[Federal Register Volume 89, Number 140 (Monday, July 22, 2024)]
[Proposed Rules]
[Pages 59186-59581]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-15087]



[[Page 59185]]

Vol. 89

Monday,

No. 140

July 22, 2024

Part II





Department of Health and Human Services





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





Centers for Medicare & Medicaid Services





42 CFR Parts 406, 407, 410, et al.





Office of the Secretary

45 CFR Part 180





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





Medicare and Medicaid Programs; Proposed Rule

  Federal Register / Vol. 89 , No. 140 / Monday, July 22, 2024 / 
Proposed Rules  

[[Page 59186]]


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

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 406, 407, 410, 411, 416, 419, 435, 440, 457, 482 and 
485

Office of the Secretary

45 CFR Part 180

[CMS-1809-P]
RIN 0938-AV35


Medicare and Medicaid Programs: Hospital Outpatient Prospective 
Payment and Ambulatory Surgical Center Payment Systems; Quality 
Reporting Programs, Including the Hospital Inpatient Quality Reporting 
Program; Health and Safety Standards for Obstetrical Services in 
Hospitals and Critical Access Hospitals; Prior Authorization; Requests 
for Information; Medicaid and CHIP Continuous Eligibility; Medicaid 
Clinic Services Four Walls Exceptions; Individuals Currently or 
Formerly in Custody of Penal Authorities; Revision to Medicare Special 
Enrollment Period for Formerly Incarcerated Individuals; and All-
Inclusive Rate Add-On Payment for High-Cost Drugs Provided by Indian 
Health Service and Tribal Facilities

AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of 
Health and Human Services (HHS).

ACTION: Proposed rule.

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

SUMMARY: This proposed rule would revise the Medicare hospital 
Outpatient Prospective Payment System (OPPS) and the Medicare 
Ambulatory Surgical Center (ASC) payment system for calendar year 2025 
based on our continuing experience with these systems. In this proposed 
rule, we describe the changes to the amounts and factors used to 
determine the payment rates for Medicare services paid under the OPPS 
and those paid under the ASC payment system. Also, this proposed rule 
would update and refine the requirements for the Hospital Outpatient 
Quality Reporting Program, Rural Emergency Hospital Quality Reporting 
Program, Ambulatory Surgical Center Quality Reporting Program, and 
Hospital Inpatient Quality Reporting Program. This proposed rule would 
request information on options being considered for future changes to 
the Overall Hospital Quality Star Rating methodology. The proposed rule 
would narrow the description of ``custody'' for purposes of Medicare's 
no legal obligation to pay payment exclusion. The proposed rule would 
revise the eligibility requirements in the special enrollment period 
(SEP) for formerly incarcerated individuals to tie the eligibility for 
this SEP to the determination made by the Social Security 
Administration that they are no longer incarcerated for releases that 
occur on and after January 1, 2025. This rule also proposes to codify 
the requirement in the Consolidated Appropriations Act, 2023 (CAA, 
2023) to provide 12 months of continuous eligibility to children under 
the age of 19 in Medicaid and CHIP, with limited exceptions. Further, 
this proposed rule would provide updates to the Conditions of 
Participation (CoPs) for hospitals and critical access hospitals (CAHs) 
in an effort to advance the health and safety of pregnant, birthing, 
and postpartum patients. This rule proposes to separately pay IHS and 
tribal hospitals for high-cost drugs furnished in hospital outpatient 
departments through an add-on payment in addition to the AIR under the 
authorities used to calculate the AIR starting January 1, 2025. This 
rule also requests further information related to a Tribal Technical 
Advisory Group request to apply the Indian Health Service encounter 
rate to all outpatient tribal clinics. Finally, the proposed rule would 
provide exceptions to the Medicaid clinic services benefit four walls 
requirement for Indian Health Service and Tribal clinics, and, at state 
option, for behavioral health clinics and clinics located in rural 
areas.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, by September 9, 2024.

ADDRESSES: In commenting, please refer to file code CMS-1809-P.
    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 submit electronic comments on this 
regulation to https://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    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-1809-P, P.O. Box 8010, 
Baltimore, MD 21244-8010.
    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 to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-1809-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: 
    Au'Sha Washington or Elise Barringer at [email protected].
    Advisory Panel on Hospital Outpatient Payment (HOP Panel), 
contact the HOP Panel mailbox at [email protected].
    Ambulatory Surgical Center Quality Reporting (ASCQR) Program 
policies, contact Anita Bhatia via email at 
[email protected].
    Ambulatory Surgical Center Quality Reporting (ASCQR) Program 
measures, contact Marsha Hertzberg via email at 
[email protected].
    All-Inclusive Rate (AIR) Add-On Payment for High-Cost Drugs 
Provided by Indian Health Service (IHS) and Tribal Facilities, 
contact Nate Vercauteren via email at 
[email protected].
    Blood and Blood Products, contact Au'Sha Washington via email at 
[email protected] or Josh McFeeters via email at 
[email protected].
    Cancer Hospital Payments, contact Scott Talaga via email at 
[email protected].
    CMS Web Posting of the OPPS and ASC Payment Files, contact Chuck 
Braver via email at [email protected].
    Medicaid Clinic Services Four Walls Flexibilities, contact Sheri 
Gaskins via email at [email protected] or Ryan Tisdale via 
email at [email protected].
    Composite APCs (Multiple Imaging and Mental Health) and 
Comprehensive APCs (C-APCs), via email at Mitali Dayal via email at 
[email protected].
    Device-Intensive Status and No Cost/Full Credit and Partial 
Credit Devices, contact Scott Talaga via email at 
[email protected].
    Domestic Personal Protection Equipment RFI, contact Jesse 
Hawkins via email at [email protected].
    Health and Safety Standards for Obstetrical Services in 
Hospitals and Critical Access Hospitals, contact The Clinical 
Standards Group, [email protected].
    Hospital Inpatient Quality Reporting (IQR) Program measures, 
contact Melissa Hager or Ngozi Uzokwe via email 
[email protected] or [email protected].
    Hospital Outpatient Quality Reporting (OQR) Program policies, 
contact Kimberly Go via email [email protected].
    Hospital Outpatient Quality Reporting (OQR) Program measures, 
contact Janis Grady via email [email protected].
    Hospital Outpatient Visits (Emergency Department Visits and 
Critical Care Visits), contact Abby Cesnik via email at 
[email protected] or Nate Vercauteren via email at 
[email protected].

[[Page 59187]]

    IHS Outpatient Encounter Rate available to all American Indian 
and Alaska Native (AI/AN) Outpatient Programs Request for 
Information, contact Lisa Parker via email at 
[email protected].
    Inpatient Only (IPO) Procedures List, contact Abigail Cesnik via 
email at [email protected].
    Medicaid and CHIP Continuous Eligibility Policy, contact Cassie 
Lagorio via email at [email protected].
    New Technology Intraocular Lenses (NTIOLs), contact Scott Talaga 
via email at [email protected].
    No Legal Obligation to Pay Payment Exclusion, contact Frederick 
Grabau via email at [email protected].
    Non-Opioid Policy or Implementation of Section 4135 of the 
Consolidated Appropriations Act (CAA), 2023, contact Mitali Dayal 
via email at [email protected] or Cory Duke via email at 
[email protected].
    OPPS Brachytherapy, contact Cory Duke via email at 
[email protected] and Scott Talaga via email at 
[email protected].
    OPPS Data (APC Weights, Conversion Factor, Copayments, Cost-to-
Charge Ratios (CCRs), Data Claims, Geometric Mean Calculation, 
Outlier Payments, and Wage Index), contact Erick Chuang via email at 
[email protected], or Scott Talaga via email at 
[email protected], or Josh McFeeters via email at 
[email protected].
    OPPS Dental Policy, contact Nicole Marcos via email at 
[email protected].
    OPPS Drugs, Radiopharmaceuticals, Biologicals, and Biosimilar 
Products, contact Josh McFeeters via email at 
[email protected], Gil Ngan via email at 
[email protected], Cory Duke via email at [email protected], 
or Au'Sha Washington via email at [email protected].
    OPPS New Technology Procedures/Services, contact the New 
Technology APC mailbox at [email protected].
    OPPS Packaged Items/Services, contact Mitali Dayal via email at 
[email protected] or Cory Duke via email at 
[email protected].
    OPPS Pass-Through Devices, contact the Device Pass-Through 
mailbox at [email protected].
    OPPS Status Indicators (SI) and Comment Indicators (CI), contact 
Marina Kushnirova via email at [email protected].
    Outpatient Department Prior Authorization Process, contact Kelly 
Wojciechowski via email at [email protected].
    Overall Hospital Quality Star Rating Request for Information, 
contact Tyson Nakashima Sr. via email [email protected].
    Partial Hospitalization Program (PHP), Intensive Outpatient 
(IOP), and Community Mental Health Center (CMHC) Issues, contact the 
PHP Payment Policy Mailbox at [email protected].
    Payment Policy for Devices in Category B Investigational Device 
Exemption Clinical Trials Policy and Drugs with a Medicare Coverage 
with Evidence Development (CED) Designation, contact Cory Duke via 
email at [email protected].
    Remote Services, contact Emily Yoder via email at 
[email protected] or Nate Vercauteren via email at 
[email protected].
    Rual Emergency Hospital Quality Reporting (REHQR) Program 
policies, contact Anita Bhatia via email at 
[email protected].
    Rual Emergency Hospital Quality Reporting (REHQR) Program 
measures, contact Melissa Hager via email [email protected].
    Special Enrollment Period for Formerly Incarcerated Individuals, 
contact Steve Manning via email at [email protected].
    All Other Issues Related to Hospital Outpatient Payments Not 
Previously Identified, contact the OPPS mailbox at 
[email protected].
    All Other Issues Related to the Ambulatory Surgical Center 
Payments Not Previously Identified, contact the ASC mailbox at 
[email protected].

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. CMS will not post on Regulations.gov public 
comments that make threats to individuals or institutions or suggest 
that the individual will take actions to harm the individual. CMS 
continues to encourage individuals not to submit duplicative comments. 
We will post acceptable comments from multiple unique commenters even 
if the content is identical or nearly identical to other comments.
    Plain Language Summary: In accordance with 5 U.S.C. 553(b)(4), a 
plain language summary of this rule may be found at https://www.regulations.gov/.

Addenda Available Only Through the Internet on the CMS Website

    In the past, a majority of the Addenda referred to in our OPPS/ASC 
proposed and final rules were published in the Federal Register as part 
of the annual rulemakings. However, beginning with the calendar year 
(CY) 2012 OPPS/ASC proposed rule, all of the Addenda no longer appear 
in the Federal Register as part of the annual OPPS/ASC proposed and 
final rules to decrease administrative burden and reduce costs 
associated with publishing lengthy tables. Instead, these Addenda are 
published and available only on the CMS website. The Addenda relating 
to the OPPS are available at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices.
    The Addenda relating to the ASC payment system are available at: 
https://www.cms.gov/medicare/payment/prospective-payment-systems/ambulatory-surgical-center-asc/asc-regulations-and-notices.

Current Procedural Terminology (CPT) Copyright Notice

    Throughout this final rule with comment period, we use CPT codes 
and descriptions to refer to a variety of services. We note that CPT 
codes and descriptions are copyright 2021 American Medical Association 
(AMA). All Rights Reserved. CPT is a registered trademark of the AMA. 
Applicable Federal Acquisition Regulations and Defense Federal 
Acquisition Regulations apply.

Table of Contents

I. Summary and Background
    A. Executive Summary of This Document
    B. Legislative and Regulatory Authority for the Hospital OPPS
    C. Excluded OPPS Services and Hospitals
    D. Prior Rulemaking
    E. Advisory Panel on Hospital Outpatient Payment (the HOP Panel 
or the Panel)
    F. Public Comments Received on the CY 2024 OPPS/ASC Proposed 
Rule
II. Proposed Updates Affecting OPPS Payments
    A. Recalibration of APC Relative Payment Weights
    B. Conversion Factor Update
    C. Proposed Wage Index Changes
    D. Proposed Statewide Average Default Cost-to-Charge Ratios 
(CCRs)
    E. Proposed Adjustment for Rural Sole Community Hospitals (SCHs) 
and Essential Access Community Hospitals (EACHs) Under Section 
1833(t)(13)(B) of the Act for CY 2025
    F. Proposed Payment Adjustment for Certain Cancer Hospitals for 
CY 2025
    G. Proposed Hospital Outpatient Outlier Payments
    H. Proposed Calculation of an Adjusted Medicare Payment From the 
National Unadjusted Medicare Payment
    I. Proposed Beneficiary Copayments
III. Proposed OPPS Ambulatory Payment Classification (APC) Group 
Policies
    A. Proposed OPPS Treatment of New and Revised HCPCS Codes
    B. Proposed OPPS Changes--Variations Within APCs
    C. Proposed New Technology APCs
    D. Proposed Universal Low Volume APC Policy for Clinical and 
Brachytherapy APCs
    E. Proposed APC-Specific Policies

[[Page 59188]]

IV. Proposed OPPS Payment for Devices
    A. Proposed Pass-Through Payment for Devices
    B. Proposed Device-Intensive Procedures
V. Proposed OPPS Payment for Drugs, Biologicals, and 
Radiopharmaceuticals
    A. Proposed OPPS Transitional Pass-Through Payment for 
Additional Costs of Drugs, Biologicals, and Radiopharmaceuticals
    B. Proposed OPPS Payment for Drugs, Biologicals, and 
Radiopharmaceuticals Without Pass-Through Payment Status
VI. Proposed Estimate of OPPS Transitional Pass-Through Spending for 
Drugs, Biologicals, Radiopharmaceuticals, and Devices
    A. Amount of Additional Payment and Limit on Aggregate Annual 
Adjustment
    B. Estimate of Pass-Through Spending for CY 2025
VII. Proposed OPPS Payment for Hospital Outpatient Visits and 
Critical Care Services
VIII. Proposed Payment for Partial Hospitalization and Intensive 
Outpatient Services
    A. Background
    B. Coding and Billing for PHP and IOP Services Under the OPPS
    C. Proposed CY 2025 Payment Rates for PHP and IOP
    D. Proposed Outlier Policy for CMHCs
IX. Services That Will Be Paid Only as Inpatient Services
    A. Background
    B. Changes to the Inpatient Only (IPO) List
X. Nonrecurring Policy Changes
    A. Remote Services
    B. Virtual Direct Supervision of Cardiac Rehabilitation (CR), 
Intensive Cardiac Rehabilitation (ICR), Pulmonary Rehabilitation 
(PR) Services and Diagnostic Services Furnished to Hospital 
Outpatients
    C. All-Inclusive Rate (AIR) Add-On Payment for High-Cost Drugs 
Provided by Indian Health Service and Tribal Facilities
    D. Request for Information- IHS Outpatient Encounter Rate 
Available to All American Indian and Alaska Native (AI/AN) 
Outpatient Programs
    E. Coverage Changes for Colorectal Cancer (CRC) Screening 
Services
    F. Request for Comment on Payment Adjustments Under the IPPS and 
OPPS for Domestic Personal Protective Equipment
    G. Payment for HIV Pre-Exposure Prophylaxis (PrEP) in Hospital 
Outpatient Departments
    H. Payment Policy for Devices in Category B Investigational 
Device Exemption (IDE) Clinical Trials Policy and Drugs With a 
Medicare Coverage With Evidence Development (CED) Designation
XI. Proposed CY 2025 OPPS Payment Status and Comment Indicators
    A. Proposed CY 2025 OPPS Payment Status Indicator Definitions
    B. Proposed CY 2025 Comment Indicator Definitions
XII. MedPAC Recommendations
    A. OPPS Payment Rates Update
    B. Medicare Safety Net Index
    C. ASC Cost Data
XIII. Proposed Updates to the Ambulatory Surgical Center (ASC) 
Payment System
    A. Background, Legislative History, Statutory Authority, and 
Prior Rulemaking for the ASC Payment System
    B. Proposed ASC Treatment of New and Revised Codes
    C. Proposed Payment Policies Under the ASC Payment System
    D. Proposed Additions to ASC Covered Surgical Procedures and 
Covered Ancillary Services Lists
    E. ASC Payment Policy for Non-Opioid Post-Surgery Pain 
Management Drugs, Biologicals, and Devices
    F. Proposed CY 2025 Non-Opioid Policy for Pain Relief Under the 
OPPS and ASC Payment System
    G. Proposed New Technology Intraocular Lenses (NTIOLs)
    H. Proposed Calculation of the ASC Payment Rates and the ASC 
Conversion Factor
XIV. Cross-Program Proposals for the Hospital Outpatient Quality 
Reporting (OQR), Rural Emergency Hospital Quality Reporting (REHQR), 
and Ambulatory Surgical Center Quality Reporting (ASCQR) Programs
    A. Background
    B. CMS Commitment to Advancing Health Equity Using Quality 
Measurement
    C. Proposal To Modify the Immediate Measure Removal Policy for 
the Hospital Outpatient Quality Reporting (OQR) and Ambulatory 
Surgical Center Quality Reporting (ASCQR) Programs Beginning With CY 
2025
XV. Hospital Outpatient Quality Reporting (OQR) Program
    A. Background and Statutory Authority
    B. Program Measure Set Policies
    C. Program Measure Proposals
    D. Administrative Requirements
    E. Form, Manner, and Timing of Data Submission
    F. Public Reporting of Measure Data
    G. Payment Reduction for Hospitals That Fail To Meet the 
Hospital OQR Program
XVI. Rural Emergency Hospital Quality Reporting (REHQR) Program
    A. Background and Statutory Authority
    B. Program Measure Set Policies: Retention, Suspension or 
Removal, Modification, and Adoption
    C. Program Measure Proposals
    D. Administrative Requirements
    E. Form, Manner, and Timing of Data Submission
    F. Public Reporting of Measure Data
XVII. Ambulatory Surgical Center Quality Reporting (ASCQR) Program
    A. Background and Statutory Authority
    B. Program Measure Set Policies
    C. Program Measure Proposals
    D. Administrative Requirements
    E. Form, Manner, and Timing of Data Submission
    F. Public Reporting of Measure Data
    G. Request for Information (RFI)--Development of Frameworks for 
Specialty Focused Reporting and Minimum Case Number for Required 
Reporting
    H. Payment Reduction for ASCs That Fail To Meet the ASCQR 
Program Requirements
XVIII. Medicaid Clinic Services Four Walls Exceptions
XIX. Changes to the Review Timeframes for the Hospital Outpatient 
Department (OPD) Prior Authorization Process
XX. Provisions Related to Medicaid and the Children's Health 
Insurance Program (CHIP)
XXI. Health and Safety Standards for Obstetrical Services in 
Hospitals and Critical Access Hospitals
    A. Background
    B. Provisions of the Proposed Regulations
XXII. Modification to the Hybrid Hospital-Wide All-Cause Readmission 
and Hybrid Hospital-Wide All-Cause Risk Standardized Mortality 
Measures in the Hospital Inpatient Quality Reporting Program
XXIII. Individuals Currently or Formerly in the Custody of Penal 
Authorities
    A. Medicare FFS No Legal Obligation To Pay Payment Exclusion and 
Incarceration (Revisions to 42 CFR 411.4)
    B. Revision to Medicare Special Enrollment Period for Formerly 
Incarcerated Individuals
XXIV. Overall Hospital Quality Star Rating Modification To Emphasize 
the Safety of Care Summary
    A. Background
    B. Current Overall Hospital Quality Star Rating Methodology
    C. Safety of Care in Star Ratings
    D. Potential Future Options to Greater Emphasize Patient Safety 
in the Overall Hospital Quality Star Rating
    E. Solicitation of Public Comment
XXIII. Files Available to the Public via the Internet
XXIV. Collection of Information Requirements
    A. ICRs for the Hospital Outpatient Quality Reporting (OQR) 
Program
    B. ICRs for the Rural Emergency Hospitals Quality Reporting 
(REHQR) Program
    C. ICRs for the Ambulatory Surgical Center Quality Reporting 
(ASCQR) Program
    D. ICRs Related to Medicaid Clinic Services Four Walls 
Exceptions
    E. ICRs for Changes to the Review Timeframes for Hospital 
Outpatient Department (OPD) Prior Authorization Process
    F. ICRs for the Hospital Inpatient Quality Reporting (IQR) 
Program
    G. ICRs for Continuous Eligibility (42 CFR 435.926 and 457.342)
    H. ICRs Regarding Organization, Staffing and Delivery of 
Services for Hospitals (Sec.  482.59a and b) and CAHs (Sec.  
485.649a Through b)
    I. ICRs Regarding OB Staff Training for Hospitals (Sec.  
482.59(c) and CAHs (Sec.  485.649(c))
    J. ICRs Regarding Revisions to QAPI (Sec.  482.21) Standards for 
OB Services
    K. ICRS Regarding Emergency Services Readiness in Emergency 
Services (Sec.  482.55) for Hospitals
    L. Transfer Protocols in Discharge Planning (Sec.  482.43) for 
Hospitals
    M. Total Costs for all ICRs Related to Maternal Health

[[Page 59189]]

XXV. Response to Comments
XXVI. Economic Analyses
    A. Statement of Need
    B. Overall Impact of Provisions of Proposed Rule
    C. Detailed Economic Analyses
    D. Regulatory Review Cost Estimation
    E. Regulatory Flexibility Act (RFA) Analysis
    F. Unfunded Mandates Reform Act Analysis
    G. Federalism
    H. Conclusion

I. Summary and Background

A. Executive Summary of this Document

1. Purpose

    In this proposed rule, we propose to update the payment policies 
and payment rates for services furnished to Medicare beneficiaries in 
hospital outpatient departments (HOPDs) and ambulatory surgical centers 
(ASCs), beginning January 1, 2025. Section 1833(t) of the Social 
Security Act (the Act) requires us to annually review and update the 
payment rates for services payable under the Hospital Outpatient 
Prospective Payment System (OPPS). Specifically, section 1833(t)(9)(A) 
of the Act requires the Secretary of the Department of Health and Human 
Services (the Secretary) to review certain components of the OPPS not 
less often than annually, and to revise the groups, the relative 
payment weights, and the wage and other adjustments that take into 
account changes in medical practice, changes in technology, and the 
addition of new services, new cost data, and other relevant information 
and factors. In addition, under section 1833(i)(D)(v) of the Act, we 
annually review and update the ASC payment rates. This proposed rule 
also includes additional policy changes made in accordance with our 
experience with the OPPS and the ASC payment system and recent changes 
in our statutory authority. We describe these and various other 
statutory authorities in the relevant sections of this proposed rule. 
In addition, this proposed rule would update and refine the 
requirements for the Hospital Outpatient Quality Reporting (OQR) 
Program, the Rural Emergency Hospital Quality Reporting (REHQR) 
Program, the Ambulatory Surgical Center Quality Reporting (ASCQR) 
Program, and the Hospital Inpatient Quality Reporting (IQR) Program. 
This proposed rule would request information on options being 
considered for future changes to the Overall Hospital Quality Star 
Rating methodology. Given that the maternal health crisis in the United 
States is among the highest in high-income countries and also 
disproportionately impacts racial and ethnic minorities, we are 
proposing updates to the CoPs for hospitals and CAHs in an effort to 
advance the health and safety of pregnant, birthing, and post-partum 
women.
    The proposed rule would narrow the description of ``custody'' for 
the purposes of Medicare's no legal obligation to pay payment exclusion 
at Sec.  411.4(b), add a definition of ``penal authority,'' reorganize 
the regulation, and make certain technical edits. The proposed rule 
would revise the eligibility requirements in the special enrollment 
period (SEP) for formerly incarcerated individuals at Sec. Sec.  
406.27(d) (Premium Part A) and 407.23(d) (Part B) to tie the 
eligibility for this SEP to the determination made by SSA that they are 
no longer incarcerated for releases beginning on January 1, 2025 and 
limit the current eligibility criteria for the SEP, with reference to 
``custody'' associated with Sec.  411.4(b) to releases between January 
1, 2023 and December 31, 2024.
    Finally, this proposed rule includes a proposal to create 
exceptions to the Medicaid clinic services benefit four walls 
requirement, to authorize Medicaid payment for services provided 
outside the four walls of the clinic for IHS/Tribal clinics, behavioral 
health clinics, and clinics located in rural areas. Our current 
regulation at 42 CFR 440.90(b) includes an exception to the four walls 
requirement under the Medicaid clinic services benefit only for certain 
clinic services furnished to individuals who are unhoused. We believe 
these proposed exceptions would help maintain and improve access for 
the populations served by IHS/Tribal clinics, behavioral health 
clinics, and clinics located in rural areas.
    Please note, some sections of this proposed rule contain a request 
for information (RFI). In accordance with the implementing regulations 
of the Paperwork Reduction Act of 1995 (PRA), specifically 5 CFR 
1320.3(h)(4), these general solicitations are exempt from the PRA. 
Facts or opinions submitted in response to general solicitations of 
comments from the public, published in the Federal Register or other 
publications, regardless of the form or format thereof, provided that 
no person is required to supply specific information pertaining to the 
commenter, other than that necessary for self-identification, as a 
condition of the agency's full consideration, are not generally 
considered information collections and therefore not subject to the 
PRA.
    Respondents are encouraged to provide complete but concise 
responses. These RFIs are issued solely for information and planning 
purposes; they do not constitute a Request for Proposal (RFP), 
applications, proposal abstracts, or quotations. These RFIs do not 
commit the U.S. Government to contract for any supplies or services or 
make a grant award. Further, CMS is not seeking proposals through these 
RFIs and will not accept unsolicited proposals. Responders are advised 
that the U.S. Government will not pay for any information or 
administrative costs incurred in response to these RFIs; all costs 
associated with responding to these RFIs will be solely at the 
interested party's expense. Not responding to these RFIs does not 
preclude participation in any future procurement, if conducted. It is 
the responsibility of the potential responders to monitor these RFI 
announcements for additional information pertaining to these requests.
    Please note that CMS will not respond to questions about the policy 
issues raised in these RFIs. CMS may or may not choose to contact 
individual responders. Such communications would only serve to further 
clarify written responses. Contractor support personnel may be used to 
review RFI responses. Responses to this notice are not offers and 
cannot be accepted by the U.S. Government to form a binding contract or 
issue a grant. Information obtained as a result of these RFIs may be 
used by the U.S. Government for program planning on a non-attribution 
basis. Respondents should not include any information that might be 
considered proprietary or confidential. These RFIs should not be 
construed as a commitment or authorization to incur cost for which 
reimbursement would be required or sought. All submissions become U.S. 
Government property and will not be returned. CMS may publicly post the 
comments received, or a summary thereof.
2. Summary of the Major Provisions
     OPPS Update: For CY 2025, we propose to increase the 
payment rates under the OPPS by an Outpatient Department (OPD) fee 
schedule increase factor of 2.6 percent. This increase factor is based 
on the proposed inpatient hospital market basket percentage increase of 
3.0 percent for inpatient services paid under the hospital inpatient 
prospective payment system (IPPS) reduced by a proposed productivity 
adjustment of 0.4 percentage point. Based on this update, we estimate 
that total payments to OPPS providers (including beneficiary cost

[[Page 59190]]

sharing and estimated changes in enrollment, utilization, and case mix) 
for calendar year (CY) 2025 would be approximately $88.2 billion, a 
proposed increase of approximately $5.2 billion compared to estimated 
CY 2024 OPPS payments.
    We are continuing to implement the statutory 2.0 percentage point 
reduction in payments for hospitals that fail to meet the hospital 
outpatient quality reporting requirements by applying a reporting 
factor of 0.9805 to the OPPS payments and copayments for all applicable 
services.
     ASC Payment Update: For CYs 2019 through 2023, we adopted 
a policy to update the ASC payment system using the hospital market 
basket update. In light of the impact of the COVID-19 PHE on healthcare 
utilization, we extended our policy to update the ASC payment system 
using the hospital market basket update an additional 2 years--through 
CYs 2024 and 2025. Using the hospital market basket methodology, for CY 
2025, we propose to increase payment rates under the ASC payment system 
by 2.6 percent for ASCs that meet the quality reporting requirements 
under the ASCQR Program. This increase is based on a proposed hospital 
market basket percentage increase of 3.0 percent reduced by a 
productivity adjustment of 0.4 percentage point. Based on this proposed 
update, we estimate that total payments to ASCs (including beneficiary 
cost sharing and estimated changes in enrollment, utilization, and 
case-mix) for CY 2025 will be approximately $7.4 billion, an increase 
of approximately $202 million compared to estimated CY 2024 Medicare 
payments.
     Data Used in CY 2025 OPPS/ASC Ratesetting: To set OPPS and 
ASC payment rates, we normally use the most updated claims and cost 
report data available. The best available claims data is the most 
recent set of data which would be from 2 years prior to the calendar 
year that is the subject of rulemaking. Cost report data usually lags 
the claims data by a year, and we believe that using the most updated 
cost report extract available from the Healthcare Cost Report 
Information System (HCRIS) is appropriate for CY 2025 OPPS ratesetting. 
Therefore, we are using our typical data process of using the most 
updated cost reports and claims data available for CY 2025 OPPS 
ratesetting.
     Device Pass-Through Payment Applications: For CY 2025, we 
received 14 complete applications for device pass-through payments. We 
solicit public comment on these applications and will make final 
determinations on these applications in the CY 2025 OPPS/ASC final rule 
with comment period.
     Changes to the List of ASC Covered Surgical Procedures and 
Ancillary Services Lists: For CY 2025, we propose to add 20 medical and 
dental procedures to the ASC CPL and ancillary services lists based 
upon existing criteria at Sec.  416.166.
     Changes to the Inpatient Only (IPO) List: For CY 2025, we 
propose to add three services for which codes were newly created by the 
AMA CPT Editorial Panel for CY 2025 to the IPO list: CPT codes 0894T 
(Cannulation of the liver allograft in preparation for connection to 
the normothermic perfusion device and decannulation of the liver 
allograft following normothermic perfusion), 0895T (Connection of liver 
allograft to normothermic machine perfusion device, hemostasis control; 
initial 4 hours of monitoring time, including hourly physiological and 
laboratory assessments (e.g., perfusate temperature, perfusate pH, 
hemodynamic parameters, bile production, bile pH, bile glucose, 
biliary), and 0896T (Connection of liver allograft to normothermic 
machine perfusion device, hemostasis control; each additional hour, 
including physiological and laboratory assessments (e.g., perfusate 
temperature, perfusate pH, hemodynamic parameters, bile production, 
bile pH, bile glucose, biliary bicarbonate, lactate levels, macroscopic 
assessment)).
     Remote Services: For CY 2025, we are clarifying our 
policies for remotely furnished outpatient therapy services, Diabetes 
Self-Management Training and Medical Nutrition Therapy services and 
mental health services furnished remotely to beneficiaries in their 
homes by hospital staff to maintain alignment across payment systems.
     All-Inclusive Rate (AIR) Add-On Payment for High-Cost 
Drugs Provided by Indian Health Service and Tribal Facilities: In CY 
2024 OPPS/ASC rulemaking, due to health equity and beneficiary access 
concerns, we solicited comment from the public on whether Medicare 
should pay separately for certain high-cost drugs provided by IHS and 
tribal facilities and, if so, how we might do so. Based on the 
responses we received, we are proposing, starting January 1, 2025, to 
separately pay IHS and tribal hospitals for high-cost drugs furnished 
in hospital outpatient departments through an add-on payment in 
addition to the AIR under the authorities used to calculate the AIR.
     Clinical Trials Coding and Payment: We propose technical 
refinements to our Category B clinical trials coding and payment policy 
for devices and procedures. We are also proposing to extend our coding 
and payment policy to drugs and devices that meet CAG's coverage and 
evidence development (CED) requirement for which there is a control 
arm.
     Payment for HIV Pre-Exposure Prophylaxis (PrEP) in 
Hospital Outpatient Departments: For CY 2025, we are proposing to pay 
for HIV PrEP drugs covered as an additional preventive service and 
related services under the OPPS, if covered by CMS through a National 
Coverage Determination. We propose a site neutral policy where products 
are generally paid similar rates under the OPPS and Physician Fee 
Schedule.
     Diagnostic Radiopharmaceuticals Separate Payment: We 
propose to pay separately for diagnostic radiopharmaceuticals with per 
day costs above a threshold of $630, which is approximately two times 
the volume weighted average cost amount currently associated with 
diagnostic radiopharmaceuticals. We also propose to update the $630 
threshold in CY 2026 and subsequent years by the Producer Price Index 
(PPI) for Pharmaceutical Preparations. Finally, we propose to pay for 
separately payable diagnostic radiopharmaceuticals based on their Mean 
Unit Cost (MUC) derived from OPPS claims and seek comment on the use of 
Average Sales Price (ASP) for payment in future years.
     Exclusion of Cell and Gene Therapies from Comprehensive 
Ambulatory Payment Classification (C-APC) Packaging: We propose to 
exclude qualifying cell and gene therapies from C-APC packaging and 
seek comment on whether there are other changes to the C-APC packaging 
policy we should consider for future years.
     Add-on Payment for Radiopharmaceutical Technetium-99m (Tc-
99m): For CY 2025, an add-on payment applies radiopharmaceuticals that 
use Tc-99m produced without use of highly enriched uranium (HEU). We 
propose for CY 2026 that we would replace the add-on payment for 
radiopharmaceuticals produced without the use of Tc-99m derived from 
non-HEU sources with an add-on payment for radiopharmaceuticals that 
use Tc-99m derived from domestically produced Mo-99.
     Changes to the Review Timeframes for the Hospital 
Outpatient Department (OPD) Prior Authorization Process: We are 
changing the current review timeframe for prior authorization

[[Page 59191]]

requests for OPD services from 10-business days to 7-calendar days for 
standard reviews.
     Cross-Program Proposals for the Hospital Outpatient 
Quality Reporting (OQR), Rural Emergency Hospital Quality Reporting 
(REHQR), and Ambulatory Surgical Center Quality Reporting (ASCQR) 
Programs: We propose to: (1) adopt the Hospital Commitment to Health 
Equity (HCHE) measure in the Hospital OQR and REHQR Programs and the 
Facility Commitment to Health Equity (FCHE) measure in the ASCQR 
Program beginning with the CY 2025 reporting period/CY 2027 payment or 
program determination; (2) adopt the Screening for Social Drivers of 
Health (SDOH) measure in all three programs beginning with voluntary 
reporting for the CY 2025 reporting period followed by mandatory 
reporting beginning with the CY 2026 reporting period/CY 2028 payment 
or program determination; (3) adopt the Screen Positive Rate for SDOH 
measure in all three programs beginning with voluntary reporting for 
the CY 2025 reporting period followed by mandatory reporting beginning 
with the CY 2026 reporting period/CY 2028 payment or program 
determination; and (4) modify the Immediate Measure Removal policy for 
adopted Hospital OQR and ASCQR Program measures beginning with CY 2025.
     Hospital Outpatient Quality Reporting (OQR) Program: In 
addition to the cross-program proposals, we propose to: (1) adopt the 
Patient Understanding of Key Information Related to Recovery After a 
Facility-Based Outpatient Procedure or Surgery, Patient Reported 
Outcome-Based Performance Measure (Information Transfer PRO-PM) 
beginning with voluntary reporting for the CY 2026 reporting period 
followed by mandatory reporting beginning with the CY 2027 reporting 
period/CY 2029 payment determination; (2) remove the MRI Lumbar Spine 
for Low Back Pain measure beginning with the CY 2025 reporting period/
CY 2027 payment determination; (3) remove the Cardiac Imaging for 
Preoperative Risk Assessment for Non-Cardiac, Low-Risk Surgery measure 
beginning with the CY 2025 reporting period/CY 2027 payment 
determination; (4) require electronic health record (EHR) technology to 
be certified to all electronic clinical quality measures (eCQMs) 
available to report beginning with the CY 2025 reporting period/CY 2027 
payment determination; and (5) publicly report the Median Time from 
Emergency Department (ED) Arrival to ED Departure for Discharged ED 
Patients measure--Psychiatric/Mental Health Patients stratification on 
Care Compare beginning with CY 2025.
     Rural Emergency Hospital Quality Reporting (REHQR) 
Program: In addition to the cross-program proposals, we propose to: (1) 
extend the reporting period for the Risk-Standardized Hospital Visits 
Within 7 Days After Hospital Outpatient Surgery measure from one year 
to two years beginning with the CY 2027 program determination; and (2) 
establish when, after status conversion, REHs would be required to 
report data under the REHQR Program.
     Ambulatory Surgical Center Quality Reporting 
(ASCQR) Program: In addition to the cross-program proposals, we are 
requesting public comment on the potential development of frameworks 
for specialty focused reporting and minimum case number for required 
reporting under the ASCQR Program.
     Hospital Inpatient Quality Reporting (IQR) 
Program: We propose to continue voluntary reporting of the core 
clinical data elements (CCDEs) and linking variables for both the 
Hybrid Hospital-Wide Readmission (HWR) and Hybrid Hospital-Wide 
Standardized Mortality (HWM) measures, for the performance period of 
July 1, 2023 through June 30, 2024, impacting the FY 2026 payment 
determination for the Hospital IQR Program.
     Overall Hospital Quality Star Rating: We are requesting 
information on potential modifications to the Safety of Care measure 
group in the Overall Hospital Quality Star Rating methodology.
     Medicare FFS No Legal Obligation to Pay Payment Exclusion 
and Incarceration: We propose to narrow the description of ``custody'' 
for purposes of Medicare's no legal obligation to pay payment exclusion 
at Sec.  411.4(b), add a definition of ``penal authority,'' reorganize 
the regulation, and make certain technical edits.
     Revision to Medicare Special Enrollment Period for 
Formerly Incarcerated Individuals: The proposed rule would revise the 
eligibility requirements in the special enrollment period (SEP) for 
formerly incarcerated individuals at Sec. Sec.  406.27(d) and 407.23(d) 
to remove the reference to ``custody'' associated with Sec.  411.4(b) 
and instead tie the eligibility for this SEP to the determination made 
by SSA that they are no longer incarcerated.
     Continuous Eligibility in Medicaid and CHIP: We propose to 
revise Medicaid and CHIP regulations to codify the requirement within 
the CAA, 2023 to require States to provide 12 months of continuous 
eligibility to children under the age of 19 in Medicaid and CHIP, with 
limited exceptions. Specifically, we propose to remove the option to 
provide continuous eligibility to a subgroup of Medicaid and CHIP 
enrollees and for a time period of less than 12 months. For CHIP, we 
propose to remove the option to disenroll children from CHIP during a 
continuous eligibility period for failure to pay premiums.
     Medicaid Clinic Services Four Walls Exceptions: Beginning 
with the effective date of any final rule implementing this proposal, 
we propose to add three exceptions to the Medicaid clinic services 
benefit four walls requirement at 42 CFR 440.90. Our current regulation 
at 42 CFR 440.90(b) allows for Medicaid payment for clinic services 
furnished outside of the four walls of the clinic only to individuals 
who are unhoused. Our proposal would add a mandatory exception to the 
four walls requirement for IHS/Tribal clinics at 42 CFR 440.90(c) and 
optional exceptions for behavioral health clinics and clinics located 
in rural areas at 42 CFR 440.90(d) and (e), respectively.
     Health and Safety Standards for Obstetrical Services in 
Hospitals and Critical Access Hospitals: CMS is proposing new 
Conditions of Participation (CoPs) for hospitals and CAHs for 
obstetrical services, including new requirements for maternal quality 
assessment and performance improvement (QAPI), maternal health data 
reporting, baseline standards for the organization, staffing, and 
delivery of care within obstetrical units, and staff training on 
evidence-based best practices on an annual basis. CMS is further 
proposing revisions to the emergency services CoP related to emergency 
readiness for hospitals and CAHs that provide emergency services. In 
addition, CMS is proposing revisions to the Discharge Planning CoP for 
all hospitals and CAHs related to transfer protocols. Lastly, CMS is 
soliciting comments on whether these proposed requirements should also 
apply to rural emergency hospitals (REHs).
3. Summary of Costs and Benefits
    In section XXVI of this proposed rule, we set forth a detailed 
analysis of the regulatory and federalism impacts that the proposed 
changes would have on affected entities and beneficiaries. Key 
estimated impacts are described below.
a. Impacts of All OPPS Changes
    Table 131 in section XXVI.C of this proposed rule displays the 
distributional impact of all the proposed OPPS changes on various 
groups of hospitals and CMHCs for CY 2025

[[Page 59192]]

compared to all estimated OPPS payments in CY 2024. We estimate that 
the proposed policies in this proposed rule would result in a 2.3 
percent overall increase in OPPS payments to providers. We estimate 
that total OPPS payments for CY 2025, including beneficiary cost-
sharing, to the approximately 3,500 facilities paid under the OPPS 
(including general acute care hospitals, children's hospitals, cancer 
hospitals, and CMHCs) would increase by approximately $1.8 billion 
compared to CY 2024 payments, excluding our estimated changes in 
enrollment, utilization, and case-mix.
    We estimated the isolated impact of our proposed OPPS policies on 
CMHCs because CMHCs have historically only been paid for partial 
hospitalization services under the OPPS. Since CY 2024, they have also 
been paid for new intensive outpatient program (IOP) services under the 
OPPS. Continuing the provider-specific structure we adopted beginning 
in CY 2011, and basing payment fully on the type of provider furnishing 
the service, we estimate a 7.2 percent increase in CY 2025 payments to 
CMHCs relative to their CY 2024 payments.
b. Impacts of the Updated Wage Indexes
    We estimate that our update of the wage indexes based on the fiscal 
year (FY) 2025 IPPS final rule wage indexes would result in a 0.1 
percent increase for urban hospitals under the OPPS and a 1.0 percent 
increase for rural hospitals. These wage indexes include the 
implementation of the Office of Management and Budget (OMB) labor 
market area delineations based on 2020 Decennial Census data, with 
updates, as discussed in section II.C of this proposed rule.
c. Impacts of the Rural Adjustment and the Cancer Hospital Payment 
Adjustment
    For CY 2025, we are continuing to provide additional payments to 
cancer hospitals so that a cancer hospital's payment-to-cost ratio 
(PCR) after the additional payments is equal to the weighted average 
PCR for the other OPPS hospitals using the most recently submitted or 
settled cost report data. Section 16002(b) of the 21st Century Cures 
Act requires that this weighted average PCR be reduced by 1.0 
percentage point. In light of the COVID-19 PHE impact on claims and 
cost data used to calculate the target PCR, we had maintained the CY 
2021 target PCR of 0.89 through CYs 2022 and 2023. However, in CY 2024, 
we finalized a policy to reduce the target PCR by 1.0 percentage point 
each calendar year until the target PCR equals the PCR of non-cancer 
hospitals using the most recently submitted or settled cost report 
data. For CY 2024, we finalized a target PCR of 0.88. For CY 2025, we 
are proposing a target PCR of 0.87 to determine the CY 2025 cancer 
hospital payment adjustment to be paid at cost report settlement. That 
is, the payment adjustments would be the additional payments needed to 
result in a PCR equal to 0.87 for each cancer hospital.
d. Impacts of the OPD Fee Schedule Increase Factor
    For the CY 2025 OPPS/ASC, we are proposing an OPD fee schedule 
increase factor of 2.6 percent and proposing to apply that increase 
factor to the conversion factor for CY 2025. As a result of the 
proposed OPD fee schedule increase factor and the proposed budget 
neutrality adjustments, we estimate that urban hospitals would 
experience an increase in payments of approximately 2.4 percent and 
that rural hospitals would experience an increase in payments of 2.8 
percent. Classifying hospitals by teaching status, we estimate non-
teaching hospitals would experience an increase in payments of 2.5 
percent, minor teaching hospitals would experience an increase in 
payments of 2.6 percent, and major teaching hospitals would experience 
an increase in payments of 2.1 percent. We also classified hospitals by 
the type of ownership. We estimate that hospitals with voluntary 
ownership would experience an increase of 2.3 percent in payments, 
while hospitals with government ownership would experience an increase 
of 2.4 percent in payments. We estimate that hospitals with proprietary 
ownership would experience an increase of 3.5 percent in payments.
e. Impacts of the Proposed ASC Payment Update
    For impact purposes, the surgical procedures on the ASC covered 
surgical procedure list are aggregated into surgical specialty groups 
using CPT and HCPCS code range definitions. The percentage change in 
estimated total payments by specialty groups under the CY 2025 payment 
rates, compared to estimated CY 2024 payment rates, generally ranges 
between an increase of 1 percent and an increase of 4 percent, 
depending on the service, with some exceptions. We estimate the impact 
of applying the proposed inpatient hospital market basket update to ASC 
payment rates will increase payments by $202 million under the ASC 
payment system in CY 2025.
f. Impacts of Medicaid Clinic Services Four Walls Exceptions
    We estimate that the proposed exceptions to the four walls 
requirement under the Medicaid clinic services benefit for IHS/Tribal 
clinics, behavioral health clinics, and clinics located in rural areas 
would increase total expenditures by $1.18 billion from FY 2025 through 
2029. Our estimate includes a Federal impact of $1.15 billion and 
impact to States of $30 million. These estimates are discussed in more 
detail in section XXVI of this proposed rule.
g. Impacts of Health and Safety Standards for Obstetrical Services in 
Hospitals and Critical Access Hospitals
    We propose maternal health focused revisions to the CoPs for 
hospitals and critical access hospitals (CAHs), which are estimated to 
increase burden on hospitals and CAHs by $446 million annually with 
total costs estimated at $4.46 billion over 10 years. We expect an 
average annual cost of $70,671 per hospital and CAH. As discussed in 
detail in section XXVI, we expect the benefits of these proposed 
policies to include reduced maternal morbidity and mortality, leading 
to financial benefits for patients, their families, and payors. We also 
expect that the proposed policies are likely to reduce inequality in 
maternal health outcomes among pregnant and postpartum women from 
different groups and lead to overall improvements in patient care.
B. Legislative and Regulatory Authority for the Hospital OPPS
    When Title XVIII of the Act was enacted, Medicare payment for 
hospital outpatient services was based on hospital-specific costs. In 
an effort to ensure that Medicare and its beneficiaries pay 
appropriately for services and to encourage more efficient delivery of 
care, the Congress mandated replacement of the reasonable cost-based 
payment methodology with a prospective payment system (PPS). The 
Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) added section 
1833(t) to the Act, authorizing implementation of a PPS for hospital 
outpatient services. The OPPS was first implemented for services 
furnished on or after August 1, 2000. Implementing regulations for the 
OPPS are located at 42 CFR parts 410 and 419.
    The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 
1999 (BBRA) (Pub. L. 106-113) made major changes in the hospital OPPS. 
The following Acts made additional changes to the OPPS: the Medicare,

[[Page 59193]]

Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 
(BIPA) (Pub. L. 106-554); the Medicare Prescription Drug, Improvement, 
and Modernization Act of 2003 (MMA) (Pub. L. 108-173); the Deficit 
Reduction Act of 2005 (DRA) (Pub. L. 109-171), enacted on February 8, 
2006; the Medicare Improvements and Extension Act under Division B of 
Title I of the Tax Relief and Health Care Act of 2006 (MIEA-TRHCA) 
(Pub. L. 109-432), enacted on December 20, 2006; the Medicare, 
Medicaid, and SCHIP Extension Act of 2007 (MMSEA) (Pub. L. 110-173), 
enacted on December 29, 2007; the Medicare Improvements for Patients 
and Providers Act of 2008 (MIPPA) (Pub. L. 110-275), enacted on July 
15, 2008; the Patient Protection and Affordable Care Act (Pub. L. 111-
148), enacted on March 23, 2010, as amended by the Health Care and 
Education Reconciliation Act of 2010 (Pub. L. 111-152), enacted on 
March 30, 2010 (these two public laws are collectively known as the 
Affordable Care Act); the Medicare and Medicaid Extenders Act of 2010 
(MMEA, Pub. L. 111-309); the Temporary Payroll Tax Cut Continuation Act 
of 2011 (TPTCCA, Pub. L. 112-78), enacted on December 23, 2011; the 
Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA, Pub. L. 
112-96), enacted on February 22, 2012; the American Taxpayer Relief Act 
of 2012 (Pub. L. 112-240), enacted January 2, 2013; the Pathway for SGR 
Reform Act of 2013 (Pub. L. 113-67) enacted on December 26, 2013; the 
Protecting Access to Medicare Act of 2014 (PAMA, Pub. L. 113-93), 
enacted on March 27, 2014; the Medicare Access and CHIP Reauthorization 
Act (MACRA) of 2015 (Pub. L. 114-10), enacted April 16, 2015; the 
Bipartisan Budget Act of 2015 (Pub. L. 114-74), enacted November 2, 
2015; the Consolidated Appropriations Act, 2016 (Pub. L. 114-113), 
enacted on December 18, 2015, the 21st Century Cures Act (Pub. L. 114-
255), enacted on December 13, 2016; the Consolidated Appropriations 
Act, 2018 (Pub. L. 115-141), enacted on March 23, 2018; the Substance 
Use Disorder-Prevention that Promotes Opioid Recovery and Treatment for 
Patients and Communities Act (Pub. L. 115-271), enacted on October 24, 
2018; the Further Consolidated Appropriations Act, 2020 (Pub. L. 116-
94), enacted on December 20, 2019; the Coronavirus Aid, Relief, and 
Economic Security Act (Pub. L. 116-136), enacted on March 27, 2020; the 
Consolidated Appropriations Act, 2021 (Pub. L. 116-260), enacted on 
December 27, 2020; the Inflation Reduction Act, 2022 (Pub. L. 117-169), 
enacted on August 16, 2022; and Consolidated Appropriations Act (CAA), 
2023 (Pub. L. 117-238), enacted December 29, 2022.
    Under the OPPS, we generally pay for hospital Part B services on a 
rate-per-service basis that varies according to the APC group to which 
the service is assigned. We use the Healthcare Common Procedure Coding 
System (HCPCS) (which includes certain Current Procedural Terminology 
(CPT) codes) to identify and group the services within each APC. The 
OPPS includes payment for most hospital outpatient services, except 
those identified in section I.C of this final rule with comment period. 
Section 1833(t)(1)(B) of the Act provides for payment under the OPPS 
for hospital outpatient services designated by the Secretary (which 
includes partial hospitalization services furnished by CMHCs), and 
certain inpatient hospital services that are paid under Medicare Part 
B.
    The OPPS rate is an unadjusted national payment amount that 
includes the Medicare payment and the beneficiary copayment. This rate 
is divided into a labor-related amount and a nonlabor-related amount. 
The labor-related amount is adjusted for area wage differences using 
the hospital inpatient wage index value for the locality in which the 
hospital or CMHC is located.
    All services and items within an APC group are comparable 
clinically and with respect to resource use, as required by section 
1833(t)(2)(B) of the Act. In accordance with section 1833(t)(2)(B) of 
the Act, subject to certain exceptions, items and services within an 
APC group cannot be considered comparable with respect to the use of 
resources if the highest median cost (or mean cost, if elected by the 
Secretary) for an item or service in the APC group is more than 2 times 
greater than the lowest median cost (or mean cost, if elected by the 
Secretary) for an item or service within the same APC group (referred 
to as the ``2 times rule''). In implementing this provision, we 
generally use the cost of the item or service assigned to an APC group.
    For new technology items and services, special payments under the 
OPPS may be made in one of two ways. Section 1833(t)(6) of the Act 
provides for temporary additional payments, which we refer to as 
``transitional pass-through payments,'' for at least 2 but not more 
than 3 years for certain drugs, biological agents, brachytherapy 
devices used for the treatment of cancer, and categories of other 
medical devices. For new technology services that are not eligible for 
transitional pass-through payments, and for which we lack sufficient 
clinical information and cost data to appropriately assign them to a 
clinical APC group, we have established special APC groups based on 
costs, which we refer to as New Technology APCs. These New Technology 
APCs are designated by cost bands which allow us to provide appropriate 
and consistent payment for designated new procedures that are not yet 
reflected in our claims data. Similar to pass-through payments, an 
assignment to a New Technology APC is temporary; that is, we retain a 
service within a New Technology APC until we acquire sufficient data to 
assign it to a clinically appropriate APC group.

C. Excluded OPPS Services and Hospitals

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

[[Page 59194]]

     Critical access hospitals (CAHs);
     Hospitals located in Maryland and paid under Maryland's 
All-Payer or Total Cost of Care Model;
     Hospitals located outside of the 50 States, the District 
of Columbia, and Puerto Rico;
     Indian Health Service (IHS) hospitals; and
     Rural emergency hospitals (REH).

D. Prior Rulemaking

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

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

1. Authority of the Panel
    Section 1833(t)(9)(A) of the Act, as amended by section 201(h) of 
Public Law 106-113, and redesignated by section 202(a)(2) of Public Law 
106-113, requires that we consult with an expert outside advisory panel 
composed of an appropriate selection of representatives of providers to 
annually review (and advise the Secretary concerning) the clinical 
integrity of the payment groups and their weights under the OPPS. In CY 
2000, based on section 1833(t)(9)(A) of the Act, the Secretary 
established the Advisory Panel on Ambulatory Payment Classification 
Groups (APC Panel) to fulfill this requirement. In CY 2011, based on 
section 222 of the Public Health Service Act (the PHS Act), which gives 
discretionary authority to the Secretary to convene advisory councils 
and committees, the Secretary expanded the panel's scope to include the 
supervision of hospital outpatient therapeutic services in addition to 
the APC groups and weights. To reflect this new role of the panel, the 
Secretary changed the panel's name to the Advisory Panel on Hospital 
Outpatient Payment (the HOP Panel). The HOP Panel is not restricted to 
using data compiled by CMS, and in conducting its review, it may use 
data collected or developed by organizations outside the Department.
2. Establishment of the Panel
    On November 21, 2000, the Secretary signed the initial charter 
establishing the Panel, and, at that time, named the APC Panel. This 
expert panel is composed of appropriate representatives of providers 
(currently employed full-time, not as consultants, in their respective 
areas of expertise) who review clinical data and advise CMS about the 
clinical integrity of the APC groups and their payment weights. Since 
CY 2012, the Panel also is charged with advising the Secretary on the 
appropriate level of supervision for individual hospital outpatient 
therapeutic services. The Panel is technical in nature, and it is 
governed by the provisions of the Federal Advisory Committee Act 
(FACA). The current charter specifies, among other requirements, that 
the Panel--
     May advise on the clinical integrity of Ambulatory Payment 
Classification (APC) groups and their associated weights;
     May advise on the appropriate supervision level for 
hospital outpatient services;
     May advise on OPPS APC rates for ASC covered surgical 
procedures;
     Continues to be technical in nature;
     Is governed by the provisions of the FACA;
     Has a Designated Federal Official (DFO); and
     Is chaired by a Federal Official designated by the 
Secretary.
    The Panel's charter was amended on November 15, 2011, renaming the 
Panel and expanding the Panel's authority to include supervision of 
hospital outpatient therapeutic services and to add critical access 
hospital (CAH) representation to its membership. The Panel's charter 
was also amended on November 6, 2014 (80 FR 23009), and the number of 
members was revised from up to 19 to up to 15 members. The Panel's 
current charter was approved on November 21, 2022, for a 2-year period.
    The current Panel membership and other information pertaining to 
the Panel, including its charter, Federal Register notices, membership, 
meeting dates, agenda topics, and meeting reports, can be viewed on the 
CMS website at: https://www.cms.gov/Regulations-and-Guidance/Guidance/FACA/AdvisoryPanelonAmbulatoryPaymentClassificationGroups.html.
3. Panel Meetings and Organizational Structure
    The Panel has held many meetings, with the last meeting taking 
place on August 21, 2023. Prior to each meeting, we publish a notice in 
the Federal Register to announce the meeting, new members, and any 
other changes of which the public should be aware. Beginning in CY 
2017, we have transitioned to one meeting per year (81 FR 31941). In CY 
2022, we published a Federal Register notice requesting nominations to 
fill vacancies on the Panel (87 FR 68499). CMS is currently accepting 
nominations at: https://mearis.cms.gov.
    In addition, the Panel has established an administrative structure 
that, in part, currently includes the use of three subcommittee 
workgroups to provide preparatory meeting and subject support to the 
larger panel. The three current subcommittees include the following:
     APC Groups and Status Indicator Assignments Subcommittee, 
which advises and provides recommendations to the Panel on the 
appropriate status indicators to be assigned to HCPCS codes, including 
but not limited to whether a HCPCS code or a category of codes should 
be packaged or separately paid, as well as the appropriate APC 
assignment of HCPCS codes regarding services for which separate payment 
is made;
     Data Subcommittee, which is responsible for studying the 
data issues confronting the Panel and for recommending options for 
resolving them; and
     Visits and Observation Subcommittee, which reviews and 
makes recommendations to the Panel on all technical issues pertaining 
to observation services and hospital outpatient visits paid under the 
OPPS.
    Each of these workgroup subcommittees was established by a majority 
vote from the full Panel during a scheduled Panel meeting, and the 
Panel recommended at the August 21, 2023, meeting that the 
subcommittees continue. We accepted this recommendation.
    For discussions of earlier Panel meetings and recommendations, we 
refer readers to previously published OPPS/ASC proposed and final 
rules, the CMS website mentioned earlier in this section, and the FACA 
database at https://facadatabase.gov.

[[Page 59195]]

F. Public Comments Received on the CY 2024 OPPS/ASC Final Rule With 
Comment Period

    We received approximately 180 timely pieces of correspondence on 
the CY 2024 OPPS/ASC final rule with comment period that appeared in 
the Federal Register on November 22, 2023 (88 FR 81540) and the related 
correction notice. In-scope comments were related to the interim APC 
assignments and/or status indicators of new or replacement Level II 
HCPCS codes, which are identified with comment indicator ``NI'' in OPPS 
Addendum B, ASC Addendum AA, and ASC Addendum BB to that final rule).

II. Proposed Updates Affecting OPPS Payments

A. Recalibration of APC Relative Payment Weights

1. Database Construction
a. Database Source and Methodology
    Section 1833(t)(9)(A) of the Act requires that the Secretary review 
not less often than annually and revise the relative payment weights 
for Ambulatory Payment Classifications (APCs). In the April 7, 2000, 
OPPS final rule with comment period (65 FR 18482), we explained in 
detail how we calculated the relative payment weights that were 
implemented on August 1, 2000, for each APC group.
    For the CY 2025 OPPS, we propose to recalibrate the APC relative 
payment weights for services furnished on or after January 1, 2025, and 
before January 1, 2026 (CY 2025), using the same basic methodology that 
we described in the CY 2024 OPPS/ASC final rule with comment period (88 
FR 81549 through 81552), using CY 2023 claims data. That is, we propose 
to recalibrate the relative payment weights for each APC based on 
claims and cost report data for hospital outpatient department (HOPD) 
services to construct a database for calculating APC group weights.
    For the purpose of recalibrating the proposed APC relative payment 
weights for CY 2025, we began with approximately 145 million final 
action claims (claims for which all disputes and adjustments have been 
resolved and payment has been made) for HOPD services furnished on or 
after January 1, 2023, and before January 1, 2024, before applying our 
exclusionary criteria and other methodological adjustments. After the 
application of those data processing changes, we used approximately 73 
million final action claims to develop the proposed CY 2025 OPPS 
payment weights. For exact numbers of claims used and additional 
details on the claims accounting process, we refer readers to the 
claims accounting narrative under supporting documentation for this 
proposed rule on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.
    Addendum N to this proposed rule (which is available via the 
internet on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices) 
includes the proposed list of bypass codes for CY 2025. The proposed 
list of bypass codes contains codes that are reported on claims for 
services in CY 2023 and, therefore, includes codes that were in effect 
in CY 2023 and used for billing. We propose to retain these deleted 
bypass codes on the proposed CY 2025 bypass list because these codes 
existed in CY 2023 and were covered OPD services in that period, and CY 
2023 claims data were used to calculate proposed CY 2025 payment rates. 
Keeping these deleted bypass codes on the bypass list potentially 
allows us to create more ``pseudo'' single procedure claims for 
ratesetting purposes. ``Overlap bypass codes'' that are members of the 
proposed multiple imaging composite APCs are identified by asterisks 
(*) in the third column of Addendum N to this proposed rule. HCPCS 
codes that we propose to add for CY 2025 are identified by asterisks 
(*) in the fourth column of Addendum N.
b. Proposed Calculation and Use of Cost-to-Charge Ratios (CCRs)
    For CY 2025, we propose to continue to use the hospital-specific 
overall ancillary and departmental cost-to-charge ratios (CCRs) to 
convert charges to estimated costs through application of a revenue 
code-to-cost center crosswalk. To calculate the APC costs on which the 
proposed CY 2025 APC payment rates are based, we calculated hospital-
specific departmental CCRs for each hospital for which we had CY 2023 
claims data by comparing these claims data to the most recently 
available hospital cost reports, which, in most cases, are from CY 
2022. For the proposed CY 2025 OPPS payment rates, we used the set of 
claims processed during CY 2023. We applied the hospital-specific CCR 
to the hospital's charges at the most detailed level possible, based on 
a revenue code-to-cost center crosswalk that contains a hierarchy of 
CCRs used to estimate costs from charges for each revenue code. To 
ensure the completeness of the revenue code-to-cost center crosswalk, 
we reviewed changes to the list of revenue codes for CY 2023 (the year 
of claims data we used to calculate the proposed CY 2025 OPPS payment 
rates) and updates to the National Uniform Billing Committee (NUBC) 
2023 Data specifications Manual. That crosswalk is available for review 
and continuous comment on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.
    In accordance with our longstanding policy, similar to our 
finalized policy for CY 2024 OPPS ratesetting, we propose to calculate 
CCRs for the standard cost centers--cost centers with a predefined 
label--and nonstandard cost centers--cost centers defined by a 
hospital--accepted by the electronic cost report database. In general, 
the most detailed level at which we calculate CCRs is the hospital-
specific departmental level.
    While we generally view the use of additional cost data as 
improving our OPPS ratesetting process, we have historically not 
included cost report lines for certain nonstandard cost centers in the 
OPPS ratesetting database construction when hospitals have reported 
these nonstandard cost centers on cost report lines that do not 
correspond to the cost center number. We believe it is important to 
further investigate the accuracy of these cost report data before 
including such data in the ratesetting process. Further, we believe it 
is appropriate to gather additional information from the public as well 
before including them in OPPS ratesetting. For CY 2025, we propose not 
to include the nonstandard cost centers reported in this way in the 
OPPS ratesetting database construction.
2. Proposed Data Development and Calculation of Costs Used for 
Ratesetting
    In this section of this proposed rule, we discuss the use of claims 
to calculate the OPPS payment rates for CY 2025. The Hospital OPPS page 
on the CMS website on which this proposed rule is posted (https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient) provides an accounting of claims used in the development of 
the proposed payment rates. That accounting provides additional detail 
regarding the number of claims derived at each stage of the process. In 
addition, later in this section we discuss the file of claims that 
comprises the data set that is available upon payment of an 
administrative fee under a CMS data use agreement. The CMS website, 
https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient, includes information about obtaining

[[Page 59196]]

the ``OPPS Limited Data Set,'' which now includes the additional 
variables previously available only in the OPPS Identifiable Data Set, 
including International Classification of Diseases, Tenth Revision, 
Clinical Modification (ICD-10-CM) diagnosis codes and revenue code 
payment amounts. This file is derived from the CY 2023 claims that are 
used to calculate the proposed payment rates for this proposed rule.
    Previously, the OPPS established the scaled relative weights on 
which payments are based using APC median costs, a process described in 
the CY 2012 OPPS/ASC final rule with comment period (76 FR 74188). 
However, as discussed in more detail in section II.A.2.f of the CY 2013 
OPPS/ASC final rule with comment period (77 FR 68259 through 68271), we 
finalized the use of geometric mean costs to calculate the relative 
weights on which the CY 2013 OPPS payment rates were based. While this 
policy changed the cost metric on which the relative payments are 
based, the data process in general remained the same under the 
methodologies that we used to obtain appropriate claims data and 
accurate cost information in determining estimated service cost.
    We used the methodology described in sections II.A.2.a through 
II.A.2.c of this proposed rule to calculate the costs we used to 
establish the proposed relative payment weights used in calculating the 
OPPS payment rates for CY 2025 shown in Addenda A and B to this 
proposed rule (which are available via the internet on the CMS website 
at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices). We refer readers to section 
II.A.4 of this proposed rule for a discussion of the conversion of APC 
costs to scaled payment weights.
    We note that under the OPPS, CY 2019 was the first year in which 
the claims data used for setting payment rates (CY 2017 data) contained 
lines with the modifier ``PN,'' which indicates nonexcepted items and 
services furnished and billed by off-campus provider-based departments 
(PBDs) of hospitals. Because nonexcepted items and services are not 
paid under the OPPS, in the CY 2019 OPPS/ASC final rule with comment 
period (83 FR 58832), we finalized a policy to remove those claim lines 
reported with modifier ``PN'' from the claims data used in ratesetting 
for the CY 2019 OPPS and subsequent years. For the CY 2025 OPPS, we 
propose to continue to remove claim lines with modifier ``PN'' from the 
ratesetting process.
    For details of the claims accounting process used in this CY 2025 
OPPS/ASC proposed rule, we refer readers to the claims accounting 
narrative under supporting documentation for this proposed rule on the 
CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.
a. Calculation of Single Procedure APC Criteria-Based Costs
(1) Blood and Blood Products
    Since the implementation of the OPPS in August 2000, we have made 
separate payments for blood and blood products through APCs rather than 
packaging payment for them into payments for the procedures with which 
they are administered. Hospital payments for the costs of blood and 
blood products, as well as for the costs of collecting, processing, and 
storing blood and blood products, are made through the OPPS payments 
for specific blood product APCs.
    We propose to continue to establish payment rates for blood and 
blood products using our blood-specific CCR methodology (88 FR 49562), 
which utilizes actual or simulated CCRs from the most recently 
available hospital cost reports to convert hospital charges for blood 
and blood products to costs. This methodology has been our standard 
ratesetting methodology for blood and blood products since CY 2005. It 
was developed in response to data analysis indicating that there was a 
significant difference in CCRs for those hospitals with and without 
blood-specific cost centers and past public comments indicating that 
the former OPPS policy of defaulting to the overall hospital CCR for 
hospitals not reporting a blood-specific cost center often resulted in 
an underestimation of the true hospital costs for blood and blood 
products. To address the differences in CCRs and to better reflect 
hospitals' costs, our methodology simulates blood CCRs for each 
hospital that does not report a blood cost center by calculating the 
ratio of the blood-specific CCRs to hospitals' overall CCRs for those 
hospitals that do report costs and charges for blood cost centers and 
applies this mean ratio to the overall CCRs of hospitals not reporting 
costs and charges for blood cost centers on their cost reports. We 
propose to calculate the costs upon which the proposed payment rates 
for blood and blood products are based using the actual blood-specific 
CCR for hospitals that reported costs and charges for a blood cost 
center and a hospital-specific, simulated, blood-specific CCR for 
hospitals that did not report costs and charges for a blood cost 
center.
    We continue to believe that the hospital-specific, simulated, 
blood-specific CCR methodology takes into account the unique charging 
and cost accounting structure of each hospital, as it better responds 
to the absence of a blood-specific CCR for a hospital than alternative 
methodologies, such as defaulting to the overall hospital CCR or 
applying an average blood-specific CCR across hospitals. This 
methodology also yields more accurate estimated costs for these 
products and results in payment rates for blood and blood products that 
appropriately reflect the relative estimated costs of these products 
for hospitals without blood cost centers and for these blood products 
in general.
    We refer readers to Addendum B to this proposed rule (which is 
available via the internet on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices) for the proposed CY 2025 payment rates for blood 
and blood products (which are generally identified with status 
indicator ``R'').
    For a more detailed discussion of payments for blood and blood 
products through APCs, we refer readers to:
     the CY 2005 OPPS proposed rule (69 FR 50524 and 50525) for 
a more comprehensive discussion of the blood-specific CCR methodology;
     the CY 2008 OPPS/ASC final rule with comment period (72 FR 
66807 through 66810) for a detailed history of the OPPS payment for 
blood and blood products; and
     the CY 2015 OPPS/ASC final rule with comment period (79 FR 
66795 and 66796) for additional discussion of our policy not to make 
separate payments for blood and blood products when they appear on the 
same claims as services assigned to a C-APC.
(2) Brachytherapy Sources
    Section 1833(t)(2)(H) of the Act mandates the creation of 
additional groups of covered OPD services that classify devices of 
brachytherapy--cancer treatment through solid source radioactive 
implants--consisting of a seed or seeds (or radioactive source) 
(``brachytherapy sources'') separately from other services or groups of 
services. The statute provides certain criteria for the additional 
groups. For the history of OPPS payment for brachytherapy sources, we 
refer readers to prior OPPS final rules, such as the CY 2012 OPPS/ASC 
final rule with comment period (77 FR 68240 and 68241). As we have 
stated in prior OPPS updates, we believe that adopting the

[[Page 59197]]

general OPPS prospective payment methodology for brachytherapy sources 
is appropriate for a number of reasons (77 FR 68240). The general OPPS 
methodology uses costs based on claims data to set the relative payment 
weights for hospital outpatient services. This payment methodology 
results in more consistent, predictable, and equitable payment amounts 
per source across hospitals by averaging the extremely high and low 
values, in contrast to payment based on hospitals' charges adjusted to 
costs. We believe that the OPPS methodology, as opposed to payment 
based on hospitals' charges adjusted to cost, also would provide 
hospitals with incentives for efficiency in the provision of 
brachytherapy services to Medicare beneficiaries. Moreover, this 
approach is consistent with our payment methodology for the vast 
majority of items and services paid under the OPPS. We refer readers to 
the CY 2016 OPPS/ASC final rule with comment period (80 FR 70323 
through 70325) for further discussion of the history of OPPS payment 
for brachytherapy sources.
    For CY 2025, except where otherwise indicated, we propose to 
continue our policy and use the costs derived from CY 2023 claims data 
to set the proposed CY 2025 payment rates for brachytherapy sources 
because CY 2023 is the year of data we propose to use to set the 
proposed payment rates for most other items and services that would be 
paid under the CY 2025 OPPS. With the exception of the proposed payment 
rate for brachytherapy source C2645 (Brachytherapy planar source, 
palladium-103, per square millimeter) and the proposed payment rates 
for low-volume brachytherapy APCs discussed in section III.D of this 
proposed rule, we propose to base the payment rates for brachytherapy 
sources on the geometric mean unit costs for each source, consistent 
with the methodology that we propose for other items and services paid 
under the OPPS, as discussed in section II.A.2 of this proposed rule. 
We also propose for CY 2025 and subsequent years to continue the other 
payment policies for brachytherapy sources that we finalized and first 
implemented in the CY 2010 OPPS/ASC final rule with comment period (74 
FR 60537). For CY 2025 and subsequent years, we propose to pay for the 
stranded and nonstranded not otherwise specified (NOS) codes, HCPCS 
codes C2698 (Brachytherapy source, stranded, not otherwise specified, 
per source) and C2699 (Brachytherapy source, non-stranded, not 
otherwise specified, per source), at a rate equal to the lowest 
stranded or nonstranded prospective payment rate for such sources, 
respectively, on a per-source basis (as opposed to, for example, per 
mCi), which is based on the policy we established in the CY 2008 OPPS/
ASC final rule with comment period (72 FR 66785). For CY 2025 and 
subsequent years, we also propose to continue the policy we first 
implemented in the CY 2010 OPPS/ASC final rule with comment period (74 
FR 60537) regarding payment for new brachytherapy sources for which we 
have no claims data, based on the same reasons we discussed in the CY 
2008 OPPS/ASC final rule with comment period (72 FR 66786; which was 
delayed until January 1, 2010, by section 142 of Pub. L. 110-275). 
Specifically, this policy is intended to enable us to assign new HCPCS 
codes for new brachytherapy sources to their own APCs, with prospective 
payment rates set based on our consideration of external data and other 
relevant information regarding the expected costs of the sources to 
hospitals. The proposed CY 2025 payment rates for brachytherapy sources 
are included on Addendum B to this proposed rule (which is available 
via the internet on the CMS website) and identified with status 
indicator ``U.''
    For CY 2018, we assigned status indicator ``U'' (Brachytherapy 
Sources, Paid under OPPS; separate APC payment) to HCPCS code C2645 
(Brachytherapy planar source, palladium-103, per square millimeter) in 
the absence of claims data and established a payment rate using 
external data (invoice price) at $4.69 per mm\2\ for the brachytherapy 
source's APC--APC 2648 (Brachytx planar, p-103). For CY 2019, in the 
absence of sufficient claims data, we continued to establish a payment 
rate for C2645 at $4.69 per mm\2\ for APC 2648 (Brachytx planar, p-
103). Our CY 2018 claims data available for the CY 2020 OPPS/ASC final 
rule with comment period (84 FR 61142) included two claims with a 
geometric mean cost for HCPCS code C2645 of $1.02 per mm\2\. In 
response to comments from interested parties, we agreed that, given the 
limited claims data available and a new outpatient indication for 
C2645, a payment rate for HCPCS code C2645 based on the geometric mean 
cost of $1.02 per mm\2\ may not adequately reflect the cost of HCPCS 
code C2645. In the CY 2020 OPPS/ASC final rule with comment period, we 
finalized our policy to use our equitable adjustment authority under 
section 1833(t)(2)(E) of the Act, which states that the Secretary shall 
establish, in a budget neutral manner, other adjustments as determined 
to be necessary to ensure equitable payments, to maintain the CY 2019 
payment rate of $4.69 per mm\2\ for HCPCS code C2645 for CY 2020. 
Similarly, in the absence of sufficient claims data to establish an APC 
payment rate, in the CY 2021, CY 2022, CY 2023, and CY 2024 OPPS/ASC 
final rules with comment period (85 FR 85879 through 85880, 86 FR 
63469, 87 FR 71760-71761, and 88 FR 81553), we finalized our policy to 
use our equitable adjustment authority under section 1833(t)(2)(E) of 
the Act to maintain the CY 2019 payment rate of $4.69 per mm\2\ for 
HCPCS code C2645 for CYs 2021 through 2024.
    There are no CY 2023 claims available that reported HCPCS code 
C2645 for this CY 2025 OPPS/ASC proposed rule. Therefore, in the 
absence of claims data, we propose to continue to use our equitable 
adjustment authority under section 1833(t)(2)(E) of the Act to maintain 
the CY 2024 payment rate of $4.69 per mm\2\ for HCPCS code C2645, which 
is proposed to be assigned to APC 2648 (Brachytx planar, p-103), for CY 
2025.
    Additionally, for CY 2022 and subsequent calendar years, we adopted 
a Universal Low Volume APC policy for clinical and brachytherapy APCs. 
As discussed in further detail in section X.C of the CY 2022 OPPS/ASC 
final rule with comment period (86 FR 63743 through 63747), we adopted 
this policy to mitigate wide variation in payment rates that occur from 
year to year for APCs with low utilization. Such volatility in payment 
rates from year to year can result in even lower utilization and 
potential barriers to access. Brachytherapy APCs that have fewer than 
100 single claims used for ratesetting purposes are designated as Low 
Volume APCs unless an alternative payment rate is applied, such as the 
use of our equitable adjustment authority under section 1833(t)(2)(E) 
of the Act in the case of APC 2648 (Brachytx planar, p-103), for which 
HCPCS code C2645 (Brachytherapy planar source, palladium-103, per 
square millimeter) is the only code assigned as discussed previously in 
this section.
    For CY 2025, we propose to designate six brachytherapy APCs as Low 
Volume APCs as these APCs meet our criteria to be designated as Low 
Volume APCs. For more information on the brachytherapy APCs we propose 
to designate as Low Volume APCs, see section III.D of this proposed 
rule.
    We invite interested parties to submit recommendations for new 
codes to describe new brachytherapy sources.

[[Page 59198]]

Such recommendations should be directed via email to 
[email protected] or by mail to the Division of Outpatient 
Care, Mail Stop C4-01-26, Centers for Medicare and Medicaid Services, 
7500 Security Boulevard, Baltimore, MD 21244. We will continue to add 
new brachytherapy source codes and descriptors to our systems for 
payment on a quarterly basis.
b. Comprehensive APCs (C-APCs) for CY 2025
(1) Background
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74861 
through 74910), we finalized a comprehensive payment policy that 
packages payment for adjunctive and secondary items, services, and 
procedures into the most costly primary procedure under the OPPS at the 
claim level. The policy was finalized in CY 2014, but the effective 
date was delayed until January 1, 2015, to allow additional time for 
further analysis, opportunity for public comment, and systems 
preparation. The comprehensive APC (C-APC) policy was implemented 
effective January 1, 2015, with modifications and clarifications in 
response to public comments received regarding specific provisions of 
the C-APC policy (79 FR 66798 through 66810).
    A C-APC is defined as a classification for the provision of a 
primary service and all adjunctive services provided to support the 
delivery of the primary service. We established C-APCs as a category 
broadly for OPPS payment and implemented 25 C-APCs beginning in CY 2015 
(79 FR 66809 and 66810). We have gradually added new C-APCs since the 
policy was implemented beginning in CY 2015, with the number of C-APCs 
now totaling 72 (80 FR 70332; 81 FR 79584 and 79585; 83 FR 58844 
through 58846; 84 FR 61158 through 61166; 85 FR 85885; 86 FR 63474; 87 
FR 71769; and 88 FR 81562).
    Under our C-APC policy, we designate a service described by a HCPCS 
code assigned to a C-APC as the primary service when the service is 
identified by OPPS status indicator ``J1.'' When such a primary service 
is reported on a hospital outpatient claim, taking into consideration 
the few exceptions that are discussed below, we make payment for all 
other items and services reported on the hospital outpatient claim as 
being integral, ancillary, supportive, dependent, and adjunctive to the 
primary service (hereinafter collectively referred to as ``adjunctive 
services'') and representing components of a complete comprehensive 
service (78 FR 74865 and 79 FR 66799). Payments for adjunctive services 
are packaged into the payments for the primary services. This results 
in a single prospective payment for each of the primary, comprehensive 
services based on the costs of all reported services at the claim 
level. One example of a primary service would be a partial mastectomy 
and an example of a secondary service packaged into that primary 
service would be a radiation therapy procedure.
    Services excluded from the C-APC policy under the OPPS include 
services that are not covered OPD services, services that cannot by 
statute be paid for under the OPPS, and services that are required by 
statute to be separately paid. This includes certain mammography and 
ambulance services that are not covered OPD services in accordance with 
section 1833(t)(1)(B)(iv) of the Act; brachytherapy seeds, which also 
are required by statute to receive separate payment under section 
1833(t)(2)(H) of the Act; pass-through payment drugs and devices, which 
also require separate payment under section 1833(t)(6) of the Act; 
self-administered drugs (SADs) that are not otherwise packaged as 
supplies because they are not covered under Medicare Part B under 
section 1861(s)(2)(B) of the Act; and certain preventive services (78 
FR 74865 and 79 FR 66800 and 66801). A list of services excluded from 
the C-APC policy is included in Addendum J to this proposed rule (which 
is available via the internet on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices). If a service does not appear on this 
list of excluded services, payment for it will be packaged into the 
payment for the primary C-APC service when it appears on an outpatient 
claim with a primary C-APC service.
    The C-APC policy payment methodology set forth in the CY 2014 OPPS/
ASC final rule with comment period and modified and implemented 
beginning in CY 2015 is summarized as follows (78 FR 74887 and 79 FR 
66800):
    Basic Methodology. As stated in the CY 2015 OPPS/ASC final rule 
with comment period, we define the C-APC payment policy as including 
all covered OPD services on a hospital outpatient claim reporting a 
primary service that is assigned to status indicator ``J1,'' \1\ 
excluding services that are not covered OPD services or that cannot by 
statute be paid for under the OPPS. Services and procedures described 
by HCPCS codes assigned to status indicator ``J1'' are assigned to C-
APCs based on our usual APC assignment methodology by evaluating the 
geometric mean costs of the primary service claims to establish 
resource similarity and the clinical characteristics of each procedure 
to establish clinical similarity within each APC.
---------------------------------------------------------------------------

    \1\ Status indicator ``J1'' denotes Hospital Part B Services 
Paid Through a Comprehensive APC. Further information can be found 
in CY 2025 Addendum D1.
---------------------------------------------------------------------------

    In the CY 2016 OPPS/ASC final rule with comment period, we expanded 
the C-APC payment methodology to qualifying extended assessment and 
management encounters through the ``Comprehensive Observation 
Services'' C-APC (C-APC 8011). Services within this APC are assigned 
status indicator ``J2.'' \2\ Specifically, we make a payment through C-
APC 8011 for a claim that:
---------------------------------------------------------------------------

    \2\ Status indicator ``J2'' denotes Hospital Part B Services 
That May Be Paid Through a Comprehensive APC. Further information 
can be found in CY 2025 Addendum D1.
---------------------------------------------------------------------------

     Does not contain a procedure described by a HCPCS code to 
which we have assigned status indicator ``T;''
     Contains 8 or more units of services described by HCPCS 
code G0378 (Hospital observation services, per hour);
     Contains services provided on the same date of service or 
one day before the date of service for HCPCS code G0378 that are 
described by one of the following codes: HCPCS code G0379 (Direct 
admission of patient for hospital observation care) on the same date of 
service as HCPCS code G0378; CPT code 99281 (Emergency department visit 
for the evaluation and management of a patient (Level 1)); CPT code 
99282 (Emergency department visit for the evaluation and management of 
a patient (Level 2)); CPT code 99283 (Emergency department visit for 
the evaluation and management of a patient (Level 3)); CPT code 99284 
(Emergency department visit for the evaluation and management of a 
patient (Level 4)); CPT code 99285 (Emergency department visit for the 
evaluation and management of a patient (Level 5)) or HCPCS code G0380 
(Type B emergency department visit (Level 1)); HCPCS code G0381 (Type B 
emergency department visit (Level 2)); HCPCS code G0382 (Type B 
emergency department visit (Level 3)); HCPCS code G0383 (Type B 
emergency department visit (Level 4)); HCPCS code G0384 (Type B 
emergency department visit (Level 5)); CPT code 99291 (Critical care, 
evaluation and management of the critically ill or critically injured 
patient; first 30-74 minutes); or HCPCS code G0463 (Hospital outpatient 
clinic visit

[[Page 59199]]

for assessment and management of a patient); and
     Does not contain services described by a HCPCS code to 
which we have assigned status indicator ``J1.''
    The assignment of status indicator ``J2'' to a specific set of 
services performed in combination with each other allows for all other 
OPPS payable services and items reported on the claim (excluding 
services that are not covered OPD services or that cannot by statute be 
paid for under the OPPS) to be deemed adjunctive services representing 
components of a comprehensive service and resulting in a single 
prospective payment for the comprehensive service based on the costs of 
all reported services on the claim (80 FR 70333 through 70336).
    Services included under the C-APC payment packaging policy, that 
is, services that are typically adjunctive to the primary service and 
provided during the delivery of the comprehensive service, include 
diagnostic procedures, laboratory tests, and other diagnostic tests and 
treatments that assist in the delivery of the primary procedure; visits 
and evaluations performed in association with the procedure; uncoded 
services and supplies used during the service; durable medical 
equipment as well as prosthetic and orthotic items and supplies when 
provided as part of the outpatient service; and any other components 
reported by HCPCS codes that represent services that are provided 
during the complete comprehensive service (78 FR 74865 and 79 FR 
66800).
    In addition, payment for hospital outpatient department services 
that are similar to therapy services, such as speech language 
pathology, and delivered either by therapists or nontherapists is 
included as part of the payment for the packaged complete comprehensive 
service. These services that are provided during the perioperative 
period are adjunctive services and are deemed not to be therapy 
services as described in section 1834(k) of the Act, regardless of 
whether the services are delivered by therapists or other nontherapist 
health care workers. We have previously noted that therapy services are 
those provided by therapists under a plan of care in accordance with 
section 1835(a)(2)(C) and section 1835(a)(2)(D) of the Act and are paid 
for under section 1834(k) of the Act, subject to annual therapy caps as 
applicable (78 FR 74867 and 79 FR 66800). However, certain other 
services similar to therapy services are considered and paid for as 
hospital outpatient department services. Payment for these nontherapy 
outpatient department services that are reported with therapy codes and 
provided with a comprehensive service is included in the payment for 
the packaged complete comprehensive service. We note that these 
services, even though they are reported with therapy codes, are 
hospital outpatient department services and not therapy services. We 
refer readers to the July 2016 OPPS Change Request 9658 (Transmittal 
3523) for further instructions on reporting these services in the 
context of a C-APC service.
    Items included in the packaged payment provided in conjunction with 
the primary service also include all drugs, biologicals, and 
radiopharmaceuticals, regardless of cost, except those drugs with pass-
through payment status and SADs, unless they function as packaged 
supplies (78 FR 74868, 74869, and 74909 and 79 FR 66800). We refer 
readers to Section 50.2M, Chapter 15, of the Medicare Benefit Policy 
Manual for a description of our policy on SADs treated as hospital 
outpatient supplies, including lists of SADs that function as supplies 
and those that do not function as supplies.\3\
---------------------------------------------------------------------------

    \3\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c15.pdf.
---------------------------------------------------------------------------

    We define each hospital outpatient claim reporting a single unit of 
a single primary service assigned to status indicator ``J1'' as a 
single ``J1'' unit procedure claim (78 FR 74871 and 79 FR 66801). Line-
item charges for services included on the C-APC claim are converted to 
line-item costs, which are then summed to develop the estimated APC 
costs. These claims are then assigned one unit of the service with 
status indicator ``J1'' and later used to develop the geometric mean 
costs for the C-APC relative payment weights. (We note that we use the 
term ``comprehensive'' to describe the geometric mean cost of a claim 
reporting ``J1'' service(s) or the geometric mean cost of a C-APC, 
inclusive of all the items and services included in the C-APC service 
payment bundle.) Charges for services that would otherwise be 
separately payable are added to the charges for the primary service. 
This process differs from our traditional cost accounting methodology 
only in that all such services on the claim are packaged (except 
certain services as described above). We apply our standard data trims, 
which exclude claims with extremely high primary units or extreme 
costs.
    The comprehensive geometric mean costs are used to establish 
resource similarity and, along with clinical similarity, dictate the 
assignment of the primary services to the C-APCs. We establish a 
ranking of each primary service (single unit only) to be assigned to 
status indicator ``J1'' according to its comprehensive geometric mean 
costs. For the minority of claims reporting more than one primary 
service assigned to status indicator ``J1'' or units thereof, we 
identify one ``J1'' service as the primary service for the claim based 
on our cost-based ranking of primary services. We then assign these 
multiple ``J1'' procedure claims to the C-APC to which the service 
designated as the primary service is assigned. If the reported ``J1'' 
services on a claim map to different C-APCs, we designate the ``J1'' 
service assigned to the C-APC with the highest comprehensive geometric 
mean cost as the primary service for that claim. If the reported 
multiple ``J1'' services on a claim map to the same C-APC, we designate 
the most costly service (at the HCPCS code level) as the primary 
service for that claim. This process results in initial assignments of 
claims for the primary services assigned to status indicator ``J1'' to 
the most appropriate C-APCs based on both single and multiple procedure 
claims reporting these services and clinical and resource homogeneity.
    Complexity Adjustments. We use complexity adjustments to provide 
increased payment for certain comprehensive services. We apply a 
complexity adjustment by promoting qualifying paired ``J1'' service 
code combinations or paired code combinations of ``J1'' services and 
certain add-on codes (as described further below) from the originating 
C-APC (the C-APC to which the designated primary service is first 
assigned) to the next higher paying C-APC in the same clinical family 
of C-APCs. We apply this type of complexity adjustment when the paired 
code combination represents a complex, costly form or version of the 
primary service according to the following criteria:
     Frequency of 25 or more claims reporting the code 
combination (frequency threshold); and
     Violation of the 2 times rule, as stated in section 
1833(t)(2) of the Act and section III.B.2 of this proposed rule, in the 
originating C-APC (cost threshold).
    These criteria identify paired code combinations that occur 
commonly and exhibit materially greater resource requirements than the 
primary service. The CY 2017 OPPS/ASC final rule with comment period 
(81 FR 79582) included a revision to the complexity adjustment

[[Page 59200]]

eligibility criteria. Specifically, we finalized a policy to 
discontinue the requirement that a code combination (that qualifies for 
a complexity adjustment by satisfying the frequency and cost criteria 
thresholds described above) also not create a 2 times rule violation in 
the higher level or receiving APC.
    After designating a single primary service for a claim, we evaluate 
that service in combination with each of the other procedure codes 
reported on the claim assigned to status indicator ``J1'' (or certain 
add-on codes) to determine if there are paired code combinations that 
meet the complexity adjustment criteria. For a new HCPCS code, we 
determine initial C-APC assignment and qualification for a complexity 
adjustment using the best available information, crosswalking the new 
HCPCS code to a predecessor code(s) when appropriate.
    Once we have determined that a particular code combination of 
``J1'' services (or combinations of ``J1'' services reported in 
conjunction with certain add-on codes) represents a complex version of 
the primary service because it is sufficiently costly, frequent, and a 
subset of the primary comprehensive service overall according to the 
criteria described above, we promote the claim including the complex 
version of the primary service as described by the code combination to 
the next higher cost C-APC within the clinical family, unless the 
primary service is already assigned to the highest cost APC within the 
C-APC clinical family or assigned to the only C-APC in a clinical 
family. We do not create new APCs with a comprehensive geometric mean 
cost that is higher than the highest geometric mean cost (or only) C-
APC in a clinical family just to accommodate potential complexity 
adjustments. Therefore, the highest payment for any claim including a 
code combination for services assigned to a C-APC would be the highest 
paying C-APC in the clinical family (79 FR 66802).
    We package payment for all add-on codes into the payment for the C-
APC. However, certain primary service add-on combinations may qualify 
for a complexity adjustment. As noted in the CY 2016 OPPS/ASC final 
rule with comment period (80 FR 70331), all add-on codes that can be 
appropriately reported in combination with a base code that describes a 
primary ``J1'' service are evaluated for a complexity adjustment.
    To determine which combinations of primary service codes reported 
in conjunction with an add-on code may qualify for a complexity 
adjustment for CY 2025, we apply the frequency and cost criteria 
thresholds discussed above, testing claims reporting one unit of a 
single primary service assigned to status indicator ``J1'' and any 
number of units of a single add-on code for the primary ``J1'' service. 
If the frequency and cost criteria thresholds for a complexity 
adjustment are met and reassignment to the next higher cost APC in the 
clinical family is appropriate (based on meeting the criteria outlined 
above), we make a complexity adjustment for the code combination; that 
is, we reassign the primary service code reported in conjunction with 
the add-on code to the next higher cost C-APC within the same clinical 
family of C-APCs. As previously stated, we package payment for add-on 
codes into the C-APC payment rate. If any add-on code reported in 
conjunction with the ``J1'' primary service code does not qualify for a 
complexity adjustment, payment for the add-on service continues to be 
packaged into the payment for the primary service and is not reassigned 
to the next higher cost C-APC. We list the complexity adjustments for 
``J1'' and add-on code combinations for CY 2025, along with all the 
other proposed complexity adjustments, in Addendum J to this proposed 
rule (which is available via the internet on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices).
    Addendum J to this proposed rule includes the cost statistics for 
each code combination that would qualify for a complexity adjustment 
(including primary code and add-on code combinations). Addendum J to 
this proposed rule also contains summary cost statistics for each of 
the paired code combinations that describe a complex code combination 
that would qualify for a complexity adjustment and be reassigned to the 
next higher cost C-APC within the clinical family. The combined 
statistics for all proposed reassigned complex code combinations are 
represented by an alphanumeric code with the first four digits of the 
designated primary service followed by a letter. For example, the 
proposed geometric mean cost listed in Addendum J for the code 
combination described by complexity adjustment assignment 3320R, which 
is assigned to C-APC 5224 (Level 4 Pacemaker and Similar Procedures), 
includes all paired code combinations that will be reassigned to C-APC 
5224 when CPT code 33208 is the primary code. Providing the information 
contained in Addendum J to this proposed rule allows interested parties 
the opportunity to better assess the impact associated with the 
assignment of claims with each of the paired code combinations eligible 
for a complexity adjustment.
(2) Exclusion of Procedures Assigned to New Technology APCs From the C-
APC Policy
    Services that are assigned to New Technology APCs are typically new 
procedures that do not have sufficient claims history to establish an 
accurate payment for them. Beginning in CY 2002, we retain services 
within New Technology APC groups until we gather sufficient claims data 
to enable us to assign the service to an appropriate clinical APC. This 
policy allows us to move a service from a New Technology APC in less 
than 2 years if sufficient data are available. It also allows us to 
retain a service in a New Technology APC for more than 2 years if 
sufficient data upon which to base a decision for reassignment have not 
been collected (82 FR 59277).
    The C-APC payment policy packages payment for adjunctive and 
secondary items, services, and procedures into the most costly primary 
procedure under the OPPS at the claim level. Prior to CY 2019, when a 
procedure assigned to a New Technology APC was included on the claim 
with a primary procedure, identified by OPPS status indicator ``J1,'' 
payment for the new technology service was typically packaged into the 
payment for the primary procedure. Because the new technology service 
was not separately paid in this scenario, the overall number of single 
claims available to determine an appropriate clinical APC for the new 
service was reduced. This was contrary to the objective of the New 
Technology APC payment policy, which is to gather sufficient claims 
data to enable us to assign the service to an appropriate clinical APC.
    To address this issue and ensure that there are sufficient claims 
data for services assigned to New Technology APCs, in the CY 2019 OPPS/
ASC final rule with comment period (83 FR 58847), we finalized 
excluding payment for any procedure that is assigned to a New 
Technology APC (APCs 1491 through 1599 and APCs 1901 through 1908) from 
being packaged when included on a claim with a ``J1'' service assigned 
to a C-APC. In the CY 2020 OPPS/ASC final rule with comment period, we 
finalized that beginning in CY 2020, payment for services assigned to a 
New Technology APC would be excluded from being packaged into the 
payment for comprehensive observation

[[Page 59201]]

services assigned status indicator ``J2'' when they are included on a 
claim with a ``J2'' service (84 FR 61167).
(3) Exclusion of Drugs and Biologicals Described by HCPCS Code C9399 
(Unclassified Drugs or Biologicals) From the C-APC Policy
    Section 1833(t)(15) of the Act, as added by section 621(a)(1) of 
the Medicare Prescription Drug, Improvement, and Modernization Act of 
2003 (Pub. L. 108-173), provides for payment under the OPPS for new 
drugs and biologicals until HCPCS codes are assigned. Under this 
provision, we are required to make payment for a covered outpatient 
drug or biological that is furnished as part of covered outpatient 
department services but for which a HCPCS code has not yet been 
assigned in an amount equal to 95 percent of average wholesale price 
(AWP) for the drug or biological.
    In the CY 2005 OPPS/ASC final rule with comment period (69 FR 
65805), we implemented section 1833(t)(15) of the Act by instructing 
hospitals to bill for a drug or biological that is newly approved by 
the Food and Drug Administration (FDA) and that does not yet have a 
HCPCS code by reporting the National Drug Code (NDC) for the product 
along with the newly created HCPCS code C9399 (Unclassified drugs or 
biologicals). We explained that when HCPCS code C9399 appears on a 
claim, the Outpatient Code Editor (OCE) suspends the claim for manual 
pricing by the Medicare Administrative Contractor (MAC). The MAC prices 
the claim at 95 percent of the drug or biological's AWP, using Red Book 
or an equivalent recognized compendium, and processes the claim for 
payment. We emphasized that this approach enables hospitals to bill and 
receive payment for a new drug or biological concurrent with its 
approval by the FDA. The hospital does not have to wait for the next 
quarterly release or for approval of a product specific HCPCS code to 
receive payment for a newly approved drug or biological or to resubmit 
claims for adjustment. We instructed that hospitals would discontinue 
billing HCPCS code C9399 and the NDC upon implementation of a product 
specific HCPCS code, status indicator, and appropriate payment amount 
with the next quarterly update. We also note that HCPCS code C9399 is 
paid in a similar manner in the ASC setting, as 42 CFR 416.171(b) 
outlines that certain drugs and biologicals for which separate payment 
is allowed under the OPPS are considered covered ancillary services for 
which the OPPS payment rate, which is 95 percent of AWP for HCPCS code 
C9399, applies. Since the implementation of the C-APC policy in 2015, 
payment for drugs and biologicals described by HCPCS code C9399 had 
been included in the C-APC payment when these products appear on a 
claim with a primary C-APC service. Packaging payment for these drugs 
and biologicals that appear on a hospital outpatient claim with a 
primary C-APC service is consistent with our C-APC packaging policy 
under which we make payment for all items and services, including all 
non-pass-through drugs, reported on the hospital outpatient claim as 
being integral, ancillary, supportive, dependent, and adjunctive to the 
primary service and representing components of a complete comprehensive 
service, with certain limited exceptions (78 FR 74869). It was our 
position that the total payment for the C-APC with which payment for a 
drug or biological described by HCPCS code C9399 is packaged includes 
payment for the drug or biological at 95 percent of its AWP.
    However, we determined that in certain instances, drugs and 
biologicals described by HCPCS code C9399 are not being paid at 95 
percent of their AWPs when payment for them is packaged with payment 
for a primary C-APC service. In order to ensure payment for new drugs, 
biologicals, and radiopharmaceuticals described by HCPCS code C9399 at 
95 percent of their AWP, for CY 2023 and subsequent years, we finalized 
our proposal to exclude any drug, biological, or radiopharmaceutical 
described by HCPCS code C9399 from packaging when the drug, biological, 
or radiopharmaceutical is included on a claim with a ``J1'' service, 
which is the status indicator assigned to a C-APC, and a claim with a 
``J2'' service, which is the status indicator assigned to comprehensive 
observation services. See Addendum J for the CY 2025 C-APC payment 
policy exclusions.
    In the CY 2023 OPPS/ASC final rule with comment period, we 
finalized the proposal in section XI. ``CY 2023 OPPS Payment Status and 
Comment Indicators'' to add a new definition to status indicator ``A'' 
to include unclassified drugs and biologicals that are reportable with 
HCPCS code C9399 (87 FR 72051). The definition, found in Addendum D1, 
would ensure the MAC prices claims for drugs, biologicals, or 
radiopharmaceuticals billed with HCPCS code C9399 at 95 percent of the 
drug or biological's AWP and pays separately for the drug, biological, 
or radiopharmaceutical under the OPPS when it appears on the same claim 
as a primary C-APC service.
(4) Exclusion of Cell and Gene Therapies From the C-APC Policy
    As previously discussed in this section, and in the CY 2014 OPPS/
ASC final rule with comment period (78 FR 74865), the C-APC policy 
packages payment for items and services that are typically integral, 
ancillary, supportive, dependent, or adjunctive to the primary service 
and provided during the delivery of the comprehensive service, 
including diagnostic procedures, laboratory tests and other diagnostic 
tests and treatments that assist in the delivery of the primary 
procedure. In the CY 2014 OPPS/ASC final rule (78 FR 74861), we 
finalized defining a comprehensive APC as a classification for the 
provision of a primary service and all adjunctive services provided to 
support the delivery of the primary service. Because a comprehensive 
APC treats all individually reported codes as representing components 
of the comprehensive service, we make a single prospective payment 
based on the cost of all individually reported codes that represent the 
provision of a primary service and all adjunctive services provided to 
support that delivery of the primary service.
    We generally treat all items and services reported on a C-APC claim 
as integral, ancillary, supportive, dependent, and adjunctive to the 
primary service and representing components of a comprehensive service. 
Historically, items packaged for payment provided in conjunction with 
the primary C-APC service also include all drugs, biologicals, and 
radiopharmaceuticals, regardless of cost, except those drugs with pass-
through payment status and those drugs that are usually self-
administered (SADs), unless they function as supplies (78 FR 74868 
through 74869 and 74909).
    Our intent has been to make a single prospective payment based on 
the cost of all individually reported codes that appear on a claim with 
the primary C-APC service, which we believe represent the provision of 
a primary service and all adjunctive services provided to support that 
delivery of the primary service. However, there are rare instances 
where the cell and gene therapies listed in Table 1, which are usually 
separately payable under the OPPS, appear on the same claim as a 
primary C-APC service and therefore, have their payment packaged with 
payment for the primary C-APC service. The therapies in Table 1 are 
usually separately paid and priced using the ASP methodology when not 
on a C-APC claim. Given the unique nature of these therapies, we do not 
believe they

[[Page 59202]]

function as integral, ancillary, supportive, dependent, or adjunctive 
to any of the current C-APCs primary services. The cell therapies 
described in Table 1 are primarily for the treatment of specific 
cancers and are administered through an intravenous infusion. The gene 
therapies listed in Table 1 are generally for the treatment of certain 
rare ocular or spinal conditions caused by specific genetic mutations 
and are also either intravenously infused or administered through a 
subretinal injection. When these products are administered, they are 
the primary treatment being administered to a patient and thus, are not 
integral, ancillary, supportive, dependent, or adjunctive to any 
primary C-APC services. Additionally, the current primary C-APC 
services describe common surgical procedures, such as breast/lymphatic 
surgery and musculoskeletal procedures. The cell and gene therapies 
listed in Table 1 are intended to treat a specific condition and would 
not be used to support the outcome of any primary C-APC procedure. For 
example, HCPCS code J3399 (Injection, onasemnogene abeparvovec-xioi, 
per treatment, up to 5x10[supcaret]15 vector genomes) may be used to 
describe the gene therapy Zolgensma. This product is FDA-approved as an 
adeno-associated virus (AAV) vector-based gene therapy indicated for 
the treatment of pediatric patients less than 2 years of age with 
spinal muscular atrophy (SMA) with bi-allelic mutations in the survival 
motor neuron 1 (SMN1) gene. The specified mechanism of onasemnogene 
abeparvovec is a recombinant AAV9-based gene therapy designed to 
deliver a copy of the gene encoding the human SMN protein.\4\ The 
function of a product such as Zolgensma, is not intended to be 
integral, ancillary, supportive, dependent, and adjunctive to any C-APC 
as the gene therapy itself is an independent treatment.
---------------------------------------------------------------------------

    \4\ Zolgensma. FDA Package Insert. October 2023. https://www.fda.gov/media/126109/download?attachment.
---------------------------------------------------------------------------

    Yescarta (HCPCS code Q2041) is an example of a cell therapy that 
functions as an independent treatment. Based on its FDA-approved 
indication,\5\ this product's intended clinical use would not be 
integral, ancillary, supportive, dependent, or adjunctive to any 
current C-APC primary service. Yescarta is indicated as a CD19-directed 
genetically modified autologous T cell immunotherapy for the treatment 
of Adult patients with large B-cell lymphoma that is refractory to 
first-line chemoimmunotherapy or that relapses within 12 months of 
first-line chemoimmunotherapy and adult patients with relapsed or 
refractory large B-cell lymphoma after two or more lines of systemic 
therapy, including diffuse large B-cell lymphoma (DLBCL) not otherwise 
specified, primary mediastinal large B-cell lymphoma, high grade B-cell 
lymphoma, and DLBCL arising from follicular lymphoma. Yescarta is the 
primary treatment being performed when administered for these FDA-
approved indications and should not be packaged as supportive of any C-
APC primary service even if the two services appear on the same claim. 
We explained in the CY 2014 OPPS/ASC final rule with comment period (78 
FR 74868) that intravenous drugs, for example, are OPPS services that 
are considered adjunctive to the primary procedure because the correct 
administration of the drug either promotes a beneficial outcome, such 
as the use of intravenous pain medications, or prevents possible 
complications, such as the use of intravenous blood pressure 
medications to temporarily replace oral blood pressure medications and 
reduce the risk of a sudden rise in blood pressure when a normal daily 
medication is stopped. In the case of the cell and gene therapies 
described in Table 1, however, we do not believe the therapies 
``promote a beneficial outcome'' or ``prevent possible complications'' 
of any of the procedures currently designated as primary C-APC 
services. While the cell and gene therapies in Table 1 may ``promote a 
beneficial outcome'' for the patient in general, we do not believe the 
provision of cell and gene therapies are ``promoting a beneficial 
outcome'' for any of the primary C-APC services themselves, as the cell 
and gene therapies are serving as independent therapies. These are 
distinguishable from the previous examples of intravenous pain 
medications that are directly related to the primary C-APC service and 
promote a beneficial outcome for that procedure. Further, in the CY 
2014 OPPS/ASC final rule with comment period (78 FR 74865), we stated 
that we proposed to package into C-APCs all of these integral, 
ancillary, supportive, dependent, and adjunctive services, hereinafter 
collectively referred to as ``adjunctive services,'' provided during 
the delivery of the comprehensive service. This includes the diagnostic 
procedures, laboratory tests and other diagnostic tests, and treatments 
that assist in the delivery of the primary procedure. We do not believe 
that the cell and gene therapies listed in Table 1 are assisting in the 
delivery of any primary procedure currently assigned to a C-APC.
---------------------------------------------------------------------------

    \5\ FDA Package Insert. Yescarta. April 2024. https://www.fda.gov/media/108377/download?attachment.
---------------------------------------------------------------------------

    Therefore, for CY 2025 only, we propose not to package payment for 
the cell and gene therapies listed in Table 1 into the payment for the 
primary C-APC service when they appear on the same claim as primary C-
APCs services. We propose this policy for one year only in order to 
gather more information from interested parties as to whether this 
proposed policy appropriately captures all of the unique therapies, 
such as the cell and gene therapies listed in Table 1, that function as 
primary treatments and do not support C-APC primary services. As 
discussed later in this section, we welcome comments from readers on 
this proposal and the potential need for a different, modified, 
expanded, or supplemental policy for future rulemaking. We will assess 
whether to continue this policy, or a modified version of this policy, 
beyond one year in future rulemaking, taking into consideration the 
comments received.
    We are not proposing to include therapies that are on drug pass-
through status for all of CY 2025 in Table 1 because pass-through drugs 
are already excluded from C-APC packaging. We are proposing that 
products for which pass-through status is expiring in CY 2025 would be 
excluded from C-APC packaging after their pass-through status expires. 
For example, the product described by HCPCS code Q2056 has pass-through 
status expiring June 30, 2025. Until its pass-through status expires, 
the product will be excluded from C-APC packaging due to the pass-
through C-APC exclusion policy, but after its pass-through status 
expires, we propose that the therapy would continue to be excluded from 
C-APC packaging under our proposed exclusion for cell and gene 
therapies. For more information on drug pass-through status, including 
expiring and continuing pass-through status, please see section V.A. of 
this proposed rule.
BILLING CODE 4120-01-P

[[Page 59203]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.000

BILLING CODE 4120-01-C
    We propose to exclude the therapies listed in Table 1 from C-APC 
packaging. We seek comment on this proposal, and we seek comment on 
whether there are any additional cell and gene therapies that may be 
appropriate to exclude from C-APC packaging for CY 2025. Commenters 
should explain why any additional cell and gene therapies that they 
believe should be excluded from C-APC packaging are not integral, 
ancillary, supportive, dependent, or adjunctive to any C-APC primary 
service. We seek comment on whether this proposal should be extended 
beyond 1 year or if a different, expanded, or supplemental policy 
approach may be warranted in future rulemaking. For example, we are 
interested in comments on whether there are other classes of drugs, 
biologicals, or other products that are not clearly integral, 
ancillary, adjunctive, or supportive of a primary C-APC service but 
could appear on the same claim as the C-APC for that primary service 
and for which payment would be packaged into the C-APC payment under 
our current policy. We would expect clinical evidence supporting 
commenters' assertion that other identified classes of drugs, 
biologicals, medical devices, or other

[[Page 59204]]

products are not clearly supportive of a primary C-APC service but may 
nonetheless appear on the same claim as a primary C-APC procedure. 
Similarly, we seek comment on whether interested parties believe it is 
appropriate for these other classes of drugs, biologicals, or medical 
devices to be excluded from packaging with all C-APCs or only specific 
C-APCs, such as the Comprehensive Observation Services C-APC (SI = 
``J2'').
    Finally, we seek comment on the following:
    (1) Because the cell and gene therapies listed in Table 1 are not 
integral, ancillary, supportive, dependent, or adjunctive to any 
current C-APC procedure, how could CMS structure a new C-APC, or 
similar packaged payment policy, for the service to administer cell or 
gene therapies, such by creating as a Chimeric Antigen Receptor (CAR) 
T-cell therapy administration C-APC, with which the CAR-T or gene 
therapy would be integral, ancillary, supportive, dependent, or 
adjunctive to the primary C-APC service?
    (2) What integral, ancillary, supportive, dependent, or adjunctive 
items and services are routinely provided as part of the administration 
of cell and gene therapies or in conjunction with cell and gene 
therapies generally?
    We recognize that currently, the following HCPCS codes are 
associated with CAR-T therapy: HCPCS code 0537T (Chimeric antigen 
receptor t-cell (car-t) therapy; harvesting of blood-derived t 
lymphocytes for development of genetically modified autologous car-t 
cells, per day), 0538T (Chimeric antigen receptor t-cell (car-t) 
therapy; preparation of blood-derived t lymphocytes for transportation 
(e.g., cryopreservation, storage)), 0539T (Chimeric antigen receptor t-
cell (car-t) therapy; receipt and preparation of car-t cells for 
administration), and 0540T (Chimeric antigen receptor t-cell (car-t) 
therapy; car-t cell administration, autologous) as discussed in 
previous OPPS rulemaking, including the CY 2022 OPPS/ASC final rule 
with comment period (86 FR 63550 through 63552).
    Separately, we also seek comment on whether policy revisions to the 
C-APC policy may be appropriate in future rulemaking, such as a 
modified outlier payment policy specific to C-APCs to address related 
situations in the future. We list all proposed C-APC exclusion 
categories for CY 2025 in Addendum J to this proposed rule (which is 
available via the internet on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices).
(5) Exclusion of Non-Opioid Products for Pain Relief Under Section 4135 
of the Consolidated Appropriations Act, 2023 From the C-APC Policy
    The Consolidated Appropriations Act (CAA), 2023 (Pub. L. 117-328), 
was signed into law on December 29, 2022. Section 4135(a) and (b) of 
the CAA, 2023, titled ``Access to Non-Opioid Treatments for Pain 
Relief,'' amended section 1833(t)(16) and section 1833(i) of the Social 
Security Act, respectively, to provide for temporary additional 
payments for non-opioid treatments for pain relief (as that term is 
defined in section 1833(t)(16)(G)(i) of the Act). In particular, 
section 1833(t)(16)(G) provides that with respect to a non-opioid 
treatment for pain relief furnished on or after January 1, 2025, and 
before January 1, 2028, the Secretary shall not package payment for the 
non-opioid treatment for pain relief into payment for a covered OPD 
service (or group of services) and shall make an additional payment for 
the non-opioid treatment for pain relief as specified in clause (ii) of 
that section. Clauses (ii) and (iii) of section 1833(t)(16)(G) of the 
Act provide for the amount of additional payment and set a limitation 
on that amount. As stated earlier in this section, our current policy 
is to exclude from the packaged C-APC payment those items and services 
that are required by statute to be separately paid.
    Accordingly, we propose to exclude the non-opioid treatments for 
pain relief identified as satisfying the required criteria for payment 
under Section 4135 of the CAA, 2023 from the C-APC policy to ensure 
payment is not packaged into any C-APC and that separate payment is 
made in accordance with the statute. Please see section XIII.F. of this 
proposed rule for a list of the products that we propose would qualify 
for payment under the new payment policy for non-opioid drugs, 
biologicals, and devices for pain relief.
(6) C-APCs for CY 2025
    For CY 2025 and subsequent years, we propose to continue to apply 
the C-APC payment policy methodology. We refer readers to the CY 2017 
OPPS/ASC final rule with comment period (81 FR 79583) for a discussion 
of the C-APC payment policy methodology and revisions.
    Each year, in accordance with section 1833(t)(9)(A) of the Act, we 
review and revise the services within each APC group and the APC 
assignments under the OPPS. As a result of our annual review of the 
services and the APC assignments under the OPPS, we are not proposing 
to convert any standard APCs to C-APCs in CY 2025; thus, we propose 
that the number of C-APCs for CY 2025 would be the same as the number 
for CY 2024, which is 72 C-APCs.
    Table 2 lists the proposed C-APCs for CY 2025, all of which were 
established in past rules. All C-APCs are also displayed in Addendum J 
to this proposed rule (which is available via the internet on the CMS 
website). Addendum J to this proposed rule also contains all the data 
related to the C-APC payment policy methodology, including the list of 
complexity adjustments and other information.
BILLING CODE 4120-01-P

[[Page 59205]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.001


[[Page 59206]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.002


[[Page 59207]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.003

BILLING CODE 4120-01-C
c. Calculation of Composite APC Criteria-Based Costs
    As discussed in the CY 2008 OPPS/ASC final rule with comment period 
(72 FR 66613), we believe it is important that the OPPS enhance 
incentives for hospitals to provide necessary, high-quality care as 
efficiently as possible. For CY 2008, we developed composite APCs to 
provide a single payment for groups of services that are typically 
performed together during a single clinical encounter and that result 
in the provision of a complete service. Combining payment for multiple, 
independent services into a single OPPS payment in this way enables 
hospitals to manage their resources with maximum flexibility by 
monitoring and adjusting the volume and efficiency of services 
themselves. An additional advantage to the composite APC model is that 
we can use data from correctly coded multiple procedure claims to 
calculate payment rates for the specified combinations of services, 
rather than relying upon single procedure claims which may be low in 
volume and/or incorrectly coded. Under the OPPS, we currently have 
composite policies for mental health services and multiple imaging 
services. We refer readers to the CY 2008 OPPS/ASC final rule with 
comment period (72 FR 66611 through 66614 and 66650 through 66652) for 
a full discussion of the development of the composite APC methodology, 
and the CY 2012 OPPS/ASC final rule with comment period (76 FR 74163) 
and the CY 2018 OPPS/ASC final rule with comment period (82 FR 59241, 
59242, and 59246 through 52950) for more recent background.
(1) Mental Health Services Composite APC
    For CY 2025, we propose to continue our longstanding policy of 
limiting the aggregate payment for specified less resource-intensive 
mental health services furnished on the same date to the payment for a 
day of partial hospitalization services provided by a hospital, which 
we consider to be the most resource-intensive of all outpatient mental 
health services (88 FR 49572). We refer readers to the April 7, 2000, 
OPPS final rule with comment period (65 FR 18452 through 18455) for the 
initial discussion of this longstanding policy and the CY 2012 OPPS/ASC 
final rule with comment period (76 FR 74168) for more recent 
background.
    In the CY 2018 OPPS/ASC proposed rule and final rule with comment 
period (82 FR 33580, 33581, 59246, and 59247), we proposed and 
finalized the policy for CY 2018 and subsequent years that, when the 
aggregate payment for specified mental health services provided by one 
hospital to a single beneficiary on a single date of service, based on 
the payment rates associated with the APCs for the individual services, 
exceeds the maximum per diem payment rate for partial hospitalization 
services provided by a hospital, those specified mental health services 
will be paid through composite APC 8010 (Mental Health Services 
Composite). In addition, we set the payment rate for composite APC 8010 
for CY 2018 at the same payment rate for APC 5863, which was the 
maximum partial hospitalization per diem payment rate for a hospital, 
and finalized a policy that the hospital would continue to be paid the 
payment rate for composite APC 8010. This policy applied in CYs 2018 
through 2023.
    In the CY 2024 OPPS/ASC proposed rule, we stated that APC 5863 was 
no longer the maximum partial hospitalization per diem payment rate for 
a hospital due to the creation of APC 5864, which is 4 or more 
hospital-based PHP services per day (88 FR 49572). We solicited comment 
on whether APC 5864 would be appropriate to use as the daily mental 
health cap, as we have historically set the daily mental health cap for 
composite APC 8010 at the maximum partial hospitalization per diem 
payment rate for a hospital (88 FR 49572). Based on public comments 
received and our longstanding policy, in CY 2024 OPPS/ASC final rule, 
we finalized APC 5864, four hospital-based PHP services per day, as the 
daily mental health cap (88 FR 81566).
    We continue to believe that the costs associated with administering 
a partial hospitalization program at a hospital represent the most 
resource intensive of all outpatient mental health services.

[[Page 59208]]

For CY 2025 and subsequent years, we propose to continue this policy 
that when the aggregate payment for specified mental health services 
provided by one hospital to a single beneficiary on a single date of 
service, based on the payment rates associated with the APCs for the 
individual services, exceeds the per diem payment rate for 4 partial 
hospitalization services provided in a day by a hospital (the payment 
amount for APC 5864), those specified mental health services would be 
paid through composite APC 8010. In addition, we propose to continue to 
set the payment rate for composite APC 8010 at the same payment rate 
that we propose for APC 5864, which is a partial hospitalization per 
diem payment rate for 4 partial hospitalization services furnished in a 
day by a hospital.
    Under this proposed policy, the Integrated OCE (I/OCE) would 
continue to determine whether to pay for these specified mental health 
services individually, or to make a single payment at the same payment 
rate established for APC 5864 for all the specified mental health 
services furnished by the hospital on that single date of service by 
paying for the services through composite APC 5863.
(2) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007, and 
8008)
    Effective January 1, 2009, we provide a single payment each time a 
hospital submits a claim for more than one imaging procedure within an 
imaging family on the same date of service, to reflect and promote the 
efficiencies hospitals can achieve when performing multiple imaging 
procedures during a single session (73 FR 41448 through 41450). We 
utilize three imaging families based on imaging modality for purposes 
of this methodology: (1) ultrasound; (2) computed tomography (CT) and 
computed tomographic angiography (CTA); and (3) magnetic resonance 
imaging (MRI) and magnetic resonance angiography (MRA). The HCPCS codes 
subject to the multiple imaging composite policy and their respective 
families are listed in Table 3 below.
    While there are three imaging families, there are five multiple 
imaging composite APCs due to the statutory requirement under section 
1833(t)(2)(G) of the Act that we differentiate payment for OPPS imaging 
services provided with and without contrast. While the ultrasound 
procedures included under the policy do not involve contrast, both CT/
CTA and MRI/MRA scans can be provided either with or without contrast. 
The five multiple imaging composite APCs established in CY 2009 are:
     APC 8004 (Ultrasound Composite);
     APC 8005 (CT and CTA without Contrast Composite);
     APC 8006 (CT and CTA with Contrast Composite);
     APC 8007 (MRI and MRA without Contrast Composite); and
     APC 8008 (MRI and MRA with Contrast Composite).
    We define the single imaging session for the ``with contrast'' 
composite APCs as having at least one or more imaging procedures from 
the same family performed with contrast on the same date of service. 
For example, if the hospital performs an MRI without contrast during 
the same session as at least one other MRI with contrast, the hospital 
will receive payment based on the payment rate for APC 8008, the ``with 
contrast'' composite APC.
    We make a single payment for those imaging procedures that qualify 
for payment based on the composite APC payment rate, which includes any 
packaged services furnished on the same date of service. The standard 
(noncomposite) APC assignments continue to apply for single imaging 
procedures and multiple imaging procedures performed across families. 
For a full discussion of the development of the multiple imaging 
composite APC methodology, we refer readers to the CY 2009 OPPS/ASC 
final rule with comment period (73 FR 68559 through 68569).
    For CY 2025, we propose to continue to pay for all multiple imaging 
procedures within an imaging family performed on the same date of 
service using the multiple imaging composite APC payment methodology. 
We continue to believe that this policy would reflect and promote the 
efficiencies hospitals can achieve when performing multiple imaging 
procedures during a single session.
    For CY 2025, except where otherwise indicated, we propose to use 
the costs derived from CY 2023 claims data to set the proposed CY 2025 
payment rates. Therefore, for CY 2025, the proposed payment rates for 
the five multiple imaging composite APCs (APCs 8004, 8005, 8006, 8007, 
and 8008) were based on proposed geometric mean costs calculated from 
CY 2023 claims available for the CY 2025 OPPS/ASC proposed rule that 
qualify for composite payment under the current policy (that is, those 
claims reporting more than one procedure within the same family on a 
single date of service). To calculate the proposed geometric mean 
costs, we used the same methodology that we used to calculate the 
geometric mean costs for these composite APCs since CY 2014, as 
described in the CY 2014 OPPS/ASC final rule with comment period (78 FR 
74918). The imaging HCPCS codes referred to as ``overlap bypass codes'' 
that we removed from the bypass list for purposes of calculating the 
proposed multiple imaging composite APC geometric mean costs, in 
accordance with our established methodology as stated in the CY 2014 
OPPS/ASC final rule with comment period (78 FR 74918), are identified 
by asterisks in Addendum N to this proposed rule (which is available 
via the internet on the CMS website) and are discussed in more detail 
in section II.A.1.a of this proposed rule.
    For this CY 2025 OPPS/ASC proposed rule, we were able to identify 
approximately 0.95 million ``single session'' claims out of an 
estimated 2.1 million potential claims for payment through composite 
APCs from our ratesetting claims data, which represents approximately 
45.0 percent of all eligible claims, to calculate the proposed CY 2025 
geometric mean costs for the multiple imaging composite APCs. Table 3 
lists the proposed HCPCS codes that would be subject to the multiple 
imaging composite APC policy and their respective families and 
approximate composite APC proposed geometric mean costs for CY 2025.
BILLING CODE 4120-01-P

[[Page 59209]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.004


[[Page 59210]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.005


[[Page 59211]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.006


[[Page 59212]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.007

BILLING CODE 4120-01-C
3. Proposed Changes to Packaged Items and Services
a. Background and Rationale for Packaging in the OPPS
    Like other prospective payment systems, the OPPS relies on the 
concept of averaging to establish a payment rate for services. The 
payment may be more or less than the estimated cost of providing a 
specific service or a bundle of specific services for a particular 
beneficiary. The OPPS packages payments for multiple interrelated items 
and services into a single payment to create incentives for hospitals 
to furnish services most efficiently and to manage their resources with 
maximum flexibility. Our packaging policies support our strategic goal 
of using larger payment bundles in the OPPS to maximize hospitals' 
incentives to provide care in the most efficient manner. For example, 
where there are a variety of devices, drugs, items, and supplies that 
could be used to furnish a service, some of which are more costly than 
others, packaging encourages hospitals to use the most cost-efficient 
item that meets the patient's needs, rather than to routinely use a 
more expensive item, which may occur if separate payment is provided 
for the item.
    Packaging also encourages hospitals to effectively negotiate with 
manufacturers and suppliers to reduce the purchase price of items and 
services

[[Page 59213]]

or to explore alternative group purchasing arrangements, thereby 
encouraging the most economical health care delivery. Similarly, 
packaging encourages hospitals to establish protocols that ensure that 
necessary services are furnished, while scrutinizing the services 
ordered by practitioners to maximize the efficient use of hospital 
resources. Packaging payments into larger payment bundles promotes the 
predictability and accuracy of payment for services over time. Finally, 
packaging may reduce the importance of refining service-specific 
payment because packaged payments include costs associated with higher 
cost cases requiring many ancillary items and services and lower cost 
cases requiring fewer ancillary items and services. Because packaging 
encourages efficiency and is an essential component of a prospective 
payment system, packaging payments for items and services that are 
typically integral, ancillary, supportive, dependent, or adjunctive to 
a primary service has been a fundamental part of the OPPS since its 
implementation in August 2000. As we continue to develop larger payment 
groups that more broadly reflect services provided in an encounter or 
episode of care, we have expanded the OPPS packaging policies. Most, 
but not necessarily all, categories of items and services currently 
packaged in the OPPS are listed in 42 CFR 419.2(b). Our overarching 
goal is to make payments for all services under the OPPS more 
consistent with those of a prospective payment system and less like 
those of a per-service fee schedule, which pays separately for each 
coded item. As a part of this effort, we have continued to examine the 
payment for items and services provided under the OPPS to determine 
which OPPS services can be packaged to further achieve the objective of 
advancing the OPPS toward a more prospective payment system.
b. Proposal on Packaged Items and Services
    For CY 2025, we examined the items and services currently provided 
under the OPPS, reviewing categories of integral, ancillary, 
supportive, dependent, or adjunctive items and services for which we 
believe payment would be appropriately packaged into payment for the 
primary service that they support. Specifically, we examined the HCPCS 
code definitions (including CPT code descriptors) and hospital 
outpatient department billing patterns to determine whether there were 
categories of codes for which packaging would be appropriate according 
to existing OPPS packaging policies or a logical expansion of those 
existing OPPS packaging policies.
    For CY 2025, we do not propose any changes to the overall packaging 
policy discussed. We propose to continue to conditionally package the 
costs of selected newly identified ancillary services into payment for 
a primary service where we believe that the packaged item or service is 
integral, ancillary, supportive, dependent, or adjunctive to the 
provision of care that was reported by the primary service HCPCS code.
c. Proposed Payment for Diagnostic Radiopharmaceuticals
(1) Background on OPPS Packaging Policy for Diagnostic 
Radiopharmaceuticals
    Under the OPPS, we package several categories of nonpass-through 
drugs, biologicals, and radiopharmaceuticals, regardless of the cost of 
the products. Because the products are packaged according to the 
policies in Sec.  419.2(b), we refer to them as ``policy-packaged'' 
drugs, biologicals, and radiopharmaceuticals. In particular, under 
Sec.  419.2(b)(15), payment for drugs, biologicals, and 
radiopharmaceuticals that function as supplies when used in a 
diagnostic test or procedure is packaged with the payment for the 
related procedure or service. Packaging costs into a single aggregate 
payment for a service, encounter, or episode of care is a fundamental 
principle that distinguishes a prospective payment system from a fee 
schedule. In general, packaging the costs of supportive items and 
services into the payment for the primary procedure or service with 
which they are associated encourages hospital efficiencies and enables 
hospitals to manage their resources with maximum flexibility.
    In the CY 2008 OPPS/ASC final rule with comment period we finalized 
the packaging status of diagnostic radiopharmaceuticals as part of our 
overall enhanced packaging approach for the CY 2008 OPPS and subsequent 
years (72 FR 66635 through 66641). Importantly, we believed diagnostic 
radiopharmaceuticals are always intended to be used with a diagnostic 
nuclear medicine procedure and function as supplies when used in a 
diagnostic test or procedure, making it appropriate to package the 
payment for the diagnostic radiopharmaceutical into the payment for the 
related nuclear medicine procedure. Diagnostic radiopharmaceuticals are 
one specific type of product that is policy packaged under the category 
described by Sec.  419.2(b)(15). Since we implemented this policy in CY 
2008, interested parties have raised concerns regarding policy 
packaging of diagnostic radiopharmaceuticals. In previous rulemaking 
(87 FR 71962 and 71963), commenters recommended that CMS always pay 
separately under the OPPS for diagnostic radiopharmaceuticals, not just 
when the products have pass-through payment status. Many of these 
commenters mentioned that pass-through payment status helps the 
diffusion of new diagnostic radiopharmaceuticals into the market. 
However, commenters believe the packaged payment rate is often 
inadequate after pass-through status expires, especially in cases where 
the diagnostic radiopharmaceutical is high-cost and has low 
utilization.
    We have heard from interested parties regarding alternative payment 
methodologies, such as subjecting diagnostic radiopharmaceuticals to 
the drug packaging threshold and creating separate APC payments for 
diagnostic radiopharmaceuticals with a per-day cost greater than $500. 
Interested parties have also recommended that we analyze our nuclear 
medicine APC structure and consider establishing additional nuclear 
medicine APCs to reflect the costs of diagnostic radiopharmaceuticals 
more accurately. Historically, commenters opposed incorporating the 
cost of diagnostic radiopharmaceuticals into the associated nuclear 
medicine APC as the nuclear medicine APCs are sometimes paid at a lower 
rate than the payment rate for the diagnostic radiopharmaceutical 
itself when it has pass-through payment status (87 FR 71962 and 71963).
    Importantly, commenters historically have also been concerned that 
packaging payment for precision diagnostic radiopharmaceuticals in the 
outpatient hospital setting creates barriers to beneficiary access for 
safety net hospitals serving a high proportion of Medicare 
beneficiaries and hospitals serving underserved communities (87 FR 
71962 and 71963). Commenters specified that certain populations, such 
as those with Alzheimer's disease, depend on the use of certain high-
cost diagnostic radiopharmaceuticals. Commenters discussed difficulties 
enrolling hospitals in clinical studies due to OPPS packaging policies 
and suggested that we pay separately under the OPPS specifically for 
radiopharmaceuticals that are used for Alzheimer's disease. 
Additionally, commenters have recommended that CMS continue to apply 
radiolabeled product edits to the nuclear medicine procedures to ensure 
that all packaged costs are included on nuclear medicine

[[Page 59214]]

claims to establish appropriate payment rates in the future. Beginning 
January 1, 2008, CMS implemented OPPS edits that require hospitals to 
include a HCPCS code for a radiolabeled product when a separately 
payable nuclear medicine procedure is present on a claim. This policy 
to require hospitals to include a HCPCS code for a radiolabeled product 
for a separately payable nuclear medicine procedure ended in CY 2014 
(78 FR 75033 through 75034).
    Many of these comments and our responses have been discussed in 
rulemaking since the policy to package diagnostic radiopharmaceuticals 
was adopted, and they prompted us to solicit comment on the payment of 
diagnostic radiopharmaceuticals in the CY 2024 OPPS/ASC proposed rule 
(88 FR 49577). In that proposed rule, we stated we continue to believe 
that diagnostic radiopharmaceuticals are an integral component of many 
nuclear medicine and imaging procedures and charges associated with 
them should be reported on hospital claims to the extent they are used. 
Accordingly, we reiterated our belief that the payment for the 
diagnostic radiopharmaceutical should be reflected within the payment 
for the primary procedure with which it is used. We noted that 
ratesetting uses the geometric mean of reported procedure costs, which 
in the example of nuclear medicine procedures includes the costs of the 
reported diagnostic radiopharmaceutical, based on data submitted to CMS 
from all hospitals paid under the OPPS to set the payment rate for the 
service. The costs that are calculated by Medicare reflect the average 
costs of items and services that are packaged into a primary procedure 
and will not necessarily equal the sum of the cost of the primary 
procedure and the average sales price of the specific items and 
services used in the procedure in each case. Furthermore, we explained 
that the costs are based on the reported costs submitted to Medicare by 
the hospitals and not the list price established by the manufacturer. 
Claims data that include the diagnostic radiopharmaceutical packaged 
with the associated procedure should reflect the combined cost of the 
procedure and the radiopharmaceutical used in the procedure.
    As we have reiterated over the years, we believe packaging policies 
are inherent principles of the OPPS and are essential to a prospective 
payment system. At the same time, we have explained that we are 
committed to ensuring beneficiary access to diagnostic 
radiopharmaceuticals while also ensuring the availability of new and 
innovative diagnostic tools for Medicare beneficiaries. Therefore, we 
sought public comments on potential modifications to our packaging 
policy for diagnostic radiopharmaceuticals to ensure equitable payment 
and continued beneficiary access.
    As described in the CY 2024 OPPS/ASC proposed rule (88 FR 49578), 
we solicited comment on how the OPPS packaging policy for diagnostic 
radiopharmaceuticals has impacted beneficiary access, including whether 
there are specific patient populations or clinical disease states for 
whom this issue is especially critical.
    In addition, we solicited comment on the following potential 
approaches that would enhance beneficiary access, while also 
maintaining the principles of the outpatient prospective payment 
system. These approaches included: (1) paying separately for diagnostic 
radiopharmaceuticals with per-day costs above the OPPS drug packaging 
threshold of $140; (2) establishing a specific per-day cost threshold 
that may be greater or less than the OPPS drug packaging threshold; (3) 
restructuring APCs, including by adding nuclear medicine APCs for 
services that utilize high-cost diagnostic radiopharmaceuticals; (4) 
creating specific payment policies for diagnostic radiopharmaceuticals 
used in clinical trials; and (5) adopting codes that incorporate the 
disease state being diagnosed or a diagnostic indication of a 
particular class of diagnostic radiopharmaceuticals.
    Finally, we were interested in hearing from stakeholders how the 
suggested policy modifications might impact our overarching goal of 
utilizing packaging policies to better align OPPS policies with those 
of a prospective payment system rather than a fee schedule. We stated 
we would also like to know if making any of the suggested policy 
changes could have negative consequences for beneficiaries, such as 
unintentionally influencing clinical practice decisions, increasing 
beneficiary cost-sharing obligations, or inadvertently encouraging the 
use of higher-cost diagnostic radiopharmaceuticals over lower cost, but 
equally effective, diagnostic options.
    We received a significant number of comments in response to the 
comment solicitation on potential issues caused by our current payment 
policy for diagnostic radiopharmaceuticals under the OPPS and on new 
approaches to payment for these products. Commenters expressed concerns 
regarding the CMS policy to package diagnostic radiopharmaceuticals and 
the financial implications this policy has for facilities. Commenters 
believe that, for newer, more innovative radiopharmaceuticals, the 
current OPPS packaging policy has led to a lack of patient access to 
the technologies after the radiopharmaceutical's pass-through status 
expires, especially if there is no clinical alternative to the 
radiopharmaceutical. Most commenters requested that CMS provide 
separate payment for diagnostic radiopharmaceuticals. Some commenters 
believed paying separately for all diagnostic radiopharmaceuticals 
regardless of their per-day cost was the best methodology to avoid 
encouraging price inflation for diagnostic radiopharmaceuticals to 
reach a certain threshold. Other commenters thought that applying the 
existing OPPS per-day cost threshold ($135 for CY 2024) to the payment 
of diagnostic radiopharmaceuticals would be an adequate solution. 
Others supported a $500 threshold, and many cited the Facilitating 
Innovative Nuclear Diagnostics Act (FIND Act) of 2023 as their 
rationale for that number and recognized that the $500 threshold number 
may be a more targeted approach relative to the OPPS drug packaging 
threshold as the higher cost diagnostic radiopharmaceuticals are the 
most disadvantaged by the OPPS packaging policy in their view. For the 
full discussion on the comment solicitation summarized here, refer to 
the CY 2024 OPPS/ASC final rule with comment period (88 FR 81573 
through 81577).
(2) Proposed Packaging Threshold for Diagnostic Radiopharmaceuticals
    As stated in the CY 2024 OPPS final rule with comment period (88 FR 
81577), we agree with commenters that payment for diagnostic 
radiopharmaceuticals is a complex and important issue. We explained 
that we intended to further consider these points and take them into 
consideration for future notice and comment rulemaking. After 
significant consideration and ongoing engagement from interested 
parties, we are proposing a change to our current policy that packages 
diagnostic radiopharmaceuticals regardless of their cost.
    We continue to believe diagnostic radiopharmaceuticals are always 
intended to be used with a diagnostic nuclear medicine procedure and 
function as supplies when used in a diagnostic test or procedure, 
generally making it appropriate to package payment for them with 
payment for the related nuclear medicine procedure. While we continue 
to believe that this should be the policy for most diagnostic

[[Page 59215]]

radiopharmaceuticals, we believe there are certain situations in which 
the packaged payment amount attributed to the diagnostic 
radiopharmaceutical used in an imaging procedure assigned to a nuclear 
medicine APC may not adequately account for the cost of a diagnostic 
radiopharmaceutical that has a significantly higher cost, but lower 
utilization relative to the other diagnostic radiopharmaceuticals that 
may be used with the procedure. In situations where a hospital may have 
to pay significantly more to purchase a diagnostic radiopharmaceutical 
than Medicare pays, a hospital may decide not to provide that specific 
diagnostic radiopharmaceutical imaging agent to Medicare beneficiaries. 
This could potentially deny access to diagnostic tools for which there 
is no clinical alternative. To ensure Medicare payment policy is not 
providing a financial disincentive to using high cost, low utilization 
diagnostic radiopharmaceuticals, especially when those agents may be 
the most clinically appropriate, and to ensure appropriate beneficiary 
access, we believe a subset of diagnostic radiopharmaceuticals with 
higher per day costs should be paid separately and not packaged into 
the diagnostic procedure with which the diagnostic radiopharmaceutical 
is used.
    To address these concerns, we propose to pay separately for any 
diagnostic radiopharmaceutical with a per day cost greater than $630. 
Any diagnostic radiopharmaceutical with a per day cost below that 
threshold would continue to be policy packaged under the current policy 
at Sec.  419.2(b)(15). We discuss our methodology for determining the 
proposed per day cost threshold of $630 in further detail in this 
section.
    To determine an appropriate threshold, we estimated the approximate 
payment that would typically be attributable to diagnostic 
radiopharmaceutical payment within each nuclear medicine APC (APCs 
5591, 5592, 5593, and 5594). We did this by assessing the offsets 
associated with these APCs that were directly attributable to ``policy 
packaged'' drugs. The offset amounts used are correlated with the 
approximate portion of APC payment associated with these ``policy 
packaged'' drugs. For nuclear medicine APCs, the primary ``policy 
packaged'' drugs are diagnostic radiopharmaceuticals. To calculate this 
threshold, we calculated a volume weighted average of the offset dollar 
amount of each nuclear medicine APC. This involved taking the offset 
percentage for ``policy packaged'' drugs, multiplying it by the APC 
geometric mean to get an offset dollar amount, and then multiplying 
that offset amount by the number of single claims to get the total 
offset amount for each nuclear medicine APC level. We then calculated 
the sum of the total offset amount for all 4 of the nuclear medicine 
APCs. We divided this number by the total number of single claims for 
all 4 nuclear medicine APCs, resulting in $314.28, which represents the 
volume weighted average policy packaged offset amount for the nuclear 
medicine APC series. We then took that number and multiplied it by 2, 
and rounded it to the nearest $5 increment, which resulted in $630. See 
Table 4 for the values used to calculate this threshold amount. We note 
that the data values in Table 4 were collected without unpackaging the 
set of diagnostic radiopharmaceuticals listed in Table 5. If we 
finalize our proposal and those diagnostic radiopharmaceuticals are 
unpackaged, it would change the APC geometric mean unit costs (MUCs) as 
well as the offset percentages. This is why the APC geometric mean cost 
values listed below are not the same as in the addenda to this rule.
[GRAPHIC] [TIFF OMITTED] TP22JY24.008

    The offset percentages used have been updated based on the 
available data for CY 2025 rulemaking and would be updated for the 
final rule. However, the file and corresponding offset percentages used 
are similar to the ones that can be found in the CY 2024 NFRM APC 
Offset File. These files are available via the internet on the CMS OPPS 
website.\6\
---------------------------------------------------------------------------

    \6\ https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/annual-policy-files.
---------------------------------------------------------------------------

    We propose to multiply by two the volume weighted average amount of 
the offset to establish the threshold triggering separate payment 
because this amount would ensure that separate payment would apply only 
to diagnostic radiopharmaceuticals whose costs significantly exceed the 
approximate amount of payment already attributed to the product in the 
nuclear medicine APC payment. This is consistent with the principles of 
a prospective payment system where some payments are lower than 
hospitals' costs while other payments are greater than a hospitals'

[[Page 59216]]

costs. However, diagnostic radiopharmaceuticals with costs more than 
double the volume weighted average amount of the offset could present a 
hospital with a significant financial loss. This is why the OPPS has 
several payment provisions that rely on a multiplier of costs as a 
threshold for modifying payment.
    Our proposed approach to multiply the average offset amount by two 
is consistent with the two-times rule the OPPS uses to determine 
Ambulatory Payment Classification (APC) levels, where a significant 
service that has a cost greater than two times the lowest cost 
significant service in an APC is generally moved to a higher level APC 
in the series. The two-times rule requires that the highest calculated 
cost of an individual procedure categorized to any given APC cannot 
exceed two times the calculated cost of the lowest cost procedure 
categorized to that same APC. We note that the two-times rule does not 
apply to diagnostic radiopharmaceuticals themselves, but only to the 
procedures in which they are used, which is why we are proposing a 
diagnostic radiopharmaceutical packaging threshold utilizing a similar 
two-times methodology.
    Our proposed approach to multiply the average offset amount by two 
is also generally consistent with the OPPS outlier policy applicable to 
certain high-cost procedures, where costs greater than 1.75 times the 
APC payment trigger an additional outlier payment. The OPPS provides 
outlier payments to hospitals to help mitigate the financial risk 
associated with high-cost and complex procedures, where a very costly 
service could present a hospital with significant financial loss. 
Outlier payments are provided on a service basis when the cost of a 
service exceeds the APC payment amount multiplier threshold (1.75) as 
well as the APC payment amount plus a fixed-dollar amount threshold. 
The proposed diagnostic radiopharmaceutical packaging threshold would 
serve a similar purpose as the outlier policy, in that it would provide 
payments to hospitals to help mitigate the financial risk associated 
with high-cost diagnostic radiopharmaceuticals, where a very costly 
diagnostic radiopharmaceutical could present a hospital with 
significant financial loss.
    While we are proposing two, and believe two is the most appropriate 
number for the multiplier for the volume weighted average amount of the 
offset, for the reasons articulated for the OPPS outlier policy, we 
seek comment on the alternatives of using 1.75 times the volume 
weighted average amount of the offset as the threshold amount for 
triggering separate payment, or another appropriate multiplier amount. 
For example, an interested party could present data that a financial 
disincentive to use diagnostic radiopharmaceuticals exists when costs 
are 1.75 times, or three times or five times, the volume weighted 
average offset amount. Since the hospital outpatient outlier payment 
policy is a longstanding policy familiar to most hospitals, we seek 
comment on utilizing elements of that policy for purposes of our 
proposed diagnostic radiopharmaceutical packaging policy in order to 
help hospitals mitigate the financial risk that may be associated with 
furnishing high-cost and complex diagnostic radiopharmaceuticals. As 
previously mentioned, we seek comment on the use of 1.75 times as the 
multiplier threshold rather than 2. Although the outlier policy uses 
both a 1.75 multiplier threshold and a fixed-dollar threshold, we are 
seeking comment regarding the use of 1.75 as the multiplier to set a 
fixed dollar threshold for the volume weighted average amount of the 
offset as the goals of the outlier policy and this proposed diagnostic 
radiopharmaceutical policy are similar.
    We also solicit comment on the alternative of using the standard 
drug packaging threshold, which is proposed to be $140 for CY 2025 in 
this rule, as the threshold for separate payment for diagnostic 
radiopharmaceuticals. We believe that diagnostic radiopharmaceuticals 
are functioning as supplies to the nuclear medicine procedure in which 
they are used. Because diagnostic radiopharmaceuticals function as 
supplies in the diagnostic procedures in which they are used, they are 
serving as an item that is integral, ancillary, supportive, dependent, 
or adjunctive to the primary diagnostic service. This is in contrast to 
therapeutic drugs, biologicals, and therapeutic radiopharmaceuticals 
that are typically packaged under the standard drug packaging 
threshold. These products could be the only therapeutic modality 
provided to a patient during an encounter and may not serve as an item 
that is integral, ancillary, supportive, dependent, or adjunctive to 
the primary service. Due to this clinical difference, we do not believe 
that using the standard drug packaging threshold is appropriate for 
diagnostic radiopharmaceuticals, and therefore we are proposing a 
threshold specific to diagnostic radiopharmaceuticals. We would be 
interested to hear from commenters whether they agree or disagree with 
this assessment.
(3) Calculating the Per Day Cost of Diagnostic Radiopharmaceuticals
    We are proposing to calculate the per day costs for diagnostic 
radiopharmaceuticals using a methodology similar to the one we use for 
determining the per day costs of drugs and biologicals for comparison 
to the OPPS drug packaging threshold, proposed to be $140 for CY 2025.
    We propose to calculate the per day cost based on the methodology 
described in section V.B.1.b. of this proposed rule, which relies on 
the methodology in the CY 2006 OPPS/ASC proposed rule (70 FR 42723 and 
42724) and finalized in the CY 2006 OPPS final rule with comment period 
(70 FR 68636 through 68638). Though the clinical use of the drugs, 
biologicals, and therapeutic radiopharmaceuticals differs from 
diagnostic radiopharmaceuticals, we believe the method of determining 
how much of that item is used per day should be similar. Therefore, we 
are proposing to use a similar methodology for determining the per day 
costs of diagnostic radiopharmaceuticals, as we do drugs, biologicals, 
and therapeutic radiopharmaceuticals. This methodology consists of nine 
steps:
    Step 1. After application of the CCRs, we aggregated all line-items 
for a single date of service on a single claim for each product. This 
resulted in creation of a single line-item with the total number of 
units and the total cost of a diagnostic radiopharmaceutical given to a 
patient in a single day.
    Step 2. We then created a separate record for each diagnostic 
radiopharmaceutical by date of service, regardless of the number of 
lines on which the diagnostic radiopharmaceutical was billed on each 
claim. For example, ``diagnostic radiopharmaceutical X'' is billed on a 
claim with two different dates of service, and for each date of 
service, the diagnostic radiopharmaceutical is billed on two line-items 
with a cost of $10 and 5 units for each line-item. In this case, the 
computer program would create two records for this diagnostic 
radiopharmaceutical, and each record would have a total cost of $20 and 
10 units of the product.
    Step 3. We trimmed records with unit counts per day greater or less 
than 3 standard deviations from the geometric mean.
    Step 4. For each remaining record for a diagnostic 
radiopharmaceutical, we calculated the cost per unit of the diagnostic 
radiopharmaceutical. If the HCPCS descriptor for ``diagnostic

[[Page 59217]]

radiopharmaceutical X'' is ``per 1 millicurie'' and one record was 
created for a total of 10 millicurie (as indicated by the total number 
of units for the diagnostic radiopharmaceutical on the claim for each 
unique date of service), the computer program divided the total cost 
for the record by 10 to give a per unit cost. We then weighted this 
unit cost by the total number of units in the record. We did this by 
generating a number of line-items equivalent to the number of units in 
that particular claim. Thus, a claim with 100 units of ``diagnostic 
radiopharmaceutical X'' and a total cost of $200 would be given 100 
line-items, each with a cost of $2, while a claim of 50 units with a 
cost of $50 would be given 50 line items, each with a cost of $1.
    Step 5. We trimmed the unit records with cost per unit greater or 
less than 3 standard deviations from the geometric mean.
    Step 6. We aggregated the remaining unit records to determine the 
mean cost per unit of the diagnostic radiopharmaceutical.
    Step 7. Using only the records that remained after records with 
unit counts per day greater or less than 3 standard deviations from the 
geometric mean were trimmed (step 3), we determined the total number of 
units billed for each item and the total number of unique per-day 
records for each item. We divided the count of the total number of 
units by the total number of unique per day records for each item to 
calculate an average number of units per day.
    Step 8. We used the payment rate (the mean unit cost (MUC) derived 
from the CY 2023 hospital claims data) for each diagnostic 
radiopharmaceutical and multiplied the payment rate by the average 
number of units per day for each diagnostic radiopharmaceutical to 
arrive at its per day cost.
    Step 9. We packaged the items with per day costs less than or equal 
to $630 and designated items with per day costs greater than $630 as 
separately payable.
    As just described, to determine the proposed CY 2025 packaging 
status for all nonpass-through diagnostic radiopharmaceuticals, we 
propose to use the per day cost, calculated on a HCPCS code-specific 
basis, of each diagnostic radiopharmaceutical that had a HCPCS code in 
CY 2023 and was paid (via packaged or separate payment) under the OPPS. 
We used data from CY 2023 claims processed through December 31, 2023, 
for this calculation.
    We propose to continue to package payment for diagnostic 
radiopharmaceuticals with per day costs less than or equal to $630 
under our existing packaging policy for diagnostic radiopharmaceuticals 
that function as surgical supplies under Sec.  419.2(b)(15). Similar to 
our policy for the drug packaging threshold, we propose to use updated 
claims data to make final determinations of the packaging status of 
HCPCS codes for diagnostic radiopharmaceuticals for each OPPS/ASC final 
rule with comment period. We propose to make an annual packaging 
determination for each diagnostic radiopharmaceutical HCPCS code only 
when we develop the OPPS/ASC final rule with comment period for the 
update year. We propose that only diagnostic radiopharmaceutical HCPCS 
codes that are identified as separately payable in the final rule with 
comment period would be subject to quarterly updates.
    Consequently, the packaging status of some HCPCS codes for 
diagnostic radiopharmaceuticals in the OPPS/ASC proposed rule may 
differ from the same HCPCS codes' packaging status determined based on 
the data used for the final rule with comment period. Under these 
circumstances, we propose to follow the established policies for the 
OPPS drug packaging threshold, which were initially adopted for the CY 
2005 OPPS (69 FR 65780), to more equitably pay for those diagnostic 
radiopharmaceuticals whose costs fluctuate relative to the proposed CY 
2025 OPPS diagnostic radiopharmaceutical packaging threshold in a way 
that affects the product's payment status (packaged or separately 
payable). Our policy for the OPPS drug packaging threshold has not 
changed for many years and is the same as described in the CY 2016 
OPPS/ASC final rule with comment period (80 FR 70434). We believe these 
same policies should apply to diagnostic radiopharmaceuticals in order 
to ensure payment consistency for those diagnostic radiopharmaceuticals 
whose costs fluctuate relative to the proposed CY 2025 OPPS diagnostic 
radiopharmaceutical packaging threshold. For CY 2025, similar to our 
historical practice for the drug packaging threshold, we propose to 
apply the following policies to those HCPCS codes for diagnostic 
radiopharmaceuticals whose relationship to the diagnostic 
radiopharmaceutical packaging threshold changes based on the final 
updated data: HCPCS codes for diagnostic radiopharmaceuticals that are 
proposed for separate payment in CY 2025, and that then have per day 
costs equal to or less than the CY 2025 final rule diagnostic 
radiopharmaceutical packaging threshold, based on the updated hospital 
claims data used for the CY 2025 final rule, would remain packaged in 
CY 2025. HCPCS codes for diagnostic radiopharmaceuticals for which we 
proposed packaged payment in CY 2025 but that then have per-day costs 
greater than the CY 2025 final rule drug packaging threshold, based on 
updated hospital claims data used for the CY 2025 final rule, would 
receive separate payment in CY 2025.
(4) Proposal To Update the Diagnostic Radiopharmaceutical Packaging 
Threshold in CY 2026
    Starting in CY 2026 and subsequent years, we propose to update the 
proposed threshold amount of $630 by the PPI for Pharmaceuticals for 
Human Use (Prescription) (Bureau of Labor Statistics series code 
WPUSI07003) from IHS Global, Inc (IGI). IGI is a nationally recognized 
economic and financial forecasting firm with which CMS contracts to 
forecast the various price indexes including the Producer Price Index 
(PPI) Pharmaceuticals for Human Use (Prescription). This is the same as 
the update factor used for the OPPS drug packaging threshold, where we 
originally used the four-quarter moving average PPI levels for 
Pharmaceutical Preparations (Prescription) to trend the $50 threshold 
forward from the third quarter of CY 2005 (when the Pub. L. 108-173 
mandated threshold became effective) to the third quarter of the 
applicable calendar year. We believe it is appropriate to use the same 
PPI for Pharmaceuticals for Human Use (Prescription) for the diagnostic 
radiopharmaceutical packaging threshold, as diagnostic 
radiopharmaceuticals are also prescription pharmaceuticals for human 
use. We propose that starting for CY 2026, we would use the most 
recently available four quarter moving average PPI levels to trend the 
final CY 2025 threshold forward from the third quarter of CY 2024 to 
the third quarter of CY 2025 and round the resulting dollar amount to 
the nearest $5 increment. This proposal to update the diagnostic 
radiopharmaceutical packaging threshold maintains consistency with our 
longstanding methodology for updating the OPPS drug packaging 
threshold, which is discussed in more detail in section V.B.1.a. of 
this rule and also in the CY 2007 OPPS/ASC final rule with comment 
period (71 FR 68085 and 68086).
(5) Amount of Separate Payment for Diagnostic Radiopharmaceuticals 
Exceeding the Threshold
    Once we determine that the per day cost of a nonpass-through 
diagnostic

[[Page 59218]]

radiopharmaceutical exceeds the proposed cost threshold of $630 per day 
for CY 2025, we then propose to assign that radiopharmaceutical to an 
APC, making it a specified covered outpatient drug (SCOD) per section 
1833(t)(14)(B) of the Act. Accordingly, we propose to pay for those 
nonpass-through, separately payable diagnostic radiopharmaceuticals 
based on our authority under section 1833(t)(14)(A)(iii)(II) of the 
Act. While under this authority we would ordinarily use the ASP 
methodology under section 1847A of the Act, we find that the ASP data 
we have is not usable for payment purposes. As previously mentioned, 
radiopharmaceuticals are not required to report ASP under 1847A, and as 
such, there are very few manufacturers reporting ASP for their products 
currently. Of those few manufacturers reporting ASP, the ASP values 
that we do have generally do not align with the ASP we would expect 
based on the cost and MUC data submitted to CMS by hospitals. For 
example, a frequently used diagnostic radiopharmaceutical has a 
reported ASP that is over 23,000 percent higher than the MUC derived 
from claims data. As manufacturers of diagnostic radiopharmaceuticals 
may be unaware of the correct reporting requirements, we believe it 
would be inappropriate to propose to pay for separately payable 
diagnostic radiopharmaceuticals based on their ASPs as currently 
reported, without giving manufacturers the opportunity to submit, 
certify, or restate the ASPs of their products. We believe MUC is an 
appropriate proxy for the average price for a diagnostic 
radiopharmaceutical for a given year, as it is calculated based on the 
average costs for a particular year and is directly reflective of the 
actual cost data that hospitals submit to CMS.
    Under our policy for therapeutic radiopharmaceuticals (74 FR 
60520), there are several requirements for reporting ASP. For example, 
ASP data submitted would need to be provided for a patient-specific 
dose, or patient-ready form, of the radiopharmaceutical in order to 
properly calculate the ASP amount for a given HCPCS code if that HCPCS 
code dose descriptor was per study dose or similar. ASP data submitted 
should align with the code's dose descriptor and billing unit. We 
stated we would expect that the ASP data reported by a manufacturer 
would be representative of the item(s) sold by the manufacturer. We 
used the term ``patient-ready'' in that rule to ensure that ASP data 
submitted for OPPS payment purposes for separately payable 
radiopharmaceuticals reflect the costs of all the component materials 
of the finished radiopharmaceutical product. We expect that the ASP 
data would represent the sales price of all of the component materials 
of the finished radiopharmaceutical product sold by the manufacturer in 
terms that reflect the applicable HCPCS code descriptor such as ``per 
study dose'', ``per millicurie''and ``up to XX millicuries.'' For the 
few manufacturers currently reporting ASP data for their diagnostic 
radiopharmaceuticals, we believe it may be possible that they are not 
aware of the reporting requirements or are unaware of how to properly 
report ASP for their product, as CMS has not used ASP as the basis of 
payment for non-passthrough diagnostic radiopharmaceuticals before. 
Therefore, we believe a reasonable alternative for separate payment of 
diagnostic radiopharmaceuticals that exceed the per day cost threshold 
is the use of their mean unit cost from claims data. This is consistent 
with our current practice for therapeutic radiopharmaceuticals when ASP 
data is not available. For diagnostic radiopharmaceuticals, we believe 
that ASP data is effectively not available for purposes of determining 
a payment amount and, therefore, payment based on MUC is a reasonable 
alternative.
    We previously acknowledged (74 FR 35335), and continue to 
acknowledge, the complexities associated with reporting ASP for 
radiopharmaceuticals. We encourage manufacturers to submit ASP 
information for diagnostic radiopharmaceuticals, if possible. While CMS 
is proposing to use MUC to pay for separately payable diagnostic 
radiopharmaceuticals in CY 2025, manufacturers can begin, or continue, 
to report ASP data for potential future use in paying for diagnostic 
radiopharmaceuticals. For CY 2025, ASP reporting is voluntary for 
diagnostic radiopharmaceuticals paid under the OPPS. We encourage 
interested parties to submit comments regarding potential issues that 
may arise that prevent appropriate ASP reporting for diagnostic 
radiopharmaceuticals. If manufacturers choose to report ASP data, the 
data must meet reporting requirements in order to be used for payment 
under the OPPS.
    Manufacturers that choose to report ASP data for their diagnostic 
radiopharmaceuticals would need to provide comprehensive data in order 
for CMS to calculate an ASP amount for a given HCPCS code. In instances 
where there is more than one manufacturer of a particular diagnostic 
radiopharmaceutical, we propose that all manufacturers would need to 
submit ASP information in order for payment to be made based on ASP. 
This is because it would be inappropriate for Medicare payment for a 
HCPCS code to be based on the payment information submitted by one 
manufacturer, if that payment is used for a product made by different 
manufacturers. This is because the ASP information reported by one 
manufacturer might not reflect the ASP of the same product made by 
other manufacturers.
    We note that ASP submissions for radiopharmaceutical payment under 
the OPPS would need to meet all of the existing regulatory and 
subregulatory requirements of the ASP reporting process under sections 
1847A and 1927(b)(3) of the Act.
    Specifically, we reiterate our ASP reporting requirements outlined 
in the CY 2010 OPPS/ASC final rule with comment period (74 FR 60520) 
for products for which we are encouraging the reporting of ASP, but for 
which reporting is not statutorily required. The ASP data submitted 
would need to be provided for a patient-specific dose, or patient-ready 
form, of the diagnostic radiopharmaceutical in order to properly 
calculate the ASP amount that aligns with the dose descriptor for a 
given HCPCS code. When reporting an ASP for a separately payable 
radiopharmaceutical, we expect that the ASP data reported by a 
manufacturer would be representative of the item(s) sold by the 
manufacturer. In the CY 2010 OPPS/ASC final rule with comment period 
(74 FR 60520), we used the term ``patient-ready'' to ensure that ASP 
data submitted for OPPS payment purposes for separately payable 
radiopharmaceuticals reflect the costs of all the component materials 
of the finished radiopharmaceutical product. We expect that the ASP 
data would represent the sales price of all of the component materials 
of the finished radiopharmaceutical product sold by the manufacturer in 
terms that reflect the applicable HCPCS code descriptor, such as ``per 
study dose'' or ``millicurie.'' We defined a ``patient-ready'' dose for 
OPPS purposes as including all component materials of the 
radiopharmaceutical, at a minimum, and any other processing the 
manufacturer requires to produce the radiopharmaceutical that it sells 
that are reflected in the sales price, including radiolabeling, as long 
as any fees paid for such processing done on behalf of the manufacturer 
meet the definition of ``bona fide service fees'' under Sec.  414.802 
(74 FR 60525).
    We understand that manufacturers of separately payable 
radiopharmaceuticals produce

[[Page 59219]]

radiopharmaceuticals that require a variety of processing steps in 
order to prepare the product for administration to a beneficiary. To be 
used for separate OPPS radiopharmaceutical payment, the ASP data 
reported by a manufacturer must represent sales of all of the component 
materials associated with the radiopharmaceutical. For our full policy 
on which factors to incorporate into ASP pricing, please see the CY 
2010 OPPS/ASC final rule with comment period (74 FR 60520 through 
60521).
    In order to be used for payment under the OPPS, all 
radiopharmaceutical ASP submissions should meet the existing regulatory 
and subregulatory requirements of the ASP submission process under 
sections 1847A and 1927(b)(3) of the Act. In particular, we believe the 
``bona fide service fee'' test in the ASP regulations is instructive 
here, and we refer readers to the CY 2010 OPPS/ASC final rule with 
comment period for our discussion on radiopharmaceutical ASP reporting 
(74 FR 60521).
    To summarize our CY 2010 policy for ASP reporting on 
radiopharmaceuticals for OPPS payment purposes (74 FR 60521), a 
patient-specific dose or patient-ready form in the context of OPPS ASP 
submission for radiopharmaceutical payment means that the ASP 
reflecting manufacturer sales must represent sales of all of the 
component materials for the radiopharmaceutical, including a minimum of 
a cold kit and a radioisotope, and be reported in terms that reflect 
the applicable HCPCS code descriptor, such as ``treatment dose'' or 
``millicurie.'' The ASP would not necessarily take into account the 
preparation of the final form of the radiopharmaceutical for patient 
administration, including radiolabeling, which may be conducted by the 
manufacturer, freestanding radiopharmacy, hospital pharmacy, or other 
entity. With respect to the latter, fees paid by the manufacturer for 
these services would be excluded from the ASP calculation (that is, 
would not be considered price concessions that reduce the ASP) only if 
they are ``bona fide service fees'' as defined in the regulations 
governing ASP. Thus, if the manufacturer pays a ``bona fide service 
fee'' for the services of the freestanding radiopharmacy, hospital 
pharmacy, or other entity, and reflects that fee in its price for the 
radiopharmaceutical, the amount of the ``bona fide service fee'' would 
be taken into account in the reported ASP data. However, manufacturers 
are not required to pay for the preparation of a radiopharmaceutical 
(including radiolabeling) in a freestanding radiopharmacy, hospital 
pharmacy, or other entity after sale of all of the component materials, 
and in that case, the cost of those services would not be reflected in 
the ASP data submitted to CMS. Manufacturers should submit ASP data for 
a separately payable radiopharmaceutical that incorporates prices for 
sales of all of the component materials by the manufacturer. We seek 
comment on these ASP reporting requirements outlined in the CY 2010 
OPPS/ASC final rule with comment period (74 FR 60521) and previous CMS 
guidance on the guidelines for the Submission of OPPS ASP Data for 
Nonpass-Through Separately Payable Therapeutic Radiopharmaceuticals and 
Radiopharmaceuticals with Pass-Through Status.\7\ We continue to 
believe that these ASP reporting practices should be applicable to 
radiopharmaceuticals, including both therapeutic and diagnostic 
radiopharmaceuticals, but seek comment from interested parties in this 
space to ensure that these reporting guidelines are clear and 
reflective of clinical practice today.
---------------------------------------------------------------------------

    \7\ https://www.cms.gov/medicare/medicare-fee-for-service-payment/hospitaloutpatientpps/downloads/opps_asp_radiopharm_guidance10302009.pdf.
---------------------------------------------------------------------------

    We still see the potential value in the use of ASP data for payment 
purposes for diagnostic radiopharmaceuticals when reported correctly 
and by all manufacturers who manufacture a product that is described by 
a given HCPCS code. We believe that the use of ASP information for OPPS 
payment could provide an opportunity to improve payment accuracy for 
separately payable diagnostic radiopharmaceuticals by applying an 
established methodology that has already been successfully implemented 
under the OPPS for other separately payable drugs and biologicals, as 
well as therapeutic radiopharmaceuticals. Because the per day cost 
calculations determine whether a diagnostic radiopharmaceutical 
qualifies for separate payment, using the most accurate pricing 
information is paramount. The use of ASP information could provide an 
opportunity to further improve the accuracy of the per day cost 
calculations and the separate payment amounts for diagnostic 
radiopharmaceuticals. As previously mentioned, we do not believe that 
the limited amount of ASP information submitted currently is adequate 
for the purpose of determining separate payment for those few products 
that currently do report ASP, which is why we are proposing to pay 
diagnostic radiopharmaceuticals with per day costs above the proposed 
$630 threshold at each diagnostic radiopharmaceutical's mean unit cost. 
However, we are still interested in the potential to use ASP for the 
purpose of determining a diagnostic radiopharmaceutical's per day cost 
and payment amount in the future. Therefore, we want to engage with 
interested parties to learn about the unique aspects and challenges 
that may be associated with reporting ASP for diagnostic 
radiopharmaceuticals, and radiopharmaceuticals in general. We 
specifically seek comment as to whether interested parties believe CMS 
should require payment for diagnostic radiopharmaceuticals on ASP in 
the future, such as in CY 2026 rulemaking, if interested parties are 
confident in their reporting ability.
    We do believe that there could be situations in which it is 
appropriate to use ASP currently. For example, in section V.A.4. of 
this proposed rule, we propose to utilize ASP in payment for diagnostic 
radiopharmaceuticals on OPPS transitional pass-through status. In this 
situation, we believe the use of ASP is appropriate as the manufacturer 
of that diagnostic radiopharmaceutical is actively involved in the 
radiopharmaceutical's pass-through application, and CMS can ensure that 
pricing is reported appropriately for purposes of the drug pass-through 
cost significance tests and for purposes of payment if the pass-through 
status is approved. Typically, there is only one manufacturer for a 
diagnostic radiopharmaceutical applying for pass-through status, so CMS 
does not have to ensure all manufacturers are reporting ASP for that 
particular HCPCS code prior to establishing a separate payment amount 
based on ASP. Additionally, as discussed in section V.B.5. (Proposed 
Payment for Nonpass-Through Drugs, Biologicals, and 
Radiopharmaceuticals with HCPCS Codes but Without OPPS Hospital Claims 
Data) of this rule, we propose to base the initial payment for new 
diagnostic radiopharmaceuticals with HCPCS codes, but which do not have 
pass-through status and are without claims data, on ASP, and on the WAC 
for these products if ASP data for these diagnostic 
radiopharmaceuticals are not available. If the WAC also is unavailable, 
we propose to make payment for new diagnostic radiopharmaceuticals at 
95 percent of the products' most recent AWP. We believe the volume of 
products in this category will typically be very low; however, in these 
rare situations, we

[[Page 59220]]

believe it would be appropriate to use ASP until a MUC is available. 
Similar to drugs applying for pass-through status, there is typically 
only one manufacturer for a diagnostic radiopharmaceutical that is new 
and described by a HCPCS code, but without claims data, so CMS does not 
have to ensure all manufacturers are reporting ASP for that particular 
HCPCS code prior to establishing a separate payment amount based on 
ASP. Additionally, although reporting of ASP is not a condition of CMS 
approving a HCPCS application, CMS has the opportunity to actively 
engage with the manufacturer, or sponsor of a HCPCS application, during 
the HCPCS application process. This allows for ongoing dialogue and 
education regarding the unique ASP reporting requirements that may be 
associated with a particular product, including how to ensure the 
reported ASP aligns with the dose descriptor for the newly assigned 
HCPCS code.
    We seek comments on additional unique situations in which it still 
may be appropriate for CMS to use ASP information to assess per day 
costs and payment amounts for diagnostic radiopharmaceuticals for CY 
2025. For example, one such unique situation could be continuing the 
use of ASP for a particular HCPCS code once its pass-through status has 
ended, if the HCPCS code was actively being paid based on ASP while on 
pass-through status. Under our current proposal, payment for a 
diagnostic radiopharmaceutical would be based on MUC once its pass-
through status ends. We seek comment on this potential unique 
situation, as well as others of which readers may be aware, and we may 
finalize utilizing ASP in additional situations that commenters bring 
to our attention in the final rule as policies for CY 2025 depending on 
comments received.
    As discussed, we propose to base the payment rate for diagnostic 
radiopharmaceuticals on mean unit cost data derived from hospital 
claims. We are not proposing to use ASP data for determining payment 
rates of non-passthrough diagnostic radiopharmaceuticals with claims 
data but are seeking comment on its use for determining the per day 
cost and setting the payment rate for diagnostic radiopharmaceuticals 
in the future. Additionally, we are not proposing to use WAC or AWP as 
a basis for payment for diagnostic radiopharmaceuticals. Similar to our 
reasoning for payment of therapeutic radiopharmaceuticals in the CY 
2012 OPPS/ASC final rule with comment period (77 FR 68390), we believe 
that paying for diagnostic radiopharmaceuticals using mean unit cost 
would appropriately pay for the average price of nonpass-through 
separately payable diagnostic radiopharmaceuticals for the applicable 
year. We believe MUC is an appropriate proxy for the average price for 
a diagnostic radiopharmaceutical for a given year, as it is calculated 
based on the average costs for a particular year and is directly 
reflective of the actual cost data that hospitals submit to CMS.
    As we stated in the CY 2010 OPPS/ASC final rule with comment period 
(74 FR 60523), we believe that WAC or AWP is not an appropriate proxy 
to provide OPPS payment for average therapeutic radiopharmaceutical 
acquisition cost and associated handling costs when manufacturers are 
not required to submit ASP data because payment based on WAC or AWP for 
separately payable drugs and biologicals is usually temporary for a 
calendar quarter until a manufacturer is able to submit the required 
ASP data in accordance with the quarterly ASP submission timeframes for 
reporting under section 1847A of the Act. However, WAC and AWP reported 
to compendia may not be reflective of a patient ready dose. We are 
additionally concerned about the use of WAC and AWP since ASP reporting 
for OPPS payment of separately payable diagnostic radiopharmaceuticals 
would not be required for CY 2025. The absence of appropriate ASP 
reporting could result in payment for a separately payable diagnostic 
radiopharmaceutical based on WAC or AWP indefinitely, a result which we 
believe would be inappropriate, as these pricing metrics do not capture 
all of the pricing discounts that may be reflected in the ASP.
    Given all of the concerns we currently have with other pricing 
methodologies for diagnostic radiopharmaceuticals, we propose to rely 
on CY 2023 mean unit cost data derived from hospital claims data for 
payment rates for diagnostic radiopharmaceuticals for CY 2025.
    Our proposed payment methodology for diagnostic 
radiopharmaceuticals that have costs above a $630 threshold would be 
similar, but not the same as the methodology adopted for therapeutic 
radiopharmaceuticals as described in the CY 2010 OPPS/ASC final rule 
with comment period (74 FR 60518). Although therapeutic 
radiopharmaceuticals are generally targeted at treating a certain 
disease or condition, and diagnostic radiopharmaceuticals are generally 
targeted at diagnosing a certain disease or condition, we believe they 
are clinically very similar products, manufactured in a similar manner, 
and should generally be paid using a similar payment methodology when 
paid separately. As such, we believe the same payment method as is used 
for therapeutic radiopharmaceuticals should apply to diagnostic 
radiopharmaceuticals above the cost threshold. However, as previously 
discussed, given our concerns with current ASP reporting patterns, we 
are proposing to use MUC as the basis of payment for non-passthrough 
diagnostic radiopharmaceuticals for CY 2025. Therefore, we believe it 
is appropriate for the methodology to determine the proposed payment 
amounts to differ between diagnostic and therapeutic 
radiopharmaceuticals, at least for CY 2025. We will consider aligning 
the payment methodologies between therapeutic and diagnostic 
radiopharmaceuticals, either based on ASP or MUC, in future rulemaking.
    We believe mean unit cost data is an appropriate and adequate proxy 
for the average price for diagnostic radiopharmaceuticals and 
associated handling costs for these products. Mean unit cost data is 
reflective of the actual cost data that hospitals submit to CMS. The 
MUC payment methodology is consistent with our payment policy for 
therapeutic radiopharmaceuticals as stated in the CY 2010 OPPS/ASC 
final rule with comment period (74 FR 60523) and is the basis for 
payment of many therapeutic radiopharmaceuticals when ASP is 
unavailable currently.
    As previously discussed, we find that the ASP data we have is not 
usable for the purpose of paying for diagnostic radiopharmaceuticals 
and, therefore, we are proposing to pay for qualifying non-passthrough 
diagnostic radiopharmaceuticals with claims data based on MUC. However, 
we are also seeking comment on how we could potentially use our 
equitable adjustment authority at section 1833(t)(2)(E) of the Act to 
make an adjustment to the ASP data that has been reported in order to 
make it usable for the purpose of paying equitably for these products. 
For example, we seek comment as to whether CMS could use its equitable 
adjustment authority to adjust payment for diagnostic 
radiopharmaceuticals based on an adjusted ASP value when the ASP 
amounts reported to CMS deviate by a given threshold, such as two times 
the MUC calculated for the diagnostic radiopharmaceutical using claims 
data. Alternatively, the adjusted payment rate could be an average of 
the reported ASP and MUC, or other methodologies suggested by 
commenters. We broadly seek comment on this potential use of equitable 
adjustment authority to make the

[[Page 59221]]

limited ASP data reported for diagnostic radiopharmaceuticals usable 
for purposes of setting payment rates for qualifying products.
    We note, if readers do not believe it is appropriate for CMS to 
base the payment amount for diagnostic radiopharmaceuticals on MUC for 
CY 2025, we would propose in the alternative to maintain our current 
policy of unconditionally policy packaging all diagnostic 
radiopharmaceuticals regardless of their cost until an appropriate 
payment methodology can be established to determine a separate payment 
amount for diagnostic radiopharmaceuticals.
    HCPCS codes that describe diagnostic radiopharmaceuticals with per 
day costs that meet or exceed the proposed diagnostic 
radiopharmaceutical packaging threshold would be assigned to a status 
indicator of ``K'', indicating separate payment. An APC and a payment 
rate would be assigned as shown in Addendum B to this proposed rule. 
HCPCS codes that describe diagnostic radiopharmaceuticals with per day 
costs that are at or below the proposed diagnostic radiopharmaceutical 
packaging threshold would continue to be assigned to a status indicator 
of ``N'', indicating packaged payment. We welcome comment on these 
determinations. The proposed list of diagnostic radiopharmaceuticals 
that have calculated per day costs that exceed $630 and their proposed 
status indicators can be found in table 5.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP22JY24.009


[[Page 59222]]


BILLING CODE 4120-01-C
    Definitions of status indicators can be found in Addendum D1 to 
this proposed rule. Addenda to this proposed rule can be found on the 
CMS OPPS web page.
    We propose corresponding regulation text edits at Sec.  
419.2(b)(15) to only package diagnostic radiopharmaceuticals when their 
per day cost is at or below the per day diagnostic radiopharmaceutical 
packaging threshold for the applicable year. This is achieved by adding 
the text ``at or below the per-day diagnostic radiopharmaceutical 
packaging threshold for the applicable year'' to qualify the packaging 
of diagnostic radiopharmaceuticals. We also propose corresponding 
regulation text edits at Sec.  419.41 (Calculation of national 
beneficiary copayment amounts and national Medicare program payment 
amounts) to codify our proposed payment policy for diagnostic 
radiopharmaceuticals and our existing policy for therapeutic 
radiopharmaceuticals.
4. Proposed Implementation of Section 4135 of the Consolidated 
Appropriations Act (CAA)
    The Consolidated Appropriations Act (CAA), 2023 (Pub. L. 117-328), 
was signed into law on December 29, 2022. Section 4135(a) and (b) of 
the CAA, 2023, titled Access to Non-Opioid Treatments for Pain Relief, 
amended sections 1833(t)(16) and 1833(i) of the Act, respectively, to 
provide for temporary additional payments for non-opioid treatments for 
pain relief (as that term is defined in section 1833(t)(16)(G)(i) of 
the Act). In particular, section 1833(t)(16)(G) of the Act provides 
that with respect to a non-opioid treatment for pain relief furnished 
on or after January 1, 2025, and before January 1, 2028, the Secretary 
shall not package payment for the non-opioid treatment for pain relief 
into payment for a covered OPD service (or group of services) and shall 
make an additional payment for the non-opioid treatment for pain relief 
as specified in clause (ii) of that section. Clauses (ii) and (iii) of 
section 1833(t)(16)(G) of the Act provide for the amount of additional 
payment and set a limitation on that amount, respectively.
    As the additional payments are required to begin on January 1, 
2025, we propose to implement the CAA, 2023 section 4135 amendments in 
this proposed rule. Our proposal to implement section 4135 of CAA, 2023 
can be found in section XIII.E of this proposed rule.
5. Calculation of OPPS Scaled Payment Weights
    We established a policy in the CY 2013 OPPS/ASC final rule with 
comment period (77 FR 68283) of using geometric mean-based APC costs to 
calculate relative payment weights under the OPPS. In the CY 2024 OPPS/
ASC final rule with comment period (88 FR 81577 through 81578), we 
applied this policy and calculated the relative payment weights for 
each APC for CY 2024 that were shown in Addenda A and B of the CY 2024 
OPPS/ASC final rule with comment period (which were made available via 
the internet on the CMS website) using the APC costs discussed in 
sections II.A.1 and II.A.2 of the CY 2024 OPPS/ASC final rule with 
comment period (88 FR 81549 through 81572). For CY 2025, as we did for 
CY 2024, we proposed to continue to apply the policy established in CY 
2013 and calculate relative payment weights for each APC for CY 2025 
using geometric mean-based APC costs.
    For CY 2012 and CY 2013, outpatient clinic visits were assigned to 
one of five levels of clinic visit APCs, with APC 0606 representing a 
mid-level clinic visit. In the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75036 through 75043), we finalized a policy that created 
alphanumeric HCPCS code G0463 (Hospital outpatient clinic visit for 
assessment and management of a patient), representing all clinic visits 
under the OPPS. HCPCS code G0463 was assigned to APC 0634 (Hospital 
Clinic Visits). We also finalized a policy to use CY 2012 claims data 
to develop the CY 2014 OPPS payment rates for HCPCS code G0463 based on 
the total geometric mean cost of the levels one through five CPT 
Evaluation or Assessment and Management (E/M) codes for clinic visits 
previously recognized under the OPPS (CPT codes 99201 through 99205 and 
99211 through 99215). In addition, we finalized a policy to no longer 
recognize a distinction between new and established patient clinic 
visits.
    For CY 2016, we deleted APC 0634 and reassigned the outpatient 
clinic visit HCPCS code G0463 to APC 5012 (Level 2 Examinations and 
Related Services) (80 FR 70372). For CY 2025, as we did for CY 2024, we 
propose to continue to standardize all of the relative payment weights 
to APC 5012. We believe that standardizing relative payment weights to 
the geometric mean of the APC to which HCPCS code G0463 is assigned 
maintains consistency in calculating unscaled weights that represent 
the cost of some of the most frequently provided OPPS services. For CY 
2025, as we did for CY 2024, we propose to assign APC 5012 a relative 
payment weight of 1.00 and to divide the geometric mean cost of each 
APC by the geometric mean cost for APC 5012 to derive the unscaled 
relative payment weight for each APC. The choice of the APC on which to 
standardize the relative payment weights does not affect payments made 
under the OPPS because we scale the weights for budget neutrality.
    Section 1833(t)(9)(B) of the Act requires that APC reclassification 
and recalibration changes, wage index changes, and other adjustments be 
made in a budget neutral manner. Budget neutrality ensures that the 
estimated aggregate weight under the OPPS for CY 2025 is neither 
greater than nor less than the estimated aggregate weight that would 
have been calculated without the changes. To comply with this 
requirement concerning the APC changes, we proposed to compare the 
estimated aggregate weight using the CY 2024 scaled relative payment 
weights to the estimated aggregate weight using the proposed CY 2025 
unscaled relative payment weights.
    For CY 2024, we multiplied the CY 2024 scaled APC relative payment 
weight applicable to a service paid under the OPPS by the volume of 
that service from CY 2023 claims to calculate the total relative 
payment weight for each service. We then added together the total 
relative payment weight for each of these services in order to 
calculate an estimated aggregate weight for the year. For CY 2025, we 
propose to apply the same process using the estimated CY 2025 unscaled 
relative payment weights rather than scaled relative payment weights. 
We propose to calculate the weight scalar by dividing the CY 2024 
estimated aggregate weight by the unscaled CY 2025 estimated aggregate 
weight.
    For a detailed discussion of the weight scalar calculation, we 
refer readers to the OPPS claims accounting document available on the 
CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices. Click on the 
link labeled ``Hospital Outpatient Prospective Payment--Notice of 
Proposed Rulemaking with Comment Period (NPRM)'' for 2025, which can be 
found under the heading ``Hospital Outpatient Regulations and Notices'' 
and open the claims accounting document link, which is labeled ``2025 
NPRM OPPS Claims Accounting (PDF).''
    We propose to compare the estimated unscaled relative payment 
weights in CY 2025 to the estimated total relative

[[Page 59223]]

payment weights in CY 2024 using CY 2023 claims data, holding all other 
components of the payment system constant to isolate changes in total 
weight. Based on this comparison, we propose to adjust the calculated 
CY 2025 unscaled relative payment weights for purposes of budget 
neutrality. We propose to adjust the estimated CY 2025 unscaled 
relative payment weights by multiplying them by a proposed weight 
scalar of 1.4405 to ensure that the proposed CY 2025 relative payment 
weights are scaled to be budget neutral. The proposed CY 2025 relative 
payment weights listed in Addenda A and B to this proposed rule (which 
are available via the internet on the CMS website) are scaled and 
incorporate the recalibration adjustments discussed in sections II.A.1 
and II.A.2 of this proposed rule.
    Section 1833(t)(14) of the Act provides the payment rates for 
certain specified covered outpatient drugs (SCODs). Section 
1833(t)(14)(H) of the Act provides that additional expenditures 
resulting from this paragraph shall not be taken into account in 
establishing the conversion factor, weighting, and other adjustment 
factors for 2004 and 2005 under paragraph (9) but shall be taken into 
account for subsequent years. Therefore, the cost of those SCODs (as 
discussed in section V.B.2 of this proposed rule) is included in the 
budget neutrality calculations for the CY 2025 OPPS.

B. Proposed Conversion Factor Update

1. OPD Fee Schedule Increase Factor
    Section 1833(t)(3)(C)(ii) of the Act requires the Secretary to 
update the conversion factor used to determine the payment rates under 
the OPPS on an annual basis by applying the OPD fee schedule increase 
factor. For purposes of section 1833(t)(3)(C)(iv) of the Act, subject 
to sections 1833(t)(17) and 1833(t)(3)(F) of the Act, the OPD fee 
schedule increase factor is equal to the hospital inpatient market 
basket percentage increase applicable to hospital discharges under 
section 1886(b)(3)(B)(iii) of the Act. In the FY 2025 IPPS/Long Term 
Care Hospital (LTCH) PPS proposed rule (89 FR 36204), consistent with 
current law, based on IHS Global, Inc.'s fourth quarter 2023 forecast, 
the proposed FY 2025 IPPS market basket percentage increase was 3.0 
percent. We note that under our regular process for the CY 2025 OPPS/
ASC final rule with comment period, we would use the market basket 
update for the FY 2025 IPPS/LTCH PPS final rule. If that forecast is 
different than the IPPS market basket percentage increase used for this 
proposed rule, the CY 2025 OPPS/ASC final rule with comment period OPD 
fee schedule increase factor would reflect that updated forecast of the 
market basket percentage increase.
    For CY 2025, we propose to use the estimate of the hospital 
inpatient market basket percentage increase of 3.0 percent as one 
component to calculate the OPD fee schedule increase factor.
2. Productivity Adjustment
    Section 1833(t)(3)(F)(i) of the Act requires that, for 2012 and 
subsequent years, the OPD fee schedule increase factor under 
subparagraph (C)(iv) be reduced by the productivity adjustment 
described in section 1886(b)(3)(B)(xi)(II) of the Act. Section 
1886(b)(3)(B)(xi)(II) of the Act defines the productivity adjustment as 
equal to the 10-year moving average of changes in annual economy-wide, 
private nonfarm business multifactor productivity (MFP) (as projected 
by the Secretary for the 10-year period ending with the applicable 
fiscal year, year, cost reporting period, or other annual period) (the 
``productivity adjustment''). 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. 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) of the Act 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) of the 
Act 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 IHS Global, Inc.'s (IGI) TFP projection 
methodology is available on the CMS website at https://www.cms.gov/data-research/statistics-trends-and-reports/medicare-program-rates-statistics/market-basket-research-and-information. 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. In the FY 2025 
IPPS/LTCH PPS proposed rule (89 FR 36204), the proposed productivity 
adjustment for FY 2025 was 0.4 percentage point.
    Therefore, we propose that the productivity adjustment for the CY 
2025 OPPS/ASC would be 0.4 percentage point. We also propose that if 
more recent data subsequently became available after the publication of 
the CY 2025 OPPS/ASC proposed rule (for example, a more recent estimate 
of the market basket percentage increase and/or the productivity 
adjustment), we would use such updated data, if appropriate, to 
determine the CY 2025 hospital inpatient market basket update and the 
productivity adjustment, which are components in calculating the OPD 
fee schedule increase factor under sections 1833(t)(3)(C)(iv) and 
1833(t)(3)(F) of the Act.
    We note that section 1833(t)(3)(F) of the Act provides that 
application of this subparagraph may result in the OPD fee schedule 
increase factor under section 1833(t)(3)(C)(iv) of the Act being less 
than 0.0 percent for a year and may result in OPPS payment rates being 
less than rates for the preceding year. As described in further detail 
below, we propose for CY 2025 an OPD fee schedule increase factor of 
2.6 percent for the CY 2025 OPPS/ASC (which is the proposed estimate of 
the hospital inpatient market basket percentage increase of 3.0 
percent, less the proposed 0.4 percentage point productivity 
adjustment).
3. Other Conversion Factor Adjustments
    To set the OPPS conversion factor for 2025, we propose to increase 
the CY 2024 conversion factor of $87.382 by 2.6 percent. In accordance 
with section 1833(t)(9)(B) of the Act, we propose further to adjust the 
conversion factor for CY 2025 to ensure that any revisions made to the 
wage index and rural adjustment are made on a budget neutral basis. We 
propose to calculate an overall budget neutrality factor of 1.0026 for 
wage index changes by comparing proposed total estimated payments from 
our simulation model using the proposed FY 2025 IPPS wage indexes to 
those payments using the FY 2024 IPPS wage indexes, as adopted on a 
calendar year basis for the OPPS. We further propose to calculate an 
additional budget neutrality factor of 0.9982 to account for our 
proposed policy to cap wage index reductions for

[[Page 59224]]

hospitals at 5 percent on an annual basis.
    For CY 2025, we propose to maintain the current rural adjustment 
policy, as discussed in section II.E of this proposed rule. Therefore, 
the proposed budget neutrality factor for the rural adjustment is 
1.0000.
    We propose to calculate a CY 2025 budget neutrality adjustment 
factor for the cancer hospital payment adjustment by transitioning from 
the target PCR of 0.89 we finalized for CYs 2020 through 2023 (which 
included the 1.0 percentage point reduction as required by section 
16002(b) of the 21st Century Cures Act) and incrementally reducing the 
target PCR by an additional 1.0 percentage point for each calendar 
year, beginning with CY 2024, until the target PCR equals the PCR of 
non-cancer hospitals calculated using the most recent data minus 1.0 
percentage point as required by section 16002(b) of the 21st Century 
Cures Act. Therefore, we propose to apply a budget neutrality 
adjustment factor of 1.0006 to the conversion factor for the cancer 
hospital payment adjustment. In accordance with section 1833(t)(18)(C) 
of the Act, as added by section 16002(b) of the 21st Century Cures Act 
(Pub. L. 114-255), we reduce the target PCR by 0.01, which brings the 
proposed target PCR to 0.87. This is 0.02 less than the target PCR of 
0.89 from CY 2021 through CY 2023, which was held at the pre-PHE 
target.
    For this proposed rule, we estimated that proposed pass-through 
spending for drugs, biologicals, and devices for CY 2025 would equal 
approximately $625 million, which represents 0.71 percent of total 
projected CY 2025 OPPS spending. Therefore, we stated that the proposed 
conversion factor would be adjusted by the difference between the 0.27 
percent estimate of pass-through spending for CY 2024 and the 0.71 
percent estimate of proposed pass-through spending for CY 2025, 
resulting in a proposed decrease to the conversion factor for CY 2025 
of 0.44 percent.
    We propose that estimated payments for outliers would remain at 1.0 
percent of total OPPS payments for CY 2025. We estimated for this 
proposed rule that outlier payments would be approximately 0.85 percent 
of total OPPS payments in CY 2024; the 1.00 percent for proposed 
outlier payments in CY 2025 would constitute a 0.15 percent increase in 
payment in CY 2025 relative to CY 2024.
    For 2025, we propose to use a conversion factor of $87.382 in the 
calculation of the national unadjusted payment rates for those items 
and services for which payment rates are calculated using geometric 
mean costs; that is, the proposed OPD fee schedule increase factor of 
2.6 percent for CY 2025, the required proposed wage index budget 
neutrality adjustment of approximately 1.0026, the proposed 5 percent 
annual cap for individual hospital wage index reductions adjustment of 
approximately 0.9982, the proposed cancer hospital payment adjustment 
of 1.0006, and the proposed adjustment of a decrease of 0.44 percentage 
point of projected OPPS spending for the difference in pass-through 
spending, which resulted in a proposed conversion factor for CY 2025 of 
$89.379.
    For CY 2025, we also propose that hospitals that fail to meet the 
reporting requirements of the Hospital OQR Program would continue to be 
subject to a further reduction of 2.0 percentage points to the OPD fee 
schedule increase factor. For hospitals that fail to meet the 
requirements of the Hospital OQR Program, we propose to make all other 
adjustments discussed above, but use a reduced OPD fee schedule update 
factor of 0.6 percent (that is, the proposed OPD fee schedule increase 
factor of 2.6 percent further reduced by 2.0 percentage points). This 
would result in a proposed reduced conversion factor for CY 2025 of 
$87.636 for hospitals that fail to meet the Hospital OQR Program 
requirements (a difference of -1.743 in the conversion factor relative 
to hospitals that met the requirements). For further discussion of the 
Hospital OQR Program, we refer readers to section XV of this proposed 
rule. For 2025, we propose to use a reduced conversion factor of 
$87.636 in the calculation of payments for hospitals that fail to meet 
the Hospital OQR Program requirements (a difference of -1.743 in the 
conversion factor relative to hospitals that met the requirements).
    The calculations we performed to determine the CY 2025 proposed 
conversion factor are shown in Table 6.
BILLING CODE 4120-01-P

[[Page 59225]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.010


[[Page 59226]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.011

BILLING CODE 4120-01-C

C. Proposed Wage Index Changes

    Section 1833(t)(2)(D) of the Act requires the Secretary to 
determine a wage adjustment factor to adjust the portion of payment and 
coinsurance attributable to labor-related costs for relative 
differences in labor and labor-related costs across geographic regions 
in a budget neutral manner (codified at 42 CFR 419.43(a)). This portion 
of the OPPS payment rate is called the OPPS labor-related share. Budget 
neutrality is discussed in section II.A.5 of this proposed rule.
    The OPPS labor-related share is 60 percent of the national OPPS 
payment. This labor-related share is based on a regression analysis 
that determined that, for all hospitals, approximately 60 percent of 
the costs of services paid under the OPPS were attributable to wage 
costs. We confirmed that this labor-related share for outpatient 
services is appropriate during our regression analysis for the payment 
adjustment for rural hospitals in the CY 2006 OPPS final rule with 
comment period (70 FR 68553). We propose to continue this policy for 
the CY 2025 OPPS/ASC. We refer readers to section II.C of this proposed 
rule for a description and an example of how the wage index for a 
particular hospital is used to determine payment for the hospital.
    As discussed in the claims accounting narrative included with the 
supporting documentation for this proposed rule (which is available via 
the internet on the CMS website (https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices)), 
for estimating APC costs, we would standardize 60 percent of estimated 
claims costs for geographic area wage variation using the same FY 2025 
pre-reclassified wage index that we use under the IPPS to standardize 
costs. This standardization process removes the effects of differences 
in area wage levels from the determination of a national unadjusted 
OPPS payment rate and copayment amount.
    Under 42 CFR 419.41(c)(1) and 419.43(c) (published in the OPPS 
April 7, 2000, final rule with comment period (65 FR 18495 and 18545)), 
the OPPS adopted the final fiscal year IPPS post-reclassified wage 
index as the calendar year wage index for adjusting the OPPS standard 
payment amounts for labor market differences. Therefore, the wage index 
that applies to a particular acute care, short-stay hospital under the 
IPPS also applies to that hospital under the OPPS. As initially 
explained in the September 8, 1998, OPPS/ASC proposed rule (63 FR 
47576), we believe that using the IPPS wage index as the source of an 
adjustment factor for the OPPS is reasonable and logical, given the 
inseparable, subordinate status of the HOPD within the hospital 
overall. In accordance with section 1886(d)(3)(E) of the Act, the IPPS 
wage index is updated annually.
    The Affordable Care Act contained several provisions affecting the 
wage index. These provisions were discussed in the CY 2012 OPPS/ASC 
final rule with comment period (76 FR 74191). Section 10324 of the 
Affordable Care Act added section 1886(d)(3)(E)(iii)(II) to the Act, 
which defines a frontier State and amended section 1833(t) of the Act 
to add paragraph (19), which requires a frontier State wage index floor 
of 1.00 in certain cases, and states that the frontier State floor 
shall not be applied in a budget neutral manner. We codified these 
requirements at Sec.  419.43(c)(2) and (3) of our regulations. For CY 
2025 we propose to implement this provision in the same manner as we 
have since CY 2011. Under this policy, the frontier State hospitals 
would receive a wage index of 1.00 if the otherwise applicable wage 
index (including reclassification, the rural floor, and rural floor 
budget neutrality) is less than 1.00. Because the HOPD receives a wage 
index based on the geographic location of the specific inpatient 
hospital with which it is associated, the frontier State wage index 
adjustment applicable for the inpatient hospital also would apply for 
any associated HOPD. We refer readers to the FY 2011 through FY 2024 
IPPS/LTCH PPS final rules for discussions regarding this provision, 
including our methodology for identifying which areas meet the 
definition of ``frontier States'' as provided for in section 
1886(d)(3)(E)(iii)(II) of the Act: for FY 2011, 75 FR 50160 through 
50161; for FY 2012, 76 FR 51793, 51795, and 51825; for FY 2013, 77 FR 
53369 and 53370; for FY 2014, 78 FR 50590 and

[[Page 59227]]

50591; for FY 2015, 79 FR 49971; for FY 2016, 80 FR 49498; for FY 2017, 
81 FR 56922; for FY 2018, 82 FR 38142; for FY 2019, 83 FR 41380; for FY 
2020, 84 FR 42312; for FY 2021, 85 FR 58765; for FY 2022, 86 FR 45178; 
FY 2023, 87 FR 49006; and for FY 2024, 88 FR 58977.
    In addition to the changes required by the Affordable Care Act, we 
note that the proposed FY 2025 IPPS wage indexes continue to reflect a 
number of adjustments implemented in past years, including, but not 
limited to, reclassification of hospitals to different geographic 
areas, the rural floor provisions, the imputed floor wage index 
adjustment in all-urban states, an adjustment for occupational mix, an 
adjustment to the wage index based on commuting patterns of employees 
(the out-migration adjustment), and the permanent 5-percent cap on any 
decrease to a hospital's wage index from its wage index in a prior FY. 
Beginning with FY 2024, we 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 (88 
FR 58971 through 58973). We also propose to continue the low wage index 
hospital policy, under which we increase the wage index for hospitals 
with a wage index value below the 25th percentile wage index value for 
a fiscal year by half the difference between the otherwise applicable 
final wage index value for a year for that hospital and the 25th 
percentile wage index value for that year across all hospitals. We 
refer readers to the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36181 
through 36186) for a detailed discussion of all proposed changes to the 
FY 2025 IPPS wage indexes.
    We note that in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49018 
through 49021), we finalized a permanent approach to smooth year-to-
year decreases in hospitals' wage indexes. Specifically, for FY 2023 
and subsequent years, 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. That is, a hospital's wage 
index for FY 2025 would not be less than 95 percent of its final wage 
index for FY 2024. Except for newly opened hospitals, we apply the cap 
for a fiscal year using the final wage index applicable to the hospital 
on the last day of the prior fiscal year. A newly opened hospital would 
be paid the wage index for the area in which it is geographically 
located for its first full or partial fiscal year (subject to any 
reclassification), and it would not receive a cap for that first year, 
because it would not have been assigned a wage index in the prior year 
(in accordance with 42 CFR 419.41(c)(1) and 419.43(c), as noted 
previously).
    We delineate hospital labor market areas based on Core-Based 
Statistical Areas (CBSAs) established by the Office of Management and 
Budget (OMB). As discussed in the FY 2025 IPPS/LTCH PPS proposed rule 
(89 FR 36139 through 36174), OMB issued revisions to the current labor 
market area delineations on July 21, 2023, that included a number of 
significant changes such as new CBSAs, urban counties that become 
rural, rural counties that become urban, and existing CBSAs that are 
split apart (OMB Bulletin 23-01). This bulletin can be found at: 
https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf. The proposed changes to the IPPS wage index based on the newest 
CBSA delineations are available in the FY 2025 IPPS/LTCH PPS proposed 
rule. We propose that corresponding changes would be adopted in the 
OPPS, which uses the IPPS wage index, based on the new OMB delineations 
in this CY 2025 OPPS/ASC proposed rule, consistent with any proposals 
in the FY 2025 IPPS/LTCH PPS proposed rule. We believe that using the 
revised delineations based on OMB Bulletin No. 23-01 will increase the 
integrity of the OPPS wage index system by creating a more accurate 
representation of current geographic variations in wage levels. We 
refer readers to proposed changes based on the new OMB delineations in 
the FY 2025 IPPS/LTCH proposed rule at 89 FR 36139 through 36174, which 
includes a discussion of the effects of implementation of the proposal 
to adopt the revised OMB labor market area delineations on reclassified 
hospitals.
    CBSAs are made up of one or more constituent counties. Each CBSA 
and constituent county has its own unique identifying codes. The FY 
2018 IPPS/LTCH PPS final rule (82 FR 38130) discussed the two different 
lists of codes to identify counties: Social Security Administration 
(SSA) codes and Federal Information Processing Standard (FIPS) codes. 
Historically, CMS listed and used SSA and FIPS county codes to identify 
and crosswalk counties to CBSA codes for purposes of the IPPS and OPPS 
wage indexes. However, the SSA county codes are no longer being 
maintained and updated, although the FIPS codes continue to be 
maintained by the U.S. Census Bureau. The Census Bureau's most current 
statistical area information is derived from ongoing census data 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/geo/reference/county-changes.html (which, as of May 6, 
2019, migrated to: https://www.census.gov/programs-surveys/geography.html). In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38130), 
for purposes of cross walking counties to CBSAs for the IPPS wage 
index, we finalized our proposal to discontinue the use of the SSA 
county codes and begin using only the FIPS county codes. Similarly, for 
the purposes of cross walking counties to CBSAs for the OPPS wage 
index, in the CY 2018 OPPS/ASC final rule with comment period (82 FR 
59260), we finalized our proposal to discontinue the use of SSA county 
codes and begin using only the FIPS county codes. For CY 2025, under 
the OPPS, we are continuing to use only the FIPS county codes for 
purposes of cross walking counties to CBSAs.
    We propose to use the FY 2025 IPPS post-reclassified wage index for 
urban and rural areas as the wage index for the OPPS to determine the 
wage adjustments for both the OPPS payment rate and the copayment rate 
for CY 2025. We note that the proposed FY 2025 IPPS wage indexes 
reflect several proposed changes as a result of the revised OMB 
delineations, including proposed policies to accommodate changes in 
rural or urban status for existing counties, as well as addition or 
removal of certain individual CBSAs compared to the previous 
delineations. Therefore, any policies and adjustments that are 
finalized for the FY 2025 IPPS post-reclassified wage index would be 
reflected in the final CY 2025 OPPS wage index beginning on January 1, 
2025, if appropriate. We refer readers to the FY 2025 IPPS/LTCH PPS 
proposed rule (89 FR 36181 through 36186) and the proposed FY 2025 
hospital wage index files posted on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/fy-2025-ipps-proposed-rule-home-page. Regarding budget 
neutrality for the CY 2025 OPPS wage index, we refer readers to section 
II.C of this proposed rule. We continue to believe that using the IPPS 
post-reclassified wage index as the source of an adjustment factor for 
the OPPS is reasonable and logical, given the inseparable, subordinate 
status of the HOPD within the hospital overall.

[[Page 59228]]

    Hospitals that are paid under the OPPS, but not under the IPPS, do 
not have an assigned hospital wage index under the IPPS. Therefore, for 
non-IPPS hospitals paid under the OPPS, it is our longstanding policy 
to assign the wage index that would be applicable if the hospital was 
paid under the IPPS, based on its geographic location and any 
applicable wage index policies and adjustments. We propose to continue 
this policy for CY 2025. We refer readers to the FY 2025 IPPS/LTCH PPS 
proposed rule (89 FR 36181 through 36186) for a detailed discussion of 
the proposed changes to the FY 2025 IPPS wage indexes.
    It has been our longstanding policy to allow non-IPPS hospitals 
paid under the OPPS to qualify for the out-migration adjustment if they 
are located in a section 505 out-migration county (section 505 of the 
Medicare Prescription Drug, Improvement, and Modernization Act of 2003 
(MMA)) (Pub. L. 108-173). Applying this adjustment is consistent with 
our policy of adopting IPPS wage index policies for hospitals paid 
under the OPPS. We note that, because non-IPPS hospitals cannot 
reclassify, they are eligible for the out-migration wage index 
adjustment if they are located in a section 505 out-migration county. 
This is the same out-migration adjustment policy that would apply if 
the hospital were paid under the IPPS. For CY 2025, we propose to 
continue our policy of allowing non-IPPS hospitals paid under the OPPS 
to qualify for the outmigration adjustment if they are located in a 
section 505 out-migration county (section 505 of the MMA) (88 FR 49585 
and 49586). Furthermore, we propose that the wage index that would 
apply for CY 2025 to non-IPPS hospitals paid under the OPPS would 
continue to include the rural floor adjustment and any policies and 
adjustments applied to the IPPS wage index to address wage index 
disparities. In addition, we propose that the wage index that would 
apply to non-IPPS hospitals paid under the OPPS would include the 5-
percent cap on wage index decreases.
    For CMHCs, for CY 2025, we propose to continue to calculate the 
wage index by using the post-reclassification IPPS wage index based on 
the CBSA where the CMHC is located. Furthermore, we propose that the 
wage index that would apply to a CMHC for CY 2025 would continue to 
include the rural floor adjustment and any policies and adjustments 
applied to the IPPS wage index to address wage index disparities. In 
addition, the wage index that would apply to CMHCs would include the 5-
percent cap on wage index decreases. Also, we propose that the wage 
index that would apply to CMHCs would not include the outmigration 
adjustment because that adjustment only applies to hospitals.
    Table 4A associated with the FY 2025 IPPS/LTCH PPS proposed rule 
(available via the internet on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/fy-2025-ipps-proposed-rule-home-page) identifies counties that would be 
eligible for the out-migration adjustment. Table 2 associated with the 
FY 2025 IPPS/LTCH PPS proposed rule (available for download via the 
website noted previously) identifies IPPS hospitals that would receive 
the out-migration adjustment for FY 2025. We are including the 
outmigration adjustment information from Table 2 associated with the FY 
2025 IPPS/LTCH PPS proposed rule as Addendum L to this proposed rule, 
with the addition of non-IPPS hospitals that would receive the section 
505 outmigration adjustment under this proposed rule Addendum L is 
available via the internet on the CMS website. We refer readers to the 
CMS website for the OPPS at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices. At 
this link, readers will find a link to the proposed FY 2025 IPPS wage 
index tables and Addendum L.

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

    In addition to using CCRs to estimate costs from charges on claims 
for ratesetting, we use overall hospital-specific CCRs calculated from 
the hospital's most recent cost report (OMB control number: 0938-0050 
for Form CMS-2552-10) to determine outlier payments, payments for pass-
through devices, and monthly interim transitional corridor payments 
under the OPPS during the PPS year. For certain hospitals, under the 
regulations at 42 CFR 419.43(d)(5)(iii), we use the statewide average 
default CCRs to determine the payments mentioned earlier if it is not 
possible to determine an accurate CCR for a hospital in certain 
circumstances. This includes hospitals that are new, hospitals that 
have not accepted assignment of an existing hospital's provider 
agreement, and hospitals that have not yet submitted a cost report. We 
also use the statewide average default CCRs to determine payments for 
hospitals whose CCR falls outside the predetermined ceiling threshold 
for a valid CCR or for hospitals in which the most recent cost report 
reflects an all-inclusive rate status (Medicare Claims Processing 
Manual (Pub. L. 100-04), Chapter 4, Section 10.11).
    We discussed our policy for using default CCRs, including setting 
the ceiling threshold for a valid CCR, in the CY 2009 OPPS/ASC final 
rule with comment period (73 FR 68594 through 68599) in the context of 
our adoption of an outlier reconciliation policy for cost reports 
beginning on or after January 1, 2009. For details on our process for 
calculating the statewide average CCRs, we refer readers to the Claims 
Accounting Narrative for this CY 2025 OPPS/ASC proposed rule, which is 
posted on our website. We propose to calculate the default ratios for 
CY 2025 using the most recent cost report data.
    We no longer publish a table in the Federal Register containing the 
statewide average CCRs in the annual OPPS proposed rule and final rule 
with comment period. These CCRs with the upper limit will be available 
for download with each OPPS CY proposed rule and final rule on the CMS 
website. We refer readers to our website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html; click on the link on 
the left of the page titled ``Annual Policy Files'' and then select the 
relevant year to download the statewide CCRs and upper limit in the 
downloads section of the web page.

E. Proposed Adjustment for Rural Sole Community Hospitals (SCHs) and 
Essential Access Community Hospitals (EACHs) Under Section 
1833(t)(13)(B) of the Act for CY 2025

    In the CY 2006 OPPS final rule with comment period (70 FR 68556), 
we finalized a payment increase for rural sole community hospitals 
(SCHs) of 7.1 percent for all services and procedures paid under the 
OPPS, excluding separately payable drugs and biologicals, brachytherapy 
sources, items paid at charges reduced to costs, and devices paid under 
the pass-through payment policy, in accordance with section 
1833(t)(13)(B) of the Act, as added by section 411 of the Medicare 
Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) 
(Pub. L. 108-173). Section 1833(t)(13) of the Act provides the 
Secretary the authority to make an adjustment to OPPS payments for 
rural hospitals, effective January 1, 2006, if justified by a study of 
the difference in costs by APC between hospitals in rural areas and 
hospitals in urban areas. Our analysis showed a difference in costs for 
rural SCHs. Therefore, for the CY 2006 OPPS,

[[Page 59229]]

we finalized a payment adjustment for rural SCHs of 7.1 percent for all 
services and procedures paid under the OPPS, excluding separately 
payable drugs and biologicals, brachytherapy sources, items paid at 
charges reduced to costs, and devices paid under the pass-through 
payment policy, in accordance with section 1833(t)(13)(B) of the Act.
    In the CY 2007 OPPS/ASC final rule with comment period (71 FR 68010 
and 68227), for purposes of receiving this rural adjustment, we revised 
our regulations at Sec.  419.43(g) to clarify that essential access 
community hospitals (EACHs) are also eligible to receive the rural SCH 
adjustment, assuming these entities otherwise meet the rural adjustment 
criteria. Currently, two hospitals are classified as EACHs, and as of 
CY 1998, under section 4201(c) of the Balanced Budget Act of 1997 (BBA) 
(Pub. L. 105-33), a hospital can no longer become newly classified as 
an EACH.
    This adjustment for rural SCHs is budget neutral and applied before 
calculating outlier payments and copayments. We stated in the CY 2006 
OPPS final rule with comment period (70 FR 68560) that we would not 
reestablish the adjustment amount on an annual basis, but we may review 
the adjustment in the future and, if appropriate, would revise the 
adjustment. We provided the same 7.1 percent adjustment to rural SCHs, 
including EACHs, again in CYs 2008 through 2024.
    For CY 2025, we propose to continue the current policy of a 7.1 
percent payment adjustment for rural SCHs, including EACHs, for all 
services and procedures paid under the OPPS, excluding separately 
payable drugs and biologicals, brachytherapy sources, items paid at 
charges reduced to costs, and devices paid under the pass-through 
payment policy, applied in a budget neutral manner.

F. Proposed Payment Adjustment for Certain Cancer Hospitals for CY 2025

1. Background
    Since the inception of the OPPS, which was authorized by the 
Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33), Medicare has paid 
the 11 hospitals that meet the criteria for cancer hospitals identified 
in section 1886(d)(1)(B)(v) of the Act under the OPPS for covered 
outpatient department services. These cancer hospitals are exempted 
from payment under the IPPS. With the Medicare, Medicaid and SCHIP 
Balanced Budget Refinement Act of 1999 (Pub. L. 106-113), the Congress 
added section 1833(t)(7), ``Transitional Adjustment to Limit Decline in 
Payment,'' to the Act, which requires the Secretary to determine OPPS 
payments to cancer and children's hospitals based on their pre-BBA 
payment amount (these hospitals are often referred to under this policy 
as ``held harmless'' and their payments are often referred to as ``hold 
harmless'' payments).
    As required under section 1833(t)(7)(D)(ii) of the Act, a cancer 
hospital receives the full amount of the difference between payments 
for covered outpatient department services under the OPPS and a ``pre-
BBA amount.'' That is, cancer hospitals are permanently held harmless 
to their ``pre-BBA amount,'' and they receive transitional outpatient 
payments (TOPs) or hold harmless payments to ensure that they do not 
receive a payment that is lower in amount under the OPPS than the 
payment amount they would have received before implementation of the 
OPPS, as set forth in section 1833(t)(7)(F) of the Act. The ``pre-BBA 
amount'' is the product of the hospital's reasonable costs for covered 
outpatient department services occurring in the current year and the 
base payment-to-cost ratio (PCR) for the hospital defined in section 
1833(t)(7)(F)(ii) of the Act. The ``pre-BBA amount'' and the 
determination of the base PCR are defined at Sec.  419.70(f). TOPs are 
calculated on Worksheet E, Part B, of the Hospital Cost Report or the 
Hospital Health Care Complex Cost Report (Form CMS-2552-96 or Form CMS-
2552-10 (OMB NO: 0938-0050), respectively), as applicable each year. 
Section 1833(t)(7)(I) of the Act exempts TOPs from budget neutrality 
calculations.
    Section 3138 of the Affordable Care Act (Pub. L. 111-148) amended 
section 1833(t) of the Act by adding a new paragraph (18), which 
instructs the Secretary to conduct a study to determine if, under the 
OPPS, outpatient costs incurred by cancer hospitals described in 
section 1886(d)(1)(B)(v) of the Act with respect to APC groups exceed 
outpatient costs incurred by other hospitals furnishing services under 
section 1833(t) of the Act, as determined appropriate by the Secretary. 
Section 1833(t)(18)(A) of the Act requires the Secretary to take into 
consideration the cost of drugs and biologicals incurred by cancer 
hospitals and other hospitals. Section 1833(t)(18)(B) of the Act 
provides that, if the Secretary determines that cancer hospitals' costs 
are higher than those of other hospitals, the Secretary shall provide 
an appropriate adjustment under section 1833(t)(2)(E) of the Act to 
reflect these higher costs. In 2011, after conducting the study 
required by section 1833(t)(18)(A) of the Act, we determined that 
outpatient costs incurred by the 11 specified cancer hospitals were 
greater than the costs incurred by other OPPS hospitals. For a complete 
discussion regarding the cancer hospital cost study, we refer readers 
to the CY 2012 OPPS/ASC final rule with comment period (76 FR 74200 and 
74201).
    Based on these findings, we finalized a policy to provide a payment 
adjustment to the 11 specified cancer hospitals that reflects their 
higher outpatient costs, as discussed in the CY 2012 OPPS/ASC final 
rule with comment period (76 FR 74202 through 74206). Specifically, we 
adopted a policy to provide additional payments to the cancer hospitals 
so that each cancer hospital's final PCR for services provided in a 
given calendar year is equal to the weighted average PCR (which we 
refer to as the ``target PCR'') for other hospitals paid under the 
OPPS. The target PCR is set in advance of the calendar year and is 
calculated using the most recently submitted or settled cost report 
data that are available at the time of final rulemaking for the 
calendar year. The amount of the payment adjustment is made on an 
aggregate basis at cost report settlement. We note that the changes 
made by section 1833(t)(18) of the Act do not affect the existing 
statutory provisions that provide for TOPs for cancer hospitals. The 
TOPs are assessed, as usual, after all payments, including the cancer 
hospital payment adjustment, have been made for a cost reporting 
period. Table 7 displays the target PCR for purposes of the cancer 
hospital adjustment for CY 2012 through CY 2024.

[[Page 59230]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.012

2. Proposed Policy for CY 2025
    Section 16002(b) of the 21st Century Cures Act (Pub. L. 114-255) 
amended section 1833(t)(18) of the Act by adding subparagraph (C), 
which requires that in applying Sec.  419.43(i) (that is, the payment 
adjustment for certain cancer hospitals) for services furnished on or 
after January 1, 2018, the target PCR adjustment be reduced by 1.0 
percentage point less than what would otherwise apply. Section 16002(b) 
also provides that, in addition to the percentage reduction, the 
Secretary may consider making an additional percentage point reduction 
to the target PCR that takes into account payment rates for applicable 
items and services described under section 1833(t)(21)(C) of the Act 
for hospitals that are not cancer hospitals described under section 
1886(d)(1)(B)(v) of the Act. Further, in making any budget neutrality 
adjustment under section 1833(t) of the Act, the Secretary shall not 
take into account the reduced expenditures that result from application 
of section 1833(t)(18)(C) of the Act.
    We propose to provide additional payments to the 11 specified 
cancer hospitals so that each cancer hospital's proposed PCR is equal 
to the weighted average PCR (or ``target PCR'') for the other OPPS 
hospitals, generally using the most recent submitted or settled cost 
report data that are available, reduced by 1.0 percentage point, to 
comply with section 16002(b) of the 21st Century Cures Act, and 
adjusted by the proposed post-Public Health Emergency (PHE) transition 
as described later in this section. We are not proposing an additional 
reduction beyond the 1.0 percentage point reduction required by section 
16002(b) of the 21st Century Cures Act for CY 2025.
    To calculate the proposed CY 2025 target PCR, we would use the same 
extract of cost report data from HCRIS used to estimate costs for the 
CY 2025 OPPS which, in most cases, would be the most recently available 
hospital cost reports. Using these cost report data, we included data 
from Worksheet E, Part B, for each hospital, using data from each 
hospital's most recent cost report, whether as submitted or settled.
    We then limited the dataset to the hospitals with CY 2023 claims 
data that we used to model the impact of the proposed CY 2025 APC 
relative payment weights (3,448 hospitals) because it is appropriate to 
use the same set of hospitals that are being used to calibrate the 
modeled CY 2025 OPPS. The cost report data for the hospitals in this 
dataset were from cost report periods with fiscal year ends ranging 
from 2019 to 2023; however, the cost reporting periods were 
predominantly from fiscal years ending in 2022 and 2023. We then 
removed the cost report data of the 49 hospitals located in Puerto Rico 
from our dataset because we did not believe their cost structure 
reflected the costs of most hospitals paid under the OPPS, and, 
therefore, their inclusion may bias the calculation of hospital-
weighted statistics. We also removed the cost report data of 16 
hospitals because these hospitals had cost report data that were not 
complete (missing aggregate OPPS payments, missing aggregate cost data, 
or missing both), so that all cost reports in the study would have both 
the payment and cost data necessary to calculate a PCR for each 
hospital, leading to a proposed analytic file of 3,421 hospitals with 
cost report data.
    Using this smaller dataset of cost report data, we estimated that, 
on average, the OPPS payments to other hospitals furnishing services 
under the OPPS were approximately 87 percent of reasonable cost 
(weighted average PCR of 0.87). Therefore, after applying the 1.0 
percentage point reduction, as required by section 16002(b) of the 21st 
Century Cures Act, using our standard process the payment amount 
associated with the cancer hospital payment adjustment to be determined 
at cost report settlement would be the additional payment needed to 
result in a target PCR equal to 0.86 for each cancer hospital.
    In the CY 2024 OPPS/ASC final rule with comment period (88 FR 81586 
through 81589), we explained that we believe we should begin to take 
into consideration the PCR of non-cancer hospitals based on the most 
recently available data for calculating the target PCR. We noted that 
we do not know if the changes in the data that have yielded lower PCRs 
for non-cancer hospitals are likely to continue in future years or if, 
when data from after the PHE is available, we will see the target PCR 
increase toward its historical norm. Therefore, in the CY 2024 OPPS/ASC 
final rule with comment period, we finalized our proposal to transition 
from the target PCR of 0.89 we finalized for

[[Page 59231]]

CYs 2020 through 2024 (which included the 1.0 percentage point 
reduction as required by section 16002(b) of the 21st Century Cures 
Act) and incrementally reduce the target PCR by an additional 1.0 
percentage point for each calendar year, beginning with CY 2024, until 
the target PCR equals the PCR of non-cancer hospitals calculated using 
the most recent data minus 1.0 percentage point as required by section 
16002(b) of the 21st Century Cures Act. Therefore, utilizing this 
methodology for the CY 2025 OPPS/ASC proposed rule, since the target 
PCR that would otherwise apply under our standard process would be a 
target PCR of 0.86, we propose to reduce the CY 2024 target PCR of 0.88 
by 1 percentage point and propose a cancer hospital target PCR of 0.87 
for CY 2025.
    Table 8 shows the estimated percentage increase in OPPS payments to 
each cancer hospital for CY 2025, due to the cancer hospital payment 
adjustment policy. The actual, final amount of the CY 2025 cancer 
hospital payment adjustment for each cancer hospital will be determined 
at cost report settlement and will depend on each hospital's CY 2025 
payments and costs from the settled CY 2025 cost report. We note that 
the requirements contained in section 1833(t)(18) of the Act do not 
affect the existing statutory provisions that provide for TOPs for 
cancer hospitals. The TOPs will be assessed, as usual, after all 
payments, including the cancer hospital payment adjustment, have been 
made for a cost reporting period.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP22JY24.013

BILLING CODE 4120-01-C

G. Proposed Hospital Outpatient Outlier Payments

1. Background
    The OPPS provides outlier payments to hospitals to help mitigate 
the financial risk associated with high-cost and complex procedures, 
where a very costly service could present a hospital with significant 
financial loss. As explained in the CY 2015 OPPS/ASC final rule with 
comment period (79 FR 66832 through 66834), we set our projected target 
for aggregate outlier payments at 1.0 percent of the estimated 
aggregate total payments under the OPPS for the prospective year. 
Outlier payments are provided on a service-by-service basis when the 
cost of a service exceeds the APC payment amount multiplier threshold 
(the APC payment amount multiplied by a certain amount) as well as the 
APC payment amount plus a fixed-dollar amount threshold (the APC 
payment plus a certain dollar amount). In CY 2024, the outlier 
threshold was met when the hospital's cost of furnishing a service 
exceeded 1.75 times the APC payment amount (the multiplier threshold) 
and exceeded the APC payment amount plus $7,750 (the fixed-dollar 
amount threshold) (88 FR 81589 through 81591). If the hospital's cost 
of furnishing a service exceeds both the multiplier threshold and the 
fixed-dollar threshold, the outlier payment is calculated as 50 percent 
of the amount by which the hospital's cost of furnishing the service 
exceeds 1.75 times the APC payment amount. Beginning with CY 2009 
payments, outlier payments are subject to a reconciliation process 
similar to the IPPS outlier reconciliation process for cost reports, as 
discussed in the CY 2009 OPPS/ASC final rule with

[[Page 59232]]

comment period (73 FR 68594 through 68599).
    It has been our policy to report the actual amount of outlier 
payments as a percent of total spending in the claims being used to 
model the OPPS. Our estimate of total outlier payments as a percent of 
total CY 2023 OPPS payments, using CY 2023 claims available for this CY 
2025 OPPS proposed rule, is approximately 0.68 percent. Therefore, for 
CY 2023, we estimate that we did not meet the outlier target by 0.32 
percent of total aggregated OPPS payments.
    For this proposed rule, using CY 2023 claims data and CY 2024 
payment rates, we estimate that the aggregate outlier payments for CY 
2024 would be approximately 0.85 percent of the total CY 2024 OPPS 
payments. We provide estimated CY 2025 outlier payments for hospitals 
and CMHCs with claims included in the claims data that we used to model 
impacts in the Hospital-Specific Impacts--Provider-Specific Data file 
on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.
2. Outlier Calculation for CY 2025
    For CY 2025, we propose to continue our policy of estimating 
outlier payments to be 1.0 percent of the estimated aggregate total 
payments under the OPPS. We propose that a portion of that 1.0 percent, 
an amount equal to less than 0.01 percent of outlier payments (or 
0.0001 percent of total OPPS payments), would be allocated to CMHCs for 
partial hospitalization program (PHP) and intensive outpatient program 
(IOP) outlier payments. This is the amount of estimated outlier 
payments that would result from the proposed CMHC outlier threshold as 
a proportion of total estimated OPPS outlier payments. We propose to 
continue our outlier policy that if a CMHC's cost for PHP and IOP 
services exceeds 3.40 times the APC payment rate, the outlier payment 
would be calculated as 50 percent of the amount by which the cost 
exceeds 3.40 times the proposed APC payment rate.
    For further discussion of CMHC outlier payments, we refer readers 
to section VIII.C of this proposed rule.
    To ensure that the estimated CY 2025 aggregate outlier payments 
would equal 1.0 percent of estimated aggregate total payments under the 
OPPS, we propose that the hospital outlier threshold be set so that 
outlier payments would be triggered when a hospital's cost of 
furnishing a service exceeds 1.75 times the APC payment amount and 
exceeds the APC payment amount plus the fixed-dollar threshold.
    We calculated the proposed fixed-dollar threshold using the 
standard methodology most recently used for CY 2024 (88 FR 81589 
through 81591). For purposes of estimating outlier payments for CY 
2025, we use the hospital-specific overall ancillary CCRs available in 
the April 2024 update to the Outpatient Provider-Specific File (OPSF). 
The OPSF contains provider-specific data, such as the most current 
CCRs, which are maintained by the MACs and used by the OPPS Pricer to 
pay claims. The claims that we generally use to model each OPPS update 
lag by 2 years.
    In order to estimate the CY 2025 hospital outlier payments, we 
inflate the charges on the CY 2023 claims using the same proposed 
charge inflation factor of 1.084555 that we used to estimate the IPPS 
fixed-loss cost threshold for the FY 2025 IPPS/LTCH PPS proposed rule 
(89 FR 36572). We used an inflation factor of 1.04142 to estimate CY 
2024 charges from the CY 2023 charges reported on CY 2023 claims before 
applying CY 2024 CCRs to estimate the percent of outliers paid in CY 
2024. The proposed methodology for determining these charge inflation 
factors is discussed in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 
36572). As we stated in the CY 2005 OPPS final rule with comment period 
(69 FR 65844 through 65846), we believe that the use of the same charge 
inflation factors is appropriate for the OPPS because, with the 
exception of the inpatient routine service cost centers, hospitals use 
the same ancillary and cost centers to capture costs and charges for 
inpatient and outpatient services.
    As noted in the CY 2007 OPPS/ASC final rule with comment period (71 
FR 68011), we are concerned that we could systematically overestimate 
the OPPS hospital outlier threshold if we did not apply a CCR inflation 
adjustment factor. Therefore, we propose to apply the same CCR 
adjustment factor that we proposed to apply for the FY 2025 IPPS 
outlier calculation to the CCRs used to simulate the proposed CY 2025 
OPPS outlier payments to determine the fixed-dollar threshold. 
Specifically, for CY 2025, we propose to apply an adjustment factor of 
1.03331 to the CCRs that were in the April 2024 OPSF to trend them 
forward from CY 2024 to CY 2025. The methodology for calculating the 
proposed CCR adjustment factor is discussed in the FY 2025 IPPS/LTCH 
PPS proposed rule (89 FR 36572 through 36573).
    To model hospital outlier payments for the proposed rule, we 
applied the overall CCRs from the April 2024 OPSF after adjustment 
(using the proposed CCR inflation adjustment factor of 1.03331 to 
approximate CY 2025 CCRs) to charges on CY 2023 claims that were 
adjusted (using the proposed charge inflation factor of 1.084555 to 
approximate CY 2025 charges). We simulated aggregated CY 2023 hospital 
outlier payments using these costs for several different fixed-dollar 
thresholds, holding the 1.75 multiplier threshold constant and assuming 
that outlier payments would continue to be made at 50 percent of the 
amount by which the cost of furnishing the service would exceed 1.75 
times the APC payment amount, until the total outlier payments equaled 
1.0 percent of aggregated estimated total CY 2025 OPPS payments. We 
estimated that a proposed fixed-dollar threshold of $8,000, combined 
with the proposed multiplier threshold of 1.75 times the APC payment 
rate, would allocate 1.0 percent of aggregated total OPPS payments to 
outlier payments. For CMHCs, we propose that, if a CMHC's cost for 
partial hospitalization or intensive outpatient services exceeds 3.40 
times the APC payment rate, the outlier payment would be calculated as 
50 percent of the amount by which the cost exceeds 3.40 times the APC 
payment rate.
    Section 1833(t)(17)(A) of the Act, which applies to hospitals, as 
defined under section 1886(d)(1)(B) of the Act, requires that hospitals 
that fail to report data required for the quality measures selected by 
the Secretary, in the form and manner required by the Secretary under 
section 1833(t)(17)(B) of the Act, incur a 2.0 percentage point 
reduction to their OPD fee schedule increase factor; that is, the 
annual payment update factor. The application of a reduced OPD fee 
schedule increase factor results in reduced national unadjusted payment 
rates that would apply to certain outpatient items and services 
furnished by hospitals that are required to report outpatient quality 
data and that fail to meet the Hospital Outpatient Quality Reporting 
(OQR) Program requirements. For hospitals that fail to meet the 
Hospital OQR Program requirements, we proposed to continue the policy 
that we implemented in CY 2010 that the hospitals' costs would be 
compared to the reduced payments for purposes of outlier eligibility 
and payment calculation. For more information on the Hospital OQR 
Program, we refer readers to section XV of this proposed rule.

[[Page 59233]]

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

    The national unadjusted payment rate is the payment rate for most 
APCs before accounting for the wage index adjustment or any applicable 
adjustments. The basic methodology for determining prospective payment 
rates for HOPD services under the OPPS is set forth in existing 
regulations at 42 CFR part 419, subparts C and D. For this proposed 
rule, the payment rate for most services and procedures for which 
payment is made under the OPPS is the product of the conversion factor 
calculated in accordance with section II.B of this proposed rule and 
the relative payment weight described in section II.A of this proposed 
rule. The national unadjusted payment rate for most APCs contained in 
Addendum A to this proposed rule (which is available via the CMS 
website ``Hospital Outpatient Regulations and Notices'') and for most 
HCPCS codes to which separate payment under the OPPS has been assigned 
in Addendum B to this proposed rule (which is available on the CMS 
website link above) is calculated by multiplying the proposed CY 2025 
scaled weight for the APC by the CY 2025 conversion factor.
    We note that section 1833(t)(17) of the Act, which applies to 
hospitals, as defined under section 1886(d)(1)(B) of the Act, requires 
that hospitals that fail to submit data required to be submitted on 
quality measures selected by the Secretary, in the form and manner and 
at a time specified by the Secretary, incur a reduction of 2.0 
percentage points to their OPD fee schedule increase factor, that is, 
the annual payment update factor. The application of a reduced OPD fee 
schedule increase factor results in reduced national unadjusted payment 
rates that apply to certain outpatient items and services provided by 
hospitals that are required to report outpatient quality data and that 
fail to meet the Hospital OQR Program requirements. For further 
discussion of the payment reduction for hospitals that fail to meet the 
requirements of the Hospital OQR Program, we refer readers to section 
XIV of this proposed rule.
    Below we demonstrate the steps used to determine the APC payments 
that will be made in a CY under the OPPS to a hospital that fulfills 
the Hospital OQR Program requirements and to a hospital that fails to 
meet the Hospital OQR Program requirements for a service that has any 
of the following status indicator assignments: ``J1,'' ``J2,'' ``P,'' 
``Q1,'' ``Q2,'' ``Q3,'' ``Q4,'' ``R,'' ``S,'' ``T,'' ``U,'' or ``V'' 
(as defined in Addendum D1 to this proposed rule, which is available 
via the internet on the CMS website), in a circumstance in which the 
multiple procedure discount does not apply, the procedure is not 
bilateral, and conditionally packaged services (status indicator of 
``Q1'' and ``Q2'') qualify for separate payment. We note that, although 
blood and blood products with status indicator ``R'' and brachytherapy 
sources with status indicator ``U'' are not subject to wage adjustment, 
they are subject to reduced payments when a hospital fails to meet the 
Hospital OQR Program requirements.
    Individual providers interested in calculating the payment amount 
that they would receive for a specific service from the national 
unadjusted payment rates presented in Addenda A and B to this proposed 
rule (which are available via the internet on the CMS website) should 
follow the formulas presented in the following steps. For purposes of 
the payment calculations below, we refer to the national unadjusted 
payment rate for hospitals that meet the requirements of the Hospital 
OQR Program as the ``full'' national unadjusted payment rate. We refer 
to the national unadjusted payment rate for hospitals that fail to meet 
the requirements of the Hospital OQR Program as the ``reduced'' 
national unadjusted payment rate. The reduced national unadjusted 
payment rate is calculated by multiplying the reporting ratio of 0.9805 
times the ``full'' national unadjusted payment rate. The national 
unadjusted payment rate used in the calculations below is either the 
full national unadjusted payment rate or the reduced national 
unadjusted payment rate, depending on whether the hospital met its 
Hospital OQR Program requirements to receive the full CY 2025 OPPS fee 
schedule increase factor.
    Step 1. Calculate 60 percent (the labor-related portion) of the 
national unadjusted payment rate. Since the initial implementation of 
the OPPS, we have used 60 percent to represent our estimate of that 
portion of costs attributable, on average, to labor. We refer readers 
to the April 7, 2000 OPPS/ASC final rule with comment period (65 FR 
18496 through 18497) for a detailed discussion of how we derived this 
percentage. During our regression analysis for the payment adjustment 
for rural hospitals in the CY 2006 OPPS final rule with comment period 
(70 FR 68553), we confirmed that this labor-related share for hospital 
outpatient services is appropriate.
    The formula below is a mathematical representation of Step 1 and 
identifies the labor-related portion of a specific payment rate for a 
specific service.
    X is the labor-related portion of the national unadjusted payment 
rate.

X = .60 * (national unadjusted payment rate).

    Step 2. Determine the wage index area in which the hospital is 
located and identify the wage index level that applies to the specific 
hospital. The wage index values assigned to each area would reflect the 
geographic statistical areas (which are based upon OMB standards) to 
which hospitals are assigned for FY 2025 under the IPPS, 
reclassifications through the Medicare Geographic Classification Review 
Board (MGCRB), section 1886(d)(8)(B) ``Lugar'' hospitals, and 
reclassifications under section 1886(d)(8)(E) of the Act, as 
implemented in Sec.  412.103 of the regulations. We are continuing to 
apply for the CY 2025 OPPS wage index any adjustments for the FY 2025 
IPPS post-reclassified wage index, including, but not limited to, the 
rural floor adjustment, a wage index floor of 1.00 in frontier states, 
in accordance with section 10324 of the Affordable Care Act of 2010, 
and an adjustment to the wage index for certain low wage index 
hospitals. For further discussion of the wage index we are applying for 
the CY 2025 OPPS, we refer readers to section II.C of this proposed 
rule.
    Step 3. Adjust the wage index of hospitals located in certain 
qualifying counties that have a relatively high percentage of hospital 
employees who reside in the county, but who work in a different county 
with a higher wage index, in accordance with section 505 of the 
Medicare Prescription Drug, Improvement, and Modernization Act of 2003 
(Pub. L. 108-173). Addendum L to this proposed rule (which is available 
via the internet on the CMS website) contains the qualifying counties 
and the associated wage index increase developed for the proposed FY 
2025 IPPS wage index, which are listed in Table 3 associated with the 
FY 2025 IPPS proposed rule and available via the internet on the CMS 
website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps. (Click on the link on the left side of the 
screen titled ``FY 2025 IPPS Proposed Rule Home Page'' and select ``FY 
2025 Proposed Rule Tables.'') This step is to be followed only if the 
hospital is not reclassified or redesignated under section 1886(d)(8) 
or section 1886(d)(10) of the Act.
    Step 4. Multiply the applicable wage index determined under Steps 2 
and 3 by the amount determined under Step 1

[[Page 59234]]

that represents the labor-related portion of the national unadjusted 
payment rate.
    The formula below is a mathematical representation of Step 4 and 
adjusts the labor-related portion of the national unadjusted payment 
rate for the specific service by the wage index.
    Xa is the labor-related portion of the national unadjusted payment 
rate (wage adjusted).

Xa = labor-portion of the national unadjusted payment rate * applicable 
wage index.

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

Y = 0.40 * (national unadjusted payment rate).

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

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

    Step 7. The adjusted payment rate is the sum of the wage adjusted 
labor-related portion of the national unadjusted payment rate and the 
nonlabor-related portion of the national unadjusted payment rate.
    Xa is the labor-related portion of the national unadjusted payment 
rate (wage adjusted).
    Y is the nonlabor-related portion of the national unadjusted 
payment rate.

Adjusted Medicare Payment = Xa + Y

    We are providing examples below of the calculation of both the full 
and reduced national unadjusted payment rates that would apply to 
certain outpatient items and services performed by hospitals that meet 
and that fail to meet the Hospital OQR Program requirements, using the 
steps outlined previously. For purposes of this example, we are using a 
provider that is located in Brooklyn, New York that is assigned to CBSA 
35614. This provider bills one service that is assigned to APC 5071 
(Level 1 Excision/Biopsy/Incision and Drainage). The proposed CY 2025 
full national unadjusted payment rate for APC 5071 is $700.10. The 
proposed reduced national adjusted payment rate for APC 5071 for a 
hospital that fails to meet the Hospital OQR Program requirements is 
$686.45. This reduced rate is calculated by multiplying the reporting 
ratio of 0.9805 by the full unadjusted payment rate for APC 5071.
    Step 1. The labor-related portion of the proposed full national 
unadjusted payment is approximately $420.06 (0.60 * $700.10). The 
labor-related portion of the proposed reduced national adjusted payment 
is approximately $411.87 (0.60 * $686.45).
    Step 2 & 3. The FY 2025 wage index for a provider located in CBSA 
35614 in New York, which includes the adoption of the proposed IPPS 
2025 wage index policies, is 1.2867.
    Step 4. The wage adjusted labor-related portion of the proposed 
full national unadjusted payment is approximately $540.49 ($420.06 
*1.2867). The wage adjusted labor-related portion of the proposed 
reduced national adjusted payment is approximately $529.95 ($411.87 * 
1.2867).
    Step 5. The nonlabor-related portion of the proposed full national 
unadjusted payment is approximately $280.04 (0.40 * $700.10). The 
nonlabor-related portion of the proposed reduced national adjusted 
payment is approximately $274.58 (0.40 * $686.45).
    Step 6. For this example of a provider located in Brooklyn, New 
York, the rural adjustment for rural SCHs does not apply.
    Step 7. The sum of the labor-related and nonlabor-related portions 
of the proposed full national unadjusted payment is approximately 
$820.53 ($540.49 + $280.04). The sum of the portions of the proposed 
reduced national adjusted payment is approximately $804.53 ($529.95 + 
$274.58) as shown in Table 9.
[GRAPHIC] [TIFF OMITTED] TP22JY24.014

I. Proposed Beneficiary Copayments

1. Background
    Section 1833(t)(3)(B) of the Act requires the Secretary to set 
rules for determining the unadjusted copayment amounts to be paid by 
beneficiaries for covered OPD services. Section 1833(t)(8)(C)(ii) of 
the Act specifies that the Secretary must reduce the national 
unadjusted copayment amount for a covered OPD service (or group of such 
services) furnished in a year in a manner so that the effective 
copayment rate (determined on a national unadjusted basis) for that 
service in the year does not exceed a specified percentage. As 
specified in section 1833(t)(8)(C)(ii)(V) of the Act, the effective 
copayment rate for a covered OPD service paid under the OPPS in CY 
2006, and in CYs thereafter, shall not exceed 40 percent of the APC 
payment rate.
    Section 1833(t)(3)(B)(ii) of the Act provides that, for a covered 
OPD service (or group of such services) furnished in a year, the 
national unadjusted copayment amount cannot be less than 20 percent of 
the OPD fee schedule amount. However, section 1833(t)(8)(C)(i) of the 
Act limits the amount of beneficiary copayment that may be collected 
for a procedure

[[Page 59235]]

(including items such as drugs and biologicals) performed in a year to 
the amount of the inpatient hospital deductible for that year.
    Section 4104 of the Affordable Care Act eliminated the Medicare 
Part B coinsurance for preventive services furnished on and after 
January 1, 2011, that meet certain requirements, including flexible 
sigmoidoscopies and screening colonoscopies, and waived the Part B 
deductible for screening colonoscopies that become diagnostic during 
the procedure. For a discussion of the changes made by the Affordable 
Care Act with regard to copayments for preventive services furnished on 
and after January 1, 2011, we refer readers to section XII.B of the CY 
2011 OPPS/ASC final rule with comment period (75 FR 72013).
    Section 122 of the Consolidated Appropriations Act (CAA) of 2021 
(Pub. L. 116-260), Waiving Medicare Coinsurance for Certain Colorectal 
Cancer Screening Tests, amended section 1833(a) of the Act to offer a 
special coinsurance rule for screening flexible sigmoidoscopies and 
screening colonoscopies, regardless of the code that is billed for the 
establishment of a diagnosis as a result of the test, or for the 
removal of tissue or other matter or other procedure, that is furnished 
in connection with, as a result of, and in the same clinical encounter 
as the colorectal cancer screening test. We refer readers to section 
X.B, ``Changes to Beneficiary Coinsurance for Certain Colorectal Cancer 
Screening Tests,'' of the CY 2022 OPPS/ASC final rule with comment 
period for the full discussion of this policy (86 FR 63740 through 
63743). Under the regulation at 42 CFR 410.152(l)(5)(i)(B), the 
Medicare Part B payment percentage for colorectal cancer screening 
tests described in the regulation at Sec.  410.37(j) that are furnished 
in CY 2023 through CY 2026 is 85 percent, with beneficiary coinsurance 
equal to 15 percent.
    On August 16, 2022, the Inflation Reduction Act of 2022 (IRA) (Pub. 
L. 117-169) was signed into law. Section 11101(a) of the IRA amended 
section 1847A of the Act by adding a new subsection (i), which requires 
the payment of rebates into the Supplementary Medical Insurance Trust 
Fund for Part B rebatable drugs if the payment limit amount exceeds the 
inflation-adjusted payment amount, which is calculated as set forth in 
section 1847A(i)(3)(C) of the Act. The provisions of section 11101 of 
the IRA thus far have primarily been implemented through program 
instruction, as permitted under section 1847A(c)(5)(C) of the Act. As 
such, we issued guidance for the computation of inflation-adjusted 
beneficiary coinsurance under section 1847A(i)(5) of the Act and 
amounts paid under section 1833(a)(1)(EE) of the Act on February 9, 
2023.\8\ \9\ For additional information regarding implementation of 
section 11101 of the IRA, please see the inflation rebates resources 
page at https://www.cms.gov/inflation-reduction-act-and-medicare/inflation-rebates-medicare.
---------------------------------------------------------------------------

    \8\ https://www.cms.gov/files/document/medicare-part-b-inflation-rebate-program-initial-guidance.pdf.
    \9\ In addition, beginning with the April 2023 ASP Drug Pricing 
file, the file includes the coinsurance percentage for each drug and 
specifies ``inflation-adjusted coinsurance'' in the ``Notes'' column 
if the coinsurance for a drug is less than 20 percent of the 
Medicare Part B payment amount. Drug pricing files are available at 
https://www.cms.gov/medicare/medicare-fee-for-service-part-b-drugs/mcrpartbdrugavgsalesprice.
---------------------------------------------------------------------------

    Section 11101(b) of the IRA amended sections 1833(i) and 1833(t)(8) 
of the Act by adding a new paragraph (9) and subparagraph (F), 
respectively. Section 1833(i)(9) requires under the ASC payment system 
that in the case of a Part B rebatable drug, in lieu of calculation of 
coinsurance that would otherwise apply under the ASC payment system, 
the provisions of section 1847A(i)(5) of the Act shall, as determined 
appropriate by the Secretary, apply for calculation of beneficiary 
coinsurance in the same manner as the provisions of section 1847A(i)(5) 
of the Act apply under that section. Similarly, section 1833(t)(8)(F) 
of the Act requires under the OPPS that in the case of a Part B 
rebatable drug (except for a drug that has no copayment applied under 
subparagraph (E) of such section or for which payment is packaged into 
the payment for a covered OPD service or group of services), in lieu of 
the calculation of the copayment amount that would otherwise apply 
under the OPPS, the provisions of section 1847A(i)(5) of the Act shall, 
as determined appropriate by the Secretary, apply in the same manner as 
the provisions of section 1847A(i)(5) of the Act apply under that 
section. Section 1847A(i)(5) of the Act requires that for Part B 
rebatable drugs, as defined in section 1847A(i)(2)(A) of the Act, 
furnished on or after April 1, 2023, in quarters in which the payment 
amount described in section 1847A(i)(3)(A)(ii)(I) of the Act (or, in 
the case of selected drugs described under section 1192(c) of the Act, 
the payment amount described in section 1847A(b)(1)(B) of the Act), 
exceeds the inflation-adjusted payment amount determined in accordance 
with section 1847A(i)(3)(C) of the Act, the coinsurance will be 20 
percent of the inflation-adjusted payment amount for such quarter 
(hereafter, the inflation-adjusted coinsurance amount). This inflation-
adjusted coinsurance amount is applied as a percent, as determined by 
the Secretary, to the payment amount that would otherwise apply for 
such calendar quarter in accordance with section 1847A(b)(1)(B) or (C) 
of the Act, as applicable, including in the case of a selected drug.
    Paragraph (9) of section 1833(i) of the Act and subparagraph (F) of 
section 1833(t)(8) of the Act, as added by section 11101(b) of the IRA, 
also provide that in lieu of the amounts of payment otherwise 
applicable under the ASC payment system and the OPPS, the provisions of 
paragraph (1)(EE) of subsection (a) of section 1833 of the Act shall 
apply, as determined appropriate by the Secretary. Section 11101(b) of 
the IRA amended section 1833(a)(1) of the Act by adding a new 
subparagraph (EE), which requires that if the payment amount under 
section 1847A(i)(3)(A)(ii)(I) of the Act or, in the case of a selected 
drug, the payment amount described in section 1847A(b)(1)(B) of the 
Act, for that drug exceeds the inflation-adjusted payment amount for a 
Part B rebatable drug, the Part B payment amount would, subject to the 
Part B deductible and sequestration, equal the difference between such 
payment amount and the inflation-adjusted coinsurance amount. 
Consistent with the policy adopted in section 40 of the revised 
Medicare Part B Drug Inflation Rebate Guidance, the calculation to 
determine the applicable beneficiary coinsurance amount would not be 
adjusted for sequestration. CMS codified the Medicare payment for Part 
B rebatable drugs in the CY 2024 PFS final rule by adding new paragraph 
(m) to Sec.  410.152.
    In the CY 2024 OPPS/ASC final rule with comment period (88 FR 
81594), we codified the OPPS program payment and cost sharing amounts 
for Part B rebatable drugs as required by section 1833(t)(8)(F) by 
adding a new paragraph (e) to Sec.  419.41, which cross-references the 
regulations adopted in the CY 2024 PFS final rule (Sec. Sec.  
410.152(m) and 489.30(b)(6)). We also amended the regulation text to 
reflect our longstanding policies for calculating the Medicare program 
payment and cost sharing amounts for separately payable drugs and 
biologicals by adding a new paragraph (d) to Sec.  419.41. Similarly, 
we codified the ASC cost sharing amounts for Part B rebatable drugs as 
required by section 1833(i)(9) of the Act by revising Sec.  416.172(d) 
to include a cross-reference to 42 CFR 489.30(b)(6), which codified

[[Page 59236]]

the cost sharing amounts for Part B rebatable drugs with prices 
increasing at a rate faster than inflation.
    In the CY 2025 Medicare PFS proposed rule, CMS proposes to adopt 
new provisions at Sec.  427.200 and Sec.  427.201 to codify the 
policies regarding the computation of the inflation-adjusted 
beneficiary coinsurance, defined in Sec.  427.200, for Part B rebatable 
drugs as required by section 1847A(i)(5) of the Act. This proposed new 
provision includes references to the existing provisions at Sec. Sec.  
410.152(m), 419.41(e), and 489.30(b)(6) of this title. CMS further 
proposes at Sec.  427.201(c) that any category of products that is 
excluded from the identification of Part B rebatable drugs at Sec.  
427.101(b) is not subject to the inflation-adjusted beneficiary 
coinsurance. Examples of these excluded products include separately 
payable radiopharmaceuticals, skin substitute products, and qualifying 
biosimilar biological products.
    Additionally, CMS proposes at Sec.  427.201(b) that CMS will use 
the published payment amount in quarterly pricing files 
10 11 12 to determine if a Part B rebatable drug should have 
an adjusted beneficiary coinsurance equal to 20 percent of the 
inflation-adjusted payment amount as described in section 
1847A(i)(3)(C) for a calendar quarter. This proposed approach deviates 
from the rebate calculation approach proposed in Sec.  427.302, which 
relies on the specified amount defined at Sec.  427.20 even when the 
specified amount and the published payment amount in quarterly pricing 
files differ. The approach proposed at Sec.  427.201(b) would be used 
only to determine whether there should be a coinsurance adjustment and 
would not impact the applicability or calculation of inflation rebates. 
CMS believes this approach is consistent with the statutory language 
and appropriately reflects the differences in the statutory text of 
section 1847A(i)(5) of the Act, which sets forth the payment amount 
that is used to determine whether coinsurance should be adjusted, and 
section 1847A(i)(3)(A) of the Act, which sets forth the ``specified 
amount'' used to determine rebate amounts.
---------------------------------------------------------------------------

    \10\ See: https://www.cms.gov/medicare/payment/part-b-drugs/asp-pricing-files.
    \11\ See: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/addendum-a-b-updates.
    \12\ See: https://www.cms.gov/medicare/payment/prospective-payment-systems/ambulatory-surgical-center-asc/asc-payment-rates-addenda.
---------------------------------------------------------------------------

    We refer readers to the CY 2025 Medicare PFS proposed rule for a 
detailed discussion of proposals related to the Part B inflation 
rebates, including inflation-adjusted beneficiary coinsurance and 
Medicare payment for Medicare Part B rebatable drugs.
2. Proposed OPPS Copayment Policy
    For CY 2025, we propose to determine copayment amounts for new and 
revised APCs using the same methodology that we implemented beginning 
in CY 2004. (We refer readers to the November 7, 2003 OPPS final rule 
with comment period for a discussion of that methodology (68 FR 
63458).) In addition, we propose to use the same standard rounding 
principles that we have historically used in instances where the 
application of our standard copayment methodology would result in a 
copayment amount that is less than 20 percent and cannot be rounded, 
under standard rounding principles, to 20 percent. (We refer readers to 
the CY 2008 OPPS/ASC final rule with comment period (72 FR 66687) in 
which we discuss our rationale for applying these rounding principles.) 
The proposed national unadjusted copayment amounts for services payable 
under the OPPS that would be effective January 1, 2025, are included in 
Addenda A and B to this proposed rule (which are available via the 
internet on the CMS website).
    As discussed in section XIV.E of this proposed rule, for CY 2025, 
the Medicare beneficiary's minimum unadjusted copayment and national 
unadjusted copayment for a service to which a reduced national 
unadjusted payment rate applies will equal the product of the reporting 
ratio and the national unadjusted copayment, or the product of the 
reporting ratio and the minimum unadjusted copayment, respectively, for 
the service.
    We note that OPPS copayments may increase or decrease each year 
based on changes in the calculated APC payment rates, due to updated 
cost report and claims data, and any changes to the OPPS cost modeling 
process. However, as described in the CY 2004 OPPS final rule with 
comment period, the development of the copayment methodology generally 
moves beneficiary copayments closer to 20 percent of OPPS APC payments 
(68 FR 63458 through 63459).
    In the CY 2004 OPPS final rule with comment period (68 FR 63459), 
we adopted a new methodology to calculate unadjusted copayment amounts 
in situations including reorganizing APCs, and we finalized the 
following rules to determine copayment amounts in CY 2004 and 
subsequent years.
     When an APC group consists solely of HCPCS codes that were 
not paid under the OPPS the prior year because they were packaged or 
excluded or are new codes, the unadjusted copayment amount would be 20 
percent of the APC payment rate.
     If a new APC that did not exist during the prior year is 
created and consists of HCPCS codes previously assigned to other APCs, 
the copayment amount is calculated as the product of the APC payment 
rate and the lowest coinsurance percentage of the codes comprising the 
new APC.
     If no codes are added to or removed from an APC and, after 
recalibration of its relative payment weight, the new payment rate is 
equal to or greater than the prior year's rate, the copayment amount 
remains constant (unless the resulting coinsurance percentage is less 
than 20 percent).
     If no codes are added to or removed from an APC and, after 
recalibration of its relative payment weight, the new payment rate is 
less than the prior year's rate, the copayment amount is calculated as 
the product of the new payment rate and the prior year's coinsurance 
percentage.
     If HCPCS codes are added to or deleted from an APC and, 
after recalibrating its relative payment weight, holding its unadjusted 
copayment amount constant results in a decrease in the coinsurance 
percentage for the reconfigured APC, the copayment amount would not 
change (unless retaining the copayment amount would result in a 
coinsurance rate less than 20 percent).
     If HCPCS codes are added to an APC and, after 
recalibrating its relative payment weight, holding its unadjusted 
copayment amount constant results in an increase in the coinsurance 
percentage for the reconfigured APC, the copayment amount would be 
calculated as the product of the payment rate of the reconfigured APC 
and the lowest coinsurance percentage of the codes being added to the 
reconfigured APC.
    We noted in the CY 2004 OPPS final rule with comment period that we 
would seek to lower the copayment percentage for a service in an APC 
from the prior year if the copayment percentage was greater than 20 
percent. We noted that this principle was consistent with section 
1833(t)(8)(C)(ii) of the Act, which accelerates the reduction in the 
national unadjusted coinsurance rate so that beneficiary liability will 
eventually equal 20 percent of the OPPS payment rate for all OPPS 
services to which a copayment applies, and with section 1833(t)(3)(B) 
of the Act, which achieves a 20-percent copayment percentage when fully 
phased in and gives the Secretary the

[[Page 59237]]

authority to set rules for determining copayment amounts for new 
services. We further noted that the use of this methodology would, in 
general, reduce the beneficiary coinsurance rate and copayment amount 
for APCs for which the payment rate changes as the result of the 
reconfiguration of APCs and/or recalibration of relative payment 
weights (68 FR 63459).
3. Proposed Calculation of an Adjusted Copayment Amount for an APC 
Group
    Individuals interested in calculating the national copayment 
liability for a Medicare beneficiary for a given service provided by a 
hospital that met or failed to meet its Hospital OQR Program 
requirements should follow the formulas presented in the following 
steps.
    Step 1. Calculate the beneficiary payment percentage for the APC by 
dividing the APC's national unadjusted copayment by its proposed 
payment rate. For example, using APC 5071, $140.02 is approximately 20 
percent of the full national unadjusted payment rate of $700.10. For 
APCs with only a minimum unadjusted copayment in Addenda A and B to 
this proposed rule (which are available via the internet on the CMS 
website), the beneficiary payment percentage is 20 percent.
    The formula below is a mathematical representation of Step 1 and 
calculates the national copayment as a percentage of national payment 
for a given service.
    B is the beneficiary payment percentage.

B = National unadjusted copayment for APC/national unadjusted payment 
rate for APC.

    Step 2. Calculate the appropriate wage-adjusted payment rate for 
the APC for the provider in question, as indicated in Steps 2 through 4 
under section II.H of this with comment period. Calculate the rural 
adjustment for eligible providers, as indicated in Step 6 under section 
II.H of this final rule with comment period.
    Step 3. Multiply the percentage calculated in Step 1 by the payment 
rate calculated in Step 2. The result is the wage-adjusted copayment 
amount for the APC.
    The formula below is a mathematical representation of Step 3 and 
applies the beneficiary payment percentage to the adjusted payment rate 
for a service calculated under section II.H of this proposed rule, with 
and without the rural adjustment, to calculate the adjusted beneficiary 
copayment for a given service.

Wage-adjusted copayment amount for the APC = Adjusted Medicare Payment 
* B.
Wage-adjusted copayment amount for the APC (SCH or EACH) = (Adjusted 
Medicare Payment * 1.071) * B.

    Step 4. For a hospital that failed to meet its Hospital OQR Program 
requirements, multiply the copayment calculated in Step 3 by the 
reporting ratio of 0.9805.
    The unadjusted copayments for services payable under the OPPS that 
would be effective January 1, 2025, are shown in Addenda A and B to 
proposed rule (which are available via the CMS website). We note that 
the proposed national unadjusted payment rates and copayment rates 
shown in Addenda A and B to this proposed rule reflect the proposed CY 
2025 OPD fee schedule increase factor discussed in section II.B of this 
proposed rule.
    In addition, as noted earlier, section 1833(t)(8)(C)(i) of the Act 
limits the amount of beneficiary copayment that may be collected for a 
procedure performed in a year to the amount of the inpatient hospital 
deductible for that year.

III. Proposed OPPS Ambulatory Payment Classification (APC) Group 
Policies

A. Proposed OPPS Treatment of New and Revised HCPCS Codes

    Payments for OPPS procedures, services, and items are generally 
based on medical billing codes, specifically, HCPCS codes, that are 
reported on HOPD claims. HCPCS codes are used to report surgical 
procedures, medical services, items, and supplies under the hospital 
OPPS. The HCPCS is divided into two principal subsystems, referred to 
as Level I and Level II of the HCPCS. Level I is comprised of CPT 
(Current Procedural Terminology) codes, a numeric and alphanumeric 
coding system that is established and maintained by the American 
Medical Association (AMA), and consists of Category I, II, III, MAAA, 
and PLA CPT codes. Level II, which is established and maintained by 
CMS, is a standardized coding system that is used primarily to identify 
products, supplies, and services not included in the CPT codes. 
Together, Level I and II HCPCS codes are used to report procedures, 
services, items, and supplies under the OPPS payment system. 
Specifically, we recognize the following codes on OPPS claims:
     Category I CPT codes, which describe surgical procedures, 
diagnostic and therapeutic services, and vaccine codes;
     Category III CPT codes, which describe new and emerging 
technologies, services, and procedures;
     MAAA CPT codes, which describe laboratory multianalyte 
assays with algorithmic analyses (MAA);
     PLA CPT codes, which describe proprietary laboratory 
analyses (PLA) services; and
     Level II HCPCS codes (also known as alpha-numeric codes), 
which are used primarily to identify drugs, devices, supplies, 
temporary procedures, and services not described by CPT codes.
    The codes are updated and changed throughout the year. CPT and 
Level II HCPCS code changes that affect the OPPS are published through 
the annual rulemaking cycle and through the OPPS quarterly update 
Change Requests (CRs). Generally, these code changes are effective 
January 1, April 1, July 1, or October 1. CPT code changes are released 
by the AMA (via their website) while Level II HCPCS code changes are 
released to the public via the CMS HCPCS website. CMS recognizes the 
release of new CPT and Level II HCPCS codes outside of the formal 
rulemaking process via OPPS quarterly update CRs. Based on our review, 
we assign the new codes to interim status indicators (SIs) and APCs. 
These interim assignments are finalized in the OPPS/ASC final rules. 
This quarterly process offers hospitals access to codes that more 
accurately describe the items or services furnished and provides 
payment for these items or services in a timelier manner than if we 
waited for the annual rulemaking process. We solicit public comments on 
the new CPT and Level II HCPCS codes, status indicators, and APC 
assignments through our annual rulemaking process.
    We note that, under the OPPS, the APC assignment determines the 
payment rate for an item, procedure, or service. The items, procedures, 
or services not exclusively paid separately under the hospital OPPS are 
assigned to appropriate status indicators. Certain payment status 
indicators provide separate payment while other payment status 
indicators do not. In section XI ``Proposed CY 2025 Payment Status and 
Comment Indicators'' of this proposed rule, we discuss the various 
status indicators and comment indicators used under the OPPS. We also 
provide a complete list of the proposed status indicators and their 
definitions in Addendum D1 to this proposed rule.
1. April 2024 HCPCS Codes Proposed Rule Comment Solicitation
    For the April 2024 update, 73 new HCPCS codes were established and

[[Page 59238]]

made effective on April 1, 2024. Through the April 2024 OPPS quarterly 
update CR (Transmittal 12552, Change Request 13568, dated March 21, 
2024), we recognized several new HCPCS codes for payment under the 
OPPS. In this proposed rule, we solicit public comments on the proposed 
APC and status indicator assignments for the codes listed in Table 10 
(New HCPCS Codes Effective April 1, 2024). The proposed status 
indicator, APC assignment, and payment rate for each HCPCS code can be 
found in Addendum B to this proposed rule. The new codes effective 
April 1, 2024, are assigned to comment indicator ``NP'' in Addendum B 
to this proposed rule to indicate that the codes are assigned to an 
interim APC assignment and comments will be accepted on their interim 
APC assignments. The complete list of proposed status indicators and 
definitions used under the OPPS can be found in Addendum D1 to this 
proposed rule, while the complete list of proposed comment indicators 
and definitions can be found in Addendum D2. We note that OPPS Addendum 
B (OPPS payment file by HCPCS code), Addendum D1 (OPPS Status 
Indicators), and Addendum D2 (OPPS Comment Indicators) are available 
via the CMS website.
BILLING CODE 4120-01-P

[[Page 59239]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.015


[[Page 59240]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.016


[[Page 59241]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.017

BILLING CODE 4120-01-C
2. July 2024 HCPCS Codes Proposed Rule Comment Solicitation
    For the July 2024 update, 127 new codes were established and made 
effective July 1, 2024. Through the July 2024 OPPS quarterly update CR 
(Transmittal 12665, Change Request 13632, dated May 31, 2024), we 
recognized several new codes for payment and assigned them to 
appropriate interim OPPS status indicators and APCs. In this proposed 
rule, we solicit public comments on the proposed APC and status 
indicator assignments for the codes listed in Table 11 (New HCPCS Codes 
Effective July 1, 2024). The proposed status indicator, APC assignment, 
and payment rate for each HCPCS code can be found in Addendum B to this 
proposed rule. The complete list of proposed status indicators and 
corresponding definitions used under the OPPS can be found in Addendum 
D1 to this proposed rule. In addition, the new codes are assigned to 
comment indicator ``NP'' in Addendum B to this proposed rule to 
indicate that the codes are assigned to an interim APC assignment and 
comments will be accepted on their interim APC assignments. The 
complete list of proposed comment indicators and definitions used under 
the OPPS can be found in Addendum D2 to this proposed rule. We note 
that OPPS Addendum B (OPPS payment file by HCPCS code), Addendum D1 
(OPPS Status Indicators), and Addendum D2 (OPPS Comment Indicators) are 
available via the internet on the CMS website.
BILLING CODE 4120-01-P

[[Page 59242]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.018


[[Page 59243]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.019


[[Page 59244]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.020


[[Page 59245]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.021


[[Page 59246]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.022


[[Page 59247]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.023


[[Page 59248]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.024


[[Page 59249]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.025


[[Page 59250]]


BILLING CODE 4120-01-C
3. October 2024 HCPCS Codes Final Rule Comment Solicitation
    As has been our practice in the past, we will solicit comments on 
the new CPT and Level II HCPCS codes that will be effective October 1, 
2024, in the CY 2025 OPPS/ASC final rule with comment period, thereby 
allowing us to finalize the status indicators and APC assignments for 
the codes in the CY 2025 OPPS/ASC final rule with comment period. The 
HCPCS codes will be released to the public through the October 2024 
OPPS Update CR and the CMS HCPCS website while the CPT codes will be 
released to the public through the AMA website.
    For CY 2025, we propose to continue our established policy of 
assigning comment indicator ``NI'' in Addendum B to the OPPS/ASC final 
rule with comment period to those new HCPCS codes that will be 
effective October 1, 2024, to indicate that we are assigning them an 
interim status indicator, which is subject to public comment. We will 
be inviting public comments in the CY 2025 OPPS/ASC final rule with 
comment period on the status indicator and APC assignments, which would 
then be finalized in the CY 2026 OPPS/ASC final rule with comment 
period.
4. January 2025 HCPCS Codes
a. New Level II HCPCS Codes Final Rule Comment Solicitation
    Consistent with past practice, we will solicit comments on the new 
Level II HCPCS codes that will be effective January 1, 2025, in the CY 
2025 OPPS/ASC final rule with comment period, thereby allowing us to 
finalize the status indicators and APC assignments for the codes in the 
CY 2026 OPPS/ASC final rule with comment period. Unlike the CPT codes 
that are effective January 1 and are included in the OPPS/ASC proposed 
rules, and except for the proposed new C-codes and G-codes listed in 
Addendum O of this proposed rule, most Level II HCPCS codes are not 
released until sometime around November to be effective January 1. 
Because these codes are not available until November, we are unable to 
include them in the OPPS/ASC proposed rules. Consequently, for CY 2025, 
we propose to include the new Level II HCPCS codes effective January 1, 
2025, in Addendum B to the CY 2025 OPPS/ASC final rule with comment 
period, which would be incorporated in the January 2025 OPPS quarterly 
update CR. Specifically, for CY 2025, we propose to continue our 
established policy of assigning comment indicator ``NI'' in Addendum B 
to the OPPS/ASC final rule with comment period to the new HCPCS codes 
that will be effective January 1, 2025, to indicate that we are 
assigning them an interim status indicator, which is subject to public 
comment. We will be inviting public comments in the CY 2025 OPPS/ASC 
final rule with comment period on the status indicator and APC 
assignments, which would then be finalized in the CY 2026 OPPS/ASC 
final rule with comment period.
b. New CPT Codes Proposed Rule Comment Solicitation
    In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66841 
through 66844), we finalized a revised process of assigning APC and 
status indicators for new and revised Category I and III CPT codes that 
would be effective January 1. Specifically, for the new/revised CPT 
codes that we receive in a timely manner from the AMA's CPT Editorial 
Panel, we finalized our proposal to include the codes that would be 
effective January 1 in the OPPS/ASC proposed rules, along with proposed 
APC and status indicator assignments for them, and to finalize the APC 
and status indicator assignments in the OPPS/ASC final rules beginning 
with the CY 2016 OPPS update. For those new/revised CPT codes that were 
received too late for inclusion in the OPPS/ASC proposed rule, we 
finalized our proposal to establish and use HCPCS G-codes that mirror 
the predecessor CPT codes and retain the current APC and status 
indicator assignments for a year until we can propose APC and status 
indicator assignments in the following year's rulemaking cycle. We note 
that even if we find that we need to create HCPCS G-codes in place of 
certain CPT codes for the PFS proposed rule, we do not anticipate that 
these HCPCS G-codes will always be necessary for OPPS purposes. We will 
make every effort to include proposed APC and status indicator 
assignments for all new and revised CPT codes that the AMA makes 
publicly available in time for us to include them in the proposed rule, 
and to avoid resorting to use of HCPCS G-codes and the resulting delay 
in utilization of the most current CPT codes. Also, we finalized our 
proposal to make interim APC and status indicator assignments for CPT 
codes that are not available in time for the proposed rule and that 
describe wholly new services (such as new technologies or new surgical 
procedures), to solicit public comments in the final rule, and to 
finalize the specific APC and status indicator assignments for those 
codes in the following year's final rule.
    For the CY 2025 OPPS update, we received the CPT codes that will be 
effective January 1, 2025, from the AMA in time to be included in this 
proposed rule. The new, revised, and deleted CPT codes can be found in 
Addendum B to this proposed rule (which is available via the internet 
on the CMS website). We note that the new and revised CPT codes are 
assigned to comment indicator ``NP'' in Addendum B of this proposed 
rule to indicate that the code is new for the next calendar year or the 
code is an existing code with substantial revision to its code 
descriptor in the next calendar year as compared to the current 
calendar year with a proposed APC assignment, and that comments will be 
accepted on the proposed APC assignment and status indicator. Further, 
we note that the CPT code descriptors that appear in Addendum B are 
short descriptors and do not accurately describe the complete 
procedure, service, or item described by the CPT code. Therefore, we 
are including the 5-digit placeholder codes and the long descriptors 
for the new and revised CY 2025 CPT codes in Addendum O, specifically 
under the column labeled ``CY 2025 OPPS/ASC Proposed Rule 5-Digit AMA/
CMS Placeholder Code.'' The final HCPCS code numbers will be included 
in the CY 2025 OPPS/ASC final rule with comment period. In summary, we 
solicit public comments on the proposed CY 2025 status indicators and 
APC assignments for the new and revised CPT codes that will be 
effective January 1, 2025. The CPT codes listed in Addendum B appear 
with short descriptors only, therefore, we list them again in Addendum 
O to this proposed rule with long descriptors. In addition, we propose 
to finalize the status indicator and APC assignments for these codes 
(with their final CPT code numbers) in the CY 2025 OPPS/ASC final rule 
with comment period. The proposed status indicator and APC assignment 
for these codes can be found in Addendum B to this proposed rule. In 
addition, the complete list of proposed comment indicators and 
definitions used under the OPPS can be found in Addendum D2 to this 
proposed rule. We note that OPPS Addendum B (OPPS payment file by HCPCS 
code), Addendum D1 (OPPS Status Indicators), and Addendum D2 (OPPS 
Comment Indicators) are available via the internet on the CMS website.
    Finally, in Table 12 (Comment and Finalization Timeframes for New 
and Revised OPPS-Related HCPCS Codes) below, we summarize our current

[[Page 59251]]

process for updating codes through our OPPS quarterly update CRs, 
seeking public comments, and finalizing the treatment of these codes 
under the OPPS.
[GRAPHIC] [TIFF OMITTED] TP22JY24.026

B. Proposed OPPS Changes--Variations Within APCs

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

[[Page 59252]]

the independent service or combination of services is assigned. For CY 
2025, we propose that each APC relative payment weight represents the 
hospital cost of the services included in that APC, relative to the 
hospital cost of the services included in APC 5012 (Clinic Visits and 
Related Services). The APC relative payment weights are scaled to APC 
5012 because it is the hospital clinic visit APC and clinic visits are 
among the most frequently furnished services in the hospital outpatient 
setting.
2. Application of the 2 Times Rule
    Section 1833(t)(9)(A) of the Act requires the Secretary to review, 
not less often than annually, and revise the APC groups, the relative 
payment weights, and the wage and other adjustments described in 
paragraph (2) to consider changes in medical practice, changes in 
technology, the addition of new services, new cost data, and other 
relevant information and factors. Section 1833(t)(9)(A) of the Act also 
requires the Secretary to consult with an expert outside advisory panel 
composed of an appropriate selection of representatives of providers to 
review (and advise the Secretary concerning) the clinical integrity of 
the APC groups and the relative payment weights. We note that the 
Advisory Panel on Hospital Outpatient Payment (also known as the HOP 
Panel or the Panel) recommendations for specific services for the CY 
2025 OPPS update will be discussed in the relevant specific sections 
throughout the CY 2025 OPPS/ASC final rule with comment period.
    In addition, section 1833(t)(2) of the Act provides that, subject 
to certain exceptions, the items and services within an APC group 
cannot be considered comparable regarding the use of resources if the 
highest cost for an item or service in the group is more than 2 times 
greater than the lowest cost for an item or service within the same 
group (referred to as the ``2 times rule''). The statute authorizes the 
Secretary to make exceptions to the 2 times rule in unusual cases, such 
as for low-volume items and services (but the Secretary may not make 
such an exception in the case of a drug or biological that has been 
designated as an orphan drug under section 526 of the Federal Food, 
Drug, and Cosmetic Act). In determining the APCs with a 2 times rule 
violation, we consider only those HCPCS codes that are significant 
based on the number of claims. We note that, for purposes of 
identifying significant procedure codes for examination under the 2 
times rule, we consider procedure codes that have more than 1,000 
single major claims or procedure codes that both have more than 99 
single major claims and contribute at least 2 percent of the single 
major claims used to establish the APC cost to be significant (75 FR 
71832). This longstanding definition of when a procedure code is 
significant for purposes of the 2 times rule was selected because we 
believe that a subset of 1,000 or fewer claims is negligible within the 
set of approximately 100 million single procedure or single session 
claims we use for establishing costs. Similarly, a procedure code for 
which there are fewer than 99 single claims and that comprises less 
than 2 percent of the single major claims within an APC will have a 
negligible impact on the APC cost (75 FR 71832). In this section of 
this proposed rule, for CY 2025, we propose to make exceptions to this 
limit on the variation of costs within each APC group in unusual cases, 
such as for certain low-volume items and services.
    For the CY 2025 OPPS update, we identified the APCs with violations 
of the 2 times rule, and we propose changes to the procedure codes 
assigned to these APCs (with the exception of those APCs for which we 
propose a 2 times rule exception) in Addendum B to this proposed rule. 
We note that Addendum B does not appear in the printed version of the 
Federal Register as part of this proposed rule. Rather, it is published 
and made available via the internet on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices. To eliminate a violation of the 2 times 
rule and improve clinical and resource homogeneity in the APCs for 
which we are not proposing a 2 times rule exception, we propose to 
reassign these procedure codes to new APCs that contain services that 
are similar with regard to both their clinical and resource 
characteristics. In many cases, the proposed HCPCS code reassignments 
and associated APC reconfigurations for CY 2025 included in this 
proposed rule are related to changes in costs of services that were 
observed in the CY 2023 claims data available for CY 2025 ratesetting. 
Addendum B to this proposed rule identifies with a comment indicator 
``CH'' those procedure codes for which we propose a change to the APC 
assignment or status indicator, or both, that were initially assigned 
in the July 1, 2024, OPPS Addendum B Update, which is available via the 
internet on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/addendum-a-b-updates.
3. Proposed APC Exceptions to the 2 Times Rule
    While considering the APC changes that we propose for CY 2025, we 
reviewed all of the APCs for which we identified 2 times rule 
violations to determine whether any of the APCs would qualify for an 
exception. We used the following criteria to evaluate whether to 
propose exceptions to the 2 times rule for affected APCs:
     Resource homogeneity;
     Clinical homogeneity;
     Hospital outpatient setting utilization;
     Frequency of service (volume); and
     Opportunity for upcoding and code fragments.
    For a detailed discussion of these criteria, we refer readers to 
the April 7, 2000 final rule (65 FR 18457 through 18458).
    Based on the CY 2023 claims data available for this proposed rule, 
we found 23 APCs with violations of the 2 times rule. We applied the 
criteria as described above to identify the APCs for which we propose 
to make exceptions under the 2 times rule for CY 2025 and found that 
all of the 23 APCs we identified meet the criteria for an exception to 
the 2 times rule based on the CY 2023 claims data available for this 
proposed rule. We note that, on an annual basis, based on our analysis 
of the latest claims data, we identify violations to the 2 times rule 
and propose changes when appropriate. Those APCs that violate the 2 
times rule are identified and appear in Table 13 below. In addition, we 
did not include in that determination those APCs where a 2 times rule 
violation was not a relevant concept, such as APC 5401 (Dialysis), 
which only has two HCPCS codes assigned to it that have similar 
geometric mean costs and do not create a 2 times rule violation. 
Therefore, we have only identified those APCs, including those with 
criteria-based costs, such as device-dependent CPT/HCPCS codes, with 
violations of the 2 times rule, where a 2 times rule violation is a 
relevant concept.
    Table 13 of this proposed rule lists the 23 APCs for which we 
propose to make an exception under the 2 times rule for CY 2025 based 
on the criteria cited above and claims data submitted between January 
1, 2023, and December 31, 2023, and processed on or before December 31, 
2023, and CCRs, if available. The proposed geometric mean costs for 
covered hospital outpatient services for these and all other APCs that 
were used in the development of

[[Page 59253]]

this proposed rule can be found on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices.
[GRAPHIC] [TIFF OMITTED] TP22JY24.027

C. Proposed New Technology APCs

1. Background
    In the CY 2002 OPPS final rule (66 FR 59903), we finalized changes 
to the time period in which a service can be eligible for payment under 
a New Technology APC. Beginning in CY 2002, we retain services within 
New Technology APC groups until we gather sufficient claims data to 
enable us to assign the service to an appropriate clinical APC. This 
policy allows us to move a service from a New Technology APC in less 
than 2 years if sufficient data are available. It also allows us to 
retain a service in a New Technology APC for more than 2 years if 
sufficient data upon which to base a decision for reassignment have not 
been collected.
    We also adopted in the CY 2002 OPPS final rule the following 
criteria for assigning a complete or comprehensive service to a New 
Technology APC: (1)

[[Page 59254]]

the service must be truly new, meaning it cannot be appropriately 
reported by an existing HCPCS code assigned to a clinical APC and does 
not appropriately fit within an existing clinical APC; (2) the service 
is not eligible for transitional pass-through payment (however, a truly 
new, comprehensive service could qualify for assignment to a new 
technology APC even if it involves a device or drug that could, on its 
own, qualify for pass-through payment); and (3) the service falls 
within the scope of Medicare benefits under section 1832(a) of the Act 
and is reasonable and necessary in accordance with section 
1862(a)(1)(A) of the Act (66 FR 59898 through 59903). For additional 
information about our New Technology APC policy, we refer readers to 
https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/pass-through-payment-status-new-technology-ambulatory-payment-classification-apc on the CMS website and then 
follow the instructions to access the MEARISTM system for 
OPPS New Technology APC applications.\13\
---------------------------------------------------------------------------

    \13\ Currently approved under OMB control number 0938-0860; 
expires 07/31/2024.
---------------------------------------------------------------------------

    In the CY 2004 OPPS final rule with comment period (68 FR 63416), 
we restructured the New Technology APCs to make the cost intervals more 
consistent across payment levels and refined the cost bands for these 
APCs to retain two parallel sets of New Technology APCs: one set with a 
status indicator of ``S'' (Significant Procedures, Not Discounted when 
Multiple. Paid under OPPS; separate APC payment) and the other set with 
a status indicator of ``T'' (Significant Procedure, Multiple Reduction 
Applies. Paid under OPPS; separate APC payment). These current New 
Technology APC configurations allow us to price new technology services 
more appropriately and consistently.
    For CY 2024, there were 52 New Technology APC levels, ranging from 
the lowest cost band assigned to APC 1491 (New Technology--Level 1A 
($0-$10)) to the highest cost band assigned to APC 1908 (New 
Technology--Level 52 ($145,001-$160,000)). We note that the cost bands 
for the New Technology APCs, specifically, APCs 1491 through 1599 and 
1901 through 1908, vary with increments ranging from $10 to $14,999. 
These cost bands identify the APCs to which new technology procedures 
and services with estimated service costs that fall within those cost 
bands are assigned under the OPPS. Payment for each APC is made at the 
mid-point of the APC's assigned cost band. For example, payment for New 
Technology APC 1507 (New Technology--Level 7 ($501-$600)) is made at 
$550.50.
    Under the OPPS, one of our goals is to make payments that are 
appropriate for the services that are necessary for the treatment of 
Medicare beneficiaries. The OPPS, like other Medicare payment systems, 
is budget neutral and increases are limited to the annual hospital 
market basket increase reduced by the productivity adjustment. We 
believe that our payment rates reflect the costs that are associated 
with providing care to Medicare beneficiaries and are adequate to 
ensure access to services (80 FR 70374). For many emerging 
technologies, there is a transitional period during which utilization 
may be low, often because providers are first learning about the 
technologies and their clinical utility. Quite often, parties request 
that Medicare make higher payments under the New Technology APCs for 
new procedures in that transitional phase. These requests, and their 
accompanying estimates for expected total patient utilization, often 
reflect very low rates of patient use of expensive equipment, resulting 
in high per-use costs for which requesters believe Medicare should make 
full payment. Medicare does not, and we believe should not, assume 
responsibility for more than its share of the costs of procedures based 
on projected utilization for Medicare beneficiaries and does not set 
its payment rates based on initial projections of low utilization for 
services that require expensive capital equipment. For the OPPS, we 
rely on hospitals to make informed business decisions regarding the 
acquisition of high-cost capital equipment, taking into consideration 
their knowledge about their entire patient base (Medicare beneficiaries 
included) and an understanding of Medicare's and other payers' payment 
policies. We refer readers to the CY 2013 OPPS/ASC final rule with 
comment period (77 FR 68314) for further discussion regarding this 
payment policy.
    Some services assigned to New Technology APCs have low annual 
volume, which we consider to be fewer than 100 claims in the year of 
claims data used for ratesetting (86 FR 63528). Where utilization of 
services assigned to a New Technology APC is low, it can lead to wide 
variation in payment rates from year to year, resulting in even lower 
utilization and potential barriers to access to new technologies, which 
ultimately limits our ability to assign the service to the appropriate 
clinical APC. To mitigate these issues, we finalized a policy in the CY 
2019 OPPS/ASC final rule with comment period to utilize our equitable 
adjustment authority at section 1833(t)(2)(E) of the Act to adjust how 
we determine the costs for low-volume services assigned to New 
Technology APCs (83 FR 58892 through 58893). Specifically, in the CY 
2019 OPPS/ASC final rule with comment period (83 FR 58893), we 
established that, in each of our annual rulemakings, we would calculate 
and present the result of each statistical methodology (arithmetic 
mean, geometric mean, and median) based on up to 4 years of claims data 
and solicit public comment on which methodology should be used to 
establish the payment rate for the low-volume new technology service. 
In the CY 2022 OPPS/ASC final rule (86 FR 63529), we replaced the New 
Technology APC low volume policy with the universal low volume APC 
policy. Unlike the New Technology APC low volume policy, the universal 
low volume APC policy applies to clinical APCs and brachytherapy APCs, 
in addition to procedures assigned to New Technology APCs, and uses the 
highest of the geometric mean, arithmetic mean, or median based on up 
to 4 years of claims data to set the payment rate for the APC. We refer 
readers to the CY 2022 OPPS/ASC final rule with comment period (86 FR 
63529) for further discussion regarding this policy.
    Finally, we note that, in a budget-neutral system, payments may not 
fully cover hospitals' costs in a particular circumstance, including 
those for the purchase and maintenance of capital equipment. We rely on 
hospitals to make their decisions regarding the acquisition of high-
cost equipment with the understanding that the Medicare program must be 
careful to establish its initial payment rates, including those made 
through New Technology APCs, for new services that lack hospital claims 
data based on realistic utilization projections for all such services 
delivered in cost-efficient hospital outpatient settings. As the OPPS 
acquires claims data regarding hospital costs associated with new 
procedures, we regularly examine the claims data and any available new 
information regarding the clinical aspects of new procedures to confirm 
that our OPPS payments remain appropriate for procedures as they 
transition into mainstream medical practice (77 FR 68314). For CY 2025, 
we included the proposed payment rates for New Technology APCs 1491 to 
1599 and 1901 through 1908 in Addendum A to this proposed rule (which 
is available on the CMS website at https://

[[Page 59255]]

www.cms.gov/medicare/payment/prospective-payment-systems/hospital-
outpatient/regulations-notices.
2. Proposal To Exempt Services With Very Low Claims Volume From APC 
Reassignment Based on the Universal Low Volume Policy
    We continue to be concerned about payment stability for services 
assigned to New Technology APCs, specifically services with very low 
claims volume of fewer than 10 claims in the 4-year lookback period 
used under the universal low volume APC policy. Historically, we have 
used our equitable adjustment authority at section 1833(t)(2)(E) of the 
Act to exempt a number of services with very low claims volume from the 
universal low volume APC policy in instances where application of the 
universal low volume policy would lead to significant fluctuations in 
payment. Given the frequency with which we have needed to utilize our 
equitable adjustment authority to address significant fluctuations in 
payment for very low volume services, we believe that refinements to 
our universal low volume policy for services assigned to New Technology 
APCs may be necessary. We also recognize that determining initial cost 
estimates for these services may be particularly challenging, given the 
lack of cost information for new and innovative technologies.
    To allow time for us to consider these issues, we propose for CY 
2025 to exempt services assigned to New Technology APCs with fewer than 
10 claims over the 4-year lookback period used for the universal low 
volume policy. Instead of assigning these services to a different New 
Technology APC based on the very few claims available, we propose that 
we would maintain the New Technology APC assignment for each service 
from the prior year, which in this case would be the New Technology APC 
assignment for CY 2024. We believe it is appropriate to apply this 
policy to New Technology APCs because services assigned to New 
Technology APCs represent new technologies for which it may be more 
challenging to determine an appropriate cost than for other, more 
established services. We believe 10 claims is an appropriate ceiling 
for exempting services from reassignment based on the universal low 
volume policy because we believe that at 10 claims a rough standard 
distribution begins to appear. We also believe that services with so 
few claims over the 4-year lookback period would be especially 
vulnerable to large changes in payment rates year-to-year as a result 
of one or two new claims being available or one or two claims from what 
was previously the fourth year of the lookback period no longer being 
included in that period.
    Consistent with our overall policy regarding use of updated claims 
data in the final rule, we propose to perform a similar analysis for 
the final rule using updated claims data, including determining whether 
specific HCPCS codes continue to meet the criteria for our universal 
low volume APC policy or our proposal to exempt services with fewer 
than 10 claims in the 4-year lookback period from the universal low 
volume APC policy and maintain their CY 2024 New Technology APC 
assignment. We will update the APC placement as needed in the final 
rule.
3. Procedures Assigned to New Technology APCs for CY 2025
    As we described in the CY 2002 OPPS final rule (66 FR 59902), we 
generally retain a procedure in the New Technology APC to which it is 
initially assigned until we have obtained sufficient claims data to 
justify reassignment of the procedure to a clinically appropriate APC. 
In addition, in cases where we find that our initial New Technology APC 
assignment was based on inaccurate or inadequate information (although 
it was the best information available at the time), where we obtain new 
information that was not available at the time of our initial New 
Technology APC assignment, or where the New Technology APCs are 
restructured, we may, based on more recent resource utilization 
information (including claims data) or the availability of refined New 
Technology APC cost bands, reassign the procedure or service to a 
different New Technology APC that more appropriately reflects its cost 
(66 FR 59903).
    Consistent with our current policy, for CY 2025, we propose to 
retain services within New Technology APC groups until we obtain 
sufficient claims data to justify reassignment of the service to an 
appropriate clinical APC. The flexibility associated with this policy 
allows us to reassign a service from a New Technology APC in less than 
2 years if we have obtained sufficient claims data. It also allows us 
to retain a service in a New Technology APC for more than 2 years if we 
have not obtained sufficient claims data upon which to base a 
reassignment decision (66 FR 59902).
a. Administration of Subretinal Therapies Requiring Vitrectomy (APC 
1563)
    Effective January 1, 2021, CMS established HCPCS code C9770 
(Vitrectomy, mechanical, pars plana approach, with subretinal injection 
of pharmacologic/biologic agent) and assigned it to a New Technology 
APC based on the geometric mean cost of CPT code 67036 (Vitrectomy, 
mechanical, pars plana approach) due to similar resource utilization. 
For CY 2021, HCPCS code C9770 was assigned to APC 1561 (New 
Technology--Level 24 ($3,001-$3,500)). This code may be used to 
describe the administration of HCPCS code J3398 (Injection, voretigene 
neparvovec-rzyl, 1 billion vector genomes). This procedure was 
previously discussed in depth in the CY 2021 OPPS/ASC final rule with 
comment period (85 FR 85939 through 85940). For CY 2022, we maintained 
the APC assignment of APC 1561 (New Technology--Level 24 ($3,001-
$3,500)) for HCPCS code C9770 (86 FR 63531 through 63532).
    HCPCS code J3398 (Injection, voretigene neparvovec-rzyl, 1 billion 
vector genomes) is for a gene therapy product indicated for a rare 
mutation-associated retinal dystrophy. Voretigene neparvovec-rzyl 
(Luxturna[supreg]) was approved by FDA in December of 2017 and is an 
adeno-associated virus vector-based gene therapy indicated for the 
treatment of patients with confirmed biallelic RPE65 mutation-
associated retinal dystrophy.\14\ This therapy is administered through 
a subretinal injection, which interested parties describe as an 
extremely delicate and sensitive surgical procedure. The FDA-approved 
package insert describes one of the steps for administering Luxturna 
as, ``after completing a vitrectomy, identify the intended site of 
administration. The subretinal injection can be introduced via pars 
plana.''
---------------------------------------------------------------------------

    \14\ Luxturna. FDA Package Insert. Available: https://www.fda.gov/media/109906/download.
---------------------------------------------------------------------------

    Interested parties, including the manufacturer of Luxturna[supreg], 
recommended CPT code 67036 (Vitrectomy, mechanical, pars plana 
approach) for the administration of the gene therapy.\15\ However, the 
manufacturer previously contended the administration was not accurately 
described by any existing codes as CPT code 67036 (Vitrectomy, 
mechanical,

[[Page 59256]]

pars plana approach) does not account for the administration itself.
---------------------------------------------------------------------------

    \15\ LUXTURNA REIMBURSEMENT GUIDE FOR TREATMENT CENTERS. https://mysparkgeneration.com/uploads/2022/09/LUXTURNA-Reimbursement-Guide-for-Treatment-Centers-ISI-Update-April-2022-P-RPE65-US-320025.pdf.
---------------------------------------------------------------------------

    CMS recognized the need to accurately describe the unique procedure 
that is required to administer the therapy described by HCPCS code 
J3398. Therefore, in the CY 2021 OPPS/ASC proposed rule (85 FR 48832), 
we proposed to establish a new HCPCS code, C97X1 (Vitrectomy, 
mechanical, pars plana approach, with subretinal injection of 
pharmacologic/biologic agent) to describe this process. We stated that 
we believed this new HCPCS code accurately described the unique service 
associated with intraocular administration of HCPCS code J3398. We 
recognized that CPT code 67036 represents a clinically similar 
procedure and process that approximates similar resource utilization to 
C97X1. However, we also recognized that it is not prudent for the code 
that describes the administration of this unique gene therapy, C97X1, 
to be assigned to the same C-APC to which CPT code 67036 is assigned, 
as this would package the primary therapy, HCPCS code J3398, into the 
code that represents the process to administer the gene therapy.
    Therefore, for CY 2021, we proposed to assign the services 
described by C97X1 to a New Technology APC with a cost band that 
contains the geometric mean cost for CPT code 67036. The placeholder 
code C97X1 was replaced by HCPCS code C9770. For CY 2021, we finalized 
our proposal to create HCPCS code C9770 (Vitrectomy, mechanical, pars 
plana approach, with subretinal injection of pharmacologic/biologic 
agent), and we assigned this code to APC 1561 (New Technology--Level 24 
($3,001-$3,500)) using the geometric mean cost of CPT code 67036. For 
CY 2022, we continued to assign HCPCS code C9770 to APC 1561 (New 
Technology--Level 24 ($3,001-$3,500)) using the geometric mean cost of 
CPT code 67036.
    CY 2023 was the first year that claims data were available for 
HCPCS code C9770; therefore, we proposed and finalized a policy to base 
the payment rate of HCPCS code C9770 on claims data for that code 
rather than on the geometric mean cost of CPT code 67036. Given the low 
number of claims for this procedure, we designated HCPCS code C9770 as 
a low volume procedure under our universal low volume APC policy and 
used the greater of the geometric mean, arithmetic mean, or median cost 
calculated based on the available claims data to calculate an 
appropriate payment rate for purposes of assigning HCPCS code C9770 to 
a New Technology APC.
    Based on the claims data available for the CY 2023 OPPS/ASC final 
rule with comment period, we found the median was the statistical 
methodology that estimated the highest cost for the service. The 
payment rate calculated using this methodology fell within the cost 
band for New Technology APC 1562 (New Technology--Level 25 ($3,501-
$4,000)). Therefore, we finalized our proposal to assign HCPCS code 
C9770 to APC 1562 for CY 2023.
    For CY 2024, we proposed and finalized that we would delete HCPCS 
code C9770 effective December 31, 2023 and recognize CPT code 0810T 
(Subretinal injection of a pharmacologic agent, including vitrectomy 
and 1 or more retinotomies) starting January 1, 2024 (88 FR 81617 
through 81619). We determined the payment rate for CPT code 0810T using 
the claims data for HCPCS code C9770 and designated CPT code 0810T as a 
low volume procedure under our universal low volume APC policy and used 
the greater of the geometric mean, arithmetic mean, or median cost 
calculated based on the available claims data for HCPCS code C9770 to 
calculate an appropriate payment rate for purposes of assigning CPT 
code 0810T to a New Technology APC. For CY 2024, we finalized 
assignment of CPT code 0810T to APC 1563 (New Technology--Level 26 
($4,001-$4,500)) (88 FR 81617 through 81619).
    Since CMS recognized CPT code 0810T starting January 1, 2024, we do 
not have claims data for CPT code 0810T available for CY 2025 
rulemaking. However, as HCPCS code C9770 was still in use until 
December 31, 2023, we propose to determine the payment rate for CPT 
code 0810T using the claims data for HCPCS code C9770. This is similar 
to the policy we finalized for CY 2024. For CY 2025, we propose to 
designate CPT code 0810T as a low volume procedure under our universal 
low volume APC policy, given that there are only 34 claims available 
for HCPCS code C9770 and none for CPT code 0810T. This is below the 
threshold of 100 claims for a service within a year required to 
designate a service as a low volume service and apply our universal low 
volume APC policy. Therefore, we propose to use the greater of the 
geometric mean, arithmetic mean, or median cost calculated based on the 
available claims data for HCPCS code C9770 to calculate an appropriate 
payment rate for purposes of assigning CPT code 0810T to a New 
Technology APC.
    Using all available claims from the 4-year lookback period, based 
on 34 claims, we determined the geometric mean cost to be $3,934, the 
arithmetic mean cost to be $4,173, and the median cost to be $4,103. 
Because the arithmetic mean is the statistical methodology that 
estimated the highest cost for the service, we propose to use this cost 
to determine the New Technology APC placement. The arithmetic mean of 
$4,173 falls within the cost band for New Technology APC 1563 (New 
Technology--Level 26 ($4,001-$4,500)). Therefore, we propose to assign 
CPT code 0810T to APC 1563 for CY 2025. Additionally, we propose to 
perform a similar analysis using updated claims data, including 
determining if CPT code 0810T continues to meet the criteria for our 
universal low volume APC policy, in the CY 2025 OPPS/ASC final rule 
with comment period and update the APC assignment as needed.
    Please refer to Table 14 below for the proposed OPPS New Technology 
APC and status indicator assignments for CPT code 0810T for CY 2025. 
The proposed CY 2025 payment rates can be found in Addendum B to this 
proposed rule via the internet on the CMS website.

[[Page 59257]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.028

b. BgRT (APC 1521)
    Biology Guided Radiation Therapy (BgRT) uses positron-emitting 
radiopharmaceuticals to control delivery of radiation therapy to treat 
primary and metastatic lung or bone tumors. During radiation treatment 
delivery, the same system applies these firing filters to the real-time 
positron emission tomography (PET) data collected by the radiation 
treatment delivery machine. Effective January 1, 2024, CMS created 
HCPCS codes C9794 (Therapeutic radiology simulation-aided field 
setting; complex, including acquisition of PET and CT imaging data 
required for radiopharmaceutical-directed radiation therapy treatment 
planning (i.e., modeling) and C9795 (Stereotactic body radiation 
therapy, treatment delivery, per fraction to 1 or more lesions, 
including image guidance and real-time positron emissions-based 
delivery adjustments to 1 or more lesions, entire course not to exceed 
5 fractions) to describe the modeling and treatment delivery portions 
of the BgRT service. We assigned HCPCS code C9794 to APC 1521 (New 
Technology--Level 21 ($1,901-$2,000)) and HCPCS code C9795 to APC 1525 
(New Technology--Level 25 ($3,501-$4,000)) for CY 2024.
    For CY 2025, the proposed OPPS payment rates are based on available 
CY 2023 claims data. As HCPCS codes C9794 and C9795 were effective 
January 1, 2024, we do not have any claims data for the service. 
Therefore, for CY 2025, we propose to continue to assign HCPCS code 
C9794 to APC 1521 (New Technology--Level 21 ($1,901-$2,000)) with a 
payment rate of $1,950.50 and HCPCS code C9795 to APC 1525 (New 
Technology--Level 25 ($3,501-$4,000)) with a payment rate of $3,750.50.
    Please refer to Table 15 below for the proposed OPPS New Technology 
APC and status indicator assignment for HCPCS codes C9794 and C9795 for 
CY 2025. The proposed CY 2025 payment rates can be found in Addendum B 
to this proposed rule via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TP22JY24.029


[[Page 59258]]


c. Blinded Procedure for NYHA Class III/IV Heart Failure (APC 1590)
    A randomized, double-blinded, controlled IDE study is currently in 
progress for the V-Wave interatrial shunt. The V-Wave interatrial shunt 
is for patients with severe symptomatic heart failure and is designed 
to regulate left atrial pressure in the heart. All participants who 
passed initial screening for the study receive a right heart 
catheterization procedure described by CPT code 93451 (Right heart 
catheterization including measurement(s) of oxygen saturation and 
cardiac output, when performed). Participants assigned to the 
experimental group also receive the V-Wave interatrial shunt procedure 
while participants assigned to the control group only receive right 
heart catheterization. The developer of V-Wave was concerned that the 
current coding of these services by Medicare would reveal to the study 
participants whether they had received the interatrial shunt because an 
additional procedure code, CPT code 93799 (Unlisted cardiovascular 
service or procedure), would be included on the claims for participants 
receiving the interatrial shunt. Therefore, for CY 2020, we created a 
temporary HCPCS code to describe the V-Wave interatrial shunt procedure 
for both the experimental group and the control group in the study. 
Specifically, we established HCPCS code C9758 (Blinded procedure for 
NYHA class III/IV heart failure; transcatheter implantation of 
interatrial shunt or placebo control, including right heart 
catheterization, trans-esophageal echocardiography (TEE)/intracardiac 
echocardiography (ICE), and all imaging with or without guidance (for 
example, ultrasound, fluoroscopy), performed in an approved 
investigational device exemption (IDE) study) to describe the service, 
and we assigned the service to New Technology APC 1589 (New 
Technology--Level 38 ($10,001-$15,000)) with a payment rate of 
$12,500.50.
    In the CY 2021 OPPS/ASC final rule with comment period (85 FR 
85946), we stated that we believe similar resources and device costs 
are involved with the V-Wave interatrial shunt procedure and the Corvia 
Medical interatrial shunt procedure (HCPCS code C9760), except that 
payment for HCPCS codes C9758 and C9760 differs based on how often the 
interatrial shunt is implanted when each code is billed. An interatrial 
shunt is implanted one-half of the time HCPCS code C9758 is billed, 
whereas an interatrial shunt is implanted every time HCPCS code C9760 
is billed. Accordingly, for CY 2021, we reassigned HCPCS code C9758 to 
New Technology APC 1590 (New Technology--Level 39 ($15,001-$20,000)), 
which reflects the cost of furnishing the interatrial shunt one-half of 
the time the procedure is performed.
    For CY 2022, we used the same claims data from CY 2019 that we did 
for the CY 2021 OPPS/ASC final rule with comment period. Because there 
were no claims reporting HCPCS code C9758, we continued to assign HCPCS 
code C9758 to New Technology APC 1590 with a payment rate of $17,500.50 
for CY 2022. For CY 2023 we used claims data from CY 2019 through CY 
2022. Because there were no claims reporting HCPCS code C9758 in CY 
2023 or CY 2024, we continued to assign HCPCS code C9758 to New 
Technology APC 1590 with a payment rate of $17,500.50 for CY 2023 and 
2024.
    For CY 2025, the OPPS payment rates are proposed to be based on 
available CY 2023 claims data. There were only three claims for HCPCS 
code C9758 within this time period. As this is below the threshold of 
100 claims for a service within a year, we would designate C9758 as a 
low volume service and apply our universal low volume APC policy. Under 
this policy, we would use the highest of the geometric mean cost, 
arithmetic mean cost, or median cost based on up to 4 years of claims 
data to assign HCPCS code C9758 to the appropriate New Technology APC. 
Given our proposal to maintain current New Technology APC assignments 
for CY 2025 for New Technology APC services with fewer than 10 claims 
in the 4-year lookback period applicable for the universal low-volume 
APC policy, we propose to continue assigning HCPCS code C9758 to New 
Technology New Technology APC 1590 with a proposed payment rate of 
$17,500.50.
    Please refer to Table 16 below for the proposed OPPS New Technology 
APC and status indicator assignments for HCPCS code C9758 for CY 2025. 
The proposed CY 2025 payment rates can be found in Addendum B to this 
proposed rule via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TP22JY24.030


[[Page 59259]]


d. Bronchoscopy With Transbronchial Ablation of Lesion(s) by Microwave 
Energy (APC 1562)
    Effective January 1, 2019, CMS established HCPCS code C9751 
(Bronchoscopy, rigid or flexible, transbronchial ablation of lesion(s) 
by microwave energy, including fluoroscopic guidance, when performed, 
with computed tomography acquisition(s) and 3-D rendering, computer-
assisted, image-guided navigation, and endobronchial ultrasound (EBUS) 
guided transtracheal and/or transbronchial sampling (e.g., 
aspiration[s]/biopsy[ies]) and all mediastinal and/or hilar lymph node 
stations or structures and therapeutic intervention(s)). This microwave 
ablation procedure utilizes a flexible catheter to access the lung 
tumor via a working channel and may be used as an alternative procedure 
to a percutaneous microwave approach. Based on our review of the New 
Technology APC application for this service and the service's clinical 
similarity to existing services paid under the OPPS, we estimated the 
likely cost of the procedure would be between $8,001 and $8,500. We 
assigned the procedure to New Technology APC 1571 (New Technology--
Level 34 ($8,001-$8,500)) for CY 2019.
    In claims data available from CY 2019 for the CY 2021 OPPS/ASC 
final rule with comment period, there were four claims reported for 
bronchoscopy with transbronchial ablation of lesions by microwave 
energy. Given the low volume of claims for the service, we proposed for 
CY 2021 to apply the universal low volume APC policy we adopted in CY 
2019, under which we utilize our equitable adjustment authority under 
section 1833(t)(2)(E) of the Act to calculate the geometric mean, 
arithmetic mean, and median costs to determine an appropriate payment 
rate for purposes of assigning bronchoscopy with transbronchial 
ablation of lesions by microwave energy to a New Technology APC. We 
found the geometric mean cost for the service to be approximately 
$2,693, the arithmetic mean cost to be approximately $3,086, and the 
median cost to be approximately $3,708. The median was the statistical 
methodology that estimated the highest cost for the service. The 
payment rate calculated using this methodology fell within the cost 
band for New Technology APC 1562 (New Technology--Level 25 ($3,501-
$4,000)). Therefore, we assigned HCPCS code C9751 to APC 1562 for CY 
2021.
    In CY 2022, we again used the claims data from CY 2019 for HCPCS 
code C9751. Because the claims data was unchanged from when it was used 
in CY 2021, the values for the geometric mean cost ($2,693), the 
arithmetic mean cost ($3,086), and the median cost ($3,708) for the 
service described by HCPCS code C9751 remained the same. The highest 
cost metric using these methodologies was again the median and within 
the cost band for New Technology APC 1562 (New Technology--Level 25 
($3,501-$4,000)). Therefore, we continued to assign HCPCS code C9751 to 
APC 1562 (New Technology--Level 25 ($3,501-$4,000)), with a payment 
rate of $3,750.50 for CY 2022.
    There have been no separately payable claims reported for HCPCS 
code C9751 since 2019. Therefore, we continued to use claims from CY 
2019 to determine to payment rate for this service; and the reported 
claims are the same claims used to calculate the payment rate for the 
service in the CY 2023 and CY 2024 OPPS/ASC final rules with comment 
period. We continued to assign HCPCS code C9751 to APC 1562 (New 
Technology--Level 25 ($3,501-$4,000)), with a payment rate of 
$3,750.50.
    For CY 2025, there are no new claims for HCPCS code C9751. Given 
our proposal to maintain current New Technology APC assignments for CY 
2025 for New Technology APC services with fewer than 10 claims in the 
4-year lookback period applicable for the universal low-volume APC 
policy, we propose for CY 2025 to continue to assign HCPCS code C9751 
to APC 1562 (New Technology--Level 25 ($3,501-$4,000)), with a payment 
rate of $3,750.50.
    Please refer to Table 17 below for the proposed OPPS New Technology 
APC and status indicator assignments for HCPCS code C9751 for CY 2025. 
The proposed CY 2025 payment rates can be found in Addendum B to this 
proposed rule via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TP22JY24.031


[[Page 59260]]


e. Cardiac Positron Emission Tomography (PET)/Computed Tomography (CT) 
Studies (APCs 1520 and 1522)
    For CY 2025, the OPPS payment rates for the service described by 
CPT codes 78431, 78432, and 78433 are proposed to be based on available 
CY 2023 claims data. CPT code 78431 had over 26,000 single frequency 
claims in CY 2023. The geometric mean for CPT code 78431 is 
approximately $2,350. The geometric mean falls within APC 1522 (New 
Technology--Level 22 ($2,001-$2,500)) with a payment rate of $2,250.50, 
which is the current APC assignment for this service. Therefore, we 
propose, for CY 2025, to assign CPT code 78431 to APC 1522 (New 
Technology--Level 22 ($2,001-$2,500)) with a payment rate of $2,250.50.
    There were only 19 single frequency claims in CY 2023 for CPT code 
78432. As this is below the threshold of 100 claims for a service 
within a year, we propose to apply our universal low volume New 
Technology APC policy and use the highest of the geometric mean cost, 
arithmetic mean cost, or median cost based on up to 4 years of claims 
data to assign CPT code 78432 to the appropriate New Technology APC. 
Using available claims data from CY 2021, CY 2022, and CY 2023, our 
analysis found the geometric mean cost of the service is approximately 
$1,762, the arithmetic mean cost of the service is approximately 
$1,923, and the median cost of the service is approximately $1,544. The 
arithmetic mean is the statistical methodology that estimates the 
highest cost for the service. The arithmetic mean cost of $1,923, is an 
amount that is above the cost band for APC 1520 (New Technology--Level 
20 ($1,801-$1,900)), where the procedure is currently assigned. 
Therefore, we propose, for CY 2025, to assign CPT code 78432 to APC 
1521 (New Technology--Level 21 ($1,901-$2,000)) with a payment rate of 
$1950.50.
    There were over 1,400 single frequency claims for CPT code 78433 in 
CY 2023. The geometric mean for CPT code 78433 is approximately $2,010, 
which is an amount that is above the current New Technology APC cost 
band APC 1521 (New Technology--Level 21 ($1,901-$2,000)) to which it is 
assigned. Therefore, for CY 2025, we propose to reassign CPT code 78433 
to APC 1522 (New Technology--Level 22 ($2,001-$2,500)) with a payment 
rate of $2,250.50.
    Please refer to Table 18 below for the proposed OPPS New Technology 
APC and status indicator assignments for CPT codes 78431, 78432, and 
78433 for CY 2025. The proposed CY 2025 payment rates can be found in 
Addendum B to the CY 2025 OPPS/ASC proposed rule via the internet on 
the CMS website.

[[Page 59261]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.032

f. CardiAMP (APC 1590)
    The CardiAMP cell therapy IDE studies are two randomized, double-
blinded, controlled IDE studies: the CardiAMP Cell Therapy Chronic 
Myocardial Ischemia Trial \16\ and the CardiAMP Cell Therapy Heart 
Failure Trial.\17\ The two trials are designed to investigate the 
safety and efficacy of autologous bone marrow mononuclear cell 
treatment for the following: (1) patients with medically refractory and 
symptomatic ischemic cardiomyopathy; and (2) patients with refractory 
angina pectoris and chronic myocardial ischemia. On April 1, 2022, we 
established HCPCS code C9782 to describe the CardiAMP cell therapy IDE 
studies and assigned HCPCS code C9782 to APC 1574 (New Technology--
Level 37 ($9,501-$10,000)) with the status indicator ``T.'' We 
subsequently revised the descriptor for HCPCS code C9782 to: (Blinded 
procedure for New York Heart Association (NYHA) Class II or III heart 
failure, or Canadian Cardiovascular Society (CCS) Class III or IV 
chronic refractory angina; transcatheter intramyocardial 
transplantation of autologous bone marrow cells (e.g., mononuclear) or 
placebo control, autologous bone marrow harvesting and preparation for 
transplantation, left heart catheterization including ventriculography, 
all laboratory services, and all imaging with or without guidance 
(e.g., transthoracic echocardiography, ultrasound,

[[Page 59262]]

fluoroscopy), all device(s), performed in an approved Investigational 
Device Exemption (IDE) study) to clarify the inclusion of the Helix 
trans endocardial injection catheter device in the descriptor. 
Additionally, we determined that APC 1590 (New Technology--Level 39 
($15,001-$20,000)) most accurately accounted for the resources 
associated with furnishing the procedure described by HCPCS code C9782.
---------------------------------------------------------------------------

    \16\ ClinicalTrials.gov. ``Randomized Controlled Pivotal Trial 
of Autologous Bone Marrow Cells Using the CardiAMP Cell Therapy 
System in Patients With Refractory Angina Pectoris and Chronic 
Myocardial Ischemia.'' Accessed May 10, 2022. https://clinicaltrials.gov/ct2/show/NCT03455725?term=NCT03455725&rank=1.
    \17\ ClinicalTrials.gov. ``Randomized Controlled Pivotal Trial 
of Autologous Bone Marrow Mononuclear Cells Using the CardiAMP Cell 
Therapy System in Patients With Post Myocardial Infarction Heart 
Failure.'' Accessed May 10, 2022. https://clinicaltrials.gov/ct2/show/NCT02438306.
---------------------------------------------------------------------------

    For CY 2025, the OPPS payment rates are proposed to be based on 
available CY 2023 claims data. We have identified three single 
frequency paid claims for C9782 for ratesetting for CY 2025. As this is 
below the threshold of 100 claims for a service within a year, we would 
designate C9782 as a low volume service and apply our universal low 
volume APC policy. Under this policy, we would use the highest of the 
geometric mean cost, arithmetic mean cost, or median cost based on up 
to 4 years of claims data to assign CPT codes C9782 to the appropriate 
New Technology APC. Our analysis of the data found the geometric mean 
cost of the service is approximately $18,045, the arithmetic mean cost 
of the service is approximately $18,332, and the median cost of the 
service is approximately $20,394. The median was the statistical 
methodology that estimated the highest cost for the service. However, 
because there are only three claims for HCPCS code C9782 from the CY 
2023 claims data, we have concerns that the universal low volume APC 
policy calculations do not accurately capture the cost of the service. 
Given our proposal to maintain current New Technology APC assignments 
for CY 2025 for New Technology APC services with fewer than 10 claims 
in the 4-year lookback period applicable for the universal low-volume 
APC policy, we therefore propose to continue to assign HCPCS code C9782 
to New Technology APC 1590 with a payment rate of $17,050.50.
    Please refer to Table 19 below for the proposed OPPS New Technology 
APC and status indicator assignments for HCPCS code C9782 for CY 2025. 
The proposed CY 2025 payment rates can be found in Addendum B to this 
proposed rule via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TP22JY24.033

g. Atherosclerosis Imaging-Quantitative Computer Tomography (AI-QCT) 
(APC 1511)
    Atherosclerosis Imaging-Quantitative Computer Tomography (AI-QCT) 
is a Software as a Service (SaaS) that assesses the extent of coronary 
artery disease severity. This procedure is performed to quantify the 
extent of coronary plaque and stenosis in patients who have undergone 
coronary computed tomography analysis (CCTA). The AMA CPT Editorial 
Panel established the following four codes associated with this 
service, effective January 1, 2021:
    0623T: Automated quantification and characterization of coronary 
atherosclerotic plaque to assess severity of coronary disease, using 
data from coronary computed tomographic angiography; data preparation 
and transmission, computerized analysis of data, with review of 
computerized analysis output to reconcile discordant data, 
interpretation and report.
    0624T: Automated quantification and characterization of coronary 
atherosclerotic plaque to assess severity of coronary disease, using 
data from coronary computed tomographic angiography; data preparation 
and transmission.
    0625T: Automated quantification and characterization of coronary 
atherosclerotic plaque to assess severity of coronary disease, using 
data from coronary computed tomographic angiography; computerized 
analysis of data from coronary computed tomographic angiography.
    0626T: Automated quantification and characterization of coronary 
atherosclerotic plaque to assess severity of coronary disease, using 
data from coronary computed tomographic angiography; review of 
computerized analysis output to reconcile discordant data, 
interpretation and report.
    Of these four CPT codes, only CPT code 0625T was determined to be 
separately payable in the OPPS and was assigned to status indicator = 
``S'' (Procedure or Service, Not Discounted

[[Page 59263]]

When Multiple) starting October 1, 2022. We assigned CPT code 0625T to 
a separately payable status indicator based on the technology and its 
potential utilization in the HOPD setting, our evaluation of the 
service, as well as input from our medical advisors. The procedure was 
assigned to APC 1511 (New Technology--Level 11 ($900-$1,000)) with a 
payment rate of $950.50.
    For CY 2024, the OPPS payment rates were proposed to be based on 
available CY 2022 claims data. There were 37 claims for CPT code 0625T 
during this time period. As this was below the threshold of 100 claims 
for a service within a year, we explained that we could propose to 
designate CPT code 0625T as a low volume service under our universal 
low volume New Technology APC policy and use the highest of the 
geometric mean cost, arithmetic mean cost, or median cost based on up 
to 4 years of claims data to assign code 0625T to the appropriate New 
Technology APC. We found the geometric mean cost for the service to be 
approximately $3.70, the arithmetic mean cost to be approximately 
$4.10, and the median cost to be approximately $3.50. Under our 
universal low volume New Technology APC policy, we would use the 
greatest of the statistical methodologies, the arithmetic mean, to 
assign CPT code 0625T to New Technology 1491 (New Technology Level 1A--
(0-$10)) with a payment rate of $5.00. However, we acknowledged that, 
because CPT code 0625T was only made separately payable as part of the 
OPPS in October 2022, and, therefore, the claims available only reflect 
two months of data, we were concerned that we do not have sufficient 
claims data to justify reassignment to another New Technology APC (66 
FR 69902). Therefore, consistent with our current policy to retain 
services within New Technology APC groups until we obtain sufficient 
claims data to justify reassignment (66 FR 59902), for CY 2024 we 
adopted as final our proposal to maintain CPT code 0625T's current 
assignment to APC 1511 (New Technology--Level 11 ($901-$1,000) with a 
payment rate of $950.50.
    For setting CY 2025 payment rates, there were only three separately 
payable claims in the CY 2023 data reported for CPT code 0625T that 
have a geometric mean of approximately $180, which is substantially 
lower than the current payment rate of $950.50. In CY 2022 and CY 2023, 
there are a total of 40 separately payable claims reported for CPT code 
0625T, but it is unlikely that a service with a current payment rate of 
$950.50 would have a geometric mean of $4.20, an arithmetic mean of 
$6.60, and a median of $3.52. These findings lead to uncertainty about 
the appropriate payment rate for the service described by CPT code 
0625T. A review of the evidence submitted by the developer of the 
procedure when this procedure was originally assigned to a New 
Technology APC before any claims data were available indicated the 
procedure had a cost between $901 and $1,000. Claims assigned to CPT 
code 0625T from CY 2021 and CY 2022, indicate that the cost of the 
procedure is less than $10, which would not appear to cover basic cost 
of this procedure including computing time, generating a report, and 
having medical personnel interpret the report. For CY 2023, the 
geometric mean cost of approximately $180 based on three claims may 
better reflect the cost of the procedure described by CPT code 0625T, 
but there are not enough claims to be confident about the result. 
Therefore, we propose to use our authority under section 1833(t)(2)(E) 
for CY 2025 to continue to assign CPT code 0625T to APC 1511 (New 
Technology--Level 11 ($901-$1,000) with a payment rate of $950.50 based 
on the data currently available to us, which we believe best reflects 
the cost of the service as described by the New Technology APC 
application.
    Refer to Table 20 below for the proposed OPPS New Technology APC 
and status indicator assignments for CPT code 0625T for CY 2025. The 
proposed CY 2025 payment rates can be found in Addendum B to the CY 
2025 OPPS/ASC proposed rule via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TP22JY24.034

h. Corvia Medical Interatrial Shunt Procedure (APC 1592)
    On July 1, 2020, we established HCPCS code C9760 (Non-randomized, 
non-blinded procedure for nyha class ii, iii, iv heart failure; 
transcatheter implantation of interatrial shunt, including right and 
left heart catheterization, transeptal puncture, trans-esophageal 
echocardiography (tee)/intracardiac echocardiography (ice), and all 
imaging with or without guidance (for example, ultrasound, fluoroscopy) 
performed in an approved investigational device exemption (ide) study, 
performed in an approved investigational device exemption (ide) study) 
to facilitate payment for the

[[Page 59264]]

implantation of the Corvia Medical interatrial shunt.
    As we stated in the CY 2021 OPPS final rule with comment period (85 
FR 85947), we believe that similar resources and device costs are 
involved with the Corvia Medical interatrial shunt procedure and the V-
Wave interatrial shunt procedure. Unlike the V-Wave interatrial shunt, 
which is implanted half the time the associated interatrial shunt 
procedure described by HCPCS code C9758 is billed, the Corvia Medical 
interatrial shunt is implanted every time the associated interatrial 
shunt procedure (HCPCS code C9760) is billed. Therefore, for CY 2021, 
we assigned HCPCS code C9760 to New Technology APC 1592 (New 
Technology--Level 41 ($25,001-$30,000)) with a payment rate of 
$27,500.50. We also modified the code descriptor for HCPCS code C9760 
to remove the phrase ``or placebo control,'' from the descriptor. In CY 
2022, we generally used the same claims data as was used in the CY 2021 
OPPS final rule to set the payment rates for that year. Accordingly, 
because there were no claims for this service in CY 2019, we continued 
to assign HCPCS code C9760 to New Technology APC 1592 in CY 2022. There 
continued to be no claims data for this service in CYs 2021 or 2022, so 
we continued to assign HCPCS code C9760 to New Technology APC 1592 in 
CY 2023 and CY 2024, the years for which we used CY 2021 and CY 2022 
data, respectively, for ratesetting.
    For CY 2025, the OPPS payment rates are proposed to be based on 
available CY 2023 claims data. There were no claims for HCPCS code 
C9760 in CY 2023. Therefore, we propose to continue assigning HCPCS 
code C9760 to New Technology APC 1592.
    Refer to Table 21 below for the proposed OPPS New Technology APC 
and status indicator assignments for CPT code C9760. The proposed CY 
2025 payment rates can be found in Addendum B to this proposed rule via 
the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TP22JY24.035

i. DARI Motion Procedure (APC 1505)
    Effective January 1, 2022, CPT code 0693T (Comprehensive full body 
computer-based markerless 3D kinematic and kinetic motion analysis and 
report) is associated with the DARI Motion Procedure, a service that 
provides human motion analysis to aid clinicians in pre- and post-
operative surgical intervention and in making other treatment 
decisions, including selecting the best course of physical therapy and 
rehabilitation. The technology consists of eight cameras that surround 
a patient, which send live video to a computer workstation that 
analyzes the video to create a 3D reconstruction of the patient without 
the need for special clothing, markers, or devices attached to the 
patient's clothing or skin. For CY 2022, we assigned CPT code 0693T to 
New Technology APC 1505 (New Technology--Level 5 ($301-$400)). For CY 
2023, the OPPS payment rates were based on claims submitted between 
January 1, 2021, and December 31, 2021, processed through June 30, 
2022. Due to its effective date of January 1, 2022, there were no 
claims available for CPT code 0693T for rate setting in CY 2023. 
Therefore, in CY 2023, we continued to assign CPT code 0693T to New 
Technology APC 1505. For CY 2024, there were no claims available, so we 
again continued to assign CPT code 0693T to New Technology APC 1505.
    For CY 2025, the OPPS payment rates are proposed based on available 
CY 2023 claims data. Although CPT code 0693T was effective January 1, 
2022, we have no claims data at this time. Because we have no claims 
data, for CY 2025, we propose to continue to assign CPT code 0693T to 
APC 1505 with a proposed payment rate of $350.50.
    Please refer to Table 22 below for the proposed OPPS New Technology 
APC and status indicator assignments for CPT code 0693T for CY 2025. 
The proposed CY 2025 payment rates can be found in Addendum B to this 
proposed rule via the internet on the CMS website.

[[Page 59265]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.036

j. Instillation of Anti-Neoplastic Pharmacologic/Biologic Agent Into 
Renal Pelvis (APC 1558)
    Effective October 1, 2023, CMS established HCPCS code C9789 
(Instillation of anti-neoplastic pharmacologic/biologic agent into 
renal pelvis, any method, including all imaging guidance, including 
volumetric measurement if performed) and assigned it to New Technology 
APC 1559 (New Technology--Level 22 ($2,001-$2,500)), with a payment 
rate of $2,250.50 based on our review of the clinical and resource 
characteristics of this service.
    This code may be used to describe the unique procedure associated 
with the administration of the drug described by HCPCS code J9281 
(Mitomycin pyelocalyceal instillation, 1 mg) or similar products. HCPCS 
code J9281 may be used to describe the product, Jelmyto (mitomycin for 
pyelocalyceal solution). The FDA approved Jelmyto in 2020, and the FDA 
approved indication and usage for Jelmyto is as an alkylating drug 
indicated for the treatment of adult patients with low-grade Upper 
Tract Urothelial Cancer (LG-UTUS).\18\
---------------------------------------------------------------------------

    \18\ Jelmyto Package Insert. 01/14/2021. https://www.accessdata.fda.gov/drugsatfda_docs/label/2021/211728s002lbl.pdf.
---------------------------------------------------------------------------

    Because we created HCPCS code C9789 effective October 1, 2023, we 
have limited claims data from CY 2023 available for CY 2025 rulemaking. 
Specifically, we only have 6 claims available. Given our proposal to 
maintain current New Technology APC assignments for CY 2025 for New 
Technology APC services with fewer than 10 claims in the 4-year 
lookback period applicable for the universal low-volume APC policy, we 
therefore propose to continue to assign HCPCS code C9789 to New 
Technology APC 1559 (New Technology--Level 22 ($2,001-$2,500)).
    Please refer to Table 23 below for the proposed OPPS New Technology 
APC and status indicator assignments for CPT code C9789 for CY 2025. 
The proposed CY 2025 payment rates can be found in Addendum B to this 
proposed rule via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TP22JY24.037

k. LimFlow TADV Procedure CPT Code 0620T (APC 1579)
    The LimFlow TADV procedure, which is described by CPT code 0620T 
(Endovascular venous arterialization, tibial or peroneal vein, with 
transcatheter placement of intravascular stent graft(s) and closure by 
any method, including percutaneous or open vascular access, ultrasound 
guidance for vascular access when performed, all catheterization(s) and 
intraprocedural roadmapping and imaging guidance necessary to complete 
the intervention, all associated radiological supervision and 
interpretation, when performed), is an endovascular procedure that is 
used to treat patients with chronic limb-

[[Page 59266]]

threatening ischemia. According to the developer, these patients are no 
longer eligible for conventional endovascular or open bypass surgery to 
treat their artery blockage, and without this procedure, they are 
likely to face limb amputation.
    CPT code 0620T was established in January 2021 and was assigned to 
APC 5194 (Level 4 Endovascular Procedures) with a payment rate of 
approximately $17,400, which is the highest-paying APC for endovascular 
procedures. While we proposed to continue to assign CPT code 0620T to 
APC 5194 for CY 2024, we finalized a reassignment to a New Technology 
APC with a higher payment rate based on comments received expressing 
concern that the low payment rate of the procedure would discourage 
providers from performing the procedure and deny access to the 
procedure. To determine the appropriate New Technology APC assignment 
for CY 2024, we looked at the available cost information. There were 
only 15 claims for the procedure for CY 2021 and CY 2022, so the 
LimFlow TADV procedure was subject to our new technology procedure low 
volume APC policy. An analysis of the median, arithmetic mean, and 
geometric mean of CPT code 0620T for CY 2024 rulemaking found that the 
median was approximately $25,800, the arithmetic mean was approximately 
$28,600, and the geometric mean was approximately $26,700. Because the 
arithmetic mean had the highest value of the three cost statistics, for 
CY 2024, we assigned CPT code 0620T to New Technology APC 1578 (New 
Technology--Level 41 ($25,001-$30,000)) with a payment rate of 
$27,500.50.
    For CY 2025, the OPPS payment rates are proposed to be based on 
available CY 2023 claims data. There are only six single frequency 
claims for CPT code 0620T in the CY 2023 claims data. As this is below 
the threshold of 100 claims for a service within a year, we propose to 
again apply our universal low volume APC policy and use the highest of 
the geometric mean cost, arithmetic mean cost, or median cost based on 
up to 4 years of claims data to assign HCPCS code 0620T to the 
appropriate New Technology APC. Considering the available claims data 
for HCPCS code 0620T, the arithmetic mean is approximately $35,000; the 
median is approximately $36,000; and the geometric mean cost is 
approximately $33,000. Of these, the median is the statistical 
methodology that estimates the highest cost for the service. The 
payment rate calculated using this methodology falls within the cost 
band for New Technology APC 1579 (New Technology--Level 42 ($30,001-
$40,000)) with a payment rate of $35,000.50. Therefore, for CY 2024, we 
propose to assign HCPCS code 0620T to New Technology APC 1579.
    Please refer to Table 24 for the proposed New Technology APC and 
status indicator assignments for CPT code 0620T. The proposed CY 2025 
payment rates can be found in Addendum B to this proposed rule via the 
internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TP22JY24.038

l. Liver Histotripsy Service (APC 1576)
    CPT code 0686T (Histotripsy (i.e., non-thermal ablation via 
acoustic energy delivery) of malignant hepatocellular tissue, including 
image guidance) was first effective July 1, 2021, and describes the 
histotripsy service associated with the use of the HistoSonics system. 
Histotripsy is a non-invasive, non-thermal, mechanical process that 
uses a focused beam of sonic energy to destroy cancerous liver tumors 
and is currently in a non-randomized, prospective clinical trial to 
evaluate the efficacy and safety of the device for the treatment of 
primary or metastatic tumors located in the liver.\19\ When HCPCS code 
0686T was first effective, the histotripsy procedure was designated as 
a Category A IDE clinical study (NCT04573881). Since devices in 
Category A IDE studies are excluded from Medicare payment, payment for 
CPT code 0686T only reflected the cost of the service that is performed 
(absent the cost of the device) each time it is reported on a claim. On 
March 2, 2023, the histotripsy IDE clinical study was re-designated as 
a Category B (Non-experimental/Investigational) IDE study. Due to this 
new designation, payment for CPT code 0686T in CY 2024 reflects payment 
for both the service that is performed and the device used each time it 
is reported on a claim. For CY 2024, we assigned CPT code 0686T to

[[Page 59267]]

New Technology APC 1576 (New Technology--Level 39 ($15,001-$20,000)) 
with a payment rate of $17,500.50.
---------------------------------------------------------------------------

    \19\ ClinicalTrials.gov. ``The HistoSonics System for Treatment 
of Primary and Metastatic Liver Tumors Using Histotripsy 
(#HOPE4LIVER) (#HOPE4LIVER).'' Accessed May 10, 2022. https://clinicaltrials.gov/ct2/show/study/NCT04573881.
---------------------------------------------------------------------------

    For CY 2025, OPPS payment rates are proposed to be based on 
available CY 2023 claims data. We have identified one claim for CPT 
code 0686T within the CY 2023 claims data. As the available claims data 
is below the threshold of 100 claims for a service within a year, we 
would propose to designate CPT code 0686T as a low volume service under 
our universal low volume APC policy, and use the highest of the 
geometric mean cost, arithmetic mean cost, or median cost to assign CPT 
code 0686T to the appropriate New Technology APC. However, because 
there is only a single claim in the CY 2023 data, we have concerns that 
the universal low volume APC policy calculations do not accurately 
capture the cost of the service.
    Given our proposal to maintain current New Technology APC 
assignments for CY 2025 for New Technology APC services with fewer than 
10 claims in the 4-year lookback period applicable for the universal 
low-volume APC policy, and based on the fact that there have only been 
3 claims for CPT code 0686T in the prior 4-year period, we propose to 
continue to assign CPT code 0686T to APC 1576 (New Technology--Level 39 
($15,001-$20,000)) with a payment rate of $17,500.50 as shown in Table 
25.
    Please refer to Table 25 below for the proposed OPPS New Technology 
APC and status indicator assignments for CPT code 0686T for CY 2025. 
The proposed CY 2025 payment rates can be found in Addendum B to this 
proposed rule.
[GRAPHIC] [TIFF OMITTED] TP22JY24.039

m. LiverMultiScan Service (APC 1511)
    Effective July 1, 2021, CPT codes 0648T (Quantitative magnetic 
resonance for analysis of tissue composition (e.g., fat, iron, water 
content), including multiparametric data acquisition, data preparation 
and transmission, interpretation and report, obtained without 
diagnostic mri examination of the same anatomy (e.g., organ, gland, 
tissue, target structure) during the same session; single organ) and 
0649T (Quantitative magnetic resonance for analysis of tissue 
composition (e.g., fat, iron, water content), including multiparametric 
data acquisition, data preparation and transmission, interpretation and 
report, obtained with diagnostic mri examination of the same anatomy 
(e.g., organ, gland, tissue, target structure); single organ (list 
separately in addition to code for primary procedure)) are associated 
with the LiverMultiScan service. LiverMultiScan is a Software as a 
medical Service (SaaS) that is intended to aid the diagnosis and 
management of chronic liver disease, the most prevalent of which is 
Non-Alcoholic Fatty Liver Disease (NAFLD). It provides standardized, 
quantitative imaging biomarkers for the characterization and assessment 
of inflammation, hepatocyte ballooning, and fibrosis, as well as 
steatosis, and iron accumulation. LiverMultiScan receives MR images 
acquired from patients' providers and analyzes the images using their 
proprietary Artificial Intelligence (AI) algorithms. It then sends the 
providers a quantitative metric report of the patient's liver fibrosis 
and inflammation. In accordance with our SaaS add-on codes policy (87 
FR 72032 to 72033), SaaS CPT add-on codes are assigned to the same APCs 
and status indicators as their standalone codes. Thus, CPT code 0649T, 
the add-on code for LiverMultiScan, is assigned to the identical APC 
and status indicator as CPT code 0648T, the standalone code for the 
same service. For CY 2024, we assigned CPT codes 0648T and 0649T to New 
Technology APC 1511 (New Technology--Level 11 ($901-$1,000) with a 
payment rate of $950.50.
    For CY 2025, the OPPS payment rates are proposed to be based on 
available CY 2023 claims data. We identified 71 claims for CPT code 
0648T and 72 claims CPT code 0649T for CY 2023. As this is below the 
threshold of 100 claims for each code within a year, we propose to 
apply our universal low volume APC policy and use the highest of the 
geometric mean cost, arithmetic mean cost, or median cost based on up 
to 4 years of claims data to assign CPT codes 0648T and 0649T to the 
appropriate New Technology APC. There are available claims data from CY 
2021 and CY 2022 for CPT codes 0648T and 0649T. Our analysis of the 
combined data, 114 claims for CPT code 0648T and 115 claims for CPT 
code 0649T, yielded a geometric mean cost of approximately $180, an 
arithmetic mean cost of approximately $234, and a median cost of 
approximately $197. We believe it is appropriate to utilize our 
universal low volume APC policy to assign the LiverMultiScan service to 
a New Technology APC because we believe that the combined claims data 
from CY 2021 to CY 2023 provide sufficient claims to capture the cost 
of the service. The arithmetic mean was the statistical methodology 
that estimated the highest cost for CPT codes 0648T and 0649T. 
Therefore, we

[[Page 59268]]

propose to reassign CPT codes 0648T and 0649T to New Technology APC 
1504 (New Technology--Level 4 ($201-$300)) with a payment rate of 
$250.50 as shown in Table 26.
[GRAPHIC] [TIFF OMITTED] TP22JY24.040

n. Optellum Lung Cancer Prediction (LCP) (APC 1508)
    CPT codes 0721T (Quantitative computed tomography (CT) tissue 
characterization, including interpretation and report, obtained without 
concurrent CT examination of any structure contained in previously 
acquired diagnostic imaging) and 0722T (Quantitative computed 
tomography (CT) tissue characterization, including interpretation and 
report, obtained with concurrent CT examination of any structure 
contained in the concurrently acquired diagnostic imaging dataset (list 
separately in addition to code for primary procedure)) became effective 
July 1, 2022, and are associated with the Optellum LCP technology. The 
Optellum LCP applies an algorithm to a patient's CT scan to produce a 
raw risk score for a patient's pulmonary nodule. The physician uses the 
risk score to quantify the risk of lung cancer and to determine what 
the next management step should be for the patient (for example, CT 
surveillance versus invasive procedure). In accordance with our SaaS 
add-on codes policy (87 FR 72032 to 72033), SaaS CPT add-on codes are 
assigned to the same APCs and status indicators as their standalone 
codes. Thus, CPT code 0722T, the add-on code for the Optellum LCP 
service, is assigned to the identical APC and status indicator as CPT 
code 0721T, the standalone code for the same service. For CY 2024, we 
assigned CPT codes 0721T and 0722T to APC New Technology 1508 (New 
Technology--Level 8 ($601-$700)).
    For CY 2025, the OPPS payment rates are proposed to be based on 
available CY 2023 claims data. We identified three claims for CPT codes 
0721T and 0722T for ratesetting for CY 2025. As this is below the 
threshold of 100 claims for a service within a year, we would usually 
propose to apply our universal low volume APC policy and use the 
highest of the geometric mean cost, arithmetic mean cost, or median 
cost based on up to 4 years of claims data to assign CPT codes 0721T 
and 0722T to the appropriate New Technology APC. There are available 
claims data only from CY 2023 for CPT codes 0721T and 0722T. Our 
analysis of the data for CPT code 0721T found the geometric mean cost 
of the service is approximately $84, the arithmetic mean cost of the 
service is approximately $98, and the median cost of the service is 
approximately $130. We did not identify any reported claims for CPT 
code 0722T. However, because there are only three claims for the 
Optellum LCP service and these claims show a much lower cost than would 
be expected based on the current APC assignment of this service, we 
have concerns that the universal low volume APC policy calculations do 
not accurately capture the cost of the service. We believe it is 
appropriate to continue assigning the Optellum LCP service to its 
current APC assignment determined from the New Technology APC 
application review due to insufficient claims data to capture the cost 
of this service at this time. Given our proposal to maintain current 
New Technology APC assignments for CY 2025 for New Technology APC 
services with fewer than 10 claims in the 4-year lookback period 
applicable for the universal low-volume APC policy, we propose to 
continue to assign CPT codes

[[Page 59269]]

0721T and 0722T to New Technology APC 1508 (New Technology--Level 8 
($601-$700)) with a proposed payment rate of $650.50.
    Please refer to Table 27 below for the proposed OPPS New Technology 
APC and status indicator assignments for HCPCS codes 0721T and 0722T 
for CY 2025. The proposed CY 2025 payment rates can be found in 
Addendum B to this proposed rule via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TP22JY24.041

o. Quantitative Magnetic Resonance (QMR) for Analysis of Tissue 
Composition (APC 1511)
    Effective January 1, 2022, CPT codes 0697T (Quantitative magnetic 
resonance for analysis of tissue composition (e.g., fat, iron, water 
content), including multiparametric data acquisition, data preparation 
and transmission, interpretation and report, obtained without 
diagnostic mri examination of the same anatomy (e.g., organ, gland, 
tissue, target structure) during the same session; multiple organs) and 
0698T (Quantitative magnetic resonance for analysis of tissue 
composition (e.g., fat, iron, water content), including multiparametric 
data acquisition, data preparation and transmission, interpretation and 
report, obtained with diagnostic mri examination of the same anatomy 
(e.g., organ, gland, tissue, target structure); multiple organs (list 
separately in addition to code for primary procedure)) are associated 
with the CoverScan Software as a medical Service (SaaS). This service 
is a medical image management and processing software package that 
analyzes MR data and provides quantified metrics of multiple organs 
such as the heart, lungs, liver, spleen, pancreas, and kidney. In 
accordance with our SaaS add-on codes policy (87 FR 72032 to 72033), 
SaaS CPT add-on codes are assigned to the same APCs and status 
indicators as their standalone codes. Thus, CPT code 0698T, the add-on 
code for CoverScan is be assigned to the identical APC and status 
indicator as CPT code 0697T, the standalone code for the same service. 
For CY 2024, we assigned CPT codes 0697T and 0698T to New Technology 
APC 1511 (New Technology--Level 11 ($900-$1,000)).
    For CY 2025, the OPPS payment rates are proposed to be based on 
available CY 2023 claims data. We identified 46 claims for CPT code 
0698T and no claims for CPT code 0697T in CY 2023. As this is below the 
threshold of 100 claims for a service within a year, we propose to 
apply our universal low volume APC policy and use the highest of the 
geometric mean cost, arithmetic mean cost, or median cost based on up 
to 4 years of claims data to assign CPT codes 0697T and 0698T to the 
appropriate New Technology APC. There are available claims data from CY 
2022 and CY 2023 for CPT code 0697T and 0698T. Our analysis of the 
combined data, zero claims for CPT code 0697T and 46 claims for CPT 
code 0698T, yielded a geometric mean cost of approximately $444, an 
arithmetic mean cost of approximately $622, and a median cost of 
approximately $786. The median cost is the statistical methodology that 
estimates the highest cost for CPT codes 0697T and 0698T. Therefore, we 
propose, for CY 2025, to reassign CPT codes 0697T and 0698T to APC 1509 
(New Technology--Level 9 ($701-$800)) with a payment rate of $750.50.
    Refer to Table 28 below for the proposed OPPS New Technology APC 
and status indicator assignments for CPT codes 0697T and 0698T for CY 
2025. The proposed CY 2025 payment rates can be found in Addendum B to 
this proposed rule via the internet on the CMS website.

[[Page 59270]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.042

p. Quantitative Magnetic Resonance Cholangiopancreatography (QMRCP) 
(APC 1511)
    Effective July 1, 2022, CPT codes 0723T (Quantitative magnetic 
resonance cholangiopancreatography (QMRCP) including data preparation 
and transmission, interpretation and report, obtained without 
diagnostic magnetic resonance imaging (MRI) examination of the same 
anatomy (e.g., organ, gland, tissue, target structure) during the same 
session) and 0724T (Quantitative magnetic resonance 
cholangiopancreatography (QMRCP), including data preparation and 
transmission, interpretation and report, obtained with diagnostic 
magnetic resonance imaging (MRI) examination of the same anatomy (e.g., 
organ, gland, tissue, target structure) (list separately in addition to 
code for primary procedure)) are associated with the QMRCP Software as 
a medical Service (SaaS). The service performs quantitative assessment 
of the biliary tree and gallbladder. It uses a proprietary algorithm 
that produces a three-dimensional reconstruction of the biliary tree 
and pancreatic duct and also provides precise quantitative information 
of biliary tree volume and duct metrics. In accordance with our SaaS 
add-on codes policy (87 FR 72032 to 72033), SaaS CPT add-on codes are 
assigned to the same APCs and status indicators as their standalone 
codes. Consistent with our SaaS add-on codes policy, CPT code 0724T, 
the add-on code for QMRCP is assigned to the identical APC and status 
indicator as CPT code 0723T, the standalone code for the same service. 
For CY 2024, we assigned CPT codes 0723T and 0724T to New Technology 
APC 1511 (New Technology--Level 11 ($900-$1,000)).
    For CY 2025, the OPPS payment rates are proposed to be based on 
available CY 2023 claims data. We identified 3 claims for CPT code 
0724T and no claims for CPT code 0723T in CY 2023. As this is below the 
threshold of 100 claims for a service within a year, we would usually 
propose to apply our universal low volume APC policy and use the 
highest of the geometric mean cost, arithmetic mean cost, or median 
cost based on up to 4 years of claims data to assign CPT codes 0723T 
and 0724T to the appropriate New Technology APC. There is only a single 
claim from CY 2022 for CPT code 0724T and no claims for CPT code 0723T. 
For CY 2023, we received 3 claims for CPT code for CPT 0724T and no 
claims for CPT code 0723T. Our analysis of the combined CY 2022 and CY 
2023 data for CPT code 0723T and 0724T found the geometric mean cost of 
the service is approximately $26, the arithmetic mean cost of the 
service is approximately $26, and the median cost of the service is 
approximately $27. However, because there are only three claims for CPT 
codes 0723T and 0724T and these claims show costs far below what would 
be expected for these services given their current APC assignments, we 
have concerns that the universal low volume APC policy calculations do 
not accurately capture the cost of the service. Given our proposal to 
maintain current New Technology APC assignments for CY 2025 for New 
Technology APC services with fewer than 10 claims in the 4-year 
lookback period applicable for the universal low-volume APC policy, we 
propose to continue to assign the CPT codes 0723T and 0724T to New 
Technology APC 1511 (New Technology--Level 11 ($901-$1,000)) with a 
payment rate of $950.50.
    Refer to Table 29 below for the proposed OPPS New Technology APC 
and status indicator assignments for

[[Page 59271]]

CPT codes 0723T and 0724T for CY 2025. The proposed CY 2025 payment 
rates can be found in Addendum B to this proposed rule via the internet 
on the CMS website.
[GRAPHIC] [TIFF OMITTED] TP22JY24.043

q. Scalp Cooling (APC 1514)
    CPT code 0662T (Scalp cooling, mechanical; initial measurement and 
calibration of cap) became effective on July 1, 2021, to describe 
initial measurement and calibration of a scalp cooling device for use 
during chemotherapy administration to prevent hair loss. According to 
Medicare's National Coverage Determination (NCD) policy, specifically, 
NCD 110.6 (Scalp Hypothermia During Chemotherapy to Prevent Hair Loss), 
the scalp cooling cap itself is classified as an incident to supply to 
a physician service, and would not be paid under the OPPS; however, 
interested parties have indicated that there are substantial resource 
costs of around $1,900 to $2,400 associated with calibrating and 
fitting the cap. CPT guidance states that CPT code 0662T should be 
billed once per chemotherapy session, which we interpret to mean once 
per course of chemotherapy. Therefore, if a course of chemotherapy 
involves, for example, 6 or 18 sessions, HOPDs should report CPT 0662T 
only once for that 6 or 18 therapy sessions. For CY 2022, we assigned 
CPT code 0662T to APC New Technology 1520 (New Technology--Level 20 
($1,801-$1,900)) with a payment rate of $1,850.50. For CY 2023, we did 
not have any claims data, so we continued to assign CPT code 0662T to 
APC 1520. For CY 2024 we finalized reassignment of CPT code 0662T to 
APC 1514 (New Technology--Level 14 ($1,201-$1,300)) with a payment rate 
of $1,250.50 based on 11 single frequency claims.
    For CY 2025, the OPPS payment rates are proposed to be based on 
available CY 2023 claims data. The Scalp Cooling service became 
effective in the OPPS in CY 2022, and we have identified 38 single 
frequency paid claims for CPT code 0662T for CY 2023. As this is below 
the threshold of 100 claims for a service within a year, we propose to 
designate CPT code 0662T as a low volume service under our universal 
low volume APC policy and to use the highest of the geometric mean 
cost, arithmetic mean cost, or median cost based on up to 4 years of 
claims data to assign the service to the appropriate New Technology 
APC. Based on our review of the available claims, the geometric mean 
cost for CPT code 0662T is approximately $841; the median is 
approximately $1,351; and the arithmetic mean is approximately $1,361. 
Therefore, for CY 2025, we propose to designate this service as a low 
volume service under our universal low volume APC policy and to 
reassign CPT code 0662T to APC 1515 (New Technology--Level 15 ($1,301-
$1,400)) with a payment rate of $1,350.50 for CY 2025 based on the 
arithmetic mean of approximately $1,361.
    Refer to Table 30 below for the current and proposed OPPS New 
Technology APC and status indicator assignments for CPT code 0662T. The 
proposed CY 2025 payment rates can be found in Addendum B to this 
proposed rule via the internet on the CMS website.

[[Page 59272]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.044

r. Supervised Visits for Esketamine Self-Administration (APCs 1513 and 
1518)
    On March 5, 2019, FDA approved SpravatoTM (esketamine) 
nasal spray, used in conjunction with an oral antidepressant, for 
treatment of depression in adults who have tried other antidepressant 
medicines but have not benefited from them (treatment-resistant 
depression (TRD)). This is the first FDA approval of esketamine for any 
use.
    Esketamine is a noncompetitive N-methyl D-aspartate (NMDA) receptor 
antagonist. It is a nasal spray supplied as an aqueous solution of 
esketamine hydrochloride in a vial with a nasal spray device. Each 
device delivers two sprays containing a total of 28 mg of esketamine. 
Patients would require either two (2) devices (for a 56 mg dose) or 
three (3) devices (for an 84 mg dose) per treatment.
    Because of the risk of serious adverse outcomes resulting from 
sedation and dissociation caused by esketamine nasal spray 
administration, and the potential for misuse of the product, it is only 
available through a restricted distribution system under a Risk 
Evaluation and Mitigation Strategy (REMS). A REMS is a drug safety 
program that the FDA can require for certain medications with serious 
safety concerns to help ensure the benefits of the medication outweigh 
its risks. The SpravatoTM REMS program requires the 
esketamine nasal spray to be dispensed and administered to enrolled 
patients in health care settings that are certified in the REMS. See 
www.fda.gov for more information regarding the SpravatoTM 
REMS program compliance requirements.
    A treatment session of esketamine consists of instructed nasal 
self-administration by the patient followed by a period of at least 2 
hours post-administration observation of the patient under direct 
supervision of a health care professional in the certified health care 
setting. Refer to the CY 2020 PFS final rule and interim final rule for 
more information about supervised visits for esketamine nasal spray 
self-administration (84 FR 63102 through 63105).
    To facilitate prompt beneficiary access to the new, potentially 
life-saving treatment for TRD using esketamine, we created two new 
HCPCS G codes, G2082 and G2083, effective January 1, 2020. HCPCS code 
G2082 is for an outpatient visit for the evaluation and management of 
an established patient who requires the supervision of a physician or 
other qualified health care professional and provision of up to 56 mg 
of esketamine through nasal self-administration and includes two hours 
of post-administration observation. For CY 2020, HCPCS code G2082 was 
assigned to New Technology APC 1508 (New Technology--Level 8 ($601-
$700)) with a payment rate of $650.50. HCPCS code G2083 describes a 
similar service to HCPCS code G2082 but involves the administration of 
more than 56 mg of esketamine. For CY 2020, HCPCS code G2083 was 
assigned to New Technology APC 1511 (New Technology--Level 11 ($901-
$1,000)) with a payment rate of $950.50. Updates to the APC assignments 
for G2082 and G2083 have been made in past rules. See the CY 2021 OPPS/
ASC final rule with comment period (85 FR 85948), CY 2022 OPPS/ASC 
final rule with comment period (86 FR 63538), CY 2023 OPPS/ASC final 
rule with comment period (87 FR 71816-71817), and CY 2024 OPPS/ASC 
final rule with comment period (88 FR 81628-81630) for these updates.
    For CY 2025, the OPPS payment rates are proposed based on available 
CY 2023 claims data as the available single frequency claims exceed the 
100 claims threshold generally used for our universal low volume 
policy. Therefore, for CY 2025, we propose to assign HCPCS codes G2082 
and G2083 to New Technology APCs based on the codes' geometric mean 
costs. Specifically, we propose to assign HCPCS code G2082 to New 
Technology APC 1512 (New Technology--Level 12 ($1,001-$1,100)) with a 
payment rate of $1,050.50 based on its geometric mean cost of $1,087, 
which was calculated using the available 424 single frequency claims 
from CY 2023 claims data. We also propose to assign HCPCS code G2083 to 
New Technology APC 1518 (New Technology--Level 18 ($1,601-$1,700)) with 
a payment rate of $1,650.50 based on its geometric mean cost of $1,643, 
which was calculated using the available 2,482 single frequency claims 
from CY 2023 claims data. We note, as we have begun to gather adequate 
claims data on these codes, we are considering placing HCPCS codes 
G2082 and G2083 in clinical APCs through future rulemaking.
    The proposed New Technology APC and status indicator assignments 
for HCPCS codes G2082 and G2083 are shown in Table 31. The proposed CY 
2025 payment rates for these HCPCS codes can be found in Addendum B to 
this proposed rule.

[[Page 59273]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.045

s. Surfacer[supreg] Inside-Out[supreg] Access Catheter System (APC 
1534)
    HCPCS code C9780 (Insertion of central venous catheter through 
central venous occlusion via inferior and superior approaches (e.g., 
inside-out technique), including imaging guidance) describes the 
procedure associated with the use of the Surfacer[supreg] Inside-
Out[supreg] Access Catheter System that is designed to address central 
venous occlusion. HCPCS code C9780 was established on October 1, 2021, 
and since its establishment the code has been assigned to New 
Technology APC 1534 (New Technology--Level 34 ($8,001-$8,500)).
    For CY 2025, there were only 3 single frequency claims in CY 2023 
for HCPCS code C9780. There were no available claims from CY 2021 or CY 
2022. Given our proposal to maintain current New Technology APC 
assignments for CY 2025 for New Technology APC services with fewer than 
10 claims in the 4-year lookback period applicable for the universal 
low-volume APC policy, we propose to continue to assign HCPCS code 
C9780 to APC 1534 (New Technology--Level 34 ($8,001-$8,500))) with a 
payment rate of $8,250.50. Refer to Table 32 for the proposed New 
Technology APC and status indicator assignments for HCPCS code C9780.

[[Page 59274]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.046

t. TASS (APC 1537)
    The Transcatheter Atrial Shunt System (TASS) is a nitinol self-
expanding cardiovascular implant consisting of four arms including two 
left atrial (LA) arms and two coronary sinus (CS) arms placed between 
the left atrium and coronary sinus to create a 7mm flow diameter 
channel for blood to flow from the high pressure region of the left 
atrium to the lower pressure region of the right atrium via the 
coronary sinus. TASS is currently in a Category B IDE clinical trial. 
Effective October 1, 2023 CMS created HCPCS code C9792 (Blinded or 
nonblinded procedure for symptomatic New York Heart Association (NYHA) 
Class II, III, IVa heart failure; transcatheter implantation of left 
atrial to coronary sinus shunt using jugular vein access, including all 
imaging necessary to intra procedurally map the coronary sinus for 
optimal shunt placement (e.g., TEE or ICE ultrasound, fluoroscopy), 
performed under general anesthesia in an approved investigational 
device exemption (IDE) study) to describe the TASS service and assigned 
it to APC 1537 (New Technology--Level 37 ($9,501-$10,000)) with a 
payment rate of $9750.50.
    For CY 2025, the proposed OPPS payment rates are based on available 
CY 2023 claims data. Due to the effective date of the code of October 
1, 2023, there were no claims available for HCPCS code C9792 for rate 
setting in CY 2024. Therefore, in CY 2025, we propose to continue to 
assign HCPCS code C9792 to APC 1537.
    Please refer to Table 33 below for the current and proposed OPPS 
New Technology APC and status indicator assignment for HCPCS code 
C9792. The proposed CY 2025 payment rates can be found in Addendum B to 
this proposed rule via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TP22JY24.047

u. Magnetic Resonance Imaging With Inhaled Hyperpolarized Xenon-129 
Contrast Agent (APC 1551)
    HCPCS code C9791 (Magnetic resonance imaging with inhaled 
hyperpolarized xenon-129 contrast agent, chest, including preparation 
and administration of agent) was established on October 1, 2023. For CY 
2023, we assigned HCPCS code C9791 to New Technology APC 1551 (New 
Technology--Level 14 ($1,201-$1,300)). For CY 2024, the OPPS payment 
rates were based on claims submitted between January 1, 2022, and 
December 31, 2022, processed through June 30, 2023. Due to the 
effective date of the

[[Page 59275]]

service of October 1, 2023, there were no claims available for HCPCS 
code C9791 for rate setting in CY 2024. Therefore, in CY 2024, we 
continued to assign HCPCS code C9791 to New Technology APC 1551.
    For CY 2025, the proposed OPPS payment rates are generally based on 
available CY 2023 claims data. Although HCPCS code C9791 was effective 
October 1, 2023, we do not have any claims data for the service. 
Therefore, for CY 2025, we propose to continue to assign HCPCS code 
C9791 to APC 1551 with a proposed payment rate of $1,250.50.
    Refer to Table 34 for the proposed OPPS New Technology APC and 
status indicator assignment for HCPCS code C9791 for CY 2025. The 
proposed CY 2025 payment rates can be found in Addendum B to this 
proposed rule via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TP22JY24.048

D. Universal Low Volume APC Policy for Clinical and Brachytherapy APCs

    In the CY 2022 OPPS/ASC final rule with comment period (86 FR 63743 
through 63747), we adopted a policy to designate clinical and 
brachytherapy APCs as low volume APCs if they have fewer than 100 
single claims that can be used for ratesetting purposes in the claims 
year used for ratesetting for the prospective year. For the CY 2025 
OPPS/ASC proposed rule, CY 2023 claims are generally the claims used 
for ratesetting; and clinical and brachytherapy APCs with fewer than 
100 single claims from CY 2023 that can be used for ratesetting would 
be low volume APCs subject to our universal low volume APC policy. As 
we stated in the CY 2022 OPPS/ASC final rule with comment period, we 
adopted this policy to reduce the volatility in the payment rate for 
those APCs with fewer than 100 single claims. Where a clinical or 
brachytherapy APC has fewer than 100 single claims that can be used for 
ratesetting, under our low volume APC payment adjustment policy, we 
determine the APC cost as the greatest of the geometric mean cost, 
arithmetic mean cost, or median cost based on up to 4 years of claims 
data. We excluded APC 5853 (Partial Hospitalization for CMHCs) and APC 
5863 (Partial Hospitalization for Hospital-based PHPs) from our 
universal low volume APC policy given the different nature of policies 
that affect the partial hospitalization program. We also excluded APC 
2698 (Brachytx, stranded, nos) and APC 2699 (Brachytx, non-stranded, 
nos) as our current methodology for determining payment rates for non-
specified brachytherapy sources is appropriate.
    Based on claims data available for the CY 2025 OPPS/ASC proposed 
rule, we proposed to designate six brachytherapy APCs and five clinical 
APCs as low volume APCs under the OPPS. The six brachytherapy APCs and 
five clinical APCs meet our criteria of having fewer than 100 single 
claims in the claims' year used for ratesetting (CY 2023 for the CY 
2025 OPPS/ASC proposed rule). Nine of the 11 APCs were designated as 
low volume APCs in CY 2024. Based on data for the CY 2025 OPPS/ASC 
proposed rule, APC 2645 (Brachytx, non-stranded, gold-198) and APC 5881 
(Ancillary Outpatient Services When Patient Dies) now meet our criteria 
to be designated a Low Volume APCs; and we proposed to designate those 
APCs as such for CY 2025.
    Table 35 includes the CY 2023 claims available for ratesetting for 
each of the APCs we are proposing to be designated as low volume APCs 
for CY 2025. The cost statistics for our proposed low volume APCs, such 
as the median, arithmetic mean, and geometric mean cost are available 
for download with this proposed rule on the CMS website. We refer 
readers to our website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices; 
click on the relevant regulation to download the low volume APC cost 
statistics under the comprehensive (OPPS) ratesetting methodology in 
the downloads section of the web page.

[[Page 59276]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.049

E. APC-Specific Policies

1. Request for Information on Cardiac CT Services
    For the 2006 coding update, the AMA's CPT Editorial Panel 
established six Category III CPT codes to describe cardiac computed 
tomography angiography (cardiac CT services) with contrast materials 
effective January 1, 2006. The codes were active and separately payable 
under the OPPS between January 1, 2006 and December 31, 2009. The CPT 
Editorial Panel deleted the Category III CPT codes and replaced them 
with Category I CPT codes 75572 through 75574 effective January 1, 
2010. With the deletion of the Category III CPT codes on December 31, 
2009, we crosswalked the APC assignments from the Category III CPT 
codes (predecessor codes) to the new Category I CPT codes effective 
January 1, 2010. Since 2010, the Category I CPT codes describing 
cardiac computed tomography angiography with contrast materials are CPT 
codes 75572, 75573, and 75574. The codes and their long descriptors are 
listed below.
     75572: Computed tomography, heart, with contrast material, 
for evaluation of cardiac structure and morphology (including 3D image 
postprocessing, assessment of cardiac function, and evaluation of 
venous structures, if performed).
     75573: Computed tomography, heart, with contrast material, 
for evaluation of cardiac structure and morphology in the setting of 
congenital heart disease (including 3D image postprocessing, assessment 
of left ventricular (LV) cardiac function, right ventricular (RV) 
structure and function and evaluation of vascular structures, if 
performed).
     75574: Computed tomographic angiography, heart, coronary 
arteries and bypass grafts (when present), with contrast material, 
including 3D image postprocessing (including evaluation of cardiac 
structure and morphology, assessment of cardiac function, and 
evaluation of venous structures, if performed).
    The cardiac CT codes that are described by CPT codes 75572, 75573, 
and 75574 have been paid separately under the OPPS since 2010. From CY 
2015 through CY 2024, the OPPS payment rate, based on the geometric 
mean cost (GMC) for the cardiac CT codes, has ranged between $175 and 
$265 for these codes, as listed in Table 36 below.

[[Page 59277]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.050

    We note that the OPPS payment rate applies only to the hospital 
outpatient facility and does not include the physician service payment. 
Physician services are paid under Medicare's Physician Fee Schedule 
(PFS).
    As we have stated in every OPPS/ASC proposed and final rule, we 
update the OPPS payment rates on an annual basis consistent with the 
requirements set forth in section 1833(t)(9)(A) of the Act, which 
requires the HHS Secretary to review, not less often than annually, and 
revise the APC groups, the relative payment weights, and the wage and 
other adjustments to take into account changes in medical practice, 
changes in technology, the addition of new services, new cost data, and 
other relevant information and factors. Because of the annual updates, 
OPPS payment rates for services may fluctuate from year to year. We 
note that we generally use the latest claims data available to set the 
annual payment rates. Payment rates for the CY 2025 OPPS/ASC final rule 
will be based on claims with dates of service between January 1, 2023, 
and December 31, 2023, processed through June 30, 2024.
    Over the years we have received comments noting that the payment 
for these codes has declined since 2017. Commenters have indicated that 
the payment amount is insufficient to cover the cost of providing the 
service and have stated that the payment amount does not consider the 
hospital resources required to perform these services, including the 
use of the equipment, medication administration, staff time, and 
scanner time. We have maintained over the years that an analysis of our 
claims data for these three (3) codes have shown geometric mean costs 
consistent with the geometric mean cost for APC 5571 (Level 1 Imaging 
with Contrast).
    We have also received comments in the past urging CMS to allow 
hospitals the flexibility to submit charges for cardiac CT services 
with a revenue code other than CT scan (035X) and Radiology Diagnostic 
(032X) revenue codes, implying that MACs had applied edits to the 
cardiac CT codes that prevented hospitals from reporting a cardiology 
(048X) revenue code when appropriate. It is longstanding CMS policy 
that hospital outpatient facilities are responsible for reporting the 
appropriate cost centers and revenue codes on claims. As stated in 
section 20.5 in Chapter 4 (Part B Hospital) of the Medicare Claims 
Processing Manual, CMS ``does not instruct hospitals on the assignment 
of HCPCS codes to revenue codes for services provided under OPPS since 
hospitals' assignment of cost vary. Where explicit instructions are not 
provided, HOPDs should report their charges under the revenue code that 
will result in the charges being assigned to the same cost center to 
which the cost of those services are assigned in the cost report.'' We 
have consistently stated that hospital outpatient facilities must 
determine the most appropriate cost center and revenue code for the 
cardiac CT codes (87 FR 71849, 88 FR 81664).
    After we issued the CY 2024 OPPS/ASC final rule, interested parties 
notified CMS of a specific claims edit that may have affected the 
revenue codes reported with the cardiac CT codes in prior years' claims 
data. CMS confirmed the existence of the revenue code edit and removed 
the revenue code edit in early December 2023. We informed the public of 
our findings and the changes that we made in the January 2024 OPPS 
Update (Transmittal 12421, Change Request 13488), dated December 21, 
2023. Specifically, we stated the following: ``We recently identified 
an outdated return-to-provider (RTP) Healthcare Common Procedure Coding 
System-to-revenue code edit that resulted in certain claims submissions 
being limited to specific revenue codes for CPT codes 75572, 75573, and 
75574. These claims were returned to the providers for resubmission. 
The outdated edit has been removed; and providers, when appropriate, 
may begin billing these codes with any appropriate revenue code.''
    We believe the edit may have prevented some providers from 
reporting the cardiology revenue code (048X), which maps to the 
cardiology cost center (03140), when billing for cardiac CT services. 
In the past, commenters have indicated that the cardiology cost center 
has a higher cost-to-charge ratio (CCR) than the imaging cost centers, 
and they believe the inability to report the cardiology revenue code 
has resulted in a lower payment rate for cardiac CT services. Since the 
OPPS ratesetting process utilizes the applicable cost center's CCR to 
reduce the charges on the claim to estimated cost, utilizing cost 
centers with lower CCRs results in a lower OPPS payment compared to 
utilizing cost centers with higher CCRs. With the edit no longer in 
place, hospitals may bill for cardiac CT services with whichever 
revenue code they believe appropriate for CY 2024, and the CY 2026 OPPS 
payment rates (which most likely will be based on CY 2024 claims) will 
reflect those updated revenue code billing patterns.
    We note that for CY 2025, based on our standard ratesetting 
methodology using claims submitted during CY 2023, our analysis reveals 
that the angiocardiography and CT scan revenue

[[Page 59278]]

codes were reported with CPT codes 75572-75574, which were mapped to 
cost centers angiocardiography and CT scan, as shown in Table 37.
[GRAPHIC] [TIFF OMITTED] TP22JY24.051

    Because we wanted to determine the extent to which the revenue edit 
may have affected the GMC for CPT codes 75572-75574, we conducted a 
study to calculate HCPCS geometric mean costs for these codes based on 
a simulation that assumed that differing numbers of HOPDs (specifically 
25 percent, 50 percent, and 75 percent of the total number of HOPDs 
billing for these services) would have assigned these services to the 
cardiology revenue code (048X) and cardiology cost center (03140). 
Based upon the results of the study, we found that if 50 percent or 
more of HOPDs had billed these services with the cardiology revenue 
code (048X) and cardiology cost center (03140), the GMC for these codes 
would have increased and would have resulted in a revised APC 
assignment from APC 5571 (Level 1 Imaging with Contrast) to APC 5572 
(Level 2 Imaging with Contrast). Specifically, as noted in Table 38, 
under our standard ratesetting methodology, the GMC for the cardiac CT 
codes would be approximately $182, which maps to APC 5571, while an 
assumption that 50 percent of HOPDs billed with the cardiology revenue 
code (048X) and cardiology cost center (03140) on CY 2023 claims would 
result in a GMC of about $386, which maps to APC 5572.
[GRAPHIC] [TIFF OMITTED] TP22JY24.052


[[Page 59279]]


    Because the RTP edit associated with the cardiac CT codes may have 
affected the CY 2023 data we have available to establish the CY 2025 
OPPS payment rates for these services, in this CY 2025 OPPS/ASC 
proposed rule, we are requesting information on the following topics 
regarding hospitals' billing practices for cardiac CT services:
    (1) Where are cardiac CT services performed in a hospital? Are 
cardiac CT services performed in a dedicated cardiology department, 
radiology department, or some other hospital outpatient department?
    (2) What factors determine the revenue code assignment for cardiac 
CT services (i.e., the department in which the service is performed, 
the type of service that is performed, or some other factor)?
    (3) What revenue codes are HOPDs reporting for these services in CY 
2024? Are HOPDs using the cardiology revenue code on claims for cardiac 
CT services now that they are no longer restricted from using this 
revenue code?
    In addition to reviewing comments received, we will review the 
limited CY 2024 claims data for Cardiac CT services to ascertain the 
percentage of HOPDs that are utilizing the cardiology revenue code 
(048X) and cardiology cost center (03140) with the understanding that 
many HOPDs may still be updating their current billing practices. The 
comments received and the information we glean from the CY 2024 claims 
data will help us identify whether the current OPPS payment is 
appropriate for the cardiac CT codes, or whether we should consider 
revising the payment methodology for the CY 2025 OPPS. If these 
comments indicate a number of HOPDs sufficient to affect the geometric 
mean and APC assignment for these codes (i.e., 50 percent or more of 
HOPDs) are now billing these codes with the cardiology revenue code and 
cardiology cost center, we would change the payment methodology for 
these codes to simulate the GMC these codes would have had for CY 2025 
ratesetting, with the assumption that 50 percent or more of HOPDs would 
have billed in CY 2023 using the cardiology revenue code (048X) and 
cardiology cost center (03140) if not for the revenue code edit. We 
would assign these services to the APC that corresponds to the 
simulated GMC, which we currently project to be APC 5572 (Level 2 
Imaging with Contrast). We note that if a revision in payment 
methodology is implemented for CY 2025 for the cardiac CT codes, 
specifically, CPT codes 75572, 75573, and 75574, for CY 2025, such a 
change would not involve reprocessing of claims with dates prior to 
January 1, 2025. If, after comments are received and the limited CY 
2024 claims data for cardiac CT services is reviewed, we are not 
persuaded that 50 percent or more of HOPDs would have billed using the 
cardiology revenue codes (048X) and cardiology cost center (03140) in 
CY 2023 if not for the revenue code edit, we would maintain our 
standard ratesetting for these services as proposed in this proposed 
rule.
2. Neurostimulator and Related Procedures (APCs 5461 Through 5465)
    In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66807 
through 66808), we finalized a restructuring of what were previously 
several neurostimulator procedure-related APCs into a four-level 
series. In addition to that restructuring, in the CY 2015 OPPS/ASC 
final rule with comment period, we also made the Levels 2 through 4 
APCs comprehensive APCs (79 FR 66807 through 66808). Later, in the CY 
2020 OPPS/ASC final rule with comment period, we also made the Level 1 
Neurostimulator and Related Procedure APC (APC 5461) a comprehensive 
APC (84 FR 61162 through 61166).
    In reviewing the claims data available for the CY 2021 OPPS/ASC 
proposed rule, we believed that it was appropriate to create an 
additional Neurostimulator and Related Procedures level, between what 
were then the Levels 2 and 3 APCs. Creating this APC allowed for a 
smoother distribution of the costs between the different levels based 
on their resource costs and clinical characteristics. Therefore, for 
the CY 2021 OPPS, we finalized a five-level APC structure for the 
Neurostimulator and Related Procedures series (85 FR 85968 through 
85970). In addition to creating the new level, we also assigned CPT 
code 0398T (Magnetic resonance image guided high intensity focused 
ultrasound (mrgfus), stereotactic ablation lesion, intracranial for 
movement disorder including stereotactic navigation and frame placement 
when performed) to the new Level 3 APC (85 FR 85970).
    Some interested parties requested for the CY 2023 OPPS/ASC proposed 
rule that we create a Level 6 Neurostimulator and Related Procedures 
APC, due to their concerns around clinical and resource cost similarity 
in the Level 5 Neurostimulator and Related Procedures APC. Based on our 
review of the data available for the CY 2023 OPPS/ASC proposed rule, we 
believed that the five-level structure for the Neurostimulator and 
Related Procedures APC series remained appropriate. The proposed 
geometric mean cost for the Level 5 Neurostimulator and Related 
Procedures was $30,198.36 with the geometric means of cost significant 
codes in Level 5 ranging from approximately $28,000 to $36,000, which 
was well within the range of the 2 times rule. In addition, a review of 
the clinical characteristics of the services in the APC suggested that 
the current structure was appropriate. Finally, as discussed in the CY 
2021 OPPS/ASC final rule with comment period, we reiterated that the 
OPPS is a prospective payment system. We group procedures with similar 
clinical characteristics and resource costs into APCs and establish a 
payment rate that reflects the geometric mean of all services in the 
group even though the cost of any individual service within the APC may 
be higher or lower than the APC's geometric mean. As a result, in the 
OPPS any individual procedure may potentially be overpaid or underpaid 
because the payment rate is based on the geometric mean of the entire 
group of services in the APC. However, the impact of these payment 
differences should be mitigated when distributed across a large number 
of APCs (85 FR 85968).
    While we did not propose any changes in the CY 2023 OPPS/ASC 
proposed rule to the 5-level structure of the Neurostimulator and 
Related Procedures APC series, we recognized the interested parties' 
concerns regarding the granularity of the current APC levels and their 
request to create an additional level to address such concerns. 
Accordingly, we solicited comments on the potential creation of a new 
Level 6 APC. After consideration of those comments, we finalized a five 
level APC structure for the series and reassigned HCPCS code 0424T to 
New Tech APC 1581 (87 FR 71869).
    In the CY 2024 OPPS/ASC final rule with comment period, we did not 
make any changes to the 5 level APC structure for the Neurostimulator 
and Related Procedures series. However, we made temporary changes to 
services previously assigned to the neurostimulator APCS: reassigning 
HCPCS codes 0424T and 33276 from New Tech APC 1581 to New Tech APC 1580 
(88 FR 81645 through 81647) and assigning HCPCS code 0266T to New Tech 
APC 1580 (88 FR 81658).
    For this CY 2025 OPPS/ASC proposed rule, we believe that the 5 
level APC structure for the series remains appropriate. We note that 
while we have claims data available for HCPCS codes 0424T, 0266T, and 
several other codes in the APC series that are no longer active, there 
will be cost and coding changes associated with the new CPT codes as 
their claims data become

[[Page 59280]]

available. For example, CPT codes 33276 (Insertion of phrenic nerve 
stimulator system (pulse generator and stimulating lead[s]), including 
vessel catheterization, all imaging guidance, and pulse generator 
initial analysis with diagnostic mode activation, when performed) and 
33287 (Removal and replacement of phrenic nerve stimulator, including 
vessel catheterization, all imaging guidance, and interrogation and 
programming, when performed; pulse generator) both became newly active 
in CY 2024. With the changes associated with those codes we believe 
that it is appropriate to reassign HCPCS codes 0266T and 33276 to the 
clinical APCs, specifically to the level 5 APC in the series. We will 
continue to monitor as more claims data become available for the new 
codes.
    While we continue to believe that a five-level structure for the 
Neurostimulator and Related Procedures APC series remains appropriate, 
we continue to solicit comments from interested parties on the need for 
a Level 6 APC given the clinical and estimated cost characteristics of 
the services currently assigned to the Level 5 APC.
    In summary, for the CY 2025 OPPS, we propose to maintain the 
current 5-level structure for the Neurostimulator and Related Procedure 
APC series and assign HCPCS codes 0424T, 0266T, and 33276 to the level 
5 APC. However, we are also soliciting comment on potentially creating 
an additional Level 6 APC in the series from the current Level 5 APC 
that would include HCPCS codes 33276, 0266T, 64568, 0424T, 0427T, and 
0431T.
    See Table 39 for the services that will be reassigned to the Level 
5 APC and Table 40 below for the proposed CY 2025 Neurostimulator and 
Related Procedures APCs.

[[Page 59281]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.053


[[Page 59282]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.054

3. Focal Laser Ablation (APC 5374)
    Focal laser ablation is an MRI directed and image guided, minimally 
invasive procedure that targets prostate cancer tissue. The focal laser 
ablation procedure, represented by CPT code 0655T (Transperineal focal 
laser ablation of malignant prostate tissue, including transrectal 
imaging guidance, with mr-fused images or other enhanced ultrasound 
imaging), became effective July 1, 2021, and describes the destruction 
of localized prostate cancer tissue with the high energy source of 
focal laser radiation. The procedure utilizes real-time intraoperative 
prostate ultrasound fused with MRI guidance to allow the surgeon to 
precisely plan the ablation and guide the laser targeting as well as 
providing real-time feedback to minimize changes to the tissues outside 
of the targeted ablation zone. This procedure offers another therapy 
option for select patients with localized intermediate risk prostate 
cancer.
    For CY 2024, we assigned CPT code 0655T to APC 5374 (Level 4 
Urology and Related Services) with a payment rate of $3,321.58 based on 
its geometric mean cost of approximately $10,323, which was calculated 
using the available 16 single frequency claims from the CY 2022 claims 
data.
    For this CY 2025 OPPS/ASC proposed rule, we reviewed the CY 2023 
claims submitted between January 1, 2023, through December 31, 2023, 
that were processed on or before December 31, 2023, for CPT code 0655T 
and found seven single frequency claims available for ratesetting, with 
a resulting geometric mean cost of $12,777. Additionally, for this CY 
2025 OPPS/ASC proposed rule, we examined the procedures assigned to the 
Urology Procedures APCs. Based on our examination of the procedures 
assigned to Urology and Related Procedures APCs and the available CY 
2023 claims data, we believe it is appropriate to move CPT code 0655T 
to APC 5375 (Level 5 Urology and Related Services) from APC 5374 (Level 
4 Urology and Related Services) because 0655T shares more resource cost 
and clinical homogeneity with procedures in APC 5375. Specifically, we 
believe CPT code 0655T shares resource and clinical homogeneity with 
CPT code 0714T (Transperineal laser ablation of benign prostatic 
hyperplasia, including imaging guidance), and CPT code 52648 (Laser 
vaporization of prostate, including control of postoperative bleeding, 
complete (vasectomy, meatotomy, cystourethroscopy, urethral calibration 
and/or dilation, internal urethrotomy and transurethral resection of 
prostate are included if performed)). We note that the seven available 
CY 2023 single frequency claims for CPT code 0655T would not 
significantly impact the geometric mean cost calculations for APC 5374 
and APC 5375. Therefore, for CY 2025, we propose to reassign CPT code 
0655T from APC 5374 (Level 4 Urology and Related Services) to APC 5375 
(Level 5 Urology and Related Services).
4. Bone Mass Measurement: Biomechanical Computed Tomography (BCT) 
Analysis With Vertebral Fracture Assessment (APCs 5521, 5523, and 5731)
    CPT code 0743T (Bone strength and fracture risk using finite 
element analysis of functional data and bone mineral density (BMD), 
with concurrent vertebral fracture assessment, utilizing data from a 
computed tomography scan, retrieval and transmission of the scan data, 
measurement of bone strength and BMD and classification of any 
vertebral fractures, with overall fracture-risk assessment, 
interpretation and report) became effective January 1, 2023. This code 
describes the service associated with BCT analysis with concurrent 
vertebral fracture assessment (VFA).
    In the CY 2023 OPPS/ASC final rule (87 FR71844 through 71846), we 
stated that, based on our review and understanding of the service, BCT 
analysis does not meet Medicare's definition of bone mass measurement, 
as specified in Sec.  410.31(a), which specifies the coverage of, and 
payment for, bone mass measurements for Medicare beneficiaries. 
Therefore, we assigned the BCT codes (CPT codes 0554T-0558T) and CPT 
code 0743T to status indicator ``E1'' to indicate that these codes are 
not covered by Medicare, and not paid by Medicare when submitted on 
outpatient claims (any outpatient bill type). The complete long 
descriptors for the codes can be found in Table 41 below.
    In the CY 2024 OPPS/ASC proposed rule, we proposed to continue to 
assign the codes to status indicator ``E1'' to indicate non-coverage 
and non-payment for the services. (See Addendum B for CY 2024/ASC 
proposed rule via the internet on the CMS website.) However, as 
discussed in the CY 2024 OPPS/ASC final rule (88 FR 81660 through 
81661), based on comments received and further review of the issue, we 
did not finalize our proposal. We instead assigned CPT code 0555T to 
APC 5731 (Level 1 Minor

[[Page 59283]]

Procedures) and SI of ``S,'' (Procedure or Service, Not Discounted When 
Multiple; Paid under OPPS; separate APC payment.), CPT code 0556T to 
APC 5523 (Level 3 Imaging without Contrast) and SI of ``S,'' and CPT 
code 0558T to APC 5521 (Level 1 Imaging without Contrast) with SI of 
``S,'' which were the same APC assignments for the codes between CY 
2019 and CY 2022. In addition, we assigned CPT codes 0554T, 0557T, and 
0743T to SI of ``M'' (Items and Services Not Billable to the MAC. Not 
paid under OPPS.) to indicate that these codes are not payable under 
the OPPS because they describe physician-only services. The final 
payment rates for these codes were listed in the OPPS Addendum B that 
was released with the CY 2024 OPPS/ASC final rule via the internet on 
the CMS website.
    For CY 2025, we propose to continue to assign CPT codes 0554T and 
0557T to status indicator of ``M'' as the codes include or describe a 
professional component of the service that is provided by a physician 
as evidenced by ``interpretation and report'' in the descriptor. It is 
important to note that CPT code 0554T is a comprehensive code (or 
``parent code'') that includes both technical and professional 
components. Because there are additional CPT codes (``child codes'') 
that facilities can use to describe the technical components of BCT 
analysis, it is appropriate for the comprehensive code that includes 
the professional component to be assigned a SI of ``M''. In addition, 
we propose to continue to assign CPT code 0555T to APC 5731 (Level 1 
Minor Procedures) and a SI of ``S,'' CPT code 0556T to APC 5523 (Level 
3 Imaging without Contrast) and a SI of ``S,'' and CPT code 0558T to 
APC 5521 (Level 1 Imaging without Contrast) with a SI of ``S.'' 
However, for CY 2025, based on input from our medical advisors, we now 
believe the service described by CPT code 0743T is a comprehensive code 
and involves both a technical component and a professional component 
that are performed by hospital outpatient facilities. Unlike CPT 0554T, 
there are no additional codes to describe the technical component(s) of 
this service (BCT analysis and VFA) and there is a parenthetical note 
instructing facilities to not report the BCT analysis codes (0554T-
0557T) with CPT code 0743T. Consequently, we propose to assign CPT code 
0743T to APC 5523 (Level 3 Imaging without Contrast) and we propose to 
change the status indicator for 0743T from a ``M'' in CY 2024 to a 
``S'' (Procedure or Service, Not Discounted When Multiple; Paid under 
OPPS; separate APC payment) for CY 2025. As a reminder, Medicare 
Administrative Contractors (MACs) determine whether a drug, device, 
procedure, or other service meets all program requirements and 
conditions for coverage and payment. Accordingly, we emphasize that 
HOPDs would only receive payment for these services when the 
appropriate MAC determines that the service meets the relevant 
conditions for coverage and payment. As we have consistently stated in 
past OPPS/ASC final rules (see, e.g., 87 FR 71879 and 88 FR 81660 
through 81661)), the fact that a drug, device, procedure or service is 
assigned a HCPCS code and a payment rate under the OPPS does not imply 
coverage by the Medicare program, but indicates only how the product, 
procedure, or service may be paid if covered by the program (see, e.g., 
Pub 100-04 Medicare Claims Processing, Transmittal 11937).
    Please refer to Table 41 below for the proposed APCs and status 
indicator assignment for CPT codes 0554T-0558T and CPT code 0743T for 
CY 2025. The proposed CY 2025 payment rates, where applicable, can be 
found in Addendum B to this proposed rule via the internet on the CMS 
website.

[[Page 59284]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.055

IV. Proposed OPPS Payment for Devices

A. Proposed Pass-Through Payment for Devices

1. Beginning Eligibility Date for Device Pass-Through Status and 
Quarterly Expiration of Device Pass-Through Payments
a. Background
    The intent of transitional device pass-through payment, as 
implemented at Sec.  419.66, is to facilitate access for beneficiaries 
to the advantages of new and truly innovative devices by allowing for 
adequate payment for these new devices while the necessary cost data is 
collected to incorporate the costs for these devices into the procedure 
APC rate (66 FR 55861). Under section 1833(t)(6)(B)(iii) of the Act, 
the period for which a device category eligible for transitional pass-
through payments under the OPPS can be in effect is at least 2 years 
but not more than 3 years. Prior to CY 2017, our regulation at Sec.  
419.66(g) provided that this pass-through payment eligibility period 
began on the date CMS established a particular transitional pass-
through category of devices, and we based the pass-through status 
expiration date for a device category on the date on which pass-through 
payment was effective for the category. In the CY 2017 OPPS/ASC final 
rule with comment period (81 FR 79654), in accordance with section 
1833(t)(6)(B)(iii)(II) of the Act, we amended Sec.  419.66(g) to 
provide that the pass-through eligibility period for a

[[Page 59285]]

device category begins on the first date on which pass-through payment 
is made under the OPPS for any medical device described by such 
category.
    In addition, prior to CY 2017, our policy was to propose and 
finalize the dates for expiration of pass-through status for device 
categories as part of the OPPS annual update. This means that device 
pass-through status would expire at the end of a calendar year when at 
least 2 years of pass-through payments had been made, regardless of the 
quarter in which the device was approved. In the CY 2017 OPPS/ASC final 
rule with comment period (81 FR 79655), we changed our policy to allow 
for quarterly expiration of pass-through payment status for devices, 
beginning with pass-through devices approved in CY 2017 and subsequent 
calendar years, to afford a pass-through payment period that is as 
close to a full 3 years as possible for all pass-through payment 
devices. We also have an established policy to package the costs of the 
devices that are no longer eligible for pass-through payments into the 
costs of the procedures with which the devices are reported in the 
claims data used to set the payment rates (67 FR 66763).
    We refer readers to the CY 2017 OPPS/ASC final rule with comment 
period (81 FR 79648 through 79661) for a full discussion of the current 
device pass-through payment policy.\20\
---------------------------------------------------------------------------

    \20\ To apply for OPPS transitional device pass-through status, 
applicants complete an application that is subject to the Paperwork 
Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et seq.). This 
information collection (CMS-10052) is currently approved under OMB 
control number 0938-0857 and has an expiration date of November 30, 
2025.
---------------------------------------------------------------------------

    In the CY 2023 OPPS/ASC final rule with comment period, we 
finalized our policy to publicly post online OPPS device pass-through 
applications received on or after March 1, 2023, beginning with the 
issuance of the CY 2025 proposed rule and for each OPPS rulemaking 
thereafter. We refer readers to the CY 2023 OPPS/ASC final rule with 
comment period (87 FR 71934 through 71938) for a full discussion of the 
policy to publicly post OPPS device pass-through applications.
b. Expiration of Transitional Pass-Through Payments for Certain Devices
    As stated earlier, section 1833(t)(6)(B)(iii) of the Act requires 
that, under the OPPS, a category of devices be eligible for 
transitional pass-through payments for at least 2 years, but not more 
than 3 years. Currently, there are 13 device categories eligible for 
pass-through payment. These devices are listed in Table 42 of this 
proposed rule where we detail the expiration dates of pass-through 
payment status for each of the 13 devices currently receiving device 
pass-through payment.
BILLING CODE 4120-01-P

[[Page 59286]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.056

BILLING CODE 4120-01-C

[[Page 59287]]

    As discussed in section IV.A.2. New Device Pass-Through 
Applications for CY 2024 of the CY 2024 OPPS/ASC final rule with 
comment period, we approved HCPCS code C1601 (Endoscope, single-use 
(i.e. disposable), pulmonary, imaging/illumination device 
(insertable)), as a new device category for pass-through status under 
the OPPS, with an effective date of January 1, 2024. For the full 
discussion of the criteria used to evaluate device pass-through 
applications, refer to the CY 2024 OPPS/ASC final rule with comment 
period, which was published in the Federal Register on November 22, 
2023 (88 FR 81729 through 81743). We note that HCPCS code C1601 was 
established for a bronchoscope that can only be used for a single 
procedure and cannot be reprocessed. As such, HCPCS code C1601 only 
describes devices that cannot be reprocessed.
    In addition, as discussed in section IV.A.2. New Device Pass-
Through Applications for CY 2023 of the CY 2023 OPPS/ASC final rule 
with comment period, we approved HCPCS code C1747 (Endoscope, single-
use (i.e., disposable), urinary tract, imaging/illumination device 
(insertable)), as a new device category for pass-through status under 
the OPPS, with an effective date of January 1, 2023. For the full 
discussion on the criteria used to evaluate device pass-through 
applications, refer to the CY 2023 OPPS/ASC final rule with comment 
period, which was published in the Federal Register on November 23, 
2022 (87 FR 71929 through 71934). We note that HCPCS code C1747 was 
established for a ureteroscope that can only be used for a single 
procedure and cannot be reprocessed. As such, HCPCS code C1747 only 
describes devices that cannot be reprocessed.
2. New Device Pass-Through Applications for CY 2025
a. Background
    Section 1833(t)(6) of the Act provides for pass-through payments 
for devices, and section 1833(t)(6)(B) of the Act requires CMS to use 
categories in determining the eligibility of devices for pass-through 
payments. As part of implementing the statute through regulations, we 
have continued to believe that it is important for hospitals to receive 
pass-through payments for devices that offer substantial clinical 
improvement in the treatment of Medicare beneficiaries to facilitate 
access by beneficiaries to the advantages of the new technology. 
Conversely, we have noted that the need for additional payments for 
devices that offer little or no clinical improvement over previously 
existing devices is less apparent. In such cases, these devices can 
still be used by hospitals, and hospitals will be paid for them through 
appropriate APC payment. Moreover, a goal is to target pass-through 
payments for those devices where cost considerations are most likely to 
interfere with patient access (66 FR 55852; 67 FR 66782; and 70 FR 
68629).
    As specified in regulations at Sec.  419.66(b)(1) through (3), to 
be eligible for transitional pass-through payment under the OPPS, a 
device must meet the following criteria:
     If required by FDA, the device must have received FDA 
approval or clearance and FDA marketing authorization (except for a 
device that has received an FDA investigational device exemption (IDE) 
and has been classified as a Category B device by FDA), or meet another 
appropriate FDA exemption; and the pass-through payment application 
must be submitted within 3 years from the date of the initial FDA 
marketing authorization, if required, unless there is a documented, 
verifiable delay in U.S. market availability after FDA marketing 
authorization is granted, in which case CMS will consider the pass-
through payment application if it is submitted within 3 years from the 
date of market availability;
     The device is determined to be reasonable and necessary 
for the diagnosis or treatment of an illness or injury or to improve 
the functioning of a malformed body part, as required by section 
1862(a)(1)(A) of the Act; and
     The device is an integral part of the service furnished, 
is used for one patient only, comes in contact with human tissue, and 
is surgically implanted or inserted (either permanently or 
temporarily), or applied in or on a wound or other skin lesion.
    In addition, according to Sec.  419.66(b)(4), a device is not 
eligible to be considered for device pass-through payment if it is any 
of the following: (1) equipment, an instrument, apparatus, implement, 
or item of this type for which depreciation and financing expenses are 
recovered as depreciation assets as defined in Chapter 1 of the 
Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a 
material or supply furnished incident to a service (for example, a 
suture, customized surgical kit, or clip, other than a radiological 
site marker).
    Separately, we use the following criteria, as set forth under Sec.  
419.66(c), to determine whether a new category of pass-through payment 
devices should be established. The device to be included in the new 
category must--
     Not be appropriately described by an existing category or 
by any category previously in effect established for transitional pass-
through payments, and was not being paid for as an outpatient service 
as of December 31, 1996;
     Have an average cost that is not ``insignificant'' 
relative to the payment amount for the procedure or service with which 
the device is associated as determined under Sec.  419.66(d) by 
demonstrating: (1) the estimated average reasonable cost of devices in 
the category exceeds 25 percent of the applicable APC payment amount 
for the service related to the category of devices; (2) the estimated 
average reasonable cost of the devices in the category exceeds the cost 
of the device-related portion of the APC payment amount for the related 
service by at least 25 percent; and (3) the difference between the 
estimated average reasonable cost of the devices in the category and 
the portion of the APC payment amount for the device exceeds 10 percent 
of the APC payment amount for the related service (with the exception 
of brachytherapy and temperature-monitored cryoablation, which are 
exempt from the cost requirements as specified at Sec.  419.66(c)(3) 
and (e)); and
     Demonstrate a substantial clinical improvement, that is, 
substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment, or, for devices for which pass-
through payment status will begin on or after January 1, 2020, as an 
alternative pathway to demonstrating substantial clinical improvement, 
a device is part of the FDA's Breakthrough Devices Program and has 
received marketing authorization for the indication covered by the 
Breakthrough Device designation.
    Beginning in CY 2016, we changed our device pass-through evaluation 
and determination process. Device pass-through applications are still 
submitted to CMS through the quarterly subregulatory process, but the 
applications are subject to notice and comment rulemaking in the next 
applicable OPPS annual rulemaking cycle. Under this process, all 
applications that are preliminarily approved upon quarterly review will 
automatically be included in the next applicable OPPS annual rulemaking 
cycle, while submitters of applications that are not approved upon 
quarterly review will have the option of being

[[Page 59288]]

included in the next applicable OPPS annual rulemaking cycle or 
withdrawing their application from consideration. Under this notice-
and-comment process, applicants may submit new evidence, such as 
clinical trial results published in a peer-reviewed journal or other 
materials, for consideration during the public comment process for the 
proposed rule. This process allows those applications that we are able 
to determine meet all of the criteria for device pass-through payment 
under the quarterly review process to receive timely pass-through 
payment status, while still allowing for a transparent, public review 
process for all applications (80 FR 70417 through 70418).
    In the CY 2020 annual rulemaking process, we finalized an 
alternative pathway for devices that are granted a Breakthrough Device 
designation (84 FR 61295) and receive FDA marketing authorization for 
the indication covered by the Breakthrough Device designation. Under 
this alternative pathway, devices that are granted an FDA Breakthrough 
Device designation are not evaluated in terms of the current 
substantial clinical improvement criterion at Sec.  419.66(c)(2) for 
the purposes of determining device pass-through payment status, but do 
need to meet the other requirements for pass-through payment status in 
our regulation at Sec.  419.66. Devices that are part of the 
Breakthrough Devices Program, have received FDA marketing authorization 
for the indication covered by the Breakthrough Devices designation, and 
meet the other criteria in the regulation can be approved through the 
quarterly process and announced through that process (81 FR 79655). 
Proposals regarding these devices and whether pass-through payment 
status should continue to apply are included in the next applicable 
OPPS rulemaking cycle. This process promotes timely pass-through 
payment status for innovative devices, while also recognizing that such 
devices may not have a sufficient evidence base to demonstrate 
substantial clinical improvement at the time of FDA marketing 
authorization.
    More details on the requirements for device pass-through payment 
applications are included on the CMS website in the application form 
itself at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html, in the 
``Downloads'' section. In addition, CMS is amenable to meeting with 
applicants or potential applicants to facilitate information sharing to 
support the evaluation of an OPPS device pass-through payment 
application or discuss general application criteria, including the 
substantial clinical improvement criterion.
b. Applications Received for Device Pass-Through Status for CY 2025
    We received 14 complete applications by the March 1, 2024 quarterly 
deadline, which was the last quarterly deadline for applications to be 
received in time to be included in this proposed rule. Of the complete 
applications, we received two applications in the second quarter of 
2023, two application in the third quarter of 2023, three applications 
in the fourth quarter of 2023, and seven applications in the first 
quarter of 2024. Three of the applications were approved for device 
pass-through payment during the quarterly review process: The 
DETOURTM System, which received was preliminarily approved 
upon quarterly review under the alternative pathway effective January 
1, 2024, and the AVEIRTM DR Dual Chamber Leadless Pacemaker 
System and the EndoSound Vision System[supreg] (EVS) which both were 
preliminarily approved upon quarterly review under the alternative 
pathway effective July 1, 2024. As previously stated, all applications 
that are preliminarily approved upon quarterly review will 
automatically be included in the next applicable OPPS annual rulemaking 
cycle. Therefore, the DETOURTM System, the 
AVEIRTM DR Dual Chamber Leadless Pacemaker System, and the 
EndoSound Vision System[supreg] (EVS) are discussed in the following 
section IV.2.b.1.
    We note that the quarterly application process and requirements 
have not changed because of the addition of rulemaking review. Detailed 
instructions on submission of a quarterly device pass-through payment 
application are included on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Downloads/catapp.pdf.
    Discussions of the applications we received by the March 1, 2024 
deadline are included in this proposed rule.
(1) Alternative Pathway Device Pass-Through Applications
    We received 10 device pass-through applications by the March 2024 
quarterly application deadline for devices that have received 
Breakthrough Device designation from FDA and FDA marketing 
authorization for the indication for which they have a Breakthrough 
Device designation, and therefore were eligible to apply under the 
alternative pathway.
(a) AGENT\TM\ Paclitaxel-Coated Balloon Catheter
    Boston Scientific Corporation submitted an application for a new 
device category for transitional pass-through payment status for 
AGENT\TM\ Paclitaxel-Coated Balloon Catheter for CY 2025. Per the 
applicant, AGENT\TM\ Paclitaxel-Coated Balloon Catheter is a device/
drug combination product consisting of a semi-compliant intracoronary 
balloon catheter with a paclitaxel/acetyl tributyl citrate drug coating 
on the balloon component. The applicant asserted that AGENT\TM\ 
Paclitaxel-Coated Balloon Catheter delivers paclitaxel, an 
antiproliferative drug, directly to the arterial tissue which inhibits 
the proliferation of neointimal smooth muscle cells without introducing 
an additional stent layer, thereby reducing the rate of restenosis. 
According to the applicant, AGENT\TM\ Paclitaxel-Coated Balloon 
Catheter is intended for use in adult patients, after appropriate 
vessel preparation, undergoing percutaneous coronary intervention (PCI) 
in coronary arteries 2.0 mm to 4.0 mm in diameter and lesions up to 26 
mm in length for the purpose of improving myocardial perfusion when 
treating in-stent restenosis (ISR) and the management of 
atherosclerotic coronary artery disease.
    Please refer to the online application posting for the AGENT\TM\ 
Paclitaxel-Coated Balloon Catheter, available at https://mearis.cms.gov/public/publications/device-ptp/DEP2402295H2TU, for 
additional detail describing this device and the disease treated by the 
device.
    As stated previously, to be eligible for transitional pass-through 
payment under the OPPS, a device must meet the criteria at Sec.  
419.66(b)(1) through (4). With respect to the newness criterion at 
Sec.  419.66(b)(1), AGENT\TM\ Paclitaxel-Coated Balloon Catheter 
received FDA Breakthrough Device designation effective January 22, 
2021, as a combination product indicated for percutaneous transluminal 
coronary angioplasty in coronary arteries 2.0 mm to 4.0 mm in diameter 
to treat ISR, up to 26 mm in length, for the purpose of improving 
myocardial perfusion. FDA approved the premarket approval application 
(PMA) for AGENT\TM\ Paclitaxel-Coated Balloon Catheter on February 29, 
2024, as indicated for use after appropriate vessel preparation in 
adult patients undergoing PCI in coronary arteries 2.0 mm to 4.0 mm in 
diameter and lesions up to 26 mm in length for the purpose of improving 
myocardial perfusion when treating ISR. We note that while the 
indication for

[[Page 59289]]

the FDA Breakthrough Device designation and the indication for the FDA 
premarket approval vary slightly, we believe that FDA premarket 
approval indication is the indication covered by the Breakthrough 
Device designation. We received the application for a new device 
category for transitional pass-through payment status for AGENT\TM\ 
Paclitaxel-Coated Balloon Catheter on February 29, 2024, which is 
within three years of the date of the initial FDA marketing 
authorization.
    We are inviting public comments on whether AGENT\TM\ Paclitaxel-
Coated Balloon Catheter meets the newness criterion at Sec.  
419.66(b)(1).
    With respect to the eligibility criterion at Sec.  419.66(b)(3), 
the device must be an integral part of the service furnished, used for 
one patient only, come in contact with human tissue, and be surgically 
inserted or implanted, or applied in or on a wound or other skin 
lesion. The applicant did not explicitly indicate whether the AGENT\TM\ 
Paclitaxel-Coated Balloon Catheter is integral to the service provided. 
The applicant stated that the AGENT\TM\ Paclitaxel-Coated Balloon 
Catheter is used for one patient only, comes in contact with human 
tissue, and is surgically implanted or inserted as required by Sec.  
419.66(b)(3).
    We are inviting public comments on whether AGENT\TM\ Paclitaxel-
Coated Balloon Catheter meets the eligibility criterion at Sec.  
419.66(b)(3).
    With respect to the exclusion criterion at Sec.  419.66(b)(4), a 
device is not eligible to be considered for device pass-through payment 
if it is any of the following: (1) equipment, an instrument, apparatus, 
implement, or item of this type for which depreciation and financing 
expenses are recovered as depreciation assets as defined in Chapter 1 
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a 
material or supply furnished incident to a service (for example, a 
suture, customized surgical kit, or clip, other than a radiological 
site marker). The applicant did not indicate whether AGENT\TM\ 
Paclitaxel-Coated Balloon Catheter is equipment, an instrument, 
apparatus, implement, or item of this type for which depreciation and 
financing expenses are recovered, or if AGENT\TM\ Paclitaxel-Coated 
Balloon Catheter is a supply or material furnished incident to a 
service.
    We are inviting public comments on whether AGENT\TM\ Paclitaxel-
Coated Balloon Catheter meets the exclusion criterion at Sec.  
419.66(b)(4).
    In addition to the criteria at Sec.  419.66(b)(1) through (4), the 
criteria for establishing new device categories are specified at Sec.  
419.66(c). The first criterion, at Sec.  419.66(c)(1), provides that 
CMS determines that a device to be included in the category is not 
appropriately described by any of the existing categories or by any 
category previously in effect, and was not being paid for as an 
outpatient service as of December 31, 1996. According to the applicant, 
no previous or existing device categories for pass-through payment 
appropriately describe the AGENT\TM\ Paclitaxel-Coated Balloon 
Catheter. Per the applicant, while device category C2623 (Catheter, 
transluminal angioplasty, drug-coated, non-laser) describes related or 
similar products to the AGENT\TM\ Paclitaxel-Coated Balloon Catheter, 
the AGENT\TM\ Paclitaxel-Coated Balloon Catheter is not appropriately 
described by C2623 because the devices in this category differ from 
AGENT\TM\ Paclitaxel-Coated Balloon Catheter in both size and indicated 
use, and therefore, the device is not appropriately described by C2623. 
The applicant further claimed that the devices described by C2623 are 
approved for use in the femoral or popliteal arteries in vessels with a 
diameter of at least 4.0 mm, whereas AGENT\TM\ Paclitaxel-Coated 
Balloon Catheter is indicated for use in coronary arteries that are 
between 2.0 mm to 4.0 mm in diameter. In addition, the applicant also 
noted that the length of the lesions (up to 180 mm) treated with 
devices in this device category greatly exceeds the maximum lesion size 
of 26 mm for AGENT\TM\ Paclitaxel-Coated Balloon Catheter. Moreover, 
the applicant asserted that the devices described by C2623 are used to 
treat peripheral arterial disease and are contraindicated for use in 
coronary arteries. Per the applicant, the AGENT\TM\ Paclitaxel-Coated 
Balloon Catheter is used in conjunction with transluminal PCIs which 
are described by different procedure codes than the percutaneous 
transluminal angioplasty services used for the devices in C2623. 
Lastly, the applicant stated that an analysis of claims found that the 
devices described by C2623 are typically reported with femoral or 
popliteal revascularization procedures (CPT[supreg] codes from 37224 to 
37227).
    We note that, based on the description the applicant provided, the 
AGENT\TM\ Paclitaxel-Coated Balloon Catheter is a device/drug 
combination product consisting of a semi-compliant intracoronary 
balloon catheter with a paclitaxel/acetyl tributyl citrate drug coating 
on the balloon component and thus could be appropriately described by 
C2623. Specifically, we believe that C2623 may appropriately describe 
the AGENT\TM\ Paclitaxel-Coated Balloon Catheter because it is a non-
laser, drug-coated catheter used for transluminal angioplasty 
procedures. In this context, we believe the AGENT\TM\ Paclitaxel-Coated 
Balloon Catheter may be similar to the devices described by C2623, and 
therefore, the AGENT\TM\ Paclitaxel-Coated Balloon Catheter may also be 
appropriately described by C2623.
    In addition, while we acknowledge that when C2623 was established 
as a device category code effective April 1, 2015, the procedure codes 
with which C2623 could be reported (CPT[supreg] 37224 and CPT[supreg] 
37226) were limited to use in the femoral or popliteal arteries. 
However, based on the subsequent changes that were made to the 
procedure codes with which C2623 could be reported, we do not agree 
that C2623 is limited to use with femoral or popliteal 
revascularization procedures. First, we note that effective August 25, 
2017, while C2623 was in device pass-through payment status, CMS added 
two procedure codes with which C2623 could be reported that were for 
procedures other than femoral popliteal revascularization procedures. 
Specifically, based on the FDA approval of a new indication for an 
existing device (a drug-coated balloon catheter for use with dialysis 
circuit procedures for the treatment of patients with dysfunctional 
arteriovenous fistulae \21\), CMS added two procedure codes, 
CPT[supreg] codes 36902 and 36903 (transluminal balloon angioplasty 
procedures in peripheral dialysis segments), with which C2623 could be 
reported effective August 25, 2017. The devices used with these two 
added CPT[supreg] codes, 36902 and 36903, which are also described by 
C2623, are drug-coated balloon catheters used for dialysis circuit 
procedures in the upper extremities. We believe that the inclusion of 
these additional reportable procedure codes illustrates our belief that 
devices that may be described by C2623 were neither intended to be 
restricted to the treatment of vascular lesions of a specified 
dimension nor anatomically limited to femoral or popliteal 
revascularization procedures and is inconsistent with the applicant's 
assertion that AGENT\TM\ Paclitaxel-Coated Balloon Catheter is not 
appropriately described by C2623 because the category is only 
applicable for devices used in femoral or popliteal

[[Page 59290]]

arteries with a diameter of at least 4.0 mm, and not smaller coronary 
arteries.
---------------------------------------------------------------------------

    \21\ Centers for Medicare & Medicaid Services (2017). Pub 100-04 
Medicare Claims Processing (Transmittal 3941) in CMS Manual System. 
Accessed at https://www.cms.gov/regulations-and-guidance/guidance/transmittals/2017downloads/r3941cp.pdf.
---------------------------------------------------------------------------

    Further, beginning January 1, 2018, upon the expiration of device 
pass-through payment status for C2623, CMS packaged the payment for the 
costs of each of the devices described by C2623 into the payment for 
the costs related to the procedure with which each device is reported 
in the hospital claims data (FR 82 59321 through 59323). We further 
note that upon becoming packaged for payment, C2623 effectively became 
reportable with other transluminal angioplasty procedure codes, 
including procedure codes for percutaneous coronary transluminal 
angioplasty services. Finally, we note that while, per the applicant, 
the devices described by C2623 are typically reported with femoral or 
popliteal revascularization procedures, other procedure codes, 
including procedure codes for other percutaneous transluminal 
angioplasty services and other related coronary procedure codes can and 
have been performed with devices described by C2623. As such, we 
believe that the procedures with which AGENT\TM\ Paclitaxel-Coated 
Balloon Catheter is utilized could be reported with C2623.
    In this context, based on the description the applicant provided, 
we believe the AGENT\TM\ Paclitaxel-Coated Balloon Catheter may be 
similar to the devices described by C2623, and therefore, the AGENT\TM\ 
Paclitaxel-Coated Balloon Catheter may also be appropriately described 
by C2623.
    We are inviting public comment on whether AGENT\TM\ Paclitaxel-
Coated Balloon Catheter meets the device category criterion at Sec.  
419.66(c)(1).
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines either of the following: (i) 
that a device to be included in the category has demonstrated that it 
will substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment; or (ii) for devices for which 
pass-through status will begin on or after January 1, 2020, as an 
alternative to the substantial clinical improvement criterion, the 
device is part of the FDA's Breakthrough Devices Program and has 
received FDA marketing authorization for the indication covered by the 
Breakthrough Device designation. AGENT\TM\ Paclitaxel-Coated Balloon 
Catheter has a Breakthrough Device designation and marketing 
authorization from FDA for the indication covered by the Breakthrough 
Device designation (as explained in the discussion of the newness 
criterion) and therefore is not evaluated for substantial clinical 
improvement.
    We are inviting public comment on whether AGENT\TM\ Paclitaxel-
Coated Balloon Catheter meets the device category criterion at Sec.  
419.66(c)(2)(ii).
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that AGENT\TM\ 
Paclitaxel-Coated Balloon Catheter would be reported with the HCPCS 
codes as shown in Table 43.
[GRAPHIC] [TIFF OMITTED] TP22JY24.057

    To meet the cost criterion for device pass-through payment status, 
a device must pass all three tests of the cost criterion for at least 
one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775), 
we generally use the lowest APC payment rate applicable for use with 
the nominated device when we assess whether a device meets the cost

[[Page 59291]]

significance criterion, thus increasing the probability the device will 
pass the cost significance test. Beginning in CY 2017, we calculate the 
device offset amount at the HCPCS/CPT code level instead of the APC 
level (81 FR 79657). We note the applicant utilized the CY 2024 payment 
rates for the three tests of the cost criterion. For our calculations, 
we used APC 5192, which had a CY 2024 payment rate of $5,445.84 at the 
time the application was received. HCPCS code 92920 in APC 5192 had a 
device offset amount of $1,662.61 at the time the application was 
received. According to the applicant, the cost of AGENT\TM\ Paclitaxel-
Coated Balloon Catheter is $5,500.00.
    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The average 
reasonable cost of $5,500.00 for AGENT\TM\ Paclitaxel-Coated Balloon 
Catheter is 101.00 percent of the applicable APC payment amount for the 
service related to the category of devices of $5,445.84 (($5,500.00/
$5,445.84) x 100 = 101.00 percent). Therefore, we believe AGENT\TM\ 
Paclitaxel-Coated Balloon Catheter meets the first cost significance 
requirement.
    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $5,500.00 for 
AGENT\TM\ Paclitaxel-Coated Balloon Catheter is 330.81 percent of the 
cost of the device-related portion of the APC payment amount for the 
related service of $1,662.61 (($5,500.00/$1,662.61) x 100 = 330.81 
percent). Therefore, we believe that AGENT\TM\ Paclitaxel-Coated 
Balloon Catheter meets the second cost significance requirement.
    The third cost significance requirement, at Sec.  419.66(d)(3), 
provides that the difference between the estimated average reasonable 
cost of the devices in the category and the portion of the APC payment 
amount for the device must exceed 10 percent of the APC payment amount 
for the related service. The difference between the estimated average 
reasonable cost of $5,500.00 for AGENT\TM\ Paclitaxel-Coated Balloon 
Catheter and the portion of the APC payment amount for the device of 
$1,662.61 is 70.46 percent of the APC payment amount for the related 
service of $5,445.84 ((($5,500.00-$1,662.61)/$ 5,445.84) x 100 = 70.46 
percent). Therefore, we believe that AGENT\TM\ Paclitaxel-Coated 
Balloon Catheter meets the third cost significance requirement.
    We are inviting public comment on whether the AGENT\TM\ Paclitaxel-
Coated Balloon Catheter meets the device pass-through payment criteria 
discussed in this section, including the cost criterion for device 
pass-through payment status.
(b) Aveir\TM\ DR Dual Chamber Leadless Pacemaker System
    Abbott Laboratories submitted an application for a new device 
category for transitional pass-through payment status for the Aveir\TM\ 
DR Dual Chamber Leadless Pacemaker System (Aveir\TM\ DR System) for CY 
2025. Per the applicant, the Aveir\TM\ DR System is comprised of two 
leadless pacemakers, one atrial and one ventricular with each 
containing a generator and electrodes, that provide dual-chamber pacing 
therapy after being placed within the heart's myocardium through a 
minimally invasive catheter-based procedure. According to the 
applicant, the Aveir\TM\ DR System is a programmable system equipped 
with bidirectional implant-to-implant communication without the need 
for traditional wire electrodes and can provide beat-to-beat 
communication and synchrony between the two pacemakers for the 
treatment of arrhythmia/bradycardia. Per the applicant, patients with 
indication for dual-chamber pacing would benefit from a dual-chamber 
leadless pacemaker system that provides atrial and ventricular 
bradycardia therapy, while eliminating the complications associated 
with conventional pacing systems.
    Please refer to the online application posting for the Aveir\TM\ DR 
System, available at https://mearis.cms.gov/public/publications/device-ptp/DEP230831B8DX0, for additional detail describing the device and the 
disease treated by the device.
    As stated previously, to be eligible for transitional pass-through 
payment under the OPPS, a device must meet the criteria at Sec.  
419.66(b)(1) through (4). With respect to the newness criterion at 
Sec.  419.66(b)(1), the Aveir\TM\ DR System received FDA Breakthrough 
Device designation effective March 27, 2020, as a pacemaker 
implantation indicated in one or more of the following permanent 
conditions: syncope, presyncope, fatigue, disorientation due to 
arrhythmia/bradycardia, or any combination of these symptoms. FDA 
approved the premarket approval application (PMA) for the Aveir\TM\ DR 
System on June 29, 2023, for the indication covered by the Breakthrough 
Device designation. We received the application for a new device 
category for transitional pass-through payment status for the Aveir\TM\ 
DR System on March 23, 2023, which is within three years of the date of 
the initial FDA marketing authorization.
    We are inviting public comments on whether the Aveir\TM\ DR System 
meets the newness criterion at Sec.  419.66(b)(1).
    With respect to the eligibility criteria at Sec.  419.66(b)(3), the 
device must be an integral part of the service furnished, used for one 
patient only, come in contact with human tissue, and be surgically 
inserted or implanted, or applied in or on a wound or other skin 
lesion. The applicant did not indicate whether the Aveir\TM\ DR System 
is integral to the service furnished. The applicant also did not 
explicitly state that the AveirTM DR System is single-use; 
however, the applicant stated that one AveirTM DR System is 
required per patient per procedure. While the applicant did not 
explicitly state whether the Aveir\TM\ DR System comes in contact with 
human tissue or is surgically inserted or implanted, the applicant 
noted that the two AveirTM Delivery Catheters are inserted 
into the peripheral vasculature and the cardiovascular system to 
deliver and implant the AveirTM AR Atrial Leadless Pacemaker 
and the AveirTM VR Ventricular Leadless Pacemaker into the 
right atrium and right ventricle of the heart, respectively.
    We are inviting public comments on whether the Aveir\TM\ DR System 
meets the eligibility criterion at Sec.  419.66(b)(3).
    With respect to the exclusion criterion at Sec.  419.66(b)(4), a 
device is not eligible to be considered for device pass-through payment 
if it is any of the following: (1) equipment, an instrument, apparatus, 
implement, or item of this type for which depreciation and financing 
expenses are recovered as depreciation assets as defined in Chapter 1 
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a 
material or supply furnished incident to a service (for example, a 
suture, customized surgical kit, or clip, other than a radiological 
site marker). The applicant did not indicate whether the Aveir\TM\ DR 
System is equipment, an instrument, apparatus, implement, or item of 
this type for which depreciating and financing expenses are recovered, 
or if the Aveir\TM\ DR System is a supply

[[Page 59292]]

or material furnished incident to a service.
    We are inviting public comments on whether the Aveir\TM\ DR System 
meets the exclusion criterion at Sec.  419.66(b)(4).
    In addition to the criteria at Sec.  419.66(b)(1) through (4), the 
criteria for establishing new device categories are specified at Sec.  
419.66(c). The first criterion, at Sec.  419.66(c)(1), provides that 
CMS determines that a device to be included in the category is not 
appropriately described by any of the existing categories or by any 
category previously in effect, and was not being paid for as an 
outpatient service as of December 31, 1996. The applicant asserted that 
the Aveir\TM\ DR System is the only dual-chamber leadless pacemaker 
authorized by FDA and indicated for implantation in patients with one 
or more of the following permanent conditions: syncope, presyncope, 
fatigue, disorientation due to arrhythmia/bradycardia, or any 
combination of those conditions. Per the applicant, the Aveir\TM\ DR 
System is a modular dual-chamber leadless pacemaker system with 
bidirectional implant-to-implant communication that can accommodate all 
pacing indications. According to the applicant, no previous or existing 
device categories for pass-through payment appropriately describe the 
Aveir\TM\ DR System. The applicant stated that device categories C1785 
(Pacemaker, dual-chamber, rate-responsive (implantable)) and C1889 
(Insertable/implantable device, not otherwise classified) do not 
appropriately describe the Aveir\TM\ DR System because the Aveir\TM\ DR 
System received Breakthrough Device designation from FDA and has 
specific functionality and capabilities that are new to the market. The 
applicant also asserted that the AveirTM DR system is 
modular, such that a single device can be implanted in a heart chamber 
initially, and the second pacemaker added to the other heart chamber in 
the future should the clinical need arise; and therefore, it is not 
appropriately described by either C1785 or C1889.
    We have not identified an existing pass-through payment category 
that describes the Aveir\TM\ DR System. We are inviting public comment 
on whether the Aveir\TM\ DR System meets the device category criterion 
at Sec.  419.66(c)(1).
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines either of the following: (i) 
that a device to be included in the category has demonstrated that it 
will substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment; or (ii) for devices for which 
pass-through status will begin on or after January 1, 2020, as an 
alternative to the substantial clinical improvement criterion, the 
device is part of the FDA's Breakthrough Devices Program and has 
received FDA marketing authorization for the indication covered by the 
Breakthrough Device designation. The Aveir\TM\ DR System has a 
Breakthrough Device designation and marketing authorization from FDA 
for the indication covered by the Breakthrough Device designation (as 
explained in more detail in the discussion of the newness criterion), 
and therefore, is not evaluated for substantial clinical improvement.
    We are inviting public comment on whether Aveir\TM\ DR System meets 
the device category criterion at Sec.  419.66(c)(2)(ii).
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that the Aveir\TM\ DR 
System would be reported with HCPCS codes as shown in Table 44.

[[Page 59293]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.058

    To meet the cost criterion for device pass-through payment status, 
a device must pass all three tests of the cost criterion for at least 
one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775), 
we generally use the lowest APC payment rate applicable for use with 
the nominated device when we assess whether a device meets the cost 
significance criterion, thus increasing the probability the device will 
pass the cost significance test. Beginning in CY 2017, we calculate the 
device offset amount at the HCPCS/CPT code level instead of the APC 
level (81 FR 79657). We note the applicant used the CY 2023 payment 
rates for the three tests of the cost criterion. For our calculations, 
we used APC 5224, which had a CY 2023 payment rate of $18,672.01 at the 
time the application was received. We used the CY 2023 APC level device 
offset amount of $11,739.09 for APC 5224, as HCPCS codes 0795T and 
0801T provided by the applicant were not included in Addendum P to the 
CY 2023 OPPS/ASC final rule with comment period and no CY 2023 HCPCS/
CPT code level device offset amount was available at the time the 
application was received.\22\ According to the applicant, the cost of 
the AveirTM DR System is $24,000.00.
---------------------------------------------------------------------------

    \22\ We note that the applicant originally utilized APC 5231 
(Level 1 ICD and Similar Procedures) for the three tests of the cost 
criteria in the application. However, the applicant provided 
supplemental information indicating that, HCPCS codes 0795T and 
0801T were assigned to APC 5224 (Level 4 Pacemaker and Similar 
Procedures) in the corrected Addendum B to the CY 2024 OPPS/ASC 
final rule with comment period and they believed that APC 5224 is 
currently the appropriate APC for the purposes of performing the 
cost significance calculations. We agree with the applicant and 
selected APC 5224 for our calculation, which we believe is a more 
appropriate APC to use based on the assignment of HCPCS codes 0795T 
and 0801T to APC 5224 and the clinical similarity to other pacemaker 
insertion codes in APC 5224.
---------------------------------------------------------------------------

    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The average 
reasonable cost of $24,000.00 for the Aveir\TM\ DR System is 128.54 
percent of the applicable APC payment amount for the service related to 
the category of devices of $18,672.01 (($24,000.00/$18,672.01) x 100 = 
128.54 percent). Therefore, we believe the Aveir\TM\ DR System meets 
the first cost significance requirement.
    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $24,000.00 for 
the Aveir\TM\ DR System is 204.45 percent of the cost of the device-
related portion of the APC payment amount for the related service of 
$11,739.09 (($24,000.00/$11,739.09) x 100 = 204.45 percent). Therefore, 
we believe that the Aveir\TM\ DR System meets the second cost 
significance requirement.
    The third cost significance requirement, at Sec.  419.66(d)(3), 
provides that the difference between the estimated average reasonable 
cost of the devices in the category and the portion of the APC payment 
amount for the device must exceed 10 percent of the APC payment amount 
for the related service. The difference between the estimated average 
reasonable cost of $24,000.00 for the Aveir\TM\ DR System and the 
portion of the APC payment

[[Page 59294]]

amount for the device of $11,739.09 is 65.66 percent of the APC payment 
amount for the related service of $18,672.01 ((($24,000.00 - 
$11,739.09)/$ 18,672.01) x 100 = 65.66 percent). Therefore, we believe 
that the Aveir\TM\ DR System meets the third cost significance 
requirement.
    We are inviting public comment on whether the Aveir\TM\ DR System 
meets the device pass-through payment criteria discussed in this 
section, including the cost criterion for device pass-through payment 
status.
(c) CANTURIOTM Tibial Extension (CTE) With Canary Health 
Implanted Reporting Processor (CHIRP[supreg]) System
    Canary Medical, Inc. submitted an application for a new device 
category for transitional pass-through payment status for the CTE with 
CHIRP[supreg] System for CY 2025. The applicant is only seeking a new 
device category for transitional pass-through payment status for the 
CTE component (hereinafter referred to as ``CTE'') of the CTE with 
CHIRP[supreg] System. According to the applicant, the CTE implant is a 
physical implant that is attached to the tibial baseplate as part of a 
total knee arthroplasty (TKA) to form the patient's knee prosthesis and 
provide additional stability to the replacement knee joint. Per the 
applicant the software and electronics within the CTE implant with 
CHIRP[supreg] system collects unprocessed 3-D accelerometer and 3-D 
gyroscopic sensor data using its Inertial Measurement Unit on the 
patient's functional movement and gait parameter post-surgery and 
transmits the encrypted data via the Home Base Station to the cloud 
platform. According to the applicant, the CTE implant with 
CHIRP[supreg] System 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.
    Please refer to the online application posting for the CTE implant 
with CHIRP[supreg] System, available at https://mearis.cms.gov/public/publications/device-ptp/DEP240229Q7CYC, for additional detail 
describing the device and the disease treated by the device.
    As stated previously, to be eligible for transitional pass-through 
payment under the OPPS, a device must meet the criteria at Sec.  
419.66(b)(1) through (4). With respect to the newness criterion at 
Sec.  419.66(b)(1), the CTE implant with CHIRP[supreg] System received 
FDA Breakthrough Device designation effective October 24, 2019, as 
indicated for use with the Zimmer Persona[supreg] Personalized Knee 
System (K113369) for TKA in patients with severe knee pain and 
disabilities, including: (1) rheumatoid arthritis, osteoarthritis, 
traumatic arthritis, polyarthritis; (2) collagen disorders, and/or 
avascular necrosis of the femoral condyle; (3) post-traumatic loss of 
joint configuration, particularly when there is patellofemoral erosion, 
dysfunction or prior patellectomy; (4) moderate valgus, varus, or 
flexion deformities; and (5) the salvage of previously failed surgical 
attempts or for a knee in which satisfactory stability in flexion 
cannot be obtained at the time of surgery. The CTE implant with 
CHIRP[supreg] System is indicated to provide objective kinematic data 
from the implanted medical device during a patient's TKA post-surgical 
care. FDA noted that the kinematic data are 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 for the CTE implant 
with CHIRP[supreg] System on August 27, 2021, with the following 
indications for use: (1) to provide objective kinematic data from the 
implanted medical device during a patient's TKA post-surgical care. The 
kinematic data are an adjunct to other physiological parameter 
measurement tools applied or utilized by the physician during the 
course of patient monitoring and treatment post-surgery; (2) for use in 
patients undergoing a cemented TKA procedure that are normally 
indicated for at least a 58 mm sized tibial stem extension; (3) the 
objective kinematic data generated by the CTE implant with 
CHIRP[supreg] System are not intended to support clinical decision-
making and have not been shown to provide any clinical benefit; and (4) 
the CTE implant with CHIRP[supreg] System is compatible with Zimmer 
Persona[supreg] Personalized Knee System. We note that while the 
indication for the FDA Breakthrough Device designation and the 
indication for the FDA premarket approval vary slightly, we believe 
that FDA premarket approval indication is the indication covered by the 
Breakthrough Device designation. We received the application for a new 
device category for transitional pass-through payment status for the 
CTE implant with CHIRP[supreg] System on February 29, 2024, which is 
within three years of the date of the initial FDA marketing 
authorization.
    We are inviting public comments on whether the CTE implant with 
CHIRP[supreg] System meets the newness criterion at Sec.  419.66(b)(1).
    Regarding the eligibility criterion at Sec.  419.66(b)(3), the 
device must be an integral part of the service furnished, used for one 
patient only, come in contact with human tissue, and be surgically 
inserted or implanted, or applied in or on a wound or other skin 
lesion. The applicant did not indicate whether the CTE implant is 
integral to the service furnished. We note that in CY 2014 final rule 
with comment period (78 FR 75005), we stated that we have interpreted 
the term ``integral'' to mean that the device is necessary to furnish 
or deliver the primary procedure with which it is used. For example, a 
pacemaker is integral to the procedure of implantation of a pacemaker. 
Per the applicant, the CTE implant is a physical implant that is 
attached to the tibial baseplate as part of a TKA to form the patient's 
knee prosthesis and provide additional stability to the replacement 
knee joint. We question whether the CTE implant is integral to the 
service furnished because utilization of the CTE implant during the 
primary procedure, TKA, appears to be purely additive in nature and not 
necessary to furnish or deliver the TKA consistent with our previous 
interpretation of integral. Further, we note that the indications for 
use of the CTE implant with CHIRP[supreg] System listed in the FDA 
DeNovo review letter states that the objective kinematic data generated 
by the CTE implant with CHIRP[supreg] System are not intended to 
support clinical decision-making and have not been shown to provide any 
clinical benefit. Moreover, a warning included in the device IFU for 
the CTE implant with CHIRP[supreg] System provides that the kinematic 
data obtained from this device have not been demonstrated to have 
clinical benefit. It is not intended to be utilized for clinical 
decision-making, and no data have been evaluated by FDA regarding 
clinical benefits. We note that the inclusion of the CTE implant does 
not appear to be necessary to furnish or deliver a TKA, nor does it 
appear that the data generated from the CTE implant post-procedure is 
necessary to furnish or deliver the primary service. In this context, 
we question whether the CTE implant can be considered integral in 
accordance with eligibility criteria at Sec.  419.66(b)(3).
    The applicant stated that the CTE implant was single-use, intended 
to be used with one patient only, comes into contact with human tissue, 
and is implanted into the patient's knee prosthesis.
    We are inviting public comments on whether the CTE implant meets 
the eligibility criterion at Sec.  419.66(b)(3).
    With respect to the exclusion criterion at Sec.  419.66(b)(4), a 
device is not eligible to be considered for device pass-through payment 
if it is any of the following: (1)

[[Page 59295]]

equipment, an instrument, apparatus, implement, or item of this type 
for which depreciation and financing expenses are recovered as 
depreciation assets as defined in Chapter 1 of the Medicare Provider 
Reimbursement Manual (CMS Pub. 15-1); or (2) a material or supply 
furnished incident to a service (for example, a suture, customized 
surgical kit, or clip, other than a radiological site marker). The 
applicant did not indicate whether the CTE implant is equipment, an 
instrument, apparatus, implement, or item of this type for which 
depreciation and financing expenses are recovered, or if the CTE 
implant is a supply or material furnished incident to a service.
    We are inviting public comments on whether the CTE implant meets 
the exclusion criterion at Sec.  419.66(b)(4).
    In addition to the criteria at Sec.  419.66(b)(1) through (4), the 
criteria for establishing new device categories are specified at Sec.  
419.66(c). The first criterion, at Sec.  419.66(c)(1), provides that 
CMS determines that a device to be included in the category is not 
appropriately described by any of the existing categories or by any 
category previously in effect, and was not being paid for as an 
outpatient service as of December 31, 1996. The applicant asserted that 
the CTE implant with CHIRP[supreg] System is the only device authorized 
by FDA with an indication to provide objective kinematic data from the 
implanted medical device during a patient's TKA post-surgical care. 
According to the applicant, no previous or existing device categories 
for pass-through payment appropriately describe the CTE implant. Per 
the applicant, the device category code C1776 (Joint device 
(implantable)) does not appropriately describe the CTE implant because 
C1776 was created for older technology that performs the function of 
the joint and does not describe a device that captures activity and 
kinematic data but is not a substitute for the natural knee.
    We have not identified an existing pass-through payment category 
that describes the CTE implant. We are inviting public comment on 
whether the CTE implant meets the device category criterion at Sec.  
419.66(c)(1).
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines either of the following: (i) 
that a device to be included in the category has demonstrated that it 
will substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment; or (ii) for devices for which 
pass-through status will begin on or after January 1, 2020, as an 
alternative to the substantial clinical improvement criterion, the 
device is part of the FDA's Breakthrough Devices Program and has 
received FDA marketing authorization for the indication covered by the 
Breakthrough Device designation. The CTE implant with CHIRP[supreg] 
system has a Breakthrough Device designation and marketing 
authorization from FDA for the indication covered by the Breakthrough 
Device designation (as explained in the discussion of the newness 
criterion) and therefore is not evaluated for substantial clinical 
improvement.
    We are inviting public comment on whether the CTE implant meets the 
device category criterion at Sec.  419.66(c)(2)(ii).
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that the CTE implant 
would be reported with the HCPCS code as shown in Table 45.
[GRAPHIC] [TIFF OMITTED] TP22JY24.059

    To meet the cost criterion for device pass-through payment status, 
a device must pass all three tests of the cost criterion for at least 
one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775), 
we generally use the lowest APC payment rate applicable for use with 
the nominated device when we assess whether a device meets the cost 
significance criterion, thus increasing the probability the device will 
pass the cost significance test. Beginning in CY 2017, we calculate the 
device offset amount at the HCPCS/CPT code level instead of the APC 
level (81 FR 79657). We note the applicant utilized the CY 2024 payment 
rates for the three cost criterion tests. For our calculations, we used 
APC 5115, which had a CY 2024 payment rate of $12,539.82 at the time 
the application was received. HCPCS code 27447 had a device offset 
amount of $5,659.22 at the time the application was received. According 
to the applicant, the cost of the CTE implant part of the CTE implant 
with CHIRP[supreg] System is $7,250.00.
    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The average 
reasonable cost of $7,250.00 for the CTE implant is 57.82 percent of 
the applicable APC payment amount for the service related to the 
category of devices of $12,539.82 (($7,250.00/$12,539.82) x 100 = 57.82 
percent). Therefore, we believe the CTE implant meets the first cost 
significance requirement.
    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $7,250.00 for 
the CTE implant is 128.11 percent of the cost of the device-related 
portion of the APC payment amount for the related service of $5,659.22 
(($7,250.00/$5,659.22) x 100 = 128.11 percent). Therefore, we believe 
that the CTE implant meets the second cost significance requirement.
    The third cost significance requirement, at Sec.  419.66(d)(3), 
provides that the difference between the estimated average reasonable 
cost of the

[[Page 59296]]

devices in the category and the portion of the APC payment amount for 
the device must exceed 10 percent of the APC payment amount for the 
related service. The difference between the estimated average 
reasonable cost of $7,250 for the CTE implant and the portion of the 
APC payment amount for the device of $5659.22 is 12.69 percent of the 
APC payment amount for the related service of $12,539.82 ((($7,250-
$5,659.22)/$12,539.82) x 100 =12.69 percent). Therefore, we believe 
that the CTE implant meets the third cost significance requirement.
    We are inviting public comment on whether the CTE implant meets the 
device pass-through payment criteria discussed in this section, 
including the cost criterion for device pass-through payment status.
(d) The DETOURTM System
    Endologix, LLC submitted an application for a new device category 
for transitional pass-through payment status for the 
DETOURTM System for CY 2025. According to the applicant, the 
DETOURTM System is an implantable component, used to create 
a femoropopliteal bypass routed through the femoral vein. The 
DETOURTM System is comprised of two main components: (1) the 
TORUSTM Stent Graft System, which is comprised of the 
TORUSTM Stent Graft and the TORUSTM Stent Graft 
Delivery System, and (2) the ENDOCROSSTM Device. Per the 
applicant, the DETOURTM System is used to treat patients 
with advanced peripheral vascular disease, specifically those with long 
complex femoropopliteal artery stenoses and occlusions resulting in 
lifestyle limiting claudication or severe lower limb threatening 
ischemia. According to the applicant, the DETOURTM System 
can restore arterial blood flow to the lower limb around the blocked 
femoral artery and allows for venous blood flow around the conduit for 
normal venous return, to reduce signs and symptoms of lower limb 
ischemia and prevent amputation.
    Please refer to the online application posting for the 
DETOURTM System, available at https://mearis.cms.gov/public/publications/device-ptp/DEP23090164QL2, for additional detail 
describing the device and the disease treated by the device.
    As stated previously, to be eligible for transitional pass-through 
payment under the OPPS, a device must meet the criteria at Sec.  
419.66(b)(1) through (4). With respect to the newness criterion at 
Sec.  419.66(b)(1), the DETOURTM System received FDA 
Breakthrough Device designation effective September 2, 2020, under the 
name the PQ Bypass System, as a device intended 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. FDA approved the premarket approval 
application (PMA) for the DETOURTM System on June 7, 2023, 
indicated for use for percutaneous revascularization in patients with 
symptomatic femoropopliteal lesions from 200 mm to 460 mm in length 
with chronic total occlusions (100 mm to 425 mm) or diffuse stenosis 
>70 percent who may be considered suboptimal candidates for surgical or 
alternative endovascular treatments. The DETOURTM System, or 
any of its components, is not for use in the coronary and cerebral 
vasculature. We note that while the indication for the FDA Breakthrough 
Device designation and the indication for the FDA premarket approval 
vary slightly, we believe that FDA premarket approval indication is the 
indication covered by the Breakthrough Device designation. We received 
the application for a new device category for transitional pass-through 
payment status for the DETOURTM System on September 1, 2023, 
which is within three years of the date of the initial FDA marketing 
authorization.
    We are inviting public comments on whether the DETOURTM 
System meets the newness criterion at Sec.  419.66(b)(1).
    With respect to the eligibility criteria at Sec.  419.66(b)(3), the 
device must be an integral part of the service furnished, used for one 
patient only, come in contact with human tissue, and be surgically 
inserted or implanted, or applied in or on a wound or other skin 
lesion. Per the applicant, the DETOURTM System is integral 
to the service provided and is used for one patient only. While the 
applicant did not indicate whether the DETOURTM System comes 
in contact with human tissue, the applicant did specify that both 
components of the DETOURTM System, the TORUSTM 
Stent Graft System and the ENDOCROSSTM Device, are inserted 
or implanted during the percutaneous transmural femoropopliteal bypass 
procedure, as required by Sec.  419.66(b)(3).
    We are inviting public comments on whether the DETOURTM 
System meets the eligibility criterion at Sec.  419.66(b)(3).
    With respect to the exclusion criterion at Sec.  419.66(b)(4), a 
device is not eligible to be considered for device pass-through payment 
if it is any of the following: (1) equipment, an instrument, apparatus, 
implement, or item of this type for which depreciation and financing 
expenses are recovered as depreciation assets as defined in Chapter 1 
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a 
material or supply furnished incident to a service (for example, a 
suture, customized surgical kit, or clip, other than a radiological 
site marker). The applicant asserted that the DETOURTM 
System meets the device eligibility requirements because it is not an 
instrument, apparatus, implement, or item of this type for which 
depreciation and financing expenses are recovered, and it is not a 
supply or material furnished incident to a service.
    We are inviting public comments on whether the DETOURTM 
System meets the exclusion criterion at Sec.  419.66(b)(4).
    In addition to the criteria at Sec.  419.66(b)(1) through (4), the 
criteria for establishing new device categories are specified at Sec.  
419.66(c). The first criterion, at Sec.  419.66(c)(1), provides that 
CMS determines that a device to be included in the category is not 
appropriately described by any of the existing categories or by any 
category previously in effect, and was not being paid for as an 
outpatient service as of December 31, 1996. The applicant described 
that the DETOURTM System is a minimally invasive, single-use 
device with an implantable component, used to create a femoropopliteal 
bypass routed through the femoral vein. According to the applicant, no 
previous or existing device categories for pass-through payment 
appropriately describe the DETOURTM System. The applicant 
provided a list of existing and previous device categories for pass-
through payment for other stents and explained why they do not believe 
any of the categories describe the DETOURTM System. In 
summary, the applicant asserted that the referenced device categories 
do not adequately describe the DETOURTM System because, in 
contrast to the DETOURTM System, the referenced device 
categories do not have: (1) a crossing device with long needle for 
transmural access, (2) a crossing device with high pressure needle 
delivery for heavily calcified and atherosclerotic arteries, (3) a high 
radial strength transmural stent graft capable of self-support and 
sustaining blood flow through conduit bridging artery to vein and back 
to artery, (4) a percutaneous stent graft delivery catheter, (5) a 
covered stent graft to allow for arterial blood flow within the conduit 
as venous blood flows around it in the vein, or (6) a permanent implant 
to maintain arterial and venous blood flow. The reasons the applicant 
asserted

[[Page 59297]]

for why the DETOURTM System is not adequately described by 
each of the device categories are shown in Table 46.
[GRAPHIC] [TIFF OMITTED] TP22JY24.060

    We have not identified an existing pass-through payment category 
that describes the DETOURTM System. We are inviting public 
comment on whether the DETOURTM System meets the device 
category criterion at Sec.  419.66(c)(1).
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines either of the following: (i) 
that a device to be included in the category has demonstrated that it 
will substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment; or (ii) for devices for which 
pass-through status will begin on or after January 1, 2020, as an 
alternative to the substantial clinical improvement criterion, the 
device is part of the FDA's Breakthrough Devices Program and has 
received FDA marketing authorization for the indication covered by the 
Breakthrough Device designation. The DETOURTM System has a 
Breakthrough Device designation and marketing authorization from FDA 
for the indication covered by the Breakthrough Device designation (as 
explained in more detail in the discussion of the newness criterion) 
and therefore is not evaluated for substantial clinical improvement.
    We are inviting public comment on whether the DETOURTM 
System meets the device category criterion at Sec.  419.66(c)(2)(i).
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost

[[Page 59298]]

significance criteria that must each be met. The applicant provided the 
following information in support of the cost significance requirements. 
The applicant stated that the DETOURTM System would be 
reported with HCPCS code as shown in Table 47.
[GRAPHIC] [TIFF OMITTED] TP22JY24.061

    To meet the cost criterion for device pass-through payment status, 
a device must pass all three tests of the cost criterion for at least 
one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775), 
we generally use the lowest APC payment rate applicable for use with 
the nominated device when we assess whether a device meets the cost 
significance criterion, thus increasing the probability the device will 
pass the cost significance test. Beginning in CY 2017, we calculate the 
device offset amount at the HCPCS/CPT code level instead of the APC 
level (81 FR 79657). We note the applicant used the CY 2023 payment 
rates for the three tests of the cost criterion. For our calculations, 
like the applicant, we used APC 5193, which had a CY 2023 payment rate 
of $10,615.31 at the time the application was received. HCPCS code 
0505T in APC 5193 had a CY 2023 device offset amount of $5,229.10 at 
the time the application was received. According to the applicant, the 
cost of the DETOURTM System is $25,000.00.
    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The average 
reasonable cost of $25,000.00 for the DETOURTM System is 
235.51 percent of the applicable APC payment amount for the service 
related to the category of devices of $10,615.31 (($25,000.00/
$10,615.31) x 100 = 235.51 percent). Therefore, we believe the 
DETOURTM System meets the first cost significance 
requirement.
    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $25,000.00 for 
the DETOURTM System is 478.09 percent of the cost of the 
device-related portion of the APC payment amount for the related 
service of $5,229.10 (($25,000.00/$5,229.10) x 100 = 478.09 percent). 
Therefore, we believe that the DETOURTM System meets the 
second cost significance requirement.
    The third cost significance requirement, at Sec.  419.66(d)(3), 
provides that the difference between the estimated average reasonable 
cost of the devices in the category and the portion of the APC payment 
amount for the device must exceed 10 percent of the APC payment amount 
for the related service. The difference between the estimated average 
reasonable cost of $25,000.00 for the DETOURTM System and 
the portion of the APC payment amount for the device of $5,229.10 is 
186.25 percent of the APC payment amount for the related service of 
$10,615.31 ((($25,000.00 - $5,229.10)/$10,615.31) x 100 = 186.25 
percent). Therefore, we believe that the DETOURTM System 
meets the third cost significance requirement.
    We are inviting public comment on whether the DETOURTM 
System meets the device pass-through payment criteria discussed in this 
section, including the cost criterion for device pass-through payment 
status.
    (e) EndoSound Vision SystemTM (EVSTM)
    EndoSound, Inc. submitted an application for a new device category 
for transitional pass-through payment status for the EVSTM 
for CY 2025. The applicant is only seeking a new device category for 
transitional pass-through payment status for the Ultrasound Disposable 
Kit--Diagnostic/Therapeutic (UDK-T) component (hereinafter referred to 
as ``UDK-T'') of the EVSTM. According to the applicant, the 
EVSTM is an ultrasound system designed to externally attach 
to an upper gastrointestinal (GI) endoscope (gastroscope/upper (EGD) 
endoscope). Per the applicant, the EVSTM is a device that, 
once attached to an EGD endoscope, temporarily converts the EGD 
endoscope to a fully capable endoscopic ultrasound (EUS) endoscope. The 
applicant asserted that the EVSTM can be coupled with an 
upper GI endoscope device to enable real-time ultrasound imaging, 
ultrasound guided needle aspiration, and other EUS guided procedures 
within the upper GI tract and surrounding organs. According to the 
applicant, the EVSTM consists of: (1) the EVSScanner, a 
beamformer/scanner that performs ultrasound signal processing; (2) the 
Ultrasound Transducer Module (UTM), a reusable transducer assembly that 
converts the electrical signals from the scanner into ultrasound 
energy; (3) the Transducer Extension Cable (TEC), a cable/connector to 
interface the UTM to the EVSScanner; and (4) the UDK-T, a disposable 
mounting kit with an operator control mechanism used to

[[Page 59299]]

externally affix the EVSTM to a standard EGD endoscope and 
to provide needle and transducer angulation while maintaining the 
native gastroscope controls.
    Please refer to the online application posting for the 
EVSTM, available at https://mearis.cms.gov/public/publications/device-ptp/DEP240228GJT0X, for additional detail 
describing this device and the disease treated by the device.
    As stated previously, to be eligible for transitional pass-through 
payment under the OPPS, a device must meet the criteria at Sec.  
419.66(b)(1) through (4). With respect to the newness criterion at 
Sec.  419.66(b)(1), the EVSTM, which includes the UDK-T, 
received FDA Breakthrough Device designation effective July 29, 2021, 
as a device intended to provide optical visualization of, ultrasonic 
visualization of, and therapeutic access to, the upper GI tract 
including but not restricted to the organs, tissues, and subsystems: 
esophagus, stomach, duodenum, and underlying areas. The instrument is 
introduced ``per orally'' when indications consistent with the 
requirement for procedure are observed in adult patient populations. 
FDA granted the applicant 510(k) clearance for the EVSTM on 
December 27, 2023, indicated for use such that when affixed to an 
endoscope, is intended to provide ultrasonic visualization of, and 
ultrasound guided therapeutic access to the upper GI tract including 
but not restricted to the organs, tissues, and subsystems: esophagus, 
stomach, duodenum, and underlying areas. The EVSTM, mounted 
on an endoscope, is introduced orally when indications consistent with 
the requirement for a GI procedure are met. The EVSTM is a 
prescription-only device to be used by a qualified physician. The 
clinical environments where the system can be used include clinics, 
hospitals, and ambulatory surgery centers. We note that while the 
indication for the FDA Breakthrough Device designation and the 
indication for the FDA premarket approval vary slightly, we believe 
that FDA premarket approval indication is the one covered by the 
Breakthrough Device designation. We received the application for a new 
device category for transitional pass-through payment status for the 
EVSTM on February 28, 2024, which is within three years of 
the date of the initial FDA marketing authorization.
    We are inviting public comments on whether the EVSTM, 
inclusive of the UDK-T component, meets the newness criterion at Sec.  
419.66(b)(1).
    With respect to the eligibility criterion at Sec.  419.66(b)(3), 
the device must be an integral part of the service furnished, used for 
one patient only, come in contact with human tissue, and be surgically 
inserted or implanted, or applied in or on a wound or other skin 
lesion. The applicant did not indicate whether the UDK-T component of 
the EVSTM is integral to the service furnished; however, the 
applicant did indicate that the UDK-T is single-use, comes in contact 
with human tissue, and is inserted as part of an endoscopy procedure. 
We preliminarily approved the EndoSound Vision System[supreg] (EVS) 
HCPCS code C1606 (Adapter, single-use (i.e. disposable), for attaching 
ultrasound system to upper gastrointestinal endoscope) upon quarterly 
review under the alternative pathway with an effective of July 1, 2024. 
We note that HCPCS code C1606 was established for an adapter for 
attaching an ultrasound system to an upper gastrointestinal endoscope 
that can only be used for a single procedure and cannot be reprocessed. 
As such, HCPCS code C1606 only describes devices that cannot be 
reprocessed.
    We are inviting public comments on whether the UDK-T component of 
the EVSTM meets the eligibility criterion at Sec.  
419.66(b)(3).
    With respect to the exclusion criterion at Sec.  419.66(b)(4), a 
device is not eligible to be considered for device pass-through payment 
if it is any of the following: (1) equipment, an instrument, apparatus, 
implement, or item of this type for which depreciation and financing 
expenses are recovered as depreciation assets as defined in Chapter 1 
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a 
material or supply furnished incident to a service (for example, a 
suture, customized surgical kit, or clip, other than a radiological 
site marker). The applicant claimed that the UDK-T meets the device 
eligibility requirements because it is not equipment or an item for 
which depreciation and financing expenses are recovered. In addition, 
the applicant asserted that the UDK-T is not a supply or material.
    We are inviting public comments on whether the UDK-T component of 
the EVSTM meets the exclusion criterion at Sec.  
419.66(b)(4).
    In addition to the criteria at Sec.  419.66(b)(1) through (4), the 
criteria for establishing new device categories are specified at Sec.  
419.66(c). The first criterion, at Sec.  419.66(c)(1), provides that 
CMS determines that a device to be included in the category is not 
appropriately described by any of the existing categories or by any 
category previously in effect, and was not being paid for as an 
outpatient service as of December 31, 1996. According to the applicant, 
the EVSTM is an ultrasound system designed to externally 
attach to an upper gastrointestinal (GI) endoscope (gastroscope/upper 
(EGD) endoscope). According to the applicant, no previous or existing 
device categories for pass-through payment appropriately describe the 
UDK-T. Per the applicant, device category C1748 (Endoscope, single-use 
(i.e., disposable), Upper GI, imaging/illumination device (insertable)) 
does not appropriately describe the EVSTM, inclusive of the 
UDK-T, because: (1) the EVSTM, inclusive of the UDK-T, 
enables an endoscope that a hospital has to have added functionalities 
such as the ability to perform an EUS procedure, but is not an 
endoscope like the devices in C1748; (2) the EVSTM, 
inclusive of the UDK-T, when used with an endoscope allows EUS 
procedures to be done without an elevator, unlike the other devices 
described in C1748; and (3) the EVSTM, inclusive of the UDK-
T, and the devices described in C1748 are used in different procedures. 
The applicant explained that CMS indicated that C1748 should always be 
billed with a CPT code in the ranges of 43260-43265 and 43274-43278, 
but there is no overlap between those CPT codes billed with C1748 and 
the CPT codes the applicant stated that the EVSTM would be 
reported with as shown in Table 48.
    We have not identified an existing pass-through payment category 
that describes the UDK-T component of the EVSTM.
    We are inviting public comment on whether the UDK-T component of 
the EVSTM meets the device category criterion at Sec.  
419.66(c)(1).
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines either of the following: (i) 
that a device to be included in the category has demonstrated that it 
will substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment; or (ii) for devices for which 
pass-through status will begin on or after January 1, 2020, as an 
alternative to the substantial clinical improvement criterion, the 
device is part of the FDA's Breakthrough Devices Program and has 
received FDA marketing authorization for the indication covered by the 
Breakthrough Device designation. The EVSTM, inclusive of the 
UDK-T, has a Breakthrough Device designation and

[[Page 59300]]

marketing authorization from FDA for the indication covered by the 
Breakthrough Device designation (as explained in more detail in the 
discussion of the newness criterion) and therefore is not evaluated for 
substantial clinical improvement.
    We are inviting public comment on whether the EVSTM, 
inclusive of the UDK-T component, meets the device category criterion 
at Sec.  419.66(c)(2)(ii).
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that the 
EVSTM would be reported with HCPCS codes as shown in Table 
48.
[GRAPHIC] [TIFF OMITTED] TP22JY24.062

    To meet the cost criterion for device pass-through payment status, 
a device must pass all three tests of the cost criterion for at least 
one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775), 
we generally use the lowest APC payment rate applicable for use with 
the nominated device when we assess whether a device meets the cost 
significance criterion, thus increasing the probability the device will 
pass the cost significance test. Beginning in CY 2017, we calculate the 
device offset amount at the HCPCS/CPT code level instead of the APC 
level (81 FR 79657). We note the applicant used the CY 2024 payment 
rates for the three tests of the cost criterion. For our calculations, 
we used APC 5302, which had a CY 2024 payment rate of $1,812.99 at the 
time the application was received. HCPCS code 43232 in APC 5302 had a 
CY 2024 device offset amount of $14.50 at the time the application was 
received.\23\ According to the applicant, the cost of the disposable, 
single-use UDK-T component of the EVSTM is $500.00.
---------------------------------------------------------------------------

    \23\ We note that the applicant selected the APC payment rate of 
$1,814.88 and the APC level device offset amount of $178.95 for APC 
5302. However, the values selected are inconsistent with the APC 
payment rate and the APC level device offset amount found in CY 2024 
OPPS APC Offset File, which were corrected as described in the CY 
2024 OPPS/ASC final rule with comment period correction (89 FR 
9002). The HCPCS/CPT code level device offset amounts for the HCPCS/
CPT codes provided by the applicant are available in the corrected 
Addendum P to the CY 2024 OPPS/ASC final rule with comment period. 
For our calculation, we selected the APC payment rate of $1,812.99 
and the HCPCS/CPT code level device offset amount of $14.50 related 
to HCPCS 43232 in APC 5302 found in the corrected Addendum P, which 
are the accurate values for these codes. Based on our initial 
assessment for this proposed rule, using the APC payment rate of 
$1,812.99 and the device offset amount of $14.50 would result in the 
EVSTM meeting the cost significance requirement.
---------------------------------------------------------------------------

    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25

[[Page 59301]]

percent of the applicable APC payment amount for the service related to 
the category of devices. The average reasonable cost of $500.00 for the 
UDK-T is 27.59 percent of the applicable APC payment amount for the 
service related to the category of devices of $1,812.99 (($500.00/
$1,812.99) x 100 = 27.59 percent). Therefore, we believe the UDK-T 
component of the EVSTM meets the first cost significance 
requirement.
    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $500.00 for the 
UDK-T is 3,448.28 percent of the cost of the device-related portion of 
the APC payment amount for the related service of $14.50 (($500.00/
$14.50) x 100 = 3,448.28 percent). Therefore, we believe that the UDK-T 
component of the EVSTM meets the second cost significance 
requirement.
    The third cost significance requirement, at Sec.  419.66(d)(3), 
provides that the difference between the estimated average reasonable 
cost of the devices in the category and the portion of the APC payment 
amount for the device must exceed 10 percent of the APC payment amount 
for the related service. The difference between the estimated average 
reasonable cost of $500.00 for the UDK-T and the portion of the APC 
payment amount for the device of $14.50 is 26.78 percent of the APC 
payment amount for the related service of $1,812.99 ((($500.00--
$14.50)/$1,812.99) x 100 = 26.78 percent). Therefore, we believe that 
the UDK-T component of the EVSTM meets the third cost 
significance requirement.
    We are inviting public comment on whether the UDK-T component of 
the EVSTM meets the device pass-through payment criteria 
discussed in this section, including the cost criterion for device 
pass-through payment status.
(f) iFuse Bedrock Granite\TM\ Implant System
    SI-BONE submitted an application for a new device category for 
transitional pass-through payment status for the iFuse Bedrock 
Granite\TM\ Implant System for CY 2025. According to the applicant, the 
iFuse Bedrock Granite\TM\ Implant System consists of iFuse Granite\TM\ 
implants of various lengths and diameters and associated instruments 
sets. The titanium (Ti-6Al-4V ELI) iFuse Granite\TM\ implant consists 
of a porous fusion sleeve with threaded length attached to a solid post 
that has connection and implant placement features of a typical pedicle 
fixation screw. The iFuse Granite\TM\ implant is intended to provide 
sacropelvic fusion of the sacroiliac joint (when placed in the sacral-
alar-iliac (SAI) trajectory) and fixation to the pelvis when used in 
conjunction with commercially available pedicle screw fixation systems 
as a foundational element for segmental spinal fusion only when 
performing both a lumbar and a sacroiliac joint (SIJ) fusion procedure 
in the same operative session. The applicant asserted that joint fusion 
occurs as a result of the device's porous surface and interstices and 
fixation occurs through the device's helical threaded design and 
traditional posterior fixation rod connection.
    Per the applicant, the device can be placed into the pelvis in two 
trajectories: the SAI trajectory (i.e., into the sacrum, across the SIJ 
and into the ilium), or directly into the ilium. The applicant 
explained that the iFuse Granite\TM\ implant is typically placed in the 
SAI trajectory, bilaterally, and oftentimes stacked to achieve two 
points of fusion and fixation/stabilization across each SIJ. According 
to the applicant, the iFuse Granite\TM\ implant may also be used in a 
single, but bilateral, configuration, where only two implants may be 
required when replacing traditional pedicle screws in either a SAI 
trajectory or iliac trajectory. The applicant asserted that the iFuse 
Bedrock Granite\TM\ Implant System is always used in addition to lumbar 
fusion instrumentation when used to perform lumbar and SIJ fusion at 
the same time.
    Please refer to the online application posting for the iFuse 
Bedrock Granite\TM\ Implant System, available at https://mearis.cms.gov/public/publications/device-ptp/DEP240220LPFNM, for 
additional detail describing the device and the disease treated by the 
device.
    As stated previously, to be eligible for transitional pass-through 
payment under the OPPS, a device must meet the criteria at Sec.  
419.66(b)(1) through (4). With respect to the newness criterion at 
Sec.  419.66(b)(1), the iFuse Bedrock Granite\TM\ Implant System 
received FDA Breakthrough Device designation effective November 23, 
2021, as a treatment of the acute and chronic instabilities or 
deformities of the thoracic, lumbar, and sacral spine, including: (1) 
degenerative disc disease (DDD), as defined by back pain of discogenic 
origin with degeneration of the disc confirmed by patient history and 
radiographic studies; (2) severe spondylolisthesis (Grades 3 and 4) of 
the L5-S1 vertebra; (3) skeletally mature patients receiving fusions by 
autogenous bone graft having implants attached to the lumbar and sacral 
spine (L3 to sacrum) with removal of the implants after the attainment 
of a solid fusion; (4) spondylolisthesis; (5) trauma (i.e., fracture or 
dislocation); (6) spinal stenosis; (7) deformities or curvatures (i.e., 
scoliosis, kyphosis, and/or lordosis); (8) spinal tumor; and (9) 
pseudarthrosis, and/or failed previous fusion. Subsequently, FDA also 
granted the applicant 510(k) clearance for the iFuse Bedrock 
Granite\TM\ Implant System on May 26, 2022 and December 22, 2022, for 
the indication covered by the Breakthrough Device designation with one 
additional indication for use: SIJ dysfunction that is a direct result 
of SIJ disruption and degenerative sacroiliitis, including conditions 
whose symptoms began during pregnancy or in the peripartum period and 
have persisted postpartum for more than 6 months. We note that the 
510(k) clearance dated December 22, 2022, expanded the previously 
cleared indication of the iFuse Bedrock Granite\TM\ Implant System to 
include general compatibility with certain compatible pedicle screw 
systems, whereas the indications under the May 26, 2022, 510(k) 
clearance only addressed compatibility of the iFuse Bedrock Granite\TM\ 
Implant System with the SeaSpine Mariner Pedicle Screw System. Each 
510(k) clearance, the May 26, 2022, and the December 22, 2022, are 
covered by the November 23, 2021 Breakthrough Device designation for 
the iFuse Bedrock Granite\TM\ Implant System. We received the 
application for a new device category for transitional pass-through 
payment status for the iFuse Bedrock Granite\TM\ Implant System on 
February 20, 2024, which is within three years of the dates of the May 
26, 2022 and December 22, 2022 FDA marketing authorizations for the 
iFuse Bedrock Granite\TM\ Implant System.
    We are inviting public comments on whether the iFuse Bedrock 
Granite\TM\ Implant System meets the newness criterion at Sec.  
419.66(b)(1).
    With respect to the eligibility criterion at Sec.  419.66(b)(3), 
the device must be an integral part of the service furnished, used for 
one patient only, come in contact with human tissue, and be surgically 
inserted or implanted, or applied in or on a wound or other skin 
lesion. The applicant did not indicate if the iFuse Bedrock Granite\TM\ 
Implant System is integral to the service furnished. The applicant 
provided that

[[Page 59302]]

the iFuse Bedrock Granite\TM\ Implant is single-use, permanently 
implanted, and surgically inserted into the patient. However, we note 
that we do not have sufficient information to determine if the 
associated instruments sets included in the iFuse Bedrock Granite\TM\ 
Implant System meet the eligibility criterion at Sec.  419.66(b)(3).
    We are inviting public comments on whether the iFuse Bedrock 
Granite\TM\ Implant System meets the eligibility criterion at Sec.  
419.66(b)(3).
    With respect to the exclusion criterion at Sec.  419.66(b)(4), a 
device is not eligible to be considered for device pass-through payment 
if it is any of the following: (1) equipment, an instrument, apparatus, 
implement, or item of this type for which depreciation and financing 
expenses are recovered as depreciation assets as defined in Chapter 1 
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a 
material or supply furnished incident to a service (for example, a 
suture, customized surgical kit, or clip, other than a radiological 
site marker). The applicant did not indicate whether the iFuse Bedrock 
Granite\TM\ Implant System is equipment, an instrument, apparatus, 
implement, or item of this type for which depreciation and financing 
expenses are recovered, or if the iFuse Bedrock Granite\TM\ Implant 
System is a supply or material furnished incident to a service.
    We are inviting public comments on whether the iFuse Bedrock 
Granite\TM\ Implant System meets the exclusion criterion at Sec.  
419.66(b)(4).
    In addition to the criteria at Sec.  419.66(b)(1) through (4), the 
criteria for establishing new device categories are specified at Sec.  
419.66(c). The first criterion, at Sec.  419.66(c)(1), provides that 
CMS determines that a device to be included in the category is not 
appropriately described by any of the existing categories or by any 
category previously in effect, and was not being paid for as an 
outpatient service as of December 31, 1996. According to the applicant, 
no previous or existing device categories for pass-through payment 
appropriately describe the iFuse Bedrock Granite\TM\ Implant System. 
Per the applicant, the device category C1821 (Interspinous process 
distraction device) does not appropriately describe the iFuse Bedrock 
Granite\TM\ Implant System because the iFuse Bedrock Granite\TM\ 
Implant System is used to fixate and fuse, while the devices described 
in C1821 are interspinous spacers which, after implantation, are opened 
or expanded to distract the neural foramina and decompress the nerves. 
The applicant asserted that device category C1713 (Anchor/screw for 
opposing bone-to-bone or soft tissue-to-bone (implantable)) also does 
not appropriately describe the iFuse Bedrock Granite\TM\ Implant System 
because the iFuse Bedrock Granite\TM\ Implant System allows for 
simultaneous fusion of the SIJ and fixation of the pelvis by connecting 
via Tulip Connector to the base of the stabilizing rods within the 
lumbosacral spinal construct, while C1713 includes implantable pins 
and/or screws that are used to oppose soft tissue-to-bone, tendon-to-
bone, or bone-to-bone. Per the applicant, the device category C1889 
(Implantable/insertable device, not otherwise classified) also does not 
appropriately describe the iFuse Bedrock Granite\TM\ Implant System 
because it does not describe any specific device category, and 
therefore does not uniquely describe the device category proposed for 
the iFuse Bedrock Granite\TM\ Implant System.
    We note that, according to the applicant, the iFuse Bedrock 
Granite\TM\ implant is intended to provide sacropelvic fusion of the 
sacroiliac joint (when placed in the sacral-alar-iliac (SAI) 
trajectory) and fixation to the pelvis when used in conjunction with 
commercially available pedicle screw fixation systems as a foundational 
element for segmental spinal fusion only when performing both a lumbar 
and sacroiliac joint (SIJ) fusion procedure in the same operative 
session. The applicant asserted that joint fusion occurs as a result of 
the device's porous surface and interstices and fixation occurs through 
the device's helical threaded design and traditional posterior fixation 
rod connection. We believe that the device category C1713 may 
appropriately describe the iFuse Bedrock Granite\TM\ Implant System and 
question whether a transfixing device utilizing the Tulip Connector is 
sufficiently distinguishable from traditional implantable pins or 
screws that it is meant to replace. In this context, based on the 
description the applicant provided, we believe the iFuse Bedrock 
Granite\TM\ Implant System may be similar to the devices described by 
C1713, and therefore, the iFuse Bedrock Granite\TM\ Implant System may 
also be appropriately described by C1713.
    In addition, we believe that the device category C1889 may 
appropriately describe the iFuse Bedrock Granite\TM\ Implant System 
because C1889 may be used to describe any implantable/insertable device 
that is not otherwise described by a more specific device category and 
is, therefore, sufficiently broad to include implantable devices that 
allow for simultaneous fusion of the SIJ and fixation of the pelvis. We 
note that in the CY 2017 OPPS/ASC final rule with comment period (81 FR 
79562), CMS created C1889 with the specific intent to recognize devices 
furnished during a device intensive procedure that are not described by 
a specific Level II HCPCS Category C-code. In this context, we believe 
the iFuse Bedrock Granite\TM\ Implant System may be appropriately 
described by either C1713 or C1889.
    We are inviting public comment on whether the iFuse Bedrock 
Granite\TM\ Implant System meets the device category criterion at Sec.  
419.66(c)(1).
    The second criterion for establishing a device category at Sec.  
419.66(c)(2) provides that CMS determines either of the following: (i) 
that a device to be included in the category has demonstrated that it 
will substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment; or (ii) for devices for which 
pass-through status will begin on or after January 1, 2020, as an 
alternative to the substantial clinical improvement criterion, the 
device is part of the FDA's Breakthrough Devices Program and has 
received FDA marketing authorization for the indication covered by the 
Breakthrough Device designation. The iFuse Bedrock Granite\TM\ Implant 
System has a Breakthrough Device designation and marketing 
authorization from FDA for the indication covered by the Breakthrough 
Device designation (as explained in the discussion of the newness 
criterion) and therefore is not evaluated for substantial clinical 
improvement.
    We are inviting public comment on whether the iFuse Bedrock 
Granite\TM\ Implant System meets the device category criterion at Sec.  
419.66(c)(2)(ii).
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that the iFuse Bedrock 
Granite\TM\ Implant System would be reported with HCPCS codes shown in 
Table 49.

[[Page 59303]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.063

    According to the applicant, the iFuse Bedrock GraniteTM 
Implant System is only used when both a SIJ fusion procedure and a 
lumbar fusion procedure are performed in the same operative session. 
The applicant stated that the iFuse Bedrock GraniteTM 
Implant System is not utilized when only a SIJ fusion procedure is 
performed (HCPCS code 27279) or when only a lumbar fusion procedure is 
performed (HCPCS code 22612, 22630 or 22633). Rather, per the 
applicant, the appropriate coding of the procedure where the iFuse 
Bedrock GraniteTM Implant System is used should include the 
CPT code for SIJ fusion (HCPCS code 27279) and a CPT code for lumbar 
fusion (HCPCS code 22612, 22630 or 22633). Per the applicant, the 
selection of the primary lumbar fusion CPT code (HCPCS code 22612, 
22630 or 22633) is dependent on the procedure performed.
    To meet the cost criterion for device pass-through payment status, 
a device must pass all three tests of the cost criterion for at least 
one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775), 
we generally use the lowest APC payment rate applicable for use with 
the nominated device when we assess whether a device meets the cost 
significance criterion, thus increasing the probability the device will 
pass the cost significance test. Beginning in CY 2017, we calculate the 
device offset amount at the HCPCS/CPT code level instead of the APC 
level (81 FR 79657). We note the applicant utilized the CY 2024 payment 
rates for the three tests of the cost criterion. For our calculations, 
we used APC 5116, which had a CY 2024 payment rate of $17,756.28 at the 
time the application was received. The applicant stated the iFuse 
Bedrock GraniteTM Implant System device should be reported 
with the SIJ fusion procedure HCPCS code 27279 along with one of the 
three lumbar fusion procedures (HCPCS code 22612, 22630 or 22633). 
While the applicant utilized HCPCS code 22612 for the device offset 
amount for test two of the cost criterion, we believe that HCPCS code 
27279 is the appropriate HCPCS code for the offset and subsequent 
calculation. Specifically, it is our understanding that code 27279 is 
always reported when the iFuse device is used along with only one of 
the three specified lumbar fusion codes. That is to say, the SIJ fusion 
procedure described by code 27279 is always performed when the iFuse 
device is used along with just one of three possible lumbar procedures, 
depending on the specific surgical approach used. Therefore, we believe 
that neither HCPCS code 22612, 22630, nor 22633 is appropriate to use 
for the cost criterion calculation. As such, we used HCPCS 27279, the 
code that should always be reported with the iFuse device, for our 
calculations.
    HCPCS code 27279 in APC 5116 had a CY 2024 device offset amount of 
$12,264.26 at the time the application was received. According to the 
applicant, the cost of the iFuse Bedrock GraniteTM Implant 
System is $11,689.00. Section 419.66(d)(1), the first cost significance 
requirement, provides that the estimated average reasonable cost of 
devices in the category must exceed 25 percent of the applicable APC 
payment amount for the service related to the category of devices. The 
average reasonable cost of $11,689.00 for the iFuse Bedrock 
GraniteTM Implant System is 65.83 percent of the applicable 
APC payment amount for the service related to the category of devices 
of $17,756.28 (($11,689.00/$17,756.28) x 100 = 65.83 percent). 
Therefore, we believe the iFuse Bedrock GraniteTM Implant 
System meets the first cost significance requirement.
    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $11,689.00 for 
the iFuse Bedrock GraniteTM Implant System is 95.31 percent 
of the cost of the device-related portion of the APC payment amount for 
the related service of $12,264.26 (($11,689.00/$12,264.26) x 100 = 
95.31 percent). Therefore, we believe that the iFuse Bedrock 
GraniteTM Implant System does not meet the second cost 
significance requirement.
    The third cost significance requirement, at Sec.  419.66(d)(3), 
provides

[[Page 59304]]

that the difference between the estimated average reasonable cost of 
the devices in the category and the portion of the APC payment amount 
for the device must exceed 10 percent of the APC payment amount for the 
related service. The difference between the estimated average 
reasonable cost of $11,689.00 for the iFuse Bedrock 
GraniteTM Implant System and the portion of the APC payment 
amount for the device of $12,264.26 is negative 3.24 percent of the APC 
payment amount for the related service of $17,756.28 ((($11,689.00-
$12,264.26)/$17,756.28) x 100 = -3.24 percent). Therefore, we believe 
that the iFuse Bedrock GraniteTM Implant System does not 
meet the third cost significance requirement.
    We are inviting public comment on whether the iFuse Bedrock 
GraniteTM Implant System meets the device pass-through 
payment criteria discussed in this section, including the cost 
criterion for device pass-through payment status.
(g) Paradise[supreg] Ultrasound Renal Denervation (RDN) System
    ReCor Medical, Inc. submitted an application for a new device 
category for transitional pass-through payment status for the 
Paradise[supreg] Ultrasound RDN System for CY 2025. Per the applicant, 
the Paradise[supreg] Ultrasound RDN System is a catheter-based system 
that delivers ultrasound energy in the location of sympathetic nerves 
surrounding the renal arteries. The applicant explained that the 
Paradise[supreg] Ultrasound RDN System is indicated to reduce blood 
pressure as an adjunctive treatment in patients with hypertension in 
whom lifestyle modifications and antihypertensive medications do not 
adequately control blood pressure. According to the applicant, the 
Paradise[supreg] Catheter, when used with the other Paradise[supreg] 
Ultrasound RDN System components, provides complete 360-degree energy 
delivery and targeted ablation depth with each energy emission with the 
goal of disrupting the nerves and consequently achieving a reduction in 
systemic arterial blood pressure. The applicant asserted that the 
Paradise[supreg] Catheter protects the artery walls using a cooling 
system during periods of ultrasound energy emission (also called 
sonications).
    Per the applicant's instructions for use, the Paradise[supreg] 
Ultrasound RDN System includes the following components: (1) 
Paradise[supreg] Generator, which circulates coolant fluid and 
electrical energy to the Paradise[supreg] Catheter via the 
Paradise[supreg] Cable and Paradise[supreg] Cartridge; (2) 
Paradise[supreg] Catheter, which connects with the Paradise[supreg] 
Generator and has a distal balloon (available in six different 
diameters that correspond to varying artery diameter ranges) that is 
pressurized using coolant fluid; (3) Paradise[supreg] Cartridge, which 
controls the fluid flow into and out of the Paradise[supreg] Catheter 
when used in conjunction with the Paradise[supreg] Generator; (4) 
Paradise[supreg] Connection Cable, which transfers electrical energy 
from the Paradise[supreg] Generator to the Paradise[supreg] Catheter; 
(5) Paradise[supreg] Remote, included with the Paradise[supreg] 
Generator for optional use; and (6) Paradise[supreg] Cart, an optional 
wheeled cart to which the Paradise[supreg] Generator can be mounted to 
stabilize the Paradise[supreg] Generator during a procedure and to 
transport the Paradise[supreg] Generator from one location to another. 
Per the applicant, additional items required for the procedure include: 
(1) a bag of coolant fluid for inflation and cooling of balloon; (2) a 
0.014 inch guidewire to track the Paradise[supreg] Catheter into 
position for delivery of ultrasound energy; (3) a Push/Pull style 
hemostasis valve; (4) a 6 French (Fr) or larger guide sheath; and (5) a 
7 Fr or larger guide catheter. According to the applicant, the 
Paradise[supreg] Catheter, Paradise[supreg] Cartridge, and 
Paradise[supreg] Connection Cable are single-patient, one-time use 
components of the system. According to the applicant, key steps for 
operating the Paradise[supreg] Ultrasound RDN System include: (1) 
gaining access to the femoral artery using standard interventional 
techniques and placing a 7 Fr (or larger) guide catheter; (2) advancing 
the 7 Fr guide catheter into the left or right renal artery under 
fluoroscopic guidance; (3) performing an angiogram to verify the 
patency of the left or right renal artery; (4) measuring the distal, 
mid, and proximal artery diameters and selecting the appropriate 
Paradise[supreg] Catheter balloon size; (5) preparing and attaching the 
Paradise[supreg] Cartridge, Paradise[supreg] Connection Cable, and 
sterile water supply, and connecting the Paradise[supreg] Cartridge 
extension tubing to the Paradise[supreg] Catheter; (6) preparing and 
flushing the Paradise[supreg] Catheter; removing access devices from 
the lumen of the guide catheter and inserting a 0.014 inch guidewire; 
(7) verifying the balloon on the Paradise[supreg] Catheter is deflated; 
(8) tracking the Paradise[supreg] Catheter over the guidewire and 
gently inserting the Paradise[supreg] Catheter into the push/pull style 
hemostasis valve and guide catheter; (9) advancing and positioning the 
Paradise[supreg] Catheter in desired locations within the renal 
arteries; (10) inflating the balloon via the Paradise[supreg] 
Generator; (11) verifying the position of the balloon and catheter 
transducer via fluoroscopy and contrast injection; (12) performing 
denervation of the left and/or right renal artery by delivery of 
ultrasound energy; (13) verifying balloon deflation via fluoroscopy 
before moving to the next location; (14) withdrawing the 
Paradise[supreg] Catheter back into the guide catheter prior to moving 
the device into an alternate artery or accessory vessel, continuing to 
another position and exchanging the balloon catheter, as needed; (15) 
removing the Paradise[supreg] Catheter, ensuring that Paradise[supreg] 
Catheter balloon is in a deflated state prior to removal, by slowly 
withdrawing the Paradise[supreg] Catheter through the guide catheter, 
until completely withdrawn, and removing the guidewire and guide 
catheter; and (16) closing the wound per standard of practice.
    Please refer to the online application posting for the 
Paradise[supreg] RDN System, available at https://mearis.cms.gov/public/publications/device-ptp/DEP231128137E1, for additional detail 
describing the device and the disease treated by the device.
    As stated previously, to be eligible for transitional pass-through 
payment under the OPPS, a device must meet the criteria at Sec.  
419.66(b)(1) through (4). With respect to the newness criterion at 
Sec.  419.66(b)(1), the Paradise[supreg] Ultrasound RDN System received 
FDA Breakthrough Device designation effective December 4, 2020, as a 
device with the indicated use to reduce blood pressure in adult (>=22 
years of age) patients with uncontrolled hypertension, who may be 
inadequately responsive to, or who are intolerant to anti-hypertensive 
medications. FDA approved the premarket approval application (PMA) for 
the Paradise[supreg] Ultrasound RDN System on November 7, 2023 for the 
indicated use to reduce blood pressure as an adjunctive treatment in 
hypertension patients in whom lifestyle modifications and 
antihypertensive medications do not adequately control blood pressure. 
We note that while the indication for the FDA Breakthrough Device 
designation and the indication for the FDA premarket approval vary 
slightly, we believe that FDA premarket approval indication is the one 
covered by the Breakthrough Device designation. We received the 
application for a new device category for transitional pass-through 
payment status for the Paradise[supreg] Ultrasound RDN System on 
November 28, 2023, which is within 3 years of the date of the initial 
FDA marketing authorization.

[[Page 59305]]

    We are inviting public comments on whether the Paradise[supreg] 
Ultrasound RDN System meets the newness criterion at Sec.  
419.66(b)(1).
    With respect to the eligibility criteria at Sec.  419.66(b)(3), the 
device must be an integral part of the service furnished, be used for 
one patient only, come in contact with human tissue, and be surgically 
inserted or implanted, or applied in or on a wound or other skin 
lesion. The applicant did not explicitly state whether the 
Paradise[supreg] Ultrasound RDN System is integral to the service 
furnished. With respect to whether the Paradise[supreg] Ultrasound RDN 
System is used for one patient only, the applicant asserted that the 
Paradise[supreg] Catheter, Paradise[supreg] Cartridge, and 
Paradise[supreg] Connection Cable are single patient use. However, the 
Paradise[supreg] Generator, Paradise[supreg] Remote, and 
Paradise[supreg] Cart are reusable and are capital equipment. While the 
applicant did not explicitly state whether the Paradise[supreg] 
Ultrasound RDN System comes into contact with human tissue, the 
applicant provided that the Paradise[supreg] Catheter is placed within 
the renal artery. According to the applicant, the Paradise[supreg] 
Ultrasound RDN System is an implantable device. We note that the 
Paradise[supreg] Generator, Paradise[supreg] Remote, and 
Paradise[supreg] Cart are reusable, do not come in contact with the 
patient's tissue, are not surgically implanted or inserted, or applied 
in or on a wound or other skin lesion, as required by Sec.  
419.66(b)(3).
    We are inviting public comments on whether the Paradise[supreg] 
Ultrasound RDN System meets the eligibility criterion at Sec.  
419.66(b)(3).
    With respect to the exclusion criterion at Sec.  419.66(b)(4), a 
device is not eligible to be considered for device pass-through payment 
if it is any of the following: (1) equipment, an instrument, apparatus, 
implement, or item of this type for which depreciation and financing 
expenses are recovered as depreciation assets as defined in Chapter 1 
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a 
material or supply furnished incident to a service (for example, a 
suture, customized surgical kit, or clip, other than a radiological 
site marker). While the applicant did not explicitly state whether the 
Paradise[supreg] Ultrasound RDN System, or select components, is 
equipment, an instrument, apparatus, implement, or item for which 
depreciation and financing expenses are recovered, per the applicant, 
the Paradise[supreg] Catheter, Paradise[supreg] Cartridge, and 
Paradise[supreg] Connection Cable are single-use only. The applicant 
further explained that the Paradise[supreg] Generator, Paradise[supreg] 
Cart, and Paradise[supreg] Remote are capital equipment; as such, they 
are excluded from device pass-through payment eligibility under Sec.  
419.66(b)(4). The applicant did not explicitly state whether the 
Paradise[supreg] Ultrasound RDN System is a supply or material 
furnished incident to a service.
    The applicant requested pass-through payment for the 
Paradise[supreg] Ultrasound RDN System, but we question whether only 
the Paradise[supreg] Catheter component of the Paradise[supreg] 
Ultrasound RDN System, as opposed to the whole system, is eligible for 
pass-through payments under Sec.  419.66(b)(3) or at Sec.  
419.66(b)(4). We do not believe that the Paradise[supreg] Generator, 
Paradise[supreg] Cable, Paradise[supreg] Cartridge, Paradise[supreg] 
Connection Cable, Paradise[supreg] Remote, or Paradise[supreg] Cart 
meet the eligibility requirements under Sec.  419.66(b)(3) or at Sec.  
419.66(b)(4), and, as such, are not eligible for pass-through payments.
    We are inviting public comments on whether the Paradise[supreg] 
Ultrasound RDN System meets the exclusion criterion at Sec.  
419.66(b)(4).
    In addition to the criteria at Sec.  419.66(b)(1) through (4), the 
criteria for establishing new device categories are specified at Sec.  
419.66(c). The first criterion, at Sec.  419.66(c)(1), provides that 
CMS determines that a device to be included in the category is not 
appropriately described by any of the existing categories or by any 
category previously in effect, and was not being paid for as an 
outpatient service as of December 31, 1996. Per the applicant, the 
Paradise[supreg] Ultrasound RDN System is a catheter-based system that 
delivers ultrasound energy in the location of sympathetic nerves 
surrounding the renal arteries. According to the applicant, no previous 
or existing device categories for pass-through payment have encompassed 
the Paradise[supreg] Ultrasound RDN System. Per the applicant, device 
categories C1753 (Catheter, intravascular ultrasound) and C1888 
(Catheter, ablation, noncardiac, endovascular (implantable)) do not 
appropriately describe the Paradise[supreg] Ultrasound RDN System. The 
applicant asserted that C1753 does not appropriately describe the 
Paradise[supreg] Ultrasound RDN System because the Paradise[supreg] 
Ultrasound RDN System is used to treat a disease and denervates renal 
nerves, whereas C1753 was created to describe ultrasound catheter 
devices that are not used to treat a disease and are used for imaging 
of the vessel. According to the applicant, C1888 does not appropriately 
describe the Paradise[supreg] Ultrasound RDN System because the 
Paradise[supreg] Ultrasound RDN System is intended to denervate renal 
nerves by using ultrasound energy that does not otherwise affect the 
blood vessel tissue, whereas C1888 was created to describe devices that 
use radiofrequency or laser technologies to occlude or obliterate blood 
vessels.\24\
---------------------------------------------------------------------------

    \24\ The applicant referenced the Medicare Claims Processing 
Manual, Chapter 4 to support these assertions.
---------------------------------------------------------------------------

    We have not identified an existing pass-through payment category 
that describes the Paradise[supreg] Ultrasound RDN System. We are 
inviting public comment on whether the Paradise[supreg] Ultrasound RDN 
System meets the device category criterion at Sec.  419.66(c)(1).
    We note that the applicant indicated the Paradise[supreg] 
Ultrasound RDN System is the only device authorized by FDA with an 
indication for renal denervation using ultrasound energy to achieve 
reductions in blood pressure. However, we note that the Symplicity 
Spyral\TM\ Catheter (Symplicity SpyralTM RDN System) device, 
for which we also received an application for transitional pass-through 
payments for CY 2025 as discussed in this proposed rule, is authorized 
by FDA with an indication for renal denervation using a radiofrequency 
modality to achieve reductions in blood pressure. Accordingly, we note 
that while the Paradise[supreg] Ultrasound RDN System device may have a 
different modality (i.e., ultrasound compared to radiofrequency) to 
that of the Symplicity Spyral\TM\ Catheter device, the Paradise[supreg] 
Ultrasound RDN System device may have a similar mechanism of action to 
that of the Symplicity Spyral\TM\ Catheter device. We question whether 
the device descriptions provided in the respective applications support 
establishing two modality specific pass-through payment device 
categories or a single device category that would encompass both RDN 
device modalities. We address this question in detail immediately 
following the full discussion of all other applicable eligibility 
criteria for both the Paradise[supreg] Ultrasound RDN System and the 
Symplicity SpyralTM RDN System applications.
    We are inviting public comment on whether Paradise[supreg] 
Ultrasound RDN System meets the device category criterion at Sec.  
419.66(c)(1).
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines either of the following: (i) 
that a device to be included in the category has demonstrated that it 
will substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part

[[Page 59306]]

compared to the benefits of a device or devices in a previously 
established category or other available treatment; or (ii) for devices 
for which pass-through status will begin on or after January 1, 2020, 
as an alternative to the substantial clinical improvement criterion, 
the device is part of the FDA's Breakthrough Devices Program and has 
received FDA marketing authorization for the indication covered by the 
Breakthrough Device designation. As previously stated, the 
Paradise[supreg] Ultrasound RDN System has Breakthrough Device 
designation and marketing authorization from FDA for the indication 
covered by the Breakthrough Device designation (as explained in more 
detail in the discussion of the newness criterion) and therefore is not 
evaluated for substantial clinical improvement.
    We are inviting public comment on whether the Paradise[supreg] 
Ultrasound RDN System meets the device category criterion at Sec.  
419.66(c)(2)(ii).
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that Paradise[supreg] 
Ultrasound RDN System would be reported with HCPCS codes shown in Table 
50.
[GRAPHIC] [TIFF OMITTED] TP22JY24.064

    To meet the cost criterion for device pass-through payment status, 
a device must pass all three tests of the cost criterion for at least 
one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775), 
we generally use the lowest APC payment rate applicable for use with 
the nominated device when we assess whether a device meets the cost 
significance criterion, thus increasing the probability the device will 
pass the cost significance test. Beginning in CY 2017, we calculate the 
device offset amount at the HCPCS/CPT code level instead of the APC 
level (81 FR 79657). We note the applicant used the CY 2023 payment 
rates for the three tests of the cost criterion. For our calculations, 
we

[[Page 59307]]

used APC 5192, which had a CY 2023 payment rate of $5,215.40 at the 
time the application was received. We used the CY 2023 APC level device 
offset amount of $1,491.08 for APC 5192, since HCPCS codes 0338T and 
0339T were not included in Addendum P to the CY 2023 OPPS/ASC final 
rule with comment period and no CY 2023 HCPCS/CPT code level device 
offset amount was available at the time the application was 
received.\25\ According to the applicant, the operating cost \26\ of 
the Paradise[supreg] Ultrasound RDN System is $23,000.00.
---------------------------------------------------------------------------

    \25\ The applicant stated as neither HCPCS code 0338T nor 0339T 
had a device offset amount listed in Addendum P to the CY 2023 OPPS/
ASC final rule with comment period, it selected a device offset 
amount of $0.00. However, for our calculation, we selected the CY 
2023 APC level device offset amount of $1,491.08 for APC 5192 found 
in CY 2023 NFRM OPPS APC Offset File, as no CY 2023 HCPCS/CPT code 
level device offset amount was available at the time the application 
was received. Based on our initial assessment for this proposed 
rule, using the device offset amount of $1,491.08 would result in 
Paradise[supreg] RDN meeting the cost significance requirement.
    \26\ According to the applicant, the current total cost of the 
Paradise[supreg] Ultrasound RDN System device is $23,235.00. For the 
cost criteria estimates, the applicant submitted an operating cost 
of $23,000.00 for the Paradise[supreg] Ultrasound RDN System device. 
Per the applicant, the individual component costs are as follows: 
Paradise[supreg] Remote (capital equipment) is $5.00; 
Paradise[supreg] Cart (capital equipment) is $5.00; Paradise[supreg] 
Generator (capital equipment) is $225.00; Paradise[supreg] RDN 
Catheter Kit (one time use) is $22,000.00; Paradise RDN Cable (one 
time use) is $250.00; and the Paradise[supreg] RDN Cartridge (one 
time use) is $750.00.
---------------------------------------------------------------------------

    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The average 
reasonable cost of $23,000.00 for the Paradise[supreg] Ultrasound RDN 
System is 441.00 percent of the applicable APC payment amount for the 
service related to the category of devices of $5,215.40 (($23,000.00/
$5,215.40) x 100 = 441.00 percent). Therefore, we believe the 
Paradise[supreg] Ultrasound RDN System meets the first cost 
significance requirement.
    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $23,000.00 for 
the Paradise[supreg] Ultrasound RDN System is 1,542.51 percent of the 
cost of the device-related portion of the APC payment amount for the 
related service of $1,491.08 (($23,000.00/$1,491.08) x 100 = 1,542.51 
percent). Therefore, we believe that the Paradise[supreg] Ultrasound 
RDN System meets the second cost significance requirement.
    The third cost significance requirement, at Sec.  419.66(d)(3), 
provides that the difference between the estimated average reasonable 
cost of the devices in the category and the portion of the APC payment 
amount for the device must exceed 10 percent of the APC payment amount 
for the related service. The difference between the estimated average 
reasonable cost of $23,000.00 for the Paradise[supreg] Ultrasound RDN 
System and the portion of the APC payment amount for the device of 
$1,491.08 is 412.41 percent of the APC payment amount for the related 
service of $5,215.40 ((($23,000.00-$1,491.08)/$5,215.40) x 100 = 412.41 
percent). Therefore, we believe that the Paradise[supreg] Ultrasound 
RDN System meets the third cost significance requirement.
    We are inviting public comment on whether the Paradise[supreg] 
Ultrasound RDN System meets the device pass-through payment criteria 
discussed in this section, including the cost criterion for device 
pass-through payment status.
(h) Precision GI
    Limaca Medical submitted an application for a new device category 
for transitional pass-through payment status for Precision GI for CY 
2025. According to the applicant, Precision GI is a motorized, battery 
operated, single-use, fully disposable endoscopic ultrasound-guided 
(EUS) fine needle biopsy device used to obtain biopsies of tissue for 
definitive diagnosis of pancreatic cancer and other life-threatening GI 
abnormalities. Per the applicant, Precision GI is untethered and 
battery operated with an internally powered and controlled motor, 
featuring a long flexible shaft transferring the proximal force of the 
motor through the inserted endoscope to the needle circumferential 
cutting tip. The device is controlled by a physician, who inserts the 
device into the patient's gastrointestinal (GI) tract via the 
ultrasound endoscope. Upon reaching the designated biopsy site, the 
physician operates the device's motorized mechanism that automatically 
rotates the needle (which is included in the device's package) to cut 
and extract tissue. The biopsy site is accessed through the instrument 
channel of an ultrasound imaging endoscope that detects the device's 
echogenic needle tip.
    Please refer to the online application posting for Precision GI, 
available at https://mearis.cms.gov/public/publications/device-ptp/DEP23113023REE, for additional detail describing the device and the 
disease treated by the device.
    As stated previously, to be eligible for transitional pass-through 
payment under the OPPS, a device must meet the criteria at Sec.  
419.66(b)(1) through (4). With respect to the newness criterion at 
Sec.  419.66(b)(1), Precision GI received FDA Breakthrough Device 
designation effective March 24, 2022, as a device used with an 
ultrasound endoscope for fine needle biopsy of submucosal lesions, 
mediastinal masses, lymph nodes, and intraperitoneal masses within or 
adjacent to the GI tract. FDA granted the applicant 510(k) clearance 
for Precision GI on August 28, 2023, for the indication covered by the 
Breakthrough Device designation. We received the application for a new 
device category for transitional pass-through payment status for 
Precision GI on November 30, 2023, which is within three years of the 
date of the initial FDA marketing authorization.
    We are inviting public comments on whether Precision GI meets the 
newness criterion at Sec.  419.66(b)(1).
    With respect to the eligibility criteria at Sec.  419.66(b)(3), the 
device must be an integral part of the service furnished used for one 
patient only, come in contact with human tissue, and be surgically 
inserted or implanted, or applied in or on a wound or other skin 
lesion. The applicant did not indicate whether Precision GI is an 
integral part of the service furnished. The applicant stated that the 
device is intended for single-use. While the applicant did not 
explicitly state whether Precision GI comes in contact with human 
tissue and is surgically inserted or implanted, the applicant noted 
that Precision GI is used to sample targeted submucosal lesions, 
mediastinal masses, lymph nodes, and intraperitoneal masses within or 
adjacent to the GI tract and this is achieved by a physician who 
inserts Precision GI into the patient's GI tract using an ultrasound 
endoscope. However, we note that, while the needle (which is a 
component of the device and is included in the device's package) does 
come into contact with human tissue and is surgically inserted, the 
motorized mechanism of the Precision GI device itself may not come in 
contact with human tissue and may not be surgically implanted or 
inserted (either permanently or temporarily), or applied in or on a 
wound or other skin lesion, as required at Sec.  419.66(b)(3).

[[Page 59308]]

    We are inviting public comments on whether Precision GI meets the 
eligibility criterion at Sec.  419.66(b)(3).
    With respect to the exclusion criterion at Sec.  419.66(b)(4), a 
device is not eligible to be considered for device pass-through payment 
if it is any of the following: (1) equipment, an instrument, apparatus, 
implement, or item of this type for which depreciation and financing 
expenses are recovered as depreciation assets as defined in Chapter 1 
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a 
material or supply furnished incident to a service (for example, a 
suture, customized surgical kit, or clip, other than a radiological 
site marker). The applicant indicated that Precision GI is equipment, 
an instrument, apparatus, implement, or item of this type for which 
depreciation and financing expenses are recovered as depreciation 
assets, the applicant noted that Precision GI is a motorized, single-
use, fully disposable EUS fine needle biopsy device that functions with 
no related capital component. The applicant stated that Precision GI is 
not a material or supply furnished incident. However, based on the 
description of the device as a biopsy device, we question whether 
Precision GI may be considered a supply or material furnished incident 
to a service and excluded from device pass-through payment eligibility 
under Sec.  419.66(b)(4).
    Specifically, in the CY 2001 OPPS interim final rule with comment 
period (65 FR 67804 through 67805), we explained how we interpreted 
Sec.  419.43(e)(4)(iv). We stated that we consider a device to be 
surgically implanted or inserted if it is introduced into the human 
body through a surgically created incision. We also stated that we do 
not consider an item used to cut or otherwise create a surgical opening 
to be a device that is surgically implanted or inserted. We consider 
items used to create incisions, such as scalpels, electrocautery units, 
biopsy apparatuses, or other commonly used operating room instruments, 
to be supplies or capital equipment not eligible for transitional pass-
through payments. We stated that we believe the function of these items 
is different and distinct from that of devices that are used for 
surgical implantation or insertion. Finally, we stated that, generally, 
we would expect that surgical implantation or insertion of a device 
occurs after the surgeon uses certain primary tools, supplies, or 
instruments to create the surgical path or site for implanting the 
device. Further, in the CY 2006 OPPS final rule with comment period (70 
FR, 68629 through 68630), we adopted as final our interpretation that 
the surgical insertion or implantation criterion can be met by devices 
that are surgically inserted or implanted via a natural or surgically 
created orifice, as well as those devices that are inserted or 
implanted via a surgically created incision. We reiterated that we 
maintain all of the other criteria in Sec.  419.66 of the regulations, 
namely, that we do not consider an item used to cut or otherwise create 
a surgical opening to be a device that is surgically implanted or 
inserted. We reiterated this interpretation in the CY 2024 OPPS final 
rule (88 FR 81543, 81743).
    We note that Precision GI, is inserted into the patient's GI tract 
via the ultrasound endoscope to reach the designated biopsy site where 
the device's motorized mechanism is then used for cutting and 
extraction of tissue endoscopically from within or adjacent to the 
patient's GI tract. However, we question whether Precision GI, which is 
described as a biopsy device, may be considered a supply or material 
furnished incident to a service consistent with our previous 
interpretation of Sec.  419.43(e)(4)(iv) and therefore excluded from 
device pass-through payment eligibility under Sec.  419.66(b)(4).
    We welcome additional evidence regarding whether Precision GI 
should be considered a material or supply incident to a service based 
on our previous interpretation of Sec.  419.43(e)(4)(iv) as it has been 
applied to biopsy devices and we invite public comments on whether 
Precision GI meets the exclusion criterion at Sec.  419.66(b)(4).
    In addition to the criteria at Sec.  419.66(b)(1) through (4), the 
criteria for establishing new device categories are specified at Sec.  
419.66(c). The first criterion, at Sec.  419.66(c)(1), provides that 
CMS determines that a device to be included in the category is not 
appropriately described by any of the existing categories or by any 
category previously in effect, and was not being paid for as an 
outpatient service as of December 31, 1996. The applicant asserted that 
Precision GI is authorized by FDA with an indication to sample targeted 
submucosal lesions, mediastinal masses, lymph nodes, and 
intraperitoneal masses within or adjacent to the gastrointestinal 
tract. Per the applicant, the device category C1830 (Powered bone 
marrow biopsy needle) does not appropriately describe Precision GI 
because Precision GI is not targeting the bone marrow and instead is 
targeting sub[hyphen]mucosal and extramural gastrointestinal lesions. 
According to the applicant, another device category C1782 (Morcellator) 
does not appropriately describe Precision GI because that device 
category, per Medicare Claims Processing Manual, Ch. 4, Sec.  60.4.3, 
is only for laparoscopic procedures. The applicant added that Precision 
GI cuts and extracts tissue endoscopically, not laparoscopically.
    We have not identified an existing pass-through payment category 
that describes Precision GI. We are inviting public comment on whether 
Precision GI meets the device category criterion at Sec.  419.66(c)(1).
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines either of the following: (i) 
that a device to be included in the category has demonstrated that it 
will substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment; or (ii) for devices for which 
pass-through status will begin on or after January 1, 2020, as an 
alternative to the substantial clinical improvement criterion, the 
device is part of the FDA's Breakthrough Devices Program and has 
received FDA marketing authorization for the indication covered by the 
Breakthrough Device designation. Precision GI has a Breakthrough Device 
designation and marketing authorization from FDA for the indication 
covered by the Breakthrough Device designation (as explained in more 
detail in the discussion of the newness criterion) and therefore is not 
evaluated for substantial clinical improvement.
    We are inviting public comment on whether the Precision GI meets 
the device category criterion at Sec.  419.66(c)(2)(ii). The third 
criterion for establishing a device category, at Sec.  419.66(c)(3), 
requires us to determine that the cost of the device is not 
insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that Precision GI would 
be reported with HCPCS codes as shown in Table 51.

[[Page 59309]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.065

    To meet the cost criterion for device pass-through payment status, 
a device must pass all three tests of the cost criterion for at least 
one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775), 
we generally use the lowest APC payment rate applicable for use with 
the nominated device when we assess whether a device meets the cost 
significance criterion, thus increasing the probability the device will 
pass the cost significance test. Beginning in CY 2017, we calculate the 
device offset amount at the HCPCS/CPT code level instead of the APC 
level (81 FR 79657). We note the applicant utilized the CY 2024 payment 
rates for the three tests of the cost criterion. For our calculations, 
we used APC 5302, which had a CY 2024 payment rate of $1,812.99 at the 
time the application was received. HCPCS code 43242 in APC 5302 had a 
CY 2024 device offset amount of $23.75 at the time the application was 
received.\27\ According to the applicant, the cost of Precision GI is 
$1,400.00.
---------------------------------------------------------------------------

    \27\ We note that the applicant selected the APC payment rate of 
$1,814.88 and the APC level device offset amount of $178.95 for APC 
5302. However, the values selected are inconsistent with the APC 
payment rate and the APC level device offset amount found in CY 2024 
OPPS APC Offset File, which were corrected as described in the CY 
2024 OPPS/ASC final rule with comment period correction (89 FR 
9002). The HCPCS/CPT code level device offset amounts for the HCPCS/
CPT codes provided by the applicant are available in the corrected 
Addendum P to the CY 2024 OPPS/ASC final rule with comment period. 
For our calculation, we selected the APC payment rate of $1,812.99 
and the HCPCS/CPT code level device offset amount of $23.75 related 
to HCPCS 43242 in APC 5302 found in the corrected Addendum P, which 
are the accurate values for these codes. Based on our initial 
assessment for this proposed rule, using the APC payment rate of 
$1,812.99 and the device offset amount of $23.75 would result in 
Precision GI meeting the cost significance requirement.
---------------------------------------------------------------------------

    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The average 
reasonable cost of $1,400.00 for Precision GI is 77.22 percent of the 
applicable APC payment amount for the service related to the category 
of devices of $1,812.99 (($1,400.00/$1,812.99) x 100 = 77.22 percent). 
Therefore, we believe Precision GI meets the first cost significance 
requirement.
    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount. The estimated average reasonable cost of $1,400.00 
for Precision GI is 5894.74 percent of the cost of the device-related 
portion of the APC payment amount for the related service of $23.75 
(($1,400.00/$23.75) x 100 = 5894.74 percent). Therefore, we believe 
that Precision GI meets the second cost significance requirement.
    The third cost significance requirement, at Sec.  419.66(d)(3), 
provides that the difference between the estimated average reasonable 
cost of the devices in the category and the portion of the APC payment 
amount for the device must exceed 10 percent of the APC payment amount 
for the related service. The difference between the estimated average 
reasonable cost of $1,400.00 for Precision GI and the portion of the 
APC payment amount for the device of $23.75 is 75.91 percent of the APC 
payment amount for the related service of $1,812.99 ((($1,400-$23.75)/
$1,812.99) x 100 = 75.91 percent). Therefore, we believe that Precision 
GI meets the third cost significance requirement.
    We are inviting public comment on whether Precision GI meets the 
device pass-through payment criteria discussed in this section, 
including the cost criterion for device pass-through payment status.
(i) PulseSelectTM Pulsed Field Ablation (PFA) System
    Medtronic, Inc. submitted an application for a new device category 
for transitional pass-through payment status for the 
PulseSelectTM PFA System for CY 2025. Per the applicant, the 
PulseSelectTM PFA System is used to perform pulmonary vein 
isolation (PVI) via cardiac catheter ablation to treat atrial 
fibrillation. According to the applicant, unlike existing methods that 
rely on thermal energy (either radiofrequency or cryoablation), the 
PulseSelectTM PFA System uses non-thermal irreversible 
electroporation (IRE) to induce cardiac tissue cell death. The pulsed 
field ablation, or IRE for PVI during cardiac catheter ablation, is 
performed as a percutaneous, transvenous procedure under imaging 
guidance. The applicant stated the PulseSelectTM PFA System 
consists of three elements: (1) the PulseSelectTM PFA Loop 
Catheter (Loop Catheter), a one-time use, steerable, multi-electrode 
loop catheter used to deliver IRE in pulmonary vein isolation as a 
treatment for atrial fibrillation; (2) the PulseSelectTM PFA 
Catheter Interface Cable (Catheter Interface Cable), a one-time use 
interface cable used to connect the Loop Catheter to the 
PulseSelectTM

[[Page 59310]]

PFA Generator system; and (3) the PulseSelectTM PFA 
Generator system (Generator system) used to deliver IRE in pulmonary 
vein isolation as a treatment for atrial fibrillation.
    Please refer to the online application posting for the 
PulseSelectTM PFA System, available at https://mearis.cms.gov/public/publications/device-ptp/DEP240228J1461, for 
additional detail describing the device and the disease treated by the 
device.
    As stated previously, to be eligible for transitional pass-through 
payment under the OPPS, a device must meet the criteria at Sec.  
419.66(b)(1) through (4). With respect to the newness criterion at 
Sec.  419.66(b)(1), the PulseSelectTM PFA System received 
FDA Breakthrough Device designation effective September 27, 2018, for 
the treatment of drug refractory recurrent symptomatic atrial 
fibrillation. The Medtronic multi-electrode cardiac ablation catheter 
(which is now known as PulseSelectTM) is also intended to be 
used for cardiac electrophysiological (EP) mapping and measuring of 
intracardiac electrograms, delivery of diagnostic pacing stimuli, and 
verifying electrical isolation post-treatment. FDA approved the 
premarket approval application (PMA) for the PulseSelectTM 
PFA System on December 13, 2023, for the indication covered by the 
Breakthrough Device designation. We received the application for a new 
device category for transitional pass-through payment status for the 
PulseSelectTM PFA System on February 28, 2024, which is 
within three years of the date of the initial FDA marketing 
authorization.
    We are inviting public comments on whether the 
PulseSelectTM PFA System meets the newness criterion at 
Sec.  419.66(b)(1).
    With respect to the eligibility criterion at Sec.  419.66(b)(3), 
the device must be an integral part of the service furnished, used for 
one patient only, come in contact with human tissue, and be surgically 
inserted or implanted, or applied in or on a wound or other skin 
lesion. The applicant did not indicate whether the 
PulseSelectTM PFA System is integral to the service 
furnished. Per the applicant, the Loop Catheter and Catheter Interface 
Cable components are single-use. While the applicant did not explicitly 
state whether any of the device components come in contact with human 
tissue, based on the device description, the procedure with which the 
PulseSelectTM PFA System Loop Catheter is used is performed 
percutaneously (i.e., passing through the skin) and transvenously 
(i.e., through or across a vein) using the Loop Catheter to achieve 
ablation in the targeted areas. However, neither the Generator system 
nor the Catheter Interface Cable which is used to connect the Loop 
Catheter to the Generator system appear to come in contact with the 
patient's tissue, be surgically implanted or inserted, or applied in or 
on a wound or other skin lesion, as required by Sec.  419.66(b)(3) and 
therefore, we do not believe that either component is eligible for 
device pass-through payments. We discuss the Catheter Interface Cable 
in more detail in the following criteria discussions.
    We are inviting public comments on whether the 
PulseSelectTM PFA System meets the eligibility criterion at 
Sec.  419.66(b)(3).
    With respect to the exclusion criterion at Sec.  419.66(b)(4), a 
device is not eligible to be considered for device pass-through payment 
if it is any of the following: (1) equipment, an instrument, apparatus, 
implement, or item of this type for which depreciation and financing 
expenses are recovered as depreciation assets as defined in Chapter 1 
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a 
material or supply furnished incident to a service (for example, a 
suture, customized surgical kit, or clip, other than a radiological 
site marker). The applicant did not indicate whether the Loop Catheter 
and the Catheter Interface Cable are equipment, an instrument, 
apparatus, implement, or item of this type for which depreciation and 
financing expenses are recovered or a material or supply furnished 
incident to a service. However, we note that in the application for a 
new device category for transitional pass-through payment status for CY 
2025, the applicant stated that the Catheter Interface Cable is a one-
time use cable that cannot be reprocessed. This assertion appears 
contrary to the information provided to CMS by the applicant in their 
application submission for FY 2025 IPPS new technology add-on payment 
under the name ``PulseSelectTM Pulsed Field Ablation (PFA) 
Loop Catheter'' (https://mearis.cms.gov/public/publications/ntap/NTP231017BMQKQ). Specifically, in the FY 2025 IPPS/LTCH PPS proposed 
rule, CMS noted that the applicant stated that the 
PulseSelectTM PFA Interface Cable is a component of the 
PulseSelectTM PFA Generator Reusable Accessories. Further, 
CMS explained that the new technology add-on payment application is for 
the PulseSelectTM PFA Loop Catheter (as opposed to the 
PulseSelectTM PFA System) and that the applicant had 
specified in its application that the PulseSelectTM PFA 
Generator System is not the subject of this new technology add-on 
payment application (89 FR 36124). Therefore, we stated that we believe 
the total cost should be based only on the cost of the 
PulseSelectTM PFA Loop Catheter.
    In contrast to the new technology add-on payment application, the 
application for a new device category for transitional pass-through 
payment status is for the PulseSelectTM PFA System, which 
includes the PulseSelect\TM\ PFA Generator system. The 
PulseSelectTM PFA Interface Cable is listed as a component 
of the PulseSelectTM PFA Generator System, which the 
applicant described as capital equipment in its new technology add-on 
payment application. We therefore believe the PulseSelectTM 
PFA Generator System, including the Catheter Interface Cable, is an 
item for which depreciation and financing expenses are recovered as 
depreciation assets and thus, is ineligible for device pass-through 
payment under Sec.  419.66(b)(4).
    We are inviting public comments on whether the 
PulseSelectTM PFA System meets the exclusion criterion at 
Sec.  419.66(b)(4).
    In addition to the criteria at Sec.  419.66(b)(1) through (4), the 
criteria for establishing new device categories are specified at Sec.  
419.66(c). The first criterion, at Sec.  419.66(c)(1), provides that 
CMS determines that a device to be included in the category is not 
appropriately described by any of the existing categories or by any 
category previously in effect, and was not being paid for as an 
outpatient service as of December 31, 1996. The applicant asserted that 
the PulseSelectTM PFA System is the only device authorized 
by FDA with an indication for cardiac electrophysiological mapping 
(stimulation and recording) and for treatment of drug refractory, 
recurrent, symptomatic paroxysmal atrial fibrillation or persistent 
atrial fibrillation (episode duration less than 1 year) through the use 
of IRE. According to the applicant, no previous or existing device 
categories for pass-through payment appropriately describe the 
PulseSelectTM PFA System. Per the applicant, device 
categories C2630 (Catheter, electrophysiology, diagnostic/ablation, 
other than 3D or vector mapping, cool-tip) and C1733 (Catheter, 
electrophysiology, diagnostic/ablation, other than 3D or vector 
mapping, other than cool-tip) do not appropriately describe the 
PulseSelectTM PFA System because, unlike cardiac catheter 
ablation technologies using thermal energy where options are either 
heat (radiofrequency) or cold (cryoablation), the 
PulseSelectTM PFA System uses non-thermal IRE to elicit 
targeted

[[Page 59311]]

cardiac tissue cell death. The applicant stated that the 
PulseSelectTM PFA System's non-thermal IRE mechanism of 
action avoids many risks present in thermal cardiac catheter ablation 
technologies.
    We note that, based on the description the applicant provided, the 
PulseSelectTM PFA System is used to achieve catheter 
ablation to treat atrial fibrillation, and thus could be appropriately 
described by C1733. Specifically, we believe that C1733 may 
appropriately describe the PulseSelectTM PFA System because 
it includes a catheter used for ablation of tissue without a cool-tip. 
Further, C1733 does not specify the modality needed to deliver the 
ablation, whether thermal or by electroporation. In this context, we 
believe the PulseSelectTM PFA System may be similar to the 
devices described by C1733, and therefore, the PulseSelectTM 
PFA System may also be appropriately described by C1733.
    We are inviting public comment on whether the 
PulseSelectTM PFA System meets the device category criterion 
at Sec.  419.66(c)(1).
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines either of the following: (i) 
that a device to be included in the category has demonstrated that it 
will substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment; or (ii) for devices for which 
pass-through status will begin on or after January 1, 2020, as an 
alternative to the substantial clinical improvement criterion, the 
device is part of the FDA's Breakthrough Devices Program and has 
received FDA marketing authorization for the indication covered by the 
Breakthrough Device designation. The PulseSelectTM PFA 
System has a Breakthrough Device designation and marketing 
authorization from FDA for the indication covered by the Breakthrough 
Device designation (as explained in the discussion of the newness 
criterion) and therefore is not evaluated for substantial clinical 
improvement.
    We are inviting public comment on whether the 
PulseSelectTM PFA System meets the device category criterion 
at Sec.  419.66(c)(2)(ii).
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that the 
PulseSelectTM PFA System would be reported with the HCPCS 
code shown in Table 52.
[GRAPHIC] [TIFF OMITTED] TP22JY24.066

    To meet the cost criterion for device pass-through payment status, 
a device must pass all three tests of the cost criterion for at least 
one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775), 
we generally use the lowest APC payment rate applicable for use with 
the nominated device when we assess whether a device meets the cost 
significance criterion, thus increasing the probability the device will 
pass the cost significance test. Beginning in CY 2017, we calculate the 
device offset amount at the HCPCS/CPT code level instead of the APC 
level (81 FR 79657). We note that the applicant utilized the CY 2024 
payment rates for the three tests of the cost criterion. For our 
calculations, we used APC 5213, which had a CY 2024 payment rate of 
$22,629.19 at the time the application was received. HCPCS code 93656 
in APC 5213 had a CY 2024 device offset amount of $11,251.23 at the 
time the application was received.
    According to the applicant, the cost of the one-time use Loop 
Catheter is $9,750.00. We note the applicant included the cost of the 
Loop Catheter ($9,750.00) and the cost of the Catheter Interface Cable 
($800.00) in the cost significance tests, totaling the cost of the 
device as $10,550.00. However, as previously discussed, we believe that 
the PulseSelectTM PFA Generator System, including the 
PulseSelectTM PFA Catheter Interface Cable, is capital 
equipment and therefore not eligible for device pass-through status 
payment. As such we removed the cost of Catheter Interface Cable in our 
calculations and only included the cost of the Loop Catheter, which 
changed the total device cost from $10,550.00 to $9,750.00; we have 
used $9,750.00 to perform the cost significance tests. We further note 
that the decision to exclude the cost of the Catheter Interface Cable 
($800.00) in the cost significance tests did not change the outcome of 
the cost significance criterion determinations.
    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The average 
reasonable cost of $9,750.00 for the PulseSelectTM PFA 
System is 43.09 percent of the applicable APC payment amount for the 
service related to the category of devices of $22,629.19 (($9,750.00/
$22,629.19) x 100 = 43.09 percent). Therefore, we believe the

[[Page 59312]]

PulseSelectTM PFA System meets the first cost significance 
requirement.
    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $9,750.00 for 
the PulseSelectTM PFA System is 86.66 percent of the cost of 
the device-related portion of the APC payment amount for the related 
service of $11,251.23 (($9,750.00/$11,251.23) x 100 = 86.66 percent). 
Therefore, we believe that the PulseSelectTM PFA System does 
not meet the second cost significance requirement.
    The third cost significance requirement, at Sec.  419.66(d)(3), 
provides that the difference between the estimated average reasonable 
cost of the devices in the category and the portion of the APC payment 
amount for the device must exceed 10 percent of the APC payment amount 
for the related service. The difference between the estimated average 
reasonable cost of $9,750.00 for the PulseSelectTM PFA 
System and the portion of the APC payment amount for the device of 
$11,251.23 is negative 6.63 percent of the APC payment amount for the 
related service of $22,629.19 ((($9,750.00-$11,251.23)/$22,629.19) x 
100 = -6.63 percent). Therefore, we believe that the 
PulseSelectTM PFA System does not meet the third cost 
significance requirement.
    We are inviting public comment on whether the 
PulseSelectTM PFA System meets the device pass-through 
payment criteria discussed in this section, including the cost 
criterion for device pass-through payment status.
(j) Symplicity Spyral\TM\ Renal Denervation (RDN) System
    Medtronic submitted an application for a new device category for 
transitional pass-through payment status for the Symplicity 
SpyralTM RDN System, for CY 2025. The applicant is only 
seeking a new device category for transitional pass-through payment 
status for the Symplicity SpyralTM Multi-Electrode RDN 
Catheter (hereinafter Symplicity SpyralTM Catheter) the 
Symplicity SpyralTM RDN System. According to the applicant, 
the Symplicity SpyralTM RDN System consists of the 
Symplicity SpyralTM Catheter and the Symplicity 
G3TM generator; the applicant requested device pass-through 
status for the catheter component of the system only. The applicant 
further explained that the Symplicity Spyral\TM\ RDN System is 
indicated to reduce blood pressure as an adjunctive treatment in 
hypertension patients in whom lifestyle modifications and 
antihypertensive medications do not adequately control blood pressure. 
Per the applicant, the Symplicity Spyral\TM\ Catheter, when used with 
the Symplicity G3\TM\ generator, delivers radiofrequency (RF) energy 
through the wall of the renal artery to disrupt the surrounding renal 
nerves with the aim of modulating or suppressing sympathetic nerve 
hyperactivity. According to the applicant, the Symplicity Spyral\TM\ 
Catheter is a single-use catheter used to deliver multiple ablations in 
both kidneys, in the renal main, accessory, and branch arteries, based 
on a patient's artery anatomy and size.
    Per the applicant, the Symplicity Spyral\TM\ Catheter is designed 
to be used with the Symplicity G3\TM\ generator and includes the 
following components: (1) 4 gold radiopaque electrodes at the spiral 
(helical) distal end that are deployed into a spiral (helical) shape by 
partially retracting the guidewire proximal to the spiral section of 
the catheter; (2) self-expanding electrode array assembly which 
radially spaces the four gold electrodes for quadratic ablation; (3) 
rapid exchange port; (4) straightening tool intended to facilitate safe 
insertion of the guidewire into the catheter; (5) cable connector 
attached to the catheter handle that connects the catheter to the 
generator; (6) catheter handle; and (7) femoral marker. Per the 
applicant, additional components of the Symplicity SpyralTM 
RDN System include the: (1) Symplicity G3\TM\ generator, which is only 
compatible with the Symplicity SpyralTM Catheter, which 
includes a remote control, power cable, and output for the Symplicity 
SpyralTM Catheter; (2) Symplicity G3\TM\ generator cart, an 
optional mobile cart; and (3) foot switch, an optional component. Per 
the applicant, additional items required for the procedure include: (1) 
a 0.36 mm (0.014 in) guidewire, preferably without hydrophilic coating; 
(2) a dispersive electrode; (3) a sterile bag to cover the remote 
control if used in the sterile field; (4) a 6 French (Fr) guide-
catheter; (5) an introducer sheath; (6) a stopcock sidearm; (7) a 
Tuohy-Borst adapter; and (8) other standard items used to aid 
percutaneous transluminal catheterization in renal arteries.
    According to information submitted by the applicant, key steps for 
operating the Symplicity SpyralTM Catheter include: (1) 
connecting the Symplicity SpyralTM Catheter to the 
Symplicity G3TM generator; (2) inserting the Symplicity 
SpyralTM Catheter through a small femoral incision and 
guiding it to the renal artery via the abdominal aorta; (3) advancing 
the Symplicity SpyralTM Catheter until the distal electrode 
is located in the desired position within the renal artery; (4) 
retracting the guidewire, allowing the self-expanding catheter to 
expand and fit the renal arterial vessel walls; (5) delivering the 
treatment of RF energy to ablate the renal nerves through the 
activation of the catheter electrodes, which is controlled using the 
generator; (6) if treating another vessel, repositioning the guide 
catheter within the next vessel and repeating the procedure for 
positioning the catheter and delivering treatments; (7) upon completion 
of all treatments, straightening the distal end by advancing the 
guidewire and withdrawing both the guidewire and the straightened 
catheter from the guide catheter; (8) retracting the guide catheter 
from the sheath and removing the introducer sheath from the artery; (9) 
using standard of care procedures to achieve hemostasis at the puncture 
site; and (10) disposing of the devices.
    Please refer to the online application posting for the Symplicity 
SpyralTM RDN System, available at https://mearis.cms.gov/public/publications/device-ptp/DEP231130WPU4J, for additional detail 
describing the device and the disease treated by the device.
    As stated previously, to be eligible for transitional pass-through 
payment under the OPPS, a device must meet the criteria at Sec.  
419.66(b)(1) through (4). With respect to the newness criterion at 
Sec.  419.66(b)(1), the Symplicity SpyralTM RDN System 
received FDA Breakthrough Device designation effective March 27, 2020, 
as a device with the following indicated use: the Symplicity Spyral 
multi-electrode renal denervation catheter and the Symplicity G3 RF 
Generator are indicated for the reduction of blood pressure in patients 
with uncontrolled hypertension despite the use of anti-hypertensive 
medications or in patients who may have documented intolerance to anti-
hypertensive medications. FDA approved the premarket approval 
application (PMA) for the Symplicity Spyral\TM\ RDN System on November 
17, 2023, for the indicated use to reduce blood pressure as an 
adjunctive treatment in patients with hypertension in whom lifestyle 
modifications and antihypertensive medications do not adequately 
control blood pressure. We received the application for a new device 
category for transitional pass-

[[Page 59313]]

through payment status for the Symplicity Spyral\TM\ Catheter on 
November 30, 2023, which is within 3 years of the date of the initial 
FDA marketing authorization.
    We are inviting public comments on whether the Symplicity 
Spyral\TM\ Catheter meets the newness criterion at Sec.  419.66(b)(1).
    With respect to the eligibility criteria at Sec.  419.66(b)(3), the 
device must be an integral part of the service furnished, used for one 
patient only, come in contact with human tissue, and be surgically 
inserted or implanted, or applied in or on a wound or other skin 
lesion. The applicant did not indicate whether the Symplicity 
SpyralTM Catheter is integral to the service furnished. Per 
the applicant, the Symplicity SpyralTM Catheter is intended 
for single patient use only. While the applicant did not explicitly 
state whether the Symplicity SpyralTM Catheter comes into 
contact with human tissue, the applicant asserted that the 
SymplicityTM Catheter ablates renal nerve tissue by 
positioning the catheter within the renal artery, which expands and 
fits the renal arterial vessel walls. While the applicant did not 
explicitly state if the Symplicity SpyralTM Catheter is 
surgically inserted or implanted, per the device description, the 
Symplicity SpyralTM Catheter is inserted through a small 
femoral incision, after which it is inserted into the renal arterial 
vessel.
    We are inviting public comments on whether the Symplicity 
SpyralTMCatheter meets the eligibility criterion at Sec.  
419.66(b)(3).
    With respect to the exclusion criterion at Sec.  419.66(b)(4), a 
device is not eligible to be considered for device pass-through payment 
if it is any of the following: (1) equipment, an instrument, apparatus, 
implement, or item of this type for which depreciation and financing 
expenses are recovered as depreciation assets as defined in Chapter 1 
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a 
material or supply furnished incident to a service (for example, a 
suture, customized surgical kit, or clip, other than a radiological 
site marker). The applicant did not state whether the Symplicity 
SpyralTM Catheter is equipment, an instrument, apparatus, 
implement, or item of this type for which depreciation and financing 
expenses are recovered whether the Symplicity SpyralTM 
Catheter is a supply or material furnished incident to a service.
    We are inviting public comments on whether the Symplicity 
SpyralTM Catheter meets the exclusion criterion at Sec.  
419.66(b)(4).
    In addition to the criteria at Sec.  419.66(b)(1) through (4), the 
criteria for establishing new device categories are specified at Sec.  
419.66(c). The first criterion, at Sec.  419.66(c)(1), provides that 
CMS determines that a device to be included in the category is not 
appropriately described by any of the existing categories or by any 
category previously in effect, and was not being paid for as an 
outpatient service as of December 31, 1996. According to the applicant, 
the Symplicity SpyralTM Catheter is a single-use catheter 
used to deliver multiple ablations in both kidneys, in the renal main, 
accessory, and branch arteries, based on a patient's artery anatomy and 
size. According to the applicant, no previous or existing device 
categories for pass-through payment appropriately describe the 
Symplicity SpyralTM Catheter. The applicant asserted that 
two categories, C1886 (Catheter, extravascular tissue ablation, any 
modality (insertable)) and C1888 (Catheter, ablation, noncardiac, 
endovascular (implantable)), do not appropriately describe the 
Symplicity SpyralTM Catheter. Per the applicant, C1886 does 
not appropriately describe the Symplicity SpyralTM Catheter 
because the Symplicity SpyralTM Catheter ablates renal nerve 
tissue via an endovascular approach by positioning the catheter within 
the renal artery and was created to describe devices that ablate 
extravascular tissue (via an extravascular approach).\28\ According to 
the applicant, C1888 does not appropriately describe the Symplicity 
SpyralTM Catheter because the Symplicity SpyralTM 
Catheter does not ablate or otherwise affect the blood vessel tissue 
and was created to describe devices designed to occlude or obliterate 
blood vessels.\29\
---------------------------------------------------------------------------

    \28\ The applicant referenced CY 2013 OPPS FR (77 FR 68352) and 
Transmittal 2386, Change Request 7672 (Jan 13, 2012) to support 
these assertions.
    \29\ The applicant referenced the Medicare Claims Processing 
Manual, Chapter 4, section 60.4.3 to support these assertions.
---------------------------------------------------------------------------

    We have not identified an existing pass-through payment category 
that describes the Symplicity SpyralTM Catheter. We are 
inviting public comment on whether the Symplicity SpyralTM 
Catheter meets the device category criterion at Sec.  419.66(c)(1).
    We note that the applicant indicated the Symplicity 
SpyralTM Catheter is not the only device authorized by FDA 
with an indication for renal denervation to achieve reductions in blood 
pressure. Paradise[supreg] Ultrasound RDN System, for which we also 
received an application for transitional pass-through payments for CY 
2025 as discussed in more detail in this proposed rule, is also 
authorized by FDA with an indication for renal denervation using 
ultrasound energy to achieve reductions in blood pressure. Per the 
applicant, the Paradise[supreg] Ultrasound RDN System would also be 
described by the applicant's proposed pass-through payment category: 
Ablation catheter, renal nerve, via endovascular approach, any 
modality. Accordingly, we note that while the Symplicity 
SpyralTM Catheter device may have a different modality 
(i.e., radiofrequency compared to ultrasound), the Symplicity 
SpyralTM Catheter device may have a similar mechanism of 
action to that of the Paradise[supreg] Ultrasound RDN System device. We 
question whether the device descriptions provided in the respective 
applications support establishing two modality specific pass-through 
payment device categories or a single device category that would 
encompass both RDN device modalities. We will address this question in 
detail immediately following the full discussion of all other 
applicable eligibility criteria for the Symplicity SpyralTM 
RDN System application.
    We are inviting public comment on whether Symplicity 
SpyralTM Catheter meets the device category criterion at 
Sec.  419.66(c)(1).
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines either of the following: (i) 
that a device to be included in the category has demonstrated that it 
will substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment; or (ii) for devices for which 
pass-through status will begin on or after January 1, 2020, as an 
alternative to the substantial clinical improvement criterion, the 
device is part of the FDA's Breakthrough Devices Program and has 
received FDA marketing authorization for the indication covered by the 
Breakthrough Device designation. As previously stated, the Symplicity 
SpyralTM Catheter has Breakthrough Device designation and 
marketing authorization from FDA for the indication covered by the 
Breakthrough Device designation (as explained in more detail in the 
discussion of the newness criterion) and therefore is not evaluated for 
substantial clinical improvement.
    We are inviting public comment on whether the Symplicity 
SpyralTM Catheter meets the device category criterion at 
Sec.  419.66(c)(2)(ii).
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3),

[[Page 59314]]

requires us to determine that the cost of the device is not 
insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that the Symplicity 
SpyralTM Catheter would be reported with HCPCS codes shown 
in Table 53.
[GRAPHIC] [TIFF OMITTED] TP22JY24.067

    To meet the cost criterion for device pass-through payment status, 
a device must pass all three tests of the cost criterion for at least 
one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775), 
we generally use the lowest APC payment rate applicable for use with 
the nominated device when we assess whether a device meets the cost 
significance criterion, thus increasing the probability the device will 
pass the cost significance test. Beginning in CY 2017, we calculate the 
device offset amount at the HCPCS/CPT code level instead of the APC 
level (81 FR 79657). We note the applicant used the CY 2024 payment 
rates for the three tests of the cost criterion. For our calculations, 
we used APC 5192, which had a CY 2024 payment rate of $5,445.84 at the 
time the application was received. HCPCS code 0339T in APC 5192 had a 
CY 2024 device offset amount of $3,362.26 at the time the application 
was received.\30\ According to the applicant, the cost of the 
Symplicity SpyralTM Catheter is $16,000.00.
---------------------------------------------------------------------------

    \30\ We note that the applicant selected the APC payment rate of 
$5,451.51 and the HCPCS/CPT code level device offset amount of 
$3,365.76 for HCPCS 0339T in APC 5192. However, the values selected 
are inconsistent with the APC payment rate and the device offset 
amount found in the corrected Addendum P to the CY 2024 OPPS/ASC 
final rule with comment period. For our calculation, we selected the 
APC payment rate of $5,445.84 and the HCPCS/CPT code level device 
offset amount of $3,362.26 for HCPCS 0339T in APC 5192 found in the 
corrected Addendum P, which are the accurate values for these codes. 
Based on our initial assessment for this proposed rule, using the 
APC payment rate of $5,445.84 and the HCPCS/CPT code level device 
offset amount of $3,362.26 would result in Symplicity 
SpyralTM Catheter meeting the cost significance 
requirement.
---------------------------------------------------------------------------

    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The average 
reasonable cost of $16,000.00 for the Symplicity SpyralTM 
Catheter is 293.80 percent of the applicable APC payment amount for the 
service related to the category of devices of $5,445.84 (($16,000.00/
$5,445.84) x 100 = 293.80 percent). Therefore, we believe the 
Symplicity SpyralTM Catheter meets the first cost 
significance requirement.
    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $16,000.00 for 
the Symplicity SpyralTM Catheter is 475.87 percent of the 
cost of the device-related portion of the APC payment amount for the 
related service of $3,362.26 (($16,000.00/$3,362.26) x

[[Page 59315]]

100 = 475.87 percent). Therefore, we believe that the Symplicity 
SpyralTM Catheter meets the second cost significance 
requirement.
    The third cost significance requirement at Sec.  419.66(d)(3), 
provides that the difference between the estimated average reasonable 
cost of the devices in the category and the portion of the APC payment 
amount for the device must exceed 10 percent of the APC payment amount 
for the related service. The difference between the estimated average 
reasonable cost of $16,000.00 for the Symplicity SpyralTM 
Catheter and the portion of the APC payment amount for the device of 
$3,362.26 is 232.06 percent of the APC payment amount for the related 
service of $5,445.84 ((($16,000.00-$3,362.26)/$5,445.84) x 100 = 232.06 
percent). Therefore, we believe that the Symplicity SpyralTM 
Catheter meets the third cost significance requirement.
    We are inviting public comment on whether the Symplicity 
SpyralTM Catheter meets the device pass-through payment 
criteria discussed in this section, including the cost criterion for 
device pass-through payment status.
(k) Paradise[supreg] Ultrasound RDN System and the Symplicity 
SpyralTM RDN System Device Category Code Establishment
    As previously discussed, we received two applications, the 
Paradise[supreg] Ultrasound RDN System and the Symplicity 
SpyralTM RDN System (Symplicity SpyralTM 
Catheter) for transitional device pass-through payments for CY 2025 
that, per the applicants, are RDN devices that use an endovascular 
approach to enter the renal arteries and ablate renal sympathetic 
nerves to achieve reductions in blood pressure. We question whether the 
information provided for each respective nominated device supports 
establishing two modality specific device pass-through payment device 
categories or establishing a single device category that would 
encompass both RDN devices.
    We note that the Paradise[supreg] Ultrasound RDN System and the 
Symplicity SpyralTM RDN System are both authorized by FDA 
for the indicated use to reduce blood pressure as an adjunctive 
treatment in patients with hypertension in whom lifestyle modifications 
and antihypertensive medications do not adequately control blood 
pressure. In addition, based on the information provided in the 
respective applications, it appears that the Paradise[supreg] 
Ultrasound RDN System and the Symplicity SpyralTM RDN System 
use the same procedure (renal sympathetic denervation, also called 
renal sympathetic nerve ablation), treat the same disease 
(hypertension) in the same patient population (patients in whom 
lifestyle modifications and antihypertensive medications do not 
adequately control blood pressure), and aim to achieve the same 
therapeutic outcome (to reduce blood pressure), using the same or 
similar mechanism of action (thermal ablation). We note that in 
addition to having the same indicated use, per the applicants, both the 
Paradise[supreg] Ultrasound RDN System and the Symplicity 
SpyralTM RDN System may be used with the same HCPCS 
procedure codes: 0338T \31\ or 0339T.\32\ In addition, the applicant 
for the Symplicity SpyralTM RDN System asserted that the 
Paradise[supreg] Ultrasound RDN System similarly generates heat to 
ablate the same renal sympathetic nerves to achieve reductions in blood 
pressure and this similarity supports establishing a single device 
category that would encompass RDN devices regardless of the specified 
modality.
---------------------------------------------------------------------------

    \31\ HCPCS procedure code 0338T (Transcatheter renal sympathetic 
denervation, percutaneous approach including arterial puncture, 
selective catheter placement(s) renal artery(ies), fluoroscopy, 
contrast injection(s), intraprocedural roadmapping and radiological 
supervision and interpretation, including pressure gradient 
measurements, flush aortogram and diagnostic renal angiography when 
performed; unilateral).
    \32\ HCPCS procedure code 0339T (Transcatheter renal sympathetic 
denervation, percutaneous approach including arterial puncture, 
selective catheter placement(s) renal artery(ies), fluoroscopy, 
contrast injection(s), intraprocedural roadmapping and radiological 
supervision and interpretation, including pressure gradient 
measurements, flush aortogram and diagnostic renal angiography when 
performed; bilateral).
---------------------------------------------------------------------------

    Despite these similarities, the applicants have proposed different 
device category descriptions. Based on the information submitted, it 
appears that the device category proposed for the Paradise[supreg] 
Ultrasound RDN System does not appropriately describe the Symplicity 
SpyralTM RDN System, however, we believe the device category 
proposed for the Symplicity SpyralTM RDN System would 
appropriately describe the Paradise[supreg] Ultrasound RDN System. 
Specifically, the applicant for the Paradise[supreg] Ultrasound RDN 
System proposed the following device category: Catheter, intravascular 
renal denervation, ultrasound, with balloon cooling; \33\ while the 
applicant for the Symplicity SpyralTM RDN System proposed 
the following device category: Ablation catheter, renal nerve, via 
endovascular approach, any modality. The device category descriptor the 
applicant proposed for the Paradise[supreg] Ultrasound RDN System 
specifies the device's treatment or procedure (catheter renal 
denervation), the ablation modality (i.e., ultrasound), and an 
attribute of the catheter (i.e., the cooling balloon). We note that 
while the device category descriptor the applicant proposed for the 
Symplicity SpyralTM RDN System device also specifies the 
device's treatment or procedure (catheter ablation of the renal 
nerves), it does not specify an ablation modality or any additional 
attributes of the catheter; rather, the proposed device category for 
the Symplicity SpyralTM RDN System device more broadly 
describes any ablation modality (e.g., radiofrequency or ultrasound).
---------------------------------------------------------------------------

    \33\ The Paradise[supreg] Ultrasound RDN System device category 
does not explicitly describe using an endovascular approach; 
however, it does describe renal nerve ablation via a catheter. We 
believe that the device category describes the intravascular 
sonication (ultrasound treatment) delivered by the catheter. We note 
that this proposed device description does not preclude an 
endovascular approach, and that, per the applicant, the 
Paradise[supreg] Ultrasound RDN system is a catheter-based 
endovascular based system.
---------------------------------------------------------------------------

    We note several differences in procedural technique with use of the 
Paradise[supreg] Ultrasound RDN System device compared to the 
Symplicity SpyralTM RDN System device. Per the applicants, 
the Paradise[supreg] Ultrasound RDN System delivers ablation while 
positioned in the main renal arteries only, whereas the Symplicity 
SpyralTM RDN System may deliver ablation while positioned in 
the main renal, accessory and branch arteries and therefore may require 
advancing the catheter beyond the main renal arteries. According to the 
applicants, the Paradise[supreg] Ultrasound RDN System procedural 
technique requires the measurement of the main renal artery diameter to 
select the appropriate size cooling balloon catheter, whereas the 
Symplicity SpyralTM RDN System's one size catheter does not 
require this measurement. Similarly, per the applicants, the 
Paradise[supreg] Catheter's cooling balloon requires specific 
procedural techniques to ensure the balloon is appropriately inflated 
and deflated during the procedure, but the Symplicity 
SpyralTM Catheter does not have this requirement.
    Both the Paradise[supreg] Ultrasound RDN System and the Symplicity 
SpyralTM RDN System received FDA Breakthrough Device 
designation and marketing authorization from FDA for the indications 
covered by the Breakthrough Device designation, and therefore, are not 
evaluated for substantial clinical improvement. However, we note that 
per the applicant of the Paradise[supreg] Ultrasound RDN System, a 
separate device category

[[Page 59316]]

associated with ultrasound denervation is supported by possible 
differences in clinical efficacy between RDN devices using ultrasound 
and RDN devices using radiofrequency ablation. Specifically, the 
applicant of the Paradise[supreg] Ultrasound RDN System asserted that, 
when compared to radiofrequency RDN, on average ultrasound RDN requires 
fewer ablations per patient (5.4 compared to 46.9), less time per 
ablation (7 seconds compared to 60 seconds), less time for the total 
procedure (72 minutes compared to 100 minutes), and less ablation depth 
(1 to 6 mm compared to 2 to 3 mm). The applicant of the 
Paradise[supreg] Ultrasound RDN System further stated that the 
Paradise[supreg] Ultrasound RDN System circumferential (360 degrees) 
emission per individual ablation and the lack of a requirement for 
distal renal artery branch ablation to deliver the treatment are 
technological features not shared by the radiofrequency RDN device.\34\ 
However, we note that we did not evaluate the validity or 
generalizability of these claims nor is it is clear if the two 
different ablation modalities (i.e., ultrasound and radiofrequency) 
would render different clinical results in larger studies or in the 
long term.35 36 We further note that we discuss these claims 
here solely for the purpose of determining whether the information 
provided supports establishing two modality-specific pass-through 
payment device categories or establishing a single device category that 
may encompass both RDN devices.
---------------------------------------------------------------------------

    \34\ See Application's Device Info tab, attachment, Procedural 
Comparison Ultrasound RDN_11.21.2023.
    \35\ Fengler K, Rommel K-P, Kriese W, et al. Research 
Correspondence: 6- and 12-Month Follow-Up From a Randomized Clinical 
Trial of Ultrasound vs Radiofrequency Renal Denervation (RADIOSOUND-
HTN). JACC: CARDIOVASCULAR INTERVENTIONS VOL. 16, NO. 3, 2023 
Letters FEBRUARY 13, 2023:367-369.
    \36\ Fengler K, Rommel K-P, Blazek S, et al. A three-arm 
randomized trial of different renal denervation devices and 
techniques in patients with resistant hypertension (RADIOSOUND-HTN). 
Circulation. 2019;139:590-600.
---------------------------------------------------------------------------

    In seeking comment, we note that in accordance with section 
1833(t)(6)(B)(ii)(II) of the Act, new categories must be established in 
such a way that no medical device is described by more than one 
category. We further note that CMS does not establish pass-through 
device categories for the purposes of describing specific devices, but 
rather, device categories which are intended to encompass all devices 
that can be appropriately described by a category. However, there are 
examples in which CMS has defined specific ablation modalities such as 
high intensity ultrasound, microwave, and cryoablation in HCPCS codes 
for use with the OPPS. In addition, we note the existence of several 
modality specific tissue ablation procedure codes in the Current 
Procedural Terminology (CPT[supreg]) 2024. However, there are examples 
where CMS has established device categories with additional granularity 
to differentiate similar devices with special characteristics (e.g., 
implantable neurostimulators). In addition, there are examples where 
CMS has created HCPCS codes specifying the modality of ablation (e.g., 
ultrasound, microwave). Finally, we note as previously mentioned, the 
intent of transitional device pass-through payment, as implemented at 
Sec.  419.66, is to facilitate access for beneficiaries to the 
advantages of new and truly innovative devices by allowing for adequate 
payment for these new devices while the necessary cost data is 
collected to incorporate the costs for these devices into the procedure 
APC rate (66 FR 55861). We question whether two modality-specific 
device category codes may facilitate the collection of more accurate 
data for incorporating the costs of these two devices into the 
procedure APC rate as well as foster the tracking of efficacy data for 
these two ablation modalities.
    As such, we are inviting public comment on whether the device 
descriptions provided in the Paradise[supreg] Ultrasound RDN System and 
the Symplicity SpyralTM RDN System applications support 
establishing two modality specific pass-through payment device 
categories or a single device category that would encompass both RDN 
device modalities.
(2) Traditional Device Pass-Through Applications
(a) Ambu[supreg] aScopeTM Gastro
    Ambu Inc. submitted an application for a new device category for 
transitional pass-through payment status for the Ambu[supreg] 
aScopeTM Gastro for CY 2025. Per the applicant, the 
Ambu[supreg] aScopeTM Gastro is a sterile, single-use, 
flexible gastroscope intended to be used for: (1) endoscopic access to 
and examination of the upper gastrointestinal (GI) anatomy; and (2) 
upper GI endoscopy or esophagogastroduodenoscopy (EGD) to diagnose and 
treat problems in the upper GI tract, including dysphagia, 
gastroesophageal reflux disease, narrowing or blockages, esophageal 
varices, inflammation, ulcers, tumors, hiatal hernia, Celiac disease, 
Crohn's disease, and infections of the upper GI tract in adult 
patients.
    According to the applicant, the Ambu[supreg] aScopeTM 
Gastro works with the Ambu[supreg] aBoxTM 2, a compatible, 
reusable displaying unit. The Ambu[supreg] aScopeTM Gastro 
endoscope is inserted into the upper GI anatomy airway through the 
mouth, while the Ambu[supreg] aBoxTM 2 is a non-sterile 
digital monitor intended to display live imaging data from Ambu 
visualization devices. The applicant is only seeking a new device 
category for transitional pass-through payment status for the 
Ambu[supreg] aScopeTM Gastro.
    Please refer to the online application posting for the Ambu[supreg] 
aScopeTM Gastro, available at https://mearis.cms.gov/public/publications/device-ptp/DEP2305305795M, for additional detail 
describing this device and the disease treated by the device.
    As stated previously, to be eligible for transitional pass-through 
payment under the OPPS, a device must meet the criteria at Sec.  
419.66(b)(1) through (4). With respect to the newness criterion at 
Sec.  419.66(b)(1), on February 3, 2022, the applicant received 510(k) 
clearance from FDA for the Ambu[supreg] aScopeTM Gastro, 
Ambu[supreg] aBoxTM 2, as a sterile, single-use, flexible 
gastroscope intended to be used for endoscopic access to and 
examination of the upper gastrointestinal anatomy. The Ambu[supreg] 
aScopeTM Gastro is intended to provide visualization via a 
compatible Ambu displaying unit and to be used with endotherapy 
accessories and other ancillary equipment. We received the application 
for a new device category for transitional pass-through payment status 
for the Ambu[supreg] aScopeTM Gastro on May 30, 2023, which 
is within three years of the date of the initial FDA marketing 
authorization.
    We are inviting public comments on whether Ambu[supreg] 
aScopeTM Gastro meets the newness criterion at Sec.  
419.66(b)(1).
    With respect to the eligibility criteria at Sec.  419.66(b)(3), the 
device must be an integral part of the service furnished, used for one 
patient only, come in contact with human tissue, and be surgically 
inserted or implanted, or applied in or on a wound or other skin 
lesion. The applicant did not indicate whether the Ambu[supreg] 
aScopeTM Gastro is integral to the service furnished. The 
applicant stated that the device was single-use and is intended to be 
used with one patient only. We note that the Ambu[supreg] 
aScopeTM Gastro, based on the device description provided by 
the applicant and the evidence provided in support of the substantial 
clinical improvement as discussed in detail in the Sec.  419.66(c)(2) 
analysis in this

[[Page 59317]]

application summary write-up, explicitly provides that the nominated 
device is intended to be used on one patient, for a single procedure 
and then disposed of. As such, we note that our evaluation and final 
decision as it relates to this potential category of devices 
(gastroscopes) will be based on the understanding that devices included 
in this device category (gastroscopes) can only be used for a single 
procedure, on a single patient, and cannot be reprocessed. While the 
applicant did not explicitly state whether the device comes in contact 
with human tissue or is surgically inserted, per the device 
description, Ambu[supreg] aScopeTM Gastro is a flexible 
gastroscope intended to be used for endoscopic access to and 
examination of the upper GI anatomy.
    We are inviting public comments on whether Ambu[supreg] 
aScopeTM Gastro meets the eligibility criterion at Sec.  
419.66(b)(3).
    With respect to the exclusion criterion at Sec.  419.66(b)(4), a 
device is not eligible to be considered for device pass-through payment 
if it is any of the following: (1) equipment, an instrument, apparatus, 
implement, or item of this type for which depreciation and financing 
expenses are recovered as depreciation assets as defined in Chapter 1 
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a 
material or supply furnished incident to a service (for example, a 
suture, customized surgical kit, or clip, other than a radiological 
site marker). The applicant indicated that the Ambu[supreg] 
aScopeTM Gastro is single-use equipment, not intended for 
use in multiple patients, for which depreciation and financing expenses 
are not recovered. The applicant explained that the Ambu[supreg] 
aScopeTM Gastro is purely an operating cost and is not 
subject to capitalization or a depreciation schedule.
    We note that the applicant stated in the application that the 
Ambu[supreg] aScopeTM Gastro is a supply furnished incident 
to a service rendered, as described, Ambu[supreg] aScopeTM 
Gastro would be considered a supply or material furnished incident to a 
service and excluded from device pass-through payment eligibility under 
Sec.  419.66(b)(4).
    We are inviting public comments on whether the Ambu[supreg] 
aScopeTM Gastro meets the exclusion criterion at Sec.  
419.66(b)(4).
    In addition to the criteria at Sec.  419.66(b)(1) through (4), the 
criteria for establishing new device categories are specified at Sec.  
419.66(c). The first criterion, at Sec.  419.66(c)(1), provides that 
CMS determines that a device to be included in the category is not 
appropriately described by any of the existing categories or by any 
category previously in effect, and was not being paid for as an 
outpatient service as of December 31, 1996. Per the applicant, the 
Ambu[supreg] aScopeTM Gastro is a sterile, single-use, 
flexible, imaging/illumination gastroscope device that uses an 
integrated camera module and built-in dual light-emitting diode (LED) 
illumination to provide access to, illumination, and imaging of the 
upper GI anatomy for diagnostic and therapeutic purposes for a GI 
patient. According to the applicant, no previous or existing device 
categories for pass-through payment appropriately describe the 
Ambu[supreg] aScopeTM Gastro. Per the applicant, the two 
device categories, C1747 (Endoscope, single-use (i.e., disposable), 
urinary tract, imaging/illumination device (insertable)) and C1748 
(Endoscope, single-use (i.e., disposable), upper gastrointestinal tract 
(GI), imaging/illumination device, (insertable)), do not appropriately 
describe the Ambu[supreg] aScopeTM Gastro. Specifically, the 
applicant asserted that the urinary tract scopes described in C1747 are 
not indicated for use in the GI system and therefore, do not 
appropriately describe Ambu[supreg] aScopeTM Gastro. The 
applicant further asserted that while C1748 describes a single-use 
endoscopic device, C1748 is only appropriate for single-use 
duodenoscopes and endoscopic retrograde cholangiopancreatography (ERCP) 
services. While the long descriptor of C1748 describes disposable 
endoscopes with imaging and illumination capabilities intended for use 
in the upper GI and the applicant describes the Ambu[supreg] 
aScopeTM Gastro as a single-use, gastroscope with 
illumination and imaging intended for use in the upper GI anatomy, we 
note that C1748 only describes single-use duodenoscopes and ERCP 
services. As such, Ambu[supreg] aScopeTM Gastro is not 
described by C1748.
    We have not identified an existing pass-through payment category 
that describes Ambu[supreg] aScopeTM Gastro. We are inviting 
public comment on whether the Ambu[supreg] aScopeTM Gastro 
meets the device category criterion at Sec.  419.66(c)(1).
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines either of the following: (i) 
that a device to be included in the category has demonstrated that it 
will substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment; or (ii) for devices for which 
pass-through status will begin on or after January 1, 2020, as an 
alternative to the substantial clinical improvement criterion, the 
device is part of the FDA's Breakthrough Devices Program and has 
received FDA marketing authorization for the indication covered by the 
Breakthrough Device designation. The applicant claimed that 
Ambu[supreg] aScopeTM Gastro represents a substantial 
clinical improvement over existing technologies in the diagnosis and 
management of endoscopic procedures and examination within the upper GI 
anatomy. The applicant outlined the following areas in which it claimed 
the Ambu[supreg] aScopeTM Gastro would provide a substantial 
clinical improvement: (1) elimination of the risk of cross-
contamination between patients and scopes, (2) elimination of the risk 
of cross-contamination for reusable gastroscopes, (3) elimination of 
the risk of resistant infections that originate from reusable 
gastroscopes, (4) avoidance of scope damage and debris after 
reprocessing, (5) avoidance of damaged and contaminated scopes from 
being used on patients, (6) elimination of the risk of patient-to-
patient infections associated with contaminated scopes, and (7) 
avoidance of infection and death associated with reusable gastroscope 
contamination.
    The applicant provided seven background articles about reusable GI 
endoscopes to support its claims. Table 54 summarizes the applicant's 
assertions regarding the substantial clinical improvement criterion. 
Please see the online posting for Ambu[supreg] aScopeTM 
Gastro for the applicant's complete statements regarding the 
substantial clinical improvement criterion and the supporting evidence 
provided.
BILLING CODE 4120-01-P

[[Page 59318]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.068


[[Page 59319]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.069

BILLING CODE 4120-01-C
    After review of the information provided by the applicant, we have 
the following concerns regarding whether Ambu[supreg] 
aScopeTM Gastro meets the substantial clinical improvement 
criterion.
    First, we note that the applicant identified 11 other devices that 
it believed are most like the Ambu[supreg] aScopeTM Gastro: 
(1) Olympus GIF-HQ 190; (2) Olympus GIF-1TH190; (3) Olympus GIF-H190; 
(4) Olympus GIF-CP190N; (5) Fujifilm EG-760R; (6) Fujifilm EG-760CT; 
(7) Fujifilm EG-

[[Page 59320]]

760Z; (8) Fujifilm EG-740N; (9) Pentax HD Video Gastroscope EG34 i10; 
(10) Pentax MagniView EG 2990Zi; and (11) Pentax G EYE. According to 
the applicant, these devices are used during the same specific 
procedure(s) and/or services with which the nominated device is used. 
The applicant stated that the nominated device's single-use feature is 
unique among the comparators because its single-use feature eliminates 
gastroscope reprocessing. The applicant also indicated that there are 
no HCPCS Level I and/or Level II code(s) used to identify these 
existing devices. While the evidence provided demonstrates that the 
Ambu[supreg] aScopeTM Gastro may be different than the other 
11 closely related devices, it does not provide any comparative data 
that demonstrates that the Ambu[supreg] aScopeTM Gastro 
offers a substantial clinical improvement when compared to the other 11 
devices.
    Second, we note that the nominated device was determined to be 
substantially equivalent to a predicate device: OLYMPUS EVIS EXERA II 
Gastrointestinal Videoscope GIF H180 (K100584). The FDA 510(k) summary 
indicated that both devices share the same technological 
characteristics such as insertion portion length, working channel 
diameter, direction of view and bending angles. We note that the 510(k) 
summary indicated that, unlike the predicate device, the Ambu[supreg] 
aScopeTM Gastro is a sterile, single-use device and not 
intended to be reprocessed. Again, while this demonstrates that the 
Ambu[supreg] aScopeTM Gastro may be different than the 
predicate device, it is unclear whether this difference demonstrates 
substantial clinical improvement. No comparative data demonstrating 
that the Ambu[supreg] aScopeTM Gastro provides a substantial 
clinical improvement when compared to the OLYMPUS EVIS EXERA II 
Gastrointestinal Videoscope GIF H180 was provided. We would be 
interested in additional information to demonstrate whether the 
nominated device demonstrates a substantial clinical benefit in 
comparison to other existing devices.
    Further, the applicant indicated that while other single-use 
endoscopes are available, there are no known competitive devices on the 
market that are single-use, transoral, and marketed in the U.S. The 
applicant compared the Ambu[supreg] aScopeTM Gastro to the 
following two existing devices: (1) EndoFresh Single-Use Gastroscope; 
and (2) EvoEndo Model LE Single-Use Gastroscope. Specifically, the 
applicant noted that although EndoFresh Single-Use Gastroscope is FDA-
cleared and a similar device that could also become eligible for 
transitional pass-through payment under the proposed additional 
category, it has no commercial activity in the U.S. According to the 
applicant, while EvoEndo Model LE Single-Use Gastroscope is used during 
the same specific procedure(s) and/or services as the Ambu[supreg] 
aScopeTM Gastro, the Ambu[supreg] aScopeTM Gastro 
is different from EvoEndo Model LE Single-Use Gastroscope because the 
Ambu[supreg] aScopeTM Gastro is a transoral scope, not 
transnasal. The applicant also indicated that there are no HCPCS Level 
I and/or Level II code(s) used to identify EvoEndo Model LE Single-Use 
Gastroscope. However, we note that EvoEndo Model LE Single-Use 
Gastroscope is both transoral and transnasal, which is indicated on the 
EvoEndo's website \37\ and on its FDA 510(k) \38\ clearance letter. We 
also note that the applicant did not compare the Ambu[supreg] 
aScopeTM Gastro to another single-use, FDA-cleared endoscope 
available on the market--EXALT\TM\ Model D, Single-Use Duodenoscope 
\39\--which we believe may be similar. We would be interested in 
additional information to demonstrate whether the nominated device 
demonstrates a substantial clinical improvement in comparison to 
similar single-use competitive devices such as the EvoEndo Model LE 
Single-Use Gastroscope and the EXALT\TM\ Model D, Single-Use 
Duodenoscope.
---------------------------------------------------------------------------

    \37\ EvoEndo[supreg] Model LE Single-Use Gastroscope and EvoEndo 
Controller.
    \38\ EvoEndo[supreg] Model LE Single-use Gastroscope is FDA 
cleared and marketed under 510(k) since 2022 (FDA 510(k)) letter: 
https://www.accessdata.fda.gov/cdrh_docs/pdf21/K213606.pdf). The 
EvoEndo Model LE Gastroscope is intended for the visualization of 
the upper digestive tract in adults and pediatric patients, 
specifically for the observation, diagnosis, and endoscopic 
treatment of the esophagus, stomach, and duodenal bulb in patients 
over the age of five years. The gastroscope is a sterile single-use 
device and can be inserted orally or transnasally.
    \39\ EXALT\TM\ Model D, Single-Use Duodenoscope is FDA cleared 
and marketed under 510(k) since 2019 (FDA 510(k)) letter: https://www.accessdata.fda.gov/cdrh_docs/pdf19/K193202.pdf). The EXALTTM 
Model D, Single-Use Duodenoscope is intended for use with a Boston 
Scientific endoscopic video imaging system, for endoscopy and 
endoscopic surgery within the duodenum.
---------------------------------------------------------------------------

    In addition, we note that the applicant's self-sponsored studies, 
which are background articles by Muscarella, L.F. (2022),\40\ 
Muscarella, L.F. (2023),\41\ and Ofstead, et. al. (2022),\42\ lack 
direct comparison of the nominated device to other devices, and do not 
directly show any clinical improvement that results from the use of the 
nominated device compared to the use of other devices. In order to 
demonstrate substantial clinical improvement over currently available 
treatments, we consider supporting evidence, preferably published peer-
reviewed clinical trials, that shows improved clinical outcomes, such 
as reduction in mortality, complications, subsequent interventions, 
future hospitalizations, recovery time, pain, or a more rapid 
beneficial resolution of the disease process compared to the standard 
of care. Additional supporting evidence, preferably published peer-
reviewed clinical trials, that shows these improved clinical outcomes 
would help inform our assessment of whether the Ambu[supreg] 
aScopeTM Gastro demonstrates substantial clinical 
improvement over existing technologies.
---------------------------------------------------------------------------

    \40\ Muscarella, L. F. (2022). Contamination of Flexible 
Endoscopes and Associated Infections: A Comprehensive Review and 
Analysis of FDA Adverse Event Reports. https://lfm-hcs.com/2022/01/contamination-of-flexible-endoscopes-and-associated-infections/.
    \41\ Muscarella, L. F. (2023). Gastroscopes Have Been Linked to 
A Cluster of Resistant E. coli Infections--Is the Risk Sufficiently 
Recognized? https://lfm-hcs.com/2023/01/gastroscopes-have-been-linked-to-a-cluster-of-resistant-e-coli-infections-is-the-risk-sufficiently-recognized/.
    \42\ Ofstead, C. L., Smart, A. G., Hopkins, K. M., & Wetzler, H. 
P. (2023). The utility of lighted magnification and borescopes for 
visual inspection of flexible endoscopes. American Journal of 
Infection Control, 51(1), 2-10.
---------------------------------------------------------------------------

    Moreover, while the details provided in the application and all the 
articles submitted as evidence of substantial clinical improvement 
discuss potential adverse events from reusable gastroscope procedures, 
they do not appear to directly show any clinical improvement that 
results from the use of the Ambu[supreg] aScopeTM Gastro. 
Rather, the applicant provided evidence which seems to rely on indirect 
inferences from other sources of data. Specifically, the applicant 
included an FDA Manufacturer and User Facility Device Experience 
(MAUDE) report \43\ which provides the details of multiple adverse 
event reports associated with the contamination or suspected 
contamination of reusable gastroscopes but does not directly show any 
clinical improvement that results from the use of the Ambu[supreg] 
aScopeTM Gastro.
---------------------------------------------------------------------------

    \43\ MAUDE Adverse Event Report: AIZU OLYMPUS CO., LTD. EVIS 
EXERA III GASTROINTESTINAL VIDEOSCOPE (fda.gov).
---------------------------------------------------------------------------

    While the applicant claims that the Ambu[supreg] 
aScopeTM Gastro eliminates cross-contamination associated 
with reusable gastroscopes and eliminates the risk of infections that 
originate from reusable gastroscopes, we do not believe that we have 
sufficient information on the prevalence of infection to evaluate the 
applicant's substantial clinical improvement claims for the 
Ambu[supreg] aScopeTM Gastro. We note the

[[Page 59321]]

analyses 44 45 on adverse event reports and the FDA MAUDE 
report \46\ appear to apply to flexible, reprocessed gastroscope or 
endoscopes, broadly, but not to disposable, single-use devices 
comparable to the nominated device. Therefore, we question the direct 
relevance of these background articles to the nominated device and the 
applicant's substantial clinical improvement claims. Further, we note 
that many of the applicant's substantial clinical improvement claims 
rely on an assumption that inadequate reprocessing of reusable 
endoscopes is positively correlated with heightened risk of infection. 
We note that the applicant's self-sponsored analyses of FDA adverse 
event reports and studies 47 48 49 and the FDA MAUDE report 
\50\ do not provide evidence on the prevalence of infection, establish 
a clear relationship between infection risk and reprocessing 
procedures, or substantiate that single-use disposable scopes, or the 
nominated device specifically, would be a substantial clinical 
improvement over currently available devices. We would be interested in 
more information on the prevalence of infection due to incomplete/
inadequate processing for gastroscopes in the U.S. and whether single-
use gastroscopes reduce the infection rate in patients to identify the 
extent of the problem with existing technologies.
---------------------------------------------------------------------------

    \44\ Muscarella, L. F. (2022). Contamination of Flexible 
Endoscopes and Associated Infections: A Comprehensive Review and 
Analysis of FDA Adverse Event Reports. https://lfm-hcs.com/2022/01/contamination-of-flexible-endoscopes-and-associated-infections/.
    \45\ Muscarella, L. F. (2023). Gastroscopes Have Been Linked to 
A Cluster of Resistant E. coli Infections--Is the Risk Sufficiently 
Recognized? https://lfm-hcs.com/2023/01/gastroscopes-have-been-linked-to-a-cluster-of-resistant-e-coli-infections-is-the-risk-sufficiently-recognized/.
    \46\ MAUDE Adverse Event Report: AIZU OLYMPUS CO., LTD. EVIS 
EXERA III GASTROINTESTINAL VIDEOSCOPE (fda.gov).
    \47\ Muscarella, L. F. (2022). Contamination of Flexible 
Endoscopes and Associated Infections: A Comprehensive Review and 
Analysis of FDA Adverse Event Reports. https://lfm-hcs.com/2022/01/contamination-of-flexible-endoscopes-and-associated-infections/.
    \48\ Muscarella, L. F. (2023). Gastroscopes Have Been Linked to 
A Cluster of Resistant E. coli Infections--Is the Risk Sufficiently 
Recognized? https://lfm-hcs.com/2023/01/gastroscopes-have-been-linked-to-a-cluster-of-resistant-e-coli-infections-is-the-risk-sufficiently-recognized/.
    \49\ Ofstead, C. L., Smart, A. G., Hopkins, K. M., & Wetzler, H. 
P. (2023). The utility of lighted magnification and borescopes for 
visual inspection of flexible endoscopes. American Journal of 
Infection Control, 51(1), 2-10.
    \50\ MAUDE Adverse Event Report: AIZU OLYMPUS CO., LTD. EVIS 
EXERA III GASTROINTESTINAL VIDEOSCOPE (fda.gov).
---------------------------------------------------------------------------

    We are inviting public comment on whether Ambu[supreg] 
aScopeTM Gastro meets the device category criterion at Sec.  
419.66(c)(2).
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that Ambu[supreg] 
aScopeTM Gastro would be reported with HCPCS codes shown in 
Table 55.
BILLING CODE 4120-01-P

[[Page 59322]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.070


[[Page 59323]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.071

BILLING CODE 4120-01-C
    To meet the cost criterion for device pass-through payment status, 
a device must pass all three tests of the cost criterion for at least 
one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775), 
we generally use the lowest APC payment rate applicable for use with 
the nominated device when we assess whether a device meets the cost 
significance criterion, thus increasing the probability the device will 
pass the cost significance test. Beginning in CY 2017, we calculate the 
device offset amount at the HCPCS/CPT code level instead of the APC 
level (81 FR 79657).

[[Page 59324]]

We note the applicant used the CY 2023 payment rates for the three 
tests of the cost criterion. For our calculations, we used APC 5301, 
which had a CY 2023 payment rate of $825.51 at the time the application 
was received. HCPCS code 43239 in APC 5301 had a CY 2023 device offset 
amount of $2.64 at the time the application was received.\51\ According 
to the applicant, the cost of Ambu[supreg] aScopeTM Gastro 
is $799.00.
---------------------------------------------------------------------------

    \51\ We note that the applicant selected a device offset amount 
of $21.55 for APC 5301 without selecting a specific HCPCS/CPT code. 
However, for the HCPCS/CPT codes provided by the applicant, we note 
the HCPCS/CPT code level device offset amounts are available in 
Addendum P to the CY 2023 OPPS/ASC final rule with comment period. 
For our calculation, we selected the HCPCS/CPT code level device 
offset amount of $2.64 related to HCPCS 43239 in APC 5301 found in 
Addendum P to the CY 2023 OPPS/ASC final rule with comment period. 
Based on our initial assessment for this proposed rule, using the 
device offset amount of $2.64 would result in Ambu[supreg] 
aScopeTM Gastro meeting the cost significance 
requirement.
---------------------------------------------------------------------------

    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The average 
reasonable cost of $799.00 for Ambu[supreg] aScopeTM Gastro 
is 96.79 percent of the applicable APC payment amount for the service 
related to the category of devices of $825.51 (($799.00/$825.51) x 100 
= 96.79 percent). Therefore, we believe Ambu[supreg] 
aScopeTM Gastro meets the first cost significance 
requirement.
    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $799.00 for 
Ambu[supreg] aScopeTM Gastro is 30,265.15 percent of the 
cost of the device-related portion of the APC payment amount for the 
related service of $2.64 (($799.00/$2.64) x 100 = 30,265.15 percent). 
Therefore, we believe that the Ambu[supreg] aScopeTM Gastro 
meets the second cost significance requirement.
    The third cost significance requirement, at Sec.  419.66(d)(3), 
provides that the difference between the estimated average reasonable 
cost of the devices in the category and the portion of the APC payment 
amount for the device must exceed 10 percent of the APC payment amount 
for the related service. The difference between the estimated average 
reasonable cost of $799.00 for Ambu[supreg] aScopeTM Gastro 
and the portion of the APC payment amount for the device of $2.64 is 
96.47 percent of the APC payment amount for the related service of 
$825.51 ((($799.00-$2.64)/$825.51) x 100 = 96.47 percent). Therefore, 
we believe that Ambu[supreg] aScopeTM Gastro meets the third 
cost significance requirement.
    We are inviting public comment on whether the Ambu[supreg] 
aScopeTM Gastro meets the device pass-through payment 
criteria discussed in this section, including the cost criterion for 
device pass-through payment status.
(b) OMEZA Wound Care Matrix (OCM\TM\)
    OMEZA LLC submitted an application for a new device category for 
transitional pass-through payment status for OCM\TM\ for CY 2025. 
According to the applicant, OCM\TM\ is an amorphous, solid, malleable 
sheet comprised of hydrolyzed fish peptides infused with cod liver oil, 
which acts as an anhydrous skin protectant. Per the applicant, 
OCMTM is indicated for the management of wounds. The 
applicant asserted that, when applied to a clean wound surface, OCM\TM\ 
is naturally incorporated into the wound over time. Per the applicant, 
OCMTM's cold water fish peptides provide building blocks for 
tissue regeneration and cell signaling molecules stimulate tissue 
growth. Additionally, OCMTM's matrix-like device also 
contains active pharmaceutical ingredient(s) (API) and nutrients that 
continuously reduce biofilm impact, reduce inflammation, increase 
tissue proliferation, and support remodeling of tissue.
    Please refer to the online application posting for the OCM\TM\, 
available at https://mearis.cms.gov/public/publications/device-ptp/DEP2403016HWP6 , for additional detail describing the device and the 
disease treated by the device.
    As stated previously, to be eligible for transitional pass-through 
payment under the OPPS, a device must meet the criteria at Sec.  
419.66(b)(1) through (4). With respect to the newness criterion at 
Sec.  419.66(b)(1), on September 1, 2021, the applicant received 510(k) 
clearance from FDA for OCM\TM\ as a device to be used for the 
management of wounds including: (1) partial and full-thickness wounds, 
(2) pressure ulcers, (3) venous ulcers, (4) diabetic ulcers, (5) 
chronic vascular ulcers, (6) tunneled/undermined wounds, (7) surgical 
wounds (donor sites/grafts, post-Moh's surgery, post-laser surgery, 
podiatric, wound dehiscence), (8) trauma wounds (abrasions, 
lacerations, superficial partial thickness burns, skin tears), and (9) 
draining wounds. We received the application for a new device category 
for transitional pass-through payment status for OCM\TM\ on March 1, 
2024, which is within three years of the date of the initial FDA 
marketing authorization.
    We are inviting public comments on whether OCM\TM\ meets the 
newness criterion at Sec.  419.66(b)(1).
    With respect to the eligibility criteria at Sec.  419.66(b)(3), the 
device must be an integral part of the service furnished, used for one 
patient only, come in contact with human tissue, and be surgically 
inserted or implanted, or applied in or on a wound or other skin 
lesion. The applicant did not indicate whether OCM\TM\ is integral to 
the service furnished. We note that in the CY 2014 final rule with 
comment period (78 FR 75005), we stated that we have interpreted the 
term ``integral'' to mean that the device is necessary to furnish or 
deliver the primary procedure with which it is used. For example, a 
pacemaker is integral to the procedure of implantation of a pacemaker. 
OCMTM does not appear to be necessary to furnish or deliver 
the primary procedure with which it is used, specifically debridement. 
Rather, the use of OCMTM following the debridement 
procedure, including the duration of treatment and the reapplication 
frequency, seems to be based entirely on provider discretion. As such, 
we do not believe that OCMTM is integral to the service 
furnished as required by Sec.  419.66(b)(3). The applicant stated that 
OCMTM is classified for one-time use and is designed for 
intimate contact with both regular and irregular wound beds, and as 
such, it is applied in or on a wound.
    We are inviting public comments on whether OCM\TM\ meets the 
eligibility criterion at Sec.  419.66(b)(3).
    With respect to the exclusion criterion at Sec.  419.66(b)(4), a 
device is not eligible to be considered for device pass-through payment 
if it is any of the following: (1) equipment, an instrument, apparatus, 
implement, or item of this type for which depreciation and financing 
expenses are recovered as depreciation assets as defined in Chapter 1 
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a 
material or supply furnished incident to a service (for example, a 
suture, customized surgical kit, or clip, other than a radiological 
site marker). The applicant did not indicate whether OCM\TM\ is 
equipment, an instrument, apparatus, implement, or item of this type 
for which depreciation and financing expenses are recovered, or if 
OCM\TM\ is a supply or material

[[Page 59325]]

furnished incident to a service. However, in the CY 2014 final rule, we 
described skin substitutes as a type of supply used in a surgical 
procedure (78 FR 74929 through 74930). As explained the CY 2014 final 
rule, supplies are a large category of items that typically are either 
for single patient use or have a shorter life span in use than 
equipment. Supplies can be anything that is not equipment and include 
not only minor, inexpensive, or commodity-type items but also include a 
wide range of products used in the hospital outpatient setting, 
including certain implantable medical devices, which we have considered 
supplies since the inception of the OPPS (78 FR 74929 through 74930). 
We clarified that we believe skin substitutes are supplies used in a 
surgical procedure because, as a part of a surgical repair procedure, 
they reinforce and aid the healing of tissue like implantable 
biologicals, but with skin substitutes, the tissue is skin instead of 
internal connective tissues. (78 FR 74931). As such, we question 
whether OCM\TM\ would be considered a supply, and as such it would be 
excluded from device pass-through payments under Sec.  419.66(b)(4).
    We are inviting public comments on whether OCM\TM\ meets the 
exclusion criterion at Sec.  419.66(b)(4).
    In addition to the criteria at Sec.  419.66(b)(1) through (4), the 
criteria for establishing new device categories are specified at Sec.  
419.66(c). The first criterion, at Sec.  419.66(c)(1), provides that 
CMS determines that a device to be included in the category is not 
appropriately described by any of the existing categories or by any 
category previously in effect, and was not being paid for as an 
outpatient service as of December 31, 1996. The applicant asserted that 
OCM\TM\ is indicated for the comprehensive treatment of advanced wounds 
and provides continuous delivery of pharmaceutical grade products 
through an amorphous, anhydrous solid, which reduces biofilm while 
simultaneously promoting tissue proliferation and remodeling. According 
to the applicant, no previous or existing device categories for pass-
through payment appropriately describe OCM\TM\.
    We have not identified an existing pass-through payment category 
that describes OCM\TM\. We are inviting public comment on whether 
OCM\TM\ meets the device category criterion at Sec.  419.66(c)(1).
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines either of the following: (i) 
that a device to be included in the category has demonstrated that it 
will substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment; or (ii) for devices for which 
pass-through status will begin on or after January 1, 2020, as an 
alternative to the substantial clinical improvement criterion, the 
device is part of the FDA's Breakthrough Devices Program and has 
received FDA marketing authorization for the indication covered by the 
Breakthrough Device designation. The applicant claimed that OCM\TM\ 
represents a substantial clinical improvement over existing 
technologies in the treatment of hard to heal or chronic wounds which 
require advanced wound care procedures such as venous leg ulcers, 
diabetic foot ulcers, pressure ulcers, and wound dehiscence where 
proper wound preparation, product application, and proper secondary 
dressings are a requirement. Specifically, the applicant claimed that 
OCM\TM\ demonstrates: (1) superior clinical outcomes and healing for 
Diabetic Foot Ulcers (DFU) compared to standard of care; (2) faster 
healing rates than standard of care for Venous Leg Ulcers (VLUs); (3) 
superior clinical outcomes for patients who could not qualify for 
clinical trials due to comorbidities; (4) improved results when 
compared to results with standard of care for patients who failed prior 
treatment; (5) in vitro/in vivo antimicrobial properties and patient 
safety; and (6) improved patient safety.
    The applicant provided the following clinical trial data and case 
studies to support these claims: (1) two randomized controlled trials 
(a single-site trial of patients with DFUs to evaluate percent area 
reduction, and a randomized, multicenter, open label study for a 
patient group with VLUs); (2) two real-world trials comprised of two 
separate case studies of patients receiving follow-up care at two 
different wound treatment centers; (3) one in vitro study; (4) one in 
vivo porcine study; and (5) one consumer research study assessing the 
safety of OCM\TM\ using the skin prick method. Table 56 summarizes the 
applicant's assertions regarding the substantial clinical improvement 
criterion. Note that there are multiple variations in poster 
presentations for the same study; these posters are identified by study 
number and presentation number in parentheses. Please see the online 
posting for OCM\TM\ for the applicant's complete statements regarding 
the substantial clinical improvement criterion and the supporting 
evidence provided.
BILLING CODE 4120-01-P

[[Page 59326]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.072


[[Page 59327]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.073


[[Page 59328]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.074


[[Page 59329]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.075

BILLING CODE 4120-01-C
    After review of the information provided by the applicant, we 
identified the following concerns regarding whether the applicant 
presents clinical data to suggest that OCM\TM\ provides a substantial 
clinical improvement over other similar skin protectant and wound 
healing products to meet the criterion at Sec.  419.66(c)(2)(i). Based 
on the evidence submitted in the application, we note the following 
concerns: (1) lack of direct comparison between the nominated device 
and the predicate or reference devices for skin substitutes, 
particularly with respect to treatment of deep or persistent chronic 
wounds in people with DFU and VLU; (2) reliance on non-peer-reviewed 
studies, such as unpublished abstracts or conference posters, the 
results of which are only presented in a final data table; and (3) 
reliance on studies which were sponsored by the device manufacturer 
rather than independent research. At this time, we note that the 
unpublished abstract for OCM\TM\ lacked a detailed discussion of study 
limitations, patient population, and assurances that studies have been 
thoroughly peer-reviewed, and free from implicit bias. The abstract 
furthermore did not state if or how standard of care treatment was 
administered within the same time period to control groups, and 
therefore we are not clear if there was a direct comparison between 
OCM\TM\ and its predicate or reference devices. Furthermore, the two 
randomized controlled trials 52 53 and two real world 
studies 54 55 submitted by the applicant

[[Page 59330]]

to support its claims had relatively small sample sizes, some 
investigating only two patients total, which potentially limits the 
statistical significance of the results.
---------------------------------------------------------------------------

    \52\ Desmond P. Bell, DPM, CWS, FFPM RCPS, et al. A Clinical 
Study Using Combination Therapy with Standard of Care for the 
Treatment of Diabetic Foot Ulcers: Interim Analysis. ProMedica Jobst 
Wound Care, Toledo, OH, US; ProMedica Jobst Vascular Institute, 
Sylvania, OH, US; University of Toledo College of Medicine, Toledo, 
OH, US, Omeza, LLC, Sarasota, FL, US (poster presented at the 20th 
Annual Desert Foot Conference, December 6-9, 2023, Phoenix, AZ, 
USA).
    \53\ Randomized Controlled Trial in Venous Leg Ulcers 
(NCT05291169) (no author or publication date given).
    \54\ A Novel Combination Therapy Technology: Case Studies of 
Complete Closure of a Diabetic Foot Ulcer and a Charcot Foot Ulcer 
Greg Black, DPM; Suzanne Bakewell, Ph.D.; Desmond Bell, DPM, CWS, 
FFPM RCPS 1Sylvania Podiatry, Sylvania, OH; Omeza, LLC, Sarasota, FL 
(poster presented resented at the 2023 Diabetic Foot Conference, 
September 28-30, 2023, Anaheim, CA).
    \55\ A Novel Combination Therapy Technology: Case Studies of 
Complete Closure of Diabetic Foot Ulcers Christopher L. Barrett, 
DPM, CWS; Suzanne J. Bakewell, Ph.D.; Desmond Bell, DPM, CWS, FFPM 
RCPS 1Wound Care Specialist, Downingtown, PA, USA; 2Omeza, Sarasota, 
FL, USA Presented at the 2023 Diabetic Foot Conference, September 
28-30, 2023, Anaheim, CA.
---------------------------------------------------------------------------

    We note that the applicant did not provide a comparison of OCM\TM\ 
to other devices it identified are closely related or similar to 
OCM\TM\. Specifically, the FDA authorization letter dated September 1, 
2021, FDA identified one predicate device, SweetBio Apis (K182725), and 
three reference devices, INTEGRA\TM\ Flowable Wound Matrix (K072113), 
Kerecis MariGen Wound Dressing (K132343), and Southwest Technologies 
Stimulen Collagen (K030774) to which OCM\TM\ may be compared. We note 
that we did not approve transitional device pass-through payment for 
Kerecis MariGen Wound Dressing (K132343) for CY 2018 after determining 
that the clinical data provided by the applicant did not support the 
claim that Kerecis Omega3 Wound Dressing provides a substantial 
clinical improvement over other similar skin substitute products (82 FR 
59330 through 59332). The FDA authorization letter noted that OCM\TM\ 
and the predicate device SweetBio Apis have similar indications and the 
same intended use, namely, to manage wounds by providing an animal-
derived collagen product that is biodegradable and incorporates into 
the surrounding tissue during the body's natural wound healing 
processes. Both products supplement the collagen constituent with 
additional biocompatible materials to achieve a final product that 
covers and protects the wound, assists in managing wound exudate, and 
maintains a moist wound environment. Further, the substantial 
equivalence table included in the FDA authorization letter indicated 
that OCM\TM\ raised no new questions of safety or effectiveness when 
compared to the predicate and reference devices.
    In the first claim, the applicant asserted OCM\TM\ has superior 
clinical outcomes and healing for DFU compared to the standard of care. 
Based on the evidence submitted by the applicant, we note the following 
concerns: (1) lack of a direct comparison to the predicate or reference 
devices in the two randomized controlled trials and the two real world 
clinical studies; (2) reliance on unpublished studies; (3) reliance on 
manufacturer sponsored studies; and (4) small sample sizes. First, 
Simman, et al. (2023) describes the results of a single-site trial in 
patients with DFUs to evaluate percent area reduction in wound healing. 
The stated goal of this study was to demonstrate that a combination 
therapy, using OCM\TM\ plus standard of care treatment, moves chronic 
DFUs from a stalled state to a healing state in a 4-week period. The 
study enrolled 25 patients, five of whom did not complete the study, 
and one of whom died during the study from comorbidities related to 
their underlying condition. Study group DFUs were managed with 
combination therapy from 4-12 weeks, and control group DFUs (comprised 
of six total study participants) were managed with standard of care 
treatment involving cleaning and debridement only.
    Interim analyses presented as a poster (Bell, et al., 2023) as 
evidence to support the first claim was limited to 12 total study 
participants. The interim analysis concluded that healing rates showed 
an average of 63 percent area reduction for the remaining participants 
at 4 weeks following standard of care treatment, and an average of 91 
percent area reduction at 12 weeks following the treatment in patients 
with DFUs managed with the combination therapy. The interim analysis 
study further showed that one patient with a 12-week percent area 
reduction of 73 percent continued to improve through week 14 while 
three patients' wounds had not healed at the time of analysis for those 
receiving combination therapy.
    In the final results presented in Simman et al. (2023), the average 
4-week percent area reduction was 60 percent, with three patients 
experiencing 100 percent closure with combination therapy. At 12 weeks, 
the median wound size was 0.0 cm\2\ (range, 0-2.59), and the average 
percent area reduction was 93 percent, with five additional patients 
experiencing 100 percent closure with combination therapy. Average 4- 
and 12-week percent area reductions with standard of care alone were 42 
percent and 45 percent, respectively. According to the final analysis 
study abstract, every wound treated with OCM\TM\ combination therapy 
was reduced by more than 70 percent in 12 weeks and all wounds 
previously failed treatments.
    We note that the Simman et al. (2023) study abstract and the 
interim analysis do not provide any direct comparison to standard of 
care treatment with another collagen-based wound matrix or device that 
is otherwise similar to the indications for use of OCM\TM\ in 
nonhealing wounds. In addition, it is unclear if any of the control 
group patients received collagen-based treatments including the 
predicate or reference devices to draw comparisons to collagen-based 
skin protectants that perform similarly to OCM\TM\. While we recognize, 
given the number of skin substitute products on the U.S. market, it is 
not possible to compare OCM\TM\ to each product, we believe that 
studies comparing the product against other powder, liquid, or gel skin 
substitute products could provide more evidence demonstrating the 
clinical superiority of OCM\TM\. In addition to the lack of comparison 
to other collagen-based wound matrix devices, the standard of care 
treatment in this study was limited to cleaning and debridement, which, 
based on the applicant's description for methods for administering 
OCM\TM\, is a step prior to administering OCM\TM\.
    In reference to the applicant's statements that debridement 
combined with application of OCM\TM\ is more effective in the removal 
of biofilm compared to the standard of care of debridement alone, we 
note that neither the abstract nor the interim analysis for this study 
analyzed results on removal or prevention of biofilm in isolation from 
the overall metric on wound percent area reduction. We note that FDA 
recommends sharp debridement alone as an effective method to remove the 
biofilm and necrotic tissue in a chronic wound (Bettle, et al., 2023). 
We question whether the results describing the average percent area 
reduction in wounds transitioning from a nonhealing state to a healing 
state are sufficient to show substantial clinical improvement in 
removal or prevention of biofilm. We further question whether the 
results in percent area reduction can be attributed to debridement 
combined with application of OCM\TM\ as opposed to debridement alone 
because it is unclear if debridement was performed on all participants 
in the retrospective control group. Furthermore, we note that only the 
effects of historic standard of care treatments administered prior to 
the start of the study to patients in the control group were included 
for analysis. While one of the selection criteria for study 
participants was having failed prior treatment, neither the abstract 
nor interim analysis discussed how other variables, such as age and 
comorbidities, may have contributed to treatment failure, or which 
specific treatments failed in each of the six control group 
participants. We note that not all patients in the control group 
received, or were eligible to receive, the same standard of care 
treatments prior to the study and did not receive any skin substitute 
or wound dressing treatments during the study as a comparison to the 
test group patients that were treated with OCM\TM\. Due to the stated 
limitations in the

[[Page 59331]]

study as previously described, we do not believe that the applicant has 
demonstrated that OCM\TM\ offers a substantial clinical improvement 
over existing treatments.
    Finally, the sample size of 19 individuals (six of whom were 
assigned to the control group) in the Simman et al. (2023) study limits 
the generalizability of the findings. Therefore, we question whether 
OCM\TM\ has superior clinical outcomes and healing for DFUs compared to 
the standard of care or the predicate or reference devices. 
Additionally, we note that the Simman et al. (2023) study abstract and 
interim analysis were sponsored by the manufacturer and have not been 
published, and therefore are not based on independent and peer-reviewed 
findings.
    In addition to the Simman et al. (2023) study (including the 
abstract and interim results), in support of its first claim, the 
applicant submitted two posters presenting results from limited case 
studies investigating two patients who received treatment using OCM\TM\ 
combination therapy at the point of care. The first poster (Black, et 
al., 2023) discussed the treatment of two patients seeking treatment 
for DFUs at a wound care clinic: (1) a 75-year-old female patient who 
developed a DFU on her right third toe whose DFU wound progressed from 
nonhealing to healing after one application of the combination OCM\TM\ 
therapy; and (2) a 65-year-old female patient with a history of 
diabetes and a blister of 3-month duration that progressed from 
nonhealing (after treatment with collagen powder, a gauze covering, an 
absorbent dressing, and a protective bandage) to completely closed 
after nine applications of the combination OCM\TM\ therapy over 63 
days. The study authors concluded that these case studies demonstrated: 
(1) rapid and durable healing of chronic/nonhealing wounds in two 
patients with diabetes who received the combination therapy for their 
chronic wounds; (2) significantly faster closure of a DFU within 1 week 
using OCM\TM\ combination therapy than the average healing rate of 84 
days for a 1-3 cm\2\ plantar ulcer managed using standard care 
practices; and (3) that early treatment of chronic/nonhealing wounds 
with OCM\TM\ combination therapy improves outcomes and can lead to 
complete closure.
    Similarly, the second poster (Barrett et al. (2023) presented 
results from a case study of two patients who received follow-up care 
at an outpatient wound center: (1) a 58-year-old male patient with a 
distal plantar lateral ulceration with infection, which required 
hospitalization; and (2) a 56-year-old male patient with leg trauma 
that had obliterated the patient's anterior tibial and peroneal 
arteries, leaving him with single vessel runoff to the left foot via 
the posterior tibial artery. In the first patient, after 5 weeks of 
initial negative pressure wound therapy following surgery, the 
percentage area reduction of the wound was 19 percent. In comparison, 
after three weekly follow-up applications of OCM\TM\ combination 
therapy, the patient's percentage area reduction was 95 percent. In the 
second patient, the amputation site was noted as completely necrotic, 
and therefore not a candidate for standard of care negative pressure 
wound therapy due to poor skin condition, ischemia, and hyperalgesia. 
It was noted that after three applications of OCM\TM\ combination 
therapy, there was a significant improvement in the wound depth and 
tissue color, with visible epithelialization at the wound edges despite 
the patient's obvious ischemia. It was noted that the wound size 
improved and completely healed between the fourth and fifth application 
of OCM\TM\ combination therapy and after the seventh application of 
OCM\TM\ combination therapy. The researchers concluded that the case 
studies demonstrate complete and rapid healing of refractory DFUs in 
two patients with diabetes who had previously undergone lower extremity 
amputations and that early use of OCM\TM\ combination therapy has the 
potential to reduce the rate of amputations and improve patients' 
quality of life.
    We note that both case studies (Barrett et al. (2023) and (Black, 
et al., 2023), were sponsored by the manufacturer and only had two 
study participants treated with OCM\TM\ combination therapy, which 
limits the generalizability of the findings. Although the studies 
suggest that the two participants treated with OCM\TM\ combination 
therapy showed transition to a healing state subsequent to the 
application of OCM\TM\, the results varied widely in terms of number of 
applications needed to achieve positive results and treatment duration. 
Further, these case studies provide no direct comparison to the 
standard of care treatment or the predicate or reference devices. We 
note that eligibility for standard of care treatments also varied 
across patients and resulted in varying degrees of percent area 
reduction or wound closure from prior treatments before application of 
OCM\TM\ combination therapy. While in one patient, the study showed an 
improved clinical outcome in percentage area reduction (19 percent to 
95 percent) with treatment utilizing OCM\TM\ combination therapy, we 
note that the treatment including OCM\TM\ was not only completed 
subsequent to standard of care treatment with a collagen wound 
protectant, but also delivered to the same individual rather than as a 
comparison to standard of care treatments in a control group.
    We question whether the submitted evidence adequately supports the 
claim that OCM\TM\ has superior clinical outcomes and healing for DFU 
compared to the standard of care. We would be interested in additional 
information to demonstrate whether the nominated device demonstrates a 
substantial clinical improvement in comparison to similar collagen-
based matrix devices.
    In the second claim, the applicant asserted that OCM\TM\ provides 
faster healing rates than standard of care for VLUs. However, based on 
the evidence submitted, we note the following concerns: (1) reliance on 
unpublished studies; and (2) a lack of any documentation indicating the 
study authors, study description, methods, limitations, information on 
standard of care treatment for the comparison or control groups, 
analysis, or discussion. The only data provided were in the form of two 
tables. One table \56\ provided demographic information for the study 
participants such as race, age, gender, presence of VLUs, 
comorbidities, wound area, and wound age; however, there is no 
indication of how many initial study participants were included in the 
final results or how many were assigned to either the treatment or 
control group receiving the standard of care. The other table \57\ 
presented one row of data from the final results of a randomized 
controlled trial on VLUs showing an average percent area reduction of 
66 percent at 12 weeks in OCM\TM\ treatment group (there was no 
comparison to the standard of care treatment group) and an average 
percent area reduction of 34 percent at 4 weeks in the OCM\TM\ 
treatment group compared to an average percent area reduction of 31 
percent at 4 weeks in the standard of care group. Due to the lack of a 
study report, we have insufficient information to adequately assess 
this study or make a determination as to whether the study supports the 
claim that OCM\TM\

[[Page 59332]]

provides faster healing rates than standard of care for VLU.
---------------------------------------------------------------------------

    \56\ Demographics for RCT in VLU (no author or publication date 
given).
    \57\ Randomized Controlled Trial in Venous Leg Ulcers 
(NCT05291169) (no author or publication date given).
---------------------------------------------------------------------------

    In order to demonstrate substantial clinical improvement over 
currently available treatments, we consider supporting evidence, 
preferably published peer-reviewed clinical trials, that shows improved 
clinical outcomes, such as reduction in mortality, complications, 
subsequent interventions, future hospitalizations, recovery time, pain, 
or a more rapid beneficial resolution of the disease process compared 
to the standard of care. Additional supporting evidence, preferably 
published peer-reviewed clinical trials, that shows these improved 
clinical outcomes would help inform our assessment of whether OCM\TM\ 
demonstrates substantial clinical improvement over existing 
technologies.
    In the third claim, the applicant asserted that OCM\TM\ provides 
superior clinical outcomes for patients who could not qualify for 
clinical trials due to comorbidities, and in the fourth claim, the 
applicant stated that OCM\TM\ improved results when compared to results 
with standard of care for patients who failed prior treatment. The 
applicant used the same pair of documents as supporting evidence for 
both the third and fourth claims: (1) a case study by 16 independent 
investigators (Bettle, et al., 2023), and (2) a final summary table 
\58\ of the results of that case study. In the case study by the 16 
independent investigators, OCM\TM\ combination therapy was administered 
to 65 patients with wound ages ranging from 12 weeks to 15 years who 
failed prior treatment, including six patients with prior failed 
cellular tissue product therapies. Patients were not otherwise 
subjected to inclusion or exclusion criteria. According to the 
applicant, the findings by the 16 independent investigators showed 77 
percent of wounds were closed by 12 weeks and the average area 
reduction was 90 percent. Wounds treated included DFUs, VLUs, pressure 
injuries, arterial, pyoderma, hematomas, surgical, and trauma. We note 
that the study lacked direct comparison to a standard of care 
treatment. Rather, the study compared patient data to standardized data 
on wound closure and mean time to total wound closure by wound type 
based on standardized data from the U.S. Wound Registry.
---------------------------------------------------------------------------

    \58\ OCM treating Multiple Etiologies Final Trial Data (no 
author or publication date given.
---------------------------------------------------------------------------

    We question whether the submitted evidence adequately supports the 
claims that OCM\TM\ provides superior clinical outcomes for patients 
who could not qualify for clinical trials, due to comorbidities, or 
that OCM\TM\ improved results when compared to results with standard of 
care for patients who failed prior treatment. We would welcome further 
investigation with comparators to help determine whether the device 
demonstrates substantial clinical improvement over currently available 
treatments in the clinical setting where it is most likely to be used.
    In its fifth claim, the applicant asserted that in vitro (Davis, et 
al., 2023) and in vivo (Davis, Jozic, et al., 2023) study results 
demonstrate antimicrobial properties and patient safety. The applicant 
further asserted that OCM\TM\ addresses an unmet medical need, stating 
that no other product demonstrates antimicrobial properties and leads 
to complete wound healing. In the in vivo study (Davis, Jozic, et al., 
2023), researchers made 31 deep reticular wounds across the 
paravertebral and thoracic areas on each of specific pathogen-free 
pigs. Pathogenic strains of Methicillin-Resistant Staphylococcus Aureus 
(USA300) or Pseudomonas Aeruginosa (ATCC 27312), prepared as 106 CFU/ml 
inoculum suspensions, were used to inoculate all wounds within 20 
minutes after wounding followed by application of polyurethane 
dressings (Tegaderm, 3M, USA) for 72 hours before being treated. 
Subsequent treatment consisted of OCM\TM\ alone in one test group, 
OCM\TM\ plus a skin protectant in another test group, Aquacel Ag 
Advantage in the positive control group, or the wounds were left 
untreated in the negative control group. We note that the only in vivo 
study (Davis, Jozic, et al., 2023) with direct comparison to a skin 
protectant was conducted on non-human subjects (pigs). We question 
whether these data can be extrapolated to demonstrate significant 
clinical improvement in humans. In addition, according to the 
applicant, the in vitro study (Davis, et al., 2023) showed OCM\TM\ 
significantly inhibiting Methicillin-resistant Staphylococcus aureus 
and Pseudomonas aeruginosa compared to negative controls. We note that 
the in vitro study (Davis, Jozic, et al., 2023) lacked a direct 
comparison to performance of other similar skin protectant products or 
wound therapies besides infection control methods such as silver 
sulfadiazine or Mupirocin antibiotic. We further note that both the in 
vitro and in vivo studies were submitted as poster presentations and 
that the studies have not been published and peer-reviewed in full.
    We question whether the submitted evidence adequately supports the 
claims that OCM\TM\ demonstrates antimicrobial properties and patient 
safety. Additional supporting evidence, preferably published peer-
reviewed clinical trials, that demonstrates improved clinical outcomes, 
such as reduction in mortality, complications, subsequent 
interventions, future hospitalizations, recovery time, pain, or a more 
rapid beneficial resolution of the disease process, would help inform 
our assessment of whether OCM\TM\ demonstrates substantial clinical 
improvement over the standard of care and existing technologies.
    For its sixth claim, the applicant asserted that study results 
demonstrated patient safety of OCM\TM\. In support of this claim, the 
applicant provided one consumer research study--Princeton Consumer 
Research Corp. (2019)--of 25 subjects showing no immediate allergic 
reaction to OCM\TM\. We note that, similar to our previously stated 
concerns, the study did not include a direct comparison to predicate or 
reference devices despite claiming an improvement over standard of care 
treatment. Additionally, this study was also sponsored by the 
manufacturer and, therefore, not an independent study. Furthermore, 
since this study only included one type of adverse effect 
(allergenicity), and was limited to only 25 research subjects, there 
are limitations in demonstrating safety. We note that the submitted 
evidence does not adequately support the claims that OCM\TM\ 
demonstrates substantial clinical improvement in product safety in 
comparison to similar products.
    Finally, we note that OCM\TM\ may not demonstrate that it 
substantially improves the diagnosis or treatment of an illness when 
compared to the benefits of other available treatments. OCM\TM\ was 
determined to be substantially equivalent to a legally marketed device, 
the SweetBio Apis, which received 510(k) clearance on April 29, 2019. 
The FDA 510(k) summary for OCM\TM\ indicated that both devices share 
similar technological characteristics. Per FDA,\59\ the main 
differences between OCM\TM\ and the predicate are the specific collagen 
source (OCM\TM\ uses whitefish skin-derived collagen, while the 
SweetBio Apis uses porcine skin-derived collagen) and the specific 
identity of the supplemental components (which serve the same 
fundamental purpose in enabling each wound dressing to achieve the 
shared intended use).
---------------------------------------------------------------------------

    \59\ The SweetBio Apis is FDA cleared and marketed under 510(k) 
since 2019 (FDA 510(k)) letter: https://www.accessdata.fda.gov/cdrh_docs/pdf21/K211972.pdf.

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

[[Page 59333]]

    We are inviting public comment on whether OCM\TM\ meets the device 
category criterion at Sec.  419.66(c)(2)(i).
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that OCM\TM\ would be 
reported with HCPCS codes as shown in Table 57.
[GRAPHIC] [TIFF OMITTED] TP22JY24.076

    To meet the cost criterion for device pass-through payment status, 
a device must pass all three tests of the cost criterion for at least 
one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775), 
we generally use the lowest APC payment rate applicable for use with 
the nominated device when we assess whether a device meets the cost 
significance criterion, thus increasing the probability the device will 
pass the cost significance test. Beginning in CY 2017, we calculate the 
device offset amount at the HCPCS/CPT code level instead of the APC 
level (81 FR 79657). We note the applicant utilized the CY 2024 payment 
rates for the three tests of the cost criterion. For our calculations, 
we used APC 5052, which had a CY 2024 payment rate of $379.92 at the 
time the application was received.

[[Page 59334]]

HCPCS code 11042 in APC 5052 had a device offset amount of $0.04 at the 
time the application was received. According to the applicant, the cost 
of OCM\TM\ is $1,320.00.
    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The average 
reasonable cost of $1,320.00 of OCM\TM\ is 347.44 percent of the 
applicable APC payment amount for the service related to the category 
of devices of $379.92 (($1,320.00/$379.92) x 100 = 347.44 percent). 
Therefore, we believe OCM\TM\ meets the first cost significance 
requirement.
    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $1,320.00 for 
OCM\TM\ is 3,300,000.00 percent of the cost of the device-related 
portion of the APC payment amount for the related service of $0.04 
(($1,320.00/$0.04) x 100 = 3,300,000.00 percent). Therefore, we believe 
that OCM\TM\ meets the second cost significance requirement.
    The third cost significance requirement, at Sec.  419.66(d)(3), 
provides that the difference between the estimated average reasonable 
cost of the devices in the category and the portion of the APC payment 
amount for the device must exceed 10 percent of the APC payment amount 
for the related service. The difference between the estimated average 
reasonable cost of $1,320.00 for OCM\TM\ and the portion of the APC 
payment amount for the device of $0.04 is 347.43 percent of the APC 
payment amount for the related service of $379.92 ((($1,320.00-$0.04)/
$379.92) x 100 = 347.43 percent). Therefore, we believe that OCM\TM\ 
meets the third cost significance requirement.
    We are inviting public comment on whether OCM\TM\ meets the device 
pass-through payment criteria discussed in this section, including the 
cost criterion for device pass-through payment status.
(c) OPN NC
    SIS Medical AG submitted an application for a new device category 
for transitional pass-through payment status for OPN NC for CY 2025. 
Per the applicant, OPN NC percutaneous transluminal coronary 
angioplasty (PTCA) dilatation catheter is a sterile, single-use, rapid 
exchange catheter with a distal non-compliant double layer balloon 
attached to a flexible distal polymer shaft. The applicant explained 
that OPN NC is intended for balloon dilatation of the stenotic portion 
of a coronary artery or bypass graft stenosis for the purpose of 
improving myocardial perfusion. Per the applicant, the balloon 
dilatation catheter is also indicated for post deployment expansion of 
balloon expandable coronary stents. The applicant asserted that the 
device is inserted to position a balloon in a calcified coronary lesion 
where super-high pressure is used with the intention of achieving 
acceptable expansion of the lesion. Per the applicant, radiopaque 
balloon marker bands enable accurate positioning of the device, and 
shaft markers for brachial and femoral techniques are also in place. 
According to the applicant, OPN NC is intended for all patient 
populations.
    Please refer to the online application posting for OPN NC, 
available at https://mearis.cms.gov/public/publications/device-ptp/DEP231214L8XQC, for additional detail describing the device and the 
disease treated by the device.
    As stated previously, to be eligible for transitional pass-through 
payment under the OPPS, a device must meet the criteria at Sec.  
419.66(b)(1) through (4). With respect to the newness criterion at 
Sec.  419.66(b)(1), on March 14, 2022, the applicant received 510(k) 
clearance from FDA for OPN NC as a device intended for balloon 
dilatation of the stenotic portion of a coronary artery or bypass graft 
stenosis for the purpose of improving myocardial perfusion. The balloon 
dilatation catheter is also indicated for post deployment expansion of 
balloon expandable coronary stents. We received the application for a 
new device category for transitional pass-through payment status for 
OPN NC on December 14, 2023, which is within three years of the date of 
the initial FDA marketing authorization.
    We are inviting public comments on whether OPN NC meets the newness 
criterion at Sec.  419.66(b)(1).
    With respect to the eligibility criteria at Sec.  419.66(b)(3), the 
device must be an integral part of the service furnished, used for one 
patient only, come in contact with human tissue, and be surgically 
inserted or implanted, or applied in or on a wound or other skin 
lesion. Per the applicant, OPN NC is integral to the service provided 
and is used for one patient only. While the applicant did not 
explicitly state whether the device is surgically inserted or comes in 
contact with human tissue, per the device description, OPN NC is 
inserted into the patient for balloon dilation of the stenotic portion 
of a coronary artery or bypass graft stenosis for the purpose of 
improving myocardial perfusion.
    We are inviting public comments on whether OPN NC meets the 
eligibility criterion at Sec.  419.66(b)(3).
    With respect to the exclusion criterion at Sec.  419.66(b)(4), a 
device is not eligible to be considered for device pass-through payment 
if it is any of the following: (1) equipment, an instrument, apparatus, 
implement, or item of this type for which depreciation and financing 
expenses are recovered as depreciation assets as defined in Chapter 1 
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a 
material or supply furnished incident to a service (for example, a 
suture, customized surgical kit, or clip, other than a radiological 
site marker). The applicant did not address whether OPN NC is 
equipment, an instrument, apparatus, implement, or item of this type 
for which depreciation and financing expenses are recovered, or if OPN 
NC is a supply or material furnished incident to a service.
    We are inviting public comments on whether OPN NC meets the 
exclusion criterion at Sec.  419.66(b)(4).
    In addition to the criteria at Sec.  419.66(b)(1) through (4), the 
criteria for establishing new device categories are specified at Sec.  
419.66(c). The first criterion, at Sec.  419.66(c)(1), provides that 
CMS determines that a device to be included in the category is not 
appropriately described by any of the existing categories or by any 
category previously in effect, and was not being paid for as an 
outpatient service as of December 31, 1996. The applicant described OPN 
NC as a percutaneous transluminal coronary angioplasty (PTCA) 
dilatation catheter with a distal non-compliant double layer balloon 
attached to a flexible distal polymer shaft. According to the 
applicant, no previous or existing device categories for pass-through 
payment appropriately describe the OPN NC. Per the applicant, the 
device category, C1725 (Catheter, transluminal angioplasty, non-laser 
(may include guidance, infusion/perfusion capability)) does not 
appropriately describe OPN NC because OPN NC is a super high pressure, 
non-compliant double (twin) layer balloon. Based on the description the 
applicant provided, OPN NC is a transluminal vascular dilatation 
catheter with a balloon intended for dilatation of the stenotic portion 
of a coronary artery or

[[Page 59335]]

bypass graft stenosis for the purpose of improving myocardial 
perfusion, which is consistent with the devices described by C1725. In 
this context, we believe OPN NC may be similar to the devices described 
by C1725, and therefore, OPN NC may also be appropriately described by 
C1725.
    We are inviting public comment on whether OPN NC meets the device 
category criterion at Sec.  419.66(c)(1).
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines either of the following: (i) 
that a device to be included in the category has demonstrated that it 
will substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment; or (ii) for devices for which 
pass-through status will begin on or after January 1, 2020, as an 
alternative to the substantial clinical improvement criterion, the 
device is part of the FDA's Breakthrough Devices Program and has 
received FDA marketing authorization for the indication covered by the 
Breakthrough Device designation. According to the applicant, OPN NC 
represents a substantial clinical improvement over existing 
technologies in the management of patients with highly calcified 
coronary lesions by providing optimal lumen expansion and demonstrating 
better outcomes in lesion treatment compared to other devices.
    The applicant provided the following evidence to support its claim: 
three peer-reviewed studies; a PowerPoint presenting an indirect 
comparison of OPN NC versus another device, Shockwave Intravascular 
Lithotripsy (IVL) System with Shockwave C2 Coronary Intravascular 
Lithotripsy (IVL) Catheter (Shockwave),\60\ that uses intravascular 
lithotripsy (IVL) to treat calcium lesions; a spreadsheet summarizing 
the data presented in the PowerPoint document comparing OPN NC and 
Shockwave; and a background article providing an expert consensus 
statement from the Society for Cardiovascular Angiography & 
Interventions on management of in-stent restenosis and stent 
thrombosis.\61\ Table 58 summarizes the applicant's assertion regarding 
the substantial clinical improvement criterion. Please see the online 
posting for OPN NC for the applicant's complete statements regarding 
the substantial clinical improvement criterion and the supporting 
evidence provided.
---------------------------------------------------------------------------

    \60\ CMS approved an application for the Shockwave IVL System 
with Shockwave C2 Coronary IVL Catheter as a new device category for 
transitional pass-through payment status and established HCPCS code 
C1761 as a new device category effective July 1, 2021. We refer 
readers to the CY 2022 OPPS/ASC final rule with comment period (86 
FR 63577 through 63583) for a full discussion the Shockwave IVL 
System with Shockwave C2 Coronary IVL Catheter application and 
decision.
    \61\ 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 59336]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.077


[[Page 59337]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.078

BILLING CODE 4120-01-C
    After review of the information provided by the applicant, we have 
the following concerns regarding whether OPN NC meets the substantial 
clinical improvement criterion. The applicant presented the published 
results of one study of 50 patients undergoing optical coherence 
tomography (OCT)-guided percutaneous coronary interventions, including 
OPN NC, to treat calcified lesions (Natalia Pinilla-Echeverri, et al., 
2023). The retrospective study aimed to gain a better understanding of 
OPN NC calcium modification mechanisms, such as creating deep and wide 
calcium fractures during percutaneous coronary interventions with the 
intended clinical outcome of improving myocardial perfusion. Per the 
applicant, the study showed a primary efficacy endpoint of >=80 percent 
expansion of the mean reference lumen area achieved in 80 percent of 
the patients treated. The applicant also presented a retrospective 
study evaluating 326 highly resistant coronary lesions that had failed 
to achieve adequate post-dilatation luminal gain with conventional NC-
balloons (Secco et al., 2019). Per the study authors, an OPN NC balloon 
was inflated to achieve a uniform balloon expansion after the failed 
attempts with conventional NC-balloons. According to the authors, 413 
OPN NC balloons were used (1.26 per lesion), and angiographic success 
was achieved in 318 lesions (97.5 percent), procedural success was 
achieved in 315 lesions (96.6 percent), and technical success was 
achieved in 288 patients (90.5 percent). The study authors also 
reported that the OPN NC balloon alone was able to achieve adequate 
expansion in 288 cases (90.5 percent), while in 30 patients, rotational 
atherectomy was needed and performed because of the impossibility to 
cross the lesion with a proper sized OPN NC balloon. The applicant 
presented a third study focused on patients needing treatment of in-
stent restenosis (ISR) (Seiler et at., 2023). According to the authors, 
208 ISR lesions were treated in 188 patients. The study authors 
concluded that the use of OPN NC for treatment of ISR lesions was safe 
(primary endpoint of the study) and may lead to a low rate of target 
lesion/vessel failure (TLF/TVF) during long-term follow-up. We note 
that these studies were not randomized clinical trials with a 
comparator to demonstrate clinical improvement. Instead, the applicant 
presented results from registries using non-randomized, retrospective 
study designs without a control group, which we believe may reduce the 
strength of the evidence presented to support the claim. The authors 
noted in all three studies that randomized trials may be needed to 
compare OPN NC to other similar devices.
    Further, we also note that in one of the studies (Natalia Pinilla-
Echeverri, et al., 2023), the study authors indicated that use of other 
calcium lesion modification devices prior to applying

[[Page 59338]]

OPN NC to the patients in that study is a potential confounder that 
could result in overestimation of OPN NC effectiveness. The study 
authors stated that this was controlled by having an exclusive OCT 
pullback pre-OPN NC, but indicated that calcium plaque modification 
caused by other devices may not be evident on OCT. The study authors 
further noted that since other devices were used before OPN NC, they 
could not comment on calcium modification from OPN NC use upfront or an 
OPN NC-only strategy. We would welcome any additional evidence 
supporting the claim that that OPN NC provides optimal lumen expansion 
and the impact of using other calcium lesion modification devices prior 
to applying OPN NC to a patient.
    With regards to safety, in the Natalia Pinilla-Echeverri, et al. 
(2023) study, one patient was found to have had a flow limiting 
dissection requiring stent deployment; however, no coronary 
perforations or no-reflow were reported. In the Secco et al. (2019) 
study, three patients (0.9 percent) were reported to have experienced 
coronary rupture after balloon inflation and were successfully treated 
with stent implantation. In the Seiler, et al. (2023) study, coronary 
perforation was reported to have occurred twice (0.96 percent) with 
both successfully treated by balloon inflation and implantation of a 
covered stent; a total of nine (4.3 percent) locally limited, but flow 
limiting dissections were reported to have occurred and were 
successfully treated with implantation of a drug-eluting stent; 4 (1.9 
percent) cases of flow deterioration due to embolization of thrombotic 
material (no-reflow) were found; and one patient (0.5 percent) was 
reported to have suffered from immediate vessel closure after stent 
implantation. The application did not address whether the use of the 
device is safe beyond the data on safety endpoints presented in the 
studies provided. We would welcome additional studies or evidence 
discussing the risk of adverse events with the use of these types of 
non-compliant balloons.
    Finally, we are concerned that the evidence may not demonstrate 
that OPN NC substantially improves the treatment of an illness when 
compared to the benefits of other available treatments. The applicant 
asserted in a supporting document included in the application that OPN 
NC is not the only FDA-authorized device with an indication for balloon 
dilatation of the stenotic portion of a coronary artery or bypass graft 
stenosis for the purpose of improving myocardial perfusion and also an 
indication for post deployment expansion of balloon expandable coronary 
stents. OPN NC was determined to be substantially equivalent to a 
legally marketed device, the NC Euphora Rapid Exchange Balloon 
Dilatation Catheter (Medtronic Inc; K141090), which received 510(k) 
clearance on August 15, 2014. The FDA 510(k) summary for OPN NC 
indicated that the devices share similar technological characteristics. 
In fact, the FDA 510(k) summary indicated that OPN NC differs only in 
the rated burst pressure of the balloon. We note that the applicant did 
not compare the nominated device with the NC Euphora Rapid Exchange 
Balloon Dilatation Catheter, which we believe may be similar. While the 
applicant asserted that OPN NC is the only super-high pressure, non-
compliant twin layer balloon dilatation catheter available in the U.S. 
and the only device on the market of this nature and capability, we 
would be interested in additional information to demonstrate whether 
the nominated device demonstrates a substantial clinical benefit in 
comparison to other similar NC balloon devices.
    We are inviting public comment on whether OPN NC meets the 
substantial clinical improvement criterion at Sec.  419.66(c)(2).
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that OPN NC would be 
reported with HCPCS codes shown in Table 59.
[GRAPHIC] [TIFF OMITTED] TP22JY24.079

    To meet the cost criterion for device pass-through payment status, 
a device must pass all three tests of the cost criterion for at least 
one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775), 
we generally use the lowest APC payment rate applicable for use with 
the nominated device when we assess whether a device meets the cost 
significance criterion, thus increasing the probability the device will 
pass the cost significance test. Beginning in CY 2017, we calculate the 
device offset amount at the HCPCS/CPT code level instead of the APC 
level (81 FR 79657). We note the applicant did not provide details 
regarding the payment rates it applied for the three tests of the cost 
criterion. For our calculations, we used APC 5192, which had a CY 2023 
payment rate of $5,215.40 at the time the application was received. 
HCPCS code 92920 in APC 5192 had a CY 2023

[[Page 59339]]

device offset amount of $1609.99 at the time the application was 
received.
    We note that the applicant provided two cost amounts for OPN NC: 
(1) a price list showing the cost of OPN NC as $2,200.00; and (2) a 
product list that lists the cost of OPN NC as $1,200.00. We further 
note that the cost included on the product list provided by the 
applicant for OPN NC ($1,200.00) does not pass any of the three tests 
of the cost criterion, but the cost included on the price list for OPN 
NC ($2,200.00) passes all three tests of the cost criterion.
    When performed with the price list cost for OPN NC of $2,200.00, we 
note the following calculation outcomes: section 419.66(d)(1), the 
first cost significance requirement, provides that the estimated 
average reasonable cost of devices in the category must exceed 25 
percent of the applicable APC payment amount for the service related to 
the category of devices. The average reasonable cost of $2,200.00 for 
OPN NC is 42.18 percent of the applicable APC payment amount for the 
service related to the category of devices of $5,215.40 (($2,200.00/
$5,215.40) x 100 = 42.18 percent). Therefore, when utilizing the price 
list cost of $2,200.00 provided, we believe OPN NC meets the first cost 
significance requirement.
    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $2,200.00 for 
OPN NC is 136.65 percent of the cost of the device-related portion of 
the APC payment amount for the related service of $1,609.99 ($2,200.00/
$1,609.99) x 100 = 136.65 percent). Therefore, when utilizing the price 
list cost of $2,200.00 provided, we believe that OPN NC meets the 
second cost significance requirement.
    The third cost significance requirement, at Sec.  419.66(d)(3), 
provides that the difference between the estimated average reasonable 
cost of the devices in the category and the portion of the APC payment 
amount for the device must exceed 10 percent of the APC payment amount 
for the related service. The difference between the estimated average 
reasonable cost of $2,200.00 for OPN NC and the portion of the APC 
payment amount for the device of $1,609.99 is 11.31 percent of the APC 
payment amount for the related service of $5,215.40 ((($2,200.00-
$1,609.99)/$5,215.40) x 100 = 11.31 percent). Therefore, when utilizing 
the price list cost of $2,200.00 provided, we believe that OPN NC meets 
the third cost significance requirement.
    When performed with the product list cost for OPN NC of $1,200.00, 
we note the following calculation outcomes: section 419.66(d)(1), the 
first cost significance requirement, provides that the estimated 
average reasonable cost of devices in the category must exceed 25 
percent of the applicable APC payment amount for the service related to 
the category of devices. The average reasonable cost of $1,200.00 for 
OPN NC is 23.01 percent of the applicable APC payment amount for the 
service related to the category of devices of $5,215.40 (($1,200.00/
$5,215.40) x 100 = 23.01 percent). Therefore, when utilizing the 
product list cost of $1,200.00 provided, we believe OPN NC does not 
meet the first cost significance requirement.
    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $1,200.00 for 
OPN NC is 74.53 percent of the cost of the device-related portion of 
the APC payment amount for the related service of $1,609.99 ($1,200.00/
$1,609.99) x 100 = 74.53 percent). Therefore, when utilizing the 
product list cost of $1,200.00 provided, we believe OPN NC does not 
meet the second cost significance requirement.
    The third cost significance requirement, at Sec.  419.66(d)(3), 
provides that the difference between the estimated average reasonable 
cost of the devices in the category and the portion of the APC payment 
amount for the device must exceed 10 percent of the APC payment amount 
for the related service. The difference between the estimated average 
reasonable cost of $1,200.00 for OPN NC and the portion of the APC 
payment amount for the device of $1,609.99 is negative 7.86 percent of 
the APC payment amount for the related service of $5,215.40 
((($1,200.00-$1,609.99)/$5,215) x 100 = -7.86 percent). Therefore, when 
utilizing the product list cost of $1,200.00 provided, we believe that 
OPN NC does not meet the third cost significance requirement.
    Based on the conflicting amounts provided for the reasonable cost 
of OPN NC, we question whether OPN NC meets the cost significance 
criterion. We would welcome additional information regarding this 
inconsistency on the estimated average reasonable cost of OPN NC.
    We are inviting public comment on whether the OPN NC meets the 
device pass-through payment criteria discussed in this section, 
including the cost criterion for device pass-through payment status.
(d) OSCAR[supreg] Peripheral Multifunctional Catheter
    Biotronik, Inc. submitted an application for a new device category 
for transitional pass-through payment status for OSCAR[supreg] 
Peripheral Multifunctional Catheter (OSCAR[supreg]) for CY 2025. 
According to the applicant, OSCAR[supreg] is a tool used to simplify 
the treatment of peripheral artery disease (PAD), a disease process 
characterized by the narrowing of arteries that supply blood to the 
limbs, usually the legs. In severe cases PAD can cause tissue death and 
gangrene, leading to amputation. Per the applicant, OSCAR[supreg] can 
simplify the process of peripheral interventions, reduce the time 
required to perform the procedure and the need for repeat procedures, 
reduce the risk of complications associated with changing out multiple 
medical devices, minimize radiation exposure, and enhance patient 
comfort.
    Please refer to the online application posting for OSCAR[supreg], 
available at https://mearis.cms.gov/public/publications/device-ptp/DEP230601F6NM2, for additional detail describing the device and the 
disease treated by the device.
    As stated previously, to be eligible for transitional pass-through 
payment under the OPPS, a device must meet the criteria at Sec.  
419.66(b)(1) through (4). With respect to the newness criterion at 
Sec.  419.66(b)(1), on July 5, 2022, the applicant received 510k 
clearance from FDA for OSCAR[supreg] as a device to be used for 
percutaneous transluminal interventions in the peripheral vasculature 
to provide support during access into and to dilate stenoses in 
femoral, popliteal and infrapopliteal arteries. The product is also 
intended for injecting radiopaque contrast media for angiography. We 
received the application for a new device category for transitional 
pass-through payment status for OSCAR[supreg] on June 1, 2023, which is 
within three years of the date of the initial FDA marketing 
authorization.
    We are inviting public comments on whether OSCAR[supreg] meets the 
newness criterion at Sec.  419.66(b)(1).

[[Page 59340]]

    With respect to the eligibility criteria at Sec.  419.66(b)(3), the 
device must be an integral part of the service furnished, used for one 
patient only, come in contact with human tissue, and be surgically 
inserted or implanted, or applied in or on a wound or other skin 
lesion. The applicant did not explicitly state whether OSCAR[supreg] is 
integral to the service provided. While the applicant did not 
explicitly state whether the device is used for one patient only or 
whether it comes in contact with human tissue, per the device 
description, OSCAR[supreg] is surgically inserted into the lower 
extremity peripheral vascular system and is single-use. We are inviting 
public comments on whether OSCAR[supreg] meets the eligibility 
criterion at Sec.  419.66(b)(3).
    With respect to the exclusion criterion at Sec.  419.66(b)(4), a 
device is not eligible to be considered for device pass-through payment 
if it is any of the following: (1) equipment, an instrument, apparatus, 
implement, or item of this type for which depreciation and financing 
expenses are recovered as depreciation assets as defined in Chapter 1 
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a 
material or supply furnished incident to a service (for example, a 
suture, customized surgical kit, or clip, other than a radiological 
site marker). The applicant did not indicate whether OSCAR[supreg] is 
equipment, an instrument, apparatus, implement, or item of this type 
for which depreciation and financing expenses are recovered, or if 
OSCAR[supreg] is a supply or material furnished incident to a service.
    We are inviting public comments on whether OSCAR[supreg] meets the 
exclusion criterion at Sec.  419.66(b)(4).
    In addition to the criteria at Sec.  419.66(b)(1) through (4), the 
criteria for establishing new device categories are specified at Sec.  
419.66(c). The first criterion, at Sec.  419.66(c)(1), provides that 
CMS determines that a device to be included in the category is not 
appropriately described by any of the existing categories or by any 
category previously in effect, and was not being paid for as an 
outpatient service as of December 31, 1996. The applicant asserted that 
OSCAR[supreg] is a combination device authorized by FDA with an 
indication to diagnose and treat peripheral vascular lesions, identify 
obstructions, and cross the areas of obstruction and restore blood flow 
using a single system. According to the applicant, no previous or 
existing device categories for pass-through payment appropriately 
describe OSCAR[supreg]. Per the applicant, OSCAR[supreg] has the 
functionality of multiple devices currently used during lower extremity 
peripheral vasculature interventions. The applicant provided multiple 
HCPCS codes that could describe some of the components of 
OSCAR[supreg]; however, only one of the codes provided, C1725, is a 
device category HCPCS code, and, therefore, C1725 is the only device 
category we evaluated for this criterion. Per the applicant, the device 
category C1725 (Catheter, transluminal angioplasty, non-laser (may 
include guidance, infusion/perfusion capability)) does not 
appropriately describe OSCAR[supreg] because OSCAR[supreg] can cover 
the functionality of support catheters, several sizes of angioplasty 
balloons, chronic total occlusion crossing devices, reentry catheters, 
resistant lesion preparation devices, and dissection-reducing devices. 
According to the applicant, current pass-through coding does not 
adequately capture OSCAR[supreg]'s full functionality and the added 
clinical and economic value derived from its simplification of 
peripheral vascular interventions.
    We note, based on the description the applicant provided, that when 
the OSCAR[supreg] support catheter and OSCAR[supreg] dilator are 
combined with the OSCAR[supreg] PTA balloon, the device is used to 
complete a transluminal angioplasty, which is consistent with the 
devices described by C1725. In this context, we believe that 
OSCAR[supreg] may be similar to the devices described by C1725 and, 
therefore, may be appropriately described by C1725.
    We are inviting public comment on whether OSCAR[supreg] meets the 
device category criterion at Sec.  419.66(c)(1).
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines either of the following: (i) 
that a device to be included in the category has demonstrated that it 
will substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment; or (ii) for devices for which 
pass-through status will begin on or after January 1, 2020, as an 
alternative to the substantial clinical improvement criterion, the 
device is part of the FDA's Breakthrough Devices Program and has 
received FDA marketing authorization for the indication covered by the 
Breakthrough Device designation. The applicant claimed that 
OSCAR[supreg] represents a substantial clinical improvement over 
existing technologies in the diagnosis and management of peripheral 
artery disease because it uses less equipment, cuts down procedure 
time, and mitigates risks like vascular damage, infections, and 
radiation exposure, thereby enhancing clinical efficiency and safety.
    The applicant provided four background documents supporting its 
substantial clinical improvement claim.\62\ Please see the online 
posting for OSCAR[supreg] for the applicant's complete statements 
regarding the substantial clinical improvement criterion and the 
supporting evidence provided.
---------------------------------------------------------------------------

    \62\ Background articles are not included in the following table 
but can be accessed via the online posting for the technology.

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

[[Page 59341]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.080

    After review of the information provided by the applicant, we have 
the following concerns regarding whether OSCAR[supreg] meets the 
substantial clinical improvement criterion. First, the applicant did 
not submit peer-reviewed or published clinical evidence to substantiate 
clinical improvement over existing devices. The applicant submitted 
four background documents in support of OSCAR[supreg]: (1) a clinical 
benefit table, (2) a presentation on the Evaluation of Market 
Acceptance, (3) the OSCAR[supreg] US Evaluation of Market Acceptance 
Report, and the (4) OSCAR[supreg] Clinical Evaluation Report. All four 
of these documents rely on data from the Evaluation of Market 
Acceptance. We note these documents are not published or peer-reviewed, 
and reflect data collected for marketing purposes rather than clinical 
improvement purposes. The data included appear to be opinion-based 
survey questions asked of

[[Page 59342]]

physicians recruited by the applicant for the purpose of the Evaluation 
of Market Acceptance and note that these documents suggest an implicit 
bias. We question the link between these documents and the claims the 
applicant made that OSCAR[supreg] shows substantial clinical 
improvement because it uses less equipment, cuts down procedure time, 
and mitigates risks like vascular damage, infections, and radiation 
exposure, thereby enhancing clinical efficiency and safety. We request 
clarification on how the support documents directly relate to the 
substantial clinical improvement claims.
    Further, we question how a collection of devices currently 
available on the market consolidated into a single packaged product 
demonstrates substantial clinical improvement. According to the 
applicant, with OSCAR[supreg] some procedures may be performed with a 
single device which cuts down procedure time and mitigates risks like 
vascular damage, infections, and radiation exposure, thereby enhancing 
clinical efficiency and safety. The applicant asserted several benefits 
of using OSCAR[supreg] over multiple devices, including reducing (1) 
the need to remove and replace multiple devices, which may reduce the 
incidence of complications like infection and vessel damage; (2) the 
need to use ill-fitting devices; (3) the need for multiple guidewires 
in several procedures; and (4) the incidence of complications, such as 
infections and vessel damage. However, we did not receive comparative 
data supporting the claim that OSCAR[supreg] offers superiority over 
currently available treatments in terms of clinical benefit or safety. 
The evidence provided did not discuss any advantages of using a single 
system of devices rather than multiple individual devices with diverse 
functionalities. We would welcome any additional evidence supporting 
these claims.
    Furthermore, per the applicant, OSCAR[supreg] is effective in 
preparing intravascular lesions for advanced interventions, 
particularly stenting, and by ensuring optimal lesion preparation, 
OSCAR[supreg] elevates the success rate of these procedures, enhances 
patient safety, and streamlines institutional operations. According to 
the applicant, OSCAR[supreg] handles chronic total occlusions (CTOs) 
and incorporates reentry capabilities, features traditionally found in 
standalone devices. The applicant asserted this integration enhances 
patient safety, simplifies procedures, and elevates the efficiency of 
operations. However, we note that the applicant did not provide 
clinical information in support of these claims. Again, we would 
welcome any additional evidence supporting these claims.
    Finally, we question whether OSCAR[supreg] can be sufficiently 
distinguished from similar existing technologies to demonstrate 
substantial clinical improvement. OSCAR[supreg] was determined to be 
substantially equivalent to a legally marketed device, the INFINITY 
Angioplasty Balloon Catheter\TM\, which received 510(k) clearance on 
May 20, 2020. The FDA 510(k) summary for OSCAR[supreg] indicated that 
the devices share similar technological characteristics, and that 
OSCAR[supreg] differs only in that it combines support catheters to be 
used with the dilator and balloon catheter. We did not receive data 
demonstrating how OSCAR[supreg] offers a substantial clinical 
improvement compared to the INFINITY Angioplasty Balloon Catheter. We 
would be interested in additional information to demonstrate whether 
the nominated device demonstrates a substantial clinical benefit in 
comparison to INFINITY Angioplasty Balloon Catheter.
    Further, per the applicant, there are six device types that it 
believed OSCAR[supreg] is most closely related to: (1) workhorse 
guidewires (Abbott, Boston Scientific, Terumo, Medtronic, Biotronik, 
Cook Medical, Cordis); (2) premium guidewires (Abbott, Asahi Intecc, 
Boston Scientific, Cook Medical and more); (3) workhorse & premium 
support catheters (Philips, Boston Scientific, Cook Medical, Medtronic, 
Asahi Intecc, Teleflex and more); (4) angioplasty balloons (Abbott, BD 
Interventional, Biotronik, Cook Medical, Medtronic and more); (5) 
lesion preparation balloons (Philips, Medtronic, BD Interventional and 
Cagent Vascular); and (6) chronic total occlusion and reentry devices. 
We do not believe that OSCAR[supreg] is similar to the workhorse 
guidewires and premium guidewires listed because OSCAR[supreg] does not 
include guidewires. We would welcome additional information 
illustrating how OSCAR[supreg] is similar to the listed workhorse 
guidewires and premium guidewires and evidence demonstrating the 
benefits of OSCAR[supreg] over these other devices.
    While we note that OSCAR[supreg] is comparable, we did not receive 
data demonstrating how OSCAR[supreg] offers a substantial clinical 
improvement compared to the workhorse and premium support catheters, 
angioplasty balloons, lesion preparation balloons, or chronic total 
occlusion and reentry devices and would be interested in additional 
evidence demonstrating the substantial clinical benefits of 
OSCAR[supreg] over these other devices.
    Additional evidence comparing OSCAR[supreg] to existing 
technologies would be particularly helpful to determine whether the 
device demonstrates substantial clinical improvements over currently 
available treatments in the clinical setting where it is most likely to 
be used. Specifically, we would welcome published peer-reviewed 
clinical trials that show improved clinical outcomes, such as reduction 
in mortality, complications, subsequent interventions, future 
hospitalizations, recovery time, pain, or a more rapid beneficial 
resolution of the disease process compared to the standard of care.
    We are inviting public comment on whether OSCAR[supreg] meets the 
device category criterion at Sec.  419.66(c)(2)(i).
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that OSCAR[supreg] 
would be reported with HCPCS codes as shown in Table 61.
BILLING CODE 4120-01-P

[[Page 59343]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.081


[[Page 59344]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.082


[[Page 59345]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.083

BILLING CODE 4120-01-C
    To meet the cost criterion for device pass-through payment status, 
a device must pass all three tests of the cost criterion for at least 
one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775), 
we generally use the lowest APC payment rate applicable for use with 
the nominated device when we assess whether a device meets the cost 
significance criterion, thus increasing the probability the device will 
pass the cost significance test. Beginning in CY 2017, we calculate the 
device offset amount at the HCPCS/CPT code level instead of the APC 
level (81 FR 79657). We note the applicant used the CY 2023 payment 
rates for the three tests of the cost criterion. For our calculations, 
we used APC 5183, which had a CY 2023 payment rate of $2,978.97 at the 
time the application was received. HCPCS code 75625 in APC 5183 had a 
CY 2023 device offset amount of $530.85 at the time the application was 
received.\63\ According to the applicant, the cost of OSCAR[supreg] is 
$2,020.00.
---------------------------------------------------------------------------

    \63\ We note the applicant selected APC 5192 and an APC payment 
rate of $5,061.89 for the three tests of the cost criteria. However, 
for our calculation, we selected APC 5183, which we believe had the 
lowest applicable APC payment rate of $2,978.97 found in Addendum P 
to the CY 2023 OPPS/ASC final rule with comment period, among the 
APCs related to the HCPCS/CPT codes provided by the applicant. We 
selected the HCPCS/CPT code level device offset amount of $530.85 
related to HCPCS 75625 in APC 5183. Based on our initial assessment 
for this proposed rule, using the APC payment rate of $2,978.97 and 
the device offset amount of $530.85 would result in OSCAR[supreg] 
meeting the cost significance requirement.
---------------------------------------------------------------------------

    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The estimated 
average reasonable cost of $2,020.00 for OSCAR is 67.81 percent of the 
applicable APC payment amount for the service related to the category 
of devices of $2,978.97 (($2,020.00/$2,978.97) x 100 = 67.81 percent). 
Therefore, we believe OSCAR meets the first cost significance 
requirement.
    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $2,020.00 for 
OSCAR[supreg] is 380.52 percent of the cost of the device-related 
portion of the APC payment amount for the related service of $530.85 
(($2,020.00/$530.85) x 100 = 380.52 percent). Therefore, we believe 
that OSCAR[supreg] meets the second cost significance requirement.
    The third cost significance requirement, at Sec.  419.66(d)(3), 
provides that the difference between the estimated average reasonable 
cost of the devices in the category and the portion of the APC payment 
amount for the device must exceed 10 percent of the APC payment amount 
for the related service. The difference between the estimated average 
reasonable cost of $2,020.00 for OSCAR[supreg] and the portion of the 
APC payment amount for the device of $530.85 is 49.99 percent of the 
APC payment amount for the related service of $2978.97 ((($2,020.00-
$530.85)/$ 2,978.97) x 100 = 49.99 percent). Therefore, we believe that 
OSCAR[supreg] meets the third cost significance requirement.
    We are inviting public comment on whether the OSCAR[supreg] meets 
the device pass-through payment criteria discussed in this section, 
including the cost criterion for device pass-through payment status.

B. Proposed Device-Intensive Procedures

1. Background
    Under the OPPS, prior to CY 2017, device-intensive status for 
procedures was determined at the APC level for APCs with a device 
offset percentage greater than 40 percent (79 FR 66795). Beginning in 
CY 2017, CMS began determining device-intensive status at the HCPCS 
code level. In assigning device-intensive status to an APC prior to CY 
2017, the device costs of all the procedures within the APC were 
calculated and the geometric mean device offset of all of the 
procedures had to exceed 40 percent. Almost all of the procedures 
assigned to device-intensive APCs utilized devices, and the device 
costs for the associated HCPCS codes exceeded the 40-percent threshold. 
The no cost/full credit and partial credit device policy (79 FR 66872 
through

[[Page 59346]]

66873) applies to device-intensive procedures and is discussed in 
detail in section IV.B.4 of this proposed rule. A related device policy 
was the requirement that certain procedures assigned to device-
intensive APCs require the reporting of a device code on the claim (80 
FR 70422) and is discussed in detail in section IV.B.3 of this proposed 
rule. For further background information on the device-intensive APC 
policy, we refer readers to the CY 2016 OPPS/ASC final rule with 
comment period (80 FR 70421 through 70426).
a. HCPCS Code-Level Device-Intensive Determination
    As stated earlier, prior to CY 2017, under the device-intensive 
methodology we assigned device-intensive status to all procedures 
requiring the implantation of a device that were assigned to an APC 
with a device offset greater than 40 percent and, beginning in CY 2015, 
that met the three criteria as listed. Historically, the device-
intensive designation was at the APC level and applied to the 
applicable procedures within that APC. In the CY 2017 OPPS/ASC final 
rule with comment period (81 FR 79658), we changed our methodology to 
assign device-intensive status at the individual HCPCS code level 
rather than at the APC level. Under this policy, a procedure could be 
assigned device-intensive status regardless of its APC assignment, and 
device-intensive APC designations were no longer applied under the OPPS 
or the ASC payment system.
    We believe that a HCPCS code-level device offset is, in most cases, 
a better representation of a procedure's device cost than an APC-wide 
average device offset based on the average device offset of all of the 
procedures assigned to an APC. Unlike a device offset calculated at the 
APC level, which is a weighted average offset for all devices used in 
all of the procedures assigned to an APC, a HCPCS code-level device 
offset is calculated using only claims for a single HCPCS code. We 
believe that this methodological change results in a more accurate 
representation of the cost attributable to implantation of a high-cost 
device, which ensures consistent device-intensive designation of 
procedures with a significant device cost. Further, we believe a HCPCS 
code-level device offset removes inappropriate device-intensive status 
for procedures without a significant device cost that are granted such 
status because of their APC assignment.
    Under our existing policy, procedures that meet the criteria listed 
in section IV.C.1.b of this proposed rule are identified as device-
intensive procedures and are subject to all the policies applicable to 
procedures assigned device-intensive status under our established 
methodology, including our policies on device edits and no cost/full 
credit and partial credit devices discussed in sections IV.C.3 and 
IV.C.4 of this proposed rule.
b. Use of the Three Criteria To Designate Device-Intensive Procedures
    We clarified our established policy in the CY 2018 OPPS/ASC final 
rule with comment period (82 FR 52474), where we explained that device-
intensive procedures require the implantation of a device and 
additionally are subject to the following criteria:
     All procedures must involve implantable devices that would 
be reported if device insertion procedures were performed;
     The required devices must be surgically inserted or 
implanted devices that remain in the patient's body after the 
conclusion of the procedure (at least temporarily); and
     The device offset amount must be significant, which is 
defined as exceeding 40 percent of the procedure's mean cost.
    We changed our policy to apply these three criteria to determine 
whether procedures qualify as device-intensive in the CY 2015 OPPS/ASC 
final rule with comment period (79 FR 66926), where we stated that we 
would apply the no cost/full credit and partial credit device policy--
which includes the three criteria listed previously--to all device-
intensive procedures beginning in CY 2015. We reiterated this position 
in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70424), 
where we explained that we were finalizing our proposal to continue 
using the three criteria established in the CY 2007 OPPS/ASC final rule 
with comment period for determining the APCs to which the CY 2016 
device intensive policy will apply. Under the policies we adopted in 
CYs 2015, 2016, and 2017, all procedures that require the implantation 
of a device and meet the previously described criteria are assigned 
device-intensive status, regardless of their APC placement.
2. Proposed Device-Intensive Procedure Policy
    As part of our effort to better capture costs for procedures with 
significant device costs, in the CY 2019 OPPS/ASC final rule with 
comment period (83 FR 58944 through 58948), for CY 2019, we modified 
our criteria for device-intensive procedures. We had heard from 
interested parties that the criteria excluded some procedures that 
interested parties believed should qualify as device-intensive 
procedures. Specifically, we were persuaded by interested party 
arguments that procedures requiring expensive surgically inserted or 
implanted devices that are not capital equipment should qualify as 
device-intensive procedures, regardless of whether the device remains 
in the patient's body after the conclusion of the procedure. We agreed 
that a broader definition of device-intensive procedures was warranted, 
and made two modifications to the criteria for CY 2019 (83 FR 58948). 
First, we allowed procedures that involve surgically inserted or 
implanted single-use devices that meet the device offset percentage 
threshold to qualify as device-intensive procedures, regardless of 
whether the device remains in the patient's body after the conclusion 
of the procedure. We established this policy because we no longer 
believe that whether a device remains in the patient's body should 
affect a procedure's designation as a device-intensive procedure, as 
such devices could, nonetheless, comprise a large portion of the cost 
of the applicable procedure. Second, we modified our criteria to lower 
the device offset percentage threshold from 40 percent to 30 percent, 
to allow a greater number of procedures to qualify as device intensive. 
We stated that we believe allowing these additional procedures to 
qualify for device-intensive status will help ensure these procedures 
receive more appropriate payment in the ASC setting, which will help 
encourage the provision of these services in the ASC setting. In 
addition, we stated that this change would help to ensure that more 
procedures containing relatively high-cost devices are subject to the 
device edits, which leads to more correctly coded claims and greater 
accuracy in our claims data. Specifically, for CY 2019 and subsequent 
years, we finalized that device-intensive procedures will be subject to 
the following criteria:
     All procedures must involve implantable devices assigned a 
CPT or HCPCS code;
     The required devices (including single-use devices) must 
be surgically inserted or implanted; and
     The device offset amount must be significant, which is 
defined as exceeding 30 percent of the procedure's mean cost (83 FR 
58945).
    In addition, to further align the device-intensive policy with the 
criteria used for device pass-through payment status, we finalized, for 
CY 2019 and subsequent years, that for purposes of

[[Page 59347]]

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

[[Page 59348]]

describing procedures requiring the insertion or implantation of 
devices that do not yet have claims data (from either the new HCPCS 
code or any predecessor code), we apply a default device offset set at 
31 percent.
    As we stated previously, the purpose of applying the default device 
offset to new codes that describe procedures that implant or insert 
devices is to ensure access in the ASC setting for new procedures until 
claims data become available. Also, under the OPPS, the default device 
offset is useful for establishing a device amount for new device-
intensive procedures. For example, under our policy for no cost/full 
credit or partial credit devices, we reduce the OPPS payment for 
device-intensive procedures by the lesser of the full or partial credit 
a hospital receives for a replaced device or the device offset amount. 
Additionally, we may remove the device offset amount from the OPPS 
payment for procedures that are terminated prior to administering 
anesthesia (since the device was not used for the procedure).
    While we do allow for additional information in consideration of a 
higher offset percentage than the default device offset, it would be 
extremely rare that the appropriate determination of a device offset 
percentage would rely on pricing data or invoices from a device 
manufacturer rather than the default device offset percentage. However, 
we are aware that there may be certain situations where the default 
device offset percentage would not adequately reflect the existing 
device portion of the procedure's costs when compared to the cost of 
similar devices. This difference could impede our ability to accurately 
remove device offset amounts from new device-intensive procedures under 
the OPPS. As HOPDs and ASCs perform new procedures with significant 
device costs, we believe it is appropriate to modify our default device 
offset methodology to pay HOPDs and ASCs more appropriately when we 
lack claims data for these newer procedures. Therefore, for this CY 
2025 OPPS/ASC proposed rule and subsequent calendar years, we propose 
to modify our default device offset percentage policy for new device-
intensive procedures. Specifically, for new HCPCS codes that describe a 
procedure that requires the implantation or insertion of a single-use 
device that meets our requirements of a device as described above and 
the procedure lacks claims data (from either the new HCPCS code or any 
predecessor code), we would apply a default device offset percentage 
that is the greater of 31 percent or the device offset percentage of 
the APC to which the procedure has been assigned. We propose this 
methodological change for both the OPPS and ASC Payment System for CY 
2025 and subsequent calendar years. We still believe that a HCPCS code-
level device offset is, in most cases, a more accurate representation 
of a procedure's device cost than an APC-wide average device offset 
based on the average device offset of all the procedures assigned to an 
APC. However, because newer device-intensive procedures lack claims 
data, we believe the APC-wide average device offset percentage is, in 
many cases, a better reflection of the estimated device costs of the 
procedure than a default 31 percent offset. Additionally, there can be 
instances where the typical device costs of procedures in an APC can be 
significantly greater than the 31 percent default device offset. For 
these reasons, we propose to modify our default device offset 
percentage for new device-intensive procedures that describe the 
implantation or insertion of a single-use device that meets our 
requirements of a device (as described above) and that do not yet have 
associated claims data, by applying a default device offset percentage 
that is the greater of 31 percent or the device offset percentage of 
the APC to which the procedure has been assigned. This proposal would 
apply to new procedures assigned to clinical APCs, but not new 
procedures assigned to New Technology APCs.
    As we indicated in the CY 2019 OPPS/ASC proposed rule and final 
rule with comment period, we may consider additional information for an 
offset percentage greater than the default offset percentage (which, 
for this proposed rule, is the greater of 31 percent or the APC-level 
offset percentage) for new HCPCS codes describing procedures requiring 
the implantation (or, in some cases, the insertion) of a device that do 
not yet have associated claims data, such as pricing data or invoices 
from a device manufacturer. This would be for our consideration in 
extremely rare circumstances, such as an extremely high-cost 
implantable device. While we believe our proposed modification of a 
default device offset will improve payment under the OPPS and ASC 
payment system, we will continue to accept additional information in 
consideration of an alternative offset percentage. This information 
should be directed to the Division of Outpatient Care, Mail Stop C4-01-
26, Centers for Medicare & Medicaid Services, 7500 Security Boulevard, 
Baltimore, MD 21244-1850, or electronically at 
[email protected]. Additional information can be submitted 
prior to issuance of an OPPS/ASC proposed rule or as a public comment 
in response to an issued OPPS/ASC proposed rule. Device offset 
percentages will be set in each year's final rule.
    The full listing of the proposed CY 2025 device-intensive 
procedures, which incorporates our proposed changes to the default 
device offset policy, can be found in Addendum P to this proposed rule 
(which is available via the internet on the CMS website). Further, our 
claims accounting narrative contains a description of our device offset 
percentage calculation. Our claims accounting narrative for this 
proposed rule can be found under supporting documentation for the CY 
2025 OPPS/ASC proposed rule on our website at: https://www.cms.gov/medicare/medicare-fee-for-service-payment/hospitaloutpatientpps.
3. Device Edit Policy
    In the CY 2015 OPPS/ASC final rule with comment period (79 FR 
66795), we finalized a policy and implemented claims processing edits 
that require any of the device codes used in the previous device-to-
procedure edits to be present on the claim whenever a procedure code 
assigned to any of the APCs listed in Table 5 of the CY 2015 OPPS/ASC 
final rule with comment period (the CY 2015 device-dependent APCs) was 
reported on the claim. In addition, in the CY 2016 OPPS/ASC final rule 
with comment period (80 FR 70422), we modified our previously existing 
policy and applied the device coding requirements exclusively to 
procedures that require the implantation of a device assigned to a 
device-intensive APC. In the CY 2016 OPPS/ASC final rule with comment 
period, we also finalized our policy that the claims processing edits 
are such that any device code, when reported on a claim with a 
procedure assigned to a device-intensive APC (listed in Table 42 of the 
CY 2016 OPPS/ASC final rule with comment period (80 FR 70422)), will 
satisfy the edit.
    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79658 
through 79659), we changed our policy for CY 2017 and subsequent years 
to apply the CY 2016 device coding requirements to the newly defined 
device-intensive procedures. For CY 2017 and subsequent years, we also 
specified that any device code, when reported on a claim with a device-
intensive procedure, will satisfy the edit. In addition, we created 
HCPCS code C1889 to recognize devices furnished during a device-
intensive procedure that are not described by a specific Level II HCPCS 
Category C-code. Reporting HCPCS code C1889

[[Page 59349]]

with a device-intensive procedure will satisfy the edit requiring a 
device code to be reported on a claim with a device-intensive 
procedure. In the CY 2019 OPPS/ASC final rule with comment period, we 
revised the description of HCPCS code C1889 to remove the specific 
applicability to device-intensive procedures (83 FR 58950). For CY 2019 
and subsequent years, the description of HCPCS code C1889 is 
``Implantable/insertable device, not otherwise classified.''
    In the CY 2024 OPPS/ASC final rule with comment period (88 FR 81758 
through 81759), we finalized our proposal to establish a procedure-to-
device edit for the procedures assigned to APC 5496 (Level 6 
Intraocular Procedures) and require hospitals to report the correct 
device HCPCS codes when reporting any of the four procedures--CPT codes 
0308T, 0616T, 0617T, and 0618T. While we noted that interested parties 
have previously recommended in past rulemaking that we reestablish all 
of our previous procedure-to-device edits, we did not expect to extend 
this policy beyond the procedures assigned to APC 5496 (Level 6 
Intraocular Procedures). This APC represents a unique situation--the 
APC (which was the Level 5 Intraocular APC in previous years) had been 
a Low Volume APC (fewer than 100 claims in a claims year) since we 
established our Low Volume APC policy, the procedures associated with 
this APC have significant procedure costs often greater than $15,000, 
and the procedures associated with this APC require the implantation of 
a high-cost intraocular device. Additionally, in our review of claims 
data for some of the procedures, we noticed unusual coding, charge, and 
cost data. These claims had an outsized impact because of the low 
volume of claims for the APC which impeded our ability to determine a 
payment rate accurately and appropriately for APC 5496 (Level 6 
Intraocular Procedures). Further, because of the low volume of 
procedures assigned to this APC, we did not believe the reinstatement 
of procedure-to-device edits for the four procedures assigned to this 
APC would be administratively burdensome to hospitals. We finalized our 
proposal to modify our device edits policy to require a procedure-to-
device edit for procedures assigned to APC 5496 (Level 6 Intraocular 
Procedures) for CY 2024. We propose to continue this policy for APC 
5496 (Level 6 Intraocular Procedures) for CY 2025 and subsequent CYs 
and note that new CPT placeholder code 6X004 (Implantation of iris 
prosthesis, including suture fixation and repair or removal of iris, 
when performed) is replacing CPT code 0616T (Insertion of iris 
prosthesis, including suture fixation and repair or removal of iris, 
when performed; without removal of crystalline lens or intraocular 
lens, without insertion of intraocular lens) effective January 1, 2025. 
Additionally, CPT codes 0617T and 0618T currently assigned to APC 5496 
(Level 6 Intraocular Procedures) will be deleted effective January 1, 
2025. Therefore, for CY 2025, the procedure-to-device edit for 
procedures assigned to APC 5496 (Level 6 Intraocular Procedures) will 
apply to CPT code 0308T and 6X004.
    We are not proposing any other changes to our device edit policy 
for CY 2025.
4. Adjustment to OPPS Payment for No Cost/Full Credit and Partial 
Credit Devices
a. Background
    To ensure equitable OPPS payment when a hospital receives a device 
without cost or with full credit, in CY 2007, we implemented a policy 
to reduce the payment for specified device-dependent APCs by the 
estimated portion of the APC payment attributable to device costs (that 
is, the device offset) when the hospital receives a specified device at 
no cost or with full credit (71 FR 68071 through 68077). Hospitals were 
instructed to report no cost/full credit device cases on the claim 
using the ``FB'' modifier on the line with the procedure code in which 
the no cost/full credit device is used. In cases in which the device is 
furnished without cost or with full credit, hospitals were instructed 
to report a token device charge of less than $1.01. In cases in which 
the device being inserted is an upgrade (either of the same type of 
device or to a different type of device) with a full credit for the 
device being replaced, hospitals were instructed to report as the 
device charge the difference between the hospital's usual charge for 
the device being implanted and the hospital's usual charge for the 
device for which it received full credit. In CY 2008, we expanded this 
payment adjustment policy to include cases in which hospitals receive 
partial credit of 50 percent or more of the cost of a specified device. 
Hospitals were instructed to append the ``FC'' modifier to the 
procedure code that reports the service provided to furnish the device 
when they receive a partial credit of 50 percent or more of the cost of 
the new device. We refer readers to the CY 2008 OPPS/ASC final rule 
with comment period for more background information on the ``FB'' and 
``FC'' modifiers payment adjustment policies (72 FR 66743 through 
66749).
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75005 
through 75007), beginning in CY 2014, we modified our policy of 
reducing OPPS payment for specified APCs when a hospital furnishes a 
specified device without cost or with a full or partial credit. For CY 
2013 and prior years, our policy had been to reduce OPPS payment by 100 
percent of the device offset amount when a hospital furnishes a 
specified device without cost or with a full credit and by 50 percent 
of the device offset amount when the hospital receives partial credit 
in the amount of 50 percent or more of the cost for the specified 
device. For CY 2014, we reduced OPPS payment, for the applicable APCs, 
by the full or partial credit a hospital receives for a replaced 
device. Specifically, under this modified policy, hospitals are 
required to report on the claim the amount of the credit in the amount 
portion for value code ``FD'' (Credit Received from the Manufacturer 
for a Replaced Device) when the hospital receives a credit for a 
replaced device that is 50 percent or greater than the cost of the 
device. For CY 2014, we also limited the OPPS payment deduction for the 
applicable APCs to the total amount of the device offset when the 
``FD'' value code appears on a claim. For CY 2015, we continued our 
policy of reducing OPPS payment for specified APCs when a hospital 
furnishes a specified device without cost or with a full or partial 
credit and to use the three criteria established in the CY 2007 OPPS/
ASC final rule with comment period (71 FR 68072 through 68077) for 
determining the APCs to which our CY 2015 policy will apply (79 FR 
66872 through 66873). In the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70424), we finalized our policy to no longer specify a 
list of devices to which the OPPS payment adjustment for no cost/full 
credit and partial credit devices would apply and instead apply this 
APC payment adjustment to all replaced devices furnished in conjunction 
with a procedure assigned to a device-intensive APC when the hospital 
receives a credit for a replaced specified device that is 50 percent or 
greater than the cost of the device.
b. Policy for No Cost/Full Credit and Partial Credit Devices
    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79659 
through 79660), for CY 2017 and subsequent years, we finalized a policy

[[Page 59350]]

to reduce OPPS payment for device-intensive procedures, by the full or 
partial credit a provider receives for a replaced device, when a 
hospital furnishes a specified device without cost or with a full or 
partial credit. Under our current policy, hospitals continue to be 
required to report on the claim the amount of the credit in the amount 
portion for value code ``FD'' when the hospital receives a credit for a 
replaced device that is 50 percent or greater than the cost of the 
device.
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75005 
through 75007), we adopted a policy of reducing OPPS payment for 
specified APCs when a hospital furnishes a specified device without 
cost or with a full or partial credit by the lesser of the device 
offset amount for the APC or the amount of the credit. We adopted this 
change in policy in the preamble of the CY 2014 OPPS/ASC final rule 
with comment period and discussed it in subregulatory guidance, 
including Chapter 4, Section 61.3.6 of the Medicare Claims Processing 
Manual. Further, in the CY 2021 OPPS/ASC final rule with comment period 
(85 FR 86017 through 86018, 86302), we made conforming changes to our 
regulations at Sec.  419.45(b)(1) and (2) that codified this policy.
    We are not proposing any changes to our policies regarding payment 
for no cost/full credit and partial credit devices for CY 2025.

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

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

1. Background
    Section 1833(t)(6) of the Act provides for temporary additional 
payments or ``transitional pass-through payments'' for certain drugs 
and biologicals. Throughout this proposed rule, the term ``biological'' 
is used because this is the term that appears in section 1861(t) of the 
Act. A ``biological'' as used in this proposed rule includes (but is 
not necessarily limited to) a ``biological product'' or a ``biologic'' 
as defined under section 351 of the PHS Act. As enacted by the 
Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 
(BBRA) (Pub. L. 106113), this pass-through payment provision requires 
the Secretary to make additional payments to hospitals for: current 
orphan drugs for rare diseases and conditions, as designated under 
section 526 of the Federal Food, Drug, and Cosmetic Act; current drugs 
and biologicals and brachytherapy sources used in cancer therapy; and 
current radiopharmaceutical drugs and biologicals. ``Current'' refers 
to those types of drugs or biologicals mentioned above that are 
hospital outpatient services under Medicare Part B for which 
transitional pass-through payment was made on the first date the 
hospital OPPS was implemented.
    Transitional pass-through payments also are provided for certain 
``new'' drugs and biologicals that were not being paid for as an HOPD 
service as of December 31, 1996, and whose cost is ``not 
insignificant'' in relation to the OPPS payments for the procedures or 
services associated with the new drug or biological. For pass-through 
payment purposes, radiopharmaceuticals are included as ``drugs.'' As 
required by statute, transitional pass-through payments for a drug or 
biological described in section 1833(t)(6)(C)(i)(II) of the Act can be 
made for a period of at least 2 years, but not more than 3 years, after 
the payment was first made for the drug as a hospital outpatient 
service under Medicare Part B. Proposed CY 2025 pass-through drugs and 
biologicals and their designated APCs are assigned status indicator 
``G'' in Addenda A and B to this proposed rule (which are available on 
the CMS website).\64\
---------------------------------------------------------------------------

    \64\ https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.
---------------------------------------------------------------------------

    Section 1833(t)(6)(D)(i) of the Act specifies that the pass-through 
payment amount, in the case of a drug or biological, is the amount by 
which the amount determined under section 1842(o) of the Act for the 
drug or biological exceeds the portion of the otherwise applicable 
Medicare OPD fee schedule that the Secretary determines is associated 
with the drug or biological. The methodology for determining the pass-
through payment amount is set forth in regulations at 42 CFR 419.64. 
These regulations specify that the pass-through payment equals the 
amount determined under section 1842(o) of the Act minus the portion of 
the APC payment that CMS determines is associated with the drug or 
biological.
    Section 1847A of the Act establishes the average sales price (ASP) 
methodology, which is used for payment for drugs and biologicals 
described in section 1842(o)(1)(C) of the Act furnished on or after 
January 1, 2005. The ASP methodology, as applied under the OPPS, uses 
several sources of data as a basis for payment, including the ASP, the 
wholesale acquisition cost (WAC), and the average wholesale price 
(AWP). In this proposed rule, the term ``ASP methodology'' and ``ASP-
based'' are inclusive of all data sources and methodologies described 
therein. Additional information on the ASP methodology can be found on 
our website at: https://www.cms.gov/medicare/payment/fee-for-service-providers/part-b-drugs/average-drug-sales-price.
    The pass-through application \65\ and review process for drugs and 
biologicals is described on our website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/pass-through-payment-status-new-technology-ambulatory-payment-classification-apc.
---------------------------------------------------------------------------

    \65\ To apply for OPPS transitional Pass-Through Payment Status 
and New Technology Ambulatory Payment Classification (APC), 
applicants complete an application that is subject to the Paperwork 
Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et seq.). This 
information collection (CMS-10008) is currently approved under OMB 
control number of 0938-0802 and has an expiration date of January 
31, 2025.
---------------------------------------------------------------------------

2. Transitional Pass-Through Payment Period for Pass-Through Drugs, 
Biologicals, and Radiopharmaceuticals and Quarterly Expiration of Pass-
Through Status
    As required by statute, transitional pass-through payments for a 
drug or biological described in section 1833(t)(6)(C)(i)(II) of the Act 
can be made for a period of at least 2 years, but not more than 3 
years, after the payment was first made for the drug or biological as a 
hospital outpatient service under Medicare Part B. Our current policy 
is to accept pass-through applications on a quarterly basis and to 
begin pass-through payments for approved pass-through drugs and 
biologicals on a quarterly basis through the next available OPPS 
quarterly update after the approval of a drug's or biological's pass-
through status. However, prior to CY 2017, we expired pass-through 
status for drugs and biologicals on an annual basis through notice-and-
comment rulemaking (74 FR 60480). In the CY 2017 OPPS/ASC final rule 
with comment period (81 FR 79662), we finalized a policy change, 
beginning with pass-through drugs and biologicals approved in CY 2017 
and subsequent calendar years, to allow for a quarterly expiration of 
pass-through payment status for drugs, biologicals, and 
radiopharmaceuticals to afford a pass-through payment period that is as 
close to a full 3 years as possible for all pass-through drugs, 
biologicals, and radiopharmaceuticals.
    This change eliminated the variability of the pass-through payment 
eligibility period, which previously varied based

[[Page 59351]]

on when a particular application was initially received. We adopted 
this change for pass-through approvals beginning on or after CY 2017, 
to allow, on a prospective basis, for the maximum pass-through payment 
period for each pass-through drug without exceeding the statutory limit 
of 3 years. Notice of drugs for which pass-through payment status is 
ending during the calendar year is included in the quarterly OPPS 
Change Request transmittals.
3. Drugs and Biologicals With Expiring Pass-Through Payment Status in 
CY 2024
    There are 25 drugs and biologicals for which pass-through payment 
status expires by December 31, 2024, as listed in Table 62. These drugs 
and biologicals will have received OPPS pass-through payment for 3 
years during the period of April 1, 2021 through December 31, 2024. In 
accordance with the policy finalized in CY 2017 and described earlier, 
pass-through payment status for drugs and biologicals approved in CY 
2017 and subsequent years will expire on a quarterly basis, with a 
pass-through payment period as close to 3 years as possible.
    With the exception of those groups of drugs and biologicals that 
are always packaged when they do not have pass-through payment status 
(specifically, anesthesia drugs; drugs, biologicals, and 
radiopharmaceuticals \66\ that function as supplies when used in a 
diagnostic test or procedure; and drugs and biologicals that function 
as supplies when used in a surgical procedure), our standard 
methodology for providing payment for drugs and biologicals with 
expiring pass-through payment status in an upcoming calendar year is to 
determine the product's estimated per day cost and compare it with the 
OPPS drug packaging threshold for that calendar year, which is proposed 
to be $140 for CY 2025 for all drugs, biologicals, and therapeutic 
radiopharmaceuticals (for diagnostic radiopharmaceuticals we propose 
separate payment when their per day cost exceeds the proposed threshold 
of $630). These proposals are discussed further in section V.B.1 of 
this proposed rule. If the estimated per day cost for the drug or 
biological is less than or equal to the applicable OPPS drug packaging 
threshold, we package payment for the drug or biological into the 
payment for the associated procedure in the upcoming calendar year. If 
the estimated per day cost of the drug or biological is greater than 
the OPPS drug packaging threshold, we provide separate payment at the 
applicable ASP methodology-based payment amount (which is generally ASP 
plus 6 percent), as discussed further in section V.B.2 of this proposed 
rule.
---------------------------------------------------------------------------

    \66\ We propose to pay separately for diagnostic 
radiopharmaceuticals with per-day costs above a proposed threshold. 
If our proposal is finalized, this category of policy-packaged drugs 
that function as supplies in a diagnostic test or procedure would 
include diagnostic radiopharmaceuticals with per-day costs below the 
threshold for the applicable year. Please refer to Section II.A.3.c. 
for more information regarding our proposal.
---------------------------------------------------------------------------

BILLING CODE 4120-01-P

[[Page 59352]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.084


[[Page 59353]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.085


[[Page 59354]]


BILLING CODE 4120-01-C
4. Drugs, Biologicals, and Radiopharmaceuticals With Pass-Through 
Payment Status Expiring in CY 2025
    We propose to end pass-through payment status in CY 2025 for 28 
drugs and biologicals. These drugs and biologicals, which were 
initially approved for pass-through payment status between April 1, 
2022 and January 1, 2023, are listed in Table 63. The APCs and HCPCS 
codes for these drugs and biologicals, which have pass-through payment 
status that will end by December 31, 2025, are assigned status 
indicator ``G'' (Pass-Through Drugs and Biologicals) in Addenda A and B 
to this proposed rule (which are available on the CMS website).\67\ The 
APCs and HCPCS codes for these drugs and biologicals are assigned 
status indicator ``G'' only for the duration of their pass-through 
status.
---------------------------------------------------------------------------

    \67\ https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.
---------------------------------------------------------------------------

    Section 1833(t)(6)(D)(i) of the Act sets the amount of pass-through 
payment for pass-through drugs and biologicals (the pass-through 
payment amount) as the difference between the amount authorized under 
section 1842(o) of the Act and the portion of the otherwise applicable 
OPD fee schedule that the Secretary determines is associated with the 
drug or biological. For CY 2025, we are continuing our policy to pay 
for pass-through drugs and biologicals using the ASP methodology, 
meaning a payment rate based on ASP, WAC, or AWP, as applicable. This 
payment rate is generally ASP plus 6 percent, equivalent to the payment 
rate these drugs and biologicals would receive in the physician's 
office setting in CY 2025. We note that, under the OPD fee schedule, 
separately payable drugs assigned to an APC are generally payable at 
ASP plus 6 percent. Therefore, a $0 pass-through payment amount would 
continue to be paid for pass-through drugs and biologicals under the CY 
2025 OPPS because the difference between the amount authorized under 
section 1842(o) of the Act, which is generally ASP plus 6 percent, and 
the portion of the otherwise applicable OPD fee schedule that the 
Secretary determines is appropriate, which is generally ASP plus 6 
percent, is $0.
    In the case of policy-packaged drugs (which include the following: 
anesthesia drugs; drugs, biologicals, and radiopharmaceuticals \68\ 
that function as supplies when used in a diagnostic test or procedure; 
and drugs and biologicals that function as supplies when used in a 
surgical procedure), their pass-through payment amount will continue to 
be equal to a payment rate calculated using the ASP methodology, 
meaning a payment rate based on ASP, WAC, or AWP. This payment rate 
will generally continue to be ASP plus 6 percent for CY 2025, minus a 
payment offset for the portion of the otherwise applicable OPD fee 
schedule that the Secretary determines is associated with the drug or 
biological. We note that if not for the pass-through payment status of 
these policy-packaged products, payment for these products would be 
packaged into the associated procedure and therefore, there are 
associated OPD fee schedule amounts for them.
---------------------------------------------------------------------------

    \68\ We propose to pay separately for diagnostic 
radiopharmaceuticals with per-day costs above a proposed threshold. 
If our proposal is finalized, this category of policy-packaged drugs 
that function as supplies in a diagnostic test or procedure would 
include diagnostic radiopharmaceuticals with per-day costs below the 
threshold for the applicable year. Please refer to Section II.A.3.c. 
for more information regarding our proposal.
---------------------------------------------------------------------------

    We will continue our policy to update pass-through payment rates on 
a quarterly basis on the CMS website during CY 2025 if later quarter 
ASP submissions (or more recent WAC or AWP information, as applicable) 
indicate that adjustments to the payment rates for these pass-through 
payment drugs or biologicals are necessary. For a full description of 
this policy, we refer readers to the CY 2006 OPPS/ASC final rule with 
comment period (70 FR 68632 through 68635).
    For CY 2025, consistent with our CY 2024 policy for diagnostic and 
therapeutic radiopharmaceuticals, we would continue to provide payment 
for both diagnostic and therapeutic radiopharmaceuticals that are 
granted pass-through payment status based on the ASP methodology. As 
stated earlier, for purposes of pass-through payment, we consider 
radiopharmaceuticals to be drugs under the OPPS. Therefore, if a 
diagnostic or therapeutic radiopharmaceutical receives pass-through 
payment status during CY 2025, we would continue to follow the standard 
ASP methodology to determine the pass-through payment rate that drugs 
receive under section 1842(o) of the Act, which is generally ASP plus 6 
percent. If ASP data are not available for a radiopharmaceutical, we 
would continue to provide pass-through payment at WAC plus 3 percent 
(consistent with our policy in section V.B.2.a of this proposed rule), 
the equivalent payment provided for pass-through drugs and biologicals 
without ASP information. Additional detail on the WAC plus 3 percent 
payment policy can be found in section V.B.2.a of this proposed rule. 
If WAC information also is not available, we would continue to provide 
payment for the pass-through radiopharmaceutical at 95 percent of its 
most recent AWP.
    We refer readers to Table 63 below for the list of drugs and 
biologicals with pass-through payment status expiring during CY 2025.
BILLING CODE 4120-01-P

[[Page 59355]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.086


[[Page 59356]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.087


[[Page 59357]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.088

BILLING CODE 4120-01-C
5. Drugs, Biologicals, and Radiopharmaceuticals With Pass-Through 
Payment Status Continuing Through CY 2025
    We propose to continue pass-through payment status in CY 2025 for 
57 drugs and biologicals. These drugs and biologicals, which were 
approved for pass-through payment status with effective dates beginning 
between April 1, 2023 and April 1, 2024, are listed in Table 64. The 
APCs and HCPCS codes for these drugs and biologicals, which have pass-
through payment status that would continue after December 31, 2025, are 
assigned status indicator ``G'' in Addenda A and B to this proposed 
rule (which are available on the CMS website).\69\
---------------------------------------------------------------------------

    \69\ https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.
---------------------------------------------------------------------------

    Section 1833(t)(6)(D)(i) of the Act sets the amount of pass-through 
payment for pass-through drugs and biologicals (the pass-through 
payment amount) as the difference between the amount authorized under 
section 1842(o) of the Act and the portion of the otherwise applicable 
OPD fee schedule that the Secretary determines is associated with the 
drug or biological. For CY 2025, we are continuing our policy to pay 
for pass-through drugs and biologicals at a payment rate based on the 
ASP methodology, which may be based on ASP, WAC, or AWP, but is 
generally ASP plus 6 percent, which is equivalent to the payment rate 
these drugs and biologicals would receive in the physician's office 
setting in CY 2025. We will continue with our policy of paying a $0 
pass-through payment amount for pass-through drugs and biologicals that 
are not policy-packaged under the CY 2025 OPPS, because the difference 
between the amount authorized under section 1842(o) of the Act, which 
would generally be ASP plus 6 percent, and the portion of the otherwise 
applicable OPD fee schedule that the Secretary determines is 
appropriate, which would also generally be ASP plus 6 percent, is $0.
    In the case of policy-packaged drugs (which include the following: 
anesthesia drugs; drugs, biologicals, and radiopharmaceuticals \70\ 
that function as supplies when used in a diagnostic test or procedure; 
and drugs and biologicals that function as supplies when used in a 
surgical procedure), their pass-through payment amount would continue 
to be equal to a payment rate based on the ASP methodology, which may 
be based on ASP, WAC, or AWP, but would generally be ASP plus 6 percent 
for CY 2025, minus a payment offset for any predecessor drug products 
contributing to the pass-through payment. We note if not for the pass-
through payment status of these policy-packaged products, payment for 
these products would be packaged into the associated procedure and 
therefore, there are associated OPD fee schedule amounts for them. We 
are continuing our policy to update pass-through payment rates on a 
quarterly basis on our website during CY 2025 if later quarter ASP 
submissions (or more recent WAC or AWP information, as applicable) 
indicate that adjustments to the payment rates for these pass-through 
payment drugs or biologicals are necessary. For a full description of 
this policy, we refer readers to the CY 2006 OPPS/ASC final rule with 
comment period (70 FR 68632 through 68635).
---------------------------------------------------------------------------

    \70\ We propose to pay separately for diagnostic 
radiopharmaceuticals with per-day costs above a proposed threshold. 
If our proposal is finalized, the category of policy-packaged drugs 
that function as supplies in a diagnostic test or procedure would 
include diagnostic radiopharmaceuticals with per-day costs below the 
threshold for the applicable year. Please refer to Section II.A.3.c. 
for more information regarding our proposal.
---------------------------------------------------------------------------

    For CY 2025, consistent with our CY 2024 policy for diagnostic and 
therapeutic radiopharmaceuticals, we propose to continue our policy to 
provide payment for both diagnostic and therapeutic 
radiopharmaceuticals that are granted pass-through payment status based 
on the ASP methodology. As stated earlier, for purposes of pass-through 
payment, we consider radiopharmaceuticals to be drugs under the OPPS. 
Therefore, if a diagnostic or therapeutic radiopharmaceutical receives 
pass-through payment status during CY 2025, we will continue to follow 
the standard ASP methodology to determine the pass-through payment rate 
that drugs receive under section 1842(o) of the Act, which would 
generally be ASP plus 6 percent. If ASP data are not available for a 
radiopharmaceutical, we would provide pass-through payment at WAC plus 
3 percent (consistent with our policy in section V.B.2.a of this 
proposed rule), the equivalent payment provided for pass-through drugs 
and biologicals without ASP information. Additional detail on the WAC 
plus 3 percent payment policy can be found in section V.B.2.a of this 
proposed rule. If WAC information also is not available, we would 
provide payment for the pass-through radiopharmaceutical at 95 percent 
of its most recent AWP.
    The drugs and biologicals that would have pass-through payment 
status expire after December 31, 2025, are shown in Table 64.
BILLING CODE 4120-01-P

[[Page 59358]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.089


[[Page 59359]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.090


[[Page 59360]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.091


[[Page 59361]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.092


[[Page 59362]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.093


[[Page 59363]]


BILLING CODE 4120-01-C

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

1. Proposed Criteria for Packaging Payment for Drugs, Biologicals, and 
Radiopharmaceuticals
a. Proposed Packaging Threshold
    In accordance with section 1833(t)(16)(B) of the Act, the threshold 
for establishing separate APCs for payment of drugs and biologicals was 
set to $50 per administration during CYs 2005 and 2006. In CY 2007, we 
used the four-quarter moving average Producer Price Index (PPI) levels 
for Pharmaceutical Preparations (Prescription) to trend the $50 
threshold forward from the third quarter of CY 2005 (when the Pub. L. 
108-173 mandated threshold became effective) to the third quarter of CY 
2007. We then rounded the resulting dollar amount to the nearest $5 
increment in order to determine the CY 2007 threshold amount of $55. 
Using the same methodology as that used in CY 2007 (which is discussed 
in more detail in the CY 2007 OPPS/ASC final rule with comment period 
(71 FR 68085 through 68086)), we set the packaging threshold for 
establishing separate APCs for drugs and biologicals at $135 for CY 
2024 (88 FR 81776 through 81777).
    Following the CY 2007 methodology, for this proposed rule, we use 
the most recently available four quarter moving average PPI levels to 
trend the $50 threshold forward from the third quarter of CY 2005 to 
the third quarter of CY 2025 and round the resulting dollar amount 
($140.81) to the nearest $5 increment, which yielded a figure of $140. 
In performing this calculation, we used the most recent forecast of the 
quarterly index levels for the PPI for Pharmaceuticals for Human Use 
(Prescription) (Bureau of Labor Statistics series code WPUSI07003) from 
IGI. IGI is a nationally recognized economic and financial forecasting 
firm with which CMS contracts to forecast the various price indexes 
including the PPI Pharmaceuticals for Human Use (Prescription). Based 
on these calculations using the CY 2007 OPPS methodology, we propose a 
packaging threshold for CY 2025 of $140 for drugs, biologicals, and 
therapeutic radiopharmaceuticals.
    We propose in section II.A.3.c of this proposed rule to pay 
separately for diagnostic radiopharmaceuticals with a per-day cost 
above the proposed packaging threshold for CY 2025 of $630. We also 
propose that starting in CY 2026 and subsequent years, we would update 
this threshold by the PPI for Pharmaceuticals for Human Use 
(Prescription) (Bureau of Labor Statistics series code WPUSI07003) from 
IHS Global, Inc (IGI). For the diagnostic radiopharmaceutical packaging 
threshold, we propose to use the same methodology as that used in CY 
2007 (which is discussed in more detail in the CY 2007 OPPS/ASC final 
rule with comment period (71 FR 68085 and 68086)) to calculate the 
update to the OPPS drug packaging threshold. Specifically, we propose 
that starting for the CY 2026 rulemaking, we would use the most 
recently available four quarter moving average PPI levels to trend the 
final CY 2025 threshold forward from the third quarter of CY 2024 to 
the third quarter of CY 2025 and round the resulting dollar amount to 
the nearest $5 increment. We refer readers to section II.A.3.c.(4) of 
this proposed rule for information regarding our proposal to update the 
proposed diagnostic radiopharmaceutical packaging threshold in future 
years.
    We also propose that if more recent data are subsequently available 
(for example, a more recent estimate of the PPI for Pharmaceutical 
Preparations (Prescription), we would use such data, if appropriate, to 
determine the CY 2025 packaging threshold for drugs, biologicals, 
therapeutic radiopharmaceuticals, and diagnostic radiopharmaceuticals 
for the CY 2025 OPPS/ASC final rule with comment period.
b. Proposed Packaging of Payment for HCPCS Codes That Describe Certain 
Drugs, Certain Biologicals, and Certain Radiopharmaceuticals Under the 
Cost Thresholds
    To determine the proposed CY 2025 packaging status for all nonpass-
through drugs, biologicals, diagnostic and therapeutic 
radiopharmaceuticals that are not policy packaged, we calculated, on a 
HCPCS code-specific basis, the per day cost of all drugs, biologicals, 
and therapeutic radiopharmaceuticals that had a HCPCS code in CY 2023 
and were paid (via packaged or separate payment) under the OPPS. We 
used data from CY 2023 claims processed through December 31, 2023, for 
this calculation. However, we did not perform this calculation for 
those drugs and biologicals with multiple HCPCS codes that include 
different dosages, as described in section V.B.1.d of this proposed 
rule, or for the following policy-packaged items that we propose to 
continue to package in CY 2025: anesthesia drugs; drugs, biologicals, 
and contrast agents and other drugs that function as supplies when used 
in a diagnostic test or procedure; and drugs and biologicals that 
function as supplies when used in a surgical procedure. Consistent with 
our policy described in section V.B.5., in situations where we have no 
claims data and must determine if these products exceed the per-day 
cost threshold, we estimated the average number of units of each 
product that would typically be furnished to a patient during one day 
in the hospital outpatient setting and utilized the ASP methodology to 
determine whether their payment will be packaged as well as their 
payment status indicators.
    In order to calculate the per day costs for drugs, biologicals, 
diagnostic radiopharmaceuticals, and therapeutic radiopharmaceuticals 
to determine their proposed packaging status in CY 2025, we used the 
methodology that was described in detail in the CY 2006 OPPS proposed 
rule (70 FR 42723 through 42724) and finalized in the CY 2006 OPPS 
final rule with comment period (70 FR 68636 through 68638). For each 
drug and biological HCPCS code, we used an estimated payment rate based 
on the ASP methodology, which is generally ASP plus 6 percent (which is 
the payment rate we propose for separately payable drugs and 
biologicals for CY 2025, as discussed in more detail in section V.A.1 
of this proposed rule) to calculate the CY 2025 proposed rule per day 
costs. We used the manufacturer-submitted ASP data from the fourth 
quarter of CY 2023 (data that were used for payment purposes in the 
physician's office setting, effective April 1, 2024) to determine the 
proposed rule per day cost.
    As is our standard methodology, for CY 2025, we propose to use 
payment rates based on the ASP data from the fourth quarter of CY 2023 
for budget neutrality estimates, packaging determinations, impact 
analyses, and completion of Addenda A and B to this proposed rule 
(which are available via the internet on the CMS website) because these 
are the most recent data available for use at the time of development 
of the CY 2025 OPPS proposed rule. These data also are the basis for 
drug payments in the physician's office setting, effective April 1, 
2024. Exceptions to our standard methodology include:
     For therapeutic radiopharmaceuticals that do not have 
pass-through status as of October 1, 2024, and do not have an ASP-based 
payment rate, we did not use a payment rate based on WAC or AWP for 
those items, consistent with our policy described in section V.B.3.a of 
this proposed rule. We used their mean unit cost derived from the CY 
2023 hospital

[[Page 59364]]

claims data to determine their per day cost.
     For diagnostic radiopharmaceuticals that do not have pass-
through status as of October 1, 2024, we used their mean unit cost 
derived from the CY 2023 hospital claims data to determine their per 
day cost. We did not use an ASP-based, WAC-based, or AWP-based payment 
rate for those items unless there was no mean unit cost reported for 
the product, consistent with our proposed policy described in section 
V.B.3.b of this proposed rule.
     For items other than diagnostic or therapeutic 
radiopharmaceuticals that did not have either an ASP-based payment 
rate, a payment rate based on WAC, or a payment rate based on AWP, we 
used mean unit cost of the items derived from the CY 2023 hospital 
claims data to determine their per day cost.
    We propose to package drugs, biologicals, and therapeutic 
radiopharmaceuticals with a per day cost less than or equal to $140 and 
identify items with a per day cost greater than $140 as separately 
payable unless they are policy-packaged. For diagnostic 
radiopharmaceuticals, we propose to package those items with a per day 
cost less than or equal to $630 and identify items with a per day cost 
greater than $630 as separately payable. Consistent with our past 
practice, we cross-walked historical OPPS claims data from the CY 2023 
HCPCS codes that were reported to the CY 2023 HCPCS codes that we 
display in Addendum B to this proposed rule (which is available on the 
CMS website) \71\ for proposed payment in CY 2025.
---------------------------------------------------------------------------

    \71\ https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.
---------------------------------------------------------------------------

    Our policy during previous cycles of OPPS rulemaking has been to 
use updated ASP and claims data to make final determinations of the 
packaging status of HCPCS codes for drugs, biologicals, and therapeutic 
radiopharmaceuticals for the OPPS/ASC final rule with comment period. 
We note that it is also our policy to make an annual packaging 
determination for a HCPCS code only when we develop the OPPS/ASC final 
rule with comment period for the update year. Only HCPCS codes that are 
identified as separately payable in the final rule with comment period 
are subject to quarterly updates. For our calculation of per day costs 
of HCPCS codes for drugs, biologicals, and radiopharmaceuticals in this 
proposed rule, we propose to use ASP data from the fourth quarter of CY 
2023, which is the basis for calculating payment rates for drugs and 
biologicals in the physician's office setting using the ASP 
methodology, effective April 1, 2024, along with updated hospital 
claims data from CY 2023. We note that we also propose to use these 
data for budget neutrality estimates and impact analyses for this 
proposed rule.
    Payment rates for HCPCS codes for separately payable drugs and 
biologicals included in Addenda A and B of this proposed rule are based 
on ASP data from the second quarter of CY 2024. These data will be the 
basis for calculating payment rates for drugs and biologicals in the 
physician's office setting using the ASP methodology, effective October 
1, 2024. These payment rates would then be updated in the January 2025 
OPPS update, based on the most recent ASP data to be used for 
physicians' office and OPPS payment as of January 1, 2025. For drugs 
and biologicals that do not currently have a payment rate based on ASP, 
WAC, or AWP, for therapeutic radiopharmaceuticals that do not currently 
have an ASP payment rate, and for all diagnostic radiopharmaceuticals, 
we calculate their mean unit cost from all of the CY 2023 claims data 
and updated cost report information available for this proposed rule to 
determine their final per day cost.
    Consequently, the packaging status of some HCPCS codes for drugs, 
biologicals, and radiopharmaceuticals in the OPPS/ASC proposed rule may 
be different from the same drugs' HCPCS codes' packaging status 
determined based on the data used for this final rule with comment 
period. Under such circumstances, we propose to continue to follow the 
established policies initially adopted for the CY 2005 OPPS (69 FR 
65780) in order to more equitably pay for those drugs whose costs 
fluctuate relative to the proposed CY 2025 OPPS drug packaging 
threshold and the drug's payment status (packaged or separately 
payable) in CY 2024. These established policies have not changed for 
many years and are the same as described in the CY 2016 OPPS/ASC final 
rule with comment period (80 FR 70434). Specifically, for CY 2025 and 
subsequent years, consistent with our historical practice, we propose 
to apply the following policies to those HCPCS codes for drugs, 
biologicals, and therapeutic radiopharmaceuticals whose relationship to 
the drug packaging threshold changes based on the updated drug 
packaging threshold and on the final updated data:
     HCPCS codes for drugs, biologicals, and 
radiopharmaceuticals that were paid separately in CY 2024 and that are 
proposed for separate payment in CY 2025, and that then have per day 
costs equal to or less than the CY 2025 final rule drug packaging 
threshold or diagnostic radiopharmaceutical packaging threshold, based 
on the updated ASPs and hospital claims data used for the CY 2025 final 
rule, would continue to receive separate payment in CY 2025.
     HCPCS codes for drugs, biologicals, and 
radiopharmaceuticals that were packaged in CY 2024 and that are 
proposed for separate payment in CY 2025, and that then have per day 
costs equal to or less than the CY 2025 final rule drug packaging 
threshold or diagnostic radiopharmaceutical packaging threshold, based 
on the updated ASPs and hospital claims data used for the CY 2025 final 
rule, would remain packaged in CY 2025.
     HCPCS codes for drugs, biologicals, and 
radiopharmaceuticals for which we proposed packaged payment in CY 2025 
but that then have per-day costs greater than the CY 2025 final rule 
drug packaging threshold or diagnostic radiopharmaceutical packaging 
threshold, based on the updated ASPs and hospital claims data used for 
the CY 2025 final rule, would receive separate payment in CY 2025.
c. Policy-Packaged Drugs, Biologicals, and Radiopharmaceuticals
    As mentioned earlier in this section, under the OPPS, we package 
several categories of nonpass-through drugs, biologicals, and 
radiopharmaceuticals, regardless of the cost of the products. Because 
the products are packaged according to the policies in 42 CFR 419.2(b), 
we refer to these packaged drugs, biologicals, and radiopharmaceuticals 
as ``policy-packaged'' drugs, biologicals, and radiopharmaceuticals. 
These policies are either longstanding or based on longstanding 
principles and inherent to the OPPS and are as follows:
     Anesthesia, certain drugs, biologicals, and other 
pharmaceuticals; medical and surgical supplies and equipment; surgical 
dressings; and devices used for external reduction of fractures and 
dislocations (Sec.  419.2(b)(4));
     Intraoperative items and services (Sec.  419.2(b)(14));
     Drugs, biologicals, and radiopharmaceuticals that function 
as supplies when used in a diagnostic test or procedure (including but 
not limited to, diagnostic radiopharmaceuticals,\72\

[[Page 59365]]

contrast agents, and pharmacologic stress agents) (Sec.  419.2(b)(15)); 
and
---------------------------------------------------------------------------

    \72\ We propose to pay separately for diagnostic 
radiopharmaceuticals with per-day costs above a proposed threshold. 
If our proposal is finalized, this category of policy-packaged drugs 
that function as supplies in a diagnostic test or procedure would 
include diagnostic radiopharmaceuticals with per-day costs below the 
threshold for the applicable year. Please refer to Section II.A.3.c. 
for more information regarding our proposal.
---------------------------------------------------------------------------

     Drugs and biologicals that function as supplies when used 
in a surgical procedure (including, but not limited to, skin 
substitutes and similar products that aid wound healing and implantable 
biologicals) (Sec.  419.2(b)(16)).
    The policy at Sec.  419.2(b)(16) is broader than the policy at 
Sec.  419.2(b)(14). As we stated in the CY 2015 OPPS/ASC final rule 
with comment period: ``We consider all items related to the surgical 
outcome and provided during the hospital stay in which the surgery is 
performed, including postsurgical pain management drugs, to be part of 
the surgery for purposes of our drug and biological surgical supply 
packaging policy'' (79 FR 66875). The category described by Sec.  
419.2(b)(15) is large and includes diagnostic radiopharmaceuticals that 
have a per day cost below the proposed diagnostic radiopharmaceutical 
packaging threshold that we discussed in section II.A.3 of this 
proposed rule,\73\ contrast agents, stress agents, and some other 
products. The category described by Sec.  419.2(b)(16) includes skin 
substitutes and some other products. We believe it is important to 
reiterate that cost consideration is not a factor when determining 
whether an item is a surgical supply (79 FR 66875).
---------------------------------------------------------------------------

    \73\ In section II.A.3 of this proposed rule, we propose to pay 
separately for diagnostic radiopharmaceuticals with per-day costs 
above a proposed threshold. If our proposal is finalized, this 
category of policy-packaged drugs that function as supplies in a 
diagnostic test or procedure would include diagnostic 
radiopharmaceuticals with per-day costs below the threshold for the 
applicable year. Please refer to Section II.A.3.c. for more 
information regarding our proposal.
---------------------------------------------------------------------------

    We welcome ongoing dialogue and engagement from interested parties 
regarding suggestions for payment changes for consideration in future 
rulemaking.
d. Packaging Determination for HCPCS Codes That Describe the Same Drug 
or Biological But Different Dosages
    In the CY 2010 OPPS/ASC final rule with comment period (74 FR 60490 
through 60491), we finalized a policy to make a single packaging 
determination for a drug, rather than an individual HCPCS code, when a 
drug has multiple HCPCS codes describing different dosages because we 
believe that adopting the standard HCPCS code-specific packaging 
determinations for these codes could lead to inappropriate payment 
incentives for hospitals to report certain HCPCS codes instead of 
others. We continue to believe that making packaging determinations on 
a drug-specific basis eliminates payment incentives for hospitals to 
report certain HCPCS codes for drugs and allows hospitals flexibility 
in choosing to report all HCPCS codes for different dosages of the same 
drug or only the lowest dosage HCPCS code. Therefore, we propose to 
continue our policy to make packaging determinations on a drug-specific 
basis, rather than a HCPCS code-specific basis, for those HCPCS codes 
that describe the same drug or biological but different dosages in CY 
2025.
    In order to propose a packaging determination that is consistent 
across all HCPCS codes that describe different dosages of the same drug 
or biological, we aggregated both our CY 2023 claims data and our 
pricing information, which is based on the ASP methodology, generally 
ASP plus 6 percent, across all of the HCPCS codes that describe each 
distinct drug or biological in order to determine the mean units per 
day of the drug or biological in terms of the HCPCS code with the 
lowest dosage descriptor. The following drugs did not have pricing 
information available for the ASP methodology for this proposed rule; 
and, as is our current policy for determining the packaging status of 
other drugs, we used the mean unit cost available from the CY 2023 
claims data to make the proposed packaging determinations for them: 
HCPCS code C9257 (Injection, bevacizumab, 0.25 mg); HCPCS code J3471 
(injection, hyaluronidase, ovine, preservative free, per 1 usp unit (up 
to 999 usp units)); HCPCS code J3472 (Injection, hyaluronidase, ovine, 
preservative free, per 1000 usp units); HCPCS code J7100 (Infusion, 
dextran 40,500 ml); and HCPCS code J7110 (Infusion, dextran 75,500 ml).
    For all other drugs and biologicals that have HCPCS codes 
describing different doses, we then multiplied the proposed weighted 
average ASP methodology based payment rate, which is generally ASP plus 
6 percent, per-unit payment amount across all dosage levels of a 
specific drug or biological by the estimated units per day for all 
HCPCS codes that describe each drug or biological from our claims data 
to determine if the estimated per day cost of each drug or biological 
is less than or equal to the proposed CY 2025 drug packaging threshold 
of $140 (in which case all HCPCS codes for the same drug or biological 
would be packaged) or greater than the proposed CY 2025 drug packaging 
threshold of $140 (in which case all HCPCS codes for the same drug or 
biological would be separately payable). The proposed packaging status 
of each drug and biological HCPCS code to which this methodology would 
apply in CY 2025 is displayed in Table 65.

[[Page 59366]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.094

    We propose that our policy to make packaging determinations on a 
drug-specific basis, rather than a HCPCS code-specific basis, for those 
HCPCS codes that describe the same drug or biological but different 
dosages in CY 2025 would also apply to diagnostic radiopharmaceuticals. 
In order to propose a packaging determination that is consistent across 
all HCPCS codes that describe different dosages of the same diagnostic 
radiopharmaceutical, we would aggregate our CY 2023 claims data across 
all of the HCPCS codes that describe each distinct diagnostic 
radiopharmaceutical in order to determine the mean units per day of the 
diagnostic radiopharmaceutical in terms of the HCPCS code with the 
lowest dosage descriptor. We would then analyze the aggregate per day 
cost of the diagnostic radiopharmaceutical to determine if the per day 
cost is less than or equal to the proposed CY 2025 diagnostic 
radiopharmaceutical packaging threshold of $630 (in which case all 
HCPCS codes for the same diagnostic radiopharmaceutical would be 
packaged) or greater than the proposed CY 2025 diagnostic 
radiopharmaceutical packaging threshold of $630 (in which case all 
HCPCS codes for the same diagnostic radiopharmaceutical would be 
separately payable). There are currently no diagnostic 
radiopharmaceuticals that this policy would apply to.
2. Proposed Payment for Drugs and Biologicals Without Pass-Through 
Status That Are Not Packaged
a. Proposed Payment for Specified Covered Outpatient Drugs (SCODs) and 
Other Separately Payable Drugs and Biologicals
    Section 1833(t)(14) of the Act defines certain separately payable 
radiopharmaceuticals, drugs, and biologicals and mandates specific 
payments for these items. Under section 1833(t)(14)(B)(i) of the Act, a 
``specified covered outpatient drug'' (known as a SCOD) is defined as a 
covered outpatient drug, as defined in section 1927(k)(2) of the Act, 
for which a separate APC has been established and that either is a 
radiopharmaceutical agent or a drug or biological for which payment was 
made on a pass-through basis on or before December 31, 2002.
    Under section 1833(t)(14)(B)(ii) of the Act, certain drugs and 
biologicals are designated as exceptions and are not included in the 
definition of SCODs. These exceptions are--
     A drug or biological for which payment is first made on or 
after January 1, 2003, under the transitional pass-through payment 
provision in section 1833(t)(6) of the Act.
     A drug or biological for which a temporary HCPCS code has 
not been assigned.
     During CYs 2004 and 2005, an orphan drug (as designated by 
the Secretary).
    Section 1833(t)(14)(A)(iii) of the Act requires that payment for 
SCODs in CY

[[Page 59367]]

2006 and subsequent years be equal to the average acquisition cost for 
the drug for that year as determined by the Secretary, subject to any 
adjustment for overhead costs and considering the hospital acquisition 
cost survey data collected by the Government Accountability Office 
(GAO) in CYs 2004 and 2005, and later periodic surveys conducted by the 
Secretary as set forth in the statute. If hospital acquisition cost 
data are not available, the law requires that payment be equal to 
payment rates established under the methodology described in section 
1842(o), section 1847A, or section 1847B of the Act, as calculated and 
adjusted by the Secretary as necessary for purposes of paragraph (14). 
We refer to this alternative methodology as the ``statutory default.'' 
Most physician Part B drugs are paid at ASP plus 6 percent in 
accordance with section 1842(o) and section 1847A of the Act.
    Section 1833(t)(14)(E)(ii) of the Act provides for an adjustment in 
OPPS payment rates for SCODs to consider overhead and related expenses, 
such as pharmacy services and handling costs. Section 1833(t)(14)(E)(i) 
of the Act required MedPAC to study pharmacy overhead and related 
expenses and to make recommendations to the Secretary regarding 
whether, and if so how, a payment adjustment should be made to 
compensate hospitals for overhead and related expenses. Section 
1833(t)(14)(E)(ii) of the Act authorizes the Secretary to adjust the 
weights for ambulatory procedure classifications for SCODs to consider 
the findings of the MedPAC study.\74\
---------------------------------------------------------------------------

    \74\ Medicare Payment Advisory Committee. June 2005 Report to 
the Congress. Chapter 6: Payment for pharmacy handling costs in 
hospital outpatient departments. Available at: https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/June05_ch6.pdf.
---------------------------------------------------------------------------

    It has been our policy since CY 2006 to apply the same treatment to 
all separately payable drugs and biologicals, which include SCODs, and 
drugs and biologicals that are not SCODs. Therefore, we apply the 
payment methodology in section 1833(t)(14)(A)(iii) of the Act to SCODs, 
as required by statute, but we also apply it to separately payable 
drugs and biologicals that are not SCODs, which is a policy 
determination rather than a statutory requirement. For CY 2023 and 
subsequent years, we finalized a policy to apply section 
1833(t)(14)(A)(iii)(II) of the Act to all separately payable drugs and 
biologicals, including SCODs. Although we do not distinguish SCODs in 
this discussion, we note that we are required to apply section 
1833(t)(14)(A)(iii)(II) of the Act to SCODs; but we also are applying 
this provision to other separately payable drugs and biologicals, 
consistent with our history of using the same payment methodology for 
all separately payable drugs and biologicals.
    For a detailed discussion of our OPPS drug payment policies from CY 
2006 to CY 2012, we refer readers to the CY 2013 OPPS/ASC final rule 
with comment period (77 FR 68383 through 68385). In the CY 2013 OPPS/
ASC final rule with comment period (77 FR 68386 through 68389), we 
first adopted the statutory default policy to pay for separately 
payable drugs and biologicals at ASP plus 6 percent based on section 
1833(t)(14)(A)(iii)(II) of the Act. We have continued this policy of 
paying for separately payable drugs and biologicals at the statutory 
default for CYs 2014 through 2024.
    In the case of a drug or biological during an initial sales period 
in which data on the prices for sales of the drug or biological are not 
sufficiently available from the manufacturer, section 1847A(c)(4) of 
the Act permits the Secretary to make payments that are based on WAC. 
Under section 1833(t)(14)(A)(iii)(II) of the Act, the amount of payment 
for a separately payable drug equals the average price for the drug for 
the year established under, among other authorities, section 1847A of 
the Act. As explained in greater detail in the CY 2019 PFS final rule, 
under section 1847A(c)(4) of the Act, although payments may be based on 
WAC, unlike section 1847A(b) of the Act (which specifies that payments 
using ASP or WAC must be made with a 6 percent add-on), section 
1847A(c)(4) of the Act does not require that a particular add-on amount 
be applied to WAC-based pricing for this initial period when ASP data 
are not available. Consistent with section 1847A(c)(4) of the Act, in 
the CY 2019 PFS final rule (83 FR 59661 to 59666), we finalized a 
policy that, effective January 1, 2019, WAC-based payments for Part B 
drugs made under section 1847A(c)(4) of the Act will utilize a 3-
percent add-on in place of the 6 percent add-on that was being used 
according to our policy in effect as of CY 2018. For the CY 2019 OPPS, 
we followed the same policy finalized in the CY 2019 PFS final rule (83 
FR 59661 to 59666). Since CY 2020, we have continued to utilize a 3 
percent add-on instead of a 6 percent add-on for drugs that are paid 
based on WAC pursuant to our authority under section 
1833(t)(14)(A)(iii)(II) of the Act (84 FR 61318 and 85 FR 86039), which 
provides, in part, that the amount of payment for a SCOD is the average 
price of the drug in the year established under section 1847A of the 
Act. We also apply this provision to non-SCOD separately payable drugs. 
Because we establish the average price for a drug paid based on WAC 
under section 1847A of the Act as WAC plus 3 percent instead of WAC 
plus 6 percent, we believe it is appropriate to price separately 
payable drugs paid based on WAC at the same amount under the OPPS. Our 
policy to pay for drugs and biologicals at WAC plus 3 percent, rather 
than WAC plus 6 percent, applies whenever WAC-based pricing is used for 
a drug or biological under section 1847A(c)(4). We refer readers to the 
CY 2019 PFS final rule (83 FR 59661 to 59666) for additional background 
on this policy.
    Consistent with our current policy, payments for separately payable 
drugs and biologicals are included in the budget neutrality 
adjustments, under the requirements in section 1833(t)(9)(B) of the 
Act. Also, the budget neutral weight scalar is not applied in 
determining payments for these separately payable drugs and 
biologicals.
    Separately payable drug, biological, and radiopharmaceutical 
payment rates are listed in Addenda A and B to this proposed rule 
(available on the CMS website).\75\ These addenda provide the proposed 
CY 2025 payment rates based on the ASP methodology for separately 
payable nonpass-through drugs, biologicals, and radiopharmaceuticals 
and the ASP methodology for pass-through drugs, biologicals, and 
radiopharmaceuticals. Except for proposed payment rates for 
radiopharmaceuticals, these rates are based either on ASP information 
that is the basis for calculating payment rates for drugs and 
biologicals in the physician's office setting effective April 1, 2024, 
or WAC, AWP, or mean unit cost from CY 2023 claims data and updated 
cost report information available for this proposed rule. For nonpass-
through therapeutic radiopharmaceuticals, payment rates are based on 
ASP data or mean unit cost. We propose in section II.A.3.c.(5) to pay 
separately at mean unit cost for diagnostic radiopharmaceuticals with 
per day costs above the proposed threshold; the payment rates proposed 
for qualifying diagnostic radiopharmaceuticals are entirely mean unit 
cost. In general, these published proposed payment rates are not the 
same as the actual January 2025 payment rates. This is because payment 
rates for drugs, biologicals, and

[[Page 59368]]

therapeutic radiopharmaceuticals with ASP information for January 2025 
will be determined through the standard quarterly process where ASP 
data submitted by manufacturers for the third quarter of CY 2024 (July 
1, 2024, through September 30, 2024) will be used to set the payment 
rates that are released for the quarter beginning in January 2025 in 
December 2024. In addition, in Addenda A and B to this proposed rule, 
payment rates for drugs, biologicals, and therapeutic 
radiopharmaceuticals for which there was no ASP, WAC, or AWP 
information available for April 2024, as well as all separately payable 
diagnostic radiopharmaceuticals, are based on mean unit cost in the 
available CY 2023 claims data. If new pricing information becomes 
available for payment for the quarter beginning in January 2025, we 
will price payment for these drugs, biologicals, therapeutic 
radiopharmaceuticals, and diagnostic radiopharmaceuticals based on 
their newly available information. Finally, there may be drugs, 
biologicals and therapeutic radiopharmaceuticals that have ASP, WAC, or 
AWP information available for this proposed rule (reflecting April 2024 
ASP data) that do not have ASP, WAC, or AWP information available for 
the quarter beginning in January 2025. These drugs, biologicals and 
therapeutic radiopharmaceuticals would then be paid based on mean unit 
cost data derived from CY 2023 hospital claims. Therefore, the proposed 
payment rates listed in Addenda A and B to this proposed rule are not 
for January 2025 payment purposes and are only illustrative of the CY 
2025 OPPS payment methodology using the most recently available 
information at the time of issuance of this proposed rule.
---------------------------------------------------------------------------

    \75\ https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.
---------------------------------------------------------------------------

    We note that payment amounts for most drugs separately payable 
under Medicare Part B are determined using the methodology in section 
1847A of the Act, and in many cases, payment is based on the average 
sales price (ASP) plus a statutorily mandated 6 percent add-on.
    For CY 2025, we propose to clarify that only ASP data or, if ASP 
data are not available, mean unit cost data, would be used to set 
payment rates for separately payable nonpass-through therapeutic 
radiopharmaceuticals under the OPPS as described further in section 
V.B.3.a of this proposed rule. We propose for CY 2025 to use mean unit 
cost data to set payment rates for separately payable nonpass-through 
diagnostic radiopharmaceuticals for which we propose separate payment 
because their cost exceeds the per-day threshold. Otherwise, we are not 
proposing any changes to our policies for payment for separately 
payable drugs and biologicals; and we propose to continue our payment 
policy that has been in effect since CY 2013 to pay for separately 
payable drugs and biologicals in accordance with section 
1833(t)(14)(A)(iii)(II) of the Act (the statutory default).
b. Biosimilar Biological Products
    For CY 2024, we finalized the exception of biosimilars from the 
OPPS threshold packaging policy when their reference products are 
separately paid (88 FR 81783 through 81785). This policy allows for 
separate payment for biosimilars even if the biosimilar's per-day cost 
is below the packaging threshold if the biosimilar's reference product 
is separately paid. This policy removes the financial incentive to use 
a more expensive separately payable biological and promotes biosimilar 
use as a lower cost alternative to higher cost reference products.
    Payment rates for drugs and biologicals (including biosimilars) 
under Medicare Part B are determined using the methodology in section 
1847A of the Act, and in many cases, payment is based on the average 
sales price (ASP) plus a statutorily mandated 6 percent add-on. 
Additionally, Section 11403 of the IRA requires that a qualifying 
biosimilar be paid at ASP plus 8 percent of the reference product's ASP 
rather than 6 percent during the applicable 5-year period. Section 
1847A(b)(8)(B)(ii) of the Act defines the applicable 5-year period for 
a qualifying biosimilar for which payment has been made using ASP (that 
is, payment under section 1847A(b)(8) of the Act) as of September 30, 
2022 as the 5-year period beginning on October 1, 2022. For a 
qualifying biosimilar for which payment is first made using ASP during 
the period beginning October 1, 2022, and ending December 31, 2027, the 
statute defines the applicable 5-year period as the 5-year period 
beginning on the first day of such calendar quarter of such payment (88 
FR 81783). These payment rates are published in the quarterly release 
of Addendum B or ASP pricing files.
d. Invoice Drug Pricing Proposal for CY 2026
    We have observed that in recent years there has been an increasing 
number of drug and biological HCPCS codes for which ASP, WAC, AWP, and 
mean unit cost information is not available. These are often HCPCS 
codes for new drugs or biologicals that have been approved for 
marketing, but for which the manufacturer does not have sales data, and 
WAC, AWP, and mean unit cost information is not available. As a result, 
we are unable to assign a payable status indicator to these drugs or 
biologicals due to of a lack of payment data. The numbers of drug and 
biological HCPCS codes without payment rates from Addendum B for the CY 
2022 through CY 2024 OPPS/ASC final rules with comment period are 
listed in Table 66.
[GRAPHIC] [TIFF OMITTED] TP22JY24.095


[[Page 59369]]


    In order to provide appropriate payment rates for these drugs and 
biologicals without pricing data, we propose to adopt an invoice 
pricing policy beginning in CY 2026. Because this policy necessitates 
significant operational changes to implement, we propose to implement 
it beginning in CY 2026, rather than CY 2025. For CY 2025, the affected 
drugs and biologicals would continue to be assigned a non-payable 
status indicator until we implement our invoice pricing policy, if 
adopted. We believe invoice pricing is appropriate for use under the 
OPPS because it provides temporary drug or biological cost information 
to generate a representative payment rate for a drug or biological and 
supports the utilization of new drug or biological HCPCS codes. 
Otherwise, the new drug and biological HCPCS codes would not receive 
payment under the OPPS, which would discourage their use by providers. 
Currently, the Physician Fee Schedule utilizes invoice pricing for 
drugs and biologicals when other types of pricing information are not 
available.
    We propose that, for separately payable drugs or biologicals for 
which CMS does not provide a payment rate in Addendum B, which would 
indicate to MACs that CMS does not have pricing information 
(specifically, that ASP, WAC, AWP, and mean unit cost information is 
not available to determine a payment rate), MACs would calculate the 
payment based on provider invoices. The drug or biological invoice cost 
would be the net acquisition cost minus any rebates, chargebacks, or 
post-sale concessions. Before calculating an invoice-based payment 
amount, MACs would use the provider invoice to determine that: (a) the 
drug is not policy packaged; and (b) the per-day cost of the drug, 
biological, therapeutic radiopharmaceutical or diagnostic 
radiopharmaceutical is above the threshold packaging amount, as 
applicable. If both conditions are met, we propose that MACs would use 
the provider invoice amount to set a payment rate for the separately 
payable drug, biological, or radiopharmaceutical until its payment 
amount becomes available to CMS. We generally would expect invoice 
pricing to be temporary, lasting two to three quarters, for qualified 
drugs required to report ASP under 1847A of the Act. For drug products 
that are not required to report ASP under 1847A of the Act (i.e., 
diagnostic pharmaceuticals), invoice pricing may be used longer term 
until a MUC can be calculated. We propose that we would not begin using 
invoice pricing for drugs, biologicals, and radiopharmaceuticals 
without pricing information until CY 2026 because we would need to make 
technical updates to outpatient hospital claims to allow the hospitals 
to report drug invoice pricing. We intend to work with the National 
Uniform Billing Committee (NUBC) in order to create a value code that 
would allow for the reporting of invoice prices of drugs, biologicals, 
and radiopharmaceuticals for purposes of this policy.
3. Payment Policy for Radiopharmaceuticals
    For a complete history of the OPPS payment policy for 
radiopharmaceuticals, we refer readers to the CY 2005 OPPS final rule 
with comment period (69 FR 65811), the CY 2006 OPPS final rule with 
comment period (70 FR 68655), and the CY 2010 OPPS/ASC final rule with 
comment period (74 FR 60524).
a. Payment Policy for Therapeutic Radiopharmaceuticals
    In the CY 2023 OPPS/ASC final rule with comment period, we adopted 
as final our proposal to continue our longstanding payment policy for 
therapeutic radiopharmaceuticals for CY 2023 and subsequent years. 
Accordingly, this payment policy for therapeutic radiopharmaceuticals 
will continue to apply in CY 2025.
    Specifically, our policy of paying for separately payable pass-
through therapeutic radiopharmaceuticals under the ASP methodology 
adopted for separately payable drugs and biologicals described in 
section V.A.1 of this proposed rule will continue to apply for CY 2025. 
We will pay for separately payable nonpass-through therapeutic 
radiopharmaceuticals through a modified ASP methodology where we pay at 
ASP plus 6 percent if ASP data are available. However, if ASP 
information is unavailable for a separately payable nonpass-through 
therapeutic radiopharmaceutical, we will continue to base the payment 
rate on mean unit cost data derived from hospital claims. Our policy 
not to use WAC or AWP to establish payment for separately payable 
nonpass-through therapeutic radiopharmaceuticals if ASP is not 
available will continue for CY 2025. We explained our rationale in the 
CY 2010 OPPS/ASC final rule with comment period (74 FR 60524 through 
60525) when we first adopted our policy to apply the principles of 
separately payable drug pricing to therapeutic radiopharmaceuticals.
    We note that in the CY 2024 OPPS final rule with comment period (88 
FR 81786), we stated that the ASP payment methodology for separately 
payable nonpass-through therapeutic radiopharmaceuticals did allow for 
using WAC or AWP to establish a payment rate for these items. This was 
an error and conflicted with the policy implemented in CY 2010 and 
continued in subsequent years. The statement also conflicted with the 
policy that we proposed and finalized for CY 2023 and subsequent years 
in the CY 2023 OPPS/ASC final rule with comment period (87 FR 71969). 
The policy implemented in CY 2010 regarding ASP payment for separately 
payable nonpass-through therapeutic radiopharmaceuticals remains our 
intended policy. Therefore, we will pay for all nonpass-through 
separately payable therapeutic radiopharmaceuticals at ASP plus 6 
percent based on the statutory default described in section 
1833(t)(14)(A)(iii)(II) of the Act. For a full discussion of ASP-based 
payment for therapeutic radiopharmaceuticals, we refer readers to the 
CY 2010 OPPS/ASC final rule with comment period (74 FR 60520 through 
60521). We will rely on CY 2023 mean unit cost data derived from 
hospital claims data for payment rates for separately payable nonpass-
through therapeutic radiopharmaceuticals for which ASP data are 
unavailable and update the payment rates for these products according 
to our usual process for updating the payment rates for separately 
payable drugs and biologicals on a quarterly basis if updated ASP 
information becomes available.
    The proposed CY 2025 payment rates for separately payable nonpass-
through therapeutic radiopharmaceuticals are included in Addenda A and 
B of this proposed rule (which are available on the CMS website).\76\
---------------------------------------------------------------------------

    \76\ https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.
---------------------------------------------------------------------------

b. Payment Policy for Diagnostic Radiopharmaceuticals
    For CY 2025, we propose, as described in section II.A.3 of this 
proposed rule, to pay separately for diagnostic radiopharmaceuticals 
with a per day cost above our proposed diagnostic radiopharmaceutical 
packaging threshold (proposed at $630 for CY 2025). We propose to pay 
for pass-through diagnostic radiopharmaceuticals based on ASP WAC, and 
AWP.
    We propose to base the payment rate for separately payable nonpass-
through diagnostic radiopharmaceuticals on mean unit cost data derived 
from hospital claims. As discussed in Section II.A.3.c.(5), we are not 
proposing to use

[[Page 59370]]

ASP data when mean unit cost data are available for a separately 
payable nonpass-through diagnostic radiopharmaceutical, but we are 
seeking comment on using ASP for setting the payment rate for nonpass-
through diagnostic radiopharmaceuticals in the future. Additionally, we 
are not proposing to use WAC or AWP as a basis for payment for nonpass-
through diagnostic radiopharmaceuticals when mean unit cost data 
derived from hospital claims is available. We believe that paying for 
nonpass-through diagnostic radiopharmaceuticals using mean unit cost 
would appropriately pay for the average price of a nonpass-through 
separately payable diagnostic radiopharmaceutical. In our view, MUC is 
an appropriate proxy for the average price for a diagnostic 
radiopharmaceutical for a given year, as it is calculated based on the 
average costs for a particular year and is directly reflective of the 
actual cost data that hospitals submit to CMS. As we stated in the CY 
2010 OPPS/ASC final rule with comment period (74 FR 60523), we believe 
that WAC or AWP is not an appropriate proxy to provide OPPS payment for 
radiopharmaceuticals because these pricing methodologies do not include 
discounts. Specifically, the absence of appropriate ASP reporting could 
result in payment for a separately payable diagnostic 
radiopharmaceutical based on WAC or AWP indefinitely, a result which we 
believe would be inappropriate, as these pricing metrics do not capture 
all of the pricing discounts that may be reflected in the ASP.
    Additionally, we propose to base the initial payment for new 
diagnostic radiopharmaceuticals with HCPCS codes that do not have pass-
through status or claims data on ASP, and on the WAC for these products 
if ASP data for these diagnostic radiopharmaceuticals are not 
available. If the WAC also is unavailable, we propose to make payment 
for new diagnostic radiopharmaceuticals at 95 percent of the products' 
most recent AWP. We believe the volume of products in this category 
will typically be very low; however, in these rare situations, we 
believe it would be appropriate to use ASP until a MUC is established 
for new diagnostic radiopharmaceuticals with HCPCS codes that do not 
have passthrough status or claims data.
    The proposed CY 2025 payment rates for separately payable nonpass-
through diagnostic radiopharmaceuticals are included in Addenda A and B 
of this proposed rule (which are available on the CMS website).\77\
---------------------------------------------------------------------------

    \77\ https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.
---------------------------------------------------------------------------

4. Proposed Payment for Blood Clotting Factors
    For CY 2025, we propose to continue our established policy to 
provide payment for blood clotting factors using the same methodology 
as other separately payable drugs and biologicals under the OPPS and to 
continue to pay a furnishing fee. For a full discussion of our 
established payment policy for blood clotting factors, please refer to 
the CY 2023 OPPS/ASC final rule with comment period (87 FR 71969 
through 71970). In accordance with our policy as finalized in the CY 
2008 OPPS/ASC final rule with comment period (72 FR 66765), we will 
announce the actual figure of the percent change in the applicable CPI 
and the updated furnishing fee calculation based on that figure through 
the applicable program instructions and posting on the CMS website at 
https://www.cms.gov/medicare/payment/fee-for-service-providers/part-b-drugs/average-drug-sales-price.
5. Proposed Payment for Nonpass-Through Drugs, Biologicals, and 
Radiopharmaceuticals With HCPCS Codes But Without OPPS Hospital Claims 
Data
    In the CY 2023 OPPS/ASC final rule with comment period, we adopted 
as final our proposal to continue our longstanding payment policy for 
nonpass-through drugs, biologicals, and radiopharmaceuticals with HCPCS 
codes but without OPPS hospital claims data for CY 2023 and subsequent 
years. Therefore, for CY 2025, this policy will continue to apply. For 
a detailed discussion of the payment policy and methodology, we refer 
readers to the CY 2016 OPPS/ASC final rule with comment period (80 FR 
70442 through 70443). Consistent with our policy, because we have no 
claims data and must determine if these products exceed the per-day 
cost threshold, we estimated the average number of units of each 
product that would typically be furnished to a patient during one day 
in the hospital outpatient setting and utilized the ASP methodology to 
determine whether their payment will be packaged as well as their 
payment status indicators.
6. Requirement in the CY 2025 Physician Fee Schedule Proposed Rule for 
HOPDs and ASCs To Report Discarded Amounts of Certain Single-Dose or 
Single-Use Package Drugs
    Section 90004 of the Infrastructure Investment and Jobs Act (Pub. 
L. 117-9, November 15, 2021) (``the Infrastructure Act'') amended 
section 1847A of the Act to re-designate subsection (h) as subsection 
(i) and insert a new subsection (h), which requires manufacturers to 
provide a refund to CMS for certain discarded amounts from a refundable 
single-dose container or single-use package drug. The CY 2025 PFS 
proposed rule includes proposals related to the discarded drug refund 
policy, including proposals that may impact hospital outpatient 
departments (HOPDs) and ambulatory surgical centers (ASCs). Similar to 
our CY 2023 and CY 2024 notice in the OPPS/ASC proposed rule (87 FR 
71988), we wanted to ensure interested parties were aware of these 
proposals and knew to refer to the CY 2025 PFS proposed rule for a full 
description of the proposed policy. Interested parties are asked to 
submit comments on any proposals to implement Section 90004 of the 
Infrastructure Act to the CY 2025 PFS proposed rule. Public comments on 
these proposals will be addressed in the CY 2025 PFS final rule with 
comment period.
7. High-Cost/Low-Cost Threshold for Packaged Skin Substitutes
a. Background
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 
74938), we unconditionally packaged skin substitute products into their 
associated surgical procedures as part of a broader policy to package 
all drugs and biologicals that function as supplies when used in a 
surgical procedure. As part of the policy to package skin substitutes, 
we also finalized a methodology that divides the skin substitutes into 
a high-cost group and a low-cost group, to ensure adequate resource 
homogeneity among APC assignments for the skin substitute application 
procedures (78 FR 74933). In the CY 2015 OPPS/ASC final rule with 
comment period (79 FR 66886), we stated that skin substitutes are best 
characterized as either surgical supplies or devices because of their 
required surgical application and because they share significant 
clinical similarity with other surgical devices and supplies.
    Skin substitutes assigned to the high-cost group are described by 
HCPCS codes 15271 through 15278. Skin

[[Page 59371]]

substitutes assigned to the low-cost group are described by HCPCS codes 
C5271 through C5278. Geometric mean costs for the various procedures 
are calculated using only claims for the skin substitutes that are 
assigned to each group. Specifically, claims billed with HCPCS codes 
15271, 15273, 15275, or 15277 are used to calculate the geometric mean 
costs for procedures assigned to the high-cost group, and claims billed 
with HCPCS codes C5271, C5273, C5275, or C5277 are used to calculate 
the geometric mean costs for procedures assigned to the low-cost group 
(78 FR 74935).
    Each of the HCPCS codes described earlier are assigned to one of 
the following three skin procedure APCs according to the geometric mean 
cost for the code: APC 5053 (Level 3 Skin Procedures): HCPCS codes 
C5271, C5275, and C5277; APC 5054 (Level 4 Skin Procedures): HCPCS 
codes C5273, 15271, 15275, and 15277; or APC 5055 (Level 5 Skin 
Procedures): HCPCS code 15273. In CY 2024, the payment rate for APC 
5053 (Level 3 Skin Procedures) was $599.02, the payment rate for APC 
5054 (Level 4 Skin Procedures) was $1,739.33, and the payment rate for 
APC 5055 (Level 5 Skin Procedures) was $3,421.82. This information is 
also available in Addenda A and B of the CY 2024 final rule with 
comment period (88 FR 81540) (the Addenda A and B are available on the 
CMS website https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices).
    We have continued the high-cost/low-cost categories policy since CY 
2014. Under the current policy, skin substitutes in the high-cost 
category are reported with the skin substitute application CPT codes, 
and skin substitutes in the low-cost category are reported with the 
analogous skin substitute HCPCS C-codes. For a discussion of the CY 
2014 and CY 2015 methodologies for assigning skin substitutes to either 
the high-cost group or the low-cost group, we refer readers to the CY 
2014 OPPS/ASC final rule with comment period (78 FR 74932 through 
74935) and the CY 2015 OPPS/ASC final rule with comment period (79 FR 
66882 through 66885).
    For a discussion of the high-cost/low-cost methodology that was 
adopted in CY 2016 and has been in effect since then, we refer readers 
to the CY 2016 OPPS/ASC final rule with comment period (80 FR 70434 
through 70435). Beginning in CY 2016, we adopted a policy where we 
determined the high-cost/low-cost status for each skin substitute 
product based on either a product's geometric mean unit cost (MUC) 
exceeding the geometric MUC threshold or the product's per day cost 
(PDC) (the total units of a skin substitute multiplied by the mean unit 
cost and divided by the total number of days) exceeding the PDC 
threshold. We assigned each skin substitute that exceeded either the 
MUC threshold or the PDC threshold to the high-cost group. In addition, 
we assigned any skin substitute with a MUC or a PDC that did not exceed 
either the MUC threshold or the PDC threshold to the low-cost group (87 
FR 71976).
    However, some skin substitute manufacturers have raised concerns 
about significant fluctuation in both the MUC threshold and the PDC 
threshold from year to year using the methodology developed in CY 2016. 
The fluctuation in the thresholds may result in the reassignment of 
several skin substitutes from the high-cost group to the low-cost 
group, which, under current payment rates, can be a difference of over 
$1,000 in the payment amount for the same procedure. In addition, these 
interested parties were concerned that the inclusion of cost data from 
skin substitutes with pass-through payment status in the MUC and PDC 
calculations would artificially inflate the thresholds. Skin substitute 
interested parties requested that CMS consider alternatives to the 
current methodology used to calculate the MUC and PDC thresholds and 
whether it might be appropriate to establish a new cost group in 
between the low-cost group and the high-cost group to allow for 
assignment of moderately priced skin substitutes to a newly created 
middle group.
    We share the goal of promoting payment stability for skin 
substitute products and their related procedures as price stability 
allows hospitals using such products to more easily anticipate future 
payments associated with these products. We have attempted to limit 
year-to-year shifts for skin substitute products between the high-cost 
and low-cost groups through multiple initiatives implemented since CY 
2014, including: establishing separate skin substitute application 
procedure codes for low-cost skin substitutes (78 FR 74935); using a 
skin substitute's MUC calculated from outpatient hospital claims data 
instead of an average of ASP plus 6 percent as the primary methodology 
to assign products to the high-cost or low-cost group (79 FR 66883); 
and establishing the PDC threshold as an alternate methodology to 
assign a skin substitute to the high-cost group (80 FR 70434 through 
70435).
    To allow additional time to evaluate concerns and suggestions from 
interested parties about the volatility of the MUC and PDC thresholds, 
in the CY 2018 OPPS/ASC proposed rule (82 FR 33627), we proposed that a 
skin substitute that was assigned to the high-cost group for CY 2017 
would be assigned to the high-cost group for CY 2018, even if it did 
not exceed the CY 2018 MUC or PDC thresholds. We finalized this policy 
in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59347). 
For more detailed information and discussion regarding the goals of 
this policy and the subsequent comment solicitations in CY 2019 and CY 
2020 regarding possible alternative payment methodologies for graft 
skin substitute products, please refer to the CY 2018 OPPS/ASC final 
rule with comment period (82 FR 59347); the CY 2019 OPPS/ASC final rule 
with comment period (83 FR 58967 to 58968); and the CY 2020 OPPS/ASC 
final rule with comment period (84 FR 61328 to 61331).
b. Proposals for Packaged Skin Substitutes for CY 2025
    For CY 2025, consistent with our policy since CY 2016, we propose 
to continue to determine the high-cost/low-cost status for each skin 
substitute product based on either a product's geometric MUC exceeding 
the geometric MUC threshold or the product's PDC (the total units of a 
skin substitute multiplied by the MUC and divided by the total number 
of days) exceeding the PDC threshold. Consistent with the methodology 
as established in the CY 2014 OPPS/ASC through CY 2018 OPPS/ASC final 
rules with comment period, we analyzed CY 2023 claims data to calculate 
the MUC threshold (a weighted average of all skin substitutes' MUCs) 
and the PDC threshold (a weighted average of all skin substitutes' 
PDCs). The proposed CY 2025 MUC threshold is $50 per cm\2\ (rounded to 
the nearest $1) and the proposed CY 2025 PDC threshold is $840 (rounded 
to the nearest $1). Also, the availability of a HCPCS code for a 
particular human cell, tissue, or cellular or tissue-based product 
(HCT/P) does not mean that that product is appropriately regulated 
solely under section 361 of the PHS Act and the FDA regulations in 21 
CFR part 1271. Manufacturers of HCT/Ps should consult with the FDA 
Tissue Reference Group (TRG) or obtain a determination through a 
Request for Designation (RFD) on whether their HCT/Ps are appropriately 
regulated solely under section 361 of the PHS Act and the regulations 
in 21 CFR part 1271.
    For CY 2025, as we did for CY 2024, we propose to assign each skin 
substitute that exceeds either the MUC

[[Page 59372]]

threshold or the PDC threshold to the high-cost group. In addition, we 
propose to assign any skin substitute that does not exceed either the 
MUC threshold or the PDC threshold to the low-cost group except that we 
propose that any skin substitute product that is assigned to the high-
cost group in CY 2024 would be assigned to the high-cost group for CY 
2025, regardless of whether it exceeds or falls below the CY 2025 MUC 
or PDC threshold. This policy was established in the CY 2018 OPPS/ASC 
final rule with comment period (82 FR 59346 through 59348).
    For CY 2025, we propose to continue to assign skin substitutes with 
pass-through payment status to the high-cost category. We propose to 
assign skin substitutes with pricing information but without claims 
data to calculate a geometric MUC or PDC to either the high-cost or 
low-cost category based on the product's ASP plus 6 percent payment 
rate as compared to the MUC threshold. If ASP is not available, we 
propose to use WAC plus 3 percent to assign a product to either the 
high-cost or low-cost category. Finally, if neither ASP nor WAC is 
available, we propose to use 95 percent of AWP to assign a skin 
substitute to either the high-cost or low-cost category. We propose to 
continue to use WAC plus 3 percent instead of WAC plus 6 percent to 
conform to our proposed policy described in section V.B.2.b of this 
proposed rule to establish a payment rate of WAC plus 3 percent for 
separately payable drugs and biologicals that do not have ASP data 
available. We propose that any skin substitute product that is assigned 
a code in the HCPCS A2XXX series would be assigned to the high-cost 
skin substitute group including new products without pricing 
information. New skin substitutes without pricing information that are 
not assigned a code in the HCPCS A2XXX series would be assigned to the 
low-cost category until pricing information is available to compare to 
the CY 2024 MUC and PDC thresholds. For a discussion of our policy 
under which we assign skin substitutes without pricing information that 
are not assigned a code in the HCPCS A2XXX series to the low-cost 
category until pricing information is available, we refer readers to 
the CY 2016 OPPS/ASC final rule with comment period (80 FR 70436).
    Table 67 includes the proposed CY 2025 cost category assignment for 
each skin substitute product.
BILLING CODE 4120-01-P

[[Page 59373]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.096


[[Page 59374]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.097


[[Page 59375]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.098


[[Page 59376]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.099


[[Page 59377]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.100

BILLING CODE 4120-01-C
8. Radioisotopes Derived From Non-Highly Enriched Uranium (Non-HEU) 
Sources
    Radioisotopes are widely used in modern medical imaging, 
particularly for cardiac imaging and predominantly for the Medicare 
population. Technetium-99m (Tc-99m), the radioisotope used in the 
majority of such diagnostic imaging services, is produced through the 
radioactive decay of molybdenum-99 (Mo-99). Historically, most of the 
Mo-99 used in the United States was produced in legacy reactors outside 
of the United States using highly enriched uranium (HEU).
    The United States wanted to eliminate domestic reliance on these 
reactors and promoted the conversion of all medical radioisotope 
production to non-HEU sources. Alternative methods for producing Tc-99m 
without HEU are technologically and economically viable, but it was 
expected that this change in the supply source for the radioisotope 
used for modern medical imaging would introduce increased costs into 
the payment system that would not be fully accounted for in the 
historical claims data until all Tc-99m was produced from non-HEU 
sources.
    Therefore, beginning in CY 2013, we finalized a policy to provide 
an additional payment of $10 for the marginal cost for radioisotopes 
produced by non-HEU sources (77 FR 68323). Under this policy, hospitals 
report HCPCS code Q9969 (Tc-99m from non-highly enriched uranium 
source, full cost recovery add-on per study dose) once per dose along 
with any diagnostic scan or scans furnished using Tc-99m as long as the 
Tc-99m doses used can be certified by the hospital to be at least 95 
percent derived from non-HEU sources (77 FR 68323).
    We stated in the CY 2013 OPPS/ASC final rule with comment period 
(77 FR 68321) that our expectation was that this additional payment 
would be needed for the duration of the industry's conversion to 
alternative methods of producing Tc-99m without HEU. We also stated 
that we would reassess, and propose, if necessary, on an annual basis 
whether such an adjustment continued to be necessary and whether any 
changes to the adjustment were warranted (77 FR 68321). The Secretaries 
of Energy and Health and Human Services issued a certification 
regarding the supply of non-HEU-sourced Mo-99 effective January 2, 2022 
(86 FR 73270). Mo-99 is the precursor material from which Tc-99m is 
sourced. The certification by the Secretary of Energy stated that there 
was a sufficient global supply of Mo-99 produced without the use of HEU 
available to meet the needs of patients in the United States. In the CY 
2023 OPPS/ASC final rule with comment period, we stated that we 
believed the conversion to non-HEU sources of Tc-99m had reached a 
point where it was necessary to reassess our policy of providing an 
additional payment of $10 for the marginal cost for radioisotopes 
produced by non-HEU sources (87 FR 71987).
    In the OPPS, diagnostic radiopharmaceuticals are currently packaged 
into the cost of the associated diagnostic imaging procedure no matter 
the per day cost of the radiopharmaceutical (though we are proposing in 
this rule to provide separate payment for high-cost diagnostic 
radiopharmaceuticals starting in CY 2025). The cost of the 
radiopharmaceutical is included as a part of the cost of the diagnostic 
imaging procedure and is reported through Medicare claims data. 
Medicare claims data used to set payment rates under the OPPS generally 
is from 2 years prior to the payment year.
    As we explained in the CY 2023 OPPS/ASC final rule with comment 
period (87 FR 71987), the claims data we used to set payment rates for 
CY 2024 (generally CY 2022 claims data) contained claims for diagnostic 
radiopharmaceuticals that reflect both HEU-sourced Tc-99m and non-HEU-
sourced Tc99m, rather than radiopharmaceuticals sourced solely from 
non-HEU Tc-99m. The cost of HEU-sourced Tc-99m is substantially lower 
than the cost of non-HEU-sourced Tc-99m. Therefore, we explained that 
providers who use radiopharmaceuticals in CY 2024 that contain only 
non-HEU-sourced Tc-99m might not receive a payment that is reflective 
of the radiopharmaceutical's current cost without the add-on payment. 
We believed that extending the additional $10 add-on payment described 
by HCPCS code Q9969 for non-HEU-sourced Tc-99m through the end of CY 
2024 would ensure adequate payment for non-HEU-sourced Tc-99m. Starting 
in CY 2025, we believed the Medicare claims data utilized to set 
payment rates (likely CY 2023 claims data) would only include claims 
for diagnostic radiopharmaceuticals that utilized non-HEU-sourced Tc-
99m, meaning the data would reflect the full cost of the Tc-99m 
diagnostic radiopharmaceuticals that would be used by providers in CY 
2025. As a

[[Page 59378]]

result, we believed there would no longer be a need for the additional 
$10 add-on payment for CY 2025 or future years.
    The conversion of the last major global Mo-99 producer from HEU to 
Low Enriched Uranium (LEU) was previously expected to complete by 
December 31, 2022 but did not occur until March 2023, so it is possible 
that some claims for diagnostic radiopharmaceuticals in CY 2023 would 
report the cost of HEU-sourced Tc-99m. This means that in CY 2025, as 
in CY 2024, there is the possibility that the payment rate for 
procedures using diagnostic radiopharmaceuticals could be lower than 
the costs providers will face for these procedures because providers 
will only have access to non-HEU-sourced Tc-99m. Therefore, we adopted 
a policy in the CY 2024 OPPS final rule with comment period (88 FR 
81803) to extend the additional $10 add-on payment described by HCPCS 
code Q9969 for non-HEU-sourced Tc-99m through the end of CY 2025 to 
continue to ensure adequate payment for non-HEU-sourced Tc-99m.
    Recently, the Department of Energy and other interested parties 
raised another issue affecting the domestic supply chain for Mo-99 and 
Tc-99 that, left unaddressed, could cause payment inequity among 
outpatient hospital providers. Foreign Mo-99 production has 
historically been subsidized by foreign governments, resulting in 
prices below the true cost of production. These artificially low, 
government-subsidized prices have created a disincentive for 
investments in Mo-99 production infrastructure, and they also created a 
barrier to entry for new producers, including U.S. companies. This in 
turn has resulted in unreliable production and periodic shortages. In 
response to the 2009-2010 shortages, Congress passed the American 
Medical Isotopes Production Act of 2012 (AMIPA), which directs the 
Secretary of Energy to provide financial and technical support to U.S. 
companies working to build new irradiation and manufacturing facilities 
to produce Mo-99 without HEU.
    It was expected that the transition from HEU to LEU-based 
production would also involve the transition to a Full Cost Recovery 
pricing model; however, it does not appear that this transition has 
occurred in practice. Foreign producers continue to rely on 
multipurpose nuclear research reactors for Mo-99 production, and the 
global Mo-99 supply chain has not established a system of verifying 
that all of the costs attributable to Mo-99 production are being 
incorporated into the price of the product.
    U.S. companies have made significant progress towards establishing 
the infrastructure needed for large-scale Mo-99 production. Unlike many 
foreign producers, U.S. companies must price their products high enough 
to cover the full cost of operating their production facilities. Based 
in part on the differences in pricing models, U.S. companies have 
experienced challenges in competing with foreign producers for 
customers. Currently, there is no domestic production of Mo-99.
    Once U.S. companies initiate or resume Mo-99 production, the 
difference in pricing models will likely create a payment inequity, as 
hospitals purchasing Tc-99m derived from domestically produced Mo-99 
would likely pay higher prices than those purchasing Tc-99m derived 
from imported Mo-99. We propose to address the payment inequity 
resulting from the higher cost of domestically produced Tc-99m by 
establishing a new add-on payment of $10 per dose for 
radiopharmaceuticals that use Tc-99m derived from domestically produced 
Mo-99 starting on January 1, 2026 using our equitable adjustment 
authority under section 1833(t)(2)(E) of the Act. We believe the $10 
add-on payment for domestically produced Tc-99m would ensure equitable 
payments by paying providers who use domestically produced Tc-99m 
radiopharmaceuticals when available an amount that reflects the 
anticipated higher cost of these products. The $10 add-on payment will 
help to preserve provider and beneficiary access to domestically 
produced Tc-99m radiopharmaceuticals by providing an additional payment 
amount that addresses the additional costs of domestically produced Tc-
99m radiopharmaceuticals. DOE/NNSA would establish the criteria to 
certify whether the Tc-99m radiopharmaceutical dose is domestically 
produced and eligible for the add-on payment, which would be included 
in the CY 2026 OPPS/ASC proposed rule. The CY 2026 OPPS/ASC proposed 
rule would include additional details on how providers would bill for 
this add-on payment in CY 2026.

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

A. Amount of Additional Payment and Limit on Aggregate Annual 
Adjustment

    Section 1833(t)(6)(E) of the Act limits the total projected amount 
of transitional pass-through payment for drugs, biologicals, and 
categories of devices for a given year to an ``applicable percentage,'' 
currently not to exceed 2.0 percent of total program payments estimated 
to be made for all covered services under the OPPS furnished for that 
year. If we estimate before the beginning of the calendar year that the 
total amount of pass-through payments in that year would exceed the 
applicable percentage, section 1833(t)(6)(E)(iii) of the Act requires a 
uniform prospective reduction in the amount of each of the transitional 
pass-through payments made in that year to ensure that the limit is not 
exceeded. We estimate the pass-through spending to determine whether 
payments exceed the applicable percentage and the appropriate pro rata 
reduction to the conversion factor for the projected level of pass-
through spending in the following year to ensure that total estimated 
pass-through spending for the prospective payment year is budget 
neutral, as required by section 1833(t)(6)(E) of the Act.
    For devices, developing a proposed estimate of pass-through 
spending in CY 2025 entails estimating spending for two groups of 
items. The first group of items consists of device categories that are 
currently eligible for pass-through payment and that will continue to 
be eligible for pass-through payment in CY 2025. The CY 2008 OPPS/ASC 
final rule with comment period (72 FR 66778) describes the methodology 
we have used in previous years to develop the pass-through spending 
estimate for known device categories continuing into the applicable 
update year. The second group of items consists of devices that we know 
are newly eligible, or project may be newly eligible, for device pass-
through payment in the remaining quarters of CY 2024 or beginning in CY 
2025. The sum of the proposed CY 2025 pass-through spending estimates 
for these two groups of device categories equals the proposed total CY 
2025 pass-through spending estimate for device categories with pass-
through payment status. We determined the device pass-through estimated 
payments for each device category based on the amount of payment as 
required by section 1833(t)(6)(D)(ii) of the Act, and as outlined in 
previous rules, including the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75034 through 75036). We note that, beginning in CY 2010, 
the pass-through evaluation process and pass-through payment 
methodology for implantable biologicals newly approved for pass-through 
payment beginning on or after January 1, 2010, that are surgically 
inserted or implanted (through a surgical incision

[[Page 59379]]

or a natural orifice) use the device pass-through process and payment 
methodology (74 FR 60476). As has been our past practice (76 FR 74335), 
in the proposed rule, we propose to include an estimate of any 
implantable biologicals eligible for pass-through payment in our 
estimate of pass-through spending for devices. Similarly, we finalized 
a policy in CY 2015 that applications for pass-through payment for skin 
substitutes and similar products be evaluated using the medical device 
pass-through process and payment methodology (76 FR 66885 through 
66888). Therefore, as we did beginning in CY 2015, for CY 2025, we also 
propose to include an estimate of any skin substitutes and similar 
products in our estimate of pass-through spending for devices.
    For drugs and biologicals eligible for pass-through payment, 
section 1833(t)(6)(D)(i) of the Act establishes the pass-through 
payment amount as the amount by which the amount authorized under 
section 1842(o) of the Act (or, if the drug or biological is covered 
under a competitive acquisition contract under section 1847B of the 
Act, an amount determined by the Secretary equal to the average price 
for the drug or biological for all competitive acquisition areas and 
year established under such section as calculated and adjusted by the 
Secretary) exceeds the portion of the otherwise applicable fee schedule 
amount that the Secretary determines is associated with the drug or 
biological. Consistent with current policy, we propose to apply a rate 
of ASP plus 6 percent to most drugs and biologicals for CY 2025, and 
therefore our estimate of drug and biological pass-through payment for 
CY 2025 for this group of items is $10.2 million.
    Payment for certain drugs, specifically diagnostic 
radiopharmaceuticals and contrast agents without pass-through payment 
status, is packaged into payment for the associated procedures, and 
these products are not separately paid. In addition, we policy-package 
all non-pass-through drugs, biologicals, and radiopharmaceuticals that 
function as supplies when used in a diagnostic test or procedure, drugs 
and biologicals that function as supplies when used in a surgical 
procedure, drugs and biologicals used for anesthesia, and other 
categories of drugs and biologicals, as discussed in section V.B.1.c of 
this proposed rule. Consistent with current policy, we propose that all 
of these policy-packaged drugs and biologicals with pass-through 
payment status will be paid at ASP+6 percent, like other pass-through 
drugs and biologicals, for CY 2025, less the policy-packaged drug APC 
offset amount described below. Our estimate of pass-through payment for 
policy-packaged drugs and biologicals with pass-through payment status 
approved prior to CY 2025 is not $0. This is because the pass-through 
payment amount and the fee schedule amount associated with the drug or 
biological will not be the same, unlike for separately payable drugs 
and biologicals. In section V.A.6 of this proposed rule, we discuss our 
policy to determine if the costs of certain policy-packaged drugs or 
biologicals are already packaged into the existing APC structure. If we 
determine that a policy-packaged drug or biological approved for pass-
through payment resembles predecessor drugs or biologicals already 
included in the costs of the APCs that are associated with the drug 
receiving pass-through payment, we propose to offset the amount of 
pass-through payment for the policy-packaged drug or biological. For 
these drugs or biologicals, the APC offset amount is the portion of the 
APC payment for the specific procedure performed with the pass-through 
drug or biological, which we refer to as the policy-packaged drug APC 
offset amount. Consistent with current policy, if we determine that an 
offset is appropriate for a specific policy-packaged drug or biological 
receiving pass-through payment, we propose to reduce our estimate of 
pass-through payments for these drugs or biologicals by the APC offset 
amount.
    Similar to pass-through spending estimates for devices, the first 
group of drugs and biologicals requiring a pass-through payment 
estimate consists of those products that were recently made eligible 
for pass-through payment and that will continue to be eligible for 
pass-through payment in CY 2025. The second group contains drugs and 
biologicals that we know are newly eligible, or project will be newly 
eligible, in the remaining quarters of CY 2024 or beginning in CY 2025. 
The sum of the CY 2025 pass-through spending estimates for these two 
groups of drugs and biologicals equals the total CY 2025 pass-through 
spending estimate for drugs and biologicals with pass-through payment 
status.

B. Proposed Estimate of Pass-Through Spending for CY 2025

    For CY 2025, we propose to set the applicable pass-through payment 
percentage limit at 2.0 percent of the total projected OPPS payments 
for CY 2025, consistent with section 1833(t)(6)(E)(ii)(II) of the Act 
and our OPPS policy from CY 2004 through CY 2024 (88 FR 81805). The 
pass-through payment percentage limit is calculated using pass-through 
spending estimates for devices and for drugs and biologicals.
    For the first group of devices, consisting of device categories 
that are currently eligible for pass-through payment and will continue 
to be eligible for pass-through payment in CY 2025, there are 8 active 
categories for CY 2025. The active categories are described by HCPCS 
codes C1747, C1826, C1827, C1600, C1601, C1602, C1603 and C1604. Based 
on the information from the device manufacturers, we estimate that 
HCPCS code C1747 will cost $19.5 million in pass-through expenditures 
in CY 2025, HCPCS code C1826 will cost $151,991 in pass-through 
expenditures in CY 2025, HCPCS code C1827 will cost $364,793 in pass-
through expenditures in CY 2025, HCPCS code C1600 will cost $21.9 
million in pass-through expenditures in CY 2025, HCPCS code C1601 will 
cost $14.4 million in pass-through expenditures in CY 2025, HCPCS code 
C1602 will cost $8.2 million in pass-through expenditures in CY 2025, 
HCPCS code C1603 will cost $6.6 million in pass-through expenditures in 
CY 2025, and HCPCS code C1604 will cost $20.0 million in pass-through 
expenditures in CY 2025. Therefore, we propose an estimate for the 
first group of devices of $91.1 million.
    In estimating our proposed CY 2025 pass-through spending for device 
categories in the second group, we included the following: (1) device 
categories that we assumed at the time of the development of the 
proposed rule would be newly eligible for pass-through payment in CY 
2025; (2) additional device categories that we estimated could be 
approved for pass-through status after the development of this proposed 
rule and before January 1, 2025; and (3) contingent projections for new 
device categories established in the second through fourth quarters of 
CY 2025. For CY 2025, we propose to use the general methodology 
described in the CY 2008 OPPS/ASC final rule with comment period (72 FR 
66778), while also taking into account recent OPPS experience in 
approving new pass-through device categories. For this proposed rule, 
the proposed estimate of CY 2025 pass-through spending for this second 
group of device categories was $523.7 million.
    To estimate proposed CY 2025 pass-through spending for drugs and 
biologicals in the first group, specifically those drugs and 
biologicals recently made eligible for pass-through payment and 
continuing on pass-through payment status for at least one quarter in 
CY 2025, we propose to use

[[Page 59380]]

the CY 2023 Medicare hospital outpatient claims data regarding their 
utilization, information provided in their respective pass-through 
applications, other historical hospital claims data, pharmaceutical 
industry information, and clinical information regarding these drugs 
and biologicals to project the CY 2025 OPPS utilization of the 
products.
    For the known drugs and biologicals (excluding policy-packaged 
diagnostic radiopharmaceuticals, contrast agents, drugs, biologicals, 
and radiopharmaceuticals that function as supplies when used in a 
diagnostic test or procedure, and drugs and biologicals that function 
as supplies when used in a surgical procedure) that will be continuing 
on pass-through payment status in CY 2025, we estimated the pass-
through payment amount as the difference between the general payment 
rate of ASP+6 percent and the payment rate for non-pass-through drugs 
and biologicals that would be separately paid. Because we propose to 
utilize a payment rate of ASP plus 6 percent for most drugs and 
biologicals in this proposed rule, the proposed payment rate difference 
between the pass-through payment amount and the non-pass-through 
payment amount is $0 for this group of drugs.
    Because payment for policy-packaged drugs and biologicals is 
packaged if the product is not paid separately due to its pass-through 
payment status, we propose to include in the CY 2025 pass-through 
estimate the difference between payment for the policy-packaged drug or 
biological at ASP+6 percent (or WAC+6 percent, or 95 percent of AWP, if 
ASP or WAC information is not available) and the policy-packaged drug 
APC offset amount, if we determine that the policy-packaged drug or 
biological approved for pass-through payment resembles a predecessor 
drug or biological already included in the costs of the APCs that are 
associated with the drug receiving pass-through payment. Given the 
proposal to pay separately for diagnostic radiopharmaceuticals that 
exceed the proposed per-day threshold referenced in section II.A.3.c of 
this proposed rule, for CY 2025, all diagnostic radiopharmaceuticals 
that are currently on pass-through will be separately payable once 
their pass-through status has expired. For this first group of policy-
packaged drugs and biologicals, we estimate pass-through spending for 
CY 2025 of $200,000 as compared to $90 million for CY 2024 OPPS/ASC 
final rule (88 FR 81806).
    To estimate proposed CY 2025 pass-through spending for drugs and 
biologicals in the second group (that is, drugs and biologicals that we 
knew at the time of development of this proposed rule were newly 
eligible or recently became eligible for pass-through payment in CY 
2024, additional drugs and biologicals that we estimated could be 
approved for pass-through status subsequent to the development of this 
proposed rule and before January 1, 2025, and projections for new drugs 
and biologicals that could be initially eligible for pass-through 
payment in the second through fourth quarters of CY 2025), we propose 
to use utilization estimates from pass-through applicants, 
pharmaceutical industry data, clinical information, recent trends in 
the per unit ASPs of hospital outpatient drugs, and projected annual 
changes in service volume and intensity as our basis for making the CY 
2025 pass-through payment estimate. We also propose to consider the 
most recent OPPS experience in approving new pass-through drugs and 
biologicals. Using our proposed methodology for estimating CY 2025 
pass-through payments for this second group of drugs, we calculated a 
proposed spending estimate for this second group of drugs and 
biologicals of approximately $10 million.
    We estimate for this proposed rule that the amount of pass-through 
spending for the device categories and the drugs and biologicals that 
are continuing to receive pass-through payment in CY 2025 and the 
amount of pass-through spending for those device categories, drugs, and 
biologicals that first become eligible for pass-through payment during 
CY 2025 would be approximately $625 million (approximately $614.8 
million for device categories and approximately $10.2 million for drugs 
and biologicals), which represents only 0.71 percent of total projected 
OPPS payments for CY 2025 (approximately $88.2 billion). Therefore, we 
estimate that pass-through spending in CY 2025 would not exceed the 2.0 
percent of total projected OPPS CY 2025 program spending limit provided 
for in section 1833(t)(6)(E) of the Act.

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

    For CY 2025, we propose to continue our current clinic and 
emergency department (ED) hospital outpatient visits payment policies. 
For a description of these policies, we refer readers to the CY 2016 
OPPS/ASC final rule with comment period (80 FR 70448). We also propose 
to continue our payment policy for critical care services for CY 2025. 
For a description of this policy, we refer readers to the CY 2016 OPPS/
ASC final rule with comment period (80 FR 70449), and for the history 
of this payment policy, we refer readers to the CY 2014 OPPS/ASC final 
rule with comment period (78 FR 75043).
    As we stated in the CY 2022 OPPS/ASC final rule with comment period 
(86 FR 63663), the volume control method for clinic visits furnished by 
non-excepted off-campus provider-based departments (PBDs) applies for 
CY 2022 and subsequent years. More specifically, we finalized a policy 
to continue to utilize a PFS-equivalent payment rate for the hospital 
outpatient clinic visit service described by HCPCS code G0463 when it 
is furnished by these departments for CY 2022 and beyond. The PFS-
equivalent rate for CY 2025 is 40 percent of the proposed OPPS payment. 
Under this policy, these departments will be paid approximately 40 
percent of the OPPS rate for the clinic visit service in CY 2025.
    In the CY 2023 OPPS/ASC final rule with comment period (87 FR 
71748), we finalized a policy that excepted off-campus provider-based 
departments (PBDs) (departments that bill the modifier ``PO'' on claim 
lines) of rural Sole Community Hospitals (SCHs), as described under 42 
CFR 412.92 and designated as rural for Medicare payment purposes, are 
exempt from the clinic visit payment policy that applies a PFS-
equivalent payment rate for the clinic visit service, as described by 
HCPCS code G0463, when provided at an off-campus PBD excepted from 
section 1833(t)(21) of the Act. For the full discussion of this policy, 
we refer readers to the CY 2023 OPPS/ASC final rule with comment period 
(87 FR 72047 through 72051). For CY 2025, we propose to continue to 
exempt excepted off-campus PBDs of rural SCHs from the clinic visit 
payment policy. We will continue to monitor the effect of this change 
in Medicare payment policy, including on the volume of these types of 
OPD services.

VIII. Payment for Partial Hospitalization and Intensive Outpatient 
Services

    This section discusses payment for partial hospitalization services 
as well as intensive outpatient services. Since CY 2000, Medicare has 
paid for partial hospitalization services under the OPPS. Beginning in 
CY 2024, as authorized by section 4124 of the Consolidated 
Appropriations Act (CAA), 2023 (Pub. L. 117-328), Medicare began paying 
for intensive outpatient services furnished by hospital outpatient 
departments,

[[Page 59381]]

community mental health centers, federally qualified health centers, 
and rural health clinics in addition to opioid treatment programs. 
Additional background on the partial hospitalization and intensive 
outpatient benefits is included in the following paragraphs.

A. Background

1. Partial Hospitalization
    A partial hospitalization program (PHP) is an intensive outpatient 
program of psychiatric services provided as an alternative to inpatient 
psychiatric care for individuals who have an acute mental illness, 
which includes, but is not limited to, conditions such as depression, 
schizophrenia, and substance use disorders (SUD). Section 1861(ff)(1) 
of the Act defines partial hospitalization services as the items and 
services described in paragraph (2) prescribed by a physician and 
provided under a program described in paragraph (3) under the 
supervision of a physician pursuant to an individualized, written plan 
of treatment established and periodically reviewed by a physician (in 
consultation with appropriate staff participating in such program), 
which sets forth the physician's diagnosis, the type, amount, 
frequency, and duration of the items and services provided under the 
plan, and the goals for treatment under the plan. Section 1861(ff)(2) 
of the Act describes the items and services included in partial 
hospitalization services. Section 1861(ff)(3)(A) of the Act specifies 
that a PHP is a program furnished by a hospital to its outpatients or 
by a community mental health center (CMHC), as a distinct and organized 
intensive ambulatory treatment service, offering less than 24-hour-
daily care, in a location other than an individual's home or inpatient 
or residential setting. Section 1861(ff)(3)(B) of the Act defines a 
CMHC for purposes of this benefit. We refer readers to sections 
1833(t)(1)(B)(i), 1833(t)(2)(B), 1833(t)(2)(C), and 1833(t)(9)(A) of 
the Act and 42 CFR 419.21, for additional information regarding PHP.
    Partial hospitalization program policies and payment have been 
addressed under OPPS since CY 2000. In CY 2008, we began efforts to 
strengthen the PHP benefit through extensive data analysis, along with 
policy and payment changes, by implementing two refinements to the 
methodology for computing the PHP median. For a detailed discussion on 
these policies, we refer readers to the CY 2008 OPPS/ASC final rule 
with comment period (72 FR 66670 through 66676). In CY 2009, we 
implemented several regulatory, policy, and payment changes. For a 
detailed discussion on these policies, we refer readers to the CY 2009 
OPPS/ASC final rule with comment period (73 FR 68688 through 68697). In 
CY 2010, we retained the two-tier payment approach for partial 
hospitalization services and used only hospital-based PHP data in 
computing the PHP APC per diem costs, upon which PHP APC per diem 
payment rates are based (74 FR 60556 through 60559). In CY 2011 (75 FR 
71994), we established four separate PHP APC per diem payment rates: 
two for CMHCs (APC 0172 and APC 0173) and two for hospital-based PHPs 
(APC 0175 and APC 0176) and instituted a two-year transition period for 
CMHCs to the CMHC APC per diem payment rates. For a detailed 
discussion, we refer readers to section X.B of the CY 2011 OPPS/ASC 
final rule with comment period (75 FR 71991 through 71994). In CY 2012, 
we determined the relative payment weights for partial hospitalization 
services provided by CMHCs based on data derived solely from CMHCs and 
the relative payment weights for partial hospitalization services 
provided by hospital-based PHPs based exclusively on hospital data (76 
FR 74348 through 74352). In the CY 2013 OPPS/ASC final rule with 
comment period, we finalized our proposal to base the relative payment 
weights that underpin the OPPS APCs, including the four PHP APCs (APCs 
0172, 0173, 0175, and 0176), on geometric mean costs rather than on the 
median costs. For a detailed discussion on this policy, we refer 
readers to the CY 2013 OPPS/ASC final rule with comment period (77 FR 
68406 through 68412).
    In the CY 2014 OPPS/ASC proposed rule (78 FR 43621 through 43622) 
and CY 2015 OPPS/ASC final rule with comment period (79 FR 66902 
through 66908), we continued to apply our established policies to 
calculate the four PHP APC per diem payment rates based on geometric 
mean per diem costs using the most recent claims data for each provider 
type. For a detailed discussion on this policy, we refer readers to the 
CY 2014 OPPS/ASC final rule with comment period (78 FR 75047 through 
75050). In the CY 2016 OPPS/ASC final rule with comment period (80 FR 
70453 through 70467), we described our extensive analysis of the claims 
and cost data and ratesetting methodology, corrected a cost inversion 
that occurred in the final rule data with respect to hospital-based PHP 
providers, and renumbered the PHP APCs. In the CY 2017 OPPS/ASC final 
rule with comment period (81 FR 79687 through 79691), we continued to 
apply our established policies to calculate the PHP APC per diem 
payment rates based on geometric mean per diem costs and finalized a 
policy to combine the Level 1 and Level 2 PHP APCs for CMHCs and for 
hospital-based PHPs. We also implemented an eight-percent outlier cap 
for CMHCs to mitigate potential outlier billing vulnerabilities. For a 
comprehensive description of PHP payment policy, including a detailed 
methodology for determining PHP per diem amounts, we refer readers to 
the CY 2016 and CY 2017 OPPS/ASC final rules with comment period (80 FR 
70453 through 70455 and 81 FR 79678 through 79680, respectively).
    In the CYs 2018 and 2019 OPPS/ASC final rules with comment period 
(82 FR 59373 through 59381 and 83 FR 58983 through 58998, 
respectively), we continued to apply our established policies to 
calculate the PHP APC per diem payment rates based on geometric mean 
per diem costs, designated a portion of the estimated 1.0 percent 
hospital outpatient outlier threshold specifically for CMHCs, and 
proposed updates to the PHP allowable HCPCS codes. We finalized these 
proposals in the CY 2020 OPPS/ASC final rule with comment period (84 FR 
61352).
    In the CY 2020 OPPS/ASC final rule with comment period (84 FR 61339 
through 61350), we finalized a proposal to use the calculated CY 2020 
CMHC geometric mean per diem cost and the calculated CY 2020 hospital-
based PHP geometric mean per diem cost, but with a cost floor equal to 
the CY 2019 final geometric mean per diem costs as the basis for 
developing the CY 2020 PHP APC per diem rates. Also, we continued to 
designate a portion of the estimated 1.0 percent hospital outpatient 
outlier threshold specifically for CMHCs, consistent with the 
percentage of projected payments to CMHCs under the OPPS, excluding 
outlier payments.
    In the April 30, 2020 interim final rule with comment (85 FR 27562 
through 27566), effective as of March 1, 2020 and for the duration of 
the COVID-19 Public Health Emergency (PHE), hospital and CMHC staff 
were permitted to furnish certain outpatient therapy, counseling, and 
educational services (including certain PHP services), incident to a 
physician's services, to beneficiaries in temporary expansion 
locations, including the beneficiary's home, as long as the location 
met all conditions of participation to the extent not waived. A 
hospital or CMHC could furnish such services using telecommunications 
technology to a

[[Page 59382]]

beneficiary in a temporary expansion location if that beneficiary was 
registered as an outpatient. In the CY 2023 OPPS/ASC final rule (87 FR 
72247), we confirmed that these provisions applied only for the 
duration of the COVID-19 PHE. On May 11, 2023, the COVID-19 PHE ended, 
and accordingly, these flexibilities ended as well.
    In the CY 2021 OPPS/ASC final rule with comment period (85 FR 86073 
through 86080), we continued our current methodology to utilize cost 
floors, as needed. Since the final calculated geometric mean per diem 
costs for both CMHCs and hospital-based PHPs were significantly higher 
than each proposed cost floor, a floor was not necessary at the time, 
and we did not finalize the proposed cost floors in the CY 2021 OPPS/
ASC final rule with comment period.
    In the CY 2022 OPPS/ASC final rule with comment period (86 FR 63665 
through 63666), we explained that we observed a number of changes, 
likely as a result of the COVID-19 PHE, in the CY 2020 OPPS claims that 
we would have ordinarily used for CY 2022 ratesetting, and this 
included changes in the claims for partial hospitalization. We 
explained that significant decreases in utilization and in the number 
of hospital-based PHP providers who submitted CY 2020 claims led us to 
believe that CY 2020 data were not the best overall approximation of 
expected PHP services in CY 2022. Therefore, we finalized our proposal 
to calculate the PHP per diem costs using the year of claims consistent 
with the calculations that would be used for other OPPS services, by 
using the CY 2019 claims and the cost reports that were used for CY 
2021 final rulemaking to calculate the CY 2022 PHP per diem costs. In 
addition, for CY 2022 and subsequent years, we finalized our proposal 
to use cost and charge data from the Hospital Cost Report Information 
System (HCRIS) as the source for the CMHC cost-to-charge ratios (CCRs), 
instead of using the Outpatient Provider Specific File (OPSF) (86 FR 
63666).
    In the CY 2023 OPPS/ASC final rule with comment period (87 FR 
71995), we explained that we continued to observe a decrease in the 
number of hospital-based and CMHC PHP days in our trimmed dataset due 
to the continued effects of COVID-19; however, the Medicare outpatient 
service volumes appeared to be returning to more normal, pre-pandemic 
levels. Therefore, we finalized our proposal to use the latest 
available CY 2021 claims but use the cost information from prior to the 
COVID-19 PHE for calculating the CY 2023 CMHC and hospital-based PHP 
APC per diem costs. The application of the OPPS standard methodology, 
including the effect of budget neutralizing all other OPPS policy 
changes unique to CY 2023, resulted in the final calculated CMHC PHP 
APC payment rate being unexpectedly lower than the CY 2022 final CMHC 
PHP APC rate. Therefore, in the interest of accurately paying for CMHC 
PHP services, under the unique circumstances of budget neutralizing all 
other OPPS policy changes for CY 2023, and in keeping with our 
longstanding goal of protecting continued access to PHP services 
provided by CMHCs by ensuring that CMHCs remain a viable option as 
providers of mental health care in the beneficiary's own community, we 
finalized utilizing the equitable adjustment authority of section 
1833(t)(2)(E) of the Act to appropriately pay for CMHC PHP services at 
the same payment rate as for CY 2022, that is, $142.70. In addition, we 
clarified the payment under the OPPS for new HCPCS codes that designate 
non-PHP services provided for the purposes of diagnosis, evaluation, or 
treatment of a mental health disorder and are furnished to 
beneficiaries in their homes by clinical staff of the hospital would 
not be recognized as PHP services; however, none of the PHP regulations 
would preclude a patient that is under a PHP plan of care from 
receiving other reasonable and medically necessary non-PHP services 
from a hospital (87 FR 72001 and 72002).
    In the CY 2024 OPPS/ASC final rule with comment period (88 FR 
81811), we revised the regulation at Sec.  424.24(e)(1)(i) to require 
the physician certification for PHP services to include a certification 
that the patient requires such services for a minimum of 20 hours per 
week, as required by section 1861(ff)(1) of the Act, as amended by 
section 4124(a) of Division FF of the CAA, 2023. In addition, we 
modified the regulations for PHP at Sec.  410.43 to include references 
to SUD. In the same CY 2024 OPPS/ASC final rule, we also established 
separate payment rates for PHP days with 3 services and days with 4 or 
more services. Accordingly, we established four separate PHP APC per 
diem payment rates: one for CMHCs for 3-service days and another for 
CMHCs for 4-service days (APC 5853 and APC 5854, respectively), and one 
for hospital-based PHPs for 3-service days and another for hospital-
based PHPs for 4-service days (APC 5863 and APC 5864, respectively). We 
also finalized a policy to utilize the separate CMHC rates for 3-
service and 4-service PHP days as the Medicare Physician Fee Schedule 
(MPFS) rates, depending upon whether a nonexcepted off-campus hospital 
outpatient department furnishes 3 or 4 PHP services in a day. Lastly, 
we finalized several changes beginning in CY 2024 to align coding, 
billing, and payment between PHPs and intensive outpatient programs, 
which are discussed in greater detail in the following sections of this 
CY 2025 OPPS/ASC proposed rule.
2. Intensive Outpatient Program Services
    Section 4124(b) of the CAA, 2023 established Medicare coverage for 
intensive outpatient services effective for items and services 
furnished on or after January 1, 2024. An intensive outpatient program 
(IOP) is a distinct and organized program of psychiatric services for 
individuals who have an acute mental illness, which includes, but is 
not limited to, conditions such as depression, schizophrenia, and SUD. 
Intensive outpatient services are not required to be provided in lieu 
of inpatient hospitalization. Section 1861(ff)(4) of the Act defines 
intensive outpatient services as the items and services described in 
paragraph (2) prescribed by a physician for an individual determined 
(not less frequently than every other month) by a physician to have a 
need for such services for a minimum of 9 hours per week and provided 
under a program described in paragraph (3) under the supervision of a 
physician pursuant to an individualized, written plan of treatment 
established and periodically reviewed by a physician (in consultation 
with appropriate staff participating in such program), which plan sets 
forth the physician's diagnosis, the type, amount, frequency, and 
duration of the items and services provided under the plan, and the 
goals for treatment under the plan. Section 1861(ff)(2) of the Act 
describes the items and services included in intensive outpatient 
services. Section 1861(ff)(4)(C) of the Act specifies that an IOP is a 
program furnished by a hospital to its outpatients, a CMHC, a Federally 
qualified health center (FQHC), or by a rural health clinic (RHC) as a 
distinct and organized intensive ambulatory treatment service, offering 
less than 24-hour-daily care, in a location other than an individual's 
home or inpatient or residential setting. Section 1861(ff)(3)(B) of the 
Act defines a CMHC for purposes of this benefit. We refer readers to 
sections 1833(t)(1)(B)(i), 1833(t)(2)(B), 1833(t)(2)(C), and 
1833(t)(9)(A) of the

[[Page 59383]]

Act and 42 CFR 419.21, for additional information regarding IOP.
    In the CY 2024 OPPS/ASC final rule with comment period (88 FR 81812 
through 81857), we established payment and program requirements for the 
IOP benefit furnished by a hospital to its outpatients, or by a CMHC, 
an FQHC, or an RHC. In addition, we established Medicare Part B 
coverage for IOP services provided by Opioid Treatment Programs (OTPs) 
for the treatment of opioid use disorder (OUD). We refer readers to the 
CY 2025 Physician Fee Schedule (PFS) proposed rule, published elsewhere 
in the Federal Register, for additional information regarding CY 2025 
proposed payment policies for IOP services furnished by FQHCs and RHCs.
    Consistent with the statutory definition of intensive outpatient 
services under section 1861(ff)(2) of the Act, we finalized regulations 
at 42 CFR 410.44 to set forth the conditions and exclusions applicable 
for intensive outpatient services, and at Sec.  424.24 to set forth the 
content of the certification and plan of treatment requirements for 
intensive outpatient services. We also revised certain existing 
regulations at Sec. Sec.  410.2, 410.3, 410.10, 410.27, 410.150, and 
419.21 to add a regulatory definition of intensive outpatient services 
and to include intensive outpatient services in the regulations for 
medical and other health services paid for under Medicare Part B, and 
in the case of Sec.  419.21, under the OPPS. Additionally, we created 
regulations at Sec.  410.111 to establish the requirements for coverage 
of IOP services furnished in CMHCs, and at Sec.  410.173 to establish 
conditions of payment for IOP services furnished in CMHCs. Lastly, we 
revised Sec.  410.155 to exclude IOP services from the outpatient 
mental health treatment limitation, consistent with the statutory 
requirement of section 1833(c)(2) of the Act, as amended by section 
4124(b)(3) of the CAA, 2023.
    In addition, as discussed in greater detail in the following 
sections, we established coding, billing, and payment policies for IOP 
that align with the policies established for PHP provided in the same 
settings. Specifically, we established four separate IOP APC per diem 
payment rates at the same rates we proposed for the PHP APCs: one for 
CMHCs for 3-service days and another for CMHCs for 4-service days (APC 
5851 and APC 5852, respectively), and one for hospital-based IOPs for 
3-service days and another for hospital-based IOPs for 4-service days 
(APC 5861 and APC 5862, respectively). Similar to the policy finalized 
for PHP, we finalized a policy to utilize the CMHC rates for 3-service 
and 4-service IOP days as the MPFS rates, depending upon whether a 
nonexcepted hospital outpatient department furnishes 3 or 4 IOP 
services in a day.
    We also established payment for IOP provided by an RHC or FQHC at 
the same rate as APC 5861, which is the 3-service hospital-based IOP 
rate (Sec.  405.2462(j)). Furthermore, we established a payment 
adjustment for IOP provided by an OTP based on 3 times the payment rate 
for APC 5861 beginning in CY 2024 (Sec.  410.67(d)(4)(i)(F)). As noted 
earlier in this CY 2025 OPPS/ASC proposed rule, additional information 
regarding CY 2025 proposed payment policies for IOP services furnished 
by FQHCs and RHCs can be found in the CY 2025 PFS proposed rule, 
published elsewhere in the Federal Register.

B. Coding and Billing for PHP and IOP Services Under the OPPS

    In the CY 2024 OPPS/ASC final rule, we finalized a billing 
requirement that all providers use condition code 41 to indicate that a 
claim is for partial hospitalization services and use condition code 92 
to identify intensive outpatient claims, effective January 1, 2024. 
Since the statutory definitions of both IOP and PHP generally include 
the same types of items and services covered, we stated in the CY 2024 
final OPPS rule that we believe it is appropriate to align the programs 
using a consistent list of services, so that level of intensity would 
be the only differentiating factor between partial hospitalization 
services and intensive outpatient services. The use of condition codes 
41 for PHP claims and 92 for IOP claims allows us to differentiate 
between these services for billing purposes.
    We recognize that the level of intensity of mental health services 
that a patient requires may vary over time; therefore, we believe 
utilizing a consolidated list of HCPCS codes to identify services under 
both the IOP and PHP benefits supports a smooth transition for patients 
when a change in the intensity of their services is necessary to best 
meet their needs. For example, a patient receiving IOP services may 
experience an acute mental health need that necessitates more intense 
services through a PHP. Alternatively, an IOP patient that no longer 
requires the level of intensity provided by the IOP can access less 
intense mental health services, such as individual mental health 
services. The full list of HCPCs codes recognized under the PHP and IOP 
benefits can be found in the Medicare Claims Processing internet Only 
Manual, Chapter 4, Sections 260.1 and 261.1, respectively, and their 
subsections, available at https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/clm104c04.pdf.
    To qualify for payment for the IOP APC (5851, 5852, 5861, or 5862) 
or the PHP APC (5853, 5854, 5863, or 5864), one service provided that 
day must be from the Partial Hospitalization and Intensive Outpatient 
Primary list. We refer readers to the CY 2024 OPPS final rule for 
further discussion regarding our expectation that at least one of the 
services on the PHP and IOP Primary list will be indicated per day for 
patients who need the level of care offered by a PHP or IOP program. 
The PHP and IOP Primary List can be found in the CY 2024 OPPS/ASC final 
rule at 88 FR 81821.
    Beginning in CY 2024, we recognized caregiver training services and 
Principal Illness Navigation (PIN) services as PHP and IOP services. We 
explained that the reported costs associated with providing such 
services are included when we calculate the PHP and IOP payment rates; 
however, these services do not count toward the determination of 
whether a PHP or IOP day is paid at the 3-service or 4-service rate. We 
refer readers to the CY 2024 OPPS final rule for a detailed discussion 
of this policy (88 FR 81823 through 81825).
    As finalized in the CY 2024 OPPS final rule, if new codes are 
established that represent the PHP and IOP services described under 
Sec. Sec.  410.43(a)(4) and 410.44(a)(4), respectively, such codes are 
added to the list of codes recognized for payment for PHP or IOP 
through sub-regulatory guidance. We note that coding updates frequently 
occur outside of the standard rulemaking timeline. We adopted this sub-
regulatory process in order to pay expeditiously when new codes are 
created that describe any of the services enumerated at Sec. Sec.  
410.43(a)(4) and 410.44(a)(4), which PHPs and IOPs, respectively, would 
provide. We explained that this policy applies to new codes that are 
crosswalked to a previously included code, or whose code descriptor is 
substantially similar to a descriptor for a code on the list or 
describes a service on the list. We stated that any additional services 
not described at Sec. Sec.  410.43(a)(4) or 410.44(a)(4) would be added 
to the lists in regulation through notice and comment rulemaking. We 
note that for CY 2025, we are not proposing to add any new services not 
described at Sec. Sec.  410.43(a)(4) or 410.44(a)(4) to the list of PHP 
and IOP services.

[[Page 59384]]

C. Proposed CY 2025 Payment Rates for PHP and IOP

1. Background
    Beginning in CY 2024, we established four separate PHP APC per diem 
payment rates: one for CMHCs for 3-service days and another for CMHCs 
for 4-service days (APC 5853 and APC 5854, respectively), and one for 
hospital-based PHPs for 3-service days and another for hospital-based 
PHPs for 4-service days (APC 5863 and APC 5864, respectively). In 
addition, for hospital-based PHPs, we finalized a policy to calculate 
payment rates using the broader OPPS data set, instead of using 
hospital-based PHP data only. We explained that using the broader OPPS 
data set allows CMS to capture data from claims not identified as PHP, 
but that also include the service codes and intensity required for a 
PHP day. Because we established consistent coding and payment between 
the PHP and IOP benefits, we considered all OPPS data for PHP days and 
non-PHP days that include 3 or more of the same service codes. We 
established four separate IOP APC per diem payment rates at the same 
rates we proposed for the PHP APCs: one for CMHCs for 3-service days 
and another for CMHCs for 4-service days (APC 5851 and APC 5852, 
respectively), and one for hospital-based IOPs for 3-service days and 
another for hospital-based IOPs for 4-service days (APC 5861 and APC 
5862, respectively).
    In the CY 2024 OPPS/ASC final rule, we noted that the standard PHP 
day is typically four services or more per day. We explained that we 
have historically provided payment for three services a day for 
extenuating circumstances when a beneficiary would be unable to 
complete a full day of PHP treatment. As we stated in the CY 2008 OPPS/
ASC final rule with comment period (72 FR 66672), it was never our 
intention that days with only three units of service should represent 
the number of services provided in a typical PHP day. Our intention was 
to cover days that consisted of three units of service only in certain 
limited circumstances. For example, as we noted in the CY 2009 OPPS/ASC 
proposed rule (73 FR 41513), we believe 3-service days may be 
appropriate when a patient is transitioning towards discharge (or days 
when a patient is at the beginning of his or her PHP stay). Another 
example of when it may be appropriate for a program to provide only 
three units of service in a day is when a patient is required to leave 
the PHP early for the day due to an unexpected medical appointment.
    We also explained that prior to CY 2024, we historically prepared 
the data by first applying PHP-specific trims and data exclusions and 
assessing CCRs. We direct the reader to the CY 2016 OPPS/ASC final rule 
with comment period (80 FR 70463 through 70465) for a more complete 
discussion of these trims, data exclusions, and CCR adjustments. In 
prior rules, we have typically included a discussion of PHP-specific 
data trims, exclusions, and CCR adjustments; we did not include that 
discussion in the CY 2024 OPPS/ASC proposed or final rule. We stated 
that these PHP-specific data trims and exclusions addressed limitations 
as well as anomalies in the PHP data. However, as noted earlier, we 
finalized a methodology for CY 2024 to calculate hospital-based PHP 
payment rates for 3 services per day and 4 services per day based on 
cost per day using the broader OPPS data set. Accordingly, we did not 
apply PHP-specific trims and data exclusions, but rather we applied the 
same trims and data exclusions consistent with the OPPS.
    We stated in the CY 2024 OPPS/ASC final rule (88 FR 81830) that 
while no IOP benefit existed prior to the CAA, 2023, the types of items 
and services included in IOP had been, and were, paid for by Medicare 
either as part of the PHP benefit or under the OPPS more generally. 
Additionally, we stated that prior to the CAA, 2023, CMS had begun 
gathering information from interested parties on IOP under Medicare. In 
the CY 2023 OPPS/ASC proposed rule (87 FR 44679), we issued a comment 
solicitation on intensive outpatient mental health treatment, including 
SUD treatment furnished by IOPs, to collect information regarding 
whether there are any gaps in coding that may be limiting access to 
needed levels of care for treatment of mental health disorders or SUDs 
for Medicare beneficiaries, and specific information about IOP 
services, such as the settings of care in which these programs 
typically furnish services, the range of services typically offered, 
and the range of practitioner types that typically furnish these 
services.
    We explained that along with the requirements for IOP mandated by 
the CAA, 2023, we took into consideration information we received from 
the comment solicitation to construct an appropriate data set to 
develop proposed rates for IOP. Since IOPs furnish the same types of 
services as PHP, just at a lower intensity, we stated that we believe 
it was appropriate to use the same data and methodology for calculating 
payment rates for both PHP and IOP for CY 2024. We explained that 
although PHP claims can be specifically identified, there was no 
specific identifier or billing code to indicate IOP services that may 
have been provided before CY 2024. However, we noted that hospitals 
have been permitted to furnish and bill for many of these services as 
outpatient services under the OPPS. Thus, we analyzed a broader set of 
data that included both PHP and non-PHP days with 3 or more services in 
order to calculate proposed payment for PHP services. In order to 
establish consistent payment between PHP and IOP, we set IOP payment 
rates at the same rates as PHP. We stated that the primary goal in 
developing the payment rate methodology for IOP and PHP services was to 
pay providers an appropriate amount relative to the patients' needs, 
and to avoid cost inversion in future years. We stated that setting the 
IOP payment rates equal to the PHP payment rates was appropriate 
because IOP was a newly established benefit, and we did not have 
definitive data on utilization. However, we explained that both 
programs utilize the same services, but furnish them at different 
levels of intensity, with different numbers of services furnished per 
day and per week, depending on the program. Therefore, we stated that 
we expect it would be appropriate to pay the same per diem rates for 
IOP and PHP services unless future data analysis supports calculating 
rates independently.
2. CY 2025 Payment Rate Methodology for PHP and IOP
    For CY 2025, we propose to use the latest available cost 
information, from cost reports beginning three fiscal years prior to 
the year that is the subject of the rulemaking, and CY 2023 OPPS claims 
to update the payment rates for the four PHP APCs and the four IOP APCs 
finalized in the CY 2024 OPPS/ASC final rule. This proposal is 
consistent with the overall proposed use of cost data for the OPPS, 
which is discussed in section II.A.1.a of this proposed rule. In 
accordance with the methodology finalized in the CY 2024 OPPS/ASC final 
rule, we propose to base the payment rate for each PHP APC on the 
geometric mean per diem cost for days with 3 services and 4 or more 
services, calculated separately for CMHCs and hospital outpatient 
departments. We propose to use the broader set of OPPS data to 
calculate the geometric mean costs for hospital outpatient departments, 
and we propose to apply the same trims and exclusions consistent with 
the OPPS. We also propose to set the payment rates for the four IOP 
APCs based on the geometric mean per diem cost for PHP days with

[[Page 59385]]

3 services and 4 or more services, calculated separately for CMHCs and 
hospital outpatient departments. Lastly, we propose that if more recent 
data subsequently become available after the publication of this 
proposed rule, we would use such updated data, if appropriate, to 
determine the CY 2025 payment rates for the four PHP APCs and the four 
IOP APCs finalized in the CY 2024 OPPS/ASC final rule.
    Table 68 below shows the proposed APCs and the calculated geometric 
mean per diem costs for the CY 2025 OPPS/ASC proposed rule. Additional 
information about the data trims, data exclusions, and CCR adjustments 
applicable to the data used for this final rule can be found online at: 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html).\78\
---------------------------------------------------------------------------

    \78\ Click on the link labeled ``CY 2025 OPPS/ASC Notice of 
Proposed Rulemaking'', which can be found under the heading 
``Hospital Outpatient Prospective Payment System Rulemaking'' and 
open the claims accounting document link at the bottom of the page, 
which is labeled ``2025 NPRM OPPS Claims Accounting (PDF)''.
[GRAPHIC] [TIFF OMITTED] TP22JY24.101

    For beneficiaries in a PHP or IOP, we propose to apply the four-
service payment rate (that is, payment for PHP APCs 5854 for CMHCs and 
5864 for hospitals, and IOP APCs 5852 for CMHCs and 5862 for hospitals) 
for days with 4 or more services. For days with three or fewer 
services, we propose to apply the three-service payment rate (that is, 
payment for PHP APCs 5853 for CMHCs and 5863 for hospitals, and IOP 
APCs 5851 for CMHCs and 5861 for hospitals), which is consistent with 
the policy we established in the CY 2024 OPPS/ASC final rule (88 FR 
81833). As we noted in the CY 2024 OPPS/ASC final rule, we expect days 
with fewer than three services would be very infrequent, and we intend 
to monitor the provision of these days among providers and individual 
patients.

D. Proposed Outlier Policy for CMHCs

    For CY 2025, we propose to maintain the calculations of the CMHC 
outlier percentage, cutoff point and percentage payment amount, outlier 
reconciliation, outlier payment cap, and fixed dollar threshold 
according to previously established policies to include PHP and IOP 
services. We refer readers to the CY 2024 OPPS/ASC final rule with 
comment period (88 FR 81834 through 81836) for more details on CMHC 
outlier policies, and to section II.G.1 of this proposed rule for our 
general policies for hospital outpatient outlier payments.
1. Background
    As discussed in the CY 2004 OPPS final rule with comment period (68 
FR 63469 through 63470), we created a separate outlier policy specific 
to the estimated costs and OPPS payments provided to CMHCs. We 
designated a portion of the estimated OPPS outlier threshold 
specifically for CMHCs, consistent with the percentage of projected 
payments to CMHCs under the OPPS each year, excluding outlier payments, 
and established a separate outlier threshold for CMHCs.
2. CMHC Outlier Percentage
    In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59267 
through 59268), we described the current outlier policy for hospital 
outpatient payments and CMHCs. We note that we also discussed our 
outlier policy for CMHCs in more detail in section VIII.C of that same 
final rule (82 FR 59381). We set our projected target for all OPPS 
aggregate outlier payments at 1.0 percent of the estimated aggregate 
total payments under the OPPS (82 FR 59267). This same policy was also 
reiterated in the CY 2019 OPPS/ASC final rule with comment period (83 
FR 58996), the CY 2020 OPPS/ASC final rule with comment period (84 FR 
61350), and the CY 2021 OPPS/ASC final rule with comment period (85 FR 
86082). We are not proposing any changes to the CMHC outlier percentage 
policy for CY 2025.
3. Cutoff Point and Percentage Payment Amount
    Also described in the CY 2018 OPPS/ASC final rule with comment 
period (82 FR 59381), our policy has been to pay CMHCs for outliers if 
the estimated cost of the day exceeds a cutoff point. In CY 2006, we 
set the cutoff point for outlier payments at 3.4 times the highest CMHC 
PHP APC payment rate implemented for that calendar year (70 FR 68551). 
For CY 2018, the highest CMHC PHP APC payment rate was the payment rate 
for CMHC PHP APC 5853. In addition, in CY 2002, the final OPPS outlier 
payment percentage for costs above the multiplier threshold was set at 
50 percent (66 FR 59889). In CY 2018, we

[[Page 59386]]

continued to apply the same 50 percent outlier payment percentage that 
applies to hospitals to CMHCs and continued to use the existing cutoff 
point (82 FR 59381). Therefore, for CY 2018, we continued to pay for 
partial hospitalization services that exceeded 3.4 times the CMHC PHP 
APC payment rate at 50 percent of the amount of CMHC PHP APC geometric 
mean per diem costs over the cutoff point. This same policy was also 
reiterated in the CY 2019 OPPS/ASC final rule with comment period (83 
FR 58996 through 58997), the CY 2020 OPPS/ASC final rule with comment 
period (84 FR 61351), the CY 2021 OPPS/ASC final rule with comment 
period (85 FR 86082 through 86083), the CY 2022 OPPS/ASC final rule 
with comment period (86 FR 63670), the CY 2023 OPPS/ASC final rule with 
comment period (87 FR 72004), and the CY 2024 OPPS/ASC final rule with 
comment period (88 FR 81835). For CY 2024, we extended this policy to 
intensive outpatient services. We are not proposing any changes to the 
cutoff point and payment amount policy for CY 2025.
4. Outlier Reconciliation
    In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68594 
through 68599), we established an outlier reconciliation policy to 
address charging aberrations related to OPPS outlier payments. We 
addressed vulnerabilities in the OPPS outlier payment system that led 
to differences between billed charges and charges included in the 
overall CCR, which are used to estimate cost and would apply to all 
hospitals and CMHCs paid under the OPPS. We initiated steps to ensure 
that outlier payments appropriately account for the financial risk when 
providing an extraordinarily costly and complex service but are only 
being made for services that legitimately qualify for the additional 
payment.
    For a comprehensive description of outlier reconciliation, we refer 
readers to the CY 2023 OPPS/ASC and CY 2019 OPPS/ASC final rules with 
comment period (83 FR 58874 through 58875 and 81 FR 79678 through 
79680, respectively). We are not proposing any changes to the outlier 
reconciliation policy for CY 2025.
5. Outlier Payment Cap
    In the CY 2017 OPPS/ASC final rule with comment period, we 
implemented a CMHC outlier payment cap to be applied at the provider 
level, such that in any given year, an individual CMHC will receive no 
more than a set percentage of its CMHC total per diem payments in 
outlier payments (81 FR 79692 through 79695). Our analysis of CY 2014 
claims data found that CMHC outlier payments began to increase 
similarly to the way they had prior to CY 2004. This was due to 
inflated cost from three CMHCs that accounted for 98 percent of all 
CMHC outlier payments that year and received outlier payments that 
ranged from 104 percent to 713 percent of their total per diem 
payments. To balance our concern about disadvantaging CMHCs with our 
interest in protecting the benefit from excessive outlier payments and 
to mitigate potential inappropriate outlier billing vulnerabilities, we 
finalized the CMHC outlier payment cap at 8 percent of the CMHC's total 
per diem payments (81 FR 79694 through 79695) to limit the impact of 
inflated CMHC charges on outlier payments. This outlier payment cap 
only affects CMHCs; it does not affect other provider types (that is, 
hospital-based PHPs), and is in addition to and separate from the 
current outlier policy and reconciliation policy in effect. We are not 
proposing any changes to the outlier payment cap for CY 2025.
6. Fixed-Dollar Threshold
    In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59267 
through 59268), for the hospital outpatient outlier payment policy, we 
set a fixed-dollar threshold in addition to an APC multiplier 
threshold. Fixed-dollar thresholds are typically used to drive outlier 
payments for very costly items or services, such as cardiac pacemaker 
insertions. Currently, for CY 2024, CMHC PHP APCs (5853 or 5854) and 
IOP APCs (5851 or 5852) are the only APCs for which CMHCs may receive 
payment under the OPPS, and these APCs are for providing a defined set 
of services that are relatively low cost when compared to other OPPS 
services. Because of the relatively low cost of CMHC services that are 
used to comprise the structure of CMHC PHP APCs (5853 or 5854) and IOP 
APCs (5851 or 5852), it is not necessary to also impose a fixed-dollar 
threshold on CMHCs. Therefore, in the CY 2018 OPPS/ASC final rule with 
comment period, we did not set a fixed-dollar threshold for CMHC 
outlier payments (82 FR 59381). This same policy was also reiterated in 
the CY 2020 OPPS/ASC final rule with comment period (84 FR 61351), the 
CY 2021 OPPS/ASC final rule with comment period (85 FR 86083), the CY 
2022 OPPS/ASC final rule with comment period (86 FR 63508), the CY 2023 
OPPS/ASC final rule with comment period (87 FR 72004), and the CY 2024 
OPPS/ASC final rule with comment period (88 FR 81836). We are not 
proposing any changes to the fixed-dollar threshold policy for CY 2025.

IX. Services That Will Be Paid Only as Inpatient Services

A. Background

    Established in rulemaking as part of the initial implementation of 
the OPPS, the inpatient only (IPO) list identifies services for which 
Medicare will only make payment when the services are furnished in the 
inpatient hospital setting because of the invasive nature of the 
procedure, the underlying physical condition of the patient, or the 
need for at least 24 hours of postoperative recovery time or monitoring 
before the patient can be safely discharged (70 FR 68695). The IPO list 
was created based on the premise (rooted in the practice of medicine at 
that time), that Medicare should not pay for procedures furnished as 
outpatient services that are performed on an inpatient basis virtually 
all of the time for the Medicare population, for the reasons described 
above, because performing these procedures on an outpatient basis would 
not be safe or appropriate, and therefore not reasonable and necessary 
under Medicare rules (63 FR 47571). Services included on the IPO list 
were those determined to require inpatient care, such as those that are 
highly invasive, result in major blood loss or temporary deficits of 
organ systems (such as neurological impairment or respiratory 
insufficiency), or otherwise require intensive or extensive 
postoperative care (65 FR 67826). There are some services designated as 
inpatient only that, given their clinical intensity, would not be 
expected to be performed in the hospital outpatient setting. For 
example, we have traditionally considered certain surgically invasive 
procedures on the brain, heart, and abdomen, such as craniotomies, 
coronary-artery bypass grafting, and laparotomies, to require inpatient 
care (65 FR 18456). Designation of a service as inpatient only does not 
preclude the service from being furnished in a hospital outpatient 
setting but rather means that Medicare will not make payment for the 
service if it is furnished to a Medicare beneficiary in the hospital 
outpatient setting (65 FR 18443). Conversely, the fact that a procedure 
is not on the IPO list should not be interpreted to mean the procedure 
is only appropriately performed in the hospital outpatient setting (70 
FR 68696).
    As part of the annual update process, we have historically worked 
with interested parties, including

[[Page 59387]]

professional societies, hospitals, surgeons, hospital associations, and 
beneficiary advocacy groups, to evaluate the IPO list and to determine 
whether services should be added to or removed from the list. 
Interested parties are encouraged to request reviews for a particular 
code or group of codes; and we have asked that their requests include 
evidence that demonstrates that the procedure was performed on an 
outpatient basis in a safe and appropriate manner in a variety of 
different types of hospitals--including but not limited to--operative 
reports of actual cases, peer-reviewed medical literature, community 
medical standards and practice, physician comments, outcome data, and 
post-procedure care data (67 FR 66740).
    We traditionally have used five longstanding criteria to determine 
whether a procedure should be removed from the IPO list. As noted in 
the CY 2012 OPPS/ASC final rule with comment period (76 FR 74353), we 
assess whether a procedure or service meets these criteria to determine 
whether it should be removed from the IPO list and assigned to an APC 
group for payment under the OPPS when provided in the hospital 
outpatient setting. We have explained that while we only require a 
service to meet one criterion to be considered for removal, satisfying 
only one criterion does not guarantee that the service will be removed; 
instead, the case for removal is strengthened with the more criteria 
the service meets. The criteria for assessing procedures for removal 
from the IPO list are as follows:
     Most outpatient departments are equipped to provide the 
services to the Medicare population.
     The simplest procedure described by the code may be 
furnished in most outpatient departments.
     The procedure is related to codes that we have already 
removed from the IPO list.
     A determination is made that the procedure is being 
furnished in numerous hospitals on an outpatient basis.
     A determination is made that the procedure can be 
appropriately and safely furnished in an ASC and is on the list of 
approved ASC services or has been proposed by us for addition to the 
ASC covered procedures list.
    In the past, we have requested that interested parties submit 
corresponding evidence in support of their claims that a code or group 
of codes meet the longstanding criteria for removal from the IPO list 
and are safe to perform on the Medicare population in the hospital 
outpatient setting--including, but not limited to case reports, 
operative reports of actual cases, peer-reviewed medical literature, 
medical professional analysis, clinical criteria sets, and patient 
selection protocols. Our clinicians then thoroughly review all 
information submitted within the context of the established criteria 
and if, following this review, we determine that there is sufficient 
evidence to confirm that the code could be safely and appropriately 
performed on an outpatient basis, we assign the service to an APC and 
include it as a payable procedure under the OPPS (67 FR 66740). We 
determine the APC assignment for services removed from the IPO list by 
evaluating the clinical similarity and resource costs of the service 
compared to other services paid under the OPPS and by reviewing the 
Medicare Severity Diagnosis Related Groups (MS-DRG) rate for the 
service under the IPPS, though we note we would generally expect the 
cost to provide a service in the outpatient setting to be less than the 
cost to provide the service in the inpatient setting.
    We stated in prior rulemaking that, over time, given advances in 
technology and surgical technique, we would continue to evaluate 
services to determine whether they should be removed from the IPO list. 
Our goal is to ensure that inpatient only designations are consistent 
with the current standards of practice. We have asserted in prior 
rulemaking that, insofar as advances in medical practice mitigate 
concerns about these procedures being performed on an outpatient basis, 
we would be prepared to remove procedures from the IPO list and provide 
payment for them under the OPPS (65 FR 18443). Further, CMS has at 
times had to reclassify codes as inpatient only services with the 
emergence of new information.
    We refer readers to the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74352 through 74353) for a full discussion of our 
historic policies for identifying services that are typically provided 
only in an inpatient setting and that, therefore, will not be paid by 
Medicare under the OPPS, as well as the criteria we have used to review 
the IPO list to determine whether any services should be removed.

B. Changes to the Inpatient Only (IPO) List

    As stated above, we encourage interested parties to request reviews 
for a particular code or group of codes for removal from the IPO list. 
For the CY 2025 OPPS/ASC proposed rule, we received requests from 
interested parties recommending that certain services be removed from 
the IPO list. Following our clinical review using the five criteria 
listed above, we did not find sufficient evidence that any of those 
services meet the criteria to be removed from the IPO list for CY 2025. 
Therefore, we are not proposing to remove any services from the IPO 
list for CY 2025. Interested parties may comment on this proposed rule 
if they believe a service should be removed from the IPO list for CY 
2025 and we will consider that recommendation and address the comment 
in the CY 2025 OPPS/ASC final rule.
    We propose to add three services for which codes were newly created 
by the AMA CPT Editorial Panel for CY 2025 to the IPO list. These new 
services are described by CPT codes 0894T, 0895T, and 0896T, which will 
be effective on January 1, 2025. After clinical review of these 
services, we found that they require a hospital inpatient admission or 
stay and are not appropriate for payment under the OPPS. We propose to 
assign these services to status indicator ``C'' (Inpatient Only) for CY 
2025. The CPT codes, long descriptors, and the proposed CY 2025 payment 
indicators are displayed in Table 69.
    Table 69 below contains the proposed changes to the IPO list for CY 
2025. The complete list of codes describing services that we propose to 
designate as inpatient only services beginning in CY 2025 is also 
included as Addendum E to this proposed rule, which is available via 
the internet on the CMS website.

[[Page 59388]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.102

X. Nonrecurring Policy Changes

A. Remote Services

1. Payment for Outpatient Therapy Services, Diabetes Self-Management 
Training, and Medical Nutrition Therapy When Furnished by Institutional 
Staff to Beneficiaries in Their Homes Through Communications Technology
    Section 1861(p) of the Act establishes the benefit category for 
outpatient PT, SLP and OT services (expressly for PT services and, 
through section 1861(ll)(2) of the Act, for outpatient SLP services 
and, through section 1861(g) of the Act, for outpatient OT services).
    Section 1861(p) of the Act defines outpatient therapy services in 
the three disciplines as those furnished by a provider of services, a 
clinic, rehabilitation agency, or a public health agency, or by others 
under an arrangement with, and under the supervision of, such provider, 
clinic, rehabilitation agency, or public health agency to an individual 
as an outpatient; and those furnished by a therapist not under 
arrangements with a provider of services, clinic, rehabilitation 
agency, or a public health agency. As such, section 1861(p) of the Act 
defines outpatient therapy services very broadly to include those 
furnished by providers and other institutional settings, as well as 
those furnished in office settings. Section 1834(k)(3) of the Act 
requires payment for outpatient therapy services to be made based on 
the PFS (via section 1848 of the Act), for all institutional providers 
listed at sections 1833(a)(8) and (9) of the Act. These providers 
include clinics, rehabilitation agencies, public health agencies, 
comprehensive outpatient rehabilitation agencies (CORFs), SNFs, home 
health agencies (HHAs) (to individuals who are not homebound), 
hospitals to outpatients or hospital inpatients who are entitled to 
benefits under Part A but have exhausted benefits for inpatient 
hospital services during a spell of illness or is not so entitled to 
benefits under Part A, and all other CORF services.
    Section 1861(qq) of the Act defines Diabetes Self-Management 
Training (DSMT) services and authorizes CMS to regulate Medicare DSMT 
outpatient services. A ``certified provider'' of DSMT is further 
defined in section 1861(qq)(2)(A) of the Act as a physician or other 
individual or entity designated by the Secretary who meets certain 
quality requirements described in section 1861(qq)(2)(B) of the Act. In 
CY 2000, we finalized a standalone rule titled ``Medicare Program; 
Expanded Coverage for Outpatient Diabetes Self-Management Training and 
Diabetes Outcome Measurements.'' In that rule, we finalized that 
payment for outpatient DSMT would be made under the PFS (65 FR 83132). 
We further established that, in the case of payments made to other 
approved entities, such as hospital outpatient departments, ESRD 
facilities, and durable medical equipment suppliers, the payment would 
be equal to the amounts established under the PFS and made under the 
appropriate payment systems (65 FR 83142).
    Section 1861(s)(2)(V) of the Act authorizes Medicare Part B 
coverage of medical nutrition therapy services (MNT) for certain 
beneficiaries who have diabetes or a renal disease. In the CY 2000 PFS 
final rule, we established that payment for MNT services furnished in 
the institutional setting, including hospital outpatient departments 
(HOPDs), would be made under the PFS, not under the hospital Outpatient 
Prospective Payment System (OPPS) (66 FR 55279). Telehealth services 
may be paid under the PFS only when the services are furnished to a 
beneficiary at an originating site (defined at 410.78), which prior to 
the PHE was not typically defined to include a beneficiary's home.
    During the PHE for COVID-19, outpatient therapy services, DSMT, and 
MNT could be furnished via a telecommunications system to

[[Page 59389]]

beneficiaries in their homes, and bills for these services were 
submitted and paid either separately or as part of a bundled payment, 
when either personally provided by the billing practitioner or provided 
by institutional staff and billed for by institutions, such as HOPDs, 
SNFs, and HHAs. For professionals, CMS used waiver authority provided 
under section 1135 of the Act to expand the range of practitioners that 
could serve as distant site practitioners for Medicare telehealth 
services as described in section 1834(m)(4)(E) of the Act and 42 CFR 
410.78(b)(2), as well as to waive the originating site requirements for 
Medicare telehealth services described in section 1834(m)(4)(C) of the 
Act. This allowed for outpatient therapy services to be furnished and 
billed by therapists (PTs, OTs and SLPs) in private practice, and for 
DSMT and MNT to be furnished via Medicare telehealth to beneficiaries 
in urban areas, as well as rural areas, including to beneficiaries 
located in their homes.\79\
---------------------------------------------------------------------------

    \79\ https://www.cms.gov/files/document/03092020-covid-19-faqs-508.pdf.
---------------------------------------------------------------------------

    When CMS expanded the types of practitioners who may bill for their 
services when furnished as Medicare telehealth services from a distant 
site to include therapists using section 1135 waiver authority during 
the PHE for COVID-19, CMS generally took the position for services 
furnished in HOPDs that separate waiver authority was needed to allow 
hospitals to bill for services furnished by hospital staff through 
communication technology to beneficiaries in their homes. CMS 
implemented the Hospitals Without Walls (HWW) policy that relied on 
waiver authority, which allowed hospitals to reclassify patients' homes 
as part of the hospital. HWW allowed hospitals to bill two different 
kinds of fees for services furnished remotely to patients in their 
homes: (1) hospital facility payment in association with professional 
services billed under the PFS; and (2) single payment for a limited 
number of practitioner services, when statute or other applicable rules 
only allow the hospital to bill for services personally provided by 
their staff. These services are either billed by hospitals or by 
professionals, there would not be separate facility and professional 
billing. This latter category includes outpatient therapy services, 
DSMT, and MNT. However, while CMS relied upon PHE-specific waiver 
authority to allow hospital billing for these services, CMS also issued 
guidance instructing HOPDs to bill using modifiers consistent with 
those used for Medicare telehealth services. For further background, we 
refer readers to https://www.cms.gov/files/document/03092020-covid-19-faqs-508.pdf. In the same referenced document, CMS also issued specific 
guidance for other institutional providers of therapy services to use 
modifier 95 (indicating a Medicare telehealth service), along with the 
specific bill types for outpatient therapy services furnished by their 
staff.
    The Consolidated Appropriations Act (CAA), 2023 (Pub. L. 117-328) 
extended many of the flexibilities that were available for Medicare 
telehealth services during the PHE for COVID-19 under emergency waiver 
authorities, including adding PTs, OTs and SLPs as distant site 
practitioners through the end of CY 2024. In developing post-PHE 
guidance, CMS initially took the position that institutions billing for 
services furnished remotely by their employed practitioners (where the 
practitioners do not bill for their own services), would end with the 
PHE for COVID-19 along with the HWW waivers).\80\ However, after 
reviewing input from interested parties, as well as relevant guidance, 
including applicable billing instructions, we considered whether 
certain institutions, as the furnishing providers, can bill for certain 
remotely furnished services personally performed by employed 
practitioners.
---------------------------------------------------------------------------

    \80\ https://www.cms.gov/files/document/frequently-asked-questions-cms-waivers-flexibilities-and-end-covid-19-public-health-emergency.pdf.
---------------------------------------------------------------------------

    In the CY 2024 PFS final rule, we stated that, while we considered 
how we might address this topic in future rulemaking, in the interests 
of maintaining access to outpatient therapy, DSMT, and MNT services 
furnished remotely by institutional staff to beneficiaries in their 
homes consistent with the accessibility of these services when 
furnished by professionals via Medicare telehealth, we finalized that 
we would continue to allow institutional providers to bill for these 
services when furnished remotely in the same manner they have during 
the PHE for COVID-19 through the end of CY 2024. We sought comment on 
current practice for these services when billed, including how and to 
what degree they continue to be provided remotely to beneficiaries in 
their homes. We sought comment as to whether these services may fall 
within the scope of Medicare telehealth at section 1834(m) of the Act 
or if there are other relevant authorities CMS might consider in future 
rulemaking. For further information on this comment solicitation, 
please see the discussion in the CY 2024 PFS final rule (88 FR 78886 
through 78888).
    For DSMT specifically, we stated that the clinical staff personally 
delivering the service may be a type of practitioner authorized to 
furnish Medicare telehealth services under section 1834(m) of the Act; 
but we also understood that DSMT may be provided by other types of 
staff. Accordingly, we noted in an FAQ that we were exercising 
enforcement discretion in reviewing the telehealth eligibility status 
of the practitioner personally providing any part of a remotely 
furnished DSMT service, so long as the persons were otherwise qualified 
to provide the service until the end of 2024. For more background we 
refer readers to https://www.cms.gov/files/document/frequently-asked-questionscms-waivers-flexibilities-and-end-covid19-public-health-emergency.pdf.
    While the amendments made by section 4113 of the CAA, 2023 to 
section 1834(m) of the Act have continued to expand the range of 
practitioners eligible to furnish telehealth services through CY 2024, 
without subsequent legislation these practitioners will no longer be 
able to bill for Medicare telehealth services beginning January 1, 
2025.
    In the CY 2024 PFS final rule, we articulated the importance of 
maintaining access to outpatient therapy, DSMT, and MNT services 
furnished remotely by institutional staff to beneficiaries in their 
homes consistent with the availability of these services when furnished 
by professionals via Medicare telehealth as part of our rationale for 
allowing institutional providers to bill for these services when 
furnished remotely in the same manner they have during the PHE for 
COVID-19 through the end of CY 2024.
    We recognize that for the past several years, through the PHE for 
COVID-19 and several legislative extensions of PHE-related 
flexibilities for Medicare telehealth services under section 1834(m) of 
the Act, we have generally aligned payment policies for outpatient 
therapy, DSMT, and MNT services furnished remotely by hospital staff to 
beneficiaries in their homes with policies for Medicare telehealth 
services. To the extent that therapists and DSMT and MNT practitioners 
continue to be distant site practitioners for purposes of Medicare 
telehealth services, we anticipate aligning our policy for these 
services with policies under the PFS and continuing to make payment to 
the hospital for these

[[Page 59390]]

services when furnished by hospital staff.
2. Periodic In-Person Visits for Mental Health Services Furnished 
Remotely by Hospital Staff to Beneficiaries in Their Homes
    In the CY 2023 OPPS/ASC final rule with comment period (87 FR 
72017), we finalized a requirement that payment for mental health 
services furnished remotely to beneficiaries in their homes using 
telecommunications technology may only be made if the beneficiary 
receives an in-person service within 6 months prior to the first time 
the hospital clinical staff provides the mental health services 
remotely; and that there must be an in-person service without the use 
of telecommunications technology within 12 months of each mental health 
service furnished remotely by the hospital clinical staff. We also 
finalized that we would permit exceptions to the requirement that there 
be an in-person service without the use of communications technology 
within 12 months of each remotely furnished mental health service when 
the hospital clinical staff member and beneficiary agree that the risks 
and burdens of an in-person service outweigh the benefits of it. We 
stated that exceptions to the in-person visit requirement should 
involve a clear justification documented in the beneficiary's medical 
record including the clinician's professional judgement that the 
patient is clinically stable and/or that an in-person visit has the 
risk of worsening the person's condition, creating undue hardship on 
the person or their family, or would otherwise result in disengaging 
with care that has been effective in managing the person's illness. We 
also finalized that hospitals must document that the patient has a 
regular source of general medical care and has the ability to obtain 
any needed point of care testing, including vital sign monitoring and 
laboratory studies. We finalized that these requirements would not go 
into effect until the 152nd day after the PHE for COVID-19 ends to 
maintain consistency with similar policies implemented for professional 
services paid under the PFS, and for RHCs/FQHCs (87 FR 72018).
    Section 4113(d) of the CAA, 2023, extended the delay in 
implementing the in-person visit requirements until January 1, 2025, 
for both professionals billing for mental health services via Medicare 
telehealth and for RHCs/FQHCs furnishing remote mental health visits. 
In the CY 2024 OPPS we reiterated that we believe it is important to 
maintain consistent requirements for these policies across payment 
systems; therefore, we finalized delaying the in-person visit 
requirements for mental health services furnished remotely by hospital 
staff to beneficiaries in their homes until January 1, 2025. As such, 
these in-person visit requirements are currently set to take effect for 
services furnished on or after January 1, 2025 (88 FR 81874).
    However, to the extent that these in-person visit requirements are 
delayed in the future for professionals billing for mental health 
services via Medicare telehealth, we anticipate that we would align the 
requirements for mental health services furnished remotely to 
beneficiaries in their homes through communications technology with 
mental health services furnished via Medicare telehealth in future 
rulemaking.
3. Proposed HOPD Payment for Telemedicine Evaluation and Management 
Services
    The CPT Editorial Panel created 17 new codes describing audio/video 
and audio-only telemedicine E/M services. For further discussion of 
these 17 new codes and CMS' related proposals, please see section 
II.E.4.18 of the CY 2025 PFS proposed rule.
    In 2014, CMS established HCPCS code G0463 (Hospital outpatient 
clinic visit for assessment and management of a patient) to describe 
the service associated with a hospital outpatient clinic visit for 
assessment and management of a patient. In the CY 2014 OPPS/ASC final 
rule with comment period (78 FR 75042), we stated that the code is 
applicable for hospital use only representing any clinic visit under 
the OPPS. We further stated that HCPCS code G0463 replaces evaluation 
and management (E/M) CPT codes 99201-99205 (new patient) and 99211-
99215 (established patient), thereby eliminating the distinction 
between new and established clinic visits.
    Given the similarities between the new telemedicine E/M code set 
and the office/outpatient E/M code set, we believe that the 
telemedicine E/M codes fall within the scope of the hospital outpatient 
clinic visit policy because the predecessor codes (the office/
outpatient E/M code set) would be reported by hospitals using HCPCS 
code G0463. Under the hospital outpatient clinic visit policy, the CPT 
codes describing office/outpatient E/M visits are not recognized under 
OPPS and instead hospitals report HCPCS code G0463 (Hospital outpatient 
clinic visit for assessment and management of a patient) when billing 
for the facility costs associated with an outpatient E/M visit. 
Therefore, we propose not to recognize the telemedicine E/M code set 
under OPPS. We are, however, seeking comment on the hospital resources 
associated with the telemedicine E/M services, particularly any 
resource costs that would not be included in the payment for HCPCS code 
G0463. We are also seeking comment, should CMS finalize separate 
payment for these telemedicine E/M codes under the PFS, on the resource 
costs that would be associated with these services for hospitals and 
whether we should develop separate coding to describe the resource 
costs associated with a telemedicine E/M service.

B. Virtual Direct Supervision of Cardiac Rehabilitation (CR), Intensive 
Cardiac Rehabilitation (ICR), Pulmonary Rehabilitation (PR) Services 
and Diagnostic Services Furnished to Hospital Outpatients

1. Background
a. Virtual Direct Supervision of CR, ICR and PR Services Furnished to 
Hospital Outpatients (42 CFR 410.27(a)(1)(B)(1))
    In the interim final rule with comment period titled ``Policy and 
Regulatory Provisions in Response to the COVID-19 Public Health 
Emergency,'' published on April 6, 2020 (the April 6th COVID-19 IFC) 
(85 FR 19230, 19246, 19286), we changed the regulation at 42 CFR 
410.27(a)(1)(iv)(D) \81\ to provide that, during a Public Health 
Emergency as defined in 42 CFR 400.200, the presence of the physician 
for purposes of the direct supervision requirement for PR, CR, and ICR 
services includes virtual presence through audio/video real-time 
communications technology when use of such technology is indicated to 
reduce exposure risks for the beneficiary or health care provider. 
Specifically, the required direct physician supervision can be provided 
through virtual presence using audio/video real-time communications 
technology (excluding audio-only) subject to the clinical judgment of 
the supervising practitioner. We further amended Sec.  
410.27(a)(1)(iv)(B) \82\ in the CY 2021 OPPS/ASC final rule with 
comment period to provide that this flexibility continues until the 
later of the end of the calendar year in which the PHE as defined in 
Sec.  400.200 ends or December 31, 2021 (85 FR 86113 and 86299). In

[[Page 59391]]

the CY 2021 OPPS/ASC final rule with comment period we also clarified 
that this flexibility excluded the presence of the supervising 
practitioner via audio-only telecommunications technology (85 FR 
86113).
---------------------------------------------------------------------------

    \81\ In the CY 2023 OPPS/ASC final rule with comment period, we 
removed Sec.  410.27(a)(1)(iv)(D) in its entirety and added its 
language regarding pulmonary rehabilitation, cardiac rehabilitation, 
and intensive cardiac rehabilitation services and the virtual 
presence of a physician through audio/video real-time communications 
technology during the PHE to the newly designated Sec.  
410.27(a)(1)(iv)(B)(1) (87 FR 72024).
    \82\ Ibid.
---------------------------------------------------------------------------

    In the CY 2023 OPPS/ASC final rule with comment period, we 
finalized a policy to extend the revised definition of direct 
supervision of CR, ICR, and PR to include the presence of the 
supervising practitioner through two-way, audio/video 
telecommunications technology until December 31, 2023 (87 FR 72019 and 
72020). In the CY 2024 OPPS/ASC final rule with comment period, we 
finalized a policy to further revise Sec.  410.27(a)(1)(iv)(B)(1) \83\ 
to allow for the direct supervision requirement for CR, ICR, and PR to 
include the virtual presence of the physician through audio-video real-
time communications technology (excluding audio-only) through December 
31, 2024 and to extend this policy to the nonphysician practitioners, 
that is NPs, PAs, and CNSs, who were eligible to supervise these 
services beginning in CY 2024 (88 FR 81863 through 81867).
---------------------------------------------------------------------------

    \83\ Ibid.
---------------------------------------------------------------------------

b. Virtual Direct Supervision of Diagnostic Services Furnished to 
Hospital Outpatients (42 CFR 410.28(e)(2)(iii))
    In the April 6th COVID-19 IFC, for consistency with the revisions 
made to 42 CFR 410.27(a)(1)(iv)(D) \84\ and 410.32(b)(3)(ii), we 
changed the regulation at 42 CFR 410.28(e) to provide that, during a 
Public Health Emergency as defined in 42 CFR 400.200, the presence of 
the physician for purposes of the direct supervision requirement for 
diagnostic services includes virtual presence through audio/video real-
time communications technology when use of such technology is indicated 
to reduce exposure risks for the beneficiary or health care provider 
(85 FR 19245 and 19246).
---------------------------------------------------------------------------

    \84\ Ibid.
---------------------------------------------------------------------------

    In the CY 2023 OPPS/ASC final rule with comment period, to ensure 
consistency with additional revisions made to 42 CFR 
410.27(a)(1)(iv)(B)(1) and 410.32(b)(3)(ii) extending the end date of 
the flexibility allowing for the virtual supervision of the services 
governed by those regulations, we revised Sec.  410.28(e) to extend the 
end date of the flexibility allowing for the virtual supervision of 
outpatient diagnostic services through audio/video real-time 
communications technology (excluding audio-only) from the end of the 
PHE to the end of the calendar year in which the PHE ends (87 FR 72024 
through 72026).
    In the CY 2024 final OPPS rule with comment period, to again ensure 
consistency with further revisions made to 42 CFR 
410.27(a)(1)(iv)(B)(1) and 410.32(b)(3)(ii) extending the end date of 
the flexibility allowing for the virtual supervision of the services 
governed by those regulations, we revised Sec.  410.28(e) to extend the 
end date of the flexibility allowing for the virtual supervision of 
outpatient diagnostic services through audio/video real-time 
communications technology (excluding audio-only) through December 31, 
2024 (88 FR 81866 and 81867).
2. Extension of Virtual Direct Supervision of CR, ICR, PR Services and 
Diagnostic Services Furnished to Hospital Outpatients Through December 
31, 2025
    In the CY 2025 PFS proposed rule, we propose to revise the 
definition of direct supervision at Sec.  410.32(b)(3)(ii) to extend 
the availability of virtual direct supervision of therapeutic and 
diagnostic services under the PFS through December 31, 2025. As 
explained in that proposed rule, we propose this extension based on our 
concern that an immediate reversion to the pre-PHE definition of direct 
supervision would prohibit virtual direct supervision, which may 
present a barrier to access to many services that have been facilitated 
by our PHE-related policy over the past several years; and that 
physicians and other practitioners need time to reorganize their 
practice patterns established during the PHE to reimplement the pre-PHE 
approach to direct supervision without the use of audio/video 
technology. For the complete discussion of the proposed revision to 
Sec.  410.32(b)(3)(ii), we refer readers to the CY 2025 PFS proposed 
rule.
    In addition to desiring uniformity under the PFS and OPPS in how 
regulations are applied to similarly situated providers, the 
beneficiary access and provider preparedness concerns motivating us to 
propose extending the availability of virtual direct supervision of 
therapeutic and diagnostic services under the PFS through December 31, 
2025, are also concerns with respect to the direct supervision of CR, 
ICR, PR and diagnostic services under the OPPS. Consequently, we 
propose to revise Sec.  410.27(a)(1)(iv)(B)(1) and Sec.  
410.28(e)(2)(iii) to allow for the direct supervision of CR, ICR, PR 
services and diagnostic services via audio-video real-time 
communications technology (excluding audio-only) through December 31, 
2025.

C. All-Inclusive Rate (AIR) Add-On Payment for High-Cost Drugs Provided 
by Indian Health Service and Tribal Facilities

1. Background
    In the CY 2000 OPPS final rule (65 FR 18434), CMS implemented the 
PPS for hospital outpatient services furnished to Medicare 
beneficiaries, as set forth in section 1833(t) of the Act. In this 
final rule, we noted that the OPPS applies to covered hospital 
outpatient services furnished by all hospitals participating in the 
Medicare program with a few exceptions. We identified one of these 
exceptions as ``outpatient services provided by hospitals of the Indian 
Health Service (IHS).'' We stated that these services would ``continue 
to be paid under separately established rates which are published 
annually in the Federal Register'' and, in the CY 2002 OPPS/ASC final 
rule (66 FR 59856), we finalized a revision to Sec.  419.20 (Hospitals 
subject to the hospital outpatient prospective payment system) by 
adding paragraph (b)(4), which specifies that hospitals of the IHS are 
excluded from the OPPS.
    In the intervening years, IHS and tribal facilities have been paid 
under the separately established All-Inclusive Rate (AIR). On an annual 
basis, the IHS calculates and publishes, in the Federal Register, 
calendar year reimbursement rates.\85\ Due to the higher cost of living 
in Alaska, separate rates are calculated for Alaska and the lower 48 
States. For CY 2024, the Medicare Outpatient per Visit Rate is $667 for 
the lower 48 states and $961 for Alaska.\86\
---------------------------------------------------------------------------

    \85\ https://www.ihs.gov/BusinessOffice/reimbursement-rates/.
    \86\ https://www.federalregister.gov/documents/2023/12/19/2023-27815/reimbursement-rates-for-calendar-year-2024.
---------------------------------------------------------------------------

    IHS and tribal facilities have continued to expand the breadth of 
services that they provide to their communities. Increasingly, this has 
meant providing higher-cost drugs along with more complex and expensive 
services. While the majority of IHS and tribal facilities appear to be 
well served by the AIR, some IHS and tribal facilities provide 
specialized services for which the AIR might not adequately represent 
Medicare's share of costs. If providing a drug or service costs IHS and 
tribal facilities thousands of dollars more than the payment they 
receive through the AIR, it is likely not financially feasible for 
these facilities to routinely provide that drug or service. For 
example, the cost of providing a

[[Page 59392]]

frequently used cancer drug such as Opdualag (HCPCS code 00003-7125), 
which has a per day cost of $28,975, greatly exceeds the $667 payment a 
IHS or tribal facility receives through the AIR. We are concerned that, 
if payments under the AIR are inadequate for high-cost drugs, this 
could potentially threaten the viability of the few IHS and tribal 
hospital outpatient specialty programs currently in operation and 
provide less incentive to IHS hospitals and tribal facilities not 
currently offering specialty services to begin doing so. This 
constitutes a significant equity and beneficiary access concern if IHS 
and tribal hospitals are not able to provide oncology services or other 
services that require high-cost drugs because the hospital would always 
receive payment for those services that is far below what it would have 
to pay to acquire those high-cost drugs.
    Consequently, in the CY 2024 OPPS/ASC proposed rule, we sought 
comment on whether Medicare should pay separately for certain high-cost 
drugs provided by IHS and tribal facilities and, if so, how we might do 
so. Among other topics, we specifically requested input on which drugs 
it would be appropriate to pay separately for (high-cost oncology drugs 
or all high-cost drugs), how we might define high-cost drugs (for 
example, a list of named drugs versus any drugs exceeding a certain 
cost threshold), and what the appropriate payment amount for the 
separately paid drugs should be (ASP plus 6 percent, which is what 
hospitals are generally paid under the OPPS for separately payable 
drugs, or the Federal Supply Schedule (FSS), which is where IHS and 
tribal hospitals acquire the majority of their drugs at rates 
significantly lower than ASP plus 6 percent). For a full discussion of 
the comment solicitation, we refer readers to the CY 2024 OPPS/ASC 
proposed rule (88 FR 49741 through 49742).
    Commenters, including a tribal facility, the CMS Tribal Technical 
Advisory Group (TTAG), organizations representing tribal healthcare 
providers, pharmaceutical companies, and other interested parties, 
expressed universal support for establishing a policy that would allow 
IHS and tribal healthcare facilities to receive separate payment 
outside of the AIR for high-cost drugs. The preferred approach of those 
commenters who provided input on how to define a high-cost drug 
eligible for separate payment was to treat the amount of the Medicare 
Outpatient per Visit Rate for the lower 48 States' AIR (hereinafter 
referred to as ``the lower 48 AIR'') as a payment threshold. Under this 
approach, if the cost of a particular drug is less than or equal to the 
lower 48 AIR, the provider would not receive a separate payment for the 
drug and if the cost of the drug was more than the lower 48 AIR, then 
the provider would receive a separate payment for the drug. Commenters 
noted that this payment approach is currently being used for all drugs 
(oncology and otherwise) receiving payment through Arizona Medicaid 
(AHCCCS) for IHS and tribal facilities located in Arizona. With respect 
to the payment amount, several commenters requested that separately 
payable drugs furnished by IHS and tribal facilities be paid at a rate 
of ASP plus 6 percent rather than the FSS rate. These commenters argued 
that the IHS is chronically underfunded and that paying ASP plus 6 
percent for high-cost drugs could help with remedying those funding 
issues. For a full discussion of the comments we received as a result 
of our comment solicitation and our responses to those comments, we 
refer readers to the CY 2024 OPPS/ASC final rule with comment period 
(88 FR 81896 through 81897).
2. Proposed AIR Add-On Payment for High-Cost Drugs Provided by Indian 
Health Service and Tribal Facilities
    In light of the equity and beneficiary access concerns that 
prompted our CY 2024 comment solicitation and the input received in 
response to that solicitation, we propose, starting January 1, 2025, to 
separately pay IHS and tribal hospitals \87\ for high-cost drugs 
furnished in hospital outpatient departments through an add-on payment 
in addition to the AIR using the authority under which the annual AIR 
is calculated.\88\ We emphasize the amount of this proposed add-on 
payment would not be carved out of the annual AIR payment amount 
calculation. In other words, we propose that the add-on payment would 
have no effect on the calculation of the annual AIR payment amount. We 
seek comment on separately paying IHS and tribal hospitals for high-
cost drugs furnished in hospital outpatient departments through the 
establishment of an add-on payment to the AIR using the authority under 
which the annual AIR is calculated.
---------------------------------------------------------------------------

    \87\ IHS Critical Access Hospitals (CAHs) are paid for covered 
outpatient services based on 101 percent of an all-inclusive 
facility specific rate rather than the national AIR rate. 
Consequently, they are excluded from the proposed separate payment 
policy.
    \88\ Sections 321(a) and 322(b) of the Public Health Service Act 
(42 U.S.C. 248), Public Law 83-568 (42 U.S.C. 2001(a)), and the 
Indian Health Care Improvement Act (25 U.S.C. 1601 et seq.).
---------------------------------------------------------------------------

    We propose that the drugs to which the add-on payment would apply 
would not be limited to high-cost oncology drugs but would include all 
high-cost drugs furnished in hospital outpatient departments of IHS and 
tribal hospitals to the extent those drugs are covered under Medicare 
Part B and would be paid for under the OPPS if furnished by a hospital 
paid under that system. In determining which drugs would be eligible 
for the add-on payment, we considered limiting the add-on payment to 
high-cost oncology drugs. However, we determined that it would be 
appropriate to apply the add-on payment to all high-cost drugs for 
several reasons. First, the same equity and access concerns that 
support utilizing an add-on payment for oncology drugs also support 
utilizing an add-on for high-cost drugs used in other care specialties. 
Although this issue arose in the context of removing barriers to 
beneficiaries' access to high-cost oncology drugs, there are presumably 
similar barriers to other specialties that use high-cost drugs that 
would be addressed through a broader application of the add-on payment. 
Second, applying the add-on payment to all high-cost drugs would 
eliminate the possibility of unintentionally excluding an oncology drug 
from separate payment due to the inherent challenge of defining a class 
of drugs. Third, the proposal would parallel how drugs are being paid 
for under Arizona Medicaid (AHCCCS) for IHS and tribal facilities. We 
seek comment on applying the add-on payment to all high-cost drugs 
furnished in hospital outpatient departments of IHS and tribal 
hospitals to the extent those drugs are covered under Medicare Part B 
and would be paid for under the OPPS if furnished by a hospital paid 
under that system.
    As to what constitutes a high-cost drug, we propose to define high-
cost drugs for the purpose of this policy as all drugs covered under 
Medicare Part B and for which payment would otherwise be made under the 
OPPS whose per day cost exceeds two times the lower 48 AIR ($1,334 in 
CY 2024). We propose a threshold greater than the lower 48 AIR to 
account for the fact that IHS and tribal hospitals would continue to 
receive the lower 48 AIR payment, in addition to the add-on payment, 
for encounters that include a high-cost drug. While it is true that 
under the Arizona Medicaid program, IHS and tribal hospitals are paid 
the lower 48 AIR payment in addition to an add-on payment for drugs 
whose costs exceed the lower 48 AIR, we are concerned that providing 
separate payment for drugs whose costs only slightly exceed the lower 
48 AIR could result in excessive

[[Page 59393]]

payment for those drugs. For example, for a drug that costs $700, using 
the CY 2024 lower 48 AIR as the threshold for our proposal would result 
in a payment of at least $1,367 (the $667 AIR encounter payment plus an 
add-on payment for the high-cost drug as calculated under the payment 
methodology we propose later in this section) for the provision of a 
drug whose cost exceeds the lower 48 AIR by only $33.00. Such an 
outcome would be at odds with the objective of the proposed policy, 
which is to provide adequate payment for drugs that are high cost in 
relation to the lower 48 AIR. Consequently, we propose two times the 
lower 48 AIR as the threshold triggering the add-on payment because 
this amount would ensure that the add-on payment would apply only to 
drugs whose costs significantly exceed the lower 48 AIR. This cost-
multiplier approach is also consistent with how CMS has implemented 
thresholds relating to payments to hospitals under other payment 
systems. For example, the OPPS outlier policy \89\ requires that the 
cost of a service exceed 1.75 times the payment amount for the service 
to qualify for an additional payment. Similarly, the OPPS two-times 
rule requires that the highest calculated cost of an individual 
procedure categorized to any given Ambulatory Payment Classification 
(APC) not exceed two times the calculated cost of the lowest cost 
procedure categorized to that same APC.
---------------------------------------------------------------------------

    \89\ The OPPS provides outlier payments to hospitals to help 
mitigate the financial risk associated with high-cost and complex 
procedures, where a very costly service could present a hospital 
with significant financial loss. Outlier payments are provided on a 
service basis when the cost of a service exceeds the APC payment 
amount multiplier threshold (the APC payment amount multiplied by 
1.75) as well as the APC payment amount plus a fixed-dollar amount 
threshold (the APC payment plus a certain dollar amount).
---------------------------------------------------------------------------

    An alternative to our proposal to set the threshold at two times 
the lower 48 AIR would be to set the threshold at the lower 48 AIR 
despite our previously described concerns. Another alternative would be 
to set the threshold at 1.75 times the lower 48 AIR ($1,167.25 in CY 
2024) to align it with the multiplier used to calculate the threshold 
triggering outlier payments under the OPPS. We seek comment on the 
alternatives of using the lower 48 AIR or 1.75 times the lower 48 AIR 
as the threshold amount for triggering the add-on payment for high-cost 
drugs.
    We also seek comment on whether we should adopt an exception to 
whichever AIR-based threshold we adopt that would parallel the drug 
packaging threshold exception for biosimilars \90\ under the OPPS. 
Under the OPPS, if a drug's per-day cost is less than or equal to the 
drug packaging threshold, then payment for the drug is packaged. 
Conversely, if a drug's per-day cost exceeds the drug packaging 
threshold, then it is paid for separately. For a more detailed 
discussion of the drug packaging threshold, we refer readers to the CY 
2024 OPPS/ASC final rule with comment period (88 FR 81776 through 
81778). In CY 2024, we established an exception to this threshold for 
biosimilars when the biosimilar's per-day cost does not exceed the 
threshold, but its reference product's per-day cost does. In other 
words, if the biosimilar's reference product is paid separately 
(because its per-day cost exceeds the threshold), then we also pay 
separately for the biosimilar even if its per-day cost does not exceed 
the threshold. This exception was based on our concern that packaging 
biosimilars when the reference product or other marketed biosimilars 
are separately paid might create financial incentives for providers to 
select more expensive, but clinically similar, products. For a more 
detailed discussion of the exception for biosimilars to the drug 
packaging threshold, we refer readers to the CY 2024 OPPS/ASC final 
rule with comment period (88 FR 81783 through 81786). Because we 
propose to use a threshold to trigger application of the add-on payment 
for high-cost drugs to IHS and tribal hospitals, we have the same 
concerns about financial incentives that motivated us to establish the 
exception for biosimilars to the drug packaging threshold. 
Consequently, we seek comment on whether we should pay the add-on 
payment to IHS and tribal hospitals for biosimilars whose per-day costs 
do not exceed the threshold but whose reference products do exceed the 
threshold.
---------------------------------------------------------------------------

    \90\ A biosimilar is a biologic medication. It is highly similar 
to a biologic medication already approved by FDA--the original 
biologic (also called the reference product).
---------------------------------------------------------------------------

    We also propose that the amount of the add-on payment for a high-
cost drug would be the average sales price (ASP) for the drug with no 
additional payment (i.e., ASP). This payment amount would be consistent 
with what hospitals receive as payment for most drugs under the OPPS 
(ASP plus 6 percent) but would exclude the 6 percent additional payment 
in recognition of the fact that IHS and tribal facilities, unlike 
hospitals paid under the OPPS, primarily obtain their drugs through the 
FSS, whose rates are significantly lower than ASP. This approach is 
also consistent with our existing policies of paying ASP without any 
additional payment for certain Opioid Treatment Program drugs under 42 
CFR 410.67(d)(2)(i)(A) and (B). In the event ASP pricing information is 
not available for a particular drug, we propose to pay the Wholesale 
Acquisition Cost (WAC) plus 0 percent. If WAC pricing information is 
not available, we propose to pay 89.6 percent of Average Wholesale 
Price (AWP).
    We seek comment on whether we should instead pay ASP plus 6 
percent. If we were to adopt this alternative policy and pricing 
information is not available for a particular drug, we would pay WAC 
plus 6 percent and if WAC pricing information is not available, we 
would pay 95 percent of AWP. We seek comment on our proposal to pay an 
add-on of ASP plus 0 percent in addition to the AIR for drugs 
administered by IHS and tribal facilities with costs that exceed two 
times the lower 48 AIR. We also seek comment on our proposed pricing 
hierarchy for drugs for which ASP pricing information is not available.
    To implement this policy, we propose that, starting with IHS's 
annual announcement in the Federal Register in December 2024 of the 
lower 48 AIR amount for CY 2025, we would multiply the lower 48 AIR 
amount by two and then compare the result to the estimated per day 
costs of all drugs covered under Part B for which payment would 
otherwise be made under the OPPS. To determine the calculated per day 
cost for each drug and biological HCPCS code, we propose to follow a 
methodology similar to our longstanding methodology used to calculate 
the per day cost of drugs and biologicals for OPPS payment purposes as 
discussed in section V.B.1.b of this proposed rule. Specifically, to 
calculate the per day cost, we propose to use an estimated payment rate 
based on the ASP methodology payment rate, which for purposes of this 
proposal is generally ASP plus 0 percent (which is the payment rate we 
propose for separately payable IHS drugs and biologicals) for CY 2025 
to calculate the CY 2025 proposed rule per day costs. We used the 
manufacturer-submitted ASP data from the fourth quarter of CY 2023 to 
determine the proposed rule per day cost. For drugs and biologicals 
that did not have either an ASP-based payment rate or a payment rate 
based on WAC, we used mean unit cost of the items derived from the CY 
2023 hospital claims data to determine their per day cost.
    A list of drugs whose costs exceeds two times the lower 48 AIR 
would be

[[Page 59394]]

generated and communicated to IHS and tribal hospitals prior to January 
1, 2025. During CY 2025, IHS and tribal hospitals would submit claims 
for drugs included on this list. The list of drugs would be updated on 
a quarterly basis using existing drug compendia and CMS ASP quarterly 
reporting only to account for newly introduced drugs. The payment rates 
for drugs on the list would be updated quarterly as well based on 
changes in drug prices. We would then repeat this process on an annual 
basis each December when the lower 48 AIR amount for the following 
calendar year is announced by IHS. For example, had our proposed policy 
been in place for CY 2024, the drugs for which the add-on payment would 
have been made (drugs with a per day cost exceeding two times the CY 
2024 lower 48 AIR) are those listed in Addendum Q. We seek comment on 
this proposed implementation plan.
    Finally, we propose to implement this policy on a permanent basis 
but may revisit it in the future if we have any concerns about its 
impact once it has been implemented.

D. Request for Information--Paying All IHS and Tribally Operated 
Clinics the IHS Medicare Outpatient All Inclusive Rate

    CMS established a Tribal Technical Advisory Group (TTAG) in 2004 to 
provide advice and input to CMS on policy and program issues impacting 
AI/AN populations served by CMS programs. Although not a substitute for 
formal consultation with tribal leaders, the TTAG enhances the 
government-to-government relationship between HHS and federally 
recognized tribes and improves understanding between CMS and tribes. 
The TTAG has subject specific subcommittees that meet on a regular 
basis in order to be more effective and perform in-depth analysis of 
Medicare, Medicaid, CHIP, and Health Insurance Marketplace[supreg] \91\ 
policies that have tribal implications. The TTAG is composed of 17 
representatives. It has historically included an elected tribal leader 
or an appointed representative from each of the 12 geographic areas of 
the IHS delivery system and a representative from each of the national 
Indian organizations headquartered in Washington, DC--the National 
Indian Health Board, the National Congress of American Indians, and the 
Tribal Self-Governance Advisory Group. Section 5006(e)(1) of the 
American Recovery and Reinvestment Act of 2009, which became effective 
July 1, 2009, mandates that TTAG shall be maintained within CMS and 
added two new representatives: a representative from a national urban 
Indian health organization; and a representative from the IHS.
---------------------------------------------------------------------------

    \91\ Health Insurance Marketplace[supreg] is a registered 
service mark of the U.S. Department of Health & Human Services.
---------------------------------------------------------------------------

    In June 2020, the TTAG requested[thinsp]that CMS amend its Medicare 
regulations to make all IHS and tribally-operated outpatient facilities 
eligible for Medicare payment at the IHS Medicare outpatient per visit 
rate/AIR. The TTAG explained that outpatient clinics, which are 
otherwise similar to grandfathered tribal FQHCs, are paid at different 
rates depending upon whether they meet the requirements as a provider-
based facility, a grandfathered tribal FQHC, a non-grandfathered tribal 
FQHC, or none of the above. TTAG's position is that the rates vary 
based on Medicare regulatory definitions, rather than the actual costs 
of the outpatient clinic.\92\ There are varying payment differentials 
among Medicare enrolled providers and suppliers under the authorities 
of the SSA. For example, ASCs are paid differently than HOPDs; which 
are paid differently depending on whether they are located in a 
critical access hospital.
---------------------------------------------------------------------------

    \92\ https://www.nihb.org/tribalhealthreform/wp-content/uploads/2020/06/TTAG-letter-to-CMS-requesting-IHS-rate-for-all-tribal-clinics-06.10.2020.pdf.
---------------------------------------------------------------------------

    In the CY 2022 PFS proposed rule (86 FR 39240), we acknowledged 
that the TTAG is concerned about ensuring appropriate Medicare payments 
for similar services and is also concerned about the impact on tribal 
Medicare beneficiaries and on ensuring equitable access to healthcare. 
We take these concerns seriously but noted in the CY 2022 PFS proposed 
rule that we had insufficient information to evaluate the costs and 
benefits of potential changes to these policies. Therefore, we 
solicited comments on the TTAG's request for CMS to amend its Medicare 
regulations to make all IHS- and tribally operated outpatient 
facilities/clinics eligible for payment at the Medicare outpatient per 
visit rate/AIR, regardless of whether they were owned, operated, or 
leased by IHS. In response to the solicitation, we did not receive 
specific information on costs or specific types of clinics; however, in 
the CY 2022 PFS final rule (86 FR 65211 through 65214), we stated we 
would like to continue these discussions to evaluate the impact of the 
commenters' proposed changes to the current Medicare payment policies 
and will consider these recommendations for future rulemaking. Thus, to 
continue these discussions, we would like to request this information 
again in this proposed rule.
    Beginning in the Fall of 2023, CMS began participating in a 
workgroup related to the TTAG's Medicare priority to make the IHS 
Medicare outpatient AIR available to all IHS and tribally operated 
outpatient facilities that request it. Although we have received some 
information through the workgroup, we would like to request information 
consistent with our comment solicitation in the CY 2022 PFS proposed 
rule.
    We seek information on the kinds of and number of facilities or 
clinics that the Medicare outpatient IHS AIR could apply to; that is, 
it is unclear whether TTAG anticipates that these facilities enroll in 
Medicare as FQHCs going forward, or whether they are referring to FQHCs 
that are currently paid under the FQHC PPS. Moreover, we request 
information on whether the facilities in question are freestanding or 
provider-based. We would like commenters to confirm or clarify whether 
the clinics are physician offices, or whether they are recommending 
establishment of a new provider type. We seek information regarding the 
relative operating costs of tribally operated outpatient clinics, as 
well as feedback and supporting evidence to address whether or why 
payment set at the IHS AIR would be more appropriate than payment rates 
under the FQHC PPS, the physician fee schedule, or other some other 
Medicare payment system. Further, we seek comment on how the Medicare 
outpatient AIR, which is based upon a limited number of hospital cost 
reports, relates to costs in tribal clinics and the kinds of services 
that the clinics furnish. Finally, we seek comment on the concerns that 
the AI/AN community may have regarding access to or inequity of care in 
situations where a payment differential exists.
    We have information on historically excepted FQHCs, the outpatient 
provider-based clinics to the hospital, and some general information 
about the composition of IHS and tribal facilities and clinics. 
However, there are still gaps in the data and therefore we are 
soliciting answers to the following questions: If the clinic or 
facilities in question are not enrolled in Medicare as an FQHC or 
provider-based to a hospital, are they physician practices? How are 
these facilities organized and related?
    Because paying the Medicare outpatient AIR to additional IHS and 
tribally operated facilities that are currently paid under another 
Medicare payment methodology or not yet enrolled in Medicare as all 
would

[[Page 59395]]

potentially increase expenditures, we also solicit information on how 
tribally operated facilities participate in Medicare currently, which 
would help us to estimate the impacts of such a policy change.

E. Coverage Changes for Colorectal Cancer (CRC) Screening Services

    Medicare coverage for colorectal cancer (CRC) screening tests under 
Part B is described in statutes (sections 1861(s)(2)(R), 1861(pp), 
1862(a)(1)(H) and 1834(d) of the Social Security Act (the Act)), 
regulation (42 CFR 410.37), and a National Coverage Determination (NCD) 
(Section 210.3 of the Medicare National Coverage Determinations 
Manual). Section 1861(pp)(1)(D) of the Act includes in its definition 
of colorectal cancer screening test ``[s]uch other tests or procedures, 
and modifications to the tests and procedures described under this 
subsection, with such frequency and payment limits as the Secretary 
determines appropriate, in consultation with appropriate 
organizations.''
    42 CFR 410.37 lists and defines the tests and procedures covered by 
Medicare as colorectal cancer screening tests. Specifically, the 
following tests and procedures furnished to an individual for the 
purpose of early detection of colorectal cancer are covered by 
Medicare:
     Screening fecal-occult blood tests.
     Screening flexible sigmoidoscopies.
     Screening colonoscopies, including anesthesia furnished in 
conjunction with the service.
     Screening barium enemas.
     Other tests or procedures established by a national 
coverage determination, and modifications to tests under this 
paragraph, with such frequency and payment limits as CMS determines 
appropriate, in consultation with appropriate organizations.
    In recent years we have received recommendations from the public to 
remove Medicare coverage for the barium enema test since the test no 
longer meets modern clinical standards and is no longer recommended in 
clinical guidelines. As a replacement to the barium enema test, 
organizations have suggested the use of CT colonography, which is a 
more effective test for colorectal cancer screening. For a more 
extensive discussion on the background and proposal to revise the 
Medicare coverage for colorectal cancer screening services, we refer 
readers to the CY 2025 Physician Fee Schedule (PFS) proposed rule.
    For CY 2025, based on public input and consultation with specialty 
societies, and as discussed in the CY 2025 PFS proposed rule, we 
propose to exercise our authority under section 1861(pp)(1)(D) of the 
Act to update and expand coverage for CRC screening. As discussed in 
the CY 2025 PFS proposed rule, we propose to make the following 
revisions to Sec.  410.37:
     Remove coverage for the barium enema procedure.
     Add coverage for the computed tomography colonography 
(CTC) procedure.
     Expand the existing definition of a ``complete colorectal 
cancer screening'' to include a follow-on screening colonoscopy after a 
Medicare covered blood-based biomarker CRC screening test (described 
and authorized in NCD 210.3).
    The above screening tests are currently described by existing HCPCS 
codes. These HCPCS codes are listed in Table 70 along with their long 
descriptors.
[GRAPHIC] [TIFF OMITTED] TP22JY24.103

    Based on the proposed coverage changes for CRC screening, we 
propose to make the following changes under the OPPS for CY 2025:
     HCPCS codes G0106 and G0120 (screening barium enema): 
These codes were established by CMS effective January 1, 1998, to 
implement Medicare coverage for barium enema as a test for colorectal 
cancer screening. Since we propose to remove Medicare coverage for 
barium enema effective January 1, 2025, and we no longer need to keep 
these codes active, we propose to delete them on December 31, 2024. 
Therefore, we are revising the status indicator for the HCPCS codes 
from status indicator ``S'' (Procedure or Service, Not Discounted When 
Multiple. Paid under OPPS; separate APC payment.) to ``D'' 
(Discontinued code) to indicate that HCPCS codes G0106 and G0120 will 
be deleted on December 31, 2024. In addition to the deletion of these 
codes, we also propose to delete HCPCS code G0122 (Colorectal cancer 
screening; barium enema), which is already non-covered by Medicare, on 
December 31, 2024.

[[Page 59396]]

     CPT code 74263 (screening computed tomography colonography 
(CTC)/virtual colonoscopy): We are reassigning this code from status 
indicator ``E1'' (not covered/not payable) to status indicator ``S'' 
and APC 5522 (Level 2 Imaging Without Contrast) to indicate that the 
code is separately payable. Based on our review, the time and resources 
associated with performing a screening virtual colonoscopy is similar 
to a diagnostic virtual colonoscopy, which is described by CPT code 
74261 (Computed tomographic (ct) colonography, diagnostic, including 
image postprocessing; without contrast material). Consequently, the 
proposed APC assignment for CPT code 74263 is based on its clinical and 
resource homogeneity to CPT code 74261, which is assigned to APC 5522.
     HCPCS code G0327 (screening blood-based biomarker): This 
HCPCS code is currently assigned to status indicator ``A'' to indicate 
that the test is paid separately under a different Medicare payment 
system than the OPPS. Since HCPCS G0327 is currently separately payable 
under the Clinical Laboratory Fee Schedule (CLFS), we are not proposing 
to revise the status indicator. Specifically, with the expanded 
coverage to include blood-based biomarker as a screening test to detect 
colorectal cancer, we propose to continue to assign HCPCS code G0327 to 
status indicator ``A'' for CY 2025.
    In summary, based on the proposed coverage changes for colorectal 
cancer screening services, we propose to revise the OPPS status 
indicator for certain HCPCS codes for CY 2025. Table 71 shows the long 
descriptors, current CY 2024 OPPS status indicators, and proposed CY 
2025 OPPS status indicators for HCPCS codes G0106, G0120, G0122, 74263, 
and G0327. The proposed CY 2025 OPPS payment rates, where applicable, 
for these HCPCS codes can be found in Addendum B to this proposed rule. 
In addition, for the complete list of the proposed status indicators 
and their definitions, refer to Addendum D1 of this proposed rule.
[GRAPHIC] [TIFF OMITTED] TP22JY24.104

F. Request for Comment on Payment Adjustments Under the IPPS and OPPS 
for Domestic Personal Protective Equipment

1. General Background
    As discussed in the FY 2023 IPPS/LTCH PPS and CY 2023 OPPS/ASC 
rules, President Biden issued Executive Order (E.O.) 13987 ``Organizing 
and Mobilizing the United States Government To Provide a Unified and 
Effective Response To Combat COVID-19 and To Provide United States 
Leadership on Global Health and Security'' on January 20, 2021 (86 FR 
7019). This order launched a whole-of-government effort to combat the 
coronavirus disease 2019 (COVID-19) and prepare for future biological 
and pandemic threats. As the COVID-19 pandemic eased, work has 
continued to prepare for future pandemics. As the COVID-19 pandemic 
demonstrated, sufficient availability of personal protective equipment 
(PPE) in the health care sector is a critical component of 
preparedness.
    The CY 2023 OPPS/ASC final rule implemented payment adjustments 
under the OPPS and IPPS to support a resilient and reliable supply of 
surgical N95 respirators--a specific type of filtering facepiece 
respirator that is a subset of N95 masks used in some clinical settings 
under conditions requiring respiratory protection from airborne 
pathogens and splash protection from exposure to fluids. Early on in 
the COVID-19 pandemic, ``just-in-time'' supply chains, minimal 
stockpiling, and overreliance on foreign imports left U.S. hospitals 
unable to obtain enough N95 respirators to protect health care workers. 
Prices for surgical N95s soared from an estimated $0.25-$0.40/unit to 
$5.75/unit (and up to $12.00/unit in some reported cases). Unable to 
obtain surgical N95s regulated by NIOSH, hospitals had to turn to 
KN95s--a Chinese standard respirator--and other non-NIOSH-approved 
respirators under Emergency Use Authorization (EUA). Skyrocketing

[[Page 59397]]

demand during the COVID-19 pandemic also raised counterfeit respirator 
concerns.
    Currently available payment adjustments offset the marginal costs 
that hospitals face in procuring domestically made NIOSH-approved and 
FDA-certified surgical N95 respirators. These marginal costs are due to 
higher per-unit acquisition prices that stem from higher costs of 
inputs and labor in the U.S., as compared to international suppliers, 
where many N95 and other respirators are made, as well as a 
demonstrated record of more consistent high quality for domestically 
made products.\93\ These payment adjustments offset the additional 
marginal costs of hospitals that purchase domestically made NIOSH-
approved surgical N95 respirators to help sustain demand for--and thus 
domestic production of--high-quality domestically made respirators in 
order to ensure quality PPE is available to health care personnel when 
needed.
---------------------------------------------------------------------------

    \93\ https://www.cdc.gov/niosh/npptl/respirators/testing/NonNIOSHresults.html.
---------------------------------------------------------------------------

    The policy goal to maintain a baseline domestic production capacity 
of high-quality PPE in order to ensure that quality PPE is readily 
available to health care personnel when needed is emphasized in the 
National Strategy for a Resilient Public Health Supply Chain, published 
in July 2021 as directed by President Biden's Executive Order 14001 on 
``A Sustainable Public Health Supply Chain.'' The U.S. Government has 
committed to purchase wholly domestically-made PPE in line with section 
70953 of the Infrastructure Investment and Jobs Act (Pub. L. 117-58).
2. Potential Modifications to Payment Adjustments for Domestic NIOSH-
Approved Surgical N95 Respirators
    Although the payment adjustments for domestic NIOSH-approved 
surgical N95 respirators under the OPPS and IPPS have applied to cost 
reporting periods beginning on or after January 1, 2023, use of the 
payment adjustments has been limited. Furthermore, market data suggests 
that a majority of surgical N95 respirators purchased by hospitals are 
not wholly domestically made. In the CY 2023 OPPS/ASC final rule, we 
stated that as we gain more experience with this policy and the data 
collected, we may also consider modifications to the reasonable cost-
based payment approach we were finalizing. HHS has conducted 
stakeholder outreach to better understand barriers to awareness and 
uptake and seek feedback on potential modifications that could increase 
effectiveness, and continues to engage hospitals and other 
manufacturers on these payment adjustments. We are interested in 
feedback and comments on potential modifications to the payment 
adjustment in order to reduce reporting burden and achieve the policy 
goal to maintain a baseline domestic production capacity of PPE in 
order to ensure that quality PPE is readily available to health care 
personnel when needed.
    Payment adjustment methodology: In the CY 2023 OPPS/ASC final rule, 
we finalized to initially base the payment adjustments on the IPPS and 
OPPS shares of the estimated difference in the reasonable costs. We 
created a new supplemental cost reporting form to enable calculation of 
a hospital-specific unit cost differential between domestic and non-
domestic NIOSH-approved surgical N95 respirators. We noted that, based 
on available data, our best estimate of the difference in the average 
unit cost of domestic and non-domestic NIOSH-approved surgical N95 
respirators was $0.20. In the CY 2023 OPPS/ASC final rule, we also 
noted that MedPAC, while not supportive of the proposed payment 
adjustments, stated that CMS should set the unit cost differential 
between domestic and non-domestic NIOSH-approved surgical N95 
respirators at a national level (rather than on a hospital-by-hospital 
basis). MedPAC believed this would reduce the administrative burden on 
hospitals, encourage hospitals to purchase the most economical 
domestically made product, and reduce the ability of hospitals to 
increase their payments by artificially inflating reported N95 costs. 
We solicit comment on the following questions:
     Should we consider modifying the payment adjustment 
methodology calculation to provide a national standard unit cost 
differential between domestic and non-domestic NIOSH-approved surgical 
N95 respirators (rather than on a hospital-by-hospital basis)?
     If so, how should we calculate that standard unit cost 
differential between domestic and non-domestic NIOSH-approved surgical 
N95 respirators, and what should the current unit cost differential be?
     If we modified the payment adjustment methodology 
calculation to provide a national standard unit cost differential, 
would it be appropriate to calculate the payment adjustment by 
multiplying the unit cost differential by the total quantity of 
domestic NIOSH-approved surgical N95 respirators used by the hospital, 
and then multiplying by the Medicare Part A hospital inpatient cost 
share (to calculate the IPPS payment adjustment) or the Medicare Part B 
hospital outpatient cost share (to calculate the OPPS payment 
adjustment)?
     Do hospitals need additional support to purchase domestic-
made surgical N95 respirators as opposed to non-domestic surgical N95 
respirators? If so, how much support is needed, and in what form?
    Payment adjustment eligibility: In the CY 2023 OPPS/ASC final rule, 
we stated that we recognize that a hospital cannot fully independently 
determine if a NIOSH-approved surgical N95 respirator it purchases is 
domestic under our definition. Therefore, we finalized that a hospital 
may rely on a written statement from the manufacturer stating that the 
NIOSH-approved surgical N95 respirator the hospital purchased is 
domestic under our definition. We solicit comment on the following 
questions:
     Do hospitals have sufficient access to information on 
which surgical N95 models on the market are wholly domestically made?
     Have hospitals been able to obtain written statements from 
manufacturers stating that the NIOSH-approved surgical N95 respirator 
the hospital purchased is domestic under our definition?
     Would a publicly available list of products eligible for 
the payment adjustment (for example, if provided by CMS, NIOSH, or 
another government entity) make it easier for hospitals to locate 
products eligible for the payment adjustment?
     If we modified the payment adjustment such that hospitals 
that attested to purchasing wholly domestically made surgical N95 
models from such a list did not need to obtain a written statement from 
the manufacturer, would hospitals more easily be able to utilize the 
payment adjustment?
    Types of N95 respirators: In the CY 2023 OPPS/ASC proposed rule, 
for purposes of the payment adjustment policy, we proposed to 
categorize all NIOSH-approved surgical N95 respirators purchased by 
hospitals into two categories: (1) Domestic NIOSH-approved surgical N95 
respirators; and (2) Non-domestic NIOSH-approved surgical N95 
respirators. Feedback from external stakeholders has suggested that it 
is a challenge that the payment adjustments are limited to surgical N95 
respirators, given some hospitals also procure non-surgical N95 
respirators. Both surgical N95 respirators and non-surgical N95 
respirators are primarily

[[Page 59398]]

used to protect the wearer from inhaling airborne particles, including 
infectious agents like bacteria and viruses. They are highly efficient 
at filtering out at least 95% of airborne particles and are commonly 
used by healthcare workers during procedures that may generate 
aerosols, such as intubation or suctioning, or when caring for patients 
with infectious respiratory diseases like tuberculosis or coronavirus. 
Both types of N95 respirators serve as frontline defense for medical 
professionals. They are crucial for preventing the transmission of 
diseases within healthcare settings and safeguarding the health and 
well-being of both healthcare workers and patients. Surgical N95 
respirators have the added protection against fluid penetration, and 
may be most useful is specialized health care settings (e.g., ICU, 
Emergency Department, Operating Room) where the risk of fluid exposure 
may be greater. Additionally, during the COVID-19 pandemic, both types 
of N95 respirators saw issues around lack of availability and risk of 
counterfeit outlined in the CY 2023 OPPS/ASC final rule--issues which 
could compromise the safety of health care personnel and patients. We 
solicit comment on the following questions:
     Do hospitals procure both surgical N95 respirators and 
non-surgical N95 respirators?
     Has the payment adjustment's current focus on surgical N95 
respirators inhibited uptake of the payment adjustments?
     Are the quality differentials between domestic and non-
domestic surgical respirators also applicable to non-surgical 
respirators, and is a sustained and reliable source of domestically 
made non-surgical N95 respirators important for strengthening 
hospitals' ability to protect the health and safety of personnel and 
patients in a public health emergency?
     Should CMS consider expanding the payment adjustments to 
include all domestic NIOSH-approved N95 respirators--i.e., non-surgical 
and surgical N95 respirators?
     If we expanded the payment adjustments to include all 
domestic NIOSH-approved N95 respirators, and if we modified the payment 
adjustment methodology calculation to provide a national standard unit 
cost differential between domestic and non-domestic NIOSH-approved 
surgical N95 respirators (rather than on a hospital-by-hospital basis), 
would the unit cost differential for non-surgical N95 respirators be 
different than the one for surgical N95 respirators?
3. Potential Modifications To Include Nitrile Gloves
    In addition to N95 respirators, nitrile gloves are another type of 
PPE for which it is particularly crucial to maintain a resilient, 
quality supply. Nitrile gloves protect health care workers and patients 
from the spread of micro-organisms that may potentially cause infection 
or illness during medical procedures and examination. They create a 
barrier between germs and the wearer's hands, and are generally worn 
anytime a health care worker touches blood, bodily fluids, bodily 
tissues, mucous membranes, or broken skin. They are disposable, 
enabling the use of new gloves for each patient. A resilient healthcare 
system needs readily available, high-quality nitrile gloves to respond 
efficiently and effectively to public health emergencies. During the 
COVID-19 pandemic, supply chain breakdowns limited the supply of 
quality nitrile gloves, putting U.S. health care workers and patients 
at risk. As with N95 respirators, non-domestic-sourced gloves during 
the COVID-19 pandemic saw counterfeit and quality challenges. The 
receipt of non-U.S.-made counterfeit or already-used gloves put the 
safety of health care workers and patients at risk.94 95 
Prior to 2020, over 95 percent of nitrile gloves sold in the U.S. came 
from other countries. As the pandemic escalated in 2020, U.S. demand 
for gloves outstripped available supply, leading to shortages. Around 
the same time, supply was also limited by coronavirus-related lockdowns 
in other countries that decreased production capacity, and by export 
restrictions of PPE. Further adding to supply pressures, forced labor 
violations by subsidiaries of a major glove producer led U.S. Customs 
and Border Protection (CBP) to issue a Withhold and Release Order, 
resulting in seizure of all listed products, including nitrile gloves, 
at CBP inspections. During the initial months of the pandemic, the cost 
of gloves increased, rising 18 percent from July to August 2020 (to 
$0.03 per glove) and then an additional 20 percent from November to 
December 2020 (to $0.05 per glove).\96\
---------------------------------------------------------------------------

    \94\ https://www.cnn.com/2021/10/24/health/medical-gloves-us-thailand-investigation-cmd-intl/index.html.
    \95\ https://www.propublica.org/article/ppe-covid-scams-fraud-nitrile-gloves.
    \96\ Glove Story Global Glove Production Amidst the COVID-19 
Pandemic (usitc.gov).
---------------------------------------------------------------------------

    During the pandemic, the U.S. government has invested in domestic 
glove manufacturing capabilities. U.S. glove-manufacturing projects 
received approximately $290 million in public funding as part of a 
broader $1.5-billion investment to support domestic glove 
manufacturing. These investments have resulted in an increase of 3.91 
billion in annual production capacity for domestically manufactured 
nitrile gloves. The U.S. government also invested in manufacturing 
capacity for nitrile glove inputs such as nitrile butadiene rubber, and 
this manufacturing capacity is expected to become available in 2026.
    However, since the pandemic began, some U.S. factories have been 
forced to consolidate operations or exit the industry. Further, non-
U.S. nitrile glove producers have deployed cost-cutting tactics such as 
using lower-grade raw materials, prompting some purchasers to seek 
other sources out of concern for quality.\97\ Producers of these lower 
quality products began selling gloves for the price of $0.02 each, 
rapidly increasing U.S. market share, going from 13% of U.S. market 
share in July 2020 to 19 percent in February 2021. As of 2024, only 
three producers of nitrile gloves are left in the United States, and 
they supply an estimated .05% percent of U.S. demand for nitrile 
gloves.
---------------------------------------------------------------------------

    \97\ Glove Story Global Glove Production Amidst the COVID-19 
Pandemic (usitc.gov).
---------------------------------------------------------------------------

    As with N95 respirators, a resilient public health industrial base 
requires baseline manufacturing capacity for nitrile gloves as critical 
PPE items, to ensure that hospitals and other institutions will be able 
to procure high quality gloves reliably. To help achieve this goal, 
certain U.S. Government departments have committed to purchase wholly 
domestically made nitrile gloves in line with the requirements in 
section 70953 of the Infrastructure Investment and Jobs Act. However, 
federal demand alone cannot sustain a baseline level of nitrile glove 
production in the U.S. Private medical and health care users are the 
primary purchasers and users of medical-grade PPE, including nitrile 
gloves.
    To ensure access to high quality products, as with N95 respirators, 
it is critically important to ensure that a sufficient share of nitrile 
gloves is wholly made in the U.S.--that is, including raw materials and 
components. In the CY 2023 OPPS/ASC rule, we stated our belief that the 
most appropriate framework for determining if a NIOSH-approved surgical 
N95 respirator is wholly made in the U.S. and therefore, considered 
domestic for purposes of the proposed adjustments, is the Berry 
Amendment. The Berry Amendment is a statutory requirement familiar to 
manufacturers that restricts the Department of Defense (DoD) from

[[Page 59399]]

using funds appropriated or otherwise available to DoD for procurement 
of food, clothing, fabrics, fibers, yarns, other made-up textiles, and 
hand or measuring tools that are not grown, reprocessed, reused, or 
produced in the United States. For nitrile gloves, which are not 
covered by the Berry Amendment, we believe the Make PPE in America 
domestic content requirements outlined in section 70953 of the 
Infrastructure Investment and Jobs Act is the most appropriate 
framework for determining if a nitrile glove is wholly made in the U.S. 
These statutory requirements, which apply to procurement of nitrile 
gloves and other PPE by the U.S. Departments of Health and Human 
Services, and Veterans Affairs, and Homeland Security, require the 
procurement PPE, including the materials and components thereof, that 
is grown, reprocessed, reused, or produced in the U.S. These statutory 
requirements have become familiar to manufacturers of nitrile gloves 
and other PPE. With respect to domestic manufacturing capabilities for 
raw materials and components, we understand that nitrile butadiene 
rubber (NBR), a key nitrile glove input, is currently not yet available 
domestically in sufficient quantity or quality to meet market needs. We 
understand that U.S. manufacturers do anticipate having the capability 
to source and manufacture all glove components domestically within the 
next two years.
    Wholly domestically made, high quality nitrile gloves are generally 
more expensive than foreign-made ones, especially those of lower 
quality. This fact is also true for domestically made nitrile gloves 
that include non-domestically sourced NBR. These higher prices 
primarily stem from higher costs of manufacturing labor in the U.S. 
compared to costs in other countries, where most nitrile gloves and 
their inputs are made, and higher quality standards. These higher 
prices mean higher marginal costs for hospitals for procuring wholly 
domestically made nitrile gloves. Based on available data, our best 
estimate of the difference in the average unit cost of domestic and 
non-domestic nitrile gloves, is $0.13 per glove.
    As outlined in this section, quality nitrile gloves are a crucial 
component of PPE needed to ensure the safety of health care workers and 
patients. The COVID-19 pandemic highlighted how overreliance on foreign 
imports of gloves jeopardized public health and the health and safety 
of healthcare workers and patients. We solicit comment on the following 
questions:
     Would modifying the payment adjustment to include nitrile 
gloves help offset the marginal costs that hospitals face in procuring 
high quality domestically made nitrile gloves?
     Would modifying the payment adjustment to include nitrile 
gloves help to sustain a baseline level of domestic manufacturing of 
nitrile gloves to ensure that hospitals and other stakeholders have 
ongoing, reliable access to an adequate supply of quality product?
     Would having access to a sustained and reliable source of 
domestically made nitrile gloves strengthen hospitals' ability to 
protect the health and safety of personnel and patients in a public 
health emergency?
     Are there other reasons why hospitals would benefit from 
an extension of the payment adjustment to include nitrile gloves not 
covered in the preceding questions?
     Do stakeholders believe a significant portion of hospitals 
would use domestic nitrile gloves if the payment adjustment were 
offered?
     If the payment adjustment was modified to include nitrile 
gloves, how should CMS define wholly domestically made nitrile gloves? 
Would it be appropriate to categorize all nitrile gloves purchased by 
hospitals into two categories: (1) domestic nitrile gloves that--with 
the exception of nitrile butadiene rubber (NBR)--comply with the 
Infrastructure Investment and Jobs Act's Make PPE in America Act 
domestic content requirements; and (2) non-domestic nitrile gloves?
     If the payment adjustment was modified to include nitrile 
gloves, and the categories were defined as described previously, would 
it be appropriate to eliminate the domestic content exception for NBR 
if domestic NBR production reaches a sufficient level to meet market 
needs?
     If the payment adjustment was modified to include nitrile 
gloves, should a national standard unit cost differential between 
domestic and non-domestic nitrile gloves be used to calculate the 
payment adjustment, and if so, what should the current unit cost 
differential be (or, what should the data source be)?
4. Potential Modifications To Include Other PPE and Medical Devices
    As noted in the CY 2023 OPPS/ASC final rule, we received many 
comments urging CMS to expand this policy to cover other forms of PPE 
and critical medical supplies. A few commenters stated that other forms 
of PPE suffered shortages during the pandemic similar to surgical N95 
respirators and therefore investing in domestic production for these 
products was also important for future emergency preparedness. We 
stated that we will consider these comments for future rulemaking if 
appropriate as we gain more experience with our policy. We seek comment 
on other PPE types and medical devices that could be appropriate for a 
similar payment adjustment.

G. Payment for HIV Pre-Exposure Prophylaxis (PrEP) in Hospital 
Outpatient Departments

    On July 12, 2023, CMS proposed to cover Pre-Exposure Prophylaxis 
(PrEP) to prevent Human Immunodeficiency Virus (HIV) under Medicare 
Part B. This proposed coverage would include coverage for the HIV PrEP 
drugs, drug administration, HIV and hepatitis B screening, and 
individual counseling performed by either physicians or certain other 
health care practitioners. If finalized as proposed, all of the 
components would be covered as an additional preventive service without 
Part B cost-sharing (i.e., deductibles or co-pays), The final National 
Coverage Determination (NCD) has not been issued as of the issuance of 
this proposed rule.\98\
---------------------------------------------------------------------------

    \98\ https://www.cms.gov/files/document/faq-prep-hiv-06242024.pdf.
---------------------------------------------------------------------------

    The HCPCS codes that describe these services are described in Table 
72.
BILLING CODE 4120-01-P

[[Page 59400]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.105

BILLING CODE 4120-01-C
    For CY 2025, we propose to pay for HIV PrEP drugs and related 
services as additional preventive services under the OPPS, if covered 
in the final NCD. We believe the resource costs for HCPCS codes listed 
in Table 72 would be similar across different settings of care, 
including the HOPD and physician office, and therefore the proposed 
policies for determining the payment amounts for these services in the 
CY 2025 PFS proposed rule would be appropriate for use under the OPPS 
as well. Therefore, we propose to pay for the HCPCS codes listed in 
Table 72 that are furnished in HOPDs in a similar manner as when these 
codes are furnished in the physician office.
    HCPCS code G0012 (Injection of pre-exposure prophylaxis (prep) drug 
for hiv prevention, under skin or into muscle) may be used to describe 
the injection of a PrEP drug for HIV prevention. For CY 2025, if 
covered as an additional preventative service, we propose to assign 
this HCPCS code to APC 5692 (Level 2 Drug Administration) based on the 
crosswalk to HCPCS code 96372 (Therapeutic, prophylactic, or diagnostic 
injection (specify substance or drug); subcutaneous or intramuscular) 
based on the anticipated similarity in resource use. For the HIV PrEP 
counseling services performed by hospital staff, specifically HCPCS 
code G0013, if covered as an additional preventative service, we are 
proposing to assign this service to a clinical APC with a payment rate 
that approximates the payment rate in the physician office setting. The 
proposed CY 2025 payment rates can be found in Addendum B to this 
proposed rule via the internet on the CMS website. We are not proposing 
to pay for HIV PrEP counseling performed by physicians under the OPPS 
as this is a physician-only service.
    To determine the OPPS payment amount for HIV PrEP drugs we propose 
to utilize the ASP methodology under section 1847A of the Act when ASP 
data is available. As discussed in the CY 2025 PFS proposed rule, we 
believe the use of ASP data would be preferable for determining the 
payment amount for HIV PrEP, for two reasons. First, this approach 
would determine the payment amount for these drugs in the same way as 
the payment amount is usually determined for most other drugs that are 
separately payable under Part B, when possible. This would include the 
application of payment limit calculations for multiple source drugs, 
single source drugs and biologicals, and biosimilar biological 
products, as is done products under section 1847A of the Act, for each 
applicable billing and payment code. Second, because section 
1847A(c)(3) of the Act requires that calculation of the manufacturer's 
ASP for an NDC must include volume discounts, prompt pay discounts, 
cash discounts, free goods that are contingent on any purchase 
requirement, chargebacks, and rebates (other than rebates under the 
Medicaid drug rebate

[[Page 59401]]

program, discounts under the 340B Program, and rebates under the Part B 
and Part D Medicare inflation rebate program), this would set a payment 
amount that would likely better reflect acquisition cost of the drug 
than list prices in available compendia (such as Wholesale Acquisition 
Cost (WAC)).
    Specifically, for HIV PrEP drugs, if ASP data is not available for 
a particular drug, the PFS proposal describes the use of alternative 
pricing sources. As previously stated, we believe the resource costs 
should be similar regardless of whether HIV PrEP drugs are furnished in 
the HOPD or the physician office, and we propose to use the same method 
of utilizing alternative pricing sources for drugs paid under the OPPS 
as additional preventive services as is proposed under the PFS.
    If ASP data for HIV PrEP is not available, we propose to determine 
the payment amount for the applicable billing and payment code using 
the most recently published amount for the drug in Medicaid's National 
Average Drug Acquisition Cost (NADAC) survey (OMB control number 0938-
1041).\99\ When using NADAC data, we propose to determine the payment 
amount per billing unit, which would be an average of NADAC prices for 
all NDCs for the drug. If a drug is available in generic and brand 
formulations, we propose all NDCs will be averaged together to 
determine the payment amount.
---------------------------------------------------------------------------

    \99\ https://www.medicaid.gov/medicaid/prescription-drugs/retail-price-survey/index.html.
---------------------------------------------------------------------------

    Most recently published for purposes of this policy means the most 
recently updated NADAC survey available 30 days after the close of the 
quarter for which ASP data would have been reported if it were 
available.\100\ For example, if NADAC is used to determine the payment 
amount effective for dates of service in the third calendar quarter, 
CMS would use the most recent NADAC survey update available on the 30th 
day after the close of the first calendar quarter. This survey provides 
a national drug pricing benchmark for certain drugs that is adequately 
comprehensive to serve as the first alternative pricing source in the 
case that ASP data is not available. CMS conducts surveys of retail 
community pharmacy prices to develop the NADAC pricing benchmark in the 
annual NADAC pricing file. The pricing benchmark is reflective of the 
prices paid by retail community pharmacies to acquire prescription and 
over-the-counter covered outpatient drugs. NADAC data is publicly 
available and it can be accessed at https://data.medicaid.gov/nadac.
---------------------------------------------------------------------------

    \100\ 42 CFR 414.804(a)(5).
---------------------------------------------------------------------------

    Since NADAC pricing is only available for drugs typically dispensed 
through retail community pharmacies, there could be circumstances in 
which ASP and NADAC are not available for HIV PrEP. Therefore, if both 
ASP and NADAC pricing data are not available for a DCAPS drug, we 
propose to use the most recently published and listed prices for 
pharmaceutical products in the Federal Supply Schedule (FSS) to 
calculate the payment amount for the applicable billing and payment 
code. Most recently published for purposes of this policy means the 
most recently updated FSS survey available 30 days after the close of 
the quarter for which ASP data would have been reported if it were 
available.\101\ For example, if FSS is used to determine the payment 
amount effective for dates of service in the third calendar quarter, 
CMS would use the most recent FSS update available on the 30th day 
after the close of the first calendar quarter. When using the FSS, we 
would calculate the average price per billing unit (as described in the 
billing and payment code for the drug) for all NDCs listed for a drug. 
Drug pricing information, including FSS pricing, from the Veteran 
Affairs' (VA's) pharmaceutical pricing database is publicly available 
at the NDC level and published at https://www.va.gov/opal/nac/fss/pharmPrices.asp.
---------------------------------------------------------------------------

    \101\ 42 CFR 414.804(a)(5).
---------------------------------------------------------------------------

    We propose to use FSS data when ASP and NADAC data are not 
available because FSS data is one of the few existing options for drug 
pricing that includes a wide variety of drug formulations, including 
both self-administered drugs typically dispensed through retail 
community pharmacies and drugs administered incident to a physician's 
service. For more details on this pricing methodology for the physician 
office setting, please see the CY 2025 PFS proposed rule.
    We note that the PFS proposal includes a final step of invoice 
pricing; however, invoice pricing is not currently available under the 
OPPS, so we are not proposing to adopt that portion of the PFS 
proposal. However, please see our Invoice Drug Pricing Proposal for CY 
2026 in section V.B.2.d. of this proposed rule. Because invoice pricing 
is not available in the OPPS currently, we propose that if ASP, NADAC, 
and FSS pricing are not available for a particular drug covered as an 
additional preventive service, we will use WAC plus 6 percent, or 3 
percent if in an initial sales period, consistent with payment for 
separately payable drugs paid under the OPPS. This would result in 
different pricing between the OPPS and PFS if ASP, NADAC, and FSS 
pricing are not available, but we believe it is appropriate because 
invoice pricing is not an option under the OPPS and this pricing metric 
should only apply to a small subset of drugs covered as additional 
preventive services until one of the other pricing metrics becomes 
available. We are proposing to treat other drugs covered as additional 
preventative services under this same methodology.
    If the HIV PrEP drugs are covered as additional preventative 
services, we propose to update the payment rates determined using the 
methodologies previously summarized on January 1, 2025 or the date of 
coverage, whichever is later, which would be further updated on the 
same schedule as the ASP pricing file, which is updated each calendar 
quarter. We propose to assign the drug products covered as additional 
preventive services to status indicator K (Nonpass-Through Drugs and 
Nonimplantable Biologicals, Including Therapeutic Radiopharmaceuticals; 
Paid under OPPS; separate APC payment), as this status indicator 
identifies drugs and biologicals that are separately paid under the 
OPPS and therefore would allow us to operationalize separate payment 
for PrEP drugs. If the HIV PrEP drugs are covered as additional 
preventative services, on January 1, 2025 or the date of coverage, 
whichever is later, we propose that we would assign each HIV PrEP drug 
covered as an additional preventative to its own APC, which will have a 
payment rate assigned according to the previously defined methodology.
    HCPCS code J0799 (Hiv prep, fda approved, noc) was created 
effective January 2, 2024, and may be used to describe an HIV PrEP drug 
that is FDA approved but is not otherwise classified. We propose to pay 
95 percent of AWP for HCPCS code J0799, which is consistent with how 
unlisted drugs and biologicals are paid under the OPPS when they are 
reported with HCPCS code C9399 (Unclassified drugs or biologicals). As 
HCPCS code J0799 and HCPCS code C9399 both describe drugs that are 
unclassified or not otherwise classified, we believe the payment 
methodologies should be similarly aligned. Section 1833(t)(15) of the 
Act, as added by section 621(a)(1) of the Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003 (Pub. L. 108-173), provides 
for payment under the OPPS for new drugs and biologicals until HCPCS 
codes are assigned. Under this provision, we are

[[Page 59402]]

required to make payment for a covered outpatient drug or biological 
that is furnished as part of covered outpatient department services but 
for which a HCPCS code has not yet been assigned in an amount equal to 
95 percent of AWP for the drug or biological.
    In the CY 2005 OPPS/ASC final rule with comment period (69 FR 
65805), we implemented section 1833(t)(15) of the Act by instructing 
hospitals to bill for a drug or biological that is newly approved by 
the FDA and that does not yet have a HCPCS code by reporting the NDC 
for the product along with the newly created HCPCS code C9399 
(Unclassified drugs or biologicals). We explained that when HCPCS code 
C9399 appears on a claim, the Shared Systems suspends the claim for 
manual pricing by the Medicare Administrative Contractor (MAC). The MAC 
prices the claim at 95 percent of the drug or biological's AWP, using 
Red Book or an equivalent recognized compendium, and processes the 
claim for payment. We emphasized that this approach enables hospitals 
to bill and receive payment for a new drug or biological concurrent 
with its approval by the FDA. The hospital does not have to wait for 
the next quarterly release or for approval of a product-specific HCPCS 
code to receive payment for a newly approved drug or biological or to 
resubmit claims for adjustment. We instructed that hospitals would 
discontinue billing HCPCS code C9399 and the NDC upon implementation of 
a product specific HCPCS code, status indicator, and appropriate 
payment amount with the next quarterly update. While the statute does 
not require drugs that are covered as additional preventive services to 
be paid at 95 percent of AWP when not assigned to a product specific 
HCPCS code, we believe it would be appropriate to create a parallel 
policy given that HCPCS code J0799 and HCPCS code C9399 both describe 
drugs that are unclassified or not otherwise classified. As the payment 
amount for HCPCS code C9399 is statutorily mandated at 95 percent of 
AWP, we believe that the payment amount for HCPCS code J0799 should 
also be 95 percent of AWP.
    Therefore, we propose to establish an identical payment policy for 
HCPCS code J0799, which may be used to describe drugs that are FDA-
approved for PrEP and are covered as additional preventive services. In 
order to effectuate payment at 95 percent of AWP, we propose to require 
hospitals to bill for a drug that is newly FDA approved for HIV PrEP, 
and covered as an additional preventive service, and that does not yet 
have a HCPCS code, by reporting the NDC for the product along with the 
newly created HCPCS code J0799. Similar to HCPCS code C9399, when HCPCS 
code J0799 appears on a claim, the Shared Systems will suspend the 
claim for manual pricing by the MAC. The MAC would price the claim at 
95 percent of the drug or biological's AWP, using Red Book or an 
equivalent recognized compendium, and process the claim for payment. 
This approach would enable hospitals to bill and receive payment for a 
drug that is newly FDA approved for HIV PrEP and covered as an 
additional preventive service concurrent with its approval by the FDA. 
The hospital would not have to wait for the next quarterly release or 
for approval of a product-specific HCPCS code to receive payment for a 
newly approved drug or to resubmit claims for adjustment. We would 
instruct hospitals to discontinue billing HCPCS code C9399 and the NDC 
upon implementation of a product specific HCPCS code, status indicator, 
and appropriate payment amount with the next quarterly update.
    Finally, if covered as an additional preventive service, we propose 
to assign all HCPCS codes describing pharmacy suppling fees for HIV 
PrEP to an OPPS status indicator of ``B''. This follows the 
longstanding OPPS practice of assigning HCPCS codes that describe a 
pharmacy supply or dispensing fee to status indicator ``B'' (Codes that 
are not recognized by OPPS when submitted on an outpatient hospital 
Part B bill type (12x and 13x); Not paid under OPPS), such as HCPCS 
code Q0512 (Pharmacy supply fee for oral anti-cancer, oral anti-emetic 
or immunosuppressive drug(s); for a subsequent prescription in a 30-day 
period) and HCPCS code Q0513 (Pharmacy dispensing fee for inhalation 
drug(s); per 30 days).

H. Payment Policy for Devices in Category B Investigational Device 
Exemption (IDE) Clinical Trials Policy and Drugs/Devices With a 
Medicare Coverage With Evidence Development (CED) Designation

    In the CY 2023 OPPS/ASC final rule with comment period (87 FR 
72027), and as authorized by section 1833(w) of the Act, we finalized a 
policy to make a single blended payment for devices and services in 
Category B IDE studies in order to preserve the scientific validity of 
these studies by avoiding differences in Medicare payment methods that 
would otherwise reveal the group (treatment or control) to which a 
patient has been assigned. Specifically, we codified our process of 
utilizing a single packaged payment for Category B IDE studies, 
including the cost of the device and routine care items and services, 
in the regulation text for payment to hospitals in a new Sec.  419.47. 
We provided in new Sec.  419.47(a) and (b) that CMS will create a new 
HCPCS code, or revise an existing HCPCS code, to describe a Category B 
IDE study, which will include both the treatment and control arms, 
related device(s) of the study, as well as routine care items and 
services, as specified under 42 CFR 405.201, when CMS determines that 
the Medicare coverage IDE study criteria at Sec.  405.212 are met, and 
a new or revised code is necessary to preserve the scientific validity 
of the IDE study, such as by preventing the unblinding of the study. We 
finalized that the single blended payment rate would be dependent on 
the specific trial protocol and would account for the frequency with 
which the investigational device is used compared to the control where 
the investigational device is not used. For example, in a study for 
which CMS determines the Medicare coverage IDE study criteria in Sec.  
405.212 are met and where there is a 1:1 assignment of the device to 
control (no device), Medicare's payment rate would prospectively 
average the payment for the device with the zero payment for the 
control in a 1:1 ratio. Furthermore, costs for routine care items and 
services in the study, as specified under Sec.  405.201, would be 
included in the single blended payment (87 FR 72026 through 72027).
    Since implementing this policy, we have heard from interested 
parties that our regulation at Sec.  419.47(a) and (b) excluded 
clinical trials for which there is no control arm. We appreciate the 
input. Category B IDE studies with no control arm would be paid 
normally because an alternative payment methodology would not be 
necessary to preserve their scientific validity. Our policy at Sec.  
419.47 applies only to IDE studies with a control arm and where a 
payment adjustment is necessary to preserve the scientific validity of 
such a study. The rule was not intended to suggest that CMS will not 
pay for Category B IDEs with no control arm, provided the studies meet 
the coverage criteria. In those circumstances, Medicare payments would 
be made using the usual Medicare payment methodologies.
    In many instances, requests for coding and payment for devices in 
Category B IDE studies are submitted through our New Technology APC 
application process and include the submission of cost information. 
However, we have encountered difficulties determining accurate payment 
rates for Category B IDE studies in the absence of New Technology APC 
applications such as

[[Page 59403]]

when coding for Category B IDE studies is developed through the CPT 
Editorial Panel process. We encourage interested parties to use the New 
Technology APC application process where applicable to submit cost 
information to CMS. Absent information on the resource costs associated 
with the services and devices in a Category B IDE study, we may assign 
a SI of E2 to indicate an item, code or service for which pricing 
information and claims data are not available, and, therefore, the 
item, code or service is not paid by Medicare when submitted by an 
outpatient claim.
    For CY 2025, we are proposing to utilize a payment methodology 
similar to the one developed for Category B IDE clinical trials for 
drugs and devices covered under a national coverage determination (NCD) 
that uses the Coverage with Evidence Development (CED) paradigm and a 
payment adjustment is necessary to preserve the scientific validity of 
such a study. Specifically, we propose to use our authority at section 
1833(w) of the Act to develop alternative methods of payment under 
Medicare Part B for drugs and devices being studied in clinical trials 
under a CED NCD. These CED NCDs will be listed on the CMS CED 
website.\102\
---------------------------------------------------------------------------

    \102\ https://www.cms.gov/medicare/coverage/evidence.
---------------------------------------------------------------------------

    Similar to our policy on devices in Category B IDE trials, for 
devices under a CED NCD, we propose to make a single blended payment 
rate that would be dependent on the specific trial protocol and would 
account for the frequency with which the investigational device is used 
compared to the control where the investigational device is not used. 
For example, in a study for which there is a 1:1 assignment of the 
device to control (no device), Medicare's payment rate would 
prospectively average the payment for the device with the zero payment 
for the control in a 1:1 ratio.
    As described previously and when necessary to preserve the 
scientific validity of the study, we propose to make payment using an 
adjusted payment level representing the frequency with which the study 
drug and placebo, or comparator drug, is furnished. A placebo, or 
comparator drug, could represent what a beneficiary would typically 
receive in order to serve as a comparator to assess the effectiveness, 
or therapeutic benefit, of the study drug. These adjusted payments 
would protect the scientific validity of the trial by avoiding 
differences in Medicare payment methods that could otherwise invalidate 
the scientific validity of the trial, such as by revealing the group 
(treatment or control) to which a patient has been assigned. We propose 
to base the payment amount for the study drug, or active comparator 
drug, on the ASP methodology, that is ASP plus 6 percent if ASP data is 
available. If ASP data is not available, then we propose to pay the 
wholesale acquisition cost (WAC). During an initial sales period, we 
propose to base the payment on WAC plus 3 percent, otherwise, we 
propose to base payment on WAC plus 6 percent. If WAC is not available, 
then we propose to pay 95 percent of average wholesale price (AWP). 
This payment hierarchy is consistent with CMS payment for non-
passthrough separately payable drugs in the OPPS as discussed in 
section V.B. of this proposed rule.
    These payment amounts would be used to calculate the adjusted 
payment level representing the frequency with which the study drug and 
placebo, or comparator drug, is furnished. For purposes of setting this 
adjusted payment level, we propose to use a zero dollar amount for a 
placebo or comparator. A new, or revised, HCPCS code would be created 
for the drug and placebo or comparator in the CED study. We propose 
that we would assign this HCPCS code to its own APC reflecting the 
payment amount determined appropriate based on available pricing 
information and the frequency with which the study drug and placebo, or 
comparator drug, is used.
    For example, as most drugs are currently paid per dosage unit, such 
as per 1 mg, a payment rate, potentially priced per 1 mg of drug, 
placebo, or active comparator, might be based on the average sales 
price methodology for the drug averaged with a zero-dollar payment for 
the placebo, or the applicable payment rate of the comparator drug. A 
single averaged payment would be made regardless of whether 1 mg of 
study drug, 1 mg of placebo, or 1 mg of comparator drug is used. If the 
trial is a 1:1 (treatment: placebo) then the payment rate would be the 
same for every trial participant and would represent half of the total 
payment for the drug. In a simplified example, if the ASP plus 6 
percent payment rate for Drug X was $1 per 1 mg then in this example, 
the payment rate for the blended code of Drug X and placebo would be 
$0.50 per 1 mg. If a beneficiary received 100 mg of the study drug, 
then a $50 payment would be made. If a beneficiary received 100 mg of 
the placebo, then a $50 payment would be made. The same HCPCS code 
would be billed in both the study drug and placebo examples. The same 
payment methodology would apply if the study design was 1:2 (treatment: 
placebos, which equals payment at \1/3\ the cost of the study drug) or 
1:3 (treatment: placebos, which equals payment at \1/4\ the cost of the 
study drug). In situations where there are multi-arm, or single-arm, 
cross over trials where participants receive placebo, or sham, for the 
first half of the trial and then the study drug for the second half of 
the trial, the payment would be reflective of this, and set in the same 
manner as a 1:1 trial, since half of the time the beneficiary would 
receive the placebo and the other half they would receive the study 
drug. No matter the trial design, CMS payment would be reflective of 
the expected frequency with which the study treatment, control, active 
comparator, or placebo is provided. We note that we propose to assign 
payment rates based on an adjusted payment level representing the 
frequency with which the study drug and placebo, or comparator drug, is 
projected to be furnished for the trial as a whole, and not necessarily 
the exact frequency with which the study drug and placebo, or 
comparator drug, is furnished to a particular hospital enrolled as a 
clinical trial site. Clinical trial sponsors should work with CMS to 
ensure timely establishment of payment and coding for drugs being 
studied under a CED designation requiring an adjusted level of payment.
    While the items and services furnished as placebo controls may not 
be considered reasonable and necessary under section 1862(a)(1)(A) of 
the Act because they have no health benefit, these items and services 
can be necessary in order to conduct a scientifically valid clinical 
study. As such, these items can be covered under section 1862(a)(1)(E) 
of the Act when furnished in the context of a qualifying clinical 
study.\103\
---------------------------------------------------------------------------

    \103\ Guidance for the Public, Industry, and CMS Staff: Coverage 
with Evidence Development. November 20, 2014. https://www.cms.gov/medicare-coverage-database/view/medicare-coverage-document.aspx?MCDId=27.
---------------------------------------------------------------------------

    CMS may cover and pay for routine costs of an approved clinical 
trial in both the treatment arm and the control (standard of care or 
placebo). Routine costs include all items and services that are 
otherwise generally available to Medicare beneficiaries (i.e., there 
exists a benefit category for the item or service, coverage is not 
statutorily excluded for the item or service, and there is not a 
national non-coverage decision for the item or service) that are 
provided in either the experimental or the control arms of a clinical 
trial. Although CMS

[[Page 59404]]

may cover and pay for routine costs of an CED approved clinical trial 
in both the treatment arm and the control (standard of care or 
placebo), there may be circumstances, such as single arm studies, where 
no unique coding or unique payment would be required to preserve the 
scientific validity of such a study created for routine costs 
associated with clinical trials. Similarly, if the routine costs are 
the exact same between different arms of a trial, and routine billing 
and payment of those routine costs would not unblind a study, then no 
unique coding or payment would be required for those costs. There would 
be no need to include these routine costs in the HCPCS code assigned to 
a blended payment rate. If covered, these routine costs would be paid 
according to existing coding and Medicare payment mechanisms. Under the 
proposed rule an alternate method of payment would be established only 
when necessary to maintain the scientific validity of the trial, such 
as to prevent the billing and payment of routine costs from unblinding 
the trial. These determinations will be made based on the clinical 
trial protocol communicated to CMS by the clinical trial sponsor, 
before CMS would establish an appropriate code with an adjusted payment 
level for routine costs for CED trials. CMS's determination will be 
different in CED trials from our policy regarding devices and 
procedures in Category B IDE trials, where the provision of an 
investigational device usually requires a combination of procedures or 
services to implant, or administer, the device to a patient. In 
contrast, the infusion of a drug is typically a more straightforward 
process, and associated routine costs may not be provided at the same 
time that the drug is administered, making it impractical to create a 
single code to describe the study drug and all associated routine 
costs.
    Finally, we want to be sure there are no other instances where 
Medicare payment methodologies might interfere with the scientific 
validity of a trial. We are seeking comment on these possible 
alternative scenarios, such as Medicare payment interfering with 
clinical trial recruitment in such a way that could compromise the 
scientific integrity of a clinical trial and would consider adjustments 
to our payment policy for devices in Category B IDE clinical trials and 
devices/drugs in clinical trials with a CED designation in future 
rulemaking.
    We propose to codify our coding and payment policy to Category B 
IDE clinical trials with control arms through revisions to Sec.  
419.47(a) to specify that these are placebo control arms. We also 
propose to codify our proposed process for developing coding and 
payment for devices/drugs in CED-designated clinical trials by adding 
new paragraphs (c) and (d) to Sec.  419.47. Specifically, we propose to 
provide in new Sec.  419.47(c) that CMS would create a new HCPCS code, 
or revise an existing HCPCS code, to describe a device/drug studied in 
a clinical trial with the Medicare CED designation, which would include 
the study device/drug and control arm, when CMS determines it is 
necessary to establish a CED designation for a device/drug subsequent 
to a CED NCD. Additionally, in new Sec.  419.47(d) we propose that when 
we create a new HCPCS code or revise an existing HCPCS code under 
proposed paragraph (c), we would make a single payment for the HCPCS 
code that includes payment for the investigational device/drug and any 
control.

XI. Proposed CY 2025 OPPS Payment Status and Comment Indicators

A. Proposed CY 2025 OPPS Payment Status Indicator Definitions

    Payment status indicators (SIs) that we assign to HCPCS codes and 
APCs serve an important role in determining payment for services under 
the OPPS. They indicate whether a service represented by a HCPCS code 
is payable under the OPPS or another payment system and whether 
particular OPPS policies apply to the code.
    For CY 2025 and subsequent years, we propose to create two new 
status indicators, ``K1'' and ``H1.'' We propose these two new status 
indicators to identify the products that qualify for separate payment 
under our new payment policy for non-opioid post-surgical pain 
management drugs, biologicals, and devices, as authorized by section 
4135 of the Consolidated Appropriations Act, 2023. This policy is 
discussed further in section XIII.E of this proposed rule. The proposed 
definitions and payment status of proposed status indicators ``K1'' and 
``H1'' can be found in Table 73.
[GRAPHIC] [TIFF OMITTED] TP22JY24.106


[[Page 59405]]


    For CY 2025 and subsequent years, we propose to modify the 
definition of status indicator ``K'' to remove the word ``therapeutic'' 
from the phrase ``therapeutic radiopharmaceuticals'' to indicate that 
both diagnostic and therapeutic radiopharmaceuticals may be assigned to 
status indicator ``K'' in accordance with our policy proposal in 
section II.A.3.a. of this proposed rule. The proposed definition and 
payment status of status indicator ``K'' can be found in Table 74.
[GRAPHIC] [TIFF OMITTED] TP22JY24.107

    We do not propose to make any other changes to the existing 
definitions of status indicators that are listed in Addendum D1 to this 
proposed rule, which is available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices.
    The complete list of proposed CY 2025 payment status indicators and 
their definitions is displayed in Addendum D1 to this proposed rule, 
which is available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices.
    The proposed CY 2025 payment status indicator assignments for APCs 
and HCPCS codes are shown in Addendum A and Addendum B, respectively, 
to this proposed rule, which are available on the CMS website at: 
https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices.

B. Proposed CY 2025 Comment Indicator Definitions

    We propose to use four comment indicators for the CY 2025 OPPS. 
These comment indicators, ``CH,'' ``NC,'' ``NI,'' and ``NP,'' are in 
effect for CY 2024; and we propose to continue their use in CY 2025. 
The proposed CY 2025 OPPS comment indicators are as follows:
     ``CH''--Active HCPCS code in current and next calendar 
year, status indicator and/or APC assignment has changed; or active 
HCPCS code that will be discontinued at the end of the current calendar 
year.
     ``NC''--New code for the next calendar year or existing 
code with substantial revision to its code descriptor in the next 
calendar year, as compared to current calendar year for which we 
requested comments in the CY 2024 OPPS/ASC proposed rule, final APC 
assignment; comments will not be accepted on the final APC assignment 
for the new code.
     ``NI''--New code for the next calendar year or existing 
code with substantial revision to its code descriptor in the next 
calendar year, as compared to current calendar year, interim APC 
assignment; comments will be accepted on the interim APC assignment for 
the new code.
     ``NP''--New code for the next calendar year or existing 
code with substantial revision to its code descriptor in the next 
calendar year, as compared to current calendar year, proposed APC 
assignment; comments will be accepted on the proposed APC assignment 
for the new code.
    The definitions of the proposed OPPS comment indicators for CY 2025 
are listed in Addendum D2 to this proposed rule, which is available on 
the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices.
    We solicit public comments on our proposed definitions of the OPPS 
comment indicators for 2025.

XII. MedPAC Recommendations

    The Medicare Payment Advisory Commission (MedPAC) was established 
under section 1805 of the Act in large part to advise the U.S. Congress 
on issues affecting the Medicare program. As required under the 
statute, MedPAC submits reports to the Congress no later than March and 
June of each year that present its Medicare payment policy 
recommendations. The March report typically provides discussion of 
Medicare payment policy across different payment systems and the June 
report typically discusses selected Medicare issues. We are including 
this section to make stakeholders aware of certain MedPAC 
recommendations for the OPPS and ASC payment systems as discussed in 
its March 2024 report.

A. OPPS Payment Rates Update

    The March 2024 MedPAC ``Report to the Congress: Medicare Payment 
Policy,'' recommended that Congress update Medicare OPPS payment rates 
by the amount specified in current law plus 1.5 percent. We refer 
readers to the March 2024 report for a complete discussion of this 
recommendation.\104\ We appreciate MedPAC's recommendation and, as 
discussed further in section II.B of this proposed rule, we propose to 
increase the OPPS payment rates by the amount specified in current law.
---------------------------------------------------------------------------

    \104\ Medicare Payment Advisory Committee. March 2024 Report to 
the Congress. Chapter 3: Hospital inpatient and outpatient services, 
p.49. Available at: https://www.medpac.gov.
---------------------------------------------------------------------------

B. Medicare Safety Net Index

    In the March 2024 MedPAC ``Report to the Congress: Medicare Payment 
Policy,'' MedPAC stated that their recommended update to IPPS and OPPS 
payment rates of current law plus 1.5 percent may not be sufficient to 
ensure the financial viability of some Medicare safety-net hospitals 
with a poor payer mix. MedPAC recommends redistributing the current 
Medicare safety-net payments (disproportionate share hospital and 
uncompensated care payments) using the MedPAC-developed Medicare 
Safety-Net Index (MSNI) for hospitals. In addition, MedPAC recommends 
adding $4 billion to this MSNI pool of funds to help

[[Page 59406]]

maintain the financial viability of Medicare safety-net hospitals and 
recommended to the Congress transitional approaches for a MSNI policy.
    We appreciate MedPAC's recommendation and, as discussed further in 
section II.B of this proposed rule, we propose to increase the OPPS 
payment rates by the amount specified in current law.

C. ASC Cost Data

    In the March 2024 MedPAC ``Report to the Congress: Medicare Payment 
Policy,'' MedPAC reiterated its longstanding recommendation that 
Congress require ASCs to report cost data to enable the Commission to 
examine the growth of ASCs' costs over time and analyze Medicare 
payments relative to the costs of efficient providers. MedPAC suggested 
that such cost data would enable policymakers to establish payment 
rates that accurately reflect ASC costs and are also necessary to 
determine whether an existing Medicare market basket is an appropriate 
proxy for ASC costs or whether an ASC-specific market basket should be 
developed, stating both the CPI-U and hospital market basket update 
likely do not reflect an ASC's cost structure. MedPAC contended that it 
is feasible for small facilities, such as ASCs, to provide cost 
information since other small facilities, such as home health agencies, 
hospices, and rural health clinics, currently furnish cost data to CMS. 
Further, ASCs in Pennsylvania submit cost and revenue data annually to 
a state agency to estimate margins for those ASCs, and that, as 
businesses, ASCs keep records of their costs for filing taxes and other 
purposes.\105\
---------------------------------------------------------------------------

    \105\ Medicare Payment Advisory Committee. March 2024 Report to 
the Congress. Chapter 10: Ambulatory surgical center services: 
Status report, p. 297. Available at: https://www.medpac.gov/wp-content/uploads/2024/03/Mar24_MedPAC_Report_To_Congress_SEC.pdf.
---------------------------------------------------------------------------

    While we recognize that the submission of cost data could place 
additional administrative burden on most ASCs, and we do not propose 
any cost reporting requirements for ASCs in this proposed rule, as in 
previous years, we continue to seek public comment on methods that 
would mitigate the burden of reporting costs on ASCs while also 
collecting enough data to reliably use such data in the determination 
of ASC costs. Such cost data would be beneficial in establishing an 
ASC-specific market basket for updating payment rates under the ASC 
payment system.

XIII. Proposed Updates to the Ambulatory Surgical Center (ASC) Payment 
System

A. Background, Legislative History, Statutory Authority, and Prior 
Rulemaking for the ASC Payment System

    For a detailed discussion of the legislative history and statutory 
authority related to payments to ASCs under Medicare, we refer readers 
to the CY 2012 OPPS/ASC final rule with comment period (76 FR 74377 
through 74378) and the June 12, 1998 proposed rule (63 FR 32291 through 
32292). For a discussion of prior rulemaking on the ASC payment system, 
we refer readers to the CYs 2012 to 2024 OPPS/ASC final rules with 
comment period (76 FR 74378 through 74379; 77 FR 68434 through 68467; 
78 FR 75064 through 75090; 79 FR 66915 through 66940; 80 FR 70474 
through 70502; 81 FR 79732 through 79753; 82 FR 59401 through 59424; 83 
FR 59028 through 59080; 84 FR 61370 through 61410; 85 FR 86121 through 
86179; 86 FR 63761 through 63815; 87 FR 72054 through 72096; and 88 FR 
81900 through 81961).

B. Proposed ASC Treatment of New and Revised Codes

1. Background on Process for New and Revised HCPCS Codes
    We update the lists and payment rates for covered surgical 
procedures and covered ancillary services in ASCs in conjunction with 
the annual proposed and final rulemaking process to update the OPPS and 
the ASC payment systems (Sec.  416.173; 72 FR 42535). We base ASC 
payment and policies for most covered surgical procedures, drugs, 
biologicals, and certain other covered ancillary services on the OPPS 
payment policies and we use quarterly change requests (CRs) to update 
services paid for under the OPPS. We also provide quarterly update CRs 
for ASC covered surgical procedures and covered ancillary services 
throughout the year (January, April, July, and October). We release new 
and revised Level II HCPCS codes and recognize the release of new and 
revised CPT codes by the American Medical Association (AMA) and make 
these codes effective (that is, the codes are recognized on Medicare 
claims) via these ASC quarterly update CRs. We recognize the release of 
new and revised Category III CPT codes in the July and January CRs. 
These updates implement newly created and revised Level II HCPCS and 
Category III CPT codes for ASC payments and update the payment rates 
for separately paid drugs and biologicals based on the most recently 
submitted ASP data. New and revised Category I CPT codes, except 
vaccine codes, are released only once a year, and are implemented only 
through the January quarterly CR update. New and revised Category I CPT 
vaccine codes are released twice a year and are implemented through the 
January and July quarterly CR updates. We refer readers to Table 41 in 
the CY 2012 OPPS/ASC proposed rule for an example of how this process 
is used to update HCPCS and CPT codes, which we finalized in the CY 
2012 OPPS/ASC final rule with comment period (76 FR 42291; 76 FR 74380 
through 74384).
    In our annual updates to the ASC list of, and payment rates for, 
covered surgical procedures and covered ancillary services, we 
undertake a review of excluded surgical procedures, new codes, and 
codes with revised descriptors, to identify any that we believe meet 
the criteria for designation as ASC covered surgical procedures or 
covered ancillary services. Updating the lists of ASC covered surgical 
procedures and covered ancillary services, as well as their payment 
rates, in association with the annual OPPS rulemaking cycle, is 
particularly important because the OPPS relative payment weights and, 
in some cases, payment rates, are used as the basis for the payment of 
many covered surgical procedures and covered ancillary services under 
the revised ASC payment system. This joint update process ensures that 
the ASC updates occur in a regular, predictable, and timely manner.
    Payment for ASC procedures, services, and items are generally based 
on medical billing codes, specifically, HCPCS codes, that are reported 
on ASC claims. The HCPCS is divided into two principal subsystems, 
referred to as Level I and Level II. Level I is comprised of CPT 
(Current Procedural Terminology) codes, a numeric and alphanumeric 
coding system maintained by the AMA, and includes Category I, II, and 
III CPT codes. Level II of the HCPCS, which is maintained by CMS, is a 
standardized coding system that is used primarily to identify products, 
supplies, and services not included in the CPT codes. Together, Level I 
and II HCPCS codes are used to report procedures, services, items, and 
supplies under the ASC payment system. Specifically, we recognize the 
following codes on ASC claims:
     Category I CPT codes, which describe surgical procedures, 
diagnostic and therapeutic services, and vaccine codes;
     Category III CPT codes, which describe new and emerging

[[Page 59407]]

technologies, services, and procedures; and
     Level II HCPCS codes (also known as alpha-numeric codes), 
which are used primarily to identify drugs, devices, supplies, 
temporary procedures, and services not described by CPT codes.
    We finalized a policy in the August 2, 2007 final rule (72 FR 42533 
through 42535) to evaluate each year all new and revised Category I and 
Category III CPT codes and Level II HCPCS codes that describe surgical 
procedures, and to make preliminary determinations during the annual 
OPPS/ASC rulemaking process regarding whether or not they meet the 
criteria for payment in the ASC setting as covered surgical procedures 
and, if so, whether or not they are office-based procedures. In 
addition, we identify new and revised codes as ASC covered ancillary 
services based upon the final payment policies of the revised ASC 
payment system. In prior rulemakings, we refer to this process as 
recognizing new codes. However, this process has always involved the 
recognition of new and revised codes. We consider revised codes to be 
new when they have substantial revision to their code descriptors that 
necessitate a change in the current ASC payment indicator. To clarify, 
we refer to these codes as new and revised in this CY 2025 OPPS/ASC 
proposed rule.
    We have separated our discussion below based on when the codes are 
released and whether we propose to solicit public comments in this 
proposed rule (and respond to those comments in the CY 2025 OPPS/ASC 
final rule with comment period) or whether we will be soliciting public 
comments in the CY 2025 OPPS/ASC final rule with comment period (and 
responding to those comments in the CY 2026 OPPS/ASC final rule with 
comment period).
1. April 2024 HCPCS Codes Proposed Rule Comment Solicitation
    For the April 2024 update, there were no new CPT codes; however, 
there were several new Level II HCPCS codes. In the April 2024 ASC 
quarterly update (Transmittal 12559, dated March 28, 2024, CR 13577), 
we added several new Level II HCPCS codes to the list of covered 
ancillary services. Table 75 (New Level II HCPCS Codes for Ancillary 
Services Effective April 1, 2024) of this proposed rule, lists the new 
Level II HCPCS codes that were implemented April 1, 2024. The proposed 
comment indicators, payment indicators and payment rates, where 
applicable, for these April codes can be found in Addendum BB to this 
proposed rule. The list of ASC payment indicators and corresponding 
definitions can be found in Addendum DD1 to this proposed rule. These 
new codes that are effective April 1, 2024, are assigned to comment 
indicator ``NP'' in Addendum BB to this proposed rule to indicate that 
the codes are assigned to an interim APC assignment and that comments 
will be accepted on their interim APC assignments. The list of comment 
indicators and definitions used under the ASC payment system can be 
found in Addendum DD2 to this proposed rule. We note that the following 
ASC addenda are available via the internet on the CMS website.
     ASC Addendum AA: Proposed ASC Covered Surgical Procedures 
for CY 2025 (Including Surgical Procedures for Which Payment is 
Packaged),
     ASC Addendum BB: Proposed ASC Covered Ancillary Services 
Integral to Covered Surgical Procedures for CY 2025 (Including 
Ancillary Services for Which Payment is Packaged),
     ASC Addendum DD1: Proposed ASC Payment Indicators (PI) for 
CY 2025,
     ASC Addendum DD2: Proposed ASC Comment Indicators (CI) for 
CY 2025,
     ASC Addendum EE: Proposed Surgical Procedures to be 
Excluded from Payment in ASC for CY 2025, and
     ASC Addendum FF: Proposed ASC Device Offset Percentages 
for CY 2025,
     Addendum O: Long Descriptors for New Category I CPT Codes, 
Category III CPT Codes, C-codes, and G-Codes Effective January 1, 2025.
    We invite public comments on the proposed payment indicators for 
the new HCPCS codes that were recognized as ASC covered ancillary 
services in April 2024 through the quarterly update CRs, as listed in 
Table 75 (New Level II HCPCS Codes for Ancillary Services Effective 
April 1, 2024) of this proposed rule. We propose to finalize their 
payment indicators in the CY 2025 OPPS/ASC final rule with comment 
period.
BILLING CODE 4120-01-P

[[Page 59408]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.108

2. July 2024 HCPCS Codes Proposed Rule Comment Solicitation
    In the July 2024 ASC quarterly update (Transmittal 12673, Change 
Request 13656, dated June 13, 2024), we added several separately 
payable CPT and Level II HCPCS codes to the list of covered surgical 
procedures and covered ancillary services. Table 76 (New HCPCS Codes 
for Covered Surgical Procedures and Covered Ancillary Services 
Effective July 1, 2024) of this proposed rule, lists the new HCPCS 
codes that are effective July 1, 2024. The proposed comment indicators, 
payment indicators, and payment rates for the codes can be found in 
Addendum AA and Addendum BB to this proposed rule. The list of ASC 
payment indicators and corresponding definitions can be found in 
Addendum DD1 to this proposed rule. These new codes that are effective 
July 1, 2024, are assigned to comment indicator ``NP'' in Addendum AA 
and BB to this proposed rule to indicate that the codes are assigned to 
an interim APC assignment and that comments will be accepted on their 
interim APC assignments. The list of comment indicators and definitions 
used under the ASC payment system can be found in Addendum DD2 to this 
proposed rule. We note that ASC Addenda AA, BB, DD1, and DD2 are 
available via the internet on the CMS website.

[[Page 59409]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.109

BILLING CODE 4120-01-C
    We invite public comments on the proposed payment indicators for 
the new HCPCS codes newly recognized as ASC covered surgical procedures 
and

[[Page 59410]]

covered ancillary services effective April 1, 2024 and July 1, 2024, 
through the quarterly update CRs, as listed in Tables 75 and 76. We 
propose to finalize the payment indicators in the CY 2025 OPPS/ASC 
final rule with comment period.
3. October 2024 HCPCS Codes Final Rule Comment Solicitation
    For CY 2025, consistent with our established policy, we propose 
that the Level II HCPCS codes that will be effective October 1, 2024, 
would be flagged with comment indicator ``NI'' in Addendum BB to the CY 
2025 OPPS/ASC final rule with comment period to indicate that we have 
assigned the codes an interim ASC payment status for CY 2024. We will 
invite public comments in the CY 2025 OPPS/ASC final rule with comment 
period on the interim payment indicators, which would then be finalized 
in the CY 2026 OPPS/ASC final rule with comment period.
5. January 2025 HCPCS Codes
a. Level II HCPCS Codes Final Rule Comment Solicitation
    As has been our practice in the past, we incorporate those new 
Level II HCPCS codes that are effective January 1 in the final rule 
with comment period, thereby updating the ASC payment system for the 
calendar year. We note that unlike the CPT codes that are effective 
January 1 and are included in the OPPS/ASC proposed rules, and except 
for the G-codes listed in Addendum O to this proposed rule, most Level 
II HCPCS codes are not released until sometime around November to be 
effective January 1. Because these codes are not available until 
November, we are unable to include them in the OPPS/ASC proposed rules. 
Therefore, these Level II HCPCS codes will be released to the public 
through the CY 2025 OPPS/ASC final rule with comment period, January 
2025 ASC Update CR, and the CMS HCPCS website.
    In addition, for CY 2025, we propose to continue our established 
policy of assigning comment indicator ``NI'' in Addendum AA and 
Addendum BB to the OPPS/ASC final rule with comment period to the new 
Level II HCPCS codes that will be effective January 1, 2025, to 
indicate that we are assigning them an interim payment indicator, which 
is subject to public comment. We will be inviting public comments in 
the CY 2025 OPPS/ASC final rule with comment period on the payment 
indicator assignments, which would then be finalized in the CY 2026 
OPPS/ASC final rule with comment period.
b. CPT Codes Proposed Rule Comment Solicitation
    For the CY 2025 ASC update, we received the CPT codes that will be 
effective January 1, 2025, from the AMA in time to be included in this 
proposed rule. The new, revised, and deleted CPT codes can be found in 
ASC Addendum AA and Addendum BB to this proposed rule (which are 
available via the internet on the CMS website). We note that the new 
and revised CPT codes are assigned to comment indicator ``NP'' in ASC 
Addendum AA and Addendum BB of this proposed rule to indicate that the 
code is new for the next calendar year, or the code is an existing code 
with substantial revision to its code descriptor in the next calendar 
year as compared to the current calendar year with a proposed payment 
indicator assignment. We will accept comments and finalize the payment 
indicators in the CY 2025 OPPS/ASC final rule with comment period. 
Further, we remind readers that the CPT code descriptors that appear in 
Addendum AA and Addendum BB are short descriptors and do not describe 
the complete procedure, service, or item described by the CPT code. 
Therefore, we include the 5-digit placeholder codes and their long 
descriptors for the new CY 2025 CPT codes in Addendum O to this 
proposed rule (which is available via the internet on the CMS website) 
so that the public can comment on our proposed payment indicator 
assignments. The 5-digit placeholder codes can be found in Addendum O 
to this proposed rule, specifically under the column labeled ``CY 2025 
OPPS/ASC Proposed Rule 5-Digit AMA/CMS Placeholder Code.'' We intend to 
include the final CPT code numbers the CY 2025 OPPS/ASC final rule with 
comment period.
    In summary, we solicit public comments on the proposed CY 2025 
payment indicators for the new Category I and III CPT codes that will 
be effective January 1, 2025. Because these codes are listed in 
Addendum AA and Addendum BB with short descriptors only, we are listing 
them again in Addendum O with the long descriptors. We also propose to 
finalize the payment indicator for these codes (with their final CPT 
code numbers) in the CY 2025 OPPS/ASC final rule with comment period. 
The proposed payment indicators and comment indicators for these codes 
can be found in Addendum AA and BB to this proposed rule. The list of 
ASC payment indicators and corresponding definitions can be found in 
Addendum DD1 to this proposed rule. The new CPT codes that will be 
effective January 1, 2025, are assigned to comment indicator ``NP'' in 
Addendum AA and BB to this proposed rule to indicate that the codes are 
assigned to an interim payment indicator and that comments will be 
accepted on their interim ASC payment assignments. The list of comment 
indicators and definitions used under the ASC payment system can be 
found in Addendum DD2 to this proposed rule. We note that ASC Addenda 
AA, BB, DD1, and DD2 are available via the internet on the CMS website.
    Finally, in Table 77, we summarize our process for updating codes 
through our ASC quarterly update CRs, seeking public comments, and 
finalizing the treatment of these new codes under the ASC payment 
system.
BILLING CODE 4120-01-P

[[Page 59411]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.110

BILLING CODE 4120-01-C
6. ASC Payment and Comment Indicators
a. Background
    In addition to the payment indicators that we introduced in the 
August 2, 2007 ASC final rule, we created final comment indicators for 
the ASC payment system in the CY 2008 OPPS/ASC final rule with comment 
period (72 FR 66855). We created Addendum DD1 to define ASC payment 
indicators that we use in Addenda AA and BB to provide payment 
information regarding covered surgical procedures and covered ancillary 
services, respectively, under the revised ASC payment system. The ASC 
payment indicators in Addendum DD1 are intended to capture policy-
relevant characteristics of HCPCS codes that may receive packaged or 
separate payment in ASCs, such as whether they were on the ASC CPL 
prior to CY 2008; payment designation, such as device-intensive or 
office-based, and the corresponding ASC payment methodology; and their 
classification as separately payable ancillary services, including 
radiology services, brachytherapy sources, OPPS pass-through devices, 
corneal tissue acquisition services, drugs or biologicals, or NTIOLs.
    We also created Addendum DD2 that lists the ASC comment indicators. 
The ASC comment indicators included in Addenda AA and BB to the 
proposed rules and final rules with comment period serve to identify, 
for the revised ASC payment system, the status of a specific HCPCS code 
and its payment indicator with respect to the timeframe when comments 
will be accepted. The comment indicator ``NI'' is used in the OPPS/ASC 
final rule with comment period to indicate new codes for the next 
calendar year for which the interim payment indicator assigned is 
subject to comment. The comment indicator ``NI'' also is assigned to 
existing codes with substantial revisions to their descriptors such 
that we consider them to be describing new services, and the interim 
payment indicator assigned is subject to comment, as discussed in the 
CY 2010 OPPS/ASC final rule with comment period (74 FR 60622).
    The comment indicator ``NP'' is used in the OPPS/ASC proposed rule 
to indicate new codes for the next calendar year for which the proposed 
payment indicator assigned is subject to comment. The comment indicator 
``NP'' also is assigned to existing codes with substantial revisions to 
their descriptors, such that we consider them to be describing new 
services, and the proposed payment indicator assigned is subject to 
comment, as discussed in the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70497).
    The ``CH'' comment indicator is used in Addenda AA and BB to the 
proposed rule (these addenda are available via the internet on the CMS 
website) to indicate that the payment indicator assignment has changed 
for an active HCPCS code in the current year and the next calendar 
year, for example, if an active HCPCS code is newly recognized as 
payable in ASCs or an active HCPCS code is discontinued at the end of 
the current calendar year. The ``CH'' comment indicators that are 
published in the final rule are provided to alert readers that a change 
has been made from one calendar year to the next, but do not indicate 
that the change is subject to comment.

[[Page 59412]]

    In the CY 2021 OPPS/ASC final rule with comment period, we 
finalized the addition of ASC payment indicator ``K5''--Items, Codes, 
and Services for which pricing information and claims data are not 
available. No payment made.--to ASC Addendum DD1 (which is available 
via the internet on the CMS website) to indicate those services and 
procedures that CMS anticipates will become payable when claims data or 
payment information becomes available.
    In CY 2024 OPPS/ASC final rule with comment period, we finalized 
the addition of two ASC payment indicators, ``D1''--``Ancillary dental 
service/item; no separate payment made'' and ``D2''--``Non office-based 
dental procedure added in CY 2024 or later'', for new dental codes for 
CY 2024 and subsequent calendar years to indicate potentially payable 
dental services and procedures in the ASC setting (88 FR 81907). We 
added these two codes to Addendum DD1 (which is available via the 
internet on the CMS website).
b. Proposed ASC Payment and Comment Indicators for CY 2025
    For CY 2025, we propose new and revised Category I and III CPT 
codes as well as new and revised Level II HCPCS codes. Proposed 
Category I and III CPT codes that are new and revised for CY 2025 and 
any new and existing Level II HCPCS codes with substantial revisions to 
the code descriptors for CY 2025, compared to the CY 2024 descriptors, 
are included in ASC Addenda AA and BB to this proposed rule and labeled 
with comment indicator ``NP'' to indicate that these CPT and Level II 
HCPCS codes are open for comment as part of the CY 2025 OPPS/ASC 
proposed rule.
    We propose to modify the descriptor of ASC payment indicator 
``L6''--``New Technology Intraocular Lens (NTIOL); special payment'' to 
``Special payment; New Technology Intraocular Lens (NTIOL) or 
qualifying non-opioid devices'', to account for non-opioid devices paid 
for under the ASC payment system pursuant to section 4135 of the CAA, 
2023. More information about this non-opioid policy can be found in 
section XIII.E of this proposed rule.
    We refer readers to Addenda DD1 and DD2 of this proposed rule 
(these addenda are available via the internet on the CMS website) for 
the complete list of ASC payment and comment indicators proposed for 
the CY 2025 update.

C. Proposed Payment Policies Under the ASC Payment System

1. Proposed ASC Payment for Covered Surgical Procedures
a. Background
    Our ASC payment policies for covered surgical procedures under the 
revised ASC payment system are described in the CY 2008 OPPS/ASC final 
rule with comment period (72 FR 66828 through 66831). Under our 
established policy, we use the ASC standard ratesetting methodology of 
multiplying the ASC relative payment weight for the procedure by the 
ASC conversion factor for that same year to calculate the national 
unadjusted payment rates for procedures with payment indicators ``G2'' 
and ``A2.'' Payment indicator ``A2'' was developed to identify 
procedures that were included on the list of ASC covered surgical 
procedures in CY 2007 and, therefore, were subject to transitional 
payment prior to CY 2011. Although the 4-year transitional period has 
ended and payment indicator ``A2'' is no longer required to identify 
surgical procedures subject to transitional payment, we have retained 
payment indicator ``A2'' because it is used to identify procedures that 
are exempted from the application of the office-based designation.
    Payment rates for office-based procedures (payment indicators 
``P2,'' ``P3,'' and ``R2'') are the lower of the PFS nonfacility PE 
RVU-based amount or the amount calculated using the ASC standard rate 
setting methodology for the procedure. As detailed in section 
XIII.C.3.b of this proposed rule, we update the payment amounts for 
office-based procedures (payment indicators ``P2,'' ``P3,'' and ``R2'') 
using the most recent available MPFS and OPPS data. We compare the 
estimated current year rate for each of the office-based procedures, 
calculated according to the ASC standard rate setting methodology, to 
the PFS nonfacility PE RVU-based amount to determine which is lower 
and, therefore, would be the current year payment rate for the 
procedure under our final policy for the revised ASC payment system 
(Sec.  416.171(d)).
    The rate calculation established for device-intensive procedures 
(payment indicator ``J8'') is structured so only the service (non-
device) portion of the rate is subject to the ASC conversion factor. We 
update the payment rates for device-intensive procedures to incorporate 
the most recent device offset percentages calculated under the ASC 
standard ratesetting methodology, as discussed in section XIII.C.4 of 
this proposed rule.
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 
75081), we finalized our proposal to calculate the CY 2014 payment 
rates for ASC covered surgical procedures according to our established 
methodologies, with the exception of device removal procedures. For CY 
2014, we finalized a policy to conditionally package payment for device 
removal procedures under the OPPS. Under the OPPS, a conditionally 
packaged procedure (status indicators ``Q1'' and ``Q2'') describes a 
HCPCS code where the payment is packaged when it is provided with a 
significant procedure but is separately paid when the service appears 
on the claim without a significant procedure. Because ASC services 
always include a covered surgical procedure, HCPCS codes that are 
conditionally packaged under the OPPS are always packaged (payment 
indicator ``N1'') under the ASC payment system. Under the OPPS, device 
removal procedures are conditionally packaged and, therefore, would be 
packaged under the ASC payment system. There is no Medicare payment 
made when a device removal procedure is performed in an ASC without 
another surgical procedure included on the claim; therefore, no 
Medicare payment would be made if a device was removed but not 
replaced. To ensure that the ASC payment system provides separate 
payment for surgical procedures that only involve device removal--
conditionally packaged in the OPPS (status indicator ``Q2'')--we have 
continued to provide separate payment since CY 2014 and assign the 
current ASC payment indicators associated with these procedures.
b. Update to ASC Covered Surgical Procedure Payment Rates for CY 2025
    We propose to update ASC payment rates for CY 2025 and subsequent 
years using the established rate calculation methodologies under Sec.  
416.171 and using our definition of device-intensive procedures, as 
discussed in section XIII.C.4 of this proposed rule. As the proposed 
OPPS relative payment weights are generally based on geometric mean 
costs, we propose that the ASC payment system will generally use the 
geometric mean cost to determine proposed relative payment weights 
under the ASC standard methodology. We propose to continue to use the 
amount calculated under the ASC standard ratesetting methodology for 
procedures assigned payment indicators ``A2'' and ``G2.''
    We propose to calculate payment rates for office-based procedures 
(payment indicators ``P2,'' ``P3,'' and ``R2'') and device-intensive 
procedures

[[Page 59413]]

(payment indicator ``J8'') according to our established policies and to 
identify device-intensive procedures using the methodology discussed in 
section XIII.C.4 of this proposed rule. Therefore, we propose to update 
the payment amount for the service portion (the non-device portion) of 
the device-intensive procedures using the standard ASC ratesetting 
methodology and the payment amount for the device portion based on the 
proposed CY 2025 device offset percentages that have been calculated 
using the standard OPPS APC ratesetting methodology. We propose that 
payment for office-based procedures would be at the lesser of the 
proposed CY 2025 MPFS nonfacility PE RVU-based amount or the proposed 
CY 2025 ASC payment amount calculated according to the ASC standard 
ratesetting methodology.
    As we did for CYs 2014 through 2024, for CY 2025, we propose to 
continue our policy for device removal procedures, such that device 
removal procedures that are conditionally packaged in the OPPS (status 
indicators ``Q1'' and ``Q2'') will be assigned the current ASC payment 
indicators associated with those procedures and will continue to be 
paid separately under the ASC payment system.
c. Proposed Payment for ASC Add-On Procedures Eligible for Complexity 
Adjustments Under the OPPS
    In this section, we discuss the policy to provide increased payment 
under the ASC payment system for combinations of certain ``J1'' service 
codes and add-on procedure codes that are eligible for a complexity 
adjustment under the OPPS.
(1) OPPS C-APC Complexity Adjustment Policy
    Under the OPPS, complexity adjustments are utilized to provide 
increased payment for certain comprehensive services. As discussed in 
section II.A.2.b of this proposed rule, we apply a complexity 
adjustment by promoting qualifying paired ``J1'' service code 
combinations or paired code combinations of ``J1'' services and add-on 
codes from the originating Comprehensive APC (C-APC) (the C-APC to 
which the designated primary service is first assigned) to the next 
higher paying C-APC in the same clinical family of C-APCs. A ``J1'' 
status indicator refers to a hospital outpatient service paid through a 
C-APC. We package payment for all add-on codes, which are codes that 
describe a procedure or service always performed in addition to a 
primary service or procedure, into the payment for the C-APC. However, 
certain combinations of primary service codes and add-on codes may 
qualify for a complexity adjustment.
    We apply complexity adjustments when the paired code combination 
represents a complex, costly form or version of the primary service 
when the frequency and cost thresholds are met. The frequency threshold 
is met when there are 25 or more claims reporting the code combination, 
and the cost threshold is met when there is a violation of the 2 times 
rule, as specified in section 1833(t)(2) of the Act and described in 
section III.A.2.b of this proposed rule, in the originating C-APC. 
These paired code combinations that meet the frequency and cost 
threshold criteria represent those that exhibit materially greater 
resource requirements than the primary service. After designating a 
single primary service for a claim, we evaluate that service in 
combination with each of the other procedure codes reported on the 
claim that are either assigned to status indicator ``J1'' or add-on 
codes to determine if there are paired code combinations that meet the 
complexity adjustment criteria. Once we have determined that a 
particular combination of ``J1'' services, or combinations of a ``J1'' 
service and add-on code, represents a complex version of the primary 
service because it is sufficiently costly, frequent, and a subset of 
the primary comprehensive service overall according to the criteria 
described previously, we promote the claim to the next higher cost C-
APC within the clinical family unless the primary service is already 
assigned to the highest cost APC within the C-APC clinical family or 
assigned to the only C-APC in a clinical family. We do not create new 
C-APCs with a comprehensive geometric mean cost that is higher than the 
highest geometric mean cost (or only) C-APC in a clinical family just 
to accommodate potential complexity adjustments. Therefore, the highest 
payment for any claim including a code combination for services 
assigned to a C-APC would be the highest paying C-APC in the clinical 
family (79 FR 66802).
    As previously stated, we package payment for add-on codes into the 
C-APC payment rate. If any add-on code reported in conjunction with the 
``J1'' primary service code does not qualify for a complexity 
adjustment, payment for the add-on service continues to be packaged 
into the payment for the primary service and the primary service code 
reported with the add-on code is not reassigned to the next higher cost 
C-APC. We list the proposed complexity adjustments for ``J1'' and add-
on code combinations for CY 2025, along with all of the other proposed 
complexity adjustments, in Addendum J to this proposed rule (which is 
available via the internet on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices).
(2) CY 2025 ASC Special Payment Policy Proposal for OPPS Complexity-
Adjusted C-APCs
    For CY 2025, we propose to continue the special payment policy and 
methodology for OPPS complexity-adjusted C-APCs that was finalized in 
the CY 2023 OPPS/ASC final rule with comment period (87 FR 72078 
through 72080).
    For those ASC complexity adjustment codes for which we have claims 
data, we propose to use the claims data to calculate the code 
combination utilization and estimated payments for the ASC payment 
system budget neutrality calculations for CY 2025. The ASC complexity 
adjustment budget neutrality calculations are discussed further in 
section XIII.H.2.a of this proposed rule. The full list of the proposed 
ASC complexity adjustment codes for CY 2025 can be found in the ASC 
addenda and the supplemental policy file, which also includes both the 
existing ASC complexity adjustment codes and proposed additions, is 
published with the proposed rule on the CMS website at https://www.cms.gov/medicare/medicare-fee-for-service-payment/ascpayment/asc-regulations-and-notices. Since the complexity adjustment assignments 
change each year under the OPPS, the proposed list of ASC complexity 
adjustment codes eligible for this proposed payment policy has changed 
slightly from the previous year.
d. Proposed Low Volume APCs and Limit on ASC Payment Rates for 
Procedures Assigned to Low Volume APCs
    As stated in section XIII.D.1.b of this proposed rule, the ASC 
payment system generally uses OPPS geometric mean costs under the 
standard methodology to determine proposed relative payment weights 
under the standard ASC ratesetting methodology.
    In the CY 2022 OPPS/ASC final rule with comment period (86 FR 63743 
through 63747), we adopted a universal Low Volume APC policy for CY 
2022 and subsequent calendar years. Under our policy, we expanded the 
low volume adjustment policy that is applied to procedures assigned to 
New Technology APCs to also apply to clinical and brachytherapy APCs.

[[Page 59414]]

Specifically, a clinical APC or brachytherapy APC with fewer than 100 
claims per year would be designated as a Low Volume APC. For items or 
services assigned to a Low Volume APC, we use up to 4 years of claims 
data to establish a payment rate for the APC as we currently do for low 
volume services assigned to New Technology APCs. The payment rate for a 
Low Volume APC or a low volume New Technology procedure would be based 
on the highest of the median cost, arithmetic mean cost, or geometric 
mean cost calculated using multiple years of claims data.
    Based on claims data available for this proposed rule, we propose 
to designate six brachytherapy APCs and four clinical APCs as Low 
Volume APCs under the ASC payment system and shown in Table 78. The 
four clinical APCs and six brachytherapy APCs meet our criteria of 
having fewer than 100 single claims in the relevant claims year (CY 
2023 for this CY 2025 OPPS/ASC proposed rule) and therefore, we propose 
that they would be subject to our universal Low Volume APC policy and 
the APC cost metric would be based on the greater of the median cost, 
arithmetic mean cost, or geometric mean cost using up to 4 years of 
claims data. Nine of the ten APCs were designated as low volume APCs in 
CY 2024. Based on data for the CY 2025 OPPS/ASC proposed rule, APC 2645 
(Brachytx, non-stranded, hold-198) now meets our criteria to be 
designated a low volume APC; and we propose to designate it as such for 
CY 2025.
    Table 78 includes the CY 2023 claims available for ratesetting for 
each of the APCs we propose be designated as low volume APCs for CY 
2025. The cost statistics for our proposed low volume APCs, such as the 
median, arithmetic mean, and geometric mean cost are available for 
download with this proposed rule on the CMS website. We refer readers 
to our website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/ambulatory-surgical-center-asc/asc-regulations-and-notices; click on the relevant regulation to download the low volume 
APC cost statistics under the standard (ASC) ratesetting methodology in 
the downloads section of the web page.
[GRAPHIC] [TIFF OMITTED] TP22JY24.111

2. Payment for Covered Ancillary Services
a. Background
    Our payment policies under the ASC payment system for covered 
ancillary services generally vary according to the particular type of 
service and its payment policy under the OPPS. Our overall policy 
provides separate ASC payment for certain ancillary items and services 
integrally related to the provision of ASC covered surgical procedures 
that are paid separately under the OPPS and provides packaged ASC 
payment for other ancillary items and services that are packaged or 
conditionally packaged (status indicators ``N,'' ``Q1,'' and ``Q2'') 
under the OPPS.
    In the CY 2013 OPPS/ASC rulemaking (77 FR 45169 and 77 FR 68457 
through 68458), we further clarified our policy regarding the payment 
indicator assignment for procedures that are conditionally packaged in 
the OPPS (status indicators ``Q1'' and ``Q2''). Under the OPPS, a 
conditionally packaged procedure describes a HCPCS code where the 
payment is packaged when it is provided with a significant procedure 
but is separately paid when the service appears on the claim without a 
significant procedure. Because ASC services always include a surgical 
procedure, HCPCS codes that are conditionally packaged under the OPPS 
are generally packaged (payment indictor ``N1'') under the ASC payment 
system (except for device removal procedures, as discussed in the CY 
2022 OPPS/ASC proposed rule (86 FR 42083)). Thus, our policy generally 
aligns ASC payment bundles with those under the OPPS (72 FR 42495). In 
all cases, in order for ancillary items and services also to be paid, 
the ancillary items and services must be provided integral to the 
performance of ASC covered surgical procedures for which the ASC bills 
Medicare.

[[Page 59415]]

    Our ASC payment policies generally provide separate payment for 
drugs and biologicals that are separately paid under the OPPS at the 
OPPS rates and package payment for drugs and biologicals for which 
payment is packaged under the OPPS. However, as discussed in the CY 
2022 OPPS/ASC final rule with comment period, for CY 2022, we finalized 
a policy to unpackage and pay separately at ASP plus 6 percent for the 
cost of non-opioid pain management drugs and biologicals that function 
as a supply when used in a surgical procedure as determined by CMS 
under Sec.  416.174 (86 FR 63483).
    We generally pay for separately payable radiology services at the 
lower of the PFS nonfacility PE RVU-based (or technical component) 
amount or the rate calculated according to the ASC standard ratesetting 
methodology (72 FR 42497). However, as finalized in the CY 2011 OPPS/
ASC final rule with comment period (75 FR 72050), payment indicators 
for all nuclear medicine procedures (defined as CPT codes in the range 
of 78000 through 78999) that are designated as radiology services that 
are paid separately when provided integral to a surgical procedure on 
the ASC list are set to ``Z2'' so that payment is made based on the ASC 
standard ratesetting methodology rather than the MPFS nonfacility PE 
RVU amount (``Z3''), regardless of which is lower (Sec.  
416.171(d)(1)).
    Similarly, we also finalized our policy to set the payment 
indicator to ``Z2'' for radiology services that use contrast agents so 
that payment for these procedures will be based on the OPPS relative 
payment weight using the ASC standard ratesetting methodology and, 
therefore, will include the cost for the contrast agent (Sec.  
416.171(d)(2)).
    ASC payment policy for brachytherapy sources mirrors the payment 
policy under the OPPS. ASCs are paid for brachytherapy sources provided 
integral to ASC covered surgical procedures at prospective rates 
adopted under the OPPS or, if OPPS rates are unavailable, at 
contractor-priced rates (72 FR 42499). Since December 31, 2009, ASCs 
have been paid for brachytherapy sources provided integral to ASC 
covered surgical procedures at prospective rates adopted under the 
OPPS.
    Our ASC policies also provide separate payment for: (1) certain 
items and services that CMS designates as contractor-priced, including, 
but not limited to, the procurement of corneal tissue; and (2) certain 
implantable items that have pass-through payment status under the OPPS. 
These categories do not have prospectively established ASC payment 
rates according to ASC payment system policies (72 FR 42502 and 42508 
through 42509; Sec.  416.164(b)). Under the ASC payment system, we have 
designated corneal tissue acquisition and hepatitis B vaccines as 
contractor-priced. Corneal tissue acquisition is contractor-priced 
based on the invoiced costs for acquiring the corneal tissue for 
transplantation. Hepatitis B vaccines are contractor-priced based on 
invoiced costs for the vaccine.
    Devices that are eligible for pass-through payment under the OPPS 
are separately paid under the ASC payment system and are contractor-
priced. Under the revised ASC payment system (72 FR 42502), payment for 
the surgical procedure associated with the pass-through device is made 
according to our standard methodology for the ASC payment system, based 
on only the service (non-device) portion of the procedure's OPPS 
relative payment weight if the APC weight for the procedure includes 
other packaged device costs. We also refer to this methodology as 
applying a ``device offset'' to the ASC payment for the associated 
surgical procedure. This ensures that duplicate payment is not provided 
for any portion of an implanted device with OPPS pass-through payment 
status.
    In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66933 
through 66934), we finalized that, beginning in CY 2015, certain 
diagnostic tests within the medicine range of CPT codes for which 
separate payment is allowed under the OPPS are covered ancillary 
services when they are integral to an ASC covered surgical procedure. 
We finalized that diagnostic tests within the medicine range of CPT 
codes include all Category I CPT codes in the medicine range 
established by CPT, from 90000 to 99999, and Category III CPT codes and 
Level II HCPCS codes that describe diagnostic tests that crosswalk or 
are clinically similar to procedures in the medicine range established 
by CPT. In the CY 2015 OPPS/ASC final rule with comment period, we also 
finalized our policy to pay for these tests at the lower of the PFS 
nonfacility PE RVU-based (or technical component) amount or the rate 
calculated according to the ASC standard ratesetting methodology (79 FR 
66933 through 66934). We finalized that the diagnostic tests for which 
the payment is based on the ASC standard ratesetting methodology be 
assigned to payment indicator ``Z2'' and revised the definition of 
payment indicator ``Z2'' to include a reference to diagnostic services 
and those for which the payment is based on the PFS nonfacility PE RVU-
based amount be assigned payment indicator ``Z3,'' and revised the 
definition of payment indicator ``Z3'' to include a reference to 
diagnostic services.
b. Proposed Payment for Covered Ancillary Services for CY 2025
    We propose to update the ASC payment rates and to make changes to 
ASC payment indicators, as necessary, to maintain consistency between 
the OPPS and ASC payment system regarding the packaged or separately 
payable status of services and the proposed CY 2025 OPPS and ASC 
payment rates and subsequent years' payment rates. We also propose to 
continue to set the CY 2025 ASC payment rates and subsequent years' 
payment rates for brachytherapy sources and separately payable drugs 
and biologicals equal to the OPPS payment rates for CY 2025 and 
subsequent years' payment rates.
    Covered ancillary services and their proposed payment indicators 
for CY 2025 are listed in Addendum BB of this proposed rule (which is 
available via the internet on the CMS website). For those covered 
ancillary services where the payment rate is the lower of the rate 
under the ASC standard rate setting methodology and the PFS final rates 
(similar to our office-based payment policy), the proposed payment 
indicators and rates set forth in this proposed rule are based on a 
comparison using the proposed PFS rates effective January 1, 2025. For 
a discussion of the PFS rates, we refer readers to the CY 2025 PFS 
proposed rule, which is available on the CMS website at: https://www.cms.gov/medicare/payment/fee-schedules/physician/federal-regulation-notices.
3. Covered Surgical Procedures Designated as Office-Based Procedures
a. Background
    In the August 2, 2007 ASC final rule, we finalized our policy to 
designate as ``office-based'' those procedures that are added to the 
ASC Covered Procedures List (CPL) in CY 2008 or later years that we 
determine are furnished predominantly (more than 50 percent of the 
time) in physicians' offices based on consideration of the most recent 
available volume and utilization data for each individual procedure 
code and/or, if appropriate, the clinical characteristics, utilization, 
and volume of related codes. In that final rule, we also finalized our 
policy to exempt all procedures on the CY 2007 ASC list

[[Page 59416]]

from application of the office-based classification (72 FR 42512). The 
procedures that were added to the ASC CPL beginning in CY 2008 that we 
determined were office-based were identified in Addendum AA to that 
final rule with payment indicator ``P2'' (Office-based surgical 
procedure added to ASC list in CY 2008 or later with MPFS nonfacility 
PE RVUs; payment based on OPPS relative payment weight); ``P3'' 
(Office-based surgical procedures added to ASC list in CY 2008 or later 
with MPFS nonfacility PE RVUs; payment based on MPFS nonfacility PE 
RVUs); or ``R2'' (Office-based surgical procedure added to ASC list in 
CY 2008 or later without MPFS nonfacility PE RVUs; payment based on 
OPPS relative payment weight), depending on whether we estimated the 
procedure would be paid according to the ASC standard ratesetting 
methodology based on its OPPS relative payment weight or at the MPFS 
nonfacility PE RVU-based amount.
    Consistent with our final policy to annually review and update the 
ASC CPL to include all covered surgical procedures eligible for payment 
in ASCs, each year we identify covered surgical procedures as either 
temporarily office-based (these are new procedure codes with little or 
no utilization data that we have determined are clinically similar to 
other procedures that are permanently office-based), permanently 
office-based, or nonoffice-based, after taking into account updated 
volume and utilization data.
b. CY 2025 Proposed Office-Based Procedures
    In developing this proposed rule, we followed our policy to 
annually review and update the covered surgical procedures for which 
ASC payment is made and to identify new procedures that may be 
appropriate for ASC payment (described in detail in section XIII.C.1.d 
of this proposed rule), including their potential designation as 
office-based. Historically, we would also review the most recent claims 
volume and utilization data (CY 2023 claims) and the clinical 
characteristics for all covered surgical procedures that are currently 
assigned a payment indicator in CY 2024 of ``G2'' (Non office-based 
surgical procedure added in CY 2008 or later; payment based on OPPS 
relative payment weight) as well as for those procedures assigned one 
of the temporary office-based payment indicators, specifically ``P2,'' 
``P3,'' or ``R2'' in the CY 2023 OPPS/ASC final rule with comment 
period (86 FR 63769 through 63773).
    Our review of the CY 2023 volume and utilization data of covered 
surgical procedures currently assigned a payment indicator of ``G2'' 
(Non office-based surgical procedure added in CY 2008 or later; payment 
based on OPPS relative payment weight) resulted in the identification 
of two surgical procedures that we believed met the criteria for 
designation as permanently office-based. The data indicate that these 
procedures are performed more than 50 percent of the time in 
physicians' offices, and the services are of a level of complexity 
consistent with other procedures performed routinely in physicians' 
offices. The CPT codes that we propose to permanently designate as 
office-based for CY 2025 are listed in Table 79.
[GRAPHIC] [TIFF OMITTED] TP22JY24.112

    As discussed in the August 2, 2007 ASC final rule (72 FR 42533 
through 42535), we finalized our policy to designate certain new 
surgical procedures as temporarily office-based until adequate claims 
data are available to assess their predominant sites of service, 
whereupon if we confirm their office-based nature, the procedures are 
permanently assigned to the list of office-based procedures. In the 
absence of claims data, we use other available information, including 
our clinical advisors' judgment, predecessor CPT and Level II HCPCS 
codes, information submitted by representatives of specialty societies 
and professional associations, and information submitted by commenters 
during the public comment period.
    We reviewed CY 2023 volume and utilization data for nine surgical 
procedures designated as temporarily office-based in the CY 2023 OPPS/
ASC final rule with comment period and temporarily assigned one of the 
office-based payment indicators, specifically ``P2,'' ``P3,'' or 
``R2.'' In Table 122 of the CY 2024 OPPS/ASC final rule with comment 
period, we finalized assigning temporary office-based designations to 
seven surgical procedures for CY 2024 (88 FR 81919). As shown in Table 
80, for one of the seven surgical procedures, there was greater than 50 
claims available and the volume and utilization data indicated this 
procedure was performed predominantly in the office setting. Therefore, 
we propose to no

[[Page 59417]]

longer designate this procedure as temporarily office-based and to 
permanently designate this procedure as office-based and assign one of 
the office-based payment indicators, specifically ``P2,'' ``P3,'' or 
``R2.''
[GRAPHIC] [TIFF OMITTED] TP22JY24.113

    For six of the seven procedures that were designated as temporarily 
office-based in the CY 2023 OPPS/ASC final rule with comment period and 
temporarily assigned one of the office-based payment indicators, 
specifically ``P2,'' ``P3,'' or ``R2,'' there were fewer than 50 
claims; therefore, there was an insufficient amount to determine if the 
office setting was the predominant setting of care for these 
procedures. Therefore, as shown in Table 81, we propose to continue to 
designate such procedures as temporarily office-based for CY 2025 and 
assign one of the office-based payment indicators.
    For CY 2025, we propose to designate three new CY 2025 CPT codes 
for ASC covered surgical procedures as temporarily office-based--CPT 
codes XX34T (Removal of integrated neurostimulation system, vagus 
nerve), 15XX3 (Preparation of skin cell suspension autograft, requiring 
enzymatic processing, manual mechanical disaggregation of skin cells, 
and filtration; first 25 sq cm or less of harvested skin), and 5XX06 
(Catheterization with removal of temporary device for ischemic 
remodeling (i.e., pressure necrosis) of bladder neck and prostate). 
After reviewing the clinical characteristics, utilization, and volume 
of related procedure codes, we determined that CPT code XX34T is most 
similar to 0588T, which is temporarily designated as an office-based 
surgical procedure. Additionally, CPT code 15XX3 is most similar to CPT 
code 11310 (Shaving of epidermal or dermal lesion, single lesion, face, 
ears, eyelids, nose, lips, mucous membrane; lesion diameter 0.5 cm or 
less), which is designated as an office-based surgical procedure. 
Lastly, CPT code 5XX06 is most similar to CPT code 51705 (Change of 
bladder tube) which is also designated as an office-based surgical 
procedure. Therefore, as shown in Table 81, we propose to also 
designate these three new CPT codes as temporarily office-based for CY 
2025.
BILLING CODE 4120-01-P

[[Page 59418]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.114

BILLING CODE 4120-01-C
    The procedures for which the proposed office-based designation for 
CY 2025 is temporary are indicated by an asterisk in Addendum AA to 
this proposed rule (which is available via the internet on the CMS 
website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-
Payment/ASCPayment/ASC-Regulations-and-Notices).
4. Device-Intensive ASC Covered Surgical Procedures
a. Background
    We refer readers to the CY 2019 OPPS/ASC final rule with comment

[[Page 59419]]

period (83 FR 59040 through 59041), for a summary of our existing 
policies regarding ASC covered surgical procedures that are designated 
as device-intensive.
b. CY 2025 Proposed Device Intensive Procedures
    In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59040 
through 59043), for CY 2019, we modified our criteria for device-
intensive procedures to better capture costs for procedures with 
significant device costs. We adopted a policy to allow procedures that 
involve surgically inserted or implanted, high-cost, single-use devices 
to qualify as device-intensive procedures. In addition, we modified our 
criteria to lower the device offset percentage threshold from 40 
percent to 30 percent. The device offset percentage is the percentage 
of device costs within a procedure's total costs. Specifically, for CY 
2019 and subsequent years, we adopted a policy that device-intensive 
procedures would be subject to the following criteria:
     All procedures must involve implantable or insertable 
devices assigned a CPT or HCPCS code;
     The required devices (including single-use devices) must 
be surgically inserted or implanted; and
     The device offset amount must be significant, which is 
defined as exceeding 30 percent of the procedure's mean cost. 
Corresponding to this change in the cost criterion, we adopted a policy 
that the default device offset for new codes that describe procedures 
that involve the implantation of medical devices will be 31 percent 
beginning in CY 2019. For new codes describing procedures that are 
payable when furnished in an ASC and involve the implantation of a 
medical device, we adopted a policy that the default device offset 
would be applied in the same manner as the policy we adopted in section 
IV.B.2 of the CY 2019 OPPS/ASC final rule with comment period (83 FR 
58944 through 58948). We amended Sec.  416.171(b)(2) of the regulations 
to reflect these new device criteria.
    In addition, as also adopted in section IV.B.2 of the CY 2019 OPPS/
ASC final rule with comment period, to further align the device-
intensive policy with the criteria used for device pass-through status, 
we specified, for CY 2019 and subsequent years, that for purposes of 
satisfying the device-intensive criteria, a device-intensive procedure 
must involve a device that:
     Has received FDA marketing authorization, has received an 
FDA investigational device exemption (IDE) and has been classified as a 
Category B device by FDA in accordance with 42 CFR 405.203 through 
405.207 and 405.211 through 405.215, or meets another appropriate FDA 
exemption from premarket review;
     Is an integral part of the service furnished;
     Is used for one patient only;
     Comes in contact with human tissue;
     Is surgically implanted or inserted (either permanently or 
temporarily); and
     Is not any of the following:
    ++ Equipment, an instrument, apparatus, implement, or item of this 
type for which depreciation and financing expenses are recovered as 
depreciable assets as defined in Chapter 1 of the Medicare Provider 
Reimbursement Manual (CMS Pub. 15-1); or
    ++ A material or supply furnished incident to a service (for 
example, a suture, customized surgical kit, scalpel, or clip, other 
than a radiological site marker).
    In the CY 2022 OPPS/ASC final rule with comment period (86 FR 63773 
through 63775), we modified our approach to assigning device-intensive 
status to surgical procedures under the ASC payment system. First, we 
adopted a policy of assigning device-intensive status to procedures 
that involve surgically inserted or implanted, high-cost, single-use 
devices if their device offset percentage exceeds 30 percent under the 
ASC standard ratesetting methodology, even if the procedure is not 
designated as device-intensive under the OPPS. Second, we adopted a 
policy that if a procedure is assigned device-intensive status under 
the OPPS, but has a device offset percentage below the device-intensive 
threshold under the standard ASC ratesetting methodology, the procedure 
will be assigned device-intensive status under the ASC payment system 
with a default device offset percentage of 31 percent. The policies 
were adopted to provide consistency between the OPPS and ASC payment 
system and provide a more appropriate payment rate for surgical 
procedures with significant device costs under the ASC payment system.
    In the CY 2023 OPPS/ASC final rule with comment period (87 FR 72078 
through 72080), we finalized our policy to create certain C-codes, or 
ASC complexity adjustment codes that describe certain combinations of a 
primary covered surgical procedure as well as a packaged (payment 
indicator = ``N1'') procedure that are otherwise eligible for a 
complexity adjustment under the OPPS (as listed in Addendum J). Each 
ASC complexity adjustment code's APC assignment is based on its 
corresponding OPPS complexity adjustment code's APC assignment. In the 
CY 2023 OPPS/ASC final rule with comment period, we stated our belief 
that it would be appropriate for these ASC complexity adjustment codes 
to qualify for device-intensive status under the ASC payment system if 
the primary procedure of the code was also designated as device-
intensive. Under our current policy, the ASC complexity adjustment code 
retains the device portion of the primary procedure (also called the 
``device offset amount'') and not the device offset percentage. 
Therefore, for device-intensive ASC complexity adjustment codes, we set 
the device portion of the combined procedure equal to the device 
portion of the primary procedure and calculate the device offset 
percentage by dividing the device portion by the ASC complexity 
adjustment code's APC payment rate. Further, we apply our standard ASC 
payment system ratesetting methodology to the non-device portion of the 
ASC complexity adjustment code's APC payment rate; that is, we multiply 
the OPPS relative weight by the ASC budget neutrality adjustment and 
the ASC conversion factor and sum that amount with the device portion 
to calculate the ASC payment rate.
    As discussed in section IV.B of this proposed rule, the purpose of 
applying the default device offset percentage to new codes that 
describe procedures that implant or insert devices is to ensure access 
in the ASC setting for new procedures until claims data become 
available. Our ratesetting methodology sets the ASC device offset 
amount constant at the OPPS device offset amount. Device offset amounts 
under the OPPS and ASC Payment System are the device offset percentages 
of a procedure multiplied by the OPPS or ASC Payment System payment 
rate, respectively, for that procedure. While the ASC ratesetting 
methodology relies on the ASC conversion factor and the scaled OPPS APC 
relative weights to construct ASC payment rates, for device-intensive 
procedures, the device offset percentage of the procedure relies on the 
higher OPPS conversion factor while the non device portion relies on 
the lower ASC conversion factor. For non device-intensive procedures 
for which the payment is based on OPPS relative payment weight, one 
hundred percent of the procedure's payment rate relies on the ASC 
conversion factor. Therefore, the greater the device offset percentage 
under the ASC Payment System, the greater the ASC payment rate.
    Device offset percentages, which represent the device cost portion 
of a

[[Page 59420]]

procedure's total cost, are determined using the most recent claims 
data for that procedure. For newer procedures that describe procedures 
which implant or insert single-use devices that meet our definition of 
a device and for which the device costs are estimated to be greater 
than 30 percent of the total procedure cost and lack claims data, we 
have relied on several policies to determine an appropriate device 
offset percentage until such claims data becomes available. First, if 
the new procedure has claims data from a predecessor code, as described 
by CPT coding guidance, we rely on claims data from the predecessor 
code in assigning the device offset percentage for the new HCPCS code 
(88 FR 81919 through 81922). Second, in limited instances where a new 
device-intensive procedure does not have a predecessor code as defined 
by CPT, but describes a procedure that was previously described by an 
existing code, we may use clinical discretion to identify HCPCS codes 
that are clinically related or similar to the new HCPCS code but are 
not officially recognized as a predecessor code by CPT, and use the 
claims data of the clinically related or similar code(s) for purposes 
of determining whether to use the device offset percentage of the 
clinically related or similar code(s) or to apply the default device 
offset to the new HCPCS code (83 FR 58946). Clinically related and 
similar procedures for purposes of this policy are procedures that have 
few or no clinical differences and use the same device(s). If the new 
device-intensive procedure does not have claims data from a predecessor 
code or a clinically similar code that uses the same device, we have 
assigned a default device offset percentage of 31 percent. While we do 
allow for additional information in our consideration of a higher 
offset percentage than the default device offset, our payment policies 
under both the OPPS and ASC Payment System are meant to encourage 
efficiencies and promote savings to the Medicare program and we believe 
relying on claims data rather than external pricing data helps put 
downward pressure on changes in medical device prices. Therefore, it 
would be extremely rare that the appropriate determination of a device 
offset percentage would rely on pricing data or invoices from a device 
manufacturer rather than the default device offset percentage.
    However, we are aware that there may be certain situations where 
newer device-intensive procedures lack claims data from a predecessor 
code and a clinically similar code that uses the same device, but the 
default device offset percentage would not adequately reflect the 
existing device portion of the procedure's costs when compared to the 
cost of similar devices. The difference in the default device portion 
and the potential device cost could possibly limit access to newer, 
more complex, device-intensive procedures in the ASC setting if the 
cost of the new device does indeed reflect a cost equivalent to that of 
the similar existing devices. As HOPDs and ASCs perform new procedures 
with significant device costs, we believe it is appropriate to modify 
our default device offset methodology to pay HOPDs and ASCs more 
appropriately when we lack claims data for these newer procedures. 
Therefore, for this proposed rule and subsequent calendar years, we 
propose to modify our default device offset percentage for new device-
intensive procedures. Specifically, for all new covered surgical HCPCS 
codes that describe procedures which implant or insert single-use 
devices that meet our definition of a device and for which the device 
costs are estimated to be greater than 30 percent of the total 
procedure cost and lack claims data, we would apply a default device 
offset percentage that is the greater of: 31 percent or the device 
offset percentage of the APC to which the procedure has been assigned. 
We propose this methodological change for both the OPPS and ASC Payment 
System for CY 2025 and subsequent calendar years.
    We still believe that a HCPCS code-level device offset is, in most 
cases, a more accurate representation of a procedure's device cost than 
an APC-wide average device offset based on the average device offset of 
all the procedures assigned to an APC. However, because newer device-
intensive procedures lack claims data and therefore a HCPCS code-level 
device offset may not be possible, we believe the APC-wide average 
device offset percentage is, in most cases, a better reflection of the 
estimated device costs of the procedure than a default 31 percent 
offset. Additionally, there can be instances where the typical device 
costs of procedures in an APC can be significantly greater than the 31 
percent default device offset. For these reasons, we propose to modify 
our methodology for determining the device offset percentage for new 
procedures that describe the implantation or insertion of a single-use 
device that meet our definition of a device and for which the device 
cost is projected to be greater than 30 percent of the total procedure 
cost that do not yet have associated claims data to apply a device 
offset percentage that is the greater of 31 percent or the device 
offset percentage of the APC to which the procedure has been assigned. 
This proposal would apply to new device-intensive procedures assigned 
to clinical APCs and would not apply to new procedures assigned to New 
Technology APCs.
    Under our proposal, we would continue to first rely on the 
associated claims data for the new HCPCS code or any predecessor code, 
as described by CPT coding guidance, for the new HCPCS code. If there 
is no claims data from the new HCPCS or any predecessor code, we may 
continue to use clinical discretion to identify HCPCS codes that are 
clinically related or similar to the new HCPCS code but are not 
officially recognized as a predecessor code by CPT, and to use the 
claims data of the clinically related or similar code(s) for purposes 
of determining a device offset percentage to the new HCPCS code (83 FR 
58946). Clinically related and similar procedures for purposes of this 
policy are procedures that have few or no clinical differences and use 
the same devices. For new device-intensive procedures that describe the 
implantation or insertion of a single-use device that meet our 
definition of a device and for which the device cost is significant, 
projected to be greater than 30 percent of the total procedure cost, 
and lack claims data, we would then rely on our proposed device offset 
policy and apply the greater of 31 percent or the device offset 
percentage of the APC to which the procedure has been assigned.
    We solicit comments on our proposed changes to our default device 
offset policy for CY 2025 and subsequent calendar years under the OPPS 
and ASC payment system. The listing of proposed payment indicators for 
covered surgical procedures as well as their respective proposed device 
offset percentages and device offset amounts, which incorporates our 
proposed changes to the default device offset policy, can be found in 
Addendum FF to this proposed rule (which is available via the internet 
on the CMS website).
c. Adjustment to ASC Payments for No Cost/Full Credit and Partial 
Credit Devices
    Our ASC payment policy for costly devices implanted or inserted in 
ASCs at no cost/full credit or partial credit is set forth in Sec.  
416.179 of our regulations and is consistent with the OPPS policy that 
was in effect until CY 2014. We refer readers to the CY 2008 OPPS/ASC 
final rule with comment period (72 FR 66845 through 66848) for a full

[[Page 59421]]

discussion of the ASC payment adjustment policy for no cost/full credit 
and partial credit devices. ASC payment is reduced by 100 percent of 
the device offset amount when a hospital furnishes a specified device 
without cost or with a full credit and by 50 percent of the device 
offset amount when the hospital receives partial credit in the amount 
of 50 percent or more of the cost for the specified device.
    Effective CY 2014, under the OPPS, we finalized our proposal to 
reduce OPPS payment for applicable APCs by the full or partial credit a 
provider receives for a device, capped at the device offset amount. 
Although we finalized our proposal to modify the policy of reducing 
payments when a hospital furnishes a specified device without cost or 
with full or partial credit under the OPPS, in the CY 2014 OPPS/ASC 
final rule with comment period (78 FR 75076 through 75080), we 
finalized our proposal to maintain our ASC policy for reducing payments 
to ASCs for specified device-intensive procedures when the ASC 
furnishes a device without cost or with full or partial credit. Unlike 
the OPPS, there is currently no mechanism within the ASC claims 
processing system for ASCs to submit to CMS the amount of the actual 
credit received when furnishing a specified device at full or partial 
credit. Therefore, under the ASC payment system, we finalized our 
proposal for CY 2014 to continue to reduce ASC payments by 100 percent 
or 50 percent of the device offset amount when an ASC furnishes a 
device without cost or with full or partial credit, respectively.
    Under current ASC policy, all ASC device-intensive covered surgical 
procedures are subject to the no cost/full credit and partial credit 
device adjustment policy. Specifically, when a device-intensive 
procedure is performed to implant or insert a device that is furnished 
at no cost or with full credit from the manufacturer, the ASC appends 
the HCPCS ``FB'' modifier on the line in the claim with the procedure 
to implant or insert the device. The contractor reduces payment to the 
ASC by the device offset amount that we estimate represents the cost of 
the device when the necessary device is furnished without cost or with 
full credit to the ASC. We continue to believe that the reduction of 
ASC payment in these circumstances is necessary to pay appropriately 
for the covered surgical procedure furnished by the ASC.
    In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59043 
through 59044) we adopted a policy to reduce the payment for a device-
intensive procedure for which the ASC receives partial credit by one-
half of the device offset amount that would be applied if a device was 
provided at no cost or with full credit if the credit to the ASC is 50 
percent or more (but less than 100 percent) of the cost of the new 
device. The ASC will append the HCPCS ``FC'' modifier to the HCPCS code 
for the device-intensive surgical procedure when the facility receives 
a partial credit of 50 percent or more (but less than 100 percent) of 
the cost of a device. To report that the ASC received a partial credit 
of 50 percent or more (but less than 100 percent) of the cost of a new 
device, ASCs have the option of either: (1) submitting the claim for 
the device-intensive procedure to their Medicare contractor after the 
procedure's performance, but prior to manufacturer acknowledgment of 
credit for the device, and subsequently contacting the contractor 
regarding a claim adjustment, once the credit determination is made; or 
(2) holding the claim for the device implantation or insertion 
procedure until a determination is made by the manufacturer on the 
partial credit and submitting the claim with the ``FC'' modifier 
appended to the implantation procedure HCPCS code if the partial credit 
is 50 percent or more (but less than 100 percent) of the cost of the 
device. Beneficiary coinsurance would be based on the reduced payment 
amount. As finalized in the CY 2015 OPPS/ASC final rule with comment 
period (79 FR 66926), to ensure our policy covers any situation 
involving a device-intensive procedure where an ASC may receive a 
device at no cost or receive full credit or partial credit for the 
device, we apply our ``FB''/``FC'' modifier policy to all device-
intensive procedures.
    In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59043 
through 59044) we stated we would reduce the payment for a device-
intensive procedure for which the ASC receives partial credit by one-
half of the device offset amount that would be applied if a device was 
provided at no cost or with full credit, if the credit to the ASC is 50 
percent or more (but less than 100 percent) of the cost of the device. 
In the CY 2020 OPPS/ASC final rule with comment period, we finalized 
continuing our existing policies for CY 2020. We note that we 
inadvertently omitted language that this policy would apply not just in 
CY 2019 but also in subsequent calendar years. We intended to apply 
this policy in CY 2019 and subsequent calendar years. Therefore, we 
finalized our proposal to apply our policy for partial credits 
specified in the CY 2019 OPPS/ASC final rule with comment period (83 FR 
59043 through 59044) in CY 2022 and subsequent calendar years (86 FR 
63775 through 63776). Specifically, for CY 2022 and subsequent calendar 
years, we would reduce the payment for a device-intensive procedure for 
which the ASC receives partial credit by one-half of the device offset 
amount that would be applied if a device was provided at no cost or 
with full credit, if the credit to the ASC is 50 percent or more (but 
less than 100 percent) of the cost of the device. To report that the 
ASC received a partial credit of 50 percent or more (but less than 100 
percent) of the cost of a device, ASCs have the option of either: (1) 
submitting the claim for the device intensive procedure to their 
Medicare contractor after the procedure's performance, but prior to 
manufacturer acknowledgment of credit for the device, and subsequently 
contacting the contractor regarding a claim adjustment, once the credit 
determination is made; or (2) holding the claim for the device 
implantation or insertion procedure until a determination is made by 
the manufacturer on the partial credit and submitting the claim with 
the ``FC'' modifier appended to the implantation procedure HCPCS code 
if the partial credit is 50 percent or more (but less than 100 percent) 
of the cost of the device. Beneficiary coinsurance would be based on 
the reduced payment amount.
    We are not proposing any changes to our policies related to no 
cost/full credit or partial credit devices for CY 2025.
5. Requirement in the Physician Fee Schedule CY 2025 Proposed Rule for 
HOPDs and ASCs To Report Discarded Amounts of Certain Single-Dose or 
Single-Use Package Drugs
    Section 90004 of the Infrastructure Investment and Jobs Act (Pub. 
L. 117-9, November 15, 2021) (``the Infrastructure Act'') amended 
section 1847A of the Act to re-designate subsection (h) as subsection 
(i) and insert a new subsection (h), which requires manufacturers to 
provide a refund to CMS for certain discarded amounts from a refundable 
single-dose container or single-use package drug. The CY 2025 PFS 
proposed rule includes proposals related to the discarded drug refund 
policy, including proposals that may impact hospital outpatient 
departments (HOPDs) and ambulatory surgical centers (ASCs). Similar to 
our CY 2023 and CY 2024 notice in the OPPS/ASC proposed rules (87 FR 
71988 and 88 FR 49760), we wanted to ensure interested parties were

[[Page 59422]]

aware of these proposals and knew to refer to the CY 2025 Physician Fee 
Schedule proposed rule for a full description of the proposed policy. 
Interested parties are asked to submit comments on any proposals to 
implement Section 90004 of the Infrastructure Act to the CY 2025 PFS 
proposed rule. Public comments on these proposals will be addressed in 
the CY 2025 PFS final rule with comment period. We note that this same 
notice appears in section V.B.6 of this proposed rule with respect to 
the OPPS.

D. Proposed Additions to ASC Covered Surgical Procedures and Covered 
Ancillary Services Lists

1. Proposed Additions to the List of ASC Covered Surgical Procedures
    Section 1833(i)(1) of the Act requires us, in part, to specify, in 
consultation with appropriate medical organizations, surgical 
procedures that are appropriately performed on an inpatient basis in a 
hospital but that can also be safely performed in an ASC, a CAH, or an 
HOPD, and to review and update the list of ASC covered surgical 
procedures at least every 2 years. We evaluate the ASC covered 
procedures list (ASC CPL) each year to determine whether procedures 
should be added to or removed from the list, and changes to the list 
are often made in response to specific concerns raised by stakeholders.
    Under our regulations at Sec. Sec.  416.2 and 416.166, covered 
surgical procedures furnished on or after January 1, 2022, are surgical 
procedures that meet the general standards specified in Sec.  
416.166(b) and are not excluded under the general exclusion criteria 
specified in Sec.  416.166(c). Specifically, under Sec.  416.166(b), 
the general standards provide that covered surgical procedures are 
surgical procedures specified by the Secretary and published in the 
Federal Register and/or via the internet on the CMS website that are 
separately paid under the OPPS, that would not be expected to pose a 
significant safety risk to a Medicare beneficiary when performed in an 
ASC, and for which standard medical practice dictates that the 
beneficiary would not typically be expected to require active medical 
monitoring and care at midnight following the procedure.
    Section 416.166(c) sets out the general exclusion criteria used 
under the ASC payment system to evaluate the safety of procedures for 
performance in an ASC. The general exclusion criteria provide that 
covered surgical procedures do not include those surgical procedures 
that: (1) generally result in extensive blood loss; (2) require major 
or prolonged invasion of body cavities; (3) directly involve major 
blood vessels; (4) are generally emergent or life-threatening in 
nature; (5) commonly require systemic thrombolytic therapy; (6) are 
designated as requiring inpatient care under Sec.  419.22(n); (7) can 
only be reported using a CPT unlisted surgical procedure code; or (8) 
are otherwise excluded under Sec.  411.15.
    In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59029 
through 59030), we defined a surgical procedure under the ASC payment 
system as any procedure described within the range of Category I CPT 
codes that the CPT Editorial Panel of the AMA defines as ``surgery'' 
(CPT codes 10000 through 69999) (72 FR 42476), as well as procedures 
that are described by Level II HCPCS codes or by Category I CPT codes 
or by Category III CPT codes that directly crosswalk or are clinically 
similar to procedures in the CPT surgical range that we determined met 
the general standards established in previous years for addition to the 
ASC CPL.
    In the CY 2024 OPPS/ASC final rule with comment period, we 
finalized adding several dental surgical procedures to the ASC CPL that 
met our regulatory criteria at Sec. Sec.  416.166. We note that there 
are statutory and regulatory limitations regarding Medicare coverage 
and payment for dental services. Section 1862(a)(12) of the Act 
generally precludes Medicare Part A or Part B payment for services in 
connection with the care, treatment, filling, removal, or replacement 
of teeth or structures directly supporting teeth (collectively referred 
to in this section as ``dental services''). The regulation at Sec.  
411.15(i) similarly prohibits payment for dental services. In the CY 
2023 PFS final rule (87 FR 69663), we explained that there are certain 
instances where dental services are so integral to other medically 
necessary services that they are not in connection with dental services 
within the meaning of section 1862(a)(12) of the Act. Rather, such 
dental services are inextricably linked to, and substantially related 
to the clinical success of, other covered services (hereafter in this 
section, ``inextricably linked''). To provide greater clarity to 
current policies, the CY 2023 PFS final rule finalized: (1) a 
clarification of our interpretation of section 1862(a)(12) of the Act 
to permit payment for dental services that are inextricably linked to 
other covered services; (2) clarification and codification of certain 
longstanding Medicare FFS payment policies for dental services that are 
inextricably linked to other covered services; (3) that, beginning for 
CY 2023, Medicare Parts A and B payment can be made for certain dental 
services inextricably linked to Medicare-covered organ transplant, 
cardiac valve replacement, or valvuloplasty procedures; and, (4) 
beginning for CY 2024, that Medicare Parts A and B payment can be made 
for certain dental services inextricably linked to Medicare-covered 
services for treatment of head and neck cancers (87 FR 69670 through 
69671).
    For the ASC setting, services must meet all applicable Medicare 
conditions for coverage and payment to be paid by Medicare, including 
those as specified under the CY 2023 PFS final rule (87 FR 69687 
through 69688) and Sec.  411.15(i)(3). Medicare payment may be made in 
the ASC setting for dental services for which payment may be made under 
Medicare Part B, paid under the OPPS, and that meet the ASC CPL 
criteria. The fact that a drug, device, procedure, or service is 
assigned a HCPCS code and a payment rate under the ASC payment system 
indicates only how the product, procedure, or service may be paid if 
covered by the program. MACs will be involved in the final decision 
regarding whether a drug, device, procedure, or other service meets all 
program requirements and conditions for coverage and payment. 
Therefore, even if a code describing a dental service has an associated 
payment rate on the ASC CPL, Medicare will only make payment for the 
service if it meets applicable requirements. We also clarify that 
adding dental procedures to the ASC CPL does not serve as a coverage 
determination for dental services under general anesthesia. We direct 
readers to the CY 2025 PFS proposed rule for additional discussion of 
Medicare coverage and payment for dental services, which is available 
on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html.
    For a detailed discussion of the history of our policies for adding 
surgical procedures to the ASC CPL, we refer readers to the CY 2021 
through CY 2024 OPPS/ASC final rules with comment period (85 FR 86143 
through 86145; 86 FR 63777 through 63805; 87 FR 72068 through 72076; 
and 88 FR 81923 through 81945).
2. Proposed Changes to the List of ASC Covered Surgical Procedures for 
CY 2025
    Our current policy, which includes consideration of the general 
standards and exclusion criteria we have historically used to determine 
whether

[[Page 59423]]

a surgical procedure should be added to the ASC CPL, is intended to 
ensure that surgical procedures added to the ASC CPL can be performed 
safely in the ASC setting on the typical Medicare beneficiary.
    As part of our evaluation process to add procedures to the CPL, we 
assess potential procedures against the specific list of ASC CPL 
criteria at Sec.  416.166. We also examine clinical data on these 
procedures from multiple sites of services, review literature and 
experiential data, and analyze claims data trends to ensure that these 
procedures meet all our criteria and are not expected to pose a 
significant risk to beneficiary safety when performed in an ASC. For CY 
2025, we also reviewed supporting evidence received in the pre-proposed 
rule nominations process to inform our procedure evaluations. Based 
upon this review, we propose to update the ASC CPL by adding 20 medical 
and dental surgical procedures to the list for CY 2025, as shown in 
Table 82.
    After reviewing the clinical characteristics of these twenty 
procedures and consulting with stakeholders and multiple clinical 
advisors, we determined that these procedures are separately paid under 
the OPPS, would not be expected to pose a significant risk to 
beneficiary safety when performed in an ASC, and would not be expected 
to require active medical monitoring and care of the beneficiary at 
midnight following the procedure. These procedures are surgical or 
surgery-like, clinically similar to procedures in the CPT surgical 
range that we determined met the general standards for addition to the 
ASC CPL. These procedures are not excluded from being included on the 
ASC CPL because they do not generally result in extensive blood loss, 
require major or prolonged invasion of body cavities, commonly require 
systemic thrombolytic therapy, or directly involve major blood vessels; 
are not generally emergent or life-threatening in nature or designated 
as requiring inpatient care; or can only be reported using a CPT 
unlisted surgical procedure code or are otherwise excluded under 
Medicare. Therefore, we believe these procedures may all be 
appropriately performed in an ASC and propose to include them on the 
ASC CPL for CY 2025.
    We continue to focus on maximizing patient access to care by adding 
procedures to the ASC CPL when appropriate. While expanding the ASC CPL 
offers benefits, such as preserving the capacity of hospitals to treat 
more acute patients and promoting site neutrality, we also believe that 
any additions to the CPL should be added in a carefully calibrated 
fashion to ensure that the procedure is safe to be performed in the ASC 
setting. We encourage interested parties to submit procedure 
recommendations to be added to the ASC CPL, particularly if there is 
evidence that these procedures meet our criteria and can be safely 
performed in the ASC setting. We expect to continue to gradually expand 
the ASC CPL, as medical practice and technology continue to evolve and 
advance in future years.
BILLING CODE 4120-01-P

[[Page 59424]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.115


[[Page 59425]]


BILLING CODE 4120-01-C
3. Covered Ancillary Services
    Covered ancillary services are specified in Sec.  416.164(b) and, 
as stated previously, are eligible for separate ASC payment. As 
provided at Sec.  416.164(b), we make separate ASC payments for 
ancillary items and services when they are provided integral to ASC 
covered surgical procedures that include the following: (1) 
brachytherapy sources; (2) certain implantable items that have pass-
through payment status under the OPPS; (3) certain items and services 
that we designate as contractor-priced, including, but not limited to, 
procurement of corneal tissue; (4) certain drugs and biologicals for 
which separate payment is allowed under the OPPS; (5) certain radiology 
services for which separate payment is allowed under the OPPS; and (6) 
non-opioid pain management drugs that function as a supply when used in 
a surgical procedure. Payment for ancillary items and services that are 
not paid separately under the ASC payment system is packaged into the 
ASC payment for the covered surgical procedure.
    In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59062 
through 59063), consistent with the established ASC payment system 
policy (72 FR 42497), we finalized the policy to update the ASC list of 
covered ancillary services to reflect the payment status for the 
services under the OPPS and to continue this reconciliation of packaged 
status for subsequent calendar years. As discussed in prior rulemaking, 
maintaining consistency with the OPPS may result in changes to ASC 
payment indicators for some covered ancillary services. For example, if 
a covered ancillary service was separately paid under the ASC payment 
system in CY 2024, but will be packaged under the CY 2025 OPPS, we 
would also package the ancillary service under the ASC payment system 
for CY 2025 to maintain consistency with the OPPS. Comment indicator 
``CH'' is used in Addendum BB (which is available via the internet on 
the CMS website) to indicate covered ancillary services for which we 
propose a change in the ASC payment indicator to reflect a proposed 
change in the OPPS treatment of the service for CY 2025.
    In the CY 2022 OPPS/ASC final rule with comment period, we 
finalized our proposal to revise 42 CFR 416.164(b)(6) to include, as 
ancillary items that are integral to a covered surgical procedure and 
for which separate payment is allowed, non-opioid pain management drugs 
and biologicals that function as a supply when used in a surgical 
procedure as determined by CMS (86 FR 63490).
    New CPT and HCPCS codes for covered ancillary services for CY 2025 
can be found in section XIII.B of this proposed rule. All ASC covered 
ancillary services and their final payment indicators for CY 2025 are 
also included in Addendum BB to this proposed rule (which is available 
via the internet on the CMS website). Claims Processing Limitations for 
Covered Ancillary Procedures Performed with G0330.
    We finalized adding HCPCS code G0330 (Facility services for dental 
rehabilitation procedure(s) performed on a patient who requires 
monitored anesthesia (e.g., general, intravenous sedation (monitored 
anesthesia care) and use of an operating room)) to the ASC CPL in the 
CY 2024 OPPS/ASC final rule (88 FR 81924). In ASC Addendum BB, there is 
a specific and definitive list of covered ancillary dental services 
with payment indicator of ``D1,'' indicating an ancillary dental 
service or item with no separate payment made. In the CY 2024 OPPS/ASC 
final rule with comment period (88 FR 81945 through 46), we finalized 
that code G0330 could only be billed when accompanied by a covered 
ancillary procedure that has the payment indicator of ``D1.'' 
Performance of at least one of these covered ancillary services is 
integral to each of the surgical procedures that correspond to G0330. 
This limitation ensures that only covered ancillary services we 
evaluated for safety in the ASC setting could be performed with code 
G0330.
    While HCPCS code G0330 must be billed with a covered ancillary 
procedure with a payment indicator of ``D1,'' these covered ancillary 
procedures with a payment indicator of ``D1'' can be billed with 
surgical procedures other than G0330. When billed with procedures other 
than code G0330, these ancillary procedures would be packaged in 
accordance with our policy for covered ancillary procedures. 
Additionally, other than HCPCS code G0330, procedures assigned to 
payment indicator ``D2'', indicating non office-based dental procedure 
added in CY 2024 or later, are not required to be billed with a covered 
ancillary procedure assigned to payment indicator ``D1'' to receive 
payment for the procedure.
    The fact that a drug, device, procedure, or service is assigned a 
HCPCS code and a payment rate under the ASC payment system indicates 
only how the product, procedure, or service may be paid if covered by 
the program. MACs will be involved in the final decision regarding 
whether a drug, device, procedure, or other service meets all program 
requirements and conditions for coverage and payment. Therefore, even 
if a code describing a dental service has an associated payment rate on 
the ASC CPL, Medicare will only make payment for the service if it 
meets applicable requirements.

E. ASC Payment Policy for Non-Opioid Post-Surgery Pain Management 
Drugs, Biologicals, and Devices

1. Background on OPPS/ASC Non-Opioid Pain Management Packaging Policies
    On October 24, 2018, the Substance Use-Disorder Prevention that 
Promotes Opioid Recovery and Treatment for Patients and Communities 
(SUPPORT) Act (Pub. L. 115-271) was enacted. Section 1833(t)(22)(A)(i) 
of the Act, as added by section 6082(a) of the SUPPORT Act, states that 
the Secretary must review payments under the OPPS for opioids and 
evidence based non-opioid alternatives for pain management (including 
drugs and devices, nerve blocks, surgical injections, and 
neuromodulation) with a goal of ensuring that there are not financial 
incentives to use opioids instead of non-opioid alternatives. As part 
of this review, under section 1833(t)(22)(A)(iii) of the Act, the 
Secretary must consider the extent to which revisions to such payments 
(such as the creation of additional groups of covered outpatient 
department (OPD) services to separately classify those procedures that 
utilize opioids and non-opioid alternatives for pain management) would 
reduce the payment incentives for using opioids instead of non-opioid 
alternatives for pain management. In conducting this review and 
considering any revisions, the Secretary must focus on covered OPD 
services (or groups of services) assigned to C-APCs, APCs that include 
surgical services, or services determined by the Secretary that 
generally involve treatment for pain management. If the Secretary 
identifies revisions to payments pursuant to section 
1833(t)(22)(A)(iii) of the Act, section 1833(t)(22)(C) of the Act 
requires the Secretary to, as determined appropriate, begin making 
revisions for services furnished on or after January 1, 2020. Revisions 
under this paragraph are required to be treated as adjustments for 
purposes of paragraph (9)(B) of the Act, which requires any adjustments 
to be made in a budget neutral manner. Section 1833(i)(8) of the Act, 
as added by section 6082(b) of the SUPPORT Act, requires the Secretary 
to conduct a similar type of review as required for

[[Page 59426]]

the OPPS and to make revisions to the ASC payment system in an 
appropriate manner, as determined by the Secretary.
    For a detailed discussion of rulemaking on non-opioid alternatives 
prior to CY 2020, we refer readers to the CYs 2018 and 2019 OPPS/ASC 
final rules with comment period (82 FR 59345; 83 FR 58855 through 
58860).
    For the CY 2020 OPPS/ASC proposed rule (84 FR 39423 through 39427), 
as required by section 1833(t)(22)(A)(i) of the Act, we reviewed 
payments under the OPPS for opioids and evidence-based non-opioid 
alternatives for pain management (including drugs and devices, nerve 
blocks, surgical injections, and neuromodulation) with a goal of 
ensuring that there are not financial incentives to use opioids instead 
of non-opioid alternatives. For the CY 2020 OPPS/ASC proposed rule (84 
FR 39423 through 39427), we proposed to continue our policy to pay 
separately at ASP plus 6 percent for non-opioid pain management drugs 
that function as surgical supplies in the performance of surgical 
procedures when they are furnished in the ASC setting and to continue 
to package payment for non-opioid pain management drugs that function 
as surgical supplies in the performance of surgical procedures in the 
hospital outpatient department setting.
    In the CY 2020 OPPS/ASC final rule with comment period (84 FR 61173 
through 61180), after reviewing data from stakeholders and Medicare 
claims data, we did not find compelling evidence to suggest that 
revisions to our OPPS payment policies for non-opioid pain management 
alternatives were necessary for CY 2020. We finalized our proposal to 
continue to unpackage and pay separately at ASP plus 6 percent for non-
opioid pain management drugs that function as surgical supplies when 
furnished in the ASC setting for CY 2020. Under this policy, for CY 
2020, the only drug that qualified for separate payment in the ASC 
setting as a non-opioid pain management drug that functions as a 
surgical supply was Exparel.
    In the CY 2021 OPPS/ASC final rule with comment period (85 FR 85896 
through 85899), we continued the policy to pay separately at ASP plus 6 
percent for non-opioid pain management drugs that function as surgical 
supplies in the performance of surgical procedures when they were 
furnished in the ASC setting and to continue to package payment for 
non-opioid pain management drugs that function as surgical supplies in 
the performance of surgical procedures in the hospital outpatient 
department setting for CY 2021. For CY 2021, only Exparel and Omidria 
met the criteria as non-opioid pain management drugs that function as 
surgical supplies in the ASC setting and received separate payment 
under the ASC payment system.
    In the CY 2022 OPPS/ASC final rule with comment period (86 FR 
63483), we finalized a policy to unpackage and pay separately at ASP 
plus 6 percent for non-opioid pain management drugs that function as 
surgical supplies when they are furnished in the ASC setting, are FDA-
approved, have an FDA-approved indication for pain management or as an 
analgesic, and have a per-day cost above the OPPS/ASC drug packaging 
threshold; and we finalized our proposed regulation text changes at 42 
CFR 416.164(a)(4) and (b)(6), 416.171(b)(1), and 416.174 as proposed.
    In the CY 2023 OPPS/ASC final rule with comment period (87 FR 
72089), we determined that five products were eligible for separate 
payment in the ASC setting under our final policy for CY 2022. We noted 
that future products, or products not discussed in that rulemaking that 
may be eligible for separate payment under this policy, would be 
evaluated in future rulemaking (86 FR 63496). In the CY 2023 final rule 
with comment period, we finalized that five drugs would receive 
separate payment in the ASC setting for CY 2023 under the policy for 
non-opioid pain management drugs and biologicals that function as 
surgical supplies (86 FR 63496).
    In the CY 2023 OPPS/ASC final rule with comment period, we 
finalized a clarification of our policy by codifying the two additional 
criteria for separate payment for non-opioid pain management drugs and 
biologicals that function as surgical supplies in the regulatory text 
at Sec.  416.174 as a technical change. First, we finalized at new 
Sec.  416.174(a)(3) that non-opioid pain management drugs or 
biologicals that function as a supply in a surgical procedure are 
eligible for separate payment if the drug or biological does not have 
transitional pass-through payment status under Sec.  419.64. In the 
case where a drug or biological otherwise meets the requirements under 
Sec.  416.174 and has transitional pass-through payment status that 
will expire during the calendar year, the drug or biological would 
qualify for separate payment under Sec.  416.174 during such calendar 
year on the first day of the next calendar year quarter after its pass-
through status expires. Second, we finalized that new Sec.  
416.174(a)(4) would reflect that the drug or biological must not 
already be separately payable in the OPPS or ASC payment system under a 
policy other than the one specified in Sec.  416.174.
    In the CY 2024 OPPS/ASC final rule with comment period, we 
finalized four drugs as eligible to receive separate payment as a non-
opioid pain management drug that functions as a supply in a surgical 
procedure under the ASC payment system and which met the criteria at 
Sec.  416.174(a) for CY 2024. (See Table 83.)

[[Page 59427]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.116

F. Proposed CY 2025 Non-Opioid Policy for Pain Relief Under the OPPS 
and ASC Payment System

1. Background on Access to Non-Opioid Treatments for Pain Relief
    The Consolidated Appropriations Act (CAA), 2023 (Pub. L. 117-328), 
was signed into law on December 29, 2022. Section 4135(a) and (b) of 
the CAA, 2023, titled Access to Non-Opioid Treatments for Pain Relief, 
amended section 1833(t)(16) and section 1833(i) of the Social Security 
Act, respectively, to provide for temporary additional payments for 
non-opioid treatments for pain relief (as that term is defined in 
section 1833(t)(16)(G)(i) of the Act). In particular, section 
1833(t)(16)(G) provides that with respect to a non-opioid treatment for 
pain relief furnished on or after January 1, 2025 and before January 1, 
2028, the Secretary shall not package payment for the non-opioid 
treatment for pain relief into payment for a covered OPD service (or 
group of services) and shall make an additional payment for the non-
opioid treatment for pain relief as specified in clause (ii) of that 
section. Clauses (ii) and (iii) of section 1833(t)(16)(G) of the Act 
provide for the amount of additional payment and set a limitation on 
that amount.
    Paragraph (10) of section 1833(i) of the Act cross-references the 
OPPS provisions about the additional payment amount and payment 
limitation for non-opioid treatments for pain relief and applies them 
to payment under the ASC payment system. In particular, subparagraph 
(A) of paragraph (10) of section 1833(i) of the Act, as added by 
section 4135(b) of the CAA, 2023, provides that in the case of surgical 
services furnished on or after January 1, 2025, and before January 1, 
2028, additional payments shall be made under the ASC payment system 
for non-opioid treatments for pain relief in the same amount provided 
in clause (ii) and subject to the limitation in clause (iii) of section 
1833(t)(16)(G) of the Act for the OPPS. Subparagraph (B) of section 
1833(i)(10) of the Act provides that a drug or biological that meets 
the requirements of 42 CFR 416.174 and is a non-opioid treatment for 
pain relief shall also receive additional payment in the amount 
provided in clause (ii) and subject to the limitation in clause (iii) 
of section 1833(t)(16)(G) of the Act. Additional payments are required 
to begin on January 1, 2025. The statute directs CMS to provide 
``additional payment'', and for purposes of this proposal, we interrupt 
this language to be equivalent to ``separate payment,'' since CMS 
provides an additional payment by unpackaging the product and then 
making a separate payment. ``Separate payment'' is the more commonly 
used terminology in the OPPS rule and likely more familiar with 
readers, therefore, to avoid confusion we will be using ``separate 
payment'' throughout the rest of this section, which we believe to be 
synonymous with ``additional payment.''
    Our proposals to implement the amendments to sections 1833(t)(16) 
and section 1833(i) of the Act required by section 4135 of the CAA, 
2023 are discussed below.
2. Proposed CY 2025 Non-Opioid Policy Implementation of Section 4135 of 
the CAA, 2023
a. Statutory Authority for OPPS/ASC Non-Opioid Policy
    Prior to CY 2025, the statutory authority for the ASC non-opioid 
policy is section 1833(i)(8) of the Act, as added by section 6082(b) of 
the SUPPORT Act. Section 1833(i)(8) of the Act refers to paragraph 
(t)(22), which states that the Secretary shall conduct a similar type 
of review as the one required for the OPPS for opioids and evidence 
based non-opioid alternatives for pain management (including drugs and 
devices, nerve blocks, surgical injections, and neuromodulation) with a 
goal of ensuring that there are not financial incentives to use opioids 
instead of non-opioid alternatives and make such revisions as the 
Secretary determines appropriate. As discussed in the previous section, 
CMS's policy for CY 2024 is to provide separate payment in the ASC 
setting for certain qualifying non-opioid pain management drugs that

[[Page 59428]]

function as a supply in a surgical procedure.
    As noted previously, section 4135 of the CAA, 2023, provides for 
temporary separate payments for certain non-opioid treatments for pain 
relief in both the hospital outpatient department and ambulatory 
surgical center settings from January 1, 2025 through December 31, 
2027. Specifically, these separate payments are for qualifying drugs, 
biologicals, and devices that, among other requirements, have their 
payment packaged into payment for a covered OPD service (or group of 
services). Pursuant to section 1833(t)(2)(E) of the Act, the temporary 
separate payments must be made in a budget neutral manner.
(1) Drugs and Biologicals Subject to the ASC Non-Opioid Policy (42 CFR 
416.174)
    Section 1833(i)(10)(B), titled ``Transition,'' provides that a drug 
or biological that meets the requirements of the regulation at 42 CFR 
416.174 (the current ASC non-opioid policy) and that meets the 
definition of a non-opioid treatment for pain relief at section 
1833(t)(16)(G)(iv) shall receive separate payments under section 4135 
of the CAA, 2023, subject to the payment limitation. In light of this 
requirement, we propose that drugs and biologicals that meet the 
definition of a non-opioid treatment for pain relief for purposes of 
section 4135 that are currently subject to the ASC policy for non-
opioid treatments authorized by section 6082 of the SUPPORT Act, would 
instead receive separate payments, subject to the limitation, for the 
duration of the payment period for section 4135. These drugs and 
biologicals are described in the discussions that follow.
(2) Definition of Non-Opioid Treatment for Pain Relief
    Section 1833(t)(16)(G)(iv) of the Act defines a non-opioid 
treatment for pain relief. In order for a drug or biological product to 
qualify as a non-opioid treatment for pain relief, pursuant to section 
1833(t)(16)(G)(iv)(I), the product must have ``a label indication 
approved by the Food and Drug Administration to reduce postoperative 
pain, or produce postsurgical or regional analgesia, without acting 
upon the body's opioid receptors.'' In order for a medical device to 
qualify as a non-opioid treatment for pain relief, pursuant to section 
1833(t)(16)(G)(iv)(II)(bb), the medical devices must be ``used to 
deliver a therapy to reduce postoperative pain, or produce post-
surgical or regional analgesia.'' This subparagraph also defines such a 
device as having ``an application under section 515 of the Federal 
Food, Drug, and Cosmetic Act that has been approved with respect to the 
device, been cleared for market under section 510(k) of such Act, or is 
exempt from the requirements of section 510(k) of such Act pursuant to 
subsection (l) or (m) or section 510 of such Act or section 520(g) of 
such Act'' and ``demonstrated the ability to replace, reduce, or avoid 
intraoperative or postoperative opioid use or the quantity of opioids 
prescribed in a clinical trial or through data published in a peer-
reviewed journal.''
(3) Evidence Requirement for Medical Devices
    To determine whether a medical device fulfills the requirement that 
it has demonstrated the ability to replace, reduce, or avoid 
intraoperative or postoperative opioid use or the quantity of opioids 
prescribed in a clinical trial or through data published in a peer-
reviewed journal, we propose to review all data submitted during the 
public comment period to determine if the device demonstrates the 
ability to replace, reduce, or avoid intraoperative or postoperative 
opioid use or the quantity of opioids. When interested parties submit 
non-opioid device recommendations for CY 2025, we encourage them to 
also submit with their public comments any relevant literature that 
demonstrates that the named medical device replaces, reduces, or avoids 
opioid use per this statutory provision. We propose that CMS will 
review any literature submitted and determine whether it meets this 
evidence criterion. We are not requiring that commenters submit any 
data or literature with their device recommendations. If there is no 
data or literature submitted for a medical device, or if the materials 
submitted do not demonstrate any ability of the medical device to 
replace, reduce, or avoid opioids, the medical device will not meet 
this evidence criterion and will therefore not qualify for separate 
payment under section 4135.
c. Non-Opioid Product Indications
(1) FDA-Approved Indications for Drugs and Biologicals
    Section 1833(t)(16)(G)(iv)(I) of the Act specifies that to meet the 
definition of a non-opioid treatment for pain relief and to be eligible 
for separate payment, a drug or biological product must have a label 
indication approved by the Food and Drug Administration to reduce 
postoperative pain, or produce postsurgical or regional analgesia, 
without acting upon the body's opioid receptors.
    Given these statutory requirements, we propose only to approve 
separate payment for drug or biological products with an FDA-approved 
indication that closely aligns with the statutorily required indication 
language to reduce post-operative pain or produce post-surgical or 
regional analgesia. Products with an indication that does not meet the 
statutory requirement will not qualify. Table 84 includes citations to 
the indications of the drugs and biologicals that we propose meet the 
statutory requirements and should qualify for separate payment for CY 
2025.
(2) Indications for Medical Devices
    With respect to medical devices, section 1833(t)(16)(G)(iv)(II) of 
the Act specifies that such a device must be used to deliver a therapy 
to reduce postoperative pain or produce post-surgical or regional 
analgesia to qualify for separate payment under section 4135. It also 
must have an application approved under section 515 of the Federal 
Food, Drug, and Cosmetic Act (FDCA), have been cleared for market under 
section 510(k) of the FDCA, or be exempt from the requirements of 
section 510(k) of the FDCA pursuant to section 510(l) or (m) or 520(g) 
of the FDCA. For medical devices, we propose to only approve medical 
devices with an indication that specifies that the device is used to 
deliver a therapy to reduce postoperative pain or produce post-surgical 
or regional analgesia and which also have FDA approval, market 
clearance, or an appropriate exemption from the requirements of section 
510(k). Table 84 includes citations to the indication of one device 
that we propose meets the statutory requirements and should qualify for 
separate payment for CY 2025.
d. Amount of Payment
    Section 1833(t)(16)(G)(ii)(I) of the Act provides that, for a non-
opioid treatment for pain relief that is a drug or biological product, 
the amount of separate payment is the amount of payment for such 
product determined under section 1847A of the Act that exceeds the 
portion of the otherwise applicable Medicare OPD fee schedule that the 
Secretary determines is associated with the drug or biological, subject 
to a limitation, as described in the next section. Section 
1833(t)(16)(G)(ii)(II) of the Act provides that, for a non-opioid 
treatment for pain relief that is a medical device, the amount of 
separate payment is the amount of the hospital's charges for the

[[Page 59429]]

device, adjusted to cost, that exceeds the portion of the otherwise 
applicable Medicare OPD fee schedule that the Secretary determines is 
associated with the device, subject to a limitation, as described in 
the next section. As the language in Section 1833(t)(16)(G)(ii)(II) of 
the Act is very similar to the transitional pass-through language at 
section 1833(t)(6)(D)(i) and (ii) of the Act, we propose implementing a 
similar payment methodology for non-opioid products. A payment offset 
is the amount reflecting the portion of the non-opioid product in the 
procedure payment rate. We propose to assign a payment offset of zero 
dollars for the qualifying drugs, biologicals, and devices for CY 2025. 
A zero offset means that we would not offset or remove the amount that 
the non-opioid product represents from the procedure payment rate when 
setting payment rates. We propose this would apply for CY 2025 for all 
non-opioid drugs, biologicals, and devices that qualify for separate 
payment. We believe it makes sense to propose a zero dollar offset for 
the initial year of the policy as some of these products are new 
products or newly separately paid in the OPPS setting and their costs 
may not be fully reflected yet in the cost of procedures in which they 
may be used. Therefore, the separate payment for a drug or biological 
will be determined by subtracting from the amount calculated using the 
methodology outlined in section 1847A of the Act the portion of the 
otherwise applicable Medicare OPD fee schedule associated with the drug 
or biological, which as previously discussed, we propose to be zero 
dollars for CY 2025. For the amount of payment for a medical device, 
the separate payment amount will be determined by subtracting from the 
hospital's charges for the device, adjusted to cost, the portion of the 
otherwise applicable Medicare OPD fee schedule amount associated with 
the medical device, which as previously discussed, we propose to be 
zero dollars for CY 2025. These separate payment amounts will all be 
subject to the payment limitation described in the subsequent section.
    Section 1833(i)(10) of the Act establishes the same separate 
payment for the ASC setting as for hospital outpatient departments, as 
described in section 1833(t)(16)(G)(ii) of the Act. Both separate 
payments are subject to the limitation in section 1833(t)(16)(G)(iii) 
of the Act, which specifies that the separate payment amount shall not 
exceed the estimated average of 18 percent of the OPD fee schedule 
amount for the OPD service (or group of services) with which the non-
opioid treatment for pain relief is furnished. Our proposed 
implementation of this payment limitation is discussed in further 
detail below. Given this statutory requirement, we propose to pay the 
same separate payment amount for qualifying non-opioid products in both 
the HOPD and ASC settings.
    As the statute requires separate payment for these non-opioid 
treatments for pain relief, these products cannot be packaged into the 
procedure payment. Under our current threshold packaging policy, if the 
estimated per day cost for a drug or biological is less than or equal 
to the applicable OPPS drug packaging threshold, we package payment for 
the drug or biological into the payment for the associated procedure. 
Similarly, under our comprehensive APC (C-APC) policy, we package all 
payments for services integral, ancillary, supportive, dependent, and 
adjunctive to the primary service into a single payment for the primary 
comprehensive service. For more information on the drug packaging 
threshold, see section V.B.1.a of this proposed rule, and section 
II.A.b of this proposed rule for further information on C-APC 
packaging. We propose that non-opioid treatments for pain relief would 
not be subject to the threshold packaging policy in section V.B.1.a. of 
the proposed rule (88 FR 49676) and would also be separately paid when 
used during a comprehensive APC (C-APC) procedure in the HOPD setting.
e. Payment Limitation
    Section 1833(t)(16)(G)(iii) of the Act states that the separate 
payment amount specified in clause (ii), (which is described in the 
previous section) shall not exceed the estimated average of 18 percent 
of the OPD fee schedule amount for the OPD service (or group of 
services) with which the non-opioid treatment for pain relief is 
furnished, as determined by the Secretary.
    For the non-opioid products that are currently billed under the 
OPPS, we conducted a claims analysis of CY 2023 OPPS claims, which are 
the claims available for CY 2025 rulemaking, and found that 
approximately 90 percent of the utilization, on average, for these non-
opioid products is focused in the top five most frequently performed 
services for each product. Given this, we believe that using the top 
five services would provide a representative estimate for purposes of 
the payment limitation. As illustrated in Table 85, we propose to use 
the top five services by volume associated with a drug, biological, or 
medical device, to determine the volume-weighted payment rate per claim 
and the 18 percent payment limitation specified by statute, based on 
the most recent claims data available. This payment limitation approach 
is also generally consistent with the comments received in response to 
the comment solicitation in the CY 2024 OPPS/ASC proposed rule (88 FR 
49767 through 49769). For example, in response to the CY 2024 comment 
solicitation, several commenters supported CMS establishing a payment 
limitation for each non-opioid treatment item based on a volume-
weighted OPPS payment rate for the top five services that package the 
item into their payment rate.
    We propose to apply the 18 percent payment limitation per date of 
service billed, rather than per HCPCS dosage unit. This is due to the 
fact that there are typically multiple HCPCS dosage units (also called 
billing units) of each drug or biological billed per claim. Thus, the 
total units of a drug billed on a date of service is more reflective of 
the cost of the drug in that encounter. The amount of drug or 
biological used during an encounter, represented by a date of service 
for purposes of this proposal, will impact whether the separate payment 
for the drug or biological exceeds the payment limitation required by 
statute. Meaning, the same drug or biological may or may not be subject 
to the payment limitation depending on the amount of drug used. For 
example, a drug is paid $1 per 1 mg (per billing unit) and has a 
payment limitation set at $100 based on 18 percent of the volume 
weighted average of the payment of the top 5 services associated with 
the use of the drug. If 50 mg (50 billing units) of this drug were to 
be billed during one patient encounter or one date of service, then $50 
would be paid. The payment limitation would not apply as the payment 
for the drug did not exceed the payment limitation of $100. If 200 mg 
(200 billing units) of that same drug were to be billed during one 
patient encounter or one date of service, then the $200 payment would 
be limited to $100. In this case the payment limitation would apply as 
the payment for the drug exceeded the payment limitation of $100. We 
propose to apply this payment limitation to the date of service billed 
as the payment limitation applies to the total amount of separate 
payment, rather than the HCPCS dosage unit payment, which may only 
represent a small fraction of the total amount of payment.
    We propose to create new status indicators for non-opioid drugs and

[[Page 59430]]

devices to implement this payment limitation. Under the OPPS, non-
opioid drugs and biologicals under this policy would be assigned a 
status indicator of K1, while non-opioid devices would be assigned a 
status indicator of H1. Further discussion of these new status 
indicators can be found in section X1.A of this proposed rule.
    As discussed in section XIII.B.6.b. of this proposed rule, we 
propose to modify the descriptor of ASC payment indicator ``L6''--``New 
Technology Intraocular Lens (NTIOL); special payment'' to ``Special 
payment; New Technology Intraocular Lens (NTIOL) or qualifying non-
opioid devices'' and propose to assign qualifying non-opioid medical 
devices to this payment indicator to operationalize payment of these 
devices. We propose to assign qualifying drugs and biologicals to 
existing payment indicator ``K2.'' We refer readers to Addenda DD1 and 
DD2 of this proposed rule (these addenda are available via the internet 
on the CMS website) for the complete list of ASC payment and comment 
indicators proposed for the CY 2025 update.
    We have presented our proposed payment limitation calculations for 
qualifying non-opioid products in Table 85. We welcome public comment 
on the methodology used to determine the payment limitation.
d. Payment Limitation With No Claims Data
    For drugs, biologicals, and devices with no claims data, such as 
for newly FDA-approved and marketed products or products that did not 
previously have their own product-specific HCPCS code by which to track 
payment and utilization data, we are soliciting comment on the best 
approach for determining a payment limitation, as required by section 
1833(t)(16)(G)(iii) of the Act. As discussed in the CY 2024 OPPS/ASC 
final rule with comment period (88 FR 81953), CMS could utilize the 
services with which a product would be expected to be furnished and 
would typically be packaged absent this policy, based on expected 
clinical use patterns. Determining the service, or group of services, 
to use to calculate the payment limitation could be accomplished 
through engagement with interested parties and a review by CMS Medical 
Officers and clinical staff. Absent engagement from interested parties, 
CMS could determine the service, or group of services, to use to 
calculate the payment limitation based on expected clinical use 
patterns. CMS could then adjust the services that are used to calculate 
the payment limitation as claims data becomes available in subsequent 
years. We welcome comments on how to set a payment limitation for a 
product for which we do not have claims data on which to base a payment 
limitation. The product is described by HCPCS code C98X4 (ON-Q Pump). 
We solicit comment on the top 5 procedures performed with this product, 
and the HCPCS code that describes the procedure, in order to calculate 
a volume weighted payment limitation for this device for CY 2025.
    We anticipate that we may update the payment limitation amount in 
future rulemaking as we gather additional claims data on the 
utilization of and payment for this product.
e. Qualifying Products
    The following tables (Tables 84 and 85) list the non-opioid 
alternatives of which we are aware that we propose would receive 
separate payment as a non-opioid pain management drug or device under 
section 4135 criteria for CY 2025. With respect to one medical device, 
Table 84 also includes references to literature previously submitted to 
CMS, which CMS has reviewed and based on that review, has determined 
that the device shows the ability to replace, reduce, or avoid 
intraoperative or postoperative opioid use or the quantity of opioids 
prescribed in a clinical trial or through data published in a peer-
reviewed journal. Based on this determination, we propose the device 
listed in Table 84 is eligible for separate payment.
    In general, CMS routinely receives comments from readers of the 
proposed rule with detailed rationale as to why and how a particular 
drug, biological, medical device, or other item or service should be 
paid in their view. We are soliciting comment on whether there are any 
additional drugs, biologicals, or medical devices that meet the 
statutory requirements outlined in 1833(t)(16)(G) and 1833(i)(10). As 
discussed in this section, there are specific requirements with respect 
to FDA approval that must be met in order for the product to qualify 
for separate payment. For medical devices, the statute also requires 
that the device has demonstrated the ability to replace, reduce, or 
avoid intraoperative or postoperative opioid use or the quantity of 
opioids prescribed in a clinical trial or through data published in a 
peer-reviewed journal. Interested parties that believe that a product 
not addressed in this proposed rule meets the statutory requirements 
should submit information during the comment period that indicates that 
such product meets the statutory eligibility requirements. If CMS 
determines that such product(s) does in fact meet the statutory 
eligibility requirements, we would finalize separate payment for that 
product in the CY 2025 OPPS/ASC final rule with comment period. For 
drugs and biological products not addressed in this proposed rule, if 
no comment is submitted that outlines how that drug or biological meets 
the statutory criteria, then CMS will not finalize separate payment for 
such product for CY 2025. For medical devices not addressed in this 
proposed rule, unless a comment is submitted that both outlines how 
that device meets the statutory criteria and includes literature that 
demonstrates that the device has the ability to replace, reduce, or 
avoid intraoperative or postoperative opioid use or the quantity of 
opioids prescribed in a clinical trial or through data published in a 
peer-reviewed journal, then CMS will not finalize separate payment for 
such device for CY 2025.
BILLING CODE 4120-01-P

[[Page 59431]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.117

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

    \106\ Exparel. FDA Package Insert. November 2023. https://www.accessdata.fda.gov/drugsatfda_docs/label/2023/022496s051lbl.pdf.
    \107\ Omidria. FDA Package Insert. December 2017. https://www.accessdata.fda.gov/drugsatfda_docs/label/2017/205388s006lbl.pdf.
    \108\ Dextenza. FDA Package Insert. October 2021. https://www.accessdata.fda.gov/drugsatfda_docs/label/2021/208742s007lbl.pdf.
    \109\ Xaracoll. FDA Package Insert. August 2020. https://www.accessdata.fda.gov/drugsatfda_docs/label/2020/209511s000lbl.pdf.
    \110\ Zynrelef. FDA Package Insert. January 2024. https://www.accessdata.fda.gov/drugsatfda_docs/label/2024/211988s013lbl.pdf.
    \111\ Ketorolac tromethamine Injection. FDA Package Insert. May 
2014. https://www.accessdata.fda.gov/drugsatfda_docs/label/2014/074802s038lbl.pdf.
    \112\ On-Q Pump. FDA 510K. February 2019. https://www.accessdata.fda.gov/cdrh_docs/pdf18/K181360.pdf.
    \113\ Ding DY, Manoli A 3rd, Galos DK, Jain S, Tejwani NC. 
Continuous Popliteal Sciatic Nerve Block Versus Single Injection 
Nerve Block for Ankle Fracture Surgery: A Prospective Randomized 
Comparative Trial. J Orthop Trauma. 2015;29(9):393-398. https://pubmed.ncbi.nlm.nih.gov/2616525.

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

[[Page 59432]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.118

BILLING CODE 4120-01-C
    Conforming proposed regulation text changes can be found at 42 CFR 
416.174 for the ASC payment system and Sec.  419.43 for the OPPS. We 
propose revisions to Sec.  419.174(a) to establish the eligibility for 
non-opioid pain management drugs and biologicals, and by adding 
modifications to subparagraphs (1), (2), and (3) to outline drug and 
biological FDA approval requirements, the exclusion of drugs and 
biologicals with pass-through status, and the requirement that the drug 
or biological has payment that is packaged. We propose new Sec.  
419.174(b) to establish the eligibility for non-opioid pain management 
medical devices, which includes new subparagraphs (1),

[[Page 59433]]

(2), (3), and (4). These new subparagraphs describe medical device FDA 
requirements, medical device clinical trial or peer-reviewed journal 
requirements, the exclusion of medical devices with pass-through 
status, and the requirement that the medical device has payment that is 
packaged. New paragraph (c) describes the payment amounts for 
qualifying drugs and biologicals in subparagraph (1) and medical 
devices in subparagraph (2), as well as the payment limitation for 
drugs, biologicals, and medical devices in subparagraph (3). Similarly, 
we also propose new 419.43(k), which contains payment for non-opioid 
pain management drugs and biologicals. Specifically, new paragraph (1) 
outlines the eligibility for separate payment for non-opioid pain 
management drugs and biologicals, with new subparagraphs outlining (i) 
the drug or biological's required FDA status, (ii) the drug or 
biological's pass-through status, and (iii) the drug or biological's 
packaged status. We also propose to add new paragraph 419.43(k)(2), 
which contains payment for non-opioid pain management medical devices. 
Specifically, new paragraph (2) outlines the eligibility for separate 
payment for non-opioid pain management medical devices, with new 
subparagraphs outlining (i) the medical device's required FDA status, 
(ii) the medical device clinical trial or peer-reviewed journal 
requirements, (iii) the medical device's pass-through status, and (iv) 
the medical device's packaged status. New 419.43(k)(3) describes the 
separate payment amount for qualifying non-opioid treatments for pain 
relief. Specifically, subparagraph (i) sets the separate payment amount 
for a qualifying drug or biological, subparagraph (ii) sets the 
separate payment amount for a qualifying medical device, and 
subparagraph (iii) sets the payment limitation for drugs, biologicals, 
and medical devices.

G. Proposed New Technology Intraocular Lenses (NTIOLs)

    New Technology Intraocular Lenses (NTIOLs) are intraocular lenses 
that replace a patient's natural lens that has been removed in cataract 
surgery and that also meet the requirements listed in Sec.  416.195.
1. NTIOL Application Cycle
    Our process for reviewing applications to establish new classes of 
NTIOLs is as follows:
     Applicants submit their NTIOL requests for review to CMS 
by the annual deadline which is announced in the annual OPPS/ASC final 
rule with comment period. For a request to be considered complete, we 
require submission of the information requested in the guidance 
document titled ``Application Process and Information Requirements for 
Requests for a New Class of New Technology Intraocular Lenses (NTIOLs) 
or Inclusion of an IOL in an Existing NTIOL Class'' posted on the CMS 
website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/ambulatory-surgical-center-asc/new-technology-intraocular-lenses-ntiols.
     We announce annually, in the proposed rule updating the 
ASC and OPPS payment rates for the following calendar year, a list of 
all requests to establish new NTIOL classes accepted for review during 
the calendar year in which the proposal is published. In accordance 
with section 141(b)(3) of Public Law 103-432 and our regulations at 
Sec.  416.185(b), the deadline for receipt of public comments is 30 
days following publication of the list of requests in the proposed 
rule.
     In the final rule with comment period updating the ASC and 
OPPS payment rates for the following calendar year, we--
    ++ Provide a list of determinations made as a result of our review 
of all new NTIOL class requests and public comments.
    ++ When a new NTIOL class is created, identify the predominant 
characteristic of NTIOLs in that class that sets them apart from other 
IOLs (including those previously approved as members of other expired 
or active NTIOL classes) and that is associated with an improved 
clinical outcome.
    ++ Set the date of implementation of a payment adjustment in the 
case of approval of an IOL as a member of a new NTIOL class 
prospectively as of 30 days after publication of the ASC payment update 
final rule, consistent with the statutory requirement.
    ++ Announce the deadline for submitting requests for review of an 
application for a new NTIOL class for the following calendar year.
2. Requests To Establish New NTIOL Classes for CY 2025
    We did not receive any requests for review to establish a new NTIOL 
class for CY 2025 by March 1, 2024, the due date published in the CY 
2024 OPPS/ASC final rule with comment period (88 FR 81956).
3. Payment Adjustment
    The current payment adjustment for a 5-year period from the 
implementation date of a new NTIOL class is $50 per lens. Since 
implementation of the process for adjustment of payment amounts for 
NTIOLs in 1999, we have not revised the payment adjustment amount, and 
we do not propose to revise the payment adjustment amount for CY 2025.

H. Proposed Calculation of the ASC Payment Rates and the ASC Conversion 
Factor

1. Background
    In the August 2, 2007, ASC final rule (72 FR 42493), we established 
our policy to base ASC relative payment weights and payment rates under 
the revised ASC payment system on APC groups and the OPPS relative 
payment weights. Consistent with that policy and the requirement at 
section 1833(i)(2)(D)(ii) of the Act that the revised payment system be 
implemented so that it would be budget neutral, the initial ASC 
conversion factor (CY 2008) was calculated so that estimated total 
Medicare payments under the revised ASC payment system in the first 
year would be budget neutral to estimated total Medicare payments under 
the prior (CY 2007) ASC payment system (the ASC conversion factor is 
multiplied by the relative payment weights calculated for many ASC 
services in order to establish payment rates). That is, application of 
the ASC conversion factor was designed to result in aggregate Medicare 
expenditures under the revised ASC payment system in CY 2008 being 
equal to aggregate Medicare expenditures that would have occurred in CY 
2008 in the absence of the revised system, taking into consideration 
the cap on ASC payments in CY 2007, as required under section 
1833(i)(2)(E) of the Act (72 FR 42522). We adopted a policy to make the 
system budget neutral in subsequent calendar years (72 FR 42532 through 
42533; Sec.  416.171(e)).
    We note that we consider the term ``expenditures'' in the context 
of the budget neutrality requirement under section 1833(i)(2)(D)(ii) of 
the Act to mean expenditures from the Medicare Part B Trust Fund. We do 
not consider expenditures to include beneficiary coinsurance and 
copayments. This distinction was important for the CY 2008 ASC budget 
neutrality model that considered payments across the OPPS, ASC, and 
MPFS payment systems. However, because coinsurance is almost always 20 
percent for ASC services, this interpretation of expenditures has 
minimal impact for subsequent budget neutrality adjustments calculated 
within the revised ASC payment system.
    In the CY 2008 OPPS/ASC final rule with comment period (72 FR 66857 
through 66858), we set out a step-by-

[[Page 59434]]

step illustration of the final budget neutrality adjustment calculation 
based on the methodology finalized in the August 2, 2007, ASC final 
rule (72 FR 42521 through 42531) and as applied to updated data 
available for the CY 2008 OPPS/ASC final rule with comment period. The 
application of that methodology to the data available for the CY 2008 
OPPS/ASC final rule with comment period resulted in a budget neutrality 
adjustment of 0.65.
    For CY 2008, we adopted the OPPS relative payment weights as the 
ASC relative payment weights for most services and, consistent with the 
final policy, we calculated the CY 2008 ASC payment rates by 
multiplying the ASC relative payment weights by the final CY 2008 ASC 
conversion factor of $41.401. For covered office-based surgical 
procedures, covered ancillary radiology services (excluding covered 
ancillary radiology services involving certain nuclear medicine 
procedures or involving the use of contrast agents, as discussed in 
section XIII.D.2 of the CY 2023 OPPS/ASC proposed rule (87 FR 44715 
through 44716)), and certain diagnostic tests within the medicine range 
that are covered ancillary services, the established policy is to set 
the payment rate at the lower of the MPFS unadjusted nonfacility PE 
RVU-based amount or the amount calculated using the ASC standard 
ratesetting methodology. Further, as discussed in the CY 2008 OPPS/ASC 
final rule with comment period (72 FR 66841 through 66843), we also 
adopted alternative ratesetting methodologies for specific types of 
services (for example, device-intensive procedures).
    As discussed in the August 2, 2007 ASC final rule (72 FR 42517 
through 42518) and as codified at Sec.  416.172(c) of the regulations, 
the revised ASC payment system accounts for geographic wage variation 
when calculating individual ASC payments by applying the pre-floor and 
pre-reclassified IPPS hospital wage indexes to the labor-related share, 
which is 50 percent of the ASC payment amount based on a GAO report of 
ASC costs using 2004 survey data. Beginning in CY 2008, CMS accounted 
for geographic wage variation in labor costs when calculating 
individual ASC payments by applying the pre-floor and pre-reclassified 
hospital wage index values that CMS calculates for payment under the 
IPPS, using updated Core Based Statistical Areas (CBSAs) issued by OMB 
in June 2003.
    The reclassification provision in section 1886(d)(10) of the Act is 
specific to acute care hospitals. We believe that using the most 
recently available pre-floor and pre-reclassified IPPS hospital wage 
indexes results in the most appropriate adjustment to the labor portion 
of ASC costs. We continue to believe that the pre-floor, pre-
reclassified hospital wage indexes, which are updated yearly and are 
used by several other Medicare payment systems, appropriately account 
for geographic variation in labor costs for ASCs (89 FR 23424). 
Therefore, the wage index for an ASC is the pre-floor and pre-
reclassified hospital wage index for the fiscal year under the IPPS of 
the CBSA that maps to the CBSA where the ASC is located.
    On July 21, 2023, OMB issued OMB Bulletin No. 23-01, which provides 
the delineations of all Metropolitan Statistical Areas, Metropolitan 
Divisions, Micropolitan Statistical Areas, Combined Statistical Areas, 
and New England City and Town Areas in the United States and Puerto 
Rico based on the standards published on July 16, 2021, in the Federal 
Register (86 FR 37770) and 2020 Census Bureau data. (A copy of this 
bulletin may be obtained at: https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf). The pre-floor pre-reclassified 
IPPS hospital wage indexes for CY 2024 do not reflect OMB's new area 
delineations and, because the ASC wage indexes are the pre-floor and 
pre-reclassified IPPS hospital wages indexes, the CY 2024 ASC wage 
indexes do not reflect the most recent OMB changes. As discussed in the 
FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36139 through 36150), we 
proposed to use the new CBSAs delineations issued by OMB in OMB 
Bulletin 23-01 for the IPPS hospital wage index beginning in CY 2025. 
Therefore, because the ASC wage indexes for the calendar year are the 
pre-floor and pre-reclassified IPPS hospital wage indexes for the 
fiscal year, we propose to incorporate the new OMB delineations into CY 
2025 ASC wage indexes. We believe that using the revised delineations 
based on OMB Bulletin No. 23-01 will increase the integrity of the ASC 
wage index system by creating a more accurate representation of current 
geographic variations in wage levels.
    In adopting the revised CBSA delineations from the 2010 Census data 
which were issued by OMB on July 15, 2015 through OMB Bulletin No. 15-
01, for ASCs in counties that would see a decline in their ASC wage 
index for CY 2015, we adopted a blended wage index of 50 percent of the 
CY 2014 wage index value and 50 percent of the CY 2015 wage index value 
(79 FR 66937). However, we note that other Medicare payment systems 
incorporate a policy of capping year-to-year wage index decreases for 
each facility at 5 percent of the previous year's wage index value (89 
FR 23431 through 23433). We believe such a policy would also be 
appropriate for the ASC payment system as we transition to the CBSA 
delineations based on the 2020 Census data. As discussed in the IPPS/
LTCH FY 2025 proposed rule, the 5-percent cap mitigates any large 
negative impacts of adopting the new delineations and prevents large 
year-to-year declines in wage index values as a means to reduce 
volatility (89 FR 36150). Therefore, for CY 2025, we propose to 
incorporate the new OMB delineations into the CY 2025 ASC wage indexes 
and propose to apply a 5-percent cap on wage index decreases at the 
county level (or county-equivalent level) and the ASC wage index of 
that county would apply to all ASCs physically located in that county. 
We note that this 5-percent cap is applied in a budget neutral manner. 
The 5-percent cap reduces the wage index scalar for a calendar year 
which, in turn, will reduce the ASC conversion factor and the payment 
rates for covered ASC services in counties that are not affected by the 
5-percent cap on wage index decreases. Further, we are soliciting 
comments on whether we should extend this policy after CY 2025 and 
permanently adopt a budget-neutral 5-percent cap on year-to-year wage 
index decreases.
    The proposed CY 2025 ASC wage indexes fully reflect the OMB labor 
market area delineations (including the revisions to the OMB labor 
market delineations discussed previously, as set forth in OMB Bulletin 
Nos. 23-01) including replacing the eight counties with the county-
equivalent planning regions of Connecticut. We note that, in certain 
instances, there might be urban or rural areas for which there is no 
IPPS hospital that has wage index data that could be used to set the 
wage index for that area. When all of the areas contiguous to the urban 
CBSA of interest are rural and there is no IPPS hospital that has wage 
index data that could be used to set the wage index for that area, our 
policy has been to determine the ASC wage index by calculating the 
average of all wage indexes for urban areas in the State (75 FR 72058 
through 72059). In other situations, where there are no IPPS hospitals 
located in a relevant labor market area, we apply our current policy of 
calculating an urban or rural area's wage index by calculating the 
average of the wage indexes for CBSAs (or metropolitan divisions where 
applicable) that are contiguous to the

[[Page 59435]]

area with no wage index. For example, for CY 2025, we are applying a 
proxy wage index based on this methodology to ASCs located in CBSA 
25980 (Hinesville, GA) and in CBSA 35 (Rural North Dakota).
2. Calculation of the ASC Payment Rates
a. Updating the ASC Relative Payment Weights for CY 2025 and Future 
Years
    We update the ASC relative payment weights each year using the 
national OPPS relative payment weights (and PFS nonfacility PE RVU-
based amounts, as applicable) for that same calendar year and uniformly 
scale the ASC relative payment weights for each update year to make 
them budget neutral (72 FR 42533). The OPPS relative payment weights 
are scaled to maintain budget neutrality for the OPPS. We then scale 
the OPPS relative payment weights again to establish the ASC relative 
payment weights. To accomplish this, we hold estimated total ASC 
payment levels constant between calendar years for purposes of 
maintaining budget neutrality in the ASC payment system. That is, we 
apply the weight scalar to ensure that projected expenditures from the 
updated ASC payment weights in the ASC payment system are equal to what 
would be the current expenditures based on the scaled ASC payment 
weights. In this way, we ensure budget neutrality and that the only 
changes to total payments to ASCs result from increases or decreases in 
the ASC payment update factor.
    Where the estimated ASC expenditures for an upcoming year are 
higher than the estimated ASC expenditures for the current year, the 
ASC weight scalar is reduced, in order to bring the estimated ASC 
expenditures in line with the expenditures for the baseline year. This 
frequently results in ASC relative payment weights for surgical 
procedures that are lower than the OPPS relative payment weights for 
the same procedures for the upcoming year. Therefore, over time, even 
if procedures performed in the HOPD and ASC receive the same update 
factor under the OPPS and ASC payment system, payment rates under the 
ASC payment system would increase at a lower rate than payment for the 
same procedures performed in the HOPD as a result of applying the ASC 
weight scalar to ensure budget neutrality.
    As discussed in section II.A.1.a of this proposed rule, we are 
using the CY 2023 claims data to be consistent with the OPPS claims 
data for this proposed rule. Consistent with our established policy, we 
propose to scale the CY 2025 relative payment weights for ASCs 
according to the following method. Holding ASC utilization, the ASC 
conversion factor, and the mix of services constant from CY 2023, we 
propose to compare the estimated total payment using the CY 2024 ASC 
relative payment weights with the estimated total payment using the CY 
2025 ASC relative payment weights to take into account the changes in 
the OPPS relative payment weights between CY 2024 and CY 2025.
    In consideration of our policy to provide a higher ASC payment rate 
with ASC complexity adjustment codes for certain primary procedures 
when performed with add-on packaged services, we incorporated estimated 
total spending and estimated utilization for these codes in our budget 
neutrality calculation for CYs 2023 and 2024. We estimated in the CY 
2023 OPPS/ASC final rule with comment period (87 FR 72094) that the 
impact on CY 2023 estimated total payments from our finalized CY 2023 
ASC complexity adjustment codes would be $5 million in spending and we 
finalized our proposal to incorporate this $5 million in estimated CY 
2023 total payments for the budget neutrality calculation. Based on CY 
2023 utilization data, we now estimate that the actual amount of 
spending on the new CY 2023 ASC complexity adjustment codes for CY 2023 
was $24 million. We estimate that there will not be an additional 
increase in ASC spending related to our newly proposed ASC complexity 
adjustment codes for CY 2025.
    Additionally, as discussed in Section XIII.E of this proposed rule, 
section 4135(a) and (b) of the CAA, 2023, titled Access to Non-Opioid 
Treatments for Pain Relief, amended section 1833(t)(16) and section 
1833(i) of the Act, respectively, to provide for temporary separate 
payments for non-opioid treatments for pain relief. As discussed in 
further detail in Section XIII.E.e of this proposed rule, for 
qualifying nonopioid products, we propose to apply the 18 percent 
payment limitation on the volume weighted payment average of the top 5 
services associated with the use of the qualifying nonopioid product. 
Currently, four of these qualifying nonopioid products are separately 
payable without the 18 percent payment limitation--HCPCS Codes C9089 
(Bupivacaine implant, 1 mg), C9290 (Inj, bupivacaine liposome), J1096 
(Dexametha opth insert 0.1 mg), and J1097 (Phenylep ketorolac opth 
soln). Therefore, to maintain budget neutrality, we must estimate the 
total anticipated reduction as a result of the 18 percent payment 
limitation required by Section 4135 of the CAA, 2023. Using CY 2023 
utilization for these four drugs and CY 2024 ASC payment rates, we 
anticipate that the 18 percent payment limitation will reduce CY 2025 
ASC expenditures by approximately $9 million. Therefore, we are 
reducing estimated CY 2025 total payments by $9 million in our weight 
scalar calculation as a result of Section 4135 of the CAA, 2023.
    We propose to use the ratio of estimated CY 2024 to estimated CY 
2025 total payments (the weight scalar) to scale the ASC relative 
payment weights for CY 2025. The proposed CY 2025 ASC weight scalar is 
0.876. We note that we have historically displayed this figure rounded 
to the nearest ten thousandth; however, we believe this level of 
specificity is unnecessarily burdensome for an ASC payment system that 
is less than one-tenth the size of the OPPS (in which the weight scalar 
is rounded to the nearest ten-thousandth). An ASC weight scalar rounded 
to the nearest ten thousandth is highly sensitive to spending changes 
and can require the costly reissuance of new ASC payment rates from 
only very minor payment rate changes within the ASC Payment System, 
such as a revised PFS conversion factor as a result of Congressional 
action. Therefore, for CY 2025 and subsequent calendar years, we 
propose to set the ASC weight scalar rounded to the nearest thousandth. 
Consistent with historical practice, we propose to scale, using this 
method, the ASC relative payment weights of covered surgical 
procedures, covered ancillary radiology services, and certain 
diagnostic tests within the medicine range of CPT codes, which are 
covered ancillary services for which the ASC payment rates are based on 
OPPS relative payment weights.
    We propose that we would not scale ASC payment for separately 
payable covered ancillary services that have a predetermined national 
payment amount (that is, their national ASC payment amounts are not 
based on OPPS relative payment weights), such as drugs and biologicals 
that are separately paid or services that are contractor-priced or paid 
at reasonable cost in ASCs. Any service with a predetermined national 
payment amount would be included in the ASC budget neutrality 
comparison, but scaling of the ASC relative payment weights would not 
apply to those services. The ASC payment weights for those services 
without predetermined national payment amounts (that is, those services 
with national payment amounts that would be based on OPPS relative 
payment weights) would be scaled to eliminate any difference in the

[[Page 59436]]

total payment between the current year and the update year.
    For any given year's ratesetting, we typically use the most recent 
full calendar year of claims data to model budget neutrality 
adjustments. We propose to use the CY 2023 claims data to model our 
budget neutrality adjustment for CY 2025.
b. Updating the ASC Conversion Factor
    Under the OPPS, we typically apply a budget neutrality adjustment 
for provider-level changes, most notably a change in the wage index 
values for the upcoming year, to the conversion factor. Consistent with 
our final ASC payment policy, for the CY 2017 ASC payment system and 
subsequent years, in the CY 2017 OPPS/ASC final rule with comment 
period (81 FR 79751 through 79753), we finalized our policy to 
calculate and apply a budget neutrality adjustment to the ASC 
conversion factor for supplier-level changes in wage index values for 
the upcoming year, just as the OPPS wage index budget neutrality 
adjustment is calculated and applied to the OPPS conversion factor. For 
CY 2025, we calculated the proposed adjustment for the ASC payment 
system by using the most recent CY 2023 claims data available and 
estimating the difference in total payment that would be created by 
introducing the proposed CY 2025 ASC wage indexes. Specifically, 
holding CY 2023 ASC utilization, service-mix, and the proposed CY 2025 
national payment rates after application of the weight scalar constant, 
we calculated the total adjusted payment using the CY 2024 ASC wage 
indexes and the total adjusted payment using the proposed CY 2025 ASC 
wage indexes which included our proposed 5-percent cap on wage index 
declines. We used the 50 percent labor-related share for both total 
adjusted payment calculations. We then compared the total adjusted 
payment calculated with the CY 2024 ASC wage indexes to the total 
adjusted payment calculated with the proposed CY 2025 ASC wage indexes 
and applied the resulting ratio of 0.9958 (the proposed CY 2025 ASC 
wage index budget neutrality adjustment) to the CY 2024 ASC conversion 
factor to calculate the proposed CY 2025 ASC conversion factor.
    Section 1833(i)(2)(D)(v) of the Act requires that the ASC 
conversion factor be reduced by a productivity adjustment in each 
calendar year. Section 1886(b)(3)(B)(xi)(II) of the Act defines the 
productivity adjustment to be equal to the 10-year moving average of 
changes in annual economy-wide private nonfarm business multifactor 
productivity (MFP). We finalized the methodology for calculating the 
productivity adjustment in the CY 2011 PFS final rule with comment 
period (75 FR 73394 through 73396) and revised it in the CY 2012 PFS 
final rule with comment period (76 FR 73300 through 73301) and the CY 
2016 OPPS/ASC final rule with comment period (80 FR 70500 through 
70501). The proposed productivity adjustment for CY 2025 was projected 
to be 0.4 percentage point, as published in the FY 2025 IPPS/LTCH PPS 
proposed rule (89 FR 36204) based on IGI's 2023 fourth quarter 
forecast.
    Section 1833(i)(2)(C)(i) of the Act requires that, if the Secretary 
has not updated amounts established under the revised ASC payment 
system in a calendar year, the payment amounts shall be increased by 
the percentage increase in the Consumer Price Index for all urban 
consumers (CPI-U), U.S. city average, as estimated by the Secretary for 
the 12-month period ending with the midpoint of the year involved. The 
statute does not mandate the adoption of any particular update 
mechanism, but it requires the payment amounts to be increased by the 
CPI-U in the absence of any update. Because the Secretary updates the 
ASC payment amounts annually, we adopted a policy, which we codified at 
Sec.  416.171(a)(2)(ii)), to update the ASC conversion factor using the 
CPI-U for CY 2010 and subsequent calendar years.
    In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59075 
through 59080), we finalized a policy to apply the productivity-
adjusted hospital market basket update to ASC payment system rates for 
an interim period of 5 years (CY 2019 through CY 2023), during which we 
would assess whether there is a migration of the performance of 
procedures from the hospital setting to the ASC setting as a result of 
the use of a productivity-adjusted hospital market basket update, as 
well as whether there are any unintended consequences, such as less 
than expected migration of the performance of procedures from the 
hospital setting to the ASC setting. The most recent available full 
year of claims data to assess the expected migration applying the 
productivity-adjusted hospital market basket update during the interim 
period would fall within the period from CY 2019 through CY 2022. 
However, the impact of the COVID-19 PHE on health care utilization, in 
particular in CY 2020, was tremendously profound, particularly for 
elective surgeries, because many beneficiaries avoided healthcare 
settings, when possible, to avoid possible infection from the SARS-CoV-
2 virus. As a result, it is nearly impossible to disentangle the 
effects from the COVID-19 PHE in our analysis of whether the higher 
update factor for the ASC payment system caused increased migration to 
the ASC setting. To analyze whether procedures migrated from the 
hospital setting to the ASC setting, we need to use claims data from a 
period during which the COVID-19 PHE had less of an impact on health 
care utilization. Therefore, for CY 2024, we finalized our proposal to 
extend the 5-year interim period an additional 2 years, that is, 
through CY 2024 and CY 2025. We believed hospital outpatient and ASC 
utilization data from CYs 2023 and 2024 will enable us to more 
accurately analyze whether the application of the productivity-adjusted 
hospital market basket update to the ASC payment system had an effect 
on the migration of services from the hospital setting to the ASC 
setting. We revised our regulations at 42 CFR 416.171(a)(2)(iii) and 
(iv), which establish the annual update to the ASC conversion factor, 
to reflect this 2-year extension. We also revised our regulations at 
Sec.  416.171(a)(2)(vi) and (vii), which establish the 2.0 percentage 
point reduction for ASCs that fail to meet the standards for reporting 
ASC quality measures, and Sec.  416.171(a)(2)(viii)(B) and (C), which 
establish the productivity adjustment, to reflect this 2-year 
extension.
    For CY 2025, we propose to utilize the proposed hospital market 
basket percentage increase of 3.0 percent reduced by the proposed 
productivity adjustment of 0.4 percentage point, resulting in a 
proposed productivity-adjusted hospital market basket update of 2.6 
percent for ASCs meeting the quality reporting requirements. Therefore, 
we propose to apply a proposed 2.6 percent productivity-adjusted 
hospital market basket update factor to the CY 2024 ASC conversion 
factor for ASCs meeting the quality reporting requirements to determine 
the CY 2025 ASC payment amounts. The ASCQR Program affected payment 
rates beginning in CY 2014 and, under this program, there is a 2.0 
percentage point reduction to the productivity-adjusted hospital market 
basket update factor for ASCs that fail to meet the ASCQR Program 
requirements.

[[Page 59437]]

We refer readers to section XIV.E of the CY 2019 OPPS/ASC final rule 
with comment period (83 FR 59138 through 59139) and section XIV.E of 
this proposed rule for a detailed discussion of our policies regarding 
payment reduction for ASCs that fail to meet ASCQR Program 
requirements. We propose to utilize the proposed inpatient hospital 
market basket percentage increase of 3.0 percent reduced by 2.0 
percentage points for ASCs that do not meet the quality reporting 
requirements and then reduced by the proposed 0.4 percentage point 
productivity adjustment. Therefore, we propose to apply a 0.6 percent 
productivity-adjusted hospital market basket update factor to the CY 
2024 ASC conversion factor for ASCs not meeting the quality reporting 
requirements. We also propose that if more recent data are subsequently 
available (for example, a more recent estimate of the inpatient 
hospital market basket percentage increase or productivity adjustment), 
we would use such data, if appropriate, to determine the CY 2025 ASC 
update for the CY 2025 OPPS/ASC final rule with comment period.
    For CY 2025, we propose to adjust the CY 2024 ASC conversion factor 
($53.514) by the proposed wage index budget neutrality factor of 0.9958 
in addition to the proposed productivity-adjusted hospital market 
basket update of 2.6 percent discussed previously, which results in a 
proposed CY 2025 ASC conversion factor of $54.675 (a 2.2 percent 
increase) for ASCs meeting the quality reporting requirements. For ASCs 
not meeting the quality reporting requirements, we propose to adjust 
the CY 2024 ASC conversion factor ($53.514) by the proposed wage index 
budget neutrality factor of 0.9958 in addition to the proposed quality 
reporting/productivity-adjusted hospital market basket update of 0.2 
percent discussed previously, which results in a proposed CY 2025 ASC 
conversion factor of $53.609 for ASCs not meeting the quality reporting 
requirements.
3. Display of the Proposed CY 2025 ASC Payment Rates
    Addenda AA and BB to this proposed rule (which are available on the 
CMS website) display the proposed ASC payment rates for CY 2025 for 
covered surgical procedures and covered ancillary services, 
respectively. The proposed payment rates included in Addenda AA and BB 
to this proposed rule reflect the full ASC proposed payment update and 
not the reduced payment update used to calculate payment rates for ASCs 
not meeting the quality reporting requirements under the ASCQR Program.
    These Addenda contain several types of information related to the 
proposed CY 2025 payment rates. Specifically, in Addendum AA, a ``Y'' 
in the column titled ``To be Subject to Multiple Procedure 
Discounting'' indicates that the surgical procedure would be subject to 
the multiple procedure payment reduction policy. As discussed in the CY 
2008 OPPS/ASC final rule with comment period (72 FR 66829 through 
66830), most covered surgical procedures are subject to a 50 percent 
reduction in the ASC payment for the lower-paying procedure when more 
than one procedure is performed in a single operative session.
    For CY 2021, we finalized adding a new column to ASC Addendum BB 
titled ``Drug Pass-Through Expiration during Calendar Year'' where we 
flag through the use of an asterisk each drug for which pass-through 
payment is expiring during the calendar year (that is, on a date other 
than December 31st).
    The values displayed in the column titled ``Proposed CY 2025 
Payment Weight'' are the proposed relative payment weights for each of 
the listed services for CY 2025. The proposed relative payment weights 
for all covered surgical procedures and covered ancillary services 
where the ASC payment rates are based on OPPS relative payment weights 
were scaled for budget neutrality. Therefore, scaling was not applied 
to the device portion of the device-intensive procedures; services that 
are paid at the MPFS nonfacility PE RVU-based amount; separately 
payable covered ancillary services that have a predetermined national 
payment amount, such as drugs and biologicals and brachytherapy sources 
that are separately paid under the OPPS; or services that are 
contractor-priced or paid at reasonable cost in ASCs. This includes 
separate payment for non-opioid pain management drugs.
    To derive the proposed CY 2025 payment rate displayed in the 
``Proposed CY 2025 Payment Rate'' column, each ASC payment weight in 
the ``Proposed CY 2025 Payment Weight'' column was multiplied by the 
proposed CY 2025 conversion factor. The conversion factor includes a 
budget neutrality adjustment for changes in the wage index values and 
the annual update as reduced by the productivity adjustment. The 
proposed CY 2025 ASC conversion factor uses the proposed CY 2025 
productivity-adjusted hospital market basket update factor of 2.6 
percent (which is equal to the proposed inpatient hospital market 
basket percentage increase of 3.0 percent reduced by the proposed 
productivity adjustment of 0.4 percentage point).
    In Addendum BB, there are no relative payment weights displayed in 
the ``Proposed CY 2025 Payment Weight'' column for items and services 
with predetermined national payment amounts, such as separately payable 
drugs and biologicals. The ``Proposed CY 2025 Payment'' column displays 
the proposed CY 2025 national unadjusted ASC payment rates for all 
items and services. The proposed CY 2025 ASC payment rates listed in 
Addendum BB for separately payable drugs and biologicals are based on 
the most recently available data used for payment in physicians' 
offices.
    Addendum EE to this proposed rule provides the HCPCS codes and 
short descriptors for surgical procedures that are proposed to be 
excluded from payment in ASCs for CY 2025.
    Addendum FF to this proposed rule displays the OPPS payment rate 
(based on the standard ratesetting methodology), the APC device offset 
percentage, the device offset percentage for determining device-
intensive status (based on the standard ratesetting methodology), and 
the device portion of the ASC payment rate for CY 2025 for covered 
surgical procedures.

XIV. Cross-Program Proposals for the Hospital Outpatient Quality 
Reporting (OQR), Rural Emergency Hospital Quality Reporting (REHQR), 
and Ambulatory Surgical Center Quality Reporting (ASCQR) Programs

A. Background

    We refer readers to sections XV, XVI, and XVII of this proposed 
rule for program-specific background information, including the 
statutory authorities and previously finalized and newly proposed 
measure sets, for the Hospital Outpatient Quality Reporting (OQR), 
Rural Emergency Hospital Quality Reporting (REHQR), and Ambulatory 
Surgical Center Quality Reporting (ASCQR) Programs, respectively.

B. CMS Commitment To Advancing Health Equity Using Quality Measurement

    We are committed to advancing health equity and improving health 
outcomes through our quality reporting programs. The CMS Framework for 
Health Equity acknowledges that ``addressing health and healthcare 
disparities and achieving health equity should underpin efforts to 
focus attention and drive action on our nation's top health 
priorities.'' CMS

[[Page 59438]]

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.'' \114\
---------------------------------------------------------------------------

    \114\ Centers for Medicare & Medicaid Services. (2022). CMS 
Framework for Health Equity 2022-2032. Available at: https://www.cms.gov/files/document/cms-framework-health-equity-2022.pdf.
---------------------------------------------------------------------------

    Significant and persistent disparities in health care outcomes 
exist in the United States (U.S.). Belonging to a racial or ethnic 
minority group, living with a disability, being a member of the 
lesbian, gay, bisexual, transgender, and queer (LGBTQ+) community, 
living in a rural area, or being near or below the poverty level are 
often associated with worse health outcomes.115 116 117 
Health disparities manifest primarily as worse health outcomes in 
populations where access to care is inequitable.118 119 Such 
differences persist across geography and healthcare settings 
irrespective of improvements in quality of care over 
time.120 121 Inequities in the social determinants of health 
affecting these groups are interrelated and influence a wide range of 
health and quality of life outcomes and risks.\122\
---------------------------------------------------------------------------

    \115\ Polyakova M, Udalova V, Kocks G, Genadek K, Finlay K, 
Finkelstein AN. (2021). Racial Disparities in Excess All-Cause 
Mortality During The Early COVID-19 Pandemic Varied Substantially 
Across States. Health Affairs, 40(2), 307-316. https://doi.org/10.1377/hlthaff.2020.02142.
    \116\ Rural Health Research Gateway. (2018). Rural Communities: 
Age, Income, and Health Status. Rural Health Research Recap. 
Available at: https://www.ruralhealthresearch.org/assets/2200-8536/rural-communities-age-income-health-status-recap.pdf.
    \117\ Heslin KC, Hall JE. (2021). Sexual Orientation Disparities 
in Risk Factors for Adverse COVID-19-Related Outcomes, by Race/
Ethnicity--Behavioral Risk Factor Surveillance System, United 
States, 2017-2019. MMWR Morbidity Mortality Weekly Report, 70(5), 
149. http://dx.doi.org/10.15585/mmwr.mm7005a1.
    \118\ The Physicians Foundation. (2020). Survey of America's 
Patients, Part Three. Available at: https://physiciansfoundation.org/wp-content/uploads/2020/10/2020-Physicians-Foundation-Survey-Part3.pdf.
    \119\ Office of the Assistant Secretary for Planning and 
Evaluation. (2020). Report to Congress: Social Risk Factors and 
Performance Under Medicare's Value-Based Purchasing Program (Second 
of Two Reports). Available at: https://aspe.hhs.gov/pdf-report/second-impact-report-to-congress.
    \120\ Ibid.
    \121\ Khullar D, Schpero WL, Bond AM, Qian Y, Casalino LP. 
(2020). Association Between Patient Social Risk and Physician 
Performance Scores in the First Year of the Merit-based Incentive 
Payment System. JAMA, 324(10), 975-983. https://jamanetwork.com/journals/jama/fullarticle/2770410.
    \122\ Office of Disease Prevention and Health Promotion. (2021). 
Healthy People 2020: Disparities. Available at: https://wayback.archive-it.org/5774/20220414003754/https://www.healthypeople.gov/2020/about/foundation-health-measures/Disparities.
---------------------------------------------------------------------------

    Inequities related to the social determinants of health may affect 
health-related social needs (HRSNs). HRSNs are individual-level, 
adverse social conditions that negatively impact an individual's health 
or healthcare and are associated with worse health outcomes and 
increased healthcare utilization.\123\ While HRSNs account for 50 to 70 
percent of health outcomes, the mechanisms by which this connection 
emerges are complex and multifaceted.124 125 Growing 
evidence demonstrates that specific HRSNs are directly associated with 
patient health outcomes as well as healthcare utilization, costs, and 
performance in quality-based payment programs.126 127 The 
persistent interactions among individuals' HRSNs, medical providers' 
practices and behaviors, and community resources significantly impact 
healthcare access, quality, and costs, as described in the CMS Equity 
Plan for Improving Quality in Medicare.128 129 Assessment of 
HRSNs is an essential mechanism for capturing the interaction between 
social, community, and environmental factors associated with health 
status and health outcomes.130 131 Studies indicate that 
healthcare facility leadership can positively influence culture for 
better quality, patient outcomes, and experience of 
care.132 133 134
---------------------------------------------------------------------------

    \123\ Centers for Medicare & Medicaid Services. (2021). A Guide 
to Using the Accountable Health Communities Health-Related Social 
Needs Screening Tool: Promising Practices and Key Insights. 
Available at: https://www.cms.gov/priorities/innovation/media/document/ahcm-screeningtool-companion.
    \124\ Kaiser Family Foundation. (2021). Racial and Ethnic Health 
Inequities and Medicare. Available at: https://www.kff.org/medicare/report/racial-and-ethnic-health-inequities-and-medicare/.
    \125\ The Physicians Foundation. (2021). Viewpoints: Social 
Determinants of Health. Available at: https://physiciansfoundation.org/wp-content/uploads/2019/08/The-Physicians-Foundation-SDOH-Viewpoints.pdf.
    \126\ Zhang Y, Li J, Yu J, Braun RT, Casalino LP. (2021), Social 
Determinants of Health and Geographic Variation in Medicare per 
Beneficiary Spending. JAMA Network Open, 4(6), e2113212. https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2780864.
    \127\ Khullar D, Schpero WL, Bond AM, Qian Y, Casalino LP 
(2020). Association Between Patient Social Risk and Physician 
Performance Scores in the First Year of the Merit-based Incentive 
Payment System. JAMA, 324(10), 975-983. https://doi.org/10.1001/jama.2020.13129.
    \128\ Centers for Medicare & Medicaid Services. (2021). Paving 
the Way to Equity: A Progress Report. Available at: https://www.cms.gov/files/document/paving-way-equity-cms-omh-progress-report.pdf.
    \129\ Centers for Medicare & Medicaid Services Office of 
Minority Health. (2021). The CMS Equity Plan for Improving Quality 
in Medicare. 2015-2021. Available at: https://www.cms.gov/About-CMS/Agency-Information/OMH/OMH_Dwnld-CMSEquityPlanforMedicare_090615.pdf.
    \130\ Alley DE, Asomugha CN, Conway PH, Sanghavi DM. (2016). 
Accountable Health Communities-Addressing Social Needs through 
Medicare and Medicaid. New England Journal of Medicine, 374(1), 8-
11. Available at: https://www.nejm.org/doi/10.1056/NEJMp1512532.
    \131\ Centers for Disease Control and Prevention. (July 2020). 
CDC COVID-19 Response Health Equity Strategy: Accelerating Progress 
Towards Reducing COVID-19 Disparities and Achieving Health Equity. 
Available at: https://www.cdc.gov/coronavirus/2019-ncov/downloads/community/CDC-Strategy.pdf.
    \132\ We use the term ``healthcare facility'' to refer to 
hospital outpatient departments (HOPDs), rural emergency hospitals 
(REHs), and ambulatory surgical centers (ASCs) collectively.
    \133\ Smith SA, Yount N, Sorra J. (2017). Exploring 
Relationships Between Hospital Patient Safety Culture and Consumer 
Reports Safety Scores. BMC Health Services Research, 17(1), 143. 
https://doi.org/10.1186/s12913-017-2078-6.
    \134\ Bradley EH, Brewster AL, McNatt Z, et al. (2018). How 
Guiding Coalitions Promote Positive Culture Change in Hospitals: A 
Longitudinal Mixed Methods Interventional Study. BMJ Quality & 
Safety, 27(3), 218-225. https://qualitysafety.bmj.com/content/27/3/218.
---------------------------------------------------------------------------

    We are committed to supporting healthcare facility leadership in 
building a culture of equity that focuses on eliminating health 
disparities to provide patients with high quality healthcare through 
the collection and public reporting of health equity focused measures, 
including in outpatient care settings.\135\
---------------------------------------------------------------------------

    \135\ Smith SA, Yount N, Sorra J. (2017). Exploring 
Relationships Between Hospital Patient Safety Culture and Consumer 
Reports Safety Scores. BMC Health Services Research, 17(1), 143. 
https://bmchealthservres.biomedcentral.com/articles/10.1186/s12913-017-2078-6.
---------------------------------------------------------------------------

    Health equity quality measurement supports the Meaningful Measures 
2.0 goal to ``Leverage Quality Measures to Promote Equity and Close 
Gaps in Care'' as well as the objective to ``commit to a patient-
centered approach in quality measure and value-based incentives 
programs.'' Additionally, under the CMS National Quality Strategy, 
adoption of health equity quality measures would support addressing the 
quality priority to ``advance health equity and whole-person care'' by 
employing a uniform approach for gathering, reporting, and analyzing 
health equity data across CMS quality programs.\136\
---------------------------------------------------------------------------

    \136\ Centers for Medicare & Medicaid Services. (2024). CMS 
National Quality Strategy. Centers for Medicare and Medicaid 
Services. Available at: https://www.cms.gov/medicare/quality/meaningful-measures-initiative/cms-quality-strategy.

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

[[Page 59439]]

1. Proposal To Adopt the Hospital Commitment to Health Equity (HCHE) 
Measure for the Hospital Outpatient Quality Reporting (OQR) and Rural 
Emergency Hospital Quality Reporting (REHQR) Programs and the Facility 
Commitment to Health Equity (FCHE) Measure for the Ambulatory Surgical 
Center Quality Reporting (ASCQR) Program Beginning With the CY 2025 
Reporting Period/CY 2027 Payment Determination or Program 
Determination.\137\
---------------------------------------------------------------------------

    \137\ We use the phrase ``payment determination'' for the 
Hospital OQR and ASCQR Programs to represent our assessment of 
whether the 2-percentage point reduction in payment for failing to 
meet program requirements is warranted. We use the phrase ``program 
determination'' for the REHQR Program to represent our assessment of 
compliance with program requirements for an applicable year because 
the REHQR Program does not include an associated payment adjustment.
---------------------------------------------------------------------------

a. Background
    Strong and committed leadership from healthcare facility management 
is essential in shifting organizational culture to reduce health 
disparities and reach health equity goals.\138\ The Agency for 
Healthcare Research and Quality and The Joint Commission identified 
that healthcare facility leadership plays an important role in 
promoting a culture of quality and safety.139 140 The 
Institute of Healthcare Improvement's research shows that health equity 
must be a priority championed by leadership teams to improve both 
patient access to needed healthcare services and outcomes among 
disadvantaged populations.\141\ Based upon these findings, we believe 
that healthcare facility leadership is instrumental in setting 
specific, measurable, attainable, realistic, and time-based (SMART) 
goals to assess progress towards achieving equity priorities and 
ensuring high-quality care is equally accessible to all individuals.
---------------------------------------------------------------------------

    \138\ Bradley EH, Brewster AL, McNatt Z, Linnander EL, Cherlin 
E, Fosburgh H, Ting HH, Curry LA. (2018). How Guiding Coalitions 
Promote Positive Culture Change in Hospitals: A Longitudinal Mixed 
Methods Interventional Study. BMJ Quality & Safety, 27(3), 218-225. 
https://pubmed.ncbi.nlm.nih.gov/29101290/.
    \139\ Agency for Healthcare Research and Quality. (September 
2019). Leadership Role in Improving Patient Safety. Patient Safety 
Network. Available at: https://psnet.ahrq.gov/primer/leadership-role-improving-safety.
    \140\ Joint Commission on Accreditation of Healthcare 
Organizations. (June 2021). The essential role of leadership in 
developing a safety of culture. Sentinel Event Alert. (57), 1-8. 
https://www.jointcommission.org/-/media/tjc/newsletters/sea-57-safety-culture-and-leadership-final3.pdf.
    \141\ Mate KS, Wyatt R. (2017). Health Equity Must Be a 
Strategic Priority. NEJM Catalyst. Available at: https://catalyst.nejm.org/doi/full/10.1056/CAT.17.0556.
---------------------------------------------------------------------------

    In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25592 and 25593), 
we sought public comment on potential future efforts to address health 
equity in the Hospital Inpatient Quality Reporting (IQR) Program, 
particularly the inclusion of a structural measure to assess the degree 
of hospital leadership commitment to collecting and monitoring health 
equity performance data. We specifically sought feedback on (1) 
conceptual and measurement priorities to facilitate organizational 
efforts to improve health equity; and (2) an appropriate measure 
regarding organizational commitment to health equity and accessibility 
for individuals with intellectual and developmental disabilities. In 
response, we received support for the development and implementation of 
a health equity structural measure. We also received comments 
expressing concerns about such a health equity structural measure. We 
refer readers to the FY 2022 IPPS/LTCH PPS final rule (86 FR 45414 
through 45416) for summaries of the comments we received related to 
this solicitation.
    We considered this feedback with the intent that future health 
equity measures would align across the Medicare quality reporting 
programs, including the Hospital OQR, REHQR, and ASCQR Programs, to 
ensure equitable care across both inpatient and outpatient settings to 
the greatest extent possible within facilities and hospitals 
participating in Medicare. In addition, we believe that measuring 
leadership commitment to health equity should not be limited to the 
inpatient hospital setting but should cover the continuum of care as 
patients seek and receive care at various care settings.
    We initially developed the HCHE and FCHE measures for use in the 
Hospital IQR and Inpatient Psychiatric Facility Quality Reporting 
(IPFQR) Programs, respectively, with the expectation of expansion into 
other Medicare quality reporting programs. The HCHE and FCHE measures 
are attestation-based structural measures that assess hospitals' and 
facilities' commitment to health equity across the following five 
domains adapted from the CMS Office of Minority Health's ``Building an 
Organizational Response to Health Disparities'' framework: equity as a 
strategic priority, data calculation, data analysis, quality 
improvement, and leadership engagement.\142\ These measures are 
intended to encourage hospitals and facilities to analyze their data to 
understand how factors, including race, ethnicity, and the social 
determinants of health can contribute to the delivery of more equitable 
care.\143\
---------------------------------------------------------------------------

    \142\ Centers for Medicare & Medicaid Services. (2021). Building 
an Organizational Response to Health Disparities [Fact Sheet]. U.S. 
Department of Health and Human Services. Available at: https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/Health-Disparities-Guide.pdf.
    \143\ We note that the term ``hospital'' includes HOPDs and REHs 
for the purposes of this measure.
---------------------------------------------------------------------------

    We believe these domains provide actionable focus areas for the 
assessment of healthcare facility leadership commitment because they 
are foundational to incentivizing hospitals and facilities to collect 
and utilize data to identify critical equity gaps, implement plans to 
address those gaps, and ensure that resources are dedicated toward 
healthcare equity initiatives. We also believe these measures support 
hospitals and facilities in quality improvement, promote efficient and 
effective use of resources, and leverage available data.
    Adoption of these measures in the Hospital OQR, REHQR, and ASCQR 
Programs would support our efforts to align measures across CMS 
programs, including the Hospital Inpatient Quality Reporting (IQR) 
Program (87 FR 49191 through 49201), Inpatient Psychiatric Facility 
Quality Reporting (IPFQR) Program (88 FR 51100 through 51107), PPS-
Exempt Cancer Hospital Quality Reporting (PCHQR) Program (88 FR 59204 
through 59210), and End-Stage Renal Disease Quality Incentive Program 
(ESRD QIP) (88 FR 76437 through 76446). We believe that alignment 
across the quality reporting programs is important to ensure that 
health equity, which impacts patients regardless of where they receive 
their care, is addressed in every healthcare delivery setting. Adopting 
these measures across quality reporting programs would incentivize 
quality reporting entities to collect and utilize data to identify 
critical equity gaps, implement plans to address said gaps, and ensure 
that resources are dedicated toward addressing health equity 
initiatives.
b. Overview of the Measures
    The HCHE and FCHE measures assess a hospital's or facility's 
commitment to health equity by using equity-focused organizational 
domains aimed at advancing health equity for all patients, including 
but not limited to those in racial and ethnic minority groups, people 
with disabilities, members of the LGBTQ+ community, individuals with 
limited English proficiency, rural populations, religious minorities, 
and people facing socioeconomic challenges. Table 86 and Table 87 
describe the five attestation domains and their elements

[[Page 59440]]

for the HCHE and FCHE measures, respectively.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP22JY24.119


[[Page 59441]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.120

BILLING CODE 4120-01-C

[[Page 59442]]

    The HCHE measure is currently used in the Hospital IQR and PCHQR 
Programs. As further discussed below, we propose to adopt the HCHE 
measure for the Hospital OQR and REHQR Programs. The FCHE measure is 
currently used in the IPFQR Program and ESRD QIP. As further discussed 
below, we propose to adopt the FCHE measure for the ASCQR Program.
    We note that there are two measure specification variations between 
the HCHE and FCHE measures, as reflected in Tables 86 and 87. First, 
Table 86 references hospitals (such as HOPDs and REHs) in connection 
with HCHE; Table 87 references facilities (such as ASCs, which are not 
hospitals) in connection with FCHE. Second, Domain 2C of the HCHE 
measure requires hospitals to use a certified electronic health record 
(EHR) technology (CEHRT) \144\ in order to attest ``yes''; Domain 2C of 
the FCHE measure requires facilities to use EHR technology, but does 
not require the use of CEHRT, in order to attest ``yes.'' We recognize 
that ASCs have governance structures and operational circumstances that 
are distinct from hospitals. We also recognize that many non-hospital 
facilities, including ASCs, have not adopted CEHRT, but may use some 
EHR technology,\145\ justifying this variation in Domain 2C between the 
HCHE and FCHE measures.\146\
---------------------------------------------------------------------------

    \144\ CEHRT refers to the certified health IT requirements 
established by CMS and the Office of the National Coordinator for 
Health Information Technology (ONC). ONC health IT certification 
criteria referenced in the CEHRT definition can be found at 45 CFR 
170.315. Please refer to the following for more details on CEHRT 
requirements: https://www.cms.gov/medicare/regulations-guidance/promoting-interoperability-programs/certified-ehr-technology. Please 
refer to the Measure Calculation section for more details on CEHRT 
and the HCHE Measure.
    \145\ We define the term ``EHR technology'' as ONC's definition 
for Electronic Health Record, ``a real-time patient health record 
with access to evidence-based decision support tools that can be 
used to aid clinicians in decision making. The EHR can automate and 
streamline a clinician's workflow, ensuring that all clinical 
information is communicated. It can also prevent delays in response 
that result in gaps in care. The EHR can also support the collection 
of data for uses other than clinical care, such as billing, quality 
management, outcome reporting, and public health disease 
surveillance and reporting,'' at https://www.healthit.gov/topic/health-it-and-health-information-exchange-basics/glossary.
    \146\ Taira A. (June 2021). ASCA Survey Shows Mixed Usage of EHR 
among ASCs. ASC Focus. Available at: https://www.ascfocus.org/ascfocus/content/articles-content/articles/2021/digital-debut/asca-survey-shows-mixed-usage-of-ehr-among-ascs.
---------------------------------------------------------------------------

c. Pre-Rulemaking Measure Review
    As required under section 1890A of the Act, the Consensus-Based 
Entity (CBE), currently Battelle, established the Partnership for 
Quality Measurement (PQM), comprised of clinicians, patients, measure 
experts, and health information technology specialists, to participate 
in the pre-rulemaking process and the measure endorsement process and 
provide input on the selection of quality and efficiency measures. The 
pre-rulemaking process, which we refer to as the Pre-Rulemaking Measure 
Review (PRMR), includes a review of measures published on the publicly 
available list of Measures Under Consideration (MUC List) by one of 
several committees convened by the PQM for the purpose of providing 
multi-stakeholder input to the Secretary on the selection of quality 
and efficiency measures under consideration for use in certain Medicare 
quality programs, including the Hospital OQR, REHQR, and ASCQR 
Programs. More details regarding the PRMR process may be found in the 
PQM Guidebook of Policies and Procedures for Pre-Rulemaking Measure 
Review and Measure Set Review, including details of the measure review 
processes in Chapter 3.\147\
---------------------------------------------------------------------------

    \147\ Partnership for Quality Measurement. (September 2023). 
Guidebook of Policies and Procedures for Pre-Rulemaking Measure 
Review and Measure Set Review. Available at: https://p4qm.org/sites/default/files/2023-09/Guidebook-of-Policies-and-Procedures-for-Pre-Rulemaking-Measure-Review-%28PRMR%29-and-Measure-Set-Review-%28MSR%29-Final_0.pdf.
---------------------------------------------------------------------------

    As part of the PRMR process, the Hospital Recommendation Group 
reviewed and voted on the HCHE and FCHE measures during their meeting 
on January 18 and 19, 2024.148 149 The voting results of the 
HCHE measure for the Hospital OQR and REHQR Programs were ``recommend 
with conditions,'' and the voting results of the FCHE measure were 
``recommended without conditions'' for the ASCQR Program. The 
conditions for the HCHE measure for the Hospital OQR and REHQR Programs 
were: (1) obtaining CBE endorsement; (2) additional specificity around 
attestation requirements; and (3) ongoing data collection for further 
measure testing, particularly with regard to smaller entities.\150\ We 
have taken these conditions into account, as follows, and are proposing 
both of these measures for adoption. We discuss CBE endorsement in 
section XIV.B.1.d below.
---------------------------------------------------------------------------

    \148\ Partnership for Quality Measurement. 2023 Pre-Rulemaking 
Measure Review (PRMR) Meeting Summary: Hospital Committee. Available 
at: https://p4qm.org/sites/default/files/2024-02/PRMR-Hospital-Recommendation-Group-Meeting-Summary-Final.pdf.
    \149\ Partnership for Quality Measurement. Pre-Rulemaking 
Measure Review Measures Under Consideration: 2023 Recommendations 
Report. Available at: https://p4qm.org/sites/default/files/2024-02/PRMR-2023-MUC-Recommendations-Report-Final.pdf.
    \150\ Ibid.
---------------------------------------------------------------------------

    Regarding the condition to provide additional specificity around 
attestation requirements, we note that these domains were developed 
based on the recommendations from a technical expert panel (TEP) that 
informed our initial selection and development of this measure.\151\ We 
also addressed this concern during the January 18-19, 2024 PRMR meeting 
by sharing that there are accompanying guidance documents available to 
provide information and examples of qualifying activities for the HCHE 
measure (which can also be applied to the FCHE 
measure).152 153
---------------------------------------------------------------------------

    \151\ Centers for Medicare & Medicaid Services. (February 2022). 
Summary of Technical Expert Panel (TEP) Meeting #1, November 16, 
2021: Health Equity Quality Measurement, Hospital Commitment to 
Health Equity Measure. Available at: https://mmshub.cms.gov/sites/default/files/HealthEquityQualityMeasurementTEP1SumReport.pdf.
    \152\ Centers for Medicare & Medicaid Services (January 2024). 
Attestation Guidance for the Hospital Commitment to Health Equity 
Measure (v 1.2). Available at: https://qualitynet.cms.gov/files/659c609eca7fd3001b35edab?filename=AttstGdnceHCHEMeas_v1.2.pdf.
    \153\ Centers for Medicare & Medicaid Services (January 2024). 
Frequently Asked Questions Hospital Commitment to Health Equity, 
HIQR. Available at: https://qualitynet.cms.gov/files/659c60afd4b704001df0af51?filename=FAQ_HCHE_HIQR.pdf.
---------------------------------------------------------------------------

    With respect to the condition related to ongoing data collection 
for further measure testing due to concerns that smaller entities may 
face challenges regarding data collection and analysis, we reiterate 
that HCHE is an attestation measure only in Hospital OQR, a pay-for-
reporting program, and REHQR, a program with no associated payment 
adjustment.\154\ While we acknowledge the limitations in testing 
structural measures, we believe this measure captures useful 
information regarding providers' commitment to promoting health equity 
to inform patient choice. We have therefore considered the Hospital 
Recommendation Group's concerns and determined that they are adequately 
addressed.
---------------------------------------------------------------------------

    \154\ Partnership for Quality Measurement. (2023). 2023 PRMR 
Final MUC Recommendation Spreadsheet. Available at: https://p4qm.org/PRMR.
---------------------------------------------------------------------------

d. CBE Endorsement
    Section 1833(t)(17)(C)(i) of the Act provides that the Hospital OQR 
Program, to the extent feasible and practicable, shall include measures 
set forth by one or more national consensus building entities (not 
necessarily the CBE). Under section 1833(i)(7)(B) of the Act, this 
requirement at section 1833(t)(17)(C) applies to the ASCQR Program 
except as the Secretary may otherwise provide. For the Hospital OQR 
Program and ASCQR Program, we

[[Page 59443]]

note that section 1833(t)(17) of the Act does not require that each 
measure we adopt for these programs be CBE-endorsed (75 FR 72064 and 
72065 for the Hospital OQR Program and 76 FR 74494 for the ASCQR 
Program).
    Section 1833(t)(17)(C)(i) of the Act also requires measures 
developed for the Hospital OQR Program to reflect consensus among 
affected parties. Under section 1833(i)(7)(B) of the Act, this 
requirement also applies to the ASCQR Program except as the Secretary 
may otherwise provide. As we have noted in previous rulemaking, 
consensus among affected parties can be reflected in ways other than 
CBE endorsement, including through the measure development process, 
through broad acceptance and use of the measure(s), and through public 
comment (75 FR 72064 and 72065 for the Hospital OQR Program and 76 FR 
74494 for the ASCQR Program).
    For the REHQR Program, section 1861(kkk)(7)(C)(i) of the Act 
generally requires that quality measures specified by the Secretary for 
the REHQR Program be endorsed by a CBE; however, section 
1861(kkk)(7)(C)(ii) of the Act provides an exception to the general 
CBE-endorsement requirement, stating that in the case of a specified 
area or medical topic determined appropriate by the Secretary for which 
a 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 1861(kkk)(7)(C)(ii) of the Act 
applies for purposes of this measure for the REHQR Program.
    At this time, we find no other feasible and practicable measures 
set forth by a national consensus building entity on the topic of a 
hospital's or facility's leadership commitment to health equity. While 
we recognize the value of measures undergoing CBE endorsement review 
and prefer to use endorsed measures, there are currently no CBE-
endorsed measures that address hospital or facility commitment to 
health equity. Given the urgency of achieving health equity, it is 
important to implement this measure as soon as possible. As previously 
noted, the HCHE measure was developed based on the consensus of a TEP 
whose recommendations informed the initial selection, development, and 
emphasis of the importance of this measure and subsequently the FCHE 
measure, which, as noted in section XIV.B.1.b above, is a similar 
measure with only two measure specification variations to accommodate 
setting-specific realities with regards to CEHRT adoption.\155\ We will 
consider submitting the HCHE and FCHE measures to the CBE for 
endorsement in the future.
---------------------------------------------------------------------------

    \155\ Centers for Medicare & Medicaid Services. (February, 
2022). Summary of Technical Expert Panel (TEP) Meeting #1 November 
16, 2021: Health Equity Quality Measurement Hospital Commitment to 
Health Equity Measure. Available at: https://mmshub.cms.gov/sites/default/files/HealthEquityQualityMeasurementTEP1SumReport.pdf.
---------------------------------------------------------------------------

e. Measure Calculation
    The proposed HCHE and FCHE measures each consist of the same five 
attestation-based domains as shown in Table 86 and Table 87, 
respectively, subject to variations noted above.
    The numerator of both the HCHE and FCHE measures would capture the 
total number of domains to which the hospital or facility is able to 
attest affirmatively, up to a maximum of five domains. We propose that 
a hospital or facility would only receive a point for a domain if it 
attested ``yes'' to all of the elements within that domain. We would 
not accept an attestation whereby a hospital or facility attests 
``yes'' to some, but not all, of the elements; in the event a hospital 
or facility would not be able to attest ``yes'' to one or more elements 
within a domain, or the entirety of a domain, they would respond 
``no.'' For example, for Domain 1, if the hospital or facility's 
strategic plan meets elements (A) and (B), but not (C) and (D) of 
Domain 1, then the hospital or facility would not be able to 
affirmatively attest ``yes'' and would receive zero points for Domain 
1.
    The denominator of both the HCHE and FCHE measures would constitute 
a total of five points (that is, one point per domain).
    We also refer readers to the measure specifications, available on 
our QualityNet website.\156\
---------------------------------------------------------------------------

    \156\ The proposed Hospital OQR and REHQR Program measure 
specifications can be found at https://qualitynet.cms.gov/outpatient/oqr/proposedmeasures. The proposed ASCQR Program measure 
specifications can be found at https://qualitynet.cms.gov/asc/ascqr/proposedmeasures.
---------------------------------------------------------------------------

    As noted above, Domain 2C of the HCHE measure requires the use of 
CEHRT, while Domain 2C of the FCHE measure requires the use of EHR 
technology, which is not required to be certified by ONC in accordance 
with ONC's requirements. We made this distinction because we recognize 
that many non-hospital facilities, including ASCs, currently have not 
adopted CEHRT and instead use non-certified EHR technology,\157\ while 
a majority of hospitals have adopted CEHRT.\158\ Although REHs are a 
new Medicare provider type, the majority of REH-eligible facilities, as 
noted in the CY 2024 OPPS/ASC final rule (88 FR 82069), have met 
requirements for the reporting of electronic clinical quality measures 
(eCQMs), which require CEHRT, under the Medicare Promoting 
Interoperability Program.
---------------------------------------------------------------------------

    \157\ Taira A. (June 2021). ASCA Survey Shows Mixed Usage of EHR 
among ASCs. ASC Focus. Available at: https://www.ascfocus.org/ascfocus/content/articles-content/articles/2021/digital-debut/asca-survey-shows-mixed-usage-of-ehr-among-ascs.
    \158\ Office of the National Coordinator for Health Information 
Technology. (2023). National Trends in Hospital and Physician 
Adoption of Electronic Health Records. Available at: https://www.healthit.gov/data/quickstats/national-trends-hospital-and-physician-adoption-electronic-health-records.
---------------------------------------------------------------------------

f. Data Submission Requirements
    We propose to require hospitals and ASCs to submit their yes/no 
attestation responses on these structural measures in all three 
programs by an annual deadline using the CMS-designated information 
system (currently, the Hospital Quality Reporting (HQR) system) 
consistent with the data submission requirements of these measures in 
the Hospital IQR, IPFQR and PCHQR Programs. We refer readers to 
sections XV.E.2.a, XVI.E.3.b, and XVII.E.2.a of this proposed rule for 
additional details regarding data submission deadlines for web-based 
measure reporting such as the HCHE and FCHE measures for the Hospital 
OQR, REHQR, and ASCQR Programs, respectively.
    We invite public comment on our proposal to adopt the HCHE measure 
for the Hospital OQR Program beginning with the CY 2025 reporting 
period/CY 2027 payment determination, to adopt the HCHE measure for the 
REHQR Program beginning with the CY 2025 reporting period/CY 2027 
program determination, and to adopt the FCHE measure for the ASCQR 
Program beginning with the CY 2025 reporting period/CY 2027 payment 
determination.

2. Proposal To Adopt the Screening for Social Drivers of Health (SDOH) 
Measure for the Hospital Outpatient Quality Reporting (OQR), Rural 
Emergency Hospital Quality Reporting (REHQR), and Ambulatory Surgical 
Center Quality Reporting (ASCQR) Programs Beginning With Voluntary 
Reporting for the CY 2025 Reporting Period Followed by Mandatory 
Reporting for the CY 2026 Reporting Period/CY 2028 Payment or Program 
Determination

[[Page 59444]]

a. Background
    SDOH is an umbrella term that refers to community-level factors 
that impact health and well-being, while HRSNs are social and economic 
needs that individuals experience that affect their ability to maintain 
their health and well-being.\159\ Consistent screening of patients for 
potential HRSNs helps healthcare facilities identify individuals who 
have historically been underserved by the healthcare system and could 
support ongoing quality improvement initiatives at the population level 
by providing data to stratify patient risk and organizational 
performance to address SDOH.160 161 While widespread 
interest exists in addressing SDOH at community, state, and national 
levels and in supporting HRSNs for patients who experience one or more 
HRSNs, action is inconsistent, with 92 percent of hospitals screening 
for one or more of the five HRSNs listed in Table 88 but only 24 
percent of hospitals screening for all five of these HRSNs.\162\ 
Additionally, pilot studies screening for HRSNs have been conducted in 
the HOPD and ASC settings, with clinicians and staff agreeing that HRSN 
data are important and relevant to collect in these settings to improve 
patient care and communication as well as to connect patients with 
social-related services.163 164 We believe that it is 
essential for healthcare facilities to screen for patient-level HRSN 
data to support the improvement of patient outcomes and their 
identified social needs.
---------------------------------------------------------------------------

    \159\ Assistant Secretary for Planning and Evaluation. (November 
2023). Call to Action: Addressing Health-Related Social Needs in 
Communities Across the Nation. Available at: https://aspe.hhs.gov/sites/default/files/documents/3e2f6140d0087435cc6832bf8cf32618/hhs-call-to-action-health-related-social-needs.pdf.
    \160\ Assistant Secretary for Planning and Evaluation. 
(September 2022). Reflections Accompanying a Report on 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.
    \161\ American Hospital Association. (December 2020). Health 
Equity, Diversity & Inclusion Measures for Hospitals and Health 
System Dashboards. Available at: https://ifdhe.aha.org/system/files/media/file/2020/12/ifdhe_inclusion_dashboard.pdf.
    \162\ Fraze TK, Brewster AL, Lewis VA, Beidler LB, Murray GF, 
Colla, CH. (2019). Prevalence of Screening for Food Insecurity, 
Housing Instability, Utility Needs, Transportation Needs, and 
Interpersonal Violence by US Physician Practices and Hospitals. JAMA 
Network Open, 2(9), e1911514. https://doi.org/10.1001/jamanetworkopen.2019.11514.
    \163\ Berkowitz RL, Bui L, Shen Z, Pressman A, Moreno M, Brown 
S, Nilon, A Miller-Rosales, Azar KM. (2021). Evaluation of a social 
determinants of health screening questionnaire and workflow pilot 
within an adult ambulatory clinic. BMC Family Practice, 22(1), 256. 
https://doi.org/10.1186/s12875-021-01598-.
    \164\ Schickedanz A, Hamity C, Rogers A, Sharp AL, Jackson A. 
(2019). Clinician Experiences and Attitudes Regarding Screening for 
Social Determinants of Health in a Large Integrated Health System. 
Medical Care, 57, S197-S201. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6721844/.
---------------------------------------------------------------------------

    In 2017, the CMS Center for Medicare and Medicaid Innovation (CMMI) 
launched the Accountable Health Communities (AHC) Model, which tested 
whether systematically identifying and addressing the HRSNs of Medicare 
and Medicaid beneficiaries through screening, referral, and community 
navigation services impacted their health outcomes and related 
healthcare utilization and costs.165 166 Evaluation of the 
AHC Model's standard 10-item AHC Health-Related Social Needs Screening 
Tool (AHC HRSN Screening Tool) found a reduction in emergency 
department (ED) visits among Medicaid and Medicare fee-for-service 
(FFS) beneficiaries.\167\
---------------------------------------------------------------------------

    \165\ Centers for Medicare & Medicaid Services. (2021). A Guide 
to Using the Accountable Health Communities Health-Related Social 
Needs Screening Tool: Promising Practices and Key Insights. 
Available at: https://innovation.cms.gov/media/document/ahcm-screeningtool-companion.
    \166\ Centers for Medicare & Medicaid Services. (2021). 
Accountable Health Communities Model. Accountable Health Communities 
Model. Available at: https://www.cms.gov/priorities/innovation/innovation-models/ahcm.
    \167\ Centers for Medicare & Medicaid Services. (2023). 
Accountable Health Communities (AHC) Model Evaluation: Second 
Evaluation Report. CMS Innovation Center. Available at: https://www.cms.gov/priorities/innovation/data-and-reports/2023/ahc-second-eval-rpt.
---------------------------------------------------------------------------

    Under the AHC Model, the following five core domains were selected 
to screen for HRSNs among Medicare and Medicaid beneficiaries: (1) food 
insecurity; (2) housing instability; (3) transportation needs; (4) 
utility difficulties; and (5) interpersonal safety. These domains were 
chosen based upon literature review and expert consensus utilizing the 
following criteria: (1) availability of high-quality scientific 
evidence linking a given HRSN to adverse health outcomes and increased 
healthcare utilization, including hospitalizations and associated 
costs; (2) ability for a given HRSN to be screened and identified prior 
to discharge, be addressed by community-based services, and potentially 
improve healthcare outcomes, including reduced readmissions; and (3) 
evidence that a given HRSN is not systematically addressed by 
healthcare providers.\168\ In addition to established evidence of their 
association with health status, risk, and outcomes, these five domains 
were selected for the AHC Model because they can be assessed across the 
broadest spectrum of individuals in a variety of settings.\169\
---------------------------------------------------------------------------

    \168\ Billioux A, Verlander, K, Anthony S, Alley D. (2017). 
Standardized Screening for Health-Related Social Needs in Clinical 
Settings: The Accountable Health Communities Screening Tool. NAM 
Perspectives, 7(5). https://doi.org/10.31478/201705b.
    \169\ Centers for Medicare & Medicaid Services. (2021). 
Accountable Health Communities Model. Accountable Health Communities 
Model. Available at: https://innovation.cms.gov/innovation-models/ahcm.

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

[[Page 59445]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.121

    These five evidence-based HRSN domains described in Table 88 
informed our development of the Screening for SDOH and Screen Positive 
Rate for

[[Page 59446]]

SDOH measures. We used these five HRSN domains to inform the 
development of the SDOH measure we propose to adopt in this proposed 
rule because the AHC Model's HRSN Screening Tool allows healthcare 
facilities to quickly screen for patients' core health-related social 
needs and was designed to work in a variety of clinical settings, 
making it ideal for implementing across quality reporting programs, 
including the Hospital OQR, REHQR, and ASCQR Programs, with minimal 
burden to healthcare facilities.\186\
---------------------------------------------------------------------------

    \170\ Berkowitz SA, Seligman HK, Meigs JB, Basu S. (2018). Food 
Insecurity, Healthcare Utilization, and High Cost: A Longitudinal 
Cohort Study. The American Journal of Managed Care, 24(9), 399-404. 
http://www.ncbi.nlm.nih.gov/pmc/articles/pmc6426124/.
    \171\ Seligman HK, Berkowitz, SA. (2019). Aligning Programs and 
Policies to Support Food Security and Public Health Goals in the 
United States. Annual Review of Public Health, 40(1), 319-337. 
https://www.annualreviews.org/doi/10.1146/annurev-publhealth-040218-044132.
    \172\ National Academies of Sciences, Engineering, and Medicine. 
(2006). Executive Summary: Cost-Benefit Analysis of Providing Non-
Emergency Medical Transportation. Washington, DC: The National 
Academies Press. Available at: https://nap.nationalacademies.org/catalog/23285/executive-summary-cost-benefit-analysis-of-providing-non-emergency-medical-transportation.
    \173\ Berkowitz SA, Seligman HK, Meigs JB, Basu S. (2018). Food 
Insecurity, Healthcare Utilization, and High Cost: A Longitudinal 
Cohort Study. The American Journal of Managed Care, 24(9), 399-404. 
http://www.ncbi.nlm.nih.gov/pmc/articles/pmc6426124/.
    \174\ Dean EB, French MT, Mortensen, K. (2020). Food insecurity, 
health care utilization, and health care expenditures. Health 
Services Research, 55(S2), 883-893. Available at: https://doi.org/10.1111/1475-6773.13283.
    \175\ Hill-Briggs, F. (2020). Social Determinants of Health and 
Diabetes: A Scientific Review. Diabetes Care, 44(1), 258-279. 
https://pubmed.ncbi.nlm.nih.gov/33139407/.
    \176\ Henry M, de Sousa T, Roddey C, Gayen S, Bednar T, Abt 
Associates. (January 2021). The 2020 Annual Homeless Assessment 
Report (AHAR) to Congress; Part 1: Point-in-Time Estimates of 
Homelessness. U.S. Department of Housing and Urban Development. 
Available at: https://www.huduser.gov/portal/sites/default/files/pdf/2020-AHAR-Part-1.pdf.
    \177\ Baxter A, Tweed E, Katikireddi S, Thomson H. (2019). 
Effects of Housing First approaches on health and well-being of 
adults who are homeless or at risk of homelessness: systematic 
review and meta-analysis of randomized controlled trials. Journal of 
Epidemiology and Community Health, 73; 379-387. https://doi.org/10.1136/jech-2018-210981.
    \178\ Centers for Medicare and Medicaid Services. (2023) 
Addressing Transportation Barriers: A User Case in Leveraging the 
Value-Based Insurance Design (VBID) Model. Available at: https://www.cms.gov/priorities/innovation/innovation-models/vbid.
    \179\ Billioux A, Verlander, K, Anthony S, Alley D. (2017). 
Standardized Screening for Health-Related Social Needs in Clinical 
Settings: The Accountable Health Communities Screening Tool. NAM 
Perspectives, 7(5). https://doi.org/10.31478/201705b.
    \180\ Shier G, Ginsburg M, Howell J, Volland P, Golden R. 
(2013). Strong Social Support Services, Such as Transportation And 
Help For Caregivers, Can Lead To Lower Health Care Use And Costs. 
Health Affairs, 32(3), 544-551. https://www.healthaffairs.org/doi/10.1377/hlthaff.2012.0170.
    \181\ National Alliance on Mental Illness. Medicaid: Non-
Emergency Medical Transportation (NEMT). Available at: https://www.nami.org/Advocacy/Policy-Priorities/Supporting-Community-Inclusion-and-Non-Discrimination/Medicaid-Non-Emergency-Medical-Transportation.
    \182\ Baxter A, Tweed E, Katikireddi S, Thomson H. (2019). 
Effects of Housing First approaches on health and well-being of 
adults who are homeless or at risk of homelessness: systematic 
review and meta-analysis of randomized controlled trials. Journal of 
Epidemiology and Community Health, 73; 379-387. https://doi.org/10.1136/jech-2018-210981.
    \183\ Wright BJ, Vartanian KB, Li HF, Royal N, Matson JK (2016). 
Formerly Homeless People Had Lower Overall Health Care Expenditures 
After Moving into Supportive Housing. Health Affairs, 35(1), 20-27. 
https://www.healthaffairs.org/doi/10.1377/hlthaff.2015.0393.
    \184\ Billioux A, Verlander K, Anthony S, Alley D. (2017). 
Standardized Screening for Health-Related Social Needs in Clinical 
Settings: The Accountable Health Communities Screening Tool. NAM 
Perspectives, 7(5). https://doi.org/10.31478/201705b.
    \185\ Henry M, de Sousa T, Roddey C, Gayen S, Bednar T, Abt 
Associates. (January 2021). The 2020 Annual Homeless Assessment 
Report (AHAR) to Congress; Part 1: Point-in-Time Estimates of 
Homelessness. U.S. Department of Housing and Urban Development. 
Available at: https://www.huduser.gov/portal/sites/default/files/pdf/2020-AHAR-Part-1.pdf.
    \186\ Centers for Medicare & Medicaid Services. (2021). A Guide 
to Using the Accountable Health Communities Health-Related Social 
Needs Screening Tool: Promising Practices and Key Insights. 
Available at: https://innovation.cms.gov/media/document/ahcm-screeningtool-companion.
---------------------------------------------------------------------------

    We recognize that patient interaction with the healthcare system 
may be limited by setting. For example, a patient receiving care in an 
HOPD, REH, or ASC may not have recently received care in an acute care 
hospital paid under IPPS, inpatient psychiatric facility cancer 
hospital, or dialysis facility, and therefore would not have the 
opportunity to benefit from being screened for SDOHs despite this 
measure's prior adoption in other quality programs. By adopting aligned 
Screening for SDOH measures within the Hospital OQR, REHQR, and ASCQR 
Programs, we expect to increase the likelihood that these settings will 
screen patients and provide contextualized care and any necessary 
relevant referrals to address their patient's needs.
    Screening for food insecurity, housing instability, transportation 
needs, utility difficulties, and interpersonal safety in HOPDs, REHs, 
and ASCs can help identify and provide appropriate referrals for 
patients who may benefit from greater support in one or more of those 
areas. Adoption of the Screening for SDOH measure in the Hospital OQR, 
REHQR, and ASCQR Programs would continue to support our priority of 
identifying risk factors for inadequate health care access and adverse 
health outcomes among patients.
b. Measure Overview
    The Screening for SDOH measure is a process measure that assesses 
the total number of patients, who were 18 years or older on the date of 
service, screened for social risk factors (specifically, the five HRSNs 
of food insecurity, housing instability, transportation needs, utility 
difficulties, and interpersonal safety) as they receive care from a 
HOPD, REH, or ASC.
c. Pre-Rulemaking Measure Review
    As part of the PRMR process, the Hospital Recommendation Group 
reviewed and voted on the Screening for SDOH measure during their 
meeting on January 18 and 19, 2024.\187\ The Hospital Recommendation 
Group ``recommended with conditions'' the Screening for SDOH measure 
for all three programs (that is, the Hospital OQR, REHQR, and ASCQR 
Programs).
---------------------------------------------------------------------------

    \187\ The Screening for SDOH measure is identified on the MUC 
List as MUC2023-156.
---------------------------------------------------------------------------

    The committee recommended a condition specific to the Hospital OQR 
Program, which was to allow hospitals to report this measure one time 
each year for both the Hospital IQR Program and Hospital OQR Program if 
applicable.\188\ We note that we considered allowing hospitals to 
report this measure jointly for the Hospital IQR and Hospital OQR 
Programs (if applicable); however, as the patient populations 
represented by the programs are different, as is the measure 
calculation due to this difference in the denominator, we propose to 
require a separate data submission for each program. More importantly, 
patients and consumers would likely find useful Compare tool 
information on screening rates separated for inpatient and outpatient 
departments of the same hospital.
---------------------------------------------------------------------------

    \188\ Partnership for Quality Measurement. 2023 Pre-Rulemaking 
Measure Review (PRMR) Meeting Summary: Hospital Committee. Available 
at: https://p4qm.org/sites/default/files/2024-02/PRMR-Hospital-Recommendation-Group-Meeting-Summary-Final.pdf.
---------------------------------------------------------------------------

d. CBE Endorsement
    Section 1833(t)(17)(C)(i) of the Act provides that the Hospital OQR 
Program, to the extent feasible and practicable, shall include measures 
set forth by one or more national consensus building entities (not 
necessarily the CBE). Under section 1833(i)(7)(B) of the Act, this 
requirement at section 1833(t)(17)(C) applies to the ASCQR Program 
except as the Secretary may otherwise provide. For the Hospital OQR 
Program and ASCQR Program, we note that section 1833(t)(17) of the Act 
does not require that each measure we adopt for these programs be CBE-
endorsed (75 FR 72064 and 72065 for the Hospital OQR Program and 76 FR 
74494 for the ASCQR Program).
    Section 1833(t)(17)(C)(i) of the Act also requires measures 
developed for the Hospital OQR Program to reflect consensus among 
affected parties. Under section 1833(i)(7)(B), this requirement also 
applies to the ASCQR Program except as the Secretary may otherwise 
provide. As we have noted in previous rulemaking, consensus among 
affected parties can be reflected in ways other than CBE endorsement, 
including through the measure development process, through broad 
acceptance and use of the measure(s), and through public comment (75 FR 
72064 and 72065 for the Hospital OQR Program and 76 FR 74494 for the 
ASCQR Program).
    For the REHQR Program, section 1861(kkk)(7)(C)(i) of the Act 
generally requires that quality measures specified by the Secretary for 
the REHQR Program be endorsed by a CBE; however, section 
1861(kkk)(7)(C)(ii) of the Act provides an exception to the general 
CBE-endorsement requirement, stating that in the case of a specified 
area or medical topic determined appropriate by the Secretary for which 
a 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

[[Page 59447]]

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 1861(kkk)(7)(C)(ii) of the Act applies for purposes of this 
measure for the REHQR Program.
    At this time, we find no other feasible and practicable measures 
set forth by a national consensus building entity on the topic of 
screening for SDOH. While we recognize the value of measures undergoing 
CBE endorsement review and prefer to use endorsed measures, there are 
currently no CBE-endorsed measures that address screening for SDOH in 
the outpatient setting. Given the urgency of achieving health equity, 
it is important to implement this measure as soon as possible. We note 
that the five domains for which patients would be screened were chosen 
based upon literature review and expert consensus, and that these five 
domains informed development of the Screening for SDOH measure. We will 
consider submitting the Screening for SDOH measure to the CBE for 
endorsement in the future.
e. Data Sources
    For data collection of the Screening for SDOH measure, we propose 
that healthcare facilities would use a self-selected screening tool to 
collect these data. We propose to allow healthcare facilities to select 
their screening tool to reduce burden and in recognition of the fact 
that some healthcare facilities may already be screening their patients 
for HRSNs. If a healthcare facility is not already doing so, many 
screening tools for HRSNs already exist. While we acknowledge the 
potential benefits of requiring all healthcare facilities to use the 
same screening instrument or a prescribed set of standards around the 
number or types of screening questions used, we also recognize the 
benefits of providing healthcare facilities with flexibility to 
customize screening and data collection to their patient populations 
and individual needs.
    One example of a screening tool that healthcare facilities could 
consider using is the AHC HRSN Screening Tool, which providers used in 
the AHC Model to screen for HRSNs in their Medicare, Medicaid, and 
dually eligible beneficiary populations.\189\ We have tested the AHC 
HRSN Screening Tool across many care delivery sites in diverse 
geographic locations and determined that it demonstrates evidence of 
both reliability and validity.\190\ The AHC HRSN Screening Tool can be 
implemented in a variety of healthcare settings, including HOPDs, REHs, 
and ASCs. While the AHC Model focused on HRSNs among community-dwelling 
Medicare and Medicaid beneficiaries, the AHC HRSN Screening Tool can be 
used to screen patients with any insurance status or type, including 
commercially insured and uninsured individuals. The AHC HRSN Screening 
Tool has broad applicability in settings outside of the AHC Model as it 
screens for a range of five HRSN domains while also being concise, 
limited to only ten questions. We believe this promotes manageable 
integration into clinical workflow settings and provides greater 
accessibility and application to diverse patient 
populations.191 192
---------------------------------------------------------------------------

    \189\ Centers for Medicare and Medicaid Services. The 
Accountable Health Communities Health-Related Social Needs Screening 
Tool. Available at: https://www.cms.gov/priorities/innovation/files/worksheets/ahcm-screeningtool.pdf.
    \190\ Centers for Medicare and Medicaid Services. (2023). A 
Guide to Using the Accountable Health Communities Health-Related 
Social Needs Screening Tool: Promising Practices and Key Insights. 
Available at: https://www.cms.gov/priorities/innovation/media/document/ahcm-screeningtool-companion.
    \191\ Ibid.
    \192\ Billioux A, Verlander, K, Anthony S, Alley D. (2017). 
Standardized Screening for Health-Related Social Needs in Clinical 
Settings: The Accountable Health Communities Screening Tool. NAM 
Perspectives, 7(5). https://doi.org/10.31478/201705b.
---------------------------------------------------------------------------

    For additional screening tools for healthcare facilities to 
consider using to collect data for this proposed Screening for SDOH 
measure, we refer readers to evidence-based resources like the Social 
Interventions Research and Evaluation Network (SIREN) website, for 
example, which provides comprehensive information about the most widely 
used HRSN screening tools.193 194 SIREN contains 
descriptions of the content and characteristics of various tools, 
including information about intended populations, completion time, and 
number of questions.
---------------------------------------------------------------------------

    \193\ Social Interventions Research & Evaluation Network. 
(2019). Social Needs Screening Tool Comparison Table. Available at: 
https://sirenetwork.ucsf.edu/tools-resources/resources/screening-tools-comparison.
    \194\ The Social Interventions Research and Evaluation Network 
(SIREN) at University of California San Francisco was launched in 
the spring of 2016 to synthesize, disseminate, and catalyze research 
on SDOH and healthcare delivery.
---------------------------------------------------------------------------

    We also encourage healthcare facilities to consider digital 
standardized screening tools. We refer readers to the FY 2023 IPPS/LTCH 
PPS final rule (87 FR 49207 through 49208), where we discuss how the 
use of certified health information technology (IT), including but not 
limited to CEHRT,\195\ can support capture of HRSN information in a 
standardized, interoperable fashion. We also encourage healthcare 
facilities to learn about the United States Core Data for 
Interoperability (USCDI) standard used in certified health IT and how 
this standard can support interoperable exchange of health and HRSN 
assessment data.\196\
---------------------------------------------------------------------------

    \195\ CEHRT refers to certified health IT requirements defined 
by CMS for certain programs which incorporate health IT 
certification criteria established by the Office of the National 
Coordinator for Health Information Technology (ONC) at 45 CFR 
170.315.
    \196\ Office of the National Coordinator for Health IT (ONC). 
United States Core Data for Interoperability. Available at: https://www.healthit.gov/isa/united-states-core-data-interoperability-uscdi.
---------------------------------------------------------------------------

    In alignment with the Hospital IQR Program, we propose that HOPDs, 
REHs, and ASCs could confirm the current status of any previously 
reported HRSNs in another care setting and inquire about others not 
previously reported, in lieu of re-screening a patient within the 
reporting period. In addition, if this information has been captured in 
the EHR in another outpatient setting or the inpatient setting during 
the same reporting period, we propose that the HOPD, REH, and ASC could 
use that information for purposes of reporting the measure in lieu of 
screening the patient. We intend to monitor and evaluate the measure 
screening requirements, including frequency, in these outpatient 
settings to ensure balance between quality of care for patients and 
facility burden.
f. Measure Calculation
    The Screening for SDOH measure is calculated as a percentage equal 
to the numerator over the denominator. The numerator is defined as the 
number of patients admitted to an HOPD, REH, or ASC, who are 18 years 
or older on the date of admission and are screened for all five HRSNs 
described in Table 88 during their receipt of services in the HOPD, 
REH, or ASC, as applicable.\197\ The denominator is defined as the 
number of patients who are admitted to a HOPD, REH, or ASC, as 
applicable, and who are 18 years or older.
---------------------------------------------------------------------------

    \197\ The term ``admitted patients'' appears in the measure 
specifications and MUC documentation and is intended to refer to a 
person who receives ambulatory care in these designated settings.
---------------------------------------------------------------------------

    The measure excludes patients who: (1) opt-out of screening; or (2) 
are themselves unable to complete the screening and have no legal 
guardian or caregiver able to do so on the patient's behalf.

[[Page 59448]]

g. Data Submission and Reporting
    We propose to allow healthcare facilities to voluntarily submit to 
CMS aggregate data for this measure for the CY 2025 reporting period 
and then to require mandatory reporting beginning with the CY 2026 
reporting period/CY 2028 payment or program determination. 
Specifically, we propose that healthcare facilities would aggregate 
data they collect for the numerator and the denominator to CMS (as 
described in section XIV.B.2.f of this proposed rule), and that they 
would not be required to submit patient-level data. We propose to 
require aggregate data because we believe patient-level reporting is 
unnecessary and would cause undue burden due to the transfer of large 
quantities of data. However, in the future, we may consider requiring 
the reporting of patient-level information. This measure aims to 
encourage healthcare facilities to screen for and identify HRSNs in 
order to identify and address social needs among their patient 
populations.
    We also propose that healthcare facilities would be required to 
submit data on this measure annually using the CMS-designated 
information system (currently, the HQR system) consistent with the data 
submission requirements for this measure in the Hospital IQR, IPFQR and 
PCHQR Programs. We refer readers to sections XV.E.2.a, XVI.E.3.b, and 
XVII.E.2.a of this proposed rule for additional details regarding data 
submission using the CMS-designated information system in the Hospital 
OQR, REHQR, and ASC Programs, respectively.
    We propose to adopt this measure beginning with voluntary reporting 
for the CY 2025 reporting period followed by mandatory reporting 
beginning with the CY 2026 reporting period/CY 2028 payment or program 
determination. We propose to begin with one year of voluntary reporting 
to provide a transition period for healthcare facilities to select and 
integrate screening tools into their clinical workflow processes.
    We invite public comment on our proposal to adopt the Screening for 
SDOH measure for the Hospital OQR, REHQR, and ASCQR Programs beginning 
with voluntary reporting for the CY 2025 reporting period, and to 
require mandatory reporting beginning with the CY 2026 reporting 
period/CY 2028 payment or program determination, as described above.
3. Proposal To Adopt the Screen Positive Rate for Social Drivers of 
Health (SDOH) Measure for the Hospital Outpatient Quality Reporting 
(OQR), Rural Emergency Hospital Quality Reporting (REHQR), and 
Ambulatory Surgical Center Quality Reporting (ASCQR) Programs Beginning 
With Voluntary Reporting for the CY 2025 Reporting Period Followed by 
Mandatory Reporting Beginning With the CY 2026 Reporting Period/CY 2028 
Payment or Program Determination
a. Background
    In the outpatient setting, we encourage systematic screening of 
patients' HRSNs to identify patient needs and support improvements in 
health outcomes. While the Screening for SDOH measure (discussed 
previously in section XIV.B.2 of this proposed rule) identifies 
individuals with HRSNs, the Screen Positive Rate for SDOH measure 
estimates the magnitude of these needs for a healthcare facility's 
patient population served. We believe the adoption of the Screen 
Positive Rate for SDOH measure would encourage healthcare facilities to 
track the prevalence of specific HRSNs among patients over time and use 
the data to stratify risk as part of quality performance improvement 
efforts.
    We propose that healthcare facilities would be required to report 
the Screen Positive Rate for SDOH measure as the rate of patients who 
screened positive for each of the five core HRSNs domains discussed in 
Table 88: food insecurity, housing instability, transportation needs, 
utility difficulties, and interpersonal safety.\198\
---------------------------------------------------------------------------

    \198\ Billioux A, Verlander, K, Anthony S, Alley D. (2017). 
Standardized Screening for Health-Related Social Needs in Clinical 
Settings: The Accountable Health Communities Screening Tool. NAM 
Perspectives, 7(5). https://doi.org/10.31478/201705b.
---------------------------------------------------------------------------

b. Measure Overview
    While the Screening for SDOH measure (discussed in section XIV.B.2) 
enables identification of individuals with HRSNs, the Screen Positive 
Rate for SDOH measure would allow healthcare facilities to capture the 
magnitude of these needs by requiring healthcare facilities to report 
the rates of patients who screened positive for each of the five core 
HRSNs. The Screen Positive Rate for SDOH is a process measure that 
provides information on the percent of patients receiving care at an 
HOPD, REH, or ASC, who were 18 years or older on the date of service, 
who were screened for all five HRSNs described in Table 88, and who 
screened positive for one or more of those HRSNs. Healthcare facilities 
would report this measure as five separate rates, one for each of the 
HRSNs: food insecurity, housing instability, transportation needs, 
utility difficulties, and interpersonal safety. This measure is not 
intended for comparison of screen positive rates of HRSNs between 
healthcare facilities but is rather to provide transparency in the 
delivery of care and actionable information to healthcare facilities on 
the unmet needs among their patients.
c. Pre-Rulemaking Measure Review
    As part of the PRMR process, the Hospital Recommendation Group 
reviewed and voted on the Screen Positive Rate for SDOH measure \199\ 
during their meeting on January 18 and 19, 2024.200 201 The 
committee did not reach the75 percent vote required to reach a 
consensus as to its recommendation for the Screen Positive Rate for 
SDOH measure for the Hospital OQR, REHQR, or ASCQR Programs. The 
committee expressed a concern about ambiguity in the interpretation of 
data from the Screen Positive Rate for SDOH measure as well as 
expectations regarding healthcare facilities. We acknowledge that a 
high score could be interpreted in different ways but that the 
objective of this measure is to incentivize collection of these data to 
help identify patient needs and where resources constraints exist. The 
committee also discussed a condition specific to the Hospital OQR 
Program, which was to allow hospitals to report this measure one time 
each year for both the Hospital IQR Program and Hospital OQR 
Program.\202\ We note that we considered allowing hospitals to report 
this measure jointly for the Hospital IQR and Hospital OQR Programs (if 
applicable); however, as the patient-populations represented by the 
programs are different, as is the measure calculation due to this 
difference in the denominator, we propose to require a

[[Page 59449]]

separate data submission for each program.
---------------------------------------------------------------------------

    \199\ The Screen Positive Rate for SDOH measure is identified on 
the MUC List as MUC2023-171.
    \200\ Centers for Medicare & Medicaid Services. List of Measures 
Under Consideration for December 1, 2023. Available at: https://mmshub.cms.gov/measure-lifecycle/measure-implementation/pre-rulemaking/lists-and-reports.
    \201\ Centers for Medicare & Medicaid Services. (December 2023). 
Overview of the List of Measures Under Consideration. Available at: 
https://mmshub.cms.gov/sites/default/files/2023-MUC-List-Overview.pdf.
    \202\ Partnership for Quality Measurement. (2023). 2023 Pre-
Rulemaking Measure Review (PRMR) Meeting Summary: Hospital 
Committee. Available at: https://p4qm.org/sites/default/files/2024-02/PRMR-Hospital-Recommendation-Group-Meeting-Summary-Final.pdf.
---------------------------------------------------------------------------

    Further, we have identified the implementation of this measure in 
the Hospital OQR, REHQR, and ASCQR Programs as an important way to 
address the health equity measurement gap. We also believe that the 
information collected from this measure can help HOPDs, REHs, and ASCs 
understand SDOH needs in their patient population and to devise 
appropriate interventions. On this basis, we propose this measure for 
adoption for all three of our programs.
d. CBE Endorsement
    As discussed in section XIV.B.2.d, we find no other feasible and 
practicable measures set forth by a national consensus building entity 
on the topic of screening for SDOH. While we recognize the value of 
measures undergoing CBE endorsement review and prefer to use endorsed 
measures, there are currently no CBE-endorsed measures that address 
screening for SDOH in the outpatient setting. Given the urgency of 
achieving health equity, it is important to implement this measure as 
soon as possible. We note that the five domains for which patients 
would be screened were chosen based upon literature review and expert 
consensus, and that these five domains informed development of the 
Screen Positive Rate for SDOH measure. We will consider submitting the 
Screen Positive Rate for SDOH measure to the CBE for endorsement in the 
future.
e. Data Sources
    The data sources for this measure are as described for the 
Screening for SDOH measure found in section XIV.B.2.e of this proposed 
rule.
f. Measure Calculation
    The Screen Positive Rate for SDOH measure is calculated with a 
numerator and denominator. The numerator is defined as the number of 
patients receiving care at an HOPD, REH, or ASC who are 18 years or 
older on the date of admission, who were screened for all five HRSNs 
described in Table 88, and who screen positive for having a need in one 
or more of those HRSNs (calculated separately). The denominator is 
defined as the number of patients receiving care at the HOPD, REH, or 
ASC who are 18 years or older on the date of admission and are screened 
for all five HRSNs during their care.
    The results of this measure are calculated and reported as five 
separate rates--one for each HRSN, each calculated with the same 
denominator. The measure excludes patients who: (1) opt-out of 
screening; or (2) are themselves unable to complete the screening and 
have no legal guardian or caregiver able to do so on the patient's 
behalf.
g. Data Submission and Reporting
    While this measure would require healthcare facilities to collect 
patient-level data on their patients' SDOH screening results, 
consistent with the Screening for SDOH measure, we propose to adopt 
this measure as an aggregate measure. Specifically, we propose that 
healthcare facilities would be required to submit aggregated data 
representing the total numerator results for each of the five screening 
areas and the total number of patients screened for all five of the 
HRSNs. We propose to require aggregate data because we believe it is 
unnecessary for healthcare facilities to submit data collected at the 
patient level as this would cause undue burden due to the transfer of 
large quantities of data. However, in the future, we may consider the 
reporting of patient-level information. This measure aims to encourage 
healthcare facilities to screen for and identify HRSNs as it is most 
important for healthcare facilities to collect this HRSN data to 
address social needs among their patient populations.
    Healthcare facilities would be required to submit information via a 
CMS-designated information system (currently the HQR system) consistent 
with the prior adoption of this measure in the Hospital IQR, IPFQR and 
PCHQR Programs. We refer readers to sections XV.E.2.a, XVI.E.3.b, and 
XVII.E.2.a of this proposed rule for additional details regarding data 
submission using the CMS-designated information system in the Hospital 
OQR, REHQR, and ASC Programs, respectively.
    We note that we considered requiring hospitals to report this 
measure jointly for the Hospital IQR and Hospital OQR Programs; that 
is, requiring hospitals to submit once under both programs rather than 
submitting data twice in the HQR system. However, as the populations 
represented by the programs are different, resulting in different 
calculations of the measure denominator under each program, we propose 
to require a separate data submission for each program.
    We propose to adopt this Screen Positive Rate for SDOH measure 
beginning with voluntary reporting for the CY 2025 reporting period, 
followed by mandatory reporting beginning with the CY 2026 reporting 
period/CY 2028 payment or program determination to be consistent with 
the Screening for SDOH measure. Similar to the Screening for SDOH 
measure, a voluntary period would allow time for healthcare facilities 
to select and integrate screening tools into their clinical workflow 
processes and gain experience with both measures before measure results 
are publicly displayed on the Compare tool.
    We invite public comment on our proposal to adopt the Screen 
Positive Rate for SDOH measure for the Hospital OQR, REHQR, and ASCQR 
Programs beginning with voluntary reporting on this measure for the CY 
2025 reporting period followed by mandatory reporting beginning with 
the CY 2026 reporting period/CY 2028 payment or program determination, 
as described above.

C. Proposal To Modify the Immediate Measure Removal Policy for the 
Hospital Outpatient Quality Reporting (OQR) and Ambulatory Surgical 
Center Quality Reporting (ASCQR) Programs Beginning With CY 2025

    In the CY 2010 OPPS/ASC final rule with comment period (74 FR 60634 
through 60635) and the CY 2015 OPPS/ASC final rule with comment period 
(79 FR 66967 through 66968), we finalized a process for immediate 
removal of Hospital OQR and ASCQR Program measures, respectively, based 
on evidence that the continued use of a measure as specified raises 
patient safety concerns. We refer readers to our regulations at 42 CFR 
419.46(i)(2) for the Hospital OQR Program and 42 CFR 416.320(b) for the 
ACSQR Program for the codification of these immediate measure removal 
policies.
    When there is evidence that continued use of a measure potentially 
raises patient safety concerns, we believe that immediate action should 
be taken to discontinue collection of the measure to not encourage 
potentially harmful practices. We also believe that seeking public 
input on the removal of such measures increases the public's voice in 
decision-making and increases transparency. We noted this in the CY 
2024 OPPS/ASC final rule (88 FR 82052), where we finalized an immediate 
measure suspension policy for the REHQR Program in lieu of an immediate 
measure removal policy. The REHQR Program's immediate measure 
suspension policy more appropriately provides that, in cases where we 
believe that a measure raises patient safety concerns, we will suspend 
the measure's use in the program, instead of immediately removing the 
measure, until its potential removal undergoes the standard rulemaking 
process (88 FR 82052).

[[Page 59450]]

    We believe that our rationale for finalizing the immediate measure 
suspension policy in the REHQR Program (88 FR 82052) also applies to 
the Hospital OQR and ASCQR Programs. On this basis, we propose to 
modify the immediate measure removal policies in the Hospital OQR and 
ASCQR Programs so that they are more appropriately referred to as 
immediate measure suspension policies beginning with CY 2025.
    Under this proposed immediate measure suspension policy in the 
Hospital OQR or ASCQR Programs, in cases where we determine there is 
evidence that the collection and reporting of a measure raises 
potential patient safety concerns, we would suspend the measure from 
the program (as applicable) until potential removal can be proposed 
through the rulemaking process. We will notify the healthcare facility 
(HOPDs or ASCs, as applicable) and the public of the decision to 
suspend the measure through standard communication channels, including, 
but not limited to, program-specific listservs and program guidance 
currently housed on a CMS-designated website. We would then address the 
suspension and propose policies regarding any such suspended measure in 
the next feasible rulemaking cycle.
    We also propose to revise the Hospital OQR Program regulatory text 
at Sec.  419.46(i)(2) and the ASCQR Program regulatory text at Sec.  
416.320(b) to codify the immediate measure suspension policy. We 
further propose to clarify the standard for immediate measure 
suspension in these regulatory texts by revising references to patient 
safety concerns raised by ``continued use of a measure as specified'' 
to patient safety concerns raised by ``collection and reporting 
activities related to a quality measure''.
    We invite public comment on these proposals.

XV. Hospital Outpatient Quality Reporting (OQR) Program

A. Background and Statutory Authority

    The Hospital Outpatient Quality Reporting (OQR) Program is a pay-
for-reporting program intended to improve the quality of care provided 
to Medicare beneficiaries, facilitate public transparency, and ensure 
accountability of hospital outpatient departments (HOPDs). Section 
1833(t)(17)(A) of the Social Security Act (the Act) states that 
subsection (d) hospitals (as defined under section 1886(d)(1)(B) of the 
Act) that do not submit data required for measures selected with 
respect to such a year, in the form and manner required by the 
Secretary, will incur a 2.0 percentage point reduction to their annual 
Outpatient Department (OPD) fee schedule increase factor.
    We refer readers to the CY 2011 OPPS/ASC Payment System final rule 
(75 FR 72064 through 72065) for a detailed discussion of the statutory 
history of the Hospital OQR Program, as well as program requirements 
codified at 42 CFR 419.46, and to the CY 2024 OPPS/ASC final rule for 
information regarding the program's regulatory history (88 FR 81961 
through 82012).
1. Previously Finalized Program Measure Set Beginning With the CY 2027 
Payment Determination
    Table 89 summarizes the previously finalized Hospital OQR Program 
measures beginning with the CY 2027 payment determination:
BILLING CODE 4120[dash]01-P

[[Page 59451]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.123

BILLING CODE 4120[dash]01-C

B. Program Measure Set Policies

1. Measure Retention
    We refer readers to Sec.  419.46(i)(1) and the CY 2013 OPPS/ASC 
final rule (77 FR 68471) for our policies regarding measure retention.
    We are not proposing any changes to these policies in this proposed 
rule.
2. Measure Suspension or Removal
    We refer readers to Sec. Sec.  419.46(i)(2) and (3) and the CY 2013 
OPPS/ASC final rule (77 FR 68472 and 68473) for our program policies 
regarding: (1) general measure removal, suspension, and replacement; 
and (2) immediate measure removal.
    We refer readers to section XIV.C of this proposed rule for our 
cross-program proposal to modify the immediate removal policy for 
adopted Hospital OQR Program measures.
3. Measure Adoption
    We refer readers to the CY 2024 OPPS/ASC final rule (88 FR 81973) 
for a discussion of the statutory requirements and our considerations 
for adopting quality measures under the Hospital OQR Program.
    We are not proposing any changes to these policies in this proposed 
rule.

C. Program Measure Proposals

1. Proposed New Measures for the Hospital OQR Program Measure Set

a. Proposals To Adopt Health Equity Measures in the Hospital OQR 
Program

    We refer readers to sections XIV.B.1, XIV.B.2, and XIV.B.3, 
respectively, of

[[Page 59452]]

this proposed rule for our cross-program proposals to adopt the 
following measures in the Hospital OQR Program: (1) the Hospital 
Commitment to Health Equity (HCHE) measure, beginning with the CY 2025 
reporting period/CY 2027 payment determination; (2) the Screening for 
Social Drivers of Health (SDOH) measure, beginning with voluntary 
reporting for the CY 2025 reporting period followed by mandatory 
reporting beginning with the CY 2026 reporting period/CY 2028 payment 
determination; and (3) the Screen Positive Rate for SDOH measure, 
beginning with voluntary reporting for the CY 2025 reporting period and 
mandatory reporting beginning with the CY 2026 reporting period/CY 2028 
payment determination.
b. Proposal To Adopt the Patient Understanding of Key Information 
Related to Recovery After a Facility-Based Outpatient Procedure or 
Surgery Patient Reported Outcome-Based Performance Measure (Information 
Transfer PRO-PM) Beginning With Voluntary Reporting For the CY 2026 
Reporting Period Followed by Mandatory Reporting Beginning With the CY 
2027 Reporting Period/CY 2029 Payment Determination
(1) Background
    Recent studies have shown that compared to inpatient settings, 
outpatient settings are associated with worse patient understanding and 
lower patient activation (that is, an individual's understanding, 
competence, and willingness to participate in care decisions during 
their recovery), indicating an area for quality of care 
improvement.203 204 205 One study found that providers in 
the inpatient setting provided more complete discharge instructions and 
end-of-visit summaries to patients when compared to providers in the 
ambulatory setting, including continuing medication names and 
instructions (96 percent vs. 40 percent), new medication names and 
instructions (99 percent vs. 29 percent), and pending diagnostic test 
names and instructions (90 percent vs. 61 percent).\206\ A lack of 
understanding of recovery information \207\ and other aspects of health 
literacy have been linked to poor adherence to treatment, decreased 
patient safety, increased return to the emergency department (ED), 
lower levels of patient satisfaction, and disproportionate effects on 
patients with limited English proficiency and patients over age 65, who 
face additional barriers and recovery issues after their receipt of a 
hospital outpatient service.208 209 Reduced patient 
engagement and a deficiency in detailed discharge information in the 
inpatient setting were also associated with a higher risk of 
readmissions to an inpatient setting.\210\ Research indicates that 
information that is simpler to read and more complete has been 
associated with fewer follow-up calls to providers as well as less 
frequent hospital readmissions.211 212
---------------------------------------------------------------------------

    \203\ Kang E, Gillespie BM, Tobiano G, et al. (2018). Discharge 
education delivered to general surgical patients in their management 
of recovery post discharge: A systematic mixed studies review. Int J 
Nurs Stud. 87:1-13. https://doi.org/10.1016/j.ijnurstu.2018.07.004.
    \204\ Hoek AE, Anker SCP, van Beeck EF, et al. (2020). Patient 
Discharge Instructions in the Emergency Department and Their Effects 
on Comprehension and Recall of Discharge Instructions: A Systematic 
Review and Meta-analysis. Ann Emerg Med. 75(3):435-444. https://doi.org/10.1016/j.annemergmed.2019.06.008.
    \205\ Downey E, Olds DM. (2021). Comparison of Documentation on 
Inpatient Discharge and Ambulatory End-of-Visit Summaries. J Healthc 
Qual. 43(3):e43-e52. https://doi.org/10.1097/JHQ.0000000000000269.
    \206\ Ibid.
    \207\ We use the term ``recovery information'' to mean the 
clinical care instructions provided to patients or their caregivers 
after the completion of surgery or a non-surgical procedure.
    \208\ DeSai C, Janowiak K, Secheli B, et al. (2021). Empowering 
patients: simplifying discharge instructions. BMJ Open 
Quality;10(3)001419. http://doi.org/10.1136/bmjoq-2021-001419.
    \209\ Malevanchik L., Wheeler M., Gagliardi K., Karliner L., 
Shah S.J. (2021). Disparities After Discharge: The Association of 
Limited English Proficiency and Postdischarge Patient-Reported 
Issues,TheIssues, The Joint Commission Journal on Quality and 
Patient Safety, 47(12):775-782. https://doi.org/10.1016/j.jcjq.2021.08.013.
    \210\ Erlang AS, Schj[oslash]dt K, Linde JKS, Jensen AL. (2021). 
An observational study of older patients' experiences of involvement 
in discharge planning. Geriatr Nurs 42(4):855-862. http://doi.org/10.1016/j.gerinurse.2021.04.002
    \211\ Choudhry AJ, Younis M, Ray-Zack MD, et al. (2019). 
Enhanced readability of discharge summaries decreases provider 
telephone calls and patient readmissions in the posthospital 
setting. Surgery. 165(4):789-794. https://doi.org/10.1016/j.surg.2018.10.014.
    \212\ Mitchell JP. (2015). Association of provider communication 
and discharge instructions on lower readmissions. J Healthc Qual., 
37(1):33-40. https://doi.org/10.1097/01.JHQ.0000460126.88382.13.
---------------------------------------------------------------------------

(2) Measure Overview
    The Information Transfer PRO-PM aims to assess the level of clear, 
personalized recovery information provided to patients aged 18-years or 
older who had surgery or a procedure at an HOPD. The measure reports 
the average score of a patient's ratings on a three-domain, 9-item 
survey \213\ to evaluate the clarity of the clinical information 
patients are given before, during, and after an outpatient surgery or 
procedure. The survey covers three domains for patients or their 
caregivers to rate the clarity of information received regarding their 
post-discharge \214\ recovery: applicability to patient needs, 
medication, and daily activities. The applicability to patient needs 
domain assesses whether the recovery information considered a patient's 
health needs and personal circumstances. The medications domain 
examines the clarity of medication information provided, specifically 
guidance on taking new medications, potential side effects, and 
discontinuing medication. The daily activities domain assesses the 
clarity of guidelines around diet, physical activity, returning to 
work, and driving. Results from the survey provide hospitals with 
patient reported outcome (PRO) data designed to assess communication 
efforts and enable hospitals to reduce the risk of patient harm that 
may occur if the patient does not fully understand the recovery 
information.
---------------------------------------------------------------------------

    \213\ A copy of the survey instrument is available at: https://www.cms.gov/files/document/patient-understanding-key-information-related-recovery-after-facility-based-outpatient-procedure-or.pdf.
    \214\ The term ``discharge'' appears in the measure 
specifications and is intended to refer to the transition of a 
patient from the outpatient hospital setting to home or next level 
of care.
---------------------------------------------------------------------------

    This measure addresses the priority area stated in our Meaningful 
Measures Framework of adopting high-quality measures that focus on 
person-centered care.\215\ Additionally, the Information Transfer PRO-
PM supports the National Quality Strategy goal of equity and engagement 
by engaging individuals to become partners in their care and ensuring 
that individuals and caregivers have the information needed to make the 
best choices for their health.\216\
---------------------------------------------------------------------------

    \215\ Centers for Medicare & Medicaid Services. (2024). 
Meaningful Measures 2.0. Available at:https://www.cms.gov/medicare/quality/meaningful-measures-initiative/meaningful-measures-20.
    \216\ Centers for Medicare & Medicaid Services. (2024). CMS 
Quality Strategy. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/CMS-Quality-Strategy.
---------------------------------------------------------------------------

    Pilot testing conducted by the measure developer in 26 HOPDs in 
five states demonstrated that the measure is reliable and 
meaningful.217 218 The measure developer assessed 
reliability of the measure using the Cronbach alpha score \219\ to 
determine whether the nine survey questions reliably measured

[[Page 59453]]

the same underlying characteristic; that is, the clarity and 
applicability of recovery instructions. The Cronbach alpha score, which 
compares the amount of shared variance, or covariance, among the 
instrument items to the total variance, indicated that the survey items 
are reliable because they reflect a high level of covariance relative 
to the total variance.\220\ Additionally, the measure developer found 
the performance scores among facilities in the pilot study to be 
moderately reliable using a signal-to-noise ratio, which estimated 
variance among facilities and facility specific errors to determine the 
extent to which variance in facility scores can be attributed to 
variance in actual performance.\221\ To assess meaningfulness, the 
measure developer asked members of a Patient and Family Engagement 
(PFE) Work Group and a Technical Expert Panel (TEP) to vote on the 
measure's ability to distinguish between good and poor quality of care 
at measured facilities.222 223 All of the patients from the 
PFE Work Group and 80% of the TEP panel members who participated in the 
vote agreed that the measure could distinguish between good and poor 
quality of care.\224\ We refer readers to https://p4qm.org/measures/4210 for more information about the feasibility, scientific 
acceptability, meaningfulness, and validity of the Information Transfer 
PRO-PM.
---------------------------------------------------------------------------

    \217\ Partnership for Quality Measurement. (2024). 2023 Pre-
Rulemaking Measure Review (PRMR) Meeting Summary: Hospital 
Committee. Available at: https://p4qm.org/sites/default/files/2024-02/PRMR-Hospital-Recommendation-Group-Meeting-Summary-Final.pdf.
    \218\ Partnership for Quality Measurement. Submission Tool and 
Repository Measure Database. https://p4qm.org/measures/4210.
    \219\ For more information on what the Cronbach alpha score 
determines and how it is used, we refer readers to: Tavakol M & 
Dennick R. (2011). Making sense of Cronbach's alpha. Int J Med Educ. 
27;2: 53-55. www.doi.org/10.5116/ijme.4dfb.8dfd.
    \220\ Ibid.
    \221\ Partnership for Quality Measurement. Submission Tool and 
Repository Measure Database. https://p4qm.org/measures/4210.
    \222\ Partnership for Quality Measurement. 2023 Pre-Rulemaking 
Measure Review (PRMR) Meeting Summary: Hospital Committee. Available 
at: https://p4qm.org/sites/default/files/2024-02/PRMR-Hospital-Recommendation-Group-Meeting-Summary-Final.pdf.
    \223\ See also https://www.cms.gov/medicare/quality/initiatives/hospital-quality-initiative/measure-methodology.
    \224\ Ibid.
---------------------------------------------------------------------------

    As previously stated in the CY 2024 OPPS/ASC final rule (88 FR 
81985), while we acknowledge that PRO-PMs require providers to 
integrate data collection into clinical information systems, this 
integration provides an important opportunity for patient-reported 
outcomes to inform clinical decision-making and benefits patients by 
engaging them in discussions about potential outcomes. The testing of 
this measure by the measure developer, which included interviews with 
clinicians, nurses, quality improvement officers, and data 
administrators in HOPDs, indicated that the increased burden on HOPDs 
would be minimal because the data would be collected and reported 
electronically by administrative staff and quality officers engaged in 
data sharing activities, outside of the clinical workflow, before being 
integrated into a clinical information system. Additionally, testing 
indicated that the increased burden on respondents would be minimal and 
contribute minimally to patient survey fatigue because the survey is 
easily understood and consists of only nine questions administered 
electronically,\225\ presenting a low burden for completion.
---------------------------------------------------------------------------

    \225\ Examples of survey administration and collection include 
email, text, and patient information portals. These examples are not 
exhaustive. By leaving the method of survey administration and 
collection to the HOPD, we allow facilities the flexibility to 
choose the most appropriate method for their current infrastructure 
and patient base.
---------------------------------------------------------------------------

(3) Pre-Rulemaking Measure Review
    Under the PRMR process, the Hospital Recommendation Group reviewed 
and voted on the Information Transfer PRO-PM \226\ during their meeting 
on January 18-19, 2024.\227\ The voting results for the Information 
Transfer PRO-PM measure for the Hospital OQR Program were ``recommend 
with conditions''. The condition was that the survey be administered at 
the time of the surgery or procedure so there is no conflict with other 
measured pain and function outcomes to improve response rates.\228\ We 
have taken into account the condition to administer the survey at the 
time of the surgery or procedure; however, we have determined that 
allowing time after the surgery or procedure before administration of 
the survey is important to limit the possibility that the patient's 
responses are influenced by time-dependent variables related to 
proximity to the surgery or procedure, such as medications that could 
affect comprehension, fatigue, or acute pain. In addition, 
administering the survey more than one day but less than seven days 
post-procedure mitigates overlap of the initial administration and 
survey reminder of the OAS CAHPS, which is administered on the first 
day post-procedure and then followed up at 14 days.\229\
---------------------------------------------------------------------------

    \226\ The Information Transfer PRO-PM is identified on the MUC 
List as MUC2023-17.
    \227\ Partnership for Quality Measurement. (2024). 2023 Pre-
Rulemaking Measure Review (PRMR) Meeting Summary: Hospital 
Committee. Available at: https://p4qm.org/sites/default/files/2024-02/PRMR-Hospital-Recommendation-Group-Meeting-Summary-Final.pdf.
    \228\ Ibid.
    \229\ Centers for Medicare and Medicaid Services. Schedule of 
OAS CAHPs Contact Attempts by Survey Mode. Available at: https://oascahps.org/ScheduleOASCAHPSContactAttempts_7-20-21.pdf.
---------------------------------------------------------------------------

(4) CBE Endorsement
    We submitted the Information Transfer PRO-PM to the CBE for 
endorsement review in the Fall 2023 cycle (CBE #4210), and the CBE 
endorsed the measure on March 18, 2024.\230\
---------------------------------------------------------------------------

    \230\ Partnership for Quality Measurement. Submission Tool and 
Repository Measure Database. https://p4qm.org/measures/4210.
---------------------------------------------------------------------------

(5) Data Collection, Submission, and Reporting
(a) Data Collection
(i) Data Sources
    We propose that the Information Transfer PRO-PM would be calculated 
based on PRO data collected by HOPDs directly or through their 
authorized third-party vendors through a web-based survey instrument 
distributed to patients or their caregivers.
    We also propose that the survey would be administered two-to-seven 
days post-procedure or surgery, based on evidence that the most common 
time period for patients to be delivered a survey is within 0-48 hours 
post-procedure or surgery at a HOPD 
(n=6),231 232 233 234 235 236 while other time periods 
include within two weeks post-procedure or surgery 
(n=4),237 238 239 240

[[Page 59454]]

one week post-procedure or surgery, (n=3) 241 242 243 or 90 
days post-procedure or surgery (n=1).\244\ We propose that the survey 
would be administered not less than two days post-procedure or surgery 
because we have determined, as discussed above, that allowing time 
after the surgery or procedure before administration of the survey will 
limit the possibility that the patient's responses are influenced by 
time-dependent variables related to proximity to the surgery or 
procedure, such as medications that could affect comprehension, 
fatigue, or acute pain. We propose that the survey would be 
administered no later than seven days post-procedure or surgery because 
this timeframe may be more appropriate for patient reporting of 
specific events than longer time periods.245 246 In pilot 
testing, patients were sent a reminder to complete the survey seven 
days after receipt. The survey remained open until pilot testing was 
completed, with the mean length of time between the procedure date to 
the survey response date being 65 days, or approximately two months. We 
are therefore proposing a 65-day window for patient response.
---------------------------------------------------------------------------

    \231\ Engel KG, Buckley BA, Forth VE, et al. (2012). Patient 
understanding of emergency department discharge instructions: where 
are knowledge deficits greatest? Acad Emerg Med. 19(9):E1035-1044.
    \232\ Engel KG, Heisler M, Smith DM, Robinson CH, Forman JH, 
Ubel PA. (2009). Patient comprehension of emergency department care 
and instructions: are patients aware of when they do not understand? 
Ann Emerg Med. 53(4):454-461 e415.
    \233\ Erlang AS, Schjodt K, Linde JKS, Jensen AL. (2021). An 
observational study of older patients' experiences of involvement in 
discharge planning. Geriatr Nurs. 42(4):855-862.
    \234\ Lin MJ, Tirosh AG, Landry A. (2015). Examining patient 
comprehension of emergency department discharge instructions: Who 
says they understand when they do not? Intern Emerg Med. 10(8):993-
1002.
    \235\ Makaryus AN, Friedman EA. (2005). Patients' understanding 
of their treatment plans and diagnosis at discharge. Mayo Clin Proc. 
80(8):991-994.
    \236\ Hastings S, Stechuchak K, Oddone E, et al. (2012). Older 
veterans and emergency department discharge information. BMJ Qual 
Saf. 21(10):835-842.
    \237\ Clarke C, Friedman SM, Shi K, Arenovich T, Monzon J, 
Culligan C. (2005). Emergency department discharge instructions 
comprehension and compliance study. CJEM. 7(1):5-11.
    \238\ Henderson A, Zernike W. A study of the impact of discharge 
information for surgical patients. (2001). J Adv Nurs. 35(3):435-
441.
    \239\ Karliner LS, Auerbach A, Napoles A, Schillinger D, 
Nickleach D, Perez-Stable EJ. (2012). Language barriers and 
understanding of hospital discharge instructions. Med Care. 
50(4):283-289.
    \240\ Makaryus AN, Friedman EA. (2005). Patients' understanding 
of their treatment plans and diagnosis at discharge. Mayo Clin PRac. 
80(8):991-994.
    \241\ Albrecht JS, Gruber-Baldini AL, Hirshon JM, et al. (2014). 
Hospital discharge instructions: comprehension and compliance among 
older adults. J Gen Intern Med. 29(11):1491-1498.
    \242\ Coleman EA, Chugh A, Williams MV, et al. (2013). 
Understanding and execution of discharge instructions. AM J Med 
Qual. 28(5):383-391.
    \243\ Flacker J, Park W. Sims A. (2007). Hospital discharge 
information and older patients; do they get what they need? J Hosp 
Med. 2(5):291-296.
    \244\ Hastings SN, Barrett A, Weinberger M, et al. (2011). Older 
patients' understanding of emergency department discharge 
information and its relationship with adverse outcomes. J Patient 
Saf. 7(1):19-25.
    \245\ Stull, D, Leidy, N, Parasuraman, B, et al. (2009). Optimal 
recall periods for patient-reported outcomes: Challenges and 
potential solutions. Current medical research and opinion. 25. 929-
42. www.doi.org/10.1185/03007990902774765.
    \246\ Peasgood T, Caruana JM, Mukuria C. (2023). Systematic 
Review of the Effect of a One-Day Versus Seven-Day Recall Duration 
on Patient Reported Outcome Measures (PROMs). Patient. 16(3):201-
221. www.doi.org/10.1007/s40271-022-00611-w.
---------------------------------------------------------------------------

    The survey has been tested and reliability determined in English 
and Spanish, and the survey can be completed using a translator, proxy, 
or caregiver.
(ii) Measure Specifications
    The measure numerator is the sum of all individual scores a HOPD 
receives from eligible respondents, which could be patients or 
caregivers. Individual scores are calculated using a top-box approach; 
each individual score is calculated for each respondent by taking the 
sum of items for which the respondent gave the most positive response 
(``Yes'' or ``Very Clear'') and dividing by the number of items the 
respondent deemed applicable to their procedure or surgery. Applicable 
items are calculated by subtracting the sum of items for which the 
respondent selected ``Does not apply'' from the total number of survey 
items (nine).\247\
---------------------------------------------------------------------------

    \247\ Partnership for Quality Measurement. Submission Tool and 
Repository Measure Database. https://p4qm.org/measures/4210.
---------------------------------------------------------------------------

    The measure denominator is the total number of patients 18-years or 
older who had a procedure or surgery in an HOPD, left the HOPD alive, 
and responded to the survey.248 249 Only fully completed 
surveys are included in the measure calculation.
---------------------------------------------------------------------------

    \248\ Surveys could be completed by patient or a caregiver.
    \249\ Partnership for Quality Measurement. Submission Tool and 
Repository Measure Database. https://p4qm.org/measures/4210.
---------------------------------------------------------------------------

    The intent of the measure is to encourage HOPDs to provide 
individualized recovery instructions regardless of the patient's unique 
characteristics; therefore, there is no need for risk-adjustment. For 
additional details regarding the measure specifications, we refer 
readers to our QualityNet website.\250\
---------------------------------------------------------------------------

    \250\ The proposed OQR Program measure specifications can be 
found at https://qualitynet.cms.gov/outpatient/oqr/proposedmeasures.
---------------------------------------------------------------------------

(b) Data Submission and Reporting
    We propose to adopt the Information Transfer PRO-PM as a voluntary 
measure for the CY 2026 reporting period followed by mandatory 
reporting beginning with the CY 2027 reporting period/CY 2029 payment 
determination. We would utilize the voluntary period to monitor the 
implementation and operationalization of the measure.
    We refer readers to section XV.E.2.c of this proposed rule for a 
discussion of the Information Transfer PRO-PM form, manner, and timing 
of data submission and reporting requirements.
    We invite public comment on this proposal.

2. Proposed Measure Removals From the Hospital OQR Program Measure Set

a. Proposal To Remove the MRI Lumbar Spine for Low Back Pain Measure 
Beginning With the CY 2025 Reporting Period/CY 2027 Payment 
Determination
    In the CY 2009 OPPS/ASC final rule (73 FR 68766), we adopted the 
MRI Lumbar Spine for Low Back Pain measure beginning with the CY 2010 
payment determination. This claims-based measure evaluates the 
percentage of magnetic resonance imaging (MRI) of the lumbar spine 
studies for low back pain performed in the outpatient setting where 
conservative therapy was not attempted prior to the MRI. The MRI Lumbar 
Spine for Low Back Pain measure was initially endorsed by a consensus-
based entity (CBE) in 2008, but endorsement of this measure was removed 
in 2017 because the measure developer did not submit the measure for 
review during its designated measure endorsement maintenance cycle.
    When we adopted this measure for the Hospital OQR Program, we cited 
growing concerns about the overuse of imaging services and evidence 
that a substantial portion of MRIs for low back pain does not lead to 
any modification of therapy based on MRI results, especially when 
performed on the first visit prior to any attempt to diagnose or treat 
the patient through more conservative means (73 FR 68764). Since then, 
our internal analyses have shown that the measure has maintained stable 
national performance (excluding the CY 2022 performance period impacted 
by our COVID-19 exception policies) and low average volumes, indicating 
limited reliability and capacity to improve the quality of care for 
patients with reported low back pain. A study in the Journal of the 
American College of Radiology found that documentation of conditions 
that fall into the exclusion criteria of the measure increased after 
implementation, resulting in smaller patient populations and indicating 
that the measure may not translate to improvement of imaging 
appropriateness.\251\ Other studies have shown that the MRI Lumbar 
Spine for Low Back Pain measure has not correlated with improved 
outcomes.252 253 254 The latest findings are consistent with 
responses to a 2020 request for public comment where commenters 
expressed concerns regarding measure exclusion conditions,

[[Page 59455]]

imaging modalities, measure validity, and measure usability. In 
response to that request for public comments, commenters also stated 
that an unintended consequence of using this measure may be delayed 
diagnoses.\255\
---------------------------------------------------------------------------

    \251\ Flug JA and Lind KE. (2017). Public Reporting of MRI of 
the Lumbar Spine for Low Back Pain and Changes in Clinical 
Documentation, Journal of the American College of Radiology (14)12: 
1545-1551. https://doi.org/10.1016/j.jacr.2017.07.012.
    \252\ Blackmore CC. (2019). The Relationship Between Medicare 
Outpatient Efficiency Measure OP8 and Lumbar MRI Utilization, 
Journal of the American College of Radiology 16(3): 276-281. https://doi.org/10.1016/j.jacr.2018.10.026.
    \253\ Lind KE and Flug JA. (2019). Sociodemographic Variation in 
the Use of Conservative Therapy Before MRI of the Lumbar Spine for 
Low Back Pain in the Era of Public Reporting, Journal of the 
American College of Radiology 16(4): 560-569. https://doi.org/10.1016/j.jacr.2018.12.047.
    \254\ Martin BI and Jarvik JG. (2015). The Medicare Outpatient 
Imaging Efficiency Measure for Low Back Pain (``OP-8''), Radiology 
276(1). https://doi.org/10.1148/radiol.2015150648.
    \255\ Ibid.
---------------------------------------------------------------------------

    Based on these findings, this measure meets the criteria that we 
have adopted for measure removal Factor 2 (that is, performance or 
improvement on a measure does not result in better patient outcomes), 
as codified under Sec.  419.46(i)(3)(i)(B). Therefore, we propose to 
remove the MRI Lumbar Spine for Low Back Pain measure from the Hospital 
OQR Program beginning with the CY 2025 reporting period/CY 2027 payment 
determination.
    We invite public comment on this proposal, including feedback on 
other potential measures that may better address unnecessary imaging, 
which we will consider for adoption into the Hospital OQR Program in 
future rulemaking.
b. Proposal To Remove the Cardiac Imaging for Preoperative Risk 
Assessment for Non-Cardiac, Low-Risk Surgery Measure Beginning With the 
CY 2025 Reporting Period/CY 2027 Payment Determination
    In the CY 2011 OPPS/ASC final rule (75 FR 72079 and 72080), we 
adopted the claims-based Cardiac Imaging for Preoperative Risk 
Assessment for Non-Cardiac, Low-Risk Surgery measure beginning with the 
CY 2012 payment determination. This measure calculates the percentage 
of stress echocardiography, single photon emission computed tomography 
myocardial perfusion imaging (SPECT MPI), stress magnetic resonance 
imaging (MRI), or computed coronary tomography angiography (CCTA) 
performed at each facility in the 30 days prior to an ambulatory non-
cardiac, low-risk surgery performed at any location, and was endorsed 
by a CBE in 2011. Endorsement was removed in 2021 after the measure 
developer did not submit the measure for review during its designated 
measure endorsement maintenance cycle.
    We adopted the measure for the Hospital OQR measure set, in part, 
to address an area of patient safety related to one of the most common 
imaging services in the Medicare population at the time, as we believed 
inappropriate use could increase the patient's risk of cancer, 
contribute no benefit to the quality of care, and result in the 
unnecessary waste of services (75 FR 72076). In response to commenter 
concerns regarding the infrequent occurrence of low-risk non-cardiac 
surgeries, and whether this measure may assess significant differences 
in the provision of imaging tests and their impact on the quality of 
care provided, we stated our belief at the time that the measure could 
identify outlier practice patterns and encourage HOPDs to improve their 
quality of care.
    Our routine monitoring and evaluation shows that the range of cases 
per HOPD varies greatly (that is, from one to over 1,300 cases), posing 
limitations when assessing and interpreting comparative performance 
trends over time.\256\ In addition, while there was a slight average 
performance score improvement from payment determination years CY 2020 
to 2024 (despite the COVID-19 pandemic and the larger pool of 
reporters) of about one percent (4.7 percent and 3.6, respectively), 
the variation between the 10th and 25th percentiles of performance is 
not statistically distinguishable, indicating the measure may not 
provide meaningful data for informing consumers about quality of care 
for this service in HOPDs. Furthermore, at a 3.5 percent average 
overall rate for this measure for the CY 2024 payment determination 
year, there is little room for national performance on this measure to 
show significant improvement as lower rates are better for this 
measure.
---------------------------------------------------------------------------

    \256\ Ibid.
---------------------------------------------------------------------------

    Based on these findings, this measure meets the criteria for 
measure removal Factor 2 (that is, performance or improvement on a 
measure does not result in better patient outcomes), as codified under 
Sec.  419.46(i)(3)(i)(B). Therefore, we propose to remove the Cardiac 
Imaging for Preoperative Risk Assessment for Non-Cardiac, Low-Risk 
Surgery measure beginning with the CY 2025 reporting period/CY 2027 
payment determination.
    We invite public comment on this proposal, including feedback on 
other potential measures that may better address unnecessary imaging, 
which we will consider for adoption into the Hospital OQR Program in 
future rulemaking.
3. Summary of Proposed Program Measure Set Updates
a. Proposed Program Measure Set Beginning With the CY 2027 Payment 
Determination
    Table 90 summarizes the newly proposed Hospital OQR Program measure 
set beginning with the CY 2027 payment determination, which would 
remove the two imaging efficiency measures discussed above and add the 
three cross-program health equity measures discussed in sections 
XV.C.2.a, XV.C.2.b, and XIV.B, respectively, of this proposed rule.
BILLING CODE 4120-01-P

[[Page 59456]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.124

b. Proposed Program Measure Set Updates Beginning With the CY 2031 
Payment Determination
    Table 91 summarizes the newly proposed Hospital OQR Program measure 
set for the CY 2031 payment determination, which would remove the two 
imaging efficiency measures, discussed in sections XV.C.2.a and 
XV.C.2.b of this proposed rule; add the Information Transfer PRO-PM, 
discussed in section XV.C.1.b of this proposed rule; and add the three 
cross-program health equity measures, discussed in sections XIV.B.1, 
XIV.B.2, and XIV.B.3 of this proposed rule.

[[Page 59457]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.125

BILLING CODE 4120-01-C

D. Administrative Requirements

    We refer readers to Sec.  419.46(b) and (c) and the CYs 2014, 2016, 
and 2019 OPPS/ASC final rules (78 FR 75108 through 75109, 80 FR 70519, 
and 83 FR 59103 through 59104, respectively) for our policies regarding 
program participation requirements and withdrawal from the program.
    We are not proposing any changes to these policies in this proposed 
rule.

E. Form, Manner, and Timing of Data Submission

1. General Data Submission Policy
    We refer readers to Sec.  419.46(d) and the CY 2023 OPPS/ASC final 
rule (87 FR 72110 through 72112) for our general program policies 
regarding: (1) submission of data under the Hospital OQR Program 
generally; (2) review and correction of submitted data; and (3) 
extraordinary circumstance exception requests (ECE) for data 
submission.
    We also refer readers to the CYs 2019 and 2022 OPPS/ASC final rules 
(83 FR 59104 through 59105 and 86 FR 63861, respectively) for details 
regarding our maintenance of technical specifications. We maintain 
measure technical specification manuals (referred to as Specifications 
Manuals) that can be found on the CMS website at: https://qualitynet.cms.gov/outpatient/specifications-manuals.
    We are not proposing any changes to these policies in this proposed 
rule.

2. Measure Specific Data Submission and Reporting Requirements

    We refer readers to the CYs 2014, 2016, 2022, 2023, and 2024 OPPS/
ASC final rules (77 FR 68484; 80 FR 70521, 87 FR 72110 through 72112; 
78 FR

[[Page 59458]]

75097 through 75100; and 88 FR 82004 through 82006, respectively) for 
information regarding our claims-based, web-based, eCQM, chart-
abstracted, PRO-PM, and survey-based data submission and reporting 
requirements.
a. Web-Based Measures
(1) CMS-Designated Information System and Proposal for Data Submission 
for the Hospital Commitment to Health Equity (HCHE), Screening for 
Social Drivers of Health (SDOH), and Screen Positive Rate for SDOH 
Measures
    We refer readers to the CY 2014 OPPS/ASC final rule (78 FR 75112 
through 75115), the CY 2016 OPPS/ASC final rule (80 FR 70521), and the 
CMS website, currently available at https://qualitynet.cms.gov, for a 
discussion of the requirements for measure data submitted via the 
Hospital Quality Reporting (HQR) System (formerly referred to as the 
QualityNet Secure Portal). The HQR System safeguards protected health 
information in compliance with the HIPAA Privacy and Security Rules (45 
CFR part 160 and 45 CFR part 164, subparts A, C, and E).
    In section XIV.B.1, XIV.B.2, and XIV.B.3 of this proposed rule, we 
proposed adoption of:
    (1) the Hospital Commitment to Health Equity measure, beginning 
with the CY 2025 reporting period/CY 2027 payment determination;
    (2) the Screening for SDOH measure, beginning with voluntary 
reporting for the CY 2025 reporting period followed by mandatory 
reporting beginning with the CY 2026 reporting period/CY 2028 payment 
determination; and
    (3) the Screen Positive Rate for SDOH measure, beginning with 
voluntary reporting for the CY 2025 reporting period followed by 
mandatory reporting beginning with the CY 2026 reporting period/CY 2028 
payment determination.
    Consistent with our established data submission requirements (80 FR 
70521 and 70522), we propose that HOPDs would be required to submit all 
of the data required to calculate each of these three measures annually 
using a CMS-approved, web-based, data collection tool available within 
the HQR System starting January 1 through and including May 15 in the 
year prior to the applicable payment determination year. For the 
Hospital OQR Program, the performance period (which we refer to as the 
CY reporting period) for each of these measures on which data is 
submitted using a web-based tool would be January 1 through and 
including December 31 of the year that is 2 years prior to the 
applicable payment determination year; and the data submission period 
would be January 1 through and including May 15 in the calendar year 
immediately following the CY reporting period and immediately prior to 
applicable payment determination year. For example, for the CY 2025 
reporting period/2027 payment determination, the data submission period 
would be January 1, 2026, through and including May 15, 2026, covering 
the performance period of January 1, 2025, through and including 
December 31, 2025. Pursuant to Sec.  419.46(d)(4), a review and 
corrections period runs concurrently with the data submission period. 
During this timeframe, HOPDs would be able to enter, review, and 
correct data submitted for these measures.
    We invite public comment on this proposal.
(2) National Healthcare Safety Network (NHSN)
    We refer readers to the CY 2014 OPPS/ASC final rule (78 FR 75097 
through 75100) for a discussion of the previously finalized 
requirements for measure data submitted via the Centers for Disease 
Control and Prevention NHSN website.
    We are not proposing any changes to these policies in this proposed 
rule.
b. Electronic Clinical Quality Measures (eCQMs) and Proposal To Require 
Electronic Health Record (EHR) Technology To Be Certified to All eCQMs 
Available To Report Beginning With the CY 2025 Reporting Period/CY 2027 
Payment Determination
    In the CY 2024 Medicare Physician Fee Schedule (PFS) final rule (88 
FR 79307 through 79312), we finalized revisions to the definition of 
certified electronic health record technology (CEHRT) for the Medicare 
Promoting Interoperability Program at 42 CFR 495.4 and for the Quality 
Payment Program at 42 CFR 414.1305. Specifically, we added a reference 
to the ``Base EHR definition,'' which ONC proposed in the Health Data, 
Technology, and Interoperability: Certification Program Updates, 
Algorithm Transparency, and Information Sharing (HTI-1) proposed rule 
(88 FR 23759, 23905). We finalized these revisions to ensure, if the 
HTI-1 proposals were finalized, the ``Base EHR definition'' would be 
applicable for the CEHRT definitions going forward (88 FR 79309 through 
79312).\257\ ONC subsequently finalized a definition of ``Base EHR'' in 
the Health Data, Technology, and Interoperability: Certification 
Program Updates, Algorithm Transparency, and Information Sharing final 
rule (89 FR 1192, 1298).
---------------------------------------------------------------------------

    \257\ Revisions to the CEHRT definition are intended to 
incorporate ONC's approach of discontinuing references to yearly 
editions. For additional background, we refer readers to HTI-1 
proposed rule (88 FR 23759).
---------------------------------------------------------------------------

    We also finalized the replacement of references to the ``2015 
Edition health IT certification criteria'' with ``ONC health IT 
certification criteria,'' and the addition of the regulatory citation 
for ONC health IT certification criteria in 45 CFR 170.315. We 
finalized the proposal to specify that EHR technology must meet ONC's 
health IT certification criteria ``as adopted and updated in 45 CFR 
170.315'' to qualify as CEHRT (88 FR 79553). These revisions, finalized 
in the CY 2024 PFS final rule, are consistent with the policy 
subsequently finalized in ONC's HTI-1 final rule, which appeared in the 
Federal Register on January 9, 2024 (89 FR 1205 through 1210). For 
additional background and information on this update, we refer readers 
to the discussion in the CY 2024 PFS final rule on this topic (88 FR 
79307 through 79312).
    In the CY 2022 OPPS/ASC final rule (86 FR 63868 and 63869), we 
adopted a requirement for hospitals to utilize certified technology 
updated to be consistent with the 2015 Edition Cures Update for 
reporting eCQMs under the Hospital OQR Program, beginning with the CY 
2023 reporting period/CY 2025 payment determination. However, we did 
not finalize a requirement that the EHR technology used for eCQM 
reporting must be certified to all eCQMs (that is, tested and validated 
on each individual eCQM) in the Hospital OQR Program.
    The Hospital IQR Program and the Medicare Promoting 
Interoperability Program require EHRs to be certified to all available 
eCQMs in the programs. We finalized this policy for the Hospital IQR 
Program in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38393) for the 
FY 2019 and FY 2020 payment determination years, and we finalized in 
the FY 2020 IPPS/LTCH PPS final rule (84 FR 42505 through 42506) that 
this policy would continue beginning with the CY 2020 reporting period/
FY 2022 payment determination. For the Medicare Promoting 
Interoperability Program, we finalized this policy in the FY 2018 and 
FY 2019 IPPS/LTCH PPS final rules for CYs 2018 and 2019, respectively 
(82 FR 38483 through 38485 and 83 FR 41671 through 41672, 
respectively). We also finalized the continuation of this requirement 
in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42600 and 42601) for CY 
2020 and subsequent years. When EHRs are certified to all available 
eCQMs in a program measure set, hospitals are able to accurately 
capture and report data for these measures. For this reason, and to

[[Page 59459]]

align the Hospital OQR Program's eCQM certification requirements with 
the Hospital IQR Program and Medicare Promoting Interoperability 
Program clinical quality measure electronic submission requirements for 
eligible hospitals, we propose that beginning with the CY 2025 
reporting period/CY 2027 payment determination, a HOPD using EHR 
technology certified to the ONC health IT certification criteria would 
be required to have its EHR technology certified to all eCQMs that are 
available to report under the Hospital OQR Program to meet reporting 
requirements for the Hospital OQR Program.
    We further propose that for the CY 2025 reporting period/CY 2027 
payment determination and subsequent years, HOPDs would additionally be 
required to use the most recent version of the eCQM electronic measure 
specifications for the designated reporting period available on the 
Electronic Clinical Quality Improvement (eCQI) Resource Center website 
at: https://ecqi.healthit.gov/. We noted in the CY 2021 OPPS/ASC final 
rule (86 FR 63861) that we would generally update the measure 
specifications on an annual basis to align with current clinical 
guidelines and code systems.
    Our proposal to require that EHRs be certified to all available 
eCQMs would promote more accurate electronic quality reporting by 
incentivizing HOPDs to have their EHR and other health information 
technology (IT) vendors test all available eCQMs and offer reporting 
modules with certified eCQMs. Through this requirement, we expect 
greater certainty for hospitals that their EHR systems are capable of 
accurately calculating the eCQMs reported to CMS under the Hospital OQR 
Program because the EHR technology would be up to date and tested on 
each eCQM. Additionally, we anticipate this requirement would help 
reduce burden for hospitals by potentially reducing the frequency of 
needing to consult with their EHR and other health IT vendors to 
troubleshoot implementation or reporting issues.
    Finally, we propose to revise regulatory text at Sec.  419.46 to 
add a new section (j) to codify submission requirements for eCQMs under 
the Hospital OQR Program. Under this proposal, we would codify in Sec.  
419.46(j)(1) the requirement for hospitals to utilize certified 
technology updated to be consistent with ONC's health IT certification 
criteria, as adopted and updated in 45 CFR 170.315, for reporting eCQMs 
under the Hospital OQR Program. We propose to codify in Sec.  
419.46(j)(2) the requirement that the EHR technology used for eCQM 
reporting must be certified to all eCQMs (that is, tested and validated 
on each individual eCQM) available to report under the Hospital OQR 
Program. We also propose to codify in Sec.  419.46(j)(3) the 
requirement that hospitals use the most recent version of the eCQM 
electronic measure specifications for the applicable reporting period 
available on the Electronic Clinical Quality Improvement (eCQI) 
Resource Center website at: https://ecqi.healthit.gov/ or another 
website as designated by CMS.
    We invite public comment on these proposals.
c. Patient-Reported Outcome-Based Performance Measures (PRO-PMs)
(1) Proposal for Data Submission of PRO-PM Data
    In the CY 2024 OPPS/ASC final rule (88 FR 82006) we finalized that 
for the Total Hip Arthroplasty and/or Total Knee Arthroplasty (THA/TKA) 
PRO-PM, hospitals must use the HQR system for data submission for a 
PRO-PM. In this proposed rule, we propose to apply this submission 
method to PRO-PMs generally, including the Information Transfer PRO-PM. 
We propose that hospitals must use the HQR system for data submission 
for any PRO-PM that we adopt for the Hospital OQR Program measure set. 
HOPDs may choose to: (1) directly submit their PRO-PM data to CMS using 
the HQR system; or (2) utilize a third-party entity, such as a vendor 
or registry, to submit their data using the HQR system. The HQR system 
allows for data submission using multiple file formats (such as CSV, 
XML) and a manual data entry option, allowing HOPDs additional 
flexibility in data submission.
    We invite public comment on this proposal.
(2) Proposal for Data Submission and Reporting Requirements for the 
Patient Understanding of Key Information Related to Recovery After a 
Facility-Based Outpatient Procedure or Surgery, Patient Reported 
Outcome-Based Performance Measure (Information Transfer PRO-PM)
    In section XV.C.1.b of this proposed rule, we discuss the proposed 
adoption of the Information Transfer PRO-PM beginning with voluntary 
reporting for the CY 2026 reporting period followed by mandatory 
reporting beginning with the CY 2027 reporting period/CY 2029 payment 
determination. We propose that the performance period on which data is 
submitted would be January 1 through and including December 31 of the 
year that is two years prior to the applicable payment determination 
year. We propose to require HOPDs to submit their Information Transfer 
PRO-PM data between the period starting January 1st though and 
including May 15 of the year prior to the applicable payment 
determination year. All deadlines occurring on a Saturday, Sunday, or 
legal holiday, or on any other day all or part of which is declared to 
be a non-workday for federal employees by statute or Executive Order 
would be extended to the first day thereafter. We propose to require 
HOPDs to offer all patients meeting the measure's denominator 
specifications the opportunity to complete the survey. Additionally, we 
propose a minimum random sample size of 300 completed surveys to ensure 
the reliability of the measure, as this is a recommended minimum sample 
size for a population of 1,500 to provide a 95 percent confidence 
interval and a 90 percent confidence interval for a population of over 
10,000; this is also generally accepted as a minimum sample size for 
stable population estimates.258 259 HOPDs that are unable to 
collect 300 completed surveys will not be able to perform random 
sampling, and would instead be required to submit data on survey 
responses from all completed surveys received.
---------------------------------------------------------------------------

    \258\ Ahmad, H., & Halim, H. (2017). Determining Sample Size for 
Research Activities. Selangor Business Review, 2(1), 20-34. 
Retrieved from https://sbr.journals.unisel.edu.my/ojs/index.php/sbr/article/view/12.
    \259\ Voorhis, C & Morgan, B. (2007). Understanding Power and 
Rules of Thumb for Determining Sample Size. Tutorials in 
Quantitative Methods for Psychology. 3 (2), 43-50. www.doi.org/10.20982/tqmp.03.2.p043.
---------------------------------------------------------------------------

    We invite public comment on these proposals.

F. Public Reporting of Measure Data

1. General Policy
    We refer readers to the CY 2024 OPPS/ASC final rules (88 FR 81995 
and 81996) for our previously finalized policies regarding public 
display of quality measures.
2. Proposal To Publicly Report the Median Time From Emergency 
Department (ED) Arrival to ED Departure for Discharged ED Patients--
Psychiatric/Mental Health Patients Strata on Care Compare
    We refer readers to the CY 2011 OPPS/ASC final rule (75 FR 72086) 
where we adopted the Median Time from ED Arrival to ED Departure for 
Discharged ED Patients (Median Time for Discharged ED Patients) measure 
beginning with CY 2013 payment determination. The Median Time for

[[Page 59460]]

Discharged ED Patients measure is a chart-abstracted measure that 
evaluates the time from ED arrival to departure, also known as ED 
throughput time. The measure data are stratified into four separate 
calculations: (a) Median Time for Discharged ED Patients--Overall Rate; 
(b) Median Time for Discharged ED Patients--Reporting Measure, which 
excludes psychiatric/mental health and transfer patients; (c) Median 
Time for Discharged ED Patients--Psychiatric/Mental Health Patients, 
which includes information only for psychiatric/mental health patients; 
and (d) Median Time for Discharged ED Patients--Transfer Patients, 
which includes information only for patients transferred from the ED.
    In the CY 2024 OPPS/ASC final rule (88 FR 81995 and 81996), we 
finalized that data for three measure strata (that is, the Overall 
Rate, Reporting Measure, and Transfer Patients strata) would be 
publicly reported both on data.medicare.gov in downloadable data files 
and on Care Compare (or subsequent CMS-designated websites). Data for 
the Psychiatric/Mental Health Patients stratum are not currently 
publicly reported on the Care Compare site, though these data are 
published on data.medicare.gov in downloadable data files (82 FR 
59438). In the CY 2018 OPPS/ASC final rule (82 FR 52576 through 52578), 
we summarized commenters' concerns that delays in ED discharge of 
mental health patients may be influenced, in part, by the availability 
of community resources. In response, we stated that we would take 
additional time for further consideration prior to displaying this 
subset of data on Care Compare. We have considered commenters' concern 
that factors outside of an HOPD's control may influence ED throughput 
for psychiatric/mental health patients; however, it is our 
understanding that many hospitals face such concerns, and that timely 
care is a critical aspect of quality of care. We also stated in the CY 
2024 OPPS/ASC final rule (88 FR 82061) in the context of adopting this 
measure for the REHQR Program that the public reporting of these data 
on Care Compare could help patients and their caregivers identify which 
facilities are performing better than others despite potential 
challenges, and drive quality improvement efforts.
    Our routine monitoring and evaluation of the CY 2024 performance 
period for this measure has shown a median ED throughput time of 4.7 
hours for psychiatric/mental health patients compared to 2.6 hours for 
non-psychiatric/mental health patients, suggesting this is an area that 
may benefit from additional quality improvement efforts. Data from the 
Median Time for Discharged ED Patients--Psychiatric/Mental Health 
Patients will be useful for patients choosing a care location, as well 
as researchers and hospital staff as they attempt to address health 
disparities and improve the timeliness of care for mental health 
patients. Since the data required for public reporting are already 
collected and submitted by participating HOPDs, publicly reporting this 
stratification would not create additional hospital burden.
    For these reasons, we propose to make data for the Psychiatric/
Mental Health Patients stratification available on Care Compare, 
including data that were previously published on data.medicare.gov but 
not displayed on the Care Compare site, beginning in CY 2025.
    We invite public comment on this proposal.

G. Payment Reduction for Hospitals That Fail To Meet the Hospital OQR 
Program Requirements for the CY 2025 Payment Determination

1. Background
    Section 1833(t)(17) of the Act, which applies to subsection (d) 
hospitals (as defined under section 1886(d)(1)(B) of the Act), states 
that hospitals that fail to report data required to be submitted on 
measures selected by the Secretary, in the form and manner, and at a 
time, specified by the Secretary will incur a 2.0 percentage point 
reduction to their Outpatient Department (OPD) fee schedule increase 
factor; that is, the annual payment update factor. Section 
1833(t)(17)(A)(ii) of the Act specifies that any reduction applies only 
to the payment year involved and will not be taken into account in 
computing the applicable OPD fee schedule increase factor for a 
subsequent year.
    The application of a reduced OPD fee schedule increase factor 
results in reduced national unadjusted payment rates that apply to 
certain outpatient items and services provided by hospitals that are 
required to report outpatient quality data in order to receive the full 
payment update factor and that fail to meet the Hospital OQR Program 
requirements. Hospitals that meet the reporting requirements receive 
the full OPPS payment update without the reduction. For a more detailed 
discussion of how this payment reduction was initially implemented, we 
refer readers to the CY 2009 OPPS/ASC final rule with comment period 
(73 FR 68769 through 68772).
    The national unadjusted payment rates for many services paid under 
the OPPS equal the product of the OPPS conversion factor and the scaled 
relative payment weight for the APC to which the service is assigned. 
The OPPS conversion factor, which is updated annually by the OPD fee 
schedule increase factor, is used to calculate the OPPS payment rate 
for services with the following status indicators (listed in Addendum B 
to the proposed rule, which is available via the internet on the CMS 
website): ``J1,'' ``J2,'' ``P,'' ``Q1,'' ``Q2,'' ``Q3,'' ``R,'' ``S,'' 
``T,'' ``V,'' or ``U.'' Payment for all services assigned to these 
status indicators will be subject to the reduction of the national 
unadjusted payment rates for hospitals that fail to meet Hospital OQR 
Program requirements, with the exception of services assigned to New 
Technology APCs with assigned status indicator ``S'' or ``T.'' We refer 
readers to the CY 2009 OPPS/ASC final rule with comment period (73 FR 
68770 through 68771) for a discussion of this policy. In the CY 2017 
OPPS/ASC final rule with comment period (81 FR 79796), we clarified 
that the reporting ratio does not apply to codes with status indicator 
``Q4'' because services and procedures coded with status indicator 
``Q4'' are either packaged or paid through the Clinical Laboratory Fee 
Schedule and are never paid separately through the OPPS.
    The OPD fee schedule increase factor is an input into the OPPS 
conversion factor, which is used to calculate OPPS payment rates. To 
reduce the OPD fee schedule increase factor for hospitals that fail to 
meet reporting requirements, we calculate two conversion factors--a 
full market basket conversion factor (that is, the full conversion 
factor), and a reduced market basket conversion factor (that is, the 
reduced conversion factor). We then calculate a reduction ratio by 
dividing the reduced conversion factor by the full conversion factor. 
We refer to this reduction ratio as the ``reporting ratio'' to indicate 
that it applies to payment for hospitals that fail to meet their 
reporting requirements. Applying this reporting ratio to the OPPS 
payment amounts results in reduced national unadjusted payment rates 
that are mathematically equivalent to the reduced national unadjusted 
payment rates that would result if we multiplied the scaled OPPS 
relative payment weights by the reduced conversion factor. For example, 
to determine the reduced national unadjusted payment rates that applied 
to hospitals that failed to meet their quality reporting requirements 
for the

[[Page 59461]]

CY 2010 OPPS/ASC final rule with comment period, we multiplied the 
final full national unadjusted payment rate found in Addendum B of the 
CY 2010 OPPS/ASC final rule with comment period by the CY 2010 OPPS 
final rule with comment period reporting ratio of 0.980 (74 FR 60642).
    We note that the only difference in the calculation for the full 
conversion factor and the calculation for the reduced conversion factor 
is that the full conversion factor uses the full OPD update, and the 
reduced conversion factor uses the reduced OPD update. The baseline 
OPPS conversion factor calculation is the same since all other 
adjustments would be applied to both conversion factor calculations. 
Therefore, our standard approach of calculating the reporting ratio as 
described earlier in this section is equivalent to dividing the reduced 
OPD update factor by that of the full OPD update factor. In other 
words:

Full Conversion Factor = Baseline OPPS conversion factor * (1 + OPD 
update factor)
Reduced Conversion Factor = Baseline OPPS conversion factor * (1 + OPD 
update factor-0.02)
Reporting Ratio = Reduced Conversion Factor/Full Conversion Factor

    Which is equivalent to:

Reporting Ratio = (1 + OPD Update factor-0.02)/(1 + OPD update factor)

    In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68771 
through 68772), we established a policy that the Medicare beneficiary's 
minimum unadjusted copayment and national unadjusted copayment for a 
service to which a reduced national unadjusted payment rate applies 
would each equal the product of the reporting ratio and the national 
unadjusted copayment or the minimum unadjusted copayment, as 
applicable, for the service. Under this policy, we apply the reporting 
ratio to both the minimum unadjusted copayment and national unadjusted 
copayment for services provided by hospitals that receive the payment 
reduction for failure to meet the Hospital OQR Program reporting 
requirements. This application of the reporting ratio to the national 
unadjusted and minimum unadjusted copayments is calculated according to 
Sec.  419.41 of our regulations, prior to any adjustment for a 
hospital's failure to meet the quality reporting standards according to 
Sec.  419.43(h). Beneficiaries and secondary payers thereby share in 
the reduction of payments to these hospitals.
    In the CY 2009 OPPS/ASC final rule with comment period (73 FR 
68772), we established the policy that all other applicable adjustments 
to the OPPS national unadjusted payment rates apply when the OPD fee 
schedule increase factor is reduced for hospitals that fail to meet the 
requirements of the Hospital OQR Program. For example, the following 
standard adjustments apply to the reduced national unadjusted payment 
rates: the wage index adjustment, the multiple procedure adjustment, 
the interrupted procedure adjustment, the rural sole community hospital 
adjustment, and the adjustment for devices furnished with full or 
partial credit or without cost. Similarly, OPPS outlier payments made 
for high cost and complex procedures will continue to be made when 
outlier criteria are met. For hospitals that fail to meet the quality 
data reporting requirements, the hospitals' costs are compared to the 
reduced payments for purposes of outlier eligibility and payment 
calculation. We established this policy in the OPPS beginning in the CY 
2010 OPPS/ASC final rule with comment period (74 FR 60642). For a 
complete discussion of the OPPS outlier calculation and eligibility 
criteria, we refer readers to section II.G of the CY 2023 OPPS/ASC 
proposed rule (87 FR 44533 through 44534).
2. Reporting Ratio Application and Associated Adjustment Policy for CY 
2025
    We propose to continue our established policy of applying the 
reduction of the OPD fee schedule increase factor through the use of a 
reporting ratio for those hospitals that fail to meet the Hospital OQR 
Program requirements for the full CY 2025 annual payment update factor. 
For the CY 2025 OPPS/ASC proposed rule, the proposed reporting ratio is 
0.9805, which, when multiplied by the proposed full conversion factor 
of $89.379, equals a proposed conversion factor for hospitals that fail 
to meet the requirements of the Hospital OQR Program (that is, the 
reduced conversion factor) of $87.636. We propose to continue to apply 
the reporting ratio to all services calculated using the OPPS 
conversion factor. We propose to continue to apply the reporting ratio, 
when applicable, to all HCPCS codes to which we have proposed status 
indicator assignments of ``J1,'' ``J2,'' ``P,'' ``Q1,'' ``Q2,'' ``Q3,'' 
``R,'' ``S,'' ``T,'' ``V,'' and ``U'' (other than New Technology APCs 
to which we have proposed status indicator assignments of ``S'' and 
``T''). We propose to continue to exclude services paid under New 
Technology APCs. We propose to continue to apply the reporting ratio to 
the national unadjusted payment rates and the minimum unadjusted and 
national unadjusted copayment rates of all applicable services for 
those hospitals that fail to meet the Hospital OQR Program reporting 
requirements. We also propose to continue to apply all other applicable 
standard adjustments to the OPPS national unadjusted payment rates for 
hospitals that fail to meet the requirements of the Hospital OQR 
Program. Similarly, we propose to continue to calculate OPPS outlier 
eligibility and outlier payment based on the reduced payment rates for 
those hospitals that fail to meet the reporting requirements. In 
addition to our proposal to implement the policy through the use of a 
reporting ratio, we also propose to calculate the reporting ratio to 
four decimals (rather than the previously used three decimals) to more 
precisely calculate the reduced adjusted payment and copayment rates.
    For CY 2025, the proposed reporting ratio is 0.9805, which, when 
multiplied by the proposed full conversion factor of $89.379, equaled a 
proposed conversion factor for hospitals that fail to meet the 
requirements of the Hospital OQR Program (that is, the reduced 
conversion factor) of $87.636.

XVI. Rural Emergency Hospital Quality Reporting (REHQR) Program

A. Background and Statutory Authority

    The Rural Emergency Hospital Quality Reporting (REHQR) Program's 
overarching goals are to improve the quality of care provided to 
Medicare beneficiaries, facilitate public transparency, ensure 
accountability, and safeguard the accessibility of hospitals in rural 
settings.
    Section 1861(kkk)(7)(A) of the Social Security Act (the Act) 
provides that the Secretary shall establish quality measurement 
reporting requirements for Rural Emergency Hospitals (REHs), which may 
include the use of a small number of claims-based outcomes measures or 
surveys of patients with respect to their experience in the REH. In 
selecting measures for quality reporting, section 1861(kkk)(7)(C)(iii) 
provides that the Secretary shall take into consideration ways to 
account for REHs that lack sufficient case volume to ensure that the 
performance rates for such measures are reliable. Although section 
1861(kkk)(7)(C)(i) of the Act requires that measures specified by the 
Secretary for use in the REHQR Program be endorsed by the entity with a 
contract under section 1890(a) of the Act, section 1861(kkk)(7)(C)(ii) 
of the

[[Page 59462]]

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 so endorsed as long as due consideration is given to 
measures that have been endorsed or adopted by a consensus organization 
identified by the Secretary.
    In addition, section 1861(kkk)(7)(D) of the Act provides that the 
Secretary shall establish procedures for making data submitted by REHs 
for the REHQR Program available to the public, following the 
opportunity for the REH to review and submit corrections on such data, 
with such data to be posted on a CMS website as determined appropriate 
by the Secretary. Beginning with 2023 (or each year beginning on or 
after the date that is one year after one or more measures are first 
specified), section 1861(kkk)(7)(B)(ii) of the Act requires REHs to 
submit quality measure data to the Secretary ``in a form and manner, 
and at a time, specified by the Secretary.''
    We refer readers to section XVI of the CY 2024 OPPS/ASC final rule 
(88 FR 82046 through 82076) for an overview of the REHQR Program, which 
includes a more detailed discussion of the statutory history and 
program requirements codified at 42 CFR 419.95.
1. Previously Finalized Program Measure Sets
    We refer readers to the CY 2024 OPPS/ASC final rule (88 FR 82066 
through 82067) for more information regarding the previously finalized 
REHQR Program measure set beginning with the CY 2024 reporting period.
    Table 92 below summarizes the previously finalized REHQR Program 
measure set and initial reporting periods with program determinations 
beginning with the CY 2026 program determination.\260\
---------------------------------------------------------------------------

    \260\ We are using the phrase ``Program Determination'' for the 
REHQR Program to represent our assessment of compliance with program 
requirements for an applicable year because the REHQR Program does 
not include an associated payment adjustment.
[GRAPHIC] [TIFF OMITTED] TP22JY24.126

B. Program Measure Set Policies: Retention, Suspension or Removal, 
Modification, and Adoption

    We refer readers to Sec.  419.95(e) and the CY 2024 OPPS/ASC final 
rule (88 FR 82051 through 82053) for our program policies regarding 
measure retention, and immediate and general measure suspension and 
removal, and to Sec.  419.95(d) and the CY 2024 OPPS/ASC final rule (88 
FR 82054) for our program policies regarding modifications to 
previously adopted measures.
    We further refer readers to the CY 2024 OPPS/ASC final rule (88 FR 
82047 through 82051) for a discussion of our considerations for 
adopting quality measures under the REHQR Program, and to section 
XIV.B.1.c of this proposed rule for information regarding the pre-
rulemaking process.
    We are not proposing any changes to these policies in this proposed 
rule.

C. Program Measure Proposals

1. Proposal To Adopt Health Equity Quality Measures in the REHQR 
Program
    We refer readers to sections XIV.B.1, XIV.B.2, and XIV.B.3 of this 
proposed rule for our cross-program proposals to adopt the following 
measures in the REHQR Program: (1) the Hospital Commitment to Health 
Equity (HCHE) measure, beginning with the CY 2025 reporting period/CY 
2027 program determination; (2) the Screening for Social Drivers of 
Health (SDOH) measure, beginning with voluntary reporting for the CY 
2025 reporting period, followed by mandatory reporting beginning with 
the CY 2026 reporting period/CY 2028 program determination; and (3) the 
Screen Positive Rate for SDOH measure, beginning with voluntary 
reporting for the CY 2025 reporting period, followed by mandatory 
reporting beginning with the CY 2026 reporting period/CY 2028 program 
determination.
    Under the REHQR Program's statutory requirement under section 
1861(kkk)(7)(C)(iii) of the Act to consider the impact of low case 
volumes, we note that once mandatory reporting begins, the measure 
specifications require all patients to be screened and thus we do not 
believe the Screening for SDOH measure or the

[[Page 59463]]

Screen Positive Rate for SDOH measure would suffer from low case 
volumes. In addition, as stated in the CY 2024 OPPS/ASC final rule (88 
FR 82066), CMS does not report measures publicly unless it achieves 
sufficient case volumes to allow for public reporting of the collected 
data.
2. Proposal To Modify the Reporting Period for the Risk-Standardized 
Hospital Visits Within 7 Days After Hospital Outpatient Surgery Measure 
Beginning With the CY 2027 Program Determination
    In the CY 2024 OPPS/ASC final rule, we adopted the Risk-
Standardized Hospital Visits Within 7 Days After Hospital Outpatient 
Surgery measure in the REHQR Program with a one-year reporting period 
beginning with the CY 2024 reporting period (88 FR 82064 through 
82066).
    This measure is calculated from Part A and Part B Medicare 
administrative claims data for Medicare FFS beneficiaries with an 
outpatient same-day surgical procedure excluding eye surgeries and 
colonoscopies (except colonoscopy with biopsy). Colonoscopies are 
excluded from this measure as these procedures are examined separately 
on their own. Eye surgeries are excluded because they are performed in 
high volume and are generally perceived as being ``low risk.'' As 
stated in the CY 2024 OPPS/ASC final rule (88 FR 82064), this measure 
makes unplanned patient hospital visits (ED visits, observation stays, 
or unplanned inpatient admissions) after surgery more visible to 
providers and patients through publicly reporting scores.
    As we noted in the CY 2024 OPPS/ASC final rule (88 FR 82064), we 
believe this measure could also encourage providers to engage in 
quality improvement activities to reduce these visits by providing 
feedback to hospitals and providers. This measure meets the National 
Quality Strategy goals of embedding quality into the care journey and 
promoting safety,\261\ and we expect that the measure would promote 
improvement in patient care over time (88 FR 82064 through 82065).
---------------------------------------------------------------------------

    \261\ CMS, What is the CMS National Quality Strategy?. Available 
at: https://www.cms.gov/medicare/quality/meaningful-measures-initiative/cms-quality-strategy.
---------------------------------------------------------------------------

    We have continued to monitor and evaluate the reporting patterns of 
hospitals that have converted to REH status and have found that under 
the Hospital OQR Program, a limited number of current REHs are able to 
publicly report on this measure as specified based on case threshold 
minimums. Therefore, in consideration of our statutory obligation to 
consider ways to account for low case volumes and to publicly report on 
quality-of-care metrics for REHs, we propose to increase the reporting 
period from one year to two years beginning with the CY 2027 program 
determination.
    Under this proposal, the previously finalized one-year data 
collection period for the CY 2026 program determination would remain 
the same (that is, encounters from January 1, 2024 through December 31, 
2024), and then beginning with the CY 2027 program determination, the 
reporting period would be supplemented with data from the prior 
calendar year. For example, for the CY 2027 program determination, the 
reporting period would comprise data from CYs 2024 and 2025 (that is, 
encounters from January 1, 2024 through December 31, 2025). We note 
that, as stated in the CY 2024 OPPS/ASC final rule (88 FR 82066), CMS 
does not report measures publicly unless it achieves sufficient case 
volumes to allow for public reporting of the collected data.
[GRAPHIC] [TIFF OMITTED] TP22JY24.127

    As seen in Table 93, the longer reporting period of two years would 
facilitate greater case volumes for this measure and, subsequently, a 
larger portion of REHs would have data that could be reported publicly 
as more REHs attain the Risk-Standardized Hospital Visits Within 7 Days 
After Outpatient Surgery measure's minimum case threshold for 
reliability of 30 surgical cases. In addition, REHs reporting on the 
measure with two years

[[Page 59464]]

of data would have more eligible patients to assess; this increase in 
eligible cases would reduce the error estimate, making the confidence 
interval narrower, that is, increasing the reliability of the 
calculated measure. We refer readers to the CY 2019 OPPS/ASC final rule 
(83 FR 59106 through 59107) where we finalized a similar policy to 
extend the reporting period of the Facility 7-Day Risk-Standardized 
Hospital Visit Rate After Outpatient Colonoscopy measure in the 
Hospital OQR Program from two to three years.
    Under this proposal, there would be no gap in public reporting nor 
delay in providing REHs with data for quality improvement efforts. As 
this is a claims-based measure, REHs would not have any additional 
reporting burden associated with a longer reporting period.
    We invite public comment on this proposal.
3. Summary of Proposed Program Measure Set Updates
a. Proposed Program Measure Set Beginning With the CY 2027 Program 
Determination
    Table 94 summarizes the proposed updated REHQR Program measure set 
and reporting periods beginning with the CY 2027 program determination.
    Specifically, Table 94 includes the previously finalized measure 
set with updates to reflect the proposed extension of the reporting 
period for the Risk-Standardized Hospital Visits Within 7 Days After 
Hospital Outpatient Surgery measure beginning with the CY 2027 program 
determination, and the three proposed new cross-program health equity 
measures as detailed in sections XIV.B.1, XIV.B.2, and XIV.B.3, 
respectively, of this proposed rule:
[GRAPHIC] [TIFF OMITTED] TP22JY24.128

b. Proposed Program Measure Set Beginning With the CY 2028 Program 
Determination
    Table 95 summarizes the proposed updated REHQR Program measure set 
and reporting periods beginning with the CY 2028 program determination.
    Specifically, Table 95 includes the previously finalized measure 
set with updates to reflect the proposed extension of the reporting 
period for the Risk-Standardized Hospital Visits Within 7 Days After 
Hospital Outpatient Surgery measure beginning with the CY 2028 program 
determination, and the three proposed new cross-program health equity 
measures as detailed in sections XIV.B.1, XIV.B.2, and XIV.B.3, 
respectively, of this proposed rule:

[[Page 59465]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.129

D. Administrative Requirements

    We refer readers to Sec.  419.95(b) and the CY 2024 OPPS/ASC final 
rule (88 FR 82074) for our policies regarding administrative 
requirements previously finalized for the REHQR Program.
    We are not proposing any changes to these policies in this proposed 
rule.

E. Form, Manner, and Timing of Data Submission

1. General Policy
    We refer readers to Sec.  419.95(c) and Sec.  419.95(g) and the CY 
2024 OPPS/ASC final rule (88 FR 82074 through 82076) for our general 
policies regarding: (1) submission of data under the REHQR Program 
generally; (2) review and correction of submitted data; and (3) 
extraordinary circumstance exception (ECE) requests for data 
submission.
    We are not proposing any changes to these policies in this proposed 
rule.
2. Proposed Data Submission Policy Following Conversion to REH Status
    As we have implemented these general policies and some hospitals 
have converted to REH status, we believe that it is necessary to 
specify when a hospital that converts to REH status is required to 
report data to the REHQR Program. Thus, we propose that an REH must 
begin submitting data to the REHQR Program on the first day of the 
quarter following the date that a hospital has been designated as 
converted to an REH in accordance with the process outlined in section 
1861(kkk) of the Act.
    We invite public comment on this proposal.
3. Measure-Specific Data Submission and Reporting Requirements
a. Data Submission Requirements for Chart-Abstracted Measures
    We refer readers to the CY 2024 OPPS/ASC final rule (88 FR 82074 
through 82075) for information regarding chart-abstracted data 
submission and reporting requirements.
    We are not proposing any changes to these policies in this proposed 
rule.
b. Proposal for the HCHE, Screening for SDOH, and Screen Positive Rate 
for SDOH Measures' Data Submission Requirements and Reporting 
Requirements
    To align with the Hospital OQR (80 FR 70521 through 70522) and 
ASCQR (81 FR 79821 through 79822) Programs, we propose a web-based 
submission policy where REHs would submit data for applicable measures 
once annually using a CMS-approved, web-based, data collection tool 
available within the Hospital Quality Reporting (HQR) System. In 
alignment with the Hospital OQR and ASCQR Programs, REHs would submit 
data during the period of January 1 to May 15 in the year prior to the 
affected program determination year. For example, for the CY 2025 
reporting period/CY 2027 program determination, the data submission 
period would be January 1, 2026, to May 15, 2026, covering the 
performance period of January 1, 2025, to December 31, 2025. Under the 
review and corrections period provided at Sec.  419.95(c)(3), REHs 
would be able to enter, review, and correct data submitted during the 
data submission period.
    These policies would apply to web-based measures adopted by the 
REHQR program, including the following three measures proposed for 
adoption in this year's rule:
     The HCHE measure, beginning with the CY 2025 reporting 
period/CY 2027 program determination;
     The Screening for SDOH measure, beginning with voluntary 
reporting for the CY 2025 reporting period, followed by mandatory 
reporting beginning with the CY 2026 reporting period/CY 2028 program 
determination; and
     The Screen Positive Rate for SDOH measure, beginning with 
voluntary reporting for the CY 2025 reporting period, followed by 
mandatory reporting beginning with the CY 2026 reporting period/CY 2028 
program determination.
    We refer readers to sections XIV.B.1, XIV.B.2, and XIV.B.3 for 
additional information on the HCHE, Screening for SDOH, and Screen 
Positive Rate for SDOH measures.

[[Page 59466]]

    We invite public comment on this proposal.
c. Data Submission Requirements for Claims-Based Measure Data
    In addition, we refer readers to section XVI.C.2 of this proposed 
rule where we discuss our proposal to modify the Risk-Standardized 
Hospital Visits Within 7 Days After Hospital Outpatient Surgery Measure 
beginning with the CY 2027 program determination. This claims-based 
measure would continue to be reported in accordance with other claims-
based measures, as previously finalized in the CY 2024 OPPS/ASC final 
rule (88 FR 85075).
    We are not proposing any changes to these policies in this proposed 
rule.

F. Public Reporting of Measure Data

    We refer readers to Sec.  419.95(f) and the CY 2024 OPPS/ASC final 
rule (88 FR 82071 through 82074) for our program policy regarding the 
public reporting of quality data.
    We are not proposing any changes to these policies in this proposed 
rule.

XVII. Ambulatory Surgical Center Quality Reporting (ASCQR) Program

A. Background and Statutory Authority

    The Ambulatory Surgical Center Quality Reporting (ASCQR) Program is 
a pay-for-reporting program intended to improve the quality of care 
provided to Medicare beneficiaries, facilitate public transparency, and 
ensure accountability of ambulatory surgical centers (ASCs).
    Section 1833(i)(7)(A) of the Act authorizes the Secretary to reduce 
any annual increase under the revised ambulatory surgical center (ASC) 
payment system by 2.0 percentage points for such year that an ASC that 
fails to submit required data on quality measures specified by the 
Secretary in accordance with section 1833(i)(7)(B) of the Act. Section 
1833(i)(7)(B) of the Act states that, except as the Secretary may 
otherwise provide, several of the statutory provisions governing the 
Hospital Outpatient Quality Reporting (OQR) Program, specifically 
sections 1833(t)(17)(B) through (E) of the Act, also apply to the 
services of ASCs under the ASCQR Program in a similar manner to the 
manner in which they apply to the services of hospital outpatient 
departments under the Hospital OQR Program. Sections 1833(t)(17)(B) 
through (E) of the Act generally govern the development and replacement 
of quality measures, the form and manner of submission of data to CMS, 
and procedures for making the data submitted to CMS available to the 
public.
    We refer readers to the CY 2012 OPPS/ASC final rule (76 FR 74492 
through 74494) for a detailed discussion of the program's statutory 
authority, as well as program requirements codified at 42 CFR part 416, 
subpart H (Sec.  416.300 through Sec.  416.330), and the CY 2024 OPPS/
ASC final rule (88 FR 82012) for information regarding the program's 
regulatory history.
1. Previously Finalized Program Measure Sets
    We refer readers to the CY 2024 OPPS/ASC final rule (88 FR 82038) 
for additional information regarding the previously finalized ASCQR 
Program measure set beginning with the CY 2027 payment determination.
a. Previously Finalized Measure Set Beginning With the CY 2027 Payment 
Determination
    Table 96 summarizes the previously finalized ASCQR Program measures 
beginning with the CY 2027 payment determination.

[[Page 59467]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.130

b. Previously Finalized Measure Set Beginning With the CY 2031 Payment 
Determination
    Table 97 summarizes the previously finalized ASCQR Program measures 
beginning with the CY 2031 payment determination.

[[Page 59468]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.131

B. Program Measure Set Policies

1. Measure Retention
    We refer readers to Sec.  416.320 and the CY 2012 OPPS/ASC final 
rule (76 FR 74504) for our policies regarding measure retention.
    We are not proposing any changes to these policies in this proposed 
rule.
2. Measure Suspension or Removal
    We refer readers to Sec.  416.320 and the CY 2019 OPPS/ASC final 
rule (83 FR 59111 through 59115) for our program policies regarding: 
(1) general measure removal, suspension, or replacement; and (2) 
immediate measure removal.
    We refer readers to section XIV.C of this proposed rule for our 
cross-program proposal to modify the immediate measure removal policy 
for quality measures for the ASCQR Program.
3. Measure Modification
    We refer readers to Sec.  416.325 and the CY 2016 OPPS/ASC final 
rule (80 FR 70531) for our program policies regarding modifications to 
previously adopted measures.
    We are not proposing any changes to these policies in this proposed 
rule.
4. Measure Adoption
    We refer readers to the CY 2013 OPPS/ASC final rule (77 FR 68493 
and 68494) for details regarding program priorities we consider for 
quality measure selection.
    We are not proposing any changes to these policies in this proposed 
rule.

C. Program Measure Proposals

1. Proposal To Adopt Health Equity Quality Measures in the ASCQR 
Program
    We refer readers to sections XIV.B.1, XIV.B.2, and XIV.B.3 of this 
proposed rule for our cross-program proposals to adopt the following 
measures in the ASCQR Program: (1) the Facility Commitment to Health 
Equity (FCHE) measure, beginning with the CY 2025 reporting period/CY 
2027 payment determination; (2) the Screening for Social Drivers of 
Health (SDOH) measure, beginning with voluntary reporting for the CY 
2025 reporting period followed by mandatory reporting beginning with 
the CY 2026 reporting period/CY 2028 payment determination; and (3) the 
Screen Positive Rate for SDOH measure, beginning with voluntary 
reporting for the CY 2025 reporting period followed by mandatory 
reporting beginning with the CY 2026 reporting period/CY 2028 payment 
determination.
2. Summary of Proposed Program Measure Set Updates
a. Proposed Program Measure Set Beginning With the CY 2027 Payment 
Determination
    Table 98 summarizes the proposed updated ASCQR Program measure set 
beginning with the CY 2027 payment determination.
    Specifically, Table 98 includes the previously finalized measure 
set and the

[[Page 59469]]

three proposed new cross-program health equity measures, as detailed in 
sections XIV.B.1, XIV.B.2, and XIV.B.3, respectively, of this proposed 
rule.
[GRAPHIC] [TIFF OMITTED] TP22JY24.132

b. Proposed Program Measure Set Beginning With the CY 2031 Payment 
Determination
    Table 99 summarizes the proposed updated ASCQR Program measure set 
beginning with the CY 2031 payment determination.
    Specifically, Table 99 includes the previously finalized measure 
set and the three proposed new cross-program health equity measures, as 
detailed in sections XIV.B.1, XIV.B.2, and XIV.B.3, respectively, of 
this proposed rule.

[[Page 59470]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.133

D. Administrative Requirements

    We refer readers to Sec.  416.305 and the CY 2016 OPPS/ASC final 
rule (80 FR 70533 and 70534) for our program policies regarding 
participation and withdrawal requirements.
    We are not proposing any changes to these policies in this proposed 
rule.

E. Form, Manner, and Timing of Data Submission

1. General Policy
    We refer readers to Sec.  416.310 and the CYs 2017, 2018, and 2021 
OPPS/ASC final rules (81 FR 79824 and 79825; 82 FR 59472 through 59475; 
and 85 FR 86191 and 86192, respectively) for our general program 
policies regarding: (1) submission of data under the ASCQR Program 
generally; (2) review and correction of submitted data; and (3) 
extraordinary circumstance exception (ECE) requests for data 
submission.
    We are not proposing any changes to these policies in this proposed 
rule.
    We also refer readers to the CY 2016 OPPS/ASC final rule (80 FR 
70531) for details regarding submission requirements for previously 
adopted ASCQR Program measures in the ASCQR Program Specifications 
Manual.
2. Measure-Specific Data Submission and Reporting Requirements
    We refer readers to Sec.  416.310 and the CYs 2016, 2022, and 2024 
OPPS/ASC final rules (80 FR 70534 through 70536; 86 FR 63905 through 
63909; and 88 FR 82041 through 82045, respectively) for information 
regarding our claims-based, survey-based, and PRO-PM data submission 
and reporting requirements.

a. Web-Based Measures

[[Page 59471]]

(1) CMS-Designated Information System and Proposal for Data Submission 
for the Facility Commitment to Health Equity (FCHE), Screening for 
Social Drivers of Health (SDOH), and Screen Positive Rate for SDOH 
Measures
    We refer readers to Sec.  416.310(c)(1), the CY 2017 OPPS/ASC final 
rule (81 FR 79821 and 79822), the CY 2018 OPPS/ASC final rule (82 FR 
59473), and the CY 2024 final rule (88 FR 82039 and 82040) for details 
regarding submission of web-based data via a CMS-designated information 
system (currently the Hospital Quality Reporting (HQR) System).
    In sections XIV.B.1, XIV.B.2, and XIV.B.3 of this proposed rule, we 
propose the adoption of:
    (1) the FCHE measure, beginning with the CY 2025 reporting period/
CY 2027 payment determination;
    (2) the Screening for SDOH measure, beginning with voluntary 
reporting for the CY 2025 reporting period followed by mandatory 
reporting beginning with the CY 2026 reporting period/CY 2028 payment 
determination; and
    (3) the Screen Positive Rate for SDOH measure, beginning with 
voluntary reporting for the CY 2025 reporting period followed by 
mandatory reporting beginning with the CY 2026 reporting period/CY 2028 
payment determination.
    Consistent with our established data submission requirements (81 FR 
79821 and 79822; 82 FR 59473; 88 FR 82039 and 82040), we propose that 
ASCs would be required to submit all of the data required to calculate 
each of these three measures annually using a CMS-approved, web-based, 
data collection tool available within the HQR System starting January 1 
through and including May 15 in the year prior to the applicable 
payment determination year. For the ASCQR Program, the performance 
period (which we refer to as the CY reporting period) for each measure 
on which data is submitted using a web-based tool would be January 1 
through and including December 31 of the year that is two years prior 
to the applicable payment determination year; and the data submission 
period would be January 1 through and including May 15 in the calendar 
year immediately following the CY reporting period and immediately 
prior to applicable payment determination year. For example, for the CY 
2025 reporting period/2027 payment determination, the data submission 
period would be January 1, 2026, through and including May 15, 2026, 
covering the performance period of January 1, 2025, through and 
including December 31, 2025. Pursuant to Sec.  416.310(c)(1)(iii), a 
review and corrections period runs concurrently with the data 
submission period. During this timeframe, ASCs would be able to enter, 
review, and correct data submitted during the data submission period.
    We invite public comment on this proposal.
(2) National Health Safety Network (NHSN)
    We refer readers to Sec.  416.310(c)(2) and the CY 2014 OPPS/ASC 
final rule (78 FR 75139 and 75140) for our policies regarding 
submission of web-based data via the Center for Disease Control and 
Prevention's NHSN.
    We are not proposing any changes to these policies in this proposed 
rule.

F. Public Reporting of Measure Data

    We refer readers to Sec.  416.315 and the CY 2018 OPPS/ASC final 
rule (82 FR 59472) for our program policies regarding public reporting 
of quality data.
    We are not proposing any changes to these policies in this proposed 
rule.

G. Request for Information (RFI)--Development of Frameworks for 
Specialty Focused Reporting and Minimum Case Number for Required 
Reporting

    The ASCQR Program promotes informed patient decision-making 
regarding clinical care across ASC procedures through a robust set of 
quality measures, data on which the ASCQR Program publicly reports as 
discussed in section XVII.F of this proposed rule. The ASCQR Program's 
current measure set captures clinical quality across all ASCs, 
including specialty clinical procedures performed only by a subset of 
ASCs. Thus, a portion of the ASCQR Program measure set only applies to 
an ASC if it performs those specialty procedures. Currently, ASCs are 
required to attest if they do not have cases for a given measure, 
increasing reporting burden.
    We seek to ensure the most meaningful measures apply to each 
facility, as requiring an ASC to report on measures minimally relevant 
to their patient population increases burden with minimum benefit. 
Therefore, we are seeking comment on two potential future frameworks 
which would achieve the following outcomes: (1) the addition of case 
minimums for specialty measure reporting; (2) the removal of the zero 
case attestation requirement for specialty measures to decrease 
reporting burden; and (3) the verification of individual measure case 
counts using claims data to determine which specialty measures would 
potentially be required for reporting for individual ASCs. Verifying 
case counts using claims data would allow us to confirm that individual 
ASCs are reporting on measures meeting or surpassing case minimums.
    Under these potential frameworks, we are considering revising the 
data reporting requirements for the ASCQR Program to only require that 
ASCs report data to CMS on quality measures that are related to their 
medical interventions, policies, processes, and procedures, or can be 
abstracted from claims. These potential frameworks would require ASCs 
to report measures generally applicable to all ASCQR Program 
participants and relevant specialty-specific measures, defined as those 
which evaluate performance on certain specialty clinical procedures 
performed only by a subset of ASCs.
    The current ASCQR Program measure set has seven generally 
applicable measures for which reporting would be required in both 
frameworks for all ASCs: four patient safety measures (Patient Burn; 
Patient Fall; Wrong Site, Wrong Patient, Wrong Procedure, Wrong 
Implant; All-Cause Hospital Transfer Admission), one general surgery 
measure (Facility-Level 7-Day Hospital Visits After General Surgery 
Procedures Performed at Ambulatory Surgical Centers), one vaccination 
measure (COVID-19 Vaccination Coverage Among Health Care Personnel), 
and one patient experience of care survey measure (OAS CAHPS). In 
addition, we have proposed in this proposed rule to adopt three new 
generally applicable measures (FCHE, Screening for SDOH, and Screen 
Positive Rate for SDOH), which ASCs would also be required to report if 
finalized.
    The specialties addressed by the current ASCQR Program measure set, 
and the related specialty-specific measures, are described in Table 
100. Under our first potential framework, the ``Specialty-Select'' 
framework, all ASCs would be required to report all specialty-specific, 
claims-based measures (currently, four) because these measures are not 
administratively burdensome to ASCs. Additionally, ASCs would also be 
required to select a specified number of the remaining non-claims-based 
specialty-specific measures (currently, four) to report if those 
measures are applicable to that ASC. We would define the number of non-
claims-based specialty-specific measures that ASCs would be required to 
report in future rulemaking.
    To determine if a non-claims-based specialty-specific measure is 
applicable

[[Page 59472]]

to an ASC, we are considering the implementation of a case threshold 
minimum which we would specify in future rulemaking, for each measure. 
We would determine if case threshold minimums, defined as the number of 
cases for a specific measure that must be met or exceeded to 
potentially require reporting, have been met using claims data. Once an 
ASC met the measure's case threshold minimum, that measure would become 
available for that ASC to select to meet reporting requirements. We 
note that reporting claims-based specialty-specific measures would be 
required regardless of whether the case threshold minimum is met. In 
this RFI we are seeking comment on the number of non-claims-based 
specialty-specific measures that ASCs should be required to report and 
what the appropriate threshold for the case threshold minimum should 
be.
    We are considering the use of Medicare Fee-for-Service (FFS) and 
Medicare Advantage claim volume data to determine which non-claims-
based specialty-specific measures have met the specified case threshold 
minimum (that is, claims information would indicate an ASC was 
performing sufficient case volumes in a specialty area). We note that 
this threshold would be independent from our ``Minimum case volume for 
program participation'' policy, which exempts ASCs with fewer than 240 
total Medicare claims per year from participating in the ASCQR Program, 
in the manner specified at Sec.  416.305(c). The case threshold minimum 
discussed in this RFI would be applied to individual non-claims-based 
specialty-specific measures for ASCs required to participate in the 
ASCQR Program.
    For example, if we decide that each ASC must select three out of 
the four available non-claims-based specialty-specific measures to 
report, and an ASC surpasses the specified case threshold minimum for 
all four non-claims-based specialty-specific measures, the ASC would 
then choose three out of the four non-claims-based specialty-specific 
measures to report. If an ASC surpasses the specified case threshold 
minimum for only one or two non-claims-based specialty-specific 
measures, the ASC will no longer have a choice, and must report all 
measures meeting the case threshold minimum. If an ASC does not meet 
the case threshold minimum for any non-claims-based specialty-specific 
measures, reporting for any of these measures would be voluntary. Under 
such a framework, ASCs could not utilize the claims-based measures to 
meet Specialty-Select reporting requirements nor could ASCs opt-out of 
reporting these measures. ASCs which do not have one or more cases for 
a given measure would no longer be required to provide an attestation 
of having zero cases.
[GRAPHIC] [TIFF OMITTED] TP22JY24.134


[[Page 59473]]


    Four of these measures are not claims-based and, under this 
potential framework, would not be applicable or required for all ASCs 
to report, but would rather be available for selection upon meeting a 
specified case threshold minimum:
     Unplanned Anterior Vitrectomy;
     Cataracts Visual Function (Previously referred to as 
Cataracts: Improvement in Patient's Visual Function within 90 Days 
Following Cataract Surgery) (voluntary);
     Normothermia Outcome; and
     Risk-Standardized Patient-Reported Outcome-Based 
Performance Measure (PRO-PM) Following Elective Primary Total Hip 
Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) in the ASC 
Setting (THA/TKA PRO-PM).
    We acknowledge that currently there are few non-claims-based 
specialty-specific measures from which to choose to report. However, we 
are interested to learn if such a framework with both mandatory 
measures applicable to all ASCs and selectable, specialty-specific 
measures could lay the groundwork for providing higher quality data to 
patients while ensuring ASCs are not reporting data on measures that 
are minimally relevant, if not irrelevant, to their patient population.
    Regarding this Specialty-Select framework, we are requesting 
comment on the following questions:
     Given that ASCs would still be required to report claims-
based specialty-specific measures, as these measures are not 
administratively burdensome to ASCs, and there are currently only four 
non-claims-based specialty-specific quality measures in the ASCQR 
Program data set, how many non-claims-based specialty-specific measures 
should we require ASCs select to report?
     Are there specialty-specific measures that commenters 
would recommend for development and adoption in the ASCQR Program 
measure set to create a more robust selection?
     How should we determine what non-claims-based specialty-
specific measures would be eligible for a given ASC to select toward 
meeting reporting requirements? In other words, how can we determine if 
an ASC meets the minimum case number for a given measure, which would 
allow the ASC to choose that measure to meet reporting requirements?
    As an alternative to the Specialty-Select framework discussed 
previously, we are considering requiring reporting for all non-claims-
based specialty-specific measures for which case counts reach a 
specified case threshold minimum. This case threshold minimum would not 
apply to claims-based specialty-specific measures, as their reporting 
would be mandatory since these measures are not administratively 
burdensome to ASCs. Under this alternative framework, mandatory data 
reporting for non-claims-based specialty-specific measures would occur 
only if an ASC met established case threshold minimums. For example, if 
an ASC has 30 or more qualifying patients for the measure during the 
applicable reporting period, which is the current minimum case 
threshold required for public reporting for some measures, the ASC 
would be required to submit data for these measures. Likewise, if an 
ASC has fewer than 30 patients for the measure, data reporting on the 
measure would be voluntary. This framework could be termed a Specialty 
Threshold framework and would differ from the previously discussed 
Specialty-Select framework as an ASC would be required to report on all 
non-claims-based specialty-specific measures for which the ASC reaches 
the case threshold minimum.
    Regarding both the Specialty Threshold framework and the Specialty-
Select framework, we are requesting comment on the following questions:
     Would use of Medicare Fee-for-Service (FFS) claim volume 
be sufficient for determining minimum case volumes?
     Should Medicare Advantage claim volume or service data be 
included when determining case volume thresholds for reporting a 
measure?
     Do commenters recommend any processes that could be 
followed or analyses we could conduct to determine case minimums?
    We invite public comment on both the Specialty-Select framework and 
the alternative Specialty Threshold framework for potential inclusion 
in the ASCQR Program.

H. Payment Reduction for ASCs That Fail to Meet the ASCQR Program 
Requirements

1. Statutory Background
    We refer readers to the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74492 through 74493) for a detailed discussion of the 
statutory background regarding payment reductions for ASCs that fail to 
meet the ASCQR Program requirements.
2. Policy Regarding Reduction to the ASC Payment Rates for ASCs That 
Fail To Meet the ASCQR Program Requirements for a Payment Determination 
Year
    The national unadjusted payment rates for many services paid under 
the ASC payment system are equal to the product of the ASC conversion 
factor and the scaled relative payment weight for the APC to which the 
service is assigned. For CY 2025, the ASC conversion factor is equal to 
the conversion factor calculated for the previous year updated by the 
productivity-adjusted hospital market basket update factor. The 
productivity adjustment is set forth in section 1833(i)(2)(D)(v) of the 
Act. The productivity-adjusted hospital market basket update is the 
annual update for the ASC payment system for a 5-year period (CY 2019 
through CY 2023), which was extended an additional two years (through 
CY 2025) in the CY 2024 OPPS/ASC final rule with comment period (88 FR 
81960). Under the ASCQR Program, in accordance with section 
1833(i)(7)(A) of the Act and as discussed in the CY 2013 OPPS/ASC final 
rule with comment period (77 FR 68499), any annual increase in certain 
payment rates under the ASC payment system shall be reduced by 2.0 
percentage points for ASCs that fail to meet the reporting requirements 
of the ASCQR Program. This reduction applied beginning with the CY 2014 
payment rates (77 FR 68500). For a complete discussion of the 
calculation of the ASC conversion factor and our finalized proposal to 
update the ASC payment rates using the inpatient hospital market basket 
update for CYs 2019 through 2023, we refer readers to the CY 2019 OPPS/
ASC final rule with comment period (83 FR 59073 through 59080).
    In the CY 2013 OPPS/ASC final rule with comment period (77 FR 68499 
through 68500), in order to implement the requirement to reduce the 
annual update for ASCs that fail to meet the ASCQR Program 
requirements, we finalized the following policies: (1) to calculate a 
full update conversion factor and an ASCQR Program reduced update 
conversion factor; (2) to calculate reduced national unadjusted payment 
rates using the ASCQR Program reduced update conversion factor that 
would apply to ASCs that fail to meet their quality reporting 
requirements for that calendar year payment determination; and (3) that 
application of the 2.0 percentage point reduction to the annual update 
may result in the update to the ASC payment system being less than zero 
prior to the application of the

[[Page 59474]]

productivity adjustment. The ASC conversion factor is used to calculate 
the ASC payment rate for services with the following payment indicators 
(listed in Addenda AA and BB to the proposed rule, which are available 
via the internet on the CMS website): ``A2,'' ``G2,'' ``P2,'' ``R2'' 
and ``Z2,'' as well as the service portion of device-intensive 
procedures identified by ``J8'' (77 FR 68500). We finalized our 
proposal that payment for all services assigned the payment indicators 
listed would be subject to the reduction of the national unadjusted 
payment rates for applicable ASCs using the ASCQR Program reduced 
update conversion factor (77 FR 68500).
    The conversion factor is not used to calculate the ASC payment 
rates for separately payable services that are assigned status 
indicators other than payment indicators ``A2,'' ``D2'', ``G2,'' 
``J8,'' ``P2,'' ``R2'' and ``Z2.'' These services include separately 
payable drugs and biologicals, pass-through devices that are 
contractor-priced, brachytherapy sources that are paid based on the 
OPPS payment rates, and certain office-based procedures, radiology 
services and diagnostic tests where payment is based on the PFS 
nonfacility PE RVU-based amount, and a few other specific services that 
receive cost-based payment (77 FR 68500). As a result, we also 
finalized our proposal that the ASC payment rates for these services 
would not be reduced for failure to meet the ASCQR Program requirements 
because the payment rates for these services are not calculated using 
the ASC conversion factor and, therefore, are not affected by 
reductions to the annual update (77 FR 68500).
    Office-based surgical procedures (generally those performed more 
than 50 percent of the time in physicians' offices) and separately paid 
radiology services (excluding covered ancillary radiology services 
involving certain nuclear medicine procedures or involving the use of 
contrast agents) are paid at the lesser of the PFS nonfacility PE RVU-
based amounts or the amount calculated under the standard ASC 
ratesetting methodology. Similarly, in the CY 2015 OPPS/ASC final rule 
with comment period (79 FR 66933 through 66934), we finalized our 
proposal that payment for certain diagnostic test codes within the 
medical range of CPT codes for which separate payment is allowed under 
the OPPS will be at the lower of the PFS nonfacility PE RVU-based (or 
technical component) amount or the rate calculated according to the 
standard ASC ratesetting methodology when provided integral to covered 
ASC surgical procedures. In the CY 2013 OPPS/ASC final rule with 
comment period (77 FR 68500), we finalized our proposal that the 
standard ASC ratesetting methodology for this type of comparison would 
use the ASC conversion factor that has been calculated using the full 
ASC update adjusted for productivity. This is necessary so that the 
resulting ASC payment indicator, based on the comparison, assigned to 
these procedures or services is consistent for each HCPCS code, 
regardless of whether payment is based on the full update conversion 
factor or the reduced update conversion factor.
    For ASCs that receive the reduced ASC payment for failure to meet 
the ASCQR Program requirements, we have noted our belief that it is 
both equitable and appropriate that a reduction in the payment for a 
service should result in proportionately reduced coinsurance liability 
for beneficiaries (77 FR 68500). Therefore, in the CY 2013 OPPS/ASC 
final rule with comment period (77 FR 68500), we finalized our proposal 
that the Medicare beneficiary's national unadjusted coinsurance for a 
service to which a reduced national unadjusted payment rate applies 
will be based on the reduced national unadjusted payment rate.
    In the CY 2013 OPPS/ASC final rule with comment period, we 
finalized our proposal that all other applicable adjustments to the ASC 
national unadjusted payment rates would apply in those cases when the 
annual update is reduced for ASCs that fail to meet the requirements of 
the ASCQR Program (77 FR 68500). For example, the following standard 
adjustments would apply to the reduced national unadjusted payment 
rates: the wage index adjustment; the multiple procedure adjustment; 
the interrupted procedure adjustment; and the adjustment for devices 
furnished with full or partial credit or without cost (77 FR 68500). We 
believe that these adjustments continue to be equally applicable to 
payment for ASCs that do not meet the ASCQR Program requirements (77 FR 
68500).
    In the CY 2015 through CY 2024 OPPS/ASC final rules with comment 
period, we did not make any other changes to these policies. We propose 
to continue applying these policies for the CY 2025 reporting period/CY 
2027 payment determination and for subsequent years.

XVIII. Medicaid Clinic Services Four Walls Exceptions

A. Background

    Under section 1902(a)(10) of the Act, States may offer certain 
Medicaid benefits, at State option, to categorically needy and 
medically needy Medicaid beneficiaries, as described in that section of 
the statute. Clinic services are one of these optional benefit 
categories. Section 1905(a)(9) of the Act, as amended by section 4105 
of part 1 of subtitle B of title IV of the Omnibus Budget 
Reconciliation Act of 1987 (OBRA '87, Pub. L. 110-203), defines clinic 
services as services furnished by or under the direction of a 
physician, without regard to whether the clinic itself is administered 
by a physician, including such services furnished outside the clinic by 
clinic personnel to an eligible individual who does not reside in a 
permanent dwelling or does not have a fixed home or mailing address 
(hereinafter referred to as ``individuals who are 
unhoused'').262 263
---------------------------------------------------------------------------

    \262\ Public Law 100-203, enacted December 22, 1987, 100 Stat. 
1330, 1330-147, https://www.congress.gov/100/statute/STATUTE-101/STATUTE-101-Pg1330.pdf.
    \263\ This document contains links to non-United States 
Government websites. We are providing these links because they 
contain additional information relevant to the topic(s) discussed in 
this document or that otherwise may be useful to the reader. We 
cannot attest to the accuracy of information provided on the cited 
third-party websites or any other linked third-party site. We are 
providing these links for reference only; linking to a non-United 
States Government website does not constitute an endorsement by CMS, 
HHS, or any of their employees of the sponsors or the information 
and/or any products presented on the website. Also, please be aware 
that the privacy protections generally provided by United States 
Government websites do not apply to third-party sites.
---------------------------------------------------------------------------

    The regulation implementing section 1905(a)(9) of the Act, 42 CFR 
440.90, includes certain conditions and limitations on Medicaid 
coverage of clinic services. Specifically, Sec.  440.90 defines clinic 
services as preventive, diagnostic, therapeutic, rehabilitative, or 
palliative services that are furnished by a facility that is not part 
of a hospital but is organized and operated to provide medical care to 
outpatients.\264\ Section 440.90 further provides that clinic services 
include two types of services furnished to outpatients, listed at Sec.  
440.90(a) and (b). The first type of services included in the benefit, 
under Sec.  440.90(a), is services furnished at the clinic (hereinafter 
referred to as the ``four walls'' requirement) by or under the 
direction of a physician or dentist. Section 440.90(b) implements the 
statutory language providing that clinic services also include services 
furnished outside the clinic, by clinic personnel under the direction 
of a physician, to an

[[Page 59475]]

eligible individual who is unhoused. In section 4320 of the State 
Medicaid Manual, we explained that if a State elects to cover clinic 
services, the State may choose the type of clinics or clinic services 
that are covered.\265\
---------------------------------------------------------------------------

    \264\ An outpatient is defined at 42 CFR 440.2 as a patient of 
an organized medical facility, or distinct part of that facility who 
is expected by the facility to receive and who does receive 
professional services for less than a 24-hour period regardless of 
the hour of admission, whether or not a bed is used, or whether or 
not the patient remains in the facility past midnight.
    \265\ U.S. Department of Health and Human Services, Health Care 
Financing Administration (HCFA), The State Medicaid Manual, Manual, 
(Baltimore, MD, 1985), Section 4320, https://www.cms.gov/regulations-and-guidance/guidance/manuals/paper-based-manuals-items/cms021927.
---------------------------------------------------------------------------

    We added Sec.  440.90(b) in 1991, after Congress added the language 
about services furnished outside the clinic to individuals who are 
unhoused to section 1905(a)(9) of the Act in OBRA '87.\266\ In the 
preamble to that rule, we explained that clinic services have always 
been limited to people who go to the clinic (or a satellite location) 
and get the services onsite, and that the exception added by OBRA '87 
represents an exception to the general coverage requirement for 
services to be furnished on the premises of the clinic. Further, we 
explained our view that Congress ratified the requirement that other 
clinic services must be furnished onsite by establishing an explicit 
exception to the requirement that clinic services be furnished onsite 
in order to be covered. CMS has long interpreted the exception to the 
four walls requirement at Sec.  440.90(b) to be mandatory for States 
that opt to cover the clinic services benefit. We reiterated CMS's 
longstanding interpretation that section 1905(a)(9) of the Act and 
Sec.  440.90 establish a four walls requirement in a frequently asked 
questions document that we published on January 18, 2017 (hereinafter 
referred to as ``the January 18, 2017 FAQ''), to supplement State 
Health Official letter number 16-002, Federal Funding for Services 
``Received Through'' an IHS/Tribal Facility and Furnished to Medicaid-
Eligible American Indians and Alaska Natives.267 268
---------------------------------------------------------------------------

    \266\ Medicare and Medicaid Programs; OBRA '87 Conforming 
Amendments, 56 FR 8832, 8835 (March 1, 1991) (hereinafter referred 
to as the 1991 rule). https://archives.Federalregister.gov/issue_slice/1991/3/1/8829-8854.pdf.
    \267\ CMS, Federal Funding for Services ``Received Through'' an 
IHS/Tribal Facility and Furnished to Medicaid-Eligible American 
Indians and Alaska Natives, State Health Official Letter (SHO) #16-
002, (Baltimore, MD, 2016), https://www.medicaid.gov/sites/default/files/Federal-Policy-Guidance/Downloads/sho022616.pdf.
    \268\ CMS, Frequently-Asked Questions (FAQs) Federal Funding for 
Services ``Received Through'' an IHS/Tribal Facility and Furnished 
to Medicaid Eligible American Indians and Alaska Natives (SHO #16-
002), FAQ, (Baltimore, MD, 2017), https://www.medicaid.gov/media/40241.
---------------------------------------------------------------------------

    The Medicaid clinic services benefit is distinct from the Medicaid 
federally qualified health center (FQHC) services benefit and the 
Medicaid rural health clinic (RHC) services benefit. The Medicaid FQHC 
services benefit is defined at section 1905(a)(2)(C) of the Act, and 
FQHCs and FQHC services are further defined at section 1905(l)(2) of 
the Act. The Medicaid RHC services benefit is defined at section 
1905(a)(2)(B) of the Act, and RHCs and RHC services are further defined 
at section 1905(l)(1) of the Act. Unlike the clinic services benefit, 
which is an optional benefit for States, the FQHC and RHC benefits are 
mandatory for categorically needy Medicaid beneficiaries under section 
1902(a)(10) of the Act. In addition, there is no Federal four walls 
requirement under the Medicaid FQHC or RHC services benefits, unlike 
the clinic services benefit. Federal Medicaid law does not prevent 
States from covering Medicaid FQHC and RHC services provided outside of 
the four walls of an FQHC or RHC.\269\
---------------------------------------------------------------------------

    \269\ We note that the Consolidated Appropriations Act, 2024, 
Division G, Title I, Section 209 (P.L. 118-42) amended section 1905 
of the Act to establish a certified community behavioral health 
clinic (CCBHC) services benefit effective March 9, 2024. The CCBHC 
services benefit is distinct from the clinic services benefit and 
there is no four walls requirement for the CCBHC services benefit 
under Federal Medicaid law.
---------------------------------------------------------------------------

    On January 28, 2021, the President signed Executive Order (E.O.) 
14009, ``Strengthening Medicaid and the Affordable Care Act,'' which 
established the policy objective to protect and strengthen Medicaid and 
the Affordable Care Act and to make high-quality health care accessible 
and affordable for every American, and directed executive departments 
and agencies to review existing regulations, orders, guidance 
documents, and policies to determine whether such agency actions are 
inconsistent with this policy.\270\ As part of this review of existing 
policies, E.O. 14009 directed Federal agencies to consider whether to 
suspend, revise, or rescind agency actions considered inconsistent with 
this objective. On April 5, 2022, E.O. 14070, ``Continuing to 
Strengthen Americans' Access to Affordable, Quality Health Coverage,'' 
directed Federal agencies with responsibilities related to Americans' 
access to health coverage to review agency actions to identify ways to 
continue to expand the availability of affordable health coverage, to 
improve the quality of coverage, to strengthen benefits, and to help 
more Americans enroll in quality health coverage.\271\
---------------------------------------------------------------------------

    \270\ Exec. Order No. 14009, 86 FR 7793 (Jan. 28, 2021). See, 
https://www.Federalregister.gov/documents/2021/02/02/2021-02252/strengthening-medicaid-and-the-affordable-care-act.
    \271\ Exec. Order No. 14070, 87 FR 20689 (Apr. 8, 2021). See, 
https://www.Federalregister.gov/documents/2022/04/08/2022-07716/continuing-to-strengthen-americans-access-to-affordable-quality-health-coverage.
---------------------------------------------------------------------------

    On November 6, 2000, President Clinton signed E.O. 13175, 
``Consultation and Coordination With Indian Tribal Governments,'' which 
recognizes the unique legal relationship between the United States and 
Indian Tribal governments and, to strengthen this government-to-
government relationship and support tribal sovereignty and self-
determination, charges all executive departments and agencies with 
engaging in meaningful and timely consultation with Tribal officials in 
the development of Federal policies that have Tribal implications.\272\ 
On January 26, 2021, President Biden issued a ``Memorandum on Tribal 
Consultation and Strengthening Nation-to-Nation Relationships,'' which 
reaffirms E.O. 13175's directive to engage in regular, meaningful, and 
robust consultation with Tribal officials in the development of Federal 
policies that have Tribal implications.\273\
---------------------------------------------------------------------------

    \272\ Exec. Order No. 13175, 65 FR 67249 (Nov. 6, 2000). See, 
https://www.Federalregister.gov/documents/2000/11/09/00-29003/consultation-and-coordination-with-indian-tribal-governments.
    \273\ President Joseph R. Biden to Heads of Executive 
Departments and Agencies, memorandum, ``Tribal Consultation and 
Strengthening Nation-to-Nation Relationships,'' January 26, 2021, 
Presidential Actions, https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/26/memorandum-on-tribal-consultation-and-strengthening-nation-to-nation-relationships/.
---------------------------------------------------------------------------

    Consistent with E.O. 13175, CMS issued a Tribal Consultation policy 
in 2011 and updated it in 2015 for the purpose of building meaningful 
relationships with Indian Tribes and to establish a clear, concise and 
mutually acceptable process through which consultation can take place 
between CMS and Tribes.274 275 As one of its core 
principles, the policy provides that, because Congress amended titles 
XVIII and XIX of the Act to authorize Indian Health Service (IHS) and 
Tribal health programs to bill Medicare and Medicaid, ``[t]he 
involvement of Indian tribes in the development of CMS policy is 
crucial for mutual understanding and development of culturally 
appropriate approaches to improve greater access to CMS programs for 
American Indians and Alaska Natives (AI/ANs), to enhance health care 
resources to IHS

[[Page 59476]]

and tribal health programs, and to contribute to overall improved 
health outcomes for American Indians.'' As part of its government-to-
government relationship with the Tribes, CMS has engaged in meaningful 
consultation with Tribes and Tribal leaders, the CMS Tribal Technical 
Advisory Group (TTAG), and the HHS Secretary's Tribal Advisory 
Committee (STAC) regarding concerns about the impact that the four 
walls requirement could have on IHS/Tribal clinics and AI/AN 
beneficiaries' access to health care when a grace period currently in 
place for IHS/Tribal clinics (as discussed below) ends. As part of this 
consultation, Tribes requested a permanent exemption from the four 
walls requirement for IHS/Tribal clinics. In the development of this 
proposed rule, we have taken into consideration comments and feedback 
received during Tribal consultation.
---------------------------------------------------------------------------

    \274\ CMS, ``Tribal Consultation,'' CMS.gov, September 6, 2023, 
https://www.cms.gov/training-education/partner-outreach-resources/american-indian-alaska-native/tribal-consultation.
    \275\ CMS, Tribal Consultation Policy, Policy, (Washington, DC, 
2015), https://www.cms.gov/outreach-and-education/american-indian-alaska-native/aian/downloads/cmstribalconsultationpolicy2015.pdf.
---------------------------------------------------------------------------

    IHS, a Federal agency within the Department of Health and Human 
Services, is responsible for furnishing comprehensive, culturally 
appropriate health services to, as of April 2024, almost 2.8 million 
AI/ANs who are eligible for services from IHS, per regulations at 42 
CFR part 136, as well as other individuals whom IHS or Tribes are 
authorized to serve under 25 U.S.C. 1680c.\276\ IHS's provision of 
health services to its beneficiaries stems from the special government-
to-government relationship between the Federal government and Indian 
Tribes. The Federal government's relationship with Tribes is based on 
Article I, section 8 of the Constitution, and has been given form and 
substance by numerous treaties, statutes, Supreme Court decisions, and 
Executive Orders. The IHS delivery system includes hospitals and 
clinics that are owned and operated by IHS, owned by IHS and Tribally-
operated as authorized by the Indian Self-Determination and Education 
Assistance Act (ISDEAA, Pub. L. 93-638 (as amended)), or owned and 
operated by Tribes and Tribal organizations as authorized by the 
ISDEAA.\277\ We refer to these three kinds of facilities in our 
discussions of the proposed amendments to Sec.  440.90 as ``IHS/Tribal 
facilities'' or, when referring to circumstances where these facilities 
operate as Medicaid clinic services providers, ``IHS/Tribal clinics.'' 
\278\ Section 1911 of the Act and implementing regulations at Sec.  
431.110 provide that a facility of IHS, whether operated by IHS or by a 
Tribe or Tribal organization (CMS has interpreted similar language in 
section 1905(b) of the Act to refer to all three kinds of IHS/Tribal 
facilities described above),\279\ may participate in the Medicaid 
program subject to the conditions and requirements generally applicable 
under Title XIX of the Act. Many IHS/Tribal facilities are covered and 
paid as clinic services providers in the Medicaid program. Under 
section 1903(a)(1) of the Act, the Federal government is required to 
match State expenditures for medical assistance at the Federal Medical 
Assistance Percentage (FMAP), which is defined at section 1905(b) of 
the Act to be 100 percent for State expenditures for Medicaid-covered 
services received through an IHS facility whether operated by IHS or by 
a Tribe or Tribal organization (which, again, CMS has interpreted to 
refer to all three kinds of IHS/Tribal facilities described above). 
Under CMS's longstanding interpretation of section 1905(b) of the Act, 
this 100 percent FMAP is available only for State expenditures on 
services received through an IHS/Tribal facility (such as a clinic) by 
AI/AN Medicaid beneficiaries. State expenditures on services furnished 
by an IHS/Tribal facility to other individuals are not matched by the 
Federal government at 100 percent, but rather at the State's regularly 
applicable FMAP rate.
---------------------------------------------------------------------------

    \276\ IHS, Indian Health Service Health Equity Report, Fact 
Sheet, (2024), https://www.ihs.gov/sites/newsroom/themes/responsive2017/display_objects/documents/factsheets/IHS_Health_Equity_Report_FactSheet_2024.pdf.
    \277\ HCFA and IHS, ``Memorandum of Agreement Between the Indian 
Health Services and the Health Care Financing Administration,'' 
Memorandum of Agreement, December 19, 1996, https://www.cms.gov/Outreach-and-Education/American-Indian-Alaska-Native/AIAN/LTSS-TA-Center/pdf/memorandum-of-agreement.pdf.
    \278\ Although Urban Indian Organizations that operate under 
Title V of the Indian Health Care Improvement Act are also part of 
the IHS delivery system, for purposes of our discussions of the 
proposed amendments to Sec.  440.90, the terms IHS/Tribal facility 
and IHS/Tribal clinic do not include a facility operated by an Urban 
Indian Organization.
    \279\ HCFA and IHS, Memorandum of Agreement.
---------------------------------------------------------------------------

    As part of our Center for Medicaid & CHIP Services (CMCS) Mental 
Health and Substance Use Disorder Action Plan published in July 2023, 
we are pursuing strategies to increase access to prevention and 
treatment, engagement in care, and improve quality of care for 
beneficiaries with behavioral health disorders.\280\ Behavioral health 
disorders include both substance use disorders and mental health 
disorders. Medicaid plays a crucial role in financing health care for 
individuals with behavioral health disorders and is the largest payer 
of behavioral health services.\281\ There are no Federal requirements 
for States to cover services furnished by behavioral health clinics or 
any specific types of behavioral health clinics under the clinic 
services benefit. However, we are aware that approximately 16 States 
cover services provided by behavioral health clinics of varying types 
under the clinic services benefit, such as Community Mental Health 
Centers certified under the Medicare Conditions of Participation at 42 
CFR part 485 Subpart J, substance use disorder clinics, or mental 
health clinics.
---------------------------------------------------------------------------

    \280\ CMS, Mental Health and Substance Use Disorder Action Plan, 
(2023), Action Plan, https://www.medicaid.gov/medicaid/benefits/downloads/cmcs-mntl-helth-substnce-disrdr-actn-plan.pdf.
    \281\ Guth, Madeline, Heather Saunders, Lauren Niles, Angela 
Bergefurd, Kathleen Gifford, and Roxanne Kennedy Published. 2023. 
``How Do States Deliver, Administer, and Integrate Behavioral Health 
Care? Findings from a Survey of State Medicaid Programs.'' KFF. May 
25, 2023. https://www.kff.org/mental-health/issue-brief/how-do-states-deliver-administer-and-integrate-behavioral-health-care-findings-from-a-survey-of-state-medicaid-programs/.
---------------------------------------------------------------------------

    We released a framework for advancing health care in rural, Tribal, 
and geographically isolated communities in November 2022.\282\ Our 
framework focuses on six priorities, including expanding access to 
comprehensive health care coverage, benefits, and services and supports 
to individuals who live in these communities. Medicaid plays an 
important role in financing health care in rural areas, as nearly a 
quarter of individuals under age 65 who live in rural areas are covered 
by Medicaid. Importantly, Medicaid also provides critical access to 
care for individuals in rural areas who are older or disabled, as more 
than one in five residents of rural areas (approximately 22 percent) 
are dually enrolled in Medicaid and Medicare.\283\ There are no Federal 
requirements under the clinic services benefit governing how States 
should provide coverage of services furnished specifically by clinics 
located in rural areas under that benefit--the Federal requirements 
that apply generally to that benefit, including the four walls 
requirement, also apply to services furnished by clinics in rural 
areas. A State may cover Medicaid clinic services provided by various 
types of clinics located in rural areas, such as primary care clinics, 
behavioral health clinics, surgical clinics, and other types of 
clinics. As noted earlier in this

[[Page 59477]]

section of the proposed rule, the Medicaid RHC services benefit is 
different from the Medicaid clinic services benefit and does not 
include a four walls requirement under Federal Medicaid law; thus, 
facilities that qualify as RHCs under Federal Medicaid law could 
provide Medicaid services under the RHC services benefit, including 
outside of the four walls.
---------------------------------------------------------------------------

    \282\ CMS, CMS Framework for Advancing Health Care in Rural, 
Tribal, and Geographically Isolated Communities, (2022), Framework, 
https://www.cms.gov/files/document/cms-geographic-framework.pdf.
    \283\ Medicaid and CHIP Payment and Access Commission (MACPAC), 
Medicaid and Rural Health, Issue Brief, (Washington, DC, 2021), 1, 
https://www.macpac.gov/wp-content/uploads/2021/04/Medicaid-and-Rural-Health.pdf.
---------------------------------------------------------------------------

    Section 1902(a)(30)(A) of the Act requires that Medicaid payments 
for services be consistent with efficiency, economy, and quality of 
care, and be sufficient to enlist enough providers so that care and 
services are available under the plan at least to the extent that such 
care and services are available to the general population in the 
geographic area. Under this requirement, States generally have 
significant latitude in setting payment methodologies and rates for 
covered services, and there is no specific payment methodology required 
for clinic services, although regulations at Sec.  447.321 require the 
application of upper payment limits for clinics that are not IHS/Tribal 
clinics. States generally pay for clinic services via a facility rate. 
They typically adopt, as the payment rate for Medicaid clinic services 
furnished by IHS/Tribal clinics, the Outpatient per Visit Rate 
(excluding Medicare) that IHS establishes for services provided by IHS 
facilities to Medicaid beneficiaries and for certain other Federal 
programs. This rate, and a set of three other rates for Medicare 
outpatient visits and certain inpatient services, are frequently 
referred to collectively as the IHS all-inclusive rates (AIRs), and 
therefore this IHS Outpatient per Visit Rate (excluding Medicare) is 
hereinafter referred to as the ``AIR.'' \284\ In contrast, States 
generally pay for Medicaid benefits provided by individual 
practitioners, such as the physician services benefit, at a 
professional fee schedule rate under the Medicaid State plan.
---------------------------------------------------------------------------

    \284\ IHS establishes the AIRs under the authority in sections 
321(a) and 322(b) of the Public Health Service Act (42 U.S.C. 248 
and 249(b)), Public Law 83-568 (42 U.S.C. 2001(a)), and the Indian 
Health Care Improvement Act (25 U.S.C. 1601 et seq.). IHS calculates 
AIRs on an annual basis and the rates are then published in the 
Federal Register. The AIRs are based on annual cost report analysis 
prepared by IHS's contractor. IHS reviews the cost report analysis 
and upon completion of the review, IHS submits recommended rates to 
the Office of Management and Budget (OMB) for final approval through 
HHS and CMS. Upon approval by OMB, the approved rates are published 
in the Federal Register. See https://www.ihs.gov/BusinessOffice/reimbursement-rates/. Calendar year 2024 rates and additional 
information can be found in the Federal Register published December 
19, 2023 (88 FR 87789): https://www.Federalregister.gov/documents/
2023/12/19/2023-27815/reimbursement-rates-for-calendar-year-2024.
---------------------------------------------------------------------------

    As we noted in the January 18, 2017 FAQ, CMS recognized in 2017 
that IHS/Tribal clinics were providing services outside of the four 
walls, including to individuals to whom the existing statutory and 
regulatory exception does not apply, and that States were paying for 
these services at the clinic services rate (which in all or nearly all 
cases is the AIR). In the January 18, 2017 FAQ, we announced a 4-year 
grace period to January 30, 2021, to allow States time to come into 
compliance with the four walls requirement for IHS/Tribal clinics. On 
January 15, 2021, due to the COVID-19 Public Health Emergency (PHE), 
CMS issued a CMCS Informational Bulletin (CIB) announcing an extension 
of the four walls grace period to October 31, 2021. CMS issued 
subsequent CIBs on October 4, 2021 and September 8, 2023, announcing 
further extensions of the grace period to nine months from when the 
COVID-19 PHE ended, and February 11, 2025, respectively.\285\
---------------------------------------------------------------------------

    \285\ CMS, Further Extension of Grace Period Related to the 
``Four Walls'' Requirement under 42 CFR 440.90 for Indian Health 
Service and Tribal Facilities to February 11, 2025, CMCS 
Informational Bulletin, (Baltimore, MD, 2023), https://www.medicaid.gov/sites/default/files/2023-09/cib090823.pdf.
---------------------------------------------------------------------------

    Since the release of the January 18, 2017 FAQ and throughout the 
grace period, we have heard from Tribes, the CMS TTAG, and the HHS 
STAC, that the four walls requirement will create barriers in access to 
care for Medicaid beneficiaries who receive care from IHS/Tribal 
clinics after the grace period expires. Tribes, the TTAG, and the STAC 
have asked CMS to eliminate the four walls requirement for IHS/Tribal 
clinics. In addition to these requests, CMS has received a handful of 
other requests from States to allow exceptions to the four walls 
requirements for clinics that serve vulnerable populations. For 
example, we received one section 1115 demonstration request to cover 
clinic services outside of the four walls for behavioral health 
clinics, under which the State sought to use the requested section 1115 
demonstration authority to improve access to and retention in 
behavioral health treatment. In addition, we received inquiries from 
States seeking to cover, under the clinic services benefit, mobile 
crisis services provided by behavioral health clinics to individuals 
experiencing a behavioral health crisis, but we advised those States 
that we could not approve coverage of mobile crisis services under the 
clinic services benefit due to the four walls requirement.
    This proposed rule aims to address the concerns we have heard from 
Tribes, the TTAG, the STAC, States, and other interested parties. It 
aims to fulfill E.O.s 14009 and 14070 by helping States to strengthen 
and improve access to clinic services. It also helps to fulfill E.O. 
13175 by recognizing the United States' unique legal relationship with 
Tribes and by responding to advice and input received from Tribes 
through consultation. In addition, we believe this proposed rule is 
consistent with our strategies, goals, and objectives to advance health 
equity and improve health care access for Tribal, behavioral health, 
and rural populations as described in our CMCS Mental Health and 
Substance Use Disorder Action Plan and CMS Framework for Advancing 
Health Care in Rural, Tribal, and Geographically Isolated Communities.
    Consistent with our statutory authority at section 1905(a)(9) of 
the Act, we propose to add three exceptions to the four walls 
requirement at Sec.  440.90, for the reasons set forth in section 
XVIII.B of this proposed rule. First, we propose to add an exception 
for clinic services furnished by IHS/Tribal clinics. Second, we propose 
to add an exception for clinic services furnished by a clinic that is 
primarily organized for the care and treatment of outpatients with 
behavioral health disorders, including mental health and substance-use 
disorders. Third, we propose to add an exception for clinic services 
furnished by a clinic located in a rural area (and that is not an RHC, 
which could already provide services covered under a separate Medicaid 
benefit). We propose to make the exception for clinic services 
furnished by IHS/Tribal clinics a mandatory component of the clinic 
benefit and to make the exceptions for clinic services furnished by 
behavioral health clinics and clinics located in rural areas optional 
for States.

B. Provisions of the Proposed Regulations

    As explained in section XVIII.A of this proposed rule, we 
previously interpreted section 1905(a)(9) of the Act to limit Medicaid 
clinic services to services furnished within the four walls of the 
clinic, except only for services furnished by clinic personnel to 
individuals who are unhoused. We continue to believe that because 
Congress added only one specific reference to services furnished 
outside the clinic to the statute in OBRA `87, it generally ratified 
our prior interpretation of the four walls requirement. Thus, we 
continue to believe that the statute authorizes neither broad 
exceptions to the four walls requirement that have no relationship to 
the current exception nor

[[Page 59478]]

a complete elimination of the four walls requirement. However, we are 
now reinterpreting section 1905(a)(9) of the Act as permitting 
additional exceptions to the four walls requirements for populations 
served by clinics if those populations have similar health care access 
issues to individuals who are unhoused. When Congress added the 
exception to the statute, it introduced the exception with the word 
``including'' (OBRA '87). We interpret the word ``including'' in the 
statute as not precluding additional exceptions to the four walls 
requirement, so long as any additional exception is similar to the 
exception for individuals who are unhoused. Had Congress wanted to 
limit the clinic benefit to only services provided within the four 
walls and services provided outside the four walls to the unhoused, it 
could have written a narrower exception instead of using ``including'' 
as it did when adding the exception to section 1905(a)(9) of the Act. 
As discussed in the Congressional record for OBRA '87 in H.R. Rep. 100-
391, Congress amended section 1905(a)(9) of the Act to create an 
exception to the four walls requirement for individuals who are 
unhoused to address access concerns for a population that has unmet 
health needs, distrusts mainstream providers, and has difficulty 
accessing care when providers are unable to meet them where they are 
located.\286\ We believe that adding exceptions to the four walls 
requirement for populations with similar needs and barriers to access 
as individuals who are unhoused is consistent with the statutory text 
and purpose of the initial exception.
---------------------------------------------------------------------------

    \286\ H.R. Rep. No. 100-391, at 523 (1987), reprinted in 1987 
U.S.C.C.A.N. 2313-1, 2313-343.
---------------------------------------------------------------------------

    In developing the proposed exceptions, we considered the 
characteristics of the unhoused population that is targeted by the 
current statutory and regulatory exception. According to data from the 
Department of Housing and Urban Development (HUD), 21 percent of 
individuals who are unhoused reported having a serious mental illness 
while 16 percent reported having a substance use disorder.\287\ 
Individuals who are unhoused often lack transportation to access health 
care and cite this lack of transportation as a barrier to managing 
their health.288 289 In many cases, individuals who are 
unhoused distrust providers due to perceptions of disrespect and 
discrimination.\290\ Individuals who are unhoused also experience much 
poorer health outcomes than those who are housed; for example, nearly 
two thirds of individuals who are unhoused experience clinically 
significant dental problems and are four times as likely to visit an 
emergency department.291 292 A recent study found that when 
controlling for demographic and geographic differences, an individual 
who is unhoused is three and one half times more likely to experience 
early mortality than an individual who is housed.\293\ As indicated 
earlier in this section of the proposed rule, we believe that providing 
additional exceptions to the clinic services four walls requirement for 
populations with similar needs and barriers to access as individuals 
who are unhoused is consistent with the statute.
---------------------------------------------------------------------------

    \287\ U.S. Department of Housing and Urban Development (HUD), 
HUD 2022 Continuum of Care Homeless Assistance Programs Homeless 
Populations and Subpopulations, Summary Report, (Washington, DC, 
2022), https://files.hudexchange.info/reports/published/CoC_PopSub_NatlTerrDC_2022.pdf.
    \288\ Yale University, ``Barrier to Care,'' Hypertension 
Awareness & Prevention Program at Yale, accessed March 15, 2024, 
https://happy.sites.yale.edu/barriers-care.
    \289\ Murphy, Erin Roark. 2019. ``Transportation and 
Homelessness: A Systematic Review.'' Journal of Social Distress and 
the Homeless 28 (2): 1-10. https://doi.org/10.1080/10530789.2019.1582202.
    \290\ Becker, Jenna N., and Karen J. Foli. 2021. ``Health-
Seeking Behaviours in the Homeless Population: A Concept Analysis.'' 
Health & Social Care in the Community 30 (2). https://doi.org/10.1111/hsc.13499.
    \291\ Baggett, Travis P., James J. O'Connell, Daniel E. Singer, 
and Nancy A. Rigotti. 2010. ``The Unmet Health Care Needs of 
Homeless Adults: A National Study.'' American Journal of Public 
Health 100 (7): 1326-33. https://doi.org/10.2105/ajph.2009.180109.
    \292\ Lin, Wen-Chieh, Monica Bharel, Jianying Zhang, Elizabeth 
O'Connell, and Robin E. Clark. 2015. ``Frequent Emergency Department 
Visits and Hospitalizations among Homeless People with Medicaid: 
Implications for Medicaid Expansion.'' American Journal of Public 
Health 105 (S5): S716-22. https://doi.org/10.2105/ajph.2015.302693.
    \293\ Logani, Ilina, Bruce Meyer, and Angela Wyse. 2023. The 
Mortality of the US Homeless Population. BF Becker Friedman 
Institute for Economics at UChicago. The University of Chicago. 
March 27, 2023. https://bfi.uchicago.edu/insight/research-summary/the-mortality-of-the-us-homeless-population/.
---------------------------------------------------------------------------

    The exceptions outlined in this proposed rule follow four criteria 
that mirror the needs and barriers to access experienced by individuals 
who are unhoused:
     The population experiences high rates of behavioral health 
diagnoses or difficulty accessing behavioral health services;
     The population experiences issues accessing services due 
to lack of transportation;
     The population experiences a historical mistrust of the 
health care system; and
     The population experiences high rates of poor health 
outcomes and mortality.
    By authorizing additional clinic services to be furnished outside 
of the four walls, the proposed exceptions are expected to improve 
access to care for the populations targeted by the exceptions. The 
exceptions would authorize States to pay the facility-based clinic 
services payment rates (such as the AIR for IHS/Tribal clinics) for the 
excepted services. Currently, due to the four walls requirement, States 
can cover and pay for services that are provided by clinic personnel 
outside the four walls--but that do not fit within the exception at 
Sec.  440.90(b)--only under Medicaid practitioner services benefits, 
such as physician services, rehabilitative services, or other licensed 
practitioner services--not under the clinic services benefit.
    It is CMS's understanding that State payment rates for these 
Medicaid practitioner services benefits are generally lower than the 
facility-based payment rates that States establish or adopt for 
Medicaid clinic services (such as the facility-based payment rate under 
the AIR, in the case of IHS/Tribal clinics), because the facility-based 
payment rates typically account for more overhead costs. While it is 
CMS's understanding that States generally pay lower rates for Medicaid 
practitioner services than they do for Medicaid facility-based 
services, it should be noted that States generally have the flexibility 
to increase practitioner services payment rates. States must also 
comply with section 1902(a)(30)(A) of the Act, which requires States to 
assure that payments are consistent with efficiency, economy, and 
quality of care, and are sufficient to enlist enough providers so that 
care and services are available under the Medicaid State plan at least 
to the extent that such care and services are available to the general 
population in the geographic area.
    Creating the exceptions could thus result in higher payments to 
providers for the excepted services. Studies of Medicaid payment rates 
have found that provider willingness to furnish services may be greater 
in States that pay providers at higher rates.294 295 
Further, practitioners may be reluctant to

[[Page 59479]]

provide home-based care when paid under a professional fee schedule 
rate, since travel expenses and time are often not factored into the 
payment rate.\296\ As this evidence suggests, higher payment rates for 
services are more likely to incentivize providers to furnish those 
services. Because the proposal would authorize payment at the generally 
higher facility-based clinic services payment rates for the excepted 
services, we believe that it would incentivize providers to provide 
these services, and thereby meet these beneficiaries where they are 
located, which for reasons further discussed below, will help to ensure 
access to necessary care.
---------------------------------------------------------------------------

    \294\ Candon, Molly, Stephen Zuckerman, Douglas Wissoker, 
Brendan Saloner, Genevieve M. Kenney, Karin Rhodes, and Daniel 
Polsky. 2018. ``Declining Medicaid Fees and Primary Care Appointment 
Availability for New Medicaid Patients.'' JAMA Internal Medicine 178 
(1): 145. https://doi.org/10.1001/jamainternmed.2017.6302.
    \295\ Holgash, Kayla, and Martha Heberlein. 2019. Physician 
Acceptance of New Medicaid Patients: What Matters and What Doesn't. 
Health Affairs Blog (blog). April 19, 2019. https://www.healthaffairs.org/content/forefront/physician-acceptance-new-medicaid-patients-matters-and-doesn-t.
    \296\ Klein, Sarah, Martha Hostetter, and Douglas McCarthy. 
2017. An Overview of Home-Based Primary Care: Learning from the 
Field. The Commonwealth Fund. The Commonwealth Fund. June 7, 2017. 
https://www.commonwealthfund.org/publications/issue-briefs/2017/jun/overview-home-based-primary-care-learning-field.
---------------------------------------------------------------------------

    We considered whether this change in interpretation could burden 
States, beneficiaries, providers, or others who have relied on our 
current interpretation. Based on our current awareness of how States 
implement the Medicaid clinic services benefit, we do not anticipate 
that our proposal would create burdens for Medicaid clinic services 
providers or Medicaid beneficiaries, and we have considered the 
possible burden for State Medicaid programs in developing the proposal. 
We invite comments on whether our proposal might create any burdens for 
States, beneficiaries, providers, or other interested parties.
1. IHS/Tribal Clinics
    In response to advice and input received through Tribal 
consultation, we propose to add a new paragraph (c) to Sec.  440.90 to 
add an exception to the four walls requirement for IHS/Tribal clinics, 
to authorize payment for clinic services provided outside the four 
walls by IHS/Tribal clinic personnel. This exception would be mandatory 
for all States that opt to cover the Medicaid clinic services benefit. 
We refer in the proposed regulation text to clinics that are facilities 
of the IHS, whether operated by IHS or by a Tribe or Tribal 
organization as authorized by the ISDEAA, to make clear that this 
exception applies only to IHS/Tribal clinics. The proposed regulatory 
language identifying the facilities that would be subject to the 
exception is consistent with our longstanding interpretation of the 
language used in sections 1905(b) and 1911 of the Act, and would mean 
clinics that are owned and operated by IHS, clinics that are owned by 
IHS and Tribally-operated as authorized by the ISDEAA, or clinics that 
are owned and operated by Tribes and Tribal organizations as authorized 
by the ISDEAA.\297\
---------------------------------------------------------------------------

    \297\ HCFA and IHS, Memorandum of Agreement.
---------------------------------------------------------------------------

    Under section 1903(a)(1) of the Act, as discussed earlier, the 
Federal government is required to match State expenditures for medical 
assistance at the Federal Medical Assistance Percentage (FMAP), which 
is defined at section 1905(b) of the Act to be 100 percent for State 
expenditures for Medicaid-covered services received through an IHS 
facility whether operated by IHS or by a Tribe or Tribal organization 
(which, again, CMS has interpreted to refer to all three kinds of IHS/
Tribal facilities described above). Under CMS's longstanding 
interpretation of section 1905(b) of the Act, this 100 percent FMAP is 
available only for State expenditures on services received through an 
IHS/Tribal facility (such as a clinic) by AI/AN Medicaid beneficiaries. 
State expenditures on services furnished by an IHS/Tribal facility to 
other Medicaid beneficiaries are not matched by the Federal government 
at 100 percent, but rather at the otherwise applicable FMAP, and this 
would continue to apply for services provided outside the four walls of 
a clinic.
    We are not proposing to include facilities operated by urban Indian 
organizations (UIOs) in this proposed exception, because it is our 
understanding that many of those facilities currently participate in 
Medicaid as providers of the Medicaid FQHC services benefit, not as 
providers of the clinic services benefit. Because Medicaid FQHC 
services are not subject to a four walls requirement under Federal 
Medicaid law, we believe that UIOs are unlikely to need the proposed 
exception. UIO facilities that provide Medicaid clinic services might 
qualify as behavioral health clinics or clinics in rural areas and be 
exempt from the four walls requirement under one of the two optional 
exceptions discussed below.
    This exception would apply to any Medicaid beneficiary who receives 
services from the IHS/Tribal clinic. Under IHS authorities, these 
clinics serve Medicaid beneficiaries who are eligible to receive 
services from the IHS/Tribal clinic under IHS regulations at 42 CFR 
part 136, and also may serve other Medicaid beneficiaries under 25 
U.S.C. 1680c. As mentioned in section XVIII.A of this proposed rule, 
all services covered under the clinic services benefit must be 
furnished by or under the direction of a physician, so we propose to 
include language in this exception specifying that services subject to 
the exception would have to be furnished under the direction of a 
physician to make that requirement clear.
    We propose this exception based on advice and input received 
through Tribal consultation and because the population served by IHS/
Tribal clinics, which is predominately AI/AN, tends to meet the 
criteria CMS has identified that warrant an exception from the four 
walls requirement (for example, high rates of behavioral health needs, 
lack of accessible transportation, mistrust of the health care system, 
and high rates of morbidity and poor health outcomes).
    AI/ANs experience high rates of behavioral health diagnoses. In 
particular, the opioid crisis plaguing many communities is especially 
acute in Tribal communities.\298\ As reported by the Centers for 
Disease Control and Prevention (CDC), AI/ANs have the highest rate of 
drug overdose compared to other U.S. populations, and they experienced 
a 39 percent increase in overdoses between 2019 and 2020.\299\
---------------------------------------------------------------------------

    \298\ Tipps, Robin T., Gregory T. Buzzard, and John A. 
McDougall. 2018. ``The Opioid Epidemic in Indian Country.'' The 
Journal of Law, Medicine & Ethics 46 (2): 422-36. https://doi.org/10.1177/1073110518782950.
    \299\ Centers for Disease Control and Prevention (CDC), ``Drug 
Overdose Prevention in Tribal Communities,'' CDC, May 2, 2024, 
https://www.cdc.gov/overdose-prevention/health-equity/tribal-communities.html?CDC_AAref_Val=https://www.cdc.gov/drugoverdose/health-equity/tribal.html.
---------------------------------------------------------------------------

    Many AI/ANs also experience difficulties accessing services due to 
lack of transportation. Tribal lands encompass about 56 million acres 
nationwide, including 145,000 miles of roads.\300\ Roads in Tribal 
communities are typically rudimentary and in poor condition. For 
example, about 70 percent of Tribal roads across the country are 
unpaved compared to 45 percent of all rural roads.301 302 
Because Tribal communities are often located in rural or remote areas 
covering vast distances, providers can be extremely far away from their 
patients. For example, it is common for AI/ANs to have to travel 
between 60 and 90 miles one-way for health care appointments.\303\ Many 
AI/ANs also do

[[Page 59480]]

not have reliable personal transportation. The rate of AI/ANs without a 
personal vehicle is more than double that of individuals in other rural 
areas.\304\ Per a recent CDC report, approximately 17.1 percent of AI/
ANs lack reliable transportation, the highest rate compared to other 
U.S. populations, and this is a barrier to accessing health care.\305\ 
Many AI/ANs have a profound mistrust of the Federal government and 
mainstream providers based on trauma from a long history of harmful 
U.S. Tribal policies, such as removal of AI/ANs from homelands and 
Tribal community structures, bans on cultural practices and language, 
forced relocation to reservations, abusive boarding school practices, 
and other destructive policies. AI/AN health disparities are the 
visible, lingering result of these harmful policies.\306\
---------------------------------------------------------------------------

    \300\ Congressional Research Service (CRS), Highways and Highway 
Safety on Indian Lands, CRS Report, (Washington, DC, 2016), https://www.everycrsreport.com/files/20160202_R44359_38af583fdef681edc7b5d4daeeeb5bc506a4f919.pdf.
    \301\ Id.
    \302\ CRS, Rural Highways, CRS Report, (Washington, DC, 2018), 
https://crsreports.congress.gov/product/pdf/R/R45250.
    \303\ Government Accountability Office (GAO), Indian Health 
Service: Health Care Services Are Not Always Available to Native 
Americans, GAO-05-789, (Washington, DC, 2005), https://www.gao.gov/assets/gao-05-789.pdf.
    \304\ CRS, Tribal Highway and Public Transportation Programs, In 
Focus, (Washington, DC, 2022), https://crsreports.congress.gov/product/pdf/IF/IF12129.
    \305\ CDC, National Center for Health Statistics (NCHS), Lack of 
Reliable Transportation for Daily Living Among Adults: United 
States, 2022, by Amanda E. Ng, Dzifa Adjaye-Gbewonyo, and James 
Dahlhamer, NCHS Data Brief No. 490, (Hyattsville, MD, 2024), https://dx.doi.org/10.15620/cdc:135611.
    \306\ U.S. Commission Civil Rights, Broken Promises: Continuing 
Federal Funding Shortfall for Native Americans, Briefing Report, 
(Washington, DC, 2018), https://www.usccr.gov/files/pubs/2018/12-20-Broken-Promises.pdf.
---------------------------------------------------------------------------

    Furthermore, AI/ANs face poorer health outcomes than all other 
adults on average and have the lowest life expectancy compared to other 
U.S. populations. For example, AI/ANs have higher rates of obesity, 
heart disease, and diabetes than other adults in the U.S. population on 
average.\307\ The CDC's Provisional Life Expectancy Estimates for 2021 
found a severe drop in life expectancy for AI/ANs--decreasing by 6.6 
years from 2019 to 2021.\308\ Not only do AI/ANs, on average, die 
younger than all other Americans, but this disparity is worsening at an 
alarming rate. AI/AN life expectancy today is the same as it was for 
the average American in 1944.\309\
---------------------------------------------------------------------------

    \307\ MACPAC, Medicaid's Role in Health Care for American 
Indians and Alaska Natives, Issue Brief, (Washington, DC, 2021), 
https://www.macpac.gov/wp-content/uploads/2021/02/Medicaids-Role-in-Health-Care-for-American-Indians-and-Alaska-Natives.pdf.
    \308\ CDC, NCHS, Provisional Life Expectancy Estimates for 2021, 
by Elizabeth Arias, Betzaida Tejada-Vera, Kenneth D. Kochanek, and 
Farida B. Ahmad, Vital Statistics Rapid Release Report No. 23, 
(Hyattsville, MD, 2022), https://dx.doi.org/10.15620/cdc:118999.
    \309\ IHS, ``Disparities,'' Indian Health Services, October 
2019, https://www.ihs.gov/newsroom/factsheets/disparities/.
---------------------------------------------------------------------------

    This evidence indicates that an exception to the four walls 
requirement is warranted for IHS/Tribal clinics because the individuals 
served by these clinics are more likely than those in other groups to 
meet a higher number of the four criteria we described in this proposed 
rule. Through Tribal Consultation, Tribal leaders indicated that IHS/
Tribal clinics need the flexibility to provide services to AI/ANs where 
they are located due to their high levels of behavioral health 
diagnoses, challenges accessing services due to lack of transportation 
and appropriate infrastructure, historic mistrust of the Federal 
government and the health care system, and poor health outcomes.
    As explained below, we propose that behavioral health clinics and 
clinics in rural areas would serve as a proxy for their patient 
populations, instead of limiting the exception for behavioral health 
clinics to patients with behavioral health disorders or limiting the 
exception for clinics in rural areas to patients residing in rural 
areas. We proposed this approach because we believe that these clinics 
serve predominantly patients with behavioral health disorders or who 
live in rural areas (as applicable), and to reduce the operational 
burden of implementing these exceptions. Similar to the proposed 
exceptions for behavioral health clinics and clinics in rural areas, we 
are also proposing that the IHS/Tribal clinics would be a proxy for 
their patient population, but for somewhat different reasons. The 
operational burden that the proposed proxy approach would address for 
behavioral health clinics and clinics in rural areas would not be as 
much of an issue for IHS/Tribal clinics, because the entire patient 
population of an IHS/Tribal clinic is likely to meet some or all of the 
four criteria described in this proposed rule. For that same reason, a 
proxy approach would be appropriate for these clinics. These clinics 
serve a clearly identifiable group of Medicaid beneficiaries under IHS 
statutes and regulations: Medicaid beneficiaries whom IHS/Tribal 
clinics serve under 42 CFR part 136 or other Medicaid beneficiaries 
whom these clinics may serve under 25 U.S.C. 1680c. As discussed above, 
the population served by IHS/Tribal clinics, which is predominately AI/
AN, is more likely than other groups to meet a higher number of the 
criteria identified in this proposed rule as warranting an exception.
2. Behavioral Health Clinics
    We propose to add a new paragraph (d) to Sec.  440.90 to authorize 
an exception to the four walls requirement for clinic services provided 
outside the four walls by personnel of behavioral health clinics. This 
exception would not be mandatory in States that opt to cover the clinic 
services benefit but could be implemented as a State option. 
Specifically, we propose an exception for clinics that are primarily 
organized for the care and treatment of outpatients with behavioral 
health disorders, including mental health disorders and substance use 
disorders. We note that this proposed exception would include any 
clinic services furnished outside of the four walls by a behavioral 
health clinic, including non-behavioral clinic services such as 
physical health services.
    This proposed exception would include behavioral clinic types that 
are recognized nationally, such as Community Mental Health Centers, and 
other behavioral health clinics organized in a State. We recognize that 
the types of behavioral health clinics within a State may vary, so we 
are not proposing to limit this exception to specific types of 
behavioral health clinics. However, to be considered a behavioral 
health clinic under this proposed exception, the clinic would have to 
be primarily organized to treat outpatients with behavioral health 
disorders regardless of the patient mix of the clinic. For example, if 
a State has established separate licensure or certification 
requirements for mental health clinics and primary care clinics, under 
which primary care clinics are licensed to treat outpatients for a 
range of services beyond the treatment of behavioral health disorders, 
then we would consider a mental health clinic in that State to be 
primarily organized to treat outpatients with behavioral health 
disorders but would not consider a primary care clinic in that State to 
be primarily organized to treat such outpatients. We recognize that 
there may be other means by which a State determines that a clinic is 
primarily organized to treat outpatients with behavioral health 
disorders (that is, other than through licensure or certification), 
including behavioral health accreditation by accrediting organizations, 
such as The Joint Commission, or based on the organizing documents of 
the clinic, such as a business charter. If this proposal is finalized 
as described, States that choose to adopt this exception would describe 
the types of behavioral health clinics such exception applies to in 
their Medicaid State plan. Just like our proposed exception for IHS/
Tribal clinics, we propose to include language in this exception 
specifying that services subject to the exception would

[[Page 59481]]

have to be furnished under the direction of a physician.
    Per 2022 data from the Substance Abuse and Mental Health Services 
Administration (SAMHSA), approximately 94.7 percent of adults 
nationwide with a substance use disorder did not seek substance use 
treatment and nearly half of adults nationwide with a mental health 
disorder did not receive mental health treatment, which suggests that 
this population may have difficulty accessing behavioral health 
services.\310\ Lack of transportation and geographic distance from 
behavioral health services are often cited in research as barriers to 
behavioral health treatment.\311\ One study of transportation-
disadvantaged adults found that nearly half of adults nationwide who 
lacked medical transportation were diagnosed with depression or another 
mental health disorder.\312\ Studies have found that individuals with 
behavioral health disorders often report negative experiences with 
providers and stigmatizing attitudes from providers are common, which 
can lead to a mistrust of the health care system and forgone care.\313\ 
Finally, research has found that individuals with a severe mental 
illness or substance use disorder experience worse health outcomes and 
increased risk of premature mortality, with one recent study finding 
individuals with a severe mental illness or substance use disorder 
experiencing a shorter life span than comparable individuals by an 
average of 6 years.\314\
---------------------------------------------------------------------------

    \310\ Substance Abuse and Mental Health Services Administration 
(SAMHSA), Key substance use and mental health indicators in the 
United States: Results from the 2022 National Survey on Drug Use and 
Health, HHS Publication No. PEP23-07-01-006, NSDUH Series H-58, 
(Rockville, MD, 2023), https://www.samhsa.gov/data/report/2022-nsduh-annual-national-report.
    \311\ Priester, Mary Ann, Teri Browne, Aidyn Iachini, Stephanie 
Clone, Dana DeHart, and Kristen D. Seay. 2016. ``Treatment Access 
Barriers and Disparities among Individuals with Co-Occurring Mental 
Health and Substance Use Disorders: An Integrative Literature 
Review.'' Journal of Substance Abuse Treatment 61 (61): 47-59. 
https://doi.org/10.1016/j.jsat.2015.09.006.
    \312\ Wallace, Richard J, Paul Hughes-Cromwick, Hillary J Mull, 
and Snehamay Khasnabis. 2005. ``Access to Health Care and 
Nonemergency Medical Transportation: Two Missing Links.'' 
Transportation Research Record 1924 (January): 76-84. https://doi.org/10.3141/1924-10.
    \313\ Knaak, Stephanie, Ed Mantler, and Andrew Szeto. 2017. 
``Mental Illness-Related Stigma in Healthcare.'' Healthcare 
Management Forum 30 (2): 111-16. https://doi.org/10.1177/0840470416679413.
    \314\ Iturralde, Esti, Natalie Slama, Andrea H. Kline-Simon, 
Kelly C. Young-Wolff, Don Mordecai, and Stacy A. Sterling. 2021. 
``Premature Mortality Associated with Severe Mental Illness or 
Substance Use Disorder in an Integrated Health Care System.'' 
General Hospital Psychiatry 68 (January): 1-6. https://doi.org/10.1016/j.genhosppsych.2020.11.002.
---------------------------------------------------------------------------

    State-specific circumstances may affect the degree to which a 
State's population of individuals with behavioral health disorders 
meets the four criteria described in this proposed rule. The Health 
Resources and Services Administration (HRSA), in coordination with 
State primary care offices, designates as Health Professional Shortage 
Areas (HPSAs) \315\ areas experiencing a shortage in primary care, 
dental care, or mental health care providers for a whole geographic 
area, a specific population within a geographic area, and facilities 
that serve these areas. HRSA publishes data for each State on the 
percent of need met for primary care, dental care, and mental health 
providers, with a lower percentage indicating a lower availability of 
providers. It should be noted that the types of mental health providers 
counted in HPSAs are set in regulation, and based on the regulations, 
HRSA allows State Primary Care Offices to choose whether to count: 
psychiatrists only, core mental health professionals (psychiatrists, 
clinical psychologists, clinical social workers, psychiatric nurse 
specialists, and marriage and family therapists), or a combination of 
all types. As of December 31, 2023, there is significant variation 
among States in the percent of need met for mental health care, with a 
low of 9 percent and a high of 63 percent.\316\ This variation in 
availability of mental health care providers may suggest that 
populations of individuals with behavioral health disorders in some 
States may have greater difficulty accessing behavioral health services 
or accessing transportation to a behavioral health provider than those 
populations in other States. There may also be significant variability 
between States with regard to behavioral health outcomes and mortality. 
For example, in 2021 the age-adjusted drug overdose mortality rate by 
State had significant variation, from a low of 11 per 100,000 to a high 
of 90 per 100,000.\317\ These differences between populations of 
individuals with behavioral health disorders in different States may 
suggest that the degree to which a State's population of individuals 
with behavioral health disorders meets the four criteria may be 
variable.
---------------------------------------------------------------------------

    \315\ Health Resources & Services Administration (HRSA), ``What 
is Shortage Designation?'' HRSA Health Workforce, June 2023, https://bhw.hrsa.gov/workforce-shortage-areas/shortage-designation.
    \316\ HRSA, Designated Health Professional Shortage Areas 
Statistics, Designated HPSA Quarterly Summary, (Rockville, MD, 
2024), https://data.hrsa.gov/Default/GenerateHPSAQuarterlyReport.
    \317\ CDC, NCHS, ``Drug Overdose Mortality by State,'' CDC, 
March 1, 2022, https://www.cdc.gov/nchs/pressroom/sosmap/drug_poisoning_mortality/drug_poisoning.htm.
---------------------------------------------------------------------------

    This evidence indicates that an exception to the clinic services 
four walls requirement could be warranted, based on State-specific 
circumstances, for clinics that are primarily organized for the care 
and treatment of outpatients with a behavioral health disorder, as 
these clinics might primarily serve a patient population that may be 
more likely than other groups to meet more of the four criteria we 
described in this proposed rule. The evidence also suggests that this 
patient population is less likely to meet as many of the criteria as 
consistently nationwide as patients served by IHS/Tribal clinics. Under 
the proposal, a State could determine that individuals with a 
behavioral health disorder in that State should be engaged by 
behavioral health clinic personnel where they are located due to their 
challenges accessing services, including lack of transportation and 
geographic distance from services, historic mistrust and stigmatization 
in the health care system, and poor health outcomes.
    We considered proposing that, to qualify for this proposed 
exception, clinic services would have to be provided specifically to 
individuals with a behavioral health disorder, in addition to being 
provided by personnel of a behavioral health clinic. However, we 
believe that such a requirement would be too operationally burdensome 
and that instead behavioral health clinics can serve as a proxy for a 
population that generally consists of individuals with a behavioral 
health disorder. We recognize there may be circumstances in which a 
behavioral health clinic furnishes services to an individual who does 
not have a behavioral health disorder, but it is our understanding that 
behavioral health clinics generally serve a patient population that 
consists primarily of individuals with behavioral health disorders 
(including individuals with a formal behavioral health disorder 
diagnosis and those with an undiagnosed behavioral health disorder). 
Thus, these clinics can serve as a proxy for a patient population that 
is more likely to have such a disorder--and thus, that includes people 
who are more likely to meet more of the four criteria. In addition, we 
believe that requiring clinics or States to verify that a clinic 
patient has a behavioral health disorder and to deny coverage of 
Medicaid clinic services provided outside the four walls if the patient 
does not, would be too operationally

[[Page 59482]]

burdensome. For example, an individual might experience or present 
their behavioral health symptoms in an uncommon way, an individual 
might be misdiagnosed, or an individual might be experiencing a crisis 
where services are needed urgently and verifying that they have a 
behavioral health disorder might delay needed care. Because we believe 
that behavioral health clinics can serve as a proxy for individuals 
with behavioral health disorders, and because we do not want to make 
this exception too operationally burdensome, we are not proposing that 
to qualify for the proposed exception, clinic services must be provided 
by a behavioral health clinic specifically to an individual with a 
behavioral health disorder.
3. Clinics Located in Rural Areas
    We propose to add a new paragraph (e) to Sec.  440.90 to authorize 
an exception to the four walls requirement for clinic services provided 
outside the four walls by personnel of clinics located in rural areas, 
but that are not RHCs as referenced in section 1905(a)(2)(B) of the Act 
and Sec.  440.20(b). This exception would not be mandatory in States 
that opt to cover the clinic services benefit, but could be implemented 
at State option. Just like our proposed exception for IHS/Tribal 
clinics and behavioral health clinics, we propose to include language 
in this exception specifying that services subject to the exception 
would have to be under the direction of a physician.
    Per SAMHSA data, rates of mental illness and substance use 
disorders are similar in rural and urban areas.\318\ However, 
individuals in rural areas with a mental illness or substance use 
disorder are less likely to receive treatment than individuals in urban 
areas due to more limited access to providers, as rural areas are more 
likely to lack trained and specialized behavioral health 
providers.\319\ For example, in 2021 the number of psychologists per 
100,000 people in rural counties was less than half of the number in 
urban counties.\320\ A recent study found that rural individuals on 
average are 22 percent less likely than urban individuals to utilize 
primary and specialty clinic services.\321\ Studies have found that 
lack of transportation and distance to providers is a common barrier to 
rural individuals accessing health care services.\322\ Furthermore, a 
recent Government Accountability Office (GAO) report found that rural 
individuals need to travel 40 miles on average to access specialty 
services.\323\ With regards to mistrust of the health care system, 
research has found that rural individuals have historically mistrusted 
the health care at higher rates, and that some of this mistrust comes 
from a perception that the health care system prioritizes urban 
communities over rural communities.\324\ Per the CDC, rural individuals 
are at greater risk of poor health outcomes as they tend to be older 
and sicker than urban individuals.\325\ Finally, according to a CDC 
National Center for Health Statistics (NCHS) study, age-adjusted 
mortality rates are higher for rural individuals, with the mortality 
gap increasing since 1999 between rural and urban individuals.\326\
---------------------------------------------------------------------------

    \318\ SAMHSA, ``2022 NSDUH Detailed Tables,'' SAMHSA, November 
13, 2023, https://www.samhsa.gov/data/report/2022-nsduh-detailed-tables.
    \319\ Morales, Dawn A., Crystal L. Barksdale, and Andrea C. 
Beckel-Mitchener. 2020. ``A Call to Action to Address Rural Mental 
Health Disparities.'' Journal of Clinical and Translational Science 
4 (5): 1-20. https://doi.org/10.1017/cts.2020.42.
    \320\ WWAMI Rural Health Research Center, University of 
Washington. Changes in the Supply and Rural-Urban Distribution of 
Psychologists in the U.S., 2014-2021. 2022. https://familymedicine.uw.edu/rhrc/wp-content/uploads/sites/4/2022/10/RHRC_DBOCT2022_PSYCHOLOGIST_Andrilla.pdf.
    \321\ Nuako, Akua, Jingxia Liu, Giang Pham, Nina Smock, Aimee 
James, Timothy Baker, Laura Bierut, Graham Colditz, and Li-Shiun 
Chen. 2022. ``Quantifying Rural Disparity in Healthcare Utilization 
in the United States: Analysis of a Large Midwestern Healthcare 
System.'' Edited by Nickolas D. Zaller. PLOS ONE 17 (2): e0263718. 
https://doi.org/10.1371/journal.pone.0263718.
    \322\ Arcury, Thomas A., John S. Preisser, Wilbert M. Gesler, 
and James M. Powers. 2005. ``Access to Transportation and Health 
Care Utilization in a Rural Region.'' The Journal of Rural Health 21 
(1): 31-38. https://doi.org/10.1111/j.1748-0361.2005.tb00059.x.
    \323\ GAO, Rural Hospital Closures, GAO-21-93, (Washington, DC, 
2020), https://www.gao.gov/assets/gao-21-93.pdf.
    \324\ Lister, Jamey J., and Paul J. Joudrey. 2022. ``Rural 
Mistrust of Public Health Interventions in the United States: A Call 
for Taking the Long View to Improve Adoption.'' The Journal of Rural 
Health 39 (1): 18-20. https://doi.org/10.1111/jrh.12684.
    \325\ CDC, ``About Rural Health,'' CDC, May 16, 2024, https://www.cdc.gov/rural-health/php/about/?CDC_AAref_Val=https://www.cdc.gov/ruralhealth/about.html.
    \326\ CDC, NCHS, Trends in death rates in urban and rural areas: 
United States, 1999-2019, by Sally C. Curtin and Merianne Rose 
Spencer, NCHS Data Brief No. 417, (Hyattsville, MD, 2021), https://dx.doi.org/10.15620/cdc:109049.
---------------------------------------------------------------------------

    State-specific circumstances may affect the degree to which a 
State's population of individuals in rural areas meets the four 
criteria described in this proposed rule. A study found that 21 percent 
of adults without access to a vehicle or public transit reported 
skipping needed medical care compared to only 9 percent who did not own 
a vehicle but had access to public transit.\327\ According to a Federal 
Highway Administration publication, just under 90 percent of passenger 
trips in rural areas occur in personal vehicles.\328\ For the rural 
individuals who lack access to a personal vehicle, public transit is 
generally less available, with an approximate 40 percent of rural 
individuals living in an area without public transit.\329\ However, 
some States establish rural public transit systems that guarantee 
service coverage to all residents.\330\ This variation between States 
in their rural populations' access to public transit may suggest that 
the degree to which a State's rural population is able to access 
transportation to medical services may differ from State to State. 
There may also be significant variability between States with regards 
to health outcomes and mortality. For example, a CDC report found that 
the percentage of excess mortality from heart disease in rural counties 
varied significantly between States in the northeast and the south with 
a 13 percent excess rate for the northeast States and 56 percent for 
the southern States.\331\ These differences between State populations 
of individuals in rural areas may suggest that the degree to which a 
State's rural population meets the four criteria may be variable.
---------------------------------------------------------------------------

    \327\ Smith, Laura Berrie, Michael Karpman, Dulce Gonzalez, and 
Sarah Morriss, ``More than One in Five Adults with Limited Public 
Transit Access Forgo Health Care Because of Transportation 
Barriers,'' Robert Wood Johnson Foundation, April 26, 2023, https://www.rwjf.org/en/insights/our-research/2023/04/more-than-one-in-five-adults-with-limited-public-transit-access-forgo-healthcare-because-of-transportation-barriers.html.
    \328\ U.S. Department of Transportation (DOT), Federal Highway 
Administration (FHWA), Chapter 11: Rural America, Status of the 
Nation's Highways, Bridges, and Transit Conditions and Performance 
Report, 24th Edition (Washington, DC, 2021), https://www.fhwa.dot.gov/policy/24cpr/pdf/Chapter11.pdf.
    \329\ Id.
    \330\ Id.
    \331\ CDC, Potentially Excess Deaths from the Five Leading Cause 
of Death in Metropolitan and Nonmetropolitan Counties--United 
States, 2010-2017, by Macarena C. Garcia, Lauren M. Rossen, Brigham 
Bastian, Mark Faul, Nicole F. Dowling, Cheryll C. Thomas, Linda 
Schieb, Yuling Hong, Paula W. Yoon, and Michael F. Iademarco, 
Morbidity and Mortality Weekly Report Vol. 68, No. 10, (Atlanta, GA, 
2019), https://www.cdc.gov/mmwr/volumes/68/ss/pdfs/ss6810a1-H.pdf.
---------------------------------------------------------------------------

    This evidence indicates that an exception to the clinic services 
four walls requirement could be warranted, based on State-specific 
circumstances, for services furnished by clinics located in rural areas 
that are not RHCs, as these clinics might primarily serve a patient 
population that may be more likely than other groups to meet more of 
the four criteria we identified in this proposed rule. The evidence 
also suggests that this patient population is less likely to meet as 
many of the criteria as

[[Page 59483]]

consistently nationwide as patients served by IHS/Tribal clinics. Under 
the proposal, a State could determine that individuals who reside in 
rural areas in that State should be engaged where they are located by 
personnel of a clinic located in a rural area, due to their challenges 
accessing behavioral health services, overall health care access 
challenges stemming from lack of transportation and distance from 
providers, historic mistrust of the health care system, and poor health 
outcomes. We note that clinics located in rural areas providing 
optional services as authorized under sections 1902(a)(10) and 
1905(a)(9) of the Act and 42 CFR 440.90 are distinct from RHCs 
providing mandatory services as authorized under sections 1902(a)(10) 
and 1905(a)(2)(B) of the Act and 42 CFR 440.20(b). RHC services are a 
separate Medicaid benefit provided by a type of facility that is 
referenced in section 1905(a)(2)(B) of the Act and 42 CFR 440.20(b), 
and a four walls requirement does not apply to that benefit under 
Federal Medicaid law.
    We considered proposing that, to qualify for this proposed 
exception, clinic services would have to be provided specifically to 
individuals who reside in rural areas, in addition to being provided by 
personnel of a clinic located in a rural area. However, we believe 
clinics located in rural areas can serve as a proxy for a population 
that generally consists of individuals who reside in rural areas, and 
that such a requirement would be too operationally burdensome. We 
recognize there may be circumstances in which a clinic located in a 
rural area furnishes services to an individual who does not reside in a 
rural area, but it is our understanding that clinics located in rural 
areas generally serve a patient population that consists primarily of 
individuals who reside in rural areas. Thus, these clinics can serve as 
a proxy for a patient population that is more likely to reside in a 
rural area--and thus, that includes people who are more likely to meet 
more of the four criteria. In addition, we believe that requiring 
clinics or States to verify that a clinic patient lives in a rural 
area, and to deny coverage of Medicaid clinic services provided outside 
the four walls if the patient does not, would be too operationally 
burdensome. For example, an individual's address might change 
frequently, an individual might refuse to provide their address, or the 
clinic might be located in a rural area that borders a non-rural area. 
Because we believe that clinics located in rural areas can serve as a 
proxy for individuals who reside in rural areas, and because we do not 
want to make this exception too operationally burdensome, we are not 
proposing that to qualify for the proposed exception, clinic services 
must be provided by a clinic located in a rural area specifically to an 
individual who resides in a rural area.
    We have not included a definition of ``rural'' in proposed rule 
text, but are considering defining that term in the final rule and are 
considering various approaches to doing so, on which we seek comment. 
There are many Federal and State definitions of rural for various 
programs, and no single definition precisely identifies all rural 
areas. The Rural Health Information Hub provides a non-official tool 
that could be used to help identify if a specific location is 
considered a rural location based on various definitions.\332\ Some 
rural definitions may categorize areas that are generally recognized as 
suburban as rural, while other definitions may classify sparsely 
populated remote areas as urban. For example, the population residing 
in rural areas identified by a more limited rural definition may more 
closely meet more of the four criteria identified in this proposed rule 
than the population residing in rural areas identified under a broader 
definition. Definitions of rural adopted and used by Federal 
governmental agencies for programmatic purposes include the definition 
used by the Census Bureau, the definition used by the Office of 
Management and Budget (OMB), and the definition used by HRSA's Federal 
Office of Rural Health Policy (FORHP).333 334 In addition, 
we believe that State-level variations may also affect whether certain 
ways of defining rural are appropriate in specific States. States may 
have their own definitions of rural under State law or regulation for 
various programmatic purposes, such as definitions adopted by State 
primary care offices or State Offices of Rural Health.
---------------------------------------------------------------------------

    \332\ ``Am I Rural?--Tool,'' Rural Health Information Hub, 
accessed May 7, 2024, https://www.ruralhealthinfo.org/am-i-rural. 
This tool is not official and should not be relied upon as a formal 
Federal determination that a location is rural.
    \333\ HRSA, ``Defining Rural Population,'' Health Resources & 
Services Administration, January 2024, https://www.hrsa.gov/rural-health/about-us/what-is-rural.
    \334\ Response to Comments on Revised Geographic Eligibility for 
Federal Office of Rural Health Policy Grants, 86 FR 2418 (January 
12, 2021). See, https://www.federalregister.gov/documents/2021/01/12/2021-00443/response-to-comments-on-revised-geographic-eligibility-for-federal-office-of-rural-health-policy.
---------------------------------------------------------------------------

    Under any definition of rural, the specific areas identified as 
rural may change over time and that would have a direct impact on the 
scope of clinics eligible for this proposed four walls exception. For 
example, areas identified as rural under the Census definition may 
change after the decennial census, which may result in some clinics no 
longer being located in rural areas under that updated definition.
    We considered the following approaches to defining rural: adopting 
one of the commonly used definitions of rural adopted by the Federal 
governmental agencies referenced above, permitting a State to adopt a 
definition of rural that is adopted and used by a Federal governmental 
agency for programmatic purposes, permitting a State to adopt a 
definition of rural that is adopted and used by a State governmental 
agency with a role in setting State rural health policy, or not 
adopting any definition of rural.
    We note that the research, data, and reports cited earlier in this 
section do not all use the same definition of rural, and for four of 
the citations it is unclear what definition of rural was used. The 
SAMHSA data, the study on primary and specialty care utilization, and 
NCHS study use the OMB definition while the CDC health outcomes 
research uses the Census Bureau definition and the GAO report uses the 
FORHP definition of rural.
    If we adopt a Federal definition, we would finalize in rulemaking 
that for the purposes of this exception rural is defined as the 
definition of rural adopted or used by the Census Bureau, OMB, or FORHP 
(we would adopt only one of these definitions). The benefits to 
adopting a Federal definition include that the definition would be 
consistent for all States electing to implement the exception and all 
clinics located in rural areas in such States. However, if we adopted a 
specific Federal definition of rural then States could not consider the 
variation in which their rural populations under different rural 
definitions meet the four criteria we describe in this proposed rule. 
In addition, CMS does not directly control any of these Federal 
definitions, so if we adopt a specific Federal definition then future 
rulemaking might be necessary to align our rule with another Federal 
agency's changes to that Federal definition.
    The Census Bureau does not specifically define rural but considers 
any area that is not urban as rural. An urban area must meet certain 
density standards and contain at least 2,000 housing units or at least 
5,000 people. There are 2,644 urban areas defined by the Census Bureau 
following the 2020 Census. Over 80 percent of the Census-defined urban 
areas (2,134 urban areas) have populations of less than 50,000

[[Page 59484]]

people while the remaining 19 percent (510 urban areas) have 
populations of 50,000 people or more.\335\ Following the 2020 Census, 
the Census Bureau does not sub-categorize urban areas as Urbanized 
Areas or Urban Clusters.\336\ If we adopted the Census Bureau 
definition, then we would finalize in rulemaking that a rural area is 
defined as an area identified by the Census Bureau in ``Urban Area 
Criteria for the 2020 Census-Final Criteria,'' 87 FR 16706 as not being 
an urban area. The advantage to the Census Bureau definition of rural 
is that it is a widely recognized definition, which may make it an 
easier definition to implement for purposes of an exception to the 
clinic services four walls requirement, if this proposed rule is 
finalized. A disadvantage to the Census Bureau definition is that the 
Census Bureau's urban area boundaries do not follow other 
administrative units, such as county or municipality borders, and may 
be complex to operationalize. The Census Bureau provides TIGERweb 
Decennial online mapping tools for urban area boundaries at https://tigerweb.geo.census.gov/ that may be helpful for interested parties 
considering what it would mean for CMS to finalize a rule that defines 
rural according to the U.S. Census Bureau's definition. The CDC 
research on health outcomes we cite elsewhere in this section used the 
Census Bureau definition, which demonstrates that this definition can 
be linked to the four criteria described in this proposed rule. 
However, the Census Bureau definition is broad, and some policy experts 
point out that the definition classifies many suburban areas as rural 
while also classifying towns and small cities with populations of less 
than 50,000 people as non-rural.\337\
---------------------------------------------------------------------------

    \335\ Census Bureau, ``Urban and Rural,'' United States Census 
Bureau, September 2023, https://www.census.gov/programs-surveys/geography/guidance/geo-areas/urban-rural.html.
    \336\ Urban Area Criteria for the 2020 Census-Final Criteria, 87 
FR 16706 (Mar. 24, 2022). See, https://www.federalregister.gov/documents/2022/03/24/2022-06180/urban-area-criteria-for-the-2020-census-final-criteria.
    \337\ Revised Geographic Eligibility for Federal Office of Rural 
Health Policy Grants, 85 FR 59806 (Oct. 23, 2020). See, https://www.federalregister.gov/documents/2020/09/23/2020-20971/revised-geographic-eligibility-for-federal-office-of-rural-health-policy-grants.
---------------------------------------------------------------------------

    OMB also does not specifically define rural, but designates areas 
as metropolitan, micropolitan, or neither (also known as noncore).\338\ 
A metropolitan area consists of an urban core of 50,000 or more 
individuals, a micropolitan area consists of an urban core of 10,000 to 
49,999 individuals, and all other areas are considered neither. Areas 
that are micropolitan or neither are considered rural while 
metropolitan areas are considered urban.\339\ If we adopted the OMB 
definition, then we would finalize in regulation text that a rural area 
is defined as an area not identified as metropolitan by OMB, as 
described in ``2020 Standards for Delineating Core Based Statistical 
Areas,'' 86 FR 37770. Like the Census Bureau definition of rural, the 
OMB definition is a widely recognized definition that may be an easier 
definition to implement for purposes of an exception to the clinic 
services four walls requirement, if this proposed rule is finalized. 
For example, the study on primary and specialty care utilization and 
the NCHS study on mortality we cite elsewhere in this section use the 
OMB definition, which demonstrates that this definition can be linked 
to the four criteria described in this proposed rule. In addition, the 
NCHS Urban-Rural Classification Scheme for Counties follows the OMB 
definition of rural and is widely used in health research.\340\ 
However, the OMB definition is considered by some policy experts to be 
too narrow as areas OMB defines as metropolitan include areas that are 
often considered to be rural, like for example the Grand Canyon.\341\
---------------------------------------------------------------------------

    \338\ 2020 Standards for Delineating Core Based Statistical 
Areas, 86 FR 37770 (July 16, 2021). See, https://www.federalregister.gov/documents/2021/07/16/2021-15159/2020-standards-for-delineating-core-based-statistical-areas.
    \339\ HRSA, Defining Rural Population.
    \340\ CDC, NCHS, ``NCHS Urban-Rural Classification Scheme for 
Counties,'' CDC, June 1, 2017, https://www.cdc.gov/nchs/data_access/urban_rural.htm.
    \341\ Revised Geographic Eligibility for Federal Office of Rural 
Health Policy Grants, 85 FR 59806 (Oct. 23, 2020).
---------------------------------------------------------------------------

    The last Federal definition of rural we are considering is the 
FORHP definition, which consists of all non-metropolitan counties, all 
metropolitan census tracts with Rural-Urban Commuting Area (RUCA) codes 
four through ten, large area census tracts of at least 400 square miles 
in area with population density of 35 or less per square mile with RUCA 
codes two to three, and all outlying metropolitan counties without an 
Urbanized Area.342 343 If we adopted the FORHP definition, 
then we would finalize in regulation text that a rural area is defined 
as an area identified as rural by FORHP, as described in ``Response to 
Comments on Revised Geographic Eligibility for Federal Office of Rural 
Health Policy Grants,'' 86 FR 2418. We recognize that the FORHP 
definition uses terminology that has not yet been updated to align with 
the latest Census Bureau terminology, that is, FORHP currently refers 
to urbanized area, but we are still considering the FORHP definition, 
as is, based on its wide use and the benefits described in this 
paragraph. We note that FORHP is proposing to update the FORHP 
definition to incorporate the U.S. Department of Agriculture's Economic 
Research Service (ERS) Road Ruggedness Scale (RRS) measure of rugged 
terrain into the existing definition, specifically for census tracts of 
at least 20 square miles in area in metro counties with RRS 5 and RUCA 
code 2 or 3. In addition, if finalized, the update will align the FORHP 
definition's use of Census Bureau terminology with the current Census 
Bureau definition.\344\ If this proposed update to the FORHP definition 
is finalized, we would then consider the updated FORHP definition for 
the final rule over the existing FORHP definition. The advantage to the 
FORHP definition is that it is more precise, as it is narrower than the 
Census Bureau definition and broader than the OMB definition. In 
addition, as described elsewhere in this section, the GAO report that 
identified rural individuals needing to travel 40 miles on average to 
access specialty care used the FORHP definition in effect at the time 
of the report, which demonstrates that this definition can be linked to 
the four criteria we describe in this proposed rule. However, some have 
criticized the FORHP definition for excluding some areas that used to 
be considered rural while others consider the definition to be too 
expansive.\345\
---------------------------------------------------------------------------

    \342\ Response to Comments on Revised Geographic Eligibility for 
Federal Office of Rural Health Policy Grants, 86 FR 2418 (January 
12, 2021).
    \343\ HRSA, Defining Rural Population.
    \344\ Proposed Inclusion of Terrain Factors in the Definition of 
Rural Area for Federal Office of Rural Health Policy Grants, 89 FR 
32451 (April 26, 2024). See, https://www.federalregister.gov/documents/2024/04/26/2024-08931/proposed-inclusion-of-terrain-factors-in-the-definition-of-rural-area-for-federal-office-of-rural.
    \345\ Response to Comments on Revised Geographic Eligibility for 
Federal Office of Rural Health Policy Grants, 86 FR 2418 (January 
12, 2021).
---------------------------------------------------------------------------

    Instead of specifying a uniform definition of rural nationwide for 
this exception, we are also considering allowing States to adopt a 
definition of rural that has been adopted by a Federal governmental 
agency. If we permit States to adopt a definition of rural that is 
adopted by a Federal governmental agency for programmatic purposes, 
then we would finalize in regulation text that a rural area is defined 
by the State based upon a reasonable definition adopted by a Federal 
governmental agency for programmatic purposes. We would not 
specifically list out the Federal

[[Page 59485]]

definitions of rural that we consider reasonable in the regulation 
text. In addition to the Census, OMB, and FORHP definitions, we would 
consider rural definitions developed by the U.S. Department of 
Agriculture's Economic Research Service (ERS) to be reasonable 
definitions for a State to select if we adopt this option in the final 
rule (this would include RUCAs, Rural-Urban Continuum Codes, Urban-
Influence Codes, and Frontier and Remote Area Codes).\346\ We did not 
consider adopting any of the ERS definitions as one of the Federal 
definitions we are considering (as described above) because it is our 
understanding that the ERS definitions are less commonly used on their 
own (that is, not in conjunction with other Federal definitions) in 
identifying rural areas in health care. However, the ERS definitions 
could be used by States if we opt to permit States to identify a 
Federal definition. While we do not believe that any of the ERS 
definitions should be adopted as one definition for all States to 
follow, if we provide States with the flexibility to adopt a Federal 
definition, then we want to ensure that we are not too prescriptive in 
the definitions they may choose from. It is possible that a State could 
determine that one of the ERS definitions better captures the 
population of rural individuals that meets the four criteria described 
in this proposed rule. Under such an approach, States that elect this 
exception would identify the specific Federal definition of rural (that 
is, Census Bureau, OMB, FORHP definition, or one of the ERS 
definitions) they are adopting in their State plan and attest that the 
selected definition best captures the population of rural individuals 
that meets more of the four criteria described in this proposal. The 
benefits to this approach include that each State can consider which 
Federal definition of rural best captures the population of rural 
individuals that meet more of the four criteria described in this 
proposed rule for that State (and States would attest to this in their 
State plan), while also being required to adopt a rural definition 
commonly accepted as a legitimate definition for programmatic purposes 
at the national level. Requiring the State to attest that the selected 
Federal definition best captures the population of rural individuals 
that meets more of the four criteria would help to ensure that there is 
an explanation for any variations in the definitions selected by 
different states. However, even if the variations in the definitions 
chosen by different States can be explained, it might burden or cause 
confusion for some beneficiaries if the States that elect this 
exception have different definitions of rural. For example, a 
beneficiary that moves from a State that has adopted this exception 
with a broader definition of rural to another State that has adopted 
the exception but has a narrower definition of rural might lose access 
to clinic services provided outside of the four walls. In addition, if 
we finalize this proposal, clinics that operate in different States 
that have adopted this exception might find it confusing or burdensome 
to track each such State's definition of rural.
---------------------------------------------------------------------------

    \346\ U.S. Department of Agriculture (USDA), Economic Research 
Services (ERS), ``Rural Classifications,'' USDA, September 8, 2023, 
https://www.ers.usda.gov/topics/rural-economy-population/rural-classifications/.
---------------------------------------------------------------------------

    If we permit States to adopt a definition of rural that is adopted 
by a State governmental agency with a role in setting State rural 
health policy, then we would finalize in regulation text that a rural 
area is defined by the State based upon a rural definition adopted by a 
State governmental agency with a role in setting State rural health 
policy. Under such an approach, a State that elects this exception 
would describe in its State plan the specific definition of rural that 
it is adopting, attest that this definition has been adopted by a State 
governmental agency with a role in setting State rural health policy 
(such as a State primary care office or State Office of Rural Health), 
and attest that the selected definition best captures the population of 
rural individuals that meets more of the four criteria described in 
this proposal. The benefits to this approach include that States may 
consider a State definition of rural that best identifies the 
population of rural individuals that meet more of the four criteria 
described in this proposed rule, and attest to in their State plan that 
the definition does so. Requiring the State to attest that the selected 
definition best captures the population of rural individuals that meets 
more of the four criteria would help to ensure that there is an 
explanation for any variations in the definitions selected by different 
States. In addition, under this approach to defining rural, the State 
would adopt a rural definition commonly accepted and used to manage 
State programs, which thus may be a more familiar definition to 
providers and be easier for a State to implement since that definition 
is also used for other health policy purposes in that State. However, 
even if the variations in the definitions chosen by different States 
can be explained, it might burden or cause confusion for some 
beneficiaries if the States that elect this exception have different 
definitions of rural. For example, a beneficiary that moves from a 
State that has adopted this exception with a broader definition of 
rural to another State that has adopted the exception but has a 
narrower definition of rural may lose access to clinic services 
provided outside of the four walls. In addition, if we finalize this 
proposal, clinics that operate in different States that have adopted 
this exception might find it confusing or burdensome to track each such 
State's definition of rural.
    Finally, if we choose not to define rural in the final rule, then 
we would finalize proposed regulation text with no definition of rural. 
Under this approach, a State that elects this exception would choose 
any definition of rural that can be linked to the four criteria we 
describe in this proposed rule and meets its program needs, but would 
not identify the definition in the State plan or submit it to CMS for 
review and approval. We would require and finalize in rule text that 
the State would publish its rural definition on a website maintained by 
the State that is accessible to the public. The benefits to not 
adopting a definition of rural under the final rule would include that 
States can consider which definition of rural best captures the 
population of rural individuals that meets more of the four criteria 
described in this proposed rule. This approach also recognizes that 
States may have the best information and data to determine the 
definition of rural that best meets their operational needs. However, 
under this approach CMS would not be reviewing State definitions of 
rural, and a State might adopt a definition of rural that could be 
considered to be overly broad or overly narrow. For example, a State 
might adopt a definition of rural that encompasses large urban areas, 
such as a populous city. As we stated earlier in this section of the 
proposed rule, we are aware that there are many definitions of rural, 
so the other approaches we are considering could potentially leave out 
reasonable definitions of rural, although we are not currently aware of 
any such reasonable definitions. We invite comment on which approach to 
defining rural we should adopt if the rule is finalized.
4. Additional Four Walls Considerations
    We propose that the proposed exception to the four walls 
requirement for IHS/Tribal clinics would be a mandatory component of 
the clinic services benefit for States electing to cover that benefit. 
We propose that the proposed exceptions for behavioral health clinics 
and clinics located in

[[Page 59486]]

rural areas would be optional for States covering that benefit. In 
addition, we propose to codify in regulation text our longstanding 
interpretation (discussed in section XVIII.A of this proposed rule) 
that existing Sec.  440.90(a) and (b) are mandatory components of the 
clinic services benefit for States that elect to cover that benefit. 
Finally, we propose to delete the word ``eligible'' from existing 
regulation text at Sec.  440.90(b) because there is no Federal 
authority for States to provide Medicaid-covered services to 
individuals who are ineligible for Medicaid, so we believe it is 
unnecessary to specify that the individuals who would receive services 
under this exception are eligible.
    We propose to make the exception for IHS/Tribal clinics mandatory 
because the population served by IHS/Tribal clinics more consistently 
meets the four criteria described above, both within and across States, 
than the populations targeted by the optional exceptions, especially 
given the degree of State variability in whether the populations 
targeted by the optional exceptions meet those criteria. Further, 
Medicaid is the largest source of third-party payment for services 
billed by IHS facilities, accounting for nearly two-thirds of health 
coverage payments to these facilities.\347\ Given the significant role 
of Medicaid as a payer for IHS/Tribal clinic services, any reduction in 
the Medicaid payments IHS/Tribal clinics receive for services (such as 
a reduction in payment from the AIR to a professional services rate for 
services furnished outside the four walls by the clinic) might uniquely 
burden IHS/Tribal clinics. These clinics might need to curtail their 
available services, or no longer provide services outside the four 
walls, which could significantly impede their ability to serve their 
patients. For these reasons, we propose a mandatory exception to the 
clinic services four walls requirement for IHS/Tribal clinics.
---------------------------------------------------------------------------

    \347\ Assistant Secretary of Planning and Evaluation (ASPE), How 
Increased Funding Can Advance the Mission of the Indian Health 
Service to Improve Health Outcomes for American Indians and Alaska 
Natives, Report No. HP-2022-21, (Washington, DC, 2022), https://aspe.hhs.gov/sites/default/files/documents/1b5d32824c31e113a2df43170c45ac15/aspe-ihs-funding-disparities-report.pdf.
---------------------------------------------------------------------------

    In contrast to the exception for IHS/Tribal clinics, we believe 
that the exceptions for behavioral health clinics and clinics located 
in rural areas should be optional because there may be geographic 
variability in the degree to which the populations served by these 
clinics meet the four criteria we described above, and thus there may 
be State-specific variation in the degree to which these populations 
have the four characteristics described in this proposed rule. For 
example, the populations served by behavioral health clinics and 
clinics located in rural areas may not as consistently face 
transportation challenges nationwide, to the extent that Tribal 
populations do. In addition, it is our understanding that Medicaid 
funding is less often the largest source of payment for behavioral 
health clinics and clinics located in rural areas, compared to IHS/
Tribal clinics. We believe it best to let each State assess the degree 
to which these two exceptions might be warranted based on the State's 
specific circumstances. In making this assessment, each State should 
consider the degree to which individuals located in rural areas of the 
State and/or individuals with behavioral health disorders in the State 
meet the four criteria described in this proposed rule. We solicit 
comment on the arguments made in this proposed rule in support of the 
mandatory and optional exceptions, and on whether the optional 
exceptions should also be mandatory for States opting to cover the 
clinic services benefit.
    If we finalize this proposed rule as proposed, then upon the 
effective date of the final rule, services qualifying for the exception 
for IHS/Tribal clinics must be paid for as Medicaid clinic services in 
States that opt to cover that benefit. Accordingly, we would require 
States that cover the clinic services benefit to submit a State plan 
amendment (SPA), as applicable, to attest to coverage of IHS/Tribal 
clinic services under the exception. Similarly, if we finalize this 
proposed rule as proposed, then no earlier than the effective date of a 
SPA or SPAs implementing one or both of the optional exceptions, 
services provided outside the four walls under the exceptions may be 
paid for as Medicaid clinic services. Under any of the exceptions, the 
excepted services could be paid for using a facility-based Medicaid 
clinic services payment methodology, which for most IHS/Tribal clinics 
is the AIR.
    We are not proposing any additional exceptions to the clinic 
services four walls requirement. It is our understanding that other 
populations are better able than those targeted by the proposed 
exceptions to access services through Medicaid benefits to which a four 
walls requirement does not apply under Federal Medicaid law (for 
example, FQHC services, RHC services, outpatient hospital services, 
etc.). As described in section XVIII.A of this proposed rule, States 
have considerable discretion regarding the types of clinics they opt to 
cover under the clinic services benefit. There are no specific Federal 
Medicaid credentialling requirements, such as licensure or 
certification, for providers of the Medicaid clinic services benefit 
like there are for other Medicaid facility State plan benefits, such as 
hospitals and nursing facilities. This leads to considerable 
variability in the types of clinics providing services that a State may 
cover under the clinic services benefit. We invite comment on whether 
there are additional populations that are likely to meet the four 
criteria described in this proposed rule and that have no alternative 
access to services through Medicaid benefits not subject to a four 
walls requirement under Federal Medicaid law, and on whether there are 
additional types of clinics that might serve as a proxy for such a 
population.

XIX. Changes to the Review Timeframes for the Hospital Outpatient 
Department (OPD) Prior Authorization Process

    The CMS Interoperability and Prior Authorization final rule (89 FR 
8758) (Medicare and Medicaid Programs; Patient Protection and 
Affordable Care Act; Advancing Interoperability and Improving Prior 
Authorization Processes for Medicare Advantage Organizations, Medicaid 
Managed Care Plans, State Medicaid Agencies, Children's Health 
Insurance Program (CHIP) Agencies and CHIP Managed Care Entities, 
Issuers of Qualified Health Plans on the Federally-Facilitated 
Exchanges, Merit-Based Incentive Payment System (MIPS) Eligible 
Clinicians, and Eligible Hospitals and Critical Access Hospitals in the 
Medicare Promoting Interoperability Program) creates, improves, or 
shortens prior authorization timeframes for certain payers such as 
Medicare Advantage organizations and applicable integrated plans, CHIP 
FFS programs, Medicaid managed care plans, and CHIP managed care 
entities to respond to prior authorization requests for covered items 
and services, excluding drugs (89 FR 8878). The final rule requires 
impacted payers (excluding Qualified Health Plan issuers on the 
Federally-Facilitated Exchanges) to send prior authorization decisions 
as expeditiously as the enrollee's health condition requires or as the 
beneficiary's health condition requires but no later than 72 hours for 
expedited (that is, urgent) requests and 7 calendar days for standard 
(that is, non-urgent) requests.
    As part of the CY 2020 OPPS/ASC final rule with comment period (84 
FR 61446 through 61456), CMS established a nationwide prior 
authorization

[[Page 59487]]

process and requirements for certain OPD services. OPD providers must 
submit to the Medicare Administrative Contractor (MAC) a prior 
authorization request for any service on the list of outpatient 
department services that require prior authorization. CMS currently 
requires prior authorization for the following services: 
blepharoplasty, rhinoplasty, botulinum toxin injections, 
panniculectomy, vein ablation, cervical fusion with disc removal, 
implanted spinal neurostimulators, and facet joint interventions. Upon 
receipt of the prior authorization request, the MAC should review it 
and issue a decision within specific timeframes, which are listed in 
the regulation text at Sec.  419.82(d)(1)(iii) and Sec.  419.82(d)(2). 
These timeframes ensure providers receive timely responses and 
beneficiaries get appropriate care. While Medicare FFS is not an 
impacted payer under the CMS Interoperability and Prior Authorization 
final rule, we propose to align our Medicare FFS prior authorization 
review timeframe for standard review requests for hospital outpatient 
department services with the timeframe in this final rule. This change 
would not only streamline the prior authorization processes so that 
they are the same across payers but would also help to reduce provider 
burden by having the same timeframe and reducing the potential for 
delays in care by decreasing the time beneficiaries and providers wait 
for prior authorization decisions on standard requests in FFS Medicare. 
We propose to change the current review timeframe for provisionally 
affirmed or non-affirmed standard review requests for these services 
from 10-business days to 7-calendar days in Sec.  419.82(d)(1)(iii). 
For example, if a standard request is submitted on a Tuesday, June 2, 
under the new timeframe, a decision must be rendered by the next 
Monday, June 8, whereas under the old timeframe, the decision must be 
rendered by Monday, June 15.
    We are still considering the impact of aligning our expedited 
review decision timeframe with the expedited review decision timeframe 
in the CMS Interoperability and Prior Authorization final rule because, 
depending on when the expedited request is submitted, it may take 
longer for OPD provider to receive a decision using the 72-hour 
timeframe than our current expedited timeframe of 2-business days. The 
goal of changing the standard review timeframe is not only to align the 
timeframe across the prior authorization programs but also to reduce 
the time beneficiaries wait to access the care they need. Since 
changing the expedited review decision timeframe from 2-business days 
to 72 hours would not reduce beneficiaries' wait time in all 
circumstances, we are not proposing to conform that timeframe with the 
one in the CMS Interoperability and Prior Authorization final rule at 
this time, but we may address this issue in future rulemaking.

XX. Provisions Related to Medicaid and the Children's Health Insurance 
Program (CHIP)

A. Continuous Eligibility in Medicaid and CHIP (42 CFR 435.926 and 
457.342)

    Continuous eligibility (CE) provides important coverage protections 
for low-income children who are eligible for Medicaid or CHIP. Research 
indicates that children who are disenrolled from coverage for all or 
part of a year are more likely to have fair or poor health status 
compared to children who have health coverage continuously throughout 
the year.\348\ CE, in those States that have adopted it, has shown to 
reduce financial barriers to accessing health care for low-income 
families, promote health equity, and provide States with better tools 
to hold health plans (where applicable) accountable for quality care 
and improved health outcomes.\349\ CE policies may also be beneficial 
to States, as they may result in reduced administrative burden on State 
agencies associated with repeated eligibility reviews and re-
enrollments following a gap in coverage.\350\
---------------------------------------------------------------------------

    \348\ Brantley, E., & Ku, L. (2022). Continuous eligibility for 
Medicaid associated with improved child health outcomes. Medical 
Care Research and Review, 79(3), 404-413.
    \349\ Park, E., Alker, J., & Corcoran, A. (2020). Jeopardizing a 
Sound Investment: Why Short-Term Cuts to Medicaid Coverage During 
Pregnancy and Childhood Could Result in Long-Term Harm. Retrieved 
from: https://www.commonwealthfund.org/publications/issue-briefs/2020/dec/short-term-cuts-medicaid-long-term-harm.
    \350\ Georgetown University. (2021). Advancing Health Equity for 
Children and Adults with a Critical Tool: Medicaid and Children's 
Health Insurance Program Continuous Coverage. Retrieved from https://ccf.georgetown.edu/wp-content/uploads/2021/10/continuity-of-coverage-final.pdf.
---------------------------------------------------------------------------

    Prior to January 1, 2024, States had the option to provide up to 12 
months of continuous coverage to children under age 19 enrolled in 
Medicaid or CHIP, regardless of changes in circumstances that otherwise 
would impact their eligibility for these programs. This option has been 
available to State Medicaid programs under section 1902(e)(12) of the 
Act and Federal regulations at Sec.  435.926 and to States' separate 
CHIP programs through Federal regulations at Sec.  457.342. Under this 
option, States had the option to elect an age limit under age 19 and/or 
CE periods shorter than 12 months. However, except for the limited 
exceptions defined in the regulations, states could not terminate the 
coverage of children during a CE period.
    Section 5112 of Title V, subtitle B of the Consolidated 
Appropriations Act, 2023 (CAA, 2023) amended section 1902(e)(12) of the 
Act to make the previously optional CE policy a requirement under the 
state plan or waiver of the state plan for children enrolled in 
Medicaid. The CAA, 2023 also added a new paragraph (K) to section 
2107(e)(1) of the Act, incorporating by reference Medicaid's CE policy 
into CHIP. Thus, effective January 1, 2024, States are required to 
provide a 12-month period of CE that offers continuous coverage to 
children under the age of 19 in Medicaid and CHIP, with limited 
exceptions.
    The existing Medicaid continuous eligibility regulation includes 
three exceptions that were unaffected by the CAA, 2023, and that would 
not be altered by this proposed rule. These exceptions permit States to 
terminate coverage for children during a CE period if the child or 
child's representative requests a voluntary termination of eligibility; 
the agency determines that eligibility was erroneously granted at the 
most recent determination, redetermination, or renewal of eligibility 
because of agency error or fraud, abuse, or perjury attributed to the 
child or the child's representative; or the child is deceased. The CAA, 
2023 amended section 1902(e)(12) of the Act to make the CE option 
mandatory for state Medicaid programs, but it did not foreclose these 
existing exceptions that CMS had already promulgated pursuant to 
section 1902(e)(12), which are important to maintain program integrity. 
We described our intention to retain these exceptions in CMS State 
Health Official (SHO) Letter #23-004, Section 5112 Requirement for all 
States to Provide Continuous Eligibility to Children in Medicaid and 
CHIP under the Consolidated Appropriations Act, 2023, which was issued 
on September 29, 2023. We do not propose any changes to these 
exceptions in this proposed rule.
    We propose to update the Medicaid regulations at Sec.  435.926 to 
conform to changes to the CE policy effectuated by the CAA, 2023 
amendments to section 1902(e)(12) of the Act, which are incorporated by 
cross reference into the CHIP regulations at Sec.  457.342(a). 
Specifically, as required by section 5112 of the CAA, 2023, and under 
our authority under section 2101(a) of the

[[Page 59488]]

Act to ``initiate and expand the provision of child health assistance 
to uninsured, low-income children in an effective and efficient 
manner,'' and at section 2107(e)(1)(K) of the Act (cross-referencing 
section 1902(e)(12) of the Act as amended by CAA, 2023 relating to 
continuous eligibility), we propose to revise Sec.  435.926(b) to 
specify that a state must provide CE for the specified period. We also 
propose to revise Sec.  435.926(b)(1) to remove the option to limit CE 
to an age younger than 19. We further propose to revise Sec.  
435.926(c)(1) to remove the option to limit CE to a period of time of 
less than 12 months. Finally, we propose to revise Sec.  435.926(d)(1) 
to remove the option of ending a CE period for a person when they reach 
the state-specified maximum age, as now all States must provide CE to 
children until they reach age 19.
    Prior to January 1, 2024, States also had the option under Sec.  
457.342(b) to disenroll children from a separate CHIP for failure to 
pay required premiums or enrollment fees required under the state plan, 
subject to the disenrollment protections afforded under section 
2103(e)(3)(C) of the Act (related to premium grace periods) and Sec.  
457.570 (related to other disenrollment protections). The CAA, 2023, 
changed the statutory authority for the CE period in the CHIP statute, 
requiring that CE ``shall'' apply to CHIP ``in the same manner'' as it 
does to Medicaid. The Medicaid continuous eligibility regulation at 
Sec.  435.926 never contained an exception permitting States to 
terminate coverage for failure to pay premiums or enrollment fees, so 
after the CAA, 2023, the CHIP CE period also could not contain this 
exception.
    Therefore, under the above-mentioned authority in section 2101(a) 
of the Act to enable States to provide child health assistance in an 
effective and efficient manner and in section 2107(e)(1) of the Act as 
amended by CAA, 2023 relating to continuous eligibility, we propose to 
remove the option in Sec.  457.342(b) to disenroll children from 
separate CHIP coverage for failure to pay required premiums or 
enrollment fees during a continuous eligibility period. This change 
will not preclude States from disenrolling children with an unpaid 
premium balance at the end of their 12-month CE period, provided the 
state has followed the premium grace period requirements of section 
2103(e)(3)(C) of the Act. Under section 2103(e)(3)(C)(ii) of the Act, 
the State must provide the child with a grace period of ``at least 30 
days from the beginning of a new coverage period to make premium 
payments before the individual's coverage'' may be terminated. Section 
2103(e)(3)(C)(ii)(II) of the Act defines ``new coverage period'' as 
``the month immediately following the last month for which the premium 
has been paid.'' If a child does not pay a premium in a given month 
during the CE period, the grace period extends from that month until 
the 12-month CE period expires. Section 2103(e)(3)(C)(ii) of the Act 
also requires the State to provide notice no later than 7 days after 
the first day of the grace period (typically 7 days after the premium 
payment was due) that failure to make a premium payment within the 
grace period will result in termination of coverage and when such 
termination will be effective.
    Although current paragraph (b) of Sec.  457.342, which includes a 
reference to enrollment fees, would be eliminated, the collection of 
enrollment fees, as referenced in Sec. Sec.  457.10 and 457.510, would 
remain an option to States. States would maintain the option to require 
payment of an enrollment fee prior to initial enrollment. States will 
also continue to have the option to require payment of the first 
month's premium prior to enrolling a child who is determined eligible 
at application and to require payment of the first month's premium or 
re-enrollment fee prior to re-enrolling a child into a new CE period, 
if the child is determined eligible at renewal.

XXI. Health and Safety Standards for Obstetrical Services in Hospitals 
and Critical Access Hospitals

A. Background and Statutory Authority

    CMS has broad statutory authority to establish health and safety 
regulations, which includes the authority to establish requirements 
that protect the health and safety of pregnant, postpartum, and 
birthing patients. Several statutes applicable to specific provider and 
supplier types explicitly give CMS the authority to enact regulations 
that the Secretary finds necessary in the interest of the health and 
safety of individuals who are furnished services in an institution, 
while others give CMS the authority to prescribe regulations as may be 
necessary to carry out the administration of the program.
    Sections 1861(e)(1) through (8) of the Social Security Act (the 
Act) provide that a hospital participating in the Medicare program must 
meet certain specified requirements. Section 1861(e)(9) of the Act 
specifies that a hospital also must meet such other requirements as the 
Secretary finds necessary in the interest of the health and safety of 
individuals furnished services in the institution. Under this 
authority, the Secretary has established regulatory requirements that a 
hospital must meet to participate in Medicare at 42 CFR part 482, 
Conditions of Participation (CoPs) for Hospitals. Section 1905(a) of 
the Act provides that Medicaid payments from States may be applied to 
hospital services. Under regulations at 42 CFR 440.10(a)(3)(iii) and 42 
CFR 440.20(a)(3)(ii), hospitals are required to meet the Medicare CoPs 
in order to participate in Medicaid.
    Sections 1820 and 1861(mm) of the Act, as amended by section 4201 
of the Balanced Budget Act (BBA) of 1997, replaced the EACH/RPCH 
program with the Medicare Rural Hospital Flexibility Program (MRHFP), 
under which a qualifying facility can be designated and certified as a 
critical access hospital (CAH). CAHs participating in the MRHFP must 
meet the conditions for designation specified in the statute under 
section 1820(c)(2)(B) of the Act, and to be certified must also meet 
other criteria the Secretary may require, under section 1820(e)(3) of 
the Act. Under this authority, the Secretary has established regulatory 
requirements that a CAH must meet to participate in Medicare at 42 CFR 
part 485, subpart F.
    The CoPs for hospitals and CAHs are organized according to the 
types of services a hospital or CAH may offer, and include specific, 
process-oriented requirements for each hospital or CAH service or 
department. The purposes of these CoPs are to protect patient health 
and safety and to ensure that quality care is furnished to all patients 
in Medicare-participating hospitals and CAHs. In accordance with 
Section 1864 of the Act, State surveyors assess hospital and CAH 
compliance with the conditions as part of the process of determining 
whether a hospital qualifies for a provider agreement under Medicare. 
However, under section 1865 of the Act, hospitals and CAHs can elect to 
be reviewed instead by private accrediting organizations approved by 
CMS as having standards that meet or exceed the applicable Medicare 
standards and survey procedures comparable to those CMS requires for 
State survey agencies.
1. The U.S. Maternal Health Crisis
    The U.S. is currently facing a maternal health crisis which has not 
only led to a maternal mortality rate that is amongst the highest in 
high-income countries, but also disproportionately affects racial and 
ethnic minorities. In 2022, the most recent year for which there is 
data, there were 22 maternal deaths for every 100,000 live births in 
the U.S. which is more than double the rate for most other high-income

[[Page 59489]]

countries. For example, in 2022, Canada, France, the United Kingdom, 
Germany, and Japan had maternal death rates of 8.6 deaths per 100,000 
live births or lower.\351\ In the U.S. in 2021, 1,205 women were 
identified as having died while pregnant or within 42 days after 
pregnancy ended. In 2022, 817 women were identified as having died in 
this manner.352 353 Over 80 percent of pregnancy-related 
deaths are considered preventable.\354\ Approximately 13 percent of all 
pregnancy-related deaths (deaths during and up to one year after 
pregnancy) occur at the time of delivery, and nearly 12 percent occur 
between 1 and 6 days after the end of pregnancy.
---------------------------------------------------------------------------

    \351\ Munira Gunja et al., Insights into the U.S. Maternal 
Mortality Crisis: An International Comparison (Commonwealth Fund, 
June 2024). https://doi.org/10.26099/cthn-st75.
    \352\ https://www.cdc.gov/nchs/data/hestat/maternal-mortality/2022/maternal-mortality-rates-2022.pdf.
    \353\ https://stacks.cdc.gov/view/cdc/103855.
    \354\ https://www.cdc.gov/reproductivehealth/maternal-mortality/erase-mm/data-mmrc.html.
---------------------------------------------------------------------------

    Native Hawaiian and Pacific Islander women, Black women, and 
American Indian/Alaska Native (AI/AN) women are two to four times more 
likely to suffer a pregnancy-related death than non-Hispanic White 
women.\355\ Black and AI/AN women experience severe maternal morbidity 
rates that are more than two times higher than their White 
counterparts.356 357 Systemic societal barriers, including a 
patient's social determinants of health, have meant that these 
individuals experience a greater share of these poor maternal health 
outcomes.358 359 360
---------------------------------------------------------------------------

    \355\ https://www.cms.gov/files/document/maternal-health-may-2022.pdf.
    \356\ Centers for Disease Control and Prevention. Pregnancy 
Mortality Surveillance System. Available at: https://www.cdc.gov/maternal-mortality/php/pregnancy-mortality-surveillance/index.html/ 
Accessed June 5th, 2024.
    \357\ https://www.commonwealthfund.org/publications/issue-
briefs/2021/oct/severe-maternal-morbidity-united-states-
primer#:~:text=Approximately%20140%20of%2010%2C000%20women,severe%20m
aternal%20morbidity%20every%20year.
    \358\ https://www.whitehouse.gov/wp-content/uploads/2022/06/Maternal-Health-Blueprint.pdf.
    \359\ Taylor, J., Novoa, C., Hamm, K., & Phadke, S. (2021, 
December 3). Eliminating Racial Disparities in Maternal and Infant 
Mortality. Center for American Progress. https://www.americanprogress.org/article/eliminating-racialdisparities-maternal-infant-mortality/.
    \360\ Hoffman, K.M., Trawalter, S., Axt, J.R., Oliver, M.N. 
Racial bias in pain assessment and treatment recommendations, and 
false beliefs about biological differences between blacks and 
whites. Proc. Natl. Acad. Sci. U.S.A. 2016;113(16):4296-4301. 
doi:10.1073/pnas.1516047113 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4843483/.
---------------------------------------------------------------------------

    Pregnant women who live in rural communities face a higher risk for 
severe maternal morbidity and have about 60 percent higher risk of 
pregnancy-related deaths and are more likely to die before, during, or 
the year after delivery than those living in urban 
settings.361 362 Pregnant women with disabilities receive 
lower quality maternity care, experience a higher risk of pregnancy and 
birth-related complications, and are eleven times more likely to 
experience maternal death than people without 
disabilities.363 364
---------------------------------------------------------------------------

    \361\ White House Fact Sheet: Vice President Kamala Harris 
Announces Call to Action to Reduce Maternal Mortality and Morbidity. 
https://www.whitehouse.gov/briefing-room/statementsreleases/2021/12/07/fact-sheet-vice-presidentkamala-harris-announces-call-to-action-to-reducematernal-mortality-and-morbidity/.
    \362\ Kozhimannil, K.B., Interrante, J.D., Henning-Smith, C., & 
Admon, L.K. (2019). Rural-urban differences in severe maternal 
morbidity and mortality in the US, 2007-15. Health affairs, 38(12), 
2077-2085. Available at: https://www.healthaffairs.org/doi/10.1377/hlthaff.2019.00805.
    \363\ Gleason, J.L., Grewal, J., Chen, Z., Cernich, A.N., 
Grantz, K.L., Risk of Adverse Maternal Outcomes in Pregnant Women 
With Disabilities. JAMA Netw. Open. 2021;4(12):e2138414. 
doi:10.1001/jamanetworkopen.2021.38414.
    \364\ Willi Horner-Johnson et al., Perinatal Health Risks and 
Outcomes Among U.S. Women With Self-Reported Disability, 41 Health 
Aff. 2011 (September. 2022), https://doi.org/10.1377/hlthaff.2022.00497.
---------------------------------------------------------------------------

2. Efforts To Improve Maternal Health
    CMS has undertaken various efforts to improve the state of maternal 
health care. In 2023, CMS launched the first ever ``Birthing-Friendly'' 
designation icon on CMS' Care Compare online tool.\365\ To earn the 
designation, hospitals and health systems report their progress on our 
Maternal Morbidity Structural Measure to the Hospital Inpatient Quality 
Reporting (IQR) Program. The measure determines whether a hospital or 
health system has participated in a Statewide or national perinatal 
quality improvement collaborative program and implemented evidence-
based quality interventions in hospital settings to improve maternal 
health, such as maternal safety bundles. Maternal safety bundles have 
demonstrated success in driving improvements, particularly with regards 
to obstetric hemorrhage, severe hypertension in pregnancy, and 
nonmedically indicated Cesarean deliveries.366 367 368 
Hospitals and health professionals also have access to evidence-based 
best practices for determining the risk of obstetric hemorrhage and 
hypertension and for managing patients with these complications 
(including in an emergency setting). However, these best practices are 
not universally utilized nor incorporated into facilities' standards of 
care.\369\
---------------------------------------------------------------------------

    \365\ https://data.cms.gov/provider-data/birthing-friendly-hospitals-and-health-systems.
    \366\ Jennifer A. Callaghan-Koru et al. Implementation of the 
Safe Reduction of PrimaryCesarean Births safety bundle during the 
first year of a statewide collaborative in Maryland. Obstet Gynecol 
2019; 134:109-19.
    \367\ Elliott K. Main et al. Reduction of severe maternal 
morbidity from hemorrhage using a state perinatal quality 
collaborative. Am J Obstet Gynecol 2017;216(3); 298.e1-298.e11.
    \368\ Patricia Lee King et al. Reducing time to treatment for 
severe maternal hypertension through statewide quality improvement. 
Am J Obstet Gynecol 2018; 218:S4.
    \369\ Jennifer A. Callaghan-Koru et al. Implementation of the 
Safe Reduction of Primary Cesarean Births safety bundle during the 
first year of a statewide collaborative in Maryland. Obstet Gynecol 
2019; 134:109-19.
---------------------------------------------------------------------------

    We also published the quality, safety, and oversight memorandum 
(QSO-22-05--Hospitals) which encourages hospitals to consider the 
implementation of evidence-based best practices for the management of 
obstetric emergencies, along with interventions to address other key 
contributors to maternal health disparities, and to support the 
delivery of equitable, high-quality care for all pregnant and 
postpartum individuals.\370\ Facilities can implement these best 
practices voluntarily as part of a hospital's QAPI program (Sec.  
482.21), which requires that hospitals develop, implement, and maintain 
an effective, ongoing, hospital wide, datadriven quality assessment and 
performance improvement program.
---------------------------------------------------------------------------

    \370\ https://www.cms.gov/files/document/qso-22-05-hospitals.pdf.
---------------------------------------------------------------------------

    We have taken several steps to better understand the impacts of the 
maternal health crisis and the potential need for revisions to the CoPs 
to protect the health and safety of pregnant and postpartum women. In 
the FY 2023 IPPS/LTCH PPS final rule, we published responses to a 
maternal health RFI that solicited feedback on a wide range of maternal 
health issues and opportunities for CMS to improve maternal health care 
(87 FR 49290 through 49292). Some commenters were concerned that 
failure to comply with any new CoP could result in the loss of Medicare 
certification and that access to obstetrical care would be negatively 
impacted, potentially exacerbating rates of maternal morbidity/
mortality and disparities in obstetrical care. Other commenters 
supported the creation of a CoP specifically for labor and delivery, to 
establish minimum health and safety standards across participating 
hospitals.
    We conducted a literature review on maternal health with a focus on 
obstetric (OB) services delivery, staff training, and best practices 
for maternal health and safety to help inform the proposals in this 
rule. We also held a

[[Page 59490]]

series of listening sessions with industry stakeholders, patient 
advocacy groups, and health care professionals on ways the CoPs can be 
revised to improve maternal health care outcomes and reduce 
disparities. We received valuable feedback from stakeholders regarding 
establishing an OB services CoP, staff training and the importance of 
providing culturally competent care. Some groups also highlighted the 
value of recommendations from Maternal Mortality Review Committees 
(MMRCs). Other stakeholders cautioned on being overly specific (that 
is, certain diseases) in the CoPs and encouraged CMS to instead 
leverage existing regulations text or quality metrics rather than 
create new CoPs.
    Finally, we issued a request for information (RFI) in the FY 2025 
Inpatient Prospective Payment System (IPPS) proposed rule (89 FR 36498 
through 36502) to gather stakeholder feedback on several options for 
establishing an obstetrical services CoP for participating hospitals, 
CAHs, and rural emergency hospitals (REHs) and other detailed 
questions.
Request for Information on Obstetrical Services Standards for 
Hospitals, CAHs, and REHs: Summary and Responses to Public Comments
    In May 2024, we published a Request for Information (RFI) on 
Obstetrical Services Standards for hospitals, CAHs, and REHs in the FY 
2024 Hospital IPPS proposed rule (89 FR 35934). We solicited public 
comments on developing targeted baseline health and safety standards 
for obstetrical services. We received comments from a variety of 
parties interested in addressing obstetrical care including advocacy 
groups, industry associations, state health departments, labor unions, 
and professional organizations. Commenters supportive of CoPs for 
obstetrical care services noted that establishing CoPs for obstetrical 
care would enhance the quality and safety of maternal care and provide 
the opportunity to standardize services across various healthcare 
settings. These commenters also stated that obstetrical services CoPs 
regarding organization and staffing would promote multidisciplinary, 
team-based care with specialists, such as cardiologists, maternal fetal 
medicine practitioners, primary care physicians, and adult congenital 
heart disease specialists, among others providing care to pregnant 
women. Other commenters stated that establishing obstetrical training 
standards for hospital/CAH non-OB units can help to mitigate the impact 
of OB unit closures on maternal health outcomes and also supported 
staff training on respectful care, cultural competency, trauma-informed 
care, and nondiscrimination. Some commenters supported requiring 
facilities to report directly to the Maternal Mortality Review 
Committee (MMRC) and others supported specific transfer protocol 
requirements.
    Other commenters expressed concerns regarding establishing CoPs for 
obstetrical care services for a variety of reasons including the 
current regulatory environment related to obstetrical and gynecological 
services, conflicting regulations between the State and Federal 
requirements, insufficient clinical evidence, impact on access, 
regulatory burden, accelerating closures, potential redundancy with 
CMS' quality measurement programs, severity of consequences for not 
meeting CoP requirements, and unintended consequences. One commenter 
stated that existing CoPs provide adequate protection for patients and 
was concerned that more requirements specific to obstetrical services 
may lead to overlapping, conflicting or otherwise confusing 
requirements that may negatively impact care, while others believed 
that an obstetrical services CoP would not address the main drivers of 
maternal morbidity and mortality.
    After analyzing the issue of high rates of maternal mortality and 
morbidity in the U.S. receiving feedback from various stakeholders on 
improving maternal health care, and reviewing available resources and 
current requirements, we believe that it is necessary to establish new 
requirements for the provision of obstetrical services to protect the 
health and safety of pregnant, birthing, and post-partum patients. 
Currently, there are no baseline care requirements for hospitals and 
CAHs that are specific to maternal-child services (that is, labor and 
delivery, prenatal and post-partum care, and care for newborn infants, 
alternately referred to in this discussion as obstetrical services, 
obstetrics, maternal health, or maternity care). In addition to 
obstetrical units, care for pregnant and postpartum patients may also 
occur in other parts of facilities such as other inpatient units, 
emergency departments, hospital outpatient departments, as well as in 
facilities without obstetrical units and/or emergency services. Such 
care may occur before, during, or after delivery. Based on the issues 
regarding the delivery of maternity care referenced, we propose a new 
OB services CoP, including proposed requirements for the organization, 
staffing, and delivery of OB services and staff training. We also 
propose revisions to the current hospital and CAH QAPI, hospital and 
CAH emergency services requirements, and hospital discharge planning 
requirements specific to OB services. We also solicit comments on 
whether these proposed requirements should also apply to REHs.

B. Provisions of the Proposed Regulations

1. Organization, Staffing, and Delivery of Services (Sec.  482.59 and 
Sec.  485.649)
a. Background
    The Hospital CoPs at 42 CFR 482.51 through 482.58 include 
requirements for optional services that hospitals are not required by 
law to provide but may elect to offer to their patients. If a hospital 
provides an optional service to its patients, the hospital must comply 
with the requirements of the CoP specific to that service. The hospital 
CoPs include requirements for optional services such as surgery (Sec.  
482.51), anesthesia (Sec.  482.52), outpatient services (Sec.  482.54), 
emergency services (Sec.  482.55), and other health care services. CAHs 
may also opt to provide certain services to its patients. CoPs for the 
provision of optional CAH services such as surgeries, inpatient 
psychiatric services, and inpatient rehabilitation services have been 
established at Sec.  485.639, Sec.  485.647(a)(1) and Sec.  
485.647(a)(2), respectively. Outside of an emergency department (ED), 
hospitals and CAHs may also offer obstetrical services to their 
patients. Currently, there are no baseline requirements for the 
organization, staffing, and delivery of such OB services in hospitals 
and CAHs.
    Several accrediting bodies and professional medical specialty 
societies including the American College of Obstetricians and 
Gynecologists (ACOG), the Society for Maternal-Fetal Medicine (SMFM), 
and The Center for Improvement in Healthcare Quality (CIHQ), have 
discussed recommendations for standards of practice for OB staffing and 
organization within a hospital care setting. For example, ACOG and SMFM 
have developed a system that defines four different levels of maternal 
care that range from least complex care to the most complex care and 
they have recommended the obstetrical care providers and services, as 
well as the capabilities and equipment, that should be available at 
each level based on the patient's need.\371\ They recommend that an OB-
GYN physician be present onsite 24 hours a day, 7 days a week (24/7),

[[Page 59491]]

within the two highest facility levels that can treat complex maternal 
medical conditions (levels III and IV). Within a level II facility, 
which can treat moderate-to-high-risk maternal medical conditions, ACOG 
and SMFM suggest that such facility retain a family physician with an 
OB fellowship or equivalent training can be present in place of an OB-
GYN physician. Lastly, they recommend a certified nurse-midwife (CNM), 
certified midwife (CM), or family physician accompanied by a qualified 
registered nurse (RN) should be present 24/7 within the lowest level 
facility that provides basic care for low-risk, uncomplicated 
conditions (level I).\372\ ACOG and SMFM also recommend appropriately 
trained and qualified RNs, along with a formally trained nursing 
leadership team with maternal care experience for hospitals and CAHs 
providing maternal care.\373\
---------------------------------------------------------------------------

    \371\ https://www.acog.org/clinical/clinical-guidance/obstetric-care-consensus/articles/2019/08/levels-of-maternal-care.
    \372\ https://www.acog.org/clinical/clinical-guidance/obstetric-care-consensus/articles/2019/08/levels-of-maternal-care.
    \373\ https://www.acog.org/clinical/clinical-guidance/obstetric-care-consensus/articles/2019/08/levels-of-maternal-care.
---------------------------------------------------------------------------

    CIHQ has recommended that an OB-GYN physician with advanced 
cardiovascular life support and neonatal resuscitation training should 
always be present at a facility providing emergency OB services.\374\ 
They also recommend that OB services be organized to allow for 
effective communication, collaboration, and coordination of care 
between the emergency services program and inpatient maternal/child 
services.\375\
---------------------------------------------------------------------------

    \374\ https://cihq.org/acc-default-hospitals.asp.
    \375\ https://cihq.org/acc-default-hospitals.asp.
---------------------------------------------------------------------------

    We understand that State law regarding OB staffing varies, and some 
States have enacted laws and regulations regarding OB services 
organizational standards and require levels of maternal care 
designation. We believe that proposing standards for obstetrical 
services ensures that all Medicare and Medicaid participating hospitals 
and CAHs that offer these services are held to a consistent set of 
requirements, supports high-quality maternity care and protects the 
health and safety of patients. Therefore, we believe it is necessary to 
propose CoPs specific to obstetrical services for hospital and CAH 
CoPs, similar to the current requirements for optional services 
provided in these facilities.
b. Proposals
    We propose at new sections Sec.  482.59 and Sec.  485.649 new CoPs 
for hospitals and CAHs offering obstetrical services outside of an ED. 
Specifically, we propose to require that if a hospital or a CAH offers 
obstetrical services, the services must be well organized and provided 
in accordance with nationally recognized acceptable standards of 
practice for physical and behavioral (inclusive of both mental health 
and substance use disorders) health care of pregnant, birthing, and 
postpartum patients. If outpatient obstetrical services are offered, 
the services must be consistent in quality with inpatient care in 
accordance with the complexity of services offered. Nationally 
recognized acceptable standards of practice may be based on medical 
professional society and/or accrediting organization standards. While 
these CoPs would not require adherence to a specific organization's 
guideline or recommendations, we expect that facilities would be able 
to articulate their standards and the source(s) and to demonstrate that 
their standards are based on evidence and nationally recognized 
sources. This overarching requirement for obstetric services is 
consistent with other hospital and CAH CoPs and is foundational to 
ensuring high-quality safe care.
    At new subsections Sec.  482.59(a) and Sec.  485.649(a), we further 
propose that the organization of the obstetrical services be 
appropriate to the scope of services offered by the facility and 
integrated with other departments of the facility. For example, in 
order to provide high quality and safe care, a labor and delivery unit 
needs to ensure good communication and collaboration with services such 
as laboratory, surgical services, and anesthesia services as 
applicable. At Sec.  482.59(a)(1) and Sec.  485.649(a)(1), we propose 
that the OB patient care units (that is, labor rooms, delivery rooms, 
including rooms for operative delivery, and post-partum/recovery rooms 
whether combined or separate) be supervised by an individual with the 
necessary education and training, and specify that that person should 
be an experienced registered nurse, certified nurse midwife, nurse 
practitioner, physician assistant, or a doctor of medicine or 
osteopathy. This individual is typically responsible for a variety of 
activities important to patient safety, such as overseeing staff, 
training, overall patient care, and supporting communications within 
the unit and across the facility. Given the importance of the role, 
ensuring appropriate training and education is imperative.
    At Sec.  482.59(a)(2) and Sec.  485.649(a)(2), we propose that 
obstetrical privileges be delineated for all practitioners providing 
obstetrical care in accordance with the competencies of each 
practitioner. The obstetrical service must maintain a roster of 
practitioners specifying the privileges of each practitioner. While a 
variety of practitioners may deliver a wide range of obstetric services 
and perform a wide range of procedures, not every practitioner can 
provide all services nor perform every procedure. All hospitals are 
already required, at Sec.  482.22(c)(6), to have medical staff bylaws 
that include criteria for determining the privileges to be granted to 
individual practitioners and a procedure for applying the criteria to 
individuals requesting privileges. This process ensures that 
practitioners have the necessary education, training, and experience to 
provide safe, effective care and safely perform specific procedures. 
This proposed CoP provides additional specificity for an obstetrics 
service. Such an approach is consistent with existing hospital optional 
services CoPs, such as surgical services at Sec.  482.51(a)(4)) and, 
given existing requirements, adds little additional burden. The 
proposed obstetric services CoPs at Sec.  482.59(a)(2) and Sec.  
485.649(a)(2) also recognize that practitioners other than physicians 
are important to delivering obstetric services and we considered them 
when developing these provisions. We remind hospitals that existing 
CoPs allow for the privileging and credentialling of practitioners 
other than physicians, including nurse midwives (Sec.  482.12(a) and 
(c); Sec.  482.22). Specifically, the hospital regulations at Sec.  
482.12(c) permit licensed practitioners (for example, nurse 
practitioners, nurse midwives, etc.), as allowed by the State, to admit 
patients to a hospital. CMS does not require that these practitioners 
be employed by, under the supervision of, or associated with, a Doctor 
of Medicine (MD) or doctor of osteopathic medicine (DO) unless required 
by State law, regulations, or facility policy. A hospital is not 
precluded from credentialing and granting privileges to practitioners 
not listed under Sec.  482.12(c)(1). Additionally, if not otherwise 
prohibited by State law, a hospital may elect to include these 
practitioners (such as advanced practice providers, including advanced 
practice registered nurses, clinical nurse specialists, physician 
assistants, and nurse midwives) as part of their medical staff. 
Moreover, the hospital CoPs prohibit a hospital from granting staff 
membership or professional privileges in the hospital solely upon 
certification, fellowship, or membership in a specialty body or 
society. (Sec.  482.12(a)(7)). In States that permit nurse midwives to 
admit patients (in accordance with hospital policy and practitioner 
privileges), per statute

[[Page 59492]]

(section 1861(e)(4) of the Act) CMS requires only Medicare patients of 
a nurse midwife to be under the care of an MD or DO (Sec.  
482.12(c)(2)). CMS does not require Medicaid nor other non-Medicare 
patients admitted by a nurse midwife to be under the care of an MD or 
DO.\376\ For CAHs, CMS does not have the authority to remove the 
physician oversight requirement for inpatients at Sec.  
485.631(b)(1)(iv), as this is a statutory requirement and the physician 
oversight requirement for outpatients at Sec.  485.631(b)(1)(v) is only 
applicable if required by State law.
---------------------------------------------------------------------------

    \376\ Quality Safety & Oversight Memorandum QSO-23-22-Hospital, 
September 21, 2123. https://www.cms.gov/files/document/qso-23-22-hospital.pdf Accessed April 23 2024.
---------------------------------------------------------------------------

    At new subsections Sec.  482.59(b) and Sec.  485.649(b), ``Delivery 
of services'', we propose to require that OB services must be 
consistent with the needs and resources of the facility. Policies 
governing obstetrical care must be designed to assure the achievement 
and maintenance of high standards of medical practice and patient care 
and safety. We additionally propose at paragraphs Sec.  482.59 (b)(1) 
and Sec.  485.649(b)(1) that labor and delivery room suites have 
certain basic resuscitation equipment readily available, including a 
call-in-system, cardiac monitor, and fetal doppler or monitor. We 
believe a basic set of equipment should be in place for all obstetric 
services to ensure efficient, effective delivery of care as well as 
timely response to emergency situations. However, we recognize that 
different facilities offer different levels of service. We welcome 
public comment on what is an appropriate minimum set of equipment for 
all hospitals offering obstetric services.
    Furthermore, at Sec.  482.59 (b)(2) and Sec.  485.649(b)(2) we 
propose that the service ensure that it has protocols, consistent with 
evidence-based, nationally recognized guidelines, as well as readily 
available provisions (that is, necessary supplies and equipment on the 
unit or in close proximity and easily accessed by unit personnel) for 
obstetrical emergencies, complications, immediate post-delivery care, 
and other patient health and safety events as identified as part of the 
facility's QAPI program. While this requirement does not require any 
specific items, we would expect provisions to include equipment, in 
addition to the equipment required under Sec.  482.59 (b)(1) and Sec.  
485.649(b)(1), supplies, blood, and medication used in treating 
emergency cases. Examples of such emergency equipment or supplies could 
include: resuscitator, defibrillator, aspirator, and airways, 
endotracheal tubes, ambu bag/valve/mask, oxygen, tourniquets, 
nasogastric tubes, IV therapy supplies, suction machine, and 
defibrillator. Emergency medications could include analgesics, local 
anesthetics, anti-arrhythmics, cardiac glycosides, antihypertensives, 
antiepileptics, uterotonics, anticoagulants, antifibrinolytics, 
electrolytes and replacement solutions. As discussed in section XXI.B.2 
of this proposed rule, obstetric readiness is a concern in avoiding 
preventable maternal morbidity and mortality. Provisions and protocols, 
as we propose to require, are one step towards addressing those 
concerns and improving perinatal outcomes.
    We solicit public comments on these proposals, including whether 
these proposed requirements should be applicable to REHs.
2. Training for Obstetrical Staff in Hospitals and CAHs (Sec. Sec.  
482.59(c), 485.649(c))
a. Background
    Given the worsening maternal health crisis as discussed in 
XXI.A.1.a of this proposed rule and research indicating that over 80 
percent of pregnancy-related deaths in the U.S. are preventable, CMS is 
committed to ensuring that all Medicare and Medicaid participating 
hospitals and CAHs offering obstetrical services are held to a 
consistent standard of high-quality maternity care and patient health 
and safety. Currently, the CoPs for hospitals and CAHs include no 
baseline requirements for the training of obstetrical staff.
    The majority of hospitals participate in the Medicare program 
through deemed status with an accrediting organization.\377\ These 
accrediting organizations may have additional requirements that exceed 
the Medicare CoP requirements as part of their CMS- approved deeming 
program. For example, The Joint Commission (TJC) requires education on 
the provision of care, treatment, and services standards for maternal 
safety for all staff and providers who treat pregnant/postpartum 
patients. Specifically, TJC requires training on the hospital's 
evidence-based severe hypertension/preeclampsia and hemorrhage 
procedures.\378\ The TJC standards also require that hospitals use in-
situ training and drills that include multidisciplinary teams.\379\
---------------------------------------------------------------------------

    \377\ https://www.jointcommission.org/resources/news-and-multimedia/fact-sheets/facts-about-hospital-accreditation/.
    \378\ https://www.jointcommission.org/standards/r3-report/r3-report-issue-24-pc-standards-for-maternal-safety/.
    \379\ https://www.jointcommission.org/-/media/tjc/documents/standards/r3-reports/r3-issue-24-maternal-12-7-2021.pdf.
---------------------------------------------------------------------------

    Despite the requirements of accrediting organizations, several 
organizations have determined that in their view, obstetrical readiness 
for hospitals with obstetrical services is 
suboptimal.380 381 382 Additionally, the lack of 
standardized approaches to emergency OB care may contribute to poor 
maternal health outcomes.383 384 Variation in processes of 
care is problematic because it may lead to increased rates of 
error.\385\ Appropriate training, best practice protocols (such as 
recognizing early warning signs of hemorrhage, preeclampsia, and other 
adverse events associated with pregnancy and birth), and appropriate 
transfer protocols are critical to averting avoidable maternal 
complications and deaths, establishing and maintaining facilities' 
obstetrical readiness,\386\ and ensuring compliance with existing 
regulations.
---------------------------------------------------------------------------

    \380\ https://www.acog.org/news/news-articles/2022/01/commitment-to-action-eliminating-preventable-maternal-mortality.
    \381\ https://rhrc.umn.edu/wp-content/uploads/2021/09/UMN-emOB-Training-Needed_11.12.20_508.pdf.
    \382\ https://www.cdcfoundation.org/sites/default/files/files/ReportfromNineMMRCs.pdf.
    \383\ Jennifer A. Callaghan-Koru et al. Implementation of the 
Safe Reduction of Primary Cesarean Births safety bundle during the 
first year of a statewide collaborative in Maryland. Obstet Gynecol 
2019;134:109-19.
    \384\ https://www.acpjournals.org/doi/10.7326/M19-3258.
    \385\ https://www.acog.org/clinical/clinical-guidance/committee-opinion/articles/2019/10/clinical-guidelines-and-standardization-of-practice-to-improve-outcomes.
    \386\ https://saferbirth.org/aim-obstetric-emergency-readiness-resource-kit/.
---------------------------------------------------------------------------

    Research shows that women with any form of disability are at 
heightened risk for pregnancy and labor and delivery complications, as 
well as severe maternal morbidity and mortality, including pre-term 
birth, hypertensive disorders during pregnancy, gestational diabetes, 
and cesarean delivery.\387\ Understanding these risks, and education to 
help health care practitioners be more comfortable managing care for 
people with disabilities before, during, and after pregnancy can help 
ensure patients with

[[Page 59493]]

disabilities receive safe, high quality OB care.\388\
---------------------------------------------------------------------------

    \387\ Tarasoff LA, Ravindran S, Malik H, Salaeva D, Brown HK. 
Maternal disability and risk for pregnancy, delivery, and postpartum 
complications: a systematic review and meta-analysis. Am J Obstet 
Gynecol. 2020;222(1):27.e1-27.e32. doi: 10.1016/j.ajog.2019.07.01
    \388\ Gleason JL, Grewal J, Chen Z, Cernich AN, Grantz KL. Risk 
of Adverse Maternal Outcomes in Pregnant Women With Disabilities. 
JAMA Netw Open. 2021 Dec 1;4(12):e2138414. doi: 10.1001/
jamanetworkopen.2021.38414. PMID: 34910153; PMCID: PMC8674748. and 
Smeltzer SC, Mitra M, Long-Bellil L, Iezzoni LI, Smith LD. Obstetric 
clinicians' experiences and educational preparation for caring for 
pregnant women with physical disabilities: a qualitative study. 
Disabil Health J. 2018;11(1):8-13. doi: 10.1016/j.dhjo.2017.07.004).
---------------------------------------------------------------------------

    Research also indicates that women with limited English proficiency 
(LEP) are also found to experience disparities in OB care and are at 
risk for mental health conditions, including post-partum depression and 
substandard newborn care following neonatal intensive care unit (ICU) 
discharge due to insufficient patient education by 
staff.389 390 Language-concordant care and awareness among 
medical providers regarding the use of medical interpreters and 
materials in diverse languages can improve patient satisfaction, 
decrease medical errors, and improve patient 
safety.391 392 393
---------------------------------------------------------------------------

    \389\ Togioka, Brandon & Seligman, Katherine & Delgado Upegui, 
Carlos. (2022). Limited English proficiency in the labor and 
delivery unit. Current Opinion in Anaesthesiology. 35. 285-291.
    \390\ Sentell, Tetine & Chang, Ann & Ahn, Hyeong Jun & Miyamura, 
Jill. (2015). Maternal Language and Adverse Birth Outcomes in a 
Statewide Analysis. Women & health. 56.).
    \391\ Togioka, Brandon & Seligman, Katherine & Delgado Upegui, 
Carlos. (2022). Limited English proficiency in the labor and 
delivery unit. Current Opinion in Anaesthesiology. 35. 285-291. 
10.1097/ACO.0000000000001131.
    \392\ Sentell, Tetine & Chang, Ann & Ahn, Hyeong Jun & Miyamura, 
Jill. (2015). Maternal Language and Adverse Birth Outcomes in a 
Statewide Analysis. Women & health. 56. 10.1080/
03630242.2015.1088114.
    \393\ https://www.ahrq.gov/sites/default/files/publications/files/lepguide.pdf).
---------------------------------------------------------------------------

    Studies have shown a direct correlation between the experience of a 
severe maternal event and the development or exacerbation of a mental 
health disorder, such as posttraumatic stress disorder (PTSD).\394\ 
Posttraumatic stress disorder affects about three to four percent of 
mothers, with higher rates among some population groups. Perinatal PTSD 
includes PTSD episodes occurring during pregnancy through one year 
postpartum. Perinatal PTSD negatively affects physical and mental 
health, interpersonal relationships, and parenting capacity.\395\ After 
a severe event, patients and their families may struggle to understand 
why an event occurred and how they might have received better 
information or care throughout the experience, adding to their overall 
emotional distress.\396\ These examples highlight the need for new 
requirements for hospitals that provide obstetrical services.
---------------------------------------------------------------------------

    \394\ https://www.sciencedirect.com/science/article/pii/S0884217520303166?via%3Dihub.
    \395\ https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2023.01447.
    \396\ https://www.sciencedirect.com/science/article/pii/S0884217520303166?via%3Dihub.
---------------------------------------------------------------------------

b. Proposed Requirements for Staff Training for Hospitals and CAHs With 
OB Services
    Given the existing literature and prevalence of health and safety 
concerns impacting maternal health outcomes (as described earlier in 
this section), we propose a core set of requirements for hospitals and 
CAHs offering OB services to protect the health and safety of pregnant, 
birthing, and postpartum patients. We believe that training of OB 
services staff on evidence-based best practices and protocols would 
enhance the quality of care and services provided to pregnant, 
birthing, and postpartum women and improve patient health and safety.
    We therefore propose at new paragraph Sec. Sec.  482.59(c) and 
485.649(c) that hospitals and CAHs with OB services would be required 
to develop policies and procedures that would ensure that relevant 
obstetrical services staff would be trained on select topics for 
improving the delivery of maternal care. We propose at Sec.  
482.59(c)(1) and Sec.  485.649(c)(1) training topics would have to 
reflect the scope and complexity of services offered, including, but 
not limited to, facility-identified evidence-based best practices and 
protocols to improve the delivery of maternal care within the facility. 
Performing critical tasks consistently through standardized practices 
can reduce errors, especially when fatigue is a factor, and in 
stressful environments such as the labor and delivery suite or 
operating room.\397\ To facilitate improvements in care, the Centers 
for Disease Control and Prevention (CDC) established perinatal quality 
collaboratives (PQCs).\398\ PQCs are state or multistate networks of 
teams that work to improve the quality of care for mothers and babies 
by identifying health care processes in need of improvement. In 
addition, the Health Resource and Services Administration (HRSA) 
partnered with the Alliance for Innovation on Maternal Health (AIM) to 
establish patient safety bundles.\399\ Facilities may participate in 
local or regional PQCs and implement patient safety bundles. The 
Institute for Healthcare Improvement defines bundles as, ``a small, 
straightforward set of evidence-based best practices that, when 
performed collectively and reliably, have been demonstrated to improve 
patient outcomes.'' \400\ Maternal safety bundles, often implemented 
through PQCs, have demonstrated success in driving improvements, 
particularly with regards to obstetric hemorrhage, severe hypertension 
in pregnancy, and non-medically indicated Cesarean 
deliveries.401 402 403 404 Other examples of evidence-based 
trainings topics for obstetrical staff may include education in trauma 
informed care,405 406 cultural 
competency,407 408 409 410 411 412 413 414 415 416 417 418 419 420 421 422 423 424 425 426
 and

[[Page 59494]]

person-centered care.427 428 429 430 431 432 433 434 We also 
point readers to training resources at CMS' Medicare Learning Network: 
https://www.cms.gov/training-education/medicare-learning-network/web-based-training.
---------------------------------------------------------------------------

    \397\ https://www.acog.org/clinical/clinical-guidance/committee-opinion/articles/2019/10/clinical-guidelines-and-standardization-of-practice-to-improve-outcomes.
    \398\ https://www.cdc.gov/reproductivehealth/maternalinfanthealth/pqc.htm.
    \399\ https://saferbirth.org/about-us/.
    \400\ https://www.ihi.org/insights/what-is-a-bundle.
    \401\ Jennifer, A., Callaghan-Koru, et al., Implementation of 
the Safe Reduction of Primary Cesarean Births safety bundle during 
the first year of a statewide collaborative in Maryland. Obstet 
Gynecol 2019;134:109-19.
    \402\ Elliott K. Main et al. Reduction of severe maternal 
morbidity from hemorrhage using a state perinatal quality 
collaborative. Am. J. Obstet. Gynecol. 2017;216(3):298.e1-298.e11.
    \403\ Patricia Lee King et al. Reducing time to treatment for 
severe maternal hypertension through statewide quality improvement. 
Am. J. Obstet. Gynecol. 2018;218:S4.
    \404\ https://www.cms.gov/files/document/qso-22-05-hospitals.pdf.
    \405\ https://saferbirth.org/wp-content/uploads/13-FINAL_AIM_OERRK_RESC.pdf.
    \406\ https://www.acog.org/clinical/clinical-guidance/committee-opinion/articles/2021/04/caring-for-patients-who-have-experienced-trauma.
    \407\ https://store.samhsa.gov/sites/default/files/sma16-4931.pdf.
    \408\ Effects of Cultural Sensitivity Training on Health Care 
Provider Attitudes and Patient Outcomes https://sigmapubs.onlinelibrary.wiley.com/doi/10.1111/j.1547-5069.2004.04029.
    \409\ Lelutiu-Weinberger, Corina. Implementation and Evaluation 
of a Pilot Training to Improve Transgender Competency Among Medical 
Staff in an Urban Clinic https://www.liebertpub.com/doi/full/10.1089/trgh.2015.0009.
    \410\ Rotenberg, Sara et al., Disability Training for health 
Workers: A Global Narrative Systematic Review. Disability and Health 
Journal doi: 10.1016/j.dhjo.2021.101260.
    \411\ Cultural Competency: A Systemic Review of Health Care 
Provider Educational Interventions. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3137284/.
    \412\ https://journals.sagepub.com/doi/10.1177/0163278712454137.
    \413\ Linda Govere et al., How Effective Is Cultural Competence 
Training of Healthcare Providers on Improving Patient Satisfaction 
of Minority Groups? A Systematic Review of Literature. https://doi.org/10.1111/wvn.12176 October 25, 2016.
    \414\ https://onlinelibrary.wiley.com/doi/10.1111/j.1745-7599.2009.00406.x.
    \415\ https://journals.sagepub.com/doi/10.1177/0163278712454137.
    \416\ Santana, Maria. How to Practice Person-Centered Care: A 
conceptual Framework. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5867327/.
    \417\ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3726251/.
    \418\ https://pubmed.ncbi.nlm.nih.gov/12013268/.
    \419\ https://thinkculturalhealth.hhs.gov/clas.
    \420\ https://ethnomed.org/.
    \421\ https://minorityhealth.hhs.gov/clas-behavioral-health-implementation-guide.
    \422\ https://minorityhealth.hhs.gov/assets/PDF/Evaluation_of_the_Natn_CLAS_Standards_Toolkit_PR3599_final.508Compliant.pdf.
    \423\ https://www.cms.gov/about-cms/agency-information/omh/downloads/clas-toolkit-12-7-16.pdf.
    \424\ https://www.albany.edu/cphce/bridging-gaps-vital-role-cultural-competence-healthcare.
    \425\ https://thinkculturalhealth.hhs.gov/resources/presentations/1/fundamentals-of-the-national-standards-for-culturally-and-linguistical.
    \426\ https://thinkculturalhealth.hhs.gov/education/maternal-health-care.
    \427\ An approach to coordinate health care services to better 
address an individual's physical, mental, behavioral, and social 
needs (See https://www.cms.gov/priorities/innovation/key-concepts/person-centered-care).
    \428\ https://www.cms.gov/priorities/innovation/key-concepts/person-centered-care.
    \429\ https://www.hrsa.gov/about/organization/bureaus/ohe/health-literacy/culture-language-and-health-literacy.
    \430\ https://edit.cms.gov/about-cms/agency-information/omh/downloads/language-access-plan.pdf.
    \431\ https://www.marchofdimes.org/our-work/beyond-labels.
    \432\ https://www.acog.org/education-and-events/emodules/respectful-care.
    \433\ https://www.perinatalgi.org/page/mmtrends.
    \434\ https://www.cci.training/courses/maternal-mental-health-support-specialist.
---------------------------------------------------------------------------

    Additionally, at Sec.  482.59(c)(1)(ii) and Sec.  
485.649(c)(1)(ii), we propose that hospitals and CAHs that provide OB 
services use findings from their QAPI programs, as required at Sec.  
482.21 and Sec.  485.641, respectively, to inform obstetrical staff 
training needs and any additions, revisions, or updates to training 
topics on an ongoing basis. Stratified data can produce meaningful 
measures that can be used to expose health disparities, develop 
interventions to reduce them, and monitor performance to ensure 
interventions aimed at improving care do not have unintended 
consequences for certain patients and improve patient outcomes.\435\ 
Continuous quality improvement depends on a disciplined and well-
defined data-driven process that constantly is monitored and 
improved.\436\ We note that patient satisfaction and quality measures 
may be an effective way to measure the success of staff training.
---------------------------------------------------------------------------

    \435\ https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2011.0617.
    \436\ https://www.acog.org/clinical/clinical-guidance/committee-opinion/articles/2019/10/clinical-guidelines-and-standardization-of-practice-to-improve-outcomes.
---------------------------------------------------------------------------

    At new paragraph Sec.  482.59(c)(2) and Sec.  485.649(c)(2), we 
propose to require the governing body to identify and document which 
staff must complete annual training on the topics identified at Sec.  
482.59(c)(1) and Sec.  485.649(c)(1). In addition, we propose at Sec.  
482.59(c)(3) and Sec.  485.649(c)(3) to require the hospital and CAH to 
document in the staff personnel records that the training was 
successfully completed. Further, at new paragraph Sec.  482.59(c)(4) 
and Sec.  485.649(c)(4), we propose that the hospital and CAH be able 
to demonstrate staff knowledge on the topics identified at Sec.  
482.59(c)(1) and Sec.  485.649(c)(1), respectively. We are not 
proposing to require the specific manner or method in which a facility 
would be required to demonstrate that their staff is knowledgeable and 
competent in the ways to improve the delivery of maternal care, since 
this would likely vary based on the training delivery method. There are 
various ways in which a facility can assess their staff knowledge on 
ways to improve the delivery of maternal care. Facilities could do so 
through self-assessments, surveys, or questionnaires administered to 
their staff. Some examples of how a facility can demonstrate knowledge 
on these concepts include instructor-led training, computer-based or 
printed self-learning packets that contain a test to demonstrate their 
staff person's knowledge. In addition, for those trainings that are 
instructor-led, a question-and-answer session could follow the 
training. However the facility chooses to demonstrate this knowledge, 
we would expect the facility to maintain documentation that the 
training was completed, and that the facility's staff are knowledgeable 
of the ways to improve the delivery of maternal care.
    We would expect facilities to consider the qualifications of the 
individuals or organizations that would be conducting the staff 
training and utilize trainers that are knowledgeable on the subjects 
that they are teaching and are qualified to conduct the training. These 
requirements allow facilities the flexibility to determine the 
curriculum that would be used to train their staff on evidence-based 
best practices and protocols to improve the delivery of maternal care 
and other training topics as identified by the facilities' QAPI 
program. We would expect facilities to provide high quality training 
that is consistent with and tailored to the staff's expected role, with 
the goal of improving maternal health outcomes. We acknowledge that 
many hospitals and CAHs may have already implemented these practices 
and that those practices may satisfy this proposed requirement. Of 
note, these required staff trainings are in addition to the education 
and training necessary for a clinician to administer care within the 
scope of their practice or for a staff member to perform their job.
    While there is, as noted above, ample objective research 
demonstrating the need for such requirements, we are also asking the 
public for any additional data, detailed analysis, academic studies, or 
any other information on the link between the proposed requirements and 
patient health and safety. We solicit public comment on these 
proposals, including whether these proposed staff training requirements 
should be applicable to REHs. We also seek public comment on whether 
CMS should require specific training on person-centered care, trauma-
informed care, cultural competency, and/or other topics as part of the 
evidence-based training.
3. Quality Assessment and Performance Improvement (QAPI) Program (Sec.  
482.21; Sec.  485.641)
a. Background
i. Existing QAPI CoP Requirements
    Medicare-participating hospitals and CAHs are required by CMS 
regulations to engage in quality activities to improve patient care and 
outcomes and to facilitate efficient and effective operations under the 
QAPI program standards (42 CFR 482.21; 42 CFR 485.641). Specifically, 
the QAPI standards are a data-driven and proactive approach to 
continuous quality improvement, with the end goal of improving the 
overall quality of care and services delivered to patients. The 
governing body is required to be involved in the QAPI program by 
ensuring that the program reflects the complexity of the facility's 
organization and services.\437\ These data and measures remain with the 
facility; there is no requirement to transmit QAPI data to CMS or other 
Federal entities.
---------------------------------------------------------------------------

    \437\ RNHCIs (at Sec.  403.732), ASCs (at Sec.  416.43), 
hospices (at Sec.  418.58), hospitals (at Sec.  482.21), transplant 
programs (at Sec.  482.96), LTC facilities (at Sec.  483.75), HHAs 
(at Sec.  484.65), CAHs (at Sec.  485.641), CMHCs (at Sec.  
485.917), OPOs (at Sec.  486.348), and ESRD dialysis facilities (at 
Sec.  494.110).
---------------------------------------------------------------------------

ii. Data Analysis and Stratification
    In executing these QAPI requirements, hospitals and CAHs (including 
those with OB services) use patient population data to identify, 
reduce, and eliminate unfavorable patient health and safety outcomes, 
while identifying opportunities for

[[Page 59495]]

improvement. As such, CMS considers QAPI a critical tool for improving 
facilities' maternal health outcomes amid the ongoing maternal health 
crisis. For while existing QAPI regulations (Sec.  482.21; Sec.  
485.641) require facilities to ``develop, implement, and maintain an 
effective, ongoing, facility-wide, data-driven'' QAPI program that 
focuses on ``indicators related to improved health outcomes and the 
prevention and reduction of medical errors,'' existing regulations do 
not require that hospitals focus on addressing the worsening public 
health crises such as the U.S. maternal health crisis.
    Moreover, in performing their data analysis, facilities may 
aggregate patient data in such a way that masks health outcome 
differences among patient subpopulations.\438\ Existing QAPI standards 
do not require that facilities monitor for or address health 
disparities, or otherwise analyze or stratify QAPI data by patient 
subpopulations. Yet, research has repeatedly shown the important role 
of data collection and analysis by patient subgroup within health care 
facilities in order to improve patient care consistently across patient 
populations.439 440 441 442 443 Specifically, analysis by 
patient subgroup can produce meaningful measures that can be used to 
expose health disparities, develop interventions to reduce them, and 
monitor performance to ensure interventions to improve care do not have 
unintended consequences for certain patients.444 445
---------------------------------------------------------------------------

    \438\ https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2011.0617.
    \439\ https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2011.0617.
    \440\ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3861327/.
    \441\ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6259664/.
    \442\ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7647227/.
    \443\ https://pubmed.ncbi.nlm.nih.gov/16567608/.
    \444\ https://www.nejm.org/doi/full/10.1056/NEJMp1911700.
    \445\ https://www.nejm.org/doi/full/10.1056/NEJMp1911700.
---------------------------------------------------------------------------

    However, such data practices are not universally applied by 
hospitals.\446\ The persistent maternal health crisis and well-
documented correlations between certain patient demographics and 
maternal health outcomes as discussed at length in section XXI.A.1 of 
this proposed rule, strongly indicate that the absence of analyses by 
diverse subpopulations among obstetrical patients likely serves as a 
barrier to facilities' effectiveness in achieving performance 
improvement in maternal health outcomes. Therefore, we believe 
requiring QAPI analyses of maternal health data, quality indicators, 
and outcomes by diverse subpopulations served by a facility would 
support facilities in establishing structures to assess and improve 
health and safety conditions on an ongoing basis, thereby promoting 
access and high-quality care for all pregnant, birthing, and postpartum 
patients.
---------------------------------------------------------------------------

    \446\ https://ifdhe.aha.org/benchmarking-study-us-hospitals-surveys.
---------------------------------------------------------------------------

iii. Maternal Mortality Review Committees
    Initially created in the 1930s to combat high rates of maternal 
mortality in the U.S.,\447\ Maternal Mortality Review Committees 
(MMRCs) are multi-disciplinary teams that work at the State or local 
level to engage stakeholders, comprehensively review deaths that occur 
during or within a year of pregnancy (pregnancy-related deaths), and 
develop recommendations aimed at preventing future pregnancy-related 
deaths.448 449 As of April 2024, MMRCs exist in 47 States 
and often function under the authority of State health and safety 
codes.450 451 452 MMRC composition varies but can consist of 
individuals with training in public health, obstetrics and gynecology, 
maternal-fetal medicine, nursing, midwifery, forensic pathology, 
behavioral health professionals, patient advocacy groups, and 
community-based organizations to determine cause of death, 
preventability of death, and relationship to 
pregnancy.453 454 Specifically, as of 2021, all existing 
MMRCs included representation from State public health agencies as well 
as provider groups (inclusive of hospitals, hospital organizations, 
State health professional chapters, State medical societies, etc.). 
Twenty-one out of forty-four (21/44; 47.7 percent) included 
representation from State Medicaid agencies, 20/44 (45.5 percent) 
included State behavioral health agencies, 18/44 (40.9 percent) 
included a violence prevention agency, and 27/44 (61.4 percent) 
included community-based organizations.\455\ Among provider groups, 28/
44 (63.6 percent) of existing MMRCs included social workers; 12/44 
(27.3 percent) included doulas and 14/44 (31.8 percent) substance use 
counselors.\456\ MMRCs may use a variety of data sources including: 
birth and death certificate data, prenatal care records, hospital 
records, autopsy reports, and social services records in their review 
process.\457\ Yet such data reporting and sharing is dependent upon 
State requirements and often voluntary for health care 
facilities.458 459 MMRCs generally disseminate annual or 
biennial reports reflecting their findings.
---------------------------------------------------------------------------

    \447\ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6511983/.
    \448\ https://www.cdc.gov/reproductivehealth/maternal-mortality/erase-mm/index.html.
    \449\ https://doi.org/10.1097/AOG.0000000000002417.
    \450\ https://www.cdc.gov/reproductivehealth/maternal-mortality/erase-mm/index.html.
    \451\ https://doi.org/10.1097/AOG.0000000000002417.
    \452\ https://www.guttmacher.org/state-policy/explore/maternal-mortality-review-committees.
    \453\ https://www.cdc.gov/reproductivehealth/maternal-mortality/erase-mm/index.html.
    \454\ https://doi.org/10.1097/AOG.0000000000002417.
    \455\ https://nashp.org/state-tracker/state-maternal-mortality-review-committee-membership-and-recommendations/.
    \456\ https://nashp.org/state-tracker/state-maternal-mortality-review-committee-membership-and-recommendations/.
    \457\ https://www.cdcfoundation.org/sites/default/files/upload/pdf/MMRIAReport.pdf.
    \458\ https://www.cdcfoundation.org/sites/default/files/upload/pdf/MMRIAReport.pdf.
    \459\ https://www.guttmacher.org/state-policy/explore/maternal-mortality-review-committees.
---------------------------------------------------------------------------

    In FY 2023, CDC supported MMRC initiatives through cooperative 
agreements in 44 States and 2 territories via its Enhancing Reviews and 
Surveillance to Eliminate Maternal Mortality (ERASE MM) Program.\460\ 
Other sources of funding include the Federally-funded and State-
administered Title V Maternal and Child Health (MCH) Services Block 
Grants, State government appropriations, non-governmental grants, 
philanthropic contributions, and dedicated initiative funds.\461\
---------------------------------------------------------------------------

    \460\ https://www.cdc.gov/reproductivehealth/maternal-mortality/erase-mm/index.html.
    \461\ https://www.cdc.gov/reproductivehealth/maternal-mortality/erase-mm/index.html.
---------------------------------------------------------------------------

    Despite their pivotal role, MMRCs encounter various challenges, 
including resource constraints, funding challenges, data accessibility 
issues (including timeliness of data), operational authority, and 
limited to no ability to directly implement or enforce their 
recommendations.462 463 464 Moreover while, policies in 36 
States and the District of Columbia legally require MMRCs to operate 
and review pregnancy associated deaths, only 10 States and the District 
of Columbia mandate the consideration of health disparities during 
MMRCs' review despite the widening maternal health disparities 
described in section XXI.A.1

[[Page 59496]]

of this proposed rule.465 466 Moreover, thirteen States 
require that MMRC membership reflect and/or consider the jurisdiction's 
demographic composition (for example, geographic, racial, socioeconomic 
status, communities most affected) when selecting Committee 
members.\467\
---------------------------------------------------------------------------

    \462\ https://doi.org/10.1097/AOG.0000000000002417.
    \463\ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6511983/.
    \464\ https://www.cdc.gov/reproductivehealth/maternal-mortality/preventing-pregnancy-related-deaths/state-strategies.html.
    \465\ https://www.guttmacher.org/state-policy/explore/maternal-mortality-review-committees.
    \466\ https://pubmed.ncbi.nlm.nih.gov/31499056/.
    \467\ https://www.guttmacher.org/state-policy/explore/maternal-mortality-review-committees.
---------------------------------------------------------------------------

    Stakeholders highlight the need for improved hospital engagement in 
data standardization and data collection as part of a comprehensive 
strategy to reduce rates of maternal mortality. Collaborative and 
consistent reporting at the hospital level directly impacts the quality 
and timeliness of MMRCs' work, as well as informs targeted 
recommendations and next steps within facilities. Specifically, 
Perinatal Quality Collaboratives (PQC) are a central method for how 
MMRCs' recommendations are implemented. PQCs are State or regional 
networks working to improve maternal and infant quality of care by 
identifying possible improvements in health care processes and 
leveraging the best available methods to enact changes 
expeditiously.\468\ As of April 2024, there are 49 State-based PQCs, of 
which 36 are funded by the CDC.\469\ Through Federal grants and 
cooperative agreements with the CDC \470\ and/or funding and support 
from State and local governments, PQCs have achieved notable 
improvements in maternal health and safety, including in severe 
pregnancy complications.\471\ Of note, participation in State or 
national Perinatal Quality Improvement (QI) Collaborative is a part of 
CMS' ``birthing friendly'' hospital designation for hospitals that 
provide high quality maternal care.\472\
---------------------------------------------------------------------------

    \468\ https://www.cdc.gov/reproductivehealth/maternalinfanthealth/pqc.htm.
    \469\ https://www.cdc.gov/reproductivehealth/maternalinfanthealth/pqc-states.html.
    \470\ https://www.cdc.gov/maternal-infant-health/pqc/index.html.
    \471\ https://www.cdc.gov/reproductivehealth/maternalinfanthealth/pqc.htm.
    \472\ https://data.cms.gov/provider-data/birthing-friendly-hospitals-and-health-systems.
---------------------------------------------------------------------------

    As an example of the collaboration between MMRCs and PQCs, the 
State of California demonstrates the impact that high quality hospital 
data collection and reporting can have in supporting MMRCs' work and 
patient care improvements.\473\ California's MMRC, known as the 
California Pregnancy-Associated Mortality Review project (CA-PAMR), was 
created in 2006 to ``identify pregnancy-related deaths, causation, and 
contributing factors, and then make recommendations on quality 
improvements to maternity care.'' CA-PAMR has consistently reported a 
pregnancy-related mortality rate below the U.S. rate since 2011.\474\ 
As mentioned above, California's approach centers on a collaborative 
model, wherein CA-PAMR serves as a data collector, evaluator, and 
recommender, while the California Maternal Quality Care Collaborative 
(CMQCC; one of California's PQCs with over 200 hospital members) \475\ 
works to implement recommendations. This close collaboration has been 
described as critical to California's success in reducing maternal 
mortality.\476\ Specifically, the California Maternal Data Center 
allows for direct links between hospital reporting and State vital 
records offices for 95 percent of births, allowing for real time 
evaluation of perinatal metrics and quality improvement 
benchmarks.\477\ These comprehensive reporting efforts support the 
development of evidence-based quality improvement toolkits, which have 
driven a 65 percent reduction in maternal morbidity between 2006 (the 
year of CA-PAMR and CMQCC's founding) to 2016 in California in the 
latest analysis.\478\
---------------------------------------------------------------------------

    \473\ https://www.cmqcc.org/research/maternal-mortality-review-ca-pamr/ca-pamr-recent-data.
    \474\ https://www.cmqcc.org/research/maternal-mortality-review-ca-pamr/ca-pamr-recent-data.
    \475\ https://www.cmqcc.org/about-cmqcc/member-hospitals.
    \476\ https://www.cmqcc.org/about-cmqcc/what-we-do.
    \477\ https://www.cmqcc.org/about-cmqcc/what-we-do.
    \478\ https://www.cmqcc.org/who-we-are.
---------------------------------------------------------------------------

b. Proposals
    Given the above challenges and examples of success from MMRCs' 
work, we propose to revise the existing QAPI standards (Sec.  482.21; 
Sec.  485.641) for hospitals and CAHs that offer obstetrical 
services.\479\ First, we propose that a hospital or CAH that offers OB 
services would be required to use its QAPI program to assess and 
improve health outcomes and disparities among OB patients on an ongoing 
basis ((Sec.  482.21(b); Sec.  485.641 (e)(1)). Specifically, the 
facility at a minimum would have to: (1) analyze data and quality 
indicators collected for the QAPI program by diverse subpopulations as 
identified by the facility among OB patients; (2) measure, analyze, and 
track data, measures, and quality indicators on patient outcomes and 
disparities in processes of care, services and operations, and outcomes 
among OB patients; (3) analyze and prioritize patient health outcomes 
and disparities, develop and implement actions to improve patient 
health outcomes and disparities, measure results, and track performance 
to ensure improvements are sustained when disparities exist among OB 
patients; and (4) conduct at least one performance improvement project 
focused on improving health outcomes and disparities among the 
hospital's population(s) of OB patients annually.
---------------------------------------------------------------------------

    \479\ For purposes of this proposal, CMS considers a facility to 
``offer obstetrical services'' when the facility ``[holds itself] 
out to the public (by name, posted signs, advertising, or other 
means) as a place that provides care for obstetrical medical 
conditions.'' This is similar to how emergency departments are 
defined in EMTALA (42 CFR 489.24(b)(2) ``Dedicated emergency 
department'').
---------------------------------------------------------------------------

    For the analysis required in item (1), hospitals have flexibility 
in determining the data analysis methodology most appropriate for their 
patient population and number of cases. For example, hospitals would 
stratify data and quality indicators collected for the QAPI program by 
diverse subpopulations as identified by the hospital among OB patients. 
For items 2 and 3, we expect hospitals will be able to use this data 
analysis to monitor and assess for the presence of disparities. If 
disparities are identified, we expect hospitals to prioritize QAPI work 
to address these areas. For all QAPI work, we remind hospitals that 
such analysis must comply with HIPAA, while ensuring such 
subpopulations are not excluded from QAPI efforts based solely on low 
numbers of patients.
    In terms of existing Federal maternal health data and metrics and 
their relation to this proposal, in August 2022 CMS finalized the 
adoption of two additional maternal health quality measures to the 
Hospital IQR program, both of which are electronic clinical quality 
measures including: (1) a measure of severe obstetric complications 
(which describes the number of inpatient hospitalizations for patients 
with severe complications occurring during the delivery 
hospitalization, such as hemorrhage), and (2) a measure of low-risk 
Cesarean section rates, which describes the share of patients with low-
risk pregnancies who give birth via a Cesarean section. Hospitals may 
use these maternal health quality metrics to inform their QAPI 
activities and are an example of how a hospital could comply with this 
new standard. Hospitals may also choose to utilize CMS' mandatory 
Health Related Social Needs screening metrics and data to inform 
maternal health QAPI

[[Page 59497]]

activities.\480\ Hospitals may also collaborate with their Quality 
Improvement Organization (QIOs) in this work. We refer readers to the 
following website which discusses CMS' Action Plan for Maternity Care 
in greater detail: https://www.cms.gov/files/document/cms-maternity-care-action-plan.pdf.
---------------------------------------------------------------------------

    \480\ https://www.cms.gov/newsroom/fact-sheets/fy-2023-hospital-inpatient-prospective-payment-system-ipps-and-long-term-care-hospitals-ltch-pps.
---------------------------------------------------------------------------

    Next, under a new standard for Maternal Health QAPI activities for 
hospitals (Sec.  482.21(e)(1)) and CAHs (Sec.  485.641(d)(4)(i)), we 
propose to require that for hospitals and CAHs that offer OB services, 
leadership must be engaged in the facility's QAPI activities. For 
purposes of this provision, leadership is defined as facility 
leadership, obstetrical services leadership, or their designate(s).
    Per existing state statutes as applicable, facilities are already 
required to report data to MMRCs.\481\ We therefore propose that if a 
MMRC is available at the State or local jurisdiction in which the 
facility was located, hospitals (at Sec.  482.21(e)(2)) and CAHs (at 
Sec.  485.641(d)(4)(ii)) that offer OB services must have to have a 
process for incorporating MMRC data and recommendations into the 
facility's QAPI program. Participation in a PQC or pursuing a QI 
project based on information from a MMRC are examples of how a facility 
could comply with this proposal. Of note, facilities can review CDC and 
state resources to identify the coordinating body and/or existence of 
MMRC in their state or locality.\482\
---------------------------------------------------------------------------

    \481\ https://www.cdc.gov/maternal-mortality/php/mmrc/index.html.
    \482\ https://www.cdc.gov/maternal-mortality/php/mmrc/index.html.
---------------------------------------------------------------------------

c. Solicitation of Comments
    We welcome public comments on the enhancements to the existing QAPI 
standards for hospitals and CAHs that offer obstetrical services 
proposed above. Our central goal with these proposals is to improve the 
health and safety of all pregnant, birthing, and postpartum patients in 
Medicare-participating hospitals and CAHs, including reducing worsened 
health outcomes among vulnerable subpopulations, and we invite comment 
on how effectively these proposals would achieve this goal. We are 
additionally interested in data, evidence, and experience related to 
QAPI's impact and role in addressing maternal health disparities as 
well as any benefits, costs, and unintended consequences of the above 
policies. We welcome public input from a broad range of commenters, 
including but not limited to patients, community-based organizations, 
public health professionals, health care professionals, staff, 
hospitals, operators, researchers, those representing diverse 
perspectives (such as those from rural and otherwise underserved 
communities), those disproportionately providing or engaged in maternal 
health care for specific populations discussed in this rule such as 
people experiencing health disparities, social risk factors and mental 
health conditions and substance use disorder which may lead to stigma, 
discrimination, and adverse outcomes). We also solicit public comments 
on the following questions:
     How effectively would these proposals achieve CMS' central 
goal of improving the health and safety of all pregnant, birthing, and 
postpartum patients in Medicare-participating hospitals and CAHs, 
including reducing worsened health outcomes among vulnerable 
subpopulations?
     To what extent do facilities already stratify, measure, 
analyze, and track quality data and indicators over time by diverse 
subpopulations or conduct performance improvement projects focused on 
reducing maternal health disparities as part of their QAPI activities? 
What are examples and outcomes of such work to date? What challenges do 
facilities (including those in rural areas or geographically isolated 
areas) face in performing such data stratification (for example, 
administrative recordkeeping processes, information systems, patient 
willingness to disclose information, and staff time/expertise) and 
implementing maternal health equity related QAPI projects? How can such 
challenges be overcome? What is needed for facilities to collect and 
stratify data by diverse sub-populations?
     What types of data stratifications/subgroups/categories 
are key to ensuring the health and safety of all pregnant, birthing, 
and postpartum patient subgroups? How can facilities best ensure their 
subgroup data collection and analysis reflects the diverse 
subpopulations served? What is the benefit versus possible unintended 
consequences of CMS defining and requiring a minimum set of data 
stratifications/subgroup/categories in facilities' maternal health QAPI 
program analyses? For example, should facilities be required to, at 
minimum, collect and stratify data by the subgroups included in MMRIA? 
How can facilities meaningfully acquire and disseminate subpopulation 
data in a way that avoids disclosure (that is, protecting individual 
privacy and confidentiality of their data), which can lead to increased 
vulnerability for underserved populations? How should facilities 
address stratifying small populations?
     How can facilities best involve and/or share the results 
of the facilities' maternal health equity focused QAPI efforts with 
patients, their families/caregivers, and community members? What are 
examples and outcomes of such efforts to date? What gaps and challenges 
exist?
     Should any of these proposals apply to other types of 
Medicare-participating facilities besides hospitals and CAHs that offer 
OB services? For example, should similar requirements apply to REHs? 
What could be the benefits, challenges, or potential unintended 
consequences of such policies? How could CMS minimize the burden of any 
such requirements?
4. Emergency Services Readiness (Sec.  482.55; Sec.  485.618)
a. Background
    In compliance with the EMTALA statute (42 U.S.C. 1395dd) and its 
implementing regulations (42 CFR 489.24), Medicare-participating 
hospitals and CAHs with emergency departments must be continually 
prepared to provide individuals presenting to the emergency department 
with an appropriate medical screening exam and stabilizing treatment if 
an emergency medical condition is found or, under certain 
circumstances, appropriately transfer such individuals to receive 
stabilizing care at another facility with higher treatment capabilities 
not available at the originating hospital. Such readiness is essential 
to the health and safety of emergency services patients, and relies on 
adequate staff training, provisions, protocols, and supplies.
    However, several organizations have reported that that emergency 
department readiness can be suboptimal, especially for obstetrical, 
geriatric, and pediatric populations, among 
others.483 484 485 486 487 488 Specific to obstetrical 
patients, as discussed in section XXI.A.1 of this proposed rule,

[[Page 59498]]

given the worsening maternal morality crisis and declining access to 
inpatient and outpatient maternity care in the U.S. in recent years, 
especially in rural and low-income communities, non-obstetrical 
professionals working in hospital emergency departments, CAHs, and REHs 
nationwide may experience a higher acuity and frequency of patients 
needing OB care, which may result in patients receiving care by staff 
with less training in obstetrical emergencies. Moreover, pregnant women 
who live in rural communities, have low income, are members of certain 
racial/ethnic groups (non-Hispanic Black, American Indian/Alaska Native 
(AI/AN)), and have disabilities experience disproportionately higher 
rates of pregnancy-related morbidity and mortality. For some pregnant 
women, the emergency department may be their first and/or only contact 
with the health care system during the pregnancy. Hospital emergency 
departments, CAHs, and REHs must therefore continue to ensure they are 
prepared to meet the needs of these high-risk patient populations in 
order to maintain high quality of care and reduce disparate health 
outcomes. Research shows that additional obstetric training for 
emergency department staff improves staff competencies (that is, 
skills, knowledge, comfort, confidence, and effectiveness) in managing 
obstetric emergencies, supporting improved maternal health and 
safety.489 490 491 492 493 494 Similarly, staff training in 
pediatric readiness 495 496 497 and geriatric readiness 
498 499 500 501 502 improves staff capabilities in caring 
for these populations as well as patient health and safety.
---------------------------------------------------------------------------

    \483\ https://www.acog.org/news/news-articles/2022/01/commitment-to-action-eliminating-preventable-maternal-mortality.
    \484\ https://rhrc.umn.edu/wp-content/uploads/2021/09/UMN-emOB-Training-Needed_11.12.20_508.pdf.
    \485\ https://www.cdcfoundation.org/sites/default/files/files/ReportfromNineMMRCs.pdf.
    \486\ https://emscimprovement.center/domains/pediatric-readiness-project/.
    \487\ https://publications.aap.org/pediatrics/article/142/5/e20182459/38608/Pediatric-Readiness-in-the-Emergency-Department.
    \488\ https://forms.ihi.org/hubfs/Guide%20to%20Recognition%20for%20GEDA%20Sites_FINAL.pdf.
    \489\ Burke SM, Schmitt T, Kennedy P, et al. Emergency Medicine 
Obstetrics and Gynecology: A Case-Based Curriculum for Residents. 
MedEdPORTAL. 2023;19:11330.
    \490\ Espey E, Baty G, Rask J, Chungtuyco M, Pereda B, Leeman L. 
Emergency in the clinic: a simulation curriculum to improve 
outpatient safety. Am J Obstet Gynecol. Dec 2017;217(6):699.e1-
699.e13.
    \491\ Cooper MI, Papanagnou D, Meguerdichian M, Bajaj K. 
Emergency Obstetrics for the Emergency Medicine Provider. 
MedEdPORTAL. October 13 2016;12:10481.
    \492\ Jacobs PJ. Using High-Fidelity Simulation and Video-
Assisted Debriefing to Enhance Obstetrical Hemorrhage Mock Code 
Training. J Nurses Prof Dev. Sep/Oct 2017;33(5):234-239.
    \493\ Hopmann P, Varre JS, Duncan G, Devoe WB, Gable BD. 
Multidisciplinary Simulation of Trauma in Pregnancy with 
Resuscitative Endovascular Balloon Occlusion of the Aorta (REBOA) 
Utilization. Cureus. December 2022; 14(12): e32820.
    \494\ Harrington J, Duncan G, D. Angelo KG. Multidisciplinary 
Simulation Improves Resident Confidence for Pregnant Patients 
Requiring Surgical Intervention. Cureus. Mar 2022;14(3): e23454.
    \495\ https://pubmed.ncbi.nlm.nih.gov/31444254/.
    \496\ https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2800400.
    \497\ https://publications.aap.org/pediatrics/article/144/3/e20190568/76984/Emergency-Department-Pediatric-Readiness-and.
    \498\ https://www.sciencedirect.com/science/article/pii/S0196064413015527?via%3Dihub.
    \499\ https://onlinelibrary.wiley.com/doi/10.1111/acem.13880.
    \500\ https://onlinelibrary.wiley.com/doi/10.1111/j.1741-6612.2010.00499.x.
    \501\ https://www.sciencedirect.com/science/article/pii/S1525861021001961?via%3Dihub.
    \502\ https://pubmed.ncbi.nlm.nih.gov/37389490/.
---------------------------------------------------------------------------

    While the hospital Emergency Services CoP requires that ``there 
must be adequate medical and nursing personnel qualified in emergency 
care to meet the written emergency procedures and needs anticipated by 
the facility'' (Sec.  482.55(b)(2)), CMS believes clearer expectations 
surrounding ``qualified in emergency care'' and maintenance of 
qualifications (that is, training) would improve facilities' readiness 
to care for patients with emergency conditions, enhancing patient 
health and safety.
b. Proposal
    Given CMS' commitment to ensuring the health and safety of all 
emergency services patients, including OB patients, we propose a new 
standard entitled ``Emergency Services Readiness'' within the existing 
Emergency Services CoP for hospitals (Sec.  482.55) and CAHs (Sec.  
485.618) to set clear expectations as well as improve facility 
readiness in caring for emergency services patients, including 
pregnant, birthing, and postpartum patients. Notably, these 
requirements would apply to all hospitals and CAHs offering emergency 
services,\503\ whether or not a hospital/CAH offers an additional 
specialty service lines (such as OB services). This is done with the 
intention of ensuring baseline health, safety, and training standards 
for the care of patients with emergency conditions.
---------------------------------------------------------------------------

    \503\ For purposes of this proposal, CMS considers a facility to 
``offer emergency services'' when it meets the definition of 
``dedicated emergency department'' as defined in EMTALA (42 CFR 
489.24(b) ``Dedicated emergency department'').''
---------------------------------------------------------------------------

    First for hospitals (Sec.  482.55(c)) and CAHs (Sec.  485.618(e)) 
that offer emergency services, we propose that these facilities would 
be required to have adequate provisions and protocols to meet the 
emergency needs of patients in accordance with the complexity and scope 
of services offered. For protocols, hospitals (Sec.  482.55(c)(1)) and 
CAHs (Sec.  485.618(e)(1)) must have protocols consistent with 
nationally recognized and evidence-based guidelines for the care of 
patients with emergency conditions. For example, facilities may utilize 
national medical professional society, accrediting organization, 
credentialling body, or other national guidelines to develop 
appropriate protocols for their emergency services patient populations. 
While these CoPs would not require adherence to a specific 
organization's guideline or recommendations, we expect that facilities 
would be able to articulate their standards and the source(s) and to 
demonstrate that their standards are based on evidence and nationally 
recognized sources. The American College of Emergency Physicians, for 
instance, has issued multiple guidelines for best practices in managing 
common and critical emergency conditions and has developed a Geriatric 
Emergency Department Accreditation Program, which provides best 
practice standards for this at-risk population.504 505 For 
obstetrical emergencies, the Alliance for Innovation on Maternal 
Health's (AIM; a partnership between HRSA and American College of 
Obstetricians and Gynecologists (ACOG) and other stakeholders) has 
developed resources which include example protocols and training 
resources for responding to obstetrical hemorrhage, severe 
hypertension, perinatal mental health conditions, sepsis, substance use 
disorder, and cardiac conditions, among others.\506\ ACOG has also 
developed resources for Obstetric Emergencies in Nonobstetric 
Settings.\507\ Similarly, the HRSA-supported Emergency Medical Services 
for Children (EMSC) Innovation and Improvement Center has resources for 
emergency departments seeking to improve ``pediatric readiness.'' \508\ 
We expect hospitals to be able to identify the source of the nationally 
recognized and evidence-based guidelines utilized in their protocols.
---------------------------------------------------------------------------

    \504\ https://www.acep.org/patient-care/clinical-policies.
    \505\ https://www.acep.org/geda.
    \506\ https://saferbirth.org/.
    \507\ https://www.acog.org/programs/obstetric-emergencies-in-nonobstetric-settings.
    \508\ https://emscimprovement.center/domains/pediatric-readiness-project/.
---------------------------------------------------------------------------

    For hospitals (Sec.  482.55(c)(3)) and CAHs (Sec.  485.618(e)(2)) 
that offer emergency services, applicable emergency services personnel, 
as determined by the facility, would need to be trained on these 
protocols and provisions annually. However given the diversity of staff 
and services offered by hospitals and CAHs, we are not proposing which 
emergency services staff should be trained. Once staff are identified, 
hospitals and CAHs would be expected to document that applicable staff 
have successfully completed such facility-identified training and

[[Page 59499]]

demonstrate staff knowledge on these topics.
    Finally, for hospitals that offer emergency services, we further 
propose at Sec.  482.55(c)(2) that provisions include equipment, 
supplies, and medication used in treating emergency cases. Such 
provisions must be kept at the hospital and be readily available for 
treating emergency cases. The available provisions must include: (1) 
drugs, blood and blood products, and biologicals commonly used in life-
saving procedures; (2) equipment and supplies commonly used in life-
saving procedures; and (3) a call-in-system for each patient in each 
emergency services treatment area. These supply requirements are 
similar to existing CAHs (at Sec.  485.618(b) and (c)) and REHs (at 
Sec.  485.516(c)(2)) supply standards for emergency services, as well 
as the surgical services CoP supply requirements (Sec.  482.51(b)(3)). 
We are not proposing any new emergency services equipment, supplies, or 
medication requirements for CAHs or REHs. Of note, hospitals have the 
flexibility to contract for services (Sec.  482.12(e)), which could 
include procurement and storage of blood and blood products.
    Like CAHs and REHs, hospitals would have flexibility in identifying 
and determining the type and necessary quantity of drugs, blood 
products, biologicals, equipment and supplies commonly used in 
emergency procedures needed to meet the needs of their patients. This 
CMS proposal does not require facilities to maintain supplies of 
particular drugs, biologicals, equipment, or supplies or amounts. 
Rather each facility would be expected to tailor their equipment and 
supplies to meet the needs of their patient populations, consistent 
with the needs, services, and resources of the facility. Examples of 
drugs and biologicals commonly used in life-saving procedures could 
include analgesics, local anesthetics, antibiotics, anticonvulsants, 
antidotes and emetics, serums and toxoids, antiarrhythmics, cardiac 
glycosides, antihypertensives, diuretics, and electrolytes and 
replacement solutions. Supply and equipment commonly used in life-
saving procedures could include airways, endotracheal tubes, ambu bag/
valve/mask, oxygen, tourniquets, immobilization devices, nasogastric 
tubes, splints, IV therapy supplies, suction machine, defibrillator, 
cardiac monitor, chest tubes, and indwelling urinary catheters. Such 
standards would be consistent with existing CAH (Sec.  485.618(b) and 
(c)) and REH (Sec.  485.516(c)(2)) emergency services standards.
    Lastly, the proposed requirement for a call-in-system for each 
patient in each emergency services treatment area is in line with the 
surgical services CoP (Sec.  482.51(b)(3)) and promotes patient safety 
by ensuring patients have a ready means of notifying staff of any 
emergencies or concerns.
c. Solicitation of Comments
    We welcome public comments on the above enhancements to the 
existing emergency services standards for hospitals and CAHs. Our goal 
with this section's proposals is to improve the health and safety of 
all emergency services patients, including pregnant, birthing, and 
postpartum patients. We seek comments on how effectively these 
proposals would achieve this goal. We are additionally interested in 
data, evidence, and experience related to these proposals as well as 
any benefits, costs, and unintended consequences of the above policies. 
We welcome public input from a broad range of commenters, including but 
not limited to patients, community-based organizations, public health 
professionals, health care professionals, staff, hospitals, operators, 
and researchers. Specifically, we solicit public comments on the 
following questions:
     While REHs do have existing equipment, supply, and 
medication standards, should the above proposals related to provisions, 
protocols, and staff training apply to REHs as well?
     What would be the benefits versus burden of such an 
approach? How could any burdens be mitigated?
5. Transfer Protocols (Sec.  482.43)
a. Background
    The Discharge Planning CoP for hospitals at Sec.  482.43 currently 
require facilities to have an effective discharge planning process that 
focuses on the patient's goals and treatment preferences and includes 
the patient and his or her caregivers/support person(s) in the process. 
The discharge planning CoP include standards for the discharge planning 
process, the provision and transmission of the patient's necessary 
medical information, and discharge to post-acute services. However, the 
hospital Discharge Planning CoP does not currently include baseline 
requirements related to patient transfers.
    Errors can occur during hospital transfers, including incomplete or 
inaccurate communication at the time of transfer. This is associated 
with worse patient outcomes, including delayed diagnoses, redundant 
tests, longer length of stays, and increased costs.\509\ Additionally, 
delays from the time a patient is accepted to another hospital to when 
they are transferred can be exacerbated by limited bed 
availability.\510\ These delays can prevent patients from receiving the 
medical care they need in a timely manner. Establishing transfer 
protocols can enhance patient health and safety by ensuring consistent 
and thorough communication between healthcare providers, minimize the 
risks of errors, reduce delays, and ensure that patients receive timely 
and appropriate care.
---------------------------------------------------------------------------

    \509\ Mueller S, Schnipper JL. Physician Perspectives on 
Interhospital Transfers. J Patient Safety. 2019 June; 15(2): 86-89. 
doi: 10.1097/PTS.0000000000000312.
    \510\ Carroll M, Fanning C, Herrigel DJ, Parikh A, et al. 
Interhospital Transfer Handoff Practices Among US Tertiary Care 
Centers: A Descriptive Study. J. Hosp Med. 2017 Dec, 11(6): 
doi:10.1002/jhm.2577.
---------------------------------------------------------------------------

    Hospitals regularly encounter situations where they may be unable 
to provide the appropriate level of care to meet the needs of a patient 
and must transfer the patient to another facility. As noted previously, 
EMTALA (42 CFR 489.24) requires Medicare-participating hospitals with 
emergency departments to provide an appropriate medical screening 
examination to a presenting individual to determine whether an 
emergency medical condition exists. If the hospital determines that the 
individual has an emergency medical condition, the hospital must offer 
stabilizing treatment or, under certain circumstances, appropriately 
transfer such patients to receive stabilizing care that the originating 
hospital does not have the capability to provide.\511\ Roughly 20 
percent of patients seen in U.S. emergency departments are admitted to 
the hospital as inpatients or transferred to a different facility \512\ 
In 2018, about 2.8 percent of patients were transferred from the ED to 
another hospital. Lower-volume EDs had the highest transfer rates, at 
about 5 percent.\513\ However, hospitals that do not have an emergency 
department or are otherwise not covered by EMTALA, may also have a need 
to transfer patients to other facilities to receive needed

[[Page 59500]]

services. Additionally, patients that are admitted as hospital 
inpatients may require transfer between facilities to meet the needs of 
the patient (for example, changing clinical condition, need for 
specialty and/or higher level of care). It is estimated that each year, 
patient transfers between acute care hospitals make up approximately 
3.5 percent of all hospital inpatient admissions (roughly 1.5 million 
admissions).\514\
---------------------------------------------------------------------------

    \511\ https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-G/part-489/subpart-B/section-489.24.
    \512\ American College of Emergency Physicians--ACEP Now (2019). 
Latest Data Reveal the ED's Role as Hospital Admission Gatekeeper. 
https://www.acepnow.com/article/latest-data-reveal-theeds-role-as-hospital-admission-gatekeeper/.
    \513\ American College of Emergency Physicians--ACEP Now (2019). 
Latest Data Reveal the ED's Role as Hospital Admission Gatekeeper. 
https://www.acepnow.com/article/latest-data-reveal-theeds-role-as-hospital-admission-gatekeeper/.
    \514\ Hernandez-Boussard T, Davies S, McDonald K, Wang NE. 
Interhospital Facility Transfers in the United States: A Nationwide 
Outcomes Study. J Patient Saf. 2017 Dec;13(4):187-191. doi: 10.1097/
PTS.0000000000000148. PMID: 25397857; PMCID: PMC4956577.
---------------------------------------------------------------------------

    Existing CoPs for CAHs and REHs include requirements related to the 
transfer of patients in the event that the facility is unable to 
furnish needed services for a patient or the patient requires a higher 
level of care. For example, the CAH CoPs at Sec.  485.616(a) require 
CAHs that are members of a rural health network to have an agreement in 
place with at least one hospital that is also a member of the network 
for patient transfer. Additionally, the discharge planning requirements 
at Sec.  485.642(b) require CAHs to discharge, transfer, or refer the 
patient, where applicable, with all necessary medical information 
pertaining to the patient's condition. We require similar actions 
regarding patient transfers for REHs at Sec.  485.538.
    Efficient transfers to hospitals that can treat complex conditions 
and provide higher levels of care is critical for patients that are 
experiencing obstetrical emergencies or complications, or patients that 
require immediate post-delivery care. Elements of safe transfer would 
include: (1) risk identification and determination of conditions 
necessitating consultation, referral, and transfer; (2) mechanisms and 
procedures for transfer/transport to a higher-level hospital at all 
times; (3) a reliable, accurate, and comprehensive communication system 
between participating hospitals, hospital personnel, and transport 
teams.\515\
---------------------------------------------------------------------------

    \515\ https://www.acog.org/clinical/clinical-guidance/obstetric-care-consensus/articles/2019/08/levels-of-maternal-care.
---------------------------------------------------------------------------

b. Proposals
    We believe that comprehensive discharge planning CoP for hospitals, 
including documented requirements for transfer protocols, will enhance 
this process and better protect the health and safety needs of all 
patients, including pregnant, birthing, and postpartum women. Having an 
established process with identified policies and procedures, and a 
medical staff that has received training regarding transfer protocols 
can support hospitals in expediting transfers when necessary. 
Therefore, we propose revisions to the hospital discharge planning 
regulations to include requirements for transfer protocols.
    We propose at Sec.  482.43(c) to require that hospitals have 
written policies and procedures for transferring patients under their 
care. This would be inclusive of hospital inpatients (for example, 
transfers from the emergency department to inpatient admission, 
transfers between inpatient units in the same hospital, as well as 
transfers between inpatient units at different hospitals). This would 
ensure patients are transferred to the appropriate level of care 
promptly and without undue delay, in order to meet their needs.
    We also propose to require the hospital to provide training to the 
relevant staff (as determined by the facility) regarding the hospital 
policies and procedures for transferring patients under its care.
    Although we have established requirements for certain facilities 
regarding patient transfers and propose standards for transfer 
protocols and training requirements here, in general hospitals are not 
required to accept or receive patients transferred from other 
facilities unless the receiving hospital has the capacity to treat the 
individual (42 CFR 489.24(f)). To ensure that patients receive the care 
their medical conditions require, we encourage all recipient hospitals 
to have policies and procedures in place regarding the acceptance of 
transfers and remind hospitals of their obligations to comply with 
EMTALA and Federal civil rights laws.\516\ EMTALA requires hospitals 
with emergency departments to provide an appropriate medical screening 
examination to determine whether an emergency medical condition exists, 
provide stabilizing treatment if hospital determines that there is an 
emergency medical condition, and if necessary, to appropriately 
transfer individuals with an emergency medical condition as needed, 
whether or not the individual is eligible for Medicare benefits and 
regardless of ability to pay (42 CFR 489.24(a)). Federal civil rights 
laws prohibit discrimination based on an individual's race, color, 
national origin, sex, religion, disability, and age. Further, hospitals 
that have specialized capabilities or facilities (including, but not 
limited to, facilities such as burn units, shock-trauma units, neonatal 
intensive care units, or, with respect to rural areas, regional 
referral centers) may not refuse to accept from a referring hospital an 
appropriate transfer of an individual who requires such specialized 
capabilities or facilities, if the receiving hospital has the capacity 
to treat the individual (42 CFR 489.24(f)). We solicit comments on 
these proposals.
---------------------------------------------------------------------------

    \516\ Recipients of Federal financial assistance must comply 
with Federal civil rights laws, including but not limited to Title 
VI of the Civil Rights Act of 1964 (45 CFR part 80), Section 504 of 
the Rehabilitation Act of 1973 (45 CFR part 84), The Age 
Discrimination Act (45 CFR part 90), and Section 1557 of the 
Affordable Care Act (45 CFR part 92).
---------------------------------------------------------------------------

    We also solicit public comments on the following questions:
     How often should staff be trained in transfer protocols?
     What definitions or criteria exist to determine if a 
transfer is carried out ``promptly and without undue delay''?
     Should hospitals be required to have written policies and 
procedures outlining their standards and conditions for accepting 
transfers?
     Should all hospitals (inclusive of CAHs and REHs) be 
required to have a documented partnership with another hospital that 
both provides OB services, as well as has a Medical Fetal Medicine 
(MFM) specialist available for consultations in urgent situations, if 
such service(s) are already offered directly by the hospital? What 
would be the benefits versus burden of such a policy? How could any 
burden be mitigated?

XXII. Modification to the Hybrid Hospital-Wide All-Cause Readmission 
and Hybrid Hospital-Wide All-Cause Risk Standardized Mortality Measures 
in the Hospital Inpatient Quality Reporting Program

A. Background

    We refer readers to the following final rules for detailed 
discussions of the history of the Hospital IQR Program, including 
statutory history, and for the measures we have previously adopted for 
the Hospital IQR Program measure set:
     The FY 2010 Hospital Inpatient Prospective Payment Systems 
for Acute Care Hospitals and the Long-Term Care Hospital Prospective 
Payment System (IPPS/LTCH PPS) final rule (74 FR 43860 through 43861);
     The FY 2011 IPPS/LTCH PPS final rule (75 FR 50180 through 
50181);
     The FY 2012 IPPS/LTCH PPS final rule (76 FR 51605 through 
61653);
     The FY 2013 IPPS/LTCH PPS final rule (77 FR 53503 through 
53555);
     The FY 2014 IPPS/LTCH PPS final rule (78 FR 50775 through 
50837);
     The FY 2015 IPPS/LTCH PPS final rule (79 FR 50217 through 
50249);

[[Page 59501]]

     The FY 2016 IPPS/LTCH PPS final rule (80 FR 49660 through 
49692);
     The FY 2017 IPPS/LTCH PPS final rule (81 FR 57148 through 
57150);
     The FY 2018 IPPS/LTCH PPS final rule (82 FR 38326 through 
38328 and 38348);
     The FY 2019 IPPS/LTCH PPS final rule (83 FR 41538 through 
41609);
     The FY 2020 IPPS/LTCH PPS final rule (84 FR 42448 through 
42509);
     The FY 2021 IPPS/LTCH PPS final rule (85 FR 58926 through 
58959);
     The FY 2022 IPPS/LTCH PPS final rule (86 FR 45360 through 
45426);
     The FY 2023 IPPS/LTCH PPS final rule (87 FR 49190 through 
49310); and
     The FY 2024 IPPS/LTCH PPS final rule (88 FR 59144 through 
59203).
    We also refer readers to 42 CFR 412.140 for Hospital IQR Program 
regulations and the FY 2025 IPPS/LTCH PPS proposed rule published on 
May 2, 2024 (89 FR 36306 through 36341).

B. Proposed Update to the Form, Time, and Manner Requirements for the 
Hybrid Hospital-Wide All-Cause Readmission (HWR) and Hybrid Hospital-
Wide All-Cause Risk Standardized Mortality (HWM) Measures for the FY 
2026 Payment Determination

1. Background of the Hybrid HWR and Hybrid HWM Measures in the Hospital 
IQR Program
    The Hospital IQR Program previously adopted two hybrid measures: 
(1) the Hybrid Hospital-Wide Readmission (HWR) measure; and (2) the 
Hybrid Hospital-Wide All-Cause Risk Standardized Mortality (HWM) 
measure. Hybrid measures use more than one data source for measure 
calculation; specifically for the Hybrid HWR and Hybrid HWM measures, 
they use core clinical data elements (CCDEs), linking variables, and 
claims data (80 FR 49698). CCDEs are a set of clinical variables 
derived from electronic health records (EHRs) that can be used to risk 
adjust hospital outcome measures (80 FR 49699). Linking variables are 
administrative data that can be used to link or merge the CCDEs and 
administrative claims data for measure calculation (80 FR 49703). These 
measures are designed to enhance risk adjustment of administrative 
claims-based outcome measures by utilizing patient clinical data 
captured in EHRs (80 FR 49698).
    We initially solicited public comment on the potential future 
adoption of hybrid measures into the Hospital IQR Program in the FY 
2016 IPPS/LTCH PPS final rule adoption (80 FR 49698 through 49704). In 
subsequent years, we adopted both the Hybrid HWR measure and the Hybrid 
HWM measure with initial voluntary reporting periods. A discussion of 
the measure history for both measures follows.
    The Hybrid HWR was the first hybrid measure introduced into the 
Hospital IQR Program. The Hybrid HWR measure is designed to capture all 
unplanned readmissions that arise from acute clinical events requiring 
urgent rehospitalization within 30 days of discharge. The measure was 
adopted in a stepwise fashion starting with voluntary reporting 
periods. In the FY 2018 IPPS/LTCH PPS final rule, we finalized 6 months 
of voluntary reporting for the CY 2018 reporting period (82 FR 38350 
through 38355). In the FY 2020 IPPS/LTCH PPS final rule, we finalized 2 
additional years of voluntary reporting, followed by mandatory 
reporting impacting the FY 2026 payment determination (84 FR 42465 
through 42479). Then, in the FY2024 IPPS/LTCH PPS final rule, we 
modified the Hybrid HWR measure cohort to include both Medicare fee-
for-service (FFS) patients and Medicare Advantage (MA) patients 65 
years and older for the FY 2027 payment determination and for 
subsequent years (88 FR 59161 through 59168).
    The Hybrid HWM measure was the second hybrid measure to be adopted 
into the Hospital IQR Program. The Hybrid HWM measure is an outcome 
measure that captures the hospital-level, risk-standardized mortality 
rate (RSMR) of unplanned, all-cause mortality within 30 days of 
hospital admission for any eligible condition. Similar to the Hybrid 
HWR measure, we adopted the Hybrid HWM measure in a stepwise fashion, 
starting with a period of voluntary reporting. We initially adopted the 
Hybrid HWM measure in the FY 2022 IPPS/LTCH PPS final rule and 
finalized one voluntary reporting period followed by mandatory 
reporting impacting the FY 2026 payment determination (86 FR 45365 
through 45374). Then in the FY 2024 IPPS/LTCH PPS final rule, we 
modified the Hybrid HWM measure cohort to include both Medicare fee-
for-service (FFS) patients and Medicare Advantage (MA) patients 65 to 
94 years old for the FY 2027 payment determination and for subsequent 
years (88 FR 59161 through 59168).
    As previously noted, these hybrid measures use data from claims in 
combination with CCDEs and linking variables pulled from hospital EHRs. 
We require that hospitals submit linking variables on 95 percent of 
hospital discharges (84 FR 42470; 86 FR 45371). The previously 
finalized linking variables are: (1) CMS Certification Number; (2) 
Health and Insurance Claims Number or Medicare Beneficiary Identifier; 
(3) Date of Birth; (4) Sex; (5) Admission date; and (6) Discharge date 
(84 FR 42469; 86 FR 45371). The previously finalized CCDEs are vital 
signs and laboratory results (84 FR 42469; 86 FR 45371). We also 
previously finalized that hospitals would be required to report CCDEs 
on 90 percent of discharges in a given reporting period (84 FR 42469; 
86 FR 45371). These submission requirements were finalized beginning 
with mandatory reporting for the FY 2026 payment determination (84 FR 
42469 through 42470; 86 FR 45371). We refer readers to the FY 2020 
IPPS/LTCH PPS final rule (84 FR 42465 through 42479) and FY 2022 IPPS/
LTCH PPS final rule (86 FR 45365 through 45374) for more information 
regarding data sources, measure calculation, and risk adjustment 
requirements. We also refer readers to the FY 2020 IPPS/LTCH PPS final 
rule (84 FR 42506 through 42508), the FY 2021 IPPS/LTCH PPS final rule 
(85 FR 58941), the CY 2021 PFS final rule (85 FR 84472), and the FY 
2022 IPPS/LTCH PPS final rule (86 FR 45421) for our previously adopted 
policies regarding certification, file format, and data submission 
requirements for hybrid measures in the Hospital IQR Program. For both 
hybrid measures, hospitals are currently required to submit data for 
the mandatory reporting period impacting the FY 2026 payment 
determination, based on performance data from July 1, 2023 through June 
30, 2024, by October 1, 2024 (86 FR 45370).
    Under our stepwise approach when we adopted the hybrid measures, we 
finalized that data collected during the voluntary reporting periods 
would not be publicly reported (84 FR 42470; 86 FR 45371). We also 
finalized that we would begin public reporting of both hybrid measures' 
results, beginning with data collected from the July 1, 2023 through 
June 30, 2024 reporting period, impacting the FY 2026 payment 
determination (84 FR 42470 through 42471; 86 FR 45371).
2. Proposal To Extend Voluntary Reporting of CCDE and Linking Variable 
Data for the Hybrid HWR and Hybrid HWM Measures
    Based on hospital performance during the most recent voluntary 
reporting period, it appears that hospitals are unprepared for 
mandatory reporting of the Hybrid HWR and Hybrid HWM measures. As a 
part of measure maintenance, we routinely monitor hospital performance 
on the Hospital IQR Program's measures. We have been closely monitoring 
the results of

[[Page 59502]]

voluntary reporting for both hybrid measures, including most recently 
the results of the second voluntary period for Hybrid HWR and the first 
voluntary period for Hybrid HWM. During these periods, approximately 
one-third of IPPS hospitals participated. The data currently indicate 
that three-fourths of the participating hospitals would not have met 
the reporting thresholds for the CCDEs and linking variables if the 
reporting requirement had been mandatory, and accordingly, would have 
been subject to a one quarter reduction to their annual payment update 
under the Hospital IQR Program for the given fiscal year.
    The hospitals that participated in the voluntary reporting were 
mostly large, non-rural, non-critical access, and non-safety net. Based 
on our experience with implementing new types of digital measures, we 
understand that small and rural hospitals, as well as hospitals with 
fewer financial resources, may need additional time and flexibility to 
successfully implement new measure reporting requirements relative to 
larger, non-rural hospitals (82 FR 38357). We therefore believe the 
reporting failure rate may have been even higher if all IPPS hospitals 
participated.
    In addition, we received feedback from hospitals (via email and 
help desk questions) raising various issues with reporting including 
issues related to CCDE collection timing and clinical workflow, issues 
with the types of units required for CCDE values, and achievability of 
the data submission requirement thresholds. We are investigating 
whether any of these issues or any other issues may be making it 
difficult for hospitals to meet CCDE and linking variable thresholds 
(that is, of 90 percent and 95 percent, respectively, of hospital 
discharges), and need additional time to analyze and identify the root 
cause of these challenges.
    We appreciate that, in light of the information discussed above, 
hospitals participating in the Hospital IQR Program may need an 
additional year to remediate the issues and develop experience with 
reporting of CCDEs and linking variables before being subject to the 
associated program payment adjustments for noncompliance. We therefore 
propose that for the FY 2026 payment determination (based on 
performance data from July 1, 2023 through June 30, 2024), the 
submission of CCDEs and linking variables would remain voluntary. We 
propose that for the FY 2027 payment determination and subsequent 
years, the submission of CCDEs and linking variables become mandatory.
    Under our proposal, a hospital's annual payment determination for 
FY 2026 would not be affected by the voluntary reporting of CCDEs and 
linking variables, although we would still evaluate and assess the 
claims data portion of these measures. The Hybrid HWR and Hybrid HWM 
measures would be publicly reported based on claims data. This proposal 
would allow the Hospital IQR Program to publicly display hospital 
information on these important clinical areas and provide patients with 
visibility into hospital performance, while providing hospitals with 
more time to improve reporting on CCDEs and linking variables. 
Hospitals would continue to receive confidential hospital-specific 
reports in the Spring as a preview of public reporting. We note that 
the hospital-specific reports would reflect the CCDEs and linking 
variables, should hospitals choose to submit them. We continue to 
evaluate potential changes to the reporting requirements related to 
CCDEs and linking variables.
    We invite public comment on our proposal to continue voluntary 
reporting of the CCDEs and linking variables for both the Hybrid HWR 
and Hybrid HWM measures, for the performance period of July 1, 2023 
through June 30, 2024, impacting the FY 2026 payment determination for 
the Hospital IQR Program. We specifically request feedback regarding 
the difficulties hospitals have in meeting the thresholds and any 
recommendations hospitals may have based on their experiences reporting 
on hybrid measures.

XXIII. Individuals Currently or Formerly in the Custody of Penal 
Authorities

A. Medicare FFS No Legal Obligation To Pay Payment Exclusion and 
Incarceration (revisions to 42 CFR 411.4)

1. Background
    Section 1862(a)(2) of the Act prohibits Medicare payment under Part 
A or Part B for any expenses incurred for items or services for which 
the individual furnished such items or services has no legal obligation 
to pay, and which no other person (by reason of such individual's 
membership in a prepayment plan or otherwise) has a legal obligation to 
provide or pay for, except in the case of Federally qualified health 
center services. We refer to this payment exclusion as the ``no legal 
obligation to pay'' payment exclusion. The no legal obligation to pay 
payment exclusion is codified in regulation at Sec.  411.4. The 
regulatory exclusion includes a general rule at Sec.  411.4(a) that 
applies to all services (except as provided in Sec.  411.8(b)) and a 
special condition at Sec.  411.4(b) for services furnished to 
individuals in custody of penal authorities.
    In the 1989 final rule establishing the special condition at Sec.  
411.4(b) for services furnished to individuals in custody of penal 
authorities, we explained that the purpose of Sec.  411.4(b) is to 
clarify how the no legal obligation to pay payment exclusion applies to 
services furnished to prisoners (see 54 FR 41716, 41723 (Oct. 11, 
1989)) (``1989 final rule''). We explained that prisoners generally 
have the status of public charges and, as such, have no obligation to 
pay for the medical care they receive. Consequently, under the 
statutory no legal obligation to pay payment exclusion, Medicare is 
prohibited for paying for such care. We noted, however, that in certain 
circumstances prisoners could have a legal obligation to pay for health 
care items or services they receive, and in such circumstances, 
Medicare may pay for the items or services.
    As finalized in the 1989 final rule, the special rule at Sec.  
411.4(b) specifies the conditions that must be satisfied to establish 
that a prisoner has a legal obligation to pay for health care items or 
services, and thus that Medicare may pay for such items or services. 
Specifically, Sec.  411.4(b) provides that Medicare may pay for 
services furnished to individuals in custody of police or other penal 
authorities or in the custody of a government agency under a penal 
statute only if the following conditions are met: (1) State or local 
law must require individuals in custody to repay the cost of the 
medical services they receive while in custody; and (2) the State or 
local government must enforce the requirement to pay by billing all 
such individuals, whether or not covered by Medicare or any other 
health insurance, and by pursuing collection of the amounts they owe in 
the same way and with the same vigor that it pursues the collection of 
other debts.
    In 2007, we added a definition of ``custody'' to the special 
condition at Sec.  411.4(b) for services furnished to individuals in 
custody of penal authorities (see 72 FR 47130, 47405 through 47406 
(Aug. 22, 2007)) (``2007 final rule''). We noted that CMS would not 
defer to a particular State or local government's definition or 
interpretation of what constitutes ``custody.'' Instead, we adopted a 
definition of ``custody'' that is consistent with how the term has been 
defined by Federal courts for purposes of the habeas corpus protections 
of the U.S. Constitution. As finalized,

[[Page 59503]]

Sec.  411.4(b) provides that individuals who are in custody include, 
but are not limited to, individuals who are under arrest, incarcerated, 
imprisoned, escaped from confinement, under supervised release, on 
medical furlough, required to reside in mental health facilities, 
required to reside in halfway houses, required to live under home 
detention, or confined completely or partially in any way under a penal 
statute or rule. We explained that, under this description, individuals 
who are on parole, probation, bail, or supervised release may be in 
custody for purposes of the payment exclusion. We also stressed that 
individuals who are under supervised release for the purpose of 
receiving medical services on so-called ``medical furlough,'' and who 
are required to return to a State or local government facility after 
the medical services are furnished, are considered to be in custody for 
purposes of the no legal obligation to pay payment exclusion.
    In the 2007 final rule, we responded to several commenters who 
objected to the breadth of the definition of custody that we adopted. 
The commenters maintained that the policy would place an unreasonable 
burden on hospitals, because hospitals often have no means of 
identifying whether an individual is in custody for purposes of Sec.  
411.4(b) if the individual is not physically confined in a correctional 
facility or brought to the hospital by government authorities. Another 
commenter added that a hospital has no way of knowing whether an 
individual who is in custody for purposes of Sec.  411.4(b) has a legal 
obligation to pay for his or her medical care. In response, we stated 
that hospitals are not required to seek criminal histories or do 
background checks on all patients being registered. We explained that, 
if Medicare denies payment because the individual receiving care is in 
custody of penal authorities, the provider or supplier will be directed 
to seek payment from the State or local government that has custody of 
the individual. We concluded that, if the State or local government 
believes in such circumstances that it is not responsible for the care 
provided to the individual, it should be prepared to prove to Medicare 
either that the individual would not be considered to be in custody 
under Federal habeas corpus law or that the State or local government 
has no legal obligation to pay for the services because the conditions 
in Sec.  411.4(b)(1) and (b)(2) are satisfied.
    There have been no further revisions to Sec.  411.4 since it was 
revised in 2007.
2. Proposal
a. Overview of Proposed Changes
    The special condition at Sec.  411.4(b) for services furnished to 
individuals in custody of penal authorities operates as a rebuttable 
presumption. The presumption is that individuals who are in custody, as 
the term is described in Sec.  411.4(b), have no legal obligation to 
pay for health care items or services they receive while in custody; 
therefore, Medicare is prohibited from paying for such health care 
items or services under the no legal obligation to pay payment 
exclusion. The presumption can be rebutted by a showing that: (1) the 
State or local government requires individuals in custody to repay the 
cost of the medical services they receive while in custody; and (2) the 
State or local government enforces the requirement to pay by billing 
all such individuals, whether or not covered by Medicare or any other 
health insurance, and by pursuing collection of the amounts they owe in 
the same way and with the same vigor that it pursues the collection of 
other debts.
    We propose to narrow the description of ``custody'' in Sec.  
411.4(b), because, as explained in greater detail below, we no longer 
believe that certain classes of individuals should be presumed to be in 
custody for purposes of the no legal obligation to pay payment 
exclusion. Specifically, we propose to remove individuals who are under 
supervised release or required to live under home detention from the 
description of ``custody'' in Sec.  411.4(b), and we propose to strike 
the phrase ``or confined completely or partially in any way under a 
penal statute or rule.'' We are also seeking comments on a proposal, 
described in greater detail below, to determine when individuals who 
are required to reside in halfway houses should be considered to be in 
custody for purposes of the no legal obligation to pay payment 
exclusion.
    In addition to the proposed changes to the description of 
``custody,'' we are also taking this opportunity to reorganize and 
renumber the regulation at Sec.  411.4(b). Currently, Sec.  411.4(b) 
includes both a description of ``custody'' and a statement of the 
conditions that must be satisfied for payment to be made under Medicare 
for items or services furnished to individuals in custody of penal 
authorities. Our proposed reorganization would separately codify the 
description of ``custody'' and the special conditions for payments. 
Specifically, at proposed Sec. Sec.  411.4(b)(1)(i) through 
411.4(b)(1)(iii), we propose to state the conditions that must be 
satisfied for Medicare to pay for items or services furnished to an 
individual in custody of penal authorities; we also propose certain 
non-substantive edits to the regulatory language adopted from current 
Sec.  411.4(b). At proposed Sec.  411.4(b)(2), we propose a definition 
of ``penal authority'' that would apply generally to Sec.  411.4(b). At 
Sec.  411.4(b)(3), we propose a description of ``custody'' that is 
narrower in scope than the current description.
    In addition to these proposed changes, which are discussed in 
greater detail below, we are making certain non-substantive edits to 
Sec.  411.4(a) to align the regulatory text with the statutory no legal 
obligation to pay payment exclusion at section 1862(a)(2) of the Act. 
Specifically, where the statute refers to items and services, the 
current regulation refers only to services; consistent with the 
statute, we propose to refer to both items and services in the 
regulatory text. We are also adding a reference to Federally Qualified 
Health Center services at Sec.  411.4(a) to align with the statute. The 
regulatory text at Sec.  411.4(a)(2) currently states that no other 
person or organization has a legal obligation to pay, whereas the 
statute refers only to a person; we propose to delete ``organization'' 
from the regulation because the term ``person'' includes both natural 
and non-natural persons, and the term ``organization'' is therefore 
superfluous. We also propose to align the parenthetical in Sec.  
411.4(a)(2) with the statutory parenthetical and to replace the term 
``beneficiary'' in Sec. Sec.  411.4(a)(1) and 411.4(a)(2) with 
``individual,'' to align with section 1862(a)(2) of the Act.
    We also propose to redesignate the special conditions that are 
specified in Sec. Sec.  411.4(b)(1) and 411.4(b)(2) as Sec. Sec.  
411.4(b)(1)(i) through 411.4(b)(1)(iii). Under the proposal, the 
rebuttable presumption in Sec.  411.4(b)(1) would apply to all items or 
services furnished to individuals in custody of penal authorities, 
regardless of who provides the items or services. We are seeking 
comments on whether the scope of the rebuttable presumption in proposed 
Sec.  411.4.(b)(1) should be limited to items or services furnished by 
the penal authority or by a third party with which the penal authority 
has arranged to provide the items or services. Were we to limit the 
scope of the rebuttable presumption in this way, the rebuttable 
presumption in proposed Sec.  411.4(b)(1) would not apply to items or 
services furnished to individuals in custody of penal authorities by 
third parties who do not have an arrangement or contract

[[Page 59504]]

with the penal authority to provide the items or services. We are also 
seeking comments on whether individuals in custody of penal authorities 
are permitted to arrange for their own health care with third parties 
who do not have an agreement with the penal authority to provide the 
items or services.
    Lastly, we propose at proposed Sec.  411.4(b)(3)(v) to clarify that 
an individual who is required to reside in a mental health facility 
would only be considered to be in custody under the no legal obligation 
to pay payment exclusion if the individual is required to reside in 
such a facility under a penal statute or rule.
b. Description of ``Custody''--Proposed Sec.  411.4(b)(3)
    We propose to redesignate the description of ``custody'' as Sec.  
411.4(b)(3), to remove individuals who are on supervised release and 
home detention from the current description of ``custody,'' and to 
strike the phrase ``completely or partially in any way under a penal 
statute or rule.'' (We are also seeking comments on a separate proposal 
for individuals residing in halfway houses; this proposal is discussed 
below at section c.) Under the proposal, individuals who have been 
lawfully released from confinement in jail, prison, penitentiary, or 
similar institution, or released following arrest (that is, the 
individuals are no longer physically detained by law enforcement or 
penal authorities) on bail, parole, probation, or home detention would 
not be presumed to be in custody for purposes of the no legal 
obligation to pay payment exclusion, even if such individuals are 
required to return to jail, prison, penitentiary, or similar 
institution at some later time (for example, due to conviction or 
failure to satisfy the conditions of their supervised release). 
However, individuals who are on ``medical furlough'' or similar 
arrangements (that is, the individuals are under the control of law 
enforcement or penal authorities and required to return to jail or 
prison after medical services have been provided) would still be 
considered in custody for purposes of Sec.  411.4(b)(3). Given the 
differences in terminology used by various Federal, State, and local 
government penal authorities to refer to different levels of control 
and confinement in the criminal justice system, we are seeking comments 
on the appropriateness of the terminology in the existing description 
of ``custody'' in our regulations and whether additional or different 
terminology should be incorporated in the description of ``custody'' at 
Sec.  411.4(b)(3) in the final rule. We are also seeking comment on 
whether we should explicitly state in regulatory text that individuals 
on bail, parole, probation, or home confinement are not considered to 
be in custody for purposes of proposed Sec.  411.4(b).
    We propose to narrow the description of custody in Sec.  
411.4(b)(3) for several reasons. First, we believe that individuals who 
have been released from jail or prison on bail, parole, probation, or 
home detention typically have a legal obligation to pay for the health 
care items or services they receive. We do not believe that such 
individuals have the status of public charges, and we do not believe 
that Federal, State, or local government law enforcement or penal 
authorities are typically responsible for providing for the health care 
of such individuals. Therefore, we no longer believe that such 
individuals (and the providers and suppliers who furnish services to 
them) should have the burden to prove that the special conditions in 
existing Sec. Sec.  411.4(b)(1) and 411.4(b)(2) have been satisfied in 
order to receive payment from Medicare. We are seeking specific, 
detailed comments on the circumstances in which individuals who have 
been released from incarceration on bail, parole, probation, or home 
detention have a legal obligation to pay for some or all of the health 
care items or services they receive. We are also seeking comment on 
what specific health care items or services, if any, are typically 
furnished by Federal, State, or local governments at no cost to 
individuals who have been released from jail or prison on bail, parole, 
probation, or home detention.
    We also propose to narrow the description of ``custody'' in Sec.  
411.4(b) to remove barriers to access to Medicare by individuals who 
are returning to the community after incarceration. According to 
advocates, confusion about the applicability of the payment exclusion 
has led individuals released from incarceration to not apply for 
Medicare, even if they are eligible, or to apply only for Medicaid, 
because they believe that Medicare will not pay for items or services 
that they receive under the payment exclusion. Advocates have also 
maintained that certain providers or suppliers may be hesitant or 
refuse to treat individuals who are on bail, parole, probation, or home 
detention because the providers or suppliers believe that Medicare 
payment is not available for items or services provided to such 
individuals. As a result, such individuals may delay or forgo necessary 
treatment, including treatment for substance use disorders, upon 
release from incarceration. The proposed changes to the description of 
``custody'' would clarify that Medicare may pay for health care items 
and services furnished to an individual while on bail, parole, 
probation, or home detention, provided the individual has a legal 
obligation to pay for such items or services, without having to prove 
that the special conditions in Sec.  411.4(b)(1) have been satisfied. 
(See section XII.2 of this proposed rule for a discussion of proposed 
modifications to the special enrollment periods (SEP) for formerly 
incarcerated individuals under Sec. Sec.  406.27(d) and 407.23(d) that 
would also increase access to Medicare for individuals returning to the 
community from incarceration.)
    Finally, our proposal to narrow the description of ``custody'' in 
Sec.  411.4(b) would bring the Medicare no legal obligation to pay 
payment exclusion into greater alignment with certain related Social 
Security and Medicaid provisions. CMS relies on data provided by the 
Social Security Administration to identify individuals who are in 
custody of penal authorities. However, under Social Security 
regulations, individuals who are released from incarceration on parole, 
probation, or home detention are generally not considered to be 
confined for purposes of a limitation on payment of certain benefits 
(see section 202(x)(1) of the Social Security Act (42 U.S.C. 402)), and 
the Social Security data does not track such individuals. Our proposal 
to narrow the description of ``custody'' would improve the alignment 
between the no legal obligation to pay regulation at Sec.  411.4(b) and 
the data that is used to help carry out the rule. We note, however, 
that there would still be substantive differences between the Social 
Security definition of ``confinement'' and the proposed description of 
``custody'' at Sec.  411.4(b)(3). Most notably, the Social Security 
Administration suspends benefits if the individual has been convicted 
of a criminal offense and sentenced to a period of confinement, and 
based on that conviction remains confined for more than 30 days. In 
contrast, under proposed Sec.  411.4(b)(3), an individual is considered 
to be in custody of penal authorities for purposes of the Medicare no 
legal obligation to pay payment exclusion if the individual is under 
arrest; confined in jail, prison, penitentiary, or similar institution 
while awaiting trial (that is, the person has not yet been convicted); 
or confined in jail, prison, penitentiary, or similar institution 
following conviction for any period of time,

[[Page 59505]]

including sentences of less than 30 days. We note these differences are 
a result of Medicare's statutory no legal obligation to pay payment 
exclusion. Specifically, we believe that individuals who are confined 
to jail while awaiting trial typically do not have a legal obligation 
to pay for health care items or services. We seek comments on whether 
such individuals confined to jail while awaiting trial typically pay 
for health care items or services they receive or have a legal 
obligation to do so.
    Our proposal to narrow the description of ``custody'' in Sec.  
411.4(b)(3) would also bring the Medicare no legal obligation to pay 
payment exclusion into closer alignment with Medicaid. Under Medicaid 
regulations, Federal Financial Participation (FFP) is not available for 
services provided to individuals who are inmates of public institutions 
(see Sec.  435.1009), and an ``inmate of a public institution is 
defined generally as ``a person living in a public institution'' (see 
Sec.  435.1010). According to Medicaid State Health Official Letter 
(SHO) # 16-007, however, individuals who are on parole, probation, or 
home confinement are generally not considered to be inmates for 
purposes of Medicaid (see SHO # 16-007 (RE: To facilitate successful 
re-entry for individuals transitioning from incarceration to their 
communities) (April 28, 2016)). By no longer including such individuals 
in the Medicare description of ``custody'' at Sec.  411.4(b)(3), our 
proposal would improve dually eligible individuals' access to both 
Medicare and, potentially, Medicaid, including accessing benefits for 
already-enrolled individual. For example, advocates have shared 
anecdotally that some Medicaid agencies automatically suspend payment 
for services to an individual whose Medicare benefits are suspended due 
to a presumption that the individual is in custody. In addition, 
according to advocates, some individuals who are recently released from 
jail or prison on bail, parole, probation, or home detention have only 
enrolled in Medicaid, because they believe, even where they have a 
legal obligation to pay, that Medicare will not pay for their health 
care under the no legal obligation to pay payment exclusion. Our 
proposal to narrow the description of ``custody'' in Sec.  411.4(b)(3) 
is intended to remove this real or perceived barrier to Medicare 
access.
    We caution that, even if we finalize the proposed modification of 
the description of ``custody'' in Sec.  411.4(b)(3), the generally 
applicable no legal obligation to pay payment exclusion at Sec.  
411.4(a) would continue to apply to services furnished to individuals 
on bail, parole, probation, or home detention in the same way it 
applies to any other Medicare beneficiary who receives an item or 
service where there is no legal obligation to pay. The no legal 
obligation to pay payment exclusion in Sec.  411.4(a) is a general rule 
that is applicable to all health care items or services (except 
Federally qualified health center services and as provided in Sec.  
411.8(b)) received by any Medicare beneficiary, regardless of whether 
the individual is in custody of penal authorities. Nothing in the 
proposed modification of the special condition at Sec.  411.4(b) would 
affect the scope of the general rule at Sec.  411.4(a). Thus, if an 
individual on bail, parole, probation, or home detention has no legal 
obligation to pay for a health care item or service, the general rule 
at Sec.  411.4(a) would continue to prohibit Medicare from paying for 
such a service, regardless of the scope of the description of 
``custody'' in Sec.  411.4(b)(3). For example, if a State or local 
government requires substance use disorder counseling as a condition of 
parole, and the State or local government does not charge all parolees 
for such services, then the parolee has no legal obligation to pay for 
such service under Sec.  411.4(a); therefore, Medicare is prohibited 
under Sec.  411.4(a) from paying for the service. We are seeking 
comments on what types of medically necessary health care items or 
services, if any, are typically provided at no cost to individuals on 
parole, probation, or home detention.
c. Halfway Houses
    According to the National Institute of Justice (NIJ), a research, 
development, and evaluation agency of the U.S. Department of Justice, 
the term ``halfway house'' usually refers to temporary housing, 
provided in a community-based residential facility, which uses around-
the-clock supervision and offers services to assist with the transition 
from incarceration to the community (see https://crimesolutions.ojp.gov/ratedpractices/90#1-0). The NIJ notes that, 
although the degree to which services are provided to residents varies 
significantly among halfway house programs, the following 
characteristics are common to most halfway houses: (1) constant 
supervision and daily contact between staff and returning individuals; 
(2) a requirement for participants to abide by rules (such as curfews 
and drug testing); and (3) access to employment, education, life skills 
training, and additional services as needed (such as substance use 
disorder treatment and counseling).
    As the name suggests, halfway houses occupy a middle ground between 
complete custodial incarceration and unconditional release, and there 
appears to be wide variation in the degree of control exercised over 
halfway house residents in various State, local, and Federal 
facilities. We are therefore soliciting comments on whether halfway 
house residents typically have a legal obligation to pay for health 
care items and services, and if so, to what extent (that is, do they 
have a legal obligation to pay for all or most health care items or 
services, or only certain items or services) and under what conditions. 
In particular, we are interested in receiving detailed comments, with 
examples as appropriate, focusing specifically on the legal obligation 
that halfway house residents have to pay for the health care items and 
services they receive.
    To provide greater focus for our comment solicitation on halfway 
houses, we propose regulatory text at Sec.  411.4(b)(3)(vi) that is 
drawn from the Medicaid payment exclusion rule at Sec.  435.1009. As 
explained in SHO # 16-007, FFP is available for services furnished to 
Medicaid-eligible individuals living in halfway houses, provided the 
following conditions are met: (1) residents are not precluded from 
working outside the facility in employment available to individuals who 
are not under justice system supervision; (2) residents can use 
community resources (libraries, grocery stores, recreation, education, 
etc.) at will; and (3) residents can seek health care treatment in the 
broader community to the same or similar extent as other Medicaid 
enrollees in the state. SHO # 16-007 adds that ``at will'' is 
consistent with certain house rule restrictions and travel limitations, 
and stipulates that the State Medicaid agency must ensure that the 
halfway house meets the requirements enumerated above.
    Consistent with Medicaid guidance, we propose at Sec.  
411.4(b)(3)(vi) to consider an individual to be in custody for purposes 
of the special condition for payment at Sec.  411.4(b) if the 
individual is required to reside in a halfway house under any of the 
following conditions: residents are precluded from working outside the 
facility in employment that is available to individuals who are not 
under penal authority supervision; residents may not use community 
resources (for example, libraries, grocery stores, recreation, or 
educational institutions) at will; or residents may not seek health 
care items and services

[[Page 59506]]

in the broader community to the same or similar extent as individuals 
who are not under penal authority supervision. Like Medicaid, we would 
interpret ``at will'' to be consistent with certain house rule 
restrictions and travel limitations. Our proposal to align the Medicare 
no legal obligation to pay payment exclusion at Sec.  411.4(b) with 
Medicaid guidance would facilitate access to Medicare for dually 
eligible individuals returning to the community from incarceration and 
residing in halfway houses.
    Consistent with our discussion above regarding bail, parole, 
probation, and home detention, we note that the general no legal 
obligation to pay payment exclusion at Sec.  411.4(a) would continue to 
apply to services furnished to individuals in halfway houses even if 
those individuals do not meet any of the conditions in proposed Sec.  
411.4(b)(3)(vi) and thus are not considered to be in custody for 
purposes of Sec.  411.4(b). If an individual has no legal obligation to 
pay for a health care item or service, then Medicare may not pay for 
the item or service.
    We are seeking comments on whether individuals who reside in 
halfway houses under the conditions described in proposed Sec.  
411.4(b)(3)(vi) typically do not have a legal obligation to pay for 
health care items or services, or whether fewer, other, or additional 
factors compared to the factors described in the proposal would form a 
more appropriate basis for a presumption that the individual is in 
custody and has no legal obligation to pay for health care items or 
services.
d. Definition of Penal Authority--Proposed Sec.  411.4(b)(2)
    As noted above, we propose to reorganize Sec.  411.4(b) to 
separately codify the special conditions under which payment may be for 
items or services provided to an individual in custody at Sec. Sec.  
411.4(b)(1)(i) through 411.4(b)(1)(iii) and the description of 
``custody'' at Sec.  411.4(b)(3). We also propose to define ``penal 
authority'' at Sec.  411.4(b)(2) as a police department or other law 
enforcement agency, a government agency operating under a penal 
statute, or a State, local or Federal jail, prison, penitentiary, or 
similar institution. We are aware that private contractors in some 
circumstances may be responsible for operating certain penal 
institutions or halfway houses, and we are seeking comment on whether 
such contractors should explicitly be included in the proposed 
definition of ``penal authority.'' The proposed definition is intended 
to be broad enough to include all agencies or institutions that might 
place or hold an individual in custody, as the term is described at 
proposed Sec.  411.4(b)(3), regardless of whether the individual has 
been convicted of a crime. We are aware that the term ``penal 
authority'' does not appear to be commonly used outside of the Medicare 
context. We are seeking comments on whether other terminology would be 
more appropriate or would align more closely with terms commonly used 
in the criminal justice system. We are also seeking comments on whether 
the proposed definition of ``penal authority'' is too broad or narrow 
for purposes of the no legal obligation to pay payment exclusion.

B. Revision to Medicare Special Enrollment Period for Formerly 
Incarcerated Individuals

1. Background
    The Consolidated Appropriations Act, 2021 provided the authority to 
establish Medicare Part A and B special enrollment periods (SEP) for 
individuals due to exceptional conditions. In the final rule titled 
``Medicare Program; Implementing Certain Provisions of the Consolidated 
Appropriations Act, 2021 and Other Revisions to Medicare Enrollment and 
Eligibility Rules'' which appeared in the Federal Register on November 
3, 2022 (87 FR 66454), CMS used this authority to establish an SEP for 
formerly incarcerated individuals. Individuals who use this SEP are 
able to enroll in Medicare Premium Part A and Part B and avoid 
potential gaps in coverage and late enrollment penalties (LEPs). As 
established in Sec. Sec.  406.27(d)(1) and 407.23(d)(1), an individual 
is eligible to enroll in Medicare Parts A and/or B using this SEP so 
long as they demonstrate that they are eligible for Medicare and failed 
to enroll or reenroll in Parts A and/or B due to being in custody of 
penal authorities, and there is a record of release either through 
discharge documents or data available to the Social Security 
Administration (SSA). The SEP provisions at Sec. Sec.  406.27(d) and 
407.23(d) incorporate the description of `in custody of penal 
authorities' from the payment exclusion parameters already established 
in Sec.  411.4(b). In the November 2022 final rule, we stated that it 
was important to align the scope of the SEP with the scope of 
individuals specified in Sec.  411.4(b) as individuals in custody of 
penal authorities; alignment with Sec.  411.4(b) provides a measure of 
assurance that individuals who are no longer subject to the payment 
exclusion are able to enroll in Medicare (Part B and, if necessary, 
premium Part A). We also noted that we would continue to assess the 
impact of alignment of the SEP with the scope of the payment exclusion. 
(87 FR 66464).
2. Proposal
    Section 202 of the Act generally provides the basis for SSA to 
determine an individual's eligibility for old age, survivors, and 
disability insurance (OASDI) benefits, also known as social security 
benefits, under Title II of the Act. For most Medicare beneficiaries, 
entitlement to Medicare Part A is based on entitlement to OASDI 
benefits under Title II per section 226 of the Act.\517\ In addition, 
the SSA is responsible for determining entitlement to Part A and 
eligibility for Part B of Medicare. (See Pub. L. 103-296, sec. 105.) 
Section 202(x) of the Act suspends payment of OASDI benefits to 
prisoners, certain other inmates of publicly funded institutions, 
fugitives, probationers, and parolees, including when an individual is 
confined in a jail, prison, or other penal institution or correctional 
facility pursuant to conviction of a criminal offense for a period of 
more than 30 days. We propose to amend the SEP at Sec. Sec.  
406.27(d)(1) and 407.23(d)(1) to align the SEP triggering event more 
closely with the bases on which an individual's OASDI benefit is 
reinstated or initiated rather than on the scope of the Medicare 
payment exclusion in Sec.  411.4(b). We believe that these proposed 
amendments would streamline the administrative process for determining 
an individual eligible for this SEP and align eligibility for this SEP 
with an individual's obligation and ability to pay for services that 
would otherwise be covered by Medicare. Furthermore, we believe that 
the alignment of this SEP with the initiation or reinstatement of OASDI 
benefits is appropriate, as it allows a population facing many 
challenges reintegrating into society to enroll or reenroll in Medicare 
by having premiums deducted from their OASDI benefits, rather than 
paying out of pocket.
---------------------------------------------------------------------------

    \517\ For more detailed information about entitlement and 
eligibility for Medicare, please refer to sections 226, 226A, 1818, 
1818A, 1836, and 1881A of the Act and 42 CFR parts 406 and 407.
---------------------------------------------------------------------------

    The proposed amendments to Sec.  411.4(b), discussed in section 
XXIII.A of this proposed rule, would narrow the list of settings where 
an individual is presumed to have no obligation to pay for Medicare-
covered items and services--and, thus, Medicare is prohibited from 
paying for those services--because the individual is in custody of a 
penal authority. The rebuttable presumption at Sec.  411.4(b) provides 
the individual an opportunity

[[Page 59507]]

to indicate to CMS that the other entity did not cover certain items or 
services and ask that Medicare provide payment, but this option is moot 
if the individual is not able to enroll in Medicare. (See section 
XXIII.A of this proposed rule for more information about the rebuttable 
presumption and operation of the payment exclusion.) Under the current 
version of this SEP, beneficiary advocate groups raised concerns about 
the possibility for scenarios where an individual is not able to enroll 
when their items and services could be covered by Medicare, or they are 
able to enroll (and pay monthly premiums) but Medicare is not able to 
pay for their services.
    In making determinations about the suspension of OASDI benefits due 
to an individual's incarceration, SSA uses data it collects from jails, 
prisons, other penal institutions or correctional facilities and 
certain mental health institutions regarding individuals confined in 
those and similar institutions for the reasons outlined in section 
202(x)(1)(A) of the Act. See SSA System of Records Notice: Prisoner 
Update Processing System 60-0269, at 64 FR 11076 (Mar. 8, 1999) and 
updated at 72 FR 69723 (Dec. 10, 2007), 78 FR 40542 (Jul. 5, 2013) and 
83 FR 54969 (Nov. 1, 2018). However, information about individuals 
within the full scope of the current provisions at Sec.  411.4(b), 
including not only individuals who are confined in certain institutions 
but also individuals who are under arrest but not yet convicted, on 
medical furlough, or residing in half-way houses may not be as 
extensively or reliably available. As a result, making eligibility 
determinations for the SEP for Formerly Incarcerated Individuals as it 
is currently drafted is operationally difficult. In addition, the 
current SEP for Formerly Incarcerated Individuals incorporates the 
rebuttable presumption that is included in Sec.  411.4(b) for 
situations where an individual (or healthcare provider seeking to bill 
Medicare for the services) can demonstrate that state or local law 
requires individuals to repay the cost of medical services while they 
are in custody and the state or local government entity enforces the 
requirement to pay by billing all such individuals, whether or not 
covered by Medicare or any other health insurance, and by pursuing 
collection of the amounts they owe in the same way and with the same 
vigor that it pursues the collection of other debts. However, SSA does 
not have a role in administering the Medicare payment exclusion in 
Sec.  411.4(b). Therefore, there is a high likelihood of potential 
inconsistency and administrative burden with tying the implementation 
of the SEP at Sec. Sec.  406.27(d)(1) and 407.23(d)(1) to the Medicare 
payment exclusion under Sec.  411.4(b). Although the proposed changes 
to Sec.  411.4(b) discussed in section XXIII.A to narrow the scope of 
the payment exclusion would flow through to Sec. Sec.  406.27(d) and 
407.23(d) without amendment to the SEP parameters, we believe that 
addressing the rebuttable presumption and potential administration 
burden is appropriate and will reduce potential confusion.
    Further, since the establishment of the SEP in January 2023, we 
have received feedback that raised concerns about tying SEP eligibility 
to the Medicare payment definition at Sec.  411.4(b) and how SSA has 
begun administering the SEP using the data in SSA's systems. We have 
heard that the SEP eligibility parameters are confusing and potentially 
prevent or discourage eligible individuals from accessing the SEP. 
Conversely, situations may arise in which an individual is enrolled in 
Medicare using the SEP due to SSA data; however, due to the payment 
exclusion and limited exceptions for these settings, claims for health 
care may not be paid even if the specific state or local government 
does not provide health care in this type of setting.
    Under our proposal, we intend that SSA would make a determination 
of an individual's eligibility to enroll using the Medicare SEP at 
Sec. Sec.  406.27(d)(1) and 407.23(d)(1) based on the data SSA collects 
and keeps in its systems for determining OASDI benefit suspensions and 
any additional documentation provided by individuals to demonstrate 
that they have been released from incarceration. By more closely 
aligning the eligibility criteria for the SEP for Formerly Incarcerated 
Individuals with the data used by SSA in applying the OASDI benefit 
suspension requirement in section 202(x)(1)(A) of the Act, we intend 
that the SEP can be more efficiently and accurately administered. With 
the proposed revisions, the SEP at Sec. Sec.  406.27(d) and 407.23(d) 
will provide an opportunity, beginning January 1, 2025, for an 
individual to enroll in Medicare if the individual was released from 
incarceration on or after January 1, 2023, failed to enroll in Medicare 
(Premium Part A or Part B) due to being incarcerated, and is still 
within the 12-month SEP described in Sec. Sec.  406.27(d) and 
407.23(d).
    Overall, we propose to revise the eligibility requirements at 
Sec. Sec.  406.27(d) and 407.23(d), beginning January 1, 2025, to 
remove the use of a release from the ``custody of penal authorities as 
described in Sec.  411.4(b)'' and instead tie the eligibility for this 
SEP to whether an individual is ``released from confinement in a jail, 
prison, or other penal institution or correctional facility,'' which is 
phrasing that is more consistent with section 202(x)(1)(A)(i) of the 
Act. However, we are not proposing that a criminal conviction or formal 
sentencing be required for an individual to have been confined in a 
jail, prison, or other penal institution or correctional facility 
because conviction of crime is not required for the payment exclusion 
in Sec.  411.4(b) to apply. As this differs from the requirements under 
section 202(x)(1)(A) of the Act, we also solicit comment on what 
documentation an individual can provide to demonstrate they were 
confined and released without conviction to determine eligibility for 
the SEP for formerly incarcerated individuals under Sec. Sec.  
406.27(d) and 407.23(d). Further, individuals who have escaped 
confinement are not considered to be ``released'' from confinement. 
Under our proposal, both Sec. Sec.  406.27(d) and 407.23(d) would use 
the terms ``incarcerated'' and ``incarceration'' as a general reference 
for individuals who meet either standard. This proposed change in the 
eligibility criteria for the SEP for Formerly Incarcerated Individuals 
would align more closely with the standards SSA uses to determine 
whether an individual is within the scope of the limitation on payment 
of OASDI benefits established by section 202(x)(1)(A)(i) of the Act.
    In the rulemaking to adopt and finalize Sec. Sec.  406.27(d) and 
407.23(d), we did not fully contemplate the implications of tying the 
SEP's eligibility criteria to the Medicare no legal obligation to pay 
payment exclusion (which includes a rebuttable presumption). A 
rebuttable presumption like the one available under the payment 
exclusion does not work well in enrollment context because although 
payment can be determined at the service level, an enrollment is either 
effectuated or not. It may be that for some services, the presumption 
that the individual has no legal obligation to pay can be rebutted 
while for other services it is not rebutted based on the scope of the 
state or local entity's policies and the individual's (or the 
healthcare providers) ability to provide sufficient evidence. However, 
enrollment in Medicare, including the obligation to pay Medicare 
premiums, would not vary with the specific service. While the proposed 
changes to Sec.  411.4(b) would

[[Page 59508]]

narrow the range of settings in which an individual is presumed to be 
in custody and another entity is responsible for the individual's 
health care coverage, we believe that the proposed revisions to 
Sec. Sec.  406.27(d) and 407.23(d) would best address concerns about 
access to and confusion with the SEP for individuals who have been 
released from incarceration.
    We propose several changes to Sec. Sec.  406.27(d) and 407.23(d) to 
significantly align the SEP eligibility criteria, beginning January 1, 
2025, with the criteria used by SSA to determine whether an individual 
is incarcerated. Throughout, our proposed changes are largely to 
replace references to an individual being in custody of penal 
authorities as described in Sec.  411.4(b) with references to an 
individual's confinement in a jail, prison, or other penal institution 
or correctional facility. First, we propose to amend the introductory 
text in paragraph (d) of both Sec. Sec.  406.27 and 407.23 to state the 
general rule that there is an SEP for Medicare eligible individuals who 
are no longer incarcerated after January 1, 2023. We use 
``incarcerated'' and ``incarceration'' in this introductory language 
and in paragraph (d)(3), respectively, to include both being in custody 
of penal authorities as described in Sec.  411.4(b) (and in the 
proposed revisions to paragraph (d)(1) of each regulation regarding the 
current scope of the SEP) and being confined as described in our 
proposed amendments to paragraph (d)(2) of each regulation. Using the 
term ``incarcerated'' is consistent with how these regulations were 
originally established and leads to more streamlined and less 
repetitive regulation text. We are seeking comments on this proposal, 
especially its implications for people in halfway houses, to ensure 
access to the SEP for formerly incarcerated individuals.
    Second, we propose to reorganize paragraphs (d)(1) and (d)(2) to 
establish the rules for eligibility for and the duration of the SEP for 
releases from incarceration during the periods between (1) January 1, 
2023, through December 31, 2024, and (2) on and after January 1, 2025. 
We propose to revise paragraphs Sec. Sec.  406.27(d)(1) and 
407.23(d)(1) to state the current parameters and duration for the SEP 
that are applicable to releases after January 1, 2023, and before 
January 1, 2025. The current eligibility requirements are proposed to 
be redesignated as paragraph (d)(1)(i) and the current duration of the 
SEP (from current Sec. Sec.  406.27(d)(2) and 407.23(d)(2)) are 
proposed to be redesignated paragraph (d)(1)(ii), with clarifications 
that the date of release is used as part of the eligibility criteria. 
At Sec. Sec.  406.27(d)(2) and 407.23(d)(2) we propose to establish new 
parameters and duration for the SEP that would be applicable beginning 
January 1, 2025. Specifically, we propose at new Sec. Sec.  
406.27(d)(2)(i) and 407.23(d)(2)(i) that an individual released for 
releases that occur on and after January 1, 2025, from confinement in a 
jail, prison, or other penal institution or correctional facility would 
be eligible for the SEP. The existing parameters (currently at 
Sec. Sec.  406.27(d)(1) and 407.23(d)(1)) that the individual must 
demonstrate that they are eligible for Medicare and failed to enroll or 
reenroll due to being incarcerated and there is a record of release 
either through discharge documents or data available to SSA would 
continue to be applicable and are therefore included in proposed 
Sec. Sec.  406.27(d)(2)(i) and 407.23(d)(2)(i). At new Sec. Sec.  
406.27(d)(2)(ii) and 407.23(d)(2)(ii), we propose that beginning 
January 1, 2025, the SEP starts the day an individual is released from 
incarceration as determined by SSA and ends the last day of the 12th 
month after the month in which the individual is released. As noted 
above, individuals who use this SEP are able to enroll in Medicare 
Premium Part A and Part B without LEPs and this would continue to be 
the case whether individual uses this SEP before or after January 1, 
2025.
    Under this proposal, as originally intended with the SEP, 
individuals will have a clearer understanding for how to access this 
enrollment opportunity to ensure they do not have any gaps in coverage 
or any LEPs as they leave incarceration.
3. Technical Corrections
    In the November 2022 final rule that established the SEP for 
formerly incarcerated individuals, we provided at Sec. Sec.  
406.27(d)(3) and 407.23(d)(3) that generally entitlement would begin 
the first day of the month following the month of enrollment. We also 
provided that an individual had the option to choose a retroactive 
entitlement date for a period not to exceed 6 months, provided that the 
individual pays the monthly premiums for the period of coverage. Upon 
further examination of the regulations, we have identified a number of 
technical errors in Sec. Sec.  406.27(d)(3) and 407.23(d)(3) that we 
are taking this opportunity to propose to correct.
    First, the language in Sec.  407.23(d)(3)(ii) states that the 
individual has the option to request entitlement retroactive to the 
date of release from incarceration and this implies that coverage could 
start in the middle of the month. Entitlement for Medicare, regardless 
of the enrollment period being used or whether entitlement is 
prospective or retrospective, always begins on the first day of a 
month. As such, we propose to revise the language above to state that 
coverage could begin retroactive to the beginning of the month of 
release from incarceration. We note that the payment exclusion in Sec.  
411.4(b) may continue to apply to any items and services furnished 
during the period between the first of that month and the actual date 
of release, provided that the individual or other person has no legal 
obligation to pay for such services as articulated in Sec.  411.4(a).
    Second, in Sec. Sec.  406.27(d)(3)(ii) and 407.23(d)(3)(ii), we 
erroneously cited Sec.  406.31 when referencing the requirement for 
individuals to pay monthly premiums for all periods of coverage. We 
propose to correct the reference to Sec.  406.31 in Sec.  
406.27(d)(3)(ii) with Sec.  406.32(f) and the reference in Sec.  
407.23(d)(3)(ii) to Sec.  408.4.
    Third, we also stated at Sec.  407.23(d)(3)(ii) that if the 
individual requests retroactive enrollment and the application is filed 
within the first 6 months of the SEP, the effective date could be 
retroactive to the release from incarceration. If the individual 
requests retroactive enrollment and the application is filed in the 
last 6 months of the SEP, the coverage effective date could be 
retroactive to 6 months after the date of release from incarceration. 
This provision results in the same coverage effective date regardless 
of when the individual applies during the last six months of the SEP, 
which we do not think is consistent with our policy goal of providing 
formerly incarcerated individuals the ability to make the healthcare 
decisions best suited to their needs and provide them the opportunity 
to avoid or minimize gaps of coverage (87 FR 66463). We believe the 
best way to remedy this situation is to link the retroactive period of 
coverage to the date when the individual applies for Medicare coverage, 
not when they are released from incarceration. As such, we propose to 
revise Sec.  407.23(d)(3)(ii) to state that if the individual requests 
retroactive enrollment and the application is filed in the last 6 
months of the SEP, the coverage effective date is retroactive to the 
6th month before the month of enrollment. We believe this proposed 
approach strikes an appropriate balance of reducing gaps in coverage 
without creating excessive (and potentially costly) retroactive periods 
of coverage. We also propose to make similar changes at

[[Page 59509]]

Sec.  406.27(d)(3)(ii) for the sake of consistency and clarity.

XXIV. Overall Hospital Quality Star Rating Modification To Emphasize 
the Safety of Care Measure Group: Request for Information (RFI)

A. Summary

    We seek public input on potential methodologic modifications 
regarding the Safety of Care measure group within the Overall Hospital 
Quality Star Rating published on the provider comparison tool on 
Medicare.gov (https://www.medicare.gov/care-compare/). Patient safety 
constitutes a fundamental component of the CMS National Quality 
Strategy, representing a sustained commitment to fostering optimal 
health outcomes and ensuring the safest possible care for all 
patients.\518\ This Request for Information (RFI) is aimed at gathering 
broad public input on increasing the Safety of Care measure group's 
contribution to the Overall Hospital Quality Star Rating. We also note 
our intention to potentially issue additional RFIs or undertake 
rulemaking on this topic in the future.
---------------------------------------------------------------------------

    \518\ https://www.cms.gov/files/document/cms-national-quality-strategy-handout.pdf.
_____________________________________-

B. Background

    The Overall Hospital Quality Star Rating provides a summary of 
certain existing hospital quality information on Medicare.gov based on 
publicly available quality measure results reported through CMS' 
hospital quality measurement programs, by assigning hospitals between 
one and five stars, a way that is simple and easy for patients to 
understand (85 FR 86193). The Overall Hospital Quality Star Rating 
methodology was developed and is maintained according to the guiding 
principles of scientific validity, maximizing inclusion of hospitals 
and measure information, accounting for heterogeneity of available 
measures and hospital reporting, accommodating changes in the 
underlying measures, aligning with CMS hospital quality measure 
programs to the extent feasible, transparency of the methodology, and 
responsiveness to input from interested parties. The Overall Hospital 
Quality Star Rating was first introduced and reported on our Hospital 
Compare website in July 2016 (now reported on Medicare.gov) and has 
been refreshed multiple times, with the most current refresh planned 
for July 2024.\519\
---------------------------------------------------------------------------

    \519\ Placeholder for 2024 Stars QUS.
---------------------------------------------------------------------------

    In the CY 2021 OPPS/ASC final rule (85 FR 86193), we codified the 
Overall Hospital Quality Star Rating methodology, including several 
methodology refinements, intended to improve the simplicity and 
predictability of measure emphasis within the methodology over time, 
and comparability of ratings among hospitals. We also finalized the 
inclusion of Veterans Health Administration (VHA) hospitals and 
Critical Access Hospitals (CAHs) in the Overall Hospital Quality Star 
Rating. In the CY 2023 OPPS/ASC final rule (87 FR 72233), we provided 
additional information on the previously finalized policy to 
incorporate VHA hospitals and finalized a proposal to amend 42 CFR 
412.190 to revise how we would refresh the Overall Hospital Quality 
Star Rating annually.

C. Current Overall Hospital Quality Star Rating Methodology

    Measures reported on the provider comparison tool on Medicare.gov 
(https://www.medicare.gov/care-compare/) that meet the criteria for 
inclusion in the Overall Hospital Quality Star Rating are organized 
into five conceptually coherent measure groups: Safety of Care, 
Mortality, Readmission, and Patient Experience (all of which include 
outcome measures), and Timely and Effective Care (which includes a 
selection of process measures).
    The current Overall Hospital Quality Star Rating methodology 
includes seven general steps. First, the direction of all included 
measures that indicate better performance with a lower score are 
reversed to uniformly indicate that a higher score indicates better 
performance for all the measures, and all measure scores are 
standardized to a single, common scale to account for differences in 
measure score units. Second, measures are arranged into measure groups. 
Each measure group contains a number of publicly reported measures to 
produce a robust measure group score, which are reflective of 
differences in hospital quality. Third, the measure group scores are 
calculated as a simple average of measure scores. Measure group scores 
are then standardized to a common scale making varying scores 
comparable. Fourth, the hospital summary score is calculated as a 
weighted average of measure group scores. Specifically, each measure 
group score is multiplied by the assigned weight for that group. The 
weighted measure group scores are then summated to generate the 
hospital summary score. If a hospital has no measure scores in a group 
(for example, by not achieving sufficient sample size in any of the 
measures), the weight is redistributed proportionally across the 
remaining groups. Fifth, minimum reporting thresholds are applied. To 
receive a Star Rating, hospitals must report at least three measures in 
at least three measure groups, one of which must be either the 
Mortality or Safety of Care measure groups. Sixth, peer grouping is 
applied. Hospitals are grouped into one of three peer groups based on 
the number of measure groups for which they report at least three 
measures: a 3-measure peer group, a 4-measure peer group, and a 5-
measure peer group. Seventh, a clustering algorithm is applied within 
each peer group to assign hospital summary scores to star ratings so 
that one star is the lowest and five stars is the highest.
    For additional details regarding the methodology, we refer readers 
to Sec.  412.190(d) and the Overall Hospital Quality Star Rating 
Methodology Reports, available at https://qualitynet.cms.gov/inpatient/public-reporting/overall-ratings/resources.

D. Safety of Care in Star Ratings

    A foundational commitment of providing healthcare services is to 
ensure safety, as embedded in the centuries-old Hippocratic Oath, 
``First, do no harm.'' Yet, the landmark reports To Err is Human and 
Crossing the Quality Chasm surfaced major deficits in healthcare 
quality and safety.520 521 These reports resulted in 
widespread awareness of the alarming prevalence of patient harm and, 
over the past two decades, healthcare facilities implemented various 
interventions and strategies to improve patient safety, with some 
documented successes.\522\ Furthermore, the COVID-19 public health 
emergency (PHE) strained the healthcare system substantially, 
introducing new safety risks and negatively impacting patient safety in 
the normal delivery of care.523 524
---------------------------------------------------------------------------

    \520\ Institute of Medicine (US) Committee on Quality of Health 
Care in America, Kohn, L.T., Corrigan, J.M., & Donaldson, M.S. 
(Eds.). (2000). To Err is Human: Building a Safer Health System. 
National Academies Press (US).
    \521\ Institute of Medicine (US) Committee on Quality of Health 
Care in America. (2001). Crossing the Quality Chasm: A New Health 
System for the 21st Century. National Academies Press (US).
    \522\ Agency for Healthcare Research and Quality. (February 
2021). National Healthcare Quality and Disparities Report chartbook 
on patient safety. Rockville, MD. Available at: https://www.ahrq.gov/sites/default/files/wysiwyg/research/findings/nhqrdr/chartbooks/patientsafety/2019qdr-patient-safety-chartbook.pdf.
    \523\ Lastinger LM, Alvarez CR, Kofman A, Konnor RY, Kuhar DT, 
Nkwata A, Patel PR, Pattabiraman V, Xu SY, Dudeck MA. Continued 
increases in the incidence of healthcare-associated infection (HAI) 
during the second year of the coronavirus disease 2019 (COVID-19) 
pandemic. Infect Control Hosp Epidemiol. 2023 Jun;44(6):997-1001. 
doi: 10.1017/ice.2022.116. Epub 2022 May 20. PMID: 35591782; PMCID: 
PMC9237489.
    \524\ Patel, PR, Weiner-Lastinger, LM, Dudeck, MA, et al. Impact 
of COVID-19 pandemic on central-line-associated bloodstream 
infections during the early months of 2020, National Healthcare 
Safety Network. Infect Control Hosp Epidemiol 2021. doi: 10.1017/
ice.2021.108.

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

[[Page 59510]]

    Safety gaps and further risks in healthcare delivery were 
illuminated as a result of the COVID-19 PHE, revealing a lack of 
resiliency in the healthcare system.525 526 527 Therefore, 
we are increasing efforts to emphasize the importance of patient safety 
for both patients and healthcare workers. To accomplish these goals, 
the federal government is taking a multi-pronged inter-Agency approach 
to improve safety. The Agency for Healthcare Research and Quality 
(AHRQ) on behalf of the Department of Health & Human Services (HHS) 
established the National Action Alliance to Advance Patient and 
Workforce Safety as a public-private collaboration to improve both 
patient and workforce safety and move towards zero harm in 
healthcare.\528\ In September 2023, the President's Council of Advisors 
on Science and Technology (PCAST) published the ``Report to the 
President: A Transformational Effort on Patient Safety,'' with a call 
to action to renew ``our nation's commitment to improving patient 
safety.'' \529\ The report put forth a recommendation as part of the 
call to action to ``establish and maintain federal leadership for the 
improvement of patient safety as a national priority.'' We also 
acknowledged a noticeable decline in patient safety measure scores 
during the COVID-19 PHE which reinforces the emphasis on patient safety 
established in several CMS initiatives, including the National Quality 
Strategy and Universal Foundation.530 531 Additionally, 
hospitals report data on healthcare-associated infection (HAI) measures 
through a number of CMS quality programs, including the Hospital-
Acquired Condition (HAC) Reduction and Hospital Value-Based Purchasing 
Programs. These programs are designed to improve patient quality of 
care and safety, as well as reduce complications and mortality, by 
rewarding hospitals that achieve high scores on measures, including HAI 
measures, and penalizing those that do not meet or exceed established 
performance standards.\532\ However, it is possible in the current 
Overall Star Rating methodology for a hospital to score very low in the 
Safety of Care measure group yet still receive a high Star Rating due 
to their high performance in other measure groups. Therefore, we seek 
to explore potential adjustments to the Overall Hospital Quality Star 
Ratings methodology that would greater emphasize the measures within 
the Safety of Care measure group, in alignment with other CMS and HHS 
efforts to improve patient safety across all programs.
---------------------------------------------------------------------------

    \525\ Agency for Healthcare Research and Quality. (2021). AHRQ 
PSNet Annual Perspective: Impact of the COVID-19 Pandemic on Patient 
Safety. https://psnet.ahrq.gov/perspective/ahrq-psnet-annual-perspective-impact-covid-19-pandemic-patient-safety.
    \526\ Fleisher, L.A., Schreiber, M.D., Cardo, D., and 
Srinivasan, M.D. (2022). Health care safety during the pandemic and 
beyond--building a system that ensures resilience. N Engl J Med, 
386: 609-611. https://www.nejm.org/doi/full/10.1056/NEJMp2118285.
    \527\ Implications of the COVID-19 pandemic for patient safety: 
a rapid review. Geneva: World Health Organization; 2022. Licence: CC 
BY-NC-SA 3.0 IGO.
    \528\ AHRQ. (2023). National Action Alliance To Advance Patient 
and Workforce Safety. https://www.ahrq.gov/cpi/about/otherwebsites/action-alliance.html.
    \529\ https://www.whitehouse.gov/wp-content/uploads/2023/09/PCAST_Patient-Safety-Report_Sept2023.pdf.
    \530\ Fleisher, L.A., Schreiber, M., Cardo, D., Srinivasan, A. 
(2022). Health Care Safety during the Pandemic and Beyond--Building 
a System That Ensures Resilience. The New England Journal of 
Medicine, 386(7): 609-611. DOI: 10.1056/NEJMp2118285.
    \531\ https://www.cms.gov/aligning-quality-measures-across-cms-universal-foundation.
    \532\ https://www.cms.gov/blog/first-do-no-harm.
---------------------------------------------------------------------------

    There are currently eight measures in the Safety of Care measure 
group, including six HAI measures (HAI-1--HAI-6), one Complications 
measure after total hip or total knee replacement (Hip/Knee), and one 
composite adverse event measure (Patient Safety and Adverse Events 
Composite (PSI-90)). While this group of measures has been the same 
since the inception of the Overall Hospital Quality Star Rating, the 
specific safety measures included may be subject to change in the 
future. Measures reported on the provider comparison tool on 
Medicare.gov (https://www.medicare.gov/care-compare/) undergo a 
rigorous development process which includes extensive measure testing, 
vetting by interested parties, evaluation by the Consensus-based Entity 
(currently, Battelle, which convenes the Partnership for Quality 
Measurement), and undergoing rulemaking for inclusion in CMS programs 
and public reporting. As such, the Overall Hospital Quality Star Rating 
methodology uses the measures as required under the CMS programs, with 
measure scores as reported on Medicare.gov at the time of the Overall 
Hospital Quality Star Rating calculation. Thus, any measures that are 
removed or suspended from one of the CMS hospital quality measure 
programs and not published on Medicare.gov would no longer be included. 
Similarly, any measures that are added to the CMS programs and 
displayed on Medicare.gov may be included in the Overall Hospital 
Quality Star Rating; for example, upcoming measures such as the Severe 
Obstetric Complication (87 FR 48780), Failure-to-Rescue (89 FR 35934), 
Hospital Harm-Severe Hypoglycemia (89 FR 35934) and Hospital Harm-
Opioid-related Adverse Events (87 FR 48780) measures may be considered 
for inclusion in the Safety of Care measure group. The assessment 
presented here is based only on the current group of eight measures as 
listed above, but the Overall Hospital Quality Star Rating methodology 
is designed with the flexibility to accommodate such changes in the 
future.
    The current methodology places the highest emphasis on the Safety 
of Care and Mortality measure groups. First, the measure group weights 
currently utilized in the Overall Hospital Quality Star Rating 
methodology are based on CMS policy and interested party feedback. 
Currently, the Safety of Care, Mortality, Readmission, and Patient 
Experience measure groups are each weighted 22 percent while the Timely 
and Effective Care measure group is weighted 12 percent (Table 103). 
Interested parties generally agreed that outcome measures should have 
more weight since they represent strong indicators of quality and are 
most important to patients in making healthcare decisions. Interested 
parties and stakeholders broadly considered the current weightings to 
be acceptable.
    The Safety of Care and Mortality groups are further emphasized in 
the reporting threshold to receive a Star Rating: hospitals must report 
at least three measures in each of at least three measure groups, one 
of which must specifically be Safety of Care or Mortality (85 FR 
86228). This decision was partially informed by interested party 
feedback on the relative importance of patient safety and prevention of 
mortality.
    Given the current ongoing efforts to advance patient safety, we 
investigated options to even further emphasize the patient safety 
measures in the Overall Hospital Quality Star Rating, above and beyond 
the emphasis of the current methodology.
    We conducted an internal analysis utilizing data from the July 2023 
refresh of the Overall Hospital Quality Star Rating to determine 
correlations between the Safety of Care measure group and performance 
in the Overall Hospital Quality Star Rating. There were 3,076 hospitals 
that met the criteria to receive a Star Rating. Among the 3,076 rated 
hospitals, 2,995 (97 percent) had at least 1 Safety of Care measure and

[[Page 59511]]

therefore received a Safety of Care group score, while 2,615 (85 
percent) had at least 3 Safety of Care measures. Our analysis showed a 
strong relationship between the Safety of Care measure group and the 
Star Rating. Hospitals that did well in Safety of Care tended to also 
do well on the Star Rating; however, there were a few hospitals that 
performed in the bottom quartile (lowest performing 25 percent) of the 
Safety of Care measure group that still received a 5-star rating. Of 
the 3,076 hospitals that received a Star Rating, 658 hospitals with at 
least three Safety of Care measures scored in the lowest quartile of 
the Safety of Care measure group and 19 hospitals received a 5-star 
rating, representing 0.6 percent of all rated hospitals (Table 101). An 
additional 94 hospitals fell into the lowest quartile of Safety of Care 
when the analysis was based on hospitals that reported just one or two 
Safety of Care measures. In general, these hospitals attained 5-star 
ratings despite poor Safety of Care performance by achieving high 
performance scores across the other measure groups.
[GRAPHIC] [TIFF OMITTED] TP22JY24.135

    We assessed reporting of individual Safety of Care measures and 
performance in the Safety of Care measure group by various hospital 
characteristics. We observed significant variation in the number of 
Safety of Care measures reported across different types of hospitals, 
typically with fewer measures for hospitals that have generally lower 
volume and so are less likely to reach sufficient case volume for 
individual measurements. Specifically: non-teaching hospitals, safety 
net hospitals,\533\ critical access hospitals, smaller (<100 beds) 
hospitals, rural hospitals, and hospitals not qualifying for Medicare 
Disproportionate Share Hospital (DSH) payments were likely to report 
fewer Safety of Care measures compared to teaching, non-safety net-, 
non-critical access, hospitals with 100+ beds, urban, and DSH-
qualifying hospitals (Table 102). There was a broad distribution in 
performance scores across hospital types; however, certain hospital 
characteristics appear to be associated with performance on the Safety 
of Care measure group. For example, smaller hospitals are more likely 
to fall toward the extremes of the performance score distribution while 
larger hospitals fall more toward the center, and safety net hospitals 
tend to fall into lower quartiles than non-safety net hospitals (Table 
102).
---------------------------------------------------------------------------

    \533\ Safety net hospitals are defined as those committed to 
caring for populations without stable access to care, specifically 
public hospitals or private hospitals with a Medicaid caseload 
greater than one standard deviation above their respective state's 
mean private hospital Medicaid caseload. https://www.cmshospitalchartbook.com/sites/default/files/Pfmc-by-Char_HW-Rdmn_2015.pdf.
---------------------------------------------------------------------------

BILLING CODE 4120-01-P

[[Page 59512]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.136


[[Page 59513]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.137

BILLING CODE 4120-01-C

E. Potential Future Options to Greater Emphasize Patient Safety in the 
Overall Hospital Quality Star Rating

    As part of the national commitment to improving patient safety, we 
seek feedback on whether hospitals that performed in the bottom 
quartile (lowest-performing 25 percent) in the Safety of Care measure 
group should be eligible to receive the highest 5-star rating. We are 
considering modifying the Overall Hospital Quality Star Rating 
methodology, specifically the Safety of Care measure group, to 
reinforce our dedication to emphasize patient safety across CMS. In 
this section we discuss three options identified to modify the Overall 
Hospital Quality Star Rating methodology.
1. Reweighting the Safety of Care Measure Group
    We conducted an internal analysis to explore the impact of 
modifying the weighting system for measure groups in the Overall 
Hospital Quality Star Rating utilizing data from the July 2023 refresh. 
Specifically, we explored increasing the weight assigned to the Safety 
of Care measure group from the current 22 percent to 30 percent while 
proportionally reducing the weights assigned to the other measure 
groups to examine the isolated effect of reweighting while otherwise 
adhering to the current methodology. The exact weighting values noted 
in this RFI are not prescriptive and could be adjusted based on 
interested party feedback to be more easily interpretable (for example, 
to 30 percent, 20 percent, and 10 percent), however, the results 
reported reflect this preliminary reweighting scenario that preserves 
proportionality between the remaining groups. Current and potential new 
weights for each measure group are detailed in Table 103.

[[Page 59514]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.138

    Our analysis showed that by modifying the weight of the Safety of 
Care measure group to 30 percent, out of 3,076 hospitals, 213 hospitals 
would receive a higher Star Rating than when using the current 
weighting, while 233 hospitals would receive a lower Star Rating. 
Specifically, among the 752 rated hospitals in the lowest quartile of 
the Safety of Care measure group, 16 hospitals would achieve a higher 
Star Rating, while 133 hospitals would receive a lower Star Rating; 
only 3 of the 752 hospitals would receive a 5-star rating. Implementing 
this option would reduce the number of hospitals that perform poorly in 
Safety of Care yet still obtain the highest 5-star rating. However, 
reweighting the Safety of Care measure group would slightly reduce the 
influence of other measure groups on the Overall Hospital Quality Star 
Rating.
2. Policy-Based 1-Star Reduction for Poor Performance on Safety of Care
    We are considering a post hoc policy-based adjustment that would 
reduce the Star Rating of any hospital in the lowest quartile of Safety 
of Care (based on at least three measure scores) by one star. Using 
2023 Overall Hospital Quality Star Ratings data, applying a 1-star 
reduction for all hospitals in the lowest quartile of Safety of Care 
with at least three safety measures would result in 530 hospitals, out 
of 3,076 hospitals, receiving a lower Star Rating. This option would 
emphasize safety through a new standard for all hospitals regardless of 
their Star Rating. Since the minimum Star Rating is one star, hospitals 
already getting one star would not get a further star reduction and 
therefore would effectively be exempt from this policy-based 
adjustment. Additionally, some hospitals that perform excellently in 
all other measure groups except the Safety of Care measure group would 
still receive a 1-star reduction.
3. Reweighting the Safety of Care Measure Group Combined With a Policy-
Based Star Rating Cap
    We are considering increasing the weight of the Safety of Care 
measure group to 30 percent (and proportionally reducing the weights 
assigned to the other measure groups, as described in Table 103) while 
also applying a policy that would limit hospitals in the lowest 
quartile of Safety of Care (based on at least three measure scores) to 
a maximum of four stars out of five. Using 2023 Overall Hospital 
Quality Star Ratings data, implementing a cap of four stars in the 
lowest quartile of Safety of Care with at least three safety measures 
combined with the reweighting for all hospitals would result in 235 
hospitals, out of 3,076 hospitals, receiving a lower Star Rating and 
the reduction by 1 star for two hospitals in the lowest quartile of 
Safety of Care that would otherwise still receive a 5-star rating if 
only the reweighting solution was applied. This option provides a more 
targeted solution to the issue of hospitals performing poorly in Safety 
of Care receiving a 5-star rating and applies equally to all hospitals, 
reserving the 5-star rating for hospitals achieving a minimum threshold 
in Safety of Care.
    We also explored alternative options for emphasizing patient 
safety, such as applying only the 4-star rating maximum or combining 
reweighting of the Safety of Care measure group with a policy-based 1-
star reduction, however, these options did not effectively reach our 
goal of emphasizing patient safety. In our analysis, applying a 4-star 
rating maximum to hospitals in the lowest quartile of Safety of Care 
with at least three safety measures would have less impact, resulting 
in only 19 out of 3,076 hospitals receiving a lower Star Rating from 
five stars to four stars. Conversely, applying a combination of 
reweighting the Safety of Care measure group with a 1-star reduction 
may be considered an `over-correction', resulting in 635 out of 3,076 
hospitals receiving a lower Star Rating with the greatest impact on 
hospitals already receiving two, three, or four stars in the current 
methodology.
    Feedback solicited during fall 2023 from interested parties, 
including patients, patient advocates, technical experts, and 
clinicians, supported the increasing emphasis on Safety of Care in the 
Overall Hospital Quality Star Rating methodology.\534\ However, there 
was varying feedback from interested parties on the methods to do so, 
with concerns including a decreased emphasis on the other measure 
groups, particularly Mortality, and the adequacy of the Safety of Care 
group measures as currently established to truly represent the 
experience of patient safety at a hospital.
---------------------------------------------------------------------------

    \534\ https://mmshub.cms.gov/sites/default/files/Star-Ratings-TEP-Summary-Report-Oct23.pdf.
---------------------------------------------------------------------------

F. Solicitation of Public Comment

    We are currently seeking comments on potential modifications to the 
Safety of Care measure group in the Overall Hospital Quality Star 
Rating methodology. We are requesting input from interested parties on 
the following options: (1) reweighting the Safety of Care measure 
group; (2) applying a policy-based adjustment that reduces the Star 
Rating of any hospital in the lowest quartile of Safety of Care (based 
on at least three measures in the goup) by one star; (3) reweighting 
the Safety of Care measure group combined with a policy-based 4-star 
rating maximum on Star Rating of any hospital in the lowest quartile of 
Safety of Care (based on at least three measures in the group). 
Specifically, we are requesting comment on the following questions:
     Do you support re-weighting the Overall Hospital Quality 
Star Rating measure groups to give greater weight to Safety of Care as 
described in option 1? Do you agree with the potential new weights for 
each measure group (as shown in Table 103)?
     Do you support reducing the Star Rating for hospitals with 
a low Safety of Care score as described in option 2? Do

[[Page 59515]]

you agree with the potential policy to apply a 1-star reduction to all 
hospitals in the lowest quartile of Safety of Care?
     Do you support a combination of reweighting the Safety of 
Care measure group with a 4-star maximum on Star Rating as described in 
option 3?
     Do you have feedback or preference towards an approach of 
both up-scoring high performers and down-scoring poor performers as in 
options 1 and 3, or an approach of just down-scoring poor performers as 
in option 2?
     What are other methodological approaches that could be 
used to emphasize the Safety of Care measure group?
     With respect to the potential changes to the Overall 
Hospital Quality Star Rating methodology, are there any special 
considerations for small, rural or safety net hospitals (including 
Critical Access hospitals)?
    Any modification to the Overall Hospital Quality Star Rating 
methodology would be addressed through future notice-and-comment 
rulemaking.

XXIII. Files Available to the Public Via the Internet

    The Addenda to the OPPS/ASC proposed rules and final rules with 
comment period are published and available via the internet on the CMS 
website. In the CY 2019 OPPS/ASC final rule with comment period (83 FR 
59154), for CY 2019, we changed the format of the OPPS Addenda A, B, 
and C by adding a column titled ``Copayment Capped at the Inpatient 
Deductible of $1,364.00'' where we flag, through use of an asterisk, 
those items and services with a copayment that is equal to or greater 
than the inpatient hospital deductible amount for any given year (the 
copayment amount for a procedure performed in a year cannot exceed the 
amount of the inpatient hospital deductible established under section 
1813(b) of the Act for that year). In the CY 2022 OPPS/ASC final rule 
with comment period (85 FR 86266), we updated the format of the OPPS 
Addenda A, B, and C by adding a column titled ``Drug Pass-Through 
Expiration during Calendar Year'' where we flagged, through the use of 
an asterisk, each drug for which pass-through payment was expiring 
during the calendar year on a date other than December 31. For CY 2025 
and subsequent years, we proposed to retain these columns that are 
updated to reflect the drug codes for which pass-through payment is 
expiring in the applicable year.
    In the CY 2023 OPPS/ASC final rule with comment period (87 FR 
72250) for CY 2023, we changed the format of the OPPS Addenda A, B, and 
C by adding a column titled ``Drug Pass-Through Expiration during 
Calendar Year'' to include devices, so that the column reads: ``Drug 
and Device Pass-Through Expiration during Calendar Year'' where we 
flagged, through the use of an asterisk, each drug and device for which 
pass-through payment was expiring during the calendar year on a date 
other than December 31.
    For CY 2024 we deleted the column titled ``Copayment Capped at the 
Inpatient Deductible'' and instead added a new column for ``Adjusted 
Beneficiary Copayment'' to identify any copayment adjustment due to 
either the inpatient deductible amount copayment cap or the inflation-
adjusted copayment of a Part B rebatable drug per section 1833(t)(8)(F) 
and section 1833(i)(9) of the Act, as added by section 11101 of the 
Inflation Reduction Act (IRA). We also added another column for notes. 
The ``Note'' column contains multiple messages including, but not 
limited to, inflation-adjusted copayment of a Part B rebatable drug, 
the copayment for a code capped at the inpatient deductible, or 8 
percent of the reference product add-on applied for a biosimilar.
    In addition, for CY 2024, we updated the format of the OPPS Addenda 
A, B, and C by adding another column for ``IRA Coinsurance Percentage'' 
to identify the percentage for the inflation-adjusted copayment of a 
Part B rebatable drug per section 1833(t)(8)(F) and section 1833(i)(9) 
of the Act, as added by section 11101 of the Inflation Reduction Act 
(IRA).
    For CY 2025 and subsequent years we propose to keep the same format 
for the addenda A, B, and C, and we are not proposing any additional 
changes for CY 2025.
    To view the Addenda to this proposed rule pertaining to CY 2025 
payments under the OPPS, we refer readers to the CMS website at: 
https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices; select ``CMS-1809-P'' from the 
list of regulations. All OPPS Addenda to this proposed rule are 
contained in the zipped folder titled ``2025 NPRM OPPS Addenda'' in the 
related links section at the bottom of the page. To view the Addenda to 
this proposed rule pertaining to CY 2025 payments under the ASC payment 
system, we refer readers to the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/ambulatory-surgical-center-asc/asc-regulations-and-notices; select ``CMS-1809-P'' from the 
list of regulations. The ASC Addenda to this proposed rule are 
contained in a zipped folder titled ``2025 NPRM Addendum AA, BB, DD1, 
DD2, EE, and FF'' in the related links section at the bottom of the 
page.

XXIV. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act 
of 1995 requires that we solicit comment on the following issues:

 The need for the information collection and its usefulness in 
carrying out the proper functions of our agency.
 The accuracy of our estimate of the information collection 
burden.
 The quality, utility, and clarity of the information to be 
collected.
 Recommendations to minimize the information collection burden 
on the affected public, including automated collection techniques.

    We are soliciting public comment on each of these issues for the 
following sections of this document that contain information collection 
requirements (ICRs):
    If you comment on these information collection, that is, reporting, 
recordkeeping or third-party disclosure requirements, please submit 
your comments electronically as specified in the ADDRESSES section of 
this proposed rule.
    Comments must be received on/by September 9, 2024.

A. ICRs for the Hospital Outpatient Quality Reporting (OQR) Program

a. Background
    In section XV of this proposed rule, we discuss the requirements 
for the Hospital OQR Program. The Hospital OQR Program is generally 
aligned with the CMS quality reporting program for hospital inpatient 
services known as the Hospital Inpatient Quality Reporting (IQR) 
Program. We refer readers to the CY 2024 OPPS/ASC final rule with 
comment period (88 FR 82131 through 82140) for detailed discussions of 
the previously finalized Hospital OQR Program ICRs which are currently 
approved under OMB control number 0938-1109 (expiration date February 
28, 2025).

[[Page 59516]]

    In this proposed rule, we propose to adopt four web-based measures 
that would impact previously approved burden estimates: (1) the 
Hospital Commitment to Health Equity (HCHE) measure, beginning with the 
CY 2025 reporting period/CY 2027 payment determination; (2) the 
Screening for Social Drivers of Health (SDOH) measure, beginning with 
voluntary reporting for the CY 2025 reporting period followed by 
mandatory reporting beginning with the CY 2026 reporting period/CY 2028 
payment determination; (3) the Screen Positive Rate for SDOH measure, 
beginning with voluntary reporting for the CY 2025 reporting period and 
mandatory reporting beginning with the CY 2026 reporting period/CY 2028 
payment determination; and (4) the Patient Understanding of Key 
Information Related to Recovery After a Facility-Based Outpatient 
Procedure or Surgery, Patient Reported Outcome-Based Performance 
Measure (Information Transfer PRO-PM), beginning with voluntary 
reporting for the CY 2026 reporting period and mandatory reporting 
beginning with the CY 2027 reporting period/CY 2029 payment 
determination.
    We also propose changes to the Hospital OQR Program that would not 
impact the previously approved burden estimates. We propose to remove 
two claims-based measures beginning with the CY 2025 reporting period/
CY 2027 payment determination: (1) Magnetic Resonance Imaging (MRI) 
Lumbar Spine for Low Back Pain measure; and (2) Cardiac Imaging for 
Preoperative Risk Assessment for Non-Cardiac, Low-Risk Surgery measure. 
We further propose to modify the public reporting of data for the 
Median Time from Emergency Department (ED) Arrival to ED Departure for 
Discharged ED Patients (Median Time for Discharged ED Patients)--
Psychiatric/Mental Health Patients stratification so that it may be 
published on Care Compare in addition to the data.cms.gov downloadable 
files beginning in CY 2025. Lastly, we propose to require electronic 
health record (EHR) technology to be certified to all eCQMs available 
to report beginning with the CY 2025 reporting period/CY 2027 payment 
determination.
    In the CY 2024 OPPS/ASC final rule with comment period, we 
calculated reporting burden estimates for the Hospital OQR Program by 
utilizing the Bureau of Labor Statistics (BLS) mean hourly wage rate 
for Medical Records Specialists (88 FR 82132). Specifically, we used 
the ``general medical and surgical hospitals'' industry to estimate the 
mean wage, as this categorization aligns the closest with the Hospital 
OQR Program care setting compared to other industries, such as ``office 
of physicians'' or ``nursing care facilities.'' The most recent data 
from BLS' May 2023 National Occupational Employment and Wage Estimates 
reflects a mean hourly wage of $27.69 per hour for medical records 
specialists working in ``general medical and surgical hospitals'' (SOC 
29-2072).\535\ We calculated the cost of overhead, including fringe 
benefits, at 100 percent of the mean hourly wage, consistent with 
previous years. This is a rough adjustment, both because fringe 
benefits and overhead costs vary significantly by employer and methods 
of estimating these costs vary widely in the literature. Nonetheless, 
we believe that doubling the hourly wage rate ($27.69 x 2 = $55.38) to 
estimate total cost is a reasonably accurate estimation method. 
Accordingly, unless otherwise specified, we will calculate cost burden 
to hospitals using a wage plus benefits estimate of $55.38 per hour 
throughout the discussion in this section of this rule for the Hospital 
OQR Program.
---------------------------------------------------------------------------

    \535\ U.S. Bureau of Labor Statistics. Occupational Outlook 
Handbook, Medical Records Specialists. Accessed April 29, 2024. 
Available at: https://www.bls.gov/oes/current/oes292072.htm.
---------------------------------------------------------------------------

    In the CY 2024 OPPS/ASC final rule with comment period, our burden 
estimates were based on an assumption that approximately 3,350 hospital 
outpatient departments (HOPDs) would report data to the Hospital OQR 
Program (88 FR 82132). For this proposed rule, based on the most recent 
available data from the CY 2024 Hospital OQR Program payment 
determination, we estimate that 3,200 HOPDs will report data to the 
Hospital OQR Program for the CY 2025 reporting period/2027 payment 
determination.
b. Information Collection Burden Estimate for the Proposed Adoption of 
the Hospital Commitment to Health Equity Measure Beginning With the CY 
2025 Reporting Period/CY 2027 Payment Determination
    In section XIV.B.1 of this proposed rule, we propose to adopt the 
web-based HCHE measure beginning with the CY 2025 reporting period/CY 
2027 payment determination. For this measure, HOPDs would be required 
to report on attestations of ``yes'' or ``no'' to a set of five domains 
related to organizational efforts towards health equity once annually 
using a CMS-designated information system, as described in section 
XIV.B.1.b of this proposed rule. We estimate the reporting burden 
associated with this measure to be, on average across all 3,200 HOPDs, 
no more than 10 minutes per HOPD per year, as we believe the burden for 
HOPDs to report this measure would be very similar to the burden for 
hospital inpatient departments to report the same measure once annually 
under the Hospital IQR Program. We refer readers to the currently 
approved burden estimate for the HCHE measure in the Hospital IQR 
Program under OMB control number 0938-1022 (expiration date January 31, 
2026) and as discussed in the FY 2023 IPPS/LTCH PPS final rule (87 FR 
49385).
    Using an estimate of 10 minutes (or 0.167 hours) per HOPD per year, 
we estimate that this measure adoption would result in a total annual 
burden increase of 533 hours (0.167 hours x 3,200 HOPDs) at a cost of 
$29,518 (533 hours x $55.38/hr) across program-eligible HOPDs.
c. Information Collection Burden Estimate for the Proposed Adoption of 
the Screening for Social Drivers of Health (SDOH) Measure Beginning 
With Voluntary Reporting for the CY 2025 Reporting Period Followed by 
Mandatory Reporting Beginning With the CY 2026 Reporting Period/CY 2028 
Payment Determination
    In section XIV.B.2 of this proposed rule, we propose to adopt the 
web-based Screening for SDOH measure beginning with voluntary reporting 
for the CY 2025 reporting period followed by mandatory reporting 
beginning with the CY 2026 reporting period/CY 2028 payment 
determination. For this measure, HOPDs would be required to report 
whether they screened patients for five Health Related Social Needs 
(HRSN) domains, as described in section XIV.B.2.a of this proposed 
rule.
    HOPDs would be able to collect data for the measure using a self-
selected screening tool. We expect that most HOPDs would likely collect 
data through a screening tool incorporated into their EHR or other 
patient intake process, such as those we describe as examples in 
section XIV.B.2.e of this proposed rule. We estimate the information 
collection burden related to conducting patient screening associated 
with this measure to be 2 minutes (0.033 hours) per patient. This is 
based on the currently approved burden estimate for the Hospital IQR 
Program under OMB control number 0938-1022 for the same measure with 
patient screening for the same HRSN domains and the same frequency of 
data reporting, as discussed in the FY 2023 IPPS/LTCH PPS final rule 
(87 FR 49385 through 49386).
    To provide an estimate of patient volume for the purposes of 
calculating

[[Page 59517]]

the information collection burden associated with this measure, we 
utilized data derived from the American Hospital Association which 
estimates 2,399 outpatient visits per 1,000 population in CY 2022 \536\ 
and multiplied this by the estimated total U.S. population in CY 2022 
\537\ to estimate the total number of outpatient visits across all U.S. 
community hospitals. Then, in order to derive an estimate for only the 
3,200 program-eligible HOPDs in the Hospital OQR Program, we multiplied 
the total number of outpatient visits by a ratio of program-eligible 
HOPDs to all U.S. community hospitals. Therefore, we estimate that each 
year 498,843,518 patients (2,399 outpatient visits per 1,000 population 
in CY 2022) x 333,287,557 total U.S population in 2022 x (3,200 HOPDs / 
5,129 U.S community hospitals \538\) would be screened when reporting 
on the measure becomes mandatory. As submission rates among facilities 
may vary, we conservatively estimate that for voluntary reporting for 
the CY 2025 reporting period, 50 percent of HOPDs would survey 50 
percent of patients, and beginning with the first mandatory reporting 
period, 100 percent of HOPDs would survey 100 percent of patients.
    We determine the cost for patients (or their representative) 
undertaking administrative and other tasks, such as filling out a 
survey or intake form, using a post-tax wage of $24.49/hr based on the 
report ``Valuing Time in U.S. Department of Health and Human Services 
Regulatory Impact Analyses: Conceptual Framework and Best Practices,'' 
which identifies the approach for valuing time when individuals 
undertake activities on their own time.\539\ To derive the costs for 
patients (or their representatives), a measurement of the usual weekly 
earnings of wage and salary workers of $1,139 is divided by 40 hours to 
calculate an hourly pre-tax wage rate of $28.48/hr.\540\ This rate is 
adjusted downwards by an estimate of the effective tax rate for median 
income households of about 14 percent calculated by comparing pre-and 
post-tax income,\541\ resulting in the post-tax hourly wage rate of 
$24.49/hr. Unlike our state and private sector wage adjustments, we are 
not adjusting patient wages for fringe benefits and other indirect 
costs since the individuals' activities, if any, would occur outside 
the scope of their employment.
    Measure data aggregated to the hospital level as a numerator and a 
denominator would be submitted via the HQR system annually. Similar to 
the currently approved burden estimate for web-based measures reported 
via the HQR system for the Hospital OQR Program under OMB control 
number 0938-1109 (expiration date January 31, 2026), we estimate a 
burden of 10 minutes per HOPD to report the measure data. Therefore, we 
estimate that each HOPD would spend 10 minutes (0.167 hours) annually 
to report the Screening for SDOH measure data to CMS.
    For the CY 2025 voluntary reporting period, we estimate a total 
burden increase for patients of 4,115,459 hours (498,843,518 patients x 
50 percent response rate x 50 percent of HOPDs x 0.033 hours per 
patient) at a cost of $100,787,591 (4,115,459 hours x $24.49/hr). 
Beginning with the CY 2026 mandatory reporting period, we estimate an 
annual total burden increase for patients of 16,461,836 hours 
(498,843,518 patients x 0.033 hours per patient) at a cost of 
$403,150,364 (16,461,836 hours x $24.49/hr).
    For the CY 2025 voluntary reporting period, we estimate a total 
collection and reporting burden increase for program-eligible HOPDs of 
267 hours (3,200 HOPDs x 50 percent of HOPDs x 0.167 hours per HOPDs) 
at a cost of $14,786 (267 hours x $55.38/hr). Beginning with the CY 
2026 mandatory reporting period, we estimate a total collection and 
reporting burden increase for program-eligible HOPDs of 533 hours 
(3,200 HOPDs x 0.167 hours per HOPD) at a cost of $29,518 (533 hours x 
$55.38/hr).
d. Information Collection Burden Estimate for the Proposed Adoption of 
the Screen Positive Rate for Social Drivers of Health (SDOH) Measure 
Beginning With Voluntary Reporting for the CY 2025 Reporting Period 
Followed by Mandatory Reporting Beginning With the CY 2026 Reporting 
Period/CY 2028 Payment Determination
    In section XIV.B.3 of this proposed rule, we propose to adopt the 
Screen Positive Rate for SDOH measure beginning with voluntary 
reporting for the CY 2025 reporting period followed by mandatory 
reporting beginning with the CY 2026 reporting period/CY 2028 payment 
determination. We refer readers to the currently approved burden 
estimate for the Screen Positive Rate for SDOH measure in the Hospital 
IQR Program under OMB control number 0938-1022 for the same measure and 
the same frequency of data reporting, as discussed in the FY 2023 IPPS/
LTCH PPS final rule (87 FR 49386). As discussed in section XIV.B.3.g of 
this proposed rule, if a hospital participates in both the Hospital OQR 
and Hospital IQR Programs, the hospital would need to submit data on 
this measure separately under each program. As such, we are estimating 
the burden separately under each program.
    For this measure, HOPDs would be required to report on the number 
of patients who screened positive for one or more of the five domains 
(reported as five separate rates to reflect each of the five HRSN 
domains) divided by the total number of patients screened. We 
previously included the collection burden associated with screening 
patients in our discussion of the Screening for SDOH measure. Thus, for 
the Screen Positive Rate for SDOH measure, we estimate only the 
additional burden for HOPD reporting via the HQR system since patients 
would not need to provide, and HOPDs would not need to collect, any 
additional information for this measure. We continue to estimate that, 
for voluntary reporting for the CY 2025 reporting period, 50 percent of 
HOPDs would submit data, and beginning with the first mandatory 
reporting period, 100 percent of HOPDs would submit data.
    Measure data aggregated to the hospital level as a numerator and a 
denominator would be submitted via the HQR system annually. Similar to 
the currently approved burden estimate for web-based measures reported 
via the HQR system for the Hospital OQR Program under OMB control 
number 0938-1109, we estimate a burden of 10 minutes per HOPD to report 
the measure data. Therefore, we estimate that each HOPD would spend 10 
minutes (0.167 hours) annually to report the Screen Positive Rate for 
SDOH measure data to CMS.
    For the CY 2025 voluntary reporting period, we estimate a total 
collection and reporting burden increase of 267 hours (0.167 hours x 
3,200 HOPDs x 50 percent of HOPDs) at a cost of $14,786 (267 hours x 
$55.38), and beginning with the CY 2026 reporting period, we estimate a 
total annual collection and reporting burden increase for hospitals of 
533 hours (0.167 hours x 3,200 HOPDs) at a cost of $29,518 (533 hours x 
$55.38/hr) across all program-eligible HOPDs.

[[Page 59518]]

e. Information Collection Burden Estimate for the Proposed Adoption of 
the Patient Understanding of Key Information Related to Recovery After 
a Facility-Based Outpatient Procedure or Surgery, Patient Reported 
Outcome-Based Performance Measure (Information Transfer PRO-PM), 
Beginning With Voluntary Reporting for the CY 2026 Reporting Period and 
Mandatory Reporting Beginning With the CY 2027 Reporting Period/CY 2029 
Payment Determination
    In section XV.C.1.b of this proposed rule, we propose to adopt the 
Information Transfer PRO-PM beginning with voluntary reporting for the 
CY 2026 reporting period and mandatory reporting beginning with the CY 
2027 reporting period/CY 2029 payment determination.
    The Information Transfer PRO-PM would use PRO data regarding 
recovery instructions, collected by HOPDs through a nine-item survey 
instrument administered to patients post-operatively. The modes of PRO 
data collection can include completion of the post-operative surveys 
electronically.
    To provide an estimate of patient volume for the purposes of 
calculating the information collection burden associated with this 
measure, we utilized data derived from the American Hospital 
Association related to hospital outpatient visits to estimate that each 
year 498,843,518 patients (2,399 outpatient visits per person in CY 
2022 \542\ x 333,287,557 total U.S population in 2022 \543\ x (3,200 
HOPDs / 5,129 U.S community hospitals \544\)) would be screened if the 
measure became mandatory. As submission rates among facilities may 
vary, we conservatively estimate that for voluntary reporting for the 
CY 2025 reporting period, 50 percent of HOPDs would survey 50 percent 
of patients, and beginning with the first mandatory reporting period, 
100 percent of HOPDs would survey 100 percent of patients. While we 
have also proposed to allow HOPDs to report a sample of at least 300 
completed patient surveys, we propose to require all patients to be 
surveyed for this measure once mandatory reporting begins.
    We estimate each patient would require an average of 6 minutes 
\545\ (0.1 hours) to complete the survey. As described in section 
XXIV.B.c of this proposed rule, for purposes of calculating patient 
burden, we determine the cost for patients (or their representatives) 
undertaking administrative and other tasks, such as filling out a 
survey or intake form, using a post-tax wage of $24.49/hr based on the 
report ``Valuing Time in U.S. Department of Health and Human Services 
Regulatory Impact Analyses: Conceptual Framework and Best Practices,'' 
which identifies the approach for valuing time when individuals 
undertake activities on their own time.\546\ Unlike our state and 
private sector wage adjustments, we are not adjusting patient wages for 
fringe benefits and other indirect costs since the individuals' 
activities, if any, would occur outside the scope of their employment.
    Measure data would be submitted via the HQR system annually. 
Similar to the currently approved burden estimate for web-based 
measures reported via the HQR system for the Hospital OQR Program under 
OMB control number 0938-1109, we estimate a burden of 10 minutes per 
HOPD to report the measure data. Therefore, we estimate that each HOPD 
would spend 10 minutes (0.167 hours) annually to report the Information 
Transfer PRO-PM data to CMS.
    For the CY 2025 voluntary reporting period, we estimate a total 
burden for patients of 12,471,088 hours (498,843,518 patients x 50 
percent response rate x 50 percent of HOPDs x 0.1 hours per patient 
surveyed) at a cost of $305,416,945 (12,471,088 hours x $24.49/hr). 
Beginning with the CY 2026 mandatory reporting period, we estimate an 
annual total burden for patients of 49,884,352 hours (498,843,518 
patients x 0.1 hours per patient) at a cost of $1,221,667,780 
(49,884,352 hours x $24.49/hr).
    For the CY 2025 voluntary reporting period, we estimate a total 
collection and reporting burden for program-eligible HOPDs of 267 hours 
(3,200 HOPDs x 50 percent of HOPDs x 0.167 hours per HOPDs) at a cost 
of $14,786 (267 hours x $55.38/hr). Beginning with the CY 2026 
mandatory reporting period, we estimate a total collection and 
reporting burden for program-eligible HOPDs of 533 hours (3,200 HOPDs x 
0.167 hours per HOPD) at a cost of $29,518 (533 hours x $55.38/hr).
f. Information Collection Burden for the Proposed Removal of Two 
Claims-Based Measures
    In sections XV.C.2.a and XV.C.2.b of this proposed rule, we propose 
to remove two claims-based measures beginning with the CY 2025 
reporting period/CY 2027 payment determination: (1) MRI Lumbar Spine 
for Low Back Pain measure; and (2) Cardiac Imaging for Preoperative 
Risk Assessment for Non-Cardiac, Low-Risk Surgery measure. Because 
these measures are calculated using Medicare fee-for-service (FFS) 
claims that are already reported to the Medicare program for payment 
purposes, removing these measures would not result in a change in 
burden associated with OMB control number 0938-1109.
g. Information Collection Burden for the Proposal to Publicly Report 
Data for the Median Time for Discharged ED Patients--Psychiatric/Mental 
Health Patients Stratification on Care Compare Beginning in CY 2025
    In section XV.F.2 of this proposed rule, we propose to publicly 
report data for the Median Time for Discharged ED Patients--
Psychiatric/Mental Health Patients stratification on Care Compare 
beginning in CY 2025. Because we are not proposing to require HOPDs to 
collect or submit any additional data for purposes of this public 
reporting, this proposal would not result in a change in burden 
associated with OMB control number 0938-1109.
h. Information Collection Burden for the Proposal To Require EHR 
Technology To Be Certified to All eCQMs Available To Report Beginning 
With the CY 2025 Reporting Period/CY 2027 Payment Determination
    In section XV.E.2.b of this proposed rule, we propose to require 
EHR technology to be certified to all eCQMs (electronic clinical 
quality measures) available to report beginning with the CY 2025 
reporting period/CY 2027 payment determination. We do not expect HOPDs 
would experience an increase in information collection burden 
associated with this proposal because the use of EHR technology that is 
certified to all available eCQMs is already required for the Promoting 
Interoperability Program (83 FR 41672) and the Hospital IQR Program (84 
FR 42604).
g. Summary of Proposed Information Collection Burden Estimates for the 
Hospital OQR Program
    In summary, we estimate that the proposals in this proposed rule 
would result in a total HOPD burden increase of 66,348,321 hours at a 
cost of $1,624,936,216 annually for all 3,200 program-eligible HOPDs 
from the CY 2025 reporting period/CY 2027 payment determination through 
the CY 2027 reporting period/CY 2029 payment determination. We will 
submit the revised information collection estimates to OMB for approval 
under OMB control number 0938-1109 (expiration date February 28, 2025). 
(See Tables 104, 105 and 106.)

[[Page 59519]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.139


[[Page 59520]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.140


[[Page 59521]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.141

    We request comment on how we can reduce burden on HOPDs for both 
these new information collections as well as recommendations for the 
removal of other existing information collections to offset these new 
burdens.

B. ICRs for the Rural Emergency Hospitals Quality Reporting (REHQR) 
Program

a. Background

    In section XVI of this proposed rule, we discuss the requirements 
for the REHQR Program. The REHQR Program is generally aligned with the 
CMS quality reporting program for HOPDs known as the Hospital OQR 
Program. We refer readers to the CY 2024 OPPS/ASC final rule with 
comment period (88 FR 82148 through 82149) for detailed discussions of 
the previously finalized REHQR Program ICRs, which are currently 
approved under OMB control number 0938-1454 (expiration date April 30, 
2027).
    In this proposed rule, we propose to adopt three web-based measures 
that would impact previously approved burden estimates: (1) the 
Hospital Commitment to Health Equity (HCHE)

[[Page 59522]]

measure, beginning with the CY 2025 reporting period/CY 2027 program 
determination; (2) the Screening for Social Drivers of Health (SDOH) 
measure, beginning with voluntary reporting for the CY 2025 reporting 
period followed by mandatory reporting beginning with the CY 2026 
reporting period/CY 2028 program determination; and (3) the Screen 
Positive Rate for SDOH measure, beginning with voluntary reporting for 
the CY 2025 reporting period followed by mandatory reporting beginning 
with the CY 2026 reporting period/CY 2028 program determination.
    We also propose to extend the reporting period for the previously 
adopted Risk-Standardized Hospital Visits Within 7 Days After Hospital 
Outpatient Surgery measure beginning with the CY 2027 program 
determination. We believe this proposal would not impact the previously 
approved burden estimates if finalized.
    In the CY 2024 OPPS/ASC final rule with comment period, we 
calculated reporting burden estimates for the REHQR Program by 
utilizing the BLS mean hourly wage rate for Medical Records Specialists 
(88 FR 82148). Specifically, we used the ``general medical and surgical 
hospitals'' industry to estimate the mean wage, as this categorization 
aligns the closest with the REHQR Program care setting compared to 
other medical record specialist related industries, such as ``office of 
physicians'' or ``nursing care facilities.'' The most recent data from 
BLS' May 2023 National Occupational Employment and Wage Estimates 
reflects a mean hourly wage of $27.69 per hour for medical records 
specialists working in ``general medical and surgical hospitals'' (SOC 
29-2072).\547\ We calculated the cost of overhead, including fringe 
benefits, at 100 percent of the mean hourly wage, consistent with 
previous years. This is necessarily a rough adjustment, both because 
fringe benefits and overhead costs vary significantly by employer and 
methods of estimating these costs vary widely in the literature. 
Nonetheless, we believe that doubling the hourly wage rate ($27.69 x 2 
= $55.38) to estimate total cost is a reasonably accurate estimation 
method. Accordingly, unless otherwise specified, we will calculate cost 
burden to REHs.
    In the CY 2024 OPPS/ASC final rule with comment period, our burden 
estimates were based on an assumption that approximately 746 hospitals 
could transition to REH status assuming that all eligible hospitals in 
states which have passed or amended necessary legislation enabling 
transition to occur as of March 2023 choose to do so and we stated that 
we would update our estimates once more information was made available 
(88 FR 82148). For this proposed rule, based on the actual number of 
acute care and critical access hospital conversions to REH status as of 
April 22, 2024, we estimate that 25 REHs would report data to the REHQR 
Program during the CY 2025 reporting period unless otherwise noted. 
While the exact number of REHs required to submit data may vary due to 
status changes to and from an REH, as reiterated in section XVI.A of 
this proposed rule, REHs are required by statute to submit quality 
data. Therefore, for purposes of estimating burden, we assume that all 
25 REHs would submit data under the REHQR Program beginning with the CY 
2025 reporting period.
b. Information Collection Burden for the Proposed Adoption of the 
Hospital Commitment to Health Equity (HCHE) Measure Beginning With the 
CY 2025 Reporting Period/CY 2027 Program Determination
    In section XIV.B.1 of this proposed rule, we propose to adopt the 
web-based HCHE measure beginning with the CY 2025 reporting period/CY 
2027 program determination. For this measure, REHs would be required to 
report on attestations of ``yes'' or ``no'' to a set of five domains 
related to organizational efforts towards health equity, as described 
in section XIV.B.1.b of this proposed rule.
    We estimate the reporting burden associated with this measure to 
be, on average across all 25 REHs, no more than 10 minutes per REH per 
year, as we believe the burden that is annually reported by hospital 
inpatient departments under the Hospital IQR Program would be very 
similar to annual reporting by REHs on the same measure. We refer 
readers to the currently approved burden for the HCHE measure in the 
Hospital IQR Program under OMB control number 0938-1022 (expiration 
date January 31, 2026) and as discussed in the FY 2023 IPPS/LTCH PPS 
final rule (87 FR 49385).
    Using an estimate of 10 minutes (or 0.167 hours) per REH per year, 
we estimate that this measure adoption would result in a total annual 
burden increase of 4 hours (0.167 hours x 25 REHs) at a cost of $222 (4 
hours x $55.38/hr) across all REHs.
c. Information Collection Burden for the Proposed Adoption of the 
Screening for Social Drivers of Health (SDOH) Measure Beginning With 
Voluntary Reporting for the CY 2025 Reporting Period Followed by 
Mandatory Reporting Beginning With the CY 2026 Reporting Period/CY 2028 
Program Determination
    In section XIV.B.2 of this proposed rule, we propose to adopt the 
Screening for SDOH measure beginning with voluntary reporting for the 
CY 2025 reporting period followed by mandatory reporting beginning with 
the CY 2026 reporting period/CY 2028 program determination. We refer 
readers to the currently approved burden for the Screening for SDOH 
measure for the Hospital IQR Program under OMB control number 0938-1022 
(expiration date January 31, 2026). For this measure, REHs would be 
required to report whether they screened patients for five Health 
Related Social Needs (HRSNs) domains as described in section XIV.B.2.a 
of this proposed rule.
    REHs would be able to collect data for the measure using a self-
selected screening tool. We expect that most REHs would likely collect 
data through a screening tool incorporated into their EHR or other 
patient intake process, such as those we describe as examples in 
section XIV.B.2.e of this proposed rule. We estimate the information 
collection burden related to conducting patient screening associated 
with this measure to be 2 minutes (0.033 hours) per patient. This is 
based on the currently approved burden estimate for the Hospital IQR 
Program for the same measure with patient screening for the same HRSN 
domains and the same frequency of data reporting, as discussed in the 
FY 2023 IPPS/LTCH PPS final rule (87 FR 49385 through 49386).
    To provide an estimate of patient volume for the purposes of 
calculating the information collection burden associated with this 
measure we utilized data derived from a Definitive Healthcare survey 
which calculated that Medicare FFS patients account for 35.6 percent of 
hospital payer mix and a MedPAC report that determined hospitals which 
have converted to REH status average 4,200 outpatient visits for 
Medicare FFS beneficiaries to estimate that each year 11,798 (4,200 / 
35.6 percent) patients would be screened per REH when reporting on the 
measure becomes mandatory.548 549 We therefore estimate a 
total of approximately 295,000 patients (11,798 patients x 25 REHs) 
would be screened across all 25 REHs. As submission rates among

[[Page 59523]]

facilities may vary, we conservatively estimate that for voluntary 
reporting for the CY 2025 reporting period, 50 percent of REHs would 
survey 50 percent of patients, and beginning with the first mandatory 
reporting period, REHs would survey 100 percent of patients.
    We determine the cost for patients (or their representative) 
undertaking administrative and other tasks, such as filling out a 
survey or intake form, using a post-tax wage of $24.49/hr based on the 
report ``Valuing Time in U.S. Department of Health and Human Services 
Regulatory Impact Analyses: Conceptual Framework and Best Practices,'' 
which identifies the approach for valuing time when individuals 
undertake activities on their own time.\550\ To derive the costs for 
patients (or their representatives), a measurement of the usual weekly 
earnings of wage and salary workers of $1,139 is divided by 40 hours to 
calculate an hourly pre-tax wage rate of $28.48/hr.\551\ This rate is 
adjusted downwards by an estimate of the effective tax rate for median 
income households of about 14 percent calculated by comparing pre- and 
post-tax income,\552\ resulting in the post-tax hourly wage rate of 
$24.49/hr. Unlike our state and private sector wage adjustments, we are 
not adjusting beneficiary wages for fringe benefits and other indirect 
costs since the individuals' activities, if any, would occur outside 
the scope of their employment.
    Measure data aggregated to the hospital level as a numerator and a 
denominator would be submitted via the HQR system annually. Similar to 
the currently approved burden estimate for web-based measures reported 
via the HQR system for the Hospital OQR Program under OMB control 
number 0938-1109 (expiration date February 28, 2025), which REHs would 
have been eligible to report under prior to conversion to REH status, 
we estimate a burden of 10 minutes per REH to report the measure data. 
Therefore, we estimate that each REH would spend 10 minutes (0.167 
hours) annually to report the Screening for SDOH measure data to CMS.
    For the CY 2025 voluntary reporting period, we estimate a total 
collection and reporting burden increase for patients of 2,434 hours 
(295,000 patients x 50 percent response rate x 50 percent of REHs x 
0.033 hours per patient) at a cost of $59,609 (9,735 hours x $24.49/
hr). Beginning with the CY 2026 reporting period, we estimate a total 
collection and reporting burden increase for patients of 9,735 hours 
(295,000 patients x 0.033 hours per patient) at a cost of $238,410 
(9,735 hours x $24.49/hr).
    For the CY 2025 voluntary reporting period, we estimate a total 
collection and reporting burden increase for REHs of 2 hours (25 REHs x 
50 percent of REHs x 0.167 hours) at a cost of $111 (2 hours x $55.38/
hr). Beginning with the CY 2026 reporting period, we estimate a total 
collection and reporting burden increase for REHs of 4 hours (25 REHs x 
0.167 hours) at a cost of $222 (4 hours x $55.38/hr).
d. Information Collection Burden for the Proposed Adoption of the 
Screen Positive Rate for Social Drivers of Health (SDOH) Measure 
Beginning With Voluntary Reporting for the CY 2025 Reporting Period 
Followed by Mandatory Reporting Beginning With the CY 2026 Reporting 
Period/CY 2028 Program Determination
    In section XIV.B.3 of this proposed rule, we propose to adopt the 
Screen Positive Rate for SDOH measure beginning with voluntary 
reporting for the CY 2025 reporting period followed by mandatory 
reporting beginning with the CY 2026 reporting period/CY 2028 program 
determination. We refer readers to the currently approved burden 
estimate for the Screen Positive Rate for SDOH measure in the Hospital 
IQR Program under OMB control number 0938-1022 for the same measure and 
the same frequency of data reporting, as discussed in the FY 2023 IPPS/
LTCH PPS final rule (87 FR 49386).
    For this measure, REHs would be required to report on an annual 
basis the number of patients who screened positive for one or more of 
the five domains (reported as five separate rates to reflect each of 
the five HRSN domains) divided by the total number of patients 
screened. We previously included the burden associated with screening 
patients in our discussion of the Screening for SDOH measure. Thus, for 
the Screen Positive Rate for SODH measure, we estimate only the 
additional burden for a REH reporting via the HQR system since patients 
would not need to provide, and REHs would not need to collect, any 
additional information for this measure. We continue to estimate that, 
for voluntary reporting for the CY 2025 reporting period, 50 percent of 
REHs would survey 50 percent of patients, and beginning with the first 
mandatory period, REHs would survey 100 percent of patients.
    Measure data aggregated to the hospital level as a numerator and a 
denominator would be submitted via the HQR system annually. Similar to 
the currently approved burden estimate for web-based measures reported 
via the HQR system for the Hospital OQR Program under OMB control 
number 0938-1109 (expiration date February 28, 2025), which REHs would 
have been eligible to report under prior to conversion to REH status, 
we estimate a burden of 10 minutes per REH to report the measure data. 
Therefore, we estimate that each REH would spend 10 minutes (0.167 
hours) annually to report the Screen Positive Rate for SDOH measure 
data to CMS.
    For the CY 2025 voluntary reporting period, we estimate a total 
collection and reporting burden increase of two hours (0.167 hours x 25 
REHs x 50 percent of REHs) at a cost of $111 (2 hours x $55.38/hr), and 
beginning with the CY 2026 reporting period, we estimate a total annual 
collection and reporting burden increase for REHs of 4 hours (0.167 
hours x 25 REHs) at a cost of $222 (4 hours x $55.38/hr) across all 
REHs.
e. Information Collection Requirements for the Proposal To Extend the 
Reporting Period From for the Risk-Standardized Hospital Visits Within 
7 Days After Hospital Outpatient Surgery Measure Beginning With the CY 
2027 Program Determination
    In section XVI.C.2 of this proposed rule, we propose to extend the 
reporting period from 1 year to 2 years for the Risk-Standardized 
Hospital Visits within 7 Days after Hospital Outpatient Surgery 
measure, beginning with the CY 2027 program determination. We refer 
readers to a similar proposal which was finalized for the claims-based 
Facility 7-Day Risk-Standardized Hospital Visit Rate After Outpatient 
Colonoscopy measure under the Hospital OQR Program in the CY 2019 OPPS/
ASC final rule (83 FR 59106).
    Because this claims-based measure is calculated using data that are 
already reported to the Medicare program for payment purposes, there is 
no burden associated with the collection and submission of data for 
this measure. Accordingly, our proposal to extend the reporting period 
from 1 to 2 years would not result in additional burden for REHs.
f. Summary of Proposed Information Collection Burden Estimates for the 
REHQR Program
    In summary, we estimate that the proposals in this proposed rule, 
if finalized as proposed, would result in an increase of 9,747 hours at 
a cost of $239,076 for 25 REHs annually from the CY 2025 reporting 
period through the CY 2026 reporting period. We will

[[Page 59524]]

submit these information collection estimates to OMB for approval under 
OMB control number 0938-1454 (expiration date April 30, 2027). (See 
Tables 107 and 108.)
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP22JY24.142


[[Page 59525]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.143

BILLING CODE 4120-01-C
    We request comment on how we can reduce burden on REHs for both 
these new information collection as well as recommendations for the 
removal of other existing information collections to offset these new 
burdens.

C. ICRs for the Ambulatory Surgical Center Quality Reporting (ASCQR) 
Program

a. Background
    In section XVII of this proposed rule, we discuss the requirements 
for the ASCQR Program. We refer readers to the CY 2024 OPPS/ASC final 
rule (88 FR 82140 through 82148) for detail regarding the previously 
finalized ASCQR Program ICRs which are currently approved under OMB 
control number 0938-1270 (expiration date August 31, 2025).
    In section XIV.B of this proposed rule, we propose to adopt three 
measures that would impact previously approved burden estimates: (1) 
the Facility Commitment to Health Equity (FCHE) measure, beginning with 
the CY 2025 reporting period/CY 2027 payment determination; (2) the 
Screening for Social Drivers of Health (SDOH) measure, beginning with 
voluntary reporting for the CY 2025 reporting period followed by 
mandatory reporting beginning with the CY 2026 reporting period/CY 2028 
payment determination; and (3) the Screen Positive Rate for SDOH 
measure, beginning with voluntary reporting for the CY 2025 reporting 
period followed by mandatory reporting beginning with the CY 2026 
reporting period/CY 2028 payment determination. In section XVII.E.2.a 
of this proposed rule, we propose that ASCs would submit data annually 
for these measures using the CMS-designated information system 
(currently, the Hospital Quality Reporting [HQR] system).
    In the CY 2024 OPPS/ASC final rule with comment period, we 
calculated reporting burden estimates for the ASCQR Program by 
utilizing the BLS mean hourly wage rate for Medical

[[Page 59526]]

Records Specialists (88 FR 82140). Specifically, we used the ``general 
medical and surgical hospitals'' industry to estimate the mean wage, as 
this categorization aligns the closest with the ASCQR Program care 
setting compared to other medical record specialist related industries, 
such as ``office of physicians'' or ``nursing care facilities.'' The 
most recent data from BLS' May 2023 National Occupational Employment 
and Wage Estimates reflects a mean hourly wage of $27.69 per hour for 
medical records specialists working in ``general medical and surgical 
hospitals'' (SOC 29-2072).\553\ We calculated the cost of overhead, 
including fringe benefits, at 100 percent of the mean hourly wage, 
consistent with previous years. This is necessarily a rough adjustment, 
both because fringe benefits and overhead costs vary significantly by 
employer and methods of estimating these costs vary widely in the 
literature. Nonetheless, we believe that doubling the hourly wage rate 
($27.69 x 2 = $55.38) to estimate total cost is a reasonably accurate 
estimation method. Accordingly, unless otherwise specified, we would 
calculate cost burden to ASCs using a wage plus benefits estimate of 
$55.38 per hour throughout the discussion in this section of this rule 
for the ASCQR Program.
    Based on the most recent analysis of the CY 2024 payment 
determination data, we found that, of the 5,536 ASCs that were actively 
billing Medicare, 4,196 were required to participate in the ASCQR 
Program. Of the 1,340 ASCs not required to participate in the program, 
279 ASCs did so and met full requirements. On this basis, we estimate 
that 4,475 ASCs (4,196 + 279) would submit data for the ASCQR Program 
for the CY 2025 reporting period/CY 2027 payment determination.
b. Information Collection Burden for the Proposed Adoption of the 
Facility Commitment to Health Equity (FCHE) Measure Beginning With the 
CY 2025 Reporting Period/CY 2027 Payment Determination
    In section XIV.B.1 of this proposed rule, we propose to adopt the 
FCHE measure for the ASCQR Program beginning with the CY 2025 reporting 
period/CY 2027 payment determination. For this measure, ASCs would be 
required to report an attestation of ``yes'' or ``no'' to a set of five 
domains related to organizational efforts towards health equity, as 
described in section XIV.B.1.b of this proposed rule.
    We estimate the reporting burden associated with this measure to 
be, on average across all 4,475 ASCQR Program eligible facilities, no 
more than 10 minutes per ASC per year, based on the currently approved 
burden for the same measure under the Hospital IQR Program under OMB 
control number 0938-1022 (expiration date January 31, 2026). This also 
aligns with our estimated burden per providers for HOPDs and REHs, 
discussed above.
    Using an estimate of 10 minutes (0.167 hours) per ASC per year, we 
estimate that this measure adoption would result in a total annual 
collection and reporting burden increase of 746 hours (0.167 hours x 
4,475 ASCs) at a cost of $41,313 (746 hours x $55.38/hr) across 
program-eligible ASCs.
c. Information Collection Burden for the Proposed Adoption of the 
Screening for Social Drivers of Health (SDOH) Measure, Beginning With 
Voluntary Reporting for the CY 2025 Reporting Period Followed by 
Mandatory Reporting Beginning With the CY 2026 Reporting Period/CY 2028 
Payment Determination
    In section XIV.B.2 of this proposed rule, we propose to adopt the 
Screening for SDOH measure for the ASCQR Program beginning with 
voluntary reporting for the CY 2025 reporting period followed by 
mandatory reporting beginning with the CY 2026 reporting period/CY 2028 
payment determination. For this measure, ASCs would be required to 
report whether they screened patients for five Health Related Social 
Needs (HSRN) domains as described in section XIV.B.2.a of this proposed 
rule.
    As described in section XIV.B.2.e of this proposed rule, ASCs would 
be able to collect data for this measure using a self-selected 
screening tool. We expect that most ASCs would collect data through a 
screening tool incorporated into their EHR or other patient intake 
process, such as those we describe as examples in section XIV.B.2.e of 
this proposed rule. We estimate the information collection burden 
related to conducting patient screening associated with this measure 
would be 2 minutes (0.033 hours) per patient. This estimate is based on 
the currently approved burden for the Hospital IQR Program for the same 
measure, requiring the reporting of patient screening for the same HRSN 
domains and the same frequency of data reporting, as discussed in the 
FY 2023 IPPS/LTCH PPS final rule (87 FR 49385 through 49386).
    To provide an estimate of patient volume for the purposes of 
calculating the information collection burden associated with this 
measure, we utilized data derived from the ASC Quality Collaborative 
(ASCQC) related to ASC patient fall benchmarking data as this metric 
applies to all patients rather than a subset. We estimate that each 
year approximately 2,330 patients (10,427,619 admissions \554\ / 4,475 
ASCs) would be screened per ASC annually once reporting on the measure 
becomes mandatory. As submission rates among facilities may vary, we 
conservatively estimate that, for voluntary reporting for the CY 2025 
reporting period, 50 percent of ASCs would survey 50 percent of 
patients, and beginning with the first mandatory reporting period, ASCs 
would survey and report on 100 percent of patients.
    We determine the cost for patients (or their representative) 
undertaking administrative and other tasks, such as filling out a 
survey or intake form, using a post-tax wage of $24.49/hr based on the 
report ``Valuing Time in U.S. Department of Health and Human Services 
Regulatory Impact Analyses: Conceptual Framework and Best Practices,'' 
which identifies the approach for valuing time when individuals 
undertake activities on their own time.\555\ To derive the costs for 
patients (or their representatives), a measurement of the usual weekly 
earnings of wage and salary workers of $1,139 is divided by 40 hours to 
calculate an hourly pre-tax wage rate of $28.48/hr.\556\ This rate is 
adjusted downwards by an estimate of the effective tax rate for median 
income households of about 14 percent calculated by comparing pre- and 
post-tax income,\557\ resulting in the post-tax hourly wage rate of 
$24.49/hr. Unlike our state and private sector wage adjustments, we are 
not adjusting beneficiary wages for fringe benefits and other indirect 
costs because the individuals' activities, if any, would occur outside 
the scope of their employment.
    Measure data aggregated to the ASC level as a numerator and a 
denominator would be submitted via the HQR system annually. Similar to 
the currently approved burden estimate for web-based measures reported 
via the HQR system for the ASCQR Program under OMB control number 0938-
1270 (expiration date August 31, 2025), we estimate a burden of 10 
minutes per ASC to report the measure data. Therefore, we estimate that 
each ASC would spend 10 minutes (0.167 hours) annually to report the 
Screening for SDOH measure data to CMS.
    For the CY 2025 voluntary reporting period, we estimate a total 
collection and reporting burden increase for patients of 86,028 hours 
(10,427,619 patients x 50 percent response rate x 50

[[Page 59527]]

percent of ASCs x 0.033 hours per patient) at a cost of $2,106,826 
(86,028 hours x $24.49/hr). Beginning with the CY 2026 reporting 
period, we estimate a total collection and reporting burden increase 
for patients of 344,111 hours (10,427,619 patients x 0.033 hours per 
patient) at a cost of $8,427,278 (344,111 hours x $24.49/hr).
    For the CY 2025 voluntary reporting period, we estimate a total 
collection and reporting burden increase for program-eligible ASCs of 
373 hours (4,475 ASCs x 50 percent of ASCs x 0.167 hours) at a cost of 
$20,657 (373 hours x $55.38/hr). Beginning with the CY 2026 reporting 
period, we estimate a total collection and reporting burden increase 
for program-eligible ASCs of 746 hours (4,475 ASCs x 0.167 hours) at a 
cost of $41,313 (746 hours x $55.38/hr).
d. Information Collection Burden for the Proposed Adoption of the 
Screen Positive Rate for Social Drivers of Health (SDOH) Measure 
Beginning With Voluntary Reporting for the CY 2025 Reporting Period 
Followed by Mandatory Reporting Beginning With the CY 2026 Reporting 
Period/CY 2028 Payment Determination
    In section XIV.B.3 of this proposed rule, we propose to adopt the 
Screen Positive Rate for SDOH measure beginning with voluntary 
reporting for the CY 2025 reporting period followed by mandatory 
reporting beginning with the CY 2026 reporting period/CY 2028 payment 
determination. We refer readers to the currently approved burden for 
the Screen Positive Rate for SDOH measure in the Hospital IQR Program 
under OMB control number 0938-1022 for the same measure and the same 
frequency of data reporting, as discussed in the FY 2023 IPPS/LTCH PPS 
final rule (87 FR 49386). For this measure, we propose that ASCs would 
be required to report annually the number of patients who screened 
positive for one or more of the five domains (reported as five separate 
rates to reflect each of the five HRSN domains) divided by the total 
number of patients screened.
    We previously included the burden associated with screening 
patients in our discussion of the Screening for SDOH measure. Thus, for 
the Screen Positive Rate for SDOH measure, we estimate only the 
additional burden for an ASC reporting via the HQR system since 
patients would not need to provide, and ASCs would not need to collect, 
any additional information for this measure. We continue to estimate 
that, for voluntary reporting for the CY 2025 reporting period, 50 
percent of ASCs would survey 50 percent of patients, and beginning with 
the first mandatory reporting period, 100 percent of ASCs would submit 
data.
    Measure data aggregated to the hospital level as a numerator and a 
denominator would be submitted via the HQR system annually. Similar to 
the currently approved burden estimate for web-based measures reported 
via the HQR system for the ASCQR Program under OMB control number 0938-
1270 (expiration date August 31, 2025), we estimate a burden of 10 
minutes per ASC to report the measure data. Therefore, we estimate that 
each ASC would spend 10 minutes (0.167 hours) annually to report the 
Screen Positive Rate for SDOH measure data to CMS.
    For the CY 2025 voluntary reporting period, we estimate a total 
collection and reporting burden increase of 373 hours (0.167 hours x 
4,475 ASCs x 50 percent of ASCs) at a cost of $20,657 (373 hours x 
$55.38). Beginning with the CY 2026 reporting period, we estimate a 
total annual collection and reporting burden increase for ASCs of 746 
hours (0.167 hours x 4,475 ASCs) at a cost of $41,313 (746 hours x 
$55.38/hr) across program-eligible ASCs.
e. Summary of Proposed Information Collection Burden Estimates for the 
ASCQR Program
    In summary, we estimate that the proposals in this proposed rule 
would result in an increase of 346,349 hours at a cost of $8,551,217 
for 4,475 program-eligible ASCs from the CY 2025 reporting period/CY 
2027 payment determination through the CY 2026 reporting period/CY 2028 
payment determination. We will submit the revised information 
collection estimates to OMB for approval under OMB control number 0938-
1270 (expiration date August 31, 2025). (See Tables 109 and 110.)
BILLING CODE 4120-01-P

[[Page 59528]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.144


[[Page 59529]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.145

BILLING CODE 4120-01-C

D. ICRs Related to Medicaid Clinic Services Four Walls Exceptions

    As discussed in section XVII of this proposed rule, we propose 
three additional exceptions to the four walls requirement under the 
Medicaid clinic services benefit at 42 CFR 440.90. Specifically, we 
propose to add a mandatory four walls exception for IHS/Tribal clinics 
at Sec.  440.90(c) and optional exceptions for behavioral health 
clinics and clinics located in rural areas at Sec.  440.90(d) and (e). 
To attest to compliance with proposed Sec.  440.90(c) and to effectuate 
the options at proposed Sec.  440.90(d) and (e), States that cover the 
clinic services benefit would have to submit one or more Medicaid State 
plan amendments (SPAs).
    The PRA burden associated with submitting the SPAs implementing the 
proposed Medicaid clinic services four walls exceptions will be 
addressed as part of an associated SPA preprint being developed by CMS 
and submitted to OMB for approval under OMB control number 0938-1188 
(CMS-10398).

E. ICRs for Changes to the Review Timeframes for Hospital Outpatient 
Department (OPD) Prior Authorization Process

    In the CY 2020 OPPS/ASC final rule with comment period, we 
established a prior authorization process for certain hospital OPD 
services using our authority under section 1833(t)(2)(F) of the Act, 
which allows the Secretary to develop a method for controlling 
unnecessary increases in the volume of covered OPD services (84 FR 
61142, 61446 through 61456).\558\ As part of the CY 2021 OPPS/ASC final 
rule with comment period, we added additional service categories to the 
prior authorization process (85 FR 85866, 86236 through 86248). Through 
the CY 2023 OPPS/ASC final rule with comment period, we added an eighth 
service category to the prior authorization process for certain 
hospital OPD services (87 FR 71748, 72224 through 72233). The 
regulations governing the prior authorization process are located in 
subpart I of 42 CFR part 419, specifically at Sec. Sec.  419.80 through 
419.89.
---------------------------------------------------------------------------

    \558\ See also Correction Notice issued January 3, 2020 (85 FR 
224).
---------------------------------------------------------------------------

    In alignment with the CMS Interoperability and Prior Authorization 
final rule (87 FR 76238), we propose to change the current review 
timeframes for provisionally affirmed or non-affirmed requests from 10 
business days to 7 calendar days for standard reviews after receiving 
the prior authorization request for OPD services under Medicare FFS. 
The ICR associated with prior authorization requests for these covered 
outpatient department services is the required documentation submitted 
by providers. The prior authorization request must include all relevant 
documentation necessary to

[[Page 59530]]

show that the service meets applicable Medicare coverage, coding, and 
payment rules, and the request must be submitted before the service is 
provided to the beneficiary and before the claim is submitted for 
processing.
    The burden associated with the changes in review timeframes for the 
OPD prior authorization process will be the time and effort necessary 
for the submitter to locate and obtain the relevant supporting 
documentation to show that the service meets applicable coverage, 
coding, and payment rules. The submitter will then forward the 
information to CMS or its contractor (MAC) for review and determination 
of a provisional affirmation. We expect that this information will 
generally be maintained by providers within the normal course of 
business and that this information will be readily available. We 
estimate that the average time for office clerical activities 
associated with this task will be 30 minutes, equivalent to normal 
prepayment or postpayment medical review. We anticipate that most prior 
authorization requests will be sent by means other than mail, such as 
electronically or by fax. However, we estimate a cost of $5 per request 
for mailing medical records. Based on data from 2019-2022, we estimate 
that there will be 127,397 initial requests mailed per year. In 
addition, we estimate there will be 41,806 resubmissions of a request 
mailed following a non-affirmed decision. Therefore, the total mailing 
cost is estimated to be $846,015 (169,203 mailed requests x $5). We 
also estimate that an additional 3 hours per provider will be required 
for attending educational meetings and reviewing training documents.
    The average labor costs (including 100 percent fringe benefits) 
used to estimate the costs were calculated using data from the Bureau 
of Labor Statistics (BLS) and based on the 2022 median rate for 
Miscellaneous Healthcare Support Occupations.\559\ Based on the BLS 
information, we estimate an average clerical hourly rate of $18.53 with 
a loaded rate of $37.06. The prior authorization program does not 
create any new documentation or administrative requirements. Instead, 
it will just require the same documents needed to support claim 
payments to be submitted earlier in the claim process. We use the 
clerical rate since we do not believe that clinical staff will need to 
spend more time completing the documentation than they will need in the 
absence of the prior authorization policy. The hourly rate reflects the 
time needed for the additional clerical work of submitting the prior 
authorization request itself. We estimate that the total annual number 
of submissions will be 564,010 (394,808 submissions through fax or 
electronic means + 169,203 mailed submissions). Therefore, we estimate 
that the annual burden hours allotted across all providers will be 
316,412 hours (.5 hours x 564,010 submissions plus 3 hours x 11,469 
providers for education). The annual burden cost is $12,572,244 
(316,412 hours x $37.06 plus $846,015 for mailing costs). CMS estimates 
the annual burden to be 316,412 hours and $12,572,244 million. The ICR 
approved under OMB control number 0938-1368 will be revised and 
submitted to OMB for approval of this extension.
---------------------------------------------------------------------------

    \559\ https://www.bls.gov/oes/current/oes_nat.htm.
---------------------------------------------------------------------------

    Table 111 below is a chart reflecting the total burden and 
associated costs for the provisions included in this proposed rule with 
the comment period. The previously approved Paperwork Reduction Act 
package (CMS-10711) is currently undergoing the renewal process. CMS 
did not make any changes to the information collection, such as the 
number of respondents, responses, or other information collection 
requirements. However, there is a one-hour change in the burden hours, 
from 316,413 to 316,412, likely due to rounding up in the previous 
year's calculations. The burden costs have increased from $11,561,950 
to $12,572,244 due to an increase in the average clerical hourly rate 
from $17.13 in 2019 to $18.53 in 2022.
[GRAPHIC] [TIFF OMITTED] TP22JY24.146

F. ICRs for the Hospital Inpatient Quality Reporting (IQR) Program

    In section XXII.B.2 of this proposed rule, we propose that for the 
FY 2026 payment determination, the submission of CCDEs and linking 
variables associated with the Hybrid Hospital-Wide Readmission (HWR) 
measure and the Hybrid Hospital-Wide All-Cause Risk Standardized 
Mortality (HWM) measure would remain voluntary. We are not proposing 
any other modifications to either measure.
    In the FY 2020 IPPS/LTCH PPS final rule and the FY 2022 IPPS/LTCH 
PPS final rule, we estimated the burden for voluntary reporting for the 
Hybrid HWR (84 FR 42603 and 42604) and Hybrid HWM measures (86 FR 
45508), respectively. In both final rules, we stated that we encourage 
all hospitals to submit data for the Hybrid HWR and Hybrid HWM measures 
during the voluntary reporting period. Our previously finalized burden 
estimates assume that all hospitals will participate during the 
voluntary reporting period in order to not underestimate the burden on 
participating hospitals. Therefore, we do not anticipate any changes to 
the burden currently approved for the Hospital IQR Program under OMB 
control number 0938-1022 (expiration date January 31, 2026).

G. ICRs for Continuous Eligibility (42 CFR 435.926 and 457.342)

    In section XX of this proposed rule, we propose to align the 
Medicaid and CHIP regulations with the continuous eligibility 
requirements under section 5112 of Title V, subtitle B (hereafter, 
``section 5112'') of the CAA, 2023. To comply with section 5112 of the 
CAA, 2023, States must submit a CHIP SPA and a Medicaid SPA to provide 
continuous eligibility for children if they do not already do so in 
their CHIP or Medicaid State plans, or if their

[[Page 59531]]

current continuous eligibility SPAs do not comply with the CAA, 2023 
requirements. CMS has already received approval for the burden 
estimates for the CHIP continuous eligibility SPA under OMB control 
number 0938-1148 (CMS-10398) and for the Medicaid continuous 
eligibility SPA under OMB control number 0938-1188 (CMS-10434). We do 
not anticipate any changes to the approved burden estimates.

H. ICRs Regarding Organization, Staffing and Delivery of Services for 
Hospitals (Sec.  482.59 a and b) and CAHs (Sec.  485.649 a Through b)

    We calculated the estimated hourly rates based upon the national 
mean salary for that particular position increased by 100 percent to 
account for overhead costs and fringe benefits (using the May 2023 
National Occupational Employment and Wage Estimates, Bureau of Labor 
Statistics (BLS) at https://www.bls.gov/oes/current/oes_nat.htm. The 
wage and salary data from the BLS do not include health, retirement, 
and other fringe benefits, or the rent, utilities, information 
technology, administrative, and other types of overhead costs 
supporting each employee. The HHS-wide guidance on preparation of 
regulatory and paperwork burden estimates states that doubling salary 
costs is a good approximation for including these overhead and fringe 
benefit costs.
    Table 112 presents the BLS occupation code and title, the facility 
provider position, the estimated average or mean hourly wage, and the 
adjusted hourly wage (with a 100 percent markup of the salary to 
include fringe benefits and overhead costs).
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP22JY24.147


[[Page 59532]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.148

BILLING CODE 4120-01-C
    We propose new requirements for hospitals and CAHs that provide 
obstetrical (OB) services. We propose that if a hospital or Critical 
Access Hospital (CAH) provides OB services, such services must be well-
organized and in accordance with nationally recognized acceptable 
standards of practices for physical and behavioral health of pregnant, 
birthing, and postpartum patients. We also propose that any outpatient 
OB services would be consistent in quality with inpatient OB services 
in accordance with the complexity of services offered. In addition, we 
propose that the organization of the OB service be appropriate to the 
scope of services offered by the facility and integrated with other 
departments of the facility. We further propose that the OB patient 
care units be supervised by an individual with the necessary education 
and training, and specify that person should be an experienced 
registered nurse, certified nurse midwife, nurse practitioner, 
physician assistant, or a doctor of medicine or osteopathy. In 
addition, hospitals and CAHs must delineate and document obstetrical 
privileges for all practitioners providing obstetrical care in 
accordance with the competencies of each practitioner.
    For delivery of services, we propose that OB services must be 
consistent with the needs and resources of the facility. Policies 
governing OB care must be designed to assure the achievement and 
maintenance of high standards of medical practice and patient care and 
safety. We additionally propose that labor & delivery room suites have 
certain basic resuscitation equipment readily available, including a 
call-in-system, cardiac monitor, and fetal doppler or monitor. 
Furthermore, the service must ensure that it has adequate provisions 
and protocols, consistent with nationally recognized and evidence-based 
guidelines for OB emergencies, complications, immediate post-delivery 
care, and other patient health and safety events as identified as part 
of the facility's QAPI program.
    To identify the number of hospitals and CAHs that would be subject 
to the proposed provisions, we utilized the Center for Medicare and 
Medicaid Services' Provider of Services File--Hospital and Non-Hospital 
Facilities. We excluded hospitals and CAHs that do not provide 
obstetric services, as

[[Page 59533]]

well as Rural Emergency Hospitals that are not subject to these CoPs. 
Using this methodology, we obtained a total of 513 CAHs and 4,415 
hospitals that provide obstetric services.\560\
---------------------------------------------------------------------------

    \560\ Provider of Services File--Hospital & Non-Hospital 
Facilities. Available at https://data.cms.gov/provider-characteristics/hospitals-and-other-facilities/provider-of-services-file-hospital-non-hospital-facilities/data. Accessed April 10, 2024.
---------------------------------------------------------------------------

    We believe that most hospitals and CAHs that provide OB services 
already have internal standards and protocols to ensure that OB 
services are well organized and to provide high-quality care that is 
appropriate to the level of services provided and integrated with other 
departments of the facility. We also expect that they have internal 
standards and protocols to ensure compliance with nationally accepted 
guidelines for OB emergencies, complications, immediate post-delivery 
care, and other patient health and safety events. Many hospital 
accrediting organizations also have specific requirements governing 
care for pregnant and postpartum patients that would meet the proposed 
requirements. For example, The Joint Commission (TJC) has wide-ranging 
requirements for hospitals that provide perinatal care, covering 
everything from providing information to families in a way that is easy 
to understand to providing initial care for complications such as 
hemorrhage, hypertensive disorders, fetal heart rate 
abnormalities.\561\ We expect, however, that some hospitals and CAHs 
may need to spend time ensuring that these standards and their sources 
are well-documented.
---------------------------------------------------------------------------

    \561\ The Joint Commission Edition. Program: Perinatal Care, 
``Chapter: Provision of Care, Treatment, and Services.'' Available 
at https://e-dition.jcrinc.com/MainContent.aspx. Accessed April 10, 
2024.
---------------------------------------------------------------------------

    As outlined in 84 FR 51732, writing new policies related to patient 
care is estimated to take eight hours for each member of the staff 
involved in the care policy. We have estimated wages as indicated in 
Table 112 and included the involvement of a physician at $2,029.60 (8 x 
$253.70), a lawyer at $1357.44 (8 x $169.68), a registered nurse at 
$726.72 (8 x $90.84), a medical secretary at $333.6 (8 x $41.70), and a 
medical and health services manager at $1,034.24 (8 x $129.28) for a 
total estimated cost of $5,481.60 per policy. This estimate leads to an 
average hourly cost of $137.04 ($5481.60 / 40) per staff member 
involved in ensuring that these standards and their sources are well-
documented. We assume that documentation would consist of one 
comprehensive policy per facility.
    We do not expect that all facilities would need to spend 40 hours 
to meet these requirements. We expect that there will be no burden for 
TJC-accredited facilities since the organization has wide-ranging 
requirements for hospitals and CAHs, with the requirements increasing 
as the complexity of OB care offered increases. To account for this 
reduction in the overall burden, we used CMS' CASPER (Certification and 
Survey Provider Enhanced Reports) \562\ to identify TJC-accredited 
hospitals and CAHs. According to CASPER, approximately 72.2 percent of 
Medicare and Medicaid approved hospitals are accredited by The Joint 
Commission (TJC), as well as 25 percent of Critical Access Hospitals 
(CAHs).
---------------------------------------------------------------------------

    \562\ Quality, Certification & Oversight Reports (QCOR). CASPER 
(4/16/2024). qcor.cms.gov.
---------------------------------------------------------------------------

    To calculate the hourly burden for this proposed requirement, in 
Table 113 we multiply the number of facilities by the number of 
responses per facility, applying the discount for hospitals and CAHs 
that are accredited by TJC, by the hourly burden estimate. To determine 
the associated cost, we multiply the revised hourly burden estimate by 
the average hourly labor cost. Using this formula, in Table 113 we 
estimate a total burden of 79,853 hours at a cost of $10,943,006.
    Table 114 provides the annual burden estimate over a 10-year 
period. We do not estimate a burden for updating these policies and 
procedures after their initial development in year 1 since regularly 
reviewing and updating policies is a standard business practice for 
healthcare facilities that must comply with applicable federal, state, 
and local laws, regulations and ordinances that periodically change. As 
such, the total estimate over 10 years is 79,853 hours at a cost of 
$10,943,006.
    For the requirement that facilities delineate and document 
obstetrical privileges for all practitioners providing obstetrical 
care, we expect that most hospitals and CAHs already have knowledge 
regarding their practitioners' competencies. We expect, however, that 
they would need to spend time to build a roster of practitioners 
specifying each practitioner's privileges and to update this roster 
annually. We estimate that building and ensuring that this roster is up 
to date would take 8 hours of work annually by a medical secretary at 
$333.6 (8 x $41.70). As shown in Tables 115 and 116, we estimate that 
this provision would cost $2,180,736 annually and $21,807,360 over 10 
years.
    For the requirements that the OB patient care units be supervised 
by an individual with the necessary education and training, as well as 
ensuring that labor and delivery room suites have certain basic 
resuscitation equipment readily available, and that the facility has 
adequate provisions for obstetrical emergencies, we provide the 
estimated cost in the regulatory impact analysis section below.
[GRAPHIC] [TIFF OMITTED] TP22JY24.149


[[Page 59534]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.150

[GRAPHIC] [TIFF OMITTED] TP22JY24.151

[GRAPHIC] [TIFF OMITTED] TP22JY24.152

I. ICRs Regarding OB Staff Training for Hospitals (Sec.  482.59(c) and 
CAHs (Sec.  485.649(c))

    We propose that hospitals and CAHs that provide OB services must 
develop policies and procedures to ensure that staff are trained on 
select topics related to improving the delivery of maternal care. The 
training must reflect the scope and complexity of services offered and 
must include, but is not limited to, facility-identified evidence-based 
best practices and protocols to improve the delivery of maternal care 
within the facility. They would also need to be trained in any 
additional topics as identified by the facility's QAPI program. We also 
propose that the governing body must identify and document which staff 
must complete annual training on these topics. The facility must 
further document that training was successfully completed and must be 
able to demonstrate staff knowledge on these topics. Lastly, we propose 
that the efficacy of the training must be reviewed and assessed on an 
ongoing basis, based on the results of data, measures, and quality 
indicators from its QAPI program.
    As outlined in 84 FR 51732, writing new policies related to patient 
care is estimated to take eight hours for each member of the staff 
involved in the care policy. We have estimated wages as indicated in 
Table 112 and included the involvement of a physician at $2,029.60 (8 x 
$253.70), a lawyer at $1,357.44 (8 x $169.68), a registered nurse at 
$726.72 (8 x $90.84), a medical secretary at $333.6 (8 x $41.70), and a 
medical and health services manager at $1,034.24 (8 x $129.28) for a 
total estimated cost of $5,481.60 per policy. This estimate leads to an 
average hourly cost of $137.04 ($5,481.60 / 40) per staff member 
involved in ensuring that these standards and their sources are well-
documented. We assume that documentation would consist of one 
comprehensive policy per facility. We do not estimate a burden for 
reviewing and assessing the efficacy of these efforts since we address 
this below in the section, ``Revisions to QAPI (Sec.  482.21) Standards 
for OB Services''. We also do not estimate a burden for documentation 
that training was completed as updating employee records is also a 
customary business practice. As indicated in Table 117 and Table 118, 
we estimate that the development of the proposed OB staff training 
policies and procedures will

[[Page 59535]]

take 252,400 hours to complete and cost $34,588,896.
[GRAPHIC] [TIFF OMITTED] TP22JY24.153

[GRAPHIC] [TIFF OMITTED] TP22JY24.154

J. ICRs Regarding Revisions to QAPI (Sec.  482.21) Standards for OB 
Services

    We propose that hospitals and CAHs with OB services must use their 
QAPI program to address health disparities among OB patients on an 
ongoing basis. They must also measure and monitor for health 
disparities among OB patients and develop and implement actions to 
address these disparities and monitor subsequent results. Moreover, on 
an annual basis, they must conduct at least one performance improvement 
project focused on reducing maternal health disparities. In addition to 
the proposed QAPI requirements, we propose that OB leadership be 
engaged in the facility's QAPI requirement. We further propose that if 
a Maternal Mortality Review Committee (MMRC) is available at the state 
or local jurisdiction in which the facility is located, the facility 
must and have a process for incorporating MMRC data and recommendations 
into the facility's QAPI program.
    The costs associated with data collection would include the cost 
for facilities to modify their information technology infrastructure to 
ensure that they capture all features relevant for the diverse 
subpopulations that the facility identifies. Given that many facilities 
already collect some of these patient characteristics, such as race and 
ethnicity, we estimate that planning, programming, and performing 
quality checks would take 8 hours in the first year and 4 hours in all 
subsequent years. We anticipate a mixture of staff from computer and 
mathematical occupations would oversee these changes at an average 
hourly cost of $108.78. This leads to an average cost of $870.24 (8 x 
$108.78) per provider in the first year and $435.12 (4 x $108.78) per 
provider in subsequent years. As indicated in Table 119 we estimate 
that in the first year, updating infrastructure would cost a total of 
$5,491,214. In Table 120, we provide the estimated total 10-year cost 
which we estimate at $30,201,679.
    Based on our experience working with healthcare data, we anticipate 
that stratification of data and quality indicators, together with 
monitoring the results after actions are taken to address these 
disparities would take 8 hours annually. We anticipate that data 
scientists would oversee these efforts at an average hourly cost of 
$114.46. This leads to an average cost of $915.68 (8 x $114.46) per 
provider annually. Table 121 provides the estimated cost in year 1 and 
Table 122 provides the estimated cost over 10 years. We estimate an 
annual cost of $5,777,941 with a total cost of $57,779,408 over 10 
years.
    The final collection of information costs related to this 
requirement come from the proposed provision of information to MMRCs. 
We estimate that for each maternal death, collection of information to 
be submitted to the MMRC would take 4 hours of work by a physician at 
$1,014.80 (4 x $253.70) and 4 hours of work by a medical records 
specialist $206.48 (4 x $51.62) for a total estimated cost of $1,221.28 
per maternal death. This estimate leads to an average hourly cost of 
$152.66 (8 / $1,221.28) per staff member involved in providing 
information to the MMRC.

[[Page 59536]]

    The number of maternal deaths has varied widely in recent years. In 
2021, there was a spike in maternal deaths with the number of deaths 
increasing to 1,205, compared to 861 deaths in 2020 and 754 deaths in 
2019. Preliminary data from 2022 suggests that the number of maternal 
deaths is declining and beginning to return to pre-2021 levels with 818 
recorded deaths. Given uncertainty about how many deaths will occur in 
future years, we assume that an average of 850 deaths annually. A 
review of public sources suggests that most states have MMRCs and, as 
such, most hospitals and CAHs would be subject to this provision. While 
many hospitals and CAHs are already providing information to MMRCs, we 
are not able to estimate the exact number of deaths that are already 
being reviewed. As such, we continue to assume that 850 deaths would be 
subject to this proposed provision annually. We also assume that 
facilities would provide the information to only one MMRC even if they 
are located in a jurisdiction that has both a state and local MMRC. 
Since we are unable to divide deaths that occur in hospitals and CAHs, 
we provide a single cost estimate for both facility types. Table 119 
provides the estimated annual cost for the proposed MMRC reporting 
provisions and Table 120 provides the estimated cost over 10 years.
[GRAPHIC] [TIFF OMITTED] TP22JY24.155

[GRAPHIC] [TIFF OMITTED] TP22JY24.156

[GRAPHIC] [TIFF OMITTED] TP22JY24.157


[[Page 59537]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.158

[GRAPHIC] [TIFF OMITTED] TP22JY24.159

[GRAPHIC] [TIFF OMITTED] TP22JY24.160

K. ICRS Regarding Emergency Services Readiness in Emergency Services 
(Sec.  482.55) for Hospitals

    We propose a new standard for emergency services readiness and to 
improve staff readiness for providing emergency services to all 
hospital patients, including pregnant and postpartum patients. The 
first proposed standard would require hospitals with emergency services 
to have adequate provisions and protocols, consistent with nationally 
accepted guidelines, for the care of patients with emergency conditions 
(including but not limited to patients with OB emergencies, 
complications, immediate post-delivery care). Applicable staff would be 
required to be trained on these protocols and provisions. We also 
propose that equipment, supplies, and medication used in treating 
emergency cases are kept at the hospital and are readily available for 
treating emergency cases.
    As outlined in 84 FR 51732, writing new policies related to patient 
care is estimated to take eight hours for each member of the staff 
involved in the care policy. Since the proposed standard for emergency 
services involves adding a new standard to an existing policy, we 
estimate that it would take half the amount of time as writing a new 
policy, or 4 hours for each staff member involved. We have estimated 
wages as indicated in Table 112 and included the involvement of a 
physician at $1,014.80 (4 x $253.70), a lawyer at $678.72 (4 x 
$169.68), a registered nurse at $363.36 (4 x $90.84), a medical 
secretary at

[[Page 59538]]

$166.80 (4 x $41.70), and a health services manager at $517.12 (4 x 
$129.28) for a total estimated cost of $2,740.80 per policy. This 
estimate leads to an average hourly cost of $137.04 ($2,740.80 / 20) 
per staff member involved in developing this standard. We do not 
estimate a burden for updating standards since reviewing and updating 
policies and procedures is a customary business practice. As indicated 
in Table 125 and Table 126, we estimate that creating this standard 
would cost hospitals $15,888,418 with a total hourly burden of 115,940 
hours.
[GRAPHIC] [TIFF OMITTED] TP22JY24.161

[GRAPHIC] [TIFF OMITTED] TP22JY24.162

L. Transfer Protocols in Discharge Planning (Sec.  482.43) for 
Hospitals

    We propose transfer protocol requirements for hospitals 
transferring patients under their care to the appropriate level of 
care, including to another hospital, as necessary to meet the needs of 
the patient and stabilize any emergency conditions (including but not 
limited to patients with OB emergencies, complications, immediate post-
delivery care). 87 FR 40350 estimated that for rural emergency 
hospitals (REHs), developing a transfer agreement with at least one 
hospital would require 2 hours of work from an administrator and a 
clerical person. We believe that hospitals would face a similar burden 
for this requirement. Using estimated wages as indicated in Table 112, 
we estimate that this requirement would include the involvement of a 
medical secretary at $83.40 (2 x 41.70) and a medical and health 
services manager at $258.56 (2 x 129.28) for a total estimate cost of 
$341.96 per hospital. This estimate leads to an average hourly cost of 
$85.49 ($341.96 / 4) per staff member involved in developing this 
standard. We do not estimate a burden for updating transfer protocols 
since reviewing and updating policies and procedures is a customary 
business practice. As indicated in Table 126 and Table 127, we estimate 
that creating these protocols would cost hospitals $1,982,342 with a 
total hourly burden of 23,188 hours.
[GRAPHIC] [TIFF OMITTED] TP22JY24.163


[[Page 59539]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.164

M. Total Costs for All ICRs Related to Maternal Health

    In Tables 129 and 130, we provide the total hourly burden estimate 
and cost for all proposed collection of information requirements 
related to maternal health as outlined in Tables 114, 116, 118, 120, 
122, 124, 126, and 128. Overall, we estimate that the proposed 
requirements would have a total burden of 1,826,621 hours over 10 years 
at a cost of $183,571,989.
    We would note that our estimates rely on two key assumptions. 
First, our estimates are not able to take into account maternal deaths 
that hospitals and CAHs are already reporting to MMRCs. We seek 
comments on ways to identify the number of deaths already being 
reported to avoid overestimating the cost of this requirement. Second, 
we assume that facilities located in a jurisdiction with more than one 
MMRC would only report deaths to a single MMRC. Some facilities could, 
however, report this information to more than one MMRCs. We seek 
comments on both these assumptions.
BILLING CODE 4120[dash]01-P
[GRAPHIC] [TIFF OMITTED] TP22JY24.165


[[Page 59540]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.166

BILLING CODE 4120[dash]01-C

XXV. Response to Comments

    Because of the large number of public comments we normally receive 
on Federal Register documents, we are not able to acknowledge or 
respond to them individually. We will consider all comments we receive 
by the date and time specified in the DATES section of this preamble; 
and, when we proceed with a subsequent document, we will respond to the 
comments in the preamble to that document.

XXVI. Economic Analyses

A. Statement of Need

    This proposed rule is necessary to make updates to the Medicare 
hospital OPPS rates. It is also necessary to make changes to the 
payment policies and rates for outpatient services furnished by 
hospitals and CMHCs in CY 2025. We are required under section 
1833(t)(3)(C)(ii) of the Act to update annually the OPPS conversion 
factor used to determine the payment rates for APCs. We also are 
required under section 1833(t)(9)(A) of the Act to review, not less 
often than annually, and revise the groups, the relative payment 
weights, and the wage and other adjustments described in section 
1833(t)(2) of the Act. We must review the clinical integrity of payment 
groups and relative payment weights at least annually. We are proposing 
to revise the APC relative payment weights using claims data for 
services furnished on and after January 1, 2023, through and including 
December 31, 2023, and processed through June 30, 2024, and updated 
HCRIS cost report information.
    This proposed rule is also necessary to make updates to the ASC 
payment rates for CY 2025, enabling CMS to make changes to payment 
policies and payment rates for covered surgical procedures and covered 
ancillary services that are performed in ASCs in CY 2025. Because ASC 
payment rates are based on the OPPS relative payment weights for most 
of the procedures performed in ASCs, the ASC payment rates are updated 
annually to reflect annual changes to the OPPS relative payment 
weights. In addition, we are required under section 1833(i)(1) of the 
Act to review and update the list of surgical procedures that can be 
performed in an ASC, not less frequently than every 2 years.
    In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59075 
through 59079), we finalized a policy to

[[Page 59541]]

update the ASC payment system rates using the hospital market basket 
update instead of the CPI-U for CY 2019 through 2023. In the CY 2024 
OPPS/ASC final rule, we finalized a policy to extend the 5-year interim 
period by an additional 2 years, through CY 2024 and CY 2025, to enable 
us to more accurately analyze whether the application of the hospital 
market basket update to the ASC payment system resulted in a migration 
of services from the hospital setting to the ASC setting (88 FR 81960).
    This proposed rule is also necessary to create three additional 
exceptions to the four walls requirement under the Medicaid clinic 
services benefit at 42 CFR 440.90. Specifically, we propose to add a 
mandatory four walls exception for IHS/Tribal clinics at 42 CFR 
440.90(c) and optional exceptions for behavioral health clinics and 
clinics located in rural areas at 42 CFR 440.90(d) and (e). As 
discussed in section XVII.A of this proposed rule, our current 
regulation at 42 CFR 440.90(b) allows for an exception to the four 
walls requirement only for certain clinic services furnished to 
individuals who are unhoused.
    This proposed rule is also necessary to improve the quality of 
obstetrical services in hospitals and Critical Access Hospitals (CAHs). 
The United States has the highest maternal mortality rate among OECD 
countries.\563\ This mortality rate has increased sharply in recent 
years rising from 17.4 deaths per 100 thousand live births in 2018, to 
32.9 deaths per 100 thousand live births in 2021,\564\ with most of the 
increased deaths in 2020 and 2021 being Covid-19 related deaths.\565\ 
The causes of pregnancy-related deaths has shifted in recent years with 
a decline in traditional causes, such as hemorrhage, hypertensive 
disorders of pregnancy, and thromboembolism, and an increase in 
cardiovascular problems and other medical conditions.566 567 
Nearly a third of all pregnancy-related deaths occur between the day of 
delivery and the 6 days that follow, with another 20 percent of deaths 
occurring 7 to 42 days postpartum.\568\
---------------------------------------------------------------------------

    \563\ Tikkanen, R., et al., Maternal Mortality and Maternity 
Care in the United States Compared to 10 Other Developed Countries. 
2020, Commonwealth Fund.
    \564\ Hoyert, D.L., Maternal Mortality Rates in the United 
States, 2021. 2023, NCHS Health E-Stats.
    \565\ United States Government Accountability Office, MATERNAL 
HEALTH: Outcomes Worsened and Disparities Persisted During the 
Pandemic. 2022.
    \566\ Creanga, A.A., et al., Pregnancy-Related Mortality in the 
United States, 2011-2013. Obstetrics & Gynecology, 2017. 130(2): 
366-373.
    \567\ Wang, S., et al., Maternal Mortality in the United States: 
Trends and Opportunities for Prevention. Annual Review of Medicine, 
2023. 74(1): 199-216.
    \568\ Peterson, E.E., et al., Vital Signs: Pregnancy-Related 
Deaths, United States, 2011-2015, and Strategies for Prevention, 13 
States, 2013-2017. Morbidity and Mortality Weekly Report, 2019. 
68(18): 423-429.
---------------------------------------------------------------------------

    Within the United States, there are widespread differences in 
maternal mortality rates based on age, race, and geographical location. 
According to the National Center for Health Statistics, the maternal 
mortality rates for women in the United States over 40 years of age in 
2021 was nearly 8 times greater than for women under 25 years of age, 
with mortality rates for non-Hispanic black women over 40 years of age 
more than 21 times higher than the rate for Hispanic women under 25 
years of age.\569\ Similarly, pregnancy-related mortality rates are 
higher in rural areas vis-[agrave]-vis urban areas.\570\ Beyond deaths, 
maternal morbidity, defined as ``any health condition attributed to 
and/or aggravated by pregnancy and childbirth that has a negative 
impact on the woman's wellbeing'',\571\ remains a common occurrence, 
with rates also varying by age and race.572 573
---------------------------------------------------------------------------

    \569\ Hoyert, D.L., Maternal Mortality Rates in the United 
States, 2021. 2023, NCHS Health E-Stats.
    \570\ Merkt, P.T., et al., Urban-rural differences in pregnancy-
related deaths, United States, 2011-2016. American Journal of 
Obstetrics and Gynecology, 2021. 225(2): 183.e1-183.e16.
    \571\ Firoz, T., et al., Measuring maternal health: focus on 
maternal morbidity. Bull World Health Organ, 2013. 91(10): 794-796.
    \572\ Liese, K.L., et al., Racial and Ethnic Disparities in 
Severe Maternal Morbidity in the United States. Journal of Racial 
and Ethnic Health Disparities, 2019. 6(4): p. 790-798.
    \573\ Leonard, S.A., et al., Racial and ethnic disparities in 
severe maternal morbidity prevalence and trends. Annals of 
Epidemiology, 2019. 33: 30-36.
---------------------------------------------------------------------------

    Pregnancy-related mortality and morbidity have large health and 
economic costs. One study estimates that between 2018 and 2020, 
pregnancy-related mortalities lead to the loss of nearly 114,000 years 
of potential life lost (YPLL) and cost more than $27.4 billion based on 
the value of statistical life (VSL).\574\ Another study finds that 
severe maternal morbidity, as measured by 21 ICD-10 codes that the 
Centers for Disease Control and Prevention (CDC) identified, is 
associated with a 75 percent increase in costs for Medicaid patients 
and a more than doubling in costs for commercially insured patients 
during the prenatal to 30 days post-partum period.\575\ Focusing 
specifically on nine maternal morbidities among the 2019 US birth 
cohort from birth to 5-years postpartum, researchers estimated they had 
a cost of $32.3 billion for birthing parents and their children, with 
$18.7 billion due to medical costs and $13.6 billion coming from non-
medical costs.\576\
---------------------------------------------------------------------------

    \574\ White Robert, S., et al., Economic burden of maternal 
mortality in the USA, 2018-2020. Journal of Comparative 
Effectiveness Research, 2022. 11(13): 927-933.
    \575\ Black, C.M., et al., Costs of Severe Maternal Morbidity in 
U.S. Commercially Insured and Medicaid Populations: An Updated 
Analysis. Women's Health Reports, 2021. 2(1): 443-451.
    \576\ O'Neil, S.S., et al., Societal cost of nine selected 
maternal morbidities in the United States. PLOS ONE, 2022. 17(10): 
e0275656.
---------------------------------------------------------------------------

    Although studies vary in their methodology, time period pre-post 
birth analyzed, medical conditions analyzed, and cost estimates, they 
overall suggest that maternal morbidity and mortality impose a high 
health and safety, as well as economic costs on birth parents, 
children, and society.\577\ Given these costs, we are implementing 
conditions of participation (COPs) that are designed to help reduce 
maternal mortality and morbidity.
---------------------------------------------------------------------------

    \577\ Moran, P.S., et al., Economic burden of maternal 
morbidity--A systematic review of cost-of-illness studies. PLOS ONE, 
2020. 15(1): e0227377.
---------------------------------------------------------------------------

    We propose requirements that hospital and CAH OB patient care units 
be supervised by an individual with the necessary education and 
training and have certain basic resuscitation equipment readily 
available. We also propose that staff involved with OB services be 
trained on key topics related to improving the delivery of maternal 
care. Hospitals and CAHs would also be required to utilize data from 
their QAPI program to implement one quality improvement project to 
address disparities in maternal care and to engage with MMRCs and 
integrate information from MMRCs into their QAPI program. We also 
propose that hospitals and CAHs have basic resuscitation equipment 
available and train their staff on emergency procedures for all 
patients. Finally, we propose that all hospital staff receive annual 
training on proper transfer protocols.

B. Overall Impact of Provisions of This Proposed Rule

    We have examined the impacts of this rule, as required by Executive 
Order 12866, as amended, on Regulatory Planning and Review (September 
30, 1993), Executive Order 13563 on Improving Regulation and Regulatory 
Review (January 18, 2011), Executive Order 14094 entitled ``Modernizing 
Regulatory Review'' (April 6, 2023), the Regulatory Flexibility Act 
(RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of the 
Social Security Act, section 202 of the Unfunded Mandates Reform Act of 
1995 (March 22, 1995, Pub. L. 104-4), and Executive

[[Page 59542]]

Order 13132 on Federalism (August 4, 1999).
    Executive Orders 12866, as amended, and 13563 direct agencies to 
assess all costs and benefits of available regulatory alternatives and, 
if regulation is necessary, to select regulatory approaches that 
maximize net benefits (including potential economic, environmental, 
public health and safety effects, distributive impacts, and equity). 
Executive Order 14094 titled ``Modernizing Regulatory Review'' 
(hereinafter, the Modernizing E.O.) amends section 3(f) of Executive 
Order 12866 (Regulatory Planning and Review). The amended section 3(f) 
of Executive Order 12866 defines a ``significant regulatory action'' as 
an action that is likely to result in a rule: (1) having an annual 
effect on the economy of $200 million or more in any 1 year (adjusted 
every 3 years by the Administrator of OIRA for changes in gross 
domestic product), or adversely affect in a material way the economy, a 
sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, territorial, or 
tribal governments or communities; (2) creating a serious inconsistency 
or otherwise interfering with an action taken or planned by another 
agency; (3) materially altering the budgetary impacts of entitlement 
grants, user fees, or loan programs or the rights and obligations of 
recipients thereof; or (4) raise legal or policy issues for which 
centralized review would meaningfully further the President's 
priorities or the principles set forth in this Executive order, as 
specifically authorized in a timely manner by the Administrator of OIRA 
in each case.
    A regulatory impact analysis (RIA) must be prepared for major rules 
with significant regulatory action/s and/or with significant effects as 
per section 3(f)(1) ($200 million or more in any 1 year). Based on our 
estimates, OMB's Office of Information and Regulatory Affairs has 
determined this rulemaking is significant per section 3(f)(1)) as 
measured by an effect on the economy of $200 million or more in any 1 
year. Accordingly, we have prepared a Regulatory Impact Analysis that 
to the best of our ability presents the costs and benefits of the 
rulemaking. Based on our estimates, OMB's Office of Information and 
Regulatory Affairs has determined that this rulemaking is 
``significant''. Therefore, OMB has reviewed these proposed 
regulations, and the Departments have provided the following assessment 
of their impact.
    We estimate that the total increase in Federal Government 
expenditures under the OPPS for CY 2025, compared to CY 2024, due to 
the changes to the OPPS in this proposed rule, would be approximately 
$1.78 billion. Taking into account our estimated changes in enrollment, 
utilization, and case-mix for CY 2025 we estimate that the OPPS 
expenditures, including beneficiary cost-sharing, for CY 2025 would be 
approximately $88.2 billion, which is approximately $5.2 billion higher 
than estimated OPPS expenditures in CY 2024. Table 131 of this proposed 
rule displays the distributional impact of the proposed CY 2025 changes 
in OPPS payment to various groups of hospitals and for CMHCs.
    We note that under our proposed CY 2025 policy, drugs and 
biologicals are generally paid at ASP plus 6 percent, WAC plus 6 
percent, or 95 percent of AWP, as applicable.
    We estimate that the proposed update to the conversion factor would 
increase total OPPS payments by 2.6 percent in CY 2025. The proposed 
changes to the APC relative payment weights, the proposed changes to 
the wage indexes, the proposed continuation of a payment adjustment for 
rural SCHs, including EACHs, and the proposed payment adjustment for 
cancer hospitals would not increase total OPPS payments because these 
changes to the OPPS are budget neutral. However, these updates would 
change the distribution of payments within the budget neutral system. 
We estimate that the total change in payments between CY 2024 and CY 
2025, considering all budget-neutral payment adjustments, changes in 
estimated total outlier payments, the application of the frontier State 
wage adjustment, in addition to the application of the OPD fee schedule 
increase factor after all adjustments required by sections 
1833(t)(3)(F), 1833(t)(3)(G), and 1833(t)(17) of the Act would increase 
total estimated OPPS payments by 2.3 percent.
    We estimate the total increase (from changes to the ASC provisions 
in this proposed rule, as well as from enrollment, utilization, and 
case-mix changes) in Medicare expenditures (not including beneficiary 
cost-sharing) under the ASC payment system for CY 2025 compared to CY 
2024, to be approximately $202 million. Tables 132 and 133 of this 
proposed rule display the redistributive impact of the CY 2025 changes 
regarding ASC payments, grouped by specialty area and then grouped by 
procedures with the greatest ASC expenditures, respectively.
    We estimate that under our proposal to create three additional 
exceptions to the Medicaid clinic services benefit four walls 
requirement for IHS/Tribal clinics, behavioral health clinics, and 
clinics located in rural areas that total Medicaid transfers would 
increase by $1.18 billion for fiscal years 2025 through 2029. This 
includes a Federal impact of $1.15 billion and State impact of $30 
million.
    For the OB services provisions of this proposed rule, in Tables 160 
and 161, we provide the total estimated cost and hourly burden of these 
proposed requirements both annually and over 10 years, excluding 
collection of information costs that we have already estimated above. 
Overall, we estimate that these proposed requirements would cost an 
average of approximately $428 million and take 2.8 million hours to 
complete. Over 10 years, we estimate that the total cost would be 
approximately $4.28 billion and take 28.3 million hours to complete. 
Below, we provide the cost estimates for each of the proposed 
requirements.

C. Detailed Economic Analyses

1. Estimated Effects of OPPS Changes in This Proposed Rule
a. Limitations of Our Analysis
    The distributional impacts presented here are the projected effects 
of the proposed CY 2025 policy changes on various hospital groups. We 
post our hospital-specific estimated payments for CY 2025 on the CMS 
website with the other supporting documentation for this final rule 
with comment period. To view the hospital-specific estimates, we refer 
readers to the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient. On the website, select 
``Regulations and Notices'' from the left side of the page and then 
select ``CMS-1809-P'' from the list of regulations and notices. The 
hospital-specific file layout and the hospital-specific file are listed 
with the other supporting documentation for this proposed rule. We show 
hospital-specific data only for hospitals whose claims were used for 
modeling the impacts shown in Table 131 of this proposed rule. We do 
not show hospital-specific impacts for hospitals whose claims we were 
unable to use. We refer readers to section II.A of this proposed rule 
for a discussion of the hospitals whose claims we do not use for 
ratesetting or impact purposes.
    We estimate the effects of the individual policy changes by 
estimating payments per service, while holding all other payment 
policies constant. We use the best data available but do not attempt to 
predict behavioral responses to our policy changes in order to isolate 
the effects associated with specific policies or updates, but any 
policy that

[[Page 59543]]

changes payment could have a behavioral response. In addition, we have 
not made any adjustments for future changes in variables, such as 
service volume, service-mix, or number of encounters.
b. Estimated Effects of OPPS Changes on Hospitals
    Table 131 shows the estimated impact of this proposed rule on 
hospitals. Historically, the first line of the impact table, which 
estimates the change in payments to all facilities, has always included 
cancer and children's hospitals, which are held harmless to their pre-
Balanced Budget Act (BBA) amount. We also include CMHCs in the first 
line that includes all providers. We include a second line for all 
hospitals, excluding permanently held harmless hospitals and CMHCs.
    We present separate impacts for CMHCs in Table 131, and we discuss 
them separately below, because CMHCs have historically been paid only 
for partial hospitalization services under the OPPS and are a different 
provider type from hospitals. In the CY 2024 OPPS/ASC final rule (88 FR 
81833), we finalized paying CMHCs for partial hospitalization services 
and intensive outpatient services under APCs 5851 through 5854. For CY 
2025, we propose to maintain the same APC structure and update each APC 
payment rate to reflect the most recent available cost data.
    The estimated increase in the total payments made under the OPPS is 
determined largely by the increase to the conversion factor under the 
statutory methodology. The distributional impacts presented do not 
include assumptions about changes in volume and service-mix. The 
conversion factor is updated annually by the OPD fee schedule increase 
factor, as discussed in detail in section II.B of this proposed rule.
    Section 1833(t)(3)(C)(iv) of the Act provides that the OPD fee 
schedule increase factor is equal to the market basket percentage 
increase applicable under section 1886(b)(3)(B)(iii) of the Act, which 
we refer to as the IPPS market basket percentage increase. The proposed 
IPPS market basket percentage increase applicable to the OPD fee 
schedule for CY 2025 is 3.0 percent. Section 1833(t)(3)(F)(i) of the 
Act reduces that 3.0 percent by the productivity adjustment described 
in section 1886(b)(3)(B)(xi)(II) of the Act, which is 0.4 percentage 
point for CY 2025 (which is also the productivity adjustment for FY 
2025 in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36205)) 
resulting in the proposed CY 2025 OPD fee schedule increase factor of 
2.6 percent. We are using the OPD fee schedule increase factor of 2.6 
percent in the calculation of the proposed CY 2025 OPPS conversion 
factor. Section 10324 of the Affordable Care Act, as amended by HCERA, 
further authorized additional expenditures outside budget neutrality 
for hospitals in certain frontier States that have a wage index less 
than 1.0000. The amounts attributable to this frontier State wage index 
adjustment are incorporated in the estimates in Table 131 of this 
proposed rule.
    To illustrate the impact of the CY 2025 changes, our analysis 
begins with a baseline simulation model that uses the CY 2024 relative 
payment weights, the FY 2024 final IPPS wage indexes that include 
reclassifications, and the final CY 2024 conversion factor. Table 131 
shows the estimated redistribution of the increase or decrease in 
payments for CY 2025 over CY 2024 payments to hospitals and CMHCs as a 
result of the following factors: the impact of the APC reconfiguration 
and recalibration changes between CY 2024 and CY 2025 (Column 2); the 
wage indexes and the provider adjustments (Column 3); the combined 
impact of all of the changes described in the preceding columns plus 
the 2.6 percent OPD fee schedule increase factor update to the 
conversion factor (Column 4); the estimated impact taking into account 
all payments for CY 2025 relative to all payments for CY 2024, 
including the impact of changes in estimated outlier payments and 
changes to the pass-through payment estimate (Column 5).
    We did not model an explicit budget neutrality adjustment for the 
rural adjustment for SCHs because we proposed to maintain the current 
adjustment percentage for CY 2025. Because the proposed updates to the 
conversion factor (including the update of the OPD fee schedule 
increase factor), the estimated cost of the rural adjustment, and the 
estimated cost of projected pass-through payment for CY 2025 are 
applied uniformly across services, observed redistributions of payments 
in the impact table for hospitals largely depend on the mix of services 
furnished by a hospital (for example, how the APCs for the hospital's 
most frequently furnished services would change), and the impact of the 
wage index changes on the hospital. However, total payments made under 
this system and the extent to which this proposed rule would 
redistribute money during implementation also will depend on changes in 
volume, practice patterns, and the mix of services billed between CY 
2024 and CY 2025 by various groups of hospitals, which CMS cannot 
forecast.
    Overall, we estimate that the proposed rates for CY 2025 would 
increase Medicare OPPS payments by an estimated 2.3 percent. Removing 
payments to cancer and children's hospitals because their payments are 
held harmless to the pre-OPPS ratio between payment and cost and 
removing payments to CMHCs results in an estimated 2.4 percent increase 
in Medicare payments to all other hospitals. These estimated payments 
would not significantly impact other providers.
Column 1: Total Number of Hospitals
    The first line in Column 1 in Table 131 shows the total number of 
facilities (3,511), including designated cancer and children's 
hospitals and CMHCs, for which we were able to use CY 2023 hospital 
outpatient and CMHC claims data to model CY 2024 and CY 2025 payments, 
by classes of hospitals, for CMHCs and for dedicated cancer hospitals. 
We excluded all hospitals and CMHCs for which we could not plausibly 
estimate CY 2024 or CY 2025 payment and entities that are not paid 
under the OPPS. The latter entities include CAHs, IHS and tribal 
hospitals, and hospitals located in Guam, the U.S. Virgin Islands, 
Northern Mariana Islands, American Samoa, and the State of Maryland. 
This process is discussed in greater detail in section II.A of this 
proposed rule. At this time, we are unable to calculate a DSH variable 
for hospitals that are not also paid under the IPPS because DSH 
payments are only made to hospitals paid under the IPPS. Hospitals for 
which we do not have a DSH variable are grouped separately and 
generally include freestanding psychiatric hospitals, rehabilitation 
hospitals, and long-term care hospitals. We show the total number of 
OPPS hospitals (3,413), excluding the hold harmless cancer and 
children's hospitals and CMHCs, on the second line of the table. We 
excluded cancer and children's hospitals because section 1833(t)(7)(D) 
of the Act permanently holds harmless cancer hospitals and children's 
hospitals to their ``pre-BBA amount'' as specified under the terms of 
the statute, and therefore, we removed them from our impact analyses. 
We show the isolated impact on the 32 CMHCs at the bottom of the impact 
table (Table 131and discuss that impact separately below.
Column 2: APC Recalibration--All Changes
    Column 2 shows the estimated effect of APC recalibration. Column 2 
also

[[Page 59544]]

reflects any changes in multiple procedure discount patterns or 
conditional packaging that occur as a result of the changes in the 
relative magnitude of payment weights. As a result of APC 
recalibration, we estimate that urban hospitals would experience a 0.1 
increase, with the impact ranging from a decrease of 0.1 percent to an 
increase of 0.3, depending on the number of beds. Rural hospitals will 
experience an estimated decrease of 0.1 overall. Major teaching 
hospitals will experience an estimated decrease of 0.1 percent.
Column 3: Wage Indexes and the Effect of the Provider Adjustments
    Column 3 demonstrates the combined budget neutral impact of the APC 
recalibration, the updates for the wage indexes with the FY 2025 IPPS 
post-reclassification wage indexes, the rural adjustment, the frontier 
adjustment, and the cancer hospital payment adjustment. We modeled the 
independent effect of the budget neutrality adjustments and the OPD fee 
schedule increase factor by using the relative payment weights and wage 
indexes for each year and using a CY 2024 conversion factor that 
included the OPD fee schedule increase and a budget neutrality 
adjustment for differences in wage indexes.
    Column 3 reflects the independent effects of the updated wage 
indexes, including the application of budget neutrality for the rural 
floor policy on a nationwide basis, as well as the proposed CY 2025 
changes in wage index policy, discussed in section II.C of this 
proposed rule. We did not model a budget neutrality adjustment for the 
rural adjustment for SCHs because we propose to continue the rural 
payment adjustment of 7.1 percent to rural SCHs for CY 2025, as 
described in section II.E of this proposed rule. We modeled a budget 
neutrality adjustment for the proposed cancer hospital payment 
adjustment because the proposed payment-to-cost ratio target for the 
cancer hospital payment adjustment in CY 2025 is 0.87, which is 
different from the 0.88 PCR target adopted in the CY 2024 OPPS/ASC 
final rule with comment period (88 FR 81589). We note that, in 
accordance with section 16002 of the 21st Century Cures Act, we are 
applying a budget neutrality factor calculated as if the cancer 
hospital adjustment target payment-to-cost ratio was 0.88, not the 0.87 
target payment-to-cost ratio we propose in section II.F of this 
proposed rule.
    We modeled the independent effect of updating the wage indexes by 
varying only the wage indexes, holding APC relative payment weights, 
service-mix, and the rural adjustment constant and using the CY 2025 
scaled weights and a CY 2024 conversion factor that included a budget 
neutrality adjustment for the effect of the changes to the wage indexes 
between CY 2024 and CY 2025.
Column 4: All Budget Neutrality Changes Combined With the Market Basket 
Update
    Column 4 demonstrates the combined impact of all the proposed 
changes previously described and the update to the conversion factor of 
2.6 percent. Overall, these changes would increase payments to urban 
hospitals by 2.8 percent and to rural hospitals by 3.5 percent. Rural 
sole community hospitals would receive an estimated increase of 3.4 
percent while other rural hospitals would receive an estimated increase 
of 3.6 percent.
Column 5: All Changes for CY 2025
    Column 5 depicts the full impact of the proposed CY 2025 policies 
on each hospital group by including the effect of all changes for CY 
2025 and comparing them to all estimated payments in CY 2024. Column 5 
shows the combined budget neutral effects of Columns 2 and 3; the OPD 
fee schedule increase; the impact of estimated OPPS outlier payments, 
as discussed in section II.G of proposed rule; the change in the 
Hospital OQR Program payment reduction for the small number of 
hospitals in our impact model that failed to meet the reporting 
requirements (discussed in section XIV of this proposed rule); and 
other proposed rule adjustments to the CY 2025 OPPS payments.
    Of those hospitals that failed to meet the Hospital OQR Program 
reporting requirements for the full CY 2024 update (and assumed, for 
modeling purposes, to be the same number for CY 2025), we included 106 
hospitals in our model because they had both CY 2023 claims data and 
recent cost report data. We estimate that the cumulative effect of all 
changes for CY 2025 would increase payments to all facilities by 2.3 
percent for CY 2024. We modeled the independent effect of all changes 
in Column 5 using the final relative payment weights for CY 2024 and 
the proposed relative payment weights for CY 2025. We used the final 
conversion factor for CY 2024 of $87.382 and the proposed CY 2025 
conversion factor of $89.379 discussed in section II.B of this proposed 
rule.
    Column 5 contains simulated outlier payments for each year. We used 
the 1-year charge inflation factor used in the FY 2025 IPPS/LTCH PPS 
proposed rule (89 FR 36572) of 4.1 percent (1.04142) to increase 
charges on the CY 2023 claims, and we used the overall CCR in the April 
2024 Outpatient Provider-Specific File (OPSF) to estimate outlier 
payments for CY 2024. Using the CY 2023 claims and a 4.1 percent charge 
inflation factor, we currently estimate that outlier payments for CY 
2024, using a multiple threshold of 1.75 and a fixed-dollar threshold 
of $7,750, would be approximately 0.85 percent of total payments. The 
estimated current outlier payments of 0.85 percent are incorporated in 
the comparison in Column 5. We used the same set of claims and a charge 
inflation factor of 8.5 percent (1.084555) and the CCRs in the April 
2024 OPSF, with an adjustment of 1.03331 (89 FR 36573), to reflect 
relative changes in cost and charge inflation between CY 2023 and CY 
2025, to model the proposed CY 2025 outliers at 1.0 percent of 
estimated total payments using a multiple threshold of 1.75 and a fixed 
dollar threshold of $8,000. The charge inflation and CCR inflation 
factors are discussed in detail in the FY 2025 IPPS/LTCH PPS proposed 
rule (89 FR 36572 through 36573).
    Overall, we estimate that facilities will experience an increase of 
2.3 percent under this proposed rule in CY 2025 relative to total 
spending in CY 2024. This projected increase (shown in Column 5) of 
Table 131 of this proposed rule reflects the proposed 2.6 percent OPD 
fee schedule increase factor, adding the 0.15 difference in estimated 
outlier payments between CY 2024 (0.85 percent) and CY 2025 (1.0 
percent), minus 0.44 percent for the change in the pass-through payment 
estimate between CY 2024 and CY 2025. We estimate that the combined 
effect of all changes for CY 2025 would increase payments to urban 
hospitals by 2.4 percent. Overall, we estimate that rural hospitals 
would experience a 2.8 percent increase as a result of the combined 
effects of all the changes for CY 2025.
    Among hospitals, by teaching status, we estimate that the impacts 
resulting from the combined effects of all changes would include an 
increase of 2.1 percent for major teaching hospitals and an increase of 
2.5 percent for nonteaching hospitals. Minor teaching hospitals would 
experience an estimated increase of 2.6 percent.
    In our analysis, we also have categorized hospitals by type of 
ownership. Based on this analysis, we estimate that voluntary hospitals 
would experience an increase of 2.3 percent, proprietary hospitals 
would experience an increase of 3.5 percent, and governmental hospitals 
will experience an increase of 2.4 percent.

[[Page 59545]]

c. Estimated Effects of OPPS Changes on CMHCs
    The last line of Table 131 demonstrates the isolated impact on 
CMHCs, which historically have only furnished partial hospitalization 
services under the OPPS. As discussed in section VIII.C of this 
proposed rule, we propose for CY 2025 to continue paying CMHCs using 
APCs 5851 through 5854. We modeled the impact of this APC policy, 
assuming CMHCs will continue to provide the same PHP care as seen in 
the CY 2023 claims used for ratesetting in this proposed rule. We note 
that the CY 2023 claims used for this CY 2025 proposed rule do not 
include any provision of IOP services. We did not exclude days with one 
or two services from our modeling for CY 2025, because our proposed 
rule policy would pay the per diem rate for APC 5853 for such days 
beginning in CY 2025. As a result of the final PHP APC changes for 
CMHCs, we estimate that CMHCs would experience a 7.2 percent increase 
in CY 2025 payments relative to their CY 2024 payments (shown in Column 
5). For a detailed discussion of our proposed PHP policies, please see 
section VIII of this proposed rule.
    Column 3 shows the estimated impact of adopting the proposed FY 
2025 wage index values, which result in an estimated change of 0.7 
percent to CMHCs. Column 4 shows that combining the OPD fee schedule 
increase factor, along with the proposed changes in APC policy for CY 
2025 and the proposed FY 2025 wage index updates, would result in an 
estimated increase of 7.7 percent.
BILLING CODE 4120-01-P

[[Page 59546]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.167


[[Page 59547]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.168


[[Page 59548]]


BILLING CODE 4120-01-C
d. Estimated Effect of OPPS Changes on Beneficiaries
    For services for which the beneficiary pays a copayment of 20 
percent of the payment rate, the beneficiary's payment would increase 
for services for which the OPPS payments would rise and decrease for 
services for which the OPPS payments would fall. For further discussion 
of the calculation of the national unadjusted copayments and minimum 
unadjusted copayments, we refer readers to section II.H of this 
proposed rule. In all cases, section 1833(t)(8)(C)(i) of the Act limits 
beneficiary liability for copayment for a procedure performed in a year 
to the hospital inpatient deductible for the applicable year.
    We estimate that the aggregate beneficiary coinsurance percentage 
would be approximately 17.8 percent for all services paid under the 
OPPS in CY 2025. The estimated aggregate beneficiary coinsurance 
reflects general system adjustments, including the proposed CY 2025 
comprehensive APC payment policy discussed in section II.A.2.b of this 
proposed rule. We note that the individual payments, and therefore 
copayments, associated with services may differ based on the setting in 
which they are furnished. However, at the aggregate system level, we do 
not currently observe significant impact on beneficiary coinsurance as 
a result of those policies.
e. Estimated Effects of OPPS Changes on Other Providers
    The relative payment weights and payment amounts established under 
the OPPS affect the payments made to ASCs, as discussed in section XIII 
of this final rule. Hospitals, CMHCs, and ASCs would be affected by the 
changes in this proposed rule. Additionally, as discussed in section 
VIII.A.2 of this proposed rule, we established payment for IOP 
furnished by RHCs, FQHCs, and Opioid Treatment Programs. These 
providers of IOP are not paid under the OPPS and are not included in 
the impact analysis shown in Table 131. However, the proposed payment 
amount for OPPS APC 5861 would affect payments to RHCs and FQHCs since 
under sections 1834(o)(5)(A) and 1834(y)(3)(A) of the Act payment for 
IOP services in these settings is required to be equal to the payment 
determined for IOP services in the hospital outpatient department.
f. Estimated Effects of OPPS Changes on the Medicare and Medicaid 
Programs
    The effect of the update on the Medicare program is expected to be 
an increase of $1.78 billion in program payments for OPPS services 
furnished in CY 2025. The effect on the Medicaid program is expected to 
be limited to copayments that Medicaid may make on behalf of Medicaid 
recipients who are also Medicare beneficiaries. We estimate that the 
changes in this proposed rule would increase these Medicaid beneficiary 
payments by approximately $155 million in CY 2025. Currently, there are 
approximately 11.5 million dual-eligible beneficiaries, which represent 
approximately 40 percent of Medicare Part B fee-for-service 
beneficiaries. The impact on Medicaid was determined by taking 40 
percent of the beneficiary cost-sharing impact. The national average 
split of Medicaid payments is 58 percent Federal payments and 42 
percent State payments. Therefore, for the estimated $155 million 
Medicaid increase, approximately $90 million would be from the Federal 
government and $65 million would be from State governments.
g. Alternative OPPS Policies Considered
    Alternatives to the OPPS changes we proposed and the reasons for 
our selected alternatives are discussed throughout this proposed rule.
h. Proposed Add-On Payment for High-Cost Drugs to the Indian Health 
Service (IHS) All-Inclusive Rate (AIR)
    For CY 2025, we propose to pay Indian Health Service (IHS) and 
tribal hospitals separately for high-cost drugs (Part B drugs with 
daily costs over $1,334) furnished in hospital outpatient departments 
through an add-on payment, in addition to the All-Inclusive Rate (AIR), 
using the IHS authority \578\ under which the annual AIR is calculated. 
This policy is projected to increase Medicare program expenditures by 
approximately $30 million in CY 2025. We refer readers to section X.C 
of this proposed rule for further discussion of this policy.
---------------------------------------------------------------------------

    \578\ Sections 321(a) and 322(b) of the Public Health Service 
Act (42 U.S.C. 248), Public Law 83-568 (42 U.S.C. 2001(a)), and the 
Indian Health Care Improvement Act (25 U.S.C. 1601 et seq.).
---------------------------------------------------------------------------

2. Estimated Effects of CY 2024 ASC Payment System Changes
    Most ASC payment rates are calculated by multiplying the ASC 
conversion factor by the ASC relative payment weight. As discussed 
fully in section XIII of this proposed rule, we are setting the CY 2025 
ASC relative payment weights by scaling the proposed CY 2025 OPPS 
relative payment weights by the proposed CY 2025 ASC scalar of 0.873. 
The estimated effects of the updated relative payment weights on 
payment rates are varied and are reflected in the estimated payments 
displayed in Tables 132 and 133.
    Beginning in CY 2011, section 3401 of the Affordable Care Act 
requires that the annual update to the ASC payment system after 
application of any quality reporting reduction be reduced by a 
productivity adjustment. In CY 2019, we adopted a policy for the annual 
update to the ASC payment system to be the hospital market basket 
update for CY 2019 through CY 2023. In the CY 2024 OPPS/ASC final rule 
with comment period, we extended this 5-year interim period an 
additional 2 years through CYs 2024 and 2025. Section 
1886(b)(3)(B)(xi)(II) of the Act defines the productivity adjustment to 
be equal to the 10-year moving average of changes in annual economy-
wide private nonfarm business multifactor productivity (as projected by 
the Secretary for the 10-year period, ending with the applicable fiscal 
year, year, cost reporting period, or other annual period). For ASCs 
that fail to meet their quality reporting requirements, the CY 2025 
payment determinations would be based on the application of a 2.0 
percentage point reduction to the annual update factor, which is the 
hospital market basket update for CY 2025. We calculated the proposed 
CY 2025 ASC conversion factor by adjusting the CY 2024 ASC conversion 
factor by 0.9958 to account for changes in the pre-floor and pre-
reclassified hospital wage indexes between CY 2024 and CY 2025, which 
is includes our proposed limit on wage index declines of greater than 5 
percent, and by applying the CY 2025 productivity-adjusted hospital 
market basket update factor of 2.6 percent (which is equal to the 
proposed inpatient hospital market basket percentage increase of 3.0 
percent reduced by a productivity adjustment of 0.4 percentage point). 
The proposed CY 2025 ASC conversion factor is $54.675 for ASCs that 
successfully meet the quality reporting requirements.
a. Limitations of Our Analysis
    Presented here are the projected effects of the proposed changes 
for CY 2025 on Medicare payment to ASCs. A key limitation of our 
analysis is our inability to predict changes in ASC service-mix between 
CY 2023 and CY 2025 with precision. We believe the net effect on 
Medicare expenditures resulting from the proposed CY 2025

[[Page 59549]]

changes would be small in the aggregate for all ASCs. However, such 
changes may have differential effects across surgical specialty groups, 
as ASCs continue to adjust to the payment rates based on the policies 
of the revised ASC payment system. We are unable to accurately project 
such changes at a disaggregated level. Clearly, individual ASCs would 
experience changes in payment that differ from the aggregated estimated 
impacts presented below.
b. Estimated Effects of ASC Payment System Policies on ASCs
    Some ASCs are multispecialty facilities that perform a wide range 
of surgical procedures from excision of lesions to hernia repair to 
cataract extraction; others focus on a single specialty and perform 
only a limited range of surgical procedures, such as eye, digestive 
system, or orthopedic procedures. The combined effect of the proposed 
update to the CY 2025 payments on an individual ASC would depend on a 
number of factors, including, but not limited to, the mix of services 
the ASC provides, the volume of specific services provided by the ASC, 
the percentage of its patients who are Medicare beneficiaries, and the 
extent to which an ASC provides different services in the coming year. 
The following discussion includes tables that display estimates of the 
impact of the proposed CY 2025 updates to the ASC payment system on 
Medicare payments to ASCs, assuming the same mix of services, as 
reflected in our CY 2023 claims data. Table 132 depicts the estimated 
aggregate percent change in payment by surgical specialty or ancillary 
items and services group by comparing estimated CY 2024 payments to 
estimated CY 2025 payments, and Table 133 shows a comparison of 
estimated CY 2024 payments to estimated CY 2025 payments for procedures 
that we estimate would receive the most Medicare payment in CY 2024.
    In Table 132, we have aggregated the surgical HCPCS codes by 
specialty group, grouped all HCPCS codes for covered ancillary items 
and services into a single group, and then estimated the effect on 
aggregated payment for surgical specialty and ancillary items and 
services groups. The groups are sorted for display in descending order 
by estimated Medicare program payment to ASCs. The following is an 
explanation of the information presented in Table 132.
     Column 1--Surgical Specialty or Ancillary Items and 
Services Group indicates the surgical specialty into which ASC 
procedures are grouped and the ancillary items and services group, 
which includes all HCPCS codes for covered ancillary items and 
services. To group surgical procedures by surgical specialty, we used 
the CPT code range definitions and Level II HCPCS codes and Category 
III CPT codes, as appropriate, to account for all surgical procedures 
to which the Medicare program payments are attributed.
     Column 2--Estimated CY 2024 ASC Payments were calculated 
using CY 2023 ASC utilization data (the most recent full year of ASC 
utilization) and CY 2024 ASC payment rates. The surgical specialty 
groups are displayed in descending order based on estimated CY 2024 ASC 
payments.
     Column 3--Estimated CY 2025 Percent Change is the 
aggregate percentage increase or decrease in Medicare program payment 
to ASCs for each surgical specialty or ancillary items and services 
group that is attributable to proposed updates to ASC payment rates for 
CY 2025 compared to CY 2024.
    As shown in Table 132, for the six specialty groups that account 
for the most ASC utilization and spending, we estimate that the 
proposed update to ASC payment rates for CY 2025 would result in a 2 
percent increase in aggregate payment amounts for eye and ocular adnexa 
procedures, a 2 percent increase in aggregate payment amounts for 
musculoskeletal system procedures, a 2 percent increase in aggregate 
payment amounts for nervous system procedures, a 3 percent increase in 
aggregate payment amounts for digestive system procedures, a 2 percent 
increase in aggregate payment amounts for cardiovascular system 
procedures, and a 2 percent increase in aggregate payment amounts for 
genitourinary system procedures. We note that these changes can be a 
result of different factors, including updated data, payment weight 
changes, and changes in policy. In general, spending in each of these 
categories of services is increasing due to the 2.6 percent payment 
rate update which is offset by roughly 0.4 percentage points as a 
result of the proposed CY 2025 ASC wage indexes and the proposed ASC 
wage index scalar of 0.9958, resulting in a net 2.2 percent payment 
rate update. After the payment rate update is accounted for, aggregate 
payment increases or decreases for a category of services can be higher 
or lower than a 2.2 percent increase, depending on if payment weights 
in the OPPS APCs that correspond to the applicable services increased 
or decreased or if the most recent data show an increase or a decrease 
in the volume of services performed in an ASC for a category. For 
example, we estimate a 3 percent increase in gastrointestinal procedure 
payments. The increase in payment rates for gastrointestinal procedures 
is a result of relative increase in the OPPS relative weights for the 
Upper GI Procedures and Lower GI Procedures clinical families. These 
changes are further increased by the 2.2 percent ASC overall rate 
increase for these procedures. For estimated changes for selected 
procedures, we refer readers to Table 132 provided later in this 
section.

[[Page 59550]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.169

    Table 133 shows the estimated impact of the updates to the revised 
ASC payment system on aggregate ASC payments for selected surgical 
procedures during CY 2025. The table displays 30 of the procedures 
receiving the greatest estimated CY 2024 aggregate Medicare payments to 
ASCs. The HCPCS codes are sorted in descending order by estimated CY 
2024 program payment.
     Column 1--CPT/HCPCS code.
     Column 2--Short Descriptor of the HCPCS code.
     Column 3--Estimated CY 2024 ASC Payments were calculated 
using CY 2023 ASC utilization (the most recent full year of ASC 
utilization) and the CY 2024 ASC payment rates. The estimated CY 2024 
payments are expressed in millions of dollars.
     Column 4--Estimated CY 2025 Percent Change reflects the 
percent differences between the estimated ASC payment for CY 2024 and 
the estimated payment for CY 2025 based on the proposed update.
BILLING CODE 4120[dash]01-P

[[Page 59551]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.170

BILLING CODE 4120[dash]01-C
c. Estimated Effects of ASC Payment System Policies on Beneficiaries
    We estimate that the CY 2025 update to the ASC payment system would 
be generally positive (that is, result in lower cost-sharing) for 
beneficiaries with respect to the new procedures to be designated as 
office-based for CY 2025. First, other than certain preventive services 
where coinsurance and the Part B deductible is waived to comply with 
sections 1833(a)(1) and (b) of the Act, the ASC coinsurance rate for 
all procedures is 20 percent. This contrasts with procedures performed 
in HOPDs under the OPPS, where the beneficiary is responsible for 
copayments that range from 20 percent to 40 percent of the procedure 
payment (other than for certain preventive services), although the 
majority of HOPD procedures have a 20-percent copayment. Second, in 
almost all cases, the ASC payment rates under the ASC payment system 
are lower than payment rates for the same procedures under the OPPS. 
Therefore, the beneficiary coinsurance amount under the ASC payment 
system will usually be less than the OPPS copayment amount for the same 
services. (The only exceptions will be if the ASC coinsurance amount 
exceeds the hospital inpatient deductible since the statute requires 
that OPPS copayment amounts not exceed the hospital inpatient 
deductible. Therefore, in limited circumstances, the ASC coinsurance 
amount may exceed the hospital inpatient deductible and, therefore, the 
OPPS copayment amount for similar services.) Beneficiary coinsurance 
for services migrating from physicians' offices to ASCs may decrease or 
increase under the ASC payment system, depending on the particular 
service and the relative payment amounts under the MPFS compared to the 
ASC. While the ASC payment system bases most of its payment rates on 
hospital cost data used to set OPPS relative payment weights, services 
that are performed a majority of the time in a physician office are 
generally paid the lesser of the ASC amount according to the standard 
ASC ratesetting methodology or at the nonfacility practice expense-
based amount payable under the PFS. For

[[Page 59552]]

those additional procedures that we propose to designate as office-
based in CY 2025, the beneficiary coinsurance amount under the ASC 
payment system generally will be no greater than the beneficiary 
coinsurance under the PFS because the coinsurance under both payment 
systems generally is 20 percent (except for certain preventive services 
where the coinsurance is waived under both payment systems).
Accounting Statements and Tables for OPPS and ASC Payment System
    As required by OMB Circular A-4 (available on the Office of 
Management and Budget website at: https://www.whitehouse.gov/wp-content/uploads/2023/11/CircularA-4.pdf), we have prepared accounting 
statements to illustrate the impacts of the OPPS and ASC changes in 
this proposed rule. The first accounting statement, Table 134, 
illustrates the classification of expenditures for the CY 2025 
estimated hospital OPPS incurred benefit impacts associated with the 
final CY 2024 OPD fee schedule increase. The second accounting 
statement, Table 135, illustrates the classification of expenditures 
associated with the 3.1 percent CY 2025 update to the ASC payment 
system, based on the provisions of this proposed rule and the baseline 
spending estimates for ASCs. Both tables classify most estimated 
impacts as transfers. The third accounting statement, Table 136 
contains the classification of the costs associated with the proposed 
health and safety standards for obstetrical services in hospitals and 
critical access hospitals. This includes the total cost, benefits and 
transfers as outlined in the collection of information section in Table 
130, and the regulatory impact analysis as provided in Table 161. Since 
there are no transfers and we are not able to quantify the benefits of 
these provisions, we do not include them in the table. This statement 
provides our best estimate for the proposed health and safety standards 
for obstetrical services in hospitals and critical access hospitals 
provisions.
[GRAPHIC] [TIFF OMITTED] TP22JY24.171

[GRAPHIC] [TIFF OMITTED] TP22JY24.172

[GRAPHIC] [TIFF OMITTED] TP22JY24.173


[[Page 59553]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.174

3. Effects of Changes in Requirements for the Hospital Outpatient 
Quality Reporting (OQR) Program
a. Background
    We refer readers to the CY 2024 OPPS/ASC final rule with comment 
period (88 FR 81961 through 82012) for the previously estimated effects 
of changes to the Hospital OQR Program for the CY 2026 payment 
determination and subsequent years. Of the 3,062 hospital outpatient 
departments (HOPDs) that met eligibility requirements for the CY 2024 
payment determination for the Hospital OQR Program, we determined that 
117 HOPDs did not meet the requirements to receive the full annual 
Outpatient Department (OPD) fee schedule increase factor while an 
additional 58 HOPDs elected not to participate.
b. Impact of CY 2025 OPPS/ASC Proposed Rule Proposals
    In this proposed rule, we propose to adopt four measures: (1) the 
Hospital Commitment to Health Equity (HCHE) measure, beginning with the 
CY 2025 reporting period/CY 2027 payment determination; (2) the 
Screening for Social Drivers of Health (SDOH) measure, beginning with 
voluntary reporting for the CY 2025 reporting period followed by 
mandatory reporting beginning with the CY 2026 reporting period/CY 2028 
payment determination; (3) the Screen Positive Rate for SDOH measure, 
beginning with voluntary reporting for the CY 2025 reporting period and 
mandatory reporting beginning with the CY 2026 reporting period/CY 2028 
payment determination; and (4) the Patient Understanding of Key 
Information Related to Recovery After a Facility-Based Outpatient 
Procedure or Surgery, Patient Reported Outcome-Based Performance 
Measure (Information Transfer PRO-PM), beginning with voluntary 
reporting for the CY 2026 reporting period and mandatory reporting 
beginning with the CY 2027 reporting period/CY 2029 payment 
determination.
    In addition, we propose to remove two claims-based measures 
beginning with the CY 2025 reporting period/CY 2027 payment 
determination: (1) the MRI Lumbar Spine for Low Back Pain measure; and 
(2) the Cardiac Imaging for Preoperative Risk Assessment for Non-
Cardiac, Low-Risk Surgery measure. We further propose to require 
electronic health record (EHR) technology to be certified to all 
electronic clinical quality measures (eCQMs) available to report for 
the CY 2025 reporting period/CY 2027 payment determination and 
subsequent years.
    Lastly, we propose to modify the public reporting of data for the 
Median Time from Emergency Department (ED) Arrival to ED Departure for 
Discharged ED Patients (Median Time for Discharged ED Patients)--
Psychiatric/Mental Health Patients stratification so that it may be 
published on Care Compare in addition to the data.cms.gov downloadable 
files beginning in CY 2025.
    We refer readers to section XXIV.B (Collection of Information) of 
this proposed rule for a detailed discussion of the calculations 
estimating the changes to the information collection and reporting 
burden for proposed data requirements under the Hospital OQR Program 
for the estimated 3,200 program-eligible HOPDs. A summary table (see 
Table 106) shows an estimated total information collection and 
reporting burden increase of 66,348,321 hours at a cost of 
$1,624,936,216 annually associated with our proposals for the CY 2027 
reporting period/CY 2029 payment determination and subsequent years 
compared to our currently approved information collection burden 
estimates.
    In section XIV.B.1 of this proposed rule, we propose to adopt the 
HCHE measure. For HOPDs to receive a point for each of the domains in 
the measure, affirmative attestations are required for each of the 
elements within a domain. To attest affirmatively to all of the domains 
in the measure, HOPDs may incur costs associated with activities such 
as updating facility policies, engaging senior leadership, 
participating in new quality improvement activities, performing 
additional data analysis, and training staff. The extent of these costs 
would vary depending on what activities the HOPD is already performing, 
HOPD size, and the choices each HOPD makes in order to meet the 
criteria necessary to attest affirmatively.
    In section XIV.B.2 of this proposed rule, we propose to adopt the 
Screening for SDOH measure. HOPDs that are not currently administering 
some screening mechanism and elect to begin doing so as a result of 
this measure adoption proposal would likely incur some non-recurring 
costs associated with changes in workflow and information systems to 
collect the data. The extent of these costs is difficult to quantify as 
different HOPDs may utilize different modes of data collection (for 
example paper-based, electronically patient-directed, clinician-
facilitated, etc.). In addition, depending on the method of data 
collection utilized, the time required to complete the screening may 
add a negligible amount of time to patient visits.
    In section XIV.B.3 of this proposed rule, we propose to adopt the 
Screen Positive Rate for SDOH measure, which would not result in any 
additional economic impacts beyond those discussed for the associated 
Screening for SDOH measure or in section XXIV.B

[[Page 59554]]

(Collection of Information) of this proposed rule.
    In section XV.C.1.b of this proposed rule, we propose to adopt the 
Patient Understanding of Key Information Related to Recovery After a 
Facility-Based Outpatient Procedure or Surgery, Patient Reported 
Outcome-Based Performance Measure (Information Transfer PRO-PM). For 
HOPDs that are not currently collecting these data and elect to begin 
doing so as a result of this measure there would be some costs 
associated with changes in workflow and information systems to collect 
the data. The extent of these costs is difficult to quantify as HOPDs 
may utilize different modes of data collection (collected by facilities 
or authorized third-party vendors post-discharge through a web-based 
survey instrument, distributed electronically) and have differing 
response rates influencing data volume. While we assume the majority of 
hospitals will report data for this measure directly to CMS, we assume 
some hospitals may elect to submit measure data via a third-party 
survey vendor, for which there are associated costs. Under OMB control 
number 0938-1240 for the Outpatient and Ambulatory Surgery Consumer 
Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey 
(expiration date November 30, 2024), an estimate of approximately 
$4,000 per hospital is used to account for these costs.
    In section XV.E.2.b of this proposed rule, we propose to require 
EHR technology to be certified to all eCQMs available to report. We do 
not expect HOPDs would experience an increase in information collection 
burden for the Hospital OQR Program as discussed in section XXIV.B 
(Collection of Information) of this proposed rule, because this 
proposal does not require HOPDs to submit new data to CMS and the use 
of EHR technology that is certified to all available eCQMs has been 
required for the Medicare Promoting Interoperability Program (83 FR 
41672) and the Hospital IQR Program (84 FR 42604). In addition, due to 
the differences in the build of respective CEHRT deployed in HOPDs, the 
mapping required to capture required data for measure calculation, and 
the range of HOPD participation in the development, implementation, and 
testing of new CEHRT functionality, an estimated cost impact of the 
policy is not quantifiable as it will vary by CEHRT and HOPD. For 
certifying a new eCQM in the eCQM measure set specifically, we expect 
some costs for HOPDs so that HOPDs have the option to report it.
    In section XV.F.2 of this proposed rule, we propose to publicly 
report data for the Median Time for Discharged ED Patients--
Psychiatric/Mental Health Patients stratification on Care Compare, 
which would not result in any additional economic impacts beyond those 
discussed in section XXIV.B (Collection of Information) of this 
proposed rule.
4. Effects of Changes in Requirements for the Rural Emergency Hospital 
Quality Reporting (REHQR) Program
a. Background
    We refer readers to the CY 2024 OPPS/ASC final rule with comment 
period (88 FR 82149) for the previously estimated effects of changes to 
the REHQR Program for the CY 2024 reporting period and subsequent 
years. For the CY 2025 reporting period, we have estimated there would 
be 25 REHs mandated to report under the REHQR Program based on hospital 
conversations as of April 22, 2024. We use this number of REHs for our 
impact analyses knowing that more jurisdictions will pass or amend 
necessary legislation enabling transitions, acknowledging that the 
number of conversions could be less than or significantly greater than 
this estimate with time.
b. Impact of CY 2025 OPPS/ASC Proposed Rule Proposals
    In this proposed rule, we propose to adopt three measures: (1) the 
Hospital Commitment to Health Equity (HCHE) measure beginning with the 
CY 2025 reporting period; (2) the Screening for Social Drivers of 
Health (SDOH) measure beginning with voluntary reporting for the CY 
2025 reporting period followed by mandatory reporting beginning with 
the CY 2026 reporting period; and (3) the Screen Positive Rate for SDOH 
measure beginning with voluntary reporting for the CY 2025 reporting 
period followed by mandatory reporting beginning with the CY 2026 
reporting period. We also propose to extend the reporting period for 
the Risk-Standardized Hospital Visits Within 7 Days After Hospital 
Outpatient Surgery measure beginning with the CY 2025 reporting period.
    We refer readers to section XXIV.C (Collection of Information) of 
this proposed rule for a detailed discussion of the calculations 
estimating the changes to the information collection and reporting 
burden for proposed data requirements under the REHQR Program for the 
estimated 25 REHs. A summary table (see Table 108)) demonstrates an 
estimated total information collection and reporting burden for 25 REHs 
of 9,747 hours at a cost of $239,076 annually associated with our 
proposals for the CY 2026 reporting period/CY 2028 program 
determination and subsequent years.
    In section XIV.B.1 of this proposed rule, we propose to adopt the 
HCHE measure. For REHs to receive a point for each of the domains in 
the measure, affirmative attestations are required for each of the 
statements within a domain. To attest affirmatively to all of the 
domains in the measure, REHs may incur costs associated with activities 
such as updating facility policies, engaging senior leadership, 
participating in new quality improvement activities, performing 
additional data analysis, and training staff. The extent of these costs 
would vary depending on what activities the REH is already performing, 
and the individual choices each REH makes in order to meet the criteria 
necessary to attest affirmatively.
    In section XIV.B.2 of this proposed rule, we propose to adopt the 
Screening for SDOH measure. REHs that are not currently administering 
some screening mechanism and elect to begin doing so as a result of 
this measure adoption proposal would likely incur some costs associated 
with changes in workflow and information systems to collect the data. 
The extent of these costs is difficult to quantify as different REHs 
may utilize different modes of data collection (for example paper-
based, electronically patient-directed, clinician-facilitated, etc.). 
In addition, depending on the method of data collection utilized, the 
time required to complete the screening may add a negligible amount of 
time to patient visits.
    In section XIV.B.3 of this proposed rule, we propose to adopt the 
Screen Positive Rate for SDOH measure, which would not result in any 
additional economic impacts beyond those discussed for the associated 
Screening for SDOH measure or in section XXIV.C (Collection of 
Information) of this proposed rule.
    In section XVI.C.2 of this proposed rule, we propose to extend the 
reporting period for the Risk-Standardized Hospital Visits Within 7 
Days After Hospital Outpatient Surgery measure from 1 to 2 years and to 
establish when an REH would be required to submit data under the REHQR 
Program after converting to an REH, which, if finalized as proposed, 
would not result in any additional economic impacts beyond those 
discussed in section XXIV.C (Collection of Information) of this 
proposed rule.

[[Page 59555]]

5. Effects of Changes in Requirements for the Ambulatory Surgical 
Center Quality Reporting (ASCQR) Program
a. Background
    We refer readers to the CY 2024 OPPS/ASC final rule with comment 
period (88 FR 82143) for the previously estimated effects of changes to 
the ASCQR Program for the CY 2027 payment determination. In section 
XVII of this proposed rule, we discuss our proposals affecting the 
ASCQR Program. Based on the most recent analysis of the CY 2024 payment 
determination data, we found that, of the 5,536 ambulatory surgical 
centers (ASCs) that were actively billing Medicare, 4,196 were required 
to participate in the ASCQR Program. Of the 1,340 ASCs not required to 
participate in the program, 279 ASCs did so and met full requirements. 
On this basis, we estimate that 4,475 ASCs (4,196 + 279) would submit 
data for the ASCQR Program for the CY 2025 reporting period unless 
otherwise noted. We note that this estimate is a decrease of 334 ASCs 
from our estimate of 4,809 provided in the CY 2024 OPPS/ASC final rule 
with comment period (88 FR 82143) due to results from more recent data 
analysis regarding numbers of eligible ASCs.
b. Impact of CY 2025 OPPS/ASC Proposed Rule Proposals
    In section XIV.B of this proposed rule, we propose to adopt three 
measures: (1) the Facility Commitment to Health Equity (FCHE) measure 
beginning with the CY 2025 reporting period/CY 2027 payment 
determination; (2) the Screening for Social Drivers of Health (SDOH) 
measure beginning with voluntary reporting for the CY 2025 reporting 
period followed by mandatory reporting beginning with the CY 2026 
reporting period/CY 2028 payment determination; and (3) the Screen 
Positive Rate for SDOH measure beginning with voluntary reporting for 
the CY 2025 reporting period followed by mandatory reporting beginning 
with the CY 2026 reporting period/CY 2028 payment determination.
    We refer readers to section XXIV.D (Collection of Information) of 
this proposed rule for a detailed discussion of the calculations 
estimating the changes to the information collection and reporting 
burden for proposed data requirements under the ASCQR Program for the 
estimated 4,475 program-eligible ASCs. A summary table (see Table 110)) 
demonstrates an estimated total information collection and reporting 
burden increase for 4,475 ASCs of 346,349 hours at a cost of $8,551,217 
annually associated with our proposals for the CY 2026 reporting 
period/CY 2028 payment determination and subsequent years, compared to 
our currently approved information collection burden estimates.
    In section XIV.B.1 of this proposed rule, we propose to adopt the 
FCHE measure. For ASCs to receive a point for each of the domains in 
the measure, affirmative attestations are required for each of the 
statements within a domain. To attest affirmatively to all of the 
domains in the measure, ASCs may incur costs associated with activities 
such as updating facility policies, engaging senior leadership, 
participating in new quality improvement activities, performing 
additional data analysis, and training staff. The extent of these costs 
would vary depending on what activities the ASC is already performing, 
ASC size, and the individual choices each ASC makes in order to meet 
the criteria necessary to attest affirmatively.
    In section XIV.B.2 of this proposed rule, we propose to adopt the 
Screening for SDOH measure. ASCs that are not currently administering 
some screening mechanism and elect to begin doing so as a result of 
this measure adoption proposal would likely incur some non-recurring 
costs associated with changes in workflow and information systems to 
collect the data. The extent of these costs is difficult to quantify as 
different ASCs may utilize different modes of data collection (for 
example paper-based, electronically patient-directed, clinician-
facilitated, etc.). In addition, depending on the method of data 
collection utilized, the time required to complete the screening may 
add a negligible amount of time to patient visits.
    In section XIV.B.3 of this proposed rule, we propose to adopt the 
Screen Positive Rate for SDOH measure, which would not result in any 
additional economic impacts beyond those discussed for the associated 
Screening for SDOH measure or in section XXIV.D (Collection of 
Information) of this proposed rule.
6. Effects of Changes in Requirements for the Hospital Inpatient 
Quality Reporting (IQR) Program
    In section XXII of this proposed rule, we propose that for the FY 
2026 payment determination, the submission of core clinical data 
elements and linking variables associated with the Hybrid Hospital-Wide 
Readmission (HWR) measure and the Hybrid Hospital-Wide All-Cause Risk 
Standardized Mortality (HWM) measure would remain voluntary. This 
proposal would have no impact on participating hospitals because we are 
not modifying either measure.
7. Effects of Proposed Changes for Individuals Currently or Formerly in 
the Custody of Penal Authorities
a. Medicare FFS No Legal Obligation To Pay Payment Exclusion and 
Incarceration (Revisions to 42 CFR 411.4)
    The individuals currently or formerly in the custody of penal 
authorities provisions are discussed in section XXIII of this proposed 
rule. Section XXIII of this proposed rule describes our proposals to 
revise the regulations to clarify the ``no legal obligation to pay'' 
payment exclusion codified in regulation at Sec.  411.4. Specifically, 
we propose to narrow the description of custody in Sec.  411.4(b) 
because we no longer believe that certain classes of individuals should 
be presumed to be in custody for purposes of the no legal obligation to 
pay payment exclusion, reorganize and renumber the regulation at Sec.  
411.4(b), make certain non-substantive edits to Sec.  411.4(a) to align 
the regulatory text with the statutory no legal obligation to pay 
payment exclusion, and define ``penal authority.''
    We expect that our proposal to narrow the description of 
``custody'' will reduce burden for individuals on bail, parole, 
probation, or home detention and those providers and suppliers that 
treat them, because it will no longer be necessary to rebut the 
presumption that such individuals do not have a legal obligation to pay 
for their own healthcare in order for Medicare to pay for their health 
care items or services. We anticipate that our proposed revisions will 
ensure that Medicare properly pays for services for individuals who are 
on bail, parole, probation, or home detention. We also anticipate that 
this proposal will have a negligible impact on Medicare costs, as it 
does not add new covered services or benefits; rather, the proposed 
revisions merely remove a real or perceived barrier so that individuals 
on bail, parole, probation, or home detention can more easily access 
the Medicare benefits for which they are legally entitled.
b. Revision to Medicare Special Enrollment Period for Formerly 
Incarcerated Individuals
    We propose to revise, the eligibility criteria for the Medicare 
special enrollment period (SEP) for formerly incarcerated individuals 
at Sec. Sec.  406.27(d)(1) and 407.23(d)(1). Specifically, for releases 
on and after January 1, 2025, we propose to base the

[[Page 59556]]

determination of when an individual is no longer incarcerated on SSA's 
data collected in its systems for determining OASDI benefit suspensions 
in section 202(x)(1)(A) of the Act and any additional documentation 
provided by individuals to demonstrate that they have been released 
from incarceration. Our proposal would limit the current eligibility 
criteria for this SEP, which reference to the Medicare payment 
exclusion at Sec.  411.4(b), to releases between January 1, 2023, and 
December 31, 2024.
    The SEP for formerly incarcerated individuals at Sec. Sec.  
406.27(d)(1) (for Premium Part A) and 407.23(d)(1) (for Part B) 
starting in 2023 provides eligible individuals an opportunity to enroll 
in Medicare upon release from incarceration without waiting for the 
General Enrollment Period (GEP) and facing penalties for delayed 
enrollment. We anticipate that the proposed revisions to the SEP for 
formerly incarcerated individuals will provide clarity and make 
accessing this SEP easier upon release from incarceration, especially 
for a population facing many challenges reintegrating into society. 
However, we do not anticipate a significant impact on utilization of 
the SEP since there is no evidence that the current requirements have 
created barriers to those who want to use the SEP. As a result of this 
assumption, we expect a negligible impact on Medicare costs.
8. Estimated Effects of Medicaid Clinic Services Four Walls Exceptions
a. Background
    As discussed in more detail in section XVIII, we propose to add 
exceptions to the four walls requirement under the Medicaid clinic 
services benefit for IHS/Tribal clinics, behavioral health clinics, and 
clinics located in rural areas. The exception for IHS/Tribal clinics 
would be mandatory for States that cover the clinic services benefit 
while the exceptions for behavioral health clinics and clinics located 
in rural areas would be at State option. We believe that this proposal 
will help States strengthen and improve access to Medicaid clinic 
services for the populations served by IHS/Tribal clinics, behavioral 
health clinics, and clinics located in rural areas, and that it is 
responsive to the concerns we have heard from Tribes, the TTAG, the 
STAC, States, and other interested parties. In addition, we believe 
this proposal will advance health equity and improve health care access 
for the populations served by IHS/Tribal clinics, behavioral health 
clinics, and clinics located in rural areas.
b. Overall Estimated Effects of Medicaid Clinic Services Four Walls 
Exceptions
    The aggregate economic impact of this proposed regulation is 
estimated to be $1.18 billion in transfers for fiscal years 2025-2029. 
This includes a Federal impact of $1.15 billion and impacts to States 
of $30 million. For the purposes of this analysis, we estimated the 
impacts separately for Medicaid clinic services furnished outside of 
the four walls for IHS/Tribal clinics, behavioral health clinics, and 
clinics located in rural areas. Uncertainties in the estimate result in 
an estimated range of $554 million to $1.82 billion in the Federal 
impact and a range of $7 million to $95 million in the State impact.
    Current Medicaid clinic services expenditures were estimated using 
financial reporting for 2022. Estimated expenditures for IHS/Tribal 
Medicaid clinic services represent those expenditures not attributable 
to the following Medicaid services: inpatient hospital, outpatient 
hospital, prescription drugs, FQHC, and RHCs; in 2022, these 
expenditures included expenditures for IHS/Tribal Medicaid clinic 
services provided outside of the four walls (due to the grace period 
discussed below). We assumed that 15 percent of expenditures for 
Medicaid clinic services were related to behavioral health based on 
general behavioral health utilization and spending patterns. We assumed 
that 17 percent of remaining Medicaid clinic services expenditures were 
attributable to clinics in rural areas based on 17 percent of the 
Medicaid population residing in rural areas. Estimated baseline Federal 
Medicaid expenditures for Medicaid clinic services in 2025 are $934 
million at IHS/Tribal clinics, $530 million for behavioral health 
services provided at Medicaid clinics, and $495 million for Medicaid 
clinic services provided in rural areas. The estimates for behavioral 
health services provided at Medicaid clinics and Medicaid clinic 
services provided in rural areas do not include Medicaid clinic 
services expenditures from IHS/Tribal clinics.
    It is important to note that IHS/Tribal clinic services provided 
outside of the clinic's four walls are currently being paid for by 
Medicaid programs, under a CMS ``grace period'' that currently extends 
through February 11, 2025. For a more detailed discussion on this grace 
period please see section XVIII.A of this proposed rule. Unless the 
proposed exception for IHS/Tribal clinics is finalized, States will not 
be permitted to pay for Medicaid clinic services provided outside of 
the four walls of an IHS/Tribal clinic after February 11, 2025, when 
the grace period ends.
    Table 138 demonstrates our estimates for the economic impact of an 
exception to the Medicaid clinic services four walls requirement for 
IHS/Tribal clinics. For the proposed IHS/Tribal clinic exception at 42 
CFR 440.90(c), we assumed that 19 percent of current total IHS/Tribal 
clinic services expenditures were for services provided outside of 
clinics, based on information provided by the Tribes. Allowing current 
claiming practices to continue, trended for changes in expected cost, 
utilization, and enrollment each year, we estimate that Federal 
expenditures for services provided outside of clinics will be $1.09 
billion for fiscal years 2025 through 2029. State expenditures on 
Medicaid clinic services provided to AI/AN Medicaid beneficiaries by 
IHS/Tribal clinics are Federally matched at 100 percent. State 
expenditures on Medicaid clinic services provided to Medicaid 
beneficiaries who are not AI/AN are matched at the otherwise applicable 
Federal matching percentage, which is generally less than 100 percent. 
The estimate assumes 100 percent Federal share for all IHS/Tribal 
clinic services expenditures, but we acknowledge that a very small 
portion of these IHS/Tribal clinic services expenditures may be 
attributed to Medicaid beneficiaries who are not AI/AN, resulting in 
State expenditures. Data from which to estimate these State 
expenditures were unavailable for this analysis. Note that this impact 
estimate does reflect or account for the grace period only through 
February 11, 2025, the baseline for the impact estimate does not 
reflect or account for the grace period for dates after the expiration 
of the grace period. From February 12, 2025 forward, the estimate 
compares projections under current law, which does not allow States to 
pay for Medicaid clinic services provided outside of clinics against 
projections under the proposed regulation, which would permit States to 
pay for IHS/Tribal clinic services provided outside of clinics. When 
the grace period is factored into the analysis for dates after the 
expiration of the grace period and spending under the proposed 
regulation is compared to expenditures under current practice, which 
allows payment for clinic services provided outside of IHS/Tribal 
clinics due to the grace period, we estimate little to no impact.

[[Page 59557]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.175

    Tables 139 and 140 demonstrate our estimates for the economic 
impact of exceptions to the four walls requirement under the Medicaid 
clinic services benefit for behavioral health clinics and clinics 
located in rural areas that are not IHS/Tribal clinics. We acknowledge 
that we have not included a definition of ``rural'' in proposed rule 
text, but are considering defining that term in the final rule and are 
considering various approaches to doing so, on which we seek comment. 
For purposes of our estimates of the economic impact of our proposed 
exception to the four walls requirement for clinics located in rural 
areas, our analysis defines rural areas using the RUCA classifications. 
We also acknowledge that for our proposed exception to the four walls 
requirement for behavioral health clinics would include any clinic 
services furnished outside of the four walls by a behavioral health 
clinic, including non-behavioral clinic services such as physical 
health services. However, for purposes of our economic impact we are 
unable to quantify the cost of non-behavioral clinic services. For our 
proposed behavioral health clinic exception at 42 CFR 440.90(d) and 
clinics located in rural areas exception at 42 CFR 440.90(e), we 
assumed a 5 percent increase in current spending in each category due 
to increased payment for clinic services performed outside of the four 
walls. Growth in utilization and expenditures for clinic services 
provided both by behavioral health clinics and clinics in rural areas 
is expected to be limited by provider shortages in these areas of 
practice. Because the proposed exceptions at 42 CFR 440.90(d) and (e) 
are at State option, we assume that States representing 25 percent of 
States providing coverage of the Medicaid clinic services benefit will 
implement one or both of the optional exceptions. Estimated 
expenditures are trended each year for changes in expected cost, 
utilization, and enrollment. We estimate that Federal expenditures will 
be $35 million for fiscal years 2025 through 2029 for clinic services 
furnished by behavioral health clinics, and $30 million for fiscal 
years 2025 through 2029 for clinic services furnished by clinics in 
rural areas.
[GRAPHIC] [TIFF OMITTED] TP22JY24.176


[[Page 59558]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.177

    Projected Medicaid clinic services expenditures may differ from our 
current estimates, including the amounts broken out for IHS/Tribal 
clinics, clinic services provided by behavioral health clinics, and 
clinic services provided by clinics in rural areas. There is 
uncertainty in how much current and projected IHS/Tribal Medicaid 
clinic services spending is attributable to Medicaid clinic services 
provided outside of the four walls. The IHS/Tribal clinic impact may 
range from $544 million to $1.63 billion over 5 years due to 
uncertainty in the level of spending for Medicaid clinic services 
provided outside of IHS/Tribal clinics. Uncertainty in provider 
availability and beneficiary demand result in uncertainty in the 
potential for changes in utilization and costs. The Federal impact for 
Medicaid clinic services furnished by behavioral health clinics may 
range from $5 million to $90 million and the Federal impact for clinic 
services furnished by clinics in rural areas may range from $5 million 
to $100 million over five years. State impacts over five years may 
range from $5 million to $45 million for clinic services furnished by 
behavioral health clinics and $2 million to $50 million for clinic 
services furnished by clinics in rural areas.
    Table 141 demonstrates the total economic impact for our proposed 
regulation to include exceptions to the four walls requirement under 
the Medicaid clinic services benefit for IHS/Tribal clinics, behavioral 
health clinics, and clinics located in rural areas. The total estimated 
impact of this proposed regulation over five years is $1.18 billion, 
including Federal impact of $1.15 billion and State impact of $30 
million. The impact may range from a low of $561 million to a high of 
$1.92 billion, including a range in the Federal estimate of $554 
million to $1.82 billion and a range in the State impact of $7 million 
to $95 million.
[GRAPHIC] [TIFF OMITTED] TP22JY24.178

c. Benefits of Medicaid Clinic Services Four Walls Exceptions
    The proposed changes to the Medicaid clinic services benefit are 
expected to benefit Medicaid beneficiaries, Tribes, and States by 
improving access to care for the populations served by IHS/Tribal 
clinics, behavioral health clinics, and clinics in rural areas. The 
proposed exceptions to the four walls requirement under the Medicaid 
clinic services benefit for IHS/Tribal clinics, behavioral health 
clinics, and clinics located in rural areas would help improve access 
to care for these clinics' patient populations by allowing services to 
be furnished where the beneficiary is located. We refer readers to 
section XVIII.B of this proposed rule for more robust discussions on 
how the populations served by these clinics might benefit from 
exceptions to the Medicaid clinic services benefit four walls 
requirement and how these exceptions would improve access to

[[Page 59559]]

care. These potential benefits cannot be monetarily quantified at this 
time.
d. Alternative Medicaid Clinic Services Four Walls Exceptions 
Considered
    We considered a few different alternatives in determining the best 
way to address the concerns we heard from Tribes, the TTAG, the STAC, 
States, and other interested parties about the four walls requirement 
under the Medicaid clinic services benefit. We considered including an 
exception to the four walls requirement only for the population served 
by IHS/Tribal clinics, but we viewed that alternative as too limited. 
As we discuss in detail in section XVIII.B of this proposed rule, we 
concluded that the patient populations served by behavioral health 
clinics and clinics in rural areas might also benefit from exceptions 
to the four walls requirement for those clinics. We also considered 
proposing an exception, in addition to the three exceptions we propose 
in this rule, for any other populations that are identified by States 
as likely to meet the four criteria described in this proposed rule as 
warranting an exception to the four walls requirement and that have no 
alternative access to services through Medicaid benefits that are not 
subject to a four walls requirement under Federal Medicaid law. 
Ultimately, it is our understanding that other populations are better 
able to access services through Medicaid benefits to which a four walls 
requirement does not apply under Federal Medicaid law (for example, 
FQHC services, RHC services, outpatient hospital services, etc.) than 
the populations targeted by the proposed exceptions. As we indicate in 
section XVIII.B of this proposed rule, we invite comment on our 
assumptions about other populations that may benefit from an exception 
to the four walls requirement under the Medicaid clinic services 
benefit. We also considered making the exceptions to the four walls 
requirement mandatory for behavioral health clinics and clinics located 
in rural areas, but, as we discuss in more detail in section XVIII.B of 
this proposed rule, it is our understanding that there is greater State 
variability in the degree to which the populations targeted by the 
behavioral health and rural exceptions meet the four criteria we 
identified than the population served by IHS/Tribal clinics. We note 
for readers that we also invited public comment on these assumptions in 
section XVIII.B of this proposed rule. Finally, as we discuss in 
section XVIII.B of this proposed rule, we have not proposed a specific 
definition of rural for our exception for clinics located in rural 
areas and invite public comment on the alternatives we are considering 
and describe in that section of the proposed rule.
9. Effects of Continuous Eligibility in Medicaid and CHIP
    As discussed in section XX of this proposed rule, we propose to 
codify the requirement of the CAA, 2023 for States to provide 12 months 
of continuous eligibility for children under age 19 enrolled in 
Medicaid and CHIP, with limited exceptions. In addition, we propose to 
remove the option to disenroll children from CHIP during a continuous 
eligibility period due to failure to pay premiums. These regulation 
changes implement the statutory requirement in section 5112 of Title V, 
subtitle B of the Consolidated Appropriations Act, 2023.
    The proposed regulation to require 12-month continuous eligibility 
in Medicaid and CHIP is estimated to increase annual average enrollment 
in Medicaid and CHIP by approximately 124,000 by 2028 (75,000 in 
Medicaid and 49,000 in CHIP). The total estimated impact of this 
proposed regulation over 5 years is $2,466 million, including Federal 
impact of $1,592 million and state impact of $874 million. Enrollment 
may range from an increase of around 92,000 to an increase of around 
159,000 by 2028. The total impact may range from a low of $1,837 
million to a high of $3,154 million, including a range in the Federal 
estimate of $1,185 million to $2,039 million and a range in the state 
impact of $652 million to $1,115 million. (See Table 142.)
[GRAPHIC] [TIFF OMITTED] TP22JY24.179


[[Page 59560]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.180

10. Effects of Proposed Requirements for Obstetrical Services in 
Hospitals and Critical Access Hospitals (CAHs)
a. Organization, Staffing and Delivery of Services for Hospitals (Sec.  
482.59a Through b) and CAHs (Sec.  482.649a Through b)
    In section XXIV, we have estimated the cost for hospitals and CAHs 
to develop internal standards and protocols to ensure that services are 
well organized and to provide high-quality care that is appropriate to 
the level of services provided and integrated with other departments of 
the facility, as well as to ensure compliance with nationally 
recognized and evidence-based guidelines for OB emergencies, 
complications, immediate post-delivery care, and other patient health 
and safety events. We have also estimated the cost for hospitals and 
CAHs to delineate and document obstetrical privileges for all 
practitioners providing obstetrical services in accordance with the 
competencies of each practitioner. Below, we estimate the cost for 
ensuring that OB patient care units (i.e., labor rooms, delivery rooms, 
including rooms for operative delivery, and post-partum/recovery rooms 
whether combined or separate) be supervised by an individual with the 
necessary education and training, and specify that person should be an 
experienced registered nurse, certified nurse midwife, nurse 
practitioner, physician assistant, or a doctor of medicine or 
osteopathy. We also estimate the cost for the proposal that are also 
proposing that labor and delivery room suites have certain basic 
resuscitation equipment readily available, including a call-in-system, 
cardiac monitor, and a fetal doppler or monitor.
    While hospitals and CAHs already likely to already have an 
individual supervising OB patient care unit, there is variation across 
facilities regarding whether they have the necessary education and 
training related to OB patient care. Many facilities, especially larger 
hospitals that have large birth volumes, are likely to already have an 
experienced individual with the necessary education and training. 
Smaller facilities with lower birth volumes, in contrast, may be less 
likely to have an individual and need to recruit a new individual to 
meet the proposed requirement. Given uncertainty about the number of 
facilities that already have an experienced individual who would meet 
the requirement, we assume that each facility would need to hire one 
individual, who we assume would be a registered nurse, to meet the 
requirement. To estimate the cost of hiring this individual, we 
reviewed research related to the cost of registered nurse turnover. A 
review of academic literature found that each RN turnover cost 
employers between $21,514 and $88,000.\579\ We take the midpoint of 
these two estimates, or $54,757 per individual hired. As shown, in 
Tables 144 and 145, we estimate that this requirement will cost 
facilities $345,516,670 in both year 1 and over 10 years. We seek 
comments on data sources to estimate the number of facilities that are 
likely to already have an individual who meets the proposed 
requirements. We also seek comments on other sources of data to 
estimate the cost for hiring an individual with the necessary education 
and training to meet this requirement.
---------------------------------------------------------------------------

    \579\ Bae, S.H., Noneconomic and economic impacts of nurse 
turnover in hospitals: A systematic review. Int Nurs Rev, 2022. 
69(3): 392-404.
[GRAPHIC] [TIFF OMITTED] TP22JY24.181


[[Page 59561]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.182

    To estimate the cost for having certain basic resuscitation 
equipment readily available, we reviewed public data sources to 
estimate the cost of purchasing a call-in system, cardiac monitor, and 
a fetal doppler or monitor. While we were not able to identify public 
estimates for the price of call-in systems, based on our experience we 
estimate that they would cost $2,500 to $3,500 per system. Reviewing 
the web pages of various online suppliers, we found that fetal dopplers 
and fetal monitors cost between $502 and $8,995 580 581 and 
cardiac monitors cost between $1,071 and $10,246.\582\ For each of 
these systems, we use the mid-point of the price estimate and assume 
that each call-in system would cost $3,000, each fetal monitor or fetal 
doppler would cost $4,749, and each cardiac monitor would cost $5,659.
---------------------------------------------------------------------------

    \580\ Medical, U. FETAL DOPPLERS. 2024 May 8, 2024 [cited 2024 
May 8]; Available from: https://www.usamedicalsurgical.com/fetal-dopplers/.
    \581\ CardiacDirect. Fetal Monitors. 2024 [cited 2024 May 8]; 
Available from: https://www.cardiacdirect.com/product-category/fetal-monitors/?utm_source=google&utm_ 
medium=cpc&utm_term=fetal%20heart%20monitor&utm_content=!acq!v3!11636
26993_kwd-
295102856827__607346518010_g_c__&utm_campaign=FetalMonitor&gad_source
=1&gclid=EAIaIQobChMIsLqpo8f-hQMVLyetBh3deAZuEAAYASAAEgIcx_D_BwE.
    \582\ CardiacDirect. Patient Monitors. 2024 May 8, 2024 [cited 
2024 May 8]; Available from: https://www.cardiacdirect.com/product-category/patient-monitors/?min_price=0&max_price=10250&page=1.
---------------------------------------------------------------------------

    According to the Centers for Disease Control and Prevention there 
were a total of 3,667,758 births in 2022.\583\ With a total of 6,310 
hospitals and CAHs with obstetrical units, this leads to an average of 
581 (3,667,758 / 6,310) births per hospital and CAH or an average of 
1.59 births per facility per day. We estimate that each birth will take 
1 day on average. To account for variation in birth volumes throughout 
the year, we assume that each facility would need to prepare for double 
the number of average births per day, or 3.18 patients. Since equipment 
cannot be divided, we assume that facilities will need to have 
equipment available for 4 patients daily. We assume that each facility 
already has one fetal monitor and cardiac monitor but do not assume 
that they will have a call-in system.
---------------------------------------------------------------------------

    \583\ Osterman, M.J.K.H., Brady E., Martin, Joyce A.; Driscoll, 
Anne K.; Valenzuela, Claudia P., Births: Final Data for 2022, in 
National Vital Statistics Reports, U.S.D.o.H.a.H. Services, Editor. 
2024, Centers for Disease Control and Prevention.
---------------------------------------------------------------------------

    Based on our experience working in obstetrical units, we estimate a 
fetal doppler or monitor would be needed for each room/suite, a call-in 
system would be needed for each room/suite, and cardiac monitors would 
be needed for half the rooms/suites. As such, we estimate that each 
facility would need to purchase 3 fetal monitors or fetal dopplers at 
$14,247 ($4,749 x 3), 1 cardiac monitor at $5,659 ($5,659 x 1), and 4 
call-in systems at $12,000 ($3,000 x 4) for an average per facility 
cost of $31,906. As indicate in tables 146 and 147, we estimate that 
this requirement would cost a total of $201,326,860 over 10 years.
[GRAPHIC] [TIFF OMITTED] TP22JY24.183


[[Page 59562]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.184

b. OB Staff Training for Hospitals (Sec.  482.59(c)) and CAHs (Sec.  
485.649(c))
    We propose that hospitals and CAHs with OB services must develop 
policies and procedures to ensure that staff are trained on key topics 
related to improving the delivery of maternal care. The training must 
reflect the scope and complexity of services offered, including, but 
not limited to, evidence-based best practices and protocols to improve 
the delivery of maternal care within the facility. We also propose that 
they use findings from their QAPI to inform staff training needs and 
any additions, revisions, or updates to training topics on an ongoing 
basis. We also propose that the governing body must identify and 
document which staff must complete annual training on these topics. The 
facility must further document that training was successfully completed 
and must be able to demonstrate staff knowledge on these topics. In the 
collection of information section, we have already estimated the costs 
for developing policies and procedures to ensure that staff are trained 
on key topics related to improving the delivery of maternal care, as 
well as documentation that training was completed and staff knowledge 
on these topics. We estimate that staff training on evidence-based best 
practices and protocols would take 2 hours per employee and that each 
facility would spend 1 hour training staff on additional topics 
identified by the facility's QAPI program. This leads to a total hourly 
burden of 3 hours per employee trained.
    While hospitals and CAHs have flexibility regarding which OB staff 
will receive training, we expect that they would likely to focus their 
training on medical staff who are working directly with OB patients. 
This includes surgeons, physicians, physician assistants, nurse 
practitioners, nurse midwives, nurse anesthetists, registered nurses 
(RNs), and Licensed Practical Nurses/Licensed Vocational Nurses (LPNs/
LVNs).
    To estimate the number of employees in CAHs and hospitals that 
would likely receive training, we first obtained data from the Bureau 
of Labor Statistics (BLS) on the number of surgeons, physicians, 
physician assistants, nurse practitioners, nurse midwives, nurse 
anesthetists, RNs, and LPNs/LVNs working in hospitals (NAICS 622000). 
Since the BLS does not provide separate employment statistics for CAHs 
and hospitals, we assume that the number of employees needing training 
and, henceforth, the costs would be in proportion to the size of 
facilities, specifically the number of certified beds. We obtained 
information on the number of certified beds in hospitals and CAHs from 
CMS' Q1 2024 Provider of Services File--Hospital & Non-Hospital 
Facilities.\584\ Using this database, we estimate that 98.88 percent of 
certified beds for hospitals with OB services are in hospitals with the 
remaining 1.12 percent in CAHs.
---------------------------------------------------------------------------

    \584\ Centers for Medicare and Medicaid Services. Provider of 
Services File--Hospital & Non-Hospital Facilities, Q1 2024. https://data.cms.gov/provider-characteristics/hospitals-and-other-facilities/provider-of-services-file-hospital-non-hospital-facilities/data (Accessed April 30, 2024).
---------------------------------------------------------------------------

    In hospitals, which have a larger number of beds, there is likely 
to be a greater division of staff among units, with medical staff 
specifically designated to work in OB units and with pregnant patients, 
while other medical staff members will not work with pregnant patients. 
In contrast, critical access hospitals (CAHs), which are smaller in 
size, are likely to have medical staff that work across units given 
their small size. Based on our experience, we estimate that between 10 
and 30 percent of medical staff in hospitals and 60 to 100 percent of 
medical staff in CAHs would receive the training. Given the variation 
for hospitals, we take the midpoint of the two estimates and assume 
that 20 percent of hospital medical staff and 80 percent of medical 
staff in CAHs would receive training. We also assume that each facility 
would require staff to be trained on these topics annually. As 
indicated in Table 148 and Table 149, we estimate that the proposed 
requirements would have an annual cost of approximately $150 million 
with an average per facility cost of $24,719 for hospitals and $12,601 
for CAHs. Over 10 years, the proposed requirements are estimated to 
take 14.2 million hours to complete and cost approximately $1.50 
billion.
    We seek comments on whether hospitals and CAHs would require more 
or fewer groups of medical staff or other facility staff to receive 
this training. We are also seeking comments regarding data sources with 
other ways to measure share of staff who are likely to receive training 
in each facility type.

[[Page 59563]]

[GRAPHIC] [TIFF OMITTED] TP22JY24.185

[GRAPHIC] [TIFF OMITTED] TP22JY24.186

c. Quality Assessment and Performance Improvement Program (QAPI) for 
Hospitals (Sec.  482.21(b)(4)) and CAHs (Sec.  485.641(e)(1))
    At Sec.  482.21(b)(4) and Sec.  485.641(e) we are proposing 
modification to the QAPI program for hospitals and CAHs with OB 
services, respectively. Specifically, for obstetrical patients, 
facilities would have four new requirements: (1) analyzing data and 
quality indicators collected for the QAPI program by diverse 
subpopulations, as identified by the facility among obstetrical 
patients; (2) measuring, analyzing and tracking data, measures, and 
quality indicators on patient outcomes and disparities in processes of 
care, and services and operations, among obstetrical patients; (3) 
analyzing and prioritizing patient health outcomes and disparities, 
developing and implementing actions to improve patient health outcomes 
and disparities, measuring results, and tracking performance to ensure 
improvements are sustained when disparities exist among obstetrical 
patients; and (4) conducting at least one performance improvement 
project focused on improving health outcomes and disparities among the 
hospital's population(s) of obstetrical patients annually.
    In the ICR, we have already discussed the expected burden for 
collecting data and quality indicators for obstetric patients and their 
outcomes and disparities in processes of care and services and 
operations. We believe that these data would serve as the foundation to 
allow facilities to develop and implement actions to improve outcomes 
and reduce disparities when they exist. We would expect that these data 
would likely be the focus of the required performance improvement 
project focused on improving health outcomes and reducing disparities 
among obstetrical patients.
    To estimate the cost of tracking and implementing at least one 
quality improvement project, we utilized estimates from existing 
regulations governing QAPI program. Specifically, 81 FR 68688 estimates 
that collecting and analyzing data for all a long-term care facilities' 
improvement projects will take 20 hours, with another 20 years annually 
spent on implementing and documenting improvement projects. Given that 
the requirement we are proposing involves only a single improvement 
project and we have already accounted for the costs of collecting the 
data in the ICR, we anticipate that the ongoing annual burden for each 
facility to analyze the data and implement and document their 
improvement project(s) will be 30 hours. Using loaded hourly wage rates 
from Table 112, we anticipate that this will include the participation 
of a hospital executive at $1,861.28 ($232.66 x 8 hours), an RN at 
$931.00 ($93.10 x

[[Page 59564]]

10 hours), a physician at $1,729.64 ($216.08 x 8 hours), and a data 
scientist at $368.96 ($92.24 x 4 hours) for a total per facility cost 
of $4,889.88 annually and an average hourly cost of $163. As indicated 
in tables 150 and 151, we estimate that this requirement will cost 
$30,855,143 annually and $308,551,428 over 10 years.
[GRAPHIC] [TIFF OMITTED] TP22JY24.187

[GRAPHIC] [TIFF OMITTED] TP22JY24.188

d. Maternal Health QAPI Activities for Hospitals (Sec.  482.21(e)) and 
CAHs (Sec.  485.641(d)(4))
    Using loaded hourly wage rates from Table 112, we expect that when 
the MMRC provides information to hospitals and CAHs, incorporating this 
information into the facility's QAPI program would include the 
participation of a physician at $864.32 ($216.08 x 4 hours) and an RN 
at $372.40 ($93.10 x 4 hours) for a total cost of $1,236.72 per 
facility. Altogether, we estimate that annually it would take 8 hours 
to complete at an average hourly cost of $154.59 ($1,236.72 / 8 hours) 
per facility. As indicated in tables 152 and 153, we estimate that 
total annual cost will be $7,803,703 and the 10-year total cost will be 
$7,803,703.
[GRAPHIC] [TIFF OMITTED] TP22JY24.189


[[Page 59565]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.190

e. Emergency Services Readiness for Hospitals (Sec.  482.55(c)) and 
CAHs (Sec.  485.618(e))
    The proposed standard for emergency services readiness aims to 
improve staff readiness for providing emergency services to all 
hospital and CAH patients, including pregnant and postpartum patients. 
It would require hospitals and CAHs with emergency services to have 
adequate provisions and protocols, consistent with nationally 
recognized and evidence-based guidelines, for the care of patients with 
emergency conditions. Hospitals and CAHs would be required to train 
applicable emergency services personnel, as determined by the facility, 
on these protocols and provisions on an annual basis and document that 
applicable staff have successfully completed the training and 
demonstrate their knowledge on these topics. For hospitals only, 
provisions must include equipment, supplies, and medication used in 
treating emergency cases. Provisions must include: (1) Drugs, blood and 
blood products, and biologicals commonly used in emergency procedures; 
(2) Equipment and supplies commonly used in emergency procedures; and 
(3) a call-in-system for each patient in each emergency services 
treatment area.
    In section XXIV, we have already discussed the cost for hospitals 
to ensure that they have adequate protocols in place for emergency 
services, as well as to document that applicable staff have 
successfully completed the training and demonstrate their knowledge on 
these topics. The proposed training requirement for hospitals and CAHs 
provides flexibility regarding which staff will receive training. We 
expect, however, that they would likely focus their training on medical 
staff within emergency departments. This staff includes surgeons, 
physicians, physician assistants, nurse practitioners, nurse midwives, 
nurse anesthetists, registered nurses, and LPNs/LVNs.
    To estimate the number of employees in CAHs and REHs that would 
likely receive training, we first obtained data from the Bureau of 
Labor Statistics (BLS) on the number of surgeons, physicians, physician 
assistants, nurse practitioners, nurse midwives, nurse anesthetists, 
registered nurses, and LPNs/LVNs working in hospitals (NAICS 622000). 
Since the BLS does not provide separate employment statistics for CAHs 
and hospitals, we assume that the number of employees needing training 
and, henceforth, the costs would be in proportion to the size of 
facilities, specifically the number of certified beds. We obtained 
information on the number of certified beds in hospitals and CAHs from 
CMS' Q1 2024 Provider of Services File--Hospital & Non-Hospital 
Facilities.\585\ Using this database, we estimate that 98.88 percent of 
certified beds for hospitals are in hospitals with the remaining 1.12 
percent in CAHs.
---------------------------------------------------------------------------

    \585\ Centers for Medicare and Medicaid Services. Provider of 
Services File--Hospital & Non-Hospital Facilities, Q1 2024. https://data.cms.gov/provider-characteristics/hospitals-and-other-facilities/provider-of-services-file-hospital-non-hospital-facilities/data (Accessed April 30, 2024).
---------------------------------------------------------------------------

    Based on our experience, we expect that initial staff training 
would take approximately 3 hours per employee. Using data from Table 
112 on loaded wage rates for each employee type, we estimated the cost 
for training all medical staff in hospitals and CAHs in year 1 using 
the following formula: loaded wage rate for medical staff (surgeons, 
physicians, physician assistants, nurse practitioners, nurse midwives, 
nurse anesthetists, registered nurses, and LPNs/LVNs) x total number of 
each medical staff type working in hospitals and CAHs x 3 hours per 
employee. Using this formula, we estimate that training all medical 
staff would cost $724,555,386.
    In hospitals, which have a larger number of beds, there is likely 
to be a greater division of staff among units, with medical staff 
specifically designated to work in emergency departments. In contrast, 
CAHs, which are smaller in size, are likely to have medical staff that 
work across units given their small size. We assume, therefore, that 20 
percent of medical staff in hospitals and all medical staff in CAHs 
would receive the training. To calculate the year 1 cost for hospitals 
and CAHs, therefore, we use the following formula: Total cost for 
training all hospital/CAH medical staff x % hospital(CAH) medical staff 
receiving training x Share of all Hospital and CAH Certified Beds. As 
indicated in Table 154, we expect that the proposed requirement would 
cost approximately $8 million for CAHs and $143 million for hospitals 
in year 1.
    For subsequent years, we expect that refresher training for medical 
staff, who received the full training in previous years, would take 1 
hour to complete. In addition, new staff would need to receive the full 
3-hour training. With an annual hospital turnover rate of

[[Page 59566]]

approximately 21 percent,\586\ we would expect 21 percent of employees 
each year to be new employees who would need 3 hours of training and 79 
percent of employees would need 1 hour of training. To calculate the 
burden for years 2 to 10, therefore, we use the following formula: 
(Total cost for training all hospital/CAH medical staff x % 
hospital(CAH) medical staff needing initial training x Share of all 
Hospital and CAH Certified Beds) + (Total cost for training all 
hospital/CAH medical staff x % hospital(CAH) medical staff receiving 
needing initial training x Share of all Hospital and CAH Certified 
Beds). As indicated in Table 155 using this formula, we estimate that 
the rule would cost approximately $72 million in years 2 to 10. Table 
156 provides the total cost over 10 years which we estimate at 
$796,234,077.
---------------------------------------------------------------------------

    \586\ Nursing Solutions Incorporated, 2024 NSI National Health 
Care Retention & RN Staffing Report. 2024.
[GRAPHIC] [TIFF OMITTED] TP22JY24.191

[GRAPHIC] [TIFF OMITTED] TP22JY24.192


[[Page 59567]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.193

    To estimate the cost for having certain basic resuscitation 
equipment readily available, we consulted with medical experts on the 
requirements. Based on their experience, we expect that the most 
hospitals with emergency services will already have drugs, blood and 
blood products, and biologicals commonly used in emergency procedures, 
as well as equipment and supplies commonly used in emergency 
procedures. As such, we do not estimate a burden for these 
requirements. There is likely, however, to be wide variation in 
hospitals for the call-in systems. Based on our experience, we estimate 
that 50 percent of hospitals will already have call-in systems while 50 
percent will need to install them in their emergency departments.
    As we noted above in estimating the cost for call-in system for 
obstetrical rooms/suites, while we were not able to identify public 
estimates for the price of call-in systems, based on our experience we 
estimate that they would cost $2,500 to $3,500 per system, and we 
utilize the mid-point of the price estimate and assume each call-in 
system will cost $3,000. We assume that 20 percent of hospital beds are 
allocated for emergency services and assume that there will need to be 
a call-in system for each bed. As indicated in Tables 157 and 158, we 
estimate that this requirement would cost a total of $334,629,300 in 
year 1 and over 10 years. We seek comments on data sources that we can 
use to estimate the number of hospitals that already have call-in 
systems as well as the share of hospital beds that are devoted to 
emergency care.
[GRAPHIC] [TIFF OMITTED] TP22JY24.194


[[Page 59568]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.195

f. Transfer Protocols in Discharge Planning for Hospitals (Sec.  
482.43(c))
    We propose that hospitals have written policies and procedures for 
transferring patients under their care to the appropriate level of 
care, promptly and without undue delay to meet patients' needs. Since 
hospital inpatients are included in those who may need to be 
transferred, we believe that medical staff across hospitals, and not 
just those in emergency departments, would need to receive training on 
transfer protocols. Specifically, we expect that all surgeons, 
physicians, physician assistants, nurse practitioners, nurse midwives, 
nurse anesthetists in hospitals would receive this training. We do not 
expect, however, that LPNs would receive this training and similarly 
expect that most RNs would not receive this training. Rather, we expect 
that among RNs, only experienced RNs who serve as transfer coordinators 
would receive it and estimate that this is only 5 percent of RNs 
nationwide. We estimate that each employee would require 1 hour of 
training annually and assume that that this training would occur on an 
annual basis. As indicated in tables 159 and 160, we expect that this 
requirement to cost $71,246,104 annually and $710,461,040 over 10 
years.
[GRAPHIC] [TIFF OMITTED] TP22JY24.196

[GRAPHIC] [TIFF OMITTED] TP22JY24.197


[[Page 59569]]


g. Summary of Regulatory Impact Analysis for Obstetrical and Emergency 
Services
    In Tables 160 and 161 we provide an estimate of the total annual 
and 10-year financial and hourly burden for the proposed requirements 
related to obstetrical and emergency services that include: (1) 
organization, staffing, and delivery of services for hospitals and CAHs 
as outlined in Table 145 and Table 147; (2) obstetrical services staff 
training for hospitals and CAHs as outlined in Table 149; (3) quality 
assessment and performance improvement program requirements for 
hospitals and CAHs as outlined in Table 151; (4) maternal health QAPI 
activity requirements for hospitals and CAHs as outlined in Table 153; 
(5) emergency services readiness requirements for hospitals and CAHs in 
Table 156 and Table 158; and (6) transfer protocols training for 
hospitals as outlined in Table 160. These estimates exclude the cost 
for collection of information requirements that we have estimated above 
in Table 129 and 130 to cost $174,597,139 million over 10 years and 
take 1,768,881 hours to complete. Overall, we estimate the total 
financial cost of the requirements would be approximately $4.27 billion 
and take 28.3 million hours to complete over 10 years.
    We are seeking comments on several issues related to the regulatory 
impact analysis, including the following:
     Are there additional data sources that estimate the number 
of medical staff, who work with obstetrical patients?
     Are there additional data sources to estimate the number 
of hospital and CAH obstetrical rooms/suites?
     Are there any additional data sources to estimate the cost 
for the provisions of cardiac monitors, call-in systems, and fetal 
doppler or monitors?
     Are there additional data sources to estimate the number 
of medical staff who work with emergency care units?
     Are there data sources to estimate the number of hospital 
room/suites that are allocated for emergency services?
     Are there any additional staff members who are likely to 
receive training for emergency services and obstetrical services?
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP22JY24.198


[[Page 59570]]


[GRAPHIC] [TIFF OMITTED] TP22JY24.199

BILLING CODE 4120-01-C
h. Benefits
    There are a wide variety of benefits associated with the proposed 
requirements for obstetrical services in hospitals and CAHs.
    First, there are the financial benefits. As we noted above in the 
statement of need, research suggests that maternal mortality and 
morbidity have widespread negative effects on pregnant and postpartum 
patients and their families and high financial costs for payors. One 
study found that pregnancy-related mortality cost in the United States 
more than $27.4 billion and resulted in the loss of 114,000 years of 
potential life between 2018 and 2020.\587\ Another study showed that 
from birth to 5 years postpartum, nine maternal morbidities among the 
2019 US birth cohort cost birthing parents and their children $32.3 
billion, with $18.7 billion due to medical costs and $13.6 billion 
related to non-medical costs.588 589 A third study found 
that severe maternal morbidity during the prenatal to 30 day postpartum 
period was associated with a 75 percent increase in medical costs for 
patients utilizing Medicaid and a more than doubling in medical costs 
for commercially insured patients.\590\ While these studies vary in 
their methodology, the pre-post birth time period analyzed, medical 
conditions analyzed, and cost estimates, they suggest that maternal 
morbidity and mortality impose high health and safety, as well as 
economic costs on birth parents, children, payors, and society.\591\
---------------------------------------------------------------------------

    \587\ White Robert, S., et al., Economic burden of maternal 
mortality in the USA, 2018-2020. Journal of Comparative 
Effectiveness Research, 2022. 11(13): 927-933.
    \588\ O'Neil, S.S., et al., Societal cost of nine selected 
maternal morbidities in the United States. PLOS ONE, 2022. 17(10): 
e0275656.
    \589\ These nine conditions included the following: amniotic 
fluid embolism, cardiac arrest, gestational diabetes mellitus, 
hemorrhage, hypertensive disorders, mental health conditions, renal 
disease, sepsis, and venous thromboembolism.
    \590\ Black, C.M., et al., Costs of Severe Maternal Morbidity in 
U.S. Commercially Insured and Medicaid Populations: An Updated 
Analysis. Women's Health Reports, 2021. 2(1): 443-451.
    \591\ Moran, P.S., et al., Economic burden of maternal 
morbidity--A systematic review of cost-of-illness studies. PLOS ONE, 
2020. 15(1): e0227377.
---------------------------------------------------------------------------

    We believe that the policies we are proposing will help reduce 
maternal morbidity and mortality and their associated costs for 
pregnant and postpartum patients and their families, as well as payors. 
Specifically, the proposed requirements that OB services are well-
organized and in accordance with acceptable standards of practices, 
have adequate provisions and protocols for OB emergencies, 
complications, immediate post-delivery care and other patient health 
and safety events as identified as part of the facility's QAPI program, 
and that OB patient care units are supervised by an individual with the 
necessary education and training will provide the foundation for 
ensuring uniform high-quality OB services. Similarly, requiring 
hospitals and CAHs to delineate and document obstetrical privileges for 
all practitioners will benefit patients by helping ensure that 
practitioners have the necessary education, training, and experience to 
provide safe, effective care and safely perform specific procedures. 
Finally, the requirement that labor and delivery room suites have 
certain basic resuscitation equipment readily available will help 
ensure efficient and effective care that can help reduce patient 
morbidity and mortality.
    Similarly, OB staff training and appropriate transfer protocols can 
also help avert avoidable maternal complications and deaths.\592\ 
Finally, engagement with recommendations from MMRCs and QAPI 
stratification of data can help facilities better identify unfavorable 
patient health and safety outcomes, which can allow them to better 
tailor policies to address these issues.
---------------------------------------------------------------------------

    \592\ https://saferbirth.org/aim-obstetric-emergency-readiness-resource-kit/.
---------------------------------------------------------------------------

    Beyond reductions in maternal morbidity and mortality and their 
associated financial benefits, the proposed policies are likely also to 
reduce inequality among pregnant and postpartum women from different 
groups. For example, research shows that among women with any form of 
disability, there is a heightened risk for labor and delivery 
complications, as well as severe maternal morbidity and mortality. If 
hospitals and CAHs include training that helps health care 
practitioners better understand these risks and be more comfortable 
providing care to women with a disability, they may be able to better 
provide safe, high quality obstetric care, reducing obstetrical 
complications. Research also suggests that due to insufficient patient 
education by staff, women with limited English proficiency (LEP) 
experience

[[Page 59571]]

disparities in obstetric care and are at risk for mental health 
conditions, including post-partum depression and substandard newborn 
care following neonatal ICU discharge.\593\ If facilities engage in 
increasing language-concordant care and awareness among providers 
regarding the use of medical interpreters and materials in diverse 
languages, they may be able to improve patient satisfaction, decrease 
medical errors, and improve patient safety.594 595 
Similarly, stratification of patient data can produce insights into 
health disparities that allow facilities to develop interventions to 
reduce them, with research showing that data collection and analysis by 
patient subgroup within health care facilities has an important impact 
on improving patient care consistently across patient 
populations.596 597 598 599 600
---------------------------------------------------------------------------

    \593\ Togioka, Brandon & Seligman, Katherine & Delgado Upegui, 
Carlos. (2022). Limited English proficiency in the labor and 
delivery unit. Current Opinion in Anesthesiology. 35. 285-291.
    \594\ Sentell, Tetine & Chang, Ann & Ahn, Hyeong Jun & Miyamura, 
Jill. (2015). Maternal Language and Adverse Birth Outcomes in a 
Statewide Analysis. Women & health. 56. 10.1080/
03630242.2015.1088114.
    \595\ https://www.ahrq.gov/sites/default/files/publications/files/lepguide.pdf).
    \596\ Weinick, R.M. and R. Hasnain-Wynia, Quality Improvement 
Efforts Under Health Reform: How To Ensure That They Help Reduce 
Disparities--Not Increase Them. Health Affairs, 2011. 30(10): p. 
1837-1843.
    \597\ Bardach, N.S. and M.D. Cabana, The unintended consequences 
of quality improvement. Curr Opin Pediatr, 2009. 21(6): p. 777-82.
    \598\ Perzynski, A.T., et al., Patient portals and broadband 
internet inequality. J Am Med Inform Assoc, 2017. 24(5): p. 927-932.
    \599\ Antonio, M.G., O. Petrovskaya, and F. Lau, Is research on 
patient portals attuned to health equity? A scoping review. J Am Med 
Inform Assoc, 2019. 26(8-9): p. 871-883.
    \600\ Sequist, T.D., et al., Effect of quality improvement on 
racial disparities in diabetes care. Arch Intern Med, 2006. 166(6): 
p. 675-81.
---------------------------------------------------------------------------

    Beyond the benefits for obstetrical patients, our proposed 
requirements are likely to have positive effects on the health and 
safety for patients generally. Our proposed requirements for hospitals 
to have written policies and procedures for transferring patients under 
their care and train medical staff regarding transfer protocols can 
support hospitals in expediting transfers when necessary. Efficient 
transfers to hospitals that can treat complex conditions and provide 
higher levels of care for all patients as needed. Similarly, our 
proposed requirement that hospitals with emergency services must have 
adequate provisions and protocols for the care of patients with 
emergency conditions and train applicable staff on these protocols and 
provisions, is also likely to improve patient health and safety. 
Additional obstetric training for emergency department staff improves 
staff competencies (i.e., skills, knowledge, comfort, confidence, and 
effectiveness) in managing obstetric emergencies, supporting improved 
maternal health and safety,601 602 603 604 605 606 while 
training in pediatric readiness,607 608 and geriatric 
readiness 609 610 611 612 613 improves staff capabilities in 
caring for these populations.
---------------------------------------------------------------------------

    \601\ Burke SM, Schmitt T, Kennedy P, et al. Emergency Medicine 
Obstetrics and Gynecology: A Case-Based Curriculum for Residents. 
MedEdPORTAL. 2023;19:11330.
    \602\ Espey E, Baty G, Rask J, Chungtuyco M, Pereda B, Leeman L. 
Emergency in the clinic: a simulation curriculum to improve 
outpatient safety. Am J Obstet Gynecol. Dec 2017;217(6):699.e1-
699.e13.
    \603\ Cooper MI, Papanagnou D, Meguerdichian M, Bajaj K. 
Emergency Obstetrics for the Emergency Medicine Provider. 
MedEdPORTAL. Oct 13 2016;12:10481.
    \604\ Jacobs PJ. Using High-Fidelity Simulation and Video-
Assisted Debriefing to Enhance Obstetrical Hemorrhage Mock Code 
Training. J Nurses Prof Dev. Sep/Oct 2017;33(5):234-239.
    \605\ Hopmann P, Varre JS, Duncan G, Devoe WB, Gable BD. 
Multidisciplinary Simulation of Trauma in Pregnancy with 
Resuscitative Endovascular Balloon Occlusion of the Aorta (REBOA) 
Utilization. Cureus. Dec 2022;14(12):e32820.
    \606\ Harrington J, Duncan G, D. Angelo K G. Multidisciplinary 
Simulation Improves Resident Confidence for Pregnant Patients 
Requiring Surgical Intervention. Cureus. Mar 2022;14(3):e23454.
    \607\ Ames, S.G., et al., Emergency Department Pediatric 
Readiness and Mortality in Critically Ill Children. Pediatrics, 
2019. 144(3).
    \608\ Newgard, C.D., et al., Emergency Department Pediatric 
Readiness and Short-term and Long-term Mortality Among Children 
Receiving Emergency Care. JAMA Network Open, 2023. 6(1): p. 
e2250941-e2250941.
    \609\ Keyes, DC, et al., Impact of a New Senior Emergency 
Department on Emergency Department Recidivism, Rate of Hospital 
Admission, and Hospital Length of Stay. Annals of Emergency 
Medicine, 2014. 63(5): p. 517-524.
    \610\ Dresden, S.M., et al., Geriatric Emergency Department 
Innovations: The Impact of Transitional Care Nurses on 30-day 
Readmissions for Older Adults. Acad Emerg Med, 2020. 27(1): p. 43-
53.
    \611\ Foo, C.L., et al., Geriatric assessment and intervention 
in an emergency department observation unit reduced re-attendance 
and hospitalisation rates. Australas J Ageing, 2012. 31(1): p. 40-6.
    \612\ Chong, E., et al., Emergency Department Interventions for 
Frailty (EDIFY): Front-Door Geriatric Care Can Reduce Acute 
Admissions. Journal of the American Medical Directors Association, 
2021. 22(4): p. 923-928.e5.
    \613\ Gettel, C.J., et al., An Outcome Comparison Between 
Geriatric and Nongeriatric Emergency Departments. Ann Emerg Med, 
2023. 82(6): p. 681-689.
---------------------------------------------------------------------------

    We seek comments on additional benefits from our proposed 
requirements, as well as ways to quantify the health, safety, and 
financial benefits we have identified above.
i. Alternatives Considered
    We considered a variety of approaches when developing the proposed 
obstetrical services requirements for hospitals and CAHs. One approach 
was to leave the development of policies to improve obstetrical 
services to accrediting agencies or individual States. We decided 
against this approach, however, since there is likely to be wide 
variation across States and accrediting agencies in their requirements, 
leading to variation in obstetrical services for patients depending on 
the facility or State where they are located.
    We also considered requiring specific topics for the proposed OB 
services training requirement as well as for the requirement to train 
staff on the protocols for the care of patients with emergency 
conditions. We ultimately decided, however, to provide facilities with 
flexibility in how they approach these trainings so that they could 
provide it in a way that leads to the best improvements in and highest 
quality of care for pregnant and postpartum women. Similarly, we 
considered defining specific subpopulations that facilities must 
analyze when using their QAPI program to identify inequalities in 
health outcomes. Ultimately, however, we decided to provide facilities 
with flexibility regarding which subpopulations they analyze since 
features of patient populations are likely to vary greatly across 
different facilities.

D. Regulatory Review Cost Estimation

    If regulations impose administrative costs on private entities, 
such as the time needed to read and interpret this proposed or final 
rule, we should estimate the cost associated with regulatory review. 
Due to the uncertainty involved with accurately quantifying the number 
of entities that will review the rule, we assume that the total number 
of unique commenters on last year's proposed rule will be the number of 
reviewers of this proposed rule. We acknowledge that this assumption 
may understate or overstate the costs of reviewing this rule. It is 
possible that not all commenters reviewed last year's rule in detail, 
and it is also possible that some reviewers chose not to comment on the 
proposed rule. For these reasons we thought that the number of past 
commenters would be a fair estimate of the number of reviewers of this 
rule. We welcome any comments on the approach in estimating the number 
of entities that will review this proposed rule. We also recognize that 
different types of entities are in many cases affected by mutually 
exclusive sections of this proposed rule, and therefore for the 
purposes of our estimate we assume that each reviewer reads 
approximately 50 percent of the rule. We seek comments on this 
assumption.

[[Page 59572]]

    Using the wage information from the BLS for medical and health 
service managers (Code 11-9111), we estimate that the cost of reviewing 
this rule is $115.22 per hour, including overhead and fringe benefits 
https://www.bls.gov/oes/current/oes_nat.htm. Assuming an average 
reading speed, we estimate that it would take approximately 8 hours for 
the staff to review half of this proposed or final rule. For each 
entity that reviews the rule, the estimated cost is $921.76 (8 hours x 
$115.22). Therefore, we estimate that the total cost of reviewing this 
regulation is $3,481,487.52 ($921.76 x 3,777).

D. Regulatory Review Cost Estimation

    If regulations impose administrative costs on private entities, 
such as the time needed to read and interpret this proposed or final 
rule, we should estimate the cost associated with regulatory review. 
Due to the uncertainty involved with accurately quantifying the number 
of entities that will review the rule, we assume that the total number 
of unique commenters on last year's proposed rule will be the number of 
reviewers of this proposed rule. We acknowledge that this assumption 
may understate or overstate the costs of reviewing this rule. It is 
possible that not all commenters reviewed last year's rule in detail, 
and it is also possible that some reviewers chose not to comment on the 
proposed rule. For these reasons we thought that the number of past 
commenters would be a fair estimate of the number of reviewers of this 
rule. We welcome any comments on the approach in estimating the number 
of entities that will review this proposed rule. We also recognize that 
different types of entities are in many cases affected by mutually 
exclusive sections of this proposed rule, and therefore for the 
purposes of our estimate we assume that each reviewer reads 
approximately 50 percent of the rule. We seek comments on this 
assumption.
    Using the wage information from the BLS for medical and health 
service managers (Code 11-9111), we estimate that the cost of reviewing 
this rule is $129.28 per hour, including overhead and fringe benefits 
https://www.bls.gov/oes/current/oes_nat.htm. Assuming an average 
reading speed, we estimate that it would take approximately 8 hours for 
the staff to review half of this proposed or final rule. For each 
entity that reviews the rule, the estimated cost is $1,034.24 (8 hours 
x $129.28). Therefore, we estimate that the total cost of reviewing 
this regulation is $3,903,221.76 ($1,034.24 x 3,777).

E. Regulatory Flexibility Act (RFA) Analysis

    The RFA requires agencies to analyze options for regulatory relief 
of small entities, if a rule has a significant impact on a substantial 
number of small entities. For purposes of the RFA, we estimate that 
many hospitals are considered small businesses either by the Small 
Business Administration's size standards with total revenues of $41.5 
million or less in any single year or by the hospital's not-for-profit 
status. Most ASCs and most CMHCs are considered small businesses with 
total revenues of $16.5 million or less in any single year. For 
details, we refer readers to the Small Business Administration's 
``Table of Size Standards'' at http://www.sba.gov/content/table-small-business-sizestandards.
    Individuals and states are not included in the definition of a 
small entity. As its measure of significant economic impact on a 
substantial number of small entities, HHS uses a change in revenue of 
more than 3 to 5 percent. We believe that this threshold would be 
reached by the requirements proposed in this proposed rule. As a 
result, the Secretary has determined that this proposed rule may have a 
significant impact on a substantial number of small entities.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 603 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a metropolitan 
statistical area and has 100 or fewer beds. We estimate that this 
proposed rule would increase payments to small rural hospitals by 
approximately 3 percent; therefore, it should have a negligible impact 
on approximately 533 small rural hospitals. We note that the estimated 
payment impact for any category of small entity will depend on both the 
services that they provide as well as the payment policies and/or 
payment systems that may apply to them. Therefore, the most applicable 
estimated impact may be based on the specialty, provider type, or 
payment system.
    The analysis above, together with the remainder of this preamble, 
provides a regulatory flexibility analysis and a regulatory impact 
analysis.

F. Unfunded Mandates Reform Act Analysis

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. In 2024, that 
threshold is approximately $183 million. This proposed rule does not 
mandate any requirements for State, local, or tribal governments, or 
for the private sector. This proposed rule would not impose a mandate 
that would result in the expenditure by State, local, and Tribal 
Governments, in the aggregate, or by the private sector, of more than 
$183 million in any 1 year.

G. Federalism

    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on state 
and local governments, preempts state law, or otherwise has Federalism 
implications. We have examined the OPPS and ASC provisions included in 
this proposed rule in accordance with Executive Order 13132, 
Federalism, and have determined that they would not have a substantial 
direct effect on State, local, or tribal governments, preempt State 
law, or otherwise have a Federalism implication. As reflected in Table 
131 of this proposed rule, we estimate that OPPS payments to 
governmental hospitals (including State and local governmental 
hospitals) would increase by 2.4 percent under this proposed rule. 
While we do not know the number of ASCs or CMHCs with government 
ownership, we anticipate that it is small. The analyses we have 
provided in this section of this proposed rule, in conjunction with the 
remainder of this document, demonstrate that this proposed rule is 
consistent with the regulatory philosophy and principles identified in 
Executive Order 12866, the RFA, and section 1102(b) of the Act.
    This proposed rule would affect payments to a substantial number of 
small rural hospitals and a small number of rural ASCs, as well as 
other classes of hospitals, CMHCs, and ASCs, and some effects may be 
significant. However, as noted in section XXIII of this proposed rule, 
this rule should not have a significant effect on small rural 
hospitals.

[[Page 59573]]

H. Conclusion

    The changes we are finalizing in this proposed rule would affect 
all classes of hospitals paid under the OPPS as well as both CMHCs and 
ASCs. We estimate that most classes of hospitals paid under the OPPS 
would experience a modest increase or a minimal decrease in payment for 
services furnished under the OPPS in CY 2025. Table U168 demonstrates 
the estimated distributional impact of the OPPS budget neutrality 
requirements that would result in a 2.3 percent increase in payments 
for all services paid under the OPPS in CY 2025, after considering all 
of the changes to APC reconfiguration and recalibration, as well as the 
OPD fee schedule increase factor, wage index changes, including the 
frontier State wage index adjustment, and estimated payment for 
outliers, changes to the pass-through payment estimate, and changes to 
outlier payments. However, some classes of providers that are paid 
under the OPPS would experience more significant gains or losses in 
OPPS payments in CY 2025.
    The updates we are making to the ASC payment system for CY 2025 
would affect each of the approximately 6,100 ASCs currently approved 
for participation in the Medicare program. The effect on an individual 
ASC would depend on its mix of patients, the proportion of the ASC's 
patients who are Medicare beneficiaries, the degree to which the 
payments for the procedures offered by the ASC are changed under the 
ASC payment system, and the extent to which the ASC provides a 
different set of procedures in the coming year than in previous years. 
Table U169 demonstrates the estimated distributional impact among ASC 
surgical specialties of the productivity-adjusted hospital market 
basket update factor of 2.6 percent for CY 2025.
    Finally, our proposal to include additional exceptions to the four 
walls requirement under the Medicaid clinic services for IHS/Tribal 
clinics, behavioral health clinics, and clinics located in rural areas 
is estimated to have an $1.18 billion impact in transfers for fiscal 
years 2025-2029. Table 110 demonstrates the Federal and State share 
impacts on IHS/Tribal clinics, behavioral health clinics, clinics 
located in rural areas, and in aggregate. As explained earlier in this 
section of the proposed rule, there is uncertainty in the potential for 
changes in utilization and costs of clinic services because of 
uncertainty in provider availability and beneficiary demand.
    Chiquita Brooks-LaSure, Administrator of the Centers for Medicare & 
Medicaid Services, approved this document on June 21, 2024.

List of Subjects

42 CFR Part 406

    Diseases, Health facilities, Medicare.

42 CFR Part 407

    Medicare.

42 CFR Part 410

    Diseases, Health facilities, Health professions, Laboratories, 
Medicare, Reporting and recordkeeping requirements, Rural areas, X-
rays.

42 CFR Part 411

    Diseases, Medicare, Reporting and recordkeeping requirements.

42 CFR Part 416

    Health facilities, Health professions, Medicare, Reporting and 
recordkeeping requirements.

42 CFR Part 419

    Hospitals, Medicare, Reporting and recordkeeping requirements.

42 CFR Part 435

    Aid to Families with Dependent Children, Grant programs--health, 
Medicaid, Reporting and recordkeeping requirements, Supplemental 
Security Income (SSI), Wages.

42 CFR Part 440

    Grant programs--health, Medicaid.

42 CFR Part 457

    Administrative practice and procedure, Grant programs--health, 
Health insurance, Reporting and recordkeeping requirements.

42 CFR Part 482

    Grant programs--health, Hospitals, Medicaid, Medicare, Reporting 
and recordkeeping requirements.

42 CFR Part 485

    Grant programs--health, Health facilities, Incorporation by 
Reference, Medicaid, Privacy, Reporting and recordkeeping requirements.

    For the reasons set forth in the preamble, the Centers for Medicare 
and Medicaid Services proposes to amend 42 CFR chapter IV as set forth 
below:

PART 406--HOSPITAL INSURANCE ELIGIBILITY AND ENTITLEMENT

0
1. The authority citation for part 406 continues to read as follows:

    Authority:  42 U.S.C. 1302, 1395i-2, 1395i-2a, 1395p, 1395q and 
1395hh.

0
2. Section 406.27 is amended by revising paragraph (d) to read as 
follows:


Sec.  406.27  Special enrollment periods for exceptional conditions.

* * * * *
    (d) SEP for formerly incarcerated individuals. An SEP exists for 
Medicare eligible individuals who are no longer incarcerated on or 
after January 1, 2023.
    (1) SEP parameters and duration before January 1, 2025--(i) 
Eligibility. An individual is eligible for this SEP if they are 
released from the custody of penal authorities between January 1, 2023, 
and December 31, 2024, as described in Sec.  411.4(b) of this 
subchapter. The individual must demonstrate that they are eligible for 
Medicare and failed to enroll or reenroll in Medicare premium Part A 
due to being in custody of penal authorities and there is a record of 
release either through discharge documents or data available to SSA.
    (ii) SEP duration. The SEP starts the day of the individual's 
release from the custody of penal authorities and ends the last day of 
the 12th month after the month in which the individual is released from 
the custody of penal authorities.
    (2) SEP parameters and duration beginning January 1, 2025--(i) 
Eligibility. An individual is eligible for this SEP if they are 
released from confinement in a jail, prison, or other penal institution 
or correctional facility on or after January 1, 2025, and demonstrate 
that they are eligible for Medicare and failed to enroll or reenroll in 
Medicare premium Part A due to being so confined, and there is a record 
of release, either through discharge documents or data available to 
SSA.
    (ii) SEP duration. The SEP starts the day an individual is released 
from confinement as determined by SSA and ends the last day of the 12th 
month after the month in which the individual is released from 
confinement in a jail, prison, or other penal institution or 
correctional facility.
    (3) Entitlement--(i) General rule. Entitlement begins the first day 
of the month following the month of enrollment, so long as the date is 
on or after January 1, 2023.
    (ii) Special rule. An individual has the option of requesting 
entitlement for a retroactive period of up to 6 months provided the 
date does not precede the month of their release from incarceration, 
the date is on or after January 1, 2023, and the individual pays the 
monthly premiums for the period of coverage (as required under Sec.  
406.32(f)). If retroactive enrollment is requested

[[Page 59574]]

and the application is filed within the first 6 months of the SEP, the 
effective date is retroactive to the beginning of the month of their 
release from incarceration. If retroactive enrollment is requested and 
the application is filed in the last 6 months of the SEP, the coverage 
effective date is retroactive to the 6th month before the month of 
enrollment.
* * * * *

PART 407--SUPPLEMENTARY MEDICAL INSURANCE (SMI) ENROLLMENT AND 
ENTITLEMENT

0
3. The authority citation for part 407 continues to read as follows:

    Authority:  42 U.S.C. 1302, 1395p, 1395q, and 1395hh.

0
4. Section 407.23 is amended by revising paragraph (d) to read as 
follows:


Sec.  407.23  Special enrollment periods for exceptional conditions.

* * * * *
    (d) SEP for formerly incarcerated individuals. An SEP exists for 
Medicare eligible individuals who are no longer incarcerated on or 
after January 1, 2023.
    (1) SEP parameters and duration before January 1, 2025--(i) 
Eligibility. An individual is eligible for this SEP if they are 
released from the custody of penal authorities between January 1, 2023, 
and December 31, 2024, as described in Sec.  411.4(b) of this 
subchapter. The individual must demonstrate that they are eligible for 
Medicare and failed to enroll or reenroll in SMI due to being in the 
custody of penal authorities and there is a record of release either 
through discharge documents or data available to SSA.
    (ii) SEP duration. The SEP starts the day of the individual's 
release from the custody of penal authorities and ends the last day of 
the 12th month after the month in which the individual is released from 
the custody of penal authorities.
    (2) SEP parameters and duration beginning January 1, 2025--(i) 
Eligibility. An individual is eligible for this SEP if they are 
released from confinement in a jail, prison, or other penal institution 
or correctional facility on or after January 1, 2025, and demonstrate 
that they are eligible for Medicare and failed to enroll or reenroll in 
SMI due to being so confined, and there is a record of release, either 
through discharge documents or data available to SSA.
    (ii) SEP duration. The SEP starts the day an individual is released 
from confinement as determined by SSA and ends the last day of the 12th 
month after the month in which the individual is released from 
confinement in a jail, prison, or other penal institution or 
correctional facility.
    (3) Entitlement--(i) General rule. Entitlement begins the first day 
of the month following the month of enrollment, so long as the date is 
on after January 1, 2023.
    (ii) Special rule. An individual has the option of requesting 
entitlement for a retroactive period of up to 6 months provided the 
date does not precede the month of their release from incarceration, 
the date is on or after January 1, 2023, and the individual pays the 
monthly premiums for the period of coverage (as required under Sec.  
408.4). If retroactive enrollment is requested and the application is 
filed within the first 6 months of the SEP, the effective date is 
retroactive to the beginning of the month of their release from 
incarceration. If retroactive enrollment is requested and the 
application is filed in the last 6 months of the SEP, the coverage 
effective date is retroactive to the 6th month before the month of 
enrollment.
* * * * *

PART 410--SUPPLEMENTARY MEDICAL INSURANCE (SMI) BENEFITS

0
5. The authority citation for part 410 continues to read as follows:

    Authority:  42 U.S.C. 1302, 1395m, 1395hh, 1395rr, and 1395ddd.

0
6. Section 410.27 is amended by revising paragraph (a)(1)(iv)(B)(1) to 
read as follows:


Sec.  410.27  Therapeutic outpatient hospital or CAH services and 
supplies incident to a physician's or nonphysician practitioner's 
service: Conditions.

    (a) * * *
    (1) * * *
    (iv) * * *
    (B) * * *
    (1) For purposes of this section, direct supervision means that the 
physician or nonphysician practitioner must be immediately available to 
furnish assistance and direction throughout the performance of the 
procedure. It does not mean that the physician or nonphysician 
practitioner must be present in the room when the procedure is 
performed. For pulmonary rehabilitation, cardiac rehabilitation, and 
intensive cardiac rehabilitation services, direct supervision must be 
furnished as specified in Sec. Sec.  410.47 and 410.49, respectively. 
Through December 31, 2025, the presence of the physician or 
nonphysician practitioner for the purpose of the supervision of 
pulmonary rehabilitation, cardiac rehabilitation, and intensive cardiac 
rehabilitation services includes virtual presence through audio/video 
real-time communications technology (excluding audio-only); and
* * * * *
0
7. Section 410.28 is amended by revising paragraph (e)(2)(iii) to read 
as follows:


Sec.  410.28  Hospital or CAH diagnostic services furnished to 
outpatients: Conditions.

* * * * *
    (e) * * *
    (2) * * *
    (iii) Through December 31, 2025, the presence of the physician or 
nonphysician practitioner under paragraphs (e)(2)(i) and (ii) of this 
section includes virtual presence through audio/video real-time 
communications technology (excluding audio-only).
* * * * *

PART 411--EXCLUSIONS FROM MEDICARE AND LIMITATIONS ON MEDICARE 
PAYMENT

0
8. The authority citation for part 411 continues to read as follows:

    Authority:  42 U.S.C. 1302, 1395w-101 through 1395w-152, 1395hh, 
and 1395nn.

0
9. Section 411.4 is revised to read as follows:


Sec.  411.4  Items and services for which neither the beneficiary nor 
any other person is legally obligated to pay.

    (a) General rule. Except in the case of Federally qualified health 
center services and as provided in Sec.  411.8(b) (for services paid by 
a governmental entity), Medicare may not pay for an item or service 
under part A or part B if--
    (1) The individual has no legal obligation to pay for the item or 
service; and
    (2) No other person (by reason of such individual's membership in a 
prepayment plan or otherwise) has a legal obligation to provide or pay 
for the item or service.
    (b) Special conditions for payment for items or services furnished 
to an individual in the custody of a penal authority. (1) An individual 
in the custody of a penal authority is considered to have a legal 
obligation to pay for items or services furnished to the individual 
only if the following conditions are met:
    (i) State or local law requires the individual to pay the cost of 
items and services that the individual receives ;
    (ii) The penal authority enforces the requirement to pay for items 
or services

[[Page 59575]]

by billing all individuals who receive such items or services, whether 
or not covered by Medicare or any other health insurance; and
    (iii) The penal authority pursues collection of amounts owed for 
items or services received in the same way and with the same vigor that 
it pursues the collection of other debts.
    (2) For purposes of this paragraph, a penal authority means a 
police department or other law enforcement agency, a government agency 
operating under a penal statute, or a State, local or Federal jail, 
prison, penitentiary, or similar institution.
    (3) For purposes of this paragraph, an individual is considered to 
be in the custody of a penal authority if the individual is:
    (i) Under arrest;
    (ii) Incarcerated in a jail, prison, penitentiary, or similar 
institution;
    (iii) Temporarily outside of a jail, prison, penitentiary, or 
similar institution on medical furlough or similar arrangement;
    (iv) Escaped from confinement by a penal authority;
    (v) Required to reside in a mental health facility under a penal 
statute or rule; or
    (vi) Required to reside in a halfway house under any of the 
following conditions:
    (A) Residents are precluded from working outside the facility in 
employment that is available to individuals who are not under penal 
authority supervision;
    (B) Residents may not use community resources (for example, 
libraries, grocery stores, recreation, or educational institutions) at 
will; or
    (C) Residents may not seek health care items and services in the 
broader community to the same or similar extent as individuals who are 
not under penal authority supervision.

PART 416--AMBULATORY SURGICAL SERVICES

0
10. The authority citation for part 416 continues to read as follows:

    Authority:  42 U.S.C. 1302 and 1395hh.11. Section 416.164 is 
amended by revising paragraphs (a)(4) and (b)(6) to read as follows:


Sec.  416.164  Scope of ASC Services.

    (a) * * *
    (4) Drugs and biologicals for which separate payment is not allowed 
under the hospital outpatient prospective payment system (OPPS);
* * * * *
    (b) * * *
    (6) Non-opioid pain management drugs, biologicals, and medical 
devices as determined by CMS under Sec.  416.174;
* * * * *
0
12. Section 416.171 is amended by revising paragraph (b)(1) to read as 
follows:


Sec.  416.171  Determination of payment rates for ASC services.

* * * * *
    (b) * * *
    (1) Covered ancillary services specified in Sec.  416.164(b), with 
the exception of radiology services and certain diagnostic tests as 
provided in Sec.  416.164(b)(5) and non-opioid pain management drugs, 
biologicals, and medical devices as determined by CMS under Sec.  
416.174.
* * * * *
0
13. Revise Sec.  416.174 to read as follows:


Sec.  416.174  Payment for non-opioid pain management drugs, 
biologicals, and medical devices.

    (a) Eligibility for separate payment for non-opioid pain management 
drugs and biologicals. From January 1, 2025 through December 31, 2027, 
a non-opioid drug or biological is eligible for separate payment for an 
applicable calendar year if CMS determines it meets the following 
requirements through that year's rulemaking:
    (1) The drug is approved under a new drug application under section 
505(c) of the Federal Food, Drug, and Cosmetic Act (FDCA), under an 
abbreviated new drug application under section 505(j), or, in the case 
of a biological product, is licensed under section 351 of the Public 
Health Service Act. The product also has a label indication approved by 
the Food and Drug Administration to reduce postoperative pain, or 
produce postsurgical or regional analgesia, without acting upon the 
body's opioid receptors.
    (2) The drug or biological does not have transitional pass-through 
payment status under Sec.  419.64 of this subchapter. In the case where 
a drug or biological otherwise meets the requirements under this 
section and has transitional pass-through payment status that expires 
during the calendar year, the drug or biological will qualify for 
separate payment as specified in this paragraph (a) during such 
calendar year on the first day of the next quarter following the 
expiration of its pass-through status.
    (3) The drug or biological has payment that is packaged into a 
payment for a covered OPD service (or group of services) under a policy 
in this part.
    (b) Eligibility for separate payment for non-opioid medical 
devices. From January 1, 2025, through December 31, 2027, a medical 
device is eligible for separate payment for an applicable calendar year 
if CMS determines it meets all of the following requirements through 
that year's rulemaking:
    (1) The medical device is used to deliver a therapy to reduce 
postoperative pain, or produce postsurgical or regional analgesia, and 
has an application under section 515 of the Federal Food, Drug, and 
Cosmetic Act that has been approved with respect to the device, has 
been cleared for market under section 510(k) of such Act, or is exempt 
from the requirements of section 510(k) of such Act pursuant to 
subsection (l) or (m) or section 510 of such Act or section 520(g) of 
such Act.
    (2) The medical device has demonstrated the ability to replace, 
reduce, or avoid intraoperative or postoperative opioid use or the 
quantity of opioids prescribed in a clinical trial or through data 
published in a peer-reviewed journal.
    (3) The medical device does not have transitional pass-through 
payment status under Sec.  419.66 of this subchapter. In the case where 
a medical device otherwise meets the requirements under this section 
and has transitional pass-through payment status that expires during 
the calendar year, the medical device will qualify for separate payment 
as specified in this paragraph (b) during such calendar year on the 
first day of the next calendar year quarter following the expiration of 
its pass-through status.
    (4) The medical device has payment that is packaged into a payment 
for a covered OPD service (or group of services) under a policy in this 
part.
    (c) Payment Amount. From January 1, 2025 through December 31, 2027, 
the amount of payment for a qualifying non-opioid treatment for pain 
relief is as follows:
    (1) For a qualifying drug or biological as defined in paragraph (a) 
of this section, the amount of payment is the amount determined under 
section 1847A of the Act for the drug or biological that exceeds the 
portion of the otherwise applicable Medicare OPD fee schedule amount, 
which is determined to be zero dollars for calendar year 2025, subject 
to paragraph (c)(3) of this section.
    (2) For a qualifying medical device as defined in paragraph (b) of 
this section, the amount of payment is the amount of the hospital's 
charges for the device, adjusted to cost, that exceeds the portion of 
the otherwise applicable Medicare OPD fee schedule amount, which is 
determined to be zero dollars

[[Page 59576]]

for calendar year 2025, subject to paragraph (c)(3) of this section.
    (3) Payment limitation. The payment amounts in paragraphs (c)(1) 
and (2) of this section shall not exceed the estimated average of 18 
percent of the OPD fee schedule amount of the volume weighted average 
of the five OPD services with which the non-opioid treatment for pain 
relief is furnished most frequently.
0
14. Section 416.320 is amended by revising paragraph (b) to read as 
follows:


Sec.  416.320  Retention and removal of quality measures under the 
ASCQR Program.

* * * * *
    (b) Immediate measure suspension. If CMS determines that the 
collection and reporting activities related to a measure potentially 
raise patient safety concerns, CMS will immediately suspend the measure 
from the ASCQR Program and will promptly notify ASCs and the public of 
the suspension of the measure. CMS will address the suspension and 
propose to retain, modify, or remove the measure in the next feasible 
rulemaking cycle.
* * * * *

PART 419--PROSPECTIVE PAYMENT SYSTEM FOR HOSPITAL OUTPATIENT 
DEPARTMENT SERVICES

0
15. The authority citation for part 419 continues to read as follows:

    Authority:  42 U.S.C. 1302, 1395l(t), and 1395hh.

0
16. Section 419.2 is amended by revising paragraph (b)(15) to read as 
follows:


Sec.  419.2  Basis of payment.

* * * * *
    (b) * * *
    (15) Drugs, biologicals, and radiopharmaceuticals that function as 
supplies when used in a diagnostic test or procedure (including but not 
limited to, diagnostic radiopharmaceuticals below the per-day 
diagnostic radiopharmaceutical packaging threshold for the applicable 
year, contrast agents, and pharmacologic stress agents);
* * * * *
0
17. Section 419.41 is amended by adding paragraphs (h) and (i) to read 
as follows:


Sec.  419.41  Calculation of national beneficiary copayment amounts and 
national Medicare program payment amounts.

* * * * *
    (h) Payment for non-passthrough therapeutic radiopharmaceuticals. 
For a therapeutic radiopharmaceutical for which payment is not packaged 
into a payment for a covered outpatient department (OPD) service (or 
group of services) and that does have on transitional pass-through 
payment status as described in Sec.  419.64, to calculate the program 
payment and copayment amounts CMS does the following:
    (1) Determines the Average Sales Price (ASP) for the therapeutic 
radiopharmaceutical for the quarter established under the methodology 
described by section 1847A of the Act. If that amount is not available, 
then CMS calculates the mean unit cost (MUC) using the most recently 
available claims data for that therapeutic radiopharmaceutical.
    (2) Subtracts from the amount determined under paragraph (h)(1) of 
this section the amount of the applicable Part B deductible provided 
under Sec.  410.160 of this chapter.
    (3) Multiplies the amount determined under paragraph (h)(1) of this 
section (less any applicable deductible under paragraph (h)(2) of this 
section) by 20 percent. This is the beneficiary's copayment amount for 
the drug or biological.
    (4) Subtracts the amount determined under paragraph (h)(3) of this 
section from the amount determined under paragraph (h)(1) of this 
section (less any applicable deductible determined under paragraph 
(h)(2) of this section). This amount is the preliminary program amount.
    (5) Adds to the preliminary program amount determined under 
paragraph (h)(4) of this section the amount by which the copayment 
amount would have exceeded the inpatient hospital deductible for that 
year. This amount is the final Medicare program payment amount.
    (i) Payment for non-passthrough diagnostic radiopharmaceuticals. 
For a diagnostic radiopharmaceutical for which payment is not packaged 
into a payment for a covered outpatient department (OPD) service (or 
group of services) and that does not have transitional pass-through 
payment status as described in Sec.  419.64, to calculate the program 
payment and copayment amounts CMS does the following:
    (1) Calculates the mean unit cost (MUC) using the most recently 
available claims data for that diagnostic radiopharmaceutical.
    (2) Subtracts from the amount determined under paragraph (i)(1) of 
this section the amount of the applicable Part B deductible provided 
under Sec.  410.160 of this chapter.
    (3) Multiplies the amount determined under paragraph (i)(1) of this 
section (less any applicable deductible under paragraph (h)(2) of this 
section) by 20 percent. This is the beneficiary's copayment amount for 
the drug or biological.
    (4) Subtracts the amount determined under paragraph (i)(3) of this 
section from the amount determined under paragraph (i)(1) of this 
section (less any applicable deductible determined under paragraph 
(i)(2) of this section). This amount is the preliminary program amount.
    (5) Adds to the preliminary program amount determined under 
paragraph (i)(4) of this section the amount by which the copayment 
amount would have exceeded the inpatient hospital deductible for that 
year. This amount is the final Medicare program payment amount.
0
18. Section 419.43 is amended by adding paragraph (k) to read as 
follows:


Sec.  419.43  Adjustments to national program payment and beneficiary 
copayment amounts.

* * * * *
    (k) Payment for non-opioid pain management drugs and biologicals. 
(1) Eligibility for separate payment for non-opioid pain management 
drugs and biologicals. From January 1, 2025, through December 31, 2027, 
a drug or biological is eligible for separate payment for an applicable 
calendar year if CMS determines it meets the following requirements 
through that year's rulemaking:
    (i) The drug is approved under a new drug application under section 
505(c) of the Federal Food, Drug, and Cosmetic Act (FDCA), under an 
abbreviated new drug application under section 505(j), or, in the case 
of a biological product, is licensed under section 351 of the Public 
Health Service Act. The product has a label indication approved by the 
Food and Drug Administration to reduce postoperative pain, or produce 
postsurgical or regional analgesia, without acting upon the body's 
opioid receptors.
    (ii) The drug or biological does not have transitional pass-through 
payment status under Sec.  419.64 of this subchapter. In the case where 
a drug or biological otherwise meets the requirements under this 
section and has transitional pass-through payment status that expires 
during the calendar year, the drug or biological will qualify for 
separate payment as specified in this paragraph (k) during such 
calendar year on the first day of the next calendar year quarter 
following the expiration of its pass-through status.

[[Page 59577]]

    (iii) The drug or biological has payment that is packaged into a 
payment for a covered OPD service (or group of services) under a policy 
in this section.
    (2) Eligibility for separate payment for non-opioid medical 
devices. From January 1, 2025, through December 31, 2027, a medical 
device is eligible for separate payment for an applicable calendar year 
if CMS determines it meets the following requirements through that 
year's rulemaking:
    (i) The medical device, is used to deliver a therapy to reduce 
postoperative pain, or produce postsurgical or regional analgesia, and 
has an application under section 515 of the Federal Food, Drug, and 
Cosmetic Act that has been approved with respect to the device, been 
cleared for market under section 510(k) of such Act, or is exempt from 
the requirements of 510(k) of such Act pursuant to subsection (l) or 
(m) or section 510 of such Act or section 520(g) of such Act.
    (ii) The medical device has demonstrated the ability to replace, 
reduce, or avoid intraoperative or postoperative opioid use or the 
quantity of opioids prescribed in a clinical trial or through data 
published in a peer-reviewed journal.
    (iii) The medical device does not have transitional pass-through 
payment status under Sec.  419.66. In the case where a medical device 
otherwise meets the requirements under this section and has 
transitional pass-through payment status that expires during the 
calendar year, the medical device will qualify for separate payment as 
specified in paragraph (k)(2) of this section during such calendar year 
on the first day of the next calendar year quarter following the 
expiration of its pass-through status.
    (iv) The medical device has payment that is packaged into a payment 
for a covered OPD service (or group of services) under a policy in this 
section.
    (3) Payment Amount. From January 1, 2025, through December 31, 
2027, the amount of payment for a qualifying non-opioid treatment for 
pain relief is as follows:
    (i) For a qualifying drug or biological as defined in paragraph 
(k)(1) of this section, the amount of payment is the amount determined 
under section 1847A for the drug or biological that exceeds the portion 
of the otherwise applicable Medicare OPD fee schedule that the 
Secretary determines is associated with the drug or biological, subject 
to paragraph (k)(3)(iii) of this section.
    (ii) For a qualifying medical device as defined in paragraph (k)(2) 
of this section, the amount of payment is the amount of the hospital's 
charges for the device, adjusted to cost, that exceeds the portion of 
the otherwise applicable Medicare OPD fee schedule that the Secretary 
determines is associated with the device, subject to paragraph 
(k)(3)(iii) of this section.
    (iii) Payment limitation. The payment amounts in paragraph 
(k)(3)(i) and (ii) of this section shall not exceed the estimated 
average of 18 percent of the OPD fee schedule amount of the volume 
weighted average of the five OPD services with which the non-opioid 
treatment for pain relief is furnished most frequently.
0
19. Section 419.46 is amended by revising paragraph (i)(2) and adding 
paragraph (j) to read as follows:


Sec.  419.46  Requirements under the Hospital Outpatient Quality 
Reporting (OQR) Program.

* * * * *
    (i) * * *
    (2) Immediate measure suspension. If CMS determines that the 
collection and reporting activities related to a measure potentially 
raise patient safety concerns, CMS will immediately suspend the measure 
from the Hospital OQR Program and will promptly notify hospitals and 
the public of the suspension of the measure. CMS will address the 
suspension and propose to retain, modify, or remove the measure in the 
next feasible rulemaking cycle.
* * * * *
    (j) Requirements for submission of electronic clinical quality 
measures (eCQMs) under the Hospital OQR Program
    (1) Hospitals must utilize certified technology updated to be 
consistent with the Office of the National Coordinator for Health IT's 
(ONC) health IT certification criteria, as adopted and updated in 45 
CFR 170.315.
    (2) Hospitals must use electronic health record (EHR) technology 
certified to all eCQMs that are available to report under the Hospital 
OQR Program.
    (3) Hospitals must use the most recent version of the eCQM 
electronic measure specifications for the applicable reporting period 
available on the Electronic Clinical Quality Improvement (eCQI) 
Resource Center website at: https://ecqi.healthit.gov/ or another 
website as designated by CMS.
0
20. Section 419.47 is amended by--
0
a. Revising the section heading;
0
b. Revising paragraph (a); and
0
c. Adding paragraphs (c) and (d).
    The revisions and additions read as follows:


Sec.  419.47  Coding and Payment for Category B Investigational Device 
Exemption (IDE) Studies and Devices/Drugs Studied in a Clinical Trial 
with a Medicare Coverage with Evidence Development (CED) Designation.

    (a) Creation of a new HCPCS code for Category B IDE Studies that 
have a treatment arm and a placebo control arm. CMS will create a new 
HCPCS code, or revise an existing HCPCS code, to describe a Category B 
IDE study, which will include both the treatment and placebo control 
arms, related device(s) of the study, as well as routine care items and 
services, as specified under Sec.  405.201 of this chapter, when CMS 
determines that:
* * * * *
    (c) Creation of a new HCPCS code for devices/drugs and controls 
studied in clinical trials with the Medicare CED designation that have 
a study device/drug and a control arm. CMS will create a new HCPCS 
code, or revise an existing HCPCS code, to describe a device/drug and a 
control arm studied in a clinical trial with the Medicare CED 
designation, which will include the study device/drug and control arm, 
when CMS determines that:
    (1) The Medicare National Coverage Determination process determines 
that a coverage with evidence development is required to study a 
device/drug in a clinical trial; and
    (2) A new or revised code is necessary to preserve the scientific 
validity of such a study, such as by preventing the unblinding of the 
study.
    (d) Payment for devices/drugs studied in clinical trials with the 
Medicare CED designation. Where CMS creates a new HCPCS code or revises 
an existing HCPCS code under paragraph (c) of this section, CMS will:
    (1) Make a single packaged payment for the HCPCS code that includes 
payment for the study device/drug and any control; and
    (2) Calculate the single packaged payment rate for the HCPCS code 
based on an adjusted payment level representing the study device/drug 
and any control based on available pricing data and frequency of 
utilization of the study device/drug and any control in the study 
population.
0
21. Section 419.82 is amended by revising paragraph (d)(1)(iii) to read 
as follows:


Sec.  419.82  Prior authorization for certain covered hospital 
outpatient department services.

* * * * *
    (d) * * *
    (1) * * *
    (iii) The provisional affirmation or non-affirmation will be issued 
within 7

[[Page 59578]]

calendar days of receipt of the prior authorization request.
* * * * *

PART 435--ELIGIBILITY IN THE STATES, DISTRICT OF COLUMBIA, THE 
NORTHERN MARIANA ISLANDS, AND AMERICAN SAMOA

0
22. The authority citation for part 435 continues to read as follows:

    Authority: 42 U.S.C. 1302.

0
23. Section 435.926 is amended by revising paragraphs (b) introductory 
text, (b)(1), (c)(1); and (d)(1) to read as follows:


Sec.  435.926  Continuous eligibility for children.

* * * * *
    (b) Eligibility. The agency must provide continuous eligibility for 
the period specified in paragraph (c) of this section for an individual 
who is:
    (1) Under age 19; and
* * * * *
    (c) * * *
    (1) The length of the continuous eligibility period is 12 months.
* * * * *
    (d) * * *
    (1) The child attains age 19;
* * * * *

PART 440--SERVICES: GENERAL PROVISIONS

0
24. The authority citation for part 440 continues to read as follows:

    Authority: 42 U.S.C. 1302.

0
25. Section 440.90 is revised to read as follows:


Sec.  440.90  Clinic services.

    Clinic services means preventive, diagnostic, therapeutic, 
rehabilitative, or palliative services that are furnished by a facility 
that is not part of a hospital but is organized and operated to provide 
medical care to outpatients. The term includes the following services 
furnished to outpatients (services in paragraphs (a), (b), and (c) of 
this section are a mandatory part of clinic services, while services in 
paragraphs (d) and (e) of this section are optional):
    (a) Services furnished at the clinic by or under the direction of a 
physician or dentist.
    (b) Services furnished outside the clinic, by clinic personnel 
under the direction of a physician, to an individual who does not 
reside in a permanent dwelling or does not have a fixed home or mailing 
address.
    (c) Services furnished outside a clinic that is a facility of the 
Indian Health Service, whether operated by the Indian Health Service or 
by a Tribe or Tribal organization (as authorized by the Indian Self-
Determination and Education Assistance Act (ISDEAA), Pub. L. 93-638), 
by clinic personnel under the direction of a physician.
    (d) Services furnished outside of a clinic that is primarily 
organized for the care and treatment of outpatients with behavioral 
health disorders, including mental health and substance use disorders, 
by clinic personnel under the direction of a physician.
    (e) Services furnished outside of a clinic that is located in a 
rural area and is not a rural health clinic (as referenced in section 
1905(a)(2)(B) of the Social Security Act and 440.20(b) of this subpart) 
by clinic personnel under the direction of a physician.

PART 457--ALLOTMENTS AND GRANTS TO STATES

0
26. The authority citation for part 457 continues to read as follows:

    Authority:  42 U.S.C. 1302.

0
27. Revise Sec.  457.342to read as follows:


Sec.  457.342  Continuous eligibility for children.

    (a) A State must provide continuous eligibility for children under 
a separate CHIP in accordance with the terms of Sec.  435.926 of this 
chapter, and subject to a child remaining ineligible for Medicaid, as 
required by section 2110(b)(1) of the Act and Sec.  457.310 (related to 
the definition and standards for being a targeted low-income child) and 
the requirements of section 2102(b)(3) of the Act and Sec.  457.350 
(related to eligibility screening and enrollment).
    (b) [Reserved]

PART 482--CONDITIONS OF PARTICIPATION FOR HOSPITALS

0
28. The authority citation for part 482 continues to read as follows:

    Authority:  42 U.S.C. 1302, 1395hh, and 1395rr, unless otherwise 
noted.

0
29. Section 482.21 is amended by--
0
a. Adding paragraph (b)(4);
0
b. Redesignating paragraph (e) and (f) as (f) and (g), respectively; 
and
0
c. Adding new paragraph (e).
    The additions read as follows:


Sec.  482.21  Condition of participation: Quality assessment and 
performance improvement program.

* * * * *
    (b) * * *
    (4) For hospitals that offer obstetrical services, the hospital 
must utilize its QAPI program to assess and improve health outcomes and 
disparities among obstetrical patients on an ongoing basis. At a 
minimum, the hospital must:
    (i) Analyze data and quality indicators collected for the QAPI 
program by diverse subpopulations as identified by the hospital among 
obstetrical patients.
    (ii) Measure, analyze, and track data, measures, and quality 
indicators on patient outcomes and disparities in processes of care, 
services and operations among obstetrical patients.
    (iii) Analyze and prioritize patient health outcomes and 
disparities, develop and implement actions to improve patient health 
outcomes and disparities, measure results, and track performance to 
ensure improvements are sustained among obstetrical patients.
    (iv) Conduct at least one measurable performance improvement 
project focused on improving health outcomes and disparities among the 
hospital's population(s) of obstetrical patients annually.
* * * * *
    (e) Standard: Maternal Health QAPI activities. For hospitals that 
offer obstetrical services, the following additional QAPI requirements 
apply:
    (1) Obstetrical services leadership must engage in QAPI as 
specified in Sec.  482.21 for obstetrical services, including but not 
limited to participating in data collection and monitoring as specified 
in Sec.  482.21(b).
    (2) If a maternal mortality review committee (MMRC) is available at 
the state or local jurisdiction in which the hospital is located, the 
facility leadership, obstetrical services leadership, or their 
designate(s) must further have a process for incorporating MMRC(s) data 
and recommendations into the hospital QAPI program as specified in 
Sec.  482.21(b).
* * * * *
0
30. Section 482.43 is amended by revising paragraphs (c) and adding 
paragraph (d) to read as follows:


Sec.  482.43  Condition of participation: Discharge planning.

* * * * *
    (c) Standard: Transfer protocols. The hospital must have written 
policies and procedures for transferring patients under its care 
(inclusive of inpatient services) to the appropriate level of care 
(including to another hospital) as needed to meet the needs of the 
patient. The hospital must also provide training to relevant staff 
regarding the hospital policies and procedures for transferring 
patients under its care.
    (d) Standard: Requirements related to post-acute care services. For 
those patients discharged home and referred for HHA services, or for 
those patients transferred to a SNF for post-hospital

[[Page 59579]]

extended care services, or transferred to an IRF or LTCH for 
specialized hospital services, the following requirements apply, in 
addition to those set out at paragraphs (a) and (b) of this section:
    (1) The hospital must include in the discharge plan a list of HHAs, 
SNFs, IRFs, or LTCHs that are available to the patient, that are 
participating in the Medicare program, and that serve the geographic 
area (as defined by the HHA) in which the patient resides, or in the 
case of a SNF, IRF, or LTCH, in the geographic area requested by the 
patient. HHAs must request to be listed by the hospital as available.
    (i) This list must only be presented to patients for whom home 
health care post-hospital extended care services, SNF, IRF, or LTCH 
services are indicated and appropriate as determined by the discharge 
planning evaluation.
    (ii) For patients enrolled in managed care organizations, the 
hospital must make the patient aware of the need to verify with their 
managed care organization which practitioners, providers or certified 
suppliers are in the managed care organization's network. If the 
hospital has information on which practitioners, providers or certified 
supplies are in the network of the patient's managed care organization, 
it must share this with the patient or the patient's representative.
    (iii) The hospital must document in the patient's medical record 
that the list was presented to the patient or to the patient's 
representative.
    (2) The hospital, as part of the discharge planning process, must 
inform the patient or the patient's representative of their freedom to 
choose among participating Medicare providers and suppliers of post-
discharge services and must, when possible, respect the patient's or 
the patient's representative's goals of care and treatment preferences, 
as well as other preferences they express. The hospital must not 
specify or otherwise limit the qualified providers or suppliers that 
are available to the patient.
    (3) The discharge plan must identify any HHA or SNF to which the 
patient is referred in which the hospital has a disclosable financial 
interest, as specified by the Secretary, and any HHA or SNF that has a 
disclosable financial interest in a hospital under Medicare. Financial 
interests that are disclosable under Medicare are determined in 
accordance with the provisions of part 420, subpart C, of this chapter.
0
31. Section 482.55 is amended by adding paragraph (c) to read as 
follows:


Sec.  482.55  Condition of participation: Emergency services.

* * * * *
    (c) Standard: Emergency services readiness. In accordance with the 
complexity and scope of services offered, there must be adequate 
provisions and protocols to meet the emergency needs of patients.
    (1) Protocols. Protocols must be consistent with nationally 
recognized and evidence-based guidelines for the care of patients with 
emergency conditions, including but not limited to patients with 
obstetrical emergencies, complications, and immediate post-delivery 
care.
    (2) Provisions. Provisions include equipment, supplies, and 
medication used in treating emergency cases. Such provisions must be 
kept at the hospital and be readily available for treating emergency 
cases to meet the needs of patients. The available provisions must 
include the following:
    (i) Drugs, blood and blood products, and biologicals commonly used 
in life-saving procedures;
    (ii) Equipment and supplies commonly used in life-saving 
procedures; and
    (iii) Each emergency services treatment area must have a call-in-
system for each patient.
    (3) Staff training. Applicable staff, as identified by the 
hospital, must be trained annually on the protocols and provisions 
implemented pursuant to this section.
    (i) The governing body must identify and document which staff must 
complete such training.
    (ii) The hospital must document in the staff personnel records that 
the training was successfully completed.
    (iii) The hospital must be able to demonstrate staff knowledge on 
the topics implemented pursuant to this section.
    (iv) The hospital must use findings from its quality assessment and 
performance improvement (QAPI) program, as required at Sec.  482.21, to 
inform staff training needs and any additions, revisions, or updates to 
training topics on an ongoing basis.
0
32. Section 482.59 is added to subpart D to read as follows:


Sec.  482.59  Condition of participation: Obstetrical services.

    If the hospital offers obstetrical services, the services must be 
well organized and provided in accordance with nationally recognized 
acceptable standards of practice for the health care (including 
physical and behavioral health) of pregnant, birthing, and postpartum 
patients. If outpatient obstetrical services are offered, the services 
must be consistent in quality with inpatient care in accordance with 
the complexity of services offered.
    (a) Standard: Organization and staffing. The organization of the 
obstetrical services must be appropriate to the scope of the services 
offered. As applicable, the services must be integrated with other 
departments of the hospital.
    (1) Labor and Delivery rooms/suites (including labor rooms, 
delivery rooms (including rooms for operative delivery), and post-
partum/recovery rooms whether combined or separate) must be supervised 
by an experienced registered nurse, certified nurse midwife, nurse 
practitioner, physician assistant, or a doctor of medicine or 
osteopathy.
    (2) Obstetrical privileges must be delineated for all practitioners 
providing obstetrical care in accordance with the competencies of each 
practitioner. The obstetrical service must maintain a roster of 
practitioners specifying the privileges of each practitioner.
    (b) Standard: Delivery of service. Obstetrical services must be 
consistent with needs and resources of the facility. Policies governing 
obstetrical care must be designed to assure the achievement and 
maintenance of high standards of medical practice and patient care and 
safety.
    (1) The following equipment must be available to the labor and 
delivery room suites: call-in-system, cardiac monitor, and fetal 
doppler or monitor.
    (2) There must be adequate provisions and protocols, consistent 
with nationally recognized and evidence-based guidelines, for 
obstetrical emergencies, complications, immediate post-delivery care, 
and other patient health and safety events as identified as part of the 
QAPI program (Sec.  482.21). Provisions include equipment (in addition 
to the equipment required under (b)(1)), supplies, and medication used 
in treating emergency cases. Such provisions must be kept on the 
hospital and be readily available for treating emergency cases.
    (c) Standard: Staff training. The hospital must develop policies 
and procedures to ensure to ensure that relevant staff are trained on 
select topics for improving the delivery of maternal care.
    (1) Training concepts must reflect the scope and complexity of 
services offered within the facility, including but not limited to:
    (i) Facility-identified evidence-based best practices and protocols 
to improve the delivery of maternal care within the facility; and

[[Page 59580]]

    (ii) The hospital must use findings from its quality assessment and 
performance improvement (QAPI) program, as required at Sec.  482.21, to 
inform staff training needs and any additions, revisions, or updates to 
training topics on an ongoing basis.
    (2) The governing body must identify and document which staff must 
complete annual training on the topics identified at Sec.  
482.59(c)(1).
    (3) The hospital must document in the staff personnel records that 
the training was successfully completed.
    (4) The hospital must be able to demonstrate staff knowledge on the 
topics identified at Sec.  482.59(c)(1).

PART 485--CONDITIONS OF PARTICIPATION: SPECIALIZED PROVIDERS

0
33. The authority citation for part 485 continues to read as follows:

    Authority: 42 U.S.C. 1302 and 1395(hh).

0
34. Section 485.618 is amended by--
0
a. Revising paragraph (e); and
0
b. Adding paragraph (f).
    The revision and addition reads as follows:


Sec.  485.618  Condition of participation: Emergency Services.

* * * * *
    (e) Standard: Emergency services readiness. In accordance with the 
complexity and scope of services offered, there must be adequate 
provisions (as required under paragraphs (b) and (c) of this section) 
and protocols to meet the emergency needs of patients.
    (1) Protocols- Protocols must be consistent with nationally 
recognized and evidence-based guidelines for the care of patients with 
emergency conditions, including but not limited to patients with 
obstetrical emergencies, complications, and immediate post-delivery 
care.
    (2) Staff training- Applicable staff, as identified by the CAH, 
must be trained annually on the protocols and provisions implemented 
pursuant to this section.
    (i) The governing body must identify and document which staff must 
complete such training.
    (ii) The CAH must document in the staff personnel records that the 
training was successfully completed.
    (iii) The CAH must be able to demonstrate staff knowledge on such 
training.
    (iv) The CAH must use findings from its quality assessment and 
performance improvement (QAPI) program, as required at Sec.  485.641, 
to inform staff training needs and any additions, revisions, or updates 
to training topics on an ongoing basis.
    (f) Standard: Coordination with emergency response systems. The CAH 
must, in coordination with emergency response systems in the area, 
establish procedures under which a doctor of medicine or osteopathy is 
immediately available by telephone or radio contact on a 24-hours a day 
basis to receive emergency calls, provide information on treatment of 
emergency patients, and refer patients to the CAH or other appropriate 
locations for treatment.
0
35. Section 485.641 is amended by--
0
a. Adding paragraph (d)(4); and
0
b. Revising paragraph (e).
    The addition and revision reads as follows:


Sec.  485.641  Condition of participation: Quality assessment and 
performance improvement program.

* * * * *
    (d) * * *
    (4) For CAHs that offer obstetrical services, the following 
additional QAPI requirements apply:
    (i) Obstetrical services leadership must engage in QAPI as 
specified in this section for obstetrical services, including but not 
limited to participating in data collection and monitoring as specified 
in paragraphs (d) and (e) of this section.
    (ii) If a maternal mortality review committee (MMRC) is available 
at the state or local jurisdiction in which the CAH is located, the 
facility leadership, obstetrical services leadership, or their 
designate(s) must further have a process for incorporating MMRC(s) data 
and recommendations into the CAH QAPI program as specified in this 
section.
    (e) Standard: Program data collection and analysis. The program 
must incorporate quality indicator data including patient care data, in 
order to achieve the goals of the QAPI program. For CAHs that offer 
obstetrical services, the CAH must utilize its QAPI program to assess 
and improve health outcomes and disparities among obstetrical patients 
on an ongoing basis. At a minimum, the CAH must:
    (1) Analyze data and quality indicators collected for the QAPI 
program by diverse subpopulations as identified by the CAH among 
obstetrical patients.
    (2) Measure, analyze, and track health equity data, measures, and 
quality indicators on patient outcomes and disparities in processes of 
care, services and operations, and outcomes among obstetrical patients.
    (3) Analyze and prioritize identified patient health outcomes and 
disparities, develop and implement actions to improve patient health 
outcomes and disparities, measure results, and track performance to 
ensure improvements are sustained when disparities exist among 
obstetrical patients.
    (4) Conduct at least one measurable performance improvement project 
focused on improving health outcomes and disparities among the CAH's 
population(s) of obstetrical patients annually.
* * * * *
0
36. Section 485.649 is added to subpart S to read as follows:


Sec.  485.649  Condition of participation: Obstetrical Services.

    If the CAH offers obstetrical services, the services must be well 
organized and provided in accordance with nationally recognized 
acceptable standards of practice for the health care (including 
physical and behavioral health) of pregnant, birthing, postpartum 
patients. If outpatient obstetrical services are offered, the services 
must be consistent in quality with inpatient care in accordance with 
the complexity of services offered.
    (a) Standard: Organization and staffing. The organization of the 
obstetrical services must be appropriate to the scope of the services 
offered. As applicable, the services must be integrated with other 
departments of the CAH.
    (1) Labor and Delivery rooms/suites (including labor rooms, 
delivery rooms (including rooms for operative delivery), and post-
partum/recovery rooms whether combined or separate) must be supervised 
by an experienced registered nurse, certified nurse midwife, nurse 
practitioner, physician assistant, or a Doctor of Medicine or a Doctor 
of Osteopathy (MD/DO).
    (2) Obstetrical privileges must be delineated for all practitioners 
providing obstetrical care in accordance with the competencies of each 
practitioner. The obstetrical service must maintain a roster of 
practitioners specifying the privileges of each practitioner.
    (b) Standard: Delivery of service. Obstetrical services must be 
consistent with needs and resources of the CAH. Policies governing 
obstetrical care must be designed to assure the achievement and 
maintenance of high standards of medical practice and patient care and 
safety.
    (1) The following equipment must be available to the labor and 
delivery room suites: call-in-system, cardiac monitor, and fetal 
doppler or monitor.
    (2) There must be adequate provisions and protocols, consistent 
with nationally recognized and evidence-

[[Page 59581]]

based guidelines, for obstetrical emergencies, complications, immediate 
post-delivery care, and other patient health and safety events as 
identified as part of the QAPI program (Sec.  485.641). Provisions 
include equipment (in addition to the equipment required under (b)(1) 
of this section), supplies, and medication used in treating emergency 
cases. Such provisions must be kept on the CAH and be readily available 
for treating emergency cases.
    (c) Standard: Staff training. The CAH must develop policies and 
procedures to ensure to ensure that relevant staff are trained on 
select topics for improving the delivery of maternal care.
    (1) Training concepts must reflect the scope and complexity of 
services offered within the facility, including but not limited to:
    (i) Facility-identified evidence-based best practices and protocols 
to improve the delivery of maternal care within the facility; and
    (ii) The CAH must use findings from its quality assessment and 
performance improvement (QAPI) program, as required at Sec.  485.641, 
to inform staff training needs and any additions, revisions, or updates 
to training topics on an ongoing basis.
    (2) The governing body must identify and document which staff must 
complete annual training on the topics identified at paragraph (c)(1) 
of this section.
    (3) The CAH must document in the staff personnel records that the 
training was successfully completed.
    (4) The CAH must be able to demonstrate staff knowledge on the 
topics identified at paragraph (c)(1) of this section.

Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2024-15087 Filed 7-10-24; 8:45 am]
 BILLING CODE 4120-01-P