[Federal Register Volume 75, Number 226 (Wednesday, November 24, 2010)]
[Rules and Regulations]
[Pages 71799-72580]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-27926]



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Part II





Department of Health and Human Services





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Center for Medicare & Medicaid Services



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42 CFR Parts 410, 411, 412, et al.



Medicare Program: Hospital Outpatient Prospective Payment System and CY 
2011 Payment Rates; Ambulatory Surgical Center Payment System and CY 
2011 Payment Rates; Payments to Hospitals for Graduate Medical 
Education Costs; Physician Self-Referral Rules and Related Changes to 
Provider Agreement Regulations; Payment for Certified Registered Nurse 
Anesthetist Services Furnished in Rural Hospitals and Critical Access 
Hospitals; Final Rule

Federal Register / Vol. 75 , No. 226 / Wednesday, November 24, 2010 / 
Rules and Regulations

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 410, 411, 412, 413, 416, 419, and 489

[CMS-1504-FC and CMS-1498-IFC2]
RIN 0938-AP82 and RIN 0938-AP80


Medicare Program: Hospital Outpatient Prospective Payment System 
and CY 2011 Payment Rates; Ambulatory Surgical Center Payment System 
and CY 2011 Payment Rates; Payments to Hospitals for Graduate Medical 
Education Costs; Physician Self-Referral Rules and Related Changes to 
Provider Agreement Regulations; Payment for Certified Registered Nurse 
Anesthetist Services Furnished in Rural Hospitals and Critical Access 
Hospitals

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

ACTION: Final rule with comment period; final rules; and interim final 
rule with comment period.

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SUMMARY: The final rule with comment period in this document revises 
the Medicare hospital outpatient prospective payment system (OPPS) to 
implement applicable statutory requirements and changes arising from 
our continuing experience with this system and to implement certain 
provisions of the Patient Protection and Affordable Care Act, as 
amended by the Health Care and Education Reconciliation Act of 2010 
(Affordable Care Act). In this final rule with comment period, we 
describe the changes to the amounts and factors used to determine the 
payment rates for Medicare hospital outpatient services paid under the 
prospective payment system. These changes are applicable to services 
furnished on or after January 1, 2011.
    In addition, this final rule with comment period updates the 
revised Medicare ambulatory surgical center (ASC) payment system to 
implement applicable statutory requirements and changes arising from 
our continuing experience with this system and to implement certain 
provisions of the Affordable Care Act. In this final rule with comment 
period, we set forth the applicable relative payment weights and 
amounts for services furnished in ASCs, specific HCPCS codes to which 
these changes apply, and other pertinent ratesetting information for 
the CY 2011 ASC payment system. These changes are applicable to 
services furnished on or after January 1, 2011.
    In this document, we also are including two final rules that 
implement provisions of the Affordable Care Act relating to payments to 
hospitals for direct graduate medical education (GME) and indirect 
medical education (IME) costs; and new limitations on certain physician 
referrals to hospitals in which they have an ownership or investment 
interest.
    In the interim final rule with comment period that is included in 
this document, we are changing the effective date for otherwise 
eligible hospitals and critical access hospitals that have been 
reclassified from urban to rural under section 1886(d)(8)(E) of the 
Social Security Act and 42 CFR 412.103 to receive reasonable cost 
payments for anesthesia services and related care furnished by 
nonphysician anesthetists from cost reporting periods beginning on or 
after October 1, 2010, to December 2, 2010.

DATES: Effective Dates: The provisions of these rules are effective 
January 1, 2011, except for the amendment to 42 CFR 
412.113(c)(2)(i)(A), which is effective on December 2, 2010.
    Applicability Dates: (1) The amendments to 42 CFR 
412.105(f)(1)(ii)(A), (B), (C), and (D) are applicable retroactive to 
January 1, 1983; (2) the amendment to 42 CFR 412.105(f)(1)(ii)(E) is 
applicable retroactive to July 1, 2010; (3) the amendments to 42 CFR 
412.105(f)(1)(iii)(C) and (D) are applicable retroactive to January 1, 
1983; (4) the amendment to 42 CFR 413.75(b) is applicable retroactive 
to July 1, 2009; (5) the amendment to 42 CFR 413.78(f)(1) is applicable 
retroactive to July 1, 2009; (6) the amendment to 42 CFR 413.78(g) is 
applicable retroactive to July 1, 2010; and (7) the amendment to 42 CFR 
413.78(h) is applicable retroactive to January 1, 1983. In accordance 
with sections 1871(e)(1)(A)(i) and (e)(1)(A)(ii) of the Social Security 
Act, the Secretary has determined that the retroactive application of 
the specified regulatory amendments is necessary to comply with the 
statute and that failure to apply these changes retroactively would be 
contrary to public interest.
    Comment Period: To be assured consideration, comments on the 
payment classifications assigned to HCPCS codes identified in Addenda 
B, AA, and BB to the final rule with comment period with the ``NI'' 
comment indicator and on other areas specified throughout the final 
rule with comment period, must be received at one of the addresses 
provided in the ADDRESSES section no later than 5 p.m. EST on January 
3, 2011.
    To be assured consideration, comments on the interim final rule 
with comment period (under section XXIII. of the preamble and the 
amendment to 42 CFR 412.113(c)(2)(i)(A)) relating to reasonable cost 
payments to otherwise eligible hospitals and critical access hospitals 
that have reclassified from urban to rural for anesthesia services and 
related care furnished by nonphysician anesthetists must be received at 
one of the addresses provided in the ADDRESSES section no later than 5 
p.m. EST on January 3, 2011.
    Application Deadline--New Class of New Technology Intraocular 
Lenses: Requests for review of applications for a new class of new 
technology intraocular lenses must be received by 5 p.m. EST on March 
5, 2011.

ADDRESSES: In commenting, please refer to file code CMS-1504-FC for the 
provisions of the OPPS/ASC final rule with comment period, and to CMS-
1498-IFC2 for the interim final rule with comment period. Because of 
staff and resource limitations, we cannot accept comments by facsimile 
(FAX) transmission.
    You may submit comments in one of four ways (no duplicates, 
please):
    1. Electronically. You may submit electronic comments on this 
regulation to http://www.regulations.gov. Follow the instructions under 
the ``More Search Options'' tab.
    2. By regular mail. You may mail written comments to the following 
address only: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-1504-FC or CMS-1498-IFC2, as 
applicable, P.O. Box 8013, Baltimore, MD 21244-1850.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address only: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-1504-FC or CMS-
1498-IFC2, as applicable, Mail Stop C4-26-05, 7500 Security Boulevard, 
Baltimore, MD 21244-1850.
    4. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments before the close of the comment period 
to either of the following addresses:
    a. For delivery in Washington, DC--Centers for Medicare & Medicaid 
Services, Department of Health and

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Human Services, Room 445-G, Hubert H. Humphrey Building, 200 
Independence Avenue, SW., Washington, DC 20201.
    (Because access to the interior of the Hubert H. Humphrey Building 
is not readily available to persons without Federal Government 
identification, commenters are encouraged to leave their comments in 
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing 
by stamping in and retaining an extra copy of the comments being 
filed.)
    b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, 7500 Security 
Boulevard, Baltimore, MD 21244-1850.
    If you intend to deliver your comments to the Baltimore address, 
please call the telephone number (410) 786-7195 in advance to schedule 
your arrival with one of our staff members.
    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and received after the comment 
period.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Gift Tee, (410) 786-9316, Hospital 
outpatient prospective payment issues.
    Paula Smith, (410) 786-0378, Ambulatory surgical center issues.
    Michele Franklin, (410) 786-4533, and Jana Lindquist, (410) 786-
4533, Partial hospitalization and community mental health center 
issues.
    James Poyer, (410) 786-2261, Reporting of quality data issues.
    Tzvi Hefter, (410) 786-4487 and Ing-Jye Cheng, (410) 786-4548, 
Direct graduate medical education and indirect medical education 
payments issues.
    Jacqueline Proctor, (410) 786-8852, Physician ownership and 
investment in hospitals issues.
    Marc Hartstein, (410) 786-4539, Pass-through payments for certified 
registered nurse anesthetists services furnished in rural hospitals and 
critical access hospitals.

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 Web site as soon as possible after they have been 
received: http://www.regulations.gov. Follow the search instructions on 
that Web site to view public comments.
    Comments received timely will also be available for public 
inspection as they are received, generally beginning approximately 3 
weeks after publication of a document, at the headquarters of the 
Centers for Medicare & Medicaid Services, 7500 Security Boulevard, 
Baltimore, MD 21244, on Monday through Friday of each week from 8:30 
a.m. to 4 p.m. EST. To schedule an appointment to view public comments, 
phone 1-800-743-3951.

Electronic Access

    This Federal Register document is also available from the Federal 
Register online database through GPO Access, a service of the U.S. 
Government Printing Office. Free public access is available on a Wide 
Area Information Server (WAIS) through the Internet and via 
asynchronous dial-in. Internet users can access the database by using 
the World Wide Web; the Superintendent of Documents' home page address 
is http://www.gpoaccess.gov/index.html, by using local WAIS client 
software, or by telnet to swais.access.gpo.gov, then login as guest (no 
password required). Dial-in users should use communications software 
and modem to call (202) 512-1661; type swais, then login as guest (no 
password required).

Alphabetical List of Acronyms Appearing in This Federal Register 
Document

ACEP American College of Emergency Physicians
AHA American Hospital Association
AHIMA American Health Information Management Association
AMA American Medical Association
AMP Average manufacturer price
AOA American Osteopathic Association
APC Ambulatory payment classification
ASC Ambulatory Surgical Center
ASP Average sales price
AWP Average wholesale price
AWV Annual Wellness Visit
BBA Balanced Budget Act of 1997, Public Law 105-33
BBRA Medicare, Medicaid, and SCHIP [State Children's Health 
Insurance Program] Balanced Budget Refinement Act of 1999, Public 
Law 106-113
BCA Blue Cross Association
BCBSA Blue Cross and Blue Shield Association
BIPA Medicare, Medicaid, and SCHIP Benefits Improvement and 
Protection Act of 2000, Public Law 106-554
CAH Critical access hospital
CAP Competitive Acquisition Program
CBSA Core-Based Statistical Area
CCR Cost-to-charge ratio
CERT Comprehensive Error Rate Testing
CMHC Community mental health center
CMS Centers for Medicare & Medicaid Services
CoP Conditions of Participation
CORF Comprehensive outpatient rehabilitation facility
CPT [Physicians'] Current Procedural Terminology, Fourth Edition, 
2009, copyrighted by the American Medical Association
CRNA Certified registered nurse anesthetist
CY Calendar year
DMEPOS Durable medical equipment, prosthetics, orthotics, and 
supplies
DMERC Durable medical equipment regional carrier
DRA Deficit Reduction Act of 2005, Public Law 109-171
DSH Disproportionate share hospital
EACH Essential Access Community Hospital
E/M Evaluation and management
EPO Erythropoietin
ESRD End-stage renal disease
FACA Federal Advisory Committee Act, Public Law 92-463
FAR Federal Acquisition Regulations
FDA Food and Drug Administration
FFS Fee-for-service
FSS Federal Supply Schedule
FTE Full-time equivalent
FY Federal fiscal year
GAO Government Accountability Office
GME [Direct] Graduate medical education
HCERA Health Care and Education Reconciliation Act of 2010, Public 
Law 111-152
HCPCS Healthcare Common Procedure Coding System
HCRIS Hospital Cost Report Information System
HHA Home health agency
HIPAA Health Insurance Portability and Accountability Act of 1996, 
Public Law 104-191
HOPD Hospital outpatient department
HOP QDRP Hospital Outpatient Quality Data Reporting Program
ICD-9-CM International Classification of Diseases, Ninth Edition, 
Clinical Modification
ICD-10-CM International Classification of Diseases, Tenth Revision, 
Clinical Modification
ICD-10-PCS International Classification of Diseases, Tenth Revision, 
Procedure Coding System
IDE Investigational device exemption
IHS Indian Health Service
IME Indirect medical education
I/OCE Integrated Outpatient Code Editor
IOL Intraocular lens
IPPE Initial preventive physical examination
IPPS [Hospital] Inpatient prospective payment system
IVIG Intravenous immune globulin
MAC Medicare Administrative Contractor
MedPAC Medicare Payment Advisory Commission
MDH Medicare-dependent, small rural hospital
MIEA-TRHCA Medicare Improvements and Extension Act under Division B, 
Title I of the Tax Relief Health Care Act of 2006, Public Law 109-
432
MIPPA Medicare Improvements for Patients and Providers Act of 2008, 
Public Law 110-275

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MMA Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003, Public Law 108-173
MMSEA Medicare, Medicaid, and SCHIP Extension Act of 2007, Public 
Law 110-173
MPFS Medicare Physician Fee Schedule
MSA Metropolitan Statistical Area
NCCI National Correct Coding Initiative
NCD National Coverage Determination
NTIOL New technology intraocular lens
OIG [HHS] Office of the Inspector General
OMB Office of Management and Budget
OPD [Hospital] Outpatient department
OPPS [Hospital] Outpatient prospective payment system
PHP Partial hospitalization program
PM Program memorandum
PPACA Patient Protection and Affordable Care Act of 2010, Public Law 
111-148
PPI Producer Price Index
PPPS Personalized preventive plan services
PPS Prospective payment system
PR Pulmonary rehabilitation
PRA Paperwork Reduction Act
QAPI Quality Assessment and Performance Improvement
QIO Quality Improvement Organization
RAC Recovery Audit Contractor
RFA Regulatory Flexibility Act
RHQDAPU Reporting Hospital Quality Data for Annual Payment Update 
[Program]
RHHI Regional home health intermediary
SBA Small Business Administration
SCH Sole community hospital
SDP Single Drug Pricer
SI Status indicator
TEFRA Tax Equity and Fiscal Responsibility Act of 1982, Public Law 
97-248
TOPS Transitional outpatient payments
USPDI United States Pharmacopoeia Drug Information
USPSTF United States Preventive Services Task Force
WAC Wholesale acquisition cost

    In this document, we address two payment systems under the Medicare 
program: The hospital outpatient prospective payment system (OPPS) and 
the revised ambulatory surgical center (ASC) payment system. In 
addition, we address provisions of the Affordable Care Act, relating to 
payments to hospitals for direct graduate medical education (GME) and 
indirect medical education (IME) costs. We also address provisions 
relating to new limitations on certain physician referrals to hospitals 
in which they have an ownership or investment interest and making 
related changes to the provider agreement regulations. The provisions 
relating to the OPPS are included in sections I. through XIV. and XVI. 
through XIX. of this final rule with comment period and in Addenda A, 
B, C (Addendum C is available on the Internet only; we refer readers to 
section XVIII.A. of this final rule with comment period), D1, D2, E, L, 
and M to this final rule with comment period. The provisions related to 
the revised ASC payment system are included in sections XV., XVI. 
through XIX. of this final rule with comment period and in Addenda AA, 
BB, DD1, DD2, and EE to this final rule with comment period. (Addendum 
EE is available on the Internet only; we refer readers to section 
XVII.B. of this final rule with comment period.) The provisions related 
to payments to hospitals for direct GME and IME costs are included in 
the final rule in section XXI. of this document. The provisions 
relating to the new limitations on certain physician referrals to 
hospitals in which they have an ownership or investment interest and 
related changes to the provider agreement regulations are included in 
the final rule in section XXII. of this document. The provision 
relating to a change in the effective date for otherwise eligible rural 
hospitals and critical access hospitals (CAHs) that have reclassified 
from urban to rural areas to receive reasonable cost payments for 
anesthesia services and related care furnished by nonphysician 
anesthetists is included in the interim final rule with comment period 
in section XXIII. of this document.

Table of Contents

I. Background and Summary of the CY 2011 OPPS/ASC Proposed and Final 
Rules
    A. Legislative and Regulatory Authority for the Hospital 
Outpatient Prospective Payment System
    B. Excluded OPPS Services and Hospitals
    C. Prior Rulemaking
    D. The Affordable Care Act
    E. Advisory Panel on Ambulatory Payment Classification (APC) 
Groups
    1. Authority of the APC Panel
    2. Establishment of the APC Panel
    3. APC Panel Meetings and Organizational Structure
    F. Background and Summary of the CY 2011 OPPS/ASC Proposed Rule
    1. Updates Affecting OPPS Payments
    2. OPPS Ambulatory Payment Classification (APC) Group Policies
    3. OPPS Payment for Devices
    4. OPPS Payment Changes for Drugs, Biologicals, and 
Radiopharmaceuticals
    5. Estimate of OPPS Transitional Pass-Through Spending for 
Drugs, Biologicals, Radiopharmaceuticals, and Devices
    6. OPPS Payment for Brachytherapy Sources
    7. OPPS Payment for Drug Administration Services
    8. OPPS Payment for Hospital Outpatient Visits
    9. Payment for Partial Hospitalization Services
    10. Procedures That Would Be Paid Only as Inpatient Procedures
    11. OPPS Nonrecurring Technical and Policy Changes and 
Clarifications
    12. OPPS Payment Status and Comment Indicators
    13. OPPS Policy and Payment Recommendations
    14. Updates to the Ambulatory Surgical Center (ASC) Payment 
System
    15. Reporting Quality Data for Annual Payment Rate Updates
    16. Changes Relating to Payments to Hospitals for GME and IME 
Costs
    17. Changes to Whole Hospital and Rural Provider Exceptions to 
the Physician Self-Referral Prohibition and Related Changes to 
Provider Agreement Regulations
    18. Regulatory Impact Analysis
    G. Public Comments Received in Response to the August 3, 2010 
OPPS/ASC Proposed Rule
    H. Public Comments Received on the November 20, 2009 OPPS/ASC 
Final Rule with Comment Period
    I. Interim Final Rule on Certified Registered Nurse Anesthetist 
(CRNA) Services Furnished in Rural Hospitals and Critical Access 
Hospitals
II. Updates Affecting OPPS Payments
    A. Recalibration of APC Relative Weights
    1. Database Construction
    a. Database Source and Methodology
    b. Use of Single and Multiple Procedure Claims
    c. Calculation of Cost to Charge Ratios (CCRs)
    2. Data Development Process and Calculation of Median Costs
    a. Claims Preparation
    b. Splitting Claims and Creation of ``Pseudo'' Single Procedure 
Claims
    (1) Splitting Claims
    (2) Creation of ``Pseudo'' Single Procedure Claims
    c. Completion of Claim Records and Median Cost Calculations
    d. Calculation of Single Procedure APC Criteria-Based Median 
Costs
    (1) Device-Dependent APCs
    (2) Blood and Blood Products
    (3) Single Allergy Tests (APCs 0370 and 0381)
    (4) Hyperbaric Oxygen Therapy (APC 0659)
    (5) Payment for Ancillary Outpatient Services When Patient 
Expires (APC 0375)
    (6) Pulmonary Rehabilitation (APC 0102)
    (7) Endovascular Revascularization of the Lower Extremity (APCs 
0083, 0229, and 0319)
    (8) Non-Congenital Cardiac Catheterization (APC 0080)
    (9) Cranial Neurostimulator and Electrodes (APCs 0318)
    (10) Cardiac and Intensive Cardiac Rehabilitation (APC 0095)
    e. Calculation of Composite APC Criteria-Based Median Costs
    (1) Extended Assessment and Management Composite APCs (APCs 8002 
and 8003)
    (2) Low Dose Rate (LDR) Prostate Brachytherapy Composite APC 
(APC 8001)
    (3) Cardiac Electrophysiologic Evaluation and Ablation Composite 
APC (APC 8000)
    (4) Mental Health Services Composite APC (APC 0034)
    (5) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 
8007, and 8008)
    3. Changes to Packaged Services
    a. Background
    b. Packaging Issues

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    (1) CMS Presentation of Findings Regarding Expanded Packaging at 
the February 2010 APC Panel
    (2) Packaging Recommendations of the APC Panel at Its February 
2010 Meeting
    (3) Packaging Services Addressed by the August 2010 APC Panel 
Recommendations and Other Issues Raised in Public Comments
    (4) Other Service-Specific Packaging Issues
    4. Calculation of OPPS Scaled Payment Weights
    B. Conversion Factor Update
    C. Wage Index Changes
    D. Statewide Average Default CCRs
    E. OPPS Payment to Certain Rural and Other Hospitals
    1. Hold Harmless Transitional Payment Changes Made by Public Law 
110-275 (MIPPA)
    2. Adjustment for Rural SCHs Implemented in CY 2006 Related to 
Public Law 108-173 (MMA)
    F. OPPS Payments to Certain Cancer Hospitals Described by 
Section 1886(d)(1)(B)(v) of the Act
    1. Background
    2. Study of Cancer Hospital Costs Relative to Other Hospitals
    3. Adjustment for Certain Cancer Hospitals
    G. Hospital Outpatient Outlier Payments
    1. Background
    2. Proposed Outlier Calculation
    3. Final Outlier Calculation
    4. Outlier Reconciliation
    H. Calculation of an Adjusted Medicare Payment From the National 
Unadjusted Medicare Payment
    I. Beneficiary Copayments
    1. Background
    2. OPPS Copayment Policy
    3. Calculation of an Adjusted Copayment Amount for an APC Group
III. OPPS Ambulatory Payment Classification (APC) Group Policies
    A. OPPS Treatment of New CPT and Level II HCPCS Codes
    1. Treatment of New Level II HCPCS Codes and Category I CPT 
Vaccine Codes and Category III CPT Codes for Which We Solicited 
Public Comment in the Calendar Year 2010 Proposed Rule
    2. Process for New Level II HCPCS Codes and Category I and 
Category III CPT Codes for Which We Are Soliciting Public Comments 
on This Calendar Year 2011 OPPS/ASC Final Rule With Comment Period
    3. Temporary HCPCS Codes for 2010-2011 Seasonal Influenza 
Vaccines
    B. OPPS Changes--Variations Within APCs
    1. Background
    2. Application of the 2 Times Rule
    3. Exceptions to the 2 Times Rule
    C. New Technology APCs
    1. Background
    2. Movement of Procedures From New Technology APCs to Clinical 
APCs
    D. OPPS APC-Specific Policies
    1. Cardiovascular Services
    a. Cardiovascular Telemetry (APC 0209)
    b. Myocardial Position Emission Tomography (PET) Imaging (APC 
0307)
    c. Cardiovascular Computed Tomography (CCT) (APC 0340 and 0383)
    d. Multifunction Cardiogram (APC 0340)
    e. Unlisted Vascular Surgery Procedure (APC 0624)
    f. Implantable Loop Recorder Monitoring (APC 0691)
    2. Gastrointestinal (GI) Services: Upper GI Endoscopy (APC 0141, 
0384, and 0422)
    3. Genitourinary Services
    a. Radiofrequency Remodeling of Bladder Neck (APC 0165)
    b. Percutaneous Renal Cryoablation (APC 0423)
    4. Nervous System Services
    a. Pain-Related Procedures (APCs 0203, 0204, 0206, 0207, and 
0388)
    b. Revision Removal of Neurotransmitter Electrodes (APC 0687)
    5. Radiation Therapy Services
    a. Stereotactic Radiosurgery (SRS) Treatment Delivery Services 
(APCs 0065, 0066, 0067, and 0127)
    b. Proton Beam Therapy (APCs 0664 and 0667)
    c. Device Construction for Intensity Modulated Radiation Therapy 
(APC 303)
    d. High Dose Rate Brachytherapy (APC 0313)
    e. Electronic Brachytherapy (APC 0313)
    f. Tumor Imaging (APCs 0406 and 0414)
    6. Other Services
    a. Skin Repair (APCs 0134 and 0135)
    b. Insertion of Anterior Segment Aqueous Drainage Device (APCs 
0234, 0255 and 0673)
    c. Group Psychotherapy (APCs 0322, 0323, 0324, and 0325)
IV. OPPS Payment for Devices
    A. Pass-Through Payments for Devices
    1. Expiration of Transitional Pass-Through Payments for Certain 
Devices
    2. Provisions for Reducing Transitional Pass-Through Payments To 
Offset Costs Packaged Into APC Groups
    a. Background
    b. Proposed and Final Calendar Year 2011 Policy
    B. Adjustment to OPPS Payment for No Cost/Full Credit and 
Partial Credit Devices
    1. Background
    2. APCs and Devices Subject to the Adjustment Policy
V. OPPS Payment Changes for Drugs, Biologicals, and 
Radiopharmaceuticals
    A. OPPS Transitional Pass-Through Payment for Additional Costs 
of Drugs, Biologicals, and Radiopharmaceuticals
    1. Background
    2. Drugs and Biologicals With Expiring Pass-Through Status in CY 
2010
    3. Drugs, Biologicals, and Radiopharmaceuticals With New or 
Continuing Pass-Through Status in CY 2011
    4. Provision for Reducing Transitional Pass-Through Payments for 
Diagnostic Radiopharmaceuticals and Contrast Agents To Offset Costs 
Packaged Into APC Groups
    a. Background
    b. Payment Offset Policy for Diagnostic Radiopharmaceuticals
    c. Payment Offset Policy for Contrast Agents
    B. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals 
Without Pass-Through Status
    1. Background
    2. Criteria for Packaging Payment for Drugs, Biologicals, and 
Radiopharmaceuticals
    a. Background
    b. Cost Threshold for Packaging of Payment for HCPCS Codes That 
Describe Certain Drugs, Nonimplantable Biologicals, and Therapeutic 
Radiopharmaceuticals (``Threshold-Packaged Drugs'')
    c. Packaging Determination for HCPCS Codes That Describe the 
Same Drug or Biological But Different Dosages
    d. Packaging of Payment for Diagnostic Radiopharmaceuticals, 
Contrast Agents, and Implantable Biologicals (``Policy-Packaged'' 
Drugs and Devices)
    3. Payment for Drugs and Biologicals Without Pass-Through Status 
That Are Not Packaged
    a. Payment for Specified Covered Outpatient Drugs (SCODs) and 
Other Separately Payable and Packaged Drugs and Biologicals
    b. Payment Policy
    c. Payment Policy for Therapeutic Radiopharmaceuticals
    4. Payment for Blood Clotting Factors
    5. Payment for Nonpass-Through Drugs, Biologicals, and 
Radiopharmaceuticals With HCPCS Codes, But Without OPPS Hospital 
Claims Data
VI. Estimate of OPPS Transitional Pass-Through Spending for Drugs, 
Biologicals, Radiopharmaceuticals, and Devices
    A. Background
    B. Estimate of Pass-Through Spending
VII. OPPS Payment for Brachytherapy Sources
    A. Background
    B. OPPS Payment Policy
VIII. OPPS Payment for Drug Administration Services
    A. Background
    B. Coding and Payment for Drug Administration Services
IX. OPPS Payment for Hospital Outpatient Visits
    A. Background
    B. Policies for Hospital Outpatient Visits
    1. Clinic Visits: New and Established Patient Visits
    2. Emergency Department Visits
    3. Visit Reporting Guidelines
X. Payment for Partial Hospitalization Services
    A. Background
    B. PHP APC Update for CY 2011
    C. Changes to Regulations To Incorporate Provisions of HCERA 
2010
    D. Separate Threshold for Outlier Payments to CMHCs
XI. Procedures That Will Be Paid Only as Inpatient Procedures
    A. Background
    B. Changes to the Inpatient List
XII. OPPS Nonrecurring Technical and Policy Changes and 
Clarifications
    A. Physician Supervision
    1. Background
    a. Outpatient Therapeutic Services
    b. Outpatient Diagnostic Services
    2. Issues Regarding the Supervision of Hospital Outpatient 
Services Raised by Hospitals and Other Stakeholders

[[Page 71804]]

    3. Policies for Supervision of Outpatient Therapeutic Services 
in Hospital and CAHs
    4. Supervision of Hospital Outpatient Diagnostic Services
    B. Payment for Preventive Services
    1. Definition of ``Preventive Services''
    2. Coinsurance and Deductible for Preventive Services
    3. Extension of Waiver of Part B Deductible to Services 
Furnished in Connection With or in Relation to a Colorectal Cancer 
Screening Test That Becomes Diagnostic or Therapeutic
    C. Payment for Pulmonary Rehabilitation, Cardiac Rehabilitation, 
and Intensive Cardiac Rehabilitation Services Furnished to Hospital 
Outpatients
    D. Expansion of Multiple Procedure Payment Reduction Under the 
Medicare Physician Fee Schedule (MPFS) to Therapy Services
XIII. OPPS Payment Status and Comment Indicators
    A. OPPS Payment Status Indicator Definitions
    1. Payment Status Indicators To Designate Services That Are Paid 
Under the OPPS
    2. Payment Status Indicators To Designate Services That Are Paid 
Under a Payment System Other Than the OPPS
    3. Payment Status Indicators To Designate Services That Are Not 
Recognized Under the OPPS But That May Be Recognized by Other 
Institutional Providers
    4. Payment Status Indicators To Designate Services That Are Not 
Payable by Medicare on Outpatient Claims
    B. Comment Indicator Definitions
XIV. OPPS Policy and Payment Recommendations
    A. MedPAC Recommendations
    B. APC Panel Recommendations
    C. OIG Recommendations
XV. Updates to the Ambulatory Surgical Center (ASC) Payment System
    A. Background
    1. Legislative Authority for the ASC Payment System
    2. Prior Rulemaking
    3. Policies Governing Changes to the Lists of Codes and Payment 
Rates for ASC Covered Surgical Procedures and Covered Ancillary 
Services
    B. Treatment of New Codes
    1. Process for Recognizing New Category I and Category III CPT 
Codes and Level II HCPCS Codes
    2. Treatment of New Level II HCPCS Codes and Category III CPT 
Codes Implemented in April and July 2010 for Which We Solicited 
Public Comments in Calendar Year 2011 OPPS/ASC Proposed Rule
    3. Process for New Level II HCPCS Codes and Category I and 
Category III CPT Codes for Which We Are Soliciting Public Comments 
in This Calendar Year 2011 OPPS/ASC Final Rule With Comment Period
    C. Update to the List of ASC Covered Surgical Procedures and 
Covered Ancillary Services
    1. Covered Surgical Procedures
    a. Additions to the List of ASC Covered Surgical Procedures
    b. Covered Surgical Procedures Designated as Office-Based
    (1) Background
    (2) Changes to Covered Surgical Procedures Designated as Office-
Based for CY 2011
    c. ASC Covered Surgical Procedures Designated as Device-
Intensive
    (1) Background
    (2) Changes to List of Covered Surgical Procedures Designated as 
Device-Intensive for CY 2011
    d. ASC Treatment of Surgical Procedures Removed From the OPPS 
Inpatient List for CY 2011
    2. Covered Ancillary Services
    D. ASC Payment for Covered Surgical Procedures and Covered 
Ancillary Services
    1. Payment for Covered Surgical Procedures
    a. Background
    b. Update to ASC Covered Surgical Procedure Payment Rates for CY 
2011
    c. Adjustment to ASC Payments for No Cost/Full Credit and 
Partial Credit Devices
    d. Waiver of Coinsurance and Deductible for Certain Preventive 
Services
    2. Payment for Covered Ancillary Services
    a. Background
    b. Payment for Covered Ancillary Services for CY 2011
    E. New Technology Intraocular Lenses (NTIOLs)
    1. Background
    2. NTIOL Application Process for Payment Adjustment
    3. Classes of NTIOLs Approved and New Requests for Payment 
Adjustment
    a. Background
    b. Request To Establish New NTIOL Class for CY 2011
    4. Payment Adjustment
    5. ASC Payment for Insertion of IOLs
    6. Announcement of Calendar Year 2011 Deadline for Submitting 
Request for CMS Review of Appropriateness of ASC Payment for 
Insertion of an NTOL Following Cataract Surgery
    F. ASC Payment and Comment Indicators
    1. Background
    2. ASC Payment and Comment Indicators
    G. ASC Policy and Payment Recommendations
    H. Calculation of the ASC Conversion Factor and the ASC Payment 
Rates
    1. Background
    2. Calculation of the ASC Payment Rates
    a. Updating the ASC Relative Payment Weights for CY 2011 and 
Future Years
    b. Updating the ASC Conversion Factor
    3. Display of Calendar Year 2011 ASC Payment Rates
XVI. Reporting Quality Data for Annual Payment Rate Updates
    A. Background
    1. Overview
    2. Hospital Outpatient Quality Data Reporting under Section 
109(a) of MIEA-TRHCA
    3. ASC Quality Data Reporting Under Section 109(b) of MIEA-TRHCA
    4. HOP QDRP Quality Measures for the CY 2009 Payment 
Determination
    5. HOP QDRP Quality Measures for the CY 2010 Payment 
Determination
    6. HOP QDRP Quality Measures, Technical Specification Updates, 
and Data Publication for the CY 2011 Payment Determination
    a. Quality Measures
    b. Maintenance of Technical Specifications for Quality Measures
    c. Publication of HOP QDRP Data
    B. Expansion of HOP QDRP Quality Measures for the CY 2012, CY 
2013, and CY 2014 Payment Determinations
    1. Considerations in Expanding and Updating Quality Measures 
Under the HOP QRDP
    2. Retirement of HOP QDRP Quality Measures
    3. HOP QDRP Quality Measures for the CY 2012 Payment 
Determination
    a. Retention of Existing HOP QDRP Measures for the CY 2012 
Payment Determination
    b. New Structural Measure for CY 2012 Payment Determination
    c. New Claims-Based Measures for CY 2012 Payment Determination
    d. New Chart-Abstracted Measures for CY 2012 Payment 
Determination
    4. HOP QDRP Quality Measures for the CY 2013 Payment 
Determination
    a. Retention of CY 2012 HOP QDRP Measures for the CY 2013 
Payment Determination
    b. New Structural Measure for the CY 2013 Payment Determination
    c. New Chart-Abstracted Measures for the CY 2013 Payment 
Determination
    5. HOP QDRP Quality Measures for the CY 2014 Payment 
Determination
    a. Retention of CY 2013 HOP QDRP Measures for the CY 2014 
Payment Determination
    b. New Chart-Abstracted Measures for the CY 2014 Payment 
Determination
    6. Possible Quality Measures Under Consideration for Future 
Inclusion in the HOP QDRP
    C. Payment Reduction for Hospitals That Fail To Meet the HOP 
QDRP Requirements for the CY 2011 Payment Update
    1. Background
    2. Reporting Ratio Application and Associated Adjustment Policy 
for CY 2011
    D. Requirements for HOPD Quality Data Reporting for CY 2012 and 
Subsequent Years
    1. Administrative Requirements
    2. Data Collection and Submission Requirements
    a. General Data Collection and Submission Requirements
    b. Extraordinary Circumstance Extension or Waiver for Reporting 
Quality Data
    3. HOP QDRP Validation Requirements for Chart-Abstracted Data: 
Data Validation Approach for CY 2012 and Subsequent Years
    a. Background
    b. Data Validation Requirements for CY 2012
    c. Additional Data Validation Conditions Under Consideration for 
CY 2013 and Subsequent Years
    E. HOP QDRP Reconsideration and Appeals Procedures
    F. Reporting of ASC Quality Data
    G. Electronic Health Records

[[Page 71805]]

XVII. Files Available to the Public via the Internet
    A. Information in Addenda Related to the CY 2011 Hospital OPPS
    B. Information in Addenda Related to the CY 2011 ASC Payment 
System
XVIII. Collection of Information Requirements
    A. Legislative Requirements for Solicitation of Comments
    B. Associated Information Collections Not Specified in 
Regulatory Text
    1. Hospital Outpatient Quality Data Reporting Program (HOP QDRP)
    2. HOP QDRP Quality Measures for the CY 2011 and CY 2012 Payment 
Determinations
    3. HOP QDRP Validation Requirements
    4. HOP QDRP Reconsideration and Appeals Procedures
    5. Additional Topics
XIX. Response to Comments
XX. Regulatory Impact Analysis
    A. Overall Impact
    1. Executive Order 12866
    2. Regulatory Flexibility Act
    3. Small Rural Hospitals
    4. Unfunded Mandates
    5. Federalism
    B. Effects of OPPS Changes in This Final Rule With Comment 
Period
    1. Alternatives Considered
    2. Limitations of Our Analysis
    3. Estimated Effects of This Final Rule With Comment Period on 
Hospitals
    4. Estimated Effects of This Final Rule With Comment Period on 
CMHCs
    5. Estimated Effects of This Final Rule With Comment Period on 
Beneficiaries
    6. Conclusion
    7. Accounting Statement
    C. Effects of ASC Payment System Changes in This Final Rule With 
Comment Period
    1. Alternatives Considered
    2. Limitations of Our Analysis
    3. Estimated Effects of This Final Rule With Comment Period on 
Payments to ASCs
    4. Estimated Effects of This Final Rule With Comment Period on 
Beneficiaries
    5. Conclusion
    6. Accounting Statement
    D. Effects of Requirements for Reporting of Quality Data for 
Annual Hospital Payment Update
    E. Executive Order 12866
XXI. Final Rule: Changes Relating to Payments to Hospitals for 
Direct Graduate Medical Education (GME) and Indirect Medical 
Education (IME) Costs
    A. Background
    B. Counting Resident Time in Nonprovider Settings (Section 5504 
of the Affordable Care Act)
    1. Background and Changes Made by the Affordable Care Act
    2. Elimination of the ``All or Substantially All of the Costs 
for the Training Program in the Nonhospital Setting'' Requirement 
and New Cost Requirements for Hospitals
    3. Revision to Regulations To Allow More Than One Hospital To 
Incur the Costs of Training Programs at Nonhospital Settings, Either 
Directly or Through a Third Party
    4. Changes to Regulations Regarding Recordkeeping and Comparison 
to a Base Year
    C. Counting Resident Time for Didactic and Scholarly Activities 
and Other Activities (Section 5505 of the Affordable Care Act)
    1. Background and Changes Made by the Affordable Care Act
    2. Definition of ``Nonprovider Setting That is Primarily Engaged 
in Furnishing Patient Care''
    3. Distinguishing Between Allowed ``Nonpatient Care Activities'' 
and Nonallowable Research Time
    4. Approved Leave of Absence
    D. Reductions and Increases to Hospitals' FTE Resident Caps for 
GME Payment Purposes
    1. General Background on Methodology for Determining the FTE 
Resident Count
    2. Reduction of Hospitals' FTE Resident Caps Under the 
Provisions of Section 5503 of the Affordable Care Act
    3. Hospitals Subject to the FTE Resident Cap Reduction
    4. Exemption From FTE Resident Cap Reduction for Certain Rural 
Hospitals
    5. Application of Section 5503 to Hospitals That Participate in 
Demonstration Projects or Voluntary Reduction Programs and Certain 
Other Hospitals
    6. Determining the Estimated Number of FTE Resident Slots 
Available for Redistribution
    7. Reference Cost Reports That Are Under Appeal
    8. Determining the Reduction to a Hospital's FTE Resident Cap
    a. Reference Resident Level--General
    b. Audits of the Reference Cost Reporting Period
    c. Medicare GME Affiliation Agreements
    d. Treatment of Hospitals That Have Merged
    9. Application of Section 5503 to Hospitals That File Low 
Utilization Medicare Cost Reports
    10. Treatment of Hospitals With Caps That Have Been Reduced or 
Increased Under Section 422 of Public Law 108-173
    11. Criteria for Determining Hospitals That Will Receive 
Increases in Their FTE Resident Caps
    12. Application Process for the Increases in Hospitals' FTE 
Resident Caps
    13. CMS Evaluation of Applications for Increases in FTE Resident 
Caps
    14. CMS Evaluation of Application for Increases in FTE Resident 
Caps--Evaluation Criteria
    15. Exception If Positions Are Not Redistributed by July 1, 2011
    16. Application of Direct GME PRAs for Primary Care and 
Nonprimary Care Residents and Conforming Changes for the IME 
Multiplier
    17. Other Issues Related to a Request for Increase in the FTE 
Caps Under Section 5503 of the Affordable Care Act
    a. Rural Hospitals or Urban Nonteaching Hospitals
    b. Closed Teaching Hospitals
    c. Requirements for Hospitals That Receive Additional Slots 
Under Section 5503
    d. No Administrative or Judicial Review
    E. Preservation of Resident Cap Positions From Closed Hospitals 
(Section 5506 of the Affordable Care Act)
    1. Background
    2. Definition of a ``Closed Hospital''
    3. Priority for Hospitals in Certain Areas
    4. Application Process
    5. Ranking Criteria
    6. Demonstrated Likelihood of Filling the Positions Within a 
Certain Time Period
    7. No Duplication of FTE Cap Slots
    8. Other Payment Issues Regarding Hospitals That Receive 
Increase in FTE Caps Based on Slots From Closed Hospitals
    9. Other Comments and Responses Regarding Section 5506
    10. Application--No Reopening of Settled Cost Reports
    11. No Administrative or Judicial Review Under Section 5506
    F. Collection of Information Requirements
    G. Regulatory Impact Analysis
XXII. Final Rule: Changes to Whole Hospital and Rural Provider 
Exceptions to the Physician Self-Referral Prohibition and Related 
Changes to Provider Agreement Regulations
    A. Background
    B. Changes Made by the Affordable Care Act Relating to the Whole 
Hospital and Rural Provider Exceptions to Ownership and Investment 
Prohibition
    C. Changes to Physician Self-Referral Regulations
    1. Physician Ownership and Provider Agreement
    2. Limitation on Expansion of Facility Capacity
    3. Preventing Conflicts of Interest
    4. Ensuring Bona Fide Investment
    5. Patient Safety
    6. Conversion From Ambulatory Surgery Center (ASC)
    7. Publication of Information Reported
    8. Enforcement
    D. Related Changes to Provider Agreement Regulations
    E. Conditions of Participation for Hospitals
    F. Collection of Information Requirements
    G. Regulatory Impact Analysis
XXIII. Interim Final Rule With Comment Period: Certified Nurse 
Anesthetists (CRNAs) Services Furnished in Rural Hospitals and 
Critical Access Hospitals (CAHs)
    A. Background
    B. Revised Policy
    C. Waiver of Notice of Proposed Rulemaking and Delay in the 
Effective Date
    D. Response to Comments
    E. Collection of Information Requirements
    F. Regulatory Impact Analysis
Regulation Text
Addenda
Addendum A--Final OPPS APCs for CY 2011
Addendum AA--Final ASC Covered Surgical Procedures for CY 2011 
(Including Surgical Procedures for Which Payment Is Packaged)
Addendum B--Final OPPS Payment by HCPCS Code for CY 2011
Addendum BB--Final ASC Covered Ancillary Services Integral to 
Covered

[[Page 71806]]

Surgical Procedures for CY 2011 (Including Ancillary Services for 
Which Payment Is Packaged)
Addendum D1--Final OPPS Payment Status Indicators for CY 2011
Addendum DD1--Final ASC Payment Indicators for CY 2011
Addendum D2--Final OPPS Comment Indicators for CY 2011
Addendum DD2--Final ASC Comment Indicators for CY 2011
Addendum E--HCPCS Codes That Will Be Paid Only as Inpatient 
Procedures for CY 2011
Addendum L--Final CY 2011 OPPS Out-Migration Adjustment
Addendum M--Final HCPCS Codes for Assignment to Composite APCs for 
CY 2011

I. Background and Summary of the CY 2011 OPPS/ASC Proposed and Final 
Rules

A. Legislative and Regulatory Authority for the Hospital Outpatient 
Prospective Payment System

    When Title XVIII of the Social Security Act (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 (BBA) of 1997 (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 part 419.
    The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act 
(BBRA) of 1999 (Pub. L. 106-113) made major changes in the hospital 
outpatient prospective payment system (OPPS). The following Acts made 
additional changes to the OPPS: the Medicare, Medicaid, and SCHIP 
Benefits Improvement and Protection Act (BIPA) of 2000 (Pub. L. 106-
554); the Medicare Prescription Drug, Improvement, and Modernization 
Act (MMA) of 2003 (Pub. L. 108-173); the Deficit Reduction Act (DRA) of 
2005 (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 (MIEA-TRHCA) of 2006 (Pub. L. 109-432), 
enacted on December 20, 2006; the Medicare, Medicaid, and SCHIP 
Extension Act (MMSEA) of 2007 (Pub. L. 110-173), enacted on December 
29, 2007; the Medicare Improvements for Patients and Providers Act 
(MIPPA) of 2008 (Pub. L. 110-275), enacted on July 15, 2008; and most 
recently 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. We refer readers to section I.D. of this final rule 
with comment period for a summary of the provisions of Public Law 111-
148, as amended by Public Law 111-152, that we are implementing in this 
final rule with comment period.
    Under the OPPS, we pay for hospital outpatient services on a rate-
per-service basis that varies according to the ambulatory payment 
classification (APC) group to which the service is assigned. We use the 
Healthcare Common Procedure Coding System (HCPCS) codes (which include 
certain Current Procedural Terminology (CPT) codes) and descriptors to 
identify and group the services within each APC group. The OPPS 
includes payment for most hospital outpatient services, except those 
identified in section I.B. of this final rule with comment period. 
Section 1833(t)(1)(B)(i) of the Act provides for payment under the OPPS 
for hospital outpatient services designated by the Secretary (which 
includes partial hospitalization services furnished by community mental 
health centers (CMHCs)) and hospital outpatient services that are 
furnished to inpatients who have exhausted their Part A benefits, or 
who are otherwise not in a covered Part A stay.
    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 (section 1833(t)(2)(B) of 
the Act). In accordance with section 1833(t)(2) 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 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 median 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 
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.

B. 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 exercised the 
authority granted under the statute to also exclude from the OPPS those 
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); laboratory services paid under the 
Clinical Diagnostic Laboratory Fee Schedule (CLFS); services for 
beneficiaries with end-stage renal disease (ESRD) that are paid under 
the ESRD composite rate; and services and procedures that require an 
inpatient stay that are paid under the hospital inpatient prospective 
payment system

[[Page 71807]]

(IPPS). We set forth the services that are excluded from payment under 
the OPPS in 42 CFR 419.22 of the regulations.
    Under Sec.  419.20(b) of the regulations, we specify the types of 
hospitals and entities that are excluded from payment under the OPPS. 
These excluded entities include: Maryland hospitals, but only for 
services that are paid under a cost containment waiver in accordance 
with section 1814(b)(3) of the Act; critical access hospitals (CAHs); 
hospitals located outside of the 50 States, the District of Columbia, 
and Puerto Rico; and Indian Health Service (IHS) hospitals.

C. 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) of the Act requires the Secretary to review certain 
components of the OPPS, not less often than annually, and to revise the 
groups, relative payment weights, and other adjustments that take into 
account changes in medical practices, changes in technologies, and the 
addition of new services, new cost data, and other relevant information 
and factors.
    Since initially implementing the OPPS, we have published final 
rules in the Federal Register annually to implement statutory 
requirements and changes arising from our continuing experience with 
this system. These rules can be viewed on the CMS Web site at: http://www.cms.gov/HospitalOutpatientPPS/. The CY 2010 OPPS/ASC final rule 
with comment period appears in the November 20, 2009 Federal Register 
(74 FR 60316). In that final rule with comment period, we revised the 
OPPS to update the payment weights and conversion factor for services 
payable under the CY 2010 OPPS on the basis of claims data from January 
1, 2008, through December 31, 2008, and to implement certain provisions 
of Public Law 110-173 and Public Law 110-275. In addition, we responded 
to public comments received on the provisions of the November 18, 2008 
final rule with comment period (73 FR 68502) pertaining to the APC 
assignment of HCPCS codes identified in Addendum B to that rule with 
the new interim (``NI'') comment indicator, and public comments 
received on the July 20, 2009 OPPS/ASC proposed rule for CY 2010 (74 FR 
35232). On December 31, 2009, we issued in the Federal Register (74 FR 
69502) a notice that corrected technical and typographic errors that 
appeared in the CY 2010 OPPS/ASC final rule with comment period issued 
on November 20, 2009. On August 3, 2010, we issued in the Federal 
Register (75 FR 45700) a notice that contained further corrections of 
technical errors in the CY 2010 OPPS/ASC final rule with comment period 
issued in the Federal Register on November 20, 2009 (74 FR 60316), and 
in the correction document for that final rule with comment period that 
was issued in the Federal Register on December 31, 2009 (74 FR 69502).
    On August 3, 2010, we issued in the Federal Register (75 FR 46169) 
a proposed rule for the CY 2011 OPPS/ASC payment systems to implement 
statutory requirements and changes arising from our continuing 
experience with both systems and to implement certain provisions of the 
Affordable Care Act.
    On August 3, 2010, we issued a notice in the Federal Register (75 
FR 45769) that contained the final wage indices, hospital 
reclassifications, payment rates, impacts, and addenda for payments 
made under the OPPS for CY 2010 and the final payment rates and addenda 
for payments under the ASC payment system for CY 2010, that were 
revised to address the provisions of the Affordable Care Act that 
impacted both the CY 2010 OPPS and the ASC payment system.

D. Provisions of the Patient Protection and Affordable Care Act (Pub. 
L. 111-148), as Amended by the Health Care and Education Reconciliation 
Act of 2010 (Pub. L. 111-152)

    On March 23, 2010, the Patient Protection and Affordable Care Act, 
Public Law 111-148, was enacted. Following the enactment of Public Law 
111-148, the Health Care and Education Reconciliation Act of 2010, 
Public Law 111-152 (enacted on March 30, 2010), amended certain 
provisions of Public Law 111-148. (These two public laws are 
collectively known as the Affordable Care Act.) A number of the 
provisions of the Affordable Care Act affect the OPPS and the ASC 
payment system and the providers and suppliers addressed in this final 
rule with comment period. Listed below are the provisions of the 
Affordable Care Act that we proposed to implement in the CY 2011 OPPS/
ASC proposed rule and that we are finalizing in this final rule with 
comment period. We note that, due to the timing of the passage of the 
legislation, we were unable to address some of the provisions of the 
Affordable Care Act that affected the IPPS and the LTCH PPS in the FY 
2011 IPPS/LTCH PPS proposed rule published in the Federal Register on 
May 4, 2010. Therefore, we also included some proposals to implement 
certain provisions relating to the IPPS and LTCH PPS in the CY 2011 
OPPS/ASC proposed rule and are finalizing them in this final rule. In 
addition, we noted in the CY 2011 OPPS/ASC proposed rule that we had 
issued or planned to issue separate documents in the Federal Register 
addressing other provisions of the Affordable Care Act (75 FR 30756 and 
75 FR 31118).
     Section 1301 of the Affordable Care Act amended sections 
1861(ff)(3))(A) and (B) of the Act to establish new additional 
requirements for CMHCs applicable to items or services furnished to 
Medicare beneficiaries on or after the first day of the first calendar 
quarter that begins at least 12 months after the date of enactment of 
Public Law 111-152 (that is, beginning April 1, 2011). The new 
requirements specify that a CMHC provide at least 40 percent of its 
services to individuals who are not eligible for Medicare benefits 
under Title XVIII of the Act and that a partial hospitalization program 
must be a distinct and organized intensive ambulatory treatment service 
offering less than 24-hour daily care ``other than an individual's home 
or in an inpatient or residential setting.'' This provision is 
addressed in section X. of this final rule with comment period.
     Section 3121(a) of the Affordable Care Act amended section 
1833(t)(7)(D)(i) of the Act to extend hold harmless payment adjustments 
(called transitional corridor payments or transitional outpatient 
payments (TOPS)) to rural hospitals with 100 or fewer beds and that are 
not sole community hospitals for covered OPD services furnished on or 
after January 1, 2006 and before January 1, 2011. Section 3121(b) 
amended section 1833(t)(7)(D)(i)(III) of the Act to provide that, for 
SCHs, in the case of covered OPD services furnished on or after January 
1, 2010, and before January 1, 2011, the hold harmless TOPS provisions 
shall be applied without regard to the 100-bed limitation. These 
provisions are addressed in section II.E. of this final rule with 
comment period.
     Section 3138 of the Affordable Care Act amended section 
1833(t) of the Act to direct the Secretary to conduct a study to 
determine if costs incurred by cancer hospitals (described in section 
1886(d)(1)(B)(v) of the Act) for outpatient hospital services with 
respect to APC groups exceed those costs incurred by other hospitals 
furnishing these services. In so far as the Secretary determines that 
such costs exceed those

[[Page 71808]]

costs incurred by other hospitals, the Secretary shall provide for an 
appropriate adjustment under the authority of section 1833(t)(2)(E) to 
reflect those higher costs effective for services furnished on or after 
January 1, 2011. This provision is addressed in section II.F. of this 
final rule with comment period.
     Section 3401(i) of the Affordable Care Act amended section 
1833(t)(3) of the Act by, among other things, adding new paragraphs 
(C)(iv)(F) and (G) to reduce the OPD fee schedule increase factor by a 
productivity adjustment and an additional adjustment for payments to 
hospital OPDs beginning in various years from CY 2010 through CY 2019 
as applicable. These hospital OPD provisions are addressed in section 
II.B.1. of this final rule with comment period. Section 3401(k) of the 
Affordable Care Act amended section 1833(i)(2)(D) of the Act by 
redesignating clause (v) as clause (iv) and adding a new clause (v) to 
provide for a similar productivity adjustment for payment for ASC 
services. This ASC provision is addressed in section XV.H.2.b. of this 
final rule with comment period.
     Section 4103(a) of the Affordable Care Act amended section 
1861(s)(2) of the Act by adding a new subsection (FF) to provide 
Medicare coverage of ``personalized prevention plan services,'' 
beginning January 1, 2011. Section 4103(b) of the Affordable Care Act 
amended section 1861 of the Act by adding a new subsection (hhh) to 
define ``personalized prevention plan services'' (also cited as the 
``annual wellness visit''). Section 4103(c) of the Affordable Care Act 
excludes the annual wellness visit from payment under the OPPS and 
provides for the elimination of beneficiary coinsurance requirements 
for certain preventive services in outpatient hospital settings and for 
waiver of application of the deductible for these services. These 
provisions are addressed in section XII.B. of this final rule with 
comment period.
     Section 4104(a) of the Affordable Care Act amended section 
1861(ddd) of the Act to define ``preventive services'' under Medicare 
to include screening and preventive services described under subsection 
(ww)(2) of the Act (other than services under subparagraph (M)); an 
initial preventive physical examination as defined in subsection (ww) 
of the Act; and personalized prevention plan services as defined in 
subsection (hhh)(1) of the Act. Sections 4104(b) and 10406 of the 
Affordable Care Act amended section 1833(a)(1) of the Act, as amended 
by section 4103(c)(1) of the Affordable Care Act, to provide for the 
elimination of coinsurance for preventive services, and section 4104(c) 
amended section 1833(b) of the Act to provide for the waiver of the 
application of the deductible for both preventive services and, 
specifically, for colorectal cancer screening tests that become 
diagnostic and any related services performed with that diagnostic 
colorectal cancer screening test performed in the same clinical 
encounter, effective for items and services furnished on or after 
January 1, 2011. These provisions are addressed in section XII.B. of 
this final rule with comment period.
     Sections 5503, 5504, 5505, and 5506 of the Affordable Care 
Act made a number of changes to various sections of the Act relating to 
payment for direct GME and IME costs to hospitals.
    (1) Section 5503 amended the Act to add a provision to redistribute 
medical residency positions that have been unfilled during a prior cost 
reporting period to other hospitals and to direct slots for training 
primary care physicians, effective for portions of cost reporting 
periods occurring on or after July 1, 2011.
    (2) Section 5504 amended sections 1886(h)(4)(E) and 
1886(d)(5)(B)(iv) of the Act to allow any time spent by residents 
training in a nonprovider setting to count toward direct GME and IME 
costs if the hospital incurs the costs of residents' salaries and 
fringe benefits, effective for cost reporting periods beginning on or 
after July 1, 2010, for direct GME, and for discharges occurring on or 
after July 1, 2010, for IME.
    (3) Section 5505 amended section 1886(h) and section 1886(d)(5)(B) 
of the Act to add a provision to allow hospitals to count resident time 
spent in certain non-patient care activities while training in certain 
nonprovider settings for direct GME purposes, effective for cost 
reporting periods beginning on or after July 1, 2009; to allow 
hospitals to count resident time spent in certain non-patient care 
activities while training in certain hospital settings for IME purposes 
for cost reporting periods beginning on or after January 1, 1983; and 
to prohibit the counting of time spent by residents in research not 
associated with the treatment or diagnosis of a particular patient for 
IME purposes effective October 1, 2001 (with certain limitations).
    (4) Section 5506 amended section 1886(h)(4)(H) and section 
1886(d)(5)(B)(iv) of the Act to add a provision to allow for the 
redistribution to other hospitals in the same or contiguous areas of 
FTE resident positions from a hospital that closes (on or after the 
date that is 2 years before the date of enactment of Pub. L. 111-148).
    These provisions are addressed in section XXI. of this document.
     Section 6001 of the Affordable Care Act amended section 
1877 of the Act to add provisions under new subsection (i) relating to 
the prohibition against referrals to a hospital by a physician who has 
an ownership or investment interest in the hospital. This provision is 
addressed in section XXII. of this document.
     Section 10324(b) of the Affordable Care Act amended 
section 1833(t) of the Act by adding a new subsection (19) to provide 
for a floor on the area wage adjustment factor for hospital outpatient 
department services furnished on or after January 1, 2011, in a State 
in which at least 50 percent of the counties in the State are frontier 
counties, that is, a county in which the population per square mile is 
less than 6. This provision is addressed in section II.C. of this 
document.

E. Advisory Panel on Ambulatory Payment Classification (APC) Groups

1. Authority of the Advisory Panel on Ambulatory Payment Classification 
(APC) Groups (the APC 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 outside panel of experts to 
review the clinical integrity of the payment groups and their weights 
under the OPPS. The Act further specifies that the panel will act in an 
advisory capacity. The APC Panel, discussed under section I.E.2. of 
this final rule with comment period, fulfills these requirements. The 
APC Panel is not restricted to using data compiled by CMS, and it may 
use data collected or developed by organizations outside the Department 
in conducting its review.
2. Establishment of the APC Panel
    On November 21, 2000, the Secretary signed the initial charter 
establishing the APC Panel. This expert panel, which may be composed of 
up to 15 representatives of providers (currently employed full-time, 
not as consultants, in their respective areas of expertise) subject to 
the OPPS, reviews clinical data and advises CMS about the clinical 
integrity of the APC groups and their payment weights. The APC Panel is 
technical in nature, and it is governed by the provisions of the 
Federal Advisory Committee Act (FACA). Since its initial chartering, 
the Secretary has renewed the APC Panel's charter four times: On 
November 1, 2002; on

[[Page 71809]]

November 1, 2004; on November 21, 2006; and on November 2, 2008. (We 
note that the charter is scheduled to be renewed on or before November 
21, 2010.) The current charter specifies, among other requirements, 
that: The APC Panel continues to be technical in nature; is governed by 
the provisions of the FACA; may convene up to three meetings per year; 
has a Designated Federal Official (DFO); and is chaired by a Federal 
official designated by the Secretary.
    The current APC Panel membership and other information pertaining 
to the APC Panel, including its charter, Federal Register notices, 
membership, meeting dates, agenda topics, and meeting reports, can be 
viewed on the CMS Web site at: http://www.cms.hhs.gov/FACA/05_
AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp#TopOfPage.
3. APC Panel Meetings and Organizational Structure
    The APC Panel first met on February 27 through March 1, 2001. Since 
the initial meeting, the APC Panel has held 18 meetings, with the last 
meeting taking place on August 23-24, 2010. Prior to each meeting, we 
publish a notice in the Federal Register to announce the meeting and, 
when necessary, to solicit nominations for APC Panel membership and to 
announce new members.
    The APC Panel has established an operational structure that, in 
part, includes the use of three subcommittees to facilitate its 
required APC review process. The three current subcommittees are the 
Data Subcommittee, the Visits and Observation Subcommittee, and the 
Subcommittee for APC Groups and Status Indicator (SI) Assignments 
(previously known as the Packaging Subcommittee).
    The Data Subcommittee is responsible for studying the data issues 
confronting the APC Panel and for recommending options for resolving 
them. The Visits and Observation Subcommittee reviews and makes 
recommendations to the APC Panel on all technical issues pertaining to 
observation services and hospital outpatient visits paid under the OPPS 
(for example, APC configurations and APC payment weights). The 
Subcommittee for APC Groups and SI Assignments advises the Panel on the 
following issues: The appropriate SIs 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; and the appropriate APCs 
to be assigned to HCPCS codes regarding services for which separate 
payment is made.
    Each of these subcommittees was established by a majority vote from 
the full APC Panel during a scheduled APC Panel meeting, and the APC 
Panel recommended that the subcommittees continue at the August 2010 
APC Panel meeting. We accept those recommendations of the APC Panel. 
All subcommittee recommendations are discussed and voted upon by the 
full APC Panel.
    Discussions of the other recommendations made by the APC Panel at 
the February and August 2010 meetings are included in the sections of 
this final rule with comment period that are specific to each 
recommendation. For discussions of earlier APC Panel meetings and 
recommendations, we refer readers to previously published hospital 
OPPS/ASC proposed and final rules, the CMS Web site mentioned earlier 
in this section, and the FACA database at: http://fido.gov/facadatabase/public.asp.

F. Summary of the Major Contents of the CY 2011 OPS/ASC Proposed Rule

    A proposed rule appeared in the August 3, 2010 Federal Register (75 
FR 46170) that set forth proposed changes to the Medicare hospital OPPS 
and the revised Medicare ASC payment system for CY 2011 to implement 
statutory requirements and changes arising from our continuing 
experience with the system and to implement certain provisions of 
Public Law 111-148, as amended by Public Law 111-152 (collectively 
known as the Affordable Care Act). We proposed quality measures for the 
Hospital Outpatient Quality Data Reporting Program (HOP QDRP) for 
reporting quality data for annual payment rate updates for CY 2012 and 
subsequent calendar years, the proposed requirements for data 
collection and submission for the annual payment update, and a proposed 
reduction in the OPPS payment for hospitals that fail to meet the HOP 
QDRP requirements for the CY 2011 payment update, in accordance with 
the statutory requirement. We also proposed changes to implement 
provisions of the Affordable Care Act relating to payments to hospitals 
for direct GME and IME costs and the rules relating to physician self-
referrals to hospitals in which they have an ownership or investment 
interest. In addition, we set forth proposals affecting certain 
payments under the Medicare IPPS. The following is a summary of the 
major changes that we proposed to make:
1. Updates Affecting OPPS Payments
    In section II. of the proposed rule, we set forth--
     The methodology used to recalibrate the proposed APC 
relative payment weights.
     The proposed changes to packaged services.
     The proposed update to the conversion factor used to 
determine payment rates under the OPPS. In this section, we proposed 
changes in the amounts and factors for calculating the full annual 
update increase to the conversion factor.
     The proposed retention of our current policy to use the 
IPPS wage indices to adjust, for geographic wage differences, the 
portion of the OPPS payment rate and the copayment standardized amount 
attributable to labor-related cost. This proposal addressed the 
provisions of section 10324 of the Affordable Care Act relating to the 
establishment of a floor for the area wage adjustment factor for OPD 
services furnished in frontier States.
     The proposed update of statewide average default CCRs.
     The proposed application of hold harmless transitional 
outpatient payments (TOPs) for certain small rural hospitals, extended 
by section 3121 of the Affordable Care Act.
     The proposed payment adjustment for rural SCHs.
     The proposed calculation of the hospital outpatient 
outlier payment.
     The calculation of the proposed national unadjusted 
Medicare OPPS payment.
     The proposed beneficiary copayments for OPPS services.
2. OPPS Ambulatory Payment Classification (APC) Group Policies
    In section III. of the proposed rule, we discussed--
     The proposed additions of new HCPCS codes to APCs.
     The proposed establishment of a number of new APCs.
     Our analyses of Medicare claims data and certain 
recommendations of the APC Panel.
     The application of the 2 times rule and proposed 
exceptions to it.
     The proposed changes to specific APCs.
     The proposed movement of procedures from New Technology 
APCs to clinical APCs.
3. OPPS Payment for Devices
    In section IV. of the proposed rule, we discussed the proposed 
pass-through payment for specific categories of

[[Page 71810]]

devices and the proposed adjustment for devices furnished at no cost or 
with partial or full credit.
4. OPPS Payment Changes for Drugs, Biologicals, and 
Radiopharmaceuticals
    In section V. of the proposed rule, we discussed the proposed CY 
2011 OPPS payment for drugs, biologicals, and radiopharmaceuticals, 
including the proposed payment for drugs, biologicals, and 
radiopharmaceuticals with and without pass-through status.
5. Estimate of OPPS Transitional Pass-Through Spending for Drugs, 
Biologicals, Radiopharmaceuticals, and Devices
    In section VI. of the proposed rule, we discussed the estimate of 
CY 2011 OPPS transitional pass-through spending for drugs, biologicals, 
and devices.
6. OPPS Payment for Brachytherapy Sources
    In section VII. of the proposed rule, we discussed our proposal for 
payment for brachytherapy sources.
7. OPPS Payment for Drug Administration Services
    In section VIII. of the proposed rule, we set forth our proposed 
policy concerning coding and payment for drug administration services.
8. OPPS Payment for Hospital Outpatient Visits
    In section IX. of the proposed rule, we set forth our proposed 
policies for the payment of clinic and emergency department visits and 
critical care services based on claims data.
9. Payment for Partial Hospitalization Services
    In section X. of the proposed rule, we set forth our proposed 
payment for partial hospitalization services, including the proposed 
separate threshold for outlier payments for CMHCs. We also set forth 
our proposals to implement the new requirements for CMHCs established 
by section 1301 of the Affordable Care Act.
10. Procedures That Would Be Paid Only as Inpatient Procedures
    In section XI. of the proposed rule, we discussed the procedures 
that we proposed to remove from the inpatient list and assign to APCs 
for payment under the OPPS.
11. OPPS Nonrecurring Technical and Policy Changes and Clarifications
    In section XII. of the proposed rule, we discussed nonrecurring 
technical issues and proposed policy changes relating to physician 
supervision of OPD services in hospitals, including CAHs. We also 
proposed to implement the provisions of sections 4103 and 4104 of the 
Affordable Care Act relating to payment for preventive services, 
including personalized prevention plan services, and the waiver of 
beneficiary coinsurance and deductibles.
12. OPPS Payment Status and Comment Indicators
    In section XIII. of the proposed rule, we discussed our proposed 
changes to the definitions of status indicators assigned to APCs and 
present our proposed comment indicators.
13. OPPS Policy and Payment Recommendations
    In section XIV. of the proposed rule, we addressed recommendations 
made by the Medicare Payment Advisory Commission (MedPAC) in its March 
2010 report to Congress, by the Office of Inspector General (OIG), and 
by the APC Panel regarding the OPPS for CY 2011.
14. Updates to the Ambulatory Surgical Center (ASC) Payment System
    In section XV. of the proposed rule, we discussed the proposed 
updates of the revised ASC payment system and payment rates for CY 
2011.
15. Reporting Quality Data for Annual Payment Rate Updates
    In section XVI. of the proposed rule, we discussed the proposed 
quality measures for reporting hospital outpatient (HOP) quality data 
for the annual payment update factor for CY 2012 and subsequent 
calendar years; set forth the requirements for data collection and 
submission for the annual payment update; and discussed the reduction 
in the OPPS payment for hospitals that fail to meet the HOP Quality 
Data Reporting Program (QDRP) requirements for CY 2011.
16. Payments to Hospitals for Direct GME and IME Costs
    In section XVII. of the proposed rule, we discussed our proposed 
implementation of the provisions of section 5503, 5504, 5505, and 5506 
of the Affordable Care Act relating to redistribution of FTE resident 
slots of closed hospitals and policy changes for the counting of FTE 
residents in determining payments to hospitals for direct GME and IME 
costs.
17. Physician Self-Referrals to Hospitals
    In section XVIII. of the proposed rule, we discussed our proposal 
to implement the changes made by section 6001 of the Affordable Care 
Act relating to the rules governing the prohibition on referrals to a 
hospital by a physician who has an ownership or investment interest in 
the hospital.
18. Regulatory Impact Analysis
    In section XXII. of the proposed rule, we set forth an analysis of 
the impact that the proposed changes would have on affected entities 
and beneficiaries.

G. Public Comments Received in Response to the CY 2011 OPPS/ASC 
Proposed Rule

    We received approximately 774 timely pieces of correspondence 
containing multiple comments on the CY 2011 OPPS/ASC proposed rule that 
appeared in the Federal Register on August 3, 2010. We note that we 
received some public comments that were outside the scope of the CY 
2011 OPPS/ASC proposed rule. These public comments are not addressed in 
this CY 2011 OPPS/ASC final rule with comment period. Summaries of the 
public comments that are within the scope of the proposals and our 
responses to those public comments are set forth in the various 
sections of this final rule with comment period under the appropriate 
headings.

H. Public Comments Received on the November 20, 2009 OPPS/ASC Final 
Rule With Comment Period

    We received approximately 18 timely pieces of correspondence on the 
CY 2010 OPPS/ASC final rule with comment period that appeared in the 
Federal Register on November 20, 2009 (74 FR 60316), some of which 
contained multiple comments on the interim APC assignments and/or 
status indicators of HCPCS codes identified with comment indicator 
``NI'' in Addendum B to that final rule with comment period. Summaries 
of those public comments on topics open to comment in the CY 2010 OPPS/
ASC final rule with comment period and our responses to them are set 
forth in the various sections of this final rule with comment period 
under the appropriate headings.

I. Interim Final Rule on Certified Registered Nurse Anesthetist (CRNA) 
Services Furnished in Rural Hospitals and Critical Access Hospitals

    Under section XXIII. of this document, we set forth an interim 
final rule with comment period that changes the effective date for 
otherwise eligible hospitals and CAHs that have been reclassified from 
urban to rural status under section 1886(d)(8)(E) of the Act and 42 CFR 
412.103 to receive reasonable cost payments for anesthesia services and 
related care furnished by

[[Page 71811]]

nonphysician anesthetists, from cost reporting periods beginning on or 
after October 1, 2010, to December 2, 2010.

II. Updates Affecting OPPS Payments

A. Recalibration of APC Relative Weights

1. Database Construction
a. Database Source and Methodology
    Section 1833(t)(9)(A) of the Act requires that the Secretary review 
and revise the relative payment weights for APCs at least annually. In 
the April 7, 2000 OPPS final rule with comment period (65 FR 18482), we 
explained in detail how we calculated the relative payment weights that 
were implemented on August 1, 2000 for each APC group.
    In the CY 2011 OPPS/ASC proposed rule (75 FR 46179), we proposed to 
use for CY 2011 the same basic methodology that we described in the 
November 20, 2009 OPPS final rule with comment period to recalibrate 
the APC relative payment weights for services furnished on or after 
January 1, 2011, and before January 1, 2012 (CY 2011). That is, we 
proposed to recalibrate the relative payment weights for each APC based 
on claims and cost report data for hospital outpatient department 
(HOPD) services. We proposed to use the most recent available data to 
construct the database for calculating APC group weights. Therefore, 
for the purpose of recalibrating the proposed APC relative payment 
weights for CY 2011, we used approximately 133 million final action 
claims for hospital outpatient department services furnished on or 
after January 1, 2009, and before January 1, 2010. For this final rule 
with comment period, for the purpose of recalibrating the final APC 
relative payment weights for CY 2011, we used approximately 145 million 
final action claims for hospital outpatient department services 
furnished on or after January 1, 2009, and before January 1, 2010, 
based on more recent updated data. (For exact counts of claims used, we 
refer readers to the claims accounting narrative under supporting 
documentation for the proposed rule and this final rule with comment 
period on the CMS Web site at: http://www.cms.gov/
HospitalOutpatientPPS/HORD/.)
    Of the 145 million final action claims for services provided in 
hospital outpatient settings used to calculate the CY 2011 OPPS payment 
rates for this final rule with comment period, approximately 109 
million claims were the type of bill potentially appropriate for use in 
setting rates for OPPS services (but did not necessarily contain 
services payable under the OPPS). Of the 109 million claims, 
approximately 4 million claims were not for services paid under the 
OPPS or were excluded as not appropriate for use (for example, 
erroneous cost-to-charge ratios (CCRs) or no HCPCS codes reported on 
the claim). From the remaining 105 million claims, we created 
approximately 103 million single records, of which approximately 71 
million were ``pseudo'' single or ``single session'' claims (created 
from 24 million multiple procedure claims using the process we discuss 
later in this section). Approximately 792,000 claims were trimmed out 
on cost or units in excess of +/-3 standard deviations from the 
geometric mean, yielding approximately 102 million single bills for 
median setting. As described in section II.A.2. of this final rule with 
comment period, our data development process is designed with the goal 
of using appropriate cost information in setting the APC relative 
weights. The bypass process is described in section II.A.1.b. of this 
final rule with comment period. This section discusses how we develop 
``pseudo'' single procedure claims (as defined below), with the 
intention of using more appropriate data from the available claims. In 
some cases, the bypass process allows us to use some portion of the 
submitted claim for cost estimation purposes, while the remaining 
information on the claim continues to be unusable. Consistent with the 
goal of using appropriate information in our data development process, 
we only use claims (or portions of each claim) that are appropriate for 
ratesetting purposes. Ultimately, we were able to use for CY 2011 
ratesetting some portion of approximately 95 percent of the CY 2009 
claims containing services payable under the OPPS.
    The final APC relative weights and payments for CY 2011 in Addenda 
A and B to this final rule with comment period were calculated using 
claims from CY 2009 that were processed before July 1, 2010, and 
continue to be based on the median hospital costs for services in the 
APC groups. We selected claims for services paid under the OPPS and 
matched these claims to the most recent cost report filed by the 
individual hospitals represented in our claims data. We continue to 
believe that it is appropriate to use the most current full calendar 
year claims data and the most recently submitted cost reports to 
calculate the median costs underpinning the APC relative payment 
weights and the CY 2011 payment rates.
b. Use of Single and Multiple Procedure Claims
    For CY 2011, in general, we proposed to continue to use single 
procedure claims to set the medians on which the APC relative payment 
weights would be based, with some exceptions as discussed below in this 
section. We generally use single procedure claims to set the median 
costs for APCs because we believe that the OPPS relative weights on 
which payment rates are based should be derived from the costs of 
furnishing one unit of one procedure and because, in many 
circumstances, we are unable to ensure that packaged costs can be 
appropriately allocated across multiple procedures performed on the 
same date of service.
    We agree that, optimally, it is desirable to use the data from as 
many claims as possible to recalibrate the APC relative payment 
weights, including those claims for multiple procedures. As we have for 
several years, we continued to use date of service stratification and a 
list of codes to be bypassed to convert multiple procedure claims to 
``pseudo'' single procedure claims. Through bypassing specified codes 
that we believe do not have significant packaged costs, we were able to 
use more data from multiple procedure claims. In many cases, this 
enabled us to create multiple ``pseudo'' single procedure claims from 
claims that were submitted as multiple procedure claims spanning 
multiple dates of service, or claims that contained numerous separately 
paid procedures reported on the same date on one claim. We refer to 
these newly created single procedure claims as ``pseudo'' single 
procedure claims. The history of our use of a bypass list to generate 
``pseudo'' single procedure claims is well documented, most recently in 
the CY 2010 OPPS/ASC final rule with comment period (74 FR 60324 
through 60342). In addition, for CY 2008, we increased packaging and 
created the first composite APCs. We have continued our packaging 
policies and the creation of composite APCs for CY 2009 and 2010, and 
we proposed to continue them for CY 2011. This also increased the 
number of bills that we were able to use for median calculation by 
enabling us to use claims that contained multiple major procedures that 
previously would not have been usable. Further, for CY 2009, we 
expanded the composite APC model to one additional clinical area, 
multiple imaging services (73 FR 68559 through 68569), which also 
increased the number of bills we were able to use to calculate APC 
median costs. We have continued the composite APCs for

[[Page 71812]]

multiple imaging services for CY 2010, and we proposed to continue to 
create them for CY 2011. We refer readers to section II.A.2.e. of the 
proposed rule and this final rule with comment period for discussion of 
the use of claims to establish median costs for composite APCs.
    We proposed to continue to apply these processes to enable us to 
use as much claims data as possible for ratesetting for the CY 2011 
OPPS. This methodology enabled us to create, for the proposed rule, 
approximately 64 million ``pseudo'' single procedure claims, including 
multiple imaging composite ``single session'' bills (we refer readers 
to section II.A.2.e.(5) of the proposed rule for further discussion), 
to add to the approximately 31 million ``natural'' single procedure 
claims. For the proposed rule, ``pseudo'' single procedure and ``single 
session'' procedure bills represented approximately 67 percent of all 
single procedure bills used to calculate median costs.
    For CY 2011, we proposed to bypass 448 HCPCS codes for CY 2011 that 
were identified in Table 1 of the proposed rule. Since the inception of 
the bypass list, which is the list of codes to be bypassed to convert 
multiple procedure claims to ``pseudo'' single procedure claims, we 
have calculated the percent of ``natural'' single bills that contained 
packaging for each HCPCS code and the amount of packaging on each 
``natural'' single bill for each code. Each year, we generally retain 
the codes on the previous year's bypass list and use the update year's 
data (for CY 2011, data available for the February 2010 APC Panel 
meeting from CY 2009 claims processed through September 30, 2009, and 
CY 2008 claims data processed through June 30, 2009, used to model the 
payment rates for CY 2010) to determine whether it would be appropriate 
to propose to add additional codes to the previous year's bypass list. 
For CY 2011, we proposed to continue to bypass all of the HCPCS codes 
on the CY 2010 OPPS bypass list. We updated HCPCS codes on the CY 2010 
bypass list that were mapped to new HCPCS codes for CY 2011 ratesetting 
by adding the new replacement codes and also removing the deleted 
codes, which were listed in Table 2 of the proposed rule. None of these 
deleted codes were ``overlap bypass codes'' (those HCPCS codes that are 
both on the bypass list and are members of the multiple imaging 
composite APCs). We also proposed to add to the bypass list for CY 2011 
all HCPCS codes not on the CY 2010 bypass list that, using both CY 2010 
final rule data (CY 2008 claims) and February 2010 APC Panel data 
(first 9 months of CY 2009 claims), met the same previously established 
empirical criteria for the bypass list that are summarized below. The 
entire list proposed for CY 2011 (including the codes that remain on 
the bypass list from prior years) was open to public comment. Because 
we must make some assumptions about packaging in the multiple procedure 
claims in order to assess a HCPCS code for addition to the bypass list, 
we assumed that the representation of packaging on ``natural'' single 
procedure claims for any given code is comparable to packaging for that 
code in the multiple procedure claims. The proposed criteria for the 
bypass list were:
     There are 100 or more ``natural'' single procedure claims 
for the code. This number of single procedure claims ensures that 
observed outcomes are sufficiently representative of packaging that 
might occur in the multiple claims.
     Five percent or fewer of the ``natural'' single procedure 
claims for the code have packaged costs on that single procedure claim 
for the code. This criterion results in limiting the amount of 
packaging being redistributed to the separately payable procedures 
remaining on the claim after the bypass code is removed and ensures 
that the costs associated with the bypass code represent the cost of 
the bypassed service.
     The median cost of packaging observed in the ``natural'' 
single procedure claims is equal to or less than $50. This criterion 
also limits the amount of error in redistributed costs. Throughout the 
bypass process, we do not know the dollar value of the packaged cost 
that should be appropriately attributed to the other procedures on the 
claim. Ensuring that redistributed costs associated with a bypass code 
are small in amount and volume protects the validity of cost estimates 
for low cost services billed with the bypassed service.
    In response to comments to the CY 2010 OPPS/ASC proposed rule 
requesting that the packaged cost threshold be updated, we noted that 
we would consider whether it would be appropriate to update the $50 
packaged cost threshold for inflation when examining potential bypass 
list additions (74 FR 60328). For the CY 2011 OPPS, based on CY 2009 
claims data, we proposed to apply the final market basket of 3.6 
percent published in the CY 2009 OPPS/ASC final rule with comment 
period (73 FR 26584) to the $50 packaged cost threshold used in the CY 
2010 OPPS/ASC final rule with comment period (74 FR 60325) that we 
initially established in the CY 2005 OPPS final rule based on our 
analysis of the data (69 FR 65731), rounded to the nearest $5 
increment. This calculation led us to a proposed packaged cost 
threshold for bypass list additions of $50 ($51.80 rounded to $50). We 
stated that we believe that applying the market basket from the year of 
claims data to the packaged cost threshold, rounded to the nearest $5 
increment, would appropriately account for the effects of inflation 
when considering additions to the bypass list because the market basket 
increase percentage reflects the extent to which the price of inputs 
for hospital services has increased compared to the price of inputs for 
hospital services in the prior year. As discussed in the CY 2010 OPPS/
ASC final rule with comment period (74 FR 60328), the real value of 
this packaged cost threshold criterion has declined due to inflation, 
making the packaged cost threshold more restrictive over time when 
considering additions to the bypass list. Therefore, adjusting the 
threshold by the market basket would prevent continuing decline in the 
threshold's real value. The dollar threshold would not change for CY 
2011 under this proposed policy, because when rounded to the nearest $5 
increment after adjustment for the market basket increase, the 
threshold would for CY 2011 remain at $50. Therefore, we did not 
propose to add any additional bypass codes for CY 2011 as a result of 
the proposed policy.
     The code is not a code for an unlisted service.
    In addition, we proposed to continue to include, on the bypass 
list, HCPCS codes that CMS medical advisors believe have minimal 
associated packaging based on their clinical assessment of the complete 
CY 2011 OPPS proposal. Some of these codes were identified by CMS 
medical advisors and some were identified in prior years by commenters 
with specialized knowledge of the packaging associated with specific 
services. We also proposed to continue to include on the bypass list 
certain HCPCS codes in order to purposefully direct the assignment of 
packaged costs to a companion code where services always appear 
together and where there would otherwise be few single procedure claims 
available for ratesetting. For example, we have previously discussed 
our reasoning for adding HCPCS code G0390 (Trauma response team 
associated with hospital critical care service) and the CPT codes for 
additional hours of drug administration to the bypass list (73 FR 68513 
and 71 FR 68117 through 68118).

[[Page 71813]]

    As a result of the multiple imaging composite APCs that we 
established in CY 2009, the program logic for creating ``pseudo'' 
single procedure claims from bypassed codes that are also members of 
multiple imaging composite APCs changed. When creating the set of 
``pseudo'' single procedure claims, claims that contain ``overlap 
bypass codes'' (those HCPCS codes that are both on the bypass list and 
are members of the multiple imaging composite APCs), were identified 
first. These HCPCS codes were then processed to create multiple imaging 
composite ``single session'' bills, that is, claims containing HCPCS 
codes from only one imaging family, thus suppressing the initial use of 
these codes as bypass codes. However, these ``overlap bypass codes'' 
were retained on the bypass list because, at the end of the ``pseudo'' 
single processing logic, we reassessed the claims without suppression 
of the ``overlap bypass codes'' under our longstanding ``pseudo'' 
single process to determine whether we could convert additional claims 
to ``pseudo'' single procedure claims. (We refer readers to section 
II.A.2.b. of the proposed rule and this final rule with comment period 
for further discussion of the treatment of ``overlap bypass codes.'') 
This process also created multiple imaging composite ``single session'' 
bills that could be used for calculating composite APC median costs. 
``Overlap bypass codes'' that are members of the proposed multiple 
imaging composite APCs were identified by asterisks (*) in Table 1 of 
the proposed rule.
    Table 1 published in the CY 2011 OPPS/ASC proposed rule includes 
the proposed list of bypass codes for CY 2011. As noted in that 
proposed rule (75 FR 46181), the list of bypass codes contained codes 
that were reported on claims for services in CY 2009 and, therefore, 
included codes that were in effect in 2009 and used for billing but 
were deleted for CY 2010. We retained these deleted bypass codes on the 
proposed CY 2011 bypass list because these codes existed in CY 2009 and 
were covered OPD services in that period. Since these bypass codes were 
deleted for billing in CY 2010, we did not need to retain them for the 
CY 2010 bypass list. Keeping these deleted bypass codes on the bypass 
list potentially allowed us to create more ``pseudo'' single procedure 
claims for ratesetting purposes. ``Overlap bypass codes'' that were 
members of the proposed multiple imaging composite APCs were identified 
by asterisks (*) in the third column of Table 1 of the proposed rule. 
HCPCS codes that we proposed to add for CY 2011 also were identified by 
asterisks (*) in the fourth column of Table 1 of the proposed rule. 
Table 2 of the proposed rule contained the list of codes that we 
proposed to remove from the CY 2011 bypass list because they were 
deleted from the HCPCS before CY 2009. None of these proposed deleted 
codes were ``overlap bypass'' codes.
    Comment: Several commenters expressed support for the ratesetting 
methodology using single and ``pseudo'' single claims and recommended 
that CMS continue to explore additional methodologies to increase the 
number of multiple procedure claims used for ratesetting, including 
expanding the empirical criteria for inclusion on the bypass list. One 
commenter recommended that CMS examine the bypass list on an annual 
basis to ensure that the Agency is utilizing as many claims as possible 
for ratesetting. One commenter supported the proposal to maintain the 
current radiation oncology procedure codes on the CY 2011 bypass list.
    Response: We appreciate the commenters' support. We expect to 
continue to use our established methodologies and to evaluate 
additional refinements and improvements to our methodologies, with the 
goal of achieving appropriate and accurate estimates of the costs of 
services in the HOPD. We examine the bypass list on an annual basis to 
ensure that we are using as much information as is available through 
our claims data.
    Comment: One commenter requested that CMS explore alternative 
methodologies to capture more multiple procedure claims used for future 
rate setting of composite APC 8001 (LDR Prostate Brachytherapy 
Composite), noting that a number of multiple procedure claims were not 
used to model the composite due to containing other payable radiation 
therapy codes.
    Response: As described above, one of the challenges in estimating 
costs for individual items and services is in how to address the 
allocation of packaged costs in multiple procedure claims. While we 
continue to apply the empirical criteria and examine CMS medical 
advisor and public commenter recommendations in determining additions 
to the bypass list, we must ensure that the bypass process itself does 
not improperly allocate packaged costs. We will continue to explore 
methods through which we might obtain more information from our 
existing set of claims data.
    Comment: Several commenters recommended that CPT codes 93306 
(Echocardiography, transthoracic, real-time with image documentation 
(2D), includes M-mode recording, when performed, complete, with 
spectral Doppler echocardiography, and with color flow Doppler 
echocardiography) and 93307 (Echocardiography, transthoracic, real-time 
with image documentation (2D), includes M-mode recording, when 
performed, complete, without spectral or color Doppler 
echocardiography) be removed from the bypass list. The commenters 
believed that adding those codes to the bypass list would not 
appropriately capture costs associated with providing the services. 
Moreover, they believed that these codes do not meet the criteria for 
the bypass list. The commenters suggested that hospitals were 
continuing to bill CPT 93307 in conjunction with CPT codes 93320 
(Doppler echocardiography, pulsed wave and/or continuous wave with 
spectral display (List separately in addition to codes for 
echocardiographic imaging); complete) and 93325 (Doppler 
echocardiography color flow velocity mapping (List separately in 
addition to codes for echocardiography) rather than using new CY 2009 
CPT code 93306 because they were still adjusting to billing with CPT 
code 93306. They noted that because CPT code 93307 was a proposed 
addition to the bypass list, the code would not include the packaged 
costs of CPT codes 93320 and 93325. The commenters also noted that CPT 
code 93307 did not appear to meet the empirical criteria in the 
proposed rule claims data. They suggested that, if CMS did not remove 
CPT code 93307 from the CY 2011 bypass list, claims with combinations 
of CPT codes 93307, 93320, and 93325 be reconstructed as CPT code 93306 
and that the simulated claims be used, together with the claims for CPT 
code 99306, to set the median costs for CPT code 99306. A few 
commenters suggested that assigning CPT code 93307 to the same APC as 
CPT code 93306 was inappropriate because that reassignment was based on 
the addition of both codes to the bypass list. The commenters also 
identified APC 0269 (Level II Echocardiogram Without Contrast) as 
having a 2 times rule violation because, they stated, the median cost 
of the code with the highest median cost in the APC is more than twice 
that of the code with the lowest median cost. The application of the 2 
times rule is discussed in section III.B.2. of this final rule with 
comment period. Thus, the commenters recommended that CMS review the 
coding issues associated with the creation of those codes to ensure 
that they are not unduly

[[Page 71814]]

influencing the respective APC payment rates.
    Response: We note that, in the CY 2011 OPPS/ASC proposed rule (75 
FR 46180), we described our process for identifying additions to the 
bypass code list by determining codes that, ``using both CY 2010 final 
rule data (CY 2008 claims) and February 2010 APC Panel data (first 9 
months of CY 2009 claims), met the same previously established 
empirical criteria for the bypass list.'' However, we wish to clarify 
that proposed additions to the bypass list were identified by applying 
the empirical criteria to both sets of data individually. Thus, a code 
that met the empirical criteria in either of the two sets of claims 
data would be eligible for addition to the proposed bypass list.
    In proposing to add CPT code 93307 to the CY 2011 bypass list, we 
had examined the single major claims using CY 2010 final rule data, 
after performing the process described in the CY 2010 OPPS/ASC final 
rule with comment period to simulate billing for CPT code 93306 (74 FR 
60374 through 60376). That is, after we removed the claims that we used 
to simulate the code configuration for CPT code 93306, we assessed only 
the remaining claims for CPT code 93307 for the bypass list. When we 
applied the bypass criteria to these residual final rule claims for CPT 
code 93307, CPT code 93307 met the empirical criteria and we added it 
to the proposed rule bypass list. However, when we assessed CPT code 
93307 against the CY 2009 claims in the APC Panel data, it did not meet 
the criteria and, similarly, it does not meet the criteria when 
assessed against the proposed rule data. Therefore we are accepting the 
comment, and for the CY 2011 OPPS final rule, we are removing CPT code 
93307 from the CY 2011 bypass list. However, we are not creating 
simulated claims for CPT code 93306 from the claims that report these 
services using CPT codes 93307, 93320, and 93325 in place of reporting 
CPT code 93306. We have approximately 765,000 single bills for CPT code 
93306, and we see no reason to create simulated median costs for 
services for which we have adequate cost data from correctly coded 
claims. We note that, although miscoded claims for CPT code 93306 (that 
is, CPT code 93307 plus CPT code 93320 plus CPT code 93325) appeared in 
the data, only CPT code 93307 was paid on these claims because we 
implemented NCCI edits on January 1, 2009, that stopped CPT codes 93320 
and 93325 from being paid if reported with CPT code 93307. Hospitals 
that reported the service using the three codes instead of reporting 
CPT code 93306 received payments based on the CY 2009 national 
unadjusted payment rate of $255.05 for CPT code 93307 rather than a 
payment based on a national unadjusted payment rate of $431.37 that 
they would have received if they had reported the correct code for the 
service.
    Regarding the issue of reassignment of CPT code 93307 from APC 0697 
(Level I Echocardiogram Without Contrast) to APC 0269, after removing 
CPT code 93306 from the bypass list, the calculated median cost for CPT 
code 93306 based on final rule data was approximately $399. The 
calculated median cost of approximately $399 for CPT code 93306 
suggests that the costs of these two procedures are similar. CPT codes 
93306 and 93307 would thus meet the APC recalibration standards of 
clinical and resource homogeneity. Thus, we are finalizing our proposal 
to assign CPT code 93307 to APC 0269.
    As we discussed in the CY 2010 OPPS/ASC final rule with comment 
period (74 FR 60436), in the determination of APCs that violate the 2 
times rule, we apply the 2 times rule to HCPCS codes that are 
determined to be significant, either based on having a frequency of 
more than 1,000 single major claims or having both more than 99 single 
major claims and contributing more than 2 percent of the claims used to 
determine the APC median cost. Codes that do not meet these criteria as 
``significant procedures'' are not used to determine if there is a 2 
times rule violation in an APC. The 2 times rule is discussed in 
section III.B. of this final rule with comment period.
    Comment: One commenter requested that the proposed application of 
market basket update to the median cost of packaging threshold for the 
bypass criteria be applied retroactively beginning from CY 2005, when 
the $50 median packaged cost threshold criterion was first applied.
    Response: In the CY 2011 OPPS/ASC proposed rule, we proposed to 
apply the final market basket update for CY 2009, since it is the most 
appropriate representation of changes for hospital input prices for CY 
2009 and, therefore, most applicable to CY 2009 claims data used to set 
the CY 2011 OPPS payment rates, to the median packaged cost threshold 
of $50 established in the CY 2010 OPPS/ASC final rule with comment 
period (75 FR 46181). We believe that this would ensure that the 
packaged cost threshold would accurately reflect changes in costs from 
the prior year. However, we proposed that this market basket adjustment 
to the packaged cost criterion would apply prospectively. The $50 
threshold has historically been an appropriate measure for limiting the 
impact of redistributing the packaged costs on the multiple procedure 
claims. We established a criterion of a maximum median amount of 
packaging of $50 as a means of ensuring that the typical packaging for 
the service being placed on the bypass list is minimal in amount. With 
respect to the comment that we apply a market basket update to the 
median cost of the packaging threshold for the bypass criteria 
retroactively to CY 2005, we note that, in general, we update our 
payment rates on a prospective basis and, as explained above, we 
believe that our proposed and final policy adequately and appropriately 
accounts for the effects of inflation over time.
    Therefore, for the CY 2011 OPPS, we are applying the final CY 2009 
market basket update (which is 3.6 percent) to the $50 median packaged 
cost criterion and rounding the result ($51.80) to the neared $5 
increment. Thus, for this CY 2011 OPPS/ASC final rule with comment 
period, the median cost of packaging criterion for the CY 2011 OPPS 
bypass list remains at $50.
    Comment: One commenter requested that CPT codes 77310 (Teletherapy, 
isodose plan (whether hand or computer calculated); intermediate (3 or 
more treatment ports directed to a single area of interest)) and 77789 
(Surface application of radiation source) be added to the bypass list 
because they believed that these codes meet the bypass criteria. The 
commenter also suggested that there was a lack of transparency in how 
the criteria were applied, and that when codes were not added that met 
the empirical criteria the reasons for doing so should be explained.
    Response: Both CPT codes 77310 and 77789 failed to meet the 
empirical criterion for addition to the bypass list of having 100 or 
more ``natural'' single procedure claims in both the APC Panel data and 
the proposed rule data. Specifically, CPT code 77310 had 0 natural 
single bills in the CY 2010 final rule data and 2 natural single bills 
in the CY 2011 APC Panel data; CPT code 77789 had 30 natural single 
bills in the CY 2010 final rule data and 13 natural single bills in the 
CY 2011 APC Panel data. As described above, this criterion ensures that 
we have an adequate base of claims billed for each code so that we can 
bypass lines with the bypass code from the multiple procedure claims. 
In addition to failing the number of ``natural'' single procedure 
claims criterion, CPT code 77789 failed to meet the percentage of 
single claims with packaged costs criterion (no more than

[[Page 71815]]

5 percent of ``natural'' single procedure claims can have any 
packaging) because packaged cost appeared on 6.7 percent of the code's 
``natural'' single major claims in the CY 2010 final rule data and 38.5 
percent of the code's ``natural'' single major claims in the CY 2011 
APC Panel data. We are not aware of any codes that met the empirical 
criteria for addition to the bypass list that are not included on the 
bypass list.
    However, in the course of our review of the comment, we realized 
that CPT code 77315 (Teletherapy; isodose plan (whether hand or 
computer calculated); complex (mantle or inverted Y, tangential ports, 
the use of wedges, compensators, complex blocking, rotational beam, or 
special beam considerations)) meets the empirical criteria and is on 
the bypass list and that two other CPT codes that are very similar were 
not on any of the previous bypass code lists. There are three CPT codes 
for teletherapy, isodose plan, for which CPT code 77315 reports the 
complex level of service. CPT code 77310, which the commenters 
requested be added to the bypass list, reports the intermediate level 
of the service and CPT code 77305 (Teletherapy, isodose plan (whether 
hand or computer calculated); simple (1 or 2 parallel opposed 
unmodified ports directed to a single area of interest)) reports the 
simple level of the service. However, neither CPT codes 77305 (simple) 
nor CPT code 77310 (intermediate) were on any of the previous bypass 
code lists, notwithstanding that CPT code 77315 meets the empirical 
criteria and is on the bypass list. Agency clinicians believe that the 
packaging for CPT codes 77305 and 77310 would be less than for CPT code 
77315, because CPT code 77315 represents the most complex level of the 
service. Moreover, while the ``natural'' single major claims for CPT 
codes 77305 (9 claims) and 77310 (6 claims) did not meet the 
``natural'' single major claims criteria of a minimum of 100 claims 
each in the CY 2011 proposed rule data, they met all other criteria for 
addition to the bypass list. After consultation with our CMS clinical 
advisors, we believe that because of the nature of the services and the 
fact that both codes meet all criteria for the bypass list other than 
the minimum number of single bills, it is appropriate to add them to 
the bypass list. We note that, in prior years, we have added low volume 
services to the bypass list that are similar to requested additions, 
such as CPT codes for hyperthermia added to the CY 2010 bypass list in 
the CY 2010 OPPS/ASC final rule with comment period (74 FR 60329). 
Thus, for this CY 2011 OPPS/ASC final rule with comment period, we are 
adding CPT codes 77305 and 77310 to the bypass list.
    However, CPT code 77789 failed to meet both the ``natural'' single 
major claims criterion of 100 natural single procedure claims and 
greatly exceeded the maximum percentage of single claims with packaging 
criteria. Specifically, there were only 30 natural single procedure 
claims and 38.5 percent of the ``natural'' single procedure claims for 
CPT code 77789 had packaging and thus failed, by a significant amount, 
the 5 percent maximum allowable percent of claims with packaging. 
Therefore, we are not adding the code to the CY 2011 bypass list.
    We believe that the empirical criteria described above are 
transparent and clear, and explain the purpose of each criterion in 
detail. Moreover we make available our claims data for the public's use 
in assessing the bypass criteria or any other purpose. We believe the 
extremely detailed comments we receive on our proposals, such as the 
comments we received on CPT codes 93306 and 93307, demonstrate that the 
information we make public is fully sufficient for purposes of 
analyzing our proposed bypass list. In addition, we have a longstanding 
practice of adding or removing codes to or from the bypass list through 
analysis other than application of the empirical criteria. When we do 
this, we explain our rationale for adding or removing those codes from 
the bypass list, as we did with the addition of codes for additional 
hours of drug administration (71 FR 68117 through 68118), which did not 
meet the empirical criteria but which were added because otherwise we 
would have had very few claims on which to base the median costs of 
both initial and additional drug administration services.
    We always appreciate the empirical information that commenters 
submit regarding their suggested additions to the bypass list. However, 
we note that, due to the redistributive properties of the bypass list 
and our process for creating ``pseudo'' single procedure claims, we 
carefully consider the redistributive impact of additions to the bypass 
list on all HCPCS code and APC median costs. Future recommendations 
from the public for additions to the bypass list should consider the 
global changes to the bypass list in order to facilitate our evaluation 
of codes suggested for inclusion on the bypass list in the future.
    After consideration of the public comments we received, we are 
adopting as final the proposed ``pseudo'' single claims process and the 
final CY 2011 bypass list of 449 HCPCS codes, as displayed in Tables 1 
and 2 below. The list has been modified from the CY 2011 proposed list, 
with the removal of CPT code 93307 from the CY 2011 bypass list and the 
addition of CPT codes 77305 and 77310, as discussed above in this 
section.

Table 1--Final CY 2009 Bypass Codes for Creating ``Pseudo'' Single Procedure Claims for Calculating Median Costs
                                                for CY 2011 OPPS
----------------------------------------------------------------------------------------------------------------
                                                                                     ``Overlap
              CY 2009 HCPCS code                    CY 2009 Short descriptor      bypass codes''     Additions
----------------------------------------------------------------------------------------------------------------
11056.........................................  Trim skin lesions, 2 to 4.......  ..............  ..............
11057.........................................  Trim skin lesions, over 4.......  ..............  ..............
11300.........................................  Shave skin lesion...............  ..............  ..............
11301.........................................  Shave skin lesion...............  ..............  ..............
11719.........................................  Trim nail(s)....................  ..............  ..............
11720.........................................  Debride nail, 1-5...............  ..............  ..............
11721.........................................  Debride nail, 6 or more.........  ..............  ..............
11954.........................................  Therapy for contour defects.....  ..............  ..............
17000.........................................  Destruct premalg lesion.........  ..............  ..............
17003.........................................  Destruct premalg les, 2-14......  ..............  ..............
23600.........................................  Treat humerus fracture..........  ..............               *
29220.........................................  Strapping of low back...........  ..............  ..............
29530.........................................  Strapping of knee...............  ..............               *
31231.........................................  Nasal endoscopy, dx.............  ..............  ..............

[[Page 71816]]

 
31579.........................................  Diagnostic laryngoscopy.........  ..............  ..............
51798.........................................  Us urine capacity measure.......  ..............  ..............
53661.........................................  Dilation of urethra.............  ..............  ..............
54240.........................................  Penis study.....................  ..............  ..............
56820.........................................  Exam of vulva w/scope...........  ..............  ..............
57150.........................................  Treat vagina infection..........  ..............  ..............
57452.........................................  Exam of cervix w/scope..........  ..............               *
57454.........................................  Bx/curett of cervix w/scope.....  ..............               *
67820.........................................  Revise eyelashes................  ..............  ..............
69210.........................................  Remove impacted ear wax.........  ..............  ..............
69220.........................................  Clean out mastoid cavity........  ..............  ..............
70030.........................................  X-ray eye for foreign body......  ..............  ..............
70100.........................................  X-ray exam of jaw...............  ..............  ..............
70110.........................................  X-ray exam of jaw...............  ..............  ..............
70120.........................................  X-ray exam of mastoids..........  ..............  ..............
70130.........................................  X-ray exam of mastoids..........  ..............  ..............
70140.........................................  X-ray exam of facial bones......  ..............  ..............
70150.........................................  X-ray exam of facial bones......  ..............  ..............
70160.........................................  X-ray exam of nasal bones.......  ..............  ..............
70200.........................................  X-ray exam of eye sockets.......  ..............  ..............
70210.........................................  X-ray exam of sinuses...........  ..............  ..............
70220.........................................  X-ray exam of sinuses...........  ..............  ..............
70240.........................................  X-ray exam, pituitary saddle....  ..............               *
70250.........................................  X-ray exam of skull.............  ..............  ..............
70260.........................................  X-ray exam of skull.............  ..............  ..............
70320.........................................  Full mouth x-ray of teeth.......  ..............               *
70328.........................................  X-ray exam of jaw joint.........  ..............  ..............
70330.........................................  X-ray exam of jaw joints........  ..............  ..............
70336.........................................  Magnetic image, jaw joint.......               *  ..............
70355.........................................  Panoramic x-ray of jaws.........  ..............  ..............
70360.........................................  X-ray exam of neck..............  ..............  ..............
70370.........................................  Throat x-ray & fluoroscopy......  ..............  ..............
70371.........................................  Speech evaluation, complex......  ..............  ..............
70450.........................................  Ct head/brain w/o dye...........               *  ..............
70480.........................................  Ct orbit/ear/fossa w/o dye......               *  ..............
70486.........................................  Ct maxillofacial w/o dye........               *  ..............
70490.........................................  Ct soft tissue neck w/o dye.....               *  ..............
70544.........................................  Mr angiography head w/o dye.....               *  ..............
70547.........................................  Mr angiography neck w/o dye.....               *               *
70551.........................................  Mri brain w/o dye...............               *  ..............
71010.........................................  Chest x-ray.....................  ..............  ..............
71015.........................................  Chest x-ray.....................  ..............  ..............
71020.........................................  Chest x-ray.....................  ..............  ..............
71021.........................................  Chest x-ray.....................  ..............  ..............
71022.........................................  Chest x-ray.....................  ..............  ..............
71023.........................................  Chest x-ray and fluoroscopy.....  ..............  ..............
71030.........................................  Chest x-ray.....................  ..............  ..............
71034.........................................  Chest x-ray and fluoroscopy.....  ..............  ..............
71035.........................................  Chest x-ray.....................  ..............  ..............
71100.........................................  X-ray exam of ribs..............  ..............  ..............
71101.........................................  X-ray exam of ribs/chest........  ..............  ..............
71110.........................................  X-ray exam of ribs..............  ..............  ..............
71111.........................................  X-ray exam of ribs/chest........  ..............  ..............
71120.........................................  X-ray exam of breastbone........  ..............  ..............
71130.........................................  X-ray exam of breastbone........  ..............  ..............
71250.........................................  Ct thorax w/o dye...............               *  ..............
72010.........................................  X-ray exam of spine.............  ..............  ..............
72020.........................................  X-ray exam of spine.............  ..............  ..............
72040.........................................  X-ray exam of neck spine........  ..............  ..............
72050.........................................  X-ray exam of neck spine........  ..............  ..............
72052.........................................  X-ray exam of neck spine........  ..............  ..............
72069.........................................  X-ray exam of trunk spine.......  ..............  ..............
72070.........................................  X-ray exam of thoracic spine....  ..............  ..............
72072.........................................  X-ray exam of thoracic spine....  ..............  ..............
72074.........................................  X-ray exam of thoracic spine....  ..............  ..............
72080.........................................  X-ray exam of trunk spine.......  ..............  ..............
72090.........................................  X-ray exam of trunk spine.......  ..............  ..............
72100.........................................  X-ray exam of lower spine.......  ..............  ..............
72110.........................................  X-ray exam of lower spine.......  ..............  ..............
72114.........................................  X-ray exam of lower spine.......  ..............  ..............

[[Page 71817]]

 
72120.........................................  X-ray exam of lower spine.......  ..............  ..............
72125.........................................  Ct neck spine w/o dye...........               *  ..............
72128.........................................  Ct chest spine w/o dye..........               *  ..............
72131.........................................  Ct lumbar spine w/o dye.........               *  ..............
72141.........................................  Mri neck spine w/o dye..........               *  ..............
72146.........................................  Mri chest spine w/o dye.........               *  ..............
72148.........................................  Mri lumbar spine w/o dye........               *  ..............
72170.........................................  X-ray exam of pelvis............  ..............  ..............
72190.........................................  X-ray exam of pelvis............  ..............  ..............
72192.........................................  Ct pelvis w/o dye...............               *  ..............
72202.........................................  X-ray exam sacroiliac joints....  ..............  ..............
72220.........................................  X-ray exam of tailbone..........  ..............  ..............
73000.........................................  X-ray exam of collar bone.......  ..............  ..............
73010.........................................  X-ray exam of shoulder blade....  ..............  ..............
73020.........................................  X-ray exam of shoulder..........  ..............  ..............
73030.........................................  X-ray exam of shoulder..........  ..............  ..............
73050.........................................  X-ray exam of shoulders.........  ..............  ..............
73060.........................................  X-ray exam of humerus...........  ..............  ..............
73070.........................................  X-ray exam of elbow.............  ..............  ..............
73080.........................................  X-ray exam of elbow.............  ..............  ..............
73090.........................................  X-ray exam of forearm...........  ..............  ..............
73100.........................................  X-ray exam of wrist.............  ..............  ..............
73110.........................................  X-ray exam of wrist.............  ..............  ..............
73120.........................................  X-ray exam of hand..............  ..............  ..............
73130.........................................  X-ray exam of hand..............  ..............  ..............
73140.........................................  X-ray exam of finger(s).........  ..............  ..............
73200.........................................  Ct upper extremity w/o dye......               *  ..............
73218.........................................  Mri upper extremity w/o dye.....               *  ..............
73221.........................................  Mri joint upr extrem w/o dye....               *  ..............
73510.........................................  X-ray exam of hip...............  ..............  ..............
73520.........................................  X-ray exam of hips..............  ..............  ..............
73540.........................................  X-ray exam of pelvis & hips.....  ..............  ..............
73550.........................................  X-ray exam of thigh.............  ..............  ..............
73560.........................................  X-ray exam of knee, 1 or 2......  ..............  ..............
73562.........................................  X-ray exam of knee, 3...........  ..............  ..............
73564.........................................  X-ray exam, knee, 4 or more.....  ..............  ..............
73565.........................................  X-ray exam of knees.............  ..............  ..............
73590.........................................  X-ray exam of lower leg.........  ..............  ..............
73600.........................................  X-ray exam of ankle.............  ..............  ..............
73610.........................................  X-ray exam of ankle.............  ..............  ..............
73620.........................................  X-ray exam of foot..............  ..............  ..............
73630.........................................  X-ray exam of foot..............  ..............  ..............
73650.........................................  X-ray exam of heel..............  ..............  ..............
73660.........................................  X-ray exam of toe(s)............  ..............  ..............
73700.........................................  Ct lower extremity w/o dye......               *  ..............
73718.........................................  Mri lower extremity w/o dye.....               *  ..............
73721.........................................  Mri jnt of lwr extre w/o dye....               *  ..............
74000.........................................  X-ray exam of abdomen...........  ..............  ..............
74010.........................................  X-ray exam of abdomen...........  ..............  ..............
74020.........................................  X-ray exam of abdomen...........  ..............  ..............
74022.........................................  X-ray exam series, abdomen......  ..............  ..............
74150.........................................  Ct abdomen w/o dye..............               *  ..............
74210.........................................  Contrst x-ray exam of throat....  ..............  ..............
74220.........................................  Contrast x-ray, esophagus.......  ..............  ..............
74230.........................................  Cine/vid x-ray, throat/esoph....  ..............  ..............
74246.........................................  Contrst x-ray uppr gi tract.....  ..............  ..............
74247.........................................  Contrst x-ray uppr gi tract.....  ..............  ..............
74249.........................................  Contrst x-ray uppr gi tract.....  ..............  ..............
76100.........................................  X-ray exam of body section......  ..............  ..............
76510.........................................  Ophth us, b & quant a...........  ..............  ..............
76511.........................................  Ophth us, quant a only..........  ..............  ..............
76512.........................................  Ophth us, b w/non-quant a.......  ..............  ..............
76513.........................................  Echo exam of eye, water bath....  ..............  ..............
76514.........................................  Echo exam of eye, thickness.....  ..............  ..............
76516.........................................  Echo exam of eye................  ..............  ..............
76519.........................................  Echo exam of eye................  ..............  ..............
76536.........................................  Us exam of head and neck........  ..............  ..............
76645.........................................  Us exam, breast(s)..............  ..............  ..............
76700.........................................  Us exam, abdom, complete........               *  ..............
76705.........................................  Echo exam of abdomen............               *  ..............

[[Page 71818]]

 
76770.........................................  Us exam abdo back wall, comp....               *  ..............
76775.........................................  Us exam abdo back wall, lim.....               *  ..............
76776.........................................  Us exam k transpl w/Doppler.....               *  ..............
76801.........................................  Ob us < 14 wks, single fetus....  ..............  ..............
76805.........................................  Ob us >/= 14 wks, sngl fetus....  ..............  ..............
76811.........................................  Ob us, detailed, sngl fetus.....  ..............  ..............
76816.........................................  Ob us, follow-up, per fetus.....  ..............  ..............
76817.........................................  Transvaginal us, obstetric......  ..............  ..............
76830.........................................  Transvaginal us, non-ob.........  ..............  ..............
76856.........................................  Us exam, pelvic, complete.......               *  ..............
76857.........................................  Us exam, pelvic, limited........               *  ..............
76870.........................................  Us exam, scrotum................               *  ..............
76880.........................................  Us exam, extremity..............  ..............  ..............
76970.........................................  Ultrasound exam follow-up.......  ..............  ..............
76977.........................................  Us bone density measure.........  ..............  ..............
77072.........................................  X-rays for bone age.............  ..............  ..............
77073.........................................  X-rays, bone length studies.....  ..............  ..............
77074.........................................  X-rays, bone survey, limited....  ..............  ..............
77075.........................................  X-rays, bone survey complete....  ..............  ..............
77076.........................................  X-rays, bone survey, infant.....  ..............  ..............
77077.........................................  Joint survey, single view.......  ..............  ..............
77078.........................................  Ct bone density, axial..........  ..............  ..............
77079.........................................  Ct bone density, peripheral.....  ..............  ..............
77080.........................................  Dxa bone density, axial.........  ..............  ..............
77081.........................................  Dxa bone density/peripheral.....  ..............  ..............
77082.........................................  Dxa bone density, vert fx.......  ..............  ..............
77083.........................................  Radiographic absorptiometry.....  ..............  ..............
77084.........................................  Magnetic image, bone marrow.....  ..............  ..............
77300.........................................  Radiation therapy dose plan.....  ..............  ..............
77301.........................................  Radiotherapy dose plan, imrt....  ..............  ..............
77305.........................................  Teletx isodose plan simple......  ..............  ..............
77310.........................................  Teletx isodose plan intermediate  ..............  ..............
77315.........................................  Teletx isodose plan complex.....  ..............  ..............
77327.........................................  Brachytx isodose calc interm....  ..............  ..............
77331.........................................  Special radiation dosimetry.....  ..............  ..............
77336.........................................  Radiation physics consult.......  ..............  ..............
77370.........................................  Radiation physics consult.......  ..............  ..............
77401.........................................  Radiation treatment delivery....  ..............  ..............
77600.........................................  Hyperthermia treatment..........  ..............  ..............
77605.........................................  Hyperthermia treatment..........  ..............  ..............
77610.........................................  Hyperthermia treatment..........  ..............  ..............
78350.........................................  Bone mineral, single photon.....  ..............               *
80500.........................................  Lab pathology consultation......  ..............  ..............
80502.........................................  Lab pathology consultation......  ..............  ..............
85097.........................................  Bone marrow interpretation......  ..............  ..............
86510.........................................  Histoplasmosis skin test........  ..............  ..............
86850.........................................  RBC antibody screen.............  ..............  ..............
86870.........................................  RBC antibody identification.....  ..............  ..............
86880.........................................  Coombs test, direct.............  ..............  ..............
86885.........................................  Coombs test, indirect, qual.....  ..............  ..............
86886.........................................  Coombs test, indirect, titer....  ..............  ..............
86890.........................................  Autologous blood process........  ..............  ..............
86900.........................................  Blood typing, ABO...............  ..............  ..............
86901.........................................  Blood typing, Rh (D)............  ..............  ..............
86903.........................................  Blood typing, antigen screen....  ..............  ..............
86904.........................................  Blood typing, patient serum.....  ..............  ..............
86905.........................................  Blood typing, RBC antigens......  ..............  ..............
86906.........................................  Blood typing, Rh phenotype......  ..............  ..............
86930.........................................  Frozen blood prep...............  ..............  ..............
86970.........................................  RBC pretreatment................  ..............  ..............
86977.........................................  RBC pretreatment, serum.........  ..............  ..............
88104.........................................  Cytopath fl nongyn, smears......  ..............  ..............
88106.........................................  Cytopath fl nongyn, filter......  ..............  ..............
88107.........................................  Cytopath fl nongyn, sm/fltr.....  ..............  ..............
88108.........................................  Cytopath, concentrate tech......  ..............  ..............
88112.........................................  Cytopath, cell enhance tech.....  ..............  ..............
88160.........................................  Cytopath smear, other source....  ..............  ..............
88161.........................................  Cytopath smear, other source....  ..............  ..............
88162.........................................  Cytopath smear, other source....  ..............  ..............
88172.........................................  Cytopathology eval of fna.......  ..............  ..............

[[Page 71819]]

 
88173.........................................  Cytopath eval, fna, report......  ..............  ..............
88182.........................................  Cell marker study...............  ..............  ..............
88184.........................................  Flowcytometry/tc, 1 marker......  ..............  ..............
88185.........................................  Flowcytometry/tc, add-on........  ..............  ..............
88300.........................................  Surgical path, gross............  ..............  ..............
88302.........................................  Tissue exam by pathologist......  ..............  ..............
88304.........................................  Tissue exam by pathologist......  ..............  ..............
88305.........................................  Tissue exam by pathologist......  ..............  ..............
88307.........................................  Tissue exam by pathologist......  ..............  ..............
88311.........................................  Decalcify tissue................  ..............  ..............
88312.........................................  Special stains group 1..........  ..............  ..............
88313.........................................  Special stains group 2..........  ..............  ..............
88314.........................................  Histochemical stain add-on......  ..............               *
88321.........................................  Microslide consultation.........  ..............  ..............
88323.........................................  Microslide consultation.........  ..............  ..............
88325.........................................  Comprehensive review of data....  ..............  ..............
88331.........................................  Path consult intraop, 1 bloc....  ..............  ..............
88342.........................................  Immunohistochemistry............  ..............  ..............
88346.........................................  Immunofluorescent study.........  ..............  ..............
88347.........................................  Immunofluorescent study.........  ..............  ..............
88348.........................................  Electron microscopy.............  ..............  ..............
88358.........................................  Analysis, tumor.................  ..............  ..............
88360.........................................  Tumor immunohistochem/manual....  ..............  ..............
88361.........................................  Tumor immunohistochem/comput....  ..............  ..............
88365.........................................  Insitu hybridization (fish).....  ..............  ..............
88368.........................................  Insitu hybridization, manual....  ..............  ..............
89049.........................................  Chct for mal hyperthermia.......  ..............  ..............
89230.........................................  Collect sweat for test..........  ..............  ..............
89240.........................................  Pathology lab procedure.........  ..............  ..............
90472.........................................  Immunization admin, each add....  ..............  ..............
90474.........................................  Immune admin oral/nasal addl....  ..............  ..............
90801.........................................  Psy dx interview................  ..............  ..............
90802.........................................  Intac psy dx interview..........  ..............  ..............
90804.........................................  Psytx, office, 20-30 min........  ..............  ..............
90805.........................................  Psytx, off, 20-30 min w/e&m.....  ..............  ..............
90806.........................................  Psytx, off, 45-50 min...........  ..............  ..............
90807.........................................  Psytx, off, 45-50 min w/e&m.....  ..............  ..............
90808.........................................  Psytx, office, 75-80 min........  ..............  ..............
90809.........................................  Psytx, off, 75-80 min, w/e&m....  ..............  ..............
90810.........................................  Intac psytx, off, 20-30 min.....  ..............  ..............
90811.........................................  Intac psytx, 20-30 min, w/e&m...  ..............  ..............
90812.........................................  Intac psytx, off, 45-50 min.....  ..............  ..............
90816.........................................  Psytx, hosp, 20-30 min..........  ..............  ..............
90818.........................................  Psytx, hosp, 45-50 min..........  ..............  ..............
90826.........................................  Intac psytx, hosp, 45-50 min....  ..............  ..............
90845.........................................  Psychoanalysis..................  ..............  ..............
90846.........................................  Family psytx w/o patient........  ..............  ..............
90847.........................................  Family psytx w/patient..........  ..............  ..............
90853.........................................  Group psychotherapy.............  ..............  ..............
90857.........................................  Intac group psytx...............  ..............  ..............
90862.........................................  Medication management...........  ..............  ..............
92002.........................................  Eye exam, new patient...........  ..............  ..............
92004.........................................  Eye exam, new patient...........  ..............  ..............
92012.........................................  Eye exam established pat........  ..............  ..............
92014.........................................  Eye exam & treatment............  ..............  ..............
92020.........................................  Special eye evaluation..........  ..............  ..............
92025.........................................  Corneal topography..............  ..............  ..............
92060.........................................  Special eye evaluation..........  ..............               *
92081.........................................  Visual field examination(s).....  ..............  ..............
92082.........................................  Visual field examination(s).....  ..............  ..............
92083.........................................  Visual field examination(s).....  ..............  ..............
92135.........................................  Ophth dx imaging post seg.......  ..............  ..............
92136.........................................  Ophthalmic biometry.............  ..............  ..............
92225.........................................  Special eye exam, initial.......  ..............  ..............
92226.........................................  Special eye exam, subsequent....  ..............  ..............
92230.........................................  Eye exam with photos............  ..............  ..............
92240.........................................  Icg angiography.................  ..............  ..............
92250.........................................  Eye exam with photos............  ..............  ..............
92275.........................................  Electroretinography.............  ..............  ..............
92285.........................................  Eye photography.................  ..............  ..............

[[Page 71820]]

 
92286.........................................  Internal eye photography........  ..............  ..............
92520.........................................  Laryngeal function studies......  ..............  ..............
92541.........................................  Spontaneous nystagmus test......  ..............  ..............
92542.........................................  Positional nystagmus test.......  ..............               *
92546.........................................  Sinusoidal rotational test......  ..............  ..............
92548.........................................  Posturography...................  ..............  ..............
92552.........................................  Pure tone audiometry, air.......  ..............  ..............
92553.........................................  Audiometry, air & bone..........  ..............  ..............
92555.........................................  Speech threshold audiometry.....  ..............  ..............
92556.........................................  Speech audiometry, complete.....  ..............  ..............
92557.........................................  Comprehensive hearing test......  ..............  ..............
92567.........................................  Tympanometry....................  ..............  ..............
92582.........................................  Conditioning play audiometry....  ..............  ..............
92585.........................................  Auditor evoke potent, compre....  ..............  ..............
92603.........................................  Cochlear implt f/up exam 7 >....  ..............  ..............
92604.........................................  Reprogram cochlear implt 7 >....  ..............  ..............
92626.........................................  Eval aud rehab status...........  ..............  ..............
93005.........................................  Electrocardiogram, tracing......  ..............  ..............
93017.........................................  Cardiovascular stress test......  ..............  ..............
93225.........................................  ECG monitor/record, 24 hrs......  ..............  ..............
93226.........................................  ECG monitor/report, 24 hrs......  ..............  ..............
93231.........................................  Ecg monitor/record, 24 hrs......  ..............  ..............
93232.........................................  ECG monitor/report, 24 hrs......  ..............  ..............
93236.........................................  ECG monitor/report, 24 hrs......  ..............  ..............
93270.........................................  ECG recording...................  ..............  ..............
93271.........................................  Ecg/monitoring and analysis.....  ..............  ..............
93278.........................................  ECG/signal-averaged.............  ..............  ..............
93279.........................................  Pm device progr eval, sngl......  ..............               *
93280.........................................  Pm device progr eval, dual......  ..............               *
93281.........................................  Pm device progr eval, multi.....  ..............               *
93282.........................................  Icd device progr eval, 1 sngl...  ..............               *
93283.........................................  Icd device progr eval, dual.....  ..............               *
93284.........................................  Icd device progr eval, mult.....  ..............               *
93285.........................................  Ilr device eval progr...........  ..............               *
93288.........................................  Pm device eval in person........  ..............               *
93289.........................................  Icd device interrogate..........  ..............               *
93290.........................................  Icm device eval.................  ..............               *
93291.........................................  Ilr device interrogate..........  ..............               *
93292.........................................  Wcd device interrogate..........  ..............               *
93293.........................................  Pm phone r-strip device eval....  ..............               *
93296.........................................  Pm/icd remote tech serv.........  ..............               *
93306.........................................  Tte w/doppler, complete.........  ..............               *
93786.........................................  Ambulatory BP recording.........  ..............  ..............
93788.........................................  Ambulatory BP analysis..........  ..............  ..............
93797.........................................  Cardiac rehab...................  ..............  ..............
93798.........................................  Cardiac rehab/monitor...........  ..............  ..............
93875.........................................  Extracranial study..............  ..............  ..............
93880.........................................  Extracranial study..............  ..............  ..............
93882.........................................  Extracranial study..............  ..............  ..............
93886.........................................  Intracranial study..............  ..............  ..............
93888.........................................  Intracranial study..............  ..............  ..............
93922.........................................  Extremity study.................  ..............  ..............
93923.........................................  Extremity study.................  ..............  ..............
93924.........................................  Extremity study.................  ..............  ..............
93925.........................................  Lower extremity study...........  ..............  ..............
93926.........................................  Lower extremity study...........  ..............  ..............
93930.........................................  Upper extremity study...........  ..............  ..............
93931.........................................  Upper extremity study...........  ..............  ..............
93965.........................................  Extremity study.................  ..............  ..............
93970.........................................  Extremity study.................  ..............  ..............
93971.........................................  Extremity study.................  ..............  ..............
93975.........................................  Vascular study..................  ..............  ..............
93976.........................................  Vascular study..................  ..............  ..............
93978.........................................  Vascular study..................  ..............  ..............
93979.........................................  Vascular study..................  ..............  ..............
93990.........................................  Doppler flow testing............  ..............  ..............
94015.........................................  Patient recorded spirometry.....  ..............  ..............
94690.........................................  Exhaled air analysis............  ..............  ..............
95115.........................................  Immunotherapy, one injection....  ..............  ..............
95117.........................................  Immunotherapy injections........  ..............  ..............

[[Page 71821]]

 
95165.........................................  Antigen therapy services........  ..............  ..............
95250.........................................  Glucose monitoring, cont........  ..............  ..............
95805.........................................  Multiple sleep latency test.....  ..............  ..............
95806.........................................  Sleep study unatt & resp efft...  ..............  ..............
95807.........................................  Sleep study, attended...........  ..............  ..............
95808.........................................  Polysomnography, 1-3............  ..............  ..............
95812.........................................  Eeg, 41-60 minutes..............  ..............  ..............
95813.........................................  Eeg, over 1 hour................  ..............  ..............
95816.........................................  Eeg, awake and drowsy...........  ..............  ..............
95819.........................................  Eeg, awake and asleep...........  ..............  ..............
95822.........................................  Eeg, coma or sleep only.........  ..............  ..............
95869.........................................  Muscle test, thor paraspinal....  ..............  ..............
95872.........................................  Muscle test, one fiber..........  ..............  ..............
95900.........................................  Motor nerve conduction test.....  ..............  ..............
95921.........................................  Autonomic nerv function test....  ..............  ..............
95925.........................................  Somatosensory testing...........  ..............  ..............
95926.........................................  Somatosensory testing...........  ..............  ..............
95930.........................................  Visual evoked potential test....  ..............  ..............
95950.........................................  Ambulatory eeg monitoring.......  ..............  ..............
95953.........................................  EEG monitoring/computer.........  ..............  ..............
95970.........................................  Analyze neurostim, no prog......  ..............  ..............
95972.........................................  Analyze neurostim, complex......  ..............  ..............
95974.........................................  Cranial neurostim, complex......  ..............  ..............
95978.........................................  Analyze neurostim brain/1h......  ..............  ..............
96000.........................................  Motion analysis, video/3d.......  ..............  ..............
96101.........................................  Psycho testing by psych/phys....  ..............  ..............
96111.........................................  Developmental test, extend......  ..............  ..............
96116.........................................  Neurobehavioral status exam.....  ..............  ..............
96118.........................................  Neuropsych tst by psych/phys....  ..............  ..............
96119.........................................  Neuropsych testing by tec.......  ..............  ..............
96150.........................................  Assess hlth/behave, init........  ..............  ..............
96151.........................................  Assess hlth/behave, subseq......  ..............  ..............
96152.........................................  Intervene hlth/behave, indiv....  ..............  ..............
96153.........................................  Intervene hlth/behave, group....  ..............  ..............
96361.........................................  Hydrate iv infusion, add-on.....  ..............               *
96366.........................................  Ther/proph/diag iv inf addon....  ..............               *
96367.........................................  Tx/proph/dg addl seq iv inf.....  ..............               *
96370.........................................  Sc ther infusion, addl hr.......  ..............               *
96371.........................................  Sc ther infusion, reset pump....  ..............               *
96375.........................................  Tx/pro/dx inj new drug addon....  ..............               *
96402.........................................  Chemo hormon antineopl sq/im....  ..............  ..............
96411.........................................  Chemo, iv push, addl drug.......  ..............  ..............
96415.........................................  Chemo, iv infusion, addl hr.....  ..............  ..............
96417.........................................  Chemo iv infus each addl seq....  ..............  ..............
96423.........................................  Chemo ia infuse each addl hr....  ..............  ..............
96900.........................................  Ultraviolet light therapy.......  ..............  ..............
96910.........................................  Photochemotherapy with UV-B.....  ..............  ..............
96912.........................................  Photochemotherapy with UV-A.....  ..............  ..............
96913.........................................  Photochemotherapy, UV-A or B....  ..............  ..............
96920.........................................  Laser tx, skin < 250 sq cm......  ..............  ..............
98925.........................................  Osteopathic manipulation........  ..............  ..............
98926.........................................  Osteopathic manipulation........  ..............  ..............
98927.........................................  Osteopathic manipulation........  ..............  ..............
98940.........................................  Chiropractic manipulation.......  ..............  ..............
98941.........................................  Chiropractic manipulation.......  ..............  ..............
98942.........................................  Chiropractic manipulation.......  ..............  ..............
99203.........................................  Office/outpatient visit, new....  ..............               *
99204.........................................  Office/outpatient visit, new....  ..............  ..............
99212.........................................  Office/outpatient visit, est....  ..............  ..............
99213.........................................  Office/outpatient visit, est....  ..............  ..............
99214.........................................  Office/outpatient visit, est....  ..............  ..............
99241.........................................  Office consultation.............  ..............  ..............
99242.........................................  Office consultation.............  ..............  ..............
99243.........................................  Office consultation.............  ..............  ..............
99244.........................................  Office consultation.............  ..............  ..............
99245.........................................  Office consultation.............  ..............  ..............
99406.........................................  Behav chng smoking 3-10 min.....  ..............               *
99407.........................................  Behav chng smoking > 10 min.....  ..............               *
0144T.........................................  CT heart wo dye; qual calc......  ..............  ..............
G0008.........................................  Admin influenza virus vac.......  ..............  ..............

[[Page 71822]]

 
G0101.........................................  CA screen; pelvic/breast exam...  ..............  ..............
G0127.........................................  Trim nail(s)....................  ..............  ..............
G0130.........................................  Single energy x-ray study.......  ..............  ..............
G0166.........................................  Extrnl counterpulse, per tx.....  ..............  ..............
G0175.........................................  OPPS Service,sched team conf....  ..............  ..............
G0248.........................................  Demonstrate use home inr mon....  ..............               *
G0249.........................................  Provide INR test mater/equip....  ..............               *
G0340.........................................  Robt lin-radsurg fractx 2-5.....  ..............  ..............
G0365.........................................  Vessel mapping hemo access......  ..............  ..............
G0389.........................................  Ultrasound exam AAA screen......  ..............  ..............
G0390.........................................  Trauma Respons w/hosp criti.....  ..............  ..............
G0402.........................................  Initial preventive exam.........  ..............               *
G0404.........................................  EKG tracing for initial prev....  ..............               *
M0064.........................................  Visit for drug monitoring.......  ..............  ..............
Q0091.........................................  Obtaining screen pap smear......  ..............  ..............
----------------------------------------------------------------------------------------------------------------


 Table 2--HCPCS Codes Removed From the CY 2011 Bypass List Because They
                      Were Deleted Prior to CY 2009
------------------------------------------------------------------------
            HCPCS Code                     HCPCS Short descriptor
------------------------------------------------------------------------
90761.............................  Hydrate iv infusion, add-on.
90766.............................  Ther/proph/dg iv inf, add-on.
90767.............................  Tx/proph/dg addl seq iv inf.
90770.............................  Sc ther infusion, addl hr.
90771.............................  Sc ther infusion, reset pump.
90775.............................  Tx/pro/dx inj new drug add-on.
93727.............................  Analyze ilr system.
93731.............................  Analyze pacemaker system.
93732.............................  Analyze pacemaker system.
93733.............................  Telephone analy, pacemaker.
93734.............................  Analyze pacemaker system.
93735.............................  Analyze pacemaker system.
93736.............................  Telephonic analy, pacemaker.
93741.............................  Analyze ht pace device sngl.
93742.............................  Analyze ht pace device sngl
93743.............................  Analyze ht pace device dual.
93744.............................  Analyze ht pace device dual.
G0344.............................  Initial preventive exam.
G0367.............................  EKG tracing for initial prev.
G0376.............................  Smoke/tobacco counseling >10.
------------------------------------------------------------------------

c. Calculation and Use of Cost-to-Charge Ratios (CCRs)
    In the CY 2011 OPPS/ASC proposed rule (75 FR 46195), we proposed to 
continue for CY 2011 to use the hospital-specific overall ancillary and 
departmental CCRs to convert charges to estimated costs through 
application of a revenue code-to-cost center crosswalk. To calculate 
the APC median costs on which the proposed CY 2011 APC payment rates 
were based, we calculated hospital-specific overall ancillary CCRs and 
hospital-specific departmental CCRs for each hospital for which we had 
CY 2009 claims data from the most recent available hospital cost 
reports, in most cases, cost reports beginning in CY 2008. For the CY 
2011 OPPS proposed rates, we used the set of claims processed during CY 
2009. We applied the hospital-specific CCR to the hospital's charges at 
the most detailed level possible, based on a revenue code-to-cost 
center crosswalk that contains a hierarchy of CCRs used to estimate 
costs from charges for each revenue code. That crosswalk is available 
for review and continuous comment on the CMS Web site at: http://www.cms.gov/HospitalOutpatientPPS/03_crosswalk.asp#TopOfPage.
    To ensure the completeness of the revenue code-to-cost center 
crosswalk, we reviewed changes to the list of revenue codes for CY 2009 
(the year of the claims data we used to calculate the CY 2011 OPPS 
proposed payment rates). For CY 2009, there were several changes to 
these revenue codes. The National Uniform Billing Committee (NUBC) is 
the organization that is responsible for the data specifications for 
the Uniform Bill (currently the UB-04). For CY 2009, the NUBC changed 
the title of revenue code series 076X from ``Specialty Room--Treatment/
Observation Room'' to ``Specialty Services'' and changed the title of 
subclassification revenue code 0762 from ``Observation Room'' to 
``Observation Hours.'' We did not propose to change the revenue code-
to-cost center crosswalk as a result of this change because we believe 
that hospitals have historically reported charges for observation based 
on hours of care and that this change reflects existing practices. In 
addition, for CY 2009, NUBC removed a note that indicated that 
subcategory revenue codes 0912, Behavioral Health Treatment/Services 
(also see 091X, an extension of 090X), and 0913, Behavioral Health 
Treatment/Services--Extension of 090X, were designed as zero-billed 
revenue codes (that is, no dollar in the amount field). This change has 
no impact on the revenue code-to-cost center crosswalk. We note that 
the addition of revenue codes with effective dates in CY 2010 is not 
relevant to this process because the revenue codes were not applicable 
to claims for services furnished during CY 2009.
    We calculated CCRs for the standard and nonstandard cost centers 
accepted by the electronic cost report database. In general, the most 
detailed level at which we calculated CCRs was the hospital-specific 
departmental level. For a discussion of the hospital-specific overall 
ancillary CCR calculation, we refer readers to the CY 2007 OPPS/ASC 
final rule with comment period (71 FR 67983 through 67985). One 
longstanding exception to this general methodology for calculation of 
CCRs used for converting charges to costs on each claim is the 
calculation of median blood costs, as discussed in section II.A.2.d.(2) 
of the proposed rule and this final rule with comment period and which 
has been our standard policy since the CY 2005 OPPS.
    For the CCR calculation process, we used the same general approach 
that we used in developing the final APC rates for CY 2007 and 
thereafter, using the revised CCR calculation that excluded the costs 
of paramedical education programs and weighted the outpatient charges 
by the volume of outpatient services furnished by the hospital. We 
refer readers to the CY 2007 OPPS/ASC final rule with comment period 
for more information (71 FR 67983 through 67985). We first limited the 
population of cost reports to only those for hospitals that filed 
outpatient claims in CY 2009 before determining whether the CCRs for 
such hospitals were valid.
    We then calculated the CCRs for each cost center and the overall 
ancillary CCR for each hospital for which we had claims data. We did 
this using hospital-specific data from the Hospital Cost

[[Page 71823]]

Report Information System (HCRIS). We used the most recent available 
cost report data, in most cases, cost reports with cost reporting 
periods beginning in CY 2007. For the proposed rule, we used the most 
recently submitted cost reports to calculate the CCRs to be used to 
calculate median costs for the proposed CY 2011 OPPS payment rates. If 
the most recent available cost report was submitted but not settled, we 
looked at the last settled cost report to determine the ratio of 
submitted to settled cost using the overall ancillary CCR, and we then 
adjusted the most recent available submitted but not settled cost 
report using that ratio. We then calculated both an overall ancillary 
CCR and cost center-specific CCRs for each hospital. We used the 
overall ancillary CCR referenced in section II.A.1.c. of the proposed 
rule for all purposes that require use of an overall ancillary CCR.
    Since the implementation of the OPPS, some commenters have raised 
concerns about potential bias in the OPPS cost-based weights due to 
``charge compression,'' which is the practice of applying a lower 
charge markup to higher-cost services and a higher charge markup to 
lower-cost services. As a result, the cost-based weights may reflect 
some aggregation bias, undervaluing high-cost items and overvaluing 
low-cost items when an estimate of average markup, embodied in a single 
CCR, is applied to items of widely varying costs in the same cost 
center.
    To explore this issue, in August 2006, we awarded a contract to RTI 
International (RTI) to study the effects of charge compression in 
calculating the IPPS cost-based relative weights, particularly with 
regard to the impact on inpatient diagnosis-related group (DRG) 
payments, and to consider methods to better capture the variation in 
cost and charges for individual services when calculating costs for the 
IPPS relative weights across services in the same cost center. RTI 
issued a report in March 2007 with its findings on charge compression, 
which is available on the CMS Web site at: http://www.cms.gov/reports/
downloads/Dalton.pdf. Although this report was focused largely on 
charge compression in the context of the IPPS cost-based relative 
weights, because several of the findings were relevant to the OPPS, we 
discussed that report in the CY 2008 OPPS/ASC proposed rule (72 FR 
42641 through 42643) and discussed those findings again in the CY 2008 
OPPS/ASC final rule with comment period (72 FR 66599 through 66602).
    In August 2007, we contracted with RTI to evaluate the cost 
estimation process for the OPPS relative weights because its 2007 
report had concentrated on IPPS DRG cost-based relative weights. The 
results of RTI's analyses had implications for both the OPPS APC cost-
based relative weights and the IPPS MS-DRG (Medicare severity) cost-
based relative weights. The RTI final report can be found on RTI's Web 
site at: http://www.rti.org/reports/cms/HHSM-500-2005-0029I/PDF/
Refining_Cost_to_Charge_Ratios_200807_Final.pdf. For a complete 
discussion of the RTI recommendations, public comments, and our 
responses, we refer readers to the CY 2009 OPPS/ASC final rule with 
comment period (73 FR 68519 through 68527).
    We addressed the RTI finding that there was aggregation bias in 
both the IPPS and the OPPS cost estimation of expensive and inexpensive 
medical supplies in the FY 2009 IPPS final rule. Specifically, we 
finalized our proposal for both the OPPS and IPPS to create one cost 
center for ``Medical Supplies Charged to Patients'' and one cost center 
for ``Implantable Devices Charged to Patients,'' essentially splitting 
the then current CCR for ``Medical Supplies and Equipment'' into one 
CCR for low-cost medical supplies and another CCR for high-cost 
implantable devices in order to mitigate some of the effects of charge 
compression. Accordingly, in Transmittal 20 of the Provider 
Reimbursement Manual, Part II (PRM-II), Chapter 36, Form CMS-2552-96, 
which was issued in July 2009, we created a new subscripted Line 55.01 
on Worksheet A for the ``Implantable Devices Charged to Patients'' cost 
center. This new subscripted cost center, placed under the standard 
line for ``Medical Supplies Charged to Patients,'' is available for use 
for cost reporting periods beginning on or after May 1, 2009. A 
subscripted cost center is the addition of a separate new cost center 
line and description which bears a logical relationship to the standard 
cost center line and is located immediately following a standard cost 
center line. Subscripting a cost center line adds flexibility and cost 
center expansion capability to the cost report. For example, Line 55 of 
Worksheet A on Form CMS 2552-96 (the Medicare hospital cost report) is 
``Medical Supplies Charged to Patients.'' The additional cost center, 
which isolates the costs of ``Implantable Medical Supplies Charged to 
Patients'', was created by adding subscripted Line 55.01 to Worksheet 
A.
    Because there is approximately a 3-year lag in the availability of 
cost report data for IPPS and OPPS ratesetting purposes in a given 
calendar year, we believe we will be able to use data from the revised 
cost report form to estimate costs from charges for implantable devices 
for the CY 2013 OPPS relative weights. For a complete discussion of the 
rationale for the creation of the new cost center for ``Implantable 
Devices Charged to Patients,'' public comments, and our responses, we 
refer readers to the FY 2009 IPPS final rule (73 FR 48458 through 
45467).
    In the CY 2009 OPPS/ASC final rule with comment period, we 
indicated that we would be making some OPPS-specific changes in 
response to the RTI report recommendations. Specifically, these changes 
included modifications to the cost reporting software and the addition 
of three new nonstandard cost centers. With regard to modifying the 
cost reporting preparation software in order to offer additional 
descriptions for nonstandard cost centers to improve the accuracy of 
reporting for nonstandard cost centers, we indicated that the change 
would be made for the next release of the cost report software. These 
changes have been made to the cost reporting software with the 
implementation of CMS Transmittal 21, under Chapter 36 of the Provider 
Reimbursement Manual--Part II, available online at http://www.cms.hhs.gov/Manuals/PBM/, which is effective for cost reporting 
periods ending on or after October 1, 2009.
    We also indicated that we intended to add new nonstandard cost 
centers for Cardiac Rehabilitation, Hyperbaric Oxygen Therapy, and 
Lithotripsy. We note that in January 2010, CMS issued Transmittal 21 
which updated the PRM-II, Chapter 36, Form CMS-2552-96. One of the 
updates in this transmittal established nonstandard cost centers for 
Cardiac Rehabilitation, Hyperbaric Oxygen Therapy, and Lithotripsy for 
use on Worksheet A. These three new nonstandard cost centers are now 
available for cost reporting periods ending on or after October 1, 
2009.
    Furthermore, we noted in the FY 2010 IPPS/LTCH PPS final rule (74 
FR 43781 through 43782) that we were updating the cost report form to 
eliminate outdated requirements, in conjunction with the Paperwork 
Reduction Act (PRA), and that we had proposed actual changes to the 
cost reporting form, the attending cost reporting software, and the 
cost report instructions in Chapters 36 and 40 of the PRM-II. The new 
draft hospital cost report Form CMS-2552-10

[[Page 71824]]

was published in the Federal Register on July 2, 2009, and was subject 
to a 60-day review and comment period, which ended on August 31, 2009. 
We received numerous comments on the draft hospital cost report Form 
CMS-2552-10, specifically regarding the creation of new cost centers 
from which data might be used in the OPPS cost-based relative weights 
calculation. We proposed to create new standard cost centers for 
Computed Tomography (CT), Magnetic Resonance Imaging (MRI), and Cardiac 
Catheterization in Form CMS-2552-10. We also stated that if these 
standard cost centers are finalized, when the data become available, we 
would analyze the cost and charge data to determine if it is 
appropriate to use those data to create distinct CCRs from these cost 
centers in setting the relative weights. For a discussion of these cost 
centers, we refer readers to the FY 2011 IPPS/LTCH PPS final rule (75 
FR 50075 through 50080). Comments will be addressed in detail in the 
Federal Register notice that will finalize Form CMS-2552-10. The 
revised draft of hospital cost report Form CMS-2552-10 went on public 
display on April 23, 2010, and appeared in the Federal Register on 
April 30, 2010 (75 FR 22810) with a 30-day public comment period. The 
public comment period ended on June 1, 2010. We believe that improved 
cost report software, the incorporation of new standard and nonstandard 
cost centers, and the elimination of outdated requirements will improve 
the accuracy of the cost data contained in the electronic cost report 
data files and, therefore, the accuracy of our cost estimation 
processes for the OPPS relative weights. We will continue our standard 
practice of examining ways in which we can improve the accuracy of our 
cost estimation processes.
    Comment: One commenter noted that Medicare cost report data show 
that there is still much confusion about how hospitals should report 
the costs of large imaging equipment. Consequently, the commenter 
recommended that CMS delay implementation of the new CT and MRI cost 
center data until the cost reports reflect at least 90 percent of CT 
and MRI capital costs, based on a comparison to industry average 
equipment purchases. Some commenters requested that CMS delay 
establishing the new standard cost centers for CT and MRI until the 
causes of the associated payment distortions are understood and cost 
reporting is improved to more properly allocate large capital costs. 
The commenters requested more careful analysis of the impact of 
creating the cost centers because of the payment impacts on other 
Medicare payment systems. Several commenters encouraged CMS to continue 
monitoring the reporting of CT and MRI capital costs over the next few 
years. Some commenters recommended that CMS provide explicit, 
unambiguous guidance to hospitals on how to improve allocation of the 
large capital costs of imaging equipment directly to the new MRI or CT 
cost centers. Several commenters supported the decision to establish a 
standard cost center for cardiac catheterization but did not support 
the creation of cost centers for CT and MRI. Other commenters asked 
that CMS ensure that all hospitals are fully educated about the cost 
center requirements, ensure that the cost centers are implemented in a 
timely manner, and validate the accuracy of the data produced by the 
new cost centers to ensure that they are correct and result in more 
accurate ratesetting. They did not support use of the resulting cost 
center data at the departmental level for ratesetting until after CMS 
has produced information on the impact of the use of such data.
    Response: We understand the commenters' statements regarding the 
challenges and difficulties in appropriately reporting the cost and 
charge data accurately for these standard cost centers. We responded to 
these concerns in the FY 2011 IPPS/LTCH final rule, including the 
treatment of CT and MRI equipment costs as ``major moveable equipment'' 
rather than as a ``building equipment cost,'' our goal of obtaining 
more accurate data in creating these new standard cost centers, the 
application of these standard cost centers only for those hospitals who 
maintain distinct departments or accounts in their internal accounting 
systems for CT scanning, MRI or cardiac catheterization, and other 
concerns (75 FR 50076 through 50080). However, we note that hospitals 
have been responsible for properly reporting the cost of the equipment 
and facilities that are necessary to furnish services for the many 
years since the inception of the Medicare program and that the creation 
of cost centers for CT, MRI, and cardiac rehabilitation does not alter 
the fundamental principles of cost reporting to which hospitals have 
been and remain bound and for which they should follow the instructions 
in the Medicare Provider Reimbursement Manual.
    In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50080), we finalized 
a policy of establishing standard cost centers for CT scanning, MRI 
scans, and cardiac catheterization. This policy required hospitals that 
furnish these services and maintain distinct departments or accounts in 
their internal accounting systems for them to report the costs and 
charges under the new cost centers on the revised Medicare cost report 
Form CMS 2552-10 for cost report periods beginning on or after May 1, 
2010. We established these standard cost centers because we believe 
that we should collect cost and charge data for these areas, and use 
those data to assess the resulting CCRs specific to CT scanning and MRI 
services as a possible means of eliminating aggregation bias for these 
and other radiology services in the IPPS and the OPPS. We believe that 
establishing these standard cost centers is necessary to improving the 
accuracy of estimating costs for imaging services and will allow us to 
perform the impact assessment that some commenters want us to do.
    In the FY 2011 IPPS/LTCH PPS proposed rule (75 FR 23880) and the CY 
2011 OPPS/ASC proposed rule (75 FR 46196), we noted that there is 
typically a 3-year lag between the availability of the cost report data 
that we use to calculate the relative weights both under the IPPS and 
the OPPS and a given fiscal or calendar year, and therefore the data 
from the standard cost centers for CT scans, MRI, and cardiac 
catheterization respectively, should they be finalized, would not be 
available for possible use in calculating the relative weights earlier 
than 3 years after Form CMS-2552-10 becomes available. At that time, we 
would analyze the data and determine if it is appropriate to use those 
data to create distinct CCRs from these cost centers for use in the 
relative weights for the respective payment systems. Therefore, we wish 
to reassure the commenters that there is no need for immediate concern 
regarding possible negative payment impacts on MRI and CT scans under 
the IPPS and the OPPS. We will first thoroughly analyze and run impacts 
on the data and provide the public with the opportunity to comment, as 
usual, before distinct CCRs for MRI and CT scans would be finalized for 
use in the calculation of the relative weights. Our decision to 
finalize our proposal regarding cost centers for these services is only 
the first step to a longer process during which we will continue to 
consider public comment.
    Comment: One commenter expressed concern over potential payment 
changes for cryoablation probes as a result of the cost center creation 
of ``Implantable Devices Charged to Patients'' and how hospitals bill 
for them. The commenter stated that claims data show hospitals 
typically billing for cryoablation probes using revenue code 0272 
(Medical/

[[Page 71825]]

Surgical Supplies; Sterile Supplies) rather than revenue code 0278 
(Medical/Surgical Supplies; Other Implants). The commenter requested 
that interim payment measures regarding how the rates are calculated be 
considered until the data demonstrates appropriate revenue assignment 
of the devices into revenue code 0278, suggesting that, in the event 
that payment for the probes decreases, hospitals may elect not to 
provide the service.
    Response: In the FY 2009 IPPS final rule (73 FR 48458 through 
48467), we explained in detail the reasoning behind the development of 
the cost center split for the ``Medical Supplies Charged to Patients'' 
cost center and our decision to ultimately have hospitals use the 
American Hospital Association's National Uniform Billing Committee 
(NUBC) revenue codes to determine what would be reported in the 
``Medical Supplies Charged to Patients'' and the ``Implantable Devices 
Charged to Patients'' cost centers. In that discussion, we noted that 
while we require that the device broadly be considered implantable to 
have its costs and charges included in the new ``Implantable Devices 
Charged to Patients'' cost center, our final policy did not require the 
device to remain in the patient at discharge (73 FR 48462 through 
48463). In response to comments on our proposal to create the new cost 
center in the FY 2009 IPPS final rule, we did define the new 
``Implantable Devices Charged to Patients'' cost center by the revenue 
codes that we believe would map to this cost center to facilitate ease 
of reporting by hospitals. We note that revenue code definitions are 
established by the NUBC, and we fully expect hospitals to follow 
existing guidelines regarding revenue code use. As we stated in the CY 
2010 OPPS/ASC final rule with comment period, with regard to reporting 
cryoablation probes, we do not believe that the current NUBC definition 
of revenue code 0278 (Medical/Surgical Supplies and Devices (also see 
062x, an extension of 027x); Other implants (a)) precludes reporting 
hospital charges for cryoablation probes under this revenue code (74 FR 
60344). Therefore, we believe hospitals can report charges for 
cryoablation probes under the revenue code 0278 using the definitions 
in the official UB-04 Data Specifications Manual.
    In the FY 2009 IPPS final rule, we noted that using existing 
revenue codes and definitions as they have been currently established 
by the NUBC made sense, as the definitions have been in place for some 
time and are used across all payors (73 FR 48461). Further, we noted 
that that methodology and the accuracy of the relative weights are 
heavily dependent upon hospitals' reporting practices. Nothing 
precludes a hospital that currently reports charges for cryoablation 
probes under revenue code 0272 from changing the revenue code under 
which it reports charges for cryoablation probes to revenue code 0278 
or otherwise, if it determines that doing so would result in more 
appropriate payment for the service.
    While CMS is responsible for issuing cost reporting instructions 
that are clear, hospitals are responsible for ensuring that their cost 
reporting and billing practices are consistent and conform to Medicare 
policy. We fully expect providers to follow existing guidelines 
regarding revenue code use, and we see no basis on which to make 
payment on a basis other than the standard OPPS methodology. Therefore, 
we are not adopting an interim payment measure in the median cost 
calculation of cryoablation probes.
    Comment: One commenter requested that CMS acknowledge current 
payment inaccuracies for Magnetoencephalography (MEG), also known as 
Magnetic Source Imaging. The commenter asked CMS to create a cost 
center on the Medicare cost report that would be used solely to capture 
hospitals' costs of MEG and indicated that the NUBC had approved a 
request for a dedicated revenue code for the reporting of charges for 
MEG. The commenter argued that if CMS would create a cost center for 
the costs of MEG from which a specific CCR could be developed for 
application to MEG charges, the resulting median cost would be a more 
accurate reflection of the cost of MEG and would, therefore, result in 
more appropriate payment. The commenter suggested that, based on 
previous experience where subscripted lines created for MEG identified 
significantly different CCRs for the service, there was evidence that 
the current methodology of calculating payment for MEG was flawed.
    Response: We disagree that a new cost center is needed to capture 
the costs of MEG. Over the past several years, we have either proposed 
or discussed potential new standard and nonstandard cost centers for 
the Medicare hospital cost report in our 2008, 2009, and 2010 hospital 
inpatient and outpatient final rules. All of the potential cost centers 
that we have discussed for addition to the cost report, whether 
standard or nonstandard, have demonstrated volume in the electronic 
hospital cost report data. In its July 2008 report on using cost report 
data to estimate costs for both the IPPS and OPPS (http://www.rti.org/reports/cms/), RTI International examined the electronic hospital cost 
report database and recommended new standard and nonstandard cost 
centers on the basis of reporting volume across hospitals. RTI 
International typically identified no fewer than 200 institutions 
reporting a specific service category, such as cardiac catheterization 
or cardiac rehabilitation, in subscripted or other lines for the new 
nonstandard and standard cost centers. Historically, our rationale for 
adding official nonstandard cost centers to the cost report has been at 
the request of Medicare contractors experiencing a significant volume 
of requests for a cost center for a specific type of service.
    In contrast, the volume of MEG services is extremely low. In the 
hospital outpatient CY 2010 OPPS claims data, hospitals reported 131 
units of MEG spread among the three CPT codes for MEG among the three 
CPT codes for MEG: 52 units of CPT code 95965 (Magnetoencephalography 
(MEG), recording and analysis; for spontaneous brain magnetic activity 
(e.g. epileptic cerebral cortex localization)); 39 units of CPT code 
95966 (Magnetoencephalography (MEG), recording and analysis; for 
spontaneous brain magnetic activity (e.g. epileptic cerebral cortex 
localization) for evoked magnetic fields, single modality (e.g. 
sensory, motor, language or visual cortex localization)); and 40 units 
of CPT code 95967 (Magnetoencephalography (MEG), recording and 
analysis; for spontaneous brain magnetic activity (e.g. epileptic 
cerebral cortex localization), for evoked magnetic fields, each 
additional modality (e.g. sensory, motor language, or visual cortex 
localization (List separately in addition to code for primary 
procedure))). This continues the pattern of low volumes of the total of 
the 3 MEG codes that have been reported in the outpatient setting since 
the creation of the codes in CY 2005 (39 in CY 2005, 75 in CY 2006, 102 
units in CY 2007, 75 units in 2008, 131 units in 2009). Moreover in CY 
2009, only 13 hospitals reported CPT code 95965, the highest volume of 
the 3 MEG codes. We do not believe that it is necessary to create a 
cost center for a service for which so few providers furnish so few 
services in a year. We recognize that our claims data show only 
Medicare hospital outpatient billings and that there are likely to be 
more MEG services that are furnished to Medicare beneficiaries who are 
in covered inpatient stays and to patients who are not Medicare 
beneficiaries. However,

[[Page 71826]]

the extremely low volume of claims for MEG services furnished to 
Medicare beneficiaries in the hospital outpatient setting and the 
extremely low number of hospitals that report these codes relative to 
the volumes we typically have considered in adding both standard and 
nonstandard cost centers to the cost report lead us to conclude that a 
specific cost center for MEG is not justified at this time.
    After consideration of the public comments we received, we are 
finalizing our CY 2011 proposal, without modification, to continue to 
assign CPT code 95965 (which has a CPT level median of approximately 
$2,521) to APC 0067, with a final CY 2010 APC median cost of 
approximately $3,272, on which payment will be based, and to continue 
to assign CPT codes 95966 (which has a CPT level median of 
approximately $1,632) and 96967 (which has a CPT level median of 
approximately $1,415) to APC 0065, with a final CY 2010 APC median cost 
of approximately $967, on which the payment will be based.
2. Data Development Process and Calculation of Median Costs
    In this section of this final rule with comment period, we discuss 
the use of claims to calculate final OPPS payment rates for CY 2011. 
The hospital OPPS page on the CMS Web site on which this final rule 
with comment period is posted provides an accounting of claims used in 
the development of the final payment rates at: http://www.cms.gov/
HospitalOutpatientPPS. The accounting of claims used in the development 
of this final rule with comment period is included on the CMS Web site 
under supplemental materials for this CY 2011 OPPS/ASC final rule with 
comment period. That accounting provides additional detail regarding 
the number of claims derived at each stage of the process. In addition, 
below in this section we discuss the file of claims that comprises the 
data set that is available for purchase under a CMS data use agreement. 
Our CMS Web site, http://www.cms.gov/HospitalOutpatientPPS, includes 
information about purchasing the ``OPPS Limited Data Set,'' which now 
includes the additional variables previously available only in the OPPS 
Identifiable Data Set, including ICD-9-CM diagnosis codes and revenue 
code payment amounts. This file is derived from the CY 2009 claims that 
were used to calculate the final payment rates for the CY 2011 OPPS.
    We used the methodology described in sections II.A.2.a. through 
II.A.2.e. of this final rule with comment period to calculate the 
median costs we use to establish the relative weights used in 
calculating the final OPPS payment rates for CY 2011 shown in Addenda A 
and B to this final rule with comment period. We refer readers to 
section II.A.4. of this final rule with comment period for a discussion 
of the conversion of APC median costs to scaled payment weights.
a. Claims Preparation
    For this final rule with comment period, we used the CY 2009 
hospital outpatient claims processed before July 1, 2010 to calculate 
the median costs of APCs that underpin the final relative weights for 
CY 2011. To begin the calculation of the relative weights for CY 2011, 
we pulled all claims for outpatient services furnished in CY 2009 from 
the national claims history file. This is not the population of claims 
paid under the OPPS, but all outpatient claims (including, for example, 
critical access hospital (CAH) claims and hospital claims for clinical 
laboratory services for persons who are neither inpatients nor 
outpatients of the hospital).
    We then excluded claims with condition codes 04, 20, 21, and 77. 
These are claims that providers submitted to Medicare knowing that no 
payment would be made. For example, providers submit claims with a 
condition code 21 to elicit an official denial notice from Medicare and 
document that a service is not covered. We then excluded claims for 
services furnished in Maryland, Guam, the U.S. Virgin Islands, American 
Samoa, and the Northern Mariana Islands because hospitals in those 
geographic areas are not paid under the OPPS.
    We divided the remaining claims into the three groups shown below. 
Groups 2 and 3 comprise the 110 million claims that contain hospital 
bill types paid under the OPPS.
    1. Claims that were not bill types 12X, 13X (hospital bill types), 
14x (laboratory specimen bill types), or 76X (CMHC bill types). Other 
bill types are not paid under the OPPS and, therefore, these claims 
were not used to set OPPS payment.
    2. Claims that were bill types 12X, 13X or 14X. Claims with bill 
types 12X and 13X are hospital outpatient claims. Claims with bill type 
14X are laboratory specimen claims, of which we use a subset for the 
limited number of services in these claims that are paid under the 
OPPS.
    3. Claims that were bill type 76X (CMHC).
    To convert charges on the claims to estimated cost, we multiplied 
the charges on each claim by the appropriate hospital specific CCR 
associated with the revenue code for the charge as discussed in section 
II.A.1.c. of this final rule with comment period. We then flagged and 
excluded CAH claims (which are not paid under the OPPS) and claims from 
hospitals with invalid CCRs. The latter included claims from hospitals 
without a CCR; those from hospitals paid an all-inclusive rate; those 
from hospitals with obviously erroneous CCRs (greater than 90 or less 
than 0.0001); and those from hospitals with overall ancillary CCRs that 
were identified as outliers (3 standard deviations from the geometric 
mean after removing error CCRs). In addition, we trimmed the CCRs at 
the cost center (that is, departmental) level by removing the CCRs for 
each cost center as outliers if they exceeded +/- 3 standard deviations 
from the geometric mean. We used a four-tiered hierarchy of cost center 
CCRs, which is the revenue code-to-cost center crosswalk, to match a 
cost center to every possible revenue code appearing in the outpatient 
claims that is relevant to OPPS services, with the top tier being the 
most common cost center and the last tier being the default CCR. If a 
hospital's cost center CCR was deleted by trimming, we set the CCR for 
that cost center to ``missing'' so that another cost center CCR in the 
revenue center hierarchy could apply. If no other cost center CCR could 
apply to the revenue code on the claim, we used the hospital's overall 
ancillary CCR for the revenue code in question as the default CCR. For 
example, if a visit was reported under the clinic revenue code but the 
hospital did not have a clinic cost center, we mapped the hospital-
specific overall ancillary CCR to the clinic revenue code. The revenue 
code-to-cost center crosswalk is available for inspection and comment 
on the CMS Web site: http://www.cms.gov/HospitalOutpatientPPS. Revenue 
codes that we do not use to set medians or to model impacts are 
identified with an ``N'' in the revenue code-to-cost center crosswalk.
    At the February 17-18, 2010 APC Panel Meeting, the Panel 
recommended that CMS present to the Data Subcommittee an analysis of 
the effect of using a different lower-level threshold in the overall 
CCR error trim as part of the standard methodology. The Panel members 
were concerned that our current CCR trimming policy (excluding 
providers with an overall ancillary CCR greater than 90 or less than 
0.0001 or above and then excluding remaining providers with overall 
ancillary CCRs beyond +/-3 standard deviations from the geometric mean) 
could result in the exclusion of

[[Page 71827]]

claims from providers that could otherwise be used for ratesetting and 
modeling. As we indicated in the proposed rule (75 FR 46198), we 
accepted this recommendation. At the August 23-24, 2010 APC Panel 
meeting, we provided the Data Subcommittee with an analysis that 
displayed the number of hospitals trimmed by our current process for 
removing hospitals based on aberrant overall ancillary CCRs, as well as 
our assessment of the impact if we were to use the error CCR thresholds 
established by the IPPS of less than 0.01 and greater than 10.0 (75 FR 
50136). Specifically, we found that, using our current trimming 
methodology, we trimmed out data from 36 hospitals due to having error 
CCRs, while we trimmed data from 61 hospitals because they have CCRs 
that were outside 3 standard deviations from the geometric mean. When 
we applied the IPPS tolerances, we found that we would trim out data 
from 46 hospitals due to having error CCRs, while we would trim data 
from 57 hospitals due to the outlier trim (beyond +/-3 standard 
deviations from the geometric mean). The slight change between the 
numbers occurs because changing the error CCR trim to match the IPPS 
tolerances shifts hospitals from being trimmed based on the outlier 
trim to being trimmed based on the error trim. The standard outlier 
trim is more significant in removing data from hospitals with aberrant 
CCRs because it ensures that our claims data are accurately reflective 
of hospitals under the OPPS, independent of the actual numeric values 
of the CCRs. Observing that the number of hospitals whose data were 
removed based on the error CCR trim was limited, that a more 
significant number of hospitals were trimmed by the standard trim of 
three standard deviations beyond the geometric mean, and that the 
impact of adopting the IPPS CCR tolerances had minimal impact on a 
small subset of APCs, the Data Subcommittee recommended that CMS 
continue to use the current error CCR thresholds of 0.0001 and 90.
    We applied the CCRs as described above to claims with bill type 
12X, 13X, or 14X, excluding all claims from CAHs and hospitals in 
Maryland, Guam, the U.S. Virgin Islands, American Samoa, and the 
Northern Mariana Islands and claims from all hospitals for which CCRs 
were flagged as invalid.
    We identified claims with condition code 41 as partial 
hospitalization services of hospitals and moved them to another file. 
We note that the separate file containing partial hospitalization 
claims is included in the files that are available for purchase as 
discussed above.
    We then excluded claims without a HCPCS code. We moved to another 
file claims that contained nothing but influenza and pneumococcal 
pneumonia (PPV) vaccines. Influenza and PPV vaccines are paid at 
reasonable cost and, therefore, these claims are not used to set OPPS 
rates.
    We next copied line-item costs for drugs, blood, and brachytherapy 
sources (the lines stay on the claim, but are copied onto another file) 
to a separate file. No claims were deleted when we copied these lines 
onto another file. These line-items are used to calculate a per unit 
mean and median cost and a per day mean and median cost for drugs and 
nonimplantable biologicals, therapeutic radiopharmaceutical agents, and 
brachytherapy sources, as well as other information used to set payment 
rates, such as a unit-to-day ratio for drugs.
    To implement our policy adopted in this final rule with comment 
period to redistribute some portion of total cost of packaged drugs and 
biologicals to the separately payable drugs and biologicals as 
acquisition and pharmacy overhead and handling costs discussed in 
section V.B.3. of this final rule with comment period, we used the 
line-item cost data for drugs and biologicals for which we had a HCPCS 
code with ASP pricing information to calculate the ASP+X values, first 
for all drugs and biologicals, and then for separately payable drugs 
and biologicals and for packaged drugs and biologicals, respectively, 
by taking the ratio of total claim cost for each group relative to 
total ASP dollars (per unit of each drug or biological HCPCS code's 
July 2010 ASP amount multiplied by total units for each drug or 
biological in the CY 2009 claims data). These values are ASP+13 percent 
(for all drugs and biologicals with HCPCS codes, whether separately 
paid or packaged), ASP-1 percent (for drugs and biologicals that are 
separately paid), and ASP+296 percent (for drugs and biologicals that 
have HCPCS codes and that are packaged), respectively. As we discuss in 
section V.B.3. of this final rule with comment period, as we proposed, 
in this final rule with comment period, we are redistributing $150 
million of the total cost in our claims data for packaged drugs and 
biologicals that have an associated ASP from packaged drugs with an ASP 
to separately payable drugs and biologicals. As we also proposed, in 
this final rule with comment period, we are redistributing an 
additional $50 million of the total cost in our claims data for drugs 
and biologicals lacking an ASP, largely for estimated costs associated 
with uncoded charges billed under pharmacy revenue code series 025X 
(Pharmacy (also see 063X, an extension of 025X)), 026X (IV Therapy), 
and 063X (Pharmacy--Extension of 025X). We observe approximately $652 
million for packaged drugs lacking a HCPCs code and an ASP in our CY 
2009 claims data. This total excludes the cost of diagnostic and 
therapeutic radiopharmaceuticals because they are not reported under 
pharmacy revenue codes or under the pharmacy cost center on the 
hospital cost report.
    Removing a total of $150 million in pharmacy overhead cost from 
packaged drugs and biologicals reduces the $612 million cost of 
packaged drugs and biologicals with HCPCS codes and ASPs to $462 
million, approximately a 25-percent reduction. Removing $50 million 
from the cost of drugs lacking an ASP reduces the $652 million to $602 
million, approximately an 8-percent reduction. To implement our CY 2011 
policy adopted in this final rule with comment period to redistribute 
$150 million in claim cost from packaged drugs and biologicals with an 
ASP to separately payable drugs and biologicals and $50 million in 
claim cost from packaged drugs and biologicals lacking an ASP, 
including uncoded pharmacy revenue code charges, we multiplied the cost 
of each packaged drug or biological with a HCPCS code and ASP pricing 
information in our CY 2009 claims data by 0.75, and we multiplied all 
other packaged drug costs in our CY 2009 claims data, excluding those 
for diagnostic radiopharmaceuticals, by 0.92. We also added the 
redistributed $200 million to the total cost of separately payable 
drugs and biologicals in our CY 2009 claims data, which increased the 
relationship between the total cost for separately payable drugs and 
biologicals and ASP dollars for the same drugs and biologicals from 
ASP-1 percent to ASP+5 percent. We refer readers to section V.B.3. of 
this final rule with comment period for a complete discussion of our 
policy to pay for separately paid drugs and biologicals and pharmacy 
overhead for CY 2011.
    We then removed line-items that were not paid during claim 
processing, presumably for a line-item rejection or denial. We added 
this process to our median cost calculation methodology for the CY 2010 
OPPS, as discussed in the CY 2010 OPPS/ASC final rule with comment 
period (74 FR 60359). The number of edits for valid OPPS payment in the 
Integrated Outpatient Code Editor (I/OCE) and elsewhere has grown 
significantly in the past few years, especially with the implementation 
of

[[Page 71828]]

the full spectrum of National Correct Coding Initiative (NCCI) edits. 
To ensure that we are using valid claims that represent the cost of 
payable services to set payment rates, we removed line-items with an 
OPPS status indicator for the claim year and a status indicator of 
``S,'' ``T,'' ``V,'' or ``X'' when separately paid under the 
prospective year's payment system. This logic preserves charges for 
services that would not have been paid in the claim year but for which 
some estimate of cost is needed for the prospective year, such as 
services newly proposed to come off the inpatient list for CY 2010 that 
were assigned status indicator ``C'' in the claim year. It also 
preserves charges for packaged services so that the costs can be 
included in the cost of the services with which they are reported, even 
if the CPT codes for the packaged services were not paid because the 
service is part of another service that was reported on the same claim 
or the code otherwise violates claims processing edits.
    For CY 2011, for this final rule with comment period, we are 
expanding the application of this trim to exclude line-item data for 
pass-through drugs and biologicals (status indicator ``G'' for CY 2009) 
and nonpass-through drugs and biologicals (status indicator ``K'' for 
CY 2009) where the charges reported on the claim for the line were 
either denied or rejected during claims processing. Removing lines that 
were eligible for payment but were not paid ensures that we are using 
appropriate data. The trim avoids using cost data on lines that we 
believe were defective or invalid because those rejected or denied 
lines did not meet the Medicare requirements for payment. For example, 
edits may reject a line for a separately paid drug because the number 
of units billed exceeded the number of units that would be reasonable 
and, therefore, is likely a billing error (for example, a line 
reporting 55 units of a drug for which 5 units is known to be a fatal 
dose). For approximately 90 percent of the codes with status indicators 
``G'' and ``K'' in their claims year, to which the expansion of the 
trim would apply, between 0 and 10 percent of lines would be removed 
due to receiving zero payment. As with our trimming in the CY 2010 
OPPS/ASC final rule with comment period (74 FR 60359) of line items 
with a status indicator of ``S,'' ``T,'' ``V,'' or ``X'', we believe 
that unpaid line-items represent services that are invalidly reported 
and, therefore, should not be used for ratesetting. We believe that 
removing lines with valid status indicators that were edited and not 
paid during claims processing increases the accuracy of the single 
bills used to determine the mean unit costs for use in the ASP+X 
calculation described in section V.B.3. of this final rule with comment 
period.
    Comment: One commenter requested that CMS conduct analysis of the 
overall CCR error trim in 2010 and provide APC-specific impacts for all 
radiation oncology services. The commenter also recommended that CMS 
consider implementation of a lower-level threshold for the CCR error 
trim in future rulemaking.
    Response: As we noted above, the impact of moving the lower-level 
error CCR threshold is minimal because of its interaction with the 
standard trim of all hospitals whose overall ancillary CCR is three 
standard deviations beyond the geometric mean. Established tolerances 
of 0.0001 and 90 remove those hospitals whose CCRs are highly aberrant 
relative to the others in the data set, in particular because they 
apply at the hospital level and not at the departmental level. While 
the commenter has requested that we conduct an analysis of the impact 
of the overall CCR error trim on the APCs for radiation oncology, we 
note that this standard error CCR trim is intended to remove all claims 
(not limited to a particular category of care) from hospitals with 
highly aberrant CCRs so that the relativity of the APC payment weights 
is accurate. Therefore, the impact on selected APCs, such as radiation 
oncology APCs, is not relevant to a determination of whether a 
hospital's overall CCR is so extreme that all claims for the hospital 
should be excluded from the data on which the OPPS relative weights are 
based. We will continue to monitor whether our established error CCR 
thresholds are appropriate. However, based on the recent study we 
provided to the APC Panel Data Subcommittee, we agree with the Panel's 
assessment that the current error CCR tolerances are appropriate.
b. Splitting Claims and Creation of ``Pseudo'' Single Procedure Claims
(1) Splitting Claims
    We then split the remaining claims into five groups: single majors; 
multiple majors; single minors; multiple minors; and other claims. 
(Specific definitions of these groups follow below.) For CY 2011, we 
proposed to continue our current policy of defining major procedures as 
any HCPCS code having a status indicator of ``S,'' ``T,'' ``V,'' or 
``X;'' defining minor procedures as any code having a status indicator 
of ``F,'' ``G,'' ``H,'' ``K,'' ``L,'' ``R,'' ``U,'' or ``N,'' and 
classifying ``other'' procedures as any code having a status indicator 
other than one that we have classified as major or minor. For CY 2011, 
we proposed to continue assigning status indicator ``R'' to blood and 
blood products; status indicator ``U'' to brachytherapy sources; status 
indicator ``Q1'' to all ``STVX-packaged codes;'' status indicator 
``Q2'' to all ``T-packaged codes;'' and status indicator ``Q3'' to all 
codes that may be paid through a composite APC based on composite-
specific criteria or paid separately through single code APCs when the 
criteria are not met. As discussed in the CY 2009 OPPS/ASC final rule 
with comment period (73 FR 68709), we established status indicators 
``Q1,'' ``Q2,'' and ``Q3'' to facilitate identification of the 
different categories of codes. We proposed to treat these codes in the 
same manner for data purposes for CY 2011 as we have treated them since 
CY 2008. Specifically, we proposed to continue to evaluate whether the 
criteria for separate payment of codes with status indicator ``Q1'' or 
``Q2'' are met in determining whether they are treated as major or 
minor codes. Codes with status indicator ``Q1'' or ``Q2'' are carried 
through the data either with status indicator ``N'' as packaged or, if 
they meet the criteria for separate payment, they are given the status 
indicator of the APC to which they are assigned and are considered as 
``pseudo'' single procedure claims for major codes. Codes assigned 
status indicator ``Q3'' are paid under individual APCs unless they 
occur in the combinations that qualify for payment as composite APCs 
and, therefore, they carry the status indicator of the individual APC 
to which they are assigned through the data process and are treated as 
major codes during both the split and ``pseudo'' single creation 
process. The calculation of the median costs for composite APCs from 
multiple procedure major claims is discussed in section II.A.2.e. of 
this final rule with comment period.
    Specifically, we divided the remaining claims into the following 
five groups:
    1. Single Procedure Major Claims: Claims with a single separately 
payable procedure (that is, status indicator ``S,'' ``T,'' ``V,'' or 
``X,'' which includes codes with status indicator ``Q3''); claims with 
one unit of a status indicator ``Q1'' code (``STVX-packaged'') where 
there was no code with status indicator ``S,'' ``T,'' ``V,'' or ``X'' 
on the same claim on the same date; or claims with one unit of a status 
indicator ``Q2'' code (``T-packaged'') where there was no code with a 
status indicator ``T'' on the same claim on the same date.

[[Page 71829]]

    2. Multiple Procedure Major Claims: Claims with more than one 
separately payable procedure (that is, status indicator ``S,'' ``T,'' 
``V,'' or ``X,'' which includes codes with status indicator ``Q3''), or 
multiple units of one payable procedure. These claims include those 
codes with a status indicator ``Q2'' code (``T-packaged'') where there 
was no procedure with a status indicator ``T'' on the same claim on the 
same date of service but where there was another separately paid 
procedure on the same claim with the same date of service (that is, 
another code with status indicator ``S,'' ``V,'' or ``X''). We also 
include, in this set, claims that contained one unit of one code when 
the bilateral modifier was appended to the code and the code was 
conditionally or independently bilateral. In these cases, the claims 
represented more than one unit of the service described by the code, 
notwithstanding that only one unit was billed.
    3. Single Procedure Minor Claims: Claims with a single HCPCS code 
that was assigned status indicator ``F,'' ``G,'' ``H,'' ``K,'' ``L,'' 
``R,'' ``U,'' or ``N'' and not status indicator ``Q1'' (``STVX-
packaged'') or status indicator ``Q2'' (``T-packaged'') code.
    4. Multiple Procedure Minor Claims: Claims with multiple HCPCS 
codes that are assigned status indicator ``F,'' ``G,'' ``H,'' ``K,'' 
``L,'' ``R,'' ``U,'' or ``N;'' claims that contain more than one code 
with status indicator ``Q1'' (``STVX-packaged'') or more than one unit 
of a code with status indicator ``Q1'' but no codes with status 
indicator ``S,'' ``T,'' ``V,'' or ``X'' on the same date of service; or 
claims that contain more than one code with status indicator ``Q2'' (T-
packaged), or ``Q2'' and ``Q1,'' or more than one unit of a code with 
status indicator ``Q2'' but no code with status indicator ``T'' on the 
same date of service.
    5. Non-OPPS Claims: Claims that contain no services payable under 
the OPPS (that is, all status indicators other than those listed for 
major or minor status). These claims were excluded from the files used 
for the OPPS. Non-OPPS claims have codes paid under other fee 
schedules, for example, durable medical equipment or clinical 
laboratory tests, and do not contain a code for a separately payable or 
packaged OPPS service. Non-OPPS claims include claims for therapy 
services paid sometimes under the OPPS but billed, in these non-OPPS 
cases, with revenue codes indicating that the therapy services would be 
paid under the Medicare Physician Fee Schedule (MPFS).
    The claims listed in numbers 1, 2, 3, and 4 above are included in 
the data file that can be purchased as described above. Claims that 
contain codes to which we have assigned status indicators ``Q1'' 
(``STVX-packaged'') and ``Q2'' (``T-packaged'') appear in the data for 
the single major file, the multiple major file, and the multiple minor 
file used in this final rule with comment period. Claims that contain 
codes to which we have assigned status indicator ``Q3'' (composite APC 
members) appear in both the data of the single and multiple major files 
used in this final rule with comment period, depending on the specific 
composite calculation.
    We did not receive any public comments on our proposed process of 
organizing claims by type. Therefore, for the reasons set forth in the 
proposed rule (75 CFR 46199), we are finalizing our CY 2011 proposal 
without modification.
(2) Creation of ``Pseudo'' Single Procedure Claims
    As proposed, to develop ``pseudo'' single procedure claims for this 
final rule with comment period, we examined both the multiple procedure 
major claims and the multiple procedure minor claims. We first examined 
the multiple major procedure claims for dates of service to determine 
if we could break them into ``pseudo'' single procedure claims using 
the dates of service for all lines on the claim. If we could create 
claims with single major procedures by using dates of service, we 
created a single procedure claim record for each separately payable 
procedure on a different date of service (that is, a ``pseudo'' 
single).
    As proposed, for this final rule with comment period, we also used 
the bypass codes listed earlier in Table 1 and discussed in section 
II.A.1.b. of this final rule with comment period to remove separately 
payable procedures that we determined contained limited or no packaged 
costs or that were otherwise suitable for inclusion on the bypass list 
from a multiple procedure bill. As discussed above, we ignore the 
``overlap bypass codes,'' that is, those HCPCS codes that are both on 
the bypass list and are members of the multiple imaging composite APCs, 
in this initial assessment for ``pseudo'' single procedure claims. The 
CY 2011 ``overlap bypass codes'' are listed in Table 1 in section 
II.A.1.b. of this final rule with comment period. When one of the two 
separately payable procedures on a multiple procedure claim was on the 
bypass list, we split the claim into two ``pseudo'' single procedure 
claim records. The single procedure claim record that contained the 
bypass code did not retain packaged services. The single procedure 
claim record that contained the other separately payable procedure (but 
no bypass code) retained the packaged revenue code charges and the 
packaged HCPCS code charges. We also removed lines that contained 
multiple units of codes on the bypass list and treated them as 
``pseudo'' single procedure claims by dividing the cost for the 
multiple units by the number of units on the line. Where one unit of a 
single, separately payable procedure code remained on the claim after 
removal of the multiple units of the bypass code, we created a 
``pseudo'' single procedure claim from that residual claim record, 
which retained the costs of packaged revenue codes and packaged HCPCS 
codes. This enabled us to use claims that would otherwise be multiple 
procedure claims and could not be used.
    As proposed, for this final rule with comment period, we then 
assessed the claims to determine if the criteria for the multiple 
imaging composite APCs, discussed in section II.A.2.e.(5) of this final 
rule with comment period, were met. Where the criteria for the imaging 
composite APCs were met, we created a ``single session'' claim for the 
applicable imaging composite service and determined whether we could 
use the claim in ratesetting. For HCPCS codes that are both 
conditionally packaged and are members of a multiple imaging composite 
APC, we first assessed whether the code would be packaged and, if so, 
the code ceased to be available for further assessment as part of the 
composite APC. Because the packaged code would not be a separately 
payable procedure, we considered it to be unavailable for use in 
setting the composite APC median cost. Having identified ``single 
session'' claims for the imaging composite APCs, we reassessed the 
claim to determine if, after removal of all lines for bypass codes, 
including the ``overlap bypass codes,'' a single unit of a single 
separately payable code remained on the claim. If so, we attributed the 
packaged costs on the claim to the single unit of the single remaining 
separately payable code other than the bypass code to create a 
``pseudo'' single procedure claim. We also identified line-items of 
overlap bypass codes as a ``pseudo'' single procedure claim. This 
allowed us to use more claims data for ratesetting purposes.
    As proposed, for this final rule with comment period, we also 
examined the multiple procedure minor claims to determine whether we 
could create ``pseudo'' single procedure claims. Specifically, where 
the claim contained multiple codes with status indicator

[[Page 71830]]

``Q1'' (``STVX-packaged'') on the same date of service or contained 
multiple units of a single code with status indicator ``Q1,'' we 
selected the status indicator ``Q1'' HCPCS code that had the highest CY 
2010 relative weight, set the units to one on that HCPCS code to 
reflect our policy of paying only one unit of a code with a status 
indicator of ``Q1.'' We then packaged all costs for the following into 
a single cost for the ``Q1'' HCPCS code that had the highest CY 2010 
relative weight to create a ``pseudo'' single procedure claim for that 
code: Additional units of the status indicator ``Q1'' HCPCS code with 
the highest CY 2010 relative weight; other codes with status indicator 
``Q1''; and all other packaged HCPCS codes and packaged revenue code 
costs. We changed the status indicator for selected codes from the data 
status indicator of ``N'' to the status indicator of the APC to which 
the selected procedure was assigned for further data processing and 
considered this claim as a major procedure claim. We used this claim in 
the calculation of the APC median cost for the status indicator ``Q1'' 
HCPCS code.
    Similarly, as we proposed, for this final rule with comment period, 
where a multiple procedure minor claim contained multiple codes with 
status indicator ``Q2'' (``T-packaged'') or multiple units of a single 
code with status indicator ``Q2,'' we selected the status indicator 
``Q2'' HCPCS code that had the highest CY 2010 relative weight, set the 
units to one on that HCPCS code to reflect our policy of paying only 
one unit of a code with a status indicator of ``Q2.'' We then packaged 
all costs for the following into a single cost for the ``Q2'' HCPCS 
code that had the highest CY 2010 relative weight to create a 
``pseudo'' single procedure claim for that code: Additional units of 
the status indicator ``Q2'' HCPCS code with the highest CY 2010 
relative weight; other codes with status indicator ``Q2;'' and other 
packaged HCPCS codes and packaged revenue code costs. We changed the 
status indicator for the selected code from a data status indicator of 
``N'' to the status indicator of the APC to which the selected code was 
assigned, and we considered this claim as a major procedure claim.
    Lastly, as proposed, for this final rule with comment period, where 
a multiple procedure minor claim contained multiple codes with status 
indicator ``Q2'' (``T-packaged'') and status indicator ``Q1'' (``STVX-
packaged''), we selected the status indicator ``Q2'' HCPCS code (``T-
packaged'') that had the highest relative weight for CY 2010 and set 
the units to one on that HCPCS code to reflect our policy of paying 
only one unit of a code with a status indicator of ``Q2.'' We then 
packaged all costs for the following into a single cost for the 
selected (``T-packaged'') HCPCS code to create a ``pseudo'' single 
procedure claim for that code: Additional units of the status indicator 
``Q2'' HCPCS code with the highest CY 2010 relative weight; other codes 
with status indicator ``Q2;'' codes with status indicator ``Q1'' 
(``STVX-packaged''); and other packaged HCPCS codes and packaged 
revenue code costs. We favor status indicator ``Q2'' over ``Q1'' HCPCS 
codes because ``Q2'' HCPCS codes have higher CY 2010 relative weights. 
If a status indicator ``Q1'' HCPCS code had a higher CY 2010 relative 
weight, it would become the primary code for the simulated single bill 
process. We changed the status indicator for the selected status 
indicator ``Q2'' (``T-packaged'') code from a data status indicator of 
``N'' to the status indicator of the APC to which the selected code was 
assigned and we considered this claim as a major procedure claim.
    In public comments received on the CY 2010 OPPS/ASC proposed rule, 
a public commenter suggested that CMS could use more claims data to 
develop medians for these conditionally packaged codes if CMS applied 
the ``pseudo'' single creation process to the conditionally packaged 
codes in the multiple major claims that still contained unusable data. 
We agreed with the commenter and in the CY 2011 proposed rule, we 
proposed to use the otherwise unusable multiple procedure claims data 
that remain after the standard pseudo single creation process is 
applied to them, in order to create more pseudo single procedure 
claims. We did not receive any public comments on this proposal, and 
therefore, for the reasons set forth in the proposed rule (75 FR 
46201), we followed this practice in creating pseudo single bills for 
the proposed rule and this final rule with comment period. We do this 
by treating the conditionally packaged codes that do not meet the 
criteria for packaging as if they were separately payable major codes 
and applying the pseudo single process to the claims data to create 
single procedure claims from them if they meet the criteria for single 
procedure claims. Conditionally packaged codes are identified using 
status indicators ``Q1'' and ``Q2,'' and are described in section 
XIII.A.1. of this final rule with comment period. Using the February 
2010 APC Panel data, we estimated that the impact of adding this 
proposed additional step to the pseudo single creation process would 
result in a small increase in the number of claims usable for 
ratesetting in most cases, but with more significant increases of 
between 5 to 10 percent of claims for a few codes. For most of the 
codes affected by adding this proposed additional step to the 
``pseudo'' single creation process, we found no significant changes to 
the APC medians. Some HCPCS codes do experience some fluctuations, with 
the impact of additional claims causing their APC median to decrease. 
We believe that this change is consistent with our goal of using more 
available data from within the existing set of claims information and 
results in a more accurate estimation of the APC median cost for 
conditionally packaged services.
    As proposed, for this final rule with comment period, we excluded 
those claims that we were not able to convert to single procedure 
claims even after applying all of the techniques for creation of 
``pseudo'' single procedure claims to multiple procedure major claims 
and to multiple procedure minor claims. As has been our practice in 
recent years, we also excluded claims that contained codes that were 
viewed as independently or conditionally bilateral and that contained 
the bilateral modifier (Modifier 50 (Bilateral procedure)) because the 
line-item cost for the code represented the cost of two units of the 
procedure, notwithstanding that hospitals billed the code with a unit 
of one.
c. Completion of Claim Records and Median Cost Calculations
    As proposed, for this final rule with comment period, we then 
packaged the costs of packaged HCPCS codes (codes with status indicator 
``N'' listed in Addendum B to this final rule with comment period and 
the costs of those lines for codes with status indicator ``Q1'' or 
``Q2'' when they are not separately paid), and the costs of the 
services reported under packaged revenue codes in Table 3 that appeared 
on the claim without a HCPCS code into the cost of the single major 
procedure remaining on the claim.
    As noted in the CY 2008 OPPS/ASC final rule with comment period (72 
FR 66606), for the CY 2008 OPPS, we adopted an APC Panel recommendation 
that CMS should review the final list of packaged revenue codes for 
consistency with OPPS policy and ensure that future versions of the I/
OCE edit accordingly. As we have in the past, we will continue to 
compare the final list of packaged revenue codes that we adopt for CY 
2011 to the revenue codes that

[[Page 71831]]

the I/OCE will package for CY 2011 to ensure consistency.
    In the CY 2009 OPPS/ASC final rule with comment period (73 FR 
68531), we replaced the NUBC standard abbreviations for the revenue 
codes listed in Table 2 of the CY 2009 OPPS/ASC proposed rule with the 
most current NUBC descriptions of the revenue code categories and 
subcategories to better articulate the meanings of the revenue codes 
without changing the proposed list of revenue codes. In the CY 2010 
OPPS/ASC final rule with comment period (74 FR 60362 through 60363), we 
finalized changes to the packaged revenue code list based on our 
examination of the updated NUBC codes and public comment to the CY 2010 
proposed list of packaged revenue codes. As proposed, for this CY 2011 
OPPS/ASC final rule with comment period, we reviewed the changes to 
revenue codes that were effective during CY 2009 for purposes of 
determining the charges reported with revenue codes but without HCPCS 
codes that we would package for the CY 2011 OPPS. As we discuss in the 
context of the revenue code-to-cost center crosswalk in section 
II.A.1.c. of this final rule with comment period, for CY 2009, the NUBC 
changed the title of revenue code series 076x from ``Specialty Room--
Treatment/Observation Room'' to ``Specialty Services'' and changed the 
title of subclassification revenue code 0762 from ``Observation Room'' 
to ``Observation Hours.'' In addition, the NUBC deleted an explanatory 
note following revenue code 0913, ``Behavioral Health Treatment 
Services--Extension of 090x.'' As we proposed, for this final rule with 
comment period, we are revising the title for revenue code 076x, 
Observation Hours, in Table 3 to comport to the CY 2009 revenue code 
title for revenue code 076x. There is no need to revise the table as a 
result of the deletion of the explanatory note. We believe that the 
charges reported under the revenue codes listed in Table 3 continue to 
reflect ancillary and supportive services for which hospitals report 
charges without HCPCS codes. Therefore, as we proposed, we are 
continuing to package the costs that we derive from the charges 
reported under the revenue codes displayed in Table 3 below for 
purposes of calculating the median costs on which the CY 2011 OPPS are 
based.
    We did not receive any public comments on the proposed packaged 
revenue codes for CY 2011. Therefore, for the reasons set forth in the 
proposed rule (75 FR 46201) we are finalizing the proposed packaged 
revenue codes for CY 2011, without modification, which are identified 
in Table 3 below. We note that these revenue codes include only revenue 
codes that were in effect for CY 2009, the year of the claims data on 
which the CY 2011 OPPS payment rates are based.

                 Table 3--CY 2011 Packaged Revenue Codes
------------------------------------------------------------------------
     Revenue code                          Description
------------------------------------------------------------------------
0250..................  Pharmacy; General Classification.
0251..................  Pharmacy; Generic Drugs.
0252..................  Pharmacy; Non-Generic Drugs.
0254..................  Pharmacy; Drugs Incident to Other Diagnostic
                         Services.
0255..................  Pharmacy; Drugs Incident to Radiology.
0257..................  Pharmacy; Non-Prescription.
0258..................  Pharmacy; IV Solutions.
0259..................  Pharmacy; Other Pharmacy.
0260..................  IV Therapy; General Classification.
0261..................  IV Therapy; Infusion Pump.
0262..................  IV Therapy; IV Therapy/Pharmacy Svcs.
0263..................  IV Therapy; IV Therapy/Drug/Supply Delivery.
0264..................  IV Therapy; IV Therapy/Supplies.
0269..................  IV Therapy; Other IV Therapy.
0270..................  Medical/Surgical Supplies and Devices; General
                         Classification.
0271..................  Medical/Surgical Supplies and Devices; Non-
                         sterile Supply.
0272..................  Medical/Surgical Supplies and Devices; Sterile
                         Supply.
0275..................  Medical/Surgical Supplies and Devices;
                         Pacemaker.
0276..................  Medical/Surgical Supplies and Devices;
                         Intraocular Lens.
0278..................  Medical/Surgical Supplies and Devices; Other
                         Implants.
0279..................  Medical/Surgical Supplies and Devices; Other
                         Supplies/Devices.
0280..................  Oncology; General Classification.
0289..................  Oncology; Other Oncology.
0343..................  Nuclear Medicine; Diagnostic
                         Radiopharmaceuticals.
0344..................  Nuclear Medicine; Therapeutic
                         Radiopharmaceuticals.
0370..................  Anesthesia; General Classification.
0371..................  Anesthesia; Anesthesia Incident to Radiology.
0372..................  Anesthesia; Anesthesia Incident to Other DX
                         Services.
0379..................  Anesthesia; Other Anesthesia.
0390..................  Administration, Processing and Storage for Blood
                         and Blood Components; General Classification.
0392..................  Administration, Processing and Storage for Blood
                         and Blood Components; Processing and Storage.
0399..................  Administration, Processing and Storage for Blood
                         and Blood Components; Other Blood Handling.
0621..................  Medical Surgical Supplies--Extension of 027X;
                         Supplies Incident to Radiology.
0622..................  Medical Surgical Supplies--Extension of 027X;
                         Supplies Incident to Other DX Services.
0623..................  Medical Supplies--Extension of 027X, Surgical
                         Dressings.
0624..................  Medical Surgical Supplies--Extension of 027X;
                         FDA Investigational Devices.
0630..................  Pharmacy--Extension of 025X; Reserved.
0631..................  Pharmacy--Extension of 025X; Single Source Drug.
0632..................  Pharmacy--Extension of 025X; Multiple Source
                         Drug.
0633..................  Pharmacy--Extension of 025X; Restrictive
                         Prescription.
0681..................  Trauma Response; Level I Trauma.
0682..................  Trauma Response; Level II Trauma.
0683..................  Trauma Response; Level III Trauma.

[[Page 71832]]

 
0684..................  Trauma Response; Level IV Trauma.
0689..................  Trauma Response; Other.
0700..................  Cast Room; General Classification.
0710..................  Recovery Room; General Classification.
0720..................  Labor Room/Delivery; General Classification.
0721..................  Labor Room/Delivery; Labor.
0732..................  EKG/ECG (Electrocardiogram); Telemetry.
0762..................  Specialty services; Observation Hours.
0801..................  Inpatient Renal Dialysis; Inpatient
                         Hemodialysis.
0802..................  Inpatient Renal Dialysis; Inpatient Peritoneal
                         Dialysis (Non-CAPD).
0803..................  Inpatient Renal Dialysis; Inpatient Continuous
                         Ambulatory Peritoneal Dialysis (CAPD).
0804..................  Inpatient Renal Dialysis; Inpatient Continuous
                         Cycling Peritoneal Dialysis (CCPD).
0809..................  Inpatient Renal Dialysis; Other Inpatient
                         Dialysis.
0810..................  Acquisition of Body Components; General
                         Classification.
0819..................  Inpatient Renal Dialysis; Other Donor.
0821..................  Hemodialysis-Outpatient or Home; Hemodialysis
                         Composite or Other Rate.
0824..................  Hemodialysis-Outpatient or Home; Maintenance.--
                         100%.
0825..................  Hemodialysis-Outpatient or Home; Support
                         Services.
0829..................  Hemodialysis-Outpatient or Home; Other OP
                         Hemodialysis.
0942..................  Other Therapeutic Services (also see 095X, an
                         extension of 094x); Education/Training.
0943..................  Other Therapeutic Services (also see 095X, an
                         extension of 094X), Cardiac Rehabilitation.
0948..................  Other Therapeutic Services (also see 095X, an
                         extension of 094X), Pulmonary Rehabilitation.
------------------------------------------------------------------------

    In accordance with our longstanding policy, we are continuing to 
exclude: (1) Claims that had zero costs after summing all costs on the 
claim; and (2) claims containing packaging flag number 3. Effective for 
services furnished on or after July 1, 2004, the I/OCE assigned 
packaging flag number 3 to claims on which hospitals submitted token 
charges less than $1.01 for a service with status indicator ``S'' or 
``T'' (a major separately payable service under the OPPS) for which the 
fiscal intermediary or MAC was required to allocate the sum of charges 
for services with a status indicator equaling ``S'' or ``T'' based on 
the relative weight of the APC to which each code was assigned. We do 
not believe that these charges, which were token charges as submitted 
by the hospital, are valid reflections of hospital resources. 
Therefore, we deleted these claims. We also deleted claims for which 
the charges equaled the revenue center payment (that is, the Medicare 
payment) on the assumption that where the charge equaled the payment, 
to apply a CCR to the charge would not yield a valid estimate of 
relative provider cost. As we proposed, for this final rule with 
comment period, we are continuing these processes for the CY 2011 OPPS.
    As proposed, for this final rule with comment period, for the 
remaining claims, we then standardized 60 percent of the costs of the 
claim (which we have previously determined to be the labor-related 
portion) for geographic differences in labor input costs. We made this 
adjustment by determining the wage index that applied to the hospital 
that furnished the service and dividing the cost for the separately 
paid HCPCS code furnished by the hospital by that wage index. The 
claims accounting that we provide for the proposed and final rule 
contains the formula we use to standardize the total cost for the 
effects of the wage index. As has been our policy since the inception 
of the OPPS, we proposed to use the pre-reclassified wage indices for 
standardization because we believe that they better reflect the true 
costs of items and services in the area in which the hospital is 
located than the post-reclassification wage indices and, therefore, 
would result in the most accurate unadjusted median costs.
    In accordance with our longstanding practice, as proposed, for this 
final rule with comment period, we also excluded single and pseudo 
single procedure claims for which the total cost on the claim was 
outside 3 standard deviations from the geometric mean of units for each 
HCPCS code on the bypass list (because, as discussed above, we used 
claims that contain multiple units of the bypass codes).
    After removing claims for hospitals with error CCRs, claims without 
HCPCS codes, claims for immunizations not covered under the OPPS, and 
claims for services not paid under the OPPS, approximately 105 million 
claims were left. Using these 105 million claims, we created 
approximately 103 million single and ``pseudo'' single procedure 
claims, of which we used slightly more than 101 million single bills 
(after trimming out approximately 792,000 claims as discussed above in 
this section) in the final CY 2011 median development and ratesetting.
    We used these claims to calculate the final CY 2011 median costs 
for each separately payable HCPCS code and each APC. The comparison of 
HCPCS code-specific and APC medians determines the applicability of the 
2 times rule. Section 1833(t)(2) of the Act provides that, subject to 
certain exceptions, the items and services within an APC group cannot 
be considered comparable with respect to the use of resources if the 
highest median (or mean cost, if elected by the Secretary) for an item 
or service in the group is more than 2 times greater than the lowest 
median cost for an item or service within the same group (the 2 times 
rule). We note that, for purposes of identifying significant HCPCS for 
examination in the 2 times rule, we consider codes that have more than 
1,000 single major claims or codes that have both more than 99 single 
major claims and contribute at least 2 percent of the single major 
claims used to establish the APC median cost to be significant. 
Unlisted codes are not used in establishing the percent of claims 
contributing to the APC, nor are their costs used in the calculation of 
the APC median. Finally, we reviewed the median costs for the services 
for which we are paying separately under this final rule with comment 
period, and we reassigned HCPCS codes to different APCs where it was 
necessary to ensure clinical and resource homogeneity within the APCs. 
Section III of this final

[[Page 71833]]

rule with comment period includes a discussion of many of the HCPCS 
code assignment changes that resulted from examination of the median 
costs and for other reasons. The APC medians were recalculated after we 
reassigned the affected HCPCS codes. Both the HCPCS code-specific 
medians and the APC medians were weighted to account for the inclusion 
of multiple units of the bypass codes in the creation of ``pseudo'' 
single procedure claims.
    As we discuss in sections II.A.2 d. and II.A.2.e. and in section 
X.B. of this final rule with comment period, in some cases, APC median 
costs are calculated using variations of the process outlined above. 
Specifically, section II.A.2.d. of this final rule with comment period 
addresses the calculation of single APC criteria-based median costs. 
Section II.A.2.e. of this final rule with comment period discusses the 
calculation of composite APC criteria-based median costs. Section X.B. 
of this final rule with comment period addresses the methodology for 
calculating the median cost for partial hospitalization services.
    We received several general comments on the payment rates CMS 
proposed in the CY 2011 OPPS/ASC proposed rule:
    Comment: Several commenters objected to the volatility of the OPPS 
rates from year to year. The commenters asserted that the absence of 
stability in the OPPS rates creates budgeting, planning, and operating 
problems for hospitals. One commenter suggested that the median costs 
from claims be adjusted to limit changes from year to year. Some 
commenters asked that CMS limit any decreases in payment compared to 
the prior year to no more than a 10-percent decline.
    Response: There are a number of factors pertinent to the OPPS that 
may cause median costs to change from one year to the next. Some of 
these are a reflection of hospital behavior, and some of them are a 
reflection of fundamental characteristics of the OPPS as defined in 
statute. For example, the OPPS payment rates are based on hospital cost 
report and claims data. However, hospital costs and charges change each 
year and this results in both changes to the CCRs taken from the most 
currently available cost reports and also differences in the charges on 
the claims that are the basis of the calculation of the median costs on 
which OPPS rates are based. Similarly, hospitals adjust their mix of 
services from year to year by offering new services and ceasing to 
furnish services and changing the proportion of the various services 
they furnish, which have an impact on the CCRs that we derive from 
their cost reports. CMS cannot stabilize these hospital-driven 
fundamental inputs to the calculation of OPPS payment rates.
    Moreover, there are other essential elements of the OPPS that 
contribute to the changes in relative weights each year. These include, 
but are not limited to, reassignments of HCPCS codes to APCs to rectify 
2 times rule violations as required by the law, to address the costs of 
new services, to address differences in hospitals' costs that may 
result from changes in medical practice, and to respond to public 
comments. Our efforts to improve payment accuracy may also contribute 
to payment volatility in the short run, as may be the case when we may 
eventually be able to use more specific CCRs to estimate the costs of 
implantable devices, based on the final policy that we adopted to 
disaggregate the single cost center for medical supplies into two more 
specific cost centers, as described in the FY 2009 IPPS final rule (73 
FR 48458 through 48467). Moreover, for some services, we cannot avoid 
using small numbers of claims, either because the volume of services is 
naturally low or because the claims data do not facilitate the 
calculation of a median cost for a single service. Where there are 
small numbers of claims that are used in median calculation, there is 
more volatility in the median cost from one year to the next. Lastly, 
changes to OPPS payment policy (for example, changes to packaging) also 
contribute, to some extent, to the fluctuations in the OPPS payment 
rates for the same services from year to year.
    We cannot avoid the naturally occurring volatility in the cost 
report and claims data that hospitals submit and on which the payment 
rates are based. Moreover (with limited exceptions), we reassign HCPCS 
codes to APCs where it is necessary to avoid 2 times rule violations. 
However, we have made other changes to resolve some of the other 
potential reasons for instability from year to year. Specifically, we 
continue to seek ways to use more claims data so that we have fewer 
APCs for which there are small numbers of single bills used to set the 
APC median costs. Moreover, we have tried to eliminate APCs with very 
small numbers of single bills where we could do so. We recognize that 
changes to payment policies, such as the packaging of payment for 
ancillary and supportive services and the implementation of composite 
APCs, may contribute to volatility in payment rates in the short term, 
but we believe that larger payment packages and bundles should help to 
stabilize payments in the long term by enabling us to use more claims 
data and by establishing payments for larger groups of services.
    While we recognize the reasoning behind a request to limit 
reductions in the weights or payment rates of the OPPS, this would not 
be as simple or beneficial as commenters have implied. Implementing 
such a policy would require the assumption that payment policy is 
static from year to year. Based on the data used to develop the OPPS, 
we know that this is not true. Further, in seeking to mitigate 
fluctuations in the OPPS, implementing such a system would make 
payments less reflective of the true service costs. Limiting decreases 
to payments across all APCs in a budget neutral payment system could 
unfairly reduce the payments for other services due to the effects of 
the scaling that is necessary to maintain budget neutrality and would 
distort the realtivity of payment that is based on the cost of all 
services.
    Comment: Several commenters noted that an analysis of the hospital 
Medicare cost reports showed a disturbing trend of negative margins and 
a wide gap between the outpatient margins of major teaching hospitals 
and those of all other hospitals. The commenters recommended that CMS 
study whether the hospital outpatient costs of teaching hospitals are 
higher than the costs of other hospitals for purposes of determining 
whether there should be a teaching hospital adjustment. The commenters 
requested that CMS conduct its own analysis and that if that analysis 
showed a difference due to the unique missions of teaching hospitals, 
CMS should add a teaching adjustment to the OPPS.
    Response: Unlike payment under the IPPS, section 1833(t) of the Act 
does not require payment for indirect medical education costs to be 
made under the OPPS. However, section 1833(t)(2)(E) of the Act provides 
the Secretary with authority to make adjustments under the OPPS in 
certain circumstances. Specifically, section 1833(t)(2)(E) of the Act 
states that the Secretary shall establish, in a budget neutral manner 
``* * * other adjustments as determined to be necessary to ensure 
equitable payments, such as adjustments for certain classes of 
hospitals.'' We have not found such an adjustment to be necessary to 
ensure equitable payments to teaching hospitals and, therefore, have 
not developed such an adjustment. Furthermore, in this final rule with 
comment period, we have developed payment weights that we believe 
provide appropriate and adequate payment for the complex medical 
services, such as new technology

[[Page 71834]]

services and device-dependent procedures, which we understand are 
furnished largely by teaching hospitals. We note that teaching 
hospitals benefit from the recalibration of the APCs in this final rule 
with comment period and that teaching hospitals benefit from being 
generally located in areas with relatively high wage indices. With 
respect to the comment that teaching hospitals experience negative 
margins and a wide gap in payment between teaching hospitals and other 
hospitals, we note it is not clear the extent to which a gap between 
teaching hospitals and other hospitals may be attributable to OPPS or 
to the costs of medical education for which the law provides payment 
outside the OPPS. The final CY 2011 impacts by class of hospital are 
displayed in Table 66 in section XX.B. of this final rule with comment 
period.
APC Panel Recommendations Regarding Data Development
    At the August 2010 APC Panel Meeting, we provided the APC Panel a 
list of all APCs decreasing by more than 5 percent and increasing by 
more than 15 percent when comparing the proposed CY 2011 median costs 
based on data available for the August 2010 APC Panel meeting from CY 
2009 claims processed through June 30, 2010, to those based on CY 2010 
OPPS/ASC final rule data (CY 2008 claims). The APC Panel reviewed these 
fluctuations in the APC median costs and recommended that CMS continue 
to identify increases or decreases in APC median costs of 10 percent or 
greater and that CMS develop and present explanatory information on 
APCs with significant changes. The Panel believes that this would help 
the Data Subcommittee to be able to identify APCs that fluctuate due to 
coding and APC reassignment changes, and allow them to focus on those 
that required more investigation. We accept this comment and will 
furnish the Panel with these data. We note that, in some cases, we may 
be unable to clearly identify causes for median cost changes, but we 
will provide explanatory information to the extent possible.
    At its August 23-24, 2010 meeting, the APC Panel made a number of 
recommendations related to the data process. The Panel's 
recommendations and our responses follow. In instances where we discuss 
the issue on which the Panel made a recommendation elsewhere in this 
preamble, we provide the cross-reference to the appropriate section of 
this final rule with comment period.
Recommendation 1
    The Panel recommends that CMS retain the current overall ancillary 
cost-to-charge ratio (CCR) trim tolerances of 0.0001, 90, and +/- 3 
standard deviations from the geometric mean for determining the 
hospitals whose claims are to be included in ratesetting. The study 
upon which the Panel based this recommendation is described in section 
II.A.2.a. of this final rule with comment period.
    We are accepting this recommendation.
Recommendation 2
    The Panel recommends that CMS investigate and report at a future 
Panel meeting on the reason for the decline in median cost for APC 0307 
(Myocardial Positron Emission Tomography (PET) Imaging) from the 
calendar year (CY) 2010 OPPS to the proposed CY 2011 OPPS.
    This recommendation and APC specific-policies are discussed in 
section III.D. of this final rule with comment period.
Recommendation 3
    The Panel recommends that CMS identify increases or decreases in 
APC median costs of 10 percent or greater and that CMS develop and 
present explanatory information on APCs with significant changes.
    We are accepting this recommendation, and we discuss APC median 
cost fluctuations and the recommendation to identify these changes and 
their potential causes in this section.
Recommendation 4
    The Panel commends CMS for providing data analyses requested by the 
Data Subcommittee.
    We appreciate this recommendation.
Recommendation 5
    The Panel recommends that Patrick Grusenmeyer, Sc.D., be named 
chair of the Data Subcommittee.
    We are accepting this recommendation.
Recommendation 6
    The Panel recommends that the work of the Data Subcommittee 
continue.
    We are accepting this most recent recommendation, and we will 
continue to work closely with the APC Panel's Data Subcommittee to 
prepare and review data and analyses relevant to the APC configurations 
and OPPS payment policies for hospital outpatient items and services.
d. Calculation of Single Procedure APC Criteria-Based Median Costs
(1) Device-Dependent APCs
    Device-dependent APCs are populated by HCPCS codes that usually, 
but not always, require that a device be implanted or used to perform 
the procedure. For a full history of how we have calculated payment 
rates for device-dependent APCs in previous years and a detailed 
discussion of how we developed the standard device-dependent APC 
ratesetting methodology, we refer readers to the CY 2008 OPPS/ASC final 
rule with comment period (72 FR 66739 through 66742). Overviews of the 
procedure-to-device edits and device-to-procedure edits used in 
ratesetting for device-dependent APCs are available in the CY 2005 OPPS 
final rule with comment period (69 FR 65761 through 65763) and the CY 
2007 OPPS/ASC final rule with comment period (71 FR 68070 through 
68071).
    In the CY 2011 OPPS/ASC proposed rule (75 FR 46204 through 46205), 
we proposed to continue for CY 2011 to use the standard methodology for 
calculating median costs for device-dependent APCs that was finalized 
in the CY 2010 OPPS/ASC final rule with comment period (74 FR 60365). 
This methodology utilizes claims data that generally represent the full 
cost of the required device. Specifically, we proposed to calculate the 
median costs for device-dependent APCs for CY 2011 using only the 
subset of single procedure claims from CY 2009 claims data that pass 
the procedure-to-device and device-to-procedure edits; do not contain 
token charges (less than $1.01) for devices; do not contain the ``FB'' 
modifier signifying that the device was furnished without cost to the 
provider, supplier, or practitioner, or where a full credit was 
received; and do not contain the ``FC'' modifier signifying that the 
hospital received partial credit for the device. The ``FC'' modifier 
became effective January 1, 2008, and was present for the first time on 
claims that were used in OPPS ratesetting for CY 2010. The procedure-
to-device edits require that when a particular procedural HCPCS code is 
billed, the claim must also contain an appropriate device code, while 
the device-to-procedure edits require that a claim that contains one of 
a specified set of device codes also contain an appropriate procedure 
code. We stated in the proposed rule that we continue to believe the 
standard methodology for calculating median costs for device-dependent 
APCs gives us the most appropriate median costs for device-

[[Page 71835]]

dependent APCs in which the hospital incurs the full cost of the 
device.
    The median costs for the majority of device-dependent APCs that 
were calculated using the CY 2011 proposed rule claims data were 
generally stable, with most median costs increasing moderately compared 
to the median costs upon which the CY 2010 OPPS payment rates were 
based. However, the median costs for APC 0225 (Implantation of 
Neurostimulator Electrodes, Cranial Nerve) and APC 0418 (Insertion of 
Left Ventricular Pacing Electrode) demonstrated significant 
fluctuation. Specifically, the proposed CY 2011 median cost for APC 
0225 increased approximately 40 percent compared to its final CY 2010 
median cost, while the proposed CY 2011 median cost for APC 0418, which 
had increased approximately 53 percent from CY 2009 to CY 2010, showed 
a decrease of approximately 27 percent based on the claims data 
available for the proposed rule. We indicated in the CY 2011 OPPS/ASC 
proposed rule that we believe the fluctuations in median costs for 
these two APCs are a consequence of the small number of single bills 
upon which the median costs are based and the small number of providers 
of these services. As we have stated in the past, some fluctuation in 
relative costs from year to year is to be expected in a prospective 
payment system for low volume device-dependent APCs, particularly where 
there are small numbers of single bills from a small number of 
providers.
    Comment: Several commenters supported CMS' proposal to continue 
using the standard methodology for calculating median costs for device-
dependent APCs. Some commenters recommended that CMS continue examining 
and refining the ratesetting methodology for procedures involving 
devices in order to encourage the continued development and 
proliferation of new technology. Some commenters also requested the 
mandatory reporting of all HCPCS device C-codes on hospital claims for 
services involving devices. The commenters urged CMS to continue 
educating hospitals on the importance of accurate coding for devices, 
supplies, and other technologies, and to continue to encourage 
hospitals to remain vigilant in reporting the costs of performing 
services involving devices, in order to help ensure that these items 
are more appropriately reflected in future years' payment rates for 
outpatient services.
    Response: We appreciate the commenters' support of the continued 
use of the standard device-dependent APC ratesetting methodology.
    As we have stated in the past (73 FR 68535 through 68536 and 74 FR 
60367), we agree that accurate reporting of device, supply, and 
technology charges will help to ensure that these items are 
appropriately accounted for in future years' OPPS payment rates. We 
encourage stakeholders to carefully review HCPCS code descriptors, as 
well as any guidance CMS may have provided for specific HCPCS codes. In 
addition, we have provided further instructions on the billing of 
medical and surgical supplies in the October 2008 OPPS update 
(Transmittal 1599, Change Request 6196, dated September 19, 2008) and 
the April 2009 OPPS update (Transmittal 1702, Change Request 6416, 
dated March 13, 2009). For HCPCS codes that are paid under the OPPS, 
providers may also submit inquiries to the AHA Central Office on HCPCS, 
which serves as a clearinghouse on the proper use of Level I HCPCS 
codes for hospitals and certain Level II HCPCS codes for hospitals, 
physicians, and other health professionals. Inquiries must be submitted 
using the approved form, which may be downloaded from the AHA Web site 
(http://www.ahacentraloffice.org) and either faxed to 312-422-4583 or 
mailed directly to the AHA Central Office: Central Office on HCPCS, 
American Hospital Association, One North Franklin, Floor 29, Chicago, 
IL 60606.
    As we have stated in the past (74 FR 60367), we agree with the 
commenters that we should continue to encourage the development and 
proliferation of new technology under the OPPS. We have special 
mechanisms to provide payment for new technologies and services under 
the OPPS, including new technology APCs and transitional pass-through 
payments devices. We refer readers to sections III.C. and IV.A., 
respectively, of this final rule with comment period for more 
information on these payment methodologies. For all OPPS services, we 
continue our efforts to use the data from as many claims as possible, 
through approaches such as use of the bypass list and date splitting of 
claims as described further in section II.A. of this final rule with 
comment period, and through methodologies such as increased packaging 
and composite APCs.
    Comment: Several commenters supported the proposed CY 2011 payment 
rate for the implantation of auditory osseointegrated devices, 
described by CPT codes 69714 (Implantation, osseointegrated implant, 
temporal bone, with percutaneous attachment to external speech 
processor/cochlear stimulator; without mastoidectomy); 69715 
(Implantation, osseointegrated implant, temporal bone, with 
percutaneous attachment to external speech processor/cochlear 
stimulator; with mastoidectomy); 69717 (Replacement (including removal 
of existing device), osseointegrated implant, temporal bone, with 
percutaneous attachment to external speech processor/cochlear 
stimulator; without mastoidectomy); and 69718 (Replacement (including 
removal of existing device), osseointegrated implant, temporal bone, 
with percutaneous attachment to external speech processor/cochlear 
stimulator; with mastoidectomy), which are assigned to APC 0425. Other 
commenters also supported the proposed payment rate for APC 0259 (Level 
VII ENT Procedures), which includes the insertion of a cochlear 
implant.
    Response: We appreciate the commenters' support of the proposed 
payment rates for procedures involving auditory osseointegrated devices 
and cochlear implants. We agree that the payment rates for APCs 0259 
and 0425, calculated according to the standard device-dependent APC 
ratesetting methodology for the proposed rule and this final rule with 
comment period, appropriately reflect hospitals' relative costs for 
providing these procedures as reported to us in the claims and cost 
report data.
    Comment: One commenter concurred with CMS' determination that APC 
0385 (Level I Prosthetic Urological Procedures) and APC 0386 (Level II 
Prosthetic Urological Procedures) continue to be recognized as device-
dependent APCs. The commenter supported CMS' continued application of 
procedure-to-device edits for procedures assigned to these APCs to 
ensure the reporting of the appropriate C-code for all device-dependent 
APCs.
    Response: We appreciate the commenter's support of the continued 
recognition of APCs 0385 and 0386 as device-dependent APCs. We agree 
that claims processing edits for devices that are integral to the 
performance of procedures assigned to device-dependent APCs are an 
important element of the standard device-dependent APC ratesetting 
methodology.
    Comment: Some commenters recommended that CMS create a new APC for 
three CPT codes currently assigned to APC 0425 (Level II Arthroplasty 
or Implantation with Prosthesis): CPT code 24363 (Arthroplasty, elbow; 
with distal humerus and proximal ulnar prosthetic

[[Page 71836]]

replacement (e.g.., total elbow)); CPT code 25446 (Arthroplasty with 
prosthetic replacement; distal radius and partial or entire carpus 
(total wrist)); and CPT code 27446 (Arthroplasty, knee, condyle and 
plateau; medial OR lateral compartment). One commenter suggested that 
it would be acceptable also to include CPT code 23470 (Arthroplasty, 
glenohumeral joint; hemiarthroplasty) in the new APC. According to the 
commenters, CMS should create a new APC because the proposed payment 
rate for APC 0425 would result in a significant underpayment for these 
arthroplasty procedures. The commenters argued that the broad range in 
the median costs of procedures assigned to APC 0425 violates the 2 
times rule.
    Response: We do not believe that it is necessary to create a new 
APC for arthroplasty procedures. We do not agree with the assertion 
that the current placement of CPT codes 24363, 25446, and 27446 in APC 
0425 would result in significant underpayment for these services. 
Payment based on a measure of central tendency is a principle of any 
prospective payment system. As we have stated in the past (73 FR 
68562), in some individual cases, payment exceeds the average cost, and 
in other cases, payment is less than the average cost. However, on 
balance, payment should approximate the relative cost of the average 
case, recognizing that, as a prospective payment system, the OPPS is a 
system of averages. As stated in the CY 2008 OPPS/ASC final rule with 
comment period (72 FR 66639) and the CY 2009 OPPS/ASC final rule with 
comment period (73 FR 68546), a fundamental characteristic of a 
prospective payment system is that payment is to be set at an average 
for the service which, by definition, means that some services are paid 
more or less than the average.
    We also do not agree with the commenters' claim that the current 
configuration of APC 0425 violates the 2 times rule, which indicates 
that 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 group is more than 2 times 
greater than the lowest median cost (or mean cost, if so elected) for 
an item or service within the same group. As we describe in section 
III.B.2. of the proposed rule and this final rule with comment period, 
we make exceptions to the 2 times rule in unusual cases, such as low-
volume items and services, and we only consider significant procedures 
for purposes of the 2 times assessment. We define significant 
procedures as those with a single claim frequency of greater than 1,000 
or those with a frequency of greater than 99 and that constitute at 
least 2 percent of single claims in the APC. There are three 
significant procedures in APC 0425, CPT codes 27446, 23470, and 69714. 
The CY 2009 hospital outpatient claims used for CY 2011 ratesetting 
show that the median cost of the lowest cost significant service in the 
APC, described by CPT code 69714, is approximately $8,212, compared to 
approximately $9,557 for the highest cost significant service. Based on 
our claims data, there is no 2 times violation in APC 0425.
    Comment: Several commenters have noted that, as discussed earlier 
in this section, APC 0418 (Insertion of Left Ventricular Pacing 
Electrode) has demonstrated a significant fluctuation in median costs. 
The commenters agreed that a significant contributing factor to this 
fluctuation is a low volume of single bills available for use in 
ratesetting. The commenters suggested that CMS develop composite APCs 
for cardiac resynchronization services in order to enable CMS to use 
more claims data in median cost calculations and to create more 
appropriate payment rates.
    Response: For all OPPS services, we continue our efforts to use the 
data from as many multiple procedure claims as possible, through 
approaches such as use of the bypass list and date splitting of claims 
as described further in section II.A. of this final rule with comment 
period, and through methodologies such as increased packaging and 
composite APCs. We refer readers to section II.A.2.e. of this final 
rule with comment period for a detailed summary of the public comments 
related to the establishment of a composite payment methodology for 
procedures involving cardiac resynchronization therapy services and our 
responses.
    After consideration of the public comments we received, we are 
finalizing our proposed CY 2011 payment policies for device-dependent 
APCs without modification. The CY 2011 OPPS payment rates for device-
dependent APCs are based on their median costs calculated from CY 2009 
claims and the most recent cost report data, using only single 
procedure claims that pass the procedure-to-device and device-to-
procedure edits, do not contain token charges for devices, do not have 
an ``FB'' modifier signifying that the device was furnished without 
cost or with full credit, and do not contain an ``FC'' modifier 
signifying that the hospital received partial credit for the device. We 
continue to believe that the median costs calculated from the single 
claims that meet these criteria represent the most valid estimated 
relative costs of these services to hospitals when they incur the full 
cost of the devices required to perform the procedures.
    Table 4 below lists the APCs for which we used our standard device-
dependent APC ratesetting methodology for CY 2011. We note that we are 
adding two new device-dependent APCs for CY 2011 to Table 4 APC 0318 
(Implantation of Cranial Neurostimulator Pulse Generator and Electrode) 
and APC 0319 (Endovascular Revascularization of the Lower Extremity). 
As discussed in sections II.A.2.d.7. and II.A.2.d.9. of this final rule 
with comment period, we are creating these new device-dependent APCs in 
order to accommodate revisions to coding in CY 2011 for services that 
were previously assigned to other device-dependent APCs. We also are 
deleting APC 0225 from Table 4 below because it is replaced with APC 
0318 for CY 2011. We refer readers to Addendum A to this final rule 
with comment period for the final payment rates for these APCs.

                 Table 4--CY 2011 Device-Dependent APCs
------------------------------------------------------------------------
                                  CY 2011 Status
          CY 2011 APC               indicator        CY 2011 APC Title
------------------------------------------------------------------------
0039...........................  S                Level I Implantation
                                                   of Neurostimulator
                                                   Generator.
0040...........................  S                Percutaneous
                                                   Implantation of
                                                   Neurostimulator
                                                   Electrodes.
0061...........................  S                Laminectomy,
                                                   Laparoscopy, or
                                                   Incision for
                                                   Implantation of
                                                   Neurostimulator
                                                   Electrodes.
0082...........................  T                Coronary or Non-
                                                   Coronary Atherectomy.
0083...........................  T                Coronary or Non-
                                                   Coronary Angioplasty
                                                   and Percutaneous
                                                   Valvuloplasty.
0084...........................  S                Level I
                                                   Electrophysiologic
                                                   Procedures.

[[Page 71837]]

 
0085...........................  T                Level II
                                                   Electrophysiologic
                                                   Procedures.
0086...........................  T                Level III
                                                   Electrophysiologic
                                                   Procedures.
0089...........................  T                Insertion/Replacement
                                                   of Permanent
                                                   Pacemaker and
                                                   Electrodes.
0090...........................  T                Insertion/Replacement
                                                   of Pacemaker Pulse
                                                   Generator.
0104...........................  T                Transcatheter
                                                   Placement of
                                                   Intracoronary Stents.
0106...........................  T                Insertion/Replacement
                                                   of Pacemaker Leads
                                                   and/or Electrodes.
0107...........................  T                Insertion of
                                                   Cardioverter-
                                                   Defibrillator.
0108...........................  T                Insertion/Replacement/
                                                   Repair of
                                                   Cardioverter-
                                                   Defibrillator Leads.
0115...........................  T                Cannula/Access Device
                                                   Procedures.
0202...........................  T                Level VII Female
                                                   Reproductive
                                                   Procedures.
0227...........................  T                Implantation of Drug
                                                   Infusion Device.
0229...........................  T                Transcatheter
                                                   Placement of
                                                   Intravascular Shunts.
0259...........................  T                Level VII ENT
                                                   Procedures.
0293...........................  T                Level V Anterior
                                                   Segment Eye
                                                   Procedures.
0315...........................  S                Level II Implantation
                                                   of Neurostimulator
                                                   Generator.
0318...........................  S                Implantation of
                                                   Cranial
                                                   Neurostimulator Pulse
                                                   Generator and
                                                   Electrode.
0319...........................  T                Endovascular
                                                   Revascularization of
                                                   the Lower Extremity.
0384...........................  T                GI Procedures with
                                                   Stents.
0385...........................  S                Level I Prosthetic
                                                   Urological
                                                   Procedures.
0386...........................  S                Level II Prosthetic
                                                   Urological
                                                   Procedures.
0418...........................  T                Insertion of Left
                                                   Ventricular Pacing
                                                   Electrode.
0425...........................  T                Level II Arthroplasty
                                                   or Implantation with
                                                   Prosthesis.
0427...........................  T                Level II Tube or
                                                   Catheter Changes or
                                                   Repositioning.
0622...........................  T                Level II Vascular
                                                   Access Procedures.
0623...........................  T                Level III Vascular
                                                   Access Procedures.
0648...........................  T                Level IV Breast
                                                   Surgery.
0652...........................  T                Insertion of
                                                   Intraperitoneal and
                                                   Pleural Catheters.
0653...........................  T                Vascular
                                                   Reconstruction/
                                                   Fistula Repair with
                                                   Device.
0654...........................  T                Insertion/Replacement
                                                   of a Permanent Dual
                                                   Chamber Pacemaker.
0655...........................  T                Insertion/Replacement/
                                                   Conversion of a
                                                   Permanent Dual
                                                   Chamber Pacemaker.
0656...........................  T                Transcatheter
                                                   Placement of
                                                   Intracoronary Drug-
                                                   Eluting Stents.
0674...........................  T                Prostate Cryoablation.
0680...........................  S                Insertion of Patient
                                                   Activated Event
                                                   Recorders.
------------------------------------------------------------------------

(2) 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.
    In the CY 2011 OPPS/ASC proposed rule (75 FR 46206), we proposed 
for CY 2011 to continue to establish payment rates for blood and blood 
products using our blood-specific CCR methodology, which utilizes 
actual or simulated CCRs from the most recently available hospital cost 
reports to convert hospital charges for blood and blood products to 
costs. This methodology has been our standard ratesetting methodology 
for blood and blood products since CY 2005. It was developed in 
response to data analysis indicating that there was a significant 
difference in CCRs for those hospitals with and without blood-specific 
cost centers, and past public comments indicating that the former OPPS 
policy of defaulting to the overall hospital CCR for hospitals not 
reporting a blood-specific cost center often resulted in an 
underestimation of the true hospital costs for blood and blood 
products. Specifically, in order to address the differences in CCRs and 
to better reflect hospitals' costs, we proposed to continue to simulate 
blood CCRs for each hospital that does not report a blood cost center 
by calculating the ratio of the blood-specific CCRs to hospitals' 
overall CCRs for those hospitals that do report costs and charges for 
blood cost centers. We would then apply this mean ratio to the overall 
CCRs of hospitals not reporting costs and charges for blood cost 
centers on their cost reports in order to simulate blood-specific CCRs 
for those hospitals. We calculated the median costs upon which the 
proposed CY 2011 payment rates for blood and blood products were 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 indicated in the CY 2011 OPPS/ASC proposed rule (75 FR 46206) 
that we continue to believe the hospital-specific, blood-specific CCR 
methodology better responds to the absence of a blood-specific CCR for 
a hospital than alternative methodologies, such as defaulting to the 
overall hospital CCR or applying an average blood-specific CCR across 
hospitals. Because this methodology takes into account the unique 
charging and cost accounting structure of each hospital, we believe 
that it yields more accurate estimated costs for these products. We 
indicated that we believe that continuing with this methodology in CY 
2011 would result in median costs for blood and blood products that 
appropriately reflect the relative estimated costs of these products 
for hospitals without blood cost centers and, therefore, for these 
blood products in general.
    We requested public comments in the CY 2010 OPPS/ASC final rule 
with comment period (74 FR 60373) that addressed whether plasma protein 
fraction (PPF) products should be recognized as blood and blood 
products,

[[Page 71838]]

designated with status indicator ``R,'' or as nonpass-through drugs and 
biologicals, designated with status indicator ``K.'' Specifically, we 
were interested in how PPF is derived and manufactured, and whether the 
same access and safety concerns that apply to the blood and blood 
products recognized under the OPPS for payment purposes also apply to 
PPF. Finally, we were interested in the relationship between albumin 
and PPF, from clinical, manufacturing, and safety perspectives, and 
whether there would be a rationale for treating these products 
similarly for OPPS payment purposes.
    Comment: Several commenters asserted that CMS' proposed payments 
for blood and blood products fail to cover the acquisition and overhead 
costs incurred by hospitals for procuring, storing, and processing 
blood and blood products, especially high volume products such as 
leukocyte reduced red blood cells, described by HCPCS code P9016 (Red 
blood cells, leukocytes reduced, each unit). Several commenters noted 
that the most recent preliminary data from the National Blood 
Collection and Utilization Survey support this assertion, and that the 
Bureau of Labor and Statistics Producer Price Index (PPI) for blood and 
blood products increased 1.8 percent in 2010 compared to 2009. Other 
commenters stated that, as the costs of blood and blood products 
continue to rise, it is important for CMS to ensure that APC payment 
rates keep pace with technological advances, safety measures, and donor 
recruitment challenges. They believed that the 2-year lag inherent in 
the OPPS ratesetting process does not allow current payment rates to 
reflect these rising costs.
    Response: As we indicated in the CY 2010 OPPS/ASC final rule with 
comment period (74 FR 60372), we continue to believe that using blood-
specific CCRs applied to hospital claims data results in payments that 
appropriately reflect hospitals' relative costs of providing blood and 
blood products as reported to us by hospitals. We do not believe it is 
necessary or appropriate to use the PPI for blood and organ banks or 
survey data as a benchmark for updating the payment rates for blood and 
blood products from year to year, because it is not our standard 
process under the OPPS for any item or service to update payment rates 
by implementing across-the-board, product-specific inflation updates, 
or updates based on survey data, to the payment rates that were in 
place the year before. Rather, we annually update payment groups and 
payment weights using the most recently available hospital claims and 
cost report data. This process allows us to recalibrate the payment 
groups and payment weights in response to changes in hospitals' costs 
from year to year. A fundamental principle of the OPPS is that it is 
based on relative weights, and as we have stated in the past (73 FR 
68541), it is the relativity of the costs to one another, rather than 
absolute cost, that is important in setting payment rates. To deviate 
from our standard OPPS ratesetting methodology and update the payment 
rates for blood and blood products by the PPI or based on survey data 
would skew this relativity. We also note that the median costs per unit 
(calculated using the blood-specific CCR methodology) for this final 
rule with comment period increase for the majority of the most commonly 
provided blood and blood products (including the highest volume blood 
and blood product, described by HCPCS code P9016) by 4 percent or 
greater compared to the CY 2010 median costs.
    For all APCs whose payment rates are based upon relative payment 
weights, we note that the quality and accuracy of reported units and 
charges significantly influence the median costs that are the basis for 
our payment rates, especially for low volume items and services. Beyond 
our standard OPPS trimming methodology (described in section II.A.2. of 
this final rule with comment period) that we apply to those claims that 
have passed various types of claims processing edits, it is not our 
general policy to judge the accuracy of hospital coding and charging 
for purposes of ratesetting.
    Comment: One commenter requested that CMS exclude blood and blood 
products from the reductions to the increase factor for OPPS services 
that are mandated by section 3401(i) of the Affordable Care Act.
    Response: As discussed in section II.B.1. of this final rule with 
comment period, for CY 2011, section 3401(i) of the Affordable Care Act 
mandates a 0.25 percent reduction to the OPPS increase factor. The law 
does not exclude blood and blood products from this reduction in 
payment for CY 2011, and we see no basis to implement an exclusion.
    Comment: One commenter responded to the request for public comments 
made in the CY 2010 OPPS/ASC final rule with comment period (74 FR 
60373) concerning whether CMS should recognize PPF products as drugs 
under the OPPS and assign status indicator ``K,'' rather than 
recognizing them as blood and blood products and assigning them status 
indicator ``R.'' The same stakeholder also commented on the proposal in 
the CY 2011 OPPS/ASC proposed rule to maintain the ``R'' status 
indicators for these products in CY 2011. In both comment letters, the 
commenter delineated the relationship between PPF and albumin, 
indicating that, according to the American Association of Blood Banks 
(AABB) and the American Hospital Formulary Service, albumin and PPF are 
derived through very similar processes from human plasma, although PPF 
is subject to fewer purification steps. According to the commenter, 
neither albumin nor PPF is given through a filter as is common with 
blood products, they possess similar pharmacologic properties, 
contraindications, precautions and adverse reactions; and they are 
commonly administered interchangeably. The commenter stated that, 
unlike blood products, PPF and albumin should be stored similarly and 
not frozen, and although there is potential for transmission of human 
virus, the risk is rare. The commenter further stated that they do not 
require type and crossmatching, contain no coagulation factors, and are 
compatible with whole blood and whole packed red blood cells. Finally, 
according to the commenter, the AABB indicates in its billing guide for 
transfusion that albumin and PPF are both blood derivatives. The 
commenter again recommended that CMS assign HCPCS codes P9043 
(Infusion, plasma protein fraction (human), 5%, 50 ml) and P9048 
(Infusion, plasma protein fraction (human), 5%, 250 ml) to status 
indicator ``K.'' The commenter also requested that CMS instruct 
hospitals to bill for PPF using pharmacy revenue codes, and appropriate 
injection or infusion CPT codes rather than the CPT code for blood 
transfusion because the commenter believed this product is a blood 
derivative.
    Response: In the CY 2010 OPPS/ASC final rule with comment period 
(74 FR 60373), we indicated that, because changing the status 
indicators for these products as the commenter recommended could have 
significant payment implications, we are seeking information and input 
from all interested stakeholders. Specifically, changing the status 
indicator from ``R'' to ``K'' would require us to calculate the payment 
rates for PPF using mean unit costs from hospital claims data, as we 
currently do for albumin products, rather than using our standard 
blood-specific CCR methodology for blood and blood products. We did not 
receive public comments from other stakeholders within the blood 
community regarding this potential change in policy, either in response 
to

[[Page 71839]]

the CY 2010 OPPS/ASC final rule with comment period or to the CY 2011 
OPPS/ASC proposed rule, and we do not believe we have sufficient 
clinical information at this time to warrant changing how we have paid 
for PPF for the last several years. Therefore, we do not believe it is 
appropriate to change the status indicator assignments for HCPCS codes 
P9043 and P9048 from status indicator ``R'' to status indicator ``K'' 
for CY 2011.
    After consideration of the public comments we received, we are 
finalizing, without modification, our CY 2011 proposal to calculate 
median costs upon which the CY 2011 payments rates for blood and blood 
products are based using our blood-specific CCR methodology, which 
utilizes actual or simulated CCRs from the most recently available 
hospital cost reports to convert hospital charges for blood and blood 
products to costs (the methodology we have utilized since CY 2005). We 
believe that continuing this methodology in CY 2011 results in median 
costs for blood and blood products that appropriately reflect the 
relative estimated costs of these products for hospitals without blood 
cost centers and, therefore, for these products in general.
    We refer readers to Addendum B to this final rule with comment 
period for the final CY 2011 payment rates for blood and blood 
products, which are identified with status indicator ``R.'' For a more 
detailed discussion of the blood-specific CCR methodology, we refer 
readers to the CY 2005 OPPS proposed rule (69 FR 50524 through 50525). 
For a full history of OPPS payment for blood and blood products, we 
refer readers to the CY 2008 OPPS/ASC final rule with comment period 
(72 FR 66807 through 66810).
(3) Single Allergy Tests
    In the CY 2011 OPPS/ASC proposed rule (75 FR 46206), we proposed to 
continue with our methodology of differentiating single allergy tests 
(``per test'') from multiple allergy tests (``per visit'') by assigning 
these services to two different APCs to provide accurate payments for 
these tests in CY 2011. Multiple allergy tests are currently assigned 
to APC 0370 (Allergy Tests), with a median cost calculated based on the 
standard OPPS methodology. We provided billing guidance in CY 2006 in 
Transmittal 804 (issued on January 3, 2006) specifically clarifying 
that hospitals should report charges for the CPT codes that describe 
single allergy tests to reflect charges ``per test'' rather than ``per 
visit'' and should bill the appropriate number of units (as defined in 
the CPT code descriptor) of these CPT codes to describe all of the 
tests provided. However, as noted in the proposed rule, our CY 2009 
claims data available for the proposed rule for APC 0381 did not 
reflect improved and more consistent hospital billing practices of 
``per test'' for single allergy tests. The median cost of APC 0381, 
calculated for the proposed rule according to the standard single 
claims OPPS methodology, was approximately $52, significantly higher 
than the CY 2010 median cost of APC 0381 of approximately $29 
calculated according to the ``per unit'' methodology, and greater than 
we would expect for these procedures that are to be reported ``per 
test'' with the appropriate number of units. Some claims for single 
allergy tests still appear to provide charges that represent a ``per 
visit'' charge, rather than a ``per test'' charge. Therefore, 
consistent with our payment policy for single allergy tests since CY 
2006, we calculated a proposed ``per unit'' median cost for APC 0381, 
based upon 595 claims containing multiple units or multiple occurrences 
of a single CPT code. The proposed CY 2011 median cost for APC 0381 
using the ``per unit'' methodology was approximately $29. For a full 
discussion of this methodology, we refer readers to the CY 2008 OPPS/
ASC final rule with comment period (72 FR 66737).
    We did not receive any public comments on our CY 2011 proposal for 
determining payment of single allergy tests. We are finalizing our CY 
2011 proposal, without modification, to calculate a ``per unit'' median 
cost for APC 0381 as described above in this section. The final CY 2011 
median cost of APC 0381 is approximately $33.
(4) Hyperbaric Oxygen Therapy (APC 0659)
    Since the implementation of OPPS in August 2000, the OPPS has 
recognized HCPCS code C1300 (Hyperbaric oxygen under pressure, full 
body chamber, per 30 minute interval) for hyperbaric oxygen therapy 
(HBOT) provided in the hospital outpatient setting. In the CY 2005 
final rule with comment period (69 FR 65758 through 65759), we 
finalized a ``per unit'' median cost calculation for APC 0659 
(Hyperbaric Oxygen) using only claims with multiple units or multiple 
occurrences of HCPCS code C1300 because delivery of a typical HBOT 
service requires more than 30 minutes. We observed that claims with 
only a single occurrence of the code were anomalies, either because 
they reflected terminated sessions or because they were incorrectly 
coded with a single unit. In the same rule, we also established that 
HBOT would not generally be furnished with additional services that 
might be packaged under the standard OPPS APC median cost methodology. 
This enabled us to use claims with multiple units or multiple 
occurrences. Finally, we also used each hospital's overall CCR to 
estimate costs for HCPCS code C1300 from billed charges rather than the 
CCR for the respiratory therapy or other departmental cost centers. The 
public comments on the CY 2005 OPPS proposed rule effectively 
demonstrated that hospitals report the costs and charges for HBOT in a 
wide variety of cost centers. Since CY 2005, we have used this 
methodology to estimate the median cost for HBOT. The median costs of 
HBOT using this methodology have been relatively stable for the last 5 
years.
    In the CY 2011 OPPS/ASC proposed rule (75 FR 46206), for CY 2011, 
we proposed to continue using the same methodology to estimate a ``per 
unit'' median cost for HCPCS code C1300. This methodology resulted in a 
proposed APC median cost of approximately $109 using 328,960 claims 
with multiple units or multiple occurrences for HCPCS code C1300 for CY 
2011.
    We did not receive any public comments on our proposal to continue 
to use our established ratesetting methodology for calculating the 
median cost of APC 0659 for payment of HBOT for CY 2011. We are 
finalizing our CY 2011 proposal, without modification, to continue to 
use our established ratesetting methodology for calculating the median 
cost of APC 0659 for payment of HBOT, with a final CY 2011 median cost 
of approximately $150.
(5) Payment for Ancillary Outpatient Services When Patient Expires (APC 
0375)
    In the November 1, 2002 final rule with comment period (67 FR 
66798), we discussed the creation of the new HCPCS modifier -CA to 
address situations where a procedure on the OPPS inpatient list must be 
performed to resuscitate or stabilize a patient (whose status is that 
of an outpatient) with an emergent, life-threatening condition, and the 
patient dies before being admitted as an inpatient. HCPCS modifier -CA 
is defined as a procedure payable only in the inpatient setting when 
performed emergently on an outpatient who expires prior to admission. 
In Transmittal A-02-129, issued on January 3, 2003, we instructed 
hospitals on the use of this modifier. For a complete description of 
the history of the policy and the development of the

[[Page 71840]]

payment methodology for these services, we refer readers to the CY 2007 
OPPS/ASC final rule with comment period (71 FR 68157 through 68158).
    In the CY 2011 OPPS/ASC proposed rule (75 FR 46207), for CY 2011, 
we proposed to continue to use our established ratesetting methodology 
for calculating the median cost of APC 0375 (Ancillary Outpatient 
Services When Patient Expires) and to continue to make one payment 
under APC 0375 for the services that meet the specific conditions for 
using HCPCS modifier -CA. We proposed to calculate the relative payment 
weight for APC 0375 by using all claims reporting a status indicator 
``C'' (inpatient procedures) appended with HCPCS modifier -CA, using 
estimated costs from claims data for line-items with a HCPCS code 
assigned to status indicators ``G,'' ``H,'' ``K,'' ``N,'' ``Q1,'' 
``Q2,'' ``Q3,'' ``R,'' ``S,'' ``T,'' ``U,'' ``V,'' and ``X'' and 
charges for packaged revenue codes without a HCPCS code. (We refer 
readers to section XIII.A.1. of this final rule with comment period for 
a complete listing of status indicators). We continue to believe that 
this methodology results in the most appropriate aggregate median cost 
for the ancillary services provided in these unusual clinical 
situations.
    As discussed in the CY 2011 OPPS/ASC proposed rule (75 FR 46207), 
we believe that hospitals are reporting the HCPCS modifier -CA 
according to the policy initially established in CY 2003. We note that 
the claims frequency for APC 0375 has been relatively stable over the 
past few years. Although the median cost for APC 0375 has increased, 
the median in the CY 2009 OPPS claims data used for development of 
proposed rates for CY 2011 was only slightly higher than that for CY 
2010. Variation in the median cost for APC 0375 is expected because of 
the small number of claims and because the specific cases are grouped 
by the presence of the HCPCS modifier -CA appended to an inpatient 
procedure and not according to the standard APC criteria of clinical 
and resource homogeneity. Cost variation for APC 0375 from year to year 
is anticipated and acceptable as long as hospitals continue judicious 
reporting of the HCPCS modifier -CA. Table 5 of the proposed rule (75 
FR 46207) showed the number of claims and the proposed median costs for 
APC 0375 for CYs 2007, 2008, 2009, and 2010. For CY 2011, we proposed a 
median cost of approximately $6,566 for APC 0375 based on 117 claims.
    We did not receive any public comments regarding this proposal. 
Therefore, for the reasons explained in the CY 2011 OPPS/ASC proposed 
rule (75 FR 46207), we are finalizing our CY 2011 proposal, without 
modification, to continue to use our established ratesetting 
methodology for calculating the median cost of APC 0375, which has a 
final CY 2011 APC median cost of approximately $6,304. Table 5 below 
shows the number of claims and the final median costs for APC 0375 for 
CYs 2007, 2008, 2009, 2010, and 2011.

Table 5--Claims for Ancillary Outpatient Services When Patient Expires (-
                 CA Modifier) for CYs 2007 Through 2011
------------------------------------------------------------------------
                                                                  APC
             Prospective payment year               Number of    median
                                                      claims      cost
------------------------------------------------------------------------
CY 2007...........................................        260     $3,549
CY 2008...........................................        183      4,945
CY 2009...........................................        168      5,545
CY 2010...........................................        182      5,911
CY 2011...........................................        168      6,304
------------------------------------------------------------------------

(6) Pulmonary Rehabilitation (APC 0102)
    Section 144(a)(1) of Public Law 110-275 (MIPPA) added section 
1861(fff) to the Act to provide Medicare Part B coverage and payment 
for a comprehensive program of pulmonary rehabilitation services 
furnished to beneficiaries with chronic obstructive pulmonary disease, 
effective January 1, 2010. Accordingly, in the CY 2010 OPPS/ASC final 
rule with comment period, we established a policy to pay for pulmonary 
rehabilitation (PR) services furnished as a part of the comprehensive 
PR program benefit (74 FR 60567). We created new HCPCS code G0424 
(Pulmonary rehabilitation, including exercise (includes monitoring), 
one hour, per session, up to two sessions per day) and assigned the 
code to new APC 0102 (Level II Pulmonary Treatment).
    In the CY 2011 OPPS/ASC proposed rule (75 FR 46207 through 46208), 
for CY 2011, we proposed to continue to require hospitals to report PR 
services provided under the comprehensive PR benefit provided by 
section 1861(fff) of the Act using HCPCS code G0424. We also proposed 
to continue to use the methodology described in the CY 2010 OPPS/ASC 
final rule with comment period (74 FR 60567 through 60570) to calculate 
the median cost on which the proposed payment rate for CY 2011 is 
based. Specifically, we proposed to continue to assign HCPCS code G0424 
to APC 0102 and to calculate a median ``per session'' cost simulated 
from historical hospital claims data for similar pulmonary therapy 
services for the CY 2011 OPPS.
    To simulate the proposed ``per session'' median cost of HCPCS code 
G0424 from claims data for existing services, we used only hospital 
claims that contained at least one unit of HCPCS code G0239 
(Therapeutic procedures to improve respiratory function or increase 
strength or endurance of respiratory muscles, two or more individuals 
(includes monitoring)), the group code that is without limitation on 
time duration, and one unit of HCPCS code G0237 (Therapeutic procedures 
to increase strength or endurance of respiratory muscles, face to face, 
one on one, each 15 minutes (includes monitoring)) or G0238 
(Therapeutic procedures to improve respiratory function, other than 
described by G0237, one on one, face to face, per 15 minutes (includes 
monitoring)), the individual, face-to-face codes that report 15 minutes 
of service on the same date of service. We continue to believe that 
patients in a PR program would typically receive individual and group 
services during each session of approximately 1 hour in duration. This 
proposal is consistent with public comments received on the CY 2010 
OPPS/ASC proposed rule that were addressed in the CY 2010 OPPS/ASC 
final rule with comment period (74 FR 60569). The commenters to the CY 
2010 OPPS/ASC proposed rule suggested that PR is often provided in 
group sessions in the HOPD, although patients commonly require 
additional one-on-one care in order to fully participate in the 
program. We note that our use of ``per session'' claims that report one 
unit of HCPCS code G0237 or G0238 and one unit of HCPCS code G0239 in 
this simulation methodology is also consistent with our overall finding 
that approximately 2.4 service units of the HCPCS G-codes are furnished 
per day on a single date of service, usually consisting of both 
individual and group services, for patients receiving pulmonary therapy 
services in the HOPD based upon CY 2008 claims used for CY 2010 OPPS 
final rule ratesetting. We continue to believe that the typical session 
of PR is 1 hour based on public comments that indicated a session of PR 
is typically 1 hour and on our findings that the most commonly reported 
HCPCS code for pulmonary treatment is HCPCS code G0239, which has no 
time definition for this group service.
    In the calculation of the CY 2011 proposed median cost for APC 
0102, we included all costs of the related tests and assessment 
services, including CPT codes 94620 (Pulmonary stress testing, simple 
(e.g. 6-minute walk test,

[[Page 71841]]

prolonged exercise test for bronchospasm with pre- and post-spirometry 
and oximetry)), 94664 (Demonstration and/or evaluation of patient 
utilization of an aerosol generator, nebulizer, metered dose inhaler or 
IPPB device), and 94667 (Manipulation chest wall, such as cupping, 
percussing, and vibration to facilitate lung function; initial 
demonstration and/or evaluation) and all the costs of all CPT codes for 
established patient clinic visits on the same date of service as the 
HCPCS codes in the claims we used to simulate the median cost for HCPCS 
code G0424, which is the only HCPCS code in APC 0102. After identifying 
these ``per session'' claims, which we believe represent 1 hour of 
care, we summed the costs and calculated the median cost for the set of 
selected claims. In light of the cost and clinical similarities of PR 
and the existing services described by HCPCS codes G0237, G0238, and 
G0239 and the CPT codes for related assessments and tests, and the 
significant number of ``per session'' hospital claims we found, we 
indicated in the CY 2011 OPPS/ASC proposed rule that we were confident 
that the proposed simulated median cost for HCPCS code G0424 and APC 
0102 of approximately $68 was a valid estimate of the expected hospital 
cost of a PR session. We noted that this proposed median cost was 
higher than the CY 2010 final rule median cost for HCPCS code G0424 and 
APC 0102 of approximately $50 on which the CY 2010 payment is based.
    Comment: Several commenters approved the increase in payment for PR 
services to $68 per hour for CY 2011, stating that the rate better 
represents actual costs. One commenter noted a CPT proposal to change 
the reference code for the pulmonary rehabilitation portion of lung 
volume reduction surgery from CPT code 93797 (Physician services for 
outpatient cardiac rehabilitation; without continuous ECG monitoring 
(per session) to CPT code 93798 (Physician services for outpatient 
cardiac rehabilitation; with continuous ECG monitoring (per session). 
The commenter stated that CPT code 93798 is a more appropriate 
comparison for HCPCS code G0424. In addition, the commenters noted that 
CPT code 94620 (Pulmonary stress testing; simple (e.g. 6-minute walk 
test, prolonged exercise test for bronchospasm with pre- and post-
spirometry and oximetry)) is paid at a rate of $65 in the office 
setting when performed alone, and when performed with pulmonary 
rehabilitation, they are bundled into APC 0102 with a proposed payment 
rate of $68 in the hospital outpatient setting and with a proposed 
payment rate of $28.58 when the service is provided in the office 
setting.
    Response: We appreciate the provided information on the change to 
the reference code for the pulmonary rehabilitation portion of lung 
volume reduction surgery. We believe the commenter relayed this 
information to support the proposed increase in payment for HCPCS code 
G0424 because CPT code 97398 contains continuous ECG monitoring and CPT 
code 97397 does not. While we observe a minimal difference in estimated 
cost for CPT codes 93797 and 93798 in the CY 2009 claims data that we 
used to model payments in this final rule with comment period, we do 
not believe this influenced the observed increase between the CY 2010 
median cost of $50 and the proposed CY 2011 median cost of $68. The 
proposed CY 2011 median cost for HCPCS code G0424 was based on costs 
estimated from hospital charges on CY 2009 claims for HCPCS codes 
G0237, G0238, and G0239 and supporting services CPT codes 94620, 94664, 
and 94667 and all costs of all CPT codes for established patient clinic 
visits reported on the same date. We believe the observed increase in 
the median cost for HCPCS code G0424 may be attributable to changes in 
hospital charges for these codes or to a change in the mix of hospitals 
reporting these services in the CY 2009 claims data.
    With regard to the comment about CPT code 94620, we believe the 
commenter intended to point out that the median cost for HCPCS code 
G0424 does not adequately reflect the cost associated with the 6 minute 
walk test. In our analysis for creating a simulated median cost for 
G0424 in the CY 2010 final rule with comment period, we observed that 
CPT code 94620 appeared on the same claim as HCPCS codes G0237, G0238, 
and G0239 in approximately 3 percent of the cases, indicating that this 
service is rarely performed as part of a typical pulmonary 
rehabilitation session. The proposed median cost of $68 for HCPCS code 
G0424 reflects the packaged cost of CPT code 94620 and related services 
to the extent that hospitals report this service in conjunction with 
pulmonary rehabilitation.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to establish a median 
cost for APC 0102 by using claims with one unit of HCPCS code G0239, 
and one unit of HCPCS code G0237 or G0238, and including all costs of 
the related tests and assessment services (CPT codes 94620, 94664, and 
94667 and all the costs of all CPT codes for established patient clinic 
visits reported on the same date), which results in a final CY 2011 
median cost for HCPCS code G0424 of approximately $62.
(7) Endovascular Revascularization of the Lower Extremity (APCs 0083, 
0229, and 0319)
    For CY 2011, the AMA's CPT Editorial Panel created 16 new CPT codes 
in the Endovascular Revascularization section of the 2011 CPT Code Book 
to describe endovascular revascularization procedures of the lower 
extremity performed for occlusive disease. Table 6 lists the 16 new CPT 
codes that will be effective January 1, 2011.

     Table 6--New Endovascular Revascularization CPT Procedure Codes
                        Effective January 1, 2011
------------------------------------------------------------------------
             CPT Code                          Long descriptor
------------------------------------------------------------------------
37220.............................  Revascularization, endovascular,
                                     open or percutaneous, iliac artery,
                                     unilateral, initial vessel; with
                                     transluminal angioplasty.
37221.............................  Revascularization, endovascular,
                                     open or percutaneous, iliac artery,
                                     unilateral, initial vessel; with
                                     transluminal stent placement(s),
                                     includes angioplasty within the
                                     same vessel, when performed.
37222.............................  Revascularization, endovascular,
                                     open or percutaneous, iliac artery,
                                     each additional ipsilateral iliac
                                     vessel; with transluminal
                                     angioplasty (List separately in
                                     addition to code for primary
                                     procedure).
37223.............................  Revascularization, iliac artery,
                                     each additional ipsilateral iliac
                                     vessel; with transluminal stent
                                     placement(s) (List separately in
                                     addition to code for primary
                                     procedure), includes angioplasty
                                     within the same vessel, when
                                     performed.
37224.............................  Revascularization, endovascular,
                                     open or percutaneous, femoral/
                                     popliteal artery(s), unilateral;
                                     with transluminal angioplasty.
37225.............................  Revascularization, endovascular,
                                     open or percutaneous, femoral/
                                     popliteal artery(s), unilateral;
                                     with atherectomy, includes
                                     angioplasty within the same vessel,
                                     when performed.

[[Page 71842]]

 
37226.............................  Revascularization, endovascular,
                                     open or percutaneous, femoral/
                                     popliteal artery(s), unilateral;
                                     with transluminal stent
                                     placement(s), includes angioplasty
                                     within the same vessel, when
                                     performed.
37227.............................  Revascularization, endovascular,
                                     open or percutaneous, femoral/
                                     popliteal artery(s), unilateral;
                                     with transluminal stent
                                     placement(s) and atherectomy,
                                     includes angioplasty within the
                                     same vessel, when performed.
37228.............................  Revascularization, endovascular,
                                     open or percutaneous, tibial/
                                     peroneal artery, unilateral,
                                     initial vessel; with transluminal
                                     angioplasty.
37229.............................  Revascularization, endovascular,
                                     open or percutaneous, tibial/
                                     peroneal artery, unilateral,
                                     initial vessel; with atherectomy,
                                     includes angioplasty within the
                                     same vessel, when performed.
37230.............................  Revascularization, endovascular,
                                     open or percutaneous, tibial/
                                     peroneal artery, unilateral,
                                     initial vessel; with transluminal
                                     stent placement(s), includes
                                     angioplasty within the same vessel,
                                     when performed.
37231.............................  Revascularization, endovascular,
                                     open or percutaneous, tibial/
                                     peroneal artery, unilateral,
                                     initial vessel; with transluminal
                                     stent placement(s) and atherectomy,
                                     includes angioplasty within the
                                     same vessel, when performed.
37232.............................  Revascularization, endovascular,
                                     open or percutaneous, tibial/
                                     peroneal artery, unilateral, each
                                     additional vessel; with
                                     transluminal angioplasty (List
                                     separately in addition to code for
                                     primary procedure).
37233.............................  Revascularization, endovascular,
                                     open or percutaneous, tibial/
                                     peroneal artery, unilateral, each
                                     additional vessel; with atherectomy
                                     (List separately in addition to
                                     code for primary procedure),
                                     includes angioplasty within the
                                     same vessel, when performed.
37234.............................  Revascularization, endovascular,
                                     open or percutaneous, tibial/
                                     peroneal artery, unilateral, each
                                     additional vessel; with
                                     transluminal stent placement(s)
                                     (List separately in addition to
                                     code for primary procedure),
                                     includes angioplasty within the
                                     same vessel, when performed.
37235.............................  Revascularization, endovascular,
                                     open or percutaneous, tibial/
                                     peroneal artery, unilateral, each
                                     additional vessel; with
                                     transluminal stent placement(s) and
                                     atherectomy (List separately in
                                     addition to code for primary
                                     procedure), includes angioplasty
                                     within the same vessel, when
                                     performed.
------------------------------------------------------------------------

    Our standard process for dealing with new CPT codes is to assign 
the code to the APC that we believe contains services that are 
comparable with respect to clinical characteristics and resources 
required to furnish the service. The new CPT code is given a comment 
indicator of ``NI'' to identify it as a new interim APC assignment for 
the new year and the APC assignment for the new codes is then open to 
public comment. In some, but not all, cases, we are able to use the 
existing data from established codes to simulate an estimated median 
cost for the new code to guide us in the assignment of the new code to 
an APC. In the case of the new endovascular revascularization codes, we 
were able to use the existing CY 2009 claims and most current cost 
report data to create simulated median costs for 12 of the 16 new 
separately payable codes.
    Specifically, to estimate the hospital costs associated with the 16 
new endovascular revascularization CPT codes based on their CY 2011 
descriptors, we used claims data from hospital outpatient claims 
submitted in CY 2009 and the most recent cost report information 
submitted by the hospitals that submitted claims for the services as 
they were reported in CY 2009. We note that all of the services that 
were previously reported to describe endovascular revascularization of 
the lower extremity for occlusive disease were assigned to three APCs 
in CY 2009. These included APCs 0082 (Coronary or Non-Coronary 
Atherectomy), 0083 (Coronary or Non-Coronary Angioplasty and 
Percutaneous Valvuloplasty), and 0229 (Transcatheter Placement of 
Intravascular Shunts).
    Because the endovascular revascularization CPT codes are new for CY 
2011, we used our CY 2009 single and ``pseudo'' single claims data to 
simulate the new CY 2011 CPT code definitions. As shown in Table 7 
below, many of the new endovascular revascularization CPT codes were 
previously reported using a combination of CY 2009 CPT codes. In order 
to simulate median costs, we selected claims that we believe meet the 
definition for each of the new endovascular revascularization CPT 
codes. Table 7 shows the criteria we applied to select a claim to be 
used in the calculation of the median cost for the new codes (shown in 
column A). We developed these criteria based on our clinicians' 
understanding of services that were reported by CY 2009 CPT codes that, 
in various combinations, reflect the services provided that are 
described by the new CPT codes for CY 2011. For example, in CY 2009, 
the procedure described by new CY 2011 CPT code 37222 
(Revascularization, endovascular, open or percutaneous, iliac artery, 
each additional ipsilateral iliac vessel; with transluminal angioplasty 
(List separately in addition to code for primary procedure)) would have 
been reported using the following combination of procedures: (1) The 
transluminal balloon angioplasty of the iliac would have been reported 
using CPT code 35454 (Transluminal balloon angioplasty, open; iliac) or 
35473 (Transluminal balloon angioplasty, percutaneous; iliac); (2) the 
catheter placement would have been reported using CPT code 36248 
(Selective catheter placement, arterial system; additional second 
order, third order, and beyond, abdominal, pelvic, or lower extremity 
artery branch, within a vascular family (List in addition to code for 
initial second or third order vessel as appropriate)); and (3) the 
radiological supervision and interpretation of the transluminal balloon 
angioplasty would have been reported using CPT code 75962 (Transluminal 
balloon angioplasty, peripheral artery, other than cervical carotid, 
renal or other visceral artery, iliac or lower extremity, radiological 
supervision and interpretation) and/or 75964 (Transluminal balloon 
angioplasty, each additional peripheral artery other than cervical 
carotid, renal or other visceral artery, iliac and lower extremity, 
radiological supervision and interpretation (List separately in 
addition to code for primary procedure)). In columns B, C, D, and E of 
Table 7, for each new CY 2011 CPT code listed under column A, we 
identified the CY 2009 CPT codes that we believed corresponded to each 
new code for which we had CY 2009 claims data and that we required or 
permitted to be reported on the same line-item date of service for a 
particular claim to be used for calculating the median costs for the 
new codes. Specifically, we

[[Page 71843]]

required that at least one unit of one of the separately payable codes 
in column B must be on the claim (we permitted any number of units of 
these codes to be on the claim). Where there are codes listed in column 
C, we also required that at least one unit of one and only one of the 
codes that appears under column C must be on the claim (we permitted 
any number of units of the code to be on the claim). Where there are 
codes in column D, we required at least one unit of each of the codes 
in column D (we permitted any number of units of these codes to be on 
the claim). In addition, in column E, we identified several codes that 
were paid separately in CY 2009 but which we decided should be packaged 
into the new endovascular revascularization CPT codes if they appeared 
on the claim with the other codes in columns B through D.
    For example, in determining the CPT median cost for new CPT code 
37221, we used only those claims that contained one unit of one and 
only one of the CPT codes listed under column B, specifically CPT code 
37205 or 37207, and at least one unit (while allowing multiple units) 
of one and only one of the CPT codes that appear under column C, 
specifically CPT codes 36000, 36245, or 36246. We allowed any number of 
units for the code in column D, and packaged the costs for the codes in 
column E (CPT codes 35454 and 35473) if they appeared on the claim. We 
applied this same methodology to select claims that we believe 
reflected the services defined in each new CPT code. In addition, we 
excluded claims that met these criteria if the claim contained a 
service to which a status indicator of ``S,'' ``T,'' ``V,'' or ``X'' 
was assigned, if such code did not meet the criteria for the new code. 
By doing this, we simulated a single procedure bill for the new code. 
In addition, we applied the standard packaging, trimming, and wage 
standardization that we apply in the median calculation process. We 
used approximately 19,283 claims that met the code specific criteria to 
calculate CPT level medians and the median cost for these new codes. 
Table 7 below displays the combinations of CY 2009 code data that we 
used to select the claims we used to create simulated median costs for 
the new codes (columns A through E), and the frequency of claims that 
met the criteria (column F) we calculated for each new code using the 
CY 2009 data for the previously existing CPT codes for these services. 
We note that we did not identify any claims that met the criteria for 
new CPT codes 37222, 37223, 37234 and 37235, in part due to the 
requirement that there must be no major separately paid procedures on 
the claim other than those we identified for the new code.

[[Page 71844]]



                Table 7--Simulated CY 2009 Code Combinations and Frequencies for the New CY 2011 Endovascular Revascularization CPT Codes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                           First Required CY 2009    Second Required CY 2009   Third Required CY 2009
                           CPT Code (At least one    CPT Code (At least one    CPT Code (At least one
                             unit (and allow any       unit (and allow any      unit of each code is    Fourth Required CY 2009
    CY 2011 CPT Code       number of units) of one   number of units) of one   required and any number   CPT Code (Packaged if         Frequencies
                           and only one code must    and only one code must     of units of all codes      appeared on claim)
                            appear on the claim)      appear on the claim)           permitted)
              Column A                  Column B                  Column C                  Column D                  Column E                 Column F
--------------------------------------------------------------------------------------------------------------------------------------------------------
                 37220                     35454                     36000                     75962    .......................                     508
                                           35473                     36245    ........................  .......................  .......................
                          ........................                   34246    ........................  .......................  .......................
                 37221                     37205                     36000                     75960                     35454                    4,758
                                           37207                     36245    ........................                   35473   .......................
                          ........................                   36246    ........................  .......................  .......................
                 37222                     35454                     36248                     75962    .......................                       0
                                           35473    ........................                   75964    .......................  .......................
                 37223                     37206                     36248                     75960                     35454                        0
                                           37208    ........................  ........................                   35473   .......................
                 37224                     35456    ........................                   75962    .......................                   3,653
                                           35474    ........................                   36247    .......................  .......................
                 37225                     35483    ........................                   75992                     35456                    1,974
                                           35493    ........................                   36247                     35474   .......................
                 37226                     37205    ........................                   75960                     35456                    2,927
                                           37207    ........................                   36247                     35474   .......................
                 37227                     37205                     35483                     75960                     35456                      647
                                           37207                     35493                     75992                     35474   .......................
                          ........................  ........................                   36247    .......................  .......................
                 37228                     35459    ........................                   75962    .......................                   1,431
                                           35470    ........................                   36247    .......................  .......................
                 37229                     35485    ........................                   75992                     35459                      780
                                           35495    ........................                   36247                     35470   .......................
                 37230                     37205    ........................                   75960                     35459                    2,542
                                           37207    ........................                   36247                     35470   .......................
                 37231                     37205                     35485                     75960                     35459                       53
                                           37207                     35495                     75992                     35470   .......................
                          ........................  ........................                   36247    .......................  .......................
                 37232                     35459    ........................                   75964    .......................                       7
                                           35470    ........................                   36248    .......................  .......................
                 37233                     35485    ........................                   75993                     35459                        3
                                           35495    ........................                   36248                     35470   .......................
                 37234                     37206    ........................                   75960                     35459                        0
                                           37208    ........................                   36248                     35470   .......................
                 37235                     37206                     35485                     36247                     35459                        0
                                           37208                     35495                     36248                     35470   .......................
                          ........................  ........................                   75960    .......................  .......................
                          ........................  ........................                   75993    .......................  .......................
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 71845]]

    After determining the simulated median costs for the procedures, we 
assigned each CPT code to appropriate APCs based on their clinical 
homogeneity and resource use. Of the 16 new codes, we assigned nine CPT 
codes to APC 0083, five to APC 0229, and created a new APC for two CPT 
codes. Specifically, we assigned CPT codes 37220, 37221, 37222, 37223, 
37224, 37228, 37232, 37234, and 37235 to APC 0083, which has a final CY 
2011 APC median cost of approximately $3,740. In addition, we assigned 
CPT codes 37225, 37226, 37229, 37230, and 37233 to APC 0229, which has 
a final CY 2011 APC median cost of approximately $7,940. Because the 
resource costs associated with CPT codes 37227 and 37231 are not 
similar to the costs of procedures in the existing APCs, we established 
a new APC, specifically APC 0319 (Endovascular Revascularization of the 
Lower Extremity), which has a final CY 2011 APC median cost of 
approximately $13,751 to appropriately pay for these services.
    The new CY 2011 endovascular revascularization CPT codes and their 
final CY 2011 APC assignments and APC median costs are displayed in 
Table 8 below. We note that because these codes are new for CY 2011, 
they will be identified with comment indicator ``NI'' in Addendum B of 
this final rule to identify them as subject to public comment. We 
specifically request public comment on our methodology for simulating 
the median costs for these new CY 2011 CPT codes, in addition to public 
comments on the payment rates themselves.

    Table 8--Final CY 2011 APC Assignments and Median Costs for the Endovascular Revascularization CPT Codes
----------------------------------------------------------------------------------------------------------------
                                                                                                   Final CY 2011
             CY 2011 CPT Code                     CY 2011 Long descriptor          Final CY 2011    CPT median
                                                                                        APC            cost
----------------------------------------------------------------------------------------------------------------
37220....................................  Revascularization, endovascular, open            0083          $5,080
                                            or percutaneous, iliac artery,
                                            unilateral, initial vessel; with
                                            transluminal angioplasty.
37221....................................  Revascularization, endovascular, open            0083           6,710
                                            or percutaneous, iliac artery,
                                            unilateral, initial vessel; with
                                            transluminal stent placement(s),
                                            includes angioplasty within the same
                                            vessel, when performed.
37222....................................  Revascularization, endovascular, open            0083             N/A
                                            or percutaneous, iliac artery, each
                                            additional ipsilateral iliac vessel;
                                            with transluminal angioplasty (List
                                            separately in addition to code for
                                            primary procedure).
37223....................................  Revascularization, endovascular, open            0083             N/A
                                            or percutaneous, iliac artery, each
                                            additional ipsilateral iliac vessel;
                                            with transluminal stent placement(s)
                                            (List separately in addition to code
                                            for primary procedure), includes
                                            angioplasty within the same vessel,
                                            when performed.
37224....................................  Revascularization, endovascular, open            0083           5,247
                                            or percutaneous, femoral/popliteal
                                            artery(s), unilateral; with
                                            transluminal angioplasty.
37225....................................  Revascularization, endovascular, open            0229           9,023
                                            or percutaneous, femoral/popliteal
                                            artery(s), unilateral; with
                                            atherectomy, includes angioplasty
                                            within the same vessel, when
                                            performed.
37226....................................  Revascularization, endovascular, open            0229           9,600
                                            or percutaneous, femoral/popliteal
                                            artery(s), unilateral; with
                                            transluminal stent placement(s),
                                            includes angioplasty within the same
                                            vessel, when performed.
37227....................................  Revascularization, endovascular, open            0319          13,754
                                            or percutaneous, femoral/popliteal
                                            artery(s), unilateral; with
                                            transluminal stent placement(s) and
                                            atherectomy, includes angioplasty
                                            within the same vessel, when
                                            performed.
37228....................................  Revascularization, endovascular, open            0083           5,563
                                            or percutaneous, tibial/peroneal
                                            artery, unilateral, initial vessel;
                                            with transluminal angioplasty.
37229....................................  Revascularization, endovascular, open            0229           9,231
                                            or percutaneous, tibial/peroneal
                                            artery, unilateral, initial vessel;
                                            with atherectomy, includes
                                            angioplasty within the same vessel,
                                            when performed.
37230....................................  Revascularization, endovascular, open            0229           7,868
                                            or percutaneous, tibial/peroneal
                                            artery, unilateral, initial vessel;
                                            with transluminal stent placement(s)
                                            , includes angioplasty within the
                                            same vessel, when performed.
37231....................................  Revascularization, endovascular, open            0319          13,604
                                            or percutaneous, tibial/peroneal
                                            artery, unilateral, initial vessel;
                                            with transluminal stent placement(s)
                                            and atherectomy, includes
                                            angioplasty within the same vessel,
                                            when performed.
37232....................................  Revascularization, endovascular, open            0083           9,412
                                            or percutaneous, tibial/peroneal
                                            artery, unilateral, each additional
                                            vessel; with transluminal
                                            angioplasty (List separately in
                                            addition to code for primary
                                            procedure).
37233....................................  Revascularization, endovascular, open            0229          10,183
                                            or percutaneous, tibial/peroneal
                                            artery, unilateral, each additional
                                            vessel; with atherectomy (List
                                            separately in addition to code for
                                            primary procedure), includes
                                            angioplasty within the same vessel,
                                            when performed.
37234....................................  Revascularization, endovascular, open            0083             N/A
                                            or percutaneous, tibial/peroneal
                                            artery, unilateral, each additional
                                            vessel; with transluminal stent
                                            placement(s) (List separately in
                                            addition to code for primary
                                            procedure), includes angioplasty
                                            within the same vessel, when
                                            performed.
37235....................................  Revascularization, endovascular, open            0083             N/A
                                            or percutaneous, tibial/peroneal
                                            artery, unilateral, each additional
                                            vessel; with transluminal stent
                                            placement(s) and atherectomy (List
                                            separately in addition to code for
                                            primary procedure), includes
                                            angioplasty within the same vessel,
                                            when performed.
----------------------------------------------------------------------------------------------------------------


[[Page 71846]]

(8) Non-Congenital Cardiac Catheterization (APC 0080)
    For CY 2011, the AMA CPT Editorial Panel deleted 19 non-congenital 
cardiac catheterization-related CPT codes and replaced them with 20 new 
CPT codes in the Cardiac Catheterization and Injection-Related section 
of the 2011 CPT Code Book to describe more precisely the specific 
services provided during cardiac catheterization procedures. In 
particular, the CPT Editorial Panel deleted 19 non-congenital cardiac 
catheterization-related CPT codes from the 93500 series and created 14 
new CPT codes in the 93400 series and 6 in the 93500 series. Table 9 
below lists the specific CPT codes that will be deleted December 31, 
2010, and Table 10 lists the new CPT codes that will be effective 
January 1, 2011.

  Table 9--Non-Congenital Cardiac Catheterization-Related CPT Procedure
              Codes That Will Be Deleted December 31, 2010
------------------------------------------------------------------------
         CY 2010 CPT Code                      Long descriptor
------------------------------------------------------------------------
93501.............................  Right heart catheterization
93508.............................  Catheter placement in coronary
                                     artery(s), arterial coronary
                                     conduit(s), and/or venous coronary
                                     bypass graft(s) for coronary
                                     angiography without concomitant
                                     left heart catheterization
93510.............................  Left heart catheterization,
                                     retrograde, from the brachial
                                     artery, axillary artery or femoral
                                     artery; percutaneous
93511.............................  Left heart catheterization,
                                     retrograde, from the brachial
                                     artery, axillary artery or femoral
                                     artery; by cutdown
93514.............................  Left heart catheterization by left
                                     ventricular puncture
93524.............................  Combined transseptal and retrograde
                                     left heart catheterization
93526.............................  Combined right heart catheterization
                                     and retrograde left heart
                                     catheterization
93527.............................  Combined right heart catheterization
                                     and transseptal left heart
                                     catheterization through intact
                                     septum (with or without retrograde
                                     left heart catheterization)
93528.............................  Combined right heart catheterization
                                     with left ventricular puncture
                                     (with or without retrograde left
                                     heart catheterization)
93529.............................  Combined right heart catheterization
                                     and left heart catheterization
                                     through existing septal opening
                                     (with or without retrograde left
                                     heart catheterization)
93539.............................  Injection procedure during cardiac
                                     catheterization; for selective
                                     opacification of arterial conduits
                                     (e.g., internal mammary), whether
                                     native or used for bypass
93540.............................  Injection procedure during cardiac
                                     catheterization; for selective
                                     opacification of aortocoronary
                                     venous bypass grafts, one or more
                                     coronary arteries
93541.............................  Injection procedure during cardiac
                                     catheterization; for pulmonary
                                     angiography
93542.............................  Injection procedure during cardiac
                                     catheterization; for selective
                                     right ventricular or right atrial
                                     angiography
93543.............................  Injection procedure during cardiac
                                     catheterization; for selective left
                                     ventricular or left atrial
                                     angiography
93544.............................  Injection procedure during cardiac
                                     catheterization; for aortography
93545.............................  Injection procedure during cardiac
                                     catheterization; for selective
                                     coronary angiography (injection of
                                     radiopaque material may be by hand)
93555.............................  Imaging supervision, interpretation
                                     and report for injection
                                     procedure(s) during cardiac
                                     catheterization; ventricular and/or
                                     atrial angiography
93556.............................  Imaging supervision, interpretation
                                     and report for injection
                                     procedure(s) during cardiac
                                     catheterization; pulmonary
                                     angiography, aortography, and/or
                                     selective coronary angiography
                                     including venous bypass grafts and
                                     arterial conduits (whether native
                                     or used in bypass)
------------------------------------------------------------------------


    Table 10--New Cardiac Catheterization-Related CPT Procedure Codes
                        Effective January 1, 2011
------------------------------------------------------------------------
         CY 2011 CPT Code                      Long descriptor
------------------------------------------------------------------------
93451.............................  Right heart catheterization
                                     including measurement(s) of oxygen
                                     saturation and cardiac output, when
                                     performed
93452.............................  Left heart catheterization including
                                     intraprocedural injection(s) for
                                     left ventriculography, imaging
                                     supervision and interpretation,
                                     when performed
93453.............................  Combined right and left heart
                                     catheterization including
                                     intraprocedural injection(s) for
                                     left ventriculography, imaging
                                     supervision and interpretation,
                                     when performed
93454.............................  Catheter placement in coronary
                                     artery(s) for coronary angiography,
                                     including intraprocedural
                                     injection(s) for coronary
                                     angiography, imaging supervision
                                     and interpretation
93455.............................  Catheter placement in coronary
                                     artery(s) for coronary angiography,
                                     including intraprocedural
                                     injection(s) for coronary
                                     angiography, imaging supervision
                                     and interpretation; with catheter
                                     placement(s) in bypass graft(s)
                                     (internal mammary, free arterial
                                     venous grafts) including
                                     intraprocedural injection(s) for
                                     bypass graft angiography
93456.............................  Catheter placement in coronary
                                     artery(s) for coronary angiography,
                                     including intraprocedural
                                     injection(s) for coronary
                                     angiography, imaging supervision
                                     and interpretation; with right
                                     heart catheterization
93457.............................  Catheter placement in coronary
                                     artery(s) for coronary angiography,
                                     including intraprocedural
                                     injection(s) for coronary
                                     angiography, imaging supervision
                                     and interpretation; with catheter
                                     placement(s) in bypass graft(s)
                                     (internal mammary, free arterial,
                                     venous grafts) including
                                     intraprocedural injection(s) for
                                     bypass graft angiography and right
                                     heart catheterization
93458.............................  Catheter placement in coronary
                                     artery(s) for coronary angiography,
                                     including intraprocedural
                                     injection(s) for coronary
                                     angiography, imaging supervision
                                     and interpretation; with left heart
                                     catheterization including
                                     intraprocedural injection(s) for
                                     left ventriculography, when
                                     performed
93459.............................  Catheter placement in coronary
                                     artery(s) for coronary angiography,
                                     including intraprocedural
                                     injection(s) for coronary
                                     angiography, imaging supervision
                                     and interpretation; with left heart
                                     catheterization including
                                     intraprocedural injection(s) for
                                     left ventriculography, when
                                     performed, catheter placement(s) in
                                     bypass graft(s) (internal mammary,
                                     free arterial, venous grafts) with
                                     bypass graft angiography

[[Page 71847]]

 
93460.............................  Catheter placement in coronary
                                     artery(s) for coronary angiography,
                                     including intraprocedural
                                     injection(s) for coronary
                                     angiography, imaging supervision
                                     and interpretation; with right and
                                     left heart catheterization
                                     including intraprocedural
                                     injection(s) for left
                                     ventriculography, when performed
93461.............................  Catheter placement in coronary
                                     artery(s) for coronary angiography,
                                     including intraprocedural
                                     injection(s) for coronary
                                     angiography, imaging supervision
                                     and interpretation; with right and
                                     left heart catheterization
                                     including intraprocedural
                                     injection(s) for left
                                     ventriculography, when performed,
                                     catheter placement(s) in bypass
                                     graft(s) (internal mammary, free
                                     arterial, venous grafts) with
                                     bypass graft angiography
93462.............................  Left heart catheterization by
                                     transseptal puncture through intact
                                     septum or by transapical puncture
                                     (List separately in addition to
                                     code for primary procedure)
93463.............................  Pharmacologic agent administration
                                     (e.g., inhaled nitric oxide,
                                     intravenous infusion of
                                     nitroprusside, dobutamine,
                                     milrinone, or other agent)
                                     including assessing hemodynamic
                                     measurements before, during, after
                                     and repeat pharmacologic agent
                                     administration, when performed
93464.............................  Physiologic exercise study (e.g.,
                                     bicycle or arm ergometry including
                                     assessing hemodynamic measurements
                                     before and after) (List separately
                                     in addition to code for primary
                                     procedure)
93563.............................  Injection procedure during cardiac
                                     catheterization including imaging
                                     supervision, interpretation, and
                                     report; for selective coronary
                                     angiography during congenital heart
                                     catheterization (List separately in
                                     addition to code for primary
                                     procedure)
93564.............................  Injection procedure during cardiac
                                     catheterization including imaging
                                     supervision, interpretation, and
                                     report; for selective opacification
                                     of aortocoronary venous or arterial
                                     bypass graft(s) (e.g.,
                                     aortocoronary saphenous vein, free
                                     radial artery, or free mammary
                                     artery graft) to one or more
                                     coronary arteries and in situ
                                     arterial conduits (e.g., internal
                                     mammary), whether native or used
                                     for bypass to one or more coronary
                                     arteries during congenital heart
                                     catheterization, when performed
                                     (List separately in addition to
                                     code for primary procedure)
93565.............................  Injection procedure during cardiac
                                     catheterization including imaging
                                     supervision, interpretation, and
                                     report; for selective left
                                     ventricular or left atrial
                                     angiography (List separately in
                                     addition to code for primary
                                     procedure)
93566.............................  Injection procedure during cardiac
                                     catheterization including imaging
                                     supervision, interpretation, and
                                     report; for selective right
                                     ventricular or right atrial
                                     angiography (List separately in
                                     addition to code for primary
                                     procedure)
93567.............................  Injection procedure during cardiac
                                     catheterization including imaging
                                     supervision, interpretation, and
                                     report; for supravalvular
                                     aortography (List separately in
                                     addition to code for primary
                                     procedure)
93568.............................  Injection procedure during cardiac
                                     catheterization including imaging
                                     supervision, interpretation, and
                                     report; for pulmonary angiography
                                     (List separately in addition to
                                     code for primary procedure)
------------------------------------------------------------------------

    Of the 19 deleted non-congenital cardiac catheterization-related 
CPT codes, 9 of the CPT codes describe either a left heart 
catheterization, right heart catheterization, or a combined left and 
right heart catheterization, 7 CPT codes describe injection procedures 
during cardiac catheterization, 2 CPT codes describe imaging 
supervision during cardiac catheterization, and only 1 CPT code 
describes a catheter placement. Of the 19 deleted non-congenital 
cardiac catheterization-related CPT codes, 10 CPT codes have been 
separately payable under the hospital OPPS, while the other 9 CPT codes 
that describe injection procedures and imaging supervision during 
cardiac catheterization have been packaged. Specifically, the 10 non-
congenital cardiac catheterization-related CPT codes that have been 
separately payable under the hospital OPPS include CPT codes 93501, 
93508, 93510, 93511, 93514, 93524, 93526, 93527, 93528, and 93529. 
Alternatively, the nine non-congenital cardiac catheterization-related 
CPT codes that have been packaged under the hospital OPPS include CPT 
codes 93539, 93540, 93541, 93542, 93543, 93544, 93545, 93555, and 
93556.
    Of the 20 new CPT codes, 4 CPT codes describe either a left heart 
catheterization, right heart catheterization, or a combined left and 
right heart catheterization, 8 CPT codes describe a catheter placement, 
1 CPT code describes a pharmacologic agent administration, 1 CPT code 
describes a physiologic exercise study, and 6 CPT codes describe a 
combination of injection procedures with imaging supervision during 
cardiac catheterization. With the exception of one CPT code (CPT code 
93451), many of the new CY 2011 CPT codes are described by multiple CY 
2010 CPT codes.
    Our standard process for assigning new CPT codes to APCs is to 
assign the code to the APC that we believe contains services that are 
comparable with respect to clinical characteristics and resources 
required to furnish the service. The new CPT code is given a comment 
indicator of ``NI'' to identify it as a new interim APC assignment for 
the new first year and the APC assignment for the new codes is then 
open to public comment. In some, but not all, cases, we are able to use 
the existing data from established codes to simulate an estimated 
median cost for the new code to guide us in the assignment of the new 
code to an APC. In the case of the new cardiac catheterization codes, 
we were able to use the existing CY 2009 claims data and the most 
recent cost report data to create simulated medians for the new 
separately payable CPT codes.
    Specifically, to estimate the hospital costs associated with the 20 
new non-congenital cardiac catheterization-related CPT codes based on 
their CY 2011 descriptors, we used claims and cost report data from CY 
2009. We note that all of the services that describe cardiac 
catheterization procedures, which include both congenital and non-
congenital cardiac catheterization, are assigned to APC 0080 
(Diagnostic Cardiac Catheterization) in CY 2010. Because of the 
substantive coding changes associated with the new non-congenital 
cardiac catheterization-related CPT codes for CY 2011, we used our CY 
2009 single and ``pseudo'' single claims data to simulate the new CY 
2011 CPT code definitions. As shown in Table 11 and as stated above, 
many of the new CPT codes were previously reported using multiple CY 
2009 CPT codes. In order to simulate median costs, we selected claims 
that we believe meet the definition for each of the new CY 2011 non-
congenital cardiac catheterization codes. Table 11 shows the criteria 
we applied to select a claim to be used in the calculation of the 
median cost for the new codes (shown in column A). We developed these

[[Page 71848]]

criteria based on our clinicians' understanding of services that were 
reported by CY 2009 CPT codes that, in various combinations, reflect 
the services provided that are described in the new CPT codes. For 
example, in CY 2009, the procedure described by new CY 2011 CPT code 
93454 (Catheter placement in coronary artery(s) for coronary 
angiography, including intraprocedural injection(s) for coronary 
angiography, imaging supervision and interpretation) would have been 
reported using the following combination of procedures: (1) The 
catheter placement would have been reported using CPT code 93508 
(Catheter placement in coronary artery(s), arterial coronary 
conduit(s), and/or venous coronary bypass graft(s) for coronary 
angiography without concomitant left heart catheterization); and (2) 
the injection procedure would have been reported using CPT code 93545 
(Injection procedure during cardiac catheterization; for selective 
coronary angiography (injection of radiopaque material may be by hand); 
and CPT code 93556 (Imaging supervision, interpretation and report for 
injection procedure(s) during cardiac catheterization; pulmonary 
angiography, aortography, and/or selective coronary angiography 
including venous bypass grafts and arterial conduits (whether native or 
used in bypass)). In columns B, C, and D of Table 11, for each new CY 
2011 CPT code listed under column A, we identified both the CPT codes 
that corresponded to each new code for which we had CY 2009 claims data 
and that we required or permitted to be reported on the same line-item 
date of service for a particular claim to be used for median setting 
for the new codes. Specifically, we required that only one unit of one 
and only one of the separately payable codes in column B must be 
present on the claim. We also required that at least one unit of each 
code that appears under column C must be present on the claim, and we 
permitted any number of these codes and any number of units of these 
codes to be present on the claim. Where there are codes in column D, we 
required at least one unit of one of at least one of the codes in 
column D must be on the claim, but we permitted any number of units of 
any of the codes shown in column D for the new code.
    For example, in determining the CPT median cost for new CPT code 
93452, we used only those claims that contained one unit of one and 
only one of the CPT codes listed under column B, specifically, CPT 
codes 93510, 93511, 93514, or 93524, and at least one unit (while 
allowing multiple units) of each of the CPT codes that appear under 
column C, specifically, CPT codes 93543 and 93555. Because, in the case 
of CPT code 93452, there are no third level codes in the definition of 
CPT code 93452, no other code criteria applied and column D is left 
blank. In the case of new CPT codes 93459 and 93461, there are third 
level criteria in column D, and for those two CPT codes, we required 
that the claim contain at least one unit of one code in column D, and 
we allowed any number of units for any code in column D. We applied 
this same methodology to select claims that we believe reflected the 
services defined in each new CPT code. We used approximately 175,000 
claims for the new non-congenital catheterization-related CPT codes, 
together with the single and pseudo single procedure claims for the 
remaining congenital catheterization-related CPT codes in APC 0080, to 
calculate CPT level median costs and the median cost for APC 0080 of 
approximately $2,698. Table 11 displays the combinations of CY 2009 CPT 
code data that we used to select the claims we used to create simulated 
median costs for the new CPT codes (columns A through D), the frequency 
of claims that met the criteria (column E), and the median costs we 
calculated for each new CPT code using the CY 2009 claims data for the 
previously existing CPT codes describing these services (column F). We 
note that because the CPT codes listed in column A are new for CY 2011, 
they will be identified with comment indicator ``NI'' in Addendum B of 
this final rule with comment period to identify them as subject to 
public comment. We are specifically requesting public comment on our 
methodology for simulating the median costs for these new CY 2011 CPT 
codes, in addition to public comments on the payment rates themselves.

[[Page 71849]]



           Table 11--CY 2009 Code Combinations, Frequencies, and Simulated Median Costs for New CY 2011 Cardiac Catheterization-Related Codes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                     Second Required CY 2009   Third Required CY 2009
                           First Required CY 2009    CPT Code (At least one    CPT Code (Any number of
                           CPT Code (Only one unit   unit of each code; any     units of at least one
    CY 2011 CPT Code      of one and only one code  number of codes or units     code; any number of          Frequencies              CPT Medians
                             must appear on the      of a code may be on the     units of all codes
                                   claim)                    claim)                  permitted)
Column A                                Column B                  Column C                  Column D                  Column E                 Column F
--------------------------------------------------------------------------------------------------------------------------------------------------------
                 93451                     93501    ........................  ........................                   3,552                    1,493
                 93452                     93510                     93543    ........................                   1,055                    2,876
                                           93511                     93555    ........................  .......................  .......................
                                           93514    ........................  ........................  .......................  .......................
                                           93524    ........................  ........................  .......................  .......................
                 93453                     93526                     93543    ........................                     225                    3,182
                                           93527                     93555    ........................  .......................  .......................
                                           93528    ........................  ........................  .......................  .......................
                                           93529    ........................  ........................  .......................  .......................
                 93454                     93508                     93545    ........................                   7,852                    2,497
                          ........................                   93556    ........................  .......................  .......................
                 93455                     93508                     93545    ........................                   1,683                    2,673
                          ........................                   93556    ........................  .......................  .......................
                          ........................                   93539    ........................  .......................  .......................
                          ........................                   93540    ........................  .......................  .......................
                 93456                     93508                     93501    ........................                     914                    2,502
                          ........................                   93545    ........................  .......................  .......................
                          ........................                   93556    ........................  .......................  .......................
                 93457                     93508                     93545    ........................                     159                    3,923
                          ........................                   93556    ........................  .......................  .......................
                          ........................                   93539    ........................  .......................  .......................
                          ........................                   93540    ........................  .......................  .......................
                          ........................                   93501    ........................  .......................  .......................
                 93458                     93510                     93545    ........................                 112,395                    2,663
                                           93511                     93555    ........................  .......................  .......................
                                           93514                     93556    ........................  .......................  .......................
                                           93524                     93543    ........................  .......................  .......................
                 93459                     93510                     93545                     93539                    23,352                    2,911
                                           93511                     93555                     93540    .......................  .......................
                                           93514                     93556    ........................  .......................  .......................
                                           93524                     93543    ........................  .......................  .......................
                 93460                     93526                     93545    ........................                  20,697                    3,135
                                           93527                     93556    ........................  .......................  .......................
                                           93528                     93543    ........................  .......................  .......................
                                           93529                     93555    ........................  .......................  .......................
                 93461                     93526                     93545                     93539                     3,445                    3,382
                                           93527                     93556                     93540    .......................  .......................
                                           93528                     93543    ........................  .......................  .......................
                                           93529                     93555    ........................  .......................  .......................
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 71850]]

(9) Cranial Neurostimulator and Electrodes (APC 0318)
    For CY 2011, the AMA CPT Editorial Panel created a new CPT code 
64568 (Incision for implantation of cranial nerve (e.g., vagus nerve) 
neurostimulator electrode array and pulse generator) and indicates that 
it describes the services formerly included in the combinations of (1) 
CPT code 64573 (Incision for implantation of neurostimulator 
electrodes; cranial nerve) and CPT code 61885 (Insertion or replacement 
of cranial neurostimulator pulse generator or receiver, direct or 
inductive coupling; with connection to a single electrode array); or 
(2) CPT code 64573 and CPT code 61886 (Insertion or replacement of 
cranial neurostimulator pulse generator or receiver, direct or 
inductive coupling; with connection to two or more electrode arrays). 
Our standard process for assigning new CPT codes to APCs is to assign 
the code to the APC that we believe contains services that are 
comparable with respect to clinical characteristics and resources 
required to furnish the service. The new CPT code is given a comment 
indicator of ``NI'' to identify it as a new interim APC assignment for 
the new first year and the APC assignment for the new code is then open 
to public comment. In some, but not all, cases, we are able to use the 
existing data from established codes to simulate an estimated median 
cost for the new code to guide us in the assignment of the new code to 
an APC. In the case of the new neurostimulator electrode and pulse 
generator implantation CPT code, we were able to use the existing CY 
2009 claims and most current cost report data to create a simulated 
median cost.
    Specifically, to estimate the hospital costs of CPT code 64568 
based on its CY 2011 descriptor, we used CY 2009 claims and the most 
recent cost report data, using the single and ``pseudo'' single claims 
within this data set to simulate the new CY 2011 definition of this 
service. Specifically, we selected claims with CPT code 64573 on which 
CPT code 61885 or 61886 was also present and consistent with the 
description of the new CPT code 64568, and we treated the summed costs 
on these claims as if they were a single procedure claim for CPT code 
64568. We created an estimated median cost of approximately $22,562 for 
CPT code 64568 from 298 single claims to set a final payment rate for 
CY 2011 for the new code. We are creating new APC 0318 (Implantation of 
Cranial Neurostimulator Pulse Generator and Electrode) for CY 2011, to 
which CPT code 64568 is the only procedure assigned. APC 0225 
(Implantation of Neurostimulator Electrodes, Cranial Nerve), which 
contained only the predecessor CPT code 64573, is deleted effective 
January 1, 2011.
    We note that because CPT code 64568 is new for CY 2011, it is 
identified with comment indicator ``NI'' in Addendum B of this final 
rule with comment period to identify it as subject to public comment. 
We are specifically requesting public comment on our methodology for 
simulating the median cost for this new CY 2011 CPT code, in addition 
to public comments on the payment rate itself.
(10) Cardiac and Intensive Cardiac Rehabilitation (APC 0095)
    In the CY 2010 OPPS/ASC final rule with comment period (74 FR 60566 
through 60574), we implemented the provisions of section 144(a) of the 
Medicare Improvements for Patients and Providers Act (MIPPA, Pub. L. 
110-275). Section 144(a) of Public Law 110-275 amended the Act to 
expand Medicare Part B coverage for cardiac rehabilitation (CR) and 
intensive cardiac rehabilitation (ICR) services furnished to 
beneficiaries with certain conditions, effective January 1, 2010. 
Section 144(a) of Public Law 110-275 also expanded coverage for 
pulmonary rehabilitation. Section 1861(eee)(4)(C) of the Act provides 
for up to 72 one-hour sessions of ICR with up to 6 sessions per day, 
over a period of 18 weeks. Medicare limits the number of cardiac 
rehabilitation program sessions to a maximum of 2 1-hour sessions per 
day, for up to 36 sessions, over up to 36 weeks. Medicare contractors 
have the authority to approve additional CR sessions, up to 72 total 
sessions, over an additional period of time. Section 144(a)(2) of Pub. 
Law 110-275 also includes specific language governing payment for 
services furnished in an ICR program under the MPFS, including a 
requirement that the Secretary shall substitute the Medicare OPD fee 
schedule amount established under the prospective payment system for 
hospital outpatient department services under the OPPS.
    Last year, we also finalized our requirement that all ICR programs 
be approved through the NCD process. Once we have approved an ICR 
program or programs through the NCD process, individual sites wishing 
to furnish ICR items and services via an approved ICR program may 
enroll with their local Medicare contractor to become an ICR program 
supplier as outlined in Sec.  424.510. This enrollment is designed to 
ensure that the specific sites meet the specific statutory and 
regulatory requirements to furnish these services and will provide a 
mechanism to appeal a disapproval of a prospective ICR program site. 
With regards to billing and payment for CR and ICR services, we stated 
that hospital providers will continue to use their CMS Certification 
Number (CCN or provider number) and that appeals related to the payment 
of claims will follow those established processes.
    For CY 2010, we finalized two new HCPCS codes G0422 (Intensive 
cardiac rehabilitation; with or without continuous ECG monitoring, with 
exercise, per hour, per session) and G0423 (Intensive cardiac 
rehabilitation; with or without continuous ECG monitoring, without 
exercise, per hour, per session) to describe intensive cardiac 
rehabilitation and accompany the CPT codes for cardiac rehabilitation 
already recognized for payment under the OPPS: CPT codes 93797 
(Physician services for outpatient cardiac rehabilitation; without 
continuous ECG monitoring (per session)) and 93798 (Physician services 
for outpatient cardiac rehabilitation; with continuous ECG monitoring 
(per session)). We finalized payment for all of these HCPCS codes in 
APC 0095 with a payment rate of approximately $38 per session. We noted 
our belief that hospital costs for a single session would be similar 
and that OPPS payment for both CR and ICR services would be provided on 
a per session basis (74 FR 60571). Because there were historic claims 
data for CR services, we used our standard methodology to estimate a 
median cost and $38 payment rate for CR and ICR services.
    As discussed in section II.A.2 of this final rule with comment 
period, the standard OPPS rate setting methodology we used to establish 
a median cost for APC 0095 relies upon converting hospital charges for 
CPT codes 97397 and 97398 on claims to costs using hospital-specific 
cost-to-charge ratios (CCRs) from the hospital's Medicare cost report 
and crosswalking them to claim services based on a ``revenue code-to-
cost center crosswalk'' that matches the revenue codes on a claim to a 
hierarchy of cost centers. The OPPS uses this uniform approach to 
setting the cost-based relative payment weights for its payment groups, 
and these annually updated cost-based weights are the basis for the 
prospective payment rates for hospital outpatient services.
    In 2008, the results of a study by RTI International (RTI) 
commissioned by CMS indicated that cost estimates for CR services may 
be under-estimated (``Refining Cost to Charge Ratios for Calculating 
APC and MS-DRG Relative Payment Weights: Final Report''

[[Page 71851]]

available at http://www.rti.org/reports/cms/HHSM-500-2005-0029I/PDF/
Refining_Cost_to_Charge_Ratios_200807_Final.pdf). Specifically, 
RTI indicated that several changes in cost reporting methods would 
result in a more accurate estimated median cost. Accordingly, in 
February 2010, CMS established a CR-specific cost center for voluntary 
use on the cost report to create a CR-specific CCR and thereby improve 
the accuracy of cost estimation. However, we will not have the new cost 
report data available for ratesetting until CY 2013. We did not propose 
to use interim data from the new cost center to set CY 2011 payment 
rates because, as we previously explained, we would have to modify the 
data from its submitted form and make assumptions in a methodology that 
would be contrary to our principle of using data as submitted by 
hospitals in OPPS ratesetting (74 FR 60571 and 73 FR 68525).
    Comment: One commenter indicated that the finalized payment of $38 
is too low for ICR services, does not cover the extensive cost to 
providers to offer these services, and that many providers are closing 
due to insufficient payment. The commenter cited the RTI report again 
as a source of key recommendations to improve CMS cost estimation 
methodology. The commenter indicated that, in comparison to RTI's 
finding of about $100 median cost after incorporating all 
recommendations, the CMS proposed payment rate of about $39 is 
artificially low. The commenter suggested that CMS possesses special 
authority to conduct payment evaluations and make changes for services 
that are being implemented under national coverage determinations. With 
respect to ICR services, the commenter indicated that while more 
resources are consumed than during traditional CR programs in terms of 
hospital, physician, and patient commitments, ICR services are more 
efficacious and yield better outcomes than alternative treatment 
measures not only for cardiac conditions but also for comorbidities 
such as obesity and diabetes. The commenter stated that Congress 
recognized these principles in subjecting ICR programs to a heightened 
demonstration of efficacy through a series of measures, as proved 
through peer-reviewed literature. The commenter also stated that the 
two ICR demonstration programs at Highmark Blue Cross Blue Shield and 
Mutual of Omaha evidenced cost savings.
    Response: In response to the commenter, we revisited RTI's study. 
In further reviewing its recommendations, we agree with the commenter 
that payment for CR and ICR services could be improved in this final 
rule with comment period. Specifically, we believe that, in addition to 
adding the non-standard cost center, we may improve the accuracy of 
payment for CR and ICR services by incorporating a second policy that 
was recommended in the RTI study. RTI also recommended that we 
incorporate a clinic CCR into the ``revenue code-to-cost center 
crosswalk'' for cardiac rehabilitation as we did for pulmonary 
rehabilitation last year. Therefore, we will add a clinic cost center 
to revenue code-to-cost center crosswalk for the hierarchy of cost 
centers used to estimate costs from charges for revenue code 0943 for 
cardiac rehabilitation. With this revision, the estimated median cost 
for CR services rises to $68.08. We are establishing $68.08 as the 
median cost for APC 0095 for CR and ICR services. We also believe that 
there are other revenue codes for OPPS clinic services that could 
include a clinic CCR in their hierarchy, and we will assess potential 
changes to the crosswalk for CY 2012.
    This policy would follow RTI's general approach of including a 
clinic revenue code for services provided in the clinic setting, which 
we incorporated last year for pulmonary rehabilitation when we updated 
the crosswalk by adding a clinic CCR into the hierarchy for the PR 
revenue code 0948 (74 FR 60347). Adding a clinic revenue code to the 
crosswalk is consistent with our approach of having up to four tiers in 
our hierarchy of cost centers used to apply CCRs to charges by revenue 
code on claims data. We also note that the specific new benefits of CR 
and PR are similar under the OPPS and that the authorizing statute 
defines comparable components for CR, ICR, and PR services, which we 
believe supports using a comparable cross-walk approach for these 
services.
    We appreciate the commenter's information on the efficacy of ICR 
programs and their cost effectiveness, but note that this has no 
bearing on establishing payments under the OPPS. Also, we disagree with 
the commenter that the facility resources required to provide a one 
hour session of ICR services differ from the resources required to 
provide a one hour session of CR. In our CY 2010 OPPS/ASC final rule 
with comment period, we noted our belief that hospital costs for a 
single session would be similar and that OPPS payment for both CR and 
ICR services would be provided on a per session basis (74 FR 60571). 
Therefore, because we believe that CR and ICR services are similar from 
a per hour resource perspective, we will continue to assign the CPT 
codes for both CR and ICR services per hour to the same APC for CY 
2011. However, because we implemented HCPCS codes G0422 and G0423 in CY 
2010, we will have historic charge information specific to ICR programs 
for CY 2012 ratesetting, and we will reevaluate whether estimated costs 
for ICR are sufficiently different from standard CR services to warrant 
proposing placement in a different APC. Finally, when the new cost 
report information becomes available beginning in CY 2013, we will 
reassess placement of CR and ICR in the same APC.
e. Calculation of Composite APC Criteria-Based Median 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 only necessary, high quality care 
and to provide that 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 APC policies for extended assessment 
and management services, low dose rate (LDR) prostate brachytherapy, 
cardiac electrophysiologic evaluation and ablation services, mental 
health services, and multiple imaging services. We refer readers to the 
CY 2008 OPPS/ASC final rule with comment period for a full discussion 
of the development of the composite APC methodology (72 FR 66611 
through 66614 and 66650 through 66652).
    At its February 2010 meeting, the APC Panel recommended that, in 
order to support stem cell transplantation, CMS consider creating a 
composite APC or custom APC that captures the costs of stem cell 
acquisition performed in conjunction with recipient transplantation and 
preparation of tissue. In the CY 2011 OPPS/ASC

[[Page 71852]]

proposed rule (75 FR 46208), we indicated that we were accepting this 
APC Panel recommendation to consider creating a composite APC or custom 
APC that captures the costs of stem cell acquisition performed in 
conjunction with recipient transplantation and preparation of tissue, 
and would report the results of our assessment to the APC Panel at a 
future meeting.
    In the CY 2011 OPPS/ASC proposed rule (75 FR 46208), for CY 2011, 
we proposed to continue our established composite APC policies for 
extended assessment and management, LDR prostate brachytherapy, cardiac 
electrophysiologic evaluation and ablation, mental health services, and 
multiple imaging services, as discussed in sections II.A.2.e.(1), 
II.A.2.e.(2), II.A.2.e.(3), II.A.2.e.(4), and II.A.2.e.(5), 
respectively, of the proposed rule and this final rule with comment 
period.
    Comment: A number of commenters recommended that we establish new 
composite APCs in the clinical areas of cardiac resynchronization 
therapy (CRT) and stem cell transplantation. Regarding a request for a 
new CRT composite APC, a few commenters stated that a CRT composite is 
appropriate, recalling that the APC Panel at its February and August 
2009 meetings recommended that we evaluate the implications of the 
creation of a new composite APC for CRT and recommended that we 
reconsider creating a composite APC or group of composite APCs for CRT. 
The commenters were concerned that we have not yet reported back to the 
APC Panel with an evaluation or a proposed composite APC for CRT 
services. Some commenters noted that the procedures involved with 
implantation of CRT, CRT with defibrillator (CRT-D) or CRT with 
pacemaker (CRT-P) are never captured in claims data as single bills, 
which we use in our standard ratesetting methodology; rather, the 
correctly coded CRT services always involve the submission of two CPT 
codes on the same claim. These commenters asserted that the CY 2011 
proposed rule claims data demonstrate that the percentage of single 
claims available for use in CRT ratesetting is very low compared to the 
total number of claims submitted for CRT-D or CRT-P services. The 
result, the commenters claimed, is payment fluctuations over the years 
for APC 0418 (Insertion of Left Ventricular Pacing Electrode), which a 
CRT composite APC payment methodology will lessen through a more robust 
set of claims.
    Several commenters supported the APC Panel's recommendation and 
welcomed our acceptance of that APC Panel recommendation to consider 
creating a composite APC or custom APC that captures the costs of stem 
cell acquisition performed in conjunction with recipient 
transplantation and preparation of tissue.
    Response: While we continue to consider the development and 
implementation of larger payment bundles, such as composite APCs (a 
long-term policy objective for the OPPS), and continue to explore other 
areas where this payment model may be utilized, in the CY 2011 OPPS/ASC 
proposed rule, we did not propose any new composite APCs for CY 2011 so 
that we may monitor the effects of the existing composite APCs on 
utilization and payment, similar to our treatment of the composite APC 
methodology mentioned in the CY 2010 OPPS/ASC final rule with comment 
period (74 FR 60391). As indicated below, we have accepted the APC 
Panel recommendations to consider composite APCs for CRT, and we will 
reconsider whether it would be appropriate to propose in the future 
composite APCs for CRT services and evaluate the implications of such a 
potential policy change, and report our findings to the APC Panel at a 
future meeting. We note that several commenters to the CY 2011 proposed 
rule supported that we did not propose any new composite APCs for CY 
2011, such as new multiple imaging APCs, without public notice and 
comment.
    As noted by a few commenters, at its February 2009 meeting, the APC 
Panel recommended that CMS evaluate the implications of creating 
composite APCs for CRT services with a defibrillator or pacemaker and 
report its findings to the APC Panel. The APC Panel also recommended at 
its August 2009 meeting that CMS reconsider creating a new composite 
APC or group of composite APCs for CRT procedures. While we did not 
propose any new composite APCs for CY 2010 or CY 2011, we accepted both 
of these APC Panel recommendations, as noted in the CY 2010 OPPS/ASC 
final rule with comment period (74 FR 60391). We will reconsider 
proposing to create composite APCs for CRT services and evaluate the 
implications of such a potential policy change, and report our findings 
to the APC Panel at a future meeting. As discussed in the 2011 OPPS/ASC 
proposed rule (75 FR 46208), we accepted the APC Panel recommendation 
made at its February 2010 meeting, that we consider creating a 
composite APC or custom APC that captures the costs of stem cell 
acquisition performed in conjunction with recipient transplantation and 
preparation of tissue. We also will consider bringing other potential 
composite APCs to the APC Panel for further discussion.
    After consideration of the public comments we received, for CY 
2011, we are finalizing, without modification, our proposal to continue 
our established composite APC policies for extended assessment and 
management, LDR prostate brachytherapy, cardiac electrophysiologic 
evaluation and ablation, mental health services, and multiple imaging 
services, as discussed in sections II.A.2.e.(1), II.A.2.e.(2), 
II.A.2.e.(3), II.A.2.e.(4), and II.A.2.e.(5), respectively, of this 
final rule with comment period.
(1) Extended Assessment and Management Composite APCs (APCs 8002 and 
8003)
    In the CY 2011 OPPS/ASC proposed rule (75 FR 46208), we proposed to 
continue to include composite APC 8002 (Level I Extended Assessment and 
Management Composite) and composite APC 8003 (Level II Extended 
Assessment and Management Composite) in the OPPS for CY 2011. For CY 
2008, we created these two composite APCs to provide payment to 
hospitals in certain circumstances when extended assessment and 
management of a patient occur (an extended visit). In most 
circumstances, observation services are supportive and ancillary to the 
other services provided to a patient. In the circumstances when 
observation care is provided in conjunction with a high level visit or 
direct referral and is an integral part of a patient's extended 
encounter of care, payment is made for the entire care encounter 
through one of two composite APCs as appropriate.
    As defined for the CY 2008 OPPS, composite APC 8002 describes an 
encounter for care provided to a patient that includes a high level 
(Level 5) clinic visit or direct referral for observation services in 
conjunction with observation services of substantial duration (72 FR 
66648 through 66649). Composite APC 8003 describes an encounter for 
care provided to a patient that includes a high level (Level 4 or 5) 
Type A emergency department visit, a high level (Level 5) Type B 
emergency department visit, or critical care services in conjunction 
with observation services of substantial duration. HCPCS code G0378 
(Observation services, per hour) is assigned status indicator ``N,'' 
signifying that its payment is always packaged. As noted in the CY 2008 
OPPS/ASC final rule with comment period (72 FR 66648 through 66649), 
the Integrated Outpatient Code Editor (I/OCE) evaluates every claim 
received to determine if payment through a composite APC is 
appropriate. If

[[Page 71853]]

payment through a composite APC is inappropriate, the I/OCE, in 
conjunction with the OPPS Pricer, determines the appropriate status 
indicator, APC, and payment for every code on a claim. The specific 
criteria that must be met for the two extended assessment and 
management composite APCs to be paid are provided below in the 
description of the claims that were selected for the calculation of the 
proposed CY 2011 median costs for these composite APCs. We did not 
propose to change these criteria for the CY 2011 OPPS.
    When we created composite APCs 8002 and 8003 for CY 2008, we 
retained as general reporting requirements for all observation services 
those criteria related to physician order and evaluation, 
documentation, and observation beginning and ending time as listed in 
the CY 2008 OPPS/ASC final rule with comment period (72 FR 66812). 
These are more general requirements that encourage hospitals to provide 
medically reasonable and necessary care and help to ensure the proper 
reporting of observation services on correctly coded hospital claims 
that reflect the full charges associated with all hospital resources 
utilized to provide the reported services. We also issued guidance 
clarifying the correct method for reporting the starting time for 
observation services sections 290.2.2 through 290.5 in the Medicare 
Claims Processing Manual (Pub. 100-4), Chapter 4, through Transmittal 
1745, Change Request 6492, issued May 22, 2009 and implemented July 6, 
2009. We did not propose to change these reporting requirements for the 
CY 2011 OPPS.
    In the CY 2011 OPPS/ASC proposed rule (75 FR 46209), for CY 2011, 
we proposed to continue the extended assessment and management 
composite APC payment methodology for APCs 8002 and 8003. We stated in 
the proposed rule that we continue to believe that the composite APCs 
8002 and 8003 and related policies provide the most appropriate means 
of paying for these services. We proposed to calculate the median costs 
for APCs 8002 and 8003 using all single and ``pseudo'' single procedure 
claims for CY 2009 that meet the criteria for payment of each composite 
APC.
    Specifically, to calculate the proposed median costs for composite 
APCs 8002 and 8003, we selected single and ``pseudo'' single procedure 
claims that met each of the following criteria:
    1. Did not contain a HCPCS code to which we have assigned status 
indicator ``T'' that is reported with a date of service 1 day earlier 
than the date of service associated with HCPCS code G0378. (By 
selecting these claims from single and ``pseudo'' single claims, we had 
already assured that they would not contain a code for a service with 
status indicator ``T'' on the same date of service.);
    2. Contained 8 or more units of HCPCS code G0378; and
    3. Contained one of the following codes:
     In the case of composite APC 8002, HCPCS code G0379 
(Direct referral of patient for hospital observation care) on the same 
date of service as G0378; or CPT code 99205 (Office or other outpatient 
visit for the evaluation and management of a new patient (Level 5)); or 
CPT code 99215 (Office or other outpatient visit for the evaluation and 
management of an established patient (Level 5)) provided on the same 
date of service or one day before the date of service for HCPCS code 
G0378.
     In the case of composite APC 8003, 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)); CPT code 99291 
(Critical care, evaluation and management of the critically ill or 
critically injured patient; first 30-74 minutes); or HCPCS code G0384 
(Level 5 hospital emergency department visit provided in a Type B 
emergency department) provided on the same date of service or one day 
before the date of service for HCPCS code G0378. (As discussed in 
detail in the CY 2009 OPPS/ASC final rule with comment period (73 FR 
68684), we added HCPCS code G0384 to the eligibility criteria for 
composite APC 8003 for CY 2009.)
    As discussed further in section IX. of the proposed rule and this 
final rule with comment period, and consistent with our CY 2008, CY 
2009, and CY 2010 final policies, when calculating the median costs for 
the clinic, Type A emergency department visit, Type B emergency 
department visit, and critical care APCs (0604 through 0617 and 0626 
through 0630), we utilize our methodology that excludes those claims 
for visits that are eligible for payment through the two extended 
assessment and management composite APCs, that is APC 8002 or APC 8003. 
We believe that this approach results in the most accurate cost 
estimates for APCs 0604 through 0617 and 0626 through 0630 for CY 2011.
    At its February 2010 meeting, the APC Panel recommended that CMS 
study the feasibility of expanding the extended assessment and 
management composite APC methodology to include services commonly 
furnished in conjunction with visits and observation services, such as 
drug infusion, electrocardiogram, and chest X-ray. As we indicated in 
the proposed rule, we are accepting this recommendation, and we will 
share our assessment with the APC Panel at a future meeting. At the 
August 2010 APC Panel meeting, a similar recommendation was made that 
CMS consider including other services commonly provided with extended 
assessment and management services in the extended assessment and 
management composite APC. We are accepting this recommendation as well.
    In summary, for CY 2011, we proposed to continue to include 
composite APCs 8002 and 8003 in the OPPS. We proposed to continue the 
extended assessment and management composite APC payment methodology 
and criteria that we finalized for CYs 2009 and 2010. We also proposed 
to calculate the median costs for APCs 8002 and 8003 using the same 
methodology that we used to calculate the medians for composite APCs 
8002 and 8003 for the CY 2008 OPPS (72 FR 66649). That is, we used all 
single and ``pseudo'' single procedure claims from CY 2009 that met the 
criteria for payment of each composite APC and applied the standard 
packaging and trimming rules to the claims before calculating the 
proposed CY 2011 median costs. The proposed CY 2011 median cost 
resulting from this methodology for composite APC 8002 was 
approximately $401, which was calculated from 17,398 single and 
``pseudo'' single bills that met the required criteria. The proposed CY 
2011 median cost for composite APC 8003 was approximately $743, which 
was calculated from 201,189 single and ``pseudo'' single bills that met 
the required criteria.
    Comment: One commenter supported CMS' policy to package payment for 
observation care and to not provide additional payment through an 
extended assessment and management composite APC payment when 
observation services are billed with significant surgical procedures. 
According to the commenter, the observation services in such cases are 
most likely related to post-procedural recovery, and thus no additional 
payment is warranted. The commenter stated that minor procedures with 
extended observation care, on the other hand, should be eligible for 
additional payment through APCs 8002 and 8003.
    Response: We appreciate the commenter's support of our policy not 
to allow payment of APC 8002 or 8003 for claims that include a HCPCS 
code to which we have assigned status indicator

[[Page 71854]]

``T'' that is reported with a date of service on the same day as or one 
day prior to the date of the service associated with HCPCS code G0378. 
We agree that payment for such services is included in the payment for 
the surgical procedure. It is unclear to us exactly how the commenter 
defines minor procedures; however, we do allow payment of APCs 8002 and 
8003 when ancillary services with status indicator ``X'' or packaged 
services with status indicator ``N'' appear on the same claim as HCPCS 
code G0378.
    Comment: One commenter recommended that CMS consider adopting the 
National Universal Billing Committee (NUBC) guidelines, utilized by 
private insurance carriers, which permit payment for observation care 
furnished during the time of an inpatient hospital stay that is 
subsequently overturned by a hospital's utilization review committee.
    Response: This comment is outside of the scope of the proposals in 
the CY 2011 OPPS/ASC proposed rule. However, we will consider the 
possibility of addressing this concern through other available 
mechanisms, as appropriate. We note that we have continued to emphasize 
that observation care is a hospital outpatient service, ordered by a 
physician and reported with a HCPCS code, like any other outpatient 
service. It is not a patient status for Medicare payment purposes.
    After consideration of the public comments we received, we are 
adopting as final, without modification, our CY 2011 proposal to 
continue to include composite APCs 8002 and 8003 in the OPPS and to 
continue the extended assessment and management composite APC payment 
methodology and criteria that we finalized for CYs 2009 and 2010. We 
also are calculating the median costs for APCs 8002 and 8003 using all 
single and ``pseudo'' single procedure claims from CY 2009 that meet 
the criteria for payment of each composite APC. The final CY 2011 
median cost resulting from this methodology for APC 8002 is 
approximately $390, which was calculated from 19,156 single and 
``pseudo'' single bills that met the required criteria. The final CY 
2011 median cost for composite APC 8003 is approximately $707, which 
was calculated from 221,246 single and ``pseudo'' single bills that met 
the required criteria.
(2) Low Dose Rate (LDR) Prostate Brachytherapy Composite APC (APC 8001)
    LDR prostate brachytherapy is a treatment for prostate cancer in 
which hollow needles or catheters are inserted into the prostate, 
followed by permanent implantation of radioactive sources into the 
prostate through the needles/catheters. At least two CPT codes are used 
to report the composite treatment service because there are separate 
codes that describe placement of the needles/catheters and the 
application of the brachytherapy sources: CPT code 55875 (Transperineal 
placement of needles or catheters into prostate for interstitial 
radioelement application, with or without cystoscopy) and CPT code 
77778 (Interstitial radiation source application; complex). Generally, 
the component services represented by both codes are provided in the 
same operative session in the same hospital on the same date of service 
to the Medicare beneficiary being treated with LDR brachytherapy for 
prostate cancer. As discussed in the CY 2008 OPPS/ASC final rule with 
comment period (72 FR 66653), OPPS payment rates for CPT code 77778, in 
particular, had fluctuated over the years. We were frequently informed 
by the public that reliance on single procedure claims to set the 
median costs for these services resulted in use of mainly incorrectly 
coded claims for LDR prostate brachytherapy because a correctly coded 
claim should include, for the same date of service, CPT codes for both 
needle/catheter placement and application of radiation sources, as well 
as separately coded imaging and radiation therapy planning services 
(that is, a multiple procedure claim).
    In order to base payment on claims for the most common clinical 
scenario, and to further our goal of providing payment under the OPPS 
for a larger bundle of component services provided in a single hospital 
encounter, beginning in CY 2008, we provide a single payment for LDR 
prostate brachytherapy when the composite service, reported as CPT 
codes 55875 and 77778, is furnished in a single hospital encounter. We 
base the payment for composite APC 8001 (LDR Prostate Brachytherapy 
Composite) on the median cost derived from claims for the same date of 
service that contain both CPT codes 55875 and 77778 and that do not 
contain other separately paid codes that are not on the bypass list. In 
uncommon occurrences in which the services are billed individually, 
hospitals continue to receive separate payments for the individual 
services. We refer readers to the CY 2008 OPPS/ASC final rule with 
comment period (72 FR 66652 through 66655) for a full history of OPPS 
payment for LDR prostate brachytherapy and a detailed description of 
how we developed the LDR prostate brachytherapy composite APC.
    In the CY 2011 OPPS/ASC proposed rule (75 FR 46210), for CY 2011, 
we proposed to continue paying for LDR prostate brachytherapy services 
using the composite APC methodology proposed and implemented for CYs 
2008, 2009, and 2010. That is, we proposed to use CY 2009 claims on 
which both CPT codes 55875 and 77778 were billed on the same date of 
service with no other separately paid procedure codes (other than those 
on the bypass list) to calculate the payment rate for composite APC 
8001. Consistent with our CY 2008 through CY 2010 practice, we proposed 
not to use the claims that meet these criteria in the calculation of 
the median costs for APCs 0163 (Level IV Cystourethroscopy and Other 
Genitourinary Procedures) and 0651 (Complex Interstitial Radiation 
Source Application), the APCs to which CPT codes 55875 and 77778 are 
assigned, respectively. The median costs for APCs 0163 and 0651 would 
continue to be calculated using single and ``pseudo'' single procedure 
claims. We indicated in the proposed rule that we continue to believe 
that this composite APC contributes to our goal of creating hospital 
incentives for efficiency and cost containment, while providing 
hospitals with the most flexibility to manage their resources. We also 
continue to believe that data from claims reporting both services 
required for LDR prostate brachytherapy provide the most accurate 
median cost upon which to base the composite APC payment rate.
    Using partial year CY 2009 claims data available for the CY 2011 
proposed rule, we were able to use 788 claims that contained both CPT 
codes and 55875 and 77778 to calculate the median cost upon which the 
proposed CY 2011 payment for composite APC 8001 was based. The proposed 
median cost for composite APC 8001 for CY 2011 was approximately 
$3,265. This is an increase compared to the CY 2010 OPPS/ASC final rule 
with comment period in which we calculated a final median cost for this 
composite APC of approximately $3,084 based on a full year of CY 2008 
claims data. The proposed CY 2011 median cost for this composite APC 
was slightly less than $3,604, the sum of the proposed median costs for 
APCs 0163 and 0651 ($2,606 + $998), the APCs to which CPT codes 55875 
and 77778 map if one service is billed on a claim without the other. We 
indicated in the proposed rule that we believe the proposed CY 2011 
median cost for composite APC 8001 of approximately $3,265, calculated 
from

[[Page 71855]]

claims we believe to be correctly coded, would result in a reasonable 
and appropriate payment rate for this service in CY 2011.
    Comment: One commenter expressed appreciation for the proposed 
payment increase for composite APC 8001 based on an increase in median 
costs, and recommended that CMS finalize the proposed CY 2011 payment 
rate. Another commenter was concerned that the 788 claims with both CPT 
codes 55875 and 77778 were used for development of the proposed CY 2011 
payment rate for APC 8001 was an extremely low number of claims 
compared to the number of these procedures performed in hospitals for 
cancer patients, and encouraged CMS to explore ways to capture more 
multiple claims to be used in future ratesetting for composite APC 
8001.
    Response: We appreciate the commenter's support for our proposed 
payment rate for composite APC 8001. Regarding the commenter's concern 
with the number of CY 2011 proposed rule claims used for APC 8001 
proposed rate, for the CY 2011 final rule with comment period, we have 
849 claims that contain both CPT codes 55875 and 77778 to calculate the 
median cost of APC 8001 of approximately $3,195. We believe this is a 
robust number of claims from which to calculate accurate and 
appropriate payment rates for the services assigned to APC 8001. For 
all OPPS services, we continue our efforts to use the data from as many 
multiple procedure claims as possible, through approaches such as use 
of the bypass list and date splitting of claims as described further in 
section II.A. of this final rule with comment period, and through 
methodologies such as increased packaging and composite APCs.
    After consideration of the public comments we received, we are 
finalizing, without modification, our proposal to continue paying for 
LDR prostate brachytherapy services using the composite APC methodology 
implemented for CYs 2008, 2009, and 2010 described above in this 
section. The final CY 2011 median cost for composite APC 8001 is 
approximately $3,195 calculated from 849 single bills.
(3) Cardiac Electrophysiologic Evaluation and Ablation Composite APC 
(APC 8000)
    Cardiac electrophysiologic evaluation and ablation services 
frequently are performed in varying combinations with one another 
during a single episode-of-care in the hospital outpatient setting. 
Therefore, correctly coded claims for these services often include 
multiple codes for component services that are reported with different 
CPT codes and that, prior to CY 2008, were always paid separately 
through different APCs (specifically, APC 0085 (Level II 
Electrophysiologic Evaluation), APC 0086 (Ablate Heart Dysrhythm 
Focus), and APC 0087 (Cardiac Electrophysiologic Recording/Mapping)). 
As a result, there would never be many single bills for cardiac 
electrophysiologic evaluation and ablation services, and those that are 
reported as single bills would often represent atypical cases or 
incorrectly coded claims. As described in the CY 2008 OPPS/ASC final 
rule with comment period (72 FR 66655 through 66659), the APC Panel and 
the public expressed persistent concerns regarding the limited and 
reportedly unrepresentative single bills available for use in 
calculating the median costs for these services according to our 
standard OPPS methodology.
    Effective January 1, 2008, we established APC 8000 (Cardiac 
Electrophysiologic Evaluation and Ablation Composite) to pay for a 
composite service made up of at least one specified electrophysiologic 
evaluation service and one specified electrophysiologic ablation 
service. Calculating a composite APC for these services allowed us to 
utilize many more claims than were available to establish the 
individual APC median costs for these services, and we also saw this 
composite APC as an opportunity to advance our stated goal of promoting 
hospital efficiency through larger payment bundles. In order to 
calculate the median cost upon which the payment rate for composite APC 
8000 is based, we used multiple procedure claims that contained at 
least one CPT code from group A for evaluation services and at least 
one CPT code from group B for ablation services reported on the same 
date of service on an individual claim. Table 9 in the CY 2008 OPPS/ASC 
final rule with comment period (72 FR 66656) identified the CPT codes 
that are assigned to groups A and B. For a full discussion of how we 
identified the group A and group B procedures and established the 
payment rate for the cardiac electrophysiologic evaluation and ablation 
composite APC, we refer readers to the CY 2008 OPPS/ASC final rule with 
comment period (72 FR 66655 through 66659). Where a service in group A 
is furnished on a date of service that is different from the date of 
service for a code in group B for the same beneficiary, payments are 
made under the appropriate single procedure APCs and the composite APC 
does not apply.
    In the CY 2011 OPPS/ASC proposed rule (75 FR 46210), for CY 2011, 
we proposed to continue to pay for cardiac electrophysiologic 
evaluation and ablation services using the composite APC methodology 
proposed and implemented for CY 2008, CY 2009, and CY 2010. Consistent 
with our CY 2008 through CY 2010 practice, we proposed not to use the 
claims that meet the composite payment criteria in the calculation of 
the median costs for APC 0085 and APC 0086, to which the CPT codes in 
both groups A and B for composite APC 8000 are otherwise assigned. 
Median costs for APCs 0085 and 0086 would continue to be calculated 
using single procedure claims. As we indicated in the proposed rule, we 
continue to believe that the composite APC methodology for cardiac 
electrophysiologic evaluation and ablation services is the most 
efficient and effective way to use the claims data for the majority of 
these services and best represents the hospital resources associated 
with performing the common combinations of these services that are 
clinically typical. Furthermore, this approach creates incentives for 
efficiency by providing a single payment for a larger bundle of major 
procedures when they are performed together, in contrast to continued 
separate payment for each of the individual procedures.
    For CY 2011, using partial year CY 2009 claims data available for 
the proposed rule, we were able to use 8,964 claims containing a 
combination of group A and group B codes and calculated a proposed 
median cost of approximately $10,834 for composite APC 8000. This was 
an increase compared to the CY 2010 OPPS/ASC final rule with comment 
period in which we calculated a final median cost for this composite 
APC of approximately $10,026 based on a full year of CY 2008 claims 
data. We indicated in the proposed rule that we believe the proposed 
median cost of $10,834 calculated from a high volume of correctly coded 
multiple procedure claims would result in an accurate and appropriate 
proposed payment for cardiac electrophysiologic evaluation and ablation 
services when at least one evaluation service is furnished during the 
same clinical encounter as at least one ablation service.
    Comment: One commenter supported CMS' proposal to continue to pay 
for cardiac electrophysiologic evaluation and ablation services using 
composite APC 8001, as the most efficient and

[[Page 71856]]

effective way to use claims data for these services.
    Response: We appreciate the supportive comment, and agree that 
composite APC 8001 promotes efficient use of resources and results in 
accurate and appropriate payment rates for cardiac electrophysiologic 
evaluation and ablation services.
    After consideration of the public comments received, we are 
finalizing our proposal, without modification, to continue to pay for 
cardiac electrophysiologic evaluation and ablation services using the 
composite APC methodology implemented for CY 2008, CY 2009, and CY 
2010. For this final rule with comment period, we were able to use 
9,736 claims from CY 2009 containing a combination of group A and group 
B codes and calculated a final CY 2011 median cost of approximately 
$10,673 for composite APC 8000. Table 12 below lists the groups of 
procedures upon which we based composite APC 8000 for CY 2011.

 Table 12--Groups of Cardiac Electrophysiologic Evaluation and Ablation Procedures Upon Which Composite APC 8000
                                                    Is Based
----------------------------------------------------------------------------------------------------------------
                                                                                   Final single
 Codes used in combinations: At least one in group A and one in     CY 2011 CPT    code CY 2011    Final CY 2011
                             group B                                   code             APC       SI (composite)
----------------------------------------------------------------------------------------------------------------
                                                     Group A
----------------------------------------------------------------------------------------------------------------
Comprehensive electrophysiologic evaluation with right atrial              93619            0085              Q3
 pacing and recording, right ventricular pacing and recording,
 His bundle recording, including insertion and repositioning of
 multiple electrode catheters, without induction or attempted
 induction of arrhythmia........................................
Comprehensive electrophysiologic evaluation including insertion            93620            0085              Q3
 and repositioning of multiple electrode catheters with
 induction or attempted induction of arrhythmia; with right
 atrial pacing and recording, right ventricular pacing and
 recording, His bundle recording................................
----------------------------------------------------------------------------------------------------------------
                                                     Group B
----------------------------------------------------------------------------------------------------------------
Intracardiac catheter ablation of atrioventricular node                    93650            0085              Q3
 function, atrioventricular conduction for creation of complete
 heart block, with or without temporary pacemaker placement.....
Intracardiac catheter ablation of arrhythmogenic focus; for                93651            0086              Q3
 treatment of supraventricular tachycardia by ablation of fast
 or slow atrioventricular pathways, accessory atrioventricular
 connections or other atrial foci, singly or in combination.....
Intracardiac catheter ablation of arrhythmogenic focus; for                93652            0086              Q3
 treatment of ventricular tachycardia...........................
----------------------------------------------------------------------------------------------------------------

(4) Mental Health Services Composite APC (APC 0034)
    In the CY 2011 OPPS/ASC proposed rule (75 FR 46211), we proposed to 
continue our longstanding policy of limiting the aggregate payment for 
specified less resource-intensive mental health services furnished on 
the same date to the payment for a day of partial hospitalization, 
which we consider to be the most resource-intensive of all outpatient 
mental health treatment for CY 2011. 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. We continue to 
believe that the costs associated with administering a partial 
hospitalization program represent the most resource-intensive of all 
outpatient mental health treatment. Therefore, we do not believe that 
we should pay more for a day of individual mental health services under 
the OPPS than the partial hospitalization per diem payment.
    As discussed in detail in section X. of the CY 2011 OPPS/ASC 
proposed rule (75 FR 46298 through 46301) and this final rule with 
comment period, for CY 2011, we proposed to use a provider-specific two 
tiered payment approach for partial hospitalization services that 
distinguishes payment made for services furnished in a CMHC from 
payment made for services furnished in a hospital. Specifically, we 
proposed one APC for partial hospitalization program days with three 
services furnished in a CMHC (APC 0172, Level I Partial Hospitalization 
(3 services) for CMHCs) and one APC for days with four or more services 
furnished in a CMHC (APC 0173, Level II Partial Hospitalization (4 or 
more services) for CMHCs). We proposed that the payment rates for these 
two APCs be based upon the median per diem costs calculated using data 
only from CMHCs. Similarly, we proposed one APC for partial 
hospitalization program days with three services furnished in a 
hospital (APC 0175, Level I Partial Hospitalization (3 services) for 
Hospital-Based PHPs), and one APC for days with four or more services 
furnished in a hospital (APC 0176, Level II Partial Hospitalization (4 
or more services) for Hospital-Based PHPs). We proposed that the 
payment rates for these two APCs be based on the median per diem costs 
calculated using data only from hospitals.
    Because our longstanding policy of limiting the aggregate payment 
for specified less resource-intensive mental health services furnished 
on the same date to the payment rate for the most resource-intensive of 
all outpatient mental health treatment, we proposed to set the CY 2011 
payment rate for APC 0034 (Mental Health Services Composite) at the 
same rate as we proposed for APC 0176, which is the maximum partial 
hospitalization per diem payment. As we stated in the CY 2011 OPPS/ASC 
proposed rule (75 FR 46212), we believe this APC payment rate would 
provide the most appropriate payment for composite APC 0034, taking 
into consideration the intensity of the mental health services and the 
differences in the HCPCS codes for mental health services that could be 
paid through this composite APC compared with the HCPCS codes that 
could be paid through partial hospitalization APC 0176. When the 
aggregate payment for specified mental health services provided by one 
hospital to a single beneficiary on one date of service based on the 
payment rates associated with the APCs for the individual services 
exceeds the maximum per diem partial hospitalization payment, we 
proposed that those specified mental health services would be assigned 
to APC 0034. We proposed that APC 0034 would have the same payment rate 
as APC 0176 and that the hospital would continue to be paid one unit of 
APC

[[Page 71857]]

0034. The I/OCE currently determines, and we proposed for CY 2011 that 
it would continue to determine, whether to pay these specified mental 
health services individually or to make a single payment at the same 
rate as the APC 0176 per diem rate for partial hospitalization for all 
of the specified mental health services furnished by the hospital on 
that single date of service.
    Comment: Many commenters strongly supported the CMS proposal to use 
the hospital-based partial hospitalization APC 0176 (4 or more units of 
service) as the daily payment cap for less intensive mental health 
services provided in hospital outpatient departments.
    Response: We appreciate the commenters' support for utilizing the 
hospital-based partial hospitalization APC 0176 (4 or more units of 
service) as the daily payment cap for less intensive mental health 
services provided in hospital outpatient departments. We continue to 
believe that the costs associated with administering a partial 
hospitalization program represent the most resource intensive of all 
outpatient mental health treatment, and we do not believe CMS should 
pay more for a day of individual mental health services under the OPPS.
    After consideration of the public comments we received, we are 
finalizing our CY 2011 proposal, without modification, to limit the 
aggregate payment for specified less intensive outpatient mental health 
services furnished on the same date by a hospital to the payment for a 
day of partial hospitalization, specifically APC 0176.
(5) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007, and 
8008)
    Prior to CY 2009, hospitals received a full APC payment for each 
imaging service on a claim, regardless of how many procedures were 
performed during a single session using the same imaging modality. 
Based on extensive data analysis, we determined that this practice 
neither reflected nor promoted the efficiencies hospitals can achieve 
when performing multiple imaging procedures during a single session (73 
FR 41448 through 41450). As a result of our data analysis, and in 
response to ongoing recommendations from MedPAC to improve payment 
accuracy for imaging services under the OPPS, we expanded the composite 
APC model developed in CY 2008 to multiple imaging services. Effective 
January 1, 2009, we provide a single payment each time a hospital bills 
more than one imaging procedure within an imaging family on the same 
date of service. 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 13 of the CY 
2010 OPPS/ASC final rule with comment period (74 FR 60403 through 
60407).
    While there are three imaging families, there are five multiple 
imaging composite APCs due to the statutory requirement at 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 in 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 for APC 8008, the ``with contrast'' composite APC.
    Hospitals continue to use the same HCPCS codes to report imaging 
procedures, and the I/OCE determines when combinations of imaging 
procedures qualify for composite APC payment or map to standard (sole 
service) APCs for payment. We make a single payment for those imaging 
procedures that qualify for composite APC payment, as well as 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).
    At its February 2010 meeting, the APC Panel recommended that CMS 
continue providing analysis on an ongoing basis of the impact on 
beneficiaries of the multiple imaging composite APCs as data become 
available. In the CY 2011 OPPS/ASC proposed rule, we indicated that we 
are accepting this recommendation and will provide the requested 
analysis to the APC Panel at a future meeting.
    In summary, for CY 2011, we proposed to continue paying for all 
multiple imaging procedures within an imaging family performed on the 
same date of service using the multiple imaging composite payment 
methodology. The proposed CY 2011 payment rates for the five multiple 
imaging composite APCs (APC 8004, APC 8005, APC 8006, APC 8007, and APC 
8008) were based on median costs calculated from the partial year CY 
2009 claims available for the proposed rule that would have qualified 
for composite payment under the current policy (that is, those claims 
with more than one procedure within the same family on a single date of 
service). To calculate the proposed median costs, we used the same 
methodology that we used to calculate the final CY 2010 median costs 
for these composite APCs. That is, we removed any HCPCS codes in the 
OPPS imaging families that overlapped with codes on our bypass list 
(``overlap bypass codes'') to avoid splitting claims with multiple 
units or multiple occurrences of codes in an OPPS imaging family into 
new ``pseudo'' single claims. The imaging HCPCS codes that we removed 
from the bypass list for purposes of calculating the proposed multiple 
imaging composite APC median costs appeared in Table 8 of the proposed 
rule. (We note that, consistent with our proposal in section II.A.1.b. 
of the proposed rule to add CPT code 70547 (Magnetic resonance 
angiography, neck; without contrast material(s)) to the list of bypass 
codes for CY 2011, we also proposed to add CPT code 70547 to the list 
of proposed OPPS imaging family services overlapping with HCPCS codes 
on the proposed CY 2010 bypass list.) We integrated the identification 
of imaging composite ``single session'' claims, that is, claims with 
multiple imaging procedures within the same family on the same date of 
service, into the creation of ``pseudo'' single procedure claims to 
ensure that claims were split in the ``pseudo'' single process into 
accurate reflections of either a composite ``single session'' imaging 
service or a standard sole imaging

[[Page 71858]]

service resource cost. Like all single bills, the new composite 
``single session'' claims were for the same date of service and 
contained no other separately paid services in order to isolate the 
session imaging costs. Our last step after processing all claims 
through the ``pseudo'' single process was to reassess the remaining 
multiple procedure claims using the full bypass list and bypass process 
in order to determine if we could make other ``pseudo'' single bills. 
That is, we assessed whether a single separately paid service remained 
on the claim after removing line-items for the ``overlap bypass 
codes.''
    We were able to identify 1.7 million ``single session'' claims out 
of an estimated 2.7 million potential composite cases from our 
ratesetting claims data, or well over half of all eligible claims, to 
calculate the proposed CY 2011 median costs for the multiple imaging 
composite APCs. We listed in Table 7 of the proposed rule the HCPCS 
codes that would be subject to the proposed multiple imaging composite 
policy and their respective families for CY 2011.
    Comment: A large number of commenters were concerned with the 
composite APC policy for imaging services, and recommended separate 
payment for all imaging procedures regardless of whether multiple 
procedures are performed during the same session. Commenters supported 
the fact that CMS did not propose new composite APCs or to expand the 
multiple imaging composite APC policy for CY 2011, opining that no 
expansion of the imaging composite APCs should be considered until 
substantial data on the initial five APCs are available for public 
review and comment. The commenters further recommended that future 
proposals for expanding the imaging composite APCs should be subject to 
public notice and comment. A few commenters suggested that CMS 
undertake robust data collection to determine if imaging costs are 
correctly captured. Other commenters appreciated our proposed increases 
in payment for multiple imaging composite APCs. However, the commenters 
were concerned that the multiple imaging composite APC payment rates 
remained insufficient to reflect the current costs of diagnostic 
imaging procedures, particularly when more than two imaging procedures 
are performed. One commenter recommended that we evaluate whether the 
methodology used to establish existing composite APCs results in 
payments that accurately reflect all of the resources needed to perform 
these services. A number of commenters voiced agreement with the APC 
Panel's recommendation that we continue to provide analyses on an 
ongoing basis of the impact on beneficiaries of the multiple imaging 
composite APC methodology as data becomes available.
    One commenter requested separate payment when imaging services of 
the same modality are performed on the same day but at different times. 
The commenter claimed that for some patients, such as cancer or trauma 
patients, such protocols are essential for safety and efficacy, and 
that the same economies of scale that can be achieved by performing 
multiple imaging procedures during the same sitting may not be realized 
if a significant amount of time passes between the first and subsequent 
imaging procedures. The commenter recommended that CMS implement a 
modifier or condition code to distinguish between imaging services 
performed during the same sitting and imaging services performed at 
different times on the same day.
    Another commenter opposed the multiple imaging composite APCs, 
stating that the policy penalizes specific imaging services under the 
guise of creating incentives for efficiencies, which will not be 
achieved because payment rates are already very low under the Deficit 
Reduction Act. The commenter further asserted that hospitals will be 
encouraged to perform imaging studies on separate days to avoid payment 
under composite APCs, thus causing inconvenience to Medicare 
beneficiaries.
    Response: We appreciate the support for our decision not to propose 
any new composite APCs for CY 2011, and for the proposed CY 2011 
payment rate for the multiple imaging composite APCs. We would subject 
any future proposals on composite APCs to public notice and opportunity 
for comment through our normal rulemaking process. As noted previously, 
we are accepting the APC Panel recommendation to provide analysis on an 
ongoing basis of the impact on beneficiaries of the multiple imaging 
composite APCs as data become available, which would include analysis 
of whether imaging costs are correctly captured. We do not agree with 
the comments that the composite APC payment rates are insufficient to 
reflect the current costs of diagnostic imaging procedures when more 
than two imaging procedures are performed. As we stated in the CY 2010 
OPPS/ASC final rule with comment period (74 FR 60400), we do not 
believe that, in aggregate, OPPS payment for multiple imaging services 
will be inadequate under the multiple imaging composite APC payment 
methodology so as to limit beneficiary access, even considering the 
minority of cases in which hospitals provide more than two imaging 
procedures on a single date of service. The median costs upon which the 
payment rates for the multiple imaging composite APCs are based are 
calculated using CY 2009 claims that would have qualified for composite 
payment, including those with only two imaging procedures and those 
with substantially higher numbers of imaging procedures. Payment based 
on a measure of central tendency is a principle of any prospective 
payment system. In some individual cases, payment exceeds the average 
cost and in other cases payment is less than the average cost. On 
balance, however, payment should approximate the relative cost of the 
average case, recognizing that, as a prospective payment system, the 
OPPS is a system of averages. Moreover, consistent with our policy 
regarding APC payments made on a prospective basis, multiple composite 
imaging services are subject to the outlier provision of section 
1833(t)(5) of the Act for high cost cases meeting specific conditions. 
We also do not agree with the commenters that the multiple imaging 
composite APC payment methodology will result in hospitals requiring 
patients who need more than two imaging procedures to return for 
additional sittings on other days. As we stated in the CY 2009 OPPS/ASC 
final rule with comment period (73 FR 68562), we do not believe that, 
in general, hospitals would routinely and for purposes of financial 
gain put patients at unnecessary risk of harm from radiation or 
contrast exposure, or inconvenience them or risk lack of timely follow-
up to the point of making them return to the hospital on separate days 
to receive medically necessary diagnostic studies. However, we again 
note that we do have the capacity to examine our claims data for 
patterns of fragmented care. If we were to find a pattern in which a 
hospital appears to be fragmenting imaging services across multiple 
days for individual beneficiaries, we could refer it for review by the 
Quality Improvement Organizations (QIOs) with respect to the quality of 
care furnished, or for review by the Program Safeguard Contractors of 
claims against the medical record, as appropriate to the circumstances 
we found.
    As we stated in the CY 2010 final rule with comment period (74 FR 
60399), we do not agree with the commenters that multiple imaging 
procedures of the same modality provided on the same date of service 
but at different times

[[Page 71859]]

should be exempt from the multiple imaging composite payment 
methodology. As we indicated in the CY 2009 OPPS/ASC final rule with 
comment period (73 FR 68565) and the CY 2010 OPPS/ASC final rule with 
comment period (74 FR 60399), we believe that composite payment is 
appropriate even when procedures are provided on the same date of 
service but at different times because hospitals do not expend the same 
facility resources each and every time a patient is seen for a distinct 
imaging service in a separate imaging session. In most cases, we expect 
that patients in these circumstances would receive imaging procedures 
at different times during a single prolonged hospital outpatient 
encounter. The efficiencies that may be gained from providing multiple 
imaging procedures during a single session are achieved in ways other 
than merely not having to reposition the patient. Even if the same 
level of efficiencies could not be gained for multiple imaging 
procedures performed on the same date of service but at different 
times, we expect that any higher costs associated with these cases 
would be reflected in the claims data and cost reports we use to 
calculate the median costs for the multiple imaging composite APCs and, 
therefore, in the payment rates for the multiple imaging composite 
APCs. Therefore, we do not believe it is necessary or appropriate for 
hospitals to report imaging procedures provided on the same date of 
service but during different sittings any differently than they would 
report imaging procedures performed consecutively in one sitting with 
no time in between the imaging services. In addition, for the above 
reasons, we do not believe it is necessary to implement a modifier or 
condition code to distinguish between such cases.
    We disagree with the commenter that multiple imaging composite APCs 
penalize specific imaging services rather than create incentives for 
efficiencies, and that efficiencies cannot be achieved because payment 
rates are already very low under the DRA. As stated in the CY 2009 
OPPS/ASC final rule with comment period (72 FR 66613) and previously in 
this section, we believe that 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. The DRA does not reduce OPPS payment rates for imaging, so 
we do not agree that this contributes in any way to payment rates for 
imaging services that are too low under the OPPS.
    After consideration of the public comments we received, we are 
adopting our CY 2011 proposal, without modification, to continue paying 
for all multiple imaging procedures within an imaging family performed 
on the same date of service using the multiple imaging composite 
payment methodology. The CY 2011 payment rates for the five multiple 
imaging composite APCs (APC 8004, APC 8005, APC 8006, APC 8007, and APC 
8008) are based on median costs calculated from the CY 2009 claims that 
would have qualified for composite payment under the current policy 
(that is, those claims with more than one procedure within the same 
family on a single date of service). Using the same ratesetting 
methodology described in the CY 2011 OPPS/ASC proposed rule (75 FR 
46213), we were able to identify 1.9 million ``single session'' claims 
out of an estimated 2.9 million potential composite cases from our 
ratesetting claims data, or well over half of all eligible claims, to 
calculate the final CY 2011 median costs for the multiple imaging 
composite APCs.
    Table 13 below lists the HCPCS codes that will be subject to the 
multiple imaging composite policy and their respective families for CY 
2011. We note that we have updated Table 13 to reflect HCPCS coding 
changes for CY 2011. Specifically, we added CPT code 74176 (Computed 
tomography, abdomen and pelvis; without contrast material), CPT code 
74177 (Computed tomography, abdomen and pelvis; with contrast 
material(s)), and CPT code 74178 (Computed tomography, abdomen and 
pelvis; without contrast material in one or both body regions, followed 
by contrast material(s) and further sections in one or both body 
regions) to the CT and CTA family. These codes are new for CY 2011. We 
also added codes C8931 (Magnetic resonance angiography with contrast, 
spinal canal and contents), C8932 (Magnetic resonance angiography 
without contrast, spinal canal and contents), C8933 (Magnetic resonance 
angiography without contrast followed by with contrast, spinal canal 
and contents), C8934 (Magnetic resonance angiography with contrast, 
upper extremity), C8935 (Magnetic resonance angiography without 
contrast, upper extremity), and C8936 (Magnetic resonance angiography 
without contrast followed by with contrast, upper extremity), to the 
MRI and MRA family. These codes were recognized for OPPS payment in the 
October 2010 OPPS Update (Transmittal 2050, Change Request 7117, dated 
September 17, 2010). The HCPCS codes listed in Table 13 are assigned 
status indicated ``Q3''' in Addendum B to this final rule with comment 
period to identify their status as potentially payable through a 
composite APC. Their composite APC assignment is identified in Addendum 
M to this final rule with comment period. Table 14 below lists the OPPS 
imaging family services that overlap with HCPCS codes on the CY 2011 
bypass list.

Table 13--OPPS Imaging Families and Multiple Imaging Procedure Composite
                                  APCs
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                          Family 1--Ultrasound
------------------------------------------------------------------------
  CY 2011 APC 8004 (Ultrasound composite)      CY 2011 Approximate APC
                                                        median
                                            cost = $188
------------------------------------------------------------------------
76604.....................................  Us exam, chest.
76700.....................................  Us exam, abdom, complete.
76705.....................................  Echo exam of abdomen.
76770.....................................  Us exam abdo back wall,
                                             comp.
76775.....................................  Us exam abdo back wall, lim.
76776.....................................  Us exam k transpl w/Doppler.
76831.....................................  Echo exam, uterus.
76856.....................................  Us exam, pelvic, complete.
76870.....................................  Us exam, scrotum.
76857.....................................  Us exam, pelvic, limited.
------------------------------------------------------------------------
             Family 2--CT and CTA with and without Contrast
------------------------------------------------------------------------
   CY 2011 APC 8005 (CT and CTA without        CY 2011 Approximate APC
           Contrast Composite)*                   Median Cost = $416
------------------------------------------------------------------------
70450.....................................  Ct head/brain w/o dye.
70480.....................................  Ct orbit/ear/fossa w/o dye.
70486.....................................  Ct maxillofacial w/o dye.
70490.....................................  Ct soft tissue neck w/o dye.
71250.....................................  Ct thorax w/o dye.
72125.....................................  Ct neck spine w/o dye.
72128.....................................  Ct chest spine w/o dye.
72131.....................................  Ct lumbar spine w/o dye.
72192.....................................  Ct pelvis w/o dye.
73200.....................................  Ct upper extremity w/o dye.
73700.....................................  Ct lower extremity w/o dye.
74150.....................................  Ct abdomen w/o dye.
74261.....................................  Ct colonography, w/o dye.
74176.....................................  Ct angio abd & pelvis.
------------------------------------------------------------------------
 

[[Page 71860]]

 
CY 2011 APC 8006 (CT and CTA with Contrast     CY 2011 Approximate APC
                Composite)                        Median Cost = $622
------------------------------------------------------------------------
70487.....................................  Ct maxillofacial w/dye.
70460.....................................  Ct head/brain w/dye.
70470.....................................  Ct head/brain w/o & w/dye.
70481.....................................  Ct orbit/ear/fossa w/dye.
70482.....................................  Ct orbit/ear/fossa w/o & w/
                                             dye.
70488.....................................  Ct maxillofacial w/o & w/
                                             dye.
70491.....................................  Ct soft tissue neck w/dye.
70492.....................................  Ct sft tsue nck w/o & w/dye.
70496.....................................  Ct angiography, head.
70498.....................................  Ct angiography, neck.
71260.....................................  Ct thorax w/dye.
71270.....................................  Ct thorax w/o & w/dye.
71275.....................................  Ct angiography, chest.
72126.....................................  Ct neck spine w/dye.
72127.....................................  Ct neck spine w/o & w/dye.
72129.....................................  Ct chest spine w/dye.
72130.....................................  Ct chest spine w/o & w/dye.
72132.....................................  Ct lumbar spine w/dye.
72133.....................................  Ct lumbar spine w/o & w/dye.
72191.....................................  Ct angiograph pelv w/o & w/
                                             dye.
72193.....................................  Ct pelvis w/dye.
72194.....................................  Ct pelvis w/o & w/dye.
73201.....................................  Ct upper extremity w/dye.
73202.....................................  Ct uppr extremity w/o & w/
                                             dye.
73206.....................................  Ct angio upr extrm w/o & w/
                                             dye.
73701.....................................  Ct lower extremity w/dye.
73702.....................................  Ct lwr extremity w/o & w/
                                             dye.
73706.....................................  Ct angio lwr extr w/o & w/
                                             dye.
74160.....................................  Ct abdomen w/dye.
74170.....................................  Ct abdomen w/o & w/dye.
74175.....................................  Ct angio abdom w/o & w/dye.
74262.....................................  Ct colonography, w/dye.
75635.....................................  Ct angio abdominal arteries.
74177.....................................  Ct angio abd & pelv w/
                                             contrast.
74178.....................................  Ct angio abd & pelv 1+
                                             regns.
------------------------------------------------------------------------
* If a ``without contrast'' CT or CTA procedure is performed during the
 same session as a ``with contrast'' CT or CTA procedure, the I/OCE will
 assign APC 8006 rather than APC 8005.
------------------------------------------------------------------------
 
             Family 3--MRI and MRA with and without Contrast
------------------------------------------------------------------------
   CY 2011 APC 8007 (MRI and MRA without       CY 2011 Approximate APC
           Contrast Composite)*                   Median Cost = $699
------------------------------------------------------------------------
70336.....................................  Magnetic image, jaw joint.
70540.....................................  Mri orbit/face/neck w/o dye.
70544.....................................  Mri angiography head w/o
                                             dye.
70547.....................................  Mri angiography neck w/o
                                             dye.
70551.....................................  Mri brain w/o dye.
70554.....................................  Fmri brain by tech.
71550.....................................  Mri chest w/o dye.
72141.....................................  Mri neck spine w/o dye.
72146.....................................  Mri chest spine w/o dye.
72148.....................................  Mri lumbar spine w/o dye.
72195.....................................  Mri pelvis w/o dye.
73218.....................................  Mri upper extremity w/o dye.
73221.....................................  Mri joint upr extrem w/o
                                             dye.
73718.....................................  Mri lower extremity w/o dye.
73721.....................................  Mri jnt of lwr extre w/o
                                             dye.
74181.....................................  Mri abdomen w/o dye.
75557.....................................  Cardiac mri for morph.
75559.....................................  Cardiac mri w/stress img.
C8901.....................................  MRA w/o cont, abd.
C8904.....................................  MRI w/o cont, breast, uni.
C8907.....................................  MRI w/o cont, breast, bi.
C8910.....................................  MRA w/o cont, chest.
C8913.....................................  MRA w/o cont, lwr ext.
C8919.....................................  MRA w/o cont, pelvis.
C8932.....................................  MRA, w/o dye, spinal canal.
C8935.....................................  MRA, w/o dye, upper extr.
------------------------------------------------------------------------
    CY 2011 APC 8008 (MRI and MRA with         CY 2011 Approximate APC
            Contrast Composite)                   Median Cost = $984
------------------------------------------------------------------------
70549.....................................  Mri angiograph neck w/o & w/
                                             dye.
70542.....................................  Mri orbit/face/neck w/dye.
70543.....................................  Mri orbt/fac/nck w/o & w/
                                             dye.
70545.....................................  Mri angiography head w/dye.
70546.....................................  Mri angiograph head w/o & w/
                                             dye.
70548.....................................  Mri angiography neck w/dye.
70552.....................................  Mri brain w/dye.
70553.....................................  Mri brain w/o & w/dye.
71551.....................................  Mri chest w/dye.
71552.....................................  Mri chest w/o & w/dye.
72142.....................................  Mri neck spine w/dye.
72147.....................................  Mri chest spine w/dye.
72149.....................................  Mri lumbar spine w/dye.
72156.....................................  Mri neck spine w/o & w/dye.
72157.....................................  Mri chest spine w/o & w/dye.
72158.....................................  Mri lumbar spine w/o & w/
                                             dye.
72196.....................................  Mri pelvis w/dye.
72197.....................................  Mri pelvis w/o & w/dye.
73219.....................................  Mri upper extremity w/dye.
73220.....................................  Mri uppr extremity w/o & w/
                                             dye.
73222.....................................  Mri joint upr extrem w/dye.
73223.....................................  Mri joint upr extr w/o & w/
                                             dye.
73719.....................................  Mri lower extremity w/dye.
73720.....................................  Mri lwr extremity w/o & w/
                                             dye.
73722.....................................  Mri joint of lwr extr w/dye.
73723.....................................  Mri joint lwr extr w/o & w/
                                             dye.
74182.....................................  Mri abdomen w/dye.
74183.....................................  Mri abdomen w/o & w/dye.
75561.....................................  Cardiac mri for morph w/dye.
75563.....................................  Card mri w/stress img & dye.
C8900.....................................  MRA w/cont, abd.
C8902.....................................  MRA w/o fol w/cont, abd.
C8903.....................................  MRI w/cont, breast, uni.
C8905.....................................  MRI w/o fol w/cont, brst,
                                             un.
C8906.....................................  MRI w/cont, breast, bi.
C8908.....................................  MRI w/o fol w/cont, breast,
C8909.....................................  MRA w/cont, chest.
C8911.....................................  MRA w/o fol w/cont, chest.
C8912.....................................  MRA w/cont, lwr ext.
C8914.....................................  MRA w/o fol w/cont, lwr ext.
C8918.....................................  MRA w/cont, pelvis.
C8920.....................................  MRA w/o fol w/cont, pelvis.
C8931.....................................  MRA, w/dye, spinal canal.
C8933.....................................  MRA, w/o & w/dye, spinal
                                             canal.
C8934.....................................  MRA, w/dye, upper extremity.
C8936.....................................  MRA, w/o & w/dye, upper
                                             extr.
------------------------------------------------------------------------
* If a ``without contrast'' MRI or MRA procedure is performed during the
 same session as a ``with contrast'' MRI or MRA procedure, the I/OCE
 will assign APC 8008 rather than 8007..
------------------------------------------------------------------------


[[Page 71861]]


 Table 14--OPPS Imaging Family Services Overlapping With HCPCS Codes on
                         the CY 2011 Bypass List
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                          Family 1--Ultrasound
------------------------------------------------------------------------
76700.....................................  Us exam, abdom, complete.
76705.....................................  Echo exam of abdomen.
76770.....................................  Us exam abdo back wall,
                                             comp.
76775.....................................  Us exam abdo back wall, lim.
76776.....................................  Us exam k transpl w/Doppler.
76856.....................................  Us exam, pelvic, complete.
76870.....................................  Us exam, scrotum.
76857.....................................  Us exam, pelvic, limited.
------------------------------------------------------------------------
             Family 2--CT and CTA with and without Contrast
------------------------------------------------------------------------
70450.....................................  Ct head/brain w/o dye.
70480.....................................  Ct orbit/ear/fossa w/o dye.
70486.....................................  Ct maxillofacial w/o dye.
70490.....................................  Ct soft tissue neck w/o dye.
71250.....................................  Ct thorax w/o dye.
72125.....................................  Ct neck spine w/o dye.
72128.....................................  Ct chest spine w/o dye.
72131.....................................  Ct lumbar spine w/o dye.
72192.....................................  Ct pelvis w/o dye.
73200.....................................  Ct upper extremity w/o dye.
73700.....................................  Ct lower extremity w/o dye.
74150.....................................  Ct abdomen w/o dye.
------------------------------------------------------------------------
             Family 3--MRI and MRA with and without Contrast
------------------------------------------------------------------------
70336.....................................  Magnetic image, jaw joint.
70544.....................................  Mri angiography head w/o
                                             dye.
70551.....................................  Mri brain w/o dye.
72141.....................................  Mri neck spine w/o dye.
72146.....................................  Mri chest spine w/o dye.
72148.....................................  Mri lumbar spine w/o dye.
73218.....................................  Mri upper extremity w/o dye.
73221.....................................  Mri joint upr extrem w/o
                                             dye.
73718.....................................  Mri lower extremity w/o dye.
73721.....................................  Mri jnt of lwr extre w/o
                                             dye.
------------------------------------------------------------------------

3. Changes to Packaged Services
a. Background
    The OPPS, like other prospective payment systems, relies on the 
concept of averaging, where the payment may be more or less than the 
estimated cost of providing a service or bundle of services for a 
particular patient, but with the exception of outlier cases, the 
payment is adequate to ensure access to appropriate care. Packaging 
payment for multiple interrelated services into a single payment 
creates incentives for providers to furnish services in the most 
efficient way by enabling hospitals to manage their resources with 
maximum flexibility, thereby encouraging long-term cost containment. 
For example, where there are a variety of supplies that could be used 
to furnish a service, some of which are more expensive than others, 
packaging encourages hospitals to use the least expensive item that 
meets the patient's needs, rather than to routinely use a more 
expensive item. Packaging also encourages hospitals to negotiate 
carefully with manufacturers and suppliers to reduce the purchase price 
of items and services or to explore alternative group purchasing 
arrangements, thereby encouraging the most economical health care. 
Similarly, packaging encourages hospitals to establish protocols that 
ensure that necessary services are furnished, while carefully 
scrutinizing the services ordered by practitioners to maximize the 
efficient use of hospital resources. Packaging payments into larger 
payment bundles promotes the stability of payment for services over 
time. Finally, packaging also may reduce the importance of refining 
service-specific payment because there is more opportunity for 
hospitals to average payment across higher cost cases requiring many 
ancillary services and lower cost cases requiring fewer ancillary 
services. For these reasons, packaging payment for services that are 
typically ancillary and supportive to a primary service has been a 
fundamental part of the OPPS since its implementation in August 2000.
    We assign status indicator ``N'' to those HCPCS codes that we 
believe are always integral to the performance of the primary modality; 
therefore, we always package their costs into the costs of the 
separately paid primary services with which they are billed. Services 
assigned status indicator ``N'' are unconditionally packaged.
    We assign status indicator ``Q1'' (``STVX-Packaged Codes''), ``Q2'' 
(``T-Packaged Codes''), or ``Q3'' (Codes that may be paid through a 
composite APC) to each conditionally packaged HCPCS code. An ``STVX-
packaged code'' describes a HCPCS code whose payment is packaged when 
one or more separately paid primary services with the status indicator 
of ``S,'' ``T,'' ``V,'' or ``X'' are furnished in the hospital 
outpatient encounter. A ``T-packaged code'' describes a code whose 
payment is packaged when one or more separately paid surgical 
procedures with the status indicator of ``T'' are provided during the 
hospital encounter. ``STVX-packaged codes'' and ``T-packaged codes'' 
are paid separately in those uncommon cases when they do not meet their 
respective criteria for packaged payment. ``STVX-packaged codes'' and 
``T-packaged codes'' are conditionally packaged. We refer readers to 
section XIII.A.1. of this final rule with comment period for a complete 
listing of status indicators.
    We use the term ``dependent service'' to refer to the HCPCS codes 
that represent services that are typically ancillary and supportive to 
a primary diagnostic or therapeutic modality. We use the term 
``independent service'' to refer to the HCPCS codes that represent the 
primary therapeutic or diagnostic modality into which we package 
payment for the dependent service. In future years, as we consider the 
development of larger payment groups that more broadly reflect services 
provided in an encounter or episode-of-care, it is possible that we 
might propose to bundle payment for a service that we now refer to as 
``independent.''
    Hospitals include HCPCS codes and charges for packaged services on 
their claims, and the estimated costs associated with those packaged 
services are then added to the costs of separately payable procedures 
on the same claims in establishing payment rates for the separately 
payable services. We encourage hospitals to report all HCPCS codes that 
describe packaged services that were provided, unless the CPT Editorial 
Panel or CMS provide other guidance. The appropriateness of the OPPS 
payment rates depend on the quality and completeness of the claims data 
that hospitals submit for the services they furnish to our Medicare 
beneficiaries.
    In the CY 2008 OPPS/ASC final rule with comment period (72 FR 66610 
through 66659), we adopted the packaging of payment for items and 
services in seven categories into the payment for the primary 
diagnostic or therapeutic modality to which we believe these items and 
services are typically ancillary and supportive. The seven categories 
are: (1) Guidance services; (2) image processing services; (3) 
intraoperative services; (4) imaging

[[Page 71862]]

supervision and interpretation services; (5) diagnostic 
radiopharmaceuticals; (6) contrast media; and (7) observation services. 
We specifically chose these categories of HCPCS codes for packaging 
because we believe that the items and services described by the codes 
in these categories 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.
    In addition, in the CY 2008 OPPS/ASC final rule with comment period 
(72 FR 66650 through 66659), we finalized additional packaging for the 
CY 2008 OPPS, which included the establishment of new composite APCs 
for CY 2008, specifically APC 8000 (Cardiac Electrophysiologic 
Evaluation and Ablation Composite), APC 8001 (LDR Prostate 
Brachytherapy Composite), APC 8002 (Level I Extended Assessment & 
Management Composite), and APC 8003 (Level II Extended Assessment & 
Management Composite). In the CY 2009 OPPS/ASC final rule with comment 
period (73 FR 68559 through 68569), we expanded the composite APC model 
to one new clinical area--multiple imaging services. We created five 
multiple imaging composite APCs for payment in CY 2009 that incorporate 
statutory requirements to differentiate between imaging services 
provided with contrast and without contrast as required by section 
1833(t)(2)(G) of the Act. The multiple imaging composite APCs 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 discuss composite APCs in more detail in 
section II.A.2.e. of this final rule with comment period.
    We recognize that decisions about packaging and bundling payment 
involve a balance between ensuring that payment is adequate to enable 
the hospital to provide quality care and establishing incentives for 
efficiency through larger units of payment. Therefore, we welcomed 
public comments regarding our packaging proposals for the CY 2011 OPPS.
b. Packaging Issues
(1) CMS Presentation of Findings Regarding Expanded Packaging at the 
February 2010 APC Panel Meeting
    In deciding whether to package a service or pay for a code 
separately, we have historically considered a variety of factors, 
including whether the service is normally provided separately or in 
conjunction with other services; how likely it is for the costs of the 
packaged code to be appropriately mapped to the separately payable 
codes with which it was performed; and whether the expected cost of the 
service is relatively low.
    As discussed in section I.E. of this final rule with comment 
period, the APC Panel advises CMS on the clinical integrity of payment 
groups and their weights, and the APC Panel has had a Packaging 
Subcommittee, now renamed the Subcommittee for APC Groups and Status 
Indicator (SI) Assignments, that studies and makes recommendations on 
issues pertaining to services that are not separately payable under the 
OPPS, but whose payments are bundled or packaged into APC payments. The 
APC Panel has considered packaging issues at several earlier meetings. 
For discussions of earlier APC Panel meetings and recommendations, we 
refer readers to previously published hospital OPPS/ASC proposed and 
final rules on the CMS Web site at: http://www.cms.gov/FACA/05_
AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp#TopOfPage.
    During the August 5-6, 2009 meeting of the APC Panel, we agreed to 
continue to provide the Panel with information on the impact of 
increased packaging on Medicare beneficiaries building on the analyses 
we had presented at the February 2009 APC Panel meeting. We did not 
share additional packaging data with the APC Panel at the August 2009 
meeting because we had already presented analysis comparing CY 2007 and 
CY 2008 claims data and believed the APC Panel's discussions would 
benefit from analyses of CY 2007 and CY 2009 claims data. We indicated 
that we planned to incorporate analysis of CY 2009 claims into the 
information we would bring to the APC Panel for its review at the 
winter 2010 meeting.
    At the February 17-18, 2010 APC Panel meeting, we presented 
subsequent analyses that compared CY 2007 claims processed through 
September 30, 2007 to CY 2009 claims processed through September 30, 
2009. Similar to the initial analysis that we presented to the APC 
Panel in 2009, the HCPCS codes that we compared are the ones that we 
identified in the CY 2008 OPPS final rule with comment period as 
fitting into one of the packaging categories, including HCPCS codes 
that became effective for CY 2009. As noted above, the seven packaging 
categories in our CY 2008 packaging proposal are guidance services, 
image processing services, intraoperative services, imaging supervision 
and interpretation services, diagnostic radiopharmaceuticals, contrast 
media, and observation services. We note that, similar to the initial 
analysis, we did not make any adjustments for inflation, changes in the 
Medicare population, changes in payment due to APC recalibration, 
changes in frequency due to known changes in code definitions and 
coding practices, or changes in the population of hospitals paid under 
the OPPS. A summary of these data analyses is provided below.
    Analysis of the diagnostic radiopharmaceuticals category showed 
that the diagnostic radiopharmaceuticals were billed 1 percent more 
often during the first 9 months of CY 2009 as compared to the first 9 
months of CY 2007. We noticed very little change in the frequency of 
hospitals reporting one or more diagnostic radiopharmaceutical between 
CY 2007 and CY 2009. Beginning in CY 2008, we required reporting of a 
radiolabeled product (including diagnostic radiopharmaceuticals) when 
billing a nuclear medicine procedure, and we believe that the modest 
increases in frequency of reporting diagnostic radiopharmaceuticals and 
the percentage of reporting hospitals generally reflects hospitals 
adhering to our reporting requirements.
    We also found that nuclear medicine procedures (into which 
diagnostic radiopharmaceuticals were packaged) and associated 
diagnostic radiopharmaceuticals were billed approximately 3 million 
times during the first 9 months of both CY 2007 and CY 2009. Further 
analysis revealed that we paid hospitals over $637 million for nuclear 
medicine procedures and diagnostic radiopharmaceuticals during the 
first 9 months of CY 2007, when diagnostic radiopharmaceuticals were 
separately payable, and approximately the same amount for nuclear 
medicine procedures and diagnostic radiopharmaceuticals during the 
first 9 months of CY 2009, when payment for diagnostic 
radiopharmaceuticals was packaged. This suggests that frequency and 
payment for nuclear medicine procedures remained fairly steady between 
the first 9 months of CY 2007 and the first 9 months of CY 2009.
    We conducted the same analysis for guidance services that were 
packaged beginning in CY 2008. Analysis of the guidance category (which 
includes image-guided radiation therapy services) showed that guidance 
services were billed 8 percent more often during CY 2009 as compared to 
CY 2007 and that the number of hospitals reporting

[[Page 71863]]

guidance services declined by 1 percent between CY 2007 and CY 2009.
    We also analyzed the same data for all contrast services that were 
packaged beginning in CY 2008. Analysis of this category showed that 
contrast services were billed 9 percent more often during CY 2009 as 
compared to CY 2007 and that the number of hospitals reporting contrast 
media increased by 1 percent between CY 2007 and CY 2009.
    Analysis of the data for image supervision and interpretation 
services showed that these services were billed 10 percent more often 
during CY 2009 as compared to CY 2007 and, similar to guidance services 
and contrast agents, the number of hospitals reporting image 
supervision and interpretation services declined by 1 percent between 
CY 2007 and CY 2009.
    We also analyzed the first 9 months of CY 2007 and CY 2009 data 
related to all image processing services that were packaged beginning 
in the CY 2008 OPPS. This analysis was difficult because there were 
significant changes to the CPT codes in this category for CY 2009. For 
example, the procedures described by CPT codes 93320 (which describes 
spectral Doppler and which we classified as an intraoperative service) 
and 93325 (which describes color flow Doppler and which we classified 
as an image processing service) are now reported using one 
comprehensive code, CPT 93306, which describes complete transthoracic 
echocardiogram with spectral and color flow Doppler. In an effort to 
isolate the effects of the changes to coding from our analysis, we 
removed the data for any codes experiencing significant modifications 
and observed a 7 percent decrease from CY 2007 to CY 2009 in the 
frequency of image processing services billed. However, as we pointed 
out to the APC panel, these numbers are not necessarily the majority of 
services in the category or reflective of behavioral changes for the 
services of interest. When we included the image processing services 
with the revised coding for CY 2009, the data showed a 61-percent 
decrease in the billing of these services between CY 2007 and CY 2009 
and a 6-percent decrease in the number of hospitals reporting these 
services during the same timeframe.
    Our analysis of changes in intraoperative services between CY 2007 
and CY 2009 showed a 5-percent decrease in the billing of these 
services and a 5-percent decrease in the number of hospitals reporting 
these services during the same timeframe.
    As we did for our presentation at the February 2009 APC Panel 
meeting, we also found that cardiac catheterization and other 
percutaneous vascular procedures that would typically be accompanied by 
Intravascular Ultrasound (IVUS), Intracardiac echocardiography (ICE), 
and Fractional flow reserve (FFR) (including IVUS, ICE, and FFR) were 
billed approximately 376,000 times in CY 2007 and approximately 473,000 
times in CY 2009, representing an increase of 26 percent in the number 
of services and items billed between CY 2007 and CY 2009. IVUS, ICE, 
and FFR are intraoperative and image supervision and interpretation 
services that have received a lot of attention. Further analysis showed 
that the OPPS paid hospitals over $912 million for cardiac 
catheterizations, other related services, and IVUS, ICE, and FFR in CY 
2007, when IVUS, ICE, and FFR were paid separately. In the first 9 
months of CY 2009, the OPPS paid hospitals approximately $1.4 billion 
for cardiac catheterization and other percutaneous vascular procedures 
and IVUS, ICE, and FFR, when payments for IVUS, ICE, and FFR were 
packaged. This is a 58-percent increase in payment from CY 2007. Using 
the first 9 months of claims data for both CY 2007 and CY 2009, we 
calculated an average payment per service or item provided of $2,430 in 
CY 2007 and $3,048 in CY 2009 for cardiac catheterization and other 
related services, an increase of 25 percent in average payment per item 
or service. This observed increase in average payment per service is 
most likely attributable to the observed increase in the frequency of 
these cardiac catheterization and other percutaneous vascular 
procedures that would typically be accompanied by IVUS, ICE and FFR 
(including IVUS, ICE, and FFR) billed in CY 2009.
    We also cannot determine how much of the 58-percent increase in 
aggregate payment for these services may be due to the packaging of 
payment for IVUS, ICE, and FFR (and other services that were newly 
packaged for CY 2008) and how much may be due to annual APC 
recalibration and typical fluctuations in service frequency. However, 
we believe that all of these factors contributed to the notable 
increase in aggregate payment between CY 2007 and CY 2009.
    We further analyzed the first 9 months of CY 2007 and CY 2009 
claims data for radiation oncology services that would be accompanied 
by radiation oncology guidance. We found that radiation oncology 
services (including radiation oncology guidance services) were billed 
approximately 4 million times in CY 2007 and 3.8 million times in CY 
2009, representing a decrease in frequency of approximately 6 percent 
between CY 2007 and CY 2009. These numbers represented each instance 
where a radiation oncology service or a radiation oncology guidance 
service was billed. Our analysis indicated that hospitals were paid 
over $811 million for radiation oncology services and radiation 
oncology guidance services under the OPPS during the first 9 months of 
CY 2007, when radiation oncology guidance services were separately 
payable. During the first 9 months of CY 2009, when payments for 
radiation oncology guidance were packaged, hospitals were paid over 
$827 million for radiation oncology services under the OPPS. This $827 
million included packaged payment for radiation oncology guidance 
services and represented a 2-percent increase in aggregate payment from 
CY 2007 to CY 2009. Using the first 9 months of claims data for both CY 
2007 and CY 2009, we calculated an average payment per radiation 
oncology service or item billed of $199 in CY 2007 and $216 in CY 2009, 
representing a per service increase of 8 percent from CY 2007 to CY 
2009.
    At the February 2009 meeting, the APC panel also requested that CMS 
provide separate analyses of radiation oncology guidance, by type of 
radiation oncology service, specifically, intensity modulated radiation 
therapy (IMRT), stereotactic radiosurgery (SRS), brachytherapy, and 
conventional radiation therapy. The results from these analyses are 
discussed below:
    We conducted these analyses on the specified categories using the 
first 9 months of claims and cost report data from CY 2007, before the 
expanded packaging went into effect, and the first 9 months of claims 
and cost report data from CY 2009--the second year of packaged payment 
for the radiation guidance services. We found that IMRT services were 
billed approximately 670,000 times during the first 9 months of CY 
2007. During this same timeframe, Medicare paid hospitals approximately 
$227 million for IMRT services. In comparison, during the first 9 
months of CY 2009, IMRT services were billed 713,000 times, 
representing an increase in frequency of 6 percent. Further, during the 
first 9 months of CY 2009, when payments for radiation oncology 
guidance were packaged into the payments for the separately paid IMRT 
procedures, we paid hospitals over $298 million, representing a 31-
percent increase in payments from CY 2007 to CY 2009.
    We further analyzed the data for SRS services and found that, for 
the first 9 months of CY 2007 and CY 2009, SRS services were billed 
approximately

[[Page 71864]]

9,000 and 13,000 times, respectively, representing an increase in 
frequency of 43 percent. Aggregate Medicare payments for these SRS 
services increased by 24 percent from $34 million in CY 2007 to $42 
million in CY 2009.
    Our review of the data for brachytherapy services revealed that, 
for the first 9 months of CY 2007 and CY 2009, these services were 
billed approximately 10,000 and 11,000 times, respectively, 
representing an increase in frequency of 8 percent. During this 
timeframe, aggregate Medicare payments for these brachytherapy services 
increased by 1 percent from $9.8 million in CY 2007 to $9.9 million in 
CY 2009.
    Our review of the data for conventional radiation therapy services 
revealed that conventional radiation therapy services were billed 1.4 
million times and 1.1 million times, in the first 9 months of CY 2007 
and CY 2009, respectively, representing a decrease in frequency of 20 
percent. During this timeframe, aggregate Medicare payments for these 
conventional radiation services decreased by 10 percent from $189 
million in CY 2007 to $169 million in CY 2009.
    In reviewing our early CY 2009 claims data, which reflect the 
second year of packaged payment for services in the packaged categories 
identified in the CY 2008 OPPS/ASC final rule with comment period, we 
generally observed increases in the billing and reporting of packaged 
services described by these categories, with the caveat that we were 
not able to untangle the various causes of declines in the image 
processing category, indicating steady beneficiary access to these 
categories of supporting and ancillary services. In aggregate, our 
analysis showed that hospitals do not appear to have significantly 
changed their reporting patterns as a result of the expanded packaging 
policy nor do the analyses suggest that hospitals have stopped offering 
these supporting and ancillary services with the primary diagnostic and 
therapeutic modalities that they support.
(2) Packaging Recommendations of the APC Panel at Its February 2010 
Meeting
    During the February 2010 APC panel meeting, the APC Panel accepted 
the report of the Packaging Subcommittee (the Subcommittee for APC 
Groups and Status Indicator (SI) Assignments beginning in August 2010) 
heard several presentations related to packaged services, discussed the 
deliberations of the Packaging Subcommittee, and made six 
recommendations. The Report of the February 2010 meeting of the APC 
Panel may be found at the Web site at: http://www.cms.gov/FACA/05_
AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp.
    To summarize, the APC Panel made the following recommendations 
regarding packaging of payment under the CY 2011 OPPS:
    1. That CMS consider whether CPT code 31627 (Bronchoscopy, rigid or 
flexible, including fluoroscopic guidance, when performed; with 
computer-assisted, image-guided navigation) (also known as 
electromagnetic navigational bronchoscopy (ENB)) should be packaged or 
paid separately; if it should be paid separately, CMS should 
investigate the appropriate APC assignment. The Panel suggested that 
CMS use bronchoscopic ultrasonography (EBUS) as a clinical example for 
comparison. (Recommendation 1)
    2. That CMS make CPT code 96368 (Intravenous infusion, for therapy, 
prophylaxis, or diagnosis (specify substance or drug); concurrent 
infusion) and CPT code 96376 (Therapeutic, prophylactic, or diagnostic 
injection (specify substance or drug); subcutaneous or intramuscular, 
each additional sequential intravenous push of the same substance/drug 
provided in the facility (List separately in addition to code for 
primary procedure)) separately payable in the CY 2011 OPPS/ASC final 
rule with comment period at an appropriate payment rate as determined 
by CMS. (Recommendation 2)
    3. That CMS conditionally package payment for the guidance 
procedures that would accompany breast needle placement (specifically 
CPT code 19290 (Preoperative placement of needle localization wire, 
breast); CPT code 19291 (Preoperative placement of needle localization 
wire, breast; each additional lesion (List separately in addition to 
code for primary procedure)); CPT code 19295 (Image guided placement, 
metallic localization clip, percutaneous, during breast biopsy/
aspiration (List separately in addition to code for primary 
procedure)); CPT code 77031 (Stereotactic localization guidance for 
breast biopsy or needle placement (e.g., for wire localization or for 
injection)), each lesion, radiological supervision and interpretation); 
CPT code 77032 (Mammographic guidance for needle placement, breast 
(e.g., for wire localization or for injection), each lesion, 
radiological supervision and interpretation); CPT code 76942 
(Ultrasonic guidance for needle placement (e.g., biopsy, aspiration, 
injection, localization device), imaging supervision and 
interpretation)) when these guidance services are performed separately. 
(Recommendation 3)
    4. The Panel encourages the public to submit common clinical 
scenarios involving currently packaged HCPCS codes and recommendations 
of specific services or procedures for which payment would be most 
appropriately packaged under the OPPS for review by the Packaging 
Subcommittee members. (Recommendation 4)
    5. That CMS continue providing analysis on an ongoing basis of the 
impact on beneficiaries of the multiple imaging composite APCs as data 
become available. (Recommendation 5)
    6. That the work of the Packaging Subcommittee continue. 
(Recommendation 6)
    We address each of these recommendations in the discussion that 
follows:
Recommendation 1
    At the APC Panel's February 2010 meeting, the manufacturer asserted 
that use of ENB technology during a bronchoscopy procedure enables 
access to distal lesions that are otherwise not accessible without use 
of the ENB technology. The manufacturer also argued that without 
separate payment for ENB, hospitals would likely not adopt the 
technology and the population that would likely benefit from ENB would 
not have access to this technology. In response to the manufacturer's 
assertion, the APC Panel asked CMS to consider whether CPT code 31627, 
which describes Electromagnetic Navigational Bronchoscopy (ENB), should 
be packaged or paid separately; and if it should be paid separately, 
the APC Panel asked CMS to investigate the appropriate APC assignment.
    CPT code 31627 is new for CY 2010, and we assigned it a new interim 
status indicator of ``N'' in our CY 2010 OPPS/ASC final rule with 
comment period based on our packaging policies (discussed in section 
II.A.3.a. of this final rule with comment period). We stated in the 
proposed rule that we considered the information available to us for 
CPT code 31627 and believed that the code describes a procedure that is 
supportive of and ancillary to the primary diagnostic or therapeutic 
modality, in this case, bronchoscopy procedures (for example, CPT code 
31622 (Bronchoscopy, rigid or flexible, including fluoroscopic 
guidance, when performed: Diagnostic, with cell washing, when performed 
(separate procedure)). We stated that we currently package payment for 
CPT code 31627,

[[Page 71865]]

and that we continued to believe that this is the appropriate treatment 
of that code. Therefore, in the CY 2011 OPPS/ASC proposed rule (75 FR 
46223), we proposed to package payment for CPT code 31627. As we have 
discussed in past rules, in making our decision on whether to package a 
service or pay for it separately we consider a variety of factors, 
including whether the service is normally provided separately or in 
conjunction with other services because it supports those services. By 
proposing to packaging payment for this procedure, we would be treating 
it in the same manner as similar computer-assisted, navigational 
diagnostic procedures that are supportive of and ancillary to a primary 
diagnostic or therapeutic modality.
    In its recommendation regarding whether to make separate payment 
under an APC for CPT code 31627, the APC Panel suggested that we use 
bronchoscopic ultrasonography as a clinical example for comparison. We 
considered CPT code 31620 (Endobronchial ultrasound (EBUS) during 
bronchoscopic diagnostic or therapeutic intervention(s) (List 
separately in addition to code for primary procedure)) to be a suitable 
comparison because it describes another bronchoscopic procedure in 
which a guidance technology (that is, ultrasonography) is used to 
achieve the therapeutic benefit of the procedure. Similar to our 
proposed payment for CPT code 31627, payment for CPT code 31620 is 
currently packaged into the primary modality with which it would be 
appropriately billed. In CY 2008, as part of our increased packaging 
proposal, we identified the EBUS procedure as an intraoperative 
ancillary service that would typically be reported in conjunction with 
an independent service. In addition, similar to CPT code 31627, CPT 
code 31620 is an add-on code that, in accordance with CPT reporting 
guidelines, would only be appropriately reported in conjunction with 
specified bronchoscopy procedures with which it would be performed. 
Based on these general comparisons of CPT code 31627 to the EBUS 
procedure described by CPT code 31620, we stated in the proposed rule 
that we believe that our proposal to package payment for CPT code 31627 
would be consistent with the packaging approach that we have adopted in 
recent years. As we have stated in past rules with regard to EBUS, we 
also fully expected that, to the extent these services are billed 
appropriately, payment for the primary service would reflect the cost 
of the packaged ENB procedure. For example, in the CY 2009 OPPS/ASC 
final rule with comment period (73 FR 68584), we discussed packaging of 
CPT code 31620; we state that we observed increased packaged costs 
associated with the services into which CPT code 31620 had been 
packaged, which increased the APC payment rates for bronchoscopy 
procedures.
    In summary, we stated in the proposed rule that we continued to 
believe that CPT code 31627 describes a procedure that is ancillary to 
and supportive of the primary service with which it is often billed. 
Therefore, in the CY 2011 OPPS/ASC proposed rule, for CY 2011, we 
proposed to maintain CPT code 31627 as a packaged service.
    The APC Panel at its August 23-24, 2010 meeting heard presentations 
from the public and discussed whether ENB should remain packaged for CY 
2011. We discuss the public comments we received and the Panel 
recommendation, and provide our response to the public comments on ENB, 
in section II.A.3.b.(2) of this final rule with comment period.
Recommendation 2
    In the CY 2011 OPPS/ASC proposed rule (75 FR 46223), we stated that 
we did not accept the APC Panel's recommendation that CMS make CPT code 
96368 and CPT code 96376 separately payable for the CY 2011 OPPS. We 
consider a variety of factors in making a decision whether to package a 
service or pay for it separately, including whether the service is 
normally provided separately or in conjunction with other services and 
how likely it is for the costs of the packaged code to be appropriately 
mapped to the separately payable codes with which it was performed. In 
the proposed rule, we stated that CPT codes 93676 and 96368 describe 
concurrent and sequential services that have always been packaged under 
the OPPS. We stated that from the inception of the OPPS through CY 
2006, we paid for drug administration under the OPPS using HCPCS 
alphanumeric codes that packaged payment for concurrent infusions and 
administration of new drugs into the payment for the alphanumeric codes 
for drug administration. In CY 2007, we adopted CPT codes for drug 
administration services. The CY 2007 CPT codes did not separately 
recognize administration of new drugs during the same encounter with a 
separate CPT code. Therefore, administration of a new drug continued to 
be packaged into payment for the service of which it was a part. 
Moreover, for CY 2007, CPT code 90768 (Intravenous infusion, for 
therapy, prophylaxis, or diagnosis; concurrent infusion), which was 
replaced by CPT code 96368, was packaged under the OPPS, continuing the 
longstanding practice of not making separate payment for concurrent 
infusion. We also pointed out that, during our implementation of this 
new CPT code, while it was new for CY 2007, it represented the same 
procedures as described by the previous drug administration HCPCS code 
set, and, as a result, the payment data for these procedures would be 
captured in the claims that were available to us for ratesetting 
purposes.
    Similarly, CPT codes 96368 and 96376, which were created by CPT in 
2008, are replacement codes for those same procedures that were 
described by the previous drug administration code sets and their 
associated data would be captured in our claims database. We proposed 
that the costs for these services, concurrent infusion and additional 
push of the same drug, would continue to be packaged into payment for 
the drug administration codes with which they are reported. In the 
proposed rule, we indicated that we considered a variety of factors, 
including whether the service is normally provided separately or in 
conjunction with other services. CPT codes 96368 and 96376 describe 
concurrent and sequential drug administration services that, in 
accordance with CPT guidelines, are always provided in association with 
an initial drug administration service. Therefore, we indicated that we 
believe that they continue to be appropriately packaged into the 
payment for the separately payable services that they usually 
accompany. For example, CPT code 96376 would be billed with CPT code 
96374 (Therapeutic, prophylactic, or diagnostic injection; intravenous 
push, single or initial substance/drug), which describes an initial 
intravenous push code and, as a result, the cost for CPT code 96376 
would be reflected in the total cost for CPT code 96374. Moreover, we 
said that payment for these services has always been packaged into 
payment for the drug administration services without which they cannot 
be correctly reported.
    In the proposed rule, we stated that these two codes each describe 
services that, by definition, are always provided in conjunction with 
an initial drug administration code and that we believed that these 
services have been packaged since the inception of the OPPS. We further 
stated that we continued to believe that they are appropriately 
packaged into the payment for the separately payable services without 
which, under CPT

[[Page 71866]]

guidelines and definition, they cannot be appropriately reported. 
Therefore, for CY 2011, we proposed to continue our established policy 
of making packaged payment for CPT code 96368 and CPT code 96376, and 
we proposed to assign them a status indicator of ``N.''
    Comment: Commenters objected to CMS' proposal to package payment 
for CPT codes 96376 and 96368 into payment for the services with which 
they are furnished. The commenters believed that the resources 
associated with CPT code 96376 are similar to those associated with CPT 
code 96374 (Therapeutic, prophylactic, or diagnostic injection (specify 
substance or drug); intravenous push, single or initial substance/drug) 
(status indicator ``S''). They also believed that while the resources 
associated with CPT code 96368 somewhat resemble the resources 
associated with CPT code 96366 (Intravenous infusion, for therapy, 
prophylaxis, or diagnosis (specify substance or drug); each additional 
hour (List separately in addition to code for primary procedure) 
(status indicator ``S''), they are more similar to the services 
described by CPT code 96375 (Therapeutic, prophylactic, or diagnostic 
injection (specify substance or drug); each additional sequential 
intravenous push of a new substance/drug (List separately in addition 
to code for primary procedure) (status indicator ``S''). The commenters 
believed that the fact that CPT codes 96376 and 96368 are add-on codes 
does not preclude them from being separately paid.
    Several commenters disagreed with CMS' statement that these 
services have been packaged since the inception of the OPPS. They 
stated that hospitals formerly used a single CPT code for reporting IV 
push administrations, CPT code 90784. They further stated that this 
code was reported and paid separately for each and every IV push of 
either the same or different medications. The commenters indicated that 
when the CPT coding system changed, the payment for the ``initial'' 
successor CPT code (90774 [now 96374]) remained virtually identical to 
the rate for the previous code. Similarly, they indicated that services 
now reported with CPT code 96368 were historically reported under CPT 
codes 90780 and 90781 and received separate payment.
    Response: As we discussed in the CY 2008 OPPS/ASC final rule with 
comment period (72 FR 66787 through 66788) and in the CY 2009 OPPS/ASC 
final rule with comment period (73 FR 68674), in deciding whether to 
package a service or pay for it separately, we consider a variety of 
factors, including whether the service is normally provided separately 
or in conjunction with other services; how likely it is for the costs 
of the packaged code to be appropriately mapped to the separately 
payable codes with which it was performed; and whether the expected 
cost of the service is relatively low. CPT codes 96376 and 96368, by 
definition, are always provided in association with other drug 
administration services and the costs of these services are highly 
likely to be mapped to the separately paid codes with which they are 
performed and reported. For these reasons, we continue to believe that 
they are most appropriately packaged under the OPPS. Therefore, we are 
not accepting the APC Panel's recommendation to pay them separately.
    Furthermore, we do not agree with the commenters that the services 
described by CPT code 96376 are similar to those described by CPT code 
96374. CPT code 96374 is an initial intravenous push code, and, per CPT 
instructions, special billing guidelines apply. Commonly, this service 
requires the initial establishment of intravenous access in a patient, 
a resource-intensive task performed by hospital staff using special 
supplies. In contrast, CPT code 96376 is an add-on code and is reported 
for each additional sequential intravenous push of the same substance/
drug. In the case of this sequential service, the patient already has 
established intravenous access, so we would expect the service to 
require fewer hospital resources. In addition, we do not agree with 
commenters that the services described by CPT code 96368 are similar to 
those described by CPT code 96375. CPT code 96368 describes a 
concurrent intravenous infusion while CPT code 96375 describes a 
sequential intravenous push, and we would expect these services to 
require different hospital resources because the services require 
different medical supplies, require different nursing skills, and 
require different amounts of staff time.
    With regard to the comment that the predecessor codes were 
separately payable until CY 2008 under the OPPS, we acknowledge that 
CPT code 90784 (Therapeutic, prophylactic or diagnostic injection 
(specify material injected; intravenous) was separately paid from the 
inception of the OPPS until its deletion, which was effective December 
31, 2005, and might have been reported for an additional sequential 
intravenous push of the same substance, although the code was not 
defined as being for an additional sequential push. Similarly, CPT code 
C8952 (Therapeutic, prophylactic or diagnostic injection; intravenous 
push of each new substance/drug), which was effective January 1, 2006, 
and was deleted effective December 31, 2006, also was separately paid 
during the period that it was effective and might also have been 
reported for an additional sequential intravenous push of the same 
substance, although the code was not defined as being for an additional 
sequential push. CPT code 90776 (Therapeutic, prophylactic or 
diagnostic injection (specify substance or drug); each additional 
sequential intravenous push of the same substance/drug provided in a 
facility (list separately in addition to code for primary procedure)), 
which was effective January 1, 2008, and deleted effective December 31, 
2008, is the first code to specify that the service is an additional 
sequential intravenous push of the same substance/drug and CPT code 
90776 was packaged. Hence, before the creation of CPT code 90776, no 
code existed to specifically report an additional sequential 
intravenous push of the same substance; therefore, when the incidental 
service was furnished, there was no separate payment specifically for 
this service. We believe that hospital charges for the separately 
payable codes for the initial administration would have included a 
charge for this service, and therefore, the payment for it would have 
been packaged into payment for the separately paid code for the initial 
administration service. However, we acknowledge that it is possible 
that hospitals reported the service using separately paid codes that 
were not defined to be an additional sequential intravenous push of the 
same substance, in which case we would have paid for the service under 
the code that was reported. When CPT code 96376, which replaces CPT 
code 90776, was created effective January 1, 2009, we assigned it the 
packaged status of its predecessor code, CPT code 90776. For the 
reasons we articulate above, we disagree with the commenter that 
predecessor codes were separately payable and continue to believe that 
we should continue our policy of packaging the payment for the service 
reported by this code.
    With respect to CPT code 96368, we disagree with the commenters 
that the service has been paid separately since the inception of the 
OPPS. CPT code 96368 was made effective January 1, 2009, and for CYs 
2009 and 2010, we assigned this code to status indicator ``N'' to 
indicate that it is a packaged code under the OPPS. Prior to 2009, CPT 
code 96368 was described by its predecessor CPT code 90768 
((Intravenous infusion, for therapy, prophylaxis, or diagnosis (specify

[[Page 71867]]

substance or drug); concurrent infusion), which was also assigned to 
status indicator ``N'' from January 1, 2006 through December 30, 2008. 
Prior to January 2006, there was no specific code that accurately 
described this service, and as a result, payment for this service was 
packaged. Therefore, we do not believe that we have paid separately in 
the past for concurrent intravenous infusions for therapeutic, 
prophylaxis, or diagnostic purposes under the OPPS.
    After consideration of the APC Panel's recommendation and the 
public comments that we received, we are finalizing our CY 2011 
proposal, without modification, to continue to assign HCPCS codes 96368 
and 96376 to status indicator ``N'' to indicate that payment for these 
codes is packaged into the payment for the primary service with which 
they are reported.
Recommendation 3
    In the CY 2011 OPPS/ASC proposed rule (75 FR 46224), we indicated 
that we were not accepting the APC Panel's recommendation that we 
propose to conditionally package CPT codes 19290 (Preoperative 
placement of needle localization wire, breast), 19291 (Preoperative 
placement of needle localization wire, breast; each additional lesion 
(List separately in addition to code for primary procedure)), 19295 
(Image guided placement, metallic localization clip, percutaneous, 
during breast biopsy/aspiration (List separately in addition to code 
for primary procedure)), 77031 (Stereotactic localization guidance for 
breast biopsy or needle placement (e.g., for wire localization or for 
injection)), each lesion, radiological supervision and interpretation), 
77032 (Mammographic guidance for needle placement, breast (e.g., for 
wire localization or for injection), each lesion, radiological 
supervision and interpretation), and 76942 (Ultrasonic guidance for 
needle placement (e.g., biopsy, aspiration, injection, localization 
device), imaging supervision and interpretation). During the APC 
Panel's February 2010 meeting, we shared with the Packaging 
Subcommittee our most recent claims data for the guidance procedures 
that would accompany breast needle placement, demonstrating that, for 
some of these services, the code was billed by itself up to 25 percent 
of the time. While the Packaging Subcommittee broadly discussed 
clinical scenarios in which these services may be billed separately, it 
remains unclear to us why these services are being performed separately 
and whether they should be paid separately. We believe that these 
services typically are performed in conjunction with surgical 
procedures involving the breast and, therefore, are appropriately 
packaged. Therefore, we indicated that we were not accepting the APC 
Panel's recommendation that we conditionally package payment for these 
guidance procedures when they are performed separately.
    For CY 2011, we proposed to maintain the unconditional packaged 
payment status for these procedures. Specifically, we proposed to 
package payment, indicated by a status indicator of ``N,'' for CPT 
codes 19290, 19291, 19295, 77031, 77032, and 76942, into the primary 
modality with which they would be appropriately billed. However, 
observing such a sizable percentage of services that are the only 
service appearing on a claim for a packaged item, especially when these 
services do not receive separate payment, led us to encourage the 
public to submit any clinical scenarios in their public comments 
involving these services that show the circumstances under which these 
services may be appropriately billed without a primary procedure that 
is furnished on the same date.
    Comment: Commenters asked that CMS accept the APC Panel's February 
2010 recommendation to conditionally package the placement of needle 
localization wires and the supporting procedures. Specifically, they 
asked that CMS permit CPT codes 19290, 19291, 19295, 77031, 77032, and 
76942 to be paid when they are not furnished with a service to which we 
have assigned a payable status indicator (for example, ``S,'' ``T,'' 
``V,'' and ``X'').
    Commenters noted that CMS has found that these services are 
furnished without a base procedure approximately 25 percent of the 
time. They indicated that they believed that this occurs because the 
patient is taken to a freestanding radiology center or ASC (which may 
or may not be located on the hospital campus) with which the hospital 
has a collaborative arrangement for the non-hospital entity to perform 
the base procedure and that therefore the hospital does not bill for 
the base procedure. The commenters believed that the hospitals should 
be paid for the service that they furnish in these circumstances and, 
therefore, CMS should change the status of the procedure to 
conditionally packaged.
    Commenters indicated that it is becoming increasingly common for a 
patient to have a radiographic marker (not a wire exiting the skin, 
which has the potential for bleeding and infection) on one day, and to 
have a stereotactic or ultrasound wire localization breast biopsy on a 
different day. This technique permits intraoperative x-ray verification 
that the MRI targeted lesion has been removed. The commenters indicated 
that this is becoming increasingly common with the growing use of 
breast MRI. They stated that, in addition, some patients undergo image-
guided percutaneous placement of a radioactive pellet which is 
identified days later at the time of surgery using an intraoperative 
hand held gamma probe. Some surgeon and radiology groups have found 
that this separation of placement of localization ``wire'' from the 
surgical procedure has facilitated scheduling so that any difficulties 
or delays in the localization do not translate into delay in the 
operating room. Moreover, they stated that some patients with locally 
advanced breast cancer benefit from placement of multiple radiographic 
markers around the tumor prior to initiating neoadjuvant chemotherapy 
because the newer chemotherapy regimens have become so effective at 
shrinking aggressive locally advanced breast cancers that surgeons are 
faced with performing lumpectomies on patients with no clinically or 
radiographically detectable breast cancer. The commenters stated 
further that while, in many cases, residual calcifications combined 
with the initial marker placed at the time of the needle biopsy are 
sufficient for localization, in some cases, it is necessary to 
delineate the extent of the primary tumor using several percutaneously 
placed markers. The commenters indicated that, in these cases, the 
markers are placed after the initial breast biopsy but months before 
the patient's definitive surgery.
    Response: After further analysis, we agree that it is appropriate 
to pay separately for the placement of CPT code 19295 (Image guided 
placement, metallic localization clip, percutaneous, during breast 
biopsy/aspiration (List separately in addition to code for primary 
procedure)) when it is not reported on a claim with any other 
separately paid procedure with a status indicator of ``S,'' ``T,'' 
``V,'' or ``X.'' This makes CPT code 19295 an ``STVX-packaged code.'' 
As already discussed, an ``STVX-packaged code'' describes a HCPCS code 
whose payment is packaged when one or more separately paid primary 
services with the status indicator of ``S,'' ``T,'' ``V,'' or ``X'' are 
furnished in the hospital outpatient encounter. We are convinced by the 
clinical scenarios provided by the commenter that it is appropriate for 
a metallic localization clip to be inserted at some point significantly 
prior to the procedure for which the localization is needed. Therefore, 
separate payment for the performance of the procedure

[[Page 71868]]

described by CPT code 19295 will be made in those circumstances when 
the hospital does not report another separately paid procedure with a 
status indicator of ``S,'' ``T,'' ``V,'' or ``X'' on the same claim. 
CPT code 19295 is used to report the placement of a radiographic marker 
(not a wire exiting the skin, which has the potential for bleeding and 
infection).
    However, we continue to believe that it remains appropriate to 
package payment for CPT codes 19290, 19291, 77031, 77032, and 76942 
into the payment for the procedures of which these services are a part. 
CPT codes 19290 and 19291 may be used to report the placement of 
external wires, which, the commenters note, carry a risk of bleeding 
and infection, and, therefore, they are not appropriately performed on 
a different date than the primary procedure of which they are a part. 
With regard to CPT code 76942, the clinical scenario the commenters 
presented does not apply to this code, and the commenters did not 
present an additional clinical scenario to support the need to pay 
separately for this service. In addition, while hospitals reported CPT 
codes 77031 and 77032 on claims without any other procedure with a 
status indicator of ``S,'' ``T,'' ``V,'' or ``X'' approximately 21 
percent and 20 percent of time, respectively, the definitions of the 
codes do not fit the clinical scenarios for which the commenters 
presented convincing arguments, and the commenters presented no 
additional clinical scenarios that supported separate payment for these 
codes. For these reasons, we believe that it is inappropriate to make 
separate payment that may encourage hospitals to furnish CPT codes 
19290, 19291, 77031, 77032, and 76942 without also providing the 
primary service.
    After considering the APC Panel's recommendation and the public 
comments we received on this issue, we believe that it is appropriate 
to pay separately for CPT code 19295 when it is not furnished on the 
same date as a procedure that is separately paid and, therefore, we 
have assigned it a status indicator of ``Q1'' (packaged when reported 
with a procedure with a status indicator of ``S,'' ``T,'' ``V,'' or 
``X''; otherwise separately paid), and have assigned CPT code 19295 to 
APC 0340 (Minor Ancillary Procedures), for which the median cost for CY 
2011 is $48.72. We chose APC 0340 because, in the absence of cost data 
for the service for CY 2011, we believe that the resources required to 
furnish the service are most similar to the resources required to 
furnish other separately paid minor ancillary services. However, we 
continue to believe that payment for CPT codes 19290, 19291, 77031, 
77032, and 76942 should be made as part of the payment for the 
procedures with which these codes are reported and, therefore, for CY 
2011, we are retaining the status indicator of ``N'' for these codes.
Recommendation 4
    In the CY 2011 OPPS/ASC proposed rule (75 FR 46224), we indicated 
that we were accepting the APC Panel's recommendation to continue to 
encourage submission of common clinical scenarios involving currently 
packaged HCPCS codes to the Packaging Subcommittee for its ongoing 
review. We also encouraged recommendations from the public on specific 
services or procedures whose payment would be most appropriately 
packaged under the OPPS. Additional detailed suggestions for the 
Packaging Subcommittee could be submitted by e-mail to 
APCPanel@cms.hhs.gov with Packaging Subcommittee in the subject line.
Recommendation 5
    In the CY 2011 OPPS/ASC proposed rule (75 FR 46224), we indicated 
that we were accepting the APC Panel's recommendation that CMS provide 
information to the APC Panel on the impact of the creation of the 
imaging composite APCs on services to beneficiaries. We will present 
information on the impact of the imaging composites to the APC Panel at 
its winter CY 2011 meeting. Information on the impact of the creation 
of the imaging composites and our proposal with regard to the imaging 
composite APCs was discussed in detail in section II.A.2.e.(5) of the 
proposed rule. Our discussion of the imaging composite APCs is 
contained in section II.A.2.e.(5) of this final rule with public 
comment period.
Recommendation 6
    The Packaging Subcommittee of the APC Panel was established to 
review packaging issues. In the CY 2011 OPPS/ASC proposed rule (75 FR 
46224), we indicated that we were accepting the APC Panel's 
recommendation that the Packaging Subcommittee remain active until the 
next APC Panel meeting. That meeting occurred on August 23-24, 2010, 
and resulted in a recommendation to broaden the function of the 
Packaging Subcommittee and revise its name to Subcommittee for APC 
Groups and Status Indicator (SI) Assignments. We refer readers to our 
discussion of Recommendation 4 in section II.A.3.b.(2) of this final 
rule with comment period.
    (3) Packaged Services Addressed by the August 2010 APC Panel 
Recommendations and Other Issues Raised in Public Comments
    The APC Panel met again on August 23-24, 2010 to hear public 
presentations on the proposals set forth in the CY 2011 OPPS/ASC 
proposed rule. The APC Panel's Packaging Subcommittee reviewed the 
packaging status of several CPT codes and reported its findings to the 
APC Panel. The full report of the August 23-24, 2010 APC Panel meeting 
can be found on the CMS Web site at: http://www.cms.hhs.gov/FACA/05_
AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp. The APC Panel 
accepted the report of the Packaging Subcommittee, heard several 
presentations related to packaged services, discussed the deliberations 
of the Packaging Subcommittee, and made the following eight 
recommendations:
    1. The Panel recommends that Current Procedural Terminology (CPT) 
code 31627, Bronchoscopy, rigid or flexible, including fluoroscopic 
guidance, when performed; with computer-assisted, image-guided 
navigation (List separately in addition to code for primary 
procedure[s]), continue to be assigned a status indicator of ``N.''
    2. The Panel recommends that CMS provide claims data at the Panel's 
winter 2012 meeting about CPT code 31627, Bronchoscopy, rigid or 
flexible, including fluoroscopic guidance, when performed; with 
computer-assisted, image-guided navigation (List separately in addition 
to code for primary procedure[s]), for the Panel's consideration.
    3. The Panel recommends that CMS assign CPT 0191T, Insertion of 
anterior segment aqueous drainage device, without extraocular 
reservoir; internal approach, to APC 0673, Level V Anterior Segment Eye 
Procedures, on the basis of its clinical similarity with both CPT 
0192T, Insertion of anterior segment aqueous drainage device, without 
extraocular reservoir; external approach, and HCPCS code 66180, Aqueous 
shunt to extraocular reservoir (e.g., Molteno, Schocket, Denver-
Krupin).
    4. The Panel recommends that the Packaging Subcommittee be renamed 
the Subcommittee for APC Groups and Status Indicator (SI) Assignments.
    5. The Panel requests that CMS provide data for all unconditionally 
packaged items and services that appear by themselves on separate bills 
in outpatient claims data to the Subcommittee for APC Groups and SI 
Assignments.
    6. The Panel encourages the public to submit common clinical 
scenarios

[[Page 71869]]

involving currently packaged HCPCS codes and recommendations of 
specific services or procedures for which payment would be most 
appropriately packaged under the Outpatient Prospective Payment System 
(OPPS) for review by the Subcommittee for APC Groups and Status 
Indicator (SI) Assignments.
    7. The Panel recommends that Judith Kelly, R.H.I.T., R.H.I.A., 
C.C.S., be named chair of the Subcommittee for APC Groups and SI 
Assignments.
    8. The Panel recommends that the work of the Subcommittee for APC 
Groups and Status Indicator (SI) Assignments continue.
    Our response to the APC Panel's recommendations resulting from its 
August 23-24, 2010 public meeting, a summary of the public comments we 
received on the proposed rule for related topics, and our responses to 
those public comments follow:
Recommendation 1--Packaged Status of CPT Code 31627 (Electromagnetic 
Navigational Bronchoscopy (ENB))
    Comment: Commenters asked that CMS pay separately for ENB and that 
CMS assign it to APC 0415 with a status indicator of ``T''. Another 
commenter asked that CMS create a composite APC for ENB that would 
establish a separate payment when ENB is performed on the same date as 
CPT codes 31625 (Bronchoscopy, rigid or flexible, including 
fluoroscopic guidance, when performed; with bronchial or endobronchial 
biopsy(s), single or multiple sites), 31626 (Bronchoscopy, rigid or 
flexible, including fluoroscopic guidance, when performed; with 
placement of fiducial markers, single or multiple), 31628 
(Bronchoscopy, rigid or flexible, including fluoroscopic guidance, when 
performed; with transbronchial lung biopsy(s), single lobe), or 31629 
(Bronchoscopy, rigid or flexible, including fluoroscopic guidance, when 
performed; with transbronchial needle aspiration biopsy(s), trachea, 
main stem and/or lobar bronchus(i)). The commenters believed that such 
a composite APC would ensure that the payment would include the full 
costs of the bronchoscopy and the service described by CPT code 31627.
    One commenter stated that it is inconsistent for CMS to package 
payment for ENB when CMS pays separately for services that are very 
similar. The commenter described in detail how ENB is most clinically 
similar to CPT code 31636 (Bronchoscopy, rigid or flexible, including 
fluoroscopic guidance, when performed; with placement of bronchial 
stent(s) (includes tracheal/bronchial dilation as required), initial 
bronchus), which is separately paid under the OPPS. The commenter 
further stated that both procedures use a computer for registration and 
use a bronchoscope to facilitate access for either a guide wire or 
catheter. In both procedures, once the guide wire or catheter is in 
place, then either a stent or a fiducial marker is placed. In addition, 
the commenter noted that CPT code 19103 (Biopsy of breast; 
percutaneous, automated vacuum assisted or rotating biopsy device, 
using imaging guidance) is not packaged, notwithstanding that it uses 
imaging to guide the needle to the lesion for biopsy and is similar to 
ENB where the previously obtained CT scan is used to plan the pathway 
to the lung lesion and then the ENB catheter is used to reach the 
lesion for biopsy. The commenter stated that ENB is different from the 
other computer-assisted navigational procedures that CMS has packaged 
because, for example, those procedures use a computer only to assist 
with coordinate determination (for example, CPT 61795 (Stereotactic 
computer-assisted volumetric (navigational) procedure, intracranial, 
extracranial, or spinal (List separately in addition to code for 
primary procedure)) or anatomy determination (for example, CPT code 
20985 (Computer-assisted surgical navigational procedure for 
musculoskeletal procedures, image-less (List separately in addition to 
code for primary procedure)) but do not describe the steering of a 
catheter through an airway of the lung for the purpose of a biopsy or 
treatment. The commenter disagreed with the APC Panel that CPT code 
31620 (Endobronchial ultrasound (EBUS) during bronchoscopic diagnostic 
or therapeutic intervention(s) (List separately in addition to code for 
primary procedure)) is a comparable procedure because they stated that 
ENB, unlike EBUS, does not produce an image, is not an ancillary 
procedure and does not enable a biopsy or placement of a marker for 
radiation therapy. The commenter believed that the definition of CPT 
code 31627 as an add-on code that can only be correctly reported with a 
primary procedure, does not justify packaging payment for the code into 
the payment for the primary procedure with which it is furnished 
because CMS routinely pays separately for add-on codes.
    Several commenters noted that physicians are reimbursed for both 
the bronchoscopy and CPT code 31627 when they perform both and that 
several physician organizations support that separate payment should be 
made for CPT code 31627. Commenters also disagreed that payment for the 
primary service would reflect the cost of the packaged ENB procedure 
because they believed that a study performed in 2005 found the cost of 
ENB to be approximately $2,700 but the payment for bronchoscopy is much 
less than $2,700. Other commenters believed that packaging ENB violates 
the 2 times rule because CMS proposed to package ENB under a standard 
bronchoscopy procedure which is reimbursed under APC 0076 with a 
proposed payment of $719.84, although they believed that ENB costs 
$2,875.50, which is more than two times the highest median in APC 0076 
(CPT code 31899 (Unlisted procedure, trachea, bronchi) at $1,247.56). 
In addition, the commenter stated that all Medicare Administrative 
Contractor medical directors are covering and making payment for ENB. 
In addition, the commenters stated that Administrative Law Judges have, 
on multiple occasions, overturned denials of separate payment for ENB 
and have ordered CMS to pay for ENB in addition to standard 
bronchoscopy. In addition, the commenter stated that all Medicare 
Administrative Contractor (MAC) Medicare Directors are covering and 
making payment for ENB.
    Response: For the CY 2011 OPPS, we proposed to continue to package 
the payment for ENB into the payment for the bronchoscopy to which we 
believe that it is ancillary and supportive (75 FR 46223). The APC 
Panel met on August 23-24, 2010, to discuss the CMS proposed rule and 
recommended that CMS continue to package payment for CPT code 31627 
into payment for the procedure with which it is performed and asked 
that CMS bring claims data on the cost of CPT code 31627 to the APC 
Panel's winter 2011 meeting for review. The full set of APC Panel 
recommendations that resulted from the Panel's August 23-24, 2010 
meeting is provided in this section.
    After consideration of all of the information provided by 
commenters on this issue, and discussing the issue with the APC Panel 
at its August 23-24, 2010 meeting, we are accepting the APC Panel's 
Recommendation 1 to continue to package payment for CPT code 31627 into 
the payment for the major separately paid procedure with which it is 
reported for CY 2011. In addition, we are accepting the APC Panel's 
Recommendation 2, discussed below, that CMS bring claims data to the 
winter 2011 APC Panel meeting.
    We continue to believe that packaging payment for ENB into payment 
for the procedure in which it is furnished is appropriate because CPT 
code 31627

[[Page 71870]]

describes the computer assisted image guided navigation that is 
reported in addition to a specified range of bronchoscopy codes. As 
such, we believe that it is an ancillary and dependent service that 
enhances and supplements another service. The CPT code does not 
describe an independent service that can be reported alone.
    We do not believe that CPT code 31627 describes a service that is 
similar to the services described by CPT code 31636 or 19103 because 
CPT code 31627 is neither for placement of a stent (CPT code 31636) nor 
for a biopsy (CPT code 19103). Similarly, we do not agree that ENB is 
significantly different from the services described by CPT codes 61795 
and 20985 and from EBUS. The commenter stated that these navigation 
codes are unlike ENB (CPT code 31627 (Bronchoscopy, rigid or flexible, 
including fluoroscopic guidance, when performed; with computer-
assisted, image-guided navigation (List separately in addition to code 
for primary procedure[s])) because ENB requires steering a catheter 
through an airway of the lung for the purpose of a biopsy or treatment. 
While a catheter may be used to accomplish localization of the target 
during the ENB procedure, when the services described by CPT codes 
61795 and 20985 are utilized, another method of localization of the 
target is utilized. For example, when CPT code 20985 (Computer-assisted 
surgical navigational procedure for musculoskeletal procedures, image-
less (List separately in addition to code for primary procedure)) is 
performed, an infra-red, electromagnetic or other form of tracker may 
be utilized for localization of the target. Like CPT codes 61795 and 
20985, ENB is an add-on code that adds computer-assisted navigation to 
the primary procedure, which, in the case of ENB, is a bronchoscopy.
    We believe that ENB is an enhancement to the bronchoscopy with 
which it must be performed and as such is an ancillary and dependent 
service in the same manner that CPT code 31620 (EBUS) is an ancillary 
and supportive procedure. Both of these procedures enable the 
bronchoscopy with which they are performed to be more effective. We 
agree with the APC Panel that EBUS is the most suitable comparison 
because it describes another bronchoscopic procedure in which a 
guidance technology (that is, ultrasonography) is used to achieve the 
therapeutic benefit of the procedure. Similar to our proposed payment 
for CPT code 31627, payment for CPT code 31620 is currently packaged 
into the primary modality with which it would be appropriately billed. 
In CY 2008, as part of our increased packaging proposal, we identified 
the EBUS procedure as an intraoperative ancillary service that would 
typically be reported in conjunction with an independent service. In 
addition, similar to CPT code 31627, CPT code 31620 would only be 
appropriately reported in conjunction with specified bronchoscopy 
procedures with which it would be performed. Like EBUS, CPT code 31627, 
ENB is not an independent separately furnished procedure.
    We agree that the status of CPT code 31627 as an add-on code does 
not, of its own accord, justify packaged payment for the service as is 
evidenced, as the commenter noted, by separate payment under the OPPS 
for many add-on services. However, the status of the code as an add-on 
code supports the view that the procedure is a service that is always 
furnished in addition to another procedure and cannot be performed 
independently. We recognize that the Medicare Physician Fee Schedule 
(MPFS) pays separately for CPT code 31627, as it does for all add-on 
codes, but the MPFS and the OPPS are very different payment systems. 
Each is established under a different set of statutory and regulatory 
principles and the policies established under the physician fee 
schedule do not have bearing on the payment policies under the OPPS. 
With regard to the commenter's view that the costs of ENB cannot be 
packaged into payment for a bronchoscopy because a study shows the cost 
of ENB to be $2,700 or $2,875.50, depending on the commenter, while the 
proposed payment CMS proposed for CY 2011 for a bronchoscopy assigned 
to APC 0076 is $719.84, we note that we will develop, analyze, and 
provide to the APC Panel at its winter 2011 meeting, the cost and 
frequency data we derive from the CY 2010 claims for CPT code 31627 for 
purposes of illuminating consideration of whether the costs of ENB are 
being reflected in the claims for the service with which they are 
furnished. With regard to making a composite APC for ENB that would 
establish a separate payment for ENB when it is performed on the same 
date as the services that are reported using CPT code 31625, 31626, 
31628 or 31629, it is unclear whether ENB is a good candidate for a 
composite APC because composite APCs usually make payment for two 
separately paid procedures that are commonly performed together, and 
CPT code 31627 is currently a packaged service.
    With regard to the comment that packaging ENB is a violation of the 
2 times rule, we note that a 2 times rule violation can exist only 
within an APC and ENB has not been assigned to an APC because it is 
packaged and hence there is no application of the 2 times rule. We 
refer readers to section III. B. of this final rule with comment period 
for a more complete discussion of the 2 times rule.
    With regard to the argument that CMS should pay separately for ENB 
because MAC medical directors cover it and may have made separate 
payment for it, and that Administrative Law Judges may have overturned 
denials of separate payment for ENB is not relevant to whether the 
payment for it should be packaged into the payment for the bronchoscopy 
to which it is ancillary and supportive.
    After consideration of the public comments we received on this 
issue and the APC Panel's August 2010 recommendation on ENB, we are 
packaging payment for the service represented by CPT code 31627 into 
payment for the procedure with which it is performed for the CY 2011 
OPPS.
Recommendation 2--Developing and Sharing Cost Data for ENB
    We accept the APC Panel's recommendation to provide cost data on 
ENB, and we will provide the APC Panel with cost and frequency data at 
the winter 2011 APC Panel meeting for the Panel's use in providing CMS 
with a recommendation for CY 2012.
Recommendation 3--APC Assignment for CPT Code 0192T
    We are accepting the APC Panel's recommendation. We refer readers 
to section III.D. of this final rule with comment period for a 
discussion of CPT code 0192T.
Recommendation 4--Name and Function of the Packaging Subcommittee
    We agree with the APC Panel's recommendation and have changed the 
name and function of the committee to include the assessment of the 
content of APCs as well as the appropriate status indicator for each 
CPT code, including but not limited to the decision of whether, and if 
so when, to package payment for the service into payment for the 
services with which it is furnished. The Packaging Subcommittee will be 
renamed the ``Subcommittee for APC Groups and Status Indicator (SI) 
Assignments.''
Recommendation 5
    We agree and will, at the winter 2011 APC Panel meeting, furnish 
data about the frequency with which hospitals report unconditionally 
packaged HCPCS

[[Page 71871]]

codes on claims without another separately paid procedure.
Recommendation 6
    We support the APC Panel's recommendation that the public submit 
common clinical scenarios involving currently packaged HCPCS codes and 
make recommendations of specific services or procedures for which 
payment would be most appropriately packaged under the OPPS for review 
by the Subcommittee for APC Groups and Status Indicator (SI) 
Assignments.
Recommendation 7--Chair of the Subcommittee for APC Groups and Status 
Indicator (SI) Assignments
    We are accepting the APC Panel's recommendation that Judith Kelly, 
R.H.I.T., R.H.I.A., C.C.S., be named chair of the Subcommittee for APC 
Groups and Status Indicator (SI) Assignment.
Recommendation 8
    We are accepting the APC Panel's recommendation that the work of 
the Subcommittee for APC Groups and Status Indicator (SI) Assignments 
continue. We are continuing the work of the APC Panel Subcommittee for 
APC Groups and Status Indicator (SI) Assignments, and we appreciate the 
Subcommitee's expertise and experience regarding packaging under the 
OPPS and the valuable advice the Subcommittee continues to provide to 
us. We will continue to bring to the Subcommittee's attention clinical 
scenarios identified by us or the public regarding services that are 
currently packaged or are candidates for future packaging under the 
OPPS.
    We received public comments in response to the proposed rule on 
several issues related to packaging of payment that were in addition to 
those about which the APC Panel has made a recommendation that are 
related to packaging payment for ancillary and dependent services into 
payment for services that may be furnished independently.
    Comment: Commenters stated that CMS' packaging policies would 
likely lead to less efficient use of resources, limited access to 
innovative treatment options and greater instability in payments 
because the policies are based on several flawed assumptions. 
Commenters believed that to the extent that hospitals control the array 
of services they provide, CMS' packaging policies assume that the same 
incentives apply to hospital outpatient departments as to inpatient 
services. One commenter stated that under the inpatient prospective 
payment system (IPPS), hospitals have an incentive to provide care, 
including advanced technologies, in an efficient manner to ensure the 
lowest cost for the patient's diagnosis. In contrast, in hospital 
outpatient departments, because Medicare payment is based on procedures 
rather than diagnoses, the commenter believed that a hospital has an 
incentive to provide the lowest cost item or service included in an 
APC. The commenter further believed that if that service does not fully 
address the patient's needs, the hospital would receive better 
reimbursement by bringing the patient back for a second visit or 
admitting the patient for inpatient care than by providing a more 
costly option within the same APC. Moreover, the commenters believed 
that when an APC's payment rate is significantly less than the cost of 
a technology, hospitals have a strong disincentive to use that 
technology, even if it could reduce the costs of care at a later date. 
The commenters believed that CMS' use of expanded packaging has the 
risk of encouraging hospitals to forego performing needed services and 
using new technologies that may be more resource intensive during one 
visit, but could save the patient future outpatient department visits 
or inpatient care.
    Response: Packaging payment for items and services that are 
ancillary to and dependent on the major procedure for which a payment 
rate is established is a fundamental concept of the OPPS, based in 
regulation in the definition of costs that are included in the national 
payment rate for a service (42 CFR 419.2(b)) and in place since the 
inception of the OPPS (65 FR 18447). We continue to believe that 
packaging creates incentives for hospitals and their physician partners 
to work together to establish appropriate protocols that eliminate 
unnecessary services where they exist and institutionalize approaches 
to providing necessary services more efficiently. With respect to new 
services or new applications of existing technology, we believe that 
packaging payment for ancillary and dependent services creates 
appropriate incentives for hospitals to seriously consider whether a 
new service or a new technology offers a benefit that is sufficient to 
justify the cost of the new service or technology. Where this review 
results in reductions in services that are only marginally beneficial 
or hospitals' choices not to utilize certain technologies, we believe 
that this could improve, rather than harm, the quality of care for 
Medicare beneficiaries because every service furnished in a hospital 
carries some level of risk to the patient. Moreover, we believe that 
hospitals strive to provide the best care they can to the patients they 
serve so that when new technologies are proven to improve the quality 
of care, their utilization will increase appropriately, whether the 
payment for them is packaged or not.
    However, we are aware that there are financial pressures on 
hospitals that might motivate some providers to split services among 
different hospital encounters in such a way as to maximize payments. 
While we do not expect that hospitals would routinely change the way 
they furnish services or the way they bill for services in order to 
maximize payment, we recognize that it would be possible and we 
consider that possibility as we annually review hospital claims data. 
We will continue to examine claims data for patterns of fragmented 
care, and if we find a pattern in which a hospital appears to be 
dividing care across multiple days, we will refer it for investigation 
to the QIO or to the program safeguard contractor, as appropriate to 
the circumstances we find.
    In section II.A.1. of this final rule with comment period, we 
discuss the established methodology we use to incorporate the costs of 
packaged services into payment for the associated independent 
procedures. We package the costs of services into the payment for the 
major separately paid procedure on the same claim on which the packaged 
service appears. Hence, it is the practice of hospitals with regard to 
reporting and charging for packaged services that determines the 
separately paid service into which the cost of a packaged service is 
incorporated and the amount of packaged cost included the payment for 
that separately paid procedure.
    We believe it is important to continue to advance value-based 
purchasing by Medicare in the hospital outpatient setting by furthering 
the focus on value of care rather than volume. While we acknowledge the 
concerns of the commenters and, as discussed below, are committed to 
considering the impact of packaging payment on Medicare beneficiaries 
further in the future, we must balance the concerns of the commenters 
with our goal of continuing to encourage efficient use of hospital 
resources. As we noted in the CY 2009 OPPS/ASC final rule with comment 
period in our response to comments on the CY 2009 OPPS/ASC proposed 
rule (73 FR 68572) and as we note in our responses to public comments 
on the CY 2011 OPPS/ASC proposed rule, the suggestions and packaging 
criteria

[[Page 71872]]

recommended by most commenters are focused almost exclusively on 
preventing packaging, rather than on determining when packaging would 
be appropriate. We also welcome suggestions from the public on 
approaches to packaging that would encourage efficient use of hospital 
resources.
    Comment: Commenters asked that CMS make underlying payment rates 
for packaged services, including utilization rates, estimated median 
costs and numbers of hospitals furnishing various services available to 
the public. Commenters also asked that CMS continue to compare 
utilization of services in 2007 prior to packaging to utilization of 
the same services after packaging at the CPT level and make that 
information public. In addition, commenters asked that CMS study and 
report annually on the impact of packaged payment on beneficiary access 
to care. Commenters urged CMS to continue to monitor use of and payment 
for these services and share these reports with stakeholders, so that 
they can verify that Medicare's payment policies do not harm access to 
care. Commenters stated that CMS should provide data that demonstrates 
that the full cost of packaged services is reflected in the median cost 
for the services in which they are used.
    Response: As we note in our discussion above, we have reviewed the 
provision of packaged services for several years since we expanded 
packaging in CY 2008 and we see no evidence that increased packaging 
has caused harm to patient access to care, nor have we been presented 
with evidence that documents that packaging has been responsible for 
harm to patient access. Each year, CMS makes available an extensive 
amount of OPPS data that can be used for any data analysis an 
interested party would care to perform. Specifically, we make available 
a considerable amount of data for public analysis each year through the 
supporting data files that are posted on the CMS Web site in 
association with the display of the proposed and final rules. In 
addition, we make available the public use files of claims, including, 
for CY 2008 and later, supplemental line item cost data for every HCPCS 
code under the OPPS and a detailed narrative description of our data 
process for the annual OPPS/ASC proposed and final rules that the 
public can use to perform any desired analyses. Therefore, commenters 
are able to examine and analyze these data to develop specific 
information to assess the impact and effect of packaging for the 
services of interest to them. Therefore, this information is available 
to support their requests for changes to payments under the OPPS, 
whether with regard to separate payment for a packaged service or other 
issues. We understand that the OPPS is a complex payment system and 
that it may be difficult to determine the quantitative amount of 
packaged cost included in the median cost for every independent 
service. However, commenters routinely provide us with meaningful 
analyses at a very detailed and service-specific level based on the 
claims data we make available. We routinely receive complex and 
detailed public comments including extensive code-specific data 
analysis on packaged and separately paid codes, using the data from 
this and prior proposed and final rules. With respect to the request 
for assurance that the full cost of packaged services is included in 
the median cost used to set the payment rate for the independent 
service with which the packaged services are reported, we note that the 
use of a median cost as the measure of central tendency means that the 
full cost of a packaged service becomes part of the cost of the service 
with which it is furnished and is reflected in the median cost for the 
independent procedure since the median cost reflects the cost at the 
50th percentile of the array of the total costs for all claims in the 
set of single bills used to calculate the median cost for the CPT code 
or the APC.
    Comment: Commenters stated that, for packaged services such as 
guidance, image processing, and intraoperative services, CMS should 
provide separate, additional payment for innovative procedures. They 
urged CMS establish a 2- to 3-year data collection period during which 
separate payment would be made for these packaged services (or any new 
applications of these services). The commenters stated that the data 
collected during this period should be used to evaluate the clinical 
utilization and financial effects of the new services and that CMS 
should use this information to determine whether to propose packaging 
for the services or whether to maintain separate payment. They further 
stated that hospitals are reluctant to invest in new technologies 
because they are uncertain whether they will be able to recoup the cost 
of the services and that packaging payment for new technologies into 
payment for existing major separately paid procedures discourages them 
from making the investment.
    Response: We do not agree that innovative guidance, image 
processing, and intraoperative services or innovative uses of guidance, 
image processing, and intraoperative services should always be 
separately paid for a 2- to 3-year data collection period before a 
decision to make separate or packaged payment for them. We do not 
believe that making separate payment for 2 to 3 years would create 
incentives for hospitals to carefully consider whether the innovative 
service or innovative use of a pre-existing service represents 
sufficient value to be worthy of the investment. We continue to believe 
that hospitals will invest in innovative services or services with 
innovative uses where these services represent genuinely increased 
value to patient care, and where hospitals can furnish them 
efficiently. Of course, we will continue to pay separately for 
innovative technologies where a device meets the conditions for 
separate payment as a pass-through device or where a new procedure 
meets the criteria for payment as a new technology APC.
    Comment: Commenters believed that CMS assumes that its packaging 
policies will allow it to continue to collect the data it needs to set 
appropriate, stable payment rates in the future. The commenters 
believed that CMS' review of data from 2009 indicates that hospitals 
have continued to report codes for packaged services, but they stated 
that it remains to be seen if hospitals will continue this practice in 
subsequent years, particularly for services that have been packaged 
since their introduction. Commenters further stated that CMS' past 
experience with packaging payment for ancillary items indicates that 
hospitals do not submit codes for services that do not directly affect 
their payment and see no reason to believe that this will change and 
ask that CMS require complete and correct coding for packaged services 
so that all items and services that are not individually reimbursed 
must be included on the claim to provide CMS with essential data for 
future OPPS updates. Commenters expressed concern about what they 
believed to be decreases in the number of hospitals reporting services 
as a result of packaging and bundling. They believed that the decline 
could be due to one or both of two reasons: Hospitals may no longer be 
providing these services or hospitals could be providing these services 
but not reporting codes and charges for them, denying CMS accurate data 
for use in ratesetting. The commenters were concerned that decreased 
reporting of services will result in the costs of packaged services not 
being included in the payment for the independent service with which 
they are furnished.

[[Page 71873]]

    Response: We do not believe that there has been or will be a 
significant change in what hospitals report and charge for the 
outpatient services they furnish to Medicare beneficiaries and other 
patients as a result of our current packaging methodology. Medicare 
cost reporting standards specify that hospitals must impose the same 
charges for Medicare patients as for other patients. We are often told 
by hospitals that many private payers pay based on a percentage of 
charges and that, in accordance with Medicare cost reporting rules and 
generally accepted accounting principles, hospital chargemasters do not 
differentiate between the charges to Medicare patients and other 
patients. Therefore, we have no reason to believe that hospitals will 
stop reporting HCPCS codes and charges for packaged services they 
provide to Medicare beneficiaries. As we stated in the CY 2009 OPPS/ASC 
final rule with comment period (74 FR 68575), we strongly encourage 
hospitals to report a charge for each packaged service they furnish, 
either by billing the packaged HCPCS code and a charge for that service 
if separate reporting is consistent with CPT and CMS instructions, by 
increasing the charge for the separately paid associated service to 
include the charge for the packaged service, or by reporting the charge 
for the packaged service with an appropriate revenue code but without a 
HCPCS code. Any of these means of charging for the packaged service 
will result in the cost of the packaged service being incorporated into 
the cost we estimate for the separately paid service. If a HCPCS code 
is not reported when a packaged service is provided, we acknowledge 
that it can be challenging to specifically track the utilization 
patterns and resource cost of the packaged service itself. However, we 
have no reason to believe that hospitals have not considered the cost 
of the packaged service in reporting charges for the independent, 
separately paid service.
    We expect that hospitals, as other prudent businesses, have a 
quality review process that ensures that they accurately and completely 
report the services they furnish, with appropriate charges for those 
services to Medicare and all other payers. We encourage hospitals to 
report on their claim for payment all HCPCS codes that describe 
packaged services that were furnished, unless the CPT Editorial Panel 
or CMS provides other guidance. To the extent that hospitals include 
separate charges for packaged services on their claims, the estimated 
costs of those packaged services are then added to the costs of 
separately paid procedures on the same claims and used in establishing 
payment rates for the separately paid services.
    It is impossible to know with any certainty whether hospitals are 
failing to report HCPCS codes and charges for services for which the 
payment is packaged into payment for the independent service with which 
the packaged service is furnished. Moreover, where hospitals fail to 
report the HCPCS codes and charges for packaged services, the reason 
may be that the hospital has chosen to package the charge for the 
ancillary and dependent service into the charge for the service with 
which it is furnished. Although we prefer that hospitals report HCPCS 
codes and charges for all services they furnish, if the hospital's 
charge for the independent service also reflects the charge for all 
ancillary and supportive services it typically provides, the absence of 
HCPCS codes and separate charges would not result in inappropriately 
low median cost for the independent service, although CMS would not 
know which specific ancillary and supportive services were being 
furnished. Where a hospital is no longer providing a service, there may 
be many reasons that a hospital chooses not to provide a particular 
service or chooses to cease providing a particular service, including, 
but not limited to, because the hospital has determined that it is no 
longer cost effective for the hospital to furnish the service and that 
there may be other hospitals in the community that can furnish the 
service more efficiently.
    Comment: Many commenters who objected to payment for ancillary and 
dependent services being packaged into payment for the procedures that 
they support said that packaged payment will cause hospitals not to 
make these important services available to Medicare beneficiaries 
because they are not being paid separately for them by Medicare.
    Response: We do not believe that hospitals will cease to furnish 
Medicare beneficiaries with the ancillary and dependent services that 
are available in the facility when they are necessary to achieve the 
best therapeutic effect for their patients because the payment for the 
service is made as part of the payment for the procedure that they 
support. Instead, we believe that packaging will encourage hospitals to 
carefully review whether the ancillary and dependent services are 
genuinely necessary in individual cases to all patients and will 
carefully evaluate whether the staff and capital investments that are 
often necessary to furnish them are worthwhile. We note also that 
hospitals that fail to provide Medicare beneficiaries with the same 
services that they make available to other patients with the same 
conditions are subject to termination from the Medicare program under 
42 CFR 489.53(a)(2). Therefore, hospitals have a significant 
disincentive to treat Medicare patients differently from other patients 
with regard to the nature and scope of the services they furnish them.
    Comment: One commenter stated that CMS should provide further 
transparency and clarification of its analysis of image processing 
procedures because it is not clear why CMS has discussed coding issues 
pertaining to intraoperative procedures to support conclusions about 
packaging of image processing procedures. Specifically, the commenter 
stated that CMS notes that the intraoperative procedures described by 
CPT codes 93320 (which describes spectral Doppler) and 93325 (which 
describes color flow Doppler) are now reported using one comprehensive 
code, CPT 93306, which describes complete transthoracic echocardiogram 
with spectral and color flow Doppler. The commenter further reiterated 
CMS' statements that when data for any codes experiencing significant 
modifications were removed, there was a 7 percent decrease from CY 2007 
to CY 2009 in the frequency of image processing services billed. In a 
second analysis involving all image processing services, including 
those with revised codes, the data showed a 61-percent decrease in the 
billing of these services between CY 2007 and CY 2009 and a 6-percent 
decrease in the number of hospitals reporting these services during the 
same timeframe. The commenter believed the estimated declines in 
utilization of imaging processing services should not simply be 
disregarded, but in fact may suggest negative impacts on beneficiary 
access to these services.
    Response: The example we provided was not optimal and we were 
incorrect to characterize both CPT codes 93320 and 93325 as 
intraoperative services. For purposes of our analysis, we treated CPT 
code 93320 as an intraoperative service and we treated CPT code 93325 
as an imaging processing service. The point of the example is that 
because both codes are reported using CPT code 93306, effective for 
services on and after January 1, 2009, the CY 2009 data for these codes 
(93320 and 93325) cannot be compared to the data for them in CY 2007 in 
a meaningful way and for that reason we believe that the decreases we 
found are suspect.

[[Page 71874]]

(4) Other Service-Specific Packaging Issues
    We received the following public comments regarding the proposal to 
package specific services or services in a specific category.
    Comment: Commenters recommended that CMS eliminate packaging of 
IGRT services represented by CPT codes 76950 (Ultrasonic guidance for 
aspiration of ova, imaging supervision and interpretation), 76965 
(Ultrasonic guidance for interstitial radioelement application), 77417 
(Therapeutic radiology port film(s)), 77421 (Stereoscopic X ray 
guidance for localization of target volume for the delivery of 
radiation therapy), and 77014 (Computed tomography guidance for 
placement of radiation fields) for CY 2011. The commenters believed 
that if packaging is continued, closer monitoring of the claims data is 
necessary to better approximate the real costs associated with these 
services. They believed that these services are vital to the safe 
provision of radiation therapy, and unconditionally packaging payment 
for them may discourage hospitals from providing them. The commenters 
also believed that hospitals may not be reporting the services 
correctly and, therefore, not charging for them, which would lead to 
the cost of the service not being reflected into the packaged payment 
for the service for which separate payment is made.
    Response: We continue to believe that these services are ancillary 
and dependent services that, as the commenters indicated, are 
fundamental to the provision of optimal radiation therapy services and 
that the payment for them should be packaged into the payment for the 
procedure to which they are ancillary and supportive. We agree that it 
is vital that hospitals ensure that they report the charges for these 
services so that the cost of the independent service reflects the cost 
of these important ancillary services. We strongly encourage hospitals 
to report both the codes and the charges for these services, 
recognizing that some hospitals may prefer to incorporate the charge 
for the ancillary service into the charge for the service it supports. 
We remind hospitals that the payments they receive are developed from 
the charges they submit on claims and the charge and costs they report 
on their Medicare cost report. Therefore, it behooves them to ensure 
that they are fully reporting the charges on the claims they submit for 
payment. Moreover, we do not believe that there is value in closer 
monitoring of claims data for the purpose of better approximation of 
the real costs associated with ancillary and dependent services because 
we believe that our standard data process ensures that, to the extent 
that hospitals report charges for these services, whether with separate 
HCPCS codes or as part of the charge for the procedure to which they 
are ancillary and supportive, the cost of the service will be included 
in the APC median cost and, therefore, in the payment for the APC to 
which the separately paid procedure is assigned.
    Comment: One commenter was concerned that intravascular ultrasound 
and intracardiac echocardiography services are relatively high cost and 
low frequency services and, therefore, a small proportion of their cost 
is reflected in the payments for the services with which they are used. 
Although the commenter recognized that CMS found increases in reporting 
of these codes and payment for the procedures into which they are 
packaged from CY 2007 to CY 2009, the commenter continued to be 
concerned that payment is not adequate to protect access to these 
services and asked that CMS reinstate separate payment for 
intravascular ultrasound and intracardiac echocardiography services.
    Response: We note that IVUS, ICE, and FFR services are existing, 
established, technologies and that hospitals have provided some of 
these services in the HOPD since the implementation of the OPPS in CY 
2000. IVUS, FFR, and ICE are all dependent services that are always 
provided in association with independent services. Given the sizable 
increase in the number of services furnished and the associated payment 
between CY 2007 and CY 2009, as demonstrated by the analysis we 
presented in the proposed rule and recapped earlier in this section, we 
have seen no evidence from our claims data that beneficiary access to 
care is being harmed by packaging payment for IVUS, ICE, and FFR 
services or that payment is inadequate for hospitals to be able to 
afford to furnish these services with their associated independent 
services. We believe that packaging creates appropriate incentives for 
hospitals and their physician partners to carefully consider the 
technologies that are used in the care of patients in order to ensure 
that technologies are selected for use in each case based on their 
expected benefit to a particular Medicare beneficiary.
    Comment: Some commenters recommended that if the existing policy to 
package payment for nonpass-through implantable biologicals were to 
continue, CMS develop a crosswalk that includes specific procedure 
codes for nonpass-through implantable biologicals so that procedures 
involving those products could be reassigned to new APCs. The 
commenters also recommended that CMS provide an in-depth analysis of 
the packaging methodology to ensure that the costs of nonpass-through 
implantable biologicals are included in the procedural APCs.
    Response: We believe that creating and maintaining a crosswalk of 
nonpass-through implantable biological HCPCS codes and associated 
procedure codes would not be feasible because implantable biologicals 
may be used in a wide variety of surgical procedures. We also do not 
believe that it is necessary to develop such a crosswalk to ensure that 
the costs of nonpass-through implantable biologicals are included in 
the APC payment rates. As we discuss in section II.A.3. of this final 
rule with comment period, hospitals include HCPCS codes and charges for 
packaged services on their claims. Our packaging methodology ensures 
that the estimated costs associated with those packaged services are 
added to the costs of separately payable procedures on the same claims 
in establishing payment rates for the separately payable services.
    Regarding the request for in-depth data analysis, we note that each 
year CMS makes available an extraordinary amount of OPPS data that can 
be used for any data analysis an interested party would care to 
perform. Specifically, we make available a considerable amount of data 
for public analysis each year through the supporting data files that 
are posted on the CMS Web site in association with the display of the 
proposed and final rules. In addition, we make available the public use 
files of claims, including, for CY 2008 and later, supplemental line 
item cost data for every HCPCS code under the OPPS and a detailed 
narrative description of our data process for the annual OPPS/ASC 
proposed and final rules that the public can use to perform any desired 
analyses. Therefore, commenters are able to examine and analyze these 
data to develop specific information to assess the impact and effect of 
packaging for the services of interest to them or to support their 
requests for changes to payments under the OPPS, whether with regard to 
separate payment for a packaged service or other issues. We understand 
that the OPPS is a complex payment system and that it may be difficult 
to determine the quantitative amount of packaged cost included in the 
median cost for every independent service. However, commenters 
routinely provide us with meaningful analyses at a very detailed and 
service-specific level

[[Page 71875]]

based on the claims data we make available. We routinely receive 
complex and detailed public comments including extensive code-specific 
data analysis on packaged and separately paid codes, using the data 
from this and prior proposed and final rules.
    Comment: One commenter objected to CMS' policy of packaging payment 
for tositumomab into HCPCS code G3001 (Administration and supply of 
tositumomab, 450 mg) and requested that CMS create a HCPCS J-code for 
tositumomab, which is currently provided under a radioimmunotherapy 
regiment and billed as part of HCPCS code G3001. The commenter argued 
that because tositumomab is listed in compendia, is approved by the FDA 
as part of the BEXXAR[supreg] regimen, and has its own National Drug 
Code (NDC) number, it should be recognized as a drug and, therefore, be 
paid as other drugs are paid under the OPPS methodology, instead of 
having a payment rate determined by hospital claims data. The commenter 
suggested that a payment rate could be established using the ASP 
methodology.
    Response: As we stated in the CY 2010 OPPS/ASC final rule with 
comment period (75 FR 60517), we have consistently noted that unlabeled 
tositumomab is not approved as either a drug or a radiopharmaceutical, 
but it is a supply that is required as part of the radioimmunotherapy 
treatment regiment (CY 2009 OPPS/ASC final rule with comment period (73 
FR 68658); CY 2008 OPPS/ASC final rule with comment period (72 FR 
66765); CY 2006 OPPS final rule with comment period (70 FR 68654); and 
CY 2004 OPPS final rule with comment period (68 FR 63443)). We do not 
make separate payment for supplies used in services provided under the 
OPPS. Payments for necessary supplies are packaged into payment for the 
separately payable services provided by the hospital. Specifically, 
administration of unlabeled tostitumomab is a complete service that 
qualifies for separate payment under its own clinical APC. This 
complete service is currently described by HCPCS code G3001. Therefore, 
we do not agree with the commenter's recommendation that we assign a 
separate HCPCS code to the supply of unlabeled tositumomab. Rather, we 
will continue to make separate payment for the administration of 
tositumomab while payment for the supply of unlabeled tostitumomab will 
continue to be packaged into the administration payment.
    In addition to our final policies for specific packaged services, 
we will continue to package payment for the services we identified with 
a status indicator of ``N'' in Addendum B of the proposed rule with 
public comment into the payment for the separately paid procedures with 
which they are reported on a claim. We refer readers to section 
V.B.2.d. of this final rule with comment period for further discussion 
of our final policy to package payment for contrast agents and 
diagnostic radiopharmaceuticals. We refer readers to section 
II.A.2.e.(1) of this final rule with comment period for further 
discussion of our final policy to pay for observation services through 
extended assessment and management composite APCs under certain 
circumstances.
4. Calculation of OPPS Scaled Payment Weights
    As we proposed in the CY 2011 OPPS/ASC proposed rule (75 FR 46224 
through 46225), using the APC median costs discussed in sections 
II.A.1. and II.A.2. of this final rule with comment period, we 
calculated the final relative payment weights for each APC for CY 2011 
shown in Addenda A and B to this final rule with comment period. In 
years prior to CY 2007, we standardized all the relative payment 
weights to APC 0601 (Mid Level Clinic Visit) because mid-level clinic 
visits were among the most frequently performed services in the 
hospital outpatient setting. We assigned APC 0601 a relative payment 
weight of 1.00 and divided the median cost for each APC by the median 
cost for APC 0601 to derive the relative payment weight for each APC.
    Beginning with the CY 2007 OPPS (71 FR 67990), we standardized all 
of the relative payment weights to APC 0606 (Level 3 Clinic Visits) 
because we deleted APC 0601 as part of the reconfiguration of the 
clinic visit APCs. We selected APC 0606 as the base because APC 0606 
was the mid-level clinic visit APC (that is, Level 3 of five levels). 
Therefore, in the CY 2011 OPPS/ASC proposed rule (75 FR 46225), for CY 
2011, to maintain consistency in using a median for calculating 
unscaled weights representing the median cost of some of the most 
frequently provided services, we proposed to continue to use the median 
cost of the mid-level clinic visit APC (APC 0606) to calculate unscaled 
weights. Following our standard methodology, but using the proposed CY 
2011 median cost for APC 0606, for CY 2011 we assigned APC 0606 a 
relative payment weight of 1.00 and divided the median cost of each APC 
by the proposed median cost for APC 0606 to derive the proposed 
unscaled relative payment weight for each APC. The choice of the APC on 
which to base the proposed relative weights for all other APCs does not 
affect the 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 2011 is neither 
greater than nor less than the estimated aggregate weight that would 
have been made without the changes. To comply with this requirement 
concerning the APC changes, we proposed to compare the estimated 
aggregate weight using the CY 2010 scaled relative weights to the 
estimated aggregate weight using the proposed CY 2011 unscaled relative 
weights. For CY 2010, we multiplied the CY 2010 scaled APC relative 
weight applicable to a service paid under the OPPS by the volume of 
that service from CY 2009 claims to calculate the total weight for each 
service. We then added together the total weight for each of these 
services in order to calculate an estimated aggregate weight for the 
year. For CY 2011, we performed the same process using the proposed CY 
2011 unscaled weights rather than scaled weights. We then calculated 
the weight scaler by dividing the CY 2010 estimated aggregate weight by 
the proposed CY 2011 estimated aggregate weight. The service-mix is the 
same in the current and prospective years because we use the same set 
of claims for service volume in calculating the aggregate weight for 
each year. For a detailed discussion of the weight scaler calculation, 
we refer readers to the OPPS claims accounting document available on 
the CMS Web site at: http://www.cms.gov/HospitalOutpatientPPS/. We 
included payments to CMHCs in our comparison of estimated unscaled 
weight in CY 2011 to estimated total weight in CY 2010 using CY 2009 
claims data, holding all other components of the payment system 
constant to isolate changes in total weight. Based on this comparison, 
we adjusted the unscaled relative weights for purposes of budget 
neutrality. The proposed CY 2011 unscaled relative payment weights were 
adjusted by multiplying them by a proposed weight scaler of 1.3650 to 
ensure budget neutrality of the proposed CY 2011 relative weights.
    Section 1833(t)(14) of the Act provides the payment rates for 
certain ``specified covered outpatient drugs.'' That section states 
that ``Additional expenditures resulting from this paragraph shall not 
be taken into

[[Page 71876]]

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 
specified covered outpatient drugs (as discussed in section V.B.3. of 
the proposed rule and this final rule with comment period) was included 
in the proposed budget neutrality calculations for the CY 2011 OPPS.
    We did not receive any public comments on the proposed methodology 
for calculating scaled weights from the median costs for the CY 2011 
OPPS. Therefore, for the reasons set forth in the proposed rule (75 FR 
46224 and 46225), we are finalizing our proposed methodology without 
modification, including updating of the budget neutrality scaler for 
this final rule with comment period as we proposed. Under this 
methodology, the final unscaled payment weights were adjusted by a 
weight scaler of 1.4477 for this final rule with comment period. The 
final scaled relative payment weights listed in Addenda A and B to this 
final rule with comment period incorporate the recalibration 
adjustments discussed in sections II.A.1. and II.A.2. of this final 
rule with comment period.

B. Conversion Factor Update

    Section 1833(t)(3)(C)(ii) of the Act requires us to update the 
conversion factor used to determine payment rates under the OPPS on an 
annual basis by applying the OPD fee schedule increase factor. For CY 
2011, for purposes of section 1833(t)(3)(C)(iv) of the Act, subject to 
sections 1833(t)(17) and (t)(3)(F), 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, which we refer to as the hospital market 
basket update, or simply the market basket, in this discussion.
    The proposed hospital market basket increase for FY 2011 published 
in the FY 2011 IPPS/LTCH PPS proposed rule (75 FR 24062) prior to 
changes required by the Affordable Care Act was 2.4 percent. New 
sections 1833(t)(3)(F)(iii) and 1833(t)(3)(G)(i) of the Act, as added 
by section 3401(i) of the Affordable Care Act and as amended by section 
10319(g) of such Act and further amended by section 1105(e) of such 
Act, require a 0.25 percentage point reduction to the CY 2011 OPD fee 
schedule increase factor, which resulted in a proposed CY 2011 OPPS 
market basket update of 2.15 percent. The applicable percentage 
increase for FY 2011 published in the IPPS final rule on August 16, 
2010, is 2.35 percent (75 FR 50352), which is the 2.6 percent market 
basket update, less the 0.25 percentage point reduction required by the 
Affordable Care Act. We announced the CY 2010 OPPS conversion factor of 
$67.241 in an OPPS/ASC notice (CMS 1504-N), issued in the Federal 
Register on August 3, 2010 (75 FR 45771). Hospitals that fail to meet 
the reporting requirements of the Hospital Outpatient Quality Data 
Reporting Program (HOP QDRP) are subject to a reduction of 2.0 
percentage points from the OPD fee schedule increase factor adjustment 
to the conversion factor. For a complete discussion of the HOP QDRP 
requirements and the payment reduction for hospitals that fail to meet 
those requirements, we refer readers to section XVI. of this final rule 
with comment period.
    To set the OPPS conversion factor for CY 2011, we increased the CY 
2010 conversion factor of $67.241 by 2.35 percent. In accordance with 
section 1833(t)(9)(B) of the Act, we further adjusted the conversion 
factor for CY 2011 to ensure that any revisions we make to the updates 
for a revised wage index and rural adjustment are made on a budget 
neutral basis. We calculated an overall budget neutrality factor of 
1.0009 for wage index changes by comparing total payments from our 
simulation model using the FY 2011 IPPS final wage indices to those 
payments using the current (FY 2010) IPPS wage indices, as adopted on a 
calendar year basis for the OPPS, as indicated in the August 3, 2010 
OPPS/ASC Federal Register notice announcing Affordable Care Act changes 
to the wage indices (CMS-1504-N, 75 FR 45771). For CY 2011, as we 
proposed, we are not making a change to our rural adjustment policy. 
Therefore, the budget neutrality factor for the rural adjustment is 
1.0000. For CY 2011, we are not finalizing a cancer hospital adjustment 
policy, as discussed in section II.G. of this final rule with comment 
period, and, therefore, would not have a budget neutrality adjustment 
for that policy.
    For this final rule with comment period, we estimated that pass-
through spending for both drugs and biologicals and devices for CY 2011 
would equal approximately $57.7 million, which represents 0.15 percent 
of total projected CY 2011 OPPS spending. Therefore, the conversion 
factor was also adjusted by the difference between the 0.14 percent 
estimate of pass-through spending for CY 2010 and the 0.15 percent 
estimate of CY 2011 pass-through spending. Finally, estimated payments 
for outliers remain at 1.0 percent of total OPPS payments for CY 2011.
    The OPD fee schedule increase factor of 2.35 percent for CY 2011 
(that is, the CY 2011 estimate of the hospital market basket increase 
of 2.6 percent minus a 0.25 percentage point adjustment as required by 
the Affordable Care Act), the required wage index budget neutrality 
adjustment of approximately 1.0009, and the adjustment of 0.01 percent 
of projected OPPS spending for the difference in the pass-through 
spending resulted in a conversion factor for CY 2011 of $68.876, which 
reflects the full OPD fee schedule increase, after the adjustment 
required by the Affordable Care Act. To calculate the CY 2011 reduced 
market basket conversion factor for those hospitals that fail to meet 
the requirements of the HOP QDRP for the full CY 2011 payment update, 
we made all other adjustments discussed above, but used a reduced 
market basket increase update factor of 0.35 percent (that is, an 
unadjusted OPD fee schedule increase factor (market basket update) of 
2.6 percent reduced by 0.25 percentage point as required by the 
Affordable Care Act and further reduced by 2.0 percentage points as 
required by section 1833(t)(17)(A)(i) of the Act for failure to comply 
with the OPD quality reporting requirements) . This resulted in a 
reduced conversion factor for CY 2011 of $67.530 for those hospitals 
that fail to meet the HOP QDRP requirements (a difference of -$1.346 in 
the conversion factor relative to those hospitals that met the HOP QDRP 
requirements).
    As we mentioned above, in accordance with section 1833(t)(3)(C)(iv) 
of the Act, each year we update the OPPS conversion factor by an 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 market basket 
percentage increase applicable under section 1886(b)(3)(B)(iii) of the 
Act to hospital discharges occurring during the fiscal year ending in 
such year, reduced by 1 percentage point for such factor for services 
furnished in each of 2000 and 2002.
    For hospitals that do not meet the HOP QDRP reporting requirements 
discussed in section XVI. of this final rule with comment period, the 
update is equal to the OPD fee schedule increase factor less an 
additional 2.0 percentage points. In accordance with these statutory 
provisions, in the CY 2010 OPPS/ASC final rule with comment period (74 
FR 60419), we finalized an OPD fee schedule increase factor equal

[[Page 71877]]

to the IPPS full market basket update of 2.1 percent. Hospitals that 
failed to meet the HOP QDRP reporting requirements were subject to a 
reduced OPD fee schedule increase factor of 0.1 percent.
    We note that sections 1833(t)(3)(F)(ii) and 1833(t)(3)(G)(i) of the 
Act, as added by section 3401(i) of the Affordable Care Act and as 
amended by section 10319(g) and section 1105(e) of such Act, require 
that, after determining the OPD fee schedule increase factor, the 
Secretary shall reduce such factor for CY 2010 by 0.25 percentage 
point. Therefore, the reduction of 0.25 percentage point applied to the 
full IPPS hospital operating market basket increase factor of 2.1 
percent results in a revised OPD fee schedule increase factor of 1.85 
percent. For hospitals that do not meet the HOP QDRP reporting 
requirements, the update is equal to the OPD fee schedule increase 
factor, less the additional 0.25 percentage point required by sections 
1833(t)(3)(F)(ii) and 1833(t)(3)(G)(i) of the Act, minus 2.0 percentage 
points. New section 1833(t)(3)(F) of the Act further states that the 
application of section 1833(t)(3)(F) of the Act may result in the OPD 
fee schedule increase factor under section 1833(t)(3)(C)(iv) of the Act 
being less than zero for a given year. Thus, the CY 2010 OPD fee 
schedule increase factor was 1.85 percent (that is, 2.1 percent minus 
0.25 percentage point) for hospitals that met the HOP QDRP reporting 
requirements and negative 0.15 percent (2.1 percent, less the 0.25 
percentage point, minus the 2.0 percentage points) for hospitals 
failing to meet the HOP QDRP reporting requirements.
    As with the CY 2010 OPD fee schedule increase factor, new sections 
1833(t)(3)(F)(ii) and (t)(3)(G)(i) of the Act require that the CY 2011 
OPD fee schedule increase factor be reduced by 0.25 percentage point, 
subject to the hospital submitting quality information under rules 
established by the Secretary in accordance with section 1833(t)(17) of 
the Act. For hospitals that do not meet the HOP QDRP reporting 
requirements, the update is equal to the OPD fee schedule increase 
factor minus 0.25 percentage point minus 2.0 percentage points. Section 
1833(t)(3)(F) of the Act further states that this amendment may result 
in the applicable percentage increase being less than zero.
    In the FY 2011 IPPS/LTCH final rule (75 FR 50352), consistent with 
current law, based on IHS Global Insight, Inc.'s second quarter 2010 
forecast of the FY 2011 market basket increase, we estimated that the 
FY 2011 IPPS market basket update is 2.6 percent. However, consistent 
with the amendments to sections 1833(t)(3)(F)(ii) and (t)(3)(G)(i) of 
the Act, we are required to reduce the OPD fee schedule increase factor 
by 0.25 percentage point. Therefore, the market basket update to the CY 
2011 OPD fee schedule increase factor is 2.35 percent (that is, the CY 
2011 estimate of the OPD fee schedule increase factor of 2.6 percent 
minus 0.25 percentage point). For hospitals that do not meet the HOP 
QDRP reporting requirements, the update to the OPPS conversion factor 
is 0.35 percent (that is, the adjusted CY 2011 estimate of the market 
basket rate-of increase of 2.35 percent minus 2.0 percentage points).
    In the CY 2011 OPPS/ASC proposed rule (75 FR 46226), we proposed to 
revise Sec.  419.32(b)(1)(iv) of the regulations to reflect 
requirements of the Affordable Care Act for a 0.25 percentage point 
reduction to the OPPS fee schedule increase factor for each of CY 2010 
and CY 2011.
    Comment: One commenter supported the increase in the proposed 
conversion factor, which was updated by the market basket.
    Response: We appreciate the commenter's support.
    After consideration of the public comment we received, we are 
finalizing our proposed changes to Sec.  419.32(b)(1)(iv), without 
modification, to reflect requirements of the Affordable Care Act for a 
0.25 percentage point reduction to the OPPS fee schedule increase 
factor for each of CY 2010 and CY 2011. We are finalizing our CY 2011 
proposal, without modification, to update the OPPS conversion factor by 
the FY 2011 OPD fee schedule increase factor, which is set at the IPPS 
market basket percentage increase of 2.6 percent minus the 0.25 
percentage point reduction required under the Affordable Care Act, 
resulting in a final full conversion factor of $68.876 and in a reduced 
conversion factor of $67.530 for those hospitals that fail to meet the 
HOP QDRP reporting requirements for the full CY 2011 payment update.

C. Wage Index Changes

    Section 1833(t)(2)(D) of the Act requires the Secretary to 
determine a wage adjustment factor to adjust, for geographic wage 
differences, the portion of the OPPS payment rate, which includes the 
copayment standardized amount, that is attributable to labor and labor-
related cost. This adjustment must be made in a budget neutral manner 
and budget neutrality is discussed in section II.B. of this final rule 
with comment period.
    The OPPS labor-related share is 60 percent of the national OPPS 
payment. This labor-related share is based on a regression analysis 
that determined that, for all hospitals, approximately 60 percent of 
the costs of services paid under the OPPS were attributable to wage 
costs. We confirmed that this labor-related share for outpatient 
services is still 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). Therefore, in the CY 2011 OPPS/ASC 
proposed rule (75 FR 46226), we did not propose to revise this policy 
for the CY 2011 OPPS. We refer readers to section II.H. of this final 
rule with comment period for a description and example of how the wage 
index for a particular hospital is used to determine the payment for 
the hospital.
    As discussed in section II.A.2.c. of this final rule with comment 
period, for estimating national median APC costs, we standardize 60 
percent of estimated claims costs for geographic area wage variation 
using the same FY 2011 pre-reclassified wage index that the IPPS uses 
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 the copayment amount.
    As published in the original OPPS April 7, 2000 final rule with 
comment period (65 FR 18545), the OPPS has consistently adopted the 
final fiscal year IPPS wage index as the calendar year wage index for 
adjusting the OPPS standard payment amounts for labor market 
differences. Thus, the wage index that applies to a particular acute 
care short-stay hospital under the IPPS would also apply to that 
hospital under the OPPS. As initially explained in the September 8, 
1998 OPPS proposed rule, we believed and continue to believe that using 
the IPPS wage index as the source of an adjustment factor for the OPPS 
is reasonable and logical, given the inseparable, subordinate status of 
the HOPD within the hospital overall. In accordance with section 
1886(d)(3)(E) of the Act, the IPPS wage index is updated annually. 
Therefore, in accordance with our established policy, we proposed to 
use the final FY 2011 version of the IPPS wage index used to pay IPPS 
hospitals to adjust the CY 2011 OPPS payment rates and copayment 
amounts for geographic differences in labor cost for all providers that 
participate in the OPPS, including providers that are not paid under 
the IPPS (referred to in this section as ``non-IPPS'' providers).
    The Affordable Care Act contains a number of provisions affecting 
the FY 2011 IPPS wage index values, including revisions to the 
reclassification wage

[[Page 71878]]

comparability criteria that were finalized in the FY 2009 IPPS final 
rule (73 FR 48568 through 48570), and the application of rural floor 
budget neutrality on a national, rather than State-specific, basis 
through a uniform, national adjustment to the area wage index. These 
specific provisions are discussed in more detail in the supplemental FY 
2011 IPPS/LTCH PPS proposed rule published on June 2, 2010 in the 
Federal Register (75 FR 30920) and in the FY 2011 IPPS/LTCH PPS final 
rule which appears in the August 16, 2010 issue of the Federal Register 
(75 FR 50159). The Affordable Care Act also required CMS to establish 
an adjustment to create a wage index floor of 1.00 for hospitals 
located in States determined to be frontier States (section 10324). We 
discuss this provision and how it applies to hospital outpatient 
departments in more detail below.
    Section 10324 of the Affordable Care Act specifies that, for 
services furnished beginning CY 2011, the wage adjustment factor 
applicable to any hospital outpatient department that is located in a 
frontier State (as defined in section 1886(d)(3)(E)(iii)(II) of the 
Act) may not be less than 1.00. Further, section 10324 states that this 
adjustment to the wage index for these outpatient departments should 
not be made in a budget neutral manner. As such, for the CY 2011 OPPS, 
we proposed to adjust the wage index for all HOPDs, including those 
providers that are not paid under the IPPS, which are identified as 
being located in a frontier State, in the manner specified in the 
Affordable Care Act. Specifically, we proposed to adjust the FY 2011 
IPPS wage index, as adopted on a calendar year basis for the OPPS, for 
all hospitals paid under the OPPS, including non-IPPS hospitals, 
located in a frontier State to 1.00 in instances where the assigned FY 
2011 wage index (that reflects MGCRB reclassifications, application of 
the rural floor and rural floor budget neutrality adjustment) for these 
hospitals is less than 1.00. Similar to our current policy for HOPDs 
that are affiliated with multicampus hospital systems, we fully expect 
that the HOPD would receive a wage index based on the geographic 
location of the specific inpatient hospital with which it is 
associated. Therefore, if the associated hospital is located in a 
frontier State, the wage index adjustment applicable for the hospital 
would also apply for the affiliated HOPD. We refer readers to the FY 
2011 IPPS/LTCH PPS final rule (75 FR 50160) for a detailed discussion 
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.
    Comment: Commenters supported CMS' frontier State wage index 
proposal.
    Response: We appreciate the commenters' support.
    After consideration of the comments we received, we are finalizing 
our proposal, without modification, to adjust the FY IPPS 2011 wage 
index, as adopted on a calendar year basis for the OPPS, for all 
hospitals paid under the OPPS, including non-IPPS hospitals, located in 
a frontier State to 1.00 in instances where the assigned final FY 2011 
wage index (that reflects MGCRB reclassifications, application of the 
rural floor and rural floor budget neutrality adjustment) for these 
hospitals is less than 1.00.
    In addition, in the CY 2011 OPPS/ASC proposed rule (75 FR 46227), 
we proposed to revise 42 CFR 419.43(c) of the regulations to 
incorporate the amendments made by section 10324 of the Affordable Care 
Act. Specifically, we proposed to include a provision under a new 
paragraph (c)(2) of Sec.  419.43 to state that, for services furnished 
beginning January 1, 2011, the wage adjustment factor referenced in the 
existing regulations applicable to any HOPD that is located in a 
frontier State, as defined in the statute and regulations, may not be 
less than 1.00. We also proposed to add a new paragraph (c)(3) to Sec.  
419.43 to not consider these additional payments in budget neutrality 
calculations.
    We did not receive any public comments concerning our proposal to 
revise Sec.  419.43(c) of the regulations to incorporate the amendments 
made by section 10324 of the Affordable Care Act. Therefore, we are 
finalizing our proposed revisions to Sec.  419.43(c)(2) and (c)(3) 
without modification.
    In addition to the changes required by the Affordable Care Act, we 
note that the FY 2011 IPPS wage indices continue to reflect a number of 
adjustments implemented over the past few years, including, but not 
limited to, revised Office of Management and Budget (OMB) standards for 
defining geographic statistical areas (Core-Based Statistical Areas or 
CBSAs), reclassification of hospitals to different geographic areas, 
rural floor provisions, an adjustment for out-migration labor patterns, 
an adjustment for occupational mix, and a policy for allocating hourly 
wage data among campuses of multicampus hospital systems that cross 
CBSAs. We refer readers to the FY 2011 IPPS/LTCH PPS final rule (75 FR 
50157 through 50180) for a detailed discussion of all changes to the 
final FY 2011 IPPS wage indices, including changes required by the 
Affordable Care Act. In addition, we refer readers to the CY 2005 OPPS 
final rule with comment period (69 FR 65842 through 65844) and 
subsequent OPPS rules for a detailed discussion of the history of these 
wage index adjustments as applied under the OPPS.
    The IPPS wage index that we are adopting in this final rule with 
comment period includes all reclassifications that are approved by the 
Medicare Geographic Classification Review Board (MGCRB) for FY 2011. We 
note that reclassifications under section 508 of Public Law 108-173 and 
certain special exception wage indices that were extended by section 
106(a) of Public Law 109-432 (MIEA--TRHCA) and section 117 (a)(1) of 
Public Law 110-173 (MMSEA) were set to terminate September 30, 2008, 
but were further extended by section 124 of Public Law 110-275 (MIPPA) 
through September 30, 2009, and, most recently, by section 3137, as 
amended by section 10317, of the Affordable Care Act through September 
30, 2010. We did not make any proposals related to these provisions for 
the CY 2010 OPPS wage index because the Affordable Care Act was enacted 
after issuance of the CY 2010 OPPS/ASC proposed and final rules. In 
accordance with section 10317 of the Affordable Care Act, for CY 2010, 
we adopted all section 508 geographic reclassifications through 
September 30, 2010. Similar to our treatment of section 508 
reclassifications extended under Public Law 110-173 (MMSEA) as 
described in the CY 2009 OPPS/ASC final rule with comment period (73 FR 
68586), hospitals with section 508 reclassifications will revert to 
their home area wage index, with out-migration adjustment if 
applicable, or a current MGCRB reclassification, for the last quarter 
of CY 2010 (October 1, 2010 to December 31, 2010). In addition, as we 
did for CY 2009, we will recognize the revised wage index values for 
certain special exception hospitals from January 1, 2010 through 
December 31, 2010, under the OPPS, in order to give these hospitals the 
special exception wage indices under the OPPS for the same time period 
as under the IPPS. We refer readers to the section 508 reclassification 
discussion in the FY 2010 IPPS/LTCH PPS notice issued in the Federal 
Register on June 2, 2010 (75 FR 31118) for a detailed discussion of the 
changes to the wage indices as required by section 10317 of the 
Affordable Care Act. We also discuss the impact of the extension of 
reclassifications under section 508 and

[[Page 71879]]

special exception wage indices in the OPPS/ASC notice (CMS-1504-N) 
published in the Federal Register on August 3, 2010 (75 FR 45771). 
Because the provisions of section 10317 of the Affordable Care Act 
expire in 2010 (September 30, 2010) and are not applicable to FY 2011, 
as we proposed, we are not making any changes related to those 
provisions for the OPPS wage indices for CY 2011.
    For purposes of the OPPS, as we proposed in the CY 2011 OPPS/ASC 
proposed rule (75 FR 46228), we are continuing our policy in CY 2011 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. We note that because non-IPPS hospitals cannot reclassify, they 
are eligible for the out-migration wage adjustment. Table 4J in the FY 
2011 IPPS/LTCH PPS final rule (75 FR 50540) identifies counties 
eligible for the out-migration adjustment and providers receiving the 
adjustment. As we have done in prior years, we are reprinting Table 4J 
as Addendum L to this final rule with comment period with the addition 
of non-IPPS hospitals that will receive the section 505 out-migration 
adjustment under the CY 2011 OPPS.
    As stated earlier in this section, we continue to believe that 
using the IPPS wage index as the source of an adjustment factor for the 
OPPS is reasonable and logical, given the inseparable, subordinate 
status of the HOPD within the hospital overall. Therefore, as we 
proposed, we are using the final FY 2011 IPPS wage indices for 
calculating OPPS payments in CY 2011. With the exception of the out-
migration wage adjustment table (Addendum L to this final rule with 
comment period), which includes non-IPPS hospitals paid under the OPPS, 
we are not reprinting the FY 2011 IPPS final wage indices referenced in 
this discussion of the wage index. We refer readers to the CMS Web site 
for the OPPS at: http://www.cms.gov/HospitalOutpatientPPS/. At this 
link, readers will find a link to the FY 2011 IPPS final wage index 
tables.
    Comment: Several commenters expressed support for the CMS proposal 
to extend the IPPS wage indices to the OPPS in CY 2011, consistent with 
prior year policies under the OPPS.
    Response: We appreciate the commenters' support of our proposed CY 
2011 wage index policies.
    Comment: One commenter recommended that CMS incorporate a different 
labor-related share for APCs with high device or supply costs. The 
commenter suggested, based on its internal data analysis, that a labor-
related share of 20 percent, rather than the current labor-related 
share of 60 percent, would be more appropriate for these APCs.
    Response: We do not believe it is appropriate to vary the 
percentage of the national payment that is wage adjusted for different 
services provided under the OPPS. Such a change could not be considered 
without first assessing its impact on the OPPS labor-related share 
calculation. The OPPS labor-related share of 60 percent was determined 
through regression analyses conducted for the initial OPPS proposed 
rule (63 FR 47581) and confirmed for the CY 2006 OPPS final rule with 
comment period (70 FR 68556). The labor-related share is a provider-
level adjustment based on the relationship between the labor input 
costs and a provider's average OPPS unit cost, holding all other things 
constant. While numerous individual services may have variable labor 
shares, these past analyses identified 60 percent as the appropriate 
labor-related share across all types of outpatient services and are the 
basis for our current policy. The provider-level adjustment is an 
aggregate, not service-specific, adjustment; it addresses payment for 
almost all services paid under the OPPS.
    After consideration of the public comments we received, we are 
finalizing our CY 2011 proposal, without modification, to use the final 
FY 2011 IPPS wage indices to adjust the OPPS standard payment amounts 
for labor market differences.

D. Statewide Average Default CCRs

    In addition to using CCRs to estimate costs from charges on claims 
for ratesetting, CMS uses overall hospital-specific CCRs calculated 
from the hospital's most recent cost report to determine outlier 
payments, payments for pass-through devices, and monthly interim 
transitional corridor payments under the OPPS during the PPS year. 
Medicare contractors cannot calculate a CCR for some hospitals because 
there is no cost report available. For these hospitals, CMS uses the 
statewide average default CCRs to determine the payments mentioned 
above until a hospital's Medicare contractor is able to calculate the 
hospital's actual CCR from its most recently submitted Medicare cost 
report. These hospitals include, but are not limited to, hospitals that 
are new, have not accepted assignment of an existing hospital's 
provider agreement, and have not yet submitted a cost report. CMS also 
uses the statewide average default CCRs to determine payments for 
hospitals that appear to have a biased CCR (that is, the CCR falls 
outside the predetermined ceiling threshold for a valid CCR) or for 
hospitals whose most recent cost report reflects an all-inclusive rate 
status (Medicare Claims Processing Manual (Pub. 100-04), Chapter 4, 
Section 10.11). As we proposed, in this final rule with comment period, 
we are updating the default ratios for CY 2011 using the most recent 
cost report data. We discuss 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 CY 2011, as proposed, we are continuing to use our standard 
methodology of calculating the statewide average default CCRs using the 
same hospital overall CCRs that we use to adjust charges to costs on 
claims data for setting the CY 2011 OPPS relative weights. Table 9 
published in the CY 2011 OPPS/ASC proposed rule listed the proposed CY 
2011 default urban and rural CCRs by State and compared them to last 
year's default CCRs. These proposed CCRs represented the ratio of total 
costs to total charges for those cost centers relevant to outpatient 
services from each hospital's most recently submitted cost report, 
weighted by Medicare Part B charges. We also adjusted ratios from 
submitted cost reports to reflect final settled status by applying the 
differential between settled to submitted overall CCR for the cost 
centers relevant to outpatient services from the most recent pair of 
final settled and submitted cost reports. We then weighted each 
hospital's CCR by the volume of separately paid line-items on hospital 
claims corresponding to the year of the majority of cost reports used 
to calculate the overall CCRs. We refer readers to the CY 2008 OPPS/ASC 
final rule with comment period (72 FR 66680 through 66682) and prior 
OPPS rules for a more detailed discussion of our established 
methodology for calculating the statewide average default CCRs, 
including the hospitals used in our calculations and our trimming 
criteria.
    We did not receive any public comments on our CY 2011 proposal. We 
are finalizing our proposal to apply our standard methodology of 
calculating the statewide average default CCRs using the same hospital 
overall CCRs that we used to adjust charges to costs on claims data. We 
used this methodology to calculate the statewide average default CCRs 
listed in Table 15 below.

[[Page 71880]]

    For this CY 2011 OPS/ASC final rule with comment period, 
approximately 47 percent of the submitted cost reports utilized in the 
default ratio calculations represented data for cost reporting periods 
ending in CY 2009 and 52 percent were for cost reporting periods ending 
in CY 2008. For Maryland, we used an overall weighted average CCR for 
all hospitals in the nation as a substitute for Maryland CCRs. Few 
hospitals in Maryland are eligible to receive payment under the OPPS, 
which limits the data available to calculate an accurate and 
representative CCR. In general, observed changes in the statewide 
average default CCRs between CY 2010 and CY 2011 were modest and the 
few significant changes are associated with areas that have a small 
number of hospitals.
    Table 15 below list the finalized statewide average default CCRs 
for OPPS services furnished on or after January 1, 2011.

                                    Table 15--CY 2011 Statewide Average CCRs
----------------------------------------------------------------------------------------------------------------
                                                                                                     Previous
                                                                                   Final CY 2011    default CCR
                              State                                 Urban/Rural     default CCR    (CY 2010 OPPS
                                                                                                    final rule)
----------------------------------------------------------------------------------------------------------------
ALASKA..........................................................           RURAL           0.479           0.499
ALASKA..........................................................           URBAN           0.315           0.328
ALABAMA.........................................................           RURAL           0.212           0.220
ALABAMA.........................................................           URBAN           0.193           0.193
ARKANSAS........................................................           RURAL           0.223           0.251
ARKANSAS........................................................           URBAN           0.282           0.263
ARIZONA.........................................................           RURAL           0.231           0.251
ARIZONA.........................................................           URBAN           0.202           0.217
CALIFORNIA......................................................           RURAL           0.195           0.208
CALIFORNIA......................................................           URBAN           0.205           0.210
COLORADO........................................................           RURAL           0.350           0.345
COLORADO........................................................           URBAN           0.233           0.255
CONNECTICUT.....................................................           RURAL           0.356           0.375
CONNECTICUT.....................................................           URBAN           0.291           0.319
DISTRICT OF COLUMBIA............................................           URBAN           0.313           0.324
DELAWARE........................................................           RURAL           0.279           0.320
DELAWARE........................................................           URBAN           0.362           0.363
FLORIDA.........................................................           RURAL           0.185           0.198
FLORIDA.........................................................           URBAN           0.172           0.184
GEORGIA.........................................................           RURAL           0.246           0.265
GEORGIA.........................................................           URBAN           0.220           0.246
HAWAII..........................................................           RURAL           0.356           0.359
HAWAII..........................................................           URBAN           0.308           0.307
IOWA............................................................           RURAL           0.252           0.332
IOWA............................................................           URBAN           0.288           0.302
IDAHO...........................................................           RURAL           0.419           0.507
IDAHO...........................................................           URBAN           0.384           0.409
ILLINOIS........................................................           RURAL           0.251           0.273
ILLINOIS........................................................           URBAN           0.239           0.253
INDIANA.........................................................           RURAL           0.302           0.299
INDIANA.........................................................           URBAN           0.270           0.296
KANSAS..........................................................           RURAL           0.286           0.291
KANSAS..........................................................           URBAN           0.215           0.226
KENTUCKY........................................................           RURAL           0.220           0.223
KENTUCKY........................................................           URBAN           0.244           0.254
LOUISIANA.......................................................           RURAL           0.256           0.271
LOUISIANA.......................................................           URBAN           0.235           0.259
MARYLAND........................................................           RURAL           0.284           0.294
MARYLAND........................................................           URBAN           0.256           0.267
MASSACHUSETTS...................................................           URBAN           0.314           0.323
MAINE...........................................................           RURAL           0.460           0.433
MAINE...........................................................           URBAN           0.450           0.452
MICHIGAN........................................................           RURAL           0.312           0.318
MICHIGAN........................................................           URBAN           0.320           0.320
MINNESOTA.......................................................           RURAL           0.483           0.502
MINNESOTA.......................................................           URBAN           0.311           0.330
MISSOURI........................................................           RURAL           0.258           0.266
MISSOURI........................................................           URBAN           0.264           0.270
MISSISSIPPI.....................................................           RURAL           0.229           0.244
MISSISSIPPI.....................................................           URBAN           0.182           0.192
MONTANA.........................................................           RURAL           0.444           0.438
MONTANA.........................................................           URBAN           0.399           0.462
NORTH CAROLINA..................................................           RURAL           0.254           0.270
NORTH CAROLINA..................................................           URBAN           0.264           0.285
NORTH DAKOTA....................................................           RURAL           0.351           0.333
NORTH DAKOTA....................................................           URBAN           0.360           0.361
NEBRASKA........................................................           RURAL           0.328           0.340
NEBRASKA........................................................           URBAN           0.259           0.260
NEW HAMPSHIRE...................................................           RURAL           0.323           0.329

[[Page 71881]]

 
NEW HAMPSHIRE...................................................           URBAN           0.290           0.285
NEW JERSEY......................................................           URBAN           0.221           0.235
NEW MEXICO......................................................           RURAL           0.277           0.259
NEW MEXICO......................................................           URBAN           0.307           0.329
NEVADA..........................................................           RURAL           0.269           0.296
NEVADA..........................................................           URBAN           0.178           0.187
NEW YORK........................................................           RURAL           0.415           0.423
NEW YORK........................................................           URBAN           0.375           0.383
OHIO............................................................           RURAL           0.327           0.350
OHIO............................................................           URBAN           0.241           0.250
OKLAHOMA........................................................           RURAL           0.260           0.267
OKLAHOMA........................................................           URBAN           0.208           0.225
OREGON..........................................................           RURAL           0.306           0.303
OREGON..........................................................           URBAN           0.340           0.344
PENNSYLVANIA....................................................           RURAL           0.275           0.280
PENNSYLVANIA....................................................           URBAN           0.210           0.223
PUERTO RICO.....................................................           URBAN           0.505           0.514
RHODE ISLAND....................................................           URBAN           0.284           0.299
SOUTH CAROLINA..................................................           RURAL           0.222           0.232
SOUTH CAROLINA..................................................           URBAN           0.227           0.242
SOUTH DAKOTA....................................................           RURAL           0.316           0.320
SOUTH DAKOTA....................................................           URBAN           0.251           0.261
TENNESSEE.......................................................           RURAL           0.221           0.233
TENNESSEE.......................................................           URBAN           0.204           0.214
TEXAS...........................................................           RURAL           0.245           0.251
TEXAS...........................................................           URBAN           0.216           0.222
UTAH............................................................           RURAL           0.386           0.397
UTAH............................................................           URBAN           0.362           0.400
VIRGINIA........................................................           RURAL           0.241           0.242
VIRGINIA........................................................           URBAN           0.263           0.255
VERMONT.........................................................           RURAL           0.411           0.413
VERMONT.........................................................           URBAN           0.365           0.397
WASHINGTON......................................................           RURAL           0.367           0.365
WASHINGTON......................................................           URBAN           0.327           0.340
WISCONSIN.......................................................           RURAL           0.412           0.384
WISCONSIN.......................................................           URBAN           0.334           0.329
WEST VIRGINIA...................................................           RURAL           0.291           0.283
WEST VIRGINIA...................................................           URBAN           0.337           0.339
WYOMING.........................................................           RURAL           0.393           0.407
WYOMING.........................................................           URBAN           0.296           0.315
----------------------------------------------------------------------------------------------------------------

E. OPPS Payment to Certain Rural and Other Hospitals

1. Hold Harmless Transitional Payment Changes Made by Public Law 110-
275 (MIPPA)
    When the OPPS was implemented, every provider was eligible to 
receive an additional payment adjustment (called either transitional 
corridor payments or transitional outpatient payment (TOPs)) if the 
payments it received for covered OPD services under the OPPS were less 
than the payments it would have received for the same services under 
the prior reasonable cost-based system (referred to as the pre-BBA 
amount). Section 1833(t)(7) of the Act provides that the transitional 
corridor payments are temporary payments for most providers and were 
intended to ease their transition from the prior reasonable cost-based 
payment system to the OPPS system. There are two exceptions to this 
provision, cancer hospitals and children's hospitals, and those 
hospitals receive the transitional corridor payments on a permanent 
basis. Section 1833(t)(7)(D)(i) of the Act originally provided for 
transitional corridor payments to rural hospitals with 100 or fewer 
beds for covered OPD services furnished before January 1, 2004. 
However, section 411 of Public Law 108-173 amended section 
1833(t)(7)(D)(i) of the Act to extend these payments through December 
31, 2005, for rural hospitals with 100 or fewer beds. Section 411 also 
extended the transitional corridor payments to sole community hospitals 
(SCHs) located in rural areas for services furnished during the period 
that began with the provider's first cost reporting period beginning on 
or after January 1, 2004, and ending on December 31, 2005. Accordingly, 
the authority for making transitional corridor payments under section 
1833(t)(7)(D)(i) of the Act, as amended by section 411 of Public Law 
108-173, for rural hospitals having 100 or fewer beds and SCHs located 
in rural areas expired on December 31, 2005.
    Section 5105 of Public Law 109-171 reinstituted the TOPs for 
covered OPD services furnished on or after January 1, 2006, and before 
January 1, 2009, for rural hospitals having 100 or fewer beds that are 
not SCHs. When the OPPS payment was less than the provider's pre-BBA 
amount, the amount of payment was increased by 95 percent of the amount 
of the difference between the two amounts for CY 2006, by 90 percent of 
the amount of that difference for CY 2007, and by 85 percent of the 
amount of that difference for CY 2008.
    For CY 2006, we implemented section 5105 of Public Law 109-171 
through Transmittal 877, issued on February 24, 2006. In the 
Transmittal, we did not

[[Page 71882]]

specifically address whether TOPs apply to essential access community 
hospitals (EACHs), which are considered to be SCHs under section 
1886(d)(5)(D)(iii)(III) of the Act. Accordingly, under the statute, 
EACHs are treated as SCHs. In the CY 2007 OPPS/ASC final rule with 
comment period (71 FR 68010), we stated that EACHs were not eligible 
for TOPs under Public Law 109-171. However, we stated they were 
eligible for the adjustment for rural SCHs. In the CY 2007 OPPS/ASC 
final rule with comment period (71 FR 68010 and 68228), we updated 
Sec.  419.70(d) of our regulations to reflect the requirements of 
Public Law 109-171.
    In the CY 2009 OPPS/ASC proposed rule (73 FR 41461), we stated 
that, effective for services provided on or after January 1, 2009, 
rural hospitals having 100 or fewer beds that are not SCHs would no 
longer be eligible for TOPs, in accordance with section 5105 of Public 
Law 109-171. However, subsequent to issuance of the CY 2009 OPPS/ASC 
proposed rule, section 147 of Public Law 110-275 amended section 
1833(t)(7)(D)(i) of the Act by extending the period of TOPs to rural 
hospitals with 100 beds or fewer for 1 year, for services provided 
before January 1, 2010. Section 147 of Public Law 110-275 also extended 
TOPs to SCHs (including EACHs) with 100 or fewer beds for covered OPD 
services provided on or after January 1, 2009, and before January 1, 
2010. In accordance with section 147 of Public Law 110-275, when the 
OPPS payment is less than the provider's pre-BBA amount, the amount of 
payment is increased by 85 percent of the amount of the difference 
between the two payment amounts for CY 2009.
    For CY 2009, we revised our regulations at Sec. Sec.  419.70(d)(2) 
and (d)(4) and added a new paragraph (d)(5) to incorporate the 
provisions of section 147 of Public Law 110-275. In addition, we made 
other technical changes to Sec.  419.70(d)(2) to more precisely capture 
our existing policy and to correct an inaccurate cross-reference. We 
also made technical corrections to the cross-references in paragraphs 
(e), (g), and (i) of Sec.  419.70.
    For CY 2010, we made a technical correction to the heading of Sec.  
419.70(d)(5) to correctly identify the policy as described in the 
subsequent regulation text. The paragraph heading now indicates that 
the adjustment applies to small SCHs, rather than to rural SCHs.
    In the CY 2010 OPPS/ASC final rule with comment period (74 FR 
60425), we stated that, effective for services provided on or after 
January 1, 2010, rural hospitals and SCHs (including EACHs) having 100 
or fewer beds would no longer be eligible for TOPs, in accordance with 
section 147 of Public Law 110-275. However, subsequent to issuance of 
the CY 2010 OPPS/ASC final rule with comment period, section 3121(a) of 
the Affordable Care Act amended section 1833(t)(7)(D)(i)(III) of the 
Act by extending the period of TOPs to rural hospitals that are not 
SCHs with 100 beds or fewer for 1 year, for services provided before 
January 1, 2011. Section 3121(a) of the Affordable Care Act amended 
section 1833(t)(7)(D)(i)(III) of the Act and extended the period of 
TOPs to SCHs (including EACHs) for 1 year, for services provided before 
January 1, 2011, with section 3121(b) of the Affordable Care Act 
removing the 100-bed limitation applicable to such SCHs for covered OPD 
services furnished on and after January 1, 2010, and before January 1, 
2011. In accordance with section 3121 of the Affordable Care Act, when 
the OPPS payment is less than the provider's pre-BBA amount, the amount 
of payment is increased by 85 percent of the amount of the difference 
between the two payment amounts for CY 2010. Accordingly, in the CY 
2011 OPPS/ASC proposed rule (75 FR 46232), we proposed to update Sec.  
419.70(d) of the regulations to reflect the TOPs extensions and 
amendments described in section 3121 of the Affordable Care Act.
    We did not receive any public comments on our proposed policy for 
updating the language in Sec.  419.70(d) of the regulations. For the 
reasons we specify in the CY 2011 OPPS/ASC proposed rule (75 FR 46231-
46232), we are finalizing our proposed revisions of Sec.  419.70(d) 
without modification. Effective for services provided on or after 
January 1, 2011, rural hospitals having 100 or fewer beds that are not 
SCHs and SCHs (including EACHs) will no longer be eligible for hold 
harmless TOPs, in accordance with section 3121 of the Affordable Care 
Act.
2. Adjustment for Rural SCHs Implemented in CY 2006 Related to Public 
Law 108-173 (MMA)
    In the CY 2006 OPPS final rule with comment period (70 FR 68556), 
we finalized a payment increase for rural SCHs of 7.1 percent for all 
services and procedures paid under the OPPS, excluding drugs, 
biologicals, brachytherapy sources, and devices paid under the pass-
through payment policy in accordance with section 1833(t)(13)(B) of the 
Act, as added by section 411 of Public Law 108-173. Section 411 gave 
the Secretary the authority to make an adjustment to OPPS payments for 
rural hospitals, effective January 1, 2006, if justified by a study of 
the difference in costs by APC between hospitals in rural areas and 
hospitals in urban areas. Our analysis showed a difference in costs for 
rural SCHs. Therefore, for the CY 2006 OPPS, we finalized a payment 
adjustment for rural SCHs of 7.1 percent for all services and 
procedures paid under the OPPS, excluding separately payable drugs and 
biologicals, brachytherapy sources, and devices paid under the pass-
through payment policy, in accordance with section 1833(t)(13)(B) of 
the Act.
    In CY 2007, we became aware that we did not specifically address 
whether the adjustment applies to EACHs, which are considered to be 
SCHs under section 1886(d)(5)(D)(iii)(III) of the Act. Thus, under the 
statute, EACHs are treated as SCHs. Therefore, 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 Sec.  419.43(g) to clarify 
that EACHs are also eligible to receive the rural SCH adjustment, 
assuming these entities otherwise meet the rural adjustment criteria. 
Currently, fewer than 10 hospitals are classified as EACHs and as of CY 
1998, under section 4201(c) of Public Law 105-33, a hospital can no 
longer become newly classified as an EACH.
    This adjustment for rural SCHs is budget neutral and applied before 
calculating outliers and copayment. As stated in the CY 2006 OPPS final 
rule with comment period (70 FR 68560), 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 CY 2008 and CY 2009. Further, in the CY 2009 OPPS/ASC 
final rule with comment period (73 FR 68590), we updated the 
regulations at Sec.  419.43(g)(4) to specify, in general terms, that 
items paid at charges adjusted to costs by application of a hospital-
specific CCR are excluded from the 7.1 percent payment adjustment.
    For the CY 2011 OPPS, we proposed to continue our policy of a 
budget neutral 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, devices paid under the pass-
through payment policy, and items paid at charges reduced to costs (75 
FR 46232). In the CY 2011 OPPS/ASC proposed rule, we indicated that we 
intend to reassess the 7.1 percent adjustment in the near future by

[[Page 71883]]

examining differences between urban and rural hospitals' costs using 
updated claims, cost reports, and provider information.
    Comment: One commenter supported our proposal to continue to apply 
the budget neutral 7.1 percent adjustment to OPPS payment for rural 
sole community hospitals. The commenter also recommended that CMS 
update the analysis in the near future to assess if the 7.1 percent 
payment adjustment remains a valid figure.
    Response: We agree that it is appropriate to continue the 7.1 
percent adjustment for rural SCHs (including EACHs) as we proposed for 
CY 2011. As we indicated above, and in the proposed rule (75 FR 46232), 
we intended to reassess the 7.1 percent rural adjustment in the near 
future by examining differences between urban rural hospitals' costs 
using updated claims, cost reports, and provider information.
    After consideration of the public comments we received, we are 
finalizing our CY 2011 proposal, without modification, to apply the 7.1 
percent payment adjustment to rural SCHs, including EACHs, for all 
services and procedures paid under the OPPS in CY 2011, excluding 
separately payable drugs and biologicals, devices paid under the pass-
through payment policy, and items paid at charges reduced to costs.

F. OPPS Payments to Certain Cancer Hospitals Described by Section 
1886(d)(1)(B)(v) of the Act

1. Background
    Since the inception of the OPPS, which was authorized by the 
Balanced Budget Act of 1997 (BBA), Medicare has paid cancer hospitals 
identified in section 1886(d)(1)(B)(v) of the Act (cancer hospitals) 
under the OPPS for covered outpatient hospital services. There are 11 
cancer hospitals that meet the classification criteria in section 
1886(d)(1)(B)(v) of the Act. These 11 cancer hospitals are exempted 
from payment under the IPPS. With the Medicare, Medicaid and SCHIP 
Balanced Budget Refinement Act of 1999, Congress created section 
1833(t)(7) of the Act, ``Transitional Adjustment to Limit Decline in 
Payment,'' to serve as a permanent payment floor by limiting cancer 
hospitals' potential losses under the OPPS. Through section 
1833(t)(7)(D)(ii) of the Act, a cancer hospital receives the full 
amount of the difference between payments for covered outpatient 
services under the OPPS and a pre-BBA amount. That is, cancer hospitals 
are permanently held harmless to their ``pre-BBA'' amount, and they 
receive TOPs to ensure that they do not receive a payment that is lower 
under the OPPS than the payment they would have received before 
implementation of the OPPS, as set forth in section 1833(t)(7)(F) of 
the Act. The pre-BBA payment amount is an amount equal to the product 
of the reasonable cost of the hospital for such services for the 
portions of the hospital's cost reporting period (or periods) occurring 
in the year and the base payment to cost ratio (base PCR) for the 
hospital. The pre-BBA amount, including the determination of the base 
PCR, are defined at 42 CFR 419.70(f). TOPs are calculated on Worksheet 
E, Part B, of the Hospital and Hospital Health Care Complex Cost Report 
(Form CMS-2552-96) each year. Section 1833(t)(7)(I) of the Act exempts 
TOPs from budget neutrality calculations. Almost all of the 11 cancer 
hospitals receive TOPs each year. The volume weighted average payment 
to cost ratio (PCR) for the cancer hospitals is 0.83, or outpatient 
payment with TOPs to cancer hospitals is 83 percent of reasonable cost.
    Section 3138 of the Affordable Care Act 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 ambulatory classification groups exceed the 
costs incurred by other hospitals furnishing services under this 
subsection (section 1833(t) of the Act) as determined appropriate by 
the Secretary. In addition, section 3138 of the Affordable Care Act 
requires the Secretary to take into consideration the cost of drugs and 
biologicals incurred by such hospitals when studying cancer hospital 
costliness. Further, section 3138 of the Affordable Care Act states 
that if the cancer hospitals' costs are determined to be greater than 
the costs of other hospitals paid under the OPPS, the Secretary shall 
provide an appropriate adjustment to reflect these higher costs. 
Section 3138 of the Affordable Care Act also requires that this 
adjustment be budget neutral, and that the adjustment be effective for 
outpatient services provided at cancer hospitals on or after January 1, 
2011. Cancer hospitals described in section 1886(d)(1)(B)(v) of the Act 
remain eligible for TOPs (which are not budget neutral) and outlier 
payments (which are budget neutral).
2. Study of Cancer Hospitals' Costs Relative to Other Hospitals
    It has been our standard analytical approach to use a combination 
of explanatory and payment regression models to assess the costliness 
of a class of hospitals while controlling for other legitimate 
influences of costliness, such as ability to achieve economies of 
scale, to ensure that costliness is due to the type of hospital and to 
identify appropriate payment adjustments. We used this approach in our 
CY 2006 OPPS final rule with comment period to establish the 7.1 
percent payment adjustment for rural SCHs (70 FR 68556 through 68561). 
In our discussion for the CY 2006 OPPS proposed rule, we stated that a 
simple comparison of unit costs would not be sufficient to assess the 
costliness of a class of hospitals because the costs faced by 
individual hospitals, whether urban or rural, are a function of many 
varying factors, including local labor supply and the complexity and 
volume of services provided (70 FR 42699).
    In constructing our analysis of cancer hospitals' costs relative to 
other hospitals, we considered whether our standard analytical approach 
to use a combination of explanatory and payment regression models would 
lead to valid results for this particular study, or whether we should 
develop a different or modified analytic approach. We note that the 
analyses presented in the CY 2006 OPPS proposed and final rules were 
designed to establish an adjustment for a large class of rural 
hospitals. In contrast, section 3138 of the Affordable Care Act is 
specifically limited to identifying an adjustment for 11 cancer 
hospitals. With such a small sample size (11 out of approximately 4,000 
hospitals paid under the OPPS), we are concerned that the standard 
explanatory and payment regression models used to establish the rural 
hospital adjustment would lead to imprecise estimates of payment 
adjustments for this small group of hospitals. Further, section 3138 of 
the Affordable Care Act specifies explicitly that cost comparisons 
between classes of hospitals must include the cost of drugs and 
biologicals. In our CY 2006 analysis of rural hospitals, we excluded 
the cost of drugs and biologicals in our model because the extreme 
units associated with proper billing for some drugs and biologicals can 
bias the calculation of a service mix index, or volume weighted average 
APC relative weight, for each hospital (70 FR 42698). Therefore, we 
chose not to pursue our standard combination of explanatory and payment 
regression modeling to identify costliness and determine a cancer 
hospital adjustment.
    While we chose not to use our standard models to calculate a 
proposed cancer hospital adjustment, we determined it still would be 
appropriate

[[Page 71884]]

to construct our usual provider-level analytical dataset consisting of 
variables related to assessing costliness, including average cost per 
unit for a hospital and the hospitals average APC relative weight as an 
indicator of the hospitals resource intensity, as measured by the APC 
relative weights. We used these variables to calculate univariate 
statistics that describe the costliness and related aspects of cancer 
hospitals and other hospitals paid under the OPPS. While descriptive 
statistics cannot control for the myriad factors that contribute to 
observed costs, we believe that we can assume that stark differences in 
cost between cancer hospitals and other hospitals paid under the OPPS 
that would be observable by examining descriptive univariate statistics 
would provide some indication of relative costliness. We began our 
analysis of the cancer hospitals as we did for the rural hospitals by 
creating an analytical dataset of hospitals billing under the OPPS for 
CY 2009 (a total of 3,933) that were included in our claims dataset for 
establishing the CY 2011 OPPS proposed APC relative weights (discussed 
in detail in section II.A. of this final rule with comment period). 
This analytical dataset includes the 3,933 OPPS hospitals' total 
estimated cost (including packaged cost), total lines, total discounted 
units as modeled for CY 2011 OPPS payment, and the average weight of 
their separately payable services (total APC weight divided by total 
units) as modeled for CY 2011 OPPS. We create this dataset from the 
hospital-specific service utilization files that we use to model budget 
neutrality and to perform impact analyses after we complete estimating 
a median cost (or equivalent amount depending on unique APC 
methodologies as discussed in section II of this final rule with 
comment period) for each APC. Using the CY 2009 claims that we use to 
model the CY 2011 proposed OPPS, we used the utilization on those 
claims to model APC payment under the CY 2011 proposed payment 
policies, such as proposed payment for drugs and biologicals at ASP+6 
percent and proposed reassignment of some HCPCS codes to different 
APCs. We then summarized this estimated utilization and payment for 
each hospital (``hospital-level''). These files consist of hospital-
level aggregate costs (including the cost of packaged items and 
services), total estimated discounted units under the modeled proposed 
CY 2011 OPPS, total estimated volume of number of occurrences of 
separately payable HCPCS codes under the modeled proposed CY 2011 OPPS, 
and total relative weight of separately payable services under the 
modeled proposed CY 2011 OPPS. The calculation of these summary files 
are discussed in Stage 6 of our claims accounting narrative available 
under supporting documentation for the proposed rule on the CMS Web 
site at: http://www.cms.gov/HospitalOutpatientPPS/HORD/. After 
summarizing modeled payment to the hospital-level, we removed 48 
hospitals in Puerto Rico from our dataset because we do not believe 
that their cost structure reflects the costs of most hospitals paid 
under the OPPS and because they could bias the calculation of hospital-
weighted statistics. We then removed an additional 66 hospitals with a 
cost per unit of more than 3 standard deviations from the geometric 
mean (mean of the natural log) because including outliers in hospital-
weighted descriptive statistics also could bias those statistics. This 
resulted in a dataset with 11 cancer hospitals and 3,808 other 
hospitals.
    We included the following standard hospital-level variables that 
describe hospital costliness in our analysis file: Outpatient cost per 
discounted unit under the modeled CY 2011 OPPS (substituting a cost per 
administration, rather than a cost per unit, for drugs and 
biologicals); each hospital's proposed CY 2011 wage index as a measure 
of relative labor cost; the service mix index, or volume-weighted 
average proposed CY 2011 APC relative weight (including a simulated 
weight for drugs and biologicals created by dividing the CY 2010 April 
ASP-based payment amount at ASP+6 percent appearing in Addendum A and B 
of the proposed rule by the proposed conversion factor of $68.267); 
outpatient volume based on number of occurrences of HCPCS codes in the 
CY 2009 claims data; and number of beds. We used these variables 
because they are key indicators of costliness under the modeled OPPS 
system, and they allow us to assess the relative costliness of classes 
of hospitals under the proposed CY 2011 OPPS. We further discussed 
these variables in our CY 2006 proposed rule analysis (70 FR 42698 
through 42701). A hospital's service mix index is a measure of resource 
intensity of the services provided by the hospital as measured by the 
proposed CY 2011 OPPS relative weights, and standardizing the cost per 
discounted unit by the service mix index creates an adjusted cost per 
unit estimate that reflects the remaining relative costliness of a 
hospital remaining after receiving the estimated payments that we 
proposed to make under the CY 2011 OPPS. In short, if a class of 
hospitals demonstrates higher cost per unit after standardization by 
service mix, it is an early indication that the class of hospitals may 
be significantly more costly in the regression models. We used these 
data to calculate the descriptive univariate statistics for cancer 
hospitals appearing in Table 16 below. We note that because drugs and 
biologicals are such a significant portion of the services that the 
cancer hospitals provide, and because section 3138 of the Affordable 
Care Act explicitly requires us to consider the cost of drugs and 
biologicals, we included the cost of these items in our total cost 
calculation for each hospital, counting each occurrence of a drug in 
the modeled proposed CY 2011 data (based on units in CY 2009 claims 
data). That is, we sought to treat each administration of a drug or 
biological as one unit.
    In reviewing these descriptive statistics, we observe that cancer 
hospitals had a standardized cost per discounted unit of $150.12 
compared to a standardized cost per discounted unit of $94.14 for all 
other hospitals. That is, cancer hospitals' average cost per discounted 
unit remains high even after accounting for payment under the modeled 
proposed CY 2011 payment system, which is not true for all other 
hospitals. Observing such differences in standardized cost per 
discounted unit led us to conclude that cancer hospitals are more 
costly than other hospitals paid under the OPPS, even without the 
inferential statistical models that we typically employ.

        Table 16--Means and Standard Deviations for Key Variables by Cancer and Non-Cancer OPPS Hospitals
----------------------------------------------------------------------------------------------------------------
                                                                  Cancer hospitals        Non-cancer hospitals
                                                             ---------------------------------------------------
                          Variable                                           Standard                  Standard
                                                                  Mean      deviation       Mean      deviation
----------------------------------------------------------------------------------------------------------------
Outpatient Cost per Unit *..................................      $344.20      (64.68)      $264.11     (165.86)

[[Page 71885]]

 
Unit Cost Standardized by Service Mix Wage Indices..........       150.12      (31.64)        94.14      (81.19)
Wage Index..................................................         1.10       (0.13)         0.98       (0.16)
Service Mix Index *.........................................         2.19       (0.26)         3.18       (2.25)
Outpatient Volume...........................................      192,197    (186,063)       34,578     (43,094)
Beds........................................................          173     (162.33)          173     (171.46)
Number of Hospitals.........................................           11  ...........        3,808  ...........
----------------------------------------------------------------------------------------------------------------
* Includes drugs and biologicals based on per administration rather than per unit.

3. Adjustment for Certain Cancer Hospitals
    Having reviewed the cost data from the standard analytic database 
and determined that cancer hospitals are more costly than other 
hospitals within the OPPS system, we decided to examine hospital cost 
report data from Worksheet E, Part B (where TOPs are calculated on the 
Hospital and Hospital Health Care Complex Cost Report each year) in 
order to determine whether our findings were further supported by cost 
report data and to determine an appropriate proposed payment adjustment 
methodology. Analyses on our standard analytic database and descriptive 
statistics presented in Table 16 above, did not consider TOPs in 
assessing costliness of cancer hospitals relative to other hospitals 
furnishing services under section 1833(t) of the Act. This is because 
section 3138 of the Affordable Care Act requires that any cancer 
adjustment be made within the budget neutral system. In making a 
determination about a payment adjustment subject to budget neutrality, 
we believe it is appropriate to assess costliness and payments within 
the budget neutral payment system. We note that TOPs are based on 
reasonable cost and are not part of the budget neutral payment system. 
Further, TOPs have no associated relative weight that could be included 
in an assessment of APC-based payment. TOPs are paid at cost report 
settlement on an aggregate basis, not a per service basis, and we would 
have no way to break these payments down into a relative weight to 
incorporate these retrospective aggregate payments in the form of 
relative weight under the proposed modeled CY 2011 OPPS. The cost 
report data we selected for the analysis were limited to the OPPS-
specific payment and cost data available on Worksheet E, Part B, which 
is also where TOPs are calculated including aggregate OPPS payments, 
including outlier payments and the cost of medical and other health 
services. These aggregate measures of cost and payment also include the 
cost and payment for drugs and biologicals and other adjustments that 
we typically include in our regression modeling, including wage index 
adjustment and rural adjustment, if applicable. While these cost report 
data cannot provide an estimate of cost per unit after controlling for 
other potential factors that could influence cost per unit, we can use 
this aggregate cost and payment data to examine the cancer hospitals' 
OPPS PCR and OPPS PCR with TOPs, and compare these to the OPPS PCR for 
other hospitals.
    PCRs calculated from the most recent cost report data also indicate 
that costs relative to payments at cancer hospitals are higher than 
those at other hospitals paid under the OPPS (that is, cancer hospitals 
have lower PCRs). In order to calculate PCRs for hospitals paid under 
the OPPS (including cancer hospitals), we used the same extract of cost 
report data from the HCRIS, as discussed in section II.A. of this final 
rule with comment period, that we used to calculate the CCRs that we 
used to estimate median costs for the CY 2011 OPPS. Using these cost 
report data, we included data from Worksheet E, Part B for each 
hospital, keeping data from each hospital's most recent cost report, 
whether as submitted or settled. We then limited the dataset to the 
hospitals with CY 2009 claims data that we used to model the CY 2011 
proposed APC relative weights (3,933 hospitals) because we used the 
claims from these hospitals to calculate the estimated costs we used 
for the descriptive statistics in our first analysis and because it is 
appropriate to use the same set of hospitals that we used to calibrate 
the modeled proposed CY 2011 OPPS. The cancer hospitals in this dataset 
largely had cost report data from cost reporting periods ending in FY 
2008 and FY 2009. The cost report data for the other hospitals were 
from cost report periods with fiscal year ends ranging from 2005 to 
2009. We then removed the cost report data for 48 hospitals from Puerto 
Rico from our dataset because we do not believe that their cost 
structure reflects the costs of most hospitals paid under the OPPS and, 
therefore, may bias the results of the study. We also removed 301 
hospitals with cost report data that were not complete (missing OPPS 
payments including outliers, missing aggregate cost data, or 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 final 
analytic file of 3,584 hospitals with cost report data. We believe that 
the costs, PPS payments, and TOPs reported on Worksheet E, Part B for 
the hospitals included in our CY 2011 modeling should be sufficiently 
accurate for assessing hospital's relative costliness because all of 
the key elements that we believe to be necessary for the analysis 
(payment, cost, and TOPs) are contained on this worksheet.
    Using this much smaller dataset of cost report data, we estimate 
that, on average, the OPPS payments to the 11 cancer hospitals, not 
including TOPs, are approximately 62 percent of reasonable cost (that 
is, we calculated a PCR of 0.615 for the cancer hospitals), whereas we 
estimate that, on average, the OPPS payments to other hospitals paid 
under the OPPS are approximately 87 percent of reasonable cost 
(resulting in a PCR of 0.868). Individual cancer hospitals' OPPS PCRs 
range from approximately 48 percent to approximately 82 percent. When 
TOPS are included in the calculation of the PCR, cancer hospitals, as a 
group, receive payments that are approximately 83 percent of reasonable 
cost, which is still lower than the average PCR of other OPPS hospitals 
of approximately 87 percent of reasonable cost. Considering these data, 
we find that the cancer hospitals are more costly than other hospitals 
paid under the OPPS. The dataset of hospital cost report data that

[[Page 71886]]

we used to model the proposed adjustment is available under supporting 
documentation for the proposed rule on the CMS Web site at: http://www.cms.gov/HospitalOutpatientPPS/HORD/.)
    Based on our findings that cancer hospitals, as a class, have a 
significantly lower volume weighted average PCR than the volume 
weighted PCR of other hospitals paid under the OPPS and our findings 
above that the cancer hospitals cost per discounted unit standardized 
for service mix remains much higher than the standardized cost per 
discounted unit of all other hospitals, in the CY 2011 OPPS/ASC 
proposed rule (75 FR 46235 to 46237), we proposed an adjustment for 
cancer hospitals to reflect these higher costs, effective January 1, 
2011, as mandated by section 3138 of the Affordable Care Act. For 
purposes of calculating a proposed adjustment, we chose to rely on this 
straightforward assessment of payments and costs from the cost report 
data because of the concerns outlined above with respect to the small 
number of hospitals, and because of the challenges associated with 
accurately including drug and biological costs in our standard 
regression models. We believe that an appropriate adjustment would 
redistribute enough payments from other hospitals paid under the OPPS 
to the cancer hospitals to give cancer hospitals a PCR that is 
comparable to the average PCR for other hospitals paid under the OPPS. 
Therefore, we proposed a hospital-specific payment adjustment 
determined as the percentage of additional payment needed to raise each 
cancer hospital's PCR to the weighted average PCR for all other 
hospitals paid under OPPS (0.868) in the CY 2011 dataset. This would be 
accomplished by adjusting each cancer hospital's OPPS payment by the 
percentage difference between their individual PCR (without TOPs) and 
the weighted average PCR of the other hospitals paid under OPPS.
    We stated in the proposed rule that the proposed methodology would 
result in the proposed percentage payment adjustments for the 11 cancer 
hospitals that appeared in Table 11 of the proposed rule. We proposed 
that this hospital-specific adjustment would be applied to the wage 
adjusted payments for all items, except for items and services paid at 
charges adjusted to cost or devices receiving pass-through status 
defined in 42 CFR 419.66. We proposed that the proposed cancer hospital 
adjustment would not be applied to items and services paid at charges 
adjusted to cost because these items and services are always paid the 
estimated full cost of the item or service. We proposed to amend the 
regulations at Sec.  419.43 to add a new paragraph (i)(2) which would 
establish the amount of the adjustment to cancer hospitals. We also 
proposed that this adjustment would be budget neutral as set forth in 
proposed new Sec.  419.43(i)(3), consistent with section 3138 of the 
Affordable Care Act. We note that outlier payments would be 
appropriately assessed after application of the cancer adjustment and 
that TOPs would continue to apply. The changes made by section 3138 of 
the Affordable Care Act do not affect the existing statutory provisions 
that provide for outlier payment for all hospitals paid under the OPPS, 
including cancer hospitals and TOPs payments for cancer hospitals. 
Further, both outlier payments and TOPs serve as a safety net for 
hospitals, although outliers are budget neutral and TOPs are not, and 
TOPs are limited to certain hospitals. As a means of buffering the 
financial risk associated with a prospective payment system, both 
adjustments (outliers and TOPs) only should be assessed after final 
payments have been made. Because outlier payments are made within the 
budget neutrality, outlier payments should be assessed after all budget 
neutral payments for an individual service have been made, including 
the cancer adjustment. The TOPs payments would be assessed after all 
payments have been made for a cost reporting period. We noted that the 
proposed adjustment for all cancer hospitals would have result in an 
estimated aggregate increase in OPPS payments to cancer hospitals of 
41.2 percent for CY 2011 within the PPS system, based on cost report 
data, and a net increase in total payments, including TOPs payments, of 
5 percent.
    Comment: Many commenters urged CMS to consider TOPs when 
calculating the cancer hospital payment adjustment. The commenters 
stated that the proposed methodology to adjust each cancer hospital's 
OPPS payment by the percentage difference between their individual PCR 
without TOPs and the weighted average PCR of the other hospitals paid 
under OPPS results, largely, in a change in the form of outpatient 
payments to cancer hospitals by shifting payment from hold harmless 
payments under the TOPs provision to APC payments. This substitution of 
TOPs for APC payments, in turn, results in savings to the Medicare 
program which, the commenters asserted, is in violation of the 
statutory requirement that the policy be budget neutral. The commenters 
suggested that because the Congressional Budget Office scoring of 
section 3138 of the Affordable Care Act estimates no federal budgetary 
impact, Congress did not intend for savings under this provision.
    Commenters also suggested that the associated budget neutral 
payment reduction of 0.7 percent is not appropriate or equitable to 
other hospitals paid under the OPPS. The commenters indicated that it 
was not the intent of Congress for the provision to impact the non-
cancer hospitals in a manner that is disproportionate to the benefits 
obtained by the cancer hospitals. Many commenters noted that the 
majority of cancer care provided in the country is provided by the non-
cancer hospitals that would experience a payment reduction under the 
proposal.
    Commenters also expressed concern that the proposed payment 
adjustment increases beneficiary copayments. That is, they believed 
that the proposed cancer hospital adjustment would increase APC 
payments and, because beneficiary copayment is a percentage of the APC 
payment, Medicare beneficiaries seeking services at the 11 designated 
cancer hospitals will experience higher copayments due to the proposed 
methodology. One commenter suggested that the cancer hospitals could 
potentially lose more payment to bad debt under increased copayments 
than benefit from the proposed adjustment. The commenters strongly 
encouraged CMS to implement the adjustment in a way that does not 
increase beneficiary copayments.
    Several commenters indicated that CMS selected an inappropriate 
benchmark against which to compare each cancer hospital's PCR. 
Specifically, the commenters indicated that CMS should have taken into 
account the concentration of outpatient services at the designated 
cancer hospitals as compared to other PPS hospitals and adjust the PCR 
benchmark higher. The commenters argued that other PPS hospitals have 
the ability to improve their Medicare margins through other payment 
systems, but that cancer hospitals receive the majority of their 
Medicare payments through the OPPS. These commenters asserted that 
because concentration of outpatient services was not considered in 
establishing the benchmark, the proposed adjustment was not valid.
    Several commenters addressed CMS' study methodology. One commenter 
suggested that the CMS analysis is inadequate to conclude that costs 
are higher in cancer hospitals and that an adjustment is warranted. 
This commenter noted that the CMS analysis did not control for the many 
factors that

[[Page 71887]]

might explain differences in costliness or assess to what extent cost 
differences could be explained by differences in efficiency. This 
commenter also asserted that the exclusion of TOPs from the comparison 
of costliness distorts the analysis and makes the findings invalid. 
Another commenter suggested that CMS examine the costs of cancer 
patients generally for all hospitals, and compare the costs of these 11 
hospitals to all hospitals providing cancer care to ensure an 
adjustment does not reinforce high-cost characteristics of the 11 
designated cancer hospitals. One commenter requested that CMS confirm 
that it used a regression analysis, similar to that used to determine 
the current adjustment for rural SCHs (discussed in section II.E. of 
this final rule with comment period) and provide detail on coefficients 
and how CMS incorporated drugs into that model. Finally, the commenter 
requested that CMS confirm the bed size estimates in the analytic file 
that CMS made available with the proposed rule. Another commenter 
requested that CMS recalibrate the adjustment annually suggesting that 
the PCR for other hospitals will decline proportionate to the cancer 
hospital increase and that this should be reflected in any adjustment 
for future years.
    Another commenter indicated that additional payments to cancer 
hospitals should be guided by quality of care and, because the 
Affordable Care Act requires the 11 cancer hospitals to begin 
submitting quality data in fiscal year 2014, suggested that additional 
payments to cancer hospitals be delayed until these quality data are 
available to serve as a basis for payment. Another commenter favored 
the adjustment, stating that it offered improved beneficiary access to 
cancer care.
    Response: The many public comments we received have identified a 
broad range of very important issues and concerns associated with the 
proposed cancer hospital adjustment. After consideration of these 
public comments, we have determined that further study and deliberation 
related to these issues is critical. This process, however, will take a 
longer period of time than is permitted in order for us to meet the 
publication deadline of this final rule with comment period. Therefore, 
we are not finalizing an adjustment for certain cancer hospitals 
identified in section 1886(d)(1)(B)(v) of the Act at this time.

G. Hospital Outpatient Outlier Payments

1. Background
    Currently, the OPPS pays outlier payments on a service-by-service 
basis. For CY 2010, the outlier threshold is met when the cost of 
furnishing a service or procedure by a hospital exceeds 1.75 times the 
APC payment amount and exceeds the APC payment rate plus a $2,175 
fixed-dollar threshold. We introduced a fixed-dollar threshold in CY 
2005 in addition to the traditional multiple threshold in order to 
better target outliers to those high cost and complex procedures where 
a very costly service could present a hospital with significant 
financial loss. If the cost of a service meets both of these 
conditions, the multiple threshold and the fixed-dollar threshold, the 
outlier payment is calculated as 50 percent of the amount by which the 
cost of furnishing the service exceeds 1.75 times the APC payment rate. 
Before CY 2009, this outlier payment had historically been considered a 
final payment by longstanding OPPS policy. We implemented a 
reconciliation process similar to the IPPS outlier reconciliation 
process for cost reports with cost reporting periods beginning on or 
after January 1, 2009 (73 FR 68594 through 68599).
    It has been our policy for the past several years to report the 
actual amount of outlier payments as a percent of total spending in the 
claims being used to model the proposed OPPS. Our current estimate of 
total outlier payments as a percent of total CY 2009 OPPS payment, 
using available CY 2009 claims and the revised OPPS expenditure 
estimate for the Trustee's Report for FY 2010, is approximately 1.3 
percent of the total aggregated OPPS payments. Therefore, for CY 2009, 
we estimate that we paid 0.3 percent more than the CY 2009 outlier 
target of 1.0 percent of total aggregated OPPS payments.
    As explained in the CY 2010 OPPS/ASC final rule with comment period 
(74 FR 60426 through 60427), we set our projected target for aggregate 
outlier payments at 1.0 percent of the aggregate total payments under 
the OPPS for CY 2010. The outlier thresholds were set so that estimated 
CY 2010 aggregate outlier payments would equal 1.0 percent of the total 
aggregated payments under the OPPS. Using CY 2009 claims data and CY 
2010 payment rates, we currently estimate that the aggregate outlier 
payments for CY 2010 would be approximately 0.85 percent of the total 
CY 2010 OPPS payments. The difference between 1.0 percent and 0.85 
percent is reflected in the regulatory impact analysis in section XXII. 
of this final rule with comment period. We note that we provide 
estimated CY 2011 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 Web 
site at: http://www.cms.hhs.gov/HospitalOutpatientPPS/.
2. Proposed Outlier Calculation
    In the CY 2011 OPPS/ASC proposed rule (75 FR 46237 through 46238), 
we proposed for CY 2011 to continue our policy of estimating outlier 
payments to be 1.0 percent of the estimated aggregate total payments 
under the OPPS for outlier payments. We proposed that a portion of that 
1.0 percent, specifically 0.04 percent, would be allocated to CMHCs for 
PHP outlier payments. This is the amount of estimated outlier payments 
that would result from the proposed CMHC outlier threshold as a 
proportion of total estimated outlier payments. As discussed in section 
X.D. of this final rule with comment period, for CMHCs, as we proposed, 
we are continuing our longstanding policy that if a CMHC's cost for 
partial hospitalization services, paid under either APC 0172 (Level I 
Partial Hospitalization (3 services)) or APC 0173 (Level II Partial 
Hospitalization (4 or more services)), exceeds 3.40 times the payment 
for APC 0173, the outlier payment would be calculated as 50 percent of 
the amount by which the cost exceeds 3.40 times the APC 0173 payment 
rate. For further discussion of CMHC outlier payments, we refer readers 
to section X.D. of this final rule with comment period.
    To ensure that the estimated CY 2011 aggregate outlier payments 
would equal 1.0 percent of estimated aggregate total payments under the 
OPPS, we proposed that the hospital outlier threshold be set so that 
outlier payments would be triggered when the cost of furnishing a 
service or procedure by a hospital exceeds 1.75 times the APC payment 
amount and exceeds the APC payment rate plus a $2,025 fixed-dollar 
threshold. This proposed threshold reflects the methodology discussed 
below in this section, as well as the proposed APC recalibration for CY 
2011.
    We calculated the proposed fixed-dollar threshold for the CY 2010 
OPPS/ASC proposed rule using largely the same methodology as we did in 
CY 2009 (73 FR 41462). For purposes of estimating outlier payments for 
the proposed rule, we used the hospital-specific overall ancillary CCRs 
available

[[Page 71888]]

in the April 2010 update to the Outpatient Provider-Specific File 
(OPSF). The OPSF contains provider-specific data, such as the most 
current CCR, which are maintained by the Medicare contractors and used 
by the OPPS Pricer to pay claims. The claims that we use to model each 
OPPS update lag by 2 years. For the proposed rule, we used CY 2009 
claims to model the CY 2011 OPPS. In order to estimate the proposed CY 
2011 hospital outlier payments for the proposed rule, we inflated the 
charges on the CY 2009 claims using the same inflation factor of 1.1059 
that we used to estimate the IPPS fixed-dollar outlier threshold for 
the FY 2011 IPPS/LTCH PPS proposed rule (75 FR 24068). We used an 
inflation factor of 1.0516 to estimate CY 2010 charges from the CY 2009 
charges reported on CY 2009 claims. The methodology for determining 
this charge inflation factor was discussed in the FY 2011 IPPS/LTCH PPS 
proposed rule (75 FR 24068). As we stated in the CY 2005 OPPS final 
rule with comment period (69 FR 65845), we believe that the use of this 
charge inflation factor is appropriate for the OPPS because, with the 
exception of the inpatient routine service cost centers, hospitals use 
the same ancillary and outpatient cost centers to capture costs and 
charges for inpatient and outpatient services.
    As noted in the CY 2007 OPPS/ASC final rule with comment period (71 
FR 68011), we are concerned that we could systematically overestimate 
the OPPS hospital outlier threshold if we did not apply a CCR inflation 
adjustment factor. Therefore, we proposed to apply the same CCR 
inflation adjustment factor that we proposed to apply for the FY 2011 
IPPS outlier calculation to the CCRs used to simulate the proposed CY 
2011 OPPS outlier payments that determine the fixed-dollar threshold. 
Specifically, for CY 2011, we proposed to apply an adjustment of 0.9890 
to the CCRs that were in the April 2010 OPSF to trend them forward from 
CY 2010 to CY 2011. The methodology for calculating this adjustment was 
discussed in the FY 2011 IPPS/LTCH PPS proposed rule (75 FR 24068 
through 24070).
    Therefore, to model hospital outlier payments for the CY 2011 OPPS/
ASC proposed rule, we applied the overall CCRs from the April 2010 OPSF 
file after adjustment (using the proposed CCR inflation adjustment 
factor of 0.9890 to approximate CY 2011 CCRs) to charges on CY 2009 
claims that were adjusted (using the proposed charge inflation factor 
of 1.1059 to approximate CY 2011 charges). We simulated aggregated CY 
2011 hospital outlier payments using these costs for several different 
fixed-dollar thresholds, holding the 1.75 multiple 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 2011 OPPS 
payments. We estimated that a proposed fixed-dollar threshold of 
$2,025, combined with the proposed multiple threshold of 1.75 times the 
APC payment rate, would allocate 1.0 percent of aggregated total OPPS 
payments to outlier payments. We proposed to continue to make an 
outlier payment that equals 50 percent of the amount by which the cost 
of furnishing the service exceeds 1.75 times the APC payment amount 
when both the 1.75 multiple threshold and the proposed fixed-dollar 
threshold of $2,025 are met. For CMHCs, if a CMHC's cost for partial 
hospitalization services, paid under either APC 0172 or APC 0173, 
exceeds 3.40 times the payment for APC 0173, the outlier payment would 
be calculated as 50 percent of the amount by which the cost exceeds 
3.40 times the APC 0173 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 
1833(t)(17)(B) of the Act, incur a 2.0 percentage point reduction to 
their OPD fee schedule increase factor, that is, the annual payment 
update factor. The application of a reduced OPD fee schedule increase 
factor results in reduced national unadjusted payment rates that will 
apply to certain outpatient items and services furnished by hospitals 
that are required to report outpatient quality data and that fail to 
meet the HOP QDRP requirements. For hospitals that fail to meet the HOP 
QDRP requirements, we proposed to continue our policy that we 
implemented in CY 2009 that the hospitals' costs would be compared to 
the reduced payments for purposes of outlier eligibility and payment 
calculation. For more information on the HOP QDRP, we refer readers to 
section XVI. of this final rule with comment period.
    Comment: Several commenters supported the proposed fixed-dollar 
threshold for CY 2011 in order to maintain the target outlier spending 
percentage of 1.0 percent of total OPPS payments. One commenter 
supported CMS' proposal to develop the OPPS fixed-dollar outlier 
threshold using the same assumptions and projections that are used in 
the IPPS. One commenter believed that the proposed outlier fixed-dollar 
threshold was inappropriate and should be reduced because the CMS 
projection of estimated outlier spending for CY 2010 was only 0.85 
percent in the CY 2011 OPPS/ASC proposed rule (75 FR 46237). That 
commenter recommended that the threshold be proportionally reduced 
based on the percentage difference between target and actual outlier 
percentage spending. One commenter requested that CMS release the 
``actual'' percent that outlier payments represent of total OPPS 
payments for CY 2007 through CY 2009. One commenter believed that the 
threshold calculation should be based on actual payments rather than 
estimated payments, and requested that CMS provide the actual percents 
of OPPS spending that OPPS outliers represent. One commenter suggested 
that visit intensity data or diagnoses are not the only issues when 
looking at outliers, and that any methodology related to outliers 
should also consider a comprehensive look at resource utilization.
    Response: We appreciate the commenters' support regarding the 
development of the OPPS outlier policy. We agree that the charge and 
CCR inflation factors that apply to inpatient hospitals services are 
equally applicable to services provided under the OPPS. As we discussed 
in our CY 2005 OPPS final rule, we believe that the use of this charge 
inflation factor is appropriate for OPPS because, with the exception of 
the routine service cost centers, hospitals use the same cost centers 
to capture costs and charges across inpatient and outpatient services 
(69 FR 65845). Therefore, as specified below, we are applying the 
charge inflation factors that were used to calculate the outlier fixed-
dollar threshold for the IPPS in the calculation of the fixed-dollar 
threshold for the CY 2011 OPPS. We are not raising the threshold to 
account for the 0.15 percent of OPPS payment that we estimated was not 
paid relative to the target outlier percent of 1 percent for CY 2010 
because we do not adjust the fixed-dollar threshold for prior year 
differences in actual expenditure of outlier payments. We believe that 
our proposed and final methodology uses the best available data we have 
at the time to yield the most accurate prospective fixed-dollar outlier 
threshold for the CY 2011 OPPS. The multiple and fixed-dollar 
thresholds are important parts of a prospective

[[Page 71889]]

payment system and should be based on projected payments using the 
latest available historical data without adjustments for prior year 
outlier payments. In this case, the 0.85 percent is only an estimate 
made from CY 2009 claims for purposes of presenting an impact of the 
change in the outlier threshold in the regulatory impact analysis. 
Although estimated outlier payments for the current PPS year, which 
appear in the impact tables, frequently are below the 1 percent target 
outlier spending percentage, as we discuss below, we more often than 
not pay slightly more than 1 percent of aggregate total OPPS payments 
in outlier payments in a given year. We continue to believe that it is 
appropriate to maintain the target outlier percentage of 1.0 percent of 
estimated aggregate total payment under the OPPS and to have a fixed-
dollar threshold so that OPPS outlier payments are made only when the 
hospital would experience a significant loss for supplying a particular 
service.
    With respect to the commenter that requested that we release the 
``actual'' payment percentages for CY 2007 through CY 2009, we note 
that we have previously provided and continue to provide estimated 
actual percentage spending based on the claims data. In the CY 2009 
OPPS/ASC final rule with comment period (73 FR 68592), using CY 2007 
claims, we found OPPS outlier spending was 0.9 percent of the total 
aggregated OPPS payment for CY 2007. In the CY 2010 OPPS/ASC final rule 
with comment period (74 FR 60426), using CY 2008 claims, we found that 
OPPS outlier spending was 1.2 percent of the total aggregated OPPS 
payments for CY 2008. As discussed earlier in this section, using CY 
2009 claims, we found that OPPS outlier spending was 1.3 percent of the 
total aggregated OPPS payments for CY 2009. We note that actual outlier 
payments can only be determined based on the claims data available and 
setting a prospective fixed-dollar outlier threshold without accounting 
for changes in CCRs and charges would potentially lead to greater 
inaccuracy in establishing the outlier fixed-dollar threshold. OPPS 
outliers account for the financial risk hospitals experience when 
providing an extraordinarily costly and complex service, and account 
for the resource utilization in the methodology by identifying the 
costs associated with providing services on each claim. We note that 
visit intensity data and diagnoses data are not incorporated into the 
calculation of the threshold because these are not components of OPPS 
payments or our longstanding policy for determining outlier eligibility 
and payment amount.
3. Final Outlier Calculation
    For CY 2011, we are applying the overall CCRs from the July 2010 
Outpatient Provider-Specific File with a CCR adjustment factor of 
0.9910 to approximate CY 2011 CCRs to charges on the final CY 2009 
claims that were adjusted to approximate CY 2011 charges (using the 
final 2-year charge inflation factor of 1.0988). These are the same CCR 
adjustment and charge inflation factors that were used to set the IPPS 
fixed-dollar threshold for the FY 2011 IPPS/LTCH PPS final rule (75 FR 
50427 through 50431). We simulated aggregated CY 2011 hospital outlier 
payments using these costs for several different fixed-dollar 
thresholds, holding the 1.75 multiple threshold constant and assuming 
that outlier payment 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 2011 OPPS payments. We 
estimate that a fixed-dollar threshold of $2,025, combined with the 
multiple threshold of 1.75 times the APC payment rate, will allocate 
1.0 percent of estimated aggregated total OPPS payments to outlier 
payments.
    In summary, for CY 2011, we will continue to make an outlier 
payment that equals 50 percent of the amount by which the cost of 
furnishing the service exceeds 1.75 times the APC payment amount when 
both the 1.75 multiple threshold and the final fixed-dollar $2,025 
threshold are met. For CMHCs, if a CMHC's cost for partial 
hospitalization services, paid under either APC 0172 or APC 0173, 
exceeds 3.40 times the payment for APC 0173, the outlier payment is 
calculated as 50 percent of the amount by which the cost exceeds 3.40 
times the APC 0173 payment rate. We estimate that this threshold will 
allocate 0.02 percent of outlier payments to CMHCs for PHP outlier 
payments.
4. Outlier Reconciliation
    In the CY 2009 OPPS/ASC final rule with comment period (73 CFR 
68599), we adopted as final policy a process to reconcile hospital or 
CMHC outlier payments at cost report settlement for services furnished 
during cost reporting periods beginning in CY 2009. OPPS outlier 
reconciliation more fully ensures accurate outlier payments for those 
facilities whose CCRs fluctuate significantly relative to the CCRs of 
other facilities, and who receive a significant amount of outlier 
payments (73 FR 68598). As under the IPPS, we do not adjust the fixed-
dollar threshold or the amount of total OPPS payments set aside for 
outlier payments for reconciliation activity because such action would 
be contrary to the prospective nature of the system. Our outlier 
threshold calculation assumes that overall ancillary CCRs accurately 
estimate hospital costs based on the information available to us at the 
time we set the prospective fixed-dollar outlier threshold. For these 
reasons, as we stated in the proposed rule, and have previously 
discussed in the CY 2009 OPPS/ASC final rule with comment period (73 FR 
68596), we are not incorporating any assumptions about the effects of 
reconciliation into our calculation of the OPPS fixed-dollar outlier 
threshold.
    Comment: One commenter asked that CMS report the amount of outlier 
reconciliation activity suggesting that, if the reconciled amounts are 
significant, these amounts should be factored into the annual fixed-
dollar outlier threshold in the future. One commenter supported the 
current criteria for when OPPS outlier payments would go through a 
reconciliation process.
    Response: We appreciate the commenter's support for our policy. As 
we discuss above, we do not take outlier reconciliation amounts into 
account in our projections of future outlier payments. It is difficult 
to predict the specific hospitals that will have CCRs and outlier 
payments that may be reconciled in any given year. We also note that 
reconciliation occurs because hospitals' actual CCRs for the cost 
reporting period are different from the interim CCRs used to calculate 
outlier payment when a bill is processed. Our fixed-dollar threshold 
calculation assumes that CCRs accurately estimate hospital costs based 
on information available to us at the time we set the prospective 
fixed-dollar threshold. Furthermore, we do not believe that estimating 
the fixed-dollar threshold to account for the amount of payment that is 
recovered or removed as a result of outlier reconciliation in any given 
year would necessarily result in a more accurate estimate of outlier 
payments or a more accurate calculation of the fixed-dollar threshold 
for outlier payment for the prospective payment year. In our experience 
modeling the OPPS fixed dollar threshold each year, changing the CCRs 
for a handful for hospitals would not typically result in enough change 
in estimated total outlier payments to change the modeled fixed dollar

[[Page 71890]]

threshold. For these reasons, we will not make any assumptions about 
the amount of anticipated reconciliation of outlier payments on the 
outlier threshold calculation nor will we report the amount of 
reconciliation activity.

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

    The basic methodology for determining prospective payment rates for 
HOPD services under the OPPS is set forth in existing regulations at 42 
CFR Part 419, subparts C and D. As proposed, for this final rule with 
comment period, the payment rate for most services and procedures for 
which payment is made under the OPPS is the product of the conversion 
factor calculated in accordance with section II.B. of this final rule 
with comment period and the relative weight determined under section 
II.A. of this final rule with comment period. Therefore, as proposed, 
for this final rule with comment period, the national unadjusted 
payment rate for most APCs contained in Addendum A to this final rule 
with comment period and for most HCPCS codes to which separate payment 
under the OPPS has been assigned in Addendum B to this final rule with 
comment period was calculated by multiplying the CY 2011 scaled weight 
for the APC by the CY 2011 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 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 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 Outpatient Quality Data Reporting Program 
(HOP QDRP) requirements. For further discussion of the payment 
reduction for hospitals that fail to meet the requirements of the HOP 
QDRP, we refer readers to section XVI.C. of this final rule with 
comment period.
    We demonstrate in the steps below how to determine the APC payments 
that will be made in a calendar year under the OPPS to a hospital that 
fulfills the HOP QDRP requirements and to a hospital that fails to meet 
the HOP QDRP requirements for a service that has any of the following 
status indicator assignments: ``P,'' ``Q1,'' ``Q2,'' ``Q3,'' ``R,'' 
``S,'' ``T,'' ``U,'' ``V,'' or ``X'' (as defined in Addendum D1 to this 
final rule with comment period), 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 
HOP QDRP 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 final 
rule with comment period 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 HOP QDRP 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 HOP QDRP as the 
``reduced'' national unadjusted payment rate. The reduced national 
unadjusted payment rate is calculated by multiplying the reporting 
ratio of 0.980 times the ``full'' national unadjusted payment rate. The 
national unadjusted payment rate used in the calculations below is 
either the full national unadjusted payment rate or the reduced 
national unadjusted payment rate, depending on whether the hospital met 
its HOP QDRP requirements in order to receive the full CY 2011 OPPS 
increase factor.
    Step 1. Calculate 60 percent (the labor-related portion) of the 
proposed national unadjusted payment rate. Since the initial 
implementation of the OPPS, we have used 60 percent to represent our 
estimate of that portion of costs attributable, on average, to labor. 
We refer readers to the April 7, 2000 OPPS final rule with comment 
period (65 FR 18496 through 18497) for a detailed discussion of how we 
derived this percentage. We confirmed that this labor-related share for 
hospital outpatient services is still 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).
    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 reflect the 
geographic statistical areas (which are based upon OMB standards) to 
which hospitals are assigned for FY 2011 under the IPPS, 
reclassifications through the MGCRB, section 1886(d)(8)(B) ``Lugar'' 
hospitals, reclassifications under section 1886(d)(8)(E) of the Act, as 
defined in Sec.  412.103 of the regulations, and hospitals designated 
as urban under section 601(g) of Public Law 98-21. We note that the 
reclassifications of hospitals under section 508 of Public Law 108-173, 
as extended by section 3137 of the Affordable Care Act, expired on 
September 30, 2010, and, therefore, are not applicable under the IPPS 
for FY 2011. Therefore, these reclassifications will not apply to the 
CY 2011 OPPS. (For further discussion of the changes to the FY 2011 
IPPS wage indices, as applied to the CY 2011 OPPS, we refer readers to 
section II.C. of this final rule with comment period.) In section II.C. 
of this final rule with comment period, we also discuss our 
implementation of section 10324 of the Affordable Care Act, which 
establishes a wage index floor of 1.00 for frontier States, effective 
for services furnished on and after January 1, 2011.
    Step 3. Adjust the wage index of hospitals located in certain 
qualifying counties that have a relatively high percentage of hospital 
employees who reside in the county, but who work in a different county 
with a higher wage index, in accordance with section 505 of Public Law 
108-173. Addendum L to this final rule with comment period contains the 
qualifying counties and the associated wage index increase developed 
for the FY 2011 IPPS and published as Table 4J in the FY 2011 IPPS/LTCH 
PPS final rule (75 FR 50450 through 50646). This step is to be followed 
only if the hospital is not reclassified or redesignated under section 
1886(d)(8) or section 1886(d)(10) of the Act.
    Step 4. Multiply the applicable wage index determined under Steps 2 
and 3 by the amount determined under Step 1 that represents the labor-
related portion of the national unadjusted payment rate.
    The formula below is a mathematical representation of Step 4 and 
adjusts the

[[Page 71891]]

labor-related portion of the national payment rate for the specific 
service by the wage index.

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

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

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

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

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

    We have provided examples below of the calculation of both the full 
and reduced national unadjusted payment rates that will apply to 
certain outpatient items and services performed by hospitals that meet 
and that fail to meet the HOP QDRP requirements, using the steps 
outlined above. For purposes of this example, we use a provider that is 
located in Brooklyn, New York that is assigned to CBSA 35644. This 
provider bills one service that is assigned to APC 0019 (Level I 
Excision/Biopsy). The CY 2011 full national unadjusted payment rate for 
APC 0019 is $350.49. The reduced national unadjusted payment rate for a 
hospital that fails to meet the HOP QDRP requirements is $343.48. This 
reduced rate is calculated by multiplying the reporting ratio of 0.980 
by the full unadjusted payment rate for APC 0019.
    The FY 2011 wage index for a provider located in CBSA 35644 in New 
York is 1.3122. The labor-related portion of the full national 
unadjusted payment is $275.95 (.60 * $350.49 * 1.3122). The labor-
related portion of the reduced national unadjusted payment is $270.43 
(.60 * $343.48 * 1.3122). The nonlabor-related portion of the full 
national unadjusted payment is $140.20 (.40 * $350.49). The nonlabor-
related portion of the reduced national unadjusted payment is $137.39 
(.40 * $343.48). The sum of the labor-related and nonlabor-related 
portions of the full national adjusted payment is $416.15 ($275.95 + 
$140.19). The sum of the reduced national adjusted payment is $407.82 
($270.43 + $137.39).

I. Beneficiary Copayments

1. Background
    Section 1833(t)(3)(B) of the Act requires the Secretary to set 
rules for determining the unadjusted copayment amounts to be paid by 
beneficiaries for covered OPD services. Section 1833(t)(8)(C)(ii) of 
the Act specifies that the Secretary must reduce the national 
unadjusted copayment amount for a covered OPD service (or group of such 
services) furnished in a year in a manner so that the effective 
copayment rate (determined on a national unadjusted basis) for that 
service in the year does not exceed a specified percentage. As 
specified in section 1833(t)(8)(C)(ii)(V) of the Act, for all services 
paid under the OPPS in CY 2010, and in calendar years thereafter, the 
percentage is 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. Until CY 2011, sections 1834(d)(2)(C)(ii) 
and 1834(d)(3)(C)(ii) of the Act further require that the copayment for 
screening flexible sigmoidoscopies and screening colonoscopies be equal 
to 25 percent of the payment amount. Since the beginning of the OPPS, 
we have applied the 25 percent copayment to screening flexible 
sigmoidoscopies and screening colonoscopies. However, section 4104 of 
the Affordable Care Act eliminated the coinsurance (to which section 
1833(t)(2)(B) refers as the ``copayment'') for preventive services that 
meet certain requirements, including flexible sigmoidoscopies and 
screening colonscopies, and waived the Part B deductible for screening 
colonoscopies that become diagnostic during the procedure. We discuss 
our implementation of this provision in section XII.B. of this final 
rule with comment period.
2. OPPS Copayment Policy
    In the CY 2011 OPPS/ASC proposed rule, for CY 2011, we proposed to 
determine copayment amounts for new and revised APCs using the same 
methodology that we implemented beginning in CY 2004. (We refer readers 
to the November 7, 2003 OPPS final rule with comment period (68 FR 
63458).) In addition, we proposed to use the same standard rounding 
principles that we have historically used in instances where the 
application of our standard copayment methodology would result in a 
copayment amount that is less than 20 percent and cannot be rounded, 
under standard rounding principles, to 20 percent. (We refer readers to 
the CY 2008 OPPS/ASC final rule with comment period (72 FR 66687) in 
which we discuss our rationale for applying these rounding principles.) 
The national unadjusted copayment amounts for services payable under 
the OPPS that will be effective January 1, 2011, are shown in Addenda A 
and B to this final rule with comment period. As discussed in section 
XVI.D. of this final rule with comment period, for CY 2011, the 
Medicare beneficiary's minimum unadjusted copayment and national 
unadjusted copayment for a service to which a reduced national 
unadjusted payment rate applies would 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 did not receive any public comments regarding the proposed 
methodology for calculating copayments for CY 2011. Therefore, for the 
reasons set forth in the proposed rule (74 FR 46240), we are finalizing 
our CY 2011 copayment amounts without modification. We note that we 
received comments on the copayments that would apply to beneficiaries 
who receive services from dedicated cancer hospitals under our proposal 
to provide an adjustment to payments to these hospitals. Those 
copayment-related public comments are discussed in section II.F of this 
final rule with comment period.
3. Calculation of an Adjusted Copayment Amount for an APC Group
    Individuals interested in calculating the national copayment 
liability for a Medicare beneficiary for a given service provided by a 
hospital that met or failed to meet its HOP QDRP requirements should 
follow the formulas presented in the following steps.

[[Page 71892]]

    Step 1. Calculate the beneficiary payment percentage for the APC by 
dividing the APC's national unadjusted copayment by its payment rate. 
For example, using APC 0019, $70.10 is 20 percent of the full national 
unadjusted payment rate of $350.49. For APCs with only a minimum 
unadjusted copayment in Addendum A and B of this final rule with 
comment period, the beneficiary payment percentage is 20 percent.
    The formula below is a mathematical representation of Step 1 and 
calculates national copayment as a percentage of national payment for a 
given service.

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

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

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

    Step 4. For a hospital that failed to meet its HOP QDRP 
requirements, multiply the copayment calculated in Step 3 by the 
reporting ratio of 0.980.
    The unadjusted copayments for services payable under the OPPS that 
are effective January 1, 2011, are shown in Addenda A and B to this 
final rule with comment period. We note that the national unadjusted 
payment rates and copayment rates shown in Addenda A and B to this 
final rule with comment period reflect the full market basket 
conversion factor increase, as discussed in section XVI.D. of this 
final rule with comment period.

III. OPPS Ambulatory Payment Classification (APC) Group Policies

A. OPPS Treatment of New HCPCS and CPT Codes

    CPT and Level II HCPCS codes are used to report procedures, 
services, items, and supplies under the hospital OPPS. Specifically, 
CMS recognizes the following codes on OPPS claims: (1) Category I CPT 
codes, which describe medical services and procedures; (2) Category III 
CPT codes, which describe new and emerging technologies, services, and 
procedures; and (3) Level II HCPCS codes, which are used primarily to 
identify products, supplies, temporary procedures, and services not 
described by CPT codes. CPT codes are established by the American 
Medical Association (AMA) and the Level II HCPCS codes are established 
by the CMS HCPCS Workgroup. These codes are updated and changed 
throughout the year. CPT and HCPCS code changes that affect the OPPS 
are published both through the annual rulemaking cycle and through the 
OPPS quarterly update Change Requests (CRs). CMS releases new Level II 
HCPCS codes to the public or recognizes the release of new CPT codes by 
the AMA and makes these codes effective (that is, the codes can be 
reported on Medicare claims) outside of the formal rulemaking process 
via OPPS quarterly update CRs. This quarterly process offers hospitals 
access to codes that may more accurately describe items or services 
furnished and/or provides payment or more accurate payment for these 
items or services in a timelier manner than if CMS waited for the 
annual rulemaking process. We solicit comments on these new codes and 
finalize our proposals related to these codes through our annual 
rulemaking process. In the CY 2011 OPPS/ASC proposed rule (75 FR 46241 
through 46246, we summarized and sought public comments on our process 
for updating codes as well as our proposed treatment of certain codes. 
As we proposed, in Table 17 below, using the April 1, 2010 through 
January 1, 2011 time period, we summarize our process for updating 
codes through our OPPS quarterly update CRs, seeking public comments, 
and finalizing their treatment under the OPPS. We note that because of 
the timing of the publication of the proposed rule, the codes 
implemented through the July 2010 OPPS quarterly update were not 
included in Addendum B but were listed in Table 14 of the proposed rule 
(75 FR 46243), while those codes based upon the April 2010 OPPS 
quarterly update were included in Addendum B.

                           Table 17--Comment Timeframe for New or Revised HCPCS Codes
----------------------------------------------------------------------------------------------------------------
    OPPS quarterly update CR         Type of code       Effective date      Comments sought     When finalized
----------------------------------------------------------------------------------------------------------------
April 1, 2010...................  Level II HCPCS      April 1, 2010.....  CY 2011 OPPS/ASC    CY 2011 OPPS/ASC
                                   Codes.                                  proposed rule.      final rule with
                                                                                               comment period.
July 1, 2010....................  Level II HCPCS      July 1, 2010......  CY 2011 OPPS/ASC    CY 2011 OPPS/ASC
                                   Codes.                                  proposed rule.      final rule with
                                                                                               comment period.
                                  Category I          July 1, 2010......  CY 2011 OPPS/ASC    CY 2011 OPPS/ASC
                                   (certain vaccine                        proposed rule.      final rule with
                                   codes) and III                                              comment period.
                                   CPT codes.
October 1, 2010.................  Level II HCPCS      October 1, 2010...  CY 2011 OPPS/ASC    CY 2012 OPPS/ASC
                                   Codes.                                  final rule with     final rule with
                                                                           comment period.     comment period.
January 1, 2011.................  Level II HCPCS      January 1, 2011...  CY 2011 OPPS/ASC    CY 2012 OPPS/ASC
                                   Codes.                                  final rule with     final rule with
                                                                           comment period.     comment period.
                                  Category I and III  January 1, 2011...  CY 2011 OPPS/ASC    CY 2012 OPPS/ASC
                                   CPT Codes.                              final rule with     final rule with
                                                                           comment period.     comment period.
----------------------------------------------------------------------------------------------------------------


[[Page 71893]]

    This process is discussed in detail below. We have separated our 
discussion into two sections based on whether we proposed to solicit 
public comments in the CY 2011 OPPS/ASC proposed rule or are soliciting 
public comments in this CY 2011 OPPS/ASC final rule with comment 
period. In the CY 2011 OPPS/ASC proposed rule, we noted that we sought 
public comments in the CY 2010 OPPS/ASC final rule with comment period 
on the new CPT and Level II HCPCS codes that were effective January 1, 
2010. We also sought public comments in the CY 2010 OPPS/ASC final rule 
with comment period on the new Level II HCPCS codes effective October 
1, 2009. These new codes with an effective date of October 1, 2009, or 
January 1, 2010, were flagged with comment indicator ``NI'' (New code, 
interim APC assignment; comments will be accepted on the interim APC 
assignment for the new code) in Addendum B to the CY 2010 OPPS/ASC 
final rule with comment period to indicate that we were assigning them 
an interim payment status and an APC and payment rate, if applicable, 
which were subject to public comment following publication of the CY 
2010 OPPS/ASC final rule with comment period. We received public 
comments on the interim APC assignments for CPT codes 63663 (Revision 
including replacement, when performed, of spinal neurostimulator 
electrode percutaneous array(s), including fluoroscopy, when 
performed), 63664 (Revision including replacement, when performed, of 
spinal neurostimulator electrode plate/paddle(s) placed via laminotomy 
or laminectomy, including fluoroscopy, when performed), 75571 (Computed 
tomography, heart, without contrast material, with quantitative 
evaluation of coronary calcium), and 77338 (Multi-leaf collimator (MLC) 
device(s) for intensity modulated radiation therapy (IMRT), design and 
construction per IMRT plan) in the CY 2010 OPPS/ASC final rule with 
comment period. These codes were assigned to comment indicator ``NI'' 
in that final rule with comment period. We note that we also received 
the same comments for these codes from the CY 2011 OPPS/ASC proposed 
rule, and a summary of the comments and our responses with our 
discussion of our final treatment of these CPT codes can be found in 
section III.D. of this final rule with comment period.
1. Treatment of New Level II HCPCS Codes and Category I CPT Vaccine 
Codes and Category III CPT Codes for Which We Solicited Public Comments 
in the CY 2011 Proposed Rule
    As of April 1 and July 1 of CY 2010, we made effective a total of 
22 new Level II HCPCS codes, 4 new Category I CPT vaccine codes, and 11 
new Category III CPT codes that were not addressed in the CY 2010 OPPS/
ASC final rule with comment period that updated the OPPS. Twenty-two 
new Level II HCPCS codes were effective for the April and July 2010 
updates, and of the 22 new HCPCS codes, a total of 14 Level II HCPCS 
codes were newly recognized for separate payment under the OPPS.
    Through the April 2010 OPPS quarterly update CR (Transmittal 1924, 
Change Request 6857, dated February 26, 2010), we allowed separate 
payment for a total of 6 of the 22 Level II HCPCS codes. Specifically, 
as displayed in Table 18 below, these included HCPCS codes C9258 
(Injection, telavancin, 10 mg), C9259 (Injection, pralatrexate, 1 mg), 
C9260 (Injection, ofatumumab, 10 mg), C9261 (Injection, ustekinumab, 1 
mg), C9262 (Fludarabine phosphate, oral, 1 mg), and C9263 (Injection, 
ecallantide, 1 mg).
    In addition to the six HCPCS C-codes, five new HCPCS G-codes were 
made effective on April 1, 2010. We did not recognize the five new 
HCPCS G-codes for separate payment under the OPPS because they were 
either paid under another Medicare payment system or were noncovered 
services under Medicare. Specifically, we assigned HCPCS codes G0432 
(Infectious agent antigen detection by enzyme immunoassay (EIA) 
technique, qualitative or semi-quantitative, multiple-step method, HIV-
1 or HIV-2, screening), G0433 (Infectious agent antigen detection by 
enzyme-linked immunosorbent assay (ELISA) technique, antibody, HIV-1 or 
HIV-2, screening), G0435 (Infectious agent antigen detection by rapid 
antibody test of oral mucosa transudate, HIV-1 or HIV-2, screening), 
and G9143 (Warfarin responsiveness testing by genetic technique using 
any method, any number of specimen(s)), to status indicator ``A'' (Not 
paid under OPPS. Paid by fiscal intermediaries/MACs under a fee 
schedule or payment system other than OPPS) to indicate that these 
services are paid under the Medicare Clinical Laboratory Fee Schedule 
(CLFS). Further, we did not recognize for separate payment HCPCS code 
G9147 (Outpatient Intravenous Insulin Treatment (OIVIT) and assigned it 
to status indicator ``E'' (Not paid by Medicare when submitted on 
outpatient claims (any outpatient bill type)) because this service is 
nationally a noncovered service under Medicare.
    In the CY 2011 OPPS/ASC proposed rule, we solicited public comments 
on the status indicators and APC assignments of the 11 Level II HCPCS 
codes, which were listed in Table 13 of that proposed rule (75 FR 
46242) and now appear in Table 18 of this final rule with comment 
period.
    We did not receive any public comments on the proposed APC 
assignments and status indicators for the 11 Level II HCPCS codes 
included in Table 13 of the proposed rule. However, for CY 2011, the 
HCPCS Workgroup replaced the five of the six HCPCS C-codes with 
permanent HCPCS J-codes. Specifically, HCPCS code C9258 was replaced 
with HCPCS code J3095 (Injection, telavancin, 10 mg); HCPCS code C9259 
with HCPCS code J9307 (Injection, pralatrexate, 1 mg); HCPCS code C9260 
with HCPCS code J9302 (Injection, ofatumumab, 10 mg); HCPCS code C9261 
with HCPCS code J3357 (Injection, ustekinumab, 1 mg); and HCPCS code 
C9263 with HCPCS code J1290 (Injection, ecallantide, 1 mg). We also 
note that HCPCS code C9262 was deleted on June 30, 2010, and replaced 
with HCPCS code Q2025 (Fludarabine phosphate oral, 1 mg) effective July 
1, 2010. Finally, for the CY 2011 update, the HCPCS Workgroup deleted 
HCPCS code Q2025 and replaced it with HCPCS code J8562 (Fludarabine 
phosphate oral, 10 mg) effective January 1, 2011.
    Consistent with our general policy of streamlining coding by using 
permanent HCPCS codes if appropriate rather than HCPCS C-codes for the 
reporting of drugs under the OPPS, we are showing the replacement HCPCS 
J-codes for the same descriptor in Table 18 that replace the HCPCS C-
codes first implemented in April 2010, effective January 1, 2011. With 
the exception of HCPCS code C9262, which was deleted June 30, 2010, all 
five HCPCS C-codes will be deleted on December 31, 2010. Because HCPCS 
codes C9258, C9259, C9260, C9261, and C9263 describe the same drugs and 
the same dosages currently designated by HCPCS codes J3095, J9307, 
J9302, J3357, and J1290, respectively, these drugs will continue their 
pass-through status in CY 2011. Therefore, we are assigning HCPCS codes 
J3095, J9307, J9302, J3357, and J1290 to the same status indicators and 
APCs as their predecessor C-codes, as shown in Table 18.
    We did not receive any public comments on the new Level II HCPCS

[[Page 71894]]

codes that were implemented in April 2010. Therefore, as discussed in 
the CY 2011 OPPS/ASC proposed rule (75 FR 46242), we are adopting as 
final for CY 2011, without modification, our proposal to assign the 
Level II HCPCS codes listed in Table 18 to the specific APCs and status 
indicators set forth in the CY 2011 OPPS/ASC proposed rule. Table 18 
below shows the final APC and status indicator assignments for all 11 
Level II HCPCS codes.

    Table 18--Level II HCPCS Codes With a Change in OPPS Status Indicator or Newly Implemented in April 2010
----------------------------------------------------------------------------------------------------------------
                                                                                  Final CY 2011
      CY 2011  HCPCS Code         CY 2010 HCPCS      CY 2011 Long descriptor          Status       Final CY 2011
                                      Code                                          Indicator           APC
----------------------------------------------------------------------------------------------------------------
J3095..........................           C9258  Injection, telavancin, 10 mg..               G             9258
J9307..........................           C9259  Injection, pralatrexate, 1 mg.               G             9259
J9302..........................           C9260  Injection, ofatumumab, 10 mg..               G             9260
J3357..........................           C9261  Injection, ustekinumab, 1 mg..               G             9261
J8562..........................           C9262  Fludarabine phosphate, oral,                 G             1339
                                                  10 mg.
J1290..........................           C9263  Injection, ecallantide, 1 mg..               G             9263
G0432..........................           G0432  Infectious agent antibody                    A               NA
                                                  detection by enzyme
                                                  immunoassay (EIA) technique,
                                                  qualitative or
                                                  semiquantitative, multiple-
                                                  step method, HIV-1 or HIV-2,
                                                  screening.
G0433..........................           G0433  Infectious agent antibody                    A               NA
                                                  detection by enzyme-linked
                                                  immunosorbent assay (ELISA)
                                                  technique, antibody, HIV-1 or
                                                  HIV-2, screening.
G0435..........................           G0435  Infectious agent detection by                A               NA
                                                  rapid antibody test of oral
                                                  mucosa transudate, HIV-1 or
                                                  HIV-2, screening.
G9143..........................           G9143  Warfarin responsiveness                      A               NA
                                                  testing by genetic technique
                                                  using any method, any number
                                                  of specimen(s).
G9147..........................           G9147  Outpatient Intravenous Insulin               E               NA
                                                  Treatment (OIVIT) either
                                                  pulsatile or continuous, by
                                                  any means, guided by the
                                                  results of measurements for:
                                                  respiratory quotient; and/or,
                                                  urine urea nitrogen (UUN);
                                                  and/or, arterial, venous or
                                                  capillary glucose; and/or
                                                  potassium concentration.
----------------------------------------------------------------------------------------------------------------
* Level II HCPCS code C9262 was deleted June 30, 2010, and replaced with HCPCS code Q2025 effective July 1,
  2010. Level II HCPCS code Q2025 will be deleted on December 31, 2010, and replaced with HCPCS code J8562
  effective January 1, 2011.

    Through the July 2010 OPPS quarterly update CR (Transmittal 1980, 
Change Request 6996, dated June 4, 2010), which included HCPCS codes 
that were made effective July 1, 2010, we allowed separate payment for 
8 of the 22 new Level II HCPCS codes. Specifically, as displayed in 
Table 14 of the proposed rule, we provided separate payment for HCPCS 
codes C9264 (Injection, tocilizumab, 1 mg), C9265 (Injection, 
romidepsin, 1 mg), C9266 (Injection, collagenase clostridium 
histolyticum, 0.1 mg), C9267 (Injection, von Willebrand factor complex 
(human), Wilate, per 100 IU VWF: RCO), C9268 (Capsaicin, patch, 10cm2), 
C9367 (Skin substitute, Endoform Dermal Template, per square 
centimeter), Q2025 (Fludarabine phosphate oral, 10mg), and C9800 
(Dermal injection procedure(s) for facial lipodystrophy syndrome (LDS) 
and provision of Radiesse or Sculptra dermal filler, including all 
items and supplies).
    We note that HCPCS code C9262 was made effective April 1, 2010, and 
deleted June 30, 2010, when it was replaced with HCPCS code Q2025. As 
discussed in section V.A.3. of the CY 2011 OPPS/ASC proposed rule, 
pass-through status began for this drug on April 1, 2010. Because HCPCS 
code Q2025 describes the same drug as HCPCS code C9262, we are 
continuing its pass-through status and assigning the HCPCS Q-code to 
the same APC and status indicator as its predecessor HCPCS C-code, as 
shown in Table 19. Specifically, HCPCS code Q2025 is assigned to APC 
9262 with a status indicator ``G.''
    Of the 12 HCPCS codes that were made effective July 1, 2010, we did 
not recognize 4 HCPCS codes for separate payment. Specifically, we did 
not recognize HCPCS codes G0428 (Collagen Meniscus Implant procedure 
for filling meniscal defects (e.g., CMI, collagen scaffold, Menaflex)), 
G0429 (Dermal filler injection(s) for the treatment of facial 
lipodystrophy syndrome (LDS) (e.g., as a result of highly active 
antiretroviral therapy), Q2026 (Injection, Radiesse, 0.1 ml), and Q2027 
(Injection, Sculptra, 0.1 ml). Under the hospital OPPS, we have 
assigned HCPCS code G0428 to status indicator ``E'' (Not paid by 
Medicare when submitted on outpatient claims (any outpatient bill 
type)) because this service is nationally noncovered by Medicare. 
Further, because HCPCS code C9800 describes both the injection 
procedure and the dermal filler supplies, we have assigned HCPCS codes 
G0429, Q2026, and Q2027 to status indicator ``B'' to indicate that 
these HCPCS codes are not recognized by OPPS when submitted on an 
outpatient hospital Part B bill type 12x and 13x. Specifically, 
hospitals must report HCPCS code C9800 to report the dermal filler 
supplies and the dermal filler injection procedure. Under the hospital 
OPPS, we have assigned HCPCS code C9800 to APC 0135 with a status 
indicator ``T.''
    Comment: One commenter stated that the proposed payment rate for 
HCPCS code C9800 does not cover the cost of Sculptra. The commenter 
requested that CMS reevaluate the proposed payment rate for HCPCS code 
C9800 to ensure that it covers a hospital's acquisition cost and that 
Medicare provide access to this nationally covered therapy. The 
commenter provided no pricing information for Sculptra or other 
supplies used in this procedure.
    Response: The payment rate for HCPCS code C9800 for CY 2011 
includes both the administration of the dermal fillers as well as the 
dermal filler supplies. We further stated in the CY 2011 OPPS/ASC 
proposed rule (75 FR 46242) that because the payment for HCPCS code 
C9800 includes both the injection procedure and the dermal filler 
supplies, we have assigned HCPCS codes G0429, Q2026, and Q2027 to 
indicator ``B'' to indicate that these HCPCS codes are not recognized 
by OPPS when submitted on a hospital outpatient Part B bill types 12x 
and 13x.

[[Page 71895]]

Specifically, hospital outpatient facilities must use HCPCS code C9800 
to report dermal filler supplies and the dermal filler injection 
procedure. Although there are two HCPCS codes that describe dermal 
filler supplies, specifically, HCPCS codes Q2026 for Radiesse and Q2027 
for Sculptra, CMS has not received ASP pricing for these two products. 
Under the OPPS, there is no provision to contractor-price drugs and 
biologicals, and without ASP information, we could not recognize the Q-
codes for separate payment. We will reevaluate the status indicator 
assignments for the HCPCS codes that describe dermal injection 
procedure(s) for facial lipodystrophy syndrome (LDS) once we receive 
ASP information for the dermal filler supplies. That is, we will 
reevaluate the APC and status indicator assignments for HCPCS codes 
C9800, G0429, Q2026, and Q20207.
    Also, it should be noted that with all new codes for which we lack 
pricing information, our policy has been to assign the service to an 
existing APC based on input from a variety of sources, including, but 
not limited to, review of the clinical similarity of the service to 
existing procedures; input from CMS medical advisors; information from 
interested specialty societies; and review of all other information 
available to us. The OPPS is a prospective payment system that provides 
payment for groups of services that share clinical and resource use 
characteristics. Based on our review, we believe that the service 
described by HCPCS code C9800 shares similar resource and clinical 
characteristics to the procedures included in APC 0135 (Level III Skin 
Repair). Although we currently do not have ASP information for the 
dermal filler supplies, we believe that the service is appropriately 
placed in APC 0135 based on the latest available information that we 
have. We believe that the service described by HCPCS code C9800 is 
analogous to those services currently assigned to APC 0135 because 
HCPCS code C9800 and the procedures listed in this APC relate to 
procedures involving the skin, and HCPCS code C8900 and other 
procedures in this APC involve injection(s) into the dermal layers.
    Therefore, after consideration of the public comment we received, 
we are adopting as final, without modification, our proposal to 
continue to assign HCPCS code C9800 to APC 0135, which has a final CY 
2011 APC median cost of approximately $316.
    We did not receive any public comments on the other proposed APC 
assignments and status indicators for the other 11 Level II HCPCS codes 
listed in Table 14 of the CY 2011 OPPS/ASC proposed rule. However, for 
CY 2011, the HCPCS Workgroup replaced the six HCPCS C-codes with 
permanent HCPCS J-codes. Specifically, HCPCS code C9264 was replaced 
with HCPCS code J3262 (Injection, tocilizumab, 1 mg); HCPCS code C9265 
was replaced with HCPCS code J9315 (Injection, romidepsin, 1 mg); HCPCS 
code C9266 was replaced with HCPCS code J0775 (Injection, collagenase 
clostridium histolyticum, 0.01 mg); HCPCS code C9267 was replaced with 
HCPCS code J7184 (Injection, von Willebrand factor complex (human), 
Wilate, per 100 IU VWF: RCO); HCPCS code C9268 was replaced with J7335 
(Capsaicin 8% patch, per 10 square centimeters); and HCPCS code Q2025 
(previously described as HCPCS code C9262) was replaced with HCPCS code 
J8562 (Fludarabine phosphate oral, 10 mg).
    Consistent with our general policy of using permanent HCPCS codes 
if appropriate rather than HCPCS C-codes for the reporting of drugs 
under the OPPS in order to streamline coding, we are showing the 
replacement HCPCS J-codes in Table 19 that will replace the HCPCS C-
codes, effective January 1, 2011. Because HCPCS codes C9264, C9265, 
C9267, and C9268 describe the same drugs and the same dosages currently 
designated by HCPCS codes J3262, J9315, J7184, and J7335, respectively, 
these drugs will continue their pass-through status in CY 2011. 
Therefore, we are assigning HCPCS codes J3262, J9315, J7184, and J7335 
to the same status indicators and APCs as their predecessor C-codes, as 
shown in Table 19. We note that replacement codes for HCPCS codes C9266 
and Q2025 do not describe the same dosage descriptors, and 
consequently, the replacement HCPCS codes will be given new APCs. 
Specifically, HCPCS code C9266 describes a dosage descriptor of 0.1 mg, 
however, its replacement HCPCS code J0775 describes a dosage descriptor 
of 0.01 mg. Similarly, HCPCS code Q2025 describes a dosage descriptor 
of 1 mg; however, its replacement HCPCS code J8562 describes a dosage 
descriptor of 10 mg. For CY 2011, HCPCS codes J0775 and J8562 are 
assigned to APC 1340 and APC 1339, respectively. Because their 
predecessor codes were assigned to pass-through status, both HCPCS 
codes J0775 and J8562 continue to be assigned to status indicator ``G'' 
for CY 2011. We note that we generally assign only one APC to those 
HCPCS codes that describe separately payable drugs, and maintain that 
same APC when there is no change to the dosage descriptor of a HCPCS 
drug code. Alternatively, when there is a change to the dosage 
descriptor, we will reassign the separately payable HCPCS drug code to 
a new APC to maintain data consistency for future rulemaking.
    After consideration of the public comment that we received, we are 
adopting as final, without modification, our proposal to assign the 
Level II HCPCS codes listed in Table 19 to the APCs and status 
indicators as proposed for CY 2011. Table 19 below includes a complete 
list of the HCPCS codes that were made effective July 1, 2010, with 
their status indicators and APC assignment for CY 2011.

                           Table 19--New Level II HCPCS Codes Implemented in July 2010
----------------------------------------------------------------------------------------------------------------
                                                                                  Final CY 2011
       CY 2011 HCPCS Code         CY 2010 HCPCS      CY 2011 Long descriptor          status      Final  CY 2011
                                      Code                                          indicator           APC
----------------------------------------------------------------------------------------------------------------
J3262..........................           C9264  Injection, tocilizumab, 1 mg..               G             9264
J9315..........................           C9265  Injection, romidepsin, 1 mg...               G             9265
J0775..........................           C9266  Injection, collagenase                       G             1340
                                                  clostridium histolyticum,
                                                  0.01 mg.
J7184..........................           C9267  Injection, von Willebrand                    G             9267
                                                  factor complex (human),
                                                  Wilate, per 100 IU VWF: RCO.
J7335..........................           C9268  Capsaicin 8% patch, per 10                   G             9268
                                                  square centimeters.
C9367..........................           C9367  Skin substitute, Endoform                    G             9367
                                                  Dermal Template, per square
                                                  centimeter.
C9800..........................           C9800  Dermal injection procedure(s)                T             0135
                                                  for facial lipodystrophy
                                                  syndrome (LDS) and provision
                                                  of Radiesse or Sculptra
                                                  dermal filler, including all
                                                  items and supplies.

[[Page 71896]]

 
G0428..........................           G0428  Collagen meniscus implant                    E               NA
                                                  procedure for filling
                                                  meniscal defects (e.g., CMI,
                                                  collagen scaffold, Menaflex).
G0429..........................           G0429  Dermal filler injection(s) for               B               NA
                                                  the treatment of facial
                                                  lipodystrophy syndrome (LDS)
                                                  (e.g., as a result of highly
                                                  active antiretroviral
                                                  therapy).
J8562..........................           Q2025  Fludarabine phosphate oral, 10               G             1339
                                                  mg.
Q2026..........................           Q2026  Injection, Radiesse, 0.1 ml...               B               NA
Q2027..........................           Q2027  Injection, Sculptra, 0.1 ml...               B               NA
----------------------------------------------------------------------------------------------------------------

    For CY 2011, we proposed to continue our established policy of 
recognizing Category I CPT vaccine codes for which FDA approval is 
imminent and Category III CPT codes that the AMA releases in January of 
each year for implementation in July through the OPPS quarterly update 
process. Under the OPPS, Category I vaccine codes and Category III CPT 
codes that are released on the AMA Web site in January are made 
effective in July of the same year through the July quarterly update 
CR, consistent with the AMA's implementation date for the codes. 
Through the July 2010 OPPS quarterly update CR, we allowed separate 
payment for 10 of the 11 new Category III CPT codes effective July 1, 
2010. Specifically, as displayed in Table 15 of the proposed rule, we 
allow separate payment for CPT codes 0223T (Acoustic cardiography, 
including automated analysis of combined acoustic and electrical 
intervals; single, with interpretation and report), 0224T (Multiple, 
including serial trended analysis and limited reprogramming of device 
parameter--AV or VV delays only, with interpretation and report), 0225T 
(Multiple, including serial trended analysis and limited reprogramming 
of device parameter--AV and VV delays, with interpretation and report), 
0226T (Anoscopy, high resolution (HRA) (with magnification and chemical 
agent enhancement); diagnostic, including collection of specimen(s) by 
brushing or washing when performed), 0227T (Anoscopy, high resolution 
(HRA) (with magnification and chemical agent enhancement); with 
biopsy(ies)), 0228T (Injection(s), anesthetic agent and/or steroid, 
transforaminal epidural, with ultrasound guidance, cervical or 
thoracic; single level), 0229T (Injection(s), anesthetic agent and/or 
steroid, transforaminal epidural, with ultrasound guidance, cervical or 
thoracic; each additional level (List separately in addition to code 
for primary procedure)), 0230T (Injection(s), anesthetic agent and/or 
steroid, transforaminal epidural, with ultrasound guidance, lumbar or 
sacral; single level), 0231T (Injection(s), anesthetic agent and/or 
steroid, transforaminal epidural, with ultrasound guidance, lumbar or 
sacral; each additional level (List separately in addition to code for 
primary procedure)), and 0232T (Injection(s), platelet rich plasma, any 
tissue, including image guidance, harvesting and preparation when 
performed). We note that CMS has issued a national coverage 
determination (NCD) of noncoverage specifically for chronic, non-
healing cutaneous wounds and acute surgical wounds when the autologous 
platelet rich plasma (PRP) is applied directly to the closed incision 
or for dehiscent wounds. Category III CPT code 0232T has been assigned 
to APC 0340 to provide a payment amount when payment is appropriate, 
both under the NCD provisions and any local coverage determinations. 
Under the hospital OPPS, Category III CPT code 0233T (Skin advanced 
glycation endproducts (AGE) measurement by multi-wavelength fluorescent 
spectroscopy) is not recognized under the hospital OPPS. However, the 
service is paid under the MPFS.
    Further, CMS does not recognize the four new H1N1 Category I CPT 
vaccine codes or the administration code that are effective on July 1, 
2010, for separate payment under the OPPS because we already recognize 
an existing HCPCS G-code for reporting the H1N1 vaccine, specifically 
HCPCS code G9142 (Influenza a (h1n1) vaccine, any route of 
administration) and an existing HCPCS G-code G9141 ((Influenza a (h1n1) 
immunization administration (includes the physician counseling the 
patient/family)) for reporting the administration of that vaccine, 
which was effective September 1, 2009. We have assigned HCPCS code 
G9142 to status indicator ``E'' under the OPPS because the vaccine is 
expected to be free. Consequently, Category I CPT vaccine codes 90470 
(H1N1 immunization administration (intramuscular, intranasal), 
including counseling when performed), 90664 (Influenza virus vaccine, 
pandemic formulation, live, for intranasal use), 90666 (Influenza virus 
vaccine, pandemic formulation, split virus, preservative free, for 
intramuscular use), 90667 (Influenza virus vaccine, pandemic 
formulation, split virus, adjuvanted, for intramuscular use), and 90668 
(Influenza virus vaccine, pandemic formulation, split virus, for 
intramuscular use), are assigned to status indicator ``E'' (Not paid 
under OPPS or any other Medicare payment system). We note that CPT code 
90470 was effective September 28, 2009, when it was released by the AMA 
on its Web site.
    In the CY 2011 OPPS/ASC proposed rule (75 FR 46243 through 46245), 
we solicited public comments on the proposed status indicators and the 
APC assignments for the new Category I and III CPT codes. We received 
public comments on our payment proposal for CPT code 0232T, and our 
coding proposal not to recognize the H1N1 CPT codes 90470, 90664, 
90666, 90667, and 90668.
    Comment: One commenter requested that CMS reevaluate the APC 
assignment for CPT code 0232T, which is assigned to APC 0340 (Minor 
Ancillary Procedures) with a proposed payment rate of $47.10 for CY 
2011, based on additional cost data that may be provided to CMS.
    Response: As part of our review for new CPT codes available mid-
year, we examine the APC assignments for all items and services under 
the OPPS for appropriate placements in the context of our proposed 
policies for the update year. This review involves careful analysis of 
data we have available to us, such as the cost of comparable items or 
services, as well as input from our medical advisors, the APC Panel, 
and recommendations from the public. Based on our analysis of the 
service associated with Category III CPT code 0232T, we believe that 
APC 0340 is the

[[Page 71897]]

most appropriate assignment based on its clinical and resource 
considerations to other procedures currently assigned in APC 0340. When 
the CY 2011 claims data become available for future rulemaking, we will 
reevaluate the cost of the service described by Category III CPT code 
0232T to assess the appropriateness of the structure of APC 0340 and 
its payment rate.
    Therefore, after consideration of the public comments we received, 
we are finalizing our proposal, without modification, to continue to 
assign CPT code 0232T to APC 0340, which has a final CY 2011 APC median 
cost of approximately $46.
    Comment: Several commenters requested that CMS recognize the H1N1 
vaccine administration CPT code 90470 and the four H1N1 vaccine CPT 
codes, specifically CPT codes 90664, 906606, 90667, and 90668, because 
they are more descriptive than the Level II HCPCS codes G9141 and G9142 
describing to the same vaccine and its administration. These commenters 
stated that it is operationally burdensome for hospitals to report one 
code to Medicare and another code to other payers for the same service, 
and requested the deletion of the temporary HCPCS codes G9141 and G9142 
to enable a single, standard mechanism for reporting these services 
across all payers.
    Response: While we agree that CPT codes 90470, 90664, 906606, 
90667, and 90668 are more descriptive than the Level II HCPCS codes 
G9141 and G9142, payment for H1N1 services are not based on specific 
formulations of the H1N1 administered to Medicare beneficiaries. The 
new CPT codes describe specific formulations of H1N1, which are not 
required for Medicare payment. Further, we do not recognize the H1N1 
vaccine and administration CPT codes because Medicare already 
recognizes two existing Level II HCPCS codes G9141 and G9142 to 
describe the H1N1 vaccine and its administration. As we stated in the 
October 2009 OPPS update change request (Transmittal 1803, Change 
Request 6626), Level II HCPCS codes G9141 and G9142 were made effective 
September 1, 2009.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification. For CY 2011, we are 
continuing our established policy of recognizing Category I CPT vaccine 
codes for which FDA approval is imminent and Category III CPT codes 
that the AMA releases in January of each year for implementation in 
July through the OPPS quarterly update process. Specifically, for CY 
2011 under the OPPS, we are recognizing the current HCPCS codes G9141 
and G9142 and are not recognizing the H1N1 vaccine and administration 
CPT codes 90470, 90664, 90666, 90667, and 90668. Moreover, we are 
assigning HCPCS code G9141 to APC 0350, which has a final CY 2011 APC 
median cost of approximately $26, and assigning HCPCS code G9142 to 
status indicator ``E.'' Table 20 below lists the Category I CPT vaccine 
and Category III CPT codes that were implemented in July 2010 for which 
we are allowing separate payment, along with their status indicators, 
APC assignments, and payment rates for CY 2011.

 Table 20--Category I Vaccine and Category III CPT Codes Implemented in
                                July 2010
------------------------------------------------------------------------
                                          Final  CY 2011
 CY 2011 CPT Code       CY 2011 Long          status      Final  CY 2011
                         descriptor         indicator           APC
------------------------------------------------------------------------
0223T.............  Acoustic                          S             0099
                     cardiography,
                     including
                     automated analysis
                     of combined
                     acoustic and
                     electrical
                     intervals; single,
                     with
                     interpretation and
                     report.
0224T.............  Multiple, including               S             0690
                     serial trended
                     analysis and
                     limited
                     reprogramming of
                     device parameter--
                     AV or VV delays
                     only, with
                     interpretation and
                     report.
0225T.............  Multiple, including               S             0690
                     serial trended
                     analysis and
                     limited
                     reprogramming of
                     device parameter--
                     AV and VV delays,
                     with
                     interpretation and
                     report.
0226T.............  Anoscopy, high                    X             0340
                     resolution (HRA)
                     (with
                     magnification and
                     chemical agent
                     enhancement);
                     diagnostic,
                     including
                     collection of
                     specimen(s) by
                     brushing or
                     washing when
                     performed.
0227T.............  Anoscopy, high                    T             0146
                     resolution (HRA)
                     (with
                     magnification and
                     chemical agent
                     enhancement); with
                     biopsy(ies).
0228T.............  Injection(s),                     T             0207
                     anesthetic agent
                     and/or steroid,
                     transforaminal
                     epidural, with
                     ultrasound
                     guidance, cervical
                     or thoracic;
                     single level.
0229T.............  Injection(s),                     T             0206
                     anesthetic agent
                     and/or steroid,
                     transforaminal
                     epidural, with
                     ultrasound
                     guidance, cervical
                     or thoracic; each
                     additional level
                     (List separately
                     in addition to
                     code for primary
                     procedure).
0230T.............  Injection(s),                     T             0207
                     anesthetic agent
                     and/or steroid,
                     transforaminal
                     epidural, with
                     ultrasound
                     guidance, lumbar
                     or sacral; single
                     level.
0231T.............  Injection(s),                     T             0206
                     anesthetic agent
                     and/or steroid,
                     transforaminal
                     epidural, with
                     ultrasound
                     guidance, lumbar
                     or sacral; each
                     additional level
                     (List separately
                     in addition to
                     code for primary
                     procedure).
0232T.............  Injection(s),                     X             0340
                     platelet rich
                     plasma, any
                     tissue, including
                     image guidance,
                     harvesting and
                     preparation when
                     performed.
0233T.............  Skin advanced                     A               NA
                     glycation
                     endproducts (AGE)
                     measurement by
                     multi-wavelength
                     fluorescent
                     spectroscopy.
90664.............  Influenza virus                   E               NA
                     vaccine, pandemic
                     formulation, live,
                     for intranasal use.
90666.............  Influenza virus                   E               NA
                     vaccine, pandemic
                     formulation, split
                     virus,
                     preservative free,
                     for intramuscular
                     use.
90667.............  Influenza virus                   E               NA
                     vaccine, pandemic
                     formulation, split
                     virus, adjuvanted,
                     for intramuscular
                     use.
90668.............  Influenza virus                   E               NA
                     vaccine, pandemic
                     formulation, split
                     virus, for
                     intramuscular use.
------------------------------------------------------------------------

    In the CY 2011 OPPS/ASC proposed rule (75 FR 46243 through 46246), 
we solicited public comments on the CY 2011 proposed status indicators 
and the proposed APC assignments and payment rates, if applicable, for 
the Level II HCPCS codes and the Category I vaccine codes and Category 
III CPT codes that are newly recognized in April or July 2010 through 
the respective OPPS quarterly update CRs. These codes were listed in 
Tables 13, 14, and

[[Page 71898]]

15 of the proposed rule. We proposed to finalize their status 
indicators and their APC assignments and payment rates, if applicable, 
in this CY 2011 OPPS/ASC final rule with comment period. Because the 
July 2010 OPPS quarterly update CR is issued close to the publication 
of the proposed rule, the Level II HCPCS codes and the Category I 
vaccine and Category III CPT codes implemented through the July 2010 
OPPS quarterly update CR could not be included in Addendum B to the 
proposed rule. These codes are listed in Tables 19 and 20, 
respectively, of this final rule with comment period, and are 
incorporated into Addendum B to this final rule with comment period, 
which is consistent with our annual OPPS update policy. The Level II 
HCPCS codes implemented or modified through the April 2010 OPPS update 
CR and displayed in Table 18 are included in Addendum B to this final 
rule with comment period, where their CY 2011 payment rates also are 
shown. We did not receive any additional comment on this process. 
Therefore, as we explained in the CY 2011 OPPS/ASC proposed rule (75 FR 
46243 through 46246), we are finalizing the status indicators and their 
APC assignments and payment rates, if applicable, for Category I 
vaccine codes and Category III CPT codes that are newly recognized in 
April or July 2010, in this CY 2011 OPPS/ASC final rule with comment 
period.
2. Process for New Level II HCPCS Codes and Category I and Category III 
CPT Codes for Which We Are Soliciting Public Comments on This CY 2011 
OPPS/ASC Final Rule With Comment Period
    As has been our practice in the past, we incorporate those new 
Category I and III CPT codes and new Level II HCPCS codes that are 
effective January 1 in the final rule with comment period updating the 
OPPS for the following calendar year. These codes are released to the 
public via the CMS HCPCS (for Level II HCPCS codes) and AMA Web sites 
(for CPT codes), and also through the January OPPS quarterly update 
CRs. In the past, we also have released new Level II HCPCS codes that 
are effective October 1 through the October OPPS quarterly update CRs 
and incorporated these new codes in the final rule with comment period 
updating the OPPS for the following calendar year. All of these codes 
are flagged with comment indicator ``NI'' in Addendum B to the OPPS/ASC 
final rule with comment period to indicate that we are assigning them 
an interim payment status which is subject to public comment. 
Specifically, the status indicator and the APC assignment, and payment 
rate, if applicable, for all such codes flagged with comment indicator 
``NI'' are open to public comment in the final rule with comment 
period, and we respond to these comments in the OPPS/ASC final rule 
with comment period for the next calendar year's OPPS/ASC update. In 
the CY 2011 OPPS/ASC proposed rule (75 FR 46246), we proposed to 
continue this process for CY 2011. Specifically, for CY 2011, we 
proposed to include in Addendum B to the CY 2011 OPPS/ASC final rule 
with comment period the new Category I and III CPT codes effective 
January 1, 2011 (including those Category I vaccine and Category III 
CPT codes that were released by the AMA in July 2010) that would be 
incorporated in the January 2011 OPPS quarterly update CR and the new 
Level II HCPCS codes, effective October 1, 2010, or January 1, 2011, 
that would be released by CMS in its October 2010 and January 2011 OPPS 
quarterly update CRs. As proposed, these codes are flagged with comment 
indicator ``NI'' in Addendum B to this CY 2011 OPPS/ASC final rule with 
comment period to indicate that we have assigned them an interim OPPS 
payment status for CY 2011. Their status indicators and their APC 
assignments and payment rates, if applicable, are open to public 
comment in this final rule with comment period and will be finalized in 
the CY 2012 OPPS/ASC final rule with comment period. We note that the 
Category I vaccine and Category III CPT codes that were released by the 
AMA in July 2010 that were subject to comment in the CY 2011 OPPS/ASC 
proposed rule, and were listed in Table 15, will not be assigned to 
comment indicator ``NI'' in Addendum B because comments about these 
codes are addressed in this final rule with comment period.
    Comment: Some commenters requested that CMS reconsider the timeline 
for APC assignments for new CPT and HCPCS codes for which comments are 
sought. The commenters indicated that the current schedule has the 
potential to produce long gaps of inappropriate payment with no 
mechanism for changes over the short term period. One commenter 
suggested including the new Category I CPT codes that are approved in 
February to be included in the proposed rule to enable interested 
parties to comment on the interim payment values before they are 
finalized. This commenter further recommended that CMS should be 
prepared to implement corrections on a quarterly basis.
    Response: With respect to the comment regarding new Category I CPT 
codes that are effective in February, we believe the commenter meant 
the new Category I CPT codes that are released in late September or 
October when the annual CPT code book for the upcoming year are 
published that are then implemented in January, which are not discussed 
in the proposed rule but are published in the final rule with comment 
period. Because the CPT codes for the January 2011 update were not 
issued to the public until October 2010 when AMA published the CY 2011 
CPT codes, we could not include them in the CY 2011 OPPS/ASC proposed 
rule for comment because the proposed rule is published in the summer, 
usually several months in advance of the publication of the CPT code 
books. Similarly, the Level II HCPCS codes that are made effective in 
October are published after the publication of the proposed rule. 
Because these codes are released after the publication of the proposed 
rule, we do not discuss either the new Category I CPT codes or the 
Level II HCPCS codes that are effective for the upcoming January in the 
proposed rule, which is published sometime in the summer.
    As has been our practice for the past several years, we list the 
new Category I CPT codes and the Level II HCPCS codes in the final 
rules and flag them with comment indicator ``NI'' (New code, interim 
APC assignment; comments will be accepted on the interim APC assignment 
for the new code) in Addendum B to indicate that the codes are assigned 
to an interim payment status and an APC and payment rate, if 
applicable, that is subject to public comment following the publication 
of the final rule with comment period. For these new codes, we are only 
able to finalize their assignments in another OPPS final rule in order 
to allow for the necessary public notice and comment period and to 
allow time for CMS to respond to such comments. Therefore, we only 
assign HCPCS codes permanently for the year through the annual 
regulatory process.
    Because we are not able to revise APC and/or status indicator 
assignments for the newly implemented HCPCS codes in CY 2010 that are 
assigned an interim final status in this CY 2011 OPPS/ASC final rule 
with comment period outside of the rulemaking process, the next 
available opportunity to update an APC or status indicator for these 
codes is in the CY 2012 final rule with comment period. These HCPCS 
codes retain their interim final APC and status indicator assignments 
for all of CY 2011. Therefore, only in the CY 2012 OPPS/ASC final rule 
with comment period will we be able to finalize the APC and/

[[Page 71899]]

or status indicator assignments of the new CY 2011 HCPCS codes and 
respond to all public comments received on their interim designations.
    We also cannot implement any changes in status indicator or APC 
assignment on a quarterly basis because we have an annual process 
subject to notice and comment for the assignment of a status indicator 
and, if applicable, APC group. Therefore, actual changes to status 
indicator or APC assignments cannot be implemented on a quarterly 
basis.
    After consideration of the public comments we received, we are 
finalizing our policy to include in Addendum B to the CY 2011 OPPS/ASC 
final rule with comment period the new Category I and III CPT codes 
effective January 1, 2011 (including those Category I vaccine and 
Category III CPT codes that were released by the AMA in July 2010) that 
would be incorporated in the January 2011 OPPS quarterly update CR and 
the new Level II HCPCS codes, effective October 1, 2010, or January 1, 
2011, that would be released by CMS in its October 2010 and January 
2011 OPPS quarterly update CRs.
3. Temporary HCPCS Codes for 2010-2011 Seasonal Influenza Vaccines
    In Addendum B of the CY 2011 OPPS/ASC proposed rule (75 FR 46662), 
CPT code 90658 (Influenza virus vaccine, split virus, when administered 
to 3 years of age and older, for intramuscular use) was assigned to 
status indicator ``L'' to indicate that the code is not paid under the 
OPPS; rather, it is paid at a reasonable cost that is not subject to a 
deductible or coinsurance. Under the Medicare ASP pricing methodology, 
CPT code 90658 currently includes multiple brand name products. For 
influenza vaccines, the payment limit is 95 percent of the AWP of the 
lowest brand-name product within each billing code. We understand that 
the production capacity and supply of the lowest priced brand-name 
influenza vaccine product will not meet the program demands of the 
Medicare population for the 2010-2011 influenza season. Because of this 
patient access problem, we believe it necessary to establish separate 
HCPCS codes for the individual brand products currently associated with 
CPT code 90658. Thus, Medicare has established five HCPCS Q-codes to 
identify the individual influenza products that are reported with CPT 
code 90658. The specific list of HCPCS Q-codes can be found in Table 21 
below CY 2011. Because the HCPC Q-codes will be recognized by Medicare, 
CPT code 90658 will be assigned to status indicator ``E'' to indicate 
that the code is not recognized under the hospital OPPS. Hospitals are 
advised to report the influenza HCPCS Q-codes rather than CPT code 
90658 for CY 2011. These codes have been included in the HCPCS file 
with an added date of January 1, 2011, but the HCPCS codes will be 
implemented effective October 1, 2010. That is, CPT code 90658 is 
assigned to status indicator ``E'' effective October 1, 2010, and HCPCS 
Q-codes Q2035, Q2036, Q2037, Q2038, and Q2039 are assigned to status 
indicator ``L'' effective January 1, 2011. Table 21 below contains the 
final CY 2011 status indicators for CPT code 90658 and HCPCS Q-codes 
Q2035, Q2036, Q2037, Q2038, and Q2039.

              Table 21--Influenza HCPCS Q-Codes for CY 2011
------------------------------------------------------------------------
                       Short                              Final CY 2011
      HCPCS          descriptor       Long descriptor           SI
------------------------------------------------------------------------
90658...........  Flu vaccine, 3   Influenza virus                    E
                   yrs & >, im.     vaccine, split
                                    virus, when
                                    administered to 3
                                    years of age and
                                    older, for
                                    intramuscular use.
Q2035...........  Afluria vacc, 3  Influenza virus                    L
                   yrs & >, im.     vaccine, split
                                    virus, when
                                    administered to
                                    individuals 3 years
                                    of age and older,
                                    for intramuscular
                                    use (afluria).
Q2036...........  Flulaval vacc,   Influenza virus                    L
                   3 yrs & >, im.   vaccine, split
                                    virus, when
                                    administered to
                                    individuals 3 years
                                    of age and older,
                                    for intramuscular
                                    use (flulaval).
Q2037...........  Fluvirin vacc,   Influenza virus                    L
                   3 yrs & >, im.   vaccine, split
                                    virus, when
                                    administered to
                                    individuals 3 years
                                    of age and older,
                                    for intramuscular
                                    use (fluvirin).
Q2038...........  Fluzone vacc, 3  Influenza virus                    L
                   yrs & >, im.     vaccine, split
                                    virus, when
                                    administered to
                                    individuals 3 years
                                    of age and older,
                                    for intramuscular
                                    use (fluzone).
Q2039...........  NOS flu vacc, 3  Influenza virus                    L
                   yrs & >, im.     vaccine, split
                                    virus, when
                                    administered to
                                    individuals 3 years
                                    of age and older,
                                    for intramuscular
                                    use (not otherwise
                                    specified).
------------------------------------------------------------------------

B. OPPS Changes--Variations Within APCs

1. Background
    Section 1833(t)(2)(A) of the Act requires the Secretary to develop 
a classification system for covered hospital outpatient department 
services. Section 1833(t)(2)(B) of the Act provides that the Secretary 
may establish groups of covered OPD services within this classification 
system, so that services classified within each group are comparable 
clinically and with respect to the use of resources (and so that an 
implantable item is classified to the group that includes the services 
to which the item relates). In accordance with these provisions, we 
developed a grouping classification system, referred to as APCs, as set 
forth in Sec.  419.31 of the regulations. We use Level I and Level II 
HCPCS codes and descriptors 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, as 
well as medical visits. We also have developed separate APC groups for 
certain medical devices, drugs, biologicals, therapeutic 
radiopharmaceuticals, and brachytherapy devices.
    We have packaged into payment for each procedure or service within 
an APC group the costs associated with those items or services that are 
directly related to, and supportive of, performing the main independent 
procedures or furnishing the services. Therefore, we do not make 
separate payment for these packaged items or services. For example, 
packaged items and services include: (1) Use of an operating, 
treatment, or procedure room; (2) use of a recovery room; (3) 
observation services; (4) anesthesia; (5) medical/surgical supplies; 
(6) pharmaceuticals (other than those for which separate payment may be 
allowed under the provisions discussed in section V. of this final rule 
with comment period); (7) incidental services such as venipuncture; and 
(8) guidance services, image processing services, intraoperative 
services, imaging supervision and interpretation services, diagnostic 
radiopharmaceuticals, and

[[Page 71900]]

contrast media. Further discussion of packaged services is included in 
section II.A.3. of this final rule with comment period.
    In CY 2008, we implemented 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 (72 FR 66650 through 66652). Under CY 2010 OPPS 
policy, we provide composite APC payment for certain extended 
assessment and management services, low dose rate (LDR) prostate 
brachytherapy, cardiac electrophysiologic evaluation and ablation, 
mental health services, and multiple imaging services. Further 
discussion of composite APCs is included in section II.A.2.e. of this 
final rule with comment period.
    Under the OPPS, we generally pay for hospital outpatient services 
on a rate-per-service basis, where the service may be reported with one 
or more HCPCS codes. Payment varies according to the APC group to which 
the independent service or combination of services is assigned. Each 
APC weight represents the hospital median cost of the services included 
in that APC relative to the hospital median cost of the services 
included in APC 0606 (Level 3 Hospital Clinic Visits). The APC weights 
are scaled to APC 0606 because it is the middle level hospital clinic 
visit APC (that is, where the Level 3 hospital clinic visit CPT code of 
five levels of hospital clinic visits is assigned), and because middle 
level hospital clinic visits are among the most frequently furnished 
services in the hospital outpatient setting.
    Section 1833(t)(9)(A) of the Act requires the Secretary to review 
and revise the 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; the Act further requires us to 
repeat this process on a basis that is not less often than annually. 
Section 1833(t)(9)(A) of the Act, as amended by section 201(h) of the 
BBRA, also requires the Secretary, beginning in CY 2001, 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 (the APC Panel recommendations for specific 
services for the CY 2011 OPPS and our responses to them are discussed 
in the relevant specific sections throughout this final rule with 
comment period).
    Finally, section 1833(t)(2) of the Act provides that, subject to 
certain exceptions, the items and services within an APC group cannot 
be considered comparable with respect to the use of resources if the 
highest median cost (or mean cost as elected by the Secretary) for an 
item or service in the group is more than 2 times greater than the 
lowest median cost (or mean cost, if so elected) for an item or service 
within the same group (referred to as the ``2 times rule''). We use the 
median cost of the item or service in implementing this provision. The 
statute authorizes the Secretary to make exceptions to the 2 times rule 
in unusual cases, such as low-volume items and services (but the 
Secretary may not make such an exception in the case of a drug or 
biological that has been designated as an orphan drug under section 526 
of the Federal Food, Drug, and Cosmetic Act).
2. Application of the 2 Times Rule
    In accordance with section 1833(t)(2) of the Act and Sec.  419.31 
of the regulations, we annually review the items and services within an 
APC group to determine, with respect to comparability of the use of 
resources, if the median cost of the highest cost item or service 
within an APC group is more than 2 times greater than the median of the 
lowest cost item or service within that same group. In making this 
determination, we consider only those HCPCS codes that are significant 
based on the number of claims. That is, we consider only those HCPCS 
codes whose claim data reflect more than 1,000 singles, or if less than 
1,000 singles, at least those HCPCS codes with more than 99 singles and 
represent more than 2 percent of the claims for a given APC (74 FR 
60436). In the CY 2011 OPPS/ASC proposed rule (75 FR 46247), we 
proposed to make exceptions to this limit on the variation of costs 
within each APC group in unusual cases, such as low-volume items and 
services for CY 2011.
    During the APC Panel's February 2010 meeting, we presented median 
cost and utilization data for services furnished during the period of 
January 1, 2009 through September 30, 2009, about which we had concerns 
or about which the public had raised concerns regarding their APC 
assignments, status indicator assignments, or payment rates. The 
discussions of most service-specific issues, the APC Panel 
recommendations, if any, and our proposals for CY 2011 were contained 
mainly in sections III.C. and III.D. of the proposed rule and are 
included in the same sections of this final rule with comment period.
    In addition to the assignment of specific services to APCs that we 
discussed with the APC Panel, we also identified APCs with 2 times 
violations that were not specifically discussed with the APC Panel but 
for which we proposed changes to their HCPCS codes' APC assignments in 
Addendum B to the proposed rule. In these cases, to eliminate a 2 times 
violation or to improve clinical and resource homogeneity, we proposed 
to reassign the codes to APCs that contain services that are similar 
with regard to both their clinical and resource characteristics. We 
also proposed to rename existing APCs or create new clinical APCs to 
complement proposed HCPCS code reassignments. In many cases, the 
proposed HCPCS code reassignments and associated APC reconfigurations 
for CY 2011 included in the proposed rule were related to changes in 
median costs of services that were observed in the CY 2009 claims data 
newly available for CY 2011 ratesetting. We also proposed changes to 
the status indicators for some codes that are not specifically and 
separately discussed in the proposed rule. In these cases, we proposed 
to change the status indicators for some codes because we believe that 
another status indicator would more accurately describe their payment 
status from an OPPS perspective based on the policies that we proposed 
for CY 2011.
    We received many public comments regarding the proposed APC and 
status indicator assignments for CY 2011 for specific HCPCS codes. 
These public comments are discussed mainly in sections III.C. and 
III.D. of this final rule with comment period, and the final action for 
CY 2011 related to each HCPCS code is noted in those sections.
    Addendum B to this final rule with comment period identifies with 
comment indicator ``CH'' those HCPCS codes for which we are finalizing 
in this final rule with comment period a change to the APC assignment 
or status indicator that were initially assigned in the April 2010 
Addendum B update (via Transmittal 1924, Change Request 6857, dated 
February 26, 2010).
3. Exceptions to the 2 Times Rule
    As discussed earlier, we may make exceptions to the 2 times limit 
on the variation of costs within each APC group in unusual cases such 
as low-volume items and services. Taking into account the APC changes 
that we proposed for CY 2011 based on the APC Panel recommendations 
that were discussed mainly in sections III.C. and III.D. of the 
proposed rule, the other

[[Page 71901]]

proposed changes to status indicators and APC assignments as identified 
in Addendum B to the proposed rule, and the use of CY 2009 claims data 
to calculate the median costs of procedures classified in the APCs, we 
reviewed all the APCs to determine which APCs would not satisfy the 2 
times rule. We used the following criteria to decide whether to propose 
exceptions to the 2 times rule for affected APCs:
     Resource homogeneity.
     Clinical homogeneity.
     Hospital outpatient setting.
     Frequency of service (volume).
     Opportunity for upcoding and code fragments.
    For a detailed discussion of these criteria, we refer readers to 
the April 7, 2000 OPPS final rule with comment period (65 FR 18457 and 
18458). Table 16 of the proposed rule listed 17 APCs that we proposed 
to exempt from the 2 times rule for CY 2011 based on the criteria cited 
above (75 FR 46248).
    We did not receive any general public comments related to the list 
of proposed exceptions to the 2 times rule. We received a number of 
specific public comments about some of the procedures assigned to APCs 
that we proposed to make exempt from the 2 times rule for CY 2011. 
Those public comments are discussed elsewhere in this preamble, and can 
be found in sections related to the types of procedures that were the 
subjects of the public comments.
    For the proposed rule, the list of 17 APCs that appeared in Table 
16 of the CY 2011 OPPS/ASC proposed rule (75 FR 46248) that were 
exempted from the 2 times rule were based on data from January 1, 2009, 
through September 30, 2009. For this final rule with comment period, we 
used claims data for dates of service between January 1, 2009, and 
December 31, 2009, that were processed on or before June 30, 2010, and 
updated CCRs, if available. Thus, after responding to all of the public 
comments on the CY 2010 OPPS/ASC proposed rule and making changes to 
APC assignments based on those comments, we analyzed the CY 2009 claims 
data used for this final rule with comment period to identify the APCs 
with 2 times violations. Based on the final rule CY 2009 claims data, 
we found 22 APCs with 2 times rule violations, which is a cumulative 
increase of 5 APCs from the proposed rule. We applied the criteria as 
described earlier to identify the APCs that are exceptions to the 2 
times rule for CY 2010, and identified 10 APCs that meet the criteria 
for exception to the 2 times rule for this final rule with comment 
period, but that did not meet those criteria using proposed rule data: 
APC 0060 (Manipulation Therapy); APC 0076 (Level I Endoscopy Lower 
Airway); APC 0083 (Coronary or Non Coronary Angioplasty and 
Percutaneous Valvuloplasty), APC 0133 (Level I Skin Repair); APC 0203 
(Level IV Nerve Injections); APC 0304 (Level I Therapeutic Radiation 
Treatment Preparation); APC 0341 (Skin Tests); APC 0343 (Level III 
Pathology); APC 0433 (Level II Pathology); and APC 0607 (Level 4 
Hospital Clinic Visits). These APC exceptions are listed in Table 22 
below. For this final rule with comment period, we also determined that 
there are 5 APCs that no longer violate the 2 times rule: APC 0051 
(Level III Musculoskeletal Procedures Except Hand and Foot); APC 0138 
(Level II Closed Treatment Fracture Finger/Toe/Trunk); APC 0173 (Level 
II Partial Hospitalization (4 or more services)); APC 0325 (Group 
Psychotherapy); and APC 0344 (Level IV Pathology). We have not included 
in this count those APCs where a 2 times violation is not a relevant 
concept, such as APC 0375 (Ancillary Outpatient Services When Patient 
Expires), with an APC median cost set based on multiple procedure 
claims. As a result, we have identified only final APCs, including 
those with criteria-based median costs, such as device-dependent APCs, 
with 2 times violations. Table 22 below lists 22 APCs that we are 
exempting from the 2 times rule for CY 2011 based on the criteria cited 
above and a review of updated claims data.
    For cases in which a recommendation by the APC Panel appeared to 
result in or allow a violation of the 2 times rule, we generally 
accepted the APC Panel's recommendation because those recommendations 
were based on explicit consideration of resource use, clinical 
homogeneity, hospital specialization, and the quality of the CY 2009 
claims data used to determine the APC payment rates that we are 
finalizing for CY 2011. The median costs for hospital outpatient 
services for these and all other APCs that were used in the development 
of this final rule with comment period can be found on the CMS Web site 
at: http://www.cms.gov/HospitalOutpatientPPS/01_overview.asp.

     Table 22--Final APC Exceptions to the 2 Times Rule for CY 2011
------------------------------------------------------------------------
            CY 2011 APC                       CY 2011 APC title
------------------------------------------------------------------------
0057..............................  Bunion Procedures.
0058..............................  Level I Strapping and Cast
                                     Application.
0060..............................  Manipulation Therapy.
0076..............................  Level I Endoscopy Lower Airway.
0080..............................  Diagnostic Cardiac Catheterization.
0083..............................  Coronary and Noncoronary Angioplasty
                                     and Percutaneous Valvuloplasty.
0105..............................  Repair/Revision/Removal of
                                     Pacemakers, AICDs, or Vascular
                                     Devices.
0133..............................  Level I Skin Repair.
0142..............................  Small Intestine Endoscopy.
0203..............................  Level IV Nerve Injections.
0235..............................  Level I Posterior Segment Eye
                                     Procedures.
0245..............................  Level I Cataract Procedures without
                                     IOL Insert.
0303..............................  Treatment Device Construction.
0304..............................  Level I Therapeutic Radiation
                                     Treatment Preparation.
0340..............................  Minor Ancillary Procedures.
0341..............................  Skin Tests.
0343..............................  Level III Pathology.
0432..............................  Health and Behavior Services.
0433..............................  Level II Pathology.
0604..............................  Level 1 Hospital Clinic Visits.
0607..............................  Level 4 Hospital Clinic Visits.
0664..............................  Level I Proton Beam Radiation
                                     Therapy.
------------------------------------------------------------------------

C. New Technology APCs

1. Background
    In the November 30, 2001 final rule (66 FR 59903), we finalized 
changes to the time period a service was 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 a clinically appropriate 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 note that the cost bands for New Technology APCs range from $0 
to $50 in increments of $10, from $50 to $100 in increments of $50, 
from $100 to $2,000 in increments of $100, and from $2,000 to $10,000 
in increments of $500. 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 VII

[[Page 71902]]

($500-$600)) is made at $550. Currently, there are 82 New Technology 
APCs, ranging from the lowest cost band assigned to APC 1491 (New 
Technology--Level IA ($0-$10)) through the highest cost band assigned 
to APC 1574 (New Technology--Level XXXVII ($9,500-$10,000). In CY 2004 
(68 FR 63416), we last 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.
    Every year we receive many requests for higher payment amounts 
under our New Technology APCs for specific procedures under the OPPS 
because they require the use of expensive equipment. We are taking this 
opportunity to reiterate our response in general to the issue of 
hospitals' capital expenditures as they relate to the OPPS and 
Medicare.
    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 hospital inpatient 
market basket increase. We believe that our payment rates generally 
reflect the costs that are associated with providing care to Medicare 
beneficiaries in cost efficient settings, and we believe that our rates 
are adequate to ensure access to services.
    For many emerging technologies, there is a transitional period 
during which utilization may be low, often because providers are first 
learning about the techniques and their clinical utility. Quite often, 
parties request that Medicare make higher payment amounts under our 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 Medicare beneficiary projected utilization and 
does not set its payment rates based on initial projections of low 
utilization for services that require expensive capital equipment. 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 note that, in a budget neutral environment, 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.
2. Movement of Procedures From New Technology APCs to Clinical APCs
    As we explained in the November 30, 2001 final rule (66 FR 59902), 
we generally keep a procedure in the New Technology APC to which it is 
initially assigned until we have collected sufficient data to enable us 
to move the procedure to a clinically appropriate APC. However, in 
cases where we find that our original New Technology APC assignment was 
based on inaccurate or inadequate information (although it was the best 
information available at the time), 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 most appropriately reflects its cost.
    Consistent with our current policy, in the CY 2011 OPPS/ASC 
proposed rule (75 FR 46249), we proposed for CY 2011 to retain services 
within New Technology APC groups until we gather sufficient data to 
enable us to assign the service to a clinically appropriate APC. The 
flexibility associated with 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. Table 17 of the 
proposed rule listed the HCPCS codes and associated status indicators 
that we proposed to reassign from a New Technology APC to a clinically 
appropriate APC or to a different New Technology APC for CY 2011.
    We note that, for CY 2010, there are four services described by 
four HCPCS G-codes receiving payment through a New Technology APC. 
Specifically, HCPCS code G0416 (Surgical pathology, gross and 
microscopic examination for prostate needle saturation biopsy sampling, 
1-20 specimens) is assigned to New Technology APC 1505 (New 
Technology--Level V ($300-$400)); HCPCS code G0417 (Surgical pathology, 
gross and microscopic examination for prostate needle saturation biopsy 
sampling, 21-40 specimens) is assigned to New Technology APC 1507 (New 
Technology--Level VII ($500-$600)); HCPCS code G0418 (Surgical 
pathology, gross and microscopic examination for prostate needle 
saturation biopsy sampling, 41-60 specimens) is assigned to New 
Technology APC 1511 (New Technology--Level XI ($900-$1,000)); and HCPCS 
code G0419 (Surgical pathology, gross and microscopic examination for 
prostate needle saturation biopsy sampling, greater than 60 specimens), 
is assigned to New Technology APC 1513 (New Technology--Level XIII 
($1,100-$1,200)).
    In the CY 2011 OPPS/ASC proposed rule (75 FR 46249), we proposed to 
reassign HCPCS code G0416 from New Technology APC 1505 to clinical APC 
0661 (Level V Pathology), and HCPCS code G0417 from New Technology APC 
1507 (New Technology-Level VII ($500 to $600)) to New Technology APC 
1506 (New Technology--Level VI ($400-$500)). Based on our claims data 
used for CY 2011 rate setting, as well as clinical characteristics, we 
believed that HCPCS code G0416 is comparable clinically and with 
respect to the use of resources as other pathology services currently 
assigned to APC 0661. Further, we believed that HCPCS code G0417 is 
more appropriately placed in New Technology APC 1506 based on the 
median cost data for the CY 2011 ratesetting and based on its clinical 
and

[[Page 71903]]

resource similarities to procedures currently in APC 1506.
    We did not receive any public comments on the APC reassignments of 
HCPCS codes G0416 and G0417. Therefore, for the reasons explained 
above, we are finalizing our proposal, without modification, to assign 
HCPCS code G0416 to APC 0616, which has a final CY 2011 APC median cost 
of approximately $149, and to assign HCPCS code G0417 to APC 1506, 
which has a final CY 2011 APC median cost of approximately $489. Table 
23 below lists the HCPCS codes and associated status indicators that we 
are reassigning from a New Technology APC to a clinically appropriate 
APC or to a different New Technology APC for CY 2011.
    For CY 2011, we also proposed to continue the New Technology APC 
assignments for HCPCS codes G0418 and G0419 based on our understanding 
of the clinical and cost characteristics of the procedures described by 
these HCPCS codes. As we stated in the CY 2011 OPPS/ASC proposed rule 
(75 FR 46249), we do not believe we have enough claims data to assign 
these codes to a different APC. While we believed that these services 
will always be low volume, given the number of specimens being 
collected, we believed that we should continue the New Technology 
payments for HCPCS codes G0418 and G0419 for another year to see if 
more claims data become available. Specifically, we proposed to 
continue to assign HCPCS code G0418 to New Technology APC 1511 (New 
Technology--Level XI ($900-$1,000)) and HCPCS code G0419 to New 
Technology APC 1513 (New Technology--Level XIII ($1,100-$1,200)).
    We did not receive any public comments on the continuation of the 
APC assignments of HCPCS code G0418 and G0419. Therefore, for the 
reasons explained above, we are finalizing our proposal, without 
modification, to continue to assign HCPCS code G0418 to APC 1511, and 
to continue to assign HCPCS code G0419 to APC 1513. The final CY 2011 
payment rates for HCPCS codes G048 and G0419 can be found in Addendum B 
of this final rule with comment period.

             Table 23--CY 2011 Reassignment of Procedures Assigned to New Technology APCS in CY 2010
----------------------------------------------------------------------------------------------------------------
                             CY 2010 Short                                        Final CY 2011    Final CY 2011
   CY 2010 HCPCS code          descriptor          CY 2010 SI      CY 2010 APC          SI              APC
----------------------------------------------------------------------------------------------------------------
G0416..................  Sat biopsy prostate 1-              S             1505               X             0661
                          20 spc.
G0417..................  Sat biopsy prostate                 S             1507               S             1506
                          21-40.
----------------------------------------------------------------------------------------------------------------

D. OPPS APC-Specific Policies

1. Cardiovascular Services
a. Cardiovascular Telemetry (APC 0209)
    For CY 2011, we proposed to continue to assign CPT code 93229 
(Wearable mobile cardiovascular telemetry with electrocardiographic 
recording, concurrent computerized real time data analysis and greater 
than 24 hours of accessible ECG data storage (retrievable with query) 
with ECG-triggered and patient-selected events transmitted to a remote 
attended surveillance center for up to 30 days; technical support for 
connection and patient instructions for use, attended surveillance, 
analysis and physician prescribed transmission of daily and emergent 
data reports) to APC 0209 (Level II Extended EEG, Sleep, and 
Cardiovascular Studies), with a proposed payment rate of approximately 
$782.
    Comment: Some commenters recommended that CMS assign status 
indicator ``A'' (Services furnished to a hospital outpatient that are 
paid under a fee schedule or payment system other than OPPS) to CPT 
code 93229 in order to make this service nonpayable under the OPPS for 
CY 2011. The commenters stated that there are currently no hospitals 
that can provide the type of constant monitoring that the service 
described by CPT code 93229 requires. For this reason, according to the 
commenters, any claims submitted for CPT code 93229 by hospitals are 
incorrectly coded. The commenters suggested that, if CMS chose not to 
adopt their recommendation and instead chose to continue recognizing 
CPT code 93229 as payable under the OPPS, CMS reconsider the proposed 
assignment of the service to APC 0209. According to the commenters, the 
service described by CPT code 93229 is not similar, clinically or in 
terms of resource utilization, to the other procedures assigned to APC 
0209, in particular, the polysomnography procedures described by CPT 
codes 95810 (Polysomnography; sleep staging with 4 or more additional 
parameters of sleep, attended by a technologist) and 95811 
(Polysomnography; sleep staging with 4 or more additional parameters of 
sleep, with initiation of continuous positive airway pressure therapy 
or bilevel ventilation, attended by a technologist), which are the most 
commonly reported procedures in APC 0209 with the highest number of 
single claims contributing to the APC's median cost. The commenters 
urged CMS to assign CPT code 93229 to the New Technology APC 1513 (New 
Technology--Level XIII ($1,100-$1,200)), with a proposed payment rate 
of approximately $1,150. The commenters stated that, if any hospitals 
were to provide the remote cardiac monitoring service described by CPT 
code 93229, the proposed payment rate for APC 0209 would be less than 
hospitals' costs for providing this service.
    Response: We do not agree with the commenters that we should assign 
status indicator ``A'' to CPT code 93229 in order to make the service 
nonpayable under the OPPS for CY 2011. We typically recognize, for OPPS 
payment purposes, HCPCS codes describing services that could be covered 
by Medicare when provided to hospital outpatients, regardless of 
whether, as the commenters indicated, those services are actually being 
provided by hospitals at the time the OPPS/ASC final rule with comment 
period for the upcoming year is issued. We believe that CPT code 93229 
describes a diagnostic study that could be provided to Medicare 
beneficiaries in the hospital outpatient setting and, therefore, could 
be covered by Medicare. We also do not agree with the commenters' 
statement that there are currently no hospitals that can provide the 
type of constant monitoring that the service described by CPT code 
93229 requires. Our ratesetting methodology is based on claims 
submitted by hospitals, and our final rule claims data show 103 single 
claims and 114 total claims for this service. Based on these claims 
data, we calculated a final median cost for CPT code 93229 of 
approximately $287. (We note that placement of CPT code 93229 in APC 
0209 with higher median cost procedures does not violate the 2 times 
rule because this service is a low

[[Page 71904]]

volume procedure relative to the other procedures in APC 0209.) As to 
whether these claims are miscoded, it is generally not our policy to 
judge the accuracy of hospital coding and charging for purposes of 
ratesetting. New Technology APCs are designed to allow us to provide 
appropriate and consistent payment for designated new procedures that 
are not yet reflected in our claims data (74 FR 60438). Because we 
already have sufficient claims data for CPT code 93229 to assign it to 
a clinically appropriate APC, it would be inappropriate to move it to 
the New Technology APC 1513.
    As we stated in the CY 2010 OPPS/ASC final rule with comment period 
(74 FR 60441), we also continue to believe the service described by CPT 
code 93229 is similar, clinically and in terms of resource utilization, 
to the other procedures assigned to APC 0209 for CY 2011. For example, 
similar to the remote cardiac monitoring service described by CPT code 
93229, the polysomnography procedures described by CPT codes 95810 and 
95811 involve continuous and simultaneous monitoring and recording of 
various physiological and pathophysiological parameters, with 
attendance by a technologist.
    After consideration of the public comments we received, we are 
finalizing our CY 2011 proposal, without modification, to assign CPT 
code 93229 to APC 0209, with a final CY 2011 APC median cost of 
approximately $772.
b. Myocardial Positron Emission Tomography (PET) Imaging (APC 0307)
    For CY 2011, we proposed to assign CPT codes 78459 (Myocardial 
imaging, positron emission tomography (PET), metabolic evaluation), 
78491 (Myocardial imaging, positron emission tomography (PET), 
perfusion; single study at rest or stress), and 78492 (Myocardial 
imaging, positron emission tomography (PET), perfusion; multiple 
studies at rest and/or stress) to APC 0307 (Myocardial Position 
Emission Tomography (PET) Imaging), with a proposed median cost of 
approximately $1,121. For CY 2010, APC 0307 has a national unadjusted 
payment rate of approximately $1,433 based on a CY 2010 OPPS final rule 
median cost of approximately $1,420. At its August 2010 meeting, the 
APC Panel recommended that CMS investigate and report at a future Panel 
meeting on the reason for the decline in median cost for APC 0307 from 
the CY 2010 OPPS to the proposed CY 2011 OPPS.
    Comment: Commenters objected to the proposed decrease in the 
payment rate for myocardial PET under APC 0307. They indicated that 
there is increasing interest in the service due to shortages of 
radioisotopes required for SPECT myocardial perfusion imaging as well 
as developing evidence favoring use of myocardial PET imaging and 
growing expertise in the use of myocardial PET imaging. The commenters 
were concerned that the volatility of the payment rates from one year 
to the next at least since 2006, and the reduction in the payment rate 
from $1,433 in CY 2010 to the $1,099 proposed payment rate for APC 0307 
for CY 2011 will make it hard for hospitals to plan and budget for the 
forthcoming year. The commenters urged CMS to validate the estimated 
costs on the CY 2009 claims data for the limited numbers of hospitals 
reporting CPT codes 78459, 78491, and 78492 (APC 0307) to determine the 
reason for the proposed change in payment. The commenters believed that 
the proposed payment rate is a result of the service largely being 
furnished by a relatively small number of facilities that may be 
driving the observed reduction. One commenter stated that hospitals do 
not always align the costs and charges for the service properly in 
their accounts and, therefore, the CCRs that result from the cost 
reports understate the cost of the services. Another commenter believed 
that hospitals with disproportionately low CCRs may have been 
disproportionately included in the single bills (compared to the total 
volume of service that they furnish). This commenter also stated that 
the median cost for single scans, represented by CPT code 78491 has 
been higher than the median cost for multiple scans, represented by CPT 
code 78492 in 2007, 2009 and 2010 and that the evidence indicates that 
the data on which CMS is basing the payment rate are flawed.
    One commenter urged CMS to average the median costs over a 4-year 
period to provide stability to the payment rates or to assign CPT codes 
78459, 78491, and 78492 to New Technology APC Level XIV so that the 
services would be paid $1,250 for CY 2011. Another commenter stated 
that payment under the MPFS for these services is carrier priced and, 
therefore, has remained stable over the years. The commenter asked that 
CMS use the payment rates being paid under the MPFS as the basis for 
payment under the OPPS for these services. One commenter asked that CMS 
eliminate all single bills from hospitals that have a CCR that is less 
than 0.2 for the calculation of costs for myocardial PET services and 
that CMS establish a cost center and CCR specific to PET that would be 
used to reduce charges for PET to costs. Several commenters asked that 
CMS limit to 10 percent the amount of decrease in the median cost for 
CY 2011 compared to CY 2010 and slowly phase in any reduction beyond 10 
percent. Other commenters asked that CMS set the relative weight for 
payment for APC 0307 using the mean cost rather than the median cost.
    Response: To determine the reason that the median cost declined 
from CY 2010 to CY 2011, we examined the data for the single bills that 
were used to set the median cost for APC 0307 for CY 2010, the proposed 
CY 2011 proposed rule, and the CY 2011 final rule with comment period, 
and we determined that there are multiple reasons that the median cost 
for APC 0307 declined from CY 2010 to CY 2011. In general, when we 
looked the charges and the CCRs for CPT codes 78459, 78491, and 78492 
in APC 0307, we found that the charges either stayed the same or 
declined, that the CCRs used to estimate cost from charges for these 
codes declined, and that the cost of HCPCS code A9555 (Rb82 rubidium), 
the radiopharmaceutical that is used in a myocardial PET scan, also 
declined. Specifically, the median of the line item charge for CPT code 
78492, the highest volume code in APC 0307 (comprising 96 percent of 
single bills used to establish the median cost for APC 0307 in the CY 
2011 final rule claims data) remained virtually unchanged between the 
CY 2010 final rule claims data ($3,859.00) and the CY 2011 final rule 
claims data ($3,858.75). However, the median hospital CCR applicable to 
the line item charge for CPT code 78492, largely derived from cost 
center 4100 (Radiology-Diagnostic), declined from 0.2342 in the CY 2010 
HCRIS data to 0.1708 in the CY 2011 final rule claims data. Moreover, 
the estimated per day cost of rubidium, which is reported with 95 
percent of claims for CPT code 78492, declined from $418.05 per day in 
the CY 2010 final rule claims data to $330.06 in the CY 2011 final rule 
claims data. The hospital CCR used to estimate costs from charges for 
rubidium also is based on cost center 4100. The other two myocardial 
PET codes, CPT codes 78459 and 78491, show similar patterns of charges 
and CCRs, although they account for a much lower percent of single 
bills than CPT code 78492, which causes them to have much less 
influence on the median cost for APC 0307. We believe that the absence 
of increase in the line item charge, the significant decline in the 
applicable CCRs for CPT code 78492, and the significant decline in the 
estimated cost

[[Page 71905]]

of rubidium combine to explain the reduction in the median cost for APC 
0307 for CY 2011 compared to CY 2010. We also used a substantial volume 
of single bills for the APC (3,638 single bills out of 5,732 total 
frequency or approximately 64 percent of the claims for services in APC 
0307). In addition, as is our standard practice, we used the most 
recently submitted cost reports to calculate the CCRs (largely CCRs for 
cost center 4100 that are applied to the charges for these imaging 
services) to estimate the cost.
    We agree that the modest number of hospitals that furnish the 
service (50 in the CY 2010 final rule claims data and 61 in the CY 2011 
final rule claims data) and the addition of claims from 11 hospitals 
that reported the service for the first time in CY 2009 may have some 
bearing on the volatility in the median costs, and we will continue to 
monitor these data in the future. However, it is also possible that 
hospitals are becoming more efficient and that the cost of the service 
is declining as it becomes better established. Our standard methodology 
of estimating costs from charges and creating single claims with a 
unique resource cost for individual services resulted in the use of 64 
percent of the claims for services in APC 0307 for ratesetting; and, we 
used the most current claims and cost report data that are available 
for the estimation of the cost of the service. With regard to the 
comment that the estimated cost for CPT code 78491 has been higher than 
CPT code 78492 in past years, the low sample size and differences in 
the mix of hospitals reporting these codes likely accounts for this 
observation and do not suggest the data are flawed. We also note that 
any difference in estimated cost between single and multiple studies 
would not impact the payment rate as claims for CPT code 78492 drive 
the estimated median cost for this APC.
    Based on our review of the claim charge data and cost report data, 
we believe our estimated cost data for the services in APC 0307 are 
accurate and, therefore, will not adopt an alternative methodology, 
such as commenters requests to limit CCRs to those at 0.2 or above, 
calculating a rolling average based on 4 years of past medians, 
assigning the codes to a new technology APC, limiting the decline in 
the median cost to 10 percent, setting the weight on the mean cost 
rather than the median cost, or setting the payment rate at the amount 
paid to physicians for the service. Similarly, we do not believe that 
the CCRs that are applied to the charges for myocardial PET result in 
flawed estimated costs for the service and that a cost center specific 
to PET services is necessary to provide valid CCRs for PET services.
    After consideration of the public comments we received and 
examination of the reasons for the decline in the median cost for APC 
0307, we are not making any of the adjustments to the median cost that 
commenters request because we believe that the data on which the median 
is calculated are valid and that the median is accurate. Therefore we 
are finalizing a payment rate for APC 0307 for CY 2011 based on the CY 
2011 OPPS final rule median cost of approximately $1,096. We are 
accepting the APC Panel's recommendation and will report the findings 
of our investigation into the reason for the decline in median cost for 
APC 0307 from the CY 2010 OPPS to the proposed CY 2011 OPPS at the 
winter 2011 APC Panel meeting.
c. Cardiovascular Computed Tomography (CCT) (APCs 0340 and 0383)
    The AMA CPT Editorial Panel created the following new codes for 
Cardiovascular Computed Tomography (CCT) services, effective January 1, 
2010: CPT codes 75571 (Computed tomography, heart, without contrast 
material, with quantitative evaluation of coronary calcium), 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 LV cardiac function, RV structure and function and evaluation of 
venous structures, if performed)), and 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). For CY 
2010, we assigned CPT code 75571 to APC 0340 (Minor Ancillary 
Procedures). For CY 2010, we also assigned CPT codes 75572, 75573, and 
75574 to APC 0383 (Cardiac Computed Tomographic Imaging). For CY 2011, 
we proposed to maintain these APC assignments, with a proposed rule 
median cost for APC 0340 of approximately $48 and a proposed rule 
median cost for APC 0383 of approximately $263.
    Comment: One commenter urged CMS to consider using data sources in 
addition to our claims and cost report data to establish the basis for 
payment for CCT because the commenter believed that hospitals have 
reported incorrect or incomplete data for CY 2009 for CCT services. The 
commenter stated that the incorrect data are due to unfamiliarity or 
misinterpretation of Category III CPT codes that were used prior to CY 
2010, and are reflected in the charges on the claims for services in CY 
2009 on which the median costs for CY 2011 will be based. The commenter 
stated that it is developing a data collection to present to CMS to 
substantiate that CCT services are more costly than the CY 2009 data 
that CMS used. The commenter urged CMS to be open to accepting new 
data.
    Response: We have no reason to believe that the median costs we 
have calculated for CPT codes 75571, 75572, 75573, and 75574 do not 
reflect valid estimates of the cost of these services. We proposed to 
continue to assign CPT code 75571 to APC 0340, which had a CY 2011 
proposed rule APC median cost of approximately $46. We also proposed to 
continue to assign CPT codes 75572, 75573, and 75574 to APC 0383, which 
had a proposed rule CY 2011 APC median cost of approximately $254. 
Because CPT codes 75571, 75572, 75573, and 75574 are all new for CY 
2010, we do not have CY 2009 claims data for these codes for CY 2011 
OPPS ratesetting. However, we assigned them to APCs 0340 and 0383 based 
on what we believe to be their clinical and resource similarity to the 
other services in the APC, for which we have claims data.
    Concerning the request that we review external data that may be 
provided in the future, we do review data that the public wishes to 
share with us. However, because the OPPS is a budget neutral relative 
weight based system, we believe that it is critical that the same 
source of data and the same cost estimation process be used to 
establish the median costs for services paid under the OPPS so that the 
payment rates derived from the median costs are correct in relativity 
to one another.
    After considering the public comments we received and reviewing our 
updated CY 2009 claims data, we are continuing to maintain the 
assignment of CPT code 75571 to APC 0340 for CY 2011, for which we have 
calculated a final rule median cost of approximately $46. We also are 
maintaining the assignment of CPT codes 75572, 75573, and 75574 to APC 
0383, for which we have calculated a

[[Page 71906]]

final rule median cost of approximately $254 for CY 2011.
d. Multifunction Cardiogram (APC 0340)
    For CY 2011, we proposed to continue to assign Category III CPT 
code 0206T (Algorithmic analysis, remote, of electrocardiographic-
derived data with computer probability assessment, including report) to 
APC 0340 (Minor Ancillary Procedures), with a proposed payment rate of 
approximately $47.
    Comment: One commenter defined the procedure described by CPT code 
0206T as a multifunction cardiogram. The commenter stated that CMS 
should reconsider the proposed assignment of CPT code 0206T to APC 0340 
because it is not similar, clinically or in terms of resource 
utilization, to the other procedures assigned to APC 0340. The 
commenter stated that the majority of the other procedures in APC 0340 
are minor office procedures that are quickly done and do not require 
data transmission or analysis. According to the commenter, the complex 
data obtained and analyzed by the multifunction cardiogram is 
comparable to the data obtained and analyzed during cardiac stress 
tests or electrocardiograms, and serve as an alternative to 
radionuclide stress testing in the diagnosis of coronary artery 
disease. Based on the use of the multifunction cardiogram and the data 
it generates, the commenter believed that the procedure described by 
CPT code 0206T is most similar clinically to the procedures assigned to 
APC 0100 (Cardiac Stress Tests), which had a proposed payment rate of 
approximately $180. However, in terms of resource utilization, the 
commenter claimed that payment for the multifunction cardiogram should 
be $75 more than the payment for APC 0100. The commenter pointed out 
that CPT code 0206T was new for CY 2010, and, therefore, no CY 2009 
claims data are available for CY 2011 OPPS ratesetting. The commenter 
described a multifunction cardiogram as a non-traditional systems 
analysis tool that creates a mathematical model for the detection of 
myocardial ischemia, and argued that this tool represents a completely 
new technology. The commenter recommended that CMS reassign CPT code 
0206T to APC 1504 (New Technology--Level IV ($200-$300)).
    Response: We appreciate the commenter's submission of this clinical 
information for the procedure described by Category III CPT code 0206T 
for our review. As a new Category III CPT code for CY 2010, we do not 
yet have hospital claims data for the procedure. Category III CPT codes 
are temporary codes that describe emerging technology, procedures, and 
services, and they are created by the AMA to allow for data collection 
for new services or procedures. Under the OPPS, we generally assign a 
payment rate to a new Category III CPT code based on input from a 
variety of sources, including but not limited to, review of resource 
costs and clinical homogeneity of the service to existing procedures, 
information from specialty societies, input from CMS medical advisors, 
and other information available to us. Based on our review of the 
clinical characteristics of CPT code 0206T and the information provided 
by the commenter, we do not believe that we have sufficient clinical or 
cost information to justify a reassignment to a different APC at this 
time. However, the APC Panel Subcommittee for APC Groups and Status 
Indicator (SI) Assignments provides substantive advice to us on the 
correct assignment of services to APCs, and the Subcommittee members 
bring expertise and experience to their review of clinical issues. 
Therefore, we will review the procedure described by the commenter with 
the APC Panel's Subcommittee for APC Groups and Status Indicator (SI) 
Assignments at the winter 2011 APC Panel meeting.
    After review of the public comment we received, we are finalizing 
our CY 2011 proposal, without modification, to continue to assign 
Category III CPT code 0206T to APC 0340. As we indicated earlier, we 
also will review the APC assignment of Category III CPT code 0206T with 
the APC Panel's Subcommittee for APC Groups and SI Assignments at the 
winter 2011 APC Panel meeting.
e. Unlisted Vascular Surgery Procedure (APC 0624)
    For CY 2011, we proposed to continue to assign CPT code 37799 
(Unlisted procedure, vascular surgery) to APC 0624 (Phlebotomy and 
Minor Vascular Access Device Procedures), which had a proposed payment 
rate of approximately $43.
    Comment: One commenter requested that CMS reassign CPT code 37799 
from APC 0624 to APC 0103 (Miscellaneous Vascular Procedures), which 
had a proposed CY 2011 OPPS payment rate of approximately $1,309. The 
commenter stated that CPT code 37799 is most clinically related to the 
services assigned to APC 0103. The commenter further stated that 
continuing to assign CPT code 37799 to APC 0624 would limit patient 
access to new technology and clinically advanced procedures.
    Response: As a matter of policy, which we have stated previously in 
the OPPS final rules with comment period since 2005 (69 FR 65724 
through 65725), HCPCS codes that are unlisted procedures, not otherwise 
classified, or not otherwise specified codes, are assigned to the 
lowest level APC that is appropriate to the clinical nature of the 
service. We also do not consider the costs of these services in 
assessing APCs for 2 times rule violations. We do not believe that the 
assignment of CPT code 37799 to APC 0103, as the commenter suggested, 
would be consistent with our policy to assign HCPCS codes for unlisted 
procedures to the lowest level APC that is appropriate to the clinical 
nature of the service. Because unlisted codes do not describe any 
specific service, we believe that assigning them to the lowest level 
APC is appropriate under the hospital OPPS. Furthermore, we cannot 
assess whether the procedure described by CPT code 37799 is similar to 
procedures in APC 0103 because the CPT code does not describe any 
particular service. We note that the CPT instruction that appears 
underneath CPT code 36592 (Collection of blood specimen using 
established central or peripheral catheter, venous, not otherwise 
specified) refers to the use of unlisted CPT code 37799 for blood 
collection from an established arterial catheter, a very low intensity 
service. We also note that we would assign a service or procedure to a 
more appropriate APC once it is assigned to a specific CPT or HCPCS 
code.
    After consideration of the public comment we received, we are 
finalizing our proposal, without modification, to continue to assign 
CPT code 37799 to APC 0624, which has a final CY 2011 APC median cost 
of approximately $43.
f. Implantable Loop Recorder Monitoring (APC 0691)
    For CY 2011, we proposed to assign CPT code 93299 (Interrogation 
device evaluation(s), (remote) up to 30 days; implantable 
cardiovascular monitor system or implantable loop recorder system, 
remote data acquisition(s), receipt of transmissions and technician 
review, technical support and distribution of results) to APC 0691 
(Level III Electronic Analysis of Devices), with a proposed payment 
rate of approximately $169.
    Comment: Some commenters acknowledged that APC 0691 is a reasonable 
placement for CPT code 93299 based on its proposed rule median cost of 
approximately $274, but questioned the accuracy of the CY 2009 proposed 
rule claims data that CMS used to calculate the median cost. One

[[Page 71907]]

commenter stated that claims data were available for this service for 
the first time for CY 2011 ratesetting and argued that the proposed 
rule median cost for CPT code is too high, pointing out that the 
average physician charge for the same service in CY 2009 was only 
$42.87. In addition, the commenter stated that the OPPS median cost for 
a similar service, described by CPT 93296 (Interrogation device 
evaluation(s), (remote), up to 90 days; single, dual, or multiple lead 
pacemaker system or implantable cardioverter-defibrillator system, 
remote data acquisition(s), receipt of transmissions and technician 
review, technical support and distribution of results) is significantly 
lower than the median cost for CPT code 93299. Therefore, the commenter 
suggested that CPT code 93299 be assigned to APC 0690 (Level I, 
Electronic Analysis of Devices), the same APC to which CPT code 93296 
is assigned.
    Response: The commenters mistakenly cited $274 as the proposed rule 
median cost for CPT code 93299 for CY 2011. The proposed rule 
``median'' cost for CPT code 93299 was approximately $184, while the 
proposed rule ``mean'' cost for CPT code 93299 was approximately $274. 
We understand that the commenters are concerned about differences in 
costs for services provided in different settings (HOPDs versus 
physicians' offices) when the same services are provided to Medicare 
beneficiaries. Even though both settings use the standard CPT code set, 
the costs of providing these services in one setting may not be the 
same as the costs in another setting. The OPPS and the MPFS are 
fundamentally different payment systems with essential differences in 
their payment policies. Specifically, the OPPS is a prospective payment 
system, based on the concept of paying for groups of services that 
share clinical and resource characteristics. Payment is made under the 
OPPS according to prospectively established payment rates that are 
related to the relative costs of hospital resources for services, as 
calculated from claims data and Medicare cost reports. The MPFS is a 
fee schedule that generally provides separate payment for each 
individual service, reflecting the expected typical inputs into these 
services. The OPPS methodology allows hospitals to actively contribute 
on an ongoing basis to the ratesetting process through its annual 
updates and to influence future payment rates for services by 
submitting correctly coded and accurately priced claims for the 
services they provide. According to this methodology, it is generally 
not our policy to judge the accuracy of hospital coding and charging 
for purposes of ratesetting. The CY 2011 final rule median cost for CPT 
code 93299 is approximately $180, calculated from 558 single claims. 
Therefore, we do not agree with commenters that we should assign this 
procedure to APC 0690, which has a final rule median cost of only $35.
    After consideration of the public comments we received, we are 
finalizing our CY 2011 proposal, without modification, to continue to 
assign CPT code 93299 to APC 0691, with a final CY 2011 APC median cost 
of approximately $165.
2. Gastrointestinal (GI) Services: Upper GI Endoscopy (APCs 0141, 0384, 
and 0422)
    For CY 2011, we proposed to reassign four upper gastrointestinal 
endoscopy CPT codes from APC 0141 (Level I Upper GI Procedures) to APC 
0422 (Level II Upper GI Procedures). Specifically, we proposed to 
reassign CPT codes 43216 (Esophagoscopy, rigid or flexible; with 
removal of tumor(s), polyp(s), or other lesion(s) by hot biopsy forceps 
or bipolar cautery), 43242 (Upper gastrointestinal endoscopy including 
esophagus, stomach, and either the duodenum and/or jejunum as 
appropriate; with transendoscopic ultrasound-guided intramural or 
transmural fine needle aspiration/biopsy(s) (includes endoscopic 
ultrasound examination of the esophagus, stomach, and either the 
duodenum and/or jejunum as appropriate), 43510 Gastrotomy; with 
esophageal dilation and insertion of permanent intraluminal tube (e.g., 
celestin or mousseaux-barbin)), and 43870 (Closure of gastrostomy, 
surgical) from APC 0141, with a proposed payment rate of approximately 
$606, to APC 0422, with a proposed payment rate of approximately 
$1,113.
    For CY 2011, we proposed to continue to assign CPT code 43240 
(Upper gastrointestinal endoscopy including esophagus, stomach, and 
either the duodenum and/or jejunum as appropriate; with transmural 
drainage of pseudocyst) to APC 0141, with a proposed payment rate of 
approximately $600. We also proposed to continue to assign CPT code 
43228 (Esophagoscopy, rigid or flexible; with ablation of tumor(s), 
polyp(s), or other lesion(s), not amenable to removal by hot biopsy 
forceps, bipolar cautery or snare technique) to APC 0422 with a 
proposed payment rate of approximately $1,113.
    Comment: Several commenters disagreed with the reassignment of CPT 
codes 43216, 43242, 43510, and 43870 from APC 0141 to APC 0422 because, 
they stated, these procedures are similar to those services that will 
continue to be assigned to APC 0141, specifically CPT codes 43231 
(Esophagoscopy, rigid or flexible; with endoscopic ultrasound 
examination), 43232 (Esophagoscopy, rigid or flexible; with 
transendoscopic ultrasound-guided intramural or transmural fine needle 
aspiration/biopsy(s)), 43237 (Upper gastrointestinal endoscopy 
including esophagus, stomach, and either the duodenum and/or jejunum as 
appropriate; with endoscopic ultrasound examination limited to the 
esophagus), 43238 (Upper gastrointestinal endoscopy including 
esophagus, stomach, and either the duodenum and/or jejunum as 
appropriate; with transendoscopic ultrasound-guided intramural or 
transmural fine needle aspiration/biopsy(s), esophagus (includes 
endoscopic ultrasound examination limited to the esophagus)), and 43259 
(Upper gastrointestinal endoscopy including esophagus, stomach, and 
either the duodenum and/or jejunum as appropriate; with endoscopic 
ultrasound examination, including the esophagus, stomach, and either 
the duodenum and/or jejunum as appropriate). The commenters stated that 
the reassignment to APC 0422 does not maintain the clinical homogeneity 
and resource characteristics of these services.
    Response: Section 1833(t)(9)(A) of the Act requires the Secretary 
to review and revise the 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; the Act further 
requires us to repeat this process on a basis that is not less often 
than annually. As such, we review, on an annual basis, all APC 
assignments for both general appropriateness and for violations of the 
2 times rule and, when necessary, reassign CPT codes to more 
appropriate APCs. Although there was no violation of the 2 times rule 
in APC 0141, based on our review of the CY 2009 proposed rule claims 
data used for ratesetting, we believed that a change in APC assignment 
was necessary for CPT codes 43216, 43242, 43510, and 43870. For CY 
2011, the proposed median cost for APC 0141 was approximately $618. 
However, the median cost for CPT codes 43216, 43242, 43510, and 43870 
were significantly higher. Specifically, CPT code 43216 had a median 
cost of approximately $1,329, CPT code 43242

[[Page 71908]]

had a median cost of approximately $1,074, CPT code 43510 had a median 
cost of approximately $1,471, and CPT code 43870 had a median cost of 
approximately $1,509. Based on the proposed rule median costs, we 
proposed to reassign the four CPT codes to APC 0422, which had a 
proposed APC median cost of approximately $1,136.
    Our review of the CY 2011 final rule claims data indicates that the 
median costs for these CPT codes continue to be more consistent with 
assignment to APC 0422. Specifically, CY 2011 final rule claims data 
shows that CPT code 43216 has a final rule median cost of approximately 
$1,100, CPT code 43242 has a final rule median cost of approximately 
$1,067, CPT code 43510 has a final rule median cost of approximately 
$1,362, and CPT code 43870 has a final rule median cost of 
approximately $1,454. Based on our examination of the CY 2011 OPPS 
final rule claims data, we continue to believe that CPT codes 43216, 
43242, 43510, and 43870 are appropriately placed in APC 0422, which has 
a final rule APC median cost of approximately $1,137, based on clinical 
homogeneity and resource costs.
    Comment: Some commenters specifically disagreed with the APC 
reassignment of CPT code 43242, which describes an ultrasound 
procedure, because, the commenters stated, all the other ultrasound 
procedures would continue to be assigned to APC 0141. The commenters 
believed that the change may result in upcoding that could lead to 
incorrect coding or inappropriate payment, and suggested that, to help 
eliminate upcoding, CMS create a new APC specifically for ultrasound 
upper GI procedures. Specifically, the commenters suggested the 
creation of a new APC whose payment rate would be between the Level I 
Upper GI Procedures APC 0141 and Level II Upper GI Procedures APC 0422. 
The commenters stated that the restructuring of the current two APCs to 
three upper level GI APCs would provide appropriate payment for upper 
GI procedures consistent with CMS' policy of APC restructuring based on 
resource homogeneity, clinical homogeneity, provider concentration, 
frequency of service, and minimal opportunities for upcoding and code 
fragmentation.
    Response: Based on our review of the hospital outpatient claims 
data used for ratesetting for the proposed rule, we determined that a 
change in APC assignment for CPT code 43242 was necessary. As we 
describe above, we continue to believe that the service associated with 
CPT code 43242 is more similar in resource use to those services 
assigned to APC 0422.
    We do not agree with the commenters' suggestion for creating a new 
APC specific to ultrasound upper GI procedures. Based on our medical 
review team's assessment of the clinical characteristics of the 
procedure described by CPT code 43242 and the other procedures assigned 
to APC 0422, and based on the proposed rule and final rule claims data, 
we believe that CPT code 43242 is similar clinically and in terms of 
resource utilization to the upper GI procedures in APC 0422. Therefore, 
for CY 2011, as we proposed, we will reassign CPT code 43242 to APC 
0422. We note that, in all cases, hospitals must report HCPCS codes 
that accurately reflect the services furnished; upcoding in order to 
receive higher payment is considered fraudulent billing.
    Comment: Several commenters requested that CMS reassign CPT code 
43240 from APC 0141 to APC 0384 (GI Procedures with Stents), which had 
a proposed payment rate of approximately $1,876. The commenters 
believed that CPT code 43240 would be appropriately placed in APC 0384 
based on resource and clinical homogeneity to other procedures assigned 
to APC 0384.
    Response: After review of our claims data for both the proposed 
rule and the final rule and consideration of the clinical 
characteristics, we do not agree with the commenters' recommendation to 
reassign CPT code 43240 to APC 0384. We believe that the procedure 
described by CPT code 43240 shares clinical similarities with the other 
upper GI procedures assigned to APC 0141. Furthermore, our CY 2011 
final rule claims data show that the median cost for CPT code 43240 of 
approximately $738 based on 30 single claims (out of a total of 116 
total claims) is substantially dissimilar to the median cost of 
approximately $1,893 for APC 0384. We believe that the final rule 
median cost of approximately $738 is more similar to the median cost of 
approximately $605 for APC 0141. Therefore, for CY 2011, we will 
continue to assign CPT code 43240 to APC 0141.
    Comment: One commenter stated that the proposed payment reduction 
for APC 0422 from $1,635 for CY 2010 to $1,113.48 for CY 2011 will 
restrict Medicare beneficiary access to services that are in APC 0422. 
The commenter further stated that the payment rate for APC 0422 is 
inadequate to pay for the medical device required to perform the 
service described by CPT code 43228.
    Response: Review of our CY 2011 final rule claims data shows that 
the median cost for CPT code 43228 is approximately $1,797 based on 
1,759 single claims (out of a total of 2,199 claims), which is 
relatively similar to the final rule median cost of $1,137 for APC 
0422, which includes many upper GI procedures such as the procedure 
described by CPT code 43228. Therefore, we continue to believe that the 
procedure described by CPT code 43228 is appropriately placed in APC 
0422 based on resource and clinical homogeneity to other procedures 
currently assigned to APC 0422. We note that our cost-finding 
methodology is based on reducing each hospital's charge for its 
services to an estimated cost by applying the most discrete hospital-
specific CCR available for the hospital that submitted the claim. 
Hence, it is the hospital's claims and cost reports that determine the 
estimated costs that are used to calculate the median cost for each 
service and, when aggregated into APC groups, the hospital data is used 
to calculate the median cost for the APC on which the APC payment rate 
is based.
    With regard to the commenter's statement that hospitals will reduce 
access to these services for Medicare beneficiaries if the payment for 
them declines, we note that our regulations at 42 CFR 489.53(a)(2) 
permit CMS to terminate a hospital's provider agreement if the hospital 
places restriction on the persons it will accept for treatment and 
fails either to exempt Medicare beneficiaries from those restrictions 
or to apply them to Medicare beneficiaries the same as to all other 
persons seeking care.
    After consideration of the public comments we received, we are 
finalizing our CY 2011 proposal, without modification, to reassign CPT 
codes 43216, 43242, 43510, and 43870 from APC 0141 to APC 0422, which 
has a final CY 2011 APC median cost of approximately $1,137. We also 
are finalizing our CY 2011 proposal, without modification, to continue 
to assign CPT code 43240 to APC 0141, which has a final CY 2011 APC 
median cost of approximately $605, and to continue to assign CPT code 
43228 to APC 0422, which has a final CY 2011 APC median cost of 
approximately $1,137.
3. Genitourinary Services
a. Radiofrequency Remodeling of Bladder Neck (APC 0165)
    For CY 2011, we proposed to continue to assign Category III CPT 
code 0193T

[[Page 71909]]

(Transurethral, radiofrequency micro-remodeling of the female bladder 
neck and proximal urethra for stress urinary incontinence) to APC 0165 
(Level IV Urinary and Anal Procedures), with a proposed payment rate of 
approximately $1,403. This CPT code has been assigned to APC 0165 since 
it became effective in CY 2009.
    Comment: Some commenters disagreed with the proposed continued APC 
assignment of CPT code 0193T to APC 0165. The commenters believed that 
the proposed payment rate for APC 0165 does not accurately reflect the 
costs incurred by hospitals that perform the procedure described by CPT 
code 0193T, especially because the procedure itself utilizes a costly 
single-use disposable medical device. The commenters suggested the 
assignment of CPT code 0193 to APC 0202 (Level VII Female Reproductive 
Procedures), which had a proposed payment rate of $3,086, because APC 
0202 contains procedures that are very similar to the provedure 
described by CPT code 0193T. Specifically, the commenters indicated 
that CPT code 0193T is similar in clinical characteristics and resource 
costs to HCPCS codes 58356 (Endometrial cryoablation with ultrasonic 
guidance, including endometrial curettage, when performed) and 58565 
(Hysteroscopy, surgical; with bilateral fallopian tube cannulation to 
induce occlusion by placement of permanent implants), which are 
assigned to APC 0202. As an alternative, the commenters recommended the 
reassignment of CPT code 0193T to APC 0168 (Level II Urethral 
Procedures), which had a proposed payment rate of $2,211, because CPT 
code 0193T is also similar clinically and resource costs to CPT code 
51715 (Endoscopic injection of implant material into the submucosal 
tissues of the urethra and/or bladder neck), which are assigned to APC 
0168. The commenters added that the probe used in the procedure 
associated with CPT code 0193T costs $1,095, and, overall, the total 
procedure cost with the probe is approximately $2,600.
    Response: We do not have any CY 2009 hospital claims data for CPT 
code 0193T, which became effective on January 1, 2009. Category III CPT 
codes are temporary codes that describe emerging technology, 
procedures, and services, and these CPT codes were created by AMA to 
allow for data collection for new services or procedures. Under the 
OPPS, we generally assign new Category III CPT codes to clinical APCs 
based on input from a variety of sources, including, but not limited 
to, review of resource costs and clinical homogeneity of the service to 
existing procedures, information from specialty societies, input from 
our medical officers, and other information available to us. Based on 
our review of the clinical characteristics of CPT code 0193T, as well 
as the other procedures assigned to APCs 0165, 0168, and 0202, we 
continue to believe that the most appropriate APC for CPT code 0193T is 
APC 0165, and that the procedures contained in APC 0165 are clinically 
similar to that of CPT code 0193T. As we have stated in the past (74 FR 
60446), we do not agree with the commenters that the procedures 
assigned to APC 0202 that involve fallopian tube cannulation or 
endometrial ablation are sufficiently similar to the procedure 
described by CPT code 0193T based on procedure duration, device 
utilization, use of guidance, or other characteristics to warrant 
reassignment of CPT code 0193T to APC 0202 based on considerations of 
clinical homogeneity. We also do not believe that CPT code 0193T is 
sufficiently similar to CPT code 51715, which involves an endoscopic 
injection of implant material, to warrant reassignment.
    Furthermore, we note that, at the August 2009 APC Panel meeting, a 
presenter requested that the APC Panel recommend that CMS reassign CPT 
code 0193T to either APC 0202 or APC 0168 based on resource 
intensiveness and therapeutic benefit. The presenter claimed that the 
device cost associated with CPT code 0193T is comparable to those 
single-use devices that are used with certain procedures listed under 
APC 0202, specifically those described by CPT codes 58356, 58565, and 
57288. This same presenter indicated that, unlike the medical devices 
used in the procedures that are in APC 0202, the costs of the single-
use medical devices for the procedures in APC 0165 are very minimal. 
After a discussion, the APC Panel recommended that CMS maintain the APC 
assignment of CPT code 0193T to APC 0165.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to continue to assign 
CPT code 0193T to APC 0165, which has a final CY 2011 median cost of 
approximately $1,369.
    For CY 2011, the AMA CPT Editorial Panel decided to delete Category 
III CPT code 0193T on December 31, 2010, and replace it with CPT code 
53860 (Transurethral radiofrequency micro-remodeling of the female 
bladder neck and proximal urethra for stress urinary incontinence) 
effective January 1, 2011. Similar to its predecessor CPT code, the 
replacement CPT code 53860 will be assigned to APC 0165 effective 
January 1, 2011.
b. Percutaneous Renal Cryoablation (APC 0423)
    For CY 2011, we proposed to continue to assign CPT code 50593 
(Ablation, renal tumor(s), unilateral, percutaneous, cryotherapy) to 
APC 0423 (Level II Percutaneous Abdominal and Biliary Procedures), with 
a proposed payment rate of approximately $3,905. This CPT code was a 
new code in CY 2008; however, the same service was previously described 
by CPT code 0135T (Ablation renal tumor(s), unilateral, percutaneous, 
cryotherapy). We note that, for CY 2007, based upon the APC Panel's 
recommendation made at its March 2006 meeting, we reassigned CPT code 
50593 (then CPT code 0135T) from APC 0163 (Level IV Cystourethroscopy 
and other Genitourinary Procedures) to APC 0423, effective January 1, 
2007.
    Comment: One commenter expressed concern that the proposed payment 
rate of approximately $3,905 for CPT code 50593 is inadequate because 
the payment does not accurately account for the costs incurred by 
hospitals in performing the procedure described by this code. The 
commenter argued that the proposed payment rate for CPT code 50593, 
which the commenter considered low, is attributable to claims data that 
do not accurately capture the full costs of CPT code 50593 because only 
57 percent of the claims data used to establish the median cost for 
this procedure were correctly coded, and that the single claims do not 
contain the HCPCS code and associated charge for the required device, 
specifically HCPCS code C2618 (Probe, cryoablation). The commenter 
requested that CMS designate CPT code 50593 as a device-dependent 
procedure, which would require hospitals to submit claims with the 
appropriate device HCPCS code, assign the procedure to its own APC, and 
set the payment rate for that APC based on claims for CPT code 50593 
reported with HCPCS code C2618. The commenter argued that this request 
would be appropriate because the procedure described by CPT code 50593 
cannot be performed without the utilization of the device described by 
HCPCS code C2618. The commenter's analysis concluded that the median 
cost on which payment for CPT code 50593 would be based if the request 
were honored would be approximately $5,598, resulting in a more 
accurate payment rate for the procedure and continued Medicare 
beneficiary access to percutaneous renal cryoablation in the hospital 
outpatient setting. The

[[Page 71910]]

commenter further stated that, although APC 0423 groups similar 
ablation procedures, none of the other procedures in the APC involve 
high-cost devices.
    Response: We continue to believe that CPT code 50593 is 
appropriately assigned to APC 0423 based on clinical and resource 
considerations when compared to other procedures also proposed for 
assignment to APC 0423 for CY 2011. As we stated in the CY 2007 OPPS 
final rule with comment period (71 FR 68049 through 68050), the CY 2008 
OPPS/ASC final rule with comment period (72 FR 66709), the CY 2009 
OPPS/ASC final rule with comment period (73 FR 68611), and the CY 2010 
OPPS/ASC final rule with comment period (74 FR 60444), we initially 
revised the APC assignment for the percutaneous renal cryoablation 
procedure from APC 0163 to APC 0423 in CY 2007 based on the APC Panel's 
recommendation to reassign the procedure to APC 0423. The median costs 
of the four HCPCS codes assigned to APC 0423 for CY 2011 range from 
approximately $3,477 to $4,736, well within the two-fold variation in 
median cost that is permitted by law for an OPPS payment group. Even if 
we were to calculate the median cost for CPT code 50593 using only 
claims that also contain HCPCS code C2618, estimated by the commenter 
to be approximately $5,598 using proposed rule data, the grouping of 
these procedures in the same APC would not violate the 2 times rule.
    We also do not agree that CPT code 50593 should be designated as a 
device-dependent procedure and assigned to its own separate APC. We 
have only 344 single claims (out of a total of 757 claims) for CPT code 
50593 from CY 2009 and, as such, the procedure has the second lowest 
frequency of the four procedures assigned to APC 0423. As we stated in 
the CY 2010 OPS/ASC final rule with comment period (74 FR 60444 through 
60445), we continue to believe this relatively low volume procedure 
should be assigned to a payment group with similar services, as we have 
proposed, in order to promote payment stability and encourage hospital 
efficiency. In addition, we do not identify individual HCPCS codes as 
device-dependent HCPCS codes under the OPPS. Rather, we first consider 
the clinical and resource characteristics of a procedure and determine 
the most appropriate APC assignment. When we determine that we should 
assign a procedure to an APC that is device-dependent, based on whether 
that APC has been historically identified under the OPPS as having very 
high device costs, we then consider the implementation of device edits, 
as appropriate. We again note that the identification of device-
dependent APCs was particularly important in the early years of the 
OPPS when separate pass-through payment for many implantable devices 
expired. At that time, a variety of methodologies to package the costs 
of those devices into procedural APCs was utilized over several years 
to ensure appropriate incorporation of the device costs into the 
procedure payments. At this point in time, hospitals have significantly 
more experience reporting HCPCS codes for packaged and separately 
payable items and services under the OPPS and the payment groups are 
more mature. We believe our standard ratesetting methodology typically 
results in appropriate payment rates for new procedures that utilize 
devices, as well as those that do not use high cost devices. In recent 
years, we have not encountered circumstances for which we have had to 
establish new device-dependent APCs because we were not able to 
accommodate the clinical and resource characteristics of a procedure by 
assigning it to an existing APC (whether device-dependent or non-
device-dependent), and the procedure described by CPT code 50593 is not 
an exception.
    While all of the procedures assigned to APC 0423 require the use of 
implantable devices, for many of the procedures, there are no Level II 
HCPCS codes that describe all of the technologies that may be used in 
the procedures. Therefore, as we indicated in the CY 2010 OPPS/ASC 
final rule with comment period (74 FR 60445), it would not be possible 
for us to develop procedure-to-device edits for all of the CPT codes 
assigned to APC 0423. Under the OPPS, there are many other procedures 
that require the use of implantable devices that, because they are 
assigned to OPPS APCs that are not device-dependent, do not have 
procedure-to-device edits applied, even if those claims processing 
edits would be feasible. We continue to believe that our payments for 
procedures that utilize high cost devices are appropriate for those 
services, even when those services are grouped with other procedures 
that either do not require the use of implantable devices or which 
utilize devices that are not described by specific Level II HCPCS 
codes.
    When reporting CPT code 50593, we expect hospitals to also report 
the device HCPCS code C2618, which is associated with this procedure. 
We also remind hospitals that they must report all of the HCPCS codes 
that appropriately describe the items used to provide services, 
regardless of whether the HCPCS codes are packaged or paid separately. 
If hospitals use more than one probe in performing the procedure 
described by CPT code 50593, we expect hospitals to report this 
information on the claim and adjust their charges accordingly. 
Hospitals should report the number of cryoablation probes used to 
perform the procedure described by CPT code 50593 as the units of HCPCS 
code C2618 which describes these devices, with their charges for the 
probes. Since CY 2005, we have required hospitals to report device 
HCPCS codes for all devices used in procedures if there are appropriate 
HCPCS codes available. In this way, we can be confident that hospitals 
have included charges on their claims for costly devices used in 
procedures when they submit claims for those procedures.
    After consideration of the public comment we received, we are 
finalizing our CY 2011 proposal, without modification, to continue to 
assign CPT code 50593 to APC 0423, which has a final CY 2011 APC median 
cost of approximately $3,855.
4. Nervous System Services
a. Pain-Related Procedures (APCs 0203, 0204, 0206, 0207, and 0388)
    For CY 2011, we proposed to set the payment rates for APCs to which 
pain-related procedures were assigned based on the median costs 
determined under the standard OPPS ratesetting methodology. 
Specifically, we proposed the following CY 2011 payment rates for the 
pain-related APCs: APC 0203 (Level IV Nerve Injections), with a 
proposed payment rate of approximately $908; APC 0204 (Level I Nerve 
Injections), with a proposed payment rate of approximately $182; APC 
0206 (Level II Nerve Injections), with a (proposed payment rate of 
approximately $265); APC 0207 (Level III Nerve Injections), with a 
proposed payment rate of approximately $527), and APC 0388 
(Discography), with a proposed payment rate of approximately $1,702).
    For CY 2011, we proposed to reassign CPT codes 62273 (Injection, 
epidural, of blood or clot patch) and 64408 (Injection, anesthetic 
agent; vagus nerve) from APC 0206 to APC 0207, and to reassign CPT code 
62319 (Injection, including catheter placement, continuous infusion or 
intermittent bolus, not including neurolytic substances, with or 
without contrast (for either localization or epidurography), of 
diagnostic or therapeutic substance(s) (including anesthetic, 
antispasmodic, opioid, steroid, other solution), epidural

[[Page 71911]]

or subarachnoid; lumbar, sacral (caudal)) from APC 0207 to APC 0203. 
Table 24 provides the CPT codes on which we received comments together 
with the CY 2010 APC assignment, the CY 2011 proposed rule APC 
assignment, and the CY 2011 final rule APC assignment for each code.

                     Table 24--Pain-Related Procedures On Which We Received Public Comments
----------------------------------------------------------------------------------------------------------------
                                                                                    Proposed CY    Final CY 2011
         CPT Code                     Long descriptor               CY 2010 APC      2011 APC           APC
----------------------------------------------------------------------------------------------------------------
62273....................  Injection, epidural, of blood or clot            0206            0207            0207
                            patch), 64408 (Injection, anesthetic
                            agent; vagus nerve.
62318....................  Injection, including catheter                    0207            0207            0207
                            placement, continuous infusion or
                            intermittent bolus, not including
                            neurolytic substances, with or
                            without contrast (for either
                            localization or epidurography), of
                            diagnostic or therapeutic
                            substance(s) (including anesthetic,
                            antispasmodic, opioid, steroid,
                            other solution), epidural or
                            subarachnoid; cervical or thoracic.
62319....................  Injection, including catheter                    0207            0203            0203
                            placement, continuous infusion or
                            intermittent bolus, not including
                            neurolytic substances, with or
                            without contrast (for either
                            localization or epidurography), of
                            diagnostic or therapeutic
                            substance(s) (including anesthetic,
                            antispasmodic, opioid, steroid,
                            other solution), epidural or
                            subarachnoid; lumbar, sacral
                            (caudal).
64408....................  Injection, anesthetic agent; vagus               0207            0207            0207
                            nerve.
64410....................  Injection, anesthetic agent; phrenic             0207            0207            0207
                            nerve.
64412....................  Injection, anesthetic agent; spinal              0207            0207            0207
                            accessory nerve.
64480....................  Injection, anesthetic agent and/or               0206            0206            0206
                            steroid, transforaminal epidural;
                            cervical or thoracic, each
                            additional level (List separately in
                            addition to code for primary
                            procedure).
64484....................  Injection, anesthetic agent and/or               0206            0206            0206
                            steroid, transforaminal epidural;
                            lumbar or sacral, each additional
                            level (List separately in addition
                            to code for primary procedure).
64491....................  Injection(s), diagnostic or                      0204            0204            0204
                            therapeutic agent, paravertebral
                            facet (zygapophyseal) joint (or
                            nerves innervating that joint) with
                            image guidance (fluoroscopy or CT),
                            cervical or thoracic; second level
                            (List separately in addition to code
                            for primary procedure).
64492....................  Injection(s), diagnostic or                      0204            0204            0204
                            therapeutic agent, paravertebral
                            facet (zygapophyseal) joint (or
                            nerves innervating that joint) with
                            image guidance (fluoroscopy or CT),
                            cervical or thoracic; third and any
                            additional level(s) (List separately
                            in addition to code for primary
                            procedure).
64493....................  Injection(s), diagnostic or                      0207            0207            0207
                            therapeutic agent, paravertebral
                            facet (zygapophyseal) joint (or
                            nerves innervating that joint) with
                            image guidance (fluoroscopy or CT),
                            lumbar or sacral; single level.
64494....................  Injection(s), diagnostic or                      0204            0204            0204
                            therapeutic agent, paravertebral
                            facet (zygapophyseal) joint (or
                            nerves innervating that joint) with
                            image guidance (fluoroscopy or CT),
                            lumbar or sacral; second level (List
                            separately in addition to code for
                            primary procedure).
64623....................  Destruction by neurolytic agent,                 0207            0207            0207
                            paravertebral facet joint nerve;
                            lumbar or sacral, each additional
                            level (List separately in addition
                            to code for primary procedure).
64626....................  Destruction by neurolytic agent,                 0207            0207            0207
                            paravertebral facet joint nerve;
                            cervical or thoracic, single level.
64627....................  Destruction by neurolytic agent,                 0204            0204            0204
                            paravertebral facet joint nerve;
                            cervical or thoracic, each
                            additional level (List separately in
                            addition to code for primary
                            procedure).
72285....................  Discography, cervical or thoracic,               0338            0338            0338
                            radiological supervision and
                            interpretation.
72295....................  Discography, lumbar, radiological                0338            0338            0338
                            supervision and interpretation.
----------------------------------------------------------------------------------------------------------------

    Comment: One commenter objected to what the commenter stated were 
continuing declines in OPPS payment for CPT add-on codes 64491, 64492, 
64493, 64494, 64480, 64484, 64623, and 64627. The commenter objected 
both to the declines in the payment rates, which they indicate have 
been as much as 50 percent since CY 2007, and to the application of the 
multiple procedure reduction to them which further reduces the payment 
for them by both Medicare and other payers.
    Response: CPT codes 64491, 64492, 64493, and 64494 were new codes 
in CY 2010. Therefore, we do not have CY 2009 claims data on which to 
calculate a median cost for CY 2011 ratesetting purposes. In accordance 
with our standard ratesetting policy, we proposed to assign the new 
codes to the APCs that our clinicians believe are appropriate based on 
their understanding of the nature of the service and the resources that 
are required by services that they believe to be comparable. These 
codes had new interim APC placements for CY 2010 and were open to a 60-
day public comment period. We received no public comments objecting to 
the APC placement of the new codes.
    With regard to the variation in costs for CPT codes 64480, 64484, 
64623, and 64627, as we have stated in the past, OPPS payment rates 
fluctuate based on a variety of factors, including, but not limited to, 
changes in the mix of hospitals billing the services, differential 
changes in hospital charges and costs for the services, and changes in 
the volumes of services reported (74 FR 60447). Therefore, the median 
costs upon which the OPPS payment rates are based vary from one year to 
another. We note that the median costs of all of the APCs to which CPT 
codes 64480, 64484, 64623, and 64627 are assigned increased

[[Page 71912]]

between CY 2009 and CY 2010 and again between CY 2010 and CY 2011. 
Specifically, for CPT codes 64480 and 64484, the median cost of APC 
0206 to which they are assigned increased from approximately $236 in CY 
2009 to approximately $249 in CY 2010 and to approximately $265 based 
on CY 2011 final rule data. In the case of CPT code 64627, the median 
cost of APC 0204 to which CPT code 64627 is assigned increased from 
approximately $161 in CY 2009 to approximately $171 in CY 2010 and to 
approximately $182 based on CY 2011 final rule data. Lastly, for CPT 
code 64623, the median cost of APC 0207 to which the code is assigned 
increased from approximately $463 in CY 2009 to approximately $481 in 
CY 2010 and to approximately $517 based on final rule data for CY 2011. 
We are finalizing the APC assignments for all of these procedures as 
shown in Table 24.
    With regard to the application of the multiple procedure reduction 
for APCs 0204, 0206, and 0207, we continue to believe that it is 
appropriate to reduce the payment for services furnished in these APCs 
by 50 percent when they are furnished with a procedure that is paid at 
the same or a higher rate because we believe that there are significant 
efficiencies associated with providing multiple procedures during the 
same encounter.
    Comment: One commenter objected to the proposed payment rate for 
CPT codes 72285 and 72295, which the commenter indicated is a 73-
percent increase compared to the CY 2007 OPPS payment rate. The 
commenter stated that CPT codes 62290 (Injection procedure for 
discography, each level; lumbar) and 62291 (Injection procedure for 
discography, each level; cervical or thoracic) describe the procedures 
and that CPT codes 72285 and 72295 are paid at an unreasonable rate.
    Response: As we have noted in the past (74 FR 60447), CPT codes 
72285 and 72295, both of which are assigned to APC 0388, are ``T'' 
packaged codes and, as such, are paid separately only if there is no 
separately paid surgical procedure with a status indicator of ``T'' on 
the same claim. When there is a separate payment made for these 
services, the payment is not only payment for the service itself but 
also includes payment for all services reported on the claim that are 
always packaged (that is, those with a status indicator of ``N''). The 
median cost of APC 0388 to which CPT codes 72285 and 72295 are assigned 
for payment when separate payment can be made increased from 
approximately $1,470 in CY 2009 to approximately $1,727 in CY 2010 and 
decreased to approximately $1,654 based on final rule data for CY 2011. 
The median costs reflect the cost of all conditionally and 
unconditionally packaged services on the claim. Payment for CPT codes 
62290 and 62291 is always packaged into payment for the independent, 
separately paid procedures with which these codes are reported because 
we believe that these codes are ancillary and supportive to other major 
separately paid procedures and that they are furnished only as an 
ancillary and dependent part of an independent separately paid 
procedure. Therefore when CPT codes 72285 and 72295 are the only 
separately paid procedures that appear on the claim, payment for CPT 
codes 72285 and 72295 includes the payment for CPT codes 62290 and 
62291.
    Comment: One commenter supported the proposed payment for CPT code 
62273 and 62318.
    Response: We appreciate the commenter's support.
    Comment: One commenter argued that the proposed payment rates for 
CPT codes 64408, 64410, and 64412 are excessive because these codes 
were proposed to be paid at the same level as epidural and neurolytic 
injections. The commenter objected to neurolytic epidural injections 
receiving less payment than the payment proposed for these services. 
The commenter did not identify the CPT codes of concern.
    Response: We proposed to assign CPT codes 64408, 64410, and 64412 
to APC 0207 based on what our clinicians believe to be clinical 
similarity with other procedures in APC 0207 and because these 
procedures have median costs that are similar to the median costs of 
other procedures in APC 0207. We continue to believe that these APC 
assignments are correct and are finalizing the proposed assignments. We 
are unable to compare the clinical characteristics of the services 
without knowing the specific CPT codes of the epidural and neurolytic 
injections of concern to the commenter.
    Comment: One commenter objected to the proposed reassignment of CPT 
code 62319 from APC 0207 to APC 0203. The commenter believed this 
proposed reassignment would result in excessive payment for CPT code 
62319.
    Response: CPT code 62319 is assigned to APC 0207 for CY 2010, with 
a national unadjusted payment rate of approximately $485. We proposed 
to reassign CPT code 62319 from APC 0207 to APC 0203 because the 
proposed rule median cost for CPT code 62319 was approximately $887 
and, therefore, was far more similar to the proposed rule median cost 
of approximately $926 for APC 0203 than it was similar to the proposed 
rule median cost of approximately $537 for APC 0207. In the final rule 
claims data, the median cost for CPT code 62319, which is approximately 
$801, continues to be more similar to the median cost of approximately 
$872 for APC 0203 than to the median cost of approximately $517 for APC 
0207. Therefore, we are assigning CPT code 62319 to APC 0203 for CY 
2011 as we proposed.
    Comment: One commenter objected to the proposed reduction in 
payment for CPT code 64626 from $908.40 for CY 2010 to $527.12 for CY 
2011. The commenter believed that the proposed reduction results from a 
reassignment of the code to a new category.
    Response: CPT code 64626 is assigned to APC 0207 for CY 2010 and 
the national unadjusted payment rate is approximately $485. For CY 
2011, we did not propose to reassign CPT code 64626 as the commenter 
believed. For CY 2011, we proposed to continue to assign CPT code 64626 
to APC 0207, for which we proposed a national unadjusted payment rate 
of approximately $527. Based on our analysis of final rule claims data, 
we are continuing to assign CPT code 64626, which has a final rule 
median cost of approximately $915, to APC 0207, which has a final rule 
median cost of approximately $517. We continue to believe that CPT code 
64626 is clinically similar and requires resources similar to the other 
codes that are assigned to APC 0207. We note that there are no 2 times 
violations in APC 0207.
    After consideration of the public comments we received, we are 
finalizing our CY 2011 proposals, without modification, to pay for CPT 
codes 64491, 64492, 64493, 64494, 64480, 64484, 64623, 64627, 72285, 
72295, 64408, 64410, 64412, 62318, 62319, and 64626 through APCs 0203, 
0204, 0206, 0207, and 0388, as shown in Table 24 above. APC 0203 has a 
CY 2011 final rule median cost of approximately $872, APC 0204 has a CY 
2011 final rule median cost of approximately $182, APC 0206 has a CY 
2011 final rule median cost of approximately $265, APC 0207 has a CY 
2011 final rule median cost of approximately $517, and APC 0388 has a 
CY 2011 final rule median cost of approximately $1,654. We are 
finalizing our proposed assignment of CPT code 62273 to APC 0207. We 
also are finalizing our proposed reassignment of CPT code 62319 from 
APC 0207 to APC 0203, and we are continuing to assign CPT code 64626 to 
APC 0207.

[[Page 71913]]

b. Revision/Removal of Neurostimulator Electrodes (APC 0687)
    For CY 2011, we proposed to continue to assign CPT codes 63661 
(Removal of spinal neurostimulator electrode percutaneous array(s), 
including fluoroscopy, when performed), 63662 (Removal of spinal 
neurostimulator electrode plate/paddle(s) placed via laminotomy or 
laminectomy, including fluoroscopy, when performed), 63663 (Revision, 
including replacement, when performed, of spinal neurostimulator 
electrode percutaneous array(s), including fluoroscopy, when 
performed), and 63664 (Revision, including replacement, when performed, 
of spinal neurostimulator electrode plate/paddle(s) placed via 
laminotomy or laminectomy, including fluoroscopy, when performed) to 
APC 0687 (Revision/Removal of Neurostimulator Electrodes), for which we 
proposed a CY 2011 median cost of approximately $1,527. For CY 2010, 
these CPT codes were assigned to APC 0687, which has a CY 2010 national 
unadjusted payment rate of approximately $1,324. These new codes were 
created effective for services performed on or after January 1, 2010, 
when the AMA CPT Editorial Board deleted CPT code 63660 (Revision or 
removal of spinal neurostimulator electrode percutaneous array(s) or 
plate/paddle(s)) and created new CPT codes 63661, 63662, 63663, and 
63664 to differentiate between revision and removal procedures, and to 
also differentiate between percutaneous leads (arrays) and surgical 
leads (plates/paddles). In accordance with our standard policy, we 
indicated in Addendum B of the CY 2010 final rule that the APC 
assignments for these new CPT codes for CY 2010 were new interim APC 
assignments by showing comment indicator ``NI'' for each new code, and 
we accepted public comment on them. We received public comments both in 
response to the CY 2010 final rule interim APC assignment and in 
response to our CY 2011 proposal to continue to assign the new codes to 
APC 0687. We have incorporated the CY 2010 final rule comments and 
responses into the summary of the comments and responses on our 
proposal to continue to assign the new codes to APC 0687 for CY 2011.
    Comment: Commenters supported the placement of CPT codes 63661 and 
63662 in APC 0687. However, they objected to the placement of CPT codes 
63664 and 63665 in APC 0687 because, they stated, these codes are used 
to report both revision and replacement of neurostimulator electrodes. 
The commenters believed that hospital resources are substantially 
greater when neurostimulator electrodes are being replaced rather than 
revised. They asked that CMS create and require hospitals to use four 
new Level II alpha numeric codes to report these services in place of 
the CPT codes. Specifically, they asked that CMS create Level II alpha 
numeric HCPCS codes for (1) Revision of spinal neurostimulator 
electrode percutaneous arrays; (2) Revision of spinal neurostimualtor 
electrode plate/paddle arrays; (3) Replacement of spinal 
neurostimulator electrode percutaneous arrays; and (4) Replacement of 
spinal neurostimulator electrode plate/paddle arrays. They stated that 
CMS could continue to assign the two new HCPCS codes for revision of 
electrodes to APC 0687, which has a CY 2010 national unadjusted payment 
rate of approximately $1,324. However, the commenters suggested stated 
that CMS assign the new HCPCS codes for replacement of percutaneous 
electrodes to device-dependent APC 0040 (Percutaneous Implantation of 
Neurostimulator Electrodes), which has a CY 2010 national unadjusted 
payment rate of approximately $4,429. They also suggested that CMS 
assign the new HCPCS codes for replacement of plate/paddle electrodes 
to device dependent APC 0061 (Laminectomy, Laproscopy, or Incision for 
Implantation of Neurostimulator Electrodes), which has a CY 2010 
national unadjusted payment rate of approximately $5,832. The 
commenters believed that the creation of the two Level II alpha numeric 
HCPCS codes for replacement of the neurostimulator electrode devices 
and their assignment to device-dependent APCs 0040 and 0061 are 
necessary to ensure that hospitals are paid appropriately for the cost 
of the electrodes that are inserted during a replacement procedure. One 
commenter stated that an analysis of the registration information it 
maintains on individual patients, products, and associated procedures 
from June 2004 to April 2010 shows that 343 lead revisions would 
currently fall into CPT code 63663 or 63664. The commenter further 
stated that, of these 343 cases, 22 percent were revised without a 
device while 78 percent were revised with replacement of a device (the 
commenter provided aggregate information across both CPT codes). The 
commenter indicated that its data support the need to create the new 
Level II alpha numeric HCPCS codes and to assign the codes for 
neurostimulator electrode replacement to APCs 0040 and 0061. The 
commenter stated that CMS has created Level II alpha numeric HCPCS 
codes for the same reason in the past and, therefore, has a precedent 
for creating the Level II alpha numeric HCPCS codes as the commenter 
requested.
    Response: For CY 2011, we are assigning CPT codes 63661, 63662, 
63663, and 63664 to APC 0687 as we proposed, with a CY 2011 final rule 
median cost of approximately $1,480. We do not have CY 2009 claims data 
on the cost of these codes upon which to make an assessment of whether 
there is a meaningful difference between the cost of revising the 
electrodes or replacing them. Therefore, we are not convinced by the 
commenters that the use of the CPT codes for these services and the 
assignment of the codes for revision/replacement of neurostimulator 
electrodes to APC 0687 are inappropriate. Further, the OPPS is a 
payment system of averages in which the payment for a service is based 
on the estimated relative cost of the service, including a range of 
supply and other input costs, as well as other services in the same APC 
that are comparable in resource cost and clinical homogeneity. We 
expect that hospital charges for a service, which are derived from the 
cost of a service, can vary across individual patients. Therefore, we 
expect variability in the estimated cost of a service, across cases in 
a hospital and among hospitals, to be reflected at some level in the 
final APC relative payment weight. Further, hospitals frequently advise 
us that when we create and require that they report Level II alpha 
numeric HCPCS codes to report services for which CPT codes exist, it 
imposes a significant and costly administrative burden on them. Hence, 
we prefer not to create Level II alpha numeric codes unless there is a 
strong need to do so to administer the Medicare program, particularly 
when there are CPT codes that can be used to accurately report the 
service. However, we will examine estimated costs for these four new 
CPT codes in the CY 2010 claims data we will use to model the CY 2012 
proposed rule when that data are available.
    After carefully considering the public comments we received in 
response to the CY 2010 final rule with comment period and the CY 2011 
proposed rule, we are continuing to assign CPT codes 63661, 63662, 
63663, and 63664 to APC 0687, with a CY 2011 final rule median cost of 
approximately $1,480.

[[Page 71914]]

5. Radiation Therapy Services
a. Stereotactic Radiosurgery (SRS) Treatment Delivery Services (APCs 
0065, 0066, 0067, and 0127)
    For CY 2011, we proposed to continue to assign CPT code 77371 
(Radiation treatment delivery, stereotactic radiosurgery (SRS), 
complete course of treatment of cranial lesion(s) consisting of 1 
session; multi-source Cobalt 60 based) to APC 0127 (Level IV 
Stereotactic Radiosurgery, MRgFUS, and MEG), with a proposed payment 
rate of approximately $7,221.
    We also proposed to continue to recognize four existing HCPCS G-
codes that describe linear accelerator-based SRS treatment delivery 
services for separate payment in CY 2011. Specifically, we proposed the 
following: to assign HCPCS code G0173 (Linear accelerator based 
stereotactic radiosurgery, complete course of therapy in one session) 
and HCPCS code G0339 (Image-guided robotic linear accelerator-based 
stereotactic radiosurgery, complete course of therapy in one session or 
first session of fractionated treatment) to APC 0067 (Level III 
Stereotactic Radiosurgery, MRgFUS, and MEG), with a proposed payment 
rate of approximately $3,414; to assign HCPCS code G0251 (Linear 
accelerator-based stereotactic radiosurgery, delivery including 
collimator changes and custom plugging, fractionated treatment, all 
lesions, per session, maximum five sessions per course of treatment) to 
APC 0065 (Level I Stereotactic Radiosurgery, MRgFUS, and MEG), with a 
proposed payment rate of approximately $960; and to assign HCPCS code 
G0340 (Image-guided robotic linear accelerator-based stereotactic 
radiosurgery, delivery including collimator changes and custom 
plugging, fractionated treatment, all lesions, per session, second 
through fifth sessions, maximum five sessions per course of treatment) 
to APC 0066 (Level II Stereotactic Radiosurgery, MRgFUS, and MEG), with 
a proposed payment rate of approximately $2,517.
    Further, we proposed to continue to assign SRS CPT codes 77372 
(Radiation treatment delivery, stereotactic radiosurgery (SRS) 
(complete course of treatment of cerebral lesion(s) consisting of 1 
session); linear accelerator based) and 77373 (Stereotactic body 
radiation therapy, treatment delivery, per fraction to 1 or more 
lesions, including image guidance, entire course not to exceed 5 
fractions) status indicator ``B'' (Codes that are not recognized by 
OPPS when submitted on an outpatient hospital Part B bill type (12x and 
13x)) under the OPPS, to indicate that these CPT codes are not payable 
under the OPPS.
    Comment: One commenter urged CMS to reevaluate the APC assignments 
for the linear accelerator-based (LINAC) and robotic Cobalt-60 based 
stereotactic radiosurgery (r-SRS) HCPCS codes, given the recent 
introduction of a frameless Cobalt-60 system that can be used to 
deliver treatments in multiple sessions. The commenter stated that no 
clinical data exist to support the need for differential payments for 
LINAC-based and Cobalt-60 r-SRS procedures. The commenter further 
explained that current medical literature cites no difference in 
clinical effectiveness for one system over another, and stated that 
treatment with a Cobalt-60 system, when compared to LINAC-based system, 
does not lead to superior outcomes. The commenter recommended that CMS 
assign HCPCS code G0339 and CPT code 77371 to the same APC, thereby 
establishing payment parity for the complete course of treatment for 
intracranial and other head and neck r-SRS, regardless of equipment, 
energy source, or whether a frame is used in the procedure. In 
addition, the commenter argued that this APC reevaluation is necessary 
to protect the Medicare program and beneficiaries from excessive costs 
associated with Cobalt-60 system, when both the LINAC-based and Cobalt-
60 systems are similar in clinical homogeneity and resource costs.
    Response: We disagree with the comment's argument that the LINAC-
based and Cobalt-60 based systems have similar resource costs. For the 
past several years, we have seen resource differences based on the 
median costs for the LINAC-based and Cobalt-60 based systems, and 
analysis of our claims data show that the median costs for LINAC-based 
and Cobalt-60 SRS procedures vary significantly. Since CY 2007, when 
CPT code 77371 became effective, our claims data have shown 
consistently a median cost of more than $7,000 for the service 
associated with the Cobalt-60 system, which is higher than the median 
cost of approximately $3,500 for the LINAC-based system (described by 
HCPCS G-code G0339).
    Analysis of the updated CY 2009 claims data used for this final 
rule with comment period indicates that the code-specific median costs 
for the LINAC-based and Cobalt-60 systems continue to vary. Our updated 
claims data on the hospital outpatient claims available for CY 2011 
ratesetting show a median cost of approximately $7,580 for CPT code 
77371 based on 529 single claims (out of a total of 4,336 claims), 
which is significantly higher than the median costs associated with 
HCPCS codes G0173, G0251, G0339, and G0340. Specifically, our claims 
data indicate a median cost of approximately $2,960 for HCPCS code 
G0173 based on 627 single claims (out of a total of 1,460 claims), a 
median cost of approximately $964 for HCPCS code G0251 based on 7,005 
single claims (out of a total of 7,739 claims), a median cost of 
approximately $3,510 for HCPCS code G0339 based on 5,762 single claims 
(out of a total of 7,735 claims), and a median cost of approximately 
$2,478 for HCPCS code G0340 based on 18,539 single claims (out of a 
total of 18,713 claims). Because the median costs of HCPCS code G0339 
and CPT code 77371 vary significantly, we do not believe it would be 
appropriate to provide OPPS payment through a single APC for these r-
SRS treatment delivery services in CY 2011. We continue to believe that 
APC 0127 is an appropriate APC assignment for CPT code 77371, and, 
similarly, that APC 0067 is an appropriate APC assignment for HCPCS 
code G0339 based on consideration of the clinical characteristics 
associated with these procedures and based on the median costs for 
these services calculated from the most recently available hospital 
outpatient claims and cost report data. Consistent with our current 
policy to annually assess the appropriateness of the APC assignments 
for all services under the hospital OPPS, we will continue to monitor 
our claims data for the SRS treatment delivery services in the future.
    As we have stated in the past (74 FR 60456), the OPPS is a 
prospective payment system, where APC payment rates are based on the 
relative costs of services as reported to us by hospitals according to 
the most recent claims and cost report data as described in section 
II.A. of this final rule with comment period. The 2 times rule 
specifies that the median cost of the highest cost item or service 
within a payment group may be no more than 2 times greater than the 
median cost of the lowest cost item or service within the same group. 
Based on the 2 times rule, HCPCS code G0339 and CPT code 77371 could 
not be assigned to the same APC and, because hospitals continue to 
report very different costs for these services, we believe it is 
appropriate to maintain their assignments to different payment groups 
for CY 2011. As a matter of payment policy, the OPPS does not set 
payment rates for services based on considerations of clinical 
effectiveness. Furthermore, in accordance with the statute, we budget 
neutralize the OPPS each year in the annual update so that projected 
changes in spending for

[[Page 71915]]

certain services are redistributed to payment for other services.
    After consideration of the public comments we received, we are 
finalizing our CY 2011 proposals, without modification, to continue to 
assign CPT code 77371 to APC 0127, which has a final CY 2011 APC median 
cost of approximately $7,580, and to continue to assign HCPCS code 
G0339 to APC 0067, which has a final CY 2011 APC median cost of 
approximately $3,372.
    Comment: One commenter recommended that CMS redefine HCPCS G-code 
G0340 to include subsequent fractions delivered with both robotic 
LINAC-based and Cobalt-60 based systems because r-SRS can now be 
performed with the Cobalt-60 system based over 2 to 5 fractions.
    Response: Earlier this year, we met with stakeholders to discuss 
this topic, particularly with respect to the OPPS payment assignment of 
the LINAC-based and Cobalt-60 SRS procedures. At this meeting we were 
informed of recent technological developments that existed in Europe 
that utilizes the Cobalt-60 systems to deliver treatments over multiple 
fractions. We were informed that, while the technology currently exists 
in Europe, it would eventually migrate to the United States. Because 
only one CPT code exists currently that describes a procedure that 
utilizes a Cobalt-60 system, we believe that stakeholders would seek 
guidance from the AMA CPT Editorial Panel on the appropriate reporting 
of this service if it is being provided in the United States in a 
manner that makes the current CPT coding insufficient or inappropriate. 
Specifically, CPT code 77371 is defined as ``Radiation treatment 
delivery, stereotactic radiosurgery (SRS), complete course of treatment 
of cranial lesion(s) consisting of 1 session; multi-source Cobalt 60 
based,'' and does not describe a Cobalt-60 based multi-fraction 
service.
    We believe that HCPCS G-code G0340 appropriately describes the 
service associated with a LINAC-based system that is delivered in 
multiple fractions. We do not agree that there is a programmatic need 
to modify the descriptor for HCPCS G-code G0340 due to potential 
changes in the Cobalt-60 system. We remind hospitals that HCPCS code 
G0340 describes a multi-fraction treatment delivery that utilizes a 
LINAC-based SRS technology.
    Comment: One commenter requested that CMS finalize the proposed APC 
and status indicator assignments for HCPCS codes G0173, G0251, G0339, 
and G0340 for CY 2011 and the proposed assignment of status indicator 
``B'' to CPT codes 77372 and 77373. The commenter also recommended that 
CMS revise the code descriptors for HCPCS code G0173, G0251, G0339, and 
G0340 to distinguish between robotic and non-robotic gantry-based SRS 
systems. Based on analysis of claims data for HCPCS codes G0339 and 
G0340, the commenter found that 33 percent of the claims submitted 
during CY 2009 were paid to hospitals without image-guided robotic SRS 
systems. The commenter suggested specific code descriptor changes for 
the four HCPCS G-codes to ensure submission of correctly coded claims. 
Alternatively, the commenter requested that CMS provide guidance on the 
reporting of the existing SRS HCPCS G-codes if no change is made to the 
HCPCS code descriptors.
    Response: These HCPCS G-codes for SRS have been in effect for 
several years and, based on questions brought to our attention by 
hospitals, we have no reason to believe that hospitals are confused 
about the reporting of these codes. Moreover, based on our analysis of 
the hospital outpatient claims data that we use for ratesetting, we see 
resource differences reflected in the median costs of the four HCPCS G-
codes that are reasonably consistent with our expectations for 
different median costs for the services based on the current code 
descriptors. We believe it would be confusing to hospitals if we were 
to revise the code descriptors for HCPCS codes G0173, G0251, G0339, and 
G0340 at this point in time and could lead to instability in our median 
costs and inaccurate payments for some services. Therefore, we believe 
that modifying the G-code descriptors is not necessary for us to 
continue to provide appropriate payment for the services they describe. 
Further, we have provided instruction on the reporting of these SRS 
codes in Chapter 4, Section 200.3 of the Medicare Claims Processing 
Manual of the Internet-Only Manual.
    After consideration of the public comments we received, we are 
finalizing our CY 2011 proposals, without modification, to maintain the 
existing CY 2010 APC assignments for the SRS HCPCS codes for CY 2011. 
Specifically, we are continuing to assign HCPCS G-codes G0173 and G0339 
to APC 0067, which has a final CY 2011 APC median cost of approximately 
$3,372; HCPCS G-code G0251 to APC 0065, which has a final CY 2011 APC 
median cost of approximately $967; HCPCS G-code G0340 to APC 0066, 
which has a final CY 2011 APC median cost of approximately $2,478; and 
CPT code 77371 to APC 0127, which has a final CY 2011 APC median cost 
of approximately $7,580. In addition, we are finalizing our proposals, 
without modification, to continue to assign CPT codes 77372 and 77373 
to status indicator ``B'' under the OPPS.
b. Proton Beam Therapy (APCs 0664 and 0667)
    For CY 2011, we proposed to continue to assign CPT codes 77520 
(Proton treatment delivery; simple, without compensation) and 77522 
(Proton treatment delivery; simple, with compensation) to APC 0664 
(Level I Proton Beam Radiation Therapy), which had a proposed payment 
rate of approximately $902. We also proposed to continue to assign CPT 
codes 77523 (Proton treatment delivery; intermediate) and 77525 (Proton 
treatment delivery; complex) to APC 0667 (Level II Proton Beam 
Radiation Therapy), which had a proposed payment rate of approximately 
$1,180.
    Comment: Several commenters supported the proposed payments for the 
proton beam treatment CPT codes. However, one commenter expressed 
concern over the proposed payment rates and requested an explanation on 
the fluctuation in payments for CPT codes 77520, 77522, 77523, and 
77525 for the past 6 years, which the commenter displayed in a 
submitted table.
    Another commenter expressed concern with the reduction in the 
relative weights for APCs 0664 and 0667. The commenter indicated that 
it understood that APC 0664 is exempt from the 2 times rule violation 
based on the list of APCs that appeared in Table 16 of the CY 2011 
OPPS/ASC proposed rule, but stated that the decrease in the relative 
weights would result in decreased payments for these four CPT codes.
    Response: In accordance with section 1833(t)(2)(B) of the Act and 
Sec.  419.31 of the regulations, we annually review the items and 
services within an APC group to determine, with respect to 
comparability of the use of resources and clinical homogeneity. The 
payment rates, including the relative weights, set annually for these 
services are based on review of the claims data used for ratesetting. 
For the CY 2011 update, the payment rates for APCs 0664 and 0667 are 
based on data from claims submitted during CY 2009 according to the 
standard OPPS ratesetting methodology. Specifically, we used 11,963 
single claims (out of 12,995 total claims) from CY 2011 proposed rule 
claims data (and we used 11,963 single claims (out of 12,995 total 
claims) from CY 2011 final rule claims data) to calculate the median 
cost upon which the CY 2011 payment rate for APC 0664 is based. In 
addition,

[[Page 71916]]

we used 2,799 single claims (out of 3,081 total claims) from CY 2011 
proposed rule claims data (and we used 2,799 single claims (out of 
3,081 total claims) from CY 2011 final rule claims data) to calculate 
the median cost for APC 0667.
    For CY 2011, we are setting the final payment rate for proton beam 
therapy based on median costs of approximately $1,021 for APC 0664 and 
approximately $1,335 for APC 0667. These median costs result in modest 
declines in the final CY 2011 payment rates for proton beam therapy 
compared to the CY 2010 final payment rates. We note that our cost-
finding methodology is based on reducing each hospital's charge for its 
services to an estimated cost by applying the most discrete hospital-
specific CCR available for the hospital that submitted the claim. 
Hence, it is the hospital's claims and cost reports that determine the 
estimated costs that are used to calculate the median cost for each 
service and, when aggregated into APC groups, the hospital data are 
used to calculate the median cost for the APC on which the APC payment 
rate is based.
    After consideration of the public comments we received, we are 
finalizing our CY 2011 proposal, without modification, to pay for 
proton beam therapy through APCs 0664 and 0667, with payment rates 
based upon the most current claims and cost report data for these 
services. Specifically, we will continue to assign CPT codes 77520 and 
77522 to APC 0664, with a final CY 2011 APC median cost of 
approximately $1,021, and CPT codes 77523 and 77525 to APC 0667, with a 
final CY 2011 APC median cost of approximately $1,335.
c. Device Construction for Intensity Modulated Radiation Therapy (APC 
0303)
    For CY 2011, we proposed to continue to assign CPT code 77338 
(Multi-leaf collimator (MLC) device(s) for intensity modulated 
radiation therapy (IMRT), design and construction per IMRT plan) to APC 
0303 (Treatment Device Construction), with a proposed payment rate of 
approximately $198. CPT code 77338 is a new code for CY 2010 and, 
therefore, there are no claims for it in the CY 2009 claims data on 
which we are basing the CY 2011 OPPS payment rates. In CY 2009, the 
services represented by CPT code 77338 were reported using CPT code 
77334 (Treatment devices, design and construction; complex (irregular 
blocks, special shields, compensators, wedges, molds or casts)). For CY 
2010, CPT code 77338 is assigned to APC 0303, the same APC to which CMS 
assigned CPT code 77334. The CY 2010 OPPS payment rate for APC 0303 is 
approximately $191.
    Comment: Commenters objected to the assignment of CPT code 77338 to 
APC 0303 for CY 2010 and to the proposal to continue to assign CPT code 
77338 to APC 0303 for CY 2011. The commenters stated that CPT code 
77338 is used to report all devices that are necessary for an intensive 
modulated radiation therapy (IMRT) treatment and that a typical 
treatment requires 3 to 9 devices, whereas CPT code 77334 is used to 
report a single device. Therefore, the commenters believed that the 
payment for one unit of 77338 should not be paid the same amount as one 
unit of CPT code 77334. The commenters stated that there are typically 
two courses of IMRT treatment furnished to patients; hence, before the 
creation of CPT code 77338, hospitals reported and were paid for 3 to 9 
units of CPT code 77334 for each of the two treatments, resulting in an 
approximate total payment for all devices required for two courses of 
treatment ranging from roughly $1,500 to $3,500. The commenters stated 
that assignment of CPT code 77338 to the same APC as CPT code 77334 
results in an inappropriate reduction in payment for the creation of 
the devices that are necessary to furnish IMRT. One commenter asked CMS 
to use the first 6 months of CY 2010 claims data, which would contain 
charges for CPT code 77338, to establish an appropriate payment rate 
for CPT code 77338.
    Response: We examined our updated claims data to determine how many 
units of CPT code 77334 were reported in CY 2009 for each Medicare 
beneficiary who also received IMRT services. We found that the median 
number of units of CPT code 77334 that were furnished to patients who 
received IMRT in CY 2009 was eight. This finding is consistent with the 
commenters' statement that hospitals furnish three to nine devices per 
each of two IMRT treatments (a range of 6 to 18 devices across two 
treatments in a year). We then developed a simulated cost for one unit 
of CPT code 77338 by using the frequency information we acquired from 
the study and the median cost of one unit of CPT code 77334. We assumed 
that if a total of eight devices were typically furnished across two 
treatments, then approximately four devices were furnished for each 
treatment. We assumed that the cost of each device for IMRT would be 
approximately the same as a single unit of CPT code 77334 because one 
unit of CPT code 77334 represents one device. CPT code 77334 has a 
final rule median cost of approximately $198. Therefore, we estimated 
that the cost of the devices that would be reported by one unit of CPT 
code 77338 would be approximately $792 (4 devices at an estimated per 
device cost of $198 each). Using this hypothetical cost per unit for 
CPT code 77338, we determined that CPT code 77338 would most 
appropriately be assigned to APC 0310 (Level III Therapeutic Radiation 
Treatment Preparation), which has a final rule median cost of 
approximately $917. We chose not to use our estimated per unit cost for 
CPT code 77338 in the calculation of the CY 2011 median cost for APC 
0310 because our estimated cost is not derived from claims and cost 
report data according to our standard process, and because we made 
several assumptions modeling a representative cost, such as whether the 
per unit cost for CPT code 77334 for treatment devices specific to IMRT 
patients was an appropriate proxy for the cost of each of the multiple 
devices, all of which would be reported by one unit of CPT code 77338. 
Moreover, we did not consider the other option that commenters 
recommended, using CY 2010 claims data to calculate a median cost for 
CPT code 77338, because costs estimated from CY 2010 claims would not 
be consonant with costs estimated from claims in CY 2009. Our standard 
methodology is to use the claims from the same year for all services to 
set the relative weights for payment under the OPPS. We believe that 
using claims from different years for different services has the 
potential to skew the relativity of the median costs on which the OPPS 
relative payment weights are based.
    After consideration of the public comments we received and 
examination of updated CY 2009 claims data, we are reassigning CPT code 
77338 from APC 0303 to APC 0310 for CY 2011. For CY 2012 OPPS 
ratesetting, we will have claims data for CPT code 77338. For CY 2012, 
we plan to use our standard cost estimation process using the CY 2010 
claims data and the most recent cost report data to establish a median 
cost for CPT code 77338. In addition, we will assess whether placement 
of CPT code 77338 in APC 0310 remains appropriate for the CY 2012 OPPS.
d. High Dose Rate Brachytherapy (APC 0313)
    For CY 2011, we proposed to include four CPT codes in APC 0313 
(Brachytherapy). Specifically, APC 0313 would contain CPT codes 77785 
(Remote afterloading high dose rate radionuclide brachytherapy; 1 
channel), 77786 (Remote afterloading high dose rate radionuclide 
brachytherapy; 2-12

[[Page 71917]]

channels), 77787 (Remote afterloading high dose rate radionuclide 
brachytherapy; over 12 channels), and 0182T (High dose rate electronic 
brachytherapy, per fraction). For the CY 2011 OPPS, the proposed APC 
median cost of APC 0313 was approximately $724.
    Comment: One commenter objected to the proposed payment rate of 
approximately $724 for APC 0313 because it would be a reduction in 
payment from the CY 2010 payment rate of $777.55. The commenter 
questioned whether there was an error in the data or calculation of the 
proposed median cost for APC 0313. The commenter noted that, for the CY 
2010 calculation of the median cost for APC 0313, deleted CPT code 
77784 (Remote afterloading high intensity brachytherapy; over 12 source 
positions or catheters) had 7,577 total claims, while currently active 
CPT code 77787, which the commenter believes is analogous to CPT code 
77784 in complexity, had only 1,899 CY 2010 proposed rule total claims. 
The commenter stated that, for the CY 2010 OPPS, deleted CPT code 
77784, the most complex level of high intensity brachytherapy, 
accounted for 23.4 percent of the single bills used to calculate the 
median cost for APC 0313, while the most analogous currently active 
code, CPT code 77787, accounted for only 4.4 percent of the claims used 
to calculate the CY 2011 proposed median cost. The commenter suggested 
that the lower percentage of single frequency claims for CPT code 
77787, which had a proposed rule median cost of approximately $812, 
resulted in a lower median cost for APC 0313. The commenter also noted 
that less than half of the total claims were used for CPT codes 77785 
and 77786 in the proposed rule median cost calculations. The commenter 
asked that CMS check for possible errors in the calculation of the 
median cost and the payment rate for APC 0313 and that CMS closely 
monitor this APC.
    Response: We have reviewed the CY 2011 final rule claims data for 
APC 0313, and we have not identified flaws in the data or the process 
we used to calculate the median cost of APC 0313. The CY 2011 final 
rule median cost for APC 0313 is approximately $693, and the median 
cost for CPT code 77785 is approximately $654 based on 11,075 single 
bills (out of a total frequency of 19,799 for CPT code 77785). For CPT 
code 77786, the median is approximately $748 based on 4,164 single 
bills (out of a total frequency of 9,421). For CPT code 77787, the 
median cost is approximately $811 based on 687 single bills (out of a 
total frequency of 2,149). For CPT code 0182T, the median cost is 
approximately $994 based on 101 single bills (out of a total frequency 
of 334).
    The commenter is correct that the relative weights and median costs 
of the procedures that make up APC 0313 influence the overall APC 
median cost. However, some fluctuation in median costs across APCs is 
always present due to changes in hospital charging practices and costs. 
In addition, the CY 2011 median costs are based on CY 2009 claims. CPT 
codes 77785, 77786, and 77787 were new for CY 2009. Therefore, the 
charge for each of these codes represents a charge for a different 
combination of services than was true for the charges of the four CY 
2008 predecessor codes on which the median costs for the CY 2010 OPPS 
were based. Hence, it is not clear to us that the medians from CY 2010 
(based on charges for the four CY 2008 predecessor codes) and CY 2011 
(based on charges for the first year for the new codes) can be 
appropriately compared. We have reviewed the claims and cost report 
data for APC 0313, and have found nothing that causes us to believe 
that the median costs at either the CPT code or APC level for APC 0313 
are flawed.
    After consideration of the public comments we received and analysis 
of our CY 2011 final rule claims data, we are finalizing our proposal 
to base the APC 0313 payment rate on its CY 2011 final rule median 
cost, which is approximately $693.
e. Electronic Brachytherapy (APC 0313)
    The AMA CPT Editorial Panel created CPT code 0182T (High dose rate 
electronic brachytherapy, per fraction) effective July 1, 2007. We 
assigned CPT code 0182T to New Technology APC 1519 from July 1, 2007 
through December 31, 2010, with a payment rate of $1,750. For CY 2010, 
we assigned CPT code 0182T to APC 0313 (Brachytherapy) because the CY 
2010 OPPS final rule median cost for CPT code 0182T was approximately 
$506 and the final rule median cost for APC 0313, which contained 
services that we believed were clinically similar, was approximately 
$770. For CY 2011, we proposed to retain CPT code 0182T in APC 0313, 
with a proposed payment rate of approximately $710.
    Comment: Several commenters recommended that CPT code 0182T be 
removed from APC 0313 and assigned its own APC. The commenters stated 
there are significant clinical differences between CPT code 0182T and 
the remaining three high dose rate (HDR) service codes in APC 0313: CPT 
code 77785 (Remote afterloading high dose rate radionuclide 
brachytherapy, 1 channel); CPT code 77786 (Remote afterloading high 
dose rate radionuclide brachytherapy, 2-12 channels); and CPT code 
77787 (Remote afterloading high dose rate radionuclide brachytherapy, 
over 12 channels). However, the commenters did not provide a clinical 
rationale to support their statement. The commenters further stated 
that the total payment for CPT code 0182T is dissimilar to the total 
payment for CPT codes 77785, 77786, and 77787. They stated that CPT 
codes 77785, 77786, and 77787 are proposed to be paid both the APC 0313 
payment rate, plus the payment rate for the separately paid 
brachytherapy source code C1717 (Brachytherapy source, non-stranded, 
High Dose Rate Iridium-192, per source), which had a proposed CY 2011 
payment rate of approximately $220, thereby resulting in a total 
payment of approximately $949 for these codes. In contrast, the 
commenters stated that CMS does not allow providers to report the 
separate costs of the electronic brachytherapy source, but instead 
proposed to pay only the APC 0313 national unadjusted payment rate of 
approximately $710. The commenters believed that CMS should permit 
providers to capture the cost of the electronic brachytherapy source by 
establishing a separate APC for CPT code 0182T based on the median cost 
of CPT code 0182T alone.
    Response: We believe the clinical characteristics of high dose rate 
brachytherapy and electronic brachytherapy are similar because both use 
brachytherapy to treat malignancies. Moreover, we do not agree that 
there is a need for an additional APC specific to electronic 
brachytherapy to ``capture the cost of the electronic brachytherapy 
source'' because there is no separate source in the case of electronic 
brachytherapy. The costs of electronic brachytherapy are included in 
the fractionated costs of the procedure.
    The CY 2011 final rule median cost for CPT code 0182T of 
approximately $994, based on 101 single service claims, falls well 
within two times the APC 0313 median cost. The CY 2011 final rule APC 
0313 median is approximately $693, based on 16,027 single bills for CPT 
codes 77785, 77786, 77787, and 0182T, which are assigned to APC 0313. 
We believe that CPT code 0182T is appropriately placed in APC 0313 for 
both resource and clinical reasons, as discussed above. We note that, 
in a system of averages, such as the OPPS, we expect that the cost of 
some services will fall above the APC median

[[Page 71918]]

cost and that the cost of other services will fall below the APC median 
cost.
    After consideration of the public comments we received and analysis 
of the CY 2011 OPPS final rule claims data, we are assigning CPT code 
0182T to APC 0313 for CY 2011. Based on the CY 2011 final rule claims 
data, we determined a median cost for CPT code 0182T of approximately 
$994 and a median cost for APC 0313 of approximately $693.
f. Tumor Imaging (APC 0406 and 0414)
    For CY 2011, we proposed to assign CPT codes 78805 
(Radiopharmaceutical localization of inflammatory process; limited 
area) and 78806 (Radiopharmaceutical localization of inflammatory 
process; whole body) to APC 0414 (Level II Tumor/Infection Imaging), 
with a proposed rule APC median cost of approximately $497. We proposed 
to assign CPT code 78807 (Radiopharmaceutical localization of 
inflammatory process; tomographic (SPECT)) to APC 0406 (Level I Tumor/
Infection Imaging), with a proposed rule APC median cost of 
approximately $298. For CY 2011, CPT code 78805 had a proposed median 
cost of approximately $545; CPT code 78806 had a proposed median cost 
of approximately $561; and CPT code 78807 had a proposed median cost of 
approximately $442.
    Comment: One commenter asked CMS to restructure APCs 0406 and 0414 
to separate tumor imaging procedures from infection imaging procedures 
because the respective procedures use different drugs and resources. 
Specifically, the commenter recommended that CMS create a new APC for 
CPT codes 78805, 78806, and 78807 that would be for infection imaging.
    Response: We continue to believe that tumor imaging and infection 
imaging are sufficiently clinically similar because they are all 
imaging services to justify the inclusion of CPT codes 78805, 78806, 
and 78807, which are for infection imaging, in APC 0414 with tumor 
imaging procedures. Therefore, we are not creating an APC that is 
limited to CPT codes 78805, 78806, and 78807 for infection imaging. 
However, after review of the CY 2011 OPPS final rule median costs for 
CPT codes 78805, 78806, and 78807, we believe that it is appropriate to 
reassign CPT code 78807 to APC 0414 (instead of APC 0406) for CY 2011 
because the median cost for CPT code 78807 is similar to the median 
cost for CPT codes 78805 and 78806, which are also assigned to this 
APC. Based on the CY 2011 OPPS final rule claims data, CPT code 78805 
has a median cost of approximately $519, CPT code 78806 has a median 
cost of approximately $539, and CPT code 78807 has a final rule median 
cost of approximately $428.
    At its February 17-18, 2010 meeting, the APC Panel recommended that 
CMS analyze claims data for the tumor imaging APCs in terms of the 
average, median, and range of costs of packaged diagnostic 
radiopharmaceuticals. We are accepting the APC Panel's recommendation 
and will present the statistics regarding the use of diagnostic 
radiopharmaceuticals in tumor imaging at a forthcoming APC Panel 
meeting.
    After consideration of the public comments we received and analysis 
of the final rule cost data for CPT codes 78805, 78806, and 78807, for 
CY 2011, we are retaining CPT codes 78805 and 78806 in APC 0414; we are 
assigning CPT code 78807 to APC 0414 (instead of APC 0406 as proposed); 
and we are basing the payment for APC 0414 on the CY 2011 final rule 
median cost of approximately $470.
6. Other Services
a. Skin Repair (APCs 0134 and 0135)
    In the CY 2011 OPPS/ASC proposed rule (75 FR 46251), we proposed to 
continue to assign the CPT skin repair codes for the application of 
Apligraf, Oasis, and Dermagraft skin substitutes to the same procedural 
APCs to which they were assigned for CY 2010. Specifically, we proposed 
to continue to assign the Apligraf application CPT codes 15340 (Tissue 
cultured allogeneic skin substitute; first 25 sq cm or less) and 15341 
(Tissue cultured allogeneic skin substitute; each additional 25 sq cm, 
or part thereof) to APC 0134 (Level II Skin Repair), with a proposed 
payment rate of approximately $217. Likewise, we proposed to continue 
to assign the Dermagraft application CPT codes 15365 (Tissue cultured 
allogeneic dermal substitute, face, scalp, eyelids, mouth, neck, ears, 
orbits, genitalia, hands, feet, and/or multiple digits; first 100 sq cm 
or less, or 1% of body area of infants and children) and 15366 (Tissue 
cultured allogeneic dermal substitute, face, scalp, eyelids, mouth, 
neck, ears, orbits, genitalia, hands, feet, and/or multiple digits; 
each additional 100 sq cm, or each additional 1% of body area of 
infants and children, or part thereof) to APC 0134. We proposed to 
continue to assign the Oasis application CPT codes 15430 (Acellular 
xenograft implant; first 100 sq cm or less, or 1% of body area of 
infants and children) and 15431 (Acellular xenograft implant; each 
additional 100 sq cm, or each additional 1% of body area of infants and 
children, or part thereof) to APC 0135 (Level III Skin Repair), with a 
proposed payment rate of approximately $318. In addition, we proposed 
to pay the Apligraf, Oasis, and Dermagraft skin substitutes separately. 
Specifically, we proposed to pay separately for the Apligraf skin 
product HCPCS Q-code Q4101 (Skin substitute, Apligraf, per square 
centimeter), the Dermagraft skin product HCPCS Q-code Q4106 ('Skin 
substitute, Dermagraft, per square centimeter), and the Oasis skin 
product HCPCS Q-codes Q4102 (Skin substitute, Oasis Wound Matrix, per 
square centimeter) and Q4103 (Skin substitute, Oasis burn matrix, per 
square centimeter), Also, as discussed in more detail below, we also 
proposed for CY 2011 to create two new Level II HCPCS G-codes to report 
the application of Apligraf or Dermagraft specific to the lower 
extremities in order to provide appropriate and consistent payment for 
these services as they are commonly furnished, consistent with the CY 
2011 proposal for the MPFS.
    With regard to the assignment of CPT codes 15340, 15341, 15365, 
15366, 15430 and 15431, at the August 2009 APC Panel meeting, one 
public presenter requested that the APC Panel recommend that CMS 
reassign the Apligraf application CPT codes, specifically CPT codes 
15340 and 15341, from APC 0134 to APC 0135. The same presenter 
requested that CMS continue to assign the Dermagraft application CPT 
codes, specifically CPT codes 15365 and 15366, to APC 0134. The public 
presenter believed that the CY 2010 proposal to continue to assign both 
the Apligraf and the Dermagraft application CPT codes to APC 0134 would 
create a financial incentive favoring the Dermagraft application. 
Specifically, the presenter explained that CPT instructions allow the 
separate reporting of the CPT codes for site preparation and 
debridement when Dermagraft is applied, while the CPT instructions for 
Apligraf application codes specify that site preparation and 
debridement cannot be separately reported. The presenter believed that 
this reporting difference and the resulting expected differences in the 
associated application procedure costs could be addressed by assigning 
the Apligraf application CPT codes to a higher paying APC than the 
Dermagraft application CPT codes, instead of the same APC as CMS 
proposed for CY 2010.
    During the discussion, the APC Panel members were provided with the 
historical information on the coding and APC assignments for the skin 
substitute application procedures assigned to

[[Page 71919]]

APCs 0134 and 0135. Specifically, the Apligraf application CPT codes 
15340 and 15341, the Dermagraft application CPT codes 15365 and 15366, 
as well as the Oasis application CPT codes 15430 and 15431, were at one 
time assigned to the same APC level (Level II Skin Repair). However, 
because of violations of the 2 times rule, CMS reconfigured the skin 
repair APCs and reassigned the Oasis application CPT codes 15430 and 
15431 to APC 0135 in CY 2008.
    At the August 2009 APC Panel meeting, panel members debated whether 
the differences in sizes in each product's application CPT codes and 
the ability to bill separately for site preparation and debridement for 
Dermagraft application required different APC placement for any of the 
skin substitute application codes. We note that the long descriptors 
for the Apligraf application CPT codes 15340 and 15341 are scaled to 
``25 sq cm,'' whereas the Oasis application CPT codes 15430 and 15431 
and the Dermagraft application CPT codes 15365 and 15366 are scaled to 
``100 sq cm.'' After review of median cost data from the CY 2008 
hospital outpatient claims available at that time (those processed from 
January 1, 2008 through December 31, 2009), the APC Panel recommended 
that CMS continue to assign all six skin substitute application CPT 
codes to their existing APCs for CY 2010. In addition, because of the 
variable sizes associated with the skin repair application CPT codes, 
the Panel requested that CMS provide data at the next Panel meeting on 
the frequency of primary and add-on CPT codes billed for the Apligraf, 
Oasis, and Dermagraft applications in order to assess the variability 
in billing for the application of these products. In addition, because 
of the CPT instructions allowing site preparation and debridement to be 
reported separately only for the Dermagraft application, the Panel 
requested median cost data for site preparation and debridement.
    We accepted the APC Panel's recommendation to continue to assign 
the skin repair CPT codes for the application of Apligraf, Oasis, and 
Dermagraft skin substitutes to the same procedural APCs for CY 2010 as 
their CY 2009 assignments. As a result, we continued to assign the 
Apligraf application CPT codes 15340 and 15341 and the Dermagraft 
application CPT codes 15365 and 15366 to APC 0134 and assigned the 
Oasis application CPT codes 15430 and 15431 to APC 0135 for CY 2010.
    At the February 2010 APC Panel meeting, CMS presented the results 
of the data requested at the August 2009 meeting to the APC Panel. In 
response to data on the frequency of primary and add-on CPT codes, 
based on our analysis of the available CY 2009 hospital outpatient 
claims data on frequency of primary and add-on CPT codes billed for the 
Apligraf, Oasis, and Dermagraft applications (claims processed from 
January 1 through September 30, 2009), we found that hospitals report 
the application of Apligraf with only the primary code (CPT code 15340) 
on 77 percent of claims, while the add-on CPT code 15341 is billed in 
addition to the primary code on another 23 percent of claims. 
Specifically, our data showed that, for the Apligraf application, there 
were a total of 8,614 claims with only the primary CPT code 15340 
reported, and 2,545 claims with the add-on CPT code 15341 also reported 
on the same date of service. We note that each unit of the add-on CPT 
code is paid at 50 percent of the payment for the primary code in 
addition to the full payment for the primary code. We also found in our 
analysis that, on claims with the Dermagraft and Oasis application CPT 
codes, hospitals report the primary code only in approximately 98 to 99 
percent of the cases. In addition, in response to the request for data 
for site preparation and debridement that may be reported separately 
for the Dermagraft application, we found that approximately 87 percent 
of procedures for the application of Dermagraft were reported without 
debridement or site preparation on the same day. Similarly, we found 
that the Apligraf and Oasis procedures were rarely reported with the 
site preparation or debridement CPT procedure codes on the same day. 
Specifically, we found that the CPT procedure code for the application 
of Apligraf was reported without site preparation or debridement in 
approximately 94 percent of these cases, and that the CPT procedure 
code for application of Oasis was reported without site preparation or 
debridement in approximately 95 percent of these cases. Our data 
analysis also showed that the CPT median costs for the Apligraf 
application CPT code 15340 and the Dermagraft application CPT code 
15365 are very similar. Specifically, the CPT code-specific median cost 
of CPT code 15340 is approximately $234 for the Apligraf application 
and approximately $237 for CPT code 15365 for the Dermagraft 
application. In contrast, the CPT median cost for the Oasis application 
primary CPT code 15430 of approximately $299 is higher.
    At the February 2010 APC Panel meeting, a public presenter again 
requested that the APC Panel recommend that CMS reassign the Apligraf 
application CPT codes 15340 and 15341 from APC 0134 to APC 0135. The 
presenter indicated that the additional payment for site preparation 
and debridement procedures that may be reported separately with the 
Dermagraft application can significantly affect the total payment for 
the procedure. The presenter also provided data on the use of each 
product in relation to the size of the wounds treated, and concluded 
that the size of the wound treated does not affect the resources used. 
After further review of the available CY 2009 hospital outpatient 
claims data, the APC Panel recommended that CPT codes 15340 and 15341 
remain in APC 0134.
    As noted above, in the CY 2011 OPPS/ASC proposed rule (75 FR 
46251), we proposed to continue to assign the Apligraf application CPT 
codes 15340 and 15341 and the Dermagraft application CPT codes 15365 
and 15366 to APC 0134, and, at the same time, continue to assign the 
Oasis application CPT codes 15430 and 15431 to APC 0135. Secondly, we 
proposed to continue to pay separately for the Apligraf, Dermagraft, 
and Oasis products in CY 2011.
    Comment: One commenter disagreed with the APC assignment for the 
Apligraf CPT codes 15340 and 15341 and recommended a reassignment from 
APC 0134 to APC 0135.
    Response: We examined the updated CY 2009 claims data available for 
the CY 2011 final rule with comment period and, based on the claims 
data, we believe that CPT codes 15340 and 15341 are appropriately 
placed in APC 0134. Specifically, our claims data show that the median 
cost of approximately $231 for CPT code 15340, based on 15,648 single 
claims (out of a total of 19,949 claims), and the median cost of 
approximately $189 for CPT code 15341, based on 2,621 single claims 
(out of a total of 5,468 claims), are relatively similar to the median 
cost of approximately $215 for APC 0134, and are dissimilar to the 
median cost of approximately $316 for APC 0135. Therefore, we are 
assigning CPT codes 15340 and 15341 to APC 0134 for CY 2011.
    As noted above, we also proposed for CY 2011 to create two new 
Level II HCPCS G-codes to report the application of Apligraf or 
Dermagraft specific to the lower extremities in order to provide 
appropriate and consistent payment for these services as they are 
commonly furnished, consistent with

[[Page 71920]]

the CY 2011 proposal for the MPFS. (We refer readers to the CY 2011 
MPFS proposed rule for additional information regarding the MPFS 
proposal and to the MPFS final rule for the final CMS decision 
regarding the use of these codes for the MPFS.) The proposed HCPCS 
codes were: GXXX1 (Application of tissue cultured allogeneic skin 
substitute or dermal substitute; for use on lower limb, includes the 
site preparation and debridement if performed; first 25 sq cm or less); 
and GXXX2 (Application of tissue cultured allogeneic skin or dermal 
substitute; for use on lower limb, includes the site preparation and 
debridement if performed; each additional 25 sq cm). We note that, for 
this CY 2011 OPPS/ASC final rule with comment period, GXXX1 has been 
designated as HCPCS code G0440 and HCPCS code GXXX2 as HCPCS code 
G0441. As indicated in the HCPCS G-code descriptors, these codes will 
not allow separate reporting of CPT codes for site preparation or 
debridement. In the proposed rule, we indicated that we believed the 
descriptors of the proposed HCPCS G-codes more specifically reflect the 
characteristics of the application of Apligraf or Dermagraft to the 
lower limb so that reporting would result in more accurate cost data 
for OPPS ratesetting and, ultimately, more appropriate payment. 
Consistent with the proposed CY 2011 APC assignment for the Apligraf 
and Dermagraft application CPT codes, we proposed to assign new HCPCS 
codes G0440 and G0441 to APC 0134, with a proposed APC median cost of 
approximately $222. We indicated that we were specifically interested 
in public comment on the appropriateness of recognizing these proposed 
new HCPCS G-codes under the OPPS and their proposed APC assignments.
    Comment: Some commenters agreed with the establishment of HCPCS 
codes GXXX1 and GXXX2, and supported their APC assignment to APC 0134. 
One commenter suggested that, if CMS finalizes the proposal to 
establish the HCPCS G-codes, then it should recognize for CY 2011 the 
skin repair CPT codes, and also recommended that the HCPCS G-codes be 
assigned to APC 0135 rather than the proposed APC 0134. The commenter 
requested clarification on the definition of ``dermal substitute.''
    However, many commenters disagreed with the establishment of the 
HCPCS G-codes. The commenters argued that, although they understood the 
need to report the services accurately, they did not believe that 
creating two HCPCS G-codes is appropriate because there are existing 
CPT codes that describe the application of both the Apligraf and 
Dermagraft. They stated that if a revision to the CPT code descriptors 
is necessary to accurately describe the services associated with these 
products, CMS should work with the AMA CPT Editorial Panel in making 
the revisions rather than creating two new HCPCS G-codes. One commenter 
stated that the inappropriate reimbursement for the application of 
these products is a MPFS issue and does not apply to the hospital OPPS. 
The commenter suggested that the proposed changes to create two HCPCS 
G-codes would cause providers to use the two more expensive products 
and, thereby, inadvertently create a competitive disadvantage for other 
products.
    Response: We are persuaded from the commenters' statements that 
this is a payment issue that applies to the MPFS and not to the 
hospital OPPS, because the existing CPT codes for the application of 
these products does not impede our ability, under the standard OPPS 
ratesetting methodology, to calculate accurate median costs for these 
procedures and to assign them to appropriate APCs. Therefore, we are 
not finalizing our proposal to assign HCPCS G-codes G0440 and G0441 to 
APC 0134. For CY 2011, we are assigning the status indicators for both 
HCPCS G-codes to status indicator ``B'' to indicate that these HCPCS 
codes are not recognized under the hospital OPPS, and that hospitals 
should use a more specific HCPCS code(s) to describe the services 
associated with HCPCS codes G0440 and G0441.
    With regard to the definition of ``dermal substitute,'' we are 
directing our Medicare contractors to provide further guidance if 
specific questions arise.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to continue to assign 
the Apligraf application CPT codes 15340 and 15341 and the Dermagraft 
application CPT codes 15365 and 15366 to APC 0134, with a final CY 2011 
APC median cost of approximately $215 and to assign the Oasis 
application CPT codes 15430 and 15431 to APC 0135, with a final CY 2011 
APC median cost of approximately $316. In addition, we received no 
comments on our proposal to continue to pay separately for the skin 
products. For CY 2011, we are finalizing our proposal, without 
modification, to continue to pay separately for the skin products, 
which are described by Level II HCPCS Q-codes. That is, we are 
finalizing our proposal to pay separately for the Apligraf skin product 
HCPCS Q-code Q4101, the Dermagraft skin product HCPCS Q-code Q4106, and 
the Oasis skin product HCPCS Q-codes Q4102 and Q4103. Further, HCPCS Q-
codes Q4101, Q4102, Q4103, and Q4106 are assigned to status indicator 
``K'' to indicate that they are separately payable under the hospital 
OPPS for CY 2011. In addition, we are not finalizing our proposal to 
recognize new HCPCS G-codes G0440 and G0441 as payable under the 
hospital OPPS. New HCPCS codes G0440 and G0441 are assigned to status 
indicator ``B'' to indicate that hospitals must report a more specific 
HCPCS code(s) to describe the services associated with HCPCS codes 
G0440 and G0441 for CY 2011.
    b. Insertion of Anterior Segment Aqueous Drainage Device (APCs 
0234, 0255, and 0673)
    The AMA CPT Editorial Panel created Category III CPT code 0191T 
(Insertion of anterior segment aqueous drainage device, without 
extraocular reservoir; internal approach) effective on July 1, 2008. We 
assigned CPT code 0191T to APC 0234 (Level III Anterior Segment Eye 
Procedures) in the OPPS, effective July 1, 2008, and maintained this 
APC assignment for CY 2009 and CY 2010. For CY 2011, we proposed to 
continue to assign CPT code 0191T to APC 0234, with a proposed payment 
rate of approximately $1,674. For CY 2011, we also proposed to create 
new APC 0255 (Level III Anterior Segment Eye Procedures), and to rename 
APC 0234 as ``Level IV Anterior Segment Eye Procedures'' and APC 0673 
as ``Level V Anterior Segment Eye Procedures.''
    At its August 2010 meeting, the APC Panel recommended that CMS 
assign CPT code 0191T to APC 0673 (Level V Anterior Segment Eye 
Procedures), on the basis of its clinical similarity to both CPT code 
0192T (Insertion of anterior segment aqueous drainage device, without 
extraocular reservoir; external approach), and to CPT code 66180 
(Aqueous shunt to extraocular reservoir (e.g., Molteno, Schocket, 
Denver-Krupin)), which were proposed to be assigned to APC 0673 for CY 
2011.
    The AMA CPT Editorial Panel revised the descriptor of CPT code 
0191T to ``Insertion of anterior segment aqueous drainage device, 
without extraocular reservoir; internal approach, into the trabecular 
meshwork,'' to be effective January 1, 2011.
    Comment: A large number of commenters recommended that CMS reassign 
CPT code 0191T from APC 0234 to APC 0673, with a proposed CY 2011 
payment rate of approximately $3,039. The commenters claimed that CPT 
code 0191T is more appropriately assigned to APC 0673 based on clinical

[[Page 71921]]

homogeneity and resource costs. They pointed out that none of the 
procedures in APC 0234 have implanted device costs associated with the 
procedures, except CPT code 0191T, while most procedures in APC 0673 
have implanted device costs, including glaucoma procedures with 
implanted device costs, namely CPT code 66180 and CPT code 0192T. A few 
commenters claimed that each of the shunt devices in APC 0673 serve to 
shunt the aqueous fluid in the eye to another region in order to lower 
intraocular pressure, a common clinical purpose related to CPT code 
0191T. Commenters asserted that the major cost of performing the 
procedure described by CPT code 0191T is the device itself, and that 
the proposed payment rate for APC 0234 is too low to compensate 
hospitals and ASCs for the cost of the procedure, thus preventing 
Medicare beneficiary access. Commenters also pointed out that cataract 
surgery is almost always performed with CPT code 0191T, as many 
cataract patients have mild to moderate glaucoma, resulting in a 
multiple procedure surgical session with a 50 percent multiple 
procedure reduction in payment for CPT code 0191T, which is 
predominantly performed in the ASC setting.
    Many commenters asserted that the shunt device implantation 
performed with CPT code 0191T has much in common clinically with the 
implantation of the shunt device procedure performed with CPT code 
0192T, which is assigned to APC 0673. Some commenters stated that the 
CPT code 0191T procedure is well within the skill set of a general 
ophthalmologist performing cataract surgery and promises to avoid some 
glaucoma medication usage.
    One commenter argued that the resource costs of CPT code 0191T as 
demonstrated by CMS claims data is closer to the costs in APC 0673 than 
APC 0234, pointing out that the CY 2011 proposed rule median cost of 
approximately $2,964 for CPT code 0191T is appreciably higher than the 
range of costs of approximately $1,726 to approximately $2,026 for the 
10 most frequent procedures in APC 0234. On the other hand, the 
commenter stated that the CY 2011 proposed rule median cost of CPT code 
0191T is closer to the proposed rule median cost of approximately 
$3,099 for APC 0673 and the costs of its two most frequent procedures, 
that of CPT code 66180 (approximately $3,092) and CPT code 0192T 
(approximately $3,131). The commenter claimed that CMS has grouped 
clinically similar CPT codes together into an APC even though some 
services are significantly below the proposed APC costs. The commenter 
also noted that the procedure's device, the iStent Trabecular Micro-
Bypass Stent (iStent), is currently under an investigational device 
exemption (IDE) and is awaiting full premarket approval (PMA) from the 
FDA, which it expects to receive by the end of 2011.
    Response: After further analysis of this issue, we agree with the 
APC Panel and the commenters that CPT code 0191T is similar clinically 
and in terms of resource utilization to the procedures in APC 0673. 
Several procedures in APC 0673 have device implants that are related to 
glaucoma, such as CPT 0192T and CPT code 66180, and the CY 2011 final 
median cost for CPT code 0191T of approximately $3,139 is very similar 
to the median cost calculated for APC 0673 of approximately $2,946. 
Therefore, we are accepting the APC Panel's and the commenters' 
recommendation to reassign CPT code 0191T to APC 0673 for CY 2011.
    After consideration of the public comments we received, we are 
modifying our CY 2011 proposal and reassigning CPT code 0191T to APC 
0673 for CY 2011. We will continue to monitor claims and cost report 
data for CPT code 0191T in APC 0673.
c. Group Psychotherapy (APCs 0322, 0323, 0324, and 0325)
    For CY 2011, we proposed to set the CY 2011 payment rates for APCs 
0322 (Brief Individual Psychotherapy), 0323 (Extended Individual 
Psychotherapy), 0324 (Family Psychotherapy), and 0325 (Group 
Psychotherapy) based on the median costs determined under the OPPS 
standard ratesetting methodology. We also proposed to continue to 
assign CPT codes 90849 (Multiple family group psychotherapy), 90853 
(Group psychotherapy (other than of a multiple-family group)), and 
90857 (Interactive group psychotherapy) to APC 0325, with a proposed 
payment rate of approximately $54, calculated according to the standard 
OPPS ratesetting methodology. In CY 2010, these three CPT codes also 
were the only codes assigned to APC 0325, with a payment rate of 
approximately $60.
    Comment: Some commenters expressed concern over the decreases in 
the proposed payment rates for APCs 0322, 0323, 0324, and 0325. 
Particularly, several commenters expressed concern that the CY 2011 
proposed payment rate for APC 0325 of approximately $54 is 10 percent 
less than the CY 2010 payment rate for this APC. The commenters 
believed that the proposed payment rate would be insufficient to cover 
hospitals' costs for providing group mental health services and, as a 
result, would threaten Medicare beneficiary access to these services. 
Some commenters stated that the utilization of recent cost report data 
lags behind the provision of current services by approximately 3 to 5 
years, and a stronger level of reimbursement would seem justified and 
appropriate.
    Response: We set the payment rates for APCs 0322, 0323, 0324, and 
0325 using our standard OPPS methodology based on relative costs from 
hospital outpatient claims and the most recent cost report data that 
are available. We have no reason to believe that our claims and cost 
report data, as reported by hospitals, do not accurately reflect 
hospitals' costs of the services assigned to these APCs. As we have 
stated in the past, specifically with respect to APC 0325 (72 FR 66739 
and 73 FR 68627), we cannot speculate as to why the median cost of 
group psychotherapy services has decreased significantly in recent 
years. We again note that we have robust claims data for the CPT codes 
that map to APC 0325. Specifically, we were able to use more than 99 
percent of the approximately 1.7 million claims submitted by hospitals 
to report group psychotherapy services. It would appear that the 
relative cost of providing these mental health services, in comparison 
with other HOPD services, has decreased in recent years.
    After consideration of the public comments we received, we are 
finalizing our CY 2011 proposal, without modification, to calculate the 
payment rate for APCs 0322, 0323, 0324, and 0325 by applying our 
standard OPPS ratesetting methodology that relies on all single claims 
for all procedures assigned to these APCs, and to continue to assign 
CPT codes 90849, 90853, and 90857 to APC 0325, with a final payment 
rate of approximately $54.

IV. OPPS Payment for Devices

A. Pass-Through Payments for Devices

1. Expiration of Transitional Pass-Through Payments for Certain Devices
    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, but not more than 3, years. This pass-through 
payment eligibility period begins with the first date on which 
transitional pass-through payments may be made for any medical device 
that is described by the category. We may establish a new device 
category for pass-through payment in any quarter. Under our established 
policy, we base the pass-through status expiration dates for the 
category codes

[[Page 71922]]

on the date on which a category is in effect. The date on which a 
category is in effect is the first date on which pass-through payment 
may be made for any medical device that is described by such category. 
We propose and finalize the dates for expiration of pass-through status 
for device categories as part of the OPPS annual update.
    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). Brachytherapy 
sources, which are now separately paid in accordance with section 
1833(t)(2)(H) of the Act, are an exception to this established policy.
    There currently is one new device category eligible for pass-
through payment, described by HCPCS code C1749 (Endoscope, retrograde 
imaging/illumination colonoscope device (implantable), which we 
announced in the October 2010 OPPS Update (Transmittal 2050, Change 
Request 7117, dated September 17, 2010). There are no categories for 
which we proposed expiration of pass-through status in CY 2011. If we 
create new device categories for pass-through payment status during the 
remainder of CY 2010 or during CY 2011, we will propose future 
expiration dates in accordance with the statutory requirement that they 
be eligible for pass-through payments for at least 2, but not more than 
3, years from the date on which pass-through payment for any medical 
device described by the category may first be made.
    Comment: Some commenters expressed concern that there currently are 
no pass-through categories for new devices, and that there have been 
very few new categories approved over the past several years. The 
commenters were concerned that CMS may not be recognizing technologies 
that demonstrate a substantial clinical improvement for Medicare 
beneficiaries, even though the commenters believed that there have been 
past applications that have met or exceeded that criterion. One 
commenter recommended that CMS reevaluate the criteria and approval 
process currently used for device pass-through applications. Another 
commenter believed that the need for separate payment for new 
technologies is even more acute because of the OPPS policy of increased 
packaging and bundled payment into composite APCs. One commenter 
recommended that CMS annually publish a list of all devices for which 
pass-through status was requested, along with the rationale supporting 
its decisions regarding approval or denial of pass-through status.
    Response: The criteria for establishing additional pass-through 
categories for medical devices are included in the interim final rule 
with comment period issued in the November 2, 2001 Federal Register (66 
FR 55850), the final rule with comment period issued in the November 1, 
2002 Federal Register (67 FR 66781), and the November 10, 2005 OPPS 
final rule with comment period (70 FR 68628). We made no proposals 
regarding our device pass-through process or criteria for CY 2011. 
However, industry members have, from time to time, requested that we 
provide additional information on our new technology processes, which 
we have attempted to do in the past. We agree with the commenters that 
separate payment for new technologies through the device pass-through 
process is an important feature of the OPPS, and we continue to review 
applications on an ongoing basis using our established process and 
criteria and to establish new categories of pass-through devices when 
those criteria are met. We disagree with the commenters who believe 
that we may not be recognizing technologies that demonstrate a 
substantial clinical improvement. We carefully evaluate each 
application based on the established criteria, including whether the 
device demonstrates a substantial clinical improvement.
    We are not making any changes to the device pass-through process or 
criteria in this final rule with comment period because we believe any 
changes would require public input, including input from affected 
parties, and, therefore, should be addressed through our rulemaking 
cycle. For example, while some parties may approve of putting specific 
information about pass-through applications on our Web site, such as 
the basis for an application's denial, others who request that we treat 
all or part of their applications as confidential may not support such 
a change in the pass-through process. (We note that filing an 
application to CMS does not guarantee that CMS is able to treat any 
information as confidential because such information is used as part of 
the OPPS ratesetting process.) However, we do appreciate the 
commenters' perspectives and will take their comments under advisement 
as we consider our device pass-through criteria and process in the 
future.
2. Provisions for Reducing Transitional Pass-Through Payments to Offset 
Costs Packaged into APC Groups
    a. Background
    We have an established policy to estimate the portion of each APC 
payment rate that could reasonably be attributed to the cost of the 
associated devices that are eligible for pass-through payments (66 FR 
59904). We deduct from the pass-through payments for identified device 
categories eligible for pass-through payments an amount that reflects 
the portion of the APC payment amount that we determine is associated 
with the cost of the device, defined as the device APC offset amount, 
as required by section 1833(t)(6)(D)(ii) of the Act. We have 
consistently employed an established methodology to estimate the 
portion of each APC payment rate that could reasonably be attributed to 
the cost of an associated device eligible for pass-through payment, 
using claims data from the period used for the most recent 
recalibration of the APC rates (72 FR 66751 through 66752). We 
establish and update the applicable device APC offset amounts for 
eligible pass-through device categories through the transmittals that 
implement the quarterly OPPS updates.
    We currently have published a list of all procedural APCs with the 
CY 2010 portions (both percentages and dollar amounts) of the APC 
payment amounts that we determine are associated with the cost of 
devices, on the CMS Web site at: http://www.cms.gov/
HospitalOutpatientPPS/01_overview.asp. The dollar amounts are used as 
the device APC offset amounts. In addition, in accordance with our 
established practice, the device APC offset amounts in a related APC 
are used in order to evaluate whether the cost of a device in an 
application for a new device category for pass-through payment is not 
insignificant in relation to the APC payment amount for the service 
related to the category of devices, as specified in our regulations at 
Sec.  419.66(d).
    As of CY 2009, the costs of implantable biologicals without pass-
through status are packaged into the payment for the procedures in 
which they are inserted or implanted because implantable biologicals 
without pass-through status are not separately paid (73 FR 68633 
through 68636). For CY 2010, we finalized a new policy to specify that 
the pass-through evaluation process and pass-through payment 
methodology for implantable biologicals that are surgically inserted or 
implanted (through a surgical incision or a natural orifice) and that 
are newly approved for pass-through status beginning on or after 
January 1, 2010, be the device pass-through process and payment 
methodology only. As a result, for CY 2010, we included implantable

[[Page 71923]]

biologicals in our calculation of the device APC offset amounts (74 FR 
60476). We calculated and set the device APC offset amount for a newly 
established device pass-through category, which could include a newly 
eligible implantable biological, beginning in CY 2010 using the same 
methodology we have historically used to calculate and set device APC 
offset amounts for device categories eligible for pass-through payment 
(72 FR 66751 through 66752), with one modification. Because implantable 
biologicals are considered devices rather than drugs for purposes of 
pass-through evaluation and payment under our established policy, the 
device APC offset amounts include the costs of implantable biologicals. 
For CY 2010, we also finalized a policy to utilize the revised device 
APC offset amounts to evaluate whether the cost of an implantable 
biological in an application for a new device category for pass-through 
payment is not insignificant in relation to the APC payment amount for 
the service related to the category of devices. Further, for CY 2010, 
we also no longer used the ``policy-packaged'' drug APC offset amounts 
for evaluating the cost significance of implantable biological pass-
through applications under review and for setting the APC offset 
amounts that would apply to pass-through payment for those implantable 
biologicals, effective for new pass-through status determinations 
beginning in CY 2010 (74 FR 60463).
b. Proposed and Final CY 2011 Policy
    In the CY 2011 OPPS/ASC proposed rule (75 FR 46252), we proposed to 
continue our policy that the pass-through evaluation process and pass-
through payment methodology for implantable biologicals that are 
surgically inserted or implanted (through a surgical incision or a 
natural orifice) and that are newly approved for pass-through status 
beginning on or after January 1, 2010, be the device pass-through 
process and payment methodology only. The rationale for this policy is 
provided in the CY 2010 OPPS/ASC final rule with comment period (74 FR 
60471 through 60477). We also proposed to continue our established 
policies for calculating and setting the device APC offset amounts for 
each device category eligible for pass-through payment. In addition, we 
proposed to continue to review each new device category on a case-by-
case basis to determine whether device costs associated with the new 
category are already packaged into the existing APC structure. If 
device costs packaged into the existing APC structure are associated 
with the new category, we would deduct the device APC offset amount 
from the pass-through payment for the device category. As stated 
earlier, these device APC offset amounts also would be used in order to 
evaluate whether the cost of a device in an application for a new 
device category for pass-through payment is not insignificant in 
relation to the APC payment amount for the service related to the 
category of devices (Sec.  419.66(d)).
    We also proposed to continue our policy established in CY 2010 to 
include implantable biologicals in our calculation of the device APC 
offset amounts. In addition, we proposed to continue to calculate and 
set any device APC offset amount for a new device pass-through category 
that includes a newly eligible implantable biological beginning in CY 
2011 using the same methodology we have historically used to calculate 
and set device APC offset amounts for device categories eligible for 
pass-through payment, and to include the costs of implantable 
biologicals in the calculation of the device APC offset amounts, as we 
did for CY 2010.
    In addition, we proposed to update, on the CMS Web site at http://www.cms. gov/HospitalOutpatientPPS, the list of all procedural APCs 
with the final CY 2011 portions of the APC payment amounts that we 
determine are associated with the cost of devices so that this 
information is available for use by the public in developing potential 
CY 2011 device pass-through payment applications and by CMS in 
reviewing those applications.
    In summary, for CY 2011, consistent with the policy established for 
CY 2010, we proposed to continue the following policies related to 
pass-through payment for devices: (1) Treating implantable biologicals, 
that are surgically inserted or implanted (through a surgical incision 
or a natural orifice) and that are newly approved for pass-through 
status on or after January 1, 2010, as devices for purposes of the OPPS 
pass-through evaluation process and payment methodology; (2) including 
implantable biologicals in calculating the device APC offset amounts; 
(3) using the device APC offset amounts to evaluate whether the cost of 
a device (defined to include implantable biologicals) in an application 
for a new device category for pass-through payment is not insignificant 
in relation to the APC payment amount for the service related to the 
category of devices; and (4) reducing device pass-through payments 
based on device costs already included in the associated procedural 
APCs, when we determine that device costs associated with the new 
category are already packaged into the existing APC structure.
    Comment: Some commenters recommended that CMS not continue the 
policy it began for CY 2010 to specify that the pass-through evaluation 
process and pass-through payment methodology for implantable 
biologicals that are surgically inserted or implanted (through a 
surgical incision or a natural orifice) be the device pass-through 
process and payment methodology only. One commenter asserted that some 
implantable biologicals meet the definition of biological under section 
1861(t) of the Act, even though they are approved by the FDA as 
devices. The commenter recommended that biologicals approved by the FDA 
under a biologics license application (BLA) should be eligible for 
pass-through payment under the drug and nonimplantable biological pass-
through process, regardless of whether or not they are implanted. The 
commenter claimed that Congress intended for biologicals approved under 
BLAs to be paid as pass-through drugs because the commenter believed 
that Congress intended that biologicals be included under the specific 
OPPS statutory provisions that apply to specified covered outpatient 
drugs (SCODs). The commenter alternatively requested that if CMS 
continues to define implantable biologicals as devices for pass-through 
purposes, CMS clarify that it will apply device process and payment 
only if the devices are solely surgically implanted according to their 
FDA-approved indications. The commenter claimed that the current pass-
through policy is unclear regarding how CMS would evaluate eligibility 
for pass-through payment of a biological that has both implantable and 
nonimplantable indications.
    Another commenter believed that CMS has not sufficiently defined 
the term ``surgically inserted or implanted'' regarding applicability 
of pass-through device process and payment for implantable biologicals. 
The commenter questioned whether biologicals inserted into the body via 
catheter (which requires a surgical incision to place a catheter) or an 
injection of a biological administered through a natural orifice should 
be considered implantable biologicals. The commenter asked whether a 
biological that is inserted into the body as a drug administration, 
that is, by means of injection or infusion, is considered surgically 
inserted or implanted for purposes of pass-through status evaluation 
and payment. The commenter also recommended paying for implantable 
biologicals using the

[[Page 71924]]

drug payment methodology, proposed at ASP plus 6 percent, rather than 
the current methodology of charges adjusted to costs. The commenter 
asserted the advantages of the ASP payment methodology are as follows: 
there would be identical payment methodologies for biologicals that 
function as both implantable and nonimplantable biologicals; the ASP 
methodology is well-understood by providers and contractors; the ASP 
methodology avoids the problem of hospitals being reluctant to mark up 
charges for new implantable biologicals, thereby resulting in charge 
compression and an underestimation of costs; and the ASP methodology 
assures a consistent payment method, rather than the hospital-specific, 
charges-adjusted-to-cost methodology.
    Response: As stated in the CY 2010 OPPS/ASC final rule with comment 
period, we evaluate implantable biologicals that function as and are 
substitutes for implantable devices, regardless of their category of 
FDA approval, as devices for OPPS payment purposes (74 FR 60476). We do 
not believe it is necessary to make our OPPS payment policies regarding 
implantable biologicals dependent on categories of FDA approval, the 
intent of which is to ensure the safety and effectiveness of medical 
products.
    We do not agree with the commenter who asserted that Congress 
intended biologicals approved under BLAs to be paid under the specific 
OPPS statutory provisions that apply to SCODs, including the pass-
through provisions. Moreover, as we stated in the CY 2010 OPPS/ASC 
final rule with comment period, Congress did not specify that we must 
pay for implantable biologicals as biologicals rather than devices, if 
they also meet our criteria for payment as a device (74 FR 60476). We 
continue to believe that implantable biologicals meet the definitions 
of a device and a biological and that, for payment purposes, it is 
appropriate for us to consider implantable biologicals as implantable 
devices in all cases, not as biologicals.
    We also do not agree with the commenter's request that we pay for 
pass-through implantable biologicals using the ASP payment methodology. 
As we stated in the CY 2010 OPPS/ASC final rule with comment period (74 
FR 60474), we do not believe that this payment methodology would be 
appropriate because payment based on ASP for pass-through implantable 
biologicals would not provide similar OPPS payment treatment of 
biological and nonbiological implantable devices, which is our goal for 
new devices. Given the shared payment methodologies for implantable 
biological and nonbiological devices during their nonpass-through 
payment periods, as well as their overlapping and sometimes identical 
clinical uses and their generally similar regulation by the FDA as 
devices, we continue to believe that the most consistent pass-through 
payment policy for these different types of items that are surgically 
inserted or implanted and that may sometimes substitute for one another 
is to evaluate and pay for all of these devices, both biological and 
nonbiological, only under the device pass-through payment and 
methodology.
    Regarding the comment that claimed we have not sufficiently defined 
the term ``surgically inserted or implanted'' regarding applicability 
of pass-through device process and payment for implantable biologicals, 
we believe that infusion or injection of a biological product through a 
catheter is generally not considered implantation of a device since 
these products are being administered through a catheter rather than 
inserted or implanted into the body, in the same way that we have 
stated in the past with respect to drug and device combination products 
that it is not our intention to consider biologicals under the device 
pass-through evaluation process when these products are merely 
administered through the implantation of a delivery system for the 
biological (74 FR 60476). We believe that applicants seeking pass-
through payment for a particular technology must determine whether to 
apply through the drug or device pass-through process based on how the 
individual product will be administered.
    In response to the comment seeking clarity regarding how CMS would 
evaluate eligibility for pass-through payment of a biological that has 
both implantable and non-implantable indications, we again note that 
applicants for pass-through status must determine whether to apply 
through the drug or device pass-through process based on how the 
individual product will be used. If we were to receive applications for 
the same product for both drug pass-through status and device pass-
through status, and if both applications met the respective criteria 
for approval, we would evaluate how it is administered in order to 
determine whether it would be appropriate to differentiate the payment 
methodology for the product depending on how it is used, as we do for 
nonpass-through biologicals that may be sometimes used as drugs, and 
sometimes used as devices.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to continue the policy 
to specify that the pass-through evaluation process and pass-through 
payment methodology for implantable biologicals that are surgically 
inserted or implanted (through a surgical incision or a natural 
orifice) and that are newly approved for pass-through status on or 
after January 1, 2010, be the device pass-through process and payment 
methodology only. We also are finalizing our other proposals, without 
modification, to continue the following policies regarding device 
offsets: (1) Including implantable biologicals in calculating the 
device APC offset amounts; (2) using the device APC offset amounts to 
evaluate whether the cost of a device (defined to include implantable 
biologicals) in an application for a new device category for pass-
through payment is not insignificant in relation to the APC payment 
amount for the service related to the category of devices; and (3) 
reducing device pass-through payments based on device costs already 
included in the associated procedural APCs, when we determine that 
device costs associated with the new category are already packaged into 
the existing APC structure.

B. Adjustment to OPPS Payment for No Cost/Full Credit and Partial 
Credit Devices

1. Background
    In recent years, there have been several field actions on and 
recalls of medical devices as a result of implantable device failures. 
In many of these cases, the manufacturers have offered devices without 
cost to the hospital or with credit for the device being replaced if 
the patient required a more expensive device. In order to ensure that 
payment rates for procedures involving devices reflect only the full 
costs of those devices, our standard ratesetting methodology for 
device-dependent APCs uses only claims that contain the correct device 
code for the procedure, do not contain token charges, do not contain 
the ``FB'' modifier signifying that the device was furnished without 
cost or with a full credit, and do not contain the ``FC'' modifier 
signifying that the device was furnished with partial credit. As 
discussed in section II.A.2.d.(1) of this final rule with comment 
period, as we proposed, we are continuing to use our standard 
ratesetting methodology for device-dependent APCs for CY 2011.
    To ensure equitable payment when the hospital receives a device 
without

[[Page 71925]]

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 are 
instructed to report no cost/full credit cases 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, the hospital is 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, the hospital is instructed to report as the device charge the 
difference between its usual charge for the device being implanted and 
its 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 are 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 reduce the OPPS payment for 
the implantation procedure by 100 percent of the device offset for no 
cost/full credit cases when both a specified device code is present on 
the claim and the procedure code maps to a specified APC. Payment for 
the implantation procedure is reduced by 50 percent of the device 
offset for partial credit cases when both a specified device code is 
present on the claim and the procedure code maps to a specified APC. 
Beneficiary copayment is based on the reduced payment amount when 
either the ``FB'' or the ``FC'' modifier is billed and the procedure 
and device codes appear on the lists of procedures and devices to which 
this policy applies. We refer readers to the CY 2008 OPPS/ASC final 
rule with comment period for more background information on the ``FB'' 
and ``FC'' payment adjustment policies (72 FR 66743 through 66749).
2. APCs and Devices Subject to the Adjustment Policy
    In the CY 2011 OPPS/ASC proposed rule (75 FR 46253 through 46256), 
we proposed to continue for CY 2011 the existing policy of reducing 
OPPS payment for specified APCs 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. Because the APC payments for 
the related services are specifically constructed to ensure that the 
full cost of the device is included in the payment, we stated in the CY 
2011 OPPS/ASC proposed rule (75 FR 46253) that we continue to believe 
it is appropriate to reduce the APC payment in cases in which the 
hospital receives a device without cost, with full credit, or with 
partial credit, in order to provide equitable payment in these cases. 
(We refer readers to section II.A.2.d.(1) of this final rule with 
comment period for a description of our standard rate-setting 
methodology for device-dependent APCs). Moreover, the payment for these 
devices comprises a large part of the APC payment on which the 
beneficiary copayment is based, and we continue to believe it is 
equitable that the beneficiary cost sharing reflects the reduced costs 
in these cases.
    In the CY 2011 OPPS/ASC proposed rule (75 FR 46253), we also 
proposed to continue using the three criteria established in the CY 
2007 OPPS/ASC final rule with comment period for determining the APCs 
to which this policy applies (71 FR 68072 through 68077). Specifically: 
(1) All procedures assigned to the selected APCs must involve 
implantable devices that would be reported if device insertion 
procedures were performed; (2) 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 (3) the 
device offset amount must be significant, which, for purposes of this 
policy, is defined as exceeding 40 percent of the APC cost. We proposed 
to continue to restrict the devices to which the APC payment adjustment 
would apply to a specific set of costly devices to ensure that the 
adjustment would not be triggered by the implantation of an inexpensive 
device whose cost would not constitute a significant proportion of the 
total payment rate for an APC. We stated in the CY 2011 OPPS/ASC 
proposed rule (75 FR 46253) that we continue to believe these criteria 
are appropriate because free devices and device credits are likely to 
be associated with particular cases only when the device must be 
reported on the claim and is of a type that is implanted and remains in 
the body when the beneficiary leaves the hospital. We believe that the 
reduction in payment is appropriate only when the cost of the device is 
a significant part of the total cost of the APC into which the device 
cost is packaged, and that the 40-percent threshold is a reasonable 
definition of a significant cost.
    As indicated in the CY 2011 OPPS/ASC proposed rule (75 FR 46253), 
we examined the offset amounts calculated from the CY 2011 proposed 
rule data and the clinical characteristics of APCs to determine whether 
the APCs to which the no cost/full credit and partial credit device 
adjustment policy applies in CY 2010 continue to meet the criteria for 
CY 2011, and to determine whether other APCs to which the policy does 
not apply in CY 2010 would meet the criteria for CY 2011. Based on the 
CY 2009 claims data available for the proposed rule, we did not propose 
any changes to the APCs and devices to which this policy applies. Table 
18 of the CY 2011 OPPS/APC proposed rule (75 FR 46254) listed the 
proposed APCs to which the payment adjustment policy for no cost/full 
credit and partial credit devices would apply in CY 2011 and displayed 
the proposed payment adjustment percentages for both no cost/full 
credit and partial credit circumstances. We proposed that the no cost/
full credit adjustment for each APC to which this policy would continue 
to apply would be the device offset percentage for the APC (the 
estimated percentage of the APC cost that is attributable to the device 
costs that are packaged into the APC). We also proposed that the 
partial credit device adjustment for each APC would continue to be 50 
percent of the no cost/full credit adjustment for the APC. Table 19 of 
the CY 2011 OPPS/APC proposed rule (75 FR 46256) listed the proposed 
devices to which the payment adjustment policy for no cost/full credit 
and partial credit devices would apply in CY 2011. We stated in the CY 
2011 proposed rule (75 FR 46253) that we would update the lists of APCs 
and devices to which the no cost/full credit and partial credit device 
adjustment policy would apply for CY 2011, consistent with the three 
selection criteria discussed earlier in this section, based on the 
final CY 2009 claims data available for the CY 2011 OPPS/ASC final rule 
with comment period.
    Comment: One comment supported the 40-percent threshold as a 
reasonable definition of significant cost when determining the APCs to 
which the no cost/full credit and partial device adjustment policy 
applies. However, the commenter expressed concern about the application 
of this standard and questioned how CMS determines which

[[Page 71926]]

APCs meet the threshold based on claims data. The commenter also 
expressed concern that, for implantable orthopedic devices in 
particular, the existing codes do not include all of the devices 
currently being used. The commenter stated that currently available 
HCPCS codes do not comprehensively describe all implantable devices, 
and that this may negatively impact calculations of the device offset. 
For example, the commenter indicated that a large number of implantable 
devices are reported using HCPCS code C1713 (Anchor/screw for opposing 
bone-to-bone or soft tissue-to-bone (implantable)). The commenter 
recommended that CMS evaluate the adequacy of the device codes to 
facilitate accurate tracking and cost estimation.
    Response: We appreciate the commenter's support for the 40 percent 
threshold as a reasonable definition of significant cost. As described 
in the CY 2007 OPPS final rule with comment period (71 FR 68063 through 
68066), we calculate the APC offset amount used to determine which APCs 
meet the 40-percent threshold by first calculating an APC median cost 
including device costs and then calculating an APC median cost 
excluding device costs using single bills that contain devices.
    The device cost is estimated from the device HCPCS codes present on 
the claims and charges in the lines for four specific revenue codes: 
275 (Medical/Surgical Supplies: Pacemaker), 276 (Medical/Surgical 
Supplies: Intraocular lens), 278 (Medical/Surgical Supplies: Other 
implants), and 624 (Medical/Surgical Supplies: FDA investigational 
devices). We then divide the ``without device'' median cost by the 
``with device'' median cost and subtract the percent from 100 to 
acquire the percent of cost attributable to devices in the APC.
    We do not agree with the commenter that the available HCPCS codes 
are not sufficiently specific to allow hospitals to accurately report 
charges for implantable devices on their claims and for us to derive 
accurate device offset amount estimates from those claims. We are aware 
that devices of varying description and cost are billed with individual 
device category codes, such as HCPCS code C1713, but we do not believe 
that this limits hospitals' ability to report accurate costs and 
charges for items that may be described by those codes. Hospitals must 
determine how best to accurately report costs and charges for all items 
and services they provide, such as assigning device charges to a C-code 
or an uncoded revenue line. As described above, we use both the C-codes 
and uncoded revenue lines to calculate the device offset.
    After consideration of the public comment we received, we are 
finalizing our CY 2011 proposals, without modification, to continue the 
established no cost/full credit and partial credit adjustment policy. 
Table 25 below lists the APCs to which the payment adjustment policy 
for no cost/full credit and partial credit devices will apply in CY 
2011 and displays the final payment adjustment percentages for both no 
cost/full credit and partial credit circumstances. Table 26 below lists 
the devices to which no cost/full credit and partial credit device 
adjustment policy will apply for CY 2011, consistent with the three 
selection criteria discussed earlier in this section, based on the 
final CY 2009 claims data available for this final rule with comment 
period. For CY 2011, OPPS payments for implantation procedures to which 
the ``FB'' modifier is appended are reduced by 100 percent of the 
device offset for no cost/full credit cases when both a device code 
listed in Table 26 below, is present on the claim and the procedure 
code maps to an APC listed in Table 25 below. OPPS payments for 
implantation procedures to which the ``FC'' modifier is appended are 
reduced by 50 percent of the device offset when both a device code 
listed in Table 26 is present on the claim and the procedure code maps 
to an APC listed in Table 25. Beneficiary copayment is based on the 
reduced amount when either the ``FB'' modifier or the ``FC'' modifier 
is billed and the procedure and device codes appear on the lists of 
procedures and devices to which this policy applies.
    We note that we are adding one new APC for CY 2011 to Table 25, APC 
0318 (Implantation of Cranial Neurostimulator Pulse Generator and 
Electrode), and deleting APC 0225 (Implantation of Neurostimulator 
Electrodes, Cranial Nerve). As discussed in section II.A.2.d.9. of this 
final rule with comment period, we are making changes to these device-
dependent APCs in order to accommodate revisions to coding in CY 2011.

   Table 25--APCs To Which The No Cost/Full Credit and Partial Credit
             Device Adjustment Policy Will Apply in CY 2011
------------------------------------------------------------------------
                                         Final CY 2011    Final CY 2011
                                         device offset    device offset
  Final CY 2011     CY 2011 APC Title    percentage for   percentage for
       APC                                no cost/full    partial credit
                                          credit case          case
------------------------------------------------------------------------
0039............  Level I Implantation               86               43
                   of Neurostimulator
                   Generator.
0040............  Percutaneous                       58               29
                   Implantation of
                   Neurostimulator
                   Electrodes.
0061............  Laminectomy,                       64               32
                   Laparoscopy, or
                   Incision for
                   Implantation of
                   Neurostimulator
                   Electrodes.
0089............  Insertion/                         71               35
                   Replacement of
                   Permanent Pacemaker
                   and Electrodes.
0090............  Insertion/                         73               36
                   Replacement of
                   Pacemaker Pulse
                   Generator.
0106............  Insertion/                         46               23
                   Replacement of
                   Pacemaker Leads and/
                   or Electrodes.
0107............  Insertion of                       88               44
                   Cardioverter-
                   Defibrillator.
0108............  Insertion/                         87               44
                   Replacement/Repair
                   of Cardioverter-
                   Defibrillator Leads.
0227............  Implantation of Drug               81               41
                   Infusion Device.
0259............  Level VII ENT                      85               43
                   Procedures.
0315............  Level II                           88               44
                   Implantation of
                   Neurostimulator
                   Generator.
0318............  Implantation of                    85               43
                   Cranial
                   Neurostimulator
                   Pulse Generator and
                   Electrode.
0385............  Level I Prosthetic                 61               31
                   Urological
                   Procedures.
0386............  Level II Prosthetic                71               36
                   Urological
                   Procedures.
0418............  Insertion of Left                  73               36
                   Ventricular Pacing
                   Elect.
0425............  Level II                           59               30
                   Arthroplasty or
                   Implantation with
                   Prosthesis.
0648............  Level IV Breast                    46               23
                   Surgery.
0654............  Insertion/                         74               37
                   Replacement of a
                   permanent dual
                   chamber pacemaker.
0655............  Insertion/                         74               37
                   Replacement/
                   Conversion of a
                   permanent dual
                   chamber pacemaker.

[[Page 71927]]

 
0680............  Insertion of Patient               71               35
                   Activated Event
                   Recorders.
------------------------------------------------------------------------


  Table 26--Devices To Which the No Cost/Full Credit and Partial Credit
             Device Adjustment Policy Will Apply in CY 2011
------------------------------------------------------------------------
     CY 2011 device HCPCS code            CY 2011 short descriptor
------------------------------------------------------------------------
C1721.............................  AICD, dual chamber.
C1722.............................  AICD, single chamber.
C1728.............................  Cath, brachytx seed adm.
C1764.............................  Event recorder, cardiac.
C1767.............................  Generator, neurostim, imp.
C1771.............................  Rep dev, urinary, w/sling.
C1772.............................  Infusion pump, programmable.
C1776.............................  Joint device (implantable).
C1777.............................  Lead, AICD, endo single coil.
C1778.............................  Lead, neurostimulator.
C1779.............................  Lead, pmkr, transvenous VDD.
C1785.............................  Pmkr, dual, rate-resp.
C1786.............................  Pmkr, single, rate-resp.
C1789.............................  Prosthesis, breast, imp.
C1813.............................  Prosthesis, penile, inflatab.
C1815.............................  Pros, urinary sph, imp.
C1820.............................  Generator, neuro rechg bat sys.
C1881.............................  Dialysis access system.
C1882.............................  AICD, other than sing/dual.
C1891.............................  Infusion pump, non-prog, perm.
C1895.............................  Lead, AICD, endo dual coil.
C1896.............................  Lead, AICD, non sing/dual.
C1897.............................  Lead, neurostim, test kit.
C1898.............................  Lead, pmkr, other than trans.
C1899.............................  Lead, pmkr/AICD combination.
C1900.............................  Lead coronary venous.
C2619.............................  Pmkr, dual, non rate-resp.
C2620.............................  Pmkr, single, non rate-resp.
C2621.............................  Pmkr, other than sing/dual.
C2622.............................  Prosthesis, penile, non-inf.
C2626.............................  Infusion pump, non-prog, temp.
C2631.............................  Rep dev, urinary, w/o sling.
L8600.............................  Implant breast silicone/eq.
L8614.............................  Cochlear device/system.
L8680.............................  Implt neurostim elctr each.
L8685.............................  Implt nrostm pls gen sng rec.
L8686.............................  Implt nrostm pls gen sng non.
L8687.............................  Implt nrostm pls gen dua rec.
L8688.............................  Implt nrostm pls gen dua non.
L8690.............................  Aud osseo dev, int/ext comp.
------------------------------------------------------------------------

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

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

1. Background
    Section 1833(t)(6) of the Act provides for temporary additional 
payments or ``transitional pass-through payments'' for certain drugs 
and biologicals (also referred to as biologics). As enacted by the 
Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act (BBRA) of 
1999 (Pub. L. 106-113), this provision requires the Secretary to make 
additional payments to hospitals for current orphan drugs, as 
designated under section 526 of the Federal Food, Drug, and Cosmetic 
Act (Pub. L. 107-186); current drugs and biologicals and brachytherapy 
sources used for the treatment of cancer; and current 
radiopharmaceutical drugs and biologicals. For those drugs and 
biologicals referred to as ``current,'' the transitional pass-through 
payment began 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.'' Under 
the 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 product's first payment as a hospital outpatient service under 
Medicare Part B. CY 2011 pass-through drugs and biologicals and their 
designated APCs are assigned status indicator ``G'' in Addenda A and B 
to this final rule with comment period.
    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. If the drug or biological is covered under 
a competitive acquisition contract under section 1847B of the Act, the 
pass-through payment amount is determined by the Secretary to be equal 
to the average price for the drug or biological for all competitive 
acquisition areas and the year established under such section as 
calculated and adjusted by the Secretary.
    This methodology for determining the pass-through payment amount is 
set forth in regulations at 42 CFR 419.64, which 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 use of the average sales price (ASP) methodology as the 
basis for payment for drugs and biologicals described in section 
1842(o)(1)(C) of the Act that are 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 final rule with comment period, the term ``ASP 
methodology'' and ``ASP-based'' are inclusive of all data sources and 
methodologies described therein. Additional information on the ASP 
methodology can be found on the CMS Web site at: http://www.cms.hhs.gov/McrPartBDrugAvgSalesPrice.
    As noted above, section 1833(t)(6)(D)(i) of the Act also provides 
that, if a drug or biological is covered under a competitive 
acquisition contract under section 1847B of the Act, the payment rate 
is equal to the average price for the drug or biological for all 
competitive acquisition areas and the year established as calculated 
and adjusted by the Secretary. Section 1847B of the Act establishes the 
payment methodology for Medicare Part B drugs and biologicals under the 
competitive acquisition program (CAP). The Part B drug CAP was 
implemented on July 1, 2006, and included approximately 190 of the most 
common Part B drugs provided in the physician's office setting. As we 
noted in the CY 2009 OPPS/ASC final rule with comment period (73 FR 
68633), the Part B drug CAP program was postponed beginning in CY 2009 
(Medicare Learning Network (MLN) Matters Special Edition 0833, 
available via the Web site: http://www.medicare.gov). As

[[Page 71928]]

of publication of this final rule with comment period, the postponement 
of the Part B drug CAP program remains in effect and, there is no 
effective CAP program rate for pass-through drugs and biologicals as of 
January 1, 2009. Consistent with what we indicated in the CY 2010 OPPS/
ASC final rule with comment period (74 FR 60466), if the program is 
reinstituted during CY 2011 and Part B drug CAP rates become available, 
we would again use the Part B drug CAP rate for pass-through drugs and 
biologicals if they are a part of the Part B drug CAP program. 
Otherwise, we would continue to use the rate that would be paid in the 
physician's office setting for drugs and biologicals with pass-through 
status.
    For CYs 2005, 2006, and 2007, we estimated the OPPS pass-through 
payment amount for drugs and biologicals to be zero based on our 
interpretation that the ``otherwise applicable Medicare OPD fee 
schedule'' amount was equivalent to the amount to be paid for pass-
through drugs and biologicals under section 1842(o) of the Act (or 
section 1847B of the Act, if the drug or biological is covered under a 
competitive acquisition contract). We concluded for those years that 
the resulting difference between these two rates would be zero. For CYs 
2008 and 2009, we estimated the OPPS pass-through payment amount for 
drugs and biologicals to be $6.6 million and $23.3 million, 
respectively. For CY 2010, we estimated the OPPS pass-through payment 
estimate for drugs and biologicals to be $35.5 million. Our OPPS pass-
through payment estimate for drugs and biologicals in CY 2011 is $15.5 
million, which is discussed in section VI.B. of this final rule with 
comment period.
    The pass-through application and review process for drugs and 
biologicals is explained on the CMS Web site at: http://www.cms.hhs.gov/HospitalOutpatientPPS/04_passthrough_payment.asp.
2. Drugs and Biologicals With Expiring Pass-Through Status in CY 2010
    In the CY 2011 OPPS/ASC proposed rule (75 FR 46257 through 46258), 
we proposed that the pass-through status of 18 drugs and biologicals 
would expire on December 31, 2010, as listed in Table 20 of the 
proposed rule (75 FR 46258). All of these drugs and biologicals will 
have received OPPS pass-through payment for at least 2 years, and no 
more than 3 years, by December 31, 2010. These drugs and biologicals 
were approved for pass-through status on or before January 1, 2009. 
With the exception of those groups of drugs and biologicals that are 
always packaged when they do not have pass-through status, specifically 
diagnostic radiopharmaceuticals, contrast agents, and implantable 
biologicals, our standard methodology for providing payment for drugs 
and biologicals with expiring pass-through 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 $70 for CY 2011), as discussed further in section V.B.2. 
of this final rule with comment period. If the drug's or biological's 
estimated per day cost is less than or equal to the applicable OPPS 
drug packaging threshold, we would package payment for the drug or 
biological into the payment for the associated procedure in the 
upcoming calendar year. If the estimated per day cost of the drug or 
biological is greater than the OPPS drug packaging threshold, we would 
provide separate payment at the applicable relative ASP-based payment 
amount (which is at ASP+5 percent for CY 2011, as discussed further in 
section V.B.3. of this final rule with comment period). Section 
V.B.2.d. of this final rule with comment period discusses the packaging 
of all nonpass-through contrast agents, diagnostic 
radiopharmaceuticals, and implantable biologicals.
    Two of the products for which we proposed to expire pass-through 
status in CY 2011 are biologicals that are solely surgically implanted 
according to their Food and Drug Administration approved indications. 
As discussed in the CY 2010 OPPS/ASC final rule with comment period (74 
FR 60467), we package payment for those implantable biologicals that 
have expiring pass-though status into payment for the associated 
surgical procedure. In the CY 2011 OPPS/ASC proposed rule, we proposed 
to package payment for two products described by HCPCS codes C9356 
(Tendon, porous matrix of cross-linked collagen and glycosaminoglycan 
matrix (TenoGlide Tendon Protector Sheet), per square centimeter) and 
C9359 (Porous purified collagen matrix bone void filler (Integra Mozaik 
Osteoconductive Scaffold Putty, Integra OS Osteoconductive Scaffold 
Putty), per 0.5 cc).
    To date, for other nonpass-through biologicals paid under the OPPS 
that may sometimes be used as implantable devices, we have instructed 
hospitals, via Transmittal 1336, Change Request 5718, dated September 
14, 2007, to not separately bill for drug and biological HCPCS codes 
for the biologicals when they are used as implantable devices 
(including as a scaffold or an alternative to human or nonhuman 
connective tissue or mesh used in a graft) during surgical procedures. 
When using drugs and biologicals during surgical procedures as 
implantable devices, hospitals may include the charge for these items 
in their charge for the procedure, report the charge on an uncoded 
revenue center line, or report the charge under a device HCPCS code if 
one exists, so the costs would appropriately contribute to the future 
median setting for the associated procedure. In such cases, we consider 
payment for the biological used as an implantable device in a specific 
clinical case to be included in payment for the surgical procedure.
    As we established in the CY 2003 OPPS final rule with comment 
period (67 FR 66763), when the pass-through payment period for an 
implantable device ends, it is standard OPPS policy to package payment 
for the implantable device into payment for its associated surgical 
procedure. We consider nonpass-through implantable devices to be 
integral and supportive items and services for which packaged payment 
is most appropriate. According to our regulations at Sec.  419.2(b), as 
a prospective payment system, the OPPS establishes a national payment 
rate that includes operating and capital-related costs that are 
directly related and integral to performing a procedure or furnishing a 
service on an outpatient basis including, but not limited to, 
implantable prosthetics, implantable durable medical equipment, and 
medical and surgical supplies. Therefore, when the period of 
nonbiological device pass-through payment ends, we package the costs of 
the devices no longer eligible for pass-through payment into the costs 
of the procedures with which the devices were reported in the claims 
data used to set the payment rates for the upcoming calendar year. As 
described in the CY 2009 OPPS/ASC final rule with comment period (73 FR 
68634), we believed that this policy to package payment for implantable 
devices that are integral to the performance of separately paid 
procedures should also apply to payment for implantable biologicals 
without pass-through status, when those biologicals are used as 
implantable devices. As stated above, implantable biologicals may be 
used in place of other implantable nonbiological devices whose costs 
are already accounted for in the associated procedural APC payments for 
surgical procedures. If we were to provide separate payment for these 
implantable

[[Page 71929]]

biologicals without pass-through status, we would potentially be 
providing duplicate device payment, both through the packaged 
nonbiological device cost included in the surgical procedure's payment 
and separate biological payment. We indicated in the CY 2009 OPPS/ASC 
final rule with comment period (73 FR 68634) that we saw no basis for 
treating implantable biological and nonbiological devices without pass-
through status differently for OPPS payment purposes because both are 
integral to and supportive of the separately paid surgical procedures 
in which either may be used.
    We did not receive any public comments on our proposal to expire 
the 18 drugs and biologicals that were identified in the proposed rule 
from pass-through status, effective December 31, 2010. We are 
finalizing our proposal, without modification, to expire the pass-
through status of the 18 drugs and biologicals listed in Table 27 
below, effective December 31, 2010.

           Table 27--Drugs and Biologicals for Which Pass-Through Status Will Expire December 31, 2010
----------------------------------------------------------------------------------------------------------------
                                                                                  Final CY 2011    Final CY 2011
   CY 2010 HCPCS Code       CY 2011 HCPCS Code       CY 2011 long descriptor            SI              APC
----------------------------------------------------------------------------------------------------------------
A9581                    A9581..................  Injection, gadoxetate                       N              N/A
                                                   disodium, 1 ml.
C9248                    C9248..................  Injection, clevidipien                      K             9248
                                                   butyrate, 1 mg.
C9356                    C9356..................  Tendon, porous matrix of                    N              N/A
                                                   cross-linked collagen and
                                                   glycosaminoglycan matrix
                                                   (TenoGlide Tendon Protector
                                                   Sheet), per square
                                                   centimeter.
C9358                    C9358..................  Dermal substitute, native,                  K             9358
                                                   non-denatured collagen,
                                                   fetal bovine origin
                                                   (SurgiMend Collagen Matrix),
                                                   per 0.5 square centimeters.
C9359                    C9359..................  Porous purified collagen                    N              N/A
                                                   matrix bone void filler
                                                   (Integra Mozaik
                                                   Osteoconductive Scaffold
                                                   Putty, Integra OS
                                                   Osteoconductive Scaffold
                                                   Putty), per 0.5 cc.
J1267                    J1267..................  Injection, doripenem, 10 mg..               N              N/A
J1453                    J1453..................  Injection, fosaprepitant, 1                 K             9242
                                                   mg.
J1459                    J1459..................  Injection, immune globulin                  K             1214
                                                   (privigen), intravenous, non-
                                                   lyophilized (e.g. liquid),
                                                   500 mg.
J1571                    J1571..................  Injection, hepatitis b immune               K             0946
                                                   globulin (hepagam b),
                                                   intramuscular, 0.5 ml.
J1573                    J1573..................  Injection, hepatitis B immune               K             1138
                                                   globulin (Hepagam B),
                                                   intravenous, 0.5 ml.
J1953                    J1953..................  Injection, levetiracetam, 10                N              N/A
                                                   mg.
J2785                    J2785..................  Injection, regadenoson, 0.1                 K             9244
                                                   mg.
J2796                    J2796..................  Injection,romiplostim, 10                   K             9245
                                                   micrograms.
J9033                    J9033..................  Injection, bendamustine hcl,                K             9243
                                                   1 mg.
J9207                    J9207..................  Injection, ixabepilone, 1 mg.               K             9240
J9225                    J9225..................  Histrelin implant (vantas),                 K             1711
                                                   50 mg.
J9226                    J9226..................  Histrelin implant (supprelin                K             1142
                                                   la), 50 mg.
Q4114                    Q4114..................  Dermal substitute, granulated               K             1251
                                                   cross-linked collagen and
                                                   glycosaminoglycan matrix
                                                   (Flowable Wound Matrix), 1
                                                   cc.
----------------------------------------------------------------------------------------------------------------

3. Drugs, Biologicals, and Radiopharmaceuticals With New or Continuing 
Pass-Through Status in CY 2011
    In the CY 2011 OPPS/ASC proposed rule (75 FR 46258), we proposed to 
continue pass-through status in CY 2011 for 31 drugs and biologicals. 
None of these drugs and biologicals will have received OPPS pass-
through payment for at least 2 years and no more than 3 years by 
December 31, 2010. These drugs and biologicals, which were approved for 
pass-through status between April 1, 2009 and July 1, 2010, were listed 
in Table 21 of the proposed rule. The APCs and HCPCS codes for these 
drugs and biologicals were assigned status indicator ``G'' in Addenda A 
and B to the proposed rule (75 FR 46259).
    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 (or, if the drug or biological is covered 
under a CAP 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 the year established under such 
section as calculated and adjusted by the Secretary) and the portion of 
the otherwise applicable OPD fee schedule that the Secretary determines 
is associated with the drug or biological. Payment for drugs and 
biologicals with pass-through status under the OPPS is currently made 
at the physician's office payment rate of ASP+6 percent. In the 
proposed rule, we stated that we believe it is consistent with the 
statute to continue to provide payment for drugs and biologicals with 
pass-through status at a rate of ASP+6 percent in CY 2011, the amount 
that drugs and biologicals receive under section 1842(o) of the Act. 
Thus, for CY 2011, we proposed to pay for pass-through drugs and 
biologicals at ASP+6 percent, equivalent to the rate these drugs and 
biologicals would receive in the physician's office setting in CY 2011. 
We proposed that a zero pass-through payment amount would be paid for 
most pass-through drugs and biologicals under the CY 2011 OPPS because 
the difference between the amount authorized under section 1842(o) of 
the Act, which is ASP+6 percent, and the portion of the otherwise 
applicable OPD fee schedule that the Secretary determines is 
appropriate, proposed at ASP+6 percent, is zero. In the case of pass-
through contrast agents, diagnostic radiopharmaceuticals, and 
implantable biologicals, their pass-through payment amount would be 
equal to ASP+6 percent because, if not on pass-through status, payment 
for these products would be packaged into the associated procedures.
    In addition, we proposed to continue to update pass-through payment 
rates on a quarterly basis on the CMS Web site during CY 2011, if later 
quarter ASP submission (or more recent WAC or AWP information, as 
applicable) indicate that adjustments to the payment rates for these 
pass-through drugs or biologicals are necessary. For a full description 
of this policy, we refer readers to the CY 2006 OPPS/ASC final rule 
with comment period (70 FR 42722 and 42723). If the Part B drug CAP is 
reinstated during CY 2011, and a drug or biological that has been 
granted pass-

[[Page 71930]]

through status for CY 2011 becomes covered under the Part B drug CAP, 
we proposed to provide pass-though payment at the Part B drug CAP rate 
and to make the adjustments to the payment rates for these drugs and 
biologicals on a quarterly basis, as appropriate. As is our standard 
methodology, we annually review new permanent HCPCS codes and delete 
temporary HCPCS C-codes if an alternate permanent HCPCS code is 
available for purposes of OPPS billing and payment.
    In CY 2011, as is consistent with our CY 2010 policy for diagnostic 
and therapeutic radiopharmaceuticals, we proposed to provide payment 
for both diagnostic and therapeutic radiopharmaceuticals that are 
granted pass-through status based on the ASP methodology. As stated 
above, 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 
status during CY 2011, we proposed to follow the standard ASP 
methodology to determine the pass-through payment rate that drugs 
receive under section 1842(o) of the Act, which is, ASP+6 percent. If 
ASP data are not available for a radiopharmaceutical, we proposed to 
provide pass-through payment at WAC+6 percent, the equivalent payment 
provided to pass-through drugs and biologicals without ASP information. 
If WAC information is also not available, we proposed to provide 
payment for the pass-through radiopharmaceutical at 95 percent of its 
most recent AWP.
    As discussed in more detail in section V.B.2.d. of this final rule 
with comment period, over the last 3 years, we implemented a policy 
whereby payment for all nonpass-through diagnostic 
radiopharmaceuticals, contrast agents, and implantable biologicals is 
packaged into payment for the associated procedure. In the CY 2011 
OPPS/ASC proposed rule (75 FR 46271), we proposed to continue the 
packaging of these items, regardless of their per day cost, in CY 2011. 
As stated earlier, pass-through payment is the difference between the 
amount authorized under section 1842(o) of the Act (or, if the drug or 
biological is covered under a CAP 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 the year 
established under such section as calculated and adjusted by the 
Secretary) and the portion of the otherwise applicable OPD fee schedule 
that the Secretary determines is associated with the drug or 
biological. Because payment for a drug that is either a diagnostic 
radiopharmaceutical or a contrast agent (identified as a ``policy-
packaged'' drug, first described in the CY 2009 OPPS/ASC final rule 
with comment period (73 FR 68639)) or for an implantable biological 
(which we consider to be a device when it functions as an implantable 
device for all payment purposes, as discussed in sections V.A.4. and 
V.B.2.d. of the CY 2010 OPPS/ASC final rule with comment period (74 FR 
60458)) would otherwise be packaged if the product did not have pass-
through status, we believe the otherwise applicable OPPS payment amount 
would be equal to the ``policy-packaged'' drug or device APC offset 
amount for the associated clinical APC in which the drug or biological 
is utilized. The calculation of the ``policy-packaged'' drug and device 
APC offset amounts are described in more detail in section IV.A.2. of 
this final rule with comment period. It follows that the copayment for 
the nonpass-through payment portion (the otherwise applicable fee 
schedule amount that we would also offset from payment for the drug or 
biological if a payment offset applies) of the total OPPS payment for 
those drugs and biologicals would, therefore, be accounted for in the 
copayment for the associated clinical APC in which the drug or 
biological is used.
    According to section 1833(t)(8)(E) of the Act, the amount of 
copayment associated with pass-through items is equal to the amount of 
copayment that would be applicable if the pass-through adjustment was 
not applied. Therefore, as we did in CY 2010, we proposed to continue 
to set the associated copayment amount for pass-through diagnostic 
radiopharmaceuticals, contrast agents, and implantable biologicals that 
would otherwise be packaged if the item did not have pass-through 
status to zero for CY 2011. The separate OPPS payment to a hospital for 
the pass-through diagnostic radiopharmaceutical, contrast agent, or 
implantable biological, after taking into account any applicable 
payment offset for the item due to the device or ``policy-packaged'' 
APC offset policy, is the item's pass-through payment, which is not 
subject to a copayment according to the statute. Therefore, we proposed 
to not publish a copayment amount for these items in Addenda A and B to 
the proposed rule.
    As is our standard methodology, we annually review new permanent 
HCPCS codes and delete temporary HCPCS C-codes if an alternative 
permanent HCPCS code is available for purposes of OPPS billing and 
payment. We specifically review drugs with pass-through status for CY 
2011 that will change from C-code to a permanent J-code for CY 2011. 
For our CY 2011 review, we have determined that HCPCS code J2426 
(Injection, paliperidone palmitate, extended release, 1 mg) describes 
the product reported under HCPCS code C9255 (Injection, paliperidone 
palmitate, 1 mg); HCPCS code J7312 (Injection, dexamethasone 
intravitreal implant, 0.1 mg) describes the product reported under 
HCPCS code C9256 (Injection, dexamethasone intravitreal implant, 0.1 
mg); HCPCS code J3095 (Injection, telavancin, 10 mg) describes the 
product reported under HCPCS code C9258 (Injection, telavancin, 10 mg); 
HCPCS code J9307 (Injection, pralatrexate, 1 mg) describes the product 
reported under HCPCS code C9259 (Injection, pralatrexate, 1 mg); HCPCS 
code J9302 (Injection, ofatumumab, 10 mg) describes the product 
reported under HCPCS code C9260 (Injection, ofatumumab, 10 mg); HCPCS 
code J3357 (Injection, ustekinumab, 1 mg) describes the product 
reported under HCPCS code C9261 (Injection, ustekinumab, 1 mg); HCPCS 
code J1290 (Injection, ecallantide, 1 mg) describes the product 
reported under HCPCS code C9263 (Injection, ecallantide, 1 mg); HCPCS 
code J3262 (Injection, tocilizumab, 1 mg) describes the product 
reported under HCPCS code C9264 (Injection, tocilizumab, 1 mg); HCPCS 
code J9315 (Injection, romidepsin, 1 mg) describes the product reported 
under HCPCS code C9265 (Injection, romidepsin, 1 mg); HCPCS code J0775 
(Injection, collagenase clostridium histolyticum, 0.01 mg) describes 
the product reported under HCPCS code C9266 (Injection, collagenase 
clostridium histolyticum, 0.1 mg); HCPCS code J7184 (Injection, von 
Willebrand factor complex (human), Wilate, per 100 IU VWF: RCO) 
describes the product reported under HCPCS code C9267 (Injection, von 
Willebrand factor complex (human), Wilate, per 100 IU VWF: RCO); HCPCS 
code J7335 (Capsaicin 8% patch, per 10 square centimeters) describes 
the product reported under HCPCS code C9268 (Capsaicin, patch, 10cm2); 
HCPCS code J0597 (Injection, C-1 Esterase inhibitor (human), Berinert, 
10 units) describes the product reported under HCPCS code C9269 
(Injection, C-1 Esterase inhibitor (human), Berinert, 10 units); HCPCS 
code J3385 (Injection, velaglucerase alfa, 100 units) describes the 
product reported under HCPCS code C9271 (Injection, velaglucerase alfa, 
100 units); and HCPCS code J8562

[[Page 71931]]

(Fludarabine phosphate, oral, 10 mg) describes the product reported 
under HCPCS code Q2025 (Fludarabine phosphate, oral, 1 mg).
    Comment: Several commenters supported CMS' proposal to provide 
payment at ASP+6 percent for drugs, biologicals, contrast agents, and 
radiopharmaceuticals that are granted pass-through status. One 
commenter approved of the proposal to use the ASP methodology that 
would provide payment based on WAC if ASP information is not available, 
and payment at 95 percent of AWP if WAC information is not available. 
Some commenters requested that CMS provide an additional payment for 
radiopharmaceuticals that are granted pass-through status.
    Response: As discussed above, the statutorily mandated pass-through 
payment for CY 2011, in general, 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. Therefore, 
the pass-through payment is determined by subtracting the otherwise 
applicable payment amount under the OPPS (determined to be ASP+5 
percent for CY 2011) from the amount determined under section 1842(o) 
of the Act (ASP+6 percent).
    For CY 2011, consistent with our CY 2010 payment policy for 
diagnostic and therapeutic radiopharmaceuticals, we proposed to provide 
payment for both diagnostic and therapeutic radiopharmaceuticals with 
pass-through status based on the ASP methodology. As stated above, the 
ASP methodology, as applied under the OPPS, uses several sources of 
data as a basis for payment, including the ASP, WAC if ASP is 
unavailable, and 95 percent of the radiopharmaceutical's most recent 
AWP if ASP and WAC are unavailable. 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 status during CY 2011, we proposed to follow the standard 
ASP methodology to determine its pass-through payment rate under the 
OPPS. We have routinely provided a single payment for drugs, 
biologicals, and radiopharmaceuticals under the OPPS to account for the 
acquisition and pharmacy overhead costs, including compounding costs. 
We continue to believe that a single payment is appropriate for 
diagnostic radiopharmaceuticals with pass-through status in CY 2011 and 
that the payment rate of ASP+6 percent (or payment based on the ASP 
methodology) is appropriate to provide payment for both the 
radiopharmaceutical's acquisition cost and any associated nuclear 
medicine handling and compounding costs. We refer reader to section 
V.B.3.c. of this final rule with comment period for further discussion 
of payment for therapeutic radiopharmaceuticals based on ASP 
information submitted by manufacturers and the CMS Web site at: http://www.cms.gov/HospitalOutpatientPPS/.
    Comment: Some commenters expressed concern that a 
radiopharmaceutical may receive pass-through payment for a period of 
possibly only 2 years. Several commenters recommended providing pass-
through payment for approved radiopharmaceuticals for a full 3 year 
time period to allow hospitals time to incorporate new products into 
their chargemasters and billing practices.
    Response: The statute specifically allows for pass-through payment 
for drugs and biologicals to be made for at least 2 years, but no more 
than 3 years. We believe this period of payment facilitates 
dissemination of these new products into clinical practice and for the 
collection of hospital claims data reflective of their costs for future 
OPPS ratesetting. Our longstanding practice has been to provide pass-
through payment for a period of 2 to 3 years, with expiration of pass-
through status proposed and finalized through the annual rulemaking 
process. Each year, when proposing to expire the pass-through status of 
certain drugs and biologicals, we examine our claims data for these 
products. We observe that hospitals typically have incorporated these 
products into their chargemasters based on the utilization and costs 
observed in our claims data. Under the existing pass-through policy, 
which has been generally supported by commenters, we begin pass-through 
payment on a quarterly basis that depends on when applications are 
submitted to us for consideration and we expire pass-through status 
only on an annual basis, so there is no way to ensure that all pass-
through drugs and biologicals receive pass-through payment for a full 3 
years, while also providing pass-through payment for no more than 3 
years as the statute requires. Therefore, we will continue to provide 
drug and biologicals pass-through payment for at least 2 years, but no 
more than 3 years, as required by the statute.
    There is currently one diagnostic radiopharmaceutical, described by 
HCPCS code A9582 (Iodine I-123 iobenguane, diagnostic, per study dose, 
up to 15 millicuries), that has been granted pass-through status at the 
time of issuance of this final rule with comment period. We proposed to 
continue pass-through status for this diagnostic radiopharmaceutical as 
it would not have received at least 2 years but not more than 3 years 
of pass-through payment by December 31, 2010. This is consistent with 
the OPPS provision that provides for at least 2 years but not more than 
3 years of pass-through payment for drugs and biologicals that are 
approved for pass-through payments.
    We provide an opportunity through the annual OPPS/ASC rulemaking 
cycle for public comment on those drugs and biologicals that are 
proposed for expiration of pass-through payment at the end of the next 
calendar year. We have often received public comments related to our 
proposed expiration of pass-through status for drugs and biologicals in 
the future. In this manner, we address specific concerns about the 
pass-through payment period for individual drugs, biologicals, and 
radiopharmaceuticals.
    Comment: One commenter recommended that CMS monitor the cost and 
utilization data on HCPCS code A9583 (Injection, gadofosveset 
trisodium, 1 ml) on a quarterly basis throughout CY 2010 and CY 2011 to 
determine whether a third year of pass-through payment is necessary. 
The commenter noted that HCPCS code A9583, as a contrast agent and a 
``policy-packaged'' item, would be packaged after its pass-through 
status ends.
    Response: As stated above, section 1833(t)(6)(C)(i)(II) of the Act 
provides transitional pass-through payments for a drug or biological 
for at least 2 years, but not more than 3 years, beginning on the first 
date on which payment is made as hospital outpatient services under 
Medicare Part B. Under our current policy, supported by commenters, we 
begin pass-though payment on a quarterly basis that depends on when 
applications are submitted to us for consideration, and we expire pass-
through status only on an annual basis through the rulemaking process. 
Accordingly, there is no way to ensure that all pass-through drugs and 
biologicals receive pass-through payment for a full 3 years, while also 
providing pass-through payment for no more than 3 years, as the statute 
requires. Although it is our standard practice to monitor and review 
the cost and utilization data of all drugs and biologicals, because of 
our policy to expire pass-through status only on an annual basis 
through rulemaking, we could not use this information to authorize a 
full third year of pass-

[[Page 71932]]

through payment for an individual drug or biological. Therefore, once 
pass-through status ends for the item described by HCPCS code A9583 
(Injection, gadofosveset trisodium, 1 ml) after at least 2 years but 
not more than 3 years according to the statute, as a contrast agent, it 
will be packaged according to our policy described in section V.B.2.d. 
of this final rule with comment period. We are finalizing our proposal 
to continue pass-through status for the item described by HCPCS code 
A9583 for CY 2011.
    Comment: Several commenters supported the CY 2011 proposal to 
continue to set the associated copayment amounts for pass-through 
diagnostic radiopharmaceuticals, contrast agents, and implantable 
biologicals that would otherwise be packaged if the product did not 
have pass-through status to zero. The commenters noted that this policy 
is consistent with statutory requirements and provides cost-saving 
benefits to beneficiaries.
    Response: We appreciate the commenters' support of our proposal. As 
discussed in the CY 2011 OPPS/ASC proposed rule (75 FR 46259), we 
believe that, for drugs and biologicals that are ``policy-packaged,'' 
the copayment for the nonpass-through payment portion of the total OPPS 
payment for this subset of drugs and biologicals is accounted for in 
the copayment for the associated clinical APC in which the drug or 
biological is used. According to section 1833 (t)(8)(E) of the Act, the 
amount of copayment associated with pass-through items is equal to the 
amount of copayment that would be applicable if the pass-through 
adjustment was not applied. Therefore, we believe that the amount 
should be zero for drugs and biologicals that are ``policy-packaged,'' 
including diagnostic radiopharmaceuticals.
    Comment: One commenter noted that CMS omitted 7 of the 31 pass-
through drugs and biologicals proposed to continue on pass-through 
status for CY 2011 in Addendum B to the CY 2011 OPPS/ASC proposed rule. 
The commenter was concerned that the absence of these drugs and 
biologicals in Addendum B could cause hospitals or Medicare contractors 
to believe that the products are not paid for under the OPPS as pass-
through drugs.
    Response: Table 21 of the CY 2011 OPPS/ASC proposed rule (75 FR 
46260) contained 31 drugs, biologicals, and radiopharmaceuticals that 
we proposed to continue on pass-through status for CY 2011. This table 
included drugs, biologicals, and radiopharmaceuticals approved for 
pass-through status for the July 2010 quarterly update. While the 
commenter did not specifically mention which codes were omitted from 
Addendum B to the proposed rule, we note that HCPCS codes C9264 
(Injection, tocilizumab, 1 mg), C9265 (Injection, romidepsin, 1 mg), 
C9266 (Injection, collagenase clostridium histolyticum, 0.1 mg), C9267 
(Injection, von Willebrand factor complex (human), Wilate, per 100 IU 
VWF: RCO), C9268 (Capsaicin, patch, 10cm2), C9367 (Skin substitute, 
Endoform Dermal Template, per square centimeter), all approved for 
pass-through status for the July 2010 quarterly update, and Q2025 
(Fludarabine phosphate, oral, 1 mg) were not included in Addendum B of 
the proposed rule.
    According to our current practice, we did not include pass-through 
payment rates for those drugs, biologicals, and radiopharmaceuticals 
that were newly approved for pass-through status for July 2010 in 
Addendum B to the CY 2011 OPPS/ASC proposed rule. It has been our 
longstanding practice to include only payment rates for pass-through 
drugs, biologicals, and radiopharmaceuticals in Addendum B to the 
proposed rule that have been approved for payment under the OPPS 
through the April quarterly update because of the difficulty of 
coordinating production of the Addendum B to the proposed rule 
concurrently with decisions about pass-through drugs and biologicals 
for the July quarterly update transmittal. Payment rates for all pass-
through drugs, biologicals, and radiopharmaceuticals that are proposed 
and finalized to continue on pass-through status for a given calendar 
year are included in Addendum B to the final rule with comment period.
    Additionally, pass-through payment for the product described by 
HCPCS code Q2025 (Fludarabine phosphate, oral, 1 mg) was included in 
Addendum B to the CY 2011 OPPS/ASC proposed rule under the now 
discontinued HCPCS code C9262 (Fludarabine phosphate, oral, 1 mg). 
Beginning in July 2010, HCPCS code C9262 was deleted and replaced with 
HCPCS code Q2025. For CY 2011, HCPCS code Q2025 is finalized as HCPCS 
code J8562 (Fludarabine phosphate oral, 10mg) and will continue under 
pass-through status for CY 2011.
    We did not receive any public comments on our proposal to update 
pass-through payment rates on a quarterly basis on the CMS Website 
during CY 2011 if later quarter ASP submissions (or more recent WAC or 
AWP information, as applicable) indicate that adjustments to the 
payment rates for these pass-through drugs and biologicals are 
necessary.
    After consideration of the public comments we received, we are 
finalizing our CY 2011 pass-through payment proposals, without 
modification. Specifically, we are providing pass-through payment in CY 
2011 for those drugs, biologicals, and radiopharmaceuticals listed in 
Table 28 below. Payment for drugs, biologicals, and 
radiopharmaceuticals granted pass-through status will be made at the 
payment rate specified in section 1842(o) of the Act, that is, ASP+6 
percent. For drugs and biologicals that are not diagnostic 
radiopharmaceuticals, contrast agents, or implantable biologicals, the 
pass-through payment amount is equal to the difference between payment 
for the otherwise applicable Medicare OPD fee schedule that the 
Secretary determines is associated with the drug or biological, which 
is payment at ASP+5 percent and the payment rate specified in section 
1842(o) of the Act, ASP+6 percent or the Part B drug CAP rate as 
applicable. For contrast agents, diagnostic radiopharmaceuticals, and 
implantable biologicals, the pass-through payment is equal to the 
difference between the policy-packaged offset amount associated with an 
APC (discussed in V.A.4. of this final rule with comment period) and 
the payment rate specified in section 1842(o) of the Act of ASP+6 
percent. If ASP data are not available, payment for these pass-through 
drugs and biologicals will be based on the standard OPPS ASP 
methodology, that is, payment at WAC+6 percent if ASP data are not 
available, and payment at 95 percent of the pass-through drug's, 
biological's, or radiopharmaceutical's most recent AWP if WAC 
information is not available. We will update pass-through payment rates 
on a quarterly basis on the CMS website during CY 2011 if later ASP 
submissions (or more recent WAC or AWP information, as applicable) 
indicate that adjustments to the payment rates for pass-through drugs 
and biologicals are necessary. We will set the associated copayment 
amount for pass-through diagnostic radiopharmaceuticals, contrast 
agents, and implantable biologicals approved for pass-through as a 
biological prior to January 1, 2010 that would otherwise be packaged if 
the item did not have pass-through status to zero. The separate OPPS 
payment to a hospital for pass-through diagnostic radiopharmaceuticals, 
contrast agents, or implantable biologicals, after taking into account 
any applicable payment offset for the item due to the device or

[[Page 71933]]

``policy packaged'' APC offset policy, is the item's pass-through 
payment, which is not subject to a copayment, according to the statute. 
Finally, if a drug or biological that has been granted pass-through 
status for CY 2011 becomes covered under the Part B drug CAP if the 
program is reinstituted, we will provide pass-through payment at the 
Part B drug CAP rate and make the appropriate adjustment to the payment 
rates for the drugs and biologicals on a quarterly basis as 
appropriate.
    The 42 drugs and biologicals that are continuing on pass-through 
status for CY 2011 or that have been granted pass-through status as of 
January 2011 are displayed in Table 28 below.

                       Table 28--Drugs and Biologicals With Pass-Through Status in CY 2011
----------------------------------------------------------------------------------------------------------------
                                  CY 2011 HCPCS                                   Final CY 2011    Final CY 2011
       CY 2010 HCPCS code             code           CY 2011 long descriptor            SI              APC
----------------------------------------------------------------------------------------------------------------
A9582..........................           A9582  Iodine I-123 iobenguane,                     G             9247
                                                  diagnostic, per study dose,
                                                  up to 15 millicuries.
A9583..........................           A9583  Injection, gadofosveset                      G             1299
                                                  trisodium, 1 ml.
C9250..........................           C9250  Human plasma fibrin sealant,                 G             9250
                                                  vapor-heated, solvent-
                                                  detergent (Artiss), 2 ml.
C9255..........................           J2426  Injection, paliperidone                      G             9255
                                                  palmitate, extended release,
                                                  1 mg.
C9256..........................           J7312  Injection, dexamethasone                     G             9256
                                                  intravitreal implant, 0.1 mg.
C9258..........................           J3095  Injection, telavancin, 10 mg..               G             9258
C9259..........................           J9307  Injection, pralatrexate, 1 mg.               G             9259
C9260..........................           J9302  Injection, ofatumumab, 10 mg..               G             9260
C9261..........................           J3357  Injection, ustekinumab, 1 mg..               G             9261
C9263..........................           J1290  Injection, ecallantide, 1 mg..               G             9263
C9264..........................           J3262  Injection, tocilizumab, 1 mg..               G             9624
C9265..........................           J9315  Injection, romidepsin, 1 mg...               G             9625
C9266..........................           J0775  Injection, collagenase                       G             1340
                                                  clostridium histolyticum,
                                                  0.01 mg.
C9267..........................           J7184  Injection, von Willebrand                    G             9267
                                                  factor complex (human),
                                                  Wilate, per 100 IU VWF: RCO.
C9268..........................           J7335  Capsaicin 8% patch, per 10                   G             9268
                                                  square centimeters.
C9269..........................           J0597  Injection, C-1 Esterase                      G             9269
                                                  inhibitor (human), Berinert,
                                                  10 units.
C9270..........................           C9270  Injection, immune globulin                   G             9270
                                                  (Gammaplex), intravenous, non-
                                                  lyophilized (e.g. liquid),
                                                  500 mg.
C9271..........................           J3385  Injection, velaglucerase alfa,               G             9271
                                                  100 units.
C9272..........................           C9272  Injection, denosumab, 1 mg....               G             9272
C9273..........................           C9273  Sipuleucel-T, minimum of 50                  G             9273
                                                  million autologous CD54+
                                                  cells activated with PAPGM-
                                                  CSF in 250 mL of Lactated
                                                  Ringer's, including
                                                  leukapheresis and all other
                                                  preparatory procedures, per
                                                  infusion.
                                          C9274  Crotalidae polyvalent immune                 G             9274
                                                  fab (ovine), 1 vial.
                                          C9275  Injection, hexaminolevulinate                G             9275
                                                  hydrochloride, 100 mg, per
                                                  study dose.
                                          C9276  Injection, cabazitaxel, 1 mg..               G             9276
                                          C9277  Injection, alglucosidase alfa                G             9277
                                                  (Lumizyme), 1 mg.
                                          C9278  Injection, incobotulinumtoxin                G             9278
                                                  A, 1 unit.
                                          C9279  Injection, ibuprofen, 100 mg..               G             9279
C9360..........................           C9360  Dermal substitute, native, non-              G             9360
                                                  denatured collagen, neonatal
                                                  bovine origin (SurgiMend
                                                  Collagen Matrix), per 0.5
                                                  square centimeters.
C9361..........................           C9361  Collagen matrix nerve wrap                   G             9361
                                                  (NeuroMend Collagen Nerve
                                                  Wrap), per 0.5 centimeter
                                                  length.
C9362..........................           C9362  Porous purified collagen                     G             9362
                                                  matrix bone void filler
                                                  (Integra Mozaik
                                                  Osteoconductive Scaffold
                                                  Strip), per 0.5 cc.
C9363..........................           C9363  Skin substitute, Integra                     G             9363
                                                  Meshed Bilayer Wound Matrix,
                                                  per square centimeter.
C9364..........................           C9364  Porcine implant, Permacol, per               G             9364
                                                  square centimeter.
C9367..........................           C9367  Skin substitute, Endoform                    G             9367
                                                  Dermal Template, per square
                                                  centimeter.
J0598..........................           J0598  Injection, C1 esterase                       G             9251
                                                  inhibitor (human), 10 units.
J0641..........................           J0641  Injection, levoleucovorin                    G             1236
                                                  calcium, 0.5 mg.
J0718..........................           J0718  Injection, certolizumab pegol,               G             9249
                                                  1 mg.
J1680..........................           J1680  Injection, human fibrinogen                  G             1290
                                                  concentrate, 100 mg.
J2562..........................           J2562  Injection, plerixafor, 1 mg...               G             9252
J8705..........................           J8705  Topotecan, oral, 0.25 mg......               G             1238
J9155..........................           J9155  Injection, degarelix, 1 mg....               G             1296
J9328..........................           J9328  Injection, temozolomide, 1 mg.               G             9253
Q0138..........................           Q0138  Injection, Ferumoxytol, for                  G             1297
                                                  treatment of iron deficiency
                                                  anemia, 1 mg.
Q2025..........................           J8562  Fludarabine phosphate, oral,                 G             1339
                                                  10 mg.
----------------------------------------------------------------------------------------------------------------


[[Page 71934]]

4. Provisions for Reducing Transitional Pass-Through Payments for 
Diagnostic Radiopharmaceuticals and Contrast Agents to Offset Costs 
Packaged into APC Groups
a. Background
    Prior to CY 2008, diagnostic radiopharmaceuticals and contrast 
agents were paid separately under the OPPS if their mean per day costs 
were greater than the applicable year's drug packaging threshold. In CY 
2008 (72 FR 66768), we began a policy of packaging payment for all 
nonpass-through diagnostic radiopharmaceuticals and contrast agents as 
ancillary and supportive items and services into their associated 
nuclear medicine procedures. Therefore, beginning in CY 2008, nonpass-
through diagnostic radiopharmaceuticals and contrast agents were not 
subject to the annual OPPS drug packaging threshold to determine their 
packaged or separately payable payment status, and instead all nonpass-
through diagnostic radiopharmaceuticals and contrast agents were 
packaged as a matter of policy. In the CY 2011 OPPS/ASC proposed rule 
(75 FR 46261), for CY 2011, we proposed to continue to package payment 
for all nonpass-through diagnostic radiopharmaceuticals and contrast 
agents, as discussed in section V.B.2.d. of the proposed rule and this 
final rule with comment period.
b. Payment Offset Policy for Diagnostic Radiopharmaceuticals
    As previously noted, radiopharmaceuticals are considered to be 
drugs for OPPS pass-through payment purposes. As described above, 
section 1833(t)(6)(D)(i) of the Act specifies that the transitional 
pass-through payment amount for pass-through drugs and biologicals is 
the difference between the amount paid under section 1842(o) of the Act 
(or the Part B drug CAP rate) and the otherwise applicable OPD fee 
schedule amount. There is currently one radiopharmaceutical with pass-
through status under the OPPS, HCPCS code A9582 (Iobenguane, I-123, 
diagnostic, per study dose, up to 10 millicuries). HCPCS code A9582 was 
granted pass-through status beginning April 1, 2009 and will continue 
on pass-through status in CY 2011. We currently apply the established 
radiopharmaceutical payment offset policy to pass-through payment for 
this product. As described earlier in section V.A.3. of this final rule 
with comment period, new pass-through diagnostic radiopharmaceuticals 
will be paid at ASP+6 percent, while those without ASP information will 
be paid at WAC+6 percent or, if WAC is not available, payment will be 
based on 95 percent of the product's most recently published AWP.
    As a payment offset is necessary in order to provide an appropriate 
transitional pass-through payment, we deduct from the payment for pass-
through radiopharmaceuticals an amount that reflects the portion of the 
APC payment associated with predecessor radiopharmaceuticals in order 
to ensure no duplicate radiopharmaceutical payment is made. In CY 2009, 
we established a policy to estimate the portion of each APC payment 
rate that could reasonably be attributed to the cost of predecessor 
diagnostic radiopharmaceuticals when considering a new diagnostic 
radiopharmaceutical for pass-through payment (73 FR 68638 through 
68641). Specifically, we utilize the ``policy-packaged'' drug offset 
fraction for APCs containing nuclear medicine procedures, calculated as 
1 minus (the cost from single procedure claims in the APC after 
removing the cost for ``policy-packaged'' drugs divided by the cost 
from single procedure claims in the APC). In the CY 2010 OPPS/ASC final 
rule with comment period (74 FR 60480 through 60484), we finalized a 
policy to redefine ``policy-packaged'' drugs as only nonpass-through 
diagnostic radiopharmaceuticals and contrast agents, as a result of the 
policy discussed in sections V.A.4. and V.B.2.d. of the CY 2010 OPPS/
ASC final rule with comment period (74 FR 60471 through 60477 and 60495 
through 60499, respectively) that treats nonpass-through implantable 
biologicals that are surgically inserted or implanted (through a 
surgical incision or a natural orifice) and implantable biologicals 
that are surgically inserted or implanted (through a surgical incision 
or a natural orifice) with newly approved pass-through status beginning 
in CY 2010 or later as devices, rather than drugs. To determine the 
actual APC offset amount for pass-through diagnostic 
radiopharmaceuticals that takes into consideration the otherwise 
applicable OPPS payment amount, we multiply the ``policy-packaged'' 
drug offset fraction by the APC payment amount for the nuclear medicine 
procedure with which the pass-through diagnostic radiopharmaceutical is 
used and, accordingly, reduce the separate OPPS payment for the pass-
through diagnostic radiopharmaceutical by this amount.
    The I/OCE processes claims for nuclear medicine procedures only 
when they are performed with a radiolabeled product. Therefore, the 
radiolabeled product edits in the I/OCE require a hospital to report a 
diagnostic radiopharmaceutical with a nuclear medicine scan in order to 
receive payment for the nuclear medicine scan. We have received 
questions from hospitals on how to bill for a nuclear medicine scan 
when they receive a diagnostic radiopharmaceutical free of charge or 
with full credit. Currently, if a hospital receives a diagnostic 
radiopharmaceutical free of charge or with full credit and uses it to 
provide a nuclear medicine scan, the hospital could choose not to bill 
for both the nuclear medicine scan and the diagnostic 
radiopharmaceutical in order to bypass the radiolabeled product edits, 
but the hospital clearly would not receive OPPS payment for the scan or 
the diagnostic radiopharmaceutical. The hospital also could report the 
diagnostic radiopharmaceutical with the nuclear medicine scan and 
receive an APC payment that includes payment for the diagnostic 
radiopharmaceutical, but this would lead to inaccurate billing and 
incorrect payment. The OPPS should not pay for a free item. We believe 
neither of the above alternatives is satisfactory.
    In order to ensure that the OPPS is making appropriate and 
equitable payments under such circumstances and that a hospital can 
comply with the required radiolabeled product edits, in the CY 2011 
OPPS/ASC proposed rule (75 FR 46261 through 46262), we proposed for CY 
2011 to instruct hospitals to report the ``FB'' modifier on the line 
with the procedure code for the nuclear medicine scan in the APCs 
listed in Table 22 of the proposed rule in which the no cost/full 
credit diagnostic radiopharmaceutical is used. Modifier ``FB'' is 
defined as an ``Item Provided Without Cost to Provider, Supplier or 
Practitioner, or Credit Received for Replacement Device (Examples, but 
not Limited to: Covered Under Warranty, Replaced Due to Defect, Free 
Samples).'' Although this modifier is specific to devices, it captures 
the concept of the hospital receiving a key component of the service 
without cost. In cases in which the diagnostic radiopharmaceutical is 
furnished without cost or with full credit, we proposed to instruct the 
hospital to report a token charge of less than $1.01. We refer readers 
to the CY 2008 OPPS/ASC final rule with comment period for more 
background information on the ``FB'' modifier payment adjustment 
policies (72 FR 66743 through 66749). We proposed that when a hospital 
bills with an ``FB'' modifier with the nuclear medicine

[[Page 71935]]

scan, the payment amount for procedures in the APCs listed in Table 22 
of the proposed rule would be reduced by the full ``policy-packaged'' 
offset amount appropriate for diagnostic radiopharmaceuticals.
    As discussed in the CY 2009 OPPS/ASC final rule with comment 
period, the ``policy packaged'' offset amount that we calculate 
estimates the portion of each APC payment rate that could reasonably be 
attributed to the cost of predecessor diagnostic radiopharmaceuticals 
when considering a new diagnostic radiopharmaceutical for pass through 
payment (73 FR 68638 through 68641). As in our offset policy, discussed 
below, we believe it is appropriate to remove the ``policy packaged'' 
offset amount from payment for a nuclear medicine scan with a 
diagnostic radiopharmaceutical received at no cost or full credit which 
is billed using one of the APCs appearing in Table 29 below, because it 
represents the portion of the APC payment attributable to diagnostic 
radiopharmaceuticals used in the performance of a nuclear medicine 
scan. Using the ``FB'' modifier with radiolabeled products will allow 
the hospital to bill accurately for a diagnostic radiopharmaceutical 
received free of charge and will allow the hospital to comply with the 
radiolabeled product edits to ensure appropriate payment.
    In the CY 2011 OPPS/ASC proposed rule (75 FR 46262), we did not 
propose to recognize modifier ``FC,'' which is defined as ``Partial 
credit received for replaced device,'' because we were unsure of the 
circumstances in which hospitals would receive a diagnostic 
radiopharmaceutical at reduced cost to replace a previously provided 
diagnostic radiopharmaceutical. We note that most of the questions that 
we have received pertain to coding of free sample or trial diagnostic 
radiopharmaceuticals received free of charge. We invited public comment 
on when a diagnostic radiopharmaceutical is provided for a 
significantly reduced price and whether the ``FC'' modifier is 
appropriate for radiolabeled products.
    Comment: Several commenters supported CMS' proposal to instruct 
hospitals to report modifier ``FB'' on the line with the procedure code 
for the nuclear medicine scan when a diagnostic radiopharmaceutical is 
received free of charge or with full credit. The commenters stated that 
implementing this proposal would lead to more accurate billing and 
would prevent inappropriate payment for diagnostic radiopharmaceuticals 
received free of charge or with full credit. One commenter opposed CMS' 
proposal to instruct hospitals to report modifier ``FB'' on the line 
with the procedure code for the nuclear medicine scan, stating that a 
modifier for radiopharmaceuticals is unnecessary. The commenter further 
stated that radiopharmaceuticals cannot be compared to devices because 
of their pricing differences, since devices generally constitute a 
significant portion of the total procedure charges and 
radiopharmaceuticals only make up a small portion of the charge for 
radiology services. In addition, the commenter stated that the reasons 
for free or partial charge devices are generally manufacturer-related 
defects, such as recalls and other failures during the warranty period, 
and that radiopharmaceuticals are treated differently, in that when 
they are recalled, hospitals do not continue to stock them and, 
therefore, they would not be administered or billed.
    Response: We appreciate commenter's support for our proposal. As 
stated in the CY 2011 OPPS/ASC proposed rule (75 FR 46261 through 
46262), instructing hospitals to use the ``FB'' modifier on the line 
with the procedure code for the nuclear medicine scan would allow the 
hospital to bill accurately for a diagnostic radiopharmaceutical 
received free of charge and will allow the hospital to comply with the 
radiolabeled product edits to ensure appropriate payment.
    We have received questions from hospitals that have asked how to 
properly bill for diagnostic radiopharmaceuticals obtained free of 
charge. We believe that there is a need for hospitals to properly 
account for diagnostic radiopharmaceuticals received free of charge. 
Therefore, we disagree with the commenter's assertion that there is no 
need for a modifier for diagnostic radiopharmaceuticals received with 
no cost or free of charge. In addition, we do not find the argument 
compelling that a modifier for radiopharmaceuticals is not necessary 
because the cost of a radiopharmaceutical is lower than the cost of a 
device and because the cost of a radiopharmaceutical constitutes a 
lower percentage of the total charge for the associated primary 
procedure. We believe the commenter is making a marginal cost argument, 
that coding the ``FB'' modifier for devices makes sense because the 
recouped costs to the Medicare program could be significant depending 
on the device. While we agree that the device portion of a device-
dependent APC subject to the ``FB'' and ``FC'' policy will have a 
higher absolute dollar value than the policy-packaged portion of a 
nuclear medicine APC, we do not believe this should preclude a hospital 
from being able to bill and be paid correctly for a nuclear medicine 
scan when provided with a diagnostic radiopharmaceutical that the 
hospital received free of charge or at no cost. We have consistently 
emphasized the importance of correct coding for all drugs, biologicals, 
and radiopharmaceuticals administered in the, regardless of the cost, 
in our instructions to hospitals. Establishing the ``FB'' modifier to 
correctly account for diagnostic radiopharmaceuticals received free of 
charge allows for the diagnostic radiopharmaceutical to be reported and 
coded correctly on the same claim as the nuclear medicine scan, 
therefore fulfilling the required radiolabeled product edits. It also 
is possible that volume for nuclear medicine scans may result in more 
total aggregated savings on free-of-charge radiopharmaceuticals than 
devices, but our primary goal in instituting the ``FB'' modifiers for 
radiopharmaceuticals received free-of-charge or at no cost is for 
accurate billing and payment. With regard to the comment that using the 
``FB'' modifier with diagnostic radiopharmaceuticals is not necessary 
because hospitals would choose not to stock any radiopharmaceuticals 
after they are recalled or identified as having defects, we note that 
most of the questions that we have received pertain to coding of free 
sample or trial diagnostic radiopharmaceuticals received free of 
charge.
    Comment: One commenter supported CMS' proposal to require hospitals 
to report the ``FB'' modifier but suggested that CMS revise the 
description to read ``Item provided without cost to provider, supplier, 
or practitioner, or full credit received for replaced device or 
radiopharmaceutical (examples, but not limited to, covered under 
warranty, replaced due to defect, free sample)'' (emphasis added).
    Response: We appreciate the commenter's support. However, we do not 
establish HCPCS code modifiers through rulemaking, including this OPPS 
final rule with comment period. The CMS HCPCS Workgroup develops, 
revises, and deletes Level II HCPCS codes and Level II HCPCS modifiers. 
The ``FB'' modifier is a Level II HCPCS modifier. We will consider 
taking this request to the CMS HCPCS Workgroup for their consideration.
    Comment: One commenter suggested that CMS instruct hospitals to use 
the ``FB'' modifier when hospitals incur no cost for the diagnostic 
radi