[Federal Register Volume 76, Number 230 (Wednesday, November 30, 2011)]
[Rules and Regulations]
[Pages 74121-74584]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-28612]
[[Page 74121]]
Vol. 76
Wednesday,
No. 230
November 30, 2011
Part II
Department of Health and Human Services
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Centers for Medicare and Medicaid Services
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42 CFR Parts 410, 411, 416 et al.
Medicare and Medicaid Programs: Hospital Outpatient Prospective
Payment; Ambulatory Surgical Center Payment; Hospital Value-Based
Purchasing Program; Physician Self-Referral; and Patient Notification
Requirements in Provider Agreements; Final Rule
Federal Register / Vol. 76 , No. 230 / Wednesday, November 30, 2011 /
Rules and Regulations
[[Page 74122]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 410, 411, 416, 419, 489, and 495
[CMS-1525-FC]
RIN 0938-AQ26
Medicare and Medicaid Programs: Hospital Outpatient Prospective
Payment; Ambulatory Surgical Center Payment; Hospital Value-Based
Purchasing Program; Physician Self-Referral; and Patient Notification
Requirements in Provider Agreements
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule with comment period.
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SUMMARY: This final rule with comment period revises the Medicare
hospital outpatient prospective payment system (OPPS) for CY 2012 to
implement applicable statutory requirements and changes arising from
our continuing experience with this system. 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 OPPS.
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. In this final rule with
comment period, we set forth the relative payment weights and payment
amounts for services furnished in ASCs, specific HCPCS codes to which
these changes apply, and other ratesetting information for the CY 2012
ASC payment system.
We are revising the requirements for the Hospital Outpatient
Quality Reporting (OQR) Program, adding new requirements for ASC
Quality Reporting System, and making additional changes to provisions
of the Hospital Inpatient Value-Based Purchasing (VBP) Program.
We also are allowing eligible hospitals and CAHs participating in
the Medicare Electronic Health Record (EHR) Incentive Program to meet
the clinical quality measure reporting requirement of the EHR Incentive
Program for payment year 2012 by participating in the 2012 Medicare EHR
Incentive Program Electronic Reporting Pilot.
Finally, we are making changes to the rules governing the whole
hospital and rural provider exceptions to the physician self-referral
prohibition for expansion of facility capacity and changes to provider
agreement regulations on patient notification requirements.
DATES: Effective Date: This final rule with comment period is effective
on January 1, 2012.
Comment Period: To be assured consideration, comments on the
payment classifications assigned to HCPCS codes identified in Addenda
B, AA, and BB of this final rule with comment period with the ``NI''
comment indicator and on other areas specified throughout this final
rule with comment period, and comments on the suspension of the
effective dates of the Hospital-Acquired Condition (HAC), Agency for
Healthcare Research and Quality (AHRQ), and Medicare spending per
beneficiary measures discussed in section XVI.A.2. of this 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, 2012.
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
2, 2012, at the following address: ASC/NTOL, Division of Outpatient
Care, Mailstop C4-05-17, Centers for Medicare and Medicaid Services,
7500 Security Boulevard, Baltimore, MD 21244-1850.
ADDRESSES: In commenting, please refer to file code CMS-1525-FC.
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 (and we encourage you to) submit
electronic comments on this regulation to http://www.regulations.gov.
Follow the instructions under the ``submit a comment'' tab.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1525-FC, P.O. Box 8013,
Baltimore, MD 21244-1850.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments via
express or overnight mail to the following address ONLY: Centers for
Medicare & Medicaid Services, Department of Health and Human Services,
Attention: CMS-1525-FC, 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 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, we refer readers to the
beginning of the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
Marjorie Baldo, (410) 786-4617, Hospital outpatient prospective payment
issues.
Char Thompson, (410) 786-2300, 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 Hospital Outpatient Quality
Reporting (OQR) and ASC Quality Reporting Program issues.
Teresa Schell, (410) 786-8651, Physician Ownership and Investment in
Hospitals issues.
Georganne Kuberski, (410) 786-0799, Patient Notification Requirements
issues.
James Poyer, (410) 786-2261, and Ernessa Brawley (410) 786-2075,
Hospital Value-Based Purchasing (VBP) Program issues.
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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, generally beginning approximately 3 weeks after publication
of the rule, 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 Federal Digital System (FDsys), a
service of the U.S. Government Printing Office. This database can be
accessed via the internet at http://www.gpo.gov/fdsys/.
Addenda Available Only Through the Internet on the CMS Web Site
In the past, a majority of the Addenda referred to throughout the
preamble of our OPPS/ASC proposed and final rules were published in the
Federal Register as part of the annual rulemakings. However, beginning
with the CY 2012 proposed rule, all of the Addenda will no longer
appear in the Federal Register as part of the annual OPPS/ASC proposed
and final rules to decrease administrative burden and reduce costs
associated with publishing lengthy tables. Instead, these Addenda will
be published and available only on the CMS Web site. The Addenda
relating to the OPPS are available at: http://www.cms.gov/HospitalOutpatientPPS. The Addenda relating to the ASC payment system
are available at: http://www.cms.gov/ASCPayment/. For complete details
on the availability of the Addenda referenced in this final rule with
comment period, we refer readers to section XVII. Readers who
experience any problems accessing any of the Addenda that are posted on
the CMS Web site identified above should contact Charles Braver at
(410) 786-0378.
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
AHRQ Agency for Healthcare Research and Quality
AMA American Medical Association
AMP Average Manufacturer Price
AOA American Osteopathic Association
APC Ambulatory Payment Classification
ARRA American Recovery and Reinvestment Act of 2009, Public Law 111-
5
ASC Ambulatory Surgical Center
ASP Average Sales Price
AWP Average Wholesale Price
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
BIPA Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000, Public Law 106-554
BLS Bureau of Labor Statistics
CAH Critical Access Hospital
CAP Competitive Acquisition Program
CBSA Core-Based Statistical Area
CCN CMS Certification Number
CCR Cost-to-Charge Ratio
CDC Centers for Disease Control
CERT Comprehensive Error Rate Testing
CLFS Clinical Laboratory Fee Schedule
CMHC Community Mental Health Center
CMS Centers for Medicare & Medicaid Services
CPT Current Procedural Terminology (copyrighted by the American
Medical Association)
CQM Clinical Quality Measure
CR Cardiac Rehabilitation
CY Calendar Year
DFO Designated Federal Official
DHS Designated Health Service
DRA Deficit Reduction Act of 2005, Public Law 109-171
DSH Disproportionate Share Hospital
EACH Essential Access Community Hospital
E/M Evaluation and Management
EHR Electronic Health Record
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
FY Fiscal Year
GAO Government Accountability Office
HAC Hospital-Acquired Condition
HAI Healthcare-Associated Infection
HCAHPS Hospital Consumer Assessment of Healthcare Providers and
Systems
HCERA Health Care and Education Reconciliation Act of 2010, Public
Law 111-152
HCP Healthcare Personnel
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
Hospital OQR Hospital Outpatient Quality Reporting
ICR Intensive Cardiac Rehabilitation
IDE Investigational Device Exemption
IHS Indian Health Service
IQR Inpatient Quality Reporting
I/OCE Integrated Outpatient Code Editor
IOL Intraocular Lens
IPPS [Hospital] Inpatient Prospective Payment System
MAC Medicare Administrative Contractor
MedPAC Medicare Payment Advisory Commission
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
MMA Medicare Prescription Drug, Improvement, and Modernization Act
of 2003, Public Law 108-173
MMEA Medicare and Medicaid Extenders Act of 2010, Public Law 111-309
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
NHSN National Healthcare Safety Network
NCD National Coverage Determination
NPP Nonphysician practitioner
NQF National Quality Forum
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
OQR Outpatient Quality Reporting
PBD Provider-Based Department
PHP Partial Hospitalization Program
PPI Producer Price Index
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
RHHI Regional Home Health Intermediary
SBA Small Business Administration
SCH Sole Community Hospital
SDP Single Drug Pricer
SI Status Indicator
TEP Technical Expert Panel
TOPs Transitional Outpatient Payments
VBP Value-Based Purchasing
WAC Wholesale Acquisition Cost
In this document, we address two payment systems under the Medicare
program: the OPPS and the ASC payment system. In addition, we are
making changes to the rules governing limitations on certain physician
referrals to hospitals in which
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physicians have an ownership or investment interest, the provider
agreement regulations on patient notification requirements, and the
rules governing the Hospital Inpatient Value-Based Purchasing (VBP)
Program. The provisions relating to the OPPS are included in sections
I. through XII., section XIV., and sections XVII. through XXI. of this
final rule with comment period. Addenda A, B, C, D1, D2, E, L, M, and
N, which relate to the OPPS, are referenced in section XVII. of this
final rule with comment period and are available via the Internet on
the CMS Web site at the URL indicated in section XVII. The provisions
related to the ASC payment system are included in sections XIII., XIV.,
and XVII. through XXI. of this final rule with comment period. Addenda
AA, BB, DD1, DD2, and EE, which relate to the ASC payment system, are
referenced in section XVII. of this final rule with comment period and
are available via the Internet on the CMS Web site at the URL indicated
in section XVII. The provisions relating to physician referrals to
hospitals in which physicians have an ownership or investment interest
and to the provider agreement regulations on patient notification
requirements are included in section XV., and the provisions relating
to the Hospital Inpatient VBP Program are included in section XVI. of
this final rule with comment period.
Table of Contents
I. Background and Summary of the CY 2012 OPPS/ASC Proposed Rule and
This Final Rule With Comment Period
A. Legislative and Regulatory Authority for the Hospital
Outpatient Perspective Payment System
B. Excluded OPPS Services and Hospitals
C. Prior Rulemaking
D. 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
E. Summary of the Major Contents of the CY 2012 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 Hospital Outpatient Visits
7. Payment for Partial Hospitalization Services
8. Procedures That Would Be Paid Only as Inpatient Procedures
9. Policies on Supervision Standards for Outpatient Services in
Hospitals and CAHs
10. OPPS Payment Status and Comment Indicators
11. OPPS Policy and Payment Recommendations
12. Updates to the Ambulatory Surgical Center (ASC) Payment
System
13. Reporting Quality Data for Annual Payment Rate Updates
14. Changes to EHR Incentive Program for Eligible Hospitals and
CAHs Regarding Electronic Submission of Clinical Quality Measures
(CQMs)
15. Changes to Provisions Relating to Physician Self-Referral
Prohibition and Provider Agreement Regulations on Patient
Notification Requirements
16. Additional Changes to the Hospital Inpatient VBP Program
17. Economic and Federalism Analyses
F. Public Comments Received in Response to the CY 2012 OPPS/ASC
Proposed Rule
G. Public Comments Received on the CY 2011 OPPS/ASC Final Rule
With Comment Period
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 and Use 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) Allergy Tests (APCs 0370 and 0381)
(4) Hyperbaric Oxygen Therapy (APC 0659)
(5) Payment for Ancillary Outpatient Services When Patient
Expires (APC 0375)
(6) Endovascular Revascularization of the Lower Extremity (APCs
0083, 0229, and 0319)
(7) Non-Congenital Cardiac Catheterization (APC 0080)
(8) Cranial Neurostimulator and Electrodes (APC 0318)
(9) Brachytherapy Sources
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)
(6) Cardiac Resynchronization Therapy Composite APC (APCs 0108,
0418, 0655, and 8009)
3. Changes to Packaged Services
a. Background
b. Packaging Issues
(1) CMS Presentation of Findings Regarding Expanded Packaging at
the February 28-March 1, 2011 and August 10-12, 2011 APC Panel
Meetings
(2) Packaging Recommendations of the APC Panel at Its February
28-March 1, 2011 Meeting
(3) Packaging Recommendations of the APC Panel at Its August
2011 Meeting
(4) Other Packaging Proposals and Policies for CY 2012
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
2. Adjustment for Rural SCHs and EACHs Under Section
1833(t)(13)(B) of the Act
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. CY 2011 Proposed Payment Adjustment for Certain Cancer
Hospitals
4. Proposed CY 2011 Cancer Hospital Payment Adjustment That Was
Not Finalized
5. Payment Adjustment for Certain Cancer Hospitals for CY 2012
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 Comments in the CY 2012 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 CY 2012 OPPS/ASC Final Rule With Comment Period
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
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D. OPPS APC-Specific Policies
1. Cardiovascular Services
a. Cardiovascular Computed Tomography (CCT) (APCs 0340 and 0383)
b. Cardiac Imaging (APC 377)
c. Insertion/Replacement/Repair of AICD Leads, Generator, and
Pacing Electrodes (APC 0108)
d. Implantable Loop Recorder Monitoring (APC 0690)
e. Echocardiography (APCs 0128, 0269, 0270, and 0697)
2. Gastrointestinal Services
a. Upper Gastrointestinal (GI) Services (APCs 0141, 0419, and
0422)
b. Gastrointestinal Transit and Pressure Measurement (APC 0361)
3. Genitourinary Services
a. Laser Lithotripsy (APC 0163)
b. Percutaneous Renal Cryoablation (APC 0423)
4. Nervous System Services
a. Revision/Removal of Neurotransmitter Electrodes (APCs 0040
and 0687)
b. Magnetoencephalography (MEG) (APCs 0065, 0066, and 0067)
c. Transcranial Magnetic Stimulation Therapy (TMS) (APC 0218)
5. Ocular and Ophthalmic Services
a. Placement of Amniotic Membrane (APCs 0233 and 0244)
b. Insertion of Anterior Segment Aqueous Drainage Device (APC
0673)
c. Scanning Ophthalmic Diagnostic Imaging (APC 0230)
d. Intraocular Laser Endoscopy (APC 0233)
6. Orthopedic and Musculoskeletal Services
a. Percutaneous Laminotomy/Laminectormy (APC 0208)
b. Level II Arthroscopy (APC 0042)
c. Closed Treatment Fracture of Finger, Toe, and Trunk (APCs
0129, 0138, and 0139)
d. Level I and II Strapping and Cast Application (APCs 0058 and
0426)
7. Radiology Services
a. Proton Beam Therapy (APCs 0664 and 0667)
b. Stereotactic Radiosurgery (SRS) Treatment Delivery Services
(APCs 0065, 0066, 0067, and 0127)
c. Adrenal Imaging (APC 0408)
d. Positron Emission Tomography (PET) Imaging (APC 0308)
(Created From Myocardial Positron Emission Tomography (PET) Imaging
(APC 0307) and Nonmyocardial Positron Emission Tomography (PET)
Imaging (APC 0308))
e. Device Construction for Intensity Modulated Radiation Therapy
(IMRT) (APC 0305)
f. Computed Tomography of Abdomen/Pelvic (APCs 0331 and 0334)
g. Complex Interstitial Radiation Source Application (APC 0651)
h. Radioelement Applications (APC 0312)
8. Respiratory Services
a. Pulmonary Rehabilitation (APC 0102)
b. Bronchial Thermoplasty (APC 0415)
c. Insertion of Bronchial Valve (APC 0415)
9. Other Services
a. Skin Repair (APCs 0133, 0134, and 0135)
b. Nasal Sinus Endoscopy (APC 0075)
c. Bioimpedance Spectroscopy (APC 0097)
d. Autologous Blood Salvage (APC 0345)
IV. OPPS Payment for Devices
A. Pass-Through Payments for Devices
1. Expiration of Transitional Pass-Through Payments for Certain
Devices
a. Background
b. CY 2012 Policy
2. Provisions for Reducing Transitional Pass-Through Payments To
Offset Costs Packaged Into APC Groups
a. Background
b. CY 2012 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
2011
3. Drugs, Biologicals, and Radiopharmaceuticals With New or
Continuing Pass-Through Status in CY 2012
4. Provisions 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. CY 2012 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 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
VIII. Payment for Partial Hospitalization Services
A. Background
B. PHP APC Update for CY 2012
C. Separate Threshold for Outlier Payments to CMHCs
IX. Procedures That Will Be Paid Only as Inpatient Procedures
A. Background
B. Changes to the Inpatient List
X. Policies for the Supervision of Outpatient Services in Hospitals
and CAHs
A. Background
B. Issues Regarding the Supervision of Hospital Outpatient
Therapeutic Services Raised by Hospitals and Other Stakeholders
1. Independent Review Process
a. Selection of Review Entity
b. Review Process
c. Evaluation Criteria
2. Conditions of Payment and Hospital Outpatient Therapeutic
Services Described by Different Benefit Categories
3. Technical Corrections to the Supervision Standards for
Hospital Outpatient Therapeutic Services Furnished in Hospitals or
CAHs
C. Summary of CY 2012 Final Policies on Supervision Standards
for Outpatient Therapeutic Services in Hospitals and CAHs
1. Independent Review Process
2. Conditions of Payment and Hospital Outpatient Therapeutic
Services Described by Different Benefit Categories
3. Technical Corrections
XI. Final CY 2012 OPPS Payment Status and Comment Indicators
A. Final CY 2012 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. Final CY 2012 Comment Indicator Definitions
XII. OPPS Policy and Payment Recommendations
A. MedPAC Recommendations
B. APC Panel Recommendations
C. OIG Recommendations
XIII. Updates to the Ambulatory Surgical Center (ASC) Payment System
A. Background
1. Legislative Authority for the ASC Payment System
2. Prior Rulemaking
[[Page 74126]]
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 2011 for Which We Solicited
Public Comments in the CY 2012 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 CY 2012 OPPS/ASC Final Rule With Comment Period
C. Update to the Lists 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 for CY 2012 to Covered Surgical Procedures
Designated as Office-Based
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 2012
d. ASC Treatment of Surgical Procedures Removed From the OPPS
Inpatient List for CY 2012
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
2012
c. Adjustment to ASC Payments for No Cost/Full Credit and
Partial Credit Devices
d. Waiver of Coinsurance and Deductible for Certain Preventive
Services
e. Payment for the Cardiac Resynchronization Therapy Composite
2. Payment for Covered Ancillary Services
a. Background
b. Payment for Covered Ancillary Services for CY 2012
E. New Technology Intraocular Lenses (NTIOLs)
1. NTIOL Cycle and Evaluation Criteria
2. NTIOL Application Process for Payment Adjustment
3. Requests To Establish New NTIOL Classes for CY 2012
4. Payment Adjustment
5. Announcement of CY 2012 Deadline for Submitting Requests for
CMS Review of Appropriateness of ASC Payment for Insertion of an
NTIOL 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 2012 and
Future Years
b. Updating the ASC Conversion Factor
3. Display of CY 2012 ASC Payment Rates
XIV. Hospital Outpatient Quality Reporting Program Updates and ASC
Quality Reporting
A. Background
1. Overview
2. Statutory History of Hospital Outpatient Quality Reporting
(Hospital OQR) Program
3. Technical Specification Updates and Data Publication
a. Maintenance of Technical Specifications for Quality Measures
b. Publication of Hospital OQR Program Data
B. Revision to Measures Previously Adopted for the Hospital OQR
Program for the CY 2013 and CY 2014 Payment Determinations
1. Background
2. Revision to OP-22 Left Without Being Seen
C. New Quality Measures for the CY 2014 and CY 2015 Payment
Determinations
1. Considerations in Expanding and Updating Quality Measures
Under Hospital OQR Program
2. New Hospital OQR Program Quality Measures for the CY 2014
Payment Determination
a. New National Healthcare Safety Network (NHSN) Healthcare
Associated Infection (HAI) Measure for the CY 2014 Payment
Determination: Surgical Site Infection (NQF 0299)
b. New Chart-Abstracted Measures for the CY 2014 Payment
Determination
c. New Structural Measures
(1) Safe Surgery Checklist Use Measure
(2) Hospital Outpatient Department Volume for Selected
Outpatient Surgical Procedures Measure
3. Hospital OQR Program Measures for the CY 2015 Payment
Determination
a. Retention of CY 2014 Hospital OQR Measures for the CY 2015
Payment Determination
b. New NHSN HAI Measure for the CY 2015 Payment Determination
D. Possible Quality Measures Under Consideration for Future
Inclusion in the Hospital OQR Program
E. Payment Reduction for Hospitals That Fail To Meet the
Hospital OQR Requirements for the CY 2012 Payment Update
1. Background
2. Reporting Ratio Application and Associated Adjustment Policy
for CY 2012
F. Extraordinary Circumstances Extension or Waiver for CY 2012
and Subsequent Years
G. Requirements for Reporting of Hospital OQR Data for CY 2013
and Subsequent Years
1. Administrative Requirements for CY 2013 and Subsequent Years
2. Form, Manner, and Timing of Data Submission for CY 2013 and
Subsequent Years
a. CY 2013 and CY 2014 Data Submission Requirements for Chart-
Abstracted Measure Data Submitted Directly to CMS
b. Eligibility to Voluntarily Sample and Data Submission
Exception for Low Patient Volume for CY 2013 and Subsequent Years
c. Population and Sampling Data Requirements Beginning With the
CY 2013 Payment Determination and for Subsequent Years
d. Claims-Based Measure Data Requirements for the CY 2013 and CY
2014 Payment Determinations
e. Structural Measure Data Requirements for the CY 2013 and CY
2014 Payment Determinations
f. Data Submission Deadlines for the NHSN HAI Surgical Site
Infection Measure for the CY 2014 Payment Determination
g. Data Submission Requirements for OP-22: ED-Patient Left
Before Being Seen for the CY 2013 and CY 2014 Payment Determinations
3. Hospital OQR Validation Requirements for Chart-Abstracted
Measure Data Submitted Directly to CMS: Data Validation Approach for
the CY 2013 Payment Determination
a. Randomly Selected Hospitals
b. Use of Targeting Criteria for Data Validation Selection for
CY 2013
(1) Background
(2) Targeting Criteria for Data Validation Selection for CY 2013
c. Encounter Selection
d. Validation Score Calculation
4. Additional Data Validation Conditions Under Consideration for
CY 2014 and Subsequent Years
H. Hospital OQR Reconsideration and Appeals Procedures for CY
2013 and Subsequent Years
I. Electronic Health Records (EHRs)
J. 2012 Medicare EHR Incentive Program Electronic Reporting
Pilot for Hospitals and CAHs
1. Background
2. Electronic Reporting Pilot
3. CQM Reporting Under the Electronic Reporting Pilot
K. ASC Quality Reporting Program
1. Background
2. ASC Quality Reporting Program Measure Selection
a. Timetable for Selecting ASC Quality Measures
b. Considerations in the Selection of Measures for the ASC
Quality Reporting Program
3. ASC Quality Measures for the CY 2014 Payment Determination
a. Claims-Based Measures Requiring Submission of Quality Data
Codes (QDCs) Beginning January 1, 2012
(1) Patient Burns (NQF 0263)
(2) Patient Falls (NQF 0266)
(3) Wrong Site, Wrong Side, Wrong Patient, Wrong Procedure,
Wrong Implant (NQF 0267)
(4) Hospital Transfer/Admission (NQF 0265)
(5) Prophylactic Intravenous (IV) Antibiotic Timing (NQF
0264)
[[Page 74127]]
(6) Ambulatory Patient With Appropriate Method of Surgical Hair
Removal (NQF 0515)
(7) Selection of Prophylactic Antibiotic: First OR Second
Generation Cephalosporin (NQF 0268)
b. Surgical Site Infection Rate (NQF 0299)
4. ASC Quality Measures for the CY 2015 Payment Determination
a. Retention of Measures Adopted for the CY 2014 Payment
Determination in the CY 2015 Payment Determination
b. Structural Measures for the CY 2015 Payment Determination
(1) Safe Surgery Checklist Use
(2) ASC Facility Volume Data on Selected ASC Surgical Procedures
5. ASC Quality Measures for the CY 2016 Payment Determination
a. Retention of Measures Adopted for the CY 2015 Payment
Determination in the CY 2016 Payment Determination
b. HAI Measure: Influenza Vaccination Coverage Among Healthcare
Personnel (HCP) (NQF 0431)
6. ASC Measure Topics for Future Consideration
7. Technical Specification Updates and Data Publication for the
CY 2014 Payment Determination
a. Maintenance of Technical Specifications for Quality Measures
b. Publication of ASC Quality Reporting Program Data
8. Requirements for Reporting of ASC Quality Data for the CY
2014 Payment Determination
a. Data Collection and Submission Requirements for the Claims-
Based Measures
b. Data Submission Deadlines for the Surgical Site Infection
Rate Measure
XV. Changes to Whole Hospital and Rural Provider Exceptions to the
Physician Self-Referral Prohibition: Exception for Expansion of
Facility Capacity; and Changes to Provider Agreement Regulations on
Patient Notification Requirements
A. Background
B. Changes Made by the Affordable Care Act
1. Provisions Relating to Exception to Ownership and Investment
Prohibition (Section 6001(a) of the Affordable Care Act)
2. Provisions of Section 6001(a)(3) of the Affordable Care Act
C. Process for Requesting an Exception to the Prohibition on
Expansion of Facility Capacity
1. General Comments
2. Applicable Hospital
a. Percentage Increase in Population
b. Inpatient Admissions
c. Nondiscrimination
d. Bed Capacity
e. Bed Occupancy
3. High Medicaid Facility
a. Number of Hospitals in County
b. Inpatient Admissions
c. Nondiscrimination
4. Procedures for Submitting a Request
5. Community Input
6. Permitted Increase
a. Amount of Permitted Increase
b. Location of Permitted Increase
7. Decisions
8. Limitation on Review
9. Frequency of Request
D. Changes Related to Provider Agreement Regulations on Patient
Notification Requirements
XVI. Additional Hospital Value-Based Purchasing (Hospital VBP)
Program Policies
A. Hospital VBP Program
1. Legislative Background
2. Overview of the Hospital Inpatient VBP Program Final Rule
3. Additional FY 2014 Hospital VBP Program Measures
4. Minimum Number of Cases and Measures for the Outcome Domain
for the FY 2014 Hospital VBP Program
a. Background
b. Minimum Number of Cases for Mortality Measures, AHRQ
Composite Measures, and HAC Measures
c. Minimum Number of Measures for Outcome Domain
5. Performance Periods and Baseline Periods for FY 2014 Measures
a. Clinical Process of Care Domain and Patient Experience of
Care Domain Performance Period and Baseline Period
b. Outcome Domain Performance Periods and Baseline Periods
6. Performance Standards for the FY 2014 Hospital VBP Program
a. Background
b. Mortality Measures
c. Clinical Process of Care and Patient Experience of Care FY
2014 Performance Standards
d. AHRQ Measures
e. HAC Measures
7. FY 2014 Hospital VBP Program Scoring Methodology
a. FY 2014 Domain Scoring Methodology
b. HAC Measures Scoring Methodology
8. Ensuring HAC Reporting Accuracy
9. Domain Weighting for FY 2014 Hospital VBP Program
B. Review and Correction Process Under the Hospital VBP Program
1. Background
2. Review and Correction of Data Submitted to the QIO Clinical
Warehouse on Chart-Abstracted Process of Care Measures and Measure
Rates
3. Review and Correction Process for Hospital Consumer
Assessment of Healthcare Providers and Systems (HCAHPS) Data
a. Phase One: Review and Correction of HCAHPS Data Submitted to
the QIO Clinical Warehouse
b. Phase Two: Review and Correction of the HCAHPS Scores for the
Hospital VBP Program
XVII. Files Available to the Public via the Internet
A. Information in Addenda Related to the Final CY 2012 Hospital
OPPS
B. Information in Addenda Related to the Final CY 2012 ASC
Payment System
XVIII. Collection of Information Requirements
A. Legislative Requirements for Solicitation of Comments
B. Requirements in Regulation Text
1. ICRs Regarding Basic Commitments of Providers (Sec. 489.20)
2. ICRs Regarding Exceptions Process Related to the Prohibition
of Expansion of Facility Capacity (Sec. 411.362)
C. Associated Information Collections Not Specified in
Regulatory Text
1. Hospital Outpatient Quality Reporting (Hospital OQR) Program
2. Hospital OQR Program Measures for the CY 2012, CY 2013, CY
2014, and CY 2015 Payment Determinations
a. Previously Adopted Hospital OQR Program Measures for the CY
2012, CY 2013, and CY 2014 Payment Determinations
b. Additional Hospital OQR Program Measures for CY 2014
c. Hospital OQR Program Measures for CY 2015
3. Hospital OQR Program Validation Requirements for CY 2013
4. Hospital OQR Program Reconsideration and Appeals Procedures
5. ASC Quality Reporting Program
6. 2012 Medicare EHR Incentive Program Electronic Reporting
Pilot for Hospitals and CAHs
7. Additional Topics
XIX. Response to Comments
XX. Economic Analyses
A. Regulatory Impact Analysis
1. Introduction
2. Statement of Need
3. Overall Impacts for OPPS and ASC Provisions
4. Detailed Economic Analyses
a. Effects of OPPS Changes in This Final Rule With Comment
Period
(1) Limitations of Our Analysis
(2) Estimated Effects of This Final Rule With Comment Period on
Hospitals
(3) Estimated Effects of This Final Rule With Comment Period on
CMHCs
(4) Estimated Effect of This Final Rule With Comment Period on
Beneficiaries
(5) Effects on Other Providers
(6) Effects on the Medicare and Medicaid Programs
(7) Alternatives Considered
b. Effects of ASC Payment System Changes in This Final Rule With
Comment Period
(1) Limitations of Our Analysis
(2) Estimated Effects of This Final Rule With Comment Period on
Payments to ASCs
(3) Estimated Effects of This Final Rule With Comment Period on
Beneficiaries
(4) Alternatives Considered
c. Accounting Statements and Tables
d. Effects of Requirements for the Hospital Outpatient Quality
Reporting (OQR) Program
e. Effects of Changes to Physician Self-Referral Regulations
f. Effects of Changes to Provider Agreement Regulations on
Patient Notification Requirements
g. Effects of Additional Hospital VBP Program Requirements
h. Effects of the 2012 Electronic Reporting Pilot
B. Regulatory Flexibility Act (RFA) Analysis
C. Unfunded Mandates Reform Act Analysis
[[Page 74128]]
D. Conclusion
XXI. Federalism Analysis
Regulation Text
I. Background and Summary of the CY 2012 OPPS/ASC Proposed Rule and
This Final Rule With Comment Period
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 of 1997 (BBA) (Pub. L. 105-33)
added section 1833(t) to the Act authorizing implementation of a PPS
for hospital outpatient services. The OPPS was first implemented for
services furnished on or after August 1, 2000. Implementing regulations
for the OPPS are located at 42 CFR Part 419.
The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of
1999 (BBRA) (Pub. L. 106-113) made major changes in the hospital OPPS.
The following Acts made additional changes to the OPPS: the Medicare,
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000
(BIPA) (Pub. L. 106-554); the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003 (MMA) (Pub. L. 108-173); the Deficit
Reduction Act of 2005 (DRA) (Pub. L. 109-171), enacted on February 8,
2006; the Medicare Improvements and Extension Act under Division B of
Title I of the Tax Relief and Health Care Act of 2006 (MIEA-TRHCA)
(Pub. L. 109-432), enacted on December 20, 2006; the Medicare,
Medicaid, and SCHIP Extension Act of 2007 (MMSEA) (Pub. L. 110-173),
enacted on December 29, 2007; the Medicare Improvements for Patients
and Providers Act of 2008 (MIPPA) (Pub. L. 110-275), enacted on July
15, 2008; the Patient Protection and Affordable Care Act (Pub. L. 111-
148), enacted on March 23, 2010, as amended by the Health Care and
Education Reconciliation Act of 2010 (Pub. L. 111-152), enacted on
March 30, 2010 (These two public laws are collectively known as the
Affordable Care Act.); and most recently the Medicare and Medicaid
Extenders Act of 2010 (MMEA, Pub. L. 111-309).
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) (which includes
certain Current Procedural Terminology (CPT) codes) 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) 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 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 (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.
[[Page 74129]]
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 2011 OPPS/ASC final rule
with comment period appears in the November 24, 2010 Federal Register
(75 FR 71800). 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 2011 OPPS on the basis of claims data from January
1, 2009, through December 31, 2009, and to implement certain provisions
of the Affordable Care Act. In addition, we responded to public
comments received on the provisions of the CY 2010 final rule with
comment period (74 FR 60316) 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 August
3, 2010 OPPS/ASC proposed rule for CY 2011 (75 FR 46170).
On July 18, 2011, the CY 2012 OPPS/ASC proposed rule appeared in
the Federal Register (76 FR 42170). This proposed rule, with a 60-day
comment period that ended on August 30, 2011, proposed to revise the
Medicare OPPS and the ASC payment system to implement applicable
statutory requirements and changes arising from our continuing
experience with these systems.
D. 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.D.2. of
this final rule, 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 five times: on
November 1, 2002; on November 1, 2004; on November 21, 2006; on
November 2, 2008 and November 12, 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.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 multiple meetings, with the
last meeting taking place on August 10-12, 2011. 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, currently 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 2011
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/March 2011 and August 2011 APC Panel 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.
E. Summary of the Major Contents of the CY 2012 OPPS/ASC Proposed Rule
In the CY 2012 OPPS/ASC proposed rule that appeared in the Federal
Register on July 18, 2011 (76 FR 42170), we set forth proposed changes
to the Medicare hospital OPPS for CY 2012 to implement statutory
requirements and changes arising from our continuing
[[Page 74130]]
experience with the system. In addition, we set forth proposed changes
to the revised Medicare ASC payment system for CY 2012, including
proposed updated payment weights, covered surgical procedures, and
covered ancillary items and services based on the proposed OPPS update.
In addition, we proposed to make changes to the rules governing
limitations on certain physician referrals to hospitals in which
physicians have an ownership or investment interest, provider agreement
regulations on patient notification requirements, and the rules
governing the Hospital Inpatient Value-Based Purchasing (VBP) Program.
The following is a summary of the major changes that we proposed to
make for CY 2012:
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 consideration of adopting a policy that would
address situations where IPPS wage index adjustments result in
significant fluctuations in the wage index.
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 payment adjustment for cancer hospitals.
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 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
2012 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 2012 OPPS transitional pass-through spending for drugs, biologicals,
and devices.
6. OPPS Payment for Hospital Outpatient Visits
In section VII. 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.
7. Payment for Partial Hospitalization Services
In section VIII. of the proposed rule, we set forth our proposed
payment for partial hospitalization services, including the proposed
separate threshold for outlier payments for CMHCs.
8. Procedures That Would Be Paid Only as Inpatient Procedures
In section IX. 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.
9. Policies on Supervision Standards for Outpatient Services in
Hospitals and CAHs
In section X. of the proposed rule, we discussed proposed policy
changes relating to the supervision of outpatient services furnished in
hospitals and CAHs.
10. OPPS Payment Status and Comment Indicators
In section XI. of the proposed rule, we discussed our proposed
changes to the definitions of status indicators assigned to APCs and
presented our proposed comment indicators.
11. OPPS Policy and Payment Recommendations
In section XII. of the proposed rule, we addressed recommendations
made by the Medicare Payment Advisory Commission (MedPAC) in its March
2011 report to Congress, by the Office of Inspector General (OIG), and
by the APC Panel regarding the OPPS for CY 2012.
12. Updates to the Ambulatory Surgical Center (ASC) Payment System
In section XIII. of the proposed rule, we discussed the proposed
updates of the revised ASC payment system and payment rates for CY
2012.
13. Reporting Quality Data for Annual Payment Rate Updates
In section XIV. of the proposed rule, we discussed the proposed
measures for reporting hospital outpatient quality data for the OPD fee
schedule increase factor for CY 2013 and subsequent calendar years; set
forth the requirements for data collection and submission; and discuss
the reduction to the OPPS OPD fee schedule increase factor for
hospitals that fail to meet the Hospital OQR Program requirements. We
also discussed proposed measures for reporting ASC quality data for the
annual payment update factor for CYs 2014, 2015, and 2016; and set
forth the requirements for data collection and submission for the
annual payment update.
14. Changes to EHR Incentive Program for Eligible Hospitals and CAHs
Regarding Electronic Submission of Clinical Quality Measures (CQMs)
In section XIV.J. of the proposed rule, we proposed to allow
eligible hospitals and CAHs participating in the Medicare EHR Incentive
Program to meet the CQM reporting requirement of the EHR Incentive
Program for payment year 2012 by participating in the 2012 Medicare EHR
Incentive Program Electronic Reporting Pilot.
15. Changes to Provisions Relating to Physician Self-Referral
Prohibition and Provider Agreement Regulations on Patient Notification
Requirements
In section XV. of the proposed rule, we presented our proposed
exception
[[Page 74131]]
process for expansion of facility capacity under the whole hospital and
rural provider exceptions to the physician self-referral law, and
proposed changes to the provider agreement regulations on patient
notification requirements.
16. Additional Changes Relating to the Hospital Inpatient VBP Program
In section XVI. of the proposed rule, we presented our proposed
requirements for the FY 2014 Hospital Inpatient VBP Program.
17. Economic and Federalism Analyses
In sections XX. and XXI. of the proposed rule, we set forth an
analysis of the regulatory and federalism impacts that the proposed
changes would have on affected entities and beneficiaries.
F. Public Comments Received in Response to the CY 2012 OPPS/ASC
Proposed Rule
We received approximately 1,356 timely pieces of correspondence
containing multiple comments on the CY 2012 OPPS/ASC proposed rule that
appeared in the Federal Register on July 18, 2011. We note that we
received some public comments that were outside the scope of the CY
2012 OPPS/ASC proposed rule. Out of scope public comments are not
addressed in this CY 2012 OPPS/ASC final rule with comment period.
Summaries of the public comments that are within the scope of the
proposed rule and our responses are set forth in the various sections
of this final rule with comment period under the appropriate headings.
G. Public Comments Received on the CY 2011 OPPS/ASC Final Rule With
Comment Period
We received approximately 43 timely pieces of correspondence on the
CY 2011 OPPS/ASC final rule with comment period that appeared in the
Federal Register on November 24, 2010 (75 FR 71800), 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 2012 OPPS/
ASC final rule with comment period and our responses to them are set
forth in various sections of this final rule with comment period under
the appropriate headings.
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
not less often than annually and revise the relative payment weights
for APCs. In the April 7, 2000 OPPS final rule with comment period (65
FR 18482), we explained in detail how we calculated the relative
payment weights that were implemented on August 1, 2000 for each APC
group.
In the CY 2012 OPPS/ASC proposed rule (76 FR 42179), for the CY
2012 OPPS, we proposed to recalibrate the APC relative payment weights
for services furnished on or after January 1, 2012, and before January
1, 2013 (CY 2012), using the same basic methodology that we described
in the CY 2011 OPPS/ASC final rule with comment period. 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, using the most recent available data to construct a
database for calculating APC group weights. Therefore, for the purpose
of recalibrating the proposed APC relative payment weights for CY 2012,
we used approximately 138 million final action claims (claims for which
all disputes and adjustments have been resolved and payment has been
made) for hospital outpatient department services furnished on or after
January 1, 2010, and before January 1, 2011. For this final rule with
comment period, for the purpose of recalibrating the final APC relative
payment weights for CY 2012, we used approximately 148 million final
action claims (claims for which all disputes and adjustments have been
resolved and payment has been made) for hospital outpatient department
services furnished on or after January 1, 2010, and before January 1,
2011. (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 148 million final action claims for services provided in
hospital outpatient settings used to calculate the final CY 2012 OPPS
payment rates for this final rule with comment period, approximately
112 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 112 million claims,
approximately 3 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 approximately 109 million claims, we
created approximately 110 million single records, of which
approximately 75 million were ``pseudo'' single or ``single session''
claims (created from approximately 25 million multiple procedure claims
using the process we discuss later in this section). Approximately
888,000 claims were trimmed out on cost or units in excess of +/-3
standard deviations from the geometric mean, yielding approximately 108
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 2012 ratesetting some portion of approximately 94 percent
of the CY 2010 claims containing services payable under the OPPS.
The final APC relative weights and payments for CY 2012 in Addenda
A and B to this final rule with comment period (which are referenced in
section XVII. of this final rule with comment period and available via
the Internet on the CMS Web site) were calculated using claims from CY
2010 that were processed before July 1, 2011, and continue to be based
on the median hospital costs for services in the APC groups. Under the
methodology we are adopting in this final rule with comment period, we
select claims for services paid under the OPPS and match these claims
to the most recent cost report filed by the individual hospitals
represented in our claims data.
[[Page 74132]]
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 2012 payment rates.
b. Use of Single and Multiple Procedure Claims
For CY 2012, 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.
It is generally 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
proposed to continue 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 are 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 2011 OPPS/ASC final rule with comment period (75 FR 71811
through 71822). 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 CYs 2009, 2010, and
2011, and we proposed to continue them for CY 2012. Increased packaging
and creation of composite APCs 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 multiple imaging services for CYs 2010 and 2011, and we
proposed to continue to create them for CY 2012. We refer readers to
section II.A.2.e. of the proposed rule and this final rule with comment
period for a 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 2012
OPPS. This methodology enabled us to create, for the proposed rule,
approximately 67 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 33 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 2012, we proposed to bypass 460 HCPCS codes for CY 2012 that
were identified in Addendum N to the proposed rule (which is available
via the Internet on the CMS Web site). 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 updated year's
data (for CY 2012, data available for the February 28-March 1, 2011 APC
Panel meeting from CY 2010 claims processed through September 30, 2010,
and CY 2009 claims data processed through June 30, 2010, used to model
the payment rates for CY 2011) to determine whether it would be
appropriate to propose to add additional codes to the previous year's
bypass list. For CY 2012, we proposed to continue to bypass all of the
HCPCS codes on the CY 2011 OPPS bypass list. We updated HCPCS codes on
the CY 2011 bypass list that were mapped to new HCPCS codes for CY 2012
ratesetting by evaluating data for the replacement codes under the
empirical criteria described below and also removing the HCPCS codes
that we proposed to be deleted for CY 2012, which were listed in Table
1 of the proposed rule. We also proposed to remove HCPCS codes that
were not separately paid under the OPPS because the purpose of the
bypass list is to obtain more data for those codes relevant to
ratesetting. 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 2012 all HCPCS codes not on the CY 2011 bypass list
that, using either the CY 2011 final rule data (CY 2009 claims) or the
February 28-March 1, 2011 APC Panel data (first 9 months of CY 2010
claims), met the empirical criteria for the bypass list that are
summarized below. The entire list proposed for CY 2012 (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 $55. This criterion
also limits the amount of error in redistributed costs. During the
assessment of claims against the bypass criteria, we do not know the
dollar value of the packaged cost that should be appropriately
attributed to the other procedures on the claim. Therefore, ensuring
that redistributed costs associated with a bypass code are small in
amount and volume protects the validity of cost estimates for low
[[Page 74133]]
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 considered
whether it would be appropriate to update the $50 packaged cost
threshold for inflation when examining potential bypass list additions.
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 increase would
prevent continuing decline in the threshold's real value. For CY 2011,
based on CY 2009 claims data, we proposed to apply the final market
basket increase 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). This calculation led us to a proposed packaged cost
threshold for bypass list additions for CY 2011 of $50 ($51.80 rounded
to $50). We stated that we believe that applying the market basket
increase 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 reflects the extent to which the
price of inputs for hospital services is expected to increase compared
to the price of inputs for hospital services in the prior year. We
proposed for CY 2012, based on the same rationale described for the CY
2011 OPPS/ASC final rule with comment period (75 CFR 71812), to
continue to update the packaged cost threshold by the market basket
increase. By applying the final CY 2011 market basket increase of 1.85
percent to the prior non-rounded dollar threshold of $51.80 (75 FR
71812), we determined that the threshold increases for CY 2012 to $55
($52.76 rounded to $55, the nearest $5 increment). Therefore, we
proposed to set the median packaged cost threshold on the CY 2010
claims at $55 for a code to be considered for addition to the CY 2012
OPPS bypass list.
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 2012 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).
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 Addendum N
to the proposed rule (which is available via the Internet on the CMS
Web site).
Addendum N to the proposed rule included the proposed list of
bypass codes for CY 2012. The list of bypass codes contains codes that
were reported on claims for services in CY 2010 and, therefore,
includes codes that were in effect in 2010 and used for billing but
were deleted for CY 2011. We retained these deleted bypass codes on the
proposed CY 2012 bypass list because these codes existed in CY 2010 and
were covered OPD services in that period, and CY 2010 claims data are
used to calculate CY 2012 payment rates. 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
Addendum N to the proposed rule. HCPCS codes that we proposed to add
for CY 2012 were identified by asterisks (*) in the fourth column of
Addendum N.
Comment: One commenter recommended that CMS add CPT code 77332
(Treatment devices, design and construction; simple (simple block,
simple bolus)) to the bypass list in order to yield additional claims
for ratesetting for composite APC 8001 (LDR Prostate Brachytherapy
Composite). The commenter's analysis showed that bypassing the code
would yield a significant increase in the number of claims to set the
composite rate.
Response: As discussed above, we perform an analysis on the natural
single major claims to determine possible additions to the bypass list.
In doing so, we apply a set of empirical criteria to identify codes
that would be appropriate for addition to the bypass list, based on how
well they represent the clinical use of the service as well as the
limited packaging impact of bypassing those codes. These criteria are
consistent with the goal of using appropriate data for ratesetting. The
commenter suggested that bypassing the code would be appropriate
because it would yield additional claims without a discussion of the
impact of bypassing the code. In the APC Panel 2012 data used to create
the bypass list proposal, the code failed to meet the empirical
criteria. Of the 134 available natural single major claims, 117 (87
percent) of those claims contained packaging, which exceeds the 5
percent limit for a code to be placed on the bypass list. Additionally,
the median cost of packaging on those claims was $200.23, which exceeds
the $55 limit for the code to be placed on the bypass list. These data
suggest that bypassing the code may potentially and relatively often,
distribute packaged costs, where it
[[Page 74134]]
might not be appropriate. For example, where CPT code 77332 is
furnished on the day on which a visit was the only other payable
service, if CPT code 77332 were on the bypass list, the packaging would
be associated with the visit, not with CPT code 77332, because we use
the line-item costs for codes on the bypass list without their
attendant packaging to establish the median cost for the bypass code.
This would inappropriately reduce the median cost for CPT code 77332.
While we seek to use as much available information as possible that is
available in the OPPS claims data set, we do so with the goal of using
appropriate cost information in setting the APC relative weights. In
this case, we believe that adding the CPT code 77332 to the bypass list
would create considerable risk in assigning packaging that rightfully
should be associated with CPT code 77332 to other services. Therefore
we are not adding CPT code 77332 to the bypass list for CY 2012.
Comment: One commenter recommended that CMS continue to explore
additional methodologies to increase the number of procedure claims
used for rate setting, including expanding the criteria for inclusion
on the bypass list.
Response: We are always seeking additional methodologies that would
enable us to increase the number of procedure claims used for rate
setting. However, it is important to us that we ensure that any new
methodology or change to current methodology or criteria would not
result in costs that are appropriately packaged into a service being
inappropriately assigned to another service, as, for example, we
believe would be the case if we were to place CPT code 77332 on the
bypass list.
After consideration of the public comments we received, we are
adopting as final the proposed ``pseudo'' single claims process and the
final CY 2012 bypass list of 460 HCPCS codes, as displayed in Addendum
N of this final rule with comment period (available via the Internet on
the CMS Web site). Table 1 below contains the list of codes that we are
removing from the CY 2012 bypass list because these codes were either
deleted from the HCPCS before CY 2010 (and therefore were not covered
OPD services in CY 2010) or were not separately payable codes under the
CY 2012 OPPS because these codes are not used for ratesetting (and
therefore would not need to be bypassed). None of these deleted codes
were ``overlap bypass'' codes.
[GRAPHIC] [TIFF OMITTED] TR30NO11.000
c. Calculation and Use of Cost-to-Charge Ratios (CCRs)
In the CY 2012 OPPS/ASC proposed rule (76 FR 42181), for CY 2012,
we proposed to continue 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 2012 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 2010 claims data from the most recent available hospital cost
reports, in most cases, cost reports beginning in CY 2009. For the CY
2012 OPPS proposed rates, we used the set of claims processed during CY
2010. 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 2010
(the year of the claims data we used to calculate the proposed CY 2012
OPPS payment rates). For CY 2010, the National Uniform Billing
Committee added revenue codes 860 (Magnetoencephalography (MEG);
general classification) and 861 (Magnetoencephalography (MEG)). For
purposes of applying a CCR to charges reported under revenue codes 860
and 861, we proposed to use nonstandard Medicare cost report cost
center 3280 (Electrocardiogram (EKG) and Electroencephalography (EEG))
as the primary cost center and to use standard cost center 5400
(Electroencephalography (EEG)) as the secondary cost center. We believe
that MEG, which evaluates brain activity, is
[[Page 74135]]
similar to EEG, which also evaluates brain activity, and that the few
hospitals that furnish MEG are likely to furnish it in the same
department of the hospital in which they furnish EEG services.
Therefore, we believe that the CCRs that we apply to the EEG revenue
codes are more likely to result in a more accurate estimated cost for
MEG than would the application of the hospital-specific overall
ancillary CCR. For hospitals that report charges under revenue code 860
or 861 but do not report costs on their cost report under cost center
3280 or 5400, we proposed to apply the hospital-specific overall CCR to
the charges reported under revenue code 860 or 861 for purposes of
estimating the cost of these services. We discuss MEG, including the
issue of the CCR to be applied to charges for MEG, in section III.D. of
this final rule with comment period. We note that revenue codes with
effective dates in CY 2011 are not relevant to this process because
these new revenue codes were not applicable to claims for services
furnished during CY 2010.
In accordance with our longstanding policy, 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 2010 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 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 2009. 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 2012 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. We proposed to
continue this longstanding methodology for the calculation of median
costs for CY 2012.
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
[[Page 74136]]
55.01 to Worksheet A and is defined as capturing the costs and charges
billed with the following UB-04 revenue codes: 0275 (Pacemaker); 0276
(Intraocular lens); 0278 (other implants); and 0624 (FDA investigations
devices) (73 FR 48458).
In preparation for the FY 2012 IPPS proposed rule and the CY 2012
OPPS proposed rule, we assessed the availability of data in the
``Implantable Devices Charged to Patients'' cost center. In order to
develop a robust analysis regarding the use of cost data from the
``Implantable Devices Charged to Patients'' cost center, we believe
that it is necessary to have a critical mass of cost reports filed with
data in this cost center. The cost center for ``Implantable Devices
Charged to Patients'' is effective for cost reporting periods beginning
on or after May 1, 2009. We checked the availability of CY 2009 cost
reports in the December 31, 2010 quarter ending update of HCRIS, which
is the latest upload of CY 2009 cost report data that we could use for
the proposed rule. We determined that there were only 437 hospitals
that had completed the ``Implantable Devices Charged to Patients'' cost
center (out of approximately 3,500 IPPS hospitals). We stated in the
proposed rule that we do not believe this is a sufficient amount of
data from which to generate a meaningful analysis. Therefore, we did
not propose to use data from the ``Implantable Devices Charged to
Patients'' cost center to create a distinct CCR for Implantable Devices
Charged to Patients for use in calculating the OPPS relative weights
for CY 2012. We stated that we would reassess the availability of data
for the ``Implantable Devices Charged to Patients'' cost center for the
CY 2013 OPPS rulemaking cycle. 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 may be
able to use data from the revised Medicare hospital 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 other 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 PRM-II,
available on the CMS Web site at: http://www.cms.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 became available for cost reporting periods ending on or
after October 1, 2009, and are included in the revenue code to cost
center crosswalk we proposed to use for calculating payment rates for
the CY 2012 OPPS (76 FR 42183). Specifically, the nonstandard cost
centers are: 3120 (Cardiac Catheterization Laboratory); 3230 (CAT
Scan); 3430 (Magnetic Resonance Imaging (MRI)). The revenue code to
cost center crosswalk that we proposed to use for purposes of
estimating the median costs of items and services for the CY 2012 OPPS
is available for review and continuous comment (outside of comment on
this final rule with comment period) on the CMS Web site at: http://www.cms.gov/HospitalOutpatientPPS/03_crosswalk.asp#TopOfPage.
Furthermore, in the FY 2011 IPPS/LTCH PPS final rule (75 FR 50075
through 50080), we finalized our proposal to create new standard cost
centers for ``Computed Tomography (CT),'' ``Magnetic Resonance Imaging
(MRI),'' and ``Cardiac Catheterization,'' and to require that hospitals
report the costs and charges for these services under new cost centers
on the revised Medicare cost report Form CMS 2552-10. As we discussed
in the FY 2009 IPPS/LTCH PPS and CY 2009 OPPS/ASC proposed and final
rules, RTI found that the costs and charges of CT scans, MRI, and
cardiac catheterization differ significantly from the costs and charges
of other services included in the standard associated cost center. RTI
also concluded that both the IPPS and OPPS relative weights would
better estimate the costs of those services if CMS were to add standard
costs centers for CT scans, MRI, and cardiac catheterization in order
for hospitals to report separately the costs and charges for those
services and in order for CMS to calculate unique CCRs to estimate the
cost from charges on claims data. (We refer readers to the FY 2011
IPPS/LTCH PPS final rule (75 FR 50075 through 50080) for a more
detailed discussion on the reasons for the creation of standard cost
centers for CT scans, MRI, and cardiac catheterization.) The new
standard cost centers for MRI, CT scans, and cardiac catheterization
are effective for cost report periods beginning on or after May 1,
2010, on the revised cost report Form CMS-2552-10. CMS issued the new
hospital cost report Form CMS-2552-10 on December 30, 2010. The new
cost report form can be accessed at the CMS Web site at: https://www.cms.gov/Manuals/PBM/itemdetail.asp?filterType=none&filterByDID=-99&sortByDID=1&sortOrder=ascending&itemID=CMS021935&intNumPerPage=10.
Once at this Web site, users should double click on ``Chapter 40.''
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: Commenters requested that CMS reconsider its position to
not use the data from the implantable device cost center to calculate
the APC relative weights for CY 2012. Commenters noted that in the FY
2012 IPPS proposed rule, CMS found that only 437 hospitals out of
approximately 3,500 IPPS hospitals reported data in the ``Implantable
Devices Charged to Patients'' cost center of the Medicare hospital cost
report based on the December 2010 update of FY 2009 HCRIS. Several
commenters said that an analysis by their contractor identified nearly
800 hospitals using the new cost center in the April 2011 HCRIS update
and estimated that 1000 hospitals would be using the new cost center by
August 2011. Therefore, the commenters believed there is now a
sufficient amount of data to use the implantable device CCR to
calculate the relative weights and improve the
[[Page 74137]]
accuracy of the payment rates. Commenters also suggested that because
the IPPS and OPPS use CCRs calculated at different levels, the analysis
of robustness for the new cost center is less significant in the OPPS
than in the IPPS, and should not be necessary before adopting the CCRs
from the Implantable Device cost center. One commenter suggested that
the only justifiable reason to not implement the new CCR would be for
issues related to suspect data, and that the limited use of the cost
center should not delay implementation of the new Implantable Medical
Device cost center CCR. One commenter suggested that, should the
available data be deemed insufficient, CMS should provide additional
analysis justifying why that data were insufficient, provide data on
the representativeness of the hospitals reporting under the implantable
medical device cost center and explore other alternatives in addressing
charge compression.
Response: In the CY 2012 OPPS/ASC proposed rule, we indicated that
we did not have sufficient cost report data to develop the kind of
robust analysis that we assured the public we would provide prior to
implementing a new CCR for implantable medical devices. Therefore, we
stated that we would reassess the availability of data for CY 2013. We
have reviewed the availability of FY 2009 cost reports in the June 30,
2011 quarter ending update of HCRIS, which is the latest upload of FY
2009 cost report data that we currently have available. We have
determined that, for cost reporting periods beginning on or after May
1, 2009, the effective date of line 55.30 (Implantable Devices Charged
to Patients), there were 363 hospitals paid under the OPPS whose claims
were used for the calculation of median costs in the CY 2012 OPPS/ASC
proposed rule (out of approximately 4,000 OPPS hospitals) that have
completed the ``Implantable Devices Charged to Patients'' cost center
in the HCRIS data for the quarter ending December 31, 2010. In
contrast, we found that there were 1,689 OPPS hospitals that reported
costs in the implantable device cost center in the HCRIS data for the
quarter ending June 30, 2011, that were used to calculate the median
costs that are the basis for the CY 2012 payment rates established in
this final rule with public comment period.
We agree that there are differences between the OPPS and IPPS in
the calculation of the CCRs and their use in establishing estimated
costs. However, we believe that it is important to analyze the CCRs
used for calculation of the median costs for procedures that use
implantable devices and the impact of changes in these median costs on
payments for all services before the new CCRs for implantable devices
are adopted. Such analysis is important because it allows the
opportunity for the public to provide comment on the impact of the
adoption of those CCRs on payment for services that do not use
implantable devices. In a budget neutral payment system, payment for
services that do not require implantable devices would be reduced as a
result of increases in payment for services that use implantable
devices. Quarterly HCRIS updates and the commenters themselves indicate
that hundreds of hospitals would report cost report data for the new
implantable device cost center in the HCRIS data used for this final
rule with comment period, although such data was not available for the
proposed rule. This would create the possibility that changes to
payments for services that include implantable devices that appear in
the final rule with comment period could be vastly different from the
proposed payments for those services in the CY 2012 proposed rule.
Similarly, if we were to use the CCRs for implantable devices in the
calculation of the median costs for this final rule with comment
period, the public would not have had an opportunity to comment on the
impact of their use on payments for services that do not use
implantable devices.
We are not finalizing relative payment weights based on the new CCR
for implantable devices charged to patients for CY 2012 because we
believe that the transition in reporting charges and costs for
implantable medical devices from the general medical supplies cost
centers to a highly specialized cost center for high cost items means
that the final rule relative weights would otherwise be very different
from the proposed rule relative weights. In the proposed rule cost
report data, 363 hospitals reported approximately $4.9 billion in costs
in the implantable medical device cost center in Worksheet A. In the
final rule cost report data, 1,689 hospitals reported approximately
$20.7 billion in costs in the implantable medical device cost center on
Worksheet A. Therefore, it was not possible to calculate proposed
payment rates that would reflect the same use of the implantable
medical device CCR as would be used for the final rule due to the
transition. To the extent that the use of a CCR for implantable medical
devices in the final rule might create median costs for services that
require high cost implantable medical devices that differ significantly
from those we estimated for the proposed rule, the public would not
have had an opportunity to comment on the unexpected changes to
payments for all other services that would occur as a result of using
the CCR for implantable medical devices.
We believe that it is more appropriate to wait until CY 2013, when
we expect to provide an impact analysis that enables the public to
assess the full impact of the use of the new CCR that is specific to
implantable devices on payments for all services. Therefore, we are not
using the CCRs that are specific to implantable devices in calculating
the APC relative weights for CY 2012.
Comment: Commenters urged CMS to increase education efforts to
encourage faster hospital adoption of the use of the implantable
medical device cost center. One commenter suggested that more
widespread use of the implantable device cost center would improve the
validity of payment weights based on those estimated costs.
Response: We agree that it is important that hospitals understand
how to accurately report data in the ``Implantable Devices Charged to
Patients'' cost center, and we have worked to add more clarity to the
cost report instructions. In addition, we also believe that the
December 31, 2010 update of HCRIS reflected relatively few entries for
this cost center because the corresponding cost center line was only
available for use for cost reporting periods beginning on or after May
1, 2009. This timing of this effective date meant that hospital data
for this cost center line would not be evident to CMS until the March
31, 2011 HCRIS update. However, this update occurred after the December
31, 2010 HCRIS update we used when we prepared the proposed rule.
Comment: Commenters suggested that CMS monitor the accuracy of the
data reported in the implantable device cost center on the Medicare
hospital cost report. Commenters urged CMS to impress upon the Medicare
Administrative Contractors (MACs) the importance of establishing a
mechanism to audit the implantable device cost center to ensure that
the costs and charges are appropriately reported. In addition, one
commenter suggested that the cost reporting software be modified to
create a level 1 error in the case where no data is reported on line
55.30 (Implantable Devices Charged to Patients) to compel hospitals to
report that information.
Response: We agree with the commenters that the cost reporting
lines, whether they are for implantable devices charged to patients,
MRI, CT scans, cardiac catheterization, or any
[[Page 74138]]
others, should be subject to greater audit scrutiny from the Medicare
contractors. The new Medicare cost report form CMS-2552-10, on line 121
of Worksheet S-2, Part I, asks ``Did this facility incur and report
costs for implantable devices charged to a patient? Enter in column 1
`Y' for yes or `N' for no.'' All hospital types, including non-IPPS
hospitals, CAHs, and Maryland inpatient short-term acute hospitals, are
required to properly report their costs and charges, and if the answer
to this question is ``Y'' for any type of hospital, then line 72,
column 26, of Worksheet B, Part I must be greater than 0, with an
accurate amount that reflects the hospital's costs for implantable
devices charged to patients. In addition, we note that a Level 1 edit
on the CMS-2552-10 form already exists that ensures that line 72,
column 26, of Worksheet B, Part I (Implantable Devices Charged to
Patients on Worksheet A of the CMS-2552-10 form) is greater than 0 if
Worksheet S-2, Part I, line 121 is ``Y.'' The edit is also set up for
the reverse scenario; that is, if there is an amount on Worksheet B,
Part I, line 72, column 26, then the response on Worksheet S-2, Part I,
line 121 must be ``Y.'' We do not agree with commenters that a level 1
error should be established to force hospitals to report costs on line
55.30 because it is possible that some hospitals do not provide
services for which charges are reported in the revenue codes that
correspond to the costs that are to be reported on line 55.30 (for
example, psychiatric hospitals).
Comment: One commenter believed that the standard cost centers for
Computed Tomography and Magnetic Resonance Imaging would be
artificially low due to hospital allocation of capital costs across the
hospital rather than to particular cost centers, and suggested that
payments based on these CCRs would not accurately reflect the resources
used in providing those services. As a result, the commenter
recommended that CMS exercise a similar degree of caution as that in
the approach for the new ``Implantable Devices Charged to Patients''
cost center CCRs before using any data based on the new CT and MRI cost
centers.
Response: We provided background on the creation of the new
standard cost centers in the proposed rule and will reassess the
availability of data for the ``Implantable Devices Charged to
Patients'' cost center, and the ``MRI, CT Scans, and Cardiac
Catheterization'' cost centers, for the CY 2013 OPPS rulemaking cycle.
If appropriate, we will propose to create distinct CCRs for these cost
centers at that time.
Comment: Commenters asked that CMS create a new cost center
exclusively for the costs of MEG so that the calculation of the median
cost for MEG would more accurately reflect the expense of the
equipment, maintenance contract and dedicated staff necessary to
furnish the service. Several commenters suggested that cost center 5400
should be the primary cost center assignment and 3280 should be the
secondary cost center assignment for revenue codes 0860
(Magnetoencephalography (MEG)--General Classification) and 0861
Magnoetoecnephalography (MEG). This would reverse the current cost
center assignments for these revenue codes. Some commenters asked that
CMS adopt the non-standard subscripted cost center assignment that one
MAC had allowed for its hospitals that furnish MEG.
Response: In the absence of recommendations for use of other
existing cost center's CCRs, we continue to believe that for revenue
codes 0860 and 0861 nonstandard cost center 3280 ``EKG and EEG'' is an
appropriate primary cost center mapping and cost center 5400
``Electroencephalography'' is an appropriate secondary cost center
mapping. We welcome recommendations on more suitable currently existing
standard or nonstandard cost center CCRs. We will also discuss the
issue with the APC Panel.
With regard to the request to create a new cost center exclusive to
the costs of MEG, as we stated in the CY 2011 OPPS/ASC final rule with
comment period, we do not believe 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, 2010,
2011 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 an official nonstandard cost center 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 has been and continues to
be extremely low. In the hospital outpatient CY 2010 OPPS claims data,
hospitals reported 150 units of MEG spread among the three CPT codes
for MEG: 75 units of CPT code 95965 (Magnetoencephalography (MEG),
recording and analysis; for spontaneous brain magnetic activity (e.g.
epileptic cerebral cortex localization)); 38 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 37 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 very 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 units in CY 2005, 75 units in CY 2006, 102 units
in CY 2007, 75 units in 2008, 131 units in 2009, and 150 units in CY
2010). Therefore, we continue to believe that a specific cost center is
not appropriate for MEG, given the longstanding low volume of this
service.
For a discussion of the APC Panel recommendation on the final
payment policy for MEG, we refer readers to section III.D. of this
final rule with comment period.
Comment: Commenters requested that CMS outline a method by which
more discrete cost center lines could be requested for capital-
expensive services having their own NUBC revenue codes.
Response: The process by which a hospital may request permission to
use a subscripted line on a cost report is found in the Provider
Reimbursement Manual, Part II (PRM-II), Chapter 40. Contractor approval
is not necessary to subscript lines on the cost report for use in
reporting nonstandard cost centers, as long as hospitals follow the
Medicare guidelines in the PRM. However, as discussed above with regard
to creation of national cost centers, we have either
[[Page 74139]]
proposed or discussed potential new standard and nonstandard cost
centers for the Medicare hospital cost report in cases where doing so
would provide more accurate information that would justify the
resources and costs associated with doing so. For example, we have
proposed and finalized nonstandard cost centers such as those for
Cardiac Rehabilitation, Hyperbaric Oxygen Therapy, and Lithotripsy (74
FR 60344) as well as standard cost centers for Implantable Medical
Devices Charged to Patients, Cardiac Catheterization, Computed
Tomography, and Magnetic Resonance Imaging through the annual
rulemaking process.
Comment: Several commenters requested that CMS modify the revenue
code-to-cost center crosswalk to include data on the number of
providers billing using each revenue code in the claims data whose cost
reports contain the associated cost center under each mapping.
Response: All of the data that are required to perform this
analysis is available to the public. The HCRIS data, which include
information from the hospital cost reports, are available on the CMS
Web site at http://www.cms.gov/CostReports/CostReportsFY/list.asp#TopOfPage, while our CMS Web site, http://www.cms.gov/HospitalOutpatientPPS, includes information about purchasing the ``OPPS
Limited Data Set''. The HCRIS data can be used to extract the cost
center information the commenters request while the claims data in the
OPPS Limited Data Set include the revenue codes and HCPCS on the claims
billed by each OPPS provider.
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 OPPS payment rates for CY 2012. 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 2012 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 2010 claims that
were used to calculate the proposed and final payment rates for the CY
2012 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 OPPS payment rates for CY 2012 shown in Addenda A and B
to the this rule with comment period (which are available via the
Internet on the CMS Web site). We refer readers to section II.A.4. of
the proposed rule and this final rule with comment period for a
discussion of the conversion of APC median costs to scaled payment
weights.
Comment: Commenters expressed concern with respect to the
volatility of the OPPS payment rates from year to year. One commenter
suggested a ``stability policy'' that the median costs from claims be
adjusted to limit changes from year to year and asked that CMS limit
any decreases in payment compared to the prior year to no more than a
5-percent decline.
Response: As previously discussed in the CY 2011 OPPS/ASC final
rule with comment period (FR 75 71833), there are a number of factors
that contribute to median costs fluctuations from one year to the next
including (but not limited to) hospital behavior in adjusting mix of
services, hospital costs and charges changes each year resulting in
changes to the CCRs, reassignments of HCPCS codes, changes to OPPS
payment policy (for example, changes to packaging), and implementation
of composite APCs. We cannot stabilize hospital-driven fundamental
inputs to the calculation of OPPS payment rates. However, we have
strived 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. However, 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. 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 relativity of payment that is based on the cost of all
services.
Comment: Several commenters expressed concerns over the payment
reductions for device-dependent APCs, blood and blood products,
multiple imaging composites, and packaged services citing impact to
beneficiary access to necessary procedures and patient safety. The
commenters were also concerned that payments do not accurately reflect
the costs of providing the procedures.
Response: We discuss the public comments we received on the payment
for particular services throughout this final rule with comment period.
However, in general, we believe that our methodology for calculating
the payments made for services furnished in hospital outpatient
departments comports with the statutory requirements and results in
payments that reflect the relative cost of these services within the
statutory constraints of a budget neutral system. Indeed, our data show
significant increase in payment as a percentage of cost since the
inception of the OPPS.
a. Claims Preparation
For this final rule with comment period, we used the CY 2010
hospital outpatient claims processed before July 1, 2011, to calculate
the median costs of APCs that underpin the relative weights for CY
2012. To begin the calculation of the relative weights for CY 2012, we
pulled all claims for outpatient services furnished in CY 2010 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
because these are claims that providers submitted to Medicare knowing
that no payment would be made. For example,
[[Page 74140]]
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, and, therefore, we do not use claims for services furnished in
these areas in ratesetting.
We divided the remaining claims into the three groups shown below.
Groups 2 and 3 comprise the 112 million claims that contain hospital
bill types paid under the OPPS.
1. Claims that were not bill types 12X (Hospital Inpatient
(Medicare Part B only)), 13X (Hospital Outpatient), 14x (Hospital--
Laboratory Services Provided to Nonpatients), or 76X (Clinic--Community
Mental Health Center). Other bill types are not paid under the OPPS;
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 (that exceeded +/-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.
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 to a separate file (the lines stay on the claim, but are copied
onto another 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.
In the CY 2010 OPPS/ASC final rule with comment period (74 FR
60517), we first adopted a policy 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. As discussed further in section V.B.3. of this final rule with
comment, as we proposed, we are continuing this policy for CY 2012.
Therefore, 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 with HCPCS codes,
whether separately paid or packaged, 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 2011 ASP amount multiplied by total units for each
drug or biological in the CY 2010 claims data). These values are ASP+9
percent (for all drugs and biologicals with HCPCS codes, whether
separately paid or packaged), ASP-2 percent (for drugs and biologicals
that are separately paid), and ASP+192 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,
and as we proposed, we are redistributing $169 million of the total
cost in our claims data for coded packaged drugs and biologicals with
an ASP to payment for separately payable drugs and biologicals. We also
are redistributing an additional $71.3 million from the cost of uncoded
packaged drugs billed under pharmacy revenue code series 025X
(Pharmacy) and 026X (IV Therapy). 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. Our CY 2012 redistribution of $240.3
million in estimated costs from coded and uncoded packaged drugs to
separately payable drugs represents the $200 million in total packaged
drug costs redistributed from the CY 2011 OPPS/ASC final rule with
comment period (75 FR 71967), updated by the PPI for Pharmaceuticals
for Human Use, to derive a proportion of redistributed costs to total
costs. We then updated our analysis for this CY 2012 OPPS/ASC final
rule with comment period, holding the proportion of redistributed
pharmacy overhead and handling cost constant, both for packaged coded
drugs (35 percent) and for packaged uncoded drugs (10.7 percent),
constant between the proposed rule and the final rule with comment
period. This allowed us to keep the proportion of redistributed costs
(and
[[Page 74141]]
thus the ASP+X percent) stable between the proposed rule and the final
rule with comment period. Redistributing a total of $240.3 million in
pharmacy overhead cost from packaged drugs and biologicals reduces the
$1.4 billion cost of packaged drugs and biologicals with HCPCS codes
and ASPs to $1.16 billion, approximately a 17-percent reduction.
Redistributing $71.3 million from the cost of uncoded packaged drugs
and biologicals reduces the $666 million cost of uncoded drugs and
biologicals to $594.7 million, approximately an 11-percent reduction.
To implement our CY 2012 policy to redistribute $169 million from the
pharmacy overhead cost of coded packaged drugs and biologicals to
separately payable drugs and biologicals and $71.3 million from the
cost of uncoded packaged drugs, we multiplied the cost of each packaged
drug or biological with a HCPCS code and ASP pricing information in our
CY 2010 claims data by 0.77, and we multiplied all uncoded packaged
pharmacy drug costs in our CY 2010 claims data, excluding those for
diagnostic radiopharmaceuticals, by 0.89. We also added the
redistributed $240.3 million to the total cost of separately payable
drugs and biologicals in our CY 2010 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-2 percent to ASP+4 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 2012.
We then removed line-items that were not paid during claim
processing, presumably for a line-item rejection or denial. 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 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 that
were not paid during claims processing in the claim year, but have a
status indicator of ``S,'' ``T,'' ``V,'' or ``X'' in 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 2011 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 2012, we proposed to continue the policy we implemented for
CY 2011 to exclude line-item data for pass-through drugs and
biologicals (status indicator ``G'' for CY 2010) and nonpass-through
drugs and biologicals (status indicator ``K'' for CY 2010) 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). As with
our trimming in the CY 2011 OPPS/ASC final rule with comment period (75
FR 71828) 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.
b. Splitting Claims and Creation of ``Pseudo'' Single Procedure Claims
(1) Splitting Claims
As we proposed, for this CY 2012 final rule with comment period, 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 2012, 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 2012,
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 2012 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
[[Page 74142]]
with a status indicator ``T'' on the same claim on the same date.
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 for ratesetting. 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 (76 FR 42185 through 41286), we are finalizing our CY
2012 proposal without modification. (2) Creation of ``Pseudo'' Single
Procedure Claims
As we 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 we proposed, for this final rule with comment period, we also
used the bypass codes listed in Addendum N to this final rule with
comment period (which is referenced in section XVII. of this final rule
with comment period and available via the Internet on the CMS Web site)
and discussed in section II.A.1.b. of this final rule with comment
period to remove separately payable procedures which 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 2012 ``overlap bypass
codes'' are listed in Addendum N to this final rule with comment period
(which is available via the Internet on the CMS Web site). 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 we 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
[[Page 74143]]
allowed us to use more claims data for ratesetting purposes.
As we 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 ``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 2011
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 2011 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
2011 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 the selected code 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 2011 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 2011 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 2011
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.
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'') and status indicator ``Q1'' (``STVX-
packaged''), we selected the T-packaged status indicator ``Q2'' HCPCS
code that had the highest relative weight for CY 2011 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 2011 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 2011 relative weights. If a status indicator
``Q1'' HCPCS code had a higher CY 2011 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.
We then applied our process for creating ``pseudo'' single
procedure claims to the conditionally packaged codes that do not meet
the criteria for packaging, which enabled us to create single procedure
claims from them, where they meet the criteria for single procedure
claims. Conditionally packaged codes are identified using status
indicators ``Q1'' and ``Q2,'' and are described in section XI.A.1. of
this final rule with comment period.
Lastly, as we 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.
Comment: Commenters supported the proposed process for creating
pseudo single procedure claims.
Response: We appreciate the commenters' support and will continue
to look for ways to refine the process to secure more claims data for
use in calculating median costs.
After consideration of the public comments we received, as we
proposed, we are continuing to apply the proposed methodology described
above for the purpose of creating pseudo single procedure claims for
the CY 2012 OPPS.
c. Completion of Claim Records and Median Cost Calculations
(1) General Process
As we 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
(which is referenced in section XVII. of this final rule with comment
period and available via the Internet on the CMS Web site) 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 2 below 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
2012 to the revenue codes that the I/OCE will package for CY 2012 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
[[Page 74144]]
codes. For CY 2012, as we did for CY 2011, we reviewed the changes to
revenue codes that were effective during CY 2010 for purposes of
determining the charges reported with revenue codes but without HCPCS
codes that we would propose to package for the CY 2012 OPPS. We believe
that the charges reported under the revenue codes listed in Table 2
below continue to reflect ancillary and supportive services for which
hospitals report charges without HCPCS codes. Therefore, for CY 2012,
as we proposed, we are continuing to package the costs that we derive
from the charges reported without HCPCS code under the revenue codes
displayed in Table 2 below for purposes of calculating the median costs
on which the CY 2012 OPPS are based.
We did not receive any public comments on our proposed list of
packaged revenue codes. Therefore, for the reasons set forth in the
proposed rule (76 FR 42187 through 42188), we are finalizing the
proposed packaged revenue codes for CY 2012, without modification,
which are identified in Table 2 below. We note that these revenue codes
include only revenue codes that were in effect in CY 2010, the year of
the claims data on which the CY 2012 OPPS payment rates are based.
BILLING CODE 4120-01-P
[[Page 74145]]
[GRAPHIC] [TIFF OMITTED] TR30NO11.001
[[Page 74146]]
[GRAPHIC] [TIFF OMITTED] TR30NO11.002
BILLING CODE 4120-01-C
In accordance with our longstanding policy, as we proposed, 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. We are continuing these processes for the CY
2012 OPPS.
As we 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
[[Page 74147]]
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 109 million
claims were left. Using these 109 million claims, we created
approximately 110 million single and ``pseudo'' single procedure
claims, of which we used slightly more than 108 million single bills
(after trimming out approximately 888,000 claims as discussed in
section II.A.1.a. of this final rule with comment period) in the CY
2012 median development and ratesetting.
We used these claims to calculate the final CY 2012 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 greater 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
(75 FR 71832). This longstanding definition of when a HCPCS code is
significant for purposes of the 2 times rule was selected because we
believe that a subset of 1,000 claims is negligible within the set of
approximately 100 million single procedure or single session claims we
use for establishing median costs. Similarly, a HCPCS code for which
there are fewer than 99 single bills and which comprises less than 2
percent of the single major claims within an APC will have a negligible
impact on the APC median. 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 proposing to pay 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 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
VIII.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 VIII.B. of this final rule with comment period addresses the
methodology for calculating the median costs for partial
hospitalization services.
We did not receive any public comments on this aspect of the median
calculation process that we proposed for CY 2012. Therefore, we are
adopting it as final.
After consideration of the public comments we received, we are
finalizing our proposed methodology for calculating median costs for
purposes of creating payment weights and subsequent payment rates for
the CY 2012 OPPS.
(2) APC Panel Recommendations Regarding Data Development
At the February 28-March 1, 2011 APC Panel Meeting, we provided the
APC Panel Data Subcommittee with a list of all APCs fluctuating by
greater than 10 percent when comparing the CY 2011 OPPS final rule
median costs based on CY 2009 claims processed through June 30, 2010,
to those based on CY 2010 OPPS/ASC final rule data (CY 2008 claims
processed through June 30, 2009). We included explanatory data where
possible to allow the Data Subcommittee to focus on APC median changes
that required more investigation, based on its request (75 FR 71834).
The APC Panel Data Subcommittee reviewed the fluctuations in the APC
median costs but did not express particular concerns with the median
cost changes.
We also provided the APC Panel Data Subcommittee with a summary of
cost and CCR data related to the Myocardial Positron Emission
Tomography (PET) imaging APC, APC 0307, as well as the associated
diagnostic radiopharmaceutical, Rb82 rubidium, based on a request for
data related to the decline in the APC median cost from the CY 2010
OPPS final rule to the CY 2011 OPPS proposed rule. The Data
Subcommittee noted a decline in the CCRs associated with the HCPCS
codes in APC 0307, as well as declines in the line-item costs of the
associated diagnostic radiopharmaceutical.
At the February 28-March 1, 2011 APC Panel Meeting, the APC Panel
made a number of recommendations related to the data process. The
Panel's recommendations and our responses follow.
Recommendation 1: The Panel commends the CMS staff for responding
to the data requests of the Data Subcommittee.
CMS Response to Recommendation 1: We appreciate this
recommendation.
Recommendation 2: The Panel recommends that the work of the Data
Subcommittee continue.
CMS Response to Recommendation 2: We are accepting this
recommendation.
Recommendation 3: The Panel recommends that Agatha Nolen, D.Ph.,
M.S., F.A.S.H.P., serve as acting chairperson for the winter 2011
meeting of the Data Subcommittee.
CMS Response to Recommendation 3: We are accepting this
recommendation.
At the August 10-12, 2011 APC Panel Meeting, CMS again provided the
APC Panel Data Subcommittee with a list of all APCs fluctuating by
greater than 10 percent when comparing the CY 2012 OPPS proposed rule
median costs based
[[Page 74148]]
on CY 2010 claims processed through December 21, 2010, to those based
on CY 2011 OPPS/ASC final rule data (CY 2009 claims processed through
June 30, 2010). We also gave an overview of the ASP+X calculation and
the CY 2012 proposal for separately paid drugs, and an overview of the
proposed payment (with DRG Cap) for Cardiac Resynchronization Therapy-
Defibrillator (CRT-D) composite. The APC Panel made a number of
recommendations related to specific services. Recommendations (4-9) are
discussed as part of the discussion of the specific service to which
they pertain.
Recommendation 10: The Panel recommends that the work of the Data
Subcommittee continue.
CMS Response to Recommendation 10: We are accepting this
recommendation.
Recommendation 14: The Panel recommends that Daniel J. Pothen,
M.S., R.H.I.A, C.H.P.S., C.P.H.I.M.S., C.C.S., C.C.S.-P., C.H.C., be
named the chair of the Data Subcommittee
CMS Response to Recommendation 14: We are accepting this
recommendation.
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 2012 OPPS/ASC proposed rule (76 FR 42190), for CY 2012,
we proposed to use the standard methodology for calculating median
costs for device-dependent APCs that was finalized in the CY 2011 OPPS/
ASC final rule with comment period (75 FR 71834 through 71837). (We
referred readers to section II.D.6. and II.A.e.6. of the proposed rule
for detailed explanations of the proposed nonstandard methodology
regarding cardiac resynchronization therapy). 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 2012 using only the subset of single
procedure claims from CY 2010 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 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-dependent APCs in which the
hospital incurs the full cost of the device.
Table 3 of the proposed rule (76 FR 42191) listed the APCs for
which we proposed to use our standard device-dependent APC ratesetting
methodology (as explained in the CY 2011 OPPS/ASC final rule with
comment period (75 FR 71834 through 71837)) for CY 2012. In the
proposed rule, we noted that there are five proposed device-dependent
APC title changes and one proposed deletion for CY 2012. As discussed
in detail in section II.A.2.d.(6) of the proposed rule, we proposed to
change the title of APC 0083 from ``Coronary or Non-Coronary
Angioplasty and Percutaneous Valvuloplasty'' to ``Level I Endovascular
Revascularization of the Lower Extremity''; the title of APC 0229 from
``Transcatheter Placement of Intravascular Shunt and Stents'' to
``Level II Endovascular Revascularization of the Lower Extremity''; and
the title of APC 0319 from ``Endovascular Revascularization of the
Lower Extremity'' to ``Level III Endovascular Revascularization of the
Lower Extremity.'' We also proposed to change the title of APC 0040
from ``Percutaneous Implantation of Neurostimulator Electrodes'' to
``Level I Implantation/Revision/Replacement of Neurostimulator
Electrodes,'' and the title of APC 0061 from ``Laminectomy,
Laparoscopy, or Incision for Implantation of Neurostimulator
Electrodes'' to ``Level II Implantation/Revision/Replacement of
Neurostimulator Electrodes,'' as discussed in section III.D.1. of the
proposed rule. In addition, as discussed in section II.A.2.e.(6) of the
proposed rule, we proposed to delete APC 0418 (Insertion of Left
Ventricular Pacing Electrode) for CY 2012. As we discussed in detail in
section III.D.6. of the proposed rule, we proposed to limit the payment
for services that are assigned to APC 0108 to the proposed IPPS
standardized payment amount for MS-DRG 227 (Cardiac Defibrillator
Implant without Cardiac Catheterization and without Medical
Complications and Comorbidities), and we proposed to continue to apply
the device edits and other standard features of the device-dependent
APCs to APC 0108. Finally, we referred readers to Addendum A to the
proposed rule for the proposed payment rates for device-dependent APCs
for CY 2012.
Comment: Several commenters supported CMS' proposal to continue
using the standard methodology for calculating median costs for device-
dependent APCs as well as the continued use of device coding edits to
ensure that hospitals are reporting charges for implanted devices. 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, and that CMS further improve the accuracy of estimates for
the costs of devices included in multiple procedure claims used for the
purpose of setting relative weights. Some commenters asked for
continued focus on coding education, particularly as it impacts the use
of proper HCPCS supply codes, so that these codes are appropriately
reported by hospital coders. Other commenters supported the mandatory
reporting of all device HCPCS codes.
Response: We appreciate the commenters' support of the continued
use of the standard device-dependent APC ratesetting methodology and
the procedure-to-device and device-to-procedure edits. As we have
stated in the past (75 FR 71835 and 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
[[Page 74149]]
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.
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.
Comment: Some commenters concurred with CMS' proposed determination
that APC 0385 (Level I Prosthetic Urological Procedures) and APC 0386
(Level II Prosthetic Urological Procedures) should be categorized as
device-dependent APCs. Other commenters expressed appreciation for the
proposed increase in payment for APC 0425 (Level II Arthroplasty or
Implantation with Prosthesis).
Response: We appreciate the commenters' support of the designation
of APC 0385 and APC 0386 as device-dependent APCs and the proposed
payment increase for APC 0425.
Comment: Several commenters expressed concern that the proposed CY
2012 payment rate for the implantation of cochlear implants, described
by CPT code 69930 (cochlear device implantation, with or without
mastoidectomy) which is assigned to APC 0259 (Level VII ENT
Procedures), decreased by approximately 12 percent from that in the CY
2011 OPPS/ASC final rule with comment period. According to commenters,
this payment rate is inconsistent with the average decrease in proposed
payment of all OPPS APCs relative to CY 2011 of approximately 6 percent
and is insufficient to cover hospitals' costs for providing this
service and ensure that beneficiaries will continue to have access to
cochlear implants. The commenters observed, based on their analysis of
Medicare claims data, that while the overall median cost of APC 0259
decreased, the component parts of the APC (that is, the device, the
procedure, and the other bundled supplies and services) either remained
the same or increased. The commenters requested that CMS evaluate the
data upon which the proposed CY 2012 payment rate for APC 0259 is based
in order to ensure its validity.
Response: We appreciate the commenters' concerns regarding the
proposed payment rate for procedures involving cochlear implants. Under
the standard device-dependent APC ratesetting methodology, the median
cost for APC 0259 is calculated using only those single bills that
reflect the full cost of the cochlear implant device. While we will
monitor the changes in APC 0259 over time, we believe that the payment
rate for this service, calculated according to the standard device-
dependent APC ratesetting methodology for the proposed rule and this
final rule with comment period, appropriately reflects hospitals'
relative costs for providing this procedure as reported to us in the
claims and cost report data. We note that the median cost for CPT code
69930 calculated from the CY 2010 hospital claims and cost report data
available for this final rule with comment is $28,892, approximately 6
percent less than the median cost of $30,730 calculated from the CY
2009 hospital claims and cost report data upon which the final CY 2011
payment rate was calculated.
After consideration of the public comments we received, we are
finalizing our proposed CY 2012 payment policies for device-dependent
APCs with modification. The CY 2012 OPPS payment rates for device-
dependent APCs are based on their median costs calculated from CY 2010
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 (less than
$1.01), 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 3 below lists the APCs for which we used our standard device-
dependent APC ratesetting methodology for CY 2012. We note that we are
not finalizing our proposal to limit the payment for services that are
assigned to APC 0108 to the IPPS standardized payment amount for MS-DRG
227, and that we are continuing to apply the device edits and other
standard features of the device-dependent APCs to this APC for CY 2012.
We also are deleting APC 0418 and changing the titles of APC 0108 and
0655 as we proposed. We refer readers to section II.A.2.e.(6) of this
final rule with comment period for a detailed discussion of these final
policies. We also note that we are revising the APC titles for APC
0083, 0229, and 0319 for CY 2012, as we discuss in section II.A.2.d.(6)
of this final rule with comment period and that we are changing the APC
titles for APC 0040 and APC 0061 as discussed in section III.D.4.a. of
this final rule with comment period. We refer readers to Addendum A to
this final rule with comment period (which is available via the
Internet on the CMS Web site) for the final payment rates for these
APCs for CY 2012.
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(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 2012 OPPS/ASC proposed rule (76 FR 42191 through 42192),
we proposed 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 2012 payment rates for blood and blood products are based
using the actual blood-specific CCR for hospitals that reported costs
and charges for a blood cost center and a hospital-specific simulated
blood-specific CCR for hospitals that did not report costs and charges
for a blood cost center.
As we stated in the proposed rule (76 FR 42192), we continue to
believe the hospital-specific, blood-specific CCR methodology best
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 believe that continuing
with this methodology in CY 2012 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.
Comment: Some commenters asserted that there is a gap between CMS'
proposed payments for blood and blood products and the costs incurred
by
[[Page 74152]]
hospitals for the acquisition, management, and processing of blood and
blood products, including high volume products such as leukocyte
reduced red blood cells, described by HCPCS codes P9016 (Red blood
cells, leukocytes reduced, each unit), P9021 (Red blood cells unit),
and P9040 (Red blood cells, leukoreduced irradiated). These commenters
stated that CMS should implement appropriate payment policies, such as
paying no less than the payment rates in effect for CY 2011 for
individual blood products in CY 2012, to close the gap between OPPS
payment and the costs of blood and blood products and to ensure
continued beneficiary access. They stated that this action is crucial,
given that those costs continue to rise for a variety of reasons. For
example, one commenter cited federally mandated requirements and
recommendations by the U.S. Food and Drug Administration (FDA) as
having a significant impact on the increasing costs of blood products,
while another commenter noted that transfusion safety officers are
being hired in most major hospitals to address improper transfusion and
inappropriate use of blood. The commenters argued that, given the 2-
year lag inherent in available claims data in the OPPS ratesetting
process, the use of hospital claims data without adjustments likely
will not reflect these rising costs in a timely manner.
Response: As we indicated in the CY 2011 OPPS/ASC final rule with
comment period (75 FR 71838 through 71839), 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,
which would reflect hospitals' changing costs due to factors cited by
the commenters, such as FDA requirements, to the extent that these are
affecting blood costs. 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 in the most timely manner possible. 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 by paying no less than the payment rates in effect for CY
2011 for individual blood products in CY 2012 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) compared to the CY 2011 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.
After consideration of the public comments we received, we are
finalizing, without modification, our CY 2012 proposal to calculate
median costs upon which the CY 2012 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 2012 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 (which is available via the Internet on the CMS Web site) for
the final CY 2012 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) Allergy Tests (APCs 0370 and 0381)
In the CY 2006 OPPS final rule with comment period (70 FR 68610),
we discussed the confusion raised by a number of providers related to
the reporting of units for single and multiple allergy tests described
by CPT codes 95004 through 95078. According to the providers, while
some of these codes instruct providers to specify the number of tests
or use the singular word ``tests'' or ``testing'' in their descriptors,
others do not contain such instruction or do not contain ``tests'' or
``testing'' in their descriptors. In light of the variable hospital
billing that may be inconsistent with the CPT code descriptors, as
discussed in detail in the CY 2006 OPPS final rule with comment period
(70 FR 68610), we examined CY 2004 claims and determined that the
charges reported on many single procedure claims represent a ``per
visit'' charge, rather than a ``per test'' charge, including claims for
the allergy test codes that instruct providers to specify the number of
tests. As a result of our analysis of our claims data, we
differentiated single allergy tests (``per test'' from multiple allergy
tests (``per visit'') by placing these services in two different APCs.
We believed that making this distinction clarified billing for these
services and more accurately placed them with like services sharing
similar resource costs. We also 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. Since 2006, we have analyzed our claims data to
determine whether the reporting of these services has improved.
In the CY 2012 OPPS/ASC proposed rule (76 FR 42192), we proposed to
continue to use 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 2012. Specifically, services proposed to be assigned
to APC 0381 (Single Allergy Tests) reflect the CPT codes that describe
single allergy tests in which CPT instructions direct providers to
specify the number of tests performed. Alternatively, the procedures
proposed for assignment to APC 0370 (Allergy Tests) describe multiple
allergy tests per encounter; therefore, for these procedures, only one
unit of the service is billed even if multiple tests are performed.
As discussed in the CY 2012 OPPS/ASC proposed rule (76 FR 42192),
our analysis of the CY 2010 claims data available for the proposed rule
for the single allergy tests, specifically those services assigned to
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
[[Page 74153]]
claims OPPS methodology was approximately $51, significantly higher
than the CY 2011 OPPS/ASC final rule median cost of approximately $33
that was 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 601 claims containing multiple units or multiple occurrences
of a single CPT code. The proposed CY 2012 median cost for APC 0381
using the ``per unit'' methodology was approximately $34. For a full
discussion of the ``per unit'' methodology for APC 0381, we refer
readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR
66737).
In addition, we proposed that multiple allergy tests continue to be
assigned to APC 0370 with a median cost calculation based on the
standard OPPS methodology for CY 2012. This resulted in a proposed APC
median cost of approximately $97 based on 283 claims.
We did not receive any public comments on our CY 2012 proposal for
payment of single or multiple allergy tests. We are finalizing our CY
2012 proposal, without modification, to calculate a ``per unit'' median
cost for APC 0381 as described above in this section. The final CY 2012
median cost of APC 0381 is approximately $31.
Furthermore, we also are finalizing our CY 2012 proposal, without
modification, to use the standard OPPS methodology to set the APC
payment rate for APC 0370. We are revising the title of APC 0370 from
``Allergy Tests'' to ``Multiple Allergy Tests'' so that the APC title
more accurately describes all the services assigned to the APC. The
final CY 2012 median cost of APC 0370 is approximately $80 based on 306
claims.
(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 (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. Our rationale for using the hospital's
overall CCR can be found in the CY 2005 OPPS final rule with comment
period (69 FR 65758 through 65759). 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 several years.
In the CY 2012 OPPS/ASC proposed rule (76 FR 42192), we proposed to
continue using the same methodology to estimate a ``per unit'' median
cost for HCPCS code C1300 for CY 2012. This methodology resulted in a
proposed APC median cost of approximately $107 using 370,519 claims
with multiple units or multiple occurrences for HCPCS code C1300 for CY
2012.
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 2012. We are
finalizing our CY 2012 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 2012 median cost
of approximately $105.
(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
payment methodology for these services, we refer readers to the CY 2007
OPPS final rule with comment period (71 FR 68157 through 68158).
In the CY 2012 OPPS/ASC proposed rule (76 FR 42192 through 42193),
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.'' That is, 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.'' For the history and detailed explanation of the
methodology, we refer readers to the CY 2004 OPPS final rule (68 FR
63467 through 63468). We stated in the proposed rule that we continue
to believe that this established ratesetting methodology results in the
most appropriate aggregate median cost for the ancillary services
provided in these unusual clinical situations.
We stated that we believe that hospitals are reporting the HCPCS
modifier ``-CA'' according to the policy initially established in CY
2003. We noted that the claims frequency for APC 0375 has been
relatively stable over the past few years. We noted that the median
cost for APC 0375 has decreased based on the CY 2010 OPPS claims data
used for the development of the proposed rates for CY 2012 compared to
that for CY 2011. 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 only 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 4 of the proposed rule showed the number of claims and the median
costs
[[Page 74154]]
for APC 0375 for CYs 2007, 2008, 2009, 2010, and 2011, and the proposed
median cost for APC 0375 for CY 2012. For CY 2012, we proposed a median
cost of approximately $5,711 for APC 0375 based on 155 claims.
We did not receive any public comments regarding this proposal. For
the reasons explained in the CY 2012 OPPS/ASC proposed rule, we are
finalizing our CY 2012 proposal, without modification, to continue to
use our established ratesetting methodology for calculating the median
cost of APC 0375, which has a final CY 2012 APC median cost of
approximately $6,039. Table 4 below shows the number of claims and the
final median costs for APC 0375 for CYs 2007, 2008, 2009, 2010, 2011,
and 2012.
[GRAPHIC] [TIFF OMITTED] TR30NO11.006
(6) Endovascular Revascularization of the Lower Extremity (APCs 0083,
0229, and 0319)
For the CY 2011 update, 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. In the CY 2011
OPPS/ASC final rule with comment period (75 FR 71841 through 71845), we
discussed the process and methodology by which we assigned the new CY
2011 endovascular revascularization CPT codes to APCs that we believe
are comparable with respect to clinical characteristics and resources
required to furnish the services. Specifically, we were able to use the
existing CY 2009 hospital outpatient claims data and most recent cost
report data to create simulated medians for 12 of the 16 new separately
payable codes for CY 2011. 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 of the CY 2011 OPPS/ASC final rule
with comment period (75 FR 71844), 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 showed 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). As we stated in the
CY 2011 OPPS/ASC final rule with comment period (75 FR 71842), 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.
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 9 CPT
codes to APC 0083 (Coronary or Non-Coronary Angioplasty and
Percutaneous Valvuloplasty) and 5 CPT codes to APC 0229 (Transcatheter
Placement of Intravascular Shunts), and created new APC 0319
(Endovascular Revascularization of the Lower Extremity) for 2 CPT
codes. Table 8 of the CY 2011 OPPS/ASC final rule with comment period
displayed their final CY 2011 APC assignments and CPT median costs (75
FR 71845). We noted that because these CPT codes are new for CY 2011,
they are identified with comment indicator ``NI'' in Addendum B to the
CY 2011 OPPS/ASC final rule with comment period to identify them as a
new interim APC assignment for the new year and subject to public
comment. We specifically requested 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 (75 FR
71845).
At its February 28-March 1, 2011 meeting, the APC Panel recommended
that CMS provide data to allow the Panel to investigate and monitor the
APC weights for the lower extremity revascularization procedures in
light of CPT coding changes for CY 2011. In the CY 2012 OPPS/ASC
proposed rule, we indicated that we were accepting the APC Panel's
recommendation and will provide additional data to the Panel at an
upcoming meeting.
In the CY 2012 OPPS/ASC proposed rule (76 FR 42190), we proposed to
continue with the CY 2011 methodology that was described previously in
this section in determining the APC assignments for the CPT codes that
describe endovascular revascularization of the lower extremity. The
predecessor endovascular revascularization CPT codes were in existence
prior to CY 2011 and were assigned to APCs based on claims data and
cost report data. Given that these data are available for the services
described by the predecessor endovascular revascularization CPT codes,
we proposed to continue for CY 2012 to use the existing hospital
outpatient claims and cost report data from the previous endovascular
revascularization CPT codes to simulate an estimated median cost for
the new endovascular revascularization CPT codes in determining the
appropriate APC
[[Page 74155]]
assignments. As has been our practice since the implementation of the
OPPS in 2000, we review our latest claims data for ratesetting and, if
necessary, revise the APC assignments for the upcoming year. In this
case, review of the procedures with significant claims data in APC 0083
showed a 2 times rule violation. Specifically, APC 0083, as it was
initially configured, showed that the range of the CPT median costs for
the procedures with significant claims data was approximately between
$3,252 (for CPT code 35476 (Transluminal balloon angioplasty,
percutaneous; venous)) and $7,174 (for CPT code 37221
(Revascularization, endovascular, open or percutaneous, iliac artery,
unilateral, initial vessel; with transluminal stent placement(s),
includes angioplasty within the same vessel, when performed)),
resulting in a 2 times rule violation. Because of its median cost, we
stated that we believe that CPT code 37221 would be more appropriately
placed in APC 0229, which had an initial estimated median cost of
approximately $8,606, based on the clinical and resource
characteristics of other procedures also assigned to APC 0229.
Therefore, for CY 2012, we proposed to revise the APC assignment for
CPT code 37221, from APC 0083 to APC 0229, to accurately reflect the
cost and clinical features of the procedure. This proposed reassignment
of CPT code 37221 from APC 0083 to APC 0029 would eliminate the 2 times
rule violation for APC 0083 noted above. Based on this reconfiguration,
the CY 2010 claims data available for the proposed rule were used to
calculate a median cost of approximately $4,683 for APC 0083,
approximately $8,218 for APC 0229, and approximately $14,556 for APC
0319. All three proposed median costs for CY 2012 were significantly
greater than the CY 2011 OPPS/ASC final rule median costs of
approximately $3,740 for APC 0083, approximately $7,940 for APC 0229,
and approximately $13,751 for APC 0319.
In addition, we proposed to revise the APC titles for APCs 0083,
0229, and 0319 to better describe the procedures assigned to these
APCs. Specifically, we proposed to revise the APC title for APC 0083
from ``Coronary or Non-Coronary Angioplasty and Percutaneous
Valvuloplasty'' to ``Level I Endovascular Revascularization of the
Lower Extremity''; for APC 0229, from ``Transcatheter Placement of
Intravascular Shunt and Stents'' to ``Level II Endovascular
Revascularization of the Lower Extremity''; and for APC 0319, from
``Endovascular Revascularization of the Lower Extremity'' to ``Level
III Endovascular Revascularization of the Lower Extremity.''
We solicited public comments on the proposed status indicators and
APC assignments for the endovascular revascularization of the lower
extremity CPT codes for CY 2012. Table 5 of the proposed rule listed
the endovascular revascularization of the lower extremity CPT codes
along with their proposed status indicator and APC assignments for CY
2012. As noted previously, because these CPT codes are new for CY 2011,
they are identified with comment indicator ``NI'' in Addendum B to the
CY 2011 OPPS/ASC final rule with comment period to identify them as a
new interim APC assignment for the new year and subject to public
comment. We specifically requested 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 (75 FR
71845). We respond to any public comments received on the CY 2011 OPPS/
ASC final rule with comment period and the CY 2012 OPPS/ASC proposed
rule below.
At its August 10-12, 2011 meeting, the APC Panel supported CMS'
proposal to move HCPCS code 37221 (Revascularization, endovascular,
open or percutaneous, iliac artery, unilateral, initial vessel; with
transluminal stent placement(s), includes angioplasty within the same
vessel, when performed) to APC 0229.
Comment: Several commenters supported the CY 2012 proposal to
rename APCs 0083, 0229, and 0319 to better describe the procedures
assigned to these APCs, and requested that CMS finalize these changes.
The commenters also supported the proposed status indicator assignments
of ``T'' for each of these APCs. One commenter agreed with the proposed
renaming of APC 0229 and 0319 but asked that CMS change the APC title
of APC 0038 to ``Coronary Angioplasty, Valvuloplasty, and Level I
Endovascular Revascularization of the Lower Extremity'' in order to
reflect the coronary as well as endovascular procedures assigned to
that APC.
Response: We appreciate the commenters' support of our proposal to
revise the titles for APCs 0083, 0229, and 0319. We agree with the
commenter that a title of ``Coronary Angioplasty, Valvuloplasty, and
Level I Endovascular Revascularization of the Lower Extremity'' would
more accurately describe the procedures assigned to APC 0083.
Therefore, we are finalizing our CY 2012 proposal, with modification,
to revise the APC title for APC 0083 from ``Coronary or Non-Coronary
Angioplasty and Percutaneous Valvuloplasty'' to ``Coronary Angioplasty,
Valvuloplasty, and Level I Endovascular Revascularization of the Lower
Extremity''; for APC 0229, from ``Transcatheter Placement of
Intravascular Shunt and Stents'' to ``Level II Endovascular
Revascularization of the Lower Extremity''; and for APC 0319, from
``Endovascular Revascularization of the Lower Extremity'' to ``Level
III Endovascular Revascularization of the Lower Extremity.'' We also
are finalizing our proposal, without modification, to continue to
assign status indicator ``T'' to each of these APCs.
Comment: Many commenters supported our overall methodology for
calculating simulated medians for the endovascular revascularization
CPT codes established for 2011 and agreed with the APC reassignment for
CPT code 37221 from APC 0083 to APC 0229. A few commenters cited that,
during the August 2011 APC Panel meeting, the APC Panel recommended
that CMS finalize this proposal.
Response: We appreciate the commenters' support of our overall
methodology for calculating simulated medians for the endovascular
revascularization CPT codes established for 2011. Based on our analysis
of the hospital claims and cost report data available for this final
rule with comment period, and in accordance with the feedback we
received from many commenters, we continue to believe that CPT code
37221 is more appropriately placed in APC 0229 than in APC 0083. Our
data shows 4,673 simulated single claims (out of 4,710 total claims)
for CPT code 37221 with a CPT median cost of approximately $7,053,
which is closer to the APC median cost of approximately $8,088 for APC
0229 than to the APC 0083 median cost of approximately $4,611.28. We
also note that if CPT code 37221 were assigned to APC 0083, a 2 times
violation would likely result. Therefore, after consideration of the
public comments received and the APC Panel recommendation at its August
2011 meeting, we are finalizing our proposal, without modification, to
assign CPT code 37221 to APC 0229, which has a final CY 2012 median
cost of approximately $8,088.
Comment: Several commenters disagreed with the continued APC
assignment for CPT code 37223 (Revascularization, endovascular, open or
percutaneous, iliac artery, each additional ipsilateral iliac vessel;
with transluminal stent placement(s),
[[Page 74156]]
includes angioplasty within the same vessel, when performed) in APC
0083. They stated that the service described by CPT code 37223 is more
similar clinically and in terms of resource utilization to the
procedures assigned to APC 0229 because this service involves stent
placement. The commenters also argued that CPT code 37223 is an add-on
code to CPT code 37221, and should be assigned to APC 0229, which is
the APC to which CPT code 37221 is assigned. They pointed out that CPT
codes 37206 (Transcatheter placement of an intravascular stent(s)
(except coronary, carotid, and vertebral vessel, and lower extremity
arteries), percutaneous; each additional vessel) and 37208
(Transcatheter placement of an intravascular stent(s) (non-coronary
vessel other than iliac and lower extremity arteries), open; each
additional vessel) are also add-on CPT codes, and that they are
assigned to the same APC as the primary codes with which they are
billed (that is, APC 0229). The commenters further added that CPT code
37223, like CPT code 37221, requires the use of an implantable
endovascular stent, and that the CY 2012 OPPS proposed payment rate of
approximately $4,520 for CPT code 37223 does not take the cost of the
device into consideration. They noted that any efficiencies to be
gained by performing the procedure described by CPT code 37223 at the
same time as the procedure described by CPT code 37223 would be
captured appropriately in the multiple procedure discount that would
apply as a result of both procedures being assigned status indicator
``T.''
Response: We are unable to simulate a median cost for CPT code
37223 using the CY 2010 claims data available for this final rule with
comment period because we have no single service claims data that
appropriately describe the procedure associated with CPT code 37223.
Therefore, analysis of our hospital outpatient claims data does not
support an APC reassignment for CPT code 37223 from APC 0083 to APC
0229 based on resource homogeneity, and we believe that the service
described by CPT code 37223 is clinically similar to procedures in APC
0083. We note that we will have CY 2011 hospital claims available for
CPT code 37223 and the other new endovascular revascularization CPT
codes for the first time for CY 2013 OPPS ratesetting, and that we will
closely monitor our data to ensure that the APC placements
appropriately reflect hospitals' costs for these procedures.
We also note that when hospitals report CPT code 37223, we expect
them to also report one of the following device HCPCS C-codes for the
implantable stent used in those procedures:
C1874 (Stent, coated/covered, with delivery system)
C1875 (Stent, coated/covered, without delivery system)
C1876 (Stent, non-coated/non-covered, with delivery
system)
C1877 (Stent, non-coated/non-covered, without delivery
system)
C2617 (Stent, non-coronary, temporary, without delivery
system)
C2625 (Stent, non-coronary, temporary, with delivery
system)
These HCPCS C-codes were made effective April 1, 2001, and are a
part of the procedure-to-device edits for CPT code 37223. Procedure-to-
device edits, which have been in place for many procedures since 2005,
require that when a particular service or procedural CPT or Level II
HCPCS code is billed, the claim must also contain an appropriate device
code.
After analysis of our claims data and consideration of the public
comments received, we are finalizing our proposal, without
modification, to continue to assign CPT code 37223 to APC 0083, which
has a final CY 2012 median cost of approximately $4,611.
Comment: Some commenters disagreed with the APC assignment for CPT
codes 37224 (Revascularization, endovascular, open or percutaneous,
femoral/popliteal artery(s), unilateral; with transluminal angioplasty)
and 37235 (Revascularization, endovascular, open or percutaneous,
tibial/peroneal artery, unilateral, each additional vessel; with
transluminal stent placement(s) and atherectomy, includes angioplasty
within the same vessel, when performed) to APC 0083, and stated that
both procedures would be more appropriately placed in APC 0229 based on
the economic and clinical coherence to other procedures already
assigned to APC 0229.
Response: Analysis of our hospital outpatient claims shows 4,288
simulated single claims (out of 4,320 total claims) with a median cost
of approximately $5,418 for CPT code 37224, while there were no claims
submitted upon which we could simulate a median cost for CPT code
37235. The range of the median costs for APC 0083 with significant
claims data is approximately between $3,230 to approximately $5,766,
which is in line with the median cost of approximately $5,418 for CPT
code 37224. Based on our claims data, we believe that CPT code 37224 is
appropriately placed in APC 0083 which has a final median cost is
approximately $4,611. As is the case with CPT code 37223, we do not
have claims data to support the reassignment of CPT code 37235 to a
different APC. We also believe that CPT codes 37224 and 37235 are
sufficiently similar clinically to the other procedures in APC 0083 to
warrant their continued placement in that APC. Therefore, we will
continue to assign CPT codes 37224 and 37235 to APC 0083 for CY 2012.
We note that, similar to CPT code 37223, both CPT codes 37224 and
37235 are included as part of the procedure-to-device edits, and
hospitals are reminded to refer to the latest edits on the CMS OPPS Web
site. The updated lists of edits can be found under ``Device,
Radiolabeled Product, and Procedure Edits'' at http://www.cms.gov/HospitalOutpatientPPS/.
After consideration of the public comments received on the CY 2011
OPPS/ASC final rule with comment period and the CY 2012 OPPS/ASC
proposed rule and review of our claims data, we are finalizing our CY
2012 proposal, without modification, to continue with the CY 2011
methodology that we described in the CY 2012 OPPS/ASC proposed rule (76
FR 42193 through 42194) in determining the APC assignments for the CPT
codes that describe endovascular revascularization of the lower
extremity for the reasons set forth above. We also are finalizing our
CY 2012 proposal, without modification, to revise the APC assignment
for CPT code 37221, from APC 0083 to APC 0229. We are finalizing our CY
2012 proposal, with modification, to revise the APC titles for APCs
0083, 0229, and 0319 as described previously. Table 5 below lists the
endovascular revascularization of the lower extremity CPT codes along
with their final status indicator and APC assignments for CY 2012.
[[Page 74157]]
[GRAPHIC] [TIFF OMITTED] TR30NO11.007
(7) 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. We
discussed these coding changes in detail in the CY 2011 OPPS/ASC final
rule with comment period, along with the process by which we assigned
the new CPT codes to APCs that we believe are comparable with respect
to clinical characteristics and resources required to furnish the
cardiac catheterization services described by the new CPT codes (75 FR
71846 through 71849). As discussed in the final rule with comment
period, we were able to use the existing CY 2009 hospital outpatient
claims data and the most recent cost report data to create simulated
medians for the new separately payable CPT codes for CY 2011.
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.
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. We stated that many of the new
CPT codes were previously reported using multiple CY 2009 CPT codes,
and we provided a crosswalk of the new CY 2011 cardiac catheterization
CPT codes mapped to the CY 2009 cardiac catheterization CPT codes in
Table 11 of the CY 2011 OPPS/ASC final rule with comment period (75 FR
71849). Table 11 showed 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). As we stated in the CY 2011 OPPS/ASC final rule with comment
period (75 FR 71847 through 71848), 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 in the new CPT codes. 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. We noted that, because the CPT codes
listed in Table 11 are new for CY 2011, they were identified with
comment indicator ``NI'' in Addendum B of that final rule with comment
period to identify them
[[Page 74158]]
as subject to public comment. We specifically requested 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 (75 FR 71848).
In the CY 2012 OPPS/ASC proposed rule (76 FR 42195), for CY 2012,
we proposed to continue to use the CY 2011 methodology in determining
the APC assignments for the cardiac catheterization CPT codes. The
predecessor cardiac catheterization CPT codes were in existence prior
to CY 2011 and were assigned to APC 0080 based on claims data and cost
report data. Given that these data are available for the services
described by the predecessor cardiac catheterization CPT codes, we
proposed for CY 2012 to continue to use the existing hospital
outpatient claims and cost report data from the predecessor cardiac
catheterization CPT codes to simulate an estimated median cost for the
new cardiac catheterization CPT codes in determining the appropriate
APC assignments. As has been our practice since the implementation of
the OPPS in 2000, we review our latest claims data for ratesetting and,
if necessary, revise the APC assignments for the upcoming year. Based
on analysis of the CY 2010 claims data available for the proposed rule,
the proposed median cost for APC 0080 was approximately $2,822 for CY
2012, which was slightly greater than the median cost of approximately
$2,698 for the CY 2011 OPPS/ASC final rule with comment period. For CY
2012, we did not propose any changes to the CY 2011 APC assignments of
any of the codes assigned to APC 0080 because the claims data available
for the proposed rule support continuation of these APC assignments.
We solicited public comments on the proposed status indicators and
the APC assignments for CY 2012 for the cardiac catheterization CPT
codes. Table 6 of the proposed rule listed the new CY 2011 cardiac
catheterization CPT codes along with their proposed status indicators
and APC assignments for CY 2012.
Comment: Some commenters supported our CY 2012 proposal for payment
of non-congenital cardiac catheterization.
Response: We appreciate the commenters' support of our payment
methodology for the non-congenital cardiac catheterization procedures.
Therefore, consistent with our rationale set forth above, we are
finalizing our CY 2012 proposal, without modification, to continue with
the CY 2011 methodology in determining the APC assignments for the non-
congenital cardiac catheterization CPT codes. The final CY 2012 median
cost for APC 0080 is approximately $2,721.
Table 6 below lists the CY 2012 cardiac catheterization CPT codes
along with their final status indicators and APC assignments for CY
2012.
[[Page 74159]]
[GRAPHIC] [TIFF OMITTED] TR30NO11.008
(8) 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 indicated 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).
As we discussed in the CY 2011 OPPS/ASC final rule with comment period
(75 FR 71850), 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. A new CPT code is given a comment
indicator of ``NI'' to identify it as a new interim APC assignment for
the 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. For CY 2011, 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 definition of this service. 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. We treated the summed costs on these claims as if they were
a
[[Page 74160]]
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
created 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, was deleted effective January 1, 2011. We noted that,
because CPT code 64568 is new for CY 2011, it was identified with
comment indicator ``NI'' in Addendum B of the CY 2011 OPPS/ASC final
rule with comment period to identify it as subject to public comment.
We specifically requested public comment on our methodology for
simulating the median costs for this new CY 2011 CPT code, in addition
to public comments on the payment rate itself (75 FR 71850).
In the CY 2012 OPPS/ASC proposed rule (76 FR 42195 through 42196),
we proposed to use the same methodology we used in CY 2011 to estimate
the hospital costs of CPT code 64568 and to continue to maintain CPT
code 64568 as the only code assigned to APC 0318 for CY 2012.
Comment: One commenter on the CY 2011 OPPS final rule with comment
period expressed appreciation for CMS' efforts to establish APC 0318.
Response: We appreciate the commenters' support for the creation of
APC 0318.
We did not receive any public comments on our proposals for cost
estimation or APC assignment of CPT code 64568 for CY 2012. We are
finalizing our CY 2012 proposal, without modification, to use the same
methodology we used in CY 2011 to estimate hospital costs of CPT code
64568. For this final rule with comment period, we created an estimated
median cost of approximately $24,262 for CPT code 64568 from 455 single
claims to set a payment rate for APC 0318 for CY 2012. We are
maintaining CPT code 64568 as the only code assigned to APC 0318 for CY
2012.
(9) Brachytherapy Sources
(A) Background
Section 1833(t)(2)(H) of the Act, as added by section 621(b)(2)(C)
of Pub. L. 108-173 (MMA), mandated the creation of additional groups of
covered OPD services that classify devices of brachytherapy consisting
of a seed or seeds (or radioactive source) (``brachytherapy sources'')
separately from other services or groups of services. The additional
groups must reflect the number, isotope, and radioactive intensity of
the brachytherapy sources furnished and include separate groups for
palladium-103 and iodine-125 sources.
Section 1833(t)(16)(C) of the Act, as added by section 621(b)(1) of
Public Law 108-173, established payment for brachytherapy sources
furnished from January 1, 2004 through December 31, 2006, based on a
hospital's charges for each brachytherapy source furnished adjusted to
cost. Under section 1833(t)(16)(C) of the Act, charges for the
brachytherapy sources may not be used in determining any outlier
payments under the OPPS for that period in which payment is based on
charges adjusted to cost. Consistent with our practice under the OPPS
to exclude items paid at cost from budget neutrality consideration,
these items were excluded from budget neutrality for that time period
as well.
Subsequent to the MMA, various amendments to the Act were made that
resulted in the extension of the payment period for brachytherapy
sources based on a hospital's charges adjusted to cost through December
31, 2009. The CY 2011 OPPS/ASC final rule with comment period
summarizes these amendments to the Act and our proposals to pay for
brachytherapy sources at prospective payment rates based on their
source specific median costs from CY 2007 through CY 2009 (75 FR 71977
through 71981).
In the CY 2010 OPPS/ASC final rule with comment period (74 FR 60533
through 60537), we adopted for CY 2010 the general OPPS prospective
payment methodology for brachytherapy sources, consistent with section
1833(t)(2)(C) of the Act, with payment rates based on source-specific
median costs. For CY 2011, we continued to use the general OPPS
prospective payment methodology for brachytherapy sources, consistent
with section 1833(t)(2)(C) of the Act (75 FR 71980). We also finalized
our proposals to continue the policy we first implemented in the CY
2010 OPPS/ASC final rule with comment period (74 FR 60537 and 75 FR
71980) regarding payment for new brachytherapy sources for which we
have no claims data, based on the same reasons we discussed in the 2008
OPPS/ASC final rule with comment period (72 FR 66786; which was
superseded by section 142 of Pub. L. 110-275). That policy is intended
to enable us to assign future new HCPCS codes for new brachytherapy
sources to their own APCs, with prospective payment rates based on our
consideration of external data and other relevant information regarding
the expected costs of the sources to hospitals.
Consistent with our policy regarding APC payments made on a
prospective basis, for CYs 2010 and 2011, we finalized proposals to
subject brachytherapy sources to outlier payments under section
1833(t)(5) of the Act, and also to subject brachytherapy source payment
weights to scaling for purposes of budget neutrality (75 FR 71980
through 71981 and 75 FR 60537). Hospitals could receive outlier
payments for brachytherapy sources if the costs of furnishing
brachytherapy sources meet the criteria for outlier payment. In
addition, as noted in the CY 2010 and CY 2011 OPPS/ASC final rules with
comment period (74 FR 60534 and 75 FR 71978 and 71979, respectively),
implementation of prospective payments for brachytherapy sources
provided opportunities for eligible hospitals to receive additional
payments in CY 2010 and CY 2011 under certain circumstances through the
7.1 percent rural adjustment, as described in section II.E. of this
final rule with comment period.
(B) OPPS Payment Policy
As we have stated previously (72 FR 66780, 73 FR 41502, 74 FR 60533
through 60534, and 75 FR 71978), we believe that adopting the general
OPPS prospective payment methodology for brachytherapy sources is
appropriate for a number of reasons. The general OPPS payment
methodology uses median costs based on claims data to set the relative
payment weights for hospital outpatient services. This payment
methodology results in more consistent, predictable, and equitable
payment amounts per source across hospitals by eliminating some of the
extremely high and low payment amounts resulting from payment based on
hospitals' charges adjusted to cost. We believe that the OPPS
prospective payment methodology, as opposed to payment based on
hospitals' charges adjusted to cost, would also provide hospitals with
incentives for efficiency in the provision of brachytherapy services to
Medicare beneficiaries. Moreover, this approach is consistent with our
payment methodology for the vast majority of items and services paid
under the OPPS.
In the CY 2012 OPPS/ASC proposed rule (76 FR 42196 through 42197),
we proposed to use the median costs from CY 2010 claims data for
setting the proposed CY 2012 payment rates for brachytherapy sources,
as we proposed for most other items and services that will be paid
under the CY 2012 OPPS. We proposed to continue the other payment
policies for brachytherapy
[[Page 74161]]
sources we finalized and first implemented in the CY 2010 OPPS/ASC
final rule with comment period (74 FR 60537). We proposed to pay for
the stranded and non-stranded NOS codes, HCPCS codes C2698 and C2699,
at a rate equal to the lowest stranded or non-stranded prospective
payment rate for such sources, respectively, on a per source basis (as
opposed, for example, to a per mCi), which is based on the policy we
established in the CY 2008 OPPS/ASC final rule with comment period (72
FR 66785). The proposed payment methodology for NOS sources would
provide payment to a hospital for new sources and, at the same time,
encourage interested parties to quickly bring new sources to our
attention so that specific coding and payment could be established.
We also proposed to continue the policy we first implemented in the
CY 2010 OPPS/ASC final rule with comment period (74 FR 60537) regarding
payment for new brachytherapy sources for which we have no claims data,
based on the same reasons we discussed in the CY 2008 OPPS/ASC final
rule with comment period (72 FR 66786; which was superseded for a
period of time by section 142 of Pub. L. 110-275). That policy is
intended to enable us to assign new HCPCS codes for new brachytherapy
sources to their own APCs, with prospective payment rates set based on
our consideration of external data and other relevant information
regarding the expected costs of the sources to hospitals.
Consistent with our policy regarding APC payments made on a
prospective basis, as we did for CY 2011, we proposed to subject
brachytherapy sources to outlier payments under section 1833(t)(5) of
the Act, and also to subject brachytherapy source payment weights to
scaling for purposes of budget neutrality. Hospitals can receive
outlier payments for brachytherapy sources if the costs of furnishing
brachytherapy sources meet the criteria for outlier payment. In
addition, as noted in the CY 2010 and CY 2011 OPPS/ASC final rules with
comment period (74 FR 60534 and 75 FR 71978 through 71979,
respectively), implementation of prospective payments for brachytherapy
sources would provide opportunities for eligible hospitals to receive
additional payments in CY 2012 under certain circumstances through the
7.1 percent rural adjustment, as described in section II.E. of the
proposed rule.
Therefore, we proposed to pay for brachytherapy sources at
prospective payment rates based on their source-specific median costs
for CY 2012. We referred readers to Addendum B to the proposed rule
(which is available via the Internet on the CMS Web site) for the
proposed CY 2012 payment rates for brachytherapy sources, identified
with status indicator ``U.'' For more detailed discussion of the
legislative history surrounding brachytherapy sources and our proposed
and final policies for CY 2004 through CY 2011, we refer readers to the
CY 2011 OPPS/ASC final rule with comment period (75 FR 71977 through
71981).
Comment: Some commenters requested that CMS discard its prospective
payment methodology for brachytherapy sources based on source-specific
median costs, and revert to payments based on brachytherapy charges
adjusted to costs, for a variety of reasons. The commenters claimed
that the claims data show a huge variation in costs per unit; that
there continues to be, in the CY 2012 proposed rule data, longstanding
instability and fluctuation of costs; that more than one half of the
current brachytherapy sources have proposed payment rates based on 50
or fewer hospitals (a number that a commenter reported has declined
from 2010 to 2012); and that proposed payment rates are unstable and
fluctuate significantly. The commenters were also concerned that rank
order anomalies continue to exist in proposed source payment rates,
such as between C2635, high activity palladium, and C2640 and C2641,
which represent forms of low activity palladium. The commenters also
claimed that the charges adjusted to cost method would cost the
Medicare program approximately $10.8 million less than the prospective
payment methodology based on median cost per source. The commenters
claimed that the number of hospitals providing brachytherapy treatment
and the number of beneficiaries treated with brachytherapy have
declined from 2010 to 2011 because some hospitals cannot recover their
costs under the prospective payment rates adopted in CY 2010. The
commenters also pointed out that High Dose Rate (HDR) Iridium-192 may
treat multiple patients over a 90-day source life, making its true cost
dependent on the number of patients treated, and thus making fair
prospective payment difficult to achieve.
Response: As we stated previously (72 FR 66782; 74 FR 60534; 75 FR
71979), we believe that median costs based on hospital claims data for
brachytherapy sources have produced reasonably consistent per-source
cost estimates over the past several years, comparable to the patterns
we have observed for many other OPPS services whose payments are set
based upon relative payment weights from claims data. We believe that
our per-source payment methodology specific to each source's
radioisotope, radioactive intensity, and stranded or non-stranded
configuration, supplemented by payment based on the number of sources
used in a specific clinical case, adequately accounts for the major
expected sources of variability across treatments. As we also explained
previously (72 FR 66782; 74 FR 60535; 75 FR 71979), a prospective
payment system such as the OPPS relies on the concept of averaging,
where the payment may be more or less than the estimated cost of
providing a service for a particular patient, but with the exception of
outlier cases, it is adequate to ensure access to appropriate care. In
the case of brachytherapy sources for which the law requires separate
payment groups, without packaging, the costs of these individual items
could be expected to show greater variation than some other APCs under
the OPPS because higher variability in costs for some component items
and services is not balanced with lower variability for others and
because relative weights are typically estimated using a smaller set of
claims. Nevertheless, we believe that prospective payment for
brachytherapy sources based on median costs from claims calculated
according to the standard OPPS methodology is appropriate and provides
hospitals with the greatest incentives for efficiency in furnishing
brachytherapy treatment.
As we have stated previously (75 FR 71979), under the budget
neutral provision for the OPPS, it is the relativity of costs of
services, not their absolute costs, that is important, and we believe
that brachytherapy sources are appropriately paid according to the
standard OPPS payment approach. Furthermore, we are not concerned that
some sources may have median costs and payment rates based on 50 or
fewer providers, because it is not uncommon for OPPS prospective
payment rates to be based on claims from a relatively small number of
hospitals that furnished the service in the year of claims data
available for the OPPS update year. Fifty hospitals may report hundreds
of brachytherapy source claims for many cases and comprise the universe
of providers using particular low volume sources, for which we are
required to pay separately by statute. Further, our methodology for
estimating median costs for brachytherapy sources utilizes all line-
item charges for those sources, which allows us to use all
[[Page 74162]]
hospital reported charge and estimated cost information to set payment
rates for these items. Therefore, no brachytherapy source claims are
lost. We have no reason to believe that prospective payment rates based
on claims from those providers furnishing a particular source do not
appropriately reflect the cost of that source to hospitals.
In the case of high and low activity iodine-125 sources, our claims
data show that the cost of the high activity source is greater than the
low activity sources, as we have noticed in the past. However, this
relationship is reversed for palladium-103 sources, as one commenter
pointed out. As we have stated in the past (75 FR 71979), we have no
information about the expected cost differential between high and low
activity sources of various isotopes other than what is available in
our claims and hospital cost report data. For high activity palladium-
103, only 12 hospitals reported this service in CY 2010, compared to
150 and 211 providers for low activity palladium sources described by
HCPCS codes C2640 and C2641, respectively. As we stated regarding this
issue in the CY 2010 and CY 2011 OPPS/ASC final rule with comment
period (74 FR 60535 and 75 FR 71979), it is clear that fewer providers
furnished high activity palladium-103 sources than low activity
palladium sources, and we expect that the hospital cost distribution
for those hospitals could be different than the cost distribution of
the large number of providers reporting the low activity sources. These
varied cost distributions clearly contribute to the observed
relationship in median costs between the different types of sources.
However, we see no reason why our standard ratesetting methodology for
brachytherapy sources that relies on all claims from all hospitals
furnishing brachytherapy sources would not yield valid median costs for
those hospitals furnishing the different brachytherapy sources upon
which CY 2012 prospective payments rates are based.
Prospective payment for brachytherapy sources based on their median
costs makes the source payment an integral part of the OPPS, rather
than a separate cost-based payment methodology within the OPPS, as
indicated previously (75 FR 71980). We believe that consistent and
predictable prospectively established payment rates under the OPPS for
brachytherapy sources are appropriate because we do not believe that
the hospital resource costs associated with specific brachytherapy
sources would vary greatly across hospitals or clinical conditions
under treatment, other than through differences in the numbers of
sources utilized that would be accounted for in the standard OPPS
payment methodology we are finalizing for CY 2012.
As we indicated in the CY 2011 OPPS/ASC final rule with comment
period (75 FR 71980), we agree that high dose rate (HDR) brachytherapy
sources such as HDR irirdium-192 have a fixed active life and must be
replaced every 90 days; as a result, hospitals' per-treatment cost for
the source would be dependent on the number of treatments furnished per
source. The source cost must be amortized over the life of the source.
Therefore, in establishing their charges for HDR iridium, we expect
hospitals to project the number of treatments that would be provided
over the life of the source and establish their charges for the source
accordingly, as we have stated previously (72 FR 66783; 74 FR 60535; 75
FR 71980). For most of these OPPS services, our practice is to
establish prospective payment rates based on the median costs from
hospitals' claims data to provide incentives for efficient and cost-
effective delivery of these services.
We do not agree with the commenters that prospective brachytherapy
source payment based on median costs would increase aggregate Medicare
expenditures using the charges-adjusted-to-cost methodology compared to
the proposed prospective payment methodology. Our past studies, such as
that discussed in the CY 2010 final rule with comment period (74 FR
60535), have shown that payment at charges adjusted to cost results in
higher aggregate payment for brachytherapy sources than does
prospective payment. As we indicated in the CY 2010 final rule with
comment period and the CY 2011 final rule with comment period (74 FR
60535 and 75 FR 71980), we have traditionally found that charge
inflation for brachytherapy sources appears to be higher than the
market basket inflation update applicable to prospective payments under
the OPPS. Therefore, we found that the estimated payments we calculated
for brachytherapy charges adjusted to cost were greater than the
estimated prospective payment rates because the hospital market basket
grows more slowly than the charges for brachytherapy sources. The
commenter did not provide its aggregate payments study in its comment
to the CY 2012 OPPS/ASC proposed rule, and we do not know whether the
commenter's study took into account factors such as charge inflation.
Moreover, the OPPS is a prospective payment system that ensures
equitable prospective payment of services across providers, and
efficient use of resources, including brachytherapy sources, which
since CY 2010 are part of OPPS prospective payment.
Concerning the comment that some providers may have decided to
discontinue offering brachytherapy services because the OPPS payment
rates for sources were too low, as we have noted in the past (75 FR
71980), there are many reasons why some providers may discontinue
services, such as brachytherapy. For example, changes in medical
technology or emphasis on different treatment forms for a medical
condition can influence whether a set of services are continued. In
addition, providers accept payment from a number of payers in addition
to Medicare, and we believe a global shift by a provider to discontinue
any services would be influenced by factors other than our payment
rates alone.
Comment: One commenter supported the proposed payment policy for
new brachytherapy sources for which we have no claims data, namely, to
assign new HCPCS codes for new brachytherapy sources to their own APCs,
with prospective payment rates based on CMS' consideration of external
data and other relevant information regarding the expected costs of the
sources to hospitals.
Response: We appreciate the commenter's support for this payment
policy.
After consideration of the public comments we received, we are
finalizing our proposal to pay for brachytherapy sources at prospective
payment rates based on their source-specific median costs for CY 2012.
We refer readers to Addendum B to this final rule with comment period
(which is available via the Internet on the CMS Web site) for the final
CY 2012 payment rates for brachytherapy sources, identified with status
indicator ``U.'' We also are finalizing our proposals to continue our
policies regarding payment for NOS codes for stranded and non-stranded
sources and new brachytherapy sources for which we have no claims data.
Specifically, we are finalizing our proposals to continue payment for
stranded and non-stranded NOS codes, HCPCS codes C2698 and C2699, at a
rate equal to the lowest stranded or non-stranded prospective payment
for such sources, respectively as discussed in the CY 2008 OPPS/ASC
final rule with comment period (72 FR 66786); and our proposal to
assign HCPCS codes for new brachytherapy sources to their own APCs,
with proposed payment rates based on consideration of external data and
other
[[Page 74163]]
relevant information, in the absence of claims data. Once claims data
are available, our standard ratemaking process will be applied to the
calculation of the median cost for the new brachytherapy source.
Consistent with our policy regarding APC payments made on a
prospective basis, we are finalizing our proposal to subject the cost
of brachytherapy sources to the outlier provision of section 1833(t)(5)
of the Act, and also to subject brachytherapy source payment weights to
scaling for purposes of budget neutrality.
As stated in the proposed rule (76 FR 42197), we continue to invite
hospitals and other parties to submit recommendations to us for new
HCPCS codes to describe new brachytherapy sources consisting of a
radioactive isotope, including a detailed rationale to support
recommended new sources. Such recommendations should be directed to the
Division of Outpatient Care, Mail Stop C4-05-17, Centers for Medicare
and Medicaid Services, 7500 Security Boulevard, Baltimore, MD 21244. We
will continue to add new brachytherapy source codes and descriptors to
our systems for payment on a quarterly basis.
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).
In the CY 2012 OPPS/ASC proposed rule (76 FR 42197), for CY 2012,
we proposed to continue, with some modifications, 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. We
also proposed to create a new composite APC for cardiac
resynchronization therapy services, as discussed in section
II.A.2.e.(6) of the proposed rule.
After consideration of the public comments we received as discussed
below, for CY 2012, we are finalizing, without modification, our
proposal to modify some aspects of 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. We
also are finalizing, with modification, our proposal to create a new
composite APC for cardiac resynchronization therapy services, as
discussed in section II.A.2.e.(6) of this final rule with comment
period.
(1) Extended Assessment and Management Composite APCs (APCs 8002 and
8003)
In the CY 2012 OPPS/ASC proposed rule (76 FR 42197 through 42198),
for CY 2012, 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 2012. 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 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 2012 median costs for these composite APCs. We did not
propose to change these criteria for the CY 2012 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).
[[Page 74164]]
We did not propose to change these reporting requirements for the CY
2012 OPPS.
For CY 2012, we proposed to continue the extended assessment and
management composite APC payment methodology for APCs 8002 and 8003 (76
FR 42198). We stated 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 2010 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
already assure that they would not contain a code for a service with
status indicator ``T'' on the same date of service.);
2. Contained eight 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 HCPCS code 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 VII. of the proposed rule and this
final rule with comment period, and consistent with our CY 2008, CY
2009, CY 2010, and CY 2011 final policies (as discussed in section IX.
of the final rules with comment period for these calendar years), 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 2012.
At its February 28-March 1, 2011 meeting, the APC Panel recommended
that CMS consider expanding the extended assessment and management
composite APCs for CY 2012. In the proposed rule, we indicated that we
are accepting this recommendation.
As discussed in the CY 2012 OPPS/ASC proposed rule (76 FR 42198),
consistent with our decision to accept the APC Panel's recommendation,
we have examined various ways of potentially expanding the current
extended assessment and management composite APCs to further limit the
possibility that total beneficiary copayments would exceed the
inpatient deductible during extended observation encounters. We did not
propose for CY 2012 the expanded extended assessment and management
composite APCs that we analyzed because, while the composites that we
modeled would serve to further limit the number of beneficiaries with
copayments that exceeded the inpatient deductible, the modeled
composites also had the effect of possibly increasing copayments by a
small amount for the majority of beneficiaries undergoing extended
observation. In addition, expanded assessment and management composite
APCs do not address certain concerns about extended observation
services raised by stakeholders at CMS' observation listening session
last year (that is, observation time not counting towards the 3-day
prior hospitalization requirement for the skilled nursing facility
benefit). As we stated in the proposed rule, we will continue our
efforts to model other composite structures for a possible new extended
assessment and management composite structure for CY 2013.
In summary, for CY 2012, 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, 2010, and 2011. 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 2010 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 2012 median costs. The proposed CY 2012 median cost
resulting from this methodology for composite APC 8002 was
approximately $395, which was calculated from 16,770 single and
``pseudo'' single bills that met the required criteria. The proposed CY
2012 median cost for composite APC 8003 was approximately $735, which
was calculated from 225,874 single and ``pseudo'' single bills that met
the required criteria.
Comment: Commenters 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.
One commenter stated that the observation services in such cases are
most likely related to post-procedural recovery, and thus no additional
payment is warranted. The commenter argued, however, that when
observation services are billed along with minor surgical procedures,
the observation services should be paid separately. The commenter
suggested that CMS utilize the MPFS definition of minor surgical
procedures and reassign the codes currently assigned status indicator
``T'' to two newly created status indicators ``T1''(for general
surgical procedures) and ``T2'' (for minor surgical procedure as
defined in MPFS) in order to allow observation services to be paid
separately when provided with a minor surgical procedure with the
suggested status indicator ''T2.''
Response: We appreciate the commenters' 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 ``T'' that is reported
with a date of service on the same day as or one day prior to the date
of the service
[[Page 74165]]
associated with HCPCS code G0378. We agree with the commenters that
payment for such services is included in the payment for the surgical
procedure. We appreciate the commenter's suggestions to define minor
surgical procedures and to develop new status indicators to allow for
separate payment for observation services when billed with a minor
surgical procedure and will take these suggestions into consideration
for possible future rulemaking. At this time, we have not proposed to
make any policy changes to allow for separate payment for observation
services when billed with a minor surgical procedure, nor have we
proposed to create new status indicators for CY 2012. Therefore, we are
not making any such changes in this final rule with comment period.
After consideration of the public comments we received, we are
adopting as final, without modification, our CY 2012 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 through 2011.
We applied the standard packaging and trimming rules to the claims and
calculated the median costs for APCs 8002 and 8003 using all single and
``psuedo'' single procedure claims from CY 2010 that meet the criteria
for payment of each composite APC. The final CY 2012 median cost
resulting from this methodology for APC 8002 is approximately $393,
which was calculated from 18,447 single and ``psuedo'' single bills
that met the required criteria. The final CY 2012 median cost for
composite APC 8003 is approximately $721, which was calculated from
247,334 single and ``psuedo'' 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 began providing 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 based 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 have continued 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 2012 OPPS/ASC proposed rule (76 FR 42199), we proposed to
continue paying for LDR prostate brachytherapy services using the
composite APC methodology proposed and implemented for CY 2008 through
CY 2011. That is, we proposed to use CY 2010 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 2011 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. We proposed that the median costs for APCs 0163 and 0651
would continue to be calculated using single and ``pseudo'' single
procedure claims. We stated that we 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 a partial year of CY 2010 claims data available for the CY
2012 proposed rule, we were able to use 556 claims that contained both
CPT codes 55875 and 77778 to calculate the median cost upon which the
proposed CY 2012 payment for composite APC 8001 is based. The proposed
median cost for composite APC 8001 for CY 2012 was approximately
$3,364. This was an increase compared to the CY 2011 final median cost
for this composite APC of approximately $3,195 based on 849 single bill
claims from a full year of CY 2009 claims data. The proposed CY 2012
median cost for this composite APC was slightly less than $3,555, the
sum of the proposed median costs for APCs 0163 and 0651 ($2,658 +
$897), the APCs to which CPT codes 55875 and 77778 map if one service
is billed on a claim without the other. We stated that we believe the
proposed CY 2012 median cost for composite APC 8001 of approximately
$3,364, calculated from claims we believe to be correctly coded, would
result in a reasonable and appropriate payment rate for this service in
CY 2012.
Comment: One commenter expressed concern with CMS' methodology to
use claims for median cost calculation for APC 8001 with both CPT codes
55875 and 77778 on the same date of service and no other separately
paid services that are not on the bypass list, which resulted in 556 CY
2012 proposed rule claims. The commenter noted that this is only 12
percent of all CY 2012 proposed rule claims containing CPT codes 55875
and 77778. The commenter stated that its analysis of commonly included
procedure codes with LDR procedures would include CPT code
[[Page 74166]]
77332 (Treatment devices, design and construction; simple (simple
block, simple bolus)), which the commenter recommended be added to the
bypass list. This would add 406 claims to the median cost calculation
based on the commenter's analysis of CY 2012 proposed rule claims.
Response: We disagree with the commenter that 556 claims is not a
robust number of single claims for ratesetting purposes. There are many
services for which we have median costs based on hundreds of single and
``pseudo'' single claims. Moreover, the CY 2012 proposed rule median
cost of approximately $3,364, the CY 2012 final median cost of
approximately $3,340, and the CY 2011 final median cost of
approximately $3,195 all compare favorably and show stability in the
median cost calculation for APC 8001. We do not believe the median cost
would remain stable to such a degree if the claims used in ratesetting
for composite APC 8001 were inadequate or inaccurately reflected
hospitals' costs for providing the service described by CPT codes 55875
and 77778. We also do not believe it is appropriate to include CPT code
77332 on the bypass list for the reasons discussed in section II.A.1.b.
of this final rule with comment period.
Comment: One commenter requested that CMS implement the proposed CY
2012 payment rate for composite APC 8001, due to the increased median
cost for APC 8001.
Response: We appreciate the commenter's support for our proposed
payment rate for composite APC 8001. We note that we base final OPPS
rates on median costs calculated using a full year of hospital claims
and cost report data rather than a partial year's data, which were the
data available for the proposed rule.
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, 2010, and 2011 described above in this
section. The final CY 2012 median cost for composite APC 8001 is
approximately $3,340, calculated from 595 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 2012 OPPS/ASC proposed rule (76 FR 42200), we proposed to
continue to pay for cardiac electrophysiologic evaluation and ablation
services using the composite APC methodology proposed and implemented
for CY 2008 through CY 2011. Consistent with our CY 2008 through CY
2011 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. We stated that 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 2012, using a partial year of CY 2010 claims data available
for the proposed rule, we were able to use 11,156 claims containing a
combination of group A and group B codes and calculated a proposed
median cost of approximately $11,598 for composite APC 8000. This was
an increase compared to the CY 2011 final median cost for this
composite APC of approximately $10,673 based on a full year of CY 2009
claims data. We stated in the CY 2012 OPPS/ASC proposed rule (76 FR
42200) that we believe the proposed median cost of $11,598 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 its
current composite methodology for cardiac electrophysiologic evaluation
and ablation services, stating that it is the most efficient and
effective method to use claims data for most of the cardiac
[[Page 74167]]
electrophysiologic services, and best represents the resources
associated with the combined services.
Response: We appreciate the commenter's support.
We are finalizing our proposal for CY 2012, without modification,
to continue to pay for cardiac electrophysiologic evaluation and
ablation services using the composite APC methodology implemented for
CY 2008 through CY 2011. For this final rule with comment period, we
were able to use 11,706 claims from CY 2010 containing a combination of
group A and group B codes and calculated a final CY 2012 median cost of
approximately $11,313 for composite APC 8000. Table 7 below list the
groups of procedures upon which we based composite APC 8000 for CY
2012.
[GRAPHIC] [TIFF OMITTED] TR30NO11.009
[[Page 74168]]
(4) Mental Health Services Composite APC (APC 0034)
In the CY 2012 OPPS/ASC proposed rule (76 FR 42200 through 42201),
for CY 2012, 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
2012. 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 stated that 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 did 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 VIII. of the proposed rule, for
CY 2012, we proposed to continue using 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, for CY 2012, we proposed to
continue to set the 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 2012 OPPS/ASC proposed rule (76 FR 42201), 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 0034. The I/OCE currently determines 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, and we
proposed for CY 2012 that it would continue to determine this.
We did not receive any comments on this proposal. 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 that CMS
should pay more for a day of individual mental health services under
the OPPS than the partial hospitalization per diem payment. Therefore,
we are finalizing our CY 2012 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 2011
OPPS/ASC final rule with comment period (75 FR 71859 through 71860).
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.
[[Page 74169]]
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
were accepting this recommendation and would provide the requested
analysis to the APC Panel at a future meeting (75 FR 46212). As we
discuss in the CY 2012 OPPS/ASC proposed rule, at the February 28-March
1, 2011 APC Panel meeting, CMS staff provided an updated analysis of
the multiple imaging composite APCs to the Panel, comparing partial
year CY 2010 imaging composite cost and utilization data to comparable
CY 2009 data in order to meet the APC Panel request that we provide
analysis of the impact on beneficiaries of the multiple imaging
composite APCs (76 FR 42201).
In the CY 2012 OPPS/ASC proposed rule (76 FR 42201), for CY 2012,
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
2012 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 a partial year of CY 2010 claims available for
the CY 2012 OPPS/ASC proposed rule that 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 2011 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 appear in Table 9 of the CY 2012 OPPS/ASC
proposed rule. (We noted that, consistent with our proposal in section
II.A.1.b. of the CY 2012 proposed rule to add CPT code 71550 (Magnetic
resonance (eg, proton) imaging, chest (eg, for evaluation of hilar and
mediastinal lymphadenopathy); without contrast material(s)) to the list
of bypass codes for CY 2012, we also proposed to add CPT code 71550 to
the list of proposed OPPS imaging family services overlapping with
HCPCS codes on the proposed CY 2012 bypass list (76 FR 42201 through
42202). 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
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.''
As discussed in detail in section III.D.2. of the CY 2012 OPPS/ASC
proposed rule, we proposed to establish two APCs to which we would
propose to assign the codes created for CY 2011 by the AMA's CPT
Editorial Board for combined abdominal and pelvis CT services (76 FR
42235). Specifically, we proposed to create new APC 0331 (Combined
Abdominal and Pelvis CT Without Contrast), to which we proposed to
assign CPT code 74176 (Computed tomography, abdomen and pelvis; without
contrast material); and we proposed to create new APC 0334 (Combined
Abdominal and Pelvis CT With Contrast), to which we proposed to assign
CPT codes 74177 (Computed tomography, abdomen and pelvis; with contrast
material(s)) and 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)
for the CY 2012 OPPS. As noted and listed in section III.D.2. of the
proposed rule, we selected claims of predecessor codes of new CPT codes
74176, 74177, and 74178 to calculate the costs of proposed new APCs
0331 and 0334, respectively (76 FR 42235). Therefore, we proposed not
to use those claims listed in Table 21 in section III.D.2. of the
proposed rule in calculating the costs of APCs 8005 and 8006.
We were able to identify 1 million ``single session'' claims out of
an estimated 2 million potential composite cases from our ratesetting
claims data, or approximately half of all eligible claims, to calculate
the proposed CY 2012 median costs for the multiple imaging composite
APCs. We listed in Table 8 of the proposed rule the HCPCS codes that
would be subject to the proposed multiple imaging composite policy, the
approximate proposed median costs for the imaging composite APCs, and
their respective families for CY 2012. The HCPCS codes listed in Table
8 were assigned status indicator ``Q3''' in Addendum B to the proposed
rule (which is available via the Internet on the CMS Web site) to
identify their status as potentially payable through a composite APC.
Their proposed composite APC assignment was identified in Addendum M to
the proposed rule (which is available via the Internet on the CMS Web
site). Table 9 of the proposed rule listed the OPPS imaging family
services that overlap with HCPCS codes on the proposed CY 2012 bypass
list.
Comment: Some commenters requested that CMS provide separate APC
payment when multiple imaging services are provided on the same date of
service but at different times, because, according to the commenters,
services at different times require additional resources than services
performed together. The commenters indicated that hospitals providing
emergent services are more likely than other hospitals to provide
multiple imaging services, some of which are provided in the same day
but at different times. The commenters stated that when imaging
services are not provided at the same encounter, the same economies of
scale are not realized as when imaging services are provided together.
For example, cases in which it
[[Page 74170]]
is necessary to perform CT scans of the chest, abdomen, and pelvis, and
also a CT scan of the brain and/or soft tissues of the neck, must be
split into two separate encounters separated by a period of time, due
to required repositioning of the patient, and safety requirements. One
commenter requested that hospitals report a modifier or condition code
to report situations in which multiple imaging services are provided on
the same date but at different times, in order to afford additional
payment in those circumstances. The commenter further opined that the
fact that CMS allows separate payment for multiple E/M services on the
same date of service shows that CMS recognizes that resources are
expended for each clinic visit, and that this is an identical concept
to multiple imaging services on the same date but at differing
sessions.
Response: As we stated in the CY 2010 and CY 2011 final rules with
comment period (74 FR 60399 and 75 FR 71858 through 71859), 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
should be exempt from the multiple imaging composite payment
methodology. As we indicated in the CY 2009 through CY 2011 OPPS/ASC
final rules with comment period (73 FR 68565; 74 FR 60399; 75 FR
71859), 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 believe that the comparison to our
E/M visit policy of providing separate payments to separate clinic
visits on the same day is not relevant because, unlike radiology
departments, clinics often operate independently from each other in
different parts of the hospital with separate staffs providing
different services.
Comment: A few commenters, who expressed concern that providers may
receive inadequate compensation and a resulting decrease in beneficiary
access, stated that CMS should continue to provide analyses to the APC
Panel of the impact of its imaging composite APC policy on payment and
usage of imaging services. One commenter noted the updated analysis
that CMS staff provided at the February 28-March 1, 2011 APC Panel
meeting. The commenter appreciated the shared information, and
recommended that CMS continue to monitor costs, provide information on
the impact of multiple imaging composite APCs, and use the information
learned to ensure beneficiary access, as well as to evaluate whether
the existing multiple imaging composite APC methodology accurately
reflects all costs of proving the services. Other commenters agreed
with CMS' decision not to propose any expansion of imaging composite
APCs, opining that no expansion of the imaging composite APCs should be
considered until robust data on the current policy is available for
public review and comment. One commenter expressed concern with CMS'
proposal to create two additional multiple imaging composite APCs.
Response: We will continue to monitor the multiple imaging
composite APC rate methodology and the cost of providing imaging
services. We will report any information to the APC Panel and the
public, as appropriate. Any expansion to the multiple imaging composite
APCs would be subject to notice and comment rulemaking. We note that we
did not propose to create two additional multiple imaging composite
APCs for CY 2012 as one commenter indicated.
Comment: Some commenters stated that, while they understood the
multiple imaging composite APCs are intended to encourage efficiencies,
they were concerned that the methodology employs arbitrary reductions
absent data and may adversely affect beneficiary access to those
imaging services subject to the policy. Other commenters stated that
the efficiencies to be gained from multiple imaging procedures cannot
be extrapolated across modalities.
Response: The median costs upon which the payment rates for the
multiple imaging composite APCs are based are calculated using CY 2010
claims that qualified for composite payment, including those with only
two imaging procedures and those with substantially higher numbers of
imaging procedures. Therefore, because the payment rates reflect actual
hospitals' actual costs for providing multiple imaging services during
a single session, we do not agree with the commenter that the policy
employs arbitrary reductions. As we have stated in the past (75 FR
71858 and 74 FR 60400), we do not agree 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,
and we do not believe that, in aggregate, OPPS payment for multiple
imaging services will be inadequate so as to limit beneficiary access.
We note that the multiple imaging composite APC methodology is applied
only when multiple imaging procedures of the same imaging modality are
performed during the same session, and is not applied across imaging
modalities.
After consideration of the public comments we received, we are
adopting our CY 2012 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 2012 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 2010 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 2012 OPPS/ASC proposed rule (76 FR
42202), we were able to identify approximately 1.1 million ``single
session'' claims out of an estimated 2.2 million potential composite
cases from our ratesetting claims data, or approximately half of all
eligible claims, to calculate the final CY 2012 median costs for the
multiple imaging composite APCs.
[[Page 74171]]
Table 8 below lists the HCPCS codes that will be subject to the
multiple imaging composite policy and their respective families and
approximate composite APC median costs for CY 2012. Table 9 below lists
the OPPS imaging family services that overlap with HCPCS codes on the
CY 2012 bypass list.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR30NO11.010
[[Page 74172]]
[GRAPHIC] [TIFF OMITTED] TR30NO11.011
[[Page 74173]]
[GRAPHIC] [TIFF OMITTED] TR30NO11.012
[[Page 74174]]
[GRAPHIC] [TIFF OMITTED] TR30NO11.013
[[Page 74175]]
[GRAPHIC] [TIFF OMITTED] TR30NO11.014
BILLING CODE 4120-01-C
[[Page 74176]]
(6) Cardiac Resynchronization Therapy Composite APC (APCs 0108, 0418,
0655, and 8009)
Cardiac resynchronization therapy (CRT) uses electronic devices to
sequentially pace both sides of the heart to improve its output. CRT
utilizes a pacing electrode implanted in combination with either a
pacemaker or an implantable cardioverter defibrillator (ICD). CRT
performed by the implantation of an ICD along with a pacing electrode
is referred to as ``CRT-D.'' CRT performed by the implantation of a
pacemaker along with a pacing electrode is referred to as ``CRT-P.''
CRT-D services are described by combinations of CPT codes for the
insertion of pulse generators and the insertion of the leads associated
with ICDs, along with the insertion of the pacing electrode. For the
implantation of a pulse generator, hospitals may use CPT code 33240
(Insertion of single or dual chamber pacing cardioverter-defibrillator
pulse generator), which is the only CPT code assigned to APC 0107
(Insertion of Cardioverter-Defibrillator) for CY 2011, in combination
with CPT code 33225 (Insertion of pacing electrode, cardiac venous
system, for left ventricular pacing, at time of insertion of pacing
cardioverter-defibrillator or pacemaker pulse generator (including
upgrade to dual chamber system)), which is assigned to APC 0418
(Insertion of Left Ventricular Pacing Electrode) for CY 2011. For the
implantation of a pulse generator and leads, hospitals may use CPT code
33249 (Insertion or repositioning of electrode lead(s) for single or
dual chamber pacing cardioverter-defibrillator and insertion of pulse
generator), which is the only CPT code assigned to APC 0108 (Insertion/
Replacement/Repair of Cardioverter-Defibrillator Leads) for CY 2011, in
combination with CPT code 33225.
For CRT-P services, hospitals may use CPT codes 33206 (Insertion or
replacement of permanent pacemaker with transvenous electrode(s);
atrial) and 33207 (Insertion or replacement of permanent pacemaker with
transvenous electrode(s); ventricular), which are assigned to APC 0089
(Insertion/Replacement of Permanent Pacemaker and Electrodes) for CY
2011, in combination with CPT code 33225. Hospitals also may use CPT
code 33208 (Insertion or replacement of permanent pacemaker with
transvenous electrode(s); atrial and ventricular), for the implantation
of a pacemaker with leads, which is assigned to APC 0655 (Insertion/
Replacement/Conversion of a Permanent Dual Chamber Pacemaker), in
combination with CPT code 33225.
A number of commenters who responded to prior OPPS proposed rules,
as well as public presenters to the APC Panel, have recommended that
CMS establish new composite APCs for CRT-D services, citing significant
fluctuations in the median cost for CPT code 33225 and the payment rate
for APC 0418. The commenters and presenters have pointed out that,
because the definition of CPT code 33225 specifies that the pacing
electrode is inserted at the same time as an ICD or pacemaker, CMS
would not have many valid single or pseudo single claims upon which to
calculate an accurate median cost. These commenters and presenters also
asserted that claims data for these services 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 APC Panel at its February and August 2009 meetings
recommended that CMS evaluate the implications of the creation of a new
composite APC for CRT-D services and recommended that CMS reconsider
creating a composite APC or a group of composite APCs for CRT-D and
CRT-P services. While we did not propose to create any new composite
APCs for CY 2010 or CY 2011, we accepted both of these APC Panel
recommendations (75 FR 71852).
As described in the CY 2012 OPPS/ASC proposed rule (76 FR 42203
through 42206), in response to the APC Panel recommendations and the
comments we received, we evaluated the implications of creating four
composite APCs for CRT services, which would include the ICD and
pacemaker insertion procedures listed previously in this section
(described by CPT codes 33240, 33249, 33206, 33207, and 33208)
performed in combination with the insertion of a pacing electrode
(described by CPT code 33225). Table 10 of the proposed rule and Table
10 below outline the four potential composite APCs that we modeled.
Specifically, we provide a description of each potential composite APC,
the combination of CPT codes that we used to define the potential
composite APC, the frequency of claims that met the definition of the
potential composite APC that could be used to calculate a median cost
for the potential composite APC, and the median cost calculated for the
potential composite APC using CY 2010 claims data available for the
proposed rule, that is, those claims processed between January 1 and
December 31, 2010.
[[Page 74177]]
[GRAPHIC] [TIFF OMITTED] TR30NO11.016
For CY 2012, under the authority of section 1833(t)(1)(B) of the
Act, we proposed to create a new composite APC 8009 (Cardiac
Resynchronization Therapy with Defibrillator Composite), listed as
potential composite APC ``B'' in Table 10 above, for CRT-D services.
This proposed composite APC was the only modeled composite in the study
with significant claims volume, as shown above in Table 10, and would
provide a single payment for a procedure currently assigned to APC 0418
together with a procedure currently assigned to APC 0108 (Insertion/
Replacement/Repair of Cardioverter-Defibrillator Leads) when performed
on the same date of service. Specifically, we proposed to create
composite APC 8009, which would be used when the procedures described
by CPT code 33225 and CPT code 33249 are performed on the same day, in
order to recognize the inherent challenges in calculating accurate
median costs for CPT code 33225 based on single procedure claims
utilized in the standard OPPS ratesetting methodology, and to address
the public commenters' concerns regarding the fluctuations in median
costs for APC 0418. We stated that we believe a composite payment
methodology is appropriate for these services and would result in more
accurate payment for these services because such a methodology is
specifically designed to provide payment for two or more procedures
when they are provided in the same encounter, thus enabling us to use
more claims data to calculate median costs, and to use claims data that
more accurately represents the full cost of the services when they are
furnished in the same encounter. We also stated that we believe that
there is sufficient claims volume for CPT code 33225 and CPT code 33249
provided in the same encounter to warrant creation of the composite
APC. In addition, we indicated that we believe the claims volume for
CPT 33225 and CPT 33249 is sufficient to demonstrate that these
services are commonly performed
[[Page 74178]]
together. While the other combinations of CRT procedures listed in
Table 10 may also be performed together, we did not propose to
implement composite APCs for these services because of the low
frequency with which CPT code 33225 was reported in the claims data in
combination with other CPT codes that describe the insertion of an ICD
and a pacemaker. As we have stated previously (74 FR 60392), because of
the complex claims processing and ratesetting logic involved, in the
past, we have explored composite APCs only for combinations of services
that are commonly performed together. Because of the low frequency of
the other combinations of CRT procedures listed in Table 10 above, we
did not consider them to be commonly performed together.
Under the authority of section 1833(t)(2)(E) of the Act, we also
proposed to cap the payment rate for composite APC 8009 at the most
comparable Medicare-severity diagnosis-related group (MS-DRG) payment
rate established under the IPPS that would be provided to acute care
hospitals for providing CRT-D services to hospital inpatients.
Specifically, we proposed a payment rate for APC 8009 as the lesser of
the APC 8009 median cost or the IPPS payment rate for MS-DRG 227
(Cardiac Defibrillator Implant without Cardiac Catheterization without
Major Complication or Comorbidity), as adopted in the FY 2012 IPPS/LTCH
PPS final rule. We stated that we would establish the OPPS payment
amount as the FY 2012 IPPS standardized payment amount for MS-DRG 227
under this proposal. In the FY 2012 IPPS/LTCH proposed rule, this
amount was $26,364.93. We calculated the standardized payment rate for
MS-DRG 227 ($26,364.93) by multiplying the normalized weight from Table
5 of the FY 2012 IPPS/LTCH proposed rule (5.1370) by the sum of the
non-labor and labor-related shares of the proposed FY 2012 IPPS
operating standardized amount (nonwage-adjusted) ($5,132.36), which
were obtained from Table 1B of the FY 2012 IPPS/LTCH proposed rule. For
further detail on the calculation of the IPPS proposed FY 2012 payments
rates, we refer readers to the FY 2012 IPPS/LTCH PPS proposed rule (76
FR 26028 through 26029).
We stated that we consider the standardized payment rate for MS-DRG
227 to represent appropriate payment for a comparable package of
services furnished to outpatients. We also stated that we believe that,
because this MS-DRG includes defibrillator implantation for those
inpatients without major complications or comorbidities, it represents
the payment made for hospital inpatients who are most similar to
patients who would receive CRT-D services on an outpatient basis
because hospital outpatients are generally less sick than hospital
inpatients and because patients who have complications or comorbitities
would be most likely to be admitted to inpatient status to receive CRT-
D services. Similar to the proposed payment rate for composite APC
8009, the proposed payment rate for MS-DRG 227 included the device
costs associated with CRT-D services, along with the service costs
associated with CPT codes 33225 and 33249, which are the procedures
that are reported for implanting those devices. We stated that we
believe that we should not pay more for these services under the
proposed OPPS composite APC payment than under the IPPS because the
OPPS payment would, by definition, include fewer items and services
than the corresponding IPPS MS-DRG payment. For example, the IPPS MS-
DRG payment includes payment for drugs and diagnostic tests that would
be separately payable under the OPPS. We explained that a payment cap
is necessary, therefore, to ensure that we do not create an
inappropriate payment incentive to provide CRT-D services in one
setting of care as opposed to another by paying more for CRT-D services
in the outpatient setting compared to the inpatient setting. We also
explained that we believe that limiting payment for CRT-D services
under the OPPS to the IPPS MS-DRG payment will ensure appropriate and
equitable payment to hospitals because patients who receive these
services in the hospital outpatient setting are not as sick as patients
who have been admitted to receive this same service in the hospital
inpatient setting. Therefore, we expect it would be less costly to
provide care for these patients, who would also spend less time in the
facility.
In the CY 2012 OPPS/ASC proposed rule (76 FR 42241 through 42242),
we also addressed cases when CPT codes 33225 and 33249 are performed on
different dates of service. We proposed to retain CPT code 33249 in APC
0108, but to reassign CPT code 33225 to APC 0108 on the basis that
these codes are similar in clinical characteristics and median cost. We
proposed to revise the title of APC 0108 to read ``Insertion/
Replacement/Repair of AICD Leads, Generator, and Pacing Electrodes''
for CY 2012. We also proposed to reassign CPT code 33224 (Insertion of
pacing electrode, cardiac venous system, for left ventricular pacing,
with attachment to previously placed pacemaker or pacing cardioverter-
defibrillator pulse generator (including revision of pocket, removal,
insertion, and/or replacement of generator)) from APC 0418 to APC 0655,
and to change the title of APC 0655 from ``Insertion/Replacement/
Conversion of a Permanent Dual Chamber Pacemaker'' to ``Insertion/
Replacement/Conversion of a Permanent Dual Chamber Pacemaker or Pacing
Electrode.'' In the CY 2012 OPPS/ASC proposed rule (76 FR 42205), we
stated that we believe that reassigning CPT code 33224 to APC 0655 will
promote stability in payment for CPT code 33224 because CPT code 33224
would then be assigned to an APC with similar median costs, but with a
higher volume of services and, therefore, will benefit from the
stability in APC median costs and payment rates that generally result
as the volume of services within an APC increases. Because these
proposed actions would result in APC 0418 containing no CPT codes, we
proposed to delete APC 0418.
In addition, as with composite APC 8009 and under the authority of
section 1833(t)(2)(E) of the Act, we proposed to limit the payment for
services assigned to APC 0108 to the IPPS standardized payment amount
for MS-DRG 227. In other words, we proposed a payment rate for APC 0108
as the lesser of the APC 0108 median cost or the IPPS standardized
payment rate for MS-DRG 227. We stated that we believe that MS-DRG 227
is the most comparable DRG to APC 0108 because, like APC 0108, MS-DRG
227 includes implantation of a defibrillator in patients who do not
have medical complications or comorbidities. If we were to base payment
for APC 0108 on our calculated median cost of approximately $27,361, it
would result in a payment under the CY 2012 OPPS that would exceed our
proposed standardized payment under the IPPS for MS-DRG 227 of
$26,364.93. We stated that we do not believe that it would be equitable
to pay more for the implantation of a cardioverter defibrillator or
implantation of a left ventricular pacing electrode for an outpatient
encounter, which, by definition, includes fewer items and services than
an inpatient stay during which the patient has the same procedure.
In order to ensure that hospitals correctly code for CRT services
in the future, we proposed to create claim processing edits that would
return claims to providers unless CPT code 33225 is billed in
conjunction with one of the following CPT codes, as specified by the
AMA in the CPT code book:
[[Page 74179]]
33206 (Insertion or replacement of permanent pacemaker
with transvenous electrode(s); atrial);
33207 (Insertion or replacement of permanent pacemaker
with transvenous electrode(s); ventricular);
33208 (Insertion or replacement of permanent pacemaker
with transvenous electrode(s); atrial and ventricular);
33212 (Insertion or replacement of pacemaker pulse
generator only; single chamber, atrial or ventricular);
33213 (Insertion or replacement of pacemaker pulse
generator only; dual chamber, atrial or ventricular);
33214 (Upgrade of implanted pacemaker system, conversion
of single chamber system to dual chamber system (includes removal of
previously placed pulse generator, testing of existing lead, insertion
of new lead, insertion of new pulse generator));
33216 (Insertion of a single transvenous electrode,
permanent pacemaker or cardioverter-defibrillator);
33217 (Insertion of 2 transvenous electrodes, permanent
pacemaker or cardioverter-defibrillator);
33222 (Revision or relocation of skin pocket for
pacemaker);
33233 (Removal of permanent pacemaker pulse generator);
33234 (Removal of transvenous pacemaker electrode(s);
single lead system, atrial or ventricular);
33235 (Removal of transvenous pacemaker electrode(s); dual
lead system, atrial or ventricular);
33240 (Insertion of single or dual chamber pacing
cardioverter-defibrillator pulse generator); or
33249 (Insertion or repositioning of electrode lead(s) for
single or dual chamber pacing cardioverter-defibrillator and insertion
of pulse generator).
In summary, for CY 2012, we proposed to create a composite APC for
CRT-D services billed with CPT code 33225 and CPT code 33249 on the
same date of service (Composite APC 8009 (Cardiac Resynchronization
Therapy--ICD Pulse Generator and Leads)), for which we proposed that
payment would be capped at the IPPS payment rate for MS-DRG 227. In
other words, we would calculate payment for APC 8009 based on the
lesser of the APC 8009 median cost or the IPPS standardized payment for
MS-DRG 227. We also proposed to reassign CPT code 33225 to APC 0108 and
to continue to assign CPT code 33249 to APC 0108 when they are
furnished on different dates of service; to calculate payment for APC
0108 based on the lesser of the APC 0108 median cost or the IPPS
standardized payment for MS-DRG 227; and to delete APC 0418. Finally,
we proposed to implement claims processing edits that would return to
providers incorrectly coded claims on which a pacing electrode
insertion (CPT code 33225) is billed without an ICD or pacemaker
insertion. The proposed changes would all be made in a budget neutral
manner, in the same way that payment for other composite APCs and the
reassignment of codes to APCs are budget neutral within the OPPS.
At its August 10-11 meeting, the APC Panel recommended that CMS
establish the payment rates for APC 8009 (Cardiac Resynchronization
Therapy with Defibrillator, Composite) and APC 0108 (Insertion/
Replacement/Repair of Cardioverter-Defibrillator Leads) using only
outpatient claims data. We are accepting this recommendation and will
use only outpatient claims data to establish the payment rates for ICD
and CRT-D implantation procedures, as discussed in greater detail in
response to comments below.
Comment: Many commenters supported the creation of a composite APC
for CRT-D services, and the restructuring of APC 0108 in order to
address the median cost fluctuations in APC 0418. Many commenters
objected to the proposal to cap payments for the composite APC 8009 and
for APC 0108 at the IPPS payment rate for MS-DRG 227. While some
commenters acknowledged that limiting the payment for CRT-D services
provided to hospital outpatients makes intuitive sense and applauded
CMS for exploring Medicare payment across payment systems rather than
limiting policy proposals to within a single payment system, they
expressed concern that CMS had not demonstrated that the services
included in composite APC 8009 and APC 0108 are the same services
included in MS-DRG 227. Many commenters noted that there could be
legitimate explanations for the higher hospital outpatient cost
estimates for CRT that would support higher hospital outpatient
payments, such as the inclusion of less expensive ICD-only cases in the
MS-DRG 227 payment bundle and geographic variations in cost for CRT-D
devices provided to hospital inpatients and hospital outpatients. They
asserted that MS-DRG 227 is an inappropriate comparator because it
includes CRT-D implantation procedures, along with less expensive ICD-
only cases. Other commenters argued that a payment cap is inappropriate
because the proposed payment rate of approximately $26,365 for
composite APC 8009 would fail to cover the cost of CRT-D devices used
in the procedures described by CPT codes 33225 and 33249 based on CMS'
calculation of APC costs associated with devices presented in Table 24
of the CY 2012 OPPS/ASC proposed rule.
The leading manufacturers of CRT devices argued that the payment
cap is unnecessary, projecting that average actual payment differences
(after accounting for wage index adjustments, indirect medical
education (IME) payments, and disproportionate share hospital (DSH)
payments) under the CRT-D composite APC (with no payment cap applied)
and MS-DRG 227 would be unsubstantial and unlikely to create
inappropriate payment incentives, indicating that a significant shift
in site of care (from hospital inpatient to hospital outpatient) for
implantable defibrillator implants has already been taking place over
the past several years despite lower OPPS payment rates. Other
commenters urged CMS to postpone the proposal to link IPPS and OPPS
payments for CRT services until data from the new cost centers for
implantable devices provides more accurate information for median cost
development.
Many commenters also stated that the cap as described in the
proposed rule is not an accurate reflection of the equivalent IPPS
payment for CRT-D services because the operating and capital
standardized amounts paid to inpatient hospitals were not included,
indicating that, according to the IPPS final rule, the total payment
cap should be approximately $29,000. Other commenters added that IME
and DSH payments also should be included in the cap calculation. The
commenters urged CMS to take these MS-DRG payment adjustments into
consideration if an IPPS payment cap were applied to composite APC 8009
and APC 0108.
Response: We appreciate the commenters' suggestions presented in
response to our proposal to cap the OPPS payment for CRT-D services at
the IPPS payment for MS-DRG 227, and the commenters' support for the
creation of a composite APC for CRT-D services. After revisiting this
issue, we agree that while MS-DRG 227 includes less expensive ICD-only
cases, along with CRT-D system implants, proposed APC 8009 would
include only CRT-D cases (and not ICD-only cases), and therefore does
not represent a comparable package of services. Therefore, because
there are significant differences in these payment bundles, and because
we believe a payment cap would only be appropriate for comparable
packages of services, we agree with the commenters that a better
approach at this time would be to refrain from implementing our CY 2012
proposal to cap the hospital outpatient payment rate for CRT-D services
or ICD
[[Page 74180]]
implantation procedures based on the IPPS payment rate for MS-DRG 227.
As described in the proposed rule, we continue to believe that we
should recognize the inherent challenges in calculating accurate median
costs for CPT code 33225 based on single procedure claims utilized in
the standard OPPS ratesetting methodology, and that we should address
the commenters' past concerns regarding the fluctuations in median
costs for the APC to which this service has been assigned. We also
continue to believe that it is important to ensure that we do not
create an inappropriate payment incentive to provide services in one
setting of care as opposed to another, also as stated in the proposal.
In light of these goals, and taking into consideration the commenters'
observations that the hospital inpatient and outpatient payment bundles
for CRT-D services are different, we are modifying our proposal to
create composite APC 8009 for CRT-D services. Under this final rule
with comment period, we will treat CPT codes 33225 and 33249 as a
single, composite service when they are performed on the same day as
proposed, but rather than assigning them to composite APC 8009, we are
assigning them to existing APC 0108 for CY 2012. We believe that this
APC assignment is appropriate because the CRT-D procedure described by
the combination of CPT codes 33225 and 33249 is clinically similar to
the basic (nonresynchronization) ICD insertion procedure described by
CPT code 33249 when it is performed by itself and assigned to APC 0108.
Both procedures involve the insertion of one or more electrodes into
the heart with subsequent connection to a cardiac pacing and
defibrillation device. The difference between CRT-D and ICD insertion
is the use of an additional pacing wire, but we note that APC 0108, in
general, and CPT code 33249, specifically, already reflect a range of
numbers of electrodes. We also note that the CRT-D procedure and the
ICD-only procedure have similar final CY 2012 median costs of
approximately $38,468 (based on 3,145 single claims) and $26,988 (based
on 7,910 single claims), respectively, and that the placement of these
procedures in the same APC does not violate the 2 times rule. We also
are finalizing our proposal to change the title of APC 0108 to
``Insertion/Replacement/Repair of AICD Leads, Generator, and Pacing
Electrodes'' because this APC will provide payment for ICD procedures,
including CRT-D services.
In calculating the median costs upon which the payment rate for APC
0108 is based for CY 2012, for this final rule with comment period, we
included single procedure claims for the individual services assigned
to APC 0108, as well as single procedure claims that contain the
composite CRT-D service, defined as the combination of CPT codes 33225
and 33249 with the same date of service. We were able to use 11,055
single bills from the CY 2012 final rule claims data (3,145 composite
CRT-D service claims and 7,910 claims for other services assigned to
APC 0108) to calculate a median cost of approximately $29,839. We note
that under this policy, hospitals will continue to use the same CPT
codes to report CRT-D procedures, and the I/OCE will determine when
combinations of procedures qualify for composite service payment or map
to standard (sole service) APCs for payment. We will make a single
payment for those procedures that qualify for composite service
payment, as well as any packaged services furnished on the same date of
service. Because CPT codes 33225 and 33249 may be treated as a
composite service for payment purposes, we are assigning them status
indicator ``Q3'' (Codes that may be paid through a composite APC) in
Addendum B to this final rule with comment period. The assignment of
CPT codes 33225 and 33249 to APC 0108 when treated as a composite
service also will be reflected in Addendum M to this final rule with
comment period (which is available via the Internet on the CMS Web
site).
By continuing to recognize these procedures as a single, composite
service, we are able to use a higher volume of correctly coded claims
for CPT code 33225 and, therefore, to address the inherent ratesetting
challenges associated with CPT code 33225 and stabilize payment for
this service. We also note that this policy is consistent with the
principles of a prospective payment system, specifically to place
similar services that utilize technologies with varying costs in the
same APC in order to promote efficiency and decisionmaking based on
individual patient's clinical needs rather than financial
considerations. By calculating the median cost for APC 0108 using
claims from both ICD-only cases and CRT-D cases, we allow the costs of
each to influence the overall median cost for the APC, which will rise
or fall in the future depending on hospitals' utilization patterns. As
indicated earlier, this methodology allows us to accept the APC Panel's
recommendation to calculate payment for these services using only
hospital outpatient claims data.
Comment: A few commenters questioned CMS' authority under section
1833(t)(2)(E) of the Act to cap the payment rate for an OPPS composite
APC at a comparable MS-DRG payment rate established under the IPPS,
arguing that they believe this provision of the Act applies only to
adjustments made within the OPPS, and does not give CMS authority to
make equitable adjustments across payment systems.
Many commenters pointed out that CMS has held strongly to the
principle of setting OPPS payment rates based only on hospital
outpatient claims and cost report data since the beginning of the OPPS,
often refusing stakeholders' requests to use external data or make
cross-system payment comparisons as the basis for setting payment
rates. The commenters stated that for CMS to cross payment systems and
deviate from this longstanding policy would introduce a significant
level of uncertainty and unpredictability. Other commenters stated that
crossing payment systems for the first time under the OPPS represents a
significant departure from the standard OPPS ratesetting methodology,
undermines the integrity of the OPPS, discourages hospitals from
providing care in the most appropriate setting, and adversely affects
investment in new technologies.
Some commenters also argued that CMS should not assume the hospital
inpatient cost data for CRT-D services is more valid than hospital
outpatient cost data. To the contrary, commenters noted that there are
various mechanisms in place for hospital outpatient claims, such as the
procedure-to-device edits, to ensure that hospitals report the full
costs of devices provided in hospital outpatient departments, while
there are no similar mechanisms in place for devices provided in
hospital inpatient settings of care. The commenters pointed out that
the OPPS and the IPPS have been designed to be internally consistent
but not comparable to each other, noting that the methods used to
establish relative weights in each system are independent and
unrelated.
Commenters also stated that if CMS were to set a precedent for
looking across payment systems in this circumstance, then CMS should be
consistent and make cross-system payment comparisons for all items and
services, such as separately payable drugs and biologicals, which are
paid at a lower per drug payment rate when they are provided in
hospital outpatient settings compared to physician office settings.
[[Page 74181]]
Response: Although we are not finalizing our proposal to institute
a payment cap for composite APC 8009 and APC 0108, we believe we have
broad authority under the statute to implement a cap on the payment
rate for an OPPS APC at a comparable MS-DRG payment rate established
under the IPPS. We also disagree that we cannot explore this policy
option because it would be unprecedented and involve data other than
data obtained from hospital outpatient claims. It is not unprecedented
for CMS to use data from one payment system in the calculations for
another in specific circumstances. For example, as described in detail
in the CY 2011 OPPS/ASC final rule with comment period (75 FR 72033)
and in section XIII.C.1.b. of this CY 2012 OPPS/ASC final rule with
comment period, we use physician claims data in determining which
procedures will be designated as ``office-based'' for the ASC list of
covered surgical procedures, and in setting the ASC payment rate, we
use the lower of the MPFS nonfacility PE RVU -based amount or the
amount calculated using the ASC standard ratesetting methodology for
the procedure. Even if the use of such data were unprecedented, we do
not believe that we should neglect to pursue innovations and
refinements to Medicare payment policy because any such innovations and
refinements would be new. We also disagree that a payment policy to
create payment parity between the IPPS and OPPS in one clinical area
would necessitate the creation of parity across payment systems for all
items and services. We note that there could be many different payment
approaches that could be chosen for comparison purposes for any given
item or service, giving rise to implementation issues. That is,
comparisons could be made between the OPPS and the payment
methodologies for services furnished in the physician's office setting
such as the MPFS for physicians' services or ASP for certain covered
Part B drugs, as the commenter suggested, or comparisons could be made
between the OPPS and the IPPS or other payment systems, and the
``payment parity'' resulting from those comparisons would be vastly
different. For example, while the commenters' suggested approach to
achieve payment parity between the hospital outpatient setting and the
physician office setting for drugs and biologicals would usually result
in higher hospital outpatient payment rates of ASP+ 6 percent, an
approach that would achieve payment parity between the hospital
outpatient setting and the hospital inpatient setting would result in
payment for most drugs and biologicals being packaged into the
associated APC procedure payment, because payment for most drugs and
biologicals under the IPPS is included in the MS-DRG payment. In
addition, immediately applying such a policy across all items and
services (rather than incrementally for items and services in one
clinical area or a handful of clinical areas through notice-and-comment
rulemaking) may result in payment instability as payments would
potentially increase and decrease for thousands of services.
We note that we may consider examining the issue of payment parity
with respect to other payment systems, even when the data upon which
the cost of a service is calculated are from a different source,
because such an approach may deter inappropriate migration of services
to a setting of care based on financial consideration rather than
clinical needs.
Although we are not implementing our proposal to cap payment for
CRT-D services in CY 2012, we will continue to explore methods to
ensure our payment systems do not provide inappropriate payment
incentives to provide services in one setting of care as opposed to
another setting of care.
Comment: Some commenters contested the statement in the CY 2012
OPPS/ASC proposed rule that hospital outpatients are generally less
sick than hospital inpatients, arguing that not all patients with
comorbidities are admitted as inpatients. Several commenters stated
that CMS has not provided evidence to support the claim that CRT-D
services on an outpatient basis would include fewer items and services
than on an inpatient basis.
Response: As indicated previously, we are not implementing our
proposal to cap payment for CRT-D services at the IPPS payment rate for
MS-DRG 227. We continue to believe, however, that the Medicare
beneficiaries who receive a service on an outpatient basis would
generally not be expected to be as sick as those who are admitted to
the hospital to receive the same service. The Medicare Benefit Policy
Manual (100-02), Chapter 1, Section 10 (available on the CMS Web site
at: http://www.cms.gov/manuals/Downloads/bp102c01.pdf) defines an
inpatient as a person who has been admitted to a hospital for bed
occupancy for purposes of receiving inpatient hospital services. As
stated in the manual, factors to be considered when making the decision
to admit include such things as the severity of the signs and symptoms
exhibited by the patient and the medical predictability of something
adverse happening to the patient. We believe this supports our
statement that, generally, patients who can receive a service on an
outpatient basis rather than be admitted as inpatients are not as sick
as patients who would need to be admitted as inpatients to receive
those same services.
We also continue to believe that the costs of providing a service
to a hospital inpatient, in general, may exceed the costs for providing
the same service on an outpatient basis. In general, payment for
outpatient care through an APC consists only of the cost of the
procedure, certain packaged ancillary services, and the cost of nursing
and other staff care during the immediate recovery period. Patients are
able to go home quickly (and if they are not able to go home quickly,
they would typically be admitted). In general, the payment for
operating costs of inpatient hospital services under the IPPS includes
similar services that would be paid under the OPPS through an APC, plus
associated diagnostic testing, drugs, laboratory tests, and the cost of
an extended recovery over several days. Inpatient care is typically
associated with longer periods of recovery, which may be triggered by
increased complications, increased comorbidity, or increased risk.
Although an individual outpatient case may be more expensive than an
individual inpatient case, inpatients, on the average, will be sicker
and more costly than outpatients receiving similar services.
Comment: A few commenters disagreed with the proposed reassignment
of CPT code 33224 to APC 0655, and the proposed reassignment of CPT
code 33225 to APC 0108. According to the commenters, the claims data
upon which CMS calculated the proposed median cost of CPT code 33225
was flawed because it included many claims that should have been
rejected if CMS applied its device-to-procedure edits. The commenters
provided data analysis indicating that there were only 13 single bills
that met the criteria of the device-dependent APC ratesetting
methodology, and that the median cost calculated from those 13 single
bills is approximately $8,149 rather than the median cost of
approximately $34,018 calculated by CMS using 458 single bills from the
data available for the CY 2012 proposed rule. The commenters requested
that CMS maintain APC 0418, and continue to assign to it CPT codes
33224 and 33225, based on their estimated median cost of approximately
$8,149 for CPT code 33225 and CMS' estimated median cost of
approximately $12,418 for CPT code 33224. The commenters expressed
[[Page 74182]]
general concern that the device-to-procedure edits were not being
applied correctly to hospital outpatient claims.
Response: We appreciate the commenters bringing to our attention
potential problems with the claims used to calculate the proposed CY
2012 median cost for CPT code 33225. We are investigating the
possibility that erroneous claims may have made it pass the claims
processing logic in place to enforce the device-to-procedure and
procedure-to-device edits, and how they may have been present in the
set of claims we used in ratesetting for the proposed rule. We note
that we used a total of 28 single bills for CPT code 33225 to calculate
a median cost of approximately $18,855 for this final rule with comment
period, which is consistent with the much lower number of single bills
identified by the commenters in the proposed rule data set and
consistent with the number of single bills for this service in prior
years' hospital outpatient claims data. We will continue to examine
this issue in order to ensure that the claims we use to calculate
median costs for these CPT codes, as well as all CPT codes assigned to
device-dependent APCs, conform with the device-dependent APC
ratesetting methodology outlined in section II.A.2.d.(1) of this final
rule with comment period.
We do not agree with the commenters that we should maintain APC
0418 for CPT codes 33224 and 33225. Based on the hospital outpatient
claims and cost report data available for this final rule with comment
period, we calculated a final median cost of approximately $12,418
using 198 single bills (out of 831 total bills) for CPT code 33224, and
a final median cost of approximately $18,855 using 28 single bills (out
of 10,424 total bills) for CPT code 33225. We continue to believe that
CPT code 33224 appropriately aligns, both in terms of clinical
characteristics and resource utilization, with other procedures
assigned to APC 0655, which has a final CY 2012 median cost of
approximately $9,638, because the median cost of CPT code 33224 is
relatively close to the overall APC median cost and APC 0655 includes
pacemaker insertion procedures. Therefore, we are finalizing our
proposal, without modification, to assign CPT code 33224 to APC 0655.
In addition, we agree with commenters that CPT code 33225 should
not be assigned to APC 0108. We believe that CPT code 33225 should be
assigned to APC 0655, rather than APC 0108 or APC 0418, when it is not
performed on the same day as the service described by CPT code 33249,
based upon the median cost calculated for CPT code 33225 using data
available for this final rule with comment period and based upon the
commenters' estimates presented in their analysis of this CPT code's
cost. While we acknowledge that the final rule median cost of
approximately $18,855 is higher than the median costs of the other
procedures assigned to APC 0655, we believe this is an appropriate
assignment for this CPT code from a clinical perspective because the
procedure described by CPT code 33225 differs from the procedure
described by CPT code 33224 (which is in APC 0655) only in the position
of the end of the electrode within the heart. In addition, CPT code
33225 is also similar to other procedures assigned to APC 0655, such as
CPT code 33214 (Upgrade of implanted pacemaker system, conversion of
single chamber system to dual chamber system (includes removal of
previously placed pulse generator, testing of existing lead, insertion
of new lead, insertion of new pulse generator), which describes the
upgrade of a pacemaker which generally includes new hardware and
placement of a new electrodes. We also note that this assignment does
not violate the 2 times rule. Therefore, for CY 2012, we are modifying
our proposal to reassign CPT code 33225 to APC 0108 when it is
performed without CPT code 33249. Instead, CPT code 33225 is reassigned
to APC 0655 when it is performed without CPT code 33249. We also are
finalizing our proposals to change the title of APC 0655 to
``Insertion/Replacement/Conversion of a Permanent Dual Chamber
Pacemaker or Pacing Electrode'' and to delete APC 0418.
Comment: Many commenters supported the proposal to implement claims
processing edits that would return claims to providers unless CPT code
33225 is billed in conjunction with one of the clinically appropriate
CPT codes specified by the AMA in the CPT code book.
Response: We appreciate the commenters' support. We are
implementing our CY 2012 proposal, without modification, to create
claims processing edits for CPT code 33225 that would return claims to
providers if CPT code 33225 is not correctly billed on the claim in
conjunction with one of the clinically appropriate CPT codes specified
by the AMA in the CPT code book, as described previously in this
section.
In summary, after consideration of the public comments we received
and the APC Panel recommendation, we are not finalizing our proposal to
implement a payment cap for CRT-D services and ICD implantation
procedures based upon the payment rate for IPPS MS-DRG 227 as proposed.
Instead, we will recognize CPT codes 33225 and 33249 as a single,
composite service when they are performed on the same day as proposed.
However, for CY 2012, rather than assigning the procedures described by
CPT codes 33225 and 33249 when they are performed on the same day to
composite APC 8009, we are assigning them to existing APC 0108. We are
implementing our proposal to change the title of APC 0108 to
``Insertion/Replacement/Repair of AICD Leads, Generator, and Pacing
Electrodes'' because this APC will provide payment for ICD procedures
including CRT-D services. Hospitals will continue to use the same CPT
codes to report CRT-D procedures and ICD-only procedures, and the I/OCE
will identify when the combination of CPT codes 33225 and 33249 on the
same day qualify for composite service payment. We will make a single
composite payment for such cases. When not performed on the same day as
the service described by CPT code 33225, the service described by CPT
code 33249 will continue to be assigned to APC 0108. When not performed
on the same day as the service described by CPT code 33249, the service
described by CPT code 33225 will be assigned to APC 0655 (we note that
this is a modification from our proposal to assign CPT code 33225 when
it does not appear with CPT code 33249 to APC 0108). We also are
finalizing our proposals to reassign CPT code 33224 to APC 0655 for CY
2012, to change the title of APC 0655 from ``Insertion/Replacement/
Conversion of a Permanent Dual Chamber Pacemaker'' to ``Insertion/
Replacement/Conversion of a Permanent Dual Chamber Pacemaker or Pacing
Electrode,'' and to delete APC 0418.
In addition, we are finalizing our proposed policy to implement
claims processing edits that will return to providers incorrectly coded
claims on which a pacing electrode insertion (the procedure described
by CPT code 33225) is billed without a procedure to insert an ICD or
pacemaker.
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
[[Page 74183]]
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 outpatient 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 XI.A.1. of this final rule with comment period and
Addenda D1 (which is referenced in section XVII. of this final rule
with comment period and available via the Internet on the CMS Web site)
with other Addenda, for a complete listing of status indicators and the
meaning of each.
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 depends 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 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: (1)
APC 8004 (Ultrasound Composite); (2) APC 8005 (CT and CTA without
Contrast Composite); (3) APC 8006 (CT and CTA with Contrast Composite);
(4) APC 8007 (MRI and MRA without Contrast Composite); and (5) 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, in the CY 2012
OPPS/ASC proposed rule (76 FR 42206), we invited public comments
regarding our packaging proposals for the CY 2012 OPPS.
b. Packaging Issues
(1) CMS Presentation of Findings Regarding Expanded Packaging at the
February 28-March 1, 2011 and August 10-11, 2011 APC Panel Meetings
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
[[Page 74184]]
separately payable codes with which it was performed; and whether the
expected cost of the service is relatively low.
As discussed in section I.D. of the proposed rule and 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 that is now renamed the Subcommittee for
APC Groups and Status Indicator (SI) Assignments to reflect that its
function has expanded to include assisting CMS with assignment of HCPCS
codes to APCs. As part of its function, the APC Panel 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/HospitalOutpatientPPS/HORD/list.asp.
(2) Packaging Recommendations of the APC Panel at its February 28-March
1, 2011 Meeting
During the February 28-March 1, 2011 APC Panel meeting, the APC
Panel accepted the report of the Subcommittee for APC Groups and Status
Indicator (SI) Assignment, heard several public presentations related
to packaged services, discussed the deliberations of the subcommittee,
and made five recommendations related to packaging and to the function
of the subcommittee. The Report of the February 28-March 1, 2011
meeting of the APC Panel may be found at the CMS Web site at: http://www.cms.gov/FACA/05_AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp.
To summarize, the APC Panel made five recommendations regarding the
packaging of payment under the CY 2012 OPPS. Below we present each of
these five packaging recommendations and our responses to those
recommendations. The first APC Panel recommendation that relates to
packaging and that we discuss in this section is APC Panel
Recommendation 4. Two other recommendations, Recommendations 12 and 13,
which evolved from the discussions of the APC Groups and Status
Indicator Subcommittee, are related specifically to HCPCS codes, were
discussed in section III.D. of the proposed rule, and are addressed in
section III.D. of this final rule with comment period. Recommendation
12 was that CMS reassign HCPCS code 65778 (Placement of amniotic
membrane on the ocular surface for wound healing; self-retaining) and
HCPCS code 65779 (Placement of amniotic membrane on the ocular surface
for wound healing; single layer, sutured) to APC 0233 (Level III
Anterior Segment Eye Procedures) and that CMS furnish data when data
become available for these two codes. Recommendation 13 was that CMS
create an intermediate-level upper gastrointestinal procedures APC.
APC Panel Recommendation 4: That HCPCS 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])) should continue to be
assigned a status indicator of ``N.'' The Panel further recommended
that CMS continue to collect claims data for HCPCS code 31627.
CMS Response to Recommendation 4: HCPCS code 31627 was new for CY
2010, and we assigned a new interim status indicator of ``N'' in our CY
2010 OPPS/ASC final rule with comment period based on our policy of
packaging guidance and intraoperative services that are ancillary and
dependent upon an independent separately paid procedure. At the APC
Panel's February 2010 meeting, the manufacturer of the electromagnetic
navigation bronchoscopy (ENB) technology, one of several technologies
that can be used to perform the service described by HCPCS code 31627,
asserted that use of the 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 stated that
without separate payment for the ENB technology, hospitals would likely
not adopt the technology and the population that would likely benefit
from the ENB technology would not have access to this technology. In
response to the manufacturer's presentation at the February 2010 Panel
meeting, the APC Panel asked CMS to consider whether HCPCS code 31627
should be packaged or paid separately; and if it should be paid
separately, the APC Panel asked CMS to investigate the appropriate APC
assignment. The report of the February 2010 APC Panel meeting is
available at: http://www.cms.gov/FACA/05_AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp.
We stated in the CY 2011 OPPS/ASC proposed rule (75 FR 46223) that
we considered and analyzed the information available to us for HCPCS
code 31627 and believed that the code described a procedure that is
supportive of and ancillary to the primary diagnostic or therapeutic
modality. Therefore, we proposed to package payment for HCPCS code
31627. We stated that, by proposing to package 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.
At its August 23-24, 2010 meeting, the APC Panel listened to
discussions regarding whether HCPCS code 31627 should remain packaged
for CY 2011. After hearing presentations from the public, the APC Panel
recommended that CMS continue to package payment for HCPCS code 31627
into payment for the major separately paid procedure with which it is
performed and asked that CMS bring claims data on the cost of HCPCS
code 31627 to the APC Panel's winter 2011 meeting for review. After
consideration of all of the information provided by commenters on this
issue, and hearing the discussion of the issue by the APC Panel at its
August 23-24, 2010 meeting, we accepted the APC Panel's recommendation
to continue to package payment for HCPCS code 31627 into the payment
for the major separately paid procedure with which it is reported for
CY 2011. In addition, we also accepted the APC Panel's recommendation
that CMS bring claims data for HCPCS code 31627 to the winter 2011 APC
Panel meeting. The report of the August 2010 APC Panel meeting is
available at: http://www.cms.gov/FACA/05_AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp.
At its meeting on February 28-March 1, 2011, the APC Panel listened
to a public presentation in which the manufacturer of the ENB
technology requested that HCPCS code 31627 be paid separately on the
basis that the cost of the technology is substantially higher than the
OPPS payment for APC 0076 (Level I Endoscopy Lower Airway), the APC to
which most bronchoscopy codes are assigned and into which payment for
HCPCS code 31627 is packaged. The manufacturer stated that if CMS does
not pay HCPCS code 31627 separately, hospitals will not furnish the
procedure to hospital outpatients.
In response to the request of the APC Panel at its August 2010
meeting, we presented the available data on HCPCS code 31627 that could
be derived from the hospital outpatient claims that were paid under the
OPPS for services on and after January 1, 2010 through and
[[Page 74185]]
including September 30, 2010, as processed through the CMS common
working file by December 31, 2010. Specifically, using the limited set
of APC Panel data, CMS found that 119 hospitals billed for 573 units of
HCPCS code 31627, and that HCPCS code 31627 had a median cost of
approximately $329 per unit. We also found that HCPCS code 31627 is
reported on 0 to 4 percent of the claims for bronchoscopy codes with
which CPT guidance states that it is permissible to report HCPCS code
31627, with the exception of HCPCS code 31626 (Bronchoscopy, rigid or
flexible, including fluoroscopic guidance, when performed; with
placement of fiducial markers, single or multiple). HCPCS code 31627
was reported on approximately 52 percent of claims for HCPCS code 31626
in the APC Panel data. The APC Panel considered this information in its
formulation of Recommendation 4 that CMS continue to package payment
for HCPCS code 31627 into the payment for the bronchoscopy code with
which HCPCS code 31627 is reported. Subsequent to the APC Panel
meeting, examination and analysis of the CY 2012 proposed rule data
found that 149 hospitals reported 867 units of HCPCS code 31627, and
that HCPCS code 31627 had a proposed rule median cost of approximately
$344 per unit.
After considering the public presentation and the information
presented by CMS staff, the APC Panel recommended that HCPCS code 31627
continue to be assigned a status indicator of ``N.'' The Panel further
recommended that CMS continue to collect claims data for HCPCS code
31627. In the CY 2012 OPPS/ASC proposed rule (76 FR 42208), we proposed
to accept both of the APC Panel's recommendations for the CY 2012 OPPS.
Specifically, we proposed to assign HCPCS code 31627 to status
indicator ``N'' for the CY 2012 OPPS and, therefore, proposed to
package payment for the procedure into payment for the bronchoscopy to
which we believe that it is ancillary and supportive. As with all
packaged items and services, we propose that the cost we calculate for
CPT code 31627 would be added to the costs on the single bill for the
bronchoscopy code with which the service reported by CPT code 31627 is
furnished, and therefore, the cost of CPT code 31627 would be
incorporated into the payment for the APC to which that bronchoscopy
code is assigned. We stated in the proposed rule that we continue to
believe that HCPCS code 31627, for which there are several different
technologies, describes a service that is supportive and ancillary to
the primary bronchoscopy procedure with which it must be reported, as
defined by CPT. HCPCS code 31627 describes a computer assisted image
guided navigation service that is not furnished without a bronchoscopy.
As defined by CPT, HCPCS code 31627 may only be furnished in addition
to a bronchoscopy service and, therefore, we believe that it is
ancillary and supportive to the bronchoscopy service with which it must
be reported. We agreed to provide further claims information on HCPCS
code 31627 to the APC Panel when it becomes available.
Comment: One commenter supported the APC Panel recommendation at
its February 2011 meeting that CMS provide further claims information
on HCPCS code 31627 to the APC Panel when it becomes available.
Response: We appreciate the commenter's support and will furnish
further information on HCPCS code 31627 to the APC Panel at a future
meeting.
For CY 2012, we are continuing to package payment for HCPCS code
31627 into payment for the separately paid procedure with which it is
furnished because we continue to believe that it is ancillary and
supportive to the bronchoscopy with which it is performed, as set forth
in the CY 2012 proposed rule (76 FR 42207 through 42208). Therefore, we
have assigned HCPCS code 31627 a status indicator of ``N'' for CY 2012.
APC Panel Recommendation 5: That CMS consider a more appropriate
APC assignment for HCPCS code 31626 (Bronchoscopy, rigid or flexible,
including fluoroscopic guidance, when performed; with placement of
fiducial markers), the most common code with which HCPCS code 31627 was
billed in 2010.
CMS Response to Recommendation 5: In the CY 2012 OPPS/ASC proposed
rule, we accepted this recommendation and, therefore, proposed to
reassign HCPCS code 31626 (which had a proposed CY 2012 APC median cost
of approximately $2,708) from APC 0076 (which had a proposed CY 2012
APC median cost of approximately $751) to APC 0415 (Level II Endoscopy
Lower Airway), which had a proposed CY 2012 APC median cost of
approximately $2,007. We agreed with the APC Panel that it appears that
the proposed APC median cost of HCPCS code 31626 of $2,708 justified
placement in an APC that has a median cost that is more similar to the
APC median cost for this code. We stated that we believe that APC 0415
is the most appropriate clinically similar APC because the proposed CY
2012 median cost for APC 0415 of $2,007 is more similar in clinical
resource for HCPCS code 31626 than the proposed CY 2012 median cost for
APC 0076 of $715.
Comment: Commenters supported our proposal to move HCPCS code 31626
to APC 0415 for CY 2012.
Response: We appreciate the commenters' support and are finalizing
our proposal for the reasons set forth above.
For CY 2012, we are moving HCPCS code 31626 from APC 0076 to APC
0415, which has a final median cost of approximately $2,024.
APC Panel Recommendation 6: That Judith Kelly, R.H.I.T., R.H.I.A.,
C.C.S., continue to chair the APC Groups and Status Indicator (SI)
Assignments Subcommittee for 2011.
CMS Response to Recommendation 6: In the CY 2012 OPPS/ASC proposed
rule, we indicated that we accepted the APC Panel's recommendation that
Judith Kelly, R.H.I.T., R.H.I.A., C.C.S. continue to chair the APC
Groups and Status Indicator Assignments Subcommittee for 2011.
We did not receive any public comments on this recommendation. We
appreciate the services of Ms. Kelly as chair of the Subcommittee for
CY 2011.
APC Panel Recommendation 7: That CMS furnish the results of its
investigation of claims that contain the following unconditionally
packaged codes without separately paid procedures:
HCPCS code G0177 (Training and educational services
related to the care and treatment of patient's disabling mental health
problems per session (45 minutes or more));
HCPCS code G0378 (Hospital observation service, per hour);
HCPCS code 75940 (Percutaneous placement of IVC filter,
radiological supervision and interpretation); and
HCPCS code 76937 (Ultrasound guidance for vascular access
requiring ultrasound evaluation of potential access sites,
documentation of selected vessel patency, concurrent realtime
ultrasound visualization of vascular needle entry, with permanent
recording and reporting (List separately in addition to code for
primary procedure)).
CMS Response to Recommendation 7: In the CY 2012 OPPS/ASC proposed
rule, we indicated that we accepted the APC Panel's recommendation that
CMS furnish the results of its investigation of claims that contain the
unconditionally packaged codes, HCPCS code G0177, HCPCS code G0378,
HCPCS code 75940,
[[Page 74186]]
and HCPCS code 76937, at a future APC Panel meeting.
Comment: One commenter supported the APC Panel recommendation that
CMS furnish the results of its investigation of claims that contain the
following unconditionally packaged codes without separately paid
procedures: HCPCS code 75940 and HCPCS code 76937.
Response: As we indicated in the proposed rule (76 FR 42208), we
will furnish this information to the APC Panel at a future meeting.
APC Panel Recommendation 8: That the work of the APC Groups and
Status Indicator (SI) Assignments Subcommittee continue.
CMS Response to Recommendation 8: In the CY 2012 OPPS/ASC proposed
rule, we indicated that we accepted the APC Panel's recommendation that
the work of the APC Groups and Status Indicator Assignments
Subcommittee continue.
We did not receive any public comments on this recommendation.
(3) Packaging Recommendations of the APC Panel at Its August 2011
Meeting
During the August 10-11, 2011 APC Panel meeting, the APC Panel
accepted the report of the Subcommittee for APC Groups and Status
Indicator (SI) Assignments, heard several public presentations related
to packaged services, discussed the deliberations of the subcommittee,
and made three recommendations related to packaging and to the function
of the subcommittee. The subcommittee also made recommendations with
regard to APC placement of specific services that are discussed in
section III.D of this final rule with comment period. The Report of the
August 10-11, 2011 meeting of the APC Panel may be found at the CMS Web
site at: http://www.cms.gov/FACA/05_AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp.
Below we present each of the three recommendations related to
packaging and our responses to those recommendations. Recommendations
that evolved from the discussions of the Subcommittee on APC Groups and
Status Indicator Assignments that are specific to the APC assignment of
HCPCS codes and removal of HCPCS codes from the inpatient only list are
discussed in sections III and IX, respectively, of this final rule with
comment period.
APC Panel Recommendation 9: That CMS give HCPCS code 65778
(Placement of amniotic membrane on the ocular surface for wound
healing; self-retaining) a status indicator of ``T'' and provide the
Panel with correlating claims data when available.
CMS Response to Recommendation 9: We refer readers section
III.D.5.a of this final rule with comment period for discussion of this
recommendation.
APC Panel Recommendation 11: The Panel recommends that Judith
Kelly, R.H.I.T., R.H.I.A., C.C.S., remain the chair of the APC Groups
and SI Assignments Subcommittee.
CMS Response to Recommendation 11: We accept the recommendation
that Judith Kelly, R.H.I.T., R.H.I.A., C.C.S., remain the chair of the
APC Groups and SI Assignments Subcommittee. We appreciate Ms. Kelly's
continuing service in this position.
APC Panel Recommendation 12: The Panel recommends that the work of
the APC Groups and SI Assignments Subcommittee continue.
CMS Response to Recommendation 12: We are accepting the APC Panel's
recommendation that the work of the APC Groups and SI Assignments
Subcommittee continue.
(4) Other Packaging Proposals and Policies for CY 2012
The HCPCS codes that we proposed be packaged either unconditionally
(for which we continue to assign status indicator ``N''), or
conditionally (for which we continue to assign status indicators
``Q1,'' ``Q2,'' or ``Q3''), were displayed in Addendum B of the CY 2012
OPPS/ASC proposed rule (76 FR 42208). The supporting documents for the
CY 2012 OPPS/ASC proposed rule, including but not limited to Addendum
B, are available at the CMS Web site at: www.cms.hhs.gov/HospitalOutpatientPPS/HORD. To view the proposed status indicators by
HCPCS code in Addendum B, select ``CMS 1525-P'' and then select the
folder labeled ``2012 OPPS Proposed Rule Addenda'' or ``2012 OPPS Final
Rule with Comment Period Addenda'' from the list of supporting files.
Open the zipped file and select Addendum B, which is available as both
an Excel file and a text file.
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 services furnished in hospital outpatient
departments as to inpatient services. One commenter stated that under
the hospital 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 hospitals have 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 payment 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 new technology. Where this
review results in reductions in services that are only marginally
beneficial or influences hospitals' choices to not utilize certain
technologies, we believe that these changes could improve, rather than
harm, the quality of care for Medicare beneficiaries because every
service furnished in a hospital carries
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some level of risk to the patient and the beneficiary would be spared
the risk associated with the additional service or different
technology. 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. While we believe hospitals are committed to provide
optimal care to their patients, 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.
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. In addition, commenters asked that CMS study and report
annually to the APC Panel and to the public on the impact of packaged
payment on beneficiary access to care. One commenter believed that the
APC Panel recommended that CMS report annually on the impact of
packaging on net payments for patient care.
Response: 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, as we discuss in
detail in section II.A.2. of this final rule with comment period, 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.
This information is available to support public 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 current and prior proposed and final rules. The APC Panel did not
recommend at either the February 2011 or August 2011 meetings that CMS
should report annually on the impact of packaging on net payments for
patient care.
Comment: Commenters stated 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, but that this
assumption is flawed. Commenters 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. The commenters asked
that CMS require complete and correct coding for packaged services so
that all items and services that are not individually paid 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 rate setting. 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.
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
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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, if a hospital fails 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. If 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: One commenter asked that CMS reinstate separate payment
for radiation oncology guidance procedures because these services are
vital to the safe provision of radiation therapy and unconditionally
packaging payment for them may discourage hospitals from providing
them.
Response: We recognize that radiation oncology guidance services,
like most packaged services, are important to providing safe and high
quality care to patients. However, we continue to believe that
hospitals will invest in services that represent genuinely increased
value to patient care, and if hospitals can furnish them efficiently.
We will continue to pay separately for innovative technologies if a
device meets the conditions for separate payment as a pass-through
device or if a new procedure meets the criteria for payment as a new
technology APC.
After considering the public comments we received, for CY 2012, we
are continuing to package payment for the services for which we
proposed unconditional or conditional packaged payment in the proposed
rule for the reasons set forth above. The HCPCS codes for which payment
will be packaged into payment for the independent separately paid
procedures with which the codes are reported either unconditionally
(for which we continue to assign status indicator ``N''), or
conditionally (for which we continue to assign status indicators
``Q1'', ``Q2'', or ``Q3'') are displayed in Addendum B of this final
rule with comment period (which is referenced in section XVIII. of this
final rule with comment period and available via the Internet on the
CMS Web site). The supporting documents for this CY 2012 OPPS/ASC final
rule with comment period, including but not limited to Addendum B, are
available at www.cms.gov/HospitalOutpatientPPS/HORD. To view the status
indicators by HCPCS code in Addendum B, select ``CMS 1525-FC'' and then
select the folder labeled ``2012 OPPS Proposed Rule Addenda'' or ``2012
OPPS Final Rule With Comment Period Addenda'' from the list of
supporting files. Open the zipped file and select Addendum B, which is
available as both an Excel file and a text file.
The continuation of our standard policy regarding packaging of
drugs and biologicals, implantable biologicals, contrast agents and
diagnostic radiopharmaceuticals is discussed in section V.B. of this
final rule with comment period. We note that an implantable biological
that is surgically inserted or implanted through a surgical incision or
a natural orifice is commonly referred to throughout this final rule
with comment period as an ``implantable biological.''
The creation of a new composite APC for CY 2012 for payment of the
insertion of cardiac resynchronization devices is discussed in section
II.A.2.e.(6) of this final rule with comment period.
4. Calculation of OPPS Scaled Payment Weights
As we proposed in the CY 2012 OPPS/ASC proposed rule (76 FR 42209),
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 2012 shown in Addenda A and B to
this final rule with comment period (which are referenced in section
XVII. of this final rule with comment period and available via the
Internet on the CMS Web site). 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 2012 OPPS/ASC proposed rule (76 FR 42209), for CY
2012, 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
2012 median cost for APC 0606, for CY 2012, 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 2012 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 2011 scaled relative weights to the
estimated aggregate weight using the proposed CY 2012 unscaled relative
weights. For CY 2011, we multiplied the CY 2011 scaled APC relative
weight applicable to a service paid under the OPPS by the volume of
that service from CY 2010 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 2012, we performed the same process using the proposed CY
2012 unscaled weights rather than scaled weights. We then calculated
the weight scaler by dividing the CY 2011 estimated aggregate weight by
the
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proposed CY 2012 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 2012 to estimated total weight in CY 2011 using CY 2010
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 2012 unscaled relative payment weights were
adjusted by multiplying them by a proposed weight scaler of 1.4647 to
ensure that the proposed CY 2012 relative weights are budget neutral.
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 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
2012 OPPS.
We did not receive any public comments on the proposed methodology
for calculating scaled weights from the median costs for the CY 2012
OPPS. Therefore, for the reasons set forth in the proposed rule (76 FR
42209), 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 1.3588 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 (which are referenced in section XVII.
of this final rule with comment period and available via the Internet
on the CMS Web site) incorporate the final 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
purposes of section 1833(t)(3)(C)(iv) of the Act, subject to sections
1833(t)(17) and 1833(t)(3)(F) of the Act, the OPD fee schedule increase
factor is equal to the hospital inpatient market basket percentage
increase applicable to hospital discharges under section
1886(b)(3)(B)(iii) of the Act. In the FY 2012 IPPS/LTCH PPS final rule
(76 FR 51689), consistent with current law, based on IHS Global
Insight, Inc.'s second quarter 2011 forecast of the FY 2012 market
basket increase, the FY 2012 IPPS market basket update is 3.0 percent.
However, sections 1833(t)(3)(F) and 1833(t)(3)(G)(ii) of the Act, as
added by section 3401(i) of the Public Law 111-148 and as amended by
section 10319(g) of such law and further amended by section 1105(e) of
Public Law 111-152, provide adjustments to the OPD fee schedule update
for CY 2012.
Specifically, section 1833(t)(3)(F) requires that the OPD fee
schedule increase factor under subparagraph (C)(iv) be reduced by the
adjustments described in section 1833(t)(3)(F) of the Act.
Specifically, section 1833(t)(3)(F)(i) of the Act requires that the OPD
fee schedule increase factor under subparagraph (C)(iv) be reduced by
the productivity adjustment described in section 1886(b)(3)(B)(xi)(II)
of the Act for 2012 and subsequent years. Section 1886(b)(3)(B)(xi)(II)
of the Act defines the productivity adjustment as equal to the 10-year
moving average of changes in annual economy-wide, private nonfarm
business multifactor productivity (MFP) (as projected by the Secretary
for the 10-year period ending with the applicable fiscal year, year,
cost reporting period, or other annual period) (the ``MFP
adjustment''). We refer readers to the FY 2012 IPPS/LTCH PPS final rule
(76 FR 51690 through 51692) for a discussion of the calculation of the
MFP adjustment. The final MFP adjustment for FY 2012 is 1.0 percentage
point.
We proposed that if more recent data are subsequently available
after the publication of the proposed rule (for example, a more recent
estimate of the market basket and MFP adjustment), we would use such
data, if appropriate, to determine the CY 2012 market basket update and
the MFP adjustment in the CY 2012 final rule. Consistent with this
proposal, in this CY 2012 OPPS/ASC final rule with comment period, we
reduced the OPD fee schedule increase factor for CY 2012 by the final
MFP adjustment of 1.0 percentage point for FY 2012. Because the OPD fee
schedule increase factor is based on the IPPS hospital inpatient market
basket percentage increase, we believe that it is appropriate to apply
the same MFP adjustment that is used to reduce the IPPS market basket
increase to the OPD fee schedule increase factor. Consistent with the
FY 2012 IPPS/LTCH PPS final rule, we applied the updated final FY 2012
market basket percentage increase and the MFP adjustment to the OPD fee
schedule increase factor for the CY 2012 OPPS. We believe that it is
appropriate to apply the MFP adjustment, which is calculated on a
fiscal year basis, to the OPD fee schedule increase factor, which is
used to update the OPPS payment rates on a calendar year basis, because
we believe that it is appropriate for the numbers associated with both
components of the calculation (the underlying OPD fee schedule increase
factor and the productivity adjustment) to be aligned so that changes
in market conditions are aligned.
In addition, section 1833(t)(3)(F)(ii) of the Act requires that the
OPD fee schedule increase factor under subparagraph (C)(iv) be reduced
by the adjustment described in subparagraph (G) for each of 2010
through 2019. For CY 2012, section 1833(t)(3)(G)(ii) of the Act
provides a 0.1 percentage point reduction to the OPD fee schedule
increase factor under subparagraph (C)(iv). Therefore, as we proposed,
we are applying a 0.1 percentage point reduction to the OPD fee
schedule increase factor.
We note that section 1833(t)(F) of the Act provides that
application of this subparagraph may result in the increase factor
under subparagraph (C)(iv) being less than 0.0 for a year, and may
result in payment rates under the payment system under this subsection
for a year being less than such payment rates for the preceding year.
As described in further detail below, we are applying an OPD fee
schedule increase factor of 1.9 percent for the CY 2012 OPPS (3.0
percent, which is the final estimate of the hospital market basket
increase, less the 1.0 percentage point MFP adjustment, less the 0.1
percentage point additional adjustment).
In the CY 2012 OPPS/ASC proposed rule (76 FR 42210), we proposed to
revise 42 CFR 419.32(b)(1)(iv)(B) by adding a new paragraph (3) to
reflect the requirement in section 1833(t)(3)(F)(i) of the Act that,
for CY 2012, we reduce the OPD fee schedule increase factor by the
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multifactor productivity adjustment as determined by CMS, and to
reflect the requirement in section 1833(t)(3)(G)(ii) of the Act, as
required by section 1833(t)(3)(F)(ii) of the Act, that we reduce the
OPD fee schedule increase factor by 0.1 percentage point for CY 2012.
We also proposed to amend Sec. 419.32(b)(1)(iv)(A) to indicate that
the hospital inpatient market basket percentage increase applicable
under section 1886(b)(3)(B)(iii) of the Act is further reduced by the
adjustments necessary to satisfy the requirements in sections
1833(t)(3)(F) and (t)(3)(G) of the Act.
We did not receive any public comments on our proposed adjustments
to the OPD fee schedule increase factor or on the proposed changes to
Sec. 419.32(b)(1)(iv)(B) to add a new paragraph (3). We also did not
receive any public comments on our proposed change to Sec.
419.32(b)(1)(iv)(A). For the reasons discussed above, we are adjusting
the OPD fee schedule increase factor and are making the two changes to
Sec. 419.32 as proposed.
To set the OPPS conversion factor for CY 2012, we increased the CY
2011 conversion factor of $68.876 by 1.9 percent. In accordance with
section 1833(t)(9)(B) of the Act, we further adjusted the conversion
factor for CY 2012 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
1.0005 for wage index changes by comparing total estimated payments
from our simulation model using the FY 2012 IPPS final wage indices to
those payments using the current (FY 2011) IPPS wage indices, as
adopted on a calendar year basis for the OPPS.
For CY 2012, 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 2012, we are finalizing a payment adjustment policy for
dedicated cancer hospitals, as discussed in section II.F. of this final
rule with comment period. Consistent with the final cancer hospital
payment adjustment policies discussed in section II.F. of this final
rule with comment period, we calculated a CY 2012 budget neutrality
adjustment factor of 0.9978 by comparing the estimated total payments
under section 1833(t) of the Act, including the cancer hospital
adjustment under section 1833(t)(18)(B) and 1833(t)(2)(E) of the Act,
to hospitals described in section 1886(d)(1)(B)(v) of the Act to the
estimated total payments under section 1833(t) of the Act if there were
no cancer hospital adjustment, including TOPS that would otherwise be
made to hospitals described in section 1886(d)(1)(B)(v) of the Act. As
discussed in section II.F. of this final rule with comment period, in
terms of dollars, the budget neutrality payment reduction is estimated
to be $71 million for CY 2012; that is, we estimate that total payments
with a cancer hospital payment adjustment would increase total payments
by $71 million and this amount needs to be offset by adjusting other
payments. Therefore, we applied a budget neutrality adjustment factor
of 0.9978 to the conversion factor to make the hospital adjustment
budget neutral.
For this final rule with comment period, we estimate that pass-
through spending for both drugs and biologicals and devices for CY 2012
will equal approximately $89 million, which represents 0.22 percent of
total projected CY 2012 OPPS spending. Therefore, the conversion factor
is also adjusted by the difference between the 0.15 percent estimate of
pass-through spending for CY 2011 and the 0.22 percent estimate of CY
2012 pass-through spending, resulting in an adjustment for CY 2012 of
0.07 percent. Finally, estimated payments for outliers remain at 1.0
percent of total OPPS payments for CY 2012.
The OPD fee schedule increase factor of 1.9 percent for CY 2012
(that is, the estimate of the hospital market basket increase of 3.0
percent less the 1.0 percentage point MFP adjustment and less the 0.1
percentage point adjustment which were necessary in order to comply
with the requirements of the Affordable Care Act), the required wage
index budget neutrality adjustment of approximately 1.0005, the cancer
hospital payment adjustment of 0.9978, and the adjustment of 0.07
percent of projected OPPS spending for the difference in the pass-
through spending result in a conversion factor for CY 2012 of $70.016.
This conversion factor for CY 2012 of $70.016 reflects the full OPD fee
schedule increase, after including the adjustments which were necessary
in order to comply with the requirements of the Affordable Care Act.
As we stated in the proposed rule, hospitals that fail to meet the
reporting requirements of the Hospital OQR Program would continue to be
subject to a further reduction of additional 2.0 percentage points from
the OPD fee schedule increase factor adjustment to the conversion
factor that would be used to calculate the OPPS payment rates made for
their services as required by section 1833(t)(17) of the Act. For a
complete discussion of the Hospital OQR requirements and the payment
reduction for hospitals that fail to meet those requirements, we refer
readers to section XIV. E. of the proposed rule and this final rule
with comment period. To calculate the CY 2012 reduced market basket
conversion factor for those hospitals that fail to meet the
requirements of the Hospital OQR Program for the full CY 2012 payment
update, we are making all other adjustments discussed above, but using
a reduced OPD fee schedule update factor of -0.1 percent (that is, the
OPD fee schedule increase factor of 1.9 percent 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 Hospital OQR requirements). This
resulted in a reduced conversion factor for CY 2012 of $68.616 for
those hospitals that fail to meet the Hospital OQR requirements (a
difference of -$1.40 in the conversion factor relative to those
hospitals that met the Hospital OQR requirements).
We did not receive any public comments on our proposed methodology
for calculating the CY 2012 conversion factor.
In summary, for CY 2012, we are using a final conversion factor of
$70.016 in the calculation of the national unadjusted payment rates for
those items and services for which payment rates are calculated using
median costs. We did not receive any public comments on this proposal.
Therefore, for the reasons we discuss above, we are amending Sec.
419.32(b)(1)(iv)(B) by adding a new paragraph (3) to reflect the
reductions to the OPD fee schedule increase factor that are required
for CY 2012 in order to satisfy the statutory requirements of sections
1833(t)(3)(F) and (t)(3)(G)(ii) of the Act. We also are amending Sec.
419.32(b)(1)(iv)(A) to indicate that the hospital inpatient market
basket percentage increase is reduced by the adjustments described in
Sec. 419.32(b)(1)(iv)(B). We are using a reduced conversion factor of
$68.616 in the calculation of payments for hospitals that fail to
comply with the Hospital OQR requirements to reflect the reduction to
the OPD fee schedule increase factor that is required by section
1833(t)(17) of the Act for these hospitals.
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 portion of the OPPS payment rate is called the OPPS
[[Page 74191]]
labor-related share. 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 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 2012 OPPS/ASC
proposed rule (76 FR42211), we did not propose to revise this policy
for the CY 2012 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 2012 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 also applies to that hospital
under the OPPS. As initially explained in the September 8, 1998 OPPS
proposed rule, we believed that using the IPPS wage index as the source
of an adjustment factor for the OPPS is reasonable and logical, given
the inseparable, subordinate status of the HOPD within the hospital
overall. In accordance with section 1886(d)(3)(E) of the Act, the IPPS
wage index is updated annually.
The Affordable Care Act contains provisions that affect the final
FY 2012 IPPS wage index values, including revisions to the
reclassification wage 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 (76 FR 26021). In addition, section 10324 of the
Affordable Care Act requires 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 of the Affordable Care Act specifies that, for
services furnished beginning CY 2011, the wage adjustment factor
applicable to any HOPD 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 2012 OPPS, as we proposed, we are
continuing to adjust the FY 2012 IPPS wage index, as adopted on a
calendar year basis for the OPPS, for all hospitals paid under the
OPPS, including non-IPPS hospitals (providers that are not paid under
the IPPS) located in a frontier State, to 1.00 in instances where the
FY 2012 wage index (that reflects Medicare Geographic Classification
Review Board (MGCRB) reclassifications, the application of the rural
floor, and the 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 will 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
will also apply for the affiliated HOPD. We refer readers to the FY
2011 and FY 2012 IPPS/LTCH PPS final rules (75 FR 50160 and 76 FR
51581, respectively) 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.
In addition to the changes required by the Affordable Care Act, we
note that the FY 2012 IPPS wage indices continue to reflect a number of
adjustments implemented over the past few years, including, but not
limited to, reclassification of hospitals to different geographic
areas, the rural floor provisions, an adjustment for occupational mix,
and an adjustment to the wage index based on commuting patterns of
employees (the out-migration adjustment). We refer readers to the FY
2012 IPPS/LTCH PPS final rule (76 FR 51581 through 51605) for a
detailed discussion of all changes to the FY 2012 IPPS wage indices. 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.
Section 3137 of the Affordable Care Act extended, through FY 2010,
section 508 reclassifications as well as certain special exceptions.
The most recent extension of the provision was included in section 102
of the Medicare and Medicaid Extender Act, which extends, through FY
2011, section 508 reclassifications as well as certain special
exceptions. The latest extension of these provisions expired on
September 30, 2011, and is no longer applicable effective with FY 2012.
As we did for CY 2010, we revised wage index values for certain special
exception hospitals from January 1, 2011 through December 31, 2011,
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.
In addition, because the OPPS pays on a calendar year basis, the
effective date under the OPPS for all other nonsection 508 and non-
special exception providers was July 1, 2011, instead of April 1, 2011,
so that these providers also received a full 6 months of payment under
the revised wage index comparable to the IPPS.
For purposes of the OPPS, as we proposed, we are continuing our
policy in CY 2012 of allowing non-IPPS hospitals paid under the OPPS to
qualify for the out-migration adjustment if they are located in a
section 505 out-migration county (section 505 of the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003 (MMA)).
We note that, because non-IPPS hospitals cannot reclassify, they are
eligible for the out-migration wage adjustment. Table 4J listed in the
FY 2012 IPPS/LTCH PPS final rule (and made available via the Internet
on the CMS Web site at: http://www.cms.gov/AcuteInpatientPPS/01_overview.asp) identifies counties eligible for the out-migration
adjustment and hospitals that will receive the adjustment for FY 2012.
We note that, beginning with FY 2012, under the IPPS, an eligible
hospital that waives its Lugar status in order to receive the out-
migration adjustment has effectively waived its deemed urban status
and, thus, is rural for all purposes under the IPPS, including being
considered rural for the disproportionate share hospital (DSH)
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payment adjustment, effective for the fiscal year in which the hospital
receives the out-migration adjustment. We refer readers to the FY 2012
IPPS/LTCH PPS final rule (76 FR 51599) for a more detailed discussion
on the Lugar redesignation waiver for the out-migration adjustment). As
we have done in prior years, we are including 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 2012 OPPS. Addendum L is referenced in section XVII. of
this final rule with comment period and available via the Internet on
the CMS Web site.
As stated earlier in this section, our longstanding policy for OPPS
has been to adopt the final wage index used in IPPS. Therefore, for
calculating OPPS payments in CY 2012, we used the FY 2012 IPPS wage
indices. However, section 1833(t)(2)(D) of the Act confers broad
discretionary authority upon the Secretary in determining the wage
adjustment factor used under the OPPS. Specifically, this provision
provides that ``subject to paragraph (19), the Secretary shall
determine a wage adjustment factor to adjust the portion of payment and
coinsurance attributable to labor-related costs for relative
differences in labor and labor-related costs across geographic regions.
* * *'' In other prospective payment systems, we do not adopt the
adjustments applied to the IPPS wage index, such as the out-migration
adjustment, reclassifications, and the rural floor. For the OPPS, using
the IPPS wage index as the source of an adjustment factor for
geographic wage differences has, in the past, been both reasonable and
logical, given the inseparable, subordinate status of the outpatient
department within the hospital overall.
However, in recent years, we have become concerned that hospitals
converting their status significantly inflate wage indices across a
State. In the FY 2008 IPPS final rule (72 FR 47324 and 47325), we
discussed a situation where a CAH may have converted back to IPPS
status in order to increase the rural floor.
The FY 2012 IPPS/LTCH PPS final rule (76 FR 51824) shows the impact
of this CAH conversion. Hospitals in Massachusetts can expect an
approximate 8.7percent increase in IPPS payments due to the conversion
and the resulting increase of the rural floor. Our concern is that the
manipulation of the rural floor is of sufficient magnitude that it
requires all hospital wage indices to be reduced approximately 0.62
percent as a result of nationwide budget neutrality for the rural floor
(or more than a 0.4 percent total payment reduction to all IPPS
hospitals).
In addition to the CAH conversion, we recently received two
requests from urban hospitals to convert to rural hospital status under
section 1886(d)(8)(E) of the Act, which would inflate other States'
rural floors, through the conversion of what would otherwise be urban
hospitals to rural status. While we recognize that conversions from
urban-to-rural status are permitted under section 1886(d)(8)(E) of the
Act, we are concerned with individual urban to rural conversions
allowing payment redistributions of this magnitude.
We believe the above discussions demonstrate that the rural floor
is resulting in significant disparities in wage index and, in some
cases, resulting in situations where all hospitals in a State receive a
wage index higher than that of the single highest wage index urban
hospital in the State. As stated above, the statute does not require
the Secretary to use the IPPS wage adjustment factor to wage adjust
OPPS payments and copayments, nor to apply to OPPS payment and
copayment calculations the same wage adjustment factor that the law
requires be applied to IPPS payments.
In the CY 2012 OPPS/ASC proposed rule (76 FR 42212), we stated that
we were considering the adoption of a policy that would address
situations where IPPS wage index adjustments, such as the rural floor,
result in significant fluctuations in the wage index within a State.
One option we proposed would be not to apply the rural floor wage index
at all in the OPPS where the rural floor is set by a small number of
hospitals in a State and results in a rural floor that benefits all
hospitals in the State. Alternatively, we proposed that we could apply
within-State rural budget neutrality to the OPPS wage index as we did
for both the IPPS and OPPS wage index beginning in FY 2009. In the
proposed rule, we sought public comment on whether to: (1) Adopt the
IPPS wage index for the OPPS in its entirety including the rural floor,
geographic reclassifications, and all other wage index adjustments (our
current policy); (2) adopt the IPPS wage index for the OPPS in its
entirety except when a small number of hospitals set the rural floor
for the benefit of all other hospitals in the State, and, if so, then
not apply the rural floor wage index; (3) adopt the IPPS wage index for
the OPPS in its entirety except apply rural floor budget neutrality
within each State instead of nationally; or (4) adopt another decision
rule for when the rural floor should not be applied in the OPPS when we
have concerns about disproportionate impact.
We also requested public comments on an option that we were
considering adopting for both the IPPS and the OPPS, where we would
determine the applicable rural wage index floor using only data from
those hospitals geographically rural under OMB and the Census Bureau's
MSA designations, and without including wage data associated with
hospitals reclassified from urban to rural status under section
1886(d)(8)(E) of the Act. Such a policy would eliminate the incentive
to reclassify from urban to rural status primarily to increase rural
floors across a State, and would ensure that the rural floor is based
upon hospitals located in rural areas.
Comment: Commenters that were in favor of maintaining the current
policy (option 1 listed above) of adopting the IPPS wage indices under
the OPPS cited several different reasons for their choice. Several
commenters believed that hospital inpatient and outpatient departments
are ``inseparable'' because they are subject to the same labor cost
environment, and, therefore, should have the same wage index where
applicable. Other commenters preferred maintaining the current wage
index policy and implementing wage index changes in the context of
comprehensive wage index reform. These commenters believed that only
comprehensive wage index reform can revise the wage index in such as
way as ``to minimize volatility of the wage index and remove incentives
to game the system.'' Commenters stated that an additional reason for
maintaining the current policy was that different wage indices for
inpatient and outpatient payments would add a level of administrative
complexity that is overly burdensome and unnecessary.
Several commenters expressed a preference for wage index policy
option 2 included in the proposed rule (to adopt the IPPS wage index
for the OPPS in its entirety except when a small number of hospitals
set the rural floor for the benefit of all other hospitals in the
State, and, if so, then not apply the rural floor wage index). These
commenters typically viewed this option to be the best in terms of
addressing current inequities. However, some of the commenters
requested that CMS explicitly define a ``small number'' threshold as
well as what is considered as a ``benefit'' for all other hospitals in
the State. Some commenters that supported option 2 preferred option 2
to option 3 (the adoption of the IPPS wage index policies but
application of statewide rather than national budget
[[Page 74193]]
neutrality for the rural floor policy). Commenters that preferred
option 2 rather than option 3 argued that a national level adjustment
was in keeping with Congressional intent, especially given that
Congress enacted legislation to establish national budget neutrality
for the rural floor in the IPPS under the Affordable Care Act
(effective in FY 2011). These commenters also were concerned about CMS
deciding when budget neutrality adjustments should be applied at the
State versus national levels.
Several commenters favored option 3 because they supported the
application of statewide level budget neutrality for the rural floor
policy. These commenters favored basing the wage index on Bureau of
Labor Statistics (BLS) data rather than hospital cost reports but
believed that, in the absence of broader wage index reform, option 3
was the most equitable policy. One commenter, although supportive of
systematic wage index reform, stated that CMS ``should not wait for
reform to address obvious and significant immediate problems'' and
therefore advocated for option 3.
Instead of recommending other policy options, for the fourth
potential wage index policy option (adopting another decision rule),
most commenters simply requested further detail. Several commenters did
not exhibit any preferences for any specific wage index policy options,
choosing instead to comment generally about issues of concern. One
commenter believed that ``looking at one policy in isolation serves
only to address one issue while likely creating other inequities in the
system.'' Another commenter was concerned that any new rule could
unnecessarily harm rural providers. Another commenter that supported
systematic wage index reform advocated not making changes until reports
from the Institute of Medicine are completed and the CMS report to
Congress, which is due on December 31, 2011, are fully analyzed.
Commenters requested further detail to formulate a policy position on
the four options presented and urged CMS to include impact analyses for
the final rule.
Response: We appreciate the public comments. We acknowledge that
there may be inequities in the current application of the wage index
policy and its various adjustments. This is why we described various
methods and wage index options that we might consider under the OPPS to
address manipulation of wage index adjustment policies, and, in this
specific case, the rural floor wage index and its national level budget
neutrality.
In the CY 2012 OPPS/ASC proposed rule, we referred specifically to
the conversion of one CAH to IPPS status to increase the rural floor
for the State, which would increase IPPS and OPPS payments to that
State, while decreasing IPPS and OPPS payments to hospitals in other
States, under a policy in which the rural floor wage index budget
neutrality was applied at the national level. Similarly, we are aware
of requests from urban hospitals to convert to rural hospital status,
which would inflate those States' rural floors. While we recognize that
conversions from urban-to-rural status are permitted under section
1886(d)(8)(E) of the Act, we are concerned with individual urban-to-
rural conversions that would result in payment redistributions of this
magnitude.
However, we agree with the commenters that stated that maintaining
the current policy for CY 2012 would be the best option, given the
broader wage index reform currently under development and
consideration. This includes the Report to Congress with a plan for
wage index reform, which is due December 31, 2011, under the Affordable
Care Act. We will continue to consider these policy options in future
rulemaking, especially in the context of other significant wage index
revisions. In response to commenters' recommendations that we provide
more detailed impact analysis, we are providing a State level impact
table, similar to the table provided in the FY 2012 IPPS/LTCH final
rule (76 FR 51824 through 51825), that displays the impact of the rural
floor and imputed floor policies with national budget neutrality on
OPPS hospitals and their payments by State. This table is included in
section XX. of this final rule with comment period.
Comment: A few commenters responded to our request for comments on
setting the applicable rural wage index floor using only data from
hospitals that are geographically rural according to OMB and MSA
designations, and without including wage data associated with hospitals
reclassified from urban to rural status under section 1886(d)(8)(E) of
the Act. One commenter opposed using data from geographically rural
hospitals alone in setting the rural floor because reclassified
hospitals are considered rural for all payment policies. Several
commenters agreed that wage data associated with hospitals that are
reclassified should be excluded from calculation of the rural floor.
One commenter questioned why it is necessary to maintain the rural
floor wage index policy under the OPPS.
Response: For the reasons stated above, in this final rule with
comment period, we are adopting the IPPS wage index and its adjustments
for use under the OPPS. However, in the IPPS proposed rule for FY 2013,
we may address the issue of including hospitals reclassified from urban
to rural status under section 1886(d)(8)(E) of the Act.
Comment: One commenter asked whether an increase similar to the 1.1
percent increase included in the FY 2012 IPPS/LTCH final rule (76 FR
51788) should also apply under the OPPS.
Response: The increase cited by the commenter is limited to IPPS
payments. Budget neutrality (including that for the rural floor) is
calculated prospectively each year under the OPPS. While we have
historically adopted the IPPS wage index when developing the wage
indices for calculating payments under the OPPS, the budget neutrality
factors that applied to the standardized amount under IPPS as a result
of the rural floor were not applied to the OPPS conversion factor, and
thus would not have any effect on OPPS budget neutrality.
After consideration of the public comments we received, we are
finalizing our policy to adopt the FY 2012 IPPS wage index for the CY
2012 OPPS in its entirety including the rural floor, geographic
reclassifications, and all other wage index adjustments.
With the exception of the out-migration wage adjustment table
(Addendum L to this final rule with comment period, which is available
via the Internet on the CMS Web site), which includes non-IPPS
hospitals paid under the OPPS, we are not reprinting the final FY 2012
IPPS 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
final FY 2012 IPPS wage index tables.
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
[[Page 74194]]
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 in which the most recent cost report reflects an all-
inclusive rate status (Medicare Claims Processing Manual (Pub. 100-04),
Chapter 4, Section 10.11). As we proposed in the CY 2012 OPPS/ASC
proposed rule (76 FR 42213), we are updating the default ratios for CY
2012 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.
We proposed to continue 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 2012 OPPS relative weights. Table 11 published in the
proposed rule listed the proposed CY 2012 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 CCRs 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 2012 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 for
setting the CY 2012 OPPS relative weights. We used this methodology to
calculate the statewide average default CCRs listed in Table 11 below.
For this CY 2012 OPPS/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 2010 and 53 percent were for cost reporting periods ending
in CY 2009. 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. The weighted CCR is used for Maryland because it
takes into account each hospital's volume, rather than treating each
hospital equally. We refer readers to the CY 2005 OPPS final rule with
comment period (69 FR 65822) for further discussion and the rationale
for our longstanding policy of using the national average CCR for
Maryland. In general, observed changes in the statewide average default
CCRs between CY 2011 and CY 2012 are modest and the few significant
changes are associated with areas that have a small number of
hospitals.
Table 11 below lists the finalized statewide average default CCRs
for OPPS services furnished on or after January 1, 2012.
BILLING CODE 4120-01-P
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BILLING CODE 4120-01-C
E. OPPS Payments to Certain Rural and Other Hospitals
1. Hold Harmless Transitional Payment Changes
When the OPPS was implemented, every provider was eligible to
receive an additional payment adjustment (called either transitional
corridor payments or transitional outpatient payments (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 TOPs were
temporary payments for most providers and intended to ease their
transition from the prior reasonable cost-based payment system to the
OPPS system. There are two exceptions to this temporary provision,
cancer hospitals and children's hospitals. Such a hospital could
receive TOPs to the extent its PPS amount was less than its pre-BBA
amount in the applicable year. Section 1833(t)(7)(D)(i) of the Act
originally provided for TOPs to rural hospitals with 100 or fewer beds
for covered OPD services furnished before January 1, 2004. However,
section 411 of Pub. L. 108-173 (the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003) 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 TOPs 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 TOPs 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 (the Deficit Reduction Act of
2005) extended 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. Section 5105 also reduced the TOPs
to rural hospitals from 100 percent of the difference between the
provider's OPPS payments and the pre-BBA amount. 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 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 authorized under
section 411 of Public Law 108-173. 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
[[Page 74199]]
year, for services provided before January 1, 2011, and section 3121(b)
of the Affordable Care Act removed 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 final rule with
comment period (75 FR 71882), we updated Sec. 419.70(d) of the
regulations to reflect the TOPs extensions and amendments described in
section 3121 of the Affordable Care Act.
Section 108 of the Medicare and Medicaid Extenders Act of 2010
(MMEA) (Pub. L. 111-309) extended for 1 year the hold harmless
provision for a rural hospital with 100 or fewer beds that is not an
SCH (as defined in section 1886(d)(5)(D)(iii) of the Act). Therefore,
for such a hospital, for services furnished before January 1, 2012,
when the PPS amount 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 payments. In addition, section 108 of the
MMEA also extended for 1 year the hold harmless provision for an SCH
(as defined in section 1886(d)(5)(D)(iii) of the Act (including EACHs)
and removed the 100-bed limit applicable to such SCHs for covered OPD
services furnished on or after January 1, 2010 and before January 1,
2012. Therefore, for such hospitals, for services furnished before
January 1, 2012, when the PPS amount 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 payments. Effective for
services provided on or after January 1, 2012, a rural hospital with
100 or fewer beds that is not an SCH and an SCH (including EACHs) will
no longer be eligible for TOPs, in accordance with section 108 of the
MMEA. In the CY 2012 OPPS/ASC proposed rule (76 FR 42216), we proposed
to revise our regulations at Sec. 419.70(d) to conform the regulation
text to the self-implementing provisions of section 108 of the MMEA
described above.
We did not receive any public comments on our proposed policy to
update the language in Sec. 419.70(d) of the regulations. For the
reasons we specified in the CY 2012 OPPS/ASC proposed rule (76 FR 42215
and 42216), we are finalizing our proposed revisions of Sec. 419.70(d)
without modification.
2. Adjustment for Rural SCHs and EACHs Under Section 1833(t)(13)(B) of
the Act
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 Pub. L. 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, three 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 we 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 CYs 2008 through 2011. 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 2012 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 (76
FR 46232). In the CY 2012 OPPS/ASC proposed rule, we indicated that we
intend to reassess the 7.1 percent adjustment in the near future by
examining differences between urban hospitals' costs and rural
hospitals' costs using updated claims data, cost reports, and provider
information.
We did not receive any public comments regarding the proposed
continuation of the 7.1 rural adjustment. We are finalizing our CY 2012
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 2012, excluding separately payable
drugs and biologicals, devices paid under the pass-through payment
policy, and items paid at charges reduced to costs because we continue
to believe that the adjustment is appropriate for application in CY
2012.
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
[[Page 74200]]
are permanently held harmless to their ``pre-BBA'' amount, and they
receive transitional outpatient payments (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 covered outpatient services for the portions of the
hospital's cost reporting period (or periods) occurring in the current
year and the base payment-to-cost ratio (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 or Form CMS-2552-10, as applicable) 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 PCR for the cancer hospitals is 0.83,
or the outpatient payment with TOPs to cancer hospitals is 83 percent
of reasonable cost.
Section 3138 of the Affordable Care Act amended section 1833(t) of
the Social Security Act by adding a new paragraph (18), which instructs
the Secretary to conduct a study to determine if, under the OPPS,
outpatient costs incurred by cancer hospitals described in section
1886(d)(1)(B)(v) of the Act with respect to APC groups exceed the costs
incurred by other hospitals furnishing services under 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 provides that if the Secretary
determines that cancer hospitals' costs with respect to APC groups are
determined to be greater than the costs of other hospitals furnishing
services under section 1833(t) of the Act, the Secretary shall provide
an appropriate adjustment under section 1833(t)(2)(E) of the Act to
reflect these higher costs. 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 with
respect to APC groups 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 to the extent their costs with
respect to APC groups exceeded those costs incurred by other hospitals
furnishing services under section 1833(t) of the Act. With such a small
sample size (11 out of approximately 4,000 hospitals paid under the
OPPS), we were 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 determine
a proposed cancer hospital adjustment.
As discussed in the CY 2011 OPPS/ASC proposed rule (75 FR 46235),
while we chose not to use our standard models to calculate a proposed
cancer hospital adjustment, we determined it still would be appropriate
to construct our usual provider-level analytical dataset consisting of
variables related to assessing costliness with respect to APC groups,
including average cost per unit for a hospital and the hospital's
average APC relative weight as an indicator of the hospital's resource
intensity, as measured by the APC relative weights. We used these
variables to calculate univariate statistics that describe the
costliness with respect to APC groups 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 believed 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 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. This analytical dataset included 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 the CY 2011 OPPS. We then summarized
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. After summarizing modeled payment to the hospital-level, we
removed 48 hospitals in Puerto Rico
[[Page 74201]]
from our dataset because we did not believe that their cost structure
reflected 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 with respect to APC
groups under the modeled OPPS system, and they allowed us to assess the
relative costliness of classes of hospitals under the proposed CY 2011
OPPS. 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 12 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 observed 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 remained 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 with respect to APC groups than other hospitals furnishing
services under the OPPS, even without the inferential statistical
models that we typically employ.
[GRAPHIC] [TIFF OMITTED] TR30NO11.021
3. CY 2011 Proposed Payment Adjustment for Certain Cancer Hospitals
Having reviewed the cost data from the standard analytic database
and determined that cancer hospitals are more costly with respect to
APC groups than other hospitals furnishing services under 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 for CY
2011 based on cost report data. Analyses on
[[Page 74202]]
our standard analytic database and descriptive statistics presented in
Table 12 above did not consider TOPs in assessing costliness of cancer
hospitals relative to other hospitals furnishing services under section
1833(t) of the Act. There were several reasons for this. One reason was
that 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 on 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 a
relative weight. 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. These data include 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 used
this aggregate cost and payment data to examine the cancer hospitals'
OPPS PCR and compare these to the OPPS PCR for other hospitals. PCRs
calculated from the most recent cost report data available at the time
of the CY 2011 OPPS/ASC proposed rule also indicated that costs
relative to payments at cancer hospitals were 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 Hospital Cost Report Information System (HCRIS)
that we used to calculate the CCRs that were used to estimate median
costs for the CY 2011 OPPS. We limited the dataset to the hospitals
with CY 2009 claims data that we used to model the CY 2011 proposed APC
relative weights.
We estimated that, on average, the OPPS payments to the 11 cancer
hospitals, not including TOPs, were approximately 62 percent of
reasonable cost (that is, we calculated a PCR of 0.615 for the cancer
hospitals), whereas we estimated that, on average, the OPPS payments to
other hospitals furnishing services under the OPPS were approximately
87 percent of reasonable cost (resulting in a PCR of 0.868).
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 furnishing services under the OPPS and
our findings 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, we proposed an
adjustment for cancer hospitals to reflect these higher costs,
effective January 1, 2011. 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 believed that an
appropriate adjustment would redistribute enough payments from other
hospitals furnishing services under the OPPS to the cancer hospitals to
give cancer hospitals a PCR that was comparable to the average PCR for
other hospitals furnishing services 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 other hospitals furnishing services
under the OPPS (0.868) in the CY 2011 dataset. This would be
accomplished by adjusting each cancer hospital's OPPS APC payment by
the percentage difference between the hospital's individual PCR
(without TOPs) and the weighted average PCR of the other hospitals
furnishing services under the OPPS. This cancer hospital payment
adjustment proposed for CY 2011 would have resulted in an estimated
aggregate increase in OPPS payments to cancer hospitals of 41.2 percent
and a net increase in total payments, including TOPs, of 5 percent for
CY 2011.
4. Proposed CY 2011 Cancer Hospital Payment Adjustment Was Not
Finalized
The public comments associated with the cancer hospital adjustment
that we proposed for CY 2011 are detailed in the CY 2011 OPPS/ASC final
rule with comment period (75 FR 71886 through 71887). Many commenters
urged CMS to consider TOPs when calculating the cancer hospital payment
adjustment, stating that the proposed methodology results, largely, in
a change in the form of outpatient payments to cancer hospitals by
shifting payment from hold harmless payment under the TOPs provision to
APC payments. Noting 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 CY 2011 proposal, commenters also suggested
that the associated budget neutral payment reduction of 0.7 percent was
not appropriate or equitable to other OPPS hospitals. Commenters also
expressed concern that the proposed payment adjustment would increase
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
would experience higher copayments due to the proposed methodology.
These commenters encouraged CMS to implement the adjustment in a way
that does not increase beneficiary copayments. As indicated in the CY
2011 OPPS/ASC final rule with comment period (75 FR 71887), because the
many public comments we received identified a broad range of very
important issues and concerns associated with the proposed cancer
hospital payment adjustment, we determined that further study and
deliberation was necessary and, therefore, we did not finalize the CY
2011 proposed payment adjustment for certain cancer hospitals.
5. Payment Adjustment for Certain Cancer Hospitals for CY 2012
After further review and deliberation of the issues associated with
the cancer hospital payment adjustment, in the CY 2012 OPPS/ASC
proposed rule, we proposed a cancer hospital payment adjustment
reflecting the same approach as we took in the CY 2011 OPPS/ASC
proposed rule, that is, an adjustment under which cancer hospitals
would receive additional payments (based on estimates) so that each
cancer hospital's PCR would be comparable to the weighted average PCR
for other hospitals furnishing services under section 1833(t) of the
Act. Therefore, for services furnished on and after January 1, 2012, we
proposed that, for a cancer hospital with an individual PCR below the
weighted average PCR for other hospitals furnishing services under the
OPPS in the CY 2012 dataset, we would make a hospital-specific payment
adjustment by adjusting the wage-adjusted OPPS payment for covered OPD
services (except devices receiving pass-through status because these
items and services are always paid at the estimated full cost and,
therefore, a
[[Page 74203]]
payment adjustment above zero percent is unnecessary) furnished on and
after January 1, 2012, by the percent difference between the hospital's
individual PCR and the weighted average PCR of other hospitals
furnishing services under the OPPS in the CY 2012 dataset. This
methodology resulted in estimated percentage payment adjustments for
the 11 cancer hospitals that ranged between 10.1 percent and 61.8
percent, with an estimated aggregate increase in OPPS payment to cancer
hospitals of 39 percent for CY 2012 and an estimated net increase in
total payments, including TOPs, of 9 percent.
Because section 7101 of the Affordable Care Act expanded the 340B
drug program to include certain cancer hospitals, we also proposed that
the cancer hospital payment adjustment be recalculated each year. The
340B drug program allows certain hospitals to purchase certain
outpatient drugs at reduced prices. We understand from commenters that,
currently, two cancer hospitals participate in the 340B program.
However, inclusion of cancer hospitals in the 340B drug program should
lower drug costs at participating cancer hospitals going forward and,
therefore, may cause changes in each cancer hospital's PCR compared to
the previous year's calculation.
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 to other hospitals 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 would increase 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. The commenters encouraged CMS to implement
the adjustment in a way that does not increase beneficiary copayments,
such as providing the adjustment amount in aggregate instead of on a
per claim basis through enhanced APC payments.
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. The commenters also
indicated that, because outliers were included in the calculation of
hospital PCRs, application of the payment adjustment to the APC payment
amount will result in PCRs less than the intended target for cancer
hospitals with relatively large outlier payments and suggested that the
payment adjustment be applied to outlier payments as well as APC
payments. In addition, the commenters opposed annual recalculation of
the cancer adjustment stating that CMS should not expect significant
cost savings at the cancer hospitals as a result of the inclusion of
cancer hospitals in the 340B drug program and that the cancer hospitals
require payment stability and predictability over the long term. Other
commenters supported the proposal to annually recalculate the cancer
hospital adjustment, stating that this will ensure more equitable
payments. In addition, these commenters indicated that CMS must make
the payment adjustment effective for services furnished on or after
January 1, 2011, in order to comply with section 3138 of the Affordable
Care Act.
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 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. This commenter also 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 the additional payments to cancer hospitals be delayed
until these quality data are available to serve as a basis for the
payment adjustment.
Response: We analyzed the various issues raised by commenters, and
in this final rule with comment period, we are adopting final policies
that reflect a number of modifications to our proposed policies. We
believe that a number of points raised by the commenters have merit
and, consistent with our broad authority under the statute, we are
adopting some (but not all) of their recommendations.
As discussed above, section 3138 of the Affordable Care Act added a
new section 1833(t)(18) to the Social Security Act, providing for an
adjustment under section 1833(t)(2)(E) of the Social Security Act to
address higher costs incurred by cancer hospitals. Section
1833(t)(2)(E) of the Act, in turn, directs the Secretary to establish,
``in a budget neutral manner,'' payment ``adjustments as determined to
be necessary to ensure equitable payments, such as adjustments for
certain classes of hospitals.''
[[Page 74204]]
Under sections 1833(t)(18) and 1833(t)(2)(E) of the Social Security
Act, the agency's authority with respect to the cancer hospital
adjustment is broad; similarly, under section 1833(t)(2)(E) of the Act,
the agency's authority with respect to calculating budget neutrality is
broad. In contrast, the provision of the statute for calculating TOPs
is prescriptive.
Commenters requested that CMS maintain TOPs at their current level,
that is, calculate TOPs by ignoring the cancer hospital payment
adjustment under sections 1833(t)(18) and 1833(t)(2)(E) of the Act.
Under the statute, however, the calculation of TOPs is directly tied to
what is paid under section 1833(t) of the Act. Specifically, under
section 1833(t)(7)(D)(ii) of the Act, ``for covered OPD services for
which the PPS amount is less than the pre-BBA amount, the amount of
payment under this subsection [1833(t)] shall be increased by the
amount of such difference.'' The ``PPS amount'' means, with respect to
covered OPD services, ``the amount payable under this title [Title 18]
for such services (determined without regard to this paragraph) * * *''
(section 1833(t)(7)(E) of the Act). Under this provision, the cancer
hospital payment adjustment is included in the calculation of the ``PPS
amount'' because it is an adjustment under sections 1833(t)(18) and
1833(t) (2)(E) of the Act and, therefore, is the ``amount payable under
this title.'' To the extent the PPS amount is less than the pre-BBA
amount, a cancer hospital would qualify for a TOP.
With respect to the issue of establishing, in a budget neutral
manner, the cancer hospital payment adjustment, we agree with the
commenters that it is appropriate to consider that, to some extent, the
cancer hospital payment adjustment changes the form of payments (from
TOPs to cancer hospital adjustment payments). The cancer hospital
payment adjustment presents a unique circumstance insofar as the cancer
hospital adjustment can result in lower TOPs. Consistent with section
1833(t)(2)(E) of the Act, we agree that, in determining the baseline
for the budget neutrality calculation, it is appropriate to consider
TOPs that would otherwise be made if there were no cancer hospital
payment adjustment. In determining the budget neutrality adjustment
factor, we compare estimated CY 2012 total payments with the cancer
hospital payment adjustment under sections 1833(t)(18) and
1833(t)(2)(E) of the Act to estimated CY 2012 total payments without a
cancer hospital payment adjustment, taking into account TOPs that would
otherwise be made in the absence of a cancer hospital payment
adjustment. The inclusion of TOPs in the baseline significantly
increases the baseline, and accordingly decreases the amount that other
payments need to be reduced to offset the increased payments resulting
from the cancer hospital payment adjustment. The budget neutrality
adjustment factor for the cancer hospital payment adjustment is 0.9978.
In percentage terms, the budget neutrality reduction to the conversion
factor is 0.2 percent in this final rule with comment period, as
opposed to 0.7 percent in the proposed rule. In dollar terms, the
budget neutral payment reduction associated with the cancer hospital
payment adjustment is an estimated $71 million for CY 2012 based on
updated cost report information. That is, the cancer hospital payment
adjustment is estimated to increase total payments by $71 million over
the baseline (which accounts for TOPs) and this amount must be offset
by reductions in other payments (resulting in the 0.2 percent reduction
to the conversion factor). For this final rule with comment period, we
are adopting the above-described approach of calculating budget
neutrality, consistent with our broad authority under the statute, for
the reasons stated above and because we believe it will increase equity
to hospitals paid under the OPPS that are not cancer hospitals, as
urged by the commenters.
In response to commenters who urged us to implement the cancer
hospital payment adjustment in a manner that does not increase
beneficiary copayments, such as providing the adjustment amount in
aggregate instead of on a per claim basis through enhanced APC
payments, we reexamined the manner in which the cancer hospital payment
adjustment is applied. We have broad discretion in designing the cancer
hospital payment adjustment under sections 1833(t)(18)(B) and
1833(t)(2)(E) of the Act. Consistent with this broad authority, we
agree that it is appropriate to make the cancer hospital payment
adjustment through the form of an aggregate payment determined at cost
report settlement to each cancer hospital, as opposed to an adjustment
at the APC level, thereby avoiding the higher copayments for
beneficiaries associated with providing the adjustment on a claims
basis through increased APC payments. Therefore, in order to implement
the cancer hospital payment adjustment in a way that does not increase
beneficiary copayments as urged by commenters, and in light of the
discretion afforded by the statute, we are providing the cancer
hospital payment adjustment as an aggregate payment to each cancer
hospital at cost report settlement instead of through enhanced APC
payments as proposed. As explained further below, the aggregate
adjustment adopted in this final rule with comment period (like the
proposed APC-level adjustment) is based on the comparison of each
cancer hospital's PCR to the weighted average PCR of the other
hospitals that furnish services under the OPPS using the most recent
submitted or settled cost report available at the time of this final
rule with comment period.
In addition, commenters suggested that CMS take into account the
cancer hospitals' significant Medicare outpatient concentration (which,
based on the comment letter, is the portion of the cancer hospitals'
total Medicare payments that are OPPS payments) when establishing an
appropriate PCR benchmark. In other words, the commenter argued that
CMS should take into account the portion of the cancer hospitals' total
Medicare payments that are OPPS payments compared to the non-cancer
hospitals' total Medicare payments that are OPPS payments. Section 3138
of the Affordable Care Act provides that if the Secretary determines
under section 1833(t)(18)(A) of the Act that costs incurred by cancer
hospitals exceed those costs of other hospitals furnishing services
under section 1833(t), the Secretary shall provide for an appropriate
adjustment to reflect the higher costs. We are not persuaded that
Medicare outpatient concentration in and of itself has an impact on the
costs incurred for providing OPD services at cancer hospitals relative
to other OPPS hospitals that warrants an adjustment in determining the
cancer hospital adjustment. Therefore, we are not adopting this
suggestion of the commenters.
With respect to commenters that indicated that because outliers
were included in the calculation of hospital PCRs, application of the
payment adjustment to the APC payment amount will result in PCRs less
than the intended target for cancer hospitals with relatively large
outlier payments, we examined this issue and believe commenters made a
valid argument that cancer hospitals with relatively large outlier
payments will be provided less additional payment than intended under
the proposed methodology because the payment adjustment would be
applied only to the APC portion of
[[Page 74205]]
the payment and not to the outlier amounts. If we were to finalize the
implementation of the cancer hospital payment adjustment through
increased APC payments as proposed, the PCR used to determine the
amount of the adjustment would need to be recalculated to exclude
outlier payments. This change would provide a larger APC adjustment to
cancer hospitals that have large outlier payments relative to other
OPPS hospitals. However, because we are providing the cancer hospital
payment adjustment in aggregate at cost report settlement and not
through adjustments to the APC payment, it is appropriate to continue
to include outlier payments in the calculation of the PCRs used to
determine the payment adjustment amount.
In response to the commenters who suggested that annual
recalculation of the PCRs for purposes of calculating the cancer
hospital payment adjustment is not necessary because significant cost
savings are not expected at the cancer hospitals as a result of the
inclusion of cancer hospitals in the 340B drug program, we believe that
annual recalculation of the cancer hospital payment adjustment will
provide a timely assessment of the changes in OPPS payments relative to
costs due to any reason and, therefore, will enable CMS to provide OPPS
payments that are accurate and equitable.
With regard to the implementation date for the cancer hospital
payment adjustment, the agency did not finalize the proposed cancer
hospital adjustment for CY 2011 for a variety of reasons, as explained
in the CY 2011 OPPS/ASC final rule with comment period. Significantly,
the majority of all commenters expressed concerns about implementation
of the adjustment and, based on the broad range of important issues and
concerns raised by them, we did not implement a cancer hospital
adjustment for CY 2011. Moreover, the obligation to provide a cancer
hospital payment adjustment is triggered only insofar as the Secretary
determines under section 1833(t)(18)(A) of the Act that costs incurred
by hospitals described in section 1886(d)(1)(B)(v) of the Act exceed
those costs incurred by other hospitals furnishing services under this
subsection. Several commenters raised concerns about the agency's study
of costliness conducted under section 1833(t)(18)(A) of the Act; for
example, a commenter suggested that the CMS analysis was inadequate to
conclude that costs are higher in cancer hospitals and that an
adjustment was warranted. Given the uncertainty surrounding these
issues as well as public comments arguing against implementing a cancer
hospital payment adjustment for CY 2011, we decided not to do so for CY
2011. We note that, insofar as the cancer adjustment is budget neutral,
the lack of a cancer hospital payment adjustment for CY 2011 also means
that other payments were not reduced for CY 2011 to offset the
increased payments from the adjustment.
Regarding the commenter's concerns related to the agency's study
conducted pursuant to section 1833(t)(18)(A) of the Act, as detailed
above and in the CY 2011 OPPS/ASC final rule with comment period (75 FR
71883), we determined that we could not use our standard analytical
approach, which uses a combination of explanatory and payment
regression models while controlling for other legitimate influences of
costliness, to assess the costliness of cancer hospitals relative to
other OPPS hospitals. Although this kind of analysis would allow us to
control for the many factors that might explain differences in
costliness, as suggested by the commenter, we believe that this
approach would lead to imprecise estimates of costliness due to the
small sample size (11 hospitals).
With respect to commenters who suggested that it would be more
appropriate for the CMS study on costliness to compare the costs of
providing OPD services at the 11 cancer hospitals to the costs of
providing services related to cancer care at other hospitals furnishing
services under section 1833(t) of the Act, we believe such an approach
is not appropriate because section 3138 of the Affordable Care Act does
not specify that the comparison be made with regard to particular APC
groups related to cancer services.
In addition, with respect to the commenter who believed that the
amount of additional payments to cancer hospitals should be guided by
quality of care information and, therefore, be delayed until 2014 when
the cancer hospitals begin to submit quality data to CMS, we note that
section 1833(t)(18) of the Act did not include such a requirement nor
did it include quality measures as a requirement for the additional
payments to cancer hospitals. Therefore, we do not believe it is
appropriate to delay implementation of the cancer hospital payment
adjustment until cancer hospitals have submitted quality data to CMS.
After consideration of the public comments we received, we are
adopting in this final rule with comment period a number of the
commenters' suggestions and a number of changes to our proposed CY 2012
policies regarding the cancer hospital payment adjustment including
modifications to our CY 2012 proposal with regard to the calculation of
the budget neutrality adjustment associated with the cancer hospital
payment adjustment. The budget neutral payment reduction that is
associated with the cancer hospital payment adjustment for CY 2012 is
calculated as the difference in estimated CY 2012 total payments to
cancer hospitals, including the cancer hospital payment adjustment, and
estimated CY 2012 total payments to cancer hospitals without the cancer
adjustment, including TOPs. Therefore, based on updated cost report
data, the budget neutrality adjustment to the OPPS conversion factor is
0.9978, a reduction of 0.2 percent (as opposed to a reduction of 0.7
percent in the proposed rule). In addition, we are providing the CY
2012 cancer hospital payment adjustment to cancer hospitals in the form
of an aggregate payment at cost report settlement instead of through an
increased adjustment to APC payments on a claims basis, as was
proposed.
Consistent with the approach in the proposed rule, the CY 2012
cancer hospital payment adjustment adopted in this final rule with
comment period is intended to provide additional payments to cancer
hospitals so that the hospital's PCR with the payment adjustment is
equal to the weighted average PCR for other hospitals, which we refer
to as the ``target PCR.'' In contrast to the approach in the proposed
rule, however, in this final rule with comment period, we are adopting
a policy under which the amount of the payment adjustment will be made
on an aggregate basis at cost report settlement. Under this final rule
with comment period, we will examine each cancer hospital's data at
cost report settlement, determine the cancer hospital's PCR (before the
cancer hospital payment adjustment), and in turn determine the lump sum
amount necessary (if any) to make the cancer hospital's PCR equal to
the target PCR. To the extent at cost report settlement a cancer
hospital's PCR (before the cancer hospital payment adjustment) is above
the target PCR, a cancer hospital payment adjustment of zero is given.
This is because we believe that this would indicate that the cancer
hospital's costs do not exceed the costs incurred by other hospitals
furnishing services under the OPPS, and therefore a payment adjustment
above zero would not be necessary. We are amending are regulations at
Sec. 419.43 to capture the above-described final policy.
[[Page 74206]]
Consistent with the approach in the proposed rule, the target PCR
is set in advance and is calculated using the most recent submitted or
settled cost report data that are available at the time of this final
rule with comment period. For CY 2012, the target PCR for purposes of
the cancer hospital payment adjustment is 0.91. To calculate the target
PCR, we used the same extract of cost report data from HCRIS, as
discussed in section II.A of this final rule with comment period, used
to estimate median costs for the CY 2012 OPPS. Using these cost report
data, we included data from Worksheet E, Part B, for each hospital,
using data from each hospital's most recent cost report, whether as
submitted or settled. We then limited the dataset to the hospitals with
CY 2010 claims data that we use to model the impact of the CY 2012
final APC relative weights (4,018 hospitals) because it is appropriate
to use the same set of hospitals that we are using to calibrate the
modeled CY 2012 OPPS. The cancer hospitals in this dataset largely had
cost report data from cost reporting periods ending in FY 2010. The
cost report data for the other hospitals were from cost report periods
with fiscal year ends ranging from 2009 to 2010. We then removed the
cost report data of the 47 hospitals located in Puerto Rico from our
data set because we do not believe that their cost structure reflects
the costs of most hospitals paid under the OPPS and, therefore, their
inclusion may bias the calculation of hospital-weighted statistics. We
also removed 223 hospitals with cost report data that were not complete
(missing aggregate OPPS payments (which include outliers), missing
aggregate cost data, or missing both), so that all cost reports in the
study would have both the payment and cost data necessary to calculate
a PCR for each hospital, leading to a final analytic file of 3,748
hospitals with cost report data. We believe that the costs and PPS
payments reported on Worksheet E, Part B, for the hospitals included in
our CY 2012 modeling is sufficiently accurate for assessing hospital's
relative costliness because all of the key elements that we believe are
necessary for the analysis (payment and cost) are contained on this
worksheet.
Using this smaller dataset of cost report data, we estimated that,
on average, the OPPS payments to the 11 cancer hospitals, not including
TOPs, are approximately 67 percent of reasonable cost (that is, we
calculated a PCR of 0.674 for the cancer hospitals), whereas, we
estimated that, on average, the OPPS payments to other hospitals
furnishing services under the OPPS are approximately 91 percent of
reasonable cost (weighted average PCR of 0.91). Individual cancer
hospital's OPPS PCRs range from approximately 0.63 to approximately
0.78. Based on these data, a target PCR of 0.91 will be used to
determine the CY 2012 cancer hospital payment adjustment to be paid at
cost report settlement. Therefore, the payment amount associated with
the cancer hospital adjustment to be determined at cost report
settlement will be the additional payment needed to result in a PCR
equal to 0.91 for each cancer hospital.
Using the same data described above, we calculated estimates of the
percentage difference between each cancer hospital's PCR and the target
PCR. Table 13 below indicates estimates in percentage terms of the CY
2012 payment adjustment for each cancer hospital. The actual amount of
the CY 2012 cancer hospital payment adjustment for each cancer hospital
will be determined at cost report settlement and will depend on each
hospital's CY 2012 payments and costs. Under the policies in this final
rule with comment period, the payment adjustments for cancer hospitals
are estimated to result in an aggregate increase in OPPS payments to
cancer hospitals of 34.5 percent for CY 2012 and a net increase in
total payment, including TOPs, of 9.5 percent. We note that the changes
made by section 1833(t)(18) of the Act do not affect the existing
statutory provisions that provide for TOPs for cancer hospitals. The
TOPs will be assessed as usual after all payments, including the cancer
hospital payment adjustment, have been made for a cost reporting
period.
[[Page 74207]]
[GRAPHIC] [TIFF OMITTED] TR30NO11.022
G. Hospital Outpatient Outlier Payments
1. Background
Currently, the OPPS provides outlier payments on a service-by-
service basis. For CY 2011, 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 $2,025
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 2010 OPPS payment,
using available CY 2010 claims and the revised OPPS expenditure
estimate for the 2011 Trustee's Report, is approximately 1.13 percent
of the total aggregated OPPS payments. Therefore, for CY 2010, we
estimate that we paid at 0.13 percent above the CY 2010 outlier target
of 1.0 percent of total aggregated OPPS payments.
As explained in the CY 2011 OPPS/ASC final rule with comment period
(75 FR 71887 through 71889), we set our projected target for aggregate
outlier payments at 1.0 percent of the estimated aggregate total
payments under the OPPS for CY 2011. The outlier thresholds were set so
that estimated CY 2011 aggregate outlier payments would equal 1.0
percent of the total estimated aggregate payments under the OPPS. Using
CY 2010 claims data and CY 2011 payment rates, we currently estimate
that the aggregate outlier payments for CY 2011 will be approximately
1.06 percent of the total CY 2011 OPPS payments. The difference between
1.0 percent and 1.06 percent is reflected in the regulatory impact
analysis in section XX. of this final rule with comment period. We note
that we provide estimated CY 2012 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.gov/HospitalOutpatientPPS/.
2. Proposed Outlier Calculation
In the CY 2012 OPPS/ASC proposed rule (76 FR 42222), we proposed
for CY 2012 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 0.14 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
[[Page 74208]]
discussed in section VIII.C. of the proposed rule, for CMHCs, we
proposed to continue our longstanding policy that if a CMHC's cost for
partial hospitalization services, paid under either APC 0172 (Level I
Partial Hospitalization (3 services) for CMHCs) or APC 0173 (Level II
Partial Hospitalization (4 or more services) for CMHCs), 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 VIII.C. of this final rule with comment
period.
To ensure that the estimated CY 2012 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 $2,100 fixed-dollar
threshold. This proposed threshold reflected the methodology discussed
below in this section, as well as the proposed APC recalibration for CY
2012.
We calculated the proposed fixed-dollar threshold for the proposed
rule using largely the same methodology as we did in CY 2011 (75 FR
71887 through 71889). For purposes of estimating outlier payments for
the proposed rule, we used the hospital-specific overall ancillary CCRs
available in the April 2011 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 2010
claims to model the CY 2012 OPPS. In order to estimate the proposed CY
2012 hospital outlier payments for the proposed rule, we inflated the
charges on the CY 2010 claims using the same inflation factor of 1.0908
that we used to estimate the IPPS fixed-dollar outlier threshold for
the FY 2012 IPPS/LTCH PPS proposed rule (76 FR 26024). We used an
inflation factor of 1.0444 to estimate CY 2011 charges from the CY 2010
charges reported on CY 2010 claims. The methodology for determining
this charge inflation factor is discussed in the FY 2012 IPPS/LTCH PPS
proposed rule and final rule (76 FR 26024 and 51792, respectively). As
we stated in the CY 2005 OPPS final rule with comment period (69 FR
65845), we believe that the use of these charge inflation factors are
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, in the CY 2012 OPPS/ASC proposed rule, we
proposed to apply the same CCR inflation adjustment factor that we
proposed to apply for the FY 2012 IPPS outlier calculation to the CCRs
used to simulate the proposed CY 2012 OPPS outlier payments that
determine the fixed-dollar threshold. Specifically, for CY 2012, we
proposed to apply an adjustment of 0.9850 to the CCRs that were in the
April 2011 OPSF to trend them forward from CY 2011 to CY 2012. The
methodology for calculating this proposed adjustment was discussed in
the FY 2012 IPPS/LTCH PPS proposed rule (76 FR 26024 through 26025).
Therefore, to model hospital outlier payments for the CY 2012 OPPS/
ASC proposed rule, we applied the overall CCRs from the April 2011 OPSF
file after adjustment (using the proposed CCR inflation adjustment
factor of 0.9850 to approximate CY 2012 CCRs) to charges on CY 2010
claims that were adjusted (using the proposed charge inflation factor
of 1.0908 to approximate CY 2012 charges). We simulated aggregated CY
2012 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 2012 OPPS
payments. We estimated that a proposed fixed-dollar threshold of
$2,100, 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 $2,100 are met. For CMHCs, we proposed that, 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 Hospital OQR requirements. For hospitals that fail to meet the
Hospital OQR requirements, we proposed to continue our policy that we
implemented in CY 2010 that the hospitals' costs would be compared to
the reduced payments for purposes of outlier eligibility and payment
calculation. For more information on the Hospital OQR Program, we refer
readers to section XIV. of this final rule with comment period.
Comment: One commenter opposed the proposed increase to the fixed-
dollar threshold, stating that it would reduce the number of cases
eligible for outlier payments across the industry. Another commenter
supported the proposed policy of estimating outlier payments to be 1.0
percent of the estimated aggregate total payments under the OPPS for
outlier payments and of increasing the fixed-dollar outlier threshold
to $2,100.
Response: As indicated above, we introduced a fixed-dollar
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. We maintain the target outlier
percentage of 1.0 percent of estimated aggregate total payment under
the OPPS and 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. For CY 2012, based on updated
data, we have established a fixed-dollar threshold of $1,900 which,
together with a multiple threshold of 1.75, will enable us to meet
[[Page 74209]]
our target outlier payment of 1 percent of total OPPS spending.
3. Final Outlier Calculation
Consistent with historical practice, we used updated data for this
final rule with comment period for our outlier calculation. For CY
2012, we are applying the overall CCRs from the July 2011 Outpatient
Provider-Specific File with a CCR adjustment factor of 0.9903 to
approximate CY 2012 CCRs to charges on the final CY 2010 claims that
were adjusted to approximate CY 2012 charges (using the final 2-year
charge inflation factor of 1.0794). These are the same CCR adjustment
and charge inflation factors that were used to set the IPPS fixed-
dollar threshold for the FY 2012 IPPS/LTCH PPS final rule (76 FR 51792
through 51795). We simulated aggregated CY 2012 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 $1,900, 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 2012, 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 threshold
of $1,900 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 0.12 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 that have CCRs that fluctuate significantly relative to the
CCRs of other facilities, and that 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 have previously discussed in the CY 2009 OPPS/ASC final
rule with comment period (73 FR 68596) and as we proposed for CY 2012,
we did not incorporate any assumptions about the effects of
reconciliation into our calculation of the OPPS fixed-dollar outlier
threshold.
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 (which is referenced in section XVII. of this final
rule with comment period and available via the Internet on the CMS Web
site) 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
(which is referenced in section XVII. of this final rule with comment
period and available via the Internet on the CMS Web site) was
calculated by multiplying the CY 2012 scaled weight for the APC by the
CY 2012 conversion factor.
We note that section 1833(t)(17) of the Act, which applies to
hospitals as defined under section 1886(d)(1)(B) of the Act, requires
that hospitals that fail to submit data required to be submitted on
quality measures selected by the Secretary, in the form and manner and
at a time specified by the Secretary, incur a reduction of 2.0
percentage points to their OPD fee schedule increase factor, that is,
the annual payment update factor. The application of a reduced OPD fee
schedule increase factor results in reduced national unadjusted payment
rates that apply to certain outpatient items and services provided by
hospitals that are required to report outpatient quality data and that
fail to meet the Hospital Outpatient Quality Reporting (OQR) Program
(formerly referred to as the Hospital Outpatient Quality Data Reporting
Program (HOP QDRP)) requirements. For further discussion of the payment
reduction for hospitals that fail to meet the requirements of the
Hospital OQR Program, we refer readers to section XVI.D. 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 Hospital OQR Program requirements and to a hospital that
fails to meet the Hospital OQR Program requirements for a service that
has any of the following status indicator assignments: ``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 Hospital OQR Program requirements.
Individual providers interested in calculating the payment amount
that they would receive for a specific service from the national
unadjusted payment rates presented in Addenda A and B to this final
rule with comment period (which are referenced in section XVII. of this
final rule with comment period and available via the Internet on the
CMS Web site) should follow the formulas presented in the following
steps. For purposes of the payment calculations below, we refer to the
national unadjusted payment rate for hospitals that meet the
requirements of the Hospital OQR Program as the ``full'' national
unadjusted payment rate. We refer to the national unadjusted payment
rate for hospitals that fail to meet the requirements of the Hospital
OQR Program as the ``reduced'' national
[[Page 74210]]
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 Hospital OQR Program
requirements in order to receive the full CY 2012 OPPS fee schedule
increase factor of 1.90 percent.
Step 1. Calculate 60 percent (the labor-related portion) of the
national unadjusted payment rate. Since the initial implementation of
the OPPS, we have used 60 percent to represent our estimate of that
portion of costs attributable, on average, to labor. We refer readers
to the April 7, 2000 OPPS final rule with comment period (65 FR 18496
through 18497) for a detailed discussion of how we derived this
percentage. We confirmed that this labor-related share for hospital
outpatient services is appropriate during our regression analysis for
the payment adjustment for rural hospitals in the CY 2006 OPPS final
rule with comment period (70 FR 68553).
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 2012 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 sections 3137 and 10317 of the Affordable Care Act,
expired on September 30, 2010. Section 102 of the Medicare and Medicaid
Extenders Act of 2010 extends Section 508 and certain additional
special exception hospital reclassifications from October 1, 2010
through September 30, 2011. Therefore, these reclassifications will not
apply to the CY 2012 OPPS. (For further discussion of the changes to
the FY 2012 IPPS wage indices, as applied to the CY 2012 OPPS, we refer
readers to section II.C. of this final rule with comment period.) As we
proposed, we are continuing to apply a wage index floor of 1.00 to
frontier States, in accordance with section 10324 of the Affordable
Care Act.
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 (which is
referenced in section XVII. of this final rule with comment period and
available via the Internet on the CMS Web site) contains the qualifying
counties and the associated wage index increase developed for the FY
2012 IPPS and listed as Table 4J in the FY 2012 IPPS/LTCH PPS final
rule and available via the Internet on the CMS Web site at: http://www.cms.gov/AcuteInpatientPPS/01_overview.asp. This step is to be
followed only if the hospital is not reclassified or redesignated under
section 1886(d)(8) or section 1886(d)(10) of the Act.
Step 4. Multiply the applicable wage index determined under Steps 2
and 3 by the amount determined under Step 1 that represents the labor-
related portion of the national unadjusted payment rate.
The formula below is a mathematical representation of Step 4 and
adjusts the labor-related portion of the national 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 Hospital OQR Program 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 2012 full national unadjusted payment rate for
APC 0019 is $307.74. The reduced national unadjusted payment rate for a
hospital that fails to meet the Hospital OQR Program requirements is
$301.59. This reduced rate is calculated by multiplying the reporting
ratio of 0.980 by the full unadjusted payment rate for APC 0019.
The FY 2012 wage index for a provider located in CBSA 35644 in New
York is 1.3142. The labor-related portion of the full national
unadjusted payment is $242.66 (.60 * $307.74 * 1.3142). The labor-
related portion of the reduced national unadjusted payment is $237.81
(.60 * $301.59 * 1.3142). The nonlabor-related portion of the full
national unadjusted payment is $123.10 (.40 * $307.74). The nonlabor-
related portion of the reduced national unadjusted payment is
$120.63(.40 * $301.59). The sum of the labor-related and nonlabor-
related portions of the full national adjusted payment is $365.76
($242.66 + $123.10). The sum of the reduced national adjusted payment
is $358.44 ($237.81 + $120.63).
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
[[Page 74211]]
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. However, section 1833(t)(8)(C)(i) of the
Act limits the amount of beneficiary copayment that may be collected to
the amount of the inpatient deductible, which for CY 2012 is $1,156.
Section 4104 of the Affordable Care Act eliminated the Part B
coinsurance for preventive services furnished on and after January 1,
2011 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.
Our discussion of the changes made by the Affordable Care Act with
regard to copayments for preventive services furnished on and after
January 1, 2011 may be found in section XII.B. of the CY 2011 OPPS/ASC
final rule with comment period (75 FR 72013).
2. OPPS Copayment Policy
In the CY 2012 OPPS/ASC proposed rule (76 FR42224), 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 proposed national unadjusted copayment amounts for services payable
under the OPPS that would be effective January 1, 2012, were shown in
Addenda A and B to the proposed rule (which were available via the
Internet on the CMS Web site). As discussed in section XIV.E. of the
proposed rule and this final rule with comment period, for CY 2012, the
Medicare beneficiary's minimum unadjusted copayment and national
unadjusted copayment for a service to which a reduced national
unadjusted payment rate applies will equal the product of the reporting
ratio and the national unadjusted copayment, or the product of the
reporting ratio and the minimum unadjusted copayment, respectively, for
the service.
We did not receive any public comments regarding the proposed
methodology for calculating copayments for CY 2012. Therefore, for the
reasons set forth in the proposed rule (76 FR 42225), we are finalizing
our CY 2012 copayment amounts without modification. We note that we
received public 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 Hospital OQR Program
requirements should follow the formulas presented in the following
steps.
Step 1. Calculate the beneficiary payment percentage for the APC by
dividing the APC's national unadjusted copayment by its payment rate.
For example, using APC 0019, $61.55 is 20 percent of the full national
unadjusted payment rate of $307.74. For APCs with only a minimum
unadjusted copayment in Addenda A and B of this final rule with comment
period (which are available via the Internet on the CMS Web site), 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 Hospital OQR Program
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
will be effective January 1, 2012, are shown in Addenda A and B to this
final rule with comment period (which are referenced in section XVII.
of this final rule with comment period and available via the Internet
on the CMS Web site). 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 CY 2012 OPD fee schedule increase
factor discussed in section XIV.E. of this final rule with comment
period.
Also as noted above, section 1833(t)(8)(C)(i) of the Act limits the
amount of beneficiary copayment that may be collected to the amount of
the inpatient deductible, which for CY 2012 is $1,156.
III. OPPS Ambulatory Payment Classification (APC) Group Policies
A. OPPS Treatment of New CPT and Level II HCPCS 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:
Category I CPT codes, which describe medical services and
procedures;
Category III CPT codes, which describe new and emerging
[[Page 74212]]
technologies, services, and procedures; and
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.
As we proposed in the CY 2012 OPPS/ASC proposed rule (76 FR 42225
through 42226), in Table 14 below (also Table 14 of the proposed rule),
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 that were implemented through the July
2011 OPPS quarterly update were not included in Addendum B of the
proposed rule (which is available via the Internet on the CMS Web
site), while those codes based upon the April 2011 OPPS quarterly
update were included in Addendum B.
[GRAPHIC] [TIFF OMITTED] TR30NO11.023
[[Page 74213]]
This process is discussed in detail below. We have separated our
discussion into two sections based on whether we solicited public
comments in the CY 2012 OPPS/ASC proposed rule or whether we are
soliciting public comments in this CY 2012 OPPS/ASC final rule with
comment period. In the CY 2012 OPPS/ASC proposed rule, we noted that we
sought public comment in the CY 2011 OPPS/ASC final rule with comment
period on the new CPT and Level II HCPCS codes that were effective
January 1, 2011. We also sought public comments in the CY 2011 OPPS/ASC
final rule with comment period on the new Level II HCPCS codes
effective October 1, 2010. These new codes, with an effective date of
October 1, 2010, or January 1, 2011, 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 2011 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 2011 OPPS/ASC final rule with comment period. We
are responding to public comments and finalizing our proposed OPPS
treatment of these codes in this CY 2012 OPPS/ASC final rule with
comment period.
We received comments on several new codes that were assigned to
comment indicator ``NI'' in Addendum B of the CY 2011 OPPS/ASC final
rule with comment period. We respond to those comments in sections
II.A. and III.D. of this final rule with comment period. Table 15 lists
the long descriptors for the CPT codes that were assigned to comment
indicator ``NI'' for which we received public comments to the CY 2011
OPPS/ASC final rule with comment period and the specific sections where
the comments are addressed.
BILLING CODE 4120-01-P
[[Page 74214]]
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[[Page 74215]]
[GRAPHIC] [TIFF OMITTED] TR30NO11.025
BILLING CODE 4120-01-C
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 2012 Proposed Rule
Through the April 2011 OPPS quarterly update CR (Transmittal 2174,
Change Request 7342, dated March 18, 2011) and the July 2011 OPPS
quarterly update CR (Transmittal 2234, Change Request 7443, dated May
27, 2011), we recognized several new HCPCS codes for separate payment
under the OPPS. Effective April 1 and July 1 of CY 2011, we made
effective a total of 22 new Level II HCPCS codes and 14 Category III
CPT codes. Specifically, 5 new Level II HCPCS codes were effective for
the April 2011 update and another 17 new Level II HCPCS codes were
effective for the July 2011 update for a total of 22. Fourteen new
Category III CPT codes were effective for the July 2011 update. Of the
22 new Level II HCPCS codes, we recognized for separate payment 16 of
these codes, and of the 14 new Category III CPT codes, we recognized
for separate payment 12 of these codes, for a total of 28 new HCPCS
codes that are recognized for separate payment for CY 2012.
Through the April 2011 OPPS quarterly update CR, we allowed
separate payment for each of the five new Level II HCPCS codes.
Specifically, as displayed in Table 16 below (Table 15 of the proposed
rule), we provided separate payment for the following HCPCS codes:
HCPCS code C9280 (Injection, eribulin mesylate, 1 mg)
HCPCS code C9281 (Injection, pegloticase, 1 mg)
HCPCS code C9282 (Injection, ceftaroline fosamil, 10 mg)
HCPCS code Q2040 (Injection, incobotulinumtoxin A, 1 unit)
HCPCS code C9729 (Percutaneous laminotomy/laminectomy
(intralaminar approach) for decompression of neural elements, (with
ligamentous resection, discectomy, facetectomy and/or foraminotomy,
when performed) any method under indirect image guidance, with the use
of an endoscope when performed, single or multiple levels, unilateral
or bilateral; lumbar)
We note that HCPCS code Q2040 replaced HCPCS code C9278 (Injection,
incobotulinumtoxin A, 1 unit) beginning April 1, 2010. HCPCS code C9278
was effective January 1, 2011, and deleted March 30, 2011, because it
was replaced with HCPCS code Q2040. HCPCS code C9278 was assigned to
pass-through status beginning January 1, 2011, when the code was
implemented. Because HCPCS code Q2040 describes the same drug as HCPCS
code C9278, 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 16 below. Specifically, HCPCS code
Q2040 is assigned to APC 9278 and status indicator ``G.''
In the CY 2012 OPPS/ASC proposed rule, we solicited public comments
on the proposed status indicators and APC assignments of HCPCS codes
C9280, C9281, C9282, C9729, and Q2040, which were listed in Table 15 of
that proposed rule (76 FR 42226) and now
[[Page 74216]]
appear in Table 16 of this final rule with comment period. We did not
receive any public comments on the proposed APC assignments and status
indicators for HCPCS codes C9280, C9281, C9282, C9729, and Q2040.
However, for CY 2012, the HCPCS Workgroup replaced HCPCS C9280, C9281,
C9282, and Q2040 with permanent HCPCS J-codes. Specifically, C9280 was
replaced with J9179 (Injection, eribulin mesylate, 0.1 mg), C9281 with
J2507 (Injection, pegloticase, 1 mg), C9282 with J0712 (Injection,
ceftaroline fosamil, 10 mg), and Q2040 with J0588 (Injection,
incobotulinumtoxin A, 1 unit). Consistent with our general policy of
using permanent HCPCS codes if appropriate rather than using temporary
HCPCS codes for the reporting of drugs under the OPPS in order to
streamline coding, we are showing the replacement HCPCS codes effective
January 1, 2012 in Table 16 that replaced HCPCS C9280, C9281, C9282,
and Q2040.
Similarly, for CY 2012, we deleted HCPCS code C9729 on June 30,
2011 because it was replaced with CPT code 0275T. Further discussion of
CPT code 0275T can be found below.
Because HCPCS codes J2507, J0712, and J0588 describe the same drugs
and the same dosages currently designated by HCPCS codes C9281, C9282,
and Q2040, respectively, these drugs will continue their pass-through
status in CY 2012. Therefore, we are assigning HCPCS codes J2507,
J0712, and J0588 to the same status indicators and APCs as their
predecessor HCPCS codes, as shown in Table 16.
However, we note that the replacement code for HCPCS code C9280
does not describe the same dosage descriptor, and consequently, the
replacement HCPCS code will be assigned a new APC number. Specifically,
C9280 has a dosage descriptor of 1 mg; however, its replacement HCPCS
code J9179 has a dosage descriptor of 0.1 mg. Therefore, effective
January 1, 2012, HCPCS codes J9179 will be assigned to APC 1426 to
maintain data consistency for future rulemaking. Because the
predecessor HCPCS code C9280 was assigned to pass-through status, HCPCS
code J9179 will continue to be assigned status indicator ``G'' for CY
2012.
We did not receive any public comments on the new Level II HCPCS
codes that were implemented in April 2011. We are adopting as final,
without modification, our proposal to assign the Level II HCPCS codes
listed in Table 16 to the APCs and status indicators as proposed for CY
2012, with the exception of HCPCS code J9179, which will be assigned to
APC 1426. Table 16 shows the final APC and status indicator assignments
for all five Level II HCPCS codes.
[GRAPHIC] [TIFF OMITTED] TR30NO11.026
Through the July 2011 OPPS quarterly update CR, which included
HCPCS codes that were made effective July 1, 2011, we allowed separate
payment for 11 of the 17 new Level II HCPCS codes. Specifically, as
displayed in Table 16 of
[[Page 74217]]
the proposed rule (Table 17 of this final rule with comment period), we
provided separate payment for the following HCPCS codes:
HCPCS code C9283 (Injection, acetaminophen, 10 mg)
HCPCS code C9284 (Injection, ipilimumab, 10 mg)
HCPCS code C9285 (Lidocaine 70 mg/tetracaine 70 mg, per
patch)
HCPCS code C9365 (Oasis Ultra Tri-Layer Matrix, per square
centimeter)
HCPCS code C9406 (Iodine I-123 ioflupane, diagnostic, per
study dose, up to 5 millicuries)
HCPCS code C9730 (Bronchoscopic bronchial thermoplasty
with imaging guidance (if performed), radiofrequency ablation of airway
smooth muscle, 1 lobe)
HCPCS code C9731 (Bronchoscopic bronchial thermoplasty
with imaging guidance (if performed), radiofrequency ablation of airway
smooth muscle, 2 or more lobes)
HCPCS code Q2041 (Injection, von willebrand factor complex
(human), Wilate, 1 i.u. vwf:rco)
HCPCS code Q2042 (Injection, hydroxyprogesterone caproate,
1 mg)
HCPCS code Q2043 (Sipuleucel-t, minimum of 50 million
autologous cd54+ cells activated with pap-gm-csf, including
leukapheresis and all other preparatory procedures, per infusion)
HCPCS code Q2044 (Injection, belimumab, 10 mg)
We note that two of the Level II HCPCS Q-codes that were made
effective July 1, 2011, were previously described by a HCPCS J-code and
a C-code that were assigned to pass-through status under the hospital
OPPS. Specifically, HCPCS code Q2041 replaced HCPCS code J7184
(Injection, von willebrand factor complex (human), Wilate, per 100 iu
vwf:rco) beginning July 1, 2011. HCPCS code J7184 was assigned to pass-
through status when it was made effective January 1, 2011; however, the
code is ``Not Payable by Medicare'' because HCPCS code J7184 is
replaced with HCPCS code Q2041 effective July 1, 2011. Therefore, HCPCS
code J7184 was reassigned to status indicator ``E'' effective July 1,
2011. Because HCPCS code J7184 describes the same drug as HCPCS code
Q2041, we continued its pass-through status and assigned HCPCS code
Q2041 to status indicator ``G'' effective July 1, 2011. However,
because the dosage descriptor for HCPCS code Q2041 is not the same as
HCPCS code J7184, we reassigned HCPCS code Q2041 to a new APC to
maintain data consistency for future rulemaking. Specifically, HCPCS
code Q2041 was assigned to APC 1352 effective July 1, 2011. In
addition, HCPCS code Q2043 replaced HCPCS code C9273 (Sipuleucel-t,
minimum of 50 million autologous cd54+ cells activated with pap-gm-csf,
including leukapheresis and all other preparatory procedures, per
infusion) beginning July 1, 2011. HCPCS code C9273 was assigned to
pass-through status when it was made effective October 1, 2010. Because
HCPCS code Q2043 describes the same product as HCPCS code C9273, we
continued its pass-through status and assigned HCPCS code Q2043 to
status indicator ``G'' as well as assigned it to the same APC,
specifically APC 9273, effective July 1, 2011.
Of the 17 HCPCS codes that were made effective July 1, 2011, we did
not recognize for separate payment six HCPCS codes that describe
durable medical equipment (DME) because DME is paid under the Durable
Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Fee
Schedule and not the OPPS. These codes were listed in Table 16 of the
proposed rule, and were assigned to either status indicator ``Y'' or
``A'' effective July 1, 2011.
In the CY 2012 OPPS/ASC proposed rule, we solicited public comments
on the status indicators and APC assignments where applicable for the
17 HCPCS codes that were listed in Table 16 of that proposed rule (76
FR 42227 through 42228) and now appear in Table 17 of this final rule
with comment period. We received a comment on the APC assignments for
HCPCS codes C9730 and C9731. A summary of the comments and our
responses can be found in section III.D.8.b. (Bronchial Thermoplasty)
of this final rule with comment period. In addition, we received some
comments on the long descriptor for HCPCS code Q2043. A summary of the
comments and our responses can be found in section V.A.3. of this final
rule with comment period.
With the exception of HCPCS codes C9730, C9731, and Q2043, we
received no other public comments on the 14 other Level II HCPCS codes
listed in Table 16 of the CY 2011 OPPS/ASC proposed rule. However, for
CY 2012, the HCPCS Workgroup replaced several HCPCS C-codes with an A-
code, J-code, or Q-code. Specifically, C9283 was replaced with J0131
(Injection, acetaminophen, 10 mg), C9284 with J9228 (Injection,
ipilimumab, 1 mg), C9365 with Q4124 (Oasis Ultra Tri-Layer Matrix, per
square centimeter), C9406 with A9584 (Iodine I-123 ioflupane,
diagnostic, per study dose, up to 5 millicuries), Q2041 with J7183
(Injection, von willebrand factor complex (human), Wilate, 1 i.u.
vwf:rco), Q2042 with J1725 (Injection, hydroxyprogesterone caproate, 1
mg), and Q2044 with J0490 (Injection, belimumab, 10 mg).
Because HCPCS codes J0131, J9228, Q4124, A9584, J7183 and J0490
describe the same drugs and the same dosages currently designated by
HCPCS codes C9283,C9284, C9365, C9406, Q2041, and Q2044, respectively,
these drugs will continue their pass-through status in CY 2012.
Therefore, we are assigning HCPCS codes J0131, J9228, Q4124, A9584,
J7183 and J0490 to the same status indicators and APCs as their
predecessor HCPCS codes, as shown in Table 17. We note that since HCPCS
code Q2042 is assigned to status indicator ``K'' (Nonpass-Through
Drugs; Paid under OPPS; Separate APC payment), its replacement HCPCS
code J1725 will also continue its nonpass-through status in CY 2012.
Further, for CY 2012, the CPT Editorial Panel made effective
Category III CPT codes 0276T and 0277T on January 1, 2012. Because
Category III CPT codes 0276T and 0277T describe the same procedures as
HCPCS code C9730 and C9731, we are deleting HCPCS codes C9730 and C9731
on December 31, 2011, and assigning both CPT codes to the same status
indicator and APC assignment as its predecessor HCPCS code, as shown in
Table 17.
As stated previously, we did not receive any other public comments
on the new Level II HCPCS codes that were implemented in July 2011,
other than HCPCS codes C9730, C9731, and Q2043, which are discussed in
sections III.D.8.b. and V.A.3., respectively, of this final rule with
comment period. We are adopting as final, without modification, our
proposal to assign the 17 Level II HCPCS codes listed in Table 12 to
the APCs and status indicators as proposed for CY 2012.
Table 17 below includes a complete list of the Level II HCPCS codes
that were made effective July 1, 2011, with their final status
indicators, APC assignments, and payment rates for CY 2012.
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In the CY 2012 OPPS/ASC proposed rule (76 FR 42228), for CY 2012,
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 2011 OPPS
quarterly update CR, we allowed separate payment for 12 of the 14 new
Category III CPT codes effective July 1, 2011. Specifically, as
displayed in Table 17 of the proposed rule, we allow separate payment
for the following Category III CPT codes:
CPT code 0263T (Intramuscular autologous bone marrow cell
therapy, with preparation of harvested cells, multiple injections, one
leg, including ultrasound guidance, if performed; complete procedure
including unilateral or bilateral bone marrow harvest)
CPT code 0264T (Intramuscular autologous bone marrow cell
therapy, with preparation of harvested cells, multiple injections, one
leg, including ultrasound guidance, if performed; complete procedure
excluding bone marrow harvest)
CPT code 0265T (Intramuscular autologous bone marrow cell
therapy, with preparation of harvested cells, multiple injections, one
leg, including ultrasound guidance, if performed; unilateral or
bilateral bone marrow harvest only for intramuscular autologous bone
marrow cell therapy)
CPT code 0267T (Implantation or replacement of carotid
sinus baroreflex activation device; lead only, unilateral (includes
intra-operative interrogation, programming, and repositioning, when
performed))
CPT code 0268T (Implantation or replacement of carotid
sinus baroreflex activation device; pulse generator only (includes
intra-operative interrogation, programming, and repositioning, when
performed))
CPT code 0269T (Revision or removal of carotid sinus
baroreflex activation device; total system (includes generator
placement, unilateral or bilateral lead placement, intra-operative
interrogation, programming, and repositioning, when performed))
CPT code 0270T (Revision or removal of carotid sinus
baroreflex activation device; lead only, unilateral (includes intra-
operative interrogation, programming, and repositioning, when
performed))
CPT code 0271T (Revision or removal of carotid sinus
baroreflex activation device; pulse generator only (includes intra-
operative interrogation, programming, and repositioning, when
performed))
CPT code 0272T (Interrogation device evaluation (in
person), carotid sinus baroreflex activation system, including
telemetric iterative communication with the implantable device to
monitor device diagnostics and programmed therapy values, with
interpretation and report (eg, battery status, lead impedance, pulse
amplitude, pulse width, therapy frequency, pathway mode, burst mode,
therapy start/stop times each day))
CPT code 0273T (Interrogation device evaluation (in
person), carotid sinus baroreflex activation system, including
telemetric iterative communication with the implantable device to
monitor device diagnostics and programmed therapy values, with
interpretation and report (eg, battery status, lead impedance, pulse
amplitude, pulse width, therapy frequency, pathway mode, burst mode,
therapy start/stop times each day); with programming)
CPT 0274T (Percutaneous laminotomy/laminectomy
(intralaminar approach) for decompression of neural elements, (with or
without ligamentous resection, discectomy, facetectomy and/or
foraminotomy) any method under indirect image guidance (eg,
fluoroscopic, CT), with or without the use of an endoscope, single or
multiple levels, unilateral or bilateral; cervical or thoracic)
CPT 0275T (Percutaneous laminotomy/laminectomy
(intralaminar approach) for decompression of neural
[[Page 74220]]
elements, (with or without ligamentous resection, discectomy,
facetectomy and/or foraminotomy) any method under indirect image
guidance (eg, fluoroscopic, CT), with or without the use of an
endoscope, single or multiple levels, unilateral or bilateral; lumbar)
(As published in the July 2011 OPPS quarterly update CR, CPT code 0275T
replaced Level II HCPCS code C9729 effective July 1, 2011.)
We note that Category III CPT codes 0262T (Implantation of
catheter-delivered prosthetic pulmonary valve, endovascular approach)
and 0266T (Implantation or replacement of carotid sinus baroreflex
activation device; total system (includes generator placement,
unilateral or bilateral lead placement, intra-operative interrogation,
programming, and repositioning, when performed)) were assigned to
status indicator ``C'' (Inpatient Procedures) under the hospital OPPS
beginning July 1, 2011. As we stated in the proposed rule (76 FR
42229), we believe these procedures should only be paid when provided
in the inpatient setting because of the clinical circumstances under
which these procedures are performed. There are no new Category I
Vaccine CPT codes for the July 2011 update.
Furthermore, for CY 2012, the CPT Editorial Panel made effective
Category III CPT code 0275T on July 1, 2011. Because Category III CPT
code 0275T describes the same procedure as HCPCS code C9729, we deleted
HCPCS code C9729 on June 30, 2011. Through the July 2011 OPPS quarterly
update CR, we also instructed hospitals to report the procedure
previously described by HCPCS code C9729 with Category III CPT code
0275T effective July 1, 2011. Because Category III CPT code 0275T
describes the same procedure designated by HCPCS code C9729, we
assigned Category III CPT code 0275T to the same status indicator and
APC assignment as its predecessor HCPCS code, as shown in Table 16 and
Table 18.
We received a comment on the APC assignment and long descriptor for
Category III CPT code 0275T. A summary of the comment and our response
can be found in section III.D.6.a. (Percutaneous Laminotomy/
Laminectomy) of this final rule with comment period. Table 18 lists the
Category III CPT codes that were implemented in July 2011, along with
their final status indicators, final APC assignments where applicable,
and final payment rates for CY 2012.
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In the CY 2012 OPPS/ASC proposed rule (76 FR 42227 through 42229),
we solicited public comments on the CY 2012 proposed status indicators
and the proposed APC assignments and payment rates, if applicable, for
the Level II HCPCS codes and the Category III CPT codes that are newly
recognized in April or July 2011 through the respective OPPS quarterly
update CRs. These codes were listed in Tables 15, 16, and 17 of the
proposed rule. We proposed to finalize their status indicators and
their APC assignments and payment rates, if applicable, in this CY 2012
OPPS/ASC final rule with comment period. Because the July 2011 OPPS
quarterly update CR was issued close to the publication of the proposed
rule, the Level II HCPCS codes and the Category III CPT codes
implemented through the July 2011 OPPS quarterly update CR could not be
included in Addendum B to the proposed rule, but these codes were
listed in Tables 16 and 17, respectively. We proposed to incorporate
these codes into Addendum B to this CY 2012 OPPS/ASC 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 2011
OPPS update CR and displayed in Table 15 were included in Addendum B to
the proposed rule (which is available via the Internet on the CMS Web
site), where their proposed CY 2012 payment rates were also shown. We
did not receive any additional comments on this process. The final
status indicators, APC assignments, and payment rates, if applicable,
for the Level II HCPCS codes and the Category III CPT codes that are
newly recognized in April or July 2011 through the respective OPPS
quarterly update CRs are found in Addendum B to this CY 2012 OPPS/ASC
final rule with comment period (which is available via the Internet on
the CMS Web site).
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 2012
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 2012 OPPS/ASC proposed rule (76 FR 42230), we proposed to
continue this process for CY 2012. Specifically, for CY 2012, we
proposed to include in Addendum B to this CY 2012 OPPS/ASC final rule
with comment period (which is available via the Internet on the CMS Web
site) the new Category I and III CPT codes effective January 1, 2012
(including the Category III CPT codes that were released by the AMA in
July 2011) that would be incorporated in the January 2012 OPPS
quarterly update CR and the new Level II HCPCS codes, effective October
1, 2011, or January 1, 2012, that would be released by CMS in its
October 2011 and January 2012 OPPS quarterly update CRs. As proposed,
in this final rule with comment period, these codes are flagged with
comment indicator ``NI'' in Addendum B to this CY 2012 OPPS/ASC final
rule with comment period to indicate that we have assigned them an
interim OPPS payment status for CY 2012. As
[[Page 74224]]
proposed, in this final rule with comment period, their status
indicators and their APC assignments and payment rates, if applicable,
are open to public comment and will be finalized in the CY 2013 OPPS/
ASC final rule with comment period. We note that the CPT codes that
were released by the AMA in July 2011 that were subject to comment in
the CY 2012 OPPS/ASC proposed rule, and were listed in Table 17, will
not be assigned to comment indicator ``NI'' in Addendum B because
comments about these codes will be addressed in this CY 2012 OPPS/ASC
final rule with comment period.
Comment: One commenter recommended that, through a Web posting, CMS
request public input on the APC assignments of the Category I CPT
vaccine codes, Category III CPT codes, and Level II HCPCS codes that
are made effective on October 1 or January 1 of subsequent years but
are made available to the public by the completion of each year's OPPS
proposed rule. The commenter indicated that some of these codes have
already been released to the public, either through the CMS or AMA CPT
Web site, by July 1 of any given year. This same commenter suggested
that the lack of stakeholder input on the interim APC assignments may
negatively impact Medicare beneficiaries. In particular, the commenter
stated that interim payment assignments have been influential in
determining whether hospitals provide services to Medicare
beneficiaries or not, and further suggested that if the payment for a
procedure or service does not adequately reflect the true costs of
furnishing the service, then hospitals may decide not to offer the
service to Medicare beneficiaries.
Response: The commenter is correct that Category I Vaccine and
Category III CPT codes that are effective January 1 of a subsequent
year are released on the AMA CPT Web site on or about July 1. However,
some Level II HCPCS codes are not released on the CMS Web site until
much later. For the October update, the Level II HCPCS C-codes that are
effective October 1 are usually released and posted on the CMS Web site
in August or September, depending on the number of OPPS new technology
service and pass-through drug and device applications that are
evaluated. Therefore, we do not have sufficient time to evaluate the
new codes, determine proposed APC assignments, post those proposed
assignments to the CMS Web site, accept and consider public comments,
and respond to public comments between the time that the new codes
become available and the time that we must meet our systems deadlines
for our claims processing and payment files for the upcoming quarter.
Given the challenges and time constraints in meeting the quarterly CPT
and Level II HCPCS systems deadlines, we will continue to assign the
new codes that are effective October 1 and January 1 of subsequent year
to interim APC assignments. If we were to wait for comments on the
interim APC assignments for the new codes before making them effective
on October 1 or January 1, this may result in services and items not
being paid for separately for a whole year, which would ultimately
disadvantage both the hospital outpatient facilities and Medicare
beneficiaries.
The OPPS is a prospective payment system that provides payment for
groups of services that share clinical and resource use
characteristics. It should be noted that, with all new codes, our
policy has been to assign the service to an 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, including information
provided to us by the public, whether through meetings with
stakeholders or additional information that is mailed or otherwise
communicated to us.
After consideration of the public comments we received, we are
finalizing our proposed policy, without modification, to assign the new
CPT and Level II HCPCS codes that are effective October 1 and January 1
of subsequent years to interim APC assignments and request comments on
the codes in the annual OPPS/ASC final rule with comment period, as
described above.
Comment: Some commenters requested that CMS implement a 1 to 2 year
dampening period to minimize significant fluctuations in payments from
year to year for newly bundled or packaged procedure codes. One
commenter specifically stated that limiting the payment reduction to 10
percent would prevent hospitals from experiencing substantial payment
reductions and would allow hospitals reasonable time to appropriately
update their chargemasters to reflect the newly packaged codes.
Response: We do not believe it is necessary or appropriate to limit
payment reductions for any individual service in order to prevent
hospitals from experiencing substantial payment reductions as the
commenter indicates. While payment rates for individual services may
decrease from year to year, the total estimated payments made to
hospitals remains the same because the OPPS is, by statute, a budget
neutral payment system. In order to accurately report charges on their
claims, hospitals must be cognizant of HCPCS coding changes,
specifically with respect to Category I and III CPT codes and Level II
HCPCS codes that occur throughout the year, including the quarterly
updates (April 1, July 1, and October 1) as well as the annual updates
(January 1). In recent years, the CMS and the AMA's CPT Editorial Panel
have increasingly created new codes that use a single HCPCS code to
report combinations of services that were previously reported by
multiple HCPCS codes or multiple units of a single HCPS code. For
example, effective January 1, 2010, CMS created HCPCS code G0424
(Pulmonary rehabilitation, including exercise (includes monitoring),
per hour, per session) to represent a comprehensive program of
pulmonary therapy and the CPT Editorial Panel created CPT code 77338
(Multi-leaf collimator (MLC) device(s) for intensity modulated
radiation therapy (IMRT), design and construction per IMRT plan) to
report all devices furnished under a single IMRT treatment plan. As we
have stated before, we expect hospitals to carefully review each new
HCPCS code when setting charges for the forthcoming year. However, in
particular, hospitals should be especially careful to thoughtfully
establish charges for new codes that use a single code to report
multiple services that were previously reported by multiple codes. It
is vital in these cases that hospitals carefully establish charges that
fully include all of the charges for all of the predecessor services
that are reported by the new code. To fail to carefully construct the
charge for a new code that reports a combination of services that were
previously reported separately, particularly in the first year of the
new code, under-represents the cost of providing the service describing
by the new code and can have significant adverse impact on future
payments under the OPPS for the individual service described by the new
code.
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
[[Page 74225]]
classification system, so that services classified within each group
are comparable clinically and with respect to the use of resources. In
accordance with these provisions, we developed a grouping
classification system, referred to as Ambulatory Payment
Classifications (APCs), as set forth in Sec. 419.31 of the
regulations. We use Level I and Level II HCPCS codes to identify and
group the services within each APC. The APCs are organized such that
each group is homogeneous both clinically and in terms of resource use.
Using this classification system, we have established distinct groups
of similar services. We also have developed separate APC groups for
certain medical devices, drugs, biologicals, therapeutic
radiopharmaceuticals, and brachytherapy devices.
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 the
proposed rule and this final rule with comment period);
(7) Incidental services such as venipuncture;
(8) Guidance services, image processing services, intraoperative
services, imaging, supervision and interpretation services, diagnostic
radiopharmaceuticals, and 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 2011 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 (the Level 3 hospital clinic visit CPT code out of five
levels), 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,
on a recurring basis occurring no less than annually, 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. Section 1833(t)(9)(A) of the Act also
requires the Secretary to consult with an expert outside advisory panel
composed of an appropriate selection of representatives of providers to
review (and advise the Secretary concerning) the clinical integrity of
the APC groups and the relative payment weights (the APC Panel
recommendations for specific services for the CY 2012 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. We note that, for purposes of
identifying significant HCPCS codes for examination in the 2 times
rule, we consider codes that have more than 1,000 single major claims
or codes that have both greater 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 (75 FR 71832). This
longstanding definition of when a HCPCS code is significant for
purposes of the 2 times rule was selected because we believe that a
subset of 1,000 claims is negligible within the set of approximately
100 million single procedure or single session claims we use for
establishing median costs. Similarly, a HCPCS code for which there are
fewer than 99 single bills and which comprises less than 2 percent of
the single major claims within an APC will have a negligible impact on
the APC median. In the CY 2012 OPPS/ASC proposed rule (76 FR 42231), 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 2012.
During the APC Panel's February 2011 meeting, we presented median
cost and utilization data for services furnished during the period of
January 1, 2010, through September 30, 2010, 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 and final policies for CY
2012 are contained mainly in sections III.C. and III.D. 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
[[Page 74226]]
with the APC Panel but for which we proposed changes to their HCPCS
codes' APC assignments in Addendum B to the proposed rule. We note that
Addendum B did not appear in the printed version of the Federal
Register as part of the CY 2012 OPPS/ASC proposed rule. Rather, it was
published and made available only via the Internet on the CMS Web site
at: http://www.cms.gov/. 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 2012 included in the proposed rule were related to changes in
median costs of services that were observed in the CY 2010 claims data
newly available for CY 2012 ratesetting. We also proposed changes to
the status indicators for some codes that were 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 2012. Addendum B of the CY 2012 OPPS/ASC proposed rule
identified with a comment indicator ``CH'' those HCPCS codes for which
we proposed a change to the APC assignment or status indicator as
assigned in the April 2011 Addendum B Update (available via the
Internet on the CMS Web site at: http://www.cms.gov/). In contrast,
Addendum B of this final rule with comment period identifies with the
``CH'' comment indicator the final CY 2012 changes compared to the
codes' status as reflected in the October 2011 Addendum B update.
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 2012 based on the APC Panel recommendations
that were discussed mainly in sections III.C. and III.D. of the
proposed rule, the other proposed changes to status indicators and APC
assignments as identified in Addendum B to the proposed rule (which was
available via the Internet on the CMS Web site), and the use of CY 2010
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); and
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 18 of the CY 2012 OPPS/ASC proposed rule (76 FR 42232) listed
17 APCs that we proposed to exempt from the 2 times rule for CY 2012
based on the criteria cited above.
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, site of service, and the quality of the CY 2010 claims
data used to determine the APC payment rates that we proposed for CY
2012. The median costs for hospital outpatient services for these and
all other APCs that were used in the development of the CY 2012 OPPS/
ASC proposed rule and this final rule with comment period can be found
on the CMS Web site at: http://www.cms.gov/HospitalOutpatientPPS/01_overview.asp.
For the CY 2012 OPPS/ASC proposed rule, we based the listed
exceptions to the 2 times rule on claims data for dates of service
between January 1, 2010, and December 31, 2010, that were processed
before January 1, 2011. For this final rule with comment period, we
used claims data for dates of service between January 1, 2010, and
December 31, 2010, that were processed on or before June 30, 2011 and
updated CCRs, if available. Although we stated in the CY 2012 OPPS/ASC
proposed rule (76 FR 42232) that the list of APC exemptions that
appeared in Table 18 were based on claims data processed from January
1, 2010, through September 30, 2010, we are clarifying that the listed
exceptions were based on claims data processed between January 1, 2010,
and December 31, 2010, consistent with past practice of using claims
data processed between January 1 and December 31 of an applicable year
to determine APCs that are exempted from the 2 times rule. Thus, after
considering the public comments we received on the CY 2012 OPPS/ASC
proposed rule and making changes to APC assignments based on those
comments, we analyzed the CY 2010 claims data used for this final rule
with comment period to identify the APCs with 2 times violations. Based
on the final CY 2010 claims data, we found that there are 23 APCs with
2 times rule violations, a cumulative increase of 6 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 2012, and
identified additional APCs that meet the criteria for exception to the
2 times rule for this final rule with comment period:
APC 0076 (Level I Endoscopy Lower Airway)
APC 0135 (Level III Skin Repair)
APC 0148 (Level I Anal/Rectal Procedures)
APC 0262 (Plain Film of Teeth)
APC 0317 (Level II Miscellaneous Radiology Procedures)
0330 (Dental Procedures)
APC 0341 (Skin Tests)
APC 0403 (Level I Nervous System Imaging)
APC 0409 (Red Blood Cell Tests)
APC 0607 (Level 4 Hospital Clinic Visits)
In addition, we also determined that there are five APCs that no
longer violate the 2 times rule:
APC 0016 (Level IV Debridement & Destruction)
APC 0105 (Repair/Revision/Removal of Pacemakers, AICDs, or
Vascular Devices)
APC 0245 (Level I Cataract Procedures without IOL)
APC 0263 (Level I Miscellaneous Radiology)
APC 0432 (Health and Behavior Services)
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; therefore, we have identified only
final APCs, including those with criteria-based median costs, such as
device-dependent APCs, with 2 times rule violations.
Comment: One commenter supported CMS' proposal to exempt APCs 0016
and 0058 from the 2 times rule. According to the commenter, because the
procedures included in both APCs are similar based on clinical
homogeneity and resource costs, there is little opportunity to upcode,
and therefore, it is appropriate to exempt APCs 0016 and 0058 from the
2 times rule.
Response: We appreciate the commenter's support. Based on our
[[Page 74227]]
analysis of the CY 2010 claims used for the final rule with comment
period, we found that APC 0016 no longer violated the 2 times rule.
However, APC 0058 continued to violate the 2 times rule. The range in
median costs for the procedures with significant claims data in APC
0058 is between $49 and $116. Currently, there are only two levels of
APCs for services that describe strapping and cast application, which
include APC 0058 and APC 0426 (Level II Strapping and Cast
Application). In contrast to APC 0058, our claims data show that the
range in median costs for the procedures with significant claims data
in APC 0426 is between $150 and $197. Because of the range in median
costs in APC 0426, we believe that the procedures in APC 0058 should
continue to be placed in APC 0058. Therefore, we are finalizing our
proposal to continue to exempt APC 0058 from the 2 times rule.
After consideration of the public comment that we received and our
review of the CY 2010 costs from claims available for this final rule
with comment period, we are finalizing our proposal to exempt 12
original APCs (that appeared in Table 18 of the CY 2012 OPPS/ASC
proposed rule with comment period and also appears in Table 19 below)
from the 2 times rule for CY 2012, with modification. Specifically, we
removed five APCs that no longer violated the 2 times rule and
increased the number of APC exceptions from 17 to 23 APCs, as described
previously in this section. Our final list of 23 APCs exempted from the
2 times rule is displayed in Table 19 below.
[GRAPHIC] [TIFF OMITTED] TR30NO11.032
[[Page 74228]]
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 an appropriate clinical APC. This policy
allows us to move a service from a New Technology APC in less than 2
years if sufficient data are available. It also allows us to retain a
service in a New Technology APC for more than 2 years if sufficient
data upon which to base a decision for reassignment have not been
collected.
We 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
($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 annual 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 2012 OPPS/ASC
proposed rule (76 FR 42233), we proposed for CY 2012 to 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. The
flexibility associated with this policy allows us to move a service
from a New Technology APC in less than 2 years if sufficient claims
data are available. It also allows us to retain a service in a New
Technology APC for more than 2 years if sufficient claims data upon
which to base a decision for reassignment have not been collected.
Table 19 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 2012.
Currently, in CY 2011, there are three procedures described by a
HCPCS G-code receiving payment through a New Technology APC.
Specifically, HCPCS code G0417 (Surgical pathology, gross and
microscopic examination for prostate needle saturation biopsy sampling,
21-40 specimens) is assigned to New Technology APC 1506 (New
Technology--Level VI ($400--$500)); 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
[[Page 74229]]
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)).
Analysis of our hospital outpatient data for claims submitted for
CY 2010 indicates that prostate saturation biopsy procedures are rarely
performed on Medicare patients. For OPPS claims submitted from CY 2009
through CY 2010, our claims data show that there were only five claims
submitted for HCPCS code G0417 in CY 2009 and only one in CY 2010 with
a proposed median cost of approximately $532. Our claims data did not
show any hospital outpatient claims for HCPCS codes G0418 and G0419
from either CY 2009 or CY 2010.
While we believe that these procedures will always be low volume,
given the number of specimens being collected, we believe that we
should continue their New Technology payments for another year for
HCPCS codes G0417, G0418, and G0419 to see if more claims data become
available. For CY 2012, we proposed to revise the APC assignments for
these procedures and continue the New Technology APC payments for HCPCS
G-codes G0417, G0418, and G0419. Specifically, we proposed to reassign
HCPCS code G0417 from APC 1506 to APC 1505 (New Technology-Level V
($300-$400)), HCPCS code G0418 from APC 1511 to APC 1506 (New
Technology-Level VI ($400-$500)), and HCPCS G0419 code from APC 1513 to
APC 1508 (New Technology-Level VIII ($600-$700)). We stated in the
proposed rule that we believe that the proposed revised APC assignments
would more appropriately reflect the procedures described by these
three HCPCS G-codes, based on clinical and resource considerations.
These procedures and their proposed APC assignments are displayed in
Table 19 of the proposed rule.
We did not receive any public comments on the APC reassignments for
HCPCS codes G0417, G0418, and G0419. Therefore, for the reasons set
forth above, we are finalizing our proposal, without modification, to
assign HCPCS code G0417 to APC 1505, HCPCS code G0418 to APC 1506, and
to assign HCPCS code G0419 to APC 1508. The final CY 2012 payment rates
for HCPCS codes G0417, G0418, and G0419 can be found in Addendum B of
this final rule with comment period (which is available via the
Internet on the CMS Web site). Table 20 below lists the HCPCS codes and
associated status indicators that we are reassigning from a New
Technology APC to a different New Technology APC for CY 2012.
[GRAPHIC] [TIFF OMITTED] TR30NO11.033
D. OPPS APC-Specific Policies
1. Cardiovascular Services
a. Cardiovascular Computed Tomography (CCT) (APC 0340 and 0383)
The 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)). These
Category I CPT codes replaced eight Category III CPT codes that had
been in effect through December 31, 2009. For CY 2010, we assigned CPT
code 75571 to APC 0340 (Minor Ancillary Procedures), and we assigned
CPT codes 75572, 75573, and 75574 to APC 0383 (Cardiac Computed
Tomographic Imaging). For CY 2011, we maintained these APC assignments,
with final payment rates for APC 0340 and 0383 of $46.23 and $256.86,
respectively. For CY 2012, we proposed to maintain the assignments of
CPT code 75571 to APC 0340 and CPT codes 75572, 75573, and 75574 to APC
0383. APCs 0340 and 0383 have final CY 2012 median costs of
approximately $46 and $262, respectively.
Comment: One commenter was concerned that hospitals may be failing
to report the services in APC 0383 with CPT codes 75572, 75573, and
75574, which were effective January 1, 2010, and are continuing to
report the related services using the expired Category III CPT codes
previously used through December 31, 2009. The commenter requested that
CMS analyze the CY 2010 claims data to determine whether the expired
CCT codes are being used to report CCT services and, if so, to use
those claims in calculating the APC 0383 final median cost. The
commenter
[[Page 74230]]
also urged CMS to reassign CPT code 75571 from APC 0340 to APC 0282
(Miscellaneous Computed Axial Tomography) for reasons of clinical
coherence and resource use similarity to procedures in APC 0282. The
commenter contended that APC 0340 contains several procedures that do
not require the same equipment or clinical staff as CPT code 75571,
while APC 0282 contains services that do have similar clinical and
resource characteristics to CPT code 75571.
In addition, the commenter expressed concerns that hospitals do not
report their costs in a consistent and accurate way and do not update
their chargemasters regularly with charges that reflect appropriate
relativity, and offered to work with CMS to develop a standard
methodology to address these issues. The commenter also recommended
that CMS promote the need to accurately and completely report all
services provided.
Response: We believe that the CY 2012 median costs we have
calculated for CPT codes 75572, 75573, and 75574 and APC 0383
appropriately reflect valid estimates of the cost of these services. We
compared the median costs and single procedure claims based on CY 2009
claims (used for final CY 2011 payment rates) with median costs and
single procedure claims based on CY 2010 claims (which we are using for
the final CY 2012 payment rates). The final CY 2011 APC 0383 median
cost of approximately $254 used 11,323 single bills based on 6 of the
category III CPT codes used prior to CPT codes 75572, 75573, and 75574.
The final CY 2012 APC 0383 median cost of approximately $262 used
15,253 single bills based on CPT codes 75572, 75573, and 75574. This
shows consistency across years in median costs and an increase in the
number of single bills used. Therefore, we have no reason to believe
that the median costs we have calculated do not reflect valid estimates
of the costs of CPT codes 75572, 75573, and 75574, which went into
effect on January 1, 2010.
We believe that CPT code 75571 is a minor ancillary procedure and
is appropriately assigned to APC 0340, in terms of resources and
clinical similarity. CPT code 75571 has a final median cost of
approximately $31, and APC 0340 has a final median cost of
approximately $46. In contrast, APC 0282 has a final median cost of
approximately $107, driven largely by a single major procedure CPT
code, that is, CPT code 76380 (Computed tomography, limited or
localized follow-up study), with a final median cost of approximately
$107. Therefore, CPT code 75571, with a final median cost of
approximately $31, would not be an appropriate resource similarity for
APC 0282, while CPT code 75571 is similar to other codes in APC 0340
with respect to resource use. Therefore, we believe it is appropriately
assigned to APC 0340. We agree with the commenter that accurate
reporting of charges for all services will help to ensure that these
items are appropriately accounted for in future years' OPPS payment
rates. As we often state (73 FR 68535 through 68536; 74 FR 60367; and
75 FR 71835), we encourage stakeholders to carefully review HCPCS code
descriptors, as well as any guidance CMS may have provided for specific
HCPCS codes. We note that the definition of charges in the regulations
at 42 CFR 413.53(b) states that implicit in the use of charges as the
basis of apportionment is the objective that charges for services be
related to the cost of the services. As new HCPCS codes are developed
or existing HCPCS code descriptors are revised from year to year (for
example, by redefining units of service), we expect that hospitals'
submitted Medicare charges relate appropriately to the costs of those
services. Therefore, we do not share the commenter's belief that we
should modify our standard ratesetting methodology (for example, by
using claims data for deleted codes) in order to calculate the median
costs for the services described by CPT codes 75572, 75573, and 75574.
We refer readers to the Provider Reimbursement Manual (Pub. 15-2, Part
2, Chapter 40 Hospital and Hospital Health Care, Form CMS 2552-10) for
CMS' instructions for reporting costs.
After considering the public comments we received and reviewing our
claims data, we are maintaining the assignment of CPT code 75571 to APC
0340, for which we have calculated a final rule median cost of
approximately $46 for CY 2012, and we are maintaining the assignment of
CPT codes 75572, 75573, and 75574 to APC 0383, for which we have
calculated a final rule median cost of approximately $262 for CY 2012.
b. Cardiac Imaging (APC 0377)
For CY 2012, we proposed to assign the following CPT codes to APC
0377 (Level II Cardiac Imaging): 78451(Myocardial perfusion imaging,
tomographic (SPECT) (including attenuation correction, qualitative or
quantitative wall motion, ejection fraction by first pass or gated
technique, additional quantification, when performed); single study, at
rest or stress (exercise or pharmacologic)); 78452 (Myocardial
perfusion imaging, tomographic (SPECT) (including attenuation
correction, qualitative or quantitative wall motion, ejection fraction
by first pass or gated technique, additional quantification, when
performed); multiple studies, at rest and/or stress (exercise or
pharmacologic) and/or redistribution and/or rest reinjection); 78453
(Myocardial perfusion imaging, planar (including qualitative or
quantitative wall motion, ejection fraction by first pass or gated
technique, additional quantification, when performed); single study, at
rest or stress (exercise or pharmacologic)); and 78454 (Myocardial
perfusion imaging, planar (including qualitative or quantitative wall
motion, ejection fraction by first pass or gated technique, additional
quantification, when performed); multiple studies, at rest and/or
stress (exercise or pharmacologic) and/or redistribution and/or rest
reinjection). APC 0377 had a proposed national unadjusted payment rate
of approximately $677.
The national unadjusted payment for APC 0377 for CY 2011 is
approximately $760. However, it is important to note that the national
unadjusted payment rate for APC 0377 for CY 2011 was based on CY 2009
claims data and CPT codes 78451, 78452, 78453 and 78454 had not been
created in CY 2009. In CY 2009, APC 0377 was populated with CPT codes
78460 (Myocardial perfusion imaging (planar) single study, at rest of
stress (exercise and/or pharmacologic), with or without
quantification); 78461 (Myocardial perfusion imaging (planar) single
study, at rest or stress (exercise and/or pharmacologic), with or
without quantification; multiple studies (planar), at rest and/or
stress (exercise and/or pharmacologic), and redistribution and/or rest
injection, with or without quantification); 78464 (Myocardial perfusion
imaging (planar) single study, at rest or stress (exercise and/or
pharmacologic), with or without quantification; tomographic (SPECT)
single study (including attenuation correction when performed), at rest
or stress (exercise and/or pharmacologic), with or without
quantification); and 78465 (Myocardial perfusion imaging (planar)
single study, at rest or stress (exercise and/or pharmacologic), with
or without quantification; tomographic (SPECT) multiple studies
(including attenuation correction when performed), at rest or stress
(exercise and/or pharmacologic), with or without quantification), which
were also cardiac imaging services. Therefore, CY 2009 is the first
year in which hospitals established charges for the new CPT codes for
CY 2010 on which the CY
[[Page 74231]]
2012 proposed rule and final rule medians are based.
Comment: Several commenters expressed concern over the proposed 11
percent payment reduction to APC 0377. Commenters believed that there
were irregularities in the hospital cost data that suggest inaccurate
reporting of costs associated with procedures in APC 0377, rather than
an actual decline in resource use. Commenters particularly pointed out
that CPT code 78453 (Myocardial perfusion imaging, planar, single
study) has a higher mean and median cost than CPT code 78454
(Myocardial perfusion imaging, planar, multiple studies), according to
CMS data. The commenters stated that it is illogical to expect
hospitals to use fewer resources for furnishing multiple studies than
for furnishing a single study. In light of these irregularities, and
the continued decline in the proposed payment, the commenters
recommended that CMS reevaluate the data used to set the payment rate
for APC 0337, to ensure that the data indeed capture the entire
universe of claims for these APCs and reflect all procedure and
radiopharmaceutical costs. The commenters further recommended that CMS
recalculate median costs for these procedures after additional
refinement of the data, including eliminating hospital claims with CCRs
of 0.2 or less and, if subsequent review still warrants a payment
reduction for either APC, such a reduction should be phased in over
several years. Commenters suggested a 1- to 2-year ``dampening period''
beginning with the first year that CMS could utilize claims for
ratesetting, given that APC 0377 contains four CPT codes that were new
for CY 2010 and replaced previously existing services that were
assigned to APC 0377. Commenters stated that hospitals are often slow
to update their charge masters following coding changes. Additionally,
the commenters recommended that CMS establish a threshold change of 10
percent that triggers an enhanced CMS validation process for all APCs,
including accounting for all packaged costs and review of excluded/
included claims. The commenters also recommended that CMS limit year-
to-year changes in payment rates to a maximum of 5 to 10 percent for a
single year, unless CMS or public commenters identify factors
responsible for significant fluctuations in cost data, such as the
introduction of new technologies or changes in the composition of an
APC.
Response: In accordance with sections 1833(t)(2)(B) and
1833(t)(9)(A) of the Act and Sec. Sec. 419.31 and 419.50 of the
regulations, we annually review the items and services within an APC
group 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 the claims and
cost report data used for ratesetting. For the CY 2012 update, the
payment rates for APCs 0337 are based on data from claims submitted
during CY 2010 according to the standard OPPS ratesetting methodology.
Specifically, we used 502,757 single claims (out of 584,855 total
claims) from CY 2012 proposed rule claims data to calculate the
proposed rule median cost of approximately $701, and we used 539,100
single claims (out of 640,458 total claims) from CY 2012 final rule
claims data to calculate the median cost for APC 0337 of approximately
$672, on which we based the CY 2012 national unadjusted payment rate.
We note that the final CY 2012 median cost represents a slight
decline from the median cost of approximately $701, upon which the CY
2012 proposed payment rate for this APC was based and the median cost
of approximately $752, upon which the final CY 2011 payment rate was
based. As we have in the past (75 FR 71916), 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.
Therefore, 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. As we have previously, we note that, as part of our
standard ratesetting process, we already engage in a standard review
process for all APCs that experience significant changes in median
costs (74 FR 60365).
We examined our claims data for APC 0377 for the CY 2011 OPPS final
rule with comment period, the CY 2012 proposed rule, and this CY 2012
final rule with comment period. Specifically we looked at the following
data elements for all single and pseudo single procedure bills for the
four CPT codes that are assigned to APC 0377 and that, therefore, are
the data points on which the median cost for the APC is based: median
CCR; median charge; median line item cost (that is, without packaging);
and median amount of packaging (shown in Table 21). We also show in
Table 21 the count of single and pseudo single procedure claims for the
APC and the total frequency for the APC.
[[Page 74232]]
[GRAPHIC] [TIFF OMITTED] TR30NO11.034
We observe from this information that the median charge for
services that are assigned to APC 0377 has increased from the CY 2011
final rule data (CY 2009 claims containing charges for the deleted
codes) to the CY 2012 proposed and final rule data sets (based on
charges for the codes that were effective January 1, 2010). The CCRs
that are applied to the codes remained the same from the CY 2011 final
rule data to the CY 2012 proposed rule data but declined slightly in
the CY 2012 final rule data, with the updating of the data with more
current cost reports. Therefore, the line item median costs increased
between the CY 2011 final rule data and the CY 2012 proposed rule data
but declined in the CY 2012 final rule data due to the decrease in the
CCRs. We also observe that the packaged cost for codes in APC 0377
declined 61 percent from the CY 2011 final rule data to the CY 2012
proposed rule data and further declined another 3 percent in the CY
2012 final rule data. Therefore, we believe that the reduction in the
payment rate for APC 0377 is attributable to the slight decline in the
CCRs and the significant decline in the packaged cost.
We acknowledge that some hospitals may charge at different markups
over cost for different services. However, as long as the cost report
is correctly completed and the charges are mapped to the cost center in
which the costs for the service are recorded, the CCRs will represent a
valid reflection of the relationship between the costs and the charges.
The OPPS, like all other prospective payment systems, assumes that
hospitals complete the cost report properly, including mapping the
charges for a service to the cost center in which the costs for that
service are captured.
We recognize that there is considerable variability in the charges
that hospitals established for the four CPT codes that were new for CY
2010 and replaced deleted codes for reporting these services that had
been assigned to APC 0377, but it is not uncommon for a high level of
variability in the charges for a service to occur. In addition, it is
normal that such variability would be carried through to the
calculation of estimated costs for the service. Hospitals charges are a
reflection of the monetary value that the hospital places on the
service, and we do not advise hospitals with regard to what they should
charge for a service other than to require that the charges be
reasonably related to their cost for the service, and that they must
charge all payers the same amount for the same service. (We refer
readers to the definition of ``charges'' at 42 CFR 413.53(b).) However,
our use of the median charge to establish payment levels was
specifically designed to address wide variances in hospital cost
accounting systems and billing patterns, and also has consistently been
a reliable mechanism for promoting increased consistency without
introducing additional regulations.
We recognize that it appears peculiar that the estimated cost for
CPT code 78453, which represents the cost of a single myocardial
perfusion imaging (MPI) study, would be greater than the estimated cost
for CPT code 78454, which represents the cost of multiple myocardial
perfusion imaging studies done in a single session. However, our costs
are based on the amount of the charge that the hospital established for
the service and the hospital's CCR from its Medicare cost report. It is
not unusual for hospitals to establish charges that do not comport with
our expectation of the charges they would establish based on the
definition of the code for the service for which they are establishing
charges and on which we based simulated medians. Moreover, because the
median cost is the 50th percentile of the array of costs from different
hospitals, case-mix and volume differences between different hospitals
can also result in seemingly peculiar relativity between median costs.
Based on our review of the claims data and cost report data, we
believe our estimated median cost for APC 0377 is a valid estimate of
the relative cost of the services under the APC and, therefore, see no
reason to adopt an alternative methodology that would eliminate claims
from hospitals with CCRs below 0.2 or limit the decline in the median
cost to 5 to 10 percent. In addition, based on the significant volume
of single bills used to calculate the median cost (539,100 single
procedure bills of 640,458 total frequency or 84 percent of the total
frequency for the services in the APC), we have no reason to believe
that the median cost we have calculated should not be used to establish
the payment for APC 0377 and, therefore, will not implement a 1- to 2-
year ``dampening period,'' as suggested by the commenters. To the
extent that hospitals determine that their charges should be revised to
better reflect the resources required to furnish the services currently
assigned to APC 0377, the revised charges would be reflected in future
years' OPPS payment rates.
Comment: Commenters asked that CMS post to the CMS Web site the
data analysis that was made available to the
[[Page 74233]]
APC Panel for all APCs for which the APC Panel median costs fluctuated
by more than 10 percent compared to the CY 2011 OPPS final rule median
costs to allow all interested stakeholders to review and comment on the
data.
Response: During the August 10-11, 2011 meeting of the APC Panel,
we presented a list of all APCs whose median costs fluctuated by
greater than 10 percent when comparing the CY 2011 final rule median
costs to CY 2012 proposed rule median costs. While the proposed payment
for APC 0377 represented a reduction in payment of 11 percent, the
decline in median cost was less than 10 percent; therefore, it was not
included on the list presented to the APC Panel during its August 10-
11, 2011 meeting. The comparisons of APCs with median costs fluctuating
by more than 10 percent is based on median cost data available on the
CMS Web site at: http://www.cms.gov/HospitalOutpatientPPS.
Additionally, the OPPS Limited Data Set (LDS), which contain claims
used to establish median cost for use in ratesetting, is available for
purchase on the CMS Web site at: http://www.cms.gov/HospitalOutpatientPPS. Therefore, interested stakeholders have access
to the same data that we examined and presented to the APC Panel.
After considering the public comments we received and examining the
reasons for the decline in the median cost for APC 0377, we are
declining to make any of the adjustments to the median cost that
commenters requested because we believe that the data on which the
median cost for APC 0377 is calculated are valid and that the median
cost is an appropriate reflection of the 50th percentile of the array
of the estimated costs of services assigned to APC 0377. Therefore, we
are finalizing our CY 2012 proposal, without modification, to continue
to assign CPT codes 78451, 78452, 78453, and 78454 to APC 0377. We are
finalizing a payment rate for APC 0377 for CY 2012 based on the CY 2012
OPPS final rule median cost of approximately $672.
c. Insertion/Replacement/Repair of AICD Leads, Generator, and Pacing
Electrodes (APC 0108)
We refer readers to section II.A.2.E.(6) of this final rule with
comment period for a detailed discussion of this issue.
d. Implantable Loop Recorder Monitoring (APC 0690)
For CY 2012, we proposed to reassign 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) from APC 0691
(Level III Electronic Analysis of Devices) to APC 0690 (Level I
Electronic Analysis of Devices), with a proposed payment rate of
approximately $35.
Comment: Some commenters objected to the reassignment of CPT code
93299 from APC 0691 to APC 0690. They believed that the reassignment
will result in inadequate payment to hospitals for the resources
required to provide the service and may be a disincentive to hospitals
to provide this service.
Response: The calculated median cost for CPT code 93299 based on CY
2010 hospital claims and cost report data available for this final rule
with comment period is approximately $38. We are confident that the
observed costs in the claims data are representative of the costs of
providing this service in CY 2010 because almost all of the claims are
single claims (2,249 out of 2,253) that can be used for ratesetting.
The calculated median cost of approximately $38 for CPT code 93299 is
similar to that of most of the CPT codes in APC 0690, and very close to
the overall APC median cost of approximately $35. In contrast, the
overall APC median cost for APC 0691 is approximately $168, more than
four times the median cost of CPT code 93299. Therefore, we do not
agree with commenters that the placement of CPT code 93299 in APC 0690
does not meet the APC recalibration standards of clinical and resource
homogeneity and would result in inadequate payment to hospitals. Thus,
we are finalizing our proposal, without modification, to reassign CPT
code 93299 to APC 0690 for CY 2012.
e. Echocardiography (APCs 0128, 0269, 0270, and 0697)
Under the OPPS, echocardiography services are reported using a
combination of CPT codes and HCPCS C-codes. Hospitals report the
echocardiography CPT codes when performing echocardiography procedures
without contrast. Alternatively, hospitals report the HCPCS C-codes
when performing echocardiography procedures with contrast, or without
contrast followed by with contrast. In addition to the HCPCS C-codes,
hospitals should also report the appropriate units of the HCPCS codes
for the contrast agents used in the performance of the echocardiograms.
Currently, there are four APCs that describe echocardiography
services
APC 0128 (Echocardiogram With Contrast)
APC 0697 (Level I Echocardiogram Without Contrast)
APC 0269 (Level II Echocardiogram Without Contrast)
APC 0270 (Level III Echocardiogram Without Contrast)
For CY 2012, we proposed payment rates for these APCs of
approximately $564, $219, $384, and $567, respectively.
Comment: Some commenters expressed concern with the proposed
payment rate of approximately $384 for CPT code 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), stating that the 5-percent decrease in the payment
rate could be the result of miscoding. The commenters suggested that
hospitals were continuing to bill CPT code 93307 (Echocardiography,
transthoracic, real-time with image documentation (2D), includes M-mode
recording, when performed, complete, without spectral or color Doppler
echocardiography) 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), rather than using CPT code 93306 because they were
still adjusting to billing with CPT code 93306. The commenters
requested that CMS confirm that the calculation of the median cost for
APC 0269, which is the APC that CMS proposed to continue to assign to
CPT code 93306, is based on correct coding.
Response: CPT code 93306 was made effective on January 1, 2009.
Consistent with our statement in the CY 2011 OPPS/ASC final rule with
comment period (75 FR 71947), we find no evidence that would suggest
that the fluctuations in cost data for echocardiography APCs are due to
incorrect hospital billing practices. For this CY 2012 OPPS/ASC final
rule with comment period, which is based on the CY 2010 hospital
outpatient claims for ratesetting, our claims show a significant volume
of data for CPT code 93306. Specifically, our analysis reveals a CPT
median cost of approximately $394 based on 975,213 single claims (out
of 990,809 total claims) for CPT code 93306, which represents 90
percent of the claims in APC 0269. Given the significant volume of
claims and its CPT median cost of
[[Page 74234]]
approximately $394, we believe that CPT code 93306 is appropriately
placed in APC 0269, which has a final APC median cost of approximately
$393 for CY 2012.
Therefore, after consideration of the public comments that we
received, we are finalizing our CY 2012 proposal, without modification,
to continue to assign CPT code 93306 to APC 0269. As has been our
practice since the implementation of the OPPS, we annually review all
the items and services within an APC group to determine, with respect
to comparability of the use of resources, for any 2 times rule
violations. In making this determination, we review our claims data and
determine whether we need to make changes to the current APC
assignments for the following year. We will again reevaluate the status
indicator and APC assignment for CPT code 93306 for the CY 2013 OPPS
rulemaking cycle.
Comment: Several commenters requested that CMS reassign CPT codes
76825 (Echocardiography, fetal, cardiovascular system, real time with
image documentation (2d), with or without m-mode recording) and 76826
(Echocardiography, fetal, cardiovascular system, real time with image
documentation (2d), with or without m-mode recording; follow-up or
repeat study) from the proposed APC 0697 to APC 0269. The commenters
believed that fetal echocardiography is just as resource intensive as
adult echocardiography. Another commenter stated that the low median
cost for these services is the result of low frequency for these
services, and suggested that some of the charges reported may be the
result of miscoding.
Response: In Addendum B of the CY 2012 OPPS/ASC proposed rule, we
flagged CPT codes 76825 and 76826 with comment indicator ``CH'' to
indicate that we are reassigning the APC assignments for these codes.
Specifically, we proposed to reassign CPT code 76825 from APC 0270 to
APC 0697, and reassign CPT code 76826 from APC 0269 to APC 0697.
Because these codes have been in existence for almost 20 years, and
have been reportable under the hospital OPPS since it was implemented
in 2000, we believe that the low frequency of these services is the
result of infrequent use of this procedure on Medicare patients.
Analysis of our claims data from the past 3 years, specifically from CY
2008, CY 2009, and CY 2010, reveal that these procedures are relatively
low volume procedures. CPT code 76825 has had fewer than 330 single
claims for ratesetting for each year (327 single claims in CY 2008, 291
single claims in CY 2009, and 282 single claims in CY 2010), with a CPT
median cost that has ranged between $89 and $126. Similarly, CPT code
76826 has had fewer than 50 single claims for ratesetting for each year
(25 single claims in CY 2008, 23 single claims in CY 2009, and 43
single claims in 2010), with a CPT median cost that has ranged between
$85 and $92. Based on our claims data, we believe that CPT codes 76825
and 76826 are more appropriately placed in APC 0697 based on their
clinical homogeneity and resource costs to the other procedure assigned
to APC 0697. Furthermore, despite the relatively low volumes, the
median costs for these services are notably stable and are more
consistent with the median costs of the services assigned to lowest
level echocardiogram APC, specifically, APC 0697, than to the services
assigned to APC 0269, which has an APC median cost of approximately
$393.
After consideration of the public comments received on our proposed
APC reassignment, we are finalizing our CY 2012 proposal, without
modification, to reassign CPT code 76825 from APC 0270 to APC 0697, and
to reassign CPT code 76826 from APC 0269 to APC 0697, which has a final
CY 2012 median cost of approximately $221.
Commenter: Several commenters expressed concern that the proposed
payment rate of approximately $567 for the non-contrast echocardiogram
procedures that are assigned to APC 0270 is higher than the proposed
payment rate of approximately $564 for the contrast echocardiograms
procedures that are assigned to APC 0128. The commenters indicated that
it is not appropriate for an APC with contrast enhanced echocardiogram
procedures to have a lower median cost and lower payment rate than an
APC with non-contrast enhanced echocardiogram procedures. The
commenters requested that CMS develop a more consistent and stable
payment methodology for echocardiograms that utilize contrast agents
because the cost of the contrast agents is approximately $117 and
requires significantly more work when compared to non-contrast
echocardiogram procedures. One commenter recommended that CMS adopt
three APCs for contrast-enhanced echocardiogram procedures to parallel
the three APCs that exist for non-contrast enhanced echocardiogram
procedures, while another commenter requested data analysis supporting
the higher proposed payment rate for APC 0270. Several commenters urged
CMS to pay separately for the administration and cost of the contrast
agent.
Response: As stated above, we have four separate APCs to which
echocardiography services are assigned. Procedures that utilize
contrast agents are assigned to APC 0128, while procedures without
contrast agents are assigned to one of three APCs, specifically, APC
0270, APC 0269, or APC 0697. As described above, in the CY 2012 OPPS/
ASC proposed rule, the proposed payment rates for APCs 0270, APC 0269,
and APC 0697 varied between $219 and $567. Analysis of our claims data
show that the median costs for two of the non-contrast echocardiogram
APCs (APC 0697 and 0269) are lower than the median cost of the contrast
echocardiogram APC (APC 0128). Specifically, our claims data show an
APC median cost of approximately $221 for APC 0697 and approximately
$393 for APC 0269, compared to the median cost of approximately $557
for APC 0128. Our claims data show a higher median cost for one of the
non-contrast echocardiography APCs, specifically, APC 0270, which has a
median cost of approximately $581. We agree with the commenters that,
in general, contrast-based echocardiography procedures would involve
more resources than non-contrast echocardiography services. However, we
believe that some non-echocardiography procedures are more complex than
contrast-based echocardiography procedures despite the lack of contrast
use, and as a result, we expect their costs to be higher. As shown by
our claims data, the costs involved with the non-contrast
echocardiography procedures assigned to APC 0270 are significantly
higher than the contrast-based echocardiography procedures that are
assigned to APC 0128. As we do every year, we will again review our
claims data for these services for the CY 2013 OPPS rulemaking cycle.
We find no evidence that would suggest that the median costs calculated
for these APCs based on hospital claims and cost report data
incorrectly reflect the relative resource costs of providing the
services in APC 0128 or APC 0697. We also do not believe that it is
necessary to separate APC 0128 into three APCs as one commenter
suggested, because the current composition results in no 2 times rule
violation and the major procedures in the APC are similar based on
resource costs, ranging from approximately $505 to approximately $732.
In addition, payment for the administration of contrast agents as
well
[[Page 74235]]
as the contrast agent products are included in payment for the
associated imaging procedure, as discussed in section V.B.2.d. of this
final rule with comment period. In limited circumstances, we pay
separately for contrast agents that are approved for pass-through
status under the OPPS, as discussed in section V.A. of this final rule
with comment period. Payment for pass-through status is limited to a
minimum of 2 years but no more than 3 years.
Furthermore, as we stated above, hospitals should report the
appropriate units of the HCPCS codes for the contrast agents used in
the performance of the echocardiograms procedures. It is extremely
important that hospitals report all HCPCS codes, consistent with their
descriptors, CPT and/or CMS instructions, and correct coding
principles, for all charges for all services they furnish, whether
payment for the services is made separately or is packaged. 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 Medicare beneficiaries.
After consideration of the public comments we received, we are
finalizing, without modification, our CY 2012 proposal to continue to
calculate our median costs for the non-contrast echocardiography
procedures based on APCs 0697, 0269, and 0270, and to calculate our
median costs for the contrast-echocardiography procedures based on APC
0128. We believe that continuing this methodology in CY 2012 results in
payment rates for the contrast echocardiography and non-contrast
echocardiography procedures that appropriately reflect the costs for
these services. For a more detailed discussion and history of the OPPS
payment for echocardiography services, we refer readers to the CY 2008
OPPS/ASC final rule with comment period (72 FR 66644 through 66646),
the CY 2009 OPPS/ASC final rule with comment period (73 FR 68542
through 68544), and the CY 2010 OPPS/ASC final rule with comment period
(74 FR 60374 through 60383). Table 22 below shows the procedures and
final median costs assigned to the four echocardiography APCs.
[[Page 74236]]
[GRAPHIC] [TIFF OMITTED] TR30NO11.035
2. Gastrointestinal Services
a. Upper Gastrointestinal (GI) Services (APCs 0141, 0419, and 0422)
For CY 2012 we proposed to create new APC 0419 (Level II Upper GI
Procedures), an intermediate APC between APC 0141 (Level I Upper GI
Procedures) and APC 0422 (Level II Upper GI Procedures, which we
proposed to rename ``Level III Upper GI Procedures''). For APC 0141, we
calculated a proposed rule median cost for CY 2012 of approximately
$603. For proposed new APC 0419, we calculated a proposed rule median
cost of approximately $904. For APC 0422, we calculated a proposed rule
median cost of approximately $1,833.
For CY 2011, there are two upper gastrointestinal (GI) procedure
APCs, APC 0141, which has a CY 2011 national unadjusted payment rate of
$611.73, and APC 0422, which has a CY 2011 national unadjusted payment
rate of $1,148.75. In the CY 2011 OPPS/ASC proposed rule, we proposed
to reconfigure APCs 0141 and APC 0422 by moving several CPT codes from
APC 0141 to APC 0422. We had received public comments on the CY 2011
proposed rule objecting to our CY 2011 proposal on the basis that the
reconfiguration would reduce the median cost and, therefore, the
payment for services to which APC 0422 was assigned and would not
maintain the clinical homogeneity of these services. Instead
commenters, including the applicable medical specialty societies, asked
that we reconfigure APCs 0141 and 0422 to create three APCs by adding a
new APC for upper GI procedures. They also recommended a HCPCS
configuration that they believed would provide payment rates that would
more accurately reflect the median costs of the services in APCs 0141
and 0422. We
[[Page 74237]]
finalized our proposed changes to APCs 0141 and 0422 for CY 2011
without establishing a third APC for upper GI procedures for the
reasons discussed in the CY 2011 OPPS/ASC final rule with public
comment period (75 FR 71907).
However, when we developed the median costs for APCs 0141 and 0422
using CY 2010 claims data for discussion at the APC Panel meeting of
February 28-March 1, 2011, we observed that there was a 2 times rule
violation for APC 0141 that had not existed for the CY 2010 OPPS. For
the APC Panel meeting, we simulated the HCPCS codes and APC median
costs that would result from the reconfiguration that was recommended
by the stakeholders in their comments on the CY 2011 OPPS/ASC final
rule with comment period, and we discussed the results with the APC
Panel. The APC Panel recommended that CMS create an intermediate level
upper GI procedures APC (APC Panel Recommendation 13). The APC Panel
recommendations and report may be found at the APC Panel Web site,
located at: http://www.cms.gov/FACA/05_AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp.
For the reasons we discuss below, as stated in the proposed rule,
we accepted the APC Panel recommendation to propose to establish three
levels of upper GI procedure APCs and to propose to adopt the
reconfiguration recommended by stakeholders because we believe that the
proposed reconfiguration will provide payments that are more closely
aligned with the median costs of the services. We stated that creating
an intermediate APC for upper GI procedures would provide APC median
costs that are more closely aligned with the median costs for the many
CPT codes for upper GI procedures, and therefore, the APC median costs
better reflect the resources required to provide these services as
defined by the CPT codes for them. Moreover, we believed that the
proposed reconfiguration would resolve the 2 times rule violation that
would result in APC 0141 if we were to apply the CY 2011 APC
configuration to the CY 2012 proposed rule data. Therefore, we stated
in the proposed rule that we believed that we would need to propose to
reassign HCPCS codes, regardless of whether we created the intermediate
APC for CY 2012. We stated that we believed that the proposed
reconfiguration to create the intermediate APC would be the most
appropriate means of avoiding a 2 times rule violation that would
otherwise exist for CY 2012 and that the resulting median costs would
provide payments that are more reflective of the relative costs of the
services being furnished.
Therefore, in the CY 2012 OPPS/ASC proposed rule (76 FR 42238), for
CY 2012, we proposed to create new APC 0419 (Level II Upper GI
Procedures), as recommended by the stakeholders, and we proposed to
reassign HCPCS codes previously assigned to APCs 0141 and 0422 to the
three APC configuration. Table 23 of the proposed rule contained the
proposed HCPCS code reassignments for CY 2012 using the proposed three
APC reconfiguration. We believe that this proposed reconfiguration
classifies upper GI CPT codes in groups that demonstrate the best
clinical and resource homogeneity. For APC 0141, we calculated a
proposed rule median cost for CY 2012 of approximately $603. For
proposed new APC 0419, we calculated a proposed rule median cost of
approximately $904. For APC 0422, we calculated a proposed rule median
cost of approximately $1,833.
At its August 10-11, 2011 APC Panel meeting, the APC Panel
recommended that CMS adopt the proposed APC reconfiguration for upper
gastrointestinal (GI) procedures and the creation of a new APC 0419
(Level II Upper GI Procedures). The Panel further recommended that
HCPCS code 43227 (Esophagoscopy, rigid or flexible; with control of
bleeding (e.g., injection, bipolar cautery, unipolar cautery, laser,
heater probe, stapler, plasma coagulator)) and HCPCS code 43830
(Gastrostomy, open; without construction of gastric tube (e.g., Stamm
procedure) (separate procedure)) be reassigned to APC 0422 (proposed to
be renames ``Level III Upper GI Procedures'').
Response to APC Panel Recommendation: We do not agree with the APC
Panel recommendation to move CPT code 43227 to APC 0422 because CPT
code 43227 is a very low volume service with a total frequency of 45 in
CY 2010, for which the median cost has varied considerably over the
past few years ($1,010 in CY 2011; $725 in CY 2010). We will reassess
the placement of CPT code 43227 for CY 2013. However, we agree with the
APC Panel's recommendation to move CPT code 43830 to APC 0422 because
the median cost for CPT code 43830 of approximately $1,630 is more
similar to the median cost for APC 0422 of approximately $1,819 and is
less similar to the median cost for APC 0319 of approximately $887.
Therefore, we are assigning CPT code 43830 to APC 0422 for the CY 2012
OPPS.
Comment: Many commenters supported the creation of new APC 0419.
Commenters indicated that creation of the new intermediate APC would
result in APCs for upper GI procedures that are more cohesive with
regard to the resources used to provide the services and would provide
for more equitable payment for these services. In particular,
commenters were pleased to with the proposed reassignment of CPT code
43228 to APC 0422 because they believed that the assignment would
enable facilities to cover the cost of the device and provide patients
with greater access to the service. One commenter objected to the
reconfiguration of these APCs on the basis that some of the services in
each APC have median costs that are higher than the median cost for the
APC and, therefore, would be paid less than their median cost.
Response: We continue to believe that it is appropriate to create a
third level of upper GI procedures and that it is appropriate to assign
CPT code 43228 to APC 0422 for the reasons discussed in the proposed
rule as summarized at the beginning of this section. Therefore, we are
adopting our proposal to create new APC 0419 for CY 2012, and we have
assigned CPT code 43228 to APC 0422 for CY 2012. We disagree with the
commenter who objected to the reconfiguration of the upper GI procedure
APCs on the basis that the medians for some HCPCS codes in each APC
were higher than the median cost for the APC. The median cost by
definition is the 50th percentile of the array of the costs of single
bills. Therefore, the median costs for some HCPCS codes will always
fall below the median cost for the APC. A fundamental principle of a
prospective payment system like the OPPS is that prospective payment is
set at a measure of central tendency that, on average, pays an amount
that is appropriately reflective of the relative cost of the services
in the group to which the payment rate applies.
Comment: Several commenters objected to the proposed assignment of
CPT code 43257 (Upper gastrointestinal endoscopy including esophagus,
stomach, and either the duodenum and/or jejunum as appropriate; with
delivery of thermal energy to the muscle of lower esophageal sphincter
and/or gastric cardia, for treatment of gastroesophageal reflux
disease) and CPT code C9724 (Endoscopic full thickness placation in the
gastric cardia using endoscopic placation system (EPS); includes
endoscopy) to APC 0422 and asked that CMS create an APC for transoral
surgical endoscopy to which these codes would be assigned. The
commenters believe that CPT codes 43257 and C9724 are clinically
different
[[Page 74238]]
from most other services in APC 0422 because these services provide
surgical therapy and that the resources required to furnish them are
much greater than the resources required to furnish the other services
in APC 0422. Commenters requested the creation of the new level IV
upper GI procedure APC that they believed would result in appropriate
payment for these procedures and would also improve the accuracy of the
payment for the procedures that will remain in APC 0422. Commenters
stated that current claims data for CPT code 43257 underestimates the
cost of the service because hospitals are using the code incorrectly.
They also stated that the CY 2010 claims data for CPT code 43257
reports the cost of a generation 1 Stretta catheter that was sold at a
cost of $1,225, although since 2010 hospitals have been using a
generation 2 catheter which has an average sales price of $2,450.
Therefore, the commenters asserted that the use of CY 2010 claims data
will not fully reflect the cost of the devices that will be used in CY
2012. Commenters suggested that CMS designate the new level IV APC that
they requested as device dependent, establish procedure-to-device
edits, and use only the claims that meet the device edits in setting
the rates for the applicable APCs.
Response: We disagree that it is necessary to create a fourth level
upper GI APC to which to assign HCPCS codes 43257 and C9724. We believe
that CPT codes 43257 and C9724 are clinically similar to the other
services assigned to APC 0422 such as CPT codes 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), and 43870 (Closure of gastrostomy,
surgical), which are both therapeutic upper GI procedures. Moreover,
the final median cost for CPT code 43257 of approximately $1,535 falls
below the final median cost for APC 0422 of approximately $1,819. As we
discuss in section II.A. of this final rule with public comment, we
calculate the median costs of services based on the most recent charges
and cost reports that are available to us at the time we are preparing
the proposed and final rules. To the extent that the costs for the
catheter used to furnish CPT code 43257 increased after CY 2010, those
costs will be used to establish payment rates for the years in which
the claims are used. With regard to HCPCS code C9724, we note that it
is a low volume service for which the median cost has varied widely
over the past few years (for example, $1,370 for CY 2009 OPPS; $2,947
for CY 2010 OPPS; and $5,139 for CY 2011 OPPS), and we believe that its
median cost of approximately $5,944 and low volume make it unsuited for
establishment of a single service APC for CY 2012 OPPS. We note that
placement of HCPCS code C9724 in APC 0422 is not a violation of the 2
times rule because HCPCs code C9724 is not a significant procedure to
which the 2 times rule applies because it has a single bill frequency
of less than 1,000 and also has a single bill frequency that is less
than 99 and the single bills represent less than 2 percent of the
single bills used to calculate the median cost for APC 0422. We refer
readers to section III.B. of this final rule with comment period for
additional information regarding the 2 times rule.
After consideration of the comments we received, we are finalizing
our proposals to create new APC 0419 (Level II Upper GI Procedures), to
rename APC 0422 as ``Level III Upper GI Procedures'', and to reassign
the HCPCS codes for upper GI procedures to the three APC configuration
(APCs 0141, 0419 and 0422) for CY 2012 OPPS, as shown in Table 23
below. We are not creating a level IV upper GI procedure APC into which
to place HCPCS codes 43257 and C9724 because we believe that HCPCS
codes 43257 and C9724 are appropriately assigned to APC 0422 for CY
2012. We are not accepting the APC Panel's recommendation that we
reassign CPT code 43227 to APC 0422 because it is a very low volume
service for which the median cost has not been stable over the past few
years. We are accepting the APC Panel's recommendation that we reassign
CPT code 43830 to APC 0422, and we have done so for the CY 2012 OPPS.
BILLING CODE 4120-01-P
[[Page 74239]]
[GRAPHIC] [TIFF OMITTED] TR30NO11.036
[[Page 74240]]
[GRAPHIC] [TIFF OMITTED] TR30NO11.037
[[Page 74241]]
[GRAPHIC] [TIFF OMITTED] TR30NO11.038
BILLING CODE 4120-01-C
b. Gastrointestinal Transit and Pressure Measurement (APC 0361)
The AMA CPT Editorial Panel created CPT code 0242T
(Gastrointestinal tract transit and pressure measurement, stomach
through colon, wireless capsule, with interpretation and report)
effective January 1, 2011. For CY 2011, we assigned CPT code 0242T to
APC 0361 (Level II Alimentary Tests) with a payment rate of $282.48.
For CY 2012, we proposed to maintain the assignment of CPT code 0242T
to APC 0361 with a proposed rule median cost of approximately $295, and
a proposed payment of $284.80. (The CY 2012 OPPS/ASC final rule median
cost for APC 0361 is approximately $286.)
Comment: Several commenters on the CY 2011 final rule with comment
period regarding the APC assignment of CPT code 0242T, requested
reassignment of CPT code 0242T from APC 0361 to New Technology APC 1510
(New Technology APC--Level X), which has a payment rate of $850. The
commenters claimed that CPT code 0242T is not similar to the other
procedures assigned to APC 0361 either in terms of clinical similarity
or resource costs; therefore, it should be assigned to a New Technology
APC because there currently are insufficient utilization and claims
data for the service. The commenters believed that CPT code 0242T is
significantly different than the other procedures in APC 0361, which
[[Page 74242]]
are predominantly indicated to assess the esophagus, while CPT code
0242T is purportedly a unique test that provides transit, pressure, pH,
and temperature measurement of the GI tract from the stomach to the
colon. The commenters also stated that the resources, including
clinical labor, for the procedures in APC 0361 differ from those of CPT
code 0242T. The commenters claimed that the manometric tests assigned
to APC 0361 measure neuromuscular activity in an anatomically specific,
fixed manner, utilizing a reusable catheter, while CPT code 0242T
utilizes a disposable capsule and a special meal to capture multiple
pressure and transit measurements throughout the GI tract and cost $600
per procedure. Adding other procedure costs to the disposable costs
yields total procedure costs in excess of $800, according to the
commenters. The commenters point to the past assignment of CPT code
91110 (Gastrointestinal tract imaging, intraluminal (eg, capsule
endoscopy), esophagus through ileum, with physician interpretation and
report) to a New Technology APC until sufficient claims data were
gathered for assignment to a clinical APC, and they request a similar
approach to APC assignment for CPT code 0242T.
Response: We disagree that assignment to a clinical APC necessarily
implies that there are clinical and cost data for a new service. We
routinely make assignments of new CPT codes to clinical APCs before we
have claims data that are indicative of their source costs of a
procedure. We make these assignments initially using the best currently
available information, while reviewing claims data once such data
become available and making reassignments accordingly based on those
data. We expect to do the same regarding CPT code 0242T.
As was the case when we made the initial assignment for CY 2011, we
continue to believe that there are relevant clinical similarities
between the CPT code 0242T service and other services in APC 0361 to
continue to justify this APC assignment. CPT code 0242T and the
services in APC 0361 all involve tests of the alimentary canal.
Regarding resource costs, the final rule median cost of APC 0361 is
approximately $288, with a median cost range of procedures in the APC
from approximately $235 to approximately $680. We do not believe a New
Technology APC is warranted for this procedure at this time. We believe
that the clinical attributes and CY 2012 median costs of the services
found in APC 0361 support the assignment of CPT code 0242T to APC 0361
as an initial assignment. We generally wait until median cost claims
data are available before reassignment to a new APC. For CY 2012, we
will maintain our assignment of CPT code 0242T to APC 0361, which has a
final median cost of approximately $286. We will review this assignment
for CY 2013 when some claims data should be available for this
procedure.
3. Genitourinary Services
a. Laser Lithotripsy (APC 0163)
For CY 2012, we proposed to continue to assign CPT codes 52353
(Cystourethroscopy, with ureteroscopy and/or pyeloscopy; with
lithotripsy (ureteral catheterization is included)) and 50590
((Fragmenting of kidney stone) to their existing CY 2011 APCs. That is,
we proposed to continue to assign CPT code 52353 to APC 0163 (Level IV
Cystourethroscopy and other Genitourinary Procedures), which had a
proposed payment rate of approximately $2,566, and to continue to
assign CPT code 50590 to APC 0169 (Lithotripsy), which had a proposed
payment rate of approximately $3,568. CPT code 50590 was made effective
January 1, 1986, and describes an extracorporeal shock wave
lithotripsy. CPT code 52353 was made effective January 1, 2001, and
describes a cystourethroscopy with lithotripsy. Our understanding is
that the lithotripsy described in CPT code 52353 is laser lithotripsy.
At the August 2011 APC Panel Meeting, a presenter requested the
Panel to recommend to CMS to reassign CPT code 52353 from APC 0163 to
the same APC as CPT code 50590, which is APC 0169. The presenter stated
that the proposed payment rate for APC 0169 for CY 2012 shows an
increase of approximately 23 percent in the OPPS and approximately 25
percent in the ASCs, while the proposed payment rate for APC 0163 shows
a 0.3 percent decrease in the OPPS and a 1.3 percent decrease in the
ASCs, thereby creating a significant financial advantage for shock wave
lithotripsy over ureteroscopy with lithotripsy. The presenter further
suggested that placing CPT code 52353 in APC 0169 would be clinically
appropriate because both procedures describe lithotripsy of stones in
the ureter and kidney, and also because their historical median costs
have tracked closely over time. After discussion of the of the median
costs observed for both CPT codes 52353 and 50590, the APC Panel made
no recommendation on the CY 2012 APC assignment for CPT code 52353.
Comment: Some commenters recommended the reassignment CPT code
52353 to the same APC as CPT code 50590, which is APC 0169. One
commenter argued that the reassignment of CPT code 52353 to APC 0169
would avoid potential incentives to use shock wave lithotripsy over
ureteroscopy with lithotripsy. This commenter further stated that these
two similar and competing procedures should be placed in the same APC
so that their OPPS and ASC payment rates will increase, or decrease,
consistently in the future.
Response: CPT code 50590 has been assigned to APC 0169 since the
OPPS was implemented in 2000. CPT code 52353 was initially assigned to
APC 0162 (Level III Cystourethroscopy Procedures) when the CPT code was
made effective in 2001. However, in CY 2002, we revised the APC
assignment for CPT code 52353 to APC 0163 (Level IV Cystourethroscopy
Procedures) based on input from our clinical advisors that the
procedure is similar to the other procedures in APC 0163 based on
clinical homogeneity and resource costs. Since CY 2002, CPT code 52353
has been assigned to APC 0163.
In addition, we disagree with the commenter that placing these two
procedures in two separate APCs creates an incentive to use one
procedure over another. We believe that physicians would choose the
most appropriate procedure based on a patient's diagnosis and other
relevant clinical factors. Further, based on our claims data, we do not
believe that placing both procedures in the same APC would be
appropriate. Our analysis of the final CY 2012 claims data reveal that
shock wave lithotripsy (CPT code 50590) is more commonly performed on
Medicare patients than ureteroscopy with lithotripsy (CPT code 52353).
Specifically, our data show a CPT median cost of approximately $2,711,
based on 3,366 single claims, for CPT code 52353. CPT code 52353
represents 22 percent of the claims within APC 0163, and its CPT median
cost of approximately $2,711 is relatively close to the CY 2012 final
APC median cost of approximately $2,596 for APC 0163.
In contrast, the CY 2012 final median cost for CPT code 50590,
which is in APC 0169, is approximately $3,647, based on 30,178 single
claims. This final median cost of approximately $3,647 for CPT code
50590 is higher than the final median cost of approximately $2,711 for
CPT code 52353.
Comment: One commenter suggested that the increase in the median
cost for CPT code 50590 may be a result of the application of a CCR
calculated from costs and charges reported in the nonstandard cost
center data for lithotripsy.
[[Page 74243]]
Response: The nonstandard lithotripsy cost center 07699 is a
feature of the hospital cost report CMS 2552-10. No CMS 2552-10 cost
reports were used in determining the payment rates for the CY 2012
OPPS. The CCRs in the CY 2012 OPPS are created from the hospital cost
report CMS 2552-96, and there is no standard or nonstandard lithotripsy
cost center in the CMS 2552-96 cost report.
Given our claims data for the CY 2012 update for these lithotripsy
procedures, we believe that CPT code 52353 is appropriately placed in
APC 0163 based on its clinical homogeneity and resource cost compared
to other procedures already assigned in APC 0163. As has been our
practice since the implementation of the OPPS in 2000, we review, on an
annual basis, the APC assignments for the procedures and services paid
under the OPPS. We will continue to review on an annual basis the APC
assignment for CPT code 52353 and determine whether a reassignment in
the APC is necessary.
Therefore, after consideration of the public comments we received,
we are finalizing our CY 2012 proposal, without modification, to
continue to assign CPT code 52353 to APC 0163, which has a final CY
2012 median cost of approximately $2,596, and to continue to assign CPT
code 50590 to APC 0169, which has a final CY 2012 median cost of
approximately $3,647.
b. Percutaneous Renal Cryoablation (APC 0423)
For CY 2012, 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 $3,969. This CPT code was new
in CY 2008; however, the same service was previously described by CPT
code 0135T (Ablation renal tumor(s), unilateral, percutaneous,
cryotherapy). We note that in CY 2007, based upon the APC Panel's
recommendation made at the March 2006 APC Panel meeting, we reassigned
CPT code 50593 (then CPT code 0135T) from APC 0163 ((Level IV
Cystourethroscopy and other Genitourinary Procedures)) to APC 0423. We
expect hospitals, when reporting CPT code 50593, to also report the
device HCPCS code, C2618 (Probe, cryoablation), associated with the
procedure.
Comment: One commenter disagreed with the proposed continued
assignment for CPT code 50593 to APC 0423 because, the commenter
stated, this APC includes other procedures that do not require the use
of high-cost devices, such as cryoablation probes. The commenter
reported that the payment rate of approximately $3,969 for the
procedure does not accurately reflect the costs incurred by hospitals
that perform this procedure, and, as a result, hospitals are reluctant
to perform this procedure. The commenter suggested that CMS determine
the payment rate for CPT code 50593 based on its mean cost, rather than
on median cost. The commenter stated that the proposed mean cost for
APC 0423 is approximately $4,835, and approximately $5,394 for CPT code
50593. Further, the commenter recommended that CMS designate CPT code
50593 as a device-dependent procedure and require hospitals to submit
claims with the appropriate HCPCS code, C2618, so that charges can be
reported appropriately. The commenter stated that CPT code 50593 cannot
be performed without the device, and adding CPT code 50593 to the
device-dependent procedure list would result in more accurate claims
data for future ratesetting.
Response: First, we believe that CPT code 50593 is appropriately
placed in APC 0423 based on clinical and resource costs when compared
to other procedures also assigned to APC 0423. 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), the CY
2010 OPPS/ASC final rule with comment period (74 FR 60444), and the CY
2011 OPPS/ASC final rule with comment period (75 FR 71910), we 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.
For CY 2012, we proposed to assign four CPT codes to APC 0423.
These procedures share similar median costs ranging from approximately
$3,733 to approximately $4,493, which are well within the two-fold
variation in median cost that is permitted by the law for an OPPS
payment group. Therefore, the grouping of these procedures in the same
APC does not violate the 2 times rule. We note that all four of these
procedures are relatively low volume, with fewer than 1,800 total
claims each for CY 2010 and fewer than 700 single claims each for
ratesetting. We believe that grouping these clinically similar, low-
volume procedures for the percutaneous ablation of renal, liver, or
pulmonary tumors in the same payment group helps to promote payment
stability for these low volume services.
Secondly, as we stated in the CY 2009 OPPS/ASC final rule with
comment period (73 FR 68611), the final APC relative weights and
payment rates are based on median hospital costs, not mean costs, for
APC groups. The OPPS relies on the relativity of costs for procedures
as reported by hospitals in establishing payment rates, and we do not
believe it would be appropriate to utilize a different payment
methodology based on mean cost for one APC, while the payment rates for
the other clinical APCs would be based on median costs. Mean and median
costs are two different statistical measures of central tendency and,
based on common distributions, mean costs typically are higher than
median costs. Therefore, we do not believe it would be appropriate to
use a combination of these measures to establish the payment weights
for different APCs under the OPPS.
Further, 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), the CY 2010 OPPS/ASC final rule with
comment period (74 FR 60444), and the CY 2011 OPPS/ASC final rule with
comment period (75 FR 71910), we designate a procedure as device-
dependent service based on consideration of all the procedures in a
single APC. 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, it would not be possible for us
to develop procedure-to-device edits for all of the CPT codes assigned
to APC 0423.
Finally, we remind hospitals that we expect all of the HCPCS codes
to be reported that appropriately describe the items used to provide
services, regardless of whether the HCPCS codes are packaged or paid
separately. When reporting CPT code 50593, we expect hospitals to also
report the device HCPCS code C2618, which is associated with this
procedure. If hospitals use more than one probe in performing the CPT
code 50593 procedure, 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 CPT code 50593
procedure as the units of HCPCS code C2618, which describes these
devices, with their charges for the probes. Since CY
[[Page 74244]]
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 devices used in procedures when
they submit claims for those procedures.
After consideration of the public comment we received, we are
finalizing our CY 2012 proposal, without modification, to continue to
assign CPT code 50593 to APC 0423, which has a final CY 2012 APC median
cost of approximately $4,096.
4. Nervous System Services
a. Revision/Removal of Neurostimulator Electrodes (APCs 0040 and 0687)
As discussed in detail in the CY 2012 OPPS/ASC proposed rule (76 FR
42233 through 42234), for CY 2012, we proposed to move CPT codes 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)
from APC 0687 (Revision/Removal of Neurostimulator Electrodes) to APC
0040 (Level I Implantation/Revision/Replacement of Neurostimulator
Electrodes). We noted that the proposed CY 2012 median costs for CPT
codes 63663 and 63664 of approximately $4,316 and $4,883, respectively,
are more consistent with the proposed median cost of APC 0040 of
approximately $4,516 than with the proposed median cost of APC 0687 of
approximately $1,492. We also proposed to change the title of APC 0040
from ``Percutaneous Implantation of Neurostimulator Electrodes'' to
``Level I Implantation/Revision/Replacement of Neurostimulator
Electrodes'' and the title of APC 0061 (Level II Implantation/Revision/
Replacement of Neurostimulator Electrodes) from ``Laminectomy,
Laparoscopy, or Incision for Implantation of Neurostimulator
Electrodes'' to ``Level II Implantation/Revision/Replacement of
Neurostimulator Electrodes.'' 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, and 63664 were all effective
January 1, 2010. We proposed that CPT codes 63661 and 63662 would
remain in APC 0687.
In addition, for CY 2012, we proposed to assign CPT 64569 (Revision
or replacement of cranial nerve (eg, vagus nerve) neurostimulator
electrode array, including connection to existing pulse generator),
effective January 1, 2011, to APC 0687.
Comment: Several commenters supported the proposed reassignment of
CPT codes 63663 and 63664 from APC 0687 to APC 0040. The commenters
believed that the proposed reassignment places these CPT codes in an
APC that is consistent with their median costs. The commenters also
supported the retention of CPT code 63661 and 63662 in APC 0687 because
their proposed CY 2012 median costs are consistent with the overall
proposed APC 0687 median costs. In addition, the commenters agreed with
the proposed title changes for APC 0040 and APC 0061. One commenter
agreed with the proposed reassignment of CPT codes 63663 and 63664 to
APC 0040 but recommended the creation of two new HCPCS codes to allow
hospitals to differentiate between revision and replacement procedures
and to foster analysis of the cost differences between revision and
replacement procedures for purposes of future APC assignments. The
commenter also sought device-to-procedure and procedure-to-device edits
to ensure device costs are completely captured.
Response: We appreciate the commenters' support for the
reassignment of CPT codes 63663 and 63664 from APC 0687 to APC 0040,
the continued assignment of CPT codes 63661 and 63664 to APC 0687, and
the title changes to APC 0040 and APC 0061. We agree with the
commenters that the proposed changes would ensure that all four codes
are in APCs that are consistent with their median costs. Therefore, we
are finalizing our proposals to reassign CPT codes 63663 and 63664 to
APC 0040, to continue to assign CPT codes 63661 and 63662 to APC 0687,
and to change the titles of APC 0040 to ``Level I Implantation/
Revision/Replacement of Neurostimulator Electrodes'' and APC 0061 to
``Level II Implantation/Revision/Replacement of Neurostimulator
Electrodes.''
We do not agree that it is necessary to create new HCPCS codes in
order to differentiate between neurostimulator electrode replacement
and revision procedures. As we discussed in the CY 2012 OPPS/ASC
proposed rule (76 FR 42234), we examined the CY 2010 claims data
available for the proposed rule to compare the frequency of claims
containing CPT codes 63663 or 63664 that were billed with and without
HCPCS code C1778 (Lead, neurostimulator (implantable)) or HCPCS code
C1897 (Lead, neurostimulator test kit (implantable)) in order to
determine whether they describe mainly device revision or replacement
procedures. Because the majority of claims did not contain HCPCS code C
1778 or C1897, these findings suggested that these CPT codes are being
used by hospitals to describe mainly device revision procedures,
although there were a significant number of cases with device
replacement procedures in the claims data. We also note that we
implemented claims processing logic to allow CPT codes 63663 and 63664
to satisfy the device-to-procedure edits for HCPCS codes C1778 and
C1897, effective January 1, 2012. We cannot implement procedure-to-
device edits for CPT codes 63663 and 63664 because they do not always
involve the implantation of a device.
Comment: One commenter objected to the proposed assignment of CPT
code 64569 to APC 0687. The commenter stated that CPT code 64569 is
clinically similar to CPT codes 63663 and 63664, the only difference
being CPT code 64569 is an incision-based procedure, while CPT codes
63663 and 63664 are percutaneous. The commenter also argued that
assigning CPT code 64569 to APC 0687 would result in significant
financial losses for hospitals and presented simulated data using
claims for CPT code 63663 and 63664 to estimate a median cost for CPT
code 64569 ranging between approximately $5,551 and $7,790.
Response: We are assigning CPT code 64569 to APC 0687, as we
proposed, with a CY 2012 final rule median cost of approximately
$1,451. We do not agree that CPT code 64569 is inappropriately assigned
to APC 0687. Our clinical analysis indicates that CPT code 64569 is
similar to the other device revision and replacement procedures in APC
0687. Furthermore, since CPT code 64569 was effective January 1, 2011,
we do not have frequency and cost information upon which to make an
assessment of whether there is a meaningful difference between the cost
of revising the VNS electrodes and generator or replacing them. We do
not agree with the commenter that it is possible to derive meaningful
estimates of the costs of providing the service described by CPT code
64569 by using data for CPT codes 63663 and 63664 because these codes
involve different types of devices. Therefore, we are not
[[Page 74245]]
convinced by the commenter that the assignment of the CPT code 64569 to
APC 0687 is inappropriate. As we did with the CPT codes 63661 through
63664, we will continue to monitor and analyze the data for CPT code
64569 when it becomes available.
After consideration of the public comments we received, we are
finalizing our proposal, without modification, to assign CPT codes
63663 and 63664 to APC 0040 and to assign CPT codes 63661, 63662, and
64569 to APC 0687. We also are finalizing our proposal to change the
title of APC 0040 from ``Percutaneous Implantation of Neurostimulator
Electrodes'' to ``Level I Implantation/Revision/Replacement of
Neurostimulator Electrodes'' and the title of APC 0061 from
``Laminectomy, Laparoscopy, or Incision for Implantation of
Neurostimulator Electrodes'' to ``Level II Implantation/Revision/
Replacement of Neurostimulator Electrodes.''
b. Magnetoencephalography (MEG) (APCs 0065, 0066, and 0067)
There are three CPT codes associated with MEG: 95965
(Magnetoencephalography (meg), recording and analysis; for spontaneous
brain magnetic activity (eg, epileptic cerebral cortex localization));
95966 (Magnetoencephalography (meg), recording and analysis; for evoked
magnetic fields, single modality (eg, sensory, motor, language, or
visual cortex localization)); and 95967 (Magnetoencephalography (meg),
recording and analysis; for evoked magnetic fields, each additional
modality (eg, sensory, motor, language, or visual cortex
localization)). For CY 2012 we calculated a proposed rule median cost
of approximately $1,821 for CPT code 95965 based on a frequency of 48
single bills out of a total frequency of 50 bills. We proposed to
continue to assign CPT code 95965 to APC 0067 (Level III Stereotactic
Radiosurgery, MRgFUS, and MEG), which had a proposed rule median cost
of approximately $3,368.
At its August 10-11, 2011 meeting, the APC Panel made two
recommendations with regard to CPT code 95965. First, the APC Panel
recommended that CMS implement appropriate edits requiring hospitals to
use the new MEG revenue code, 086X, with CPT codes 95965, 95966, and
95967. We address this recommendation in the context of a comment from
the public to which we respond below. Second, the APC Panel recommended
that CMS move CPT code 95965 from APC 0067 to APC 0066 (Level II
Stereotactic Radiosurgery, MRgFUS, and MEG), for consistency. We agree
with this recommendation and have reassigned CPT code 95965 to APC 0066
because the median cost in the data available for this final rule with
comment period for CPT code 95965 of approximately $1,741 is similar to
the median cost of APC 0066 of approximately $2,521. In contrast, the
median cost of APC 0067 of approximately $3,374 is substantially above
the median cost for CPT code 95965. We note that the procedure
described by CPT code 95965 is a low-volume service for which we have a
single bill frequency of 70, compared to a total bill frequency of 75,
in our CY 2012 OPPS final rule data. Although it is a low-volume
service, single bills represent 93 percent of total frequency for CPT
code 95965.
Comment: Commenters stated that the costs of MEG are far higher
than the costs of electroencephalograms (EEG) and electrocardiograms
(ECG) and that therefore CMS should not use the CCRs from the cost
centers for these services to reduce the charges for MEG to costs.
Instead, according to commenters, CMS should create a new cost center
on the Medicare hospital cost report to isolate the costs of MEG and
calculate and apply a CCR from the dedicated MEG cost center to the
charges for MEG to secure a more accurate estimated cost for MEG.
Response: We refer readers to section II.A.1.c. of this final rule
with comment period for a summary of public comments and responses
related to the use of the CCRs for cost centers 3280 (EKG and EEG) as
primary and 5400 (Electroencephalography) as secondary, to reduce the
charges for MEG to estimated relative costs.
Comment: Commenters urged CMS to require that hospitals use revenue
codes that are specific to MEG. One hospital that furnished comments
indicated that its MEG services are furnished through the radiology
department, but that the department through which MEG services are
furnished varies across hospitals. (As indicated previously, the APC
Panel recommended that CMS implement appropriate edits requiring
hospitals to use the MEG specific revenue codes, 086X, with CPT codes
95965, 95966, and 95967.)
Response: As we indicate in the Section 20.5, Chapter 4, of the
Medicare Claims Processing Manual, generally, CMS does not instruct
hospitals on the assignment of HCPCS codes to revenue codes for
services provided under OPPS because hospitals' assignment of cost vary
(available on the CMS Web site at: http://www.cms.gov/Manuals; select
Internet Only Manuals). Where explicit instructions are not provided,
hospitals should report their charges under the revenue code that will
result in the charges being assigned to the same cost center to which
the cost of those services are assigned in the cost report. We do not
believe that establishing edits to require hospitals to report the
charges for MEG under the dedicated MEG revenue code series is
necessary or appropriate. Medicare pays for a low volume of MEG
services for which there are no special requirements that would justify
creation of edits that force hospitals to report particular revenue
codes for particular CPT codes. Specifically, in the CY 2012 final rule
claims data, a small number of hospitals reported one of the three CPT
codes for MEG. We believe that it is not reasonable to implement
national CPT-to-revenue code edits to enforce the use of MEG-specific
revenue codes when a small number of hospitals reported only 144 lines
of MEG total for the 3 MEG codes in CY 2010. Specifically, in the final
rule single bills on which we are basing the CY 2012 median costs, 4
hospitals reported 31 lines of CPT code 95967; 6 hospitals reported 384
lines of CPT code 95966; and 10 hospitals reported 75 lines of CPT code
95965. The MEG codes were first paid under the OPPS as new technology
services in CY 2006 and the total frequency of services and the number
of hospitals that furnish the service have always been very low.
For CY 2012, as stated previously, we are accepting the APC Panel's
recommendation to reassign CPT code 95965 to APC 0066 because the CY
2012 final rule median cost of CPT code 95965 of approximately $1,741
is more similar to the final median cost of APC 0066 of approximately
$2,521 than to the median cost of APC 0067, which is approximately
$3,374. We are not accepting the APC Panel's recommendation to
implement edits requiring that hospitals that furnish MEG must report
the charges for the service using the MEG specific revenue code series
086X for the reasons stated above. For a response to the commenters'
requests for a dedicated cost center on the Medicare cost report, we
refer readers to section II.A.c. of this final rule with comment
period.
c. Transcranial Magnetic Stimulation Therapy (TMS) (APC 0218)
For CY 2011, the CPT Editorial Panel deleted CPT code 0160T
(Therapeutic repetitive transcranial magnetic stimulation treatment
planning) on December 31, 2010, and replaced it with CPT codes 90867
(Therapeutic repetitive transcranial magnetic
[[Page 74246]]
stimulation treatment; planning) effective January 1, 2011. Similarly,
CPT code 0161T (Therapeutic repetitive transcranial magnetic
stimulation treatment delivery and management, per session) was deleted
on December 31, 2010, and was replaced with CPT code 90868 (Therapeutic
repetitive transcranial magnetic stimulation treatment; delivery and
management, per session) effective January 1, 2011.
In Addendum B to the CY 2011 OPPS/ASC final rule with comment
period, CPT codes 90867 and 90868 were assigned to APC 0216 (Level III
Nerve and Muscle Tests) with a payment rate of approximately $186 and
were flagged with comment indicator ``NI'' to indicate that these codes
were new codes for CY 2011 with an interim APC assignment subject to
public comment. We stated that we would address any public comments on
issues regarding these new codes in this CY 2012 OPPS/ASC final rule
with comment period.
In addition, in the CY 2012 OPPS/ASC proposed rule, we proposed to
continue to assign CPT codes 90867 and 90868 to APC 0216 for CY 2012.
Comment: One commenter on the CY 2011 OPPS/ASC final rule with
comment period agreed with the APC assignment for CPT code 90867 and
indicated that APC 0216 is appropriate, based on the resources required
to perform TMS planning and its similarity to other procedures with
similar resource costs in this APC. However, this same commenter
disagreed with the placement of CPT code 90868 in APC 0216. The
commenter stated there are no clinically similar procedures in APC 0216
whose resources are comparable to that of TMS treatment delivery, and
recommended the reassignment of CPT code 90868 from APC 0216 to APC
0320 (Electroconvulsive Therapy), which has a payment rate of
approximately $414 for CY 2011. The commenter asserted that the
hospital outpatient claims data for TMS is not reliable and, therefore,
should not be used as the basis for the assignment of CPT code 90868 to
APC 0216.
Response: Although both CPT codes 90867 and 90868 were new codes
for CY 2011, the services they describe are not new because they were
previously described by two predecessor CPT codes, specifically
Category III CPT codes 0160T and 0161T. CPT code 90867 was previously
described by CPT code 0160T, and CPT code 90868 was previously
described by CPT code 0161T. Both CPT codes 0160T and 0161T were made
effective July 1, 2006, and deleted on December 31, 2010. From July 1,
2006 through December 31, 2010, both CPT codes 0160T and 0161T were
assigned to APC 0216.
We do not agree with the commenter that CPT code 90868 should be
placed in APC 0320 based on resource similarity. Based on analysis of
our hospital outpatient claims data for predecessor CPT codes 0160T and
0161T from CY 2006 through CY 2010, we believe that both CPT codes
90867 and 90868 would be more appropriately placed in APC 0218 (Level
II Nerve and Muscle Tests) rather than in the proposed APC 0216. There
were no claims data for either procedure (as described by CPT codes
0160T and 0161T) during CY 2006, CY 2007, and CY 2008. For the CY 2011
OPPS/ASC final rule with comment period, we used claims processed
during CY 2009 for ratesetting, and our claims data showed a CPT median
cost of approximately $176 for CPT code 0160T based on 17 single claims
(out of 17 total claims), and a CPT median cost also of approximately
$176 for CPT code 0161T based on 68 single claims (out of 69 total
claims), which closely resemble the APC median cost of approximately
$184 for APC 0216 for the CY 2011 OPPS. However, for this CY 2012 OPPS/
ASC final rule with comment period, which is based on the CY 2010
hospital outpatient claims for ratesetting, our claims data show a CPT
median cost of approximately $88 for CPT code 0160T (which is now
described by CPT code 90867) based on 6 single claims (out of 9 total
claims), and a CPT median cost of approximately $105 for CPT code 0161T
(which is now described by CPT code 90868) based on 211 single claims
(out of 221 total claims). Given our claims data for predecessor CPT
codes 0160T and 0161T, we believe that both CPT codes 90867 and 90868
are appropriately placed in APC 0218, which has a final APC median cost
of approximately $84 for CY 2012 based on clinical homogeneity and
resource costs. We note that the OPPS methodology allows hospitals to
actively contribute on an ongoing basis to the ratesetting process 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. We also do not agree with the commenter that the procedure
described by CPT code 90868 would fit into APC 0320 from a clinical
perspective because the provision of electroconvulsive therapy
generally requires more extensive monitoring and services (for example,
muscle blockade) than transcranial magnetic treatment delivery and
management.
Therefore, after consideration of the public comment we received on
the CY 2011 OPPS/ASC final rule with comment period, we are finalizing
our CY 2012 proposal, with modification. That is, we are reassigning
CPT codes 90867 and 90868 from APC 0216 to APC 0218, which has a final
CY 2012 median cost of approximately $84. Given the information
reflected in the CY 2012 final rule claims data for predecessor CPT
codes 0160T, which shows a median cost of approximately $105, and a
median cost of approximately $88 for CPT code 0161T, we believe our
claims data show the costs of these procedures are similar to the costs
of other procedures assigned to APC 0218. We also believe that these
procedures are similar to the other procedures assigned to APC 0218
from a clinical standpoint. We will reevaluate the APC assignment for
CPT codes 90867 and 90868 in future OPPS updates as additional
information becomes available to us.
5. Ocular and Ophthalmic Services
a. Placement of Amniotic Membrane (APCs 0233 and 0244)
For the CY 2011 update, the AMA CPT Editorial Panel revised the
long descriptor for CPT code 65780 (Ocular surface reconstruction;
amniotic membrane transplantation, multiple layers) to include the
words ``multiple layers'' to further clarify the code descriptor. In
addition, the AMA CPT Editorial Panel created two new CPT codes that
describe the placement of amniotic membrane on the ocular surface
without reconstruction; one describing the placement of a self-
retaining (non-sutured/non-glued) device on the surface of the eye, and
the other describing a single layer of amniotic membrane sutured to the
surface of the eye. Specifically, the AMA CPT Editorial Panel created
CPT codes 65778 (Placement of amniotic membrane on the ocular surface
for wound healing; self-retaining) and 65779 (Placement of amniotic
membrane on the ocular surface for wound healing; single layer,
sutured), effective January 1, 2011.
As has been our practice since the implementation of the OPPS in
2000, we review all new procedures before assigning them to an APC. In
determining the APC assignments for CPT codes 65778 and 65779, we took
into consideration the clinical and resource characteristics involved
with placement of amniotic membrane products on the eye for wound
healing via a self-retaining device and a sutured,
[[Page 74247]]
single-layer technique. In the CY 2011 OPPS/ASC final rule with comment
period (75 FR 72402), we assigned CPT code 65780 to APC 0244 (Corneal
and Amniotic Membrane Transplant) with a CY 2011 payment rate of
approximately $2,681. We assigned CPT code 65778 to APC 0239 (Level II
Repair and Plastic Eye Procedures) with a payment rate of approximately
$559, and CPT code 65779 to APC 0255 (Level II Anterior Segment Eye
Procedures) with a payment rate of approximately $519. In addition, we
assigned both CPT codes 65778 and 65779 to comment indicator ``NI'' in
Addendum B of the CY 2011 OPPS/ASC final rule with comment period to
indicate that both codes were new codes for CY 2011 with an interim APC
assignment subject to public comment. We further stated that we would
address any public comments on issues regarding these new codes in this
CY 2012 OPPS/ASC final rule with comment period.
At the APC Panel at the February 28-March 1, 2011 meeting, a
presenter requested the reassignment of both new CPT codes 65778 and
65779 to APC 0244, which is the same APC to which CPT code 65780 is
assigned. The presenter indicated that, prior to CY 2011, the
procedures described by CPT codes 65578 and 65779 were previously
reported under the original version of CPT code 65780, which did not
specify ``multiple layers,'' and, as such, these new codes should
continue to be assigned to APC 0244. Further, the presenter stated that
the costs of the new procedures described by CPT codes 65778 and 65779
are very similar to the procedure described by CPT code 65780.
The APC Panel recommended that CMS reassign both CPT codes 65778
and 65779 to APC 0233 (Level III Anterior Segment Eye Procedures),
citing clinical similarity to procedures already in APC 0233. Based on
clinical as well as resource similarity to the other procedures
currently assigned to APC 0233, in the CY 2012 OPPS/ASC proposed rule
(76 FR 42237), we proposed to accept the APC Panel's recommendations to
reassign CPT code 65778 from APC 0239 to APC 0233 and to reassign CPT
code 65779 from APC 0255 to APC 0233. However, based upon our further
review and analysis of the clinical characteristics of the procedure
described by CPT code 65778, we also proposed to conditionally package
CPT code 65778. The service described by CPT code 65778 would rarely be
provided as a separate, stand-alone service in the HOPD; it would
almost exclusively be provided in addition to and following another
procedure or service. Our medical advisors indicated that the procedure
described by CPT code 65778 is not significantly different than placing
a bandage contact lens on the surface of the eye to cover a corneal
epithelial defect. CPT code 65778 describes the simple placement of a
special type of bandage (a self-retaining amniotic membrane device) on
the surface of the eye, which would most commonly be used in the HOPD
to cover the surface of the eye after a procedure that results in a
corneal epithelial defect. In fact, the self-retaining amniotic
membrane device is structurally similar to a bandage contact lens,
except that the central material is amniotic membrane instead of
contact lens polymer. Given the characteristics of this procedure, the
device used in the procedure, and its likely use in the HOPD, we
proposed to conditionally package CPT code 65778 for CY 2012 and
reassign its status indicator from ``T'' to ``Q2'' to indicate that the
procedure is packaged when it is billed on the same date with another
procedure or service that is also assigned to status indicator ``T.''
Otherwise, separate payment would be made for the procedure.
In summary, for CY 2012, we proposed to reassign CPT code 65778
from APC 0239 to APC 0233 with a conditionally packaged status of
``Q2,'' to reassign CPT code 65779 from APC 0255 to APC 0233, which had
a proposed median cost of approximately $1,214, and to continue to
assign CPT code 65780 to APC 0244, which had a proposed median cost of
approximately $2,767.
At the August 2011 APC Panel Meeting, a presenter urged the Panel
to recommend to CMS not to conditionally package CPT code 65778 for CY
2012, and instead, assign it to status indicator ``T.'' Based on
information presented at the meeting, and after further discussion on
the issue, the APC Panel recommended that CMS reassign the status
indicator for CPT code 65778 from conditionally packaged ``Q2'' to
status indicator ``T.''
Comment: Several commenters urged CMS not to finalize its proposal
to conditionally package CPT code 65778 by assigning it to status
indicator ``Q2,'' and instead adopt the APC Panel's recommendation to
assign it to status indicator ``T.'' One commenter expressed concern
that conditionally packaging CPT code 65778 is inappropriate because it
will result in no payment for the procedure despite the significant
costs hospitals incur in furnishing the service, which includes the
cost of the Prokera device (the self-retaining amniotic membrane
device) that is used with this procedure. Further, this same commenter
disagreed with CMS' assertion that the service described by CPT code
65778 is merely a minor procedure that involves placing a bandage
contact lens on the surface of the eye, and stated that the service is
a significant, separate procedure that should continue to be separately
paid.
Response: We disagree that the procedure described by CPT code
65778 is a significant procedure. The procedure has been described by
the manufacturer as ``like inserting a contact lens.'' The
manufacturer's Web site states the following about the Prokera self-
retaining amniotic membrane device: ``The ProKera[reg] device
configuration enables easy insertion in the office, hospital bedside or
following surgical procedures to prevent adhesions while delivering the
wound repair and wound healing actions of amniotic membrane.'' Because
this is a type of specialized bandage that is typically placed on the
surface of the eye immediately after a surgery that has resulted in a
corneal epithelial defect, we believe that assigning CPT code 65778 to
a conditionally packaged status encourages hospitals to use resources
more efficiently. We expect hospitals to provide only necessary, high
quality care and to provide that care as efficiently as possible. We
expect that, for most surgically induced corneal epithelial defects,
hospitals will use a conventional eye patch or a standard bandage
contact lens to promote faster wound healing and greater patient
comfort, and that they will reserve very high cost products, such as
the self-retaining amniotic membrane device, for rare and exceptional
vision-threatening cases. We believe that the conditional packaging of
CPT code 65778 is consistent with this expectation and will encourage
efficient hospital outpatient care under these circumstances. Based on
the nature of this procedure, we believe that assigning CPT code 65778
to status indicator ``Q2'' is appropriate under the hospital OPPS.
Therefore, we are not accepting the APC Panel's recommendation to
reassign this procedure to status indicator ``T.''
After consideration of the public comments we received and the APC
Panel's August 2011 recommendation, we are finalizing our proposal,
without modification, to assign status indicator ``Q2'' to CPT code
65778. When the service is furnished with a separately payable surgical
procedure with status indicator ``T''' on the same day, payment for CPT
code 65778 is packaged. Otherwise, payment for CPT
[[Page 74248]]
code 65778 is made separately through APC 0233, which has a CY 2012
final median cost of approximately $1,164. We also are finalizing our
proposal to accept the APC Panel's recommendation to reassign CPT code
65779 from APC 0255 to APC 0233, which has a final CY 2012 median cost
of approximately $1,164. Further, we are finalizing our proposal,
without modification, to continue to assign CPT code 65780 to APC 0244,
which has a final CY 2012 median cost of approximately $2,654.
As has been our practice since the implementation of the OPPS, we
annually review all the items and services within an APC group to
determine, with respect to comparability of the use of resources, for
any 2 times rule violations. In making this determination, we review
our claims data and determine whether we need to make changes to the
current APC assignments for the following year. In CY 2012, we will
again reevaluate the status indicator and APC assignments for CPT codes
65778, 65779, and 65780 for the CY 2013 OPPS rulemaking cycle. The
amniotic membrane procedures and their CY 2012 final APC assignments
are displayed in Table 24 below.
[GRAPHIC] [TIFF OMITTED] TR30NO11.039
b. Insertion of Anterior Segment Aqueous Drainage Device (APC 0673)
The AMA CPT Editorial Panel created category III CPT code 0253T
(Insertion of anterior segment aqueous drainage device, without
extraocular reservoir; internal approach, into the suprachoroidal
space) effective on January 1, 2011. We assigned CPT code 0253T to APC
234 (Level IV Anterior Segment Eye Procedures) in the OPPS, effective
January 1, 2011 with a comment indicator ``NI'' in Addendum B of the CY
2011 OPPS/ASC final rule with comment period (75 FR 72448). For CY
2012, we proposed to continue to assign CPT code 0253T to APC 0234,
with a proposed payment rate of approximately $1,754.
Comment: A few commenters requested that CMS reassign CPT code
0253T to APC 0673 (Level V Anterior Segment Eye Procedures), with a
proposed CY 2012 payment rate of approximately $2,901. The commenters
claimed that CPT code 0253T would be more appropriately placed in APC
0673 based on clinical homogeneity and resource costs. Specifically,
the commenters stated that, because CPT code 0253T is a glaucoma
treatment with an implantable device, it should be assigned to APC 0673
because, unlike the procedures assigned to APC 0234, the procedures
assigned to APC 0673 are primarily glaucoma treatments with an
implantable device. Commenters also stated that the procedure described
by CPT code 0253T is very similar to the procedure described by CPT
code 0191T (Insertion of anterior segment aqueous drainage device,
without extraocular reservoir; external approach), which is assigned to
APC 0673. Finally, the commenters stated that the cost of the device
used in CPT code 0253T is similar to that of other devices used in
glaucoma treatment procedures assigned to APC 0673.
Response: After revisiting this issue and reexamining the clinical
and resource characteristics of CPT code 0253T, we agree with the
commenters that CPT code 0253T is similar clinically and in terms of
resource utilization to the procedures currently assigned to APC 0673.
In fact, the procedure described by CPT code 0253T is almost the same
as the procedure described by CPT code 0191T, which is currently
assigned to APC 0673. Also, both of these procedures employ the same
type of internally inserted implantable glaucoma drainage device.
Therefore, after consideration of the public comments we received, we
are modifying our proposal and reassigning CPT code 0253T from APC 0234
to APC 0673, which has a final median cost of approximately $2,911 for
CY 2012. We will monitor claims and cost report data related to CPT
code 0253T as the data become available for future updates.
c. Scanning Ophthalmic Diagnostic Imaging (APC 0230)
For CY 2011, the CPT Editorial Panel deleted CPT codes 0187T
(Scanning computerized ophthalmic diagnostic imaging, anterior segment,
with interpretation and report, unilateral) and 92135 (Scanning
computerized ophthalmic diagnostic imaging, posterior segment, (e.g.,
scanning laser) with interpretation and report, unilateral) on December
31, 2010, and replaced them with three new codes effective January 1,
2011. Specifically, CPT code 0187T was replaced with CPT code 92132
(Scanning computerized ophthalmic diagnostic imaging, anterior segment,
with interpretation and report, unilateral or bilateral), and CPT code
92135 was replaced with CPT codes 92133 (Scanning computerized
ophthalmic diagnostic imaging, posterior segment, with interpretation
and report, unilateral or bilateral; optic nerve) and 92134 (Scanning
computerized ophthalmic diagnostic imaging, posterior segment, with
interpretation and report, unilateral or bilateral; retina).
In Addendum B of the CY 2011 OPPS/ASC final rule with comment
period, CPT codes 92132, 92133, and 92134 were assigned to APC 0230
(Level I Eye Tests & Treatments) with a payment rate of approximately
$42 and were flagged with comment indicator ``NI'' to indicate that
these codes were
[[Page 74249]]
new codes for CY 2011 with an interim APC assignment subject to public
comment. We stated that we would address any public comments on issues
regarding these new codes in this CY 2012 OPPS/ASC final rule with
comment period.
In addition, in the CY 2012 OPPS/ASC proposed rule, we proposed to
continue to assign CPT codes 92132, 92133, and 92134 to APC 0230.
Comment: One commenter on the CY 2011 OPPS/ASC final rule with
comment period requested that CMS reassign CPT codes 92132, 92133, and
92134 from APC 0230 to APC 0698 (Level II Eye Tests & Treatments),
which has a CY 2011 payment rate of approximately $67, to account for
the long descriptor changes for the new codes. Specifically, the
commenter indicated that the predecessor codes, specifically, CPT codes
0187T and 92135 described a unilateral procedure; however, the new
codes, specifically, CPT codes 92132, 92133, and 92134, describe a
``unilateral or bilateral'' procedure in the code descriptors. Further,
the commenter expressed concern that the new codes are paid at half the
CY 2010 payment rate, which the commenter believed is inappropriate
since the typical patient encounter involves two tests.
Response: As indicated above, CPT codes 92132, 92133, and 92134
were assigned to APC 0230 effective on January 1, 2011. We assigned
these new codes to the same APC and status indicator as their
predecessor CPT codes 0187T and 92135. We note that these predecessor
CPT codes were active codes for some time. CPT code 92135 was made
effective January 1, 1999 and deleted on December 31, 2010, while CPT
code 0187T was made effective January 1, 2008, and deleted on December
31, 2010. Given the history of the predecessor codes, we reviewed our
claims.
For the CY 2012 update, the payment rates are based on data from
claims submitted during CY 2010 according to the standard OPPS
ratesetting methodology. Based on our analysis, we found significant
claims data for predecessor CPT codes 92135 and 0187T. Our CY 2012
final claims data show that the median cost for CPT code 92135 is
approximately $41 based on 191,170 single claims (out of 191,934 total
claims), and approximately $44 based on 341 single claims (out of 348
total claims) for CPT code 0187T. We believe that the final rule median
costs of approximately $41 and $44 are similar to the final median cost
of approximately $48 for APC 0230. We also believe that the resources
consumed in performing these procedures are not significantly different
for unilateral versus bilateral imaging.
After consideration of the public comment we received on the CY
2011 OPPS/ASC final rule with comment period, we are finalizing our CY
2012 proposal, without modification. Given the significant information
reflected in the CY 2012 final rule claims data for predecessor CPT
codes 92135 and 0187T, we believe our claims data are sufficient for us
to continue to assign these services to APC 0230, which has a final CY
2012 median cost of approximately $45. We will reevaluate the APC
assignment for CPT codes 92132, 92133, and 92134 in future OPPS updates
as additional information becomes available to us. Also, we expect to
have the first claims data available for CPT codes 92132, 92133, and
92134 for the CY 2013 OPPS/ASC rulemaking cycle.
d. Intraocular Laser Endoscopy (APC 0233)
CPT code 66711 (Ciliary body destruction; cyclophotocoagulation,
endoscopic) is assigned to APC 0233 (Level III Anterior Segment Eye
Procedures) for CY 2011, with a CY 2011 payment rate of $1,233.03. In
the CY 2012 OPPS/ASC proposed rule, we proposed continued assignment
for CPT code 66711 for CY 2012 to APC 0233, with a proposed payment
rate of $1,171.65. The final rule median cost for APC 0233 is
approximately $1,164.
Comment: One commenter, the manufacturer of a single use
intraocular laser endoscope, indicated that the device used to
accomplish CPT code 66711 is used to treat patients with glaucoma and
retinal disease. The commenter had previously manufactured a multiple
use version of the intraocular laser endoscope, and claimed that the
multiple use device had lower per unit costs per use than the new
single use device, but that it could no longer be manufactured due to
supply constraints of a part used in the manufacturing process. The
commenter stated that the most frequent service code used to deliver
this service is represented by CPT code 66711, and stated that the
multiple procedure discount typically applies, which reduces the OPPS
payment rate to approximately $616 for CY 2011. The commenter stated
that the procedure is also performed in the ASC setting with a payment
rate of approximately $694 for CY 2011, but a multiple procedure
discount typically applies, for a payment rate of approximately $347.
The commenter requested that CMS use one of several suggested
approaches to pay for the higher costs associated with the single use
device. One approach the commenter mentioned was to establish a device
pass-through category for the single use intraocular laser endoscope,
while noting that it had filed an OPPS pass-through application, and
that it expected a separate decision on the pass-through application.
Another alternative suggested by the commenter was for CMS to use its
equitable adjustment authority under section 1833(t)(2)(E) of the SSA,
to adjust payment rates when necessary to ensure patients' treatment
options are not inappropriately limited as a result of CMS policies.
The third option the commenter listed was to temporarily assign the CPT
code 66711 procedure to a different clinical APC or to a new technology
APC, based on external data provided by the commenter, until Medicare
claims data are available for ratesetting.
Response: As stated above, CPT code 66711 is assigned to APC 0233
for CY 2011, which has a CY 2011 final rule median cost of
approximately $1,168. CPT code 66711 has a CY 2012 final median cost of
approximately $1,430. The commenter stated that the CPT code 66711
procedure will not change with use of the single use laser endoscope
over the multi-use endoscope. We do not believe that it is necessary to
invoke the equitable adjustment clause in this case. There are several
clinical APCs for anterior segment eye procedures that are potential
APCs for this type of service, and the particular APC assignment
depends in part on the underlying claims data for the procedure. Upon
further review of the various procedures in APC 0233 and APC 0234
(Level IV Anterior Segment Eye Procedures), we believe that CPT code
66711 is more clinically similar to the range of procedures in APC 0234
than the procedures in APC 0233. Both APCs 0233 and 0234 consist of
anterior segment eye procedures, but APC 0234 includes several
intraocular procedures for the treatment of glaucoma, which also
describes CPT code 66711. From a resource perspective, CPT code 66711
fits in either APC 0233 or APC 0234, which have CY 2012 final median
costs of approximately $1,164 and $1,631, respectively. Therefore, we
are reassigning CPT code 66711 to APC 0234 for CY 2012.
We agree with the commenter that we will decide on any device pass-
through application by means of our normal process for that payment
mechanism.
[[Page 74250]]
6. Orthopedic and Musculoskeletal Services
a. Percutaneous Laminotomy/Laminectomy (APC 0208)
We created new HCPCS code C9729 (Percutaneous laminotomy/
laminectomy (intralaminar approach) for decompression of neural
elements, (with ligamentous resection, discectomy, facetectomy and/or
foraminotomy, when performed) any method under indirect image guidance,
with the use of an endoscope when performed, single or multiple levels,
unilateral or bilateral; lumbar), and assigned it to APC 0208
(Laminotomies and Laminectomies) effective April 1, 2011. AMA's CPT
Editorial Panel thereafter created CPT code 0275T (Percutaneous
laminotomy/laminectomy (intralaminar approach) for decompression of
neural elements, (with or without ligamentous resection, discectomy,
facetectomy and/or foraminotomy) any method under indirect image
guidance (eg, fluoroscopic, CT), with or without the use of an
endoscope, single or multiple levels, unilateral or bilateral; lumbar)
effective July 1, 2011. We assigned CPT code 0275T to APC 0208 and
deleted HCPCS code C9729 effective July 1, 2011. For CY 2011, APC 0208
has a payment rate of $3,535.92. For CY 2012 we proposed to maintain
assignment of percutaneous laminotomy/laminectomy (HCPCS code C9729 is
used in the CY 2012 proposed rule, while CPT code 0275T is used in this
CY 2012 final rule with comment period) to APC 0208, because we believe
the service is similar clinically and with regard to resources to other
APC 0208 procedures, APC 0208 had a CY 2012 proposed rule median cost
of approximately $3,676, and has a final rule median cost of
approximately $3,553
Comment: One commenter believed it is appropriate to assign CPT
code 0275T to APC 0208, in the case of ``unilateral'' percutaneous
laminotomy/laminectomy, but not in the case of bilateral or multiple
level procedures, which are, according to the commenter, more resource
intensive. The commenter claimed that the phrase ``unilateral or
bilateral'' in the CPT code 0275T descriptor suggests to providers that
the code must be reported unmodified when the procedure is performed
either unilaterally or bilaterally, which will preclude the use of
modifier ``50'' when the bilateral approach is employed, even though
additional physician and facilities resources are used. Additionally,
the commenter believed that the CPT code 0275T descriptor's inclusion
of ``single or multiple levels'' will preclude providers from reporting
modifier ``51'' with CPT code 0275T, to reflect the additional
resources consumed when the procedure is performed on multiple levels
of the spine. Therefore, the commenter believed that the APC 0208
payment rate is not adequate when CPT code 0275T is performed
bilaterally or on multiple levels. The commenter recommended that, for
CY 2012, CMS either allow the use of modifiers when CPT code 0275T is
used, or that CMS create a HCPCS G-code that describes the service when
performed bilaterally or on multiple levels. The commenter anticipated
that the CPT Editorial Panel will take up the issue of bilateral or
multiple levels in the CPT code 0275T code descriptor for CY 2013.
Response: Concerning the request for availability of modifiers 50
or 51, or modification to the descriptor for CPT code 0275T, we refer
the commenter to the CPT Editorial Panel. CPT code 0275T is the
property of the AMA, and CMS may not modify any CPT codes. We also will
wait to see if the CPT Editorial Panel changes the descriptor for CY
2013, and we will not create a HCPCS G-code for CY 2012.
CPT code 0275T is a new code effective July 1, 2011 (as was its
predecessor code, HCPCS code C9729, which was available for one
quarter, beginning April 1, 2011), and as such we have no claims data
at this time. For CY 2013, we should have partial CY 2011 data for both
HCPCS code C9729 and CPT code 0275T, which we can use to reevaluate any
APC assignment for percutaneous laminotomy/laminectomy for CY 2013.
These claims data will include the hospital costs related to all of the
various clinical options to perform this service, (that is, unilateral
versus bilateral, and single versus multiple levels) to the extent they
were performed. Based on those claims, we will reevaluate the APC
placement of CPT code 0275T.
After consideration of the public comments we received, we are
finalizing our proposed assignment of CPT code 0275T to APC 0208 for CY
2012, which is clinically similar to the procedures in APC 0208, and
which has a median cost of approximately $3,553.
b. Level II Arthroscopy (APC 0042)
The CY 2012 proposed rule median cost for APC 0042 (Level II
Arthroscopy) was approximately $3,485, based on 5,676 single bill
claims from the 28 procedures assigned to APC 0042. The CY 2011 final
rule median is $3,301, based on 6,297 single bill claims from those 28
arthroscopic procedures. Our CY 2012 final rule data consist of a
median cost of approximately $3,996, based on 3,140 single bill claims
based on 234 procedures.
Comment: One commenter believed that the procedures currently
assigned to APC 0042 have widely varying median costs, which range from
approximately $88 to more than $10,000, according to the CY 2012
proposed rule data. The commenter claimed that the APC currently
violates the 2 times rule. The commenter recommended that CMS
reconfigure APC 0042 and create two additional APCs in order to group
procedures similar in clinical features and resources together. The
commenter recommended that CMS place the following hip procedures in
the reconfigured APC 0042: CPT codes 29861 (Arthroscopy, hip, surgical;
with removal of loose body or foreign body), 29914 (Arthroscopy, hip,
surgical; with femoroplasty (ie, treatment of cam lesion)), 29915
(Arthroscopy, hip, surgical; with acetabuloplasty (ie, treatment of
pincer lesion)), and 29916 (Arthroscopy, hip, surgical; with labral
repair). The commenter also recommended that CMS separate the remaining
CPT codes in APC 0042 into new APC 0043 (proposed descriptor ``Level
III Upper Extremity Arthroscopy'') and APC 0044 (Level IV Lower
Extremity Arthroscopy), with respective payment amounts based on the
median costs of those service groupings.
Response: We do not agree that the HCPCS codes comprising APC 0042
have widely varying median costs or that there is a 2 times rule
violation for services currently assigned to APC 0042, as claimed by
the commenter. As we stated in the CY 2012 OPPS/ASC proposed rule (76
FR 42231), 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. We note that, for purposes
of identifying significant HCPCS codes for examination in the 2 times
rule, we consider codes that have more than 1,000 single major claims
or codes that have both greater 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 (75 FR
[[Page 74251]]
71832). Based on this rule, we have no 2 times rule violations in APC
0042. Using our CY 2012 final rule claims data, the highest significant
procedure in APC 0042 is CPT code 29827 (Arthroscopy, shoulder,
surgical; with rotator cuff repair) with a final median cost of
approximately $4,817, and the lowest significant procedure in the APC
is CPT code 29823 (Arthroscopy, shoulder, surgical; debridement,
extensive), with a final median cost of approximately $2,959, leading
to a ratio of approximately 1.6, well below the 2.0 required for a
violation. Furthermore, we do not agree with the commenter's
recommendation to establish an arthroscopy APC with the four hip
arthroscopy procedures, specifically, CPT codes 29861, 29914, 29915,
and 29916, as a viable alternative, because all four of those CPT codes
have no CY 2010 median costs. Therefore, there would be no basis for
establishing an APC median cost and payment amount for those four
procedures. We see no compelling reason to revise the current
procedures of APC 0042 for CY 2012 because they are similar both
clinically and in terms of resource utilization. We will keep the
current HCPCS code configuration of APC 0042 for CY 2012, and will
review the APC 0042 and component HCPCS code median costs again next
year for clinical and resource similarity.
c. Closed Treatment Fracture of Finger, Toe, and Trunk (APCs 0129,
0138, and 0139)
In Addendum A (Proposed OPPS APCs for CY 2012) of the CY 2012 OPPS/
ASC proposed rule, we proposed to continue with the existing group
titles for APCs 0129, 0138, and 0139 to read as follows:
APC 0129 (Level I Closed Treatment Fracture Finger/Toe/Trunk)
APC 0138 (Level II Closed Treatment Fracture Finger/Toe/Trunk)
APC 0139 (Level III Closed Treatment Fracture Finger/Toe/
Trunk)
We note that Addendum A did not appear in the printed version of
the Federal Register as part of the CY 2012 OPPS/ASC proposed rule.
Rather, it was published and made available only via the Internet on
the CMS Web site at: http://www.cms.gov/.
Comment: One commenter recommended that CMS remove the words
``Finger/Toe/Trunk'' from the group titles for APCs 0129, 0138, and
0139 because there is no need to make this distinction since there are
no other APCs that describe closed treatment fractures.
Response: We appreciate the commenter's suggestion, and we accept
this recommendation. We agree that removing the words ``Finger/Toe/
Trunk'' from the group titles for APCs 0129, 0138, and 0139 more
appropriately describe these APCs.
After consideration of the public comment we received, we are
revising the group titles for APCs 0129, 0138, and 0139 to ensure that
the title describes all procedures assigned to these APCs. Table 25
shows the final group titles for APCs 0129, 0138, and 0139 for CY 2012.
[GRAPHIC] [TIFF OMITTED] TR30NO11.040
d. Level I and II Strapping and Cast Application (APCs 0058 and 0426)
In Addendum A (Proposed OPPS APCs for CY 2012) of the CY 2012 OPPS/
ASC proposed rule, we proposed to continue with the existing group
titles for APCs 0058 and 0426 to read as follows:
APC 0058 (Level I Strapping and Cast Application)
APC 0426 (Level II Strapping and Cast Application)
We note that Addendum A did not appear in the printed version of
the Federal Register as part of the CY 2012 OPPS/ASC proposed rule.
Rather, it was published and made available only via the Internet on
the CMS Web site at: http://www.cms.gov/.
Comment: One commenter stated there is only a single level APC for
the strapping procedures; therefore, the designation ``Level I'' is not
appropriate in the group title because there is no ``Level II.''
Response: We disagree with the commenter. There is another level
APC for the strapping procedures, specifically, APC 0426 which reads
``Level II Strapping and Cast Application.'' Under the OPPS, APC 0426
was made effective January 1, 2005. We remind hospitals that APCs with
multiple levels are not always in sequential order and, as a result,
may not always appear close to each other in Addendum B.
After consideration of the public comment we received, we are
finalizing our CY 2012 proposal, without modification, to continue to
title APC 0058 to read ``Level I Strapping and Cast Application'' and
APC 0426 to read ``Level II Strapping and Cast Application.''
7. Radiology Services
a. Proton Beam Therapy (APC 0664 and 0667)
For CY 2012, 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 $992. 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
$1,298.
Comment: Some commenters appreciated the relative stability in the
hospital outpatient proton therapy rates and supported the proposed
payments for the proton beam treatment CPT codes.
[[Page 74252]]
Other commenters indicated that they were pleased with CMS'
proposal to exempt APC 0667 from the 2 times rule based on the list of
APCs that appeared in Table 18 of the CY 2012 OPPS/ASC proposed rule,
but expressed concern with the proposed decrease in payments for the
proton beam therapy APCs.
Response: In accordance with sectionS 1833(t)(2)(B) and
1833(t)(9)(A) of the Act and Sec. Sec. 419.31 and 419.50 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 2012 update, the
payment rates for APCs 0664 and 0667 are based on data from claims
submitted during CY 2010 according to the standard OPPS ratesetting
methodology. Specifically, we used 12,263 single claims (out of 13,364
total claims) from CY 2012 proposed rule claims data (and we used
13,437 single claims (out of 14,519 total claims) from CY 2012 final
rule claims data) to calculate the median cost upon which the CY 2012
payment rate for APC 0664 is based. In addition, we used 3,379 single
claims (out of 3,879 total claims) from CY 2012 proposed rule claims
data (and we used 3,638 single claims (out of 4,145 total claims) from
CY 2012 final rule claims data) to calculate the median cost for APC
0667.
For CY 2012, we are setting the final payment rate for proton beam
therapy based on median costs of approximately $1,184 for APC 0664 and
approximately $1,549 for APC 0667. We note that these median costs are
higher than the median costs upon which the CY 2012 proposed payment
rates for these APCs were based ($1,028.10 and $1,344.90, respectively)
and higher than the median costs upon which the final CY 2011 payment
rates were based ($1,020.72 and $1,335.24, respectively). As we have in
the past (75 FR 71916), 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. Therefore, it is
the hospitals' 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 2012 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 2012 APC median cost of
approximately $1,184, and CPT codes 77523 and 77525 to APC 0667, with a
final CY 2012 APC median cost of approximately $1,549 because we
continue to believe these placements are appropriate in light of the
resource cost and clinical intensity of the services describe by these
CPT codes.
b. Stereotactic Radiosurgery (SRS) Treatment Delivery Services (APCs
0065, 0066, 0067, and 0127)
For CY 2012, 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 $7,368. 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 2012.
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 $3,251; 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 $864; 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 $2,447. 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 requested that CMS continue to recognize
HCPCS codes G0173, G0251, G0339, and G0340 for CY 2012 as proposed and
supported 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 nonrobotic gantry-based SRS systems.
Based on analysis of claims data for HCPCS codes G0339 and G0340, the
commenter found that 41 and 42 percent of the claims submitted for
HCPCS codes G0339 and G0340, respectively, during CY 2010 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: As we have stated in the past (75 FR 71915), 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 continue to 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
[[Page 74253]]
HCPCS 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 comment we received, we are
finalizing our CY 2012 proposals, without modification, to maintain the
existing CY 2011 APC assignments for the SRS HCPCS codes for CY 2012.
Specifically, we are continuing to assign HCPCS G-codes G0173 and G0339
to APC 0067, which has a final CY 2012 APC median cost of approximately
$3,374; HCPCS G-code G0251 to APC 0065, which has a final CY 2012 APC
median cost of approximately $903; HCPCS G-code G0340 to APC 0066,
which has a final CY 2012 APC median cost of approximately $2,521; and
CPT code 77371 to APC 0127, which has a final CY 2012 APC median cost
of approximately $7,461 because we continue to believe these placements
are appropriate in light of the resource cost and clinical intensity of
the services describe by these CPT codes. 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.
c. Adrenal Imaging (APC 0408)
For CY 2012, we proposed to reassign CPT code 78075 (Adrenal
imaging, cortex and/or medulla) from APC 0408 (Level III Tumor/
Infection Imaging), which had a proposed payment rate of approximately
$953, to APC 0414 (Level II Tumor/Infection Imaging), which had a
proposed payment rate of approximately $485.
Comment: Commenters questioned CMS' rationale for the proposal to
reassign CPT code 78075 from APC 0408 to APC 0414, citing a lack of
clinical reasoning to justify its movement as well as CPT code 78075's
cost similarity to a clinically similar procedure assigned to APC 0408.
Commenters requested that CMS reevaluate the reassignment of CPT code
78075 and consider maintaining its placement in APC 0408. Commenters
further recommended that CMS provide rationale in all proposed rules
when any CPT code placement change is proposed.
Response: After revisiting this issue and analyzing the final CY
2012 median cost for CPT code 78075, we agree with commenters'
assertion that CPT code 78075 should remain in APC 0408 and, therefore,
we will continue to assign CPT code 78075 to APC 0408 for CY 2012 based
on its final median cost of approximately $997 (calculated using 99
single claims out of 127 total claims), which is similar to the APC
median cost of APC 0408 of approximately $958. . We note that the
proposed rule does not include service-specific discussions for each
separately paid HCPCS code reassignment or for each APC. Rather, we
discuss the general methodology used to calculate the median costs upon
which the proposed payment rates are based (76 FR 42183 through 42190)
and the principles applied in determining APC configurations (76 FR
42230 through 42232). We discuss specific APCs or services in the
proposed rule only when we have a specific reason to do so, such as
when we apply a nonstandard ratesetting methodology to calculate a
proposed payment rate for a particular item or service. In most cases,
a proposed reduction of a median cost for an APC or for a HCPCS code
that is calculated from actual charges and cost data will not result in
a service specific discussion in the propose rule. The number of APCs
and the volume of HCPCS codes for which median costs are calculated
prohibit a detailed explanation of each in the proposed rule.
After consideration of the public comments we received, we are
modifying our CY 2012 proposal to reassign CPT code 78075 to APC 0414
and will instead continue to assign it to APC 0408, with a final CY
2012 APC median cost of approximately $958.
d. Positron Emission Tomography (PET) Imaging (APC 0308) (Created From
Myocardial Positron Emission Tomography (PET) Imaging (APC 0307) and
Non-Myocardial Positron Emission Tomography (PET) Imaging (APC 0308))
For CY 2012, we proposed to continue 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), for which we proposed a
national unadjusted payment rate of approximately $921. The CY 2011
national unadjusted payment rate is approximately $1,107.
For CY 2012, we proposed to continue to assign CPT codes 78608
(Brain imaging, positron emission tomography (PET); metabolic
evaluation), 78811 (Tumor imaging, positron emission tomography (PET)
imaging; limited area (eg, chest, head/neck)), 78812 (Tumor imaging,
positron emission tomography (PET) imaging; skull base to mid-thigh),
78813 (Tumor imaging, positron emission tomography (PET) imaging; whole
body), 78814 (Tumor imaging, positron emission tomography (PET) with
concurrently acquired computed tomography (CT) for attenuation
correction and anatomical localization imaging; limited area (eg,
chest, head/neck)), 78815 (Tumor imaging, positron emission tomography
(PET) with concurrently acquired computed tomography (CT) for
attenuation correction and anatomical localization imaging; skull base
to mid-thigh), and 78816 (Tumor imaging, positron emission tomography
(PET) with concurrently acquired computed tomography (CT) for
attenuation correction and anatomical localization imaging; whole body)
to APC 0308 (Non-Myocardial Positron Emission Tomography (PET)
imaging), for which we proposed a national unadjusted payment rate of
$1,015. The CY 2011 national unadjusted payment rate for APC 0308 is
approximately $1,042.
Comment: Commenters objected to the proposed decrease in the
payment rate for APC 0307. Commenters were concerned with the
volatility of the payment rates from one year to the next and the
proposed reduction in the payment rate for CY 2012, particularly in
view of the reduction in the payment rate from CY 2010 to CY 2011. The
commenters urged CMS to validate the costs estimated from the CY 2010
hospital claims and cost report data for the limited number of
hospitals reporting CPT codes 78459, 78491, and 78492 to determine the
reason for the proposed change in payment. Several commenters asked
that CMS limit to 5 to 10 percent the amount of decrease in the payment
rate for CY 2012 compared to CY 2011 because they believed that the
reduction CMS proposed for myocardial PET for CY 2012 would jeopardize
access to the service. One commenter asked that CMS combine APC 0307
and APC 0308 into one single PET imaging APC because the commenter
believed that myocardial PET and non-myocardial PET are clinically
similar and have similar resource requirements. The commenter also
believe that merging the APCs would result in more appropriate payment
for myocardial PET services and would increase the stability of payment
for myocardial PET services.
Several commenters indicated that they believed that aberrant CCRs
for a few hospitals that furnish myocardial PET services are affecting
the median cost for APC 0307 and that the
[[Page 74254]]
methodology must be flawed to permit this to occur. Commenters stated
that their analyses of the claims data showed that 4 of the top 25
hospitals contribute 34 percent of all single bills used in ratesetting
for CPT code 78492 and that these hospitals have substantially lower
calculated costs as compared to their peer institutions. The commenters
believed that the CCRs of these institutions are aberrantly low and
have skewed the data and lowered the overall median cost for APC 0307
due to the significant percentage of single bills attributable to them.
The commenter recommended that CMS delete claims from hospitals with a
CCR lower than 0.15 or 0.20 from ratesetting for APC 0307 to remove the
effect of these hospitals on the APC 0307 median cost. In contrast,
another commenter asked that CMS ensure that claims from every hospital
that furnished a service assigned to APC 0307 are included in the
calculation of the median for APC 0307.
One commenter stated that the median cost for myocardial PET
services is decreasing because they are performed at a relatively small
number of hospitals and because 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. Commenters also stated that they were concerned that
hospitals had not charged appropriately for the services and the
radiopharmaceutical that is needed to furnish the service. Some
commenters objected to the absence of a strict definition of what costs
should be included in each cost center because this results in a wide
variance in the calculation of costs. One commenter stated that the
absence of CMS guidance to hospitals with regard to how to charge for
services results in the potential for hospitals to set charges at 4 to
5 times the cost for established procedures but to establish charges at
1.5 times the cost for new, more expensive procedures. One commenter
urged CMS to remind hospitals to accurately report all myocardial PET
costs on their Medicare cost reports to improve the accuracy of the
CCRs in the futures, while another commenter suggested that CMS
establish a new cost center or CCRs for PET to moderate the
fluctuations in the median cost calculation for PET services.
Response: We agree that myocardial PET and non-myocardial PET have
similar clinical characteristics and, currently, appear to have
somewhat similar resource requirements. Therefore, for CY 2012, we are
deleting the myocardial PET APC (APC 0307) and are reassigning CPT
codes 78459, 78491, and 78492 to APC 0308, which we have renamed
``Positron Emission Tomography (PET) Imaging.'' The CY 2012 final rule
median cost for newly reconfigured APC 0308 is approximately $1,038.
We were influenced in this decision by a significant unexpected and
unusual decrease in the median cost for CPT code 78492 between the
proposed rule data and the final rule data for the CY 2012 OPPS. CPT
code 78492 comprises approximately 98 percent of the volume of the 3
myocardial PET services that were assigned to APC 0307 and therefore
largely would control the median cost for APC 0307 if it had been
retained for CY 2012 OPPS. The proposed rule median cost for CPT code
78492 was approximately $954, but the final rule median cost for CPT
code 78492 is approximately $778, a decrease of approximately 18
percent from the proposed rule median cost and a decrease of
approximately 29 percent from the CY 2011 OPPS median cost of
approximately $1,096. APC 0307 had a median cost of approximately
$1,096 for CY 2011, a median cost of approximately $954 for the CY 2012
proposed rule, and had we not deleted it for this final rule, APC 0307
would have had a median cost of approximately $809, a 15-percent
decrease from the median cost on which the CY 2012 proposed payment
rate was based.
We examined the claims and cost report data for the single
procedure claims for CPT code 78492 to determine why it declined
substantially from the CY 2011 OPPS final rule data and the CY 2012
proposed rule and yet further between the CY 2012 proposed rule and the
CY 2012 final rule data. We believe that there are multiple reasons
that the median cost for APC 0307 declined from CY 2011 to CY 2012.
Specifically, we looked at the following elements for CPT code 78492
across the three data sets: Line item CCRs; line item charges; line
item costs; packaged costs; number of hospitals billing the service;
and number of single bills. Our findings are contained in Table 26
below.
[GRAPHIC] [TIFF OMITTED] TR30NO11.041
We note three significant observations from these data for CPT code
78492, which is the myocardial PET imaging service that represents 98
percent of the volume of APC 0307. First, the median line item CCR for
CPT code 78492
[[Page 74255]]
decreased 21 percent from the CY 2011 final rule claims data to the CY
2012 proposed rule claims data, although the median charge increased
only 5 percent over the same time between the two data sets. Similarly,
the median line item CCR for CPT code 78492 decreased 5.8 percent from
the CY 2012 proposed rule data to the CY 2012 final rule data, although
the line item charge remained the same in both data sets. Therefore,
the median line item CCR for CPT code 78492 decreased 25.5 percent from
the CT 2011 final rule data to the CY 2012 final rule data although the
median line item charge increased only 5 percent over the same period,
thus resulting in a significant decrease in the CY 2012 final rule line
item median cost compared to both the CY 2011 line item median cost and
the CY 2012 line item median cost. Secondly the estimated median cost
of the packaged radiopharmaceutical and other supplies necessary to
furnish the service decreased in each data set. Specifically, the
estimated median packaged cost decreased by 16.2 percent from the CY
2011 final rule data to the CY 2012 proposed rule data and by 16.6
percent from the CY 2012 proposed rule data to the CY 2012 final rule
data, or a decrease of 30.1 percent from the CY 2012 final rule data to
the CY 2012 final rule data. Third, we observed that the number of
hospitals that furnished the service increased in a significant
proportion and that the volume of services furnished increased by 25
percent from CY 2009 (CY 2011 final rule data) to CY 2010 (CY 2012
proposed and final rule data sets) and by an additional 6.7 percent
from the CY 2012 proposed rule data set to the CY 2012 final rule data
set, or a total increase from CY 2009 to CY 2010 of 33.3 percent.
We are particularly concerned with the volatility that is displayed
in the data, particularly from the CY 2012 proposed rule data to the CY
2012 final rule data. In particular, there seems to be a transition in
CCRs underway that should stabilize itself once the number of hospitals
that furnish the service is stable and once the volume of services
being furnished each year is stable. We believe that the CCR changes
are increasing the instability in the median costs for CY 2012 and that
combining the two APCs is a reasonable response for the CY 2012 final
rule, particularly because both former APC 0307 and APC 0308 are for
PET imaging services and because it is reasonable to expect that the
costs would be similar. However, we will reevaluate the relative
resource utilization of the services after the cost center transitions
are complete. In general, large volumes of services enhance stability
of median costs, and we believe that by reassigning CPT codes 78459,
78491 and 78492 to APC 0308, we can lessen the volatility of payment
changes for these services for CY 2012. There are many legitimate
reasons why costs for these services may go down (for example,
hospitals are becoming more efficient as they provide greater volumes
of these services without incurring additional substantial costs for
equipment and staff, the radiopharmaceuticals used to provide these
services are furnished by use of a generator that produces a dose
periodically for 28 days and, therefore, additional doses are no more
costly during the life of the generator, among others). If we determine
that the per unit costs for providing myocardial PET have genuinely
decreased over time and stabilized, we believe that it is appropriate
that our payment rates would reflect these diminishing costs.
With regard to the comments that we should exclude claims from
hospitals with CCRs less than 0.15 or 0.20, we note that we applied our
standard policy regarding calculation of CCRs to the calculation of the
median cost of myocardial PET services for the proposed and final rule
data for the CY 2012 OPPS. Specifically, as we discuss in detail in the
claims accounting description that accompanies this final rule with
comment period, we excluded claims from hospitals whose CCRs were
flagged as invalid. These included claims for hospitals without a CCR,
for hospitals paid an all inclusive rate, for CAHs, for hospitals with
obviously erroneous CCRs (greater than 90 or less than .0001), and for
hospitals with CCRs that were identified as outliers (3 standard
deviations from the geometric mean after removing error CCRs). This
longstanding practice has resulted in enhancing the number of claims we
use for ratesetting, while eliminating claims that cannot be reduced to
cost or for which hospital CCRs are clearly erroneous. In the case of
myocardial PET services, the commenter indicated that the claims that
the commenter requested be deleted from the set of claims used for
ratesetting comprise 34 percent of the set of single bills and were
submitted by hospitals with CCRs lower than 0.15. Assuming that the
commenter's statement is correct, we believe that to remove 34 percent
of the claims (more than 1 in every 3 single bills) from hospitals
because their CCRs are lower than 0.15 would result in a skewed set of
single bills and that the resulting median cost would not be an
accurate representation of the relative cost of the service furnished
by the full population of providers that furnish the service. These
claims would be retained in the dataset used to set median costs under
our standard process because they would not be affected by the standard
claim trims. We refer readers to section II.A.2.c. of this final rule
with comment period for discussion of our policy with regard to
trimming of claim records before median cost calculation. The OPPS is a
system of averages in which the measure of central tendency is used as
the basis for the payment for a service, and to delete 34 percent of
the data points would necessarily result in a median cost that would be
a less accurate, if perhaps higher, reflection of the cost of the
service. We believe that the low CCRs that are of concern to the
commenter may be only one element in the transition in the data for
these codes. For CY 2012, we believe that deleting APC 0307 and
reassigning CPT codes 78459, 78491, and 78492 to APC 0308 is a more
reasonable response than deleting 34 percent of the single bills for
the procedures. Similarly, we do not believe that it is necessary to
create a service-specific cost center for the purpose of calculating a
PET-specific CCR because correct and consistent reporting of the costs
of PET services on the Medicare hospital cost report and accurate
crosswalking of the charges for PET to the cost center in which the
costs are housed will result in appropriate estimates of the cost of
PET services when the CCR for the cost center is applied to the charges
for the services.
With regard to what the commenter viewed as the absence of CMS
guidance regarding what cost centers should be used to record the costs
of services and how hospitals should charge for services, we note that
CMS provides extensive instructions on how cost reports should be
completed in the Provider Reimbursement Manual. However, hospitals
charges are a reflection of the monetary value that the hospital
establishes for service it is furnishing and the only CMS restriction
on hospital charges is that charges must be reasonably related to cost
and that the same amount must be charged to all payers for the same
service (we refer readers to the definition of ``charges'' for cost
reporting purposes in 42 CFR 413.53(b)). We recognize that some
hospitals may charge at different markups over cost for similar
services. However, as long as the cost report is correctly completed
and the charges are mapped to the cost center in which the costs for
the service are recorded, the CCRs should represent a valid reflection
[[Page 74256]]
of the relationship between the costs and the charges in the aggregate
for services for which the cost is reported in that cost center. The
OPPS, like all other prospective payment systems, assumes that
hospitals complete the cost report properly, including mapping the
charges for a service to the cost center in which the costs for that
service are captured. Therefore, when the appropriate CCR is applied to
the charge for a service for which the costs are housed in the cost
center from which the CCR is calculated, the result should be a
reasonable estimate of the cost of the service.
With regard to the comment that we should limit the decline in
payment for APC 0307 in CY 2012 to 5 to 10 percent compared to the
payment for these services in CY 2011, we do not believe that it is
appropriate to limit the decrease in payment in such an arbitrary
manner for CY 2012. Moreover, for the reasons we discuss above, we have
deleted APC 0307 for CY 2012. Accordingly, we also believe that there
will be no adverse impact on access to care as a result of deleting APC
0307 and reassigning CPT codes 78459, 78491 and 78492 to APC 0308.
Comment: One commenter asked CMS to explain why it proposed to pay
more for the non-myocardial PET APC (APC 0308) than for the myocardial
PET APC (APC 0307).
Response: We proposed to pay more for non-myocardial PET (APC 0308)
than for myocardial PET (APC 0307) because the proposed rule median
cost we calculated for APC 0308 of approximately $1,051 was higher than
the proposed rule median cost we calculated for APC 0307 of
approximately $954. We calculated both median costs using our
longstanding standard cost estimation methodology which applied each
hospital's most current, hospital-specific and departmental-specific
CCR to that hospital's charge for services furnished in CY 2010.
However, we are deleting APC 0307 for CY 2012 and, therefore, all PET
imaging services will be paid at the same payment rate for CY 2012,
based on the APC 0308 median cost of approximately $1,038.
Comment: Commenters noted that the median cost for single
myocardial PET scans, represented by CPT code 78491, has been higher
than the median cost for multiple scans, represented by CPT code 78492
in CYs 2007, 2009 and 2010. The commenters believed that this is
evidence indicating that the data on which CMS is basing the payment
rate are flawed. One commenter also stated that the CY 2012 proposed
payment rate for APC 0307 is below the mean cost for each of the codes
assigned to APC 0307 (CPT codes 78459, 78491, and 78492) and is also
below the median cost for three of the codes in APC 0307 that comprise
10,929 of the 11,060 total claims for the APC.
Response: We do not believe that the presence of a median cost for
multiple scans that is greater than the median cost for a single scan
indicates that the data are flawed. There are many reasons that the
median cost for a single scan could be higher than the median cost for
multiple scans, including different charging practices and cost
structures across hospitals and different hospital utilization of
single versus multiple scans. Our standard ratesetting methodology
converts the hospital's charge to cost by application of the most
specific departmental or overall hospital-specific CCR and after
trimming claims for which the cost exceeds +/-3 standard deviations
from the geometric mean, and calculates the 50th percentile, that is,
the median cost, the array of costs. Variation in hospital patterns of
utilization combined with differential hospital charging practices can
result in valid relative costs, as we define them for the OPPS, in
which the median cost for single scans exceeds the median cost for
multiple scans.
With respect to the commenter's observation that the proposed rule
mean cost for APC 0307 as it was proposed is higher than its proposed
rule median cost, we note that it is very common for the mean cost to
be higher than the median cost for services that are paid under the
OPPS because there is frequently a wide range between the minimum cost
and the maximum cost. For example, for CPT code 78492, the CY 2012
proposed rule minimum cost on a single bill was approximately $175 and
the maximum cost was approximately $7,828, although the median cost was
approximately $954 and the mean cost was approximately $1,186.
Therefore, it is clear that the cost of most of the single bills were
closer to $175 than they were to $7,827, but when all of the single
bill costs were averaged, the mean cost (approximately $1,186) was
greater than the median cost (approximately $954). We do not understand
what is meant by the commenter's additional statement that the CY 2012
proposed rule median cost for APC 0307 ``is also below the median cost
for three of the codes in APC 0307 that comprise 10,929 of the 11,060
total claims for the APC'' because there were only three codes in APC
0307. CPT codes 78459, 78491, and 78492 were the only CPT codes
assigned to now deleted APC 0307. We note that it is not surprising
that the median cost for APC 0307 in the CY 2012 proposed rule data was
equal to the median cost for CPT code 78492 because CPT code 78492
contained 98 percent of the single bills in APC 0307 (deleted for CY
2012) and, therefore, CPT code 78492 would be likely to control the
median cost in the array of single procedure bills.
Comment: One commenter objected to the absence of a CMS
presentation and explanation of the change in median cost for APC 0307
at either the winter or summer APC Panel meetings in 2011 and to the
limited amount of information furnished in the proposed rule.
Response: We do not discuss all services paid under the OPPS at the
APC Panel meetings. The APC Panel meetings offer the opportunity for
any member of the public to make presentations on any issue of interest
that is within scope of the Panel's charter and for CMS to seek Panel
comment and advice on issues for which CMS believes such comment and
advice would be useful. The winter APC Panel meeting generally reviews
concerns of the public with regard to the final rule for that year and
provides an opportunity for the public and CMS to seek the Panel's
comment and advice on issues for the forthcoming year's OPPS. The
summer APC Panel meeting occurs during the comment period of the
proposed rule and is generally limited to hearing the views of the
public on the proposed rule for the upcoming year. No member of the
public asked to make a presentation on the payment rate for APC 0307 at
either the Panel's winter or the summer meetings in 2011. Moreover, we
had no clinical or resource-related question related to APC 0307 for
which we believed that APC Panel input would be useful. Therefore, like
many other topics applicable to the CY 2012 OPPS, there was no
discussion of the proposed payment for APC 0307 for CY 2012.
We also note that the proposed rule does not include service-
specific discussions of the calculation of median cost for each
separately paid HCPCS code or for each APC. Rather, we discuss the
general methodology used to calculate the median costs on which the
proposed payment rates are based and the principles applied in
determining APC configurations. We discuss specific APCs or services in
the proposed rule only when we have a specific reason to do so, such as
when we apply a nonstandard ratesetting methodology to calculate a
proposed payment rate for a particular item or service. In most cases,
a proposed reduction of a median cost for an APC or for a HCPCS code
that is calculated from actual charges and cost
[[Page 74257]]
data does not result in a service-specific discussion in the proposed
rule. The number of APCs and the volume of HCPCS codes for which median
costs are calculated prohibit a detailed explanation of each change in
a median cost in the proposed rule because annual changes to hospital
charges and costs generally result in changes to median costs for each
HCPCS code and, therefore, for each APC each year.
Comment: Commenters objected to the proposed decrease in the
payment rate for non-myocardial PET imaging services assigned to APC
0308.
Response: For CY 2012, the payment rate for APC 0308 is based on
data from claims submitted during CY 2010 according to the standard
OPPS ratesetting methodology after the reassignment of CPT codes 78459,
78491, and 78492 to APC 0308 for the reasons we discuss above.
Specifically, we used 249,026 single procedure bills (out of 289,786
total claims) from CY 2012 final rule claims data to calculate the
final median cost upon which the CY 2012 payment rate for APC 0308 is
based. For CY 2012, we are setting the final payment rate for all PET
imaging services (including CPT codes 78459, 78491 and 78492 that were
in APC 0307 for CY 2011) based on final rule median costs of
approximately $1,038 for APC 0308. This median cost results in a modest
decline in the final CY 2012 median cost for PET imaging services
compared to the CY 2011 median cost for non-myocardial PET imaging
services. We note that our cost-finding methodology is based on
converting 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. Therefore, it is each 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.
In summary, based on our review of the claims and cost report data
and our assessment of the similarity of the services in APCs 0307 and
0308, we have reassigned CPT codes 78459, 78491, and 78492 to APC 0308,
for which we have calculated a median cost of approximately $1,038 for
CY 2012. We have revised the description of APC 0308 to be ``Positron
Emission Tomography (PET) Imaging,'' so that it will describe both non-
myocardial PET and myocardial PET services, and we have deleted APC
0307 for CY 2012 for the reasons we discuss previously in this section.
We have made no other reassignments to APC 0308 nor have we removed
codes that are assigned to APC 0308 for CY 2011 from APC 0308 for CY
2012.
We will reassess whether it continues to be appropriate to assign
both the non-myocardial PET and the myocardial PET services to the same
APC for CY 2013 based on the CY 2013 OPPS cost data. We would propose
to make any reassignments that we may believe to be necessary through
the standard annual notice-and-comment rulemaking process.
e. Device Construction for Intensity Modulated Radiation Therapy (IMRT)
(APC 0305)
CPT code 77338 (Multi-leaf collimator (MLC) device(s) for intensity
modulated radiation therapy (IMRT), design and construction per IMRT
plan) was new for CY 2010. The service was previously reported using
multiple units of CPT code 77334 (Treatment devices, design and
construction; complex (irregular blocks, special shields, compensators,
wedges, molds or casts)). For CY 2012, the first year of claims data
for CPT code 77338, we proposed to assign CPT code 77338 to APC 0305
(Level II Therapeutic Radiation Treatment Preparation), with a proposed
median cost of approximately $266 because we calculated a proposed rule
median cost for CPT code 77338 of approximately $186 based on a single
bill frequency of 32,547 (out of a total bill frequency of 41,663) in
the CY 2010 claims data that we used to establish the proposed payment
rates for the CY 2012 OPPS.
For CY 2011, we had assigned CPT code 77338 to APC 0310 (Level III
Therapeutic Radiation Treatment Preparation) based on a simulated
median cost of approximately $792 that we calculated using CY 2009
claims data for CPT code 77334, the predecessor code to CPT code 77338.
Using CY 2009 claims data, we estimated that hospitals would furnish 4
units of CPT code 77334 per IMRT treatment plan and that the estimated
CY 2009 cost per unit for CPT code 77334 was $198, thus resulting in an
estimated cost per IMRT plan of $792. Based on this simulated median
cost for CPT code 77338, we assigned the code to APC 0310 which had a
CY 2011 median cost of approximately $917. We stated that, for the CY
2012 OPPS, we planned 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, and that, based on that
data, we would assess whether placement of CPT code 77338 in APC 0310
would remain appropriate for the CY 2012 OPPS (75 FR 71916).
Using the claims data from CY 2010, upon which we proposed to base
the CY 2012 OPPS payment rates, we proposed to move CPT code 77338 from
APC 0310 to APC 0305 for CY 2012 because its presence in APC 0310 would
have created a 2 times rule violation. We refer readers to section
III.B. of this final rule with comment period for discussion of the 2
times rule. Specifically, the proposed rule median cost for APC 0310 of
approximately $953 was more than twice the median cost of approximately
$186 that we calculated for CPT code 77338, and the single bill
frequency for CPT code 77338 of 32,547 caused it to meet the criteria
as a significant procedure in APC 0310. To resolve the 2 times rule
violation, we proposed to move CPT code 77338 to APC 0305 for CY 2012
OPPS.
Comment: Commenters objected to our proposal to move CPT code 77338
from APC 0310 to APC 0305. They believed that even if assigned to APC
0310, the code is being underpaid because the predecessor code CPT code
77334 would have been charged 3 to 9 units for the initial IMRT
treatment and that additional units would be charged 3 to 9 units for
the successive IMRT treatments. Therefore, the commenters stated that
if CPT code 77334 had not been replaced by CPT code 77338, they would
have charged and been paid approximately $4,625 for 18 total units of
CPT code 77334. Commenters stated that it is illogical that the
proposed rule median cost of $213 for CPT code 77334, which is for one
device, would be greater than the median cost of $186 for CPT code
77338, which is for all devices in an IMRT plan of treatment. One
commenter stated that its analysis revealed there is huge variability
in hospital charges for CPT code 77338, specifically, that 25 percent
of hospitals charge less than $500 and 8.5 percent of hospitals charge
more than $5,000 for one unit of CPT code 77338. This commenter noted
that this variability is carried through the CMS cost data, with CMS
finding costs of less than $100 for 17.5 percent of hospitals and costs
of more than $1,000 for 10 percent of hospitals. Another commenter
indicated that its analysis of the proposed rule claims data indicated
that only 13 percent of hospitals submitted claims in line with CMS
expectations of the charges for CPT code 77338. Many commenters stated
that it is clear that hospitals require guidance with regard to billing
for this service before improved data should be used to establish
payment rates. Commenters asked that CMS reassign CPT code
[[Page 74258]]
77338 to APC 0301 (Level II Radiation Therapy), or alternatively assign
the procedure to an APC that would pay for construction of 10 to 20
devices or assign the code to a new technology APC. Commenters also
asked that CMS provide guidance to ensure that hospitals bill
appropriately for this new service because they believed that their
data analysis shows that median costs are not accurate.
Response: After consideration of the public comments, the nature of
the service being reported by CPT code 77338, and our claims data, we
are finalizing our placement of CPT code 77338 in APC 0305, consistent
with the median cost that we calculated based on the actual charges
reported by 965 hospitals for CPT code 77338, converted to cost by
application of the CCRs we calculated from the billing hospitals' most
recently submitted cost reports. CPT code 77338 has similar clinical
characteristics to the services in APC 0305 (Level II Therapeutic
Radiation Treatment Preparation). In addition, the final rule median
cost for CPT code 77338 of approximately $188 is more similar to the
median cost for APC 0305 of approximately $264 than it is similar to
the median cost for APC 0310 of approximately $955.
Our examination of the CY 2010 claims that we used to calculate the
final median cost of approximately $188 for CPT code 77338 reveals that
the median charge in the single bills used for ratesetting for CPT code
77338 was approximately $826. The median CCR that we used to reduce the
hospital established charges to costs was 0.23. We used 36,860 single
procedure bills from 965 hospitals (out of 47,589 total lines) or
approximately 78 percent of the total lines containing actual charges
for CPT code 77338, to calculate the final rule median cost for CPT
code 77338, which is defined as including all devices required for an
IMRT treatment plan.
We recognize that there is considerable variability in the charges
that hospitals established for these new codes, but it is not uncommon
for there to be a high level of variability in the charges for a
service, and it is normal that such variability would be carried
through to the calculation of estimated costs for the service. We do
not advise hospitals with regard to what they should charge for a
service other than to require that the charges be reasonably related to
their cost for the service and that they must charge all payers the
same amount for the same service. However, our use of the median
charges to establish payment levels was specifically designed to
address wide variances in hospital cost accounting systems and billing
patterns, and has also consistently been a reliable mechanism for
promoting increased consistency without introducing additional
regulations. We recognize that it is peculiar that the estimated cost
for CPT code 77334, which represents the cost of a single device, would
be greater than the estimated cost for CPT code 77338, which represents
the cost of all devices in a single IMRT plan of treatment, but our
estimated costs are based on the amounts of the charges established by
hospitals for the service and the hospitals' CCRs, which are calculated
from their Medicare cost reports. There are many reasons why this
apparent anomaly could exist, including clinical rationales such as the
inclusion of labor-intensive physical blocks, shields, and molds in the
service described by CPT code 77334, as well as accounting rationales
such as the crosswalking of a single collimator setting to the charges
for the construction of a physical block, also in the service described
by CPT code 77334. It is not unusual for hospitals to establish charges
that do not comport with our expectation of the charges they would
establish based on the definition of the code for the service for which
they are establishing charges and on which we based simulated medians.
The OPPS is based on the expectation that hospital charges reflect
the relative resources that are required to furnish the service for
which they are requesting a specified amount of payment. This self-
selected hospital charge is converted to an estimated cost by the
application of a CCR for the billing hospital which is calculated from
the billing hospital's own cost report. As described previously, in
this case the single bills used to calculate the median cost were
submitted in significant volume by 965 hospitals (36,860 single bills
were used for ratesetting out of 47,589 total lines). Therefore, we
have no reason to believe that the median cost we have calculated from
such a robust submission of charge data from a significant number of
hospitals should not be used to establish the payment for the service
reported by CPT code 77338 for CY 2012. To the extent that hospitals
determine that their charges should be revised to better reflect the
resources required to furnish the service as defined by CPT code 77338,
the revised charges would be reflected in future years' OPPS payment
rates. However, for CY 2012, based on the robust set of single
procedure bills containing actual charges for CPT code 77338 by 965
hospitals, we believe that it is appropriate to apply our longstanding
cost-finding methodology, as we proposed, to calculate the median cost
on which the payment for CPT code 77338 is based for CY 2012. We see no
basis to ignore our robust set of single procedure claims submitted by
a significant number of hospitals by continuing to simulate a median
cost for CPT code 77338.
In conclusion, we see no irregularities in our calculation of the
median cost for CPT code 77338 based on the actual charges reported on
36,860 single procedure bills submitted by 965 hospitals. Therefore, we
are finalizing our assignment of CPT code 77338, which has a final
median cost of approximately $188 to APC 0305, which has a final median
cost of $264 for CY 2012.
f. Computed Tomography of Abdomen and Pelvis (APC 0331 and 0334)
The AMA CPT Editorial Panel created three codes for computed
tomography (CT) of abdominal and pelvis that were effective January 1,
2011, specifically, 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). As with all new CPT
codes for CY 2011, these new codes were announced through the
publication of the CY 2011 CPT in November 2010, effective on January
1, 2011.
In accordance with our longstanding policy, we made an interim APC
assignment for each new code for CY 2011 based on our understanding of
the resources required to furnish the service as the service was
defined in the new code (75 FR 71898). Specifically, for CY 2011, we
assigned new CPT code 74176 to APC 0332 (Computed Tomography without
Contrast), which has a CY 2011 payment rate of approximately $194; we
assigned CPT code 74177 to APC 0283 (Computed Tomography with
Contrast), which has a CY 2011 payment rate of approximately $300; and
we assigned CPT code 74178 to APC 0333 (Computed Tomography Without
Contrast Followed by with Contrast), which has a CY 2011 payment rate
of approximately $334. For CY 2011, we also made these codes eligible
for composite payment under the multiple imaging composite APC
methodology when they are furnished with other CT
[[Page 74259]]
procedures to the same patient on the same day.
As is our standard practice each year, our clinicians review each
of the many CPT code changes that will be effective in the forthcoming
year and make a decision regarding status indicator and/or APC
assignment based on their understanding of the nature of the services
furnished. We are unable to include a proposed status indicator and/or
APC assignment in the proposed rule for codes that are not announced by
the AMA CPT Editorial Board prior to the proposed rule. Therefore, in
accordance with our longstanding policy, we include, in the final rule
with comment period, an interim status indicator and/or APC assignment
for all new CPT codes that are announced by the AMA CPT Editorial Board
subsequent to the OPPS/ASC proposed rule to enable payment to be made
for new services as soon as the code is effective. In accordance with
our longstanding practice, we identified the new codes for abdominal/
pelvis CT for CY 2011 in Addendum B of the CY 2011 OPPS/ASC final rule
with comment period as having new interim APC assignments by showing a
comment indicator of ``NI,'' and we provided a public comment period.
As we do with all new CPT codes, we are responding to the public
comments in this OPPS/ASC final rule with comment period for CY 2012.
This longstanding process enables us to pay for new services as soon as
the new CPT codes for them go into effect, despite the fact that they
first become publicly available around the same time the final rule
with comment period for the upcoming year is made public.
At its February 28-March 1, 2011 meeting, the APC Panel heard
public presentations on this issue and recommended that CMS provide
more data on the new CPT codes for combined abdomen and pelvis CT as
soon as these data are available. In the CY 2012 OPPS/ASC proposed rule
(76 FR 42235), we stated that we were accepting this recommendation,
and we would provide claims data as soon as the data are available. We
noted that, because these codes were effective January 1, 2011, the
first available claims data for these codes will be the APC Panel
claims data for the CY 2013 OPPS rulemaking. These data will be for
dates of service January 1, 2011 through and including September 30,
2011, as processed through the Common Working File on or before
September 30, 2011.
As we described in the proposed rule, in general, stakeholders who
provided comments on the interim assignment of these codes for CY 2011
stated that the most appropriate approach to establishing payment for
these new codes is to assign these procedures to APCs that recognize
that each of the new codes reflects the reporting under a single code
of two services that were previously reported under two separate codes
and that, therefore, payments would be more accurate and better
reflective of the relative cost of the services under the OPPS if we
were to establish payment rates for the codes for CY 2012 using claim
data that reflect the combined cost of the two predecessor codes. They
noted that when these services were reported in CY 2010 using two CPT
codes, rather than a single code, the services that are being reported
under CPT code 74176 were assigned to imaging composite APC 8005 (CT
and CTA without Contrast) for which the CY 2010 payment was $419.45.
Similarly, the services being reported under CPT code 74177 or CPT code
74178 were assigned to composite APC 8006 (CT and CTA with Contrast)
for which the CY 2010 payment was $628.49. They indicated that they
believed that simulating the median cost for CPT codes 74176, 74177,
and 74178 using historic claims data from the predecessor codes in a
manner similar to that used to create the composite APC medians would
result in the best estimates of costs for these codes and, therefore,
the most accurate payment rate for these codes.
After considering the presentations at the APC Panel meeting, the
views of stakeholders who met with us to discuss this issue, and the
comments in response to the CY 2011 final rule with public comment
period, and after examining our claims data for the predecessor codes,
we stated in the proposed rule that we believe that establishment of
payment rates for these services based on historic claims data for the
combinations of predecessor codes that are now reported by CPT codes
74176, 74177, and 74178 would result in a more accurate and appropriate
payment for these services for CY 2012 because it would take into
account the full cost of both services that are now reported by a
single CPT code. We indicated that we believe that the best way to
secure the most appropriate payments for CY 2012 is to use the claims
data from the predecessor codes under which the new codes were reported
for CY 2010 to simulate median costs for the new codes and to create
APCs that are appropriate to the services. To do so should reflect both
the full cost of the service as reported by the new code and should
also reflect the efficiencies of reporting the service represented by
the single new code. Therefore, in the CY 2012 OPPS/ASC proposed rule
(76 FR 42234), we proposed to establish two APCs to which we proposed
to assign the combined abdominal and pelvis CT services. Specifically,
we proposed to create new APC 0331 (Combined Abdominal and Pelvis CT
Without Contrast), to which we proposed to assign CPT code 74176 and
for which we proposed to base the CY 2012 OPPS payment rate on a median
cost of approximately $417. We also proposed to create new APC 0334
(Combined Abdominal and Pelvis CT With Contrast), to which we proposed
to assign CPT codes 74177 and 74178 for the CY 2012 OPPS and for which
we proposed to base the CY 2012 OPPS payment rate on a median cost of
approximately $592. We proposed to create two new APCs to which to
assign these codes, rather than one, because CPT code 74176 is
furnished without contrast, while CPT codes 74177 and 74178 are
furnished with contrast. Section 1833(t)(2)(G) of the Act requires that
services with contrast may not be assigned to APCs that contain
services without contrast. Therefore, we could not assign CPT code
74176, which does not require contrast, to the same APC as CPT codes
74177 and 74178, which require contrast.
We proposed to create new APC 0331 to which we proposed to assign
CPT code 74176 and to create new APC 0334 to which we proposed to
assign CPT codes 74177 and 74178 because the proposed methodology for
simulating the median costs for CPT codes 74176, 74177, and 74178,
which uses claims data for the predecessor codes is unique to these CPT
codes. Therefore, we believe that it is appropriate to create APCs
comprised only of services for which we calculated medians using claims
data for the predecessor codes. We stated in the proposed rule that, to
the extent this policy is finalized, we would reassess whether it
continues to be appropriate to pay these codes under APCs 0331 and 0334
once the median costs for the proposed CY 2013 OPPS are calculated
using our standard methodology, based on hospitals' CY 2011 charges for
CPT codes 74176, 74177, and 74178.
To calculate the proposed median costs for proposed APCs 0331 and
0334 for CY 2012, we selected claims that contained one unit of both of
the predecessor CPT codes that appear in the CY 2011 CPT for CPT codes
74176, 74177, and 74178. The predecessor codes were limited to the
codes in Table 20 of the proposed rule (now Table 27 of this final rule
with comment period).
[[Page 74260]]
[GRAPHIC] [TIFF OMITTED] TR30NO11.042
For purposes of selecting claims to be used to calculate simulated
median costs, we selected only claims that contained one (and only one)
unit of each of the predecessor codes in the allowed combinations
identified in Table 21 of the proposed rule (now Table 28 of this final
rule with comment period). We used only claims that contained one and
only one unit of each of the code combinations because we believe that
it represents the best simulation of the definition of the new codes.
Where more than one unit of either or both codes were reported, the
claim would be paid under an imaging composite APC, not under APC 0331
or 0334. For median calculation, claims that contained more than one
unit of either or both codes were assigned to the applicable imaging
composite APC. We refer readers to section II.A.2.e.5. of the proposed
rule and this final rule with comment period for discussion of the
imaging composite APCs.
[GRAPHIC] [TIFF OMITTED] TR30NO11.043
After we selected the claims that contained one and only one unit
of each code in each combination, we deleted claims that contained
other separately paid HCPCS codes if those codes did not appear on the
bypass list (we refer readers to section II.A.1.b. of the proposed rule
and this final rule with comment period, and to Addendum N, which was
available via the Internet on the CMS Web site). We bypassed the costs
for codes that appeared on the
[[Page 74261]]
bypass list to create simulated single procedure claims for CPT codes
74176, 74177, and 74178. Using the remaining simulated single procedure
claims for the combined abdominal and pelvis CT services, we applied
our standard trimming, packaging, and wage standardization methodology
to calculate the median cost for each combined abdominal and pelvis CT
code for the two proposed APCs. We refer readers to section II.A.2.c.
of the proposed rule and this final rule with comment period for
discussion of our standard trimming, packaging, and wage
standardization methodology.
We found that using the proposed methodology resulted in a
simulated median cost for CPT code 74176 of approximately $417, and
that, because we proposed that CPT code 74176 would be the only HCPCS
code assigned to APC 0331, the simulated median cost for APC 0331 also
would be approximately $417. We found that using this proposed
methodology, the simulated median cost for CPT code 74177 was
approximately $570 and the simulated median cost for CPT code 74178 was
approximately $638, and that the simulated median cost for proposed APC
0334 was approximately $592. We proposed to use this simulation
methodology to establish proposed median costs for proposed APCs 0331
and 0334 for the CY 2012 OPPS.
We also proposed that, in cases where CPT code 74176 is reported
with CT codes that describe CT services for other regions of the body
other than the abdomen and pelvis in which contrast is not used, it
would be assigned to imaging composite APC 8005 (CT and CTA without
Contrast), for which we proposed a median cost of approximately $445
for the CY 2012 OPPS. In cases where CPT code 74177 or 74178 is
reported with CT codes that describe CT services for regions of the
body other than abdomen and pelvis in which contrast is used, we
proposed that the code would be assigned to APC 8006 (CT and CTA with
Contrast), for which we proposed a median cost of approximately $744
for the CY 2012 OPPS. We proposed to assign CPT codes 74176 to imaging
composite APC 8005 and to assign CPT codes 74177 and 74178 to imaging
composite APC 8006 because the predecessor codes for CPT codes 74176,
74177, and 74178 (identified in Table 20 of the proposed rule) continue
to be reported when either abdominal CT or pelvis CT (but not both) is
furnished, and we proposed to continue to assign them to imaging
composite APCs 8005 and 8006. We stated that we believe that it would
be inconsistent with our proposed imaging composite policy if we did
not propose to assign CPT codes 74176, 74177, and 74178 to the
applicable imaging composite APC for CY 2012. We refer readers to
section II.A.2.e.(5) of the proposed rule and this final rule with
comment period for the discussion of the calculation of our median
costs for APCs 8005 and 8006 for CY 2012.
In summary, we proposed to establish new APCs 0331 and 0334 to
which we would assign the abdominal and pelvis CT codes that were
created by the AMA CPT Editorial Panel for CY 2011 and to use the
simulation methodology we describe above to establish simulated median
costs on which we would base the CY 2012 payment rates because we
believe that to do so would result in relative payment weights for
these new services that will more accurately reflect the resources
required to furnish these services as defined by CPT than would be true
of continued assignment of the codes to the single service APCs to
which we made interim assignments for CY 2011. We noted that claims and
cost data for these services will be available for the CY 2013 OPPS
rulemaking, and we will reassess the payment policy for these codes
based on the cost data that are used to establish the CY 2013 OPPS
median cost and payment rates.
At its August 10-11, 2011 meeting, the APC Panel recommended that
CMS adopt the proposal to create new APC 0331 (Combined Abdomen and
Pelvis CT [computed tomography] without Contrast), for payment of CPT
code 74176 (Computed tomography, abdomen and pelvis; without contrast
material); and new APC 0334 (Combined Abdomen and Pelvis CT with
Contrast), for payment of 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). We respond to the Panel's
recommendation as part of the response to comments below.
Comment: Commenters supported the use of data for the predecessor
codes for the services that were combined into CPT codes 74176, 74177,
and 74178 to create simulated median costs for use in establishing
payments for CY 2012. Commenters supported the creation of APC 0331, to
which we proposed to assign CPT code 74176, and APC 0334, to which we
proposed to assign CPT codes 74177 and 74178 for CY 2012. As described
previously, commenters on the CY 2011 OPPS/ASC final rule with comment
period also stated that the most appropriate approach to establishing
payment for these new codes is to assign these procedures to APCs that
recognize that each of the new codes reflects the reporting under a
single code of two services that were previously reported under two
separate codes and that, therefore, payments would be more accurate and
better reflective of the relative cost of the services under the OPPS
if we were to establish payment rates for the codes for CY 2012 using
claims data that reflect the combined cost of the two predecessor
codes.
Response: We continue to believe that it is appropriate to base
payment for CPT codes 74176, 74177, and 74178 on simulated median costs
established using the cost data for predecessor codes for CY 2012 for
the reasons we stated in the proposed rule, as summarized in the
discussion above. Therefore, the median costs for CPT codes 74176,
74177, and 74178 for CY 2012 are based on the cost data for the
predecessor codes, and we are establishing new APCs 0331 and 0334 to
which these codes are assigned, as we proposed. The final rule median
cost for CPT code 74176, which is the only code in APC 0331, is
approximately $406. The final median cost for CPT code 74177 is
approximately $561 and the final median cost for CPT code 74178 is
approximately $631. The final median cost for APC 0334 to which CPT
codes 74177 and 74178 are assigned is approximately $581.
We have a large volume of services in the predecessor data on which
to base the simulated median costs for APCs 0331 and 0334.
Specifically, to calculate the medians for CPT code 71476, we used
222,193 claims; for CPT code 71477, we used 331,262 claims; and for CPT
code 74178, we used 201,693 claims. Because these codes were created
effective January 1, 2011, we will have claims data containing actual
charges for use in calculating the median cost of these services for
the CY 2013 OPPS. We expect to have a very robust set of claims data
containing actual hospital charges to which we expect to apply our
standard processes to calculate the median costs for these codes for CY
2013 because of the large volume of services that we found in the
predecessor data that meet the definition of the new codes. At that
time, we will decide whether it is necessary and appropriate to propose
to retain APCs 0331 and 0334. However, we note that the extent to which
hospitals establish charges in a manner that reflects that the new
codes report both the abdominal and pelvis CT services will greatly
affect the median
[[Page 74262]]
costs that are calculated, using our longstanding methodology, from the
charge data present on claims for services in CY 2011.
Comment: One commenter on the CY 2012 proposed rule and several
commenters on the CY 2011 final rule with comment period asked that CMS
increase payment for the services described by CPT codes 74176, 74177,
and 74178 for CY 2011 because they believe that CMS inappropriately
reduced payment for these services as a result of the assignment of CPT
code 74176 to APC 0332 and the assignment of CPT codes 74177 and 74178
to APC 0333 for CY 2011. Commenters on the CY 2011 final rule with
comment period objected to the assignment of CPT code 74176 to APC 0332
and to the assignment of CPT codes 74177 and 741178 to APC 0333 on the
basis that the payments for these single service APCs reduced the
payment for the services which, when coded using multiple CPT codes in
CY 2010, would have been paid as imaging composite APCs at much higher
payment rates.
Response: The prospective payments that were established as a
result of publication of the CY 2011 OPPS/ASC final rule with comment
period are generally final payments, with the exception of any outlier
payment or transitional outpatient payment to which the hospital may be
entitled. We generally do not change payments that we implement as a
result of the standard regulatory process during the year in which the
payments are in effect unless required by legislation. We followed our
longstanding policy when we made an interim assignment of CPT code
74176 to APC 0332 and when we made an interim assignment of CPT codes
74177 and 74178 to APC 0333 for CY 2011, based on our understanding of
the hospital resources required to furnish these services. It is our
longstanding practice to assign new CPT codes to interim APCs without
having an opportunity to acquire comment from the public because the
new codes are not announced to the public until after the opportunity
for public comment has ended. This interim assignment remains in effect
for the calendar year under this established process. The first
opportunity to change the APC assignment for new codes is the final
rule with comment period following the year the new codes are first
recognized for OPPS payment.
After consideration of the public comments we received, for CY
2012, for the reasons we discussed previously in this section, we are
creating new APC 0331, to which we are assigning CPT code 74176, and
new APC 0334, to which we are assigning CPT codes 74177 and 74178.
Using the claims data for the predecessor codes and the methodology we
identify above and in the proposed rule, we calculated a simulated
median cost of approximately $406 for APC 0331 and a simulated median
cost of approximately $581 for APC 0334 for CY 2012. We will reassess
whether there is a continued need for these APCs for the CY 2013 OPPS
once we have actual charges for these services.
For the reasons we discuss previously in this section, we also are
finalizing our proposal to assign CPT code 74176 to imaging composite
APC 8005 where CPT code 74176 is reported with CT codes that describe
CT services for regions of the body other than the abdomen and pelvis
in which contrast is not used and to assign CPT codes 74177 and 74178
to APC 8006 when either of them is reported with CT codes that describe
CT services for regions of the body other than abdomen and pelvis in
which contrast is used. For CY 2012, APC 8005 has a median cost of
approximately $432 and APC 8006 has a median cost of approximately
$722.
g. Complex Interstitial Radiation Source Application (APC 0651)
APC 0651 (Complex Interstitial Radiation Source Application)
consists of one service described by CPT code 77778 (Interstitial
radiation source application; complex). Composite APC 8001 (Low Dose
Rate Prostate Brachytherapy Composite) employs claims on which both CPT
code 77778 and CPT code 55875 (Transperineal placement of needles or
catheters into prostate for interstitial radioelement application, with
or without cystoscopy) are found on the same date of service, as
described in section II.A.2.e.(2) of this final rule with comment
period. For the CY 2012 proposed rule, APC 0651 had a median cost of
approximately $897, based on 96 claims. APC 0651 has a final CY 2012
median cost of approximately $835, based on 92 single claims.
Comment: Several commenters expressed concern about the low volume
of single and ``pseudo'' single claims used for APC 0651 ratesetting.
They pointed out that both CY 2011 and CY 2012 payment rates for APC
0651 are based on fewer than 100 claims, and that the proposed CY 2012
payment rate for APC 0651 of $866.08 is a 23.3 percent decrease from
the final CY 2011 payment rate of $1,129.46. The commenters believed
the 96 claims used to set the proposed CY 2012 rate for APC 0651 are
inadequate, and recommended that CMS continue to explore additional
methodologies to increase the number of multiple procedure claims used
for brachytherapy ratesetting.
Response: While we agree that 96 single claims associated with CPT
code 77778 is not optimal for APC 0651 ratesetting, we believe that a
low volume of single claims for this code is not unexpected due to the
clinical nature of the procedure. As we describe in section
II.A.2.e.(2) of this final rule with comment period, the application of
brachytherapy sources described by CPT code 77778 and the placement of
needles or catheters into the prostate described by CPT code 55875 are
generally 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. For this reason, we are
continuing to pay for these two procedures when performed together
through composite APC 8001. However, as we indicate in that section, we
understand that there are a few occasions when a physician places the
needles or catheters outside the hospital and the patient is then
transferred to a hospital for brachytherapy source application, in
which case CPT code 77778 would be reported alone in the hospital
outpatient setting. While we agree with the commenter that it would be
preferable if we had more single bills on which to base the payment for
APC 0651, we believe the variation in the median costs for CPT code
77778 between the CY 2011 final rule and the CY 2012 final rule appears
to be normal variation that we would expect to see for low-volume
services. We also found from examining the single bills for CPT code
77778 that they are from different hospitals from year to year, which
also could result in fluctuations in the median costs. We will continue
to evaluate additional refinements and improvements to our ratesetting
methodologies to maximize our use of claims data generally and continue
to study means by which we can use more claims data to establish the
payment rate for APC 0651 in particular.
For CY 2012, the final median cost for APC 0651 is approximately
$835, based on 92 single bills. We will continue to use this median
cost to establish payment for APC 0651 for CY 2012, and are finalizing
our policy for CY 2012 that CPT code 77778, when billed alone, will be
paid at the APC 0651 payment rate.
[[Page 74263]]
h. Radioelement Applications (APC 0312)
APC 0312 consists of six radioelement application codes, one of
which is unlisted CPT code 77799 (Unlisted procedure, clinical
brachytherapy). For the CY 2012 proposed rule, APC 0312 had a median
cost of approximately $338 based on 168 single claims. For CY 2011, APC
0312 had a final rule median cost of $351.17, based on 254 single
claims.
Comment: One commenter stated that the number of APC 0312 single
claims is sparse and shows large and random variations in yearly median
costs. The commenter pointed to a decrease in single claims from the CY
2011 final rule to the CY 2012 proposed rule of 33 percent, and a
decrease in the CY 2011 final payment rate to the CY 2012 proposed
payment rate of 8.1 percent. The commenter recommended that CMS
continue to explore additional methodologies to increase the number of
multiple procedure claims used for brachytherapy ratesetting, such as
for APC 0312.
Response: The CY 2012 final median cost of approximately $378 shows
an increase of 7.8 percent from the CY 2011 final median of $351.17. We
believe the variation in the median costs between the CY 2011 final
rule and the CY 2012 final rule appears to be normal variation that we
would expect to see for low-volume services. We agree with the
commenter that it would be preferable if we had more single bills on
which to base the payment for APC 0312, and we will continue to
evaluate additional refinements and improvements to our ratesetting
methodologies generally to maximize our use of claims data generally
and continue to study means by which we can use more claims data to
establish the payment rate for APC 0312 in particular. However, we note
that 268, or approximately 36 percent, of the 736 total lines reported
for services that are assigned to APC 0312 in the CY 2012 final rule
data, were reported as CPT code 77799, which we do not use for setting
the median cost for the APC because there is no definition of the
service that was furnished. Therefore, some of the approximately 36
percent of the lines paid under APC 0312 might be used to establish the
median cost for services in APC 0312 if they had been coded
specifically, or in cases in which there is no existing code for the
service, a new code were to be created to describe the services being
furnished.
After consideration of the public comments we received, we are
finalizing a CY 2012 median cost for APC 0312 of approximately $378,
based on 183 single claims.
8. Respiratory Services
a. 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 services furnished as a part of the comprehensive
pulmonary rehabilitation program benefit (74 FR 60567). There was and
continues to be no single CPT code that fully and accurately describes
the comprehensive pulmonary rehabilitation benefit provided in section
1861(fff) of the Act. Moreover, at that time, there were no
alphanumeric HCPCS codes that described the comprehensive pulmonary
rehabilitation benefit in effect for CY 2008 (on which the CY 2010 OPPS
was based) or CY 2009 (on which the CY 2011 OPPS was based). Therefore,
for CY 2010, 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 APC 0102 (Level II
Pulmonary Treatment), which we also created for the CY 2010 OPPS.
Because none of the pulmonary treatment codes for which there were
charges for CY 2008 or CY 2009 accurately described the comprehensive
pulmonary rehabilitation service for which MIPPA provided coverage, we
did not assume that the charge reported on any one of the previously
existing HCPCS codes under which pulmonary treatments were reported
would represent the full charge for the comprehensive pulmonary
rehabilitation service.
Instead, for the CY 2010 OPPS, which was based on claims for
services in CY 2008, we calculated a median ``per session'' cost that
we simulated from historical hospital claims data for pulmonary therapy
services that were billed in combination with one another, much like we
create composite APC median costs by summing the costs of multiple
procedures that are typically provided on the same date. Our
methodology for calculating the ``per session'' median cost that we
used as the basis for the CY 2010 OPPS payment rate for HCPCS code
G0424 and APC 0102 is discussed in detail in the CY 2010 OPPS final
rule with comment period (74 FR 60567 through 60570).
Specifically, to simulate the ``per session'' median cost of new
HCPCS code G0424 from claims data for existing services, we used only
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, one on one,
face to face, per 15 minutes (includes monitoring) or HCPCS code G0238
(Therapeutic procedures to improve respiratory function or increase
strength or endurance of respiratory muscles, 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 reasoned that patients in a pulmonary rehabilitation program would
typically receive individual and group services in each session of
approximately 1 hour in duration. This was consistent with public
comments that suggested that pulmonary rehabilitation 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 reporting one
unit of HCPCS code G0237 or G0238 and one unit of HCPCS code G0239 in
this simulation methodology was also consistent with our overall
finding of approximately 2.4 service units of the HCPCS G-codes 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. We concluded that the typical
session of pulmonary rehabilitation would be 1 hour based on public
comments that indicated that a session of pulmonary rehabilitation is
typically 1 hour and based 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.
We included all costs of the related tests and assessment services
(CPT codes 94620 (Pulmonary stress testing; simple (e.g., 6-minute walk
test, prolonged exercise test for bronchospasm with pre- and post-
spirometry and oximetry)); 94664 (Demonstration and/or evaluation of
[[Page 74264]]
patient utilization of an aerosol generator, nebulizer, metered dose
inhaler or IPPB device); and 94667 (Manipulation chest wall, such as
cupping, percussion and vibration to facilitate lung function; initial
demonstration and/or evaluation), and all CPT codes for established
patient clinic visits, on the same date of service as the HCPCS G-codes
in the claims we used to simulate the median cost for HCPCS code G0424.
After identifying these ``per session'' claims, which we believe to
represent 1 hour of care, we summed the costs on them and calculated
the median cost for the set of selected claims. In light of the cost
and clinical similarities of pulmonary rehabilitation 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 believed that the
simulated median cost for HCPCS code G0424, constructed to include the
costs of these services where furnished, was our best estimate of the
expected hospital cost of a pulmonary rehabilitation session, given
that we did not have hospital charges for the comprehensive pulmonary
rehabilitation service provided by MIPPA for which we created HCPCS
code G0424. We indicated in our discussion of the simulated median that
we expected hospitals would establish charges for pulmonary
rehabilitation that would reflect all of the services that are included
in comprehensive benefit that would be reported by one unit of HCPCS
code G0424 (76 FR 42240).
We used the resulting simulated median ``per session'' cost of
approximately $50 as the basis for the payment for pulmonary
rehabilitation service for CY 2010, the first year in which the
comprehensive pulmonary rehabilitation benefit was covered. For CY
2011, which was based on claims for services furnished in CY 2009, we
continued to assign HCPCS code G0424 to APC 0102 and to apply the
simulation methodology that we used in CY 2010 to claims for services
in CY 2009 to calculate a median ``per session'' cost simulated from
historical hospital claims data for similar pulmonary therapy services
for the CY 2011 OPPS. The CY 2011 OPPS final rule median cost of
approximately $62 resulted in a national unadjusted payment rate for CY
2011 of approximately $63.
For the CY 2012 OPPS, however, we have a very robust set of claims
for HCPCS code G0424 on which hospitals reported the charges for the
comprehensive pulmonary rehabilitation service for which MIPPA provided
the pulmonary rehabilitation benefit beginning on January 1, 2010.
Specifically, the CY 2012 OPPS proposed rule data, based on CY 2010
claims, contained a total frequency of 393,056 lines of HCPCS code
G0424, of which we were able to use 391,901 single procedure bills or
almost 100 percent of the claims submitted for HCPCS code G0424. This
is an extremely robust volume of single procedure bills containing
charges for HCPCS code G0424 on which to base a median cost. In
general, we have found that higher volumes of single bills both in
absolute numbers and as a percentage of total frequency provide very
stable estimates of hospital costs.
Therefore, in the CY 2012 OPPS/ASC proposed rule (76 FR 42239 and
42240), we proposed that the payment rate for HCPCS code G0424 and,
therefore, for APC 102, would be based on the median cost for the
service as derived from claims for services furnished in CY 2010 and
the most current available cost report information, using our
longstanding process for estimating the median cost of a service
described by a HCPCS code. We refer readers to section II. of the
proposed rule and this final rule with comment period for a description
of our longstanding standard process for calculating the median costs
on which the OPPS payment rates are based. Using our standard median
calculation process for HCPCS code G0424 resulted in a proposed median
cost of approximately $38 for HCPCS code G0424 and, therefore, for APC
0102. Given that the volume of claims in the CY 2012 OPPS proposed rule
data was so robust for HCPCS code G0424, we believed that the proposed
median cost we calculated for HCPCS code G0424 was a valid reflection
of the relative cost of the comprehensive pulmonary rehabilitation
service described by HCPCS code G0424 and that the proposed median cost
for HCPCS code G0424 was an appropriate basis on which to establish the
proposed national unadjusted payment rate for APC 0102.
We indicated in the proposed rule that we recognized that there is
a significant difference between our simulated median cost for CY 2011
and the CY 2012 proposed rule median cost of approximately $38 that was
derived from application of our standard median calculation process to
hospital claims data for CY 2010. We believe that this difference
arises because the median simulation methodology we used for CY 2010
and CY 2011 selected claims that contained multiple procedures and
packaged the costs of numerous services into the ``per session'' cost
for the simulated code where numerous services appeared on the same
date of service. Our simulation methodology assumed that hospitals
would include the charges for these additional services in their CY
2010 charges for HCPCS code G0424 because the services are included in
the definition of comprehensive pulmonary rehabilitation.
In response to the CY 2012 OPPS proposed median cost of
approximately $38 for HCPCS code G0424, we looked at our claims data in
more depth. We found that 1,048 hospitals, approximately 25 percent of
hospitals paid under the OPPS, reported HCPCS code G0424 and that the
median line item median cost (exclusive of packaging) was approximately
$38, virtually no different from the median cost per unit that we
derived from the single bills. We also examined the charges that were
submitted for HCPCS code G0424 in CY 2010 and the CCRs that were
applied to the charges for HCPCS code G0424 to calculate the estimated
median cost for the code for the CY 2012 proposed rule. We also looked
at the revenue codes under which charges for HCPCS code G0424 were
reported and the percentage of cost that was associated with packaged
costs, such as oxygen, drugs, and medical supplies. We found that the
median line item charge for HCPCS code G0424 in the CY 2012 proposed
rule data was approximately $150 and that the median CCR was 0.29. We
also found that the most frequently reported revenue code for HCPCS
code G0424 was revenue code 410 (Respiratory therapy), approximately
108,000 single bills, and with revenue code 948 (Pulmonary
Rehabilitation), approximately 81,000 single bills, being the second
most commonly reported revenue code for HCPCS code G0424. We found that
only 0.02 percent of the cost of HCPCS code G0424 was packaged cost
(for example, oxygen, drugs, and supplies). In general, our detailed
examination of total and line item charges for pulmonary
rehabilitation, the CCRs used to reduce the charges to estimated costs
on the single bills, the revenue codes reported, and the absence of
packaging on the single bills supports the proposed median cost of
approximately $38 per unit as a valid estimate of the relative cost of
one unit of HCPCS code G0424.
In summary, our examination of the claims and cost data for HCPCS
code G0424 caused us to believe that the proposed median cost that we
calculated from claims data for HCPCS code G0424 was calculated
correctly
[[Page 74265]]
according to our longstanding standard median cost calculation
methodology. Therefore, we proposed to base the CY 2012 OPPS payment
rate for HCPCS code G0424 and APC 0102 on the median cost that we
derive from applying our standard median calculation methodology to the
CY 2010 charges and cost data for HCPCS code G0424.
Comment: Commenters objected to the proposed CY 2012 payment
because it proposed a significant reduction in payment from the payment
that resulted from the simulated median cost for pulmonary
rehabilitation for CY 2010 and CY 2011. They stated that such a
reduction in payment would not cover the labor cost of the service and
would result in hospitals ceasing to furnish the service and,
therefore, would reduce access to care for beneficiaries. Commenters
believed that hospitals do not understand the nature of HCPCS code
G0424 as a unit of a comprehensive service. They believed that
hospitals are very familiar with HCPCS code G0237, which is for 15
minutes of care for patients with chronic pulmonary diseases, and they
believed that hospitals presumed that a single code for very similar
services correlated to a different diagnosis would also be a 15 minute
code and that they set the charge for HCPCS code G0424, which is for
similar services but is limited to persons with chronic obstructive
pulmonary disease (COPD), accordingly. Commenters stated that CMS data
support that hospitals are not reporting charges associated with the
corollary services that are part of HCPCS code G0424. They urged CMS to
freeze the payment for pulmonary rehabilitation for CY 2012 at the CY
2011 rate and to shift from the use of a standard cost center to the
use of a nonstandard cost center for determining the relative cost of
pulmonary rehabilitation services because they believed that using a
standard cost center does not adequately capture the cost of the
services. The commenters believed that continuing the CY 2011 payment
for CY 2012 is justified because there is strong historical data for
HCPCS codes G0237 through G0239 and a weak data base for HCPCS code
G0424 and that using 10 years of data for HCPCS codes G0237 through
G0239 is wiser than using one year of artifact data for HCPCS code
G0424 as the basis for the payment for HCPCS code G0424. They indicated
that the proposed payment for pulmonary rehabilitation will reduce
access to care and thereby result in CMS losing an important tool for
reducing readmissions and decreasing length of stay in inpatient
hospital settings. The commenters stated that HCPCS codes G0237 through
G0239 are used to report individual pulmonary services while HCPCS code
G0424 is generally recognized as a group code with a maximum ratio of
one staff to four patients. However, they stated that this is not
always the case and that HCPCS code G0424 is sometimes requires a one-
to-one staff to patient ratio. Therefore, until such time as a more
robust set of data is available, the commenters asked that CMS continue
to base payment for HCPCS code G0424 on the data for HCPCS codes G0237
through G0239 using the simulated median methodology that was the basis
for payments for HCPCS code G0424 for CY 2010 and 2011.
Response: After considering the comments and reexamining our claims
data, we are establishing the CY 2012 median cost on which the CY 2012
payment for HCPCS code G0424 will be based on our claims and cost
report data. The final rule median cost for APC 0102 to which HCPCS
code G0424 is assigned is approximately $37. Our final rule data shows
that hospitals billed a total frequency of 448,396 lines of pulmonary
rehabilitation, of which we were able to use 446,456 or nearly 100
percent of the billed lines, for the calculation of the final median
cost for HCPCS code G0424 for CY 2012. We disagree with commenters that
these claims are artifact claims that should not be used.
For this final rule we expanded our data analysis to look not only
at the charges and CCRs for HCPCS code G0424, but also to look at the
charges and CCRs for HCPCS code G0237 through G0239, which the
commenters indicated are similar services, and also to look at the cost
centers that were used to reduce the charges to costs. We found that
the median charge for one unit of HCPCS code G0424 is approximately
$152 and the median charge for HCPCS code G0239, which is defined to
include services to two or more persons, rather than one on one
service, is approximately $120. Commenters stated that HCPCS code G0424
is generally, but not always, considered to be a group service with a
staff to patient ratio of 1:4. Therefore, we view it as most similar to
HCPCS code G0239, which is defined as a group service and which was the
basis for the simulated median cost methodology on which we based the
OPPS payments for CY 2010 and CY 2011. Therefore, it seems logical that
hospitals charged more for the comprehensive pulmonary rehabilitation
service of HCPCS code G0424 than for HCPCS code G0239 which is not a
comprehensive service but which is a group service for which time is
not limited. Hospital charges represent the hospital's statement of the
dollar value of the service they furnish and we conclude that hospitals
place a higher dollar value on HCPCS code G0424 than on G0239. We do
not view HCPCS code G0237 or G0238, which have median charges of
approximately $88 and $85, respectively, and which represent 15 minutes
of care to be similar to HCPCS code G0424 because each of them is for
one-on-one care, as opposed to the group nature of HCPCS codes G0239
and G0424. For that reason, when we simulated median costs for CY 2010
and CY 2011, we based the simulation on the presence of HCPCS code
G0239 on the claim, with HCPCS code G0237 and/or HCPCS code G0238 being
a secondary requirement.
We next looked at the revenue codes under which hospitals reported
HCPCS code G0424 and G0239. We found that the most commonly reported
revenue codes on the lines with the single bills for HCPCS code G0424
were 0410, Respiratory Services, with 108,154 single bills; 0948,
Pulmonary Rehabilitation, with 84,126 single bills; 0460, Pulmonary
Function, with 64,641 single bills; 0419, Other Respiratory Services,
with 37,833 single bills, and 0940, Other Therapeutic, with 59,533
single bills. Therefore, of the 446,456 single bills used to set the
median cost for APC 102, 345,738 bills (excluding the single bills
reported as ``Other therapeutic''), or 77 percent, were reported under
revenue codes that were specific to respiratory services of some nature
(that is, revenue codes 0410, 0948, 0460, and 0419). The remaining
single bills were reported under a variety of revenue codes. We next
looked at the cost centers that were applied to the charges on the
single bills, and we found that we used the respiratory therapy cost
center, cost center 4900 on the hospital cost report CMS 2552-96, to
reduce the charges on the line to costs on 63 percent of the single
bills. When we looked at the CCRs used to reduce charges to cost for
HCPCS codes G0424 and G0239, we found that both the HCPCS codes G0424
and G0239 have a CCR of 0.25, which is consistent with our finding that
charges for both codes were usually reduced by the CCR for cost center
4900, Respiratory Therapy. We disagree with the commenters' request
that we create a nonstandard cost center for pulmonary rehabilitation
because we believe that it is not necessary and would not result in
more accurate estimated median costs for pulmonary rehabilitation.
[[Page 74266]]
Stakeholders have repeatedly told us that respiratory therapists
furnish most pulmonary rehabilitation. Therefore, we expect that the
costs of pulmonary rehabilitation are captured in the standard cost
center 4900 (Respiratory Therapy), which is used to convert charges to
costs for pulmonary rehabilitation for approximately 63 percent of
single bills used to establish the median cost for pulmonary
rehabilitation. We note also that a nonstandard cost center, which
commenters' requested, is not required to be used to report costs.
However, a standard cost center, like cost center 4900, must be
completed by a hospital if it has a cost account for those costs in its
general ledger. Hence, the creation of a nonstandard cost center would
not necessarily be used.
Everything we observe in the claims data for the 446,456 single
bills used to report the CY 2010 charges from which we calculated the
median cost for HCPCS code G0424 leads us to believe that the
calculation of the median cost of approximately $37 for HCPCS code
G0424 is appropriate, based on the charge that hospitals set for the
service. The median cost was calculated using charges, the majority of
which are reported under pulmonary specific revenue codes and using
CCRs, and which mostly used the respiratory therapy cost center.
With regard to the comment that the payment that results from a
median cost of approximately $37 would be insufficient to pay the labor
cost for the service, we note that, given that HCPCS code G0424 is
generally recognized to be a group service, generally with a ratio of 1
staff to 4 patients, the payment for an hour of service would usually
be 3 to 4 times the payment for one unit of HCPCS code G0424.
We do not agree with the commenters that freezing the payment for
HCPCS code G0424 at the rate that was based on the simulated median
cost for CY 2011 would be appropriate, given the results of our
analysis of the robust charge data and cost report data that hospitals
submitted. Similarly, we see no basis for continuing to use the
simulated methodology to calculate median costs for pulmonary
rehabilitation because we now have an abundant number of single bills
containing the actual charges that hospitals requested in payment for
the service they are furnishing. With regard to the comment that
hospitals established their charges based on misunderstanding of the
nature of the service or based on charges for services that they
wrongly viewed to be similar, we note that the median hospital charge
for HCPCS code G0424 is higher than the median charge for HCPCS code
G0239, the group respiratory service as we would expect given that
HCPCS code G0424 is a comprehensive service. The charges that hospitals
establish for services are the amount they seek to be paid for the
service they furnish, and therefore, we view them as being a reflection
of the monetary value the hospital places on the service. Under our
longstanding methodology, we use hospital charges to calculate the
median costs on which the OPPS payment is based.
Lastly, we do not agree with commenters that payment based on the
median cost we derived from hospital's costs and charges for CY 2010
will necessarily result in reduced access to care for Medicare
patients. We note that the respiratory therapy services reported under
HCPCS code G0239, which commenters stated is for an hour of group
respiratory therapy and is the most similar code to HCPCS code G0424,
has a median cost of approximately $31, which compares reasonably to
the median cost of approximately $37 which we found for HCPCS code
G0424, a service of more complexity. We note that in CY 2010, when the
payment rate for HCPCS code G0239 was $27.39, hospitals reported a
total frequency of 146,616, which indicates no absence of access to
care at a payment rate significantly less than the median cost for
HCPCS code G0424 in CY 2012.
Comment: Commenters also stated that some CMS instructions to
contractors were not issued until May 2010 and that some MACs did not
permit billing of HCPCS code G0424 until October of 2010. Moreover,
they stated that some MACs instructed hospitals to report HCPCS codes
G0237 through G0239 for pulmonary rehabilitation for COPD patients
contrary to CMS instructions. They added that, given these issues with
implementation of billing and payment for HCPCS code G0424, it is
understandable that hospitals struggled with developing charges for a
one hour code for COPD patients when charges were already in place for
very similar services for patients with other chronic pulmonary
diseases.
Response: Hospitals are responsible for updating their billing
systems to recognize changes to codes and payment for services,
particularly with regard to the quarterly changes to HCPCS codes,
including the addition of new codes. CMS posts all instructions
regarding new codes on the CMS Web site, issues Medicare Learning
Network (MLN) Matters articles on new codes and hosts Hospital Open
Door Forum calls regularly to provide easy ways for hospitals to stay
up to date on changes in Medicare payment policy. The instructions to
MACs are available to the public via the Web site. If a hospital
believes that a MAC is not in compliance with the instructions and
cannot achieve satisfaction from discussing the issue with the MAC, the
hospital should bring it to the attention of the CMS regional office
staff for the area in which the hospital is located. We acknowledge
that Change Request (CR) 6823 regarding coverage and implementation of
pulmonary rehabilitation was issued by CMS on May 7, 2010, effective
for services furnished on and after January 1, 2010. However, the
Federal Register notice of the OPPS for CY 2010, which was posted to
http://www.cms.gov/HospitalOutpatientPPS/ on October 30, 2009,
contained the coverage and payment policy for the pulmonary
rehabilitation benefit, a discussion of how the services should be
coded, including a full discussion of HCPCS code G0424 and an
explanation of how the simulated median was created, including how CMS
viewed HCPCS code G0424 to be similar to HCPCS codes G0237 through
G0239 (74 FR 60569). Moreover, CMS hosted regular Hospital Open Door
Forum calls between November 2009 and January 1, 2010 at which CMS
staff was available to discuss any issue arising from the Medicare
hospital OPPS. CMS expected that hospitals would use the detailed
explanation of how we arrived at the simulated median that was
articulated in the CY 2010 OPPS/ASC final rule with comment period that
was posted on the CMS Web site as a basis for establishing charges for
the services for HCPCS code G0424 for CY 2010, because CMS advised
hospitals of how the simulated median was created. Therefore,
notwithstanding the delay in the issuance of CR 6823, we believe that
hospitals had access to all of the information that was necessary to
report the new codes and to establish appropriate charges for HCPCS
code G0424 beginning with the January 1, 2010 effective date.
Comment: Commenters asked that, for hospital cost reports filed
January 1, 2012 and later, CMS require that pulmonary rehabilitation be
reported in a nonstandard cost center rather than a standard cost
center. They believed that the recommendations of RTI in its 2006
report, with regard to the creation of a new nonstandard cost center
for cardiac rehabilitation, should also apply to pulmonary
rehabilitation because the
[[Page 74267]]
authorizing legislation is almost identical and because they believed
that this would result in more accurate charge data and cost reports
for pulmonary rehabilitation.
Response: We do not agree that the accuracy of median calculation
would be improved if CMS would create a nonstandard cost center for
pulmonary rehabilitation. There is already a cost center in which
hospitals can isolate the costs of respiratory services (which may
include the cost of hospital staff other than respiratory therapists
who furnish respiratory therapy): Cost center 4900, Respiratory
Therapy, on the CMS form 2552-96 and cost center 6600, Respiratory
Therapy, on the CMS form 2552-10. However, we believe that respiratory
therapists provide the majority of pulmonary rehabilitation and that
the costs of respiratory therapists are largely reported on the cost
report under the respiratory therapy cost center. Therefore, we believe
that most of the costs of pulmonary rehabilitation are already carried
in the Respiratory Therapy cost center, based on our finding that the
CCR for the Respiratory Therapy cost center (4900 in the CMS hospital
cost report form 2552-96) is reported sufficiently often that it was
used to reduce the charge for 279,803 of the 446,456 single bills, or
63 percent of the single bills, to cost. In view of the existence of
the standard cost center for respiratory therapy on both the CMS form
2552-96 and the CMS form 2552-10 hospital cost reports, we have no
reason to believe that creation of a nonstandard cost center would
result in more specific and accurate cost data for HCPCS code G0424. In
contrast, unlike respiratory therapy, which has long had a dedicated
cost center, the costs of the staff who furnish cardiac rehabilitation
were not predominantly carried in a single cost center before the
creation of the cardiac rehabilitation cost center. For this reason,
the creation of a cardiac rehabilitation cost center does not justify
the creation of a pulmonary rehabilitation cost center.
Comment: One commenter asked that CMS reconsider the valuation of
the cost of HCPCS code G0424 to appropriately account for the services
delivered by physical therapists. The commenter asked that,
alternatively, CMS create a separate HCPCS code that can be used to
delineate those patients who require individualized physical therapy
within the pulmonary rehabilitation program. The commenter stated that
the need for the service that would be reported by the new code would
be determined by conducting separate screening that has clear and
distinct criteria that justify the need for the physical therapy
services.
Response: Pulmonary rehabilitation is a comprehensive service in
which it would be inappropriate to create a code for a particular type
of professional who participates in providing the service. The charge a
hospital establishes for HCPCS code G0424 is a charge for the
comprehensive package of services that are encompassed in the pulmonary
rehabilitation benefit and includes the charge for whatever portion of
those services may be furnished by a physical therapist. We do not
believe that it would be appropriate to create a new and separate code
for the services furnished by a physical therapist as part of a
comprehensive pulmonary rehabilitation service because those services
are already included in the charge for HCPCS code G0424. Similarly no
additional payment should be made for those services because payment
for HCPCS code G0424 includes payment for the comprehensive package of
services for which payment is claimed when a hospital reports HCPCS
code G0424.
In summary, for CY 2010, we are establishing payment for APC 0102,
for which HCPCS code G0424 is the only assigned code, based on the
median cost of approximately $37 that we calculated using 446,456
single bills of 448,396 total frequency, or nearly 100 percent, of the
billed lines for HCPCS code G0424 and the most recent hospital cost
reports for the hospitals whose bills are being used. We are not
establishing a special purpose cost center for pulmonary rehabilitation
because the service is largely furnished by respiratory therapists for
which there is standard cost center (4900, Respiratory Therapy), which
is already used to reduce most charges for HCPCS code G0424 to costs.
Therefore, we do not believe that creating a pulmonary rehabilitation
cost center in addition to the standard respiratory therapy cost center
is necessary to the calculation of the median cost of HCPCS code G0424.
b. Bronchial Thermoplasty (APC 0415)
We created two new HCPCS codes, C9730 (Bronchoscopic bronchial
thermoplasty with imaging guidance (if performed), radiofrequency
ablation of airway smooth muscle, 1 lobe) and C9731 (Bronchoscopic
bronchial thermoplasty with imaging guidance (if performed),
radiofrequency ablation of airway smooth muscle, 2 or more lobes), also
known as bronchial thermoplasty, and assigned them to APC 0415 (Level
II Endoscopy lower airway), effective July 1, 2011. Bronchial
thermoplasty is indicated for the treatment of severe persistent
asthma, and the bronchial thermoplasty system consists of a
radiofrequency (RF) controller and a single use device with an
electrode array that is delivered through the working channel of a
bronchoscope. The bronchial thermoplasty services, technology, and
estimated costs came to our attention via an application for the
services to be placed into a New Technology APC. The APC 0415 median
cost for the CY 2012 proposed rule is $2,094.64. AMA's CPT Editorial
Panel has recently created two new Category III CPT codes to be
effective January 1, 2012, specifically, CPT codes 0276T (Bronchoscopy,
rigid or flexible, including fluoroscopic guidance, when performed;
with bronchial thermoplasty, 1 lobe) and 0277T (Bronchoscopy, rigid or
flexible, including fluoroscopic guidance, when performed; with
bronchial thermoplasty, 2 or more lobes). At the August 2011 APC Panel
meeting, the APC Panel heard from a presenter regarding APC placement
for bronchial thermoplasty, but the Panel did not make any
recommendations to CMS. We indicated at the August 2011 APC Panel
meeting that we anticipate retiring HCPCS codes C9730 and C9731, and
replacing them with CPT codes 0276T and 0277T, respectively, effective
January 1, 2012. For CY 2012, we proposed maintaining assignment of
bronchial thermoplasty services to APC 0415.
Comment: One commenter stated that the bronchial thermoplasty
codes, HCPCS codes C9730 and C9731, should not be assigned to APC 0415
for CY 2012 because the resources are not covered by the CY 2012
proposed rule median cost for APC 0415 of $2,094.64. The commenter's
estimated costs for the bronchial thermoplasty procedures range from
approximately $4,130 to $5,087, which includes its estimated cost of
$2,500 for the single use catheter, while the CY 2012 proposed rule
median costs of service codes assigned to APC 0415 range from
approximately $1,780 to $3,122. The commenter contended that no
existing clinical APCs are appropriate both in terms of clinical
characteristics and resource costs. On the other hand, the commenter
requested that CMS consider an assignment of the bronchial thermoplasty
codes to APC 0423 (Level II percutaneous abdominal and biliary
procedures). The commenter argued that APC 0423 includes CPT code 32998
(Ablation therapy for reduction or eradication of one or more pulmonary
tumor(s) including pleura or chest wall when involved by tumor
extension,
[[Page 74268]]
percutaneous, radiofrequency, unilateral), a service that the commenter
claimed is a better comparator for bronchial thermoplasty in terms of
procedural costs as well as clinical similarity. The commenter stated
that, clinically, the two procedures entail similar supplies and
equipment and involve ablative techniques. However, the commenter
stated that CPT code 32998 is performed percutaneously, while bronchial
thermoplasty is performed through a bronchoscope. The commenter
asserted that bronchial thermoplasty requires a disposable catheter
costing $2,500, while CPT code 32998 requires a disposable probe
costing approximately $1,375. Also, the commenter asserted that because
the CY 2012 proposed median cost of CPT code 32998 is approximately
$3,962 and the CY 2012 proposed median cost of APC 0423 is about
$4,112, bronchial thermoplasty should be assigned to APC 0423 because
of greater resource similarity as reflected in the higher median cost.
The second option recommended by the commenter is to revise existing
APC 0415 into APCs ``0415A'' and ``0415B'' and place the two bronchial
thermoplasty codes into an APC 0415B with CPT codes 31626
(Bronchoscopy, rigid or flexible, including fluoroscopic guidance, when
performed; with placement of fiducial markers, single or multiple),
31631 (Bronchoscopy, rigid or flexible, including fluoroscopic
guidance, when performed; with placement of tracheal stent(s) (includes
tracheal/bronchial dilation as required)), and 31636 (Bronchoscopy,
rigid or flexible, including fluoroscopic guidance, when performed;
with placement of bronchial stent(s) (includes tracheal/bronchial
dilation as required), initial bronchus). The commenter's third, final
and preferred recommendation was to assign bronchial thermoplasty codes
to a New Technology APC.
Response: As stated above, effective January 1, 2012, newly created
CPT codes 0276T and 0277T will be the codes used to report bronchial
thermoplasty, and HCPCS codes C9730 and C9731 will be deleted effective
that date. Regarding the commenter's recommended option to assign
bronchial thermoplasty codes to APC 0423, we do not believe that the
bronchial thermoplasty service is clinically similar to the procedures
in APC 0423. APC 0423 consists of percutaneous procedures, while CPT
codes 0276T and 0277T are bronchoscopic procedures, clinically similar
to services in bronchoscopy APCs. We also do not agree that APC 0415
needs to be split into 2 APCs at this time. All of the bronchoscopy
procedures in APC 0415 are clinically similar, and the final rule
median costs for procedures within APC 0415 range from approximately
$1,745 to approximately $3,300, with an overall median cost of
approximately $2,048. We proposed to assign bronchial thermoplasty to
APC 0415 because it is similar clinically to the bronchoscopy
procedures in APC 0415, particularly CPT code 31641 (Bronchoscopy, with
destruction of tumor or relief of stenosis by any method other than
excision (e.g., laser therapy, cryotherapy)), and because the estimated
resource costs are approximately similar to the upper end of the range
of median costs for procedures assigned to APC 0415. We generally
prefer to wait until median cost claims data are available before
reassignment of a service to a new APC. We also note that, according to
our usual practice, when adequate actual hospital reported cost data
become available for these procedures, we reevaluate their APC
assignments and may reassign them to another APC, as appropriate.
Regarding the option to assign the service to a New Technology APC, we
believe that APC 0415 is an appropriate clinical APC for bronchial
thermoplasty procedures. Therefore, we are maintaining assignment of
the bronchial thermoplasty services to APC 0415.
We are finalizing our proposal to maintain the assignment of
bronchial thermoplasty procedures (CPT codes 0276T and 0277T beginning
January 1, 2012) to APC 0415 for CY 2012, which has a final median cost
of approximately $2,024.
c. Insertion of Bronchial Valve (APC 0415)
AMA's CPT Editorial Panel created CPT code 0250T (Airway sizing and
insertion of bronchial valve(s), each lobe) effective January 1, 2011
to report insertion of a bronchial valve for treatment of prolonged air
leaks of the lung. CPT code 0250T is an add-on code; therefore,
hospitals must list the code in addition to the primary bronchoscopy
procedure code. For 2011, we assigned CPT code 0250T to APC 0415 (Level
II Endoscopy lower airway), with a payment rate of $1,971.77. We
believe CPT code 0250T is similar to other services in APC 0415 in its
clinical characteristics. For 2012, we proposed to maintain the
assignment of CPT code 0250T to APC 0415, which had a proposed rule
median cost of approximately $2,095, and a proposed payment rate of
approximately $2,022. The CPT code 0250T procedure is performed with a
bronchial valve intended to control prolonged air leaks of the lung
following three specific surgical procedures: Lobectomy, segmentectomy,
or lung volume reduction surgery (LVRS).
Comment: One commenter stated that APC 0415 does not adequately
cover the resource costs of CPT code 0250T, and recommended that CMS
create a new clinical APC that would accurately reflect the device and
procedural costs associated with CPT code 0250T. The commenter claimed
that the cost for the bronchial valve that is necessary to perform the
CPT code 0250T procedure is $2,750, and that a total device cost based
on the number of valves (2.4 mean, or median of 2.0 valves) is $6,600
based on the mean number of valves and $5,500 based on the median
valves. The commenter asserted that it certified to the FDA that the
current price of $2,750 complies with Humanitarian Device Exemption
(HDE) regulations governing the price of the device. The commenter
estimated that the CY 2012 total procedural cost for CPT code 0250T is
$7,268.91 (based on the mean number of valves) or $6,168.91 (based on
the median). The commenter asserted that the highest paying
bronchoscopy in APC 0415 does not adequately pay for the cost of CPT
code 0250T and requested that CMS create a new clinical APC for
bronchial valve insertion and reassign CPT code 0250T to that APC for
CY 2012.
Response: CPT code 0250T is a new code as of January 1, 2011, and
therefore, we have no CY 2010 claims data for this service for CY 2012
ratesetting. The commenter apparently agrees that the bronchoscopy APC
classification is the correct clinical APC type for the CPT code 0250T
procedure, but that the estimated resource costs support a higher
paying bronchoscopy APC. We generally wait until median cost claims
data are available before reassignment to a new APC, particularly when
there are no comparable clinical procedures that would allow us to
easily estimate the cost of this new procedure. We again note that CPT
code 0250T is an add-on code to a base bronchoscopy code.
After consideration of the public comments we received, we are
maintaining our assignment of CPT code 0250T to APC 0415 for CY 2012,
which has a final median cost of approximately $2,024, because it is
clinically similar to the services in APC 0415. We will review this
assignment for CY 2013, when we should have some claims data for CPT
code 0250T to determine the cost of the procedure.
[[Page 74269]]
9. Other Services
a. Skin Repair (APCs 0133, 0134, and 0135)
For CY 2012, we proposed to reassign CPT code 15004 (Surgical
preparation or creation of recipient site by excision of open wounds,
burn eschar, or scar (including subcutaneous tissues), or incisional
release of scar contracture, face, scalp, eyelids, mouth, neck, ears,
orbits, genitalia, hands, feet and/or multiple digits; first 100 sq cm
or 1% of body area of infants and children) from APC 0135 (Level III
Skin Repair) to APC 0134 (Level II Skin Repair). Similarly, we also
proposed to reassign CPT code 15430 (Acellular xenograft implant; first
100 sq cm or less, or 1% of body area of infants and children) from APC
0135 (Level III Skin Repair) to APC 0134 (Level II Skin Repair). We
reassigned CPT codes 15004 and 15430 from APC 0135 to APC 0134 to avoid
a 2 times rule violation in APC 0135.
For CY 2012, the AMA's CPT Editorial Panel deleted 24 skin
replacement and skin substitute-related CPT codes and replaced them
with 8 new CPT codes in the Integumentary System section of the 2012
CPT code book to describe more accurately the services associated with
skin replacement procedures. In particular, the CPT Editorial deleted
24 skin replacement and skin substitute-related CPT codes in the range
between CPT code 15170 through 15431 and created 8 new CPT codes in the
range between 15271 through 15278, which will be effective January 1,
2012.
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'' (New code, interim APC assignment; comments will be
accepted on the interim APC assignment for the new code) 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 the case of the
new the skin replacement and skin substitute-related CPT codes, we
crosswalked the existing CY 2011 CPT codes to the new CY 2012 CPT codes
that appropriately describes them. In assigning the new codes to their
appropriate APCs, we took into consideration the size of the wound
described in the code descriptor. Specifically, we assigned the new
codes to their appropriate APCs based on the following factors:
New codes whose long descriptors included the words ``each
additional 25 sq cm'' were assigned to APC 0133;
New codes whose long descriptors included the words
``first 25 sq cm or less'' or ``each additional 100 sq cm'' were
assigned to APC 0134; and
New codes whose long descriptors included the words
``first 100 sq cm'' were assigned to APC 0135
Table 29 below lists the CY 2011 APC assignments for the CY 2011
CPT codes that will be deleted on December 31, 2011, and crosswalked to
the replacement codes, which are described by the new CY 2012 CPT codes
that will be effective January 1, 2012. We note that because the eight
new CPT codes will be effective January 1, 2012, they are flagged with
comment indicator ``NI'' in Addendum B of this final rule, which will
be published and made available only via the Internet on the CMS Web
site at http://www.cms.gov/.
BILLING CODE 4120-01-P
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BILLING CODE 4120-01-C
Comment: Some commenters requested CMS to continue to assign CPT
code 15004 to APC 0135 because the procedure is clinically similar to
CPT codes 15002, 15003, and 15005, which are in APC 0135.
Response: As we stated above, we reassigned CPT code 15004 from APC
0135 to APC 0134 to eliminate a 2 times rule violation in APC 0135.
Based on our analysis, our claims data show a CPT median cost of
approximately $278 for CPT code 15004 based on 1,529 single claims (out
of 5,116 total claims). The median cost of approximately $278 for CPT
code 15004 is closer to the median cost of approximately $227 for APC
0134 than to the median cost of approximately $345 for APC 0135.
Moreover, the range of the median costs for the procedures with
significant claims data that are assigned to APC 0134 is between $157
and $291, while the range for the procedures with significant claims
data that are assigned to APC 0135 is between $284 and $642. The median
cost of approximately $278 for CPT code 15004 is in the range of median
costs for the procedures with significant claims data in APC 0134 but
not in the range of median costs for the procedures with significant
claims data in APC 0135. Further, we believe that CPT code 15004 is
similar to the procedures in APC 0134 based on clinical homogeneity and
resource costs. We remind hospitals that we have more than two levels
of skin repair APCs. Specifically, we have five levels of skin repair
APCs as follows:
APC 0133 (Level I Skin Repair)
APC 0134 (Level II Skin Repair)
APC 0135 (Level III Skin Repair)
APC 0136 (Level IV Skin Repair)
APC 0137 (Level V Skin Repair)
Therefore, after consideration of the public comments that we
received, we are finalizing our CY 2012 proposal, without modification,
to reassign CPT code 15004 from APC 0135 to APC 0134, which has a final
CY 2012 APC median cost of approximately $227.
Comment: Several commenters urged CMS not to finalize its proposal
to assign CPT code 15430 to APC 0134 and requested that CMS continue to
assign the code to APC 0135, which is the same APC that is assigned to
its add-on CPT code 15431 (Acellular xenograft implant; each additional
100 sq cm, or each additional 1% of body area of infants and children,
or part thereof). The commenters stated that APC 0135 is the
appropriate APC assignment for CPT code 15430 based on its clinical
homogeneity and resource costs to other procedures assigned in APC
0135. One commenter indicated that the proposed CPT median cost of
approximately $300 is closer to the proposed payment rate of
approximately $361 for APC 0135 than to the proposed payment rate of
approximately $228 for APC 0134.
Response: Although we proposed to reassign CPT code 15430 from APC
0135 to APC 0134, the code will be deleted on December 31, 2011, and
replaced with new CPT codes effective January 1, 2012. As listed in
Table 29, the replacement codes for CPT code 15430 have been
crosswalked to APC 0135 based on the code descriptor.
Comment: One commenter recommended that CMS provide proper notice
and comment before deleting HCPCS codes from the system. The commenter
indicated that, in the case of HCPCS code Q4109 (Tissuemend, per square
centimeter), the public should be provided adequate notice before the
code is deleted with an explanation for its deletion. This same
commenter requested that CMS temporarily reassign HCPCS code Q4109 to
status indicator ``K'' (Nonpass-Through Drugs and Nonimplantable
Biologicals, Including Therapeutic Radiopharmaceuticals) for CY 2012.
Response: HCPCS code Q4109 was deleted on December 31, 2010. We are
not considering a status indicator reassignment for this code because
the HCPCS code is no longer active. This HCPCS code was assigned to
status indicator ``D'' (Discontinued Codes) in Addendum B of the CY
2011 OPPS/ASC final rule with comment period. Every
[[Page 74276]]
year hundreds of new codes are created, revised, and deleted as part of
the annual HCPCS cycle. In its role as the Level II Alphanumeric HCPCS
code set maintainer, the CMS HCPCS Workgroup identifies redundancies
across the HCPCS Level II national code set which reduces opportunities
for duplicate billing. Because we are not aware of all the coding
changes for the upcoming year when we publish our proposed rules, we do
not address the coding changes in the proposed rule. Any interested
party that disagrees with the coding actions for the Level II
Alphanumeric HCPCS codes is welcome to submit a request to CMS to
review the matter by submitting an application using CMS' standard
procedures. The application will be considered as part of CMS' standard
code review process, including an opportunity for public comment in
reaction to a published preliminary HCPCS coding decision. The
application can be downloaded from this CMS Web site: https://www.cms.gov/MedHCPCSGenInfo/01a_Application_Form_and_Instructions.asp#TopOfPage.
b. Nasal Sinus Endoscopy (APC 0075)
For CY 2012, we proposed to assign CPT codes 31295 (Nasal/sinus
endoscopy, surgical; with dilation of maxillary sinus ostium (e.g.,
balloon dilation), transnasal or via canine fossa), 31296 (Nasal/sinus
endoscopy, surgical; with dilation of frontal sinus ostium (e.g.,
balloon dilation), and 31297 (Nasal/sinus endoscopy, surgical; with
dilation of sphenoid sinus ostium (e.g., balloon dilation) to APC 0075
(Level V Endoscopy Upper Airway).
Comment: One commenter on the CY 2012 OPPS/ASC proposed rule
objected to the assignment of CPT codes 31295, 31296, and 31297 to APC
0075 because the commenter believed that the payment rate for APC 0075
substantially underpays providers. Commenters on the CY 2011 OPPS/ASC
final rule with comment period (75 FR 71800) relating to 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 addressed the same issue. The commenters suggested that instead
of assigning CPT codes 31295, 31296, and 31297 to APC 0075, CMS create
a new device-dependent APC for these three CPT codes. Or, if CMS does
not decide to create a new device-dependent APC, the commenters
suggested that the three CPT codes should instead be assigned to one of
four alternative APCs. The commenters believed that assigning these
codes to APCs 0056 (Level II Foot Musculoskeletal Procedures), 0083
(Level I Endovascular Revascularization of the Lower Extremity), or
0114 (Thyroid/Lymphadenectomy Procedures) would be justified because
the payment rates for these APCs more closely reflect the costs
associated with CPT codes 31295, 31296, and 31297. Commenters also
suggested that another option would be to assign these CPTs to the new
technology APC 1525 (New Technology--Level XXV ($3500-$4000)) until
more claims data are accumulated and an appropriate clinical APC can be
assigned.
Response: We do not agree that CPT codes 31295, 31296, and 31297
should be assigned to a new device-dependent APC. When assigning
procedures to an APC, we first consider the clinical and resource
characteristics of a procedure and determine the most appropriate APC
assignment. We believe that the most clinically appropriate APC is APC
0075, which includes other nasal and sinus endoscopy procedures. The
APCs suggested by the commenters (APCs 0056, 0083, and 0114) are
clinically unrelated to the procedures described by CPT codes 31295,
31296, and 31297. Regarding the resource costs of the procedures in
question, the commenters asserted costs of approximately $4,000 for
these procedures, which are currently assigned to the highest paying
clinically appropriate APC (APC 0075), which is level 5 out of 5 levels
of APCs for ``endoscopy upper airway.'' The highest median cost of all
of the procedures assigned to APC 0075 is approximately $4,000.
Therefore, even the non-claims data-based cost estimate for these
procedures offered by the commenters is within the approximate range
(although on the high end of the range) of median costs for procedures
assigned to APC 0075. Therefore, we believe that, until we have claims
data to better inform an APC assignment, the current APC assignment is
the most appropriate. We have no further information at this time that
indicates that a device-dependent APC, the assignment of status
indicator ``S'' instead of status indicator ``T,'' or a new technology
APC would be more appropriate at this time. Once OPPS claims data are
available for these procedures, we will reevaluate their APC
assignments, as we do for all procedures on an ongoing and annual
basis.
c. Bioimpedance Spectroscopy (APC 0097)
CPT code 0239T (Bioimpedance spectroscopy (BIS), measuring 100
frequencies or greater, direct measurement of extracellular fluid
differences between the limbs) was effective January 1, 2011. In
accordance with our standard policy, we assessed the properties of the
service as CPT code 0239T was defined by the AMA's CPT Editorial Board.
We assigned it to the APC that we believed to have the most similar
clinical characteristics and resource requirements. In the case of CPT
code 0239T, we assigned bioimpedance spectroscopy to APC 0099
(Electrocardiogram/Cardiography). For CY 2012, we proposed to continue
to assign CPT code 0239T, for which we had no claims data on which to
calculate a median cost, to APC 0099 for CY 2012. We proposed a median
cost of approximately $28 for APC 0099.
Comment: One commenter objected to the proposed assignment of CPT
code 0239T to APC 0099 for CY 2012 on the basis that the proposed
payment rate for APC 0099 would be inadequate to pay hospitals' costs
and, therefore, would jeopardize beneficiary access to the service. The
commenter stated that BIS is a method to aid surgeons and oncologists
in the pre-surgical assessment and post-operative monitoring of
unilateral lymphedema of the arm. The commenter also stated that BIS is
an aid for therapists to assess and monitor the measurement of extra
cellular fluid volume differences between the arms during the treatment
phase for early stage lymphedema. The commenter stated that BIS is not
a diagnostic test but rather an aid to the physician in the clinical
assessment of the patient because the results require interpretation by
the physician and review of previous results for clinical relevance.
The commenter asked that CMS reassign CPT code 0239T from APC 0099
to APC 0096 (Level II Noninvasive Physiologic Studies). The commenter
stated that CPT code 239T is not similar to 93701 (Bioimpedance-derived
physiologic cardiovascular analysis), which the commenter assumed was
the CMS rationale for also placing 0239T into APC 0099. Instead the
commenter indicated that CPT code 239T is more similar in resource
time, for which the commenter stated that physician time is a proxy to
CPT code 93924 (Noninvasive physiologic studies of lower extremity
arteries, at rest and following treadmill stress testing, (i.e.,
bidirectional Doppler waveform or volume plethysmography recording and
analysis at rest with ankle/brachial indices immediately after and at
timed intervals following performance of a standardized protocol on a
motorized treadmill plus recording of time of onset of claudication or
other symptoms, maximal walking time, and time to
[[Page 74277]]
recovery) complete bilateral study). The commenter stated that the work
description for CPT code 93924 of setting the patient up, taking
diagnostic measurements, and analyzing and interpreting the records is
similar to the work involved for CPT code 0239T and, therefore, CPT
code 0239T should be assigned to APC 0096 rather than to APC 0099. The
commenter also stated that the resource time for CPT code 0239T is
similar to the resource time, using physician time as a proxy, for CPT
code 99214 (Office or other outpatient visit for the evaluation and
management of an established patient, which requires at least 2 of
these 3 key components: A detailed history; A detailed examination;
Medical decision making of moderate complexity). The commenter believed
that because CPT code 99214 is assigned to APC 0606, which has a median
cost of approximately $99, CPT code 0239T should be assigned to an APC
with a comparable payment rate. In addition, the commenter stated that
the proposed payment for APC 0099 is not adequate to compensate
hospitals for what the commenter indicated are the cost of the
necessary machine (approximately $27,000) and supplies (approximately
$50 per unit). The commenter stated that compensation under APC 0099
would not be adequate and without adequate compensation, hospitals
would not provide the service.
Response: We have no CY 2010 claims data for the service reported
by CPT code 239T because the CPT code is new for CY 2011. Therefore,
under our longstanding policy, we assigned the new code to the APC that
we believed to be most similar clinically and with regard to
homogeneity of hospital resources. Specifically, we assigned HCPCS code
0239T to APC 0099 for CY 2011, and we proposed to continue that
assignment for CY 2012. We disagree with the commenter that BIS is not
a diagnostic service because the service is used for the diagnosis of a
clinical condition. However, after examination of the information
furnished by the commenter, we agree with the commenter that CPT code
0239T appears to be somewhat dissimilar in resource utilization to the
services assigned to APC 0099. However, we do not agree with the
commenters that CPT code 0239T should be assigned to APC 0096 because
we do not believe that CPT code 0239T rises to the same level of
complexity as codes that are assigned to APC 0096. For example, we
believe that CPT code 93924, to which the commenters compared CPT code
239T, reports a service that is more complex clinically and more costly
to hospitals than the service reported by CPT code 0239T. Similarly, we
believe that there is neither clinical similarity nor similarity of
hospital resources between the services reported by CPT code 0239T,
which is used to diagnose lymphedema and CPT code 99214, which is an
established patient outpatient visit.
Although we do not believe that CPT code 0239T should be assigned
to APC 0096, we believe that CPT code 0239T is sufficiently more
complex than the services that are assigned to APC 0099 that it would
be more appropriately placed in APC 0097, based on its clinical
homogeneity and resource similarity to other procedures in APC 0097.
For example, we believe that CPT code 0239T is more similar to CPT code
93922 (Limited bilateral noninvasive physiologic studies of upper or
lower extremity arteries, (eg, for lower extremity: ankle/brachial
indices at distal posterior tibial and anterior tibial/dorsalis pedis
arteries plus bidirectional, Doppler waveform recording and analysis at
1-2 levels, or ankle/brachial indices at distal posterior tibial and
anterior tibial/dorsalis pedis arteries plus volume plethysmography at
1-2 levels, or ankle/brachial indices at distal posterior tibial and
anterior tibial/dorsalis pedis arteries with transcutaneous oxygen
tension measurements at 1-2 levels)), which is assigned to APC 0097,
both clinically and in resource requirements, than to CPT code 93924.
Therefore, we are reassigning CPT code 0239T from APC 0099 to APC 0097,
which has a final median cost of approximately $65 for CY 2012. We will
reassess the APC placement for CPT code 0239T when we have claims data
for services furnished on and after January 1, 2011, the effective date
for CPT code 0239T.
d. Autologous Blood Salvage (APC 0345)
For CY 2012, we proposed to assign CPT code 86891 (Autologous blood
or component, collection processing and storage; intra- or
postoperative salvage) to APC 0345 (Level I Transfusion Laboratory
Procedures).
Comment: One commenter objected to the assignment of CPT code 86891
to APC 0345 because the commenter believed that the payment rate for
APC 0345 underpays providers. The commenter stated that the reason for
the inappropriately low payment is that CPT 86891 would never appear on
a single procedure claim. The commenter suggested that this service
should be further analyzed and a more appropriate payment level
established based upon analysis using external data. The commenter
further stated that the current way in which the groupings and payment
levels for services under APCs are calculated does not appropriately
address the autologous blood salvage service performed at hospitals.
Response: The calculated median cost for CPT code 86891 based on
2010 claims data for this final rule with comment period is
approximately $21 based on 124 single procedure claims out of 332 total
claims. The calculated median cost of approximately $21 for CPT code
86891 is within the range of the median costs of the other procedures
assigned to APC 0345, and there is no violation of the 2 times rule.
Therefore, assignment of CPT code 86891 to APC 0345 satisfies the APC
assignment requirements of clinical and resource homogeneity. We do not
agree that additional analysis of external data is necessary. We set
the payment rates for APCs 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 APC
0345, including the service described by CPT code 86891. Furthermore,
as the service described by CPT code 86891 is a transfusion laboratory
procedure, this service is appropriately assigned to APC 0345, which is
titled ``Level I Transfusion Laboratory Procedures'' and includes other
transfusion laboratory procedures. Therefore, we are finalizing our
proposal to assign CPT code 86891 to APC 0345 for CY 2012, which has a
final rule median cost of approximately $15 for CY 2012.
IV. OPPS Payment for Devices
A. Pass-Through Payments for Devices
1. Expiration of Transitional Pass-Through Payments for Certain Devices
a. Background
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 date for a device
category on
[[Page 74278]]
the date on which pass-through payment is effective for the category.
The date on which a pass-through 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 are three new device categories eligible for pass-
through payment. These device categories are 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); and
HCPCS codes C1830 (Powered bone marrow biopsy needle), and C1840 (Lens,
intraocular (telescopic)), which were made effective for pass-through
payment October 1, 2011, and announced in Transmittal 2296, Change
Request 7545, dated September 2, 2011. 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 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.
b. CY 2012 Policy
As stated above, 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. Device pass-through category C1749 was established for pass-
through payments on October 1, 2010, and will have been eligible for
pass-through payments for more than 2 years but less than 3 years as of
the end of CY 2012. Therefore, in the CY 2012 OPPS/ASC proposed rule
(76 FR 42242), we proposed an expiration date for pass-through payment
for device category C1749 of December 31, 2012. Therefore, under our
proposal, beginning January 1, 2013, device category C1749 will no
longer be eligible for pass-through payments. We will propose
expiration dates for pass-through payment for device categories C1830
and C1840 in a future rulemaking.
Comment: Two commenters indicated that there was only one currently
approved device for pass-through payment, noting that in the CY 2012
OPPS/ASC proposed rule, we stated that there was only one device
category eligible for pass-through payment for CY 2012. These
commenters opined that there has been a decrease in the number of
categories eligible for pass-through payment over the past several
years, and encouraged CMS to approve additional device categories for
technologies that meet the criteria for pass-through payments. One
commenter recommended that CMS reevaluate the criteria and approval
process for device category pass-through eligibility. The commenter
also recommended that CMS annually publish a list of all pass-through
applications filed with CMS, along with CMS' determinations and
rationale for the resulting decisions.
Response: As indicated, we currently have three device categories
eligible for pass-through payment, rather than one category as stated
in the CY 2012 proposed rule, and we believe this shows that we have a
robust device pass-through evaluation and approval process. The number
of device pass-through categories eligible for payment will always
vary, and we believe that the number of active device pass-through
categories eligible for pass-through payment at any time is a function
of the quality of applications under consideration, that is, whether
they fully meet the device pass-through criteria, rather than a
function of our criteria and approval process, which we believe to be
appropriate. As we stated in the CY 2011 OPPS/ASC final rule with
comment period (75 FR 71922), we will take the recommendation to
publish a list of all pass-through applications filed with us under
advisement as we consider our device pass-through criteria and process
in the future.
After consideration of the public comments we received, we are
finalizing our proposal of an expiration date for pass-through payment
for device category C1749 of December 31, 2012. Therefore, beginning
January 1, 2013, device category C1749 will no longer be eligible for
pass-through payments. We remind the public that as of January 1, 2013,
device category C1749 will still be active for the billing and
reporting of devices and their charges along with the HCPCS codes of
the procedures with which they are used. When billing for procedures
utilizing devices that have active device codes, hospitals are required
to report the codes for the devices on their claims for the procedure.
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 publish a list of all procedural APCs with the CY 2011 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
[[Page 74279]]
(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; also referred to as ``implantable biologicals'') 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 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 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).
For CY 2011, we continued 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.
b. CY 2012 Policy
In the CY 2012 OPPS/ASC proposed rule (76 FR 42243), we proposed to
continue our policy, for CY 2012, 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 proposed to 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)).
For CY 2012, 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 2012 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 first finalized and implemented 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 2012 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 2012 device
pass-through payment applications and by CMS in reviewing those
applications.
In summary, for CY 2012, 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: Several commenters recommended that all biological
therapies, including implantable biologicals that are approved by the
FDA under biological license applications (BLAs), be treated as drugs
for pass-through payment status for CY 2012. The commenters claimed
that Congress intended that all biologicals approved by the FDA under a
BLA be paid under the current SCOD payment system, including according
to the drug pass-through provisions. Another commenter requested that
CMS clarify its policy to state that the device pass-through criteria
apply only to biologicals with an FDA approved indication or
indications that are only surgically implanted. This commenter believed
that the current regulation is unclear regarding how CMS would evaluate
pass-through eligibility of a biological that has indications in which
the biological is surgically implanted for one indication and
nonimplantable for another indication. The commenter recommended that
CMS revise the regulations text at 42 CFR 419.64(a)(4) so that if
refers to ``a biological that is not always surgically implanted into
the body.''
Response: As stated in the CY 2010 OPPS/ASC final rule with comment
period and reiterated in the CY 2011 OPPS/ASC final rule with comment
period, we evaluate implantable biologicals that function as, and are
substitutes for, implantable devices for OPPS payment purposes. This is
done
[[Page 74280]]
regardless of their FDA approval route, the intent of which is to
ensure their safety and effectiveness through appropriate scientific
review (74 FR 60476; 75 FR 71924).
We do not agree with the commenters who asserted that Congress
intended biologicals approved under BLAs to be paid under the statutory
provisions that apply to SCODs, including the pass-through provisions.
Moreover, as we stated in the CY 2010 and CY 2011 OPPS/ASC final rules
with comment period, Congress did not specify in the statute that we
must pay for implantable biologicals as biologicals rather than
devices, if these products that function as medical devices also meet
our criteria for payment as devices (74 FR 60476; 75 FR 71924). We
continue to believe that implantable biologicals are devices for the
purposes of OPPS payment, and therefore that it is appropriate for us
to treat implantable biologicals as implantable devices and not as
nonimplantable biologicals.
We appreciate the commenter's request that we clarify our meaning
of the regulation text at 42 CFR 419.64(a)(4)(iii), which states that a
biological for pass-through status purposes must meet the following
condition (among others): ``biological that is not surgically implanted
or inserted into the body.'' By this regulatory language, we mean to
exclude from consideration for drug and biological pass-through status
any biological that has an indication such that it may function as a
surgically implanted or inserted biological, even if there are also
other indications in which the biological is not surgically implanted
or inserted.
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 2012.
To ensure equitable payment when the hospital receives a device
without cost or with full credit, in CY 2007, we implemented a policy
to reduce the payment for specified device-dependent APCs by the
estimated portion of the APC payment attributable to device costs (that
is, the device offset) when the hospital receives a specified device at
no cost or with full credit (71 FR 68071 through 68077). Hospitals 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 2012 OPPS/ASC proposed rule (76 FR 42244 through 42245),
we proposed for CY 2012 to continue 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
2012 OPPS/ASC proposed rule (76 FR 42244) 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 ratesetting
methodology for device-dependent APCs.) Moreover, the payment for these
devices comprises a
[[Page 74281]]
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 2012 OPPS/ASC proposed rule (76 FR 42244), 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 also
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
2012 OPPS/ASC proposed rule (76 FR 42244) 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 2012 OPPS/ASC proposed rule (76 FR 42244
through 42245), we examined the offset amounts calculated from the CY
2012 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 applied in CY 2011 continue to meet the
criteria for CY 2012, and to determine whether other APCs to which the
policy did not apply in CY 2011 would meet the criteria for CY 2012.
Based on the CY 2010 claims data available for the proposed rule, we
did not propose any changes to the APCs and devices to which this
policy applies. However, as discussed in section II.A.2.e.(6) of the
proposed rule, we proposed to delete APC 0418 (Insertion of Left
Ventricular Pacing Electrode) for CY 2012 and, therefore, proposed to
remove this APC from the list of APCs to which the no cost/full credit
and partial credit device adjustment policy would apply in CY 2012.
Table 24 of the CY 2012 OPPS/ASC proposed rule (76 FR 42245) listed
the proposed APCs to which the payment adjustment policy for no cost/
full credit and partial credit devices would apply in CY 2012 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 already 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 25 of the CY 2012 OPPS/ASC proposed rule (76 FR 42245) listed the
proposed devices to which the payment adjustment policy for no cost/
full credit and partial credit devices would apply in CY 2012. We
stated in the CY 2012 proposed rule (76 FR 42244) 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 2012,
consistent with the three criteria discussed earlier in this section,
based on the final CY 2010 claims data available for the CY 2012 OPPS/
ASC final rule with comment period.
Comment: One commenter asserted that the proposed full offset
amount of 60 percent and proposed partial offset amount of 30 percent
for APC 0425 is not supported by real world cost data. The commenter
suggested that, based on its data on resource costs for the devices
used in the procedures assigned to APC 0425, the full offset amount for
this APC should be no greater than 40 percent. The commenter argued
that a 60-percent offset would result in significant financial hardship
to certain facilities and possibly lead to diminishing patient access
to critical devices.
Response: We do not agree with the commenter that the CY 2012
proposed device offset percentage for APC 0425 is inaccurate. As we
described in the CY 2011 OPPS/ASC final rule with comment period (75 FR
71926), the device cost is estimated from the device HCPCS codes
present on hospital 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). The commenter did not provide the ``real
world cost data'' upon which it based its assertion that the full
offset amount for APC 0425 should be no greater than 40 percent.
Therefore, we do not know why there would be a discrepancy between that
estimate and our estimated device offset percentage of approximately 60
percent stated in the proposed rule that was based on actual hospital
cost as calculated from hospital claims as described above. We have no
reason to believe that this device offset percentage does not
accurately reflect the percent of cost attributable to devices in APC
0425. Therefore, we do not agree that it is necessary to limit the
device offset percentage for no cost/full credit cases for APC 0425 to
40 percent, as the commenter suggested.
Comment: One commenter asked for clarification of CMS' policy for
instances when a device upgrade occurs and the original device is
refunded at full cost and the upgraded device is charged at full cost.
According to the commenter, the new device is often more expensive than
the original device, thus yielding additional device acquisition costs.
The commenter believes that the ``FC'' modifier should be used in this
situation.
Response: As stated in the Medicare Claims Processing Manual (Pub.
100-04, Chapter 4, Section 61.3.2), when a hospital replaces a device
with a more expensive device and receives a credit in the amount that
the device being replaced would otherwise cost, the hospital must
append modifier ``-FB'' to the procedure code (not on the device code)
that reports the service provided to replace the device. The hospital
must charge the difference between its usual charge for the device
being implanted and its usual charge for the device for which it
received credit. This charge should be billed in the covered charge
field. As we stated in the CY 2009 OPPS final rule with comment period
(73 FR 68630), we do not agree that we need to modify the no cost/full
credit and partial credit device adjustment policy to account for the
cost of more expensive replacement devices when manufacturers provide
device upgrades. We continue to believe that making the full APC
payment would result in significant overpayment because, as described
above, we use only those claims that reflect the full costs of devices
in ratesetting for device-
[[Page 74282]]
dependent APCs. In cases where a hospital incurs a cost for a device
upgrade, the difference between the cost of the replacement device and
the full credit the hospital receives for the device being replaced
would likely be much less than the full cost of the device that is
included in the device-dependent APC payment rate. To provide the full
APC payment in these cases would favor a device upgrade, rather than
replacement with a comparable device, in warranty or recall cases where
the surgical procedure to replace the device is only medically
necessary because of the original defective device, for which the
manufacturer bears responsibility. Moreover, we also are concerned that
a new policy to apply a smaller APC payment percentage reduction in an
upgrade case, if we were eventually able to estimate such a percentage
from sufficient claims data, could also favor device upgrades, rather
than replacement with a comparable device in those situations for which
the upgrade is only being provided because the old model failed (and
for which the manufacturer provides a full credit) but is no longer
available for use in the replacement procedure. We recognize that, in
some cases, the estimated device cost and, therefore, the amount of the
payment reduction will be more or less than the cost a hospital would
otherwise incur for a no cost/full credit device. However, because
averaging is inherent in a prospective payment system, we do not
believe this is inappropriate. Therefore, we continue to believe that
the full device offset reduction should be made when hospitals receive
full credit for the cost of a replaced device against the cost of a
more expensive replacement device.
After consideration of the public comments we received, we are
finalizing our CY 2012 proposals, without modification, to continue the
established no cost/full credit and partial credit adjustment policies.
Table 30 below lists the APCs to which the payment adjustment
policy for no cost/full credit and partial credit devices will apply in
CY 2012 and displays the final payment adjustment percentages for both
no cost/full credit and partial credit circumstances. Table 31 below
lists the devices to which no cost/full credit and partial credit
device adjustment policy will apply for CY 2012, consistent with the
three selection criteria discussed earlier in this section, based on
the final CY 2010 claims data available for this final rule with
comment period. For CY 2012, 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 31 below, is present on the claim, and the procedure
code maps to an APC listed in Table 30 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 31 is present on the claim and the procedure code maps
to an APC listed in Table 30. 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, as discussed in section II.A.2.e.(6) of this final
rule with comment period, we are finalizing our proposal to delete APC
0418 for CY 2012 and, therefore, will remove this APC from the list of
APCs to which the no cost/full credit and partial credit device
adjustment policy will apply in CY 2012.
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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. Proposed CY 2012 pass-through drugs and biologicals
and their designated APCs were assigned status indicator ``G'' in
Addenda A and B to the proposed rule, which are referenced in section
XVII. of the proposed rule and this final rule with comment period and
available via the Internet.
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.
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.cms.gov). As 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 2011 OPPS/ASC final
rule with comment period (75 FR 71928), if the program is reinstituted
during CY 2012 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 all drugs and biologicals with pass-
through status.
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 average sales price (ASP) methodology, which is used
for payment for drugs and biologicals described in section
1842(o)(1)(C) of the Act furnished on or after January 1, 2005. The ASP
methodology, as applied under the OPPS, uses several sources of data as
a basis for payment, including the ASP, the wholesale acquisition cost
(WAC), and the average wholesale price (AWP). In this 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.gov/McrPartBDrugAvgSalesPrice.
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. For CY 2011, we
estimated the OPPS pass-through payment for drugs and biologicals to be
$15.5 million. Our OPPS pass-through payment estimate for drugs and
biologicals in CY 2012 is $19 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.gov/HospitalOutpatientPPS/04_passthrough_payment.asp.
2. Drugs and Biologicals With Expiring Pass-Through Status in CY 2011
In the CY 2012 OPPS/ASC proposed rule (76 FR 42246 through 42247),
we proposed that the pass-through status of 19 drugs and biologicals
would expire on December 31, 2011, as listed in Table 26 of the
proposed rule (76 FR 42246 through 42247). 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, 2011. These drugs and
biologicals were approved for pass-through status on or before January
1, 2010. 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 $75), 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
[[Page 74287]]
separate payment at the applicable relative ASP-based payment amount
(which is ASP+4 percent for CY 2012, 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.
Comment: A number of commenters requested that CMS continue pass-
through payments for a third year for certain drugs that, as of
December 31, 2011, will have received pass-through payments for at
least 2 years and no more than 3 years and which CMS proposed to remove
from pass-through status in Table 26 of the CY 2012 OPPS/ASC proposed
rule (76 CR 42246). Several commenters stated that the volume for
products for which CMS proposed to expire pass-through status had been
low for some portion of the pass-through period, and asserted that a
third year of pass-through would permit CMS to collect more accurate
and complete cost data on the products. Other commenters stated that
the costs associated with certain drugs for which CMS proposed to
expire pass-through status are high, so packaging the product in an APC
is ``not appropriate.'' Several commenters urged CMS to adopt a 3-year
pass-through period for all eligible products. One commenter requested
that CMS grant an additional year of pass-through payments for the
product described by HCPCS code C9248 (Injection, clevidipine butyrate,
1 mg) that was removed from the pass-through list on December 31, 2010,
because the product had been subject to a 10-month long voluntary
manufacturer's recall during its pass-through period.
Response: As described in section V.A.1 of this final rule with
comment period, section 1833(t)(6)(C)(i)(II) of the Act permits CMS to
make pass-through payments 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. 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, because we
expire pass-through status only on an annual basis, 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. Further, based on our
review of available data, we are confident that the period of time for
which the products listed in Table 26 of the CY 2012 OPPS proposed rule
(76 CR 42246) received pass-through payments is adequate for CMS to
collect sufficient data to make a packaging determination and/or an APC
assignment in CY 2012. We further note that, consistent with the Act,
each of these products has received pass-through status for at least 2
years, but not more than 3 years. As noted in section V.A.1. of this
final rule with comment period, when a product's pass-through status
expires, it is either packaged by CMS into an APC if it is either a
relatively low-cost product that does not exceed the packaging
threshold or is ``policy packaged'', or, if it is a relatively high-
cost product, it is paid separately on the basis of the product's ASP
(we refer readers to section V.B.3. of this final rule with comment
period for more details regarding our payment policy for separately
payable drugs). Because our policies for drugs with expiring pass-
through status recognize products' relative costliness and establish
either separate or bundled payment as appropriate, based on such
costliness, we disagree with commenters that certain relatively high
cost products currently receiving pass-through payment would not be
adequately paid if taken off pass-through, and as a result should
continue with such status.
Regarding the request for a third year of pass-through status for
the product described by HCPCS code C9248 (Injection, clevidipine
butyrate, 1 mg) which was subject to a 10-month recall during its pass-
through period and for which pass-through status expired on December
31, 2010, we note that because CMS expires pass through status on an
annual basis, if CMS were to extend the pass-through period for the
product through CY 2012, as requested by the commenters, this would
result in the pass-through period being in excess of 3 years; this
result is not permitted under the statute.
After consideration of the public comments we received, we are
finalizing, without modification, our proposal to expire the pass-
through status of the 19 drugs and biologicals listed in Table 32
below. Table 32 lists the drugs and biologicals for which pass-through
status will expire on December 31, 2011, the status indicator, and the
assigned APC for CY 2012.
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3. Drugs, Biologicals, and Radiopharmaceuticals With New or Continuing
Pass-Through Status in CY 2012
In the CY 2012 OPPS/ASC proposed rule (76 FR 42247 through 42249),
we proposed to continue pass-through status in CY 2012 for 33 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, 2011. These drugs and biologicals, which were approved
for pass-through status between April 1, 2010 and July 1, 2011, were
listed in Table 27 of the proposed rule (76 FR 42248 through 42249).
The APCs and HCPCS codes for these drugs and biologicals were assigned
status indicator ``G'' in Addenda A and B, which are referenced in
section XVII. of the proposed rule and this final rule with comment
period and available via the Internet.
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. 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 2012, the amount that drugs and biologicals receive under section
1842(o) of the Act. Thus, for CY 2012, 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 2012. Therefore, the difference between ASP+6 percent and
ASP+4 percent that we proposed to pay for nonpass-through separately
payable drugs under the CY 2012 OPPS would be the CY 2012 pass-through
payment amount for these drugs and biologicals. In the case of pass-
through contrast agents and diagnostic radiopharmaceuticals, the
difference between ASP+6 percent and the ``policy-packaged'' drug APC
offset amount for the associated clinical APC in which the drug or
biological is utilized would be the CY 2012 pass-through payment amount
for these policy-packaged products.
We note that we proposed to expire pass-through status for the
remaining three implantable biologicals approved on or before January
1, 2010, under pass-through status as a drug or biological. Therefore,
as described in the CY 2010 OPPS/ASC final rule with comment period (74
FR 60476) and in this final rule with comment period, implantable
biologicals that are surgically inserted or implanted (through a
surgical incision or a natural orifice) will be evaluated under the
device pass-through process and paid according to the device payment
methodology. Payment for nonpass-through implantable biologicals would
continue to be packaged into the payment for the associated procedure
as described in section V.B.2.d. of this final rule with comment
period.
In addition, we proposed to continue to update pass-through payment
rates on a quarterly basis on the CMS Web site during CY 2012 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 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 2012, and a drug or biological that has been
granted pass-through status for CY 2012 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. We specifically review drugs with pass-through status for CY
2012 that will change from C-code to permanent J-code for CY 2012. For
our CY 2012 review, we have determined that HCPCS code J1557
(Injection, immune globulin (Gammaplex), intravenous, non-lyophilized
(e.g. liquid), 500 mg) describes the product reported under HCPCS code
C9270 (Injection, immune globulin (Gammaplex), intravenous, non-
lyophilized (e.g. liquid), 500 mg); HCPCS code J0894 (Injection,
denosumab, 1 mg) describes the product reported under HCPCS code C9272
(Injection, denosumab, 1 mg); HCPCS code J0840 (Crotalidae Polyvalent
Immune Fab (Ovine), 1 vial) describes the product reported under HCPCS
code C9274 (Crotalidae Polyvalent Immune Fab (Ovine), 1 vial); HCPCS
code J9043 (Injection, cabazitaxel, 1 mg) describes the product
reported under HCPCS code C9276 (Injection, cabazitaxel, 1 mg); HCPCS
code J0221 (Injection, alglucosidase alfa (Lumizyme), 1 mg) describes
the product reported under HCPCS code C9277 (Injection, alglucosidase
alfa (Lumizyme), 1 mg); HCPCS code J9179 (Injection, eribulin
[[Page 74290]]
mesylate, 1 mg) describes the product reported under HCPCS code C9270
(Injection, eribulin mesylate, 1 mg); HCPCS code J2507 (Injection,
pegloticase, 1 mg) describes the product reported under HCPCS code
C9281 (Injection, pegloticase, 1 mg); HCPCS code J0712 (Injection,
ceftaroline fosamil, 10 mg) describes the product reported under HCPCS
code C9282 (Injection, ceftaroline fosamil, 10 mg); HCPCS code J0131
(Injection, acetaminophen, 10 mg) describes the product reported under
HCPCS code C9283 (Injection, acetaminophen, 10 mg); and, HCPCS code
J9228 (Injection, ipilimumab, 1 mg) describes the product reported
under HCPCS code C9284 (Injection, ipilimumab, 1 mg).
In CY 2012, as is consistent with our CY 2011 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 2012, 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.
Comment: Many commenters supported CMS' proposal to continue
providing pass-through payments for drugs, biological, and
radiopharmaceuticals. One commenter stated that it viewed the provision
of pass-through payments as a ``temporary solution,'' and asserted that
the global marketplace for Molybdenum and other medical isotopes could
make historical payment data an inadequate indicator of costs. One
commenter recommended that CMS require manufacturers to submit ASP data
for all therapeutic radiopharmaceuticals currently paid under the OPPS.
Response: We appreciate the commenters' support for our pass-
through payment policy. Although we acknowledge that pass-through
payments are, by statute, ``temporary'' (section 1833(t)(6)(C)(i)(II)
of the Act permits CMS to make pass-through payments only for a period
of at least 2 years, but not more than 3 years), we disagree with the
commenter's assertion that historical payment data are an inadequate
indicator of costs. We permit radiopharmaceutical manufacturers to
voluntarily submit ASP data to us for therapeutic radiopharmaceuticals,
and for diagnostic radiopharmaceuticals with pass-through status. These
data are updated regularly, are as current as possible (the most
recently available ASP data used for this final rule with comment
period are from October 2011), and are an important component of
payment. Therefore, we believe that CMS' use of recent ASP data,
together with the most recently available cost and claims data, are
adequately responsive to changes in global prices for Molybdenum and
other medical isotopes.
We do not believe, however, that requiring manufacturers to submit
ASP data for all therapeutic radiopharmaceuticals currently paid under
the OPPS is appropriate. As we stated in the CY 2010 OPPS/ASC final
rule with comment period (74 FR 60524 through 60525), the challenges
involved in reporting ASP for a radiopharmaceutical are significant,
given the variety of manufacturing processes in some cases. Therefore,
due to the fact that the added administrative burden of direct
reporting outweighs the expected benefits, and given the relative
accuracy of hospital claims data regarding such drugs, payment based on
mean unit cost from historical hospital claims data offers the best
proxy for average hospital acquisition cost and associated handling
costs for a radiopharmaceutical in the absence of ASP. If ASP
information is unavailable for a therapeutic radiopharmaceutical,
meaning that a manufacturer is not willing or not able to submit ASP
information, we will provide payment based on the mean unit cost of the
product that is applicable to payment rates for the year the nonpass-
through therapeutic radiopharmaceutical is administered.
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 pass-through drugs and biologicals for CY 2012 generally
equals the amount determined under section 1842(o) of the Act minus the
portion of the otherwise applicable 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+4 percent for CY 2012) from
the amount determined under section 1842(o) of the Act (ASP+6 percent).
Regarding the comments that CMS should provide an additional
payment for radiopharmaceuticals that are granted pass-through status,
we note that for CY 2012, consistent with our CY 2011 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 2012, 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 2012, 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
readers to section V.B.3. 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:
[[Page 74291]]
http://www.cms.gov/HospitalOutpatientPPS/.
After consideration of the comments we received, we are finalizing
our proposal to provide payment for both diagnostic and therapeutic
radiopharmaceuticals that are granted pass-through status based on the
ASP methodology. If a diagnostic or therapeutic radiopharmaceutical
receives pass-through status during CY 2012, we will 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
will 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 will 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 4 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 2012
OPPS/ASC proposed rule (76 FR 42247 through 42248), we proposed to
continue the packaging of these items, regardless of their per day
cost. 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)) 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 APC offset amount for the associated clinical APC in
which the drug or biological is utilized. The calculation of the
``policy-packaged'' drug APC offset amounts is 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 2011, we proposed to continue
to set the associated copayment amount for pass-through diagnostic
radiopharmaceuticals and contrast agents that would otherwise be
packaged if the item did not have pass-through status to zero for CY
2012. The separate OPPS payment to a hospital for the pass-through
diagnostic radiopharmaceutical or contrast agent, 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 (which are referenced in
section XVII. of the proposed rule and this final rule with comment
period and available via the Internet on the CMS Web site).
Comment: Several commenters supported the CY 2012 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 2012 OPPS/ASC proposed rule (76 FR 42248), 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 copayment
amount should be zero for drugs and biologicals that are ``policy-
packaged,'' including diagnostic radiopharmaceuticals.
After consideration of the public comments we received, we are
finalizing our proposal to continue to set the associated copayment
amount for pass-through diagnostic radiopharmaceuticals and contrast
agents that would otherwise be packaged if the item did not have pass-
through status to zero for CY 2012.
The 33 drugs and biologicals that we proposed to continue on pass-
through status for CY 2012 or that have been granted pass-through
status as of July 2011 were displayed in Table 27 of the proposed rule
(76 FR 42248 through 42249). We note that, for CY 2010 and the first
two quarters of CY 2011, HCPCS code J1572 (Injection, immune globulin,
(flebogamma/flebogamma dif), intravenous, non-lyophilized (e.g.
liquid), 500 mg) was assigned a status indicator of ``K,'' meaning that
this product was paid separately as a nonpass-through separately
payable drug. Beginning on July 1, 2011, HCPCS code J1572 is assigned a
status indicator of ``G'' and will be given pass-through status for at
least 2, but not more than 3 years. The payment rate reflecting a pass-
through payment amount of ASP+6 percent was not included in Addenda A
and B of the proposed rule because these Addenda solely reflect codes
and prices effective as of the second quarter of CY 2011, or April
2011. The 38 drugs and biologicals that we are continuing on pass-
through status for CY 2012 or that have been granted pass-through
status as of January 2012 are displayed in Table 33.
BILLING CODE 4120-01-P
[[Page 74292]]
[GRAPHIC] [TIFF OMITTED] TR30NO11.056
[[Page 74293]]
[GRAPHIC] [TIFF OMITTED] TR30NO11.057
BILLING CODE 4120-01-C
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
[[Page 74294]]
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. For CY 2012, 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 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 A9584 (Iodine I-123
ioflupane, diagnostic, per study dose, up to 5 millicuries). This
product, which is presently referred to using HCPCS code A9584, was
granted pass-through status using HCPCS code C9406 beginning July 1,
2011, and we proposed that it continue receiving pass-through status in
CY 2012. 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, we
proposed that new pass-through diagnostic radiopharmaceuticals would be
paid at ASP+6 percent, while those without ASP information would be
paid at WAC+6 percent or, if WAC is not available, payment would be
based on 95 percent of the product's most recently published AWP.
Because a payment offset is necessary in order to provide an
appropriate transitional pass-through payment, we deduct from the pass-
through payment for radiopharmaceuticals an amount reflecting 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 use 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.
Beginning in CY 2011 and as discussed in the CY 2011 OPPS/ASC final
rule with comment period (75 FR 71934 through 71936), we finalized a
policy to require hospitals to append modifier ``FB'' to specified
nuclear medicine procedures when the diagnostic radiopharmaceutical is
received at no cost/full credit. These instructions are contained
within the I/OCE CMS specifications on the CMS Web site at http://www.cms.gov/OutpatientCodeEdit/02_OCEQtrReleaseSpecs.asp#TopOfPage.
For CY 2012 and future years, we proposed to continue to require
hospitals to append modifier ``FB'' to specified nuclear medicine
procedures when the diagnostic radiopharmaceutical is received at no
cost/full credit. In addition, we proposed to continue to require that
when a hospital bills with an ``FB'' modifier with the nuclear medicine
scan, the payment amount for procedures in the APCs listed in Table 28
of the proposed rule (76 FR 42250) would be reduced by the full
``policy-packaged'' offset amount appropriate for diagnostic
radiopharmaceuticals. Finally, we also proposed to continue to require
hospitals to report a token charge of less than $1.01 in cases in which
the diagnostic radiopharmaceutical is furnished without cost or with
full credit.
Comment: Several commenters supported CMS for continuing to require
that hospitals append modifier ``FB'' to specified nuclear medicine
procedures when the diagnostic pharmaceutical is received at no cost/
full credit.
Response: We appreciate the commenters' support for this proposed
policy.
Comment: One commenter recommended that CMS extend modifier ``FB''
to all procedures involving nuclear medicine in which all diagnostic
radiopharmaceuticals are received at no cost or full credit. Further,
the commenter recommended that CMS consider adopting this policy for
all contrast-enhanced procedures in which the contrast agent is
provided at no cost/full credit. The commenter stated that CMS could
then publish a list of appropriate APCs to which contrast-enhanced
procedures are assigned in a calendar year, and hospitals would then be
required to list the ``FB'' modifier with the appropriate APC for the
contrast-enhanced procedure; payment, according to the commenter, could
then be reduced by a policy-packaged offset amount for contrast agents.
As in our policy for reporting of diagnostic radiopharmaceuticals in
nuclear medicine procedures, the commenter suggested that CMS also
require hospitals report a token charge of less than $1.01 in cases in
which the contrast agent is furnished without cost or with full credit.
The commenter asserted that requiring hospitals to report modifier
``FB'' for contrast agents received at no cost/full credit would lead
to more accurate payment and would lead to greater consistency between
drugs.
Response: In the CY 2011 OPPS/ASC final rule with comment period
(75 FR 71934 through 71936), we discussed our proposed and finalized
policy requiring that hospitals append modifier ``FB'' to specified
nuclear medicine procedures when the diagnostic pharmaceutical is
received at no cost/full credit. The policy, which was finalized in the
CY
[[Page 74295]]
2011 final rule with comment period and implemented in CY 2011, was
prompted by questions from hospitals inquiring how to properly bill for
diagnostic radiopharmaceuticals obtained free of charge, typically in
cases when the radiopharmaceutical had been provided to the hospital as
a free sample. Although we have not received similar billing questions
from hospitals regarding contrast agents, and have no indications about
how widespread the practice of a manufacturer is of providing
``sample'' contrast agents at no cost to a hospital, we agree with the
commenter that requiring modifier ``FB'' in such circumstances would
lead to more consistency between drugs and, potentially, to more
accurate payment. As is the case with diagnostic radiopharmaceuticals,
CMS also annually posts a proposed and final list of APCs to which a
contrast offset may be applicable. We could foresee this list being a
possible element of a future policy establishing a modifier ``FB''
reporting policy, policy-packaged offset amount, and token charge
reporting requirement.
However, we note that contrast agents are different in some regards
from diagnostic radiopharmaceuticals. Contrast agents are, in general,
substantially less costly than diagnostic radiopharmaceuticals and are
subject to a higher level of competition from generic competitors; this
combination of lower price and higher potential for generic
substitution may lead to fewer instances of manufacturers providing
hospitals with free samples. Furthermore, many radiopharmaceuticals
have a very limited shelf life, often requiring procurement for a
specific patient or very narrow window. Contrast agents, on the other
hand, have longer shelf lives, making it much more likely that
``wastage'' from a large vial could be used to reduce or eliminate the
costs for a subsequent patient. Splitting single dose vials can be
acceptable in certain situations and may create ``free'' contrast agent
for a patient that does not economically justify an ``FB'' adjustment
by the hospital. These complexities may reduce the utility of the
``FB'' modifier for contrast agents.
Regardless of the differences and similarities between diagnostic
radiopharmaceutical products, and notwithstanding any possible policy
merits of treating these two types of products similarly with regards
to modifier ``FB,'' in the CY 2012 OPPS/ASC proposed rule, we did not
propose to extend the modifier ``FB'' policy to contrast agents.
However, we are interested in receiving comments from hospitals,
manufacturers and other interested parties regarding the possible
application of modifier ``FB'' to contrast agents when the product is
received at no cost/full credit to the hospital, the establishment of a
policy-packaged offset amount for contrast agents, and possible
reporting of a token charge of less than $1.01 in cases in which the
contrast agent is furnished without cost/full credit. Although we are
not accepting the commenter's recommendation that CMS extend the
modifier ``FB'' policy to contrast agents received at no cost/full
credit to a hospital because it was not proposed by CMS in CY 2012, we
anticipate considering these modifications for future rulemaking.
After consideration of the public comments we received, we are
finalizing our proposal, without modification, to continue requiring
hospitals to append modifier ``FB'' to specified nuclear medicine
procedures when the diagnostic radiopharmaceutical is received at no
cost/full credit in CY 2012. In addition, we will continue to reduce
the payment amount for procedures in the APCs listed in Table 34 in
this final rule with comment period by the full ``policy-packaged''
offset amount appropriate for diagnostic radiopharmaceuticals. Finally,
we also will continue to require hospitals to report a token charge of
less than $1.01 in cases in which the diagnostic radiopharmaceutical is
furnished without cost or with full credit.
For CY 2011, we finalized a policy to apply the diagnostic
radiopharmaceutical offset policy to payment for pass-through
diagnostic radiopharmaceuticals, as described above. For CY 2012, we
proposed to continue to apply the diagnostic radiopharmaceutical offset
policy to payment for pass-through diagnostic radiopharmaceuticals.
Comment: One commenter requested that CMS post all data used to
calculate the offset amounts and stated that, without these amounts,
the public cannot make comments on the accuracy and appropriateness of
CMS' calculation of radiopharmaceutical costs packaged into the nuclear
medicine APC or the corresponding offset amounts for pass-through
radiopharmaceuticals.
Response: The exact data used to calculate all of the proposed and
final payment rates, including the associated offset amounts, for the
CY 2012 OPPS are available for purchase under a CMS data use agreement
through the CMS Web site at: http://www.cms.gov/hospitalOutpatientPPS.
This Web site 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-CMS
diagnosis codes and revenue code payment amounts. We typically have not
posted the offset amounts by APC until publication of the final rule
because we assign services to APCs based on our estimate of their full
resource cost, including, but not limited to, packaged diagnostic
radiopharmaceuticals. The offset amount is 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 and has no
bearing on APC assignment.
After consideration of the public comments we received, we are
finalizing our proposal to continue applying the diagnostic
radiopharmaceutical offset policy to payment for pass-through
diagnostic radiopharmaceuticals, as described in the CY 2012 OPPS/ASC
proposed rule (76 FR 42249 through 42250).
Table 34 below displays the APCs to which nuclear medicine
procedures will be assigned in CY 2012 and for which we expect that an
APC offset could be applicable in the case of diagnostic
radiopharmaceuticals with pass-through status.
[[Page 74296]]
[GRAPHIC] [TIFF OMITTED] TR30NO11.058
c. Payment Offset Policy for Contrast Agents
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 contrast agent with pass-
through status under the OPPS: HCPCS code C9275 (Injection,
hexaminolevulinate hydrochloride, 100 mg, per study dose). HCPCS code
C9275 was granted pass-through status beginning January 1, 2011, and
was proposed to continue with pass-through status in CY 2012. As
described in section V.A.3 of the proposed rule, we proposed that new
pass-through contrast agents would be paid at ASP+6 percent, while
those without ASP information would be paid at WAC+6 percent or, if WAC
is not available, payment would be based on 95 percent of the product's
most recently published AWP.
We believe that a payment offset is necessary in order to provide
an appropriate transitional pass-through payment for contrast agents
because all of these items are packaged when they do not have pass-
through status. In accordance with our standard offset methodology, in
the CY 2012 OPPS/ASC proposed rule (76 FR 42250 through 42251), we
proposed for CY 2012 to deduct from the payment for pass-through
contrast agents an amount that reflects the portion of the APC payment
associated with predecessor contrast agents, in order to ensure no
duplicate contrast agent payment is made.
In CY 2010, we established a policy to estimate the portion of each
APC payment rate that could reasonably be attributed to the cost of
predecessor contrast agents when considering new contrast agents for
pass-through payment (74 FR 60482 through 60484). For CY 2012, as we
did in CY 2011, we proposed to continue to apply this same policy to
contrast agents. Specifically, we proposed to utilize the ``policy-
packaged'' drug offset fraction for clinical APCs 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 CY 2010, we finalized a policy
[[Page 74297]]
to redefine ``policy-packaged'' drugs as only nonpass-through
diagnostic radiopharmaceuticals and contrast agents (74 FR 60495
through 60499). To determine the actual APC offset amount for pass-
through contrast agents that takes into consideration the otherwise
applicable OPPS payment amount, we proposed to multiply the ``policy-
packaged'' drug offset fraction by the APC payment amount for the
procedure with which the pass-through contrast agent is used and,
accordingly, reduce the separate OPPS payment for the pass-through
contrast agent by this amount. We proposed to continue to apply this
methodology for CY 2012 to recognize that when a contrast agent with
pass-through status is billed with any procedural APC listed in Table
29 of the proposed rule, a specific offset based on the procedural APC
would be applied to payments for the contrast agent to ensure that
duplicate payment is not made for the contrast agent.
We did not receive any public comments on our proposal to deduct,
from the payment for pass-through contrast agents, an amount that
reflects the portion of the APC payment associated with predecessor
contrast agents in order to ensure no duplicate contrast agent payment
is made. We are finalizing, as proposed, our policy to deduct from the
payment for pass-through contrast agents an amount that reflects the
portion of the APC payment for pass-through contrast agents, as
described in the CY 2012 OPPS/ASC proposed rule (76 FR 42250 through
42251). We also are finalizing the proposed CY 2012 pass-through
contrast agent offset policy to specify the procedural APCs to which
offsets for pass through contrast agents would apply. In addition, as
we proposed, for this final rule with comment period, procedural APCs
for which we expect a contrast agent offset could be applicable in the
case of a pass-through contrast agent have been identified as any
procedural APC with a ``policy-packaged'' drug amount greater than $20
that is not a nuclear medicine APC identified in Table 34 above, and
these APCs are displayed in Table 35 below. The methodology used to
determine a threshold cost for application of a contrast agent offset
policy is described in detail in the CY 2010 OPPS/ASC final rule with
comment period (74 FR 60483 through 60484). We are finalizing this
methodology for CY 2012 to continue to recognize that, when a contrast
agent with pass-through status is billed with any procedural APC listed
in Table 35, a specific offset based on the procedural APC would be
applied to payment for the contrast agent to ensure that duplicate
payment is not made for the contrast agent.
As we proposed, for this final rule with comment period, we will
continue to post annually on the CMS Web site at http://www.cms.gov/HospitalOutpatientPPS a file that contains the APC offset amounts that
will be used for that year for purposes of both evaluating cost
significance for candidate pass-through device categories and drugs and
biologicals, including contrast agents, and establishing any
appropriate APC offset amounts. Specifically, the file will continue to
provide the amounts and percentages of APC payment associated with
packaged implantable devices, ``policy-packaged'' drugs, and
``threshold-packaged'' drugs and biologicals for every OPPS clinical
APC.
Procedural APCs for which we expect a contrast offset could be
applicable in the case of a pass-through contrast agent have been
identified as any procedural APC with a ``policy-packaged'' drug amount
greater than $20 that is not a nuclear medicine APC identified in Table
34 above and these APCs are displayed in Table 35 below. The
methodology used to determine a proposed threshold cost for application
of a contrast agent offset policy is described in detail in the CY 2010
OPPS/ASC final rule with comment period (70 FR 60483 through 60484).
For CY 2012, we proposed to continue to recognize that when a contrast
agent with pass-through status is billed with any procedural APC listed
in Table 29 of the proposed rule (76 FR 42251), a specific offset based
on the procedural APC would be applied to payment for the contrast
agent to ensure that duplicate payment is not made for the contrast
agent.
We did not receive any public comments regarding this proposal and,
therefore, are adopting it for CY 2012 without modification.
[[Page 74298]]
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B. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals
Without Pass-Through Status
1. Background
Under the CY 2011 OPPS, we currently pay for drugs, biologicals,
and radiopharmaceuticals that do not have pass-through status in one of
two ways: as a packaged payment included in the payment for the
associated service or as a separate payment (individual APCs). We
explained in the April 7, 2000 OPPS final rule with comment period (65
FR 18450) that we generally package the cost of drugs and
radiopharmaceuticals into the APC payment rate for the procedure or
treatment with which the products are usually furnished. Hospitals do
not receive separate payment for packaged items and supplies, and
hospitals may not bill beneficiaries separately for any packaged items
and supplies whose costs are recognized and paid within the national
OPPS payment rate for the associated procedure or service.
[[Page 74299]]
(Transmittal A-01-133, issued on November 20, 2001, explains in greater
detail the rules regarding separate payment for packaged services.)
Packaging costs into a single aggregate payment for a service,
procedure, or episode-of-care is a fundamental principle that
distinguishes a prospective payment system from a fee schedule. In
general, packaging the costs of items and services into the payment for
the primary procedure or service with which they are associated
encourages hospital efficiencies and also enables hospitals to manage
their resources with maximum flexibility.
Section 1833(t)(16)(B) of the Act set the threshold for
establishing separate APCs for drugs and biologicals at $50 per
administration for CYs 2005 and 2006. Therefore, for CYs 2005 and 2006,
we paid separately for drugs, biologicals, and radiopharmaceuticals
whose per day cost exceeded $50 and packaged the costs of drugs,
biologicals, and radiopharmaceuticals whose per day cost was equal to
or less than $50 into the procedures with which they were billed. For
CY 2007, the packaging threshold for drugs, biologicals, and
radiopharmaceuticals that were not new and did not have pass-through
status was established at $55. For CYs 2008 and 2009, the packaging
threshold for drugs, biologicals, and radiopharmaceuticals that were
not new and did not have pass-through status was established at $60.
For CY 2010, the packaging threshold for drugs, biologicals, and
radiopharmaceuticals that were not new and did not have pass-through
status was established at $65. For CY 2011, the packaging threshold for
drugs, biologicals, and radiopharmaceuticals that were not new and did
not have pass-through status was established at $70. The methodology
used to establish the $55 threshold for CY 2007, the $60 threshold for
CYs 2008 and 2009, the $65 threshold for CY 2010, the $70 threshold for
CY 2011, and our proposed approach for CY 2012 are discussed in more
detail in section V.B.2.b. of this final rule with comment period.
2. Criteria for Packaging Payment for Drugs, Biologicals, and
Radiopharmaceuticals
a. Background
As indicated in section V.B.1. of this final rule with comment
period, in accordance with section 1833(t)(16)(B) of the Act, the
threshold for establishing separate APCs for payment of drugs and
biologicals was set to $50 per administration during CYs 2005 and 2006.
In CY 2007, we used the four quarter moving average Producer Price
Index (PPI) levels for Pharmaceutical Preparations (Prescription) to
trend the $50 threshold forward from the third quarter of CY 2005 (when
the Pub. L. 108-173 mandated threshold became effective) to the third
quarter of CY 2007. We then rounded the resulting dollar amount to the
nearest $5 increment in order to determine the CY 2007 threshold amount
of $55. Using the same methodology as that used in CY 2007 (which is
discussed in more detail in the CY 2007 OPPS/ASC final rule with
comment period (71 FR 68085 through 68086)), we set the packaging
threshold for establishing separate APCs for drugs and biologicals at
$60 for CYs 2008 and 2009. For CY 2010, we set the packaging threshold
at $65; and for CY 2011, we set the packaging threshold at $70.
Following the CY 2007 methodology, in the CY 2012 OPPS/ASC proposed
rule, we used the most recently available four quarter moving average
PPI levels to trend the $50 threshold forward from the third quarter of
CY 2005 to the third quarter of CY 2012 and rounded the resulting
dollar amount ($77.63) to the nearest $5 increment, which yielded a
figure of $80, which we proposed as the packaging threshold for CY
2012. In performing this calculation, we used the most recent forecast
of the quarterly index levels for the PPI for Pharmaceuticals for Human
Use (Prescription) (Bureau of Labor Statistics (BLS) series code
WPUSI07003) from CMS' Office of the Actuary (OACT). (We note that we
did not propose a change to the PPI that is used to calculate the
threshold for CY 2012; rather, this change in terminology reflects a
change to the BLS naming convention for this series.) We refer below to
this series generally as the PPI for Prescription Drugs.
We chose this PPI as it reflects price changes associated with the
average mix of all pharmaceuticals in the overall economy. In addition,
we chose this price series because it is publicly available and
regularly published, improving public access and transparency.
Forecasts of the PPI for Prescription Drugs are developed by IHS Global
Insight, Inc., a nationally recognized economic and financial
forecasting firm. As actual inflation for past quarters replaced
forecasted amounts, the PPI estimates for prior quarters have been
revised (compared with those used in the CY 2007 OPPS/ASC final rule
with comment period) and have been incorporated into our calculation.
Based on the calculations described above, we proposed a packaging
threshold for CY 2012 of $80. (For a more detailed discussion of the
OPPS drug packaging threshold and the use of the PPI for Prescription
Drugs, we refer readers to the CY 2007 OPPS/ASC final rule with comment
period (71 FR 68085 through 68086).)
b. Cost Threshold for Packaging of Payment for HCPCS Codes That
Describe Certain Drugs, Nonimplantable Biologicals, and Therapeutic
Radiopharmaceuticals (``Threshold-Packaged Drugs'')
In the CY 2012 OPPS/ASC proposed rule (76 FR 42252 through 42253),
we calculated on a HCPCS code-specific basis the per day cost of all
drugs, nonimplantable biologicals, and therapeutic radiopharmaceuticals
(collectively called ``threshold-packaged'' drugs) that had a HCPCS
code in CY 2010 and were paid (via packaged or separate payment) under
the OPPS in order to determine their proposed CY 2012 packaging status.
We used data from CY 2010 claims processed before January 1, 2011 for
this calculation. However, we did not perform this calculation for
those drugs and biologicals with multiple HCPCS codes that include
different dosages as described in section V.B.2.c. of this final rule
with comment period or for diagnostic radiopharmaceuticals, contrast
agents, and implantable biologicals that we proposed to continue to
package in CY 2012, as discussed in section V.B.2.d. of this final rule
with comment period.
In order to calculate the per day costs for drugs, nonimplantable
biologicals, and therapeutic radiopharmaceuticals to determine their
proposed packaging status in CY 2012, we used the methodology that was
described in detail in the CY 2006 OPPS proposed rule (70 FR 42723
through 42724) and finalized in the CY 2006 OPPS final rule with
comment period (70 FR 68636 through 70 FR 68638). For each drug and
nonimplantable biological HCPCS code, we used an estimated payment rate
of ASP+4 percent (which is the payment rate we proposed for separately
payable drugs and nonimplantable biologicals for CY 2012, as discussed
in more detail in section V.B.3.b. of the proposed rule and this final
rule with comment period) to calculate the CY 2012 proposed rule per
day costs. We used the manufacturer submitted ASP data from the fourth
quarter of CY 2010 (data that were used for payment purposes in the
physician's office setting, effective April 1, 2011) to determine the
proposed rule per day cost.
[[Page 74300]]
As is our standard methodology, for CY 2012 we proposed to use
payment rates based on the ASP data from the fourth quarter of CY 2010
for budget neutrality estimates, packaging determinations, impact
analyses, and completion of Addenda A and B to the proposed rule (which
were referenced in section XVII. of the proposed rule and available via
the Internet) because these are the most recent data available for use
at the time of development of the proposed rule. These data were also
the basis for drug payments in the physician's office setting,
effective April 1, 2011. For items that did not have an ASP-based
payment rate, such as some therapeutic radiopharmaceuticals, we used
their mean unit cost derived from the CY 2010 hospital claims data to
determine their per day cost. We proposed to package items with a per
day cost less than or equal to $80 and identified items with a per day
cost greater than $80 as separately payable. Consistent with our past
practice, we crosswalked historical OPPS claims data from the CY 2010
HCPCS codes that were reported to the CY 2011 HCPCS codes that we
displayed in Addendum B of the proposed rule (which was referenced in
section XVII. of the proposed rule and available via the Internet) for
payment in CY 2012.
Comment: The majority of commenters objected to the proposed
increase in the OPPS packaging threshold to $80 for CY 2012. Many
stated that the $10 increase in the threshold from CY 2011 was larger
than expected because recent increases in the packaging threshold have
occurred in $5 increments. Several commenters recommended that CMS
consider either eliminating the drug packaging threshold and providing
separate payment for all drugs with HCPCS codes or freezing the
packaging threshold at $70 for CY 2012. One commenter, in particular,
suggested that CMS freeze the packaging threshold at $70 for at least 3
years. Many commenters objected to the use of a packaging threshold
under the OPPS when one is not used for physician's office payment.
These commenters expressed concern that the packaging threshold may
impede beneficiary access to lower cost packaged drugs in the HOPD
setting. A few commenters suggested that CMS limit increases in the
packaging threshold amount to the market basket update for the year.
One commenter also recommended that CMS not round up the threshold
amount to the nearest $5 increment and, instead, defer increases in the
threshold until changes in prices exceed $5.
Some commenters believed that eliminating the packaging threshold
and paying separately for all drugs in the HOPD setting would allow a
more accurate calculation of the separately payable payment amount for
drugs (otherwise referred to as the ASP+X calculation).
Response: As discussed in detail in the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66757 through 66758), the CY 2009 OPPS/ASC
final rule with comment period (73 FR 68643), the CY 2010 OPPS/ASC
final rule with comment period (74 FR 60485 through 60487), and the CY
2011 final rule with comment period (75 FR 71940 through 71943), we
continue to believe that unpackaging payment for all drugs, biologicals
and radiopharmaceuticals is inconsistent with the concept of a
prospective payment system and that such a change could create an
additional reporting burden for hospitals. The OPPS and the MPFS that
applies to physician's services are fundamentally different payment
systems with essential differences in their payment policies and
structures. Specifically, the OPPS is a prospective payment system
based on the concept of payment 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. When
physician's services are furnished in an office setting, they are paid
under the MPFS, which is a fee schedule based on the realative value of
each component. Under the MPFS, separate payment is made for each
service provided in the physician's office; when individual drugs are
furnished in the physician's office, they are generally paid under the
ASP methodology. In contrast, the OPPS includes various drugs within a
prospective payment system, where payment for certain drugs is packaged
into the associated procedure payment for the APC group. Given the
fundamental differences in the way payment is made in an HOPD and a
physician's office setting, differences in payment are to be expected.
In general, we do not believe that our packaging methodology under
the OPPS results in limited beneficiary access to drugs because
packaging is a fundamental component of a prospective payment system
that accounts for the cost of certain items and services in larger
payment bundles, recognizing that some clinical cases may be more
costly and others less costly, but that, on average, OPPS payment is
appropriate for the services provided. The growing utilization
associated with packaged drugs and biologicals in our claims data
suggests Medicare beneficiaries have sufficient access to these items.
We note that, in CYs 2005 and 2006, the statutorily mandated drug
packaging threshold was set at $50, and we continue to believe that it
is appropriate to continue a modest drug packaging threshold for the CY
2012 OPPS for the reasons set forth below. As stated in the CY 2007
OPPS/ASC final rule with comment period (71 FR 68086), we believe that
packaging certain items is a fundamental component of a prospective
payment system, that packaging these items does not lead to beneficiary
access issues and does not create a problematic site of service
differential, that the packaging threshold is reasonable based on the
initial establishment in law of a $50 threshold for the CY 2005 OPPS,
that updating the $50 threshold is consistent with industry and
government practices, and that the PPI for Prescription Drugs is an
appropriate mechanism to gauge Part B drug inflation. Therefore,
because of our continued belief that packaging is a fundamental
component of a prospective payment system that continues to provide
important flexibility and efficiency in the delivery of high quality
hospital outpatient services, we are not adopting the commenters'
recommendations to pay separately for all drugs, biologicals, and
radiopharmaceuticals for CY 2012 or to eliminate or to freeze the
packaging threshold at $70.
We disagree with the commenters who suggested that CMS should limit
increases in the outpatient drug packaging threshold amount to the
market basket update for the year. As stated above, we continue to
believe that updating the $50 threshold is consistent with industry and
government practices and that the PPI for Prescription Drugs is an
appropriate mechanism to gauge Part B drug inflation. As we stated in
the CY 2007 OPPS/ASC final rule with comment period (71 FR 68085), we
believe that the PPI for Prescription Drugs reflects price changes at
the wholesale or manufacturer stage. Because OPPS payment rates for
drugs and biologicals are generally based on the ASP data that are
reported by their manufacturers, we believe that the PPI for
Prescription Drugs is an appropriate price index to use to update the
packaging threshold for CY 2007 and beyond.
In contrast, the market basket update contains numerous price
proxies, including, but not limited to, proxies for wages and salaries,
utilities, and
[[Page 74301]]
nonlabor-related expenses, that are not related to price increases for
prescription drugs. Therefore, we believe that the market basket as a
whole is not an appropriate mechanism for determining the outpatient
drug packaging threshold amount. Within the calculation of the market
basket update, we use the PPI for Prescription Drugs specifically to
measure the price growth for prescription drugs, but price changes for
prescription drugs are only one component of price changes for the
numerous items and services hospitals purchase. Additionally, we
disagree with the commenters' suggestion that we not round up the
packaging threshold to the nearest $5 increment and, instead, defer any
increases in the threshold until changes in prices exceed $5. We note
that we equally round up or round down to the nearest $5 increment, and
we continue to believe that rounding to the nearest $5 increment more
accurately updates the 2005 statutorily mandated drug packaging
threshold.
Finally, we believe that our continued application of the
methodology initially adopted in CY 2007 to update the drug packaging
threshold does not inhibit our ability to pay accurately for drugs and
biologicals. We have made several refinements to the ASP+X drug payment
methodology under the OPPS for nonpass-through drugs and biologicals
over the past several years to improve its accuracy. During that time,
we have continued to implement our established methodology for annually
updating the drug packaging threshold. For CY 2010, we finalized an
overhead adjustment methodology for determining payment for separately
payable drugs without pass-through status while we have continued to
consistently apply the methodology described above to update the drug
packaging threshold.
Since publication of the CY 2012 OPPS/ASC proposed rule, consistent
with our policy of updating the packaging threshold with more recently
available data for the final rule, we have again followed the CY 2007
methodology for CY 2012 and used updated four quarter moving average
PPI index levels provided by the CMS Office of the Actuary to trend the
$50 threshold forward from the third quarter of CY 2005 to the third
quarter of CY 2012. We then rounded the resulting dollar updated dollar
amount ($77.44) to the nearest $5 increment, which yielded a figure of
$75. We note that this calculation, by using the most recent forecast
of the quarterly PPI index levels, resulted in a decrease in the
trended dollar amount from $77.63 in the CY 2012 proposed rule to
$77.44 for this final rule with comment period. Because it is our
policy to round the dollar amount to the nearest $5 increment, the
slight decrease in the trended dollar amount has resulted in a reduced
packaging threshold, from $80 in the proposed rule, to a final CY 2012
packaging threshold of $75. Therefore, after consideration of the
public comments we received, and consistent with our established
methodology for establishing the packaging threshold using the most
recent PPI forecast data, we are adopting a CY 2012 packaging threshold
of $75.
Our policy during previous cycles of the OPPS has been to use
updated ASP and claims data to make final determinations of the
packaging status of HCPCS codes for drugs, nonimplantable biologicals,
and therapeutic radiopharmaceuticals for the final rule with comment
period. We note that it is also our policy to make an annual packaging
determination for a HCPCS code only when we develop the OPPS/ASC final
rule with comment period for the update year. Only HCPCS codes that are
identified as separately payable in the final rule with comment period
are subject to quarterly updates. For our calculation of per day costs
of HCPCS codes for drugs and nonimplantable biologicals in this CY 2012
OPPS/ASC final rule with comment period, we proposed to use ASP data
from the first quarter of CY 2011, which is the basis for calculating
payment rates for drugs and biologicals in the physician's office
setting using the ASP methodology, effective July 1, 2011, along with
updated hospital claims data from CY 2010. We note that we also
proposed to use these data for budget neutrality estimates and impact
analyses for this CY 2012 OPPS/ASC final rule with comment period.
Payment rates for HCPCS codes for separately payable drugs and
nonimplantable biologicals included in Addenda A and B to this final
rule with comment period are based on ASP data from the second quarter
of CY 2011. These data are the basis for calculating payment rates for
drugs and biologicals in the physician's office setting using the ASP
methodology, effective October 1, 2011. These physician's office
payment rates will then be updated in the January 2012 OPPS update,
based on the most recent ASP data to be used for physician's office and
OPPS payment as of January 1, 2012. For items that do not currently
have an ASP-based payment rate as proposed, we recalculate their mean
unit cost from all of the CY 2010 claims data and updated cost report
information available for this CY 2012 final rule with comment period
to determine their final per day cost.
Consequently, the packaging status of some HCPCS codes for drugs,
nonimplantable biologicals, and therapeutic radiopharmaceuticals in
this CY 2012 OPPS/ASC final rule with comment period may be different
from the same drug HCPCS code's packaging status determined based on
the data used for the proposed rule. Under such circumstances, we
proposed to continue to follow the established policies initially
adopted for the CY 2005 OPPS (69 FR 65780) in order to more equitably
pay for those drugs whose median cost fluctuates relative to the
proposed CY 2012 OPPS drug packaging threshold and the drug's payment
status (packaged or separately payable) in CY 2011. Specifically,
consistent with our historical practice, we applied the following
policies to these HCPCS codes for drugs, nonimplantable biologicals,
and therapeutic radiopharmaceuticals whose relationship to the $75 drug
packaging threshold changes based on the updated drug packaging
threshold and on the final updated data:
HCPCS codes for drugs and nonimplantable biologicals that
were paid separately in CY 2011 and that were proposed for separate
payment in CY 2012, and that then have per day costs equal to or less
than $75, based on the updated ASPs and hospital claims data used for
this CY 2012 final rule with comment period, will continue to receive
separate payment in CY 2012.
HCPCS codes for drugs and nonimplantable biologicals that
were packaged in CY 2011 and that are proposed for separate payment in
CY 2012, and that then have per day costs equal to or less than $75,
based on the updated ASPs and hospital claims data used for this CY
2012 final rule with comment period, will remain packaged in CY 2012.
HCPCS codes for drugs and nonimplantable biologicals for
which we proposed packaged payment in CY 2012 but then have per day
costs greater than $75, based on the updated ASPs and hospital claims
data used for this CY 2012 final rule with comment period, will receive
separate payment in CY 2012.
We did not receive any public comments on our proposal to apply the
established policies initially adopted for the CY 2005 OPPS (69 FR
65780) in order to more equitably pay for those drugs whose median cost
fluctuates relative to the CY 2012 OPPS drug packaging threshold and
the drug's payment status (packaged or separately payable) in CY 2011.
Therefore, we are
[[Page 74302]]
finalizing our proposal, without modification, for CY 2012.
We note that HCPCS codes J2513 (Pentastarch 10% solution), J3310
(Perphenazine injection), and J9351 (Topotecan) were paid separately
for CY 2011 and were proposed for separate payment in CY 2012 and had
final per day costs of less than the $75 drug packaging threshold,
based on updated ASPs and the CY 2010 hospital claims data available
for this CY 2012 final rule with comment period. Therefore, HCPCS codes
J2513, J3310, and J9351 will continue to be paid separately in CY 2012
according to the established methodology set forth above.
In addition, we proposed to provide separate payment for HCPCS code
J2597 (Inj desmopressin acetate) in CY 2012, which was packaged in CY
2011. Using updated ASPs and the CY 2010 hospital claims data available
for this final rule with comment period, HCPCS code J2597 now has a per
day cost of less than $75. In accordance with our established policy
for such cases, for CY 2012, we are packaging payment for HCPCS code
J2597.
We also proposed to package HCPCS codes 90378 (Rsv ig, im, 50mg),
J0364 (Apomorphine hydrochloride), J1324 (Enfuvirtide injection), J1642
(Inj heparin sodium per 10 u), J1644 (Inj heparin sodium per 1000u),
J1756 (Iron sucrose injection), J2700 (Oxacillin sodium injeciton),
J3030 (Sumatriptan succinate/6 MG), J9070 (Cyclophosphamide 100 MG
inj), J9185 (Fludarabine phosphate inj), J9206 (Irinotecan injection),
J9390 (Vinorelbine tartrate inj), and Q4103 (Oasis burn matrix) . Using
updated ASPs and the CY 2010 hospital claims data available for this
final rule with comment period, HCPCS codes 90378, J0364, J1324, J1642,
J1644, J1756, J2700, J3030, J9070, J9185, J9206, J9390, and Q4103 now
have per day costs greater than $75. In accordance with our established
policy for such cases, for CY 2012 we will pay for HCPCS codes 90378,
J0364, J1324, J1642, J1644, J1756, J2700, J3030, J9070, J9185, J9206,
J9390, and Q4103 separately.
Finally, because we did not have claims data for HCPCS code J9213
(Interferon alfa-2a inj) in the CY 2012 OPPS/ASC proposed rule, we had
proposed a status indicator of ``E'' for this product in CY 2012.
However, since publication of the proposed rule, we have received
claims data and, because the per day cost for this product of
approximately $70 is less than the final $75 CY 2012 packaging
threshold, the product is packaged and has a CY 2012 status indicator
of ``N.''
In the CY 2010 OPPS/ASC final rule with comment period (74 FR 60485
through 60489), we implemented a policy to treat oral and injectable
forms of 5-HT3 antiemetics comparably to all other threshold packaged
drugs, nonimplantable biologicals, and therapeutic radiopharmaceuticals
under our standard packaging methodology of packaging drugs with a per
day cost less than $65. In the CY 2012 OPPS/ASC proposed rule (76 FR
42252), we proposed for CY 2012 to continue our policy of not exempting
these 5-HT3 antiemetic products from our standard packaging
methodology. For CY 2012, we proposed to package payment for all of the
5-HT3 antiemetics except palonosetron hydrochloride, which for CY 2012
has an estimated per day cost, from the CY 2010 claims data, above the
proposed CY 2012 drug packaging threshold. Our rationale for this
policy is outlined in the CY 2010 OPPS/ASC final rule with comment
period (74 FR 60487 through 60488).
Comment: Several commenters suggested that CMS reinstate its policy
of separate payment for 5-HT3 antiemetics, which are a class of drugs
often used as part of an anti-cancer treatment regimen to treat nausea.
Response: We continue to believe that use of these antiemetics is
an integral part of an anti-cancer treatment regimen and that OPPS
claims data demonstrate their increasingly common hospital outpatient
utilization. As we stated in the CY 2010 OPPS/ASC final rule with
comment period (74 FR 60488), we no longer believe that a specific
exemption to our standard drug payment methodology is necessary to
ensure access to the most appropriate antiemetic products for Medicare
beneficiaries. We continue to believe that our analysis conducted in
the CY 2010 OPPS/ASC proposed rule on 5-HT3 antiemetics (74 FR 35320),
along with the historical stability in prescribing patterns for these
products and the availability of generic alternatives for several of
these products, allow us to continue our policy of specifically not
exempting these products from the OPPS drug packaging threshold.
Comment: One commenter recommended that CMS not package any drugs
used in anti-cancer regimens.
Response: We disagree with the commenter for the reasons mentioned
above. We believe that packaging certain items, including items used in
anti-cancer regimens, is a fundamental component of a prospective
payment system, and is an essential feature that distinguishes a
prospective payment system from a fee schedule. We do not believe that
packaging drugs used in an anti-cancer regimen or in outpatient
treatment of other significant diseases leads to beneficiary access
issues. This finding is confirmed by our analysis of hospital claims
data in which we have found that beneficiaries appear to have adequate
access to cancer treatments, as is signified by ongoing volume growth
in cancer-related APCs and stability in prescribing products for anti-
cancer drugs such as 5-HT3 antiemetics, for which CMS has continued to
observe volume growth, even after we ended our multiyear exemption from
the packaging threshold for these products. In summary, after
consideration of the public comments we received, we are finalizing our
proposal to continue our policy of not exempting 5-HT3 antiemetics from
the drug packaging threshold for CY 2012. In addition, we are not
providing any exceptions to the standard drug packaging methodology for
any class of drugs, including anti-cancer therapies, for CY 2012.
However, we note that the 5-HT3 antiemetic product described by HCPCS
code J2469 (palonosetron hydrocholride) has a CY 2012 estimated per day
cost, from the CY 2010 claims data, above the CY 2012 drug packaging
threshold and, therefore, will receive separate payment in CY 2012.
c. Packaging Determination for HCPCS Codes That Describe the Same Drug
or Biological But Different Dosages
In the CY 2008 OPPS/ASC final rule with comment period (72 FR
66776), we began recognizing, for OPPS payment purposes, multiple HCPCS
codes reporting different dosages for the same covered Part B drugs or
biologicals in order to reduce hospitals' administrative burden by
permitting them to report all HCPCS codes for drugs and biologicals. In
general, prior to CY 2008, the OPPS recognized for payment only the
HCPCS code that described the lowest dosage of a drug or biological. We
extended this recognition to multiple HCPCS codes for several other
drugs under the CY 2009 OPPS (73 FR 68665). During CYs 2008 and 2009,
we applied a policy that assigned the status indicator of the
previously recognized HCPCS code to the associated newly recognized
code(s), reflecting the packaged or separately payable status of the
new code(s). In the CY 2008 OPPS/ASC final rule with comment period (72
FR 66775), we explained that once claims data were available for these
previously unrecognized HCPCS codes, we would determine the packaging
status and resulting status indicator for each HCPCS code according to
the general, established HCPCS code-specific
[[Page 74303]]
methodology for determining a code's packaging status for a given
update year. However, we also stated that we planned to closely follow
our claims data to ensure that our annual packaging determinations for
the different HCPCS codes describing the same drug or biological did
not create inappropriate payment incentives for hospitals to report
certain HCPCS codes instead of others.
In the CY 2010 OPPS/ASC final rule with comment period (74 FR 60490
through 60491), we finalized a policy to make a single packaging
determination for a drug, rather than an individual HCPCS code, when a
drug has multiple HCPCS codes describing different dosages. We analyzed
CY 2008 claims data for the HCPCS codes describing different dosages of
the same drug or biological that were newly recognized in CY 2008 and
found that our claims data would result in several different packaging
determinations for different codes describing the same drug or
biological. Furthermore, we found that our claims data included few
units and days for a number of newly recognized HCPCS codes, resulting
in our concern that these data reflected claims from only a small
number of hospitals, even though the drug or biological itself may be
reported by many other hospitals under the most common HCPCS code.
Based on these findings from our first available claims data for the
newly recognized HCPCS codes, we believed that adopting our standard
HCPCS code-specific packaging determinations for these codes could lead
to payment incentives for hospitals to report certain HCPCS codes
instead of others, particularly because we do not currently require
hospitals to report all drug and biological HCPCS codes under the OPPS
in consideration of our previous policy that generally recognized only
the lowest dosage HCPCS code for a drug or biological for OPPS payment.
For CY 2012, we continue to believe that adopting the standard
HCPCS code-specific packaging determinations for these codes could lead
to payment incentives for hospitals to report certain HCPCS codes for
drugs instead of others. Making packaging determinations on a drug-
specific basis eliminates these incentives and allows hospitals
flexibility in choosing to report all HCPCS codes for different dosages
of the same drug or only the lowest dosage HCPCS code. Therefore, in
the CY 2012 OPPS/ASC proposed rule (76 FR 42253 through 42255), we
proposed to continue our policy to make packaging determinations on a
drug-specific basis, rather than a HCPCS code-specific basis, for those
HCPCS codes that describe the same drug or biological but different
dosages in CY 2012.
For CY 2012, in order to propose a packaging determination that is
consistent across all HCPCS codes that describe different dosages of
the same drug or biological, we aggregated both our CY 2010 claims data
and our pricing information at ASP+4 percent across all of the HCPCS
codes that describe each distinct drug or biological in order to
determine the mean units per day of the drug or biological in terms of
the HCPCS code with the lowest dosage descriptor. All HCPCS codes
listed in Table 30 of the proposed rule (76 FR 42254 through 42255) had
ASP pricing information available for the CY 2012 OPPS/ASC proposed
rule. Therefore, we multiplied the weighted average ASP+4 percent per
unit payment amount across all dosage levels of a specific drug or
biological by the estimated units per day for all HCPCS codes that
describe each drug or biological from our claims data to determine the
estimated per day cost of each drug or biological at less than or equal
to $80 (whereupon all HCPCS codes for the same drug or biological would
be packaged) or greater than $80 (whereupon all HCPCS codes for the
same drug or biological would be separately payable).
Although we did not receive any public comments regarding this
methodology, as noted in section V.B.2.b. of this final rule with
comment period, the final CY 2012 drug packaging threshold is $75, and
not $80 as had been proposed in the CY 2012 OPPS proposed rule.
Therefore, in preparation for the CY 2012 final rule with comment
period, we again aggregated both our CY 2010 claims data and our
pricing information at ASP+4 percent across all of the HCPCS codes that
describe each distinct drug or biological in order to determine the
mean units per day of the drug or biological in terms of the HCPCS code
with the lowest dosage descriptor for those drugs listed in Table 30 of
the proposed rule (76 FR 42254 through 42255). We then multiplied the
weighted average ASP+4 percent per unit payment amount across all
dosage levels of a specific drug or biological by the estimated units
per day for all HCPCS codes that describe each drug or biological from
our claims data to determine the estimated per day cost of each drug or
biological at less than or equal to $75 (whereupon all HCPCS codes for
the same drug or biological would be packaged) or greater than $75
(whereupon all HCPCS codes for the same drug or biological would be
separately payable). In repeating this analysis, we found that two
products for which we had proposed a CY 2012 status indicator of ``N,''
HCPCS J1642 (Injection, heparin sodium (heparin lock flush), per 10
units) and J1644 (Injection, heparin sodium, per 1000 units) had a
recalculated per day cost in excess of the $75 packaging threshold.
Therefore, HCPCS J1642 and J1644 are assigned status indicator ``K''
and will be separately payable in CY 2012.
With the exception of the changed status indicators for HCPCS J1642
and J1644, we are adopting as final the proposed packaging status of
each drug and biological HCPCS code to which the aforementioned
methodology applies. The products affected are displayed in Table 36
below.
BILLING CODE 4120-01-P
[[Page 74304]]
[GRAPHIC] [TIFF OMITTED] TR30NO11.060
[[Page 74305]]
[GRAPHIC] [TIFF OMITTED] TR30NO11.061
[[Page 74306]]
[GRAPHIC] [TIFF OMITTED] TR30NO11.062
BILLING CODE 4120-01-C
d. Packaging of Payment for Diagnostic Radiopharmaceuticals, Contrast
Agents, and Implantable Biologicals (``Policy-Packaged'' Drugs and
Devices)
Prior to CY 2008, the methodology of calculating a product's
estimated per day cost and comparing it to the annual OPPS drug
packaging threshold was used to determine the packaging status of
drugs, biologicals, and radiopharmaceuticals under the OPPS (except for
our CYs 2005 through 2009 exemption for 5-HT3 antiemetics). However, as
established in the CY 2008 OPPS/ASC final rule with comment period (72
FR 66766 through 66768), we began packaging payment for all diagnostic
radiopharmaceuticals and contrast agents into the payment for the
associated procedure, regardless of their per day costs. In addition,
in CY 2009, we adopted a policy that packaged the payment for nonpass-
through
[[Page 74307]]
implantable biologicals into payment for the associated surgical
procedure on the claim (73 FR 68633 through 68636). We refer to
diagnostic radiopharmaceuticals and contrast agents collectively as
``policy-packaged'' drugs and implantable biologicals as devices
because, in CY 2010, we began to treat implantable biologicals as
devices for all OPPS payment purposes.
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. Packaging costs into a single aggregate payment for
a service, encounter, or episode-of-care is a fundamental principle
that distinguishes a prospective payment system from a fee schedule. In
general, packaging the costs of items and services into the payment for
the primary procedure or service with which they are associated
encourages hospital efficiencies and also enables hospitals to manage
their resources with maximum flexibility.
Prior to CY 2008, we noted that the proportion of drugs,
biologicals, and radiopharmaceuticals that were separately paid under
the OPPS had increased in recent years, a pattern that we also observed
for procedural services under the OPPS. Our final CY 2008 policy that
packaged payment for all nonpass-through diagnostic
radiopharmaceuticals and contrast agents, regardless of their per day
costs, contributed significantly to expanding the size of the OPPS
payment bundles and is consistent with the principles of a prospective
payment system.
As discussed in more detail in the CY 2009 OPPS/ASC final rule with
comment period (73 FR 68645 through 68649), we presented several
reasons supporting our initial policy to package payment of diagnostic
radiopharmaceuticals and contrast agents into their associated
procedures on a claim. Specifically, we stated that we believed
packaging was appropriate because: (1) The statutorily required OPPS
drug packaging threshold has expired; (2) we believe that diagnostic
radiopharmaceuticals and contrast agents function effectively as
supplies that enable the provision of an independent service; and (3)
section 1833(t)(14)(A)(iii) of the Act requires that payment for
specified covered outpatient drugs (SCODs) be set prospectively based
on a measure of average hospital acquisition cost.
For these reasons, we believe it is appropriate to continue to
treat diagnostic radiopharmaceuticals and contrast agents differently
from SCODs for CY 2012. Therefore, in the CY 2012 OPPS/ASC proposed
rule (76 FR 42255 through 42256), we proposed to continue packaging
payment for all contrast agents and diagnostic radiopharmaceuticals,
collectively referred to as ``policy-packaged'' drugs, regardless of
their per day costs, for CY 2012. We also proposed to continue to
package the payment for diagnostic radiopharmaceuticals into the
payment for the associated nuclear medicine procedure and to package
the payment for contrast agents into the payment of the associated
echocardiography imaging procedure, regardless of whether the agent met
the OPPS drug packaging threshold. We refer readers to the CY 2010
OPPS/ASC final rule with comment period for a detailed discussion of
nuclear medicine and echocardiography services (74 FR 35269 through
35277).
Comment: Several commenters objected to CMS' proposal to package
payment for all diagnostic radiopharmaceuticals and contrast agents in
CY 2012. A number of commenters stated that diagnostic
radiopharmaceuticals and contrast agents with per day costs over the
proposed OPPS drug packaging threshold are defined as SCODs and,
therefore, should be assigned separate APC payments. In particular, the
commenters questioned CMS' authority to classify groups of drugs, such
as diagnostic radiopharmaceuticals and contrast agents, and implement
packaging and payment policies that do not reflect their status as
SCODs. Several comments disagreed with CMS' labeling of
radiopharmaceuticals as supplies and stated instead that they should be
treated as other SCODs. The commenters recommended that diagnostic
radiopharmaceuticals should be subject to the same per day cost drug
packaging threshold that applies to other drugs, in order to determine
whether their payment would be packaged or made separately.
Response: As discussed in the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66766), the CY 2009 OPPS/ASC final rule with
comment period (73 FR 68645), the CY 2010 OPPS/ASC final rule with
comment period (74 FR 60497), and the CY 2011 final rule with comment
period (75 FR 71949), we continue to believe that diagnostic
radiopharmaceuticals and contrast agents are different from other drugs
and biologicals for several reasons. We note that the statutorily
required OPPS drug packaging threshold has expired, and we continue to
believe that diagnostic radiopharmaceuticals and contrast agents
function effectively as supplies that enable the provision of an
independent service and are always ancillary and supportive to an
independent service, rather than themselves serving as the therapeutic
modality. We packaged their payment in CYs 2008, 2009, 2010, and 2011
as ancillary and supportive services in order to provide incentives for
greater efficiency and to provide hospitals with additional flexibility
in managing their resources. In order for payment to be packaged, it is
not necessary that all products be interchangeable in every case, and
we recognized that, in some cases, hospitals may utilize higher cost
products and, in some cases, lower cost products, taking into
consideration the clinical needs of the patient and efficiency
incentives. While we recognize this variability from case to case, on
average under a prospective payment system, we expect payment to pay
appropriately for the services furnished. In the past, we have
classified different groups of drugs for specific payment purposes, as
evidenced by our CY 2005 through CY 2009 policy regarding 5-HT3
antiemetics and their exemption from the drug packaging threshold. We
note that we treat diagnostic radiopharmaceuticals and contrast agents
as ``policy-packaged'' drugs because our policy is to package payment
for all of the products in the category.
In the CY 2009 OPPS/ASC final rule with comment period (73 FR
68634), we also began packaging the payment for all nonpass-through
implantable biologicals into payment for the associated surgical
procedure because we consider these products to always be ancillary and
supportive to independent services, similar to implantable
nonbiological devices that are always packaged. Therefore, we currently
package payment for nonpass-through implantable biologicals, also known
as devices that are surgically inserted or implanted (through a
surgical incision or a natural orifice) into the body. As we stated in
the CY 2012 OPPS/ASC proposed rule (76 FR 42256), we continue to
believe that payment should be packaged for nonpass-through implantable
biologicals for CY 2012.
Although our final CY 2009 policy (which we are continuing for CY
2012 as discussed below) packages payment for all diagnostic
radiopharmaceuticals,
[[Page 74308]]
contrast agents, and nonpass-through implantable biologicals into the
payment for their associated procedures, we are continuing to provide
payment for these items in CY 2012 based on a proxy for average
acquisition cost, as we did in CY 2009. We continue to believe that the
line-item estimated cost for a diagnostic radiopharmaceutical, contrast
agent, or nonpass-through implantable biological in our claims data is
a reasonable approximation of average acquisition and preparation and
handling costs for diagnostic radiopharmaceuticals, contrast agents,
and nonpass-through implantable biologicals, respectively. As we
discussed in the CY 2009 OPPS/ASC final rule with comment period (73 FR
68645), we believe that hospitals have adapted to the CY 2006 coding
changes for radiopharmaceuticals and responded to our instructions to
include charges for radiopharmaceutical handling in their charges for
the radiopharmaceutical products. Further, because the standard OPPS
packaging methodology packages the total estimated cost of each
radiopharmaceutical, contrast agent, or nonimplantable biological on
each claim (including the full range of costs observed on the claims)
with the cost of associated procedures for ratesetting, this packaging
approach is consistent with considering the average cost for
radiopharmaceuticals, contrast agents, or nonpass-through implantable
biologicals, rather than the median cost. In addition, as we noted in
the CY 2009 OPPS/ASC final rule with comment period (72 FR 68646),
these drugs, biologicals, or radiopharmaceuticals for which we have not
established a separate APC and therefore, for which payment would be
packaged rather than separately provided under the OPPS, are considered
to not be SCODs. Similarly, drugs and biologicals with per day costs of
less than $75 in CY 2012 that are packaged and for which a separate APC
has not been established also are not SCODs. This reading is consistent
with our final payment policy whereby we package payment for diagnostic
radiopharmaceuticals, contrast agents, and nonpass-through implantable
biologicals and provide payment for these products through payment for
their associated procedures.
Comment: Several commenters disagreed with the proposal to
distinguish between diagnostic and therapeutic radiopharmaceuticals for
payment purposes under the OPPS. The commenters noted that CMS'
identification of HCPCS code A9544 (Iodine I-131 tositumomab,
diagnostic, per study dose) as a diagnostic radiopharmaceutical is
inappropriate because this radiopharmaceutical functions as a
dosimetric radiopharmaceutical and not as a diagnostic
radiopharmaceutical. A few commenters explained that this particular
radiopharmaceutical product is used as part of a therapeutic regimen
and, therefore, should be considered therapeutic for OPPS payment
purposes.
Response: As discussed above and in the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66641), the CY 2009 OPPS/ASC final rule with
comment period (73 FR 68645), the CY 2010 OPPS/ASC final rule with
comment period (74 FR 60498), and the CY 2011 OPPS/ASC final rule with
comment period (75 FR 71949), we classified each radiopharmaceutical
into one of the two groups according to whether its long descriptor
contained the term ``diagnostic'' or ``therapeutic''. HCPCS code A9544
contains the term ``diagnostic'' in its long code descriptor.
Therefore, according to our established methodology, we continue to
classify it as diagnostic for the purposes of CY 2012 OPPS payment.
While we understand that this item is provided in conjunction with
additional supplies, imaging tests, and therapeutic
radiopharmaceuticals for patients already diagnosed with cancer, we
continue to believe that the purpose of administering the product
described by HCPCS code A9544 is diagnostic in nature. As we first
stated in the CY 2008 OPPS/ASC final rule with comment period (72 FR
66641), we continue to believe that the product described by HCPCS code
A9544 is a diagnostic radiopharmaceutical. While it is not used to
necessarily diagnose a general disease state, it is used to determine
whether future therapeutic services would be beneficial to the patient
and to determine how to proceed with therapy. We note that this is no
different than the use of a lab test to guide therapy; the fact that
the diagnostic test, a service which provides information, is used to
guide therapy does not make it a therapeutic service, one which
intended to improve a patient's clinical condition. While a group of
associated services may be considered a therapeutic regimen by some
commenters, HCPCS code A9544 is provided in conjunction with a series
of nuclear medicine imaging scans. Many nuclear medicine studies using
diagnostic radiopharmaceuticals are provided to patients who already
have an established diagnosis. We continue to consider HCPCS code A9544
to be diagnostic because this item is provided for the purpose of
conducting a diagnostic imaging procedure and is used to identify the
proposed dose of the therapeutic agent to be provided at a later time.
Comment: Some commenters recommended using the ASP methodology to
make payment for nonpass-through diagnostic radiopharmaceuticals,
noting that it would be inconsistent for CMS to treat diagnostic
radiopharmaceuticals as ``drugs'' for pass-through payment purposes and
provide payment for diagnostic radiopharmaceuticals that have pass-
through status based on the ASP methodology, and, then, after the
diagnostic radiopharmaceutical's pass-through payment status expires,
package the costs included in historical hospital claims data, rather
than use the ASP methodology to pay for the product and treat the drug
as a supply. A few commenters suggested that diagnostic
radiopharmaceuticals could be paid separately as therapeutic
radiopharmaceuticals are paid, which would allow manufacturers to
voluntarily submit ASP data, and then default to the mean unit cost
when ASP data are unavailable. One commenter asserted that CMS, by
paying separately for diagnostic radiopharmaceuticals, could reduce
Medicare program expenditures through reduced outlier payments,
decreased variability in packaged costs, and more accurate payments for
nuclear medicine procedures. The commenter stated that this would occur
at ``only a modest cost'' to the OPPS.
Response: As we stated above, the statutorily required OPPS drug
packaging threshold has expired, and we continue to believe that
diagnostic radiopharmaceuticals and contrast agents are always
ancillary and supportive to an independent service, rather than
services themselves as the therapeutic modality. We disagree with
commenters who suggest that nonpass-through diagnostic
radiopharmaceuticals should be paid under the ASP methodology, that
nonpass-through diagnostic radiopharmaceuticals should be paid as pass-
through drugs and biologicals, or that nonpass-through diagnostic
radiopharmaceuticals should be paid similarly to therapeutic
radiopharmaceuticals. We continue to believe that nonpass-through
diagnostic radiopharmaceuticals and contrast agents function
effectively as supplies that enable the provision of an independent
service. As we noted in the CY 2009 OPPS/ASC final rule with comment
period (72 FR 68646) and restate above, drugs biologicals, or
[[Page 74309]]
radiopharmaceuticals for which we have not established a separate APC
will receive packaged payment under the OPPS, and are considered to not
be SCODs. We are continuing to provide payment for these items in CY
2012 based on a proxy for average acquisition cost. We continue to
believe that the line-item estimated cost for a diagnostic
radiopharmaceutical, contrast agent, or nonpass-through implantable
biological in our claims data is a reasonable approximation of average
acquisition and preparation and handling costs for diagnostic
radiopharmaceuticals, contrast agents and nonpass-through implantable
biologicals, respectively.
Further, as we have stated above, we believe that packaging costs
into a single aggregate payment for a service, encounter, or episode-
of-care is a fundamental principle that distinguishes a prospective
payment system from a fee schedule. Our policy of packaging payment for
diagnostic radiopharmaceuticals, contrast agents, and implantable
biologicals into the payment for the primary procedure or service with
which they are associated encourages hospital efficiencies and also
enables hospitals to manage their resources with maximum flexibility.
Paying separately for diagnostic radiopharmaceuticals, contrast agents,
or implantable biologicals, when each of these items is ancillary and
supportive to an independent service, is contrary to this principle of
a prospective payment system. Moreover, we note that SCODs, the payment
methodology for which the commenters suggest that CMS adopt for
diagnostic radiopharmaceuticals and contrast agents, receive OPPS
payments based on the ASP+X methodology, which has consistently
resulted in payment rates for SCODs that are equal to some amount
greater than 100 percent of average sales price for these products; in
CY 2012, as discussed in section V.B.3.b. of this final rule with
comment period, SCODs will receive payment equal to 104 percent of ASP
(ASP+4). We do not agree that payment for diagnostic
radiopharmaceuticals and contrast agents, were it equal to the SCOD
reimbursement amount calculated using the ASP+X methodology (or ASP+4
in CY 2012), could reduce outlier payments or APC variability to an
extent sufficient enough to offset higher payment rates for these
products under the ASP+X methodology. Finally, we do not agree with the
commenter's assertion that separate payment for diagnostic
radiopharmaceuticals would result in more accurate payment for these
products. When CMS discussed possible ASP-based payment for diagnostic
radiopharmaceuticals in the proposed and final rules for OPPS in CY
2006 (70 FR 68653 through 68657), numerous public commenters advised
CMS that radiopharmaceuticals are formulated, distributed, compounded,
and administered in unique distribution channels that preclude the
determination of ASP relevant to a radiopharmaceutical HCPCS code.
Further, commenters advised CMS that the manufacturer has no way to
calculate the ASP of the end product patient dose and, consequently,
could not supply CMS with accurate ASP data. In the intervening period
between the CY 2006 final rule with comment period and the present,
diagnostic radiopharmaceutical use has become more widespread, and
their formulation more complex. Moreover, we believe that the phenomena
described by commenters (including radiopharmaceutical manufacturers)
in the comment period preceding the CY 2006 OPPS final rule, including
the many preparatory and compounding steps between manufacturer and the
patient's bedside, remain an impediment to manufacturers' calculations
of accurate ASP, and thus accurate payment, for these products.
Therefore, we do not believe that diagnostic radiopharmaceuticals
should be paid separately under the OPPS such that manufacturers
voluntarily can submit ASP data and then default to mean unit cost when
ASP data are unavailable. We believe they are appropriately packaged
into a single aggregate payment for the accompanying service provided.
Comment: A few commenters recommended that CMS provide separate
payment for all diagnostic radiopharmaceuticals with a median per day
cost greater than $200. The commenters believed that this
recommendation is most consistent with the APC Panel's recommendation
to CMS at the Panel's September 2007 meeting (described below). One
commenter recommended that if CMS does not adopt the recommended $200
packaging threshold for diagnostic radiopharmaceuticals, that CMS adopt
alternate packaging criteria providing separate payment when the cost
of the product is greater than the total APC payment or when the
coefficient of variation of the radiopharmaceutical exceeds a certain
threshold.
Response: As we stated in the CY 2010 OPPS/ASC final rule with
comment period (74 FR 60499), at the September 2007 APC Panel meeting,
the APC Panel recommended that CMS package radiopharmaceuticals with a
median per day cost of less than $200 but pay separately for
radiopharmaceuticals with a median per day cost of $200 or more. In the
CY 2008 OPPS/ASC final rule with comment period (72 FR 66638), we did
not accept the APC Panel's recommendation, citing an inability to
determine an empirical basis for paying separately for
radiopharmaceuticals with a median per day cost in excess of $200.
Instead, as proposed, for CY 2008, we finalized the packaging of
payment for all diagnostic radiopharmaceuticals. Consistent with the CY
2012 OPPS/ASC proposed rule, for this final rule with comment period,
we continue to believe that diagnostic radiopharmaceuticals are
ancillary and supportive to the nuclear medicine procedures in which
they are used and that their costs should be packaged into the primary
procedures with which they are associated. We do not believe it would
be appropriate to set a cost threshold for packaging diagnostic
radiopharmaceuticals because, regardless of their per day cost, they
are always supportive of an independent procedure that is the basis for
administration of the diagnostic radiopharmaceutical. We also do not
believe that it is appropriate to consider alternate packaging criteria
for nonpass-through diagnostic radiopharmaceuticals. We continue to
believe that, regardless of their per-day cost, these items are always
supportive of an independent procedure that is the basis for
administration of the diagnostic radiopharmaceutical. Therefore, our
policy of packaging costs for these products into an associated APC
continues to be the approach best suited for use in a prospective
payment system.
Further, we note that the OPPS, as a prospective payment system,
already includes the costs associated with diagnostic
radiopharmaceuticals into the APCs for which the product is ancillary
or supportive. We believe that the cost associated with a given product
at a given point in time is immaterial because the OPPS, as a
prospective payment system with payments based on average costs
associated with a covered procedure, already takes into account both
higher and lower input costs associated with that procedure. We also
note that the OPPS, like many of Medicare's prospective payment
systems, has policies in place to provide hospitals with additional
outlier payments for certain high-cost cases whose costs exceed certain
thresholds. This system of outliers already provides hospitals (or, in
the case of partial hospitalization services, community
[[Page 74310]]
mental health centers) with additional reimbursement to offset costs
that are high relative to the prospective payment amount, regardless of
whether the costs are associated with radiopharmaceuticals or another
relatively high-cost element in the patient's course of care.
Comment: Several commenters requested that CMS provide the public
with data detailing how the full costs of diagnostic
radiopharmaceuticals and contrast agents are reflected in procedural
APC payments.
Response: The exact data used to calculate all of the proposed and
final APC assignments and rates, including costs associated with
diagnostic radiopharmaceuticals and contrast agents, for the CY 2012
OPPS are available for purchase under a CMS data use agreement through
the CMS Web site at: http://www.cms.gov/hospitalOutpatientPPS. This Web
site 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-CMS diagnosis
codes and revenue code payment amounts. We typically have not posted
the offset amounts by APC until publication of the final rule because
we assign services to APCs based on our estimate of their full resource
cost, including, but not limited to, packaged diagnostic
radiopharmaceuticals.
In CY 2009, we adopted a final policy to package payment for all
nonpass-through implantable biologicals that are surgically inserted or
implanted (through a surgical incision or a natural orifice) like our
longstanding policy that packaged payment for all implantable
nonbiological devices without pass-through status. We finalized a
policy in CY 2010 to package payment for nonpass-through implantable
biologicals that are surgically inserted or implanted (through a
surgical incision or a natural orifice) into the body, considering them
to be devices.
For CY 2012, we proposed to continue to package payment for
nonpass-through implantable biologicals that are surgically inserted or
implanted (through a surgical incision or a natural orifice) into the
body, considering them to be devices. Three of the products with
expiring pass-through status for CY 2012 are biologicals that,
according to their FDA-approved indications, are only surgically
implanted. These products are described by HCPCS codes C9361 (Collagen
matrix nerve wrap (NeuroMend Collagen Nerve Wrap), per 0.5 centimeter
length), C9362 (Porous purified collagen matrix bone void filler
(Integra Mozaik Osteoconductive Scaffold Strip), per 0.5 cc), and C9364
(Porcine implant, Permacol, per square centimeter). Like the two
implantable biologicals with expiring pass-through status in CY 2011
that were discussed in the CY 2011 OPPS/ASC final rule with comment
period (75 FR 71948 through 71950), we believe that the three
biologicals specified above with expiring pass-through status for CY
2012 differ from other biologicals paid under the OPPS in that they
specifically function as surgically implanted devices. As a result of
our proposed packaged payment methodology for nonpass-through
implantable biologicals, we proposed to package payment for HCPCS codes
C9361, C9362, and C9364 and assign them status indicator ``N'' for CY
2012. In addition, any new biologicals without pass-through status that
are surgically inserted or implanted (through a surgical incision or a
natural orifice) would be packaged in CY 2012. Moreover, for nonpass-
through biologicals that may sometimes be used as implantable devices,
we continue to instruct hospitals to not bill separately for the HCPCS
codes for the products when used as implantable devices. This reporting
ensures that the costs of these products that may be, but are not
always, used as implanted biologicals are appropriately packaged into
payment for the associated implantation procedures. We received no
comments regarding our proposed packaging of nonpass-through
implantable biologicals that are surgically inserted or implanted
(through a surgical incision or a natural orifice) into the body.
After consideration of the public comments we received, we are
finalizing our CY 2012 proposals, without modification, to continue to
package payment for all nonpass-through diagnostic radiopharmaceuticals
and contrast agents, and implantable biologicals that are surgically
inserted or implanted into the body through a surgical incision or a
natural orifice, regardless of their per day costs. Given the inherent
function of contrast agents and diagnostic radiopharmaceuticals as
ancillary and supportive to the performance of an independent procedure
and the similar functions of implantable biologicals and nonbiological
devices as integral to and supportive of the separately paid surgical
procedures in which either may be used, we continue to view the
packaging of payment for contrast agents, diagnostic
radiopharmaceuticals, and implantable biologicals as a logical
expansion of packaging payment for drugs and biologicals. In addition,
as we initially established in the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66768), we will continue to identify diagnostic
radiopharmaceuticals specifically as those Level II HCPCS codes that
include the term ``diagnostic'' along with a radiopharmaceutical in
their long code descriptors, and therapeutic radiopharmaceuticals as
those Level II HCPCS codes that include the term ``therapeutic'' along
with a radiopharmaceutical in their long code descriptors. We believe
that the current descriptors accurately discriminate between those
pharmaceuticals which are used to gather information and those which
are intended to improve the patient's medical condition.
In addition, any new biological lacking pass-through status that is
surgically inserted or implanted through a surgical incision or natural
orifice would be packaged in CY 2012. For three biologicals with
expiring pass-through status and which differ from other biologicals
paid under the OPPS in that they specifically function as surgically
implanted devices, we are finalizing our proposal to package the
products described by HCPCS code C9361, C9362, and C9364 and assign
them status indictor ``N'' for this final rule with comment period.
We also are finalizing our proposal to package payment for contrast
agents into the payment of the associated echocardiography imaging
procedure, regardless of whether the agent met the OPPS drug packaging
threshold. We refer readers to section III.D.1.e. of this final rule
with comment period for more information on CMS' final echocardiography
payment policy. For more information on how we set CY 2012 payment
rates for nuclear medicine procedures in which diagnostic
radiopharmaceuticals are used and echocardiography services provided
with and without contrast agents, we refer readers to the CY 2010 OPPS/
ASC final rule with comment period for a detailed discussion of nuclear
medicine and echocardiography services (74 FR 35269 through 35277).
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
Section 1833(t)(14) of the Act defines certain separately payable
radiopharmaceuticals, drugs, and biologicals and mandates specific
[[Page 74311]]
payments for these items. Under section 1833(t)(14)(B)(i) of the Act, a
``specified covered outpatient drug'' (SCOD) is a covered outpatient
drug, as defined in section 1927(k)(2) of the Act, for which a separate
APC has been established and that either is a radiopharmaceutical agent
or is a drug or biological for which payment was made on a pass-through
basis on or before December 31, 2002.
Under section 1833(t)(14)(B)(ii) of the Act, certain drugs and
biologicals are designated as exceptions and are not included in the
definition of ``specified covered outpatient drugs''. These exceptions
are--
A drug or biological for which payment is first made on or
after January 1, 2003, under the transitional pass-through payment
provision in section 1833(t)(6) of the Act.
A drug or biological for which a temporary HCPCS code has
not been assigned.
During CYs 2004 and 2005, an orphan drug (as designated by
the Secretary).
Section 1833(t)(14)(A)(iii) of the Act requires that payment for
SCODs in CY 2006 and subsequent years be equal to the average
acquisition cost for the drug for that year as determined by the
Secretary, subject to any adjustment for overhead costs and taking into
account the hospital acquisition cost survey data collected by the
Government Accountability Office (GAO) in CYs 2004 and 2005, and later
periodic surveys conducted by the Secretary as set forth in the
statute. If hospital acquisition cost data are not available, the law
requires that payment be equal to payment rates established under the
methodology described in section 1842(o), section 1847A, or section
1847B of the Act, as calculated and adjusted by the Secretary as
necessary. Most physician Part B drugs are paid at ASP+6 percent
pursuant to sections 1842(o) and 1847A of the Act.
Section 1833(t)(14)(E) of the Act provides for an adjustment in
OPPS payment rates for overhead and related expenses, such as pharmacy
services and handling costs. Section 1833(t)(14)(E)(i) of the Act
required MedPAC to study pharmacy overhead and related expenses and to
make recommendations to the Secretary regarding whether, and if so how,
a payment adjustment should be made to compensate hospitals for
overhead and related expenses. Section 1833(t)(14)(E)(ii) of the Act
authorizes the Secretary to adjust the weights for ambulatory procedure
classifications for SCODs to take into account the findings of the
MedPAC study.
In the CY 2006 OPPS proposed rule (70 FR 42728 through 42731), we
discussed the June 2005 report by MedPAC regarding pharmacy overhead
costs in HOPDs and summarized the findings of that study:
Handling costs for drugs, biologicals, and
radiopharmaceuticals administered in the HOPD are not insignificant;
Little information is available about the magnitude of
pharmacy overhead costs;
Hospitals set charges for drugs, biologicals, and
radiopharmaceuticals at levels that reflect their respective handling
costs; and
Hospitals vary considerably in their likelihood of
providing services that utilize drugs, biologicals, or
radiopharmaceuticals with different handling costs.
As a result of these findings, MedPAC developed seven drug
categories for pharmacy and nuclear medicine handling costs based on
the estimated level of hospital resources used to prepare the products
(70 FR 42729). Associated with these categories were two
recommendations for accurate payment of pharmacy overhead under the
OPPS.
1. CMS should establish separate, budget neutral payments to cover
the costs hospitals incur for handling separately payable drugs,
biologicals, and radiopharmaceuticals.
2. CMS should define a set of handling fee APCs that group drugs,
biologicals, and radiopharmaceuticals based on attributes of the
products that affect handling costs; CMS should instruct hospitals to
submit charges for these APCs and base payment rates for the handling
fee APCs on submitted charges reduced to costs.
In response to the MedPAC findings, in the CY 2006 OPPS proposed
rule (70 FR 42729), we discussed our belief that, because of the varied
handling resources required to prepare different forms of drugs, it
would be impossible to exclusively and appropriately assign a drug to a
certain overhead category that would apply to all hospital outpatient
uses of the drug. Therefore, our CY 2006 OPPS proposed rule included a
proposal to establish three distinct Level II HCPCS C-codes and three
corresponding APCs for drug handling categories to differentiate
overhead costs for drugs and biologicals (70 FR 42730). We also
proposed: (1) To combine several overhead categories recommended by
MedPAC; (2) to establish three drug handling categories, as we believed
that larger groups would minimize the number of drugs that may fit into
more than one category and would lessen any undesirable payment policy
incentives to utilize particular forms of drugs or specific preparation
methods; (3) to collect hospital charges for these HCPCS C-codes for 2
years; and (4) to ultimately base payment for the corresponding drug
handling APCs on CY 2006 claims data available for the CY 2008 OPPS.
In the CY 2006 OPPS final rule with comment period (70 FR 68659
through 68665), we discussed the public comments we received on our
proposal regarding pharmacy overhead. The overwhelming majority of
commenters did not support our proposal regarding pharmacy overhead and
urged us not to finalize this policy, as it would be administratively
burdensome for hospitals to establish charges for HCPCS codes for
pharmacy overhead and to report them. Therefore, we did not finalize
this proposal for CY 2006. Instead, we established payment for
separately payable drugs and biologicals at ASP+6 percent, which we
calculated by comparing the estimated aggregate cost of separately
payable drugs and biologicals in our claims data to the estimated
aggregate ASP dollars for separately payable drugs and biologicals,
using the ASP as a proxy for average acquisition cost (70 FR 68642).
Hereinafter, we refer to this methodology as our standard drug payment
methodology. We concluded that payment for drugs and biologicals and
pharmacy overhead at a combined ASP+6 percent rate would serve as an
acceptable proxy for the combined acquisition and overhead costs of
each of these products.
In the CY 2007 OPPS/ASC final rule with comment period (71 FR
68091), we finalized our proposed policy to provide a single payment of
ASP+6 percent for the hospital's acquisition cost for the drug or
biological and all associated pharmacy overhead and handling costs. The
ASP+6 percent rate that we finalized was higher than the equivalent
average ASP-based amount calculated from claims of ASP+4 percent
according to our standard drug payment methodology, but we adopted
payment at ASP+6 percent for stability while we continued to examine
the issue of the costs of pharmacy overhead in the HOPD and awaited the
accumulation of CY 2006 data as discussed in the CY 2006 OPPS/ASC final
rule with comment period.
In the CY 2008 OPPS/ASC proposed rule (72 FR 42735), in response to
ongoing discussions with interested parties, we proposed to continue
our methodology of providing a combined payment rate for drug and
biological acquisition and pharmacy overhead
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costs while continuing our efforts to improve the available data. We
also proposed to instruct hospitals to remove the pharmacy overhead
charge for both packaged and separately payable drugs and biologicals
from the charge for the drug or biological and report the pharmacy
overhead charge on an uncoded revenue code line on the claim. We
believed that this would provide us with an avenue for collecting
pharmacy handling cost data specific to drugs in order to package the
overhead costs of these items into the associated procedures, most
likely drug administration services. Similar to the public response to
our CY 2006 pharmacy overhead proposal, the overwhelming majority of
commenters did not support our CY 2008 proposal and urged us to not
finalize this policy (72 FR 66761). At its September 2007 meeting, the
APC Panel recommended that hospitals not be required to separately
report charges for pharmacy overhead and handling and that payment for
overhead be included as part of drug payment. The APC Panel also
recommended that CMS continue to evaluate alternative methods to
standardize the capture of pharmacy overhead costs in a manner that is
simple to implement at the organizational level (72 FR 66761).
Because of concerns expressed by the APC Panel and public
commenters, we did not finalize the proposal to instruct hospitals to
separately report pharmacy overhead charges for CY 2008. Instead, in
the CY 2008 OPPS/ASC final rule with comment period (72 FR 66763), we
finalized a policy of providing payment for separately payable drugs
and biologicals and their pharmacy overhead at ASP+5 percent as a
transition from their CY 2007 payment of ASP+6 percent to payment based
on the equivalent average ASP-based payment rate calculated from
hospital claims according to our standard drug payment methodology,
which was ASP+3 percent for the CY 2008 OPPS/ASC final rule with
comment period. Hospitals continued to include charges for pharmacy
overhead costs in the line-item charges for the associated drugs
reported on claims.
For CY 2009, we proposed to pay separately payable drugs and
biologicals at ASP+4 percent, including both SCODs and other drugs
without CY 2009 OPPS pass-through status, based on our standard drug
payment methodology. We also continued to explore mechanisms to improve
the available data. We proposed to split the ``Drugs Charged to
Patients'' cost center into two cost centers: One for drugs with high
pharmacy overhead costs and one for drugs with low pharmacy overhead
costs (73 FR 41492). We noted that we expected that CCRs from the
proposed new cost centers would be available in 2 to 3 years to refine
OPPS drug cost estimates by accounting for differential hospital markup
practices for drugs with high and low overhead costs. After
consideration of the public comments received and the APC Panel
recommendations, we finalized a CY 2009 policy (73 FR 68659) to provide
payment for separately payable nonpass-through drugs and biologicals
based on costs calculated from hospital claims at a 1-year transitional
rate of ASP+4 percent, in the context of an equivalent average ASP-
based payment rate of ASP+2 percent calculated according to our
standard drug payment methodology from the final rule claims data and
cost report data. We did not finalize our proposal to split the single
standard ``Drugs Charged to Patients'' cost center into two cost
centers largely due to concerns raised by hospitals about the
associated administrative burden. Instead, we indicated in the CY 2009
OPPS/ASC final rule with comment period (73 FR 68659) that we would
continue to explore other potential approaches to improve our drug cost
estimation methodology, thereby increasing payment accuracy for
separately payable drugs and biologicals.
In response to our proposals for the CY 2008 and CY 2009 OPPS, a
group of pharmacy stakeholders (hereinafter referred to as the pharmacy
stakeholders), including some cancer hospitals, some pharmaceutical
manufacturers, and some hospital and professional associations,
commented that we should pay an acquisition cost of ASP+6 percent for
separately payable drugs, should substitute ASP+6 percent for the
packaged cost of all packaged drugs and biologicals on procedure
claims, and should redistribute the difference between the aggregate
estimated packaged drug cost in claims and payment for all drugs,
including packaged drugs at ASP+6 percent, as separate pharmacy
overhead payments for separately payable drugs. They indicated that
this approach would preserve the aggregate drug cost observed in the
claims data, while significantly increasing payment accuracy for
individual drugs and procedures by redistributing drug cost from
packaged drugs. Their suggested approach would provide a separate
overhead payment for each separately payable drug or biological at one
of three different levels, depending on the pharmacy stakeholders'
assessment of the complexity of pharmacy handling associated with each
specific drug or biological (73 FR 68651 through 68652). Each
separately payable drug or biological HCPCS code would be assigned to
one of the three overhead categories, and the separate pharmacy
overhead payment applicable to the category would be made when each of
the separately payable drugs or biologicals was paid.
In the CY 2010 OPPS/ASC proposed rule (74 FR 35332), we
acknowledged the limitations of our data and our availability to find a
method to improve that data in a way that did not impose unacceptable
administrative burdens on providers. Accepting that charge compression
was a reasonable but unverifiable supposition, we proposed to
redistribute between one-third and one-half of the estimated overhead
cost associated with coded packaged drugs and biologicals with an ASP.
This proposed redistribution resulted in our proposal to pay for the
acquisition and pharmacy overhead costs of separately payable drugs and
biologicals that did not have pass-through payment status at ASP+4
percent. We calculated estimated overhead cost for coded packaged drugs
and biologicals by determining the difference between the aggregate
claims cost for coded packaged drugs and biologicals with an ASP and
the ASP dollars (ASP multiplied by the drug's or biological's units in
the claims data) for those same coded drugs and biologicals. This
difference was our estimated overhead cost for coded packaged drugs and
biologicals.
In the CY 2010 OPPS/ASC proposed rule (74 FR 35326 through 35333),
we stated that we believed that between one-third and one-half of the
estimated $395 million total in pharmacy overhead costs included in our
claims data for coded packaged drugs and biologicals with reported ASP
data, specifically approximately $150 million of those costs, should be
attributed to separately payable drugs and biologicals. We stated that
the $150 million serves as the adjustment for the pharmacy overhead
costs of separately payable drugs and biologicals. As a result, we also
proposed to reduce the costs of coded drugs and biologicals that are
packaged into payment for procedural APCs to offset the $150 million
adjustment to payment for separately payable drugs and biologicals. In
addition, we proposed that any redistribution of pharmacy overhead cost
that may arise from the CY 2010 final rule with comment period data
would occur only from some drugs and biologicals to other drugs and
biologicals, thereby maintaining the
[[Page 74313]]
estimated total cost of drugs and biologicals that we calculate based
on the charges and costs reported by hospitals on claims and cost
reports. As a result of this approach, no redistribution of cost would
occur from other services to drugs and biologicals or vice versa.
Using our CY 2010 proposed rule data, and applying our longstanding
methodology for calculating the total cost of separately payable drugs
and biologicals in our claims compared to the ASP dollars for the same
drugs and biologicals, without applying the proposed overhead cost
redistribution, we determined that the estimated aggregate cost of
separately payable drugs and biologicals (status indicators ``K'' and
``G''), including acquisition and pharmacy overhead costs, was
equivalent to ASP-2 percent. Therefore, under the standard methodology
for establishing payment for separately payable drugs and biologicals,
we would have paid for those drugs and biologicals at ASP-2 percent for
CY 2010, their equivalent average ASP-based payment rate. We also
determined that the estimated aggregate cost of coded packaged drugs
and biologicals with an ASP (status indicator ``N''), including
acquisition and pharmacy overhead costs, was equivalent to ASP+247
percent.
While we had no way of assessing whether this current distribution
of overhead cost to coded packaged drugs and biologicals with an ASP
was appropriate, we acknowledged in the CY 2010 OPPS/ASC final rule
with comment period (74 FR 60499 through 60518) that the established
method of converting billed charges to costs had the potential to
``compress'' the calculated costs to some degree. Further, we
recognized that the attribution of pharmacy overhead costs to packaged
or separately payable drugs and biologicals through our standard drug
payment methodology of a combined payment for acquisition and pharmacy
overhead costs depends, in part, on the treatment of all drugs and
biologicals each year under our annual drug packaging threshold.
Changes to the packaging threshold may result in changes to payment for
the overhead cost of drugs and biologicals that do not reflect actual
changes in hospital pharmacy overhead cost for those products. For
these reasons, we stated that we believed some portion, but not all, of
the total overhead cost that is associated with coded packaged drugs
and biologicals (the difference between aggregate cost for those drugs
and biologicals on the claims and ASP dollars for the same drugs and
biologicals), should, at least for CY 2010, be attributed to separately
payable drugs and biologicals based on our standard methodology.
We acknowledged that the observed combined payment for acquisition
and pharmacy overhead costs of ASP-2 percent for separately payable
drugs and biologicals may be too low and ASP+247 percent for coded
packaged drugs and biologicals with reported ASP data in the CY 2010
claims data may be too high (74 FR 35327 and 35328). In addition, we
stated that we believed that the pharmacy stakeholders' recommendation
to set packaged drug and biological dollars to ASP+6 percent was
inappropriate, given our understanding that an equal allocation of
indirect overhead costs among packaged and separately payable drugs and
biologicals would lead to a higher observed ASP+X percent than ASP+6
percent for packaged drugs and biologicals. Further, we indicated that
indirect overhead costs that are common to all drugs and biologicals
have no relationship to the cost of an individual drug or biological or
to the complexity of the handling, preparation, or storage of that
individual drug or biological. Therefore, we indicated that we believed
that indirect overhead cost alone for an inexpensive drug or biological
which would be packaged could be far in excess of the ASP for that
inexpensive product. We also explained that layered on these indirect
costs are direct costs of staff, supplies, and equipment that are
directly attributable only to the storage, handling, preparation, and
distribution of drugs and biologicals and which do vary, sometimes
considerably, depending upon the drug being furnished.
Therefore, we stated that a middle ground would represent the most
accurate redistribution of pharmacy overhead cost. Our assumption was
that approximately one-third to one-half of the total pharmacy overhead
cost currently associated with coded packaged drugs and biologicals in
the CY 2008 claims data offered a more appropriate allocation of drug
and biological cost to separately payable drugs and biologicals (74 FR
35328). One third of the $395 million of pharmacy overhead cost
associated with packaged drugs and biologicals was $132 million,
whereas one-half was $198 million.
Within the one-third to one-half parameters, we proposed that
reallocating $150 million in drug and biological cost observed in the
claims data from coded packaged drugs and biologicals with an ASP to
separately payable drugs and biologicals for CY 2010 would more
appropriately distribute pharmacy overhead cost among packaged and
separately payable drugs and biologicals. Based on this redistribution,
we proposed a CY 2010 payment rate for separately payable drugs and
biologicals of ASP+4 percent. Redistributing $150 million represented a
reduction in cost of coded packaged drugs and biologicals with reported
ASP data in the CY 2010 proposed rule claims data of 27 percent.
We also proposed that any redistribution of pharmacy overhead cost
that may arise from CY 2010 final rule data would occur only from some
drugs and biologicals to other drugs and biologicals, thereby
maintaining the estimated total cost of drugs and biologicals in our
claims data (no redistribution of cost would occur from other services
to drugs and biologicals or vice versa) (74 FR 35332). We further
proposed that the claims data for 340B hospitals be included in the
calculation of payment for drugs and biologicals under the CY 2010
OPPS, and that hospitals that participate in the 340B program would be
paid the same amounts for separately payable drugs and biologicals as
hospitals that do not participate in the 340B program (74 FR 35332
through 35333). Finally, we proposed that, in accordance with our
standard drug payment methodology, the estimated payments for
separately payable drugs and biologicals would be taken into account in
the calculation of the weight scaler that would apply to the relative
weights for all procedural services (but would not apply to separately
payable drugs and biologicals) paid under the OPPS, as required by
section 1833(t)(14)(H) of the Act (74 FR 35333).
In the CY 2010 OPPS final rule with comment period, we adopted a
transitional payment rate of ASP+4 percent based on a pharmacy overhead
adjustment methodology for CY 2010 that redistributed $200 million from
packaged drug and biological cost to separately payable drug cost. We
refer readers to the CY 2010 OPPS/ASC final rule with comment period
for a complete discussion of the pharmacy overhead adjustment
methodology (74 FR 60499 through 60518). This $200 million included the
proposed $150 million redistribution from the pharmacy overhead cost of
coded packaged drugs and biologicals for which an ASP is reported and
an additional $50 million dollars from the total uncoded drug and
biological cost to separately payable drugs and biologicals as a
conservative estimate of the pharmacy overhead cost of uncoded packaged
drugs and biologicals that should be appropriately associated with
[[Page 74314]]
the cost of separately payable drugs and biologicals (74 FR 60517). We
believed that our proposal to reallocate $150 million of costs from
coded packaged drugs and biologicals, or one-third of the pharmacy
overhead costs of these products, based upon the claims data available
for the CY 2010 final rule, to separately payable drugs and biologicals
was appropriate (74 FR 60511). We also acknowledged that, to some
unknown extent, there are pharmacy overhead costs being attributed to
the items and services reported under the pharmacy revenue code without
HCPCS codes that are likely pharmacy overhead for separately payable
drugs. Therefore, we reallocated $50 million or 8 percent of the total
cost of uncoded packaged drug and biological cost in order to represent
the pharmacy overhead cost of uncoded packaged drugs and biologicals
that should be appropriately associated with the cost of separately
payable drugs and biologicals. This was an intentionally conservative
estimate as we could not identify def