[Federal Register Volume 79, Number 94 (Thursday, May 15, 2014)]
[Proposed Rules]
[Pages 27978-28384]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-10067]
[[Page 27977]]
Vol. 79
Thursday,
No. 94
May 15, 2014
Part II
Department of Health and Human Services
-----------------------------------------------------------------------
Centers for Medicare & Medicaid Services
-----------------------------------------------------------------------
42 CFR Parts 405, 412, 413, et al.
Medicare Program; Hospital Inpatient Prospective Payment Systems for
Acute Care Hospitals and the Long Term Care Hospital Prospective
Payment System and Proposed Fiscal Year 2015 Rates; Quality Reporting
Requirements for Specific Providers; Reasonable Compensation
Equivalents for Physician Services in Excluded Teaching Hospitals;
Provider Administrative Appeals and Judicial Review; Enforcement
Provisions for Organ Transplant Centers; and Electronic Health Record
(EHR) Incentive Program; Proposed Rule
Federal Register / Vol. 79 , No. 94 / Thursday, May 15, 2014 /
Proposed Rules
[[Page 27978]]
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 405, 412, 413, 415, 422, 424, 485, and 488
[CMS-1607-P] RIN 0938-AS11
Medicare Program; Hospital Inpatient Prospective Payment Systems
for Acute Care Hospitals and the Long-Term Care Hospital Prospective
Payment System and Proposed Fiscal Year 2015 Rates; Quality Reporting
Requirements for Specific Providers; Reasonable Compensation
Equivalents for Physician Services in Excluded Teaching Hospitals;
Provider Administrative Appeals and Judicial Review; Enforcement
Provisions for Organ Transplant Centers; and Electronic Health Record
(EHR) Incentive Program
AGENCY: Centers for Medicare and Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: We are proposing to revise the Medicare hospital inpatient
prospective payment systems (IPPS) for operating and capital-related
costs of acute care hospitals to implement changes arising from our
continuing experience with these systems. Some of the proposed changes
implement certain statutory provisions contained in the Patient
Protection and Affordable Care Act and the Health Care and Education
Reconciliation Act of 2010 (collectively known as the Affordable Care
Act), the Protecting Access to Medicare Act of 2014, and other
legislation. These proposed changes would be applicable to discharges
occurring on or after October 1, 2014, unless otherwise specified in
this proposed rule. We also are proposing to update the rate-of-
increase limits for certain hospitals excluded from the IPPS that are
paid on a reasonable cost basis subject to these limits. The proposed
updated rate-of-increase limits would be effective for cost reporting
periods beginning on or after October 1, 2014.
We also are proposing to update the payment policies and the annual
payment rates for the Medicare prospective payment system (PPS) for
inpatient hospital services provided by long-term care hospitals
(LTCHs) and to implement certain statutory changes to the LTCH PPS
under the Affordable Care Act and the Pathway for Sustainable Growth
Rate (SGR) Reform Act of 2013 and the Protecting Access to Medicare Act
of 2014. In addition we are proposing to revise the interruption of
stay policy for LTCHs and to retire the ``5 percent'' payment
adjustment for co-located LTCHs. While many of the statutory mandates
of the Pathway for SGR Reform Act will apply to discharges occurring on
or after October 1, 2014, others will not begin to apply until 2016 and
beyond. However, in light of the degree of forthcoming change, we
discuss changes infra and request public feedback to inform our
proposals for FY 2016 in this proposed rule as well.
In addition, we are proposing to make a number of changes relating
to direct graduate medical education (GME) and indirect medical
education (IME) payments. We are proposing to establish new
requirements or revise requirements for quality reporting by specific
providers (acute care hospitals, PPS-exempt cancer hospitals, and
LTCHs) that are participating in Medicare.
We are proposing to update policies relating to the Hospital Value-
Based Purchasing (VBP) Program, the Hospital Readmissions Reduction
Program, and the Hospital-Acquired Condition (HAC) Reduction Program.
In addition, we are proposing changes to the regulations governing
provider administrative appeals and judicial review relating to
appropriate claims in provider cost reports; updates to the reasonable
compensation equivalent (RCE) limits for services furnished by
physicians to teaching hospitals excluded from the IPPS; regulatory
revisions to broaden the specified uses of risk adjustment data and to
specify the conditions for release of risk adjustment data to entities
outside of CMS; and changes to the enforcement procedures for organ
transplant centers.
We are proposing to align the reporting and submission timelines
for clinical quality measures for the Medicare EHR Incentive Program
for eligible hospitals and critical access hospitals (CAHs) with the
reporting and submission timelines for the Hospital IQR Program. In
addition, we provide guidance and clarification of certain policies for
eligible hospitals and CAHs such as our policy for reporting zero
denominators on clinical quality measures and our policy for case
threshold exemptions.
DATES: Comment Period: To be assured consideration, comments must be
received at one of the addresses provided below, no later than 5 p.m.
EDT on June 30, 2014.
ADDRESSES: In commenting, please refer to file code CMS-1607-P. 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-1607-P, P.O. Box 8011,
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-1607-P, 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
[[Page 27979]]
beginning of the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
Donald Thompson, (410) 786-4487, and Tiffany Swygert, (410) 786-
4465, Operating Prospective Payment, MS-DRGs, Hospital-Acquired
Conditions (HAC), Wage Index, New Medical Service and Technology Add-On
Payments, Hospital Geographic Reclassifications, Graduate Medical
Education, Capital Prospective Payment, Excluded Hospitals, and
Medicare Disproportionate Share Hospital (DSH) Issues.
Michele Hudson, (410) 786-4487, and Judith Richter, (410) 786-2590,
Long-Term Care Hospital Prospective Payment System and MS-LTC-DRG
Relative Weights Issues.
Siddhartha Mazumdar, (410) 786-6673, Rural Community Hospital
Demonstration Program Issues.
James Poyer, (410) 786-2261, Hospital Inpatient Quality Reporting
and Hospital Value-Based Purchasing--Program Administration,
Validation, and Reconsideration Issues.
Karen Nakano, (410) 786-6889, Hospital Inpatient Quality
Reporting--Measures Issues Except Hospital Consumer Assessment of
Healthcare Providers and Systems Issues; and Readmission Measures for
Hospitals Issues.
Elizabeth Goldstein, (410) 786-6665, Hospital Inpatient Quality
Reporting--Hospital Consumer Assessment of Healthcare Providers and
Systems Measures Issues.
Mary Pratt, (410) 786-6867, LTCH Quality Data Reporting Issues.
Kim Spalding Bush, (410) 786-3232, Hospital Value-Based Purchasing
Efficiency Measures Issues.
James Poyer, (410) 786-2261, PPS-Exempt Cancer Hospital Quality
Reporting Issues.
Kellie Shannon, (410) 786-0416, Appropriate Claims in Provider Cost
Reports; Administrative Appeals by Providers and Judicial Review
Issues.
Amelia Citerone, (410) 786-3901, and Robert Kuhl (410) 786-4597,
Reasonable Compensation Equivalent (RCE) Limits for Physician Services
Provided in Providers.
Ann Hornsby, (410) 786-1181, and Jennifer Harlow, (410) 786-4549,
Medicare Advantage Encounter Data Issues.
Thomas Hamilton, (410) 786-6763, Organ Transplant Center Issues.
Jennifer Phillips, (410) 786-1023, 2-Midnight Rule Benchmark
Issues.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All public 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 public 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.
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.
Tables Available Only Through the Internet on the CMS Web Site
In the past, a majority of the tables referred to throughout this
preamble and in the Addendum to the proposed rule and the final rule
were published in the Federal Register as part of the annual proposed
and final rules. However, beginning in FY 2012, some of the IPPS tables
and LTCH PPS tables are no longer published in the Federal Register.
Instead, these tables are available only through the Internet. The IPPS
tables for this proposed rule are available only through the Internet
on the CMS Web site at: http://www.cms.hhs.gov/Medicare/medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. Click on the link on
the left side of the screen titled, ``FY 2015 IPPS Proposed Rule Home
Page'' or ``Acute Inpatient--Files for Download''. The LTCH PPS tables
for this FY 2015 proposed rule are available only through the Internet
on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/LongTermCareHospitalPPS/index.html under the list item
for Regulation Number CMS-1607-P. For complete details on the
availability of the tables referenced in this proposed rule, we refer
readers to section VI. of the Addendum to this proposed rule.
Readers who experience any problems accessing any of the tables
that are posted on the CMS Web sites identified above should contact
Michael Treitel at (410) 786-4552.
Acronyms
3M 3M Health Information System
AAMC Association of American Medical Colleges
ACGME Accreditation Council for Graduate Medical Education
ACoS American College of Surgeons
AHA American Hospital Association
AHIC American Health Information Community
AHIMA American Health Information Management Association
AHRQ Agency for Healthcare Research and Quality
AJCC American Joint Committee on Cancer
ALOS Average length of stay
ALTHA Acute Long Term Hospital Association
AMA American Medical Association
AMGA American Medical Group Association
AMI Acute myocardial infarction
AOA American Osteopathic Association
APR DRG All Patient Refined Diagnosis Related Group System
APRN Advanced practice registered nurse
ARRA American Recovery and Reinvestment Act of 2009, Public Law 111-
5
ASCA Administrative Simplification Compliance Act of 2002, Public
Law 107-105
ASITN American Society of Interventional and Therapeutic
Neuroradiology
ATRA American Taxpayer Relief Act of 2012, Public Law 112-240
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 [State Children's Health
Insurance Program] Benefits Improvement and Protection Act of 2000,
Public Law 106-554
BLS Bureau of Labor Statistics
CABG Coronary artery bypass graft [surgery]
CAH Critical access hospital
CARE [Medicare] Continuity Assessment Record & Evaluation
[Instrument]
CART CMS Abstraction & Reporting Tool
CAUTI Catheter-associated urinary tract infection
CBSAs Core-based statistical areas
CC Complication or comorbidity
CCN CMS Certification Number
CCR Cost-to-charge ratio
CDAC [Medicare] Clinical Data Abstraction Center
CDAD Clostridium difficile-associated disease
CDC Center for Disease Control and Prevention
CERT Comprehensive error rate testing
CDI Clostridium difficile (C. difficile)
CFR Code of Federal Regulations
CLABSI Central line-associated bloodstream infection
CIPI Capital input price index
CMI Case-mix index
CMS Centers for Medicare & Medicaid Services
CMSA Consolidated Metropolitan Statistical Area
COBRA Consolidated Omnibus Reconciliation Act of 1985, Public Law
99-272
COLA Cost-of-living adjustment
CoP [Hospital] condition of participation
COPD Chronis obstructive pulmonary disease
[[Page 27980]]
CPI Consumer price index
CQM Clinical quality measure
CRNA Certified registered nurse anesthetist
CY Calendar year
DACA Data Accuracy and Completeness Acknowledgement
DPP Disproportionate patient percentage
DRA Deficit Reduction Act of 2005, Public Law 109-171
DRG Diagnosis-related group
DSH Disproportionate share hospital
EBRT External Bean Radiotherapy
ECI Employment cost index
eCQM Electronic clinical quality measure
EDB [Medicare] Enrollment Database
EHR Electronic health record
EMR Electronic medical record
EMTALA Emergency Medical Treatment and Labor Act of 1986, Public Law
99-272
EP Eligible professional
FAH Federation of American Hospitals
FDA Food and Drug Administration
FFY Federal fiscal year
FPL Federal poverty line
FQHC Federally qualified health center
FR Federal Register
FTE Full-time equivalent
FY Fiscal year
GAF Geographic Adjustment Factor
GME Graduate medical education
HAC Hospital-acquired condition
HAI Healthcare-associated infection
HCAHPS Hospital Consumer Assessment of Healthcare Providers and
Systems
HCFA Health Care Financing Administration
HCO High-cost outlier
HCRIS Hospital Cost Report Information System
HHA Home health agency
HHS Department of Health and Human Services
HICAN Health Insurance Claims Account Number
HIPAA Health Insurance Portability and Accountability Act of 1996,
Public Law 104-191
HIPC Health Information Policy Council
HIS Health information system
HIT Health information technology
HMO Health maintenance organization
HPMP Hospital Payment Monitoring Program
HSA Health savings account
HSCRC [Maryland] Health Services Cost Review Commission
HSRV Hospital-specific relative value
HSRVcc Hospital-specific relative value cost center
HQA Hospital Quality Alliance
HQI Hospital Quality Initiative
IBR Intern- and Resident-to-Bed Ratio
ICD-9-CM International Classification of Diseases, Ninth Revision,
Clinical Modification
ICD-10-CM International Classification of Diseases, Tenth Revision,
Clinical Modification
ICD-10-PCS International Classification of Diseases, Tenth Revision,
Procedure Coding System
ICR Information collection requirement
IGI IHS Global Insight, Inc.
IHS Indian Health Service
IME Indirect medical education
I-O Input-Output
IOM Institute of Medicine
IPF Inpatient psychiatric facility
IPFQR Inpatient Psychiatric Facility Quality Reporting [Program]
IPPS [Acute care hospital] inpatient prospective payment system
IRF Inpatient rehabilitation facility
IQR Inpatient Quality Reporting
LAMCs Large area metropolitan counties
LOS Length of stay
LTC-DRG Long-term care diagnosis-related group
LTCH Long-term care hospital
LTCHQR Long-Term Care Hospital Quality Reporting
MA Medicare Advantage
MAC Medicare Administrative Contractor
MAP Measure Application Partnership
MCC Major complication or comorbidity
MCE Medicare Code Editor
MCO Managed care organization
MDC Major diagnostic category
MDH Medicare-dependent, small rural hospital
MedPAC Medicare Payment Advisory Commission
MedPAR Medicare Provider Analysis and Review File
MEI Medicare Economic Index
MGCRB Medicare Geographic Classification Review Board
MIEA-TRHCA Medicare Improvements and Extension Act, Division B of
the Tax Relief and 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
MRHFP Medicare Rural Hospital Flexibility Program
MRSA Methicillin-resistant Staphylococcus aureus
MSA Metropolitan Statistical Area
MS-DRG Medicare severity diagnosis-related group
MS-LTC-DRG Medicare severity long-term care diagnosis-related group
MU Meaningful Use [EHR Incentive Program]
NAICS North American Industrial Classification System
NALTH National Association of Long Term Hospitals
NCD National coverage determination
NCHS National Center for Health Statistics
NCQA National Committee for Quality Assurance
NCVHS National Committee on Vital and Health Statistics
NECMA New England County Metropolitan Areas
NHSN National Healthcare Safety Network
NOP Notice of Participation
NQF National Quality Forum
NQS National Quality Strategy
NTIS National Technical Information Service
NTTAA National Technology Transfer and Advancement Act of 1991,
Public Law 104-113
NVHRI National Voluntary Hospital Reporting Initiative
OACT [CMS] Office of the Actuary
OBRA 86 Omnibus Budget Reconciliation Act of 1986, Public Law 99-509
OES Occupational employment statistics
OIG Office of the Inspector General
OMB [Executive] Office of Management and Budget
OPM [U.S.] Office of Personnel Management
OQR [Hospital] Outpatient Quality Reporting
O.R. Operating room
OSCAR Online Survey Certification and Reporting [System]
PCH PPS-exempt cancer hospital
PCHQR PPS-exempt cancer hospital quality reporting
PMSAs Primary metropolitan statistical areas
POA Present on admission
PPI Producer price index
PPS Prospective payment system
PRM Provider Reimbursement Manual
ProPAC Prospective Payment Assessment Commission
PRRB Provider Reimbursement Review Board
PRTFs Psychiatric residential treatment facilities
PSF Provider-Specific File
PSI Patient safety indicator
PS&R Provider Statistical and Reimbursement [System]
PQRS Physician Quality Reporting System
QIG Quality Improvement Group [CMS]
QIO Quality Improvement Organization
QRDA Quality Reporting Data Architecture
RCE Reasonable compensation equivalent
RFA Regulatory Flexibility Act, Public Law 96-354
RHC Rural health clinic
RHQDAPU Reporting hospital quality data for annual payment update
RNHCI Religious nonmedical health care institution
RPL Rehabilitation psychiatric long-term care (hospital)
RRC Rural referral center
RSMR Risk-standardized mortality rate
RSRR Risk-standard readmission rate
RTI Research Triangle Institute, International
RUCAs Rural-urban commuting area codes
RY Rate year
SAF Standard Analytic File
SCH Sole community hospital
SCIP Surgical Care Improvement Project
SFY State fiscal year
SIC Standard Industrial Classification
SNF Skilled nursing facility
SOCs Standard occupational classifications
SOM State Operations Manual
SSI Surgical site infection
SSI Supplemental Security Income
SSO Short-stay outlier
SUD Substance use disorder
TEFRA Tax Equity and Fiscal Responsibility Act of 1982, Public Law
97-248
TEP Technical expert panel
THA/TKA Total hip arthroplasty/Total knee arthroplasty
TMA TMA [Transitional Medical Assistance], Abstinence Education, and
QI
[[Page 27981]]
[Qualifying Individuals] Programs Extension Act of 2007, Public Law
110-90
TPS Total Performance Score
UHDDS Uniform hospital discharge data set
UMRA Unfunded Mandate Reform Act, Public Law 104-4
VBP [Hospital] Value Based Purchasing [Program]
VTE Venous thromboembolism
Table of Contents
I. Executive Summary and Background
A. Executive Summary
1. Purpose and Legal Authority
2. Summary of the Major Provisions
3. Summary of Costs and Benefits
B. Summary
1. Acute Care Hospital Inpatient Prospective Payment System
(IPPS)
2. Hospitals and Hospital Units Excluded From the IPPS
3. Long-Term Care Hospital Prospective Payment System (LTCH PPS)
4. Critical Access Hospitals (CAHs)
5. Payments for Graduate Medical Education (GME)
C. Summary of Provisions of Recent Legislation Discussed in This
Proposed Rule
1. Patient Protection and Affordable Care Act (Pub. L. 111-148)
and the Health Care and Education Reconciliation Act of 2010 (Pub.
L. 111-152)
2. American Taxpayer Relief Act of 2012 (Pub. L. 112-240)
3. Pathway for Sustainable Growth Rate (SGR) Reform Act of 2013
(Pub. L. 113-67)
4. Protecting Access to Medicare Act of 2014 (Pub. L. 113-93)
D. Summary of the Provisions of This Proposed Rule
II. Proposed Changes to Medicare Severity Diagnosis-Related Group
(MS-DRG) Classifications and Relative Weights
A. Background
B. MS-DRG Reclassifications
C. Adoption of the MS-DRGs in FY 2008
D. Proposed FY 2015 MS-DRG Documentation and Coding Adjustment
1. Background on the Prospective MS-DRG Documentation and Coding
Adjustments for FY 2008 and FY 2009 Authorized by Public Law 110-90
2. Adjustment to the Average Standardized Amounts Required by
Public Law 110-90
a. Prospective Adjustment Required by Section 7(b)(1)(A) of
Public Law 110-90
b. Recoupment or Repayment Adjustments in FYs 2010 Through 2012
Required by Section 7(b)(1)(B) Public Law 110-90
3. Retrospective Evaluation of FY 2008 and FY 2009 Claims Data
4. Prospective Adjustments for FY 2008 and FY 2009 Authorized by
Section 7(b)(1)(A) of Public Law 110-90
5. Recoupment or Repayment Adjustment Authorized by Section
7(b)(1)(B) of Public Law 110-90
6. Recoupment or Repayment Adjustment Authorized by Section 631
of the American Taxpayer Relief Act of 2012 (ATRA)
7. Prospective Adjustment for the MS-DRG Documentation and
Coding Effect Through FY 2010
E. Refinement of the MS-DRG Relative Weight Calculation
1. Background
2. Discussion for FY 2015
F. Proposed Adjustment to MS-DRGs for Preventable Hospital-
Acquired Conditions (HACs), Including Infections
1. Background
2. HAC Selection
3. Present on Admission (POA) Indicator Reporting
4. HACs and POA Reporting in Preparation for Transition to ICD-
10-CM and ICD-10-PCS
5. Proposal Regarding Current HACs and Previously Considered
Candidate HACs
6. RTI Program Evaluation
7. Current and Previously Considered Candidate HACs--RTI Report
on Evidence-Based Guidelines
G. Proposed Changes to Specific MS-DRG Classifications
1. Discussion of Changes to Coding System and Basis for Proposed
MS-DRG Updates
a. Conversion of MS-DRGs to the International Classification of
Diseases, 10th Edition (ICD-10)
b. Basis for FY 2015 MS-DRG Updates
2. MDC 1 (Diseases and Disorders of the Nervous System)
a. Intracerebral Therapies: Gliadel[supreg] Wafer
b. Endovascular Embolization or Occlusion of Head and Neck
3. MDC 4 (Diseases and Disorders of the Ear, Nose, Mouth and
Throat): Avery Breathing Pacemaker System
4. MDC 5 (Diseases and Disorders of the Circulatory System)
a. Exclusion of Left Atrial Appendage
b. Transcatheter Mitral Valve Repair: MitraClip[supreg]
c. Endovascular Cardiac Valve Replacement Procedures
d. Abdominal Aorta Graft
5. MDC 8 (Diseases and Disorders of the Musculoskeletal System
and Connective Tissue)
a. Shoulder Replacement Procedures
b. Ankle Replacement Procedures
c. Back and Neck Procedures
6. MDC 10 (Endocrine, Nutritional and Metabolic Diseases and
Disorders): Disorders of Porphyria Metabolism
7. MDC 15 (Newborns and Other Neonates With Conditions
Originating in the Perinatal Period)
8. Proposed Medicare Code Editor (MCE) Changes
9. Proposed Changes to Surgical Hierarchies
10. Proposed Changes to the MS-DRG Diagnosis Codes for FY 2015
a. Major Complications or Comorbidities (MCCs) and Complications
or Comorbidities (CCs) Severity Levels for FY 2015
b. Coronary Atherosclerosis Due to Calcified Coronary Lesion
11. Complications or Comorbidity (CC) Exclusions List
a. Background of the CC List and the CC Exclusions List
b. Proposed CC Exclusions List for FY 2015
12. Review of Procedure Codes in MS-DRGs 981 Through 983, 984
Through 986, and 987 Through 989
a. Moving Procedure Codes From MS-DRGs 981 Through 983 or MS-
DRGs 987 Through 989 Into MDCs
b. Reassignment of Procedures Among MS-DRGs 981 Through 983, 984
Through 986, and 987 Through 989
c. Adding Diagnosis or Procedure Codes to MDCs
13. Proposed Changes to the ICD-9-CM Coding System
a. ICD-10 Coordination and Maintenance Committee
b. Code Freeze
H. Recalibration of the Proposed FY 2015 MS-DRG Relative Weights
1. Data Sources for Developing the Proposed Relative Weights
2. Methodology for Calculation of the Proposed Relative Weights
3. Development of National Average CCRs
4. Bundled Payments for Care Improvement (BPCI) Initiative
I. Proposed Add-On Payments for New Services and Technologies
1. Background
2. Public Input Before Publication of a Notice of Proposed
Rulemaking on Add-On Payments
3. FY 2015 Status of Technologies Approved for FY 2014 Add-On
Payments
a. Glucarpidase (Trade Brand Voraxaze[supreg])
b. DIFICIDTM (Fidaxomicin) Tablets
c. Zenith[supreg] Fenestrated Abdominal Aortic Aneurysm (AAA)
Endovascular Graft
d. KcentraTM
e. Argus[supreg] II Retinal Prosthesis System
f. Zilver[supreg] PTX[supreg] Drug Eluting Stent
4. FY 2015 Applications for New Technology Add-On Payments
a. Dalbavancin (Durata Therapeutics, Inc.)
b. Heli-FXTM EndoAnchor System (Aptus Endosystems,
Inc.)
c. WATCHMAN[supreg] Left Atrial Appendage Closure Technology
d. CardioMEMSTM HF (Heart Failure) System
e. MitraClip[supreg] System
f. Responsive Neurostimulator (RNS[supreg]) System
III. Proposed Changes to the Hospital Wage Index for Acute Care
Hospitals
A. Background
B. Proposed Core-Based Statistical Areas for the Hospital Wage
Index
1. Background
2. Proposed Implementation of New Labor Market Area Delineations
a. Micropolitan Statistical Areas
b. Urban Counties That Would Become Rural Under the New OMB
Delineations
c. Rural Counties That Would Become Urban Under the New OMB
Delineations
d. Urban Counties That Would Move to a Different Urban CBSA
Under the New OMB Delineations
e. Proposed Transition Period
C. Worksheet S-3 Wage Data for the Proposed FY 2015 Wage Index
1. Included Categories of Costs
2. Excluded Categories of Costs
3. Use of Wage Index Data by Providers Other Than Acute Care
Hospitals Under the IPPS
D. Verification of Worksheet S-3 Wage Data
E. Method for Computing the Proposed FY 2015 Unadjusted Wage
Index
[[Page 27982]]
F. Proposed Occupational Mix Adjustment to the Proposed FY 2015
Wage Index
1. Development of Data for the Proposed FY 2015 Occupational Mix
Adjustment Based on the 2010 Occupational Mix Survey
2. New 2013 Occupational Mix Survey for the FY 2016 Wage Index
3. Calculation of the Proposed Occupational Mix Adjustment for
FY 2015
G. Analysis and Implementation of the Proposed Occupational Mix
Adjustment and the Proposed FY 2015 Occupational Mix Adjusted Wage
Index
1. Analysis of the Proposed Occupational Mix Adjustment and the
Proposed Occupational Mix Adjusted Wage Index
2. Proposed Application of the Rural, Imputed, and Frontier
Floors
a. Proposed Rural Floor
b. Proposed Imputed Floor and Alternative, Temporary Methodology
for Computing the Rural Floor for FY 2015
c. Proposed Frontier Floor
3. Proposed FY 2015 Wage Index Tables
H. Revisions to the Wage Index Based on Hospital Redesignations
and Reclassifications
1. General Policies and Effects of Reclassification and
Redesignation
2. FY 2015 MGCRB Reclassifications
a. FY 2015 Reclassification Requirements and Approvals
b. Effects of Implementation of New OMB Labor Market Area
Delineations on Reclassified Hospitals
c. Applications for Reclassifications for FY 2016
3. Hospitals Redesignated Under Section 1886(d)(8)(B) of the Act
a. Proposed New Lugar Areas for FY 2015
b. Hospitals Redesignated Under Section 1886(d)(8)(B) of the Act
Seeking Reclassification by the MGCRB
c. Rural Counties No Longer Meeting the Criteria To Be
Redesignated as Lugar
4. Waiving Lugar Redesignation for the Out-Migration Adjustment
5. Update of Application of Urban to Rural Reclassification
Criteria
I. Proposed FY 2015 Wage Index Adjustment Based on Commuting
Patterns of Hospital Employees
J. Process for Requests for Wage Index Data Corrections
K. Notice of Change to Wage Index Development Timetable
L. Labor-Related Share for the Proposed FY 2015 Wage Index
IV. Other Decisions and Proposed Changes to the IPPS for Operating
Costs and Graduate Medical Education (GME) Costs
A. Proposed Changes to MS-DRGs Subject to the Postacute Care
Transfer Policy (Sec. 412.4)
B. Proposed Changes in the Inpatient Hospital Updates for FY
2015 (Sec. Sec. 412.64(d) and 412.211(c))
1. Proposed FY 2015 Inpatient Hospital Update
2. Proposed FY 2015 Puerto Rico Hospital Update
C. Rural Referral Centers (RRCs): Proposed Annual Updates to
Case-Mix Index (CMI) and Discharge Criteria (Sec. 412.96)
1. Case-Mix Index (CMI)
2. Discharges
D. Proposed Payment Adjustment for Low-Volume Hospitals (Sec.
412.101)
1. Background
2. Provisions of the Protecting Access to Medicare Act of 2014
3. Low-Volume Hospital Definition and Payment Adjustment for FY
2015
E. Indirect Medical Education (IME) Payment Adjustment (Sec.
412.105)
1. IME Adjustment Factor for FY 2015
2. Proposed IME Medicare Part C Add-On Payments to Sole
Community Hospitals (SCHs) That Are Paid According to Their
Hospital-Specific Rates and Proposed Change in Methodology in
Determining Payment to SCHs
3. Other Proposed Policy Changes Affecting IME
F. Payment Adjustment for Medicare Disproportionate Share
Hospitals (DSHs) (Sec. 412.106)
1. Background
2. Impact on Medicare DSH Payment Adjustment of Proposed
Implementation of New OMB Labor Market Area Delineations
3. Payment Adjustment Methodology for Medicare Disproportionate
Share Hospitals (DSHs) Under Section 3133 of the Affordable Care Act
(Sec. 412.106)
a. General Discussion
b. Eligibility for Empirically Justified Medicare DSH Payments
and Uncompensated Care Payments
c. Empirically Justified Medicare DSH Payments
d. Uncompensated Care Payments
e. Limitations on Review
G. Medicare-Dependent, Small Rural Hospital (MDH) Program (Sec.
412.108)
1. Background
2. Provisions of Public Law 113-93 for FY 2015
3. Expiration of the MDH Program
H. Hospital Readmissions Reduction Program: Proposed Changes for
FY 2015 Through FY 2017 (Sec. Sec. 412.150 Through 412.154)
1. Statutory Basis for the Hospital Readmissions Reduction
Program
2. Regulatory Background
3. Overview of Proposals and Policies for the FY 2015 Hospital
Readmissions Reduction Program
4. Proposed Refinement of the Readmissions Measures and Related
Methodology for FY 2015 and Subsequent Years Payment Determinations
a. Proposed Refinement of Planned Readmission Algorithm for
Acute Myocardial Infarction (AMI), Heart Failure (HF), Pneumonia
(PN), Chronic Obstructive Pulmonary Disease (COPD), and Total Hip
Arthroplasty and Total Knee Arthroplasty (THA/TKA) 30-Day
Readmission Measures
b. Proposed Refinement of Total Hip Arthroplasty and Total Knee
Arthroplasty (THA/TKA) 30-Day Readmission Measure Cohort
c. Anticipated Effect of Proposed Refinements on Measures
5. No Proposed Expansion of the Applicable Conditions for FY
2016
6. Proposed Expansion of the Applicable Conditions for FY 2017
To Include Patients Readmitted Following Coronary Artery Bypass
Graft (CABG) Surgery Measure
a. Background
b. Overview of the Proposed CABG Readmissions Measure: Hospital-
Level, 30-Day, All-Cause, Unplanned Readmission Following Coronary
Artery Bypass Graft (CABG) Surgery
c. Proposed Methodology for the CABG Measure: Hospital-Level,
30-Day, All-Cause, Unplanned Readmission Following Coronary Artery
Bypass Graft (CABG) Surgery
7. Maintenance of Technical Specifications for Quality Measures
8. Waiver From the Hospital Readmissions Reduction Program for
Hospitals Formerly Paid Under Section 1814(b)(3) of the Act (Sec.
412.152 and Sec. 412.154(d))
9. Floor Adjustment Factor for FY 2015 (Sec. 412.154(c)(2))
10. Applicable Period for FY 2015
11. Proposed Inclusion of THA/TKA and COPD Readmissions Measures
To Calculate Aggregate Payments for Excess Readmissions Beginning in
FY 2015
12. Hospital Readmissions Reduction Program Extraordinary
Circumstances Exceptions
I. Hospital Value-Based Purchasing (VBP) Program
1. Statutory Background
2. Overview of Previous Hospital VBP Program Rulemaking
3. FY 2015 Payment Details
a. Payment Adjustments
b. Base Operating DRG Payment Amount Definition for Medicare-
Dependent Small Rural Hospitals (MDHs)
4. Measures for the FY 2017 Hospital VBP Program
a. Measures Previously Adopted
b. Proposed Changes Affecting Topped-Out Measures
c. Proposed New Measures for the FY 2017 Hospital VBP Program
d. Proposed Adoption of the Current CLABSI Measure (NQF
0139) for the FY 2017 Hospital VBP Program
e. Summary of Previously Adopted and Proposed New Measures for
the FY 2017 Hospital VBP Program
5. Proposed Additional Measures for the FY 2019 Hospital VBP
Program
a. Hospital-Level Risk-Standardized Complication Rate (RSCR)
Following Elective Primary Total Hip Arthroplasty (THA) and Total
Knee Arthroplasty (TKA)
b. PSI-90 Measure
6. Possible Measure Topics for Future Program Years
a. Care Transition Measure (CTM-3) Items for HCAHPS Survey
b. Possible Future Efficiency and Cost Reduction Domain Measure
Topics
7. Previously Adopted and Proposed Performance Periods and
Baseline Periods for the FY 2017 Hospital VBP Program
a. Background
b. Previously Adopted Baseline and Performance Periods for the
FY 2017 Hospital VBP Program
[[Page 27983]]
c. Proposed Clinical Care--Process Domain Performance Period and
Baseline Period for the FY 2017 Hospital VBP Program
d. Proposed Patient and Caregiver-Centered Experience of Care/
Care Coordination Domain Performance Period and Baseline Period for
the FY 2017 Hospital VBP Program
e. Proposed Safety Domain Performance Period and Baseline Period
for NHSN Measures for the FY 2017 Hospital VBP Program
f. Proposed Efficiency and Cost Reduction Domain Performance
Period and Baseline Period for the FY 2017 Hospital VBP Program
g. Summary of Previously Adopted and Proposed Performance
Periods and Baseline Periods for the FY 2017 Hospital VBP Program
8. Previously Adopted and Proposed Performance Periods and
Baseline Periods for Certain Measures for the FY 2019 Hospital VBP
Program
a. Previously Adopted and Proposed Performance Period and
Baseline Period for the FY 2019 Hospital VBP Program for Clinical
Care--Outcomes Domain Measures
b. Proposed Performance Period and Baseline Period for the PSI-
90 Safety Domain Measure for the FY 2019 Hospital VBP Program
c. Summary of Previously Adopted and Proposed Performance
Periods and Baseline Periods for Certain Measures for the FY 2019
Hospital VBP Program
9. Proposed Performance Period and Baseline Period for the
Clinical Care--Outcomes Domain for the FY 2020 Hospital VBP Program
10. Proposed Performance Standards for the Hospital VBP Program
a. Background
b. Performance Standards for the FY 2016 Hospital VBP Program
c. Previously Adopted Performance Standards for the FY 2017, FY
2018, and FY 2019 Hospital VBP Programs
d. Proposed Additional Performance Standards for the FY 2017
Hospital VBP Program
e. Proposed Performance Standards for the FY 2019 and FY 2020
Hospital VBP Programs
f. Proposed Technical Updates Policy for Performance Standards
g. Request for Public Comments on ICD-10-CM/PCS Transition
11. Proposed FY 2017 Hospital VBP Program Scoring Methodology
a. Proposed General Hospital VBP Program Scoring Methodology
b. Proposed Domain Weighting for the FY 2017 Hospital VBP
Program for Hospitals That Receive a Score on All Domains
c. Proposed Domain Weighting for the FY 2017 Hospital VBP
Program for Hospitals Receiving Scores on Fewer than Four Domains
12. Proposed Minimum Numbers of Cases and Measures for the FY
2016 and FY 2017 Hospital VBP Program's Quality Domains
a. Previously Adopted Minimum Numbers of Cases and FY 2016
Proposed Minimum Numbers of Cases
b. Proposed Minimum Number of Measures--Safety Domain
c. Proposed Minimum Number of Measures--Clinical Care Domain
d. Proposed Minimum Number of Measures--Efficiency and Cost
Reduction Domain
e. Proposed Minimum Number of Measures--Patient and Caregiver
Centered Experience of Care/Care Coordination (PEC/CC) Domain
13. Applicability of the Hospital VBP Program to Maryland
Hospitals
14. Disaster/Extraordinary Circumstance Exception Under the
Hospital VBP Program
J. Hospital-Acquired Condition (HAC) Reduction Program
1. Background
2. Statutory Basis for the HAC Reduction Program
3. Implementation of the HAC Reduction Program for FY 2015
a. Overview
b. Payment Adjustment Under the HAC Reduction Program, Including
Exemptions
c. Measure Selection and Conditions, Including Risk Adjustment
Scoring Methodology
d. Criteria for Applicable Hospitals and Performance Scoring
Policy
e. Reporting Hospital-Specific Information, Including the Review
and Correction of Information
f. Limitation on Administrative and Judicial Review
4. Proposed Maintenance of Technical Specifications for Quality
Measures
5. Extraordinary Circumstances Exceptions/Exemptions
6. Implementation of the HAC Reduction Program for FY 2016
a. Measure Selection and Conditions, Including a Risk-Adjustment
Scoring Methodology
b. Criteria for Applicable Hospitals and Performance Scoring
7. Future Consideration for the Use of Electronically Specified
Measures
K. Payments for Indirect and Direct Graduate Medical Education
(GME) Costs (Sec. Sec. 412.105 and 413.75 Through 413.83)
1. Background
2. Proposed Changes in the Effective Date of the FTE Resident
Cap, 3-Year Rolling Average, and Interim- and Resident-to-Bed (IRB)
Ratio Cap for New Programs in Teaching Hospitals
3. Proposed Changes to IME and Direct GME Policies as a Result
of New OMB Labor Market Area Delineations
a. New Program FTE Cap Adjustment for Rural Hospitals
Redesignated as Urban
b. Participation of Redesignated Hospitals in Rural Training
Track
4. Proposed Clarification of Policies on Counting Resident Time
in Nonprovider Settings Under Section 5504 of the Affordable Care
Act
5. Proposed Changes to the Review and Award Process for Resident
Slots Under Section 5506 of the Affordable Care Act
a. Effective Date of Slots Awarded Under Section 5506 of the
Affordable Care Act
b. Proposal To Remove Seamless Requirement
c. Proposed Revisions to Ranking Criteria One, Seven, and Eight
for Applications Under Section 5506
d. Clarification to Ranking Criterion Two Regarding Emergency
Medicare GME Affiliation Agreements
6. Proposed Regulatory Clarification Applicable To Direct GME
Payments to Federally Qualified Health Centers (FQHCs) and Rural
Health Clinics (RHCs) for Training Residents in Approved Programs
L. Rural Community Hospital Demonstration Program
1. Background
2. Proposed FY 2015 Budget Neutrality Offset Amount
M. Requirement for Transparency of Hospital Charges Under the
Affordable Care Act
1. Overview
2. Transparency Requirement Under the Affordable Care Act
N. Medicare Payment for Short Inpatient Hospital Stays
O. Suggested Exceptions to the 2-Midnight Benchmark
V. Proposed Changes to the IPPS for Capital-Related Costs
A. Overview
B. Additional Provisions
1. Exception Payments
2. New Hospitals
3. Hospitals Located in Puerto Rico
C. Proposed Annual Update for FY 2015
VI. Proposed Changes for Hospitals Excluded From the IPPS
A. Proposed Rate-of-Increase in Payments to Excluded Hospitals
for FY 2015
B. Proposed Updates to the Reasonable Compensation Equivalent
(RCE) Limits on Compensation for Physician Services Provided in
Providers (Sec. 415.70)
1. Background
2. Overview of the Current RCE Limits
a. Application of the RCE Limits
b. Exceptions to the RCE Limits
c. Methodology for Establishing the RCE Limits
3. Proposed Changes to the RCE Limits
C. Critical Access Hospitals (CAHs
1. Background
2. Proposed Changes Related to Reclassifications as Rural for
CAHs
3. Proposed Revision of the Requirements for Physician
Certification of CAH Inpatient Services
VII. Proposed Changes to the Long-Term Care Hospital Prospective
Payment System (LTCH PPS) for FY 2015
A. Background of the LTCH PPS
1. Legislative and Regulatory Authority
2. Criteria for Classification as an LTCH
a. Classification as an LTCH
b. Hospitals Excluded From the LTCH PPS
3. Limitation on Charges to Beneficiaries
4. Administrative Simplification Compliance Act (ASCA) and
Health Insurance Portability and Accountability Act (HIPAA)
Compliance
B. Proposed Medicare Severity Long-Term Care Diagnosis-Related
Group (MS-LTC-DRG) Classifications and Relative Weights for FY 2015
[[Page 27984]]
1. Background
2. Patient Classifications Into MS-LTC-DRGs
a. Background
b. Proposed Changes to the MS-LTC-DRGs for FY 2015
3. Development of the Proposed FY 2015 MS-LTC-DRG Relative
Weights
a. General Overview of the Development of the MS-LTC-DRG
Relative Weights
b. Proposed Development of the MS-LTC-DRG Relative Weights for
FY 2015
c. Data
d. Hospital-Specific Relative Value (HSRV) Methodology
e. Treatment of Severity Levels in Developing the Proposed MS-
LTC-DRG Relative Weights
f. Proposed Low-Volume MS-LTC-DRGs
g. Steps for Determining the Proposed FY 2015 MS-LTC-DRG
Relative Weights
C. Proposed LTCH PPS Payment Rates for FY 2015
1. Overview of Development of the LTCH Payment Rates
2. Proposed FY 2015 LTCH PPS Annual Market Basket Update
a. Overview
b. Proposed Revision of Certain Market Basket Updates as
Required by the Affordable Care Act
c. Proposed Adjustment to the Annual Update to the LTCH PPS
Standard Federal Rate Under the Long-Term Care Hospital Quality
Reporting (LTCHQR) Program
1. Background
2. Proposed Reduction to the Annual Update to the LTCH PPS
Standard Federal Rate Under the LTCHQR Program
d. Proposed Market Basket Under the LTCH PPS for FY 2015
e. Proposed Annual Market Basket Update for LTCHs for FY 2015
3. Proposed Adjustment for the Final Year of the Phase-In of the
One-Time Prospective Adjustment to the Standard Federal Rate Under
Sec. 412.523(d)(3)
D. Proposed Revision of LTCH PPS Geographic Classifications
1. Background
2. Proposed Use of New OMB Labor Market Area Delineations (``New
OMB Delineations'')
a. Micropolitan Statistical Areas
b. Urban Counties That Became Rural Under the New OMB Labor
Market Area Delineations
c. Rural Counties That Became Urban Under the New OMB Labor
Market Area Delineations
d. Urban Counties Moved to a Different Urban CBSA Under the New
OMB Labor Market Area Delineations
e. Proposed Transition Period
E. Reinstatement and Extension of Certain Payment Rules for LTCH
Services--The 25-Percent Threshold Payment Adjustment
1. Background
2. Proposed Implementation of Section 1206(b)(1) of Public Law
113-67
F. Proposed Changes to the Fixed-Day Thresholds Under the
Greater Than 3-Day Interruption of Stay Policy Under the LTCH PPS
1. Background
2. Thresholds Used in Recent Statutory Programs
3. Proposed Changes to the Greater Than 3-Day Interruption of
Stay Policy
G. Moratoria on the Establishment of LTCHs and LTCH Satellite
Facilities and on the Increase in the Number of Beds in Existing
LTCHs or LTCH Satellite Facilities
H. Evaluation and Proposed Treatment of LTCHs Classified Under
Section 1886(d)(1)(B)(iv)(II) of the Act
I. Description of Statutory Framework for Patient-Level
Criteria-Based Payment Adjustment Under the LTCH PPS Under Public
Law 113-67
1. Overview
2. Provisions of Section 1206(a) of Public Law 113-67
3. Additional LTCH PPS Issues
J. Proposed Technical Change
VIII. Appropriate Claims in Provider Cost Reports; Administrative
Appeals by Providers and Judicial Review
A. Background
1. Payment and Cost Reporting Requirements
2. Administrative Appeals by Providers and Judicial Review
3. Appropriate Claims in Provider Cost Reports
B. Proposed Changes Regarding the Claims Required in Provider
Cost Reports and for Provider Administrative Appeals
1. Proposed Addition to the Cost Reporting Regulations of the
Substantive Reimbursement Requirement of an Appropriate Cost Report
Claim
2. Proposed Revisions to the Provider Reimbursement Appeal
Regulations
C. Proposed Conforming Changes to the Board Appeal Regulations
and Corresponding Revisions to the Contractor Hearing Regulations
1. Technical Corrections and Conforming Changes to Sec. Sec.
405.1801 and 405.1803
2. Technical Corrections and Conforming Changes to Sec. Sec.
405.1811, 405.1813, and 405.1814
3. Proposed New Sec. 405.1832
4. Proposed Revisions to Sec. 405.1834
5. Technical Corrections and Conforming Changes to Sec. Sec.
405.1836, 405.1837, and 405.1839
6. Technical Corrections to 42 CFR Part 405, Subpart R and All
Subparts of 42 CFR Part 413
IX. Quality Data Reporting Requirements for Specific Providers and
Suppliers
A. Hospital Inpatient Quality Reporting (IQR) Program
1. Background
a. History of the Hospital IQR Program
b. Maintenance of Technical Specifications for Quality Measures
c. Public Display of Quality Measures
2. Removal and Suspension of Hospital IQR Program Measures
a. Considerations in Removing Quality Measures From the Hospital
IQR Program
b. Proposed Removal of Hospital IQR Program Measures for the FY
2017 Payment Determination and Subsequent Years
3. Process for Retaining Previously Adopted Hospital IQR Program
Measures for Subsequent Payment Determinations
4. Additional Considerations in Expanding and Updating Quality
Measures Under the Hospital IQR Program
5. Previously Adopted Hospital IQR Program Measures for the FY
2016 Payment Determination and Subsequent Years
6. Proposed Refinements to Existing Measures in the Hospital IQR
Program
a. Proposed Refinement of Planned Readmission Algorithm for 30-
Day Readmission Measures
b. Proposed Refinement of Total Hip Arthroplasty and Total Knee
Arthroplasty (THA/TKA) 30-Day Complication and Readmission Measures
c. Anticipated Effect of Proposed Refinements to Existing
Measures
7. Proposed Additional Hospital IQR Program Measures for the FY
2017 Payment Determination and Subsequent Years
a. Proposed Hospital 30-Day, All-Cause, Unplanned, Risk-
Standardized Readmission Rate (RSRR) Following Coronary Artery
Bypass Graft (CABG) Surgery
b. Proposed Hospital 30-Day, All-Cause, Risk-Standardized
Mortality Rate (RSMR) Following Coronary Artery Bypass Graft (CABG)
Surgery
c. Proposed Hospital-level, Risk-Standardized 30-Day Episode-of-
Care Payment Measure for Pneumonia
d. Proposed Hospital-Level, Risk-Standardized 30-Day Episode-of-
Care Payment Measure for Heart Failure
e. Proposed Severe Sepsis and Septic Shock: Management Bundle
Measure (NQF 0500)
f. Electronic Health Record-Based Voluntary Measures
g. Proposed Readoption of Measures as Voluntarily Reported
Electronic Clinical Quality Measures
h. Electronic Clinical Quality Measures
8. Possible New Quality Measures and Measure Topics for Future
Years
a. Mandatory Electronic Clinical Quality Measure Reporting for
FY 2018 Payment Determination
b. Possible Future Electronic Clinical Quality Measures
9. Form, Manner, and Timing of Quality Data Submission
a. Background
b. Procedural Requirements for the FY 2017 Payment Determination
and Subsequent Years
c. Data Submission Requirements for Chart-Abstracted Measures
d. Alignment of the EHR Incentive Program Reporting and
Submission Timelines for Clinical Quality Measures with Hospital IQR
Program Reporting and Submission Timelines
e. Sampling and Case Thresholds for the FY 2017 Payment
Determination and Subsequent Years
f. HCAHPS Requirements for the FY 2017 Payment Determination and
Subsequent Years
g. Data Submission Requirements for Structural Measures for the
FY 2017
[[Page 27985]]
Payment Determination and Subsequent Years
h. Data Submission and Reporting Requirements for Healthcare-
Associated Infection (HAI) Measures Reported via NHSN
10. Submission and Access of HAI Measures Data Through the CDC's
NHSN Web site
11. Proposed Modifications to the Existing Processes for
Validation of Chart-abstracted Hospital IQR Program Data
a. Eligibility Criteria for Hospitals Selected for Validation
b. Number of Charts to be Submitted per Hospital for Validation
c. Combining Scores for HAI and Clinical Process of Care Topic
Areas
d. Processes To Submit Patient Medical Records for Chart-
abstracted Measures
e. Plans To Validate Electronic Clinical Quality Measure Data
12. Data Accuracy and Completeness Acknowledgement Requirements
for the FY 2017 Payment Determination and Subsequent Years
13. Public Display Requirements for the FY 2017 Payment
Determination and Subsequent Years
14. Reconsideration and Appeal Procedures for the FY 2017
Payment Determination and Subsequent Years
15. Hospital IQR Program Extraordinary Circumstances Extensions
or Exemptions
B. PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program
1. Statutory Authority
2. Covered Entities
3. Previously Finalized PCHQR Program Quality Measures
4. Proposed Update to the Clinical Process/Oncology Care
Measures Beginning With the 2016 Program
5. Proposed New Quality Measures Beginning With the FY 2017
Program
a. Considerations in the Selection of Quality Measures
b. Proposed New Quality Measure Beginning With the FY 2017
Program
6. Possible New Quality Measure Topics for Future Years
7. Maintenance of Technical Specifications for Quality Measures
8. Public Display Requirements Beginning With the FY 2014
Program
9. Form, Manner, and Timing of Data Submission Beginning With
the FY 2017 Program
a. Background
b. Proposed Reporting Requirements for the Proposed New Measure:
External Beam Radiotherapy for Bone Metastases (NQF 1822)
Beginning With the FY 2017 Program
c. Proposed Reporting Options for the Clinical Process/Cancer
Specific Treatment Measures Beginning With the FY 2015 Program and
the SCIP and Clinical Process/Oncology Care Measures Beginning With
the FY 2016 Program
d. Proposed New Sampling Methodology for the Clinical Process/
Oncology Care Measures Beginning With the FY 2016 Program
10. Exceptions From Program Requirements
C. Long-Term Care Hospital Quality Reporting (LTCHQR) Program
1. Background
2. General Considerations Used for Selection of Quality Measures
for the LTCHQR Program
3. Policy for Retention of LTCHQR Program Measures Adopted for
Previous Payment Determinations
4. Policy for Adopting Changes to LTCHQR Program Measures
5. Previously Adopted Quality Measures
a. Previously Adopted Quality Measures for the FY 2015 and FY
2016 Payment Determinations and Subsequent Years
b. Previously Adopted Quality Measures for the FY 2017 and FY
2018 Payment Determinations and Subsequent Years
6. Proposed Revision to Data Collection Timelines and Submission
Deadlines for Previously Adopted Quality Measures
a. Proposed Revisions to Data Collection Timelines and
Submission Deadlines for Percent of Residents or Patients Who Were
Assessed and Appropriately Given the Seasonal Influenza Vaccine
(Short Stay) (NQF 0680)
b. Proposed Revisions to Data Collection Timelines and
Submission Deadlines for the Application of Percent of Residents
Experiencing One or More Falls With Major Injury (Long Stay) (NQF
0674)
7. Proposed New LTCHQR Program Quality Measures for the FY 2018
Payment Determination and Subsequent Years
a. Proposed New LTCHQR Program Functional Status Quality
Measures for the FY 2018 Payment Determination and Subsequent Years
b. Proposed Quality Measure: National Healthcare Safety Network
(NHSN) Ventilator-Associated Event (VAE) Outcome Measure
8. LTCHQR Program Quality Measures and Concepts Under
Consideration for Future Years
9. Form, Manner, and Timing of Quality Data Submission for the
FY 2016 Payment Determinations and Subsequent Years
a. Background
b. Finalized Timeline for Data Submission Under the LTCHQR
Program for the FY 2016 and FY 2017 Payment Determinations (Except
NQF 0680 and NQF 0431)
c. Proposed Revision to the Previously Adopted Data Collection
Timelines and Submission Deadlines for Percent of Residents or
Patients Who Were Assessed and Appropriately Given the Seasonal
Influenza Vaccine (Short-Stay) (NQF -680) for the FY 2016
Payment Determination and Subsequent Years
d. Proposed Data Submission Mechanisms for the FY 2018 Payment
Determination and Subsequent Years for Proposed New LTCHQR Program
Quality Measures and for Proposed Revision to Previously Adopted
Quality Measure
e. Proposed Data Collection Timelines and Submission Deadlines
Under the LTCHQR Program for the FY 2018 Payment Determination
f. Proposed Data Collection Timelines and Submission Deadlines
for the Application of Percent of Residents Experiencing One or More
Falls With Major Injury (Long Stay) (NQF 0674) Measure for
the FY 2018 Payment Determination and Subsequent Years
g. Proposed Data Collection Timelines and Submission Deadlines
Under the LTCHQR Program for the FY 2019 Payment Determination
10. Proposed LTCHQR Program Data Completion Threshold for the FY
2016 Payment Adjustment and Subsequent Years
a. Overview
b. Proposed LTCHQR Program Data Completion Threshold for the
Required LTCH CARE Data Set (LCDS) Data Items
c. LTCHQR Program Data Completion Threshold for Measures
Submitted Using the Centers for Disease Control and Prevention (CDC)
National Healthcare Safety Network (NHSN)
d. Application of the 2 Percentage Point Reduction for LTCHs
That Fail To Meet the Proposed Data Completion Thresholds
11. Proposed Data Validation Process for the FY 2016 Payment
Determination and Subsequent Years
a. Proposed Data Validation Process
b. Application of the 2 Percentage Point Reduction for LTCHs
That Fail To Meet the Proposed Data Accuracy Threshold
12. Public Display of Quality Measure Data for the LTCHQR
Program
13. Proposed LTCHQR Program Submission Exception and Extension
Requirements for the FY 2017 Payment Determination and Subsequent
Years
14. Proposed LTCHQR Program Reconsideration and Appeals
Procedures for the FY 2016 Payment Determination and Subsequent
Years
a. Previously Finalized LTCHQR Program Reconsideration and
Appeals Procedures for the FY 2014 and FY 2015 Payment
Determinations
b. Proposed LTCHQR Program Reconsideration and Appeals
Procedures for the FY 2016 Payment Determination and Subsequent
Years
15. Electronic Health Records (EHR) and Health Information
Exchange (HIE)
D. Electronic Health Record (EHR) Incentive Program and
Meaningful Use (MU)
1. Background
2. Alignment of the Medicare EHR Incentive Program Reporting and
Submission Timelines for Clinical Quality Measures With Hospital IQR
Program Reporting and Submission Timelines
3. Quality Reporting Data Architecture Category III (QRDA-III)
Option in 2015
4. Electronically Specified Clinical Quality Measures (CQMs)
Reporting for 2015
5. Clarification Regarding Reporting Zero Denominators
6. Case Threshold Exemption Policy; Clarification for 2014 and
Proposed Change for 2015
X. Proposed Revision of Regulations Governing Use and Release of
Medicare Advantage Risk Adjustment Data
A. Background
[[Page 27986]]
B. Proposed Regulatory Changes
1. Proposed Expansion of Uses and Reasons for Disclosure of Risk
Adjustment Data
2. Proposed Conditions for CMS Release of Data
3. Proposed Technical Change
XI. Proposed Changes to Enforcement Provisions for Organ Transplant
Centers
A. Background
B. Basis for Proposals in This Proposed Rule
1. Proposed Expansion of Mitigating Factors Based on CMS'
Experience
2. Coordination With Efforts of the Organ Procurement and
Transplantation Network (OPTN) and Health Resources and Services
Administration
C. Provisions of the Proposed Changes
1. Proposed Expansion of Mitigating Factors List
2. Content and Timeframe for Mitigating Factors Requests
3. System Improvement Agreements (SIAs)
a. Purpose and Intent of an SIA
b. Description and Contents of an SIA
c. Effective Period for an SIA
XII. MedPAC Recommendations
XIII. Other Required Information
A. Requests for Data From the Public
B. Collection of Information Requirements
1. Statutory Requirement for Solicitation of Comments
2. ICRs for Add-On Payments for New Services and Technologies
3. ICRs for the Occupational Mix Adjustment to the Proposed FY
2015 Wage Index (Hospital Wage Index Occupational Mix Survey)
4. Hospital Applications for Geographic Reclassifications by the
MGCRB
5. ICRs for Application for GME Resident Slots
6. ICRs for the Hospital Inpatient Quality Reporting (IQR)
Program
7. ICRs for PPS-Exempt Cancer Hospital Quality Reporting (PCHQR)
Program
8. ICRs for Hospital Value-Based Purchasing (VBP) Program
9. ICRs for the Long-Term Care Hospital Quality Reporting
(LTCHQR) Program
10. ICR Regarding Electronic Health Record (EHR) Incentive
Program and Meaningful Use (MU)
11. ICR Regarding Proposed Revision of Regulations Governing Use
and Release of Medicare Advantage (MA) Risk Adjustment Data (Sec.
422.310(f))
Regulation Text
Addendum--Proposed Schedule of Standardized Amounts, Update Factors,
and Rate-of-Increase Percentages Effective With Cost Reporting
Periods Beginning on or After October 1, 2014 and Payment Rates for
LTCHs Effective With Discharges Occurring on or After October 1,
2014
I. Summary and Background
II. Proposed Changes to the Prospective Payment Rates for Hospital
Inpatient Operating Costs for Acute Care Hospitals for FY 2015
A. Calculation of the Adjusted Standardized Amount
B. Proposed Adjustments for Area Wage Levels and Cost-of-Living
C. Calculation of the Prospective Payment Rates
III. Proposed Changes to Payment Rates for Acute Care Hospital
Inpatient Capital-Related Costs for FY 2015
A. Determination of Federal Hospital Inpatient Capital-Related
Prospective Payment Rate Update
B. Calculation of the Proposed Inpatient Capital-Related
Prospective Payments for FY 2015
C. Capital Input Price Index
IV. Proposed Changes to Payment Rates for Excluded Hospitals: Rate-
of-Increase Percentages for FY 2015
V. Proposed Updates to the Payment Rates for the LTCH PPS for FY
2015
A. Proposed LTCH PPS Standard Federal Rate for FY 2015
1. Background
2. Development of the Proposed FY 2015 LTCH PPS Standard Federal
Rate
B. Proposed Adjustment for Area Wage Levels Under the LTCH PPS
for FY 2015
1. Background
2. Proposed Geographic Classifications Based on the New OMB
Delineations
3. Proposed LTCH PPS Labor-Related Share
4. Proposed LTCH PPS Wage Index for FY 2015
5. Proposed Budget Neutrality Adjustment for Proposed Changes to
the Area Wage Level Adjustment
C. Proposed LTCH PPS Cost-of-Living Adjustment (COLA) for LTCHs
Located in Alaska and Hawaii
D. Proposed Adjustment for LTCH PPS High-Cost Outlier (HCO)
Cases
1. Background
2. Determining LTCH CCRs Under the LTCH PPS
3. Establishment of the Proposed LTCH PPS Fixed-Loss Amount for
FY 2015
4. Application of the Outlier Policy to SSO Cases
E. Proposed Update to the IPPS Comparable/Equivalent Amounts To
Reflect the Statutory Changes to the IPPS DSH Payment Adjustment
Methodology
F. Computing the Proposed Adjusted LTCH PPS Federal Prospective
Payments for FY 2015
VI. Tables Referenced in This Proposed Rule and Available Through
the Internet on the CMS Web site
Appendix A--Economic Analyses
I. Regulatory Impact Analysis
A. Introduction
B. Need
C. Objectives of the IPPS
D. Limitations of Our Analysis
E. Hospitals Included in and Excluded From the IPPS
F. Effects on Hospitals and Hospital Units Excluded From the
IPPS
G. Quantitative Effects of the Proposed Policy Changes Under the
IPPS for Operating Costs
1. Basis and Methodology of Estimates
2. Analysis of Table I
3. Impact Analysis of Table II
H. Effects of Other Proposed Policy Changes
1. Effects of Proposed Policy on MS-DRGs for Preventable HACs,
Including Infections
2. Effects of Proposed Policy Relating to New Medical Service
and Technology Add-On Payments
3. Effects of Proposed Changes to List of MS-DRGs Subject to
Postacute Care Transfer and DRG Special Pay Policy
4. Effects of Proposed Payment Adjustment for Low-Volume
Hospitals for FY 2015
5. Effects of Proposal Related to IME Medicare Part C Add-On
Payments to SCHs Paid According to Their Hospital-Specific Rates
6. Effects of the Extension of the MDH Program for the First
Half of FY 2015
7. Effects of Proposed Changes Under the FY 2015 Hospital Value-
Based Purchasing (VBP) Program
8. Effects of the Proposed Changes to the HAC Reduction Program
for FY 2015
9. Effects of Proposed Policy Changes Relating to Payments for
Direct GME and IME
10. Effects of Implementation of Rural Community Hospital
Demonstration Program
11. Effects of Proposed Changes Related to Reclassifications as
Rural for CAHs
12. Effects of Proposed Revision of the Requirements for
Physician Certification of CAH Inpatient Services
13. Effects of Proposed Changes Relating to Administrative
Appeals by Providers and Judicial Review for Appropriate Claims in
Provider Cost Reports
I. Effects of Proposed Changes to Updates to the Reasonable
Compensation Equivalent (RCE) Limits for Physician Services Provided
to Providers
J. Effects of Proposed Changes in the Capital IPPS
1. General Considerations
2. Results
K. Effects of Proposed Payment Rate Changes and Policy Changes
Under the LTCH PPS
1. Introduction and General Considerations
2. Impact on Rural Hospitals
3. Anticipated Effects of Proposed LTCH PPS Payment Rate Changes
and Policy Changes
4. Effect on the Medicare Program
5. Effect on Medicare Beneficiaries
L. Effects of Proposed Requirements for Hospital Inpatient
Quality Reporting (IQR) Program
M. Effects of Proposed Requirements for the PPS-Exempt Cancer
Hospital Quality Reporting (PCHQR) Program for FY 2015
N. Effects of Proposed Requirements for the LTCH Quality
Reporting (LTCHQR) Program for FY 2015 Through FY 2019
O. Effects of Proposals Regarding Electronic Health Record (EHR)
Incentive Program and Hospital IQR Program
P. Effects of Proposed Revision of Regulations Governing Use and
Release of Medicare Advantage Risk Adjustment Data
Q. Effects of Proposed Changes to Enforcement Provisions for
Organ Transplant Centers
II. Alternatives Considered
III. Overall Conclusion
A. Acute Care Hospitals
B. LTCHs
[[Page 27987]]
IV. Accounting Statements and Tables
A. Acute Care Hospitals
B. LTCHs
V. Regulatory Flexibility Act (RFA) Analysis
VI. Impact on Small Rural Hospitals
VII. Unfunded Mandate Reform Act (UMRA) Analysis
VIII. Executive Order 12866
Appendix B: Recommendation of Update Factors for Operating Cost
Rates of Payment for Inpatient Hospital Services
I. Background
II. Inpatient Hospital Update for FY 2015
A. Proposed FY 2015 Inpatient Hospital Update
B. Proposed Update for SCHs for FY 2015
C. Proposed FY 2015 Puerto Rico Hospital Update
D. Proposed Update for Hospitals Excluded From the IPPS for FY
2015
E. Proposed Update for LTCHs for FY 2015
III. Secretary's Recommendation
IV. MedPAC Recommendation for Assessing Payment Adequacy and
Updating Payments in Traditional Medicare
I. Executive Summary and Background
A. Executive Summary
1. Purpose and Legal Authority
This proposed rule would make payment and policy changes under the
Medicare inpatient prospective payment systems (IPPS) for operating and
capital-related costs of acute care hospitals as well as for certain
hospitals and hospital units excluded from the IPPS. In addition, it
would make payment and policy changes for inpatient hospital services
provided by long-term care hospitals (LTCHs) under the long-term care
hospital prospective payment system (LTCH PPS). It also would make
policy changes to programs associated with Medicare IPPS hospitals,
IPPS-excluded hospitals, and LTCHs.
Under various statutory authorities, we are proposing to make
changes to the Medicare IPPS, to the LTCH PPS, and to other related
payment methodologies and programs for FY 2015 and subsequent fiscal
years. These statutory authorities include, but are not limited to, the
following:
Section 1886(d) of the Social Security Act (the Act),
which sets forth a system of payment for the operating costs of acute
care hospital inpatient stays under Medicare Part A (Hospital
Insurance) based on prospectively set rates. Section 1886(g) of the Act
requires that, instead of paying for capital-related costs of inpatient
hospital services on a reasonable cost basis, the Secretary use a
prospective payment system (PPS).
Section 1886(d)(1)(B) of the Act, which specifies that
certain hospitals and hospital units are excluded from the IPPS. These
hospitals and units are: Rehabilitation hospitals and units; LTCHs;
psychiatric hospitals and units; children's hospitals; cancer
hospitals; and short-term acute care hospitals located in the Virgin
Islands, Guam, the Northern Mariana Islands, and American Samoa.
Religious nonmedical health care institutions (RNHCIs) are also
excluded from the IPPS.
Sections 123(a) and (c) of Public Law 106-113 and section
307(b)(1) of Public Law 106-554 (as codified under section 1886(m)(1)
of the Act), which provide for the development and implementation of a
prospective payment system for payment for inpatient hospital services
of long-term care hospitals (LTCHs) described in section
1886(d)(1)(B)(iv) of the Act.
Sections 1814(l), 1820, and 1834(g) of the Act, which
specify that payments are made to critical access hospitals (CAHs)
(that is, rural hospitals or facilities that meet certain statutory
requirements) for inpatient and outpatient services and that these
payments are generally based on 101 percent of reasonable cost.
Section 1866(k) of the Act, as added by section 3005 of
the Affordable Care Act, which establishes a quality reporting program
for hospitals described in section 1886(d)(1)(B)(v) of the Act,
referred to as ``PPS-Exempt Cancer Hospitals.''
Section 1886(d)(4)(D) of the Act, which addresses certain
hospital-acquired conditions (HACs), including infections. Section
1886(d)(4)(D) of the Act specifies that, by October 1, 2007, the
Secretary was required to select, in consultation with the Centers for
Disease Control and Prevention (CDC), at least two conditions that: (a)
Are high cost, high volume, or both; (b) are assigned to a higher
paying MS-DRG when present as a secondary diagnosis (that is,
conditions under the MS-DRG system that are CCs or MCCs); and (c) could
reasonably have been prevented through the application of evidence-
based guidelines. Section 1886(d)(4)(D) of the Act also specifies that
the list of conditions may be revised, again in consultation with CDC,
from time to time as long as the list contains at least two conditions.
Section 1886(d)(4)(D)(iii) of the Act requires that hospitals,
effective with discharges occurring on or after October 1, 2007, submit
information on Medicare claims specifying whether diagnoses were
present on admission (POA). Section 1886(d)(4)(D)(i) of the Act
specifies that effective for discharges occurring on or after October
1, 2008, Medicare no longer assigns an inpatient hospital discharge to
a higher paying MS-DRG if a selected condition is not POA.
Section 1886(a)(4) of the Act, which specifies that costs
of approved educational activities are excluded from the operating
costs of inpatient hospital services. Hospitals with approved graduate
medical education (GME) programs are paid for the direct costs of GME
in accordance with section 1886(h) of the Act. A payment for indirect
medical education (IME) is made under section 1886(d)(5)(B) of the Act.
Section 1886(b)(3)(B)(viii) of the Act, which requires the
Secretary to reduce the applicable percentage increase in payments to a
subsection (d) hospital for a fiscal year if the hospital does not
submit data on measures in a form and manner, and at a time, specified
by the Secretary.
Section 1886(o) of the Act, which requires the Secretary
to establish a Hospital Value-Based Purchasing (VBP) Program under
which value-based incentive payments are made in a fiscal year to
hospitals meeting performance standards established for a performance
period for such fiscal year.
Section 1886(p) of the Act, as added by section 3008 of
the Affordable Care Act, which establishes an adjustment to hospital
payments for hospital-acquired conditions (HACs), or a Hospital-
Acquired Condition (HAC) Reduction Program, under which payments to
applicable hospitals are adjusted to provide an incentive to reduce
hospital-acquired conditions.
Section 1886(q) of the Act, as added by section 3025 of
the Affordable Care Act and amended by section 10309 of the Affordable
Care Act, which establishes the ``Hospital Readmissions Reduction
Program'' effective for discharges from an ``applicable hospital''
beginning on or after October 1, 2012, under which payments to those
hospitals under section 1886(d) of the Act will be reduced to account
for certain excess readmissions.
Section 1886(r) of the Act, as added by section 3133 of
the Affordable Care Act, which provides for a reduction to
disproportionate share payments under section 1886(d)(5)(F) of the Act
and for a new uncompensated care payment to eligible hospitals.
Specifically, section 1886(r) of the Act now requires that, for
``fiscal year 2014 and each subsequent fiscal year,'' ``subsection (d)
hospitals'' that would otherwise receive a ``disproportionate share
payment . . . made under subsection (d)(5)(F)'' will receive two
separate payments: (1) 25 percent of the amount they previously would
have received under subsection (d)(5)(F) for DSH (``the empirically
justified amount''), and (2) an additional payment for the DSH
hospital's proportion of uncompensated care, determined as the product
of three factors. These three factors are: (1) 75
[[Page 27988]]
percent of the payments that would otherwise be made under subsection
(d)(5)(F); (2) 1 minus the percent change in the percent of individuals
under the age of 65 who are uninsured (minus 0.1 percentage points for
FY 2014, and minus 0.2 percentage points for FY 2015 through FY 2017);
and (3) a hospital's uncompensated care amount relative to the
uncompensated care amount of all DSH hospitals expressed as a
percentage.
Section 1886(m)(6) of the Act, as added by section
1206(a)(1) of the Pathway for SGR Reform Act of 2013, which provided
for the establishment of patient criteria for payment under the LTCH
PPS for implementation beginning in FY 2016.
Section 1206(b)(1) of the Pathway for SGR Reform Act of
2013, which further amended section 114(c) of the MMSEA, as amended by
section 4302(a) of the ARRA and sections 3106(c) and 10312(a) of the
Affordable Care Act, by retroactively reestablishing and extending the
statutory moratorium on the full implementation of the 25-percent
threshold payment adjustment policy under the LTCH PPS so that the
policy will be in effect for 9 years (except for ``grandfathered''
hospital-within-hospitals (HwHs), which are permanently exempt from
this policy); and section 1206(b)(2) (as amended by section 112(b) of
the Protecting Access to Medicare Act of 2014 (Pub. L. 113-93)), which
together further amended section 114(d) of the MMSEA, as amended by
section 4302(a) of the ARRA and sections 3106(c) and 10312(a) of the
Affordable Care Act to establish a new moratoria (subject to certain
defined exceptions) on the development of new LTCHs and LTCH satellite
facilities and a new moratorium on increases in the number of beds in
existing LTCHs and LTCH satellite facilities beginning January 1, 2015
and ending on September 30, 2017; and section 1206(d), which instructs
the Secretary to evaluate payments to LTCHs classified under section
1886(b)(1)(C)(iv)(II) of the Act and to adjust payment rates in FY 2015
or FY 2016 under the LTCH PPS, as appropriate, based upon the
evaluation findings.
Section 1886(m)(5)(D)(iv) of the Act, as added by section
1206(c) of the Pathway for SGR Reform Act of 2013, which provides for
the establishment, no later than October 1, 2015, of a functional
status quality measure under the LTCHQR Program for change in mobility
among inpatients requiring ventilator support.
To conform regulations to the statutory requirements of the
Provider Reimbursement Review Board (Board) appeals based on untimely
determinations of the Medicare Administrative Contractor (MAC), in this
proposed rule, we are proposing to amend the regulations to eliminate
the provider dissatisfaction requirement as a condition for Board
jurisdiction over such appeals. We are proposing a similar amendment to
the regulations for appeals to MAC hearing officers, to maintain
consistency between the regulations for MAC and Board appeals. We also
are proposing to codify in the cost reporting regulations our existing
policy, implemented in section 115 of the Provider Reimbursement
Manual, requiring providers to include an appropriate claim for an item
in its cost report. In addition, we are proposing that providers'
failure to include an appropriate claim for an item in its cost report
will result in foreclosure of payment in the notice of program
reimbursement and in any decision or order issued by a reviewing entity
in an administrative appeal filed by the provider.
We are proposing to align the reporting and submission timelines
for clinical quality measures for the Medicare EHR Incentive Program
for eligible hospitals and critical access hospitals (CAHs) with the
reporting and submission timelines for the Hospital IQR Program. In
addition, we provide guidance and clarification of certain policies for
eligible hospitals and CAHs such as our policy for reporting zero
denominators on clinical quality measures and our policy for case
threshold exemptions.
In addition, this proposed rule contains several proposals that are
not directly related to these Medicare payment systems, such as
regulatory revisions to broaden the specified uses and reasons for
disclosure of risk adjustment data and to specify the conditions for
release of risk adjustment data to entities outside of CMS and changes
to the enforcement procedures for organ transplant centers. The
specific statutory authority for these other proposals is discussed in
the relevant sections below.
2. Summary of the Major Provisions
a. MS-DRG Documentation and Coding Adjustment
Section 631 of the American Taxpayer Relief Act (ATRA, Pub. L. 112-
240) amended section 7(b)(1)(B) of Public Law 110-90 to require the
Secretary to make a recoupment adjustment to the standardized amount of
Medicare payments to acute care hospitals to account for changes in MS-
DRG documentation and coding that do not reflect real changes in case-
mix, totaling $11 billion over a 4-year period of FYs 2014, 2015, 2016,
and 2017. This adjustment represents the amount of the increase in
aggregate payments as a result of not completing the prospective
adjustment authorized under section 7(b)(1)(A) of Public Law 110-90
until FY 2013. Prior to the ATRA, this amount could not have been
recovered under Public Law 110-90.
While our actuaries estimated that a -9.3 percent adjustment to the
standardized amount would be necessary if CMS were to fully recover the
$11 billion recoupment required by section 631 of the ATRA in FY 2014,
it is often our practice to delay or phase in rate adjustments over
more than one year, in order to moderate the effects on rates in any
one year. Therefore, consistent with the policies that we have adopted
in many similar cases, we made a -0.8 percent recoupment adjustment to
the standardized amount in FY 2014. We are proposing to make an
additional -0.8 percent recoupment adjustment to the standardized
amount in FY 2015.
b. Reduction of Hospital Payments for Excess Readmissions
We are proposing changes in policies to the Hospital Readmissions
Reduction Program, which is established under section 1886(q) of the
Act, as added by section 3025 of the Affordable Care Act. The Hospital
Readmissions Reduction Program requires a reduction to a hospital's
base operating DRG payment to account for excess readmissions of
selected applicable conditions. For FYs 2013 and 2014, these conditions
are acute myocardial infarction, heart failure, and pneumonia. For FY
2014, we established additional exclusions to the three existing
readmission measures (that is, the excess readmission ratio) to account
for additional planned readmissions. We also established additional
readmissions measures, Chronic Obstructive Pulmonary Disease (COPD),
and Total Hip Arthroplasty and Total Knee Arthroplasty (THA/TKA), to be
used in the Hospital Readmissions Reduction Program for FY 2015 and
future years. We are proposing to expand the readmissions measures for
FY 2017 and future years by adding a measure of patients readmitted
following coronary artery bypass graft (CABG) surgery. We also are
proposing to refine the readmission measures and related methodology
for FY 2015 and subsequent years payment determinations. In addition,
we are proposing that the readmissions payment adjustment factors for
FY 2015
[[Page 27989]]
can be no more than a 3-percent reduction in accordance with the
statute. We also are proposing to revise the calculation of aggregate
payments for excess readmissions to include THA/TKA and COPD
readmissions measures beginning in FY 2015.
c. Hospital Value-Based Purchasing (VBP) Program
Section 1886(o) of the Act requires the Secretary to establish a
Hospital Value-Based Purchasing (VBP) Program under which value-based
incentive payments are made in a fiscal year to hospitals meeting
performance standards established for a performance period for such
fiscal year. Both the performance standards and the performance period
for a fiscal year are to be established by the Secretary.
In this proposed rule, we are proposing to adopt quality measures
for the FY 2017, FY 2019, and FY 2020 Hospital VBP Program years and to
establish performance periods and performance standards for measures to
be adopted for those fiscal years. We also are proposing to adopt
additional policies related to performance standards and to revise the
domain weighting previously adopted for the FY 2017 Hospital VBP
Program.
d. Hospital-Acquired Condition (HAC) Reduction Program
In this proposed rule, we are proposing a change in the scoring
methodology with the addition of a previously finalized measure for the
FY 2016 payment adjustment under the HAC Reduction Program. Section
1886(p) of the Act, as added under section 3008(a) of the Affordable
Care Act, establishes an adjustment to hospital payments for HACs, or a
HAC Reduction program, under which payments to applicable hospitals are
adjusted to provide an incentive to reduce HACs, effective for
discharges beginning on October 1, 2014 and for subsequent program
years. This 1-percent payment reduction applies to a hospital whose
ranking is in the top quartile (25 percent) of all applicable
hospitals, relative to the national average, of conditions acquired
during the applicable period and on all of the hospital's discharges
for the specified fiscal year. The amount of payment shall be equal to
99 percent of the amount of payment that would otherwise apply to such
discharges under section 1886(d) or 1814(b)(3) of the Act, as
applicable.
e. Proposed Changes to the DSH Payment Adjustment and the Provision of
Additional Payment for Uncompensated Care
Section 3133 of the Affordable Care Act modified the Medicare
disproportionate share hospital (DSH) payment methodology beginning in
FY 2014. Under section 1886(r) of the Act, which was added by section
3133 of the Affordable Care Act, starting in FY 2014, DSHs will receive
25 percent of the amount they previously would have received under the
current statutory formula for Medicare DSH payments. The remaining
amount, equal to 75 percent of what otherwise would have been paid as
Medicare DSH payments, will be paid as additional payments after the
amount is reduced for changes in the percentage of individuals that are
uninsured. Each Medicare DSH hospital will receive its additional
amount based on its share of the total amount of uncompensated care for
all Medicare DSH hospitals for a given time period. In this proposed
rule, we are proposing updates to the uncompensated care amount to be
distributed for FY 2015, and we are proposing changes to the
methodology to calculate the uncompensated care payment amounts to be
distributed such that we combine uncompensated care data for hospitals
that have underwent a merger in order to calculate their relative share
of uncompensated care.
f. Hospital Inpatient Quality Reporting (IQR) Program
Under section 1886(b)(3)(B)(viii) of the Act, hospitals are
required to report data on measures selected by the Secretary for the
Hospital IQR Program in order to receive the full annual percentage
increase. In past rules, we have established measures for reporting and
the process for submittal and validation of the data.
In this proposed rule, we are proposing to add nine new measures
for the Hospital IQR Program for the FY 2017 payment determination and
subsequent years. We are proposing to remove five measures for the FY
2016 payment determination and subsequent years. We also are proposing
to remove 15 chart-abstracted measures from the FY 2016 payment
determination's measure set. However, we are proposing to retain an
electronic clinical quality measure version of 10 of those chart-
abstracted measures for the program.
g. Proposed Changes to the LTCH PPS
Section 1206(b) of the Pathway for SGR Reform Act provides for the
retroactive reinstatement and extension, for an additional 4 years, of
the moratorium on the full implementation of the 25-percent threshold
payment adjustment under the LTCH PPS established under section 114(c)
of the MMSEA, as further amended by subsequent legislation. In keeping
with this mandate, we are proposing to reinstate this payment
adjustment retroactively for LTCH cost reporting periods beginning on
or after July 1, 2013 or October 1, 2013.
Section 1206(b)(2) of the Pathway for SGR Reform Act, as amended by
section 112(b) of the Protecting Access to Medicare Act of 2014,
provides for new statutory moratoria on the establishment of new LTCHs
and LTCH satellite facilities (subject to certain defined exceptions)
and a new statutory moratorium on bed increases in existing LTCHs
effective for the period beginning April 1, 2014 and ending September
30, 2017.
In accordance with section 1206(d) of the Pathway for SGR Reform
Act of 2013, we are proposing to apply a payment adjustment under the
LTCH PPS to subclause (II) LTCHs beginning in FY 2015 that would result
in payments to this type of LTCH resembling reasonable cost payments
under the TEFRA payment system model.
We also are proposing to make changes to the LTCH interruption of
stay policy, which is a payment adjustment that is applied when, during
the course of an LTCH hospitalization, a patient is discharged to an
inpatient acute care hospital, an IRF, or a SNF for treatment or
services not available at the LTCH for a specified period followed by
readmittance to the same LTCH.
3. Summary of Costs and Benefits
Proposed Adjustment for MS-DRG Documentation and Coding
Changes. We are proposing a -0.8 percent recoupment adjustment to the
standardized amount for FY 2015 to implement, in part, the requirement
of section 631 of the ATRA that the Secretary make an adjustment
totaling $11 billion over a 4-year period of FYs 2014, 2015, 2016, and
2017. This recoupment adjustment represent the amount of the increase
in aggregate payments as a result of not completing the prospective
adjustment authorized under section 7(b)(1)(A) of Public Law 110-90
until FY 2013. Prior to the ATRA, this amount could not have been
recovered under Public Law 110-90.
While our actuaries estimated that a -9.3 percent recoupment
adjustment to the standardized amount would be necessary if CMS were to
fully recover the $11 billion recoupment required by
[[Page 27990]]
section 631 of the ATRA in FY 2014, it is often our practice to delay
or phase in rate adjustments over more than one year, in order to
moderate the effects on rates in any one year. Therefore, consistent
with the policies that we have adopted in many similar cases and the
adjustment we made for FY 2014, we are proposing to make a -0.8 percent
recoupment adjustment to the standardized amount in FY 2015. We
estimated that this level of adjustment, combined with leaving the -0.8
percent adjustment made for FY 2014 in place, will recover up to $2
billion in FY 2015. Taking into account the approximately $1 billion
recovered in FY 2014, this will leave approximately $8 billion
remaining to be recovered by FY 2017.
Reduction to Hospital Payments for Excess Readmissions.
The provisions of section 1886(q) of the Act which establishes the
Hospital Readmissions Reduction Program are not budget neutral. For FY
2015, a hospital's readmissions payment adjustment factor is the higher
of a ratio of a hospital's aggregate payments for excess readmissions
to its aggregate payments for all discharges, or 0.97 (that is, or a 3-
percent reduction). In this proposed rule, we estimate that the
reduction to a hospital's base operating DRG payment amount to account
for excess readmissions of selected applicable conditions under the
Hospital Readmissions Reduction Program will result in a 0.2 percent
decrease in payments to hospitals for FY 2015 relative to FY 2014.
Value-Based Incentive Payments Under the Hospital Value-
Based Purchasing (VBP) Program. We estimate that there will be no net
financial impact to the Hospital VBP Program for FY 2015 in the
aggregate because, by law, the amount available for value-based
incentive payments under the program in a given fiscal year must be
equal to the total amount of base operating DRG payment amount
reductions for that year, as estimated by the Secretary. The estimated
amount of base operating DRG payment amount reductions for FY 2015, and
therefore the estimated amount available for value-based incentive
payments for FY 2015 discharges, is approximately $1.4 billion. We
believe that the program's benefits will be seen in improved patient
outcomes, safety, and in the patient's experience of care. However, we
cannot estimate these benefits in actual dollar and patient terms.
Proposed Payment Adjustment Under the HAC Reduction
Program for FY 2015. Under section 1886(p) of the Act, (as added by
section 3008 of the Affordable Care Act), the incentive to reduce
hospital-acquired conditions with a payment adjustment to applicable
hospitals under the HAC Reduction Program is made beginning FY 2015. We
estimate that, under this proposal, 753 hospitals would be subject to
the 1-percent reduction, and that overall payments will decrease
approximately 0.3 percent or $330 million.
Proposed Changes Relating to the Medicare DSH Payment
Adjustment and Provision of Additional Payment for Uncompensated Care.
Under section 1886(r) of the Act (as added by section 3313 of the
Affordable Care Act), disproportionate share payments to hospitals
under section 1886(d)(5)(F) of the Act are reduced and an additional
payment to eligible hospitals is made beginning in FY 2014. Hospitals
that receive Medicare DSH payments will receive 25 percent of the
amount they previously would have received under the current statutory
formula for Medicare DSH payments. The remainder, equal to 75 percent
of what otherwise would have been paid as Medicare DSH payments, will
be the basis for additional payments after the amount is reduced for
changes in the percentage of individuals that are uninsured and
additional statutory adjustments. Each hospital that receives Medicare
DSH payments will receive an additional payment based on its share of
the total uncompensated care amount reported by Medicare DSHs. The
reduction to Medicare DSH payments is not budget neutral.
For FY 2015, we are proposing that the 75 percent of what otherwise
would have been paid for Medicare DSH is adjusted to approximately 80.4
percent of the amount for changes in the percentage of individuals that
are uninsured and additional statutory adjustments. In other words,
Medicare DSH payments prior to the application of section 3133 of the
Affordable Care Act are adjusted to approximately 60.3 percent (the
product of 75 percent and 80.4 percent) and that resulting payment
amount is used to create an additional payment for a hospital's
relative uncompensated care. As a result, we project that the proposed
reduction of Medicare DSH payments and the inclusion of the additional
payments for uncompensated care will reduced payments overall by 1.1
percent as compared to the Medicare DSH payments and uncompensated care
payments distributed in FY 2014. The proposed additional payments have
redistributive effects based on a hospital's uncompensated care amount
relative to the uncompensated care amount to all hospitals that are
estimated to receive Medicare DSH payments, and the payment amount is
not tied to a hospital's discharges.
Hospital Inpatient Quality Reporting (IQR) Program. In
this proposed rule, we are proposing to add nine new measures for the
FY 2017 payment determination and subsequent years. We are proposing to
remove five measures from the hospital IQR Program for the FY 2016
payment determination and subsequent years. We also are proposing to
remove 15 chart-abstracted from the FY 2016 payment determination's
measure set, but we are proposing to retain an electronic clinical
quality measure version of 10 of those measures for the program. We
estimate that our proposals for the adoption and removal of measures
will decrease hospital costs by $39.8 million.
Proposed Update to the LTCH PPS Standard Federal Rate and
Other Payment Factors. Based on the best available data for the 423
LTCHs in our database, we estimate that the proposed changes to the
payment rates and factors we are presenting in the preamble and
Addendum of this proposed rule, including the proposed update to the
standard Federal rate for FY 2015, the proposed changes to the area
wage adjustment for FY 2015, and the expected changes to short-stay
outliers and high-cost outliers, would result in an increase in
estimated payments from FY 2014 of approximately $44 million (or 0.8
percent). In addition, we estimate that net effect of the projected
impact of certain other proposed LTCH PPS policy changes (that is, the
reinstatement of the moratorium on the full implementation of the ``25
percent threshold'' payment adjustment; the reinstatement of the
moratorium on the development of new LTCHs and LTCH satellite
facilities and additional LTCH beds; the proposed revision of the
``greater than 3-day interruption of stay'' policy; the proposed
revocation of onsite discharges and readmissions policy; and the
proposed payment adjustment for ``subclause (II)'' LTCHs) is estimated
to result in a reduction in LTCH PPS payments of approximately $14
million.
The impact analysis of the proposed payment rates and factors
presented in this proposed rule under the LTCH PPS, in conjunction with
the estimated payment impacts of certain other proposed LTCH PPS policy
changes would result in a net increase of $30 million to LTCH
providers. Additionally, we estimate that the costs to LTCHs associated
with the completion of the proposed data for the LTCHQR Program at
$3.96 million or approximately $1 million more than FY 2014.
[[Page 27991]]
B. Summary
1. Acute Care Hospital Inpatient Prospective Payment System (IPPS)
Section 1886(d) of the Social Security Act (the Act) sets forth a
system of payment for the operating costs of acute care hospital
inpatient stays under Medicare Part A (Hospital Insurance) based on
prospectively set rates. Section 1886(g) of the Act requires the
Secretary to use a prospective payment system (PPS) to pay for the
capital-related costs of inpatient hospital services for these
``subsection (d) hospitals.'' Under these PPSs, Medicare payment for
hospital inpatient operating and capital-related costs is made at
predetermined, specific rates for each hospital discharge. Discharges
are classified according to a list of diagnosis-related groups (DRGs).
The base payment rate is comprised of a standardized amount that is
divided into a labor-related share and a nonlabor-related share. The
labor-related share is adjusted by the wage index applicable to the
area where the hospital is located. If the hospital is located in
Alaska or Hawaii, the nonlabor-related share is adjusted by a cost-of-
living adjustment factor. This base payment rate is multiplied by the
DRG relative weight.
If the hospital treats a high percentage of certain low-income
patients, it receives a percentage add-on payment applied to the DRG-
adjusted base payment rate. This add-on payment, known as the
disproportionate share hospital (DSH) adjustment, provides for a
percentage increase in Medicare payments to hospitals that qualify
under either of two statutory formulas designed to identify hospitals
that serve a disproportionate share of low-income patients. For
qualifying hospitals, the amount of this adjustment varies based on the
outcome of the statutory calculations. The Affordable Care Act revised
the Medicare DSH payment methodology and provides for a new additional
Medicare payment that considers the amount of uncompensated care
beginning on October 1, 2013.
If the hospital is an approved teaching hospital, it receives a
percentage add-on payment for each case paid under the IPPS, known as
the indirect medical education (IME) adjustment. This percentage
varies, depending on the ratio of residents to beds.
Additional payments may be made for cases that involve new
technologies or medical services that have been approved for special
add-on payments. To qualify, a new technology or medical service must
demonstrate that it is a substantial clinical improvement over
technologies or services otherwise available, and that, absent an add-
on payment, it would be inadequately paid under the regular DRG
payment.
The costs incurred by the hospital for a case are evaluated to
determine whether the hospital is eligible for an additional payment as
an outlier case. This additional payment is designed to protect the
hospital from large financial losses due to unusually expensive cases.
Any eligible outlier payment is added to the DRG-adjusted base payment
rate, plus any DSH, IME, and new technology or medical service add-on
adjustments.
Although payments to most hospitals under the IPPS are made on the
basis of the standardized amounts, some categories of hospitals are
paid in whole or in part based on their hospital-specific rate, which
is determined from their costs in a base year. For example, sole
community hospitals (SCHs) receive the higher of a hospital-specific
rate based on their costs in a base year (the highest of FY 1982, FY
1987, FY 1996, or FY 2006) or the IPPS Federal rate based on the
standardized amount. Through and including FY 2006, a Medicare-
dependent, small rural hospital (MDH) received the higher of the
Federal rate or the Federal rate plus 50 percent of the amount by which
the Federal rate is exceeded by the higher of its FY 1982 or FY 1987
hospital-specific rate. As discussed below, for discharges occurring on
or after October 1, 2007, but before April 1, 2015, an MDH will receive
the higher of the Federal rate or the Federal rate plus 75 percent of
the amount by which the Federal rate is exceeded by the highest of its
FY 1982, FY 1987, or FY 2002 hospital-specific rate. (We note that the
statutory provision for payments to MDHs expires on March 31, 2015,
under current law.) SCHs are the sole source of care in their areas,
and MDHs are a major source of care for Medicare beneficiaries in their
areas. Specifically, section 1886(d)(5)(D)(iii) of the Act defines an
SCH as a hospital that is located more than 35 road miles from another
hospital or that, by reason of factors such as isolated location,
weather conditions, travel conditions, or absence of other like
hospitals (as determined by the Secretary), is the sole source of
hospital inpatient services reasonably available to Medicare
beneficiaries. In addition, certain rural hospitals previously
designated by the Secretary as essential access community hospitals are
considered SCHs. Section 1886(d)(5)(G)(iv) of the Act defines an MDH as
a hospital that is located in a rural area, has not more than 100 beds,
is not an SCH, and has a high percentage of Medicare discharges (not
less than 60 percent of its inpatient days or discharges in its cost
reporting year beginning in FY 1987 or in two of its three most
recently settled Medicare cost reporting years). Both of these
categories of hospitals are afforded this special payment protection in
order to maintain access to services for beneficiaries.
Section 1886(g) of the Act requires the Secretary to pay for the
capital-related costs of inpatient hospital services ``in accordance
with a prospective payment system established by the Secretary.'' The
basic methodology for determining capital prospective payments is set
forth in our regulations at 42 CFR 412.308 and 412.312. Under the
capital IPPS, payments are adjusted by the same DRG for the case as
they are under the operating IPPS. Capital IPPS payments are also
adjusted for IME and DSH, similar to the adjustments made under the
operating IPPS. In addition, hospitals may receive outlier payments for
those cases that have unusually high costs.
The existing regulations governing payments to hospitals under the
IPPS are located in 42 CFR part 412, Subparts A through M.
2. Hospitals and Hospital Units Excluded From the IPPS
Under section 1886(d)(1)(B) of the Act, as amended, certain
hospitals and hospital units are excluded from the IPPS. These
hospitals and units are: Rehabilitation hospitals and units; long-term
care hospitals (LTCHs); psychiatric hospitals and units; children's
hospitals; certain cancer hospitals; and short-tern acute care
hospitals located in Guam, the U.S. Virgin Islands, the Northern
Mariana Islands, and American Samoa. Religious nonmedical health care
institutions (RNHCIs) are also excluded from the IPPS. Various sections
of the Balanced Budget Act of 1997 (BBA, Pub. L. 105-33), the Medicare,
Medicaid and SCHIP [State Children's Health Insurance Program] Balanced
Budget Refinement Act of 1999 (BBRA, Pub. L. 106-113), and the
Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act
of 2000 (BIPA, Pub. L. 106-554) provide for the implementation of PPSs
for rehabilitation hospitals and units (referred to as inpatient
rehabilitation facilities (IRFs)), LTCHs, and psychiatric hospitals and
units (referred to as inpatient psychiatric facilities (IPFs)). (We
note that the annual updates to the LTCH PPS are now included as part
of the IPPS annual update document. Updates to the IRF PPS and IPF PPS
are issued as separate documents.) Children's hospitals, certain cancer
hospitals, short-tern acute care hospitals
[[Page 27992]]
located in Guam, the U.S. Virgin Islands, the Northern Mariana Islands,
and American Samoa, and RNHCIs continue to be paid solely under a
reasonable cost-based system subject to a rate-of-increase ceiling on
inpatient operating costs, as updated annually by the percentage
increase in the IPPS operating market basket.
The existing regulations governing payments to excluded hospitals
and hospital units are located in 42 CFR Parts 412 and 413.
3. Long-Term Care Hospital Prospective Payment System (LTCH PPS)
The Medicare prospective payment system (PPS) for LTCHs applies to
hospitals described in section 1886(d)(1)(B)(iv) of the Act effective
for cost reporting periods beginning on or after October 1, 2002. The
LTCH PPS was established under the authority of section 123 of the BBRA
and section 307(b) of the BIPA (as codified under section 1886(m)(1) of
the Act). During the 5-year (optional) transition period, a LTCH's
payment under the PPS was based on an increasing proportion of the LTCH
Federal rate with a corresponding decreasing proportion based on
reasonable cost principles. Effective for cost reporting periods
beginning on or after October 1, 2006, all LTCHs are paid 100 percent
of the Federal rate. The existing regulations governing payment under
the LTCH PPS are located in 42 CFR Part 412, Subpart O. Beginning with
FY 2009, annual updates to the LTCH PPS are published in the same
documents that update the IPPS (73 FR 26797 through 26798).
4. Critical Access Hospitals (CAHs)
Under sections 1814(l), 1820, and 1834(g) of the Act, payments made
to critical access hospitals (CAHs) (that is, rural hospitals or
facilities that meet certain statutory requirements) for inpatient and
outpatient services are generally based on 101 percent of reasonable
cost. Reasonable cost is determined under the provisions of section
1861(v)(1)(A) of the Act and existing regulations under 42 CFR Parts
413 and 415.
5. Payments for Graduate Medical Education (GME)
Under section 1886(a)(4) of the Act, costs of approved educational
activities are excluded from the operating costs of inpatient hospital
services. Hospitals with approved graduate medical education (GME)
programs are paid for the direct costs of GME in accordance with
section 1886(h) of the Act. The amount of payment for direct GME costs
for a cost reporting period is based on the hospital's number of
residents in that period and the hospital's costs per resident in a
base year. The existing regulations governing payments to the various
types of hospitals are located in 42 CFR Part 413.
C. Summary of Provisions of Recent Legislation Discussed in This
Proposed Rule
The Patient Protection and Affordable Care Act (Pub. L. 111-148),
enacted on March 23, 2010, the Health Care and Education Reconciliation
Act of 2010 (Pub. L. 111-152), enacted on March 30, 2010, made a number
of changes that affect the IPPS and the LTCH PPS. (Pub. L. 111-148 and
Pub. L. 111-152 are collectively referred to as the ``Affordable Care
Act.'') A number of the provisions of the Affordable Care Act affect
the updates to the IPPS and the LTCH PPS and providers and suppliers.
The provisions of the Affordable Care Act that were applicable to the
IPPS and the LTCH PPS for FYs 2010, 2011, and 2012 were implemented in
the June 2, 2010 Federal Register notice (75 FR 31118), the FY 2011
IPPS/LTCH PPS final rule (75 FR 50042) and the FY 2012 IPPS/LTCH PPS
final rule (76 FR 51476).
The American Taxpayer Relief Act of 2012 (ATRA) (Pub. L. 112-240),
enacted on January 2, 2013, also made a number of changes that affect
the IPPS. We announced changes related to certain IPPS provisions for
FY 2013 in accordance with sections 605 and 606 of Public Law 112-240
in a notice issued in the Federal Register on March 7, 2013 (78 FR
14689).
The Pathway for SGR Reform Act of 2013 (Pub. L. 113-67), enacted on
December 26, 2013, also made a number of changes that affect the IPPS
and the LTCH PPS. We implemented changes related to the low-volume
hospital payment adjustment and MDH provisions for FY 2014 in
accordance with sections 1105 and 1106 of Public Law 113-67 in an
interim final rule with comment period that appeared in the Federal
Register on March 18, 2014 (79 FR 15022).
The Protecting Access to Medicare Act of 2014 (Pub. L. 113-93),
enacted on April 1, 2014, also made a number of changes that affect the
IPPS and LTCH PPS.
1. The Patient Protection and Affordable Care Act (Pub. L. 111-148) and
the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-
152)
In this proposed rule, we are proposing policy changes to implement
(or, as applicable, continuing to implement in FY 2015) the following
provisions (or portions of the following provisions) of the Affordable
Care Act that are applicable to the IPPS, the LTCH PPS, and PPS-exempt
cancer hospitals for FY 2015:
Section 3001(a) of Public Law 111-148, which requires the
establishment of a hospital inpatient value-based purchasing program
under which value-based incentive payments are made in a fiscal year to
hospitals that meet performance standards for the performance period
for that fiscal year.
Section 3004 of Public Law 111-148, which provides for the
submission of quality data by LTCHs in order for them to receive the
full annual update to the payment rates beginning with the FY 2014 rate
year.
Section 3005 of Public Law 111-148, which provides for the
establishment of a quality reporting program for PPS-exempt cancer
hospitals beginning with FY 2014, and for subsequent program years.
Section 3008 of Public Law 111-148, which establishes the
Hospital-Acquired Condition (HAC) Reduction Program and requires the
Secretary to make an adjustment to hospital payments for applicable
hospitals, effective for discharges beginning on October 1, 2014, and
for subsequent program years.
Section 3025 of Public Law 111-148, which establishes a
hospital readmissions reduction program and requires the Secretary to
reduce payments to applicable hospitals with excess readmissions
effective for discharges beginning on or after October 1, 2012.
Section 3133 of Public Law 111-148, as amended by section
10316 of Public Law 111-148 and section 1104 of Public Law 111-152,
which modifies the methodologies for determining Medicare DSH payments
and creates a new additional payment for uncompensated care effective
for discharges beginning on or after October 1, 2013.
Section 3401 of Public Law 111-148, which provides for the
incorporation of productivity adjustments into the market basket
updates for IPPS hospitals and LTCHs.
Section 10324 of Public Law 111-148, which provides for a
wage adjustment for hospitals located in frontier States.
Sections 3401 and 10319 of Public Law 111-148 and section
1105 of Public Law 111-152, which revise certain market basket update
percentages for IPPS and LTCH PPS payment rates for FY 2015.
[[Page 27993]]
Section 5506 of Public Law 111-148, which added a
provision to the Act that instructs the Secretary to establish a
process by regulation under which, in the event a teaching hospital
closes, the Secretary will permanently increase the FTE resident caps
for hospitals that meet certain criteria up to the number of the closed
hospital's FTE resident caps.
2. American Taxpayer Relief Act of 2012 (ATRA) (Pub. L. 112-240)
In this proposed rule, we are proposing policy changes to implement
section 631 of the American Taxpayer Relief Act of 2012 that are
applicable to the IPPS for FY 2015, which amended section 7(b)(1)(B) of
Public Law 110-90 and requires a recoupment adjustment to the
standardized amounts under section 1886(d) of the Act based upon the
Secretary's estimates for discharges occurring in FY 2014 through FY
2017 to fully offset $11 billion (which represents the amount of the
increase in aggregate payments from FYs 2008 through 2013 for which an
adjustment was not previously applied).
3. Pathway for SGR Reform Act of 2013 (Pub. L. 113-67)
In this proposed rule, we are proposing policy changes to
implement, or the need for future policy changes, to carry out
provisions under section 1206 of the Pathway for SGR Reform Act of
2013. These include:
Section 1206(a), which provides the establishment of
patient criteria for ``site neutral'' payment rates under the LTCH PPS,
portions of which will begin to be implemented in FY 2016.
Section 1206(b)(1), which further amended section 114(c)
of the MMSEA, as amended by section 4302(a) of the ARRA and sections
3106(c) and 10312(a) of the Affordable Care Act by retroactively
reestablishing, and extending, the statutory moratorium on the full
implementation of the 25-percent threshold payment adjustment policy
under the LTCH PPS so that the policy will be in effect for 9 years
(except for grandfathered HwHs, which are permanently exempt from this
policy).
Section 1206(b)(2), which amended section 114(d) of the
MMSEA, as amended by section 4302(a) of the ARRA and sections 3106(c)
and 10312(a) of the Affordable Care Act to establish new moratoria
(subject to certain defined exceptions) on the development of new LTCHs
and LTCH satellite facilities and a new moratorium on increases in the
number of beds in existing LTCHs and LTCH satellite facilities.
Section 1206(d), which instructs the Secretary to evaluate
payments to LTCHs classified under section 1886(d)(1)(B)(iv)(II) of the
Act and to adjust payment rates in FY 2015 or 2016 under the LTCH PPS,
as appropriate, based upon the evaluation findings.
4. Protecting Access to Medicare Act of 2014 (Pub. L. 113-93)
In this proposed rule, we are proposing policy changes to
implement, or make conforming changes to regulations in accordance
with, the following provisions (or portions of the following
provisions) of the Protecting Access to Medicare Act of 2014 that are
applicable to the IPPS and the LTCH PPS for FY 2015:
Section 105, which extends the temporary changes to the
Medicare inpatient hospital payment adjustment for low-volume
subsection (d) hospitals through March 31, 2015.
Section 106, which extends the MDH program through March
31, 2015.
Section 112, which makes certain changes to Medicare LTCH
provisions, including modifications to the statutory moratoria on the
establishment of new LTCHs and LTCH satellite facilities and on
increases in bed size in LTCH and LTCH satellite facilities.
Section 212, which prohibits the Secretary from requiring
implementation of ICD-10 code sets before October 1, 2015.
D. Summary of the Provisions of This Proposed Rule
In this proposed rule, we are setting forth proposed changes to the
Medicare IPPS for operating costs and for capital-related costs of
acute care hospitals for FY 2015. We also are setting forth proposed
changes relating to payments for IME and GME costs and payments to
certain hospitals that continue to be excluded from the IPPS and paid
on a reasonable cost basis. In addition, in this proposed rule, we are
setting forth proposed changes to the payment rates, factors, and other
payment rate policies under the LTCH PPS for FY 2015.
Below is a summary of the major changes that we are proposing to
make:
1. Proposed Changes to MS-DRG Classifications and Recalibrations of
Relative Weights
In section II. of the preamble of this proposed rule, we include--
Proposed changes to MS-DRG classifications based on our
yearly review, including a discussion of the conversion of MS-DRGs to
ICD-10 and the status of the implementation of the ICD-10-CM and ICD-
10-PCS systems.
Proposed application of the documentation and coding
adjustment for FY 2015 resulting from implementation of the MS-DRG
system.
Proposed recalibrations of the MS-DRG relative weights.
Proposed changes to hospital-acquired conditions (HACs)
and a listing and discussion of HACs, including infections, that would
be subject to the statutorily required adjustment in MS-DRG payments
for FY 2015.
A discussion of the FY 2015 status of new technologies
approved for add-on payments for FY 2014 and a presentation of our
evaluation and analysis of the FY 2015 applicants for add-on payments
for high-cost new medical services and technologies (including public
input, as directed by Pub. L. 108-173, obtained in a town hall
meeting).
2. Proposed Changes to the Hospital Wage Index for Acute Care Hospitals
In section III. of the preamble to this proposed rule, we are
proposing revisions to the wage index for acute care hospitals and the
annual update of the wage data. Specific issues addressed include the
following:
Proposed changes in CBSAs as a result of new OMB labor
market area delineations and proposed policies related to the proposed
changes in CBSAs.
The proposed FY 2015 wage index update using wage data
from cost reporting periods beginning in FY 2011.
Analysis and implementation of the proposed FY 2015
occupational mix adjustment to the wage index for acute care hospitals,
including the proposed application of the rural floor, the proposed
imputed rural floor, and the proposed frontier State floor.
Proposed revisions to the wage index for acute care
hospitals based on hospital redesignations and reclassifications.
The proposed adjustment to the wage index for acute care
hospitals for FY 2015 based on commuting patterns of hospital employees
who reside in a county and work in a different area with a higher wage
index.
The timetable for reviewing and verifying the wage data
used to compute the proposed FY 2015 hospital wage index and proposed
revisions to that timetable.
Determination of the labor-related share for the proposed
FY 2015 wage index.
[[Page 27994]]
3. Other Decisions and Proposed Changes to the IPPS for Operating Costs
and GME Costs
In section IV. of the preamble of this proposed rule, we discuss
proposed changes or clarifications of a number of the provisions of the
regulations in 42 CFR Parts 412 and 413, including the following:
Proposed changes in postacute care transfer policies as a
result of proposed new MS-DRGs.
Proposed changes to the inpatient hospital updates for FY
2015, including incorporation of the adjustment for hospitals that are
not meaningful EHR users under section 1886(b)(3)(B)(ix) of the Act.
The proposed updated national and regional case-mix values
and discharges for purposes of determining RRC status.
Proposed payment adjustment for low-volume hospitals for
FY 2015.
The statutorily required IME adjustment factor for FY 2015
and proposed IME Medicare Part C payments to SCHs that are paid
according to their hospital-specific rates.
Effect of expiration of the MDH program on April 1, 2015.
Proposed changes to the methodologies for determining
Medicare DSH payments and the additional payments for uncompensated
care.
Proposed changes to the measures and payment adjustments
under the Hospital Readmissions Reduction Program.
Proposed changes to the requirements and provision of
value-based incentive payments under the Hospital Value-Based
Purchasing Program.
Proposed requirements for payment adjustments to hospitals
under the HAC Reduction Program for FY 2015.
Proposed IME and direct GME policy changes regarding the
effective date of the FTE resident cap, 3-year rolling average, and IRB
ratio cap in new programs in teaching hospitals; effect of new OMB
labor market area delineations on certain teaching hospitals training
residents in rural areas; clarification of effective date of provisions
on counting resident time in nonprovider settings; proposed changes to
the process for reviewing applications for and awarding slots made
available under section 5506 of the Affordable Care Act by teaching
hospitals that close; and clarification regarding direct GME payment to
FQHCs and RHCs that train residents in approved programs.
Discussion of the Rural Community Hospital Demonstration
Program and a proposal for making a budget neutrality adjustment for
the demonstration program.
Discussion of the requirements for transparency of
hospital charges under the Affordable Care Act.
Discussion of and solicitation of comments on an
alternative payment methodology under the Medicare program for short
inpatient hospital stays.
Discussion of the process for submitting suggested
exceptions to the 2-midnight benchmark.
4. Proposed FY 2015 Policy Governing the IPPS for Capital-Related Costs
In section V. of the preamble to this proposed rule, we discuss the
proposed payment policy requirements for capital-related costs and
capital payments to hospitals for FY 2015 and other related proposed
policy changes.
5. Proposed Changes to the Payment Rates for Certain Excluded
Hospitals: Rate-of-Increase Percentages
In section VI. of the preamble of this proposed rule, we discuss--
Proposed changes to payments to certain excluded hospitals
for FY 2015.
Proposed updates to the RCE limits for services furnished
by physicians to excluded hospitals.
Proposed CAH related changes regarding reclassifications
as rural.
Proposed changes to the physician certification
requirements for services furnished in CAHs.
6. Proposed Changes to the LTCH PPS
In section VII. of the preamble of this proposed rule, we set
forth--
Proposed changes to the payment rates, factors, and other
payment rate policies under the LTCH PPS for FY 2015.
Proposed revisions to the LTCH PPS geographic
classifications based on the new OMB delineations.
Proposals to implement section 1206(b)(1) of the Pathway
for SGR Reform Act, which provides for the retroactive reinstatement
and extension, for an additional 4 years, of the statutory moratorium
on the full implementation of the 25-percent threshold payment
adjustment established under section 114(c) of the MMSEA, as further
amended by subsequent legislation.
Proposals to implement section 1206(b)(2) of the Pathway
for SGR Reform Act, as amended by section 112(b) of the Protecting
Access to Medicare Act of 2014, which provides for moratoria (subject
to certain defined exceptions) on the establishment of new LTCHs and
LTCH satellite facilities and a moratorium on bed increases in LTCHs
effective for the period beginning April 1, 2014, and ending September
30, 2017.
Proposed changes to the LTCH interruption of stay policy
by revising the fixed-day thresholds under the ``greater than 3-day
interruption of stay policy'' to apply a uniform 30-day threshold as an
``acceptable standard'' for determining a linkage between an index
discharge and a readmission.
Proposal to remove the discharge and readmission
requirement, ``Special Payment Provisions for Patients Who Are
Transferred to Onsite Providers and Readmitted to an LTCH'' (the ``5
percent payment threshold'') beginning in FY 2015.
Proposal to apply a payment adjustment under the LTCH PPS
to subclause (II) LTCHs beginning in FY 2015 that would result in
payments to this type of LTCH resembling reasonable cost payment under
the TEFRA payment system model, consistent with the provisions of
section 1206(d) of the Pathway for SGR Reform Act of 2013.
7. Proposed Changes to Regulations Governing Administrative Appeals by
Providers and Judicial Review of Provider Claims
In section VIII. of the preamble of this proposed rule, we set
forth proposals to revise the regulations governing administrative
appeals and judicial review of provider claims in Medicare cost
reports.
8. Proposed Changes Relating to Quality Data Reporting for Specific
Providers and Suppliers
In section IX. of the preamble of this proposed rule, we address--
Proposed requirements for the Hospital Inpatient Quality
Reporting (IQR) Program as a condition for receiving the full
applicable percentage increase.
Proposed changes to the requirements for the quality
reporting program for PPS-exempt cancer hospitals (PCHQR Program).
Proposed changes to the requirements under the LTCH
Quality Reporting (LTCHQR) Program.
9. Proposed Uses and Release of Medicare Advantage Risk Adjustment Data
In section X. of the preamble of this proposed rule, we set forth
proposed regulatory revisions to broaden the specified uses of risk
adjustment data and to specify the conditions for release of risk
adjustment data to entities outside of CMS.
[[Page 27995]]
10. Proposed Changes to Enforcement Provisions for Organ Transplant
Centers
In section XI. of the preamble of this proposed rule, we are
proposing to revise the regulations governing organ transplant centers
that request approval, based on mitigating factors for initial approval
and re-approval, for participation in Medicare when the centers have
not met one or more of the conditions of participation.
11. Determining Prospective Payment Operating and Capital Rates and
Rate-of-Increase Limits for Acute Care Hospitals
In the Addendum to this proposed rule, we set forth proposed
changes to the amounts and factors for determining the proposed FY 2015
prospective payment rates for operating costs and capital-related costs
for acute care hospitals. We also are proposing to establish the
threshold amounts for outlier cases. In addition, we addressed the
proposed update factors for determining the rate-of-increase limits for
cost reporting periods beginning in FY 2015 for certain hospitals
excluded from the IPPS.
12. Determining Prospective Payment Rates for LTCHs
In the Addendum to this proposed rule, we set forth proposed
changes to the amounts and factors for determining the proposed FY 2015
LTCH PPS standard Federal rate. We are proposing to establish the
adjustments for wage levels (including proposed changes to the LTCH PPS
labor market area delineations based on the new OMB delineations), the
labor-related share, the cost-of-living adjustment, and high-cost
outliers, including the fixed-loss amount, and the LTCH cost-to-charge
ratios (CCRs) under the LTCH PPS.
13. Impact Analysis
In Appendix A of this proposed rule, we set forth an analysis of
the impact that the proposed changes would have on affected acute care
hospitals, LTCHs, and PCHs.
14. Recommendation of Update Factors for Operating Cost Rates of
Payment for Hospital Inpatient Services
In Appendix B of this proposed rule, as required by sections
1886(e)(4) and (e)(5) of the Act, we provided our recommendations of
the appropriate percentage changes for FY 2015 for the following:
A single average standardized amount for all areas for
hospital inpatient services paid under the IPPS for operating costs of
acute care hospitals (and hospital-specific rates applicable to SCHs).
Target rate-of-increase limits to the allowable operating
costs of hospital inpatient services furnished by certain hospitals
excluded from the IPPS.
The standard Federal rate for hospital inpatient services
furnished by LTCHs.
15. Discussion of Medicare Payment Advisory Commission Recommendations
Under section 1805(b) of the Act, MedPAC is required to submit a
report to Congress, no later than March 15 of each year, in which
MedPAC reviews and makes recommendations on Medicare payment policies.
MedPAC's March 2014 recommendations concerning hospital inpatient
payment policies address the update factor for hospital inpatient
operating costs and capital-related costs for hospitals under the IPPS.
We address these recommendations in Appendix B of this proposed rule.
For further information relating specifically to the MedPAC March 2014
report or to obtain a copy of the report, contact MedPAC at (202) 220-
3700 or visit MedPAC's Web site at: http://www.medpac.gov.
II. Proposed Changes to Medicare Severity Diagnosis-Related Group (MS-
DRG) Classifications and Relative Weights
A. Background
Section 1886(d) of the Act specifies that the Secretary shall
establish a classification system (referred to as diagnosis-related
groups (DRGs)) for inpatient discharges and adjust payments under the
IPPS based on appropriate weighting factors assigned to each DRG.
Therefore, under the IPPS, Medicare pays for inpatient hospital
services on a rate per discharge basis that varies according to the DRG
to which a beneficiary's stay is assigned. The formula used to
calculate payment for a specific case multiplies an individual
hospital's payment rate per case by the weight of the DRG to which the
case is assigned. Each DRG weight represents the average resources
required to care for cases in that particular DRG, relative to the
average resources used to treat cases in all DRGs.
Congress recognized that it would be necessary to recalculate the
DRG relative weights periodically to account for changes in resource
consumption. Accordingly, section 1886(d)(4)(C) of the Act requires
that the Secretary adjust the DRG classifications and relative weights
at least annually. These adjustments are made to reflect changes in
treatment patterns, technology, and any other factors that may change
the relative use of hospital resources.
B. MS-DRG Reclassifications
For general information about the MS-DRG system, including yearly
reviews and changes to the MS-DRGs, we refer readers to the previous
discussions in the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR
43764 through 43766), the FY 2011 IPPS/LTCH PPS final rule (75 FR 50053
through 50055), the FY 2012 IPPS/LTCH PPS final rule (76 FR 51485
through 51487), the FY 2013 IPPS/LTCH PPS final rule (77 FR 53273), and
the FY 2014 IPPS/LTCH PPS final rule (78 FR 50512).
C. Adoption of the MS-DRGs in FY 2008
For information on the adoption of the MS-DRGs in FY 2008, we refer
readers to the FY 2008 IPPS final rule with comment period (72 FR 47140
through 47189).
D. Proposed FY 2015 MS-DRG Documentation and Coding Adjustment
1. Background on the Prospective MS-DRG Documentation and Coding
Adjustments for FY 2008 and FY 2009 Authorized by Public Law 110-90
In the FY 2008 IPPS final rule with comment period (72 FR 47140
through 47189), we adopted the MS-DRG patient classification system for
the IPPS, effective October 1, 2007, to better recognize severity of
illness in Medicare payment rates for acute care hospitals. The
adoption of the MS-DRG system resulted in the expansion of the number
of DRGs from 538 in FY 2007 to 745 in FY 2008. (In FY 2014, there are
751 MS-DRGs.) By increasing the number of MS-DRGs and more fully taking
into account patient severity of illness in Medicare payment rates for
acute care hospitals, MS-DRGs encourage hospitals to improve their
documentation and coding of patient diagnoses.
In the FY 2008 IPPS final rule with comment period (72 FR 47175
through 47186), we indicated that the adoption of the MS-DRGs had the
potential to lead to increases in aggregate payments without a
corresponding increase in actual patient severity of illness due to the
incentives for additional documentation and coding. In that final rule
with comment period, we exercised our authority under section
1886(d)(3)(A)(vi) of the Act, which authorizes us to maintain budget
neutrality by adjusting the national standardized amount, to eliminate
the estimated effect of changes in coding or classification that do not
reflect real changes in case-mix. Our actuaries
[[Page 27996]]
estimated that maintaining budget neutrality required an adjustment of
-4.8 percent to the national standardized amount. We provided for
phasing in this -4.8 percent adjustment over 3 years. Specifically, we
established prospective documentation and coding adjustments of -1.2
percent for FY 2008, -1.8 percent for FY 2009, and -1.8 percent for FY
2010.
On September 29, 2007, Congress enacted the TMA [Transitional
Medical Assistance], Abstinence Education, and QI [Qualifying
Individuals] Programs Extension Act of 2007 (Pub. L. 110-90). Section
7(a) of Public Law 110-90 reduced the documentation and coding
adjustment made as a result of the MS-DRG system that we adopted in the
FY 2008 IPPS final rule with comment period to -0.6 percent for FY 2008
and -0.9 percent for FY 2009, and we finalized the FY 2008 adjustment
through rulemaking, effective October 1, 2007 (72 FR 66886).
For FY 2009, section 7(a) of Public Law 110-90 required a
documentation and coding adjustment of -0.9 percent, and we finalized
that adjustment through rulemaking effective October 1, 2008 (73 FR
48447). The documentation and coding adjustments established in the FY
2008 IPPS final rule with comment period, which reflected the
amendments made by section 7(a) of Public Law 110-90, are cumulative.
As a result, the -0.9 percent documentation and coding adjustment for
FY 2009 was in addition to the -0.6 percent adjustment for FY 2008,
yielding a combined effect of -1.5 percent.
2. Adjustment to the Average Standardized Amounts Required by Public
Law 110-90
a. Prospective Adjustment Required by Section 7(b)(1)(A) of Public Law
110-90
Section 7(b)(1)(A) of Public Law 110-90 requires that, if the
Secretary determines that implementation of the MS-DRG system resulted
in changes in documentation and coding that did not reflect real
changes in case-mix for discharges occurring during FY 2008 or FY 2009
that are different than the prospective documentation and coding
adjustments applied under section 7(a) of Public Law 110-90, the
Secretary shall make an appropriate adjustment under section
1886(d)(3)(A)(vi) of the Act. Section 1886(d)(3)(A)(vi) of the Act
authorizes adjustments to the average standardized amounts for
subsequent fiscal years in order to eliminate the effect of such coding
or classification changes. These adjustments are intended to ensure
that future annual aggregate IPPS payments are the same as the payments
that otherwise would have been made had the prospective adjustments for
documentation and coding applied in FY 2008 and FY 2009 reflected the
change that occurred in those years.
b. Recoupment or Repayment Adjustments in FYs 2010 Through 2012
Required by Section 7(b)(1)(B) Public Law 110-90
If, based on a retroactive evaluation of claims data, the Secretary
determines that implementation of the MS-DRG system resulted in changes
in documentation and coding that did not reflect real changes in case-
mix for discharges occurring during FY 2008 or FY 2009 that are
different from the prospective documentation and coding adjustments
applied under section 7(a) of Public Law 110-90, section 7(b)(1)(B) of
Public Law 110-90 requires the Secretary to make an additional
adjustment to the standardized amounts under section 1886(d) of the
Act. This adjustment must offset the estimated increase or decrease in
aggregate payments for FYs 2008 and 2009 (including interest) resulting
from the difference between the estimated actual documentation and
coding effect and the documentation and coding adjustment applied under
section 7(a) of Public Law 110-90. This adjustment is in addition to
making an appropriate adjustment to the standardized amounts under
section 1886(d)(3)(A)(vi) of the Act as required by section 7(b)(1)(A)
of Public Law 110-90. That is, these adjustments are intended to recoup
(or repay, in the case of underpayments) spending in excess of (or less
than) spending that would have occurred had the prospective adjustments
for changes in documentation and coding applied in FY 2008 and FY 2009
matched the changes that occurred in those years. Public Law 110-90
requires that the Secretary only make these recoupment or repayment
adjustments for discharges occurring during FYs 2010, 2011, and 2012.
3. Retrospective Evaluation of FY 2008 and FY 2009 Claims Data
In order to implement the requirements of section 7 of Public Law
110-90, we performed a retrospective evaluation of the FY 2008 data for
claims paid through December 2008 using the methodology first described
in the FY 2009 IPPS/LTCH PPS final rule (73 FR 43768 and 43775) and
later discussed in the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR
43768 through 43772). We performed the same analysis for FY 2009 claims
data using the same methodology as we did for FY 2008 claims (75 FR
50057 through 50068). The results of the analysis for the FY 2011 IPPS/
LTCH PPS proposed and final rules, and subsequent evaluations in FY
2012, supported that the 5.4 percent estimate accurately reflected the
FY 2009 increases in documentation and coding under the MS-DRG system.
We were persuaded by both MedPAC's analysis (as discussed in the FY
2011 IPPS/LTCH PPS final rule (75 FR 50064 through 50065)) and our own
review of the methodologies recommended by various commenters that the
methodology we employed to determine the required documentation and
coding adjustments was sound.
As in prior years, the FY 2008, FY 2009, and FY 2010 MedPAR files
are available to the public to allow independent analysis of the FY
2008 and FY 2009 documentation and coding effects. Interested
individuals may still order these files through the CMS Web site at:
http://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/LimitedDataSets/ by clicking on MedPAR Limited Data Set (LDS)-
Hospital (National). This CMS Web page describes the file and provides
directions and further detailed instructions for how to order.
Persons placing an order must send the following: A Letter of
Request, the LDS Data Use Agreement and Research Protocol (refer to the
Web site for further instructions), the LDS Form, and a check (refer to
the Web site for the required payment amount) to:
Mailing address if using the U.S. Postal Service: Centers for
Medicare & Medicaid Services, RDDC Account, Accounting Division, P.O.
Box 7520, Baltimore, MD 21207-0520.
Mailing address if using express mail: Centers for Medicare &
Medicaid Services, OFM/Division of Accounting--RDDC, 7500 Security
Boulevard, C3-07-11, Baltimore, MD 21244-1850.
4. Prospective Adjustments for FY 2008 and FY 2009 Authorized by
Section 7(b)(1)(A) of Public Law 110-90
In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43767
through 43777), we opted to delay the implementation of any
documentation and coding adjustment until a full analysis of case-mix
changes based on FY 2009 claims data could be completed. We refer
readers to the FY 2010 IPPS/RY LTCH PPS final rule for a detailed
description of our proposal, responses to comments, and finalized
policy. After analysis of the FY 2009 claims data for the FY 2011 IPPS/
LTCH PPS final rule (75 FR 50057 through
[[Page 27997]]
50073), we found a total prospective documentation and coding effect of
5.4 percent. After accounting for the -0.6 percent and the -0.9 percent
documentation and coding adjustments in FYs 2008 and 2009, we found a
remaining documentation and coding effect of 3.9 percent. As we have
discussed, an additional cumulative adjustment of -3.9 percent would be
necessary to meet the requirements of section 7(b)(1)(A) of Public Law
110-90 to make an adjustment to the average standardized amounts in
order to eliminate the full effect of the documentation and coding
changes that do not reflect real changes in case-mix on future
payments. Unlike section 7(b)(1)(B) of Public Law 110-90, section
7(b)(1)(A) does not specify when we must apply the prospective
adjustment, but merely requires us to make an ``appropriate''
adjustment. Therefore, as we stated in the FY 2011 IPPS/LTCH PPS final
rule (75 FR 50061), we believed the law provided some discretion as to
the manner in which we applied the prospective adjustment of -3.9
percent. As we discussed extensively in the FY 2011 IPPS/LTCH PPS final
rule, it has been our practice to moderate payment adjustments when
necessary to mitigate the effects of significant downward adjustments
on hospitals, to avoid what could be widespread, disruptive effects of
such adjustments on hospitals. Therefore, we stated that we believed it
was appropriate to not implement the -3.9 percent prospective
adjustment in FY 2011 because we finalized a -2.9 percent recoupment
adjustment for that fiscal year. Accordingly, we did not propose a
prospective adjustment under section 7(b)(1)(A) of Public Law 110-90
for FY 2011 (75 FR 23868 through 23870). We noted that, as a result,
payments in FY 2011 (and in each future fiscal year until we
implemented the requisite adjustment) would be higher than they would
have been if we had implemented an adjustment under section 7(b)(1)(A)
of Public Law 110-90.
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51489 and 51497), we
indicated that, because further delay of this prospective adjustment
would result in a continued accrual of unrecoverable overpayments, it
was imperative that we implement a prospective adjustment for FY 2012,
while recognizing CMS' continued desire to mitigate the effects of any
significant downward adjustments to hospitals. Therefore, we
implemented a -2.0 percent prospective adjustment to the standardized
amount instead of the full -3.9 percent.
In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53274 through
53276), we completed the prospective portion of the adjustment required
under section 7(b)(1)(A) of Public Law 110-90 by finalizing a -1.9
percent adjustment to the standardized amount for FY 2013. We stated
that this adjustment would remove the remaining effect of the
documentation and coding changes that do not reflect real changes in
case-mix that occurred in FY 2008 and FY 2009. We believed that it was
imperative to implement the full remaining adjustment, as any further
delay would result in an overstated standardized amount in FY 2013 and
any future fiscal years until a full adjustment was made.
We noted again that delaying full implementation of the prospective
portion of the adjustment required under section 7(b)(1)(A) of Public
Law 110-90 until FY 2013 resulted in payments in FY 2010 through FY
2012 being overstated. These overpayments could not be recovered by CMS
as section 7(b)(1)(B) of Public Law 110-90 limited recoupments to
overpayments made in FY 2008 and FY 2009.
5. Recoupment or Repayment Adjustment Authorized by Section 7(b)(1)(B)
of Public Law 110-90
Section 7(b)(1)(B) of Public Law 110-90 requires the Secretary to
make an adjustment to the standardized amounts under section 1886(d) of
the Act to offset the estimated increase or decrease in aggregate
payments for FY 2008 and FY 2009 (including interest) resulting from
the difference between the estimated actual documentation and coding
effect and the documentation and coding adjustments applied under
section 7(a) of Public Law 110-90. This determination must be based on
a retrospective evaluation of claims data. Our actuaries estimated that
there was a 5.8 percentage point difference resulting in an increase in
aggregate payments of approximately $6.9 billion. Therefore, as
discussed in the FY 2011 IPPS/LTCH PPS final rule (75 FR 50062 through
50067), we determined that an aggregate adjustment of -5.8 percent in
FYs 2011 and 2012 would be necessary in order to meet the requirements
of section 7(b)(1)(B) of Public Law 110-90 to adjust the standardized
amounts for discharges occurring in FYs 2010, 2011, and/or 2012 to
offset the estimated amount of the increase in aggregate payments
(including interest) in FYs 2008 and 2009.
It is often our practice to phase in payment rate adjustments over
more than one year in order to moderate the effect on payment rates in
any one year. Therefore, consistent with the policies that we have
adopted in many similar cases, in the FY 2011 IPPS/LTCH PPS final rule,
we made an adjustment to the standardized amount of -2.9 percent,
representing approximately half of the aggregate adjustment required
under section 7(b)(1)(B) of Public Law 110-90, for FY 2011. An
adjustment of this magnitude allowed us to moderate the effects on
hospitals in one year while simultaneously making it possible to
implement the entire adjustment within the timeframe required under
section 7(b)(1)(B) of Public Law 110-90 (that is, no later than FY
2012). For FY 2012, in accordance with the timeframes set forth by
section 7(b)(1)(B) of Public Law 110-90, and consistent with the
discussion in the FY 2011 IPPS/LTCH PPS final rule, we completed the
recoupment adjustment by implementing the remaining -2.9 percent
adjustment, in addition to removing the effect of the -2.9 percent
adjustment to the standardized amount finalized for FY 2011 (76 FR
51489 and 51498). Because these adjustments, in effect, balanced out,
there was no year-to-year change in the standardized amount due to this
recoupment adjustment for FY 2012. In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53276), we made a final +2.9 percent adjustment to the
standardized amount, completing the recoupment portion of section
7(b)(1)(B) of Public Law 110-90. We note that with this positive
adjustment, according to our estimates, all overpayments made in FY
2008 and FY 2009 have been fully recaptured with appropriate interest,
and the standardized amount has been returned to the appropriate
baseline.
6. Recoupment or Repayment Adjustment Authorized by Section 631 of the
American Taxpayer Relief Act of 2012 (ATRA)
Section 631 of the ATRA amended section 7(b)(1)(B) of Public Law
110-90 to require the Secretary to make a recoupment adjustment or
adjustments totaling $11 billion by FY 2017. This adjustment represents
the amount of the increase in aggregate payments as a result of not
completing the prospective adjustment authorized under section
7(b)(1)(A) of Public Law 110-90 until FY 2013. As discussed earlier,
this delay in implementation resulted in overstated payment rates in
FYs 2010, 2011, and 2012. The resulting overpayments could not have
been recovered under Public Law 110-90.
Similar to the adjustments authorized under section 7(b)(1)(B) of
Public Law 110-90, the adjustment required under section 631 of the
ATRA is a one-time recoupment of a prior overpayment, not
[[Page 27998]]
a permanent reduction to payment rates. Therefore, any adjustment made
to reduce payment rates in one year would eventually be offset by a
positive adjustment, once the necessary amount of overpayment is
recovered.
As we stated in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50515
through 50517), our actuaries estimate that a -9.3 percent adjustment
to the standardized amount would be necessary if CMS were to fully
recover the $11 billion recoupment required by section 631 of the ATRA
in FY 2014. It is often our practice to phase in payment rate
adjustments over more than one year, in order to moderate the effect on
payment rates in any one year. Therefore, consistent with the policies
that we have adopted in many similar cases, and after consideration of
the public comments we received, in the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50515 through 50517), we implemented a -0.8 percent
recoupment adjustment to the standardized amount in FY 2014. We stated
that if adjustments of approximately -0.8 percent are implemented in
FYs 2014, 2015, 2016, and 2017, using standard inflation factors, we
estimate that the entire $11 billion will be accounted for by the end
of the statutory 4-year timeline. As estimates of any future
adjustments are subject to slight variations in total savings, we did
not provide for specific adjustments for FYs 2015, 2016, or 2017 at
that time. We stated that we believed that this level of adjustment for
FY 2014 was a reasonable and fair approach that satisfies the
requirements of the statute while mitigating extreme annual
fluctuations in payment rates. In addition, we again noted that this -
0.8 percent recoupment adjustment, and future adjustments under this
authority, will be eventually offset by an equivalent positive
adjustment once the full $11 billion recoupment requirement has been
realized.
Consistent with the approach discussed in the FY 2014 rulemaking
for recouping the $11 billion required by section 631 of the ATRA, we
are proposing an additional -0.8 percent recoupment adjustment to the
standardized amount for FY 2015. We estimated that this level of
adjustment, combined with leaving the -0.8 percent adjustment made for
FY 2014 in place, will recover up to $2 billion in FY 2015. Taking into
account the approximately $1 billion recovered in FY 2014, this will
leave approximately $8 billion remaining to be recovered by FY 2017. We
continue to believe that if adjustments of approximately -0.8 percent
are implemented in FYs 2014, 2015, 2016, and 2017, using standard
inflation factors, the entire $11 billion will be accounted for by the
end of the statutory 4-year timeline. As we explained in the FY 2014
rulemaking, estimates of any future adjustments are subject to slight
variations in total savings; therefore, we are not proposing specific
adjustments for FY 2016 and FY 2017 at this time. We continue to
believe that our proposed -0.8 percent adjustment for FY 2015 is a
reasonable and fair approach that will help satisfy the requirements of
the statute while mitigating extreme annual fluctuations in payment
rates. In addition, we again note that this -0.8 percent recoupment
adjustment, and future adjustments under this authority, will be
eventually offset by an equivalent positive adjustment once the full
$11 billion recoupment requirement has been realized.
7. Prospective Adjustment for the MS-DRG Documentation and Coding
Effect Through FY 2010
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50515 through
50517), we discussed the possibility of applying an additional
prospective adjustment to account for the cumulative MS-DRG
documentation and coding effect through FY 2010. In that final rule, we
stated that if we were to apply such an adjustment, we believe the most
appropriate additional adjustment is -0.55 percent. However, we decided
not to apply such an adjustment in FY 2014, in light of the need to
make the retrospective adjustments required by the ATRA. We continue to
believe that if we were to apply an additional prospective adjustment
for the cumulative MS-DRG documentation and coding effect through FY
2010, the most appropriate additional adjustment is -0.55 percent.
However, we are not proposing such an adjustment in FY 2015, in light
of the ongoing recoupment required by the ATRA. We will consider
whether such an additional adjustment is appropriate in future years'
rulemaking.
E. Refinement of the MS-DRG Relative Weight Calculation
1. Background
Beginning in FY 2007, we implemented relative weights for DRGs
based on cost report data instead of charge information. We refer
readers to the FY 2007 IPPS final rule (71 FR 47882) for a detailed
discussion of our final policy for calculating the cost-based DRG
relative weights and to the FY 2008 IPPS final rule with comment period
(72 FR 47199) for information on how we blended relative weights based
on the CMS DRGs and MS-DRGs.
As we implemented cost-based relative weights, some public
commenters raised concerns about potential bias in the weights due to
``charge compression,'' which is the practice of applying a higher
percentage charge markup over costs to lower cost items and services,
and a lower percentage charge markup over costs to higher cost items
and services. As a result, the cost-based weights would undervalue
high-cost items and overvalue low-cost items if a single CCR is applied
to items of widely varying costs in the same cost center. To address
this concern, in August 2006, we awarded a contract to the Research
Triangle Institute, International (RTI) to study the effects of charge
compression in calculating the relative weights and to consider methods
to reduce the variation in the cost-to-charge ratios (CCRs) across
services within cost centers. For a detailed summary of RTI's findings,
recommendations, and public comments that we received on the report, we
refer readers to the FY 2009 IPPS/LTCH PPS final rule (73 FR 48452
through 48453). In addition, we refer readers to RTI's July 2008 final
report titled ``Refining Cost to Charge Ratios for Calculating APC and
MS-DRG Relative Payment Weights'' (http://www.rti.org/reports/cms/HHSM-500-2005-0029I/PDF/Refining_Cost_to_Charge_Ratios_200807_Final.pdf).
In the FY 2009 IPPS final rule (73 FR 48458 through 48467), in
response to the RTI's recommendations concerning cost report
refinements, we discussed our decision to pursue changes to the cost
report to split the cost center for Medical Supplies Charged to
Patients into one line for ``Medical Supplies Charged to Patients'' and
another line for ``Implantable Devices Charged to Patients.'' We
acknowledged, as RTI had found, that charge compression occurs in
several cost centers that exist on the Medicare cost report. However,
as we stated in the FY 2009 IPPS final rule, we focused on the CCR for
Medical Supplies and Equipment because RTI found that the largest
impact on the MS-DRG relative weights could result from correcting
charge compression for devices and implants. In determining the items
that should be reported in these respective cost centers, we adopted
the commenters' recommendations that hospitals should use revenue codes
established by the AHA's National Uniform Billing Committee to
determine the items that should be reported in the ``Medical Supplies
Charged to Patients'' and the ``Implantable Devices Charged to
[[Page 27999]]
Patients'' cost centers. Accordingly, a new subscripted line for
``Implantable Devices Charged to Patients'' was created in July 2009.
This new subscripted cost center has been available for use for cost
reporting periods beginning on or after May 1, 2009.
As we discussed in the FY 2009 IPPS final rule (73 FR 48458) and in
the CY 2009 OPPS/ASC final rule with comment period (73 FR 68519
through 68527), in addition to the findings regarding implantable
devices, RTI also found that the costs and charges of computed
tomography (CT) scans, magnetic resonance imaging (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 the OPPS relative weights would
better estimate the costs of those services if CMS were to add standard
cost centers for CT scans, MRIs, 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
costs from charges on claims data. In the FY 2011 IPPS/LTCH PPS final
rule (75 FR 50075 through 50080), we finalized our proposal to create
standard cost centers for CT scans, MRIs, 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. (We refer readers to the FY 2011 IPPS/LTCH PPS final
rule (75 FR 50075 through 50080) for a detailed discussion of the
reasons for the creation of standard cost centers for CT scans, MRIs,
and cardiac catheterization.) The new standard cost centers for CT
scans, MRIs, and cardiac catheterization are effective for cost
reporting periods beginning on or after May 1, 2010, on the revised
cost report Form CMS-2552-10.
In the FY 2009 IPPS final rule (73 FR 48468), we stated that, due
to what is typically a 3-year lag between the reporting of cost report
data and the availability for use in ratesetting, we anticipated that
we might be able to use data from the new ``Implantable Devices Charged
to Patients'' cost center to develop a CCR for ``Implantable Devices
Charged to Patients'' in the FY 2012 or FY 2013 IPPS rulemaking cycle.
However, as noted in the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74
FR 43782), due to delays in the issuance of the revised cost report
Form CMS 2552-10, we determined that a new CCR for ``Implantable
Devices Charged to Patients'' might not be available before FY 2013.
Similarly, when we finalized the decision in the FY 2011 IPPS/LTCH PPS
final rule to add new cost centers for CT scans, MRIs, and cardiac
catheterization, we explained that data from any new cost centers that
may be created will not be available until at least 3 years after they
are first used (75 FR 50077). In preparation for the FY 2012 IPPS/LTCH
PPS rulemaking, we checked the availability of data in the
``Implantable Devices Charged to Patients'' cost center on the FY 2009
cost reports, but we did not believe that there was a sufficient amount
of data from which to generate a meaningful analysis in this particular
situation. 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 MS-DRG relative weights for FY 2012. We indicated that
we would reassess the availability of data for the ``Implantable
Devices Charged to Patients'' cost center for the FY 2013 IPPS/LTCH PPS
rulemaking cycle and, if appropriate, we would propose to create a
distinct CCR at that time.
During the development of the FY 2013 IPPS/LTCH PPS proposed and
final rules, hospitals were still in the process of transitioning from
the previous cost report Form CMS-2552-96 to the new cost report Form
CMS-2552-10. Therefore, we were able to access only those cost reports
in the FY 2010 HCRIS with fiscal year begin dates on or after October
1, 2009, and before May 1, 2010; that is, those cost reports on Form
CMS-2552-96. Data from the Form CMS-2552-10 cost reports were not
available because cost reports filed on the Form CMS-2552-10 were not
accessible in the HCRIS. Further complicating matters was that, due to
additional unforeseen technical difficulties, the corresponding
information regarding charges for implantable devices on hospital
claims was not yet available to us in the MedPAR file. Without the
breakout in the MedPAR file of charges associated with implantable
devices to correspond to the costs of implantable devices on the cost
report, we believed that we had no choice but to continue computing the
relative weights with the current CCR that combines the costs and
charges for supplies and implantable devices. We stated in the FY 2013
IPPS/LTCH PPS final rule (77 FR 53281 through 53283) that when we do
have the necessary data for supplies and implantable devices on the
claims in the MedPAR file to create distinct CCRs for the respective
cost centers for supplies and implantable devices, we hoped that we
would also have data for an analysis of creating distinct CCRs for CT
scans, MRIs, and cardiac catheterization, which could then be finalized
through rulemaking. In the FY 2013 IPPS/LTCH PPS final rule (77 FR
53281), we stated that prior to proposing to create these CCRs, we
would first thoroughly analyze and determine the impacts of the data,
and that distinct CCRs for these new cost centers would be used in the
calculation of the relative weights only if they were first finalized
through rulemaking.
At the time of the development of the FY 2014 IPPS/LTCH PPS
proposed rule (78 FR 27506 through 27507), we had a substantial number
of hospitals completing all, or some, of these new cost centers on the
FY 2011 Medicare cost reports, compared to prior years. We stated that
we believed that the analytic findings described using the FY 2011 cost
report data and FY 2012 claims data supported our original decision to
break out and create new cost centers for implantable devices, MRIs, CT
scans, and cardiac catheterization, and we saw no reason to further
delay proposing to implement the CCRs of each of these cost centers.
Therefore, beginning in FY 2014, we proposed to calculate the MS-DRG
relative weights using 19 CCRs, creating distinct CCRs from cost report
data for implantable devices, MRIs, CT scans, and cardiac
catheterization (78 FR 27509).
We refer readers to the FY 2014 IPPS/LTCH PPS proposed rule (78 FR
27507 through 27509) and final rule (78 FR 50518 through 50523) in
which we presented data analyses using distinct CCRs for implantable
devices, MRIs, CT scans, and cardiac catheterization. The FY 2014 IPPS/
LTCH PPS final rule also set forth our responses to public comments we
received on our proposal to implement these CCRs. As explained in more
detail in the FY 2014 IPPS/LTCH PPS final rule, we finalized our
proposal to use 19 CCRs to calculate MS-DRG relative weights beginning
in FY 2014--the then existing 15 cost centers and the 4 new CCRs for
implantable devices, MRIs, CT scans, and cardiac catheterization.
Therefore, beginning in FY 2014, we calculated the IPPS MS-DRG relative
weights using 19 CCRs, creating distinct CCRs for implantable devices,
MRIs, CT scans, and cardiac catheterization.
2. Discussion for FY 2015
To calculate the proposed MS-DRG relative weights for FY 2015, we
use two data sources: the MedPAR file as the
[[Page 28000]]
claims data source and the HCRIS as the cost report data source. We
adjust the charges from the claims to costs by applying the 19 national
average CCRs developed from the cost reports. The description of the
calculation of the proposed 19 CCRs and the proposed MS-DRG relative
weights for FY 2015 is included in section II.H. of the preamble of
this proposed rule.
F. Proposed Adjustment to MS-DRGs for Preventable Hospital-Acquired
Conditions (HACs), Including Infections for FY 2015
1. Background
Section 1886(d)(4)(D) of the Act addresses certain hospital-
acquired conditions (HACs), including infections. This provision is
part of an array of Medicare tools that we are using to promote
increased quality and efficiency of care. Under the IPPS, hospitals are
encouraged to treat patients efficiently because they receive the same
DRG payment for stays that vary in length and in the services provided,
which gives hospitals an incentive to avoid unnecessary costs in the
delivery of care. In some cases, conditions acquired in the hospital do
not generate higher payments than the hospital would otherwise receive
for cases without these conditions. To this extent, the IPPS encourages
hospitals to avoid complications.
However, the treatment of certain conditions can generate higher
Medicare payments in two ways. First, if a hospital incurs
exceptionally high costs treating a patient, the hospital stay may
generate an outlier payment. Because the outlier payment methodology
requires that hospitals experience large losses on outlier cases before
outlier payments are made, hospitals have an incentive to prevent
outliers. Second, under the MS-DRG system that took effect in FY 2008
and that has been refined through rulemaking in subsequent years,
certain conditions can generate higher payments even if the outlier
payment requirements are not met. Under the MS-DRG system, there are
currently 261 sets of MS-DRGs that are split into 2 or 3 subgroups
based on the presence or absence of a complication or comorbidity (CC)
or a major complication or comorbidity (MCC). The presence of a CC or
an MCC generally results in a higher payment.
Section 1886(d)(4)(D) of the Act specifies that, by October 1,
2007, the Secretary was required to select, in consultation with the
Centers for Disease Control and Prevention (CDC), at least two
conditions that: (a) Are high cost, high volume, or both; (b) are
assigned to a higher paying MS-DRG when present as a secondary
diagnosis (that is, conditions under the MS-DRG system that are CCs or
MCCs); and (c) could reasonably have been prevented through the
application of evidence-based guidelines. Section 1886(d)(4)(D) of the
Act also specifies that the list of conditions may be revised, again in
consultation with the CDC, from time to time as long as the list
contains at least two conditions.
Effective for discharges occurring on or after October 1, 2008,
under the authority of section 1886(d)(4)(D) of the Act, Medicare no
longer assigns an inpatient hospital discharge to a higher paying MS-
DRG if a selected condition is not present on admission (POA). Thus, if
a selected condition that was not POA manifests during the hospital
stay, it is considered a HAC and the case is paid as though the
secondary diagnosis was not present. However, even if a HAC manifests
during the hospital stay, if any nonselected CC or MCC appears on the
claim, the claim will be paid at the higher MS-DRG rate. In addition,
Medicare continues to assign a discharge to a higher paying MS-DRG if a
selected condition is POA. When a HAC is not POA, payment can be
affected in a manner shown in the diagram below.
[GRAPHIC] [TIFF OMITTED] TP15MY14.000
2. HAC Selection
Beginning in FY 2007, we have set forth proposals, and solicited
and responded to public comments, to implement section 1886(d)(4)(D) of
the Act through the IPPS annual rulemaking process. For specific
policies addressed in each rulemaking cycle, including a detailed
discussion of the collaborative interdepartmental process and public
input regarding selected and potential candidate HACs, we refer readers
to the following rules: the FY 2007 IPPS proposed rule (71 FR 24100)
and final rule (71 FR 48051 through 48053); the FY 2008 IPPS proposed
rule (72 FR 24716 through 24726) and final rule with comment period (72
FR 47200 through 47218); the FY 2009 IPPS proposed rule (73 FR 23547)
and final rule (73 FR 48471); the FY 2010 IPPS/
[[Page 28001]]
RY 2010 LTCH PPS proposed rule (74 FR 24106) and final rule (74 FR
43782); the FY 2011 IPPS/LTCH PPS proposed rule (75 FR 23880) and final
rule (75 FR 50080); the FY 2012 IPPS/LTCH PPS proposed rule (76 FR
25810 through 25816) and final rule (76 FR 51504 through 51522); the FY
2013 IPPS/LTCH PPS proposed rule (77 FR 27892 through 27898) and final
rule (77 FR 53283 through 53303); and the FY 2014 IPPS/LTCH PPS
proposed rule (78 FR 27509 through 27512) and final rule (78 FR 50523
through 50527). A complete list of the 11 current categories of HACs is
included on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalAcqCond/Hospital-Acquired_Conditions.html.
3. Present on Admission (POA) Indicator Reporting
Collection of POA indicator data is necessary to identify which
conditions were acquired during hospitalization for the HAC payment
provision as well as for broader public health uses of Medicare data.
In previous rulemaking, we provided both CMS and CDC Web site resources
that are available to hospitals for assistance in this reporting
effort. For detailed information regarding these sites and materials,
including the application and use of POA indicators, we refer the
reader to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51506 through
51507).
Currently, as we have discussed in the prior rulemaking cited under
section II.I.2. of the preamble of this proposed rule, the POA
indicator reporting requirement only applies to IPPS hospitals because
they are subject to this HAC provision. Non-IPPS hospitals, including
CAHs, LTCHs, IRFs, IPFs, cancer hospitals, children's hospitals,
RNHCIs, and the Department of Veterans Affairs/Department of Defense
hospitals, are exempt from POA reporting.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50525), we noted
that hospitals in Maryland operating under a statutory waiver are not
paid under the IPPS, but rather were paid under the provisions of
section 1814(b)(3) of the Act and therefore exempt from reporting POA
indicators. However, we believed it was appropriate to require them to
use POA indicator reporting on their claims so that we can include
their data and have as complete a dataset as possible when we analyze
trends and make further payment policy determinations, such as those
authorized under section 1886(p) of the Act. Therefore, in the FY 2014
IPPS/LTCH PPS final rule, we finalized our policy that hospitals in
Maryland that formerly operated under section 1814(b)(3) of the Act
were no longer exempted from the POA indicator reporting requirement
beginning with claims submitted on or after October 1, 2013, including
all claims for discharges on or after October 1, 2013. We note that,
while this requirement was not effective until October 1, 2013,
hospitals in Maryland could submit data with POA indicators before that
date with the expectation that these data will be accepted by
Medicare's claims processing systems. (We refer readers to the FY 2014
IPPS/LTCH PPS final rule (78 FR 50707 through 50712) for a discussion
of our FY 2014 final policies to implement section 1886(p) of the Act
that are applicable to Maryland hospitals.)
Subsequent to our FY 2014 rulemaking, the State of Maryland entered
into an agreement with CMS, effective January 1, 2014, to participate
in CMS' new Maryland All-Payer Model, a 5-year hospital payment model.
This model is being implemented under section 1115A of the Act, as
added by section 3021 of the Affordable Care Act, which authorizes the
testing of innovative payment and service delivery models, including
models that allow States to ``test and evaluate systems of all-payer
payment reform for the medical care of residents of the State,
including dual eligible individuals.'' Section 1115A of the Act
authorizes the Secretary to waive such requirements of titles XI and
XVIII of the Act as may be necessary solely for purposes of carrying
out section 1115A of the Act with respect to testing models.
Under the agreement with CMS, Maryland will limit per capita total
hospital cost growth for all payers, including Medicare. In order to
implement the new model, effective January 1, 2014, Maryland elected to
no longer have Medicare make payments to Maryland hospitals in
accordance with section 1814(b)(3) of the Act. Maryland also
represented that it is no longer in continuous operation of a
demonstration project reimbursement system since July 1, 1977, as
specified under section 1814(b)(3) of the Act. Because Maryland
hospitals are no longer paid under section 1814(b)(3) of the Act, they
are no longer subject to those provisions of the Act and related
implementing regulations that are specific to section 1814(b)(3)
hospitals. Although CMS has waived certain provisions of the Act for
Maryland hospitals, as set forth in the agreement between CMS and
Maryland and subject to Maryland's compliance with the terms of the
agreement, CMS has not waived the POA indicator reporting requirement.
In other words, the changes to the status of Maryland hospitals under
section 1814(b)(3) of the Act as described above do not in any way
change the POA indicator reporting requirement for Maryland hospitals.
There are currently four POA indicator reporting options, ``Y'',
``W'', ``N'', and ``U'', as defined by the ICD-9-CM Official Guidelines
for Coding and Reporting. We note that prior to January 1, 2011, we
also used a POA indicator reporting option ``1''. However, beginning on
or after January 1, 2011, hospitals were required to begin reporting
POA indicators using the 5010 electronic transmittal standards format.
The 5010 format removes the need to report a POA indicator of ``1'' for
codes that are exempt from POA reporting. We issued CMS instructions on
this reporting change as a One-Time Notification, Pub. No. 100-20,
Transmittal No. 756, Change Request 7024, effective on August 13, 2010,
which can be located at the following link on the CMS Web site: http://www.cms.gov/manuals/downloads/Pub100_20.pdf.) The POA indicator
reporting process will not change when ICD-10-CM and ICD-10-PCS are
implemented on October 1, 2014. The current POA indicators and their
descriptors are shown in the chart below:
------------------------------------------------------------------------
Indicator Descriptor
------------------------------------------------------------------------
Y................................. Indicates that the condition was
present on admission.
W................................. Affirms that the hospital has
determined that, based on data and
clinical judgment, it is not
possible to document when the onset
of the condition occurred.
N................................. Indicates that the condition was not
present on admission.
U................................. Indicates that the documentation is
insufficient to determine if the
condition was present at the time
of admission.
------------------------------------------------------------------------
[[Page 28002]]
Under the HAC payment policy, we treat HACs coded with ``Y'' and
``W'' indicators as POA and allow the condition on its own to cause an
increased payment at the CC and MCC level. We treat HACs coded with
``N'' and ``U'' indicators as Not Present on Admission (NPOA) and do
not allow the condition on its own to cause an increased payment at the
CC and MCC level. We refer readers to the following rules for a
detailed discussion of POA indicator reporting: The FY 2009 IPPS
proposed rule (73 FR 23559) and final rule (73 FR 48486 through 48487);
the FY 2010 IPPS/RY 2010 LTCH PPS proposed rule (74 FR 24106) and final
rule (74 FR 43784 through 43785); the FY 2011 IPPS/LTCH PPS proposed
rule (75 FR 23881 through 23882) and final rule (75 FR 50081 through
50082); the FY 2012 IPPS/LTCH PPS proposed rule (76 FR 25812 through
25813) and final rule (76 FR 51506 through 51507); the FY 2013 IPPS/
LTCH PPS proposed rule (77 FR 27893 through 27894) and final rule (77
FR 53284 through 53285); and the FY 2014 IPPS/LTCH PPS proposed rule
(78 FR 27510 through 27511) and final rule (78 FR 50524 through 50525).
In addition, as discussed previously in the FY 2013 IPPS/LTCH PPS
final rule (77 FR 53324), the 5010 format allows the reporting and,
effective January 1, 2011, the processing of up to 25 diagnoses and 25
procedure codes. As such, it is necessary to report a valid POA
indicator for each diagnosis code, including the principal diagnosis
and all secondary diagnoses up to 25.
4. HACs and POA Reporting in Preparation for Transition to ICD-10-CM
and ICD-10-PCS
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51506 and 51507), in
preparation for the transition to the ICD-10-CM and ICD-10-PCS code
sets, we indicated that further information regarding the use of the
POA indicator with the ICD-10-CM/ICD-10-PCS classifications as they
pertain to the HAC policy would be discussed in future rulemaking.
At the March 5, 2012 and the September 19, 2012 meetings of the
ICD-9-CM Coordination and Maintenance Committee, an announcement was
made with regard to the availability of the ICD-9-CM HAC list
translation to ICD-10-CM and ICD-10-PCS code sets. Participants were
informed that the list of the ICD-9-CM selected HACs has been
translated into codes using the ICD-10-CM and ICD-10-PCS classification
system. It was recommended that the public review this list of ICD-10-
CM/ICD-10-PCS code translations of the selected HACs available on the
CMS Web site at: http://www.cms.gov/Medicare/Coding/ICD10/ICD-10-MS-DRG-Conversion-Project.html. The translations can be found under the
link titled ``ICD-10-CM/PCS MS-DRG v30 Definitions Manual Table of
Contents--Full Titles--HTML Version in Appendix I--Hospital Acquired
Conditions (HACs).'' This CMS Web site regarding the ICD-10-MS-DRG
Conversion Project is also available on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalAcqCond/icd10_hacs.html. We encouraged the public to submit comments on these
translations through the HACs Web page using the CMS ICD-10-CM/PCS HAC
Translation Feedback Mailbox that was set up for this purpose under the
Related Links section titled ``CMS HAC Feedback.''
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50525), we stated
that the final HAC list translation from ICD-9-CM to ICD-10-CM/ICD-10-
PCS would be subject to formal rulemaking. We encouraged readers to
review the educational materials and draft code sets available for ICD-
10-CM/ICD-10-PCS on the CMS Web site at: http://www.cms.gov/ICD10/. In
addition, we stated that the draft ICD-10-CM/ICD-10-PCS Coding
Guidelines could be viewed on the CDC Web site at: http://www.cdc.gov/nchs/icd/icd10cm.htm.
The HACs code translation list from ICM-9-CM to ICD-10-CM/ICD-10-
PCS is available to the public on the CMS Web site at: http://www.cms.gov/Medicare/Coding/ICD10/ICD-10-MS-DRG-Conversion-Project.html. We note that Appendix I of the ICD-10 MS-DRGs Version
31.0-R file posted on the Web site contains the DRA HACs translated to
ICD-10.
We note that section 212 of the Protecting Access to Medicare Act
of 2014 (Pub. L. 113-93), enacted on April 1, 2014, delayed the
transition from the ICD-9-CM to the ICD-10 code set.
5. Proposals Regarding Current HACs and Previously Considered Candidate
HACs
In this FY 2015 IPPS/LTCH PPS proposed rule, we are not proposing
to add or remove categories of the HACs. However, we continue to
encourage public dialogue about refinements to the HAC list by written
stakeholder comments about both previously selected and potential
candidate HACs. We refer readers to section II.F.6. of the FY 2008 IPPS
final rule with comment period (72 FR 47202 through 47218) and to
section II.F.7. of the FY 2009 IPPS final rule (73 FR 48774 through
48491) for detailed discussion supporting our determination regarding
each of these conditions. We also refer readers to section II.F.5. of
the FY 2013 IPPS/LTCH PPS proposed rule (77 FR 27892 through 27898),
the FY 2013 IPPS/LTCH PPS final rule (77 FR 53285 through 53292) for
the HAC policy for FY 2013, and the FY 2014 IPPS/LTCH PPS proposed rule
(78 FR 27509 through 27512) and the FY 2014 IPPS/LTCH PPS final rule
(78 FR 50523 through 50527) for the HAC policy for FY 2014.
6. RTI Program Evaluation
On September 30, 2009, a contract was awarded to RTI to evaluate
the impact of the Hospital-Acquired Condition-Present on Admission
(HAC-POA) provisions on the changes in the incidence of selected
conditions, effects on Medicare payments, impacts on coding accuracy,
unintended consequences, and infection and event rates. This was an
intra-agency project with funding and technical support from CMS, OPHS,
AHRQ, and CDC. The evaluation also examined the implementation of the
program and evaluated additional conditions for future selection. The
contract with RTI ended on November 30, 2012. Summary reports of RTI's
analysis of the FYs 2009, 2010, and 2011 MedPAR data files for the HAC-
POA program evaluation were included in the FY 2011 IPPS/LTCH PPS final
rule (75 FR 50085 through 50101), the FY 2012 IPPS/LTCH PPS final rule
(76 FR 51512 through 51522), and the FY 2013 IPPS/LTCH PPS final rule
(77 FR 53292 through 53302). Summary and detailed data also were made
publicly available on the CMS Web site at: http://www.cms.gov/HospitalAcqCond/01_Overview.asp and the RTI Web site at: http://www.rti.org/reports/cms/.
In addition to the evaluation of HAC and POA MedPAR claims data,
RTI also conducted analyses on readmissions due to HACs, the
incremental costs of HACs to the health care system, a study of
spillover effects and unintended consequences, as well as an updated
analysis of the evidence-based guidelines for selected and previously
considered HACs. Reports on these analyses have been made publicly
available on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalAcqCond/index.html.
7. Current and Previously Considered Candidate HACs--RTI Report on
Evidence-Based Guidelines
The RTI program evaluation includes a report that provides
references for all evidence-based guidelines available for
[[Page 28003]]
each of the selected and previously considered candidate HACs that
provide recommendations for the prevention of the corresponding
conditions. Guidelines were primarily identified using the AHRQ
National Guidelines Clearing House (NGCH) and the CDC, along with
relevant professional societies. Guidelines published in the United
States were used, if available. In the absence of U.S. guidelines for a
specific condition, international guidelines were included.
Evidence-based guidelines that included specific recommendations
for the prevention of the condition were identified for each of the
selected conditions. In addition, evidence-based guidelines also were
found for the previously considered candidate conditions. RTI prepared
a final report to summarize its findings regarding evidence-based
guidelines. This report can be found on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalAcqCond/Downloads/Evidence-Based-Guidelines.pdf. Subsequent to this final
report, RTI was awarded an FY 2014 Evidence-Based Guidelines Monitoring
contract. Under the contract, RTI will provide a summary report of all
evidence-based guidelines available for each of the selected and
previously considered candidate HACs that provide recommendations for
the prevention of the corresponding conditions. This report is usually
delivered to CMS annually in a May/June timeframe. Updates to the
guidelines will be made available to the public.
G. Proposed Changes to Specific MS-DRG Classifications
1. Discussion of Changes to Coding System and Basis for Proposed MS-DRG
Updates
a. Conversion of MS-DRGs to the International Classification of
Diseases, 10th Revision (ICD-10)
Providers use the code sets under the ICD-9-CM coding system to
report diagnoses and procedures for Medicare hospital inpatient
services under the MS-DRG system. The ICD-10 coding system includes the
International Classification of Diseases, 10th Revision, Clinical
Modification (ICD-10-CM) for diagnosis coding and the International
Classification of Diseases, 10th Revision, Procedure Coding System
(ICD-10-PCS) for inpatient hospital procedure coding, as well as the
Official ICD-10-CM and ICD-10-PCS Guidelines for Coding and Reporting.
The ICD-10 coding system was initially adopted for transactions
conducted on or after October 1, 2013, as described in the Health
Insurance Portability and Accountability Act of 1996 (HIPAA)
Administrative Simplification: Modifications to Medical Data Code Set
Standards to Adopt ICD-10-CM and ICD-10-PCS Final Rule published in the
Federal Register on January 16, 2009 (74 FR 3328 through 3362)
(hereinafter referred to as the ``ICD-10-CM and ICD-10-PCS final
rule''). However, the Secretary of Health and Human Services issued a
final rule that delays the compliance date for ICD-10 from October 1,
2013, to October 1, 2014. That final rule, entitled ``Administrative
Simplification: Adoption of a Standard for a Unique Health Plan
Identifier; Addition to the National Provider Identifier Requirements;
and a Change to the Compliance Date for ICD-10-CM and ICD-10-PCS
Medical Data Code Sets,'' CMS-0040-F, was published in the Federal
Register on September 5, 2012 (77 FR 54664) and is available for
viewing on the Internet at: http://www.gpo.gov/fdsys/pkg/FR-2012-09-05/pdf/2012-21238.pdf. On April 1, 2014, the Protecting Access to Medicare
Act of 2014 (Pub. L. 113-93) was enacted. Section 212 of Public Law
113-93, titled ``Delay in Transition from ICD-9 to ICD-10 Code Sets,''
provides that ``[t]he Secretary of Health and Human Services may not,
prior to October 1, 2015, adopt ICD-10 code sets as the standard for
code sets under section 1173(c) of the Social Security Act (42 U.S.C.
1320d-2(c)) and section 162.1002 of title 45, Code of Federal
Regulations.'' As of now, the Secretary has not implemented this
provision under HIPPA.
The anticipated move to ICD-10 necessitated the development of an
ICD-10-CM/ICD-10-PCS version of the MS-DRGs. CMS began a project to
convert the ICD-9-CM-based MS-DRGs to ICD-10 MS-DRGs. In response to
the FY 2011 IPPS/LTCH PPS proposed rule, we received public comments on
the creation of the ICD-10 version of the MS-DRGs, which will be
implemented at the same time as ICD-10 (75 FR 50127 and 50128). While
we did not propose an ICD-10 version of the MS-DRGs in the FY 2011
IPPS/LTCH PPS proposed rule, we noted that we have been actively
involved in converting current MS-DRGs from ICD-9-CM codes to ICD-10
codes and sharing this information through the ICD-10 (previously ICD-
9-CM) Coordination and Maintenance Committee. We undertook this early
conversion project to assist other payers and providers in
understanding how to implement their own conversion projects. We posted
ICD-10 MS-DRGs based on Version 26.0 (FY 2009) of the MS-DRGs. We also
posted a paper that describes how CMS went about completing this
project and suggestions for other payers and providers to follow.
Information on the ICD-10 MS-DRG conversion project can be found on the
ICD-10 MS-DRG Conversion Project Web site at: http://cms.hhs.gov/Medicare/Coding/ICD10/ICD-10-MS-DRG-Conversion-Project.html. We have
continued to keep the public updated on our maintenance efforts for
ICD-10-CM and ICD-10-PCS coding systems, as well as the General
Equivalence Mappings that assist in conversion through the ICD-10
(previously ICD-9-CM) Coordination and Maintenance Committee.
Information on these committee meetings can be found on the CMS Web
site at: http://www.cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/index.html.
During FY 2011, we developed and posted Version 28.0 of the ICD-10
MS-DRGs based on the FY 2011 MS-DRGs (Version 28.0) that we finalized
in the FY 2011 IPPS/LTCH PPS final rule on the CMS Web site. This ICD-
10 MS-DRGs Version 28.0 also included the CC Exclusion List and the
ICD-10 version of the hospital-acquired conditions (HACs), which was
not posted with Version 26.0. We also discussed this update at the
September 15-16, 2010 and the March 9-10, 2011 meetings of the ICD-9-CM
Coordination and Maintenance Committee. The minutes of these two
meetings are posted on the CMS Web site at: http://www.cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/index.html.
We reviewed comments on the ICD-10 MS-DRGs Version 28.0 and made
updates as a result of these comments. We called the updated version
the ICD-10 MS-DRGs Version 28-R1. We posted a Definitions Manual of
ICD-10 MS-DRGs Version 28-R1 on our ICD-10 MS-DRG Conversion Project
Web site. To make the review of Version 28-R1 updates easier for the
public, we also made available pilot software on a CD ROM that could be
ordered through the National Technical Information Service (NTIS). A
link to the NTIS ordering page was provided on the CMS ICD-10 MS-DRGs
Web page. We stated that we believed that, by providing the ICD-10 MS-
DRGs Version 28-R1 Pilot Software (distributed on CD ROM), the public
would be able to more easily review and provide feedback on updates to
the ICD-10 MS-DRGs. We discussed the updated ICD-10 MS-DRGs Version 28-
R1 at the September 14, 2011 ICD-9-CM Coordination and Maintenance
[[Page 28004]]
Committee meeting. We encouraged the public to continue to review and
provide comments on the ICD-10 MS-DRGs so that CMS could continue to
update the system.
In FY 2012, we prepared the ICD-10 MS-DRGs Version 29.0, based on
the FY 2012 MS-DRGs (Version 29.0) that we finalized in the FY 2012
IPPS/LTCH PPS final rule. We posted a Definitions Manual of ICD-10 MS-
DRGs Version 29.0 on our ICD-10 MS-DRG Conversion Project Web site. We
also prepared a document that describes changes made from Version 28.0
to Version 29.0 to facilitate a review. The ICD-10 MS-DRGs Version 29.0
was discussed at the ICD-9-CM Coordination and Maintenance Committee
meeting on March 5, 2012. Information was provided on the types of
updates made. Once again the public was encouraged to review and
comment on the most recent update to the ICD-10 MS-DRGs.
CMS prepared the ICD-10 MS-DRGs Version 30.0 based on the FY 2013
MS-DRGs (Version 30.0) that we finalized in the FY 2013 IPPS/LTCH PPS
final rule. We posted a Definitions Manual of the ICD-10 MS-DRGs
Version 30.0 on our ICD-10 MS-DRG Conversion Project Web site. We also
prepared a document that describes changes made from Version 29.0 to
Version 30.0 to facilitate a review. We produced mainframe and computer
software for Version 30.0, which was made available to the public in
February 2013. Information on ordering the mainframe and computer
software through NTIS was posted on the ICD-10 MS-DRG Conversion
Project Web site. The ICD-10 MS-DRGs Version 30.0 computer software
facilitated additional review of the ICD-10 MS-DRGs conversion.
We provided information on a study conducted on the impact of
converting MS-DRGs to ICD-10. Information on this study is summarized
in a paper entitled ``Impact of the Transition to ICD-10 on Medicare
Inpatient Hospital Payments.'' This paper was posted on the CMS ICD-10
MS-DRGs Conversion Project Web site and was distributed and discussed
at the September 15, 2010 ICD-9-CM Coordination and Maintenance
Committee meeting. The paper described CMS' approach to the conversion
of the MS-DRGs from ICD-9-CM codes to ICD-10 codes. The study was
undertaken using the ICD-9-CM MS-DRGs Version 27.0 (FY 2010) which was
converted to the ICD-10 MS-DRGs Version 27.0. The study estimated the
impact on aggregate payment to hospitals and the distribution of
payments across hospitals. The impact of the conversion from ICD-9-CM
to ICD-10 on Medicare MS-DRG hospital payments was estimated using FY
2009 Medicare claims data. The study found a hospital payment increase
of 0.05 percent using the ICD-10 MS-DRGs Version 27.0.
CMS provided an overview of this hospital payment impact study at
the March 5, 2012 ICD-9-CM Coordination and Maintenance Committee
meeting. This presentation followed presentations on the creation of
ICD-10 MS-DRGs Version 29.0. A summary report of this meeting can be
found on the CMS Web site at: http://www.cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/index.html. At this March 2012 meeting, CMS
announced that it would produce an update on this impact study based on
an updated version of the ICD-10 MS-DRGs. This update of the impact
study was presented at the March 5, 2013 ICD-9-CM Coordination and
Maintenance Committee meeting. The study found that moving from an ICD-
9-CM-based system to an ICD-10 MS-DRG replicated system would lead to
DRG reassignments on only 1 percent of the 10 million MedPAR sample
records used in the study. Ninety-nine percent of the records did not
shift to another MS-DRG when using an ICD-10 MS-DRG system. For the 1
percent of the records that shifted, 45 percent of the shifts were to a
higher weighted MS-DRG, while 55 percent of the shifts were to lower
weighted MS-DRGs. The net impact across all MS-DRGs was a reduction by
4/10000 or minus 4 pennies per $100. The updated paper is posted on the
CMS Web site at: http://cms.hhs.gov/Medicare/Coding/ICD10/ICD-10-MS-DRG-Conversion-Project.html under the ``Downloads'' section.
Information on the March 5, 2013 ICD-9-CM Coordination and Maintenance
Committee meeting can be found on the CMS Web site at: http://cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/ICD-9-CM-C-and-M-Meeting-Materials.html. This update of the impact paper and the ICD-
10 MS-DRG Version 30.0 software provided additional information to the
public who were evaluating the conversion of the MS-DRGs to ICD-10 MS-
DRGs.
CMS prepared the ICD-10 MS-DRGs Version 31.0 based on the FY 2014
MS-DRGs (Version 31.0) that we finalized in the FY 2014 IPPS/LTCH PPS
final rule. In November 2013, we posted a Definitions Manual of the
ICD-10 MS-DRGs Version 31.0 on the ICD-10 MS-DRG Conversion Project Web
site at: http://www.cms.hhs.gov/Medicare/Coding/ICD10/ICD-10-MS-DRG-Conversion-Project.html. We also prepared a document that described
changes made from Version 30.0 to Version 31.0 to facilitate a review.
We produced mainframe and computer software for Version 31.0, which was
made available to the public in December 2013. Information on ordering
the mainframe and computer software through NTIS was posted on the CMS
Web site at: http://cms.hhs.gov/Medicare/Coding/ICD10/ICD-10-MS-DRG-Conversion-Project.html under the ``Related Links'' section. This ICD-
10 MS-DRGs Version 31.0 computer software facilitated additional review
of the ICD-10 MS-DRGs conversion. We encouraged the public to submit to
CMS any comments on areas where they believed the ICD-10 MS-DRGs did
not accurately reflect grouping logic found in the ICD-9-CM MS-DRGs
Version 31.0.
We reviewed comments received and developed an update of ICD-10 MS-
DRGs Version 31.0, which we called ICD-10 MS-DRGs Version 31.0-R. We
have posted a Definitions Manual of the ICD-10 MS-DRGs Version 31.0-R
on the ICD-10 MS-DRG Conversion Project Web site at: http://www.cms.hhs.gov/Medicare/Coding/ICD10/ICD-10-MS-DRG-Conversion-Project.html. We also prepared a document that describes changes made
from Version 31.0 to Version 31.0-R to facilitate a review. We will
continue to share ICD-10-MS-DRG conversion activities with the public
through this Web site.
b. Basis for FY 2015 MS-DRG Updates
CMS encourages input from our stakeholders concerning the annual
IPPS updates when that input is made available to us by December 7 of
the year prior to the next annual proposed rule update. For example, to
be considered for any updates or changes in FY 2016, comments and
suggestions should be submitted by December 7, 2014. The comments that
were submitted in a timely manner for FY 2015 are discussed below in
this section.
Following are the changes we are proposing to the MS-DRGs. We are
inviting public comment on each of the MS-DRG classification proposed
changes described below, as well as our proposals to maintain certain
existing MS-DRG classifications, which also are discussed below. In
some cases, we are proposing changes to the MS-DRG classifications
based on our analysis of claims data. In other cases, we are proposing
to maintain the existing MS-DRG classification based on our analysis of
claims data. For this FY 2015 proposed rule, our MS-DRG analysis is
based on claims data from the December
[[Page 28005]]
2013 update of the FY 2013 MedPAR file, which contains hospital bills
received through September 30, 2013, for discharges occurring through
September 30, 2013. In our discussion of the proposed MS-DRG
reclassification changes that follows, we refer to our analysis of
claims data from the ``December 2013 update of the FY 2013 MedPAR
file.'' For the FY 2015 final rule, we intend to calculate the final
relative weights on claims data from the March 2014 update of the FY
2013 MedPAR file, which will contain hospital bills received through
December 31, 2013, for discharges occurring through December 31, 2013.
As explained in previous rulemaking (76 FR 51487), in deciding
whether to propose to make further modification to the MS-DRGs for
particular circumstances brought to our attention, we considered
whether the resource consumption and clinical characteristics of the
patients with a given set of conditions are significantly different
than the remaining patients in the MS-DRG. We evaluated patient care
costs using average costs and lengths of stay and relied on the
judgment of our clinical advisors to decide whether patients are
clinically distinct or similar to other patients in the MS-DRG. In
evaluating resource costs, we considered both the absolute and
percentage differences in average costs between the cases we selected
for review and the remainder of cases in the MS-DRG. We also considered
variation in costs within these groups; that is, whether observed
average differences were consistent across patients or attributable to
cases that were extreme in terms of costs or length of stay, or both.
Further, we considered the number of patients who will have a given set
of characteristics and generally preferred not to create a new MS-DRG
unless it would include a substantial number of cases.
2. MDC 1 (Diseases and Disorders of the Nervous System)
a. Intracerebral Therapies: Gliadel[supreg] Wafer
During the comment period for the FY 2014 IPPS/LTCH PPS proposed
rule, we received a public comment that we considered to be outside the
scope of that proposed rule. We stated in the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50550) that we would consider this issue in future
rulemaking as part of our annual review process. The commenter
requested that a new MS-DRG be created for intracerebral therapies,
including implantation of chemotherapeutic agents. Specifically, the
commenter referred to the Gliadel[supreg] Wafer for the treatment of
High-Grade Malignant Gliomas (HGGs) defined as aggressive tumors
originating in the brain.
The Gliadel[supreg] Wafer has been discussed in prior rulemaking,
including the FY 2004 IPPS proposed rule (68 FR 27187) and final rule
(68 FR 45354 through 45355 and 68 FR 45391 through 45392); the FY 2005
IPPS proposed rule (69 FR 28221 through 28222) and final rule (69 FR
48957 through 48971); and the FY 2008 IPPS/LTCH PPS final rule (72 FR
47252 through 47253). We refer readers to these prior discussions for
further background information regarding the Gliadel[supreg] Wafer.
Effective October 1, 2002, ICD-9-CM procedure code 00.10
(Implantation of chemotherapeutic agent) was created to identify and
describe insertion of the Gliadel[supreg] Wafer. This procedure code is
assigned to MS-DRG 023 (Craniotomy with Major Device Implant/Acute
Complex Central Nervous System (CNS) PDX with MCC or Chemo Implant) in
MDC 1. According to the commenter, this current MS-DRG assignment does
not compensate providers adequately for the expenses incurred to
perform the surgery and implantation of the wafer device. The commenter
noted that MS-DRG 023 has a national average payment rate of
approximately $28,016. However, the commenter stated, ``the acquisition
cost for 1 box of the Gliadel[supreg] Wafer alone (typical utilization
per procedure is 8 wafers or 1 box) is $29,035.''
We conducted an analysis using claims data from the December 2013
update of the FY 2013 MedPAR file. Our findings are shown in the table
below.
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 023--All cases........................................... 5,383 10.98 $36,982
MS-DRG 023--Cases with procedure code 00.10..................... 158 7.0 34,027
----------------------------------------------------------------------------------------------------------------
As shown in the table above, there were a total of 5,383 cases in
MS-DRG 023 with an average length of stay of 10.98 days and average
costs of $36,982. The number of cases reporting procedure code 00.10 in
MS-DRG 023 totaled 158, with an average length of stay of 7.0 days and
average costs of $34,027.
The data clearly demonstrate that the volume of cases reporting
procedure code 00.10 within MS-DRG 023 have a shorter average length of
stay and are lower in average costs in comparison to all the cases in
the MS-DRG. Given the low volume of cases, shorter average length of
stay, and lower average costs, the data do not support the creation of
a new MS-DRG for cases utilizing the Gliadel[supreg] Wafer. In
addition, our clinical advisors determined that cases reporting
procedure code 00.10 are appropriately assigned within MS-DRG 023. As
discussed in the FY 2005 IPPS final rule (69 FR 48959), Gliadel[supreg]
Wafer cases were assigned to a new DRG that was clinically coherent and
reflected the resources used to treat those cases, which appropriately
addressed the concerns of commenters who raised questions regarding DRG
assignment for those cases at that time. Subsequently, with the
adoption of the MS-DRGs, in the FY 2008 IPPS/LTCH PPS final rule (72 FR
47252 through 47253), we assigned all cases utilizing the
Gliadel[supreg] Wafer technology to MS-DRG 023, the higher severity
level, and revised the title of this MS-DRG in recognition of the
complexity and costs associated with the implantation. Our clinical
advisors continue to support this assignment for these same reasons.
Therefore, we are not proposing to create a new MS-DRG for FY 2015 for
cases where ICD-9-CM procedure code 00.10 is reported. We are inviting
public comments on our proposal to maintain the current MS-DRG
structure.
b. Endovascular Embolization or Occlusion of Head and Neck
We received a request to change the MS-DRG assignment for the
following three ICD-9-CM procedure codes representing endovascular
embolization or occlusion procedures of the head and neck:
39.72 (Endovascular (total) embolization or occlusion of
head and neck vessels);
39.75 (Endovascular embolization or occlusion of vessel(s)
of head or neck using bare coils); and
39.76 (Endovascular embolization or occlusion of vessel(s)
of head or neck using bioactive coils).
These three procedure codes are currently assigned to the following
eight
[[Page 28006]]
MS-DRGs under MDC 1. Cases assigned to MS-DRGs 020, 021, and 022
require a principal diagnosis of hemorrhage. Cases assigned to MS-DRGs
023 and 024 require the insertion of a major implant or an acute
complex central nervous system (CNS) principal diagnosis. Cases
assigned to MS-DRGs 025, 026, and 027 do not have a principal diagnosis
of hemorrhage, an acute complex CNS principal diagnosis, or a major
device implant.
MS-DRG 020 (Intracranial Vascular Procedures with
Principal Diagnosis of Hemorrhage with MCC)
MS-DRG 021 (Intracranial Vascular Procedures with
Principal Diagnosis of Hemorrhage with CC)
MS-DRG 022 (Intracranial Vascular Procedures with
Principal Diagnosis of Hemorrhage without CC/MCC)
MS-DRG 023 (Craniotomy with Major Device Implant/Acute
Complex CNS Principal Diagnosis with MCC or Chemo Implant)
MS-DRG 024 (Craniotomy with Major Device Implant/Acute
Complex CNS Principal Diagnosis without MCC)
MS-DRG 025 (Craniotomy & Endovascular Intracranial
Procedures with MCC)
MS-DRG 026 (Craniotomy & Endovascular Intracranial
Procedures with CC)
MS-DRG 027 (Craniotomy & Endovascular Intracranial
Procedures without CC/MCC)
The requestor recommended that cases with procedure codes 39.72,
39.75, and 39.76 be moved from MS-DRGs 025, 026, and 027 to MS-DRGs 023
and 024, even when there is no reported acute complex CNS principal
diagnosis or a major device implant. The requestor stated that
unruptured aneurysms can be treated by a minimally invasive technique
utilizing endovascular coiling. The requester noted that a
microcatheter is inserted into a groin artery and navigated through the
vascular system to the location of the aneurysm. The coils are inserted
through the microcatheter into the aneurysm in order to occlude (fill)
the aneurysm from inside the blood vessel. Once the coils are
implanted, the blood flow pattern within the aneurysm is altered. The
requestor stated that these cases do not have a principal diagnosis of
hemorrhage because the treatment is for an unruptured aneurysm which
has not hemorrhaged. Furthermore, the requestor stated that only a few
of these cases without hemorrhage have a complex CNS principal
diagnosis. Therefore, the requester believed that most of the cases
should be assigned to MS-DRGs 025, 026, and 027.
The requestor stated that the average costs of coil cases captured
by procedure codes 39.72, 39.75, and 39.76 are significantly higher
than other cases within MS-DRGs 025, 026, and 027 where most of the
coil cases are assigned. As stated earlier, the requester recommended
that cases with procedure codes 39.72, 39.75, and 39.76 be moved to MS-
DRGs 023 and 024, even when there is not an acute complex CNS principal
diagnosis or a major device implant reported.
We examined claims data from the December 2013 update of the FY
2013 MedPAR file for cases of endovascular embolization or occlusion of
head and neck. The table below shows our findings. For MS-DRGs 025,
026, and 027, the cases identified by procedure code 39.72, 39.75, or
39.76 (endovascular embolization or occlusion of head and neck) have
higher average costs and shorter lengths of stay in comparison to all
the cases within each of those respective MS-DRGs. The average costs of
cases in MS-DRG 024 are $4,049 higher than the average costs of the
1,731 endovascular embolization or occlusion of head and neck
procedures cases in MS-DRG 027 ($26,250 versus $22,201). The findings
also show that the 524 cases with procedure code 39.72, 39.75, or 39.76
with average costs of $41,030 in MS-DRG 025 are closer to the average
costs of $36,982 for cases in MS-DRG 023. Lastly, we found that the 721
endovascular embolization or occlusion of head and neck procedure cases
in MS-DRG 026 have average costs of $27,998 compared to average costs
of $26,250 for cases in MS-DRG 024.
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 23--All cases............................................ 5,383 10.98 $36,982
MS-DRG 24--All cases............................................ 1,745 6.30 26,250
MS-DRG 25--All cases............................................ 15,937 9.68 29,722
MS-DRG 25--Cases with procedure code 39.72, 39.75, or 39.76..... 524 7.97 41,030
MS-DRG 26--All cases............................................ 8,520 6.16 21,194
MS-DRG 26--Cases with procedure code 39.72, 39.75, or 39.76..... 721 3.14 27,998
MS-DRG 27--All cases............................................ 10,326 3.30 16,389
MS-DRG 27--Cases with procedure code 39.72, 39.75, or 39.76..... 1,731 1.66 22,201
----------------------------------------------------------------------------------------------------------------
Our clinical advisors reviewed the results of our examination and
determined that the endovascular embolization or occlusion of head and
neck procedures are appropriately classified within MS-DRGs 025, 026,
and 027 because they do not have an acute complex CNS principal
diagnosis or a major device implant which would add to their clinical
complexity. Cases in MS-DRG 024 have average costs that are $4,049
higher than cases in MS-DRG 027 with procedure code 39.72, 39.75, or
39.76. We acknowledge that the 1,245 cases with procedure code 39.72,
39.75, or 39.76 in MS-DRGs 025 and 026 have average costs that are
closer to those in MS-DRGs 024 and 025. However, these cases are 1,245
of the total 2,976 cases that would be involved if we moved all MS-DRGs
025, 026, and 027 cases with procedure code 39.72, 39.75, or 39.76 to
MS-DRGs 024 and 025, even if they did not have an acute complex CNS
principal diagnosis or a major device implant. Based on these findings
and the recommendations from our clinical advisors, we have determined
that proposing to move endovascular embolization or occlusion of head
and neck procedures from MS-DRGs 025, 026, and 027 to MS-DRGs 023 and
024 is not warranted. Therefore, we are proposing to maintain the
current MS-DRG assignments for endovascular embolization or occlusion
of head and neck procedures. We are inviting public comments on our
proposal.
3. MDC 4 (Diseases and Disorders of the Ear, Nose, Mouth and Throat):
Avery Breathing Pacemaker System
We received a request to create a new MS-DRG for the Avery
Breathing Pacemaker System. This system is also called a diaphragmatic
pacemaker and is captured by ICD-9-CM procedure code 34.85
(Implantation of diaphragmatic pacemaker). The requestor stated that
the diaphragmatic pacemaker is indicated for adult and
[[Page 28007]]
pediatric patients with chronic respiratory insufficiency that would
otherwise be dependent on ventilator support. The procedure consists of
surgically implanted receivers and electrodes mated to an external
transmitter by antennas worn over the implanted receivers. The external
transmitter and antennas send radiofrequency energy to the implanted
receivers under the skin. The receivers then convert the radio waves
into stimulating pulses sent down the electrodes to the phrenic nerves,
causing the diaphragm to contract. The requestor stated that this
normal pattern is superior to mechanical ventilators that force air
into the chest. The requestor also stated that the system is expensive;
the device cost is approximately $57,000. According to the requestor,
given the cost of the device, hospitals are reluctant to use it. The
requestor did not make a specific MS-DRG reassignment request.
When used for a respiratory failure patient, procedure code 34.85
is assigned to MS-DRGs 163, 164, and 165 (Major Chest Procedures with
MCC, with CC, and without CC/MCC, respectively).
We examined claims data from the December 2013 update of the FY
2013 MedPAR file for diaphragmatic pacemaker cases. The following table
shows our findings.
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 163--All cases........................................... 11,766 13.13 $34,308
MS-DRG 163--Cases with procedure code 34.85..................... 13 2.23 29,406
MS-DRG 164--All cases........................................... 16,087 6.58 18,352
MS-DRG 164--Cases with procedure code 34.85..................... 34 1.71 23,406
MS-DRG 165--All cases........................................... 9,207 3.91 13,081
MS-DRG 165--Cases with procedure code 34.85..................... 1 1.00 22,977
----------------------------------------------------------------------------------------------------------------
There were only 48 cases of diaphragmatic pacemakers within MS-DRGs
163, 164, and 165. The average costs of these diaphragmatic pacemaker
cases ranged from $22,977 for the single case in MS-DRG 165 to $29,406
for the cases in MS-DRG 163, compared to the average costs for all
cases in MS-DRGs 163, 164, and 165, which range from $13,081 to
$34,308. The average cost for diaphragmatic pacemaker cases in MS-DRG
163 was lower than that for all cases in MS-DRG 163, $29,406 compared
to $34,308 for all cases. The average cost for diaphragmatic pacemaker
cases was higher for MS-DRG 164, $23,406 compared to $18,352 for all
cases. While the average cost for the single diaphragmatic pacemaker
case was significantly higher for MS-DRG 165, $22,977 compared to
$13,081, we were unable to determine if additional factors might have
impacted the higher cost for this single case.
Given the small number of diaphragmatic pacemaker cases that we
found, we do not believe that there is justification for creating a new
MS-DRG. Basing a new MS-DRG on such a small number of cases could lead
to distortions in the relative payment weights for the MS-DRG because
several expensive cases could impact the overall relative payment
weight. Having larger clinical cohesive groups within an MS-DRG
provides greater stability for annual updates to the relative payment
weights. We note that, as discussed in section II.G.4.c. of the
preamble of this proposed rule, one of the criteria we apply in
evaluating whether to create new severity subgroups within an MS-DRG is
whether there are at least 500 cases in the CC or MCC subgroup. While
this criterion is used to evaluate whether to create a severity
subgroup within an MS-DRG, applying it here suggests that creating a
new MS-DRG for only 48 cases would not be appropriate. Although the
average costs of these diaphragmatic pacemaker cases are higher than
the average costs of all cases in MS-DRGs 163 and 164, we believe the
current MS-DRG assignment is appropriate and that the data do not
support creating an MS-DRG because there are so few cases.
Our clinical advisors reviewed this issue and determined that the
diaphragmatic pacemaker cases are appropriately classified within MS-
DRGs 163, 164, and 165 because they are clinically similar to other
cases of patients with major chest procedures within MS-DRGs 163, 164,
and 165. Our clinical advisors did not support creating a new MS-DRG
for such a small number of cases.
Based on the results of the examination of the claims data, the
recommendations from our clinical advisors, and the small number of
diaphragmatic pacemaker cases, we are not proposing to create a new MS-
DRG for diaphragmatic pacemaker cases at this time. We are proposing to
maintain the current MS-DRG assignments for diaphragmatic pacemaker
cases. We are inviting public comments on our proposal.
4. MDC 5 (Diseases and Disorders of the Circulatory System)
a. Exclusion of Left Atrial Appendage
We received a request to move the exclusion of the left atrial
appendage procedure, which is a non-O.R. procedure and captured by ICD-
9-CM procedure code 37.36 (Excision, destruction or exclusion of left
atrial appendage (LAA)), from MS-DRGs 250 (Percutaneous Cardiovascular
without Coronary Artery Stent with MCC) and 251 (Percutaneous
Cardiovascular without Coronary Artery Stent without MCC) to MS-DRGs
237 (Major Cardiovascular Procedures with MCC) and 238 (Major
Cardiovascular Procedures without MCC). The requestor stated that the
exclusion of the left atrial appendage procedure code 37.36 is not
clinically coherent with the other procedures in MS-DRGs 250 and 251
and that this current assignment to MS-DRGs 250 and 251 does not
compensate providers adequately for the expenses incurred to perform
this procedure and placement of the device.
The exclusion of the left atrial appendage procedure involves a
percutaneous placement of a snare/suture around the left atrial
appendage to close it off. The exclusion of the left atrial appendage
procedure takes place in the cardiac catheterization laboratory under
general anesthesia and is a catheter based closed-chest procedure
instead of an open heart surgical technique to treat the same clinical
condition, with the same intended results. The procedure can be
performed by either an interventional cardiologist or an
electrophysiologist.
We analyzed claims data from the December 2013 update of the FY
2013 MedPAR file for cases assigned to MS-DRGs 250 and 251 and MS-DRGs
237 and 238. Our findings are shown in the table below.
[[Page 28008]]
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 250--All cases........................................... 9,174 6.90 $21,319
MS-DRG 250--Cases with procedure code 37.36..................... 61 7.21 29,637
MS-DRG 251--All cases........................................... 26,331 3.01 14,614
MS-DRG 251--Cases with procedure code 37.36..................... 341 3.01 18,298
MS-DRG 237--All cases........................................... 17,813 9.66 35,642
MS-DRG 238--All cases........................................... 33,644 3.73 24,511
----------------------------------------------------------------------------------------------------------------
The data in the table above show that, while the average costs of
the atrial appendage exclusion procedures are higher ($29,637) than
those for all cases ($21,319) within MS-DRG 250 and are higher
($18,298) than for all cases ($14,614) within MS-DRG 251, they are
lower than those in MS-DRGs 237 ($35,642) and 238 ($24,511). Our
clinical advisors reviewed this issue and recommended not moving these
stand-alone percutaneous cases to MS-DRGs 237 and 238 because they do
not consider them to be major cardiovascular procedures. Our clinical
advisors stated that cases reporting ICD-9-CM procedure code 37.36 are
appropriately assigned within MS-DRG 250 and 251 because they are
percutaneous cardiovascular procedures and are clinically similar to
other procedures within the MS-DRG. Therefore, we are not proposing to
reassign exclusion of atrial appendage procedure cases from MS-DRGs 250
and 251 to MS-DRGs 237 and 238 for FY 2015. We are inviting public
comments on our proposal to maintain the current MS-DRG structure for
the exclusion of the left atrial appendage.
b. Transcatheter Mitral Valve Repair: MitraClip[supreg]
The MitraClip[supreg] System (hereafter referred to as
MitraClip[supreg]) for transcatheter mitral valve repair has been
discussed in extensive detail in previous rulemaking, including the FY
2012 IPPS/LTCH PPS proposed rule (76 FR 25822) and final rule (76 FR
51528 through 51529) and the FY 2013 IPPS/LTCH PPS proposed rule (77 FR
27902 through 27903) and final rule (77 FR 53308 through 53310), in
response to requests for MS-DRG reclassification, as well as, in the FY
2014 IPPS/LTCH PPS proposed rule (78 FR 27547 through 27552) under the
new technology add-on payment policy. In the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50575), the application for a new technology add-on
payment for MitraClip[supreg] was unable to be considered further due
to lack of FDA approval by the July 1, 2013 deadline.
Subsequently, on October 24, 2013, MitraClip[supreg] received FDA
approval. As a result, the manufacturer has submitted new requests for
both an MS-DRG reclassification and new technology add-on payment for
FY 2015. We refer readers to section II.I. of the preamble of this
proposed rule for discussion regarding the application for
MitraClip[supreg] under the new technology add-on payment policy. Below
we discuss the MS-DRG reclassification request.
The manufacturer's request for MS-DRG reclassification involves two
components. The first component consists of reassigning cases reporting
a transcatheter mitral valve repair using the MitraClip[supreg] from
MS-DRGs 250 and 251(Percutaneous Cardiovascular Procedure without
Coronary Artery Stent with MCC and without MCC, respectively) to MS-
DRGs 216 (Cardiac Valve & Other Major Cardiothoracic Procedures with
Cardiac Catheterization with MCC), 217 (Cardiac Valve & Other Major
Cardiothoracic Procedures with Cardiac Catheterization with CC), 218
(Cardiac Valve & Other Major Cardiothoracic Procedures with Cardiac
Catheterization without CC/MCC), 219 (Cardiac Valve & Other Major
Cardiothoracic Procedures without Cardiac Catheterization with MCC),
220 (Cardiac Valve & Other Major Cardiothoracic Procedures without
Cardiac Catheterization with CC), and 221 (Cardiac Valve & Other Major
Cardiothoracic Procedures without Cardiac Catheterization without CC/
MCC). The second component of the manufacturer's request was for CMS to
examine the creation of a new base MS-DRG for transcatheter valve
therapies.
Effective October 1, 2010, ICD-9-CM procedure code 35.97
(Percutaneous mitral valve repair with implant) was created to identify
and describe the MitraClip[supreg] technology.
To address the first component of the manufacturer's request, we
conducted an analysis of claims data from the December 2013 update of
the FY 2013 MedPAR file for cases reporting procedure code 35.97 in MS-
DRGs 250 and 251. The table below shows our findings.
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 250--All cases........................................... 9,174 6.90 $21,319
MS-DRG 250--Cases with procedure code 35.97..................... 67 8.48 39,103
MS-DRG 251--All cases........................................... 26,331 3.01 14,614
MS-DRG 251--Cases with procedure code 35.97..................... 127 3.94 25,635
----------------------------------------------------------------------------------------------------------------
As displayed in the table above, the data demonstrate that, for MS-
DRG 250, there were a total of 9,174 cases with an average length of
stay of 6.90 days and average costs of $21,319. The number of cases
reporting the ICD-9-CM procedure code 35.97 in MS-DRG 250 totaled 67
with an average length of stay of 8.48 days and average costs of
$39,103. For MS-DRG 251, there were a total of 26,331 cases with an
average length of stay of 3.01 days and average costs of $14,614. There
were 127 cases found in MS-DRG 251 reporting the procedure code 35.97
with an average length of stay of 3.94 days and average costs of
$25,635. We recognize that the cases reporting procedure code 35.97
have a longer length of stay and higher average costs in comparison to
all the cases within MS-DRGs 250 and 251. However, as stated in prior
rulemaking (77 FR 53309), it is a fundamental principle of an averaged
payment system that half of the procedures in a group will have above
average costs. It is expected that there will be higher cost and lower
cost subsets, especially when a subset has low numbers.
We also evaluated the claims data from the December 2013 update of
the FY 2013 MedPAR file for MS-DRGs 216
[[Page 28009]]
through 221. Our findings are shown in the table below.
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 216--All cases........................................... 10,131 15.41 $65,478
MS-DRG 217--All cases........................................... 5,374 9.51 44,695
MS-DRG 218--All cases........................................... 882 6.88 39,470
MS-DRG 219--All cases........................................... 17,856 11.63 54,590
MS-DRG 220--All cases........................................... 21,059 7.13 38,137
MS-DRG 221--All cases........................................... 4,586 5.32 34,310
----------------------------------------------------------------------------------------------------------------
The data in our findings do not warrant reassignment of cases
reporting use of the MitraClip[supreg]. If we were to propose
reassignment of cases reporting procedure code 35.97 to MS-DRGs 216
through 221, they would be significantly overpaid, as the average costs
range from $34,310 to $65,478 for those MS-DRGs. In addition, our
clinical advisors do not support reassigning these cases. They noted
that the current MS-DRG assignment is appropriate for the reasons
stated in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53309). To
reiterate, our clinical advisors note that the current MS-DRG
assignment is reasonable because the operating room resource
utilizations of percutaneous procedures, such as those found in MS-DRGs
250 and 251, tend to group together, and are generally less costly than
open procedures, such as those found in MS-DRGs 216 through 221.
Percutaneous procedures by organ system represent groups that are
reasonably clinically coherent. More significantly, our clinical
advisors state that postoperative resource utilization is significantly
higher for open procedures with much greater morbidity and consequent
recovery needs. Because the equipment, technique, staff, patient
populations, and physician specialty all tend to group by type of
procedure (percutaneous or open), separately grouping percutaneous
procedures and open procedures is more clinically consistent.
Therefore, we are not proposing to modify the current MS-DRG assignment
for cases reporting procedure code 35.97 from MS-DRGs 250 and 251 to
MS-DRGs 216 through 221 for FY 2015. We are inviting public comments on
our proposal to not make any modifications to the current MS-DRG logic
for these cases.
As indicated above, the second component of the manufacturer's
request involved the creation of a new base MS-DRG for transcatheter
valve therapies. We also received a similar request from another
manufacturer recommending that we create a new MS-DRG for procedures
referred to as endovascular cardiac valve replacement procedures. We
reviewed each of these requests using the same data analysis, as set
forth below. The discussion for endovascular cardiac valve replacement
procedures is included in section II.G.4.c. of the preamble of this
proposed rule and includes findings from the analysis and our proposals
for each of these similar, but distinct requests.
c. Endovascular Cardiac Valve Replacement Procedures
As noted in the previous section related to the MitraClip[supreg]
technology, we received two requests to create a new base MS-DRG for
what was referred to as ``transcatheter valve therapies'' by one
manufacturer and ``endovascular cardiac valve replacement'' procedures
by another manufacturer. Below we summarize the details of each request
and review results of the data analysis that was performed.
Transcatheter Valve Therapies
The request related to transcatheter valve therapies consisted of
creating a new MS-DRG that would include the MitraClip[supreg]
technology (ICD-9-CM procedure code 35.97 (Percutaneous mitral valve
repair with implant)), along with the following list of ICD-9-CM
procedure codes that identify the various types of valve replacements
performed by an endovascular or transcatheter technique:
35.05 (Endovascular replacement of aortic valve);
35.06 (Transapical replacement of aortic valve);
35.07 (Endovascular replacement of pulmonary valve);
35.08 (Transapical replacement of pulmonary valve); and
35.09 (Endovascular replacement of unspecified valve).
We performed analysis of claims data from the December 2013 update
of the FY 2013 MedPAR file for both the percutaneous mitral valve
repair and the transcatheter/endovascular cardiac valve replacement
codes in their respective MS-DRGs. The percutaneous mitral valve repair
with implant (MitraClip[supreg]) procedure code is currently assigned
to MS-DRGs 250 and 251, while the transcatheter/endovascular cardiac
valve replacement procedure codes are currently assigned to MS-DRGs
216, 217, 218, 219, 220, and 221. As illustrated in the table below,
the data demonstrate that, for MS-DRGs 250 and 251, there were a total
of 194 cases reporting procedure code 35.97, with an average length of
stay of 5.5 days and average costs of $30,286.
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 250 through 251--Cases with procedure code 35.97......... 194 5.5 $30,286
----------------------------------------------------------------------------------------------------------------
Upon analysis of cases in MS-DRGs 216 through 221 reporting the
cardiac valve replacement procedure codes, we found a total of 7,287
cases with an average length of stay of 8.1 days and average costs of
$53,802, as shown in the table below.
[[Page 28010]]
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRGs 216 through 221--Cases with procedure codes 35.05, 7,287 8.1 $53,802
35.06, 35.07, 35.08 and 35.09..................................
MS-DRGs 216 through 221--Cases without procedure codes 35.05, 52,601 10.1 47,177
35.06, 35.07, 35.08 and 35.09..................................
----------------------------------------------------------------------------------------------------------------
The data clearly demonstrate that the volume of cases for the
transcatheter/endovascular cardiac valve replacement procedures are
much higher in comparison to the volume of cases for the percutaneous
mitral valve repair (MitraClip[supreg]) procedure (7,287 compared to
194). In addition, the average costs of the transcatheter/endovascular
cardiac valve replacement procedures are significantly higher than the
average costs of the percutaneous mitral valve repair with implant
($53,802 compared to $30,286).
Our clinical advisors do not support grouping a percutaneous valve
repair procedure with transcatheter/endovascular valve replacement
procedures. They do not believe that these procedures are clinically
coherent or similar in terms of resource consumption because the
MitraClip[supreg] technology identified by procedure code 35.97 is
utilized for a percutaneous mitral valve repair, while the other
technologies, identified by procedure codes 35.05 through 35.09, are
utilized for transcatheter/endovascular cardiac valve replacements.
Consequently, the data analysis and our clinical advisors do not
support the creation of a new MS-DRG. Therefore, for FY 2015, we are
not proposing to create a new MS-DRG to group cases reporting the
percutaneous mitral valve repair (MitraClip[supreg]) procedure with
transcatheter/endovascular cardiac valve replacement procedures. We are
inviting public comments on our proposal.
Endovascular Cardiac Valve Replacement
The similar but separate request relating to endovascular cardiac
valve replacement procedures consisted of creating a new MS-DRG that
would only include the various types of cardiac valve replacements
performed by an endovascular or transcatheter technique. In other
words, this request specifically did not include the MitraClip[supreg]
technology (ICD-9-CM procedure code 35.97 (Percutaneous mitral valve
repair with implant)) and only included the list of ICD-9-CM procedure
codes that identify the various types of valve replacements performed
by an endovascular or transcatheter technique (ICD-9-CM procedure codes
35.05 through 35.09) as described earlier in this section.
The human heart contains four major valves--the aortic, mitral,
pulmonary, and tricuspid valves. These valves function to keep blood
flowing through the heart. When conditions such as stenosis or
insufficiency/regurgitation occur in one or more of these valves,
valvular heart disease may result. Cardiac valve replacement surgery is
performed in an effort to correct these diseased or damaged heart
valves. The endovascular or transcatheter technique presents a viable
option for high-risk patients who are not candidates for the
traditional open surgical approach.
We reviewed the claims data from the December 2013 update of the FY
2013 MedPAR file for cases in MS-DRGs 216 through 221. Our findings are
shown in the chart below. The data analysis shows that cardiac valve
replacements performed by an endovascular or transcatheter technique
represent a total of 7,287 of the cases in MS-DRGs 216 through 221,
with an average length of stay of 8.1 days and higher average costs
($53,802 compared to $47,177) in comparison to all of the cases in MS-
DRGs 216 through 221.
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRGs 216 through 221--Cases with procedure codes 35.05, 7,287 8.1 $53,802
35.06, 35.07, 35.08 and 35.09..................................
MS-DRGs 216 through 221--Cases without procedure codes 35.05, 52,601 10.1 47,177
35.06, 35.07, 35.08 and 35.09..................................
----------------------------------------------------------------------------------------------------------------
As the data appear to indicate support for the creation of a new
base MS-DRG, based on our evaluation of resource consumption, patient
characteristics, volume, and costs between the cardiac valve
replacements performed by an endovascular or transcatheter technique
and the open surgical technique, we then applied our established
criteria to determine if these cases would meet the requirements to
create subgroups. We use five criteria established in the FY 2008 IPPS
final rule (72 FR 47169) to review requests involving the creation of a
new CC or an MCC subgroup within a base MS-DRG. As outlined in the FY
2012 IPPS proposed rule (76 FR 25819), the original criteria were based
on average charges but were later converted to average costs. In order
to warrant creation of a CC or an MCC subgroup within a base MS-DRG,
this subgroup must meet all of the following five criteria:
A reduction in variance of costs of at least 3 percent.
At least 5 percent of the patients in the MS-DRG fall
within the CC or the MCC subgroup.
At least 500 cases are in the CC or the MCC subgroup.
There is at least a 20-percent difference in average costs
between subgroups.
There is a $2,000 difference in average costs between
subgroups.
In applying the five criteria, we found that the data support the
creation of a new MS-DRG subdivided into two severity levels. We also
consulted with our clinical advisors. Our clinical advisors stated that
patients receiving endovascular cardiac valve replacements are
significantly different from those patients who undergo an open chest
cardiac valve replacement. They noted that patients receiving
endovascular cardiac valve replacements are not eligible for open chest
cardiac valve procedures because of a variety of health constraints.
This highlights the fact that peri-operative complications and post-
operative morbidity have significantly different profiles for open
chest procedures compared with endovascular interventions. This is also
substantiated by the different average lengths of stay
[[Page 28011]]
demonstrated by the two cohorts. Our clinical advisors further noted
that separately grouping these endovascular valve replacement
procedures provides greater clinical cohesion for this subset of high-
risk patients.
We are proposing to create the following MS-DRGs for endovascular
cardiac valve replacements:
Proposed new MS-DRG 266 (Endovascular Cardiac Valve
Replacement with MCC); and
Proposed new MS-DRG 267 (Endovascular Cardiac Valve
Replacement without MCC).
----------------------------------------------------------------------------------------------------------------
Number of Average length
Proposed new MS-DRGs for endovascular cardiac valve replacement cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
Proposed New MS-DRG 266 with MCC................................ 3,516 10.6 $61,891
Proposed New MS-DRG 267 without MCC............................. 3,771 5.7 46,259
----------------------------------------------------------------------------------------------------------------
We are inviting public comments on our proposal to create these new
MS-DRGs for FY 2015.
d. Abdominal Aorta Graft
We received a request that we change the MS-DRG assignment for
procedure code 39.71 (Endovascular implantation of other graft in
abdominal aorta), which is assigned to MS-DRGs 237 and 238 (Major
Cardiovascular Procedures with MCC and without MCC, respectively). The
requestor asked that we reassign procedure code 39.71 to MS-DRGs 228,
229, and 230 (Other Cardiothoracic Procedures with MCC, with CC, and
without CC/MCC, respectively). The requestor stated that the average
cost of endovascular abdominal aorta graft implantation cases is
significantly higher than other cases in MS-DRGs 237 and 238. The
requestor stated that the average cost of endovascular abdominal aorta
graft implantation cases is closer to those in MS-DRGs 228, 229, and
230.
The requestor stated that the goal of endovascular repair for
abdominal aneurysm is to isolate the diseased, aneurismal portion of
the aorta and common iliac arteries from continued exposure to systemic
blood pressure. The procedure involves the delivery and deployment of
endovascular prostheses, also referred to as a graft, as required to
isolate the aneurysm above and below the extent of the disease. The
requestor stated that this significantly reduces patient morbidity and
death caused by leakage and/or sudden rupture of an untreated aneurysm.
We examined claims data from the December 2013 update of the FY
2013 MedPAR file for cases of endovascular abdominal aorta graft
implantations. The following table shows our findings.
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 237--All cases........................................... 17,813 9.66 $35,642
MS-DRG 237--Cases with procedure code 39.71..................... 2,093 8.30 44,898
MS-DRG 238--All cases........................................... 33,644 3.73 24,511
MS-DRG 238--Cases with procedure code 39.71..................... 15,483 2.30 28,484
MS-DRG 228--All cases........................................... 1,543 13.48 52,315
MS-DRG 229--All cases........................................... 2,003 7.47 32,070
MS-DRG 230--All cases........................................... 493 4.95 29,281
----------------------------------------------------------------------------------------------------------------
As this table shows, endovascular abdominal aorta graft
implantation cases have higher average costs and shorter lengths of
stay than all cases within MS-DRGs 237 and 238. The average cost for
endovascular abdominal aorta graft implantation cases in MS-DRG 237 is
$9,256 greater than that for all cases in MS-DRG 237 ($44,898 compared
to $35,642). The average cost for endovascular abdominal aorta graft
implantation cases in MS-DRG 238 is $3,973 higher than that for all
cases in MS-DRG 238 ($28,484 compared to $24,511). Cases in MS-DRG 228
have average costs that are $7,417 higher than the endovascular
abdominal aorta graft implantation cases in MS-DRG 237 ($52,315
compared to $44,898). MS-DRG 228 and MS-DRG 237 both contain cases with
MCCs. Cases in MS-DRG 229, which contain a CC, have average costs that
are $3,586 higher than average costs of the endovascular abdominal
aorta graft implantation cases in MS-DRG 238, which do not contain an
MCC ($32,070 compared to $28,484). Cases in MS-DRG 230, which have
neither an MCC nor a CC, have average costs that are $797 higher than
the endovascular abdominal aorta graft implantation cases in MS-DRG 238
($29,281 compared to $28,484). While the average costs were higher for
endovascular abdominal aorta graft implantation cases compared to all
cases within MS-DRGs 237 and 238, each MS-DRG has some cases that are
higher and some cases that are lower than the average costs for the
entire MS-DRG. MS-DRGs were developed to capture cases that are
clinically consistent with similar overall average resource
requirements. This results in some cases within an MS-DRG having costs
that are higher than the overall average and other cases having costs
that are lower than the overall average. This may be due to specific
types of cases included within the MS-DRGs or to the fact that some
cases will simply require additional resources on a specific admission.
However, taken as a whole, the hospital will be paid an appropriate
amount for the group of cases that are assigned to the MS-DRG. We
believe the endovascular abdominal aorta graft implantation cases are
appropriately grouped with other procedures within MS-DRGs 237 and 238.
Our clinical advisors reviewed this issue and determined that the
endovascular abdominal aorta graft implantation cases are appropriately
classified within MS-DRGs 237 and 238 because they are clinically
similar to the other procedures in MS-DRGs 237 and 238, which include
other procedures on the aorta. While the endovascular abdominal aorta
graft implantation cases have higher average costs than the average for
all cases within MS-DRGs 237 and 238, our clinical advisors do not
believe this justifies moving the cases to MS-DRGs 228, 229 and 230,
which involve a different set of cardiothoracic surgeries.
Based on the results of examination of the claims data and the
recommendations of our clinical advisors, we do not believe that
[[Page 28012]]
proposing to reclassify endovascular abdominal aorta graft implantation
cases from MS-DRGs 237 and 238 is warranted. We are proposing to
maintain the current MS-DRG assignments for endovascular abdominal
aorta graft implantation cases. We are inviting public comments on our
proposal.
5. MDC 8 (Diseases and Disorders of the Musculoskeletal System and
Connective Tissue)
a. Shoulder Replacement Procedures
We received a request to change the MS-DRG assignment for shoulder
replacement procedures. This request involved the following two
procedure codes:
81.88 (Reverse total shoulder replacement); and
81.97 (Revision of joint replacement of upper extremity).
With respect to procedure code 81.88, the requestor asked that
reverse total shoulder replacements be reassigned from MS-DRGs 483 and
484 (Major Joint/Limb Reattachment Procedure of Upper Extremities with
CC/MCC and without CC/MCC, respectively) to MS-DRG 483 only. The
reassignment of procedure code 81.88 from MS-DRGs 483 and 484 was
discussed previously in the FY 2014 IPPS/LTCH PPS final rule (78 FR
50534 through 50536). The result of reassigning reverse shoulder
replacements from MS-DRGs 483 and 484 to MS-DRG 483 only would be that
this procedure would be assigned to MS-DRG 483 whether or not the case
had a CC or an MCC. The requestor stated that reverse shoulder
replacement procedures are more clinically cohesive with higher
severity MS-DRGs due to the complexity and resource consumption of
these procedures. We refer readers to the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50534 through 50536) for a discussion of the reverse total
shoulder replacement.
The requestor also recommended that we reassign what it described
as another shoulder procedure involving procedure code 81.97, which is
assigned to MS-DRGs 515, 516, and 517 (Other Musculoskeletal System and
Connective Tissue O.R. Procedures with MCC, with CC, and without CC/
MCC, respectively), to MS-DRG 483. We point out that MS-DRG 483
contains upper joint replacements, including shoulder replacements. MS-
DRG 483 does not contain any joint revision procedures. Similar to the
request for reassignment of procedure code 81.88, this would mean that
procedure code 81.97 would be assigned to MS-DRG 483 whether or not the
case had a CC or an MCC. If CMS did not support this recommendation for
moving procedure code 81.97 to MS-DRG 483, the requestor recommended an
alternative reassignment to MS-DRG 515 (Other Musculoskeletal System
and Connective Tissue O.R. procedures with MCC) even if the case had no
MCC.
We point out that, while the requestor refers to procedure code
81.97 as a shoulder procedure, the code description actually includes
revisions of joint replacements of a variety of upper extremity joints,
including those in the elbow, hand, shoulder, and wrist.
As stated earlier, reverse shoulder replacements are assigned to
MS-DRGs 483 and 484. Revisions of upper joint replacements are assigned
to MS-DRGs 515, 516, and 517. We examined claims data from the December
2013 update of the FY 2013 MedPAR file for MS-DRGs 483 and 484. The
following table shows our findings of cases of reverse shoulder
replacement.
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 483--All cases........................................... 14,220 3.20 $18,807
MS-DRG 483--Cases with procedure code 81.88..................... 7,086 3.19 20,699
MS-DRG 484--All cases........................................... 23,183 1.95 16,354
MS-DRG 484--Cases with procedure code 81.88..................... 9,633 2.03 18,719
Proposed Revised MS-DRG 483 with all severity levels included... 37,403 2.4 17,287
----------------------------------------------------------------------------------------------------------------
As the above table shows, MS-DRG 484 reverse shoulder replacement
cases have similar average costs to those in MS-DRG 483 ($18,719 for
reverse shoulder replacements in MS-DRG 484 compared to $18,807 for all
cases in MS-DRG 483). However, in reviewing the data, we observed that
the claims data no longer support two severity levels for MS-DRGs 483
and 484.
We use the five criteria established in FY 2008 (72 FR 47169) to
review requests involving the creation of a new CC or MCC subgroup
within a base MS-DRG. As outlined in the FY 2012 IPPS/LTCH PPS proposed
rule (76 FR 25819), the original criteria were based on average charges
but were later converted to average costs. In order to warrant creation
of a CC or an MCC subgroup within a base MS-DRG, the subgroup must meet
all of the following five criteria:
A reduction in variance of costs of at least 3 percent.
At least 5 percent of the patients in the MS-DRG fall
within the CC or MCC subgroup.
At least 500 cases are in the CC or MCC subgroup.
There is at least a 20-percent difference in average costs
between subgroups.
There is a $2,000 difference in average costs between
subgroups.
We found through our examination of the claims data from the
December 2013 update of the FY 2013 MedPAR file that the two severity
subgroups of MS-DRG 483 and 484 no longer meet the fourth criterion of
at least a 20-percent difference in average costs between subgroups. We
found that there is a $2,453 difference in average costs between MS-DRG
483 and MS-DRG 484. The difference in average costs would need to be
$3,761 to meet the fourth criterion. Therefore, our claims data support
collapsing MS-DRGs 483 and 484 into a single MS-DRG. Our clinical
advisors reviewed this issue and agree that there is no longer enough
difference between the two severity levels to justify separate severity
subgroups for MS-DRGs 483 and 484, which include a variety of upper
joint replacements. Therefore, our clinical advisors support our
recommendation to collapse MS-DRGs 483 and 484 into a single MS-DRG.
Based on the results of examination of the claims data and the
advice of our clinical advisors, we are proposing to collapse MS-DRGs
483 and 484 into a single MS-DRG by deleting MS-DRG 484 and revising
the title of MS-DRG 483 to read ``Major Joint/Limb Reattachment
Procedure of Upper Extremities''.
The following table shows our findings of cases of revisions of
upper joint replacement from the December 2013 update of the FY 2013
MedPAR file.
[[Page 28013]]
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 515--All cases........................................... 3,407 9.22 $22,191
MS-DRG 515--Cases with procedure code 81.97..................... 88 5.66 22,085
MS-DRG 516--All cases........................................... 8,502 5.34 14,356
MS-DRG 516--Cases with procedure code 81.97..................... 799 2.84 18,214
MS-DRG 517--All cases........................................... 5,794 3.28 12,172
MS-DRG 517--Cases with procedure code 81.97..................... 1,256 2.07 15,920
MS-DRG 483--All cases........................................... 14,220 3.20 18,807
----------------------------------------------------------------------------------------------------------------
Cases identified by code 81.97 in MS-DRGs 515, 516, and 517 have
lower average costs and shorter lengths of stay than all cases in MS-
DRG 515. The average costs of cases in MS-DRG 515 are $3,977 higher
than the average costs of the cases with procedure code 81.97 in MS-DRG
516 ($22,191 compared to $18,214). The average costs of cases in MS-DRG
515 are $6,271 higher than cases with procedure code 81.97 in MS-DRG
517 ($22,191 compared to $15,920).
The table above shows that the average costs of cases in MS-DRG 483
are $3,278 lower than the average costs of cases with procedure code
81.97 in MS-DRG 515 ($18,807 compared to $22,085). The average costs of
cases in MS-DRG 483 are $593 higher than the average costs of cases
with procedure code 81.97 in MS-DRG 516 ($18,807 compared to $18,214).
The average costs of cases in MS-DRG 483 are $2,887 higher than the
average costs of cases with procedure code 81.97 in MS-DRG 517 ($18,807
compared to $15,920).
The claims data do not support moving all procedure code 81.97
cases to MS-DRG 515 or MS-DRG 483, whether or not there is a CC or an
MCC. We also point out once again that procedure code 81.97 is a
nonspecific code that captures revisions to not only the shoulder, but
also a variety of upper extremity joints including those in the elbow,
hand, shoulder, and wrist. Therefore, we have no way of determining how
many cases reporting procedure code 81.97 were actually shoulder
procedures as opposed to procedures on the elbow, hand, or wrist.
Our clinical advisors reviewed this issue and determined that the
revisions of upper joint replacement procedures are appropriately
classified within MS-DRGs 515, 516, and 517, which include other joint
revision procedures. They do not support moving revisions of upper
joint replacement procedures to MS-DRG 515, whether or not there is an
MCC. They support the current classification, which bases the severity
level on the presence of a CC or an MCC. They also do not support
moving revisions of upper joint replacement procedures to MS-DRG 483,
whether or not there is a CC or an MCC, because these revisions are not
joint replacements. Based on the results of our examination and the
advice of our clinical advisors, we are not proposing moving revisions
of upper joint replacement procedures to MS-DRG 515 or MS-DRG 483,
whether or not there is a CC or an MCC.
In summation, we are proposing to collapse MS-DRGs 483 and 484 into
a single MS-DRG by deleting MS-DRG 484 and revising the title of MS-DRG
483 to read ``Major Joint/Limb Reattachment Procedure of Upper
Extremities''. We are proposing to maintain the current MS-DRG
assignments for revisions of upper joint replacement procedures in MS-
DRGs 515, 516, and 517. We are inviting public comments on our
proposals.
b. Ankle Replacement Procedures
We received a request to change the MS-DRG assignment for two ankle
replacement procedures. The request involved the following two
procedure codes:
81.56 (Total ankle replacement); and
81.59 (Revision of joint replacement of lower extremity,
not elsewhere classified).
The reassignment of procedure code 81.56 from MS-DRGs 469 and 470
(Major Joint Replacement or Reattachment of Lower Extremity with CC and
without MCC, respectively) to a new MS-DRG or, alternatively, to MS-DRG
469 was discussed in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50536
through 50537). We refer readers to this final rule for a discussion of
ankle replacement procedures. The requestor asked that we again
evaluate reassigning total ankle replacement procedures. The requestor
also asked that we reassign what it referred to as another ankle
replacement revision procedure captured by procedure code 81.59
(Revision of joint replacement of lower extremity, not elsewhere
classified), which is assigned to MS-DRGs 515, 516, and 517 (Other
Musculoskeletal System and Connective Tissue O.R. Procedures with MCC,
with CC, and without CC/MCC, respectively).
The requestor asked that we reassign procedure code 81.56 from MS-
DRGs 469 and 470 to MS-DRG 483 (Major Joint/Limb Reattachment Procedure
of Upper Extremities with CC/MCC) and rename the MS-DRG to better
capture the additional lower extremity cases. The requestor stated that
the result would be assignment of lower joint procedures to an MS-DRG
that currently captures only upper extremity cases and assignment to
the highest severity level even if the case did not have a CC or an
MCC. If CMS did not find this acceptable, the requestor made an
alternative recommendation of assigning procedure code 81.56 to MS-DRG
469 and renaming the MS-DRG to better capture the additional cases.
Cases would be assigned to the highest severity level whether or not
the case had an MCC.
The requestor also recommended that procedure code 81.59, which is
assigned to MS-DRGs 515, 516, and 517 be reassigned to MS-DRG 483 and
that the MS-DRG be given a new title to better capture the additional
lower extremity cases. The requestor stated that the result would be
assignment of lower joint procedures to an MS-DRG that currently
captures only upper extremity cases and assignment to the highest
severity level even if the patient did not have a CC or an MCC. If CMS
did not support this recommendation, the requestor suggested two
additional recommendations. One involves moving procedure code 81.59 to
MS-DRG 515 even when the case had no MCC. The other recommendation was
to move procedure code 81.59 to MS-DRG 469, whether or not the case had
a MCC.
We point out that while the requestor refers to procedure code
81.59 as a revision of an ankle replacement, the code actually includes
revisions of joint replacements of a variety of lower extremity joints
including the ankle, foot, and toe.
The following table shows the number of total ankle replacement
cases, average length of stay, and average costs for procedure code
81.56 in MS-DRGs 469 and 470 found in claims data from the December
2013 update of the FY 2013
[[Page 28014]]
MedPAR file compared to all cases within MS-DRGs 469, 470, and 483.
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 469--All cases........................................... 25,916 722 $22,548
MS-DRG 469--Cases with procedure code 81.56..................... 32 6.19 27,419
MS-DRG 470--All cases........................................... 406,344 3.25 15,119
MS-DRG 470--Cases with procedure code 81.56..................... 1,379 2.13 19,332
MS-DRG 483...................................................... 14,220 3.20 18,807
----------------------------------------------------------------------------------------------------------------
In summary, the requestor asked us to reassign procedure code 81.56
in MS-DRGs 469 and 470 to one of the following two options: MS-DRG 483
(highest severity level); or MS-DRG 469 (highest severity level).
As the table for total ankle replacement above shows, the average
cost of cases with procedure code 81.56 in MS-DRG 469 is $27,419 and
$19,332 in MS-DRG 470. This compares with the average costs of all
cases in MS-DRGs 469 and 470 of $22,548 and $15,119, respectively.
While the average cost of cases reporting procedure code 81.56 in MS-
DRG 469 is $4,871 higher than the average cost for all cases in MS-DRG
469, we point out that there were only 32 cases. The relatively small
number of cases may have been impacted by other factors such as
complications or comorbidities. Several expensive cases could impact
the average costs for a very small number of patients. The average cost
of cases reporting procedure code 81.56 in MS-DRG 470 is $4,213 higher
than the average cost for all cases in MS-DRG 470. While the average
costs are higher, within all MS-DRGs, some cases have higher and some
cases have lower average costs. MS-DRGs are groups of clinically
similar cases that have similar overall costs. Within a group of cases,
one would expect that some cases have costs that are higher than the
overall average and some cases have costs that are lower than the
overall average.
MS-DRG 469 ankle replacement cases have average costs that are
$8,612 higher than the average costs of all cases in MS-DRG 483
($27,419 compared to $18,807). Moving these cases (procedure code
81.56) to MS-DRG 483 would result in payment below average costs
compared to the current MS-DRG assignment in MS-DRG 469. Furthermore,
as noted earlier, moving total ankle replacement cases to MS-DRG 483
would result in a lower extremity procedure being added to what is now
an upper extremity MS-DRG. This would significantly disrupt the
clinical cohesion of MS-DRG 483.
The average costs of all cases in MS-DRG 469 are $3,216 higher than
the average costs of those cases with procedure code 81.56 in MS-DRG
470 ($22,548 compared to $19,332) The data do not support moving
procedure code 81.56 cases to MS-DRG 483 or 469 because it would not
result in payments that more accurately reflect their current average
costs. Our clinical advisors reviewed this issue and determined that
the ankle replacement cases are appropriately classified within MS-DRGs
469 and 470 with the severity level leading to the MS-DRG assignment.
They do not support moving these cases to MS-DRG 483 because ankle
replacements, which are lower joint procedures, are not clinically
similar to upper joint replacement procedures. Based on the results of
examination of the claims data, the issue of clinical cohesion, and the
recommendations from our clinical advisors, we are not proposing to
move total ankle procedures to MS-DRG 483 or MS-DRG 469 when there is
no MCC. We are proposing to maintain the current MS-DRG assignments for
ankle replacement cases. We are inviting public comments on our
proposal.
The following table shows our findings from examination of the
claims data from the December 2013 update of the FY 2013 MedPAR file
for the number of cases reporting procedure code 81.59 in MS-DRGs 515,
516, and 517 (revision of joint replacement of lower extremity) and
their average length of stay and average costs as compared to all cases
within MS-DRGs 515, 516, and 517 (where procedure code 81.59 is
currently assigned), as well as data for MS-DRGs 469 and 483.
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 515--All cases........................................... 3,407 9.22 $22,191
MS-DRG 515--Cases with procedure code 81.59..................... 5 6.00 16,988
MS-DRG 516--All cases........................................... 8,502 5.34 14,356
MS-DRG 516--Cases with procedure code 81.59..................... 16 3.00 16,998
MS-DRG 517--All cases........................................... 5,794 3.28 12,172
MS-DRG 517--Cases with procedure code 81.59..................... 40 1.80 13,704
MS-DRG 483--All cases........................................... 25,916 722 22,548
MS- DRG 469--All cases.......................................... 14,220 3.20 18,807
----------------------------------------------------------------------------------------------------------------
The requestor asked that all cases with procedure code 81.59 in MS-
DRGs 515, 516, and 517 be assigned to one of the following three
choices:
MS-DRG 483 (highest severity level);
MS-DRG 515 (highest severity level) whether or not there
is an MCC; or
MS-DRG 469 (highest severity level).
Our review of data from the above revision of joint replacement of
lower extremity table shows that cases in MS-DRG 483 have average costs
that are $5,560 higher than the average costs of cases with procedure
code 81.59 in MS-DRG 515; $5,550 greater than those in MS-DRG 516; and
$8,844 greater than those in MS-DRG 517 ($22,548 compared to $16,988;
$22,548 compared to $16,998, and $22,548 compared to $13,704,
respectively). As mentioned earlier, MS-DRG 483 is currently composed
of only upper extremity procedures. Moving lower extremity procedures
into this MS-DRG would disrupt the clinical cohesiveness of MS-DRG 483.
[[Page 28015]]
The average costs of all cases in MS-DRG 469 are $18,807, compared
to average costs of $16,988, $16,998, and $13,703 for procedure code
81.59 cases in MS-DRGs 515, 516, and 517, respectively. The data do not
support moving all procedure code 81.59 cases to MS-DRG 469 even when
there is no MCC. We also point out that moving cases with procedure
code 81.59 to MS-DRG 469 would disrupt the clinical cohesiveness of MS-
DRG 469, which currently captures major joint replacement or
reattachment procedures of the lower extremity. Procedure code 81.59
includes revisions of joint replacements of a variety of lower
extremity joints including the ankle, foot, and toe. This nonspecific
code would not be considered a major joint procedure. The code captures
revisions of an ankle replacement as well as a more minor revision of
the toe.
Our clinical advisors reviewed this issue and determined that the
revision of joint replacement of lower extremity cases are
appropriately classified within MS-DRGs 515, 516, and 517 where
revisions of other joint replacements are captured. They support the
current severity levels in MS-DRGs 515, 516, and 517, which allow the
presence of a CC or an MCC to determine the severity level assignment.
They do not support moving these cases to MS-DRG 483, which is applied
to upper extremity procedures because these procedures are not
clinically consistent with revisions of lower joint procedures. They
also do not support moving these cases to MS-DRG 469 when there is no
MCC because these procedures are not joint replacement procedures.
Based on the findings of our examination of the claims data, the issue
of clinical cohesion, and the recommendations from our clinical
advisors, we are not proposing to move the revision of joint
replacement of lower extremity cases to MS-DRGs 483 or 469, whether or
not there is an MCC. We are proposing to maintain the current MS-DRG
assignments for revision of joint replacement of lower extremity cases.
In summary, we are proposing to maintain the current MS-DRG
assignment for total ankle replacements in MS-DRGs 469 and 470 and
revision of joint replacement of lower extremity procedures in MS-DRGs
515, 516, and 517. We are inviting public comments on our proposals.
c. Back and Neck Procedures
We received a request to reassign cases identified with a
complication or comorbidity (CC) in MS-DRG 490 (Back & Neck Procedures
Except Spinal Fusion with CC/MCC or Disc Device/Neurostimulator) to MS-
DRG 491 (Back & Neck Procedures Except Spinal Fusion without CC/MCC or
Disc Device/Neurostimulator). The requester suggested that we create a
new MS-DRG that would be subdivided based solely on the ``with MCC or
Disc Device/Neurostimulator'' and the ``without MCC'' (and no device)
criteria.
For the FY 2008 rulemaking cycle, we performed a comprehensive
analysis of all the spinal DRGs as we proposed (72 FR 24731 through
24735) and finalized (72 FR 47226 through 47232) adoption of the MS-
DRGs. With the revised spinal MS-DRGs, we were better able to identify
a patient's level of severity, complexity of service, and utilization
of resources. This was primarily attributed to the new structure for
the severity level designations of ``with MCC,'' ``with CC,'' and
``non-CC'' (or without CC/MCC). Another contributing factor was that we
incorporated specific procedures and technologies into the GROUPER
logic for some of those spinal MS-DRGs. Specifically, as noted above,
in the title of MS-DRG 490, we accounted for disc devices and
neurostimulators because the data demonstrated that the procedures
utilizing those technologies were more complex and required greater
utilization of resources.
According to the requester, since that time, concerns have been
expressed in the provider community regarding inadequate payment for
MS-DRG 490 when these technologies are utilized. An analysis conducted
by the requester alleged that the subset of patients identified in the
``with MCC or disc device/neurostimulator'' group are different with
regard to resource use from the ``without CC/MCC'' (and no device)
patient group.
We examined claims data from the December 2013 update of the FY
2013 MedPAR file for MS-DRGs 490 and 491. The table below shows our
findings.
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 490--All cases........................................... 16,930 4.53 $13,727
MS-DRG 491--All cases........................................... 25,778 2.20 8,151
----------------------------------------------------------------------------------------------------------------
As shown in the table above, there were a total of 16,930 cases in
MS-DRG 490 with an average length of stay of 4.53 days and average
costs of $13,727. For MS-DRG 491, there were a total of 25,778 cases
with an average length of stay of 2.20 days and average costs of
$8,151.
We then analyzed the data for MS-DRGs 490 and 491 by subdividing
cases based on the ``with MCC or Disc Device/Neurostimulator'' and the
``without MCC'' (and no device) criteria. We found a total of 3,379
cases with an average length of stay of 6.6 days and average costs of
$21,493 in the ``with MCC or Disc Device/Neurostimulator'' group and a
total of 39,329 cases with an average length of stay of 2.8 days and
average costs of $9,405 in the ``without MCC'' and no device group. Due
to the wide range in the volume of cases, length of stay, and average
costs between these two subgroups, we concluded that further analysis
of the data using a separate ``with CC'' (and no device) subset of
patients was warranted.
Therefore, we evaluated the data using a three-way severity level
split that consisted of the three subgroups shown in the table below.
Additional Analysis for Back & Neck Procedures Except Spinal Fusion: Disc Device/Neurostimulator
----------------------------------------------------------------------------------------------------------------
Number of Average length
Severity level split cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
--With MCC or disc device/neurostimulator....................... 3,379 6.6 $21,493
--With CC....................................................... 13,551 3.9 11,791
--Without CC/MCC................................................ 25,778 2.2 8,151
----------------------------------------------------------------------------------------------------------------
[[Page 28016]]
For the first subgroup, ``with MCC or Disc Device/
Neurostimulator,'' we found a total of 3,379 cases with an average
length of stay of 6.6 days and average costs of $21,493. In the second
subgroup, ``with CC'' (no device), we found a total of 13,551 cases
with an average length of stay of 3.9 days and average costs of
$11,791. In the third subgroup, ``without CC/MCC'' (no device), we
found a total of 25,778 cases with an average length of stay of 2.2
days and average costs of $8,151.
The results of this additional data analysis demonstrate a better
distribution of cases with regard to length of stay and average costs.
Our clinical advisors agree that a patient's severity of illness is
captured more appropriately with this subdivision. The data also meet
the established criteria for creating subgroups within a base MS-DRG as
discussed earlier in this proposed rule.
As the subdivision of the claims data based on these subgroups
better captures a patient's severity level and utilization of resources
and is supported by our clinical advisors, we are proposing to create
three new MS-DRGs and to delete MS-DRGs 490 and 491. These proposed new
MS-DRGs would be titled as follows and would be effective as of October
1, 2014:
Proposed new MS-DRG 518 (Back & Neck Procedures Except
Spinal Fusion with MCC or Disc Device/Neurostimulator);
Proposed new MS-DRG 519 (Back & Neck Procedures Except
Spinal Fusion with CC); and
Proposed new MS-DRG 520 (Back & Neck Procedures Except
Spinal Fusion without CC/MCC).
We are inviting public comments on our proposal to create these
proposed new MS-DRGs for FY 2015.
6. MDC 10 (Endocrine, Nutritional and Metabolic Diseases and
Disorders): Disorders of Porphyrin Metabolism
We received a comment on the FY 2014 IPPS/LTCH PPS proposed rule
that we considered out of scope for the proposed rule. We stated in the
FY 2014 IPPS/LTCH PPS final rule (78 FR 50550) that we would consider
this issue in future rulemaking as part of our annual review process.
The request was for the creation of a new MS-DRG to better identify
cases where patients with disorders of porphyrin metabolism exist, to
recognize the resource requirements in caring for these patients, to
ensure appropriate payment for these cases, and to preserve patient
access to necessary treatments. This issue has been discussed
previously in the FY 2013 IPPS/LTCH PPS proposed rule (77 FR 27904 and
27905) and final rule (77 FR 53311 through 53313).
Porphyria is defined as a group of rare disorders (``porphyrias'')
that interfere with the production of hemoglobin that is needed for red
blood cells. While some of these disorders are genetic (inborn) and
others can be acquired, they all result in the abnormal accumulation of
hemoglobin building blocks, called porphyrins, which can be deposited
in the tissues where they particularly interfere with the functioning
of the nervous system and the skin. Treatment for patients suffering
from disorders of porphyrin metabolism consists of an intravenous
injection of Panhematin[supreg] (hemin for injection). In 1984, this
pharmaceutical agent became the first approved drug for a rare disease
to be designated under the Orphan Drug Act. The requestor stated that
it is the only FDA-approved prescription treatment for acute
intermittent porphyria. ICD-9-CM diagnosis code 277.1 (Disorders of
porphyrin metabolism) describes these cases, which are currently
assigned to MS-DRG 642 (Inborn and Other Disorders of Metabolism).
We analyzed claims data from the December 2013 update of the FY
2013 MedPAR file for cases assigned to MS-DRG 642. Our findings are
shown in the table below.
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 642--All cases........................................... 1,486 4.61 $8,151
MS-DRG 642--Cases with principal diagnosis code 277.1........... 299 5.98 13,303
----------------------------------------------------------------------------------------------------------------
As shown in the table above, we found a total of 1,486 cases in MS-
DRG 642, with an average length of stay of 4.61 days and average costs
of $8,151. We then analyzed the data for cases reporting diagnosis code
277.1 as the principal diagnosis in this same MS-DRG. We found a total
of 299 cases, with an average length of stay of 5.98 days and average
costs of $13,303.
While the data show that the average costs for the 299 cases
reporting a principal diagnosis code of 277.1 were higher than the
average costs for all cases in MS-DRG 642 ($13,303 compared to $8,151),
the number of cases is small. Given the small number of porphyria
cases, we do not believe there is justification for creating a new MS-
DRG. Basing a new MS-DRG on such a small number of cases could lead to
distortions in the relative payment weights for the MS-DRG because
several expensive cases could impact the overall relative payment
weight. Having larger clinical cohesive groups within an MS-DRG
provides greater stability for annual updates to the relative payment
weights. In addition, as discussed earlier, one of the criteria we
apply in evaluating whether to create new severity subgroups within an
MS-DRG is whether there are at least 500 cases in the CC or MCC
subgroup. While this criterion is used to evaluate whether to create a
severity subgroup within an MS-DRG, applying it here suggests that
creating a new MS-DRG for cases reporting a principal diagnosis of code
277.1 would not be appropriate. Our clinical advisors reviewed this
issue and recommended no MS-DRG change for porphyria cases because they
fit clinically within MS-DRG 642.
In summary, we are not proposing to create a new MS-DRG for
porphyria cases. We are inviting public comments on our proposal to
maintain porphyria cases in MS-DRG 642.
7. MDC 15 (Newborns and Other Neonates With Conditions Originating in
the Perinatal Period)
We received a request to evaluate the MS-DRG assignment of seven
ICD-9-CM diagnosis codes in MS-DRG 794 (Neonate With Other Significant
Problems) under MDC 15. The requestor stated that these codes have no
bearing on the infant, and are not representative of a neonate with a
significant problem. The requestor recommended that we change the MS-
DRG logic so that the following seven ICD-9-CM codes would not lead to
assignment of MS-DRG 794. The requestor recommended that the diagnoses
be added to the ``only secondary diagnosis'' list under MS-DRG 795
(Normal newborn) so that the case would be assigned to MS-DRG 795
(Normal newborn).
V17.0 (Family history of psychiatric condition)
V17.2 (Family history of other neurological Diseases)
[[Page 28017]]
V17.49 (Family history of other cardiovascular diseases)
V18.0 (Family history of diabetes mellitus)
V18.19 (Family history of other endocrine and metabolic
diseases)
V18.8 (Family history of infectious and parasitic diseases)
V50.3 (Ear piercing)
In the case of a newborn with one of these diagnosis codes reported
as a secondary diagnosis, the case would be assigned to MS-DRG 794. The
commenter believed that any of these seven diagnosis codes (noted
above), when reported as a secondary diagnosis for a newborn case,
should be assigned to MS-DRG 795 instead of MS-DRG 794.
Our clinical advisors reviewed this request and concur with the
commenter that the seven ICD-9-CM diagnosis codes noted above should
not continue to be assigned to MS-DRG 794, as there is no clinically
usable information reported in those codes identifying significant
problems. Therefore, for FY 2015, we are proposing to reassign these
following seven diagnoses to the ``only secondary diagnosis list''
under MS-DRG 795 so that the case would be assigned to MS-DRG 795.
V17.0 (Family history of psychiatric condition)
V17.2 (Family history of other neurological diseases)
V17.49 (Family history of other cardiovascular diseases)
V18.0 (Family history of diabetes mellitus)
V18.19 (Family history of other endocrine and metabolic
diseases)
V18.8 (Family history of infectious and parasitic diseases)
V50.3 (Ear piercing)
We are inviting public comments on this proposal.
8. Proposed Medicare Code Editor (MCE) Changes
The Medicare Code Editor (MCE) is a software program that detects
and reports errors in the coding of Medicare claims data. Patient
diagnoses, procedure(s), and demographic information are entered into
the Medicare claims processing systems and are subjected to a series of
automated screens. The MCE screens are designed to identify cases that
require further review before classification into an MS-DRG.
As discussed in section II.G.1.a. of the preamble of this proposed
rule, we developed an ICD-10 version of the current MS-DRGs, which are
based on ICD-9-CM codes. We refer to this version of the MS-DRGs as the
ICD-10 MS-DRGs Version 31.0-R. In November 2013, we also posted a
Definitions of Medicare Code Edits Manual of the ICD-10 MCE Version
31.0 on the ICD-10 MS-DRG Conversion Project Web site at: http://www.cms.gov/Medicare/Coding/ICD10/ICD-10-MS-DRG-Conversion-Project.html. We produced mainframe and computer software for Version
31.0 of the MS-DRG GROUPER with Medicare Code Editor, which was made
available to the public in December 2013. Information on ordering the
mainframe and computer software through NTIS was posted on the CMS Web
site at: http://www.cms.hhs.gov/Medicare/Coding/ICD10/ICD-10-MS-DRG-Conversion-Project.html under the ``Related Links'' section. This ICD-
10 MS-DRG GROUPER with Medicare Code Editor Version 31.0 computer
software facilitated additional review of the ICD-10 MS-DRGs
conversion. We encouraged the public to submit to CMS any comments on
areas where they believed the ICD-10 MS-DRG GROUPER and MCE did not
accurately reflect the logic and edits found in the ICD-9-CM MS-DRG
GROUPER and MCE Version 31.0.
We also have posted an ICD-10 version of the current MCE, which is
based on ICD-9-CM codes, and refer to that version of the MCE as the
ICD-10 MCE Version 31.0-R. Both of these documents are posted on our
ICD-10 MS-DRG Conversion Project Web site at: http://www.cms.hhs.gov/Medicare/Coding/ICD10/ICD-10-MS-DRG-Conversion-Project.html. We will
continue to share ICD-10 MS-DRG and MCE conversion activities with the
public through this Web site.
For FY 2015, we are proposing to remove extracranial-intracranial
(EC-IC) bypass surgery from the ``Noncovered Procedure'' edit code list
for Version 32.0 of the MCE. This procedure is identified by ICD-9-CM
procedure code 39.28 (Extracranial-intracranial (EC-IC) vascular
bypass).
Because of the complexity of appropriately classifying the
circumstances under which the EC-IC bypass surgery may, or may not, be
considered reasonable and necessary for certain conditions, we are
proposing to remove the MCE ``Noncovered Procedure'' edit for EC-IC
bypass surgery from the ``Noncovered Procedure'' edit code list for
Version 32.0 of the MCE. We are inviting public comments on this
proposal.
9. Proposed Changes to Surgical Hierarchies
Some inpatient stays entail multiple surgical procedures, each one
of which, occurring by itself, could result in assignment of the case
to a different MS-DRG within the MDC to which the principal diagnosis
is assigned. Therefore, it is necessary to have a decision rule within
the GROUPER by which these cases are assigned to a single MS-DRG. The
surgical hierarchy, an ordering of surgical classes from most resource-
intensive to least resource-intensive, performs that function.
Application of this hierarchy ensures that cases involving multiple
surgical procedures are assigned to the MS-DRG associated with the most
resource-intensive surgical class.
Because the relative resource intensity of surgical classes can
shift as a function of MS-DRG reclassification and recalibrations, for
FY 2015, we reviewed the surgical hierarchy of each MDC, as we have for
previous reclassifications and recalibrations, to determine if the
ordering of classes coincides with the intensity of resource
utilization.
A surgical class can be composed of one or more MS-DRGs. For
example, in MDC 11, the surgical class ``kidney transplant'' consists
of a single MS-DRG (MS-DRG 652) and the class ``major bladder
procedures'' consists of three MS-DRGs (MS-DRGs 653, 654, and 655).
Consequently, in many cases, the surgical hierarchy has an impact on
more than one MS-DRG. The methodology for determining the most
resource-intensive surgical class involves weighting the average
resources for each MS-DRG by frequency to determine the weighted
average resources for each surgical class. For example, assume surgical
class A includes MS-DRGs 001 and 002 and surgical class B includes MS-
DRGs 003, 004, and 005. Assume also that the average costs of MS-DRG
001 are higher than that of MS-DRG 003, but the average costs of MS-
DRGs 004 and 005 are higher than the average costs of MS-DRG 002. To
determine whether surgical class A should be higher or lower than
surgical class B in the surgical hierarchy, we would weigh the average
costs of each MS-DRG in the class by frequency (that is, by the number
of cases in the MS-DRG) to determine average resource consumption for
the surgical class. The surgical classes would then be ordered from the
class with the highest average resource utilization to that with the
lowest, with the exception of ``other O.R. procedures'' as discussed
below.
This methodology may occasionally result in assignment of a case
involving multiple procedures to the lower-weighted MS-DRG (in the
highest, most resource-intensive surgical class) of the available
alternatives. However, given that the logic underlying the surgical
[[Page 28018]]
hierarchy provides that the GROUPER search for the procedure in the
most resource-intensive surgical class, in cases involving multiple
procedures, this result is sometimes unavoidable.
We note that, notwithstanding the foregoing discussion, there are a
few instances when a surgical class with a lower average cost is
ordered above a surgical class with a higher average cost. For example,
the ``other O.R. procedures'' surgical class is uniformly ordered last
in the surgical hierarchy of each MDC in which it occurs, regardless of
the fact that the average costs for the MS-DRG or MS-DRGs in that
surgical class may be higher than those for other surgical classes in
the MDC. The ``other O.R. procedures'' class is a group of procedures
that are only infrequently related to the diagnoses in the MDC, but are
still occasionally performed on patients with cases assigned to the MDC
with these diagnoses. Therefore, assignment to these surgical classes
should only occur if no other surgical class more closely related to
the diagnoses in the MDC is appropriate.
A second example occurs when the difference between the average
costs for two surgical classes is very small. We have found that small
differences generally do not warrant reordering of the hierarchy
because, as a result of reassigning cases on the basis of the hierarchy
change, the average costs are likely to shift such that the higher-
ordered surgical class has lower average costs than the class ordered
below it.
Based on the changes that we are proposing to make for FY 2015, as
discussed in sections II.G.4.c., II.G.5.a., and II.G.5.c. of the
preamble of this FY 2015 IPPS/LTCH PPS proposed rule, we are proposing
to revise the surgical hierarchy for MDC 5 (Diseases and Disorders of
the Circulatory System) and MDC 8 (Diseases and Disorders of the
Musculoskeletal System and Connective Tissue) as follows:
In MDC 5, we are proposing to sequence proposed new MS-DRG 266
(Endovascular Cardiac Valve Replacement with MCC) and proposed new MS-
DRG 267 (Endovascular Cardiac Valve Replacement without MCC) above MS-
DRG 222 (Cardiac Defibrillator Implant with Cardiac Catheterization
with AMI/HF/Shock with MCC).
In MDC 8, we are proposing to delete MS-DRGs 490 (Back & Neck
Procedures Except Spinal Fusion with CC/MCC or Disc Device/
Neurostimulator) and MS-DRG 491 (Back & Neck Procedures Except Spinal
Fusion without CC/MCC or Disc Device/Neurostimulator) from the surgical
hierarchy. We are proposing to sequence proposed new MS-DRG 518 (Back &
Neck Procedure Except Spinal Fusion with MCC or Disc Device/
Neurostimulator), proposed new MS-DRG 519 (Back & Neck Procedure Except
Spinal Fusion with CC), and proposed new MS-DRG 520 (Back & Neck
Procedure Except Spinal Fusion without CC/MCC) above MS-DRG 492 (Lower
Extremity and Humerus Procedure Except Hip, Foot, Femur with MCC).
We are inviting public comments on our proposals.
10. Proposed Changes to the MS-DRG Diagnosis Codes for FY 2015
a. Major Complications or Comorbidities (MCCs) and Complications or
Comorbidities (CC) Severity Levels for FY 2015
A complete updated MCC, CC, and Non-CC Exclusion List is available
via the Internet on the CMS Web site at: http://cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html as
follows:
Table 6I (Complete MCC list);
Table 6J (Complete CC list); and
Table 6K (Complete list of CC Exclusions).
b. Coronary Atherosclerosis Due to Calcified Coronary Lesion
We received a request that we change the severity level for ICD-9-
CM diagnosis code 414.4 (Coronary atherosclerosis due to calcified
coronary lesion) from a non-CC to an MCC. This issue was previously
discussed in the FY 2014 IPPS/LTCH PPS proposed rule (78 FR 27522) and
the FY 2014 IPPS/LTCH PPS final rule (78 FR 50541 through 50542).
We examined claims data from the December 2013 update of the FY
2013 MedPAR file for ICD-9-CM diagnosis code 414.4. The following chart
shows our findings.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Code Diagnosis description CC Level Cnt 1 Cnt 1 Impact Cnt 2 Cnt 2 Impact Cnt 3 Cnt 3 Impact
--------------------------------------------------------------------------------------------------------------------------------------------------------
414.4.................. Coronary Non-CC.............. 1,796 1.16 3,056 2.18 2,835 3.01
atherosclerosis due
to calcified lesion.
--------------------------------------------------------------------------------------------------------------------------------------------------------
We ran the above data as described in the FY 2008 IPPS final rule
with comment period (72 FR 47158 through 47161). The C1 value reflects
a patient with no other secondary diagnosis or with all other secondary
diagnoses that are non-CCs. The C2 value reflects a patient with at
least one other secondary diagnosis that is a CC, but none that is an
MCC. The C3 value reflects a patient with at least one other secondary
diagnosis that is an MCC.
The chart above shows that the C1 finding is 1.16. A value close to
1.0 in the C1 field suggests that the diagnosis produces the same
expected value as a non-CC. A value close to 2.0 suggests the condition
is more like a CC than a non-CC, but not as significant in resource
usage as an MCC. A value close to 3.0 suggests the condition is
expected to consume resources more similar to an MCC than a CC or a
non-CC. The C2 finding was 2.18. A C2 value close to 2.0 suggests the
condition is more like a CC than a non-CC, but not as significant in
resource usage as an MCC when there is at least one other secondary
diagnosis that is a CC but none that is an MCC. While the C1 value of
1.16 is above the 1.0 value for a non-CC, it does not support
reclassification to an MCC. As stated earlier, a value close to 3.0
suggests the condition is expected to consume resources more similar to
an MCC than a CC or a non-CC. The C2 finding of 2.18 also does not
support reclassifying this diagnosis code to an MCC. Our clinical
advisors reviewed the data and evaluated this condition. They
recommended that we not change the severity level of diagnosis code
414.4 from a non-CC to an MCC. They do not believe that this diagnosis
would increase the severity level of patients. They pointed out that a
similar code, diagnosis code 414.2 (Chronic total occlusion of coronary
artery), is a non-CC. Our clinical advisors believe that diagnosis code
414.4 represents patients who are less severe than diagnosis code
414.2. Considering the C1 and C2 ratings and the input from our
clinical advisors, we are not proposing to reclassify diagnosis code
414.4 to an MCC; the diagnosis code would continue to be considered a
non-CC.
Therefore, based on the data and clinical analysis, we are
proposing to maintain diagnosis code 414.4 as a non-
[[Page 28019]]
CC. We are inviting public comments on our proposal.
11. Complications or Comorbidity (CC) Exclusions List
a. Background of the CC List and the CC Exclusions List
Under the IPPS MS-DRG classification system, we have developed a
standard list of diagnoses that are considered CCs. Historically, we
developed this list using physician panels that classified each
diagnosis code based on whether the diagnosis, when present as a
secondary condition, would be considered a substantial complication or
comorbidity. A substantial complication or comorbidity was defined as a
condition that, because of its presence with a specific principal
diagnosis, would cause an increase in the length of stay by at least 1
day in at least 75 percent of the patients. However, depending on the
principal diagnosis of the patient, some diagnoses on the basic list of
complications and comorbidities may be excluded if they are closely
related to the principal diagnosis. In FY 2008, we evaluated each
diagnosis code to determine its impact on resource use and to determine
the most appropriate CC subclassification (non-CC, CC, or MCC)
assignment. We refer readers to sections II.D.2. and 3. of the preamble
of the FY 2008 IPPS final rule with comment period for a discussion of
the refinement of CCs in relation to the MS-DRGs we adopted for FY 2008
(72 FR 47152 through 47171).
b. Proposed CC Exclusions List for FY 2015
In the September 1, 1987 final notice (52 FR 33143) concerning
changes to the DRG classification system, we modified the GROUPER logic
so that certain diagnoses included on the standard list of CCs would
not be considered valid CCs in combination with a particular principal
diagnosis. We created the CC Exclusions List for the following reasons:
(1) To preclude coding of CCs for closely related conditions; (2) to
preclude duplicative or inconsistent coding from being treated as CCs;
and (3) to ensure that cases are appropriately classified between the
complicated and uncomplicated DRGs in a pair. As we indicated above, we
developed a list of diagnoses, using physician panels, to include those
diagnoses that, when present as a secondary condition, would be
considered a substantial complication or comorbidity. In previous
years, we have made changes to the list of CCs, either by adding new
CCs or deleting CCs already on the list.
In the May 19, 1987 proposed notice (52 FR 18877) and the September
1, 1987 final notice (52 FR 33154), we explained that the excluded
secondary diagnoses were established using the following five
principles:
Chronic and acute manifestations of the same condition
should not be considered CCs for one another;
Specific and nonspecific (that is, not otherwise specified
(NOS)) diagnosis codes for the same condition should not be considered
CCs for one another;
Codes for the same condition that cannot coexist, such as
partial/total, unilateral/bilateral, obstructed/unobstructed, and
benign/malignant, should not be considered CCs for one another;
Codes for the same condition in anatomically proximal
sites should not be considered CCs for one another; and
Closely related conditions should not be considered CCs
for one another.
The creation of the CC Exclusions List was a major project
involving hundreds of codes. We have continued to review the remaining
CCs to identify additional exclusions and to remove diagnoses from the
master list that have been shown not to meet the definition of a CC.\1\
---------------------------------------------------------------------------
\1\ We refer readers to the FY 1989 final rule (53 FR 38485,
September 30, 1988) for the revision made for the discharges
occurring in FY 1989; the FY 1990 final rule (54 FR 36552, September
1, 1989) for the FY 1990 revision; the FY 1991 final rule (55 FR
36126, September 4, 1990) for the FY 1991 revision; the FY 1992
final rule (56 FR 43209, August 30, 1991) for the FY 1992 revision;
the FY 1993 final rule (57 FR 39753, September 1, 1992) for the FY
1993 revision; the FY 1994 final rule (58 FR 46278, September 1,
1993) for the FY 1994 revisions; the FY 1995 final rule (59 FR
45334, September 1, 1994) for the FY 1995 revisions; the FY 1996
final rule (60 FR 45782, September 1, 1995) for the FY 1996
revisions; the FY 1997 final rule (61 FR 46171, August 30, 1996) for
the FY 1997 revisions; the FY 1998 final rule (62 FR 45966, August
29, 1997) for the FY 1998 revisions; the FY 1999 final rule (63 FR
40954, July 31, 1998) for the FY 1999 revisions; the FY 2001 final
rule (65 FR 47064, August 1, 2000) for the FY 2001 revisions; the FY
2002 final rule (66 FR 39851, August 1, 2001) for the FY 2002
revisions; the FY 2003 final rule (67 FR 49998, August 1, 2002) for
the FY 2003 revisions; the FY 2004 final rule (68 FR 45364, August
1, 2003) for the FY 2004 revisions; the FY 2005 final rule (69 FR
49848, August 11, 2004) for the FY 2005 revisions; the FY 2006 final
rule (70 FR 47640, August 12, 2005) for the FY 2006 revisions; the
FY 2007 final rule (71 FR 47870) for the FY 2007 revisions; the FY
2008 final rule (72 FR 47130) for the FY 2008 revisions; the FY 2009
final rule (73 FR 48510); the FY 2010 final rule (74 FR 43799); the
FY 2011 final rule (75 FR 50114); the FY 2012 final rule (76 FR
51542); the FY 2013 final rule (77 FR 53315); and the FY 2014 final
rule (78 FR 50541). In the FY 2000 final rule (64 FR 41490, July 30,
1999), we did not modify the CC Exclusions List because we did not
make any changes to the ICD-9-CM codes for FY 2000.
---------------------------------------------------------------------------
For FY 2015, we are not proposing any changes to the CC Exclusion
List. Therefore, we are not developing or publishing Tables 6G
(Additions to the CC Exclusion List) or Table 6H (Deletions from the CC
Exclusion List). We have developed Table 6K (Complete List of CC
Exclusions), which is available only via the Internet on the CMS Web
site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. Because of the length of Table 6K, we are
not publishing it in the Addendum to this proposed rule. Each of these
principal diagnosis codes for which there is a CC exclusion is shown
with an asterisk and the conditions that will not count as a CC are
provided in an indented column immediately following the affected
principal diagnosis. Beginning with discharges on or after October 1 of
each year, the indented diagnoses are not recognized by the GROUPER as
valid CCs for the asterisked principal diagnoses.
A complete updated MCC, CC, and Non-CC Exclusions List is available
via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.
Because there are no proposed new, revised, or deleted diagnosis or
procedure codes for FY 2015, we are not developing Table 6A (New
Diagnosis Codes), Table 6B (New Procedure Codes), Table 6C (Invalid
Diagnosis Codes), Table 6D (Invalid Procedure Codes), Table 6E (Revised
Diagnosis Code Titles), and Table 6F (Revised Procedure Codes) to this
proposed rule and they are not published as part of this proposed rule.
We are proposing no additions or deletions to the MS-DRG MCC List
for FY 2015 and no additions or deletions to the MS-DRG CC List for FY
2015. Therefore, we are not developing Tables 6I.1 (Additions to the
MCC List), 6I.2 (Deletions to the MCC List), 6J.1 (Additions to the CC
List), and 6J.2 (Deletions to the CC List), and they are not published
as part of this proposed rule.
Alternatively, the complete documentation of the GROUPER logic,
including the current CC Exclusions List, is available from 3M/Health
Information Systems (HIS), which, under contract with CMS, is
responsible for updating and maintaining the GROUPER program. The
current MS-DRG Definitions Manual, Version 31.0, is available on a CD
for $225.00. This manual may be obtained by writing 3M/HIS at the
following address: 100 Barnes Road, Wallingford, CT 06492; or by
calling (203) 949-0303, or by obtaining an order form at the Web site:
http://www.3MHIS.com. Please specify the revision or revisions
requested. Version
[[Page 28020]]
32.0 of this manual, which will include the final FY 2015 MS-DRG
changes, will be available after publication of the FY 2015 final rule
on a CD for $225.00. This manual may be obtained by writing 3M/HIS at
the address provided above; or by calling (203) 949-0303; or by
obtaining an order form at the Web site at: http://www/3MHIS.com.
Please specify the revision or revisions requested.
12. Review of Procedure Codes in MS DRGs 981 Through 983; 984 Through
986; and 987 Through 989
Each year, we review cases assigned to former CMS DRG 468
(Extensive O.R. Procedure Unrelated to Principal Diagnosis), CMS DRG
476 (Prostatic O.R. Procedure Unrelated to Principal Diagnosis), and
CMS DRG 477 (Nonextensive O.R. Procedure Unrelated to Principal
Diagnosis) to determine whether it would be appropriate to change the
procedures assigned among these CMS DRGs. Under the MS-DRGs that we
adopted for FY 2008, CMS DRG 468 was split three ways and became MS-
DRGs 981, 982, and 983 (Extensive O.R. Procedure Unrelated to Principal
Diagnosis with MCC, with CC, and without CC/MCC, respectively). CMS DRG
476 became MS-DRGs 984, 985, and 986 (Prostatic O.R. Procedure
Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively). CMS DRG 477 became MS-DRGs 987, 988, and 989
(Nonextensive O.R. Procedure Unrelated to Principal Diagnosis with MCC,
with CC, and without CC/MCC, respectively).
MS-DRGs 981 through 983, 984 through 986, and 987 through 989
(formerly CMS DRGs 468, 476, and 477, respectively) are reserved for
those cases in which none of the O.R. procedures performed are related
to the principal diagnosis. These MS-DRGs are intended to capture
atypical cases, that is, those cases not occurring with sufficient
frequency to represent a distinct, recognizable clinical group. MS-DRGs
984 through 986 (previously CMS DRG 476) are assigned to those
discharges in which one or more of the following prostatic procedures
are performed and are unrelated to the principal diagnosis:
60.0 (Incision of prostate);
60.12 (Open biopsy of prostate);
60.15 (Biopsy of periprostatic tissue);
60.18 (Other diagnostic procedures on prostate and
periprostatic tissue);
60.21 (Transurethral prostatectomy);
60.29 (Other transurethral prostatectomy);
60.61 (Local excision of lesion of prostate);
60.69 (Prostatectomy, not elsewhere classified);
60.81 (Incision of periprostatic tissue);
60.82 (Excision of periprostatic tissue);
60.93 (Repair of prostate);
60.94 (Control of (postoperative) hemorrhage of prostate);
60.95 (Transurethral balloon dilation of the prostatic
urethra);
60.96 (Transurethral destruction of prostate tissue by
microwave thermotherapy);
60.97 (Other transurethral destruction of prostate tissue
by other thermotherapy); and
60.99 (Other operations on prostate).
All remaining O.R. procedures are assigned to MS-DRGs 981 through
983 and 987 through 989, with MS-DRGs 987 through 989 assigned to those
discharges in which the only procedures performed are nonextensive
procedures that are unrelated to the principal diagnosis.\2\
---------------------------------------------------------------------------
\2\ The original list of the ICD-9-CM procedure codes for the
procedures we consider nonextensive procedures, if performed with an
unrelated principal diagnosis, was published in Table 6C in section
IV. of the Addendum to the FY 1989 final rule (53 FR 38591). As part
of the FY 1991 final rule (55 FR 36135), the FY 1992 final rule (56
FR 43212), the FY 1993 final rule (57 FR 23625), the FY 1994 final
rule (58 FR 46279), the FY 1995 final rule (59 FR 45336), the FY
1996 final rule (60 FR 45783), the FY 1997 final rule (61 FR 46173),
and the FY 1998 final rule (62 FR 45981), we moved several other
procedures from DRG 468 to DRG 477, and some procedures from DRG 477
to DRG 468. No procedures were moved in FY 1999, as noted in the
final rule (63 FR 40962), in the FY 2000 (64 FR 41496), in the FY
2001 (65 FR 47064), or in the FY 2002 (66 FR 39852). In the FY 2003
final rule (67 FR 49999), we did not move any procedures from DRG
477. However, we did move procedure codes from DRG 468 and placed
them in more clinically coherent DRGs. In the FY 2004 final rule (68
FR 45365), we moved several procedures from DRG 468 to DRGs 476 and
477 because the procedures are nonextensive. In the FY 2005 final
rule (69 FR 48950), we moved one procedure from DRG 468 to 477. In
addition, we added several existing procedures to DRGs 476 and 477.
In FY 2006 (70 FR 47317), we moved one procedure from DRG 468 and
assigned it to DRG 477. In FY 2007, we moved one procedure from DRG
468 and assigned it to DRGs 479, 553, and 554. In FYs 2008, 2009,
2010, 2011, 2012, 2013, and 2014, no procedures were moved, as noted
in the FY 2008 final rule with comment period (72 FR 46241), in the
FY 2009 final rule (73 FR 48513), in the FY 2010 final rule (74 FR
43796), in the FY 2011 final rule (75 FR 50122), in the FY 2012
final rule (76 FR 51549), in the FY 2013 final rule (77 FR 53321),
and in the FY 2014 final rule (78 FR 50545).
---------------------------------------------------------------------------
Our review of MedPAR claims data showed that there were no cases
that merited movement or should logically be assigned to any of the
other MDCs. Therefore, for FY 2015, we are not proposing to change the
procedures assigned among these MS-DRGs.
a. Moving Procedure Codes From MS-DRGs 981 Through 983 or MS-DRGs 987
Through 989 Into MDCs
We annually conduct a review of procedures producing assignment to
MS-DRGs 981 through 983 (Extensive O.R. procedure unrelated to
principal diagnosis with MCC, with CC, and without CC/MCC,
respectively) or MS-DRGs 987 through 989 (Nonextensive O.R. procedure
unrelated to principal diagnosis with MCC, with CC, and without CC/MCC,
respectively) on the basis of volume, by procedure, to see if it would
be appropriate to move procedure codes out of these MS-DRGs into one of
the surgical MS-DRGs for the MDC into which the principal diagnosis
falls. The data are arrayed in two ways for comparison purposes. We
look at a frequency count of each major operative procedure code. We
also compare procedures across MDCs by volume of procedure codes within
each MDC.
We identify those procedures occurring in conjunction with certain
principal diagnoses with sufficient frequency to justify adding them to
one of the surgical MS-DRGs for the MDC in which the diagnosis falls.
As noted above, there were no cases that merited movement or that
should logically be assigned to any of the other MDCs. Therefore, for
FY 2015, we are not proposing to remove any procedures from MS-DRGs 981
through 983 or MS-DRGs 987 through 989 into one of the surgical MS-DRGs
for the MDC into which the principal diagnosis is assigned.
b. Reassignment of Procedures Among MS-DRGs 981 Through 983, 984
Through 986, and 987 Through 989
We also annually review the list of ICD-9-CM procedures that, when
in combination with their principal diagnosis code, result in
assignment to MS-DRGs 981 through 983, 984 through 986 (Prostatic O.R.
procedure unrelated to principal diagnosis with MCC, with CC, or
without CC/MCC, respectively), and 987 through 989, to ascertain
whether any of those procedures should be reassigned from one of these
three MS-DRGs to another of the three MS-DRGs based on average costs
and the length of stay. We look at the data for trends such as shifts
in treatment practice or reporting practice that would make the
resulting MS-DRG assignment illogical. If we find these shifts, we
would propose to move cases to keep the MS-DRGs clinically similar or
to provide payment for the cases in a similar manner. Generally, we
move only those procedures for which we
[[Page 28021]]
have an adequate number of discharges to analyze the data.
There were no cases representing shifts in treatment practice or
reporting practice that would make the resulting MS-DRG assignment
illogical, or that merited movement so that cases should logically be
assigned to any of the other MDCs. Therefore, for FY 2015, we are not
proposing to move any procedure codes among these MS-DRGs.
c. Adding Diagnosis or Procedure Codes to MDCs
Based on the review of cases in the MDCs as described above in
sections II.G.2. through 7. of the preamble of this proposed rule, we
are not proposing to add any diagnosis or procedure codes to MDCs for
FY 2015.
13. Proposed Changes to the ICD-9-CM System
a. ICD-10 Coordination and Maintenance Committee
In September 1985, the ICD-9-CM Coordination and Maintenance
Committee was formed. This is a Federal interdepartmental committee,
co-chaired by the National Center for Health Statistics (NCHS), the
Centers for Disease Control and Prevention, and CMS, charged with
maintaining and updating the ICD-9-CM system. The final update to ICD-
9-CM codes was to be made on October 1, 2013. Thereafter, the name of
the Committee was changed to the ICD-10 Coordination and Maintenance
Committee, effective with the March 19-20, 2014 meeting. The ICD-10
Coordination and Maintenance Committee will address updates to the ICD-
10-CM, ICD-10-PCS, and ICD-9-CM coding systems. The Committee is
jointly responsible for approving coding changes, and developing
errata, addenda, and other modifications to the coding systems to
reflect newly developed procedures and technologies and newly
identified diseases. The Committee is also responsible for promoting
the use of Federal and non-Federal educational programs and other
communication techniques with a view toward standardizing coding
applications and upgrading the quality of the classification system.
The official list of ICD-9-CM diagnosis and procedure codes by
fiscal year can be found on the CMS Web site at: http://cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/codes.html. The official
list of ICD-10-CM and ICD-10-PCS codes can be found on the CMS Web site
at: http://www.cms.gov/Medicare/Coding/ICD10/index.html.
The NCHS has lead responsibility for the ICD-10-CM and ICD-9-CM
diagnosis codes included in the Tabular List and Alphabetic Index for
Diseases, while CMS has lead responsibility for the ICD-10-PCS and ICD-
9-CM procedure codes included in the Tabular List and Alphabetic Index
for Procedures.
The Committee encourages participation in the above process by
health-related organizations. In this regard, the Committee holds
public meetings for discussion of educational issues and proposed
coding changes. These meetings provide an opportunity for
representatives of recognized organizations in the coding field, such
as the American Health Information Management Association (AHIMA), the
American Hospital Association (AHA), and various physician specialty
groups, as well as individual physicians, health information management
professionals, and other members of the public, to contribute ideas on
coding matters. After considering the opinions expressed at the public
meetings and in writing, the Committee formulates recommendations,
which then must be approved by the agencies.
The Committee presented proposals for coding changes for
implementation in FY 2015 at a public meeting held on September 18-19,
2013, and finalized the coding changes after consideration of comments
received at the meetings and in writing by November 15, 2013.
The Committee held its 2014 meeting on March 19-20, 2014. Any new
ICD-10-CM/PCS codes for which there was consensus of public support and
for which complete tabular and indexing changes will be made by May
2014 will be included in the October 1, 2014 update to ICD-10-CM/ICD-
10-PCS. For FY 2015, there are no proposed new, revised, or deleted
ICD-9-CM diagnosis or procedure codes.
Copies of the minutes of the procedure codes discussions at the
Committee's September 18-19, 2013 meeting and March 19-20, 2014 meeting
can be obtained from the CMS Web site at: http://cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/index.html?redirect=/icd9ProviderDiagnosticCodes/03_meetings.asp. The minutes of the
diagnosis codes discussions at the September 18-19, 2013 meeting and
March 19-20, 2014 meeting are found at: http://www.cdc.gov/nchs/icd/icd9cm.html. These Web sites also provide detailed information about
the Committee, including information on requesting a new code,
attending a Committee meeting, and timeline requirements and meeting
dates.
We encourage commenters to address suggestions on coding issues
involving diagnosis codes to: Donna Pickett, Co-Chairperson, ICD-10
Coordination and Maintenance Committee, NCHS, Room 2402, 3311 Toledo
Road, Hyattsville, MD 20782. Comments may be sent by Email to:
[email protected].
Questions and comments concerning the procedure codes should be
addressed to: Patricia Brooks, Co-Chairperson, ICD-10 Coordination and
Maintenance Committee, CMS, Center for Medicare Management, Hospital
and Ambulatory Policy Group, Division of Acute Care, C4-08-06, 7500
Security Boulevard, Baltimore, MD 21244-1850. Comments may be sent by
Email to: [email protected].
In the September 7, 2001 final rule implementing the IPPS new
technology add-on payments (66 FR 46906), we indicated we would attempt
to include proposals for procedure codes that would describe new
technology discussed and approved at the Spring meeting as part of the
code revisions effective the following October.
Section 503(a) of Public Law 108-173 included a requirement for
updating ICD-9-CM codes twice a year instead of a single update on
October 1 of each year. This requirement was included as part of the
amendments to the Act relating to recognition of new technology under
the IPPS. Section 503(a) amended section 1886(d)(5)(K) of the Act by
adding a clause (vii) which states that the ``Secretary shall provide
for the addition of new diagnosis and procedure codes on April 1 of
each year, but the addition of such codes shall not require the
Secretary to adjust the payment (or diagnosis-related group
classification) . . . until the fiscal year that begins after such
date.'' This requirement improves the recognition of new technologies
under the IPPS system by providing information on these new
technologies at an earlier date. Data will be available 6 months
earlier than would be possible with updates occurring only once a year
on October 1.
While section 1886(d)(5)(K)(vii) of the Act states that the
addition of new diagnosis and procedure codes on April 1 of each year
shall not require the Secretary to adjust the payment, or DRG
classification, under section 1886(d) of the Act until the fiscal year
that begins after such date, we have to update the DRG software and
other systems in order to recognize and accept the new codes. We also
publicize the code changes and the need for a mid-year systems update
by providers to identify the new codes. Hospitals also have to obtain
the new code books and encoder updates, and make other system changes
[[Page 28022]]
in order to identify and report the new codes.
The ICD-10 (previously the ICD-9-CM) Coordination and Maintenance
Committee holds its meetings in the spring and fall in order to update
the codes and the applicable payment and reporting systems by October 1
of each year. Items are placed on the agenda for the Committee meeting
if the request is received at least 2 months prior to the meeting. This
requirement allows time for staff to review and research the coding
issues and prepare material for discussion at the meeting. It also
allows time for the topic to be publicized in meeting announcements in
the Federal Register as well as on the CMS Web site. The public decides
whether or not to attend the meeting based on the topics listed on the
agenda. Final decisions on code title revisions are currently made by
March 1 so that these titles can be included in the IPPS proposed rule.
A complete addendum describing details of all diagnosis and procedure
coding changes, both tabular and index, is published on the CMS and
NCHS Web sites in May of each year. Publishers of coding books and
software use this information to modify their products that are used by
health care providers. This 5-month time period has proved to be
necessary for hospitals and other providers to update their systems.
A discussion of this timeline and the need for changes are included
in the December 4-5, 2005 ICD-9-CM Coordination and Maintenance
Committee Meeting minutes. The public agreed that there was a need to
hold the fall meetings earlier, in September or October, in order to
meet the new implementation dates. The public provided comment that
additional time would be needed to update hospital systems and obtain
new code books and coding software. There was considerable concern
expressed about the impact this new April update would have on
providers.
In the FY 2005 IPPS final rule, we implemented section
1886(d)(5)(K)(vii) of the Act, as added by section 503(a) of Public Law
108-173, by developing a mechanism for approving, in time for the April
update, diagnosis and procedure code revisions needed to describe new
technologies and medical services for purposes of the new technology
add-on payment process. We also established the following process for
making these determinations. Topics considered during the Fall ICD-10
(previously ICD-9-CM) Coordination and Maintenance Committee meeting
are considered for an April 1 update if a strong and convincing case is
made by the requester at the Committee's public meeting. The request
must identify the reason why a new code is needed in April for purposes
of the new technology process. The participants at the meeting and
those reviewing the Committee meeting summary report are provided the
opportunity to comment on this expedited request. All other topics are
considered for the October 1 update. Participants at the Committee
meeting are encouraged to comment on all such requests. There were no
requests approved for an expedited April l, 2014 implementation of a
code at the September 18-19, 2013 Committee meeting. Therefore, there
were no new codes implemented on April 1, 2014.
ICD-9-CM addendum and code title information is published on the
CMS Web site at: http://www.cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/index.html?redirect=/
icd9ProviderDiagnosticCodes/01overview.asp#TopofPage. ICD-10-CM and
ICD-10-PCS addendum and code title information is published on the CMS
Web site at http://www.cms.gov/Medicare/Coding/ICD10/index.html.
Information on ICD-10-CM diagnosis codes, along with the Official ICD-
10-CM Coding Guidelines, can also be found on the CDC Web site at:
http://www.cdc.gov/nchs/icd/icd10cm.html. Information on new, revised,
and deleted ICD-10-CM/ICD-10-PCS codes is also provided to the AHA for
publication in the Coding Clinic for ICD-10. AHA also distributes
information to publishers and software vendors.
CMS also sends copies of all ICD-9-CM coding changes to its
Medicare contractors for use in updating their systems and providing
education to providers.
The code titles are adopted as part of the ICD-10 (previously ICD-
9-CM) Coordination and Maintenance Committee process. Therefore,
although we publish the code titles in the IPPS proposed and final
rules, they are not subject to comment in the proposed or final rules.
b. Code Freeze
In the January 16, 2009 ICD-10-CM and ICD-10-PCS final rule (74 FR
3340), there was a discussion of the need for a partial or total freeze
in the annual updates to both ICD-9-CM and ICD-10-CM and ICD-10-PCS
codes. The public comment addressed in that final rule stated that the
annual code set updates should cease l year prior to the implementation
of ICD-10. The commenters stated that this freeze of code updates would
allow for instructional and/or coding software programs to be designed
and purchased early, without concern that an upgrade would take place
immediately before the compliance date, necessitating additional
updates and purchases.
HHS responded to comments in the ICD-10 final rule that the ICD-9-
CM Coordination and Maintenance Committee has jurisdiction over any
action impacting the ICD-9-CM and ICD-10 code sets. Therefore, HHS
indicated that the issue of consideration of a moratorium on updates to
the ICD-9-CM, ICD-10-CM, and ICD-10-PCS code sets in anticipation of
the adoption of ICD-10-CM and ICD-10-PCS would be addressed through the
Committee at a future public meeting.
The code freeze was discussed at multiple meetings of the ICD-9-CM
Coordination and Maintenance Committee and public comment was actively
solicited. The Committee evaluated all comments from participants
attending the Committee meetings as well as written comments that were
received. The Committee also considered the delay in implementation of
ICD-10 until October 1, 2014. There was an announcement at the
September 19, 2012 ICD-9-CM Coordination and Maintenance Committee
meeting that a partial freeze of both ICD-9-CM and ICD-10 codes will be
implemented as follows:
The last regular annual update to both ICD-9-CM and ICD-10
code sets was made on October 1, 2011.
On October 1, 2012 and October 1, 2013, there will be only
limited code updates to both ICD-9-CM and ICD-10 code sets to capture
new technology and new diseases.
On October 1, 2014, there were to be only limited code
updates to ICD-10 code sets to capture new technology and diagnoses as
required by section 503(a) of Public Law 108-173. There were to be no
updates to ICD-9-CM on October 1, 2014.
On October 1, 2015, one year after the originally
scheduled implementation of ICD-10, regular updates to ICD-10 were to
begin.
The ICD-10 (previously ICD-9-CM) Coordination and Maintenance
Committee announced that it would continue to meet twice a year during
the freeze. At these meetings, the public will be encouraged to comment
on whether or not requests for new diagnosis and procedure codes should
be created based on the need to capture new technology and new
diseases. Any code requests that do not meet the criteria will be
evaluated for implementation within ICD-10 one year after the
implementation of ICD-10, once the partial freeze is ended.
[[Page 28023]]
Complete information on the partial code freeze and discussions of
the issues at the Committee meetings can be found on the ICD-10
Coordination and Maintenance Committee Web site at: http://www.cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/meetings.html. A summary of the September 19, 2012 Committee meeting,
along with both written and audio transcripts of this meeting, is
posted on the Web site at: http://www.cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/ICD-9-CM-C-and-M-Meeting-Materials-Items/2012-09-19-MeetingMaterials.html.
This partial code freeze has dramatically decreased the number of
codes created each year as shown by the following information.
Total Number of Codes and Changes in Total Number of Codes per Fiscal Year
----------------------------------------------------------------------------------------------------------------
ICD-9-CM codes ICD-10-CM and ICD-10-PCS codes
----------------------------------------------------------------------------------------------------------------
Fiscal year Number Change Fiscal year Number Change
----------------------------------------------------------------------------------------------------------------
FY 2009 (October 1, 2008): ........... ........... FY 2009: ........... ...........
Diagnoses....................... 14,025 348 ICD-10-CM.......... 68,069 +5
Procedures...................... 3,824 56 ICD-10-PCS......... 72,589 -14,327
FY 2010 (October 1, 2009): ........... ........... FY 2010: ........... ...........
Diagnoses....................... 14,315 290 ICD-10-CM.......... 69,099 +1,030
Procedures...................... 3,838 14 ICD-10-PCS......... 71,957 -632
FY 2011 (October 1, 2010): ........... ........... ...................... ........... ...........
Diagnoses....................... 14,432 117 ICD-10-CM.......... 69,368 +269
Procedures...................... 3,859 21 ICD-10-PCS......... 72,081 +124
FY 2012 (October 1, 2011): ........... ........... FY 2012: ........... ...........
Diagnoses....................... 14,567 135 ICD-10-CM.......... 69,833 +465
Procedures...................... 3,877 18 ICD-10-PCS......... 71,918 -163
FY 2013 (October 1, 2012): ........... ........... FY 2013: ........... ...........
Diagnoses....................... 14,567 0 ICD-10-CM.......... 69,832 -1
Procedures...................... 3,878 1 ICD-10-PCS......... 71,920 +2
FY 2014 (October 1, 2013): ........... ........... FY 2014:.............. ........... ...........
Diagnoses....................... 14,567 0 ICD-10-CM.......... 69,823 -9
Procedures...................... 3,882 4 ICD-10-PCS......... 71,924 +4
----------------------------------------------------------------------------------------------------------------
As mentioned earlier, the public is provided the opportunity to
comment on any requests for new diagnosis or procedure codes discussed
at the ICD-10 Coordination and Maintenance Committee meeting. The
public has supported only a limited number of new codes during the
partial code freeze, as can be seen by data shown above. We have gone
from creating several hundred new codes each year to creating only a
limited number of new ICD-9-CM and ICD-10 codes.
At the September 18-19, 2013 and March 19-20, 2014 Committee
meetings, we discussed any requests we had received for new ICD-10-CM
diagnosis and ICD-10-PCS procedure codes that were to be implemented on
October 1, 2014. We did not discuss ICD-9-CM codes. The public was
given the opportunity to comment on whether or not new ICD-10-CM and
ICD-10-PCS codes should be created, based on the partial code freeze
criteria. The public was to use the criteria as to whether codes were
needed to capture new diagnoses or new technologies. If the codes do
not meet those criteria for implementation during the partial code
freeze, consideration was to be given as to whether the codes should be
created after the partial code freeze ends one year after the
implementation of ICD-10-CM/PCS. We invited public comments on any code
requests discussed at the September 18-19, 2013 and March 19-20, 2014
Committee meetings for implementation as part of the October 1, 2014
update. The deadline for commenting on code proposals discussed at the
September 18-19, 2013 Committee meeting was November 15, 2013. The
deadline for commenting on code proposals discussed at the March 19-20,
2014 Committee meeting was April 18, 2014.
H. Recalibration of the Proposed FY 2015 MS-DRG Relative Weights
1. Data Sources for Developing the Proposed Relative Weights
In developing the proposed FY 2015 system of weights, we used two
data sources: Claims data and cost report data. As in previous years,
the claims data source is the MedPAR file. This file is based on fully
coded diagnostic and procedure data for all Medicare inpatient hospital
bills. The FY 2013 MedPAR data used in this proposed rule include
discharges occurring on October 1, 2012, through September 30, 2013,
based on bills received by CMS through December 31, 2013, from all
hospitals subject to the IPPS and short-term, acute care hospitals in
Maryland (which at that time were under a waiver from the IPPS under
section 1814(b)(3) of the Act). The FY 2013 MedPAR file used in
calculating the proposed relative weights includes data for
approximately 10,050,984 Medicare discharges from IPPS providers.
Discharges for Medicare beneficiaries enrolled in a Medicare Advantage
managed care plan are excluded from this analysis. These discharges are
excluded when the MedPAR ``GHO Paid'' indicator field on the claim
record is equal to ``1'' or when the MedPAR DRG payment field, which
represents the total payment for the claim, is equal to the MedPAR
``Indirect Medical Education (IME)'' payment field, indicating that the
claim was an ``IME only'' claim submitted by a teaching hospital on
behalf of a beneficiary enrolled in a Medicare Advantage managed care
plan. In addition, the December 31, 2013 update of the FY 2013 MedPAR
file complies with version 5010 of the X12 HIPAA Transaction and Code
Set Standards, and includes a variable called ``claim type.'' Claim
type ``60'' indicates that the claim was an inpatient claim paid as
fee-for-service. Claim types ``61,'' ``62,'' ``63,'' and ``64'' relate
to encounter claims, Medicare Advantage IME claims, and HMO no-pay
claims. Therefore, the calculation of the proposed relative weights for
FY 2015 also excludes claims with claim type values not equal to
``60.'' The data exclude CAHs, including hospitals that subsequently
became CAHs after the period from which the data were taken. We note
that the FY 2015 proposed relative weights are based on the ICD-
[[Page 28024]]
9-CM diagnoses and procedures codes from the MedPAR claims data,
grouped through the ICD-9-CM version of the FY 2015 GROUPER (Version
32). The second data source used in the cost-based relative weighting
methodology is the Medicare cost report data files from the HCRIS.
Normally, we use the HCRIS dataset that is 3 years prior to the IPPS
fiscal year. Specifically, we used cost report data from the December
31, 2013 update of the FY 2012 HCRIS for calculating the proposed FY
2015 cost-based relative weights.
2. Methodology for Calculation of the Proposed Relative Weights
As we explain in section II.E.2. of the preamble of this proposed
rule, we are calculating the proposed FY 2015 relative weights based on
19 CCRs, as we did for FY 2014. The methodology we used to calculate
the proposed FY 2015 MS-DRG cost-based relative weights based on claims
data in the FY 2013 MedPAR file and data from the FY 2012 Medicare cost
reports is as follows:
To the extent possible, all the claims were regrouped
using the proposed FY 2015 MS-DRG classifications discussed in sections
II.B. and II.G. of the preamble of this proposed rule.
The transplant cases that were used to establish the
proposed relative weights for heart and heart-lung, liver and/or
intestinal, and lung transplants (MS-DRGs 001, 002, 005, 006, and 007,
respectively) were limited to those Medicare-approved transplant
centers that have cases in the FY 2012 MedPAR file. (Medicare coverage
for heart, heart-lung, liver and/or intestinal, and lung transplants is
limited to those facilities that have received approval from CMS as
transplant centers.)
Organ acquisition costs for kidney, heart, heart-lung,
liver, lung, pancreas, and intestinal (or multivisceral organs)
transplants continue to be paid on a reasonable cost basis. Because
these acquisition costs are paid separately from the prospective
payment rate, it is necessary to subtract the acquisition charges from
the total charges on each transplant bill that showed acquisition
charges before computing the average cost for each MS-DRG and before
eliminating statistical outliers.
Claims with total charges or total lengths of stay less
than or equal to zero were deleted. Claims that had an amount in the
total charge field that differed by more than $10.00 from the sum of
the routine day charges, intensive care charges, pharmacy charges,
special equipment charges, therapy services charges, operating room
charges, cardiology charges, laboratory charges, radiology charges,
other service charges, labor and delivery charges, inhalation therapy
charges, emergency room charges, blood charges, and anesthesia charges
were also deleted.
At least 92.2 percent of the providers in the MedPAR file
had charges for 14 of the 19 cost centers. All claims of providers that
did not have charges greater than zero for at least 14 of the 19 cost
centers were deleted. In other words, a provider must have no more than
five blank cost centers. If a provider did not have charges greater
than zero in more than five cost centers, the claims for the provider
were deleted. (We refer readers to the FY 2014 IPPS/LTCH PPS final rule
(78 FR 50551) for the edit threshold related to FY 2014 and prior
fiscal years).
Statistical outliers were eliminated by removing all cases
that were beyond 3.0 standard deviations from the geometric mean of the
log distribution of both the total charges per case and the total
charges per day for each MS-DRG.
Effective October 1, 2008, because hospital inpatient
claims include a POA indicator field for each diagnosis present on the
claim, only for purposes of relative weight-setting, the POA indicator
field was reset to ``Y'' for ``Yes'' for all claims that otherwise have
an ``N'' (No) or a ``U'' (documentation insufficient to determine if
the condition was present at the time of inpatient admission) in the
POA field.
Under current payment policy, the presence of specific HAC codes,
as indicated by the POA field values, can generate a lower payment for
the claim. Specifically, if the particular condition is present on
admission (that is, a ``Y'' indicator is associated with the diagnosis
on the claim), it is not a HAC, and the hospital is paid for the higher
severity (and, therefore, the higher weighted MS-DRG). If the
particular condition is not present on admission (that is, an ``N''
indicator is associated with the diagnosis on the claim) and there are
no other complicating conditions, the DRG GROUPER assigns the claim to
a lower severity (and, therefore, the lower weighted MS-DRG) as a
penalty for allowing a Medicare inpatient to contract a HAC. While the
POA reporting meets policy goals of encouraging quality care and
generates program savings, it presents an issue for the relative
weight-setting process. Because cases identified as HACs are likely to
be more complex than similar cases that are not identified as HACs, the
charges associated with HAC cases are likely to be higher as well.
Therefore, if the higher charges of these HAC claims are grouped into
lower severity MS-DRGs prior to the relative weight-setting process,
the relative weights of these particular MS-DRGs would become
artificially inflated, potentially skewing the relative weights. In
addition, we want to protect the integrity of the budget neutrality
process by ensuring that, in estimating payments, no increase to the
standardized amount occurs as a result of lower overall payments in a
previous year that stem from using weights and case-mix that are based
on lower severity MS-DRG assignments. If this would occur, the
anticipated cost savings from the HAC policy would be lost.
To avoid these problems, we reset the POA indicator field to ``Y''
only for relative weight-setting purposes for all claims that otherwise
have an ``N'' or a ``U'' in the POA field. This resetting ``forced''
the more costly HAC claims into the higher severity MS-DRGs as
appropriate, and the relative weights calculated for each MS-DRG more
closely reflect the true costs of those cases.
Once the MedPAR data were trimmed and the statistical outliers were
removed, the charges for each of the 19 cost groups for each claim were
standardized to remove the effects of differences in area wage levels,
IME and DSH payments, and for hospitals located in Alaska and Hawaii,
the applicable cost-of-living adjustment. Because hospital charges
include charges for both operating and capital costs, we standardized
total charges to remove the effects of differences in geographic
adjustment factors, cost-of-living adjustments, and DSH payments under
the capital IPPS as well. Charges were then summed by MS-DRG for each
of the 19 cost groups so that each MS-DRG had 19 standardized charge
totals. These charges were then adjusted to cost by applying the
national average CCRs developed from the FY 2012 cost report data.
The 19 cost centers that we used in the proposed relative weight
calculation are shown in the following table. The table shows the lines
on the cost report and the corresponding revenue codes that we used to
create the 19 national cost center CCRs.
[[Page 28025]]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cost from HCRIS Charges from HCRIS Medicare charges from
Revenue codes (Worksheet C, Part 1, (Worksheet C, Part 1, HCRIS (Worksheet D-
Cost center group name (19 MedPAR charge contained in Cost report line Column 5 and line Column 6 & 7 and line 3, Column & line
total) field MedPAR charge description number) Form CMS-2552- number) Form CMS-2552- number) Form CMS-2552-
field 10 10 10
--------------------------------------------------------------------------------------------------------------------------------------------------------
Routine Days................. Private Room 011X and 014X... Adults & C--1--C5--30 C--1--C6--30 D3--HOS--C2--30
Charges. Pediatrics
(General
Routine Care).
Semi-Private 012X, 013X and ..................... .....................
Room Charges. 016X-019X
Ward Charges.... 015X ..................... .....................
Intensive Days............... Intensive Care 020X............ Intensive Care C--1--C5--31 C--1--C6--31 D3--HOS--C2--31
Charges. Unit.
Coronary Care 021X............ Coronary Care C--1--C5--32 C--1--C6--32 D3--HOS--C2--32
Charges. Unit.
Burn Intensive C--1--C5--33 C--1--C6--33 D3--HOS--C2--33
Care Unit.
Surgical C--1--C5--34 C--1--C6--34 D3--HOS--C2--34
Intensive Care
Unit.
Other Special C--1--C5--35 C--1--C6--35 D3--HOS--C2--35
Care Unit.
Drugs........................ Pharmacy Charges 025X, 026X and Intravenous C--1--C5--64 C--1--C6--64 D3--HOS--C2--64
063X. Therapy. C--1--C7--64
Drugs Charged To C--1--C5--73 C--1--C6--73 D3--HOS--C2--73
Patient. C--1--C7--73
Supplies and Equipment....... Medical/Surgical 0270, 0271, Medical Supplies C--1--C5--71 C--1--C6--71 D3--HOS--C2--71
Supply Charges. 0272, 0273, Charged to C--1--C7--71
0274, 0277, Patients.
0279, and 0621,
0622, 0623.
Durable Medical 0290, 0291, 0292 DME-Rented...... C--1--C5--96 C--1--C6--96 D3--HOS--C2--96
Equipment and 0294-0299. C--1--C7--96
Charges.
Used Durable 0293............ DME-Sold........ C--1--C5--67 C--1--C6--97 D3--HOS--C2--97
Medical Charges. C--1--C7--97
Implantable Devices.......... ................ 0275, 0276, Implantable C--1--C5--72 C--1--C6--72 D3--HOS--C2--72
0278, 0624. Devices Charged C--1--C7--72
to Patients.
Therapy Services............. Physical Therapy 042X............ Physical Therapy C--1--C5--66 C--1--C6--66 D3--HOS--C2--66
Charges. C--1--C7--66
Occupational 043X............ Occupational C--1--C5--67 C--1--C6--67 D3--HOS--C2--67
Therapy Charges. Therapy. C--1--C7--67
Speech Pathology 044X and 047X... Speech Pathology C--1--C5--68 C--1--C6--68 D3--HOS--C2--68
Charges. C--1--C7--68
Inhalation Therapy........... Inhalation 041X and 046X... Respiratory C--1--C5--65 C--1--C6--65 D3--HOS--C2--65
Therapy Charges. Therapy. C--1--C7--65
Operating Room............... Operating Room 036X............ Operating Room.. C--1--C5--50 C--1--C6--50 D3--HOS--C2--50
Charges. C--1--C7--50
071X............ Recovery Room... C--1--C5--51 C--1--C6--51 D3--HOS--C2--51
C--1--C7--51
Labor & Delivery............. Operating Room 072X............ Delivery Room C--1--C5--52 C--1--C6--52 D3--HOS--C2--52
Charges. and Labor Room. C--1--C7--52
Anesthesia................... Anesthesia 037X............ Anesthesiology.. C--1--C5--53 C--1--C6--53 D3--HOS--C2--53
Charges. C--1--C7--53
Cardiology................... Cardiology 048X and 073X... Electrocardiolog C--1--C5--69 C--1--C6--69 D3--HOS--C2--69
Charges. y. C--1--C7--69
Cardiac Catheterization...... ................ 0481............ Cardiac C--1--C5--59 C--1--C6--59 D3--HOS--C2--59
Catheterization. C--1--C7--59
Laboratory................... Laboratory 030X, 031X, and Laboratory...... C--1--C5--60 C--1--C6--60 D3--HOS--C2--60
Charges. 075X. C--1--C7--60
PBP Clinic C--1--C5--61 C--1--C6--61 D3--HOS--C2--61
Laboratory C--1--C7--61
Services.
074X, 086X...... Electro- C--1--C5--70 C--1--C6--70 D3--HOS--C2--70
Encephalography. C--1--C7--70
Radiology.................... Radiology 032X, 040X...... Radiology--Diagn C--1--C5--54 C--1--C6--54 D3--HOS--C2--54
Charges. ostic. C--1--C7--54
028x, 0331, Radiology--Thera C--1--C5--55 C--1--C6--55 D3--HOS--C2--55
0332, 0333, peutic.
0335, 0339,
0342.
0343 and 344.... Radioisotope.... C--1--C5--56 C--1--C6--56 D3--HOS--C2--56
C--1--C7--56
Computed Tomography (CT) Scan CT Scan Charges. 035X............ Computed C--1--C5--57 C--1--C6--57 D3--HOS--C2--57
Tomography (CT) C--1--C7--57
Scan.
[[Page 28026]]
Magnetic Resonance Imaging MRI Charges..... 061X............ Magnetic C--1--C5--58 C--1--C6--58 D3--HOS--C2--58
(MRI). Resonance C--1--C7--58
Imaging (MRI).
Emergency Room............... Emergency Room 045x............ Emergency....... C--1--C5--91 C--1--C6--91 D3--HOS--C2--91
Charges. C--1--C7--91
Blood and Blood Products..... Blood Charges... 038x............ Whole Blood & C--1--C5--62 C--1--C6--62 D3--HOS--C2--62
Packed Red C--1--C7--62
Blood Cells.
Blood Storage/ 039x............ Blood Storing, C--1--C5--63 C--1--C6--63 D3--HOS--C2--63
Processing. Processing, & C--1--C7--63
Transfusing.
Other Services............... Other Service 0002-0099, 022X,
Charge. 023X, 024X,
052X, 053X.
055X-060X, 064X-
070X, 076X-
078X, 090X-095X
and 099X.
Renal Dialysis.. 0800X........... Renal Dialysis.. C--1--C5--74 C--1--C6--74 D3--HOS--C2--74
ESRD Revenue 080X and 082X- ................ ..................... C--1--C7--74 .....................
Setting Charges. 088X.
Home Program C--1--C5--94 C--1--C6--94 D3--HOS--C2--94
Dialysis. C--1--C7--94
Outpatient 049X............ ASC (Non C--1--C5--75 C--1--C6--75 D3--HOS--C2--75
Service Charges. Distinct Part).
Lithotripsy 079X............ ................ ..................... C--1--C7--75 .....................
Charge.
Other Ancillary. C--1--C5--76 C--1--C6--76 D3--HOS--C2--76
C--1--C7--76
Clinic Visit 051X............ Clinic.......... C--1--C5--90 C--1--C6--90 D3--HOS--C2--90
Charges. C--1--C7--90
Observation beds C--1--C5--92.01 C--1--C6--92.01 D3--HOS--C2--92.01
C--1--C7--92.01
Professional 096X, 097X, and Other Outpatient C--1--C5--93 C--1--C6--93 D3--HOS--C2--93
Fees Charges. 098X. Services. C--1--C7--93
Ambulance 054X............ Ambulance....... C--1--C5--95 C--1--C6--95 D3--HOS--C2--95
Charges. C--1--C7--95
Rural Health C--1--C5--88 C--1--C6--88 D3--HOS--C2--88
Clinic. C--1--C7--88
FQHC............ C--1--C5--89 C--1--C6--89 D3--HOS--C2--89
C--1--C7--89
--------------------------------------------------------------------------------------------------------------------------------------------------------
We refer readers to the FY 2009 IPPS/LTCH PPS final rule (73 FR
48462) for a discussion on the revenue codes included in the Supplies
and Equipment and Implantable Devices CCRs, respectively.
3. Development of National Average CCRs
We developed the national average CCRs as follows:
Using the FY 2012 cost report data, we removed CAHs, Indian Health
Service hospitals, all-inclusive rate hospitals, and cost reports that
represented time periods of less than 1 year (365 days). We included
hospitals located in Maryland because we include their charges in our
claims database. We then created CCRs for each provider for each cost
center (see prior table for line items used in the calculations) and
removed any CCRs that were greater than 10 or less than 0.01. We
normalized the departmental CCRs by dividing the CCR for each
department by the total CCR for the hospital for the purpose of
trimming the data. We then took the logs of the normalized cost center
CCRs and removed any cost center CCRs where the log of the cost center
CCR was greater or less than the mean log plus/minus 3 times the
standard deviation for the log of that cost center CCR. Once the cost
report data were trimmed, we calculated a Medicare-specific CCR. The
Medicare-specific CCR was determined by taking the Medicare charges for
each line item from Worksheet D-3 and deriving the Medicare-specific
costs by applying the hospital-specific departmental CCRs to the
Medicare-specific charges for each line item from Worksheet D-3. Once
each hospital's Medicare-specific costs were established, we summed the
total Medicare-specific costs and divided by the sum of the total
Medicare-specific charges to produce national average, charge-weighted
CCRs.
After we multiplied the total charges for each MS-DRG in each of
the 19 cost centers by the corresponding national average CCR, we
summed the 19 ``costs'' across each MS-DRG to produce a total
standardized cost for the MS-DRG. The average standardized cost for
each MS-DRG was then computed as the total standardized cost for the
MS-DRG divided by the transfer-adjusted case count for the MS-DRG. The
average cost for each MS-DRG was then divided by the national average
standardized cost per case to determine the relative weight.
The proposed FY 2015 cost-based relative weights were then
normalized by an adjustment factor of 1.642112 so that the average case
weight after
[[Page 28027]]
recalibration was equal to the average case weight before
recalibration. The normalization adjustment is intended to ensure that
recalibration by itself neither increases nor decreases total payments
under the IPPS, as required by section 1886(d)(4)(C)(iii) of the Act.
The proposed 19 national average CCRs for FY 2015 are as follows:
------------------------------------------------------------------------
Group CCR
------------------------------------------------------------------------
Routine Days................................................... 0.483
Intensive Days................................................. 0.405
Drugs.......................................................... 0.191
Supplies & Equipment........................................... 0.293
Implantable Devices............................................ 0.355
Therapy Services............................................... 0.345
Laboratory..................................................... 0.128
Operating Room................................................. 0.212
Cardiology..................................................... 0.124
Cardiac Catheterization........................................ 0.131
Radiology...................................................... 0.164
MRIs........................................................... 0.086
CT Scans....................................................... 0.043
Emergency Room................................................. 0.197
Blood and Blood Products....................................... 0.360
Other Services................................................. 0.398
Labor & Delivery............................................... 0.393
Inhalation Therapy............................................. 0.182
Anesthesia..................................................... 0.115
------------------------------------------------------------------------
Since FY 2009, the relative weights have been based on 100 percent
cost weights based on our MS-DRG grouping system.
When we recalibrated the DRG weights for previous years, we set a
threshold of 10 cases as the minimum number of cases required to
compute a reasonable weight. In this FY 2015 IPPS/LTCH PPS proposed
rule, we are proposing to use that same case threshold in recalibrating
the proposed MS-DRG relative weights for FY 2015. Using data from the
FY 2013 MedPAR file, there were 8 MS-DRGs that contain fewer than 10
cases. Under the MS-DRGs, we have fewer low-volume DRGs than under the
CMS DRGs because we no longer have separate DRGs for patients aged 0 to
17 years. With the exception of newborns, we previously separated some
DRGs based on whether the patient was age 0 to 17 years or age 17 years
and older. Other than the age split, cases grouping to these DRGs are
identical. The DRGs for patients aged 0 to 17 years generally have very
low volumes because children are typically ineligible for Medicare. In
the past, we have found that the low volume of cases for the pediatric
DRGs could lead to significant year-to-year instability in their
relative weights. Although we have always encouraged non-Medicare
payers to develop weights applicable to their own patient populations,
we have received frequent complaints from providers about the use of
the Medicare relative weights in the pediatric population. We believe
that eliminating this age split in the MS-DRGs will provide more stable
payment for pediatric cases by determining their payment using adult
cases that are much higher in total volume. Newborns are unique and
require separate MS-DRGs that are not mirrored in the adult population.
Therefore, it remains necessary to retain separate MS-DRGs for
newborns. All of the low-volume MS-DRGs listed below are for newborns.
In FY 2015, because we do not have sufficient MedPAR data to set
accurate and stable cost relative weights for these low-volume MS-DRGs,
we are proposing to compute relative weights for the low-volume MS-DRGs
by adjusting their final FY 2014 relative weights by the percentage
change in the average weight of the cases in other MS-DRGs. The
crosswalk table is shown below:
------------------------------------------------------------------------
Low[dash]volume MS-DRG MS-DRG title Crosswalk to MS-DRG
------------------------------------------------------------------------
768................... Vaginal Delivery with Final FY 2014 relative
O.R. Procedure weight (adjusted by
Except Sterilization percent change in
and/or D&C. average weight of the
cases in other MS-DRGs).
789................... Neonates, Died or Final FY 2014 relative
Transferred to weight (adjusted by
Another Acute Care percent change in
Facility. average weight of the
cases in other MS-DRGs).
790................... Extreme Immaturity or Final FY 2014 relative
Respiratory Distress weight (adjusted by
Syndrome, Neonate. percent change in
average weight of the
cases in other MS-DRGs).
791................... Prematurity with Final FY 2014 relative
Major Problems. weight (adjusted by
percent change in
average weight of the
cases in other MS-DRGs).
792................... Prematurity without Final FY 2014 relative
Major Problems. weight (adjusted by
percent change in
average weight of the
cases in other MS-DRGs).
793................... Full-Term Neonate Final FY 2014 relative
with Major Problems. weight (adjusted by
percent change in
average weight of the
cases in other MS-DRGs).
794................... Neonate with Other Final FY 2014 relative
Significant Problems. weight (adjusted by
percent change in
average weight of the
cases in other MS-DRGs).
795................... Normal Newborn....... Final FY 2014 relative
weight (adjusted by
percent change in
average weight of the
cases in other MS-DRGs).
------------------------------------------------------------------------
4. Bundled Payments for Care Improvement (BPCI) Initiative
The Bundled Payments for Care Improvement (BPCI) initiative,
developed under the authority of section 3021 of the Affordable Care
Act (codified at section 1115A of the Act), is comprised of four
broadly defined models of care, which link payments for multiple
services beneficiaries receive during an episode of care. Under the
BPCI initiative, organizations enter into payment arrangements that
include financial and performance accountability for episodes of care.
On January 31, 2013, CMS announced the health care organizations
selected to participate in the BPCI initiative. For additional
information on the BPCI initiative, we refer readers to the CMS' Center
for Medicare and Medicaid Innovation's Web site at http://innovation.cms.gov/initiatives/Bundled-Payments/index.html and to
section IV.H.4. of the preamble of the FY 2013 IPPS/LTCH PPS final rule
(77 FR 53341 through 53343) for a discussion on the BPCI initiative.
In the FY 2013 IPPS/LTCH PPS final rule, for FY 2013 and subsequent
fiscal years, we finalized a policy to treat hospitals that participate
in the BPCI initiative the same as prior fiscal years for the IPPS
payment modeling and ratesetting process without regard to a hospital's
participation within these bundled payment models (that is, as if a
hospital were not participating in those models under the BPCI
initiative). Therefore, for FY 2015, we are proposing to continue to
include all applicable data from subsection (d) hospitals participating
in BPCI Models 1, 2, and 4 in our IPPS payment modeling and ratesetting
calculations. We refer readers to the FY 2013 IPPS/LTCH PPS final rule
for a complete discussion on our final policy for the treatment of
hospitals participating in
[[Page 28028]]
the BPCI initiative in our ratesetting process.
I. Proposed Add-On Payments for New Services and Technologies
1. Background
Sections 1886(d)(5)(K) and (L) of the Act establish a process of
identifying and ensuring adequate payment for new medical services and
technologies (sometimes collectively referred to in this section as
``new technologies'') under the IPPS. Section 1886(d)(5)(K)(vi) of the
Act specifies that a medical service or technology will be considered
new if it meets criteria established by the Secretary after notice and
opportunity for public comment. Section 1886(d)(5)(K)(ii)(I) of the Act
specifies that a new medical service or technology may be considered
for new technology add-on payment if, ``based on the estimated costs
incurred with respect to discharges involving such service or
technology, the DRG prospective payment rate otherwise applicable to
such discharges under this subsection is inadequate.'' We note that
beginning with discharges occurring in FY 2008, CMS transitioned from
CMS-DRGs to MS-DRGs.
The regulations at 42 CFR 412.87 implement these provisions and
specify three criteria for a new medical service or technology to
receive the additional payment: (1) The medical service or technology
must be new; (2) the medical service or technology must be costly such
that the DRG rate otherwise applicable to discharges involving the
medical service or technology is determined to be inadequate; and (3)
the service or technology must demonstrate a substantial clinical
improvement over existing services or technologies. Below we highlight
some of the major statutory and regulatory provisions relevant to the
new technology add-on payment criteria as well as other information.
For a complete discussion on the new technology add-on payment
criteria, we refer readers to the FY 2012 IPPS/LTCH PPS final rule (76
FR 51572 through 51574).
Under the first criterion, as reflected in Sec. 412.87(b)(2), a
specific medical service or technology will be considered ``new'' for
purposes of new medical service or technology add-on payments until
such time as Medicare data are available to fully reflect the cost of
the technology in the MS-DRG weights through recalibration. We note
that we do not consider a service or technology to be new if it is
substantially similar to one or more existing technologies. That is,
even if a technology receives a new FDA approval, it may not
necessarily be considered ``new'' for purposes of new technology add-on
payments if it is ``substantially similar'' to a technology that was
approved by FDA and has been on the market for more than 2 to 3 years.
In the FY 2006 IPPS final rule (70 FR 47351) and the FY 2010 IPPS/RY
2010 LTCH PPS final rule (74 FR 43813 and 43814), we explained our
policy regarding substantial similarity in detail.
Under the second criterion, Sec. 412.87(b)(3) further provides
that, to be eligible for the add-on payment for new medical services or
technologies, the MS-DRG prospective payment rate otherwise applicable
to the discharge involving the new medical services or technologies
must be assessed for adequacy. Under the cost criterion, to assess the
adequacy of payment for a new technology paid under the applicable MS-
DRG prospective payment rate, we evaluate whether the charges for cases
involving the new technology exceed certain threshold amounts. Table 10
that was released with the FY 2014 IPPS/LTCH PPS final rule contains
the final thresholds that we use to evaluate applications for new
technology add-on payments for FY 2015. We refer readers to the CMS Web
site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2014-IPPS-Final-Rule-Home-Page.html for a complete
viewing of Table 10 from the FY 2014 IPPS/LTCH PPS final rule.
In the September 7, 2001 final rule that established the new
technology add-on payment regulations (66 FR 46917), we discussed the
issue of whether the Health Insurance Portability and Accountability
Act (HIPAA) Privacy Rule at 45 CFR Parts 160 and 164 applies to claims
information that providers submit with applications for new technology
add-on payments. We refer readers to the FY 2012 IPPS/LTCH PPS final
rule (76 FR 51573) for complete information on this issue.
Under the third criterion, Sec. 412.87(b)(1) of our existing
regulations provides that a new technology is an appropriate candidate
for an additional payment when it represents ``an advance that
substantially improves, relative to technologies previously available,
the diagnosis or treatment of Medicare beneficiaries.'' For example, a
new technology represents a substantial clinical improvement when it
reduces mortality, decreases the number of hospitalizations or
physician visits, or reduces recovery time compared to the technologies
previously available. (We refer readers to the September 7, 2001 final
rule for a more detailed discussion of this criterion (66 FR 46902).)
The new medical service or technology add-on payment policy under
the IPPS provides additional payments for cases with relatively high
costs involving eligible new medical services or technologies while
preserving some of the incentives inherent under an average-based
prospective payment system. The payment mechanism is based on the cost
to hospitals for the new medical service or technology. Under Sec.
412.88, if the costs of the discharge (determined by applying cost-to-
charge ratios (CCRs) as described in Sec. 412.84(h)) exceed the full
DRG payment (including payments for IME and DSH, but excluding outlier
payments), Medicare will make an add-on payment equal to the lesser of:
(1) 50 percent of the estimated costs of the new technology (if the
estimated costs for the case including the new technology exceed
Medicare's payment); or (2) 50 percent of the difference between the
full DRG payment and the hospital's estimated cost for the case. Unless
the discharge qualifies for an outlier payment, the additional Medicare
payment is limited to the full MS-DRG payment plus 50 percent of the
estimated costs of the new technology.
Section 503(d)(2) of Public Law 108-173 provides that there shall
be no reduction or adjustment in aggregate payments under the IPPS due
to add-on payments for new medical services and technologies.
Therefore, in accordance with section 503(d)(2) of Public Law 108-173,
add-on payments for new medical services or technologies for FY 2005
and later years have not been subjected to budget neutrality.
In the FY 2009 IPPS final rule (73 FR 48561 through 48563), we
modified our regulations at Sec. 412.87 to codify our longstanding
practice of how CMS evaluates the eligibility criteria for new medical
service or technology add-on payment applications. That is, we first
determine whether a medical service or technology meets the newness
criterion, and only if so, do we then make a determination as to
whether the technology meets the cost threshold and represents a
substantial clinical improvement over existing medical services or
technologies. We also amended Sec. 412.87(c) to specify that all
applicants for new technology add-on payments must have FDA approval or
clearance for their new medical service or technology by July 1 of each
year prior to the beginning of the fiscal year that the application is
being considered.
The Council on Technology and Innovation (CTI) at CMS oversees the
[[Page 28029]]
agency's cross-cutting priority on coordinating coverage, coding and
payment processes for Medicare with respect to new technologies and
procedures, including new drug therapies, as well as promoting the
exchange of information on new technologies between CMS and other
entities. The CTI, composed of senior CMS staff and clinicians, was
established under section 942(a) of Public Law 108-173. The Council is
co-chaired by the Director of the Center for Clinical Standards and
Quality (CCSQ) and the Director of the Center for Medicare (CM), who is
also designated as the CTI's Executive Coordinator.
The specific processes for coverage, coding, and payment are
implemented by CM, CCSQ, and the local claims-payment contractors (in
the case of local coverage and payment decisions). The CTI supplements,
rather than replaces, these processes by working to assure that all of
these activities reflect the agency-wide priority to promote high-
quality, innovative care. At the same time, the CTI also works to
streamline, accelerate, and improve coordination of these processes to
ensure that they remain up to date as new issues arise. To achieve its
goals, the CTI works to streamline and create a more transparent coding
and payment process, improve the quality of medical decisions, and
speed patient access to effective new treatments. It is also dedicated
to supporting better decisions by patients and doctors in using
Medicare-covered services through the promotion of better evidence
development, which is critical for improving the quality of care for
Medicare beneficiaries.
To improve the understanding of CMS' processes for coverage,
coding, and payment and how to access them, the CTI has developed an
``Innovator's Guide'' to these processes. The intent is to consolidate
this information, much of which is already available in a variety of
CMS documents and in various places on the CMS Web site, in a user-
friendly format. This guide was published in August 2008 and is
available on the CMS Web site at: http://www.cms.gov/CouncilonTechInnov/Downloads/InnovatorsGuide5_10_10.pdf.
As we indicated in the FY 2009 IPPS final rule (73 FR 48554), we
invite any product developers or manufacturers of new medical
technologies to contact the agency early in the process of product
development if they have questions or concerns about the evidence that
would be needed later in the development process for the agency's
coverage decisions for Medicare.
The CTI aims to provide useful information on its activities and
initiatives to stakeholders, including Medicare beneficiaries,
advocates, medical product manufacturers, providers, and health policy
experts. Stakeholders with further questions about Medicare's coverage,
coding, and payment processes, or who want further guidance about how
they can navigate these processes, can contact the CTI at
[email protected].
We note that applicants for add-on payments for new medical
services or technologies for FY 2016 must submit a formal request,
including a full description of the clinical applications of the
medical service or technology and the results of any clinical
evaluations demonstrating that the new medical service or technology
represents a substantial clinical improvement, along with a significant
sample of data to demonstrate that the medical service or technology
meets the high-cost threshold. Complete application information, along
with final deadlines for submitting a full application, will be posted
as it becomes available on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/newtech.html. To allow interested parties to identify the new medical
services or technologies under review before the publication of the
proposed rule for FY 2016, the CMS Web site also will post the tracking
forms completed by each applicant.
2. Public Input Before Publication of a Notice of Proposed Rulemaking
on Add-On Payments
Section 1886(d)(5)(K)(viii) of the Act, as amended by section
503(b)(2) of Public Law 108-173, provides for a mechanism for public
input before publication of a notice of proposed rulemaking regarding
whether a medical service or technology represents a substantial
clinical improvement or advancement. The process for evaluating new
medical service and technology applications requires the Secretary to--
Provide, before publication of a proposed rule, for public
input regarding whether a new service or technology represents an
advance in medical technology that substantially improves the diagnosis
or treatment of Medicare beneficiaries;
Make public and periodically update a list of the services
and technologies for which applications for add-on payments are
pending;
Accept comments, recommendations, and data from the public
regarding whether a service or technology represents a substantial
clinical improvement; and
Provide, before publication of a proposed rule, for a
meeting at which organizations representing hospitals, physicians,
manufacturers, and any other interested party may present comments,
recommendations, and data regarding whether a new medical service or
technology represents a substantial clinical improvement to the
clinical staff of CMS.
In order to provide an opportunity for public input regarding add-
on payments for new medical services and technologies for FY 2015 prior
to publication of the FY 2015 IPPS/LTCH PPS proposed rule, we published
a notice in the Federal Register on November 29, 2013 (78 FR 71555
through 71557), and held a town hall meeting at the CMS Headquarters
Office in Baltimore, MD, on February 12, 2014. In the announcement
notice for the meeting, we stated that the opinions and alternatives
provided during the meeting would assist us in our evaluations of
applications by allowing public discussion of the substantial clinical
improvement criterion for each of the FY 2015 new medical service and
technology add-on payment applications before the publication of the FY
2015 proposed rule.
Approximately 91 individuals registered to attend the town hall
meeting in person, while additional individuals listened over an open
telephone line. We also live-streamed the town hall meeting and posted
the town hall on the CMS YouTube Web page at: http://www.youtube.com/watch?v=WXyR_TILfKo&list=TLiu1B_AxXsinTW6EEn4BVUdR4iEM61eV4. We
considered each applicant's presentation made at the town hall meeting,
as well as written comments submitted on the applications that were
received by the due date of January 21, 2014, in our evaluation of the
new technology add-on payment applications for FY 2015 in this proposed
rule.
In response to the published notice and the New Technology Town
Hall meeting, we received written comments regarding the applications
for FY 2015 new technology add-on payments. We summarize these comments
below or, if applicable, indicate that there were no comments received,
at the end of each discussion of the individual applications in this
proposed rule.
A number of attendees at the New Technology Town Hall meeting
provided comments that were unrelated to the ``substantial clinical
improvement'' criterion. As explained above and in the Federal Register
notice
[[Page 28030]]
announcing the New Technology Town Hall meeting (78 FR 71555 through
71557), the purpose of the meeting was specifically to discuss the
substantial clinical improvement criterion in regard to pending new
technology add-on payment applications for FY 2015. Therefore, we are
not summarizing those comments in this proposed rule. Commenters are
welcome to resubmit these comments in response to proposals presented
in this proposed rule.
3. FY 2015 Status of Technologies Approved for FY 2014 Add-On Payments
a. Glucarpidase (Trade Brand Voraxaze[supreg])
BTG International, Inc. submitted an application for new technology
add-on payments for Glucarpidase (trade brand Voraxaze[supreg]) for FY
2013. Glucarpidase is used in the treatment of patients who have been
diagnosed with toxic methotrexate (MTX) concentrations as of result of
renal impairment. The administration of Glucarpidase causes a rapid and
sustained reduction of toxic MTX concentrations.
Voraxaze[supreg] was approved by the FDA on January 17, 2012.
Beginning in 1993, certain patients could obtain expanded access for
treatment use to Voraxaze[supreg] as an investigational drug. Since
2007, the applicant has been authorized to recover the costs of making
Voraxaze[supreg] available through its expanded access program. We
describe expanded access for treatment use of investigational drugs and
authorization to recover certain costs of investigational drugs in the
FY 2013 IPPS/LTCH PPS final rule (77 FR 53346 through 53350).
Voraxaze[supreg] was available on the market in the United States as a
commercial product to the larger population as of April 30, 2012. In
the FY 2013 IPPS/LTCH PPS proposed rule (77 FR 27936 through 27939), we
expressed concerns about whether Voraxaze[supreg] could be considered
new for FY 2013. After consideration of all of the public comments
received, in the FY 2013 IPPS/LTCH PPS final rule, we stated that we
considered Voraxaze[supreg] to be ``new'' as of April 30, 2012, which
is the date of market availability.
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology payments for Voraxaze[supreg]
and consideration of the public comments we received in response to the
FY 2013 IPPS/LTCH PPS proposed rule, we approved Voraxaze[supreg] for
new technology add-on payments for FY 2013. Cases of Voraxaze[supreg]
are identified with ICD-9-CM procedure code 00.95 (Injection or
infusion of glucarpidase). The cost of Voraxaze[supreg] is $22,500 per
vial. The applicant stated that an average of four vials is used per
Medicare beneficiary. Therefore, the average cost per case for
Voraxaze[supreg] is $90,000 ($22,500 x 4). Under Sec. 412.88(a)(2),
new technology add-on payments are limited to the lesser of 50 percent
of the average cost of the technology or 50 percent of the costs in
excess of the MS-DRG payment for the case. As a result, the maximum new
technology add-on payment for Voraxaze[supreg] is $45,000 per case.
As stated above, the new technology add-on payment regulations
provide that ``a medical service or technology may be considered new
within 2 or 3 years after the point at which data begin to become
available reflecting the ICD-9-CM code assigned to the new service or
technology'' (Sec. 412.87(b)(2)). Our practice has been to begin and
end new technology add-on payments on the basis of a fiscal year, and
we have generally followed a guideline that uses a 6-month window
before and after the start of the fiscal year to determine whether to
extend the new technology add-on payment for an additional fiscal year.
In general, we extend add-on payments for an additional year only if
the 3-year anniversary date of the product's entry on the market occurs
in the latter half of the fiscal year (70 FR 47362).
With regard to the newness criterion for Voraxaze[supreg], as
stated above, we consider the beginning of the newness period to
commence when Voraxaze[supreg] was first available on the market on
April 30, 2012. Because the 3-year anniversary date for
Voraxaze[supreg] will occur in the latter half of FY 2015 (April 30,
2015), we are proposing to continue new technology add-on payments for
this technology for FY 2015. We are inviting public comments on this
proposal.
b. DIFICIDTM (Fidaxomicin) Tablets
Optimer Pharmaceuticals, Inc. submitted an application for new
technology add-on payments for FY 2013 for the use of
DIFICIDTM tablets. As indicated on the labeling submitted to
the FDA, the applicant noted that Fidaxomicin is taken twice a day as a
daily dosage (200 mg tablet twice daily = 400 mg per day) as an oral
antibiotic. The applicant asserted that Fidaxomicin provides potent
bactericidal activity against C. Diff., and moderate bactericidal
activity against certain other gram-positive organisms, such as
enterococcus and staphylococcus. Unlike other antibiotics used to treat
CDAD, the applicant noted that the effects of Fidaxomicin preserve
bacteroides organisms in the fecal flora. These are markers of normal
anaerobic microflora. The applicant asserted that this helps prevent
pathogen introduction or persistence, which potentially inhibits the
re-emergence of C. Diff., and reduces the likelihood of overgrowths as
a result of vancomycin-resistant Enterococcus (VRE). Because of this
narrow spectrum of activity, the applicant asserted that Fidaxomicin
does not alter this native intestinal microflora.
In the FY 2013 IPPS/LTCH PPS proposed rule (77 FR 27939 through
27941), we expressed concern that DIFICIDTM may not be
eligible for new technology add-on payments because eligibility is
limited to new technologies associated with procedures described by
ICD-9-CM codes. We further stated that drugs that are only taken orally
(such as DIFICIDTM) may not be eligible for consideration
for new technology add-on payments because there is no procedure
associated with these drugs and, therefore, no ICD-9-CM code(s). In the
FY 2013 IPPS/LTCH PPS final rule (77 FR 53350 through 53358), after
consideration of the public comments received, we revised our policy to
allow the use of National Drug Codes (NDCs) to identify oral
medications that have no inpatient procedure for the purposes of new
technology add-on payments. The revised policy is effective for
payments for discharges occurring on or after October 1, 2012. We refer
readers to the FY 2013 IPPS/LTCH PPS final rule for a complete
discussion on this issue.
With regard to the newness criterion, Fidaxomicin was approved by
the FDA on May 27, 2011, for the treatment of CDAD in adult patients,
18 years of age and older. In the FY 2013 IPPS/LTCH PPS final rule, we
established that the beginning of the newness period for this
technology is its FDA approval date of May 27, 2011.
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology add-on payments for
DIFICIDTM and consideration of the public comments we
received in response to the FY 2013 IPPS/LTCH PPS proposed rule, we
approved DIFICIDTM for new technology add-on payments for FY
2013. Cases of DIFICIDTM are identified with ICD-9-CM
diagnosis code 008.45 (Intestinal infection due to Clostridium
difficile) in combination with NDC code 52015-0080-01. Providers must
report the NDC on the 837i Health Care Claim Institutional form (in
combination with ICD-9-CM diagnosis code 008.45) in order to receive
the new technology add-on payment. According to the applicant, the cost
of DIFICIDTM is
[[Page 28031]]
$2,800 for a 10-day dosage. The average cost per day for
DIFICIDTM is $280 ($2,800/10). Cases of DIFICIDTM
within the inpatient setting typically incur an average dosage of 6.2
days, which results in an average cost per case for
DIFICIDTM of $1,736 ($280 x 6.2). Under Sec. 412.88(a)(2),
new technology add-on payments are limited to the lesser of 50 percent
of the average cost of the technology or 50 percent of the costs in
excess of the MS-DRG payment for the case. As a result, the maximum new
technology add-on payment for DIFICIDTM is $868.
As stated above, the new technology add-on payment regulations
provide that ``a medical service or technology may be considered new
within 2 or 3 years after the point at which data begin to become
available reflecting the ICD-9-CM code assigned to the new service or
technology'' (Sec. 412.87(b)(2)).
The manufacturer commented through a letter to CMS, prior to the
publication of this proposed rule, requesting that CMS extend the
eligibility for a third year of new technology add-on payments for
DIFICIDTM in FY 2015. The manufacturer maintained that the
technology still meets all three criteria for new technology add-on
payments. Regarding the substantial clinical improvement criterion, the
applicant stated that DIFICIDTM continues to remain the only
FDA-approved treatment to demonstrate substantial clinical improvement
over existing therapies. No new treatments for CDAD have been approved
by the FDA since DIFICIDTM. The applicant further stated
that a third year of new technology add-on payments for
DIFICIDTM would continue to reduce access barriers in the
acute care hospital inpatient setting, which would support the
appropriate use of DIFICIDTM, a treatment that offers a
substantial clinical improvement over existing therapies.
With respect to the cost criterion, the applicant stated that
DIFICIDTM continues to meet the cost criterion. Using claims
data from the FY 2012 MedPAR file, the applicant provided updated data
from the two analyses described in the FY 2013 IPPS/LTCH PPS final rule
(77 FR 53350 through 53358), and demonstrated that the average case-
weighted standardized charge per case exceeded the average case-
weighted thresholds under both analyses. The applicant stated that the
new technology add-on payment is intended to offer additional payments
to support patient access and appropriate use of new technologies for a
period of time until the MS-DRGs are adjusted to reflect the cost of
the new technology. The applicant believed that the analyses conducted
with the most recent MedPAR claims data available demonstrate that the
MS-DRG recalibrations are insufficient to accommodate the cost
associated with CDAD and new technologies to treat CDAD under the IPPS
within the allotted timeframe of 2 years. According to the applicant,
these payment amounts remain an obstacle for the appropriate use of new
technologies for CDAD that demonstrate substantial clinical improvement
over existing treatments, such as DIFICIDTM. The applicant
concluded that a third year of new technology add-on payments for
DIFICIDTM is needed to allow sufficient data for future MS-
DRG recalibration analyses.
With regard to newness criterion, the manufacturer commented that
it believed that the technology still meets the newness criterion for
the following reason: Sec. 412.87(b)(2) states that ``A medical
service or technology may be considered new within 2 or 3 years after
the point at which data begin to become available reflecting the
International Classification of Diseases, Ninth Revision, Clinical
Modification (ICD-9-CM) code assigned to the new service or technology
(depending on when a new code is assigned and data on the new service
or technology become available for DRG recalibration). After CMS has
recalibrated the DRGs, based on available data, to reflect the costs of
an otherwise new medical service or technology, the medical service or
technology will no longer be considered `new' under the criterion of
this section.'' The manufacturer noted that DIFICIDTM was
not assigned an ICD-9-CM procedure code and DIFICIDTM is the
first product for which no inpatient procedure is associated to receive
a new technology add-on payment since the implementation of the new
technology add-on payment policy.
The manufacturer also cited the FY 2013 IPPS/LTCH PPS final rule
(77 FR 53352), which indicated that ``Hospitals currently code and
report procedures and more invasive services such as surgeries,
infusion of drugs, and specialized procedures such as cardiac
catheterizations. Hospitals neither code nor report self-administered
drugs.'' Therefore, the manufacturer contended that, as an oral
therapy, neither DIFICIDTM nor its administration was
assigned an ICD-9-CM procedure code and, therefore, the technology
should still be eligible for the new technology add-on payments.
The manufacturer further noted that, in the FY 2013 IPPS/LTCH PPS
final rule, because an ICD-9-CM procedure code for the administration
of an oral medication did not exist and hospitals had no other
mechanism to report the use of DIFICIDTM, for FY 2013, CMS
instructed hospitals to report the DIFICIDTM NDC on hospital
inpatient claims to receive the new technology add-on payment for
DIFICIDTM. Prior to October 1, 2012, hospitals did not use
NDCs on hospital inpatient claims, which prevented CMS from isolating
DIFICIDTM cases and their associated costs. The manufacturer
further stated that the NDC methodology was a bold change in policy and
inpatient billing processes, and it stands to reason that, because of
hospitals unfamiliarity with reporting NDCs on inpatient claims,
hospitals' use of the DIFICIDTM NDC would greatly lag behind
the traditional use of ICD-9-CM procedure codes. As such, the
manufacturer reasoned that any lag in hospital reporting would directly
impact CMS' ability to track and analyze the cost data associated with
DIFICIDTM cases.
The manufacturer also noted that on August 31, 2012, CMS issued
Transmittal 2539, which is a change request for Medicare Administrative
Contractors concerning updates for the upcoming fiscal year. The
manufacturer stated that because the new technology add-on heading was
omitted in the transmittal, this change request did not highlight the
NDC billing approach to ensure that hospitals recognized the important
change, which may have caused hospitals to overlook the claim reporting
instructions for DIFICIDTM.
The manufacturer added that Transmittal 2539 and a Medicare
Learning Network[supreg] Matters (MLN) article were rescinded and
replaced by Transmittal 2627 on January 4, 2013. The manufacturer noted
that among CMS' reasons for replacing the transmittal was to insert the
omitted new technology add-on section heading. The manufacturer stated
that, although the original transmittal further supports that
collection of DIFICIDTM-specific data did not begin until at
least October 1, 2012, CMS' reissuance of the claims processing
instructions, and the missing header in the initial instructions,
effectively delayed implementation of the new technology add-on
payments for 3 months past the October 2012 beginning date. The
manufacturer also believed that the need to replace the transmittal
underlies hospitals' difficulties instituting claims' reporting
instructions to receive new technology add-on payments for
DIFICIDTM at the hospital level.
The manufacturer noted that anecdotal feedback from hospitals,
which was shared with CMS during a
[[Page 28032]]
meeting in June 2013, suggests that some hospitals faced challenges
implementing the appropriate billing and coding processes. The
manufacturer was concerned that that these challenges were, in part,
caused by the missing header, and that these challenges may have
impacted whether eligible cases were properly billed and coded to
receive the new technology add-on payment for DIFICIDTM. The
manufacturer was further concerned that the effects of any lag or delay
caused by unfamiliarity with reporting NDCs and the missing header
would also impact the data available to CMS to recalibrate the MS-DRGs
and, separately, to evaluate the impact of the new technology add-on
payment for DIFICIDTM. The manufacturer further explained
that, while DIFICIDTM was available to hospitals after its
launch in July 2011, hospitals had no experience reporting NDCs until
October 2012, and may not have recognized the opportunity to, or
understood the mechanism for doing so, until after January 2013. For
the purposes of inpatient data collection and ratesetting, the
manufacturer believed that this meant that 2 complete years of
DIFICIDTM costs would not be fully reflected in the Medicare
claims data for the FY 2015 MS-DRG recalibrations.
The manufacturer also analyzed the 100 percent sample of the
Standard Analytical File (SAF) for calendar year 2012, which contained
first quarter claims data for FY 2013, the first 3 months that
DIFICIDTM was eligible for the new technology add-on
payments. The manufacturer found a total of 43,608 cases with a
diagnosis of CDI. Of these 43,608 cases, the manufacturer found 38
cases across 26 hospitals that reported new technology add-on payments
for DIFICIDTM on submitted claims. The manufacturer stated
that this preliminary data suggests that the number of cases available
for MS-DRG recalibrations for FY 2015 is limited. The manufacturer
stated that it is currently attempting to secure FY 2013 MedPAR claims
data and that it will likely provide further insights on these issues.
In addition, the manufacturer noted that prior new technology add-
on payment application approvals have involved technologies with much
narrower patient populations compared to DIFICIDTM, allowing
the costs of those technologies to influence the MS-DRG relative
payment weights for the small number of MS-DRGs with which they are
associated. The manufacturer explained that, unlike other technologies
approved for new technology add-on payments, the DIFICIDTM
therapeutic value, while limited to patients with CDAD, is used in
patients across a wide range of MS-DRGs due to it being reported as a
secondary diagnosis in two-thirds of the cases compared to other
technologies, which are assigned to a relatively small number of MS-
DRGs. For example, cases involving the Spiration IBV[supreg] Valve
System, which was granted approval for new technology add-on payments
in FY 2010, primarily mapped to three MS-DRGs: 163 (Major Chest
Procedures with MCC), 164 (Major Chest Procedures with CC), and 165
(Major Chest Procedures without CC/MCC). In its analysis of the FY 2012
MedPAR data for the cost criterion, the manufacturer found cases using
DIFICIDTM mapped to 544 unique MS-DRGs. Under the 100
percent sample of the SAF for calendar year 2012, the 38 cases
mentioned above mapped to 20 different MS-DRGs. The manufacturer
maintained that because of the diffuse nature of the
DIFICIDTM cases mapping to many MS-DRGs, it believed an
extension of the newness period is required for the costs to be
adequately reflected in the MS-DRG relative payment weights. In the
unique case of DIFICIDTM for the treatment of CDAD, the
manufacturer stated that 2 years of new technology add-on payments is
insufficient to allow the 544 MS-DRGs to be recalibrated to
sufficiently reflect the cost of the use of DIFICIDTM, a
treatment that offers significant clinical improvement over existing
therapies.
With regard to the technology's newness, as discussed in the FY
2005 IPPS final rule (69 FR 49003), the timeframe that a new technology
can be eligible to receive new technology add-on payments begins when
data become available. Section 412.87(b)(2) clearly states that, ``a
medical service or technology may be considered new within 2 or 3 years
after the point at which data begin to become available reflecting the
ICD-9-CM code assigned to the new service or technology (depending on
when a new code is assigned and data on the new service or technology
become available for DRG recalibration).'' Section 412.87(b)(2) also
states, ``[a]fter CMS has recalibrated the DRGs, based on available
data, to reflect the costs of an otherwise new medical service or
technology, the medical service or technology will no longer be
considered `new' under the criterion of this section.'' Therefore,
regardless of whether a technology can be individually identified by a
separate ICD-9-CM code or whether it can only be identified using a NDC
code, if the costs of the technology are included in the charge data,
and the MS-DRGs have been recalibrated using that data, then the
technology can no longer be considered ``new'' for the purposes of this
provision. We further stated in that final rule that the period of
newness does not necessarily start with the approval date for the
medical service or technology, and does not necessarily start with the
issuance of a distinct code. Instead, it begins with availability of
the product on the U.S. market, which is when data become available. We
have consistently applied this standard, and believe that it is most
consistent with the purpose of new technology add-on payments.
In addition, similar to our discussion in the FY 2006 IPPS final
rule (70 FR 47349), we do not believe that case volume is a relevant
consideration for making the determination as to whether a product is
``new.'' Consistent with the statute, a technology no longer qualifies
as ``new'' once it is more than 2 to 3 years old, irrespective of how
frequently it has been used in the Medicare population. Similarly, this
same determination is applicable no matter how many MS-DRGs the
technology is spread across. Therefore, if a product is more than 2 to
3 years old, we consider its costs to be included in the MS-DRG
relative weights whether its use in the Medicare population has been
frequent or infrequent. We recognize that using an NDC was a novel
billing practice under the IPPS. Nevertheless, even though hospitals
may not have coded all uses of DIFICIDTM with the NDC,
hospital bills would still include charges for all items and services
furnished to a Medicare patient, including use of DIFICIDTM.
Therefore, even though we may be not be able to identify all uses of
DIFICIDTM in the Medicare charge data, hospital charges for
the MS-DRGs would continue to reflect use of this technology.
With respect to the Transmittal 2539 omitting the header referenced
above, as noted above, CMS corrected this issue as soon as possible by
rescinding and reissuing this transmittal. Additionally, as noted by
the manufacturer, this transmittal was meant for MACs and not
hospitals. We believe the guidance issued in Transmittal 2539 clearly
described to MACs how hospitals were to report the NDC on the inpatient
claim in order to identify cases using DIFICIDTM for
purposes of new technology add-on payments. Additionally, the MLN
article that the manufacturer referred to above (MLN articles are
typically a summary of transmittals for the general public) clearly
indicated that DIFICIDTM was new for FY 2013 new technology
add-
[[Page 28033]]
on payments and clearly described how to properly code
DIFICIDTM on the inpatient bill in order to receive the new
technology add-on payment for FY 2013. The MLN article can be
downloaded from the CMS Web site at: http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/MM8041.pdf.
After considering the manufacturer's comments above, we still
consider the beginning of the newness period to commence when
DIFICIDTM was first approved by the FDA on May 27, 2011.
Because the 3-year anniversary date of the product's entry on the U.S.
market occurred in the second half of the fiscal year (after April 1,
2014), we continued new technology add-on payments for
DIFICIDTM for FY 2014. However, for FY 2015, the 3-year
anniversary date of the product's entry on the U.S. market would occur
on May 27, 2014, which is prior to the beginning of FY 2015. Therefore,
we are proposing to discontinue new technology add-on payments for
DIFICIDTM for FY 2015. We are inviting public comments on
this proposal.
c. Zenith[supreg] Fenestrated Abdominal Aortic Aneurysm (AAA)
Endovascular Graft
Cook[supreg] Medical submitted an application for new technology
add-on payments for the Zenith[supreg] Fenestrated Abdominal Aortic
Aneurysm (AAA) Endovascular Graft (Zenith[supreg] F. Graft) for FY
2013. The applicant stated that the current treatment for patients who
have had an AAA is an endovascular graft. The applicant explained that
the Zenith[supreg] F. Graft is an implantable device designed to treat
patients who have an AAA and who are anatomically unsuitable for
treatment with currently approved AAA endovascular grafts because of
the length of the infrarenal aortic neck. The applicant noted that,
currently, an AAA is treated through an open surgical repair or medical
management for those patients not eligible for currently approved AAA
endovascular grafts.
With respect to newness, the applicant stated that FDA approval for
the use of the Zenith[supreg] F. Graft was granted on April 4, 2012. In
the FY 2013 IPPS/LTCH PPS final rule (77 FR 53360 through 53365), we
stated that because the Zenith[supreg] F. Graft was approved by the FDA
on April 4, 2012, we believed that the Zenith[supreg] F. Graft met the
newness criterion as of that date.
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology add-on payments for the
Zenith[supreg] F. Graft and consideration of the public comments we
received in response to the FY 2013 IPPS/LTCH PPS proposed rule, we
approved the Zenith[supreg] F. Graft for new technology add-on payments
for FY 2013. Cases involving the Zenith[supreg] F. Graft that are
eligible for new technology add-on payments are identified by ICD-9-CM
procedure code 39.78 (Endovascular implantation of branching or
fenestrated graft(s) in aorta). In the application, the applicant
provided a breakdown of the costs of the Zenith[supreg] F. Graft. The
total cost of the Zenith[supreg] F. Graft utilizing bare metal (renal)
alignment stents was $17,264. Of the $17,264 in costs for the
Zenith[supreg] F. Graft, $921 are for components that are used in a
standard Zenith AAA Endovascular Graft procedure. Because the costs for
these components are already reflected within the MS-DRGs (and are no
longer ``new''), in the FY 2013 IPPS/LTCH PPS final rule, we stated
that we do not believe it is appropriate to include these costs in our
calculation of the maximum cost to determine the maximum add-on payment
for the Zenith[supreg] F. Graft. Therefore, the total maximum cost for
the Zenith[supreg] F. Graft is $16,343 ($17,264-$921). Under Sec.
412.88(a)(2), new technology add-on payments are limited to the lesser
of 50 percent of the average cost of the device or 50 percent of the
costs in excess of the MS-DRG payment for the case. As a result, the
maximum add-on payment for a case involving the Zenith[supreg] F. Graft
is $8,171.50.
As stated above, the new technology add-on payment regulations
provide that ``a medical service or technology may be considered new
within 2 or 3 years after the point at which data begin to become
available reflecting the ICD-9-CM code assigned to the new service or
technology'' (Sec. 412.87(b)(2)). With regard to the newness criterion
for the Zenith[supreg] F. Graft, as stated above, we consider the
beginning of the newness period to commence when the Zenith[supreg] F.
Graft was approved by the FDA on April 4, 2012. Because the 3-year
anniversary date of the entry of the Zenith[supreg] F. Graft on the
U.S. market will occur in the second half of the fiscal year (April 4,
2015), we are proposing to continue new technology add-on payments for
this technology for FY 2015. We are inviting public comments on this
proposal.
d. KcentraTM
CSL Behring submitted an application for new technology add-on
payments for KcentraTM for FY 2014. KcentraTM is
a replacement therapy for fresh frozen plasma (FFP) for patients with
an acquired coagulation factor deficiency due to warfarin and who are
experiencing a severe bleed. KcentraTM contains the Vitamin
K dependent coagulation factors II, VII, IX and X, together known as
the prothrombin complex, and antithrombotic proteins C and S. Factor IX
is the lead factor for the potency of the preparation. The product is a
heat-treated, non-activated, virus filtered and lyophilized plasma
protein concentrate made from pooled human plasma. KcentraTM
is available as a lyophilized powder that needs to be reconstituted
with sterile water prior to administration via intravenous infusion.
The product is dosed based on Factor IX units. Concurrent Vitamin K
treatment is recommended to maintain blood clotting factor levels once
the effects of KcentraTM have diminished.
KcentraTM was approved by the FDA on April 29, 2013. In
the FY 2014 IPPS/LTCH PPS final rule, we approved new ICD-9-CM
procedure code 00.96 (Infusion of 4-Factor Prothrombrin Complex
Concentrate) which uniquely identifies KcentraTM.
In the FY 2014 IPPS/LTCH PPS proposed rule (78 FR 27538), we noted
that we were concerned that KcentraTM may be substantially
similar to FFP and/or Vitamin K therapy. In the FY 2014 IPPS/LTCH PPS
final rule, in response to comments submitted by the manufacturer, we
stated that we agree that KcentraTM may be used in a patient
population that is experiencing an acquired coagulation factor
deficiency due to Warfarin and who are experiencing a severe bleed
currently but are ineligible for FFP, particularly for use by IgA
deficient patients and other patient populations that have no other
treatment option to resolve severe bleeding in the context of an
acquired Vitamin K deficiency. In addition, FFP is limited because it
requires special storage conditions while KcentraTM is
stable for up to 36 months at room temperature thus allowing hospitals
that otherwise would not have access to FFP (for example, small rural
hospitals as discussed by the applicant in its comments) to keep a
supply of KcentraTM and treat patients who would possibly
have no access to FFP. We noted that FFP is considered perishable and
can be scarce by nature (due to production and other market
limitations) thus making some hospitals unable to store FFP, which
limits access to certain patient populations in certain locations.
Therefore, we stated that we believe that KcentraTM provides
a therapeutic option for a new patient population and is not
substantially similar to FFP. Also, we gave credence to the information
presented by the
[[Page 28034]]
manufacturer that KcentraTM provides a simple and rapid
repletion relative to FFP and reduces the risk of a transfusion
reaction relative to FFP because it does not contain ABO antibodies and
does not require ABO typing. As a result, we concluded that
KcentraTM is not substantially similar to FFP, and that it
meets the newness criterion.
After evaluation of the newness, cost, and substantial clinical
improvement criteria for new technology add-on payments for
KcentraTM and consideration of the public comments we
received in response to the FY 2014 IPPS/LTCH PPS proposed rule, we
approved KcentraTM for new technology add-on payments for FY
2014 (78 FR 50575 through 50580). Cases involving KcentraTM
that are eligible for new technology add-on payments are identified by
ICD-9-CM procedure code 00.96. In the application, the applicant
estimated that the average Medicare beneficiary would require an
average dosage of 2500 International Units (IU). Vials contain 500 IU
at a cost of $635 per vial. Therefore, cases of KcentraTM
would incur an average cost per case of $3,175 ($635 x 5). Under Sec.
412.88(a)(2), new technology add-on payments are limited to the lesser
of 50 percent of the average cost of the technology or 50 percent of
the costs in excess of the MS-DRG payment for the case. As a result,
the maximum add-on payment for a case of KcentraTM is
$1,587.50 for FY 2014.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50579), we stated
that new technology add-on payments for KcentraTM would not
be available with respect to discharges for which the hospital received
an add-on payment for a blood clotting factor administered to a
Medicare beneficiary with hemophilia who is a hospital inpatient. Under
section 1886(d)(1)(A)(iii) of the Act, the national adjusted DRG
prospective payment rate is ``the amount of the payment with respect to
the operating costs of inpatient hospital services (as defined in
subsection (a)(4) of this section)'' for discharges on or after April
1, 1988. Section 1886(a)(4) of the Act excludes from the term
``operating costs of inpatient hospital services'' the costs with
respect to administering blood clotting factors to individuals with
hemophilia. The costs of administering a blood clotting factor to a
Medicare beneficiary who has hemophilia and is a hospital inpatient are
paid separately from the IPPS. (For information on how the blood
clotting factor add-on payment is made, we refer readers to Section
20.7.3 of Chapter Three of the Medicare Claims Processing Manual, which
can be downloaded from the CMS Web site at: http://cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c03.pdf.) In addition, we
stated that if KcentraTM is approved by the FDA as a blood
clotting factor, we believed that it may be eligible for blood clotting
factor add-on payments when administered to Medicare beneficiaries with
hemophilia. We make an add-on payment for KcentraTM for such
discharges in accordance with our policy for payment of a blood
clotting factor, and the costs would be excluded from the operating
costs of inpatient hospital services as set forth in section 1886(a)(4)
of the Act.
Section 1886(d)(5)(K)(i) of the Act requires the Secretary to
``establish a mechanism to recognize the costs of new medical services
and technologies under the payment system established under this
subsection'' beginning with discharges on or after October 1, 2001. We
believe that it is reasonable to interpret this requirement to mean
that the payment mechanism established by the Secretary recognizes only
costs for those items that would otherwise be paid based on the
prospective payment system (that is, ``the payment system established
under this subsection''). As noted above, under section
1886(d)(1)(A)(iii) of the Act, the national adjusted DRG prospective
payment rate is the amount of payment for the operating costs of
inpatient hospital services, as defined in section 1886(a)(4) of the
Act, for discharges on or after April 1, 1988. We understand this to
mean that a new medical service or technology must be an operating cost
of inpatient hospital services paid based on the prospective payment
system, and not excluded from such costs, in order to be eligible for
the new technology add-on payment. We pointed out that new technology
add-on payments are based on the operating costs per case relative to
the prospective payment rate as described in Sec. 412.88. Therefore,
we believe that new technology add-on payments are appropriate only
when the new technology is an operating cost of inpatient hospital
services and are not appropriate when the new technology is excluded
from such costs.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50579), we stated
that we believe that hospitals may only receive new technology add-on
payments for discharges where KcentraTM is an operating cost
of inpatient hospital services. In other words, a hospital would not be
eligible to receive the new technology add-on payment when it is
administering KcentraTM in treating a Medicare beneficiary
who has hemophilia. In those instances, KcentraTM is
specifically excluded from the operating costs of inpatient hospital
services in accordance with section 1886(a)(4) of the Act and paid
separately from the IPPS. However, when a hospital administers
KcentraTM to a Medicare beneficiary who does not have
hemophilia, the hospital would be eligible for a new technology add-on
payment because KcentraTM would not be excluded from the
operating costs of inpatient hospital services. Therefore, discharges
where the hospital receives a blood clotting factor add-on payment are
not eligible for a new technology add-on payment for the blood clotting
factor. We refer readers to Chapter Three, Section 20.7.3 of the
Medicare Claims Processing Manual for a complete discussion on when a
blood clotting factor add-on payment is made. The manual can be
downloaded from the CMS Web site at: http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c03.pdf.
As stated above, the new technology add-on payment regulations
provide that ``a medical service or technology may be considered new
within 2 or 3 years after the point at which data begin to become
available reflecting the ICD-9-CM code assigned to the new service or
technology'' (Sec. 412.87(b)(2)). With regard to the newness criterion
for KcentraTM, as stated above, we consider the beginning of
the newness period to commence when KcentraTM was approved
by the FDA on April 29, 2013. Because KcentraTM is still
within the 3-year newness period, we are proposing to continue new
technology add-on payments for this technology for FY 2015. We are
inviting public comments on this proposal.
e. Argus[supreg] II Retinal Prosthesis System
Second Sight Medical Products, Inc. submitted an application for
new technology add-on payments for the Argus[supreg] II Retinal
Prosthesis System (Argus[supreg] II System) for FY 2014. The
Argus[supreg] II System is an active implantable medical device that is
intended to provide electrical stimulation of the retina to induce
visual perception in patients who are profoundly blind due to retinitis
pigmentosa (RP). These patients have bare or no light perception in
both eyes. The system employs electrical signals to bypass dead photo-
receptor cells and stimulate the overlying neurons according to a real-
time video signal that is wirelessly transmitted from an externally
worn video camera. The Argus[supreg] II implant is intended to be
implanted in a single eye, typically the worse-seeing eye. Currently,
bilateral
[[Page 28035]]
implants are not intended for this technology. According to the
applicant, the surgical implant procedure takes approximately 4 hours
and is performed under general anesthesia.
The Argus[supreg] II System consists of three primary components:
(1) An implant which is an epiretinal prosthesis that is fully
implanted on and in the eye (that is, there are no percutaneous leads);
(2) external components worn by the user; and (3) a ``fitting'' system
for the clinician that is periodically used to perform diagnostic tests
with the system and to custom-program the external unit for use by the
patient. We describe these components more fully below.
Implant: The retinal prosthesis implant is responsible for
receiving information from the external components of the system and
electrically stimulating the retina to induce visual perception. The
retinal implant consists of: (a) A receiving coil for receiving
information and power from the external components of the Argus[supreg]
II System; (b) electronics to drive stimulation of the electrodes; and
(c) an electrode array. The receiving coil and electronics are secured
to the outside of the eye using a standard scleral band and sutures,
while the electrode array is secured to the surface of the retina
inside the eye by a retinal tack. A cable, which passes through the eye
wall, connects the electronics to the electrode array. A pericardial
graft is placed over the extra-ocular portion on the outside of the
eye.
External Components: The implant receives power and data
commands wirelessly from an external unit of components, which include
the Argus II Glasses and Video Processing Unit (VPU). A small
lightweight video camera and transmitting coil are mounted on the
glasses. The telemetry coils and radio-frequency system are mounted on
the temple arm of the glasses for transmitting data from the VPU to the
implant. The glasses are connected to the VPU by a cable. This VPU is
worn by the patient, typically on a belt or a strap, and is used to
process the images from the video camera and convert the images into
electrical stimulation commands, which are transmitted wirelessly to
the implant.
``Fitting System'': To be able to use the Argus[supreg] II
System, a patient's VPU needs to be custom-programmed. This process,
which the applicant called ``fitting'', occurs in the hospital/clinic
shortly after the implant surgery and then periodically thereafter as
needed. The clinician/physician also uses the ``Fitting System'' to run
diagnostic tests (for example, to obtain electrode and impedance
waveform measurements or to check the radio-frequency link between the
implant and external unit). This ``Fitting System'' can also be
connected to a ``Psychophysical Test System'' to evaluate patients'
performance with the Argus[supreg] II System on an ongoing basis.
These three components work together to stimulate the retina and
allow a patient to perceive phosphenes (spots of light), which they
then need to learn to interpret. While using the Argus[supreg] II
System, the video camera on the patient-worn glasses captures a video
image. The video camera signal is sent to the VPU, which processes the
video camera image and transforms it into electrical stimulation
patterns. The electrical stimulation data are then sent to a
transmitter coil mounted on the glasses. The transmitter coil sends
both data and power via radio-frequency (RF) telemetry to the implanted
retinal prosthesis. The implant receives the RF commands and delivers
stimulation to the retina via an array of electrodes that is secured to
the retina with a retinal tack.
In patients with RP, the photoreceptor cells in the retina, which
normally transduce incoming light into an electro-chemical signal, have
lost most of their function. The stimulation pulses delivered to the
retina via the electrode array of the Argus[supreg] II Retinal
Prosthesis System are intended to mimic the function of these
degenerated photoreceptors cells. These pulses induce cellular
responses in the remaining, viable retinal nerve cells that travel
through the optic nerve to the visual cortex where they are perceived
as phosphenes (spots of light). Patients learn to interpret the visual
patterns produced by these phosphenes.
With respect to the newness criterion, according to the applicant,
the FDA designated the Argus[supreg] II System a Humanitarian Use
Device in May 2009 (HUD designation 09-0216). The applicant
submitted a Humanitarian Device Exemption (HDE) application
(H110002) to the FDA in May 2011 to obtain market approval for
the Argus[supreg] II System. The HDE was referred to the Ophthalmic
Devices Panel of the FDA's Medical Devices Advisory Committee for
review and recommendation. At the Panel's meeting held on September 28,
2012, the Panel voted 19 to 0 that the probable benefits of the
Argus[supreg] II System outweigh the risks of the system for the
proposed indication for use. The applicant received the HDE approval
from the FDA on February 14, 2013. Currently there are no other
approved treatments for patients with severe to profound RP. The
Argus[supreg] II System has an IDE number of G050001 and is a Class III
device. In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50580 through
50583), we approved new ICD-9-CM procedure code 14.81 (Implantation of
Epiretinal Visual Prosthesis), which uniquely identifies the
Argus[supreg] II System. The other two codes approved by CMS are for
removal, revision, or replacement of the device. More information on
these codes can be found on the CMS Web site at: http://cms.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/ICD-9-CM-C-and-M-Meeting-Materials-Items/2013-03-05-MeetingMaterials.html.
After evaluation of the new technology add-on payment application
and consideration of public comments received, we concluded that the
Argus[supreg] II System met all of the new technology add-on payment
policy criteria. Therefore, we approved the Argus[supreg] II System for
new technology add-on payments in FY 2014 (78 FR 50580 through 50583).
Cases involving the Argus[supreg] II System that are eligible for new
technology add-on payments are identified by ICD-9-CM procedure code
14.81. We note that section 1886(d)(5)(K)(i) of the Act requires that
the Secretary establish a mechanism to recognize the costs of new
medical services or technologies under the payment system established
under that subsection, which establishes the system for paying for the
operating costs of inpatient hospital services. The system of payment
for capital costs is established under section 1886(g) of the Act,
which makes no mention of any add-on payments for a new medical service
or technology. Therefore, it is not appropriate to include capital
costs in the add-on payments for a new medical service or technology.
In the application, the applicant provided a breakdown of the costs of
the Argus[supreg] II System. The total operating cost of the
Argus[supreg] II System is $144,057.50. Under Sec. 412.88(a)(2), new
technology add-on payments are limited to the lesser of 50 percent of
the average cost of the device or 50 percent of the costs in excess of
the MS-DRG payment for the case. As a result, the maximum add-on
payment for a case involving the Argus[supreg] II System for FY 2014 is
$72,028.75.
As stated above, the new technology add-on payment regulations
provide that ``a medical service or technology may be considered new
within 2 or 3 years after the point at which data begin to become
available reflecting the ICD-9-CM code assigned to the new service or
technology'' (Sec. 412.87(b)(2)). With regard to the newness criterion
for the Argus[supreg] II System, as stated above, we consider the
beginning of the newness period to commence when the Argus[supreg] II
[[Page 28036]]
System was approved by the FDA on February 14, 2013. Because the
Argus[supreg] II System is still within the 3-year newness period, we
are proposing to continue new technology add-on payments for this
technology for FY 2015. We are inviting public comments on this
proposal.
f. Zilver[supreg] PTX[supreg] Drug Eluting Peripheral Stent
Cook[supreg] Medical submitted an application for new technology
add-on payments for the Zilver[supreg] PTX[supreg] Drug Eluting
Peripheral Stent (Zilver[supreg] PTX[supreg]) for FY 2014. The
Zilver[supreg] PTX[supreg] is intended for use in the treatment of
peripheral artery disease (PAD) of the above-the-knee femoropopliteal
arteries (superficial femoral arteries). According to the applicant,
the stent is percutaneously inserted into the artery(s), usually by
accessing the common femoral artery in the groin. The applicant stated
that an introducer catheter is inserted over the wire guide and into
the target vessel where the lesion will first be treated with an
angioplasty balloon to prepare the vessel for stenting. The applicant
indicated that the stent is self-expanding, made of nitinol (nickel
titanium), and is coated with the drug Paclitaxel. Paclitaxel is a drug
approved for use as an anticancer agent and for use with coronary
stents to reduce the risk of renarrowing of the coronary arteries after
stenting procedures.
The applicant received FDA approval on November 15, 2012, for the
Zilver[supreg] PTX[supreg]. The applicant maintains that the
Zilver[supreg] PTX[supreg] is the first drug-eluting stent used for
superficial femoral arteries. The technology is currently described by
ICD-9-CM procedure code 00.60 (Insertion of drug-eluting stent(s) of
the superficial femoral artery).
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50583 through
50585), after evaluation of the new technology add-on payment
application and consideration of the public comments received, we
approved the Zilver[supreg] PTX[supreg] for new technology add-on
payments in FY 2014. Cases involving the Zilver[supreg] PTX[supreg]
that are eligible for new technology add-on payments are identified by
ICD-9-CM procedure code 00.60. As explained in the FY 2014 IPPS/LTCH
PPS final rule, to determine the amount of Zilver[supreg] PTX[supreg]
stents per case, instead of using the amount of stents used per case
based on the ICD-9-CM codes, the applicant used an average of 1.9
stents per case based on the Zilver[supreg] PTX[supreg] Global Registry
Clinical Study. The applicant stated in its application that the
anticipated cost per stent is approximately $1,795. Therefore, cases of
the Zilver[supreg] PTX[supreg] would incur an average cost per case of
$3,410.50 ($1,795 x 1.9). Under Sec. 412.88(a)(2), new technology add-
on payments are limited to the lesser of 50 percent of the average cost
of the device or 50 percent of the costs in excess of the MS-DRG
payment for the case. As a result, the maximum add-on payment for a
case of the Zilver[supreg] PTX[supreg] is $1,705.25 for FY 2014.
As stated above, the new technology add-on payment regulations
provide that ``a medical service or technology may be considered new
within 2 or 3 years after the point at which data begin to become
available reflecting the ICD-9-CM code assigned to the new service or
technology'' (Sec. 412.87(b)(2)). With regard to the newness criterion
for the Zilver[supreg] PTX[supreg], as stated above, we consider the
beginning of the newness period to commence when the Zilver[supreg]
PTX[supreg] was approved by the FDA on November 15, 2012. Because the
Zilver[supreg] PTX[supreg] is still within the 3-year newness period,
we are proposing to continue new technology add-on payments for this
technology for FY 2015. We are inviting public comments on this
proposal.
4. FY 2015 Applications for New Technology Add-On Payments
We received seven applications for new technology add-on payments
for FY 2015, three of which were applications resubmitted from FY 2014.
However, one applicant withdrew its application prior to the
publication of this proposed rule. In accordance with the regulations
under Sec. 412.87(c), applicants for new technology add-on payments
must have FDA approval by July 1 of each year prior to the beginning of
the fiscal year that the application is being considered. A discussion
of the six remaining applications is presented below.
a. Dalbavancin (Durata Therapeutics, Inc.)
Durata Therapeutics, Inc. submitted an application for new
technology add-on payments for FY 2015 for the use of Dalbavancin.
Dalbavancin is an intravenous (IV) lipoglycopeptide antibiotic
administered as a once-weekly 30-minute infusion via a peripheral line
for the treatment of patients with acute bacterial skin and skin
structure infections, or ABSSSI. According to the applicant,
Dalbavancin's unique pharmacokinetic profile demonstrates rapid
bactericidal activity that is potent and sustained against serious
gram-positive bacteria, including methicillin-resistant Staphylococcus
aureus (MRSA).
With respect to the newness criterion, the applicant stated that
Dalbavancin's once-weekly dosing, a simpler regimen than the current
standard of care (Vancomycin) of daily or multiple-times daily
intravenous dosing, allows for the discontinuation of IV access with
its attendant risks of line-related thrombosis and infection. The
applicant submitted a New Drug Approval Application (NDA) on September
26, 2013, and anticipates FDA approval of Dalbavancin sometime in May
of 2014. To date, no ICD-10-PCS code specifically describes the
administration of Dalbavancin. The applicant applied for a new ICD-10-
PCS code to describe the administration of Dalbavancin, which was
presented at the March 19-20, 2014 ICD-10 Coordination and Maintenance
Committee meeting. If approved, the code will be effective on October
1, 2014. We are inviting public comments on whether the technology
meets the newness criterion.
We note that in the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR
43813 through 43814), we established criteria for evaluating whether a
new technology is substantially similar to an existing technology,
specifically: (1) Whether a product uses the same or a similar
mechanism of action to achieve a therapeutic outcome; (2) whether a
product is assigned to the same or a different MS-DRG; and (3) whether
the new use of the technology involves the treatment of the same or
similar type of disease and the same or similar patient population. If
a technology meets all three of the criteria above, it would be
considered substantially similar to an existing technology and would
not be considered ``new'' for purposes of new technology add-on
payments.
In evaluating the first criterion, the applicant stated that
Dalbavancin's mechanism of action is unique compared to other
antibiotics as it involves the interruption of cell wall synthesis
resulting in bacterial cell death. Furthermore, the applicant cited
Dalbavancin's long half-life as the factor that differentiates itself
from existing antibacterial agents active against MRSA. With respect to
the second criterion, we believe that cases of ABSSSI that use
Dalbavancin or other antibiotics for treatment would be assigned to the
same MS-DRGs. Finally, with respect to the third criterion, we believe
that Dalbavancin and other antibiotics used to treat cases of ABSSSI
treat the same disease and patient population. Based on evaluation of
the substantially similarity criteria, it appears that Dalbavancin is
not substantially similar to other antibiotics for the treatment of
ABSSSI because it
[[Page 28037]]
does not use the same or a similar mechanism of action to achieve a
therapeutic outcome. We are inviting public comments regarding whether
Dalbavancin is substantially similar to existing antibiotics and
whether Dalbavancin meets the newness criterion.
According to the applicant, Dalbavancin is indicated to treat gram-
positive ABSSSIs, such as cellulitis or erysipelas, and MRSA. These
conditions may be a primary diagnosis, but are often secondary to an
underlying condition such as diabetes, heart failure, pressure ulcers,
etc. Therefore, the technology is eligible to be used across all MS-
DRGs. To demonstrate that it meets the cost criterion, the applicant
searched the FY 2012 MedPAR file (across all MS-DRGs) for cases where
at least one ABSSSI ICD-9-CM code was present on the claim, including
those where MRSA was present on a claim with an ABSSSI diagnosis.
Specifically, the applicant searched for cases with one of the
following diagnosis codes: 035 (Erysipelas); 681.00 (Cellulitis and
abscess of finger, unspecified); 681.01 (Felon); 681.02 (Onychia and
paronychia of finger); 681.10 (Cellulitis and abscess of toe,
unspecified); 681.11 (Onychia and paronychia of toe); 681.9 (Cellulitis
and abscess of unspecified digit); 682.0-682.9 (Other cellulitis and
abscess of face, neck, trunk, upper arm and forearm, hand except
fingers and thumb, buttock, leg except foot, foot except toes,
specified sites, unspecified sites); 686.00 (Pyoderma, unspecified);
686.01 (Pyoderma gangrenosum); 686.09 (Other pyoderma); 686.1 (Pyogenic
granuloma of skin and subcutaneous tissue); 686.8 (Other specified
local infections of skin and subcutaneous tissue); 686.9 (Unspecified
local infection of skin and subcutaneous tissue); 958.3 (Posttraumatic
wound infection not elsewhere classified); 998.51 (Infected
postoperative seroma); and 998.59 (Other postoperative infection). The
applicant believed that these cases represent potential cases eligible
for the administration of Dalbavancin.
The applicant found 570,698 cases across 682 MS-DRGs and noted that
almost 25 percent of the total number of cases would map to MS-DRGs 603
(Cellulitis without MCC), while the top 10 MS-DRGs accounted for almost
half (or 49 percent) of the total number of cases. Of the 682 MS-DRGs,
only 90 of these MS-DRGs accounted for 1,000 cases or more. The
applicant standardized the charges for all 570,698 cases, which equated
to an average case-weighted standardized charge per case of $46,138. We
note that the applicant did not inflate the charges nor did it include
charges for Dalbavancin in the average case-weighted standardized
charge per case. The applicant calculated an average case-weighted
threshold of $44,255 across all MS-DRGs. Therefore, the applicant
asserted the average case-weighted standardized charge per case
(without inflating and including charges for Dalbavancin) exceeds the
average case-weighted threshold of $44,255 (as indicated in Table 10 of
the FY 2014 IPPS/LTCH PPS final rule). Therefore, the applicant
maintained that Dalbavancin meets the cost criterion. We are inviting
public comments regarding whether Dalbavancin meets the cost criterion,
particularly with regard to the assumptions and methodology used in the
applicant's analysis.
With regard to substantial clinical improvement, as previously
stated by the applicant, Dalbavancin is a new intravenous (IV)
lipoglycopeptide antibiotic administered as a once-weekly 30 minute
infusion via a peripheral line for the treatment of patients with acute
bacterial skin and skin structure infections, or ABSSSI. The applicant
noted that, in the setting of continuing emergence of resistance among
gram-positive pathogens worldwide, there is an increasing medical need
for new antibacterial agents with enhanced gram-positive activity. The
applicant cited the Infectious Diseases Society of America (IDSA),\3\
stating the need for a multi-pronged approach to address the impact of
antibiotic resistance. In addition, the applicant stated the FDA has
also designated MRSA as a pathogen of special interest which allows an
antibiotic effective against this organism to be designated as a
``Qualified Infectious Disease Product,'' recognizing the medical need
for drugs to treat infections caused by this pathogen. The applicant
believed that having a medicinal agent with clinical efficacy against
gram-positive pathogens, including MRSA and CA-MRSA, a favorable
benefit/risk ratio, and a favorable pharmacokinetics profile allowing
convenient dosing in inpatients and outpatients with the potential for
minimizing patient noncompliance would be a valuable addition to the
antibacterial armamentarium for the treatment of ABSSSI. The applicant
also noted that, when taking Dalbavancin, there is no need for oral
step-down therapy.
---------------------------------------------------------------------------
\3\ ``Bad Bugs, No Drugs,'' July 2004.
---------------------------------------------------------------------------
The applicant suggested that Dalbavancin offers treatment
advantages over other available options for therapy for skin infections
as a result of the following:
Improved potency against key bacterial pathogens with the
concentration of Dalbavancin required to kill key target pathogens
lower relative to other antibiotics commonly used to treat such
pathogens;
Retained activity against staphylococcus aureus resistant
to other antibiotics;
Improved safety profile as Dalbavancin exhibits more
favorable tolerability and safety than alternative approved
antibacterial drugs in areas such as no evidence of thrombocytopenia as
seen with linezolid and tedezolid, superior infusion related
tolerability relative to other antiobiotics, an absence or reduction of
drug specific toxicities, and once a week dosing of IV Dalbavancin
avoids pitfalls of patient noncompliance with an oral medication;
Lack of drug interactions due to metabolic profile which
minimizes risk of unexpected adverse events when co-administered with
other compounds as seen with linezolid and quinupristin/dalfopristin;
Decreased requirement for therapeutic interventions,
specifically the need for an intravenous catheter as Dalbavancin is
administered once a week, thus reducing catheter related infection as
well;
Reduced time to patient defined recovery;
Reduced mortality rate as demonstrated in the combined
phase of the Discover 1 and Discover 2 clinical trials;
The potential for avoidance of admission to the hospital
as Dalbavancin allows the utilization of a weekly treatment regimen,
thus potentially increasing the convenience of outpatient therapy for
patients.
The applicant conducted three phase three randomized, controlled,
double blinded clinical trials. The first was the pivotal VER001-9
study with a total of 873 patients with cSSSIs, which compared the
safety and efficacy of IV Dalbavancin with possible switch to oral
placebo to IV Linezolid with possible switch to oral Linezolid.
According to the applicant, the primary efficacy endpoint of clinical
response at test of 14 days with a plus or minus of 2 days after
completion of therapy demonstrated comparable clinical efficacy to
linezolid and met the requirement of statistical demonstration of
noninferiority. In the clinically evaluable population, 88.9 percent of
patients who received Dalbavancin compared to 91.2 percent of patients
who received vancomycin/linezolid
[[Page 28038]]
were clinical successes. The applicant also noted that Dalbavancin had
an improved safety profile compared to Linezolid as the overall
incidence and percentage of adverse events and deaths were lower in the
Dalbavancin group, which was statistically significant.
The second and third clinical trials were the Discover 1 and
Discover 2 trials, which enrolled a total of 1,312 patients with ABSSSI
and compared IV Dalbavancin with IV placebo every 12 hours to match
Vancomycin with possible switch to oral Vancomycin to IV Vancomycin
with IV placebo to match IV Dalbavancin with possible switch to oral
Linezolid. The applicant reported that in both studies, the primary
efficacy outcome measure was clinical response in 48 to 72 hours post-
study drug initiation and a secondary outcome measure was clinical
status at the end of treatment visit (day 14) in the Intent to Treat
(ITT) and clinically evaluable at End of Treatment populations.
Clinical status was also determined at the short-term follow-up and
long-term follow-up visits.
According to the applicant, the Discover 1 trial demonstrated that
83.3 percent of patients in the ITT population who received Dalbavancin
were responders at 48 to 72 hours after the start of therapy compared
to 81.8 percent of patients who received Vancomycin/Linezolid. The
applicant also noted that Dalbavancin was noninferior to Vancomycin/
Linezolid (Absolute Difference in Success Rates (95 percent confidence
interval): -4.6 percent; 7.9 percent).
The applicant further noted that the Discover 2 trial showed
similar results to the Discover 1 trial. Specifically, the trial
demonstrated that 76.8 percent of patients in the ITT population who
received Dalbavancin were responders at 48 to 72 hours after the start
of therapy compared to 78.3 percent of patients who received
Vancomycin/Linezolid. The applicant again noted that Dalbavancin was
noninferior to Vancomycin/Linezolid (Absolute Difference in Success
Rates (95 percent confidence interval): -7.4 percent; 4.6 percent).
The applicant found Dalbavancin to be effective against MRSA and
other gram-positive bacteria associated with ABSSSI. The applicant
stated that 25 percent of patients in the study were treated without an
inpatient admission.
We are concerned with the details of the trial design and the
primary efficacy endpoints used within those trials that were used to
provide the clinical data supplied by the applicant. All of the trials
were noninferiority studies, which prevent any determination as to
substantial clinical improvement from the trial data. The primary
efficacy endpoint was defined as having no increase in lesion size, and
no fever 48 to 72 hours after drug initiation. The secondary endpoint
was a >20 percent reduction in infection area at defined points in
time. At neither endpoint is the patient oriented endpoint of
resolution of infection increased. With these limitations in using
efficacy data to establish substantial clinical improvement, the
applicant suggested that the outpatient treatment, elimination of
central lines and avoidance of hospitalization all may improve safety,
avoid treatment-associated infections and improve patient satisfaction,
and that these factors demonstrate substantial clinical improvement.
While the factors mentioned may be true, the applicant did not present
any evidence to support its assertions. We are inviting public comments
on whether Dalbavancin meets the substantial clinical improvement
criterion, including public comments in response to our concern that
the applicant has only provided efficacy data of noninferiority, and no
data for the other suggested benefits.
We did not receive any public comments in response to the New
Technology Town Hall meeting held on February 12, 2014 regarding this
technology.
b. Heli-FXTM EndoAnchor System (Aptus Endosystems, Inc.)
The Heli-FXTM EndoAnchor System is indicated for use in
the treatment of patients whose endovascular grafts during treatment of
aortic aneurysms have exhibited migrations or endoleaks, or in the
treatment of patients who are at risk of such complications, and in
whom augmented radial fixation and/or sealing is required to regain or
maintain adequate aneurysm exclusion.
The Heli-FXTM EndoAnchor System is comprised of the
following three components: (1) The EndoAnchor Implant; (2) the Heli-
FXTM Applier; and (3) the Heli-FXTM Guide with
Obturator. The Heli-FXTM EndoAnchor System is a mechanical
fastening device that is designed to enhance the long-term durability
and reduce the risk of repeat interventions in endovascular aneurysm
repair (EVAR) and thoracic endovascular aneurysm repair (TEVAR). By
deploying a small helical screw (the Heli-FXTM EndoAnchors)
to connect the endograft to the aorta, the Heli-FXTM System
seeks to provide a permanent seal and fixation, similar to the
stability achieved with an open surgical anastomosis.
The original Heli-FXTM EndoAnchor System, designed for
treating abdominal aortic aneurysms (AAA), was cleared by the FDA
through the ``de novo'' 510(k) process on November 21, 2011 (reference
K102333). The Heli-FXTM Thoracic System, which allows the
expanded use of the Heli-FXTM EndoAnchor System technology
to the treatment of thoracic aortic aneurysms (TAA), was cleared by the
FDA on August 14, 2012 (reference K121168).
The applicant submitted two applications for approval for new
technology add-on payment in FY 2015: one for the treatment of AAAs and
the other for the treatment of TAA repair. We note that, as stated in
the Inpatient New Technology Add-on Payment Final Rule (66 FR 46915),
two applications are necessary in this instance, because patients that
may be eligible for use of the technology under the first indication
are not expected to be assigned to the same MS-DRGs as patients
receiving treatment using the new technology under the second
indication. Specifically, patients who have endovascular grafts
implanted for the treatment of AAA map to MS-DRGs 237 (Major
Cardiovascular Procedures with MCC) and 238 (Major Cardiovascular
Procedures without MCC), while patients who have endovascular grafts
implanted for the treatment of TAA map to MS-DRGs 219 (Cardiac Valve
and Other Major Cardiothoracic Procedure without Cardiac Catheter with
MCC), 220 (Cardiac Valve and Other Major Cardiothoracic Procedure
without Cardiac Catheter with CC), and 221 (Cardiac Valve and Other
Major Cardiothoracic Procedure without Cardiac Catheter without CC/
MCC). Each indication/application must also meet the cost criterion and
the substantial clinical improvement criterion in order to be eligible
for new technology add-on payments beginning in FY 2015. We discuss
both of these applications below.
(1) Heli-FXTM EndoAnchor System for the Treatment of AAA
As mentioned above, the original Heli-FXTM EndoAnchor
System, designed for treating patients diagnosed with AAA, was cleared
by the FDA through the ``de novo'' 510(k) process on November 21, 2011
(reference K102333). According to the applicant, the device became
available to Medicare beneficiaries following the product launch at the
Society of Vascular Surgery (SVS) Annual Meeting held on June 7-9,
2012. Therefore, the applicant maintained that the Heli-FXTM
EndoAnchor System meets the ``newness'' criterion because the
[[Page 28039]]
technology was not available on the U.S. market until June 2012. The
applicant explained that the delay in the general market availability
of the original Heli-FXTM EndoAnchor System, following
initial FDA clearance, was mainly because of the regulatory uncertainty
inherent in the ``de novo'' 510(k) process. This uncertainty prevented
the manufacturer from being able to secure the venture capital funding
that was necessary to prepare for commercialization before obtaining
market clearance. The ability to secure venture capital through the
fundraising process was dependent upon the FDA clearance. According to
the applicant, funding to commercially market the technology was not
obtained until June 2012. In subsequent discussions with the applicant,
the applicant confirmed that the Heli-FXTM EndoAnchor System
was available on the U.S. market as of November 2011. Further, the
applicant acknowledged that four implantations were performed on
Medicare beneficiaries between November 2011 and June 2012. Therefore,
the Heli-FXTM EndoAnchor System is considered ``new'' as of
November 2011 when the technology was cleared by the FDA and became
available on the U.S. market.
Section 412.87(b)(2) of the regulations state that, ``a medical
service or technology may be considered new within 2 or 3 years after
the point at which data begin to become available reflecting the ICD-9-
CM code assigned to the new service or technology.'' Our past practice
has been to begin and end the eligibility for new technology add-on
payments on a fiscal year basis. We have generally followed a guideline
that uses a 6-month window, before and after the beginning of the
fiscal year, to determine whether to still consider a technology
``new'' and extend approved new technology add-on payments for an
additional fiscal year. In general, a technology is still considered
``new'' (and eligible to receive new technology add-on payments) only
if the 3-year anniversary date of the product's entry on the market
occurs in the latter half of the fiscal year. (We refer readers to 70
FR 47362.) With regard to the newness criterion for the Heli-
FXTM EndoAnchor System, as stated above, we consider the
beginning of the newness period for the device to begin when the
technology first became available on the U.S. market in November 2011.
As previously stated, the applicant acknowledged that four
implantations were performed on Medicare beneficiaries between November
2011 and June 2012. Therefore, the costs of the Heli-FXTM
EndoAnchor System are currently reflected in the MS-DRGs, and the 3-
year anniversary date under the newness criterion for the product's
entry on the U.S. market will occur during November 2014 (the first
half of FY 2015). As such, we do not believe that the Heli-
FXTM EndoAnchor System meets the newness criterion. We are
inviting public comments on whether the Heli-FXTM EndoAnchor
System meets the newness criterion.
The applicant requested an ICD-10-PCS code, and presented comments
at the March 2014 ICD-10 Coordination & Maintenance Committee meeting.
To demonstrate that the technology meets the cost criterion, the
applicant researched claims data from the 100 percent sample of the
2012 Inpatient Hospital Standard Analytical File (SAF) for cases
reporting either procedure code 39.71 (Endovascular implantation of
other graft in abdominal aorta), or procedure code 39.79 (Other
endovascular procedures on other vessels) in the first or second
procedure position on the claim, in combination with one of the
following primary diagnosis codes: 441.4 (Abdominal aneurysm without
mention of rupture); 996.1 (Mechanical complication of other vascular
device, implant, and graft); or 996.74 (Other complications due to
other vascular device, implant, and graft). The applicant believed that
this combination of ICD-9-CM codes identifies cases treated for AAA. We
note that the 2012 SAF dataset includes all claims submitted from
hospitals paid under the IPPS for calendar year 2012.
The applicant focused its analysis on MS-DRGs 237 and 238 because
these are the MS-DRGs that cases treated with the implantation of
endovascular grafts for AAAs would most likely map to. The applicant
found a total of 8,142 cases, and noted that 9.35 percent of the total
number of cases would map to MS-DRG 237, and 90.65 percent of the total
number of cases would map to MS-DRG 238. The applicant standardized the
charges for all 8,142 cases. Using the inflation factor of 1.47329
published in the FY 2014 IPPS/LTCH final rule (78 FR 50982), the
applicant inflated the standardized charges by 14.88 percent (the
applicant multiplied 1.47329 x 1.47329 x 1.47329 in order to inflate
the charges from 2012 to 2015). The applicant then added the charges
for the Heli-FXTM EndoAnchor System to the standardized
charges by dividing the cost of the Heli-FXTM EndoAnchor
System device by each individual hospital specific CCR from the FY 2012
impact file. This equated to an average case-weighted inflated
standardized charge per case of $111,613. The applicant noted that the
average case-weighted inflated standardized charge per case did not
contain additional operating room charges that relate to the Heli-
FXTM EndoAnchor System. Therefore, the applicant determined
that it was necessary to add an additional $1,440 for operating room
charges, which was based on an additional half hour of operating room
time from one hospital, to the average case-weighted standardized
charge per case. This resulted in an average case-weighted standardized
charge per case of $113,053. The applicant calculated an average case-
weighted threshold of $86,278 across both MS-DRGs 237 and 238. The
applicant noted that the average case-weighted standardized charge per
case, computed without including the additional operating room charges
that relate to the Heli-FXTM EndoAnchor System, exceeded the
average case-weighted threshold of $86,278. Therefore, the applicant
maintained that the technology meets the cost criterion.
The applicant also submitted claims data from the ANCHOR (Aneurysm
Treatment Using the Heli-FX Aortic Securement System Global Registry)
study to demonstrate that the technology meets the cost criterion. A
total of 51 cases were submitted with 11.76 percent of all the cases
mapping to MS-DRG 237, and 88.24 percent of all the cases mapping to
MS-DRG 238. The applicant standardized the charges for all 51 cases,
and determined an average case-weighted standardized charge per case of
$128,196. The applicant calculated an average case-weighted threshold
of $87,118 across MS-DRGs 237 and 238. Therefore, because the average
case-weighted standardized charge per case exceeds the average case-
weighted threshold, the applicant maintained that the technology meets
the cost criterion. We are inviting public comments on whether the
Heli-FXTM EndoAnchor System meets the cost criterion,
particularly with regard to the assumptions and methodology used in the
applicant's analyses. We discuss whether the Heli-FXTM
EndoAnchor System represents a substantial clinical improvement over
other treatments used for the repair of both abdominal and thoracic
aortic aneurysms in one discussion below.
(2) Heli-FXTM EndoAnchor System for the Treatment of
Thoracic Aortic Aneurysms
The Heli-FXTM Thoracic System, which allows the expanded
use of the Heli-FXTM EndoAnchor System technology to TAA
repair, was cleared
[[Page 28040]]
by the FDA on August 14, 2012 (reference K121168). The new system
consists of a longer delivery device with additional tip configurations
to allow the helical EndoAnchor technology to treat TAA. A line
extension to the original Heli-FXTM EndoAnchor System,
allowing improved treatment of AAA patients with larger aortic neck
diameters, was cleared by the FDA on April 12, 2013 (reference
K130677).
With regard to the newness criterion for the Heli-FXTM
Thoracic System, we consider the beginning of the newness period for
the device to begin when the technology was approved by the FDA on
August 14, 2012. Because the 3-year anniversary date of the product's
entry on the U.S. market would occur in the second half of FY 2015
(August 14, 2015), we believe that the Heli-FXTM Thoracic
System meets the newness criterion. We are inviting public comments on
whether the Heli-FXTM Thoracic System meets the newness
criterion. As stated above, the applicant requested an ICD-10-PCS code,
and presented comments at the March 2014 ICD-10 Coordination &
Maintenance Committee meeting.
To demonstrate that the Heli-FXTM Thoracic System meets
the cost criterion, similar to the analysis performed for the Heli-
FXTM EndoAnchor System for the treatment of AAA, the
applicant researched claims data from the 100 percent sample of the
2012 SAF for cases reporting procedure code 39.73 (Endovascular
implantation of graft in thoracic aorta) in the first or second
procedure position on the claim, in combination with one of the
following primary diagnosis codes: 404.93 (Hypertensive heart and
chronic kidney disease, unspecified, with heart failure and chronic
kidney disease stage V or end-stage renal disease); 441.01 (Dissection
of aorta, thoracic); 441.03 (Dissection of aorta, thoracoabdominal);
441.2 (Thoracic aneurysm without mention of rupture); 441.4 (Abdominal
aneurysm without mention of rupture); 441.7 (Thoracoabdominal aneurysm,
without mention of rupture); 996.1 (Mechanical complication of other
vascular device, implant, and graft); or 996.74 (Other complications
due to other vascular device, implant, and graft). The applicant
believed that this combination of ICD-9-CM codes identifies cases
treated for TAA. We note that the 2012 SAF dataset includes all claims
submitted from hospitals paid under the IPPS for CY 2012.
The applicant focused its analysis on MS-DRGs 219, 220, and 221
because these are the MS-DRGs to which cases treated with the
implantation of endovascular grafts for TAA repair would most likely
map. The applicant found a total of 642 cases, and noted that 27.88
percent of the total number of cases would map to MS-DRG 219, 40.50
percent of the total number of cases would map to MS-DRG 220, and 31.62
percent of the total number of cases would map to MS-DRG 221. The
applicant standardized the charges for all 642 cases. Using the
inflation factor of 1.47329 published in the FY 2014 IPPS/LTCH final
rule (78 FR 50982), the applicant inflated the standardized charges by
14.88 percent (the applicant multiplied 1.47329 x 1.47329 x 1.47329 in
order to inflate the charges from 2012 to 2015). The applicant then
added the charges for the Heli-FXTM EndoAnchor System to the
standardized charges by dividing the cost of the Heli-FXTM
EndoAnchor System device by each individual hospital specific CCR from
the FY 2012 impact file. This equated to an average case-weighted
inflated standardized charge per case of $156,625. The applicant noted
that the average case-weighted inflated standardized charge per case
did not contain additional operating room charges related to the use of
this technology. Therefore, the applicant determined that it was
necessary to add an additional $2,160 for operating room charges, which
was based on an additional 45 minutes of operating room time from one
hospital, to the average case-weighted standardized charge per case.
This resulted in an average case-weighted standardized charge per case
of $158,785. The applicant calculated an average case-weighted
threshold of $141,194 across MS-DRGs 219, 220, and 221. The applicant
noted that the average case-weighted standardized charge per case,
without including charges for additional operating room time, exceeded
the average case-weighted threshold of $141,194. Therefore, the
applicant maintained that the technology meets the cost criterion. We
are inviting public comments on whether the Heli-FXTM
Thoracic System meets the cost criterion, particularly with regard to
the assumptions and methodology used in the applicant's analysis.
(3) Evaluation of the Substantial Clinical Improvement Criterion for
the Heli-FXTM EndoAnchor System for the Treatment of
Abdominal and Thoracic Aortic Aneurysms
The applicant stated that the Heli-FXTM EndoAnchor
System represents a substantial clinical improvement for the following
reasons: The technology improves overall rates of aneurysm exclusion
and long-term success after EVAR by increasing the integrity and long-
term durability of the proximal seal and fixation; the technology
reduces the risk and rate of secondary interventions and readmissions
due to aneurysm-related complications (for example, endoleaks,
migration, aneurysm enlargement) caused by failure of the proximal
seal; the technology improves the general applicability of EVAR to
patients with a broader spectrum of aortoiliac anatomy, including those
with hostile proximal neck anatomy; and the technology reduces the
rigor of life-long imaging follow-up for EVAR patients by reducing the
rate of late failure and increasing the post-EVAR rates of aneurysm sac
regression due to complete, endoleak-free durable aneurysm exclusion.
While current devices and capabilities are greatly improved over
the first generation of devices, the applicant noted that EVAR
treatments using the first generation of devices has not proven to be
as durable, anatomically applicable, or complication-free as open
surgery. 4 5 6 7 Several critical and life-threatening
limitations continue to require improvement to these devices and
procedures, including the need to reduce serious early and late device
and procedure-related complications, such as loss of stability, and
integrity and robustness of the clinical proximal aortic landing zone,
and to offer an alternative method of EVAR to a broader segment of the
patient population.
---------------------------------------------------------------------------
\4\ Abbruzzese, T.A., Kwolek, C.J., Brewster, D.C., et al,
``Outcomes following endovascular abdominal aortic aneurysm repair
(EVAR): An anatomic and device-specific analysis,'' Journal of
Vascular Surgery, 2008, Vol. 48, pp. 19-28.
\5\ Dangas, G., O'Connor, D., Firwana, B., et al, ``Open Versus
Endovascular Stent Graft Repair of Abdominal Aortic Aneurysms: A
Meta-Analysis of Randomized Trials,'' JACC, 2012, Vol. 5 (10), pp.
1072-1080.
\6\ De Bruin, J.L., Baas, A.F., Buth, J., et al, ``Long-Term
Outcome of Open or Endovascular Repair of Abdominal Aortic
Aneurysm,'' New England Journal of Medicine, May 2010, Vol. 362(20),
pp. 1881-1889.
\7\ Greenhalgh, R.M., Brown, L.C., Powell, J.T., et al,
``Endovascular versus open repair of abdominal aortic aneurysm,''
New England Journal of Medicine, May 2010, Vol. 362(20), pp. 1863-
1871.
---------------------------------------------------------------------------
The applicant provided literature, analyses of data from the
``STAPLE-2'' clinical trial and the ANCHOR Registry, and a meta-
analysis of EVAR trials to demonstrate that the Heli-FXTM
EndoAnchor System represents a substantial clinical improvement above
current treatments available. We summarize the information provided by
the applicant that supports the clinically beneficial results of using
the Heli-FXTM EndoAnchor System.
The ``STAPLE-2'' clinical trial enrolled 155 patients at 25 U.S.
centers between September 2007 and January
[[Page 28041]]
2009. Clinical (and imaging) data are available for 147, 139 and 125
patients at 1-year, 2-year, and 3-year follow-up, respectively,
representing the complete data sets at these time points. Patients
enrolled in the clinical trial and observed under the study will
continue to be followed per protocol for 5 years following aneurysm
repair. According to the applicant, the results of the trial and study
demonstrate that the Heli-FXTM EndoAnchor System is
associated with an extremely low rate of proximal neck-related issues
in long-term follow-up. The applicant maintained that this
determination results in improved outcomes for aortic aneurysm
patients, and reduced rate of re-interventions, which are associated
with hospital admissions, procedural risks, and reversions to increased
follow-up frequency requiring more physician visits and radiographic
imaging studies.
The data used for this analysis was extracted from the clinical
database on February 1, 2013, and are identical to those used to
generate the most recent Annual Progress Report (APR) submitted to the
FDA, as required under the U.S. IDE regulations.
While the ``STAPLE-2'' clinical trial was conducted exclusively
with the Aptus AAA endograft (which remains investigational), the
applicant believed that the use of the Heli-FXTM EndoAnchor
System-related data is applicable to the use of the anchor with the
compatible Cook, Gore, and Medtronic manufactured endografts in
treatment anatomies for AAA and TAA cases.
Through 3-year follow-up, the applicant noted that there have been
no anchor fractures as observed by the core lab. Further, there have
been no relative migrations of the Heli-FXTM EndoAnchor
System as compared to other endografts reported by the core laboratory.
In the analysis of the ``STAPLE-2'' clinical trial data at 1-year
follow-up, the applicant noted that the core lab observed no proximal
migrations, and a single case of Type I endoleak. A single secondary
intervention was required to address the Type I endoleak in a patient
with a circumferentially incomplete proximal neck within the 1-year
follow-up period.
The applicant further noted that no additional Type I endoleaks
have been observed beyond the 1-year follow-up in any patient enrolled
in the trial. In addition, there were no reported instances of aneurysm
rupture, vessel perforation, vessel dissection, catheter embolization,
enteric fistula, infection, Type III endoleak, conversion, allergic
reactions, renal emboli, or patient death associated with the use of
the Heli-FXTM EndoAnchor System. Further, there have been no
reports of bleeding or hematoma at the EndoAnchor penetration locations
in the aortic neck.
Beyond the 1-year follow-up, three patients have demonstrated
proximal migrations less than 1 cm. None of these cases were associated
with Type I endoleaks or aneurysm sac expansions.
The applicant then compared migrations and Type I endoleaks data
from the ``STAPLE-2'' clinical trial to analogous data from five
compatible AAA endografts that were not anchored (data taken from
published SSE data obtained from the FDA's Web site). One year of data
was compared because this timeframe is what is reported in a standard
fashion from IDE trials of endografts. The applicant noted that the
Heli-FXTM EndoAnchor System data compares favorably against
the data obtained in U.S. pivotal trials of devices that did not employ
discrete independent fixation means, particularly when viewed in light
of the shorter average neck lengths treated in the ``STAPLE-2''
clinical trial versus those involving the Cook, Gore, and Medtronic
manufactured endografts. According to the applicant, the number of
proximal migrations were low across devices as reported in the SSE
data, and an analysis using the Fisher's exact method demonstrated no
statistically significant differences when compared to the anchored
endografts used in the ``STAPLE-2'' clinical trial (all p = NS). The
incidence of Type I endoleaks and the need for secondary interventions
to address them was significantly lower for the Heli-FXTM
EndoAnchor System endografts analyzed under the ``STAPLE-2'' clinical
trial versus the Medtronic, AneuRx, and Talent manufactured endografts
(p = 0.026 versus AneuRx and p = 0.015 versus Talent). The applicant
stated that the applicability of post-hoc statistical analyses is
limited. However, the applicant believed that because the data being
compared under the analyses were collected through similar protocols
and with the same endpoint definitions, post-hoc comparisons were
deemed appropriate. The applicant further believed that the comparison
of this data demonstrates that the Heli-FXTM EndoAnchor
System is associated with very low rates of Type I endoleaks and
migrations.
The applicant also provided data from the ANCHOR Registry, which is
a post-market, prospective, observational, multi-center, international,
dual-arm study designed to capture real-world data on the usage
patterns and clinical results associated with the use of the Heli-
FXTM EndoAnchor System as a method of treatment for patients
in need of EVAR. The applicant explained that the ANCHOR Registry
represents a growing body of data on the application of the Heli-
FXTM EndoAnchor System used as a method of endovascular
aortic aneurysm repair. The applicant noted that to its knowledge, the
anatomical challenges present in the registry are greater than those in
any large scale published series. The applicant further noted that,
although long-term results are limited, the acute results demonstrate a
high level of device safety, technical feasibility and acute success in
a patient population with few viable options.
Primary safety for the ANCHOR Registry is being measured as a
composite of freedom from device or procedure-related serious adverse
events through 1-year follow-up following the Heli-FXTM
EndoAnchor System implantation. Primary effectiveness is being measured
as a composite of acute technical success and freedom from Type Ia
endoleaks and endograft migrations through 1-year follow-up. Inclusion
and exclusion criteria are minimal, essentially following the IFU
requirements. Patients are being followed in the registry by their
physician's standard of care for 5 years.
Enrollment in the ANCHOR Registry began in March 2012. Through
August 2013, a total of 258 patients were enrolled at 40 participating
centers (29 located in the United States and 11 located in the European
Union), and data are available in the registry's database. Of these,
195 patients (76 percent) were enrolled in the primary arm, having the
Heli-FXTM EndoAnchor System implanted at the time of their
initial aneurysm treatment, either as a prophylactic measure, or to
address an acute leak seen on completion arteriography. The remaining
patients (63 or 24 percent) were enrolled in the revision arm, having
the Heli-FXTM EndoAnchor Systems implanted at a secondary
procedure to arrest migration, or address endoleaks discovered on
follow-up in previously implanted endografts.
The applicant noted that physicians are choosing to apply the Heli-
FXTM EndoAnchor System in a subset of patients that are at a
higher risk for proximal neck-related complications during follow-up.
The large average sac diameter in the revision arm suggested that these
patients' initial treatments were unsuccessful and, as such, they have
experienced continued sac expansion post-EVAR. These patients
[[Page 28042]]
also represent a high-risk subset of patients.
Acute results are measured in terms of technical success. In the
primary arm, 193 of 194 procedures were successful, and in the revision
arm, 57 of 63 procedures were successful. All technical failures were
persistence of Type Ia endoleaks. There has been a single re-
intervention at 69 days post-Endoanchor implantation for a persistent
Type Ia endoleak in one patient in the revision arm, in which the Heli-
FXTM EndoAnchor System combined with a proximal cuff were
unable to completely resolve the endoleak. There have been no device-
related serious adverse events.
As mentioned above, because the ``STAPLE-1,'' \8\ and ``STAPLE-2''
clinical trials were single-arm studies, no data are available from
them to assess the impact of the Heli-FXTM EndoAnchor System
on endograft performance. To make this assessment, a meta-analysis was
conducted. The meta-analysis combined long-term AAA endograft
performance from endografts marketed in the United States, and compared
these measures to those from long-term follow-up in the ``STAPLE-2''
trial.
---------------------------------------------------------------------------
\8\ Deaton, D.H., Mehla, M., Kasirajan, K., et al., ``The Phase
I Multi-center Trial (Staple-1) of the Aptus Endovascular Repair
System: Results at 6 Months and 1 Year,'' Journal of Vascular
Surgery, 2009, Vol. 49, pp. 851-857 (discussion on pp. 857-858.)
---------------------------------------------------------------------------
According to the applicant, the key findings from the meta-analysis
are as follows:
Heli-FXTM EndoAnchors reduced the proportion of
treated aneurysms with enlargement greater than 5 mm at 3 years from
12.7 percent to 3.9 percent (p = .002).
Heli-FX EndoAnchor System reduced the proportion of leaks
requiring treatment at 3 years from 12 percent to 1.3 percent (p <
.001).
Heli-FXTM EndoAnchor System reduced (all-cause)
mortality at 3 years from 18.8 percent to 8.4 percent (p = .002).
However, this does not appear to have been totally mediated by AAA-
related mortality, which was reduced by the Heli-FXTM
EndoAnchor System from 2.5 percent to 0.7 percent at 3 years (but was
not statistically significant, p = .372).
According to the applicant, in general, patients in the ANCHOR
Registry were similar to the patients in the AAA endograft studies. The
applicant noted that the results of the analysis using the Fisher's
Exact Tests were consistent between the All-Studies' comparisons and
the IDE-Studies' comparisons: All-Cause Mortality, Leaks requiring
Treatment, and Enlargement were all significantly lower at 3 years in
the endografts implanted with the Heli-FXTM EndoAnchor
System than in standard endografts.
The applicant asserted that the meta-analysis shows that there is
objective evidence that the Heli-FXTM EndoAnchor System
effectively reduces well-documented problems with endografts. By
providing the endograft with better apposition to the native artery,
the applicant noted that the Heli-FXTM EndoAnchor System
reduces the rates of enlargement and endoleaks requiring treatment. The
applicant further noted that these results were consistent in the All-
Studies' and IDE Studies' meta-analyses. The applicant believed that
lower rates of leaks requiring intervention would save payers money
over the long term.
The applicant observed that, while there was no significant
improvement in the rate of ruptures with the Heli-FXTM
EndoAnchor System, this may be due to the fact that leaks were treated
and, thereby, prevented any ruptures. The applicant believed that the
higher rate of treated endoleaks in endografts implanted without the
Heli-FXTM EndoAnchor System provides for this hypothesis.
Also, migration did not appear to be significantly reduced by the Heli-
FXTM EndoAnchor System (3.5 percent at 3 years in both
groups; p = 1.0).
Finally, the applicant concluded that, overall, the lower
complication rates seen with the Heli-FXTM EndoAnchor System
in the meta-analysis provide evidence of the clinical benefits and
likely economic benefits associated with the use of the Heli-
FXTM EndoAnchor System. The applicant believed that the
technology may be especially helpful in patients with difficult
anatomy, and that it may be reasonable to consider using the Heli-
FXTM EndoAnchor System prophylactically in the treatment of
all such patients.
In addition to the formal study data from the ``STAPLE-2'' trial,
the Global ANCHOR Registry, and the meta-analysis based on these, the
applicant provided published peer-reviewed literature that represent an
early state of scientific data dissemination outside of non-company
sponsored clinical studies, which is commensurate with the recent
market approvals of the Heli-FXTM EndoAnchor System
technology. The applicant believed that this data demonstrates strong
initial physician enthusiasm and resulting favorable clinical results
in their experience to date. The applicant noted that the general body
of scientific literature is considered meaningful and growing for this
early stage of market introduction. However, the applicant asserted
that the literature supports the study and meta-analysis data above
that documents that improved clinical outcomes were observed, including
outcomes in a broader range of patients that are often ineligible for,
or at greatest risk with, EVAR.
We are concerned that the three sources of data, the ``STAPLE-2''
clinical trial, the Anchor registry, and the literature review that the
applicant submitted to support their application are not high quality
evidence. The ``STAPLE-2'' study was a single-arm study and only used
one endograft, the registry is an observational study, and the
literature review does not provide clinical data. Also, the meta-
analysis of all the submitted data is only as good as the data used.
While the clinical data submitted suggests that some outcomes such as
EVAR failure are improved, we are concerned that there is not enough
clinical evidence to support the substantial clinical improvement
criterion. We are inviting public comments on whether the submitted
data demonstrate that the Heli-FXTM EndoAnchor System
represents a substantial clinical improvement in the treatment of
Medicare beneficiaries, particularly in regard to the concerns we have
identified.
We received public comments in response to the New Technology Town
Hall meeting held on February 12, 2014. We summarize these comments
below.
Comment: Several commenters supporting new technology add-on
payments for the Heli-FXTM EndoAnchor System. In addition,
one commenter believed that EndoAnchors would broaden the applicability
of endovascular aneurysm repair. The commenter noted that use of
EndoAnchors increases the force needed to dislodge the proximal neck of
the graft by several times, and in some cases even stronger than a
hand-sewn anastomosis. This commenter further noted that this would
allow patients with short, or otherwise difficult aortic necks to be
treated more safely with endovascular aneurysm repair. The commenter
stated that the technology is beneficial for patients who have medical
problems or advanced age as contraindications to open surgery because
endovascular repair can be made possible with the Heli-FXTM
EndoAnchor System.
The commenter further stated that patients with endoleaks
identified during follow-up are frequently not candidates for extension
prostheses and would otherwise require open explantation of the graft
and aneurysm
[[Page 28043]]
repair. The commenter explained that these are far more challenging and
risky operations than primary open aneurysm repairs, and are routinely
associated with blood loss of several liters as well as prolonged lower
extremity, renal, and visceral ischemia. The commenter noted that many
of these often elderly patients can be successfully treated in a
minimally invasive manner using the Heli-FXTM EndoAnchor
System, reestablishing proximal fixation and seal while avoiding the
morbidity and mortality associated with graft explantation and open
repair. The commenter concluded that if new technology add-on payments
are approved for the Heli-FXTM EndoAnchor System, many
patients would realize the advantages of this unique and necessary
device, improving their care and reducing overall cost.
Another commenter stated that the Heli-FXTM EndoAnchor
System provides an opportunity to extend a less mortal procedure (EVAR)
to patients whose anatomy may predispose them to late failure,
including patients with large proximal neck diameters, increased iliac
diameters, or abnormal neck anatomy. In primary repair, the applicant
stated that endoanchors have been demonstrated to mimic a surgical
anastomosis. The commenter believed that this would lead to less
reinterventions and less aneurysm related mortality. Given the cost of
reintervention or treating a ruptured AAA, the commenter believed that
this technology should have a real impact in the overall cost of EVAR
in this patient population.
Response: We appreciate the commenters' support. We considered
these comments in our evaluation of the Heli-FXTM EndoAnchor
System application for new technology add-on payments for FY 2015 and
in the development of this proposed rule. As stated above, we are
inviting additional public comments on whether the Heli-FXTM
EndoAnchor System represents a substantial clinical improvement in the
treatment of Medicare beneficiaries, particularly in regard to the
concerns we have identified.
c. WATCHMAN[supreg] Left Atrial Appendage Closure Technology
Boston Scientific Corporation submitted an application for new
technology add-on payments for the WATCHMAN[supreg] Left Atrial
Appendage Closure Technology (Watchman[supreg] System) for FY 2015.
When a patient has an arrhythmia known as atrial fibrillation (AF), the
left atrium does not expand and contract normally. As a result, the
left atrium is not capable of completely emptying itself of blood.
Blood may pool, particularly in the part of the left atrium called the
left atrial appendage. This pooled blood is prone to clotting, causing
formation of a thrombus (that is, a blood clot). When a thrombus breaks
off, it is called an embolism (or thromboembolism). An embolism can
cause a stroke or other peripheral arterial blockage.
The WATCHMAN[supreg] Left Atrial Appendage (LAA) Closure Device is
an implant that acts as a physical barrier, sealing the LAA to prevent
thromboemboli from entering into the arterial circulation from the LAA,
thereby reducing the risk of stroke and potentially eliminating the
need for Warfarin therapy in those patients diagnosed with nonvalvular
AF and who are eligible for Warfarin therapy.
The applicant anticipates FDA premarket approval of the
WATCHMAN[supreg] System in the first half of 2014. According to the
applicant, the WATCHMAN[supreg] System is the first LAA closure device
that would be approved by the FDA. Therefore, the applicant believes
that the technology meets the newness criterion. The device is
currently identified by ICD-9-CM procedure code 37.90 (Insertion of
Left Atrial Appendage Device), which was issued on October 1, 2004. We
are inviting public comments on if, and how, the WATCHMAN[supreg]
System meets the newness criterion.
With regard to the cost criterion, the applicant used the FY 2012
MedPAR file and searched the claims data for cases reporting with ICD-
9-CM procedure code 37.90. The applicant provided two analyses. The
first analysis includes all claims that contained ICD-9-CM procedure
code 37.90 regardless of whether it was the principle procedure that
determined the MS-DRG assignment of the case. This returned 243 cases
spread across 21 MS-DRGs. The applicant noted that the MedPAR file
contained claims that were returned to the provider reporting charges
for actual cases from clinical trials that used the WATCHMAN[supreg]
System that were well below post-FDA approval pricing. Therefore, the
applicant removed the premarket device related charges. The applicant
then standardized the charges, applied an inflation factor of 1.096898
based on the 2-year charge inflation factor listed in the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50982) and then added post-FDA approval
charges for the WATCHMAN[supreg] System. This resulted in an average
case-weighted standardized charge per case of $176,943. The applicant
calculated an average case-weighted threshold of $107,345 across all
MS-DRGs. Therefore, the applicant asserted that the average case-
weighted standardized charge per case exceeds the average case-weighted
threshold and maintained that the technology meets the cost criterion.
The second analysis focused on cases reporting ICD-9-CM procedure
code 37.90, and assigned to MS-DRGs 250 (Percutaneous Cardiovascular
Procedure without Coronary Artery Stent with MCC) and 251 (Percutaneous
Cardiovascular Procedure without Coronary Artery Stent without MCC).
According to the applicant, these are the MS-DRGs to which cases using
the WATCHMAN[supreg] System in the delivery of treatment as the
principal procedure performed during the inpatient stay are assigned.
The applicant found a total of 122 cases, and noted that 9.02 percent
of the total number of cases would map to MS-DRG 250, and 90.98 percent
of the total number of cases would map to MS-DRG 252. Similar to above,
the applicant noted that the MedPAR file contained claims that were
returned to the provider reporting charges for actual cases from
clinical trials that used the WATCHMAN[supreg] System that were well
below post-FDA approval pricing. Therefore, the applicant removed the
premarket device-related charges. The applicant then standardized the
charges, applied an inflation factor of 1.096898 based on the 2-year
charge inflation factor listed in the FY 2014 IPPS/LTCH final rule (78
FR 50982), and then added post FDA-approval charges for the
WATCHMAN[supreg] System. This resulted in an average case-weighted
standardized charge per case of $113,210. The applicant calculated an
average case-weighted threshold of $68,093. The applicant asserted that
the average case-weighted standardized charge per case exceeds the
average case-weighted threshold. Therefore, the applicant maintained
that the technology meets the cost criterion. We are inviting public
comments on whether the WATCHMAN[supreg] System meets the cost
criterion, particularly with regard to the assumptions and methodology
used in the applicant's analysis.
The applicant asserted in its application that the WATCHMAN[supreg]
System meets the substantial clinical improvement criterion. The
applicant believed that the WATCHMAN[supreg] System provides a
permanent solution proven to reduce the risk of thromboembolic stroke
in patients diagnosed with high-risk, nonvalvular AF, and who are
eligible for Warfarin therapy. Therefore, the applicant believed that
the WATCHMAN[supreg] System fulfills a major unmet clinical need.
According to the applicant, clinical trial data
[[Page 28044]]
demonstrated non-inferiority of the WATCHMAN[supreg] System compared to
Warfarin therapy. Further, long-term follow-up data suggested
superiority compared to Warfarin therapy by demonstrating 40 percent
relative reduction of primary efficacy events, and 60 percent relative
reduction for CV mortality. The applicant also stated that, procedure
complication rate is low, with the majority of events occurring soon
before, during, or soon after the procedure.
The applicant submitted multiple clinical trial studies to
demonstrate that the technology represents a substantial clinical
improvement. Specifically, the WATCHMAN[supreg] System United States
clinical program included five studies with approximately 2000
patients. There were two prospective, randomized-controlled trials
(PROTECT AF 9 10 11 12 and PREVAIL \13\ \14\), two continued
access registries for patients who completed PROTECT AF and PREVAIL
(CAP and CAP2, respectively), and the ASAP feasibility study.
---------------------------------------------------------------------------
\9\ Wrigley, B., Lip, G., ``Can the WATCHMAN device truly
PROTECT from stroke in atrial fibrillation?'', Lancet Neurology,
2009.
\10\ Reddy, V., Holmes, D., Doshi, S., et al. ``Safety of
percutaneous left atrial appendage closure: Results from the
WATCHMAN left atrial appendage system for embolic protection in
patients With AF (PROTECT AF) clinical trial and the Continued
Access Registry. Circulation.'' Vol. 123, 2011.
\11\ Reddy, V., Doshi, S., Sievert, H., et. al., ``Percutaneous
left atrial appendage closure for stroke prophylaxis in patients
with atrial fibrillation: 2.3-year follow up of the PROTECT AF
(Watchman Left Atrial Appendage System for embolic protection in
patients with atrial fibrillation) trial,'' Circulation., 2013, Vol.
127, pp. 720-729.
\12\ Alli, O., Doshi, S., Kar, S., et al., ``Quality of Life
Assessment in the Randomized PROTECT AF Trial of Patients at Risk
for Stroke With Non-Valvular Atrial Fibrillation,'' Journal of
American College of Cardiology, Vol. 61, No 17, 2013, pp. 1790-1798.
\13\ Landmesser, U., Holmes, D., ``Left atrial appendage
closure: A percutaneous transcatheter approach for stroke prevention
in atrial fibrillation,'' European Heart Journal, Vol. 33, 2012.
\14\ Homes, D.R. PREVAIL Results CIT, 2013.
---------------------------------------------------------------------------
According to the applicant, PROTECT AF was a prospective,
randomized-controlled trial comparing the outcomes of patients who
received care for LAA closure using the WATCHMAN[supreg] System (463
patients) with those of patients who were anticoagulated with Warfarin
therapy (244 patients). The trial was designed to show that the
WATCHMAN[supreg] System was noninferior to Warfarin therapy. The
primary outcome was anticipated to occur at a rate of 6.15 per 100
patient-years in the control group, and the sample size was chosen
using a ``two-fold non-inferiority margin.'' Because patients could be
randomized to Warfarin therapy, all patients were eligible to continue
Warfarin, and did not have an excessive risk of bleeding. By design,
all patients in PROTECT AF continued Warfarin therapy for 45 days after
the device implantation procedure.
Outcome data from PROTECT AF have been reported after mean follow-
ups of 1.5 years, 2.3 years, and 3.7 years. The primary efficacy
endpoint was the composite of stroke, systemic embolism, cardiovascular
death, or unexplained death. This primary endpoint occurred in the
control group at a lower rate than was assumed in the sample size
calculations: The observed rate was between 3.8 and 4.9 per 100
patient-years compared with the design estimate of 6.15 per 100
patient-years. According to the applicant, patients randomly assigned
to receive the WATCHMAN[supreg] System device in the PROTECT AF trial
had numerically lower rates of the primary endpoint than the patients
randomly assigned to Warfarin (also known as Coumadin) at all time
points. We note that, although the point estimates favor the device for
the primary endpoint, the differences were not statistically
significant because the upper 95 percent confidence intervals are all
above 1.0. However, the secondary endpoint of cardiovascular death was
reduced significantly, as was all-cause mortality with a rate ratio of
0.66 (CL 0.45-0.98).
The criteria for noninferiority of the primary endpoint were met
over all follow-up intervals. According to the applicant, the
probability is >99 percent that device-treated patients have no more
than twice the rate of stroke, embolism, or death than Warfarin-treated
patients.
Also, the incidence of procedural-related complications in this
trial was 8.7 percent. The applicant noted that complications early in
the trial were related to procedures performed by new users. As a
result, changes were made to the procedure and physician training, and
the complication rate subsequently decreased.
The applicant stated in its application that the Circulatory System
Devices Advisory Panel to the Division of Cardiovascular Devices (DCD)
within the Center for Devices and Radiological Health (CDRH) of the FDA
reviewed the 1-year PROTECT AF data on April 23, 2009. The panel voted
7:5 in favor of the device, resulting in a positive recommendation for
``approval with conditions.'' However, noting the complication rate,
the FDA required additional data collection on procedural safety to
confirm the lower rates observed in the second half of the trial. As a
result of this requirement, the PREVAIL trial study was designed in a
similar fashion to PROTECT AF, but with modifications to trial entry
criteria and a minimum number of new operators.
According to the applicant, in the interim, FDA also recognized the
effectiveness of the WATCHMAN[supreg] System and the need for a new
therapeutic option for patients receiving Warfarin therapy, and a
continued access program (CAP) was authorized. With 460 patients
enrolled, according to the applicant, efficacy rates in the CAP trial
study were similar to those seen in the PROTECT AF trial study, and
procedural complications were reduced by over 50 percent compared to
the PROTECT AF trial study, from 8.7 percent to 4.1 percent.
From November 2010 to June 2012, the PREVAIL trial enrolled a total
of 407 patients, 269 of whom received treatment for LAA closure with
the WATCHMAN[supreg] System, and 138 who received Warfarin therapy. The
applicant noted that the procedural complication rate was 4.4 percent,
confirming the rate seen in the second half of the PROTECT AF trial
study and the CAP trial study. After the PREVAIL trial closed, the FDA
authorized a second CAP (specifically, CAP2), which has enrolled 336
patients as of the date the applicant submitted its application.
The applicant also submitted data concerning patients diagnosed
with AF who are not on an oral anticoagulant. These patients are not
protected from stroke by an oral anticoagulant. There may be increased
periprocedural risk of device implantation because thrombus might form
on the device surface more readily in patients with no anticoagulation
(patients in the PROTECT AF trial were treated with Warfarin for 45
days after the device implantation procedure). Specifically, the ASAP
Registry (5) enrolled 150 patients, at one of four centers, that had a
contraindication to even short-term anticoagulation, mostly a history
of prior bleeding. There was no control group. Device implantation led
to a serious adverse event in 13 patients (8.7 percent), including one
case of device thrombus leading to ischemic stroke. Five other patients
had a device-related thrombus that did not lead to stroke (four of
these patients were treated with low molecular weight heparin),
resulting in an overall 4.0 percent incidence (6 out of 150) of device-
associated thrombus. In the PROTECT AF trail study, 20 of the 473
patients (4.2 percent) had device-associated thrombus, 3 of which led
to an ischemic stroke. The rates of device-related thrombus are similar
in the two studies
[[Page 28045]]
(4.0 percent versus 4.2 percent), but the number of patient studied is
smaller in the ASAP Registry (5) study compared to the PROTECT AF
clinical trial study.
In the 14-month follow-up data for the ASAP Registry (5) study, the
rate of stroke or systemic embolism was 2.3 percent per year, which was
said to be ``lower than expected'' based on prior data for patients
diagnosed with AF who were not treated with Warfarin (there was no
concurrent control group). The data provided suggested efficacy in this
patient population. However, we are concerned that there is not strong
evidence that the device prevents stroke.
All trials in the U.S. clinical program allowed for continued
follow-up of patients out to 5 years post-randomization. According to
the applicant, the patients enrolled in the PROTECT AF clinical trial
now have an average of 3.8 years of follow-up. The applicant asserted
that an analysis of this long-term data demonstrates superior primary
efficacy outcomes of the WATCHMAN[supreg] System over Warfarin therapy.
The applicant concluded that the WATCHMAN[supreg] System provides a
permanent solution to reduce the risk of ischemic strokes caused by
thromboemboli originating in the LAA in patients diagnosed with
nonvalvular AF. The applicant further stated that, the data demonstrate
that LAA closure using the WATCHMAN[supreg] System is a substantial
improvement in care as compared to currently available pharmacologic
therapy, such as Warfarin therapy.
The WATCHMAN[supreg] System may be used in two populations: (1)
Patients who could take Warfarin (or other oral anticoagulant), but
would prefer to avoid the risk of bleeding from anticoagulant therapy;
(2) patients who are not eligible for oral anticoagulation therapy
because of an unacceptable risk of bleeding. Most of the clinical
evidence presented by the applicant is from the former group, and the
applicant has requested from the FDA that the label indication be for
``high risk patients with nonvalvular atrial fibrillation who are
eligible for warfarin therapy, but, for whom the risks posed by long-
term warfarin therapy outweigh the benefits.''
We are concerned that the evidence presented by the applicant
demonstrating the superiority of the WATCHMAN[supreg] System compared
to Warfarin therapy is insufficient. The clinical study discussed above
was designed to demonstrate that the WATCHMAN[supreg] is noninferior to
Warfarin therapy. Specifically, in the PREVAIL AF trial study, the
primary endpoint was not significantly improved in the conventional
hypothesis testing statistical analysis at any time point. The longer
term data has improved efficacy and safety data, but still remain
sparse. Even for the secondary patient population ineligible for
anticoagulation therapy, the evidence remains weak as the only data
comes from the ASAP Registry (5) observational study of 150 patients
without a concurrent control group.
A recent article in the Journal of the American College of
Cardiology echoes these concerns: ``Current issues compromising the
implementation of procedural approaches for stroke prevention in AF are
discussed herein and include: (1) Lack of multiple randomized clinical
trials; (2) lack of consensus regarding the appropriate target
population to study; and (3) ability to obtain approval of devices for
outcome measures of unconfirmed clinical importance, such as, the use
of complete closure of the LAA at the time of the index procedure as a
surrogate for clinical efficacy.'' \15\
---------------------------------------------------------------------------
\15\ Holmes, D.R., et. al., ``Left Atrial Occlusion,'' Journal
of American College of Cardiology, 2014, Vol. 63, pp. 291-8.
---------------------------------------------------------------------------
We are inviting public comments on whether this technology meets
the substantial clinical improvement criterion, particularly regarding
our concerns discussed above.
We did not receive any public comments in response to the New
Technology Town Hall meeting held on February 12, 2014 in regard to
this technology.
d. CardioMEMSTM HF (Heart Failure) System
CardioMEMS, Inc. submitted an application for new technology add-on
payment for FY 2015 for the CardioMEMSTM HF (Heart Failure)
System, which is an implantable hemodynamic monitoring system comprised
of an implantable sensor/monitor placed in the distal pulmonary artery.
Pulmonary artery hemodynamic monitoring is used in the management of
heart failure. The CardioMEMSTM HF System measures multiple
pulmonary artery pressure parameters for an ambulatory patient to
measure and transmit data via a wireless sensor to a secure Web site.
The CardioMEMSTM HF System utilizes radiofrequency (RF)
energy to power the sensor and to measure pulmonary artery (PA)
pressure and consists of three components: An Implantable Sensor with
Delivery Catheter, an External Electronics Unit, and a Pulmonary Artery
Pressure Database. The system provides the physician with the patient's
PA pressure waveform (including systolic, diastolic, and mean
pressures) as well as heart rate. The sensor is permanently implanted
in the distal pulmonary artery using transcatheter techniques in the
catheterization laboratory where it is calibrated using a Swan-Ganz
catheter. PA pressures are transmitted by the patient at home in a
supine position on a padded antenna, pushing one button which records
an 18-second continuous waveform. The data also can be recorded from
the hospital, physician's office or clinic.
The hemodynamic data, including a detailed waveform, are
transmitted to a secure Web site that serves as the Pulmonary Artery
Pressure Database, so that information regarding PA pressure is
available to the physician or nurse at any time via the Internet.
Interpretation of trend data allows the clinician to make adjustments
to therapy and can be used along with heart failure signs and symptoms
to adjust medications.
The applicant believed that a large majority of patients receiving
the sensor would be admitted as an inpatient to a hospital with a
diagnosis of acute or chronic heart failure, which is typically
described by ICD-9-CM diagnosis code 428.43 (Acute or chronic combine
systolic and diastolic heart failure) and the sensor would be implanted
during the inpatient stay. The applicant stated that for safety
considerations, a small portion of these patients may be discharged and
the sensor would be implanted at a future date in the hospital
outpatient setting. In addition, there would likely be a group of
patients diagnosed with chronic heart failure who are not currently
hospitalized, but who have been hospitalized in the past few months for
whom the treating physician believes that regular pulmonary artery
pressure readings are necessary to optimize patient management.
Depending on the patient's status, the applicant stated that these
patients may have the sensor implanted in the hospital inpatient or
outpatient setting.
The applicant anticipates FDA approval and commercial launch in the
second quarter of 2014. The CardioMEMSTM HF System is
currently described by ICD-9-CM procedure code 38.26 (Insertion of
implantable pressure sensor without lead for intracardiac or great
vessel hemodynamic monitoring). We are inviting public comments
regarding how the CardioMEMSTM HF System meets the newness
criterion.
With respect to cost criterion, the applicant submitted actual
claims from
[[Page 28046]]
the CHAMPION \16\ clinical trial. Of the 550 patients enrolled in the
trial, the applicant received 310 hospital bills. The applicant
excluded the following claims: Incomplete or missing procedure codes,
incomplete charge information and bills that were statistical outliers
(three standard deviations away from the geometric mean). This resulted
in a final cohort of 138 claims. The applicant noted that cases treated
with the CardioMEMSTM HF System would typically map to MS-
DRG 264 (Other Circulatory System Operating Room Procedures). Using the
138 clinical trial claims, the applicant standardized the charges and
added charges for the CardioMEMSTM HF System (because the
clinical trial claims did not contain charges for the
CardioMEMSTM HF System). This resulted in an average case-
weighted standardized charge per case of $79,218.
---------------------------------------------------------------------------
\16\ Abraham WT, Adamson PB, Bourge RC, Aaron MF, Costanzo MR,
Stevenson LW, Strickland W, Neelagaru S, Raval N, Krueger S, Weiner
S, Shavelle D, Jeffries B, Yadav JS; for the CHAMPION Trial Study
Group. Wireless pulmonary artery haemodynamic monitoring in chronic
heart failure: a randomised controlled trial, Lancet, February 19,
2011, Vol. 377(9766), pp:658-666.
---------------------------------------------------------------------------
Using the FY 2014 Table 10 thresholds, the threshold for MS-DRG 264
is $60,172. Because the average case-weighted standardized charge per
case exceeded the threshold amount, the applicant maintained that the
CardioMEMSTM HF System would meet the cost criterion. We are
inviting public comments on whether or not the CardioMEMSTM
HF System meets the cost criterion.
With regard to substantial clinical improvement, the applicant
asserted that elevated PA pressures occur prior to signs and symptoms
of heart failure and changes in PA pressures provide a sound
physiologic basis for its management. The applicant also contended
that, until the creation of the CardioMEMS wireless PA implant,
knowledge of PA pressure was only feasible in the hospital with the
performance of a right heart catheterization. According to the
applicant, the CardioMEMSTM HF System provides physicians
knowledge of PA pressure while the patient is at home, allowing
proactive management to prevent heart failure decompensation and
hospitalization.
The applicant cited clinical data from the CHAMPION trial. The
trial is a prospective, multicenter, randomized, single-blinded
clinical trial conducted in the United States, designed to evaluate the
safety and efficacy of the CardioMEMSTM HF System in
reducing heart failure-related hospitalizations in a subset of subjects
suffering from heart failure. The applicant shared several major
findings from the CHAMPION trial as described below.
The primary efficacy endpoint of the CHAMPION trial was the rate of
HF hospitalizations during the first 6 months of randomized access.
There were 84 heart failure hospitalizations in the treatment group
compared with 120 heart failure hospitalizations in the control group.
This difference between the groups represented a 28-percent reduction
in the rate of hospitalization for heart failure in the treatment group
(0.32 hospitalizations per patient in the treatment group versus 0.44
hospitalizations per patient in the control group, p = 0.0002).
Although not a primary end point, the rate of HF hospitalizations after
18 months was 33 percent lower in the treatment group than in the
control group.
According to the applicant, secondary endpoints of the CHAMPION
trial are changes in pulmonary artery pressures, proportion of subjects
hospitalized, days alive outside of the hospital, quality of life
(QOL), and heart failure management which demonstrated the following
results:
Pulmonary Artery Pressures: At baseline, both treatment
and control patients had similar PA mean pressures. The change in
pressure over the first 6 months was evaluated by integrating the area
under the pressure curve (AUC). At 6 months of follow-up, the treatment
group had a significantly greater reduction in AUC of -155.7 mmHg days
compared to the control group which had an increase in AUC of +33.1
mmHg-days; p = 0.0077.
Proportion of Subjects Hospitalized: During the 6-month
follow-up period, the proportion of subjects hospitalized for 1 or more
HF hospitalizations was significantly lower in the treatment group (55
out of 270 patients) than in the control group (80 out of 280 patients)
(20.4 percent versus 28.6 percent; p = 0.0292).
Days Alive Outside of the Hospital: At 6 months, treatment
patients had a nonsignificant and clinically not meaningful increase in
days alive outside of the hospital (174.4 versus 172.1; p = 0.0280) and
fewer average days in the hospital (2.2 versus 3.8; p = 0.0246)
compared to control patients.
Quality of Life: The heart failure specific quality of
life was assessed with the MLHFQ total score at 6 months. The average
total score in the treatment group was 45.2 26.4 which was
significantly better than the average total score in the control group
50.6 24.8 (p = 0.0236). The difference in total quality of
life was primarily due to the physical domain. The average physical
score for the treatment group (19.8 11.2) was
significantly better than the control group (22.4 10.9) (p
= 0.0096). There was also a significant difference in the emotional
domain with an average score of 9.5 8.1 for the treatment
group and 11.0 7.7 for the control group (p = 0.0398).
Heart Failure Management: Physicians responded to
treatment of patients' elevated PA pressures by making medication
changes to lower PA pressures and reduce the risk for HF
hospitalization. Physicians documented all medication changes for all
patients and indicated whether the change was made in response to PA
pressures or standard of care information. During the 6-month follow-up
period, physicians made approximately one additional HF medication
change per patient per month in the treatment group when compared to
the control group. Specifically, treatment patients had 1.55 medication
changes per month on average compared to control patients having 0.65
medication changes per month (p < 0.0001). The difference in HF
management between the treatment and control group was due to HF
medication changes made in response to PA pressures.
The study met the two primary safety endpoints: (1) Freedom from
device/system related complications (DSRC); and (2) freedom from sensor
failure. The protocol pre-specified objective performance criterion
(OPC) were that at least 80 percent of patients were to be free from
DSRC and at least 90 percent were to be free from pressure sensor
failure. Of the 575 patients in the safety population, 567 (98.6
percent) were free from DSRC at 6 months (lower confidence limit 97.3
percent, p < 0.0001). This lower limit of 97.3 percent is greater than
the pre-specified OPC of 80 percent. There were no sensor explants or
repeat implants and all sensors were operational at 6 months for a
freedom from sensor failure of 100 percent (lower confidence limit 99.3
percent, p < 0.0001). This lower limit of 99.3 percent is greater than
the pre-specified OPC of 90 percent.
The applicant also noted that the CardioMEMSTM HF System
reduces the occurrence of HF hospitalizations in NYHA Class III heart
failure patients. According to the applicant, the device had very few
device and system related complications occurring over the course of
the clinical trial. All primary and secondary study endpoints were
successfully achieved. In addition, the CHAMPION trial suggests the
safety and effectiveness of the device was
[[Page 28047]]
maintained during longer term follow-up.
After reviewing the information provided by the applicant, we have
the following concerns. The applicant did not discuss long-term
outcomes, specifically death. We believe additional long-term outcome
information and how the technology changes long-term outcomes would
further assist in our determination of whether the technology
represents a substantial clinical improvement. With regard to the
clinical trial, information from the randomized access period and the
open access period did not include the total number of deaths in each
group. While the data support a reduction in total hospitalizations,
the rate of hospitalization in each group (0.32 versus 0.44) does not
appear to be clinically meaningful. This is supported by total days
alive out of the hospital being virtually identical in both groups.
Finally, we are concerned about the cause of the significant dropouts
in the Kaplan Meier curves which further demonstrates lack of impact on
survival. We are inviting public comments on whether or not the
CardioMEMSTM HF Monitoring System technology represents a
substantial clinical improvement in the Medicare population.
We received public comments via email in response to the February
12, 2014 New Technology Town Hall meeting in regard to this technology.
We summarize these comments below.
Comment: Commenters supported the approval of new technology add-on
payments for the CardioMEMSTM HF System. One commenter
stated that it had personal experience with the CardioMEMSTM
HF System. The commenter explained that having access to a patient's
daily pressures provides trend data. The commenter further explained
that if there is a variation or increase in a patient's pressure, the
physician can contact the patient over the phone and conduct an
evaluation to look for increased symptoms or to learn if the patient
has skipped their diuretics. The device prompts the clinician to ask
questions such as what is different today than yesterday and if the
patient is feeling okay, especially if the patient has not taken a
pressure rate in a few days. Based on the answer to these questions or
if the clinician has concerns, the primary investigator or the
patient's primary cardiologist can assess the pressures and symptoms
and decide the next course of treatment for the patient. The commenter
believed that this structured and consistent monitoring has kept many
patients out of the hospital.
The commenter noted that the monitoring of pressures to assess
clinical status before the patient recognizes symptoms for chronic CHF
patients with significant left ventricular dysfunction can be very
useful. The commenter explained that these patients are accustomed to
being sick and tend to ignore the first symptoms and do not seek
treatment until they are unable to breathe. The commenter noted that
often a clinician can increase the patient's home medications before
pressures get too high.
The commenter also noted that, for patients who go to a CHF clinic
on a regular basis, typically patient information of pressure trends,
along with symptoms and laboratory results, can help determine if
medications should be given that day. The commenter stated that extra
information from the CardioMEMSTM HF System can change the
way physicians treat the patient and has, in many instances, at its
site. The commenter concluded the CardioMEMSTM HF System
provides a substantial clinical benefit versus current methods for
managing heart failure.
Another commenter stated that the implant procedure was very simple
and straightforward for patients, especially compared to having a
pacemaker or defibrillator implanted. The commenter further stated that
the device is compatible with defibrillators and cardiac
resynchronization therapy, which are present in many advanced heart
failure patients. The commenter added that the CardioMEMSTM
HF System is a wireless device and does not involve addition of another
intracardiac lead. Aside from regular pressure readings, the commenter
noted that it found unexpected intake issues for some patients who were
unknowingly consuming certain high-sodium foods. The commenter noted
that they were able to reduce sodium intake further to help reduce
pressures. The commenter also noted that it presented a case report of
increasing pressures in a patient in whom the primary investigator
adjusted diuretic therapy and later the patient's ACE-Inhibitor and
nitrates. The commenter stated that it successfully lowered pressures
and avoided a probable heart failure hospitalization. The commenter
added that the CardioMEMSTM HF System allows hospitals to
easily obtain pressures at home for transmission and the ability to
check pressures rather than perform right heart catheterization if a
patient was admitted to the hospital.
The commenter also stated that patients found transmission of their
data easy and were surprised how quickly the data was sent to the
clinic. The commenter added that it had patients that liked the
portability of the home electronic equipment, which allowed them to
take it with them on long weekends or vacations. The commenter added
that this information was advantageous as it further allowed clinicians
to implement changes in a timely manner.
The commenter noted the following trial results in its clinic,
which the commenter believed confirm the benefit of hemodynamic
monitoring: A 28-percent reduction in heart failure hospitalization at
6 months and a 15-percent reduction at 15 months. The commenter noted
that there were no sensor failures and 98.6 percent of patients
remained free from device or system complications. The commenter
further noted that it did not experience any complications in patients
who were implanted with the device. The commenter did explain that
inevitably, due to the nature of heart failure, several patients
eventually required advanced therapies with transplantation or
ventricular assist device support without any issue from the sensor.
The commenter also noted some additional key points such as: A
reduction in hospitalization for patients with preserved ejection
fraction; in addition to diuretic adjustment, the study found nitrates
were also adjusted, which further supports use of the device to
optimize vasodilator therapy for pulmonary hypertension and afterload
reduction in this patient population. The commenter concluded that, for
the reasons stated above, the CardioMEMSTM HF System
provides a substantial clinical benefit versus current methods for
managing heart failure.
One commenter stated that the CardioMEMSTM HF System
provides clinicians with daily remotely monitored pulmonary artery
pressure and has been proven clinically and dramatically to reduce
heart failure hospitalizations. The commenter cited the CHAMPION IDE
trial, which was a prospective, multicenter, single-blind, clinical
study that enrolled 550 patients randomized to treatment guided by the
CardioMEMSTM HF System verses optimal medical therapy. The
commenter stated that the trial met all of its primary safety and
efficacy endpoints; reducing heart failure hospitalizations by 28
percent 6 months after implant (p = 0.0002). The commenter further
stated that the reduction in heart failure hospitalizations increased
over time reaching 33 percent (p < 0.0001) at 17 months after implant.
In addition, the
[[Page 28048]]
commenter asserted that the system was shown to be extremely safe, with
almost 99 percent of patients free from device or system complications.
The commenter also stated that one criterion CMS uses to evaluate
substantial clinical improvement is that the device offers the ability
to diagnose a medical condition earlier in a patient population than
allowed by currently available methods. The commenter believed that
there is evidence that use of the CardioMEMSTM HF System to
make a diagnosis affects the management of the patient. The commenter
added that the CHAMPION trial demonstrated that therapy guided by
CardioMEMSTM HF System allows physicians to titrate
medications earlier and more effectively reduce heart failure
hospitalizations. The commenter noted that this information is not
available with any other device or treatment alternative.
The commenter further stated that another of CMS' criteria is that
use of the device significantly improves clinical outcomes for a
patient population as compared to currently available treatments, such
as a decreased number of future hospitalizations. The commenter stated
that evidence provided in the CHAMPION trial at 6 months showed a 28-
percent reduction in heart failure hospitalizations and even a larger
reduction of 33 percent during long-term follow-up at 17 months. Based
on the criteria outlined by CMS and the evidence supporting the
CardioMEMSTM HF System, the commenter believed that the
CardioMEMSTM HF System meets the criteria for substantial
clinical improvement.
Another commenter, the applicant, reiterated the statements set
forth above in the substantial clinical improvement discussion.
Response: We appreciate the commenters' support. We considered
these comments in our evaluation of the CardioMEMSTM HF
System for new technology add-on payments for FY 2015 and in the
development of this proposed rule. As stated above, we are inviting
additional public comments on whether or not the
CardioMEMSTM HF System represents a substantial clinical
improvement in the Medicare population.
e. MitraClip[supreg] System
Abbott Vascular submitted an application for new technology add-on
payments for the MitraClip[supreg] System for FY 2015. (We note that
the applicant submitted an application for new technology add-on
payments for FY 2014 but failed to receive FDA approval by the July 1
deadline.) The MitraClip[supreg] System is a transcatheter mitral valve
repair system that includes a MitraClip[supreg] device implant, a
Steerable Guide Catheter, and a Clip Delivery System. It is designed to
perform reconstruction of the insufficient mitral valve for high-risk
patients who are not candidates for conventional open mitral valve
repair surgery.
Mitral regurgitation (MR), also referred to as mitral insufficiency
or mitral incompetence, occurs when the mitral valve fails to close
completely causing the blood to leak or flow backwards (regurgitate)
into the left ventricle. If the amount of blood that leaks backwards
into the left ventricle is minimal, then intervention is usually not
necessary. However, if the amount of blood that is regurgitated becomes
significant, this can cause the left ventricle to work harder to meet
the body's need for oxygenated blood. Severity levels of MR can range
from grade 1+ through grade 4+. If left untreated, severe MR can lead
to heart failure and death. The American College of Cardiology (ACC)
and the American Heart Association (AHA) issued practice guidelines in
2006 that recommended intervention for moderate/severe or severe MR
(grade 3+ to 4+). The applicant stated that the MitraClip[supreg]
System is ``indicated for percutaneous reduction of significant mitral
regurgitation . . . in patients who have been determined to be at
prohibitive risk for mitral value surgery by a heart team, which
includes a cardiac surgeon experienced in mitral valve surgery and a
cardiologist experienced in mitral valve disease and in whom existing
comorbidities would not preclude the expected benefit from correction
of the mitral regurgitation.''
The MitraClip [supreg] System mitral valve repair procedure is
based on the double-orifice surgical repair technique that has been
used as a surgical technique in open chest, arrested-heart surgery for
the treatment of MR since the early 1990s. According to the applicant,
in utilizing ``the double-orifice technique, a portion of the anterior
leaflet is sutured to the corresponding portion of the posterior
leaflet using standard techniques and forceps and suture, creating a
point of permanent coaptation (``approximation'') of the two leaflets.
When the suture is placed in the middle of the valve, the valve will
have a functional double orifice during diastole.''
With regard to the newness criterion, the MitraClip[supreg] System
received a premarket approval from the FDA on October 24, 2013. The
MitraClip[supreg] System is indicated ``for the percutaneous reduction
of significant symptomatic mitral regurgitation (MR >= 3+) due to
primary abnormality of the mitral apparatus (degenerative MR) in
patients who have been determined to be at prohibitive risk for mitral
valve surgery by a heart team, which includes a cardiac surgeon
experienced in mitral valve surgery and a cardiologist experienced in
mitral valve disease, and in whom existing comorbidities would not
preclude the expected benefit from reduction of the mitral
regurgitation.'' The MitraClip[supreg] System became immediately
available on the U.S. market following FDA approval. The
MitraClip[supreg] System is a Class III device, and has an
investigational device exemption (IDE) for the EVEREST study
(Endovascular Valve Edge-to-Edge Repair Study)--IDE G030061, and for
the COAPT study (Cardiovascular Outcomes Assessment of the MitraClip
Percutaneous Therapy for Health Failure Patients with Functional Mitral
Regurgitation)--IDE G120024. Effective October 1, 2010, ICD-9-CM
procedure code 35.97 (Percutaneous mitral valve repair with implant)
was created to identify and describe the MitraClip[supreg] System
technology.
Abbott Vascular has also submitted an application for a National
Coverage Decision (NCD) for the MitraClip[supreg] System device. We
refer readers to the CMS Web site at: http://www.cms.gov/medicare-coverage-database/details/nca-tracking-sheet.aspx?NCAId=273&NcaName=Transcatheter+Mitral+Valve+(TMV)+Procedures
&TimeFrame=90&DocType=All&bc=AAAAIAAACAAAAA%3d%3d& for information
related to this ongoing NCD. The tracking sheet for this National
Coverage Analysis (NCA) indicates an expected NCA completion date of
August 16, 2014, which is after the FY 2015 IPPS/LTCH PPS final rule is
scheduled to be published. The processes for evaluation and
determination of an NCD, and the processes for evaluation and approval
of an application for new technology add-on payments are made
independent of each other. However, any payment made under the Medicare
program for services provided to a beneficiary would be contingent on
CMS' coverage of the item, and any restrictions on the coverage would
apply. We are inviting public comments on how the MitraClip[supreg]
System meets the newness criterion for purposes of new technology add-
on payments and the issues that may arise from concurrent NCD requests
and new technology add-on payment application review and approval
processes.
[[Page 28049]]
With regard to the cost criterion, the applicant conducted two
analyses. The applicant noted that, while ICD-9-CM procedure code 35.97
maps to MS-DRGs 246 (Percutaneous Cardiovascular Procedure with Drug-
Eluting Stent with Major Complication or Comorbidity (MCC) or 4+
Vessels/Stents), 247 (Percutaneous Cardiovascular Procedure with Drug-
Eluting Stent without MCC), 248 (Percutaneous Cardiovascular Procedure
with Non-Drug-Eluting Stent with MCC or 4+ Vessels/Stents), 249
(Percutaneous Cardiovascular Procedure with Non-Drug-Eluting Stent
without MCC), 250 (Percutaneous Cardiovascular Procedure without
Coronary Artery Stent or AMI with MCC), and 251 (Percutaneous
Cardiovascular Procedure without Coronary Artery Stent or AMI without
MCC), clinical experience with the MitraClip[supreg] System device has
demonstrated that it is extremely rare for a patient to receive stents
concurrently during procedures using the MitraClip[supreg] System
device. The applicant further cited the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53308) which stated, ``According to the Food and Drug
Administration's (FDA's) terms of the clinical trial for MitraClip\TM\,
the device is to be implanted in patients without any additional
surgeries performed. Therefore, based on these terms, we stated that
while the procedure code is assigned to MS-DRGs 246 through 251, the
most likely MS-DRG assignments would be MS-DRGs 250 and 251.'' As a
result, the applicant stated that it conducted its analyses solely for
MS-DRGs 250 and 251 to demonstrate that the cases involving the
MitraClip[supreg] System device meet the incremental cost thresholds
provided in Table 10 for those MS-DRGs.
The applicant researched the FY 2012 MedPAR file for claims for
cases reporting ICD-9-CM procedure code 35.97. Under the first analysis
and methodology, the applicant noted that this search yielded actual
claims for cases in which the MitraClip[supreg] System device was used
in procedures performed in an IDE study type setting, and hospitals
obtained the MitraClip[supreg] System device at a reduced
investigational price. The applicant further stated that it is likely
that hospitals did not report the charges for the investigational
device, or submitted claims for charges that were significantly less
than the actual device acquisition costs (we refer readers to the
explanation below). The applicant found 57 cases in MS-DRG 250 (29.38
percent of the total number of cases), and 137 cases in MS-DRG 251
(70.61 percent of the total number of cases), which resulted in an
average case-weighted standardized charge per case of $232,670.
The applicant standardized the charges using the FY 2014 IPPS final
rule impact file, and inflated the result using three different
inflation factors. We note that, since the applicant used FY 2012
MedPAR data, we believe it is appropriate to use comparable data for
standardization. Therefore, we believe use of the FY 2012 final rule
impact file is more appropriate rather than the FY 2014 final rule
impact file. The first analysis and methodology used an inflation
factor of 4.57 percent, which was based on data from the BLS' non-
seasonally adjusted CPI for all urban consumers between January 2011
and January 2013. This resulted in an average case-weighted
standardized charge per case of $94,517. The second methodology under
the first analysis used an inflation factor of 9.92 percent, which was
based on the 2-year charge inflation factor listed in the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50982). This resulted in an average case-
weighted standardized charge per case of $96,199. The third methodology
used under the first analysis used an inflation factor of 4.63 percent,
which was based on the Medicare Economic Index (MEI) from the IPPS
market basket update between the third quarter of 2012 projected
through the third quarter of 2014. This resulted in an average case-
weighted standardized charge per case of $91,570. The applicant noted
that all three methodologies used under the first analysis to determine
each respective average case-weighted standardized charge per case were
calculated without any adjustments to reflect the reduced
investigational price, or inadequate hospital claim reporting and
billing.
Using the FY 2014 IPPS Table 10 thresholds, the average case-
weighted threshold for MS-DRGs 250 and 251 is $71,467 (all calculations
above were performed using unrounded numbers). Because the average
case-weighted standardized charge per case for the applicable MS-DRGs
calculated under each methodology under the first analysis discussed
above exceeds the average case-weighted threshold amount, the applicant
maintained that the technology meets the cost criterion.
Under the second analysis, which used the same premise as the first
analysis, the applicant researched the FY 2012 MedPAR file for claims
for cases reporting procedure code 35.97 that mapped to MS-DRGs 250 and
251, except that the applicant excluded charges related to the
MitraClip[supreg] System by removing all charges from the claim that
would map to the implantable cost center on the cost report. The
applicant then standardized the charges, inflated the result using the
three inflation factors above, and added a fixed amount of commercial
charges based on post-FDA approval pricing. This resulted in an average
case weighted standardized charge per case of $139,536 under the first
inflation factor (4.57 percent), $142,364 under the second inflation
factor (9.2 percent), and $139,568 under the third inflation factor
(4.63 percent).
Using the FY 2014 IPPS Table 10 thresholds, the average case-
weighted threshold for MS-DRGs 250 and 251 is $71,467 (all calculations
above were performed using unrounded numbers). Because the average
case-weighted standardized charge per case for the applicable MS-DRGs
calculated under all three methodologies discussed above exceeds the
average case-weighted threshold amount, the applicant maintained that
the MitraClip[supreg] System meets the cost criterion.
We are inviting public comments on whether or not the
MitraClip[supreg] System meets the cost criterion. In addition, we are
inviting public comments on the methodologies used by the applicant in
its two analyses.
The applicant asserted that the MitraClip[supreg] System meets the
substantial clinical improvement criterion. Severe MR is associated
with significant morbidity and mortality rates, and is a progressive
condition. For symptomatic patients diagnosed with significant MR,
surgical repair or replacement is considered the gold standard--
offering improvements in symptoms and longer survival rates. However,
the applicant explained that studies have indicated that a significant
proportion of patients are not eligible for mitral valve repair and/or
replacement surgery because of risk factors, including reduced left
ventricular function, significant comorbidities, and advanced age. As a
result, the applicant stated that there is a significant unmet clinical
need for patients diagnosed with severe MR who are too high-risk for
surgery, who are receiving palliative medical management.
The applicant also stated that the MitraClip[supreg] System meets
the substantial clinical improvement criterion based on clinical
studies \17,18,19,20,21,22,23,24,25\
[[Page 28050]]
that have consistently shown that procedures performed using the
MitraClip [supreg] System device lead to a significant reduction of MR;
improvements in left ventricular (LV) function including LV volumes and
dimensions; improved patient outcomes as measured by improvements in
New York Heart Association (NYHA) functional class, improvement in
health-related quality of life measures, and reductions in heart-
failure related hospitalizations; and significantly lower mortality
rates than predicted surgical mortality rates.
---------------------------------------------------------------------------
\17\ Feldman, et al., ``Percutaneous Repair or Surgery for
Mitral Regurgitation,'' New England Journal of Medicine, 2011, Vol.
364, pp. 1395-1406.
\18\ Foster, et al., ``Percutaneous Mitral Valve Repair in the
Initial EVEREST Cohort: Evidence of Reverse Left Ventricular
Remodeling,'' Circulation in Cardivascular Imaging, July 2013, Vol.
6(4), pp. 522-530.
\19\ Grayburn, et al., ``The Relationship between the Magnitude
of Reduction in Mitral Regurgitation Severity and Left Ventricular
and Left Atrial Reverse Remodeling after MitraClip Therapy,''
Circulation in Cardiovascular Imaging, September 2013, epub,
September 6, 2013.
\20\ Lim, et al., ``Improved Functional Status and Quality of
Life in Prohibitive Surgical Risk Patients With Degenerative Mitral
Regurgitation Following Transcatheter Mitral Valve Repair With the
MitraClip[supreg] System,'' Journal of American College of
Cardiology, 2013, In Press, Accepted Manuscript, Available online,
October 31, 2013.
\21\ Maisano, F., et al., ``Percutaneous Mitral Valve
Interventions in the Real World: Early and One Year Results From the
ACCESS-EU, a Prospective, Multicenter, Non-Randomized Post-Approval
Study of the MitraClip Therapy in Europ,'' Journal of American
College of Cardiology, 2013, doi: 10.1016/j.jacc.2013.02.094.
\22\ Mauri, et al., ``4-Year Results of a Randomized Controlled
Trial of Percutaneous Repair Versus Surgery for Mitral
Regurgitation,'' Journal of American College of Cardiology, Volume
62, Issue 4, 2013, pp. 317-328.
\23\ Munkholm, et al., ``Asystemic Review on the Safety and
Efficacy of Percutaneousedge-to-edge Mitral Valve Repair with the
MitraClip System for high surgical risk candidates,'' Heart, June
27, 2013.
\24\ Reichenspurner, H., et al., ``Clinical Outcomes Through 12
Months in Patients With Degenerative Mitral Regurgitation Treated
With the MitraClip Device in the ACCESS-EUrope Phase I Trial,''
European Journal of Cardiology-and Thoracic Surgy, 2013, Vol. 15,
pp. 919-927.
\25\ Whitlow, et al,. ``Acute and 12-Month Results With
Catheter-Based Mitral Valve Leaflet Repair: The EVEREST II
(Endovascular Valve Edge-to-Edge Repair) High Risk Study,'' Journal
of American College of Cardiology, 2012, Vol. 59, pp. 130-139.
---------------------------------------------------------------------------
The applicant cited clinical data from the EVEREST II High-Risk
Study and the EVEREST II (REALISM) Continued Access Study/Registry. The
applicant also cited clinical data from a high-risk cohort of patients
(the EVEREST II High-Risk Cohort), which is an integrated analysis of
the following: (1) Patients within the EVEREST II High-Risk Study who
met eligibility criteria for being too high-risk to undergo mitral
valve repair surgery; and (2) patients within the EVEREST II (REALISM)
Continued Access Study/Registry who were too high-risk for surgery
using identical eligibility inclusion criteria. The applicant also
cited data from the Prohibitive Risk Degenerative Mitral Regurgitation
(DMR) Cohort, which is an analysis of retrospectively evaluated high-
risk patients diagnosed with DMR enrolled in the EVEREST II studies
that had 1-year follow-up available.
In addition to the published clinical experience from the EVEREST
studies, the applicant cited data on the use of the MitraClip[supreg]
System device in a ``real-world'' setting published recently by a
select number of European centers as part of their individual and/or
multi-center commercial experience or enrollment in the
MitraClip[supreg] System device group of the ACCESS-EU post-approval
clinical trial in Europe. The European use of the MitraClip[supreg]
System device is focused on patients who are too high-risk for surgery,
and patients who are selected for therapy using a multi-disciplinary
``heart team'' approach.
The applicant stated that published reports on the
MitraClip[supreg] System device and the procedures in which the device
was used have consistently demonstrated a significant reduction in MR
incidents that have been durable out to 1, 2, 3, and 4 years. The
applicant cited the EVEREST II High-Risk Study (an analysis of 78
patients diagnosed with degenerative or functional MR enrolled in the
trial), which stated that ``objective measures of MR grade improved in
the MitraClipTM group, including MR grade of <=2+ in 78
percent of surviving patients at 1 year. These patients also
experienced clinically significant improvements in left ventricular
volume measurements. The clinical significance of these improvements is
reflected in the NYHA class improvements. At baseline, 89 percent of
patients were NYHA III/IV, improving to Class I/II in 74 percent of
surviving patients at 12 months. Quality of life scores also improved
significantly. Finally, the number of admissions for heart failure was
significantly reduced compared to the year prior to
MitraClipTM therapy.''
The applicant cited clinical outcomes from the Prohibitive Risk DMR
cohort. These results are the basis of the FDA premarket approval.
Major effectiveness endpoints evaluated at 12 months demonstrated
clinically important improvements in MR severity, with MR severity
grades of 3+/4+ decreasing from 90.4 percent at baseline to 16.7
percent at 1 year; NYHA Class III/IV decreasing from 86.6 percent at
baseline to 13.1 percent at 1 year; and the SF-36 Physical/Mental scale
measuring 33.4/46.6 at baseline increasing to 39.4/52.2 at 1 year.
The applicant stated in its new technology add-on payment
application that, ``Heart failure hospitalizations were reduced by 73
percent in the 12 months post MitraClipTM procedure from the
12 month pre-MitraClipTM procedure . . .,'' and ``the
primary safety analysis indicated low procedural (30-day) mortality
(6.3 percent) after MitraClipTM in comparison with the STS
predicted surgical mortality risk score for these patients (13.2
percent).''
The applicant discussed published results \26\ ``assessing the
relationship between the magnitude of reduction in MR and left
ventricular (LV) and left atrial (LA) remodeling after the
MitraClipTM therapy.'' In this study of patients diagnosed
with significant (grade 3+ or 4+) DMR or functional MR (FMR), the
authors found that, ``even reduction of MR severity to moderate (2+) is
associated with LV and LA reverse remodeling. In both DMR and FMR,
reduction in left ventricular end-diastolic volume (LVEDV) and LA
volumes were improved proportionally to the degree of MR reduction at
one year.''
---------------------------------------------------------------------------
\26\ Grayburn, et al., ``The Relationship between the Magnitude
of Reduction in Mitral Regurgitation Severity and Left Ventricular
and Left Atrial Reverse Remodeling after MitraClip Therapy,''
Circulation in Cardiovascular Imaging, September 2013, epub,
September 6, 2013.
---------------------------------------------------------------------------
In conclusion, the applicant cited data from the ACCESS-EU study,
which noted improvement in disease-specific quality of life measures,
including the Minnesota Living with Heart Failure Questionnaire and
Six-Minute Walk Test. The applicant also provided data supporting the
overall safety and effectiveness of the MitraClip[supreg] System device
in European ``real-world'' outcome studies.
As noted in the FY 2014 IPPS/LTCH PPS proposed rule (78 FR 27547
through 27552), we are concerned that the applicant revised its initial
FDA request for the use of the MitraClip[supreg] System device in all
patients diagnosed with significant MR, after learning that the FDA
expressed concern that the initial study, EVEREST II, demonstrated
that, while the MitraClip[supreg] System device had clinically
meaningful improvements in LV volume and QOL, the surgical option had
better outcomes than the MitraClip[supreg] System device in surgical
candidates. The FDA then required a second trial focused on high
surgical risk patients. We note that the data evaluated by the FDA and
presented by the applicant in its application for new technology add-on
payments included information from the following:
[ssquf] EVEREST I feasibility trial; enrollment 2003-2006; 55
patients.
[ssquf] EVEREST II RCT; enrollment 2005-2008; 279 patients.
[[Page 28051]]
[ssquf] EVEREST II High-Risk Study; enrollment 2007-2008; 78
patients. (A comparator group of 36 patients was identified from
patients who were screened for the study, but did not meet the mitral
valve anatomic criteria for placement of the device.)
[ssquf] EVEREST (REALISM) Continued Access Study and compassionate
use; enrollment 2009-2013; 49 patients.
The applicant provided comparisons of various outcomes prior to the
procedure using the MitraClip[supreg] System device and outcomes 12
months later. MR severity, LV end diastolic volume, NYHA Class, SF36
Physical/Mental scale, and heart failure hospitalization rates all had
clinically meaningful improvements. For the EVEREST II HRS, the
applicant provided analysis demonstrating a significant survival
benefit (76 percent versus 55 percent/p <0.047) over the comparator
group.
In our review of the clinical trials' data, we have the following
key points of concern:
Post-hoc analyses of pooled data sets retain all of the
individual shortcomings of the individual data sets;
Pooling does not enhance the utility and scientific value
of uncontrolled single-arm registries with no comparators; and
Inappropriate pooling introduces additional confounders.
It is also unclear if the appropriate target population for the
MitraClip[supreg] System device has been identified because the
clinical trials conducted by the applicant included patients diagnosed
with both DMR and FMR. This makes it difficult to determine which group
of patients may benefit more, or less, from the new technology. For
example, in a subgroup analysis of the EVEREST II RCT, the authors
concluded that, older patients and those patients diagnosed with FMR or
abnormal left ventricular function had results more comparable to
surgical repair. Data results from 2 years of the EVEREST II RCT also
demonstrated that surgery reduced incidents of MR more than the
procedures performed using the percutaneous MitraClip[supreg] System
device. However, both the surgical patients and the patients who were
treated using the MitraClip[supreg] System device showed comparable
results for improved left ventricular function, NYHA functional class,
and quality of life.
We are inviting public comments on whether this technology meets
the substantial clinical improvement criterion, particularly in
comparison to other surgical therapies, such as mitral valve repair or
replacement, and the appropriate target population for this technology.
We did not receive any public comments in response to the New
Technology Town Hall meeting held on February 12, 2014 in regard to
this technology.
f. Responsive Neurostimulator (RNS[supreg]) System
NeuroPace, Inc. submitted an application for new technology add-on
payments for FY 2015 for the use of the RNS[supreg] System. (We note
that the applicant submitted an application for new technology add-on
payments for FY 2014, but failed to receive FDA approval prior to the
July 1 deadline.) Seizures occur when brain function is disrupted by
abnormal electrical activity. Epilepsy is a brain disorder
characterized by recurrent, unprovoked seizures. According to the
applicant, the RNS[supreg] System is the first implantable medical
device (developed by NeuroPace, Inc.) for treating persons diagnosed
with epilepsy whose partial onset seizures have not been adequately
controlled with antiepileptic medications. The applicant further stated
that, the RNS[supreg] System is the first closed-loop, responsive
system to treat partial onset seizures. Responsive electrical
stimulation is delivered directly to the seizure focus in the brain
when abnormal brain activity is detected. A cranially implanted
programmable neurostimulator senses and records brain activity through
one or two electrode-containing leads that are placed at the patient's
seizure focus/foci. The neurostimulator detects electrographic patterns
previously identified by the physician as abnormal, and then provides
brief pulses of electrical stimulation through the leads to interrupt
those patterns. Stimulation is delivered only when abnormal
electrocorticographic activity is detected. The typical patient is
treated with a total of 5 minutes of stimulation a day. The RNS[supreg]
System incorporates remote monitoring, which allows patients to share
information with their physicians remotely.
With respect to the newness criterion, the applicant stated that
some patients diagnosed with partial onset seizures that cannot be
controlled with antiepileptic medications may be candidates for the
vagus nerve stimulator (VNS) or for surgical removal of the seizure
focus. According to the applicant, these treatments are not appropriate
for, or helpful to, all patients. Therefore, the applicant believed
that there is an unmet clinical need for additional therapies for
partial onset seizures. The applicant further stated that the
RNS[supreg] System addresses this unmet clinical need by providing a
novel treatment option for treating persons diagnosed with medically
intractable partial onset seizures. The applicant received FDA
premarket approval in November 2013. The following ICD-9-CM procedure
codes are used to identify this technology: 01.20 (Cranial implantation
or replacement of neurostimulator pulse generator); 01.29 (Removal of
cranial neurostimulator pulse generator); and 02.93 (Implantation or
replacement of intracranial neurostimulator lead(s)). We are inviting
public comments on whether the technology meets the newness criterion.
With regard to the cost criterion, the applicant stated that
substantially all cases eligible for the RNS[supreg] System would map
to MS-DRG 024 (Craniotomy with Major Device Implant/Acute Complex
Central Nervous System Principal Diagnosis without MCC). The applicant
further stated that, while it is possible for some cases to occur in
MS-DRG 023 (Craniotomy with Major Device Implant/Acute Complex Central
Nervous System Principal Diagnosis with MCC or Chemotherapy Implant),
it would be extremely rare because the applicant believed that these
major complications and/or comorbidities would probably preclude a
patient from receiving treatment using the RNS[supreg] System because
the technology is an elective procedure.
The applicant submitted two analyses to demonstrate that the
technology meets the cost criterion. For the first analysis, the
applicant used clinical trial claims data collected in the RNS[supreg]
System Pivotal Clinical Investigation to calculate the anticipated
average case-weighted standardized charge per case. The applicant
maintained that this analysis best represents the anticipated charges
for the technology because it is based on actual cases treated using
this technology. The applicant analyzed 163 claims from 28 hospitals
participating in the clinical trial. Five claims from one hospital were
excluded because no hospital-specific information regarding
standardization was available. The resulting 158 claims included dates
of service ranging from May 2006 through May 2009. The average case-
weighted standardized charge per case for these 158 claims was $54,691.
The applicant then standardized the charges for each claim. The
applicant noted that it was not necessary to remove any charges from
these claims because the technology was provided at no charge in the
trial. After standardizing the charges for each
[[Page 28052]]
claim, the applicant inflated the charges reported on each claim using
the BLS' CPI-IP data covering the same period. Specifically, because
the publicly available FY 2012 MedPAR data do not identify the month of
the discharge on inpatient claims, but do identify the calendar
quarter, the applicant used a mid-month convention to determine the
relevant monthly CPI-IP for each calendar quarter. The applicant then
calculated the percentage change from the relevant quarter to the
quarter of the most recently available CPI-IP, which was the August
2013 CPI-IP. Specifically, the applicant used the following
assumptions:
----------------------------------------------------------------------------------------------------------------
Percent change
FY 2012 calendar quarter Midpoint of quarter CPI IP to August 2013
----------------------------------------------------------------------------------------------------------------
Q4 2011....................................... Nov-11.......................... 242.672 7.93
Q1 2012....................................... Feb-11.......................... 245.721 6.59
Q2 2012....................................... May-11.......................... 247.646 5.76
Q3 2012....................................... Aug-11.......................... 248.856 5.25
Most recent as of application................. Aug-13.......................... 261.915 ..............
----------------------------------------------------------------------------------------------------------------
Source as cited by applicant: Bureau of Labor Statistics' Web site, accessed October 13, 2013; Base Period:
December 1996 = 100.
After inflating the charges, the applicant estimated charges for
the RNS[supreg] System by multiplying the device cost to the hospital
by an anticipated hospital markup of 100 percent, or conversely by
dividing the device cost by a CCR of 0.50. The applicant based its
estimated CCR on four analyses. First, the applicant reviewed the 2007
and 2008 reports prepared by RTI for CMS on charge compression, which
found that the national aggregate CCR for devices and implants was 0.43
and 0.467, as presented in the respective reports. Second, the
applicant queried hospitals participating in the RNS[supreg] System
Pivotal trial, and these queries yielded a mean and median CCR for
implantable devices of 0.37 and 0.36, respectively. Third, the
applicant reviewed data from the (All Payor) Premier database for cases
performed during 2000 through 2010 that reported ICD-9 CM procedure
codes 02.93 and/or 86.95 on a claim, and calculated a mean and median
CCR for implanted leads and neurostimulators of 0.50 and 0.44,
respectively. The applicant then reviewed other discussions of past new
technology add-on payment applications published in the Federal
Register, and noted that other applicants used lower CCRs (higher
markups) for implanted devices than the CCR of 0.50 used in the
applicant's analyses.
Using this approach, the applicant added the anticipated hospital
charge for the implantable RNS[supreg] System to the average case-
weighted standardized charge per case, and determined a final average
case-weighted standardized charge per case of $128,723. The anticipated
hospital charge for the implantable RNS[supreg] System is $73,900.
Using the FY 2014 IPPS Table 10 thresholds, the threshold for MS-DRG
024 is $91,197. Because the final average case-weighted standardized
charge per case of $128,723 for MS-DRG 024 exceeds the average case-
weighted threshold amount, the applicant maintained that the
RNS[supreg] System meets the cost criterion.
In the second analysis, which the applicant characterizes as
supplementary, the applicant researched the FY 2012 MedPAR file for
cases reporting the following combinations of ICD-9-CM procedures
codes: 02.93 and 86.95, or procedures codes 02.93 and 01.20 that mapped
to MS-DRG 024. The applicant found 383 claims for cases reporting the
combination of ICD-9-CM procedures codes 02.93 and 01.20, and pointed
out that these cases were coded with procedure code 01.20 in error
because no new RNS[supreg] System implantations occurred after May
2009. The applicant analyzed these 383 claims, and found that more than
90 percent of these cases had a primary or secondary diagnosis of
Parkinson's disease, essential tremor, or dystonia. These diagnoses are
FDA-approved indications for deep brain stimulation (DBS). In addition,
the applicant noted that the total covered charges for these cases were
less than the estimated charges for a full DBS system, and hypothesized
that these cases did not represent implantation of a full DBS system,
but did represent the implantation of leads only. The applicant
contacted two hospitals that reported claims for cases where total
covered charges were less than the charges for a full DBS system, and
the hospitals confirmed that their claims represented lead
implantations only. Therefore, for the second analysis, the applicant
included all of the cases assigned to MS-DRG 024 reporting a
combination of ICD-9-CM procedures codes 02.93 and 86.95, and all of
the cases assigned to MS-DRG 024 reporting a combination of ICD-9-CM
procedures codes 02.93 and 01.20 where the covered charges were greater
than, or equal to, the estimated charges of a full DBS system. The
applicant maintained that 374 claims from 106 providers met this
criterion, and data represented claims from the fourth calendar quarter
of 2011 through the third calendar quarter of 2012. Based on this
assumption, the applicant calculated an average case-weighted
standardized charge per case of $65,555.
The applicant then removed DBS charges from the average case-
weighted standardized charge per case. The applicant estimated charges
for a full DBS system, and maintained that the average cost for a full
DBS system is $25,979. Similar to its first analysis, the applicant
assumed a CCR of 0.50, or 100 percent markup, which resulted in
estimated charges for a full DBS system of $51,958. After removing the
DBS system charges, the applicant inflated the charges to the current
period using the same methodology in the first analysis, added charges
for the RNS[supreg] System, and determined a final average case-
weighted standardized charge per case of $130,233. As noted above, the
anticipated hospital charge for the implantable RNS[supreg] System is
$73,900. Using the FY 2014 IPPS Table 10 thresholds, the average case-
weighted threshold for MS-DRG 024 is $91,197. Because the final average
standardized charge per case of $130,233 for MS-DRG 024 exceeds the
threshold amount, the applicant maintained that the RNS[supreg] System
meets the cost criterion.
Under either analysis, the applicant maintained that the final
average case-weighted standardized charge per case would exceed the
average case-weighted threshold. We are inviting public comments on
whether the RNS[supreg] System meets the cost criterion, particularly
based on the assumptions and methodology used in the applicant's
analyses.
With regard to substantial clinical improvement, as previously
stated, some patients diagnosed with partial
[[Page 28053]]
onset seizures may not be able to control their seizures with
antiepileptic medications, VNS, or with surgical removal of the seizure
focus. The applicant stated that the RNS[supreg] System provides
treatment for those patients diagnosed with partial onset seizures who
fail treatment with antiepileptic medications, or VNS therapy, and who
are ineligible for resective surgery because of the extent and/or
location of the seizure focus, or patients who do not elect surgery.
According to the applicant, the RNS[supreg] System clinical trials
provide Class I evidence that treatment using the RNS[supreg] System
substantially reduces disabling seizures in patients diagnosed with
severe epilepsy, who have tried and failed treatment with antiepileptic
medications, and in many cases, VNS or epilepsy surgery. The applicant
maintained that the results from their clinical trials demonstrate
significant and sustained improvements in health outcomes over the
controlled period and over the long term. The applicant conducted a
feasibility trial, which was designed to demonstrate adequate safety of
its treatment, and provide evidence of effectiveness to support
commencement of a randomized double-blinded pivotal trail. In addition,
the applicant has an ongoing long-term treatment clinical investigation
trial (LTT trial) to assess the long-term safety and effectiveness of
the treatment on patients who have completed either the Feasibility
trial, or the RNS[supreg] System Pivotal trial for an additional seven
years. The LTT trial started in April 2006, and the final patient is
expected to complete the trial in 2018. The applicant noted that
patients enrolled in the LTT trial continued to experience a reduction
in seizures over several years of follow-up, further demonstrating the
positive effect of responsive stimulation from the RNS[supreg] System
is durable.
The applicant stated that their pivotal trial met its primary
effectiveness endpoint by proving that there was a statistically
significant greater reduction in seizures in the treatment group&fnl;
compared to the control group (p = 0.012). Significant improvements at
1 and 2 years post-implant included:
A significant reduction in disabling seizures of 44
percent and 53 percent at 1 and 2 years, respectively;
Fifty-five percent of patients who reached 2 years post-
implant experienced a 50 percent or greater reduction in seizures; and
Significant improvements in overall quality of life, as
well as individual quality of life measures including memory, language,
attention, concentration and medication effects.
The applicant asserted that there was no negative effect of
treatment using the RNS[supreg] System on neuropsychological function
(including verbal functioning, visual spatial processing, and memory)
or mood. The applicant concluded that the RNS[supreg] System Pivotal
trial provides Class I evidence that responsive cortical stimulation is
effective in significantly reducing seizure frequency in adults with
one or two seizure foci who have failed two or more antiepileptic
medication trials. The applicant stated that experience across all of
the RNS[supreg] System trials demonstrates the reduction in seizure
frequency of disabling partial onset seizures improves over time. In
addition, the applicant noted that sustained improvements were also
seen in quality of life. Finally, the applicant noted that safety and
tolerability measures compare favorably to alternative treatments, such
as antiepileptic medications, VNS, and epilepsy surgery.
With regard to the substantial clinical improvement criterion, we
are concerned that the average age of the patients enrolled in the
applicant's trials was 35 years. Although the applicant maintained that
31 percent of the patients enrolled in the pivotal trial were Medicare
beneficiaries, we are unsure of the extent to which this technology
would be used by Medicare beneficiaries because of the relatively young
age of the majority of the patients enrolled in the pivotal trial. We
also are concerned that further clarification on how the RNS[supreg]
System compares to other neurostimulation treatments was not provided
by the applicant.
Because the applicant included claims with DBS charges in one of
its cost analyses, we believe that the similarities and differences
between DBS and the RNS[supreg] System may also be relevant under the
substantial clinical improvement criterion. In addition, we are
concerned that the time period in the clinical trial may not be
sufficient to confirm durability. In the RNS[supreg] System Pivotal
Clinical Investigation, the primary effectiveness endpoint considered
seizure frequency over the last 3 months of the blinded period of the
trial. We note that the applicant is currently conducting a 5-year
study. We are inviting public comments on whether the RNS[supreg]
System meets the substantial clinical improvement criterion,
particularly in regard to the degree in which the technology would be
used by Medicare beneficiaries, the comparison to other
neurostimulation treatments, and its durability.
We received public comments in response to the New Technology Town
Hall meeting held on February 12, 2014, regarding this technology and
the application for new technology add-on payments. We summarize these
comments below.
Comment: One commenter, a physician, stated that even with the
release of multiple new antiepileptic medications in the past 20 years,
over one-third of people diagnosed with epilepsy cannot obtain adequate
seizure control. The commenter noted that seizures lead to loss of
employment and driving licenses and are socially disabling. The
commenter further noted that uncontrolled seizures can cause physical
injury and even significantly increased risk of death. The commenter
stated that only a fraction of these patients are candidates for
potentially curative resective brain surgery and antiepileptic
medications can have disabling or severe adverse effects, such as
lethargy, ataxia, organ or blood cell damage, Stevens-Johnson syndrome,
and psychiatric changes including suicidal ideation. For this reason,
the commenter believed that new treatments are still needed.
The commenter asserted that the RNS[supreg] System represents a
much needed new therapy for patients who are desperate to get seizures
under control and lead a productive life. The commenter stated that of
its patients that participated in the clinical trials, these patients
have demonstrated significant and sustained benefits from treatment
with the RNS[supreg] System. The commenter noted that two patients had
a significant reduction in the amount of seizures per month, and are
now able to obtain driver licenses and both show improved quality of
life.
The commenter also noted that the RNS[supreg] System is a unique
therapy for the following reasons: (1) While medications are chemicals
that circulate to every organ, the RNS[supreg] System delivers therapy
directly to the epileptic focus; (2) RNS[supreg] therapy is delivered
automatically, avoiding compliance problems that occur with
medications; and (3) the RNS[supreg] System constantly records data on
seizure occurrences that is available to the clinician at any time
which can track a patient's progress without depending on the patient's
memory or willingness to report seizures. The commenter asserted that
no other therapy offers this capability.
The commenter urged CMS to approve the new technology add-on
payment application for the RNS[supreg] System, which the commenter
believed would help ensure access to this novel therapy for Medicare
beneficiaries for whom there are otherwise no good treatment options
available.
[[Page 28054]]
Another commenter, also a physician, stated that some of the
benefits of the RNS[supreg] System therapy include a significant
reduction in the seizure frequency and severity, and for some patients,
extended periods of seizure freedom. The commenter explained that this
reduction in the seizure frequency improves over time, is sustained
over several years of follow-up, and can result in improved cognition
and a better quality of life. The commenter further stated that some
patients have been able to live independently for the first time in
their life, take care of children, resume driving, go back to school
and/or obtain employment. The commenter concluded the following
comparisons between the RNS[supreg] System and the vagus nerve
stimulator (VNS):
In clinical trials, the RNS[supreg] System subjects
experienced a greater reduction in seizures than VNS subjects. The
median percent reduction in seizures was: 1 year: RNS--44 percent and
VNS--31 percent; 2 years: RNS--53 percent and VNS--41 percent.
VNS therapy results in stimulation-related side effects,
including coughing, difficulties with speech and throat pain.
RNS[supreg] therapy does not result in chronic side effects.
About one-third of patients in RNS[supreg] System pivotal
trial had previously failed therapy with a VNS. These subjects achieved
the same positive improvements in health outcomes from the RNS[supreg]
System as patients that had not previously tried a VNS.
In the commenter's experience, not only is the frequency
of the seizure activity improved but also the severity of the seizures
can improve with the RNS[supreg] System.
The commenter further noted the ``positive long-term results of RNS
therapy.'' The commenter stated that therapy is being evaluated in the
ongoing LTT trial, in which patients are enrolled for an additional 7
years after completing the initial 2-year clinical trial with some
patients having the implant for over 9 years. The commenter asserted
that the long-term data clearly show that the therapy is durable.
Specifically, the commenter noted that seizure reductions are
maintained at 50 percent or greater through 7 years (that is, the
median percent reduction in seizures is about 60 percent at 7 years).
The commenter added that the vast majority of its patients have elected
to continue treatment with the device given their response to the
RNS[supreg] therapy. The commenter encouraged CMS to approve new
technology add-on payments for the RNS[supreg] System.
Response: We appreciate the commenters' support. We considered
these comments in our evaluation of the RNS[supreg] System new
technology add-on payment application for FY 2015 and in the
development of this proposed rule. As stated above, we are inviting
additional public comments on whether the RNS[supreg] System meets the
substantial clinical improvement criterion, particularly in regard to
the degree in which the technology would be used by Medicare
beneficiaries, the comparison to other neurostimulation treatments, and
its durability.
III. Proposed Changes to the Hospital Wage Index for Acute Care
Hospitals
A. Background
Section 1886(d)(3)(E) of the Act requires that, as part of the
methodology for determining prospective payments to hospitals, the
Secretary adjust the standardized amounts ``for area differences in
hospital wage levels by a factor (established by the Secretary)
reflecting the relative hospital wage level in the geographic area of
the hospital compared to the national average hospital wage level.'' We
currently define hospital labor market areas based on the delineations
of statistical areas established by the Office of Management and Budget
(OMB). A discussion of the proposed FY 2015 hospital wage index based
on the statistical areas appears under section III.B. of the preamble
of this proposed rule.
Section 1886(d)(3)(E) of the Act requires the Secretary to update
the wage index annually and to base the update on a survey of wages and
wage-related costs of short-term, acute care hospitals. This provision
also requires that any updates or adjustments to the wage index be made
in a manner that ensures that aggregate payments to hospitals are not
affected by the change in the wage index. The proposed adjustment for
FY 2015 is discussed in section II.B. of the Addendum to this proposed
rule.
As discussed in section III.H. of the preamble of this proposed
rule, we also take into account the geographic reclassification of
hospitals in accordance with sections 1886(d)(8)(B) and 1886(d)(10) of
the Act when calculating IPPS payment amounts. Under section
1886(d)(8)(D) of the Act, the Secretary is required to adjust the
standardized amounts so as to ensure that aggregate payments under the
IPPS after implementation of the provisions of sections 1886(d)(8)(B),
1886(d)(8)(C), and 1886(d)(10) of the Act are equal to the aggregate
prospective payments that would have been made absent these provisions.
The proposed budget neutrality adjustment for FY 2015 is discussed in
section II.A.4.b. of the Addendum to this proposed rule.
Section 1886(d)(3)(E) of the Act also provides for the collection
of data every 3 years on the occupational mix of employees for short-
term, acute care hospitals participating in the Medicare program, in
order to construct an occupational mix adjustment to the wage index. A
discussion of the occupational mix adjustment that we are proposing to
apply to the FY 2015 wage index appears under section III.F. of the
preamble of this proposed rule.
B. Proposed Core-Based Statistical Areas for the Hospital Wage Index
1. Background
The wage index is calculated and assigned to hospitals on the basis
of the labor market area in which the hospital is located. Under
section 1886(d)(3)(E) of the Act, beginning with FY 2005, we delineate
hospital labor market areas based on the Core-Based Statistical Areas
(CBSAs) established by the Office of Management and Budget (OMB). The
current statistical areas used in FY 2014 are based on OMB standards
published on December 27, 2000 (65 FR 82228) and Census 2000 data and
Census Bureau population estimates for 2007 and 2008 (OMB Bulletin No.
10-02). For a discussion of OMB's delineations of CBSAs and our
implementation of the CBSA definitions, we refer readers to the
preamble of the FY 2005 IPPS final rule (69 FR 49026 through 49032). We
also discussed in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51582)
and the FY 2013 IPPS/LTCH PPS final rule (77 FR 53365) that, in 2013,
OMB planned to announce new labor market area delineations based on new
standards adopted in 2010 (75 FR 37246) and the 2010 Census of
Population and Housing data. As stated in the FY 2014 IPPS/LTCH PPS
proposed rule (78 FR 27552) and final rule (78 FR 50586), on February
28, 2013, OMB issued OMB Bulletin No. 13-01, which established revised
delineations for Metropolitan Statistical Areas, Micropolitan
Statistical Areas, and Combined Statistical Areas, and provided
guidance on the use of the delineations of these statistical areas. A
copy of this bulletin may be obtained at http://www.whitehouse.gov/sites/default/files/omb/bulletins/2013/b-13-01.pdf. According to OMB,
``[t]his bulletin provides the delineations of all Metropolitan
Statistical Areas, Metropolitan Divisions, Micropolitan Statistical
Areas, Combined Statistical
[[Page 28055]]
Areas, and New England City and Town Areas in the United States and
Puerto Rico based on the standards published on June 28, 2010, in the
Federal Register (75 FR 37246-37252) and Census Bureau data.'' In this
FY 2015 IPPS/LTCH PPS proposed rule, when referencing the new OMB
geographic boundaries of statistical areas, we are using the term
``delineations'' rather than the term '' definitions'' that we have
used in the past, consistent with OMB's use of the terms (75 FR 37249).
In order to implement these changes for the IPPS, it is necessary
to identify the new labor market area delineation for each county and
hospital in the country. While the revisions OMB published on February
28, 2013 are not as sweeping as the changes OMB announced in 2003, the
February 28, 2013 bulletin does contain a number of significant
changes. For example, under the new OMB delineations, there would be
new CBSAs, urban counties that would become rural, rural counties that
would become urban, and existing CBSAs would be split apart. In
addition, the effect of the new OMB delineations on various hospital
reclassifications, the out-migration adjustment (established by section
505 of Pub. L. 108-173), and treatment of hospitals located in certain
rural counties (that is, ``Lugar'' hospitals) provided for under
section 1886(d)(8)(B) of the Act must be considered. These are just a
few of the many issues that need to be reviewed regarding the effects
of the new OMB labor market area delineations prior to proposing and
establishing policies.
However, because the bulletin was not issued until February 28,
2013, with supporting data not available until later, and because the
changes made by the bulletin and their ramifications needed to be
extensively reviewed and verified, we were unable to undertake such a
lengthy process before publication of the FY 2014 IPPS/LTCH PPS
proposed rule and, thus, did not implement changes to the wage index
for FY 2014 based on these new OMB delineations. In the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50586), we stated that we intended to
propose changes to the wage index based on the new OMB delineations in
this FY 2015 proposed rule. As discussed below, in this proposed rule,
we are proposing to implement the new OMB delineations as described in
the February 28, 2013 OMB Bulletin No. 13-01, effective for the FY 2015
IPPS wage index.
2. Proposed Implementation of New Labor Market Area Delineations
As discussed previously, CMS delayed implementing the new OMB labor
market area delineations to allow for sufficient time to assess the new
changes. We believe it is important for the IPPS to use the latest
labor market area delineations available as soon as is reasonably
possible in order to maintain a more accurate and up-to-date payment
system that reflects the reality of population shifts and labor market
conditions. While CMS and other stakeholders have explored potential
alternatives to the current CBSA-based labor market system (we refer
readers to the CMS Web site at: www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Reform.html), no consensus
has been achieved regarding how best to implement a replacement system.
As discussed in the FY 2005 IPPS final rule (69 FR 49027), ``While we
recognize that MSAs are not designed specifically to define labor
market areas, we believe they do represent a useful proxy for this
purpose.'' We further believe that using the most current delineations
will increase the integrity of the IPPS wage index system by creating a
more accurate representation of geographic variations in wage levels.
We have reviewed our findings and impacts relating to the new OMB
delineations, and find no compelling reason to further delay
implementation. Therefore, we are proposing to implement the new OMB
delineations as described in the February 28, 2013 OMB Bulletin No. 13-
01, effective for the FY 2015 IPPS wage index. We are proposing to use
these new delineations to calculate area wage indexes in a manner that
is generally consistent with the CBSA-based methodologies finalized in
the FY 2005 IPPS final rule, and refined in subsequent rulemaking. We
also are proposing a wage index transition period applicable to all
hospitals that experience negative impacts due to the proposed
implementation of the new OMB delineations. This transition is
discussed in more detail below.
a. Micropolitan Statistical Areas
As discussed in the FY 2005 IPPS final rule (69 FR 49029 through
49032), CMS considered whether to use Micropolitan Statistical Areas to
define the labor market areas for the purpose of the IPPS wage index.
OMB defines a ``Micropolitan Statistical Area'' as a CBSA ``associated
with at least one urban cluster that has a population of at least
10,000, but less than 50,000'' (75 FR 37252). We refer to these areas
as Micropolitan Areas. After extensive impact analysis, CMS determined
the best course of action would be to treat all hospitals located in
Micropolitan Areas as ``rural'' and include them in the calculation of
each State's rural wage index. Because Micropolitan areas tend to
encompass smaller population centers and contain fewer hospitals than
MSAs, we determined that if Micropolitan Areas were to be treated as
separate labor market areas, the IPPS wage index would have included
drastically more single-provider labor market areas. This larger number
of labor market areas with fewer hospitals could create instability in
year-to-year wage index values for a large number of hospitals; could
reduce the averaging effect of the wage index, thus lessening some of
the efficiency incentive inherent in a system based on the average
hourly wages for a large number of hospitals; and could arguably create
an inequitable system when so many hospitals have wage indexes based
solely on their own wage data while other hospitals' wage indexes are
based on an average hourly wage across many hospitals. For these
reasons, we adopted a policy to include Micropolitan Areas in the
State's rural wage area, and have continued this policy through the
present.
Based upon the new 2010 Decennial Census data, a number of urban
counties have switched status and have joined or became Micropolitan
Areas, and some counties that once were part of a Micropolitan Area,
under current OMB delineations, have become urban. Overall, there are
fewer Micropolitan Areas (541) under the new OMB delineations based on
the 2010 Census than existed under the latest data from the 2000 Census
(581). We believe that the best course of action would be to continue
the policy established in the FY 2005 IPPS final rule and include
hospitals located in Micropolitan Areas in each State's rural wage
index. These areas continue to be defined as having relatively small
urban cores (populations of 10,000-49,999). We do not believe it would
be appropriate to calculate a separate wage index for areas that
typically may include only a few hospitals for the reasons set forth in
the FY 2005 IPPS/LTCH PPS final rule, as discussed above. Therefore, in
conjunction with our proposal to implement the new OMB labor market
area delineations beginning in FY 2015, we are proposing to continue to
treat Micropolitan Areas as ``rural'' and to include the Micropolitan
Areas in the calculation of each State's rural wage index.
b. Urban Counties That Would Become Rural Under the New OMB
Delineations
As previously discussed, we are proposing to implement the new OMB
labor market area delineations (based
[[Page 28056]]
upon the 2010 Decennial Census data) beginning in FY 2015. Our analysis
shows that a total of 37 counties (and county equivalents) and 12
hospitals that were once considered part of an urban CBSA would be
considered to be located in a rural area, beginning in FY 2015, under
these new OMB delineations. The following chart lists the 37 urban
counties that would be rural if we finalize our proposal to implement
the new OMB delineations.
Counties That Would Lose Urban Status
----------------------------------------------------------------------------------------------------------------
Previous
County State CBSA CBSA
number
----------------------------------------------------------------------------------------------------------------
Greene County............................ IN 14020 Bloomington, IN.
Anson County............................. NC 16740 Charlotte-Gastonia-Rock Hill, NC-
SC.
Franklin County.......................... IN 17140 Cincinnati-Middletown, OH-KY-IN.
Stewart County........................... TN 17300 Clarksville, TN-KY.
Howard County............................ MO 17860 Columbia, MO.
Delta County............................. TX 19124 Dallas-Fort Worth-Arlington, TX.
Pittsylvania County...................... VA 19260 Danville, VA.
Danville City............................ VA 19260 Danville, VA.
Preble County............................ OH 19380 Dayton, OH.
Gibson County............................ IN 21780 Evansville, IN-KY.
Webster County........................... KY 21780 Evansville, IN-KY.
Franklin County.......................... AR 22900 Fort Smith, AR-OK.
Ionia County............................. MI 24340 Grand Rapids-Wyoming, MI.
Newaygo County........................... MI 24340 Grand Rapids-Wyoming, MI.
Greene County............................ NC 24780 Greenville, NC.
Stone County............................. MS 25060 Gulfport-Biloxi, MS.
Morgan County............................ WV 25180 Hagerstown-Martinsburg, MD-WV.
San Jacinto County....................... TX 26420 Houston-Sugar Land-Baytown, TX.
Franklin County.......................... KS 28140 Kansas City, MO-KS.
Tipton County............................ IN 29020 Kokomo, IN.
Nelson County............................ KY 31140 Louisville/Jefferson County, KY-
IN.
Geary County............................. KS 31740 Manhattan, KS.
Washington County........................ OH 37620 Parkersburg-Marietta-Vienna, WV-
OH.
Pleasants County......................... WV 37620 Parkersburg-Marietta-Vienna, WV-
OH.
George County............................ MS 37700 Pascagoula, MS.
Power County............................. ID 38540 Pocatello, ID.
Cumberland County........................ VA 40060 Richmond, VA.
King and Queen County.................... VA 40060 Richmond, VA.
Louisa County............................ VA 40060 Richmond, VA.
Washington County........................ MO 41180 St. Louis, MO-IL.
Summit County............................ UT 41620 Salt Lake City, UT.
Erie County.............................. OH 41780 Sandusky, OH.
Franklin County.......................... MA 44140 Springfield, MA.
Ottawa County............................ OH 45780 Toledo, OH.
Greene County............................ AL 46220 Tuscaloosa, AL.
Calhoun County........................... TX 47020 Victoria, TX.
Surry County............................. VA 47260 Virginia Beach-Norfolk-Newport
News, VA-NC.
----------------------------------------------------------------------------------------------------------------
We are proposing that the wage data for all hospitals located in
the counties listed above would now be considered rural when
calculating their respective State's rural wage index. We recognize
that rural areas typically have lower area wage index values than urban
areas, and hospitals located in these counties may experience a
negative impact in their IPPS payment due to the proposed adoption of
the new OMB delineations. We refer readers to section III.B.2.e. of the
preamble of this proposed rule for a discussion of the proposed wage
index transition period, in particular, the discussion regarding the 3-
year transition for hospitals located in these specific counties.
c. Rural Counties That Would Become Urban Under the New OMB
Delineations
As previously discussed, we are proposing to implement the new OMB
labor market area delineations (based upon the 2010 Decennial Census
data) beginning in FY 2015. Analysis of these OMB labor market area
delineations shows that a total of 105 counties (and county
equivalents) and 81 hospitals that were located in rural areas would be
located in urban areas under the new OMB delineations. The following
chart lists the 105 rural counties that would be urban if we finalize
our proposal to implement the new OMB delineations.
Counties That Would Gain Urban Status
------------------------------------------------------------------------
New CBSA
County State number CBSA.
------------------------------------------------------------------------
Utuado Municipio............. PR 10380 Aguadilla-Isabela,
PR.
Linn County.................. OR 10540 Albany, OR.
Oldham County................ TX 11100 Amarillo, TX.
Morgan County................ GA 12060 Atlanta-Sandy
Springs-Roswell,
GA.
Lincoln County............... GA 12260 Augusta-Richmond
County, GA-SC.
[[Page 28057]]
Newton County................ TX 13140 Beaumont-Port
Arthur, TX.
Fayette County............... WV 13220 Beckley, WV.
Raleigh County............... WV 13220 Beckley, WV.
Golden Valley County......... MT 13740 Billings, MT.
Oliver County................ ND 13900 Bismarck, ND.
Sioux County................. ND 13900 Bismarck, ND.
Floyd County................. VI 13980 Blacksburg-
Christiansburg-
Radford, VA.
De Witt County............... IL 14010 Bloomington, IL.
Columbia County.............. PA 14100 Bloomsburg-Berwick,
PA.
Montour County............... PA 14100 Bloomsburg-Berwick,
PA.
Allen County................. KY 14540 Bowling Green, KY.
Butler County................ KY 14540 Bowling Green, KY.
St. Mary's County............ MD 15680 California-Lexington
Park, MD.
Jackson County............... IL 16060 Carbondale-Marion,
IL.
Williamson County............ IL 16060 Carbondale-Marion,
IL.
Franklin County.............. PA 16540 Chambersburg-
Waynesboro, PA.
Iredell County............... NC 16740 Charlotte-Concord-
Gastonia, NC-SC.
Lincoln County............... NC 16740 Charlotte-Concord-
Gastonia, NC-SC.
Rowan County................. NC 16740 Charlotte-Concord-
Gastonia, NC-SC.
Chester County............... SC 16740 Charlotte-Concord-
Gastonia, NC-SC.
Lancaster County............. SC 16740 Charlotte-Concord-
Gastonia, NC-SC.
Buckingham County............ VA 16820 Charlottesville, VA.
Union County................. IN 17140 Cincinnati, OH-KY-
IN.
Hocking County............... OH 18140 Columbus, OH.
Perry County................. OH 18140 Columbus, OH.
Walton County................ FL 18880 Crestview-Fort
Walton Beach-
Destin, FL.
Hood County.................. TX 23104 Dallas-Fort Worth-
Arlington, TX.
Somervell County............. TX 23104 Dallas-Fort Worth-
Arlington, TX.
Baldwin County............... AL 19300 Daphne-Fairhope-
Foley, AL.
Monroe County................ PA 20700 East Stroudsburg,
PA.
Hudspeth County.............. TX 21340 El Paso, TX.
Adams County................. PA 23900 Gettysburg, PA.
Hall County.................. NE 24260 Grand Island, NE.
Hamilton County.............. NE 24260 Grand Island, NE.
Howard County................ NE 24260 Grand Island, NE.
Merrick County............... NE 24260 Grand Island, NE.
Montcalm County.............. MI 24340 Grand Rapids-
Wyoming, MI.
Josephine County............. OR 24420 Grants Pass, OR.
Tangipahoa Parish............ LA 25220 Hammond, LA.
Beaufort County.............. SC 25940 Hilton Head Island-
Bluffton-Beaufort,
SC.
Jasper County................ SC 25940 Hilton Head Island-
Bluffton-Beaufort,
SC.
Citrus County................ FL 26140 Homosassa Springs,
FL.
Butte County................. ID 26820 Idaho Falls, ID.
Yazoo County................. MS 27140 Jackson, MS.
Crockett County.............. TN 27180 Jackson, TN.
Kalawao County............... HI 27980 Kahului-Wailuku-
Lahaina, HI.
Maui County.................. HI 27980 Kahului-Wailuku-
Lahaina, HI.
Campbell County.............. TN 28940 Knoxville, TN.
Morgan County................ TN 28940 Knoxville, TN.
Roane County................. TN 28940 Knoxville, TN.
Acadia Parish................ LA 29180 Lafayette, LA.
Iberia Parish................ LA 29180 Lafayette, LA.
Vermilion Parish............. LA 29180 Lafayette, LA.
Cotton County................ OK 30020 Lawton, OK.
Scott County................. IN 31140 Louisville/Jefferson
County, KY-IN.
Lynn County.................. TX 31180 Lubbock, TX.
Green County................. WI 31540 Madison, WI.
Benton County................ MS 32820 Memphis, TN-MS-AR.
Midland County............... MI 33220 Midland, MI.
Martin County................ TX 33260 Midland, TX.
Le Sueur County.............. MN 33460 Minneapolis-St. Paul-
Bloomington, MN-WI.
Mille Lacs County............ MN 33460 Minneapolis-St. Paul-
Bloomington, MN-WI.
Sibley County................ MN 33460 Minneapolis-St. Paul-
Bloomington, MN-WI.
Maury County................. TN 34980 Nashville-Davidson-
Murfreesboro-
Franklin, TN.
Craven County................ NC 35100 New Bern, NC.
Jones County................. NC 35100 New Bern, NC.
Pamlico County............... NC 35100 New Bern, NC.
St. James Parish............. LA 35380 New Orleans-
Metairie, LA.
Box Elder County............. UT 36260 Ogden-Clearfield,
UT.
Gulf County.................. FL 37460 Panama City, FL.
Custer County................ SD 39660 Rapid City, SD.
[[Page 28058]]
Fillmore County.............. MN 40340 Rochester, MN.
Yates County................. NY 40380 Rochester, NY.
Sussex County................ DE 41540 Salisbury, MD-DE.
Worcester County............. MA 41540 Salisbury, MD-DE.
Highlands County............. FL 42700 Sebring, FL.
Webster Parish............... LA 43340 Shreveport-Bossier
City, LA.
Cochise County............... AZ 43420 Sierra Vista-
Douglas, AZ.
Plymouth County.............. IA 43580 Sioux City, IA-NE-
SD.
Union County................. SC 43900 Spartanburg, SC.
Pend Oreille County.......... WA 44060 Spokane-Spokane
Valley, WA.
Stevens County............... WA 44060 Spokane-Spokane
Valley, WA.
Augusta County............... VA 44420 Staunton-Waynesboro,
VA.
Staunton City................ VA 44420 Staunton-Waynesboro,
VA.
Waynesboro City.............. VA 44420 Staunton-Waynesboro,
VA.
Little River County.......... AR 45500 Texarkana, TX-AR.
Sumter County................ FL 45540 The Villages, FL.
Pickens County............... AL 46220 Tuscaloosa, AL.
Gates County................. NC 47260 Virginia Beach-
Norfolk-Newport
News, VA-NC.
Falls County................. TX 47380 Waco, TX.
Columbia County.............. WA 47460 Walla Walla, WA.
Walla Walla County........... WA 47460 Walla Walla, WA.
Peach County................. GA 47580 Warner Robins, GA.
Pulaski County............... GA 47580 Warner Robins, GA.
Culpeper County.............. VA 47894 Washington-Arlington-
Alexandria, DC-VA-
MD-WV.
Rappahannock County.......... VA 47894 Washington-Arlington-
Alexandria, DC-VA-
MD-WV.
Jefferson County............. NY 48060 Watertown-Fort Drum,
NY.
Kingman County............... KS 48620 Wichita, KS.
Davidson County.............. NC 49180 Winston-Salem, NC.
Windham County............... CT 49340 Worcester, MA-CT.
------------------------------------------------------------------------
We are proposing that when calculating the area wage index, the
wage data for hospitals located in these counties would be included in
their new respective urban CBSAs. Typically, hospitals located in an
urban area would receive a higher wage index value than hospitals
located in their State's rural area. However, with regard to the wage
index applicable to individual hospitals, we are proposing to implement
a transitional wage index adjustment for any hospital that would
receive a lower wage index under the new OMB delineations than it would
have received under the current CBSA definitions. We refer readers to
section III.B.2.e. of the preamble of this proposed rule for further
discussion of this proposed transition.
d. Urban Counties That Would Move to a Different Urban CBSA Under the
New OMB Delineations
In addition to rural counties becoming urban and urban counties
becoming rural, several urban counties would shift from one urban CBSA
to another urban CBSA under our proposal to adopt the new OMB
delineations. In certain cases, adopting the new OMB delineations would
involve a change only in CBSA name or number, while the CBSA continues
to encompass the same constituent counties. For example, CBSA 29140
(Lafayette, IN) would experience both a change to its number and its
name, and become CBSA 29200 (Lafayette-West Lafayette, IN), while all
of its three constituent counties would remain the same. We have
identified 19 counties that would remain in a CBSA that experienced a
change in name or number under the new delineations, but would retain
the same constituent counties, as shown in the following table.
Counties That Would Remain in CBSA That Changed Number
------------------------------------------------------------------------
Prior CBSA No. New CBSA No. County State
------------------------------------------------------------------------
14484................. 14454 Norfolk County... MA.
14484................. 14454 Plymouth County.. MA.
14484................. 14454 Suffolk County... MA.
47644................. 47664 Lapeer County.... MI.
47644................. 47664 Livingston County MI.
47644................. 47664 Macomb County.... MI.
47644................. 47664 Oakland County... MI.
47644................. 47664 St. Clair County. MI.
26180................. 46520 Honolulu County.. HI.
29140................. 29200 Benton County.... IN.
29140................. 29200 Carroll County... IN.
29140................. 29200 Tippecanoe County IN.
42044................. 11244 Orange County.... CA.
42060................. 42200 Santa Barbara CA.
County.
44600................. 48260 Jefferson County. OH.
44600................. 48260 Brooke County.... WV.
[[Page 28059]]
44600................. 48260 Hancock County... WV.
13644................. 43524 Frederick County. MD.
13644................. 43524 Montgomery County MD.
------------------------------------------------------------------------
We are not discussing further in this section these proposed
changes because they are inconsequential changes with respect to the
IPPS wage index. However, in other cases, if we adopt the new OMB
delineations, counties would shift between existing and new CBSAs,
changing the constituent makeup of the CBSAs.
In one type of change, an entire CBSA would be subsumed by another
CBSA. For example, CBSA 37380 (Palm Coast, FL) currently is a single
county (Flagler, FL) CBSA. Flagler County would become a part of CBSA
19660 (Deltona-Daytona Beach-Ormond Beach, FL) under the new OMB
delineations.
In another type of change, some CBSAs have counties that would
split off to become part of or to form entirely new labor market areas.
For example, CBSA 37964 (Philadelphia Metropolitan Division) currently
is comprised of five Pennsylvania counties (Bucks, Chester, Delaware,
Montgomery, and Philadelphia). If we adopt the new OMB delineations,
Montgomery, Bucks, and Chester counties would split off and form the
new CBSA 33874 (Montgomery County-Bucks County-Chester County, PA
Metropolitan Division), while Delaware and Philadelphia counties would
remain in CBSA 37964.
Finally, in some cases, a CBSA would lose counties to another
existing CBSA if we adopt the new OMB delineations. For example,
Lincoln County and Putnam County, WV would move from CBSA 16620
(Charleston, WV) to CBSA 26580 (Huntington-Ashland, WV-KY-OH). CBSA
16620 still would exist in the new labor market delineations with fewer
constituent counties.
The following chart lists the urban counties that would move from
one urban CBSA to another urban CBSA if we adopted the new OMB
delineations.
Counties That Would Change to Another CBSA
------------------------------------------------------------------------
Prior CBSA New CBSA County State
------------------------------------------------------------------------
11300................. 26900 Madison County... IN.
11340................. 24860 Anderson County.. SC.
14060................. 14010 McLean County.... IL.
37764................. 15764 Essex County..... MA.
16620................. 26580 Lincoln County... WV.
16620................. 26580 Putnam County.... WV.
16974................. 20994 DeKalb County.... IL.
16974................. 20994 Kane County...... IL.
21940................. 41980 Ceiba Municipio.. PR.
21940................. 41980 Fajardo Municipio PR.
21940................. 41980 Luquillo PR.
Municipio.
26100................. 24340 Ottawa County.... MI.
31140................. 21060 Meade County..... KY.
34100................. 28940 Grainger County.. TN.
35644................. 35614 Bergen County.... NJ.
35644................. 35614 Hudson County.... NJ.
20764................. 35614 Middlesex County. NJ.
20764................. 35614 Monmouth County.. NJ.
20764................. 35614 Ocean County..... NJ.
35644................. 35614 Passaic County... NJ.
20764................. 35084 Somerset County.. NJ.
35644................. 35614 Bronx County..... NY.
35644................. 35614 Kings County..... NY.
35644................. 35614 New York County.. NY.
35644................. 20524 Putnam County.... NY.
35644................. 35614 Queens County.... NY.
35644................. 35614 Richmond County.. NY.
35644................. 35614 Rockland County.. NY.
35644................. 35614 Westchester NY.
County.
37380................. 19660 Flagler County... FL.
37700................. 25060 Jackson County... MS.
37964................. 33874 Bucks County..... PA.
37964................. 33874 Chester County... PA.
37964................. 33874 Montgomery County PA.
39100................. 20524 Dutchess County.. NY.
39100................. 35614 Orange County.... NY.
41884................. 42034 Marin County..... CA.
41980................. 11640 Arecibo Municipio PR.
41980................. 11640 Camuy Municipio.. PR.
41980................. 11640 Hatillo Municipio PR.
41980................. 11640 Quebradillas PR.
Municipio.
48900................. 34820 Brunswick County. NC.
49500................. 38660 Gu[aacute]nica PR.
Municipio.
49500................. 38660 Guayanilla PR.
Municipio.
[[Page 28060]]
49500................. 38660 Pe[ntilde]uelas PR.
Municipio.
49500................. 38660 Yauco Municipio.. PR.
------------------------------------------------------------------------
If hospitals located in these counties move from one CBSA to
another under the new OMB delineations, there may be impacts, both
negative and positive, upon their specific wage index values. We refer
readers to section III.B.2.e. of the preamble of this proposed rule for
a discussion of our proposals to moderate the impact of our proposed
adoption of the new OMB delineations.
e. Proposed Transition Period
(1) Background
Overall, we believe implementing the new OMB labor market area
delineations would result in wage index values being more
representative of the actual costs of labor in a given area. However,
we recognize that some hospitals would experience decreases in wage
index values as a result of our proposed implementation of the new
labor market area delineations. We also realize that some hospitals
would have higher wage index values due to our proposed implementation
of the new labor market area delineations.
In the past, we have provided for transition periods when adopting
changes that have significant payment implications, particularly large
negative impacts. As discussed in the FY 2005 IPPS final rule (69 FR
49032 through 49034), we evaluated several options to ease the
transition to the new CBSA system, which we implemented starting in FY
2005 and which is the system currently in use.
As discussed in that rule, we determined that the transition to the
current wage index system would have the largest negative impacts upon
hospitals that were originally considered urban, but would be
considered rural under the new definitions. To alleviate the decreased
payments associated with having a rural wage index, in calculating the
area wage index, in the FY 2005 IPPS final rule, we allowed urban
hospitals that became rural under new definitions to maintain their
assignment to the labor market area where they were located for FY
2004. This adjustment was granted for a period of 3 fiscal years.
In the FY 2005 IPPS final rule, for all hospitals that experienced
negative payment impacts due to new definitions (for example, they were
moved to an urban CBSA with a lower wage index value than their
previous rural or urban labor market area), we implemented a 1-year
blended adjustment. We calculated wage indexes for all hospitals using
both old and new labor market definitions. Hospitals received 50
percent of their wage index based on the new OMB delineations, and 50
percent of their wage index based on their current labor market area.
This adjustment only applied to hospitals that would have experienced a
drop in wage index values due to a change in labor market definitions.
Hospitals that benefitted from the labor market area transition
received their new wage index at the time the new labor market
definitions became effective.
We continue to have the same concerns expressed in the FY 2005 IPPS
final rulemaking. Therefore, we are proposing a similar transition
methodology to mitigate any negative financial impacts experienced by
hospitals due to our proposal to implement the new OMB labor market
area delineations for FY 2015.
(2) Proposed Transition for Hospitals in Urban Areas That Would Become
Rural
For hospitals that are currently located in an urban county that
would become rural under the new OMB delineations, and would have no
form of wage index reclassification or redesignation in place for FY
2015 (that is, MGCRB reclassifications under section 1886(d)(10) of the
Act, redesignations under section 1886(d)(8)(B) of the Act, or rural
reclassifications under section 1886(d)(8)(E) of the Act), we are
proposing a policy to assign them the urban wage index value of the
CBSA in which they are physically located for FY 2014 for a period of 3
fiscal years (with the rural and imputed floors applied and with the
rural floor budget neutrality adjustment applied to the area wage
index). As stated in the FY 2005 IPPS proposed rule (69 FR 28252), we
have in the past provided transitions when adopting changes that have
significant payment implications, particularly large negative impacts.
We believe it is appropriate to apply a 3-year transition period for
hospitals located in urban counties that would become rural under the
new OMB delineations, given the potentially significant payment impacts
for these hospitals. This is consistent with the transition policy
adopted in FY 2005 (69 FR 49032 through 49034). We continue to believe,
as we stated in the FY 2005 IPPS final rule (69 FR 49033), that the
longer transition period is appropriate because, as a group, we expect
these hospitals would experience a steeper and more abrupt reduction in
their wage index due to the labor market revisions compared to other
hospitals. Assigning these hospitals the urban wage index value of the
CBSA in which they are physically located for FY 2014 for a period of 3
fiscal years (with the rural and imputed floors applied and with the
rural floor budget neutrality adjustment applied to the area wage
index) would be the most similar to the actual payment wage index that
these hospitals received in FY 2014, thereby minimizing the negative
impact of adopting the new OMB delineations for these hospitals.
Accordingly, for FYs 2015, 2016, and 2017, assuming no other form of
wage index reclassification or redesignation is granted, we are
proposing to assign these hospitals the area wage index value of the
urban CBSA to which they geographically were located in FY 2014 (with
the rural and imputed floors applied and with the rural floor budget
neutrality adjustment applied to the area wage index). For example, if
urban CBSA 12345 consisted of three counties in FY 2014, and, under the
new OMB delineations, one of those counties, County X, would no longer
be part of CBSA 12345 and would become rural for FY 2015, we are
proposing that hospitals in County X would be assigned the FY 2015 wage
index of CBSA 12345, computed using the remaining two counties, with
the rural and imputed floors applied and with the rural floor budget
neutrality adjustment applied to the area wage index. We believe that
assigning the wage index of the hospitals' current area is the simplest
and most effective method for mitigating negative payment impacts due
to the proposed adoption of the new OMB delineations. We have
identified relatively few hospitals that are located in urban counties
that would become rural, and fewer yet that do not have a
reclassification or redesignation in effect for FY 2015. Because we
believe that these urban to rural transitions would
[[Page 28061]]
be the most likely to cause significant negative payment impacts, we
believe that these hospitals should be granted a longer transition
period than hospitals that may be switching between urban labor market
areas, which as discussed later, we are proposing may receive 1-year
blended wage index.
We note that there are situations where a hospital cannot be
assigned the wage index value of the CBSA to which it geographically
belonged in FY 2014 because that CBSA would be split and no longer
exist and some or all of the constituent counties would be added to
another urban labor market area under the new OMB delineations. If the
hospital cannot be assigned the wage index value of the CBSA to which
it is geographically located in FY 2014 because that CBSA would be
split apart and no longer exist, and some or all of its constituent
counties would be added to another urban labor market area under the
new OMB delineations, we are proposing that hospitals located in such
counties that would become rural under the new OMB delineations would
be assigned the wage index of the FY 2015 urban labor market area that
contains the urban county in their FY 2014 CBSA to which they are
closest (with the rural and imputed floors applied and with the rural
floor budget neutrality adjustment applied) for a period of 3 fiscal
years. We believe this approach of assigning the wage index of the FY
2015 urban labor market area that contains the urban county in their FY
2014 CBSA to which they are closest (with the rural and imputed floors
applied and with the rural floor budget neutrality adjustment applied)
would most closely approximate the hospitals' FY 2014 actual payment
wage index, thereby minimizing the negative effects of the proposed
change in the OMB delineations. For example, George County, MS and
Jackson County, MS, together, in FY 2014, comprise the urban CBSA 37700
(Pascagoula, MS). Under the new OMB delineations, George County would
be considered rural and Jackson County, MS would become part of the
urban labor market area of Gulfport-Biloxi-Pascagoula, MS (CBSA 25060).
In this instance, we are proposing that hospitals in George County, MS
would be assigned the FY 2015 wage index for CBSA 25060 (Gulfport-
Biloxi-Pascagoula, MS), with the rural and imputed floors applied and
with the rural floor budget neutrality adjustment applied.
Furthermore, we are proposing that any hospital that is currently
located in an urban county that would become rural for FY 2015 under
the new OMB delineations, but also has a reclassification or
redesignation in effect for FY 2015 (from a pre-existing
reclassification or redesignation granted prior to FY 2015), would not
be eligible for the 3-year transition wage index. This is because if
the hospital is reclassified or redesignated in some manner, it would
instead receive a wage index that reflects its own choice to obtain its
reclassified or redesignated status. Accordingly, if a hospital is
currently located in an urban county that would become rural for FY
2015 under the new OMB delineations and such hospital sought and was
granted reclassification or redesignation for FY 2015 or such hospital
seeks and is granted any reclassification or redesignation for FY 2016
or FY 2017, we are proposing that the hospital would permanently lose
its 3-year transitional assigned wage index status, and would not be
eligible to reinstate it. For example, if a hospital that is currently
urban but would become rural under the new OMB delineations received a
3-year transition wage index in FY 2015 based on the wage index of the
urban CBSA to which it was geographically located in FY 2014 and then
by its own choice, reclassifies to obtain a different area wage index
in FY 2016, the hospital would not be eligible to reinstate the
transition wage index, even if it opts to cancel its reclassification
for FY 2017. We are proposing the transition adjustment to assist
hospitals if they experience a negative payment impact specifically due
to the proposed adoption of the new OMB delineations in FY 2015. If a
hospital chooses in a future fiscal year to forego this transition
adjustment by obtaining some form of reclassification or redesignation,
we do not believe reinstatement of this transition adjustment would be
appropriate. The purpose of the adjustment is to assist hospitals that
may be negatively impacted by the new OMB delineations in transitioning
to a wage index based on these delineations. By obtaining a
reclassification or redesignation, we believe that the hospital has
made the determination that the transition adjustment is not necessary
because it has other viable options for mitigating the impact of the
transition to the new OMB delineations.
With respect to the wage index computation, we are proposing to
follow our existing policy regarding the inclusion of a hospital's wage
index data in the CBSA in which it is geographically located (we refer
readers to Step 6 of the method for computing the unadjusted wage index
in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51592)). Accordingly,
beginning with FY 2015, we are proposing that the wage data of all
hospitals receiving this type of 3-year transition adjustment would be
included in the statewide rural area in which they are geographically
located under the new OMB labor market area delineations of FY 2015.
After the 3-year transition period, beginning in FY 2018, we are
proposing that these formerly urban hospitals discussed above would
receive their statewide rural wage index, absent any reclassification
or redesignation.
In addition, we are proposing that the hospitals receiving this 3-
year transition because they are in counties that were urban under the
current CBSA definitions, but would be rural under the new OMB
delineations, would not be considered urban hospitals. Rather, they
would maintain their status as rural hospitals for other payment
considerations. This is because our proposal to apply a 3-year
transitional wage index for these newly rural hospitals only applies
for the purpose of calculating the wage index under our proposal to
adopt the new CBSA delineations. We are not proposing transitions for
other IPPS payment policies that may be impacted by the proposed
adoption of the new CBSA delineations. However, we will continue to
apply the existing regulations at Sec. 412.102 with respect to
determining DSH payments in the first year after a hospital loses urban
status (we refer readers to section II.B.2.e.(7) of the preamble of
this proposed rule).
(3) Proposed Transition for Hospitals Deemed Urban Under Section
1886(d)(8)(B) of the Act Where the Urban Area Would Become Rural Under
the New OMB Delineations
As discussed in section II.H.3. of the preamble of this proposed
rule, there are some hospitals that currently are geographically
located in rural areas but are deemed to be urban under section
1886(d)(8)(B) of the Act. For FY 2015, some of these hospitals
currently redesignated under section 1886(d)(8)(B) of the Act would no
longer be eligible for deemed urban status under the new OMB
delineations, as discussed in detail in section III.H.3. of the
preamble of this proposed rule. Similar to the policy implemented in
the FY 2005 IPPS final rule (69 FR 49059), and consistent with the
policy we are proposing for other hospitals in counties that were urban
and would become rural under the new OMB delineations, we are proposing
to apply the 3-year transition to these hospitals currently
redesignated to urban areas under section 1886(d)(8)(B) of the Act
[[Page 28062]]
that would no longer be deemed urban under the new OMB delineations and
would revert to being rural. That is, for FYs 2015, 2016, and 2017,
assuming no other form of wage index reclassification or redesignation
is granted, we are proposing to assign these hospitals the FY 2015 area
wage index value of hospitals reclassified to the urban CBSA (that is,
the attaching wage index) to which they were redesignated in FY 2014
(with the rural and imputed floors applied and with the rural floor
budget neutrality adjustment applied). If the hospital cannot be
assigned the reclassified wage index value of the CBSA to which it was
redesignated in FY 2014 because that CBSA would split apart and no
longer exist, and some or all of its constituent counties would be
added to another urban labor market area under the new OMB
delineations, we are proposing that such hospitals would be assigned
the wage index of the hospitals reclassified to the FY 2015 urban labor
market area that contains the urban county in their FY 2014
redesignated CBSA to which they are closest for a period of 3 fiscal
years. We are proposing to assign these hospitals the area wage index
of hospitals reclassified to a CBSA because hospitals deemed urban
under section 1886(d)(8)(B) of the Act are treated as reclassified
under current policy, under which such hospitals receive an area wage
index that includes wage data of all hospitals reclassified to the
area.
(4) Proposed Transition for Hospitals That Would Experience a Decrease
in Wage Index Under the New OMB Delineations
While we believe that instituting the latest OMB labor market area
delineations would create a more accurate wage index system, we also
recognize that implementing the new OMB delineations may cause some
short-term instability in hospital payments. Therefore, in addition to
the 3-year transition adjustment for hospitals being transitioned from
urban to rural status as discussed above, we are proposing a 1-year
blended wage index for all hospitals that would experience any decrease
in their actual payment wage index (that is, a hospital's actual wage
index used for payment, which accounts for all applicable effects of
reclassification and redesignation) exclusively due to the proposed
implementation of the new OMB delineations. Similar to the policy
adopted in the FY 2005 IPPS final rule (69 FR 49033), we are proposing
that a post-reclassified wage index with the rural and imputed floor
applied would be computed based on the hospital's FY 2014 CBSA (that
is, using all of its FY 2014 constituent county/ies), and another post-
reclassified wage index with the rural and imputed floor applied would
be computed based on the hospital's new FY 2015 CBSA (that is, the FY
2015 constituent county/ies). We are proposing to compare these two
wage indexes. If the proposed FY 2015 wage index with FY 2015 CBSAs
would be lower than the proposed FY 2015 wage index with FY 2014 CBSAs,
we are proposing that a blended wage index would be computed,
consisting of 50 percent of each of the two wage indexes added
together. We are proposing that this blended wage index would be the
hospital's wage index for FY 2015. We believe a 1-year, 50/50 blend
would mitigate the short-term instability and negative payment impacts
due to the proposed implementation of the new OMB delineations,
providing hospitals with a transition period during which they may
adjust to their new geographic CBSA or may assess any reclassification
options that would be available to them starting in FY 2016. We are
proposing a longer 3-year transition adjustment for hospitals losing
urban status because there are significantly fewer affected urban-to-
rural hospitals, and we believe the negative impacts to a hospital
shifting from urban to rural status would typically be greater than
other types of transitions. We believe that a transition period longer
than 1 year to address other impacts of the proposed adoption of new
OMB delineations would reduce the accuracy of the overall labor market
area wage index system because far more hospitals would be affected.
In addition, for FY 2015, for hospitals that would receive the
proposed 3-year transition, it is possible that receiving the FY 2015
wage index (with the rural and imputed floors applied and with the
rural floor budget neutrality adjustment applied) of the CBSA where the
hospital is geographically located for FY 2014 might still be less than
the FY 2015 wage index that the hospital would have received in the
absence of the adoption of the new OMB delineations (particularly in
States where the rural floor is historically very high). Therefore,
such a hospital may additionally benefit from application of the 50/50
blended wage indexes. Accordingly, we are proposing to include the
assignment of the 3-year transitional wage index in our calculation of
the FY 2015 portion of the 50/50 blended wage index for that hospital.
After FY 2015, such a hospital may revert to the second year of the 3-
year transition. For example, if Hospital X (formerly part of CBSA
12345, now rural) is assigned CBSA 12345's FY 2015 wage index value of
1.0000 as part of the 3-year transition, but that FY 2015 wage index
value would have been 1.1000 under the previous OMB delineations, that
hospital would receive a 50/50 blended wage index of 1.0500 for FY
2015. In FY 2016 and FY 2017, Hospital X would still be eligible to
receive the remaining 2 years of the 3-year transition wage index of
CBSA 12345 (that is, in FY 2016, Hospital X would receive the FY 2016
wage index of CBSA 12345 (with the rural and imputed floors applied and
with the rural floor budget neutrality adjustment applied)), and in FY
2017, Hospital X would receive the FY 2017 wage index of CBSA 12345
(with the rural and imputed floors applied and with the rural floor
budget neutrality adjustment applied).
(5) Impact of Proposed Adoption of New OMB Labor Market Area
Delineations
To illustrate how the proposed adoption of the new OMB labor market
area delineations would impact hospitals' proposed FY 2015 wage
indexes, we compared the proposed FY 2015 occupational mix adjusted
post-reclassified wage indexes with rural floor budget neutrality
applied under the FY 2014 CBSAs and under the proposed FY 2015 CBSAs
using the new OMB delineations. (This analysis does not include the
effects of the out-migration adjustment, the frontier floor, the
proposed 3-year hold harmless transition wage indexes, or the proposed
1-year transition blended wage indexes). As a result of applying the
proposed new OMB delineations to the wage data, the proposed wage index
values for 2,362 urban hospitals (83.8 percent) and 396 (64.0 percent)
rural hospitals would increase. The wage index values of 2,337 (82.9
percent) urban hospitals would increase by less than 5 percent, and the
wage index values of 13 (0.5 percent) urban hospitals would increase by
at least 5 percent but less than 10 percent. The wage index values of
12 (0.4 percent) urban hospitals would increase by greater than or
equal to 10 percent. The wage index values of 369 (59.6 percent) rural
hospitals would increase by less than 5 percent, 18 rural hospitals
(2.9 percent) would increase by at least 5 percent but less than 10
percent, and 9 rural hospitals (1.5 percent) would increase by greater
than or equal to 10 percent. However, the wage index values for 451
urban hospitals (16.0 percent) and 223 (36.0 percent) rural hospitals
would decrease. The wage index values of 396 (14.0
[[Page 28063]]
percent) urban hospitals would decrease by less than 5 percent, 40
urban hospitals (1.4 percent) would decrease by at least 5 percent but
less than 10 percent, and 15 urban hospitals (0.5 percent) would
decrease by greater than or equal to 10 percent. The wage index values
of 198 (32.0 percent) rural hospitals would decrease by less than 5
percent, 24 rural hospitals (3.9 percent) would decrease by 5 percent
and less than 10 percent, and 1 rural hospital (0.2 percent) would
decrease by greater than or equal to 10 percent. The wage index values
of 6 (0.2 percent) urban hospitals and zero rural hospitals would
remain unchanged by the adoption of the new OMB CBSA delineations. The
largest positive impacts would be for 8 hospitals in 5 States (Texas,
Minnesota, Louisiana, Alabama, and Michigan) that would be moving from
a rural to an urban area (ranging from a 16.57 percent to a 22.91
percent increase in wage index), and for 10 hospitals that would be
moving from one urban CBSA (FY 2014 CBSA 20764, Edison-New Brunswick,
NJ) to new urban CBSA 35614 (New York-Jersey City-White Plains, NY-NJ),
representing a 15.12 percent increase in wage index. The largest
negative impacts would be for 5 hospitals in 4 States (New York,
Alabama, Idaho, and North Carolina) that would be moving from an urban
to a rural area (ranging from a 13.08 percent to a 27.25 percent
decrease in wage index), and for 8 hospitals that would be moving from
one urban CBSA (FY 2014 CBSA 35644, New York-White Plains-Wayne, NY-NJ)
to new urban CBSA 20524 (Dutchess County-Putnam County, NY),
representing a 11.42 percent decrease in wage index. These results
illustrate that hospitals that would move from rural CBSAs to urban
CBSAs generally would benefit significantly, while hospitals that would
move from urban to rural CBSAs generally would have larger negative
impacts. For all hospitals combined, the wage index values of 2,758
(80.2 percent) overall would be increasing, and 674 (19.6 percent)
overall would be decreasing, indicating that most hospitals would be
positively affected by the adoption of the new OMB delineations.
Furthermore, the magnitude of the changes would be relatively small
overall, with only 132 hospitals (3.8 percent) experiencing either an
increase or decrease of at least 5 percent.
The following table shows the impact of the proposed adoption of
the new OMB delineations on hospitals' proposed FY 2015 wage indexes,
comparing the proposed FY 2015 occupational mix adjusted post-
reclassified wage indexes with rural floor budget neutrality applied
under the FY 2014 CBSAs and the proposed FY 2015 CBSAs using the new
OMB delineations. (This analysis does not include the effects of the
out-migration adjustment, the frontier floor, the proposed 3-year hold
harmless transition wage indexes, or the proposed 1-year transition
blended wage indexes).
----------------------------------------------------------------------------------------------------------------
Number of post- Number of post-
reclassified reclassified
Percent change in FY 2015 wage index rural hospitals urban hospitals Total number of
based on FY 2014 based on FY 2014 hospitals
CBSA CBSA
----------------------------------------------------------------------------------------------------------------
Decrease greater than or equal to 10.0.................... 1 15 16
Decrease greater than or equal to 5.0 but less than 10.0.. 24 40 64
Decrease greater than or equal to 2.0 but less than 5.0... 36 94 130
Decrease greater than 0.0 but less than 2.0............... 162 302 464
No change................................................. 0 6 6
Increase greater than 0.0 but less than 2.0............... 365 2,304 2,669
Increase greater than or equal to 2.0 but less than 5.0... 4 33 37
Increase greater than or equal to 5.0 but less than 10.0.. 18 13 31
Increase greater than or equal to 10.0.................... 9 12 21
-----------------------------------------------------
Total................................................. 619 2,819 3,438
----------------------------------------------------------------------------------------------------------------
(6) Proposed Budget Neutrality
For FY 2015, we are proposing to apply both the 3-year transition
and 50/50 blended wage index adjustments in a budget neutral manner. We
are proposing to make an adjustment to the standardized amount to
ensure that the total payments, including the effect of the transition
provisions, would equal what payments would have been if we would not
be providing for any transitional wage indexes under the new OMB
delineations. For a complete discussion on this proposed budget
neutrality adjustment for FY 2015, we refer the reader to section
II.A.4.b. of the Addendum to this proposed rule.
We note that, consistent with past practice (69 FR 49034), we are
not adopting the new OMB delineations themselves in a budget neutral
manner. We do not believe that the revision to the labor market areas
in and of itself constitutes an ``adjustment or update'' to the
adjustment for area wage differences, as provided under section
1886(d)(3)(E) of the Act.
(7) Proposals With Respect To Determining Disproportionate Share
Hospital (DSH) Payments
As noted in the FY 2005 IPPS final rule (69 FR 49033), the
provisions of Sec. 412.102 of the regulations would continue to apply
with respect to determining DSH payments. Specifically, in the first
year after a hospital loses urban status, the hospital would receive an
additional payment that equals two-thirds of the difference between the
urban DSH payments applicable to the hospital before its redesignation
from urban to rural and the rural DSH payments applicable to the
hospital subsequent to its redesignation from urban to rural. In the
second year after a hospital loses urban status, the hospital would
receive an additional payment that equals one-third of the difference
between the urban DSH payments applicable to the hospital before its
redesignation from urban to rural and the rural DSH payments applicable
to the hospital subsequent to its redesignation from urban to rural.
We also are proposing to make changes to the regulations to delete
Sec. 412.64(b)(1)(ii)(D). In this regulation section, we currently
define a ``hospital reclassified as rural'' as a hospital located in a
county that, in FY 2004, was urban but was redesignated as rural after
September 30, 2004, as a result of the most recent census data and
implementation of the new MSA definitions announced by OMB on June 6,
2003. Because this term is not used in Sec. 412.64, but is used in
Sec. 412.102, we
[[Page 28064]]
are proposing to delete Sec. 412.64(b)(1)(ii)(D) and revise the
language at Sec. 412.102 to address the circumstances set forth in
Sec. 412.64(b)(1)(ii)(D). The regulation at Sec. 412.102, which
addresses special treatment of hospitals located in areas that are
changing from urban to rural as a result of a geographic redesignation,
is the only location that currently references a ``hospital
reclassified as rural'', as defined at Sec. 412.64(b)(1)(ii)(D). To
avoid confusion with urban hospitals that choose to reclassify as rural
under Sec. 412.103, we are proposing to revise the regulation text at
Sec. 412.102 so that it no longer refers to the defined term
``hospital reclassified as rural,'' and instead specifically states the
circumstances in which Sec. 412.102 applies. In addition, we are
proposing to modify the regulation text so that it would apply to all
transitions from urban to rural status that occur as a result of any
future adoption of new or revised OMB standards for delineating
statistical areas adopted by CMS. Specifically, we are proposing to
revise the regulations at Sec. 412.102 to state that ``An urban
hospital that was part of an MSA, but was redesignated as rural as a
result of the most recent OMB standards for delineating statistical
areas adopted by CMS, may receive an adjustment to its rural Federal
payment amount for operating costs for 2 successive fiscal years as
provided in paragraphs (a) and (b) of this section. . . .''
C. Worksheet S-3 Wage Data for the Proposed FY 2015 Wage Index
The proposed FY 2015 wage index values are based on the data
collected from the Medicare cost reports submitted by hospitals for
cost reporting periods beginning in FY 2011 (the FY 2014 wage indexes
were based on data from cost reporting periods beginning during FY
2010).
1. Included Categories of Costs
The proposed FY 2015 wage index includes the following categories
of data associated with costs paid under the IPPS (as well as
outpatient costs):
Salaries and hours from short-term, acute care hospitals
(including paid lunch hours and hours associated with military leave
and jury duty);
Home office costs and hours;
Certain contract labor costs and hours (which includes
direct patient care, certain top management, pharmacy, laboratory, and
nonteaching physician Part A services, and certain contract indirect
patient care services (as discussed in the FY 2008 final rule with
comment period (72 FR 47315 through 47318)); and
Wage-related costs, including pension costs (based on
policies adopted in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51586
through 51590)) and other deferred compensation costs.
2. Excluded Categories of Costs
Consistent with the wage index methodology for FY 2014, the
proposed wage index for FY 2015 also excludes the direct and overhead
salaries and hours for services not subject to IPPS payment, such as
skilled nursing facility (SNF) services, home health services, costs
related to GME (teaching physicians and residents) and certified
registered nurse anesthetists (CRNAs), and other subprovider components
that are not paid under the IPPS. The proposed FY 2015 wage index also
excludes the salaries, hours, and wage-related costs of hospital-based
rural health clinics (RHCs), and Federally qualified health centers
(FQHCs) because Medicare pays for these costs outside of the IPPS (68
FR 45395). In addition, salaries, hours, and wage-related costs of CAHs
are excluded from the wage index, for the reasons explained in the FY
2004 IPPS final rule (68 FR 45397 through 45398).
3. Use of Wage Index Data by Providers Other Than Acute Care Hospitals
Under the IPPS
Data collected for the IPPS wage index are also currently used to
calculate wage indexes applicable to other providers, such as SNFs,
home health agencies (HHAs), and hospices. In addition, they are used
for prospective payments to IRFs, IPFs, and LTCHs, and for hospital
outpatient services. We note that, in the IPPS rules, we do not address
comments pertaining to the wage indexes for non-IPPS providers, other
than for LTCHs. Such comments should be made in response to separate
proposed rules for those providers.
D. Verification of Worksheet S-3 Wage Data
The wage data for the proposed FY 2015 wage index were obtained
from Worksheet S-3, Parts II and III of the Medicare cost report for
cost reporting periods beginning on or after October 1, 2010, and
before October 1, 2011. For wage index purposes, we refer to cost
reports during this period as the ``FY 2011 cost report,'' the ``FY
2011 wage data,'' or the ``FY 2011 data.'' Instructions for completing
the wage index sections of Worksheet S-3 are included in the Provider
Reimbursement Manual (PRM), Part 2 (Pub. No. 15-2), Chapter 40,
Sections 4005.2 through 4005.4 for Form CMS-2552-10. The data file used
to construct the proposed FY 2015 wage index includes FY 2011 data
submitted to us as of February 27, 2014. As in past years, we performed
an extensive review of the wage data, mostly through the use of edits
designed to identify aberrant data.
We asked our MACs to revise or verify data elements that result in
specific edit failures. For the proposed FY 2015 wage index, we
identified and excluded 50 providers with data that were too aberrant
to include in the proposed wage index, although if data elements for
some of these providers are corrected, we intend to include some of
these providers in the final FY 2015 wage index. We instructed MACs to
complete their data verification of questionable data elements and to
transmit any changes to the wage data no later than April 9, 2014. We
intend that all unresolved data elements will be resolved by the date
the FY 2015 final rule is issued. The revised data will be reflected in
the FY 2015 IPPS final rule.
In constructing the proposed FY 2015 wage index, we included the
wage data for facilities that were IPPS hospitals in FY 2011, inclusive
of those facilities that have since terminated their participation in
the program as hospitals, as long as those data did not fail any of our
edits for reasonableness. We believe that including the wage data for
these hospitals is, in general, appropriate to reflect the economic
conditions in the various labor market areas during the relevant past
period and to ensure that the current wage index represents the labor
market area's current wages as compared to the national average of
wages. However, we excluded the wage data for CAHs as discussed in the
FY 2004 IPPS final rule (68 FR 45397 through 45398). For this proposed
rule, we removed 6 hospitals that converted to CAH status on or after
February 14, 2013, the cut-off date for CAH exclusion from the FY 2014
wage index, and through and including February 13, 2014, the cut-off
date for CAH exclusion from the FY 2015 wage index. After removing
hospitals with aberrant data and hospitals that converted to CAH
status, the proposed FY 2015 wage index is calculated based on 3,400
hospitals.
For the proposed FY 2015 wage index, we allotted the wages and
hours data for a multicampus hospital among the different labor market
areas where its campuses are located in the same manner that we
allotted such hospitals' data in the FY 2014 wage index (78 FR 50587).
Table 2 containing the proposed
[[Page 28065]]
FY 2015 wage index associated with this proposed rule (available via
the Internet on the CMS Web site) includes separate wage data for the
campuses of 6 multicampus hospitals.
Questions have been raised recently regarding the reporting of
contract housekeeping and dietary services on Worksheet S-3, Part II,
lines 33 and 35 of the Medicare cost report. CMS finalized its proposal
to begin collecting contract labor costs and hours for housekeeping,
and dietary (along with management services and the overhead services
of administrative and general) in the FY 2003 IPPS final rule (67 FR
50022 through 50023). At that time, we stated, ``We continue to
consider whether to expand our contract labor definition to include
more types of contract services in the wage index. In particular, we
have examined whether to include the costs for acquired dietary and
housekeeping services, as many hospitals now provide these services
through contracts. Costs for these services tend to be below the
average wages for all hospital employees. Therefore, excluding the
costs and hours for these services if they are provided under contract,
while including them if the services are provided directly by the
hospital, creates an incentive for hospitals to contract for these
services in order to increase their average hourly wage for wage index
purposes'' (67 FR 50022). In the FY 2003 IPPS proposed rule, we
explained that we selected the three overhead services of
administrative and general, housekeeping, and dietary because they are
provided at all hospitals, either directly or through contracts, and
together they comprise about 60 percent of a hospital's overhead hours
(67 FR 31433). In the FY 2003 IPPS final rule, we stated that we ``will
monitor the hospital industry for information regarding the hospitals'
ability to provide the data. Further, we will work with hospitals and
intermediaries [MACs] to develop acceptable methods for tracking the
costs and hours. Finally, before including these additional costs in
the wage index, we will provide a detailed analysis of the impact of
including these additional costs in the wage index values in the
Federal Register and provide for public comment. Our final decision on
whether to include contract indirect patient care labor costs in our
calculation of the wage index will depend on the outcome of our
analyses and public comments'' (67 FR 50023).
Subsequent to the issuance of the FY 2003 IPPS final rule, we
revised Worksheet S-3, Part II of the Medicare cost report (CMS Form
2552-96) to add four lines for the reporting of contract labor
salaries, wages, and hours. The lines added for contract housekeeping
and dietary services were lines 26.01 and 27.01, respectively. (Line
9.03 for contract management and line 22.01 for contract administrative
and general (A&G) services were also added at that time). These lines
were effective with cost reporting periods beginning on or after
October 1, 2003 (that is, FY 2004). Because the cost report data used
for the wage index are on a 4-year lag, data from these new contract
labor lines would first be available for the FY 2008 wage index.
In the FY 2008 rulemaking process, we provided an analysis of the
effect on the inclusion in the wage index of the wages and hours
related to the new contract labor lines. At that time, 56 hospitals
(1.6 percent) failed edits for contract housekeeping line 26.01; and 99
hospitals (2.8 percent) failed edits for contract dietary line 27.01
(72 FR 24680 and 24782). We also noted that ``many of these edit
failures are for wage data that are not to be included in the wage
index and will be excluded through the wage index calculation. . . . In
addition, some of the aberrant data will be resolved by the final rule
through the correction process'' (72 FR 24680 and 24782). The small
percentage of hospitals that failed edits for these contract labor
lines indicates that the vast majority of hospitals completing these
contract labor lines were able to obtain and report reasonable
salaries, wages, and hours associated with contract housekeeping and
dietary services. In the FY 2008 IPPS final rule, we stated that we
believe that ``the impact of this policy is generally very minor, and
we do not believe the additional complexity of a transition wage index
is warranted for an impact this small. Further, we continue to believe
it is prudent policy to include in the wage index the costs for these
contract indirect patient care services'' (72 FR 47316). Therefore, we
adopted the policy to include the new contract labor lines in the wage
index, beginning with the FY 2008 wage index.
The questions that have recently come to our attention involve
hospitals that consistently do not provide documentable salaries,
wages, and hours for their contracted housekeeping and/or dietary
services. (On the Medicare cost report (CMS Form 2552-10), contract
housekeeping is on Worksheet S-3, Part II, line 33 and contract dietary
is on line 35). When this situation occurs, CMS has instructed the
Medicare contractors to use reasonable estimates, such as regional
average hourly rates, as a substitute for actual wages and hours, and
to report the estimates on the hospital's Worksheet S-3, Part II, line
33 or line 35, respectively. Our policy has been to use reasonable
estimates for these housekeeping and dietary lines, rather than report
zeroes for wages and hours, because, as discussed above and as stated
in the FY 2003 IPPS final rule, ``[c]osts for these services tend to be
below the average wages for all hospital employees. Therefore,
excluding the costs and hours for these services if they are provided
under contract, while including them if the services are provided
directly by the hospital, creates an incentive for hospitals to
contract for these services in order to increase their average hourly
wage for wage index purposes'' (57 FR 50022). We understand that the
reason many hospitals provide for failing to report such contract wages
and hours is that their contracts do not clearly specify this
information, often because they use a single vendor to provide several
different contract labor services. We believe that allowing hospitals
to routinely use contracts that do not clearly break out the salaries,
wages, and hours associated with these services as a reason for not
being able to report proper salaries, wages, and hours for these cost
report lines undermines the purpose of instituting these lines in the
first place. Furthermore, because every hospital must provide
housekeeping and dietary services, and because the wage index is a
relative measure of the value of the labor provided to a hospital in a
particular labor market area, to report zeroes for salaries, wages, and
hours for housekeeping and dietary services is not only unrealistic (in
that every hospital provides for these services), but also
misrepresents the labor costs in that area and undermines our policy.
Consequently, CMS has instructed the Medicare contractors not to zero
out these line items when a hospital cannot document the housekeeping
or dietary salaries, wages, and hours, but instead to use a reasonable
estimation of these wages and hours.
In this proposed rule, we are reiterating our requirement that all
hospitals must document salaries, wages, and hours for the purpose of
reporting this information on Worksheet S-3, Part II, lines 32, 33, 34,
and/or 35 (for either directly employed housekeeping and dietary
employees on lines 32 and 34, and contract labor on lines 33 and 35).
It is not acceptable for a hospital to request that the Medicare
contractor zero out these line items if the hospital's contract does
not
[[Page 28066]]
specifically break out the actual wages and hours. As indicated above,
and stated in the FY 2008 IPPS proposed rule (72 FR 24680 and 24782), a
small percentage of hospitals failed edits associated with the contract
housekeeping and dietary lines, showing that the vast majority of
hospitals reporting data on these lines were able to obtain and report
reasonable salaries, wages, and hours associated with contract
housekeeping and dietary services. We encourage hospitals to ensure
that their contracts clearly specify the salaries, wages, and hours
related to all of their contract labor. Because these line items have
been included in the cost report since FY 2004, we believe that
hospitals have had adequate notice and time to structure their
contracts so that the wages and hours of contract employees can be
determined and included in the cost reports. We expect hospitals to
provide accurate data on their cost reports.
We understand that there may be rare situations where a hospital
would not have documentable salaries, wages, and hours for contract
housekeeping and dietary services. In these situations, we believe that
it is appropriate and necessary to use reasonable estimates for these
numbers in order to determinate the best, most realistic, wage index
that we can. As discussed previously, housekeeping and dietary services
are unique in that the costs for housekeeping and dietary services tend
to be below the average wages for all hospital employees. Thus, an
incentive is created for hospitals to avoid reporting these contract
labor salaries, wages, and hours on the cost report in order to
increase their average hourly wage for wage index purposes. To deter
hospitals from not reporting this information and to ensure that the
wage index more accurately reflects the labor costs in an area, we
believe that it is both necessary and appropriate for the Medicare
contractors to estimate such salaries, wages, and hours in the rare
instance where a hospital cannot provide such information. Therefore,
in the absence of documentable wages and hours for contract
housekeeping and dietary services, Medicare contractors would continue
to use reasonable estimates for these services. Examples of reasonable
estimates are regional average hourly rates, including an average of
the wages and hours for dietary and housekeeping services of other
hospitals in the same CBSA as the hospital in question. Hospitals also
may conduct time studies to determine hours worked. If, for whatever
reason, regional averages or time studies cannot be used, Medicare
contractors may use data from the Bureau of Labor Statistics to obtain
average wages and hours for housekeeping and dietary services.
Commenters may also suggest alternatives for imputing reasonable
estimates for possible consideration by CMS. In all cases, Medicare
contractors must determine that the data used are reasonable.
E. Method for Computing the Proposed FY 2015 Unadjusted Wage Index
The method used to compute the proposed FY 2015 wage index without
an occupational mix adjustment follows the same methodology that we
used to compute the FY 2012, FY 2013, and FY 2014 final wage indexes
without an occupational mix adjustment (76 FR 51591 through 51593, 77
FR 53366 through 53367, and 78 FR 50587 through 50588, respectively).
As discussed in the FY 2012 final rule, in ``Step 5,'' for each
hospital, we adjust the total salaries plus wage-related costs to a
common period to determine total adjusted salaries plus wage-related
costs. To make the wage adjustment, we estimate the percentage change
in the employment cost index (ECI) for compensation for each 30-day
increment from October 14, 2010, through April 15, 2012, for private
industry hospital workers from the BLS' Compensation and Working
Conditions. We have consistently used the ECI as the data source for
our wages and salaries and other price proxies in the IPPS market
basket, and we are not proposing any changes to the usage for FY 2015.
The factors used to adjust the hospital's data were based on the
midpoint of the cost reporting period, as indicated in the following
table.
Midpoint of Cost Reporting Period
------------------------------------------------------------------------
After Before Adjustment factor
------------------------------------------------------------------------
10/14/2010 11/15/2010 1.02230
11/14/2010 12/15/2010 1.02078
12/14/2010 01/15/2011 1.01929
01/14/2011 02/15/2011 1.01782
02/14/2011 03/15/2011 1.01637
03/14/2011 04/15/2011 1.01494
04/14/2011 05/15/2011 1.01355
05/14/2011 06/15/2011 1.01219
06/14/2011 07/15/2011 1.01084
07/14/2011 08/15/2011 1.00948
08/14/2011 09/15/2011 1.00811
09/14/2011 10/15/2011 1.00674
10/14/2011 11/15/2011 1.00538
11/14/2011 12/15/2011 1.00403
12/14/2011 01/15/2012 1.00269
01/14/2012 02/15/2012 1.00134
02/14/2012 03/15/2012 1.00000
03/14/2012 04/15/2012 0.99866
------------------------------------------------------------------------
For example, the midpoint of a cost reporting period beginning
January 1, 2011, and ending December 31, 2011, is June 30, 2011. An
adjustment factor of 1.01084 would be applied to the wages of a
hospital with such a cost reporting period.
Using the data as described above and in the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50587 through 50588), the proposed FY 2015 national
average hourly wage (unadjusted for occupational mix) is $39.1525. The
proposed FY 2015 Puerto Rico overall average hourly wage (unadjusted
for occupational mix) is $17.0010.
F. Proposed Occupational Mix Adjustment to the Proposed FY 2015 Wage
Index
As stated earlier, section 1886(d)(3)(E) of the Act provides for
the collection of data every 3 years on the occupational mix of
employees for each short-term, acute care hospital participating in the
Medicare program, in order to construct an occupational mix adjustment
to the wage index, for application beginning October 1, 2004 (the FY
2005 wage index). The purpose of the occupational mix adjustment is to
control for the effect of hospitals' employment choices on the wage
index. For example, hospitals may choose to employ different
combinations of registered nurses, licensed practical nurses, nursing
aides, and medical assistants for the purpose of providing nursing care
to their patients. The varying labor costs associated with these
choices reflect hospital management decisions rather than geographic
differences in the costs of labor.
1. Development of Data for the Proposed FY 2015 Occupational Mix
Adjustment Based on the 2010 Occupational Mix Survey
As provided for under section 1886(d)(3)(E) of the Act, we collect
data every 3 years on the occupational mix of employees for each short-
term, acute care hospital participating in the Medicare program.
As discussed in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50588),
the occupational mix adjustment to the FY 2014 wage index was based on
data collected on the 2010 Medicare Wage Index Occupational Mix Survey
(Form CMS-10079 (2010)). For the FY 2015
[[Page 28067]]
wage index, we are proposing to again use occupational mix data
collected on the 2010 survey to compute the occupational mix adjustment
for FY 2015. We are including data for 3,165 hospitals that also have
wage data included in the proposed FY 2015 wage index.
2. New 2013 Occupational Mix Survey for the FY 2016 Wage Index
As stated earlier, section 304(c) of Public Law 106-554 amended
section 1886(d)(3)(E) of the Act to require CMS to collect data every 3
years on the occupational mix of employees for each short-term, acute
care hospital participating in the Medicare program. We used
occupational mix data collected on the 2010 survey to compute the
occupational mix adjustment for FY 2013, FY 2014, and the proposed FY
2015 wage index associated with this proposed rule. Therefore, a new
measurement of occupational mix will be required for FY 2016.
On December 7, 2012, we published in the Federal Register a notice
soliciting comments on the proposed 2013 Medicare Wage Index
Occupational Mix Survey (77 FR 73032 through 73033). The new 2013
survey, which will be applied to the FY 2016 wage index, includes the
same data elements and definitions as the 2010 survey and provides for
the collection of hospital-specific wages and hours data for nursing
employees for calendar year 2013 (that is, payroll periods ending
between January 1, 2013 and December 31, 2013). The comment period for
the notice ended on February 5, 2013. After considering the public
comments that we received on the December 2012 notice, we made a few
minor editorial changes and published the 2013 survey in the Federal
Register on February 28, 2013 (78 FR 13679). This survey was approved
by OMB on May 14, 2013, and is available on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Downloads/WAGE-INDEX-OCCUPATIONAL-MIX-SURVEY2013.pdf.
The 2013 Occupational Mix Survey Hospital Reporting Form CMS-10079
for the Wage Index Beginning FY 2016 (in excel format) is available on
the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items/FY2016-Wage-Index-OccupationalMix.html. Hospitals are required to submit their
completed 2013 surveys to their MACs by July 1, 2014. The preliminary,
unaudited 2013 survey data will be released afterward, along with the
FY 2012 Worksheet S-3 wage data, for the FY 2016 wage index review and
correction process.
3. Calculation of the Proposed Occupational Mix Adjustment for FY 2015
For FY 2015, we are proposing to calculate the occupational mix
adjustment factor using the same methodology that we used for the FY
2012, FY 2013, and FY 2014 wage indexes (76 FR 51582 through 51586, 77
FR 53367 through 53368, and 78 FR 50588 through 50589, respectively).
As a result of applying this methodology, the proposed FY 2015
occupational mix adjusted national average hourly wage (based on the
proposed new OMB delineations) is $39.1177. The proposed FY 2015
occupational mix adjusted Puerto Rico-specific average hourly wage
(based on the proposed new OMB delineations) is $17.0526.
Because the occupational mix adjustment is required by statute, all
hospitals that are subject to payments under the IPPS, or any hospital
that would be subject to the IPPS if not granted a waiver, must
complete the occupational mix survey, unless the hospital has no
associated cost report wage data that are included in the proposed FY
2015 wage index. For the FY 2015 proposed wage index, because we are
using the Worksheet S-3, Parts II and III wage data of 3,400 hospitals,
and we are using the occupational mix surveys of 3,165 hospitals for
which we also have Worksheet S-3 wage data, that represents a
``response'' rate of 93.1 percent (3,165/3,400). In the proposed FY
2015 wage index established in this proposed rule, we applied proxy
data for noncompliant hospitals, new hospitals, or hospitals that
submitted erroneous or aberrant data in the same manner that we applied
proxy data for such hospitals in the FY 2012 wage index occupational
mix adjustment (76 FR 51586).
In the FY 2011 IPPS/LTCH PPS proposed rule and final rule (75 FR
23943 and 75 FR 50167, respectively), we stated that, in order to gain
a better understanding of why some hospitals are not submitting the
occupational mix data, we will require hospitals that do not submit
occupational mix data to provide an explanation for not complying. This
requirement was effective beginning with the 2010 occupational mix
survey. We instructed fiscal intermediaries/MACs to continue gathering
this information as part of the FY 2014 and FY 2015 wage index desk
review process. We stated that we would review these data for future
analysis and consideration of potential penalties for noncompliant
hospitals.
G. Analysis and Implementation of the Proposed Occupational Mix
Adjustment and the Proposed FY 2015 Occupational Mix Adjusted Wage
Index
1. Analysis of the Proposed Occupational Mix Adjustment and the
Proposed Occupational Mix Adjusted Wage Index
As discussed in section III.F. of the preamble of this proposed
rule, for FY 2015, we are proposing to apply the proposed occupational
mix adjustment to 100 percent of the proposed FY 2015 wage index. We
calculated the proposed occupational mix adjustment using data from the
2010 occupational mix survey data, using the methodology described in
the FY 2012 IPPS/LTCH PPS final rule (76 FR 51582 through 51586).
Using the occupational mix survey data and applying the
occupational mix adjustment to 100 percent of the proposed FY 2015 wage
index results in a proposed national average hourly wage (based on the
new OMB delineations) of $39.1177 and a proposed Puerto-Rico specific
average hourly wage of $17.0526. After excluding data of hospitals that
either submitted aberrant data that failed critical edits, or that do
not have FY 2011 Worksheet S-3, Parts II and III, cost report data for
use in calculating the proposed FY 2015 wage index, we calculated the
proposed FY 2015 wage index using the occupational mix survey data from
3,165 hospitals. For the FY 2015 proposed wage index, because we are
using the Worksheet S-3, Parts II and III wage data of 3,400 hospitals,
and we are using the occupational mix survey data of 3,165 hospitals
for which we also have Worksheet S-3 wage data, those data represent a
``response'' rate of 93.1 percent (3,165/3,400). The proposed FY 2015
national average hourly wages for each occupational mix nursing
subcategory as calculated in Step 2 of the occupational mix calculation
are as follows:
[[Page 28068]]
------------------------------------------------------------------------
Proposed average
Occupational mix nursing subcategory hourly wage
------------------------------------------------------------------------
National RN.................................... 37.388291241
National LPN and Surgical Technician........... 21.767178303
National Nurse Aide, Orderly, and Attendant.... 15.31155016
National Medical Assistant..................... 17.246724132
National Nurse Category........................ 31.744397958
------------------------------------------------------------------------
The proposed national average hourly wage for the entire nurse
category as computed in Step 5 of the occupational mix calculation is
$31.744397958. Hospitals with a nurse category average hourly wage (as
calculated in Step 4) of greater than the national nurse category
average hourly wage receive an occupational mix adjustment factor (as
calculated in Step 6) of less than 1.0. Hospitals with a nurse category
average hourly wage (as calculated in Step 4) of less than the national
nurse category average hourly wage receive an occupational mix
adjustment factor (as calculated in Step 6) of greater than 1.0.
Based on the 2010 occupational mix survey data, we determined (in
Step 7 of the occupational mix calculation) that the national
percentage of hospital employees in the nurse category is 43.43
percent, and the national percentage of hospital employees in the all
other occupations category is 56.57 percent. At the CBSA level, using
the new OMB delineations proposed for FY 2015, the percentage of
hospital employees in the nurse category ranged from a low of 21.88
percent in one CBSA to a high of 73.27 percent in another CBSA.
We compared the proposed FY 2015 occupational mix adjusted wage
indexes for each CBSA to the proposed unadjusted wage indexes for each
CBSA. We used the proposed FY 2015 new OMB delineations for this
analysis. As a result of applying the proposed occupational mix
adjustment to the wage data, the proposed wage index values for 215
(52.8 percent) urban areas and 29 (61.7 percent) rural areas would
increase. One hundred and sixteen (28.5 percent) urban areas would
increase by 1 percent but less than 5 percent, and 4 (1.0 percent)
urban areas would increase by 5 percent or more. Fourteen (29.8
percent) rural areas would increase by 1 percent but less than 5
percent, and no rural areas would increase by 5 percent or more.
However, the wage index values for 190 (46.7 percent) urban areas and
18 (38.3 percent) rural areas would decrease. Eighty (19.7 percent)
urban areas would decrease by 1 percent but less than 5 percent, and 1
(0.2 percent) urban area would decrease by 5 percent or more. Seven
(14.9 percent) rural areas would decrease by 1 percent and less than 5
percent, and no rural areas would decrease by 5 percent or more. The
largest positive impacts would be 6.56 percent for an urban area and
3.35 percent for a rural area. The largest negative impacts would be
5.32 percent for an urban area and 1.71 percent for a rural area. Two
urban areas' wage indexes, but no rural area wage indexes, would remain
unchanged by application of the occupational mix adjustment. These
results indicate that a larger percentage of rural areas (61.7 percent)
would benefit from the occupational mix adjustment than would urban
areas (52.8 percent). However, approximately one-third (38.3 percent)
of rural CBSAs would still experience a decrease in their wage indexes
as a result of the occupational mix adjustment.
2. Proposed Application of the Rural, Imputed, and Frontier Floors
a. Proposed Rural Floor
Section 4410(a) of Public Law 105-33 provides that, for discharges
on or after October 1, 1997, the area wage index applicable to any
hospital that is located in an urban area of a State may not be less
than the area wage index applicable to hospitals located in rural areas
in that State. This provision is referred to as the ``rural floor.''
Section 3141 of Public Law 111-148 also requires that a national budget
neutrality adjustment be applied in implementing the rural floor. In
the proposed FY 2015 wage index associated with this proposed rule and
available on the CMS Web site, based on the proposed implementation of
the new OMB delineations discussed in section III.B. of the preamble of
this proposed rule, we estimated that 441 hospitals would receive an
increase in their FY 2015 proposed wage index due to the application of
the rural floor.
b. Proposed Imputed Floor for FY 2015
In the FY 2005 IPPS final rule (69 FR 49109 through 49111), we
adopted the ``imputed floor'' policy as a temporary 3-year regulatory
measure to address concerns from hospitals in all-urban States that
have argued that they are disadvantaged by the absence of rural
hospitals to set a wage index floor for those States. Since its initial
implementation, we have extended the imputed floor policy four times,
the last of which was adopted in the FY 2014 IPPS/LTCH PPS final rule
and is set to expire on September 30, 2014. (We refer readers to
further discussion of the imputed floor in the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50589 through 50590) and to our regulations at 42 CFR
412.64(h)(4).) There were previously two all-urban States, New Jersey
and Rhode Island, that have a range of wage indexes assigned to
hospitals in the State, including through reclassification or
redesignation (we refer readers to discussions of geographic
reclassifications and redesignations in section III.H. of the preamble
of this proposed rule). However, as we explain below, the method as of
FY 2012 for computing the imputed floor (the original methodology)
benefitted only New Jersey, and not Rhode Island.
In computing the imputed floor for an all-urban State under the
original methodology, we calculated the ratio of the lowest-to-highest
CBSA wage index for each all-urban State as well as the average of the
ratios of lowest-to-highest CBSA wage indexes of those all-urban
States. We then compared the State's own ratio to the average ratio for
all-urban States and whichever is higher is multiplied by the highest
CBSA wage index value in the State--the product of which established
the imputed floor for the State. Under the current OMB labor market
area delineations that we used for the FY 2014 wage index, Rhode Island
has only one CBSA (Providence-New Bedford-Fall River, RI-MA) and New
Jersey has 10 CBSAs. Therefore, under the original methodology, Rhode
Island's own ratio equaled 1.0, and its imputed floor was equal to its
original CBSA wage index value. However, because the average ratio of
New Jersey and Rhode Island was higher than New Jersey's own ratio,
this methodology provided a benefit for New Jersey, but not for Rhode
Island.
In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53368 through
53369), we retained the imputed floor calculated under the original
methodology as discussed above, and established an alternative
methodology for computing the imputed floor wage index to address the
concern that the original imputed floor methodology guaranteed a
benefit
[[Page 28069]]
for one all-urban State with multiple wage indexes (New Jersey) but
could not benefit the other all-urban State (Rhode Island). The
alternative methodology for calculating the imputed floor was
established using data from the application of the rural floor policy
for FY 2013. Under the alternative methodology, we first determined the
average percentage difference between the post-reclassified, pre-floor
area wage index and the post-reclassified, rural floor wage index
(without rural floor budget neutrality applied) for all CBSAs receiving
the rural floor. (Table 4D associated with the FY 2013 IPPS/LTCH PPS
final rule (which is available on the CMS Web site) included the CBSAs
receiving a State's rural floor wage index.) The lowest post-
reclassified wage index assigned to a hospital in an all-urban State
having a range of such values then is increased by this factor, the
result of which establishes the State's alternative imputed floor. We
amended Sec. 412.64(h)(4) of the regulations to add new paragraphs to
incorporate the finalized alternative methodology, and to make
reference and date changes.
In summary, for the FY 2013 wage index, we did not make any changes
to the original imputed floor methodology at Sec. 412.64(h)(4) and,
therefore, made no changes to the New Jersey imputed floor computation
for FY 2013. Instead, for FY 2013, we adopted a second, alternative
methodology for use in cases where an all-urban State has a range of
wage indexes assigned to its hospitals, but the State cannot benefit
from the methodology in existing Sec. 412.64(h)(4).
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50589 through
50590), we extended the imputed floor policy (both the original
methodology and the alternative methodology) for 1 additional year,
through September 30, 2014, while we continued to explore potential
wage index reforms.
For FY 2015, we are proposing to continue the extension of the
imputed floor policy (both the original methodology and alternative
methodology) for another year, through September 30, 2015, as we
continue to explore potential wage index reforms. As discussed in
section III.B. of the preamble of this proposed rule, we are proposing
to adopt the new OMB labor market area delineations beginning in FY
2015. Under OMB's new labor market area delineations based on Census
2010 data, Delaware would become an all-urban State, along with New
Jersey and Rhode Island. Under the new OMB delineations, Delaware would
have three CBSAs, New Jersey would have seven CBSAs, and Rhode Island
would continue to have only one CBSA (Providence-Warwick, RI-MA). We
refer readers to a detailed discussion of our proposal to adopt the new
OMB labor market area delineations in section III.B. of the preamble of
this proposed rule. We are proposing to revise the regulations at Sec.
412.64(h)(4) and (h)(4)(vi) to reflect the proposed 1-year extension of
the imputed floor. We are inviting public comments on our proposal
regarding the 1-year extension of the imputed floor.
The wage index and impact tables associated with this FY 2015 IPPS/
LTCH PPS proposed rule that are available on the CMS Web site reflect
the proposed continued application of the imputed floor policy at Sec.
412.64(h)(4) and a national budget neutrality adjustment for the
imputed floor for FY 2015. There are 12 providers in New Jersey, and 1
provider in Delaware that would receive an increase in their FY 2015
wage index due to the proposed continued application of the imputed
floor policy under the original methodology. The wage index and impact
tables for this FY 2015 proposed rule also reflect the proposed
application of the second alternative methodology for computing the
imputed floor, which would benefit four hospitals in Rhode Island.
c. Proposed State Frontier Floor
Section 10324 of Public Law 111-148 requires that hospitals in
frontier States cannot be assigned a wage index of less than 1.0000 (we
refer readers to regulations at 42 CFR 412.64(m) and to a discussion of
the implementation of this provision in the FY 2011 IPPS/LTCH PPS final
rule (75 FR 50160 through 50161)). Based on the proposed implementation
of the new OMB delineations discussed in section III.B. of the preamble
of this proposed rule, 46 hospitals would receive the frontier floor
value of 1.0000 for their proposed FY 2015 wage index in this proposed
rule. These hospitals are located in Montana, North Dakota, South
Dakota, and Wyoming. Although Nevada is also defined as a frontier
State, its proposed FY 2015 rural floor value of 1.1373 is greater than
1.0000, and therefore, no Nevada hospitals would receive a frontier
floor value for their proposed FY 2015 wage index.
The areas affected by the proposed rural, imputed, and frontier
floor policies for the proposed FY 2015 wage index are identified in
Table 4D associated with this proposed rule, which is available on the
CMS Web site.
3. Proposed FY 2015 Wage Index Tables
The proposed wage index values for FY 2015 (except those for
hospitals receiving wage index adjustments under section 1886(d)(13) of
the Act), included in Tables 4A, 4B, 4C, and 4F, available on the CMS
Web site, include the proposed occupational mix adjustment, geographic
reclassification or redesignation as discussed in section III.H. of the
preamble of this proposed rule, and the application of the rural,
imputed, and frontier State floors as discussed in section III.G.2. of
the preamble of this proposed rule. We note that because we are
proposing to adopt the new OMB labor market area delineations for FY
2015, these tables have additional tabulations to account for wage
index calculations computed under the previous and the new OMB
delineations.
Tables 3A and 3B, available on the CMS Web site, list the proposed
3-year average hourly wage for each labor market area before the
redesignation or reclassification of hospitals based on FYs 2009, 2010,
and 2011 cost reporting periods. Table 3A lists these data for urban
areas, and Table 3B lists these data for rural areas. In addition,
Table 2, which is available on the CMS Web site, includes the proposed
adjusted average hourly wage for each hospital from the FY 2009 and FY
2010 cost reporting periods, as well as the FY 2011 period used to
calculate the proposed FY 2015 wage index. The proposed 3-year averages
are calculated by dividing the sum of the dollars (adjusted to a common
reporting period using the method described in Step 5 in section III.G.
of the preamble of this proposed rule) across all 3 years, by the sum
of the hours. If a hospital is missing data for any of the previous
years, its proposed average hourly wage for the 3-year period is
calculated based on the data available during that period. The proposed
average hourly wages in Tables 2, 3A, and 3B, which are available on
the CMS Web site, include the proposed occupational mix adjustment. The
proposed wage index values in Tables 4A, 4B, 4C, and 4D also include
the proposed national rural floor budget neutrality adjustment (which
includes the proposed imputed floor). The proposed wage index values in
Table 2 also include the proposed out-migration adjustment for eligible
hospitals. As stated above, because we are proposing to adopt the new
OMB labor market area delineations for FY 2015, these tables have
additional tabulations to account for wage index calculations computed
under the current labor market definitions and the
[[Page 28070]]
new OMB labor market area delineations. In addition, for certain
applicable hospitals, the proposed wage index values included in Table
2 are computed to reflect the proposed transitional wage index or the
50/50 blended wage index discussed in detail in section III.B.2.e. of
the preamble of this proposed rule.
H. Revisions to the Wage Index Based on Hospital Redesignations and
Reclassifications
1. General Policies and Effects of Reclassification and Redesignation
Under section 1886(d)(10) of the Act, the MGCRB considers
applications by hospitals for geographic reclassification for purposes
of payment under the IPPS. Hospitals must apply to the MGCRB to
reclassify not later than 13 months prior to the start of the fiscal
year for which reclassification is sought (generally by September 1).
Generally, hospitals must be proximate to the labor market area to
which they are seeking reclassification and must demonstrate
characteristics similar to hospitals located in that area. The MGCRB
issues its decisions by the end of February for reclassifications that
become effective for the following fiscal year (beginning October 1).
The regulations applicable to reclassifications by the MGCRB are
located in 42 CFR 412.230 through 412.280. (We refer readers to a
discussion in the FY 2002 IPPS final rule (66 FR 39874 and 39875)
regarding how the MGCRB defines mileage for purposes of the proximity
requirements.) The general policies for reclassifications and
redesignations that we are proposing for FY 2015, and the policies for
the effects of hospitals' reclassifications and redesignations on the
wage index, are the same as those discussed in the FY 2012 IPPS/LTCH
PPS final rule for the FY 2012 final wage index (76 FR 51595 and
51596). Also, in the FY 2012 IPPS/LTCH PPS final rule, we discussed the
effects on the wage index of urban hospitals reclassifying to rural
areas under 42 CFR 412.103. Hospitals that are geographically located
in States without any rural areas are ineligible to apply for rural
reclassification in accordance with the provisions of 42 CFR 412.103.
While our general policies on geographic reclassification,
redesignations under section 1886(d)(8)(B) of the Act, and urban
hospitals reclassifying to rural under 42 CFR 412.103 will remain
unchanged for FY 2015, we note that, due to our proposed adoption of
the new OMB labor market area delineations for FY 2015, there are
numerous unique classification considerations for FY 2015 that are
discussed in more detail in section III.H. of the preamble of this
proposed rule. For a discussion of the new CBSA changes based on the
new OMB labor market area delineations and our proposed implementation
of those changes, we refer readers to sections III.B. and VI.C. of the
preamble of this proposed rule.
2. FY 2015 MGCRB Reclassifications
a. FY 2015 Reclassification Requirements and Approvals
Under section 1886(d)(10) of the Act, the MGCRB considers
applications by hospitals for geographic reclassification for purposes
of payment under the IPPS. The specific procedures and rules that apply
to the geographic reclassification process are outlined in regulations
under 42 CFR 412.230 through 412.280.
In February 2014, the MGCRB completed its review of FY 2015
reclassification requests. Based on such reviews, there were 379
hospitals approved for wage index reclassifications by the MGCRB
starting in FY 2015. Because MGCRB wage index reclassifications are
effective for 3 years, for FY 2015, hospitals reclassified beginning
during FY 2013 or FY 2014 are eligible to continue to be reclassified
to a particular labor market area based on such prior reclassifications
for the remainder of their 3-year period. There were 172 hospitals
approved for wage index reclassifications in FY 2013, and 287 hospitals
approved for wage index reclassifications in FY 2014. Of all the
hospitals approved for reclassification for FY 2013, FY 2014, and FY
2015, as of February 2014, 838 hospitals are in a reclassification
status for FY 2015.
Under the regulations at 42 CFR 412.273, hospitals that have been
reclassified by the MGCRB are permitted to withdraw their applications
within 45 days of the publication of a proposed rule. For information
about withdrawing, terminating, or canceling a previous withdrawal or
termination of a 3-year reclassification for wage index purposes, we
refer readers to 42 CFR 412.273, as well as the FY 2002 IPPS final rule
(66 FR 39887 through 39888) and the FY 2003 IPPS final rule (67 FR
50065 through 50066). Additional discussion on withdrawals and
terminations, and clarifications regarding reinstating
reclassifications and ``fallback'' reclassifications, were included in
the FY 2008 IPPS final rule (72 FR 47333).
Changes to the wage index that result from withdrawals of requests
for reclassification, terminations, wage index corrections, appeals,
and the Administrator's review process for FY 2015 will be incorporated
into the wage index values published in the FY 2015 IPPS/LTCH PPS final
rule. These changes affect not only the wage index value for specific
geographic areas, but also the wage index value redesignated/
reclassified hospitals receive; that is, whether they receive the wage
index that includes the data for both the hospitals already in the area
and the redesignated/reclassified hospitals. Further, the wage index
value for the area from which the hospitals are redesignated/
reclassified may be affected.
b. Effects of Implementation of New OMB Labor Market Area Delineations
on Reclassified Hospitals
Because hospitals that have been reclassified beginning in FY 2013,
2014, or 2015 were reclassified based on the current labor market
delineations, if we adopt the new OMB labor market area delineations
beginning in FY 2015, the areas to which they have been reclassified,
or the areas where they are located, may change. Under the new OMB
delineations, many existing CBSAs would be reconfigured. Hospitals with
current reclassifications are encouraged to verify area wage indexes on
Tables 4A-2 and 4B-2 associated with this proposed rule (which are
available via the Internet on the CMS Web site), and confirm that the
areas to which they have been reclassified for FY 2015 would continue
to provide a higher wage index than their geographic area wage index.
Hospitals may withdraw their FY 2015 reclassifications by contacting
the MGCRB within 45 days from the publication of this proposed rule.
In some cases, adopting the new OMB delineations would result in
counties splitting apart from CBSAs to form new CBSAs, or counties
shifting from one CBSA designation to another CBSA. Reclassifications
granted under section 1886(d)(10) of the Act are effective for 3 fiscal
years so that a hospital or county group of hospitals would be assigned
a wage index based upon the wage data of hospitals in a nearby labor
market area for a 3-year period. If CBSAs are split apart, or if
counties shift from one CBSA to another under the new OMB delineations,
it raises the question of how to continue a hospital's reclassification
for the remainder of its 3-year reclassification period, if that area
to which the hospital reclassified no longer exists, in whole or in
part. We dealt with this question in FY 2005 as well when CMS adopted
the current OMB labor market area definitions.
[[Page 28071]]
Consistent with the policy CMS implemented in the FY 2005 IPPS final
rule (69 FR 49054 through 49056), if a CBSA would be reconfigured due
to the new OMB delineations and it would not be possible for the
reclassification to continue seamlessly to the reconfigured CBSA, we
believe it is appropriate for us to determine the best alternative
location to reassign current reclassifications for the remaining 3
years. Therefore, to maintain the integrity of a hospital's 3-year
reclassification period, we are proposing a policy to assure that
current geographic reclassifications (applications approved in FY 2013,
FY 2014, or FY 2015) that would be affected by CBSAs that are split
apart or counties that shift to another CBSA under the new OMB
delineations, would ultimately be assigned to a CBSA under the new OMB
delineations that contains at least one county from the reclassified
CBSA under the current FY 2014 OMB definitions, and would be generally
consistent with rules that govern geographic reclassification. That is,
consistent with policy finalized in FY 2005 (69 FR 49054 and 49055), we
are proposing a general policy that affected reclassified hospitals
would be assigned to a CBSA that (1) would contain the most proximate
county that is located outside of the hospital's proposed FY 2015
geographic labor market area, and (2) is part of the original FY 2014
CBSA to which the hospital is reclassified. We believe that by
assigning reclassifications to the CBSA that contains the nearest
eligible county (as described above) satisfies the statutory
requirement at section 1886(d)(10)(v) of the Act by maintaining
reclassification status for a period of 3 fiscal years, while generally
respecting the longstanding principle of geographic proximity in the
labor market reclassification process. The hospitals that we are
proposing to reassign to a different CBSA based on our proposed policy
above are listed in a special Table 9A-2 for this proposed rule, which
is available via the Internet on the CMS Web site. In addition, we are
proposing to allow a hospital, or county group of hospitals, to request
reassignment to another CBSA that would contain a county that is part
of the current FY 2014 CBSA to which they are reclassified, if the
hospital or county group of hospitals can demonstrate compliance with
applicable reclassification proximity rules, as described later in this
section.
We recognize that this proposed reclassification reassignment
described for hospitals that are reclassified to CBSAs that would split
apart or to counties that would shift to another CBSA under the new OMB
delineations may result in the reassignment of the hospital for the
remainder of its 3-year reclassification period to a CBSA having a
lower wage index than the wage index that would have been assigned for
the reclassified hospital in the absence of the proposed adoption of
the new OMB delineations. Therefore, as discussed in section
III.B.2.e.(4) of the preamble of this proposed rule, we are proposing
that all hospitals that would experience a decrease in their FY 2015
wage index value due to the proposed implementation of the new OMB
delineations would receive a 50/50 blended wage index adjustment in FY
2015. For FY 2015, using FY 2015 wage data, we are proposing to
calculate a wage index value based on the current FY 2014 OMB
definitions, and a wage index value based upon the proposed new OMB
delineations (including reclassification assignments discussed in this
section). If the wage index under the proposed new OMB delineations
would be lower than the wage index calculated with the current (FY
2014) OMB definitions, the hospital would be assigned a blended wage
index (50 percent of the current; 50 percent of the proposed). We
believe that this proposed transitional adjustment would mitigate
negative payment impacts for FY 2015, and would afford hospitals
additional time to fully assess any additional reclassification options
available to them under the new OMB delineations.
We are including the following descriptions of specific situations
where we have determined that reassignment of reclassification areas
would be appropriate.
(1) Reclassifications to CBSAs That Would Be Subsumed by Other CBSAs
We identified 66 counties that are currently located in CBSAs that
would be subsumed by another CBSA under the new OMB labor market area
delineations. As a result, hospitals reclassifying to those CBSAs would
now find that their reclassifications are to a CBSA that no longer
exists. For these hospitals, we are proposing to reassign
reclassifications to the newly configured CBSA to which all of the
original constituent counties in the FY 2014 CBSA are transferred. For
example, CBSA 11300 (Anderson, IN) would no longer exist under the
proposed FY 2015 delineations. The only constituent county in CBSA
11300, Madison County, IN, would be moving to CBSA 26900 (Indianapolis-
Carmel-Anderson, IN). Because the original Anderson, IN labor market
area no longer exists, we are proposing to reassign reclassifications
from the original Anderson, IN labor market area to a newly configured
CBSA where the original constituent county or counties are transferred,
which is Indianapolis-Carmel-Anderson, IN. For hospitals reclassified
to a CBSA that would be subsumed by another CBSA, the following table
reflects the hospitals' current reclassified CBSA, and the CBSA to
which CMS is proposing to assign them for FY 2015.
Proposed Hospital Reclassification Reassignments for Hospitals
Reclassified to a CBSA That Would Be Subsumed by Another CBSA
------------------------------------------------------------------------
CMS certification No. Current reclassified
(CCN) CBSA Proposed CBSA
------------------------------------------------------------------------
050022 42044 11244
050054 42044 11244
050102 42044 11244
050243 42044 11244
050292 42044 11244
050329 42044 11244
050390 42044 11244
050423 42044 11244
050534 42044 11244
050573 42044 11244
050684 42044 11244
050686 42044 11244
050701 42044 11244
050765 42044 11244
050770 42044 11244
140067 14060 14010
150089 11300 26900
220001 14484 14454
220002 14484 14454
220008 14484 14454
220011 14484 14454
220019 14484 14454
220020 14484 14454
220049 14484 14454
220058 14484 14454
220062 14484 14454
220063 14484 14454
220070 14484 14454
220073 14484 14454
220074 14484 14454
220082 14484 14454
220084 14484 14454
220090 14484 14454
220095 14484 14454
220098 14484 14454
220101 14484 14454
220105 14484 14454
220163 14484 14454
220171 14484 14454
220175 14484 14454
220176 14484 14454
230002 47644 47664
230020 47644 47664
230024 47644 47664
230053 47644 47664
230089 47644 47664
230104 47644 47664
230142 47644 47664
230146 47644 47664
[[Page 28072]]
230165 47644 47664
230176 47644 47664
230244 47644 47664
230270 47644 47664
230273 47644 47664
230297 47644 47664
300017 37764 15764
300023 37764 15764
300029 37764 15764
390151 13644 43524
410001 14484 14454
410004 14484 14454
410005 14484 14454
410007 14484 14454
410010 14484 14454
410011 14484 14454
410012 14484 14454
------------------------------------------------------------------------
(2) Reclassification to CBSAs Where the CBSA Number or Name Has Changed
or to CBSAs Containing Counties That Would Be Moving to Another CBSA
We identified six CBSAs with current reclassifications that would
maintain the same constituent counties, but the CBSA number or name
would change if we adopted the new OMB delineations. For example, CBSA
29140 (Lafayette, IN) currently contains three counties (Benton,
Carroll, and Tippecanoe Counties). The CBSA name and number for these
counties would change to CBSA 29200 (Lafayette-West Lafayette, IN)
under the new OMB delineations. Because the constituent counties in
these CBSAs would not change under the new delineations, we would
consider these CBSAs to be unchanged, and we are not proposing any
reassignment for hospitals reclassified to those labor market areas.
Table 9A-2 for this proposed rule (which is available via the Internet
on the CMS Web site) reflects the proposed revised CBSA number
effective in FY 2015.
We identified eight CBSAs with current reclassifications that have
one or more counties that would split off and move to a new CBSA or to
a different existing CBSA under the new OMB delineations. These CBSAs
are shown in the following table.
------------------------------------------------------------------------
Current FY 2014 CBSA Current FY 2014 CBSA name
------------------------------------------------------------------------
16620............................ Charleston, WV.
16974............................ Chicago-Joliet-Naperville, IL.
20764............................ Edison-New Brunswick, NJ.
31140............................ Louisville/Jefferson County, KY-IN.
35644............................ New York-White Plains-Wayne, NY-NJ.
37964............................ Philadelphia, PA.
39100............................ Poughkeepsie-Newburgh-Middletown, NY.
48900............................ Wilmington, NC.
------------------------------------------------------------------------
We have determined that 69 hospitals have current reclassifications
to one of these CBSAs. Similar to the methodology finalized in the FY
2005 IPPS final rule (69 FR 49054 through 49055), we are proposing to
follow the general policy discussed in section III.H.2.b. of the
preamble of this proposed rule. Specifically, we are proposing that
affected reclassified hospitals would be assigned to a CBSA (under the
new OMB delineations) that would contain the most proximate county that
is (1) located outside of the hospital's proposed FY 2015 geographic
labor market area; and (2) is included in the current CBSA to which
they are reclassified. For each of the 69 hospitals, we conducted a
mapping analysis and determined driving distances from their geographic
location to the borders of each county (that is in the reclassified
CBSA under the FY 2014 delineations) and is also included in a CBSA
under the new OMB delineations, excluding any counties that would be
located in the hospital's proposed FY 2015 geographic labor market
area. Following the general reassignment principle that we are
proposing, we are proposing to reassign those reclassified hospitals to
the CBSA which contains the geographically closest county. For example,
there are hospitals that currently are reclassified to CBSA 39100
(Poughkeepsie-Newburgh-Middletown, NY) under the FY 2014 delineations,
which is comprised of Dutchess County and Orange County, NY. Under the
new OMB delineations, Dutchess County would become part of new CBSA
20524 (Dutchess County-Putnam County, NY), while Orange County would
join CBSA 35614 (New York-Jersey City-White Plains, NY-NJ Metropolitan
Division). Therefore, we mapped the distances from one reclassified
hospital to the border of Dutchess County and Orange County, NY (the
two counties that were part of CBSA 39100 under the FY 2014
delineations). Our analysis showed that the hospital is 2.2 miles from
Dutchess County, and 25.9 miles from Orange County. Therefore, we are
proposing to reassign this hospital's reclassification from the FY 2014
CBSA 39100 to the new CBSA 20524.
We also identified affected county group reclassifications. For
these reclassifications, we would follow our proposed policy discussed
above, except that, for county group reclassifications, we are
proposing to reassign hospitals in a county group reclassification to
the CBSA under the new OMB delineations to which the majority of
hospitals in the group reclassification are geographically closest.
Because hospitals in a county group applied as a group, we believe the
reassignment should also be applied to the whole group. For example,
the hospitals of Fairfield County, CT are reclassified as a group to
CBSA 35644 under the FY 2014 delineations. Under the new OMB
delineations, CBSA 35644 would no longer exist and would be split into
the following two new CBSAs: 20524 (Dutchess County-Putnam County, NY)
and 35614 (New York-Jersey City-White Plains, NY-NJ). Of the six
hospitals in the group reclassification, all but one would be closer to
an eligible county (Westchester, NY) in CBSA 35614 than to an eligible
county (Putnam, NY) in CBSA 20524. Because these hospitals in
Fairfield, CT applied as a group, we believe the reassignment should
also be applied to the whole group. Therefore, we are proposing to
assign the hospitals in this group reclassification to CBSA 35614, the
reconfigured CBSA to which the majority of the hospitals in the group
reclassification are geographically closest.
To summarize, of the 69 hospitals reclassified to one of the 8
CBSAs in the preceding table that have counties that would split off
and move to a new CBSA or a different existing CBSA under the new OMB
delineations, there are 27 hospitals that would maintain the same
reclassified CBSA number under our proposals. Another 28 hospitals
would be reassigned to a reconfigured CBSA that would contain a similar
number of counties from their current reclassified CBSA. For example,
the new CBSA 35614 (New York-Jersey City-White Plains, NY-NJ
Metropolitan Division) would contain 10 out of 11 counties from current
(FY 2014) CBSA 35644 (New York-White Plains-Wayne, NY-NJ Metropolitan
Division).
For the remaining 14 reclassified hospitals, we are proposing to
assign them to a CBSA (under the new OMB delineations) that would have
a different CBSA number from the labor market area to which they are
currently reclassified (under the current FY 2014 delineations). This
is because if the original CBSA to which the hospitals are reclassified
is losing counties to another urban CBSA, it may be that the
[[Page 28073]]
original reclassification determination would not be reflective of the
new delineations. In addition, because proximity to a CBSA is a
requirement of reclassifications approved under section 1886(d)(10) of
the Act, we believe it is appropriate to propose to reassign
reclassification status to an urban CBSA that contains the county (from
the hospital's current CBSA reclassification) that is closest to the
hospital. We believe this would more accurately reflect the geographic
labor market area of the reclassified hospital. For example, under the
FY 2014 delineations, CBSA 37964 (Philadelphia, PA Metropolitan
Division) is comprised of five counties (Bucks, Chester, Delaware,
Montgomery, and Philadelphia Counties, PA). Under the new OMB
delineations, CBSA 37964 would retain the same CBSA name and number,
but three counties (Bucks, Chester, and Montgomery) would split off to
form the new CBSA 33874 (Montgomery County-Bucks County-Chester County,
PA Metropolitan Division). While CBSA 37964 exists under the FY 2014
and proposed new labor market area delineations, the fact that three
counties would be moved to another CBSA means that current
reclassifications to CBSA 37964 (Philadelphia) may be more proximate to
new CBSA 33874. Therefore, if reclassified hospitals, or the majority
of hospitals in a county group, are geographically closer to a county
in CBSA 33874 than to a county in CBSA 37964, we are proposing to
reassign the reclassification to that area, new CBSA 33874 (Montgomery
County-Bucks County-Chester County, PA Metropolitan Division).
Consistent with refinements implemented in the FY 2005 IPPS final
rule (69 FR 49055), we are proposing to allow hospitals that
reclassified under section 1886(d)(10) of the Act to one of the eight
CBSAs that split (that is, current FY 2014 CBSAs 16620, 16974, 20764,
31140, 35644, 37964, 39100, 48900) to be reclassified to any CBSA
containing a county from their original reclassification labor market
area, provided that the hospital demonstrates that it meets the
applicable proximity requirements under 42 CFR 412.230(b) and (c) (for
individual hospitals), 42 CFR 412.232(a)(1) (for a rural group), and 42
CFR 412.234(a)(2) and (a)(3) (for an urban group) to that CBSA.
Hospitals that wish to be reassigned to an alternate CBSA (other than
the CBSA to which their reclassification would be reassigned in this
proposed rule) for which they meet the applicable proximity criteria
may request reassignment within 45 days from the publication of this
proposed rule. Hospitals must send a request to [email protected]
and provide documentation certifying that they meet the requisite
proximity criteria for reassignment to an alternate CBSA, as described
above. We believe this option of allowing hospitals to submit a request
to CMS would provide hospitals with greater flexibility with respect to
their reclassification reassignment, while ensuring that the proximity
requirements are met. We believe that where the proximity requirements
are met, the reclassified wage index would be consistent with the labor
market area to which the hospitals were originally approved for
reclassification. Under this proposed policy, a hospital may request to
be assigned a reclassification to any CBSA that contains any county
from the CBSA to which it is currently reclassified. However, to be
reassigned to an area that is not the most proximate to the hospital
(or the majority of hospitals in a county group), we believe it is
necessary that the hospital demonstrates that it complies with the
applicable proximity criteria. If a hospital cannot demonstrate
proximity to an alternate CBSA, the hospital would not be considered
for reclassification to that labor market area, and reassignment would
remain with the closest eligible (new) CBSA.
As discussed previously in this section, under the new OMB
delineations, we identified CBSA 35644 (New York-White Plains-Wayne,
NY-NJ Metropolitan Division) as one of the examples of the eight CBSAs
that would have at least one county that would split off and join
another new CBSA (Putnam County joined Dutchess County, NY to form new
CBSA 20524), while also having multiple counties assigned to a
reconfigured CBSA 35614 (New York-Jersey City-White Plains, NY-NJ
Metropolitan Division). CBSA 35614 would also add Orange County, NY
under the new OMB delineations. The hospitals that are currently
located in CBSA 39100 (Poughkeepsie-Newburgh-Middletown, NY) are
currently part of a group reclassification of Orange County, NY to CBSA
35644 (New York-White Plains-Wayne, NY-NJ Metropolitan Division). As
discussed above, we are proposing to reassign current reclassifications
to the CBSA that contains the most proximate county that is located
outside of the reclassified hospital's proposed geographic labor market
area, and is currently part of the original CBSA to which the hospital
is reclassified. In the case of the Orange County, NY group
reclassification, the closest (and only) county from the original
reclassified area (CBSA 35644), that would not be located in Orange
County's proposed home labor market area (CBSA 35614) is Putnam County,
NY. Therefore, we are proposing to reassign the Orange County group
reclassification to CBSA 20524 (Putnam County-Dutchess County, NY). If
the hospitals from the Orange County, NY group reclassification do not
wish to maintain this assignment, we encourage them to formally
terminate the current group reclassification within 45 days from the
publication of this proposed rule, as discussed earlier in this
section.
The following table shows proposed hospital reclassification
assignments for hospitals reclassified to CBSAs from which counties
would be split off and moved to a different CBSA under the new OMB
delineations. The following table shows the current reclassified CBSA
and the CBSA to which CMS is proposing reassignment.
Proposed Hospital Reclassification Reassignments for Hospitals That Are
Reclassified to CBSAs From Which Counties Would Be Split Off and Moved
to a Different CBSA
------------------------------------------------------------------------
CMS Certification number Current reclassified Proposed reassigned
(CCN) CBSA CBSA
------------------------------------------------------------------------
070006 35644 35614
070010 35644 35614
070018 35644 35614
070028 35644 35614
070033 35644 35614
070034 35644 35614
140B10 16974 16974
140012 16974 20994
140033 16974 16974
140084 16974 16974
140100 16974 16974
140110 16974 16974
140130 16974 16974
140155 16974 16974
140161 16974 16974
140186 16974 16974
140202 16974 16974
140291 16974 16974
150002 16974 16974
150004 16974 16974
150008 16974 16974
150034 16974 16974
150090 16974 16974
150125 16974 16974
150126 16974 16974
150165 16974 16974
150166 16974 16974
180012 31140 31140
180048 31140 31140
310002 35644 35614
310009 35644 35614
310014 37964 37964
310015 35644 35614
310017 35644 35614
310031 20764 35614
310038 35644 20524
[[Page 28074]]
310039 35644 20524
310050 35644 35614
310054 35644 35614
310070 35644 20524
310076 35644 35614
310083 35644 35614
310096 35644 35614
310108 35644 20524
310119 35644 35614
330027 35644 35614
330106 35644 35614
330126 35644 20524
330135 35644 20524
330167 35644 35614
330181 35644 35614
330182 35644 35614
330198 35644 35614
330205 35644 20524
330224 39100 20524
330225 35644 35614
330259 35644 35614
330264 35644 20524
330331 35644 35614
330332 35644 35614
330372 35644 35614
340042 48900 48900
340068 48900 34820
390044 37964 33874
390096 37964 33874
390316 37964 33874
420085 48900 48900
510062 16620 16620
510070 16620 16620
------------------------------------------------------------------------
Table 9A-2 for this proposed rule (which is available via the
Internet on the CMS Web site) reflects all proposed reassignments of
hospital reclassifications. We are proposing that hospitals that
disagree with our determination of the most proximate county must
provide an alternative method for determining proximity to CMS within
45 days from the publication of this proposed rule.
The hospital's request for reassignment should contain the
hospital's name, address, CCN, and point of contact information. All
requests must be sent to [email protected]. Changes to a hospital's
CBSA assignment on the basis of a hospital's disagreement with our
determination of closest county, or on the basis of being granted a
reassignment due to meeting applicable proximity criteria to an
eligible CBSA will be announced in the FY 2015 IPPS final rule.
(3) Reclassifications to CBSAs That Would Contain Hospital's Geographic
County
We identified 14 reclassified hospitals that would be
geographically located in their reclassified labor market area under
the new OMB delineations. For example, hospital 34-0015 is located in
Rowan County, NC. Rowan County is currently a Micropolitan Statistical
Area in NC, and treated as rural. The hospital is reclassified to CBSA
16740 (Charlotte-Concord-Rock Hill, NC-SC). Under the new OMB
delineations, CBSA 16740 (Charlotte-Concord-Gastonia, NC-SC) would
include Rowan County. Therefore, the current reclassification would
become redundant. CBSA 16740 did not lose any counties to another labor
market area; therefore, assignment to another alternate CBSA would not
be an option under our proposed methodology. Because, by definition, a
hospital would not be ``reclassified'' to its own geographic labor
market area, and maintaining that ``reclassified'' status to its own
geographic labor market area would serve no beneficial purpose for a
hospital, we expect that all such affected hospitals would wish to
terminate their reclassification status. Therefore, we are assuming for
purposes of this proposed rule that the affected hospitals would be
terminating their reclassification status for the remaining years of
their 3-year reclassification period, and for FY 2015, we are proposing
to assign them the wage index of the CBSA in which they are
geographically located. Affected hospitals should inform CMS if they
wish to retain their current reclassification by sending notice to
[email protected] within 45 days from the publication of this
proposed rule. If an affected hospital does not inform us that they
wish to retain their current reclassification, we will assume that the
hospital has elected to terminate the reclassification. For purposes of
this proposed rule, we are presenting tables under the presumption that
all 14 hospitals will opt to cancel their reclassification status. We
are proposing to assign these hospitals the wage index value of their
home area from Table 4A-2 for this proposed rule (which is available
via the Internet on the CMS Web site), and not include them as
reclassified hospitals in Table 9A-2 for this proposed rule (which is
available via the Internet on the CMS Web site).
Hospitals Reclassified to Proposed Home Labor Market Area
------------------------------------------------------------------------
CMS certification No. Current geographic Proposed geographic
(CCN) CBSA CBSA
------------------------------------------------------------------------
340015 34 16740
340129 34 16740
340144 34 16740
420036 42 16740
450596 45 23104
420027 11340 24860
150088 11300 26900
150113 11300 26900
190003 19 29180
440073 44 34980
460017 46 36260
460039 46 36260
190144 19 43340
490019 49 47894
------------------------------------------------------------------------
We have included a footnote for Table 9A-2 for this proposed rule
indicating that these hospitals have been removed from this table,
pending notification by the hospitals.
c. Applications for Reclassifications for FY 2016
Applications for FY 2016 reclassifications are due to the MGCRB by
September 2, 2014 (the first working day of September 2014). We note
that this is also the deadline for canceling a previous wage index
reclassification withdrawal or termination under 42 CFR 412.273(d). As
discussed in section III.B. of the preamble of this proposed rule, we
are proposing to adopt the new OMB labor market area delineations
announced on February 28, 2013. Therefore, hospitals would apply for
reclassifications based on the new OMB delineations we are proposing to
use for FY 2015. Applications and other information about MGCRB
reclassifications may be obtained via the Internet on the CMS Web site
at: http://www.cms.gov/Regulations-and-Guidance/Review-Boards/MGCRB/index.html, or by calling the MGCRB at (410) 786-1174. The mailing
address of the MGCRB is: 2520 Lord Baltimore Drive, Suite L, Baltimore,
MD 21244-2670.3.
We also are proposing changes to the regulations at Sec.
412.232(b)(2) and Sec. 412.234(a)(3)(iv) to include reference to the
most recent OMB standards for delineating statistical areas (using the
most recent Census Bureau data and estimates) that were adopted by CMS.
For rural groups, the group of hospitals must demonstrate that the
county in which the hospitals are located meets the standards for
redesignation to an MSA as an ``outlying county.'' For urban groups,
hospitals located in counties that are in the same combined statistical
area or CBSA as the urban area to which
[[Page 28075]]
they seek redesignation qualify as meeting the proximity requirements
for reclassification to the urban area to which they seek
redesignation. We are not proposing any changes to the reclassification
policy, but would include language to reflect use of the most recent
OMB standards for delineating statistical areas (using the most recent
Census Bureau data and estimates) that were adopted by CMS in
consideration of group reclassification applications submitted for
review in FY 2015 (that is submitted by September 30, 2014, reviewed by
the MGCRB in FY 2015, to be effective in FY 2016) and future years.
3. Redesignation of Hospitals Under Section 1886(d)(8)(B) of the Act
Section 1886(d)(8)(B)(i) of the Act requires the Secretary to
``treat a hospital located in a rural county adjacent to one or more
urban areas as being located in the urban metropolitan statistical area
to which the greatest number of workers in the county commute'' if
certain adjacency and commuting criteria are met. The criteria utilize
standards for designating Metropolitan Statistical Areas published in
the Federal Register by the Director of the Office of Management and
Budget (OMB) based on the most recently available decennial population
data. Effective beginning FY 2005, we used OMB's CBSA standards based
on the 2000 Census and the 2000 Census data to identify counties in
which hospitals qualify under section 1886(d)(8)(B) of the Act to
receive the wage index of the urban area. Hospitals located in these
counties have been known as ``Lugar'' hospitals and the counties
themselves are often referred to as ``Lugar'' counties.
As discussed in section III.B. of the preamble to this proposed
rule, we are proposing to implement OMB's revised labor market area
delineations based on the Census 2010 data for purposes of determining
applicable wage indexes for acute care hospitals beginning in FY 2015.
As we have done in the past, we also are proposing to use the new OMB
delineations to identify rural counties that would qualify as ``Lugar''
under section 1886(d)(8)(B) of the Act and therefore would be
redesignated to urban areas for FY 2015. We are proposing to revise the
regulations at Sec. 412.64(b)(3)(i) to reflect the most recent OMB
standards for delineating statistical areas adopted by CMS. By applying
the new OMB delineations, the number of qualifying counties, shown in
the following chart, would increase from 98 to 127. After evaluating
and analyzing the 2010 Census commuting data, we are proposing that,
effective for discharges on or after October 1, 2014, in accordance
with section 1886(d)(8)(B) of the Act, hospitals located in the rural
counties listed in the first column of the following table would be
designated as part of the urban area listed in the second column based
on the criteria discussed above. We note that rural counties that no
longer meet the qualifying criteria to be Lugar are discussed below in
section III.H.3.c. of the preamble of this proposed rule.
Rural Counties Containing Hospitals Redesignated as Urban Under Section 1886(d)(8)(B) of the Act (Based on New
OMB Delineations and Census 2010 Data)
----------------------------------------------------------------------------------------------------------------
Rural county Lugar designated CBSA
----------------------------------------------------------------------------------------------- NEW
County name State CBSA CBSA name
----------------------------------------------------------------------------------------------------------------
Chambers County...................... AL.............. 12220 Auburn-Opelika, AL.......... New.
Cherokee County...................... AL.............. 40660 Rome, GA.................... ................
Cleburne County...................... AL.............. 11500 Anniston-Oxford- New.
Jacksonville, AL.
Macon County......................... AL.............. 12220 Auburn-Opelika, AL.......... ................
Talladega County..................... AL.............. 11500 Anniston-Oxford- ................
Jacksonville, AL.
Denali Borough....................... AK.............. 21820 Fairbanks, AK............... New.
Hot Spring County.................... AR.............. 26300 Hot Springs, AR............. ................
Litchfield County.................... CT.............. 35300 New Haven-Milford, CT....... ................
Bradford County...................... FL.............. 27260 Jacksonville, FL............ ................
Levy County.......................... FL.............. 23540 Gainesville, FL............. ................
Washington County.................... FL.............. 37460 Panama City, FL............. New.
Chattooga County..................... GA.............. 40660 Rome, GA.................... ................
Jackson County....................... GA.............. 12060 Atlanta-Sandy Springs- ................
Roswell, GA.
Lumpkin County....................... GA.............. 12060 Atlanta-Sandy Springs- ................
Roswell, GA.
Polk County.......................... GA.............. 40660 Rome, GA.................... ................
Talbot County........................ GA.............. 17980 Columbus, GA-AL............. ................
Oneida County........................ ID.............. 36260 Ogden-Clearfield, UT........ New.
Christian County..................... IL.............. 44100 Springfield, IL............. ................
Iroquois County...................... IL.............. 28100 Kankakee, IL................ ................
Logan County......................... IL.............. 44100 Springfield, IL............. ................
Mason County......................... IL.............. 37900 Peoria, IL.................. ................
Ogle County.......................... IL.............. 40420 Rockford, IL................ ................
Union County......................... IL.............. 16060 Carbondale-Marion, IL....... ................
Clinton County....................... IN.............. 29200 Lafayette-West Lafayette, IN ................
Greene County........................ IN.............. 14020 Bloomington, IN............. New.
Henry County......................... IN.............. 26900 Indianapolis-Carmel- ................
Anderson, IN.
Marshall County...................... IN.............. 43780 South Bend-Mishawaka, IN-MI. New.
Parke County......................... IN.............. 45460 Terre Haute, IN............. New.
Spencer County....................... IN.............. 21780 Evansville, IN-KY........... ................
Starke County........................ IN.............. 16980 Chicago-Naperville-Elgin, IL- ................
IN-WI.
Tipton County........................ IN.............. 26900 Indianapolis-Carmel- New.
Anderson, IN.
Warren County........................ IN.............. 29200 Lafayette-West Lafayette, IN ................
Boone County......................... IA.............. 11180 Ames, IA.................... ................
Buchanan County...................... IA.............. 47940 Waterloo-Cedar Falls, IA.... ................
Cedar County......................... IA.............. 26980 Iowa City, IA............... ................
Delaware County...................... IA.............. 20220 Dubuque, IA................. New.
Iowa County.......................... IA.............. 26980 Iowa City, IA............... New.
[[Page 28076]]
Jasper County........................ IA.............. 19780 Des Moines-West Des Moines, New.
IA.
Franklin County...................... KS.............. 28140 Kansas City, MO-KS.......... New.
Nelson County........................ KY.............. 31140 Louisville/Jefferson County, New.
KY-IN.
Assumption Parish.................... LA.............. 12940 Baton Rouge, LA............. ................
Jefferson Davis Parish............... LA.............. 29340 Lake Charles, LA............ New.
St. Landry Parish.................... LA.............. 29180 Lafayette, LA............... New.
Oxford County........................ ME.............. 30340 Lewiston-Auburn, ME......... New.
Caroline County...................... MD.............. 12580 Baltimore-Columbia-Towson, New.
MD.
Franklin County...................... MA.............. 44140 Springfield, MA............. New.
Allegan County....................... MI.............. 24340 Grand Rapids-Wyoming, MI.... ................
Ionia County......................... MI.............. 24340 Grand Rapids-Wyoming, MI.... New.
Lenawee County....................... MI.............. 11460 Ann Arbor, MI............... New.
Newaygo County....................... MI.............. 24340 Grand Rapids-Wyoming, MI.... New.
Shiawassee County.................... MI.............. 29620 Lansing-East Lansing, MI.... ................
Tuscola County....................... MI.............. 40980 Saginaw, MI................. ................
Goodhue County....................... MN.............. 33460 Minneapolis-St. Paul- New.
Bloomington, MN-WI.
Meeker County........................ MN.............. 33460 Minneapolis-St. Paul- New.
Bloomington, MN-WI.
Rice County.......................... MN.............. 33460 Minneapolis-St. Paul- New.
Bloomington, MN-WI.
Pearl River County................... MS.............. 25060 Gulfport-Biloxi-Pascagoula, ................
MS.
Stone County......................... MS.............. 25060 Gulfport-Biloxi-Pascagoula, New.
MS.
Dade County.......................... MO.............. 44180 Springfield, MO............. ................
Otoe County.......................... NE.............. 30700 Lincoln, NE................. New.
Douglas County....................... NV.............. 16180 Carson City, NV............. New.
Lyon County.......................... NV.............. 16180 Carson City, NV............. ................
Los Alamos County.................... NM.............. 42140 Santa Fe, NM................ ................
Cayuga County........................ NY.............. 45060 Syracuse, NY................ ................
Cortland County...................... NY.............. 27060 Ithaca, NY.................. New.
Genesee County....................... NY.............. 40380 Rochester, NY............... ................
Greene County........................ NY.............. 10580 Albany-Schenectady-Troy, NY. ................
Lewis County......................... NY.............. 48060 Watertown-Fort Drum, NY..... New.
Montgomery County.................... NY.............. 10580 Albany-Schenectady-Troy, NY. New.
Schuyler County...................... NY.............. 27060 Ithaca, NY.................. ................
Seneca County........................ NY.............. 40380 Rochester, NY............... New.
Camden County........................ NC.............. 47260 Virginia Beach-Norfolk- New.
Newport News, VA-NC.
Caswell County....................... NC.............. 15500 Burlington, NC.............. ................
Granville County..................... NC.............. 20500 Durham-Chapel Hill, NC...... ................
Greene County........................ NC.............. 24780 Greenville, NC.............. New.
Harnett County....................... NC.............. 39580 Raleigh, NC................. ................
Polk County.......................... NC.............. 43900 Spartanburg, SC............. ................
Wilson County........................ NC.............. 40580 Rocky Mount, NC............. New.
Traill County........................ ND.............. 24220 Grand Forks, ND-MN.......... New.
Ashtabula County..................... OH.............. 17460 Cleveland-Elyria, OH........ ................
Champaign County..................... OH.............. 44220 Springfield, OH............. ................
Columbiana County.................... OH.............. 49660 Youngstown-Warren-Boardman, ................
OH-PA.
Harrison County...................... OH.............. 48260 Weirton-Steubenville, WV-OH. New.
Preble County........................ OH.............. 19380 Dayton, OH.................. New.
Clinton County....................... PA.............. 48700 Williamsport, PA............ ................
Fulton County........................ PA.............. 25180 Hagerstown-Martinsburg, MD- New.
WV.
Greene County........................ PA.............. 38300 Pittsburgh, PA.............. ................
Lawrence County...................... PA.............. 38300 Pittsburgh, PA.............. New.
Schuylkill County.................... PA.............. 39740 Reading, PA................. ................
Susquehanna County................... PA.............. 13780 Binghamton, NY.............. ................
Adjuntas Municipio................... PR.............. 38660 Ponce, PR................... New.
Coamo Municipio...................... PR.............. 41980 San Juan-Carolina-Caguas, PR New.
Las Mar[iacute]as Municipio.......... PR.............. 32420 Mayag[uuml]ez, PR........... New.
Maricao Municipio.................... PR.............. 32420 Mayag[uuml]ez, PR........... New.
Salinas Municipio.................... PR.............. 25020 Guayama, PR................. New.
Clarendon County..................... SC.............. 44940 Sumter, SC.................. ................
Colleton County...................... SC.............. 16700 Charleston-North Charleston, New.
SC.
Lee County........................... SC.............. 44940 Sumter, SC.................. ................
Marion County........................ SC.............. 22500 Florence, SC................ New.
Newberry County...................... SC.............. 17900 Columbia, SC................ New.
Meigs County......................... TN.............. 17420 Cleveland, TN............... ................
Blanco County........................ TX.............. 12420 Austin-Round Rock, TX....... New.
Bosque County........................ TX.............. 47380 Waco, TX.................... ................
Calhoun County....................... TX.............. 47020 Victoria, TX................ New.
Fannin County........................ TX.............. 19100 Dallas-Fort Worth-Arlington, ................
TX.
Grimes County........................ TX.............. 17780 College Station-Bryan, TX... ................
Harrison County...................... TX.............. 30980 Longview, TX................ ................
[[Page 28077]]
Henderson County..................... TX.............. 46340 Tyler, TX................... ................
Hill County.......................... TX.............. 19100 Dallas-Fort Worth-Arlington, New.
TX.
Milam County......................... TX.............. 12420 Austin-Round Rock, TX....... ................
Van Zandt County..................... TX.............. 19100 Dallas-Fort Worth-Arlington, ................
TX.
Willacy County....................... TX.............. 15180 Brownsville-Harlingen, TX... ................
King and Queen County................ VA.............. 40060 Richmond, VA................ New.
Louisa County........................ VA.............. 40060 Richmond, VA................ New.
Madison County....................... VA.............. 16820 Charlottesville, VA......... New.
Orange County........................ VA.............. 47900 Washington-Arlington- New.
Alexandria, DC-VA-MD-WV.
Page County.......................... VA.............. 25500 Harrisonburg, VA............ ................
Shenandoah County.................... VA.............. 49020 Winchester, VA-WV........... ................
Southampton County................... VA.............. 47260 Virginia Beach-Norfolk- New.
Newport News, VA-NC.
Surry County......................... VA.............. 47260 Virginia Beach-Norfolk- New.
Newport News, VA-NC.
Island County........................ WA.............. 42660 Seattle-Tacoma-Bellevue, WA. ................
Mason County......................... WA.............. 36500 Olympia-Tumwater, WA........ ................
Jackson County....................... WV.............. 16620 Charleston, WV.............. ................
Morgan County........................ WV.............. 25180 Hagerstown-Martinsburg, MD- New.
WV.
Roane County......................... WV.............. 16620 Charleston, WV.............. ................
Green Lake County.................... WI.............. 22540 Fond du Lac, WI............. ................
Jefferson County..................... WI.............. 33340 Milwaukee-Waukesha-West ................
Allis, WI.
Walworth County...................... WI.............. 33340 Milwaukee-Waukesha-West ................
Allis, WI.
----------------------------------------------------------------------------------------------------------------
a. Proposed New Lugar Areas for FY 2015
Of the 127 qualifying counties identified as Lugar counties based
on the new OMB delineations, 58 counties would be newly designated as
Lugar for FY 2015 if we finalize our proposed adoption of the new OMB
delineations. Hospitals in these counties, with at least 25 percent of
their workers commuting to a higher wage area, effective October 1,
2014, will be deemed to be located in the CBSA to which the highest
number of their workers commute (which is identified in the column
titled ``Lugar Designated CBSA'' in the table above). Hospitals in
these counties would receive the reclassified urban wage index of the
corresponding Lugar Designated CBSA, unless they choose to waive their
Lugar status, as discussed later in this section.
Some areas that are currently urban counties would be
geographically rural if we adopted the new OMB delineations and would
meet the requirements for redesignation as Lugar areas. As described in
section III.B.2.e.(2) of the preamble of this proposed rule, we are
proposing a 3-year hold harmless transitional wage index adjustment for
hospitals located in urban counties that become rural under the new OMB
delineations. Because Lugar status is a form of redesignation,
hospitals that currently are located in urban counties that would
become rural under the new OMB delineations and are also considered
Lugar areas under the new OMB delineations would not be eligible for
the 3-year transition wage index adjustment unless they choose to waive
Lugar status for FY 2015 (as discussed later in this section) and seek
no other form of wage index reclassification.
b. Hospitals Redesignated Under Section 1886(d)(8)(B) of the Act
Seeking Reclassification by the MGCRB
As in the past, hospitals redesignated under section 1886(d)(8)(B)
of the Act are also eligible to be reclassified to a different area by
the MGCRB. Using Table 4C associated with this proposed rule (which is
available via the Internet on the CMS Web site), affected hospitals may
compare the reclassified wage index for the labor market area into
which they would be reclassified by the MGCRB to the reclassified wage
index for the area to which they are redesignated under section
1886(d)(8)(B) of the Act. Hospitals may withdraw from an MGCRB
reclassification within 45 days of the publication of this FY 2015
proposed rule. (We refer readers to the FY 2012 IPPS/LTCH PPS final
rule (76 FR 51598 through 51599) for the procedural rules and
requirements for a hospital that is redesignated under section
1886(d)(8)(B) of the Act and seeking reclassification under the MGCRB,
as well as our policy of measuring the urban area, exclusive of the
Lugar County, for purposes of meeting proximity requirements.)
We treat New England deemed counties in a manner consistent with
how we treat Lugar counties. (We refer readers to the FY 2008 IPPS
final rule with comment period (72 FR 47337 through 47338) for a
discussion of this policy.)
c. Rural Counties No Longer Meeting the Criteria To Be Redesignated as
Lugar
If we adopt the new OMB delineations, 29 rural counties would no
longer meet the qualifying criteria to be redesignated as Lugar
effective October 1, 2014, either because they would be geographically
located in an urban area, or they would fail to meet the 25-percent
cumulative out-migration threshold with application of the new 2010
Census commuting data.
Counties that were deemed urban under section 1886(d)(8)(B) of the
Act in FY 2014, but would be geographically located in an urban area
under the new OMB delineations for FY 2015 are:
Windham County, CT
Flagler County, FL
Walton County, FL
Morgan County, GA
Peach County, GA
De Witt County, IL
Allen County, KY
St. James Parrish, LA
Montcalm County, MI
Fillmore County, MN
Lincoln County, NC
Cotton County, OK
Linn County, OR
Adams County, PA
Monroe County, PA
Falls County, TX
Buckingham County, VA
Floyd County, VA
Green County, WI
[[Page 28078]]
Counties that would fail to meet the 25-percent threshold in FY
2015 are:
Banks County, GA
Hendry County, FL
Bingham County, ID
Oceana County, MI
Columbia County, NY
Sullivan County, NY
Wyoming County, NY
Oconee County, SC
Middlesex County, VA
Wahkiakum County, WA
In section III.B.2.e.(2) of the preamble of this proposed rule, to
help ease dramatic negative impacts in payment for hospitals designated
as urban under the current FY 2014 OMB delineations, but would be
classified as rural under the new OMB delineations, for FYs 2015, 2016,
and 2017, assuming no other form of wage index reclassification or
redesignation is granted, we are proposing to assign these hospitals
the FY 2015 area wage index value of the urban CBSA to which they
geographically belonged in FY 2014 (with the rural and imputed floors
applied and with the rural floor budget neutrality adjustment applied
to the area wage index). (For purposes of the wage index computation,
the wage data of these hospitals would remain assigned to the statewide
rural area in which they are located.) Similarly, we are proposing that
the same 3-year transition apply to hospitals located in those counties
that would lose their deemed urban designation under section
1886(d)(8)(B) of the Act and would become rural if we adopt the new OMB
delineations. Because these hospitals would, in fact, lose their
designated urban status, we are proposing to extend the 3-year hold
harmless transitional wage index adjustment to these hospitals located
in counties formerly designated as urban under section 1886(d)(8)(B) of
the Act. That is, for FYs 2015, 2016, and 2017, assuming no other form
of wage index reclassification or redesignation is granted, we are
proposing to assign these hospitals the FY 2015 area wage index value
of the urban CBSA to which they were designated as urban in FY 2014
(with the rural and imputed floors applied and with the rural floor
budget neutrality adjustment applied). We are proposing to use the wage
data from these hospitals as part of computing the rural wage index. In
addition, during this 3-year transition period, these hospitals would
be eligible to apply for reclassification by the MGCRB. As discussed in
section III.B.2.e.(3) of the preamble of this proposed rule, we are
proposing that if a hospital is currently located in an urban county
that would become rural for FY 2015 under the new OMB delineations, and
such hospital seeks and is granted any reclassification or
redesignation during FYs 2015, 2016, or 2017, the hospital would
permanently lose its 3-year transitional assigned wage index, and would
not be able to reinstate it. Similarly, we are proposing that this
policy also apply to hospitals located in those counties that would
lose their deemed urban designation under section 1886(d)(8)(B) of the
Act and would become rural if we adopt the new OMB delineations. In FY
2018, we are proposing that these hospitals would receive their
statewide rural wage index.
4. Waiving Lugar Redesignation for the Out-Migration Adjustment
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51599 through
51600), we adopted the policy that, beginning with FY 2012, an eligible
hospital that waives its Lugar status in order to receive the out-
migration adjustment has effectively waived its deemed urban status
and, thus, is rural for all purposes under the IPPS, including being
considered rural for the DSH payment adjustment, effective for the
fiscal year in which the hospital receives the out-migration
adjustment. (We refer readers to a discussion of DSH payment adjustment
under section IV.F. of the preamble of this proposed rule.)
In addition, we adopted a minor procedural change that would allow
a Lugar hospital that qualifies for and accepts the out-migration
adjustment (through written notification to CMS within 45 days from the
publication of the proposed rule) to waive its urban status for the
full 3-year period for which its out-migration adjustment is effective.
By doing so, such a Lugar hospital would no longer be required during
the second and third years of eligibility for the out-migration
adjustment to advise us annually that it prefers to continue being
treated as rural and receive the out-migration adjustment. Therefore,
under the procedural change, a Lugar hospital that requests to waive
its urban status in order to receive the rural wage index in addition
to the out-migration adjustment would be deemed to have accepted the
out-migration adjustment and agrees to be treated as rural for the
duration of its 3-year eligibility period, unless, prior to its second
or third year of eligibility, the hospital explicitly notifies CMS in
writing, within the required period (generally 45 days from the
publication of the proposed rule), that it instead elects to return to
its deemed urban status and no longer wishes to accept the out-
migration adjustment. If the hospital does notify CMS that it is
electing to return to its deemed urban status, it would again be
treated as urban for all IPPS payment purposes.
We refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR
51599 through 51600) for a detailed discussion of the policy and
process for waiving Lugar status for the out-migration adjustment.
5. Update of Application of Urban to Rural Reclassification Criteria
Section 401(a) of the Medicare, Medicaid, and SCHIP Balanced Budget
Refinement Act of 1999 (Pub. L. 106-113), which amended section
1886(d)(8) of the Act by adding a new paragraph (E), directed the
Secretary to treat any subsection (d) hospital located in an urban area
as being located in the rural area of the State in which the hospital
is located, providing that the hospital applied for reclassification in
a manner determined by the Secretary and met certain criteria. As
discussed in the FY 2001 interim final rule (65 FR 47029 through
47031), we codified in regulation at Sec. 412.103 the application
process and the qualifying criteria for any hospital seeking rural
reclassification.
In order to be approved for a rural reclassification, a hospital
must meet one of three criteria. The first criterion, located at Sec.
412.103(a)(1), qualifies a hospital located in a rural census tract of
an MSA area, as determined under the most recent version of the
Goldsmith Modification, the Rural-Urban Commuting Area (RUCA) codes. On
February 28, 2013, OMB issued OMB Bulletin No. 13-01, which established
revised delineations for Metropolitan Statistical Areas, Micropolitan
Statistical Areas, and Combined Statistical Areas, and provided
guidance on the use of the delineations of these statistical areas.
These delineations are based on 2010 decennial Census data. Several
modifications of RUCA codes were necessary to take into account updated
commuting data and revised OMB delineations. We refer readers to the
U.S. Department of Agriculture's Economic Research Service Web site for
a detailed listing of updated RUCA codes found at: http://www.ers.usda.gov/data-products/rural-urban-commuting-area-codes.aspx.
The updated RUCA code definitions were introduced in late 2013. As
discussed at Sec. 412.103(f), the duration of an approved rural
reclassification remains in effect without need for reapproval unless
there is a change in the circumstances under which the
[[Page 28079]]
classification was approved. If a hospital located in an urban area was
approved for a rural reclassification under Sec. 412.103(a)(1), that
reclassification would no longer be valid if the hospital is no longer
located within a rural census tract of an MSA defined as an RUCA.
Therefore, we encourage all hospitals with active rural
reclassifications under section 1886(d)(8)(E) of the Act to review
their original reclassification application and determine whether the
reclassification status would still apply. As discussed in section
VI.C.2. of the preamble of this proposed rule, we are proposing a 2-
year grace period allowing affected CAHs additional time to seek a new
rural reclassification without the threat of losing its CAH status. As
discussed in section VI.C.2. of the preamble of this proposed rule, we
are not proposing a grace period for other types of hospitals to seek a
new rural reclassification. We note that rural reclassification status
under Sec. 412.103 is effective as of the filing date of the
application. Therefore, if the change in RUCA codes invalidates any
hospital's rural reclassification status, we believe hospitals will
have adequate time to apply for a new reclassification using an
alternative qualification criterion specified at either Sec.
412.103(a)(2) or Sec. 412.103(a)(3). A rural referral center (RRC) or
a sole community hospital (SCH) that continues to meet the appropriate
qualification criteria would, in itself, qualify for a rural
reclassification. If a complete application is received before October
1, 2014, and is approved by the CMS Regional Office, the hospital would
experience no interruption in its rural status.
I. Proposed FY 2015 Wage Index Adjustment Based on Commuting Patterns
of Hospital Employees
In accordance with section 1886(d)(13) of the Act, as added by
section 505 of Public Law 108-173, beginning with FY 2005, we
established a process to make adjustments to the hospital wage index
based on commuting patterns of hospital employees (the ``out-
migration'' adjustment). The process, outlined in the FY 2005 IPPS
final rule (69 FR 49061), provides for an increase in the wage index
for hospitals located in certain counties that have a relatively high
percentage of hospital employees who reside in the county but work in a
different county (or counties) with a higher wage index.
When this provision was implemented for the FY 2005 wage index, we
analyzed commuting data compiled by the U.S. Census Bureau which was
derived from a special tabulation of the 2000 Census journey-to-work
data for all industries (CMS extracted data applicable to hospitals).
These data were compiled from responses to the ``long-form'' survey,
which the Census Bureau used at the time, and it contained questions on
where residents in each county worked (69 FR 49062). However, the 2010
Census was ``short form'' only; therefore, this information was not
collected as part of the 2010 Census. The Census Bureau is working with
CMS to provide an alternative dataset based on the latest available
data that is expected to meet our needs for developing a new out-
migration adjustment. We believe we will have the necessary time to
obtain, review and analyze the data in order to propose new out-
migration adjustments based on new commuting patterns developed from
the 2010 Census data beginning with FY 2016. Section 1886(d)(13)(B) of
the Act requires the Secretary to use data the Secretary determines to
be appropriate to establish the qualifying counties. The data used for
the FY 2014 out-migration adjustment are the most recent data that have
been analyzed, and we believe that these data are appropriate to
establish the qualifying counties. Therefore, we are proposing that the
FY 2015 out-migration adjustments continue to be based on the 2000
Census data. We also are proposing that the FY 2015 out-migration
adjustments continue to be based on the policies, procedures, and
computation that were used for the FY 2014 out-migration adjustment.
(We refer readers to a full discussion of the adjustment, including
rules on deeming hospitals reclassified under section 1886(d)(8) or
section 1886(d)(10) of the Act to have waived the out-migration
adjustment, in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51601
through 51602)). Table 4J, which is available via the Internet on the
CMS Web site, lists the proposed out-migration adjustments for the
proposed FY 2015 wage index.
Section 1886(d)(13)(F) of the Act states that ``[a] wage index
increase under this paragraph shall be effective for a period of 3
fiscal years, except that the Secretary shall establish procedures
under which a subsection (d) hospital may elect to waive the
application of such wage index increase.'' Therefore, for FY 2015,
because we are proposing to continue to use the out-migration
adjustment data used for FY 2014, consistent with the statute, we also
are proposing to allow hospitals that qualified in FY 2013 or FY 2014
to receive the out-migration adjustment based on the commuting data and
the CBSA delineations used for FY 2014 to continue to receive the same
out-migration adjustment for the remainder of their 3-year
qualification period. Similarly, if a hospital qualifies for and opts
to receive the out-migration adjustment for the first time in FY 2015,
we also are proposing to allow that hospital to receive the out-
migration adjustment based on the data used for FY 2014 for FYs 2015,
2016, and 2017. Accordingly, even if we propose to adopt new out-
migration adjustment data for FY 2016, as we believe we will be able to
do, hospitals that are already receiving an out-migration adjustment
beginning with a fiscal year prior to FY 2016 would still receive their
out-migration adjustment based on the data used for FY 2014 for the
years that remain of their 3-year qualification period in FY 2016 and
after.
We intend to address application of the FY 2016 out-migration
adjustment in greater detail in the FY 2016 proposed rule. However, in
this FY 2015 proposed rule, we are soliciting comments on how to
implement the new out-migration adjustment data for FY 2016, given the
statutory requirement at section 1886(d)(13)(F) of the Act that an out-
migration adjustment be effective for 3 fiscal years.
As discussed in section III.B. of the preamble of this proposed
rule, we are proposing to use OMB's new labor market area delineations
based on the 2010 Census data to identify counties qualifying as Lugar
counties for FY 2015. In section III.H.3 of the preamble of this
proposed rule, we discuss hospitals located in rural counties that are
deemed to be urban under section 1886(d)(8)(B) of the Act. These rural
counties are known as ``Lugar'' counties. Under the new OMB
delineations, there would be counties newly qualifying as Lugar as well
as counties that were previously Lugar counties that would no longer
meet the criteria to be redesignated as Lugar. As discussed in section
III.H.4. of the preamble of this proposed rule, if a Lugar hospital
qualifies for and accepts the out-migration adjustment, it must waive
its deemed urban status and can do so for the 3-year period for which
the out-migration adjustment is effective. Therefore, hospitals located
in counties newly designated as Lugar due to the new OMB delineations
would have the choice to either maintain their Lugar status or waive it
in order to receive the out-migration adjustment in FY 2015 based on
the out-migration adjustment data used for FY 2014.
On the other hand, there are hospitals in counties deemed to be
Lugar under
[[Page 28080]]
the previous CBSA delineations that waived their Lugar status for the
out-migration adjustment, but are not Lugar under the new OMB
delineations. These hospitals would continue to receive the out-
migration adjustment for the 3-year eligibility period through FY 2015
or FY 2016. However, these hospitals that are located in urban counties
under the new OMB delineations, and wish to continue to maintain their
rural status effective October 1, 2014, must do so by reclassifying
from urban to rural under Sec. 412.103. Section 1886(d)(13)(G) of the
Act states that a hospital cannot simultaneously receive the out-
migration adjustment and be subject to a reclassification under section
1886(d)(8) or 1886(d)(10) of the Act. Therefore, if such hospital is
not located in a geographically rural area under the new OMB
delineations, and reclassifies under Sec. 412.103 of the regulations
in order to be treated as rural for IPPS purposes, the hospital would
be ineligible to receive an out-migration adjustment, even if the 3-
year eligibility period has not expired.
As discussed in section III.B.5. of the preamble of this proposed
rule, we are proposing a 1-year blended wage index for any provider
that experiences a decrease in wage index value due to the proposed
implementation of the new OMB labor market area delineations. This
proposal would create a wage index that is 50 percent of the wage index
derived using the current FY 2014 OMB delineations, and 50 percent of
the wage index based on the proposed new OMB delineations. As discussed
in section III.B.2.e.(4) of the preamble of this proposed rule, we are
proposing to apply this blended wage index value to any affected
hospital in a budget neutral manner. However, we are proposing that
hospitals receiving the out-migration adjustment would have it added to
the result of the 50/50 blended wage index, after budget neutrality is
applied. We are proposing the blended wage index transition adjustment
specifically to address any negative impact that may be caused by the
proposed adoption of the new OMB delineations in FY 2015. To
specifically identify and address any such negative payment impact, we
are proposing to apply the out-migration adjustment independent of the
blended wage index and other wage index adjustments (for example, the
rural floor) and related budget neutrality adjustments. This is
consistent with our current policy to apply the out-migration
adjustment after all other wage index adjustments and related budget
neutrality adjustments have been applied. Therefore, we believe the
out-migration adjustment would be properly applied as a supplemental
addition to a hospital's final wage index value, similar to our
treatment of hospitals receiving the frontier State floor value of
1.00, as described under 42 CFR 412.64(m), that also qualify for an
out-migration adjustment and would receive that adjustment.
J. Process for Requests for Wage Index Data Corrections
The preliminary, unaudited Worksheet S-3 wage data and occupational
mix survey data files for the proposed FY 2015 wage index were made
available on September 13, 2013, through the Internet on the CMS Web
site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items/FY-2015-Wage-Index-Home-Page.html.
In the interest of meeting the data needs of the public, beginning
with the proposed FY 2009 wage index, we post an additional public use
file on our Web site that reflects the actual data that are used in
computing the proposed wage index. The release of this file does not
alter the current wage index process or schedule. We notify the
hospital community of the availability of these data as we do with the
current public use wage data files through our Hospital Open Door
forum. We encourage hospitals to sign up for automatic notifications of
information about hospital issues and the scheduling of the Hospital
Open Door forums at the CMS Web site at: http://www.cms.gov/Outreach-and-Education/Outreach/OpenDoorForums/index.html.
In a memorandum dated September 16, 2013, we instructed all MACs to
inform the IPPS hospitals they service of the availability of the wage
index data files and the process and timeframe for requesting revisions
(including the specific deadlines listed below). We also instructed the
MACs to advise hospitals that these data were also made available
directly through their representative hospital organizations.
If a hospital wished to request a change to its data as shown in
the September 13, 2013 wage and occupational mix data files, the
hospital was to submit corrections along with complete, detailed
supporting documentation to its MAC by November 21, 2013. Hospitals
were notified of this deadline and of all other deadlines and
requirements, including the requirement to review and verify their data
as posted in the preliminary wage index data files on the Internet,
through the September 16, 2013 memorandum referenced above.
In the September 16, 2013 memorandum, we also specified that a
hospital requesting revisions to its occupational mix survey data was
to copy its record(s) from the CY 2010 occupational mix preliminary
files posted to the CMS Web site in September, highlight the revised
cells on its spreadsheet, and submit its spreadsheet(s) and complete
documentation to its MAC no later than November 21, 2013.
The MACs notified the hospitals by early-February 2014 of any
changes to the wage index data as a result of the desk reviews and the
resolution of the hospitals' late-November revision requests. The MACs
also submitted the revised data to CMS by late January 2014. CMS
published the proposed wage index public use files that included
hospitals' revised wage index data on February 20, 2014. Hospitals had
until March 3, 2014, to submit requests to the MACs for reconsideration
of adjustments made by the MACs as a result of the desk review, and to
correct errors due to CMS' or the MAC's mishandling of the wage index
data. Hospitals also were required to submit sufficient documentation
to support their requests.
After reviewing requested changes submitted by hospitals, MACs were
required to transmit to CMS any additional revisions resulting from the
hospitals' reconsideration requests by April 9, 2014. The deadline for
a hospital to request CMS intervention in cases where the hospital
disagreed with the MAC's policy interpretations was April 16, 2014. We
note that, beginning with the FY 2015 wage index, per the FY 2015 wage
index timeline posted on the CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Downloads/FY2015-WI-Timeline.pdf, the April appeals must be sent via mail and
email. We refer readers to the wage index timeline for complete
details.
Upon release of this proposed rule, hospitals should examine Table
2, which is listed in section VI. of the Addendum to this proposed rule
and available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items/FY-2015-Wage-Index-Home-Page.html. Table 2 contains each hospital's proposed adjusted average
hourly wage used to construct the wage index values for the past 3
years, including the FY 2011 data used to construct the proposed FY
2015 wage index. We note that the proposed hospital average hourly
wages shown in
[[Page 28081]]
Table 2 only reflect changes made to a hospital's data that were
transmitted to CMS by February 26, 2014.
The final wage index data public use files are posted on May 2,
2014 on the Internet at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items/FY-2015-Wage-Index-Home-Page.html. The May 2014 public use files are made available
solely for the limited purpose of identifying any potential errors made
by CMS or the MAC in the entry of the final wage index data that
resulted from the correction process described above (revisions
submitted to CMS by the MACs by April 9, 2014).
After the release of the May 2014 wage index data files, changes to
the wage and occupational mix data will only be made in those very
limited situations involving an error by the MAC or CMS that the
hospital could not have known about before its review of the final wage
index data files. Specifically, neither the MAC nor CMS will approve
the following types of requests:
Requests for wage index data corrections that were
submitted too late to be included in the data transmitted to CMS by the
MACs on or before April 9, 2014.
Requests for correction of errors that were not, but could
have been, identified during the hospital's review of the February 20,
2014 wage index public use files.
Requests to revisit factual determinations or policy
interpretations made by the MAC or CMS during the wage index data
correction process.
If, after reviewing the May 2014 final public use files, a hospital
believes that its wage or occupational mix data are incorrect due to a
MAC or CMS error in the entry or tabulation of the final data, the
hospital should notify both its MAC and CMS regarding why the hospital
believes an error exists and provide all supporting information,
including relevant dates (for example, when it first became aware of
the error). The hospital is required to send its request to CMS and to
the MAC no later than June 2, 2014. Similar to the April appeals,
beginning with the FY 2015 wage index, in accordance with the FY 2015
wage index timeline posted on the CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Downloads/FY2015-WI-Timeline.pdf, the June appeals must be sent via mail and
email to CMS and the MACs. We refer readers to the wage index timeline
for complete details. (We refer readers to section II.K. of the
preamble to this proposed rule where we are proposing revisions to the
wage index timetable.)
Verified corrections to the wage index data received timely by CMS
and the MACs (that is, by June 2, 2014) will be incorporated into the
final wage index in the FY 2015 IPPS/LTCH PPS final rule, which will be
effective October 1, 2014.
We created the processes described above to resolve all substantive
wage index data correction disputes before we finalize the wage and
occupational mix data for the FY 2015 payment rates. Accordingly,
hospitals that do not meet the procedural deadlines set forth above
will not be afforded a later opportunity to submit wage index data
corrections or to dispute the MAC's decision with respect to requested
changes. Specifically, our policy is that hospitals that do not meet
the procedural deadlines set forth above will not be permitted to
challenge later, before the PRRB, the failure of CMS to make a
requested data revision. We refer readers also to the FY 2000 IPPS
final rule (64 FR 41513) for a discussion of the parameters for appeals
to the PRRB for wage index data corrections.
Again, we believe the wage index data correction process described
above provides hospitals with sufficient opportunity to bring errors in
their wage and occupational mix data to the MAC's attention. Moreover,
because hospitals have access to the final wage index data by early May
2014, they have the opportunity to detect any data entry or tabulation
errors made by the MAC or CMS before the development and publication of
the final FY 2015 wage index by August 2014, and the implementation of
the FY 2015 wage index on October 1, 2014. If hospitals avail
themselves of the opportunities afforded to provide and make
corrections to the wage and occupational mix data, the wage index
implemented on October 1 should be accurate. Nevertheless, in the event
that errors are identified by hospitals and brought to our attention
after June 2, 2014, we retain the right to make midyear changes to the
wage index under very limited circumstances.
Specifically, in accordance with 42 CFR 412.64(k)(1) of our
existing regulations, we make midyear corrections to the wage index for
an area only if a hospital can show that: (1) The MAC or CMS made an
error in tabulating its data; and (2) the requesting hospital could not
have known about the error or did not have an opportunity to correct
the error, before the beginning of the fiscal year. For purposes of
this provision, ``before the beginning of the fiscal year'' means by
the June deadline for making corrections to the wage data for the
following fiscal year's wage index (for example, June 2, 2014 for the
FY 2015 wage index). This provision is not available to a hospital
seeking to revise another hospital's data that may be affecting the
requesting hospital's wage index for the labor market area. As
indicated earlier, because CMS makes the wage index data available to
hospitals on the CMS Web site prior to publishing both the proposed and
final IPPS rules, and the MACs notify hospitals directly of any wage
index data changes after completing their desk reviews, we do not
expect that midyear corrections will be necessary. However, under our
current policy, if the correction of a data error changes the wage
index value for an area, the revised wage index value will be effective
prospectively from the date the correction is made.
In the FY 2006 IPPS final rule (70 FR 47385 through 47387 and
47485), we revised 42 CFR 412.64(k)(2) to specify that, effective on
October 1, 2005, that is, beginning with the FY 2006 wage index, a
change to the wage index can be made retroactive to the beginning of
the Federal fiscal year only when CMS determines all of the following:
(1) The MAC or CMS made an error in tabulating data used for the wage
index calculation; (2) the hospital knew about the error and requested
that the MAC and CMS correct the error using the established process
and within the established schedule for requesting corrections to the
wage index data, before the beginning of the fiscal year for the
applicable IPPS update (that is, by the June 2, 2014 deadline for the
FY 2015 wage index); and (3) CMS agreed before October 1 that the MAC
or CMS made an error in tabulating the hospital's wage index data and
the wage index should be corrected.
In those circumstances where a hospital requested a correction to
its wage index data before CMS calculated the final wage index (that
is, by the June 2, 2014 deadline for the FY 2015 wage index), and CMS
acknowledges that the error in the hospital's wage index data was
caused by CMS' or the MAC's mishandling of the data, we believe that
the hospital should not be penalized by our delay in publishing or
implementing the correction. As with our current policy, we indicated
that the provision is not available to a hospital seeking to revise
another hospital's data. In addition, the provision cannot be used to
correct prior years' wage index data; and it can only be used for the
current Federal fiscal year. In situations where our policies would
allow midyear
[[Page 28082]]
corrections other than those specified in 42 CFR 412.64(k)(2)(ii), we
continue to believe that it is appropriate to make prospective-only
corrections to the wage index.
We note that, as with prospective changes to the wage index, the
final retroactive correction will be made irrespective of whether the
change increases or decreases a hospital's payment rate. In addition,
we note that the policy of retroactive adjustment will still apply in
those instances where a final judicial decision reverses a CMS denial
of a hospital's wage index data revision request.
K. Notice of Change to Wage Index Development Timetable
As explained in section III.J. the preamble of this proposed rule,
the preliminary, unaudited Worksheet S-3 wage data and occupational mix
survey data files for the proposed FY 2015 wage index were made
available on September 13, 2013, through the Internet on the CMS Web
site. The posting of these preliminary files initiate what is virtually
a year-long cycle for developing the wage index associated with the
following IPPS fiscal year. This lengthy, almost year-long cycle is
unique to the development of the IPPS wage index, and occurs
independently from the development of the IPPS proposed and final
rules, which typically are published in the spring and summer each
year. In addition, the wage index, which is based on hospitals' wage
data reported on Worksheets S-3, Parts II and III of the Form CMS-2552-
10 of the Medicare cost report and occupational mix data, is the only
portion of the IPPS that historically has been subject to its own
annual review process, first by the MACs, and then by CMS, followed by
distinct opportunities for hospitals to appeal decisions made by the
MACs or CMS. This process is separate and independent from the standard
cost report settlement and appeals processes established under the
regulations at 42 CFR 405.1800 through 405.1889.
Although this unique wage index development timetable has been in
place since the early days of the IPPS, the current timetable is rooted
in changes adopted in the FY 1998 IPPS final rule with comment period
(62 FR 45990 through 45993). However, with numerous legislative and
regulatory changes made to the IPPS since FY 1998, the demands on
hospitals, MACs, and CMS have increased substantially. As a result, it
has become increasingly challenging for wage index stakeholders to
manage the wage index timetable with competing priorities. For the FY
2015 wage index, CMS made slight changes to the wage index development
timetable, by posting the preliminary public use file (PUF) in
September 2013 rather than in October 2013, which, in turn, moved back
the deadline for hospitals to request revisions to the data displayed
in that preliminary PUF to November 2013, instead of December 2013. In
addition, the date for the MACs to complete desk reviews on that data
was similarly moved to a slightly earlier deadline in early CY 2014.
The FY 2015 Wage Index Development Timetable, which is posted on the
CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Downloads/FY2015-WI-Timeline.pdf, shows that
hospitals have a little more than 2 months to request revisions to
their data displayed in the September 13, 2013 preliminary PUF, until
the commencement of the desk review process by the MACs on November 21,
2013. The MACs also have a little more than 2 months to complete the
desk reviews and submit revised cost report data to CMS by January 29,
2014. Less than a month later, on February 20, 2014, the revised FY
2015 wage index and occupational mix PUFs were posted on the CMS Web
site. Ensuring the accuracy of the February PUF is extremely important
and beneficial to hospitals because, as the timetable shows, it is the
basis for hospitals to appeal data that are incorrect, with March 3,
2014 being the last date that hospitals can request revisions to errors
in the February 20, 2014 PUF.
Therefore, we have concluded that steps should be taken to improve
the accuracy of the February PUF, most importantly by proposing changes
to the wage index timetables for future IPPS fiscal years that are much
more significant and fundamental than the slight revisions to the
timetable implemented for FY 2015. We believe that the changes we are
proposing below would not only improve the accuracy of the February
PUF, but also would reduce the number of hospital appeals based on the
February PUF. For example, as specified below, instead of the current
timetable which only provides CMS with less than a month to review the
MACs' desk reviews and prepare the February PUF, we are proposing
approximately 3 months between the date that the MACs' desk reviews
would end and the date that CMS would post the subsequent PUF. To allow
hospitals and MACs adequate time to prepare for the changes to the wage
index development timetable, we are proposing to make the following
significant changes beginning with the FY 2017 wage index cycle. We are
listing the proposed changes for FY 2017 below in a table side by side
with the existing timetable, so that commenters may read the proposed
changes in the context of the existing timetable. Under the proposed
changes for FY 2017, although we are not providing exact dates for the
FY 2017 wage index timetable, we note that, with every change listed
below, we intend to provide hospitals and MACs with the same or
somewhat more time than under the current timetable to complete reviews
and request revisions. The proposed revisions would not reduce the
amount of time that either hospitals or MACs have to review wage data.
Therefore, these proposed changes would not result in additional work
on the part of the hospitals or MACs; in fact, in shifting the various
dates, we expect that more time would be provided to hospitals, MACs,
and CMS to ensure an even more accurate wage index.
----------------------------------------------------------------------------------------------------------------
Deadlines FY 2015 Timetable Proposed FY 2017 timetable
----------------------------------------------------------------------------------------------------------------
Posting of Preliminary PUF on CMS Web site September 13, 2013...... Mid May 2015.
Deadline for Hospitals to Request November 21, 2013....... Early August 2015.
Revisions to Preliminary PUF.
Deadline for MACs to Complete Desk Reviews January 29, 2014........ Mid-October 2015.
Posting of February PUF on CMS Web site... February 20, 2014....... Late January 2016.
Deadline Following Posting of February PUF March 3, 2014........... Mid-February 2016.
for Hospitals to Request Revisions.
Completion of Appeals by MACs and April 9, 2014........... Mid- to Late March 2016.
Transmission of Final Wage Data to CMS.
Deadline for Hospitals to Appeal in April. April 16, 2014.......... Early April 2016.
Posting of Final Rule PUF................. May 2, 2014............. Late April 2016.
Deadline for Hospitals to Appeal in June.. June 2, 2014............ Late May 2016.
Expected Issuance of IPPS final rule...... August 1, 2014.......... August 1, 2016.
----------------------------------------------------------------------------------------------------------------
[[Page 28083]]
With regard to the FY 2016 wage index cycle, we believe it can
serve as a transition to the more significant changes we are proposing
for the FY 2017 wage index cycle. We believe that there are steps we
can take to improve the accuracy of the February 2016 PUF by building
in more time to the FY 2016 wage index review process as well.
Specifically, we are notifying hospitals of changes to the deadlines
only in the beginning of the FY 2016 wage index timetable, as a
transition to the more significant proposed changes for the entire FY
2017 wage index timetable. That is, for FY 2016, we are only changing
the following four dates: the posting of the preliminary wage index
PUF; the posting of the CY 2013 occupational mix survey data
preliminary PUF; the deadline for hospitals to request revisions to the
wage data and occupational mix data preliminary PUFs; and the deadline
for MACs to complete the desk reviews. We are not changing the
remainder of the FY 2016 timetable at this time. We expect that making
these changes for the FY 2016 timetable would improve the accuracy of
the February 2016 PUF, and also mitigate the number of hospital appeals
based on the February 2016 PUF. In addition, we believe these changes
would help hospitals, MACs, and CMS adjust to the more significant
timeline changes proposed for FY 2017. We are listing only the changes
for FY 2016 in the following table side by side with the existing FY
2015 timetable, so that commenters may read the FY 2016 changes in the
context of the existing timetable. We are not listing dates that would
remain unchanged for FY 2016.
----------------------------------------------------------------------------------------------------------------
Deadlines FY 2015 Timetable Adjusted FY 2016 timetable
----------------------------------------------------------------------------------------------------------------
Posting of Preliminary Wage Data PUF on September 13, 2013...... Late May 2014.
CMS Web site.
Posting of Preliminary CY 2013 September 13, 2013...... Early to Mid-July 2014.
Occupational Mix Data PUF on CMS Web site.
Deadline for Hospitals to Request November 21, 2013....... Early October 2014.
Revisions to Preliminary PUF.
Deadline for MACs to Complete Desk Reviews January 29, 2014........ Mid-December 2014.
----------------------------------------------------------------------------------------------------------------
Typically, the preliminary PUF initiating the start of an IPPS wage
index fiscal year contains one spreadsheet with the Worksheet S-3 wage
data for the applicable fiscal year on one tab, and another tab with
the preliminary occupational mix data for that fiscal year. For the FY
2016 wage index, new occupational mix survey data will be available for
use, based on the CY 2013 occupational mix survey. Hospitals are
required to submit their CY 2013 occupational mix surveys to their MACs
no later than July 1, 2014. Therefore, we will not have the preliminary
CY 2013 occupational mix survey data in time to post it simultaneously
in late May 2014 with the preliminary FY 2016 wage data. Accordingly,
as the table above indicates, we would post the preliminary FY 2016
wage data by itself first in late May 2014, to be followed by a
separate posting of the preliminary CY 2013 occupational mix survey
data when the data are available, in early to mid-July 2014.
We are inviting public comments on our proposals set forth above to
make revisions to the wage index timetables for FY 2017.
L. Labor-Related Share for the FY 2015 Wage Index
Section 1886(d)(3)(E) of the Act directs the Secretary to adjust
the proportion of the national prospective payment system base payment
rates that are attributable to wages and wage-related costs by a factor
that reflects the relative differences in labor costs among geographic
areas. It also directs the Secretary to estimate from time to time the
proportion of hospital costs that are labor-related: ``The Secretary
shall adjust the proportion (as estimated by the Secretary from time to
time) of hospitals' costs which are attributable to wages and wage-
related costs of the DRG prospective payment rates. . . .'' We refer to
the portion of hospital costs attributable to wages and wage-related
costs as the labor-related share. The labor-related share of the
prospective payment rate is adjusted by an index of relative labor
costs, which is referred to as the wage index.
Section 403 of Public Law 108-173 amended section 1886(d)(3)(E) of
the Act to provide that the Secretary must employ 62 percent as the
labor-related share unless this ``would result in lower payments to a
hospital than would otherwise be made.'' However, this provision of
Public Law 108-173 did not change the legal requirement that the
Secretary estimate ``from time to time'' the proportion of hospitals'
costs that are ``attributable to wages and wage-related costs.'' Thus,
hospitals receive payment based on either a 62-percent labor-related
share, or the labor-related share estimated from time to time by the
Secretary, depending on which labor-related share resulted in a higher
payment.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50596 through
50607), we rebased and revised the hospital market basket. We
established a FY 2010-based IPPS hospital market basket to replace the
FY 2006-based IPPS hospital market basket, effective October 1, 2013.
In that final rule, we presented our analysis and conclusions regarding
the frequency and methodology for updating the labor-related share for
FY 2014. Using the FY 2010-based IPPS market basket, we finalized a
labor-related share for FY 2014 of 69.6 percent. In addition, we
implemented this revised and rebased labor-related share in a budget
neutral manner, but consistent with section 1886(d)(3)(E) of the Act,
we did not take into account the additional payments that would be made
as a result of hospitals with a wage index less than or equal to 1.0
being paid using a labor-related share lower than the labor-related
share of hospitals with a wage index greater than 1.0.
The labor-related share is used to determine the proportion of the
national IPPS base payment rate to which the area wage index is
applied. In this FY 2015 proposed rule, we are not proposing to make
any further changes to the national average proportion of operating
costs that are attributable to wages and salaries, employee benefits,
contract labor, the labor-related portion of professional fees,
administrative and facilities support services, and all other labor-
related services.
Therefore, for FY 2015, we are proposing to continue to use a
labor-related share of 69.6 percent for discharges occurring on or
after October 1, 2014. Tables 1A and 1B, which are published in section
VI. of the Addendum to this proposed rule and available via the
Internet, reflect this proposed labor-related share. For FY 2015, for
all IPPS hospitals whose wage indexes are less than or equal to 1.0000,
we are proposing to apply the wage index to a labor-related share of 62
percent of the national standardized amount. For all IPPS hospitals
whose wage indexes are greater than 1.0000, for FY 2015, we are
proposing to apply the wage index to a proposed labor-
[[Page 28084]]
related share of 69.6 percent of the national standardized amount. We
note that, for Puerto Rico hospitals, the national labor-related share
is 62 percent because the national wage index for all Puerto Rico
hospitals is less than 1.0.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50601 through
50603), we also rebased and revised the labor-related share for the
Puerto Rico-specific standardized amounts using FY 2010 as a base year.
We finalized a labor-related share for the Puerto Rico-specific
standardized amounts for FY 2014 of 63.2 percent. In this FY 2015
proposed rule, we are not proposing to make any further changes to the
Puerto Rico specific average proportion of operating costs that are
attributable to wages and salaries, employee benefits, contract labor,
the labor-related portion of professional fees, administrative and
facilities support services, and all other labor-related services.
Therefore, for FY 2015, we are proposing to continue to use a labor-
related share for the Puerto Rico-specific standardized amounts of 63.2
percent for discharges occurring on or after October 1, 2014. Puerto
Rico hospitals are paid based on 75 percent of the national
standardized amounts and 25 percent of the Puerto Rico-specific
standardized amounts. For FY 2015, we are proposing to adopt that the
labor-related share of a hospital's Puerto Rico-specific rate would be
either the Puerto Rico-specific labor-related share of 63.2 percent or
62 percent, depending on which results in higher payments to the
hospital. If the hospital has a Puerto Rico-specific wage index of
greater than 1.0 for FY 2015, we are proposing to set the hospital's
rates using a labor-related share of 63.2 percent for the 25 percent
portion of the hospital's payment determined by the Puerto Rico
standardized amounts because this amount would result in higher
payments. Conversely, a hospital with a Puerto Rico-specific wage index
of less than or equal to 1.0 for FY 2015 would be paid using the Puerto
Rico-specific labor-related share of 62 percent of the Puerto Rico-
specific rates because the lower labor-related share would result in
higher payments. The proposed Puerto Rico labor-related share of 63.2
percent for FY 2015 is reflected in Table 1C, which is published in
section VI. of the Addendum to this proposed rule and available via the
Internet.
IV. Other Decisions and Proposed Changes to the IPPS for Operating
Costs and Graduate Medical Education (GME) Costs
A. Proposed Changes to MS-DRGs Subject to the Postacute Care Transfer
Policy (Sec. 412.4)
1. Background
Existing regulations at Sec. 412.4(a) define discharges under the
IPPS as situations in which a patient is formally released from an
acute care hospital or dies in the hospital. Section 412.4(b) defines
acute care transfers, and Sec. 412.4(c) defines postacute care
transfers. Our policy, set forth in Sec. 412(f), provides that when a
patient is transferred and his or her length of stay is less than the
geometric mean length of stay for the MS-DRG to which the case is
assigned, the transferring hospital is generally paid based on a
graduated per diem rate for each day of stay, not to exceed the full
MS-DRG payment that would have been made if the patient had been
discharged without being transferred.
The per diem rate paid to a transferring hospital is calculated by
dividing the full DRG payment by the geometric mean length of stay for
the MS-DRG. Based on an analysis that showed that the first day of
hospitalization is the most expensive (60 FR 45804), our policy
generally provides for payment that is twice the per diem amount for
the first day, with each subsequent day paid at the per diem amount up
to the full MS-DRG payment (Sec. 412.4(f)(1)). Transfer cases are also
eligible for outlier payments. In general, the outlier threshold for
transfer cases, as described in Sec. 412.80(b), is equal to the fixed-
loss outlier threshold for nontransfer cases (adjusted for geographic
variations in costs), divided by the geometric mean length of stay for
the MS-DRG, and multiplied by the length of stay for the case, plus one
day.
We established the criteria set forth in Sec. 412.4(d) for
determining which DRGs qualify for postacute care transfer payments in
the FY 2006 IPPS final rule (70 FR 47419 through 47420). The
determination of whether a DRG is subject to the postacute care
transfer policy was initially based on the Medicare Version 23.0
GROUPER (FY 2006) and data from the FY 2004 MedPAR file. However, if a
DRG did not exist in Version 23.0 or a DRG included in Version 23.0 is
revised, we use the current version of the Medicare GROUPER and the
most recent complete year of MedPAR data to determine if the DRG is
subject to the postacute care transfer policy. Specifically, if the MS-
DRG's total number of discharges to postacute care equals or exceeds
the 55th percentile for all MS-DRGs and the proportion of short-stay
discharges to postacute care to total discharges in the MS-DRG exceeds
the 55th percentile for all MS-DRGs, CMS will apply the postacute care
transfer policy to that MS-DRG and to any other MS-DRG that shares the
same base MS-DRG. In the preamble to the FY 2006 IPPS final rule (70 FR
47419), we stated that ``we will not revise the list of DRGs subject to
the postacute care transfer policy annually unless we are making a
change to a specific DRG.''
To account for MS-DRGs subject to the postacute care transfer
policy that exhibit exceptionally higher shares of costs very early in
the hospital stay, Sec. 412.4(f) also includes a special payment
methodology. For these MS-DRGs, hospitals receive 50 percent of the
full MS-DRG payment, plus the single per diem payment, for the first
day of the stay, as well as a per diem payment for subsequent days (up
to the full MS-DRG payment (Sec. 412.4(f)(6)). For an MS-DRG to
qualify for the special payment methodology, the geometric mean length
of stay must be greater than 4 days, and the average charges of 1-day
discharge cases in the MS-DRG must be at least 50 percent of the
average charges for all cases within the MS-DRG. MS-DRGs that are part
of an MS-DRG group will qualify under the DRG special payment policy if
any one of the MS-DRGs that share that same base MS-DRG qualifies
(Sec. 412.4(f)(6)).
2. Proposed Changes to the Postacute Care Transfer MS-DRGs
Based on our annual review of MS-DRGs, we have identified a number
of MS-DRGs that should be included on the list of MS-DRGs subject to
the postacute care transfer policy. As we discuss in section II.G. of
this proposed rule, in response to public comments and based on our
analysis of FY 2013 MedPAR claims data, we are proposing to make
several changes to MS-DRGs to better capture certain severity of
illness levels, to be effective for FY 2015. Specifically, we are
proposing to modify the assignment of endovascular cardiac valve
replacements currently assigned to MS-DRGs 216 (Cardiac Valve & Other
Major Cardiothoracic Procedures with Cardiac Catheterization with MCC),
217 (Cardiac Valve & Other Major Cardiothoracic Procedures with Cardiac
Catheterization with CC), 218 (Cardiac Valve & Other Major
Cardiothoracic Procedures with Cardiac Catheterization without CC/MCC),
219 (Cardiac Valve & Other Major Cardiothoracic Procedures
[[Page 28085]]
without Cardiac Catheterization with MCC), 220 (Cardiac Valve & Other
Major Cardiothoracic Procedures without Cardiac Catheterization with
CC), and 221 (Cardiac Valve & Other Major Cardiothoracic Procedures
without Cardiac Catheterization without CC/MCC) to MS-DRGs 266 and 267
(Endovascular Cardiac Valve Replacement with and without MCC,
respectively) to better reflect the differences in patients receiving
endovascular cardiac valve replacements from patients who undergo an
open chest cardiac valve replacement. We also are proposing to further
refine back and neck procedures currently assigned to MS-DRGs 490 and
491 (Back & Neck Procedure Except Spinal Fusion with CC/MCC or Disc
Device/Neurostimulator and without CC/MCC or Disc Device/
Neurostimulator, respectively) into additional severity levels, now
identified as MS-DRGs 518, 519, and 520 (Back & Neck Procedure Except
Spinal Fusion with MCC or Disc Device/Neurostimulator, with CC, and
without MCC/CC, respectively). Finally, we are proposing to remove the
severity levels for reverse shoulder replacements, merging MS-DRGs 483
and 484 (Major Joint & Limb Reattachment Procedure of Upper Extremity
with CC/MCC and without CC/MCC, respectively) into MS-DRG 483 (Major
Joint/Limb Reattachment Procedure of Upper Extremities). A discussion
of these proposed changes can be found in section II.G.4.c., II.G.5.c.
and II.G.5.a., respectively, of the preamble of this proposed rule.
In light of these proposed changes to the MS-DRGs, according to the
regulations under Sec. 412.4(c), we evaluated these proposed FY 2015
MS-DRGs against the general postacute care transfer policy criteria
using the FY 2013 MedPAR data. If an MS-DRG qualified for the postacute
care transfer policy, we also evaluated that MS-DRG under the special
payment methodology criteria according to regulations at Sec.
412.4(f)(6). We continue believe it is appropriate to reassess MS-DRGs
when proposing reassignment of diagnostic codes that would result in
material changes to an MS-DRG. As a result of our review, we found that
MS-DRGs 216 through 221 would require no revisions in postacute care
transfer or special payment policy status. However, we are proposing to
update the list of MS-DRGs that are subject to the postacute care
transfer policy to include the proposed new MS-DRGs 266, 267, 518, 519,
and 520. (These MS-DRGs are reflected in Table 5, which is listed in
section VI. of the Addendum to this proposed rule and available via the
Internet on the CMS Web site, and also are listed in the charts at the
end of this section.)
In addition, based on our evaluation of the proposed FY 2015 MS-
DRGs using the FY 2013 Med PAR data, we have determined that proposed
revised MS-DRG 483 would no longer meet the postacute care transfer
criteria. Therefore, we are proposing that it be removed from the list
of MS-DRGs subject to the postacute care transfer policy, effective FY
2015. We refer readers to the asterisk (*) bolded text in the following
table for which criterion was not met in our analysis for each MS-DRG
removed from the postacute care transfer policy list.
List of MS-DRGs That Would Change Postacute Care Transfer Policy Status in FY 2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
Percent of short-
stay postacute
Postacute care care transfers
transfers (55th Short-stay to all cases Postacute transfer
MS-DRG MS-DRG Title Total cases percentile: postacute care (55th policy status
1,471) transfers percentile:
7.9060%)
(percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
266........................... Endovascular Cardiac Valve. 4,086 2,851 1,030 25.21 YES.
Replacement with MCC.......
267........................... Endovascular Cardiac Valve 4,476 2,800 835 18.66 YES.
Replacement w/o MCC.
483........................... Major Joint/Limb 41,372 17,289 2,271 * 5.49 NO.
Reattachment Procedure of
Upper Extremities.
518........................... Back & Neck Procedure 3,844 2,136 412 10.72 YES.
Except Spinal Fusion with
MCC or Disc Device/
Neurostimulator.
519........................... Back & Neck Procedure 15,238 7,405 1,126 * 7.39 YES.**
Except Spinal Fusion with
CC.
520........................... Back & Neck Procedure 31,792 7,859 0 * 0.00 YES.**
Except Spinal Fusion
without CC/MCC).
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Indicates a current postacute care transfer policy criterion that the MS-DRG did not meet.
** As described in the policy at 42 CFR 412.4(d)(3)(ii)(D), MS-DRGs that share the same base MS-DRG will all qualify under the postacute care transfer
policy if any one of the MS-DRGs that share that same base MS-DRG qualifies.
Finally, we have determined that MS-DRGs 266, 267, 518, 519, and
520 also would meet the criteria for the special payment methodology.
Therefore, we are proposing that they would be subject to the MS-DRG
special payment methodology, effective FY 2015.
List of MS-DRGs That Would Change DRG Special Payment Policy Status in FY 2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
50% of average
Geometric mean Average charges of charges for all Special pay policy
MS-DRG MS-DRG Title length of stay 1-day discharges cases within MS- status
DRG
--------------------------------------------------------------------------------------------------------------------------------------------------------
266............................... Endovascular Cardiac Valve 8.3643 $42,081 $126,326 YES.*
Replacement with MCC.
[[Page 28086]]
267............................... Endovascular Cardiac Valve 5.0271 128,013 95,141 YES.
Replacement without MCC.
518............................... Back & Neck Procedure Except 4.2882 68,515 43,514 YES.
Spinal Fusion with MCC or Disc
Device/Neurostimulator.
519............................... Back & Neck Procedure Except 3.0507 0 0 YES.*
Spinal Fusion with CC.
520............................... Back & Neck Procedure Except 1.7315 0 0 YES.*
Spinal Fusion without CC/MCC.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* As described in the policy at 42 CFR 412.4(d)(6)(iv), MS-DRGs that share the same base MS-DRG will all qualify under the DRG special payment policy if
any one of the MS-DRGs that share that same base MS-DRG qualifies.
B. Proposed Changes in the Inpatient Hospital Update for FY 2015 (Sec.
412.64(d))
1. Proposed FY 2015 Inpatient Hospital Update
In accordance with section 1886(b)(3)(B)(i) of the Act, each year
we update the national standardized amount for inpatient operating
costs by a factor called the ``applicable percentage increase.'' In FY
2014, consistent with section 1886(b)(3)(B) of the Act, as amended by
sections 3401(a) and 10319(a) of the Affordable Care Act, we set the
applicable percentage increase under the IPPS by applying the following
adjustments in the following sequence. Specifically, the applicable
percentage increase under the IPPS is equal to the rate-of-increase in
the hospital market basket for IPPS hospitals in all areas, subject to
a reduction of 2.0 percentage points if the hospital fails to submit
quality information under rules established by the Secretary in
accordance with section 1886(b)(3)(B)(viii) of the Act, and then
subject to an adjustment based on changes in economy-wide productivity
(the multifactor productivity (MFP) adjustment), and an additional
reduction of 0.3 percentage point as required by section
1886(b)(3)(B)(xii) of the Act. Sections 1886(b)(3)(B)(xi) and
(b)(3)(B)(xii) of the Act, as added by section 3401(a) of the
Affordable Care Act, state that application of the MFP adjustment and
the additional FY 2014 adjustment of 0.3 percentage point may result in
the applicable percentage increase being less than zero.
For FY 2015, there are three statutory changes to the applicable
percentage increase compared to FY 2014. First, under section
1886(b)(3)(B)(viii) of the Act, beginning with FY 2015, the reduction
in the applicable percentage increase for hospitals that fail to submit
quality information under rules established by the Secretary is one-
quarter of the applicable percentage increase (prior to the application
of statutory adjustments under sections 1886(b)(3)(B)(ix),
1886(b)(3)(B)(xi), and 1886(b)(3)(B)(xii) of the Act) or one-quarter of
the applicable market basket update. For FY 2014, the reduction to the
applicable percentage increase for hospitals that failed to submit
quality information under rules established by the Secretary was 2.0
percentage points. Second, beginning with FY 2015, section
1886(b)(3)(B)(ix) requires that any hospital that is not a meaningful
electronic health record (EHR) user (as defined in section1886(n)(3) of
the Act and not subject to an exception under section1886(b)(3)(B)(ix)
of the Act)) will have ``three-quarters'' of the applicable percentage
increase (prior to the application of statutory adjustments under
sections 1886(b)(3)(B)(viii), 1886(b)(3)(B)(xi), and 1886(b)(3)(B)(xii)
of the Act), or three-quarters of the applicable market basket update,
reduced by 33\1/3\ percent. The reduction to three-quarters of the
applicable percentage increase for those hospitals that are not
meaningful EHR users increases to 66\2/3\ percent for FY 2016, and, for
FY 2017 and subsequent fiscal years, to 100 percent. Third, for FY
2015, section 1886(b)(3)(B)(xii) of the Act applies an additional
reduction of 0.2 percentage point compared to 0.3 percentage point for
FY 2014.
To summarize, for FY 2015, consistent with section 1886(b)(3)(B) of
the Act, as amended by sections 3401(a) and 10319(a) of the Affordable
Care Act, we are setting the applicable percentage increase by applying
the following adjustments in the following sequence. Specifically, the
applicable percentage increase under the IPPS is equal to the rate-of-
increase in the hospital market basket for IPPS hospitals in all areas,
subject to a reduction of one-quarter of the applicable percentage
increase (prior to the application of other statutory adjustments; also
referred to as the market basket update or rate-of-increase (with no
adjustments)) for hospitals that fail to submit quality information
under rules established by the Secretary in accordance with section
1886(b)(3)(B)(viii) of the Act and a 33\1/3\ percent reduction to
three-fourths of the applicable percentage increase (prior to the
application of other statutory adjustments; also referred to as the
market basket update or rate-of-increase (with no adjustments)) for
hospitals not considered to be meaningful EHR users in accordance with
section 1886(b)(3)(B)(ix) of the Act, and then subject to an adjustment
based on changes in economy-wide productivity (the multifactor
productivity (MFP) adjustment), and an additional reduction of 0.2
percentage point as required by section 1886(b)(3)(B)(xii) of the Act.
As noted previously, sections 1886(b)(3)(B)(xi) and (b)(3)(B)(xii) of
the Act, as added by section 3401(a) of the Affordable Care Act, state
that application of the MFP adjustment and the additional FY 2015
adjustment of 0.2 percentage point may result in the applicable
percentage increase being less than zero.
We note that, in compliance with section 404 of the MMA, in the FY
2014 IPPS/LTCH PPS final rule, we replaced the FY 2006-based IPPS
operating and capital market baskets with the revised and rebased FY
2010-based IPPS operating and capital market baskets for FY 2014. We
are proposing to continue to use the FY 2010-based IPPS operating and
capital market baskets for FY 2015. We also are proposing to continue
to use a labor-related share that is reflective of the FY 2010 base
year. For FY 2015, we are proposing to continue using the labor-related
share of 69.6 percent, which is based on the FY 2010-based IPPS market
basket.
Based on the most recent data available for this FY 2015 proposed
rule, in accordance with section 1886(b)(3)(B) of the Act, we are
[[Page 28087]]
proposing to base the proposed FY 2015 market basket update used to
determine the applicable percentage increase for the IPPS on IHS Global
Insight, Inc.'s (IGI's) first quarter 2014 forecast of the FY 2010-
based IPPS market basket rate-of-increase with historical data through
fourth quarter 2013, which is estimated to be 2.7 percent.
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51689 through
51692), we finalized our methodology for calculating and applying the
MFP adjustment. For FY 2015, we are not proposing to make any change in
our methodology for calculating and applying the MFP adjustment. For FY
2015, we are proposing a MFP adjustment of -0.4 percentage point.
Similar to the market basket adjustment, for this proposed rule, we
used the most recent data available to compute the MFP adjustment.
For FY 2015, depending on whether a hospital submits quality data
under the rules established in accordance with section
1886(b)(3)(B)(viii) of the Act (hereafter referred to as a hospital
that submits quality data) and is a meaningful EHR user under section
1886(b)(3)(B)(ix) of the Act (hereafter referred to as a hospital that
is a meaningful EHR user), there are four possible applicable
percentage increases that can be applied to the standardized amount.
Below we discuss these four options.
For a hospital that submits quality data and is a
meaningful EHR user, we are proposing an applicable percentage increase
to the FY 2015 operating standardized amount of 2.1 percent (that is,
the FY 2015 estimate of the market basket rate-of-increase of 2.7
percent less an adjustment of 0.4 percentage point for economy-wide
productivity (that is, the MFP adjustment) and less 0.2 percentage
point).
For a hospitals that submits quality data and is not a
meaningful EHR user, we are proposing an applicable percentage increase
to the operating standardized amount of 1.425 percent (that is, the FY
2015 estimate of the market basket rate-of-increase of 2.7 percent,
less an adjustment of 0.675 percentage point (the market basket rate-
of-increase of 2.7 percent x 0.75)/3) for failure to be a meaningful
EHR user, less an adjustment of 0.4 percentage point for the MFP
adjustment, and less an additional adjustment of 0.2 percentage point).
For a hospital that does not submit quality data and is a
meaningful EHR user, we are proposing an applicable percentage increase
to the operating standardized amount of 1.425 percent (that is, the FY
2015 estimate of the market basket rate-of-increase of 2.7 percent,
less an adjustment of 0.675 percentage point (the market basket rate-
of-increase of 2.7 percent/4) for failure to submit quality data, less
an adjustment of 0.4 percentage point for the MFP adjustment, and less
an additional adjustment of 0.2 percentage point).
For a hospital that does not submit quality data and is
not a meaningful EHR user, we are proposing an applicable percentage
increase to the operating standardized amount of 0.75 percent (that is,
the FY 2015 estimate of the market basket rate-of-increase of 2.7
percent, less an adjustment of 0.675 percentage point (the market
basket rate-of-increase of 2.7 percent/4) for failure to submit quality
data, less an adjustment of 0.675 percentage point (the market basket
rate-of-increase of 2.7 percent x 0.75)/3) for failure to be a
meaningful EHR user, less an adjustment of 0.4 percentage point for the
MFP adjustment, and less an additional adjustment of 0.2 percentage
point).
If more recent data become subsequently available (for example, a
more recent estimate of the market basket and the MFP adjustment), we
are proposing to use such data, if appropriate, to determine the FY
2015 market basket update and MFP adjustment in the final rule. Below
we provide a table summarizing the four proposed applicable percentage
increases.
----------------------------------------------------------------------------------------------------------------
Hospital submitted Hospital did NOT Hospital did NOT
Hospital submitted quality data and submit quality submit quality
FY 2015 quality data and is NOT a data and is a data and is NOT a
is a meaningful meaningful EHR meaningful EHR meaningful EHR
EHR user user user user
----------------------------------------------------------------------------------------------------------------
Market Basket 2.7 2.7 2.7 2.7
Rate[dash]of[dash]Increase.....
Adjustment for Failure to Submit 0.0 0.0 -0.675 -0.675
Quality Data under Section
1886(b)(3)(B)(viii) of the Act.
Adjustment for Failure to be a 0.0 -0.675 0.0 -0.675
Meaningful EHR User under
Section 1886(b)(3)(B)(ix) of
the Act........................
MFP Adjustment under Section -0.4 -0.4 -0.4 -0.4
1886(b)(3)(B)(xi) of the Act...
Statutory Adjustment under -0.2 -0.2 -0.2 -0.2
Section 1886(b)(3)(B)(xii) of
the Act........................
-------------------------------------------------------------------------------
Proposed Applicable 2.1 1.425 1.425 0.75
Percentage Increase Applied
to Standardized Amount.....
----------------------------------------------------------------------------------------------------------------
We are proposing to revise the existing regulations at 42 CFR
412.64(d) to reflect the current law for the FY 2015 update.
Specifically, in accordance with section 1886(b)(3)(B) of the Act, we
are proposing to add a new paragraph (vi) to Sec. 412.64(d)(1) to
reflect the applicable percentage increase to the FY 2015 operating
standardized amount as the percentage increase in the market basket
index, subject to a reduction of one-fourth of the applicable
percentage increase (prior to the application of other statutory
adjustments) if the hospital fails to submit quality information (under
rules established by the Secretary in accordance with section
1886(b)(3)(B)(viii) of the Act) and a 33\1/3\ percent reduction to
three-fourths of the applicable percentage increase (prior to the
application of other statutory adjustments) for a hospital that is not
a meaningful EHR user in accordance with section 1886(b)(3)(B)(ix) of
the Act, less an MFP adjustment and less an additional reduction of 0.2
percentage point.
In addition, we are proposing to make technical changes to
Sec. Sec. 412.64(d)(1), (d)(1)(i) through (d)(1)(v), (d)(2)(i),
(d)(2)(ii), and (d)(3) introductory text to reflect the order in which
CMS applies the statutory adjustments to the
[[Page 28088]]
applicable percentage increase under section 1886(b)(3)(B) of the Act.
As mentioned above, consistent with section 1886(b)(3)(B) of the Act,
CMS sets the applicable percentage increase under the IPPS by applying
the following adjustments in the following sequence. Specifically, we
set the applicable percentage increase under the IPPS equal to the
rate-of-increase in the hospital market basket for IPPS hospitals in
all areas subject to a reduction for hospitals that fail to submit
quality information under rules established by the Secretary in
accordance with section 1886(b)(3)(B)(viii) of the Act and, beginning
in FY 2015, a reduction for hospitals not considered to be meaningful
EHR users in accordance with section 1886(b)(3)(B)(ix) of the Act; and
then subject to an adjustment based on changes in economy-wide
productivity (the MFP adjustment), and an additional reduction as
required by section 1886(b)(3)(B)(xii) of the Act.
The existing regulation text at Sec. 412.64(d)(2) and (d)(3)
describes the reductions for hospitals that fail to submit quality
information under rules established by the Secretary in accordance with
section 1886(b)(3)(B)(viii) of the Act and hospitals not considered to
be meaningful EHR users in accordance with section 1886(b)(3)(B)(ix) of
the Act as reductions to ``the applicable percentage change specified
in paragraph (d)(1) of this section.'' Section 412.64(d)(1) describes
the applicable percentage change for the applicable fiscal year as the
percentage increase in the market basket index less the MFP adjustment
and less the additional reduction required by section
1886(b)(3)(B)(xii) of the Act. This text suggests that CMS applies the
reduction for hospitals that fail to submit quality information and,
beginning in FY 2015, the reduction for hospitals not considered to be
meaningful EHR users, after it applies the MFP adjustment and the
additional reduction under section 1886(b)(3)(B)(xii) of the Act.
Therefore, we are proposing to revise the regulations in Sec.
412.64(d) to reflect the order in which CMS applies the adjustments to
the applicable percentage increase under section 1886(b)(3)(B) of the
Act. We note that we also are proposing clarifying amendments to the
regulatory text for prior fiscal years under Sec. Sec. 412.64(d)(1)(i)
through (d)(1)(v) to reflect the determination of the applicable
percentage change for those prior years as well as other technical
changes for readability.
Section 1886(b)(3)(B)(iv) of the Act provides that the applicable
percentage increase to the hospital-specific rates for SCHs and MDHs
equals the applicable percentage increase set forth in section
1886(b)(3)(B)(i) of the Act (that is, the same update factor as for all
other hospitals subject to the IPPS). Therefore, the update to the
hospital-specific rates for SCHs and MDHs is also subject to section
1886(b)(3)(B)(i) of the Act, as amended by sections 3401(a) and
10319(a) of the Affordable Care Act. Accordingly, for FY 2015, we are
proposing the following updates to the hospital-specific rates
applicable to SCHs and MDHs: An update of 2.1 percent for a hospital
that submits quality data and is a meaningful EHR user; an update of
1.425 percent for a hospital that fails to submit quality data and is a
meaningful EHR user; an update of 1.425 percent for a hospital that
submits quality data and is not a meaningful EHR user; an update of
0.75 percent for a hospital that fails to submit quality data and is
not a meaningful EHR user. (As noted below, under current law, the MDH
program is effective for discharges occurring on or before March 31,
2015.) For FY 2015, the existing regulations in Sec. Sec.
412.73(c)(16), 412.75(d), 412.77(e), 412.78(e), and 412.79(d) contain
provisions that set the update factor for SCHs and MDHs equal to the
update factor applied to the national standardized amount for all IPPS
hospitals. Therefore, we are not proposing to make any further changes
to these five regulatory provisions to reflect the FY 2015 update
factor for the hospital-specific rates of SCHs and MDHs. As mentioned
above, for this proposed rule, we used IGI's first quarter 2014
forecast of the FY 2010-based IPPS market basket update with historical
data through fourth quarter 2013. Similarly, we used IGI's first
quarter 2014 forecast of the MFP adjustment. For the final rule, we are
proposing to use the most recent data available.
We note that, as discussed in section IV.G. of the preamble of this
proposed rule, section 1106 of the Pathway for SGR Reform Act of 2013
(Pub. L. 113-67), enacted on December 26, 2013, extended the MDH
program from the end of FY 2013 through the first half of FY 2014 (that
is, for discharges occurring before April 1, 2014). Subsequently,
section 106 of the Protecting Access to Medicare Act of 2014, Public
Law 113-93, enacted on April 1, 2014, further extended the MDH program
through the first half of FY 2015 (that is, for discharges occurring
before April l, 2015). Prior to the enactment of Public Law 113-67, the
MDH program was to be in effect through the end of FY 2013 only. The
MDH program expires for discharges beginning on April 1, 2015 under
current law. Accordingly, the proposed update of the hospital-specific
rates for FY 2015 for MDHs will apply in determining payments for FY
2015 discharges occurring before April 1, 2015.
2. FY 2015 Puerto Rico Hospital Update
Puerto Rico hospitals are paid a blended rate for their inpatient
operating costs based on 75 percent of the national standardized amount
and 25 percent of the Puerto Rico-specific standardized amount. Section
1886(d)(9)(C)(i) of the Act is the basis for determining the applicable
percentage increase applied to the Puerto Rico-specific standardized
amount. Section 401(c) of Public Law 108-173 amended section
1886(d)(9)(C)(i) of the Act, which states that, for discharges
occurring in a fiscal year (beginning with FY 2004), the Secretary
shall compute an average standardized amount for hospitals located in
any area of Puerto Rico that is equal to the average standardized
amount computed under subclause (I) for fiscal year 2003 for hospitals
in a large urban area (or, beginning with FY 2005, for all hospitals in
the previous fiscal year) increased by the applicable percentage
increase under subsection (b)(3)(B) for the fiscal year involved.
Therefore, the update to the Puerto Rico-specific operating
standardized amount equals the applicable percentage increase set forth
in section 1886(b)(3)(B)(i) of the Act, as amended by sections 3401(a)
and 10319(a) of the Affordable Care Act (that is, the same update
factor as for all other hospitals subject to the IPPS). Accordingly, we
are proposing an applicable percentage increase to the Puerto Rico-
specific operating standardized amount of 2.1 percent for FY 2015. We
note that the provisions of section 1886(b)(3)(B)(viii) of the Act,
which specify the adjustments to the applicable percentage increase for
``subsection (d)'' hospitals that do not submit quality data under the
rules established by the Secretary, and the provisions of section
1886(b)(3)(B)(ix) of the Act, which specify the adjustments to the
applicable percentage increase for ``subsection (d)'' hospitals that
are not meaningful EHR users, are not applicable to hospitals located
in Puerto Rico.
For FY 2015, the existing regulations in Sec. 412.211(c) set the
update factor for
[[Page 28089]]
Puerto Rico-specific standardized amount equal to the update factor
applied to the national standardized amount for all IPPS hospitals.
Therefore, we are not proposing to make any further changes to this
regulatory provision to reflect the FY 2015 update factor for the
Puerto Rico-specific standardized amount.
As mentioned previously, for this proposed rule, we used IGI's
first quarter 2014 forecast of the FY 2010-based IPPS market basket
update with historical data through fourth quarter 2013. For the final
rule, we are proposing to use the most recent data available.
Similarly, we used IGI's first quarter 2014 forecast of the MFP
adjustment. For the final rule, we are proposing to use the most recent
data available.
C. Rural Referral Centers (RRCs): Proposed Annual Updates to Case-Mix
Index and Discharge Criteria (Sec. 412.96)
Under the authority of section 1886(d)(5)(C)(i) of the Act, the
regulations at Sec. 412.96 set forth the criteria that a hospital must
meet in order to qualify under the IPPS as a rural referral center
(RRC). RRCs receive some special treatment under both the DSH payment
adjustment and the criteria for geographic reclassification.
Section 402 of Public Law 108-173 raised the DSH payment adjustment
for RRCs such that they are not subject to the 12-percent cap on DSH
payments that is applicable to other rural hospitals. RRCs are also not
subject to the proximity criteria when applying for geographic
reclassification. In addition, they do not have to meet the requirement
that a hospital's average hourly wage must exceed, by a certain
percentage, the average hourly wage of the labor market area where the
hospital is located.
Section 4202(b) of Public Law 105-33 states, in part, ``[a]ny
hospital classified as an RRC by the Secretary . . . for fiscal year
1991 shall be classified as such an RRC for fiscal year 1998 and each
subsequent year.'' In the August 29, 1997 IPPS final rule with comment
period (62 FR 45999), CMS reinstated RRC status for all hospitals that
lost the status due to triennial review or MGCRB reclassification.
However, CMS did not reinstate the status of hospitals that lost RRC
status because they were now urban for all purposes because of the OMB
designation of their geographic area as urban. Subsequently, in the
August 1, 2000 IPPS final rule (65 FR 47089), we indicated that we were
revisiting that decision. Specifically, we stated that we would permit
hospitals that previously qualified as an RRC and lost their status due
to OMB redesignation of the county in which they are located from rural
to urban, to be reinstated as an RRC. Otherwise, a hospital seeking RRC
status must satisfy all of the other applicable criteria. We use the
definitions of ``urban'' and ``rural'' specified in Subpart D of 42 CFR
Part 412. One of the criteria under which a hospital may qualify as an
RRC is to have 275 or more beds available for use (Sec.
412.96(b)(1)(ii)). A rural hospital that does not meet the bed size
requirement can qualify as an RRC if the hospital meets two mandatory
prerequisites (a minimum CMI and a minimum number of discharges), and
at least one of three optional criteria (relating to specialty
composition of medical staff, source of inpatients, or referral
volume). (We refer readers to Sec. 412.96(c)(1) through (c)(5) and the
September 30, 1988 Federal Register (53 FR 38513).) With respect to the
two mandatory prerequisites, a hospital may be classified as an RRC
if--
The hospital's CMI is at least equal to the lower of the
median CMI for urban hospitals in its census region, excluding
hospitals with approved teaching programs, or the median CMI for all
urban hospitals nationally; and
The hospital's number of discharges is at least 5,000 per
year, or, if fewer, the median number of discharges for urban hospitals
in the census region in which the hospital is located. (The number of
discharges criterion for an osteopathic hospital is at least 3,000
discharges per year, as specified in section 1886(d)(5)(C)(i) of the
Act.)
1. Case-Mix Index (CMI)
Section 412.96(c)(1) provides that CMS establish updated national
and regional CMI values in each year's annual notice of prospective
payment rates for purposes of determining RRC status. The methodology
we used to determine the national and regional CMI values is set forth
in the regulations at Sec. 412.96(c)(1)(ii). The proposed national
median CMI value for FY 2015 includes data from all urban hospitals
nationwide, and the proposed regional values for FY 2015 are the median
CMI values of urban hospitals within each census region, excluding
those hospitals with approved teaching programs (that is, those
hospitals that train residents in an approved GME program as provided
in Sec. 413.75). These proposed values are based on discharges
occurring during FY 2013 (October 1, 2012 through September 30, 2013),
and include bills posted to CMS' records through December 2013.
We are proposing that, in addition to meeting other criteria, if
rural hospitals with fewer than 275 beds are to qualify for initial RRC
status for cost reporting periods beginning on or after October 1,
2014, they must have a CMI value for FY 2013 that is at least--
1.5730; or
The median CMI value (not transfer-adjusted) for urban
hospitals (excluding hospitals with approved teaching programs as
identified in Sec. 413.75) calculated by CMS for the census region in
which the hospital is located.
The proposed CMI values by region are set forth in the following
table:
------------------------------------------------------------------------
Proposed case-
Region mix index
value
------------------------------------------------------------------------
1. New England (CT, ME, MA, NH, RI, VT)................. 1.3602
2. Middle Atlantic (PA, NJ, NY)......................... 1.4334
3. South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV).. 1.4815
4. East North Central (IL, IN, MI, OH, WI).............. 1.4915
5. East South Central (AL, KY, MS, TN).................. 1.4099
6. West North Central (IA, KS, MN, MO, NE, ND, SD)...... 1.5498
7. West South Central (AR, LA, OK, TX).................. 1.6041
8. Mountain (AZ, CO, ID, MT, NV, NM, UT, WY)............ 1.6583
9. Pacific (AK, CA, HI, OR, WA)......................... 1.5680
------------------------------------------------------------------------
We intend to update the preceding numbers in the FY 2015 final rule
to reflect the updated FY 2013 MedPAR file, which would contain data
from additional bills received through March 2014.
[[Page 28090]]
A hospital seeking to qualify as an RRC should obtain its hospital-
specific CMI value (not transfer-adjusted) from its fiscal intermediary
or MAC. Data are available on the Provider Statistical and
Reimbursement (PS&R) System. In keeping with our policy on discharges,
the CMI values are computed based on all Medicare patient discharges
subject to the IPPS MS-DRG-based payment.
2. Discharges
Section 412.96(c)(2)(i) provides that CMS set forth the national
and regional numbers of discharges in each year's annual notice of
prospective payment rates for purposes of determining RRC status. As
specified in section 1886(d)(5)(C)(ii) of the Act, the national
standard is set at 5,000 discharges. We are proposing to update the
regional standards based on discharges for urban hospitals' cost
reporting periods that began during FY 2012 (that is October 1, 2011
through September 30, 2012), which are the latest cost report data
available at the time this proposed rule was developed.
We are proposing that, in addition to meeting other criteria, a
hospital, if it is to qualify for initial RRC status for cost reporting
periods beginning on or after October 1, 2014, must have, as the number
of discharges for its cost reporting period that began during FY 2012,
at least--
5,000 (3,000 for an osteopathic hospital); or
The median number of discharges for urban hospitals in the
census region in which the hospital is located, as indicated in the
following table.
------------------------------------------------------------------------
Number of
Region discharges
------------------------------------------------------------------------
1. New England (CT, ME, MA, NH, RI, VT)................. 7,679
2. Middle Atlantic (PA, NJ, NY)......................... 10,661
3. South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV).. 10,591
4. East North Central (IL, IN, MI, OH, WI).............. 8,130
5. East South Central (AL, KY, MS, TN).................. 7,065
6. West North Central (IA, KS, MN, MO, NE, ND, SD)...... 7,925
7. West South Central (AR, LA, OK, TX).................. 4,524
8. Mountain (AZ, CO, ID, MT, NV, NM, UT, WY)............ 8,830
9. Pacific (AK, CA, HI, OR, WA)......................... 8,261
------------------------------------------------------------------------
We intend to update these numbers in the FY 2015 final rule based
on the latest available cost report data.
We reiterate that, if an osteopathic hospital is to qualify for RRC
status for cost reporting periods beginning on or after October 1,
2014, the hospital would be required to have at least 3,000 discharges
for its cost reporting period that began during FY 2012.
D. Proposed Payment Adjustment for Low-Volume Hospitals (Sec. 412.101)
1. Background
Section 1886(d)(12) of the Act provides for an additional payment
to each qualifying low-volume hospital that is paid under IPPS
beginning in FY 2005. Sections 3125 and 10314 of the Affordable Care
Act provided for a temporary change in the low-volume hospital payment
policy for FYs 2011 and 2012. Section 605 of the American Taxpayer
Relief Act of 2012 (ATRA) extended, for FY 2013, the temporary changes
in the low-volume hospital payment policy provided for in FYs 2011 and
2012 by the Affordable Care Act. Prior to the enactment of the Pathway
for SGR Reform Act of 2013 (Pub. L. 113-67) on December 26, 2013 and
section 106 of the Protecting Access to Medicare Act of 2014 (Pub. L.
113-93) on April l, 2014, beginning with FY 2014, the low-volume
hospital qualifying criteria and payment adjustment returned to the
statutory requirements under section 1886(d)(12) of the Act that were
in effect prior to the amendments made by the Affordable Care Act and
the ATRA. (For additional information on the expiration of the
temporary changes in the low-volume hospital payment policy for FYs
2011 through 2013 provided for by the Affordable Care Act and the ATRA,
we refer readers to the FY 2014 IPPS/LTCH PPS final rule (78 FR 50610
through 50613).)
Section 1105 of the Pathway for SGR Reform Act extended, for the
first 6 months of FY 2014 (that is, through March 31, 2014), the
temporary changes in the low-volume hospital payment policy provided
for in FYs 2011 and 2012 by the Affordable Care Act and extended
through FY 2013 by the ATRA. We addressed the extension of the
temporary changes to the low-volume hospital payment policy through
March 31, 2014 under the Pathway for SGR Reform Act in an interim final
rule with comment period that appeared in the Federal Register on March
18, 2014 (79 FR 15022 through 15025). In that March 18, 2014 interim
final rule with comment period, we also amended the regulations at 42
CFR 412.101 to reflect the extension of the temporary changes to the
qualifying criteria and the payment adjustment for low-volume hospitals
through March 31, 2014.
2. Provisions of the Protecting Access to Medicare Act of 2014
Section 105 of the Protecting Access to Medicare Act of 2014 (Pub.
L. 113-93) extends, for an additional year (that is, through March 31,
2015), the temporary changes in the low-volume hospital payment policy
provided for in FYs 2011 and 2012 by the Affordable Care Act and
extended through FY 2013 by the ATRA and the first half of FY 2014 by
the Pathway for SGR Reform Act. We intend to address the extension of
the temporary changes to the low-volume hospital payment policy for the
second half of FY 2014 (that is, from April 1, 2014 through September
30, 2014) under Public Law 113-93 in a forthcoming Federal Register
notice. However, in this proposed rule, we are proposing to make
conforming changes to the existing regulations text at Sec. 412.101 to
reflect the extension of the changes to the qualifying criteria and the
payment adjustment methodology for low-volume hospitals through the
first half of FY 2015 (that is, through March 31, 2015) in accordance
with section 105 of Public Law 113-93. Specifically, we are proposing
to revise paragraphs (b)(2)(i), (b)(2)(ii), (c)(1), (c)(2), and (d) of
Sec. 412.101. Under these proposed changes to Sec. 412.101, beginning
with FY 2015 discharges occurring on or after April 1, 2015, consistent
with section 1886(d)(12) of the Act, as amended, the low-volume
hospital qualifying criteria and payment adjustment methodology would
revert to that which was in effect prior to the amendments made by the
Affordable Care Act and subsequent legislation (that is, the low-volume
hospital payment adjustment policy in effect for FYs 2005 through
2010).
[[Page 28091]]
3. Low-Volume Hospital Definition and Payment Adjustment for FY 2015
As discussed above, under section 1886(d)(12) of the Act, as
amended, the temporary changes in the low-volume hospital payment
policy originally provided by the Affordable Care Act and extended
through subsequent legislation, are effective for FY 2015 discharges
occurring before April 1, 2015. To implement the extension of the
temporary change in the low-volume hospital payment policy through the
first half of FY 2015 (that is, for discharges occurring through March
31, 2015) provided for by Public Law 113-93, in accordance with
proposed Sec. 412.101(b)(2)(ii) and consistent with our historical
approach, we are proposing to update the discharge data source used to
identify qualifying low-volume hospitals and calculate the payment
adjustment (percentage increase) for FY 2015 discharges occurring
before April 1, 2015. Under existing Sec. 412.101(b)(2)(ii), for the
applicable fiscal years, a hospital's Medicare discharges from the most
recently available MedPAR data, as determined by CMS, are used to
determine if the hospital meets the discharge criteria to receive the
low-volume payment adjustment in the current year. The applicable low-
volume percentage increase, as originally provided for by the
Affordable Care Act, is determined using a continuous linear sliding
scale equation that results in a low-volume hospital payment adjustment
ranging from an additional 25 percent for hospitals with 200 or fewer
Medicare discharges to a zero percent additional payment adjustment for
hospitals with 1,600 or more Medicare discharges. For FY 2015
discharges occurring before April 1, 2015, consistent with our
historical policy, we are proposing that qualifying low-volume
hospitals and their payment adjustment would be determined using the
most recently available Medicare discharge data from the FY 2013 MedPAR
file, as these data are the most recent data available. Table 14 listed
in the Addendum of this proposed rule (which is available only through
the Internet on the CMS Web site at http://www.cms.hhs.gov/AcuteInpatientPPS/01_overview.asp) lists the ``subsection (d)''
hospitals with fewer than 1,600 Medicare discharges based on the
December 2013 update of the FY 2013 MedPAR file and their proposed low-
volume payment adjustment for FY 2015 discharges occurring before April
1, 2015 (if eligible). Eligibility for the low-volume hospital payment
adjustment for the first 6 months of FY 2015 would also be dependent
upon meeting (in the case of a hospital that did not qualify for the
low-volume hospital payment adjustment in FY 2014) or continuing to
meet (in the case of a hospital that did qualify for the low-volume
hospital payment adjustment in FY 2014) the mileage criterion specified
at proposed Sec. 412.101(b)(2)(ii). A hospital also must be located
more than 15 road miles from any other IPPS hospital in order to
qualify for a low-volume hospital payment adjustment for FY 2015
discharges occurring before April 1, 2015. We note that the list of
hospitals with fewer than 1,600 Medicare discharges in Table 14 does
not reflect whether or not the hospital meets the mileage criterion. If
more recent Medicare discharge data become available, we intend to use
updated data to determine the list of ``subsection (d)'' hospitals with
fewer than 1,600 Medicare discharges based on the March 2014 update of
the FY 2013 MedPAR file and their potential low-volume payment
adjustment for FY 2015 discharges occurring before April 1, 2015 (if
eligible) in Table 14 of the final rule.
Furthermore, in accordance with section 1886(d)(12) of the Act, as
amended, beginning with FY 2015 discharges occurring on or after April
1, 2015, the low-volume hospital definition and payment adjustment
methodology will revert back to the statutory requirements that were in
effect prior to the amendments made by the Affordable Care Act and
subsequent legislation (including the Protecting Access to Medicare
Act). Therefore, consistent with section 1886(d)(12) of the Act, as
amended, under the proposed conforming changes to Sec. 412.101(b)(2),
effective for FY 2015 discharges occurring on or after April 1, 2015
and subsequent years, in order to qualify as a low-volume hospital, a
subsection (d) hospital must be more than 25 road miles from another
subsection (d) hospital and have less than 200 discharges (that is,
less than 200 discharges total, including both Medicare and non-
Medicare discharges) during the fiscal year. Under our existing policy,
effective for FY 2015 discharges occurring on or after April 1, 2015
and subsequent years, qualifying hospitals would receive the low-volume
hospital payment adjustment of an additional 25 percent for discharges
occurring during the fiscal year (or portion of the fiscal year).
Consistent with our existing policy for FYs 2005 through 2010, for FY
2015 discharges occurring on or after April 1, 2015 (and subsequent
years), the discharge determination for the low-volume hospital payment
adjustment would be made based on the hospital's number of total
discharges, that is, Medicare and non-Medicare discharges, as specified
at proposed Sec. 412.101(b)(2)(i). The hospital's most recently
submitted cost report is used to determine if the hospital meets the
discharge criterion to receive the low-volume hospital payment
adjustment in the current fiscal year. We use cost report data to
determine if a hospital meets the discharge criterion because these
data are the best available data source that includes information on
both Medicare and non-Medicare discharges. In addition to a discharge
criterion, eligibility for the low-volume hospital payment adjustment
also depends on the hospital meeting a mileage criterion. As specified
at proposed Sec. 412.101(b)(2)(i), to meet the mileage criterion to
qualify for the low-volume hospital payment adjustment for FY 2015
discharges occurring on or after April 1, 2015 (and subsequent years),
a hospital must be located more than 25 road miles from the nearest
subsection (d) hospital.
Consistent with our previously established procedure, for FY 2015,
we are proposing the following process for requesting and obtaining the
low-volume hospital payment adjustment. That is, in order to receive a
low-volume hospital payment adjustment under Sec. 412.101, a hospital
must notify and provide documentation to its MAC that it meets the
discharge and distance requirements under proposed Sec.
412.101(b)(2)(ii) for FY 2015 discharges occurring before April 1,
2015, and under proposed Sec. 412.101(b)(2)(i) for FY 2015 discharges
occurring on or after April 1, 2015, if also applicable. The MAC will
determine, based on the most recent data available, if the hospital
qualifies as a low-volume hospital, so that the hospital would know in
advance whether or not it will receive a payment adjustment. The MAC
and CMS may review available data, in addition to the data the hospital
submits with its request for low-volume hospital status, in order to
determine whether or not the hospital meets the qualifying criteria.
Consistent with our previously established procedure, for FY 2015, we
are proposing that a hospital must make a written request for low-
volume hospital status that is received by its MAC no later than
September 1, 2014, in order for the applicable low-volume hospital
payment adjustment to be applied to payments for its discharges
[[Page 28092]]
occurring on or after October 1, 2014, and through March 31, 2015,
under proposed Sec. 412.101(b)(2)(ii) or through September 30, 2015,
for hospitals that also qualify under proposed Sec. 412.101(b)(2)(i)).
A hospital that qualified for the low-volume payment adjustment in FY
2014 may continue to receive a low-volume payment adjustment for FY
2015 discharges occurring before April 1, 2015, without reapplying if
it continues to meet the Medicare discharge criterion established for
FY 2015 (shown in Table 14, which is available via the Internet on the
CMS Web site) and the distance criterion. However, the hospital must
send written verification that is received by its MAC no later than
September 1, 2014, that it continues to be more than 15 miles from any
other ``subsection (d)'' hospital.
If a hospital's written request for low-volume hospital status for
FY 2015 is received after September 1, 2014, and if the MAC determines
that the hospital meets the criteria to qualify as a low-volume
hospital under proposed Sec. 412.101(b)(2)(ii), the MAC would apply
the applicable low-volume hospital payment adjustment to determine the
payment for the hospital's FY 2015 discharges, effective prospectively
within 30 days of the date of its low-volume hospital status
determination through discharges occurring on or before March 31, 2015.
If the hospital also qualifies under proposed Sec. 412.101(b)(2)(i),
the MAC would apply the 25-percent low-volume hospital payment
adjustment to determine the payment for the hospital's FY 2015
discharges occurring on or after April 1, 2015. If a hospital's written
request for low-volume hospital status for FY 2015 is received on a
later date such that the prospective effective date would be on or
after April 1, 2015, and the hospital qualifies under proposed Sec.
412.101(b)(2)(i), the MAC would apply the 25-percent low-volume
hospital payment adjustment to determine the payment for the hospital's
FY 2015 discharges occurring from the prospective effective date
through September 30, 2015. (For additional details on our established
process for the low-volume hospital payment adjustment, we refer
readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53408).)
E. Indirect Medical Education (IME) Payment Adjustment (Sec. 412.105)
1. IME Adjustment Factor for FY 2015
Under the IPPS, an additional payment amount is made to hospitals
with residents in an approved graduate medical education (GME) program
in order to reflect the higher indirect patient care costs of teaching
hospitals relative to nonteaching hospitals. The payment amount is
determined by use of a statutorily specified adjustment factor. The
regulations regarding the calculation of this additional payment, known
as the IME adjustment, are located at Sec. 412.105. We refer readers
to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51680) for a full
discussion of the IME adjustment and IME adjustment factor. Section
1886(d)(5)(B) of the Act states that, for discharges occurring during
FY 2008 and fiscal years thereafter, the IME formula multiplier is
1.35. Accordingly, for discharges occurring during FY 2015, the formula
multiplier is 1.35. We estimate that application of this formula
multiplier for the FY 2015 IME adjustment will result in an increase in
IPPS payment of 5.5 percent for every approximately 10 percent increase
in the hospital's resident to bed ratio.
2. Proposed IME Medicare Part C Add-On Payments to Sole Community
Hospitals (SCHs) That Are Paid According to Their Hospital-Specific
Rates and Proposed Change in Methodology in Determining Payment to SCHs
Section 1886(d)(11) of the Act provides for an additional payment
amount to a subsection (d) teaching hospital that has an approved
medical residency training program for each applicable discharge of any
individual who is enrolled under Medicare Managed Care under Part C.
The amount of such payment is specified in section 1886(d)(11)(C) of
the Act and ``shall be equal to the applicable percentage (as defined
in subsection (h)(3)(D)(ii)) of the estimated average per discharge
amount that would otherwise have been paid under paragraph (5)(B) if
the individuals had not been enrolled as described in subparagraph
(B).''
Under section 1886(d)(5)(D) of the Act, sole community hospitals
(SCHs) are paid based on their hospital-specific rate from specified
base years or the IPPS Federal rate, whichever yields the greatest
aggregate payment for the hospital's cost reporting period. Payments
based on the Federal rate are based on the IPPS standardized amount and
include all applicable IPPS add-on payments, such as outliers, DSH, and
IME, while payments based on the hospital-specific rate include no add-
on payments. Under CMS' current payment system, both the IME add-on
payment for Medicare Part A patient discharges under section
1886(d)(5)(B) of the Act and the IME add-on payment for Medicare Part C
patient discharges under section 1886(d)(11) of the Act are included as
part of the Federal rate payment, whereas neither of these add-on
payments are included as part of the hospital-specific rate payment. We
note that SCHs that are paid based on their hospital-specific rate do
not receive an IME add-on payment for Medicare Part A patient
discharges because, generally, the hospital-specific rate already
reflects the additional costs that a teaching hospital incurs for its
Medicare Part A patients, but they also do not receive the IME add-on
payment for Medicare Part C patient discharges under section
1886(d)(11) of the Act. Therefore, in the case of Medicare Part C
patients, there is no component of the hospital-specific rate that
already accounts for the additional costs that SCHs incur for their
Medicare Part C patients, and there is currently no payment mechanism
for SCHs paid based on their hospital-specific rate to receive the IME
add-on payment for Medicare Part C patients.
For the reasons specified below, effective for discharges occurring
in cost reporting periods beginning on or after October 1, 2014, we are
proposing: (1) To provide all SCHs that are subsection (d) teaching
hospitals IME add-on payments for applicable discharges of Medicare
Part C patients in accordance with section 1886(d)(11) of the Act,
regardless of whether the SCH is paid based on the Federal rate or its
hospital-specific rate; and (2) that, for purposes of the comparison of
payments based on the Federal rate and payments based on the hospital-
specific rate under section 1886(d)(5)(D) of the Act, IME payments
under section 1886(d)(11) of the Act for Medicare Part C patients will
no longer be included as part of the Federal rate payment. After the
higher of the Federal rate payment amount or the hospital-specific rate
payment amount is determined, any IME add-on payments under section
1886(d)(11) of the Act would be added to that payment for purposes of
determining the hospital's total payment amount.
As noted above, under section 1886(d)(5)(D) of the Act, SCHs are
paid based on their hospital-specific rate or the IPPS Federal rate,
whichever yields the higher payment for the hospital's cost reporting
period. For each cost reporting period, the MAC determines which of the
payment options will yield the higher aggregate payment. Interim
payments are automatically made on a claim-by-claim basis at the higher
rate using the best data available at the time the MAC makes the
payment determination for each discharge. However, it may not be
possible for the MAC to determine in advance precisely
[[Page 28093]]
which of the rates will yield the higher aggregate payment by year's
end. In many cases, it is not possible to forecast outlier payments or
the final amount of the DSH payment adjustment or the IME adjustment
until cost report settlement. As noted above, these adjustment amounts
are applicable only to payments based on the Federal rate and not to
payments based on the hospital-specific rate. The MAC makes a final
adjustment at cost report settlement after it determines precisely
which of the two payment rates would yield the higher aggregate payment
to the hospital for its cost reporting period. This payment methodology
makes SCHs unique because SCH payments can change on a yearly basis
from payments based on the hospital-specific rate to payments based on
the Federal rate, or vice versa.
As we stated earlier, section 1886(d)(11) of the Act provides for
an additional payment for each applicable discharge of any subsection
(d) teaching hospital for treating Medicare Part C patients. Section
1886(d)(11)(C) of the Act specifies that the amount of the payment
``shall be equal to the applicable percentage (as defined in subsection
(h)(3)(D)(ii)) of the estimated average per discharge amount that would
otherwise have been paid under paragraph (5)(B) if the individuals had
not been enrolled as described in subparagraph (B)'' (emphasis added).
Because an SCH that is paid based on its hospital-specific rate does
not receive any IME add-on payment for Medicare Part A patients as
provided under section 1886(d)(5)(B) of the Act because, generally, the
hospital-specific rate already reflects the additional costs that a
teaching hospital incurs for its Medicare Part A patients, CMS has
interpreted section 1886(d)(11)(C) of the Act to mean that an SCH that
is paid based on its hospital-specific rate also is not entitled to
receive an additional payment for discharges of Medicare Part C
patients under section 1886(d)(11) of the Act.
After further consideration of the language at section 1886(d)(11)
of the Act, we believe that the statute would allow an SCH that is paid
based on its hospital-specific rate to receive IME add-on payments for
its Medicare Part C patient discharges. Section 1886(d)(11)(A) of the
Act provides for an additional payment amount for each applicable
discharge of a Medicare Part C patient of a subsection (d) hospital
that has an approved medical residency training program. Section
1886(d)(11)(C) of the Act sets forth the amount of this additional
payment, by reference to the amount that would otherwise have been paid
under section 1886(d)(5)(B) of the Act. Although an SCH that is paid
based on its hospital-specific rate does not receive any amount under
section 1886(d)(5)(B) of the Act for discharges of Medicare Part A
patients, we believe that section 1886(d)(11)(C) of the Act can be
interpreted as simply establishing the methodology for calculating the
amount of the add-on payment, without limiting the applicability of the
add-on payment to those SCHs that are paid based on the Federal rate.
As noted earlier, in making the comparison of SCH payments under
the Federal rate and the hospital-specific rate under section
1886(d)(5)(D) of the Act, the aggregate Federal rate payments are based
on the IPPS standardized amount and include IME add-on payments for
both Medicare Part A and Medicare Part C patient discharges. Payments
based on the hospital-specific rate do not include the Medicare Part A
IME add-on payment under section 1886(d)(5)(B) of the Act, under the
rationale that, generally, the hospital-specific rate already reflects
the additional costs that a teaching hospital incurs for its Medicare
Part A patients. Payments based on the hospital-specific rate also do
not include the IME add-on payment for Medicare Part C patient
discharges under section 1886(d)(11) of the Act. As a result, under the
current methodology, if an SCH that is a teaching hospital is paid
based on its hospital-specific rate, it receives no IPPS payment that
accounts for the additional costs that a teaching hospital incurs for
its Medicare Part C patients.
In conjunction with our proposal to provide IME add-on payments
under section 1886(d)(11) of the Act to SCHs, regardless of whether the
SCH is paid based on the Federal rate or its hospital-specific rate, we
also believe that, for purposes of the comparison of payments under the
Federal rate and the hospital-specific rate for SCHs under section
1886(d)(5)(D) of the Act, it is no longer appropriate for IME add-on
payments under section 1886(d)(11) of the Act to be included as part of
the Federal rate payment. Therefore, we are proposing to no longer
include these payments in the comparison in order to more accurately
reflect comparable payments for Medicare Part A patient discharges. In
addition, because the IME add-on payment for Medicare Part C patient
discharges for a given SCH would be the same, regardless of whether it
is paid based on the Federal rate or its hospital-specific rate, there
would be no need to include the IME add-on payment for Medicare Part C
patient discharges in the comparison. This is because the Part C IME
adjustment is always multiplied by the Federal rate that is used under
section 1886(d)(5)(B) of the Act, regardless of whether the hospital-
specific rate is higher, in accordance with section 1886(d)(11) of the
Act, which states that the IME Part C add-on amount ``shall be equal to
the applicable percentage . . . of the estimated average per discharge
amount that would otherwise have been paid under paragraph (5)(B).''
In summary, effective with discharges occurring in cost reporting
periods beginning on or after October 1, 2014, we are proposing: (1) To
provide all SCHs that are subsection (d) teaching hospitals IME add-on
payments for Medicare Part C patient discharges in accordance with
section 1886(d)(11) of the Act; and (2) that, for purposes of the
comparison of payments based on the Federal rate and the hospital-
specific rate for SCHs under section 1886(d)(5)(D) of the Act, IME add-
on payments under section 1886(d)(11) of the Act for Medicare Part C
patient discharges will no longer be included in the aggregate payment
under the Federal rate. That is, for purposes of determining payment to
an SCH under section 1886(d)(5)(D) of the Act, we are proposing to
compare aggregate payments based on the Federal rate, including the IME
add-on payment for Medicare Part A patients (where applicable), but not
the IME add-on payment for Medicare Part C patients, to aggregate
payments based on the hospital-specific rate, which as explained
earlier, do not include any IME add-on payments for either Medicare
Part A or Part C patients. After the higher of the Federal rate payment
amount or the hospital-specific rate payment amount under section
1886(d)(5)(D) of the Act is determined, the Part C IME adjustment
factor would be multiplied by the Federal rate payment amount to
determine the add-on payment amount under section 1886(d)(11) of the
Act, and then any IME add-on payments under section 1886(d)(11) of the
Act would be added to the payment amount under section 1886(d)(5)(D) of
the Act for purposes of determining the hospital's total payment
amount. We are inviting public comments on both of these proposals and
any alternatives that we should consider.
3. Other Proposed Policy Changes Affecting IME
In section IV.K. of the preamble of this proposed rule, we present
other proposed policy changes relating to GME payments, which may also
apply to IME payments. We refer readers to
[[Page 28094]]
that section of the preamble of this proposed rule where we present the
proposed policies.
F. Payment Adjustment for Medicare Disproportionate Share Hospitals
(DSHs) (Sec. 412.106)
1. Background
Section 1886(d)(5)(F) of the Act provides for additional Medicare
payments to subsection (d) hospitals that serve a significantly
disproportionate number of low-income patients. The Act specifies two
methods by which a hospital may qualify for the Medicare
disproportionate share hospital (DSH) adjustment. Under the first
method, hospitals that are located in an urban area and have 100 or
more beds may receive a Medicare DSH payment adjustment if the hospital
can demonstrate that, during its cost reporting period, more than 30
percent of its net inpatient care revenues are derived from State and
local government payments for care furnished to needy patients with low
incomes. This method is commonly referred to as the ``Pickle method.''
The second method for qualifying for the DSH payment adjustment, which
is the most common, is based on a complex statutory formula under which
the DSH payment adjustment is based on the hospital's geographic
designation, the number of beds in the hospital, and the level of the
hospital's disproportionate patient percentage (DPP). A hospital's DPP
is the sum of two fractions: The ``Medicare fraction'' and the
``Medicaid fraction.'' The Medicare fraction (also known as the ``SSI
fraction'' or ``SSI ratio'') is computed by dividing the number of the
hospital's inpatient days that are furnished to patients who were
entitled to both Medicare Part A and Supplemental Security Income (SSI)
benefits by the hospital's total number of patient days furnished to
patients entitled to benefits under Medicare Part A. The Medicaid
fraction is computed by dividing the hospital's number of inpatient
days furnished to patients who, for such days, were eligible for
Medicaid, but were not entitled to benefits under Medicare Part A, by
the hospital's total number of inpatient days in the same period.
Because the DSH payment adjustment is part of the IPPS, the DSH
statutory references (under section 1886(d)(5)(F) of the Act) to
``days'' apply only to hospital acute care inpatient days. Regulations
located at Sec. 412.106 govern the Medicare DSH payment adjustment and
specify how the DPP is calculated as well as how beds and patient days
are counted in determining the Medicare DSH payment adjustment. Under
Sec. 412.106(a)(1)(i), the number of beds for the Medicare DSH payment
adjustment is determined in accordance with bed counting rules for the
IME adjustment under Sec. 412.105(b).
2. Impact on Medicare DSH Payment Adjustment of Proposed Implementation
of New OMB Labor Market Delineations
As discussed in section III.B. of the preamble of this proposed
rule, we are proposing to implement the new OMB labor market area
delineations (which are based on 2010 Decennial Census data) for the FY
2015 wage index. This proposal also would have an impact on the
calculation of Medicare DSH payments to certain hospitals. Hospitals
that are designated as rural with less than 500 beds and that are not
rural referral centers (RRCs) are subject to a maximum DSH payment
adjustment of 12 percent. Accordingly, hospitals with less than 500
beds that are currently in urban counties that would become rural if we
adopt the new OMB delineations, and that do not become RRCs, would be
subject to a maximum DSH payment adjustment of 12 percent. (We note
that urban hospitals are only subject to a maximum DSH payment
adjustment of 12 percent if they have less than 100 beds.)
Under existing regulations at 42 CFR 412.102, a hospital located in
an area that is reclassified from urban to rural, as defined in the
regulations, may receive an adjustment to its rural Federal payment
amount for operating costs for two successive fiscal years.
Specifically, the regulations state that, in the first year after a
hospital loses urban status, the hospital will receive an additional
payment that equals two-thirds of the difference between the urban
standardized amount and disproportionate share payments as applicable
to the hospital before its redesignation from urban to rural and the
rural standardized amount and disproportionate share payments otherwise
applicable to the hospital subsequent to its redesignation from urban
to rural. In the second year after a hospital loses urban status, the
hospital will receive an additional payment that equals one-third of
the difference between the urban standardized amount and
disproportionate share payments applicable to the hospital before its
redesignation from urban to rural and the rural standardized amount and
disproportionate share payments otherwise applicable to the hospital
subsequent to its redesignation from urban to rural.
We note that we no longer make a distinction between the urban
standardized amount and the rural standardized amount. Rather,
hospitals receive the same standardized amount regardless of their
geographic designation. Accordingly, we are proposing to revise the
regulation at Sec. 412.102 to remove references to the urban and rural
standardized amounts.
The provisions of Sec. 412.102 would continue to apply with
respect to the calculation of the DSH payments to hospitals that are
currently located in urban counties that would become rural if we adopt
the new OMB delineations. Specifically, the regulations would state
that in the first year after a hospital loses urban status, the
hospital will receive an additional payment that equals two-thirds of
the difference between disproportionate share payments as applicable to
the hospital before its redesignation from urban to rural and the
disproportionate share payments otherwise applicable to the hospital
subsequent to its redesignation from urban to rural. In the second year
after a hospital loses urban status, the hospital will receive an
additional payment that equals one-third of the difference between the
disproportionate share payments applicable to the hospital before its
redesignation from urban to rural and the disproportionate share
payments otherwise applicable to the hospital subsequent to its
redesignation from urban to rural.
For the purposes of ratesetting, calculating budget neutrality, and
modeling payment impacts for this proposed rule, any hospital that was
previously urban but would be changed to rural status in FY 2015 as a
result of the proposed adoption of the new OMB labor market area
delineations would have its DSH payments modeled such that the payment
equals the amount of the rural disproportionate share payments plus
two-thirds of the difference between the urban disproportionate share
payments and the rural disproportionate share payments.
3. Payment Adjustment Methodology for Medicare Disproportionate Share
Hospitals (DSHs) Under Section 3133 of the Affordable Care Act (Sec.
412.106)
a. General Discussion
Section 3133 of the Patient Protection and Affordable Care Act, as
amended by section 10316 of the same act and section 1104 of the Health
Care and Education Reconciliation Act (Pub. L. 111-152), added a new
section 1886(r) to the Act that modifies the methodology for computing
the
[[Page 28095]]
Medicare DSH payment adjustment beginning in FY 2014. For purposes of
this proposed rule, we refer to these provisions collectively as
section 3133 of the Affordable Care Act.
Medicare DSH adjustment payments are calculated under a statutory
formula that considers the hospital's Medicare utilization attributable
to beneficiaries who also receive Supplemental Security Income (SSI)
benefits and the hospital's Medicaid utilization. Beginning with
discharges in FY 2014, hospitals that qualify for Medicare DSH payments
under section 1886(d)(5)(F) of the Act receive 25 percent of the amount
they previously would have received under the statutory formula for
Medicare DSH payments. This provision applies equally to hospitals that
qualify for DSH payments under section 1886(d)(5)(F)(i)(I) of the Act
and those hospitals that qualify under the Pickle method under section
1886(d)(5)(F)(i)(II) of the Act.
The remaining amount, equal to an estimate of 75 percent of what
otherwise would have been paid as Medicare DSH payments, reduced to
reflect changes in the percentage of individuals under age 65 who are
uninsured, is available to make additional payments to each hospital
that qualifies for Medicare DSH payments and that has uncompensated
care. The payments to each hospital for a fiscal year are based on the
hospital's amount of uncompensated care for a given time period
relative to the total amount of uncompensated care for that same time
period reported by all hospitals that receive Medicare DSH payments for
that fiscal year.
As provided by section 3133 of the Affordable Care Act, section
1886(r) of the Act requires that, for FY 2014 and each subsequent
fiscal year, a ``subsection (d) hospital'' that would otherwise receive
a ``disproportionate share hospital payment . . . made under subsection
(d)(5)(F)'' receives two separately calculated payments. Specifically,
section 1886(r)(1) of the Act provides that the Secretary shall pay to
such a subsection (d) hospital (including a Pickle hospital) 25 percent
of the amount the hospital would have received under section
1886(d)(5)(F) of the Act for disproportionate share hospital payments,
which represents ``the empirically justified amount for such payment,
as determined by the Medicare Payment Advisory Commission in its March
2007 Report to the Congress.'' We refer to this payment as the
``empirically justified Medicare DSH payment.''
In addition to this payment, section 1886(r)(2) of the Act provides
that, for FY 2014 and each subsequent fiscal year, the Secretary shall
pay to ``such subsection (d) hospital an additional amount equal to the
product of'' three factors. The first factor is the difference between
``the aggregate amount of payments that would be made to subsection (d)
hospitals under subsection (d)(5)(F) if this subsection did not apply''
and ``the aggregate amount of payments that are made to subsection (d)
hospitals under paragraph (1)'' for each fiscal year. Therefore, this
factor amounts to 75 percent of the payments that would otherwise be
made under section 1886(d)(5)(F) of the Act.
The second factor is, for FYs 2014 through 2017, 1 minus the
percent change in the percent of individuals under the age of 65 who
are uninsured, determined by comparing the percent of such individuals
who are uninsured in 2013, the last year before coverage expansion
under the Affordable Care Act (as calculated by the Secretary based on
the most recent estimates available from the Director of the
Congressional Budget Office before a vote in either House on the Health
Care and Education Reconciliation Act of 2010 that, if determined in
the affirmative, would clear such Act for enrollment), minus 0.1
percentage points for FY 2014, and minus 0.2 percentage points for FYs
2015 through 2017. For FYs 2014 through 2017, the baseline for the
estimate of the change in uninsurance is fixed by the most recent
estimate of the Congressional Budget Office before the final vote on
the Health Care and Education Reconciliation Act of 2010, which is
contained in a March 20, 2010 letter from the Director of the
Congressional Budget Office to the Speaker of the House. (A link to
this letter is included in section IV.F.3.d.(2) of the preamble of this
proposed rule).
For FY 2018 and subsequent years, the second factor is 1 minus the
percent change in the percent of individuals who are uninsured, as
determined by comparing the percent of individuals ``who are uninsured
in 2013 (as estimated by the Secretary, based on data from the Census
Bureau or other sources the Secretary determines appropriate, and
certified by the Chief Actuary'' of CMS, and the percent of individuals
``who are uninsured in the most recent period for which data is
available (as so estimated and certified), minus 0.2 percentage points
for FYs 2018 and 2019.'' Therefore, for FY 2018 and subsequent years,
the statute provides some greater flexibility in the choice of the data
sources to be used for the estimate of the change in the percent of
uninsured individuals.
The third factor is a percent that, for each subsection (d)
hospital, ``represents the quotient of . . . the amount of
uncompensated care for such hospital for a period selected by the
Secretary (as estimated by the Secretary, based on appropriate data . .
.),'' including the use of alternative data ``where the Secretary
determines that alternative data is available which is a better proxy
for the costs of subsection (d) hospitals for . . . treating the
uninsured,'' and ``the aggregate amount of uncompensated care for all
subsection (d) hospitals that receive a payment under this
subsection.'' Therefore, this third factor represents a hospital's
uncompensated care amount for a given time period relative to the
uncompensated care amount for that same time period for all hospitals
that receive Medicare DSH payments in that fiscal year, expressed as a
percent. For each hospital, the product of these three factors
represents its additional payment for uncompensated care for the
applicable fiscal year. We refer to the additional payment determined
by these factors as the ``uncompensated care payment.''
Section 1886(r) of the Act applies to FY 2014 and each subsequent
fiscal year. In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50620
through 50647) and the FY 2014 IPPS interim final rule with comment
period (78 FR 61191 through 61197), we set forth our policies for
implementing the required changes to the DSH payment methodology made
by section 3133 of the Affordable Care Act for FY 2014. In those rules,
we noted that, because section 1886(r) of the Act modifies the payment
required under section 1886(d)(5)(F) of the Act, it affects only the
DSH payment under the operating IPPS. It does not revise or replace the
capital IPPS DSH payment provided under the regulations at 42 CFR Part
412, Subpart M, which were established through the exercise of the
Secretary's discretion in implementing the capital IPPS under section
1886(g)(1)(A) of the Act.
Finally, section 1886(r)(3) of the Act provides that there shall be
``no administrative or judicial review under section 1869, section
1878, or otherwise'' of ``any estimate of the Secretary for purposes of
determining the factors described in paragraph (2),'' or of ``any
period selected by the Secretary'' for the purpose of determining those
factors. Therefore, there is no administrative or judicial review of
the estimates developed for purposes of applying the three factors used
to determine uncompensated care payments, or the periods selected in
order to develop such estimates.
[[Page 28096]]
b. Eligibility for Empirically Justified Medicare DSH Payments and
Uncompensated Care Payments
As indicated earlier, the payment methodology under section 3133 of
the Affordable Care Act applies to ``subsection (d) hospitals'' that
would otherwise receive a ``disproportionate share payment . . . made
under subsection (d)(5)(F).'' Therefore, eligibility for empirically
justified Medicare DSH payments is unchanged under section 3133 of the
Affordable Care Act. Consistent with the law, hospitals must receive
empirically justified Medicare DSH payments in a fiscal year to receive
an additional Medicare uncompensated care payment for that year.
Specifically, section 1886(r)(2) of the Act states that ``[i]n addition
to the payment made to a subsection (d) hospital under paragraph (1) .
. . the Secretary shall pay to such subsection (d) hospital an
additional amount . . .'' (emphasis supplied). Because paragraph (1)
refers to empirically justified Medicare DSH payments, the additional
payment under section 1886(r)(2) of the Act therefore, is limited to
hospitals that receive empirically justified Medicare DSH payments in
accordance with section 1886(r)(1) of the Act for the applicable fiscal
year.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50622) and the FY
2014 IPPS interim final rule with comment period (78 FR 61193), we
provided that hospitals that are not eligible to receive empirically
justified Medicare DSH payments in a fiscal year will not receive
uncompensated care payments for that year. We also specified that we
would make a determination concerning eligibility for interim
uncompensated care payments based on each hospital's estimated DSH
status for the applicable fiscal year (using the most recent data that
are available). We indicated that our final determination on the
hospital's eligibility for uncompensated care payments would be based
on the hospital's actual DSH status on the cost report for that payment
year.
In the FY 2014 IPPS/LTCH PPS final rule, we also considered whether
several specific classes of hospitals are included within the scope of
section 1886(r) of the Act. As we specified in that final rule (78 FR
50623), subsection (d) Puerto Rico hospitals that are eligible for DSH
payments also are eligible to receive empirically justified Medicare
DSH payments and uncompensated care payments under the new payment
methodology.
In addition, in the FY 2014 IPPS/LTCH PPS final rule, we considered
whether Maryland hospitals that were paid under section 1814(b)(3) of
the Act, would be eligible to receive uncompensated care payments. We
explained that, under section 1814(b) of the Act, hospitals in the
State of Maryland were subject to a waiver from the Medicare payment
methodologies under which they would otherwise be paid. Because
Maryland waiver hospitals were not paid under the IPPS (section 1886(d)
of the Act), in the FY 2014 IPPS/LTCH PPS final rule, we determined
that Maryland hospitals that operated under a waiver under section
1814(b)(3) of the Act were not eligible to receive empirically
justified Medicare DSH payments and uncompensated care payments under
the payment methodology of section 1886(r) of the Act (78 FR 50623). As
stated in section IV.H. of the preamble of this proposed rule,
effective January 1, 2014, the State of Maryland elected to no longer
have Medicare pay Maryland hospitals in accordance with section
1814(b)(3) of the Act and entered into an agreement with CMS that
Maryland hospitals would be paid under the Maryland All-Payor Model.
However, under the Maryland All-Payor Model, Maryland hospitals still
are not paid under the IPPS. Therefore, they remain ineligible to
receive empirically justified Medicare DSH payments or the
uncompensated care payments under section 1886(r) of the Act.
SCHs are paid based on their hospital-specific rate from certain
specified base years or the IPPS Federal rate, whichever yields the
greater aggregate payment for the hospital's cost reporting period. If
an SCH is paid under its hospital-specific rate, it is not eligible for
Medicare DSH payments. In order to implement the provisions of section
1886(r) of the Act, in the FY 2014 IPPS/LTCH PPS final rule (78 FR
50624), we specified that we will continue to determine interim
payments for SCHs based on what we estimate and project their DSH
status to be prior to the beginning of the Federal fiscal year (based
on the best available data at that time), subject to settlement through
the cost report. We also specified that SCHs that receive interim
empirically justified Medicare DSH payments in a fiscal year would
receive interim uncompensated care payments for that fiscal year on a
per discharge basis, subject as well to settlement through the cost
report. Final eligibility determinations will be made at the end of the
cost reporting period at settlement, and both interim empirically
justified Medicare DSH payments and uncompensated care payments will be
adjusted accordingly. Therefore, we follow the same processes of
interim and final payments for SCHs that we follow for eligible IPPS
DSH hospitals generally.
MDHs are paid based on the IPPS Federal rate or, if higher, the
IPPS Federal rate plus 75 percent of the amount by which the Federal
rate is exceeded by the updated hospital-specific rate from certain
specified base years (76 FR 51684). The IPPS Federal rate used in the
MDH payment methodology is the same IPPS Federal rate that is used in
the SCH payment methodology. Uncompensated care payments to MDHs were
not explicitly addressed in the FY 2014 IPPS/LTCH PPS final rule
because, at the time of the publication of the final rule, the MDH
program was set to expire at the end of FY 2013. Since the publication
of the FY 2014 IPPS/LTCH PPS final rule, the MDH program was extended
from October 1, 2013, to March 31, 2014, under the Pathway for SGR
Reform Act (Pub. L. 113-67) and was further extended an additional year
from April 1, 2014, to March 31, 2015, by the Protecting Access to
Medicare Act of 2014 (Pub. L. 113-93). Because MDHs are paid under the
IPPS Federal rate and, therefore, are eligible to receive Medicare DSH
payments if their disproportionate patient percentage is at least 15
percent, we apply the same process to determine eligibility for
Medicare DSH and the uncompensated care payment as we do for all other
IPPS hospitals. That is, we make a determination concerning eligibility
for interim uncompensated care payments based on each hospital's
estimated DSH status for the applicable fiscal year (using the most
recent data that are available) and our final determination on the
hospital's eligibility for uncompensated care payments would be based
on the hospital's actual DSH status on the cost report for that payment
year. In addition, as we do for all IPPS hospitals, we would calculate
a numerator for Factor 3 for all MDHs, regardless of whether they are
projected to be eligible for DSH during the fiscal year, but the
denominator for Factor 3 would be based on the uncompensated care data
from the hospitals that we have projected to be eligible for DSH during
the fiscal year.
Furthermore, in the FY 2014 IPPS interim final rule with comment
period (79 FR 15027), which addressed MDH payments for the first 6
months of FY 2014, we established a policy of including a pro rata
share of the uncompensated care payment amount for that period as part
of the Federal rate payment in the comparison of payments under the
hospital-specific rate and the
[[Page 28097]]
Federal rate. Consistent with that policy, for MDH payments for the
first 6 months of FY 2015, a pro rata share of the uncompensated care
payment amount for that period will be included as part of the Federal
rate payment in the comparison of payments under the hospital-specific
rate and the Federal rate. That is, in making this comparison at cost
report settlement, we will include the pro rata share of the
uncompensated care payment amount that reflects the period of time the
hospital was paid under the MDH program for its discharges occurring on
or after October 1, 2014, and before April 1, 2015. Consistent with the
policy for hospitals with Medicare cost reporting periods that span
more than 1 Federal fiscal year, this pro rata share will be determined
based on the proportion of the applicable Federal fiscal year that is
included in that cost reporting period (78 FR 61192 through 61194). As
noted previously, section 106 of Public Law 113-93 provides for an
extension of the MDH program through March 31, 2015, only. Therefore,
beginning April 1, 2015, all hospitals that previously qualified for
MDH status will no longer have MDH status under current law.
IPPS hospitals that have elected to participate in the Bundled
Payments for Care Improvement initiative receive a payment that links
multiple services furnished to a patient during an episode of care. We
have stated in previous rulemaking that those hospitals continue to be
paid under the IPPS (77 FR 53342). Hospitals that elect to participate
in the initiative can still receive DSH payments while participating in
the initiative, if they otherwise meet the requirements for receiving
such payments. In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50625),
we specified that we will apply the new DSH payment methodology to the
hospitals participating in this initiative, so that eligible hospitals
will receive empirically justified Medicare DSH payments and
uncompensated care payments.
Section 410A of the Medicare Modernization Act established the
Rural Community Hospital Demonstration Program. After the initial 5-
year period, the demonstration was extended for an additional 5-year
period by sections 3123 and 10313 of the Affordable Care Act. There are
23 hospitals currently participating in the demonstration. Under the
payment methodology provided in section 410A, participating hospitals
receive payment for Medicare inpatient services on the basis of a cost
methodology. Specifically, for discharges occurring in the hospitals'
first cost reporting period of the initial 5-year demonstration or the
first cost reporting period of the 5-year extension, the hospitals
participating in the demonstration receive payments for the reasonable
cost of providing such services. For discharges occurring in subsequent
cost reporting periods during the applicable 5-year period, hospitals
receive the lesser of the current year's reasonable cost-based amount,
or the previous year's amount updated by the percentage increase in the
IPPS market basket (the target amount). The instructions (Change
Request 5020 (April 14, 2006) and Change Request 7505 (July 22, 2011)
for the demonstration require that the MAC not pay Medicare DSH
payments in addition to the amount received under the reasonable cost-
based payment methodology. Because hospitals participating in the
demonstration do not receive DSH payments, we determined in the FY 2014
IPPS/LTCH PPS final rule that these hospitals also are excluded from
receiving empirically justified Medicare DSH payments and uncompensated
care payments under the new payment methodology (78 FR 50625).
c. Empirically Justified Medicare DSH Payments
As we have discussed earlier, section 1886(r)(1) of the Act
requires the Secretary to pay 25 percent of the amount of the DSH
payment that would otherwise be made under subsection (d)(5)(F) to a
subsection (d) hospital. Because section 1886(r)(1) of the Act merely
requires the program to pay a designated percentage of these payments,
without revising the criteria governing eligibility for DSH payments or
the underlying payment methodology, we stated in the FY 2014 IPPS/LTCH
PPS final rule that we did not believe that it is necessary to develop
any new operational mechanisms for making such payments. Therefore, in
the FY 2014 IPPS/LTCH PPS final rule (78 FR 50626), we implemented this
provision simply by revising the claims payment methodologies to adjust
the interim claim payments to the requisite 25 percent of what would
have otherwise been paid. We also made corresponding changes to the
hospital cost report so that these empirically justified Medicare DSH
payments can be settled at the appropriate level at the time of cost
report settlement. We provided more detailed operational instructions
and cost report instructions following issuance of the final rule that
can be found on the CMS Web site at: http://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2014-Transmittals-Items/R5P240.html.
d. Uncompensated Care Payments
As we have discussed earlier, section 1886(r)(2) of the Act
provides that, for each eligible hospital in FY 2014 and subsequent
years, the new uncompensated care payment is the product of three
factors. These three factors represent our estimate of 75 percent of
the amount of Medicare DSH payments that would otherwise have been
paid, an adjustment to this amount for the percent change in the
national rate of uninsurance compared to the rate of uninsurance in
2013, and each eligible hospital's estimated uncompensated care amount
relative to the estimated uncompensated care amount for all eligible
hospitals. Below we review the data sources and methodologies for
computing each of these factors, our final policies for FY 2014, and
our proposed policies for FY 2015.
(1) Proposed Calculation of Factor 1 for FY 2015
Section 1886(r)(2)(A) of the Act establishes Factor 1 in the
calculation of the uncompensated care payment. Section 1886(r)(2)(A) of
the Act states that it is a factor ``equal to the difference between
(i) the aggregate amount of payments that would be made to subsection
(d) hospitals under subsection (d)(5)(F) if this subsection did not
apply for such fiscal year (as estimated by the Secretary); and (ii)
the aggregate amount of payments that are made to subsection (d)
hospitals under paragraph (1) for such a fiscal year (as so
estimated).'' Therefore, section 1886(r)(2)(A)(i) of the Act represents
the estimated Medicare DSH payment that would have been made under
section 1886(d)(5)(F) if section 1886(r) of the Act did not apply for
such fiscal year. Under a prospective payment system, we would not know
the precise aggregate Medicare DSH payment amount that would be paid
for a Federal fiscal year until cost report settlement for all IPPS
hospitals is completed, which occurs several years after the end of the
Federal fiscal year. Therefore, section 1886(r)(2)(A)(i) of the Act
provides authority to estimate this amount, by specifying that, for
each fiscal year to which the provision applies, such amount is to be
``estimated by the Secretary.'' Similarly, section 1886(r)(2)(A)(ii) of
the Act represents the estimated empirically justified Medicare DSH
payments to be made in a fiscal year, as prescribed under section
1886(r)(1) of the Act. Again, section
[[Page 28098]]
1886(r)(2)(A)(ii) of the Act provides authority to estimate this
amount.
Therefore, Factor 1 is the difference between our estimates of: (1)
The amount that would have been paid in Medicare DSH payments for the
fiscal year, in the absence of the new payment provision; and (2) the
amount of empirically justified Medicare DSH payments that are made for
the fiscal year, which takes into account the requirement to pay 25
percent of what would have otherwise been paid under section
1886(d)(5)(F) of the Act. In other words, this factor represents our
estimate of 75 percent (100 percent minus 25 percent) of our estimate
of Medicare DSH payments that would otherwise be made, in the absence
of section 1886(r) of the Act, for the fiscal year.
In order to determine Factor 1 in the uncompensated care payment
formula, in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50628 through
50630) and in the FY 2014 IPPS interim final rule with comment period
(78 FR 61194), we adopted a policy under which we develop final
estimates of both the aggregate amount of Medicare DSH payments that
would be made in the absence of section 1886(r)(1) of the Act and the
aggregate amount of empirically justified Medicare DSH payments to
hospitals under section 1886(r)(1) of the Act prior to each fiscal year
to which the new provision applies. These estimates are not revised or
updated after we know the final Medicare DSH payments for the fiscal
year. Specifically, in order to determine the two elements of Factor 1
(Medicare DSH payments prior to the application of section 1886(r)(1)
of the Act, and empirically justified Medicare DSH payments after
application of section 1886(r)(1) of the Act), we use the most recently
available projections of Medicare DSH payments for the fiscal year, as
calculated by CMS' Office of the Actuary. The Office of the Actuary
projects Medicare DSH payments on a biannual basis, typically in
February of each year (based on data from December of the previous
year) as part of the President's Budget, and in July (based on data
from June) as part of the Midsession Review. The estimates are based on
the most recently filed Medicare hospital cost report with Medicare DSH
payment information, supplemental cost report data provided by Indian
Health Service (IHS) hospitals to CMS, and the most recent Medicare DSH
patient percentages and Medicare DSH payment adjustments provided in
the IPPS Impact File.
Therefore, for the Office of the Actuary's February 2014 estimate,
the data are based on the December 2013 update of the Medicare Hospital
Cost Report Information System (HCRIS), supplemental cost report data
provided by IHS hospitals to CMS as of December 2013 and the FY 2014
IPPS/LTCH PPS final rule IPPS Impact file, published in conjunction
with the publication of the FY 2014 IPPS/LTCH PPS final rule. For the
July 2014 estimate, we anticipate that the data will be based on the
March 2014 update of the HCRIS data, supplemental cost report data
provided by IHS hospitals to CMS as of March 2014, and the FY 2015
proposed rule's IPPS Impact file, published in conjunction with this
proposed rule (and which is available via the Internet on the CMS Web
site). For purposes of this proposed rule, we are using the February
2014 Medicare DSH estimates to calculate Factor 1 and to model the
proposed impact of this provision. For the final rule, we intend to use
the July 2014 Medicare DSH estimates to determine Factor 1 and to model
the impact of this provision. In addition, because SCHs paid under
their hospital-specific payment rate are excluded from the application
of section 1886(r) of the Act, we also exclude SCHs that are projected
to be paid under their hospital-specific rate from our Medicare DSH
estimates. Similarly, because Maryland hospitals participating in the
Maryland All-Payer Model and hospitals participating in the Rural
Community Hospital Demonstration do not receive DSH payments, we also
exclude these hospitals from our Medicare DSH estimates.
Using the data sources discussed above, the Office of the Actuary
uses the most recently submitted Medicare cost report data to identify
current Medicare DSH payments, supplemental cost report data provided
by IHS hospitals to CMS, and the most recent DSH payment adjustments
provided in the IPPS Impact File, and applies inflation updates and
assumptions for future changes in utilization and case-mix to estimate
Medicare DSH payments for the upcoming fiscal year. The February 2014
Office of the Actuary estimate for Medicare DSH payments for FY 2015,
without regard to the application of section 1886(r)(1) of the Act, is
$14.205 billion. This estimate excludes Maryland hospitals
participating in the Maryland All-Payer Model, SCHs paid under their
hospital-specific payment rate, and hospitals participating in the
Rural Community Hospital Demonstration as discussed above. Therefore,
based on this estimate, the estimate for empirically justified Medicare
DSH payments for FY 2015, with the application of section 1886(r)(1) of
the Act, is $3.551 billion (25 percent of the total amount estimated).
Under Sec. 412.l06(g)(1)(i) of the regulations, Factor 1 is the
difference between these two estimates of the Office of the Actuary.
Therefore, for the purpose of modeling Factor 1, we are proposing that
Factor 1 for FY 2015 would be $10.654 billion ($14.205 billion minus
$3.551 billion). We are inviting public comment on our proposed
calculation of Factor 1 for FY 2015.
(2) Proposed Calculation of Factor 2 for FY 2015
Section 1886(r)(2)(B) of the Act establishes Factor 2 in the
calculation of the uncompensated care payment. Specifically, section
1886(r)(2)(B)(i) of the Act provides: ``For each of fiscal years 2014,
2015, 2016, and 2017, a factor equal to 1 minus the percent change in
the percent of individuals under the age of 65 who are uninsured, as
determined by comparing the percent of such individuals (I) who are
uninsured in 2013, the last year before coverage expansion under the
Patient Protection and Affordable Care Act (as calculated by the
Secretary based on the most recent estimates available from the
Director of the Congressional Budget Office before a vote in either
House on the Health Care and Education Reconciliation Act of 2010 that,
if determined in the affirmative, would clear such Act for enrollment);
and (II) who are uninsured in the most recent period for which data is
available (as so calculated), minus 0.1 percentage points for fiscal
year 2014 and minus 0.2 percentage points for each of fiscal years
2015, 2016, and 2017.''
Section 1886(r)(2)(B)(i)(I) of the Act further indicates that the
percent of individuals under 65 without insurance in 2013 must be the
percent of such individuals ``who are uninsured in 2013, the last year
before coverage expansion under the Patient Protection and Affordable
Care Act (as calculated by the Secretary based on the most recent
estimates available from the Director of the Congressional Budget
Office before a vote in either House on the Health Care and Education
Reconciliation Act of 2010 that, if determined in the affirmative,
would clear such Act for enrollment).'' The Health Care and Education
Reconciliation Act (Pub. L. 111-152) was enacted on March 30, 2010. It
was passed in the House of Representatives on March 21, 2010, and by
the Senate on March 25, 2010. Because the House of Representatives was
the first House to vote on the Health Care and Education
[[Page 28099]]
Reconciliation Act of 2010 on March 21, 2010, we have determined that
the most recent estimate available from the Director of the
Congressional Budget Office ``before a vote in either House on the
Health Care and Education Reconciliation Act of 2010 . . .'' (emphasis
added) appeared in a March 20, 2010 letter from the director of the CBO
to the Speaker of the House. Therefore, we believe that only the
estimates in this March 20, 2010 letter meet the statutory requirement
under section 1886(r)(2)(B)(i)(I) of the Act. (To view the March 20,
2010 letter, we refer readers to the Web site at: http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/113xx/doc11379/amendreconprop.pdf.)
In its March 20, 2010 letter to the Speaker of the House of
Representatives, the CBO provided two estimates of the ``post-policy
uninsured population.'' The first estimate is of the ``Insured Share of
the Nonelderly Population Including All Residents'' (82 percent) and
the second estimate is of the ``Insured Share of the Nonelderly
Population Excluding Unauthorized Immigrants'' (83 percent). In the FY
2014 IPPS/LTCH PPS final rule (78 FR 50631), we used the first estimate
that includes all residents, including unauthorized immigrants. We
stated that we believe this estimate is most consistent with the
statute which requires us to measure ``the percent of individuals under
the age of 65 who are uninsured,'' and provides no exclusions except
for individuals over the age of 65. In addition, we stated that we
believe that this estimate more fully reflects the levels of
uninsurance in the United States that influence uncompensated care for
hospitals than the estimate that reflects only legal residents. The
March 20, 2010 CBO letter reports these figures as the estimated
percentage of individuals with insurance. However, because section
1886(r)(2)(B)(i) of the Act requires that we compare the percent of
individuals who are uninsured in the applicable year with the percent
of individuals who were uninsured in 2013, in the FY 2014 IPPS/LTCH PPS
final rule, we used the CBO insurance rate figure and subtracted that
amount from 100 percent (that is the total population without regard to
insurance status) to estimate the 2013 baseline percent of individuals
without insurance. Therefore, for FYs 2014 through 2017, our estimate
of the uninsurance percentage for 2013 is 18 percent.
Section 1886(r)(2)(B)(i) of the Act requires that we compare the
baseline uninsurance rate to the percent of such individuals ``who are
uninsured in the most recent period for which data is available (as so
calculated).'' In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50634),
we used the same data source, CBO estimates, to calculate this percent
of individuals without insurance. In response to public comments, we
also agreed that we should normalize the CBO estimates, which are based
on the calendar year, for the Federal fiscal years for which each
calculation of Factor 2 is made (78 FR 50633). Therefore, in the FY
2014 IPPS/LTCH PPS final rule, we employed the most recently available
estimate, specifically CBO's May 2013 estimates of the effects of the
Affordable Care Act on health insurance coverage (which are available
at: http://www.cbo.gov/sites/default/files/cbofiles/attachments/44190_EffectsAffordableCareActHealthInsuranceCoverage_2.pdf) as amended by
CBO's July 2013 estimates of changes in estimates of the effects of
insurance coverage provisions in the Affordable Care Act issued in
conjunction with a memo regarding ``Analysis of the Administration's
Announced Delay of Certain Requirements Under the Affordable Care
Act,'' which are available at: http://www.cbo.gov/sites/default/files/cbofiles/attachments/44465-ACA.pdf. The CBO's May 2013 estimate of the
rate of insurance for CY 2013 was 80 percent, and for CY 2014 was 84
percent. Therefore, the calculation of Factor 2 for FY 2014, employing
a weighted average of the CBO projections for CY 2013 and CY 2014, was
as follows:
CY 2013 rate of insurance coverage (May 2013 CBO
estimate): 80 percent.
CY 2014 rate of insurance coverage (May 2013 CBO estimate,
updated with July 2013 CBO estimate): 84 percent.
FY 2014 rate of insurance coverage: (80 percent * .25) +
(84 percent * .75) = 83 percent.
Percent of individuals without insurance for 2013 (March
2010 CBO estimate): 18 percent.
Percent of individuals without insurance for FY 2014
(weighted average): 17 percent.
1-[verbar][(0.17-0.18)/0.18][verbar] = 1-0.056 = 0.944 (94.4 percent).
0.944 (94.4 percent)-0.001 (0.1 percentage points) = 0.943 (94.3
percent).
0.943 = Factor 2
Therefore, in the FY 2014 IPPS/LTCH PPS final rule, we adopted
0.943 as the final determination of Factor 2 for FY 2014. In
conjunction with this determination, we also determined in the FY 2014
IPPS/LTCH PPS final rule and later revised in the FY 2014 IPPS interim
final rule with comment period (78 FR 61195) that the amount available
for uncompensated care payments for FY 2014 would be approximately
$9.046 billion (0.943 times our Factor 1 estimate of $9.593 billion).
For this FY 2015 proposed rule, we have used CBO's February 2014
estimates of the effects of the Affordable Care Act on health insurance
coverage (which are available at http://www.cbo.gov/publication/43900?utm_source=feedblitz&utm_medium=FeedBlitzEmail&utm_content=812526&utm_campaign=0). The CBO's February 2014 estimate of
individuals under the age of 65 with insurance in CY 2014 is 84
percent. Therefore, the CBO's most recent estimate of the rate of
uninsurance in CY 2014 is 16 percent (that is, 100 percent minus 84
percent.) Similarly, the CBO's February 2014 estimate of individuals
under the age of 65 with insurance in CY 2015 is 86 percent. Therefore,
the CBO's most recent estimate of the rate of uninsurance in CY 2015
available during the development of this proposed rule is 14 percent
(that is, 100 percent minus 86 percent.)
The calculation of the proposed Factor 2 for FY 2015, employing a
weighted average of the CBO projections for CY 2014 and CY 2015, is as
follows:
CY 2014 rate of insurance coverage (February 2014 CBO
estimate): 84 percent.
CY 2015 rate of insurance coverage (February 2014 CBO
estimate): 86 percent.
FY 2015 rate of insurance coverage: (84 percent * .25) +
(86 percent * .75) = 85.5 percent.
Percent of individuals without insurance for 2013 (March
2010 CBO estimate): 18 percent
Percent of individuals without insurance for FY 2015
(weighted average): 14.5 percent
1-[verbar][(0.145--0.18)/0.18][verbar] = 1-0.19444 = 0.80556 (80.556
percent)
0.80556 (80.556 percent)-0.002 (0.2 percentage points for FY 2015 under
section 1886(r)(2)(B)(i) of the Act) = 0.8036 (80.36 percent)
0.8036 = Factor 2
Therefore, we are proposing that Factor 2 for FY 2015 would be
0.8036. Our proposal for Factor 2 is subject to change if more recent
CBO estimates of the insurance rate become available at the time of the
preparation of the final rule. We are inviting public comments on our
proposed calculation of Factor 2 for FY 2015.
[[Page 28100]]
(3) Proposed Calculation of Factor 3 for FY 2015
Section 1886(r)(2)(C) of the Act defines Factor 3 in the
calculation of the uncompensated care payment. As we have discussed
earlier, section 1886(r)(2)(C) of the Act states that Factor 3 is
``equal to the percent, for each subsection (d) hospital, that
represents the quotient of (i) the amount of uncompensated care for
such hospital for a period selected by the Secretary (as estimated by
the Secretary, based on appropriate data (including, in the case where
the Secretary determines alternative data is available which is a
better proxy for the costs of subsection (d) hospitals for treating the
uninsured, the use of such alternative data)); and (ii) the aggregate
amount of uncompensated care for all subsection (d) hospitals that
receive a payment under this subsection for such period (as so
estimated, based on such data).''
Therefore, Factor 3 is a hospital-specific value that expresses the
proportion of the estimated uncompensated care amount for each
subsection (d) hospital and each subsection (d) Puerto Rico hospital
with the potential to receive DSH payments relative to the estimated
uncompensated care amount for all hospitals estimated to receive DSH
payments in the fiscal year for which the uncompensated care payment is
to be made. Factor 3 is applied to the product of Factor 1 and Factor 2
to determine the amount of the uncompensated care payment that each
eligible hospital will receive for FY 2014 and subsequent fiscal years.
In order to implement the statutory requirements for this factor of the
uncompensated care payment formula, it was necessary to determine: (1)
The definition of uncompensated care or, in other words, the specific
items that are to be included in the numerator (that is, the estimated
uncompensated care amount for an individual hospital) and denominator
(that is, the estimated uncompensated care amount for all hospitals
estimated to receive DSH payments in the applicable fiscal year); (2)
the data source(s) for the estimated uncompensated care amount; and (3)
the timing and manner of computing the quotient for each hospital
estimated to receive DSH payments. The statute instructs the Secretary
to estimate the amounts of uncompensated care for a period ``based on
appropriate data.'' In addition, we note that the statute permits the
Secretary to use alternative data ``in the case where the Secretary
determines that alternative data is available,'' which is a better
proxy for the costs of subsection (d) hospitals for treating uninsured
individuals.
In the course of considering how to determine Factor 3 during the
rulemaking process for FY 2014, we considered defining the amount
uncompensated care for a hospital as the uncompensated care costs of
each hospital and considered potential data sources for those costs.
For purposes of selecting an appropriate data source for this possible
definition of uncompensated care costs, we reviewed the literature and
available data sources and determined that Worksheet S-10 of the
Medicare cost report could potentially provide the most complete data
for Medicare hospitals. (We refer readers to the report ``Improvements
to Medicare Disproportionate Share (DSH) Payments'' for a full
discussion and evaluation of the available data sources. The report is
available on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/dsh.html.) However, we noted
that Worksheet S-10 is a relatively new data source that has been used
for specific payment purposes only in relatively restricted ways (for
example, to provide a source of charity care charges in the computation
of EHR incentive payments (75 FR 44456)). We also noted that some
stakeholders have expressed concern that hospitals have not had enough
time to learn how to submit accurate and consistent data through this
reporting mechanism. Other stakeholders have maintained that some
instructions for Worksheet S-10 still require clarification in order to
ensure standardized and consistent reporting by hospitals. At the same
time, we noted that Worksheet S-10 is the only national data source
that includes data for all Medicare hospitals and is designed to elicit
data on uncompensated care costs. We discussed the possible use of data
reported on Worksheet S-10 to determine uncompensated care costs in
more detail in the FY 2014 IPPS/LTCH PPS proposed rule (78 FR 27586).
Because of concerns regarding variations in the data reported on
Worksheet S-10 of the Medicare cost report and the completeness of
these data, we did not propose to use data from the Worksheet S-10 to
determine the amount of uncompensated care. However, we stated our
belief that Worksheet S-10 of the Medicare cost report would otherwise
be an appropriate data source to determine uncompensated care costs. In
particular, we noted that Worksheet S-10 was developed specifically to
collect information on uncompensated care costs in response to interest
by MedPAC and other stakeholders regarding the topic (for example,
MedPAC's March 2007 Report to Congress) and that it is not unreasonable
to expect information on the cost report to be used for payment
purposes. Furthermore, hospitals attest to the accuracy and
completeness of the information reported in the cost report at the time
of submission. We indicated that we expect reporting on Worksheet S-10
to improve over time, particularly in the area of charity care which is
already being used and audited for payment determinations related to
the EHR Incentive Program, and that we will continue to monitor these
data. Accordingly, we stated that we may proceed with a proposal to use
data on the Worksheet S-10 to determine uncompensated care costs in the
future, once hospitals are submitting accurate and consistent data
through this reporting mechanism.
As a result of our concerns regarding the data reported on
Worksheet S-10 of the Medicare cost report, we believed it was
appropriate to consider the use of alternative data, at least in FY
2014, the first year that this provision is in effect, and possibly for
additional years until hospitals have adequate experience reporting all
of the data elements on Worksheet S-10. We noted that this approach is
consistent with input we received from some stakeholders in response to
the CMS National Provider Call in January 2013, who stated their belief
that existing FY 2010 and FY 2011 data from the Worksheet S-10 should
not be used for implementation of section 1886(r) of the Act and who
requested the opportunity to resubmit the data once more specific
instructions were issued by CMS. Accordingly, we examined alternative
data sources that could be used to allow time for hospitals to gain
experience with and to improve the accuracy of their reporting on
Worksheet S-10 of the Medicare cost report. We stated in the FY 2014
IPPS/LTCH PPS final rule that we believe that data on utilization for
insured low-income patients can be a reasonable proxy for the treatment
costs of uninsured patients. Moreover, due to the concerns regarding
the accuracy and consistency of the data reported on the Worksheet S-
10, we also determined that these alternative data, which are currently
reported on the Medicare cost report, would be a better proxy for the
amount of uncompensated care provided by hospitals. Accordingly, in the
FY 2014 IPPS/LTCH PPS final rule (78 FR 50639), we adopted the policy
of employing the utilization of insured low-income patients defined as
[[Page 28101]]
inpatient days of Medicaid patients plus inpatient days of Medicare SSI
patients as defined in 42 CFR 412.106(b)(4) and 412.106(b)(2)(i),
respectively, to determine Factor 3. We also indicated that we remained
convinced that the Worksheet S-10 could ultimately serve as an
appropriate source of more direct data regarding uncompensated care
costs for purposes of determining Factor 3 once hospitals are
submitting more accurate and consistent data through this reporting
mechanism. In the interim, we indicated that we would take steps such
as revising and clarifying cost report instructions, as appropriate. We
stated that it is our intention to propose introducing the use of the
Worksheet S-10 data for purposes of determining Factor 3 within a
reasonable amount of time.
Since the publication of the FY 2014 IPPS/LTCH PPS final rule, we
have continued to evaluate and assess the comments we have received
from stakeholders about Worksheet S-10 as well as evaluate what changes
might need to be made to the instructions to make the data hospitals
submit more accurate and consistent across hospitals. Although we have
not yet developed revisions to the Worksheet S-10 instructions at this
time, we remain committed to making improvements to Worksheet S-10. For
that reason, we believe it would be premature to propose the use of
Worksheet S-10 data for purposes of determining Factor 3 for FY 2015.
Therefore, we are proposing to continue to employ the utilization of
insured low-income patients defined as inpatient days of Medicaid
patients plus inpatient days of Medicare SSI patients, as defined in
Sec. 412.106(b)(4) and Sec. 412.106(b)(2)(i), respectively, to
determine Factor 3 for FY 2015. Accordingly, we are proposing to revise
the regulations at 42 CFR 412.106(g)(1)(iii)(C) to state that, for FY
2015, CMS will base its estimates of the amount of hospital
uncompensated care on the most recent available data on utilization for
Medicaid and Medicare SSI patients, as determined by CMS in accordance
with paragraphs (b)(2)(i) and (b)(4) of that section of the
regulations. We are inviting public comments on this proposal, and we
will continue to work with the hospital community and others to develop
the appropriate clarifications and revisions to Worksheet S-10 of the
Medicare cost report for reporting uncompensated care data. In
particular, we are inviting public comments on what would be a
reasonable timeline for adopting Worksheet S-10 of the Medicare cost
report as the data source for determining Factor 3.
As we did for the FY 2014 IPPS/LTCH PPS proposed rule, we are
publishing on the CMS Web site a table listing Factor 3 for all
hospitals that we estimate would receive empirically justified Medicare
DSH payments in a fiscal year (that is, hospitals that we project would
receive interim uncompensated care payments during the fiscal year),
and for the remaining subsection (d) and subsection (d) Puerto Rico
hospitals that have the potential of receiving a DSH payment in the
event that they receive an empirically justified Medicare DSH payment
for the fiscal year as determined at cost report settlement. Hospitals
have 60 days from the date of public display of the IPPS/LTCH PPS
proposed rule to review these tables and notify CMS in writing of a
change in a hospital's subsection (d) hospital status, such as if a
hospital has closed or converted to a CAH.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50639), we
considered public comments which recommended that we use the wage index
to adjust insured low-income days in determining Factor 3 in order to
account for the differences in ``purchasing power'' in different
regions of the country. With respect to these public comments, we
agreed that there may be regional variation in uncompensated care costs
due to regional variations in the costs of care generally. However, we
stated that we did not believe that there was sufficient basis for
believing that the wage index reflects the variations in uncompensated
care costs well enough to adopt it as the basis for adjusting Factor 3.
The wage index reflects the relative hospital wage level in the
geographic area of the hospital compared to the national average
hospital wage level. In computing the wage index, we derive an average
hourly wage for each labor market area (total wage costs divided by
total hours for all hospitals in the geographic area) and a national
average hourly wage (total wage costs divided by total hours for all
hospitals surveyed in the nation). A labor market area's wage index
value is the ratio of the area's average hourly wage to the national
average hourly wage. We note that, for FY 2014, 69.6 percent of the
standardized amount is considered to be the labor-related share and,
therefore, adjusted by the wage index. However, in addition to the
labor-related share of the standardized amount being adjusted by the
wage index, the entire standardized amount is also adjusted for the
relative weight of the MS-DRG for each individual patient. In other
words, the wage index only adjusts for a portion of the variation in
costs, and does not address variations in resource use and patient
severity. Therefore, we stated that we did not believe that there was
sufficient basis for believing that adjusting low-income patient days
by the wage index would better reflect variations in uncompensated care
costs.
Since the publication of the FY 2014 IPPS/LTCH PPS final rule, we
have continued to consider whether to propose employing the wage index
to adjust insured low-income days in determining Factor 3. After this
consideration, we continue to believe that a wage index adjustment to
insured low-income days is not an appropriate measure to account for
variations in the costs of uncompensated care among hospitals. The
intensity of such care, and therefore the costs, may vary by hospital,
but we still lack convincing evidence that the wage index data are an
accurate measure of that intensity. Therefore, we are not proposing to
adopt such an adjustment to low-income days for purposes of calculating
Factor 3 in FY 2015.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50639), we also
considered public comments that requested that we include insured low-
income days from exempt units (specifically, inpatient rehabilitation
units paid under the IRF PPS and inpatient psychiatric units paid under
the IPF PPS) of the hospital in the computation of Factor 3, in order
to better capture the treatment costs of the uninsured by the hospital.
In response to those public comments, we stated our belief that there
may be some merit to including insured low-income days from exempt
units of the hospital in order to better capture the full costs of the
treatment of the uninsured by the hospital insofar as those data may be
publicly available, subject to audit, and used for payment purposes. We
also indicated that we believed it would be prudent to consider the
degree to which these data meet these conditions before adopting this
recommendation. Therefore, we stated that we would consider including
this recommendation among our proposals in future rulemaking.
Since the publication of the FY 2014 IPPS/LTCH PPS final rule, we
have conducted an analysis of the impact of adopting this
recommendation. That analysis has indicated that the inclusion of
Medicaid and Medicare-SSI days for exempt inpatient units does not
significantly change the distribution of uncompensated care payments to
hospitals, with the exception of a few hospitals with high utilization
associated with those exempt units that
[[Page 28102]]
would see increases in their uncompensated care payments. Furthermore,
Medicaid and SSI days for inpatient rehabilitation units have been
audited and are used for payment purposes under the IRF PPS;
specifically, these data are used to calculate the low-income payment
(LIP) adjustment under the IRF PPS. However, the data for inpatient
psychiatric units are not generally audited and have not been used
previously for payment purposes. Therefore, we are not proposing at
this time to include those days in the calculation of a hospital's
share of uncompensated care payments. As we indicated earlier, we
believe it would be appropriate to include such data in the calculation
of uncompensated care payments only insofar as those data may be
publicly available, subject to audit, and used for payment purposes.
The use of data for inpatient psychiatric units would fail the second
and third conditions. At the same time, we do not believe that
including only inpatient rehabilitation unit days without inpatient
psychiatric unit days would improve the accuracy of the uncompensated
care payment calculation. We also observe, as we have previously noted,
that the statutory references under section 1886(d)(5)(F) of the Act to
``days'' apply only to hospital acute care inpatient days. Section
412.106(a)(1)(ii) of the regulations therefore provides that, for
purposes of DSH payments, ``the number of patient days in the hospital
includes only those days attributable to units or wards of the hospital
providing acute care services generally payable under the prospective
payment system and excludes'' other days. In the absence of compelling
reasons to do otherwise, we believe it is preferable to maintain
consistency with this longstanding precedent in the context of this
temporary method for determining uncompensated care payments. However,
we are inviting public comments on this issue.
The statute also allows the Secretary the discretion to determine
the time periods from which we will derive the data to estimate the
numerator and the denominator of the Factor 3 quotient. Specifically,
section 1886(r)(2)(C)(i) of the Act defines the numerator of the
quotient as ``the amount of uncompensated care for such hospital for a
period selected by the Secretary. . . .'' (emphasis added). Section
1886(r)(2)(C)(ii) of the Act defines the denominator as ``the aggregate
amount of uncompensated care for all subsection (d) hospitals that
receive a payment under this subsection for such period'' (emphasis
added). In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50638), we
adopted a process of making interim payments with final cost report
settlement for both the empirically justified Medicare DSH payments and
the uncompensated care payments required by section 3133 of the
Affordable Care Act. Consistent with that process, we also determined
the time period from which to calculate the numerator and denominator
of the Factor 3 quotient in a way that would be consistent with making
interim and final payments. Specifically, we must have Factor 3 values
available for hospitals that we estimate will qualify for Medicare DSH
payments using the most recently available historical data and for
those hospitals that we do not estimate will qualify for Medicare DSH
payments but that may ultimately qualify for Medicare DSH payments at
the time of cost report settlement.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50638), therefore,
we adopted the policy to calculate the numerator and the denominator of
Factor 3 for hospitals based on the most recently available full year
of Medicare cost report data (including the most recently available
data that may be used to update the SSI ratios) with respect to a
Federal fiscal year. In other words, we use data from the most recently
available full year cost report for the Medicaid days and the most
recently available SSI ratios (that is, latest available SSI ratios
before the beginning of the Federal fiscal year) for the Medicare SSI
days. We noted that these data are publicly available, subject to
audit, and used for payment purposes. While we recognized that older
data also meet these criteria, we often use the most recently available
data for payment determinations. Furthermore, in the FY 2014 IPPS
interim final rule with comment period (78 FR 61195), we revised our
policy to also include supplemental cost report data submitted to CMS
only by IHS hospitals in order allow their Medicaid days to be used to
calculate Factor 3.
Therefore, for FY 2014, we used data from the most recently
available full year cost report for the Medicaid days and the most
recently available SSI ratios, which meant data from the 2010/2011 cost
reports for the Medicaid days, supplemental 2011 cost report data
submitted to CMS by IHS hospitals, and the FY 2011 SSI ratios for the
Medicare SSI days to estimate Factor 3 for FY 2014. For FY 2015, we are
again proposing to use data from the most recently available full year
cost report for the Medicaid days (that is, we are proposing to use the
2012 cost report, unless that cost report is unavailable or reflects
less than a full 12-month year; in the event the 2012 cost report is
for less than 12 months, we are proposing to use the cost report from
2012 or 2011 that is closest to being a full 12-month cost report),
supplemental cost report data submitted to CMS only by IHS hospitals
and the most recently available SSI ratios. For purposes of this
proposed rule, we are using data from the December 2013 update of the
2011/2012 Medicare cost reports for the Medicaid days and the FY 2011
SSI ratios for the Medicare SSI days. Consistent with our FY 2014 IPPS
interim final rule with comment period (78 FR 61195), for FY 2015, we
also are using supplemental cost report data provided by IHS hospitals
to CMS as of December 2013 in order to calculate the proposed Factor 3.
For the FY 2015 IPPS final rule, we intend to use the March 2014 update
of the 2011/2012 Medicare cost reports, supplemental cost report data
submitted to CMS by IHS hospitals as of March 2014, and the most
recently available SSI ratios (FY 2012 SSI ratios and, if not
available, the FY 2011 SSI ratios) to calculate Factor 3. We believe
the March update to the Medicare cost reports will be the most recently
available data to calculate Factor 3 at the time of publication of the
FY 2015 IPPS final rule. We believe this is consistent with CMS'
historical policy to use the best available data when setting the
payment rates and factors in both the proposed and final rules.
Furthermore, this is consistent with our approach in other areas of
IPPS, where we historically use the March update of cost report data
and MedPAR claims data to calculate IPPS relative weights, budget
neutrality factors, the outlier threshold, and the standardized amount
for the IPPS final rule. If we were to wait for a later update of the
cost report data to become available, this could cause delay of the
publication of the IPPS final rule.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50642), we discussed
several specific issues concerning the use of cost report data to
determine Factor 3. One issue concerned the process and data to be
employed in determining Factor 3 in the case of hospital mergers.
Specifically, two hospitals that merged in 2011 with one surviving
provider number requested that we account for the merger by including
data from both hospitals' cost reports immediately prior to the merger
in the calculation of the Factor 3 amount. In that final rule, we had
calculated Factor 3 using only the surviving hospital's cost report
data and SSI ratio data. In the final rule (78 FR
[[Page 28103]]
50602), we responded to the public comment that Factor 3 would be
calculated based on the low-income insured patient days (that is,
Medicaid days and SSI days) under the surviving CCN, based on the most
recent available data for that CCN (for FY 2014, from the cost report
for 2011 or 2010). We noted that this was consistent with the treatment
of other IPPS payment factors, where data used to calculate a
hospital's Medicare DSH payment adjustment, CCRs for outlier payments,
and wage index values are tied to a hospital's CCN. Data associated
with a CCN that is no longer in use are not used to determine those
IPPS hospital payments under the surviving CCN.
Since the publication of the FY 2014 IPPS/LTCH PPS final rule, we
have received additional input from hospitals that have undergone
mergers that suggest using only the surviving CCN produces an estimate
of the surviving hospital's uncompensated care burden that is lower
than warranted. For FY 2015, for example, Factor 3 of the uncompensated
care payment calculation would be determined using 2011/2012 cost
reports. As a result, for any mergers occurring between FY 2011 and FY
2015, Factor 3 of the uncompensated care payment for FY 2015 would
reflect only the data of the hospital with the surviving CCN, not the
combination of the data from the two hospitals that merged. We believe
that revising our methodology to incorporate data from both of the
hospitals that merged could improve our estimate of the uncompensated
care burden of the merged hospital. Accordingly, we are proposing to
revise our methodology for determining Factor 3 to incorporate data
from both merged hospitals until data for the merged hospitals become
available under the surviving CCN.
In addition, because the data systems used to calculate Factor 3 do
not identify hospitals that have merged, we also are proposing to
establish a process to identify hospitals that have merged after the
period of the historical data that are being used to calculate Factor
3, up to a point in time during ratesetting for that Federal fiscal
year. Under this approach, we would combine the data for the merged
hospitals to calculate Factor 3 of the uncompensated care payment.
Specifically, we are proposing that we would identify the hospitals
that merged after the period from which data are being used to
calculate Factor 3 (for FY 2015, 2012 and 2011) but before the
publication of each year's final rule. For purposes of this proposal,
we are defining a merger to be an acquisition where the Medicare
provider agreement of one hospital is subsumed into the provider
agreement of the surviving provider. We would not consider an
acquisition where the new owner voluntarily terminates the Medicare
provider agreement of the hospital it purchased by rejecting assignment
of the previous owner's provider agreement to be a merger. We believe
it is appropriate to combine data to calculate Factor 3 for a merged
hospital where the Medicare provider agreement of one hospital is
subsumed into the provider agreement of the surviving provider because,
in this type of acquisition as described in the September 6, 2013
Survey & Certification Memorandum S&C: 13-60-ALL (http://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/SurveyCertificationGenInfo/Downloads/Survey-and-Cert-Letter-13-60.pdf),
the buyer is subject to all applicable statutes and regulations and to
the terms and conditions under which the assigned agreement was
originally issued. These include, but are not limited to, Medicare
requirements to adjust payments to account for prior overpayments and
underpayments, even if they relate to a pre-acquisition period
(successor liability), and to adjust payments to collect civil monetary
penalties. Therefore, we believe it is appropriate to also retain the
data of the subsumed hospital to calculate the uncompensated care
payment for the merged hospital. Conversely, by rejecting assignment of
the Medicare provider agreement of the subsumed hospital, the surviving
provider has voluntarily terminated the Medicare provider agreement and
is precluded from having successor liability for Medicare overpayments
or underpayments that would have otherwise been made to the subsumed
provider. Furthermore, when the surviving hospital rejects automatic
assignment of the existing provider agreement, but wishes to
participate in the Medicare program, the merged hospital is considered
an initial applicant to the Medicare program. In an instance in which
the surviving provider has rejected assignment of the Medicare provider
agreement of the subsumed provider, it would not seem appropriate to
use data from the subsumed provider for purposes of Medicare payment,
including for the calculation of a hospital's uncompensated care
payment.
For FY 2015, we are proposing to identify mergers by querying the
Medicare contractors. We believe it is appropriate to obtain merger
information from the Medicare contractors, as a copy of each final
sales agreement/transaction indicating the effective date of the
acquisition is generally submitted to the Medicare contractors once an
acquisition is finalized. For the purpose of this proposed rule, we
requested that the Medicare contractors provide us with a list of
mergers that occurred between October 1, 2010 (the first day of FY
2011, which is the earliest date that would be included in any 2011
cost report data that are used to calculate a hospital's Factor 3)
through January 2014 (when we started preparing for the FY 2015 IPPS
proposed rule). On the basis of this information, we would then combine
the data elements of any hospitals that had merged to calculate the
uncompensated care payment for the merged hospital. Specifically, we
would combine the Medicaid days from the most recently available full
year cost reports and the SSI days from the most recently available SSI
ratios tied to the two CCNs prior to the merger to calculate the merged
hospital's Factor 3. For FY 2015, we would combine the Medicaid days
from either the 2011 or 2012 cost reports and would use the most
recently available SSI ratios available at the time the final rule is
developed.
In order to confirm these mergers and the accuracy of the data used
to determine each merged hospital's uncompensated care payment, we are
proposing to publish a table on the CMS Web site, in conjunction with
the issuance of the proposed and final rules for a fiscal year,
containing a list of the mergers that we are aware of and the computed
uncompensated care payment for each merged hospital. A copy of this
table is being published on the CMS Web site in conjunction with the
issuance of this proposed rule. The affected hospitals would then have
the opportunity to comment during the public comment period on the
accuracy of this information.
We are proposing to treat hospitals that merge after the
development of the final rule similar to new hospitals. For these newly
merged hospitals, we would not have data currently available to
calculate a Factor 3 amount that accounts for the merged hospital's
uncompensated care burden. In addition, we would not have data to
determine if the newly merged hospital is eligible for Medicare DSH
payment and, therefore, eligible for uncompensated care payments for
the applicable fiscal year because the only data we would have to make
this determination are those for the surviving CCN. Accordingly, we are
proposing to treat newly merged hospitals in a similar manner as new
[[Page 28104]]
hospitals, such that the newly merged hospital's final uncompensated
care payment would be determined at cost report settlement where the
numerator of the newly merged hospital's Factor 3 would be based on the
Medicaid days and SSI days reported on the cost report used for the
applicable fiscal year. We are proposing that the interim uncompensated
care payments for the newly merged hospitals would be based on only the
data of the surviving hospital's CCN at the time of the preparation of
the final rule for the applicable fiscal year. In other words, for
newly merged hospitals, eligibility to receive interim uncompensated
care payments and the amount of any interim uncompensated care payments
would be based on the Medicaid days from either the 2011 or 2012 cost
reports and the most recently available SSI ratios available at the
time the final rule is developed for only the surviving CCN. However,
at cost report settlement, we would determine the newly merged
hospital's final uncompensated care payments based on the Medicaid days
and SSI days reported on the cost report used for the applicable fiscal
year. That is, we would revise the numerator of Factor 3 for the newly
merged hospital to reflect the Medicaid and SSI days reported on the
cost report for the applicable fiscal year. We are inviting public
comment on our proposed change to the treatment of hospital mergers in
the calculation of a hospital's uncompensated care payment.
G. Medicare-Dependent, Small Rural Hospital (MDH) Program (Sec.
412.108)
1. Background
Section 1885(d)(5)(G) of the Act provides special payment
protections, under the IPPS, to a Medicare-dependent, small rural
hospital (MDH). (For additional information on the MDH program and the
payment methodology, we refer readers to the FY 2012 IPPS/LTCH PPS
final rule (76 FR 51683 through 51684.)) As we discussed in the FY 2011
IPPS/LTCH PPS final rule (75 FR 50287) and in the FY 2012 IPPS/LTCH PPS
final rule (76 FR 51683 through 51684), section 3124 of the Affordable
Care Act extended the expiration of the MDH program from the end of FY
2011 (that is, for discharges occurring before October 1, 2011) to the
end of FY 2012 (that is, for discharges occurring before October 1,
2012). Under prior law, as specified in section 5003(a) of Public Law
109-171 (DRA 2005), the MDH program was to be in effect through the end
of FY 2011 only.
Since the extension of the MDH program through FY 2012 provided by
section 3124 of the Affordable Care Act, the MDH program has been
further extended multiple times. First, section 606 of the ATRA of 2012
(Pub. L. 112-240) extended the MDH program through FY 2013 (that is,
for discharges occurring before October 1, 2013.) Second, section 1106
of the Pathway for SGR Reform Act of 2013 (Pub. L. 113-67) extended the
MDH program through the first half of FY 2014 (that is, for discharges
occurring before April 1, 2014.) In the FY 2014 interim final rule with
comment period that appeared in the Federal Register on March 18, 2013
(79 FR 15025 through 15027), we discussed the expiration of the MDH
program on March 31, 2014, and explained how providers may be affected
by the 6-month extension of the MDH program under Public Law 113-67 and
described the steps to reapply for MDH status for FY 2014, as
applicable. Generally, a provider that was classified as an MDH as of
September 30, 2013, was reinstated as an MDH effective October 1, 2013,
with no need to reapply for MDH classification. However, if the MDH had
classified as an SCH or cancelled its rural classification under Sec.
412.103(g) effective on or after October 1, 2013, the effective date of
MDH status may not be retroactive to October 1, 2013. In the FY 2014
IPPS/LTCH PPS final rule (78 FR 50647 through 50649) and the FY 2014
interim final rule with comment period (79 FR 15025 through 15027), we
made conforming changes to the regulations at Sec. 412.108(a)(1) and
(c)(2)(iii) to reflect the extensions of the MDH program provided for
by the ATRA and Pathway for SGR Reform Act, respectively. Lastly, under
current law, section 106 of the Protecting Access to Medicare Act of
2014 (Pub. L. 113-93) provides for a 1-year extension of the MDH
program effective from April 1, 2014 through March 31, 2015.
Specifically, section 106 of Public Law 113-93 amended sections
1886(d)(5)(G)(i) and 1886(d)(5)(G)(ii)(II) of the Act by striking
``April 1, 2014'' and inserting ``April 1, 2015''. Section 106 of
Public Law 113-93 also made conforming amendments to sections
1886(b)(3)(D)(i) and 1886(b)(3)(D)(iv) of the Act.
We intend to address the extension of the MDH program for the
second half of FY 2014 (that is, from April 1, 2014 through September
30, 2014) under Public Law 113-93 in a separate Federal Register
notice. For additional information on the extensions of the MDH program
after FY 2012, we refer readers to the following rules: The FY 2013
IPPS/LTCH PPS final rule (77 FR 53404 through 53405 and 53413 through
53414); the FY 2013 IPPS notice that appeared in the Federal Register
on March 7, 2013 (78 FR 14689); the FY 2014 IPPS/LTCH PPS final rule
(78 FR 50647 through 50649); and the FY 2014 interim final rule with
comment period (79 FR 15025 through 15027).
2. Provisions of Public Law 113-93 for FY 2015
Prior to the enactment of Public Law 113-93, under section 1106 of
Public Law 113-67, the MDH program authorized by section 1886(d)(5)(G)
of the Act was set to expire midway through FY 2014. Section 106 of
Public Law 113-93 amended sections 1886(d)(5)(G)(i) and
1886(d)(5)(G)(ii)(II) of the Act to provide for an additional 1-year
extension of the MDH program, effective from April 1, 2014 through
March 31, 2015. Section 106 of Public Law 113-93 also made conforming
amendments to sections 1886(b)(3)(D)(i) and 1886(b)(3)(D)(iv) of the
Act.
In this proposed rule, we are proposing to make conforming changes
to the regulations at Sec. Sec. 412.108(a)(1) and (c)(2)(iii) to
reflect the statutory extension of the MDH program for the first 6
months of FY 2015 made by section 106 of Public Law 113-93.
3. Expiration of the MDH Program
Because section 106 of Public Law 113-93 extends the MDH program
through the first half of FY 2015 only, effective April 1, 2015, the
MDH program will no longer be in effect. Because the MDH program is not
authorized by statute beyond March 31, 2015, beginning April 1, 2015,
all hospitals that previously qualified for MDH status will no longer
have MDH status and will be paid based on the Federal rate. As noted
earlier, in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53404 through
53405), we revised our SCH policies to allow MDHs to apply for SCH
status and be paid as such under certain conditions, following
expiration of the MDH program at the end of FY 2012. We codified these
changes in the regulations at Sec. 412.92(b)(2)(i) and Sec.
412.92(b)(2)(v). For additional information, we refer readers to the FY
2013 IPPS/LTCH PPS final rule (77 FR 53404 through 53405 and 53674). We
note that those same conditions apply to MDHs that intend to apply for
SCH status with the expiration of the MDH program on March 31, 2015.
Specifically, the existing regulations at Sec. 412.92(b)(2)(i) and
(b)(2)(v) allow for an effective date of approval of SCH status that is
the day following the expiration date of the MDH program. In accordance
with these regulations, in order for an MDH to receive SCH status
[[Page 28105]]
effective April 1, 2015, it must apply for SCH status at least 30 days
before the end of the MDH program; that is, the MDH must apply for SCH
status by March 1, 2015. The MDH also must request that, if approved as
an SCH, the SCH status be effective with the expiration of the MDH
program provision; that is, the MDH must request that the SCH status,
if approved, be effective April 1, 2015, immediately after its MDH
status expires with the expiration of the MDH program on March 31,
2015. We note that an MDH that applies for SCH status in anticipation
of the expiration of the MDH program would not qualify for the April 1,
2015 effective date upon approval if it does not apply by the March 1,
2015 deadline. The provider would instead be subject to the usual
effective date for SCH classification, that is, 30 days after the date
of CMS' written notification of approval as specified at Sec.
412.92(b)(2)(i).
H. Hospital Readmissions Reduction Program: Proposed Changes for FY
2015 Through FY 2017 (Sec. Sec. 412.150 Through 412.154)
1. Statutory Basis for the Hospital Readmissions Reduction Program
Section 3025 of the Affordable Care Act, as amended by section
10309 of the Affordable Care Act, added a new section 1886(q) to the
Act. Section 1886(q) of the Act establishes the ``Hospital Readmissions
Reduction Program,'' effective for discharges from an ``applicable
hospital'' beginning on or after October 1, 2012, under which payments
to those applicable hospitals may be reduced to account for certain
excess readmissions.
Section 1886(q)(1) of the Act sets forth the methodology by which
payments to ``applicable hospitals'' will be adjusted to account for
excess readmissions. In accordance with section 1886(q)(1) of the Act,
payments for discharges from an ``applicable hospital'' will be an
amount equal to the product of the ``base operating DRG payment
amount'' and the adjustment factor for the hospital for the fiscal
year. That is, ``base operating DRG payments'' are reduced by a
hospital-specific adjustment factor that accounts for the hospital's
excess readmissions. Section 1886(q)(2) of the Act defines the base
operating DRG payment amount as ``the payment amount that would
otherwise be made under subsection (d) (determined without regard to
subsection (o) [the Hospital VBP Program]) for a discharge if this
subsection did not apply; reduced by . . . any portion of such payment
amount that is attributable to payments under paragraphs (5)(A),
(5)(B), (5)(F), and (12) of subsection (d).'' Paragraphs (5)(A),
(5)(B), (5)(F), and (12) of subsection (d) refer to outlier payments,
IME payments, DSH adjustment payments, and add-on payments for low-
volume hospitals, respectively.
Furthermore, section 1886(q)(2)(B) of the Act specifies special
rules for defining ``the payment amount that would otherwise be made
under subsection (d)'' for certain hospitals, including policies for
SCHs and for MDHs for FY 2013. In the FY 2013 IPPS/LTCH PPS final rule
(77 FR 53374), we finalized policies to implement the statutory
provisions related to the definition of ``base operating DRG payment
amount'' with respect to those hospitals.
Section 1886(q)(3)(A) of the Act defines the ``adjustment factor''
for an applicable hospital for a fiscal year as equal to the greater of
``(i) the ratio described in subparagraph (B) for the hospital for the
applicable period (as defined in paragraph (5)(D)) for such fiscal
year; or (ii) the floor adjustment factor specified in subparagraph
(C).'' Section 1886(q)(3)(B) of the Act, in turn, describes the ratio
used to calculate the adjustment factor. It states that the ratio is
``equal to 1 minus the ratio of--(i) the aggregate payments for excess
readmissions . . . and (ii) the aggregate payments for all discharges .
. . '' Section 1886(q)(3)(C) of the Act establishes the floor
adjustment factor, which is set at 0.99 for FY 2013, 0.98 for FY 2014,
and 0.97 for FY 2015 and subsequent fiscal years.
Section 1886(q)(4) of the Act defines the terms ``aggregate
payments for excess readmissions'' and ``aggregate payments for all
discharges'' for an applicable hospital for the applicable period. The
term ``aggregate payments for excess readmissions'' is defined in
section 1886(q)(4)(A) of the Act as ``the sum, for applicable
conditions . . . of the product, for each applicable condition, of (i)
the base operating DRG payment amount for such hospital for such
applicable period for such condition; (ii) the number of admissions for
such condition for such hospital for such applicable period; and (iii)
the excess readmissions ratio. . . for such hospital for such
applicable period minus 1.'' The ``excess readmissions ratio'' is a
hospital-specific ratio based on each applicable condition.
Specifically, section 1886(q)(4)(C) of the Act defines the excess
readmissions ratio as the ratio of actual-over-expected readmissions;
specifically, the ratio of ``risk-adjusted readmissions based on actual
readmissions'' for an applicable hospital for each applicable
condition, to the ``risk-adjusted expected readmissions'' for the
applicable hospital for the applicable condition.
Section 1886(q)(5) of the Act provides definitions of ``applicable
condition,'' ``expansion of applicable conditions,'' ``applicable
hospital,'' ``applicable period,'' and ``readmission.'' The term
``applicable condition'' (which is addressed in detail in section
IV.C.3.a. of the FY 2012 IPPS/LTCH PPS final rule (76 FR 51665 through
51666)) is defined as a ``condition or procedure selected by the
Secretary among conditions and procedures for which: (i) Readmissions .
. . represent conditions or procedures that are high volume or high
expenditures . . . and (ii) measures of such readmissions . . . have
been endorsed by the entity with a contract under section 1890(a) [of
the Act] . . . and such endorsed measures have exclusions for
readmissions that are unrelated to the prior discharge (such as a
planned readmission or transfer to another applicable hospital).''
Section 1886(q)(5)(B) of the Act also requires the Secretary, beginning
in FY 2015, ``to the extent practicable, [to] expand the applicable
conditions beyond the 3 conditions for which measures have been
endorsed . . . to the additional 4 conditions that have been identified
by the Medicare Payment Advisory Commission in its report to Congress
in June 2007 and to other conditions and procedures as determined
appropriate by the Secretary.''
Section 1886(q)(5)(C) of the Act defines ``applicable hospital,''
that is, a hospital subject to the Hospital Readmissions Reduction
Program, as a ``subsection (d) hospital or a hospital that is paid
under section 1814(b)(3) [of the Act], as the case may be.'' The term
``applicable period,'' as defined under section 1886(q)(5)(D) of the
Act, ``means, with respect to a fiscal year, such period as the
Secretary shall specify.'' As explained in the FY 2012 IPPS/LTCH PPS
final rule (76 FR 51671), the ``applicable period'' is the period
during which data are collected in order to calculate various ratios
and payment adjustments under the Hospital Readmissions Reduction
Program.
Section 1886(q)(6) of the Act sets forth the public reporting
requirements for hospital-specific readmission rates. Section
1886(q)(7) of the Act limits administrative and judicial review of
certain determinations made pursuant to section 1886(q) of the Act.
Finally, section 1886(q)(8) of the Act requires the Secretary to
collect data on readmission rates for all hospital
[[Page 28106]]
inpatients (not just Medicare patients) for a broad range of both
subsection (d) and non-subsection(d) hospitals, in order to calculate
the hospital-specific readmission rates for all such hospital
inpatients and to publicly report these ``all-patient'' readmission
rates.
2. Regulatory Background
The payment adjustment factor set forth in section 1886(q) of the
Act did not apply to discharges until FY 2013. In the FY 2012 IPPS/LTCH
PPS final rule (76 FR 51660 through 51676), we addressed the issues of
the selection of readmission measures and the calculation of the excess
readmissions ratio, which will be used, in part, to calculate the
readmissions adjustment factor. Specifically, in that final rule, we
finalized policies that relate to the portions of section 1886(q) of
the Act that address the selection of and measures for the applicable
conditions, the definitions of ``readmission'' and ``applicable
period,'' and the methodology for calculating the excess readmissions
ratio. We also established policies with respect to measures for
readmission for the applicable conditions and our methodology for
calculating the excess readmissions ratio.
In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53374 through
53401), we finalized policies that relate to the portions of section
1886(q) of the Act that address the calculation of the hospital
readmission payment adjustment factor and the process by which
hospitals can review and correct their data. Specifically, in that
final rule, we addressed the base operating DRG payment amount,
aggregate payments for excess readmissions and aggregate payments for
all discharges, the adjustment factor, applicable hospital, limitations
on review, and reporting of hospital-specific information, including
the process for hospitals to review readmission information and submit
corrections. We also established a new Subpart I under 42 CFR part 412
(Sec. Sec. 412.150 through 412.154) to codify rules for implementing
the Hospital Readmissions Reduction Program.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50649 through
50676), we finalized our policies that relate to refinement of the
readmissions measures and related methodology for the current
applicable conditions, expansion of the ``applicable conditions''
beginning for FY 2015, and clarification of the process for reporting
hospital-specific information, including the opportunity to review and
submit corrections. We also established policies related to the
calculation of the adjustment factor for FY 2014.
3. Overview of Proposals and Policies for the FY 2015 Hospital
Readmissions Reduction Program
In this proposed rule, we are--
Proposing to make refinements to the readmissions measures
and related methodology for FY 2015 and subsequent years (section
IV.H.4. of the preamble of this proposed rule);
Proposing to expand the scope of ``applicable conditions''
for FY 2017 to include coronary artery bypass graft (CABG) (section
IV.H.6. of the preamble of this proposed rule);
Discussing the maintenance of technical specifications for
quality measures (section IV.H.7. of the preamble of this proposed
rule);
Describing a waiver from the Hospital Readmissions
Reduction Program for hospitals formerly paid under section 1814(b)(3)
of the Act (Sec. 412.154(d)) (section IV.H.8. of the preamble of this
proposed rule);
Proposing to specify the adjustment factor floor for FY
2015 (section IV.H.9. of the preamble of this proposed rule);