[Federal Register Volume 75, Number 148 (Tuesday, August 3, 2010)]
[Proposed Rules]
[Pages 46170-46831]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-16448]
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Part II--Continued
Book 3 of 3 Books
Pages 46169-46836
Department of Health and Human Services
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Centers for Medicare and Medicaid
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42 CFR Parts 410, 416 and 419
Medicare Program: Changes to the Hospital Outpatient Prospective
Payment System and CY 2010 Payment Rates; Changes to the Ambulatory
Surgical Center Payment System and CY 2010 Payment Rates; Corrections;
Final Rule, Notice, and Proposed Rule
Federal Register / Vol. 75, No. 148 / Tuesday, August 3, 2010 /
Proposed Rules
[[Page 46170]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 410, 411, 412, 413, 416, 419, 482, and 489
[CMS-1504-P]
RIN 0938-AP82
Medicare Program; Proposed Changes to the Hospital Outpatient
Prospective Payment System and CY 2011 Payment Rates; Proposed Changes
to the Ambulatory Surgical Center Payment System and CY 2011 Payment
Rates; Proposed Changes to Payments to Hospitals for Certain Inpatient
Hospital Services and for Graduate Medical Education Costs; and
Proposed Changes to Physician Self-Referral Rules and Related Changes
to Provider Agreement Regulations
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would revise the Medicare hospital
outpatient prospective payment system (OPPS) to implement applicable
statutory requirements and changes arising from our continuing
experience with this system and to implement certain provisions of the
Patient Protection and Affordable Care Act, as amended by the Health
Care and Education Reconciliation Act of 2010 (Affordable Care Act). In
this proposed rule, we describe the proposed changes to the amounts and
factors used to determine the payment rates for Medicare hospital
outpatient services paid under the prospective payment system. These
proposed changes would be applicable to services furnished on or after
January 1, 2011.
In addition, this proposed rule would update the revised Medicare
ambulatory surgical center (ASC) payment system to implement applicable
statutory requirements and changes arising from our continuing
experience with this system and to implement certain provisions of the
Affordable Care Act. In this proposed rule, we set forth the proposed
applicable relative payment weights and amounts for services furnished
in ASCs, specific HCPCS codes to which these proposed changes would
apply, and other pertinent ratesetting information for the CY 2011 ASC
payment system. These proposed changes would be applicable to services
furnished on or after January 1, 2011.
This proposed rule also includes proposals to implement provisions
of the Affordable Care Act relating to payments to hospitals for direct
graduate medical education (GME) and indirect medical education (IME)
costs; and new limitations on certain physician referrals to hospitals
in which they have an ownership or investment interest.
DATES: To be assured consideration, comments on all sections of this
proposed rule must be received at one of the addresses provided in the
ADDRESSES section no later than 5 p.m. EST on August 31, 2010.
ADDRESSES: In commenting, please refer to file code CMS-1504-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 submit electronic comments on this
regulation to http://www.regulations.gov. Follow the instructions under
the ``More Search Options'' tab.
2. By regular mail. You may mail written comments to the following
address ONLY:
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, Attention: CMS-1504-P, P.O. Box 8013, Baltimore, MD
21244-1850.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY:
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, Attention: CMS-1504-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.
Submission of comments on paperwork requirements. You may submit
comments on this document's paperwork requirements by following the
instructions at the end of the ``Collection of Information
Requirements'' section in this document.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
Alberta Dwivedi, (410) 786-0378, Hospital outpatient prospective
payment issues.
Paula Smith, (410) 786-0378, Ambulatory surgical center issues.
Michele Franklin, (410) 786-4533, and Jana Lindquist, (410) 786-
4533, Partial hospitalization and community mental health center
issues.
James Poyer, (410) 786-2261, Reporting of quality data issues.
Tzvi Hefter, (410) 786-4487, and Ing-Jye Cheng, (410) 786-4548,
Hospital preadmission services and direct graduate medical education
and indirect medical education payments issues.
Jacqueline Proctor, (410) 786-8852, Physician ownership and
investment in hospitals issues.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that Web site to
view public comments.
Comments received timely will also be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, MD 21244, on Monday through Friday of each week from 8:30
[[Page 46171]]
a.m. to 4 p.m. EST. To schedule an appointment to view public comments,
phone 1-800-743-3951.
Electronic Access
This Federal Register document is also available from the Federal
Register online database through GPO Access, a service of the U.S.
Government Printing Office. Free public access is available on a Wide
Area Information Server (WAIS) through the Internet and via
asynchronous dial-in. Internet users can access the database by using
the World Wide Web; the Superintendent of Documents' home page address
is http://www.gpoaccess.gov/index.html, by using local WAIS client
software, or by telnet to swais.access.gpo.gov, then login as guest (no
password required). Dial-in users should use communications software
and modem to call (202) 512-1661; type swais, then login as guest (no
password required).
Alphabetical List of Acronyms Appearing in This Proposed Rule
ACEP American College of Emergency Physicians
AHA American Hospital Association
AHIMA American Health Information Management Association
AMA American Medical Association
AMP Average manufacturer price
AOA American Osteopathic Association
APC Ambulatory payment classification
ASC Ambulatory Surgical Center
ASP Average sales price
AWP Average wholesale price
BBA Balanced Budget Act of 1997, Public Law 105-33
BBRA Medicare, Medicaid, and SCHIP [State Children's Health
Insurance Program] Balanced Budget Refinement Act of 1999, Public
Law 106-113
BCA Blue Cross Association
BCBSA Blue Cross and Blue Shield Association
BIPA Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000, Public Law 106-554
CAH Critical access hospital
CAP Competitive Acquisition Program
CBSA Core-Based Statistical Area
CCR Cost-to-charge ratio
CERT Comprehensive Error Rate Testing
CMHC Community mental health center
CMS Centers for Medicare & Medicaid Services
CoP Conditions of Participation
CORF Comprehensive outpatient rehabilitation facility
CPT [Physicians'] Current Procedural Terminology, Fourth Edition,
2009, copyrighted by the American Medical Association
CY Calendar year
DMEPOS Durable medical equipment, prosthetics, orthotics, and
supplies
DMERC Durable medical equipment regional carrier
DRA Deficit Reduction Act of 2005, Public Law 109-171
DSH Disproportionate share hospital
EACH Essential Access Community Hospital
E/M Evaluation and management
EPO Erythropoietin
ESRD End-stage renal disease
FACA Federal Advisory Committee Act, Public Law 92-463
FAR Federal Acquisition Regulations
FDA Food and Drug Administration
FFS Fee-for-service
FSS Federal Supply Schedule
FTE Full-time equivalent
FY Federal fiscal year
GAO Government Accountability Office
GME Graduate medical education
HCERA Health Care and Education Reconciliation Act of 2010, Public
Law 111-152
HCPCS Healthcare Common Procedure Coding System
HCRIS Hospital Cost Report Information System
HHA Home health agency
HIPAA Health Insurance Portability and Accountability Act of 1996,
Public Law 104-191
HOPD Hospital outpatient department
HOP QDRP Hospital Outpatient Quality Data Reporting Program
ICD-9-CM International Classification of Diseases, Ninth Edition,
Clinical Modification
ICD-10-CM International Classification of Diseases, Tenth Revision,
Clinical Modification
ICD-10-PCS International Classification of Diseases, Tenth Revision,
Procedure Coding System
IDE Investigational device exemption
IHS Indian Health Service
IME Indirect medical education
I/OCE Integrated Outpatient Code Editor
IOL Intraocular lens
IPPE Initial preventive physical examination
IPPS [Hospital] Inpatient prospective payment system
IVIG Intravenous immune globulin
MAC Medicare Administrative Contractor
MedPAC Medicare Payment Advisory Commission
MDH Medicare-dependent, small rural hospital
MIEA-TRHCA Medicare Improvements and Extension Act under Division B,
Title I of the Tax Relief Health Care Act of 2006, Public Law 109-
432
MIPPA Medicare Improvements for Patients and Providers Act of 2008,
Public Law 110-275
MMA Medicare Prescription Drug, Improvement, and Modernization Act
of 2003, Public Law 108-173
MMSEA Medicare, Medicaid, and SCHIP Extension Act of 2007, Public
Law 110-173
MPFS Medicare Physician Fee Schedule
MSA Metropolitan Statistical Area
NCCI National Correct Coding Initiative
NCD National Coverage Determination
NTIOL New technology intraocular lens
OIG [HHS] Office of the Inspector General
OMB Office of Management and Budget
OPD [Hospital] Outpatient department
OPPS [Hospital] Outpatient prospective payment system
PHP Partial hospitalization program
PM Program memorandum
PPACA Patient Protection and Affordable Care Act, Public Law 111-148
PPI Producer Price Index
PPPS Personalized preventive plan services
PPS Prospective payment system
PR Pulmonary rehabilitation
PRA Paperwork Reduction Act
QAPI Quality Assessment and Performance Improvement
QIO Quality Improvement Organization
RAC Recovery Audit Contractor
RFA Regulatory Flexibility Act
RHQDAPU Reporting Hospital Quality Data for Annual Payment Update
[Program]
RHHI Regional home health intermediary
SBA Small Business Administration
SCH Sole community hospital
SDP Single Drug Pricer
SI Status indicator
TEFRA Tax Equity and Fiscal Responsibility Act of 1982, Public Law
97-248
TOPS Transitional outpatient payments
USPDI United States Pharmacopoeia Drug Information
USPSTF United States Preventive Services Task Force
WAC Wholesale acquisition cost
In this document, we address two payment systems under the Medicare
program: The hospital outpatient prospective payment system (OPPS) and
the revised ambulatory surgical center (ASC) payment system. In
addition, we are addressing provisions of the Affordable Care Act,
relating to payments to hospitals for direct graduate medical education
(GME) and indirect medical education (IME) costs; we are also
addressing provisions relating to new limitations on certain physician
referrals to hospitals in which they have an ownership or investment
interest and proposing related changes to provider agreement
regulations. The provisions relating to the OPPS are included in
sections I. through XIV., XVI, and XIX. through XXII. of this proposed
rule and in Addenda A, B, C (Addendum C is available on the Internet
only; we refer readers to section XIX.A. of this proposed rule), D1,
D2, E, L, and M to this proposed rule. The provisions related to the
revised ASC payment system are included in sections XV., XVI., and XIX.
through XXII. of this proposed rule and in Addenda AA, BB, DD1, DD2,
and EE to this proposed rule. (Addendum EE is available on the Internet
only; we refer readers to section XIX.B. of this proposed rule.) The
provisions related to payments to hospitals for direct graduate medical
education (GME) and indirect medical education (IME) costs are included
in section XVII. of this proposed rule. The provisions relating to the
new limitations on certain physician referrals to hospitals in which
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they have an ownership or investment interest and proposed related
changes to provider agreement regulations are included in section
XVIII. of this proposed rule.
Table of Contents
I. Background and Summary of the CY 2011 OPPS/ASC Proposed Rule
A. Legislative and Regulatory Authority for the Hospital
Outpatient Prospective Payment System
B. Excluded OPPS Services and Hospitals
C. Prior Rulemaking
D. The Affordable Care Act
E. Advisory Panel on Ambulatory Payment Classification (APC)
Groups
1. Authority of the APC Panel
2. Establishment of the APC Panel
3. APC Panel Meetings and Organizational Structure
F. Background and Summary of This Proposed Rule
1. Proposed Updates Affecting OPPS Payments
2. Proposed OPPS Ambulatory Payment Classification (APC) Group
Policies
3. Proposed OPPS Payment for Devices
4. Proposed OPPS Payment Changes for Drugs, Biologicals, and
Radiopharmaceuticals
5. Proposed Estimate of OPPS Transitional Pass-Through Spending
for Drugs, Biologicals, Radiopharmaceuticals, and Devices
6. Proposed OPPS Payment for Brachytherapy Sources
7. Proposed OPPS Payment for Drug Administration Services
8. Proposed OPPS Payment for Hospital Outpatient Visits
9. Proposed Payment for Partial Hospitalization Services
10. Proposed Procedures That Would Be Paid Only as Inpatient
Procedures
11. Proposed OPPS Nonrecurring Technical and Policy Changes and
Clarifications
12. Proposed OPPS Payment Status and Comment Indicators
13. OPPS Policy and Payment Recommendations
14. Proposed Updates to the Ambulatory Surgical Center (ASC)
Payment System
15. Reporting Quality Data for Annual Payment Rate Updates
16. Proposed Changes Relating to Payments to Hospitals for
Preadmission Services and GME and IME Costs
17. Proposed Changes to Whole Hospital and Rural Provider
Exceptions to the Physician Self-Referral Prohibition and Related
Changes to Provider Agreement Regulations
18. Regulatory Impact Analysis
II. Proposed Updates Affecting OPPS Payments
A. Proposed Recalibration of APC Relative Weights
1. Database Construction
a. Database Source and Methodology
b. Proposed Use of Single and Multiple Procedure Claims
c. Proposed Calculation of CCRs
(1) Development of the CCRs
(2) Charge Compression
2. Proposed Data Development Process and Calculation of Median
Costs
a. Claims Preparation
b. Splitting Claims and Creation of ``Pseudo'' Single Procedure
Claims
(1) Splitting Claims
(2) Creation of ``Pseudo'' Single Procedure Claims
c. Completion of Claim Records and Median Cost Calculations
d. Proposed Calculation of Single Procedure APC Criteria-Based
Median Costs
(1) Device-Dependent APCs
(2) Blood and Blood Products
(3) Single Allergy Tests
(4) Hyperbaric Oxygen Therapy (APC 0659)
(5) Payment for Ancillary Outpatient Services When Patient
Expires (APC 0375)
(6) Pulmonary Rehabilitation
e. Proposed Calculation of Composite APC Criteria-Based Median
Costs
(1) Extended Assessment and Management Composite APCs (APCs 8002
and 8003)
(2) Low Dose Rate (LDR) Prostate Brachytherapy Composite APC
(APC 8001)
(3) Cardiac Electrophysiologic Evaluation and Ablation Composite
APC (APC 8000)
(4) Mental Health Services Composite APC (APC 0034)
(5) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006,
8007, and 8008)
3. Proposed Changes to Packaged Services
a. Background
b. Packaging Issues
(1) Packaged Services Addressed by the February 2010 APC Panel
Recommendations
(2) Other Service-Specific Packaging Issues
4. Proposed Calculation of OPPS Scaled Payment Weights
B. Proposed Conversion Factor Update
C. Proposed Wage Index Changes
D. Proposed Statewide Average Default CCRs
E. Proposed OPPS Payment to Certain Rural and Other Hospitals
1. Hold Harmless Transitional Payment Changes Made by Pub. L.
111-148
2. Proposed Adjustment for Rural SCHs Implemented in CY 2006
Related to Public Law 108-173 (MMA)
F. Proposed OPPS Payments to Certain Cancer Hospitals Described
by Section 1886(d)(1)(B)(v) of the Act
1. Background
2. Study of Cancer Hospital Costs Relative to Other Hospitals
3. Proposed Adjustment for Certain Cancer Hospitals
G. Proposed Hospital Outpatient Outlier Payments
1. Background
2. Proposed Outlier Calculation
H. Proposed Calculation of an Adjusted Medicare Payment From the
National Unadjusted Medicare Payment
I. Proposed Beneficiary Copayments
1. Background
2. Proposed OPPS Copayment Policy
3. Proposed Calculation of an Adjusted Copayment Amount for an
APC Group
III. Proposed OPPS Ambulatory Payment Classification (APC) Group
Policies
A. Proposed OPPS Treatment of New CPT and Level II HCPCS Codes
1. Proposed Treatment of New Level II HCPCS Codes and Category I
CPT Vaccine Codes and Category III CPT Codes for Which We Are
Soliciting Public Comments in This Proposed Rule
2. Proposed Process for New Level II HCPCS Codes and Category I
and Category III CPT Codes for Which We Are Soliciting Public
Comments in the CY 2011 OPPS/ASC Final Rule With Comment Period
B. Proposed OPPS Changes--Variations Within APCs
1. Background
2. Application of the 2 Times Rule
3. Proposed Exceptions to the 2 Times Rule
C. New Technology APCs
1. Background
2. Proposed Movement of Procedures From New Technology APCs to
Clinical APCs
D. Proposed OPPS APC-Specific Policy: Skin Repair (APCs 0134 and
0135)
IV. Proposed OPPS Payment for Devices
A. Proposed Pass-Through Payments for Devices
1. Expiration of Transitional Pass-Through Payments for Certain
Devices
2. Proposed Provisions for Reducing Transitional Pass-Through
Payments To Offset Costs Packaged Into APC Groups
a. Background
b. Proposed Policy
B. Proposed Adjustment to OPPS Payment for No Cost/Full Credit
and Partial Credit Devices
1. Background
2. Proposed APCs and Devices Subject to the Adjustment Policy
V. Proposed OPPS Payment Changes for Drugs, Biologicals, and
Radiopharmaceuticals
A. Proposed OPPS Transitional Pass-Through Payment for
Additional Costs of Drugs, Biologicals, and Radiopharmaceuticals
1. Background
2. Drugs and Biologicals With Expiring Pass-Through Status in CY
2010
3. Proposed Drugs, Biologicals, and Radiopharmaceuticals With
New or Continuing Pass-Through Status in CY 2011
4. Proposed Provision for Reducing Transitional Pass-Through
Payments for Diagnostic Radiopharmaceuticals and Contrast Agents To
Offset Costs Packaged Into APC Groups
a. Background
b. Proposed Payment Offset Policy for Diagnostic
Radiopharmaceuticals
c. Proposed Payment Offset Policy for Contrast Agents
B. Proposed OPPS Payment for Drugs, Biologicals, and
Radiopharmaceuticals Without Pass-Through Status
1. Background
2. Proposed Criteria for Packaging Payment for Drugs,
Biologicals, and Radiopharmaceuticals
a. Background
b. Proposed Cost Threshold for Packaging of Payment for HCPCS
Codes That Describe Certain Drugs, Nonimplantable Biologicals, and
Therapeutic
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Radiopharmaceuticals (``Threshold-Packaged Drugs'')
c. Proposed Packaging Determination for HCPCS Codes That
Describe the Same Drug or Biological But Different Dosages
d. Proposed Packaging of Payment for Diagnostic
Radiopharmaceuticals, Contrast Agents, and Implantable Biologicals
(``Policy-Packaged'' Drugs and Devices)
3. Proposed Payment for Drugs and Biologicals Without Pass-
Through Status That Are Not Packaged
a. Proposed Payment for Specified Covered Outpatient Drugs
(SCODs) and Other Separately Payable and Packaged Drugs and
Biologicals, Including Therapeutic Radiopharmaceuticals
b. Proposed Payment Policy
4. Proposed Payment for Blood Clotting Factors
5. Proposed Payment for Nonpass-Through Drugs, Biologicals, and
Radiopharmaceuticals With HCPCS Codes, But Without OPPS Hospital
Claims Data
VI. Proposed Estimate of OPPS Transitional Pass-Through Spending for
Drugs, Biologicals, Radiopharmaceuticals, and Devices
A. Background
B. Proposed Estimate of Pass-Through Spending
VII. Proposed OPPS Payment for Brachytherapy Sources
A. Background
B. Proposed OPPS Payment Policy
VIII. Proposed OPPS Payment for Drug Administration Services
A. Background
B. Proposed Coding and Payment for Drug Administration Services
IX. Proposed OPPS Payment for Hospital Outpatient Visits
A. Background
B. Proposed Policies for Hospital Outpatient Visits
1. Clinic Visits: New and Established Patient Visits
2. Emergency Department Visits
3. Visit Reporting Guidelines
X. Proposed Payment for Partial Hospitalization Services
A. Background
B. Proposed PHP APC Update for CY 2011
C. Proposed Changes to Regulations To Incorporate Provisions of
HCERA of 2010
D. Proposed Separate Threshold for Outlier Payments to CMHCs
XI. Proposed Procedures That Will Be Paid Only as Inpatient
Procedures
A. Background
B. Proposed Changes to the Inpatient List
XII. Proposed OPPS Nonrecurring Technical and Policy Issues
A. Physician Supervision
1. Background
a. Outpatient Therapeutic Services
b. Outpatient Diagnostic Services
2. Issues Regarding the Supervision of Hospital Outpatient
Services Raised by Hospitals and Other Stakeholders
3. Proposed Policies for Supervision of Outpatient Therapeutic
Services in Hospital and CAHs
4. Supervision of Hospital Outpatient Diagnostic Services
B. Proposed Payment for Preventive Services
1. Definition of ``Preventive Services''
2. Coinsurance and Deductible for Preventive Services
3. Extension of Waiver of Deductible to Services Furnished in
Connection With or in Relation to a Colorectal Cancer Screening Test
That Becomes Diagnostic or Therapeutic
C. Payment for Pulmonary Rehabilitation, Cardiac Rehabilitation,
and Intensive Cardiac Rehabilitation Services Furnished to Hospital
Outpatients
D. Expansion of Multiple Procedure Payment Reduction Under the
Medicare Physician Fee Schedule (MPFS) to Therapy Services
XIII. Proposed OPPS Payment Status and Comment Indicators
A. Proposed OPPS Payment Status Indicator Definitions
1. Proposed Payment Status Indicators To Designate Services That
Are Paid Under the OPPS
2. Proposed Payment Status Indicators To Designate Services That
Are Paid Under a Payment System Other Than the OPPS
3. Proposed Payment Status Indicators To Designate Services That
Are Not Recognized Under the OPPS But That May Be Recognized by
Other Institutional Providers
4. Proposed Payment Status Indicators To Designate Services That
Are Not Payable by Medicare on Outpatient Claims
B. Proposed Comment Indicator Definitions
XIV. OPPS Policy and Payment Recommendations
A. MedPAC Recommendations
B. APC Panel Recommendations
C. OIG Recommendations
XV. Proposed Updates to the Ambulatory Surgical Center (ASC) Payment
System
A. Background
1. Legislative Authority for the ASC Payment System
2. Prior Rulemaking
3. Policies Governing Changes to the Lists of Codes and Payment
Rates for ASC Covered Surgical Procedures and Covered Ancillary
Services
B. Proposed Treatment of New Codes
1. Proposed Process for Recognizing New Category I and III CPT
Codes and Level II HCPCS Codes
2. Proposed Treatment of New Level II HCPCS Codes and Category
III CPT Codes Implemented in April and July 2010
C. Proposed Update to the List of ASC Covered Surgical
Procedures and Covered Ancillary Services
1. Covered Surgical Procedures
a. Proposed Additions to the List of ASC Covered Surgical
Procedures
b. Proposed Covered Surgical Procedures Designated as Office-
Based
(1) Background
(2) Proposed Changes to Covered Surgical Procedures Designated
as Office-Based for CY 2011
c. ASC Covered Surgical Procedures Designated as Device-
Intensive
(1) Background
(2) Proposed Changes to List of Covered Surgical Procedures
Designated as Device-Intensive for CY 2011
d. ASC Treatment of Surgical Procedures Proposed for Removal
From the OPPS Inpatient List for CY 2011
2. Covered Ancillary Services
D. Proposed ASC Payment for Covered Surgical Procedures and
Covered Ancillary Services
1. Proposed Payment for Covered Surgical Procedures
a. Background
b. Proposed Update to ASC Covered Surgical Procedure Payment
Rates for CY 2011
c. Proposed Adjustment to ASC Payments for No Cost/Full Credit
and Partial Credit Devices
d. Proposed Waiver of Coinsurance and Deductible for Certain
Preventive Services
2. Proposed Payment for Covered Ancillary Services
a. Background
b. Proposed Payment for Covered Ancillary Services for CY 2011
E. New Technology Intraocular Lenses (NTIOLs)
1. Background
2. NTIOL Application Process for Payment Adjustment
3. Classes of NTIOLs Approved and New Requests for Payment
Adjustment
a. Background
b. Request To Establish New NTIOL Class for CY 2011 and Deadline
for Public Comment
4. Proposed Payment Adjustment
5. Proposed ASC Payment for Insertion of IOLs
F. Proposed ASC Payment and Comment Indicators
1. Background
2. Proposed ASC Payment and Comment Indicators
G. ASC Policy and Payment Recommendations
H. Calculation of the Proposed ASC Conversion Factor and the
Proposed ASC Payment Rates
1. Background
2. Calculation of the Proposed ASC Payment Rates
a. Updating the Proposed ASC Relative Payment Weights for CY
2011 and Future Years
b. Updating the ASC Conversion Factor With Application of a
Productivity Adjustment to the Update Factor
3. Display of Proposed ASC Payment Rates
XVI. Reporting Quality Data for Annual Payment Rate Updates
A. Background
1. Overview
2. Hospital Outpatient Quality Data Reporting Under Section
109(a) of Public Law 109-432
3. Reporting ASC Quality Data for Annual Payment Update
4. HOP QDRP Quality Measures for the CY 2009 Payment
Determination
5. HOP QDRP Quality Measures for the CY 2010 Payment
Determination
6. HOP QDRP Quality Measures, Technical Specification Updates,
and Data
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Publication for the CY 2011 Payment Determination
a. Quality Measures
b. Maintenance of Technical Specifications for Quality Measures
c. Publication of HOP QDRP Data
B. Proposed Expansion of HOP QDRP Quality Measures for the CY
2012, CY 2013, and CY 2014 Payment Determinations
1. Considerations in Expanding and Updating Quality Measures
Under the HOP QRDP Program
2. Retirement of HOP QDRP Quality Measures
3. Proposed HOP QDRP Quality Measures for the CY 2012 Payment
Determination
a. Proposed Retention of Existing HOP QDRP Measures for the CY
2012 Payment Determination
b. Proposed New Structural Measure for CY 2012 Payment
Determination
c. Proposed New Claims-Based Measures for CY 2012 Payment
Determination
d. Proposed New Chart-Abstracted Measures for CY 2012 Payment
Determination
4. Proposed HOP QDRP Quality Measures for the CY 2013 Payment
Determination
a. Proposed Retention of CY 2012 HOP QDRP Measures for the CY
2013 Payment Determination
b. Proposed New Structural Measure for the CY 2013 Payment
Determination
c. Proposed New Chart-Abstracted Measures for the CY 2013
Payment Determination
5. Proposed HOP QDRP Quality Measures for the CY 2014 Payment
Determination
a. Proposed Retention of CY 2013 HOP QDRP Measures for the CY
2014 Payment Determination
b. Proposed New Chart-Abstracted Measures for the CY 2014
Payment Determination
6. Possible Quality Measures Under Consideration for Future
Inclusion in HOP QDRP
C. Proposed Payment Reduction for Hospitals That Fail To Meet
the HOP QDRP Requirements for the CY 2011 Payment Update
1. Background
2. Proposed Reporting Ratio Application and Associated
Adjustment Policy for CY 2011
D. Proposed Requirements for HOPD Quality Data Reporting for CY
2012 and Subsequent Years
1. Administrative Requirements
2. Data Collection and Submission Requirements
a. General Data Collection and Submission Requirements
b. Extraordinary Circumstance Extension or Waiver for Reporting
Quality Data
3. HOP QDRP Validation Requirements for Abstracted Data: Data
Validation Approach for CY 2012 and Subsequent Years
a. Background
b. Proposed Data Validation Requirements for CY 2012
c. Additional Data Validation Conditions Under Consideration for
CY 2013 and Subsequent Years
E. Proposed HOP QDRP Reconsideration and Appeals Procedures
F. Reporting of ASC Quality Data
G. Electronic Health Records
XVII. Proposed Changes Relating to Payments to Hospitals for
Preadmission Services and for Direct Graduate Medical Education
(GME) and Indirect Medical Education (IME) Costs
A. Proposed Changes Relating to Payments to Hospitals for Direct
GME and IME Costs
1. Background
2. Counting Resident Time in Nonprovider Settings (Section 5504
of the Affordable Care Act)
a. Background and Changes Made by the Affordable Care Act
b. Elimination of the ``All or Substantially All of the Costs
for the Training Program in the Nonhospital Setting'' Requirement
and New Cost Requirements for Hospitals
c. Proposed Revision to Regulations To Allow More Than One
Hospital To Incur the Costs of Training Programs at Nonhospital
Settings, Either Directly or Through a Third Party
d. Proposed Changes to Regulations Regarding Recordkeeping and
Comparison to a Base Year
3. Counting Resident Time for Didactic and Scholarly Activities
and Other Activities (Section 5505 of the Affordable Care Act)
a. Background and Changes Made by the Affordable Care Act
b. Definition of ``Nonprovider Setting That Is Primarily Engaged
in Furnishing Patient Care''
c. Distinguishing Between Allowed ``Nonpatient Care Activities''
and Nonallowable Research Time
d. Approved Leave of Absence
4. Reductions of and Increases in Hospitals' FTE Resident Caps
for GME Payment Purposes
a. General Background on Methodology for Determining the FTE
Resident Count
b. Reduction of Hospitals' FTE Resident Caps Under the
Provisions of Section 5503 of the Affordable Care Act
c. Hospitals Subject to the FTE Resident Cap Reduction
d. Exemption From FTE Resident Cap Reduction for Certain Rural
Hospitals
e. Application of Section 5503 to Hospitals That Participate in
Demonstration Projects or Voluntary Reduction Programs and Certain
Other Hospitals
f. Determining the Estimated Number of FTE Resident Slots
Available for Redistribution
g. Reference Cost Reports That Are Under Appeal
h. Determining the Possible Reduction to a Hospital's FTE
Resident Cap
i. Application of Section 5503 to Hospitals That File Low
Utilization Medicare Cost Reports
j. Treatment of Hospitals With Caps That Have Been Reduced or
Increased Under Section 422 of Public Law 108-173
k. Criteria for Determining Hospitals That Will Receive
Increases in Their FTE Resident Caps
l. Application Process for the Increases in Hospitals' FTE
Resident Caps
m. CMS Evaluation of Applications for Increases in FTE Resident
Caps
n. CMS Evaluation of Application for Increases in FTE Resident
Caps
o. Exception If Positions Are Not Redistributed by July 1, 2011
p. Application of Direct GME PRAs for Primary Care and
Nonprimary Care Residents and Conforming Changes for the IME
Multiplier
q. Other Issues Related to a Request for Increase in the FTE
Caps Under Section 5503
5. Preservation of Resident Cap Positions From Closed Hospitals
(Section 5506 of the Affordable Care Act)
a. Background
b. Definition of a ``Closed Hospital''
c. Priority for Hospitals in Certain Areas
d. Application Process
e. Ranking Criteria
f. Demonstrated Likelihood of Filling the Positions Within a
Certain Time Period
g. No Duplication of FTE Cap Slots
h. Other Payment Issues Regarding Hospitals That Receive Slots
From Closed Hospitals
i. Application--No Reopening of Settled Cost Reports
XVIII. Proposed Changes to Whole Hospital and Rural Provider
Exceptions to the Physician Self-Referral Prohibition and Related
Changes to Provider Agreement Regulations
A. Background
B. Changes Made by the Affordable Care Act Relating to the Whole
Hospital and Rural Provider Exceptions to Ownership and Investment
Prohibition
C. Proposed Changes to Physician Self-Referral Regulations
1. Physician Ownership and Provider Agreement
2. Limitation on Expansion of Facility Capacity
3. Preventing Conflicts of Interest
4. Ensuring Bona Fide Investment
5. Patient Safety
6. Conversion From Ambulatory Surgery Center (ASC)
7. Publication of Information Reported
8. Enforcement
D. Proposed Related Changes to Provider Agreement Regulations
XIX. Files Available to the Public via the Internet
A. Information in Addenda Related to the Proposed CY 2011
Hospital OPPS
B. Information in Addenda Related to the Proposed CY 2011 ASC
Payment System
XX. Collection of Information Requirements
A. Legislative Requirements for Solicitation of Comments
B. Requirements in Regulation Text
C. Associated Information Collections Not Specified in
Regulatory Text
1. Hospital Outpatient Quality Data Reporting Program (HOP QDRP)
2. Proposed HOP QDRP Quality Measures for the CY 2011 and CY
2012 Payment Determinations
3. Proposed HOP QDRP Validation Requirements
4. Proposed HOP QDRP Reconsideration and Appeals Procedures
5. Additional Topics
[[Page 46175]]
XXI. Response to Comments
XXII. Regulatory Impact Analysis
A. Overall Impact
1. Executive Order 12866
2. Regulatory Flexibility Act
3. Small Rural Hospitals
4. Unfunded Mandates
5. Federalism
B. Effects of OPPS Changes in This Proposed Rule
1. Alternatives Considered
2. Limitations of Our Analysis
3. Estimated Effects of This Proposed Rule on Hospitals
4. Estimated Effects of This Proposed Rule on CMHCs
5. Estimated Effects of This Proposed Rule on Beneficiaries
6. Conclusion
7. Accounting Statement
C. Effects of ASC Payment System Changes in This Proposed Rule
1. Alternatives Considered
2. Limitations of Our Analysis
3. Estimated Effects of This Proposed Rule on Payments to ASCs
4. Estimated Effects of This Proposed Rule on Beneficiaries
5. Conclusion
6. Accounting Statement
D. Effects of Proposed Requirements for Reporting of Quality
Data for Annual Hospital Payment Update
E. Effects of Proposed Changes in Payments to Hospitals for
Direct GME and IME Costs
F. Effects of Proposed Changes to Physician Self-Referral
Regulations and Related Proposed Changes to Provider Agreement
Regulations
G. Executive Order 12866
Regulation Text
Addenda
Addendum A--Proposed OPPS APCs for CY 2011
Addendum AA--Proposed ASC Covered Surgical Procedures for CY 2011
(Including Surgical Procedures for Which Payment Is Packaged)
Addendum B--Proposed OPPS Payment by HCPCS Code for CY 2011
Addendum BB--Proposed ASC Covered Ancillary Services Integral to
Covered Surgical Procedures for CY 2011 (Including Ancillary
Services for Which Payment Is Packaged)
Addendum D1--Proposed OPPS Payment Status Indicators for CY 2011
Addendum DD1--Proposed ASC Payment Indicators for CY 2011
Addendum D2--Proposed OPPS Comment Indicators for CY 2011
Addendum DD2--Proposed ASC Comment Indicators for CY 2011
Addendum E--Proposed HCPCS Codes That Would Be Paid Only as
Inpatient Procedures for CY 2011
Addendum L--Proposed CY 2011 OPPS Out-Migration Adjustment
Addendum M--Proposed HCPCS Codes for Assignment to Composite APCs
for CY 2011
I. Background and Summary of the CY 2011 OPPS/ASC Proposed Rule
A. Legislative and Regulatory Authority for the Hospital Outpatient
Prospective Payment System
When Title XVIII of the Social Security Act (the Act) was enacted,
Medicare payment for hospital outpatient services was based on
hospital-specific costs. In an effort to ensure that Medicare and its
beneficiaries pay appropriately for services and to encourage more
efficient delivery of care, the Congress mandated replacement of the
reasonable cost-based payment methodology with a prospective payment
system (PPS). The Balanced Budget Act (BBA) of 1997 (Pub. L. 105-33)
added section 1833(t) to the Act authorizing implementation of a PPS
for hospital outpatient services. The OPPS was first implemented for
services furnished on or after August 1, 2000. Implementing regulations
for the OPPS are located at 42 CFR part 419.
The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act
(BBRA) of 1999 (Pub. L. 106-113) made major changes in the hospital
outpatient prospective payment system (OPPS). The following Acts made
additional changes to the OPPS: the Medicare, Medicaid, and SCHIP
Benefits Improvement and Protection Act (BIPA) of 2000 (Pub. L. 106-
554); the Medicare Prescription Drug, Improvement, and Modernization
Act (MMA) of 2003 (Pub. L. 108-173); the Deficit Reduction Act (DRA) of
2005 (Pub. L. 109-171), enacted on February 8, 2006; the Medicare
Improvements and Extension Act under Division B of Title I of the Tax
Relief and Health Care Act (MIEA-TRHCA) of 2006 (Pub. L. 109-432),
enacted on December 20, 2006; the Medicare, Medicaid, and SCHIP
Extension Act (MMSEA) of 2007 (Pub. L. 110-173), enacted on December
29, 2007; the Medicare Improvements for Patients and Providers Act
(MIPPA) of 2008 (Pub. L. 110-275), enacted on July 15, 2008; and most
recently the Patient Protection and Affordable Care Act (Pub. L. 111-
148), enacted on March 23, 2010, as amended by the Health Care and
Education Reconciliation Act of 2010 (Pub. L. 111-152), enacted on
March 30, 2010. We refer readers to section I.D. of this proposed rule
for a summary of the provisions of Public Law 111-148, as amended by
Public Law 111-152, that we are proposing to implement in this proposed
rule.
Under the OPPS, we pay for hospital outpatient services on a rate-
per-service basis that varies according to the ambulatory payment
classification (APC) group to which the service is assigned. We use the
Healthcare Common Procedure Coding System (HCPCS) codes (which include
certain Current Procedural Terminology (CPT) codes) and descriptors to
identify and group the services within each APC group. The OPPS
includes payment for most hospital outpatient services, except those
identified in section I.B. of this proposed rule. Section
1833(t)(1)(B)(ii) of the Act provides for payment under the OPPS for
hospital outpatient services designated by the Secretary (which
includes partial hospitalization services furnished by community mental
health centers (CMHCs)) and hospital outpatient services that are
furnished to inpatients who have exhausted their Part A benefits, or
who are otherwise not in a covered Part A stay.
The OPPS rate is an unadjusted national payment amount that
includes the Medicare payment and the beneficiary copayment. This rate
is divided into a labor-related amount and a nonlabor-related amount.
The labor-related amount is adjusted for area wage differences using
the hospital inpatient wage index value for the locality in which the
hospital or CMHC is located.
All services and items within an APC group are comparable
clinically and with respect to resource use (section 1833(t)(2)(B) of
the Act). In accordance with section 1833(t)(2) of the Act, subject to
certain exceptions, items and services within an APC group cannot be
considered comparable with respect to the use of resources if the
highest median cost (or mean cost, if elected by the Secretary) for an
item or service in the APC group is more than 2 times greater than the
lowest median cost for an item or service within the same APC group
(referred to as the ``2 times rule''). In implementing this provision,
we generally use the median cost of the item or service assigned to an
APC group.
For new technology items and services, special payments under the
OPPS may be made in one of two ways. Section 1833(t)(6) of the Act
provides for temporary additional payments, which we refer to as
``transitional pass-through payments,'' for at least 2 but not more
than 3 years for certain drugs, biological agents, brachytherapy
devices used for the treatment of cancer, and categories of other
medical devices. For new technology services that are not eligible for
transitional pass-through payments, and for which we lack sufficient
data to appropriately assign them to a clinical APC group, we have
established special APC groups based on costs, which we refer to as New
Technology APCs. These New
[[Page 46176]]
Technology APCs are designated by cost bands which allow us to provide
appropriate and consistent payment for designated new procedures that
are not yet reflected in our claims data. Similar to pass-through
payments, an assignment to a New Technology APC is temporary; that is,
we retain a service within a New Technology APC until we acquire
sufficient data to assign it to a clinically appropriate APC group.
B. Excluded OPPS Services and Hospitals
Section 1833(t)(1)(B)(i) of the Act authorizes the Secretary to
designate the hospital outpatient services that are paid under the
OPPS. While most hospital outpatient services are payable under the
OPPS, section 1833(t)(1)(B)(iv) of the Act excludes payment for
ambulance, physical and occupational therapy, and speech-language
pathology services, for which payment is made under a fee schedule. It
also excludes screening mammography, diagnostic mammography, and
effective January 1, 2011, an annual wellness visit providing
personalized prevention plan services. The Secretary exercised the
authority granted under the statute to also exclude from the OPPS those
services that are paid under fee schedules or other payment systems.
Such excluded services include, for example, the professional services
of physicians and nonphysician practitioners paid under the Medicare
Physician Fee Schedule (MPFS); laboratory services paid under the
clinical diagnostic laboratory fee schedule (CLFS); services for
beneficiaries with end-stage renal disease (ESRD) that are paid under
the ESRD composite rate; and services and procedures that require an
inpatient stay that are paid under the hospital inpatient prospective
payment system (IPPS). We set forth the services that are excluded from
payment under the OPPS in Sec. 419.22 of the regulations.
Under Sec. 419.20(b) of the regulations, we specify the types of
hospitals and entities that are excluded from payment under the OPPS.
These excluded entities include: Maryland hospitals, but only for
services that are paid under a cost containment waiver in accordance
with section 1814(b)(3) of the Act; critical access hospitals (CAHs);
hospitals located outside of the 50 States, the District of Columbia,
and Puerto Rico; and Indian Health Service (IHS) hospitals.
C. Prior Rulemaking
On April 7, 2000, we published in the Federal Register a final rule
with comment period (65 FR 18434) to implement a prospective payment
system for hospital outpatient services. The hospital OPPS was first
implemented for services furnished on or after August 1, 2000. Section
1833(t)(9) of the Act requires the Secretary to review certain
components of the OPPS, not less often than annually, and to revise the
groups, relative payment weights, and other adjustments that take into
account changes in medical practices, changes in technologies, and the
addition of new services, new cost data, and other relevant information
and factors.
Since initially implementing the OPPS, we have published final
rules in the Federal Register annually to implement statutory
requirements and changes arising from our continuing experience with
this system. These rules can be viewed on the CMS Web site at: http://www.cms.gov/HospitalOutpatientPPS/. The CY 2010 OPPS/ASC final rule
with comment period appears in the November 20, 2009 Federal Register
(74 FR 60316). In that final rule with comment period, we revised the
OPPS to update the payment weights and conversion factor for services
payable under the CY 2010 OPPS on the basis of claims data from January
1, 2008, through December 31, 2008, and to implement certain provisions
of Public Law 110-173 and Public Law 110-275. In addition, we responded
to public comments received on the provisions of the November 18, 2008
final rule with comment period (73 FR 68502) pertaining to the APC
assignment of HCPCS codes identified in Addendum B to that rule with
the new interim (``NI'') comment indicator, and public comments
received on the July 20, 2009 OPPS/ASC proposed rule for CY 2010 (74 FR
35232).
D. Provisions of the Patient Protection and Affordable Care Act (Pub.
L. 111-148), as Amended by the Health Care and Education Reconciliation
Act of 2010 (Pub. L. 111-152)
On March 23, 2010, the Patient Protection and Affordable Care Act,
Public Law 111-148, was enacted. Following the enactment of Public Law
111-148, the Health Care and Education Reconciliation Act of 2010,
Public Law 111-152 (enacted on March 30, 2010), amended certain
provisions of Public Law 111-148. (These two public laws are
collectively known as the Affordable Care Act.) A number of the
provisions of the Affordable Care Act affect the OPPS and the ASC
payment system and the providers and suppliers addressed in this
proposed rule. Listed below are the provisions of the Affordable Care
Act that we are proposing to implement in this proposed rule. We note
that, due to the timing of the passage of the legislation, we were
unable to address some of the provisions of the Affordable Care Act
that affect the IPPS and the LTCH PPS in the FY 2011 IPPS/LTCH PPS
proposed rule published in the Federal Register on May 4, 2010.
Therefore, we also are including some proposals to implement certain
provisions relating to the IPPS and LTCH PPS in this proposed rule. In
addition, we note that we have issued or plan to issue separate
documents in the Federal Register addressing other provisions of the
Affordable Care Act (75 FR 30756 and 75 FR 31118).
Section 1301 of the Affordable Care Act amended sections
1861(ff)(3)(A) and (B) of the Act to establish new additional
requirements for CMHCs applicable to items or services furnished to
Medicare beneficiaries on or after the first day of the first calendar
quarter that begins at least 12 months after the date of enactment of
Public Law 111-152 (that is, beginning April 1, 2011). The new
requirements specify that a CMHC provide at least 40 percent of its
services to individuals who are not eligible for Medicare benefits
under Title XVIII of the Act and that a partial hospitalization program
must be a distinct and organized intensive ambulatory treatment service
offering less than 24-hour daily care ``other than an individual's home
or in an inpatient or residential setting.'' This provision is
addressed in section X. of this proposed rule.
Section 3121(a) of the Affordable Care Act amended section
1833(t)(7)(D)(i) of the Act to extend hold harmless payment adjustments
(called transitional corridor payments or transitional outpatient
payments (TOPS)) to rural hospitals with 100 or fewer beds and that are
not sole community hospitals for covered OPD services furnished on or
after January 1, 2006 and before January 1, 2011. Section 3121(b)
amended section 1833(t)(7)(D)(i)(III) of the Act to provide that, for
SCHs, in the case of covered OPD services furnished on or after January
1, 2010, and before January 1, 2011, the hold harmless TOPS provisions
shall be applied without regard to the 100-bed limitation. These
provisions are addressed in section II.E. of this proposed rule.
Section 3138 of the Affordable Care Act amended section
1833(t) of the Act to direct the Secretary to conduct a study to
determine if costs incurred by cancer hospitals (described in section
1886(d)(1)(B)(v) of the Act) for outpatient hospital services with
respect to APC groups exceed those costs
[[Page 46177]]
incurred by other hospitals furnishing these services. In so far as the
Secretary determines that such costs exceed those costs incurred by
other hospitals, the Secretary shall provide for an appropriate
adjustment under the authority of section 1833(t)(2)(E) to reflect
those higher costs effective for services furnished on or after January
1, 2011. This provision is addressed in section II.F. of this proposed
rule.
Section 3401(i) of the Affordable Care Act amended section
1833(t)(3) of the Act by, among other things, adding new paragraphs
(C)(iv)(F) and (G) to reduce the OPD fee schedule increase factor by a
productivity adjustment and an additional adjustment for payments to
hospital OPDs beginning in various years from CY 2010 through CY 2019
as applicable. These hospital OPD provisions are addressed in section
II.B.1. of this proposed rule. Section 3401(k) of the Affordable Care
Act amended section 1833(i)(2)(D) of the Act by adding a new subsection
(iv) to provide for a similar productivity adjustment for payment for
ASC services. This ASC provision is addressed in section XV.H.2.b. of
this proposed rule.
Section 4103(a) of the Affordable Care Act amended section
1861(s)(2) of the Act by adding a new subsection (FF) to provide
Medicare coverage of ``personalized prevention plan services,''
beginning January 1, 2011. Section 4103(b) of the Affordable Care Act
amended section 1861 of the Act by adding a new subsection (hhh) to
define ``personalized prevention plan services'' (also cited as the
``annual wellness visit''). Section 4103(c) of the Affordable Care Act
excludes the annual wellness visit from payment under the OPPS and
provides for the elimination of beneficiary coinsurance requirements
for these preventive services in outpatient hospital settings and for
waiver of application of the deductible for these services. These
provisions are addressed in section XII.B. of this proposed rule.
Section 4104(a) of the Affordable Care Act amended section
1861(ddd) of the Act to define ``preventive services'' under Medicare
to include screening and preventive services described under subsection
(ww)(2) of the Act (other than services under subparagraph (M)); an
initial preventive physical examination as defined in subsection (ww)
of the Act; and personalized prevention plan services as defined in
subsection (hhh)(1) of the Act. Section 4104(b) of the Affordable Care
Act amended section 1833(a)(1) of the Act, as amended by section
4103(c)(1) of the Affordable Care Act, to provide for the elimination
of coinsurance for most preventive services, and section 4104(c)
amended section 1833(b) of the Act to provide for the waiver of the
application of the deductible for most preventive services and,
specifically, for colorectal cancer screening tests that become
diagnostic and any related services performed with that diagnostic
colorectal cancer screening test performed in the same clinical
encounter, effective for items and services furnished on or after
January 1, 2011. These provisions are addressed in section XII.B. of
this proposed rule.
Sections 5503, 5504, 5505, and 5506 of the Affordable Care
Act made a number of changes to various sections of the Act relating to
payment for direct GME and IME costs to hospitals.
(1) Section 5503 amended the Act to add a provision to redistribute
medical residency positions that have been unfilled during a prior cost
reporting period to other hospitals and to direct slots for training
primary care physicians beginning July 1, 2011.
(2) Section 5504 amended sections 1886(h)(4)(E) and
1886(d)(5)(B)(iv) of the Act to allow any time spent by residents
training in a nonprovider setting to count toward direct GME and IME
costs if the hospital incurs the costs of residents' salaries and
fringe benefits, effective for cost reporting periods beginning on or
after July 1, 2010, for direct GME, and for discharges occurring on or
after July 1, 2010, for IME.
(3) Section 5505 amended section 1886(h) and section 1886(d)(5)(B)
of the Act to add a provision to allow hospitals to count resident time
spent in certain non-patient care activities while training in certain
nonhospital settings for direct GME purposes, effective for cost
reporting periods beginning on or after July 1, 2009; to allow
hospitals to count resident time spent in certain non-patient care
activities while training in certain hospital settings for IME purposes
for cost reporting periods beginning on or after January 1, 1983; and
to prohibit the counting of time spent by residents in research not
associated with the treatment or diagnosis of a particular patient for
IME purposes effective October 1, 2001 (with certain limitations).
(4) Section 5506 amended section 1886(h)(4)(H) and section
1886(d)(5)(B)(iv) of the Act to add a provision to allow for the
redistribution to other hospitals in the same or contiguous areas of
FTE resident positions from a hospital that closes (on or after the
date that is 2 years before the date of enactment of Pub. L. 111-148).
These provisions are addressed in section XVII.B. of this proposed
rule.
Section 6001 of the Affordable Care Act amended section
1877 of the Act to add provisions under new subsection (i) relating to
the prohibition against referrals to a hospital by a physician who has
an ownership or investment interest in the hospital. This provision is
addressed in section XVIII. of this proposed rule.
Section 10324(b) of the Affordable Care Act amended
section 1833(t) of the Act by adding a new subsection (19) to provide
for a floor on the area wage adjustment factor for hospital outpatient
department services furnished on or after January 1, 2011, in a State
in which at least 50 percent of the counties in the State are frontier
counties, that is, a county in which the population per square mile is
less than 6. This provision is addressed in section II.C. of this
proposed rule.
E. Advisory Panel on Ambulatory Payment Classification (APC) Groups
1. Authority of the Advisory Panel on Ambulatory Payment Classification
(APC) Groups (the APC Panel)
Section 1833(t)(9)(A) of the Act, as amended by section 201(h) of
Public Law 106-113, and redesignated by section 202(a)(2) of Public Law
106-113, requires that we consult with an outside panel of experts to
review the clinical integrity of the payment groups and their weights
under the OPPS. The Act further specifies that the panel will act in an
advisory capacity. The APC Panel, discussed under section I.E.2. of
this proposed rule, fulfills these requirements. The APC Panel is not
restricted to using data compiled by CMS, and it may use data collected
or developed by organizations outside the Department in conducting its
review.
2. Establishment of the APC Panel
On November 21, 2000, the Secretary signed the initial charter
establishing the APC Panel. This expert panel, which may be composed of
up to 15 representatives of providers (currently employed full-time,
not as consultants, in their respective areas of expertise) subject to
the OPPS, reviews clinical data and advises CMS about the clinical
integrity of the APC groups and their payment weights. The APC Panel is
technical in nature, and it is governed by the provisions of the
Federal Advisory Committee Act (FACA). Since its initial chartering,
the Secretary has renewed the APC Panel's charter four times: on
November 1, 2002; on November 1, 2004; on November 21, 2006; and on
November 2, 2008. The
[[Page 46178]]
current charter specifies, among other requirements, that: the APC
Panel continues to be technical in nature; is governed by the
provisions of the FACA; may convene up to three meetings per year; has
a Designated Federal Official (DFO); and is chaired by a Federal
official designated by the Secretary.
The current APC Panel membership and other information pertaining
to the APC Panel, including its charter, Federal Register notices,
membership, meeting dates, agenda topics, and meeting reports, can be
viewed on the CMS Web site at: http://www.cms.hhs.gov/FACA/05_AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp#TopOfPage.
3. APC Panel Meetings and Organizational Structure
The APC Panel first met on February 27 through March 1, 2001. Since
the initial meeting, the APC Panel has held 17 meetings, with the last
meeting taking place on February 17 and 18, 2010. Prior to each
meeting, we publish a notice in the Federal Register to announce the
meeting and, when necessary, to solicit nominations for APC Panel
membership and to announce new members.
The APC Panel has established an operational structure that, in
part, includes the use of three subcommittees to facilitate its
required APC review process. The three current subcommittees are the
Data Subcommittee, the Visits and Observation Subcommittee, and the
Packaging Subcommittee. The Data Subcommittee is responsible for
studying the data issues confronting the APC Panel and for recommending
options for resolving them. The Visits and Observation Subcommittee
reviews and makes recommendations to the APC Panel on all technical
issues pertaining to observation services and hospital outpatient
visits paid under the OPPS (for example, APC configurations and APC
payment weights). The Packaging Subcommittee studies and makes
recommendations on issues pertaining to services that are not
separately payable under the OPPS, but whose payments are bundled or
packaged into APC payments. Each of these subcommittees was established
by a majority vote from the full APC Panel during a scheduled APC Panel
meeting, and the APC Panel recommended that the subcommittees continue
at the February 2010 APC Panel meeting. We accept those recommendations
of the APC Panel. All subcommittee recommendations are discussed and
voted upon by the full APC Panel.
Discussions of the other recommendations made by the APC Panel at
the February 2010 meeting are included in the sections of this proposed
rule that are specific to each recommendation. For discussions of
earlier APC Panel meetings and recommendations, we refer readers to
previously published hospital OPPS/ASC proposed and final rules, the
CMS Web site mentioned earlier in this section, and the FACA database
at: http://fido.gov/facadatabase/public.asp.
F. Summary of the Contents of This Proposed Rule
In this proposed rule, we set forth proposed changes to the
Medicare hospital OPPS for CY 2011 to implement statutory requirements
and changes arising from our continuing experience with the system and
to implement certain provisions of Public Law 111-148, as amended by
Public Law 111-152 (collectively known as the Affordable Care Act). In
addition, we set forth proposed changes to the revised Medicare ASC
payment system for CY 2011, including proposed updated payment weights,
covered surgical procedures, and covered ancillary items and services
based on the proposed OPPS update. We set forth proposed quality
measures for the Hospital Outpatient Quality Data Reporting Program
(HOP QDRP) for reporting quality data for annual payment rate updates
for CY 2012 and subsequent calendar years, the proposed requirements
for data collection and submission for the annual payment update, and a
proposed reduction in the OPPS payment for hospitals that fail to meet
the HOP QDRP requirements for the CY 2011 payment update, in accordance
with the statutory requirement. We also set forth proposed changes to
implement provisions of the Affordable Care Act relating to payments to
hospitals for direct GME and IME costs and the rules relating to
physician self-referrals to hospitals in which they have an ownership
or investment interest. In addition, we are setting forth proposals
affecting certain payments under the Medicare IPPS. The following is a
summary of the major proposed changes that we are proposing to make:
1. Proposed Updates Affecting OPPS Payments
In section II. of this proposed rule, we set forth--
The methodology used to recalibrate the proposed APC
relative payment weights.
The proposed changes to packaged services.
The proposed update to the conversion factor used to
determine payment rates under the OPPS. In this section, we set forth
proposed changes in the amounts and factors for calculating the full
annual update increase to the conversion factor.
The proposed retention of our current policy to use the
IPPS wage indices to adjust, for geographic wage differences, the
portion of the OPPS payment rate and the copayment standardized amount
attributable to labor-related cost. This proposal addresses the
provisions of section 10324 of the Affordable Care Act relating to the
establishment of a floor for the area wage adjustment factor for OPD
services furnished in frontier States.
The proposed update of statewide average default CCRs.
The proposed application of hold harmless transitional
outpatient payments (TOPs) for certain small rural hospitals, extended
by section 3121 of the Affordable Care Act.
The proposed payment adjustment for rural SCHs.
The proposed calculation of the hospital outpatient
outlier payment.
The calculation of the proposed national unadjusted
Medicare OPPS payment.
The proposed beneficiary copayments for OPPS services.
2. Proposed OPPS Ambulatory Payment Classification (APC) Group Policies
In section III. of this proposed rule, we discuss--
The proposed additions of new HCPCS codes to APCs.
The proposed establishment of a number of new APCs.
Our analyses of Medicare claims data and certain
recommendations of the APC Panel.
The application of the 2 times rule and proposed
exceptions to it.
The proposed changes to specific APCs.
The proposed movement of procedures from New Technology
APCs to clinical APCs.
3. Proposed OPPS Payment for Devices
In section IV. of this proposed rule, we discuss the proposed pass-
through payment for specific categories of devices and the proposed
adjustment for devices furnished at no cost or with partial or full
credit.
4. Proposed OPPS Payment Changes for Drugs, Biologicals, and
Radiopharmaceuticals
In section V. of this proposed rule, we discuss the proposed CY
2011 OPPS
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payment for drugs, biologicals, and radiopharmaceuticals, including the
proposed payment for drugs, biologicals, and radiopharmaceuticals with
and without pass-through status.
5. Proposed Estimate of OPPS Transitional Pass-Through Spending for
Drugs, Biologicals, Radiopharmaceuticals, and Devices
In section VI. of this proposed rule, we discuss the estimate of CY
2011 OPPS transitional pass-through spending for drugs, biologicals,
and devices.
6. Proposed OPPS Payment for Brachytherapy Sources
In section VII. of this proposed rule, we discuss our proposal for
payment for brachytherapy sources.
7. Proposed OPPS Payment for Drug Administration Services
In section VIII. of this proposed rule, we set forth our proposed
policy concerning coding and payment for drug administration services.
8. Proposed OPPS Payment for Hospital Outpatient Visits
In section IX. of this proposed rule, we set forth our proposed
policies for the payment of clinic and emergency department visits and
critical care services based on claims data.
9. Proposed Payment for Partial Hospitalization Services
In section X. of this proposed rule, we set forth our proposed
payment for partial hospitalization services, including the proposed
separate threshold for outlier payments for CMHCs. We also set for our
proposals to implement the new requirements for CMHCs established by
section 1301 of the Affordable Care Act.
10. Proposed Procedures That Would Be Paid Only as Inpatient Procedures
In section XI. of this proposed rule, we discuss the procedures
that we are proposing to remove from the inpatient list and assign to
APCs for payment under the OPPS.
11. Proposed OPPS Nonrecurring Technical and Policy Changes and
Clarifications
In section XII. of this proposed rule, we discuss nonrecurring
technical issues and proposed policy changes relating to physician
supervision of OPD services in hospitals, including CAHs. We also are
proposing to implement the provisions of sections 4103 and 4104 of the
Affordable Care Act relating to payment for preventive services,
including personalized prevention plan services, and the waiver of
beneficiary coinsurance and deductibles.
12. Proposed OPPS Payment Status and Comment Indicators
In section XIII. of this proposed rule, we discuss our proposed
changes to the definitions of status indicators assigned to APCs and
present our proposed comment indicators for the final rule with comment
period.
13. OPPS Policy and Payment Recommendations
In section XIV. of this proposed rule, we address recommendations
made by the Medicare Payment Advisory Commission (MedPAC) in its March
2010 report to Congress, by the Office of Inspector General (OIG), and
by the APC Panel regarding the OPPS for CY 2011.
14. Proposed Updates to the Ambulatory Surgical Center (ASC) Payment
System
In section XV. of this proposed rule, we discuss the proposed
updates of the revised ASC payment system and payment rates for CY
2011.
15. Reporting Quality Data for Annual Payment Rate Updates
In section XVI. of this proposed rule, we discuss the proposed
quality measures for reporting hospital outpatient (HOP) quality data
for the annual payment update factor for CY 2012 and subsequent
calendar years; set forth the requirements for data collection and
submission for the annual payment update; and discuss the reduction in
the OPPS payment for hospitals that fail to meet the HOP Quality Data
Reporting Program (QDRP) requirements for CY 2011.
16. Bundling of Payments for Inpatient and Outpatient Services and
Payments to Hospitals for Direct GME and IME Costs
In section XVII. of this proposed rule, we discuss our proposed
implementation of the provisions of section 5503, 5504, 5505, and 5506
of the Affordable Care Act relating to redistribution of FTE resident
slots of closed hospitals and policy changes for the counting of FTE
residents in determining payments to hospitals for direct GME and IME
costs.
17. Physician Self-Referrals to Hospitals
In section XVIII. of this preamble, we discuss our proposal to
implement the changes made by section 6001 of the Affordable Care Act
relating to the rules governing the prohibition on referrals to a
hospital by a physician who has an ownership or investment interest in
the hospital.
18. Regulatory Impact Analysis
In section XXII. of this proposed rule, we set forth an analysis of
the impact that the proposed changes would have on affected entities
and beneficiaries.
II. Proposed Updates Affecting OPPS Payments
A. Proposed Recalibration of APC Relative Weights
1. Database Construction
a. Database Source and Methodology
Section 1833(t)(9)(A) of the Act requires that the Secretary review
and revise the relative payment weights for APCs at least annually. In
the April 7, 2000 OPPS final rule with comment period (65 FR 18482), we
explained in detail how we calculated the relative payment weights that
were implemented on August 1, 2000 for each APC group.
For CY 2011, we are proposing to use the same basic methodology
that we described in the November 20, 2009 OPPS final rule with comment
period to recalibrate the APC relative payment weights for services
furnished on or after January 1, 2011, and before January 1, 2012 (CY
2011). That is, we are proposing to recalibrate the relative payment
weights for each APC based on claims and cost report data for hospital
outpatient department (HOPD) services. We are proposing to use the most
recent available data to construct the database for calculating APC
group weights. Therefore, for the purpose of recalibrating the proposed
APC relative payment weights for CY 2011, we used approximately 133
million final action claims for hospital outpatient department services
furnished on or after January 1, 2009, and before January 1, 2010. (For
exact counts of claims used, we refer readers to the claims accounting
narrative under supporting documentation for this proposed rule on the
CMS Web site at: http://www.cms.gov/HospitalOutpatientPPS/HORD/.)
Of the 133 million final action claims for services provided in
hospital outpatient settings used to calculate the CY 2011 OPPS payment
rates for this proposed rule, approximately 102 million claims were the
type of bill potentially appropriate for use in setting rates for OPPS
services (but did not necessarily contain services payable under the
OPPS). Of the 102 million claims, approximately 4 million claims were
not for services paid under the OPPS or were excluded as not
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appropriate for use (for example, erroneous cost-to-charge ratios
(CCRs) or no HCPCS codes reported on the claim). From the remaining 98
million claims, we created approximately 95 million single records, of
which approximately 64 million were ``pseudo'' single or ``single
session'' claims (created from 24 million multiple procedure claims
using the process we discuss later in this section). Approximately
696,000 claims were trimmed out on cost or units in excess of +/- 3
standard deviations from the geometric mean, yielding approximately 95
million single bills for median setting. As described in section
II.A.2. of this proposed rule, our data development process is designed
with the goal of using appropriate cost information in setting the APC
relative weights. The bypass process is described in section II.A.1.b.
of this proposed rule. This section discusses how we develop ``pseudo''
single procedure claims, with the intention of using more appropriate
data from the available claims. In some cases, the bypass process
allows us to use some portion of the submitted claim for cost
estimation purposes, while the remaining information on the claim
continues to be unusable. Consistent with the goal of using appropriate
information in our data development process, we only use claims (or
portions of each claim) that are appropriate for ratesetting purposes.
Ultimately, we were able to use for CY 2011 ratesetting some portion of
95 percent of the CY 2009 claims containing services payable under the
OPPS.
The proposed APC relative weights and payments for CY 2011 in
Addenda A and B to this proposed rule were calculated using claims from
CY 2009 that were processed before January 1, 2010, and continue to be
based on the median hospital costs for services in the APC groups. We
selected claims for services paid under the OPPS and matched these
claims to the most recent cost report filed by the individual hospitals
represented in our claims data. We continue to believe that it is
appropriate to use the most current full calendar year claims data and
the most recently submitted cost reports to calculate the median costs
underpinning the APC relative payment weights and the CY 2011 payment
rates.
b. Proposed Use of Single and Multiple Procedure Claims
For CY 2011, in general, we are proposing to continue to use single
procedure claims to set the medians on which the APC relative payment
weights would be based, with some exceptions as discussed below in this
section. We generally use single procedure claims to set the median
costs for APCs because we believe that the OPPS relative weights on
which payment rates are based should be derived from the costs of
furnishing one unit of one procedure and because, in many
circumstances, we are unable to ensure that packaged costs can be
appropriately allocated across multiple procedures performed on the
same date of service.
We agree that, optimally, it is desirable to use the data from as
many claims as possible to recalibrate the APC relative payment
weights, including those claims for multiple procedures. As we have for
several years, we continued to use date of service stratification and a
list of codes to be bypassed to convert multiple procedure claims to
``pseudo'' single procedure claims. Through bypassing specified codes
that we believe do not have significant packaged costs, we are able to
use more data from multiple procedure claims. In many cases, this
enables us to create multiple ``pseudo'' single procedure claims from
claims that were submitted as multiple procedure claims spanning
multiple dates of service, or claims that contained numerous separately
paid procedures reported on the same date on one claim. We refer to
these newly created single procedure claims as ``pseudo'' single
procedure claims. The history of our use of a bypass list to generate
``pseudo'' single procedure claims is well documented, most recently in
the CY 2010 OPPS/ASC final rule with comment period (74 FR 60324
through 60342). In addition, for CY 2008, we increased packaging and
created the first composite APCs. We have continued our packaging
policies and the creation of composite APCs for CY 2009 and 2010, and
we are proposing to continue them for CY 2011. This also increased the
number of bills that we were able to use for median calculation by
enabling us to use claims that contained multiple major procedures that
previously would not have been usable. Further, for CY 2009, we
expanded the composite APC model to one additional clinical area,
multiple imaging services (73 FR 68559 through 68569), which also
increased the number of bills we were able to use to calculate APC
median costs. We have continued the composite APCs for multiple imaging
services for CY 2010, and we are proposing to continue to create them
for CY 2011. We refer readers to section II.A.2.e. of this proposed
rule for discussion of the use of claims to establish median costs for
composite APCs.
We are proposing to continue to apply these processes to enable us
to use as much claims data as possible for ratesetting for the CY 2011
OPPS. This methodology enabled us to create, for this proposed rule,
approximately 64 million ``pseudo'' single procedure claims, including
multiple imaging composite ``single session'' bills (we refer readers
to section II.A.2.e.(5) of this proposed rule for further discussion),
to add to the approximately 31 million ``natural'' single procedure
claims. For this proposed rule, ``pseudo'' single procedure and
``single session'' procedure bills represent approximately 67 percent
of all single procedure bills used to calculate median costs.
For CY 2011, we are proposing to bypass 448 HCPCS codes for CY 2011
that are identified in Table 1 of this proposed rule. Since the
inception of the bypass list, we have calculated the percent of
``natural'' single bills that contained packaging for each HCPCS code
and the amount of packaging on each ``natural'' single bill for each
code. Each year, we generally retain the codes on the previous year's
bypass list and use the update year's data (for CY 2011, data available
for the February 2010 APC Panel meeting from CY 2009 claims processed
through September 30, 2009, and CY 2008 claims data processed through
June 30, 2009, used to model the payment rates for CY 2010) to
determine whether it would be appropriate to propose to add additional
codes to the previous year's bypass list. For CY 2011, we are proposing
to continue to bypass all of the HCPCS codes on the CY 2010 OPPS bypass
list. We updated HCPCS codes on the CY 2010 bypass list that were
mapped to new HCPCS codes for CY 2011 ratesetting by adding the new
replacement codes and also removing the deleted codes, which are listed
in Table 2. None of these deleted codes were ``overlap bypass codes''
(those HCPCS codes that are both on the bypass list and are members of
the multiple imaging composite APCs). We also are proposing to add to
the bypass list for CY 2011 all HCPCS codes not on the CY 2010 bypass
list that, using both CY 2010 final rule data (CY 2008 claims) and
February 2010 APC Panel data (first 9 months of CY 2009 claims), met
the same previously established empirical criteria for the bypass list
that are summarized below. The entire list proposed for CY 2011
(including the codes that remain on the bypass list from prior years)
is open to public comment. Because we must make some assumptions about
packaging in the multiple procedure claims in order to
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assess a HCPCS code for addition to the bypass list, we assume that the
representation of packaging on ``natural'' single procedure claims for
any given code is comparable to packaging for that code in the multiple
procedure claims. The proposed criteria for the bypass list are:
There are 100 or more ``natural'' single procedure claims
for the code. This number of single procedure claims ensures that
observed outcomes are sufficiently representative of packaging that
might occur in the multiple claims.
Five percent or fewer of the ``natural'' single procedure
claims for the code have packaged costs on that single procedure claim
for the code. This criterion results in limiting the amount of
packaging being redistributed to the separately payable procedures
remaining on the claim after the bypass code is removed and ensures
that the costs associated with the bypass code represent the cost of
the bypassed service.
The median cost of packaging observed in the ``natural''
single procedure claims is equal to or less than $50. This criterion
also limits the amount of error in redistributed costs. Throughout the
bypass process, we do not know the dollar value of the packaged cost
that should be appropriately attributed to the other procedures on the
claim. Ensuring that redistributed costs associated with a bypass code
are small in amount and volume protects the validity of cost estimates
for low cost services billed with the bypassed service.
In response to comments to the CY 2010 OPPS/ASC proposed rule
requesting that the packaged cost threshold be updated, we noted that
we would consider whether it would be appropriate to update the $50
packaged cost threshold for inflation when examining potential bypass
list additions (74 FR 60328). For the CY 2011 OPPS, based on CY 2009
claims data, we are proposing to apply the final market basket of 3.6
percent published in the CY 2009 OPPS/ASC final rule with comment
period (73 FR 26584) to the $50 packaged cost threshold used in the CY
2010 OPPS/ASC final rule with comment period (74 FR 60325) that we
initially established in the CY 2005 OPPS final rule based on our
analysis of the data (69 FR 65731), rounded to the nearest $5
increment. This calculation would lead us to a proposed packaged cost
threshold for bypass list additions of $50 ($51.80 rounded to $50). We
believe that applying the market basket from the year of claims data to
the packaged cost threshold, rounded to the nearest $5 increment, would
appropriately account for the effects of inflation when considering
additions to the bypass list because the market basket increase
percentage reflects the extent to which the cost of inputs for hospital
services has increased compared to the cost of inputs for hospital
services in the prior year. As discussed in the CY 2010 OPPS/ASC final
rule with comment period (74 FR 60328), the real value of this packaged
cost threshold criterion has declined due to inflation, making the
packaged cost threshold more restrictive over time when considering
additions to the bypass list. Therefore, adjusting the threshold by the
market basket would prevent continuing decline in the threshold's real
value. The dollar threshold would not change for CY 2011 under this
proposed policy, because when rounded to the nearest $5 increment after
adjustment for the market basket increase, the threshold would for CY
2011 remain at $50. Therefore, we are not proposing to add any
additional bypass codes for CY 2011 as a result of this proposed
policy.
The code is not a code for an unlisted service.
In addition, we are proposing to continue to include, on the bypass
list, HCPCS codes that CMS medical advisors believe have minimal
associated packaging based on their clinical assessment of the complete
CY 2011 OPPS proposal. Some of these codes were identified by CMS
medical advisors and some were identified in prior years by commenters
with specialized knowledge of the packaging associated with specific
services. We also are proposing to continue to include on the bypass
list certain HCPCS codes in order to purposefully direct the assignment
of packaged costs to a companion code where services always appear
together and where there would otherwise be few single procedure claims
available for ratesetting. For example, we have previously discussed
our reasoning for adding HCPCS code G0390 (Trauma response team
associated with hospital critical care service) and the CPT codes for
additional hours of drug administration to the bypass list (73 FR 68513
and 71 FR 68117 through 68118).
As a result of the multiple imaging composite APCs that we
established in CY 2009, the program logic for creating ``pseudo''
single procedure claims from bypassed codes that are also members of
multiple imaging composite APCs changed. When creating the set of
``pseudo'' single procedure claims, claims that contain ``overlap
bypass codes'' (those HCPCS codes that are both on the bypass list and
are members of the multiple imaging composite APCs), were identified
first. These HCPCS codes were then processed to create multiple imaging
composite ``single session'' bills, that is, claims containing HCPCS
codes from only one imaging family, thus suppressing the initial use of
these codes as bypass codes. However, these ``overlap bypass codes''
were retained on the bypass list because, at the end of the ``pseudo''
single processing logic, we reassessed the claims without suppression
of the ``overlap bypass codes'' under our longstanding ``pseudo''
single process to determine whether we could convert additional claims
to ``pseudo'' single procedure claims. (We refer readers to section
II.A.2.b. of this proposed rule for further discussion of the treatment
of ``overlap bypass codes.'') This process also created multiple
imaging composite ``single session'' bills that could be used for
calculating composite APC median costs. ``Overlap bypass codes'' that
are members of the proposed multiple imaging composite APCs are
identified by asterisks (*) in Table 1 below.
Table 1 below includes the proposed list of bypass codes for CY
2011. The list of bypass codes contains codes that were reported on
claims for services in CY 2009 and, therefore, includes codes that were
in effect in 2009 and used for billing but were deleted for CY 2010. We
retain these deleted bypass codes on the proposed CY 2011 bypass list
because these codes existed in CY 2009 and were covered OPD services in
that period. Since these bypass codes were deleted for billing in CY
2010, we will not need to retain them for the CY 2010 bypass list.
Keeping these deleted bypass codes on the bypass list potentially
allows us to create more ``pseudo'' single procedure claims for
ratesetting purposes. ``Overlap bypass codes'' that are members of the
proposed multiple imaging composite APCs are identified by asterisks
(*) in the third column of Table 1 below. HCPCS codes that we are
proposing to add for CY 2011 also are identified by asterisks (*) in
the fourth column of Table 1. Table 2 contains the list of codes that
we are proposing to remove from the CY 2011 bypass list because they
were deleted from the HCPCS before CY 2009. None of these proposed
deleted codes were ``overlap bypass'' codes.
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c. Proposed Calculation and Use of Cost-to-Charge Ratios (CCRs)
For CY 2011, we are proposing to continue to use the hospital-
specific overall ancillary and departmental CCRs to convert charges to
estimated costs through application of a revenue code-to-cost center
crosswalk. To calculate the APC median costs on which the proposed CY
2011 APC payment rates are based, we calculated hospital-specific
overall ancillary CCRs and hospital-specific departmental CCRs for each
hospital for which we had CY 2009 claims data from the most recent
available hospital cost reports, in most cases, cost reports beginning
in CY 2008. For the CY 2011 OPPS proposed rates, we used the set of
claims processed during CY 2009. We applied the hospital-specific CCR
to the hospital's charges at the most detailed level possible, based on
a revenue code-to-cost center crosswalk that contains a hierarchy of
CCRs used to estimate costs from charges for each revenue code. That
crosswalk is available for review and continuous comment on the CMS Web
site at: http://www.cms.gov/HospitalOutpatientPPS/03_crosswalk.asp#TopOfPage.
To ensure the completeness of the revenue code-to-cost center
crosswalk, we reviewed changes to the list of revenue codes for CY 2009
(the year of the claims data we are using to calculate the CY 2011 OPPS
proposed payment rates). For CY 2009, there were several changes to
these revenue codes. The National Uniform Billing Committee (NUBC) is
the organization that is responsible for the data specifications for
the Uniform Bill (currently the UB-04). For CY 2009, the NUBC changed
the title of revenue code series 076X from ``Specialty Room--Treatment/
Observation Room'' to ``Specialty Services'' and changed the title of
subclassification revenue code 0762 from ``Observation Room'' to
``Observation Hours''. We are not proposing to change the revenue code-
to-cost center crosswalk as a result of this change because we believe
that hospitals have historically reported charges for observation based
on hours of care and that this change reflects existing practices. In
addition, for CY 2009, NUBC removed a note that indicated that
subcategory revenue codes 0912, Behavioral Health Treatment/Services
(also see 091X, an extension of 090X), and 0913, Behavioral Health
Treatment/Services--Extension of 090X, were designed as zero-billed
revenue codes (that is, no dollar in the amount field). This change has
no impact on the revenue code-to-cost center crosswalk. We note that
the addition of revenue codes with effective dates in CY 2010 is not
relevant to this process because the revenue codes were not applicable
to claims for services furnished during CY 2009.
We calculated CCRs for the standard and nonstandard cost centers
accepted by the electronic cost report database. In general, the most
detailed level at which we calculated CCRs was the hospital-specific
departmental level. For a discussion of the hospital-specific overall
ancillary CCR calculation, we
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refer readers to the CY 2007 OPPS/ASC final rule with comment period
(71 FR 67983 through 67985). One longstanding exception to this general
methodology for calculation of CCRs used for converting charges to
costs on each claim is the calculation of median blood costs, as
discussed in section II.A.2.d.(2) of this proposed rule and which has
been our standard policy since the CY 2005 OPPS.
For the CCR calculation process, we used the same general approach
that we used in developing the final APC rates for CY 2007 and
thereafter, using the revised CCR calculation that excluded the costs
of paramedical education programs and weighted the outpatient charges
by the volume of outpatient services furnished by the hospital. We
refer readers to the CY 2007 OPPS/ASC final rule with comment period
for more information (71 FR 67983 through 67985). We first limited the
population of cost reports to only those for hospitals that filed
outpatient claims in CY 2009 before determining whether the CCRs for
such hospitals were valid.
We then calculated the CCRs for each cost center and the overall
ancillary CCR for each hospital for which we had claims data. We did
this using hospital-specific data from the Hospital Cost Report
Information System (HCRIS). We used the most recent available cost
report data, in most cases, cost reports with cost reporting periods
beginning in CY 2007. For this proposed rule, we used the most recently
submitted cost reports to calculate the CCRs to be used to calculate
median costs for the proposed CY 2011 OPPS payment rates. If the most
recent available cost report was submitted but not settled, we looked
at the last settled cost report to determine the ratio of submitted to
settled cost using the overall ancillary CCR, and we then adjusted the
most recent available submitted but not settled cost report using that
ratio. We then calculated both an overall ancillary CCR and cost
center-specific CCRs for each hospital. We used the overall ancillary
CCR referenced in section II.A.1.c. of this proposed rule for all
purposes that require use of an overall ancillary CCR.
Since the implementation of the OPPS, some commenters have raised
concerns about potential bias in the OPPS cost-based weights due to
``charge compression,'' which is the practice of applying a lower
charge markup to higher-cost services and a higher charge markup to
lower-cost services. As a result, the cost-based weights may reflect
some aggregation bias, undervaluing high-cost items and overvaluing
low-cost items when an estimate of average markup, embodied in a single
CCR, is applied to items of widely varying costs in the same cost
center.
To explore this issue, in August 2006 we awarded a contract to RTI
International (RTI) to study the effects of charge compression in
calculating the IPPS cost-based relative weights, particularly with
regard to the impact on inpatient diagnosis-related group (DRG)
payments, and to consider methods to better capture the variation in
cost and charges for individual services when calculating costs for the
IPPS relative weights across services in the same cost center. RTI
issued a report in March 2007 with its findings on charge compression,
which is available on the CMS Web site at: http://www.cms.gov/reports/downloads/Dalton.pdf. Although this report was focused largely on
charge compression in the context of the IPPS cost-based relative
weights, because several of the findings were relevant to the OPPS, we
discussed that report in the CY 2008 OPPS/ASC proposed rule (72 FR
42641 through 42643) and reiterated them in the CY 2008 OPPS/ASC final
rule with comment period (72 FR 66599 through 66602).
In August 2007, we contracted with RTI to evaluate the cost
estimation process for the OPPS relative weights because its 2007
report had concentrated on IPPS DRG cost-based relative weights. The
results of RTI's analyses had implications for both the OPPS APC cost-
based relative weights and the IPPS MS-DRG (Medicare severity) cost-
based relative weights. The RTI final report can be found on RTI's Web
site at: http://www.rti.org/reports/cms/HHSM-500-2005-0029I/PDF/Refining_Cost_to_Charge_Ratios_200807_Final.pdf. For a complete
discussion of the RTI recommendations, public comments, and our
responses, we refer readers to the CY 2009 OPPS/ASC final rule with
comment period (73 FR 68519 through 68527).
We addressed the RTI finding that there was aggregation bias in
both the IPPS and the OPPS cost estimation of expensive and inexpensive
medical supplies in the FY 2009 IPPS final rule. Specifically, we
finalized our proposal for both the OPPS and IPPS to create one cost
center for ``Medical Supplies Charged to Patients'' and one cost center
for ``Implantable Devices Charged to Patients,'' essentially splitting
the then current CCR for ``Medical Supplies and Equipment'' into one
CCR for low-cost medical supplies and another CCR for high-cost
implantable devices in order to mitigate some of the effects of charge
compression. Accordingly, in Transmittal 20 of the Provider
Reimbursement Manual, Part II (PRM-II), Chapter 36, Form CMS-2552-96,
which was issued in July 2009, we created a new subscripted Line 55.01
on Worksheet A for the ``Implantable Devices Charged to Patients'' cost
center. This new subscripted cost center, placed under the standard
line for ``Medical Supplies Charged to Patients,'' is available for use
for cost reporting periods beginning on or after May 1, 2009. A
subscripted cost center is the addition of a separate new cost center
line and description which bears a logical relationship to the standard
cost center line and is located immediately following a standard cost
center line. Subscripting a cost center line adds flexibility and cost
center expansion capability to the cost report. For example, Line 55 of
Worksheet A on Form CMS 2552-96 (the Medicare hospital cost report) is
``Medical Supplies Charged to Patients.'' The additional cost center,
which isolates the costs of ``Implantable Medical Supplies Charged to
Patients'', was created by adding subscripted Line 55.01 to Worksheet
A.
Because there is approximately a 3-year lag in the availability of
cost report data for IPPS and OPPS ratesetting purposes in a given
calendar year, we believe we will be able to use data from the revised
cost report form to estimate costs from charges for implantable devices
for the CY 2013 OPPS relative weights. For a complete discussion of the
rationale for the creation of the new cost center for ``Implantable
Devices Charged to Patients,'' public comments, and our responses, we
refer readers to the FY 2009 IPPS final rule (73 FR 48458 through
45467).
In the CY 2009 OPPS/ASC final rule with comment period, we
indicated that we would be making some OPPS-specific changes in
response to the RTI report recommendations. Specifically, these changes
included modifications to the cost reporting software and the addition
of three new nonstandard cost centers. With regard to modifying the
cost reporting preparation software in order to offer additional
descriptions for nonstandard cost centers to improve the accuracy of
reporting for nonstandard cost centers, we indicated that the change
would be made for the next release of the cost report software. These
changes have been made to the cost reporting software with the
implementation of CMS Transmittal 21, under Chapter 36 of the Provider
Reimbursement Manual--Part II, available online at http://www.cms.hhs.gov/Manuals/PBM/, which is effective for cost reporting
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periods ending on or after October 1, 2009.
We also indicated that we intended to add new nonstandard cost
centers for Cardiac Rehabilitation, Hyperbaric Oxygen Therapy, and
Lithotripsy. We note that in January 2010, CMS issued Transmittal 21
which updated the PRM-II, Chapter 36, Form CMS-2552-96. One of the
updates in this transmittal established nonstandard cost centers for
Cardiac Rehabilitation, Hyperbaric Oxygen Therapy, and Lithotripsy for
use on Worksheet A. These three new nonstandard cost centers are now
available for cost reporting periods ending on or after October 1,
2009.
Furthermore, we noted in the FY 2010 IPPS/LTCH PPS final rule (74
FR 43781 through 43782) that we were updating the cost report form to
eliminate outdated requirements, in conjunction with the Paperwork
Reduction Act (PRA), and that we had proposed actual changes to the
cost reporting form, the attending cost reporting software, and the
cost report instructions in Chapters 36 and 40 of the PRM-II. The new
draft hospital cost report Form CMS-2552-10 was published in the
Federal Register on July 2, 2009, and was subject to a 60-day review
and comment period, which ended on August 31, 2009. We received
numerous comments on the draft hospital cost report Form CMS-2552-10,
specifically regarding the creation of new cost centers from which data
might be used in the OPPS cost-based relative weights calculation. We
had proposed to create new standard cost centers for Computed
Tomography (CT), Magnetic Resonance Imaging (MRI), and Cardiac
Catheterization in Form CMS-2552-10. If these standard cost centers are
finalized, when the data become available, we would analyze the cost
and charge data to determine if it is appropriate to use those data to
create distinct CCRs from these cost centers in setting the relative
weights. For a discussion of these cost centers, we refer readers to
the FY 2011 IPPS/LTCH PPS proposed rule (75 FR 23878 through 23880).
Comments will be addressed in detail in the Federal Register notice
that will finalize Form CMS-2552-10. The revised draft of hospital cost
report Form CMS-2552-10 went on public display on April 23, 2010, and
appeared in the Federal Register on April 30, 2010 (75 FR 22810) with a
30-day public comment period. The public comment period ended on June
1, 2010.
We believe that improved cost report software, the incorporation of
new standard and nonstandard cost centers, and the elimination of
outdated requirements will improve the accuracy of the cost data
contained in the electronic cost report data files and, therefore, the
accuracy of our cost estimation processes for the OPPS relative
weights. We will continue our standard practice of examining ways in
which we can improve the accuracy of our cost estimation processes.
2. Proposed Data Development Process and Calculation of Median Costs
In this section of this proposed rule, we discuss the use of claims
to calculate proposed OPPS payment rates for CY 2011. The hospital OPPS
page on the CMS Web site on which this proposed rule is posted provides
an accounting of claims used in the development of the proposed payment
rates at: http://www.cms.gov/HospitalOutpatientPPS. The accounting of
claims used in the development of this proposed rule is included on the
CMS Web site under supplemental materials for the CY 2011 OPPS/ASC
proposed rule. That accounting provides additional detail regarding the
number of claims derived at each stage of the process. In addition,
below in this section, we discuss the file of claims that comprises the
data set that is available for purchase under a CMS data use agreement.
Our CMS Web site, http://www.cms.gov/HospitalOutpatientPPS, includes
information about purchasing the ``OPPS Limited Data Set,'' which now
includes the additional variables previously available only in the OPPS
Identifiable Data Set, including ICD-9-CM diagnosis codes and revenue
code payment amounts. This file is derived from the CY 2009 claims that
were used to calculate the proposed payment rates for the CY 2011 OPPS.
We used the methodology described in sections II.A.2.a. through
II.A.2.e. of this proposed rule to calculate the median costs we use to
establish the relative weights used in calculating the proposed OPPS
payment rates for CY 2011 shown in Addenda A and B to this proposed
rule. We refer readers to section II.A.4. of this proposed rule for a
discussion of the conversion of APC median costs to scaled payment
weights.
a. Claims Preparation
We used the CY 2009 hospital outpatient claims processed before
January 1, 2010 to calculate the median costs of APCs that underpin the
proposed relative weights for CY 2011. To begin the calculation of the
relative weights for CY 2011, we pulled all claims for outpatient
services furnished in CY 2009 from the national claims history file.
This is not the population of claims paid under the OPPS, but all
outpatient claims (including, for example, critical access hospital
(CAH) claims and hospital claims for clinical laboratory services for
persons who are neither inpatients nor outpatients of the hospital).
We then excluded claims with condition codes 04, 20, 21, and 77.
These are claims that providers submitted to Medicare knowing that no
payment would be made. For example, providers submit claims with a
condition code 21 to elicit an official denial notice from Medicare and
document that a service is not covered. We then excluded claims for
services furnished in Maryland, Guam, the U.S. Virgin Islands, American
Samoa, and the Northern Mariana Islands because hospitals in those
geographic areas are not paid under the OPPS.
We divided the remaining claims into the three groups shown below.
Groups 2 and 3 comprise the 102 million claims that contain hospital
bill types paid under the OPPS.
1. Claims that were not bill types 12X, 13X (hospital bill types),
14X (laboratory specimen bill types), or 76X (CMHC bill types). Other
bill types are not paid under the OPPS and, therefore, these claims
were not used to set OPPS payment.
2. Claims that were bill types 12X, 13X or 14X. Claims with bill
types 12X and 13X are hospital outpatient claims. Claims with bill type
14X are laboratory specimen claims, of which we use a subset for the
limited number of services in these claims that are paid under the
OPPS.
3. Claims that were bill type 76X (CMHC).
To convert charges on the claims to estimated cost, we multiplied
the charges on each claim by the appropriate hospital specific CCR
associated with the revenue code for the charge as discussed in section
II.A.1.c. of this proposed rule. We then flagged and excluded CAH
claims (which are not paid under the OPPS) and claims from hospitals
with invalid CCRs. The latter included claims from hospitals without a
CCR; those from hospitals paid an all-inclusive rate; those from
hospitals with obviously erroneous CCRs (greater than 90 or less than
.0001); and those from hospitals with overall ancillary CCRs that were
identified as outliers (3 standard deviations from the geometric mean
after removing error CCRs). In addition, we trimmed the CCRs at the
cost center (that is, departmental) level by removing the CCRs for each
cost center as outliers if they exceeded +/- 3 standard deviations from
the geometric mean. We used a four-tiered hierarchy of cost
[[Page 46198]]
center CCRs, which is the revenue code-to-cost center crosswalk, to
match a cost center to every possible revenue code appearing in the
outpatient claims that is relevant to OPPS services, with the top tier
being the most common cost center and the last tier being the default
CCR. If a hospital's cost center CCR was deleted by trimming, we set
the CCR for that cost center to ``missing'' so that another cost center
CCR in the revenue center hierarchy could apply. If no other cost
center CCR could apply to the revenue code on the claim, we used the
hospital's overall ancillary CCR for the revenue code in question as
the default CCR. For example, if a visit was reported under the clinic
revenue code but the hospital did not have a clinic cost center, we
mapped the hospital-specific overall ancillary CCR to the clinic
revenue code. The revenue code-to-cost center crosswalk is available
for inspection and comment on the CMS Web site: http://www.cms.gov/HospitalOutpatientPPS. Revenue codes that we do not use to set medians
or to model impacts are identified with an ``N'' in the revenue code-
to-cost center crosswalk.
At the February 17-18, 2010 APC Panel Meeting, the Panel
recommended that CMS present to the Data Subcommittee an analysis of
the effect of using a different lower-level threshold in the overall
CCR error trim as part of the standard methodology. The Panel members
were concerned that our current CCR trimming policy (excluding
providers with an overall ancillary CCR greater than 90 or less than
.0001 or above and then excluding remaining providers with overall
ancillary CCRs beyond +/- 3 standard deviations from the geometric
mean) could result in the exclusion of claims from providers that could
otherwise be used for ratesetting and modeling. We are accepting this
recommendation. We will study the issue and provide the relevant data
to the Data Subcommittee at an upcoming meeting.
We applied CCRs as described above to claims with bill type 12X,
13X, or 14X, excluding all claims from CAHs and hospitals in Maryland,
Guam, the U.S. Virgin Islands, American Samoa, and the Northern Mariana
Islands and claims from all hospitals for which CCRs were flagged as
invalid.
We identified claims with condition code 41 as partial
hospitalization services of hospitals and moved them to another file.
We note that the separate file containing partial hospitalization
claims is included in the files that are available for purchase as
discussed above.
We then excluded claims without a HCPCS code. We moved to another
file claims that contained nothing but influenza and pneumococcal
pneumonia (PPV) vaccines. Influenza and PPV vaccines are paid at
reasonable cost and, therefore, these claims are not used to set OPPS
rates.
We next copied line-item costs for drugs, blood, and brachytherapy
sources (the lines stay on the claim, but are copied onto another file)
to a separate file. No claims were deleted when we copied these lines
onto another file. These line-items are used to calculate a per unit
mean and median cost and a per day mean and median cost for drugs and
nonimplantable biologicals, therapeutic radiopharmaceutical agents, and
brachytherapy sources, as well as other information used to set payment
rates, such as a unit-to-day ratio for drugs.
To implement our proposed policy to redistribute some portion of
total cost for packaged drugs and biologicals to the separately payable
drugs and biologicals as acquisition and pharmacy overhead and handling
costs discussed in section V.B.3. of this proposed rule, we used the
line-item cost data for drugs and biologicals for which we had a HCPCS
code with ASP pricing information to calculate the ASP+X values, first
for all drugs and biologicals, and then for separately payable drugs
and biologicals and for packaged drugs and biologicals, respectively,
by taking the ratio of total claim cost for each group relative to
total ASP dollars (per unit of each drug or biological HCPCS code's
April 2010 ASP amount multiplied by total units for each drug or
biological in the CY 2009 claims data). These values are ASP+14 percent
(for all drugs and biologicals with HCPCS codes, whether separately
paid or packaged), ASP+0 percent (for drugs and biologicals that are
separately paid), and ASP+283 percent (for drugs and biologicals that
have HCPCS codes and that are packaged), respectively. As we discuss in
section V.B.3. of this proposed rule, we are proposing a policy to
redistribute $150 million of the total cost in our claims data for
packaged drugs and biologicals that have an associated ASP from
packaged drugs with an ASP to separately payable drugs and biologicals.
We also are proposing a policy to redistribute an additional $50
million of the total cost in our claims data for drugs and biologicals
lacking an ASP, largely for estimated costs associated with uncoded
charges billed under pharmacy revenue code series 025X (Pharmacy (also
see 063X, an extension of 025X)), 026X (IV Therapy), and 063X
(Pharmacy--Extension of 025X). We observe about $623 million for drugs
lacking an ASP in our CY 2009 claims data. This total excludes the cost
of diagnostic and therapeutic radiopharmaceuticals because they are not
reported under pharmacy revenue codes or under the pharmacy cost center
on the hospital cost report.
Removing a total of $150 million in pharmacy overhead cost from
packaged drugs and biologicals reduces the $593 million to $443
million, approximately a 25 percent reduction. Removing $50 million
from the cost of drugs lacking an ASP reduces the $623 million to $573
million, approximately an 8 percent reduction. To implement our
proposed CY 2011 policy to redistribute $150 million in claim cost from
packaged drugs and biologicals with an ASP to separately payable drugs
and biologicals and $50 million in claim cost from packaged drugs and
biologicals lacking an ASP, including uncoded pharmacy revenue code
charges, we multiplied the cost of each packaged drug or biological
with a HCPCS code and ASP pricing information in our CY 2009 claims
data by 0.75, and we multiplied all other packaged drug costs in our CY
2009 claims data, excluding those for diagnostic radiopharmaceuticals,
by 0.92. We also added the redistributed $200 million to the total cost
of separately payable drugs and biologicals in our CY 2009 claims data,
which increased the relationship between the total cost for separately
payable drugs and biologicals and ASP dollars for the same drugs and
biologicals from ASP+0 percent to ASP+6 percent. We refer readers to
section V.B.3. of this proposed rule for a complete discussion of our
proposal to pay for separately paid drugs and biologicals and pharmacy
overhead for CY 2011.
We then removed line-items that were not paid during claim
processing, presumably for a line-item rejection or denial. We added
this process to our median cost calculation methodology for the CY 2010
OPPS, as discussed in the CY 2010 OPPS/ASC final rule with comment
period (74 FR 60359). The number of edits for valid OPPS payment in the
Integrated Outpatient Code Editor (I/OCE) and elsewhere has grown
significantly in the past few years, especially with the implementation
of the full spectrum of National Correct Coding Initiative (NCCI)
edits. To ensure that we are using valid claims that represent the cost
of payable services to set payment rates, we removed line-items with an
OPPS status indicator for the claim year and a status indicator of
``S,'' ``T,'' ``V,'' or ``X'' when separately paid under the
prospective
[[Page 46199]]
year's payment system. This logic preserves charges for services that
would not have been paid in the claim year but for which some estimate
of cost is needed for the prospective year, such as services newly
proposed to come off the inpatient list for CY 2010 that were assigned
status indicator ``C'' in the claim year.
For CY 2011, we are proposing to expand the application of this
trim to exclude line-item data for pass-through drugs and biologicals
(status indicator ``G'' for CY 2009) and nonpass-through drugs and
biologicals (status indicator ``K'' for CY 2009) where the charges
reported on the claim for the line were either denied or rejected
during claims processing. Removing lines that were eligible for payment
but were not paid ensures that we are using appropriate data. The trim
avoids using cost data on lines that we believe were defective or
invalid because those rejected or denied lines did not meet the
Medicare requirements for payment. For example, edits may reject a line
for a separately paid drug because the number of units billed exceeded
the number of units that would be reasonable and, therefore, is likely
a billing error (for example, a line reporting 55 units of a drug for
which 5 units is known to be a fatal dose). For approximately 90
percent of the codes with status indicators ``G'' and ``K'' in their
claims year, to which the expansion of the trim would apply, between 0
and 10 percent of lines would be removed due to receiving zero payment.
As with our trimming in the CY 2010 OPPS/ASC final rule with comment
period (74 FR 60359) of line items with a status indicator of ``S,''
``T,'' ``V,'' or ``X'', we believe that unpaid line-items represent
services that are invalidly reported and, therefore, should not be used
for ratesetting. We believe that removing lines with valid status
indicators that were edited and not paid during claims processing
increases the accuracy of the single bills used to determine the mean
unit costs for use in the ASP+X calculation described in section V.B.3.
of this proposed rule.
b. Splitting Claims and Creation of ``Pseudo'' Single Procedure Claims
(1) Splitting Claims
We then split the remaining claims into five groups: Single majors;
multiple majors; single minors; multiple minors; and other claims.
(Specific definitions of these groups follow below.) For CY 2011, we
are proposing to continue our current policy of defining major
procedures as any HCPCS code having a status indicator of ``S,'' ``T,''
``V,'' or ``X;'' defining minor procedures as any code having a status
indicator of ``F,'' ``G,'' ``H,'' ``K,'' ``L,'' ``R,'' ``U,'' or ``N,''
and classifying ``other'' procedures as any code having a status
indicator other than one that we have classified as major or minor. For
CY 2011, we are proposing to continue assigning status indicator ``R''
to blood and blood products; status indicator ``U'' to brachytherapy
sources; status indicator ``Q1'' to all ``STVX-packaged codes;'' status
indicator ``Q2'' to all ``T-packaged codes;'' and status indicator
``Q3'' to all codes that may be paid through a composite APC based on
composite-specific criteria or paid separately through single code APCs
when the criteria are not met. As discussed in the CY 2009 OPPS/ASC
final rule with comment period (73 FR 68709), we established status
indicators ``Q1,'' ``Q2,'' and ``Q3'' to facilitate identification of
the different categories of codes. We are proposing to treat these
codes in the same manner for data purposes for CY 2011 as we have
treated them since CY 2008. Specifically, we are proposing to continue
to evaluate whether the criteria for separate payment of codes with
status indicator ``Q1'' or ``Q2'' are met in determining whether they
are treated as major or minor codes. Codes with status indicator ``Q1''
or ``Q2'' are carried through the data either with status indicator
``N'' as packaged or, if they meet the criteria for separate payment,
they are given the status indicator of the APC to which they are
assigned and are considered as ``pseudo'' single procedure claims for
major codes. Codes assigned status indicator ``Q3'' are paid under
individual APCs unless they occur in the combinations that qualify for
payment as composite APCs and, therefore, they carry the status
indicator of the individual APC to which they are assigned through the
data process and are treated as major codes during both the split and
``pseudo'' single creation process. The calculation of the median costs
for composite APCs from multiple procedure major claims is discussed in
section II.A.2.e. of this proposed rule.
Specifically, we divided the remaining claims into the following
five groups:
1. Single Procedure Major Claims: Claims with a single separately
payable procedure (that is, status indicator ``S,'' ``T,'' ``V,'' or
``X,'' which includes codes with status indicator ``Q3''); claims with
one unit of a status indicator ``Q1'' code (``STVX-packaged'') where
there was no code with status indicator ``S,'' ``T,'' ``V,'' or ``X''
on the same claim on the same date; or claims with one unit of a status
indicator ``Q2'' code (``T-packaged'') where there was no code with a
status indicator ``T'' on the same claim on the same date.
2. Multiple Procedure Major Claims: Claims with more than one
separately payable procedure (that is, status indicator ``S,'' ``T,''
``V,'' or ``X,'' which includes codes with status indicator ``Q3''), or
multiple units of one payable procedure. These claims include those
codes with a status indicator ``Q2'' code (``T-packaged'') where there
was no procedure with a status indicator ``T'' on the same claim on the
same date of service but where there was another separately paid
procedure on the same claim with the same date of service (that is,
another code with status indicator ``S,'' ``V,'' or ``X''). We also
include, in this set, claims that contained one unit of one code when
the bilateral modifier was appended to the code and the code was
conditionally or independently bilateral. In these cases, the claims
represented more than one unit of the service described by the code,
notwithstanding that only one unit was billed.
3. Single Procedure Minor Claims: Claims with a single HCPCS code
that was assigned status indicator ``F,'' ``G,'' ``H,'' ``K,'' ``L,''
``R,'' ``U,'' or ``N'' and not status indicator ``Q1'' (``STVX-
packaged'') or status indicator ``Q2'' (``T-packaged'') code.
4. Multiple Procedure Minor Claims: Claims with multiple HCPCS
codes that are assigned status indicator ``F,'' ``G,'' ``H,'' ``K,''
``L,'' ``R,'' ``U,'' or ``N;'' claims that contain more than one code
with status indicator ``Q1'' (``STVX-packaged'') or more than one unit
of a code with status indicator ``Q1'' but no codes with status
indicator ``S,'' ``T,'' ``V,'' or ``X'' on the same date of service; or
claims that contain more than one code with status indicator ``Q2'' (T-
packaged), or ``Q2'' and ``Q1,'' or more than one unit of a code with
status indicator ``Q2'' but no code with status indicator ``T'' on the
same date of service.
5. Non-OPPS Claims: Claims that contain no services payable under
the OPPS (that is, all status indicators other than those listed for
major or minor status). These claims were excluded from the files used
for the OPPS. Non-OPPS claims have codes paid under other fee
schedules, for example, durable medical equipment or clinical
laboratory tests, and do not contain a code for a separately payable or
packaged OPPS service. Non-OPPS claims include claims for therapy
services paid sometimes under the OPPS but billed, in these non-OPPS
cases, with revenue codes indicating that the therapy services would be
paid under the Medicare Physician Fee Schedule (MPFS).
[[Page 46200]]
The claims listed in numbers 1, 2, 3, and 4 above are included in
the data file that can be purchased as described above. Claims that
contain codes to which we have assigned status indicators ``Q1''
(``STVX-packaged'') and ``Q2'' (``T-packaged'') appear in the data for
the single major file, the multiple major file, and the multiple minor
file used in this proposed rule. Claims that contain codes to which we
have assigned status indicator ``Q3'' (composite APC members) appear in
both the data of the single and multiple major files used in this
proposed rule, depending on the specific composite calculation.
(2) Creation of ``Pseudo'' Single Procedure Claims
To develop ``pseudo'' single procedure claims for this proposed
rule, we examined both the multiple procedure major claims and the
multiple procedure minor claims. We first examined the multiple major
procedure claims for dates of service to determine if we could break
them into ``pseudo'' single procedure claims using the dates of service
for all lines on the claim. If we could create claims with single major
procedures by using dates of service, we created a single procedure
claim record for each separately payable procedure on a different date
of service (that is, a ``pseudo'' single).
We also used the bypass codes listed earlier in Table 1 and
discussed in section II.A.1.b. of this proposed rule to remove
separately payable procedures that we determined contained limited or
no packaged costs or that were otherwise suitable for inclusion on the
bypass list from a multiple procedure bill. As discussed above, we
ignore the ``overlap bypass codes,'' that is, those HCPCS codes that
are both on the bypass list and are members of the multiple imaging
composite APCs, in this initial assessment for ``pseudo'' single
procedure claims. The proposed CY 2011 ``overlap bypass codes'' are
listed in Table 1 in section II.A.1.b. of this proposed rule. When one
of the two separately payable procedures on a multiple procedure claim
was on the bypass list, we split the claim into two ``pseudo'' single
procedure claim records. The single procedure claim record that
contained the bypass code did not retain packaged services. The single
procedure claim record that contained the other separately payable
procedure (but no bypass code) retained the packaged revenue code
charges and the packaged HCPCS code charges. We also removed lines that
contained multiple units of codes on the bypass list and treated them
as ``pseudo'' single procedure claims by dividing the cost for the
multiple units by the number of units on the line. Where one unit of a
single, separately payable procedure code remained on the claim after
removal of the multiple units of the bypass code, we created a
``pseudo'' single procedure claim from that residual claim record,
which retained the costs of packaged revenue codes and packaged HCPCS
codes. This enabled us to use claims that would otherwise be multiple
procedure claims and could not be used.
We then assessed the claims to determine if the criteria for the
multiple imaging composite APCs, discussed in section II.A.2.e.(5) of
this proposed rule, were met. Where the criteria for the imaging
composite APCs were met, we created a ``single session'' claim for the
applicable imaging composite service and determined whether we could
use the claim in ratesetting. For HCPCS codes that are both
conditionally packaged and are members of a multiple imaging composite
APC, we first assessed whether the code would be packaged and, if so,
the code ceased to be available for further assessment as part of the
composite APC. Because the packaged code would not be a separately
payable procedure, we considered it to be unavailable for use in
setting the composite APC median cost. Having identified ``single
session'' claims for the imaging composite APCs, we reassessed the
claim to determine if, after removal of all lines for bypass codes,
including the ``overlap bypass codes,'' a single unit of a single
separately payable code remained on the claim. If so, we attributed the
packaged costs on the claim to the single unit of the single remaining
separately payable code other than the bypass code to create a
``pseudo'' single procedure claim. We also identified line-items of
overlap bypass codes as a ``pseudo'' single procedure claim. This
allowed us to use more claims data for ratesetting purposes.
We also examined the multiple procedure minor claims to determine
whether we could create ``pseudo'' single procedure claims.
Specifically, where the claim contained multiple codes with status
indicator ``Q1'' (``STVX-packaged'') on the same date of service or
contained multiple units of a single code with status indicator ``Q1,''
we selected the status indicator ``Q1'' HCPCS code that had the highest
CY 2010 relative weight, set the units to one on that HCPCS code to
reflect our policy of paying only one unit of a code with a status
indicator of ``Q1.'' We then packaged all costs for the following into
a single cost for the ``Q1'' HCPCS code that had the highest CY 2010
relative weight to create a ``pseudo'' single procedure claim for that
code: Additional units of the status indicator ``Q1'' HCPCS code with
the highest CY 2010 relative weight; other codes with status indicator
``Q1''; and all other packaged HCPCS codes and packaged revenue code
costs. We changed the status indicator for selected codes from the data
status indicator of ``N'' to the status indicator of the APC to which
the selected procedure was assigned for further data processing and
considered this claim as a major procedure claim. We used this claim in
the calculation of the APC median cost for the status indicator ``Q1''
HCPCS code.
Similarly, where a multiple procedure minor claim contained
multiple codes with status indicator ``Q2'' (``T-packaged'') or
multiple units of a single code with status indicator ``Q2,'' we
selected the status indicator ``Q2'' HCPCS code that had the highest CY
2010 relative weight, set the units to one on that HCPCS code to
reflect our policy of paying only one unit of a code with a status
indicator of ``Q2.'' We then packaged all costs for the following into
a single cost for the ``Q2'' HCPCS code that had the highest CY 2010
relative weight to create a ``pseudo'' single procedure claim for that
code: Additional units of the status indicator ``Q2'' HCPCS code with
the highest CY 2010 relative weight; other codes with status indicator
``Q2;'' and other packaged HCPCS codes and packaged revenue code costs.
We changed the status indicator for the selected code from a data
status indicator of ``N'' to the status indicator of the APC to which
the selected code was assigned, and we considered this claim as a major
procedure claim.
Lastly, where a multiple procedure minor claim contained multiple
codes with status indicator ``Q2'' (``T-packaged'') and status
indicator ``Q1'' (``STVX-packaged''), we selected the status indicator
``Q2'' HCPCS code (``T-packaged'') that had the highest relative weight
for CY 2010 and set the units to one on that HCPCS code to reflect our
policy of paying only one unit of a code with a status indicator of
``Q2.'' We then packaged all costs for the following into a single cost
for the selected (``T packaged'') HCPCS code to create a ``pseudo''
single procedure claim for that code: Additional units of the status
indicator ``Q2'' HCPCS code with the highest CY 2010 relative weight;
other codes with status indicator ``Q2;'' codes with status indicator
``Q1'' (``STVX-packaged''); and other packaged HCPCS codes and packaged
revenue code costs. We favor status indicator ``Q2'' over ``Q1''
[[Page 46201]]
HCPCS codes because ``Q2'' HCPCS codes have higher CY 2010 relative
weights. If a status indicator ``Q1'' HCPCS code had a higher CY 2010
relative weight, it would become the primary code for the simulated
single bill process. We changed the status indicator for the selected
status indicator ``Q2'' (``T-packaged'') code from a data status
indicator of ``N'' to the status indicator of the APC to which the
selected code was assigned and we considered this claim as a major
procedure claim.
In public comments received on the CY 2010 OPPS/ASC proposed rule,
a public commenter suggested that CMS could use more claims data to
develop medians for these conditionally packaged codes if CMS applied
the ``pseudo'' single creation process to the conditionally packaged
codes in the multiple major claims that still contained unusable data.
We agree and, for this CY 2011 OPPS/ASC proposed rule, we are proposing
to use the otherwise unusable multiple procedure claims data that
remain after the standard pseudo single creation process is applied to
them, in order to create more pseudo single procedure claims. We would
do this by treating the conditionally packaged codes that do not meet
the criteria for packaging as if they were separately payable major
codes and applying the pseudo single process to the claims data to
create single procedure claims from them if they meet the criteria for
single procedure claims. Conditionally packaged codes are identified
using status indicators ``Q1'' and ``Q2,'' and are described in section
XIII.A.1. of this proposed rule. Using the February 2010 APC Panel
data, we estimate that the impact of adding this proposed additional
step to the pseudo single creation process would result in a small
increase in the number of claims usable for ratesetting in most cases,
but with more significant increases of between 5 to 10 percent of
claims for a few codes. For most of the codes affected by adding this
proposed additional step to the ``pseudo'' single creation process, we
found no significant changes to the APC medians. Some HCPCS codes do
experience some fluctuations, with the impact of additional claims
causing their APC median to decrease. We believe that this change is
consistent with our goal of using more available data from within the
existing set of claims information and results in a more accurate
estimation of the APC median cost for conditionally packaged services.
We excluded those claims that we were not able to convert to single
procedure claims even after applying all of the techniques for creation
of ``pseudo'' single procedure claims to multiple procedure major and
to multiple procedure minor claims. As has been our practice in recent
years, we also excluded claims that contained codes that were viewed as
independently or conditionally bilateral and that contained the
bilateral modifier (Modifier 50 (Bilateral procedure)) because the
line-item cost for the code represented the cost of two units of the
procedure, notwithstanding that hospitals billed the code with a unit
of one.
c. Completion of Claim Records and Median Cost Calculations
We then packaged the costs of packaged HCPCS codes (codes with
status indicator ``N'' listed in Addendum B to this proposed rule and
the costs of those lines for codes with status indicator ``Q1'' or
``Q2'' when they are not separately paid), and the costs of the
services reported under packaged revenue codes in Table 3 that appeared
on the claim without a HCPCS code into the cost of the single major
procedure remaining on the claim.
As noted in the CY 2008 OPPS/ASC final rule with comment period (72
FR 66606), for the CY 2008 OPPS, we adopted an APC Panel recommendation
that CMS should review the final list of packaged revenue codes for
consistency with OPPS policy and ensure that future versions of the I/
OCE edit accordingly. As we have in the past, we will continue to
compare the final list of packaged revenue codes that we adopt for CY
2011 to the revenue codes that the I/OCE will package for CY 2011 to
ensure consistency.
In the CY 2009 OPPS/ASC final rule with comment period (73 FR
68531), we replaced the NUBC standard abbreviations for the revenue
codes listed in Table 2 of the CY 2009 OPPS/ASC proposed rule with the
most current NUBC descriptions of the revenue code categories and
subcategories to better articulate the meanings of the revenue codes
without changing the proposed list of revenue codes. In the CY 2010
OPPS/ASC final rule with comment period (74 FR 60362 through 60363), we
finalized changes to the packaged revenue code list based on our
examination of the updated NUBC codes and public comment to the CY 2010
proposed list of packaged revenue codes. For this CY 2011 OPPS proposed
rule, we reviewed the changes to revenue codes that were effective
during CY 2009 for purposes of determining the charges reported with
revenue codes but without HCPCS codes that we would propose to package
for the CY 2011 OPPS. As we discuss in the context of the revenue code-
to-cost center crosswalk in section II.A.1.c. of this proposed rule,
for CY 2009, the NUBC changed the title of revenue code series 076x
from ``Specialty Room--Treatment/Observation Room'' to ``Specialty
Services'' and changed the title of subclassification revenue code 0762
from ``Observation Room'' to ``Observation Hours''. In addition, the
NUBC deleted an explanatory note following revenue code 0913,
``Behavioral Health Treatment Services--Extension of 090x.'' We are
proposing to revise the title for revenue code 076x, Observation Hours,
in Table 3 to comport to the CY 2009 revenue code title for revenue
code 076x. There is no need to revise the table as a result of the
deletion of the explanatory note. We believe that the charges reported
under the revenue codes listed in Table 3 continue to reflect ancillary
and supportive services for which hospitals report charges without
HCPCS codes. Therefore, we are proposing to continue to package the
costs that we derive from the charges reported under the revenue codes
displayed in Table 3 below for purposes of calculating the median costs
on which the CY 2011 OPPS would be based.
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In accordance with our longstanding policy, we are proposing to
continue to exclude: (1) Claims that had zero costs after summing all
costs on the claim; and (2) claims containing packaging flag number 3.
Effective for services furnished on or after July 1, 2004, the I/OCE
assigned packaging flag number 3 to claims on which hospitals submitted
token charges less than $1.01 for a service with status indicator ``S''
or ``T'' (a major separately payable service under the OPPS) for which
the fiscal intermediary or MAC was required to allocate the sum of
charges for services with a status indicator equaling ``S'' or ``T''
based on the relative weight of the APC to which each code was
assigned. We do not believe that these charges, which were token
charges as submitted by the hospital, are valid reflections of hospital
resources. Therefore, we deleted these claims. We also deleted claims
for which the charges equaled the revenue center payment (that is, the
Medicare payment) on the assumption that where the charge equaled the
payment, to apply a CCR to the charge would not yield a valid estimate
of relative provider cost. We are proposing to continue these processes
for the CY 2011 OPPS.
For the remaining claims, we then standardized 60 percent of the
costs of the claim (which we have previously determined to be the
labor-related portion) for geographic differences in labor input costs.
We made this adjustment by determining the wage index that applied to
the hospital that furnished the service and dividing the cost for the
separately paid HCPCS code furnished by the hospital by that wage
index. As has been our policy since the inception of the OPPS, we are
proposing to use the pre-reclassified wage indices for standardization
because we believe that they better reflect the true costs of items and
services in the area in which the hospital is located than the post-
reclassification wage indices and, therefore, would result in the most
accurate unadjusted median costs.
In accordance with our longstanding practice, we also excluded
single and pseudo single procedure claims for
[[Page 46204]]
which the total cost on the claim was outside 3 standard deviations
from the geometric mean of units for each HCPCS code on the bypass list
(because, as discussed above, we used claims that contain multiple
units of the bypass codes).
After removing claims for hospitals with error CCRs, claims without
HCPCS codes, claims for immunizations not covered under the OPPS, and
claims for services not paid under the OPPS, approximately 98 million
claims were left. Using these 98 million claims, we created
approximately 96 million single and ``pseudo'' single procedure claims,
of which we used 95 million single bills (after trimming out
approximately 696,000 claims as discussed above in this section) in the
proposed CY 2011 median development and ratesetting.
We used these claims to calculate the proposed CY 2011 median costs
for each separately payable HCPCS code and each APC. The comparison of
HCPCS code-specific and APC medians determines the applicability of the
2 times rule. Section 1833(t)(2) of the Act provides that, subject to
certain exceptions, the items and services within an APC group cannot
be considered comparable with respect to the use of resources if the
highest median (or mean cost, if elected by the Secretary) for an item
or service in the group is more than 2 times greater than the lowest
median cost for an item or service within the same group (the 2 times
rule). Finally, we reviewed the median costs for the services for which
we are proposing to pay separately under this proposed rule, and we
reassigned HCPCS codes to different APCs where it was necessary to
ensure clinical and resource homogeneity within the APCs. Section III.
of this proposed rule includes a discussion of many of the HCPCS code
assignment changes that resulted from examination of the median costs
and for other reasons. The APC medians were recalculated after we
reassigned the affected HCPCS codes. Both the HCPCS code-specific
medians and the APC medians were weighted to account for the inclusion
of multiple units of the bypass codes in the creation of ``pseudo''
single procedure claims.
As we discuss in sections II.A.2 d. and II.A.2.e. and in section
X.B. of this proposed rule, in some cases, APC median costs are
calculated using variations of the process outlined above.
Specifically, section II.A.2.d. of this proposed rule addresses the
proposed calculation of single APC criteria-based median costs. Section
II.A.2.e. of this proposed rule discusses the proposed calculation of
composite APC criteria-based median costs. Section X.B. of this
proposed rule addresses the methodology for calculating the proposed
median cost for partial hospitalization services.
At the February 2010 APC Panel Meeting, we provided the APC Panel a
list of all APCs decreasing by more than 5 percent and increasing by
more than 15 percent when comparing the proposed CY 2011 median costs
based on data available for the February 2010 APC Panel meeting from CY
2009 claims processed through September 30, 2009, to those based on CY
2010 OPPS/ASC final rule data (CY 2008 claims). The APC Panel reviewed
these fluctuations in the APC median costs but did not express
particular concerns with the median cost changes.
As we stated earlier, at the February 2010 APC Panel Meeting, the
APC Panel also recommended that the Data Subcommittee continue its
work. We are proposing to accept that recommendation.
d. Proposed Calculation of Single Procedure APC Criteria-Based Median
Costs
(1) Device-Dependent APCs
Device-dependent APCs are populated by HCPCS codes that usually,
but not always, require that a device be implanted or used to perform
the procedure. For a full history of how we have calculated payment
rates for device-dependent APCs in previous years and a detailed
discussion of how we developed the standard device-dependent APC
ratesetting methodology, we refer readers to the CY 2008 OPPS/ASC final
rule with comment period (72 FR 66739 through 66742). Overviews of the
procedure-to-device edits and device-to-procedure edits used in
ratesetting for device-dependent APCs are available in the CY 2005 OPPS
final rule with comment period (69 FR 65761 through 65763) and the CY
2007 OPPS/ASC final rule with comment period (71 FR 68070 through
68071).
For CY 2011, we are proposing to continue to use the standard
methodology for calculating median costs for device-dependent APCs that
was finalized in the CY 2010 OPPS/ASC final rule with comment period
(74 FR 60365). This methodology utilizes claims data that generally
represent the full cost of the required device. Specifically, we are
proposing to calculate the median costs for device-dependent APCs for
CY 2011 using only the subset of single procedure claims from CY 2009
claims data that pass the procedure-to-device and device-to-procedure
edits; do not contain token charges (less than $1.01) for devices; do
not contain the ``FB'' modifier signifying that the device was
furnished without cost to the provider, supplier, or practitioner, or
where a full credit was received; and do not contain the ``FC''
modifier signifying that the hospital received partial credit for the
device. The ``FC'' modifier became effective January 1, 2008, and was
present for the first time on claims that were used in OPPS ratesetting
for CY 2010. We continue to believe the standard methodology for
calculating median costs for device-dependent APCs gives us the most
appropriate proposed median costs for device-dependent APCs in which
the hospital incurs the full cost of the device.
The median costs for the majority of device-dependent APCs that are
calculated using the CY 2011 proposed rule claims data are generally
stable, with most median costs increasing moderately compared to the
median costs upon which the CY 2010 OPPS payment rates were based.
However, the median costs for APC 0225 (Implantation of Neurostimulator
Electrodes, Cranial Nerve) and APC 0418 (Insertion of Left Ventricular
Pacing Electrode) demonstrate significant fluctuation. Specifically,
the proposed CY 2011 median cost for APC 0225 increased approximately
40 percent compared to its final CY 2010 median cost, while the
proposed CY 2011 median cost for APC 0418, which had increased
approximately 53 percent from CY 2009 to CY 2010, showed a decrease of
approximately 27 percent based on the claims data available for this CY
2011 proposed rule. We believe the fluctuations in median costs for
these two APCs are a consequence of the small number of single bills
upon which the median costs are based and the small number of providers
of these services. As we have stated in the past, some fluctuation in
relative costs from year to year is to be expected in a prospective
payment system for low volume device-dependent APCs, particularly where
there are small numbers of single bills from a small number of
providers. The additional single bills available for ratesetting in the
CY 2011 final rule data and updated cost report data may result in less
fluctuation in the median costs for these APCs for CY 2011.
Table 4 below lists the APCs for which we are proposing to use our
standard device-dependent APC ratesetting methodology for CY 2011. We
refer readers to Addendum A to this proposed rule for the proposed
payment rates for these APCs.
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(2) Blood and Blood Products
Since the implementation of the OPPS in August 2000, we have made
separate payments for blood and blood products through APCs rather than
packaging payment for them into payments for the procedures with which
they are administered. Hospital payments for the costs of blood and
blood products, as well as for the costs of collecting, processing, and
storing blood and blood products, are made through the OPPS payments
for specific blood product APCs.
For CY 2011, we are proposing to continue to establish payment
rates for blood and blood products using our blood-specific CCR
methodology, which utilizes actual or simulated CCRs from the most
recently available hospital cost reports to convert hospital charges
for blood and blood products to costs. This methodology has been our
standard ratesetting methodology for blood and blood products since CY
2005. It was developed in response to data analysis indicating that
there was a significant difference in CCRs for those hospitals with and
without blood-specific cost centers, and past comments indicating that
the former OPPS policy of defaulting to the overall hospital CCR for
hospitals not reporting a blood-specific cost center often resulted in
an underestimation of the true hospital costs for blood and blood
products. Specifically, in order to address the differences in CCRs and
to better reflect hospitals' costs, we are proposing to continue to
simulate blood CCRs for each hospital that does not report a blood cost
center by calculating the ratio of the blood-specific CCRs to
hospitals' overall CCRs for those hospitals that do report costs and
charges for blood cost centers. We would then apply this mean ratio to
the overall CCRs of hospitals not reporting costs and charges for blood
cost centers on their cost reports in order to simulate blood-specific
CCRs for those hospitals. We calculated the median costs upon which the
proposed CY 2011 payment rates for blood and blood products are based
using the actual blood-specific CCR for hospitals that reported costs
and charges for a blood cost center and a hospital-specific simulated
blood-specific CCR for hospitals that did not report costs and charges
for a blood cost center.
We continue to believe the hospital-specific, blood-specific CCR
methodology better responds to the absence of a blood-specific CCR for
a hospital than alternative methodologies, such as defaulting to the
overall hospital CCR or applying an average blood-specific CCR across
hospitals. Because this methodology takes into account the unique
charging and cost accounting structure of each provider, we believe
that it yields more accurate estimated costs for these products. We
believe that continuing with this methodology in CY 2011 would result
in median costs for blood and blood products that appropriately reflect
the relative estimated costs of these products for hospitals without
blood cost centers and, therefore, for these blood products in general.
We refer readers to Addendum B to this proposed rule for the
proposed CY 2011 payment rates for blood and blood products, which are
identified with status indicator ``R.'' For more detailed discussion of
the blood-specific CCR methodology, we refer readers to the CY 2005
OPPS proposed rule (69 FR 50524 through 50525). For a full history of
OPPS payment for blood and blood products, we refer readers to the CY
2008 OPPS/ASC final rule with comment period (72 FR 66807 through
66810).
(3) Single Allergy Tests
We are proposing to continue with our methodology of
differentiating single allergy tests (``per test'') from multiple
allergy tests (``per visit'') by assigning these services to two
different APCs to provide accurate payments for these tests in CY 2011.
Multiple allergy tests are currently assigned to APC 0370 (Allergy
Tests), with a median cost calculated based on the standard OPPS
methodology. We provided billing guidance in CY 2006 in Transmittal 804
(issued on January 3, 2006) specifically clarifying that hospitals
should report charges for the CPT codes that describe single allergy
tests to reflect charges ``per test'' rather than ``per visit'' and
should bill the appropriate number of units (as defined in the CPT code
descriptor) of these CPT codes to describe all of the tests provided.
Our CY 2009 claims data available for this proposed rule for APC 0381
do not reflect improved and more consistent hospital billing practices
of ``per test'' for single allergy tests. The median cost of APC 0381,
calculated for this proposed rule according to the standard single
claims OPPS methodology, is approximately $52, significantly higher
than the CY 2010 median cost of APC 0381 of approximately $29
calculated according to the ``per unit'' methodology, and greater than
we would expect for these procedures that are to be reported ``per
test'' with the appropriate number of units. Some claims for single
allergy tests still appear to provide charges that represent a ``per
visit'' charge, rather than a ``per test'' charge. Therefore,
consistent with our payment policy for single allergy tests since CY
2006, we are proposing to calculate a ``per unit'' median cost for APC
0381, based upon 595 claims containing multiple units or multiple
occurrences of a single CPT code. The proposed CY 2011 median cost for
APC 0381 using the ``per unit'' methodology is approximately $29. For a
full discussion of this methodology, we refer readers to the CY 2008
OPPS/ASC final rule with comment period (72 FR 66737).
(4) Hyperbaric Oxygen Therapy (APC 0659)
Since the implementation of OPPS in August 2000, the OPPS has
recognized HCPCS code C1300 (Hyperbaric oxygen under pressure, full
body chamber, per 30 minute interval) for hyperbaric oxygen therapy
(HBOT) provided in the hospital outpatient setting. In the CY 2005
final rule with comment period (69 FR 65758 through 65759), we
finalized a ``per unit'' median cost calculation for APC 0659
(Hyperbaric Oxygen) using only claims with multiple units or multiple
occurrences of HCPCS code C1300 because delivery of a typical HBOT
service requires more than 30 minutes. We observed that claims with
only a single occurrence of the code were anomalies, either because
they reflected terminated sessions or because they were incorrectly
coded with a single unit. In the same rule, we also established that
HBOT would not generally be furnished with additional services that
might be packaged under the standard OPPS APC median cost methodology.
This enabled us to use claims with multiple units or multiple
occurrences. Finally, we also used each hospital's overall CCR to
estimate costs for HCPCS code C1300 from billed charges rather than the
CCR for the respiratory therapy or other departmental cost centers. The
public comments on the CY 2005 OPPS proposed rule effectively
demonstrated that hospitals report the costs and charges for HBOT in a
wide variety of cost centers. Since CY 2005, we have used this
methodology to estimate the median cost for HBOT. The median costs of
HBOT using this methodology have been relatively stable for the last 5
years. For CY 2011, we are proposing to continue using the same
methodology to estimate a ``per unit'' median cost for HCPCS code
C1300. This methodology results in a proposed APC median cost of
approximately $109 using 328,960 claims with multiple units or multiple
occurrences for HCPCS code C1300 for CY 2011.
[[Page 46207]]
(5) Payment for Ancillary Outpatient Services When Patient Expires (APC
0375)
In the November 1, 2002 final rule with comment period (67 FR
66798), we discussed the creation of the new HCPCS modifier -CA to
address situations where a procedure on the OPPS inpatient list must be
performed to resuscitate or stabilize a patient (whose status is that
of an outpatient) with an emergent, life-threatening condition, and the
patient dies before being admitted as an inpatient. HCPCS modifier -CA
is defined as a procedure payable only in the inpatient setting when
performed emergently on an outpatient who expires prior to admission.
In Transmittal A-02-129, issued on January 3, 2003, we instructed
hospitals on the use of this modifier. For a complete description of
the history of the policy and the development of the payment
methodology for these services, we refer readers to the CY 2007 OPPS/
ASC final rule with comment period (71 FR 68157 through 68158).
For CY 2011, we are proposing to continue to use our established
ratesetting methodology for calculating the median cost of APC 0375
(Ancillary Outpatient Services When Patient Expires) and to continue to
make one payment under APC 0375 for the services that meet the specific
conditions for using HCPCS modifier -CA. We are proposing to calculate
the relative payment weight for APC 0375 by using all claims reporting
a status indicator ``C'' (inpatient procedures) appended with HCPCS
modifier -CA, using estimated costs from claims data for line-items
with a HCPCS code assigned to status indicators ``G,'' ``H,'' ``K,''
``N,'' ``Q1,'' ``Q2,'' ``Q3,'' ``R,'' ``S,'' ``T,'' ``U,'' ``V,'' and
``X'' and charges for packaged revenue codes without a HCPCS code (we
refer readers to section XIII.A.1. of this proposed rule for a complete
listing of status indicators). We continue to believe that this
methodology results in the most appropriate aggregate median cost for
the ancillary services provided in these unusual clinical situations.
We believe that hospitals are reporting the HCPCS modifier -CA
according to the policy initially established in CY 2003. We note that
the claims frequency for APC 0375 has been relatively stable over the
past few years. Although the median cost for APC 0375 has increased,
the median in the CY 2009 OPPS claims data used for development of
proposed rates for CY 2011 was only slightly higher than that for CY
2010. Variation in the median cost for APC 0375 is expected because of
the small number of claims and because the specific cases are grouped
by the presence of the HCPCS modifier -CA appended to an inpatient
procedure and not according to the standard APC criteria of clinical
and resource homogeneity. Cost variation for APC 0375 from year to year
is anticipated and acceptable as long as hospitals continue judicious
reporting of the HCPCS modifier -CA. Table 5 below shows the number of
claims and the final median costs for APC 0375 for CYs 2007, 2008,
2009, and 2010. For CY 2011, we are proposing a median cost of
approximately $6,566 for APC 0375 based on 117 claims.
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(6) Pulmonary Rehabilitation
Section 144(a)(1) of Public Law 110-275 (MIPPA) added section
1861(fff) to the Act to provide Medicare Part B coverage and payment
for a comprehensive program of pulmonary rehabilitation services
furnished to beneficiaries with chronic obstructive pulmonary disease,
effective January 1, 2010. Accordingly, in the CY 2010 OPPS/ASC final
rule with comment period, we established a policy to pay for pulmonary
rehabilitation (PR) services furnished as a part of the comprehensive
PR program benefit (74 FR 60567). We created new HCPCS code G0424
(Pulmonary rehabilitation, including exercise (includes monitoring),
one hour, per session, up to two sessions per day) and assigned it to
new APC 0102 (Level II Pulmonary Treatment).
For CY 2011, we are proposing to continue to require hospitals to
report PR services provided under the comprehensive PR benefit in
section 1861(fff) of the Act using HCPCS code G0424. We also are
proposing to continue to use the methodology described in the CY 2010
OPPS/ASC final rule with comment period (74 FR 60567 through 60570) to
calculate the median cost on which the proposed payment rate for CY
2011 is based. Specifically, we are proposing to continue to assign
HCPCS code G0424 to APC 0102 and to calculate a median ``per session''
cost simulated from historical hospital claims data for similar
pulmonary therapy services for the CY 2011 OPPS.
To simulate the proposed ``per session'' median cost of HCPCS code
G0424 from claims data for existing services, we used only claims that
contained at least one unit of HCPCS code G0239 (Therapeutic procedures
to improve respiratory function or increase strength or endurance of
respiratory muscles, two or more individuals (includes monitoring)),
the group code that is without limitation on time duration, and one
unit of HCPCS code G0237 (Therapeutic procedures to increase strength
or endurance of respiratory muscles, face to face, one on one, each 15
minutes (includes monitoring)) or G0238 (Therapeutic procedures to
improve respiratory function, other than described by G0237, one on
one, face to face, per 15 minutes (includes monitoring)), the
individual, face-to-face codes that report 15 minutes of service on the
same date of service. We continue to believe that patients in a PR
program would typically receive individual and group services in each
session of
[[Page 46208]]
approximately 1 hour in duration. This proposal is consistent with
public comments on the CY 2010 OPPS/ASC proposed rule that were
addressed in the CY 2010 OPPS/ASC final rule with comment period (74 FR
60569) that suggested that PR is often provided in group sessions in
the HOPD, although patients commonly require additional one-on-one care
in order to fully participate in the program. We note that our use of
``per session'' claims reporting one unit of HCPCS code G0237 or G0238
and one unit of HCPCS code G0239 in this simulation methodology is also
consistent with our overall finding of approximately 2.4 service units
of the HCPCS G-codes per day on a single date of service, usually
consisting of both individual and group services, for patients
receiving pulmonary therapy services in the HOPD based upon CY 2008
claims used for CY 2010 OPPS final rule ratesetting. We continue to
believe that the typical session of PR is 1 hour based on public
comments that indicated that a session of PR is typically 1 hour and
based on our findings that the most commonly reported HCPCS code for
pulmonary treatment is HCPCS code G0239, which has no time definition
for this group service.
In the calculation of the proposed median cost for APC 0102, we
included all costs of the related tests and assessment services,
including CPT codes 94620 (Pulmonary stress testing, simple (e.g. 6-
minute walk test, prolonged exercise test for bronchospasm with pre-
and post-spirometry and oximetry)), 94664 (Demonstration and/or
evaluation of patient utilization of an aerosol generator, nebulizer,
metered dose inhaler or IPPB device), and 94667 (Manipulation chest
wall, such as cupping, percussing, and vibration to facilitate lung
function; initial demonstration and/or evaluation and all the costs of
all CPT codes for established patient clinic visits) on the same date
of service as the HCPCS codes in the claims we used to simulate the
median cost for HCPCS code G0424, which is the only HCPCS code in APC
0102. After identifying these ``per session'' claims, which we believe
represent 1 hour of care, we summed the costs and calculated the median
cost for the set of selected claims. In light of the cost and clinical
similarities of PR and the existing services described by HCPCS codes
G0237, G0238, and G0239 and the CPT codes for related assessments and
tests, and the significant number of ``per session'' hospital claims we
found, we are confident that the proposed simulated median cost for
HCPCS code G0424 and APC 0102 of approximately $68 is a valid estimate
of the expected hospital cost of a PR session. We note that this
proposed median cost is higher than the CY 2010 final rule median cost
for HCPCs code G0424 and APC 0102 of approximately $50 on which the CY
2010 payment is based.
e. Proposed Calculation of Composite APC Criteria-Based Median Costs
As discussed in the CY 2008 OPPS/ASC final rule with comment period
(72 FR 66613), we believe it is important that the OPPS enhance
incentives for hospitals to provide only necessary, high quality care
and to provide that care as efficiently as possible. For CY 2008, we
developed composite APCs to provide a single payment for groups of
services that are typically performed together during a single clinical
encounter and that result in the provision of a complete service.
Combining payment for multiple independent services into a single OPPS
payment in this way enables hospitals to manage their resources with
maximum flexibility by monitoring and adjusting the volume and
efficiency of services themselves. An additional advantage to the
composite APC model is that we can use data from correctly coded
multiple procedure claims to calculate payment rates for the specified
combinations of services, rather than relying upon single procedure
claims which may be low in volume and/or incorrectly coded. Under the
OPPS, we currently have composite APC policies for extended assessment
and management services, low dose rate (LDR) prostate brachytherapy,
cardiac electrophysiologic evaluation and ablation services, mental
health services, and multiple imaging services. We refer readers to the
CY 2008 OPPS/ASC final rule with comment period for a full discussion
of the development of the composite APC methodology (72 FR 66611
through 66614 and 66650 through 66652).
At its February 2010 meeting, the APC Panel recommended that, in
order to support stem cell transplantation, CMS consider creating a
composite APC or custom APC that captures the costs of stem cell
acquisition performed in conjunction with recipient transplantation and
preparation of tissue. We are accepting this APC Panel recommendation
to consider creating a composite APC or custom APC that captures the
costs of stem cell acquisition performed in conjunction with recipient
transplantation and preparation of tissue, and will report the results
of our assessment to the APC Panel at a future meeting.
For CY 2011, we are proposing to continue our established composite
APC policies for extended assessment and management, LDR prostate
brachytherapy, cardiac electrophysiologic evaluation and ablation,
mental health services, and multiple imaging services, as discussed in
sections II.A.2.e.(1), II.A.2.e.(2), II.A.2.e.(3), II.A.2.e.(4), and
II.A.2.e.(5), respectively, of this proposed rule.
(1) Extended Assessment and Management Composite APCs (APCs 8002 and
8003)
For CY 2011, we are proposing to continue to include composite APC
8002 (Level I Extended Assessment and Management Composite) and
composite APC 8003 (Level II Extended Assessment and Management
Composite) in the OPPS. For CY 2008, we created these two composite
APCs to provide payment to hospitals in certain circumstances when
extended assessment and management of a patient occur (an extended
visit). In most circumstances, observation services are supportive and
ancillary to the other services provided to a patient. In the
circumstances when observation care is provided in conjunction with a
high level visit or direct referral and is an integral part of a
patient's extended encounter of care, payment is made for the entire
care encounter through one of two composite APCs as appropriate.
As defined for the CY 2008 OPPS, composite APC 8002 describes an
encounter for care provided to a patient that includes a high level
(Level 5) clinic visit or direct referral for observation services in
conjunction with observation services of substantial duration (72 FR
66648 through 66649). Composite APC 8003 describes an encounter for
care provided to a patient that includes a high level (Level 4 or 5)
Type A emergency department visit, a high level (Level 5) Type B
emergency department visit, or critical care services in conjunction
with observation services of substantial duration. HCPCS code G0378
(Observation services, per hour) is assigned status indicator ``N,''
signifying that its payment is always packaged. As noted in the CY 2008
OPPS/ASC final rule with comment period (72 FR 66648 through 66649),
the Integrated Outpatient Code Editor (I/OCE) evaluates every claim
received to determine if payment through a composite APC is
appropriate. If payment through a composite APC is inappropriate, the
I/OCE, in conjunction with the OPPS Pricer, determines the appropriate
status indicator, APC, and
[[Page 46209]]
payment for every code on a claim. The specific criteria that must be
met for the two extended assessment and management composite APCs to be
paid are provided below in the description of the claims that were
selected for the calculation of the proposed CY 2011 median costs for
these composite APCs. We are not proposing to change these criteria for
the CY 2011 OPPS.
When we created composite APCs 8002 and 8003 for CY 2008, we
retained as general reporting requirements for all observation services
those criteria related to physician order and evaluation,
documentation, and observation beginning and ending time as listed in
the CY 2008 OPPS/ASC final rule with comment period (72 FR 66812).
These are more general requirements that encourage hospitals to provide
medically reasonable and necessary care and help to ensure the proper
reporting of observation services on correctly coded hospital claims
that reflect the full charges associated with all hospital resources
utilized to provide the reported services. We also issued guidance
clarifying the correct method for reporting the starting time for
observation services sections 290.2.2 through 290.5 in the Medicare
Claims Processing Manual (Pub. 100-4), Chapter 4, through Transmittal
1745, Change Request 6492, issued May 22, 2009 and implemented July 6,
2009. We are not proposing to change these reporting requirements for
the CY 2011 OPPS.
For CY 2011, we are proposing to continue the extended assessment
and management composite APC payment methodology for APCs 8002 and
8003. We continue to believe that the composite APCs 8002 and 8003 and
related policies provide the most appropriate means of paying for these
services. We are proposing to calculate the median costs for APCs 8002
and 8003 using all single and ``pseudo'' single procedure claims for CY
2009 that meet the criteria for payment of each composite APC.
Specifically, to calculate the proposed median costs for composite
APCs 8002 and 8003, we selected single and ``pseudo'' single procedure
claims that met each of the following criteria:
1. Did not contain a HCPCS code to which we have assigned status
indicator ``T'' that is reported with a date of service 1 day earlier
than the date of service associated with HCPCS code G0378. (By
selecting these claims from single and ``pseudo'' single claims, we had
already assured that they would not contain a code for a service with
status indicator ``T'' on the same date of service.);
2. Contained 8 or more units of HCPCS code G0378; and
3. Contained one of the following codes:
In the case of composite APC 8002, HCPCS code G0379
(Direct referral of patient for hospital observation care) on the same
date of service as G0378; or CPT code 99205 (Office or other outpatient
visit for the evaluation and management of a new patient (Level 5)); or
CPT code 99215 (Office or other outpatient visit for the evaluation and
management of an established patient (Level 5)) provided on the same
date of service or one day before the date of service for HCPCS code
G0378.
In the case of composite APC 8003, CPT code 99284
(Emergency department visit for the evaluation and management of a
patient (Level 4)); CPT code 99285 (Emergency department visit for the
evaluation and management of a patient (Level 5)); CPT code 99291
(Critical care, evaluation and management of the critically ill or
critically injured patient; first 30-74 minutes); or HCPCS code G0384
(Level 5 hospital emergency department visit provided in a Type B
emergency department) provided on the same date of service or one day
before the date of service for HCPCS code G0378. (As discussed in
detail in the CY 2009 OPPS/ASC final rule with comment period (73 FR
68684), we added HCPCS code G0384 to the eligibility criteria for
composite APC 8003 for CY 2009.)
As discussed further in section IX. of this proposed rule, and
consistent with our CY 2008, CY 2009, and CY 2010 final policies, when
calculating the median costs for the clinic, Type A emergency
department visit, Type B emergency department visit, and critical care
APCs (0604 through 0617 and 0626 through 0630), we utilize our
methodology that excludes those claims for visits that are eligible for
payment through the two extended assessment and management composite
APCs, that is APC 8002 or APC 8003. We believe that this approach
results in the most accurate cost estimates for APCs 0604 through 0617
and 0626 through 0630 for CY 2011.
At its February 2010 meeting, the APC Panel recommended that CMS
study the feasibility of expanding the extended assessment and
management composite APC methodology to include services commonly
furnished in conjunction with visits and observation services, such as
drug infusion, electrocardiogram, and chest X-ray. We are accepting
this recommendation, and we will share our assessment with the APC
Panel at a future meeting.
In summary, for CY 2011, we are proposing to continue to include
composite APCs 8002 and 8003 in the OPPS. We are proposing to continue
the extended assessment and management composite APC payment
methodology and criteria that we finalized for CYs 2009 and 2010. We
also are proposing to calculate the median costs for APCs 8002 and 8003
using the same methodology that we used to calculate the medians for
composite APCs 8002 and 8003 for the CY 2008 OPPS (72 FR 66649). That
is, we used all single and ``pseudo'' single procedure claims from CY
2009 that met the criteria for payment of each composite APC and
applied the standard packaging and trimming rules to the claims before
calculating the proposed CY 2011 median costs. The proposed CY 2011
median cost resulting from this methodology for composite APC 8002 is
approximately $401, which was calculated from 17,398 single and
``pseudo'' single bills that met the required criteria. The proposed CY
2011 median cost for composite APC 8003 is approximately $743, which
was calculated from 201,189 single and ``pseudo'' single bills that met
the required criteria.
(2) Low Dose Rate (LDR) Prostate Brachytherapy Composite APC (APC 8001)
LDR prostate brachytherapy is a treatment for prostate cancer in
which hollow needles or catheters are inserted into the prostate,
followed by permanent implantation of radioactive sources into the
prostate through the needles/catheters. At least two CPT codes are used
to report the composite treatment service because there are separate
codes that describe placement of the needles/catheters and the
application of the brachytherapy sources: CPT code 55875 (Transperineal
placement of needles or catheters into prostate for interstitial
radioelement application, with or without cystoscopy) and CPT code
77778 (Interstitial radiation source application; complex). Generally,
the component services represented by both codes are provided in the
same operative session in the same hospital on the same date of service
to the Medicare beneficiary being treated with LDR brachytherapy for
prostate cancer. As discussed in the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66653), OPPS payment rates for CPT code 77778, in
particular, had fluctuated over the years. We were frequently informed
by the public that reliance on single procedure claims to set the
median costs for these services resulted in use of mainly
[[Page 46210]]
incorrectly coded claims for LDR prostate brachytherapy because a
correctly coded claim should include, for the same date of service, CPT
codes for both needle/catheter placement and application of radiation
sources, as well as separately coded imaging and radiation therapy
planning services (that is, a multiple procedure claim).
In order to base payment on claims for the most common clinical
scenario, and to further our goal of providing payment under the OPPS
for a larger bundle of component services provided in a single hospital
encounter, beginning in CY 2008, we provide a single payment for LDR
prostate brachytherapy when the composite service, reported as CPT
codes 55875 and 77778, is furnished in a single hospital encounter. We
base the payment for composite APC 8001 (LDR Prostate Brachytherapy
Composite) on the median cost derived from claims for the same date of
service that contain both CPT codes 55875 and 77778 and that do not
contain other separately paid codes that are not on the bypass list. In
uncommon occurrences in which the services are billed individually,
hospitals continue to receive separate payments for the individual
services. We refer readers to the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66652 through 66655) for a full history of OPPS
payment for LDR prostate brachytherapy and a detailed description of
how we developed the LDR prostate brachytherapy composite APC.
For CY 2011, we are proposing to continue paying for LDR prostate
brachytherapy services using the composite APC methodology proposed and
implemented for CYs 2008, 2009, and 2010. That is, we are proposing to
use CY 2009 claims on which both CPT codes 55875 and 77778 were billed
on the same date of service with no other separately paid procedure
codes (other than those on the bypass list) to calculate the payment
rate for composite APC 8001. Consistent with our CY 2008 through CY
2010 practice, we are proposing not to use the claims that meet these
criteria in the calculation of the median costs for APCs 0163 (Level IV
Cystourethroscopy and Other Genitourinary Procedures) and 0651 (Complex
Interstitial Radiation Source Application), the APCs to which CPT codes
55875 and 77778 are assigned, respectively. The median costs for APCs
0163 and 0651 would continue to be calculated using single and
``pseudo'' single procedure claims. We continue to believe that this
composite APC contributes to our goal of creating hospital incentives
for efficiency and cost containment, while providing hospitals with the
most flexibility to manage their resources. We also continue to believe
that data from claims reporting both services required for LDR prostate
brachytherapy provide the most accurate median cost upon which to base
the composite APC payment rate.
Using partial year CY 2009 claims data available for this proposed
rule, we were able to use 788 claims that contained both CPT codes and
55875 and 77778 to calculate the median cost upon which the proposed CY
2011 payment for composite APC 8001 is based. The proposed median cost
for composite APC 8001 for CY 2011 is approximately $3,265. This is an
increase compared to the CY 2010 OPPS/ASC final rule with comment
period in which we calculated a final median cost for this composite
APC of approximately $3,084 based on a full year of CY 2008 claims
data. The proposed CY 2011 median cost for this composite APC is
slightly less than $3,604, the sum of the proposed median costs for
APCs 0163 and 0651 ($2,606 + $998), the APCs to which CPT codes 55875
and 77778 map if one service is billed on a claim without the other. We
believe the proposed CY 2011 median cost for composite APC 8001 of
approximately $3,265, calculated from claims we believe to be correctly
coded, would result in a reasonable and appropriate payment rate for
this service in CY 2011.
(3) Cardiac Electrophysiologic Evaluation and Ablation Composite APC
(APC 8000)
Cardiac electrophysiologic evaluation and ablation services
frequently are performed in varying combinations with one another
during a single episode-of-care in the hospital outpatient setting.
Therefore, correctly coded claims for these services often include
multiple codes for component services that are reported with different
CPT codes and that, prior to CY 2008, were always paid separately
through different APCs (specifically, APC 0085 (Level II
Electrophysiologic Evaluation), APC 0086 (Ablate Heart Dysrhythm
Focus), and APC 0087 (Cardiac Electrophysiologic Recording/Mapping)).
As a result, there would never be many single bills for cardiac
electrophysiologic evaluation and ablation services, and those that are
reported as single bills would often represent atypical cases or
incorrectly coded claims. As described in the CY 2008 OPPS/ASC final
rule with comment period (72 FR 66655 through 66659), the APC Panel and
the public expressed persistent concerns regarding the limited and
reportedly unrepresentative single bills available for use in
calculating the median costs for these services according to our
standard OPPS methodology.
Effective January 1, 2008, we established APC 8000 (Cardiac
Electrophysiologic Evaluation and Ablation Composite) to pay for a
composite service made up of at least one specified electrophysiologic
evaluation service and one specified electrophysiologic ablation
service. Calculating a composite APC for these services allowed us to
utilize many more claims than were available to establish the
individual APC median costs for these services, and we also saw this
composite APC as an opportunity to advance our stated goal of promoting
hospital efficiency through larger payment bundles. In order to
calculate the median cost upon which the payment rate for composite APC
8000 is based, we used multiple procedure claims that contained at
least one CPT code from group A for evaluation services and at least
one CPT code from group B for ablation services reported on the same
date of service on an individual claim. Table 9 in the CY 2008 OPPS/ASC
final rule with comment period (72 FR 66656) identified the CPT codes
that are assigned to groups A and B. For a full discussion of how we
identified the group A and group B procedures and established the
payment rate for the cardiac electrophysiologic evaluation and ablation
composite APC, we refer readers to the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66655 through 66659). Where a service in group A
is furnished on a date of service that is different from the date of
service for a code in group B for the same beneficiary, payments are
made under the appropriate single procedure APCs and the composite APC
does not apply.
For CY 2011, we are proposing to continue to pay for cardiac
electrophysiologic evaluation and ablation services using the composite
APC methodology proposed and implemented for CY 2008, CY 2009, and CY
2010. Consistent with our CY 2008 through CY 2010 practice, we are
proposing not to use the claims that meet the composite payment
criteria in the calculation of the median costs for APC 0085 and APC
0086, to which the CPT codes in both groups A and B for composite APC
8000 are otherwise assigned. Median costs for APCs 0085 and 0086 would
continue to be calculated using single procedure claims. We continue to
believe that the composite APC methodology for cardiac
electrophysiologic evaluation and
[[Page 46211]]
ablation services is the most efficient and effective way to use the
claims data for the majority of these services and best represents the
hospital resources associated with performing the common combinations
of these services that are clinically typical. Furthermore, this
approach creates incentives for efficiency by providing a single
payment for a larger bundle of major procedures when they are performed
together, in contrast to continued separate payment for each of the
individual procedures.
Using partial year CY 2009 claims data available for this proposed
rule, we were able to use 8,964 claims containing a combination of
group A and group B codes and calculated a proposed median cost of
approximately $10,834 for composite APC 8000. This is an increase
compared to the CY 2010 OPPS/ASC final rule with comment period in
which we calculated a final median cost for this composite APC of
approximately $10,026 based on a full year of CY 2008 claims data. We
believe the proposed median cost of $10,834 calculated from a high
volume of correctly coded multiple procedure claims would result in an
accurate and appropriate proposed payment for cardiac
electrophysiologic evaluation and ablation services when at least one
evaluation service is furnished during the same clinical encounter as
at least one ablation service. Table 6 below list the groups of
procedures upon which we are proposing to base composite APC 8000 for
CY 2011.
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(4) Mental Health Services Composite APC (APC 0034)
We are proposing to continue our longstanding policy of limiting
the aggregate payment for specified less resource-intensive mental
health services furnished on the same date to the payment for a day of
partial hospitalization, which we consider to be the most resource-
intensive of all outpatient mental health treatment for CY 2011. We
refer readers to the April 7, 2000 OPPS final rule with comment period
(65 FR 18452 through 18455) for the initial discussion of this
longstanding policy. We continue to believe that the costs associated
with administering a partial hospitalization program represent the most
resource-intensive of all outpatient mental health treatment.
Therefore, we do not believe that we should pay more for a day of
individual mental health services under
[[Page 46212]]
the OPPS than the partial hospitalization per diem payment.
As discussed in detail in section X. of this proposed rule, for CY
2011, we are proposing to use a provider-specific two tiered payment
approach for partial hospitalization services that distinguishes
payment made for services furnished in a CMHC from payment made for
services furnished in a hospital. Specifically, we are proposing one
APC for partial hospitalization program days with three services
furnished in a CMHC (APC 0172, Level I Partial Hospitalization (3
services) for CMHCs) and one APC for days with four or more services
furnished in a CMHC (APC 0173, Level II Partial Hospitalization (4 or
more services) for CMHCs). We are proposing that the payment rates for
these two APCs be based upon the median per diem costs calculated using
data only from CMHCs. Similarly, we are proposing one APC for partial
hospitalization program days with three services furnished in a
hospital (APC 0175, Level I Partial Hospitalization (3 services) for
Hospital-Based PHPs), and one APC for days with four or more services
furnished in a hospital (APC 0176, Level II Partial Hospitalization (4
or more services) for Hospital-Based PHPs). We are proposing that the
payment rates for these two APCs be based on the median per diem costs
calculated using data only from hospitals.
Because our longstanding policy of limiting the aggregate payment
for specified less resource-intensive mental health services furnished
on the same date to the payment rate for the most resource-intensive of
all outpatient mental health treatment, we are proposing to set the CY
2011 payment rate for APC 0034 (Mental Health Services Composite) at
the same rate as we are proposing for APC 0176, which is the maximum
partial hospitalization per diem payment. We believe this APC payment
rate would provide the most appropriate payment for composite APC 0034,
taking into consideration the intensity of the mental health services
and the differences in the HCPCS codes for mental health services that
could be paid through this composite APC compared with the HCPCS codes
that could be paid through partial hospitalization APC 0176. When the
aggregate payment for specified mental health services provided by one
hospital to a single beneficiary on one date of service based on the
payment rates associated with the APCs for the individual services
exceeds the maximum per diem partial hospitalization payment, we are
proposing that those specified mental health services would be assigned
to APC 0034. We are proposing that APC 0034 would have the same payment
rate as APC 0176 and that the hospital would continue to be paid one
unit of APC 0034. The I/OCE currently determines, and we are proposing
for CY 2011 that it would continue to determine, whether to pay these
specified mental health services individually or to make a single
payment at the same rate as the APC 0176 per diem rate for partial
hospitalization for all of the specified mental health services
furnished by the hospital on that single date of service.
(5) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007, and
8008)
Prior to CY 2009, hospitals received a full APC payment for each
imaging service on a claim, regardless of how many procedures were
performed during a single session using the same imaging modality.
Based on extensive data analysis, we determined that this practice
neither reflected nor promoted the efficiencies hospitals can achieve
when performing multiple imaging procedures during a single session (73
FR 41448 through 41450). As a result of our data analysis, and in
response to ongoing recommendations from MedPAC to improve payment
accuracy for imaging services under the OPPS, we expanded the composite
APC model developed in CY 2008 to multiple imaging services. Effective
January 1, 2009, we provide a single payment each time a hospital bills
more than one imaging procedure within an imaging family on the same
date of service. We utilize three imaging families based on imaging
modality for purposes of this methodology: (1) Ultrasound; (2) computed
tomography (CT) and computed tomographic angiography (CTA); and (3)
magnetic resonance imaging (MRI) and magnetic resonance angiography
(MRA). The HCPCS codes subject to the multiple imaging composite
policy, and their respective families, are listed in Table 13 of the CY
2010 OPPS/ASC final rule with comment period (74 FR 60403 through
60407).
While there are three imaging families, there are five multiple
imaging composite APCs due to the statutory requirement at section
1833(t)(2)(G) of the Act that we differentiate payment for OPPS imaging
services provided with and without contrast. While the ultrasound
procedures included in the policy do not involve contrast, both CT/CTA
and MRI/MRA scans can be provided either with or without contrast. The
five multiple imaging composite APCs established in CY 2009 are:
APC 8004 (Ultrasound Composite);
APC 8005 (CT and CTA without Contrast Composite);
APC 8006 (CT and CTA with Contrast Composite);
APC 8007 (MRI and MRA without Contrast Composite); and
APC 8008 (MRI and MRA with Contrast Composite).
We define the single imaging session for the ``with contrast''
composite APCs as having at least one or more imaging procedures from
the same family performed with contrast on the same date of service.
For example, if the hospital performs an MRI without contrast during
the same session as at least one other MRI with contrast, the hospital
will receive payment for APC 8008, the ``with contrast'' composite APC.
Hospitals continue to use the same HCPCS codes to report imaging
procedures, and the I/OCE determines when combinations of imaging
procedures qualify for composite APC payment or map to standard (sole
service) APCs for payment. We make a single payment for those imaging
procedures that qualify for composite APC payment, as well as any
packaged services furnished on the same date of service. The standard
(noncomposite) APC assignments continue to apply for single imaging
procedures and multiple imaging procedures performed across families.
For a full discussion of the development of the multiple imaging
composite APC methodology, we refer readers to the CY 2009 OPPS/ASC
final rule with comment period (73 FR 68559 through 68569).
At its February 2010 meeting, the APC Panel recommended that CMS
continue providing analysis on an ongoing basis of the impact on
beneficiaries of the multiple imaging composite APCs as data become
available. We are accepting this recommendation and will provide the
requested analysis to the APC Panel at a future meeting.
In summary, for CY 2011, we are proposing to continue paying for
all multiple imaging procedures within an imaging family performed on
the same date of service using the multiple imaging composite payment
methodology. The proposed CY 2011 payment rates for the five multiple
imaging composite APCs (APC 8004, APC 8005, APC 8006, APC 8007, and APC
8008) are based on median costs calculated from the partial year CY
2009 claims available for this proposed rule that would have qualified
for composite payment under the current policy (that is, those claims
with more than one
[[Page 46213]]
procedure within the same family on a single date of service). To
calculate the proposed median costs, we used the same methodology that
we used to calculate the final CY 2010 median costs for these composite
APCs. That is, we removed any HCPCS codes in the OPPS imaging families
that overlapped with codes on our bypass list (``overlap bypass
codes'') to avoid splitting claims with multiple units or multiple
occurrences of codes in an OPPS imaging family into new ``pseudo''
single claims. The imaging HCPCS codes that we removed from the bypass
list for purposes of calculating the proposed multiple imaging
composite APC median costs appear in Table 8 of this proposed rule. (We
note that, consistent with our proposal in section II.A.1.b. of this
proposed rule to add CPT code 70547 (Magnetic resonance angiography,
neck; without contrast material(s)) to the list of bypass codes for CY
2011, we also are proposing to add CPT code 70547 to the list of
proposed OPPS imaging family services overlapping with HCPCS codes on
the proposed CY 2010 bypass list.) We integrated the identification of
imaging composite ``single session'' claims, that is, claims with
multiple imaging procedures within the same family on the same date of
service, into the creation of ``pseudo'' single procedure claims to
ensure that claims were split in the ``pseudo'' single process into
accurate reflections of either a composite ``single session'' imaging
service or a standard sole imaging service resource cost. Like all
single bills, the new composite ``single session'' claims were for the
same date of service and contained no other separately paid services in
order to isolate the session imaging costs. Our last step after
processing all claims through the ``pseudo'' single process was to
reassess the remaining multiple procedure claims using the full bypass
list and bypass process in order to determine if we could make other
``pseudo'' single bills. That is, we assessed whether a single
separately paid service remained on the claim after removing line-items
for the ``overlap bypass codes.''
We were able to identify 1.7 million ``single session'' claims out
of an estimated 2.7 million potential composite cases from our
ratesetting claims data, or well over half of all eligible claims, to
calculate the proposed CY 2011 median costs for the multiple imaging
composite APCs. Table 7 below lists the HCPCS codes that would be
subject to the proposed multiple imaging composite policy and their
respective families for CY 2011.
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[[Page 46219]]
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BILLING CODE 4120-01-C
3. Proposed Changes to Packaged Services
a. Background
The OPPS, like other prospective payment systems, relies on the
concept of averaging, where the payment may be more or less than the
estimated cost of providing a service or bundle of services for a
particular patient, but with the exception of outlier cases, the
payment is adequate to ensure access to appropriate care. Packaging
payment for multiple interrelated services into a single payment
creates incentives for providers to furnish services in the most
efficient way by enabling hospitals to manage their resources with
maximum flexibility, thereby encouraging long-term cost containment.
For example, where there are a variety of supplies that could be used
to furnish a service, some of which are more expensive than others,
packaging encourages hospitals to use the least expensive item that
meets the patient's needs, rather than to routinely use a more
expensive item. Packaging also encourages hospitals to negotiate
carefully with manufacturers and suppliers to reduce the purchase price
of items and services or to explore alternative group purchasing
arrangements, thereby encouraging the most economical health care.
Similarly, packaging encourages hospitals to establish protocols that
ensure that necessary services are furnished, while carefully
scrutinizing the services ordered by practitioners to maximize the
efficient use of hospital resources. Packaging payments into larger
payment bundles promotes the stability of payment for services over
time. Finally, packaging also may reduce the importance of refining
service-specific payment because there is more opportunity for
hospitals to average payment across higher cost cases requiring many
ancillary services and lower cost cases requiring fewer ancillary
services. For these reasons, packaging payment for services that are
typically ancillary and supportive to a primary service has been a
fundamental part of the OPPS since its implementation in August 2000.
We assign status indicator ``N'' to those HCPCS codes that we
believe are always integral to the performance of the primary modality;
therefore, we always package their costs into the costs of the
separately paid primary services with which they are billed. Services
assigned status indicator ``N'' are unconditionally packaged.
We assign status indicator ``Q1'' (``STVX-Packaged Codes''), ``Q2''
(``T-Packaged Codes''), or ``Q3'' (Codes that may be paid through a
composite APC) to each conditionally packaged HCPCS code. An ``STVX-
packaged code''
[[Page 46220]]
describes a HCPCS code whose payment is packaged when one or more
separately paid primary services with the status indicator of ``S,''
``T,'' ``V,'' or ``X'' are furnished in the hospital outpatient
encounter. A ``T-packaged code'' describes a code whose payment is
packaged when one or more separately paid surgical procedures with the
status indicator of ``T'' are provided during the hospital encounter.
``STVX-packaged codes'' and ``T-packaged codes'' are paid separately in
those uncommon cases when they do not meet their respective criteria
for packaged payment. ``STVX-packaged codes'' and ``T-packaged codes''
are conditionally packaged. We refer readers to section XIII.A.1. of
this proposed rule for a complete listing of status indicators.
We use the term ``dependent service'' to refer to the HCPCS codes
that represent services that are typically ancillary and supportive to
a primary diagnostic or therapeutic modality. We use the term
``independent service'' to refer to the HCPCS codes that represent the
primary therapeutic or diagnostic modality into which we package
payment for the dependent service. In future years, as we consider the
development of larger payment groups that more broadly reflect services
provided in an encounter or episode-of-care, it is possible that we
might propose to bundle payment for a service that we now refer to as
``independent.''
Hospitals include HCPCS codes and charges for packaged services on
their claims, and the estimated costs associated with those packaged
services are then added to the costs of separately payable procedures
on the same claims in establishing payment rates for the separately
payable services. We encourage hospitals to report all HCPCS codes that
describe packaged services that were provided, unless the CPT Editorial
Panel or CMS provide other guidance. The appropriateness of the OPPS
payment rates depend on the quality and completeness of the claims data
that hospitals submit for the services they furnish to our Medicare
beneficiaries.
In the CY 2008 OPPS/ASC final rule with comment period (72 FR 66610
through 66659), we adopted the packaging of payment for items and
services in seven categories into the payment for the primary
diagnostic or therapeutic modality to which we believe these items and
services are typically ancillary and supportive. The seven categories
are: (1) Guidance services; (2) image processing services; (3)
intraoperative services; (4) imaging supervision and interpretation
services; (5) diagnostic radiopharmaceuticals; (6) contrast media; and
(7) observation services. We specifically chose these categories of
HCPCS codes for packaging because we believe that the items and
services described by the codes in these categories are typically
ancillary and supportive to a primary diagnostic or therapeutic
modality and, in those cases, are an integral part of the primary
service they support.
In addition, in the CY 2008 OPPS/ASC final rule with comment period
(72 FR 66650 through 66659), we finalized additional packaging for the
CY 2008 OPPS, which included the establishment of new composite APCs
for CY 2008, specifically APC 8000 (Cardiac Electrophysiologic
Evaluation and Ablation Composite), APC 8001 (LDR Prostate
Brachytherapy Composite), APC 8002 (Level I Extended Assessment &
Management Composite), and APC 8003 (Level II Extended Assessment &
Management Composite). In the CY 2009 OPPS/ASC final rule with comment
period (73 FR 68559 through 68569), we expanded the composite APC model
to one new clinical area--multiple imaging services. We created five
multiple imaging composite APCs for payment in CY 2009 that incorporate
statutory requirements to differentiate between imaging services
provided with contrast and without contrast as required by section
1833(t)(2)(G) of the Act. The multiple imaging composite APCs are: APC
8004 (Ultrasound Composite); APC 8005 (CT and CTA without Contrast
Composite); APC 8006 (CT and CTA with Contrast Composite); APC 8007
(MRI and MRA without Contrast Composite); and APC 8008 (MRI and MRA
with Contrast Composite). We discuss composite APCs in more detail in
section II.A.2.e. of this proposed rule.
We recognize that decisions about packaging and bundling payment
involve a balance between ensuring that payment is adequate to enable
the hospital to provide quality care and establishing incentives for
efficiency through larger units of payment. Therefore we welcome public
comments regarding our packaging proposals for calendar year (CY) 2011
OPPS.
b. Packaging Issues
(1) CMS Presentation of Findings Regarding Expanded Packaging at the
February 2010 APC Panel Meeting
In deciding whether to package a service or pay for a code
separately, we have historically considered a variety of factors,
including whether the service is normally provided separately or in
conjunction with other services; how likely it is for the costs of the
packaged code to be appropriately mapped to the separately payable
codes with which it was performed; and whether the expected cost of the
service is relatively low.
As discussed in section I.E. of this proposed rule, the APC Panel
advises CMS on the clinical integrity of payment groups and their
weights, and the APC Panel has a Packaging Subcommittee that studies
and makes recommendations on issues pertaining to services that are not
separately payable under the OPPS, but whose payments are bundled or
packaged into APC payments. The APC Panel has considered packaging
issues at several earlier meetings. For discussions of earlier APC
Panel meetings and recommendations, we refer readers to previously
published hospital OPPS/ASC proposed and final rules on the CMS Web
site at: http://www.cms.gov/FACA/05_AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp#TopOfPage.
During the August 5-6, 2009 meeting of the APC Panel, we agreed to
continue to provide the Panel with information on the impact of
increased packaging on Medicare beneficiaries building on the analyses
we had presented at the February 2009 APC Panel meeting. We did not
share additional packaging data with the APC Panel at the August 2009
meeting because we had already presented analysis comparing CY 2007 and
CY 2008 claims data and believed the APC Panel's discussions would
benefit from analyses of CY 2007 and CY 2009 claims data. We indicated
that we planned to incorporate analysis of CY 2009 claims into the
information we would bring to the APC Panel for its review at the
winter 2010 meeting.
At the February 17-18, 2010 APC Panel meeting, we presented
subsequent analyses that compared CY 2007 claims processed through
September 30, 2007 to CY 2009 claims processed through September 30,
2009. Similar to the initial analysis that we presented to the APC
Panel in 2009, the HCPCS codes that we compared are the ones that we
identified in the CY 2008 OPPS final rule with comment period as
fitting into one of the packaging categories, including HCPCS codes
that became effective for CY 2009. As noted above, the seven packaging
categories in our CY 2008 packaging proposal are guidance services,
image processing services, intraoperative services, imaging supervision
and interpretation services, diagnostic radiopharmaceuticals, contrast
media, and observation services. We note that, similar to the initial
analysis, we did not
[[Page 46221]]
make any adjustments for inflation, changes in the Medicare population,
changes in payment due to APC recalibration, changes in frequency due
to known changes in code definitions and coding practices, or changes
in the population of hospitals paid under the OPPS. A summary of these
data analyses is provided below.
Analysis of the diagnostic radiopharmaceuticals category showed
that the diagnostic radiopharmaceuticals were billed 1 percent more
often during the first 9 months of CY 2009 as compared to the first 9
months of CY 2007. We noticed very little change in the frequency of
hospitals reporting one or more diagnostic radiopharmaceutical between
CY 2007 and CY 2009. Beginning in CY 2008, we required reporting of a
radiolabeled product (including diagnostic radiopharmaceuticals) when
billing a nuclear medicine procedure, and we believe that the modest
increases in frequency of reporting diagnostic radiopharmaceuticals and
the percentage of reporting hospitals generally reflects hospitals
adhering to our reporting requirements.
We also found that nuclear medicine procedures (into which
diagnostic radiopharmaceuticals were packaged) and associated
diagnostic radiopharmaceuticals were billed approximately 3 million
times during the first 9 months of both CY 2007 and CY 2009. Further
analysis revealed that we paid hospitals over $637 million for nuclear
medicine procedures and diagnostic radiopharmaceuticals during the
first 9 months of CY 2007, when diagnostic radiopharmaceuticals were
separately payable, and approximately the same amount for nuclear
medicine procedures and diagnostic radiopharmaceuticals during the
first 9 months of CY 2009, when payment for diagnostic
radiopharmaceuticals was packaged. This suggests that frequency and
payment for nuclear medicine procedures remained fairly steady between
the first 9 months of CY 2007 and the first 9 months of CY 2009.
We conducted the same analysis for guidance services that were
packaged beginning in CY 2008. Analysis of the guidance category (which
includes image-guided radiation therapy services) showed that guidance
services were billed 8 percent more often during CY 2009 as compared to
CY 2007 and that the number of hospitals reporting guidance services
declined by 1 percent between CY 2007 and CY 2009.
We also analyzed the same data for all contrast services that were
packaged beginning in CY 2008. Analysis of this category showed that
contrast services were billed 9 percent more often during CY 2009 as
compared to CY 2007 and that the number of hospitals reporting contrast
media increased by 1 percent between CY 2007 and CY 2009.
Analysis of the data for image supervision and interpretation
services showed that these services were billed 10 percent more often
during CY 2009 as compared to CY 2007 and, similar to guidance services
and contrast agents, the number of hospitals reporting image
supervision and interpretation services declined by 1 percent between
CY 2007 and CY 2009.
We also analyzed the first 9 months of CY 2007 and CY 2009 data
related to all image processing services that were packaged beginning
in the CY 2008 OPPS. This analysis was difficult because there were
significant changes to the CPT codes in this category for CY 2009. For
example, the intraoperative procedures described by CPT codes 93320
(which describes spectral Doppler) and 93325 (which describes color
flow Doppler) are now reported using one comprehensive code, CPT 93306,
which describes complete transthoracic echocardiogram with spectral and
color flow Doppler. In an effort to isolate the effects of the changes
to coding from our analysis, we removed the data for any codes
experiencing significant modifications and observed a 7 percent
decrease from CY 2007 to CY 2009 in the frequency of image processing
services billed. However, as we pointed out to the APC panel, these
numbers are not necessarily the majority of services in the category or
reflective of behavioral changes for the services of interest. When we
included the image processing services with the revised coding for CY
2009, the data showed a 61-percent decrease in the billing of these
services between CY 2007 and CY 2009 and a 6-percent decrease in the
number of hospitals reporting these services during the same timeframe.
Our analysis of changes in intraoperative services between CY 2007
and CY 2009 showed a 5-percent decrease in the billing of these
services and a 5-percent decrease in the number of hospitals reporting
these services during the same timeframe.
As we did for our presentation at the February 2009 APC Panel
meeting, we also found that cardiac catheterization and other
percutaneous vascular procedures that would typically be accompanied by
Intravascular Ultrasound (IVUS), Intracardiac echocardiography (ICE),
and Fractional flow reserve (FFR) (including IVUS, ICE, and FFR) were
billed approximately 376,000 times in CY 2007 and approximately 473,000
times in CY 2009, representing an increase of 26 percent in the number
of services and items billed between CY 2007 and CY 2009. IVUS, ICE,
and FFR are intraoperative and image supervision and interpretation
services that have received a lot of attention. Further analysis showed
that the OPPS paid hospitals over $912 million for cardiac
catheterizations, other related services, and IVUS, ICE, and FFR in CY
2007, when IVUS, ICE, and FFR were paid separately. In the first 9
months of CY 2009, the OPPS paid hospitals approximately $1.4 billion
for cardiac catheterization and other percutaneous vascular procedures
and IVUS, ICE, and FFR, when payments for IVUS, ICE, and FFR were
packaged. This is a 58-percent increase in payment from CY 2007. Using
the first 9 months of claims data for both CY 2007 and CY 2009, we
calculated an average payment per service or item provided of $2,430 in
CY 2007 and $3,048 in CY 2009 for cardiac catheterization and other
related services, an increase of 25 percent in average payment per item
or service. This observed increase in average payment per service is
most likely attributable to the observed increase in the frequency of
these cardiac catheterization and other percutaneous vascular
procedures that would typically be accompanied by IVUS, ICE, and FFR
(including IVUS, ICE, and FFR) billed in CY 2009.
We also cannot determine how much of the 58-percent increase in
aggregate payment for these services may be due to the packaging of
payment for IVUS, ICE, and FFR (and other services that were newly
packaged for CY 2008) and how much may be due to annual APC
recalibration and typical fluctuations in service frequency. However,
we believe that all of these factors contributed to the notable
increase in aggregate payment between CY 2007 and CY 2009.
We further analyzed the first 9 months of CY 2007 and CY 2009
claims data for radiation oncology services that would be accompanied
by radiation oncology guidance. We found that radiation oncology
services (including radiation oncology guidance services) were billed
approximately 4 million times in CY 2007 and 3.8 million times in CY
2009, representing a decrease in frequency of approximately 6 percent
between CY 2007 and CY 2009. These numbers represented each instance
where a radiation oncology service or a radiation oncology guidance
service was billed. Our analysis indicated that hospitals were paid
over $811 million for radiation oncology services and
[[Page 46222]]
radiation oncology guidance services under the OPPS during the first 9
months of CY 2007, when radiation oncology guidance services were
separately payable. During the first 9 months of CY 2009, when payments
for radiation oncology guidance were packaged, hospitals were paid over
$827 million for radiation oncology services under the OPPS. This $827
million included packaged payment for radiation oncology guidance
services and represented a 2-percent increase in aggregate payment from
CY 2007 to CY 2009. Using the first 9 months of claims data for both CY
2007 and CY 2009, we calculated an average payment per radiation
oncology service or item billed of $199 in CY 2007 and $216 in CY 2009,
representing a per service increase of 8 percent from CY 2007 to CY
2009.
At the February 2009 meeting, the APC panel also requested that CMS
provide separate analyses of radiation oncology guidance, by type of
radiation oncology service, specifically, intensity modulated radiation
therapy (IMRT), stereotactic radiosurgery (SRS), brachytherapy, and
conventional radiation therapy. The results from these analyses are
discussed below:
We conducted these analyses on the specified categories using the
first 9 months of claims and cost report data from CY 2007, before the
expanded packaging went into effect, and the first 9 months of claims
and cost report data from CY 2009--the second year of packaged payment
for the radiation guidance services. We found that IMRT services were
billed approximately 670 thousand times during the first 9 months of CY
2007. During this same timeframe, Medicare paid hospitals approximately
$227 million for IMRT services. In comparison, during the first 9
months of CY 2009, IMRT services were billed 713 thousand times,
representing an increase in frequency of 6 percent. Further, during the
first 9 months of CY 2009, when payments for radiation oncology
guidance were packaged into the payments for the separately paid IMRT
procedures, we paid hospitals over $298 million, representing a 31-
percent increase in payments from CY 2007 to CY 2009.
We further analyzed the data for SRS services and found that, for
the first 9 months of CY 2007 and CY 2009, SRS services were billed
approximately 9 thousand and 13 thousand times, respectively,
representing an increase in frequency of 43 percent. Aggregate Medicare
payments for these SRS services increased by 24 percent from $34
million in CY 2007 to $42 million in CY 2009.
Our review of the data for brachytherapy services revealed that,
for the first 9 months of CY 2007 and CY 2009, these services were
billed approximately 10 thousand and 11 thousand times, respectively,
representing an increase in frequency of 8 percent. During this
timeframe, aggregate Medicare payments for these brachytherapy services
increased by 1 percent from $9.8 million in CY 2007 to $9.9 million in
CY 2009.
Our review of the data for conventional radiation therapy services
revealed that conventional radiation therapy services were billed 1.4
million times and 1.1 million times, in the first 9 months of CY 2007
and CY 2009, respectively, representing a decrease in frequency of 20
percent. During this timeframe, aggregate Medicare payments for these
conventional radiation services decreased by 10 percent from $189
million in CY 2007 to $169 million in CY 2009.
In reviewing our early CY 2009 claims data, which reflect the
second year of packaged payment for services in the packaged categories
identified in the CY 2008 OPPS/ASC final rule with comment period, we
generally observed increases in the billing and reporting of packaged
services described by these categories, with the caveat that we are not
able to untangle the various causes of declines in the image processing
category, indicating steady beneficiary access to these categories of
supporting and ancillary services. In aggregate, hospitals do not
appear to have significantly changed their reporting patterns as a
result of the expanded packaging policy nor do the analyses suggest
that hospitals have stopped offering these supporting and ancillary
services with the primary diagnostic and therapeutic modalities that
they support.
(2) Packaging Recommendations of the APC Panel at Its February 2010
Meeting
During the February 2010 APC panel meeting, the APC Panel accepted
the report of the Packaging Subcommittee, heard several presentations
related to packaged services, discussed the deliberations of the
Packaging Subcommittee, and made 6 recommendations. The Report of the
February 2010 meeting of the APC Panel may be found at the Web site at:
http://www.cms.gov/FACA/05_AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp.
To summarize, the APC Panel made the following recommendations
regarding packaging of payment under the CY 2011 OPPS:
1. That CMS consider whether CPT code 31627 (Bronchoscopy, rigid or
flexible, including fluoroscopic guidance, when performed; with
computer-assisted, image-guided navigation) (also known as
electromagnetic navigational bronchoscopy (ENB)) should be packaged or
paid separately; if it should be paid separately, CMS should
investigate the appropriate APC assignment. The Panel suggests CMS use
bronchoscopic ultrasonography (EBUS) as a clinical example for
comparison. (Recommendation 1)
2. That CMS make CPT code 96368 (Intravenous infusion, for therapy,
prophylaxis, or diagnosis (specify substance or drug); concurrent
infusion) and CPT code 96376 (Therapeutic, prophylactic, or diagnostic
injection (specify substance or drug); subcutaneous or intramuscular,
each additional sequential intravenous push of the same substance/drug
provided in the facility (List separately in addition to code for
primary procedure)) separately payable in the CY 2011 OPPS/ASC final
rule with comment period at an appropriate payment rate as determined
by CMS. (Recommendation 2)
3. That CMS conditionally package payment for the guidance
procedures that would accompany breast needle placement (specifically
CPT code 19290 (Preoperative placement of needle localization wire,
breast); CPT code 19291 (Preoperative placement of needle localization
wire, breast; each additional lesion (List separately in addition to
code for primary procedure)); CPT code 19295 (Image guided placement,
metallic localization clip, percutaneous, during breast biopsy/
aspiration (List separately in addition to code for primary
procedure)); CPT code 77031 (Stereotactic localization guidance for
breast biopsy or needle placement (e.g., for wire localization or for
injection)), each lesion, radiological supervision and interpretation);
CPT code 77032 (Mammographic guidance for needle placement, breast
(e.g., for wire localization or for injection), each lesion,
radiological supervision and interpretation); CPT code 76942
(Ultrasonic guidance for needle placement (e.g., biopsy, aspiration,
injection, localization device), imaging supervision and
interpretation)) when these guidance services are performed separately.
(Recommendation 3)
4. The Panel encourages the public to submit common clinical
scenarios involving currently packaged HCPCS codes and recommendations
of specific services or procedures for which
[[Page 46223]]
payment would be most appropriately packaged under the OPPS for review
by the Packaging Subcommittee members. (Recommendation 4)
5. That CMS continue providing analysis on an ongoing basis of the
impact on beneficiaries of the multiple imaging composite APCs as data
become available. (Recommendation 5)
6. That the work of the Packaging Subcommittee continue.
(Recommendation 6)
We address each of these recommendations in the discussion that
follows:
Recommendation 1
At the APC Panel's February 2010 meeting, the manufacturer asserted
that use of ENB technology during a bronchoscopy procedure enables
access to distal lesions that are otherwise not accessible without use
of the ENB technology. The manufacturer also argued that without
separate payment for ENB, hospitals would likely not adopt the
technology and the population that would likely benefit from ENB would
not have access to this technology. In response to the manufacturer's
assertion, the APC Panel asked CMS to consider whether CPT code 31627,
which describes Electromagnetic Navigational Bronchoscopy (ENB), should
be packaged or paid separately; and if it should be paid separately,
the APC Panel asked CMS to investigate the appropriate APC assignment.
CPT code 31627 is new for CY 2010, and we assigned it a new interim
status indicator of ``N'' in our CY 2010 OPPS/ASC final rule with
comment period based on our packaging policies (discussed in section
II.A.3.a. of this proposed rule). We have considered the information
available to us for CPT code 31627 and believe that the code describes
a procedure that is supportive of and ancillary to the primary
diagnostic or therapeutic modality, in this case, bronchoscopy
procedures (for example, CPT code 31622 (Bronchoscopy, rigid or
flexible, including fluoroscopic guidance, when performed: diagnostic,
with cell washing, when performed (separate procedure)). We currently
package payment for CPT code 31627, and we continue to believe that
this is the appropriate treatment of that code. Therefore, we are
proposing to package payment for CPT code 31627. As we have discussed
in past rules, in making our decision on whether to package a service
or pay for it separately we consider a variety of factors, including
whether the service is normally provided separately or in conjunction
with other services because it supports those services. By proposing to
packaging payment for this procedure, we would be treating it in the
same manner as similar computer-assisted, navigational diagnostic
procedures that are supportive of and ancillary to a primary diagnostic
or therapeutic modality. In its recommendation regarding whether to
make separate payment under an APC for CPT code 31627, the APC Panel
suggested that we use bronchoscopic ultrasonography as a clinical
example for comparison. We consider CPT code 31620 (Endobronchial
ultrasound (EBUS) during bronchoscopic diagnostic or therapeutic
intervention(s) (List separately in addition to code for primary
procedure)) to be a suitable comparison because it describes another
bronchoscopic procedure in which a guidance technology (that is,
ultrasonography) is used to achieve the therapeutic benefit of the
procedure. Similar to our proposed payment for CPT code 31627, payment
for CPT code 31620 is currently packaged into the primary modality with
which it would be appropriately billed. In CY 2008, as part of our
increased packaging proposal, we identified the EBUS procedure as an
intraoperative ancillary service that would typically be reported in
conjunction with an independent service. In addition, similar to CPT
code 31627, CPT code 31620 is an add-on code that, per CPT reporting
guidelines, would only be appropriately reported in conjunction with
specified bronchoscopy procedures with which it would be performed.
Based on these general comparisons of CPT code 31627 to the EBUS
procedure described by CPT code 31620, we believe that our proposal to
package payment for CPT code 31627 is consistent with the packaging
approach that we have adopted in recent years. As we have stated in
past rules with regard to EBUS, we also fully expect that, to the
extent these services are billed appropriately, payment for the primary
service would reflect the cost of the packaged ENB procedure. For
example, in the CY 2009 OPPS/ASC final rule with comment period (73 FR
68584), we discussed packaging of CPT code 31620; we state that we
observed increased packaged costs associated with the services into
which CPT code 31620 had been packaged, which increased the APC payment
rates for bronchoscopy procedures.
In summary, we continue to believe that CPT code 31627 describes a
procedure that is ancillary to and supportive of the primary service
with which it is often billed. Therefore, for CY 2011, we are proposing
to maintain CPT code 31627 as a packaged service.
Recommendation 2
We are not accepting the APC Panel's recommendation that CMS make
CPT code 96368 and CPT code 96376 separately payable for the CY 2011
OPPS. We consider a variety of factors in making a decision whether to
package a service or pay for it separately, including whether the
service is normally provided separately or in conjunction with other
services and how likely it is for the costs of the packaged code to be
appropriately mapped to the separately payable codes with which it was
performed. CPT codes 96376 and 96368 describe concurrent and sequential
drug administration services that have always been packaged under the
OPPS. From the inception of the OPPS through CY 2006, we paid for drug
administration under the OPPS using HCPCS alphanumeric codes that
packaged payment for concurrent infusions and administration of new
drugs into the payment for the alphanumeric codes for drug
administration. In CY 2007, we adopted CPT codes for drug
administration services. The CY 2007 CPT codes did not separately
recognize administration of new drugs during the same encounter with a
separate CPT code. Therefore, administration of a new drug continued to
be packaged into payment for the service of which it was a part.
Moreover, for CY 2007, CPT code 90768 (Intravenous infusion, for
therapy, prophylaxis, or diagnosis; concurrent infusion), which was
replaced by CPT code 96368, was packaged under the OPPS, continuing the
longstanding practice of not making separate payment for concurrent
infusion. We also pointed out that, during our implementation of this
new CPT code, while it was new for CY 2007, it represented the same
procedures as described by the previous drug administration HCPCS code
set, and, as a result, the payment data for these procedures would be
captured in the claims that were available to us for ratesetting
purposes.
Similarly, CPT codes 96368 and 96376, which were created by CPT in
2008, are replacement codes for those same procedures that were
described by the previous drug administration code sets and their
associated data would be captured in our claims database. The costs for
these services, concurrent infusion and additional push of the same
drug, would continue to be packaged into payment for the drug
administration codes with which they
[[Page 46224]]
are reported. In making our decision whether to package a service or
pay for it separately, we consider a variety of factors, including
whether the service is normally provided separately or in conjunction
with other services. CPT codes 96368 and 96376 describe concurrent and
sequential drug administration services that, per CPT guidelines, are
always provided in association with an initial drug administration
service. Therefore, they continue to be appropriately packaged into the
payment for the separately payable services that they usually
accompany. For example, CPT code 96376 would be billed with CPT code
96374 (Therapeutic, prophylactic, or diagnostic injection; intravenous
push, single or initial substance/drug), which describes an initial
intravenous push code and, as a result, the cost for CPT code 96376
would be reflected in the total cost for CPT code 96374. Moreover,
payment for these services has always been packaged into payment for
the drug administration services without which they cannot be correctly
reported.
These two codes each describe services that, by definition, are
always provided in conjunction with an initial drug administration
code. These services have been packaged since the inception of the
OPPS, and we continue to believe they are appropriately packaged into
the payment for the separately payable services without which, under
CPT guidelines and definitions, they cannot be appropriately reported.
Therefore, for CY 2011, we are proposing to make packaged payment for
CPT code 96368 and CPT code 96376 and assign them a status indicator of
``N.''
Recommendation 3
We are not accepting the APC Panel's recommendation that we
conditionally package CPT codes 19290, 19291, 19295, 77031, 77032, and
76942. During the APC Panel's February 2010 meeting, we shared with the
Packaging Subcommittee our most recent claims data for the guidance
procedures that would accompany breast needle placement, demonstrating
that, for some of these services, the code was billed by itself up to
25 percent of the time. While the Packaging Subcommittee broadly
discussed clinical scenarios in which these services may be billed
separately, it remains unclear to us why these services are being
performed separately and whether they should be paid separately. We
believe that these services typically are performed in conjunction with
surgical procedures involving the breast and, therefore, are
appropriately packaged. Therefore, we are not accepting the APC panel's
recommendation that we conditionally package payment for these guidance
procedures when they are performed separately. For CY 2011, we are
proposing to maintain the unconditional packaged payment status for
these procedures. Specifically, we are proposing to package payment,
indicated by a status indicator of ``N,'' for CPT codes 19290, 19291,
19295, 77031, 77032, and 76942, into the primary modality with which
they would be appropriately billed. However, observing such a sizable
percentage of services that are the only service appearing on a claim
for a packaged item, especially when these services do not receive
separate payment, leads us to encourage the public to submit any
clinical scenarios in their public comments involving these services
that show the circumstances under which these services may be
appropriately billed without a primary procedure that is furnished on
the same date.
Recommendation 4
We are accepting the APC Panel's recommendation to continue to
encourage submission of common clinical scenarios involving currently
packaged HCPCS codes to the Packaging Subcommittee for its ongoing
review. We also encourage recommendations from the public on specific
services or procedures whose payment would be most appropriately
packaged under the OPPS. Additional detailed suggestions for the
Packaging Subcommittee should be submitted by e-mail to
APCPanel@cms.hhs.gov with Packaging Subcommittee in the subject line.
Recommendation 5
We are accepting the APC Panel's recommendation that CMS provide
information to the APC Panel on the impact of the creation of the
imaging composite APCs on services to beneficiaries. Our proposal with
regard to the imaging composite APCs is discussed in detail in section
II.A.2.e.(5) of this proposed rule.
Recommendation 6
The Packaging Subcommittee of the APC Panel was established to
review packaging issues. We are accepting the APC Panel's
recommendation that the Packaging Subcommittee remain active until the
next APC Panel meeting. We note that the APC Panel Packaging
Subcommittee is currently active and that we will share additional
issues and new data concerning the packaged status of codes with the
APC Panel Packaging Subcommittee as that information becomes available.
4. Proposed Calculation of OPPS Scaled Payment Weights
Using the proposed APC median costs discussed in sections II.A.1.
and II.A.2. of this proposed rule, we calculated the proposed relative
payment weights for each APC for CY 2011 shown in Addenda A and B to
this proposed rule. In years prior to CY 2007, we standardized all the
relative payment weights to APC 0601 (Mid Level Clinic Visit) because
mid-level clinic visits were among the most frequently performed
services in the hospital outpatient setting. We assigned APC 0601 a
relative payment weight of 1.00 and divided the median cost for each
APC by the median cost for APC 0601 to derive the relative payment
weight for each APC.
Beginning with the CY 2007 OPPS (71 FR 67990), we standardized all
of the relative payment weights to APC 0606 (Level 3 Clinic Visits)
because we deleted APC 0601 as part of the reconfiguration of the
clinic visit APCs. We selected APC 0606 as the base because APC 0606
was the mid-level clinic visit APC (that is, Level 3 of five levels).
Therefore, for CY 2011, to maintain consistency in using a median for
calculating unscaled weights representing the median cost of some of
the most frequently provided services, we are proposing to continue to
use the median cost of the mid-level clinic visit APC (APC 0606) to
calculate unscaled weights. Following our standard methodology, but
using the proposed CY 2011 median cost for APC 0606, for CY 2011 we
assigned APC 0606 a relative payment weight of 1.00 and divided the
median cost of each APC by the proposed median cost for APC 0606 to
derive the proposed unscaled relative payment weight for each APC. The
choice of the APC on which to base the proposed relative weights for
all other APCs does not affect the payments made under the OPPS because
we scale the weights for budget neutrality.
Section 1833(t)(9)(B) of the Act requires that APC reclassification
and recalibration changes, wage index changes, and other adjustments be
made in a budget neutral manner. Budget neutrality ensures that the
estimated aggregate weight under the OPPS for CY 2011 is neither
greater than nor less than the estimated aggregate weight that would
have been made without the changes. To comply with this requirement
concerning the APC changes, we are proposing to compare the estimated
aggregate weight using the CY 2010 scaled relative weights to the
estimated aggregate weight using the proposed CY 2011 unscaled relative
[[Page 46225]]
weights. For CY 2010, we multiply the CY 2010 scaled APC relative
weight applicable to a service paid under the OPPS by the volume of
that service from CY 2009 claims to calculate the total weight for each
service. We then add together the total weight for each of these
services in order to calculate an estimated aggregate weight for the
year. For CY 2011, we perform the same process using the proposed CY
2011 unscaled weights rather than scaled weights. We then calculate the
weight scaler by dividing the CY 2010 estimated aggregate weight by the
proposed CY 2011 estimated aggregate weight. The service-mix is the
same in the current and prospective years because we use the same set
of claims for service volume in calculating the aggregate weight for
each year. For a detailed discussion of the weight scaler calculation,
we refer readers to the OPPS claims accounting document available on
the CMS Web site at: http://www.cms.gov/HospitalOutpatientPPS/ HospitalOutpatientPPS/. We
included payments to CMHCs in our comparison of estimated unscaled
weight in CY 2011 to estimated total weight in CY 2010 using CY 2009
claims data, holding all other components of the payment system
constant to isolate changes in total weight. Based on this comparison,
we adjusted the unscaled relative weights for purposes of budget
neutrality. The proposed CY 2011 unscaled relative payment weights were
adjusted by multiplying them by a proposed weight scaler of 1.3650 to
ensure budget neutrality of the proposed CY 2011 relative weights.
Section 1833(t)(14) of the Act provides the payment rates for
certain ``specified covered outpatient drugs.'' That section states
that ``Additional expenditures resulting from this paragraph shall not
be taken into account in establishing the conversion factor, weighting
and other adjustment factors for 2004 and 2005 under paragraph (9) but
shall be taken into account for subsequent years.'' Therefore, the cost
of those specified covered outpatient drugs (as discussed in section
V.B.3. of this proposed rule) was included in the proposed budget
neutrality calculations for the CY 2011 OPPS.
The proposed scaled relative payment weights listed in Addenda A
and B to this proposed rule incorporate the proposed recalibration
adjustments discussed in sections II.A.1. and II.A.2. of this proposed
rule.
B. Proposed Conversion Factor Update
Section 1833(t)(3)(C)(ii) of the Act requires us to update the
conversion factor used to determine payment rates under the OPPS on an
annual basis by applying the OPD fee schedule increase factor. Under
the authority in section 1833(t)(3)(C)(iv) of the Act, for CY 2010, the
OPD fee schedule increase factor is equal to the hospital inpatient
market basket percentage increase applicable to hospital discharges
under section 1886(b)(3)(B)(iii) of the Act. The proposed hospital
market basket increase for FY 2011 published in the FY 2011 IPPS/LTCH
PPS proposed rule (75 FR 24062) prior to changes required by the
Affordable Care Act and the HCERA is 2.4 percent. New section
1833(t)(3)(F)(iii) and (G)(i) of the Act (as added by 3401(i) of the
Affordable Care Act and as amended by 10319(g) of such Act and section
1105(e) of HCERA) require a .25 percentage point reduction to the CY
2011 OPD fee schedule increase factor, resulting in a proposed CY 2011
OPPS market basket update of 2.15 percent. To set the proposed OPPS
conversion factor for CY 2011, we increased the CY 2010 conversion
factor of $67.241 by 2.15 percent. We announced the CY 2010 OPPS
conversion factor of $67.241 in the Federal Register Notice CMS 1504-N,
entitled ``Medicare Program; Changes to the Hospital Outpatient
Prospective Payment System and Ambulatory Surgical Center Payment
System for CY 2010, and Extension of Part B Payment for Services
Furnished by Hospitals or Clinics Operated by the Indian Health
Service, Indian Tribes, or Tribal Organizations Made by the Affordable
Care Act and ASC Changes Made By Previous Correction Notices,'' which
is being published around the time of this proposed rule. Hospitals
that fail to meet the reporting requirements of the Hospital Outpatient
Quality Data Reporting Program (HOP QDRP) are subject to a reduction of
2.0 percentage points from the OPD fee schedule increase factor
adjustment to the conversion factor. For a complete discussion of the
HOP QDRP requirements and the payment reduction for hospitals that fail
to meet those requirements, we refer readers to section XVI. of this
proposed rule.
In accordance with section 1833(t)(9)(B) of the Act, we further
adjusted the proposed conversion factor for CY 2011 to ensure that any
revisions we are proposing to make to our updates for a revised wage
index and rural adjustment are made on a budget neutral basis. We
calculated a proposed overall budget neutrality factor of 1.0011 for
wage index changes by comparing total payments from our simulation
model using the FY 2011 IPPS proposed wage indices to those payments
using the current (FY 2010) IPPS wage indices, as adopted on a calendar
year basis for the OPPS, as indicated in the Federal Register notice
announcing Affordable Care Act changes to the wage indices (See CMS
1504-N referenced above). For CY 2011, we are not proposing a change to
our rural adjustment policy. Therefore, the proposed budget neutrality
factor for the rural adjustment is 1.0000. In addition, to accommodate
the proposed cancer hospital adjustment described in section II.F. of
this preamble, we calculated an additional proposed budget neutrality
factor of 0.9934 by comparing total payments from our simulation model
for CY 2011 including the proposed adjustment for cancer hospitals to
total payments from our simulation model for CY 2011 without the
proposed adjustment for cancer hospitals.
For this proposed rule, we estimated that pass-through spending for
both drugs and biologicals and devices for CY 2011 would equal
approximately $86.9 million, which represents 0.20 percent of total
projected CY 2011 OPPS spending. Therefore, the conversion factor would
also be adjusted by the difference between the 0.14 percent estimate of
pass-through spending for CY 2010 and the 0.20 percent estimate of CY
2011 pass-through spending. Finally, estimated payments for outliers
remain at 1.0 percent of total OPPS payments for CY 2011.
The proposed OPD fee schedule increase factor of 2.15 percent for
CY 2011, the required proposed wage index budget neutrality adjustment
of approximately 1.0011, the proposed cancer hospital budget neutrality
adjustment of 0.9934, and the proposed adjustment of 0.06 percent of
projected OPPS spending for the difference in the pass-through spending
resulted in a proposed conversion factor for CY 2011 of $68.267, which
reflects the full proposed OPD fee schedule increase. To calculate the
proposed CY 2011 reduced market basket conversion factor for those
hospitals that fail to meet the requirements of the HOP QDRP for the
full CY 2011 payment update, we made all other adjustments discussed
above, but used a proposed reduced market basket increase update factor
of 0.15 percent (that is, an unadjusted OPD fee schedule increase
factor of 2.4 percent reduced by 0.25 percentage point as required by
the Affordable Care Act and HCERA and further reduced by 2.0 percentage
points as required by section 1833(t)(17)(A)(i) of the Act for failure
to comply with the OPD quality reporting requirements). This resulted
in a proposed reduced conversion factor for
[[Page 46226]]
CY 2011 of $66.930 for those hospitals that fail to meet the HOP QDRP
requirements.
OPD Fee Schedule Increase Factor
In accordance with section 1833(t)(3)(C)(iv) of the Act, each year
we update the OPPS conversion factor by an OPD fee schedule increase
factor. For purposes of section 1833(t)(3)(C)(iv) of the Act, subject
to 1833(t)(17) and 1833(t)(F), the OPD fee schedule increase factor is
equal to the market basket percentage increase applicable under section
1886(b)(3)(B)(iii) to hospital discharges occurring during the fiscal
year ending in such year, reduced by 1 percentage point for such factor
for services furnished in each of 2000 and 2002. For hospitals that do
not meet the HOP QDRP reporting requirements discussed in section XVI
of this proposed rule, the update is equal to the OPD fee schedule
increase factor less an additional 2.0 percentage points. In accordance
with these statutory provisions, in the CY 2010 OPPS final rule (74 FR
60419), we finalized an OPD fee schedule increase factor equal to the
IPPS full market basket update of 2.1 percent. Hospitals that failed to
meet the HOP QDRP reporting requirements were subject to a reduced OPD
fee schedule increase factor of 0.1 percent.
We note that section 1833(t)(3)(F)(ii) and (G)(i) of the Act as
added by section 3401(i) of Public Law 111-148 (Affordable Care Act)
and as amended by section 10319(g) of such Act and section 1105(e) of
Public Law 111-152 (HCERA) require that after determining the OPD fee
schedule increase factor, the Secretary shall reduce such factor for CY
2010 by 0.25 percentage point. Therefore, the reduction of 0.25
percentage point applied to the full IPPS hospital operating market
basket increase factor of 2.1 percent results in a revised OPD fee
schedule increase factor of 1.85 percent. For hospitals that do not
meet the HOP QDRP reporting requirements, the update is equal to the
OPD fee schedule increase factor, less the additional 0.25 percentage
point required by section 1833(t)(F)(ii) and (G)(i) of the Act, minus
2.0 percentage points. New section 1833(t)(3)(F) of the Act further
states the application of 1833(t)(3)(F) may result in the OPD fee
schedule increase factor under 1833(t)(3)(C)(iv) of the Act being less
than zero for a year. Thus, the CY 2010 OPD fee schedule increase
factor was 1.85 percent (that is, 2.1 percent minus 0.25 percentage
point) for hospitals that met the HOP QDRP reporting requirements and
negative 0.15 percent (2.1 percent, less the 0.25 percentage point,
minus the 2.0 percentage points) for hospitals failing to meet the HOP
QDRP reporting requirements.
As with the CY 2010 OPD fee schedule increase factor, new section
1833(t)(3)(F)(ii) and (G)(i) of the Act requires that the CY 2011 OPD
fee schedule increase factor be reduced by 0.25 percentage point,
subject to the hospital submitting quality information under rules
established by the Secretary in accordance with section 1833(t)(17) of
the Act. For hospitals that do not meet the HOP QDRP reporting
requirements, the update is equal to the OPD fee schedule increase
factor minus 0.25 percentage point minus 2.0 percentage points. Section
1833(t)(3)(F) of the Act further states that this amendment may result
in the applicable percentage increase being less than zero.
In the FY 2011 IPPS proposed rule, consistent with current law,
based on IHS Global Insight, Inc.'s first quarter 2010 forecast, with
historical data through the 2009 fourth quarter, we estimated that the
FY 2011 IPPS market basket update would be 2.4 percent (75 FR 24016).
However, consistent with the amendments to section 1833(t)(3)(F)(ii)
and (G)(i) of the Act, we are required to reduce the OPD fee schedule
increase factor by 0.25 percentage point. Therefore, the proposed
market basket update to the CY 2011 OPD fee schedule increase factor is
2.15 percent (that is, the CY 2011 estimate of the OPD fee schedule
increase factor of 2.4 percent minus 0.25 percentage point). For
hospitals that do not meet the HOP QDRP reporting requirements, the
proposed update to the OPPS conversion factor is 0.15 percent (that is,
the adjusted CY 2011 estimate of the market basket rate-of increase of
2.15 percent minus 2.0 percentage points).
We are proposing to revise 42 CFR 419.32 to reflect the Affordable
Care Act and HCERA requirements for 0.25 percentage point reductions to
the OPPS fee schedule increase factor for CY 2010 and CY 2011
respectively in revised paragraph 42 CFR 419.32(b)(1)(iv).
C. Proposed Wage Index Changes
Section 1833(t)(2)(D) of the Act requires the Secretary to
determine a wage adjustment factor to adjust, for geographic wage
differences, the portion of the OPPS payment rate, which includes the
copayment standardized amount, that is attributable to labor and labor-
related cost. This adjustment must be made in a budget neutral manner
and budget neutrality is discussed in section II.B. of this proposed
rule.
The OPPS labor-related share is 60 percent of the national OPPS
payment. This labor-related share is based on a regression analysis
that determined that approximately 60 percent of the costs of services
paid under the OPPS were attributable to wage costs. We confirmed that
this labor-related share for outpatient services is still appropriate
during our regression analysis for the payment adjustment for rural
hospitals in the CY 2006 OPPS final rule with comment period (70 FR
68553). Therefore, we are not proposing to revise this policy for the
CY 2011 OPPS. We refer readers to section II.H. of this proposed rule
for a description and example of how the wage index for a particular
hospital is used to determine the payment for the hospital.
As discussed in section II.A.2.c. of this proposed rule, for
estimating national median APC costs, we standardize 60 percent of
estimated claims costs for geographic area wage variation using the
same FY 2011 pre-reclassified wage index that the IPPS uses to
standardize costs. This standardization process removes the effects of
differences in area wage levels from the determination of a national
unadjusted OPPS payment rate and the copayment amount.
As published in the original OPPS April 7, 2000 final rule with
comment period (65 FR 18545), the OPPS has consistently adopted the
final IPPS wage index as the wage index for adjusting the OPPS standard
payment amounts for labor market differences. Thus, the wage index that
applies to a particular acute care short-stay hospital under the IPPS
would also apply to that hospital under the OPPS. As initially
explained in the September 8, 1998 OPPS proposed rule, we believed and
continue to believe that using the IPPS wage index as the source of an
adjustment factor for the OPPS is reasonable and logical, given the
inseparable, subordinate status of the HOPD within the hospital
overall. In accordance with section 1886(d)(3)(E) of the Act, the IPPS
wage index is updated annually. Therefore, in accordance with our
established policy, we are proposing to use the final FY 2011 version
of the IPPS wage index used to pay IPPS hospitals to adjust the CY 2011
OPPS payment rates and copayment amounts for geographic differences in
labor cost for all providers that participate in the OPPS, including
providers that are not paid under the IPPS (referred to in this section
as ``non-IPPS'' providers).
The Affordable Care Act contains a number of provisions affecting
the FY 2011 IPPS wage index values, including revisions to the
reclassification wage comparability criteria that were finalized in the
FY 2009 IPPS final rule (73 FR 48568 through 48570), and the
application of rural floor budget
[[Page 46227]]
neutrality on a national, rather than State-specific, basis through a
uniform, national adjustment to the area wage index. These specific
provisions are discussed in more detail in the supplemental FY 2011
IPPS/LTCH PPS proposed rule published June 2, 2010 in the Federal
Register (75 FR 30920). The Affordable Care Act also required CMS to
establish an adjustment to create a wage index floor of 1.00 for
hospitals located in States determined to be frontier States (section
10324). We discuss this provision and how it applies to hospital
outpatient departments in more detail below.
Section 10324 of the Affordable Care Act specifies that, for
services furnished beginning CY 2011, the wage adjustment factor
applicable to any hospital outpatient department that is located in a
frontier State (as defined in section 1886(d)(3)(E)(iii)(II) of the
Act) may not be less than 1.00. Further, section 10324 states that this
adjustment to the wage index for these outpatient departments should
not be made in a budget neutral manner. As such, for the CY 2011 OPPS,
we are proposing to adjust the wage index for all HOPDs, including
those providers that are not paid under the IPPS, which are identified
as being located in a frontier State, in the manner specified in the
Affordable Care Act. Specifically, we would adjust the FY 2011 wage
index, as adopted on a calendar year basis for the OPPS, for all
hospitals paid under the OPPS, including non-IPPS hospitals, located in
a frontier State to 1.00 in instances where the assigned FY 2011 wage
index (that reflects MGCRB reclassifications, application of the rural
floor and rural floor budget neutrality adjustment) for these hospitals
is less than 1.00. Similar to our current policy for HOPDs that are
affiliated with multicampus hospital systems, we fully expect that the
HOPD would receive a wage index based on the geographic location of the
specific inpatient hospital with which it is associated. Therefore, if
the associated hospital is located in a frontier state, then the wage
index adjustment applicable for the hospital would also apply for the
affiliated HOPD. We refer readers to the FY 2011 supplemental proposed
rule published subsequent to the FY 2011 IPPS/LTCH proposed rule for
detailed discussion regarding this provision, including our proposed
methodology for identifying which areas meet the definition of frontier
States as provided for in section 1886(d)(3)(E)(iii)(II)) of the Act.
In addition, we are proposing to revise Sec. 419.43(c) of the
regulations to incorporate the amendments made by section 10324 of the
Affordable Care Act. Specifically, we would include a provision under a
new paragraph (c)(2) to state that for services furnished beginning
January 1, 2011, the wage adjustment factor referenced in the existing
regulations applicable to any HOPD that is located in a frontier State,
as defined in the statute and regulations, may not be less than 1.00.
We also are proposing to add a new paragraph (c)(3) to Sec. 419.43 to
not consider these additional payments in budget neutrality.
In addition to the changes required by the Affordable Care Act, we
note that the proposed FY 2011 IPPS wage indices continue to reflect a
number of adjustments implemented over the past few years, including
revised Office of Management and Budget (OMB) standards for defining
geographic statistical areas (Core-Based Statistical Areas or CBSAs),
reclassification of hospitals to different geographic areas, rural
floor provisions, an adjustment for out-migration labor patterns, an
adjustment for occupational mix, and a policy for allocating hourly
wage data among campuses of multicampus hospital systems that cross
CBSAs. We refer readers to the FY 2011 IPPS/LTCH PPS proposed rule (75
FR 23936 through 23956) and the supplemental proposed rule (75 FR
30918) for a detailed discussion of all proposed changes, including
changes required by the Affordable Care Act, to the FY 2011 IPPS wage
indices. In addition, we refer readers to the CY 2005 OPPS final rule
with comment period (69 FR 65842 through 65844) and subsequent OPPS
rules for a detailed discussion of the history of these wage index
adjustments as applied under the OPPS.
The IPPS wage index that we are proposing to adopt in this proposed
rule includes all reclassifications that are approved by the Medicare
Geographic Classification Review Board (MGCRB) for FY 2011. We note
that reclassifications under section 508 of Public Law 108-173 and
certain special exception wage indices that were extended by section
106(a) of Public Law 109-432 (MIEA-TRHCA) and section 117(a)(1) of
Public Law 110-173 (MMSEA) were set to terminate September 30, 2008,
but were further extended by section 124 of Public Law 110-275 (MIPPA)
through September 30, 2009 and, most recently, by section 3137 as
amended by section 10317 of Public Law 111-148 (Affordable Care Act)
through September 30, 2010. We did not make any proposals related to
these provisions for the CY 2010 OPPS wage index because Public Law
111-148 (Affordable Care Act) was enacted after issuance of the CY 2010
OPPS/ASC proposed and final rules. In accordance with section 10317 of
Public Law 111-148, for CY 2010, we adopted all section 508 geographic
reclassifications through September 30, 2010. Similar to our treatment
of section 508 reclassifications extended under Public Law 110-173
(MMSEA) as described in the CY 2009 OPPS/ASC final rule with comment
period (73 FR 68586), hospitals with section 508 reclassifications will
revert to their home area wage index, with out-migration adjustment if
applicable, or a current MGCRB reclassification, from October 1, 2010
to December 31, 2010. In addition, as we did for CY 2009, we will
recognize the revised wage index values for certain special exception
hospitals from January 1, 2010 through December 31, 2010, under the
OPPS, in order to give these hospitals the special exception wage
indices under the OPPS for the same time period as under the IPPS. We
refer readers to the FY 2010 section 508 reclassification Federal
Register notice published on June 2, 2010 (75 FR 31118) for a detailed
discussion of the changes to the wage indices as required by section
10317 of the Affordable Care Act. We also discuss the impact of the
extension of reclassifications under section 508 and special exception
wage indices in the Federal Register notice CMS-1504-N, entitled
``Medicare Program; Changes to the Hospital Outpatient Prospective
Payment System for CY 2010, Changes to the Ambulatory Surgical Center
Payment System for CY 2010, and Extension of Payment under Part B for
Services Furnished by Hospitals or Clinics Operated by the Indian
Health Service or Tribal Organizations Made by the Affordable Care Act
and the Health Care and Education Reconciliation Act of 2010 and
Changes to the Ambulatory Surgical Center Payment System for CY 2010
Made By Previous Correction Notices'' that will be published around the
same time as this proposed rule. Because the provisions of section
10317 of the Affordable Care Act expired in 2010 and are not applicable
to FY 2011, we are not making any proposals related to those provisions
for the OPPS wage indices for CY 2011. However, we note that Congress
is currently considering legislation that may further extend section
508 reclassifications and wage indexes for special exception providers
for FY 2011, which would be applicable for the CY 2011 OPPS. We will
implement any extension occurring before or during the comment period
for this proposed rule in our final rule.
[[Page 46228]]
For purposes of the OPPS, we are proposing to continue our policy
in CY 2011 to allow non-IPPS hospitals paid under the OPPS to qualify
for the out-migration adjustment if they are located in a section 505
out-migration county. We note that because non-IPPS hospitals cannot
reclassify, they are eligible for the out-migration wage adjustment.
Table 4J in the Federal Register for the supplemental FY 2011 IPPS
proposed rule (75 FR 31049), identifies counties eligible for the out-
migration adjustment and providers receiving the adjustment. As we have
done in prior years, we are reprinting Table 4J as Addendum L to this
proposed rule with the addition of non-IPPS hospitals that would
receive the section 505 out-migration adjustment under the CY 2011
OPPS.
As stated earlier in this section, we continue to believe that
using the IPPS wage index as the source of an adjustment factor for the
OPPS is reasonable and logical, given the inseparable, subordinate
status of the HOPD within the hospital overall. Therefore, we are
proposing to use the final FY 2011 IPPS wage indices for calculating
OPPS payments in CY 2011. With the exception of the out-migration wage
adjustment table (Addendum L to this proposed rule), which includes
non-IPPS hospitals paid under the OPPS, we are not reprinting the FY
2011 IPPS proposed wage indices referenced in this discussion of the
wage index. We refer readers to the CMS Web site for the OPPS at:
http://www.cms.gov/HospitalOutpatientPPS/. At this link, readers will
find a link to the FY 2011 IPPS proposed wage index tables.
D. Proposed Statewide Average Default CCRs
In addition to using CCRs to estimate costs from charges on claims
for ratesetting, CMS uses overall hospital-specific CCRs calculated
from the hospital's most recent cost report to determine outlier
payments, payments for pass-through devices, and monthly interim
transitional corridor payments under the OPPS during the PPS year.
Medicare contractors cannot calculate a CCR for some hospitals because
there is no cost report available. For these hospitals, CMS uses the
statewide average default CCRs to determine the payments mentioned
above until a hospital's Medicare contractor is able to calculate the
hospital's actual CCR from its most recently submitted Medicare cost
report. These hospitals include, but are not limited to, hospitals that
are new, have not accepted assignment of an existing hospital's
provider agreement, and have not yet submitted a cost report. CMS also
uses the statewide average default CCRs to determine payments for
hospitals that appear to have a biased CCR (that is, the CCR falls
outside the predetermined ceiling threshold for a valid CCR) or for
hospitals whose most recent cost report reflects an all-inclusive rate
status (Medicare Claims Processing Manual (Pub. 100-04), Chapter 4,
Section 10.11). We are proposing to update the default ratios for CY
2011 using the most recent cost report data. We discuss our policy for
using default CCRs, including setting the ceiling threshold for a valid
CCR, in the CY 2009 OPPS/ASC final rule with comment period (73 FR
68594 through 68599) in the context of our adoption of an outlier
reconciliation policy for cost reports beginning on or after January 1,
2009.
For CY 2011, we are proposing to continue to use our standard
methodology of calculating the statewide average default CCRs using the
same hospital overall CCRs that we use to adjust charges to costs on
claims data for setting the CY 2011 proposed OPPS relative weights.
Table 9 below lists the proposed CY 2011 default urban and rural CCRs
by State and compares them to last year's default CCRs. These proposed
CCRs represent the ratio of total costs to total charges for those cost
centers relevant to outpatient services from each hospital's most
recently submitted cost report, weighted by Medicare Part B charges. We
also adjusted ratios from submitted cost reports to reflect final
settled status by applying the differential between settled to
submitted overall CCR for the cost centers relevant to outpatient
services from the most recent pair of final settled and submitted cost
reports. We then weighted each hospital's CCR by the volume of
separately paid line-items on hospital claims corresponding to the year
of the majority of cost reports used to calculate the overall CCRs. We
refer readers to the CY 2008 OPPS/ASC final rule with comment period
(72 FR 66680 through 66682) and prior OPPS rules for a more detailed
discussion of our established methodology for calculating the statewide
average default CCRs, including the hospitals used in our calculations
and our trimming criteria.
For this proposed rule, approximately 87 percent of the submitted
cost reports utilized in the default ratio calculations represented
data for cost reporting periods ending in CY 2008 and 12 percent were
for cost reporting periods ending in CY 2007. For Maryland, we used an
overall weighted average CCR for all hospitals in the nation as a
substitute for Maryland CCRs. Few hospitals in Maryland are eligible to
receive payment under the OPPS, which limits the data available to
calculate an accurate and representative CCR. In general, observed
changes in the statewide average default CCRs between CY 2010 and CY
2011 are modest and the few significant changes are associated with
areas that have a small number of hospitals.
BILLING CODE 4120-01-P
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BILLING CODE 4120-01-C
E. Proposed OPPS Payment to Certain Rural and Other Hospitals
1. Hold Harmless Transitional Payment Changes Made by Public Law 110-
275 (MIPPA)
When the OPPS was implemented, every provider was eligible to
receive an additional payment adjustment (called either transitional
corridor payments or transitional outpatient payment (TOPs)) if the
payments it received for covered OPD services under the OPPS were less
than the payments it would have received for the same services under
the prior reasonable cost-based system (referred to as the pre-BBA
amount). Section 1833(t)(7) of the Act provides that the transitional
corridor payments are temporary payments for most providers and were
intended to ease their transition from the prior reasonable cost-based
payment system to the OPPS system. There are two exceptions to this
provision, cancer hospitals and children's hospitals, and those
hospitals receive the transitional corridor payments on a permanent
basis. Section 1833(t)(7)(D)(i) of the Act originally provided for
transitional corridor payments to rural hospitals with 100 or fewer
beds for covered OPD services furnished before January 1, 2004.
However, section 411 of Public Law 108-173 amended section
1833(t)(7)(D)(i) of the Act to extend these payments through December
31, 2005, for rural hospitals with 100 or fewer beds. Section 411 also
extended the transitional corridor payments to sole community hospitals
(SCHs) located in rural areas for services furnished during the period
that began with the provider's first cost reporting period beginning on
or after January 1, 2004, and ended on December 31, 2005. Accordingly,
the authority for making transitional corridor payments under section
1833(t)(7)(D)(i) of the Act, as amended by section 411 of Pub. L. 108-
173, for rural hospitals having 100 or fewer beds and SCHs located in
rural areas expired on December 31, 2005.
Section 5105 of Public Law 109-171 reinstituted the TOPs for
covered OPD services furnished on or after January 1, 2006, and before
January 1, 2009, for rural hospitals having 100 or fewer beds that are
not SCHs. When the OPPS payment was less than the provider's pre-BBA
amount, the amount of payment was increased by 95 percent of the amount
of the difference between the two amounts for CY 2006, by 90 percent of
the amount of that difference for CY 2007, and by 85 percent of the
amount of that difference for CY 2008.
For CY 2006, we implemented section 5105 of Public Law 109-171
through Transmittal 877, issued on February 24, 2006. In the
Transmittal, we did not specifically address whether TOPs apply to
essential access community hospitals (EACHs), which are considered to
be SCHs under section 1886(d)(5)(D)(iii)(III) of the Act. Accordingly,
under the statute, EACHs are treated as SCHs. In the CY 2007 OPPS/ASC
final rule with comment period (71 FR 68010), we stated that EACHs were
not eligible for TOPs under Public Law 109-171. However, we stated they
were eligible for the adjustment for rural SCHs. In the CY 2007 OPPS/
ASC final rule with comment period (71 FR 68010 and 68228), we updated
Sec. 419.70(d) of our regulations to reflect the requirements of
Public Law 109-171.
[[Page 46232]]
In the CY 2009 OPPS/ASC proposed rule (73 FR 41461), we stated
that, effective for services provided on or after January 1, 2009,
rural hospitals having 100 or fewer beds that are not SCHs would no
longer be eligible for TOPs, in accordance with section 5105 of Public
Law 109-171. However, subsequent to issuance of the CY 2009 OPPS/ASC
proposed rule, section 147 of Public Law 110-275 amended section
1833(t)(7)(D)(i) of the Act by extending the period of TOPs to rural
hospitals with 100 beds or fewer for 1 year, for services provided
before January 1, 2010. Section 147 of Public Law 110-275 also extended
TOPs to SCHs (including EACHs) with 100 or fewer beds for covered OPD
services provided on or after January 1, 2009, and before January 1,
2010. In accordance with section 147 of Public Law 110-275, when the
OPPS payment is less than the provider's pre-BBA amount, the amount of
payment is increased by 85 percent of the amount of the difference
between the two payment amounts for CY 2009.
For CY 2009, we revised our regulations at Sec. Sec. 419.70(d)(2)
and (d)(4) and added a new paragraph (d)(5) to incorporate the
provisions of section 147 of Public Law 110-275. In addition, we made
other technical changes to Sec. 419.70(d)(2) to more precisely capture
our existing policy and to correct an inaccurate cross-reference. We
also made technical corrections to the cross-references in paragraphs
(e), (g), and (i) of Sec. 419.70.
For CY 2010, we made a technical correction to the heading of Sec.
419.70(d)(5) to correctly identify the policy as described in the
subsequent regulation text. The paragraph heading now indicates that
the adjustment applies to small SCHs, rather than to rural SCHs.
In the CY 2010 OPPS/ASC final rule (74 FR 60425), we stated that,
effective for services provided on or after January 1, 2010, rural
hospitals and SCHs (including EACHs) having 100 or fewer beds would no
longer be eligible for TOPs, in accordance with section 147 of Pub. L.
110-275. However, subsequent to issuance of the CY 2010 OPPS/ASC final
rule, section 3121(a) of the Affordable Care Act, Public Law 111-148,
amended section 1833(t)(7)(D)(i)(III) of the Act by extending the
period of TOPs to rural hospitals that are not SCHs with 100 beds or
fewer for 1 year, for services provided before January 1, 2011. Section
3121(a) of Public Law 111-148, amended section 1833(t)(7)(D)(i)(III) of
the Act and extended the period of TOPs to SCHs (including EACHs) for 1
year, for services provided before January 1, 2011, with Section
3121(b) of Public Law 111-148 removing the 100-bed limitation
applicable to such SCHs for covered OPD services furnished on and after
January 1, 2010 and before January 1, 2011. In accordance with section
3121 of Public Law 111-148, when the OPPS payment is less than the
provider's pre-BBA amount, the amount of payment is increased by 85
percent of the amount of the difference between the two payment amounts
for CY 2010. Accordingly, we are proposing to update section 419.70(d)
of the regulations to reflect the TOPs extensions and amendments
described in section 3121 of Public Law 111-148.
Effective for services provided on or after January 1, 2011, rural
hospitals having 100 or fewer beds that are not SCHs and SCHs
(including EACHs) will no longer be eligible for hold harmless TOPs, in
accordance with section 3121 of Public Law 111-148.
2. Proposed Adjustment for Rural SCHs Implemented in CY 2006 Related to
Public Law 108-173 (MMA)
In the CY 2006 OPPS final rule with comment period (70 FR 68556),
we finalized a payment increase for rural SCHs of 7.1 percent for all
services and procedures paid under the OPPS, excluding drugs,
biologicals, brachytherapy sources, and devices paid under the pass-
through payment policy in accordance with section 1833(t)(13)(B) of the
Act, as added by section 411 of Public Law 108-173. Section 411 gave
the Secretary the authority to make an adjustment to OPPS payments for
rural hospitals, effective January 1, 2006, if justified by a study of
the difference in costs by APC between hospitals in rural areas and
hospitals in urban areas. Our analysis showed a difference in costs for
rural SCHs. Therefore, for the CY 2006 OPPS, we finalized a payment
adjustment for rural SCHs of 7.1 percent for all services and
procedures paid under the OPPS, excluding separately payable drugs and
biologicals, brachytherapy sources, and devices paid under the pass-
through payment policy, in accordance with section 1833(t)(13)(B) of
the Act.
In CY 2007, we became aware that we did not specifically address
whether the adjustment applies to EACHs, which are considered to be
SCHs under section 1886(d)(5)(D)(iii)(III) of the Act. Thus, under the
statute, EACHs are treated as SCHs. Therefore, in the CY 2007 OPPS/ASC
final rule with comment period (71 FR 68010 and 68227), for purposes of
receiving this rural adjustment, we revised Sec. 419.43(g) to clarify
that EACHs are also eligible to receive the rural SCH adjustment,
assuming these entities otherwise meet the rural adjustment criteria.
Currently, fewer than 10 hospitals are classified as EACHs and as of CY
1998, under section 4201(c) of Public Law 105-33, a hospital can no
longer become newly classified as an EACH.
This adjustment for rural SCHs is budget neutral and applied before
calculating outliers and copayment. As stated in the CY 2006 OPPS final
rule with comment period (70 FR 68560), we would not reestablish the
adjustment amount on an annual basis, but we may review the adjustment
in the future and, if appropriate, would revise the adjustment. We
provided the same 7.1 percent adjustment to rural SCHs, including
EACHs, again in CY 2008 and CY 2009. Further, in the CY 2009 OPPS/ASC
final rule with comment period (73 FR 68590), we updated the
regulations at Sec. 419.43(g)(4) to specify, in general terms, that
items paid at charges adjusted to costs by application of a hospital-
specific CCR are excluded from the 7.1 percent payment adjustment.
For the CY 2011 OPPS, we are proposing to continue our policy of a
budget neutral 7.1 percent payment adjustment for rural SCHs, including
EACHs, for all services and procedures paid under the OPPS, excluding
separately payable drugs and biologicals, devices paid under the pass-
through payment policy, and items paid at charges reduced to costs. We
intend to reassess the 7.1 percent adjustment in the near future by
examining differences between urban and rural hospitals' costs using
updated claims, cost reports, and provider information.
F. Proposed OPPS Payments to Cancer Hospitals Described in Section
1886(d)(1)(B)(v) of the Act
1. Background
Since the inception of the hospital outpatient prospective payment
system (OPPS), which was authorized by the Balanced Budget Act of 1997
(BBA), Medicare has paid cancer hospitals identified in section
1886(d)(1)(B)(v) of the Act (cancer hospitals) under the OPPS for
covered outpatient hospital services. There are 11 cancer hospitals
that meet the classification criteria in section 1886(d)(1)(B)(v) of
the Act. These 11 cancer hospitals are exempted from payment under the
inpatient prospective payment system (IPPS). With the Medicare,
Medicaid and SCHIP Balanced Budget Refinement Act of 1999, Congress
created section 1833(t)(7) of the Act, ``Transitional Adjustment to
Limit Decline in Payment,'' to serve as a permanent payment floor by
limiting cancer
[[Page 46233]]
hospitals' potential losses under the OPPS. Through 1833(t)(7)(D)(ii)
of the Act, a cancer hospital receives the full amount of the
difference between payments for covered outpatient services under the
OPPS and a pre-BBA amount. That is, cancer hospitals are permanently
held harmless to their ``pre-BBA'' amount, and they receive
transitional outpatient payments (TOPs) to ensure that they do not
receive a payment that is lower under the OPPS than the payment they
would have received before implementation of the OPPS, as set forth in
section 1833(t)(7)(F) of the Act. The pre-BBA payment amount is an
amount equal to the product of the reasonable cost of the hospital for
such services for the portions of the hospital's cost reporting period
(or periods) occurring in the year and the base payment to cost ratio
(base PCR) for the hospital. The pre-BBA amount, including the
determination of the base PCR, are defined at 42 CFR 419.70(f). TOPs
are calculated on Worksheet E Part B of the Hospital and Hospital
Health Care Complex Cost Report (form CMS-2552-96) each year. Section
1833(t)(7)(I) of the Act exempts TOPs from budget neutrality
calculations. Almost all of the 11 cancer hospitals receive TOPs each
year. The volume weighted average payment to cost ratio (PCR) for the
cancer hospitals is 0.83, or outpatient payment with TOPs to cancer
hospitals is 83 percent of reasonable cost.
Section 3138 of the Affordable Care Act instructs the Secretary to
conduct a study to determine if, under the OPPS, outpatient costs
incurred by cancer hospitals described in section 1886(d)(1)(1)(v)(B)
of the Act with respect to ambulatory classification groups exceed the
costs incurred by other hospitals furnishing services under this
subsection (section 1833(t) of the Act) as determined appropriate by
the Secretary. In addition, section 3138 of the Affordable Care Act
requires the Secretary to take into consideration the cost of drugs and
biologicals incurred by such hospitals when studying cancer hospital
costliness. Further, section 3138 of the Affordable Care Act states
that if the cancer hospitals' costs are determined to be greater than
the costs of other hospitals paid under the OPPS, the Secretary shall
provide an appropriate adjustment to reflect these higher costs.
Section 3138 of the Affordable Care Act also requires that this
adjustment be budget neutral, and it would be effective for outpatient
services provided at cancer hospitals on or after January 1, 2011.
Cancer hospitals described in section 1886(d)(1)(B)(v) of the Act
remain eligible for TOPs payment (which are not budget neutral) and
outlier payments (which are budget neutral).
2. Study of Cancer Hospitals' Costs Relative to Other Hospitals
It has been our standard analytical approach to use a combination
of explanatory and payment regression models to assess the costliness
of a class of hospitals while controlling for other legitimate
influences of costliness, such as ability to achieve economies of
scale, to ensure that costliness is due to the type of hospital and to
identify appropriate payment adjustments. We used this approach in our
CY 2006 OPPS final rule with comment period to establish the 7.1
percent payment adjustment for rural sole community hospitals (70 FR
68556 through 68561). In our discussion for the CY 2006 OPPS proposed
rule we stated that a simple comparison of unit costs would not be
sufficient to assess the costliness of a class of hospitals because the
costs faced by individual hospitals, whether urban or rural, are a
function of many varying factors, including local labor supply and the
complexity and volume of services provided (70 FR 42699).
In constructing our analysis of cancer hospitals' costs relative to
other hospitals, we considered whether our standard analytical approach
to use a combination of explanatory and payment regression models would
lead to valid results for this particular study, or whether we should
develop a different or modified analytic approach. We note that the
analyses presented in the CY 2006 OPPS proposed and final rules were
designed to establish an adjustment for a large class of rural
hospitals. In contrast, section 3138 of the Affordable Care Act is
specifically limited to identifying an adjustment for 11 cancer
hospitals. With such a small sample size (11 out of approximately 4,000
hospitals paid under the OPPS), we are concerned that the standard
explanatory and payment regression models used to establish the rural
hospital adjustment would lead to imprecise estimates of payment
adjustments for this small group of hospitals. Further, Section 3138 of
the Affordable Care Act specifies explicitly that cost comparisons
between classes of hospitals must include the cost of drugs and
biologicals. In our CY 2006 analysis of rural hospitals, we excluded
the cost of drugs and biologicals in our model because the extreme
units associated with proper billing for some drugs and biologicals can
bias the calculation of a service mix index, or volume weighted average
APC relative weight, for each hospital (70 FR 42698). Therefore, we
chose not to pursue our standard combination of explanatory and payment
regression modeling to identify costliness and determine a cancer
hospital adjustment.
While we chose not to use our standard models to calculate a
proposed cancer hospital adjustment, we determined it still would be
appropriate to construct our usual provider-level analytical dataset
consisting of variables related to assessing costliness including
average cost per unit for a hospital and the hospitals average APC
relative weight as an indicator of the hospitals resource intensity, as
measured by the APC relative weights. We used these variables to
calculate univariate statistics that describe the costliness and
related aspects of cancer hospitals and other hospitals paid under the
OPPS. While descriptive statistics cannot control for the myriad
factors that contribute to observed costs, we believe that we can
assume that stark differences in cost between cancer hospitals and
other hospitals paid under the OPPS that would be observable by
examining descriptive univariate statistics would provide some
indication of relative costliness. We began our analysis of the cancer
hospitals as we did for the rural hospitals by creating an analytical
dataset of hospitals billing under the OPPS for CY 2009 (a total of
3,933) that were included in our claims dataset for establishing the CY
2011 OPPS proposed APC relative weights (discussed in detail in section
II.A. of this proposed rule). This analytical dataset includes the
3,933 OPPS hospitals' total estimated cost (including packaged cost),
total lines, total discounted units as modeled for CY 2011 OPPS
payment, and the average weight of their separately payable services
(total APC weight divided by total units) as modeled for CY 2011 OPPS.
We create this dataset from the hospital specific service utilization
files that we use to model budget neutrality and to perform impact
analyses after we complete estimating a median cost (or equivalent
amount depending on unique APC methodologies as discussed in section II
of this proposed rule) for each APC. Using the CY 2009 claims that we
use to model the CY 2011 proposed OPPS, we use the utilization on those
claims to model APC payment under the CY 2011 proposed payment
policies, such as proposed payment for drugs and biologicals at ASP+6
percent and proposed reassignment of some HCPCS codes to different
APCs. We then summarized this estimated
[[Page 46234]]
utilization and payment for each hospital (``hospital-level''). These
files consist of hospital-level aggregate costs (including the cost of
packaged items and services), total estimated discounted units under
the modeled proposed CY 2011 OPPS, total estimated volume of number of
occurrences of separately payable HCPCS codes under the modeled
proposed CY 2011 OPPS, and total relative weight of separately payable
services under the modeled proposed CY 2011 OPPS. The calculation of
these summary files are discussed in Stage 6 of our claims accounting
narrative available under supporting documentation for this proposed
rule on the CMS Web site at: http://www.cms.gov/HospitalOutpatientPPS/HORD/. After summarizing modeled payment to the hospital-level, we
removed 48 hospitals in Puerto Rico from our dataset, because we do not
believe that their cost structure reflects the costs of most hospitals
paid under the OPPS and because they could bias the calculation of
hospital-weighted statistics. We then removed an additional 66
hospitals with a cost per unit of more than 3 standard deviations from
the geometric mean (mean of the natural log) because including outliers
in hospital-weighted descriptive statistics also could bias the those
statistics. This resulted in a dataset with 11 cancer hospitals and
3,808 other hospitals.
We included the following standard hospital-level variables that
describe hospital costliness in our analysis file: Outpatient cost per
discounted unit under the modeled CY 2011 OPPS (substituting a cost per
administration, rather than a cost per unit, for drugs and
biologicals); each hospital's proposed CY 2011 wage index as a measure
of relative labor cost; the service mix index, or volume-weighted
average proposed CY 2011 APC relative weight (including a simulated
weight for drugs and biologicals created by dividing the CY 2010 April
ASP-based payment amount at ASP+6 percent appearing in Addendum A and B
of this proposed rule by the proposed conversion factor of $68.267);
outpatient volume based on number of occurrences of HCPCS codes in the
CY 2009 claims data; and number of beds. We use these variables because
they are key indicators of costliness under the modeled OPPS system,
and they allow us to assess the relative costliness of classes of
hospitals under the proposed CY 2011 OPPS. We further discuss these
variables in our CY 2006 proposed rule analysis (70 FR 42698 through
42701). A hospital's service mix index is a measure of resource
intensity of the services provided by the hospital as measured by the
proposed CY 2011 OPPS relative weights, and standardizing the cost per
discounted unit by the service mix index creates an adjusted cost per
unit estimate that reflects the remaining relative costliness of a
hospital remaining after receiving the estimated payments that we are
proposing to make under the CY 2011 OPPS. In short, if a class of
hospitals demonstrates higher cost per unit after standardization by
service mix it is an early indication that the class of hospitals may
be significantly more costly in the regression models. We used this
data to calculate the descriptive univariate statistics for cancer
hospitals appearing in Table 10 below. We note that because drugs and
biologicals are such a significant portion of the services that the
cancer hospitals provide, and because Section 3138 of the Affordable
Care Act explicitly requires us to consider the cost of drugs and
biologicals, we included the cost of these items in our total cost
calculation for each hospital, counting each occurrence of a drug in
the modeled proposed CY 2011 data (based on units in CY 2009 claims
data). That is, we sought to treat each administration of a drug or
biological as one unit.
In reviewing these descriptive statistics, we observe that cancer
hospitals had a standardized cost per discounted unit of $150.12
compared to a standardized cost per discounted unit of $94.14 for all
other hospitals. That is, cancer hospitals' average cost per discounted
unit remains high even after accounting for payment under the modeled
proposed CY 2011 payment system, which is not true for all other
hospitals. Observing such differences in standardized cost per
discounted unit lead us to conclude that cancer hospitals are more
costly than other hospitals paid under the OPPS, even without the
inferential statistical models that we typically employ.
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[[Page 46235]]
3. Proposed Adjustment for Certain Cancer Hospitals
Having reviewed the cost data from the standard analytic database
and determined that cancer hospitals are more costly than other
hospitals within the OPPS system, we decided to examine hospital cost
report data from Worksheet E Part B (where TOPs are calculated on the
Hospital and Hospital Health Care Complex Cost Report each year) in
order to determine whether our findings were further supported by cost
report data and to determine an appropriate proposed payment adjustment
methodology. Analyses on our standard analytic database and descriptive
statistics presented in Table 10 above, did not consider TOPs in
assessing costliness of cancer hospitals relative to other hospitals
furnishing services under section 1833(t) of the Act. This is because
section 3138 of the Affordable Care Act requires that any cancer
adjustment be made within the budget neutral system. In making a
determination about a payment adjustment subject to budget neutrality,
we believe it is appropriate to assess costliness and payments within
the budget neutral payment system. We note that TOPs are based on
reasonable cost and are not part of the budget neutral payment system.
Further, TOPs have no associated relative weight that could be included
in an assessment of APC-based payment. TOPs are paid at cost report
settlement on an aggregate basis, not a per service basis, and we would
have no way to break these payments down into a relative weight to
incorporate these retrospective aggregate payments in the form of
relative weight under the proposed modeled CY 2011 OPPS. The cost
report data we selected for the analysis was limited to the OPPS-
specific payment and cost data available on Worksheet E Part B, which
is also where TOPs are calculated including aggregate OPPS payments,
including outlier payments and the cost of medical and other health
services. These aggregate measures of cost and payment also include the
cost and payment for drugs and biologicals and other adjustments that
we typically include in our regression modeling, including wage index
adjustment and rural adjustment, if applicable. While this cost report
data cannot provide an estimate of cost per unit after controlling for
other potential factors that could influence cost per unit, we can use
this aggregate cost and payment data to examine the cancer hospitals'
OPPS PCR and OPPS PCR with TOPs, and compare these to the OPPS PCR for
other hospitals.
PCRs calculated from the most recent cost report data also indicate
that costs relative to payments at cancer hospitals are higher than
those at other hospitals paid under the OPPS (that is, cancer hospitals
have lower PCRs). In order to calculate PCRs for hospitals paid under
the OPPS (including cancer hospitals), we used the same extract of cost
report data from the Hospital Cost Report Information System (HCRIS),
as discussed in section II.A. of this proposed rule, that we used to
calculate the CCRs that we used to estimate median costs for this
proposed CY 2011 OPPS. Using this cost report data, we included data
from Worksheet E Part B for each hospital, keeping data from each
hospital's most recent cost report, whether as submitted or settled. We
then limited the data set to the hospitals with CY 2009 claims data
that we used to model the CY 2011 proposed APC relative weights (3933
hospitals) because we used the claims from these hospitals to calculate
the estimated costs we used for the descriptive statistics in our first
analysis and because it is appropriate to use the same set of hospitals
that we are using to calibrate the modeled proposed CY 2011 OPPS. The
cancer hospitals in this data set largely had cost report data from
cost reporting periods ending in FY 2008 and FY 2009. The cost report
data for the other hospitals were from cost report periods with fiscal
year ends ranging from 2005 to 2009. We then removed the cost report
data for 48 hospitals from Puerto Rico from our data set because we do
not believe that their cost structure reflects the costs of most
hospitals paid under the OPPS and therefore may bias the results of the
study. We also removed 301 hospitals with cost report data that was not
complete (missing OPPS payments including outliers, missing aggregate
cost data, or both) so that all cost reports in the study would have
both the payment and cost data necessary to calculate a PCR for each
hospital, leading to a final analytic file of 3584 hospitals with cost
report data. We believe that the costs, PPS payments, and TOPs reported
on Worksheet E part B for the hospitals included in our CY 2011
modeling should be sufficiently accurate for assessing hospitals'
relative costliness because all of the key elements that we believe to
be necessary for the analysis (payment, cost and TOPs) are contained on
this worksheet.
Using this much smaller dataset of cost report data, we estimate
that on average, the OPPS payments to the 11 cancer hospitals, not
including TOPs, are approximately 62 percent of reasonable cost (that
is, we calculate a PCR of 0.615 for the cancer hospitals), whereas, we
estimate that, on average, the OPPS payments to other hospitals paid
under the OPPS are approximately 87 percent of reasonable cost
(resulting in a PCR of 0.868). Individual cancer hospitals' OPPS PCRs
range from approximately 48 percent to approximately 82 percent. When
TOPS are included in the calculation of the PCR, cancer hospitals, as a
group, receive payments that are approximately 83 percent of reasonable
cost, which is still lower than the average PCR of other OPPS hospitals
of approximately 87 percent of reasonable cost. Considering this data,
we find that the cancer hospitals are more costly than other hospitals
paid under the OPPS. The dataset of hospital cost report data that we
used to model this proposed adjustment is available under supporting
documentation for this proposed rule on the CMS Web site at: http://www.cms.gov/HospitalOutpatientPPS/HORD/.
Based on our findings that cancer hospitals, as a class, have a
significantly lower volume weighted average PCR than the volume
weighted PCR of other hospitals paid under the OPPS and our findings
above that the cancer hospitals cost per discounted unit standardized
for service mix remains much higher than the standardized cost per
discounted unit of all other hospitals, we are proposing an adjustment
for cancer hospitals to reflect these higher costs effective January 1,
2011, as mandated by section 3138 of the Affordable Care Act. For
purposes of calculating a proposed adjustment, we chose to rely on this
straightforward assessment of payments and costs from the cost report
data because of the concerns outlined above with respect to the small
number of hospitals, and because of the challenges associated with
accurately including drug and biological costs in our standard
regression models. We believe that an appropriate adjustment would
redistribute enough payments from other hospitals paid under the OPPS
to the cancer hospitals to give cancer hospitals a PCR that is
comparable to the average PCR for other hospitals paid under the OPPS.
Therefore, we propose a hospital-specific payment adjustment determined
as the percentage of additional payment needed to raise each cancer
hospital's PCR to the weighted average PCR for all other hospitals paid
under OPPS (0.868) in the CY 2011 dataset. This would be accomplished
by adjusting each cancer hospital's OPPS payment by the percentage
difference
[[Page 46236]]
between their individual PCR (without TOPs) and the weighted average
PCR of the other hospitals paid under OPPS.
This proposed methodology would result in the proposed percentage
payment adjustments for the 11 cancer hospitals appearing in Table 11.
We propose that this hospital-specific adjustment would be applied to
the wage adjusted payments for all items, except for items and services
paid at charges adjusted to cost or devices receiving pass-through
status defined in 42 CFR 419.66. The proposed cancer hospital
adjustment would not be applied to items and services paid at charges
adjusted to cost because these items and services are always paid the
estimated full cost of the item or service. We are proposing to amend
42 CFR to add new section 419.43(i)(2) which would establish the amount
of the adjustment to cancer hospitals. We also propose that this
adjustment would be budget neutral as set forth in proposed new section
42 CFR 419.43(i)(3), consistent with section 3138 of the Affordable
Care Act. We note that outlier payments would be appropriately assessed
after application of the cancer adjustment and that TOPs would continue
to apply. The changes made by section 3138 of the Affordable Care Act
do not affect the existing statutory provisions that provide for
outlier payment for all hospitals paid under the OPPS, including cancer
hospitals and TOPs payments for cancer hospitals. Further, both outlier
payments and TOPs serve as a safety net for hospitals, although
outliers are budget neutral and TOPs are not, and TOPs are limited to
certain hospitals. As a means of buffering the financial risk
associated with a prospective payment system, both adjustments
(outliers and TOPs) only should be assessed after final payments have
been made. Because outlier payments are made within the budget
neutrality, outlier payments should be assessed after all budget
neutral payments for an individual service have been made, including
the cancer adjustment. The TOPs payments would be assessed after all
payments have been made for a cost reporting period. We note that the
proposed adjustment for all cancer hospitals would result in an
estimated aggregate increase in OPPS payments to cancer hospitals of
41.2 percent for CY 2011, based on cost report data.
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We propose to recalibrate the ``other hospital'' PCR target amount
and the hospital-specific percentage adjustment for each cancer
hospital periodically, but not every year, because we do not believe
that these amounts will change
[[Page 46237]]
so drastically in any given year to warrant annual recalculation. In
the event that a cancer hospital has a PCR that is higher than the
volume weighted average PCR for all hospitals, we propose that the
specific hospital would not be eligible for this adjustment. We believe
that this would indicate that the hospital's costs do not exceed the
costs incurred by other hospitals furnishing services under the OPPS
and, therefore, an adjustment would not be required and would be
unnecessary. We note that the TOPS provision remains in effect and that
we will continue to make TOPS to cancer hospitals that continue to have
all final OPPS payments (including but not limited to outlier payments,
the wage adjustment, and this new cancer hospital adjustment), that are
lower than their pre-BBA payment amount. If this proposed adjustment is
finalized, we estimate that only one cancer hospital would continue to
receive TOPS. We propose to update the hospital-specific cancer
hospital payment adjustments in Table 11 using the more recent cost
reports that become available for the CY 2011 OPPS/ASC final rule with
comment period.
G. Proposed Hospital Outpatient Outlier Payments
1. Background
Currently, the OPPS pays outlier payments on a service-by-service
basis. For CY 2010, the outlier threshold is met when the cost of
furnishing a service or procedure by a hospital exceeds 1.75 times the
APC payment amount and exceeds the APC payment rate plus a $2,175
fixed-dollar threshold. We introduced a fixed-dollar threshold in CY
2005 in addition to the traditional multiple threshold in order to
better target outliers to those high cost and complex procedures where
a very costly service could present a hospital with significant
financial loss. If the cost of a service meets both of these
conditions, the multiple threshold and the fixed-dollar threshold, the
outlier payment is calculated as 50 percent of the amount by which the
cost of furnishing the service exceeds 1.75 times the APC payment rate.
Before CY 2009, this outlier payment had historically been considered a
final payment by longstanding OPPS policy. We implemented a
reconciliation process similar to the IPPS outlier reconciliation
process for cost reports with cost reporting periods beginning on or
after January 1, 2009 (73 FR 68594 through 68599).
It has been our policy for the past several years to report the
actual amount of outlier payments as a percent of total spending in the
claims being used to model the proposed OPPS. Our current estimate of
total outlier payments as a percent of total CY 2009 OPPS payment,
using available CY 2009 claims and the revised OPPS expenditure
estimate for the President's Budget for FY 2011, is approximately 1.0
percent of the total aggregated OPPS payments. Therefore, for CY 2009,
we estimate that we paid at the CY 2009 outlier target of 1.0 percent
of total aggregated OPPS payments.
As explained in the CY 2010 OPPS/ASC final rule with comment period
(74 FR 60426 through 60427), we set our projected target for aggregate
outlier payments at 1.0 percent of the aggregate total payments under
the OPPS for CY 2010. The outlier thresholds were set so that estimated
CY 2010 aggregate outlier payments would equal 1.0 percent of the total
aggregated payments under the OPPS. Using CY 2009 claims data and CY
2010 payment rates, we currently estimate that the aggregate outlier
payments for CY 2010 would be approximately 0.85 percent of the total
CY 2010 OPPS payments. The difference between 1.0 percent and 0.85
percent is reflected in the regulatory impact analysis in section
XXIII. of this proposed rule. We note that we provide estimated CY 2011
outlier payments for hospitals and CMHCs with claims included in the
claims data that we used to model impacts in the Hospital-Specific
Impacts--Provider-Specific Data file on the CMS Web site at: http://www.cms.hhs.gov/HospitalOutpatientPPS/.
2. Proposed Outlier Calculation
For CY 2011, we are proposing to continue our policy of estimating
outlier payments to be 1.0 percent of the estimated aggregate total
payments under the OPPS for outlier payments. We are proposing that a
portion of that 1.0 percent, specifically 0.04 percent, would be
allocated to CMHCs for PHP outlier payments. This is the amount of
estimated outlier payments that would result from the proposed CMHC
outlier threshold as a proportion of total estimated outlier payments.
As discussed in section X.D. of this proposed rule, for CMHCs, we are
proposing to continue a policy, that if a CMHC's cost for partial
hospitalization services, paid under either APC 0172 (Level I Partial
Hospitalization (3 services)) or APC 0173 (Level II Partial
Hospitalization (4 or more services)), exceeds 3.40 times the payment
for APC 0173, the outlier payment would be calculated as 50 percent of
the amount by which the cost exceeds 3.40 times the APC 0173 payment
rate. For further discussion of CMHC outlier payments, we refer readers
to section X.D. of this proposed rule.
To ensure that the estimated CY 2011 aggregate outlier payments
would equal 1.0 percent of estimated aggregate total payments under the
OPPS, we are proposing that the hospital outlier threshold be set so
that outlier payments would be triggered when the cost of furnishing a
service or procedure by a hospital exceeds 1.75 times the APC payment
amount and exceeds the APC payment rate plus a $2,025 fixed-dollar
threshold. This proposed threshold reflects the methodology discussed
below in this section, as well as the proposed APC recalibration for CY
2011.
We calculated the proposed fixed-dollar threshold for this proposed
rule using largely the same methodology as we did in CY 2009 (73 FR
41462). For purposes of estimating outlier payments for this proposed
rule, we used the hospital-specific overall ancillary CCRs available in
the April 2010 update to the Outpatient Provider-Specific File (OPSF).
The OPSF contains provider-specific data, such as the most current CCR,
which are maintained by the Medicare contractors and used by the OPPS
Pricer to pay claims. The claims that we use to model each OPPS update
lag by 2 years. For this proposed rule, we used CY 2009 claims to model
the CY 2011 OPPS. In order to estimate the proposed CY 2011 hospital
outlier payments for this proposed rule, we inflated the charges on the
CY 2009 claims using the same inflation factor of 1.1059 that we used
to estimate the IPPS fixed-dollar outlier threshold for the FY 2011
IPPS/LTCH PPS proposed rule (75 FR 24068). We used an inflation factor
of 1.0516 to estimate CY 2010 charges from the CY 2009 charges reported
on CY 2009 claims. The methodology for determining this charge
inflation factor was discussed in the FY 2011 IPPS/LTCH PPS proposed
rule (75 FR 24068). As we stated in the CY 2005 OPPS final rule with
comment period (69 FR 65845), we believe that the use of this charge
inflation factor is appropriate for the OPPS because, with the
exception of the inpatient routine service cost centers, hospitals use
the same ancillary and outpatient cost centers to capture costs and
charges for inpatient and outpatient services.
As noted in the CY 2007 OPPS/ASC final rule with comment period (71
FR 68011), we are concerned that we could systematically overestimate
the OPPS hospital outlier threshold if we did not apply a CCR inflation
adjustment factor. Therefore, we are proposing to apply the same CCR
inflation adjustment factor
[[Page 46238]]
that we proposed to apply for the FY 2011 IPPS outlier calculation to
the CCRs used to simulate the proposed CY 2011 OPPS outlier payments
that determine the fixed-dollar threshold. Specifically, for CY 2011,
we are proposing to apply an adjustment of 0.9890 to the CCRs that were
in the April 2010 OPSF to trend them forward from CY 2010 to CY 2011.
The methodology for calculating this adjustment is discussed in the FY
2011 IPPS/LTCH PPS proposed rule (75 FR 24068 through 24070).
Therefore, to model hospital outlier payments for this proposed
rule, we applied the overall CCRs from the April 2010 OPSF file after
adjustment (using the proposed CCR inflation adjustment factor of
0.9890 to approximate CY 2011 CCRs) to charges on CY 2009 claims that
were adjusted (using the proposed charge inflation factor of 1.1059 to
approximate CY 2011 charges). We simulated aggregated CY 2011 hospital
outlier payments using these costs for several different fixed-dollar
thresholds, holding the 1.75 multiple threshold constant and assuming
that outlier payment would continue to be made at 50 percent of the
amount by which the cost of furnishing the service would exceed 1.75
times the APC payment amount, until the total outlier payments equaled
1.0 percent of aggregated estimated total CY 2011 OPPS payments. We
estimated that a proposed fixed-dollar threshold of $2,025, combined
with the proposed multiple threshold of 1.75 times the APC payment
rate, would allocate 1.0 percent of aggregated total OPPS payments to
outlier payments. We are proposing to continue to make an outlier
payment that equals 50 percent of the amount by which the cost of
furnishing the service exceeds 1.75 times the APC payment amount when
both the 1.75 multiple threshold and the proposed fixed-dollar $2,025
threshold are met. For CMHCs, if a CMHC's cost for partial
hospitalization services, paid under either APC 0172 or APC 0173,
exceeds 3.40 times the payment for APC 0173, the outlier payment would
be calculated as 50 percent of the amount by which the cost exceeds
3.40 times the APC 0173 payment rate.
Section 1833(t)(17)(A) of the Act, which applies to hospitals as
defined under section 1886(d)(1)(B) of the Act, requires that hospitals
that fail to report data required for the quality measures selected by
the Secretary, in the form and manner required by the Secretary under
1833(t)(17)(B) of the Act, incur a 2.0 percentage point reduction to
their OPD fee schedule increase factor, that is, the annual payment
update factor. The application of a reduced OPD fee schedule increase
factor results in reduced national unadjusted payment rates that will
apply to certain outpatient items and services furnished by hospitals
that are required to report outpatient quality data and that fail to
meet the HOP QDRP requirements. For hospitals that fail to meet the HOP
QDRP requirements, we are proposing to continue our policy that we
implemented in CY 2009 that the hospitals' costs would be compared to
the reduced payments for purposes of outlier eligibility and payment
calculation. For more information on the HOP QDRP, we refer readers to
section XVI. of this proposed rule.
In the CY 2009 OPPS/ASC final rule with comment period (73 CFR
68599), we adopted as final policy a process to reconcile hospital or
CMHC outlier payments at cost report settlement for services furnished
during cost reporting periods beginning in CY 2009. OPPS outlier
reconciliation ensures accurate outlier payments for those facilities
whose CCRs fluctuate significantly relative to the CCRs of other
facilities, and who receive a significant amount of outlier payments.
As under the IPPS, we do not adjust the fixed-dollar threshold or
amount of total OPPS payment set aside for outlier payments for
reconciliation activity because such action would be contrary to the
prospective nature of the system. Our outlier threshold calculation
assumes that overall ancillary CCRs accurately estimate hospital costs
based on the information available to us at the time we set the
prospective fixed-dollar outlier threshold. For these reasons, we are
not incorporating any assumptions about the effects of reconciliation
into our calculation of the proposed OPPS fixed-dollar outlier
threshold.
H. Proposed Calculation of an Adjusted Medicare Payment From the
National Unadjusted Medicare Payment
The basic methodology for determining prospective payment rates for
HOPD services under the OPPS is set forth in existing regulations at 42
CFR part 419, subparts C and D. The payment rate for most services and
procedures for which payment is made under the OPPS is the product of
the conversion factor calculated in accordance with section II.B. of
this proposed rule and the relative weight determined under section
II.A. of this proposed rule. Therefore, the proposed national
unadjusted payment rate for most APCs contained in Addendum A to this
proposed rule and for most HCPCS codes to which separate payment under
the OPPS has been assigned in Addendum B to this proposed rule was
calculated by multiplying the proposed CY 2011 scaled weight for the
APC by the proposed CY 2011 conversion factor.
We note that section 1833(t)(17) of the Act, which applies to
hospitals as defined under section 1886(d)(1)(B) of the Act, requires
that hospitals that fail to submit data required to be submitted on
quality measures selected by the Secretary, in the form and manner and
at a time specified by the Secretary, incur a 2.0 percentage point
reduction to their OPD fee schedule increase factor, that is, the
annual payment update factor. The application of a reduced OPD fee
schedule increase factor results in reduced national unadjusted payment
rates that apply to certain outpatient items and services provided by
hospitals that are required to report outpatient quality data and that
fail to meet the Hospital Outpatient Quality Data Reporting Program
(HOP QDRP) requirements. For further discussion of the payment
reduction for hospitals that fail to meet the requirements of the HOP
QDRP, we refer readers to section XVII.D. of this proposed rule.
We demonstrate in the steps below how to determine the APC payments
that would be made in a calendar year under the OPPS to a hospital that
fulfills the HOP QDRP requirements and to a hospital that fails to meet
the HOP QDRP requirements for a service that has any of the following
status indicator assignments: ``P,'' ``Q1,'' ``Q2,'' ``Q3,'' ``R,''
``S,'' ``T,'' ``U,'' ``V,'' or ``X'' (as defined in Addendum D1 to this
proposed rule), in a circumstance in which the multiple procedure
discount does not apply, the procedure is not bilateral, and
conditionally packaged services (status indicator of ``Q1'' and ``Q2'')
qualify for separate payment. We note that although blood and blood
products with status indicator ``R'' and brachytherapy sources with
status indicator ``U'' are not subject to wage adjustment, they are
subject to reduced payments when a hospital fails to meet the HOP QDRP
requirements because the national unadjusted payment rates for these
services are updated by the OPD fee schedule increase factor.
Individual providers interested in calculating the payment amount
that they would receive for a specific service from the national
unadjusted payment rates presented in Addenda A and B to this proposed
rule should follow the formulas presented in the following steps. For
purposes of the payment calculations below, we refer to the national
unadjusted payment rate for hospitals that meet the requirements of
[[Page 46239]]
the HOP QDRP as the ``full'' national unadjusted payment rate. We refer
to the national unadjusted payment rate for hospitals that fail to meet
the requirements of the HOP QDRP as the ``reduced'' national unadjusted
payment rate. The reduced national unadjusted payment rate is
calculated by multiplying the reporting ratio of 0.980 times the
``full'' national unadjusted payment rate. The national unadjusted
payment rate used in the calculations below is either the full national
unadjusted payment rate or the reduced national unadjusted payment
rate, depending on whether the hospital met its HOP QDRP requirements
in order to receive the full CY 2011 OPPS increase factor.
Step 1. Calculate 60 percent (the labor-related portion) of the
proposed national unadjusted payment rate. Since the initial
implementation of the OPPS, we have used 60 percent to represent our
estimate of that portion of costs attributable, on average, to labor.
We refer readers to the April 7, 2000 OPPS final rule with comment
period (65 FR 18496 through 18497) for a detailed discussion of how we
derived this percentage. We confirmed that this labor-related share for
hospital outpatient services is still appropriate during our regression
analysis for the payment adjustment for rural hospitals in the CY 2006
OPPS final rule with comment period (70 FR 68553).
The formula below is a mathematical representation of Step 1 and
identifies the labor-related portion of a specific payment rate for a
specific service.
X is the labor-related portion of the national unadjusted payment
rate.
X = .60 * (national unadjusted payment rate)
Step 2. Determine the wage index area in which the hospital is
located and identify the wage index level that applies to the specific
hospital. The wage index values assigned to each area reflect the
geographic statistical areas (which are based upon OMB standards) to
which hospitals are assigned for FY 2011 under the IPPS,
reclassifications through the MGCRB, section 1886(d)(8)(B) ``Lugar''
hospitals, reclassifications under section 1886(d)(8)(E) of the Act, as
defined in Sec. 412.103 of the regulations, and hospitals designated
as urban under section 601(g) of Public Law 98-21. We note that the
reclassifications of hospitals under section 508 of Public Law 108-173,
as extended by section 3137 of the Affordable Care Act, expires on
September 30, 2010, and, therefore, are not applicable under the IPPS
for FY 2011. Therefore, these reclassifications will not apply to the
CY 2011 OPPS. (For further discussion of the changes to the FY 2011
IPPS wage indices, as applied to the CY 2011 OPPS, we refer readers to
section II.C. of this proposed rule.) In section II.C. of this proposed
rule, we also discuss our proposal to implement section 10324 of the
Affordable Care Act, which establishes a wage index floor of 1.00 for
frontier States, effective for services furnished on and after January
1, 2011.
Step 3. Adjust the wage index of hospitals located in certain
qualifying counties that have a relatively high percentage of hospital
employees who reside in the county, but who work in a different county
with a higher wage index, in accordance with section 505 of Public Law
108-173. Addendum L to this proposed rule contains the qualifying
counties and the associated proposed wage index increase developed for
the FY 2011 IPPS and published as Table 4J in the FY 2011 IPPS/LTCH PPS
proposed rule (75 FR 24182). This step is to be followed only if the
hospital is not reclassified or redesignated under section 1886(d)(8)
or section 1886(d)(10) of the Act.
Step 4. Multiply the applicable wage index determined under Steps 2
and 3 by the amount determined under Step 1 that represents the labor-
related portion of the national unadjusted payment rate.
The formula below is a mathematical representation of Step 4 and
adjusts the labor-related portion of the national payment rate for the
specific service by the wage index.
Xa is the labor-related portion of the national unadjusted payment
rate (wage adjusted).
Xa = .60 * (national unadjusted payment rate) * applicable
wage index.
Step 5. Calculate 40 percent (the nonlabor-related portion) of the
proposed national unadjusted payment rate and add that amount to the
resulting product of Step 4. The result is the wage index adjusted
payment rate for the relevant wage index area.
The formula below is a mathematical representation of Step 5 and
calculates the remaining portion of the national payment rate, the
amount not attributable to labor, and the adjusted payment for the
specific service.
Y is the nonlabor-related portion of the national unadjusted
payment rate.
Y = .40 * (national unadjusted payment rate)
Adjusted Medicare Payment = Y + Xa
Step 6. If a provider is a SCH, set forth in the regulations at
Sec. 412.92, or an EACH, which is considered to be a SCH under section
1886(d)(5)(D)(iii)(III) of the Act, and located in a rural area, as
defined in Sec. 412.64(b), or is treated as being located in a rural
area under Sec. 412.103, multiply the wage index adjusted payment rate
by 1.071 to calculate the total payment.
The formula below is a mathematical representation of Step 6 and
applies the rural adjustment for rural SCHs.
Adjusted Medicare Payment (SCH or EACH) = Adjusted Medicare Payment *
1.071
We have provided examples below of the calculation of both the
proposed full and reduced national unadjusted payment rates that would
apply to certain outpatient items and services performed by hospitals
that meet and that fail to meet the HOP QDRP requirements, using the
steps outlined above. For purposes of this example, we use a provider
that is located in Brooklyn, New York that is assigned to CBSA 35644.
This provider bills one service that is assigned to APC 0019 (Level I
Excision/Biopsy). The proposed CY 2011 full national unadjusted payment
rate for APC 0019 is $335.76. The proposed reduced national unadjusted
payment rate for a hospital that fails to meet the HOP QDRP
requirements is $329.04. This reduced rate is calculated by multiplying
the reporting ratio of 0.980 by the full unadjusted payment rate for
APC 0019.
The proposed FY 2011 wage index for a provider located in CBSA
35644 in New York is 1.3154. The proposed labor-related portion of the
full national unadjusted payment is $264.99 (.60 * $335.76 * 1.3154).
The proposed labor-related portion of the reduced national unadjusted
payment is $259.69 (.60 * $329.04 * 1.3154). The proposed nonlabor-
related portion of the full national unadjusted payment is $134.30 (.40
* $335.76). The proposed nonlabor-related portion of the reduced
national unadjusted payment is $131.62 (.40 * $329.04). The sum of the
labor-related and nonlabor-related portions of the full national
adjusted payment is $399.29 ($264.99 + $134.30). The sum of the reduced
national adjusted payment is $391.31 ($259.69 + $131.62).
I. Proposed Beneficiary Copayments
1. Background
Section 1833(t)(3)(B) of the Act requires the Secretary to set
rules for determining the unadjusted copayment amounts to be paid by
beneficiaries for covered OPD services. Section 1833(t)(8)(C)(ii) of
the Act specifies that the Secretary must reduce the national
unadjusted copayment amount for a covered OPD service (or group of such
services) furnished in a year in a manner so that the effective
copayment
[[Page 46240]]
rate (determined on a national unadjusted basis) for that service in
the year does not exceed a specified percentage. As specified in
section 1833(t)(8)(C)(ii)(V) of the Act, for all services paid under
the OPPS in CY 2010, and in calendar years thereafter, the percentage
is 40 percent of the APC payment rate.
Section 1833(t)(3)(B)(ii) of the Act provides that, for a covered
OPD service (or group of such services) furnished in a year, the
national unadjusted copayment amount cannot be less than 20 percent of
the OPD fee schedule amount. Until CY 2011, sections 1834(d)(2)(C)(ii)
and 1834(d)(3)(C)(ii) of the Act further require that the copayment for
screening flexible sigmoidoscopies and screening colonoscopies be equal
to 25 percent of the payment amount. Since the beginning of the OPPS,
we have applied the 25 percent copayment to screening flexible
sigmoidoscopies and screening colonoscopies. However, section 4104 of
the Affordable Care Act eliminated the coinsurance (to which section
1833(t)(2)(B) refers as the ``copayment'') for preventive services that
meet certain requirements, including flexible sigmoidoscopies and
screening colonscopies, and waived the Part B deductible for screening
colonoscopies that become diagnostic during the procedure. We discuss
our proposal to implement this provision in section XII.B. of this
proposed rule.
2. Proposed OPPS Copayment Policy
For CY 2011, we are proposing to determine copayment amounts for
new and revised APCs using the same methodology that we implemented
beginning in CY 2004. (We refer readers to the November 7, 2003 OPPS
final rule with comment period (68 FR 63458).) In addition, we are
proposing to use the same standard rounding principles that we have
historically used in instances where the application of our standard
copayment methodology would result in a copayment amount that is less
than 20 percent and cannot be rounded, under standard rounding
principles, to 20 percent. (We refer readers to the CY 2008 OPPS/ASC
final rule with comment period (72 FR 66687) in which we discuss our
rationale for applying these rounding principles.) The national
unadjusted copayment amounts for services payable under the OPPS that
would be effective January 1, 2011, are shown in Addenda A and B to
this proposed rule. As discussed in section XVI.D. of this proposed
rule, for CY 2011, the Medicare beneficiary's minimum unadjusted
copayment and national unadjusted copayment for a service to which a
reduced national unadjusted payment rate applies would equal the
product of the reporting ratio and the national unadjusted copayment,
or the product of the reporting ratio and the minimum unadjusted
copayment, respectively, for the service.
3. Proposed Calculation of an Adjusted Copayment Amount for an APC
Group
Individuals interested in calculating the national copayment
liability for a Medicare beneficiary for a given service provided by a
hospital that met or failed to meet its HOP QDRP requirements should
follow the formulas presented in the following steps.
Step 1. Calculate the beneficiary payment percentage for the APC by
dividing the APC's national unadjusted copayment by its payment rate.
For example, using APC 0019, $67.16 is 20 percent of the full national
unadjusted payment rate of $335.76. For APCs with only a minimum
unadjusted copayment in Addendum A and B of this proposed rule, the
beneficiary payment percentage is 20 percent.
The formula below is a mathematical representation of Step 1 and
calculates national copayment as a percentage of national payment for a
given service.
B is the beneficiary payment percentage.
B = National unadjusted copayment for APC/national unadjusted payment
rate for APC
Step 2. Calculate the appropriate wage-adjusted payment rate for
the APC for the provider in question, as indicated in Steps 2 through 4
under section II.H. of this proposed rule. Calculate the rural
adjustment for eligible providers as indicated in Step 6 under section
II.H. of this proposed rule.
Step 3. Multiply the percentage calculated in Step 1 by the payment
rate calculated in Step 2. The result is the wage-adjusted copayment
amount for the APC.
The formula below is a mathematical representation of Step 3 and
applies the beneficiary percentage to the adjusted payment rate for a
service calculated under section II.H. of this proposed rule, with and
without the rural adjustment, to calculate the adjusted beneficiary
copayment for a given service.
Wage-adjusted copayment amount for the APC = Adjusted Medicare Payment
* B
Wage-adjusted copayment amount for the APC (SCH or EACH) = (Adjusted
Medicare Payment * 1.071) * B
Step 4. For a hospital that failed to meet its HOP QDRP
requirements, multiply the copayment calculated in Step 3 by the
reporting ratio of 0.980.
The proposed unadjusted copayments for services payable under the
OPPS that would be effective January 1, 2011, are shown in Addenda A
and B to this proposed rule. We note that the national unadjusted
payment rates and copayment rates shown in Addenda A and B to this
proposed rule reflect the full market basket conversion factor
increase, as discussed in section XVI.D. of this proposed rule.
III. Proposed OPPS Ambulatory Payment Classification (APC) Group
Policies
A. Proposed OPPS Treatment of New HCPCS and CPT Codes
CPT and Level II HCPCS codes are used to report procedures,
services, items, and supplies under the hospital OPPS. Specifically,
CMS recognizes the following codes on OPPS claims: (1) Category I CPT
codes, which describe medical services and procedures; (2) Category III
CPT codes, which describe new and emerging technologies, services, and
procedures; and (3) Level II HCPCS codes, which are used primarily to
identify products, supplies, temporary procedures, and services not
described by CPT codes. CPT codes are established by the American
Medical Association (AMA) and the Level II HCPCS codes are established
by the CMS HCPCS Workgroup. These codes are updated and changed
throughout the year. CPT and HCPCS code changes that affect the OPPS
are published both through the annual rulemaking cycle and through the
OPPS quarterly update Change Requests (CRs). CMS releases new Level II
HCPCS codes to the public or recognizes the release of new CPT codes by
the AMA and makes these codes effective (that is, the codes can be
reported on Medicare claims) outside of the formal rulemaking process
via OPPS quarterly update CRs. This quarterly process offers hospitals
access to codes that may more accurately describe items or services
furnished and/or provides payment or more accurate payment for these
items or services in a timelier manner than if CMS waited for the
annual rulemaking process. We solicit comments on these new codes and
finalize our proposals related to these codes through our annual
rulemaking process. In Table 12 below, we summarize our proposed
process for updating codes through our OPPS quarterly update CRs,
seeking public comments, and finalizing their treatment under the OPPS.
[[Page 46241]]
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This process is discussed in detail below and we have separated our
discussion into two sections based on whether we are proposing to
solicit public comments in this CY 2011 OPPS/ASC proposed rule on a
specific group of the CPT and Level II HCPCS codes or whether we are
proposing to solicit public comments on another specific group of the
codes in the CY 2011 OPPS/ASC final rule with comment period. We note
that we sought public comments in the CY 2010 OPPS/ASC final rule with
comment period on the new CPT and Level II HCPCS codes that were
effective January 1, 2010. We also sought public comments in the CY
2010 OPPS/ASC final rule with comment period on the new Level II HCPCS
codes effective October 1, 2009. These new codes with an effective date
of October 1, 2009, or January 1, 2010, were flagged with comment
indicator ``NI'' (New code, interim APC assignment; comments will be
accepted on the interim APC assignment for the new code) in Addendum B
to the CY 2010 OPPS/ASC final rule with comment period to indicate that
we were assigning them an interim payment status and an APC and payment
rate, if applicable, which were subject to public comment following
publication of the CY 2010 OPPS/ASC final rule with comment period. We
will respond to public comments and finalize our proposed OPPS
treatment of these codes in the CY 2011 OPPS/ASC final rule with
comment period.
1. Proposed Treatment of New Level II HCPCS Codes and Category I CPT
Vaccine Codes and Category III CPT Codes for Which We Are Soliciting
Public Comments in This Proposed Rule
Effective April 1 and July 1 of CY 2010, we make effective a total
of 22 new Level II HCPCS codes, 4 new Category I CPT vaccine codes, and
11 new Category III CPT codes that were not addressed in the CY 2010
OPPS/ASC final rule with comment period that updated the OPPS. Twenty-
two new Level II HCPCS codes are effective for the April and July 2010
updates, and of the 22 new HCPCS codes, a total of 14 Level II HCPCS
codes are newly recognized for separate payment under the OPPS.
Through the April 2010 OPPS quarterly update CR (Transmittal 1924,
Change Request 6857, dated February 26, 2010), we allowed separate
payment for a total of six of the 22 Level II HCPCS codes.
Specifically, as displayed in Table 13 below, these included HCPCS code
C9258 (Injection, telavancin, 10 mg), C9259 (Injection, pralatrexate, 1
mg), C9260 (Injection, ofatumumab, 10 mg), C9261 (Injection,
ustekinumab, 1 mg), C9262 (Fludarabine phosphate, oral, 1 mg), and
C9263 (Injection, ecallantide, 1 mg).
In addition to the six HCPCS C-codes, five new HCPCS G-codes were
made effective on April 1, 2010. We did not recognize the five new
HCPCS G-codes for separate payment under the OPPS because they were
either paid under another Medicare payment system or were noncovered
services under Medicare. Specifically, we assigned HCPCS G0432
(Infectious agent antigen detection by enzyme immunoassay (EIA)
technique, qualitative or semi-quantitative, multiple-step method, HIV-
1 or HIV-2, screening), G0433 (Infectious agent antigen detection by
enzyme-linked immunosorbent assay
[[Page 46242]]
(ELISA) technique, antibody, HIV-1 or HIV-2, screening), G0435
(Infectious agent antigen detection by rapid antibody test of oral
mucosa transudate, HIV-1 or HIV-2, screening), and G9143 (Warfarin
responsiveness testing by genetic technique using any method, any
number of specimen(s)), to status indicator ``A'' (Not paid under OPPS.
Paid by fiscal intermediaries/MACs under a fee schedule or payment
system other than OPPS) to indicate that these services are paid under
the Medicare Clinical Laboratory Fee Schedule (CLFS). Further, we did
not recognize for separate payment HCPCS G9147 (Outpatient Intravenous
Insulin Treatment (OIVIT) and assigned it to status indicator ``E''
(Not paid by Medicare when submitted on outpatient claims (any
outpatient bill type)) because this service is nationally a noncovered
service under Medicare.
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Through the July 2010 OPPS quarterly update CR (Transmittal 1980,
Change Request 6996, dated June 4, 2010), which included HCPCS codes
that were made effective July 1, 2010, we allowed separate payment for
8 of the 22 new Level II HCPCS codes. Specifically, as displayed in
Table 14, we provided separate payment for HCPCS codes C9264
(Injection, tocilizumab, 1 mg), C9265 (Injection, romidepsin, 1 mg),
C9266 (Injection, collagenase clostridium histolyticum, 0.1 mg), C9267
(Injection, von Willebrand factor complex (human), Wilate, per 100 IU
VWF: RCO), C9268 (Capsaicin, patch, 10cm2), C9367 (Skin substitute,
Endoform Dermal Template, per square centimeter), Q2025 (Fludarabine
phosphate oral, 10mg), and C9800 (Dermal injection procedure(s) for
facial lipodystrophy syndrome (LDS) and provision of Radiesse or
Sculptra dermal filler, including all items and supplies).
We note that HCPCS code C9262 was made effective April 1, 2010, and
deleted June 30, 2010, when it was replaced with HCPCS code Q2025. As
discussed in section V.A.3. of this proposed rule, pass-through status
began for this drug on April 1, 2010. Because HCPCS code Q2025
describes the same drug as HCPCS code C9262, we are continuing its
pass-through status and assigning the HCPCS Q-code to the same APC and
status indicator as its predecessor HCPCS C-code, as shown in Table 14.
Specifically, HCPCS code Q2025 is assigned to APC 9262 and status
indicator ``G.''
[[Page 46243]]
Of the 12 HCPCS codes that were made effective July 1, 2010, we did
not recognize for separate payment four HCPCS codes. Specifically, we
did not recognize HCPCS codes G0428 (Collagen Meniscus Implant
procedure for filling meniscal defects (e.g., CMI, collagen scaffold,
Menaflex)), G0429 (Dermal filler injection(s) for the treatment of
facial lipodystrophy syndrome (LDS) (e.g., as a result of highly active
antiretroviral therapy), Q2026 (Injection, Radiesse, 0.1 ml), and Q2027
(Injection, Sculptra, 0.1 ml). Under the hospital OPPS, we have
assigned HCPCS code G0428 to status indicator ``E'' (Not paid by
Medicare when submitted on outpatient claims (any outpatient bill
type)) because this service is nationally noncovered by Medicare.
Further, because HCPCS code C9800 describes both the injection
procedure and the dermal filler supplies, we have assigned HCPCS codes
G0429, Q2026, and Q2027 to status indicator ``B'' to indicate that
these HCPCS codes are not recognized by OPPS when submitted on an
outpatient hospital Part B bill type 12x and 13x. Specifically,
hospitals must report HCPCS code C9800 to report the dermal filler
supplies and the dermal filler injection procedure. Under the hospital
OPPS, we have assigned HCPCS code C9800 to APC 0135 with a status
indicator ``T''. We refer readers to Table 14 below for a complete list
of the HCPCS codes that were made effective July 1, 2010.
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For CY 2011, we are proposing to continue our established policy of
recognizing Category I CPT vaccine codes for which FDA approval is
imminent and Category III CPT codes that the AMA releases in January of
each year for implementation in July through the OPPS quarterly update
process. Under the OPPS, Category I vaccine codes and Category III CPT
codes that are released on the AMA Web site in January are made
effective in July of the same year through the July quarterly update
CR, consistent with the AMA's implementation date for the codes.
Through the July 2010 OPPS quarterly update CR, we allow separate
payment for 10 of the 11 new Category III CPT codes effective July 1,
2010. Specifically, as displayed in Table 15 below, we allow separate
payment for CPT codes 0223T (Acoustic cardiography, including automated
analysis of combined acoustic and electrical intervals; single, with
interpretation and report), 0224T (Multiple, including serial trended
analysis and limited reprogramming of device parameter--AV or VV delays
only, with interpretation and report), 0225T (Multiple, including
serial trended analysis and limited reprogramming of device parameter--
AV and VV delays, with interpretation and report), 0226T (Anoscopy,
high resolution (HRA) (with magnification and chemical agent
enhancement); diagnostic, including collection of specimen(s) by
brushing or washing when performed), 0227T (Anoscopy, high resolution
(HRA) (with magnification and chemical agent enhancement); with
biopsy(ies)), 0228T (Injection(s), anesthetic agent and/or steroid,
transforaminal epidural, with ultrasound guidance, cervical or
thoracic; single level), 0229T (Injection(s), anesthetic agent and/or
steroid, transforaminal epidural, with ultrasound guidance, cervical or
thoracic; each additional level (List separately in addition to code
for primary procedure)), 0230T (Injection(s), anesthetic agent and/or
steroid, transforaminal epidural, with ultrasound guidance, lumbar or
sacral; single level), 0231T (Injection(s),
[[Page 46244]]
anesthetic agent and/or steroid, transforaminal epidural, with
ultrasound guidance, lumbar or sacral; each additional level (List
separately in addition to code for primary procedure)), and 0232T
(Injection(s), platelet rich plasma, any tissue, including image
guidance, harvesting and preparation when performed). We note that CMS
has issued a noncoverage determination (NCD) specifically for chronic,
non-healing cutaneous wounds and acute surgical wounds when the
autologous platelet rich plasma (PRP) is applied directly to the closed
incision or for dehiscent wounds. Category III CPT code 0232T has been
assigned to APC 0340 to provide a payment amount when payment is
appropriate, both under the NCD provisions and any local coverage
determinations. Under the hospital OPPS, Category III CPT code 0233T
(Skin advanced glycation endproducts (AGE) measurement by multi-
wavelength fluorescent spectroscopy) has been assigned to status
indicator ``A'' and hospital payment for this test will be made under
the MPFS.
Further, CMS does not recognize the four new H1N1 Category I CPT
vaccine codes that are effective on July 1, 2010, for separate payment
under the OPPS because we already recognize an existing HCPCS G-code
for reporting the H1N1 vaccine, specifically HCPCS code G9142
(Influenza a (h1n1) vaccine, any route of administration), which is
effective September 1, 2009. We have assigned HCPCS code G9142 to
status indicator ``E'' under the OPPS because the vaccine is expected
to be free. Consequently, Category I CPT vaccine codes 90664 (Influenza
virus vaccine, pandemic formulation, live, for intranasal use), 90666
(Influenza virus vaccine, pandemic formulation, split virus,
preservative free, for intramuscular use), 90667 (Influenza virus
vaccine, pandemic formulation, split virus, adjuvanted, for
intramuscular use), and 90668 (Influenza virus vaccine, pandemic
formulation, split virus, for intramuscular use), are assigned to
status indicator ``E'' (Not paid under OPPS or any other Medicare
payment system). These codes and their status indicators are listed in
Table 15 below.
BILLING CODE 4120-01-P
[[Page 46245]]
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BILLING CODE 4120-01-C
[[Page 46246]]
For CY 2011, we are soliciting public comments on the proposed
status indicators and the proposed APC assignments and payment rates,
if applicable, for the Level II HCPCS codes and the Category I vaccine
codes and Category III CPT codes that are newly recognized in April or
July 2010 through the respective OPPS quarterly update CRs. These codes
are listed in Tables 13, 14, and 15 of this proposed rule. We are
proposing to finalize their status indicators and their APC assignments
and payment rates, if applicable, in the CY 2011 OPPS/ASC final rule
with comment period. Because the July 2010 OPPS quarterly update CR is
issued close to the publication of this proposed rule, the Level II
HCPCS codes and the Category I vaccine and Category III CPT codes
implemented through the July 2010 OPPS quarterly update CR could not be
included in Addendum B to this proposed rule, but these codes are
listed in Tables 14 and 15, respectively. We are proposing to
incorporate them into Addendum B to the CY 2011 OPPS/ASC final rule
with comment period, which is consistent with our annual OPPS update
policy. The Level II HCPCS codes implemented or modified through the
April 2010 OPPS update CR and displayed in Table 13 are included in
Addendum B to this proposed rule, where their proposed CY 2011 payment
rates also are shown.
2. Proposed Process for New Level II HCPCS Codes and Category I and
Category III CPT Codes for Which We Will Be Soliciting Public Comments
on the CY 2011 OPPS/ASC Final Rule With Comment Period
As has been our practice in the past, we incorporate those new
Category I and III CPT codes and new Level II HCPCS codes that are
effective January 1 in the final rule with comment period updating the
OPPS for the following calendar year. These codes are released to the
public via the CMS HCPCS (for Level II HCPCS codes) and AMA Web sites
(for CPT codes), and also through the January OPPS quarterly update
CRs. In the past, we also have released new Level II HCPCS codes that
are effective October 1 through the October OPPS quarterly update CRs
and incorporated these new codes in the final rule with comment period
updating the OPPS for the following calendar year. All of these codes
are flagged with comment indicator ``NI'' in Addendum B to the OPPS/ASC
final rule with comment period to indicate that we are assigning them
an interim payment status which is subject to public comment.
Specifically, the status indicator and the APC assignment, and payment
rate, if applicable, for all such codes flagged with comment indicator
``NI'' are open to public comment in the final rule with comment
period, and we respond to these comments in the OPPS/ASC final rule
with comment period for the next calendar year's OPPS/ASC update. We
are proposing to continue this process for CY 2011. Specifically, for
CY 2011, we are proposing to include in Addendum B to the CY 2011 OPPS/
ASC final rule with comment period the new Category I and III CPT codes
effective January 1, 2011 (including those Category I vaccine and
Category III CPT codes that were released by the AMA in July 2010) that
would be incorporated in the January 2011 OPPS quarterly update CR and
the new Level II HCPCS codes, effective October 1, 2010, or January 1,
2011, that would be released by CMS in its October 2010 and January
2011 OPPS quarterly update CRs. These codes would be flagged with
comment indicator ``NI'' in Addendum B to the CY 2011 OPPS/ASC final
rule with comment period to indicate that we have assigned them an
interim OPPS payment status. Their status indicators and their APC
assignments and payment rates, if applicable, would be open to public
comment in the CY 2011 OPPS/ASC final rule with comment period and
would be finalized in the CY 2012 OPPS/ASC final rule with comment
period.
B. Proposed OPPS Changes--Variations Within APCs
1. Background
Section 1833(t)(2)(A) of the Act requires the Secretary to develop
a classification system for covered hospital outpatient department
services. Section 1833(t)(2)(B) of the Act provides that the Secretary
may establish groups of covered OPD services within this classification
system, so that services classified within each group are comparable
clinically and with respect to the use of resources (and so that an
implantable item is classified to the group that includes the services
to which the item relates). In accordance with these provisions, we
developed a grouping classification system, referred to as APCs, as set
forth in Sec. 419.31 of the regulations. We use Level I and Level II
HCPCS codes and descriptors to identify and group the services within
each APC. The APCs are organized such that each group is homogeneous
both clinically and in terms of resource use. Using this classification
system, we have established distinct groups of similar services, as
well as medical visits. We also have developed separate APC groups for
certain medical devices, drugs, biologicals, therapeutic
radiopharmaceuticals, and brachytherapy devices.
We have packaged into payment for each procedure or service within
an APC group the costs associated with those items or services that are
directly related to and supportive of performing the main independent
procedures or furnishing the services. Therefore, we do not make
separate payment for these packaged items or services. For example,
packaged items and services include: (1) Use of an operating,
treatment, or procedure room; (2) use of a recovery room; (3)
observation services; (4) anesthesia; (5) medical/surgical supplies;
(6) pharmaceuticals (other than those for which separate payment may be
allowed under the provisions discussed in section V. of this proposed
rule); (7) incidental services such as venipuncture; and (8) guidance
services, image processing services, intraoperative services, imaging
supervision and interpretation services, diagnostic
radiopharmaceuticals, and contrast media. Further discussion of
packaged services is included in section II.A.3. of this proposed rule.
In CY 2008, we implemented composite APCs to provide a single
payment for groups of services that are typically performed together
during a single clinical encounter and that result in the provision of
a complete service (72 FR 66650 through 66652). Under CY 2010 OPPS
policy, we provide composite APC payment for certain extended
assessment and management services, low dose rate (LDR) prostate
brachytherapy, cardiac electrophysiologic evaluation and ablation,
mental health services, and multiple imaging services. Further
discussion of composite APCs is included in section II.A.2.e. of this
proposed rule.
Under the OPPS, we generally pay for hospital outpatient services
on a rate-per-service basis, where the service may be reported with one
or more HCPCS codes. Payment varies according to the APC group to which
the independent service or combination of services is assigned. Each
APC weight represents the hospital median cost of the services included
in that APC relative to the hospital median cost of the services
included in APC 0606 (Level 3 Hospital Clinic Visits). The APC weights
are scaled to APC 0606 because it is the middle level hospital clinic
visit APC (that is, where the Level 3 hospital clinic visit CPT code of
five levels of hospital clinic visits is assigned), and because middle
level hospital clinic visits are among the most frequently
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furnished services in the hospital outpatient setting.
Section 1833(t)(9)(A) of the Act requires the Secretary to review
not less often than annually and revise the groups, the relative
payment weights, and the wage and other adjustments to take into
account changes in medical practice, changes in technology, the
addition of new services, new cost data, and other relevant information
and factors. Section 1833(t)(9)(A) of the Act, as amended by section
201(h) of the BBRA, also requires the Secretary, beginning in CY 2001,
to consult with an expert outside advisory panel composed of an
appropriate selection of representatives of providers to review (and
advise the Secretary concerning) the clinical integrity of the APC
groups and the relative payment weights (the APC Panel recommendations
for specific services for the CY 2011 OPPS and our responses to them
are discussed in the relevant specific sections throughout this
proposed rule).
Finally, section 1833(t)(2) of the Act provides that, subject to
certain exceptions, the items and services within an APC group cannot
be considered comparable with respect to the use of resources if the
highest median cost (or mean cost as elected by the Secretary) for an
item or service in the group is more than 2 times greater than the
lowest median cost (or mean cost, if so elected) for an item or service
within the same group (referred to as the ``2 times rule''). We use the
median cost of the item or service in implementing this provision. The
statute authorizes the Secretary to make exceptions to the 2 times rule
in unusual cases, such as low-volume items and services (but the
Secretary may not make such an exception in the case of a drug or
biological that has been designated as an orphan drug under section 526
of the Federal Food, Drug, and Cosmetic Act).
2. Application of the 2 Times Rule
In accordance with section 1833(t)(2) of the Act and Sec. 419.31
of the regulations, we annually review the items and services within an
APC group to determine, with respect to comparability of the use of
resources, if the median cost of the highest cost item or service
within an APC group is more than 2 times greater than the median of the
lowest cost item or service within that same group. We are proposing to
make exceptions to this limit on the variation of costs within each APC
group in unusual cases, such as low-volume items and services for CY
2011.
During the APC Panel's February 2010 meeting, we presented median
cost and utilization data for services furnished during the period of
January 1, 2009 through September 30, 2009, about which we had concerns
or about which the public had raised concerns regarding their APC
assignments, status indicator assignments, or payment rates. The
discussions of most service-specific issues, the APC Panel
recommendations, if any, and our proposals for CY 2011 are contained
mainly in sections III.C. and III.D. of this proposed rule.
In addition to the assignment of specific services to APCs that we
discussed with the APC Panel, we also identified APCs with 2 times
violations that were not specifically discussed with the APC Panel but
for which we are proposing changes to their HCPCS codes' APC
assignments in Addendum B to this proposed rule. In these cases, to
eliminate a 2 times violation or to improve clinical and resource
homogeneity, we are proposing to reassign the codes to APCs that
contain services that are similar with regard to both their clinical
and resource characteristics. We also are proposing to rename existing
APCs or create new clinical APCs to complement proposed HCPCS code
reassignments. In many cases, the proposed HCPCS code reassignments and
associated APC reconfigurations for CY 2011 included in this proposed
rule are related to changes in median costs of services that were
observed in the CY 2009 claims data newly available for CY 2011
ratesetting. We also are proposing changes to the status indicators for
some codes that are not specifically and separately discussed in this
proposed rule. In these cases, we are proposing to change the status
indicators for some codes because we believe that another status
indicator would more accurately describe their payment status from an
OPPS perspective based on the policies that we are proposing for CY
2011.
Addendum B to this proposed rule identifies with comment indicator
``CH'' those HCPCS codes for which we are proposing a change to the APC
assignment or status indicator that were initially assigned in the
April 2010 Addendum B update (via Transmittal 1924, Change Request
6857, dated February 26, 2010).
3. Proposed Exceptions to the 2 Times Rule
As discussed earlier, we may make exceptions to the 2 times limit
on the variation of costs within each APC group in unusual cases such
as low-volume items and services. Taking into account the APC changes
that we are proposing for CY 2011 based on the APC Panel
recommendations discussed mainly in sections III.C. and III.D. of this
proposed rule, the other proposed changes to status indicators and APC
assignments as identified in Addendum B to this proposed rule, and the
use of CY 2009 claims data to calculate the median costs of procedures
classified in the APCs, we reviewed all the APCs to determine which
APCs would not satisfy the 2 times rule. We used the following criteria
to decide whether to propose exceptions to the 2 times rule for
affected APCs:
Resource homogeneity
Clinical homogeneity
Hospital outpatient setting
Frequency of service (volume)
Opportunity for upcoding and code fragments.
For a detailed discussion of these criteria, we refer readers to
the April 7, 2000 OPPS final rule with comment period (65 FR 18457 and
18458).
Table 16 of this proposed rule lists 17 APCs that we are proposing
to exempt from the 2 times rule for CY 2011 based on the criteria cited
above. For cases in which a recommendation by the APC Panel appeared to
result in or allow a violation of the 2 times rule, we generally
accepted the APC Panel's recommendation because those recommendations
were based on explicit consideration of resource use, clinical
homogeneity, hospital specialization, and the quality of the CY 2009
claims data used to determine the APC payment rates that we are
proposing for CY 2011. The median costs for hospital outpatient
services for these and all other APCs that were used in the development
of this proposed rule can be found on the CMS Web site at: http://www.cms.gov/HospitalOutpatientPPS/01_overview.asp.
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C. New Technology APCs
1. Background
In the November 30, 2001 final rule (66 FR 59903), we finalized
changes to the time period a service was eligible for payment under a
New Technology APC. Beginning in CY 2002, we retain services within New
Technology APC groups until we gather sufficient claims data to enable
us to assign the service to a clinically appropriate APC. This policy
allows us to move a service from a New Technology APC in less than 2
years if sufficient data are available. It also allows us to retain a
service in a New Technology APC for more than 2 years if sufficient
data upon which to base a decision for reassignment have not been
collected.
We note that the cost bands for New Technology APCs range from $0
to $50 in increments of $10, from $50 to $100 in increments of $50,
from $100 through $2,000 in increments of $100, and from $2,000 through
$10,000 in increments of $500. These cost bands identify the APCs to
which new technology procedures and services with estimated service
costs that fall within those cost bands are assigned under the OPPS.
Payment for each APC is made at the mid-point of the APC's assigned
cost band. For example, payment for New Technology APC 1507 (New
Technology--Level VII ($500-$600)) is made at $550. Currently, there
are 82 New Technology APCs, ranging from the lowest cost band assigned
to APC 1491 (New Technology--Level IA ($0-$10)) through the highest
cost band assigned to APC 1574 (New Technology--Level XXXVII ($9,500-
$10,000). In CY 2004 (68 FR 63416), we last restructured the New
Technology APCs to make the cost intervals more consistent across
payment levels and refined the cost bands for these APCs to retain two
parallel sets of New Technology APCs, one set with a status indicator
of ``S'' (Significant Procedures, Not Discounted when Multiple. Paid
under OPPS; separate APC payment) and the other set with a status
indicator of ``T'' (Significant Procedure, Multiple Reduction Applies.
Paid under OPPS; separate APC payment). These current New Technology
APC configurations allow us to price new technology services more
appropriately and consistently.
Every year we receive many requests for higher payment amounts
under our New Technology APCs for specific procedures under the OPPS
because they require the use of expensive equipment. We again are
taking this opportunity to reiterate our response in general to the
issue of hospitals' capital expenditures as they relate to the OPPS and
Medicare.
Under the OPPS, one of our goals is to make payments that are
appropriate for the services that are necessary for the treatment of
Medicare beneficiaries. The OPPS, like other Medicare payment systems,
is budget neutral and increases are limited to the hospital inpatient
market basket. We believe that our payment rates generally reflect the
costs that are associated with providing care to Medicare beneficiaries
in cost-efficient settings, and we believe that our rates are adequate
to ensure access to services.
For many emerging technologies there is a transitional period
during which utilization may be low, often because providers are first
learning about the techniques and their clinical utility. Quite often,
parties request that Medicare make higher payment amounts under our New
Technology APCs for new procedures in that transitional phase. These
requests, and their accompanying estimates for expected total patient
utilization, often reflect very low rates of patient use of expensive
equipment, resulting in high per use costs for which requesters believe
Medicare should make full payment. Medicare does not, and we believe
should not, assume responsibility for more than its share of
[[Page 46249]]
the costs of procedures based on Medicare beneficiary projected
utilization and does not set its payment rates based on initial
projections of low utilization for services that require expensive
capital equipment. For the OPPS, we rely on hospitals to make informed
business decisions regarding the acquisition of high cost capital
equipment, taking into consideration their knowledge about their entire
patient base (Medicare beneficiaries included) and an understanding of
Medicare's and other payers' payment policies.
We note that in a budget neutral environment, payments may not
fully cover hospitals' costs in a particular circumstance, including
those for the purchase and maintenance of capital equipment. We rely on
providers to make their decisions regarding the acquisition of high
cost equipment with the understanding that the Medicare program must be
careful to establish its initial payment rates, including those made
through New Technology APCS, for new services that lack hospital claims
data based on realistic utilization projections for all such services
delivered in cost-efficient hospital outpatient settings. As the OPPS
acquires claims data regarding hospital costs associated with new
procedures, we regularly examine the claims data and any available new
information regarding the clinical aspects of new procedures to confirm
that our OPPS payments remain appropriate for procedures as they
transition into mainstream medical practice.
2. Proposed Movement of Procedures From New Technology APCs to Clinical
APCs
As we explained in the November 30, 2001 final rule (66 FR 59902),
we generally keep a procedure in the New Technology APC to which it is
initially assigned until we have collected sufficient data to enable us
to move the procedure to a clinically appropriate APC. However, in
cases where we find that our original New Technology APC assignment was
based on inaccurate or inadequate information (although it was the best
information available at the time), or where the New Technology APCs
are restructured, we may, based on more recent resource utilization
information (including claims data) or the availability of refined New
Technology APC cost bands, reassign the procedure or service to a
different New Technology APC that most appropriately reflects its cost.
Consistent with our current policy, for CY 2011, we are proposing
to retain services within New Technology APC groups until we gather
sufficient data to enable us to assign the service to a clinically
appropriate APC. The flexibility associated with this policy allows us
to move a service from a New Technology APC in less than 2 years if
sufficient data are available. It also allows us to retain a service in
a New Technology APC for more than 2 years if sufficient data upon
which to base a decision for reassignment have not been collected.
Table 17 below lists the HCPCS codes and associated status
indicators that we are proposing to reassign from a New Technology APC
to a clinically appropriate APC or to a different New Technology APC
for CY 2011. For CY 2010, there are four services described by a HCPCS
G-code receiving payment through a New Technology APC. Specifically,
HCPCS code G0416 (Surgical pathology, gross and microscopic examination
for prostate needle saturation biopsy sampling, 1-20 specimens), is
assigned to New Technology APC 1505 (New Technology--Level V ($300-
$400)); HCPCS code G0417 (Surgical pathology, gross and microscopic
examination for prostate needle saturation biopsy sampling, 21-40
specimens), is assigned to New Technology APC 1507 (New Technology--
Level VII ($500-$600)); G0418 (Surgical pathology, gross and
microscopic examination for prostate needle saturation biopsy sampling,
41-60 specimens), is assigned to New Technology APC 1511 (New
Technology--Level XI ($900--$1000)); and HCPCS code G0419 (Surgical
pathology, gross and microscopic examination for prostate needle
saturation biopsy sampling, greater than 60 specimens), is assigned to
New Technology APC 1513 (New Technology--Level XIII ($1100-$1200)).
Based on the CY 2009 OPPS claims data available for this proposed rule,
we believe that we have sufficient claims data to propose reassignment
of HCPCS codes G0416 and G0417. Specifically, for HCPCS code G0416, our
claims data show a median cost of approximately $113 based on 251
single claims out of 1,373 total claims for this service in CY 2009.
For HCPCS code G0417, our claims data show a median cost of
approximately $489 based on 5 single claims out of 135 total claims. We
discuss our identification of single procedure claims, including
``pseudo'' single procedure claims, for ratesetting in section II.A.2.
of this proposed rule. We believe we have sufficient claims data to
propose the reassignment of HCPCS G-codes G0416 and G0417 to more
appropriate APCs for CY 2011. Therefore, for CY 2011, we are proposing
to reassign these procedures to more appropriate APCs. Specifically, we
are proposing to reassign HCPCS G-code G0416 from New Technology APC
1505 to clinical APC 0661 (Level V Pathology), which has an APC median
cost of approximately $165, and HCPCS G-code G0417 from New Technology
APC 1507 (New Technology--Level VII ($500 to $600)) to New Technology
APC 1506 (New Technology--Level VI ($400-$500)). We believe that HCPCS
G-code G0416 is comparable clinically and with respect to the use of
resources as other pathology services currently assigned to APC 0661.
We also believe that HCPCS G-code G0417 would be more appropriately
placed in New Technology APC 1506 in light of the median cost data
available to us. Specifically, the HCPCS median cost of approximately
$489 for HCPCS code G0417 closely aligns with the APC median cost of
approximately $489 for APC 1506. We believe that HCPCS code G0417 would
be more appropriately placed in APC 1506 based on clinical and resource
considerations. These services and their proposed APC assignments are
displayed in Table 17 below.
For CY 2011, we are proposing to continue the New Technology APC
assignments for HCPCS G-codes G0418 and G0419, which is based on our
understanding of the clinical and cost characteristics of the
procedures described by these HCPCS codes. We do not believe we have
enough claims data to assign these codes to a different APC.
Specifically, our claims data show no single claims, out of 29 total
claims, for HCPCS code G0418. Similarly, our data show no single
claims, out of 3 total claims, for HCPCS code G0419. While we believe
that these services always will be low volume, given the number of
specimens being collected, we believe that we should continue their New
Technology payments for another year to see if more claims data become
available for HCPCS codes G0418 and G0419. Specifically, we are
proposing to continue to assign HCPCS G-code G0418 to New Technology
APC 1511 (New Technology--Level XI ($900-$1,000)) and HCPCS G-code
G0419 to New Technology APC 1513 (New Technology--Level XIII ($1,100-
$1,200)).
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D. Proposed OPPS APC-Specific Policy: Skin Repair (APCs 0134 and 0135)
At the August 2009 APC Panel meeting, one public presenter
requested that the APC Panel recommend that CMS reassign the Apligraf
application CPT codes, specifically CPT codes 15340 (Tissue cultured
allogeneic skin substitute; first 25 sq cm or less) and 15341 (Tissue
cultured allogeneic skin substitute; each additional 25 sq cm, or part
thereof), from APC 0134 (Level II Skin Repair) to APC 0135 (Level III
Skin Repair). The same presenter requested that CMS continue to assign
the Dermagraft application CPT codes, specifically CPT codes 15365
(Tissue cultured allogeneic dermal substitute, face, scalp, eyelids,
mouth, neck, ears, orbits, genitalia, hands, feet, and/or multiple
digits; first 100 sq cm or less, or 1% of body area of infants and
children) and 15366 (Tissue cultured allogeneic dermal substitute,
face, scalp, eyelids, mouth, neck, ears, orbits, genitalia, hands,
feet, and/or multiple digits; each additional 100 sq cm, or each
additional 1% of body area of infants and children, or part thereof),
to APC 0134. The public presenter believed that the CY 2010 proposal to
continue to assign both the Apligraf and the Dermagraft application CPT
codes to APC 0134 would create a financial incentive favoring the
Dermagraft application. Specifically, the presenter explained that CPT
instructions allow the separate reporting of the CPT codes for site
preparation and debridement when Dermagraft is applied, while the CPT
instructions for Apligraf application codes specify that site
preparation and debridement cannot be separately reported. The
presenter believed that this reporting difference and the resulting
expected differences in the associated application procedure costs
could be addressed by assigning the Apligraf application CPT codes to a
higher paying APC than the Dermagraft application CPT codes, instead of
the same APC as CMS proposed for CY 2010.
During the discussion, the APC Panel members were provided with the
historical information on the coding and APC assignments for the skin
substitute application procedures assigned to APCs 0134 and 0135.
Specifically, the Apligraf application CPT codes 15340 and 15341, the
Dermagraft application CPT codes 15365 and 15366, as well as the Oasis
application CPT codes 15430 (Acellular xenograft implant; first 100 sq
cm or less, or 1% of body area of infants and children) and 15431
(Acellular xenograft implant; each additional 100 sq cm, or each
additional 1% of body area of infants and children, or part thereof),
were at one time assigned to the same APC level (Level II Skin Repair).
However, because of violations of the two times rule, CMS reconfigured
the skin repair APCs and reassigned the Oasis application CPT codes
15430 and 15431 to APC 0135 (Level III Skin Repair) in CY 2008.
At the August 2009 APC Panel meeting, panel members debated whether
the differences in sizes in each product's application CPT codes and
the ability to bill separately for site preparation and debridement for
Dermagraft application required different APC placement for any of the
skin substitute application codes. We note that the long descriptors
for the Apligraf application CPT codes 15340 and 15341 are scaled to
``25 sq cm,'' whereas the Oasis application CPT codes 15430 and 15431
and the Dermagraft application CPT codes 15365 and 15366 are scaled to
``100 sq cm.'' After review of median cost data from the CY 2008
hospital outpatient claims available at that time (those processed from
January 1, 2008 through December 31, 2009), the APC Panel recommended
that CMS continue to assign all six skin substitute application CPT
codes to their existing APCs for CY 2010. In addition, because of the
variable sizes associated with the skin repair application CPT codes,
the Panel requested that CMS provide data at the next Panel meeting on
the frequency of primary and add-on CPT codes billed for the Apligraf,
Oasis, and Dermagraft applications in order to assess the variability
in billing for the application of these products. In addition, because
of the CPT instructions allowing site preparation and debridement to be
reported separately only for the Dermagraft application, the Panel
requested median cost data for site preparation and debridement.
We accepted the APC Panel's recommendation to continue to assign
the skin repair CPT codes for the application of Apligraf, Oasis, and
Dermagraft skin substitutes to the same procedural APCs for CY 2010 as
their CY 2009 assignments. As a result, we continued to assign the
Apligraf application CPT codes 15340 and 15341 and the Dermagraft
application CPT codes 15365 and 15366 to APC 0134 and assigned the
Oasis application CPT codes 15430 and 15431 to APC 0135 for CY 2010.
At the February 2010 APC Panel meeting, CMS presented the results
of the data requested at the August 2009 meeting to the APC Panel. In
response to data on the frequency of primary and add-on CPT codes,
based on our analysis of the available CY 2009 hospital outpatient
claims data on frequency of primary and add-on CPT codes billed for the
Apligraf, Oasis, and Dermagraft applications (claims processed from
January 1 through September 30, 2009), we found that hospitals report
the application of Apligraf with only the primary code (CPT code 15340)
on 77 percent of claims, while the add-on CPT code 15341 is billed in
addition to the primary code on another 23 percent of claims.
Specifically, our data showed that for the Apligraf application, there
were a total of 8,614 claims with only the primary CPT code 15340
reported, and 2,545 claims with the add-on CPT code 15341 also reported
on the same date of service. We note that each unit of the add-on CPT
code is paid at 50 percent of the payment for the primary code in
addition to the full payment for the primary code. We also found in our
analysis that, on claims with the Dermagraft and Oasis application CPT
codes, hospitals report the primary code only in approximately 98 to 99
percent of the cases. In addition, in response to the request for data
for site preparation and debridement that may be reported
[[Page 46251]]
separately for the Dermagraft application, we found that approximately
87 percent of procedures for the application of Dermagraft were
reported without debridement or site preparation on the same day.
Similarly, we found that the Apligraf and Oasis procedures were rarely
reported with the site preparation or debridement CPT procedure codes
on the same day. Specifically, we found that the CPT procedure code for
the application of Apligraf was reported without site preparation or
debridement in approximately 94 percent of these cases, and that the
CPT procedure code for application of Oasis was reported without site
preparation or debridement in approximately 95 percent of these cases.
Our data analysis also showed that the CPT median costs for the
Apligraf application CPT code 15340 and the Dermagraft application CPT
code 15365 are very similar. Specifically, the CPT code-specific median
cost of CPT code 15340 is approximately $234 for the Apligraf
application and approximately $237 for CPT code 15365 for the
Dermagraft application. In contrast, the CPT median cost for the Oasis
application primary CPT code 15430 of approximately $299 is higher.
At the February 2010 APC Panel meeting, a public presenter again
requested that the APC Panel recommend that CMS reassign the Apligraf
application CPT codes 15340 and 15341 from APC 0134 to APC 0135. The
presenter indicated that the additional payment for site preparation
and debridement procedures that may be reported separately with the
Dermagraft application can significantly affect the total payment for
the procedure. The presenter also provided data on the use of each
product in relation to the size of the wounds treated, and concluded
that the size of the wound treated does not affect the resources used.
After further review of the available CY 2009 hospital outpatient
claims data, the APC Panel recommended that CPT codes 15340 and 15341
remain in APC 0134.
We are accepting the recommendation of the APC Panel and are
proposing to continue to assign the CPT skin repair codes for the
application of Apligraf, Dermagraft, and Oasis skin substitutes to the
same procedural APCs as their CY 2010 assignments for CY 2011. We also
are proposing to continue to pay separately for the Apligraf,
Dermagraft, and Oasis products themselves in CY 2011. Specifically, we
are proposing to continue to assign the Apligraf application CPT codes
15340 and 15341 and the Dermagraft application CPT codes 15365 and
15366 to APC 0134, with a proposed APC median cost of approximately
$222. We are proposing to continue to assign the Oasis application CPT
codes 15430 and 15431 to APC 0135, with a proposed APC median cost of
approximately $325.
For CY 2011, we also are proposing to create two new Level II HCPCS
G-codes to report the application of Apligraf or Dermagraft specific to
the lower extremities in order to provide appropriate and consistent
payment for these services as they are commonly furnished, consistent
with the CY 2011 proposal for the MPFS. (We refer readers to the CY
2011 MPFS proposed rule for additional information regarding the MPFS
proposal.) The proposed HCPCS codes are: GXXX1 (Application of tissue
cultured allogeneic skin substitute or dermal substitute; for use on
lower limb, includes the site preparation and debridement if performed;
first 25 sq cm or less); and GXXX2 (Application of tissue cultured
allogeneic skin or dermal substitute; for use on lower limb, includes
the site preparation and debridement if performed; each additional 25
sq cm). As indicated in the HCPCS G-code descriptors, these codes would
not allow separate reporting of CPT codes for site preparation or
debridement. We believe the descriptors of these proposed HCPCS G-codes
more specifically reflect the characteristics of the application of
Apligraf or Dermagraft to the lower limb so that reporting would result
in more accurate cost data for OPPS ratesetting and, ultimately, more
appropriate payment. Consistent with the proposed CY 2011 APC
assignment for the Apligraf and Dermagraft application CPT codes, we
are proposing to assign new HCPCS codes GXXX1 and GXXX2 to APC 0134,
with a proposed APC median cost of approximately $222. We are
specifically interested in public comment on the appropriateness of
recognizing these proposed new HCPCS G-codes under the OPPS and their
proposed APC assignments.
IV. Proposed OPPS Payment for Devices
A. Pass-Through Payments for Devices
1. Expiration of Transitional Pass-Through Payments for Certain Devices
Section 1833(t)(6)(B)(iii) of the Act requires that, under the
OPPS, a category of devices be eligible for transitional pass-through
payments for at least 2, but not more than 3, years. This pass-through
payment eligibility period begins with the first date on which
transitional pass-through payments may be made for any medical device
that is described by the category. We may establish a new device
category for pass-through payment in any quarter. Under our established
policy, we base the pass-through status expiration dates for the
category codes on the date on which a category is in effect. The date
on which a category is in effect is the first date on which pass-
through payment may be made for any medical device that is described by
such category. We propose and finalize the dates for expiration of
pass-through status for device categories as part of the OPPS annual
update.
We also have an established policy to package the costs of the
devices that are no longer eligible for pass-through payments into the
costs of the procedures with which the devices are reported in the
claims data used to set the payment rates (67 FR 66763). Brachytherapy
sources, which are now separately paid in accordance with section
1833(t)(2)(H) of the Act, are an exception to this established policy.
There currently are no device categories eligible for pass-through
payment, and there are no categories for which we would propose
expiration of pass-through status in CY 2011. If we create new device
categories for pass-through payment status during the remainder of CY
2010 or during CY 2011, we will propose future expiration dates in
accordance with the statutory requirement that they be eligible for
pass-through payments for at least 2, but not more than 3, years from
the date on which pass-through payment for any medical device described
by the category may first be made.
2. Proposed Provisions for Reducing Transitional Pass-Through Payments
to Offset Costs Packaged Into APC Groups
a. Background
We have an established policy to estimate the portion of each APC
payment rate that could reasonably be attributed to the cost of the
associated devices that are eligible for pass-through payments (66 FR
59904). We deduct from the pass-through payments for identified device
categories eligible for pass-through payments an amount that reflects
the portion of the APC payment amount that we determine is associated
with the cost of the device, defined as the device APC offset amount,
as required by section 1833(t)(6)(D)(ii) of the Act. We have
consistently employed an established methodology to estimate the
portion of each APC payment rate that could reasonably be attributed to
the cost of an associated device eligible for pass-through payment,
using claims data from the period used for the most
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recent recalibration of the APC rates (72 FR 66751 through 66752). We
establish and update the applicable device APC offset amounts for
eligible pass-through device categories through the transmittals that
implement the quarterly OPPS updates.
We currently have published a list of all procedural APCs with the
CY 2010 portions (both percentages and dollar amounts) of the APC
payment amounts that we determine are associated with the cost of
devices, on the CMS Web site at: http://www.cms.gov/HospitalOutpatientPPS/01_overview.asp. The dollar amounts are used as
the device APC offset amounts. In addition, in accordance with our
established practice, the device APC offset amounts in a related APC
are used in order to evaluate whether the cost of a device in an
application for a new device category for pass-through payment is not
insignificant in relation to the APC payment amount for the service
related to the category of devices, as specified in our regulations at
Sec. 419.66(d).
As of CY 2009, the costs of implantable biologicals without pass-
through status are packaged into the payment for the procedures in
which they are inserted or implanted because implantable biologicals
without pass-through status are not separately paid (73 FR 68633
through 68636). For CY 2010, we finalized a new policy to specify that
the pass-through evaluation process and pass-through payment
methodology for implantable biologicals that are surgically inserted or
implanted (through a surgical incision or a natural orifice) and that
are newly approved for pass-through status beginning on or after
January 1, 2010, be the device pass-through process and payment
methodology only. As a result, for CY 2010, we included implantable
biologicals in our calculation of the device APC offset amounts (74 FR
60476). We calculated and set the device APC offset amount for a newly
established device pass-through category, which could include a newly
eligible implantable biological, beginning in CY 2010 using the same
methodology we have historically used to calculate and set device APC
offset amounts for device categories eligible for pass-through payment
(72 FR 66751 through 66752), with one modification. Because implantable
biologicals are considered devices rather than drugs for purposes of
pass-through evaluation and payment under our established policy, the
device APC offset amounts include the costs of implantable biologicals.
For CY 2010, we also finalized a policy to utilize the revised device
APC offset amounts to evaluate whether the cost of an implantable
biological in an application for a new device category for pass-through
payment is not insignificant in relation to the APC payment amount for
the service related to the category of devices. Further, for CY 2010,
we also no longer used the ``policy-packaged'' drug APC offset amounts
for evaluating the cost significance of implantable biological pass-
through applications under review and for setting the APC offset
amounts that would apply to pass-through payment for those implantable
biologicals, effective for new pass-through status determinations
beginning in CY 2010 (74 FR 60463).
b. Proposed Policy
For CY 2011, we are proposing to continue our policy that the pass-
through evaluation process and pass-through payment methodology for
implantable biologicals that are surgically inserted or implanted
(through a surgical incision or a natural orifice) and that are newly
approved for pass-through status beginning on or after January 1, 2010,
be the device pass-through process and payment methodology only. The
rationale for this policy is provided in the CY 2010 OPPS/ASC final
rule with comment period (74 FR 60471 through 60477). We also are
proposing to continue our established policies for calculating and
setting the device APC offset amounts for each device category eligible
for pass-through payment. We also are proposing to continue to review
each new device category on a case-by-case basis to determine whether
device costs associated with the new category are already packaged into
the existing APC structure. If device costs packaged into the existing
APC structure are associated with the new category, we would deduct the
device APC offset amount from the pass-through payment for the device
category. As stated earlier, these device APC offset amounts also would
be used in order to evaluate whether the cost of a device in an
application for a new device category for pass-through payment is not
insignificant in relation to the APC payment amount for the service
related to the category of devices (Sec. 419.66(d)).
We also are proposing to continue our policy established in CY 2010
to include implantable biologicals in our calculation of the device APC
offset amounts. In addition, we are proposing to continue to calculate
and set any device APC offset amount for a new device pass-through
category that includes a newly eligible implantable biological
beginning in CY 2011 using the same methodology we have historically
used to calculate and set device APC offset amounts for device
categories eligible for pass-through payment, and to include the costs
of implantable biologicals in the calculation of the device APC offset
amounts, as we did for CY 2010.
In addition, we are proposing to update, on the CMS Web site at
http://www.cms.gov/HospitalOutpatientPPS, the list of all procedural
APCs with the final CY 2011 portions of the APC payment amounts that we
determine are associated with the cost of devices so that this
information is available for use by the public in developing potential
CY 2011 device pass-through payment applications and by CMS in
reviewing those applications.
In summary, for CY 2011, consistent with the policy established for
CY 2010, we are proposing to continue the following policies related to
pass-through payment for devices: (1) Treating implantable biologicals,
that are surgically inserted or implanted (through a surgical incision
or a natural orifice) and that are newly approved for pass-through
status on or after January 1, 2010, as devices for purposes of the OPPS
pass-through evaluation process and payment methodology; (2) including
implantable biologicals in calculating the device APC offset amounts;
(3) using the device APC offset amounts to evaluate whether the cost of
a device (defined to include implantable biologicals) in an application
for a new device category for pass-through payment is not insignificant
in relation to the APC payment amount for the service related to the
category of devices; and (4) reducing device pass-through payments
based on device costs already included in the associated procedural
APCs, when we determine that device costs associated with the new
category are already packaged into the existing APC structure.
B. Proposed Adjustment to OPPS Payment for No Cost/Full Credit and
Partial Credit Devices
1. Background
In recent years, there have been several field actions on and
recalls of medical devices as a result of implantable device failures.
In many of these cases, the manufacturers have offered devices without
cost to the hospital or with credit for the device being replaced if
the patient required a more expensive device. In order to ensure that
payment rates for procedures involving devices reflect only the full
costs of those devices, our
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standard rate-setting methodology for device-dependent APCs uses only
claims that contain the correct device code for the procedure, do not
contain token charges, do not contain the ``FB'' modifier signifying
that the device was furnished without cost or with a full credit, and
do not contain the ``FC'' modifier signifying that the device was
furnished with partial credit. As discussed in section II.A.2.d.(1) of
this proposed rule, we are proposing to continue to use our standard
rate-setting methodology for device-dependent APCs for CY 2011.
To ensure equitable payment when the hospital receives a device
without cost or with full credit, in CY 2007 we implemented a policy to
reduce the payment for specified device-dependent APCs by the estimated
portion of the APC payment attributable to device costs (that is, the
device offset) when the hospital receives a specified device at no cost
or with full credit (71 FR 68071 through 68077). Hospitals are
instructed to report no cost/full credit cases using the ``FB''
modifier on the line with the procedure code in which the no cost/full
credit device is used. In cases in which the device is furnished
without cost or with full credit, the hospital is instructed to report
a token device charge of less than $1.01. In cases in which the device
being inserted is an upgrade (either of the same type of device or to a
different type of device) with a full credit for the device being
replaced, the hospital is instructed to report as the device charge the
difference between its usual charge for the device being implanted and
its usual charge for the device for which it received full credit. In
CY 2008, we expanded this payment adjustment policy to include cases in
which hospitals receive partial credit of 50 percent or more of the
cost of a specified device. Hospitals are instructed to append the
``FC'' modifier to the procedure code that reports the service provided
to furnish the device when they receive a partial credit of 50 percent
or more of the cost of the new device. We reduce the OPPS payment for
the implantation procedure by 100 percent of the device offset for no
cost/full credit cases when both a specified device code is present on
the claim and the procedure code maps to a specified APC. Payment for
the implantation procedure is reduced by 50 percent of the device
offset for partial credit cases when both a specified device code is
present on the claim and the procedure code maps to a specified APC.
Beneficiary copayment is based on the reduced payment amount when
either the ``FB'' or the ``FC'' modifier is billed and the procedure
and device codes appear on the lists of procedures and devices to which
this policy applies. We refer readers to the CY 2008 OPPS/ASC final
rule with comment period for more background information on the ``FB''
and ``FC'' payment adjustment policies (72 FR 66743 through 66749).
2. Proposed APCs and Devices Subject to the Adjustment Policy
For CY 2011, we are proposing to continue to apply the existing
policy of reducing OPPS payment for specified APCs by 100 percent of
the device offset amount when a hospital furnishes a specified device
without cost or with a full credit and by 50 percent of the device
offset amount when the hospital receives partial credit in the amount
of 50 percent or more of the cost for the specified device. Because the
APC payments for the related services are specifically constructed to
ensure that the full cost of the device is included in the payment, we
continue to believe it is appropriate to reduce the APC payment in
cases in which the hospital receives a device without cost, with full
credit, or with partial credit, in order to provide equitable payment
in these cases. (We refer readers to section II.A.2.d.(1) of this
proposed rule for a description of our standard rate-setting
methodology for device-dependent APCs.) Moreover, the payment for these
devices comprises a large part of the APC payment on which the
beneficiary copayment is based, and we continue to believe it is
equitable that the beneficiary cost sharing reflects the reduced costs
in these cases.
We also are proposing to continue using the three criteria
established in the CY 2007 OPPS/ASC final rule with comment period for
determining the APCs to which this policy applies (71 FR 68072 through
68077). Specifically, (1) all procedures assigned to the selected APCs
must involve implantable devices that would be reported if device
insertion procedures were performed; (2) the required devices must be
surgically inserted or implanted devices that remain in the patient's
body after the conclusion of the procedure (at least temporarily); and
(3) the device offset amount must be significant, which, for purposes
of this policy, is defined as exceeding 40 percent of the APC cost. We
are proposing to continue to restrict the devices to which the APC
payment adjustment would apply to a specific set of costly devices to
ensure that the adjustment would not be triggered by the implantation
of an inexpensive device whose cost would not constitute a significant
proportion of the total payment rate for an APC. We continue to believe
these criteria are appropriate because free devices and device credits
are likely to be associated with particular cases only when the device
must be reported on the claim and is of a type that is implanted and
remains in the body when the beneficiary leaves the hospital. We
believe that the reduction in payment is appropriate only when the cost
of the device is a significant part of the total cost of the APC into
which the device cost is packaged, and that the 40-percent threshold is
a reasonable definition of a significant cost.
We examined the offset amounts calculated from the CY 2011 proposed
rule data and the clinical characteristics of APCs to determine whether
the APCs to which the no cost/full credit and partial credit device
adjustment policy applies in CY 2010 continue to meet the criteria for
CY 2011, and to determine whether other APCs to which the policy does
not apply in CY 2010 would meet the criteria for CY 2011. Based on the
CY 2009 claims data available for this proposed rule, we are not
proposing any changes to the APCs and devices to which this policy
applies. Table 18 below lists the proposed APCs to which the payment
adjustment policy for no cost/full credit and partial credit devices
would apply in CY 2011 and displays the proposed payment adjustment
percentages for both no cost/full credit and partial credit
circumstances. We are proposing that the no cost/full credit adjustment
for each APC to which this policy would continue to apply would be the
device offset percentage for the APC (the estimated percentage of the
APC cost that is attributable to the device costs that are packaged
into the APC). We also are proposing that the partial credit device
adjustment for each APC would continue to be 50 percent of the no cost/
full credit adjustment for the APC as shown in Table 18. Table 19 below
lists the proposed devices to which this policy would apply in CY 2011.
We will update the lists of APCs and devices to which the no cost/full
credit and partial credit device adjustment policy would apply for CY
2011, consistent with the three selection criteria discussed earlier in
this section, based on the final CY 2009 claims data available for the
CY 2011 OPPS/ASC final rule with comment period.
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V. Proposed OPPS Payment Changes for Drugs, Biologicals, and
Radiopharmaceuticals
A. Proposed OPPS Transitional Pass-Through Payment for Additional Costs
of Drugs, Biologicals, and Radiopharmaceuticals
1. Background
Section 1833(t)(6) of the Act provides for temporary additional
payments or ``transitional pass-through payments'' for certain drugs
and biological agents. As enacted by the Medicare, Medicaid, and SCHIP
Balanced Budget Refinement Act (BBRA) of 1999 (Pub. L. 106-113), this
provision requires the Secretary to make additional payments to
hospitals for current orphan drugs, as designated under section 526 of
the Federal Food, Drug, and Cosmetic Act (Pub. L. 107-186); current
drugs and biological agents and brachytherapy sources used for the
treatment of cancer; and current radiopharmaceutical drugs and
biological products. For those drugs and biological agents referred to
as ``current,'' the transitional pass-through payment began on the
first date the hospital OPPS was implemented.
Transitional pass-through payments also are provided for certain
``new'' drugs and biological agents that were not being paid for as an
HOPD service as of December 31, 1996, and whose cost is ``not
insignificant'' in relation to the OPPS payments for the procedures or
services associated with the new drug or biological. For pass-through
payment purposes, radiopharmaceuticals are included as ``drugs.'' Under
the statute, transitional pass-through payments for a drug or
biological described in section 1833(t)(6)(C)(i)(II) of the Act can be
made for at least 2 years but not more than 3 years after the product's
first payment as a hospital outpatient service under Part B. Proposed
CY 2011 pass-through drugs and biologicals and their designated APCs
are assigned status indicator ``G'' in Addenda A and B to this proposed
rule.
Section 1833(t)(6)(D)(i) of the Act specifies that the pass-through
payment amount, in the case of a drug or biological, is the amount by
which the amount determined under section 1842(o) of the Act for the
drug or biological exceeds the portion of the otherwise applicable
Medicare OPD fee schedule that the Secretary determines is associated
with the drug or biological. If the drug or biological is covered under
a competitive acquisition contract under section 1847B of the Act, the
pass-through payment amount is determined by the Secretary to be equal
to the average price for the drug or biological for all competitive
acquisition areas and the year established under such section as
calculated and adjusted by the Secretary.
This methodology for determining the pass-through payment amount is
set forth in Sec. 419.64 of the regulations, which specifies that the
pass-through payment equals the amount determined under section 1842(o)
of the Act minus the portion of the APC payment that CMS determines is
associated with the drug or biological. Section 1847A of the Act
establishes the use of the average sales price (ASP) methodology as the
basis for payment for drugs and biologicals described in section
1842(o)(1)(C) of the Act that are furnished on or after January 1,
2005. The ASP methodology, as applied under the OPPS, uses several
sources of data as a basis for payment, including the ASP, wholesale
acquisition cost (WAC), and average wholesale price (AWP). In this
proposed rule, the term ``ASP methodology'' and ``ASP-based'' are
inclusive of all data sources and methodologies described therein.
Additional information on the ASP methodology can be found on the CMS
Web site at: http://www.cms.hhs.gov/McrPartBDrugAvgSalesPrice.
As noted above, section 1833(t)(6)(D)(i) of the Act also states
that if a drug or biological is covered under a competitive acquisition
contract under section 1847B of the Act, the payment rate is equal to
the average price for the drug or biological for all competitive
acquisition areas and the year established as calculated and adjusted
by the Secretary. Section 1847B of the Act establishes the payment
methodology for Medicare Part B drugs and biologicals under the
competitive acquisition program (CAP). The Part B drug CAP was
implemented on July 1, 2006, and included approximately 190 of the most
common Part B drugs provided in the physician's office setting. As we
noted in the CY 2009 OPPS/ASC final rule with comment period (73 FR
68633), the Part B drug CAP program was suspended beginning in CY 2009
(Medicare Learning Network (MLN) Matters Special Edition 0833,
available via the Web site: http://www.medicare.gov). Therefore, there
is no effective Part B drug CAP rate for pass-through drugs and
biologicals as of January 1, 2009. Consistent with what we indicated in
the CY 2010 OPPS/ASC final rule with comment period (74 FR 60466), if
the program is reinstituted during CY 2011 and Part B drug CAP rates
become available, we would again use the Part B drug CAP rate for pass-
through drugs and biologicals if they are a part of the Part B drug CAP
program. Otherwise, we would continue to use the rate that would be
paid in the physician's office setting for drugs and biologicals with
pass-through status.
For CYs 2005, 2006, and 2007, we estimated the OPPS pass-through
payment amount for drugs and biologicals to be zero based on our
interpretation that the ``otherwise applicable Medicare OPD fee
schedule'' amount was equivalent to the amount to be paid for pass-
through drugs and biologicals under section 1842(o) of the Act (or
section 1847B of the Act, if the drug or biological is covered under a
competitive acquisition contract). We concluded for those years that
the resulting difference between these two rates would be zero. For CYs
2008 and 2009, we estimated the OPPS pass-through payment amount for
drugs and biologicals to be $6.6 million and $23.3 million,
respectively. For CY 2010, we estimated that the OPPS pass-through
payment estimate for drugs and biologicals to be $35.5 million. Our
proposed OPPS pass-through payment estimate for drugs and biologicals
in CY 2011 is $15 million, which is discussed in section VI.B. of this
proposed rule.
The pass-through application and review process for drugs and
biologicals is explained on the CMS Web site at: http://www.cms.hhs.gov/HospitalOutpatientPPS/04_passthrough_payment.asp.
2. Proposed Drugs and Biologicals With Expiring Pass-Through Status in
CY 2010
We are proposing that the pass-through status of 18 drugs and
biologicals would expire on December 31, 2010, as listed in Table 20 of
this proposed rule. All of these drugs and biologicals will have
received OPPS pass-through payment for at least 2 years and no more
than 3 years by December 31, 2010. These items were approved for pass-
through status on or before January 1, 2009. With the exception of
those groups of drugs and biologicals that are always packaged when
they do not have pass-through status, specifically diagnostic
radiopharmaceuticals, contrast agents, and implantable biologicals, our
standard methodology for providing payment for drugs and biologicals
with expiring pass-through status in an upcoming calendar year is to
determine the product's estimated per day cost and compare it with the
OPPS drug packaging threshold for that calendar year (which is proposed
at $70 for CY 2011), as discussed further in section V.B.2 of this
proposed rule. If the drug's or biological's estimated per day cost is
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less than or equal to the applicable OPPS drug packaging threshold, we
would package payment for the drug or biological into the payment for
the associated procedure in the upcoming calendar year. If the
estimated per day cost of the drug or biological is greater than the
OPPS drug packaging threshold, we would provide separate payment at the
applicable relative ASP-based payment amount (which is proposed at
ASP+6 percent for CY 2011, as discussed further in section V.B.3. of
this proposed rule). Section V.B.2.d. of this proposed rule discusses
the packaging of all nonpass-through contrast agents, diagnostic
radiopharmaceuticals, and implantable biologicals.
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3. Proposed Drugs, Biologicals, and Radiopharmaceuticals With New or
Continuing Pass-Through Status in CY 2011
We are proposing to continue pass-through status in CY 2011 for 31
drugs and biologicals. None of these products will have received OPPS
pass-through payment for at least 2 years and no more than 3 years by
December 31, 2010. These items, which were approved for pass-through
status between April 1, 2009 and July 1, 2010, are listed in Table 21
below. The APCs and HCPCS codes for these drugs and biologicals were
assigned status indicator ``G'' in Addenda A and B to this proposed
rule.
Section 1833(t)(6)(D)(i) of the Act sets the amount of pass-through
payment for pass-through drugs and biologicals (the pass-through
payment amount) as the difference between the amount authorized under
section 1842(o) of the Act (or, if the drug or biological is
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covered under a CAP under section 1847B of the Act, an amount
determined by the Secretary equal to the average price for the drug or
biological for all competitive acquisition areas and the year
established under such section as calculated and adjusted by the
Secretary) and the portion of the otherwise applicable OPD fee schedule
that the Secretary determines is associated with the drug or
biological. Payment for drugs and biologicals with pass-through status
under the OPPS is currently made at the physician's office payment rate
of ASP+6 percent. We believe it is consistent with the statute to
continue to provide payment for drugs and biologicals with pass-through
status at a rate of ASP+6 percent in CY 2011, the amount that drugs and
biologicals receive under section 1842(o) of the Act. Thus, for CY
2011, we are proposing to pay for pass-through drugs and biologicals at
ASP+6 percent, equivalent to the rate these drugs and biologicals would
receive in the physician's office setting in CY 2011. We are proposing
that a $0.00 pass-through payment amount would be paid for most pass-
through drugs and biologicals under the CY 2011 OPPS because the
difference between the amount authorized under Section 1842(o) which is
ASP+6 percent and the portion of the otherwise applicable OPD fee
schedule that the Secretary determines is appropriate, proposed at
ASP+6 percent is $0. In the case of pass-through contrast agents,
diagnostic radiopharmaceuticals, and implantable biologicals, their
pass-through payment amount would be equal to ASP+6 percent because, if
not on pass-through status, payment for these products would be
packaged into the associated procedures.
In addition, we are proposing to continue to update pass-through
payment rates on a quarterly basis on the CMS Web site during CY 2011
if later quarter ASP submission (or more recent WAC or AWP information,
as applicable) indicate that adjustments to the payment rates for these
pass-through drugs or biologicals are necessary. For a full description
of this policy, we refer readers to the CY 2006 OPPS/ASC final rule
with comment period (70 FR 42722 and 42723). If the Part B drug CAP is
reinstated during CY 2011, and a drug or biological that has been
granted pass-through status for CY 2011 becomes covered under the Part
B drug CAP, we are proposing to provide pass-though payment at the Part
B drug CAP rate and to make the appropriate adjustments to the payment
rates for these drugs and biologicals on a quarterly basis as
appropriate. As is our standard methodology, we annually review new
permanent HCPCS codes and delete temporary HCPCS C-codes if an
alternate permanent HCPCS code is available for purposes of OPPS
billing and payment.
In CY 2011, as is consistent with our CY 2010 policy for diagnostic
radiopharmaceuticals, we are proposing to provide payment for both
diagnostic and therapeutic radiopharmaceuticals that are granted pass-
through status based on the ASP methodology. As stated above, for
purposes of pass-through payment, we consider radiopharmaceuticals to
be drugs under the OPPS and, therefore, if a diagnostic or therapeutic
radiopharmaceutical receives pass-through status during CY 2011, we are
proposing to follow the standard ASP methodology to determine its pass-
through payment rate that drugs receive under section 1842(o) of the
Act, that is, ASP+6 percent. If ASP data are not available for a
radiopharmaceutical, we are proposing to provide pass-through payment
at WAC+6 percent, the equivalent payment provided to pass-through drugs
and biologicals without ASP information. If WAC information is also not
available, we are proposing to provide payment for the pass-through
radiopharmaceutical at 95 percent of its most recent AWP.
As discussed in more detail in section V.B.2.d. of this proposed
rule, over the last 3 years, we implemented a policy whereby payment
for all nonpass-through diagnostic radiopharmaceuticals, contrast
agents, and implantable biologicals is packaged into payment for the
associated procedure, and we are proposing to continue the packaging of
these items, regardless of their per day cost, in CY 2011. As stated
earlier, pass-through payment is the difference between the amount
authorized under section 1842(o) of the Act (or, if the drug or
biological is covered under a CAP under section 1847B of the Act, an
amount determined by the Secretary equal to the average price for the
drug or biological for all competitive acquisition areas and the year
established under such section as calculated and adjusted by the
Secretary) and the portion of the otherwise applicable OPD fee schedule
that the Secretary determines is associated with the drug or
biological. Because payment for a drug that is either a diagnostic
radiopharmaceutical or a contrast agent (identified as a ``policy-
packaged'' drug, first described in the CY 2009 OPPS/ASC final rule
with comment period (73 FR 68639)) or for an implantable biological
(which we do consider to be a device for all payment purposes as
discussed in sections V.A.4. and V.B.2.d. of the CY 2010 OPPS/ASC final
rule with comment period (74 FR 60458)) would otherwise be packaged if
the product did not have pass-through status, we believe the otherwise
applicable OPPS payment amount would be equal to the ``policy-
packaged'' drug or device APC offset amount for the associated clinical
APC in which the drug or biological is utilized. The calculation of the
``policy-packaged'' drug and device APC offset amounts are described in
more detail in sections IV.A.2. of this proposed rule. It follows that
the copayment for the nonpass-through payment portion (the otherwise
applicable fee schedule amount that we would also offset from payment
for the drug or biological if a payment offset applies) of the total
OPPS payment for those drugs and biologicals would, therefore, be
accounted for in the copayment for the associated clinical APC in which
the drug or biological is used. According to section 1833(t)(8)(E) of
the Act, the amount of copayment associated with pass-through items is
equal to the amount of copayment that would be applicable if the pass-
through adjustment was not applied. Therefore, as we did in CY 2010, we
are proposing to continue to set the associated copayment amount for
pass-through diagnostic radiopharmaceuticals, contrast agents, and
implantable biologicals that would otherwise be packaged if the item
did not have pass-through status to zero for CY 2011. The separate OPPS
payment to a hospital for the pass-through diagnostic
radiopharmaceutical, contrast agent, or implantable biological, after
taking into account any applicable payment offset for the item due to
the device or ``policy-packaged'' APC offset policy, is the item's
pass-through payment, which is not subject to a copayment according to
the statute. Therefore, we are proposing to not publish a copayment
amount for these items in Addenda A and B to the proposed rule.
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4. Proposed Provisions for Reducing Transitional Pass-Through Payments
for Diagnostic Radiopharmaceuticals and Contrast Agents to Offset Costs
Packaged Into APC Groups
a. Background
Prior to CY 2008, diagnostic radiopharmaceuticals and contrast
agents were paid separately under the OPPS if their mean per day costs
were greater than the applicable year's drug packaging threshold. In CY
2008 (72 FR 66768), we began a policy of packaging payment for all
nonpass-through diagnostic radiopharmaceuticals and contrast agents as
ancillary and supportive items and services into their associated
nuclear medicine procedures. Therefore, beginning in CY 2008, nonpass-
through diagnostic radiopharmaceuticals and contrast agents were not
subject to the annual OPPS drug packaging threshold to determine their
packaged or separately payable payment status, and instead all nonpass-
through diagnostic radiopharmaceuticals and contrast agents were
packaged as a matter of policy. For CY 2011, we are proposing to
continue to package payment for all nonpass-through diagnostic
radiopharmaceuticals and contrast agents as discussed in section
V.B.2.d. of this proposed rule.
b. Proposed Payment Offset Policy for Diagnostic Radiopharmaceuticals
As previously noted, radiopharmaceuticals are considered to be
drugs for OPPS pass-through payment purposes. As described above,
section 1833(t)(6)(D)(i) of the Act specifies that the transitional
pass-through payment amount for pass-through drugs and biologicals is
the difference between the amount paid under section 1842(o) (or the
Part B drug CAP rate) and the otherwise applicable OPD fee schedule
amount. There is currently one radiopharmaceutical with pass-through
status under the OPPS, HCPCS code A9582 (Iobenguane, I-123, diagnostic,
per study dose, up to 10 millicuries). HCPCS code A9582 was granted
pass-through status beginning April 1, 2009 and will continue on pass-
through status in CY 2011. We currently apply the established
radiopharmaceutical payment offset policy to pass-through payment for
this product. As described earlier in section V.A.3. of this proposed
rule, new pass-through diagnostic radiopharmaceuticals will be paid at
ASP+6 percent, while those without ASP information will be paid at
WAC+6 percent or, if WAC is not available, payment will be based on 95
percent of the product's most recently published AWP.
As a payment offset is necessary in order to provide an appropriate
transitional pass-through payment, we deduct from the payment for pass-
through radiopharmaceuticals an amount that reflects the portion of the
APC payment associated with predecessor radiopharmaceuticals in order
to ensure no duplicate radiopharmaceutical payment is made. In CY 2009,
we established a policy to estimate the portion of each APC payment
rate that could reasonably be attributed to the cost of predecessor
diagnostic radiopharmaceuticals when considering a new diagnostic
radiopharmaceutical for pass-through payment (73 FR 68638 through
68641). Specifically, we utilize the ``policy-packaged'' drug offset
fraction for APCs containing nuclear medicine procedures, calculated as
1 minus (the cost from single procedure claims in the APC after
removing the cost for ``policy-packaged'' drugs divided by the cost
from single procedure claims in the APC). In the CY 2010 OPPS/ASC final
rule with comment period (74 FR 60480 through 60484), we finalized a
policy to redefine ``policy-packaged'' drugs as only nonpass-through
diagnostic radiopharmaceuticals and contrast agents, as a result of the
policy discussed in sections V.A.4. and V.B.2.d. of the CY 2010 OPPS/
ASC final rule with comment period (74 FR 60471 through 60477 and 60495
through 60499 respectively) that treats nonpass-through implantable
biologicals that are surgically inserted or implanted (through a
surgical incision or a natural orifice) and implantable biologicals
that are surgically inserted or implanted (through a surgical incision
or a natural orifice) with newly approved pass-through status beginning
in CY 2010 or later as devices, rather than drugs. To determine the
actual APC offset amount for pass-through diagnostic
radiopharmaceuticals that takes into consideration the otherwise
applicable OPPS payment amount, we multiply the ``policy-packaged''
drug offset fraction by the APC payment amount for the nuclear medicine
procedure with which the pass-through diagnostic radiopharmaceutical is
used and, accordingly, reduce the separate OPPS payment for the pass-
through diagnostic radiopharmaceutical by this amount.
The Integrated Outpatient Code Editor processes claims for nuclear
medicine procedures only when they are performed with a radiolabeled
product. Therefore, the radiolabeled product edits in the Integrated
Outpatient Code Editor require a hospital to report a diagnostic
radiopharmaceutical with a nuclear medicine scan in order to receive
payment for the nuclear medicine scan. We have received questions from
hospitals on how to bill for a nuclear medicine scan when they receive
a diagnostic radiopharmaceutical free of charge or with full credit.
Currently, if a hospital receives a diagnostic radiopharmaceutical free
of charge or with full credit and uses it to provide a nuclear medicine
scan, the hospital could choose not to bill for both the nuclear
medicine scan and the diagnostic radiopharmaceutical in order to bypass
the radiolabeled product edits, but the hospital clearly would not
receive OPPS payment for the scan or the diagnostic
radiopharmaceutical. The hospital also could report the diagnostic
radiopharmaceutical with the nuclear medicine scan and receive an APC
payment that includes payment for the diagnostic radiopharmaceutical,
but this would lead to inaccurate billing and incorrect payment. This
is because the OPPS should not pay for a free item. We believe neither
of the above alternatives is satisfactory.
In order to ensure that the OPPS is making appropriate and
equitable payments under such circumstances and that a hospital can
comply with the required radiolabeled product edits, we are proposing
for CY 2011 to instruct hospitals to report the ``FB'' modifier on the
line with the procedure code for the nuclear medicine scan in the APCs
listed in Table E3 in which the no cost/full credit diagnostic
radiopharmaceutical is used. Modifier -FB is ``Item Provided Without
Cost to Provider, Supplier or Practitioner, or Credit Received for
Replacement Device (Examples, but not Limited to: Covered Under
Warranty, Replaced Due to Defect, Free Samples).'' Although this
modifier is specific to devices, it captures the concept of the
hospital receiving a key component of the service without cost. In
cases in which the diagnostic radiopharmaceutical is furnished without
cost or with full credit, we are proposing to instruct the hospital to
report a token charge of less than $1.01. We refer readers to the CY
2008 OPPS/ASC final rule with comment period for more background
information on the ``FB'' payment adjustment policies (72 FR 66743
through 66749). We are proposing that when a hospital bills an -FB with
the nuclear medicine scan, the payment amount for procedures in the
APCs listed in Table 20 would be reduced by the full ``policy-
packaged'' offset amount appropriate for diagnostic
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radiopharmaceuticals. As discussed in our CY 2009 OPPS/ASC final rule
with comment period, the ``policy packaged'' offset amount that we
calculate estimates the portion of each APC payment rate that could
reasonably be attributed to the cost of predecessor diagnostic
radiopharmaceuticals when considering a new diagnostic
radiopharmaceutical for pass-through payment (73 FR 68638 through
68641). As in our offset policy, discussed below, we believe it is
appropriate to remove the ``policy packaged'' offset amount from
payment for a nuclear medicine scan with a diagnostic
radiopharmaceutical received at no cost or full credit which is billed
using one of the APCs appearing in Table 22 below because it represents
the portion of the APC payment attributable to diagnostic
radiopharmaceuticals used in the performance of a nuclear medicine
scan. Using the -FB modifier with radiolabeled products will allow the
hospital to bill accurately for a diagnostic radiopharmaceutical
received free of charge and will allow the hospital to comply with the
radiolabeled product edits to ensure appropriate payment.
At this time, we are not proposing to recognize modifier FC, which
is defined as ``Partial credit received for replaced device,'' because
we were unsure of the circumstances in which hospitals would receive a
diagnostic radiopharmaceutical at reduced cost to replace a previously
provided diagnostic radiopharmaceutical. We invite public comment on
when a diagnostic radiopharmaceutical is provided for a significantly
reduced price and whether the ``FC'' modifier is appropriate for
radiolabeled products.
We will continue to post annually on the CMS Web site at http://www.cms.gov/HospitalOutpatientPPS, a file that contains the APC offset
amounts that would be used for that year for purposes of both
evaluating cost significance for candidate pass-through device
categories and drugs and biologicals, including diagnostic
radiopharmaceuticals, and establishing any appropriate APC offset
amounts. Specifically, the file will continue to provide, for every
OPPS clinical APC, the amounts and percentages of APC payment
associated with packaged implantable devices, including implantable
biologicals; ``policy-packaged'' drugs, including diagnostic
radiopharmaceuticals and contrast agents; and ``threshold-packaged''
drugs and biologicals, which are all other drugs, therapeutic
radiopharmaceuticals, and nonimplantable biologicals.
Table 22 below displays the proposed APCs to which nuclear medicine
procedures would be assigned in CY 2011 and for which we expect that an
APC offset could be applicable in the case of new diagnostic
radiopharmaceuticals with pass-through status.
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c. Proposed Payment Offset Policy for Contrast Agents
As described above, section 1833(t)(6)(D)(i) of the Act specifies
that the transitional pass-through payment amount for pass-through
drugs and biologicals is the difference between the amount paid under
section 1842(o) (or the Part B drug CAP rate) and the otherwise
applicable OPD fee schedule amount. There is currently one contrast
agent with pass-through status under the OPPS, HCPCS code A9583
(Injection, gadoxetate disodium, per ml). HCPCS code A9583 was granted
pass-through status beginning January 1, 2010, and will continue with
pass-through status in CY 2011. As described earlier in section V.A.3.
of this proposed rule, new pass-through contrast agents would be paid
at ASP+6 percent, while those without ASP information would be paid at
WAC+6 percent or, if WAC is not available, payment would be based on 95
percent of the product's most recently published AWP.
We believe that a payment offset is necessary in order to provide
an appropriate transitional pass-through payment for contrast agents
because all of these items are packaged when they do not have pass-
through status. In accordance with our standard offset methodology, for
CY 2011 we are proposing to deduct from the payment for pass-through
contrast agents an amount that reflects the portion of the APC payment
associated with predecessor contrast agents in order to ensure no
duplicate contrast agent payment is made.
In CY 2010, we established a policy to estimate the portion of each
APC payment rate that could reasonably be attributed to the cost of
predecessor contrast agents when considering new contrast agents for
pass-through payment (74 FR 60482 through 60484). For CY 2011, we are
proposing to continue to apply this same policy to contrast agents.
Specifically, we are proposing to utilize the ``policy-packaged'' drug
offset fraction for clinical APCs calculated as 1 minus (the cost from
single procedure claims in the APC after removing the cost for
``policy-packaged'' drugs divided by the cost from single procedure
claims in the APC). As discussed above, in CY 2010, we finalized a
policy to redefine ``policy-packaged'' drugs as only nonpass-through
diagnostic radiopharmaceuticals and contrast agents (74 FR 60495
through 60499). To determine the actual APC offset amount for pass-
through contrast agents that takes into consideration the otherwise
applicable OPPS payment amount, we are proposing to multiply the
``policy-packaged'' drug offset fraction by the APC payment amount for
the procedure with which the pass-through contrast agent is used and,
accordingly, reduce the separate OPPS payment for the pass-through
contrast agent by this amount.
We are proposing to continue to post annually on the CMS Web site
at http://www.cms.gov/HospitalOutpatientPPS, a file that contains the
APC offset amounts that would be used for that year for purposes of
both evaluating cost significance for candidate pass-through device
categories and drugs and biologicals, including contrast agents, and
establishing any appropriate APC offset amounts. Specifically, the file
will continue to provide, for every OPPS clinical APC, the amounts and
percentages of APC payment associated with packaged implantable
devices, ``policy-packaged'' drugs, and ``threshold-packaged'' drugs
and biologicals.
Proposed procedural APCs for which we expect a contrast agent
offset could be applicable in the case of a pass-through contrast agent
have been identified as any procedural APC with a ``policy-packaged''
drug amount greater than $20 that is not a nuclear medicine APC
identified in Table 20 above, and these APCs are displayed in Table 23
below. The methodology used to determine a proposed threshold cost for
application of a contrast agent offset policy is described in detail in
the CY 2010 OPPS/ASC final rule with comment period (70 FR 60483
through 60484). For CY 2011, we are proposing to continue to recognize
that when a contrast agent with pass-through status is billed with any
procedural APC listed in Table 23, a specific offset based on the
procedural APC would be applied to payment for the contrast agent to
ensure that duplicate payment is not made for the contrast agent.
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B. Proposed OPPS Payment for Drugs, Biologicals, and
Radiopharmaceuticals Without Pass-Through Status
1. Background
Under the CY 2010 OPPS, we currently pay for drugs, biologicals,
and radiopharmaceuticals that do not have pass-through status in one of
two ways: Packaged payment into the payment for the associated service;
or separate payment (individual APCs). We explained in the April 7,
2000 OPPS final rule with comment period (65 FR 18450) that we
generally package the cost of drugs and radiopharmaceuticals into the
APC payment rate for the procedure or treatment with which the products
are usually furnished. Hospitals do not receive separate payment for
packaged items and supplies, and hospitals may not bill beneficiaries
separately for any packaged items and supplies whose costs are
recognized and paid within the national OPPS payment rate for the
associated procedure or service. (Transmittal A-01-133, issued on
November 20, 2001, explains in greater detail the rules regarding
separate payment for packaged services.)
Packaging costs into a single aggregate payment for a service,
procedure, or episode-of-care is a fundamental principle that
distinguishes a prospective payment system from a fee schedule. In
general, packaging the costs of items and services into the payment for
the primary procedure or service with which they are associated
encourages hospital efficiencies and also enables hospitals to manage
their resources with maximum flexibility.
Section 1833(t)(16)(B) of the Act, as added by section 621(a)(2) of
Public Law 108-173, set the threshold for establishing separate APCs
for drugs and biologicals at $50 per administration for CYs 2005 and
2006. Therefore, for CYs 2005 and 2006, we paid separately for drugs,
biologicals, and radiopharmaceuticals whose per day cost exceeded $50
and packaged the costs of drugs, biologicals, and radiopharmaceuticals
whose per day cost was equal to or less than $50 into the procedures
with which they were billed. For CY 2007, the packaging threshold for
drugs, biologicals, and radiopharmaceuticals that were not new and did
not have pass-through status was established at $55. For CYs 2008 and
2009, the packaging threshold for drugs, biologicals, and
radiopharmaceuticals that were not new and did not have pass-through
status was established at $60. For CY 2010, the packaging threshold for
drugs, biologicals, and radiopharmaceuticals that were not new and did
not have pass-through status was established at $65. The methodology
used to establish the $55 threshold for CY 2007, the $60 threshold for
CYs 2008 and 2009, the $65 threshold for CY 2010, and our proposed
approach for CY 2011 are discussed in more detail in section V.B.2.b.
of this proposed rule.
2. Proposed Criteria for Packaging Payment for Drugs, Biologicals, and
Radiopharmaceuticals
a. Background
As indicated in section V.B.1. of this proposed rule, in accordance
with section 1833(t)(16)(B) of the Act, the threshold for establishing
separate APCs for payment of drugs and biologicals was set to $50 per
administration during CYs 2005 and 2006. In CY 2007, we used the fourth
quarter moving average Producer Price Index (PPI) levels for
prescription preparations to trend the $50 threshold forward from the
third quarter of CY 2005 (when the Pub. L. 108-173 mandated threshold
became effective) to the third quarter of CY 2007. We then rounded the
resulting dollar amount to the nearest $5 increment in order to
determine the CY 2007 threshold amount of $55. Using the same
methodology as that used in CY 2007 (which is discussed in more detail
in the CY 2007 OPPS/ASC final rule with comment period (71 FR 68085
through 68086)), we set the packaging threshold for establishing
separate APCs for drugs and biologicals at $60 for CYs 2008 and 2009.
For CY 2010 we set the packaging threshold at $65.
Following the CY 2007 methodology, for CY 2011, we used updated
fourth quarter moving average PPI levels to trend the $50 threshold
forward from the third quarter of CY 2005 to the third quarter of CY
2011 and again rounded the resulting dollar amount ($70.64) to the
nearest $5 increment, which yielded a figure of $70. In performing this
calculation, we used the most up-to-date forecasted, quarterly PPI
estimates from CMS' Office of the Actuary (OACT). As actual inflation
for past quarters replaced forecasted amounts, the PPI estimates for
prior quarters have been revised (compared with those used in the CY
2007 OPPS/ASC final rule with comment period) and have been
incorporated into our calculation. Based on the calculations described
above, we are proposing a packaging threshold for CY 2011 of $70. (For
a more detailed discussion of the OPPS drug packaging threshold and the
use of the PPI for prescription drugs, we refer readers to the CY 2007
OPPS/ASC final rule with comment period (71 FR 68085 through 68086).)
b. Proposed Cost Threshold for Packaging of Payment for HCPCS Codes
that Describe Certain Drugs, Nonimplantable Biologicals, and
Therapeutic Radiopharmaceuticals (``Threshold-Packaged Drugs'')
To determine their proposed CY 2011 packaging status, for this
proposed rule, we calculated the per day cost of all drugs on a HCPCS
code-specific basis (with the exception of those drugs and biologicals
with multiple HCPCS codes that include different dosages as described
in section V.B.2.c. of this proposed rule and excluding diagnostic
radiopharmaceuticals, contrast agents, and implantable biologicals that
we are proposing to continue to package in CY 2011 as discussed in
section V.B.2.d. of this proposed rule), nonimplantable biologicals,
and therapeutic radiopharmaceuticals (collectively called ``threshold-
packaged'' drugs) that had a HCPCS code in CY 2009 and were paid (via
packaged or separate payment) under the OPPS, using CY 2009 claims data
processed before January 1, 2010. In order to calculate the per day
costs for drugs, nonimplantable biologicals, and therapeutic
radiopharmaceuticals to determine their proposed packaging status in CY
2011, we used the methodology that was described in detail in the CY
2006 OPPS proposed rule (70 FR 42723 through 42724) and finalized in
the CY 2006 OPPS final rule with comment period (70 FR 68636 through 70
FR 68638).
To calculate the CY 2011 proposed rule per day costs, we used an
estimated payment rate for each drug and nonimplantable biological
HCPCS code of ASP+6 percent (which is the payment rate we are proposing
for separately payable drugs and nonimplantable biologicals in CY 2011,
as discussed in more detail in section V.B.3.b. of this proposed rule).
We used the manufacturer submitted ASP data from the fourth quarter of
CY 2009 (data that were used for payment purposes in the physician's
office setting, effective April 1, 2010) to determine the proposed rule
per day cost.
As is our standard methodology, for CY 2011, we are proposing to
use payment rates based on the ASP data from the fourth quarter of CY
2009 for budget neutrality estimates, packaging determinations, impact
analyses, and completion of Addenda A and B to this proposed rule
because these are the most recent data available for use at the time of
development of this proposed rule. These data are also the basis for
drug payments in the physician's office
[[Page 46266]]
setting, effective April 1, 2010. For items that did not have an ASP-
based payment rate, such as some therapeutic radiopharmaceuticals, we
used their mean unit cost derived from the CY 2009 hospital claims data
to determine their per day cost. We are proposing to package items with
a per day cost less than or equal to $70 and identified items with a
per day cost greater than $70 as separately payable. Consistent with
our past practice, we crosswalked historical OPPS claims data from the
CY 2009 HCPCS codes that were reported to the CY 2010 HCPCS codes that
we displayed in Addendum B to this proposed rule for payment in CY
2011.
Our policy during previous cycles of the OPPS has been to use
updated ASP and claims data to make final determinations of the
packaging status of HCPCS codes for drugs, nonimplantable biologicals,
and therapeutic radiopharmaceuticals for the final rule with comment
period. We note that it is also our policy to make an annual packaging
determination for a HCPCS code only when we develop the OPPS/ASC final
rule for the update year. Only HCPCS codes that are identified as
separately payable in the final rule with comment period are subject to
quarterly updates. For our calculation of per day costs of HCPCS codes
for drugs and nonimplantable biologicals in the CY 2011 OPPS/ASC final
rule with comment period, we are proposing to use ASP data from the
first quarter of CY 2010, which is the basis for calculating payment
rates for drugs and biologicals in the physician's office setting using
the ASP methodology, effective July 1, 2010, along with updated
hospital claims data from CY 2009. We note that we also would use these
data for budget neutrality estimates and impact analyses for the CY
2011 OPPS/ASC final rule with comment period. Payment rates for HCPCS
codes for separately payable drugs and nonimplantable biologicals
included in Addenda A and B to that final rule with comment period
would be based on ASP data from the second quarter of CY 2010, which
are the basis for calculating payment rates for drugs and biologicals
in the physician's office setting using the ASP methodology, effective
October 1, 2010. These rates would then be updated in the January 2011
OPPS update, based on the most recent ASP data to be used for
physician's office and OPPS payment as of January 1, 2011. For items
that do not currently have an ASP-based payment rate, we would
recalculate their mean unit cost from all of the CY 2009 claims data
and updated cost report information available for the CY 2011 final
rule with comment period to determine their final per day cost.
Consequently, the packaging status of some HCPCS codes for drugs,
nonimplantable biologicals, and therapeutic radiopharmaceuticals in the
CY 2011 OPPS/ASC final rule with comment period using the updated data
may be different from the same drug HCPCS code's packaging status
determined based on the data used for this proposed rule. Under such
circumstances, we are proposing to continue the established policies
initially adopted for the CY 2005 OPPS (69 FR 65780) in order to more
equitably pay for those drugs whose median cost fluctuates relative to
the CY 2011 OPPS drug packaging threshold and the drug's payment status
(packaged or separately payable) in CY 2010. Specifically, we are
proposing for CY 2011 to apply the following policies to these HCPCS
codes for drugs, nonimplantable biologicals, and therapeutic
radiopharmaceuticals whose relationship to the $70 drug packaging
threshold changes based on the final updated data:
HCPCS codes for drugs and nonimplantable biologicals that
were paid separately in CY 2010 and that were proposed for separate
payment in CY 2011, and then have per day costs equal to or less than
$70, based on the updated ASPs and hospital claims data used for the CY
2011 final rule with comment period, would continue to receive separate
payment in CY 2011.
HCPCS codes for drugs and nonimplantable biologicals that
were packaged in CY 2010 and that were proposed for separate payment in
CY 2011, and then have per day costs equal to or less than $70, based
on the updated ASPs and hospital claims data used for the CY 2011 final
rule with comment period, would remain packaged in CY 2011.
HCPCS codes for drugs and nonimplantable biologicals for
which we proposed packaged payment in CY 2011 but then have per day
costs greater than $70, based on the updated ASPs and hospital claims
data used for the CY 2011 final rule with comment period, would receive
separate payment in CY 2011. In the CY 2010 OPPS/ASC final rule (74 FR
60485 through 60489), we implemented a policy to treat oral and
injectable forms of 5-HT3 antiemetics comparable to all other threshold
packaged drugs, nonimplantable biologicals, and therapeutic
radiohpharmaceuticals under our standard packaging methodology of
packaging drugs with a per day cost less than $70. For CY 2011, we are
proposing to continue our policy of not exempting these 5-HT3
antiemetic products from our standard packaging methodology and to
package payment for all of the 5-HT3 antiemetics except palonosetron
hydrochloride, consistent with their estimated per day costs from the
CY 2009 claims data.
c. Proposed Packaging Determination for HCPCS Codes That Describe the
Same Drug or Biological But Different Dosages
In the CY 2008 OPPS/ASC final rule with comment period (72 FR
66776), we began recognizing, for OPPS payment purposes, multiple HCPCS
codes reporting different dosages for the same covered Part B drugs or
biologicals in order to reduce hospitals' administrative burden by
permitting them to report all HCPCS codes for drugs and biologicals. In
general, prior to CY 2008, the OPPS recognized for payment only the
HCPCS code that described the lowest dosage of a drug or biological. We
extended this recognition to multiple HCPCS codes for several other
drugs under the CY 2009 OPPS (73 FR 68665). During CYs 2008 and 2009,
we applied a policy that assigned the status indicator of the
previously recognized HCPCS code to the associated newly recognized
code(s), reflecting the new code(s)' packaged or separately payable
status. In the CY 2008 OPPS/ASC final rule with comment period (72 FR
66775), we explained that once claims data were available for these
previously unrecognized HCPCS codes, we would determine the packaging
status and resulting status indicator for each HCPCS code according to
the general, established HCPCS code-specific methodology for
determining a code's packaging status for a given update year. However,
we also stated that we planned to closely follow our claims data to
ensure that our annual packaging determinations for the different HCPCS
codes describing the same drug or biological did not create
inappropriate payment incentives for hospitals to report certain HCPCS
codes instead of others.
In the CY 2010 OPPS/ASC final rule with comment period (74 FR 60490
through 60491), we finalized a policy to make a single packaging
determination for a drug, rather than an individual HCPCS code, when a
drug has multiple HCPCS codes describing different dosages. We analyzed
CY 2008 claims data for the HCPCS codes describing different dosages of
the same drug or biological that were newly recognized in CY 2008 and
found that our claims data would result in several different packaging
determinations for different codes describing the same drug or
biological. Furthermore, we found that
[[Page 46267]]
our claims data would include few units and days for a number of newly
recognized HCPCS codes, resulting in our concern that these data
reflected claims from only a small number of hospitals, even though the
drug or biological itself may be reported by many other hospitals under
the most common HCPCS code. Based on these findings from our first
available claims data for the newly recognized HCPCS codes, we believed
that adopting our standard HCPCS code-specific packaging determinations
for these codes could lead to payment incentives for hospitals to
report certain HCPCS codes instead of others, particularly because we
do not currently require hospitals to report all drug and biological
HCPCS codes under the OPPS in consideration of our previous policy that
generally recognized only the lowest dosage HCPCS code for a drug or
biological for OPPS payment. For CY 2011, we continue to believe that
adopting the standard HCPCS code-specific packaging determinations for
these codes could lead to payment incentives for hospitals to report
certain HCPCS codes for drugs instead of others. Making packaging
determinations on a drug-specific basis eliminates these incentives and
allows hospitals flexibility in choosing to report all HCPCS codes for
different dosages of the same drug or only the lowest dosage HCPCS
code. Therefore, we are proposing to continue our policy to make
packaging determinations on a drug-specific basis, rather than a HCPCS
code-specific basis, for those HCPCS codes that describe the same drug
or biological but different dosages in CY 2011.
For CY 2011, in order to propose a packaging determination that is
consistent across all HCPCS codes that describe different dosages of
the same drug or biological, we aggregated both our CY 2009 claims data
and our pricing information at ASP+6 percent across all of the HCPCS
codes that describe each distinct drug or biological in order to
determine the mean units per day of the drug or biological in terms of
the HCPCS code with the lowest dosage descriptor. HCPCS codes J9093
(cyclophosphamide, lyophilized, 100 mg), J9094 (cyclophosphamide,
lyophilized, 200 mg), J9095 (cyclophosphamide, lyophilized, 500 mg),
J9096 (cyclophosphamide, lyophilized, 1g), and J9097 (cyclophosphamide,
lyophilized, 2g) did not have pricing information available for the ASP
methodology and, as is our current policy for determining the packaging
status of other drugs, we used the mean unit cost available from fourth
quarter CY 2009 claims data to make the packaging determinations for
these drugs. For all other drugs and biologicals that have HCPCS codes
describing different dosages, we then multiplied the weighted average
ASP+6 percent or mean unit cost payment amount across all dosage levels
of a specific drug or biological by the estimated units per day for all
HCPCS codes that describe each drug or biological from our claims data
to determine the estimated per day cost of each drug or biological at
less than or equal to $70 (whereupon all HCPCS codes for the same drug
or biological would be packaged) or greater than $70 (whereupon all
HCPCS codes for the same drug or biological would be separately
payable). The proposed packaging status of each drug and biological
HCPCS code to which this methodology would apply is displayed in Table
24.
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d. Proposed Packaging of Payment for Diagnostic Radiopharmaceuticals,
Contrast Agents, and Implantable Biologicals (``Policy-Packaged'' Drugs
and Devices)
Prior to CY 2008, the methodology of calculating a product's
estimated per day cost and comparing it to the annual OPPS drug
packaging threshold was used to determine the packaging status of
drugs, biologicals, and radiopharmaceuticals under the OPPS (except for
our CYs 2005 through 2009 exemption for 5-HT3 antiemetics). However, as
established in the CY 2008 OPPS/ASC final rule with comment period (72
FR 66766 through 66768), we began packaging payment for all diagnostic
radiopharmaceuticals and contrast agents into the payment for the
associated procedure, regardless of their per day costs. In addition,
in CY 2009 we adopted a policy that packaged the payment for nonpass-
through implantable biologicals into payment for the associated
surgical procedure on the claim (73 FR 68633 through 68636). We refer
to diagnostic radiopharmaceuticals and contrast agents collectively as
``policy-packaged'' drugs and to implantable biologicals as devices
because, in CY 2010, we began to treat implantable biologicals as
devices for all OPPS payment purposes.
According to our regulations at Sec. 419.2(b), as a prospective
payment system, the OPPS establishes a national payment rate that
includes operating and capital-related costs that are directly related
and integral to performing a procedure or furnishing a service on an
outpatient basis including, but not limited to, implantable
prosthetics, implantable durable medical equipment, and medical and
surgical supplies. Packaging costs into a single aggregate payment for
a service, encounter, or episode-of-care is a fundamental principle
that distinguishes a prospective payment system from a fee schedule. In
general, packaging the costs of items and services into the payment for
the primary procedure or service with which they are associated
encourages hospital efficiencies and also enables hospitals to manage
their resources with maximum flexibility.
Prior to CY 2008, we noted that the proportion of drugs,
biologicals, and radiopharmaceuticals that were separately paid under
the OPPS had increased in recent years, a pattern that we also observed
for procedural services under the OPPS. Our final CY 2008 policy that
packaged payment for all nonpass-through diagnostic
radiopharmaceuticals and contrast agents, regardless of their per day
costs, contributed significantly to expanding the size of the OPPS
payment bundles and is consistent with the principles of a prospective
payment system.
As discussed in more detail in the CY 2009 OPPS/ASC final rule with
comment period (73 FR 68645 through 68649), we presented several
reasons supporting our initial policy to package payment of diagnostic
radiopharmaceuticals and contrast agents into their associated
procedures on a claim. Specifically, we stated that we believed
packaging was appropriate because: (1) The statutory requirement that
we must pay separately for drugs and biologicals for which the per day
cost exceeds $50 under section 1833(t)(16)(B) of the Act has expired;
(2) we believe that diagnostic radiopharmaceuticals and contrast agents
function effectively as supplies that enable the provision of an
independent service; and (3) section 1833(t)(14)(A)(iii) of the Act
requires that payment for specified covered outpatient drugs (SCODs) be
set prospectively based on a measure of average hospital acquisition
cost. For these reasons, we believe it is appropriate to continue to
treat diagnostic radiopharmaceuticals and contrast agents differently
from other SCODs for CY 2011. Therefore, we are proposing to continue
packaging payment for all contrast agents and diagnostic
radiopharmaceuticals, collectively referred to as ``policy-packaged''
drugs, regardless of their per day costs, for CY 2011. We also are
proposing to continue to package the payment for diagnostic
radiopharmaceuticals into the payment for the associated nuclear
medicine procedure and to package the payment for contrast agents into
the payment of the associated echocardiography imaging procedure,
regardless of whether the contrast agent met the OPPS drug packaging
threshold. We refer readers to the CY 2010 OPPS/ASC final rule with
comment period for a detailed discussion of nuclear medicine and
echocardiography services (74 FR 35269 through 35277).
In CY 2009 (73 FR 68634), we began packaging the payment for all
nonpass-through implantable biologicals into payment for the associated
surgical procedure. Because implantable biologicals may sometimes
substitute for nonbiological devices, we noted that if we were to
provide separate payment for implantable biologicals without pass-
through status, we would potentially be providing duplicate device
payment, both through the packaged nonbiological device cost already
included in the surgical procedure's payment and separate biological
payment. We concluded that we saw no basis for treating implantable
biological and nonbiological devices without pass-through status
differently for OPPS payment purposes because both are integral to and
supportive of the separately paid surgical procedures in which either
may be used. Therefore, in CY 2009, we adopted a final policy to
package payment for all nonpass-through implantable biologicals that
are surgically inserted or implanted (through a surgical incision or a
natural orifice), like our longstanding policy that packages payment
for all implantable nonbiological devices without pass-through status.
We finalized a policy in CY 2010 to package payment for nonpass-through
implantable biologicals that are surgically inserted or implanted
(through a surgical incision or a natural orifice) into the body, known
as devices. For CY 2011, we are proposing to continue to package
payment for nonpass-through implantable biologicals that are surgically
inserted or implanted (through a surgical incision or a natural
orifice) into the body, referred to as devices. In accordance with this
proposal, two of the products with expiring pass-through status for CY
2011 are biologicals that are solely surgically implanted according to
their FDA-approved indications. These products are described by HCPCS
codes C9356 (Tendon, porous matrix of cross-linked collagen and
glycosaminoglycan matrix (TenoGlide Tendon Protector Sheet), per square
centimeter) and C9359 (Porous purified collagen matrix bone void filler
(Integra Mozaik Osteoconductive Scaffold Putty, Integra OS
Osteoconductive Scaffold Putty), per 0.5 cc). Like the two implantable
biologicals with expiring pass-through status in CY 2010 that were
discussed in the CY 2010 OPPS/ASC final rule with comment period (74 FR
60459 through 60499), we believe that the two biologicals specified
above with expiring pass-through status for CY 2011 differ from other
biologicals paid under the OPPS in that they specifically function as
surgically implanted devices. As a result of the CY 2010 packaged
payment methodology for all nonpass-through implantable biologicals, we
are proposing to package payment for HCPCS codes C9356 and C9359 and
assign them status indicator ``N'' for CY 2011. In addition, any new
biologicals without pass-through status that are surgically inserted or
implanted (through a surgical incision or a natural orifice) would be
packaged in CY 2011.
[[Page 46272]]
Moreover, for nonpass-through biologicals that may sometimes be used as
implantable devices, we continue to instruct hospitals to not bill
separately for the HCPCS codes for the products when used as
implantable devices. This reporting ensures that the costs of these
products that may be, but are not always, used as implanted biologicals
are appropriately packaged into payment for the associated implantation
procedures.
3. Proposed Payment for Drugs and Biologicals without Pass-Through
Status That Are Not Packaged
a. Proposed Payment for Specified Covered Outpatient Drugs (SCODs) and
Other Separately Payable and Packaged Drugs and Biologicals
Section 1833(t)(14) of the Act defines certain separately payable
radiopharmaceuticals, drugs, and biologicals and mandates specific
payments for these items. Under section 1833(t)(14)(B)(i) of the Act, a
``specified covered outpatient drug'' is a covered outpatient drug, as
defined in section 1927(k)(2) of the Act, for which a separate APC has
been established and that either is a radiopharmaceutical agent or is a
drug or biological for which payment was made on a pass-through basis
on or before December 31, 2002.
Under section 1833(t)(14)(B)(ii) of the Act, certain drugs and
biologicals are designated as exceptions and are not included in the
definition of ``specified covered outpatient drugs,'' known as SCODs.
These exceptions are--
A drug or biological for which payment is first made on or
after January 1, 2003, under the transitional pass-through payment
provision in section 1833(t)(6) of the Act.
A drug or biological for which a temporary HCPCS code has
not been assigned.
During CYs 2004 and 2005, an orphan drug (as designated by
the Secretary).
Section 1833(t)(14)(A)(iii) of the Act requires that payment for
SCODs in CY 2006 and subsequent years be equal to the average
acquisition cost for the drug for that year as determined by the
Secretary, subject to any adjustment for overhead costs and taking into
account the hospital acquisition cost survey data collected by the
Government Accountability Office (GAO) in CYs 2004 and 2005. If
hospital acquisition cost data are not available, the law requires that
payment be equal to payment rates established under the methodology
described in section 1842(o), section 1847A, or section 1847B of the
Act, as calculated and adjusted by the Secretary as necessary. Most
physician Part B drugs are paid pursuant to ASP+6 percent pursuant to
section 1842(o) of the Act and section 1847A of the Act.
Section 1833(t)(14)(E) of the Act provides for an adjustment in
OPPS payment rates for overhead and related expenses, such as pharmacy
services and handling costs. Section 1833(t)(14)(E)(i) of the Act
required MedPAC to study pharmacy overhead and to make recommendations
to the Secretary regarding whether, and if so how, a payment adjustment
should be made to compensate hospitals for them. Section
1833(t)(14)(E)(ii) of the Act authorizes the Secretary to adjust the
weights for ambulatory procedure classifications for SCODs to take into
account the findings of the MedPAC study.
In the CY 2006 OPPS proposed rule (70 FR 42728), we discussed the
June 2005 report by MedPAC regarding pharmacy overhead costs in HOPDs
and summarized the findings of that study:
Handling costs for drugs, biologicals, and
radiopharmaceuticals administered in the HOPD are not insignificant;
Little information is available about the magnitude of
pharmacy overhead costs;
Hospitals set charges for drugs, biologicals, and
radiopharmaceuticals at levels that reflect their respective handling
costs; and
Hospitals vary considerably in their likelihood of
providing services which utilize drugs, biologicals, or
radiopharmaceuticals with different handling costs.
As a result of these findings, MedPAC developed seven drug
categories for pharmacy and nuclear medicine handling costs based on
the estimated level of hospital resources used to prepare the products
(70 FR 42729). Associated with these categories were two
recommendations for accurate payment of pharmacy overhead under the
OPPS.
1. CMS should establish separate, budget neutral payments to cover
the costs hospitals incur for handling separately payable drugs,
biologicals, and radiopharmaceuticals.
2. CMS should define a set of handling fee APCs that group drugs,
biologicals, and radiopharmaceuticals based on attributes of the
products that affect handling costs; CMS should instruct hospitals to
submit charges for these APCs and base payment rates for the handling
fee APCs on submitted charges reduced to costs.
In response to the MedPAC findings, in the CY 2006 OPPS proposed
rule (70 FR 42729), we discussed our belief that, because of the varied
handling resources required to prepare different forms of drugs, it
would be impossible to exclusively and appropriately assign a drug to a
certain overhead category that would apply to all hospital outpatient
uses of the drug. Therefore, our CY 2006 OPPS proposal included a
proposal to establish three distinct Level II HCPCS C-codes and three
corresponding APCs for drug handling categories to differentiate
overhead costs for drugs and biologicals (70 FR 42730). We also
proposed: (1) To combine several overhead categories recommended by
MedPAC; (2) to establish three drug handling categories, as we believed
that larger groups would minimize the number of drugs that may fit into
more than one category and would lessen any undesirable payment policy
incentives to utilize particular forms of drugs or specific preparation
methods; (3) to collect hospital charges for these HCPCS C-codes for 2
years; and (4) to ultimately base payment for the corresponding drug
handling APCs on CY 2006 claims data available for the CY 2008 OPPS.
In the CY 2006 OPPS final rule with comment period (70 FR 68659
through 68665), we discussed the public comments we received on our
proposal regarding pharmacy overhead. The overwhelming majority of
commenters did not support our proposal and urged us not to finalize
this policy, as it would be administratively burdensome for hospitals
to establish charges for HCPCS codes for pharmacy overhead and to
report them. Therefore, we did not finalize this proposal for CY 2006.
Instead, we established payment for separately payable drugs and
biologicals at ASP+6 percent, which we calculated by comparing the
estimated aggregate cost of separately payable drugs and biologicals in
our claims data to the estimated aggregate ASP dollars for separately
payable drugs and biologicals, using the ASP as a proxy for average
acquisition cost (70 FR 68642). Hereinafter, we refer to this
methodology as our standard drug payment methodology. We concluded that
payment for drugs and biologicals and pharmacy overhead at a combined
ASP+6 percent rate would serve as the best proxy for the combined
acquisition and overhead costs of each of these products.
In the CY 2007 OPPS/ASC final rule with comment period (71 FR
68091), we finalized our proposed policy to provide a single payment of
ASP+6 percent for the hospital's acquisition cost for the drug or
biological and all associated pharmacy overhead and handling costs. The
ASP+6 percent rate that we
[[Page 46273]]
finalized was higher than the equivalent average ASP-based amount
calculated from claims of ASP+4 percent according to our standard drug
payment methodology, but we adopted payment at ASP+6 percent for
stability while we continued to examine the issue of the costs of
pharmacy overhead in the HOPD.
In the CY 2008 OPPS/ASC proposed rule (72 FR 42735), in response to
ongoing discussions with interested parties, we proposed to continue
our methodology of providing a combined payment rate for drug and
biological acquisition and pharmacy overhead costs. We also proposed to
instruct hospitals to remove the pharmacy overhead charge for both
packaged and separately payable drugs and biologicals from the charge
for the drug or biological and report the pharmacy overhead charge on
an uncoded revenue code line on the claim. We believed that this would
provide us with an avenue for collecting pharmacy handling cost data
specific to drugs in order to package the overhead costs of these items
into the associated procedures, most likely drug administration
services. Similar to the public response to our CY 2006 pharmacy
overhead proposal, the overwhelming majority of commenters did not
support our CY 2008 proposal and urged us to not finalize this policy
(72 FR 66761). At its September 2007 meeting, the APC Panel recommended
that hospitals not be required to separately report charges for
pharmacy overhead and handling and that payment for overhead be
included as part of drug payment. The APC Panel also recommended that
CMS continue to evaluate alternative methods to standardize the capture
of pharmacy overhead costs in a manner that is simple to implement at
the organizational level (72 FR 66761). Because of concerns expressed
by the APC Panel and public commenters, we did not finalize the
proposal to instruct hospitals to separately report pharmacy overhead
charges for CY 2008. Instead, in the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66763), we finalized a policy of providing
payment for separately payable drugs and biologicals and their pharmacy
overhead at ASP+5 percent as a transition from their CY 2007 payment of
ASP+6 percent to payment based on the equivalent average ASP-based
payment rate calculated from hospital claims according to our standard
drug payment methodology, which was ASP+3 percent for the CY 2008 OPPS/
ASC final rule with comment period. Hospitals continued to include
charges for pharmacy overhead costs in the line-item charges for the
associated drugs reported on claims.
For CY 2009, we proposed to pay separately payable drugs and
biologicals at ASP+4 percent, including both SCODs and other drugs
without CY 2009 OPPS pass-through status, based on our standard drug
payment methodology, and we also proposed to split the ``Drugs Charged
to Patients'' cost center into two cost centers: One for drugs with
high pharmacy overhead costs and one for drugs with low pharmacy
overhead costs (73 FR 41492). We noted that we expected that CCRs from
the proposed new cost centers would be available in 2 to 3 years to
refine OPPS drug cost estimates by accounting for differential hospital
markup practices for drugs with high and low overhead costs. After
consideration of the public comments received and the APC Panel
recommendations, we finalized a CY 2009 policy (73 FR 68659) to provide
payment for separately payable nonpass-through drugs and biologicals
based on costs calculated from hospital claims at a 1-year transitional
rate of ASP+4 percent, in the context of an equivalent average ASP-
based payment rate of ASP+2 percent calculated according to our
standard drug payment methodology from the final rule claims and cost
report data. We did not finalize our proposal to split the single
standard ``Drugs Charged to Patients'' cost center into two cost
centers largely due to concerns raised to us by hospitals about the
associated administrative burden. Instead, we indicated in the CY 2009
OPPS/ASC final rule with comment period (73 FR 68659) that we would
continue to explore other potential approaches to improve our drug cost
estimation methodology, thereby increasing payment accuracy for
separately payable drugs and biologicals.
In response to the CMS proposals for the CY 2008 and CY 2009 OPPS,
a group of pharmacy stakeholders (hereinafter referred to as the
pharmacy stakeholders), including some cancer hospitals, some
pharmaceutical manufacturers, and some hospital and professional
associations, commented that CMS should pay an acquisition cost of
ASP+6 percent for separately payable drugs, should substitute ASP+6
percent for the packaged cost of all packaged drugs and biologicals on
procedure claims, and should redistribute the difference between the
aggregate estimated packaged drug cost in claims and payment for all
drugs, including packaged drugs at ASP+6 percent, as separate pharmacy
overhead payments for separately payable drugs. They indicated that
this approach would preserve the aggregate drug cost observed in the
claims data, while significantly increasing payment accuracy for
individual drugs and procedures by redistributing drug cost from
packaged drugs. Their suggested approach would provide a separate
overhead payment for each separately payable drug or biological at one
of three different levels, depending on the pharmacy stakeholders'
assessment of the complexity of pharmacy handling associated with each
specific drug or biological (73 FR 68651 through 68652). Each
separately payable drug or biological HCPCS code would be assigned to
one of the three overhead categories, and the separate pharmacy
overhead payment applicable to the category would be made when each of
the separately payable drugs or biologicals was paid.
In the CY 2010 OPPS/ASC proposed rule (74 FR 35332), we proposed to
redistribute between one-third and one-half of the estimated overhead
cost associated with coded packaged drugs and biologicals with an ASP
which resulted in our proposal to pay for the acquisition and pharmacy
overhead costs of separately payable drugs and biologicals that did not
have pass-through payment status at ASP+4 percent. We calculated
estimated overhead cost for coded packaged drugs and biologicals by
determining the difference between the aggregate claims cost for coded
packaged drugs and biologicals with an ASP and the ASP dollars (ASP
multiplied by the drug's or biological's units in the claims data) for
those same coded drugs and biologicals; this difference was our
estimated overhead cost for coded packaged drugs and biologicals. In
our rationale described in the CY 2010 OPPS/ASC proposed rule (74 FR
35326 through 35333), we stated that we believed that approximately
$150 million of the estimated $395 million total in pharmacy overhead
cost included in our claims data for coded packaged drugs and
biologicals with reported ASP data should be attributed to separately
payable drugs and biologicals and that the $150 million serves as the
adjustment for the pharmacy overhead costs of separately payable drugs
and biologicals. As a result, we also proposed to reduce the cost of
coded drugs and biologicals that is packaged into payment for
procedural APCs to offset the $150 million adjustment to payment for
separately payable drugs and biologicals. In addition, we proposed that
any redistribution of
[[Page 46274]]
pharmacy overhead cost that may arise from CY 2010 final rule data
would occur only from coded packaged drugs and biologicals with an ASP
to separately payable drugs and biologicals, thereby maintaining the
estimated total cost of drugs and biologicals.
Using our CY 2010 proposed rule data, and applying our longstanding
methodology for calculating the total cost of separately payable drugs
and biologicals in our claims compared to the ASP dollars for the same
drugs and biologicals, without applying the proposed overhead cost
redistribution, we determined that the estimated aggregate cost of
separately payable drugs and biologicals (status indicators ``K'' and
``G''), including acquisition and pharmacy overhead costs, was
equivalent to ASP-2 percent. Therefore, under the standard methodology
for establishing payment for separately payable drugs and biologicals,
we would have paid for those drugs and biologicals at ASP-2 percent for
CY 2010, their equivalent average ASP-based payment rate. We also
determined that the estimated aggregate cost of coded packaged drugs
and biologicals with an ASP (status indicator ``N''), including
acquisition and pharmacy overhead costs, was equivalent to ASP+247
percent.
While we had no way of assessing whether this current distribution
of overhead cost to coded packaged drugs and biologicals with an ASP
was appropriate, we acknowledged that the established method of
converting billed charges to costs had the potential to ``compress''
the calculated costs to some degree. Further, we recognized that the
attribution of pharmacy overhead costs to packaged or separately
payable drugs and biologicals through our standard drug payment
methodology of a combined payment for acquisition and pharmacy overhead
costs depends, in part, on the treatment of all drugs and biologicals
each year under our annual drug packaging threshold. Changes to the
packaging threshold may result in changes to payment for the overhead
cost of drugs and biologicals that do not reflect actual changes in
hospital pharmacy overhead cost for those products. For these reasons,
we stated that we believed some portion, but not all, of the total
overhead cost that is associated with coded packaged drugs and
biologicals (the difference between aggregate cost for those drugs on
the claims and ASP for the same drugs), based on our standard drug
payment methodology, should, at least for CY 2010, be attributed to
separately payable drugs and biologicals.
We acknowledged that the observed combined payment for acquisition
and pharmacy overhead costs of ASP-2 percent for separately payable
drugs and biologicals may be too low and ASP+247 percent for coded
packaged drugs and biologicals with reported ASP data in the CY 2010
claims data may be too high (74 FR 35328). We stated that a middle
ground of approximately one-third to one-half of the total pharmacy
overhead cost currently associated with coded packaged drugs and
biologicals in the CY 2008 claims data would represent the most
accurate redistribution of pharmacy overhead cost. We included a
discussion of indirect overhead costs, such as administrative and
general costs, capital costs, staff benefits, and other facility costs
that do not vary across drugs, and direct overhead costs, including
staff, supplies, and equipment that are directly attributable only to
the storage, handling, preparation, and distribution of drugs and
biologicals and which do vary, sometimes considerably, depending upon
the drug being furnished. We presented analyses that modeled the
redistribution of overhead costs in the packaged drugs to all drugs and
biologicals based on overhead relative weights derived from industry
and from MedPAC's recommended overhead relative weights and by
assigning each drug, both packaged and separately paid, to a category
of overhead complexity. Analyses relying on both sets of weights
suggest that indirect costs are a sizable component of the overhead
costs associated with all drugs and biologicals (74 FR 60505 to 60508).
Within the one-third to one-half parameters, we proposed that
reallocating $150 million in drug and biological cost observed in the
claims data from coded packaged drugs and biologicals with an ASP to
separately payable drugs and biologicals for CY 2010 would more
appropriately distribute pharmacy overhead cost among packaged and
separately payable drugs and biologicals. Based on this redistribution,
we proposed a payment rate for separately payable drugs and biologicals
of ASP+4 percent. Thus, we proposed a pharmacy overhead adjustment for
separately payable drugs and biologicals in CY 2010 that would result
in their payment at ASP+4 percent. Redistributing $150 million
represented a reduction in cost of coded packaged drug and biologicals
with reported ASP data in the CY 2010 proposed rule claims data of 27
percent.
We also proposed that any redistribution of pharmacy overhead cost
that may arise from CY 2010 final rule data would occur only from some
drugs and biologicals to other drugs and biologicals, thereby
maintaining the estimated total cost of drugs and biologicals in our
claims data (no redistribution of cost would occur from other services
to drugs and biologicals or vice versa). We further proposed that the
claims data for 340B hospitals be included in the calculation of
payment for drugs and biologicals under the CY 2010 OPPS and that 340B
hospitals would be paid the same amounts for separately payable drugs
and biologicals as hospitals that do not participate in the 340B
program. Finally, we proposed that, in accordance with our standard
drug payment methodology, the estimated payments for separately payable
drugs and biologicals would be taken into account in the calculation of
the weight scaler that would apply to the relative weights for all
procedural services (but would not apply to separately payable drugs
and biologicals) paid under the OPPS, as required by section
1833(t)(14)(H) of the Act.
In the CY 2010 OPPS final rule with comment period, we adopted a
transitional payment rate of ASP+4 percent based on a pharmacy overhead
adjustment methodology for CY 2010 that redistributed $200 million from
packaged drug cost to separately payable drug cost. This $200 million
included the proposed $150 million redistribution from the pharmacy
overhead cost of coded packaged drugs and biologicals for which an ASP
is reported and an additional $50 million dollars from the total
uncoded drug and biological cost to separately payable drugs and
biologicals as a conservative estimate of the pharmacy overhead cost of
uncoded packaged drugs and biologicals that should be appropriately
associated with the cost of separately payable drugs and biologicals
(74 FR 60517). We noted that our final CY 2010 payment policy for
separately payable drugs and biologicals at ASP+4 percent fell within
the range of ASP-3 percent, that would have resulted from no pharmacy
overhead cost redistribution from packaged to separately payable drugs
and biologicals, to ASP+7 percent, that would have resulted from
redistribution of pharmacy overhead cost based on expansive assumptions
about the nature of uncoded packaged drug and biological cost. We
acknowledged that, to some unknown extent, there are pharmacy overhead
costs being attributed to the items and services reported under the
pharmacy revenue code without HCPCS codes that are likely pharmacy
overhead for
[[Page 46275]]
separately payable drugs. With regard to uncoded packaged drug costs,
we redistributed $50 million and stated that we could not know the
amount of overhead associated with these drugs without making
significant further assumptions about the amount of pharmacy overhead
cost associated with the drugs and biologicals captured by these
uncoded packaged drug costs. We finalized a policy of redistributing
pharmacy overhead cost from some drugs and biologicals to other drugs
and biologicals, thereby maintaining the estimated total cost of drugs
and biologicals in our claims data (no redistribution of cost would
occur from other services to drugs and biologicals or vice versa).
b. Proposed Payment Policy
Section 1833(t)(14)(A)(iii) of the Act, as described above,
continues to be applicable to determining payments for SCODs for CY
2011. This provision requires that payment for SCODs be equal to the
average acquisition cost for the drug for that year as determined by
the Secretary, subject to any adjustment for overhead costs and taking
into account the hospital acquisition cost survey data collected by the
GAO in CYs 2004 and 2005. If hospital acquisition cost data are not
available, section 1833(t)(14)(A)(iii)(II) of the Act requires that
payment be equal to payment rates established under the methodology
described in section 1842(o) of the Act, section 1847A of the Act
(ASP+6 percent as paid for physician Part B drugs), or section 1847B of
the Act (CAP), as the case may be, as calculated and adjusted by the
Secretary as necessary. In accordance with sections 1842(o) and 1847A,
payment for most Medicare Part B drugs furnished on or after January 1,
2005, are paid based on the ASP methodology. Medicare Part B drugs
generally fall into three categories: Physician drugs (drugs furnished
incident to a physician's service), DME drugs (drugs furnished under
the durable medical equipment benefit), and drugs specifically covered
by statute (certain oral anti-cancer and immunosuppressive drugs). In
addition, section 1833(t)(14)(E)(ii) of the Act authorizes, but does
not require, the Secretary to adjust APC weights to take into account
the 2005 MedPAC report relating to overhead and related expenses, such
as pharmacy services and handling costs. As discussed in V.B.3.a. of
this proposed rule, since CY 2006, we have used ASP data and costs
estimated from charges on hospital claims data as a proxy for both the
average hospital acquisition cost that the statute requires for payment
of SCODs and the associated pharmacy overhead cost to establish a
combined payment rate for acquisition cost and pharmacy overhead. Until
CY 2010, we applied this methodology to payment for all separately
payable drugs and biologicals without pass-through status, including
both SCODs and other drugs and biologicals that do not meet the
statutory definition of SCODs.
However, for the CY 2010 OPPS, we revised the standard methodology
to include an adjustment for pharmacy overhead. We acknowledged that
the established method of converting billed charges to costs had the
potential to ``compress'' the calculated costs to some degree. We
recognized that the attribution of pharmacy overhead costs to packaged
or separately payable drugs and biologicals through our standard drug
payment methodology of a combined payment for acquisition and pharmacy
overhead costs depends, in part, on the treatment of all drugs and
biologicals each year under our annual drug packaging threshold. To
some unknown extent, we believe that some pharmacy overhead costs are
being attributed to packaged drugs and biologicals that are likely
pharmacy overhead costs for separately payable drugs.
For this CY 2011 OPPS/ASC proposed rule, using our standard
methodology for determining the total cost of separately payable drugs
in our CY 2009 claims data and comparing these costs to the ASP dollars
(April 2010 ASP quarterly payment rates multiplied by units for the
separately payable drugs and biologicals in the claims data) for the
same drugs, we determined that the total payment for separately payable
drugs (status indicators ``K'' and ``G''), including acquisition and
pharmacy overhead costs, is ASP+0 percent, which also would be the ASP-
based payment rate under the standard methodology that we established
in CY 2006. Additionally, we determined that the total aggregate cost
for packaged drugs with a HCPCS code for which manufacturers report ASP
data (status indicator ``N''), including acquisition and pharmacy
overhead costs, is equivalent to ASP+283 percent. Finally, we
determined that the total cost for both packaged drugs with a HCPCS
code and separately payable drugs (status indicators ``N'', ``K'' and
``G'') for which we also have ASP data, including acquisition and
pharmacy overhead costs, is ASP+14 percent. Table 25 below displays our
findings with regard to the percentage of ASP in comparison to the cost
for packaged coded drugs and for separately payable coded drugs before
application of the overhead adjustment methodology.
[[Page 46276]]
[GRAPHIC] [TIFF OMITTED] TP03AU10.505
We believe that the combined payment for average acquisition and
pharmacy overhead costs under our standard methodology may understate
the cost of separately payable drugs and biologicals and related
pharmacy overhead for those drugs and biologicals. Specifically, we
believe payment at ASP+0 percent for such costs may not be sufficient.
We also acknowledge that ASP+283 percent may overstate the combined
acquisition and pharmacy overhead cost of packaged drugs and
biologicals. Therefore, for CY 2011, we are proposing to continue our
CY 2010 pharmacy overhead adjustment methodology. We are proposing to
redistribute $150 million from the pharmacy overhead cost of coded
packaged drugs and biologicals with reported ASP data and to
redistribute $50 million from the cost of uncoded packaged drugs and
biologicals without an ASP, for a total redistribution of $200 million
in drug cost from the cost of coded and uncoded packaged drugs to the
cost of separately payable drugs, as we did for the CY 2010 final rule.
We estimate the overhead cost for coded packaged drugs to be $438
million ($593 million in total cost for coded packaged drugs and
biologicals with a reported ASP less $155 million in total ASP dollars
for coded packaged drugs and biologicals with a reported ASP). Similar
to the CY 2010 proposal, we are proposing that any redistribution of
pharmacy overhead cost would occur only among drugs and biologicals in
our claims data, that no redistribution of cost would occur from other
services to drugs and biologicals or vice versa. We continue to believe
that redistributing $200 million from packaged to separately payable
drugs and biologicals is an appropriate redistribution of pharmacy
overhead costs to address any charge compression in the standard
methodology. This would result in a proposed CY 2011 payment rate for
separately payable drugs and biologicals of ASP+6 percent. We emphasize
that we are proposing a pharmacy overhead adjustment methodology based
on a redistribution of overhead cost and that our proposal for payment
at ASP+6 percent is a coincidental outcome of the proposed methodology
to redistribute $200 million from packaged drugs to separately payable
drugs. We are not proposing payment of ASP+6 percent for separately
payable drugs as an alternative to payment of average acquisition costs
based on a survey under section 1833(t)(14)(A)(iii)(I) of the Act. We
continue to believe that the average sales price information collected
under section 1847A (b)(1)(A) of the Act and our hospital claims data
is a suitable proxy for the acquisition cost data. For a full
explanation of our rationale for using ASP data and our hospital claims
data as a suitable proxy for acquisition cost data we refer readers to
the CY2010 OPPS/ASC final rule with comment period (74 FR 60515). We
further note that, in past years, the proposed ASP+X amount decreased
by at least 1 percentage point when we updated the ASP data, claims
data, and cost report data between the proposed rule and the final rule
with comment period, from ASP+5 to ASP+4 for example. Therefore, it is
possible that this proposed methodology would result in an ASP+X amount
that is different from ASP+6.
[[Page 46277]]
As indicated in Table 25 above, if we were to propose to establish
payment for separately payable drugs and biologicals under the standard
methodology established in CY 2006 without applying a pharmacy overhead
adjustment, we would propose to pay for separately payable drugs and
biologicals at ASP+0 percent. However, because we are concerned about
underpaying separately payable drugs and biologicals, we believe a
pharmacy overhead adjustment using a redistribution methodology for
determining the amount of payment for drugs and biologicals as we did
for CY 2010 is appropriate. We believe the observed ASP+0 percent
reflects some amount of charge compression and variability attributable
to choice of a packaging threshold.
We continue to believe that the methodology to redistribute $200
million in drug overhead cost from packaged coded and uncoded drugs to
separately payable drugs, while keeping the total cost of drugs in the
claims data constant, continues to be appropriate for the reasons set
forth in the CY 2010 OPPS/ASC final rule with comment period (74 FR
60501 through 60517). Therefore, we are proposing to redistribute $200
million in drug overhead costs from coded and uncoded packaged drugs to
separately payable drugs while keeping the total cost of drugs in the
claims data constant. Table 26 presents the ASP+X amount after
redistribution of $150 million from the estimated overhead of $438
million for coded packaged drugs with reported ASP data to separately
payable drugs and biologicals and $50 million from uncoded packaged
drug cost for which an estimate of overhead cannot be calculated,
resulting in a total redistribution of $200 million in cost from
packaged drugs and biologicals to separately payable drugs and
biologicals.
[GRAPHIC] [TIFF OMITTED] TP03AU10.506
We generally received positive comments on our CY 2010 proposal to
redistribute $150 million of drug cost from packaged drugs and
biologicals to separately payable drugs and biologicals to establish
their final combined payment level. The general comment we received on
our pharmacy overhead adjustment methodology was that the amount of
drug cost that should be redistributed should be greater, a sentiment
reiterated at the February 2010 APC Panel meeting and discussed in
greater detail below. Commenters and presenters to the APC Panel
specifically argued that our CY 2010 proposal had not acknowledged the
potential overhead cost available for redistribution in the uncoded
packaged drugs.
We explain below our rationale for why we are not proposing to
redistribute more cost from uncoded packaged drugs. Conversations with
stakeholders and hospitals over the past year suggest that hospitals do
not always report HCPCS codes for drugs for a variety of reasons
including an internal practice not to code for packaged drugs, building
the cost of the drugs into the associated procedure charge, lack of a
HCPCS code for some drugs and biologicals, and purchased
[[Page 46278]]
vendor billing software functionality that removes codes. A key premise
of our pharmacy overhead adjustment redistribution methodology was our
assessment of the amount of drug cost in the claims data above
aggregate ASP available as ``overhead'' for redistribution. Knowing the
specific HCPCS codes for packaged drugs and their associated ASP allows
us to assess the differential between aggregate ASP and claim cost for
packaged drugs and to assess the intensity of pharmacy overhead
associated with these drugs. The inability to know which drugs are
captured by uncoded drug charges on a claim is challenging because we
cannot know what is being charged or what the overhead complexity might
be. Further, we understand that there is wide variation in how
hospitals set charges for items and services in their chargemasters,
sometimes charging separately for overhead (for example, paper cups,
gloves, transportation, staff consultations) and sometimes including
charges for those supplies in the charge for drugs. Therefore, we
cannot be certain that the amount of uncoded pharmacy overhead cost is
as high as the public has suggested or that hospitals mark up these
uncoded drugs and biologicals in the same way as packaged drugs and
biologicals with HCPCS codes.
In addition, at its February 2010 meeting, the APC Panel
recommended that CMS reallocate a larger portion of the pharmacy
overhead costs from packaged drugs to separately payable drugs for CY
2011. We do not accept the APC Panel's recommendation to redistribute a
larger portion of the pharmacy overhead costs from packaged drugs to
separately payable drugs because we also believe the analysis provided
by the presenters at the February 2010 APC Panel meeting is
insufficient to determine that it is appropriate to propose to
redistribute more payment from uncoded packaged drugs and biologicals
to separately paid drugs and biologicals. Although presenters at the
APC Panel meeting acknowledged that CMS could not know the ASP for
these uncoded drug costs, they provided analyses examining the
proportion of estimated coded packaged drug cost relative to estimated
uncoded packaged drug cost out of all packaged drug cost (both coded
and uncoded) and concluded that uncoded and coded packaged drugs are
probably the same drugs because hospitals tend to have roughly the same
amount of estimated packaged drug cost in their claims data but wide
variation on the proportion of coded packaged drugs. They also
presented analyses stating that the relationship between pharmacy
overhead and handling costs and the cost of drugs in the cost report
data can be interpreted as providing a relationship between cost and
overhead comparable to the ASP+X calculated for all drug cost in the
claims data, if an aggregate ASP amount is assumed to be the same for
uncoded drugs and biologicals as it is for coded packaged drugs. The
presenters concluded that the uncoded packaged drug and biological cost
accounts for exactly the same drugs and biologicals as those in the
coded packaged drug and biological cost and that CMS could assume the
same proportional amount of overhead cost that appears in the uncoded
packaged drug and biological cost as observed in the coded packaged
drug cost. They asked that CMS assume that uncoded packaged drugs and
biologicals resemble coded packaged drugs and biologicals and treat
them comparably for purposes of estimating ``overhead.'' We reviewed
the presenters' analyses, but we believe the information they provided
is insufficient in order to enable us to isolate the portion of the
uncoded packaged drug and biological cost that is pharmacy overhead
cost. In order to isolate the portion of uncoded packaged drug and
biological cost that is pharmacy overhead cost, we believe that we
would need more drug-specific information reported to us by hospitals,
either through more reporting of packaged drugs on claims or through
more granular cost centers on the cost report. We note that we
investigated uncoded drugs further. We evaluated the services with
which uncoded packaged drug cost appears in the claims data in an
effort to assess how much uncoded drugs resemble coded packaged drugs.
We found that most uncoded packaged drug costs appear with surgical
services and that most coded packaged drug costs appear with medical
services. In light of this information, we are not confident that the
drugs captured by uncoded drug cost are the same drugs captured by
coded packaged drug cost. Therefore, we do not believe we can assume
that they are the same drugs, with comparable overhead and handling
costs. Without being able to calculate an ASP for these drugs and
without being able to gauge the magnitude of the overhead complexity
associated with these drugs, we do not believe we should assume that
the same amount of proportional overhead is available for
redistribution for this proposed rule. We are not convinced that the
same proportionate amount of overhead cost should be redistributed from
the packaged uncoded drugs as the amount of overhead cost that is
appropriate to redistribute for packaged coded drugs. In addition, we
remain committed to using hospital claims data reported to us by
hospitals to set the OPPS payment rates because it provides more
specificity about the provided drugs and biologicals and would allow us
to assess an overhead amount for those drugs.and biologicals.
Therefore, we continue to propose to redistribute a conservative
estimate, $50 million, in cost from uncoded packaged drugs to
separately payable drugs and biologicals.
Based on the reasons set forth above, and consistent with our
rationale outlined in the CY 2010 OPPS/ASC final rule with comment
period (74 FR 60511 through 60512), we cannot be certain that we know
what portion of the uncoded drugs and biologicals cost is acquisition
cost versus pharmacy overhead costs, and we have no compelling reason
to redistribute a greater amount of drug cost. Therefore, our proposal
to redistribute $200 million in drug cost from packaged drugs to
separately payable drugs, while maintaining the total cost of drugs in
our claims data, consists of redistributing $150 million in
``overhead'' cost from packaged coded drugs and biologicals with
reported ASP data to separately payable drugs and biologicals and
redistributing $50 million in drug cost from uncoded packaged drugs and
biologicals to separately payable drugs and biologicals as a
conservative estimate of potential overhead cost appearing in uncoded
packaged drugs that should have been associated with separately payable
drugs and biologicals.
We have indicated that the basis for this CY 2011 proposal to
redistribute $150 million dollars from packaged coded drugs and
biologicals to separately payable drugs and biologicals as a pharmacy
overhead adjustment is the same as our CY 2010 final policy. The CY
2010 policy was based on our assessment that between one-third and one-
half of the overhead cost in coded packaged drugs could be attributable
to charge compression due to our cost estimation methodology and our
choice of a packaging threshold. We continue to believe that a precise
amount of drug cost attributable to charge compression cannot be known
precisely, but that $150 million is an appropriate adjustment. The
current proposal for $150 million falls within the approximate one-
third to one-half range established in CY 2010 with updated CY 2009
claim and cost report data, and we anticipate that the $150 million
would
[[Page 46279]]
continue to roughly approximate one-third to one-half or thereabouts of
overhead cost in the coded packaged drugs with updated ASP data, and
claim and cost report data for the final rule. In order to redistribute
the $150 million in pharmacy overhead from packaged costs of drugs and
biologicals for which a HCPCS code was reported, we reduced the costs
attributable to these items and services by multiplying the costs
derived from the revenue center charges for packaged HCPCs codes by
0.75 (a 25 percent reduction).
To redistribute the $50 million in total cost from packaged costs
of drugs and biologicals for which no HCPCS code was reported, we
reduced the costs attributable to these items and services by
multiplying the costs derived from revenue center charges for pharmacy
by 0.92 (an 8 percent reduction). We note that for this CY 2011 OPPS/
ASC proposed rule, the $50 million in drug overhead cost that we
propose to redistribute from packaged uncoded drugs and biologicals to
separately payable drugs and biologicals is 8 percent, comparable to
the CY 2010 final rule amount. We note that $50 million as a percent of
uncoded drug cost may be close to the 8 percent range or thereabouts of
uncoded drug and biological cost in the final rule with updated claim
and cost data. In addition, although we have arrived at a proposed
payment rate of ASP+6 percent, we emphasize that the ASP+6 percent
amount may change when ASP+X is recalculated using updated ASP data and
claims and cost report data for the CY 2011 OPPS/ASC final rule with
comment period.
We also note that, although it is CMS' longstanding policy under
the OPPS to refrain from instructing hospitals on the appropriate
revenue code to use to charge for specific services, we continue to
encourage hospitals to bill all drugs and biologicals with HCPCS codes,
regardless of whether they are separately payable or packaged. We
believe that a practice of billing all drugs and biologicals with HCPCS
codes under revenue code 0636 (Pharmacy--Extension of 025X; Drugs
Requiring Detailed Coding) would be consistent with NUBC billing
guidelines and would provide us with the most complete and detailed
information for ratesetting. We note that we make packaging
determinations for drugs annually based on cost information reported
under HCPCS codes, and the OPPS ratesetting is best served when
hospitals report charges for all items and services with HCPCS codes
when they are available, whether or not Medicare makes separate payment
for the items and services.
The APC Panel also recommended that CMS evaluate the impact of
changes in its drug payment policy on hospitals (categorized by type
and size) of such a reallocation and present this analysis to the APC
Panel at its next meeting. We accept this recommendation and will
present this analysis to the APC Panel at its next meeting.
The APC Panel also recommended that CMS continue to evaluate the
impact of its drugs and biologicals overhead payment policy on
hospitals. We accept this recommendation. We note that our regulatory
impact analysis presented in section XXIII of this proposed rule
includes some of the analysis requested in these last two
recommendations.
In conclusion, we are proposing for CY 2011 to continue our CY 2010
redistribution methodology, to redistribute $150 million from the
pharmacy overhead cost of coded packaged drugs and biologicals with an
ASP and to redistribute $50 million from the cost of uncoded packaged
drugs and biologicals for a total of $200 million from cost in coded
and uncoded packaged drugs to separately payable drugs. We are
proposing to redistribute pharmacy overhead cost among drugs and
biologicals, thereby maintaining the estimated total cost of drugs and
biologicals in our claims data (no redistribution of cost would occur
from other services to drugs and biologicals or vice versa). The result
of the proposed methodology when applied using April 2010 ASPs, data
for claims for services furnished during CY 2009 and processed through
the common working file before January 1, 2010, and the most current
submitted cost reports as of January 1, 2010, is a proposed ASP+6
percent amount for CY 2011. We are further proposing to continue to
include the claims data for 340B hospitals in the calculation of
payment for drugs and biologicals under the CY 2011 OPPS because
excluding data from hospitals that participate in the 340B program from
our ASP+X calculation, but paying those hospitals at that derived
payment amount, would effectively redistribute payment to drugs or
biologicals from payment for other services under the OPPS, and we do
not believe this redistribution would be appropriate (74 FR 35332). In
addition, we are proposing that 340B hospitals continue to be paid the
same amounts for separately payable drugs and biologicals as hospitals
that do not participate in the 340B program for CY 2011 because
commenters have generally opposed differential payment for hospitals
based on their 340B participation status. In addition, we are proposing
to include claims from 340B hospitals in our assessment of average
acquisition cost under section 1833(t)(14)(A)(iii) of the Act. We are
proposing that the estimated payments for separately payable drugs and
biologicals be taken into account in the calculation of the weight
scaler that would apply to the relative weights for all procedural
services (but would not apply to separately payable drugs and
biologicals) paid under the OPPS, as required by section 1833(t)(14)(H)
of the Act.
Finally, we note that we continue to pursue the most appropriate
methodology for establishing payment for drugs and biologicals under
the OPPS and that we will continue to evaluate the appropriateness of
this methodology in future years.
c. Proposed Payment Policy for Therapeutic Radiopharmaceuticals
From the implementation of the collection of ASP information in CY
2005, CMS exempted radiopharmaceutical manufacturers from reporting ASP
data for all radiopharmaceuticals for payment purposes under the OPPS.
(For more information, we refer readers to the CY 2005 OPPS final rule
with comment period (69 FR 65811) and the CY 2006 OPPS final rule with
comment period (70 FR 68655).) Consequently, we did not have ASP data
for radiopharmaceuticals for consideration for OPPS ratesetting until
we began collecting ASP for therapeutic radiopharmaceuticals for CY
2010. In accordance with section 1833(t)(14)(B)(i)(I) of the Act, we
have classified radiopharmaceuticals under the OPPS as SCODs. As such,
we have paid for radiopharmaceuticals at average acquisition cost as
determined by the Secretary and subject to any adjustment for overhead
costs. For CYs 2006 and 2007, we used mean unit cost data from hospital
claims to determine each radiopharmaceutical's packaging status and
implemented a temporary policy to pay for separately payable
radiopharmaceuticals based on the hospital's charge for each
radiopharmaceutical adjusted to cost using the hospital's overall CCR.
The methodology of providing separate radiopharmaceutical payment based
on charges adjusted to cost through application of an individual
hospital's overall CCR for CYs 2006 and 2007 was finalized as an
interim proxy for average acquisition cost.
In CY 2008, we packaged payment for all diagnostic
radiopharmaceuticals and
[[Page 46280]]
we proposed and finalized a methodology to provide prospective payment
for therapeutic radiopharmaceuticals (defined as those Level II HCPCS
codes that include the term ``therapeutic'' along with a
radiopharmaceutical in their long code descriptors) using mean costs
derived from the CY 2006 claims data, where the costs were determined
using our standard methodology of applying hospital-specific
departmental CCRs to radiopharmaceutical charges, defaulting to
hospital-specific overall CCRs only if appropriate departmental CCRs
were unavailable (72 FR 66772). Following issuance of the CY 2009 OPPS/
ASC proposed rule, section 142 of the Medicare Improvements for
Patients and Providers Act of 2008 (Pub. L. 110-275) amended section
1833(t)(16)(C) of the Act, as amended by section 106(a) of the
Medicare, Medicaid, and SCHIP Extension Act of 2007 (Pub. L. 110-173),
to further extend the payment period for therapeutic
radiopharmaceuticals based on hospital's charges adjusted to cost
through December 31, 2009. Therefore, for CY 2009, we finalized a
policy to continue to pay hospitals for therapeutic
radiopharmaceuticals at charges adjusted to cost through the end of CY
2009.
For CY 2010, we proposed and finalized a policy to pay for
separately paid therapeutic radiopharmaceuticals under the ASP
methodology adopted for separately payable drugs and biologicals. We
allowed manufacturers to submit the ASP data in a patient-specific dose
or patient-ready form in order to properly calculate the ASP amount for
a given HCPCS code. This resulted in payment for therapeutic
radiopharmaceuticals at ASP+4 percent for CY 2010 for products for
which the manufacturer submitted ASP. We also finalized a policy to
base therapeutic radiopharmaceutical payment on CY 2008 mean unit cost
data derived from hospital claims if ASP information was unavailable.
We believe that the rationale outlined in the CY 2010 OPPS/ASC
final rule with comment period (74 FR 60524 through 60525) continues to
be appropriate in for nonpass-through separately payable therapeutic
radiopharmaceuticals in CY 2011. Therefore, we are proposing to
continue to pay all nonpass-through, separately payable therapeutic
radiopharmaceuticals under the ASP+X payment level established using
the proposed pharmacy overhead adjustment based on a redistribution
methodology to set payment for separately payable drugs and biologicals
(as discussed in section V.B.3.b.) based on ASP information, if
available, for a ``patient ready'' dose and updated on a quarterly
basis for products for which manufacturers report ASP data. For a full
discussion of how a ``patient ready'' dose is defined, we refer readers
to the CY 2010 OPPS/ASC final rule with comment period, 74 FR 60520
through 60521. We also are proposing to rely on CY 2009 mean unit cost
data derived from hospital claims data for payment rates for
therapeutic radiopharmaceuticals for which ASP data are unavailable and
to update the payment rates for separately payable therapeutic
radiopharmaceuticals, according to our usual process for updating the
payment rates for separately payable drugs and biologicals, on a
quarterly basis if updated ASP information is available.
4. Proposed Payment for Blood Clotting Factors
For CY 2010, we provided payment for blood clotting factors under
the same methodology as other nonpass-through separately payable drugs
and biologicals under the OPPS and continued paying an updated
furnishing fee. That is, for CY 2010, we provided payment for blood
clotting factors under the OPPS at ASP+4 percent, plus an additional
payment for the furnishing fee. We note that when blood clotting
factors are provided in physicians' offices under Medicare Part B and
in other Medicare settings, a furnishing fee is also applied to the
payment. The CY 2010 updated furnishing fee is $0.170 per unit.
For CY 2011, we are proposing to pay for blood clotting factors at
ASP+6 percent, consistent with our proposed payment policy for other
nonpass-through separately payable drugs and biologicals, and to
continue our policy for payment of the furnishing fee using an updated
amount. Because the furnishing fee update is based on the percentage
increase in the Consumer Price Index (CPI) for medical care for the 12-
month period ending with June of the previous year and the Bureau of
Labor Statistics releases the applicable CPI data after the MPFS and
OPPS/ASC proposed rules are published, we are not able to include the
actual updated furnishing fee in this proposed rule. Therefore, in
accordance with our policy as finalized in the CY 2008 OPPS/ASC final
rule with comment period (72 FR 66765), we would announce the actual
figure for the percent change in the applicable CPI and the updated
furnishing fee calculated based on that figure through applicable
program instructions and posting on the CMS Web site at: http://www.cms.hhs.gov/McrPartBDrugAvgSalesPrice/.
5. Proposed Payment for Nonpass-Through Drugs, Biologicals, and
Radiopharmaceuticals With HCPCS Codes, But Without OPPS Hospital Claims
Data
The Medicare Prescription Drug, Improvement, and Modernization Act
of 2003 (Pub. L. 108-173) does not address the OPPS payment in CY 2005
and after for drugs, biologicals, and radiopharmaceuticals that have
assigned HCPCS codes, but that do not have a reference AWP or approval
for payment as pass-through drugs or biologicals. Because there is no
statutory provision that dictated payment for such drugs, biologicals,
and radiopharmaceuticals in CY 2005, and because we had no hospital
claims data to use in establishing a payment rate for them, we
investigated several payment options for CY 2005 and discussed them in
detail in the CY 2005 OPPS final rule with comment period (69 FR 65797
through 65799).
For CYs 2005 to 2007, we implemented a policy to provide separate
payment for new drugs, biologicals, and radiopharmaceuticals with HCPCS
codes (specifically those new drug, biological, and radiopharmaceutical
HCPCS codes in each of those calendar years that did not crosswalk to
predecessor HCPCS codes) but which did not have pass-through status, at
a rate that was equivalent to the payment they received in the
physician's office setting, established in accordance with the ASP
methodology for drugs and biologicals, and based on charges adjusted to
cost for radiopharmaceuticals. For CYs 2008 and 2009, we finalized a
policy to provide payment for new drugs (excluding contrast agents and
diagnostic radiopharmaceuticals) and biologicals (excluding implantable
biologicals for CY 2009) with HCPCS codes, but which did not have pass-
through status and were without OPPS hospital claims data, at ASP+5
percent and ASP+4 percent, respectively, consistent with the final OPPS
payment methodology for other separately payable drugs and biologicals.
New therapeutic radiopharmaceuticals were paid at charges adjusted to
cost based on the statutory requirement for CY 2008 and CY 2009 and
payment for new diagnostic radiopharmaceuticals was packaged in both
years. For CY 2010, we continued to provide payment for new drugs
(excluding contrast agents), and nonimplantable biologicals with HCPCS
codes that do not have pass-through status and are without OPPS
hospital
[[Page 46281]]
claims data, at ASP+4 percent, consistent with the CY 2010 payment
methodology for other separately payable nonpass-through drugs, and
nonimplantable biologicals. We also finalized a policy to extend the CY
2009 payment methodology to new therapeutic radiopharmaceutical HCPCS
codes, consistent with our final policy providing separate payment for
therapeutic radiopharmaceuticals in the CY 2010 OPPS/ASC final rule
with comment period (74 FR 60581 through 60526), that do not crosswalk
to CY 2009 HCPCS codes, do not have pass-through status, and are
without OPPS hospital claims data, at ASP+4 percent.
For CY 2011, we are proposing to continue the CY 2010 payment
methodology for new drugs (excluding contrast agents and diagnostic
radiopharmaceuticals), nonimplantable biologicals, and therapeutic
radiopharmaceuticals that meet the following conditions: those drugs,
biologicals and therapeutic radiopharmaceuticals that have HCPCS codes
that do not crosswalk to CY 2010 HCPCS codes, those that do not have
pass-through status, and those that are without OPPS hospital claims
data. We are proposing to provide payment for new CY 2011 drugs
(excluding contrast agents and diagnostic radiopharmaceuticals),
nonimplantable biologicals, and therapeutic radiopharmaceuticals, at
ASP+6 percent, consistent with the proposed CY 2011 payment methodology
for other separately payable nonpass-through drugs, nonimplantable
biololgicals, and therapeutic radiopharmaceuticals. We believe this
proposed policy would ensure that new nonpass-through drugs,
nonimplantable biologicals, and therapeutic radiopharmaceuticals would
be treated like other drugs, nonimplantable biologicals, and
therapeutic radiopharmaceuticals under the OPPS, unless they are
granted pass-through status. Only if they are pass-through drugs,
nonimplantable biologicals, or therapeutic radiopharmaceuticals would
they receive a different payment for CY 2011, generally equivalent to
the payment these drug and biologicals would receive in the physician's
office setting, consistent with the requirements of the statute.
We are proposing to continue our CY 2010 policy of packaging
payment for all new nonpass-through diagnostic radiopharmaceuticals,
contrast agents, and implantable biologicals with HCPCS codes but
without claims data (those new CY 2011 diagnostic radiopharmaceutical,
contrast agent, and implantable biological HCPCS codes that do not
crosswalk to predecessor HCPCS codes), consistent with the proposed
packaging of all existing nonpass-through diagnostic
radiopharmaceuticals, contrast agents and implantable biologicals, as
discussed in more detail in section V.B.2.d and IV.A.2. of this
proposed rule.
In accordance with the OPPS ASP methodology, in the absence of ASP
data, for CY 2011, we are proposing to continue the policy we
implemented beginning in CY 2005 of using the WAC for the product to
establish the initial payment rate for new nonpass-through drugs and
biologicals with HCPCS codes, but which are without OPPS claims data.
However, we note that if the WAC is also unavailable, we would make
payment at 95 percent of the product's most recent AWP. We also are
proposing to assign status indicator ``K'' to HCPCS codes for new drugs
and nonimplantable biologicals without OPPS claims data and for which
we have not granted pass-through status. We further note that, with
respect to new items for which we do not have ASP data, once their ASP
data become available in later quarter submissions, their payment rates
under the OPPS would be adjusted so that the rates would be based on
the ASP methodology and set to the finalized ASP-based amount (proposed
for CY 2011 at ASP+6 percent) for items that have not been granted
pass-through status. This proposed policy would ensure that new
nonpass-through drugs, nonimplantable biologicals, and therapeutic
radiopharmaceuticals would be treated like other drugs, nonimplantable
biologicals, and therapeutic radiopharmaceuticals under the OPPS,
unless they are granted pass-through status. Only if they are pass-
through drugs, nonimplantable biologicals, or therapeutic
radiopharmaceuticals would they receive a different payment for CY
2010, generally equivalent to the payment these drugs and biologicals
would receive in the physician's office setting, consistent with the
requirements of the statute.
We also are proposing to continue our CY 2010 policy to base
payment for new therapeutic radiopharmaceuticals with HCPCS codes, but
which do not have pass-through status and are without claims data, on
the WACs for these products if ASP data for these therapeutic
radiopharmaceuticals are not available. If the WACs are also
unavailable, we are proposing to make payment for a new therapeutic
radiopharmaceutical at 95 percent of the product's most recent AWP
because we would not have mean costs from hospital claims data upon
which to base payment. Analogous to new drugs and biologicals, we are
proposing to continue our policy of assigning status indicator ``K'' to
HCPCS codes for new therapeutic radiopharmaceuticals without OPPS
claims data for which we have not granted pass-through status.
Consistent with other ASP-based payments, for CY 2011, we are
proposing to announce any changes to the payment amounts for new drugs
and biologicals in the CY 2011 OPPS/ASC final rule with comment period
and also on a quarterly basis on the CMS Web site during CY 2011 if
later quarter ASP submissions (or more recent WACs or AWPs) indicate
that changes to the payment rates for these drugs and biologicals are
necessary. The payment rates for new therapeutic radiopharmaceuticals
would also be changed accordingly, based on later quarter ASP
submissions. We note that the new CY 2011 HCPCS codes for drugs,
biologicals, and therapeutic radiopharmaceuticals are not available at
the time of development of this proposed rule. However, they will be
included in Addendum B to the CY 2011 OPPS/ASC final rule with comment
period. They will be assigned comment indicator ``NI'' in Addendum B to
reflect that their interim final OPPS treatment is open to public
comment on the CY 2011 OPPS/ASC final rule with comment period.
There are several nonpass-through drugs and biologicals that were
payable in CY 2009 and/or CY 2010, for which we do not have CY 2009
hospital claims data available for this proposed rule and for which
there are no other HCPCS codes that describe different doses of the
same drug. These drugs and biologicals do have pricing information
available for the ASP methodology. We note that there are currently no
therapeutic radiopharmaceuticals in this category. In order to
determine the packaging status of these products for CY 2011, we
calculated an estimate of the per day cost of each of these items by
multiplying the payment rate for each product based on ASP+6 percent,
similar to other nonpass-through drugs and biologicals paid separately
under the OPPS, by an estimated average number of units of each product
that would typically be furnished to a patient during one
administration in the hospital outpatient setting. We are proposing to
package items for which we estimated the per administration cost to be
less than or equal to $70, which is the general packaging threshold
that we are proposing for drugs, nonimplantable biologicals, and
[[Page 46282]]
therapeutic radiopharmaceuticals in CY 2011. We are proposing to pay
separately for items with an estimated per day cost greater than $70
(with the exception of diagnostic radiopharmaceuticals, contrast agents
and implantable biologicals, which we are proposing to continue to
package regardless of cost (as discussed in more detail in section
V.B.2.d of this proposed rule) in CY 2011. We are proposing that the CY
2011 payment for separately payable items without CY 2009 claims data
would be ASP+6 percent, similar to payment for other separately payable
nonpass-through drugs and biologicals under the OPPS. In accordance
with the ASP methodology used in the physician's office setting, in the
absence of ASP data, we are proposing to use the WAC for the product to
establish the initial payment rate. However, we note that if the WAC is
also unavailable, we would make payment at 95 percent of the most
recent AWP available.
The proposed estimated units per day and status indicators for
these items are displayed in Table 27 below.
[GRAPHIC] [TIFF OMITTED] TP03AU10.507
Finally, there were five drugs and biologicals, shown in Table 28
below, that were payable in CY 2009, but for which we lacked CY 2009
claims data and any other pricing information for the ASP methodology
for this proposed rule. In CY 2009, for similar items without CY 2007
claims data and without pricing information for the ASP methodology, we
previously stated that we were unable to determine their per day cost
and we packaged these items for the year, assigning these items status
indicator ``N.''
For CY 2010, we finalized a policy to change the status indicator
for drugs and biologicals to status indicator ``E'' (Not paid by
Medicare when submitted on outpatient claims (any outpatient bill
type)) that we understood were not currently sold or had been
identified as obsolete. In addition, we noted that we would provide
separate payment for these drugs and biologicals if pricing information
reflecting recent sales becomes available mid-year in CY 2010 for the
ASP methodology. If pricing information became available, we would
assign the products status indicator ``K'' and pay for them separately
for the remainder of CY 2010.
For CY 2011, we are proposing to continue our CY 2010 policy to
assign status indicator ``E'' to drugs and biologicals that lack CY
2009 claims data and pricing information for the ASP methodology. All
drugs and biologicals without CY 2009 hospital claims data and data
based on the ASP methodology that are assigned status indicator ``E''
on this basis at the time of this proposed rule for CY 2011 are
displayed in Table 26 below. If pricing information becomes available,
we are proposing to assign the products status indicator ``K'' and pay
for them separately for the remainder of CY 2011.
[[Page 46283]]
[GRAPHIC] [TIFF OMITTED] TP03AU10.508
VI. Proposed Estimate of OPPS Transitional Pass-Through Spending for
Drugs, Biologicals, Radiopharmaceuticals, and Devices
A. Background
Section 1833(t)(6)(E) of the Act limits the total projected amount
of transitional pass-through payments for drugs, biologicals,
radiopharmaceuticals, and categories of devices for a given year to an
``applicable percentage'' (defined below) of total program payments
estimated to be made under section 1833(t) of the Act for all covered
services furnished for that year under the hospital OPPS. For a year
(or portion of a year) before CY 2004, the applicable percentage means
2.5 percent; for CY 2004 and subsequent years, the applicable
percentage means a percentage specified by the Secretary up to (but not
to exceed) 2.0 percent.
If we estimate before the beginning of the calendar year that the
total amount of pass-through payments in that year would exceed the
applicable percentage, section 1833(t)(6)(E)(iii) of the Act requires a
uniform reduction in the amount of each of the transitional pass-
through payments made in that year to ensure that the limit is not
exceeded. We make an estimate of pass-through spending to determine not
only whether payments exceed the applicable percentage, but also to
determine the appropriate reduction to the conversion factor for the
projected level of pass-through spending in the following year in order
to ensure that total estimated pass-through spending for the
prospective payment year is budget neutral as required by section
1883(t)(6)(E) of the Act.
For devices, developing an estimate of pass-through spending in CY
2011 entails estimating spending for two groups of items. The first
group of items consists of device categories that were recently made
eligible for pass-through payment and that would continue to be
eligible for pass-through payment in CY 2011. The CY 2008 OPPS/ASC
final rule with comment period (72 FR 66778) describes the methodology
we have used in previous years to develop the pass-through spending
estimate for known device categories continuing into the applicable
update year. The second group contains items that we know are newly
eligible, or project would be newly eligible, for device pass-through
payment in the remaining quarters of CY 2010 or beginning in CY 2011.
As discussed in section V.A.4. of the CY 2010 final rule with comment
period (74 FR 60529), beginning in CY 2010, the pass-through evaluation
process and pass-through payment for implantable biologicals newly
approved for pass-through payment beginning on or after January 1,
2010, that are always surgically inserted or implanted (through a
surgical incision or a natural orifice) is the device pass-through
process and payment methodology only. Therefore, we are proposing that
the estimate of pass-through spending for implantable biologicals newly
eligible for pass-through payment beginning in CY 2011 be included in
the pass-through spending estimate for this second group of device
categories. The sum of the proposed CY 2011 pass-through estimates for
these two groups of device categories equals the total proposed CY 2011
pass-through spending estimate for device categories with pass-through
status.
For devices eligible for pass-through payment, section
1833(t)(6)(D)(ii) of the Act establishes the pass-through payment
amount as the amount by which the hospital's charges for the device,
adjusted to cost, exceeds the portion of the otherwise applicable
Medicare OPD fee schedule that the Secretary determines is associated
with the device. As discussed in section IV.A.2. of this proposed rule,
we deduct from the pass-through payment for an identified device
category eligible for pass-through payment an amount that reflects the
portion of the APC payment amount that we determine is associated with
the cost of the device, defined as the device APC offset amount, when
we believe that predecessor device costs for the device category newly
approved for pass-through payment are already packaged into the
existing APC structure. For each device category that becomes newly
eligible for device pass-through payment, including implantable
biologicals from CY 2010 forward, we estimate pass-through spending to
be the difference between payment for the device category and the
device APC offset amount, if applicable, for the procedures that would
use the device. If we determine that predecessor device costs for the
new device category are not already included in the existing APC
structure, the pass-through spending estimate for the device category
would be the full payment at charges adjusted to cost.
For drugs and biologicals eligible for pass-through payment,
section 1833(t)(6)(D)(i) of the Act establishes the pass-through
payment amount as the amount by which the amount authorized under
section 1842(o) of the Act (or, if the drug or biological is covered
under a competitive acquisition contract under section 1847B of the
Act, an amount determined by the Secretary equal to the average price
for the drug or biological for all competitive acquisition areas and
year established under such section as calculated and adjusted by the
Secretary) exceeds the portion of the otherwise applicable fee schedule
amount that the Secretary determines is associated with the drug or
biological. Because we are proposing to pay for most nonpass-through
separately payable drugs and nonimplantable biologicals under the CY
2011 OPPS at ASP+6 percent, which represents the otherwise applicable
fee schedule amount associated with most pass-through drugs and
biologicals, and
[[Page 46284]]
because we are proposing to pay for CY 2011 pass-through drugs and
nonimplantable biologicals at ASP+6 percent or the Part B drug CAP
rate, if applicable, our proposed estimate of drug and nonimplantable
biological pass-through payment for CY 2011 would be zero. Furthermore,
payment for certain drugs, specifically diagnostic
radiopharmaceuticals, contrast agents, and implantable biologicals
without pass-through status, would always be packaged into payment for
the associated procedures because these products would never be
separately paid. However, all pass-through diagnostic
radiopharmaceuticals, contrast agents, and those implantable
biologicals with pass-through status approved prior to CY 2010 would be
paid at ASP+6 percent or the Part B drug CAP rate, if applicable, like
other pass-through drugs and biologicals. Therefore, our proposed
estimate of pass-through payment for all diagnostic
radiopharmaceuticals and contrast agents and those implantable
biologicals with pass-through status approved prior to CY 2011 is not
zero.
In section V.A.4. of this proposed rule, we discuss our policy to
determine if the cost of certain ``policy-packaged'' drugs, including
diagnostic radiopharmaceuticals and contrast agents, are already
packaged into the existing APC structure. If we determine that a
``policy-packaged'' drug approved for pass-through payment resembles
predecessor diagnostic radiopharmaceuticals or contrast agents already
included in the costs of the APCs that would be associated with the
drug receiving pass-through payment, we are proposing to offset the
amount of pass-through payment for diagnostic radiopharmaceuticals and
contrast agents. For these drugs, the APC offset amount would be the
portion of the APC payment for the specific procedure performed with
the pass-through diagnostic radiopharmaceutical or contrast agent that
is attributable to diagnostic radiopharmaceuticals or contrast agents,
which we refer to as the ``policy-packaged'' drug APC offset amount. If
we determine that an offset is appropriate for a specific diagnostic
radiopharmaceutical or contrast agent receiving pass-through payment,
we would reduce our estimate of pass-through payment for these drugs by
this amount. We have not established a policy to offset pass-through
payment for implantable biologicals when approved for pass-through
payment as a drug or biological, that is, for CY 2009 and earlier, so
we would consider full payment at ASP+6 percent for these implantable
biologicals receiving biological pass-through payment as of CY 2011 in
our proposed estimate of CY 2011 pass-through spending for drugs and
biologicals.
We note that the Part B drug CAP program has been suspended
beginning January 1, 2009. We refer readers to the Medicare Learning
Network (MLN) Matters Special Edition article SE0833 for more
information on this suspension. As of the publication of this proposed
rule, the Part B drug CAP program has not been reinstituted. Therefore,
for this proposed rule, we are proposing to continue to not have an
effective Part B drug CAP rate for pass-through drugs and biologicals.
Similar to pass-through estimates for devices, the first group of drugs
and biologicals requiring a pass-through payment estimate consists of
those products that were recently made eligible for pass-through
payment and that would continue to be eligible for pass-through payment
in CY 2011. The second group contains drugs and nonimplantable
biologicals that we know are newly eligible, or project would be newly
eligible, in the remaining quarters of CY 2010 or beginning in CY 2011.
The sum of the CY 2011 pass-through estimates for these two groups of
drugs and biologicals would equal the total CY 2010 pass-through
spending estimate for drugs and biologicals with pass-through status.
B. Proposed Estimate of Pass-Through Spending
We are proposing to set the applicable pass-through payment
percentage limit at 2.0 percent of the total projected OPPS payments
for CY 2011, consistent with our OPPS policy from CY 2004 through CY
2010 (74 FR 60530).
For the first group of devices for pass-through payment estimate
purposes, there currently are no device categories receiving pass-
through payment in CY 2010 that would continue for payment during CY
2011. Therefore, we are proposing a device pass-through payment
estimate for the first group of pass-through device categories of $0.
We also are proposing for CY 2011 to continue to employ the device
pass-through process and payment methodology for implantable
biologicals that are always surgically inserted or implanted (through a
surgical incision or a natural orifice) that we used for CY 2010. We
are proposing to consider existing implantable biologicals approved for
pass-through payment under the drugs and biologicals pass-through
provision prior to CY 2010 as drugs and biologicals for pass-through
payment estimate purposes until they expire from pass-through status.
Therefore, the proposed pass-through spending estimate for the first
group of pass-through devices does not include implantable biologicals
that were granted pass-through status prior to CY 2010. Finally, we are
proposing to continue to provide payment for implantable biologicals
newly eligible for pass-through payment beginning in CY 2010 or CY 2011
based on hospital charges adjusted to cost that is applicable for pass-
through device categories, rather than the ASP methodology that is
applicable to pass-through drugs and biologicals. Therefore, we are
proposing that the estimate of pass-through spending for implantable
biologicals first paid as pass-through devices in CY 2011 would be
based on the payment methodology for pass-through devices and would be
included in the device pass-through spending estimate.
In estimating our proposed CY 2011 pass-through spending for device
categories in the second group, that is, device categories that we knew
at the time of the development of the proposed rule would be newly
eligible for pass-through payment in CY 2011 (of which there are none),
additional device categories (including categories that describe
implantable biologicals) that we estimated could be approved for pass-
through status subsequent to the development of the proposed rule and
before January 1, 2011, and contingent projections for new categories
(including categories that describe implantable biologicals in the
second through fourth quarters of CY 2011), we are proposing to use the
general methodology described in the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66778), while also taking into account recent
OPPS experience in approving new pass-through device categories. While
there are no new device categories (including categories that describe
implantable biologicals) for CY 2011 of which we are aware at the time
of development of this proposed rule, there are possible new device
categories for pass-through payment based on current applications.
Therefore, the estimate of CY 2011 pass-through spending for this
second group of device categories is $72.1 million.
Employing our established methodology that the estimate of pass-
through device spending in CY 2011 incorporates CY 2011 estimates of
pass-through spending for known device categories continuing in CY
2011, those known or projected to be first effective January 1, 2011,
and those device categories projected to be approved during subsequent
quarters of CY 2010
[[Page 46285]]
or CY 2011, our proposed CY 2011 estimate of total pass-through
spending for device categories is $72.1 million.
To estimate CY 2011 proposed pass-through spending for drugs and
biologicals in the first group, specifically those drugs (including
radiopharmaceuticals and contrast agents) and biologicals (including
implantable biologicals) recently made eligible for pass-through
payment and continuing on pass-through status for CY 2011, we are
proposing to utilize the most recent Medicare physician's office data
regarding their utilization, information provided in the respective
pass-through applications, historical hospital claims data,
pharmaceutical industry information, and clinical information regarding
those drugs or biologicals, in order to project the CY 2011 OPPS
utilization of the products.
For the known drugs and biologicals (excluding diagnostic
radiopharmaceuticals, contrast agents, and implantable biologicals)
that would be continuing on pass-through status in CY 2011, we then
estimate the proposed pass-through payment amount as the difference
between ASP+6 percent or the Part B drug CAP rate, as applicable, and
ASP+6 percent, aggregated across the projected CY 2011 OPPS utilization
of these products, which is zero for this group of drugs and
biologicals. Because payment for a diagnostic radiopharmaceutical or
contrast agent would be packaged if the product were not paid
separately due to its pass-through status, we include in the pass-
through estimate the difference between payment for the drug or
biological at ASP+6 percent (or WAC+6 percent, or 95 percent of AWP, if
ASP information is not available) and the ``policy-packaged'' drug APC
offset amount, if we determined that the diagnostic radiopharmaceutical
or contrast agent approved for pass-through payment resembles
predecessor diagnostic radiopharmaceuticals or contrast agents already
included in the costs of the APCs that would be associated with the
drug receiving pass-through payment. Because payment for an implantable
biological eligible for pass-through payment in CY 2009 and continuing
on pass-through status in CY 2011 would be packaged if the product were
not paid separately due to its pass-through status and because we had
not established a pass-through payment offset policy for implantable
biologicals when approved for pass-through payment as biologicals, that
is, for CY 2009 and earlier, we are including in the proposed pass-
through spending estimate the full payment for these implantable
biologicals at ASP+6 percent (or WAC+6 percent or 95 percent of AWP, if
ASP information is not available). Based on these results, we are
proposing the spending estimate for this first group of drugs and
biologicals to be $9 million, while we are proposing our spending
estimate for the second group of drugs and biologicals to be $5.8
million.
To estimate CY 2011 pass-through spending for drugs and
nonimplantable biologicals in the second group (that is, drugs and
nonimplantable biologicals that we knew at the time of development of
this proposed rule would be newly eligible for pass-through payment in
CY 2011, additional drugs and nonimplantable biologicals that we
estimated could be approved for pass-through status subsequent to the
development of this proposed rule and before January 1, 2011, and
projections for new drugs and nonimplantable biologicals that could be
initially eligible for pass-through payment in the second through
fourth quarters of CY 2011), we are proposing to use utilization
estimates from pass-through applicants, pharmaceutical industry data,
clinical information, recent trends in the per unit ASPs of hospital
outpatient drugs, and projected annual changes in service volume and
intensity as our basis for making the CY 2011 proposed pass-through
payment estimate. We also are considering the most recent OPPS
experience in approving new pass-through drugs and nonimplantable
biologicals. Consistent with our policy established in CY 2010 (74 FR
60531 through 60532), we also are proposing to include new implantable
biologicals that we expect to be approved for pass-through status as
devices beginning in CY 2011 in the second group of items considered
for device pass-through estimate purposes. Therefore, we are not
proposing to include implantable biologicals in the second group of
items in the proposed drug and biological pass-through spending
estimate.
Based on the results of these analyses, we are proposing that the
spending estimate for this second group of drugs and biologicals to be
$5.8 million.
As described in the CY 2010 OPPS/ASC final rule with comment period
(74 FR 60476), under our current policy, beginning in CY 2010,
implantable biologicals that are surgically inserted or implanted
(through a surgical incision or a natural orifice) and that were not
receiving pass-through payment as biologicals prior to January 1, 2010,
will be evaluated under the device pass-through process and paid
according to the device payment methodology. We are proposing to
continue to consider implantable biologicals approved for pass-through
payment under the drug and biological pass-through provision prior to
CY 2010 as drugs and biologicals for pass-through payment estimate
purposes. These implantable biologicals that have been approved for
pass-through status prior to CY 2010 continue to be considered drugs
and biologicals until they expire from pass-through status. Therefore,
the pass-through spending estimate for the first group of pass-through
device categories does not include implantable biologicals that have
been granted pass-through status prior to CY 2010.
Consistent with the current policy established in the CY 2010 OPPS/
ASC final rule with comment period (74 FR 60476), we are proposing to
continue to provide that payment for implantable biologicals newly
eligible for pass-through payment beginning in CY 2011 is based on
hospital charges adjusted to cost, rather than the ASP methodology that
is applicable to pass-through drugs and biologicals. Therefore, we are
proposing that the estimate of pass-through spending for implantable
biologicals first paid as pass-through devices in CY 2011 would be
based on the payment methodology for pass-through devices, and would be
included in the proposed CY 2011 device pass-through spending estimate
for the second group of pass-through device categories.
The proposed CY 2011 pass-through spending estimate for the first
group of pass-through device categories is $0. The proposed estimate of
CY 2010 pass-through spending for the second group of pass-through
device categories is $72.1 million. Our proposed CY 2011 estimate of
total pass-through spending for device categories is $72.1 million.
The estimate for pass-through spending for the first group of drugs
and biologicals is $9.0 million for CY 2011. The estimate for pass-
through spending for the second group of drugs and biologicals is $5.8
million for CY 2011. As discussed in section V.A. of this proposed
rule, radiopharmaceuticals are considered drugs for pass-through
purposes. Therefore, we have included radiopharmaceuticals in our
proposed CY 2011 pass-through spending estimate for drugs and
biologicals. Our proposed CY 2011 estimate of total pass-through
spending for drugs and biologicals is $14.8 million.
In summary, in accordance with the methodology described above in
this section, we estimate that total pass-through spending for the
device categories and the drugs and biologicals that are continuing to
receive pass-through payment in CY 2011 and those
[[Page 46286]]
device categories, drugs, and nonimplantable biologicals that first
become eligible for pass-through payment during CY 2011 would be
approximately $86.9 million, which represents 0.20 percent of total
OPPS projected total payments for CY 2011. We estimate that pass-
through spending in CY 2011 would not amount to 2.0 percent of total
projected OPPS CY 2011 program spending.
VII. Proposed OPPS Payment for Brachytherapy Sources
A. Background
Section 1833(t)(2)(H) of the Act, as added by section 621(b)(2)(C)
of Public Law 108-173 (MMA), mandated the creation of additional groups
of covered OPD services that classify devices of brachytherapy
consisting of a seed or seeds (or radioactive source) (``brachytherapy
sources'') separately from other services or groups of services. The
additional groups must reflect the number, isotope, and radioactive
intensity of the brachytherapy sources furnished and include separate
groups for palladium-103 and iodine-125 sources.
Section 1833(t)(16)(C) of the Act, as added by section 621(b)(1) of
Public Law 108-173, established payment for brachytherapy sources
furnished from January 1, 2004 through December 31, 2006, based on a
hospital's charges for each brachytherapy source furnished adjusted to
cost. Under section 1833(t)(16)(C) of the Act, charges for the
brachytherapy sources may not be used in determining any outlier
payments under the OPPS for that period in which payment is based on
charges adjusted to cost. Consistent with our practice under the OPPS
to exclude items paid at cost from budget neutrality consideration,
these items were excluded from budget neutrality for that time period
as well.
In our CY 2007 annual OPPS rulemaking, we proposed and finalized a
policy of prospective payment based on median costs for the 11
brachytherapy sources for which we had claims data. We based the
prospective payment rates on median costs for each source from our CY
2005 claims data (71 FR 68102 through 71 FR 68115).
Subsequent to publication of the CY 2007 OPPS/ASC final rule with
comment period, section 107 of Public Law 109-432 (MIEA-TRHCA) amended
section 1833 of the Act. Specifically, section 107(a) of Public Law
109-432 amended section 1833(t)(16)(C) of the Act by extending the
payment period for brachytherapy sources based on a hospital's charges
adjusted to cost for one additional year, through December 31, 2007.
Therefore, we continued to pay for brachytherapy sources based on
charges adjusted to cost for CY 2007.
Section 107(b)(1) of Public Law 109-432 amended section
1833(t)(2)(H) of the Act by adding a requirement for the establishment
of separate payment groups for ``stranded and non-stranded''
brachytherapy sources furnished on or after July 1, 2007, in addition
to the existing requirements for separate payment groups based on the
number, isotope, and radioactive intensity of brachytherapy sources
under section 1833(t)(2)(H) of the Act. Section 107(b)(2) of Public Law
109-432 authorized the Secretary to implement this requirement by
``program instruction or otherwise.'' We note that public commenters
who responded to the CY 2007 OPPS/ASC proposed rule asserted that
stranded sources, which they described as embedded into the stranded
suture material and separated within the strand by material of an
absorbable nature at specified intervals, had greater production costs
than non-stranded sources (71 FR 68113 through 68114).
As a result of the statutory requirement to create separate groups
for stranded and non-stranded sources as of July 1, 2007, we
established several coding changes through a transmittal, effective
July 1, 2007 (Transmittal 1259, dated June 1, 2007). Based on public
comments received on the CY 2007 OPPS/ASC proposed rule and industry
input, we were aware of three sources available in stranded and non-
stranded forms at that time: iodine-125; palladium-103; and cesium-131
(72 FR 42746). We created six new HCPCS codes to differentiate the
stranded and non-stranded versions of iodine, palladium, and cesium
sources.
In Transmittal 1259, we indicated that if we receive information
that any of the other sources now designated as non-stranded are also
FDA-approved and marketed as a stranded source, we would create a code
for the stranded source. We also established two ``Not Otherwise
Specified'' (NOS) codes for billing stranded and non-stranded sources
that are not yet known to us and for which we do not have source-
specific codes. We established HCPCS code C2698 (Brachytherapy source,
stranded, not otherwise specified, per source) for stranded NOS sources
and HCPCS code C2699 (Brachytherapy source, non-stranded, not otherwise
specified, per source) for non-stranded NOS sources.
In the CY 2008 OPPS/ASC final rule with comment period (72 FR
66784), we again finalized prospective payment for brachytherapy
sources, beginning in CY 2008, with payment rates determined using the
CY 2006 claims-based costs per source for each brachytherapy source.
Consistent with our policy regarding APC payments made on a prospective
basis, we finalized the policy in the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66686) to subject the cost of brachytherapy
sources to the outlier provision of section 1833(t)(5) of the Act, and
also to subject brachytherapy source payment weights to scaling for
purposes of budget neutrality. Therefore, brachytherapy sources could
receive outlier payments if the costs of furnishing brachytherapy
sources met the criteria for outlier payment, that is, if brachytherapy
sources are paid prospectively. In addition, as noted in the CY 2008
OPPS/ASC final rule with comment period (72 FR 66683), implementation
of prospective payment for brachytherapy sources would provide
opportunities for hospitals to receive additional payments under
certain circumstances through the 7.1 percent rural SCH adjustment
(discussed in section II.E. of this proposed rule).
For CY 2008, we also proposed and finalized a policy regarding
payment for new brachytherapy sources for which we have no claims data
(72 FR 42749 and 72 FR 66786, respectively). We indicated we would
assign future new HCPCS codes for new brachytherapy sources to their
own APCs, with prospective payment rates set based on our consideration
of external data and other relevant information regarding the expected
costs of the sources to hospitals. Finally, we proposed and finalized
our policy to discontinue using status indicator ``H'' (Pass-Through
Device Categories. Separate cost based pass-through payment; not
subject to copayment) because we would not be paying charges adjusted
to costs after December 31, 2007, and instead adopted a policy of using
status indicator ``K'' (which includes, among others, ``Brachytherapy
Sources. Paid under OPPS; separate APC payment'') for CY 2008 (72 FR
42749 and 72 FR 66785, respectively).
After we finalized these policies for CY 2008, section 106(a) of
Public Law 110-173 (MMSEA) extended the charges-adjusted-to-cost
payment methodology for brachytherapy sources for an additional 6
months, through June 30, 2008. Because our final CY 2008 policies paid
for brachytherapy sources at prospective rates based on median costs,
we were unable to implement these policies during this extension.
[[Page 46287]]
In the CY 2009 OPPS/ASC proposed rule (73 FR 41502), we again
proposed prospective payment rates for brachytherapy sources for CY
2009. We proposed to pay for brachytherapy sources at prospective rates
based on their source-specific median costs as calculated from CY 2007
claims data available for CY 2009 ratesetting. Subsequent to issuance
of the CY 2009 OPPS/ASC proposed rule, Public Law 110-275 (MIPPA) was
enacted on July 15, 2008. Section 142 of Public Law 110-275 amended
section 1833(t)(16)(C) of the Act, as amended by section 106(a) of
Public Law 110-173 (MMSEA), to further extend the payment period for
brachytherapy sources based on a hospital's charges adjusted to cost
from July 1, 2008 through December 31, 2009. Therefore, we continued to
pay for brachytherapy sources at charges adjusted to cost in CY 2008
from July 1 through December 31, and we maintained the assignment of
status indicator ``H'' to brachytherapy sources for claims processing
purposes in CY 2008. For CY 2009, we continued to pay for all
separately payable brachytherapy sources based on a hospital's charges
adjusted to cost. Because brachytherapy sources are paid at charges
adjusted to cost, we did not subject them to outlier payments under
section 1833(t)(5) of the Act, or subject brachytherapy source payment
weights to scaling for purposes of budget neutrality. Moreover, during
the CY 2009 period of payment at charges adjusted to cost,
brachytherapy sources were not eligible for the 7.1 percent rural SCH
adjustment (as discussed in detail in section II.E. of this proposed
rule).
Furthermore, for CY 2009, we did not adopt the policy we
established in the CY 2008 OPPS/ASC final rule with comment period of
paying stranded and non-stranded NOS codes for brachytherapy sources,
HCPCS codes C2698 and C2699, based on a rate equal to the lowest
stranded or non-stranded prospective payment for such sources. Also,
for CY 2009, we did not adopt the policy we established in the CY 2008
OPPS/ASC final rule with comment period regarding payment for new
brachytherapy sources for which we have no claims data. NOS HCPCS codes
C2698 and C2699 and newly established specific source codes were paid
at charges adjusted to cost through December 31, 2009, consistent with
the provisions of section 142 of Public Law 110-275.
For CY 2009, we finalized our proposal to create new status
indicator ``U'' (Brachytherapy Sources. Paid under OPPS; separate APC
payment) for brachytherapy source payment, instead of using status
indicator ``K'' as proposed and finalized for CY 2008 for prospective
payment, or status indicator ``H,'' used during the period of charges
adjusted to cost payment. As noted in the CY 2009 OPPS/ASC final rule
with comment period (73 FR 68670), assigning a status indicator, such
as status indicator ``K,'' to several types of items and services with
potentially differing payment policies added unnecessary complexity to
our operations. Status indicator ``U'' is used only for brachytherapy
sources, regardless of their specific payment methodology for any
period of time.
Under section 142 of Public Law 110-275, payment for brachytherapy
sources was mandated at charges adjusted to cost only through CY 2009.
In the CY 2010 OPPS/ASC final rule with comment period (74 FR 60533
through 60537), we adopted for CY 2010 the general OPPS prospective
payment methodology for brachytherapy sources, consistent with section
1833(t)(2)(C) of the Act.
B. Proposed OPPS Payment Policy
As we have previously stated (72 FR 66780, 73 FR 41502, and 74 FR
60533 and 60534), we believe that adopting the general OPPS prospective
payment methodology for brachytherapy sources is appropriate for a
number of reasons. The general OPPS payment methodology uses median
costs based on claims data to set the relative payment weights for
hospital outpatient services. This payment methodology results in more
consistent, predictable, and equitable payment amounts per source
across hospitals by eliminating some of the extremely high and low
payment amounts resulting from payment based on hospitals' charges
adjusted to cost. We believe the OPPS prospective payment methodology
would also provide hospitals with incentives for efficiency in the
provision of brachytherapy services to Medicare beneficiaries.
Moreover, this approach is consistent with our payment methodology for
the vast majority of items and services paid under the OPPS.
We are proposing to use the median costs from CY 2009 claims data
for setting the proposed CY 2011 payment rates for brachytherapy
sources, as we are proposing for most other items and services that
will be paid under the CY 2011 OPPS. We are proposing to continue the
other payment policies for brachytherapy sources we finalized in the CY
2010 OPPS/ASC final rule with comment period (74 FR 60537). We are
proposing to pay for the stranded and non-stranded NOS codes, HCPCS
codes C2698 and C2699, at a rate equal to the lowest stranded or non-
stranded prospective payment rate for such sources, respectively, on a
per source basis (as opposed, for example, to a per mCi), which is
based on the policy we established in the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66785). The proposed payment methodology for
NOS sources would provide payment to a hospital for new sources, and at
the same time encourage interested parties to quickly bring new sources
to our attention so that specific coding and payment could be
established.
We also are proposing to continue the policy we implemented in the
CY 2010 OPPS/ASC final rule with comment period (74 FR 60537) regarding
payment for new brachytherapy sources for which we have no claims data,
based on the same reasons we discussed in the CY 2008 OPPS/ASC final
rule with comment period (72 FR 66786; which was superseded by section
142 of Pub. L. 110-275). That policy is intended to enable us to assign
future new HCPCS codes for new brachytherapy sources to their own APCs,
with prospective payment rates set based on our consideration of
external data and other relevant information regarding the expected
costs of the sources to hospitals.
Consistent with our policy regarding APC payments made on a
prospective basis, as we did for CY 2010, we are proposing to subject
brachytherapy sources to outlier payments under section 1833(t)(5) of
the Act, and also to subject brachytherapy source payment weights to
scaling for purposes of budget neutrality. Therefore, brachytherapy
sources could receive outlier payments if the costs of furnishing
brachytherapy sources meet the criteria for outlier payment, that is,
if they are prospectively paid. In addition, as noted in the CY 2010
OPPS/ASC final rule with comment period (74 FR 60534), implementation
of prospective payments for brachytherapy sources would provide
opportunities for hospitals to receive additional payments in CY 2010
under certain circumstances through the 7.1 percent rural adjustment,
as described in section II.E. of this proposed rule.
Therefore, we are proposing to pay for brachytherapy sources at
prospective payment rates based on their source-specific median costs
for CY 2011. The separately payable brachytherapy source HCPCS codes,
long descriptors, APCs, status indicators, and approximate APC median
costs that we are proposing for CY 2011 are presented in Table 29
below.
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We continue to invite hospitals and other parties to submit
recommendations to us for new HCPCS codes to describe new brachytherapy
sources consisting of a radioactive isotope, including a detailed
rationale to support recommended new sources. Such recommendations
should be directed to the Division of Outpatient Care, Mail Stop C4-05-
17, Centers for Medicare and Medicaid Services, 7500 Security
Boulevard, Baltimore, MD 21244. We will continue to add new
brachytherapy source codes and descriptors to our systems for payment
on a quarterly basis.
VIII. Proposed OPPS Payment for Drug Administration Services
A. Background
In CY 2005, in response to the recommendations made by public
commenters and the hospital industry, OPPS transitioned from Level II
HCPCS Q-codes to the use of CPT codes for drug administration services.
These CPT codes allowed specific reporting of services regarding the
number of hours for an infusion and provided consistency in coding
between Medicare and other payers. (For a discussion regarding coding
and payment for drug administration services prior to CY 2005, we refer
readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR
66787).)
While hospitals began adopting CPT codes for outpatient drug
administration services in CY 2005, physicians paid under the MPFS were
using HCPCS G-codes in CY 2005 to report office-based drug
administration services. These HCPCS G-codes were developed in
anticipation of substantial revisions to the drug administration CPT
codes by the CPT Editorial Panel that were expected for CY 2006.
In CY 2006, as anticipated, the CPT Editorial Panel revised its
coding structure for drug administration services and incorporated new
concepts, such as initial, sequential, and concurrent services, into a
structure that previously distinguished services based on type of
administration (chemotherapy/nonchemotherapy), method of administration
(injection/infusion/push), and for infusion services, first hour and
additional hours. For CY 2006, we implemented the CY 2006 drug
administration CPT codes that did not reflect the concepts of initial,
sequential, and concurrent services under the OPPS, and we created
HCPCS C-codes that generally paralleled the CY 2005 CPT codes for
reporting these other services.
For CY 2007, as a result of public comments on the proposed rule
and feedback from the hospital community and the APC Panel, we
implemented the full set of CPT codes for drug administration services,
including codes incorporating the concepts of initial, sequential, and
concurrent services. In addition, the CY 2007 update process offered us
the first opportunity to consider data gathered from the use of CY 2005
CPT codes for purposes of ratesetting. For CY 2007, we used CY 2005
claims data to implement a six-level APC structure for drug
administration services. In CY 2008, we continued to use the full set
of CPT codes for drug administration services and continued our
assignment of drug administration services to this six-level APC
structure.
For CY 2009, we continued to allow hospitals to use the full set of
CPT codes for drug administration services but moved from a six-level
APC structure to a five-level APC structure. We note that, while there
were changes in the CPT numerical coding for nonchemotherapy drug
administration services in CY 2009, the existing CPT codes were only
renumbered, and there were no significant changes to the code
descriptors themselves. As we discussed in the CY 2009 OPPS/ASC final
rule with comment period (73 FR 68672), the CY 2009 ratesetting process
afforded us the first opportunity to examine hospital claims data for
the full set of CPT codes that reflected the concepts of initial,
sequential, and concurrent services. For CY 2009, we performed our
standard annual OPPS review of the clinical and resource
characteristics of the drug administration CPT codes assigned to the
six-level CY 2008 APC structure based on the CY 2007 claims data
available for the CY 2009 OPPS/ASC proposed rule. As a result of our
hospital cost analysis and detailed clinical review, we adopted a five-
level APC structure for CY 2009 drug administration services to more
appropriately reflect their resource utilization in APCs that also
group clinically similar services. As we noted in the CY 2009 OPPS/ASC
final rule with comment period (73 FR 68671), these APCs generally
demonstrated the clinically expected and actually observed comparative
relationships between the median costs of different types of drug
administration services, including initial and additional services;
chemotherapy and other diagnostic, prophylactic, or therapeutic
services; injections and infusions; and simple and complex methods of
drug administration.
After analyzing the assignment of CPT codes for drug administration
into the five-level APC structure by utilizing our standard annual OPPS
review for clinical cohesiveness and resource homogeneity, we continued
our five-level APC structure for payment for drug administration
services in the HOPD for CY 2010. In addition, we used the full set of
CPT codes for drug administration and included all separately payable
drug administration add-on codes on the CY 2010 bypass list in order to
create pseudo single claims for these codes that would enable us to use
the claims data to set payment rates for them. As we stated in the CY
2010 OPPS/ASC final rule with comment period (74 FR 60538) since CY
2007, we continue to update the bypass methodology to reflect changing
drug administration HCPCS codes that are recognized under the OPPS.
[[Page 46290]]
B. Proposed Coding and Payment for Drug Administration Services
For CY 2011, we are proposing to continue to use the full set of
CPT codes for reporting drug administration services and to continue to
pay separately for the same set of drug administration codes under the
CY 2011 OPPS as were paid separate in the CY 2010 OPPS. As a part of
our standard annual review, we analyzed the CY 2009 claims data that
reflect assignments of CPT codes for drug administration into the five-
level APC structure and have found that the assignment of separately
paid drug administration codes to five APCs continues to appropriately
reflect the relative resources required to furnish these services. In
addition, as has been our standard policy since the CY 2007 OPPS (71 FR
68117), we are proposing to continue to include all separately payable
drug administration add-on codes on the bypass list so that we can use
the cost data we derive from claims for these codes to establish
payment rates for them.
Since this approach was first adopted for CY 2007, we have updated
and expanded the bypass methodology to reflect changing drug
administration HCPCS codes that are recognized under the OPPS. We
placed all of the add-on CPT codes for drug administration services,
including the sequential infusion and intravenous push codes, on the
bypass list in CY 2009 (73 FR 68513) in order to continue this
framework for transforming these otherwise unusable multiple bills into
``pseudo'' single claims that can be used for OPPS ratesetting
purposes. We believe that this longstanding methodology results in
appropriate payment rates for the add-on CPT codes for drug
administration; therefore, we are proposing to continue to use this
methodology for the CY 2011 OPPS because we believe this methodology
takes into account all of the packaging on claims for drug
administration services and therefore provides a reasonable framework
for developing median costs for drug administration services that are
often provided in combination with one another (74 FR 60539).
At its February 2010 meeting, the APC Panel recommended that CMS
make CPT code 96368 (Intravenous infusion, for therapy, prophylaxis, or
diagnosis (specify substance or drug); concurrent infusion (List
separately in addition to code for primary procedure) and CPT code
93676 (Therapeutic, prophylactic, or diagnostic injection (specify
substance or drug); each additional sequential intravenous push of the
same substance/drug provided in a facility (List separately in addition
to code for primary, separately payable procedure) separately payable
for the CY 2011 OPPS at an appropriate payment rate as determined by
CMS. We are not proposing to accept this APC Panel recommendation
because these two codes each describe services that, by definition, are
always provided in conjunction with an initial drug administration code
and therefore are appropriately packaged into the payment for the
separately payable services that they usually accompany. These services
have been packaged since the inception of the OPPS, and we continue to
believe they are appropriately packaged into the payment for the
separately payable services without which, under CPT guidelines and
definitions, they cannot be appropriately reported. We refer readers to
section II.A.3. of this proposed rule for a more detailed discussion of
payment for packaged services.
Table 30 below displays the proposed configuration of the five drug
administration APCs for CY 2011 and the proposed median cost for each
of the proposed drug administration APCs. We believe the updated CY
2009 claims data and the most recent cost report data for the drug
administration CPT show that these codes share sufficiently similar
clinical and resource characteristics to justify their continued
placement in the five levels of drug administration APCs that were in
effect in the CY 2010 OPPS. The median cost for each of the separately
paid drug administration CPT codes is contained in the CPT median cost
file that is provided as supporting documentation to this proposed rule
at the Web site at: http://www.cms.hhs.gov/HospitalOutpatientPPS/. The
proposed CY 2011 payment rate for each of the proposed drug
administration APCs is contained in Addendum B of this proposed rule.
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IX. Proposed OPPS Payment for Hospital Outpatient Visits
A. Background
Currently, hospitals report visit HCPCS codes to describe three
types of OPPS services: clinic visits; emergency department visits; and
critical care services. For OPPS purposes, we recognize clinic visit
codes as those codes defined in the CPT code book to report evaluation
and management (E/M) services provided in the physician's office or in
an outpatient or other ambulatory facility. We recognize emergency
department visit codes as those codes used to report E/M services
provided in the emergency department. Emergency department visit codes
consist of five CPT codes that apply to Type A emergency departments
and five Level II HCPCS codes that apply to Type B emergency
departments. For OPPS purposes, we recognize critical care codes as
those CPT codes used by hospitals to report critical care services that
involve the ``direct delivery by a physician(s) of medical care for a
critically ill or critically injured patient,'' as defined by the CPT
code book. In Transmittal 1139, Change Request 5438, dated December 22,
2006, we stated that, under the OPPS, the time that can be reported as
critical care is the time spent by a physician and/or hospital staff
engaged in active face-to-face critical care of a critically ill or
critically injured patient. Under the OPPS, we also recognize HCPCS
code G0390 (Trauma response team associated with hospital critical care
service) for the reporting of a trauma response in association with
critical care services.
We are proposing to continue to recognize these CPT and HCPCS codes
describing clinic visits, Type A and Type B emergency department
visits, critical care services, and trauma team activation provided in
association with critical care services for CY 2011. These codes are
listed below in Table 31.
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During the February 2010 APC Panel meeting, the APC Panel
recommended that CMS continue to report on clinic and emergency
department visits and observation services in the claims data, and that
if CMS identifies changes in patterns of utilization or cost, it bring
those issues before the Visits and Observation Subcommittee for future
consideration. The APC Panel also recommended that the work of the
Visits and Observation Subcommittee continue. We are adopting these
recommendations and plan to provide the requested data and analyses to
the APC Panel at an upcoming meeting.
B. Proposed Policies for Hospital Outpatient Visits
1. Clinic Visits: New and Established Patient Visits
As reflected in Table 31, hospitals use different CPT codes for
clinic visits based on whether the patient being treated is a new
patient or an established patient. Beginning in CY 2009, we refined the
definitions of a new patient and an established patient to reflect
whether or not the patient has been registered as an inpatient or
outpatient of the hospital within the past 3 years. A patient who has
been registered as an inpatient or outpatient of the hospital within
the 3 years prior to a visit would be considered to be an established
patient for that visit, while a patient who has not been registered as
an inpatient or outpatient of the hospital within the 3 years prior to
a visit would be considered to be a new patient for that visit. We
refer readers to the CY 2009 OPPS/ASC final rule with comment period
(73 FR 68677 through 68680) for a full discussion of the refined
definitions.
We continue to believe that defining new or established patient
status based on whether the patient has been registered as an inpatient
or outpatient of the hospital within the 3 years prior to a visit will
reduce hospitals' administrative burden associated with reporting
appropriate clinic visit CPT codes. For CY 2011, we are proposing to
continue recognizing the refined definitions of a new patient and an
established patient, and applying our policy of calculating median
costs for clinic visits under the OPPS using historical hospital claims
data. As discussed in section II.A.2.e.(1) of this proposed rule and
consistent with our CY 2010 policy, when calculating the median costs
for the clinic visit APCs (0604 through 0608), we would utilize our
methodology that excludes those claims for visits that are eligible for
payment through the extended assessment and management composite APC
8002 (Level I Extended Assessment and Management Composite). We
continue to believe that this approach results in the most accurate
cost estimates for APCs 0604 through 0608 for CY 2011.
2. Emergency Department Visits
Since CY 2007, we have recognized two different types of emergency
departments for payment purposes under the OPPS--Type A emergency
departments and Type B emergency departments. As described in greater
detail below, by providing payment for two types of emergency
departments, we recognize, for OPPS payment purposes, both the CPT
definition of an emergency department, which requires the facility to
be available 24 hours, and the requirements for emergency departments
specified in the provisions of the Emergency Medical Treatment and
Labor Act (EMTALA) (Pub. L. 99-272), which do not stipulate 24-hour
availability but do specify other obligations for hospitals that offer
emergency services. For more detailed information on the EMTALA
provisions, we refer readers to the CY 2009 OPPS/ASC final rule with
comment period (73 FR 68680).
In the CY 2007 OPPS/ASC final rule with comment period (71 FR
68132), we finalized the definition of a Type A emergency department to
distinguish it from a Type B emergency department. A Type A emergency
department must be available to provide services 24 hours a day, 7 days
a week, and meet one or both of the following requirements related to
the EMTALA definition of a dedicated emergency department specified at
42 CFR 489.24(b), specifically: (1) It is licensed by the State in
which it is located under the applicable State law as an emergency room
or emergency department; or (2) it is held out to the public (by name,
posted signs, advertising, or other means) as a place that provides
care for emergency medical conditions on an urgent basis without
requiring a previously scheduled appointment. For CY 2007 (71 FR
68140), we assigned the five CPT E/M emergency department visit codes
for services provided in Type A emergency departments to five created
Emergency Visit APCs, specifically APC 0609 (Level 1 Emergency Visits),
APC 0613 (Level 2 Emergency Visits), APC 0614 (Level 3 Emergency
Visits), APC 0615 (Level 4 Emergency Visits), and APC 0616 (Level 5
Emergency Visits). We defined a Type B emergency department as any
dedicated emergency department that incurred EMTALA obligations but did
not meet the CPT definition of an emergency department. For example, a
hospital department that may be characterized as a Type B emergency
department would meet the definition of a dedicated emergency
department but may not be available 24 hours a day, 7 days a week.
Hospitals with such dedicated emergency departments incur EMTALA
obligations with respect to an individual who presents to the
department and requests, or has a request made on his or her behalf,
examination or treatment for a medical condition.
To determine whether visits to Type B emergency departments have
different resource costs than visits to either clinics or Type A
emergency departments, in the CY 2007 OPPS/ASC final rule with comment
period (71 FR 68132), we finalized a set of five HCPCS G-codes for use
by hospitals to report visits to all entities that meet the definition
of a dedicated emergency department under the EMTALA regulations but
that are not Type A emergency departments. These codes are called
``Type B emergency department visit codes.'' In the CY 2007 OPPS/ASC
final rule with comment period (71 FR 68132), we explained that these
new HCPCS G-codes would serve as a vehicle to capture median cost and
resource differences among visits provided by Type A emergency
departments, Type B emergency departments, and clinics. We stated that
the reporting of specific HCPCS G-codes for emergency department visits
provided in Type B emergency departments would permit us to
specifically collect and analyze the hospital resource costs of visits
to these facilities in order to determine if, in the future, a proposal
for an alternative payment policy might be warranted. We expected
hospitals to adjust their charges appropriately to reflect differences
in Type A and Type B emergency department visit costs.
As we noted in the CY 2009 OPPS/ASC final rule with comment period
(73 FR 68681), the CY 2007 claims data used for that rulemaking were
from the first year of claims data available for analysis that included
hospitals' cost data for these new Type B emergency department HCPCS
visit codes. Based on our analysis of the CY 2007 claims data, we
confirmed that the median costs of Type B emergency department visits
were less than the median costs of Type A emergency department visits
for all but the level 5 visit. In other words, the median costs from
the CY 2007 hospital claims represented real differences in the
hospital resource costs for the same level of visits in a
[[Page 46297]]
Type A or Type B emergency department. Therefore, for CY 2009, we
adopted the August 2008 APC Panel recommendation to assign levels 1
through 4 Type B emergency department visits to their own APCs and to
assign the level 5 Type B emergency department visit to the same APC as
the level 5 Type A emergency department visit.
As discussed in the CY 2010 OPPS/ASC final rule with comment period
(74 FR 60548 through 60551), analyses of CY 2008 hospitals' cost data
from claims data used for CY 2010 ratesetting for the emergency
department HCPCS G-codes demonstrated that the pattern of relative cost
differences between Type A and Type B emergency department visits was
largely consistent with the distributions we observed in the CY 2007
data, with the exception that, in the CY 2008 data, we observed a
relatively lower HCPCS code-specific median cost associated with level
5 Type B emergency department visits compared to the HCPCS code-
specific median cost of level 5 Type A emergency department visits. As
a result, for CY 2010, we finalized a policy to continue to pay levels
1 through 4 Type B emergency department visits through four levels of
APCs, and to pay for level 5 Type B emergency department visits through
new APC 0630 (Level 5 Type B Emergency Department Visit), to which the
level 5 Type B emergency department visit HCPCS code is the only
service assigned.
Based on the CY 2009 claims data available for this proposed rule,
we note that the pattern of relative cost differences between Type A
and Type B emergency department visits is consistent with the
distributions we observed in the CY 2008 claims data, as demonstrated
in Table 32 below. Therefore, we are proposing to continue to pay for
Type B emergency department visits in CY 2011 based on their median
costs through five levels of APCs: APC 0626 (Level 1 Type B Emergency
Department Visit), APC 0627 (Level 2 Type B Emergency Department
Visit), APC 0628 (Level 3 Type B Emergency Department Visit), APC 0629
(Level 4 Type B Emergency Department Visit), and APC 0630. As we stated
in the CY 2010 OPPS/ASC final rule with comment period (74 FR 60550),
we continue to believe that this configuration pays appropriately for
each level of Type B emergency department visits based on estimated
resource costs from more recent claims data. We also note that, as
discussed in section II.A.2.e.(1) of this proposed rule and consistent
with our CY 2010 policy, when calculating the median costs for the
emergency department visit and critical care APCs (0609 through 0617
and 0626 through 0630), we are proposing to utilize our methodology
that excludes those claims for visits that are eligible for payment
through the extended assessment and management composite APC 8002. We
believe that this approach will result in the most accurate cost
estimates for APCs 0604 through 0608 for CY 2011.
Table 32 below displays the proposed median costs for each level of
Type B emergency department visit APCs under the proposed CY 2011
configuration, compared to the proposed median costs for each level of
clinic visit APCs and each level of Type A emergency department visit
APCs.
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During the February 2010 APC Panel meeting, the APC Panel requested
that CMS provide information about the common diagnoses and services
furnished with critical care services. We are accepting the APC Panel's
recommendation and will provide the requested information at an
upcoming meeting of the APC Panel.
3. Visit Reporting Guidelines
Since April 7, 2000, we have instructed hospitals to report
facility resources for clinic and emergency department hospital
outpatient visits using the CPT E/M codes and to develop internal
hospital guidelines for reporting the appropriate visit level. Because
a national set of hospital-specific codes and guidelines do not
currently exist, we have advised hospitals that each hospital's
internal guidelines that determine the levels of clinic and emergency
department visits to be reported should follow the intent of the CPT
code descriptors, in that the guidelines should be designed to
reasonably relate the intensity of hospital resources to the different
levels of effort represented by the codes.
As noted in detail in the CY 2008 OPPS/ASC final rule with comment
period (72 FR 66802 through 66805), we observed a normal and stable
distribution of clinic and emergency department visit levels in
hospital claims over the past several years. The data indicated that
hospitals, on average, were billing all five levels of visit codes with
varying frequency, in a consistent pattern over time. Overall, both the
clinic and emergency department visit distributions indicated that
hospitals were billing consistently over time and in a manner that
distinguished between visit levels, resulting in relatively normal
distributions nationally for the OPPS, as well as for specific classes
of hospitals. The results of these analyses were generally consistent
with our
[[Page 46298]]
understanding of the clinical and resource characteristics of different
levels of hospital outpatient clinic and emergency department visits.
In the CY 2008 OPPS/ASC proposed rule (72 FR 42764 through 42765), we
specifically invited public comment as to whether a pressing need for
national guidelines continued at this point in the maturation of the
OPPS, or if the current system where hospitals create and apply their
own internal guidelines to report visits was currently more practical
and appropriately flexible for hospitals. We explained that, although
we have reiterated our goal since CY 2000 of creating national
guidelines, this complex undertaking for these important and common
hospital services was proving more challenging than we initially
anticipated as we received new and expanded information from the public
on current hospital reporting practices that led to appropriate payment
for the hospital resources associated with clinic and emergency
department visits. We stated our belief that many hospitals had worked
diligently and carefully to develop and implement their own internal
guidelines that reflected the scope and types of services they provided
throughout the hospital outpatient system. Based on public comments, as
well as our own knowledge of how clinics operate, it seemed unlikely
that one set of straightforward national guidelines could apply to the
reporting of visits in all hospitals and specialty clinics. In
addition, the stable distribution of clinic and emergency department
visits reported under the OPPS over the past several years indicated
that hospitals, both nationally in the aggregate and grouped by
specific hospital classes, were generally billing in an appropriate and
consistent manner as we would expect in a system that accurately
distinguished among different levels of service based on the associated
hospital resources.
Therefore, we did not propose to implement national visit
guidelines for clinic or emergency department visits for CY 2008. Since
publication of the CY 2008 OPPS/ASC final rule with comment period, we
have again examined the distribution of clinic and Type A emergency
department visit levels based upon updated CY 2009 claims data
available for this CY 2011 proposed rule and confirmed that we continue
to observe a normal and stable distribution of clinic and emergency
department visit levels in hospital claims. We continue to believe
that, based on the use of their own internal guidelines, hospitals are
generally billing in an appropriate and consistent manner that
distinguishes among different levels of visits based on their required
hospital resources. As a result of our updated analyses, we are
encouraging hospitals to continue to report visits during CY 2011
according to their own internal hospital guidelines. In the absence of
national guidelines, we will continue to regularly reevaluate patterns
of hospital outpatient visit reporting at varying levels of
disaggregation below the national level to ensure that hospitals
continue to bill appropriately and differentially for these services.
As originally noted in detail in the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66648), we continue to expect that hospitals will
not purposely change their visit guidelines or otherwise upcode clinic
and emergency department visits for purposes of extended assessment and
management composite APC payment.
In addition, we note our continued expectation that hospitals'
internal guidelines will comport with the principles listed in the CY
2008 OPPS/ASC final rule with comment period (72 FR 66805). We
encourage hospitals with more specific questions related to the
creation of internal guidelines to contact their servicing fiscal
intermediary or MAC.
We appreciate all of the comments we have received in the past from
the public on visit guidelines, and we encourage continued submission
of comments throughout the year that would assist us and other
stakeholders interested in the development of national guidelines.
Until national guidelines are established, hospitals should continue
using their own internal guidelines to determine the appropriate
reporting of different levels of clinic and emergency department
visits. While we understand the interest of some hospitals in having us
move quickly to promulgate national guidelines that would ensure
standardized reporting of hospital outpatient visit levels, we believe
that the issues and concerns identified both by us and others are
important and require serious consideration prior to the implementation
of national guidelines.
Because of our commitment to provide hospitals with 6 to 12 months
notice prior to implementation of national guidelines, we would not
implement national guidelines prior to CY 2012. Our goal is to ensure
that OPPS national or hospital-specific visit guidelines continue to
facilitate consistent and accurate reporting of hospital outpatient
visits in a manner that is resource-based and supportive of appropriate
OPPS payments for the efficient and effective provision of services to
beneficiaries during visits in hospital outpatient settings.
X. Proposed Payment for Partial Hospitalization Services
A. Background
Partial hospitalization is an intensive outpatient program of
psychiatric services provided to patients as an alternative to
inpatient psychiatric care for individuals who have an acute mental
illness. Sections 1861(ff)(1) and (ff)(2) of the Act specify the items
and services that are defined as partial hospitalization services and
the conditions under which Medicare payment for the items and services
will be made. Section 1861(ff)(3) of the Act specifies that a partial
hospitalization program (PHP) is one that is furnished by a hospital or
community mental health center (CMHC) that meets the requirements
specified under that subsection of the Act.
Section 1301(a) of the recently enacted Health Care and Education
Reconciliation Act of 2010 (HCERA 2010) (Pub. L. 111-152, enacted on
March 30, 2010) revised the definition of a CMHC set forth at section
1861(ff)(3)(B) of the Act by adding a provision that the CMHC,
effective on the first day of the first calendar quarter that begins at
least 12 months after the date of enactment (that is, April 1, 2011),
must provide at least 40 percent of its services to individuals who are
not eligible for benefits under Title XVIII of the Act (Medicare).
Section 1301(b) of HCERA 2010 amended the description of a PHP to
specify that the program must be a distinct and organized intensive
ambulatory treatment service offering less than 24-hour daily care
``other than in an individual's home or in an inpatient or residential
setting.'' We discuss our proposal to incorporate these two provisions
of HCERA 2010 in our regulations under section X.C. of this proposed
rule.
Section 1833(t)(1)(B)(i) of the Act provides the Secretary with the
authority to designate the HOPD services to be covered under the OPPS.
The existing Medicare regulations at 42 CFR 419.21 that implement this
provision specify that payments under the OPPS will be made for partial
hospitalization services furnished by CMHCs as well as those services
furnished by hospitals to their outpatients. Section 1833(t)(2)(C) of
the Act requires the Secretary to establish relative payment weights
for covered
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HOPD services (and any APCs) based on median (or mean, at the election
of the Secretary) hospital costs using data on claims from 1996 and
data from the most recent available cost reports. Because a day of care
is the unit that defines the structure and scheduling of partial
hospitalization services, we established a per diem payment methodology
for the PHP APCs, effective for services furnished on or after August
1, 2000 (65 FR 18452 through 18455).
From CY 2003 through CY 2006, the median per diem cost for CMHCs
fluctuated significantly from year to year (from a high of $685 in CY
2003 to a low of $154 in CY 2006), while the median per diem cost for
hospital-based PHPs remained relatively constant ($177-$225). We
believe that CMHCs may have increased and decreased their charges in
response to Medicare payment policies.
Due to these significant fluctuations and declines in CMHC PHP
median per diem costs, in developing the CY 2008 update, we began an
effort to strengthen the PHP benefit through extensive data analysis
and policy and payment changes (72 FR 66670 through 66676).
Specifically, we proposed and finalized two refinements to the
methodology for computing the PHP median. First, we remapped 10 revenue
codes that are common among hospital-based PHP claims to the most
appropriate cost centers. Secondly, we refined our methodology for
calculating PHP per diem costs by computing the median using a per day
methodology. A complete discussion of these refinements can be found in
the CY 2008 OPPS/ASC final rule with comment period (72 FR 66671
through 66672).
In CY 2009, we implemented several regulatory, policy, and payment
changes, including a two-tiered payment approach for PHP services under
which we pay one amount for days with 3 services (APC 0172 (Level I
Partial Hospitalization)) and a higher amount for days with 4 or more
services (APC 0173 (Level II Partial Hospitalization)). We refer
readers to section X.C.2. of the CY 2009 OPPS/ASC final rule with
comment period (73 FR 68688 through 68693) for a full discussion of the
two-tiered payment system. In addition, for CY 2009, we finalized our
policy to deny payment for any PHP claims for days when fewer than 3
units of therapeutic services are provided. As noted in the CY 2009
OPPS/ASC final rule with comment period (73 FR 68694), we believe that
3 services should be the minimum number of services allowed in a PHP
day because a day with 1 or 2 services does not meet the statutory
intent of a PHP. Three services are a minimum threshold that will take
into consideration unforeseen circumstances, such as medical
appointments, while maintaining the integrity of the PHP benefit.
Furthermore, for CY 2009, we revised the regulations at 42 CFR
410.43 to codify existing basic PHP patient eligibility criteria and to
add a reference to current physician certification requirements at 42
CFR 424.24 to conform our regulations to our longstanding policy (73 FR
68694 through 68695). We believe these changes have helped to
strengthen the PHP benefit. We also revised the partial hospitalization
benefit to include several coding updates. We refer readers to section
X.C.2. of the CY 2009 OPPS/ASC final rule with comment period (73 FR
68694 through 68697) for a full discussion of these requirements.
For CY 2010, we retained the two-tiered payment approach for PHP
services and used only hospital-based PHP data in computing the per
diem payment rates. We used only hospital-based PHP data because we
were concerned about further reducing both PHP APC per diem payment
rates without knowing the impact of the policy and payment changes we
made in CY 2009. Because of the 2-year lag between data collection and
rulemaking, the changes we made in CY 2009 are reflected for the first
time in the claims data that we are using to determine proposed payment
rates for this CY 2011 rulemaking.
B. Proposed PHP APC Update for CY 2011
For CY 2011, we used CY 2009 claims data and computed median per
diem costs in the following three categories: (1) All days; (2) days
with 3 services; and (3) days with 4 or more services. These proposed
median per diem costs were computed separately for CMHC PHPs and
hospital-based PHPs and are shown in Table 33 below.
[GRAPHIC] [TIFF OMITTED] TP03AU10.517
Using CY 2009 data and the refined methodology for computing PHP
per diem costs that we adopted in the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66672), we computed a median per diem cost from
all claims for CY 2011 of $132.28. The data indicate that, although
CMHCs provided more days with 4 or more services in CY 2009 than in CY
2008, their median per diem cost for 4 or more services ($123.35) is
substantially lower than the median per diem cost for the same units of
service provided in hospital-based PHPs ($235.58). The median per diem
cost for claims containing 4 or more services for all PHP claims,
regardless of site of service, is $131.56. Medians for claims
containing 3 services is $118.19 for CMHC PHPs, $184.47 for hospital-
based PHPs, and $140.96 for all PHP service claims, regardless of site
of service.
These data, along with data from previous years, show the shift in
cost and utilization for CMHCs and hospital-based PHPs under the two-
tiered
[[Page 46300]]
payment system. Since CY 2009 (using 2007 data), CMHC costs decreased
from $139 in CY 2009 to $118 in CY 2011 for Level I services (3
services) and from $172 in CY 2009 to $123 in CY 2011 for Level II
services (4 or more services). For hospital-based PHPs, costs increased
from $157 in CY 2009 to $184 in CY 2011 for Level I services (3
services) and from $200 in CY 2009 to $236 in CY 2011 for Level II
services (4 or more services). For the past two years, we have based
the PHP APC per diem payment rates on only hospital-based PHP data
because including the CMHC data would have lowered the PHP APC per diem
rates and raised concerns about appropriate payment for PHP services.
Specifically, we were concerned about paying hospital-based PHP
programs a rate that is lower than what their cost structure reflects,
which in turn could lead to hospital-based program closures and
possible access problems. We also were concerned about further reducing
the payment rates without knowing the impact of the policy and payment
changes we made in CY 2009.
Because the CMHC cost data has significantly decreased again this
year, we believe that we can no longer ignore the pattern and continue
to base the PHP payment rates using only hospital-based data. We are
confident that the CY 2009 claims data reflect that CMHCs continue to
have a lower cost structure than hospitals and not the impact of CY
2009 policies. Therefore, we believe that we cannot continue to treat
these two provider types the same in terms of payment, particularly
because their cost differences continue to be so disparate. We also
believe that we need to continue to protect hospital-based PHPs from
receiving inadequate payments, given that they offer the widest access
to PHP services because they are located across the country. We believe
that the results of our analysis of the claims data indicate a need to
establish payment rates for each provider type based on its own unique
cost structures.
Therefore, for CY 2011, we are proposing to compute four separate
PHP APC per diem payment rates, two for CMHC PHPs (for Level I and
Level II services using only CMHC data) and two for hospital-based PHPs
(Level I and Level II services using only hospital-based PHP data).
Creating the proposed four payment rates (two for CMHC PHPs and two for
hospital-based PHPs) would support continued access to the PHP benefit,
including a more intensive level of care, while also providing
appropriate payment based on the unique cost structures of CMHC PHPs
and hospital-based PHPs. We request public comments on our proposal to
provide four separate PHP APC per diem payment rates, two for CMHC PHPs
and two for hospital-based PHPs.
The proposed APCs median per diem costs for PHP services for CY
2011 are as follows:
[GRAPHIC] [TIFF OMITTED] TP03AU10.518
We note that this proposal is consistent with the recommendation by
several commenters in the CY 2010 OPPS/ASC final rule with comment
period that CMS adopt two additional payment rates that are site
specific APCs for PHP services, where the hospital-based PHP APCs for
Level I services (3 services) and Level II services (4 or more
services) would be established using only hospital-based data and the
CMHC PHP APCs for Level I services (3 services) and Level II services
(4 or more services) would be established using only CMHC data (74 FR
60557).
C. Proposed Changes to Regulations To Incorporate Provisions of HCERA
2010
As stated in section X.A. of this proposed rule, section 1301 of
HCERA 2010 made a change to the statutory definition of a CMHC and a
change to the description of what constitutes a PHP. Specifically,
section 1301(a) of HCERA 2010 revised the definition of a CMHC set
forth at section 1861(ff)(3)(B) of the Act by adding a provision to the
existing provisions under which a CMHC, effective on the first day of
the first calendar quarter that begins at least 12 months after the
date of enactment (that is, April 1, 2011), must provide at least 40
percent of its services to individuals who are not eligible for
benefits under Title XVIII of the Act (Medicare). Section 1301(b) of
HCERA 2010 amended the description of a PHP to specify that the program
must be a distinct and organized intensive ambulatory treatment service
offering less than 24-hour daily care ``other than
[[Page 46301]]
in an individual's home or in an inpatient or residential setting.''
Our existing regulations at 42 CFR 410.2 incorporate the statutory
definitions of ``Community mental health center (CMHC)'' and ``Partial
hospitalization services.'' We are proposing to revise the definition
of a CMHC in Sec. 410.2 to include the additional requirement provided
for under the amendment made by section 1301(a) of HCERA 2010. Under
existing Sec. 410.2, we define ``partial hospitalization services'' to
mean ``a distinct and organized intensive ambulatory treatment program
that offers less than 24-hour daily care and furnishes the services
described in Sec. 410.43.'' We are proposing to revise this definition
to incorporate the amendment made by section 1301(b) of HCERA 2010 to
describe partial hospitalization services as a distinct and organized
intensive ambulatory treatment program that offers less than 24-hour
daily care ``other than in an individual's home or in an inpatient
residential setting'' and furnishes the services described in Sec.
410.43.
D. Proposed Separate Threshold for Outlier Payments to CMHCs
In the November 7, 2003 final rule with comment period (68 FR 63469
through 63470), we indicated that, given the difference in PHP charges
between hospitals and CMHCs, we did not believe it was appropriate to
make outlier payments to CMHCs using the outlier percentage target
amount and threshold established for hospitals. Prior to that time,
there was a significant difference in the amount of outlier payments
made to hospitals and CMHCs for PHP services. In addition, further
analysis indicated that using the same OPPS outlier threshold for both
hospitals and CMHCs did not limit outlier payments to high cost cases
and resulted in excessive outlier payments to CMHCs. Therefore,
beginning in CY 2004, we established a separate outlier threshold for
CMHCs. The separate outlier threshold for CMHCs has resulted in more
commensurate outlier payments.
In CY 2004, the separate outlier threshold for CMHCs resulted in
$1.8 million in outlier payments to CMHCs. In CY 2005, the separate
outlier threshold for CMHCs resulted in $0.5 million in outlier
payments to CMHCs. In contrast, in CY 2003, more than $30 million was
paid to CMHCs in outlier payments. We believe this difference in
outlier payments indicates that the separate outlier threshold for
CMHCs has been successful in keeping outlier payments to CMHCs in line
with the percentage of OPPS payments made to CMHCs.
As noted in section II.F. of this proposed rule, we are proposing
to continue our policy of identifying 1.0 percent of the aggregate
total payments under the OPPS for outlier payments for CY 2011. We are
proposing that a portion of that 1.0 percent, an amount equal to 0.04
percent of outlier payments (or 0.0004 percent of total OPPS payments),
would be allocated to CMHCs for PHP outliers. As discussed in section
II.F. of this proposed rule, we are proposing to set a dollar threshold
in addition to an APC multiplier threshold for OPPS outlier payments.
However, because the PHP APC is the only APC for which CMHCs may
receive payment under the OPPS, we would not expect to redirect outlier
payments by imposing a dollar threshold. Therefore, we are not
proposing to set a dollar threshold for CMHC outliers. As noted in
section II.F. of this proposed rule, we are proposing to set the
outlier threshold for CMHCs for CY 2011 at 3.40 times the APC payment
amount and the CY 2011 outlier payment percentage applicable to costs
in excess of the threshold at 50 percent. Specifically, we are
proposing to establish that if a CMHC's cost for partial
hospitalization services, paid under either APC 0172 or APC 0173,
exceeds 3.40 times the payment for APC 0173, the outlier payment would
be calculated as 50 percent of the amount by which the cost exceeds
3.40 times the APC 0173 payment rate.
XI. Proposed Procedures That Will Be Paid Only as Inpatient Procedures
A. Background
Section 1833(t)(1)(B)(i) of the Act gives the Secretary broad
authority to determine the services to be covered and paid for under
the OPPS. Before implementation of the OPPS in August 2000, Medicare
paid reasonable costs for services provided in the HOPD. The claims
submitted were subject to medical review by the fiscal intermediaries
to determine the appropriateness of providing certain services in the
outpatient setting. We did not specify in our regulations those
services that were appropriate to provide only in the inpatient setting
and that, therefore, should be payable only when provided in that
setting.
In the April 7, 2000 final rule with comment period (65 FR 18455),
we identified procedures that are typically provided only in an
inpatient setting and, therefore, would not be paid by Medicare under
the OPPS. These procedures comprise what is referred to as the
``inpatient list.'' The inpatient list specifies those services for
which the hospital will be paid only when provided in the inpatient
setting because of the nature of the procedure, the underlying physical
condition of the patient, or the need for at least 24 hours of
postoperative recovery time or monitoring before the patient can be
safely discharged. As we discussed in that rule and in the November 30,
2001 final rule with comment period (66 FR 59856), we may use any of a
number of criteria we have specified when reviewing procedures to
determine whether or not they should be removed from the inpatient list
and assigned to an APC group for payment under the OPPS when provided
in the hospital outpatient setting. Those criteria include the
following:
Most outpatient departments are equipped to provide the
services to the Medicare population.
The simplest procedure described by the code may be
performed in most outpatient departments.
The procedure is related to codes that we have already
removed from the inpatient list.
In the November 1, 2002 final rule with comment period (67 FR
66741), we added the following criteria for use in reviewing procedures
to determine whether they should be removed from the inpatient list and
assigned to an APC group for payment under the OPPS:
A determination is made that the procedure is being
performed in numerous hospitals on an outpatient basis; or
A determination is made that the procedure can be
appropriately and safely performed in an ASC, and is on the list of
approved ASC procedures or has been proposed by us for addition to the
ASC list.
The list of codes that we are proposing to be paid by Medicare in
CY 2011 only as inpatient procedures is included as Addendum E to this
proposed rule.
B. Proposed Changes to the Inpatient List
For the CY 2011 OPPS, we are proposing to use the same methodology
as described in the November 15, 2004 final rule with comment period
(69 FR 65835) to identify a subset of procedures currently on the
inpatient list that are being performed a significant amount of the
time on an outpatient basis. Using this methodology, we identified
three procedures that met the criteria for potential removal from the
inpatient list. We then clinically reviewed these three potential
procedures for possible
[[Page 46302]]
removal from the inpatient list and found them to be appropriate
candidates for removal from the inpatient list. During the February
2010 meeting of the APC Panel, we solicited the APC Panel's input on
the appropriateness of removing the following three procedures from the
CY 2011 inpatient list: CPT codes 21193 (Reconstruction of mandibular
rami; horizontal, vertical, C, or L osteotomy; without bone graft);
21395 (Open treatment of orbital floor blowout fracture; periorbital
approach with bone graft (includes obtaining graft)); and 25909
(Amputation, forearm, through radius and ulna; reamputation). Following
the discussion at its February 2010 meeting, the APC Panel recommended
that CMS remove from the CY 2011 inpatient list the three CPT codes
that we had identified: CPT codes 21193, 21395, and 25909.
For the CY 2011 OPPS, we are proposing to accept the APC Panel's
recommendations to remove the procedures described by CPT codes 21193,
21395, and 25909 from the inpatient list because we agree with the APC
Panel that the procedures may be appropriately provided as hospital
outpatient procedures for some Medicare beneficiaries. The three
procedures that we are proposing to remove from the inpatient list for
CY 2011 and their CPT codes, long descriptors, and proposed APC
assignments are displayed in Table 36 below.
[GRAPHIC] [TIFF OMITTED] TP03AU10.519
XII. Proposed OPPS Nonrecurring Technical and Policy Changes and
Clarifications
A. Physician Supervision
1. Background
In the CY 2000 OPPS final rule with comment period (65 FR 18524-
18526), we amended our regulations to establish, as a condition of
payment, the requirements for physician supervision of diagnostic and
therapeutic services provided to hospital outpatients incident to a
physician's service. We adopted physician supervision policies as a
condition of payment to ensure that Medicare pays for high quality
hospital outpatient services provided to beneficiaries in a safe and
effective manner and consistent with Medicare requirements. We
clarified and restated the various payment requirements for physician
supervision of therapeutic and diagnostic services through notice and
comment rulemaking in the CY 2009 OPPS/ASC proposed rule and final rule
with comment period (73 FR 41518 through 41519 and 73 FR 68702 through
68704, respectively). In response to concerns about our policy
restatement that were expressed following the publication of the CY
2009 final rule with comment period, we met with stakeholders and
further delineated our physician supervision policies for both
therapeutic and diagnostic services in the CY 2010 OPPS/ASC proposed
rule and final rule with comment period (74 FR 35365 and 74 FR 60679
through 60680, respectively).
While we received and responded to many comments in the course of
the CY 2010 rulemaking, addressing supervision for both diagnostic and
therapeutic services, it was not until after publication of the CY 2010
OPPS/ASC final rule with comment period that we received substantial
comments from the CAH community in response to a technical correction
we made to codify our long standing view that CAHs are subject to the
supervision policy for payment of therapeutic services in the
regulations at 42 CFR 410.27. In addition, the broader hospital
community continues to indicate that it would prefer that we modify the
current supervision policy to permit a lower level of supervision for
therapeutic services.
By way of introduction, we have defined supervision in the hospital
outpatient setting by drawing on the three levels of supervision that
we defined for the physician office setting at Sec. 410.32(b):
general, direct and personal supervision. Over time, we have tailored
these definitions to apply them in the hospital outpatient setting, but
we have maintained the following premises. General supervision means
that a service is furnished under the overall direction and control of
the physician, but his or her physical presence is not required during
the performance of the procedure. Direct supervision means that the
physician is physically present on site and is immediately available to
furnish assistance and direction throughout the performance of the
procedure. However, it does not mean the physician must be present in
the same room when the procedure is being performed. Personal
supervision means the physician is present in the room when the service
is being performed.
a. Outpatient Therapeutic Services
As set forth in the CY 2000 OPPS final rule with comment period
establishing the hospital outpatient prospective payment system, direct
supervision is the standard for supervision of hospital outpatient
therapeutic services covered and paid by Medicare in hospitals and
provider based departments (PBDs) of hospitals. In that rule, we
defined ``direct supervision'' to mean that ``the
[[Page 46303]]
physician must be present and on the premises of the location and
immediately available to furnish assistance and direction throughout
the performance of the procedure. It does not mean that the physician
must be present in the room when the procedure is performed.'' In the
CY 2000 OPPS final rule with comment period, we finalized regulation
text in Sec. 410.27(f) specifying that direct supervision is required
in PBDs of hospitals. In the preamble discussion we emphasized the
importance of the direct supervision requirement for off-campus
provider based departments. We also stated that the language of Sec.
410.27(f) ``applies to services furnished at an entity that is located
off the campus of a hospital that we designate as having provider-based
status as a department of a hospital in accordance with Sec. 413.65.''
We disagreed with commenters that the requirement for direct
supervision in the off campus provider-based hospital department was
more stringent than that required on the hospital campus. We noted that
section 1861(s)(2)(B) of the Act authorizes payment for hospital
services incident to physicians' services furnished to outpatients. We
stated that ``we require that hospital services and supplies furnished
to outpatients that are incident to physician services be furnished on
a physician's order by hospital personnel and under a physician's
supervision'' (65 FR 18525). We further stated that ``we assume the
physician supervision requirement is met on hospital premises because
staff physicians would always be nearby within the hospital.''
In manual guidance, we have clarified that we expect services
incident to physicians' services to be performed under direct
supervision. We provide in Section 20.5.1, Chapter 6, of the Medicare
Benefit Policy Manual (Pub. 100-04) that services and supplies must be
furnished on a physician's order and delivered under supervision.
Section 20.5.1 indicates further that each occasion of a service by a
nonphysician does not need to also be the occasion of the actual
rendition of a personal professional service by the physician
responsible for the care of the patient. Nevertheless, as stipulated in
that same section of the Manual ``during any course of treatment
rendered by auxiliary personnel, the physician must personally see the
patient periodically and sufficiently often enough to assess the course
of treatment and the patient's progress and, where necessary, to change
the treatment regimen.''
In the CY 2009 OPPS/ASC proposed rule and final rule with comment
period, we provided a restatement and clarification of the requirements
for physician supervision of hospital outpatient diagnostic and
therapeutic services that were set forth in the CY 2000 OPPS final rule
with comment period. We chose to restate the existing physician
supervision policy for hospital outpatient therapeutic services in part
because we were concerned that some stakeholders may have misunderstood
our use of the term ``assume'' in the following statement, ``We assume
the physician requirement is met on hospital premises because staff
physicians would always be nearby within the hospital. The effect of
the regulations in this final rule is to extend this assumption to a
department of a hospital that is located on the campus of the
hospital'' (65 FR 18525). We were concerned that stakeholders might
believe that this statement meant that we do not require any
supervision in the hospital or in an on-campus PBD for hospital
outpatient therapeutic services, or that we only require general
supervision for those services.
In our policy restatement in the CY 2009 OPPS/ASC rulemaking, we
reiterated that direct supervision is the standard for physician
supervision, as set forth in the CY 2000 OPPS final rule with comment
period, for supervision of hospital outpatient therapeutic services
covered and paid by Medicare in hospitals and PBDs of hospitals. We
stated clearly that we expect direct physician supervision of all
hospital outpatient therapeutic services, regardless of their on-campus
or off-campus location, but indicated that we would continue to
emphasize the physician supervision requirements in off-campus PBDs as
we did in the CY 2000 OPPS final rule with comment period. We noted
that if there were problems with outpatient care in a hospital or in an
on-campus PBD where direct supervision was not in place (that is, the
expectation of direct supervision was not met), we would consider that
to be a quality concern.
After we published the CY 2009 OPPS/ASC final rule with comment
period, we received significantly more public feedback than during the
rulemaking cycle about our restatement of our supervision policy for
both diagnostic and therapeutic services. We met with stakeholders in
the early part of 2009 as we prepared for the CY 2010 rulemaking cycle,
as well as reviewed all public input that we received, to craft a
response to these concerns regarding the supervision requirements. For
therapeutic services, we considered the concerns of various
stakeholders along with our position that direct supervision for
therapeutic services is appropriate and aligned with the statutory
requirement that Medicare only makes payment for therapeutic services
in the hospital outpatient setting that are ``incident to'' physician
services.
In the CY 2010 OPPS/ASC final rule with comment period, we
finalized our proposal to allow, in addition to clinical psychologists,
certain other nonphysician practitioners to directly supervise services
that they may perform themselves under their State license and scope of
practice and hospital-granted or CAH-granted privileges. The
nonphysician practitioners that were permitted to provide direct
supervision of therapeutic services under the CY 2010 OPPS/ASC final
rule with comment period are physician assistants, nurse practitioners,
clinical nurse specialists, certified nurse-midwives, and licensed
clinical social workers. These nonphysician practitioners may directly
supervise outpatient therapeutic services that they may personally
furnish in accordance with State law and all additional requirements,
including the Medicare coverage rules relating to their services
specified in our regulations at 42 CFR 410.71, 410.73, 410.74, 410.75,
410.76, and 410.77 (for example, requirements for collaboration with,
or general supervision by, a physician). In implementing the new
benefits for pulmonary rehabilitation, cardiac rehabilitation, and
intensive cardiac rehabilitation added by the Medicare Improvements for
Patients and Providers Act of 2008 (MIPPA, Pub. L. 110-275), we
required that direct supervision of services furnished in the hospital
outpatient department must be provided by a doctor of medicine or
osteopathy as required by statute.
For services furnished on a hospital's main campus, we finalized a
modification of our proposed definition of ``direct supervision'' in
new paragraph (a)(1)(iv)(A) of Sec. 410.27 that allows for the
supervisory physician or nonphysician practitioner to be anywhere on
the hospital campus. Therefore, as of CY 2010, direct supervision on
the hospital or CAH campus or in an on-campus PBD means that ``the
supervisory physician or nonphysician practitioner must be present on
the same campus and immediately available to furnish assistance and
direction throughout the performance of the procedure.'' Because the
term ``in the hospital or CAH'' applies broadly to ``incident to''
requirements such as the site-of-service requirement for therapeutic
services provided by the hospital directly and under arrangement, we
also established
[[Page 46304]]
a definition of ``in the hospital'' in new paragraph Sec. 410.27(g) as
meaning areas in the main building(s) of a hospital or CAH that are
under the ownership, financial, and administrative control of the
hospital or CAH; that are operated as part of the hospital; and for
which the hospital bills the services furnished under the hospital's or
CAH's CMS Certification Number (CCN). In the preamble to the CY 2010
OPPS/ASC final rule with comment period, as part of the discussion of
various public comments on the definition of the hospital campus, and
on the supervision requirement specifically, we stated that we would
recognize other areas or structures of the hospital's campus that are
not part of the hospital, such as physician offices, rural health
centers, skilled nursing facilities, or other entities that participate
separately under Medicare to be part of the hospital's campus.
In the CY 2010 OPPS/ASC final rule with comment period, we also
finalized our proposal to add paragraph (a)(1)(iv)(B) to Sec. 410.27.
This paragraph updated our previous regulation at Sec. 410.27(f) to
reflect that, for off-campus PBDs of hospitals, the physician or
nonphysician practitioner must be present in the off-campus PBD, as
defined in Sec. 413.65, and immediately available to furnish
assistance and direction throughout the performance of the procedure.
It does not mean that the physician or nonphysician practitioner must
be in the room when the procedure is performed. In addition, we
finalized the proposed technical change to clarify the language in
Sec. 410.27(f) by removing the phrase ``present and on the premises of
the location'' and replacing it with the phrase ``present in the off-
campus provider-based department.''
Finally, we finalized a technical correction to the title of Sec.
410.27 to read ``Outpatient hospital or CAH services and supplies
incident to a physician service: Conditions,'' to clarify in the title
that the requirements for payment of hospital outpatient therapeutic
services incident to a physician or nonphysician practitioner service
in that section apply to both hospitals and CAHs. Similarly, we
included the phrase ``hospital or CAH'' throughout the text of Sec.
410.27 wherever the text referred only to ``hospital.'' We viewed this
as a technical correction because the statute applies the same
regulations to hospitals and CAHs when appropriate. Specifically, the
definition of ``hospital'' in section 1861(e) of the Act expressly
excludes CAHs ``unless the context otherwise requires.'' Accordingly,
we do not believe it is necessary for a regulation to reference
specifically the applicability to CAHs for those regulations to be
appropriate given the ``context'' for CAHs. Although payment to CAHs is
authorized under section 1834(g) of the Act, many of the payment rules
applicable to hospitals paid under sections 1886(d) and 1833(t) of the
Act apply to CAHs.
We believe that the supervision requirements should apply in the
context of CAHs because they represent appropriate safety and quality
requirements for Medicare payment of outpatient services. In the early
part of this year, the CAH community asserted that the CAH CoPs offer
more flexibility in staffing requirements than the rule requiring
direct supervision, and that the CAH CoPs address the general
availability of physician and nonphysician practitioners on the CAH
campus. The hospital CoPs at 42 CFR 482.22 require hospital medical
staff to be composed of doctors of medicine or osteopathy and, in
accordance with State law, may also be composed of other practitioners
appointed by the governing body. They also require 24 hour nursing
services that are provided by or supervised by a registered nurse.
Under section 1820(c)(2)(B) of the Act, among other criteria, a CAH
must meet the same staffing requirements as would apply under section
1861(e) of the Act to a hospital located in a rural area. However,
there are some exceptions to these staffing requirements. Section
1820(c)(2)(B)(iv) of the Act specifies that the CAH need not meet
hospital staffing requirements under section 1861(e) of the Act
regarding the days and hours in which it is open and fully staffed; the
facility may provide certain services under arrangement at an off-site
location; that inpatient care may be provided by a physician assistant,
nurse practitioner, or clinical nurse specialist subject to the
oversight of a physician, who need not be present in the facility.
The CAH CoPs in 42 CFR 485.631 are specific in recognizing the
statutory authority to be staffed by nonphysician practitioners rather
than physicians, provided a doctor of medicine or osteopathy, nurse
practitioner, clinical nurse specialist, or physician assistant is
available to furnish patient care services at all times the CAH
operates. The requirement that the practitioner ``be available'' in
Sec. 485.631 has been interpreted to mean that the nonphysician
practitioner or physician is available by phone, but not necessarily
physically present on the CAH campus. The CAH CoPs also specify
standards for emergency personnel under Sec. 485.618, requiring that a
doctor of medicine or osteopathy, or a nonphysician practitioner such
as a physician assistant, a nurse practitioner, or a clinical nurse
specialist, with training or experience in emergency care, be on call
and immediately available by telephone or radio contact, and available
on site within 30 minutes, on a 24-hour a day basis in most areas.
However, in the Medicare program, payment requirements are
frequently different from those identified in the CoPs because the two
sets of rules serve very separate and distinct purposes. CoPs apply
largely at the facility level, while payment regulations apply at the
service level. Payment regulations, such as requirements for how
contracted entities providing services to hospital patients, support
program goals of appropriate and accurate payment for quality services.
In contrast, for all providers including CAHs, the CoPs authorize
hospitals to participate in the Medicare program. We establish CoPs as
minimum standards for patient health and safety, and CoPs focus on
creating a foundation to ensure quality and safe care for beneficiaries
throughout a given facility, irrespective of the payment system or
service provided. CoPs do not ensure that payment is appropriate for
specific types of purchased services nor can they substitute for
payment requirements since that is not their function.
In summary, requirements established for purposes of payment
frequently differ from the requirements established by the CoPs for
many providers, including hospitals and CAHs. Whereas payment
regulations establish basic parameters defining the services being
purchased, CoPs (including both the hospital CoPs and the CAH CoPs)
establish standards to ensure a minimum level of quality and safety for
operating as a hospital or a CAH. The minimum standards established as
CoPs are not always adequate to address the particular quality, safety
and other requirements for payment for a service or group of services.
b. Outpatient Diagnostic Services
As we stated in the CY 2009 OPPS/ASC and CY 2000 OPPS proposed
rules and final rules with comment period, section 1861(s)(2)(C) of the
Act authorizes payment for diagnostic services that are furnished to a
hospital outpatient for the purpose of diagnostic study. We have
further defined the requirements for diagnostic services furnished to
hospital outpatients, including requirements for physician supervision
of diagnostic services, in Sec. Sec. 410.28 and 410.32 of our
regulations. For CY 2010, we finalized a proposal to require that all
hospital outpatient
[[Page 46305]]
diagnostic services provided directly or under arrangement, whether
provided in the hospital, in a PBD of a hospital, or at a nonhospital
location, follow the physician supervision requirements for individual
tests as listed in the MPFS Relative Value File in order to receive
payment. The existing definitions of general and personal supervision
as defined in Sec. Sec. 410.32(b)(3)(i) and (b)(3)(iii) also apply.
For services furnished directly or under arrangement in the hospital or
on-campus PBD, ``direct supervision'' means that the physician must be
present on the same campus and immediately available to furnish
assistance and direction throughout the performance of the procedure.
For the purposes of Sec. 410.28, as for the general purposes of Sec.
410.27, the definition of ``in the hospital'' as incorporated in Sec.
410.27(g) applies.
These policies are an extension of the supervision requirements for
outpatient diagnostic tests performed in a provider-based department
that were adopted at the inception of the OPPS in the CY 2000 OPPS
final rule with comment period. The MPFS Relative Value File is updated
quarterly and is available on the CMS Web site at: http://www.cms.gov/PhysicianFeeSched/. For diagnostic services not listed in the MPFS, we
have indicated that Medicare contractors, in consultation with their
medical directors, would define appropriate supervision levels in order
to determine whether claims for these services are reasonable and
necessary.
We note that the current requirement in Sec. Sec. 410.28(e)(1) and
(e)(2) that physician supervision of diagnostic services provided in
the hospital or in any provider-based department follow the levels for
diagnostic services established under the MPFS explicitly applies to
hospitals that are paid pursuant to section 1833(t) of the Act, which
is the statutory authority for the OPPS. Because Medicare makes
payments to CAHs pursuant to section 1834(g) of the Act, at this time,
CAHs are not subject to this supervision requirement.
2. Issues Regarding the Supervision of Hospital Outpatient Services
Raised by Hospitals and Other Stakeholders
Following the adoption of our policies in the CY 2010 OPPS/ASC
final rule with comment period (74 FR 60575 through 60591), beginning
in January 2010, we began to receive a sizable amount of
correspondence, as well as numerous phone calls, and questions through
other public avenues, including the regular open door forum calls, from
the rural hospital and CAH community indicating its belief that the
requirement for direct supervision for therapeutic services finalized
in that rule is at odds with longstanding and prevailing practice in
rural communities. These hospitals and their representatives stated
that they generally function with a reduced level of supervision for
the provision of therapeutic services and that while they furnish
services under a physician's or appropriate nonphysician practitioner's
order, frequently no physician or nonphysician practitioner is
physically present anywhere in the CAH or small rural hospital while
the therapeutic services are being furnished. CAHs, in particular,
noted that the provisions in their CoPs allow a CAH to operate under
the reduced staffing requirements specified above. Specifically, under
the CoPs, CAHs must have a physician or one of several types of
nonphysician practitioners available by phone at all times, but not on
campus, and in most areas of the country, for emergencies, the CAH must
have a physician or certain other nonphysician practitioners with
training or experience in emergency care physically available onsite
within 30 minutes.
Both CAHs and rural hospitals have stated that the flexibility to
allow nonphysician practitioners to supervise services that we
authorized in the CY 2010 OPPS/ASC final rule with comment period is
helpful for meeting the direct supervision requirement for all
therapeutic services, but that a shortage of qualified practitioners in
rural areas continues to make it difficult to staff a physician or
nonphysician practitioner for supervision purposes. They also noted
that a practitioner retained on the campus of a small rural hospital or
CAH to meet supervision requirements may not have other patients or
medical activities to complete. In an urban or large urban hospital, a
practitioner would be able to see other patients or engage in other
activities so long as those activities could be interrupted, such that
they would be immediately available to supervise.
In a series of questions and answers about supervision on the CMS
Web site (http://www.cms.gov/HospitalOutpatientPPS/05_OPPSGuidance.asp#TopOfPage), we provided additional guidance regarding
our regulations about who can supervise services in order to explain to
CAHs and small rural hospitals the flexibility we believe exists within
our requirement for direct supervision. For example, in that document,
we state that we believe the emergency physician or non-physician
practitioner, who would be the most likely practitioners staffing a
small rural hospital or CAH, can directly supervise outpatient services
so long as the emergency physician in the emergency department of the
campus meets the other requirements of direct supervision. That is, the
individual needs to be immediately available, so that, if needed, he or
she could reasonably be interrupted to furnish assistance and direction
in the delivery of therapeutic services provided elsewhere in the
hospital. We believe that most emergency physicians can appropriately
supervise many services within the scope of their knowledge, skills,
licensure, and hospital-granted privileges, including observation
services. With regard to whether an emergency physician or a
nonphysician practitioner could be interrupted, such that the
individual could be immediately available, we have stated that each
hospital would need to assess the level of activity in their emergency
department and determine whether at least one emergency physician or
nonphysician practitioner could be interrupted to furnish assistance
and direction in the treatment of outpatients.
In their correspondence and discussion in public forums, CAHs and
small rural hospitals explicitly have raised concerns about services
that extend after regular operating hours, especially observation
services. They also asserted that direct supervision is not clinically
necessary for some services that have a significant monitoring
component that is typically performed by nursing or other auxiliary
staff typically, including IV hydration, blood transfusions, and
chemotherapy. They stated that their facilities have protocols to
safely deliver all of these services, including chemotherapy, relying
on nursing or other hospital staff to provide the service and having a
physician or non-physician practitioner available by phone to furnish
assistance and direction throughout the duration of the therapeutic
service.
In the early part of this year, small rural hospitals and CAHs
indicated that, regulations notwithstanding, many of them did not have
appropriate staff arrangements to provide the required supervision of
some services, particularly services being provided after hours or
consisting of a significant monitoring component that lasted for an
extended period of time. In response to rising concerns among the rural
community about these rules and the inability of some hospitals to meet
the direct supervision requirement, we issued a statement on March 15,
2010, indicating that we would not enforce the rules for supervision of
hospital outpatient therapeutic procedures
[[Page 46306]]
furnished in CAHs in CY 2010 (http://www.cms.gov/HospitalOutpatientPPS/01_overview.asp#TopOfPage). We also stated that we would proactively
revisit the rules surrounding the supervision of services furnished by
CAHs in the CY 2011 OPPS/ASC proposed rule.
With regard to diagnostic services, unlike supervision of
therapeutic services, we have had only limited dialogue with various
stakeholders about our CY 2010 policy to recognize the supervision
levels for diagnostic services under the MPFS for the provision of
diagnostic services in the hospital. Individual stakeholders have asked
about supervision of specific diagnostic services and have noted that
our requirement that the hospitals follow the supervision levels for
diagnostic services in the hospital identified in the MPFS Relative
Value Unit file has required some modest changes in hospital staffing
practices. We also have received questions requesting clarification
about related supervision requirements for nonphysician practitioners.
We note that adopting the supervision levels defined under the MPFS for
diagnostic services in 42 CFR 410.32 means that nonphysician
practitioners that are not specifically excluded under Sec. 410.32(b)
from the level of supervision required by the MPFS are subject to
supervision by a physician at the level of supervision required by the
diagnostic test. We also discussed in our CY 2010 OPPS/ASC final rule
with comment period that diagnostic X-ray and other diagnostic tests
must be furnished under the appropriate level of supervision by a
physician as defined in section 1861(r) of the Act (74 FR 60588 through
60590).
3. Proposed Policies for Supervision of Outpatient Therapeutic Services
in Hospitals and CAHs
As indicated in our March 15, 2010 statement, we are revisiting the
issue of supervision of outpatient therapeutic services in CAHs to
ensure a robust public discussion about supervision requirements for
payment in hospital outpatient departments, including those located in
rural communities, and CAH outpatient departments. In this proposed
rule, we are proposing modest changes to our supervision policy for
therapeutic services that reflect our continuing commitment to require
direct supervision for the provision of therapeutic services in the
hospital outpatient setting as a requirement for payment. We are
proposing these changes for all hospitals, including CAHs, because we
believe that Medicare should purchase a basic quality of service for
all Medicare beneficiaries. Specifically, we are proposing to identify
a limited set of services with a significant monitoring component that
can extend for a sizable period of time, that are not surgical, and
that typically have a low risk of complication after assessment at the
beginning of the service, as ``nonsurgical extended duration
therapeutic services.'' We are proposing for these services that there
would be a requirement for direct supervision for the initiation of the
service followed by general supervision for the remainder of the
service. We are proposing to adopt the definition of ``general
supervision'' in Sec. 410.32(b)(3)(i), which is the same definition of
general supervision that we already recognize as appropriate for
diagnostic services with a general supervision level requirement under
the MPFS. Finally, at the end of this proposal, we include several
discussion points designed to focus public comments and generate
sufficient detail to assist us in crafting a final policy.
In the CY 2010 OPPS/ASC final rule with comment period, we affirmed
our belief that direct supervision is the appropriate supervision
requirement for therapeutic services provided in the hospital
outpatient setting. In that rule, we finalized a definition of direct
supervision in the hospital or in an on-campus department of the
hospital to mean that the physician or nonphysician practitioner is
present on the same campus and immediately available to furnish
assistance and direction throughout the performance of the procedure
(74 FR 60591).
In considering the significant correspondence from CAHs and rural
communities, as well as public discussion on the issue of supervision
through the open door forum and calls with individual hospitals and
other hospital representatives, we sought to identify some means of
offering flexibility within the supervision requirement to hospitals
and CAHs, while continuing to ensure that Medicare purchases services
delivered with a basic level of quality and safety and also fulfills
the statutory requirement for payment of therapeutic outpatient
services in the hospital that are provided ``incident to'' physician
services. We recognize the concerns of CAHs and rural hospitals that it
could be difficult to staff a physician or nonphysician practitioner on
the campus of the CAH or small rural hospital to supervise services
that have a significant monitoring component and lack an active
component being performed by the physician or nonphysician
practitioner, especially when these services extend into after business
hours or overnight. CAHs and rural hospitals explicitly identified
observation services, IV hydration, chemotherapy, and blood
transfusions as the services that are particularly challenging to
provide under direct supervision. Observation services, in particular,
can extend for a significant period of time. Data from the 85X claims
indicate that most observation care lasts longer than 12 hours and
almost all such care ends within 48 hours, suggesting that observation
care frequently extends after business hours and through the night.
We recognize that any service with an extended duration and a
significant monitoring component could challenge hospitals' ability to
ensure direct supervision, and we decided to concentrate on these
services. We set out to identify services with a significant monitoring
component extending after business hours as identified by the CAHs and
hospitals in rural communities and for which we could offer some
flexibility in meeting the requirement for direct supervision of
therapeutic services without compromising the quality and safety of
services for which Medicare makes payment. One way to provide
flexibility would be to allow a reduced level of supervision for part
of these services. CAHs have already stated that their longstanding
practice has been to provide therapeutic services under general
supervision, which comports with the minimum requirements set forth in
their CoPs to participate in the Medicare program that a physician or
certain nonphysician practitioner must be available by phone but not
physically present on the CAH campus. As defined in Sec.
410.32(b)(3)(i), ``general supervision'' means the procedure is
furnished under the physician's overall direction and control, but the
physician's presence is not required during the performance of the
procedure. We have established a requirement for direct supervision for
all hospital outpatient services in our CY 2000 and CY 2010 rulemaking
processes. However, we reasoned that, for certain extended duration
services, we could adopt a general supervision requirement for some
portion of the service, as long as we believed that such flexibility
would not undermine the quality and safety of purchased services.
Therefore, we are proposing to require, for a limited set of
nonsurgical extended duration therapeutic services, direct supervision
during the initiation of the service followed by general supervision
for the remainder of the service.
We are proposing to define ``initiation of the service'' as the
beginning portion
[[Page 46307]]
of a service ending when the patient is stable and the supervising
physician or appropriate nonphysician practitioner believes the
remainder of the service can be delivered safely under their general
direction and control without their physical presence on the hospital
campus or in the PBD of the hospital. We considered further defining
the term ``stable'' in this definition as there is an established
definition in the EMTALA regulations at section 489.24(b). In those
regulations, ``stabilized'' with respect to an emergency medical
condition means ``that no material deterioration of the condition is
likely, within reasonable medical probability, to result from or occur
during the transfer for the individual from a facility * * *''.
However, this language is set within the context of emergency services,
not hospital outpatient therapeutic services generally, and we have
been clear that supervision is more than emergency response.
Ultimately, we were not certain that this definition would be
appropriate for a payment requirement for supervision of outpatient
therapeutic services.
We also are not proposing to further define the term ``initiation''
or to set time limits on this portion of the service because we believe
that the determination that a patient is sufficiently stable to
transfer from direct supervision to general supervision, and the timing
of that decision, are clinical judgments. Because some of the services
identified for this proposed policy have the potential for shorter
durations, such as an hour, we believe it is best to leave the
determination of when to move from direct to general supervision to the
discretion of the supervising physician or nonphysician practitioner.
However, we are considering whether the point of transfer from direct
supervision to general supervision should be documented in the medical
record or identified in a hospital protocol, and we invite public
comment on how CMS might review the physician or nonphysician
practitioner's decision to move from direct to general supervision to
monitor for proper billing should an adverse event occur.
We considered four criteria when identifying the list of services
to which this new policy of direct supervision during the initiation of
the service followed by general supervision for the remainder of the
service would apply. We first accepted the two criteria identified in
correspondence and discussion with CAHs and rural hospitals, that the
service be of extended duration, frequently extending beyond normal
business hours, and that the service largely consist of a significant
monitoring component typically conducted by nursing or other auxiliary
staff. We added a third criterion that the service must be of
sufficiently low risk, such that the service typically would not
require direct supervision often during the service. We believe this
criterion is appropriate because, as we have previously discussed, our
requirement for direct supervision is grounded in the statutory
``incident to'' payment authority, as well as the need to ensure that
Medicare purchases services that represent a basic level of quality and
safety. We have noted that, unlike an inpatient admission, the
provision of outpatient services lacks certain safeguards such as a
detailed medical history and a plan of care (74 FR 60578 through
60588). Finally, we excluded all surgical services including recovery
time from potential inclusion because, although monitoring of any
patient in recovery is a key component of surgery, it is not the focus
or a substantial component of the service and because we believe the
surgeon should personally evaluate the patient's medical status during
the recovery period.
Using these four criteria, we identified a list of nonsurgical
therapeutic services that have a tendency to last for a long period of
time, that largely consist of monitoring, and that have a low risk that
the physician's physical presence will be needed once the patient is
stable. To identify this list of potential services, we reviewed all
medical services, including the services and procedures specifically
identified by CAHs and rural hospitals in their correspondence and
public discussion. The proposed list of nonsurgical extended duration
therapeutic services appears in Table 37 below. We explicitly did not
include chemotherapy or blood transfusions in our proposed list of
nonsurgical extended duration therapeutic services because we believe
that these services require the physician's or nonphysician
practitioner's recurrent physical presence in order to evaluate the
patient's condition in the event it is necessary to redirect the
service.
We included observation services on the proposed list of
nonsurgical extended duration services. In Section 20.6 of Chapter 2 of
the Medicare Benefit Policy Manual (Pub. 100-02), we define observation
care as ``a well-defined set of specific, clinically appropriate
services, which include ongoing short term treatment, assessment, and
reassessment before a decision can be made regarding whether patients
will require further treatment as hospital inpatients or if they are
able to be discharged from the hospital.'' Therefore, the acuity of
patients receiving observation services and the amount of recurrent
supervisory review that may be necessary for these services can vary
significantly. Observation services can be of low acuity and can have a
low probability that the supervising physician or nonphysician
practitioner's physical presence would be needed to step in and perform
the service or otherwise furnish assistance. We do note in Section
290.5.1 of Chapter 4 of the Medicare Claims Processing Manual (Pub.
100-04) that, for observation services, (a) ``the beneficiary must be
in the care of a physician during the period of observation, as
documented in the medical record by outpatient registration, discharge,
and other appropriate progress notes that are timed, written, and
signed by the physician, and (b) the medical record also must include
documentation that the physician explicitly assessed patient risk to
determine that the beneficiary would benefit from observation
services.'' We would continue to expect hospitals and CAHs to fulfill
these specific requirements associated with observation care, so the
supervising physician or appropriate nonphysician practitioner must
continue to evaluate the patient periodically and include written notes
in the medical record.
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In summary, we are proposing to require direct supervision as
defined in Sec. 410.27(a)(1)(iv) during an initiation period, followed
by a minimum standard of general supervision as defined in Sec.
410.32(b)(3)(i) for the duration of the service, for a limited set of
``nonsurgical extended duration therapeutic services'' identified in
Table 37 above. We are proposing to add a new paragraph (a)(1)(v) to
Sec. 410.27 for this provision. In new Sec. 410.27(a)(1)(v)(A), we
are proposing to define ``nonsurgical extended duration therapeutic
services'' as services that can last a significant period of time, have
a substantial monitoring component, have a low risk of requiring the
physician's or appropriate nonphysician practitioner's physical
presence to furnish assistance and direction after the initiation of
the service, and are not primarily surgical in nature. In new Sec.
410.27(a)(1)(v)(B), we are proposing to define ``initiation of the
service'' as the beginning portion of a service ending when the patient
is stable and the supervising physician or appropriate nonphysician
practitioner believes the remainder of the service can be delivered
safely under his or her general direction and control without needing
his or her physical presence on the hospital campus or in the PBD of
the hospital. We note that in the CY 2010 OPPS/ASC final rule with
comment period, in presenting the regulation text changes for Sec.
410.27, paragraph (a)(2) (relating to PHP services) was inadvertently
deleted from the Code of Federal Regulations. We are proposing to
restore paragraph (a)(2) as it originally appeared in the regulations.
In crafting this proposal, we considered other avenues to offer
flexibility within our requirement for direct supervision. We summarize
below the alternatives we considered in order to focus public comments
and generate sufficient detail to assist us in developing the final
policy. In addition to considering the proposed policy to permit
general supervision after an initial period of direct supervision for a
limited subset of services, we also considered offering hospitals the
flexibility to broaden the list to include chemotherapy and blood
transfusions, which some stakeholders also maintain do not require
direct supervision. Because we were concerned that these services had a
high probability of needing a physician or nonphysician practitioner to
redirect the service, we reasoned that we would have to require
hospitals to create internal guidelines specifying a supervision level
and protocols for staffing that supervision level for every nonsurgical
extended duration therapeutic service. We considered proposing minimum
requirements for these internal supervision guidelines, including
annual review and approval by a governing committee, periodic internal
evaluation of implementation, and the ability to make these guidelines
available to Medicare program auditors if requested. Further, these
guidelines would be reviewed thoroughly by CMS should a quality issue
arise. Given the complexity of services such as chemotherapy and blood
transfusions, and the probability that the physician's or nonphysician
practitioner's physical presence will be required during the service,
we decided to propose a policy to ensure greater safety for these
higher acuity services. We also chose not to pursue this internal
guidelines option because we believed that hospitals would find these
requirements onerous and that the policy would not necessarily provide
the flexibility that CAHs and rural hospitals desire. We are seeking
public comment on whether hospitals agree with our assessment about the
challenge of crafting, maintaining, and implementing internal
guidelines about supervision and whether general supervision is
clinically appropriate and safe for chemotherapy, blood transfusions,
and similar services.
We also considered whether for payment purposes we should
explicitly exclude outpatient CAH services from all supervision
requirements. As discussed above, one of the grounds for applying the
direct supervision requirement to outpatient therapeutic services
furnished in hospitals is that these services are outpatient hospital
services furnished ``incident to'' physicians' services under section
1861(s)(2)(B) of the Act and paid under the OPPS pursuant to section
1833(t) of the Act. In contrast, ``outpatient critical access hospital
services'' are defined under section 1861(mm)(3) of the Act, and CAHs
are reimbursed for outpatient CAH services based on their reasonable
costs pursuant to section 1834(g) of the Act. We believe that
outpatient CAH services are correctly viewed as being furnished
``incident to'' physicians' services. Section 1861(mm)(3) of the Act
defines ``outpatient critical access hospital services'' as ``medical
and other health services furnished by a critical access hospital on an
outpatient basis.'' The term ``medical and other health services'' is
defined at section 1861(s) of the Act as including ``hospital services
* * * incident to physicians' services rendered to outpatients.''
Furthermore, the same considerations regarding the need to ensure that
services furnished to Medicare beneficiaries represent a basic level of
quality and safety that apply to outpatient hospital services are
equally applicable to outpatient CAH services. As a result, we believe
it is appropriate to apply the same supervision requirements to
outpatient therapeutic services furnished in hospitals and CAHs. We
acknowledge that statutory provisions allow CAHs some flexibility in
their staffing requirements to operate with more nursing staff and
nonphysician practitioners rather than physicians if those are the
practitioners that are available, and that our regulations recognize
those reduced staffing requirements in the CoPs by establishing that,
at a minimum, the physician or nonphysician practitioner must be
available, but not necessarily on the CAH campus. Some have suggested,
however, that these regulations which establish only minimal
requirements reduce the quality and safety of CAH services and that
CAHs should be required to disclose their reduced staffing levels to
patients prior to providing services. Accordingly, we have elected not
to propose to exempt CAHs from all direct supervision requirements
because we believe that Medicare should purchase from CAHs services
that are of the same basic level of safety and quality as from other
hospitals, and because we also believe that both small rural hospitals
paid under the OPPS through section 1833(t) of the Act and CAHs paid at
reasonable cost under section 1834(g) of the Act have similar staffing
and resource constraints. In fact, given that CAHs are reimbursed based
on their reasonable costs, we reasoned that CAHs might be better able
to hire staff to provide direct supervision. We welcome public comment
on the topic of exempting CAHs from a direct supervision requirement
for outpatient therapeutic services, including comments in response to
our concerns about making such a proposal.
4. Supervision of Hospital Outpatient Diagnostic Services
We have received limited correspondence and questions on our policy
finalized in the CY 2010 OPPS/ASC final rule with comment period to
adopt for outpatient hospital diagnostic services the physician
supervision levels in Sec. 410.32(b)(3) established under the MPFS and
indicated on the Practice Expense Relative Value Unit file. As
discussed above, the CY 2010 policy applies to hospitals and not to
CAHs. However, we have received questions asking whether nonphysician
[[Page 46310]]
practitioners previously performing diagnostic tests without physician
supervision, within their State scope of practice and hospital-granted
privileges, can continue to perform those tests without physician
supervision. The CY 2010 policy now requires physician supervision of
those services, unless the nonphysician practitioner is specifically
exempted under Sec. 410.32(b)(2) or there is some other provision
addressing supervision for that type of nonphysician practitioner. As
part of a broader proposal addressing clinical nurse-midwives as
defined in Sec. 410.77(b)(2) of the regulations, we are making a
clarifying proposal in the CY 2011 MPFS proposed rule that clinical
nurse-midwives should be excepted from requiring physician supervision
for the diagnostic tests that they are authorized to perform under
applicable State laws. Comments on that proposal should be submitted
through the comment process for that proposed rule (CMS-1503-P).
B. Proposed Payment for Preventive Services
1. Definition of ``Preventive Services''
Section 4104(a) of the Affordable Care Act revised section
1861(ddd) of the Act by adding a new paragraph (3), which defines the
term ``preventive services.'' Preventive services are defined as:
Screening and preventive services currently described in
section 1861(ww)(2) of the Act, except for electrocardiograms described
in section 1861(ww)(2)(M) of the Act;
An initial preventive physical examination (IPPE) as
defined in section 1861(ww) of the Act; and
Personalized prevention plan services (PPPS), also known
as the ``Annual Wellness Visit,'' as defined in section 1861(hhh) of
the Act (which was added by section 4103 of the Affordable Care Act).
The services specified in the definition of ``preventive services''
at section 1861(ddd)(3)(A) of the Act, as cross-referenced to section
1861(ww)(2) of the Act, excluding electrocardiograms, include the
following:
Pneumococcal, influenza, and hepatitis B vaccine and
administration.
Screening mammography.
Screening pap smear and screening pelvic examination.
Prostate cancer screening tests.
Colorectal cancer screening tests.
Diabetes outpatient self-management training (DSMT).
Bone mass measurement.
Screening for glaucoma.
Medical nutrition therapy (MNT) services.
Cardiovascular screening blood tests.
Diabetes screening tests.
Ultrasound screening for abdominal aortic aneurysm (AAA).
Additional preventive services identified for coverage
through the national coverage determination (NCD) process.
We note that currently the only additional preventive service
identified for coverage through the NCD process is HIV testing. A
proposed national coverage determination for smoking cessation services
for asymptomatic patients (CAG-00420N, ``Proposed Coverage Decision
Memorandum for Counseling to Prevent Tobacco Use''), was released in
May 2010 on the CMS Web site at: http://www.cms.gov/mcd/index_list.asp?list_type=nca. We will address the applicability of section
4104 of the Affordable Care Act to these services if an NCD
establishing them as additional preventive services is finalized before
the CY 2011 OPPS/ASC final rule with comment period is issued.
We are specifying our proposals to implement the coverage and
payment provisions for PPPS in the CY 2011 Medicare Physician Fee
Schedule (MPFS) proposed rule. Therefore, public comments on the
proposed coverage of and payment for PPPS under the provisions of the
Affordable Care Act should be submitted in response to the CY 2011 MPFS
proposed rule. The implementing regulations regarding coverage of the
IPPE are already established under existing 42 CFR 410.16 and remain
unchanged by the Affordable Care Act. As discussed below in section
XII.B.2. of this proposed rule, we are presenting our proposals for the
application or waiver of the coinsurance requirements and the
deductible for preventive services as provided for under sections
4104(b) and (c) of the Affordable Care Act.
2. Coinsurance and Deductible for Preventive Services
Sections 4104(b) and 10406 of the Affordable Care Act amended
section 1833(a)(1) of the Act to require 100 percent payment for the
IPPE and for those preventive services recommended by the United States
Preventive Services Task Force (USPSTF) with a grade of A or B for any
indication or population and that are appropriate for the individual.
This requirement waives any coinsurance or copayment that would
otherwise be applicable under section 1833(a)(1) of the Act for those
items and services listed in section 1861(ww)(2) of the Act (excluding
electrocardiograms) to which the USPSTF has given a grade of A or B. In
addition, section 4103(c) of the Affordable Care Act waives the
coinsurance or copayment for the annual wellness visit providing PPPS.
The coinsurance or copayment represents the beneficiary's share of the
payment to the provider or supplier for furnished services. Coinsurance
generally refers to a percentage (for example, 20 percent) of the
Medicare payment rate for which the beneficiary is liable and is
applicable under the MPFS and ASC payment system, while copayment
generally refers to an established amount that the beneficiary must pay
that is not necessarily related to a particular percentage of the
Medicare payment rate, and is applicable under the OPPS. We refer
readers to the CY 2011 MPFS proposed rule for the proposed provisions
related to payment for preventive services, including waiver of the
deductible and copayment, under the MPFS, and to section XV.D.1.d. of
this proposed rule for our proposals to implement the provisions
related to payment for preventive services under the ASC payment
system.
Section 4104(c) of the Affordable Care Act amended section
1833(b)(1) of the Act to waive the Part B deductible for preventive
services described in section 1861(ddd)(3)(A) of the Act that have a
grade of A or B from the USPSTF. In addition, section 4103(c)(4) of the
Affordable Care Act waives the Part B deductible for the annual
wellness visit providing PPPS. These provisions are effective for
services furnished on and after January 1, 2011. We note that section
101(b)(2) of the MIPPA previously amended section 1833(b) of the Act to
waive the deductible for the IPPE, effective January 1, 2009.
Not all preventive services described in paragraph (A) of section
1861(ddd)(3) of the Act are recommended by the USPSTF with a grade of A
or B, and therefore, some of the preventive services do not meet the
criteria in sections 1833(a)(1) and 1833(b)(1) of the Act for the
waiver of deductible and coinsurance. However, the changes made by
section 4104 of the Affordable Care Act do not affect most of the pre-
existing specific provisions listed in existing Sec. 410.160(b) and
Sec. 410.152 of the regulations (which reflect the provisions found in
sections 1833(a) and 1833(b) of the Act) that waive the deductible and
coinsurance for specific services. For example, section 1833(a)(1)(D)
of the Act waives the coinsurance and section 1833(b)(3) of the Act
waives the deductible for clinical laboratory tests (including those
furnished for screening purposes).
[[Page 46311]]
Section 4104 of the Affordable Care Act does not change this provision
and the waiver for both the deductible and coinsurance remains in place
for all laboratory tests, regardless of whether the particular clinical
laboratory test meets the criteria of section 4104 for waiver of
deductible and coinsurance as a preventive service.
The following preventive services listed in section 1833(ddd)(3)(A)
of the Act are not recommended by the USPSTF with a grade of A or B for
any indication or population: digital rectal examination provided as a
prostate cancer screening service; glaucoma screening; diabetes
outpatient self-management training; and barium enema provided as a
colorectal cancer screening service.
Specifically, HCPCS code G0102 (Prostate cancer screening; digital
rectal exam), which does not have a grade of A or B from the USPSTF for
any indication or population, will continue to be subject to the
deductible and coinsurance. However, the deductible and coinsurance for
HCPCS code G0103 (Prostate cancer screening; prostate specific antigen
test (PSA)) will continue to be waived under section 1833(a)(1)(D) of
the Act as a clinical laboratory test, even though it also does not
have a grade of A or B from the USPSTF.
Glaucoma screening services, described by HCPCS codes G0117
(Glaucoma screening for high risk patients furnished by an optometrist
or ophthalmologist) and G0118 (Glaucoma screening for high risk patient
furnished under the direct supervision of an optometrist or
ophthalmologist), will continue to be subject to the deductible and
coinsurance requirements because these services are not recommended
with a grade of A or B by the USPSTF for any indication or population.
Similarly, diabetes outpatient self-management training is currently
not rated by the USPSTF; therefore, the deductible and coinsurance
requirements will continue to apply.
Barium enemas provided as colorectal cancer screening tests,
described by HCPCS codes G0106 (Colorectal cancer screening;
alternative to G0104, screening sigmoidoscopy, barium enema) and G0120
(Colorectal cancer screening; alternative to G0105, screening
colonoscopy, barium enema) do not have a grade of A or B from the
USPSTF for any indication or population. However, the deductible does
not apply to barium enemas provided as colorectal cancer screening
tests, because colorectal cancer screening tests are explicitly
excluded from the deductible under section 1833(b)(8) of the Act.
However, there is no specific exclusion of barium enemas from the
coinsurance requirement at section 1833(b)(1) of the Act. Therefore,
this requirement, as applicable, continues to apply to barium enemas.
We note that the USPSTF has given a grade of A to colonoscopy, flexible
sigmoidoscopy, and fecal occult blood screening tests, and that, as a
result, these services qualify for the statutory waiver of both the
deductible and coinsurance.
We also note that the USPSTF ceased to make recommendations with
regard to vaccines and vaccine administration after CY 1996, so as not
to conflict with the recommendations of the CDC's Advisory Committee on
Immunization Practices. However, the USPSTF's most recent vaccine
recommendations, which were never withdrawn by the USPSTF, gave a grade
of B to the influenza and pneumococcal vaccines and their
administration and a grade of A to the hepatitis B vaccine and its
administration. While sections 1833(a)(1) and 1833(b)(1) of the Act
require that the preventive services receive a grade of A or B from the
USPSTF for the coinsurance and deductible to be waived, the statute
does not specify that the recommended grade must be furnished within
any given timeframe. The USPSTF grades for these preventive services
are the most current USPSTF grade and have never been withdrawn.
Therefore, we believe that these preventive services meet the
requirements of the statute for the waiver of the deductible and
coinsurance. We also note that the CDC's Advisory Committee on
Immunization Practices currently recommends influenza, pneumococcal,
and hepatitis B vaccines.
Table 38 below displays the HCPCS codes (paid under the OPPS or at
reasonable cost) that we are proposing as ``preventive services'' under
section 1861(ddd)(3)(A) of the Act. Table 38 also provides the most
recent USPSTF grade, if any, that is the basis for our proposed policy
with regard to waiver of the deductible and coinsurance, as applicable.
In developing recommendations regarding preventive services, we
recognize that the USPSTF may make recommendations that are specific to
an indication or population, at times including characteristics such as
gender and age in its recommendations. While we are proposing to waive
the deductible and coinsurance for any Medicare covered preventive
service recommended with a grade of A or B for any indication or
population, with no limits on the indication or population as long as
the USPSTF has recommended the preventive service for at least one
indication and/or population with a grade of A or B, we note that all
existing Medicare coverage policies for such services, including any
limitations based on indication or population, continue to apply. In
some cases, national coverage policies may currently limit Medicare
coverage based on the indication or population, consistent with the
USPSTF recommendations with a grade of A or B for the indication or
population. In other cases where Medicare does not explicitly noncover
preventive services for a specific population or indication, we would
expect that, particularly in those cases where the USPSTF
recommendation grade is a D (that is, the USPTF recommends against the
service because there is moderate or high certainty that the service
has no net benefit or that the harms outweigh the benefits),
practitioners would only order those preventive services that are
clinically appropriate for the beneficiary. If we have future concerns
about the appropriateness of preventive services for an indication or
population in light of the USPSTF's recommendations, we may consider
using our authority under section 1834(n)(1) of the Act (as added by
section 4105 of the Affordable Care Act) to modify Medicare coverage of
any preventive service consistent with the recommendations of the
USPSTF.
We note that section 4103(c)(3)(A) of the Affordable Care Act
excludes the PPPS from payment under the OPPS and establishes payment
for the PPPS when performed in a hospital outpatient department under
the MPFS. In this OPPS/ASC proposed rule, we are proposing to add a new
Sec. 419.22(t) to the regulations to specify that the PPPS is excluded
from payment under the OPPS. In the process of revising the regulations
to reflect the exclusion of PPPS from the OPPS, we noticed the need for
existing Sec. 419.21(e) to be updated to reflect that an IPPE may be
performed within 12 months after the date of the individual's initial
enrollment in Part B effective January 1, 2009. We also noticed that
existing Sec. 419.22(m) of the regulations should be updated to
reflect that a revised payment methodology for end-stage renal disease
(ESRD) services will go into effect on January 1, 2011. Therefore, we
also are proposing to revise Sec. Sec. 419.21(e) and 419.22(m). We
refer readers to the CY 2011 MPFS proposed rule for a discussion of the
proposed changes to Sec. 410.160(b) and Sec. 410.152 of the
regulations to implement the provisions related to the
[[Page 46312]]
definition of preventive services and the waiver of the coinsurance and
deductible for preventive services as specified by sections 4103 and
4104 of the Affordable Care Act.
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3. Extension of Waiver of Deductible to Services Furnished in
Connection With or in Relation to a Colorectal Cancer Screening Test
That Becomes Diagnostic or Therapeutic
Section 4104(c) of the Affordable Care Act amended section 1833(b)
of the Act to waive the Part B deductible for colorectal cancer
screening tests that become diagnostic. Specifically, section
4104(c)(2) of the Affordable Care Act waives the deductible with
respect to a colorectal cancer screening test regardless of the code
that is billed for the establishment of a diagnosis as a result of the
test, or for the removal of tissue or other matter or other procedure
that is furnished in connection with, as a result of, and in the same
clinical encounter as a screening test.
We are proposing that all surgical services furnished on the same
date as a planned screening colonoscopy, planned flexible
sigmoidoscopy, or barium enema be viewed as being furnished in
connection with, as a result of, and in the same clinical encounter as
the screening test. We believe that this interpretation is appropriate
because we believe that it would be very rare for an unrelated surgery
to occur on the same date as one of these scheduled screening tests.
Moreover, we believe that the risk of improper expenditures would be
very small under this policy because it is the deductible, and not the
coinsurance, that is waived for the related procedures other than the
screening tests. In the event of a legislative change to this policy
(for example, a statutory change that would waive the coinsurance for
these related services in addition to the deductible), we would
reassess the appropriateness of this proposed definition of services
that are furnished in connection with, as a result of, and in the same
clinical encounter as the colorectal cancer screening test that becomes
diagnostic. We also note that the annual deductible would likely be met
when any surgical procedure (related or not) is performed on the same
day as the scheduled screening test.
We are proposing to implement this provision by creating a HCPCS
modifier that providers would append to the diagnostic procedure code
that is reported instead of the screening colonoscopy or screening
flexible sigmoidoscopy HCPCS code or as a result of the barium enema
when the screening test becomes a diagnostic service. The claims
processing system would respond to the modifier by waiving the
deductible for all surgical services on the same date as the diagnostic
test. Coinsurance or copayment would continue to apply to the
diagnostic test and to other services furnished in connection with, as
a result of, and in the same clinical encounter as the screening test.
C. Payment for Pulmonary Rehabilitation, Cardiac Rehabilitation, and
Intensive Cardiac Rehabilitation Services Furnished to Hospital
Outpatients
In the CY 2010 OPPS/ASC final rule with comment period (74 FR 60566
through 60574), we addressed the provisions of section 144(a) of the
Medicare Improvements for Patients and Providers Act (MIPPA, Pub. L.
110-275). Section 144(a) provided for Medicare Part B coverage and
payment for pulmonary and cardiac rehabilitation services furnished to
beneficiaries with chronic obstructive pulmonary disease and certain
other conditions, effective January 1, 2010. Medicare Part B coverage
is provided for items and services under a cardiac rehabilitation (CR)
program, a pulmonary rehabilitation (PR) program, and an intensive
cardiac rehabilitation (ICR) program furnished in a physician's office,
a hospital on an outpatient basis, or in other settings as the
Secretary determines appropriate. We have received questions as to
whether a CAH outpatient department is a covered setting for services
furnished under these programs because the amendments made to the Act
by section 144(a) of the MMA do not specifically define CAHs as
hospitals for this benefit.
In this proposed rule, we are clarifying that a CAH outpatient
department is considered a covered setting for PR, CR and ICR programs,
provided that the programs meet all of the regulatory requirements,
including, but not limited to, direct supervision of all services by a
physician, specified in 42 CFR 410.27(a)(1)(iv)(A) and
410.47(a)(2)(ii). We can establish that CAHs are a covered setting
because the law and implementing regulations specify that PR, CR and
ICR services are covered in the hospital outpatient setting, and we
define a hospital outpatient in the regulations and program
instructions as ``a person * * * who * * * receives services * * *
directly from the hospital or CAH'' (42 CFR 410.2 and the Medicare
Benefit Policy Manual, Chapter 6, Section 20.2, available at the CMS
Web site at: http://www.cms.gov/manuals/Downloads/bp102c06.pdf). We
also note that under section 1861(e) of the Act, the context of the
term ``hospital'' as used in the coverage provisions for PR, CR and ICR
reflects the inclusion of CAHs.
D. Expansion of Multiple Procedure Reduction Under the Medicare
Physician Fee Schedule (MPFS) to Therapy Services
Hospitals are paid for outpatient physical therapy (which includes
speech language pathology services) and outpatient occupational therapy
under the Medicare Physician Fee Schedule (MPFS). Outpatient physical
therapy (which includes speech language pathology services) and
outpatient occupational therapy services, as described in section
1833(a)(8) of the Act, are excluded from the OPPS by section
1833(t)(1)(B)(iv) of the Act. Section 1833(a)(8) of the Act provides
that outpatient physical and occupational therapy are to be paid as
provided in section 1834(k)of the Act. Section 1834(k)(3) of the Act
specifies that these services are paid under the fee schedule
established under section 1848 of the Act and section 1848 of the Act
establishes payment under the MPFS.
For CY 2011, we are proposing to revise the MPFS to apply a
multiple procedure reduction to payment for all outpatient physical and
occupational therapy services paid under the MPFS. This proposal is
contained in the CY 2011 MPFS proposed rule (CMS-1503-P, Medicare
Program; Payment Policies under the Physician Fee Schedule and Other
Revisions to Part B for CY 2011). To be considered in the development
of the final policy for CY 2011, public comments on this issue should
be submitted in response to the CY 2011 MPFS proposed rule.
XIII. Proposed OPPS Payment Status and Comment Indicators
A. Proposed OPPS Payment Status Indicator Definitions
Payment status indicators (SIs) that we assign to HCPCS codes and
APCs play an important role in determining payment for services under
the OPPS. They indicate whether a service represented by a HCPCS code
is payable under the OPPS or another payment system and also whether
particular OPPS policies apply to the code. Our proposed CY 2011 status
indicator assignments for APCs and HCPCS codes are shown in Addendum A
and Addendum B, respectively, to this proposed rule.
For CY 2011, we are not proposing to make any changes to the status
indicators that were listed in Addendum D1 of the CY 2010 OPPS/ASC
final rule with comment period.
[[Page 46318]]
These status indicators are listed in the tables under sections
XIII.A.1., 2., 3., and 4. of this proposed rule.
1. Proposed Payment Status Indicators To Designate Services That Are
Paid Under the OPPS
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Section 142 of Public Law 110-275 (MIPPA) required CMS to pay for
therapeutic radiopharmaceuticals for the period of July 1, 2008,
through December 31, 2009, at hospitals' charges adjusted to the costs.
The status indicator ``H'' was assigned to therapeutic
radiopharmaceuticals to indicate that an item was paid at charges
adjusted to cost during CY 2009. In the CY 2010 OPPS/ASC final rule
with comment period (74 FR 60593), we changed our policy to pay
prospectively and separately for therapeutic radiopharmaceuticals with
average per day costs greater than the CY 2010 drug packaging threshold
of $65 under the OPPS. Therefore, we changed the status indicator for
HCPCS codes used to report separately payable therapeutic
radiopharmaceuticals from ``H'' to ``K,'' which indicated that an item
is separately paid under the OPPS at the APC payment rate established
for the item. We refer readers to section V.B.5. of the CY 2010 OPPS/
ASC final rule with comment period for discussion of the final CY 2010
changes to our payment policy for therapeutic radiopharmaceuticals (74
FR 60593). For CY 2011 OPPS, we are proposing to continue to pay for
therapeutic radiopharmaceuticals under the OPPS at the APC payment rate
established for the item. (We refer readers to our discussion of this
proposal for payment of therapeutic radiopharmaceuticals in section
V.B.3. of this proposed rule.)
For CY 2010, we established a policy to consider implantable
biologicals that are not on pass-through status as a biological before
January 1, 2010, as devices for pass-through evaluation and payment
beginning in CY 2010. Therefore, pass-through implantable biologicals
were assigned a status indicator of ``H,'' while nonpass-through
implantable biologicals were assigned a status indicator of ``N''
beginning in CY 2010. Those implantable biologicals that have been
granted pass-through status under the drug and biological criteria
prior to January 1, 2010, continued to be assigned a status indicator
of ``G'' until they are proposed for expiration from pass-through
status during our annual rulemaking cycle. In the CY 2010 OPPS/ASC
final rule with comment period (74 FR 60593), we assigned status
indicator ``K'' to nonimplantable biologicals and adjusted the
definition of status indicator ``K'' accordingly. For CY 2011, we are
not proposing any changes to current policy. We discuss our proposed
treatment of drugs, biologicals, and radiopharmaceuticals with new or
[[Page 46320]]
continuing pass-through status in CY 2011 in section V.A.3. of this
proposed rule, and we discuss our proposed treatment of drugs and
biologicals with expiring pass-through status in CY 2010 including the
specific implantable biologicals to which this policy is proposed to
apply for CY 2011 OPPS in section V.A.2. of this proposed rule.
The proposed CY 2011 status indicators are displayed in both the
table above and in Addendum D1 to this proposed rule.
2. Proposed Payment Status Indicators To Designate Services That Are
Paid Under a Payment System Other Than the OPPS
We are not proposing any changes to the status indicators listed
below for the CY 2011 OPPS.
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The proposed CY 2011 status indicators displayed in the table above
are also displayed in Addendum D1 to this proposed rule.
3. Proposed Payment Status Indicators To Designate Services That Are
Not Recognized Under the OPPS But That May Be Recognized by Other
Institutional Providers
We are not proposing any changes to the status indicators listed
below for the CY 2011 OPPS.
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The proposed status indicators are also displayed in Addendum D1 to
this proposed rule.
4. Proposed Payment Status Indicators To Designate Services That Are
Not Payable by Medicare on Outpatient Claims
We are not proposing any changes to the payment status indicators
listed below for the CY 2011 OPPS.
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Addendum B, with a complete listing of HCPCS codes including
proposed payment status indicators for each code and proposed APC
assignments for CY 2011, is available electronically on the CMS Web
site under supporting documentation for this proposed rule at: http://www.cms.hhs.gov/HospitalOutpatientPPS/HORD/list.asp#TopOfPage.
B. Proposed Comment Indicator Definitions
For the CY 2011 OPPS, we are proposing to use the same two comment
indicators that are in effect for the CY 2010 OPPS.
``CH''--Active HCPCS codes in current and next calendar
year; status indicator and/or APC assignment have changed or active
HCPCS code that will be discontinued at the end of the current calendar
year.
``NI''--New code for the next calendar year or existing
code with substantial revision to its code descriptor in the next
calendar year as compared to current calendar year, interim APC
assignment; comments will be accepted on the interim APC assignment for
the new code.
We are using the ``CH'' indicator in this proposed rule to call
attention to proposed changes in the payment status indicator and/or
APC assignment for HCPCS codes for CY 2011 compared to their assignment
as of June 30, 2010. We believe that using the ``CH'' indicator in this
proposed rule will help facilitate the public's review of the changes
that we are proposing for CY 2011. The use of the comment indicator
``CH'' in association with a composite APC indicates that we have
proposed a
[[Page 46322]]
change to the configuration of the composite APC in this proposed rule.
We are proposing to use the ``CH'' comment indicator in the CY 2011
OPPS/ASC final rule with comment period to indicate HCPCS codes for
which the status indicator or APC assignment, or both, would change in
CY 2011 compared to their assignment as of December 31, 2010.
We are not proposing any changes to our policy regarding the use of
comment indicator ``NI.'' In our CY 2010 OPPS/ASC final rule with
comment period, we expanded the definition of comment indicator ``NI''
to include an existing code with a substantial revision to its code
descriptor in the next calendar year as compared to the current
calendar year to indicate that the code's CY 2010 OPPS treatment was
open to public comment on the CY 2010 OPPS/ASC final rule with comment
period.
In the CY 2010 OPPS/ASC final rule with comment period, there are
numerous instances in which the descriptor of a previously existing
Category I CPT code was substantially revised for the next calendar
year so that it described a new service or procedure that could have
been assigned a new code number by the CPT Editorial Panel and that new
code number would then had been assigned the ``NI'' comment indicator.
We anticipate that, for CY 2011, not all new services or procedures
will be assigned a new CPT code number, but instead will be described
by an existing CPT code number with a substantially revised code
descriptor. We are proposing to continue to assign the comment
indicator ``NI'' to these codes in order to allow for comment on our
proposed payment for these substantially revised codes. Like all codes
labeled with comment indicator ``NI,'' in a final rule, we will respond
to public comments and finalize their OPPS treatment in the CY 2012
OPPS/ASC final rule with comment period. In accordance with our usual
practice, CPT and Level II HCPCS code numbers that are new for CY 2011
will also be labeled with comment indicator ``NI'' in Addendum B to the
CY 2011 OPPS/ASC final rule with comment period.
Only HCPCS codes with comment indicator ``NI'' in the CY 2011 OPPS/
ASC final rule with comment period will be subject to comment. HCPCS
codes that do not appear with comment indicator ``NI'' in the CY 2011
OPPS/ASC final rule with comment period will not be open to public
comment, unless we specifically have requested additional comments
elsewhere in the final rule with comment period. The CY 2011 treatment
of HCPCS codes that appears in the CY 2011 OPPS/ASC final rule with
comment period to which comment indicator ``NI'' is not appended will
be open to public comment during the comment period for this proposed
rule, and we will respond to those comments in the final rule with
comment period.
We are not proposing any changes to the definitions of the OPPS
comment indicators for CY 2011. Their proposed definitions are listed
in Addendum D2 to this proposed rule.
XIV. OPPS Policy and Payment Recommendations
A. MedPAC Recommendations
MedPAC was established under section 1805 of the Act to advise the
U.S. Congress on issues affecting the Medicare program. As required
under the statute, MedPAC submits reports to Congress not later than
March and June of each year that contain its Medicare payment policy
recommendations. This section describes recent recommendations relevant
to the OPPS that have been made by MedPAC.
The March 2010 MedPAC ``Report to Congress: Medicare Payment
Policy'' included the following recommendation relating specifically to
the Medicare hospital OPPS:
Recommendation 2A-1: The Congress should increase payment rates for
the acute inpatient and outpatient prospective payment systems in 2011
by the projected rate of increase in the hospital market basket index,
concurrent with implementation of a quality incentive payment program.
CMS Response: Subsequent to the issuance of the MedPAC report,
Congress enacted the Affordable Care Act. Section 1833(t)(3)(F) as
added by section 3401 of the Affordable Care Act and as amended by
section 10319 of the Affordable Care Act and section 1105 of the HCERA
provides that after determining the OPD fee schedule increase factor,
the Secretary shall reduce such increase factor by 0.25 percentage
point in 2011. As discussed in section II.B. of this proposed rule, we
are proposing to increase the full CY 2011 conversion factor by the
projected rate of increase in the hospital market basket less the
mandated 0.25 percentage point reduction. Simultaneously, we are
proposing for CY 2011 to reduce the annual update factor by 2.0
percentage points for hospitals that are defined under section
1886(d)(1)(B) of the Act and that do not meet the hospital outpatient
quality data reporting required by section 1833(t)(17) of the Act. We
would make this adjustment after the application of the 0.25 percentage
point reduction. For the adjustment under section 1833(t)(17) of the
Act, we are proposing to calculate two conversion factors: a full
conversion factor based on the annual update factor, adjusted by the
0.25 percentage point reduction required by the Affordable Care Act for
CY 2011; and a reduced conversion factor that reflects the 2.0
percentage points reduction to the annual update factor, as adjusted by
the 0.25 percentage point reduction. CMS implemented the Hospital
Outpatient Quality Data Reporting Program (HOP QDRP) in CY 2008 and is
proposing to continue this program in CY 2011 (as discussed in section
XVI. of this proposed rule).
The full March 2010 MedPAC report can be downloaded from MedPAC's
Web site at: http://www.medpac.gov/documents/Mar10_EntireReport.pdf.
B. APC Panel Recommendations
Recommendations made by the APC Panel at its February 2010 meeting
are discussed in the sections of this proposed rule that correspond to
topics addressed by the APC Panel. The report and recommendations from
the APC Panel's February 17-18, 2010 meeting are available on the CMS
Web site at: http://www.cms.gov/FACA/05_AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp.
C. OIG Recommendations
The mission of the Office of the Inspector General (OIG), as
mandated by Public Law 95-452, as amended, is to protect the integrity
of the U.S. Department of Health and Human Services (HHS) programs, as
well as the health and welfare of beneficiaries served by those
programs. This statutory mission is carried out through a nationwide
network of audits, investigations, and inspections. As of the
publication of the proposed rule, there were no OIG reports that
resulted in OIG recommendations for OPPS policy changes for CY 2011.
XV. Proposed Updates to the Ambulatory Surgical Center (ASC) Payment
System
A. Background
1. Legislative Authority for the ASC Payment System
Section 1832(a)(2)(F)(i) of the Act provides that benefits under
Medicare Part B include payment for facility services furnished in
connection with surgical procedures specified by the Secretary that are
performed in an Ambulatory Surgical Center (ASC). To participate in the
Medicare program as an ASC, a facility must meet the standards
specified in section
[[Page 46323]]
1832(a)(2)(F)(i) of the Act, which are set forth in 42 CFR part 416,
Subpart B and Subpart C of our regulations. The regulations at 42 CFR
part 416, Subpart B describe the general conditions and requirements
for ASCs, and the regulations at Subpart C explain the specific
conditions for coverage for ASCs.
Section 141(b) of the Social Security Act Amendments of 1994,
Public Law 103-432, required establishment of a process for reviewing
the appropriateness of the payment amount provided under section
1833(i)(2)(A)(iii) of the Act for intraocular lenses (IOLs) that belong
to a class of new technology intraocular lenses (NTIOLs). That process
was the subject of a final rule entitled ``Adjustment in Payment
Amounts for New Technology Intraocular Lenses Furnished by Ambulatory
Surgical Centers,'' published on June 16, 1999, in the Federal Register
(64 FR 32198).
Section 626(b) of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA), Public Law 108-173, added subparagraph
(D) to section 1833(i)(2) of the Act, which required the Secretary to
implement a revised ASC payment system to be effective not later than
January 1, 2008. Section 626(c) of the MMA amended section 1833(a)(1)
of the Act by adding new subparagraph (G), which requires that,
beginning with implementation of the revised ASC payment system,
payment for surgical procedures furnished in ASCs shall be 80 percent
of the lesser of the actual charge for the services or the amount
determined by the Secretary under the revised payment system.
Section 5103 of the Deficit Reduction Act of 2005 (DRA), Public Law
109-171, amended section 1833(i)(2) of the Act by adding new
subparagraph (E) to place a limitation on payment amounts for surgical
procedures furnished in ASCs on or after January 1, 2007, but before
the effective date of the revised ASC payment system (that is, January
1, 2008). Section 1833(i)(2)(E) of the Act provides that if the
standard overhead amount under section 1833(i)(2)(A) of the Act for an
ASC facility service for such surgical procedures, without application
of any geographic adjustment, exceeds the Medicare payment amount under
the hospital OPPS for the service for that year, without application of
any geographic adjustment, the Secretary shall substitute the OPPS
payment amount for the ASC standard overhead amount.
Section 109(b) of the Medicare Improvements and Extension Act of
2006 of the Tax Relief and Health Care Act of 2006 (MIEA-TRHCA), Public
Law 109-432, amended section 1833(i)(2)(D) of the Act, in part, by
redesignating clause (iv) as clause (v) and adding a new clause (iv)
and by adding new section 1833(i)(7)(A). These amendments provide the
Secretary the authority to require ASCs to submit data on quality
measures and to reduce the annual update by 2 percentage points for an
ASC that fails to submit data as required by the Secretary on selected
quality measures. Section 109(b) of the MIEA-TRHCA also amended section
1833(i) of the Act by adding new section 1833(i)(7)(B), which requires
that, to the extent the Secretary establishes such an ASC quality
reporting program, certain quality of care reporting requirements
mandated for hospitals paid under the OPPS, under sections
1833(t)(17)(B), (C), (D) and (E) of the Act, as added by section 109(a)
of the MIEA-TRHCA, be applied in a similar manner to ASCs unless
otherwise specified by the Secretary.
Sections 4104 and 10406 of the Affordable Care Act amend sections
1833(a)(1) and (b)(1) of the Act to waive the coinsurance and the Part
B deductible for those preventive services described in section
1861(ww)(2) of the Act (excluding electrocardiograms) that are
recommended by the United States Preventive Services Task Force
(USPSTF) with a grade of A or B for any indication or population and
that are appropriate for the individual. Section 4104(c) of the
Affordable Care Act amends section 1833(b)(1) of the Act to waive the
Part B deductible for colorectal cancer screening tests that become
diagnostic. These provisions apply to these items and services
furnished in an ASC on or after January 1, 2011.
Section 3401(k) of the Affordable Care Act amends section
1833(i)(2)(D) of the Act to require that, effective for CY 2011 and
subsequent years, any annual update under the ASC payment system be
reduced by a productivity adjustment, which is equal to the 10-year
moving average of changes in annual economy-wide private nonfarm
business multi-factor productivity (as projected by the Secretary for
the 10-year period ending with the applicable fiscal year, year, cost
reporting period, or other annual period). Application of this
productivity adjustment to the ASC payment system may result in the
update to the ASC payment system being less than zero for a year and
may result in payment rates under the ASC payment system for a year
being less than such payment rates for the preceding year.
For a detailed discussion of the legislative history related to
ASCs, we refer readers to the June 12, 1998 proposed rule (63 FR 32291
through 32292).
2. Prior Rulemaking
On August 2, 2007, we published in the Federal Register (72 FR
42470) the final rule for the revised ASC payment system, effective
January 1, 2008 (the ``August 2, 2007 final rule''). In that final
rule, we revised our criteria for identifying surgical procedures that
are eligible for Medicare payment when furnished in ASCs and adopted
the method we would use to set payment rates for ASC covered surgical
procedures and covered ancillary services furnished in association with
those covered surgical procedures beginning in CY 2008. We also
established a policy for treating new and revised HCPCS and CPT codes
under the ASC payment system. This policy is consistent with the OPPS
to the extent possible (72 FR 42533). Additionally, we established a
standard ASC ratesetting methodology that bases payment for most
services on the list of ASC covered surgical procedures on the OPPS
relative payment weight multiplied by an ASC conversion factor. We also
established modifications to this methodology for subsets of services,
such as device-intensive services (where the estimated device portion
of the ASC payment is the same as that paid under the OPPS) and
services that are predominantly performed in the office setting and
covered ancillary radiology services (where ASC payment may be based on
the MPFS non-facility practice expense (PE) Relative Value Units
(RVUs)). Additionally, we established a policy for updating the
conversion factor, the relative payment weights, and the ASC payment
rates on an annual basis. We also annually update the list of
procedures for which Medicare would not make an ASC payment.
In the CY 2008 OPPS/ASC final rule with comment period (72 FR
66827), we updated and finalized the CY 2008 ASC rates and lists of
covered surgical procedures and covered ancillary services. We also
made regulatory changes to 42 CFR Parts 411, 414, and 416 related to
our final policies to provide payments to physicians who perform
noncovered ASC procedures in ASCs based on the facility PE RVUs, to
exclude covered ancillary radiology services and covered ancillary
drugs and biologicals from the categories of designated health services
(DHS) that are subject to the physician self-referral prohibition, and
to reduce ASC
[[Page 46324]]
payments for surgical procedures when the ASC receives full or partial
credit toward the cost of the implantable device. In the CY 2009 OPPS/
ASC final rule with comment period (73 FR 68722), we updated and
finalized the CY 2009 ASC rates and lists of covered surgical
procedures and covered ancillary services.
In the CY 2010 OPPS/ASC final rule with comment period (74 FR
60596), we updated and finalized the CY 2010 ASC rates and lists of
covered surgical procedures and covered ancillary services. We also
corrected some of those ASC rates in a correction notice published in
the Federal Register on December 31, 2009 (74 FR 69502). In that
correction notice, we revised the ASC rates to reflect changes in the
MPFS conversion factor and PE RVUs listed for some CPT codes in
Addendum B to the CY 2010 MPFS final rule with comment period (74 FR
62017), which were incorrect due to methodological errors and,
consequently, were corrected in a correction notice to that final rule
with comment period (74 FR 65449). We also are publishing a second
correction notice in the Federal Register around the time of this
proposed rule to address changes to the ASC rates resulting from
corrections to the PE RVUs identified subsequent to publication of the
December 31, 2009 correction notice. Finally, we are publishing a
notice around the time of this proposed rule in the Federal Register to
reflect changes to CY 2010 ASC payment rates for certain ASC services
due to changes to the OPPS and MPFS under ACA. It also reflects
technical changes to the ASC payment rates announced in prior
correction notices.
3. Policies Governing Changes to the Lists of Codes and Payment Rates
for ASC Covered Surgical Procedures and Covered Ancillary Services
The August 2, 2007 final rule established our policies for
determining which procedures are ASC covered surgical procedures and
covered ancillary services. Under Sec. Sec. 416.2 and 416.166 of the
regulations, subject to certain exclusions, covered surgical procedures
are surgical procedures that are separately paid under the OPPS, that
would not be expected to pose a significant risk to beneficiary safety
when performed in an ASC, and that would not be expected to require
active medical monitoring and care at midnight following the procedure
(``overnight stay''). We adopted this standard for defining which
surgical procedures are covered surgical procedures under the ASC
payment system as an indicator of the complexity of the procedure and
its appropriateness for Medicare payment in ASCs. We use this standard
only for purposes of evaluating procedures to determine whether or not
they are appropriate for Medicare beneficiaries in ASCs. We define
surgical procedures as those described by Category I CPT codes in the
surgical range from 10000 through 69999, as well as those Category III
CPT codes and Level II HCPCS codes that crosswalk or are clinically
similar to ASC covered surgical procedures (72 FR 42478). We note that
we added over 800 surgical procedures to the list of covered surgical
procedures for ASC payment in CY 2008, the first year of the revised
ASC payment system, based on the criteria for payment that we adopted
in the August 2, 2007 final rule as described above in this section.
Patient safety and health outcomes continue to be important to us as
more health care moves to the ambulatory care setting. Therefore, as we
gain additional experience with the ASC payment system, we are
interested in any information the public may have regarding the
comparative patient outcomes of surgical care provided in ambulatory
settings, including HOPDs, ASCs, and physicians' offices, particularly
with regard to the Medicare population.
In the August 2, 2007 final rule, we also established our policy to
make separate ASC payments for the following ancillary items and
services when they are provided integral to ASC covered surgical
procedures: brachytherapy sources; certain implantable items that have
pass-through status under the OPPS; certain items and services that we
designate as contractor-priced, including, but not limited to,
procurement of corneal tissue; certain drugs and biologicals for which
separate payment is allowed under the OPPS; and certain radiology
services for which separate payment is allowed under the OPPS. These
covered ancillary services are specified in Sec. 416.164(b) and, as
stated previously, are eligible for separate ASC payment (72 FR 42495).
Payment for ancillary items and services that are not paid separately
under the ASC payment system is packaged into the ASC payment for the
covered surgical procedure.
We update the lists of, and payment rates for, covered surgical
procedures and covered ancillary services, in conjunction with the
annual proposed and final rulemaking process to update the OPPS and the
ASC payment system (Sec. 416.173; 72 FR 42535). In addition, as
discussed in detail below in section XV.B., because we base ASC payment
policies for covered surgical procedures, drugs, biologicals, and
certain other covered ancillary services on the OPPS payment policies,
we also provide quarterly updates for ASC services throughout the year
(January, April, July, and October), just as we do for the OPPS. The
updates are to implement newly created Level II HCPCS and Category III
CPT codes for ASC payment and to update the payment rates for
separately paid drugs and biologicals based on the most recently
submitted ASP data. New Category I CPT codes, except vaccine codes, are
released only once a year and, therefore, are implemented through the
January quarterly update. New Category I CPT vaccine codes are released
twice a year and thus are implemented through the January and July
quarterly updates.
In our annual updates to the ASC list of, and payment rates for,
covered surgical procedures and covered ancillary services, we
undertake a review of excluded surgical procedures (including all
procedures newly proposed for removal from the OPPS inpatient list),
new procedures, and procedures for which there is revised coding, to
identify any that we believe meet the criteria for designation as ASC
covered surgical procedures or covered ancillary services. Updating the
lists of covered surgical procedures and covered ancillary services, as
well as their payment rates, in association with the annual OPPS
rulemaking cycle is particularly important because the OPPS relative
payment weights and, in some cases, payment rates, are used as the
basis for the payment of covered surgical procedures and covered
ancillary services under the revised ASC payment system. This joint
update process ensures that the ASC updates occur in a regular,
predictable, and timely manner.
B. Proposed Treatment of New Codes
1. Proposed Process for Recognizing New Category I and Category III CPT
Codes and Level II HCPCS Codes
CPT and Level II HCPCS codes are used to report procedures,
services, items, and supplies under the ASC payment system.
Specifically, we recognize the following codes on ASC claims: (1)
Category I CPT codes, which describe medical services and procedures;
(2) Category III CPT codes, which describe new and emerging
technologies, services, and procedures; and (3) Level II HCPCS codes,
which are used primarily to identify products, supplies, temporary
procedures, and services not described by CPT codes. CPT codes are
established by the
[[Page 46325]]
American Medical Association (AMA) and the Level II HCPCS codes are
established by the CMS HCPCS Workgroup. These codes are updated and
changed throughout the year. CPT and HCPCS code changes that affect
ASCs are addressed both through the ASC quarterly update Change
Requests (CRs) and through the annual rulemaking cycle. CMS releases
new Level II HCPCS codes to the public or recognizes the release of new
CPT codes by the AMA and makes these codes effective (that is, the
codes are recognized on Medicare claims) outside of the formal
rulemaking process via ASC quarterly update CRs. This quarterly process
offers ASCs access to codes that may more accurately describe items or
services furnished and/or provides payment or more accurate payment for
these items or services in a more timely manner than if we waited for
the annual rulemaking process. We solicit comments on the new codes
recognized for ASC payment and finalize our proposals related to these
codes through our annual rulemaking process.
We finalized a policy in the August 2, 2007 final rule to evaluate
each year all new Category I and Category III CPT codes and Level II
HCPCS codes that describe surgical procedures, and to make preliminary
determinations in the annual OPPS/ASC final rule with comment period
regarding whether or not they meet the criteria for payment in the ASC
setting and, if so, whether they are office-based procedures (72 FR
42533 through 42535). In addition, we identify new codes as ASC covered
ancillary services based upon the final payment policies of the revised
ASC payment system.
In Table 39 below, we summarize our proposed process for updating
the HCPCS codes recognized under the ASC payment system.
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This process is discussed in detail below and we have separated our
discussion based on whether we are proposing to solicit public comments
in this CY 2011 proposed rule on a specific group of the CPT and Level
II HCPCS codes (and respond to those comments in the CY 2011 OPPS/ASC
final rule with comment period) or whether we are proposing to solicit
public comments on another specific group of the codes in the CY 2011
final rule with comment period (and respond to those comments in the CY
2012 OPPS/ASC final rule with comment period). We sought public
comments in the CY 2010 OPPS/ASC final rule with comment period on the
new CPT and HCPCS codes that were effective January 1, 2010. These new
codes were flagged with comment indicator ``N1'' in Addendum AA and BB
to the CY 2010 OPPS/ASC final rule with comment period to indicate that
we were assigning them an interim payment status and payment rate, if
applicable, which were subject to public comment following publication
of the CY 2010 OPPS/ASC final rule with comment period. We will respond
to public
[[Page 46326]]
comments and finalize our proposed ASC treatment of these codes in the
CY 2011 OPPS/ASC final rule with comment period.
2. Proposed Treatment of New Level II HCPCS Codes and Category III CPT
Codes Implemented in April and July 2010 for Which We Are Soliciting
Public Comments in This Proposed Rule
In the April and July CRs, we made effective for April 1 or July 1,
2010, a total of 14 new Level II HCPCS codes and 7 new Category III CPT
codes that were not addressed in the CY 2010 OPPS/ASC final rule with
comment period. (We note that one Level II HCPCS code, C9262, that was
added in the April 2010 CR, was deleted June 30, 2010 and replaced with
Q2025 effective July 1, 2010). The 13 new Level II HCPCS codes describe
covered ancillary services.
Through the April 2010 ASC quarterly update (Transmittal 1943, CR
6866, dated April 6, 2010), we added six new drug and biological Level
II HCPCS codes to the list of covered ancillary services. Specifically,
as displayed in Table 40, these included HCPCS codes C9258 (Injection,
telavancin, 10 mg), C9259 (Injection, pralatrexate, 1 mg), C9260
(Injection, ofatumumab, 10 mg), C9261 (Injection, ustekinumab, 1 mg),
C9262 (Fludarabine phosphate, oral, 1 mg), and C9263 (Injection,
ecallantide, 1 mg).
Through the July 2010 quarterly update (Transmittal 1984, Change
Request 7008, dated June 11, 2010), we are adding seven new drug and
biological Level II HCPCS codes to the list of covered ancillary
services. Specifically, as displayed in Table 41, we provide separate
payment for HCPCS codes C9264 (Injection, tocilizumab, 1 mg), C9265
(Injection, romidepsin, 1 mg), C9266 (Injection, collagenase
clostridium histolyticum, 0.1 mg), C9267 (Injection, von Willebrand
factor complex (human), Wilate, per 100 IU VWF: RCO), C9268 (Capsaicin,
patch, 10cm2), C9367 (Skin substitute, Endoform Dermal Template, per
square centimeter), and Q2025 (Fludarabine phosphate oral, 10mg). As
noted above, HCPCS code C9262 was made effective April 1, 2010, and
deleted June 30, 2010, when it was replaced with HCPCS code Q2025.
We assigned payment indicator ``K2'' (Drugs and biologicals paid
separately when provided integral to a surgical procedure on the ASC
list; payment based on OPPS rate) to these 13 new Level II to indicate
that they are separately paid when provided in ASCs. In this CY 2011
OPPS/ASC proposed rule, we are soliciting public comment on the
proposed CY 2010 ASC payment indicators and payment rates for the drugs
and biologicals, as listed in Tables 40 and 41 below. Those HCPCS codes
became payable in ASCs, beginning in April or July 2010, respectively,
and are paid at the ASC rates posted for the appropriate calendar
quarter on the CMS Web site at http://www.cms.gov/ASCPayment/.
The codes listed in Table 40 are included in Addendum BB to this
proposed rule. (We note that Level II HCPCS code C9262 was deleted June
30, 2010, and replaced with Q2025 effective July 1, 2010, and therefore
is not included in Addendum BB and is not open to public comment.
Instead, Level II HCPCS code Q2025 is open for public comment.)
However, because HCPCS codes that become effective for July (listed
in Table 41) are not available to us in time for incorporation into the
Addenda to the OPPS/ASC proposed rule, our policy is to include these
HCPCS codes and their proposed payment indicators and payment rates in
the preamble to the proposed rule but not in the Addenda to the
proposed rule. These codes and their final payment indicators and rates
will be included in the appropriate Addendum to the CY 2011 OPPS/ASC
final rule with comment period. Thus, the codes implemented by the July
2010 ASC quarterly update CR and their proposed CY 2011 payment rates
(based on July 2010 ASP data) that are displayed in Table 41 are not
included in Addendum BB to this proposed rule. We are proposing to
include these services reported using the new Level II HCPCS codes
displayed in Tables 40 and 41 as covered ancillary services for payment
to ASCs for CY 2011. The final list of covered ancillary services and
the associated payment weights and payment indicators will be included
in Addendum BB to the CY 2011 OPPS/ASC final rule with comment period,
consistent with our annual update policy.
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[[Page 46327]]
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Through the July 2010 quarterly update CR, we also implemented ASC
payment for seven new Category III CPT codes and one new Level II HCPCS
code as ASC covered surgical procedures, effective July 1, 2010. These
codes are listed in Table 42 below, along with their proposed payment
indicators and proposed payment rates for CY 2011. Because new Category
III CPT and Level II HCPCS codes that become effective for July are not
available to us in time for incorporation into the Addenda to the OPPS/
ASC proposed rule, our policy is to include the codes, their proposed
payment indicators, and proposed payment rates in the preamble to the
proposed rule but not in the Addenda to the proposed rule. These codes
and their final payment indicators and rates will be included in the
Addenda to the OPPS/ASC final rule with comment period. The new mid-
year codes for the covered surgical procedures implemented in July 2010
are displayed in Table 42 below, along with their proposed payment
indicators and proposed payment rates. These codes and their final
payment indicators and rates will be included in Addendum AA to the CY
2011 OPPS/ASC final rule with comment period.
[[Page 46328]]
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[[Page 46329]]
For CY 2011, we are soliciting public comments on the proposed
payment indicators and the payment rates, if applicable, for the new
Level II HCPCS codes and Category III CPT codes that were newly
recognized in April or July 2010 through the respective quarterly
update CRs. These codes are listed in Tables 40, 41, and 42 of this
proposed rule. We are proposing to finalize their payment indicators
and their payment rates, if applicable, in the CY 2011 OPPS/ASC final
rule with comment period.
3. Proposed Process for New Level II HCPCS Codes and Category I and III
CPT Codes for Which We Will Be Soliciting Public Comments in the CY
2011 OPPS/ASC Final Rule With Comment Period
As has been our practice in the past, we incorporate those new
Category I and Category III CPT codes and new Level II HCPCS codes that
are effective January 1 in the final rule with comment period updating
the ASC payment system for the following calendar year. These codes are
released to the public via the CMS HCPCS (for Level II HCPCS codes) and
AMA Web sites (for CPT codes), and also through the January ASC
quarterly update CRs. In the past, we also have released new Level II
HCPCS codes that are effective October 1 through the October ASC
quarterly update CRs and incorporated these new codes in the final rule
with comment period updating the ASC payment system for the following
calendar year. All of these codes are flagged with comment indicator
``NI'' in Addenda AA and BB to the OPPS/ASC final rule with comment
period to indicate that we are assigning them an interim payment status
which is subject to public comment. Specifically, the payment indicator
and payment rate, if applicable, for all such codes flagged with
comment indicator ``NI'' are open to public comment in the OPPS/ASC
final rule with comment period, and we respond to these comments in the
final rule with comment period for the next calendar year's OPPS/ASC
update. We are proposing to continue this process for CY 2011.
For CY 2011, we are proposing to include in Addenda AA and BB to
the CY 2011 OPPS/ASC final rule with comment period the new Category I
and III CPT codes effective January 1, 2011 (including those Category
III CPT codes that were released by the AMA in July 2010) that would be
incorporated in the January 2011 ASC quarterly update CR and the new
Level II HCPCS codes, effective October 1, 2010 or January 1, 2011,
that would be released by CMS in its October 2010 and January 2011 ASC
quarterly update CRs. These codes would be flagged with comment
indicator ``NI'' in Addenda AA and BB to the CY 2011 OPPS/ASC final
rule with comment period to indicate that we have assigned them an
interim payment status. Their payment indicators and payment rates, if
applicable, would be open to public comment in the CY 2011 OPPS/ASC
final rule with comment period and would be finalized in the CY 2012
OPPS/ASC final rule with comment period.
C. Proposed Update to the Lists of ASC Covered Surgical Procedures and
Covered Ancillary Services
1. Covered Surgical Procedures
a. Proposed Additions to the List of ASC Covered Surgical Procedures
We are proposing to update the list of ASC covered surgical
procedures by adding five procedures to the list. These five procedures
were among those excluded from the ASC list for CY 2010 because we
believed they did not meet the definition of a covered surgical
procedure based on our expectation that they would pose a significant
safety risk to Medicare beneficiaries or would require an overnight
stay if performed in ASCs. We conducted a review of all HCPCS codes
that currently are paid under the OPPS, but not included on the ASC
list of covered surgical procedures, to determine if changes in
technology and/or medical practice changed the clinical appropriateness
of these procedures for the ASC setting. We determined that these five
procedures could be safely performed in the ASC setting and are
therefore proposing to include them on the list of ASC covered surgical
procedures for CY 2011.
The five procedures that we are proposing to add to the ASC list of
covered surgical procedures, including their HCPCS code long
descriptors and proposed CY 2010 payment indicators, are displayed in
Table 43 below.
[[Page 46330]]
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b. Proposed Covered Surgical Procedures Designated as Office-Based
(1) Background
In the August 2, 2007 ASC final rule, we finalized our policy to
designate as ``office-based'' those procedures that are added to the
ASC list of covered surgical procedures in CY 2008 or later years that
we determine are performed predominantly (more than 50 percent of the
time) in physicians' offices based on consideration of the most recent
available volume and utilization data for each individual procedure
code and/or, if appropriate, the clinical characteristics, utilization,
and volume of related codes. In that rule, we also finalized our policy
to exempt all procedures on the CY 2007 ASC list from application of
the office-based classification (72 FR 42512). The procedures that were
added to the ASC list of covered surgical procedures beginning in CY
2008 that we determined were office-based were identified in Addendum
AA to that rule by payment indicator ``P2'' (Office-based surgical
procedure added to ASC list in CY 2008 or later with MPFS non-facility
PE RVUs; payment based on OPPS relative payment weight); ``P3''
(Office-based surgical procedures added to ASC list in CY 2008 or later
with MPFS non-facility PE RVUs; payment based on MPFS non-facility PE
RVUs); or ``R2'' (Office-based surgical procedure added to ASC list in
CY 2008 or later without MPFS non-facility PE RVUs; payment based on
OPPS relative payment weight), depending on whether we estimated it
would be paid according to the standard ASC payment methodology based
on its OPPS relative payment weight or at the MPFS non-facility PE RVU
amount.
Consistent with our final policy to annually review and update the
list of surgical procedures eligible for payment in ASCs, each year we
identify surgical procedures as either temporarily or permanently
office-based after taking into account updated volume and utilization
data.
(2) Proposed Changes to Covered Surgical Procedures Designated as
Office-Based for CY 2011
In developing this proposed rule, we followed our policy to
annually review and update the surgical procedures for which ASC
payment is made and to identify new procedures that may be
[[Page 46331]]
appropriate for ASC payment, including their potential designation as
office-based. We reviewed CY 2009 volume and utilization data and the
clinical characteristics for all surgical procedures that are assigned
payment indicator ``G2'' in CY 2010, as well as for those procedures
assigned one of the temporary office-based payment indicators,
specifically ``P2*,'' ``P3*,'' or ``R2*'' in the CY 2010 ASC final rule
with comment period (74 FR 60605 through 60608). We also examined the
data for the five procedures that we are proposing to add to the ASC
list of covered surgical procedures for CY 2011 (listed in Table 43
above) to determine if these procedures should be designated as office-
based.
Our review of the CY 2009 volume and utilization data resulted in
our identification of six surgical procedures that we believe meet the
criteria for designation as office-based. The data indicate that the
procedures are performed more than 50 percent of the time in
physicians' offices. Our medical advisors believe the services are of a
level of complexity consistent with other procedures performed
routinely in physicians' offices. The six procedures we are proposing
to permanently designate as office-based are listed in Table 44 below.
We note that four of these procedures are procedures that we also are
proposing to add to the ASC list of covered surgical procedures for CY
2011: CPT code 37205; CPT code 37206; CPT code 37210; and CPT code
50593. The other two procedures are already on the ASC list of covered
surgical procedures.
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[[Page 46333]]
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We also reviewed CY 2009 volume and utilization data and other
information for the six procedures proposed for temporary office-based
status in the CY 2010 OPPS/ASC proposed rule (74 FR 35382) and
finalized for temporary office-based status in the CY 2010 OPPS/ASC
final rule with comment period (74 FR 60607). Among these six
procedures, there were almost no claims data for three procedures: CPT
code 0099T (Implantation of intrastromal corneal ring segments); CPT
code 0124T (Conjunctival drug placement); and CPT code 67229 (Treatment
of extensive or progressive retinopathy, one or more sessions; preterm
infant (less than 37 weeks gestation at birth), performed from birth up
to 1 year of age (e.g., retinopathy of prematurity), photocoagulation
or cryotherapy). Consequently, we are proposing to maintain their
temporary office-based designations for CY 2011. We also are proposing
to maintain in CY 2011 the temporary office-based designation for the
four codes that became effective in the July 2010 ASC quarterly update:
CPT code 0226T (Angoscopy, high resolution (HRA) (with magnification
and chemical agent enhancement); diagnostic, including collection of
specimen(s) by brushing or washing when performed); CPT code 0227T
(Angoscopy, high resolution (HRA) (with magnification and chemical
agent enhancement); with biopsy(ies)); CPT code 0232T (Injection(s),
platelet rich plasma, any tissue, including image guidance, harvesting
and preparation when performed); and HCPCS code C9800 (Dermal injection
procedure(s) for facial lipodystrophy syndrome (LDS) and provision of
Radiesse or Sculptra dermal filler, including all items and supplies),
because no data are available for these codes at this time.
As a result of our review of the remaining three procedures that
have temporary office-based designations for CY 2010 for which we do
have claims data, we are proposing to make permanent the office based
designations for all of them for CY 2011. The three surgical procedure
codes are: CPT code 46930 (Destruction of internal hemorrhoid(s) by
thermal energy (e.g., infrared coagulation, cautery, radiofrequency));
CPT code 64455 (Injection(s), anesthetic agent and/or steroid, plantar
common digital nerve(s) (eg, Morton's neuroma)); and CPT code 64632
(Destruction by neurolytic agent; plantar common digital nerve). The
volume and utilization data for these CPT codes are sufficient to
support our determination that these procedures are performed
predominantly in physicians' offices. Therefore, we are proposing to
make permanent the office-based designations for the 3 procedures for
CY 2011.
The procedures that we are proposing to permanently designate as
office-based for CY 2011 that were temporarily designated as office-
based procedures in CY 2010 are displayed in Table 45 below. The
procedures that we are proposing to temporarily designate as office-
based for CY 2011 are displayed in Table 46 below. The procedures for
which the proposed office-based designation for CY 2011 is temporary
also are indicated by an asterisk in Addendum AA to this proposed rule.
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[[Page 46335]]
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Displayed in Table 47 below are new (or substantially revised) CY
2010 HCPCS codes to which we assigned temporary office-based payment
indicators in the CY 2010 OPPS/ASC final rule with comment period (74
FR 60608). As explained in section XV.B.1. of that final rule with
comment period (74 FR 60599 and 60607), we reviewed all of the newly
created HCPCS codes that became available after the issuance of the CY
2009 OPPS/ASC proposed rule that are used to report surgical procedures
in CY 2010 to evaluate their appropriateness for the ASC list of
covered surgical procedures. Of the procedures reported by new or
substantially revised CY 2010 HCPCS codes that we determined should not
be excluded from the ASC list based on our clinical review, including
assessment of available utilization and volume data for any closely
related procedures and consideration of other available information, we
determined that 16 of the procedures would predominantly be performed
in physicians' offices. However, because we had no utilization data for
the procedures specifically described by these new HCPCS codes, we made
the office-based designations temporary rather than permanent and
[[Page 46336]]
stated that we would reevaluate the procedures when data become
available (74 FR 60607 through 60608). The temporary payment indicators
for the 16 office-based procedures displayed in Table 47 were interim
designations and were open to public comment during the 60-day comment
period following the release of the CY 2010 OPPS/ASC final rule with
comment period. We will respond to public comments received during that
60-day comment period as well as the comment period following this
proposed rule in the CY 2011 OPPS/ASC final rule with comment period.
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c. ASC Covered Surgical Procedures Designated as Device-Intensive
(1) Background
As discussed in the August 2, 2007 final rule (72 FR 42503 through
42508), we adopted a modified payment methodology for calculating the
ASC payment rates for covered surgical procedures that are assigned to
the subset of OPPS device-dependent APCs with a device offset
percentage greater than 50 percent of the APC cost under the OPPS, in
order to ensure that payment for the procedure is adequate to provide
packaged payment for the high-cost implantable devices used in those
procedures. We assigned payment indicators ``H8'' (Device-intensive
procedure on ASC list in CY 2007; paid at adjusted rate) and ``J8''
(Device-intensive procedure added to ASC list in CY 2008 or later; paid
at adjusted rate) to identify the procedures that were eligible for ASC
payment calculated according to the modified methodology, depending on
whether the procedure was included on the ASC list of covered surgical
procedures prior to CY 2008 and, therefore, subject to transitional
payment as discussed in the CY 2009 OPPS/ASC final rule with comment
period (73 FR 68739 through 68742). The device-intensive procedures for
which the modified rate calculation methodology applies in CY 2010 were
displayed in Table 68 and in Addendum AA to the CY 2010 OPPS/ASC final
rule with comment period (74 FR 60610 through 60611 and 60692 through
60752).
(2) Proposed Changes to List of Covered Surgical Procedures Designated
as Device Intensive for CY 2011
We are proposing to update the ASC list of covered surgical
procedures that are eligible for payment according to the device-
intensive procedure payment methodology for CY 2011, consistent with
the proposed OPPS device-dependent APC update, reflecting the proposed
APC assignments of procedures, designation of APCs as device dependent,
and APC device offset percentages based on the CY 2009 OPPS claims and
cost report data available for the proposed rule. The OPPS device-
dependent APCs are discussed further in section II.A.2.d.(1) of this
proposed rule. The ASC covered surgical procedures that we are
proposing to designate as device-intensive and that would be subject to
the device-intensive procedure payment methodology for CY 2011 are
listed in Table 48 below. The CPT code, the CPT code short descriptor,
the proposed CY 2011 ASC payment indicator, the proposed CY 2011 OPPS
APC assignment and title, and the proposed CY 2011 OPPS APC device
offset percentage are also listed in Table 48 below. Each proposed
device-intensive procedure is assigned payment indicator ``H8'' or
``J8'' depending on whether it was subject to transitional payment
prior to CY 2011, and all of these procedures are included in Addendum
AA to this proposed rule.
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d. ASC Treatment of Surgical Procedures Proposed for Removal From the
OPPS Inpatient List for CY 2011
As we discussed in the CY 2009 OPPS/ASC final rule with comment
period (73 FR 68724), we adopted a policy to include in our annual
evaluation procedures proposed for removal from the OPPS inpatient list
for possible inclusion on the ASC list of covered surgical procedures.
We evaluated each of the three procedures we are proposing to remove
from the OPPS inpatient list for CY 2011 according to the criteria for
exclusion from the list of covered ASC surgical procedures. We believe
that all of these procedures should continue to be excluded from the
ASC list of covered surgical procedures for CY 2011 because they would
be expected to pose a significant risk to beneficiary safety or to
require an overnight stay in ASCs. A full discussion about the APC
Panel's recommendations regarding the procedures we are proposing to
remove from the OPPS inpatient list for CY 2011 and the procedures we
are proposing to remove from the OPPS inpatient list for CY 2011 may be
found in section XI.B. of this proposed rule. The HCPCS codes for these
three procedures and their long descriptors are listed in Table 49
below.
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2. Covered Ancillary Services
Consistent with the established ASC payment system policy, we are
proposing to update the ASC list of covered ancillary services to
reflect the proposed payment status for the services under the CY 2011
OPPS. Maintaining consistency with the OPPS may result in proposed
changes to ASC payment indicators for some covered ancillary items and
services because of changes that are being proposed under the OPPS for
CY 2011. For example, a covered ancillary service that was separately
paid under the revised ASC payment system in CY 2010 may be proposed
for packaged status under the CY 2011 OPPS and, therefore, also under
the ASC payment system for CY 2011. Comment indicator ``CH,'' discussed
in section XV.F. of this proposed rule, is used in Addendum BB to this
proposed rule to indicate covered ancillary services for which we are
proposing a change in the ASC payment indicator to reflect a proposed
change in the OPPS treatment of the service for CY 2011.
Except for the Level II HCPCS codes listed in Table 41 of this
proposed rule, all ASC covered ancillary services and their proposed
payment indicators for CY 2011 are included in Addendum BB to this
proposed rule.
D. Proposed ASC Payment for Covered Surgical Procedures and Covered
Ancillary Services
1. Proposed Payment for Covered Surgical Procedures
a. Background
Our ASC payment policies for covered surgical procedures under the
revised ASC payment system are fully described in the CY 2008 OPPS/ASC
final rule with comment period (72 FR 66828 through 66831). Under our
established policy for the revised ASC payment system, the ASC standard
ratesetting methodology of multiplying the ASC relative payment weight
for the procedure by the ASC conversion factor for that same year is
used to calculate the national unadjusted payment rates for procedures
with payment indicator ``G2.'' For procedures assigned payment
indicator ``A2,'' our final policy established blended rates to be used
during the transitional period and, beginning in CY 2011, ASC rates
calculated according to the ASC standard ratesetting methodology. The
rate calculation established for device intensive procedures (payment
indicators ``H8'' and ``J8'') is structured so that the packaged device
payment amount is the same as under the OPPS, and only the service
portion of the rate is subject to the ASC standard ratesetting
methodology. In the CY 2010 OPPS/ASC final rule with comment period (74
FR 60596 through 60629), we updated the CY 2009 ASC payment rates for
ASC covered surgical procedures with payment indicators of ``A2,''
``G2,'' ``H8,'' and ``J8'' using CY 2008 data, consistent with the CY
2010 OPPS update. Payment rates for device-intensive procedures also
were updated to incorporate the CY 2010 OPPS device offset percentages.
Payment rates for office-based procedures (payment indicators
``P2,'' ``P3,'' and ``R2'') are the lower of the MPFS non-facility PE
RVU amount (we refer readers to the CY 2011 MPFS proposed rule) or the
amount calculated using the ASC standard ratesetting methodology for
the procedure. In the CY 2010 OPPS/ASC final rule with comment period
(74 FR 60596 through 60629), we updated the payment amounts for office-
based procedures (payment indicators ``P2,'' ``P3,'' and ``R2'') using
the most recent available MPFS and OPPS data. We compared the estimated
CY 2010 rate for each of the office-based procedures, calculated
according to the ASC standard ratesetting methodology, to the MPFS
nonfacility PE RVU amount (multiplied by the conversion factor) to
determine which was lower and, therefore, would be the CY 2010 payment
rate for the procedure according to the final policy of the revised ASC
payment system (Sec. 416.171(d)).
b. Proposed Update to ASC-Covered Surgical Procedure Payment Rates for
CY 2011
We are proposing to update ASC payment rates for CY 2011 using the
established rate calculation methodologies under Sec. 416.171. Under
Sec. 416.171(c)(4), the transitional payment rates are no longer used
for CY 2011 and subsequent calendar years for a covered surgical
procedure designated in accordance with Sec. 416.166. Thus, we are
proposing to calculate CY 2011 payments for procedures formerly subject
to the transitional payment methodology (payment indicators ``A2'' and
``H8'') using the proposed CY 2011 ASC rate calculated according to the
ASC standard ratesetting methodology, incorporating the device-
intensive procedure methodology, as appropriate, for procedures
assigned ASC payment indicator ``H8.'' We are not proposing to modify
the payment indicators for procedures that were subject to transitional
payment prior to CY 2011 but will consider doing so in future
rulemaking. We are proposing to continue to use the amount calculated
under the ASC standard ratesetting methodology for procedures assigned
payment indicator ``G2.''
We are proposing that payment rates for office-based procedures
(payment indicators ``P2,'' ``P3,'' and ``R2'') and device-intensive
procedures that were not subject to transitional payment (payment
indicator ``J8'') be calculated according to our established policies,
incorporating the device-intensive procedure methodology as
appropriate. Thus, we are proposing to update the payment amounts for
device-intensive procedures based on the CY 2011 OPPS proposal that
reflects updated OPPS device offset percentages, and to make payment
for office-based procedures at
[[Page 46343]]
the lesser of the CY 2011 proposed MPFS non-facility PE RVU amount or
the proposed CY 2011 ASC payment amount calculated according to the
standard ratesetting methodology.
c. Proposed Adjustment to ASC Payments for No Cost/Full Credit and
Partial Credit Devices
Our ASC policy with regard to payment for costly devices implanted
in ASCs at no cost or with full or partial credit as set forth in Sec.
416.179 is consistent with the OPPS policy. The proposed CY 2011 OPPS
APCs and devices subject to the adjustment policy are discussed in
section IV.B.2. of this proposed rule. The established ASC policy
includes adoption of the OPPS policy for reduced payment to providers
when a specified device is furnished without cost or with full or
partial credit for the cost of the device for those ASC covered
surgical procedures that are assigned to APCs under the OPPS to which
this policy applies. We refer readers to the CY 2009 OPPS/ASC final
rule with comment period for a full discussion of the ASC payment
adjustment policy for no cost/full credit and partial credit devices
(73 FR 68742 through 68745).
Consistent with the OPPS, we are proposing to update the list of
ASC covered device intensive procedures and devices that would be
subject to the no cost/full credit and partial credit device adjustment
policy for CY 2011. Table 50 below displays the ASC covered device-
intensive procedures that we are proposing would be subject to the no
cost/full credit and partial credit device adjustment policy for CY
2011. Specifically, when a procedure that is listed in Table 50 is
performed to implant a device that is listed in Table 51 below, where
that device is furnished at no cost or with full credit from the
manufacturer, the ASC would append the HCPCS ``FB'' modifier on the
line with the procedure to implant the device. The contractor would
reduce payment to the ASC by the device offset amount that we estimate
represents the cost of the device when the necessary device is
furnished without cost to the ASC or with full credit. We would provide
the same amount of payment reduction based on the device offset amount
in ASCs that would apply under the OPPS under the same circumstances.
We continue to believe that the reduction of ASC payment in these
circumstances is necessary to pay appropriately for the covered
surgical procedure being furnished by the ASC.
We also are proposing to reduce the payment for implantation
procedures listed in Table 50 by one-half of the device offset amount
that would be applied if a device was provided at no cost or with full
credit, if the credit to the ASC is 50 percent or more of the cost of
the new device. The ASC would append the HCPCS ``FC'' modifier to the
HCPCS code for a surgical procedure listed in Table 50 when the
facility receives a partial credit of 50 percent or more of the cost of
a device listed in Table 51 below. In order to report that they
received a partial credit of 50 percent or more of the cost of a new
device, ASCs would have the option of either: (1) Submitting the claim
for the device replacement procedure to their Medicare contractor after
the procedure's performance but prior to manufacturer acknowledgment of
credit for the device, and subsequently contacting the contractor
regarding a claim adjustment once the credit determination is made; or
(2) holding the claim for the device implantation procedure until a
determination is made by the manufacturer on the partial credit and
submitting the claim with the ``FC'' modifier appended to the
implantation procedure HCPCS code if the partial credit is 50 percent
or more of the cost of the replacement device. Beneficiary coinsurance
would continue to be based on the reduced payment amount.
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d. Proposed Waiver of Coinsurance and Deductible for Certain Preventive
Services
As discussed in detail in section XII.B. of this proposed rule and
in the CY 2011 MPFS proposed rule, sections 4104(b) and 10406 of the
Affordable Care Act amended section 1833(a)(1) of the Act, in pertinent
part, to waive the coinsurance for those preventive services described
in section 1861(ww)(2) of the Act (excluding electrocardiograms) that
are recommended by the USPSTF with a grade of A or B for any indication
or population and that are appropriate for the individual. Section
4104(c) of the Affordable Care Act amended section 1833(b)(1) of the
Act to waive the Part B deductible for these preventive services. These
provisions apply to these items and services furnished in ASCs on or
after January 1, 2011. In section XII.B. of this proposed rule and in
the CY 2011 MPFS proposed rule, we are proposing to define the
preventive services to which this provision applies and to apply the
criteria specified in section 4104 of the Affordable Care Act for the
waiver of coinsurance and deductible.
Table 52 identifies the ASC covered surgical and ancillary services
that are included in the proposed definition of preventive services in
section XII.B. of this proposed rule and in the CY 2011 MPFS proposed
rule. All of the ASC covered surgical and ancillary services that are
included in the chart below are preventive services that are
recommended by the USPSTF with a grade of A or B. Therefore, we are
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proposing to update Sec. 416.160(a)(4) and add new Sec. 416.160(a)(5)
on the scope and basis of the ASC regulations and to update Sec.
410.152(l) in this proposed rule to reflect the waiver of coinsurance
and deductible for these services. We refer readers to the CY 2011 MPFS
proposed rule for a discussion of the proposed changes to Sec.
410.160(b) and proposed additional changes to Sec. 410.152 of our
regulations to implement the provisions related to the definition of
preventive services and the waiver of the coinsurance and deductible
for preventive services as specified by sections 4103, 4104, and 10406
of the Affordable Care Act.
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Section 4104(c) of the Affordable Care Act amended section 1833(b)
of the Act to waive the Part B deductible for colorectal cancer
screening tests that become diagnostic. Specifically, section
4104(c)(2) of the Affordable Care Act waives the deductible with
respect to a colorectal cancer screening test ``regardless of the code
that is billed for the establishment of a diagnosis as a result of the
test, or for the removal of tissue or other matter or other procedure
that is furnished in connection with, as a result of, and in the same
clinical encounter as a screening test.'' As discussed in section
XII.B. of this proposed rule and in the CY 2011 MPFS proposed rule, we
are proposing that all surgical services furnished on the same date as
a planned screening colonoscopy or planned flexible sigmoidoscopy would
be considered as being ``furnished in connection with, as a result of,
and in the same clinical encounter as the screening test.'' We believe
that this interpretation is appropriate because we believe that it
would be very rare for an unrelated surgery to occur on the same date
as one of these scheduled screening tests. Moreover, we believe that
the risk of improper expenditures would be very small under this policy
because it is the deductible, and not the coinsurance, that is waived
for the related procedures other than the screening tests. In the event
of a legislative change to this policy (for example, a statutory change
that would waive the coinsurance for these related services in addition
to the deductible), we would reassess the appropriateness of this
proposed definition of services that are furnished in connection with,
as a result of, and in the same clinical encounter as the colorectal
cancer screening test that becomes diagnostic. We also note that the
annual deductible would likely be met when any surgical procedure
(related or not) is performed on the same day as the scheduled
screening test.
We are proposing to implement this provision by creating a HCPCS
modifier that ASCs would append to the diagnostic procedure code that
is reported instead of the screening colonoscopy or screening flexible
sigmoidoscopy HCPCS code. The claims
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processing system would respond to the modifier by waiving the
deductible for all surgical services on the same date as the diagnostic
test. Coinsurance or copayment would continue to apply to the
diagnostic test and to other services furnished in connection with, as
a result of, and in the same clinical encounter as the screening test.
2. Proposed Payment for Covered Ancillary Services
a. Background
Our final payment policies under the revised ASC payment system for
covered ancillary services vary according to the particular type of
service and its payment policy under the OPPS. Our overall policy
provides separate ASC payment for certain ancillary items and services
integrally related to the provision of ASC covered surgical procedures
that are paid separately under the OPPS and provides packaged ASC
payment for other ancillary items and services that are packaged under
the OPPS. Thus, we established a final policy to align ASC payment
bundles with those under the OPPS (72 FR 42495).
Our ASC payment policies provide separate payment for drugs and
biologicals that are separately paid under the OPPS at the OPPS rates,
while we pay for separately payable radiology services at the lower of
the MPFS non-facility PE RVU (or technical component) amount or the
rate calculated according to the ASC standard ratesetting methodology
(72 FR 42497). In all cases, ancillary items and services must be
provided integral to the performance of ASC covered surgical procedures
for which the ASC bills Medicare, in order for those ancillary services
also to be paid.
ASC payment policy for brachytherapy sources generally mirrors the
payment policy under the OPPS. We finalized our policy in the CY 2008
OPPS/ASC final rule with comment period (72 FR 42499) to pay for
brachytherapy sources applied in ASCs at the same prospective rates
that were adopted under the OPPS or, if OPPS rates were unavailable, at
contractor-priced rates. Subsequent to publication of that rule,
section 106 of the Medicare, Medicaid, and SCHIP Extension Act of 2007
(Pub. L. 110-173) mandated that, for the period January 1, 2008 through
June 30, 2008, brachytherapy sources be paid under the OPPS at charges
adjusted to cost. Therefore, consistent with our final overall ASC
payment policy, we paid ASCs at contractor-priced rates for
brachytherapy sources provided in ASCs during that period of time.
Beginning July 1, 2008, brachytherapy sources applied in ASCs were to
be paid at the same prospectively set rates that were finalized in the
CY 2008 OPPS/ASC final rule with comment period (72 FR 67165 through
67188). Immediately prior to the publication of the CY 2009 OPPS/ASC
proposed rule, section 142 of the Medicare Improvements for Patients
and Providers Act of 2008 (Pub. L. 110-275) amended section
1833(t)(16)(C) of the Act (as amended by section 106 of the Medicare,
Medicaid, and SCHIP Extension Act of 2007, Pub. L. 110-173) to extend
the requirement that brachytherapy sources be paid under the OPPS at
charges adjusted to cost through December 31, 2009. Therefore,
consistent with final ASC payment policy, ASCs continued to be paid at
contractor-priced rates for brachytherapy sources provided integral to
ASC covered surgical procedures during that period of time.
Other separately paid covered ancillary services in ASCs,
specifically corneal tissue acquisition and device categories with OPPS
pass-through status, do not have prospectively established ASC payment
rates according to the final policies of the revised ASC payment system
(72 FR 42502 and 42509; Sec. 416.164(b)). Under the revised ASC
payment system, corneal tissue acquisition is paid based on the
invoiced costs for acquiring the corneal tissue for transplantation. As
discussed in section IV.A.1. of this proposed rule, new pass-through
device categories may be established on a quarterly basis, but
currently there are no OPPS device pass-through categories that would
continue for OPPS pass-through payment (and, correspondingly, separate
ASC payment) in CY 2011.
b. Proposed Payment for Covered Ancillary Services for CY 2011
For CY 2011, we are proposing to update the ASC payment rates and
make changes to ASC payment indicators as necessary to maintain
consistency between the OPPS and ASC payment system regarding the
packaged or separately payable status of services and the proposed CY
2011 OPPS and ASC payment rates. The proposed CY 2011 OPPS payment
methodologies for separately payable drugs and biologicals and
brachytherapy sources are discussed in sections V. and VII. of this
proposed rule, respectively, and we are proposing to set the CY 2011
ASC payment rates for those services equal to the proposed CY 2011 OPPS
rates.
Consistent with established ASC payment policy (72 FR 42497), the
proposed CY 2011 payment for separately payable covered radiology
services is based on a comparison of the CY 2011 proposed MPFS non-
facility PE RVU amounts (we refer readers to the CY 2011 MPFS proposed
rule) and the proposed CY 2011 ASC payment rates calculated according
to the ASC standard ratesetting methodology and then set at the lower
of the two amounts. Alternatively, payment for a radiology service may
be packaged into the payment for the ASC covered surgical procedure if
the radiology service is packaged under the OPPS. The payment
indicators in Addendum BB indicate whether the proposed payment rates
for radiology services are based on the MPFS nonfacility PE RVU amount
or the ASC standard rate setting methodology, or whether payment for a
radiology service is packaged into the payment for the covered surgical
procedure (payment indicator ``N1''). Radiology services that we are
proposing to pay based on the ASC standard ratesetting methodology are
assigned payment indicator ``Z2'' (Radiology service paid separately
when provided integral to a surgical procedure on ASC list; payment
based on OPPS relative payment weight) and those for which the proposed
payment is based on the MPFS non-facility PE RVU amount are assigned
payment indicator ``Z3'' (Radiology service paid separately when
provided integral to a surgical procedure on ASC list; payment based on
MPFS non-facility PE RVUs).
All covered ancillary services and their proposed payment
indicators are listed in Addendum BB to this proposed rule.
E. New Technology Intraocular Lenses (NTIOLs)
1. Background
In the CY 2007 OPPS/ASC final rule with comment period (71 FR
68176), we finalized our current process for reviewing applications to
establish new active classes of new technology intraocular lenses
(NTIOLs) and for recognizing new candidate intraocular lenses (IOLs)
inserted during or subsequent to cataract extraction as belonging to a
NTIOL class that is qualified for a payment adjustment. Specifically,
we established the following process:
We announce annually in the Federal Register a document
that proposes the update of ASC payment rates for the following
calendar year, a list of all requests to establish new NTIOL classes
accepted for review during the calendar year in which the proposal is
published and the deadline for submission of public comments
[[Page 46352]]
regarding those requests. In accordance with section 141(b)(3) of
Public Law 103-432 and our regulations at Sec. 416.185(b), the
deadline for receipt of public comments is 30 days following
publication of the list of requests.
In the Federal Register document that finalizes the update
of ASC payment rates for the following calendar year, we--
[deg] Provide a list of determinations made as a result of our
review of all new class requests and public comments; and
[deg] Announce the deadline for submitting requests for review of
an application for a new NTIOL class for the following calendar year.
In determining whether a lens belongs to a new class of NTIOLs and
whether the ASC payment amount for insertion of that lens in
conjunction with cataract surgery is appropriate, we expect that the
insertion of the candidate IOL would result in significantly improved
clinical outcomes compared to currently available IOLs. In addition, to
establish a new NTIOL class, the candidate lens must be distinguishable
from lenses already approved as members of active or expired classes of
NTIOLs that share a predominant characteristic associated with improved
clinical outcomes that was identified for each class. Furthermore, in
the CY 2007 OPPS/ASC final rule with comment period (71 FR 68227), we
finalized our proposal to base our determinations on consideration of
the following factors set out at Sec. 416.195:
The IOL must have been approved by the FDA and claims of
specific clinical benefits and/or lens characteristics with established
clinical relevance in comparison with currently available IOLs must
have been approved by the FDA for use in labeling and advertising;
The IOL is not described by an active or expired NTIOL
class; that is, it does not share the predominant, class-defining
characteristic associated with improved clinical outcomes with
designated members of an active or expired NTIOL class; and
Evidence demonstrates that use of the IOL results in
measurable, clinically meaningful, improved outcomes in comparison with
use of currently available IOLs. According to the statute, and
consistent with previous examples provided by CMS, superior outcomes
that we consider include the following:
[cir] Reduced risk of intraoperative or postoperative complication
or trauma;
[cir] Accelerated postoperative recovery;
[cir] Reduced induced astigmatism;
[cir] Improved postoperative visual acuity;
[cir] More stable postoperative vision; and/or
[cir] Other comparable clinical advantages, such as--
[cir] Reduced dependence on other eyewear (for example, spectacles,
contact lenses, and reading glasses);
[cir] Decreased rate of subsequent diagnostic or therapeutic
interventions, such as the need for YAG laser treatment;
[cir] Decreased incidence of subsequent IOL exchange; and
[cir] Decreased blurred vision, glare, other quantifiable symptom
or vision deficiency.
For a request to be considered complete, we require submission of
the information that is found in the guidance document entitled
``Application Process and Information Requirements for Requests for a
New Class of New Technology Intraocular Lens (NTIOL)'' posted on the
CMS Web site at: http://www.cms.gov/ASCPayment/08_NTIOLs.asp#TopOfPage.
As we stated in the CY 2007 OPPS/ASC final rule with comment period
(71 FR 68180), there are three possible outcomes from our review of a
request for establishment of a new NTIOL class. As appropriate, for
each completed request for consideration of a candidate IOL into a new
class that is received by the established deadline, one of the
following determinations is announced annually in the final rule
updating the ASC payment rates for the next calendar year:
The request for a payment adjustment is approved for the
candidate IOL for 5 full years as a member of a new NTIOL class
described by a new HCPCS code;
The request for a payment adjustment is approved for the
candidate IOL for the balance of time remaining as a member of an
active NTIOL class; or
The request for a payment adjustment is not approved.
We also discussed our plan to summarize briefly in the final rule
with comment period the evidence that we reviewed, the public comments,
and the basis for our determinations in consideration of applications
for establishment of a new NTIOL class. We established that when a new
NTIOL class is created, we identify the predominant characteristic of
NTIOLs in that class that sets them apart from other IOLs (including
those previously approved as members of other expired or active NTIOL
classes) and that is associated with improved clinical outcomes. The
date of implementation of a payment adjustment in the case of approval
of an IOL as a member of a new NTIOL class would be set prospectively
as of 30 days after publication of the ASC payment update final rule,
consistent with the statutory requirement.
2. NTIOL Application Process for Payment Adjustment
In CY 2007, we posted an updated guidance document to the CMS Web
site to provide process and information requirements for applications
requesting a review of the appropriateness of the payment amount for
insertion of an IOL to ensure that the ASC payment for covered surgical
procedures includes payment that is reasonable and related to the cost
of acquiring a lens that is approved as belonging to a new class of
NTIOLs. This guidance document can be accessed on the CMS Web site at:
http://www.cms.gov/ASCPayment/downloads/NTIOLprocess.pdf.
We note that we have also issued a guidance document entitled
``Revised Process for Recognizing Intraocular Lenses Furnished by
Ambulatory Surgery Centers (ASCs) as Belonging to an Active Subset of
New Technology Intraocular Lenses (NTIOLs).'' This guidance document
can be accessed on the CMS Web site at: http://www.cms.gov/ASCPayment/Downloads/Request_for_inclusion_in_current_NTIOL_subset.pdf.
This second guidance document provides specific details regarding
requests for recognition of IOLs as belonging to an existing, active
NTIOL class, the review process, and information required for a request
to review. Currently, there is one active NTIOL class whose defining
characteristic is the reduction of spherical aberration. We accept
requests throughout the year to review the appropriateness of
recognizing an IOL as a member of an active class of NTIOLs. That is,
review of candidate lenses for membership in an existing, active NTIOL
class is ongoing and not limited to the annual review process that
applies to the establishment of new NTIOL classes. We ordinarily
complete the review of such a request within 90 days of receipt of all
information that we consider pertinent to our review, and upon
completion of our review, we notify the requestor of our determination
and post on the CMS Web site notification of a lens newly approved for
a payment adjustment as an NTIOL belonging to an active NTIOL class
when furnished in an ASC.
[[Page 46353]]
3. Classes of NTIOLs Approved and New Requests for Payment Adjustment
a. Background
Since implementation of the process for adjustment of payment
amounts for NTIOLs that was established in the June 16, 1999 Federal
Register, we have approved three classes of NTIOLs, as shown in the
following table, with the associated qualifying IOLs to date:
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b. Request to Establish New NTIOL Class for CY 2010 and Deadline for
Public Comment
As explained in the guidance document on the CMS Web site, the
deadline for each year's requests for review of the appropriateness of
the ASC payment amount for insertion of a candidate IOL as a member of
a new class of NTIOLs is announced in the final rule updating the ASC
and OPPS payment rates for that calendar year. Therefore, a request for
review for a new class of NTIOLs for CY 2011 must have been submitted
to CMS by March 8, 2010, the due date published in the CY 2010 OPPS/ASC
final rule with comment period (74 FR 60621). We received one request
for review to establish a new NTIOL class for CY 2011 by the March 8,
2010 due date. A summary of this request follows.
Requestor/Manufacturer: Alcon Laboratories, Inc.
Lens Model Number: Acrysof[supreg] Natural IOLs, Models: SN60WF,
SN60AT, MN60MA, and MN60AC.
Summary of the Request: Alcon Laboratories, Inc. (Alcon) submitted
a request for CMS to determine that its Acrysof[supreg] Natural
intraocular lenses meet the criteria for recognition as NTIOL and to
concurrently establish a new class of NTIOLs for blue light filtering
to improve driving safety under glare conditions, with these lenses as
members. As part of its request, Alcon submitted descriptive
information about the candidate IOLs as outlined in the guidance
document that we make available on the CMS Web site for the
establishment of a new class of NTIOLs, as well as information
regarding approval of the candidate IOL by the
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U.S Food and Drug Administration (FDA). This information included the
approved labeling for the candidate lenses, a summary of the IOLs'
safety and effectiveness, a copy of the FDA's approval notification,
and instructions for their use. In addition, Alcon also submitted a
number of studies in support of its claim that the blue light filtering
design features of the candidate lenses would improve driving safety
under glare conditions. We note that we have previously considered
another candidate IOL for which ASC payment review was requested on the
basis of blue light filtering properties. We discussed these lenses in
the July 23, 2004 and March 25, 2005 NTIOL proposed and final rules
published in the Federal Register (69 FR 44029 and 70 FR 15337,
respectively).
In its CY 2011 request, Alcon asserts that its request is based on
new research and measurement technologies that demonstrate that the
Acrysof[supreg] Natural IOLs with a blue light filtering chromophore
filter light in a manner that approximates the human crystalline lens
in the 400-475 nm blue light wavelength range to reduce glare that
impairs the ability of the eye to differentiate objects from the
background. Alcon further states that glare reduction can help
beneficiaries avoid hazards that can be caused by glare. Alcon also
states that at present, there are no active or expired NTIOL classes
that describe IOLs similar to its IOL.
We established in the CY 2007 OPPS/ASC final rule with comment
period that when reviewing a request for recognition of an IOL as an
NTIOL and a concurrent request to establish a new class of NTIOLs, we
would base our determination on consideration of the three major
criteria that are outlined in the discussion above. We have begun our
review of Alcon's request to recognize its Acrysof[supreg] Natural IOLs
as NTIOLs and concurrently establish a new class of NTIOLs. We are
soliciting public comment on these candidate IOLs with respect to the
established NTIOL criteria as discussed above.
First, for an IOL to be recognized as an NTIOL we require that the
IOL must have been approved by the FDA and claims of specific clinical
benefits and/or lens characteristics with established clinical
relevance in comparison with currently available IOLs must have been
approved by the FDA for use in labeling and advertising. We note that
FDA approval for the candidate lens was granted in May 2007 and that
Alcon provided FDA approval documentation, including a copy of the
FDA's approval notification, the FDA's summary of the IOL's safety and
effectiveness, and the labeling approved by the FDA in its request for
a new class of NTIOLs. The approved labels for the Alcon IOLs all
state, ``Alcon's proprietary blue light filtering chromophore filters
light in a manner that approximates the human crystalline lens in the
400-475 nm blue light wavelength range.'' The FDA label does not
otherwise reference specific clinical benefits or lens characteristics
of blue light filtering on glare. We are interested in public comments
on the specific clinical benefits or lens characteristics with
established clinical relevance for the blue light filter effects on
glare. Specifically, we are interested in public comments regarding the
assertion that the specific blue light filter properties associated
with the candidate IOLs improve driving safety via the reduction of
glare.
Second, we also require that the candidate IOL not be described by
an active or expired NTIOL class; that is, it does not share the
predominant, class-defining characteristic associated with improved
clinical outcomes with designated members of an active or expired NTIOL
class. As noted in the table above regarding active and expired NTIOL
classes, since implementation of the NTIOL review process that was
established in the June 16, 1999 Federal Register, we have approved
three classes of NTIOLs: Multifocal and Reduction in Preexisting
Astigmatism classes, both of which were created in 2000 and expired in
2005, and the currently active Reduced Spherical Aberration class,
which was created in 2006 and will expire in 2011. The class-defining
characteristic specific to IOLs that are members of these classes is
evident in the name assigned to the class. For example, IOLs recognized
as members of the reduced spherical aberration class are characterized
by their aspheric design that results in reduced spherical aberration.
We refer readers to the table above for information about the NTIOL
classes that have been created since the implementation of the review
process. Based on this information, the candidate lens may not be
described by an active or expired NTIOL class. Its proposed class-
defining characteristic and associated clinical benefits that were
described in the submitted request, specifically the blue light
filtering properties, may not be similar to the class-defining
characteristics and associated benefits of the two expired NTIOL
classes, the Multifocal and Reduction in Preexisting Astigmatism
classes, or to the class-defining characteristic and associated
benefits of the currently active Reduced Spherical Aberration class. We
welcome public comments that address whether the proposed class-
defining characteristic and associated clinical benefits of the
candidate Alcon IOLs are described by the expired or currently active
NTIOL classes.
Third, our NTIOL evaluation criteria also require that an applicant
submit evidence demonstrating that use of the IOL results in
measurable, clinically meaningful, improved outcomes in comparison to
use of currently available IOLs. We note that in the CY 2007 OPPS/ASC
final rule with comment period, we sought comments as to what
constitutes currently available IOLs for purposes of such comparisons,
and we received several comments in response to our solicitation (71 FR
68178). We agreed with commenters that we should remain flexible with
respect to our view of ``currently available lenses'' for purposes of
reviewing NTIOL requests, in order to allow for consideration of
technological advances in lenses over time. For purposes of reviewing
this request to establish a new NTIOL class for CY 2011, we believe
that foldable, spherical, monofocal IOLs made of acrylic, silicone, or
polymethylmethacrylate materials represent the currently available
lenses against which the candidate NTIOL to establish a new class
should be compared. The Alcon request asserts that the proprietary blue
light filtering chromophore incorporated into the design of the
candidate lenses and asserted associated benefits makes them different
from IOLs that are currently available in the U.S. market. We are again
seeking public comment on our view of ``currently available lenses''
for the purposes of this CY 2011 review.
We reviewed the evidence submitted as part of the request,
including two peer-reviewed articles and two related clinical studies.
The first of the submitted articles discussed the effect of the
candidate lenses on glare disability, while the second article
discussed the effects of glare on driving in simulated driving
conditions. The requestor also submitted data from two clinical studies
directly related to the submitted articles discussed above. One cross
sectional study with a planned sample size of 70 subjects evaluated
glare disability by comparing the candidate lenses against control
lenses which did not include the blue light filtering chromophore.
Results from this study suggest that subjects implanted with the
applicant IOLs had significantly faster photostress recovery times than
subjects who had control IOLs implanted without the blue light
filtering chromophore. We note that this
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cross sectional study is ongoing; consequently the preliminary results
submitted with the request only reflect 40 subjects from the planned
total sample size. The requestor also submitted data from a second
clinical study with a total sample size of 34 that evaluated the
benefit of the blue light filtering chromophore on driving performance
in patients implanted with the candidate IOLs compared to patients
implanted with non blue light filtering IOLs. The results from this
study suggested that incorporation of the yellow chromophore into the
design of the candidate lenses reduce glare disability and thereby
improve the ability of older drivers implanted with the candidate
lenses to drive safely. Overall, the evidence submitted provides us
with important information that is critical to our review of this
request. However, in making our decision as to whether to establish a
new class of NTIOL based on the primary characteristic of the candidate
lenses, we are also interested in what other information the public can
contribute related to the asserted benefits of the blue light filtering
optic. Specifically, we are seeking public comment and relevant data on
the following:
Are there other peer-reviewed data that would support or
disprove the claims of clinical benefit made by the applicant?
The presented studies compare the blue filtering optic to
clear IOLs, are there other IOLs or other clinical alternatives for
reducing glare?
Is the sample size used in both studies sufficient
considering all confounding variables including, but not limited to
age, sex, race, time from surgery, status of eyes (which eye received
the IOL or both eyes, for example) to conclude that a blue light
filtering optic would reduce glare in the Medicare population?
What kind of study design would be appropriate to prove
the claim of significant clinical benefit due to glare reduction on
which the new class would be based?
Are the submitted data enough to clarify that the blue
filtering optic is responsible for reduction in glare disability as
asserted by applicant?
We welcome public comments and relevant data specifically
addressing whether use of the Alcon Acrysof[reg] Natural IOLs result in
measurable, clinically meaningful, improved outcomes in comparison with
use of currently available IOLs. Additionally, in accordance with our
established NTIOL review process, we are seeking public comments on all
of the review criteria for establishing a new NTIOL class that would be
based on the ability of the Acrysof[reg] Natural IOLs to filter blue
light and subsequently help beneficiaries avoid hazards that can be
caused by glare while driving. All comments on this request must be
received by September 2, 2010. The announcement of CMS's determination
regarding this request will appear in the CY 2011 OPPS/ASC final rule
with comment period. If a determination of membership of the candidate
lens in a new or currently active NTIOL class is made, this
determination will be effective 30 days following the date that the
final rule with comment period is published in the Federal Register.
4. Proposed Payment Adjustment
The current payment adjustment for a 5-year period from the
implementation date of a new NTIOL class is $50. In the CY 2007 OPPS/
ASC final rule with comment period, we revised Sec. 416.200(a) through
(c) to clarify how the IOL payment adjustment is made and how an NTIOL
is paid after expiration of the payment adjustment, and made minor
editorial changes to Sec. 416.200(d). For CY 2008, CY 2009, and CY
2010, we did not revise the payment adjustment amount, and we are not
proposing to revise the payment adjustment amount for CY 2011 in light
of our limited experience with the revised ASC payment system,
implemented initially on January 1, 2008.
5. Proposed ASC Payment for Insertion of IOLs
In accordance with the final policies of the revised ASC payment
system, for CY 2011, payment for IOL insertion procedures is
established according to the standard payment methodology of the
revised payment system, which multiplies the ASC conversion factor by
the ASC payment weight for the surgical procedure to implant the IOL.
CY 2011 ASC payment for the cost of a conventional lens is packaged
into the payment for the associated covered surgical procedures
performed by the ASC. The HCPCS codes for IOL insertion procedures were
included in Table 53 below, and their proposed CY 2011 payment rates
may be found in Addendum AA to this proposed rule.
[GRAPHIC] [TIFF OMITTED] TP03AU10.553
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F. Proposed ASC Payment and Comment Indicators
1. Background
In addition to the payment indicators that we introduced in the
August 2, 2007 final rule, we also created final comment indicators for
the ASC payment system in the CY 2008 OPPS/ASC final rule with comment
period (72 FR 66855). We created Addendum DD1 to define ASC payment
indicators that we use in Addenda AA and BB to provide payment
information regarding covered surgical procedures and covered ancillary
services, respectively, under the revised ASC payment system. The ASC
payment indicators in Addendum DD1 are intended to capture policy-
relevant characteristics of HCPCS codes that may receive packaged or
separate payment in ASCs, such as whether they were on the ASC list of
covered services prior to CY 2008; payment designation, such as device-
intensive or office-based and the corresponding ASC payment
methodology; and their classification as separately payable ancillary
services including radiology services, brachytherapy sources, OPPS
pass-through devices, corneal tissue acquisition services, drugs or
biologicals, or NTIOLs.
We also created Addendum DD2 that lists the ASC comment indicators.
The ASC comment indicators used in Addenda AA and BB to the proposed
rules and final rules with comment period serve to identify, for the
revised ASC payment system, the status of a specific HCPCS code and its
payment indicator with respect to the timeframe when comments will be
accepted. The comment indicator ``NI'' is used in the OPPS/ASC final
rule with comment period to indicate new HCPCS codes for the next
calendar year for which the interim payment indicator assigned is
subject to comment. The comment indicator ``NI'' is also assigned to
existing codes with substantial revisions to their descriptors such
that we consider them to be describing new services, as discussed in
the CY 2010 OPPS/ASC final rule with comment period (74 FR 60622). We
will respond to public comments and finalize the ASC treatment of all
codes labeled with comment indicator ``NI'' in the CY 2011 OPPS/ASC
final rule with comment period.
The ``CH'' comment indicator is used in Addenda AA and BB to this
CY 2011 proposed rule to indicate that a new payment indicator (in
comparison with the indicator for the CY 2010 ASC April quarterly
update) is proposed for assignment to an active HCPCS code for the next
calendar year; an active HCPCS code is proposed for addition to the
list of procedures or services payable in ASCs; or an active HCPCS code
is proposed for deletion at the end of the current calendar year. The
``CH'' comment indicators that are published in the final rule with
comment period are provided to alert readers that a change has been
made from one calendar year to the next, but do not indicate that the
change is subject to comment. The full definitions of the payment
indicators and comment indicators are provided in Addenda DD1 and DD2
to this proposed rule.
2. Proposed ASC Payment and Comment Indicators
We are not proposing any changes to the definitions of the ASC
payment and comment indicators for CY 2011. We will consider proposing
to modify the payment indicators for procedures that were subject to
transitional payment prior to CY 2011 in future rulemaking. We refer
readers to Addenda DD1 and DD2 to this proposed rule for the complete
list.
G. ASC Policy and Payment Recommendations
MedPAC was established under section 1805 of the Act to advise
Congress on issues affecting the Medicare program. Subparagraphs (B),
(C), and (D) of sections 1805(b)(1 of the Act require MedPAC to submit
reports to Congress not later than March 1 and June 15 of each year
that present its Medicare payment policy reviews and recommendations.
The following section describes a recent MedPAC recommendation that is
relevant to the ASC payment system.
The March 2010 MedPAC ``Report to the Congress: Medicare Payment
Policy'' included the following recommendation relating specifically to
the ASC payment system for CY 2011:
Recommendation 2C: The Congress should implement a 0.6 percent
increase in payment rates for ambulatory surgical center services in
calendar year 2011 concurrent with requiring ambulatory surgical
centers to submit cost and quality data.
CMS Response: In the August 2, 2007 final rule (72 FR 42518 through
42519), we adopted a policy to update the ASC conversion factor for
consistency with section 1833(i)(2)(C) of the Act, which requires that,
if the Secretary has not updated the ASC payment amounts in a calendar
year, the payment amounts shall be increased by the percentage increase
in the Consumer Price Index for All Urban Consumers (CPI-U) as
estimated by the Secretary for the 12-month period ending with the
midpoint of the year involved. The statute set the update at zero for
CY 2008 and CY 2009. We indicated that we planned to implement the
annual updates through an adjustment to the conversion factor under the
ASC payment system beginning in CY 2010 when the statutory requirement
for a zero update no longer applies. Further, we noted that that we
would update the conversion factor for the CY 2010 ASC payment system
by the percentage increase in the CPI-U, consistent with our policy as
codified under Sec. 416.171(a)(2).
As we indicated in the CY 2010 OPPS/ASC final rule with comment
period (74 FR 60622), we did not require ASCs to submit cost data to
the Secretary for CY 2010. We explained that the 2006 GAO report,
``Medicare: Payment for Ambulatory Surgical Centers Should Be Based on
the Hospital Outpatient Payment System'' (GAO-07-86), concluded that
the APC groups in the OPPS reflect the relative costs of surgical
procedures performed in ASCs in the same way they reflect the relative
costs of the same procedures when they are performed in HOPDs.
Consistent with the GAO findings, CMS is using the OPPS as the basis
for the ASC payment system, which provides for an annual revision of
the ASC payment rates under the budget neutral ASC payment system. In
addition, we noted that, under the methodology of the revised ASC
payment system, we do not utilize ASC cost information to set and
revise the payment rates for ASCs but, instead, rely on the relativity
of hospital outpatient costs developed for the OPPS, consistent with
the recommendation of the GAO. Furthermore, we explained that we have
never required ASCs to routinely submit cost data and expressed our
concern that a new Medicare requirement for ASCs to do so could be
administratively burdensome for ASCs. In 2009, MedPAC made a similar
recommendation to that made in Recommendation 2C above. In light of
that MedPAC recommendation, in the CY 2010 OPPS/ASC proposed rule (74
FR 35391), we solicited public comment on the feasibility of ASCs
submitting cost information to CMS, including whether costs should be
collected from a sample or the universe of ASCs, the administrative
burden associated with such an activity, the form that such a
submission could take considering existing Medicare requirements for
other types of facilities and the scope of ASC services, the expected
accuracy of such cost information, and any other issues or
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concerns of interest to the public on this topic.
In the CY 2010 OPPS/ASC final rule with comment period (74 FR
60623), we summarized and responded to these comments. As noted in that
final rule with comment period, commenters' expressed varied opinions
regarding the feasibility of requiring ASCs to submit cost data to the
Secretary. Some commenters believed that requiring ASC to submit such
data would not be an insurmountable obstacle and pointed out that other
small facilities submit cost reports to CMS. They stated that ASC cost
reports are necessary to assess the adequacy of Medicare payments and
evaluate the ASC update. Other commenters, however, opposed the
requirement that ASCs submit cost data to CMS because they believed
such a requirement would be unnecessary and administratively
burdensome. Commenters generally supported a requirement that ASCs
report quality data. We refer readers to the CY 2010 OPPS/ASC final
rule with comment period for a full discussion of the comments we
received on the feasibility of requiring ASCs to report cost and
quality data (74 FR 60623). We responded that we would keep the
commenters' perspectives in mind as we further consider the adequacy of
the Medicare ASC payment rates and move toward implementation of ASC
quality reporting.
Consistent with our CY 2010 policy, we are proposing not to require
ASCs to submit cost data to the Secretary for CY 2011. We continue to
believe that our established methodology results in appropriate payment
rates for ASCs. As noted in the CY 2010 OPPS/ASC final rule with
comment period (74 FR 60623), section 109(b) of the MIEA-TRHCA (Pub. L.
109-432) gives the Secretary the authority to implement ASC quality
measure reporting and to reduce the payment update for ASCs that fail
to report those required measures. We restate our belief that promoting
high quality care in the ASC setting through quality reporting is
highly desirable and fully in line with our efforts under other payment
systems. As discussed in section XVI.H. of this proposed rule, we are
proposing not to require ASC quality data reporting for CY 2011, but
our intention is to implement ASC quality reporting in a future
rulemaking.
Section 3006(f) of the Affordable Care Act, as added by section
10301(a) of the Affordable Care Act, requires CMS to develop a plan on
implementing a value-based purchasing program for ASCs that will
consider measures of quality and efficiency in ASCs, among other
requirements. The Secretary must submit a report to Congress containing
this plan not later than January 1, 2011.
H. Calculation of the ASC Conversion Factor and ASC Payment Rates
1. Background
In the August 2, 2007 final rule (72 FR 42493), we established our
policy to base ASC relative payment weights and payment rates under the
revised ASC payment system on APC groups and relative payment weights.
Consistent with that policy and the requirement at section
1833(i)(2)(D)(ii) of the Act that the revised payment system be
implemented so that it would be budget neutral, the initial ASC
conversion factor (CY 2008) was calculated so that estimated total
Medicare payments under the revised ASC payment system in the first
year would be budget neutral to estimated total Medicare payments under
the prior (CY 2007) ASC payment system. That is, application of the ASC
conversion factor was designed to result in aggregate Medicare
expenditures under the revised ASC payment system in CY 2008 equal to
aggregate Medicare expenditures that would have occurred in CY 2008 in
the absence of the revised system, taking into consideration the cap on
ASC payments in CY 2007 as required under section 1833(i)(2)(E) of the
Act (72 FR 42522).
We note that we consider the term ``expenditures'' in the context
of the budget neutrality requirement under section 1833(i)(2)(D)(ii) of
the Act to mean expenditures from the Medicare Part B Trust Fund. We do
not consider expenditures to include beneficiary coinsurance and
copayments. This distinction was important for the CY 2008 ASC budget
neutrality model that considered payments across hospital outpatient,
ASC, and MPFS payment systems. However, because coinsurance is almost
always 20 percent for ASC services, this interpretation of expenditures
has minimal impact for subsequent budget neutrality adjustments
calculated within the revised ASC payment system.
In the CY 2008 OPPS/ASC final rule with comment period (72 FR 66857
through 66858), we set out a step-by-step illustration of the final
budget neutrality adjustment calculation based on the methodology
finalized in the August 2, 2007 final rule (72 FR 42521 through 42531)
and as applied to updated data available for the CY 2008 OPPS/ASC final
rule with comment period. The application of that methodology to the
data available for the CY 2008 OPPS/ASC final rule with comment period
resulted in a budget neutrality adjustment of 0.65.
For CY 2008, we adopted the OPPS relative payment weights as the
ASC relative payment weights for most services and, consistent with the
final policy, we calculated the CY 2008 ASC payment rates by
multiplying the ASC relative payment weights by the final CY 2008 ASC
conversion factor of $41.401. For covered office-based surgical
procedures and covered ancillary radiology services, the established
policy is to set the relative payment weights so that the national
unadjusted ASC payment rate does not exceed the MPFS unadjusted non-
facility PE RVU amount. Further, as discussed in the CY 2008 OPPS/ASC
final rule with comment period (72 FR 66841 through 66843), we also
adopted alternative rate setting methodologies for specific types of
services (for example, device-intensive procedures).
As discussed in the August 2, 2007 final rule (72 FR 42518) and as
codified under Sec. 416.172(c) of the regulations, the revised ASC
payment system accounts for geographic wage variation when calculating
individual ASC payments by applying the pre-floor and pre-reclassified
hospital wage indices to the labor-related share, which is 50 percent
of the ASC payment amount. Beginning in CY 2008, CMS accounted for
geographic wage variation in labor cost when calculating individual ASC
payments by applying the pre-floor and pre-reclassified hospital wage
index values that CMS calculates for payment, using updated Core Based
Statistical Areas (CBSAs) issued by the Office of Management and Budget
in June 2003. The reclassification provision provided at section
1886(d)(10) of the Act is specific to hospitals. We believe the use of
the most recent available raw pre-floor and pre-reclassified hospital
wage indices results in the most appropriate adjustment to the labor
portion of ASC costs. In addition, use of the unadjusted hospital wage
data avoids further reductions in certain rural statewide wage index
values that result from reclassification. We continue to believe that
the unadjusted hospital wage indices, which are updated yearly and are
used by many other Medicare payment systems, appropriately account for
geographic variation in labor costs for ASCs.
We note that in certain instances there might be urban or rural
areas for which there is no IPPS hospital whose wage index data would
be used to set the wage index for that area. For these areas, our
policy has been to use the average of the wage indices for CBSAs (or
metropolitan divisions as applicable)
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that are contiguous to the area that has no wage index (where
``contiguous'' is defined as sharing a border). We have applied a proxy
wage index based on this methodology to ASCs located in CBSA 25980
Hinesville-Fort Stewart, GA, and CBSA 22 Rural Massachusetts. For CY
2011, we have identified another area, specifically, CBSA 11340
Anderson, SC for which there is no IPPS hospital whose wage index data
would be used to set the wage index for that area. Generally, we would
use the methodology described above; however in this situation all of
the areas contiguous to CBSA 11340 Anderson, SC are rural. Therefore,
for this type of unique situation, we are proposing to set the ASC wage
index by calculating the average of all wage indices for urban areas in
the state. In other situations, where there are no IPPS hospitals
located in a relevant labor market area, we would continue our current
policy of calculating an urban or rural area's wage index by
calculating the average of the wage indices for CBSAs (or metropolitan
divisions where applicable) that are contiguous to the area with no
wage index.
2. Proposed Calculation of the ASC Payment Rates
a. Updating the ASC Relative Payment Weights for CY 2011 and Future
Years
We update the ASC relative payment weights each year using the
national OPPS relative payment weights (and MPFS non-facility PE RVU
amounts, as applicable) for that same calendar year and uniformly scale
the ASC relative payment weights for each update year to make them
budget neutral (72 FR 42531 through 42532). Consistent with our
established policy, we are proposing to scale the CY 2011 relative
payment weights for ASCs according to the following method. Holding ASC
utilization and the mix of services constant from CY 2008 for CY 2011,
we are proposing to compare the total payment weight using the CY 2010
ASC relative payment weights under the 75/25 blend (of the CY 2007
payment rate calculated under the ASC standard ratesetting methodology
and the ASC payment rate calculated under the ASC standard methodology)
with the total payment weight using the CY 2011 ASC relative payment
weights (calculated under the ASC standard rate setting methodology) to
take into account the changes in the OPPS relative payment weights
between CY 2010 and CY 2011. We would use the ratio of CY 2010 to CY
2011 total payment weight (the weight scaler) to scale the ASC relative
payment weights for CY 2011. The proposed CY 2011 ASC scaler is 0.9090
and scaling would apply to the ASC relative payment weights of the
covered surgical procedures and covered ancillary radiology services
for which the ASC payment rates are based on OPPS relative payment
weights.
Scaling would not apply in the case of ASC payment for separately
payable covered ancillary services that have a predetermined national
payment amount (that is, their national ASC payment amounts are not
based on OPPS relative payment weights), such as drugs and biologicals
that are separately paid or services that are contractor-priced or paid
at reasonable cost in ASCs. Any service with a predetermined national
payment amount would be included in the ASC budget neutrality
comparison, but scaling of the ASC relative payment weights would not
apply to those services. The ASC payment weights for those services
without predetermined national payment amounts (that is, those services
with national payment amounts that would be based on OPPS relative
payment weights if a payment limitation did not apply) would be scaled
to eliminate any difference in the total payment weight between the
current year and the update year.
For any given year's ratesetting, we typically use the most recent
full calendar year of claims data to model budget neutrality
adjustments. We currently have available 98 percent of CY 2009 ASC
claims data. To create an analytic file to support calculation of the
weight scaler and budget neutrality adjustment for the wage index
(discussed below), we summarized available CY 2009 ASC claims by
provider and by HCPCS code. We created a unique supplier identifier
solely for the purpose of identifying unique ASCs within the CY 2009
claims data. We used the supplier zip code reported on the claim to
associate State, county, and CBSA with each ASC. This file, available
to the public as a supporting data file for this proposed rule, is
posted on the CMS Web site at: http://www.cms.gov/ASCPayment/01_Overview.asp#TopOfPage.
b. Updating the ASC Conversion Factor
Under the OPPS, we typically apply a budget neutrality adjustment
for provider-level changes, most notably a change in the wage index
values for the upcoming year, to the conversion factor. Consistent with
our final ASC payment policy, for the CY 2011 ASC payment system, we
are proposing to calculate and apply the pre-floor and pre-reclassified
hospital wage indices that are used for ASC payment adjustment to the
ASC conversion factor, just as the OPPS wage index adjustment is
calculated and applied to the OPPS conversion factor (73 FR 41539). For
CY 2011, we calculated this proposed adjustment for the ASC payment
system by using the most recent CY 2009 claims data available and
estimating the difference in total payment that would be created by
introducing the CY 2011 pre-floor and pre-reclassified hospital wage
indices. Specifically, holding CY 2009 ASC utilization and service-mix
and CY 2010 national payment rates after application of the weight
scaler constant, we calculated the total adjusted payment using the CY
2010 pre-floor and pre-reclassified hospital wage indices and the total
adjusted payment using the proposed CY 2011 pre-floor and pre-
reclassified hospital wage indices. We used the 50-percent labor-
related share for both total adjusted payment calculations. We then
compared the total adjusted payment calculated with the CY 2010 pre-
floor and pre-reclassified hospital wage indices to the total adjusted
payment calculated with the proposed CY 2011 pre-floor and pre-
reclassified hospital wage indices and applied the resulting ratio of
1.0006 (the proposed CY 2011 ASC wage index budget neutrality
adjustment) to the CY 2010 ASC conversion factor to calculate the
proposed CY 2011 ASC conversion factor.
Section 1833(i)(2)(C) of the Act requires that, if the Secretary
has not updated the ASC payment amounts in a calendar year, the payment
amounts shall be increased by the percentage increase in the CPI-U as
estimated by the Secretary for the 12-month period ending with the
midpoint of the year involved. Because the Secretary does update the
ASC payment amounts annually, we adopted a policy, which we codified at
Sec. 416.171(a)(2)(ii), to update the ASC conversion factor using the
CPI-U for CY 2010 and subsequent calendar years. Therefore, the annual
update to the ASC payment system is the CPI-U (referred to as the CPI-U
update factor). Section 3401(k) of the Affordable Care Act amends
section 1833(i)(2)(D) of the Act by adding a new clause (v) which
requires that ``any annual update under [the ASC payment] system for
the year * * * shall be reduced by the productivity adjustment
described in section 1886(b)(3)(B)(xi)(II)'' (which we refer to as the
MFP adjustment) effective with the calendar year beginning January 1,
2011. Section 3401(k) of the Affordable Care Act states that
application of the MFP adjustment to the ASC payment
[[Page 46359]]
system may result in the update to the ASC payment system being less
than zero for a year and may result in payment rates under the ASC
payment system for a year being less than such payment rates for the
preceding year. We are proposing to revise Sec. 416.160 and Sec.
416.171 to reflect this provision of the Affordable Care Act.
In accordance with section 1833(i)(2)(C)(i) of the Act, before
applying the MFP adjustment, the Secretary first determines the
``percentage increase'' in the CPI-U, which we interpret cannot be a
negative number. Thus, in the instance where the percentage change in
the CPI-U for a year is negative, we are proposing to hold the CPI-U
update factor for the ASC payment system to zero. Section
1833(i)(2)(D)(v) of the Act, as added by section 3401(k) of the
Affordable Care Act, then requires that the Secretary reduce the CPI-U
update factor (which would be held to zero if the CPI-U percentage
change is negative) by the MFP adjustment, and states that application
of the MFP adjustment may reduce this percentage change below zero. If
the application of the MFP adjustment to the CPI-U percentage increase
would result in a MFP-adjusted CPI-U update factor that is less than
zero, then the annual update to the ASC payment rates would be negative
and payments would decrease relative to the prior year.
Table 54 provides illustrative examples of how the MFP would be
applied to the ASC payment system. These examples show the implication
of a positive CPI-U update factor with a small MFP, a positive CPI-U
update factor with a large MFP adjustment, and a CPI-U update factor of
0. We discuss in greater detail the methodology for calculating the MFP
for the ASC payment system and the other payment systems affected by
the MFP adjustment (found in section 1886(b)(3)(B)(xi)(II) of the Act,
as added by section 3401(a) of the Affordable Care Act) in the CY 2011
MPFS proposed rule. Comments on the specific mathematical calculation
of the MFP should be made to that proposed rule. Comments on the
application of the MFP to the CPI-U update factor under the ASC payment
system should be made to this proposed rule.
[GRAPHIC] [TIFF OMITTED] TP03AU10.554
For this proposed rule, for the 12-month period ending with the
midpoint of CY 2011, the Secretary estimates that the CPI-U is 1.6
percent. The Secretary estimates that the MFP adjustment is 1.6. As
discussed in the CY 2011 MPFS proposed rule, we are proposing to reduce
the CPI-U of 1.6 percent by the MFP adjustment specific to this CPI-U,
resulting in an MFP-adjusted CPI-U updated factor of 0 percent.
Therefore, we are proposing to apply to the ASC conversion factor a 0
percent MFP-adjusted update.
For CY 2011, we also are proposing to adjust the CY 2010 ASC
conversion factor ($41.873) by the wage adjustment for budget
neutrality of 1.0006 in addition to the MFP-adjusted update factor of 0
discussed above, which results in a proposed CY 2011 ASC conversion
factor of $41.898.
3. Display of Proposed ASC Payment Rates
Addenda AA and BB to this proposed rule display the proposed
updated ASC payment rates for CY 2011 for covered surgical procedures
and covered ancillary services, respectively. These addenda contain
several types of information related to the proposed CY 2011 payment
rates. Specifically, in Addendum AA, a ``Y'' in the column titled
``Subject to Multiple Procedure Discounting'' indicates that the
surgical procedure would be subject to the multiple procedure payment
reduction policy. As discussed in the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66829 through 66830), most covered surgical
procedures are subject to a 50-percent reduction in the ASC payment for
the lower-paying procedure when more than one procedure is performed in
a single operative session. Display of the comment indicator ``CH'' in
the column titled ``Comment Indicator'' indicates a proposed change in
payment policy for the item or service, including identifying
discontinued HCPCS codes, designating items or services newly payable
under the ASC payment system, and identifying items or services with
changes in the ASC payment indicator for CY 2011.
The values displayed in the column titled ``CY 2011 Payment
Weight'' are the proposed relative payment weights for each of the
listed services for CY 2011. The payment weights for all covered
surgical procedures and covered ancillary services whose ASC payment
rates are based on OPPS relative payment weights are scaled for budget
neutrality. Thus, scaling was not applied to the device portion of the
device intensive procedures, services that are paid at the MPFS
nonfacility PE RVU amount, separately payable covered ancillary
services that have a predetermined national payment amount, such as
drugs and biologicals that are separately paid under the OPPS, or
services that are contractor-priced or paid at reasonable cost in ASCs.
To derive the proposed CY 2011 payment rate displayed in the ``CY
2011 Payment'' column, each ASC payment weight in the ``CY 2011 Payment
Weight'' column is multiplied by the proposed CY 2011 conversion factor
of $41.898. The conversion factor includes a budget neutrality
adjustment for changes in the wage index values and the CPI-U update
factor as reduced by the productivity adjustment (as discussed in
section XV.H.2.b. of this proposed rule).
In Addendum BB, there are no relative payment weights displayed in
the ``CY 2011 Payment Weight'' column for items and services with
predetermined national payment
[[Page 46360]]
amounts, such as separately payable drugs and biologicals. The ``CY
2011 Payment'' column displays the proposed CY 2011 national unadjusted
ASC payment rates for all items and services. The proposed CY 2011 ASC
payment rates listed in the Addendum AA for separately payable drugs
and biologicals are based on ASP data used for payment in physicians'
offices in April 2010.
XVI. Reporting Quality Data for Annual Payment Rate Updates
A. Background
1. Overview
CMS has implemented quality measure reporting programs for multiple
settings of care. These programs promote higher quality, more efficient
health care for Medicare beneficiaries. The quality data reporting
program for hospital outpatient care, known as the Hospital Outpatient
Quality Data Reporting Program (HOP QDRP), has been generally modeled
after the program for hospital inpatient services, the Reporting
Hospital Quality Data for Annual Payment Update (RHQDAPU) program. Both
of these quality reporting programs for hospital services, as well as
the program for physicians and other eligible professionals, known as
the Physician Quality Reporting Initiative (PQRI), have financial
incentives for the reporting of quality data to CMS. CMS also has
implemented quality reporting programs for home health agencies and
skilled nursing facilities that are based on conditions of
participation, and an end-stage renal disease quality reporting program
that is based on conditions for coverage.
2. Hospital Outpatient Quality Data Reporting Under Section 109(a) of
MIEA-TRHCA
Section 109(a) of the MIEA-TRHCA (Pub. L. 109-432) amended section
1833(t) of the Act by adding a new paragraph (17) which affects the
annual payment update factor applicable to OPPS payments for services
furnished by hospitals in outpatient settings on or after January 1,
2009. Section 1833(t)(17)(A) of the Act states that subsection (d)
hospitals (as defined under section 1886(d)(1)(B) of the Act) that fail
to report data required for the quality measures selected by the
Secretary in the form and manner required by the Secretary under
section 1833(t)(17)(B) of the Act will incur a 2.0 percentage point
reduction to their annual payment update factor. Section 1833(t)(17)(B)
of the Act requires that hospitals submit quality data in a form and
manner, and at a time, that the Secretary specifies. Section
1833(t)(17)(A)(ii) of the Act specifies that any reduction would apply
only to the payment year involved and would not be taken into account
in computing the applicable annual payment update factor for a
subsequent payment year.
Section 1833(t)(17)(C)(i) of the Act requires the Secretary to
develop measures appropriate for the measurement of the quality of care
(including medication errors) furnished by hospitals in outpatient
settings, that these measures reflect consensus among affected parties
and, to the extent feasible and practicable, that these measures
include measures set forth by one or more national consensus building
entities. The National Quality Forum (NQF) is a voluntary consensus
standard setting organization that is composed of a diverse
representation of consumer, purchaser, provider, academic, clinical,
and other health care stakeholder organizations. NQF was established to
standardize health care quality measurement and reporting through its
consensus development process. We generally prefer to adopt NQF-
endorsed measures for CMS quality reporting programs. However, we
believe that consensus among affected parties also can be reflected by
other means, including: consensus achieved during the measure
development process; consensus shown through broad acceptance and use
of measures; and consensus through public comment. We also note that
section 1833(t)(17) of the Act does not require that each measure we
adopt for the HOP QDRP be endorsed by a national consensus building
entity, or by the NQF specifically.
Section 1833(t)(17)(C)(ii) of the Act allows the Secretary to
``[select] measures that are the same as (or a subset of) the measures
for which data are required to be submitted under section
1886(b)(3)(B)(viii)'' of the Act (the RHQDAPU program). As we stated in
the CY 2009 OPPS/ASC final rule with comment period (73 FR 68758
through 68759), we do not believe that we should, without further
analysis, adopt the RHQDAPU program measures as the measures for the
HOP QDRP. We continue to believe that it is most appropriate and
desirable to adopt measures that specifically apply to the hospital
outpatient setting for the HOP QDRP.
Section 1833(t)(17)(D) of the Act gives the Secretary the authority
to replace measures or indicators as appropriate, such as when all
hospitals are effectively in compliance or when the measures or
indicators have been subsequently shown not to represent the best
clinical practice. Section 1833(t)(17)(E) of the Act requires the
Secretary to establish procedures for making data submitted under the
HOP QDRP available to the public. Such procedures include providing
hospitals with the opportunity to review their data before these data
are released to the public.
3. ASC Quality Data Reporting Under Section 109(b) of MIEA-TRHCA
Section 109(b) of the MIEA-TRHCA amended section 1833(i) of the Act
by redesignating clause (iv) as clause (v) and adding new clause (iv)
to paragraph (2)(D) and by adding new paragraph (7). Section
1833(i)(2)(D)(iv) of the Act authorizes, but does not require, the
Secretary to implement the revised ASC payment system ``so as to
provide for a reduction in any annual update for failure to report on
quality measures'' beginning with payment for ASC services furnished on
or after January 1, 2009.
Section 1833(i)(7)(A) of the Act states that the Secretary may
provide that any ASC that fails to report data required for the quality
measures selected by the Secretary in the form and manner required by
the Secretary under section 1833(i)(7) of the Act will incur a
reduction in any annual payment update of 2.0 percentage points.
Section 1833(i)(7)(A) of the Act also specifies that a reduction for
one year cannot be taken into account in computing the annual ASC
payment update for a subsequent year.
Section 1833(i)(7)(B) of the Act provides that, ``[e]xcept as the
Secretary may otherwise provide,'' the hospital outpatient quality data
provisions of subparagraphs (B) through (E) of section 1833(t)(17) of
the Act, summarized above, shall apply to ASCs in a similar manner to
the manner in which they apply under these paragraphs to hospitals
under the HOP QDRP. We did not implement an ASC quality reporting
program for CY 2008 (72 FR 66875) or for CY 2009 (73 FR 68780), or for
CY 2010 (74 FR 60656).
We refer readers to section XVI.F. of this proposed rule for
further discussion of ASC quality data reporting.
4. HOP QDRP Quality Measures for the CY 2009 Payment Determination
For the CY 2009 annual payment update, we required HOP QDRP
reporting using seven quality measures--five Emergency Department (ED)
Acute Myocardial Infarction (AMI) Cardiac Care measures and two
Surgical Care measures. These measures address care provided to a large
number of adult patients in hospital outpatient settings across a
diverse set of conditions, and
[[Page 46361]]
were selected for the initial set of HOP QDRP measures based on their
relevance as a set to all HOPDs.
Specifically, in order for hospitals to receive the full OPPS
payment update for services furnished in CY 2009, in the CY 2008 OPPS/
ASC final rule with comment period (72 FR 66865 and 66871), we required
that subsection (d) hospitals paid under the OPPS submit data on the
following seven measures for hospital outpatient services furnished on
or after April 1, 2008: (1) ED-AMI-1: Aspirin at Arrival; (2) ED-AMI-2:
Median Time to Fibrinolysis; (3) ED-AMI-3: Fibrinolytic Therapy
Received within 30 Minutes of Arrival; (4) ED-AMI-4: Median Time to
Electrocardiogram (ECG); (5) ED-AMI-5: Median Time to Transfer for
Primary PCI; (6) PQRI 20: Surgical Care-Timing of Antibiotic
Prophylaxis; and (7) PQRI 21: Surgical Care-Selection of
Antibiotic.
5. HOP QDRP Quality Measures for the CY 2010 Payment Determination
For the CY 2010 payment update, we required continued submission of
data on the existing seven measures discussed above (73 FR 68761), and
adopted four new imaging measures (73 FR 68766). For CY 2010, we also
changed the measure designations for the existing seven measures to an
``OP-'' format. For example, the designations of ED-AMI-2 and
ED-AMI-3 were changed to OP-1 and OP-2 so that the eleven measures for
the CY 2010 payment update were designated as OP-1 through OP-11. This
change allowed us to maintain a consistent sequential designation
system that we could expand as we add additional measures.
The four imaging measures that we adopted beginning with the CY
2010 payment determination (OP-8: MRI Lumbar Spine for Low Back Pain,
OP-9: Mammography Follow-up Rates, OP-10: Abdomen CT--Use of Contrast
Material, and OP-11: Thorax CT--Use of Contrast Material) are claims-
based measures that CMS will calculate using Medicare Part B claims
data without imposing upon hospitals the burden of additional chart
abstraction. For purposes of the CY 2010 payment determination, we will
calculate these measures using CY 2008 Medicare administrative claims
data.
In the CY 2009 OPPS/ASC proposed rule, OP-10 had two submeasures
listed: OP-10a: CT Abdomen--Use of contrast material excluding calculi
of the kidneys, ureter, and/or urinary tract, and OP-10b: CT Abdomen--
Use of contrast material for diagnosis of calculi in the kidneys,
ureter, and or urinary tract. In the CY 2009 OPPS/ASC final rule with
comment period (73 FR 68766), we finalized OP-10 (previously known as
OP-10a): Abdomen CT--Use of Contrast Material. To clarify, we are
calculating OP-10 excluding patients with impaired renal functions
because they are not candidates for an abdominal CT with contrast. This
exclusion is described in greater detail in the Specifications Manual
for Hospital Outpatient Department Quality Measures (HOPD
Specifications Manual) located at the QualityNet Web site (http://www.QualityNet.org).
The complete set of 11 measures to be used for the CY 2010 payment
determination is listed at 73 FR 68766.
6. HOP QDRP Quality Measures, Technical Specification Updates, and Data
Publication for the CY 2011 Payment Determination
a. Quality Measures
For the CY 2011 payment determination, we required hospitals to
continue to submit data on the existing 11 HOP QDRP measures. These
measures continue to address areas of topical importance regarding the
quality of care provided in HOPDs, and reflect consensus among affected
parties. Seven of these 11 measures are chart-abstracted measures in
two areas of importance that are also measured for the inpatient
setting: AMI cardiac care and surgical care. The remaining four
measures address imaging efficiency in HOPDs.
For the CY 2011 payment determination, we did not add any new HOP
QDRP measures. We indicated our sensitivity to the burden upon HOPDs
associated with chart abstraction and stated that we seek to minimize
the collection burden associated with quality measurement. We also
stated that we will continue to assess whether we can collect data on
additional quality measures through mechanisms other than chart
abstraction, such as from Medicare administrative claims data and EHRs.
The complete set of 11 measures that will be used for the CY 2011
payment determination is listed at 74 FR 60637.
b. Maintenance of Technical Specifications for Quality Measures
Technical specifications for each HOP QDRP measure are listed in
the HOPD Specifications Manual, which is posted on the CMS QualityNet
Web site at http://www.QualityNet.org. We maintain the technical
specifications for the measures by updating this HOPD Specifications
Manual and including detailed instructions and calculation algorithms.
In some cases where the specifications are available elsewhere, we may
include links to Web sites hosting technical specifications. These
resources are for hospitals to use when collecting and submitting data
on required measures.
In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68766
through 68767), we established a subregulatory process for updates to
the technical specifications that we use to calculate HOP QDRP
measures. This process is used when changes to the measure
specifications are necessary due to changes in scientific evidence or
in the measure as endorsed by the consensus entity. Changes of this
nature may not coincide with the timing of our regulatory actions, but
nevertheless require inclusion in the measure specifications so that
the HOP QDRP measures are calculated based on the most up-to-date
scientific and consensus standards. We indicated that notification of
changes to the measure specifications on the QualityNet Web site,
http://www.QualityNet.org, and in the HOPD Specifications Manual that
occurred as a result of changes in scientific evidence or national
consensus would occur no less than 3 months before any changes become
effective for purposes of reporting under the HOP QDRP.
The HOPD Specifications Manual is released every 6 months and
addenda are released as necessary providing at least 3 months of
advance notice for insubstantial changes such as changes to ICD-9, CPT,
NUBC, and HCPCS codes, and at least 6 months notice for substantive
changes to data elements that would require significant systems
changes.
c. Publication of HOP QDRP Data
Section 1833(t)(17)(E) of the Act requires that the Secretary
establish procedures to make data collected under the HOP QDRP program
available to the public. It also states that such procedures must
ensure that a hospital has the opportunity to review the data that are
to be made public with respect to the hospital prior to such data being
made public. To meet these requirements, data that a hospital has
submitted for the HOP QDRP are typically displayed on CMS Web sites
such as the Hospital Compare Web site, http://www.hospitalcompare.hhs.gov after a preview period. The Hospital
Compare Web site is an interactive Web tool that assists beneficiaries
by providing information on hospital quality of care. This information
encourages beneficiaries to work with their doctors and hospitals to
discuss the quality of care hospitals provide to
[[Page 46362]]
patients, thereby providing an additional incentive to hospitals to
improve the quality of care that they furnish.
In general, we strive to display hospital quality measures on the
Hospital Compare Web site as soon as possible after they have been
adopted and are available to CMS for reporting. However, information
that may not be easily understood by the public and information with
unresolved display issues or pending design considerations may be made
available on other non-interactive CMS Web sites such as http://www.cms.hhs.gov/HospitalQualityInits/. Publicly reporting the
information in this manner, though not on the Hospital Compare Web
site, allows CMS to meet the requirement under section 1833(t)(17)(E)
of the Act for establishing procedures to make quality data submitted
available to the public following a preview period. We are proposing
that, under circumstances when we have to display hospital quality
information on non-interactive CMS Web sites for reasons discussed
earlier, affected parties would be notified via CMS listserves, CMS e-
mail blasts, national provider calls, and QualityNet announcements
regarding the release of preview reports followed by the posting of
data on a Web site other than Hospital Compare. The release of preview
reports allows CMS to meet the requirement under section 1833(t)(17)(E)
of the Act for establishing procedures to make quality data submitted
available to the public following a preview period.
CMS also requires hospitals to complete and submit a registration
form (``participation form'') in order to participate in the HOP QDRP.
With submission of this form, participating hospitals agree that they
will allow CMS to publicly report the quality measures, including those
that CMS calculates using Medicare claims, as required by the Act and
the HOP QDRP.
In the CY 2009 OPPS/ASC final rule with comment period (73 FR
68778), we established that, for CY 2010, hospitals sharing the same
CMS Certification Number (CCN, previously known as the Medicare
Provider Number (MPN)) must combine data collection and submission
across their multiple campuses for the clinical measures for public
reporting purposes. We finalized the policy that, under the HOP QDRP,
we will publish quality data by the corresponding CCN. This approach is
consistent with the approach taken under the RHQDAPU program. In the CY
2009 OPPS/ASC final rule with comment period, we also stated that we
intend to indicate instances where data from two or more hospitals are
combined to form the publicly reported measures on the Web site.
In the CY 2010 OPPS/ASC final rule with comment period, we
finalized our CY 2010 policy regarding publication of HOP QDRP data (74
FR 60652 through 60654). Section 1833(t)(17)(E) of the Act requires
that the Secretary establish procedures to make data collected under
the HOP QDRP available to the public; however, this section does not
require that such data be validated before it is made public. We
explained that, initially, we decided not to post ``[i]nformation from
non-validated data, including the initial reporting period (April--June
2008)'' as discussed in the CY 2008 OPPS/ASC final rule with comment
period (72 FR 66874). We noted, however, that data submitted by
hospitals are publicly reported regardless of whether those data are
successfully validated for payment determination purposes under
existing procedures for the RHQDAPU program. We also noted that, in the
CY 2009 OPPS/ASC final rule with comment period, we stated that we
intended to make the information collected under the HOP QDRP available
to the public in 2010 (73 FR 68778).
In the CY 2010 OPPS/ASC proposed rule (74 FR 35404), we proposed to
make data collected for quarters beginning with the third quarter of CY
2008 (July--September 2008) under the HOP QDRP publicly available,
regardless of whether those data have been validated for payment
determination purposes. In the CY 2010 OPPS/ASC final rule with comment
period (74 FR 60654), we finalized our proposal to publicly report HOP
QDRP data on Hospital Compare in 2010 with some modifications in the
periods of time to be reported. For measures OP-1 through OP-5, we will
publicly report data periods beginning with the 3rd quarter of 2008.
For measures OP-6 and OP-7, we will publicly report data periods
beginning with the 3rd quarter of 2009. For measures OP-8 through OP-
11, we will report CY 2010 payment determination calculations using CY
2008 claims.
B. Proposed Expansion of HOP QDRP Quality Measures for the CY 2012, CY
2013, and CY 2014 Payment Determinations
1. Considerations in Expanding and Updating Quality Measures Under the
HOP QDRP
In general, when selecting measures for the HOP QDRP program, we
take into account several considerations and goals. These include: (a)
Expanding the types of measures beyond process of care measures to
include an increased number of outcome measures, efficiency measures,
and patients' experience-of-care measures; (b) expanding the scope of
hospital services to which the measures apply; (c) considering the
burden on hospitals in collecting chart-abstracted data; (d)
harmonizing the measures used in the HOP QDRP program with other CMS
quality programs to align incentives and promote coordinated efforts to
improve quality; (e) seeking to use measures based on alternative
sources of data that do not require chart abstraction or that utilize
data already being reported by many hospitals, such as data that
hospitals report to clinical data registries, or all-payer claims data
bases; and (f) weighing the relevance and utility of the measures
compared to the burden on hospitals in submitting data under the HOP
QDRP program.
Specifically, we give priority to quality measures that assess
performance on: (a) Conditions that result in the greatest mortality
and morbidity in the Medicare population; (b) conditions that are high
volume and high cost for the Medicare program; and (c) conditions for
which wide cost and treatment variations have been reported, despite
established clinical guidelines. We have used and continue to use these
criteria to guide our decisions regarding what measures to add to the
HOP QDRP measure set.
In the CY 2009 OPPS/ASC final rule with comment period, we adopted
four claims-based quality measures that do not require a hospital to
submit chart-abstracted clinical data (73 FR 68766). This supports our
goal of expanding the measures for the HOP QDRP while minimizing the
burden upon hospitals and, in particular, without significantly
increasing the chart abstraction burden. In addition to claims-based
measures, we are considering registries \1\ and EHRs as alternative
ways to collect data from hospitals. Many hospitals submit data to and
participate in existing registries. In addition, registries often
capture outcome information and provide ongoing quality improvement
feedback to registry participants. Instead of requiring hospitals to
submit the same data to CMS that they are already submitting to
registries, we could collect the data directly from the registries with
the permission of the hospital, thereby enabling us to expand the HOP
QDRP measure set without increasing the burden of data collection for
those
[[Page 46363]]
hospitals participating in the registries. The data that we would
receive from registries would be used to calculate quality measures
required under the HOP QDRP, and would be publicly reported like other
HOP QDRP quality measures, encouraging improvements in the quality of
care. In the CY 2010 OPPS/ASC final rule with comment period (74 FR
60633), we responded to public comments on such an approach.
---------------------------------------------------------------------------
\1\ A registry is a collection of clinical data for purposes of
assessing clinical performance, quality of care, and opportunities
for quality improvement.
---------------------------------------------------------------------------
In the CY 2009 OPPS/ASC final rule with comment period, we also
stated our intention to explore mechanisms for data submission using
EHRs (73 FR 68769). CMS has adopted the definition of Qualified EHR set
forth by the Office of the National Coordinator for Health Information
Technology (ONC) which has adopted the statutory definition of
Qualified EHR as follows: Section 3000(13) of the PHSA defines
Qualified EHR as an electronic record of health-related information on
an individual that: (A) Includes patient demographic and clinical
health information, such as medical history and problem lists; and (B)
has the capacity: (i) To provide clinical decision support; (ii) to
support physician order entry; (iii) to capture and query information
relevant to health care quality; and (iv) to exchange electronic health
information with, and integrate such information from other sources.''
CMS has also adopted the definition of Certified EHR by ONC as follows:
Certified EHR technology means a complete EHR or a combination of EHR
Modules, each of which: (1) Meets the requirements included in the
definition of a Qualified EHR; and (2) has been tested and certified in
accordance with the certification program established by the ONC as
having met all applicable certification criteria adopted by the
Secretary. Establishing a data submission mechanism using EHRs system
will require interoperability between EHRs and CMS data collection
systems, additional infrastructure development on the part of hospitals
and CMS, and the adoption of standards for the capturing, formatting,
and transmission of data elements that make up the measures. However,
once these activities are accomplished, the adoption of measures that
rely on data obtained directly from EHRs would enable us to expand the
HOP QDRP measure set with less cost and burden to hospitals. In the CY
2010 OPPS/ASC final rule with comment period (74 FR 60633 through
60634), we responded to public comments on such an approach.
In prior years, we have proposed measures for one payment
determination in a given rulemaking cycle. In prior rules, we have
identified measures for future consideration, but have not proposed or
finalized measures beyond those to be collected and used for the next
sequential payment determination. In this CY 2011 rulemaking cycle, we
are proposing the addition of new measures over a three year period of
time for CY 2012, CY 2013, and CY 2014 payment determinations. We
believe this proposed process would assist hospitals in planning,
meeting future reporting requirements, and implementing quality
improvement efforts. We also would have more time to develop, align,
and implement the infrastructure necessary to collect data on the
measures and make payment determinations. To the extent that we choose
to finalize some or all of these measures for the CY 2012, CY 2013 and
CY 2014 payment determinations, this would not preclude us from
proposing additional measures or changing the list of measures for
future payment determinations through subsequent rulemaking cycles that
affect these future payment determinations. We invite comments on our
intention to propose measures for more than one payment determination
in a single rulemaking cycle.
2. Retirement of HOP QDRP Quality Measures
In the FY 2010 IPPS/RY 2010 LTCH PPS proposed rule, we finalized a
process for immediate retirement of RHQDAPU program measures based on
evidence that the continued use of the measure as specified raises
patient safety concerns (74 FR 43864 through 43865). In circumstances
such as those prompting immediate retirement of the AMI-6 measure from
the RHQDAPU program in December 2008 as discussed in the FY 2010 IPPS/
LTCH final rule (74 FR 43864 through 43865) we do not believe that it
would be appropriate to wait for the annual rulemaking cycle to retire
a measure. We adopted this same immediate retirement policy for the HOP
QDRP in the CY 2010 OPPS/ASC final rule with comment period (74 FR
60635).
Specifically, we stated that if we receive evidence that continued
collection of a measure that has been adopted for the HOP QDRP raises
patient safety concerns, we would promptly retire the measure and
notify hospitals and the public of the retirement of the measure and
the reasons for its retirement through the usual means by which we
communicate with hospitals, including but not limited to hospital e-
mail blasts and the QualityNet Web site. We also stated that we would
confirm the retirement of a measure retired in this manner in the next
OPPS rulemaking cycle. However, for other circumstances in which we do
not believe that continued use of a measure raises specific patient
safety concerns, we stated that we intend to use the regular rulemaking
process to retire a measure.
3. Proposed HOP QDRP Quality Measures for the CY 2012 Payment
Determination
a. Proposed Retention of Existing HOP QDRP Measures for the CY 2012
Payment Determination
For the CY 2012 payment determination, we are proposing to retain
the existing 11 HOP QDRP measures. These measures continue to address
areas of topical importance regarding the quality of care provided in
HOPDs, and reflect consensus among affected parties. Seven of these 11
measures are chart-abstracted measures in two areas of importance that
are also measured for the inpatient setting: AMI cardiac care and
surgical care. The remaining four measures are claims-based measures
that address imaging efficiency in HOPDs.
We invite public comment on our proposal to retain the existing 11
HOP QDRP measures for the CY 2012 payment determination.
b. Proposed New Structural Measure for CY 2012 Payment Determination
For the CY 2012 payment determination, we are proposing to add one
structural measure: ``Ability for Providers with HIT to Receive
Laboratory Data Electronically Directly into their Qualified/Certified
EHR System as Discrete Searchable Data'' (NQF 0489).
Structural measures allow the assessment of the conduciveness of the
provider environment to processes and technologies that enable delivery
of high quality care. This particular structural measure assesses the
extent to which a provider uses a certified/qualified EHR system that
incorporates an electronic data interchange with one or more
laboratories allowing for direct electronic transmission of laboratory
data into the EHR as discrete searchable data elements. We believe that
electronic transmission of laboratory data into EHRs would enable
greater timeliness of results reporting, because the results of the
reports would be transmitted to the HOPD as soon as the laboratory data
are available and be merged with clinical information for more timely
clinical assessments, and laboratory value alerts. Electronic
transmission of laboratory data would also lead to cost efficiency,
expedite the
[[Page 46364]]
clinical decision process, and reduce redundancy of laboratory orders,
and reduce human errors. Section 1833(t)(17)(C)(i) of the Act requires
the Secretary to develop measures appropriate for the measurement of
the quality of care furnished by hospitals in outpatient settings, that
these measures reflect consensus among affected parties and, to the
extent feasible and practicable, that these measures include measures
set forth by one or more national consensus building entities. As
discussed above, this structural measure is appropriate for measuring
quality of care in the hospital outpatient department setting. This
measure also meets the consensus requirement because it was endorsed in
2008 as part of an NQF project entitled ``National Voluntary Consensus
Standards for Health Information Technology: Structural Measures.''
Additionally, this measure was conditionally adopted by the Hospital
Quality Alliance (HQA) in 2010. (The HQA is a public-private
collaboration to improve the quality of care provided by the nation's
hospitals by measuring and publicly reporting on that care.)
We are proposing that this structural measure would be submitted by
HOPDs beginning with January 1, 2011 discharges via a Web-based tool
available on the QualityNet Web site that is currently employed for the
collection of structural measures for the RHQDAPU program. For this
structural measure, HOPDs would submit the number of encounters out of
all encounters for which laboratory results were documented in the EHR.
We invite comments on our proposal to add this new structural measure
to the HOP QDRP measurement set and the submission process for the CY
2012 payment determination.
c. Proposed New Claim-Based Measures for CY 2012 Payment Determination
For the CY 2012 payment determination, we are proposing to add four
new claims-based imaging efficiency measures to the HOP QDRP
measurement set, all of which were listed as under consideration for CY
2012 and subsequent years in the CY 2010 OPPS/ASC final rule with
comment period (74 FR 60637 through 60641). Imaging efficiency is a new
area of measurement that we first implemented in the HOP QDRP for the
CY 2010 payment determination and subsequently retained for the CY 2011
payment determination. There are currently four existing claims-based
imaging efficiency measures in the HOP QDRP measurement set (OP-8
through OP-11). The four new proposed imaging efficiency measures for
the CY 2012 payment determination are: (1) Pre-operative Evaluation for
Low-Risk Non-Cardiac Surgery Risk Assessment, (2) Use of Stress
Echocardiography, SPECT MPI, and Cardiac Stress MRI post CABG, (3)
Simultaneous Use of Brain Computed Tomography (CT) and Sinus Computed
Tomography (CT), and (4) Use of Brain Computed Tomography (CT) in the
Emergency Department for Atraumatic Headache.
Like the current imaging efficiency measures in the HOP QDRP
measurement set, these four measures are based on Medicare claims and
will not require additional data submission on the part of hospitals.
All four of these proposed measures are currently undergoing NQF
review, and specifications for these measures are available at
www.imagingmeasures.com.
The first new proposed imaging efficiency measure for the CY 2012
payment determination seeks to calculate relative use of stress
echocardiography, stress MRI, and SPECT MPI prior to low-risk non-
cardiac surgical procedures in the 30 days preceding the surgery. The
second new proposed claims-based imaging efficiency measure for the CY
2012 payment determination seeks to estimate relative use of stress
echocardiography and SPECT MPI in asymptomatic patients less than five
years after a coronary artery bypass graft (CABG) procedure.
Cardiac imaging is a gap area that was not addressed in CMS' first
set of Outpatient Imaging Efficiency measures. It is among the most
common imaging services in the Medicare population. In the hospital
outpatient setting, 762,419 SPECT MPI, Stress MRI and Stress
Echocardiography procedures were performed in 2008 alone.\2\ Further,
between 1998 and 2006, the rate of myocardial perfusion imaging (MPI)
use in Medicare beneficiaries increased 51 percent among cardiologists
in the hospital setting, and by 215 percent in private offices. During
the same time period, total Medicare Part B payments for MPI across all
settings of care increased by 227 percent.\3\
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\2\ The Lewin Group analysis of Medicare Calendar Year 2007
claims data prepared for the Centers for Medicare & Medicaid
Services, HHS Contract No: HHSM-500-2005-0024I, Order No. 0002.
\3\ Levin DC, Rao VM, Parker L, et al. Recent payment and
utilization trends in radionuclide myocardial perfusion imaging:
Comparison between self-referral and referral to radiologists. J Am
Coll Radiol 2009;6:437-441.
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SPECT MPI, Stress MRI, and Stress Echocardiography are specific
procedures that must be ordered by a physician to be performed.
Therefore, there is a distinct opportunity for the physician to order
this procedure prudently based on best practices. While SPECT MPI,
Stress MRI, and Stress Echocardiography enhance the quality of care
when used appropriately, inappropriate usage of imaging would cause
unnecessary waste of services, contribute no benefit to the quality of
care, and could increase the patient's risk of cancer. An analysis by
Gibbons et al.\4\ found that, of all SPECT MPI procedures performed at
the Mayo Clinic Rochester in May 2005, 14 percent were considered
inappropriate using criteria published by the American College of
Cardiology Foundation and the American Society of Nuclear Cardiology,
and an additional 11 percent were of indeterminate appropriateness.\4\
This study also found that during the same time period, 18 percent of
all stress echocardiograms performed were inappropriate, and an
additional 9 percent were indeterminate.
---------------------------------------------------------------------------
\4\ Gibbons RJ, Miller TD, Hodge D, et al. Application of
appropriateness criteria to stress single-photon emission computed
tomography sestamibi studies and stress echocardiograms in an
academic medical center. J Am Coll Cardiology 2008;51:1283-9.
---------------------------------------------------------------------------
The third and fourth new proposed imaging efficiency measures for
the CY 2012 payment determination pertain to appropriate use of Brain
CT imaging in HOPDs. These are ``Simultaneous Use of Brain Computed
Tomography (CT) and Sinus Computed Tomography (CT),'' and ``Use of
Brain Computed Tomography (CT) in the Emergency Department for
Atraumatic Headache.''
A recent report in the New England Journal of Medicine \5\ raised
serious concerns about the use and overuse of CT scanning, stating that
for an estimated 62 million CT scans being performed per year, a third
are unnecessary, resulting in patient safety issues including
unnecessary radiation and contrast material exposure, and the danger
associated with ``false positive'' findings. A CT scan exposes the
patient to higher doses of radiation than a conventional x-ray and
increases the patient's risk of cancer.
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\5\ Brenner DJ, Hall EJ. November 29, 2007. Computer
Tomography--An Increasing Source of Radiation Exposure. New England
J of Medicine 2007:357(22): 2277-84.
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Brain CTs are often ordered in addition to a sinus CT for patients
with sinusitis because headache is a common symptom related to
sinusitis. However, simultaneous CT sinus and brain imaging for
headache without suspected complications is generally considered
inappropriate, as the standard anatomic coverage of a CT of the head
includes
[[Page 46365]]
large portions of the paranasal sinuses; thus, ordering both procedures
is duplicative and inefficient.5, 6 The third new proposed
imaging efficiency measure for the CY 2012 payment determination
``Simultaneous Use of Brain CT and Sinus CT'' assesses the extent to
which patients with a headache who have a brain CT also have a sinus CT
performed on the same date at the same facility. The measure excludes
patients with trauma diagnoses, tumors or orbital cellulitis.
---------------------------------------------------------------------------
\5\ Brenner DJ, Hall EJ. November 29, 2007. Computer
Tomography--An Increasing Source of Radiation Exposure. New England
J of Medicine: 357(22): 2277-84.
\6\ Appropriateness Criteria--Headache. Reston, VA: American
College of Radiology, 2009. Accessed November 25, 2009 at http://www.acr.org/SecondaryMainMenuCategories/quality_safety/app_criteria.aspx.
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The fourth new proposed imaging efficiency measure for the CY 2012
payment determination, ``Use of Brain Computed Tomography (CT) in the
Emergency Department for Atraumatic Headache,'' assesses the extent to
which patients presenting with a headache receive brain CT studies. The
measure excludes patients admitted or transferred to an acute care
hospital, patients with lumbar punctures, dizziness, paresthesia, lack
of coordination, subarachnoid hemorrhage or thunderclap headaches. The
lifetime prevalence of headache is over 90 percent for men and women
and according to some studies, headache accounts for 16 million
physician visits in the U.S. annually.\7\ According to a study
conducted by Goldstein et al. (2006) on U.S. emergency departments
(EDs) from 1992 to 2001, headaches represent approximately 2 percent of
U.S. ED visits.\8\ An analysis of 2007 Medicare claims data found that
approximately 200,000 Medicare beneficiaries had a visit to an ED with
a primary diagnosis of headache with about half of these patients (not
taking into account the previously mentioned exclusion of lumbar
punctures, dizziness, paresthesia, lack of coordination, subarachnoid
hemorrhage or thunderclap headaches) receiving a Brain CT coincident
with the ED visit.\9\ Unnecessary or duplicative studies are
inefficient and detrimental to the patient because CT exposes the
patient to higher doses of radiation than conventional x-ray and
increases the patient's risk for cancer.\10\
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\7\ Mellion ML, Jayaraman MV. August 2007. Use of neuroimaging
in the workup of headache. Med Health R I.; 90(8):249-50.
\8\ Goldstein JN, CA Camargo, AJ Pelletier, JA Edlow. 2006.
Headache in the United States Emergency Departments: demographics,
work-up and frequency of pathological diagnoses. Cephalalgia; 26(6)
684.
\9\ The Lewin Group analysis of Medicare Calendar Year 2007
claims data prepared for the Centers for Medicare & Medicaid
Services, HHS Contract No: HHSM-500-2005-0024I, Order No. 0002.
\10\ Brenner DJ and Hall EJ. November 29, 2007. Computed
Tomography--An Increasing Source of Radiation Exposure. N Engl J
Med;357(22):2277-84.
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Concern over the inappropriate use of CT Imaging in the ED setting
has been driven by three primary factors: False positive
interpretations, radiation exposure, and cost. There is generally a
lower threshold for ordering neuro-imaging for headache in the ED
because of physician time constraints and lack of ED physician
familiarity with headache presentation.\11\ Because of this lower
threshold, the measurement of the use of CT Brain in the ED for
patients with a diagnosis of atraumatic headache can help to raise the
awareness of the need for quality improvement on the appropriate use of
CT brain imaging in the ED and, as a result improve patient safety
through reduction in unnecessary radiation exposure.
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\11\ Ward TN, Leven M, Phillips JM. Evaluation and management of
headache in the emergency department. Med Clin N Am 2001; 85(4) 971-
85.
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Section 1833(t)(17)(C)(i) of the Act requires the Secretary to
develop measures appropriate for the measurement of the quality of care
furnished by hospitals in outpatient settings, that these measures
reflect consensus among affected parties and, to the extent feasible
and practicable, that these measures include measures set forth by one
or more national consensus building entities. As discussed above, these
measures are appropriate for measuring quality of care in the hospital
outpatient department setting. These measures also meet the consensus
requirement because these measures underwent development through a
consensus-based measure development process involving stakeholder
input. We anticipate that they will be endorsed by the NQF.
For the CY 2012 payment determination, we are proposing to
calculate these four measures using Medicare claims from CY 2010. We
invite comments on our proposal to add these four new imaging
efficiency measures to the HOP QDRP measurement set based on Medicare
claims from CY 2010 for the CY 2012 payment determination.
d. Proposed New Chart-Abstracted Measures for CY 2012 Payment
Determination
We are proposing to add one new chart-abstracted measure to the HOP
QDRP measurement set for the CY 2012 payment determination: ``Troponin
Results for Emergency Department acute myocardial infarction (AMI)
patients or chest pain patients (with Probable Cardiac Chest Pain)
Received within 60 minutes of arrival.'' Troponin is used to help
diagnose a heart attack, to detect and evaluate mild to severe heart
injury, and to distinguish chest pain that may be due to other causes.
This measure is based upon the existing ED-AMI/Chest Pain
populations for which we have adopted five measures in the current HOP
QDRP measurement set. This measure is currently undergoing NQF review.
Both patients and clinicians are impacted by the timeliness of
laboratory reporting.\12\ Decreasing laboratory turnaround times
increases ED efficiency, specifically by decreasing diversion time from
treatment of patients and decreasing length of stay.\13\ Decreasing the
numbers of hours a day on diversion as well as decreasing patients'
lengths of stay in EDs allows for the treatment of a greater number of
patients. Studies have found correlations between the length of stay
and mean turnaround times.\14\ Efficiencies in throughput with tasks
can lead to less diversion, less overcrowding, less elopements and less
financial loss.\15\ Section 1833(t)(17)(C)(i) of the Act requires the
Secretary to develop measures appropriate for the measurement of the
quality of care furnished by hospitals in outpatient settings, that
these measures reflect consensus among affected parties and, to the
extent feasible and practicable, that these measures include measures
set forth by one or more national consensus building entities. As
discussed above, this measure is appropriate for measuring quality of
care in the hospital outpatient department setting. This measure also
meets the consensus requirement because this measure underwent
development through a consensus-based measure development process
involving stakeholder input. We anticipate that
[[Page 46366]]
this measure will be endorsed by the NQF.
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\12\ Howanitz JH, and Howanitz PJ. Laboratory results:
Timeliness as a quality attribute and strategy. Am J Clin Pathol.
2002 Sep; 116 (3):311-5.
\13\ Storrow AB, Zhou C, Gaddis G, Han JH, Miller K, Klubert D,
Laidig A, and Aronsky D. Decreasing lab turnaround time improves
emergency department throughput and decreases emergency medical
services diversion: A simulation model. Acad Emerg Med. 2008 Nov; 15
(11):1130-5.
\14\ Holland LL, Smith LL, and Blick KE. Reducing laboratory
turnaround time outliers can reduce emergency department length of
stay: An 11-hospital study. Am J Clin Pathol. 2005 Nov; 124 (5):672-
4.
\15\ Falvo T, Grove L, Stachura R, and Zirkin W. The financial
impact of ambulance diversions and patient elopements. Acad Emerg
Med. 2007 Jan; 14 (1):58-62.
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If adopted, data collection for this measure would begin with
January 1, 2011 discharges, and data would be submitted quarterly
beginning with the first quarter of 2011, as with all other chart-
abstracted measures.
We invite public comment on our proposal to add this new chart-
abstracted measure to the HOP QDRP measurement set and the submission
process for the CY 2012 payment determination.
In summary, for the CY 2012 payment determination, we are proposing
to retain the 11 existing HOP QDRP measures for the CY 2011 payment
determination, to add one new structural measure, four new claims-based
imaging efficiency measures, and one new chart-abstracted measure for
the ED AMI population. Submission of data regarding the new structural
measure would begin with January 1, 2011 discharges using a Web-based
collection tool available on the QualityNet Web site. We are proposing
to calculate the four imaging measures using Medicare claims from
calendar year 2010. Data collection for the chart-abstracted measure
would begin with January 1, 2011 discharges, and data would be
submitted quaterly beginning with the first quarter of 2011, as with
all other chart-abstracted measures. We invite public comment on this
proposal for the CY 2012 payment determination.
The complete list of 17 proposed measures for the CY 2012 payment
determination is shown below.
[GRAPHIC] [TIFF OMITTED] TP03AU10.555
4. Proposed HOP QDRP Quality Measures for the CY 2013 Payment
Determination
a. Proposed Retention of CY 2012 HOP QDRP Measures for the CY 2013
Payment Determination
In general, unless otherwise specified in the retirement section of
a rule, we retain measures from one payment determination to another.
For the CY 2013 payment determination, we are proposing to retain all
of the measures adopted for the CY 2012 payment determination. We
invite public comment on this proposal for the CY 2013 payment
determination.
b. Proposed New Structural Measure for the CY 2013 Payment
Determination
We are proposing to add one structural measure to the HOP QDRP
measurement set for the CY 2013 payment determination: Tracking
Clinical Results between Visits. EHRs enable providers to issue
reminders when clinical results are not received within a predefined
timeframe. This measure assesses the extent to which a provider uses a
certified/qualified EHR system to track pending laboratory tests,
diagnostic studies (including common preventive screenings) or patient
referrals. Section 1833(t)(17)(C)(i) of the Act requires the Secretary
to develop measures appropriate for the measurement of the quality of
care furnished by hospitals in outpatient settings, that these measures
reflect consensus among affected parties and, to the extent feasible
and practicable, that these measures include measures
[[Page 46367]]
set forth by one or more national consensus building entities. As
discussed above, this structural measure is appropriate for measuring
quality of care in the hospital outpatient department setting. This
measure also meets the consensus requirement because it was endorsed as
part of an NQF Project entitled ``National Voluntary Consensus
Standards for Health IT'' (NQF 0491). Additionally, this
measure was conditionally approved by the HQA in March of 2010.
Submission of this measure would begin with first quarter CY 2012
discharges to be submitted via the Web-based tool used to collect other
structural measures, such as the registry participation structural
measures for the RHQDAPU program. We invite comments on this proposal
to add this new structural measure to the HOP QDRP measurement set and
the submission process for the CY 2013 payment determination.
c. Proposed New Chart-Abstracted Measures for the CY 2013 Payment
Determination
We are proposing to add six new chart-abstracted measures to the
HOP QDRP measurement set for the CY 2013 payment determination.
The six new chart-abstracted measures we are proposing for the CY
2013 payment determination are: (1) Median Time from ED Arrival to ED
Departure for Discharged ED Patients; (2) Transition Record with
Specified Elements Received by Discharged Patients; (3) Door to
Diagnostic Evaluation by a Qualified Medical Professional; (4) ED-
Median Time to Pain Management for Long Bone Fracture; (5) ED-Patient
Left Before Being Seen; and (6) ED-Head CT Scan Results for Acute
Ischemic Stroke or Hemorrhagic Stroke Who Received Head CT Scan
Interpretation Within 45 minutes of Arrival. The topics addressed by
these measures include ED efficiency, Imaging Efficiency, and care
coordination/transition for hospital outpatient departments. Many of
these measures would expand the chart-abstraction population for the
HOP QDRP measurement set beyond the current ED-AMI/Chest Pain, and
Surgical Care patients for which we have currently adopted seven
measures in the HOP QDRP measurement set. However, this population
expansion would be occurring at a time when subsection (d) hospitals
would begin collection of more global ED population measures for the
RHQDAPU program. Thus, we have timed the expansion of the chart-
abstracted measures for HOP QDRP to coincide with expansions that will
be occurring for the RHQDAPU program in order to reduce the burden
associated with expansion. We also anticipate that, in the future,
these measures could be captured and submitted via EHRs, eliminating
the chart abstraction burden associated with these measures. These
measures are discussed below:
(1) Median Time From ED Arrival to ED Departure for Discharged ED
Patients
This measure, which was listed as under consideration for CY 2012
and subsequent years in the CY 2010 OPPS/ASC final rule with comment
period (74 FR 60637 through 60641), addresses ED efficiency in the form
of the median time from emergency department arrival to time of
departure from the emergency room for patients discharged from the
emergency department. Reducing the time patients spend in the ED can
improve quality of care. Reducing this time potentially improves access
for more patients needing emergency care and increases hospitals'
capability to provide additional treatment as necessary. Overcrowding
and heavy emergency resource demand have led to a number of problems,
including ambulance refusals, prolonged patient waiting times,
increased suffering for those who wait, rushed and unpleasant treatment
environments, and potentially poor patient outcomes. ED crowding may
result in delays in the administration of medication such as
antibiotics for pneumonia and has been associated with perceptions of
delayed emergency care. When EDs are overwhelmed, their ability to
respond to community emergencies and disasters may be compromised.
Section 1833(t)(17)(C)(i) of the Act requires the Secretary to develop
measures appropriate for the measurement of the quality of care
furnished by hospitals in outpatient settings, that these measures
reflect consensus among affected parties and, to the extent feasible
and practicable, that these measures include measures set forth by one
or more national consensus building entities. As discussed above, this
chart-abstracted measure is appropriate for measuring quality of care
in the hospital outpatient department setting. This measure also meets
the consensus requirement because it was endorsed in 2009 (NQF
0496) as part of an NQF project entitled ``National Voluntary
Consensus Standards for Emergency Care.'' Additionally, this measure
was conditionally approved by the HQA in March of 2010.
(2) Transition Record With Specified Elements Received by Discharged
Patients
This chart-abstracted measure assesses the percentage of patients,
regardless of age, discharged from an ED to ambulatory care or home
healthcare, or their caregiver(s), who received a transition record at
the time of ED discharge including at a minimum, the following
elements: major procedures and tests performed during the ED visit;
principal diagnosis at discharge or chief complaint; patient
instructions; plan for follow-up care (or statement that none is
required)--including primary physician, other health care professional,
or site designated for follow-up care; and list of new medications and
changes to continued medications that patient should take after ED
discharge, with the quantity prescribed and/or dispensed (or intended
duration) and instructions for each. Transitions of care are a weakness
in maintaining continuity of care and proper adherence/compliance with
follow up instructions. Hand-offs between settings should be
accompanied by clear instructions for medications and follow-up care.
Information should be provided about the care delivered while in each
setting, and for what reasons, not only for the benefit of the patient
and their caregivers, but for practitioners that will be following up
with the patient after they leave an acute care setting.
Section 1833(t)(17)(C)(i) of the Act requires the Secretary to
develop measures appropriate for the measurement of the quality of care
furnished by hospitals in outpatient settings, that these measures
reflect consensus among affected parties and, to the extent feasible
and practicable, that these measures include measures set forth by one
or more national consensus building entities. As discussed above, this
measure is appropriate for measuring quality of care in the hospital
outpatient department setting. This measure also meets the consensus
requirement because it was endorsed by the NQF as part of a Project
entitled ``Endorsing Preferred Practices and Performance Measures for
Measuring and Reporting Care Coordination'' (NQF 0649). This
measure was conditionally approved by the HQA in March of 2010.
(3) Door to Diagnostic Evaluation by a Qualified Medical Professional
(Door to Provider)
This measure assesses mean time between patient presentation to the
ED and the first moment the patient is seen by a person who can
initiate a
[[Page 46368]]
diagnostic evaluation or therapeutic plan (for example, medical
student, resident, nurse practitioner; excludes triage personnel). Long
wait times in the ED before diagnosis increases the likelihood that
someone will leave the ED without treatment for a serious condition,
and can worsen the severity of the condition with which they presented.
Section 1833(t)(17)(C)(i) of the Act requires the Secretary to develop
measures appropriate for the measurement of the quality of care
furnished by hospitals in outpatient settings, that these measures
reflect consensus among affected parties and, to the extent feasible
and practicable, that these measures include measures set forth by one
or more national consensus building entities. As discussed above, this
measure is appropriate for measuring quality of care in the hospital
outpatient department setting. This measure also meets the consensus
requirement because it gained NQF endorsement as part of the project
entitled ``National Voluntary Consensus Standards for Emergency Care''
(NQF 0498). This measure was conditionally approved by the HQA
in March of 2010.
(4) ED-Median Time to Pain Management for Long Bone Fracture
This chart-abstracted measure addresses the topic of efficient pain
management in the ED, and is currently being reviewed by NQF. Pain
management in patients with long bone fractures is currently
undertreated in emergency departments.\16\ Patients with bone fractures
continue to lack administration of pain medication as part of treatment
regimens.\17\ When standards are implemented for pain management of
these patients, treatment for pain improve.\18\ Section
1833(t)(17)(C)(i) of the Act requires the Secretary to develop measures
appropriate for the measurement of the quality of care furnished by
hospitals in outpatient settings, that these measures reflect consensus
among affected parties and, to the extent feasible and practicable,
that these measures include measures set forth by one or more national
consensus building entities. As discussed above, this measure is
appropriate for measuring quality of care in the hospital outpatient
department setting. This measure also meets the consensus requirement
because it underwent development through a consensus-based measure
development process involving stakeholder input. We anticipate that
this measure will be endorsed by the NQF.
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\16\ Ritsema, T.S., Kelen, G.D., Pronovost, R.J., and Pham,
J.C.: The national trend in quality of emergency department pain
management of long bone fractures. Acad Emerg Med. 2007 Feb 14;
14(2):163-9.
\17\ Brown, J.C., Klein, E.J., Lewis, C.W., Johnston, B.D., and
Cummings, P.: Emergency department analgesia for fracture pain. Ann
Emerg Med. 2003 Aug; 42(2):197-205.
\18\ Titler, M.G., Herr, K., Brooks, J.M., Xie, X.J., Ardery,
G., Schilling, M.L., Marsh, J.L., Everett, L.Q., Clark, W.R.:
Translating research into practice intervention improves management
of acute pain in older hip fracture patients. Health Serv Res. 2009;
44(1), 264-87.
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(5) ED-Patient Left Without Being Seen
This measure is the sum of all patients leaving an ED who were not
seen by a provider (for example, medical student, resident, nurse
practitioner). A patient leaving before being seen is an indicator of
emergency department overcrowding.\19\ Patients who leave before being
seen may not receive appropriate medical care and this lack of care may
result in adverse outcomes.\20\ National estimates for patients who
leave before being seen by a provider average 1.9 percent.\21\ Section
1833(t)(17)(C)(i) of the Act requires the Secretary to develop measures
appropriate for the measurement of the quality of care furnished by
hospitals in outpatient settings, that these measures reflect consensus
among affected parties and, to the extent feasible and practicable,
that these measures include measures set forth by one or more national
consensus building entities. As discussed above, this measure is
appropriate for measuring quality of care in the hospital outpatient
department setting. This measure also meets the consensus requirement
because it was endorsed by the NQF (NQF 0499) as part of the
National Voluntary Consensus Standards for Emergency Care.
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\19\ United States General Accounting Office. Hospital emergency
departments: Crowded conditions vary among hospitals and
communities. Publication GAO-03-460, 2003.
\20\ Rowe, B.H., Channan, P., Bullard, M., Blitz, S., Saunders,
L.D., Rosychuk, R.J., Lari, H., Craig, W.R., Holroyd, B.R.:
Characteristics of patients who leave emergency departments without
being seen. Acad Emerg Med. 2006 Aug; 13(8):848-52.
\21\ McCaig, L.F., Nawar, E.W.: National hospital ambulatory
medical care survey: 2004 Emergency department summary. Adv Data.
2006 Jun 23; (372):1-29.
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(6) ED-Head CT Scan Results for Acute Ischemic Stroke or Hemorrhagic
Stroke Who Received Head CT Scan Interpretation Within 45 Minutes of
Arrival
This measure assesses whether head CT scan results for acute
ischemic stroke or hemorrhagic stroke patients who received head CT
scans in the ED were interpreted within 45 minutes of arrival. This
chart-abstracted measure is currently under NQF review. Improved access
to diagnostics assists clinicians in decisionmaking. Delayed diagnostic
imaging and laboratory reports are expected to slow down clinical
decision making process and subsequently increase length of stay in the
ED. Similarly, decreasing radiology report turnaround times can have
impacts across the facility and can assist in reducing the length of
stay in the ED. It also can enhance decisionmaking capabilities for
patient treatment plans because timely diagnostic imaging is
available.\22\ The Food and Drug Administration (FDA) approved the use
of tissue plasminogen activator (t-PA) for treatment of acute ischemic
stroke, which comprise 87 percent of stokes, when given within three
hours of stroke symptom onset.23 24 Because of the
therapeutic time window for treatment possibilities, timely completion
and results of the CT scan are imperative for timely clinical
decisionmaking and favorable outcomes. Section 1833(t)(17)(C)(i) of the
Act requires the Secretary to develop measures appropriate for the
measurement of the quality of care furnished by hospitals in outpatient
settings, that these measures reflect consensus among affected parties
and, to the extent feasible and practicable, that these measures
include measures set forth by one or more national consensus building
entities. As discussed above, this measure is appropriate for measuring
quality of care in the hospital outpatient department setting. This
measure also meets the consensus requirement because this measure
underwent development through a consensus-based measure development
process involving stakeholder input. We anticipate that this measure
will be endorsed by the NQF.
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\22\ Marquez L.O. Improving medical imaging report turnaround
times. Radiol Mange. 2005 Jan-Feb; 27(1):34-7.
\23\ National Stroke Association. STROKE the First Hours
Guidelines for Acute Treatment, 2000.
\24\ The ATLANTIS, ECASS, and NINDS rt-PA Study Group
Investigators. Association of Outcome with early stroke treatment:
pooled analysis of ATLANTIS, ECASS, and NINDS rt-PA stroke Trials.
Lancet 2004; 363:768-774.
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The submission of the new chart-abstracted measures for the CY 2013
payment determination will begin with first quarter 2012 discharges,
and data would be submitted quarterly, as with all other chart-
abstracted measures. We invite comments on this proposal to add these
new measures to the HOP QDRP measurement set and on the submission
[[Page 46369]]
process for the CY 2013 payment determination.
In summary, for the CY 2013 payment determination, we are proposing
to retain all of the measures adopted for the CY 2012 payment
determination, and to adopt one new structural measure, and six new
chart-abstracted measures for the CY 2013 payment determination on the
topics of HOPD care transitions and ED efficiency. Submission of the
new structural measure would begin with first quarter CY 2012
discharges to be submitted via a Web-based tool on the QualityNet Web
site in 2012. The submission of the new chart-abstracted measures for
the CY 2013 payment determination would begin with first quarter CY
2012 discharges, to be submitted in 2012. We invite comments on this
proposal for the CY 2013 payment determination.
The complete list of 24 proposed measures for the CY 2013 payment
determination is shown below.
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[[Page 46370]]
5. Proposed HOP QDRP Quality Measures for the CY 2014 Payment
Determination
a. Proposed Retention of CY 2013 HOP QDRP Measures for the CY 2014
Payment Determination
In general, unless otherwise specified in the retirement section of
a rule, we retain measures from one payment determination to another.
For the CY 2014 payment determination, we are proposing to retain all
of the measures adopted for the CY 2013 payment determination. We
invite comment on this proposal.
b. Proposed New Chart-Abstracted Measures for the CY 2014 Payment
Determination
We are proposing to adopt six new chart-abstracted measures for the
CY 2014 payment determination. Five of the six measures are Diabetes
Care measures for HOPDs, and one measure is an additional imaging
efficiency measure. The six measures we are proposing for the CY 2014
payment determination are: (1) Hemoglobin A1c Poor Control in Diabetic
Patients; (2) Low Density Lipoprotein (LDL-C) Control in Diabetic
Patients; (3) High Blood Pressure Control in Diabetic Patients; (4)
Dilated Eye Exam in Diabetic Patients; (5) Urine Screening for
Microalbumin or Medical Attention for Nephropathy in Diabetic Patients;
and (6) Exposure Time Reported for Procedures Using Fluoroscopy. We are
proposing that submission of these measures for the CY 2014 payment
determination begin with the first quarter CY 2013 discharges to be
submitted in 2013. These measures are discussed below.
(1) Diabetes Mellitus: Hemoglobin A1c Poor Control in Diabetic Patients
This NQF-endorsed measure (NQF 0059) measures the
percentage of adult patients with diabetes aged 18-75 years with most
recent HgA1c level greater than 9 percent (poor control). Glycosylated
hemoglobin (HgA1c) assay measures average blood glucose over the
preceding two to three months, rather than just one point in time.
HgA1c values vary less than fasting glucose values and give clinicians
a better integrated view of the patient's average blood sugar over
time. High HgA1c is a more reliable indicator of chronic high blood
sugar. Lowered HgA1c levels are associated with reduced microvascular
and neuropathic complications of diabetes.
In general, diabetes mellitus is a chronic disease that impacts the
lives of a large portion of the population and consumes a significant
amount of U.S. healthcare dollars. With the prevalence of diabetes in
the Medicare-eligible population expected to double, costs are expected
to increase almost fourfold to $171 million.\25\ Uncontrolled diabetes
often leads to biochemical imbalances that can lead to acute life-
threatening events, such as diabetic ketoacidosis and hyperosmolar, or
nonketotic coma. In patients with insulin-dependent diabetes, the risk
of development or progression of retinopathy, nephropathy, and
neuropathy can be reduced by 50 to 75 percent by intensive outpatient
treatment of hyperglycemia compared to conventional treatment. Early
treatment may help slow or halt the progression of diabetic
complications, and following the guidelines for screening may assist
those patients with no outward sign of diabetic complications to be
identified earlier through regular screening tests. HgA1c should be
performed during an initial assessment and during follow-up
assessments, which should occur at no longer than three-month
intervals.\26\ Section 1833(t)(17)(C)(i) of the Act requires the
Secretary to develop measures appropriate for the measurement of the
quality of care furnished by hospitals in outpatient settings, that
these measures reflect consensus among affected parties and, to the
extent feasible and practicable, that these measures include measures
set forth by one or more national consensus building entities. As
discussed above, this measure is appropriate for measuring quality of
care in the hospital outpatient department setting. This measure also
meets the consensus requirement because, as noted above, it has been
endorsed by the NQF.
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\25\ Huang, E.S., Basu, A., O'Grady, M., Capretta, J.C.:
Projecting the future diabetes population size and related costs for
the U.S. Diabetes Care. 2009;32(12):2225-29.
\26\ The American Association of Clinical Endocrinologists
Medical Guidelines for the Management of Diabetes Mellitus: The AACE
System of Intensive Diabetes Self-Management--2002 Update.
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(2) Diabetes Mellitus: Low Density Lipoprotein (LDL-C) Control in
Diabetic Patients
This NQF-endorsed measure (NQF 0064) measures the
percentage of adult patients with diabetes aged 18-75 years whose most
recent LDL-C test result during the measurement year was <100 mg/dl.
LDL-C measures the development of atherosclerotic plague which
increases cardiac events risks for diabetic patients whose heart
disease death rates are about two to four times higher than non-
diabetics.\27\ Improved dyslipidemia management helps to mitigate the
risk for cardiovascular disease. Lipid-lowering therapy for diabetics
has been a consistent recommendation in several guidelines, prompted by
randomized trials supporting statin therapy to lower the risk of
cardiovascular involvement for this population. Despite the evidence
basis and guideline support, only a minority of patients with diabetes
are prescribed statin treatment or achieve target LDL-C goals.\28\
Early treatment may help slow or halt the progression of cardiovascular
disease and impact the quality of the life of the diabetic patient,
affecting the patient's life expectancy and decreasing costs involved
in treating diabetic complications. Section 1833(t)(17)(C)(i) of the
Act requires the Secretary to develop measures appropriate for the
measurement of the quality of care furnished by hospitals in outpatient
settings, that these measures reflect consensus among affected parties
and, to the extent feasible and practicable, that these measures
include measures set forth by one or more national consensus building
entities. As discussed above, this measure is appropriate for measuring
quality of care in the hospital outpatient department setting. This
measure also meets the consensus requirement because, as noted above,
it has been endorsed by the NQF. We also note that this measure was
listed as under consideration for CY 2012 and subsequent years in the
CY 2010 OPPS/ASC final rule with comment period (74 FR 60637 through
60641).
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\27\ American Diabetes Association. Standards of medical care in
diabetes. Diabetes Care. 2007 Jan;30 (Suppl 1):S8-15.
\28\ Das, S.R., Vaeth, P.A., Stanek, H.G., de Lemos, J.A.,
Dobbins, R.L., McGuire, D.K.: Increased cardiovascular risk
associated with diabetes in Dallas County. Am Heart J 2006;151:1087-
93.
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(3) Diabetes Mellitus: High Blood Pressure Control in Diabetic Patients
This NQF-endorsed measure (NQF 0061) measures the
percentage of patients visits with blood pressure measurement recorded
among all patients visits aged >18 years with diagnosed hypertension.
Blood pressure control reduces the risk of cardiovascular disease and
microvascular complications in patients with diabetes. Most
importantly, early treatment of high blood pressure may help slow or
halt the progression of kidney involvement and damage.\29\
[[Page 46371]]
Blood pressure is a factor that can be controlled Well-controlled blood
pressure impacts the quality of the life of the diabetic patient,
affects the patient's life expectancy, and decreases the costs involved
in treating diabetic complications. Section 1833(t)(17)(C)(i) of the
Act requires the Secretary to develop measures appropriate for the
measurement of the quality of care furnished by hospitals in outpatient
settings, that these measures reflect consensus among affected parties
and, to the extent feasible and practicable, that these measures
include measures set forth by one or more national consensus building
entities. As discussed above, this measure is appropriate for measuring
quality of care in the hospital outpatient department setting. This
measure also meets the consensus requirement because, as noted above,
it has been endorsed by the NQF.
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\29\ Centers for Disease Control and Prevention. National
diabetes fact sheet: general information and national estimates on
diabetes in the United States, 2007. Atlanta, GA: U.S. Department of
Health and Human Services, Centers for Disease Control and
Prevention, 2008.
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(4) Diabetes Mellitus: Dilated Eye Exam in Diabetic Patients
This NQF-endorsed measure (NQF 0055) measures the
percentage of adult patients with diabetes age 18 to 75 years who
received a dilated eye exam or seven standard field stereoscopic photos
with interpretation by an ophthalmologist or optometrist, or imaging to
verify diagnosis from stereoscopic photos during the reporting year, or
during the prior year, if patient is at low risk for retinopathy. A
patient is considered low risk if the patient has no evidence of
retinopathy in the prior year. A dilated eye exam helps to detect the
risk for vision-threatening diabetic retinopathy which is prevalent
among people with diabetes. Data from the 2007 National Diabetes Fact
Sheet (using the most recent year of available data) shows that
diabetic retinopathy causes up to 24,000 new cases of blindness each
year.\30\ However, dilated eye exams for diabetic patients can prevent
retinopathy through early detection.\31\
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\30\ Centers for Disease Control and Prevention. National
diabetes fact sheet: General information and national estimates on
diabetes in the United States, 2007. Atlanta, GA: U.S. Department of
Health and Human Services, Centers for Disease Control and
Prevention, 2008.
\31\ American Diabetes Association. Standards of medical care in
diabetes. Diabetes Care. 2007 Jan;30 (Suppl 1):S8-15.
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Section 1833(t)(17)(C)(i) of the Act requires the Secretary to
develop measures appropriate for the measurement of the quality of care
furnished by hospitals in outpatient settings, that these measures
reflect consensus among affected parties and, to the extent feasible
and practicable, that these measures include measures set forth by one
or more national consensus building entities. As discussed above, this
measure is appropriate for measuring quality of care in the hospital
outpatient department setting. This measure also meets the consensus
requirement because, as noted above, this measure has been endorsed by
the NQF. We note that this measure was listed as under consideration
for CY 2012 and subsequent years in the CY 2010 OPPS/ASC final rule
with comment period (74 FR 60637 through 60641).
(5) Diabetes Mellitus: Urine Screening for Microalbumin or Medical
Attention for Nephropathy in Diabetic Patients
This NQF-endorsed measure (NQF 0062) measures the
percentage of adult diabetic patients aged 18-75 years with at least
one test for microalbumin during the measurement year or who had
evidence of medical attention for existing nephropathy (diagnosis of
nephropathy or documentation of microalbuminuria or albuminuria). Urine
screening for microalbumin detects abnormal amount of protein albumin
leaks in the urine by the capillaries of the kidney. High levels of
blood sugar in uncontrolled diabetes can cause damage to the
capillaries in the kidneys. Early urine screenings for microalbumin may
prevent kidney disease from worsening to end-stage renal disease
(ESRD). Diabetics accounted for 44 percent of new cases of kidney
disease. In 2005, a total of 178,689 diabetics with ESRD were on
dialysis or received a kidney transplant in the United States and
Puerto Rico.\32\ In 2009, MedPAC reported costs for the 330,000
Medicare recipients receiving dialysis treatment for ESRD at over 8
billion dollars.\32\ Section 1833(t)(17)(C)(i) of the Act requires the
Secretary to develop measures appropriate for the measurement of the
quality of care furnished by hospitals in outpatient settings, that
these measures reflect consensus among affected parties and, to the
extent feasible and practicable, that these measures include measures
set forth by one or more national consensus building entities. As
discussed above, this measure is appropriate for measuring quality of
care in the hospital outpatient department setting. This measure also
meets the consensus requirement because, as noted above, it has been
endorsed by the NQF. We also note that this measure was listed as under
consideration for CY 2012 and subsequent years in the CY 2010 OPPS/ASC
final rule with comment period (74 FR 60637 through 60641).
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\32\ Centers for Disease Control and Prevention. National
diabetes fact sheet: general information and national estimates on
diabetes in the United States, 2007. Atlanta, GA: U.S. Department of
Health and Human Services, Centers for Disease Control and
Prevention, 2008.
\32\ MedPAC. Outpatient dialysis service: Assessing payment
adequacy and updating payments. Report to the Congress; Medicare
payment policy. 2009 Mar; 131-56.
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(6) Exposure Time Reported for Procedures Using Fluoroscopy
This measure documents the percentage of final reports for
procedures using fluoroscopy that include documentation of radiation
exposure or exposure time, an important measure for the HOPD setting.
This measure is currently specified for physician level data collection
through the PQRI program (74 FR 61825), and can be used for the
hospital outpatient facility level. This measure evaluates the
documentation of radiation exposure or radiation time during
fluoroscopy. Data suggests that the lifetime risk for cancer can be
increased, albeit by a small amount, with frequent or repeated exposure
to ionizing radiation, including procedures using fluoroscopy.\33\ To
monitor these long term effects, the exposure time or radiation dose
that a patient receives as a result of the procedure should be measured
and recorded in the patient's record. The American College of Radiology
(ACR) encourages practices to record actual fluoroscopy time for all
fluoroscopic procedures. The fluoroscopy time for various procedures
(for example, upper gastrointestinal, pediatric voiding
cystourethrography) should then be compared with benchmark
figures.34 35 The National Cancer Institute also recommends
measuring and recording patient radiation dose, fluoroscopy time and
additional available measures: Dose area product, cumulative dose, and
skin dose. Section 1833(t)(17)(C)(i) of the Act requires the Secretary
to develop measures appropriate for the measurement of the quality of
care
[[Page 46372]]
furnished by hospitals in outpatient settings, that these measures
reflect consensus among affected parties and, to the extent feasible
and practicable, that these measures include measures set forth by one
or more national consensus building entities. As discussed above, this
measure is appropriate for measuring quality of care in the hospital
outpatient department setting. This measure also meets the consensus
requirement because it is NQF-endorsed (NQF 0510).
Additionally, this measure was conditionally approved by the HQA for
the hospital outpatient setting in March of 2010.
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\33\ National Cancer Institute (NCI), The Society for Pediatric
Radiology (SPR). Brochure: Radiation & pediatric computed
tomography. A guide for health care providers. 2002. Available at;
http://www/cancer.gov/cancertopics/cause/radiation-risks-pediatric-CT.pdf
\34\ Amis E Jr, Butler P, Applegate K, Birnbaum S, Brateman L,
Hevezi J, Mettler F, Morin R, Pentecost M, Smith G. American College
of radiology white paper on radiation dose in medicine. Journal of
American College of Radiology, 2007:4:272-284
\35\ National Cancer Institute. Interventional fluoroscopy:
Reducing radiation risks for patients and staff. 2005. Available at:
http://www.cancer.gov/cancertopics/interventionalfluoroscopy.
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In summary, for the CY 2014 payment determination, we are proposing
to retain all of the measures adopted for the CY 2013 payment
determination, and to adopt six new chart-abstracted measures for the
CY 2014 payment determination on the topics of diabetes care and
exposure time for procedures using fluoroscopy. We are proposing that
submission of the new chart-abstracted measures for the CY 2014 payment
determination begin with first quarter CY 2013 discharges to be
submitted in 2013. We invite public comment on this proposal for the CY
2014 payment determination.
The complete list of 30 proposed measures for the CY 2014 payment
determination is shown below.
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6. Possible Quality Measures Under Consideration for Future Inclusion
in HOP QDRP
In previous years' rulemakings, we have provided lists of quality
measures that are under consideration for future adoption into the HOP
QRDP measurement set. Below is a list of measures under consideration
for future rulemaking cycles.
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We invite public comment on these quality measures and topics so
that we may consider proposing to adopt them beginning with the CY 2013
payment determination. We also are seeking suggestions and rationales
to support the adoption of measures and topics for the HOP QDRP which
do not appear in the table above.
In addition, we are concerned about the lack of progress in
reducing the rates of healthcare associated infections that was
recently reported in the 2009 National Healthcare Quality Report
(http://www.ahrq.gov/qual/nhqr09/nhqr09.pdf). For example, the report
found that rates of postoperative sepsis increased by 8 percent. We
view healthcare associated infections as a significant priority for
quality measurement in order to ensure that health care does not result
in avoidable harm and to inform the public about hospitals' performance
with respect to these infections. We are inviting public comment on the
option to include among our prioritization criteria quality measures
that assess performance on healthcare associated infections. Also,
while some HOP QDRP measures cover aspects of healthcare associated
infections, we are inviting suggestions on additional measures that
could be added to those that hospitals would report and that we would
make available to the public in order promote improvement in healthcare
associated infection rates.
C. Proposed Payment Reduction for Hospitals That Fail To Meet the HOP
QDRP Requirements for the CY 2011 Payment Update
1. Background
Section 1833(t)(17)(A) of the Act, which applies to subsection (d)
hospitals (as defined under section 1886(d)(1)(B) of the Act), requires
that hospitals that fail to report data required for the quality
measures selected by the Secretary, in the form and manner required by
the Secretary under section 1833(t)(17)(B) of the Act, incur a 2.0
percentage point reduction to their OPD fee schedule increase factor,
that is, the annual payment update factor. Section 1833(t)(17)(A)(ii)
of the Act specifies that any reduction would apply only to the payment
year involved and would not be taken into account in computing the
applicable OPD fee schedule increase factor for a subsequent payment
year.
In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68769
through 68772), we discussed how the payment reduction for failure to
meet the administrative, data collection, and data submission
requirements of the HOP QDRP affected the CY 2009 payment update
applicable to OPPS payments for HOPD services furnished by the
hospitals defined under section 1886(d)(1)(B) of the Act to which the
program applies. The application of a reduced OPD fee schedule increase
factor results in reduced national unadjusted payment rates that apply
to certain outpatient items and services provided by hospitals that are
required to report outpatient quality data and that fail to meet the
HOP QDRP requirements. All other hospitals paid under the OPPS receive
the full OPPS payment update without the reduction.
The national unadjusted payment rates for many services paid under
the OPPS equal the product of the OPPS conversion factor and the scaled
relative weight for the APC to which the service is assigned. The OPPS
conversion factor, which is updated annually by the OPD fee schedule
increase factor, is used to calculate the OPPS payment rate for
services with the following status indicators (listed in Addendum B to
this proposed rule with comment period): ``P,'' ``Q1,'' ``Q2,'' ``Q3,''
``R,'' ``S,'' ``T,'' ``V,'' ``U,'' or ``X.'' In the CY 2009 OPPS/ASC
final rule with comment period (73 FR 68770), we adopted a policy that
payment for all services assigned these status indicators would be
subject to the reduction of the national unadjusted payment rates for
applicable hospitals, with the exception of services assigned to New
Technology APCs with assigned status indicator ``S'' or ``T,'' and
brachytherapy sources with assigned status indicator ``U,'' which were
paid at charges adjusted to cost in CY 2009. We excluded services
assigned to New Technology APCs from the list of services subject to
the reduced national unadjusted payment rates because the OPD fee
schedule increase factor is not used to update the payment rates for
these APCs.
In addition, section 1833(t)(16)(C) of the Act, as amended by
section 142 of the Medicare Improvements for Patients and Providers Act
of 2008 (MIPPA) (Pub. L. 110-275), specifically required that
brachytherapy sources be paid during CY 2009 on the basis of charges
adjusted to cost, rather than under the standard OPPS methodology.
Therefore, the reduced conversion factor also was not applicable to CY
2009 payment for brachytherapy sources because payment would not be
based on the OPPS conversion factor and, consequently, the payment
rates for these services were not updated by the OPD fee schedule
increase factor. However, in accordance with section 1833(t)(16)(C) of
the Act, as amended by section 142 of the MIPPA, payment for
brachytherapy sources at charges adjusted to cost expired on January 1,
2010. Therefore, in the CY 2010 OPPS/ASC final rule with comment period
(74 FR 60641), we finalized our CY 2010 proposal, without
[[Page 46376]]
modification, to apply the reduction to payment for brachytherapy
sources to hospitals that fail to meet the quality data reporting
requirements of the HOP QDRP for the CY 2010 OPD fee schedule increase
factor.
The OPD fee schedule increase factor, or market basket update, is
an input into the OPPS conversion factor, which is used to calculate
OPPS payment rates. To implement the requirement to reduce the market
basket update for hospitals that fail to meet reporting requirements,
we calculate two conversion factors: a full market basket conversion
factor (that is, the full conversion factor), and a reduced market
basket conversion factor (that is, the reduced conversion factor). We
then calculate a reduction ratio by dividing the reduced conversion
factor by the full conversion factor. We refer to this reduction ratio
as the ``reporting ratio'' to indicate that it applies to payment for
hospitals that fail to meet their reporting requirements. Applying this
reporting ratio to the OPPS payment amounts results in reduced national
unadjusted payment rates that are mathematically equivalent to the
reduced national unadjusted payment rates that would result if we
multiplied the scaled OPPS relative weights by the reduced conversion
factor. To determine the reduced national unadjusted payment rates that
applied to hospitals that failed to meet their quality reporting
requirements for the CY 2010 OPPS, we multiply the final full national
unadjusted payment rate in Addendum B to the CY 2010 OPPS/ASC final
rule with comment period by the CY 2010 OPPS final reporting ratio of
0.980 (74 FR 60642).
In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68771
through 68772), we established a policy that the Medicare beneficiary's
minimum unadjusted copayment and national unadjusted copayment for a
service to which a reduced national unadjusted payment rate applies
would each equal the product of the reporting ratio and the national
unadjusted copayment or the minimum unadjusted copayment, as
applicable, for the service. Under this policy, we apply the reporting
ratio to both the minimum unadjusted copayment and national unadjusted
copayment for those hospitals that receive the payment reduction for
failure to meet the HOP QDRP reporting requirements. This application
of the reporting ratio to the national unadjusted and minimum
unadjusted copayments is calculated according to Sec. 419.41 of our
regulations, prior to any adjustment for hospitals' failure to meet the
quality reporting standards according to Sec. 419.43(h). Beneficiaries
and secondary payers thereby share in the reduction of payments to
these hospitals.
In the CY 2009 OPPS/ASC final rule with comment period (73 FR
68772), we established the policy that all other applicable adjustments
to the OPPS national unadjusted payment rates apply in those cases when
the OPD fee schedule increase factor is reduced for hospitals that fail
to meet the requirements of the HOP QDRP. For example, the following
standard adjustments apply to the reduced national unadjusted payment
rates: the wage index adjustment; the multiple procedure adjustment;
the interrupted procedure adjustment; the rural sole community hospital
adjustment; and the adjustment for devices furnished with full or
partial credit or without cost. We believe that these adjustments
continue to be equally applicable to payments for hospitals that do not
meet the HOP QDRP requirements. Similarly, outlier payments will
continue to be made when the criteria are met. For hospitals that fail
to meet the quality data reporting requirements, the hospitals' costs
are compared to the reduced payments for purposes of outlier
eligibility and payment calculation. This policy conforms to current
practice under the IPPS. In the CY 2010 OPPS/ASC final rule with
comment period (74 FR 60642), we continued this policy. For a complete
discussion of the OPPS outlier calculation and eligibility criteria, we
refer readers to section II.G. of this CY 2011 OPPS/ASC proposed rule.
2. Proposed Reporting Ratio Application and Associated Adjustment
Policy for CY 2011
We are proposing to continue our established policy of applying the
reduction of the OPD fee schedule increase factor through the use of a
reporting ratio for those hospitals that fail to meet the HOP QDRP
requirements for the full CY 2011 annual payment update factor. For the
CY 2011 OPPS, the proposed reporting ratio is 0.980, calculated by
dividing the reduced conversion factor of $66.930 by the full
conversion factor of $68.267. We are proposing to continue to apply the
reporting ratio to all services calculated using the OPPS conversion
factor. For the CY 2011 OPPS, we are proposing to apply the reporting
ratio, when applicable, to all HCPCS codes to which we have assigned
status indicators ``P,'' ``Q1,'' ``Q2,'' ``Q3,'' ``R,'' ``S,'' ``T,''
``V,'' ``U,'' and ``X.'' We are proposing to continue to exclude
services paid under New Technology APCs. We are proposing to continue
to apply the reporting ratio to the national unadjusted payment rates
and the minimum unadjusted and national unadjusted copayment rates of
all applicable services for those hospitals that fail to meet the HOP
QDRP reporting requirements. We also are proposing to continue to apply
all other applicable standard adjustments to the OPPS national
unadjusted payment rates for hospitals that fail to meet the
requirements of the HOP QDRP. Similarly, we are proposing to continue
to calculate OPPS outlier eligibility and outlier payment based on the
reduced payment rates for those hospitals that fail to meet the
reporting requirements.
D. Proposed Requirements for HOPD Quality Data Reporting for CY 2012
and Subsequent Years
In order to participate in the HOP QDRP, hospitals must meet
administrative, data collection and submission, and data validation
requirements (if applicable). Hospitals that do not meet the
requirements of the HOP QDRP, as well as hospitals not participating in
the program and hospitals that withdraw from the program, will not
receive the full OPPS payment rate update. Instead, in accordance with
section 1833(t)(17)(A) of the Act, those hospitals will receive a
reduction of 2.0 percentage points in their annual payment update
factor for the applicable payment year. We established the payment
determination requirements for the CY 2011 payment update in the CY
2010 OPPS/ASC final rule with comment period (74 FR 60642 through
60652).
For payment determinations affecting the CY 2012 payment update, we
are proposing to implement the requirements listed below. Most of these
requirements are the same as the requirements we implemented for the CY
2011 payment determination, with some proposed modifications.
1. Administrative Requirements
To participate in the HOP QDRP, we are proposing that several
administrative steps be completed. These steps would require the
hospital to:
Identify a QualityNet security administrator who follows
the registration process located on the QualityNet Web site (http://www.QualityNet.org) and submits the information to the appropriate CMS-
designated contractor. All CMS-designated contractors would be
identified on the QualityNet Web site. The same person may be the
QualityNet security administrator for both the RHQDAPU program and the
HOP
[[Page 46377]]
QDRP. From our experience, we believe that the QualityNet security
administrator typically fulfills a variety of tasks related to the
hospital's ability to participate in the HOP QDRP, such as: creating,
approving, editing and/or terminating QualityNet user accounts within
the organization; monitoring QualityNet usage to maintain proper
security and confidentiality measures; and serving as a point of
contact for information regarding QualityNet and the HOP QDRP. The
hospital would be required to maintain a current QualityNet security
administrator for as long as the hospital participates in the program
due to CMS information systems security requirements. While only a
single QualityNet security administrator would be required for program
purposes, we suggest to hospitals that it may be beneficial to have
more than one QualityNet security administrator for back-up purposes.
Register with QualityNet, regardless of the method used
for data submission.
Complete and submit an online participation form if this
form (or a paper Notice of Participation form) has not been previously
completed, if a hospital has previously withdrawn, or if the hospital
acquires a new CCN. For HOP QDRP decisions affecting the CY 2012
payment determination, hospitals that share the same CCN would be
required to complete a single online participation form. In the CY 2009
OPPS/ASC final rule with comment period (73 FR 68772), we implemented
an online registration form and eliminated the paper form. At this
time, the participation form for the HOP QDRP is separate from the
RHQDAPU program and completing a form for each program is required.
Agreeing to participate includes acknowledging that the data submitted
to the CMS-designated contractor would be submitted to CMS and also may
be shared with one or more other CMS contractors that support the
implementation of the HOP QDRP and be publicly reported.
We are proposing to update and retain the following deadlines,
which we established in the CY 2010 OPPS/ASC final rule with comment
period (74 FR 60643), for submitting the participation form:
Hospitals with Medicare acceptance dates on or after January 1,
2011: For the CY 2012 payment update, we are proposing that any
hospital that has a Medicare acceptance date on or after January 1,
2011 (including a new hospital and hospitals that have merged) must
submit a completed participation form no later than 180 days from the
date identified as its Medicare acceptance date on the CMS Online
System Certification and Reporting (OSCAR) system. Hospitals typically
receive a package notifying them of their new CCN after they receive
their Medicare acceptance date. The Medicare acceptance date is the
earliest date that a hospital can receive Medicare payment for the
services that it furnishes. Completing the participation form would
include supplying the name and address of each hospital campus that
shares the same CCN.
The use of the Medicare acceptance date as beginning the timeline
for HOP QDRP participation allows CMS to monitor more effectively
hospital compliance with the requirement to complete a participation
form because a hospital's Medicare acceptance date is readily available
to CMS through its data systems. In addition, providing an extended
time period to register for the program would allow newly functioning
hospitals sufficient time to get their operations fully functional
before having to collect and submit quality data. We invite public
comment on this proposed policy.
Hospitals with Medicare acceptance dates before January 1, 2011:
For the CY 2012 payment update, we are proposing that any hospital that
has a Medicare acceptance date on or before December 31, 2010 that is
not currently participating in the HOP QDRP and wishes to participate
in the CY 2012 HOP QDRP must submit a participation form by March 31,
2011. We are proposing a deadline of March 31, 2011, because we believe
it would give hospitals sufficient time to decide whether they wish to
participate in the HOP QDRP, as well as put into place the necessary
staff and resources to timely report data for first quarter CY 2011
services. This requirement would apply to all hospitals whether or not
the hospital billed for payment under the OPPS. We invite public
comment on this proposed policy.
Under our current requirements, hospitals that want to withdraw
from participation must follow the same deadlines as hospitals that
want to participate. We are proposing to change this requirement. We
are proposing to lengthen the time during which hospitals may withdraw
from participation because we believe that hospitals should be allowed
more time to consider this decision. In addition, this increased time
to withdraw is comparable programmatically to our proposal under the
RHQDAPU program (75 FR 23996). Specifically, for the CY 2012 payment
update, we are proposing that any HOP QDRP participating hospital that
wants to withdraw may do so at any time from January 1, 2011 to
November 1, 2011. Hospitals that withdraw during this time period for
the CY 2012 payment update would not be able to sign up to participate
for the CY 2012 payment update, would have a 2.0 percentage point
reduction in their CY 2012 payment update, and would be required to
resubmit a participation form in order to participate for purposes of
any future payment updates. We note that once a hospital has submitted
a participation form, it is considered to be an active HOP QDRP
participant until such time as the hospital submits a withdrawal form
to CMS or the facility is designated as closed in the CMS OSCAR system.
We invite public comment on this proposed policy.
2. Data Collection and Submission Requirements
a. General Data Collection and Submission Requirements
We are proposing that, to be eligible for the full CY 2012 OPPS
payment update, hospitals would be required to:
Submit data: Hospitals that would be participating in the
HOP QDRP would be required to submit data for each applicable quarter
by the deadline posted on the QualityNet Web site; there must be no
lapse in data submission. For the CY 2012 annual payment update, the
applicable quarters would be as follows: 3rd quarter CY 2010, 4th
quarter CY 2010, 1st quarter CY 2011, and 2nd quarter CY 2011.
Hospitals that did not participate in the CY 2011 HOP QDRP, but would
like to participate in the CY 2012 HOP QDRP, and that have a Medicare
acceptance date on the OSCAR system before January 1, 2011, would begin
data submission for 1st quarter CY 2011 services using the CY 2012
measure set that would be finalized in the CY 2011 OPPS/ASC final rule
with comment period. For those hospitals with Medicare acceptance dates
on or after January 1, 2011, data submission must begin with the first
full quarter following the submission of a completed online
participation form. For the claims-based measures, we would calculate
the measures using the hospital's Medicare claims data. For the CY 2012
payment update, we would utilize paid Medicare fee-for-service (FFS)
claims submitted prior to January 1, 2011, to calculate these measures.
For the structural measure to be used for the CY 2012 payment
determination, hospitals would be required to submit data beginning
with January 1, 2011 discharges using a Web-based tool
[[Page 46378]]
available on QualityNet beginning in 2011.
Sampling and Case Thresholds: It would not be necessary for a
hospital to submit data for all eligible cases for some measures if
sufficient eligible case thresholds are met. Instead, for those
measures where a hospital has a sufficiently large number of cases, it
would sample cases and submit data for these sampled cases rather than
submitting data from all eligible cases. This sampling scheme, which
includes the minimum number of cases based upon case volume, would be
set out in the HOPD Specifications Manual at least three months in
advance of the required data collection. We have proposed to change
this notification timeframe for this sampling scheme to at least 3
months from at least 4 months to be consistent with the HOPD
Specifications Manual release schedule. Hospitals would be required to
meet the sampling requirements for required quality measures each
reporting quarter.
In addition, in order to reduce the burden on hospitals that treat
a low number of patients but otherwise meet the submission requirements
for a particular quality measure, hospitals that have five or fewer
claims (both Medicare and non-Medicare) for any measure included in a
measure topic in a quarter would not be required to submit patient
level data for the entire measure topic for that quarter. Even if
hospitals would not be required to submit patient level data because
they have five or fewer claims (both Medicare and non-Medicare) for any
measure included in a measure topic in a quarter, we are proposing that
they may voluntarily do so.
Hospitals would be required submit all required data according to
the data submission schedule that will be available on the QualityNet
Web site (https://www.QualityNet.org). This Web site meets or exceeds
all current HIPAA requirements. Submission deadlines would, in general,
be four months after the last day of each calendar quarter. Thus, for
example, the submission deadline for data for services furnished during
the first quarter of CY 2011 (January-March 2011) would be on or around
August 1, 2011. The actual submission deadlines would be posted on the
http://www.QualityNet.org Web site.
Hospitals would be required to submit data to the OPPS Clinical
Warehouse using either the CMS Abstraction and Reporting Tool for
Outpatient Department (CART-OPD) measures or the tool of a third-party
vendor that meets the measure specification requirements for data
transmission to QualityNet.
Hospitals would be required to submit quality data through My
QualityNet, the secure portion of the QualityNet Web site, to the OPPS
Clinical Warehouse. The OPPS Clinical Warehouse, which is maintained by
a CMS-designated contractor, would submit the OPPS Clinical Warehouse
data to CMS. OPPS Clinical Warehouse data are not currently considered
to be Quality Improvement Organization (QIO) data; rather, we consider
such data to be CMS data. However, it is possible that the information
in the OPPS Clinical Warehouse may at some point become QIO
information. If this occurs, these data would also become protected
under the stringent QIO confidentiality regulations in 42 CFR Part 480.
Hospitals would be required to collect HOP QDRP data from
outpatient episodes of care to which the required measures apply. For
the purposes of the HOP QDRP, an outpatient ``episode of care'' is
defined as care provided to a patient who has not been admitted as an
inpatient, but who is registered on the hospital's medical records as
an outpatient and receives services (rather than supplies alone)
directly from the hospital. Every effort would be made to ensure that
data elements common to both inpatient and outpatient settings are
defined consistently for purposes of quality reporting (such as ``time
of arrival'').
Hospitals would be required to submit quality data using the CCN
under which the care was furnished.
To be accepted into the OPPS Clinical Warehouse, data submissions,
at a minimum, would be required to be timely, complete, and accurate.
Data submissions are considered to be ``timely'' when data are
successfully accepted into the OPPS Clinical Warehouse on or before the
reporting deadline. A ``complete'' submission would be determined based
on whether the data satisfy the sampling criteria that are published
and maintained in the HOPD Specifications Manual, and must correspond
to both the aggregate number of cases submitted by a hospital and the
number of Medicare claims the hospital submits for payment. We are
aware of ``data lags'' that occur when hospitals submit claims, then
cancel and correct those claims; efforts would be made to take such
events into account that can change the aggregate Medicare case counts.
To be considered ``accurate,'' submissions would be required to pass
validation, if applicable.
We strongly recommend that hospitals review OPPS Clinical Warehouse
feedback reports and the HOP QDRP Provider Participation Reports that
are accessible through their QualityNet accounts. These reports enable
hospitals to verify whether the data they or their vendors submitted
were accepted into the OPPS Clinical Warehouse and the date/time that
such acceptance occurred. We also note that irrespective of whether a
hospital submits data to the OPPS Clinical Warehouse itself or uses a
vendor to complete the submissions, the hospital would be responsible
for ensuring that HOP QDRP requirements are met.
Finally, during the past two years of the HOP QDRP, the submission
of population and sampling data was not required, though, hospitals
could submit, on a voluntary basis, the aggregate numbers of outpatient
episodes of care which are eligible for submission under the HOP QDRP
and sample size counts. These aggregated numbers of outpatient episodes
represent the number of outpatient episodes of care in the universe of
all possible cases eligible for data reporting under the HOP QDRP. For
the CY 2012 payment update, we are proposing to require submission of
this population and sample size data. Specifically, we are proposing
that hospitals must submit on a quarterly basis, aggregate population
and sample size counts for Medicare and non-Medicare encounters for the
measure populations for which chart-abstracted data must be submitted.
Under this proposal, hospitals would submit aggregate population and
sample size counts for measure populations even if the hospital had not
treated patients in a specific measure population; that is, if a
hospital has not treated any patients in a specific HOP QDRP measure
population, the hospital would still be required to submit a zero for
its quarterly aggregate population and sample counts to meet the
requirement.
We believe that hospitals have had sufficient time to become
familiar with HOP QDRP data and to develop data systems necessary to
support this requirement. We view it as vital for quality data
reporting for hospitals to be able to determine accurately their
aggregate population and appropriate sampling size data to assess their
completeness of data reporting. We rely on hospitals to properly sample
cases where sampling occurs so that representative data are submitted;
for hospitals to correctly sample, it is necessary for them to be able
to determine their aggregate population sizes. In addition, we believe
it is highly beneficial for hospitals to develop systems that can
determine whether or
[[Page 46379]]
not they have furnished services or billed for five or fewer cases for
a particular measure topic on a quarterly basis.
We are proposing that the deadlines for the reporting of aggregate
numbers of outpatient episodes of care and sample size counts would be
the same as those for the reporting of data for the measures requiring
chart abstraction, and these deadlines would be posted on the data
submission schedule that would be available on the QualityNet Web site.
Hospitals would be permitted to submit this information prior to the
deadline; this would allow CMS to advise hospitals regarding their
incomplete submission status as appropriate and give hospitals
sufficient time to make appropriate revisions before the data
submission deadline.
We plan to use the aggregate population and sample size data to
assess data submission completeness and adherence to sampling
requirements for Medicare and non-Medicare patients.
We invite public comment on these proposed requirements.
b. Extraordinary Circumstance Extension or Waiver for Reporting Quality
Data
In our experience, there have been times when hospitals have been
unable to submit required quality data due to extraordinary
circumstances that are not within their control. It is our goal to not
penalize hospitals for such circumstances and we do not want to unduly
increase their burden during these times. Therefore, in the CY 2010
OPPS/ASC final rule with comment period (74 FR 60046 through 600647),
we adopted a process for hospitals to request and for CMS to grant
extensions or waivers with respect to the reporting of required quality
data when there are extraordinary circumstances beyond the control of
the hospital. We are proposing to retain these procedures with some
proposed modifications.
Under the process, in the event of extraordinary circumstances,
such as natural disaster, not within the control of the hospital, for
the hospital to receive consideration for an extension or waiver of the
requirement to submit quality data for one or more quarters, a hospital
would submit to CMS a request form that would be made available on the
QualityNet Web site. The following information should be noted on the
form:
Hospital CCN;
Hospital Name;
CEO and any other designated personnel contact
information, including name, e-mail address, telephone number, and
mailing address (must include a physical address, a post office box
address is not acceptable);
Hospital's reason for requesting an extension or waiver;
Evidence of the impact of the extraordinary circumstances,
including but not limited to photographs, newspaper and other media
articles; and
A date when the hospital would again be able to submit HOP
QDRP data, and a justification for the proposed date.
The request form would be signed by the hospital's CEO. A request
form would be required to be submitted within 45 days of the date that
the extraordinary circumstance occurred. We are proposing to remove the
requirement found in the CY 2010 OPPS/ASC final rule with comment
period (74 FR 60646) that the hospital to include an identified reason
for requesting an extension or waiver in addition to the hospital's
reason for requesting an extension or waiver as a requirement. We
believe that this requirement is redundant and removing it will reduce
unnecessary hospital burden.
Following receipt of such a request, CMS would--
(1) Provide a written acknowledgement using the contact information
provided in the request, to the CEO and any additional designated
hospital personnel, notifying them that the hospital's request has been
received;
(2) Provide a formal response to the CEO and any additional
designated hospital personnel using the contact information provided in
the request notifying them of our decision; and
(3) Complete any CY 2011 request for Extraordinary Circumstance
Extension or Waiver for Reporting Quality Data requests reviews and
communicate the results of these determinations within 90 days
following our receipt of such a request. We are proposing to add a
deadline for CMS response so that hospitals can have a designated
timeline for when they should receive such a response.
This proposal would not preclude us from granting waivers or
extensions to hospitals that have not requested them when we determine
that an extraordinary circumstance, such as an act of nature (for
example, hurricane) affects an entire region or locale. If we make the
determination to grant a waiver or extension to hospitals in a region
or locale, we would communicate this decision to hospitals and vendors
through routine communication channels, including but not limited to e-
mails and notices on the QualityNet Web site. We invite public comment
on these proposals.
3. HOP QDRP Validation Requirements for Chart-Abstracted Data: Data
Validation Approach for CY 2012 and Subsequent Years
a. Background
In the CY 2010 OPPS/ASC proposed rule, we solicited public comments
on our proposed validation methodology (74 FR 35403 through 35404). We
stated that we are considering building upon what we proposed as a
validation approach for CY 2012 and subsequent years by, in addition to
selecting a random sample of hospitals for validation purposes,
selecting targeted hospitals based on criteria designed to measure
whether the data they have reported raises a concern regarding data
accuracy. These possible targeting criteria included identified
abnormal data patterns, whether a hospital had previously failed
validation, whether a hospital had not been previously selected for
validation for 2 or more consecutive years, and some combination of
some or all of the criteria.
We solicited public comments on whether such criteria, or another
approach, should be applied in future years. We especially solicited
suggestions for additional criteria that could be used to target
hospitals for validation. We greatly appreciate all the public comments
we received regarding the validation process proposed for CY 2012 and
subsequent years. We responded to public comments on our proposed
methodology for CY 2012 and subsequent years but did not finalize a
validation process in the CY 2010 OPPS/ASC final rule with comment
period (74 FR 60650 through 60652). We noted that we would take all of
the comments we received into account when we develop our validation
proposals for CY 2012.
b. Proposed Data Validation Requirements for CY 2012
Similar to our proposal for the FY 2012 RHQDAPU program (75 FR
23991 through 23993), we are proposing to validate data from 800
randomly selected hospitals (approximately 20 percent of all
participating HOP QDRP hospitals) each year, beginning with CY 2012
payment determination. We are proposing to sample 800 hospitals because
we believe, based upon sampling simulation studies using HOP QDRP data,
that sampling this number would provide a sufficient number for a
representative sample of hospitals on various strata (for example,
urban, rural, bed-size) while significantly reducing overall hospital
burden. For CY 2012 payment determinations, we would
[[Page 46380]]
select only from hospitals participating for the CY 2012 payment
update, so if a hospital submitted data for the CY 2011, but withdrew,
this hospital would not be deemed as eligible for selection. We note
that because 800 hospitals would be selected randomly, every HOP QDRP-
participating hospital would be eligible each year for validation
selection.
For each selected hospital, we are proposing to randomly select up
to a total of 48 self-reported cases from the total number of cases (12
per quarter) that the hospital successfully submitted to the OPPS
Clinical Warehouse. However, if a selected hospital has submitted less
than 12 cases in any quarter, only those cases available would be
validated. We believe that validating a larger number of cases per
hospital, but only for 800 randomly selected hospitals, and validating
these cases at the measure level (rather than the data element level)
has several benefits. We are proposing up to a total of 48 cases per
hospital because a sample size of about 50 is considered sufficient for
detecting relationships and correlations, so a larger sample size is
not deemed necessary (for reference, see Van Voohis, Wilson, Morgan,
Carmen R. and Betsey L., (2007), Understanding Power and Rules of Thumb
for Determining Sample Sizes, Tutorials in Quantitative Methods for
Psychology, Volume 3(2), Pages 43-50). We believe that this approach is
suitable for HOP QDRP data because it will: produce a more reliable
estimate of whether a hospital's submitted data have been abstracted
accurately; provide more statistically reliable estimates of the
quality of care delivered in each selected hospital as well as at a
national level; and reduce overall hospital burden because most
hospitals will not be selected to undergo validation each year.
We would not be selecting cases stratified by measure or topic; our
interest is whether the data submitted by hospitals accurately reflect
the care delivered and documented in the medical record, not what the
accuracy is by measure or whether there are differences by topic.
Additionally, we note that, due to the distribution of HOP QDRP data
submitted to date by hospital size, the data do not lend themselves to
sampling by topic area. Specifically, small hospitals tend to have more
AMI Cardiac Care cases and fewer Surgical Care cases, whereas, larger
hospitals tend to have few if any AMI Cardiac Care cases and more
Surgical Care cases.
Analysis of submitted HOP QDRP data indicate that this sampling
design would provide sufficient case number of denominator cases per
measure for determination of national and individual hospital measure
estimates with acceptable levels of statistical certainty.
We are proposing to sample data for April 1, 2010 to March 31, 2011
services because this would provide a full year of the most recent data
possible to use for the purpose of completing the validation in
sufficient time for us to make the CY 2012 payment determinations.
A designated CMS contractor would, each quarter that applies to the
validation, ask each of the 800 selected hospitals to submit medical
documentation for up to 12 randomly selected cases submitted to and
accepted by the HOP QDRP Clinical Warehouse. The CMS contractor would
request paper copies of medical documentation corresponding to selected
cases from each hospital via certified mail or other trackable method
that requires a hospital representative to sign for the request letter;
a trackable method would be utilized so that CMS would be assured that
the hospital received the request. The hospital would have 45 calendar
days from the date of the request as documented in the request letter
to submit the requested documentation and have the documentation
received by the CMS contractor. If the hospital does not comply within
30 calendar days of receipt of the initial medical documentation
request, the CMS contractor would send a second letter by certified
mail or other trackable method to the hospital, reminding the hospital
that paper copies of the requested documentation must be submitted and
received within 45 calendar days following the date of the initial CMS
contractor request. If the hospital does not submit the requested
documentation and the documentation is not received by the CMS
contractor within the 45 calendar days, then the CMS contractor would
assign a ``zero'' score to each data element for each selected case and
the case would fail for all measures in the same topic (for example,
OP-6 and OP-7 measures for a Surgical Care case).
We are proposing that the letter from the designated CMS contractor
would be addressed to the hospital's medical record staff identified by
the hospital for the submission of records under the RHQDAPU program
(that is, the hospital's medical records staff identified by the
hospital to their State QIO). If CMS has evidence that the hospital
received both letters requesting medical records, the hospital would be
deemed responsible for not returning the requested medical record
documentation and the hospital would not be allowed to submit such
medical documentation as part of its reconsideration request so that
information not utilized in making a payment determination is not
included in any reconsideration request.
Once the CMS contractor receives the requested medical
documentation, the contractor would independently reabstract the same
quality measure data elements that the hospital previously abstracted
and submitted, and the contractor would then compare the two sets of
data to determine whether the two sets of data match. Specifically, the
contractor would conduct a measures level validation by calculating
each measure within a submitted case using the independently
reabstracted data and then comparing this to the measure reported by
the hospital; a percent agreement would then be calculated.
Specifically, the validation score for a hospital would equal the total
number of measure matches divided by the total number of measures
multiplied by 100 percent.
This method is the same as recommended in the CMS Hospital Value-
Based Purchasing Report to Congress and is illustrated more fully on
pages 83-84 of this report which can be found on our Web site at:
http://www.cms.hhs.gov/AcuteInpatientPPS/downloads/HospitalVBPPlanRTCFINALSUBMITTED2007.pdf. We believe that this approach
is appropriate and it was supported by many commenters when we
requested comment on HOP QDRP validation requirements outlined in the
CY 2010 OPPS/ASC proposed rule (74 FR 35402 through 35403; 74 FR 60647
through 60652).
To receive the full OPPS payment update, we are proposing that
hospitals must attain at least a 75 percent validation score, based
upon our validation process, for the designated time period. We have
selected 75 percent as the threshold for the validation score because
we believe this level is reasonable for hospitals to achieve while
still ensuring accuracy of the data. Additionally, this level is
consistent with what we proposed for the RHQDAPU program (75 FR 23993).
Since we are not validating all hospital measures submitted, it is
necessary to calculate a confidence interval that incorporates sampling
error. We would use the upper bound of a one-tailed 95 percent
confidence interval to estimate the validation score. We are proposing
to use a one-tail confidence interval to calculate the validation score
because it appropriately reflects our concern of whether the confidence
interval for the calculated validation score includes or
[[Page 46381]]
is above the 75 percent validation threshold for a hospital to be
considered as submitting accurate data. If the calculated upper limit
is above the required 75 percent validation score threshold, we would
consider a hospital's data to be ``validated'' for payment purposes.
The use of a one-tailed confidence interval and the 75 percent and
threshold level are the same as proposed for the RHQDAPU program for FY
2012 payment determinations (75 FR 23991 through 23993).
For derivation of the upper bound of a one-tailed 95 percent
confidence interval we are proposing to use a binomial distribution
approach as we are looking at the percentage of measures submitted by a
hospital matching what is calculated from the reabstracted data. Since
the measure match rate for each hospital is a proportion, a binomial
approach is appropriate, see Pagano, Robert R., (1990), Understanding
Statistics in the Behavioral Sciences, 3rd Edition, Pages 175-188.
Thus, we are proposing the following formula which includes a
finite population correction factor and a continuity correction factor
for calculating the upper bound of the one-tailed 95 percent confidence
interval:
[GRAPHIC] [TIFF OMITTED] TP03AU10.560
In this formula, N represents the population for the reporting
year, n represents the sample size for the reporting year, p
(calculated as a percentage) represents the validation score for the
reporting year (that is, the percentage of measures matching), and 1-p
represents the percentage of measures not matching. It should be noted
that a confidence interval would not need to be calculated for
hospitals that did not have enough cases to sample as the confidence
interval is equal to zero (when the value of N is equal to n, N minus n
equals zero and the upper confidence limit is equal to the validation
score in the above formula). In addition, a confidence interval would
not need to be calculated for those hospitals that have a validation
score, p, that is greater than or equal to 75 percent because the
hospital has attained the minimum threshold; the upper bound of any
calculated confidence interval would be 75 percent or greater.
For further information on the proposed methodology for calculation
of a 95 percent confidence interval for a binomial distribution
utilizing a finite population correction, see http://itl.nist.gov/div898/handbook/prc/section2/prc24.htm and http://courses.wcupa.edu/rbove/Berenson/10th%20ed%20CD-ROM%20topics/section7_3.pdf.
We solicit public comments on this proposed validation methodology.
c. Additional Data Validation Conditions Under Consideration for CY
2013 and Subsequent Years
We are considering building upon what we are proposing as a
validation approach for CY 2013 and subsequent years. We are
considering, in addition to selecting a random sample of hospitals for
validation purposes, selecting targeted hospitals based on criteria
designed to measure whether the data they have reported raises a
concern regarding data accuracy. Because hospitals have gained little
experience with validation under the HOP QDRP, we are considering this
approach for possible use beginning with the CY 2013 payment
determination. Examples of targeting criteria could include:
Abnormal data patterns identified such as consistently
high HOP QDRP measure denominator exclusion rates resulting in
unexpectedly low denominator counts;
Whether a hospital had previously failed validation;
Whether a hospital had not been previously selected for
validation for 2 or more consecutive years;
Whether a hospital had low submitted case numbers relative
to population sizes; and/or
Whether a hospital had any extreme outlier values for
submitted data elements.
We invite comment on whether, in addition to random sampling for
validation, we should use targeted validation and, if so, what criteria
for targeting we should adopt.
E. Proposed HOP QDRP Reconsideration and Appeals Procedures
When the RHQDAPU program was initially implemented, it did not
include a reconsideration process for hospitals. Subsequently, we
received many requests for reconsideration of those payment decisions
and, as a result, established a process by which participating
hospitals would submit requests for reconsideration. We anticipated
similar concerns with the HOP QDRP and, therefore, in the CY 2008 OPPS/
ASC final rule with comment period (72 FR 66875), we stated our intent
to implement for the HOP QDRP a reconsideration process modeled after
the reconsideration process we implemented for the RHQDAPU program. In
the CY 2009 OPPS/ASC final rule with comment period (73 FR 68779), we
adopted a mandatory reconsideration process that will apply to the CY
2010 payment decisions. In the CY 2010 OPPS/ASC final rule with comment
period (74 FR 60654 through 60655), we continued this process for the
CY 2011 payment update. We are proposing to continue this process for
the CY 2012 payment update with some modification. Under this proposed
process, the hospitals must--
Submit to CMS, via QualityNet, a Reconsideration Request
form that would be made available on the QualityNet Web site; this form
would be submitted by February 3, 2012, and would contain the following
information:
[cir][cir] Hospital CCN.
[cir][cir] Hospital Name.
[cir][cir] CMS-identified reason for failure (as provided in any
CMS notification of failure to the hospital).
[cir][cir] Hospital basis for requesting reconsideration. This
would identify the hospital's specific reason(s) for believing it met
the HOP QDRP requirements and should receive a full annual payment
update.
[cir][cir] CEO and any additional designated hospital personnel
contact information, including name, e-mail address, telephone number,
and mailing address (must include physical address, not just a post
office box).
[cir][cir] A copy of all materials that the hospital submitted in
order to receive the full payment update for CY 2012. Such material
would include, but may not be limited to, the applicable Notice of
Participation form or completed online registration form, and quality
measure data that the hospital submitted via QualityNet.
Submit paper copies of all the medical record
documentation that it submitted for the initial validation. Hospitals
would submit this
[[Page 46382]]
documentation to a designated CMS contractor which would have authority
to review patient level information. We would post the address where
hospitals are to ship this documentation on the QualityNet Web site.
Final review of all mismatched data under a reconsideration request
would be done by CMS.
Provide a written justification for each appealed data
element classified during the validation process as a mismatch. Only
data elements that affect a hospital's validation score would be
subject to reconsideration. We would review the data elements that were
labeled as mismatched as well as the written justifications provided by
the hospitals, and make a decision on the reconsideration request.
For CY 2011 reconsiderations, we required that a reconsideration
request must be signed by the hospital CEO (74 FR 60654). However, we
have found that this requirement increases the burden for hospitals as
it hampers the electronic submission of the HOP QDRP reconsideration
request form. Thus, we are proposing not to include this requirement;
for CY 2012 reconsiderations, reconsideration request forms would not
need to be signed by the hospital's CEO.
We invite public comment on these proposed requirements.
Following receipt of a request for reconsideration, CMS would--
Provide an e-mail acknowledgement, using the contact
information provided in the reconsideration request, to the CEO and any
additional designated hospital personnel notifying them that the
hospital's request has been received.
Provide a formal response to the hospital CEO and any
additional designated hospital personnel, using the contact information
provided in the reconsideration request, notifying the hospital of the
outcome of the reconsideration process.
We intend to complete any CY 2012 reconsideration reviews and
communicate the results of these determinations within 90 days
following the deadline for submitting requests for reconsideration. In
the CY 2010 OPPS/ASC final rule with comment period 74 FR 60654 through
60655), in response to a comment, we indicated that we would ``complete
any reconsideration reviews and communicate the results of these
determinations within 60 to 90 days following the date we receive the
request for reconsideration.'' We are proposing to refine how we
describe the time frame for CY 2011 from ``60 to 90 days'' to within
``90 days'' because designating a range of dates is unnecessary for
this provision.
If a hospital is dissatisfied with the result of a HOP QDRP
reconsideration decision, we are proposing that the hospital may file
an appeal under 42 CFR Part 405, Subpart R (PRRB appeal).
Similar to our proposal for the RHQDAPU program (75 FR 23995
through 23996), the scope of our review when a hospital requests
reconsideration because it failed our validation requirement would be
as follows:
Hospital requests reconsideration for CMS contractor-
abstracted data elements classified as mismatches affecting validation
scores. Hospitals would be required to have timely submitted requested
medical record documentation to the CMS contractor during the quarterly
validation process for the requested case to be eligible to be
reconsidered on the basis of mismatched data elements.
Hospital requests reconsideration for medical records
submitted during the quarterly validation process and classified as
invalid record selection. Invalid record selections would be defined as
medical records submitted by hospitals during the quarterly validation
process that do not match the patient's episode of care information as
determined by the designated re-abstracting CMS contractor. In other
words, the contractor determines that the hospital returned medical
documentation that is different from that which was requested. If this
designated contractor determines that the hospital submitted invalid or
incorrect medical documentation, it would award a zero validation score
for the case. During the reconsideration process, our review of invalid
record selection would initially be limited to determining whether the
medical documentation submitted initially to the designated CMS
contractor was for the designated episode of care. If we determine
during reconsideration that the hospital did submit medical
documentation corresponding to the designated episode of care, then we
would abstract data elements from the medical record documentation
submitted by the hospital; otherwise, the case would not be abstracted.
Hospital requests reconsideration for medical records not
submitted to the CMS contractor within the 45 calendar day deadline.
Our review would initially be limited to determining whether the CMS
contractor received the requested medical record documentation within
45 calendar days, and whether the hospital received the initial medical
record request and reminder notice. If we determine during
reconsideration that the CMS contractor did receive the paper copy of
the requested, supporting medical record documentation within 45
calendar days, then we would abstract data elements from the medical
record documentation submitted by the hospital. If we determine that
the hospital received two letters requesting medical documentation and
still did not submit the requested documentation within the 45 calendar
day period, CMS would not accept this documentation as part of the
reconsideration and CMS would not abstract data from this
documentation.
In sum, we are initially limiting the scope of our reconsideration
reviews involving validation to information already submitted by the
hospital during the quarterly validation process, and we would not
abstract submitted medical record documentation that was not submitted
to the CMS contractor during the quarterly validation process. We would
expand the scope of our reconsideration reviews involving validation
only if we find during the initial review that the hospital correctly
and timely submitted the requested medical record documentation; only
then would we abstract data elements from the medical record
documentation submitted by the hospital as part of our reconsideration
review.
If a hospital is dissatisfied with the result of a HOP QDRP
reconsideration decision, the hospital would be able to file an appeal
under 42 CFR part 405, Subpart R (PRRB appeal).
We invite public comment on these proposals.
F. Reporting of ASC Quality Data
As discussed above, section 109(b) of the MIEA-TRHCA amended
section 1833(i) of the Act by redesignating clause (iv) as clause (v)
and adding new clause (iv) to paragraph (2)(D) and by adding new
paragraph (7). These amendments authorize the Secretary to require ASCs
to submit data on quality measures and to reduce the annual payment
update in a year by 2.0 percentage points for ASCs that fail to do so.
However, these provisions permit, but do not require, the Secretary to
take such action.
In the CY 2008 OPPS/ASC final rule with comment period (72 FR
66875), the CY 2009 OPPS/ASC final rule with comment period (73 FR
68780), and the CY 2010 OPPS/ASC final rule with comment period (74 FR
60656), we indicated that we intend to implement the provisions of
section 109(b) of the MIEA-TRHCA in a future rulemaking. While
promoting high quality care in the ASC setting through quality
[[Page 46383]]
reporting is highly desirable and fully in line with our efforts under
other payment systems, the transition to the revised payment system in
CY 2008 posed significant challenges to ASCs, and we determined that it
would be most appropriate to allow time for ASCs to gain some
experience with the revised payment system before introducing other new
requirements. Further, by implementing quality reporting under the OPPS
prior to establishing quality reporting for ASCs, CMS would gain
experience with quality measurement in the ambulatory setting in order
to identify the most appropriate measures for quality reporting in ASCs
prior to the introduction of the requirement for ASCs. Finally, we are
sensitive to the potential burden on ASCs associated with chart
abstraction and believe that adopting such measures at this time is in
contrast with our desire to minimize collection burden, particularly
when measures may be reported via EHRs in the future.
We continue to believe that promoting high quality care in the ASC
setting through quality reporting is highly desirable and fully in line
with our efforts under other payment systems. However, we continue to
have the concerns outlined above for CY 2011. We intend to implement
the provisions of section 109(b) of the MIEA-TRHCA in a future
rulemaking. We invite public comment on: (1) The deferral of quality
data reporting for ASCs; (2) suggestions for quality measures geared
toward the services provided by ASCs; and (3) potential reporting
mechanisms for ASC quality data, including electronic submission of
these data. In addition, we invite public comment on the following
measures under future consideration for ASC quality data reporting:
Patient Fall in the ASC;
Patient Burn;
Hospital Transfer/Admission;
Wrong Site, Side, Patient, Procedure, Implant;
Prophylactic IV Antibiotic Timing;
Appropriate Surgical Site Hair Removal;
Surgical site infection (SSI);
Medication administration variance (MAV);
Medication reconciliation; and
VTE measures: outcome/assessment/prophylaxis.
We note that section 3006(f) of the Affordable Care Act, as added
by section 10301(a) of the Affordable Care Act requires CMS to develop
a plan to implement a value-based purchasing program for ASCs; this
plan is due to Congress by January 1, 2011. We intend to align
implementation of ASC quality reporting to be consistent with the
value-based purchasing plan that will be developed. We intend to
propose implementing the provisions of section 109(b) of the MIEA-TRHCA
in CY 2012 rulemaking. We invite public comment on: (1) The timing of
implementing quality data reporting for ASCs; (2) suggestions for
quality measures for services provided by ASCs; and (3) potential
reporting mechanisms for ASC quality data, including electronic
submission of these data.
G. Electronic Health Records
As we stated in the CY 2010 OPPS/ASC final rule (74 FR 60656), we
are actively seeking alternatives to manual chart abstraction for the
collection of quality measures for its quality data reporting programs.
Among these alternatives are claims-based measure calculations,
collection of data from systematic registries widely used by hospitals,
and electronic submission of quality measures using EHRs. In the CY
2009, we received suggestions during the public comment period that we
adopt measures that can be collected via EHRs (73 FR 68769). We agree
with the commenters about the importance of actively working to move to
a system of data collection based on submission from EHRs. In section
XVI.B.5.b. of this proposed rule, for the CY 2014 payment
determination, we are proposing to adopt several chart-abstracted
quality measures for diabetes mellitus, some of which have already been
specified for EHR-based capture and submission, and others that are
planned for EHR-based submission in the future. We have been engaged
with health IT standard-setting organizations to promote the adoption
of the necessary standards regarding data capture to facilitate data
collection via EHRs, and have been collaborating with such
organizations on standards for a number of quality measures. We
encourage hospitals to take steps toward the adoption of EHRs that will
allow for reporting of clinical quality data from the EHR directly to a
CMS data repository. We also encourage hospitals that are implementing,
upgrading, or developing EHR systems to ensure that such systems
conform to standards adopted by HHS. We invite public comment on the
future direction of EHR-based quality measurement submission.
XVII. Proposed Changes Relating to Payments to Hospitals for Direct
Graduate Medical Education (GME) and Indirect Medical Education (IME)
Costs
A. Background
Section 1886(h) of the Act, as added by section 9202 of the
Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 (Pub. L.
99-272) and implemented in regulations at 42 CFR 413.75 through 413.83,
establishes a methodology for determining payments to hospitals for the
direct costs of approved graduate medical education (GME) programs.
Section 1886(h)(2) of the Act sets forth a methodology for the
determination of a hospital-specific, base-period per resident amount
(PRA) that is calculated by dividing a hospital's allowable direct
costs of GME for a base period by its number of residents in the base
period. The base period is, for most hospitals, the hospital's cost
reporting period beginning in FY 1984 (that is, the period of October
1, 1983, through September 30, 1984). The base year PRA is updated
annually for inflation. In general, Medicare direct GME payments are
calculated by multiplying the applicable PRA by the weighted number of
full-time equivalent (FTE) residents working in all areas of the
hospital complex (and nonhospital sites, when applicable), and the
hospital's Medicare share of total inpatient days.
Section 1886(d)(5)(B) of the Act provides for an additional payment
amount under the IPPS for hospitals that have residents in an approved
GME program in order to reflect the higher indirect patient care costs
of teaching hospitals relative to nonteaching hospitals. The
regulations regarding the calculation of this additional payment, known
as the indirect medical education (IME) adjustment, are located at 42
CFR 412.105.
The Balanced Budget Act of 1997 (Pub. L. 105-33) established a
limit on the number of allopathic and osteopathic residents that a
hospital may include in its FTE resident count for direct GME and IME
payment purposes. Under section 1886(h)(4)(F) of the Act, for cost
reporting periods beginning on or after October 1, 1997, a hospital's
unweighted FTE count of residents for purposes of direct GME may not
exceed the hospital's unweighted FTE count for its most recent cost
reporting period ending during the 1996 calendar year. Under section
1886(d)(5)(B)(v) of the Act, a similar limit on the FTE resident count
for IME purposes is effective for
[[Page 46384]]
discharges occurring on or after October 1, 1997.
The recently enacted Patient Protection and Affordable Care Act
(Pub. L. 111-148), as amended by the Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111-152) made a number of statutory
changes relating to the determination of a hospital's FTE resident
count for direct GME and IME payment purposes and the manner in which
FTE resident limits are calculated and applied to hospitals under
certain circumstances. (These two pieces of legislation are
collectively referred to in this document as the ``Affordable Care
Act.'') Below we set forth our proposals to implement the provisions of
the Affordable Care Act relating to Medicare direct GME and IME
payments.
B. Counting Resident Time in Nonprovider Settings (Section 5504 of the
Affordable Care Act)
1. Background and Changes Made by the Affordable Care Act
Effective July 1, 1987, the Social Security Act was amended to
allow hospitals to count the time residents spend training in sites
that are not part of the hospital (referred to as ``nonprovider'' or
``nonhospital sites'') for purposes of direct GME payments under
certain conditions. Specifically, section 1886(h)(4)(E) of the Act
requires that the Secretary's rules concerning the computation of FTE
residents for purposes of direct GME payments ``provide that only time
spent in activities relating to patient care shall be counted and that
all the time so spent by a resident under an approved medical residency
training program shall be counted towards the determination of full-
time equivalency, without regard to the setting in which the activities
are performed, if the hospital incurs all, or substantially all, of the
costs for the training program in that setting.'' (Section
1886(h)(4)(E) of the Act, as added by section 9314 of the Omnibus
Budget Reconciliation Act of 1986 (Pub. L. 99-509) (OBRA 86).)
Regulations implementing this provision were published in the September
29, 1989 final rule (54 FR 40292) at 42 CFR 413.86(f)(3) (now Sec.
413.78(c)), which stated that a hospital may count the time residents
spend in nonprovider settings for purposes of direct GME payment if:
(1) The residents spend their time in patient care activities; and (2)
there is a written agreement between the hospital and the nonprovider
entity stating that the hospital will incur all or substantially all of
the costs of the program. The regulations at that time defined ``all or
substantially all'' of the costs to include the residents' compensation
for the time spent at the nonprovider setting. We also interpreted
section 1886(h)(4)(E) of the Act to mean that only one single hospital
was permitted to incur the costs of a particular training program and
count the time residents spend training in a particular nonhospital
setting.
Prior to October 1, 1997, for purposes of the IME payment
adjustment, hospitals were not permitted to count the time residents
spent training in nonhospital settings. However, section 4621(b)(2) of
the Balanced Budget Act of 1997 revised section 1886(d)(5)(B) of the
Act to allow providers to count time residents spend training in
nonprovider sites for IME purposes, effective for discharges occurring
on or after October 1, 1997. Specifically, section 1886(d)(5)(B)(iv) of
the Act was amended to provide that ``all the time spent by an intern
or resident in patient care activities under an approved medical
residency program at an entity in a nonhospital setting shall be
counted towards the determination of full-time equivalency if the
hospital incurs all, or substantially all, of the costs for the
training program in that setting.'' In the July 31, 1998 final rule (63
FR 41005), at Sec. 412.105(f)(1)(ii)(C) and Sec. 413.86(f)(4), we
specified the requirements that a hospital must meet in order to
include the time spent by residents training in a nonhospital site in
its FTE count for purposes of both direct GME and IME payments (we note
that Sec. 413.86(f)(4) is now redesignated as Sec. 413.78(d)). In
that final rule, we also redefined ``all or substantially all of the
costs for the training program in the nonhospital setting'' as the
residents' salaries and fringe benefits (including travel and lodging
where applicable), and the portion of the cost of teaching physicians'
salaries and fringe benefits attributable to direct GME.
In order to implement section 1886(h)(4)(E) (and later, section
1886(d)(5)(B)(iv)) of the Act, and to assist contractors in determining
whether a hospital incurred ``all or substantially all'' of the costs
of the program in the nonhospital setting, we required in Sec.
413.86(f)(3) and (4) that there must be a written agreement between the
hospital and the nonhospital site stating that the hospital will incur
``all or substantially all'' of the costs of training in the
nonhospital setting (we note that Sec. 413.86(f)(3) and (4) is now
redesignated as Sec. 413.78(c) and (d)). We later specified at Sec.
413.78(d)(2) that the written agreement must indicate the amount of
compensation provided by the hospital to the nonhospital site for
supervisory teaching activities.
Section 713 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) imposed a 1-year moratorium relating to
certain nonhospital site teaching physician costs for the period from
January 1, 2004, through December 31, 2004. During this 1-year period,
we were required to allow hospitals to count FTE allopathic or
osteopathic family practice residents training in nonhospital settings
for IME and direct GME payment purposes without regard to the financial
arrangement between the hospital and the teaching physician practicing
in the nonhospital setting to which the resident was assigned. We
instructed our contractors (then referred to as only ``fiscal
intermediaries'' or ``FIs'') regarding the effect of section 713 of the
MMA in the One-Time Notification (OTN), ``Changes to the FY 2004
Graduate Medical Education (GME) Payments as Required by the Medicare
Modernization Act of 2003 (MMA)'' (Change Request 3071, Transmittal 61,
issued on March 12, 2004). Generally, we stated in the OTN that, when
settling prior year cost reports during this 1-year period, or for
family practice residents actually training in nonhospital settings
during this 1-year period, contractors should allow hospitals to count
allopathic and osteopathic family practice residents training in a
nonhospital setting for direct GME and IME payment purposes without
regard to the financial arrangement between the hospital and the
nonhospital site pertaining to the teaching physicians' costs
associated with the residency program. For further information on this
provision and for a summary of comments and responses related to this
provision, we refer readers to the FY 2005 IPPS final rule (69 FR
49176).
In an effort to respond to concerns expressed by hospitals about
the administrative burden associated with meeting the written agreement
requirements, in the FY 2005 IPPS final rule (69 FR 49179), at Sec.
413.78(e), we revised our regulations to allow hospitals to choose to
either enter into a written agreement with the nonhospital site before
the hospital may begin to count residents training at the nonhospital
site, or to pay concurrently for the cost of training at the
nonhospital setting. That is, in the absence of a written agreement,
hospitals are required to pay ``all or substantially all'' of the costs
of the training program in the nonhospital setting by the end of the
third month
[[Page 46385]]
following the month in which the training occurs.
On May 11, 2007, we published a final rule (72 FR 26949) that once
again modified the definition of ``all or substantially all of the
costs for the training program in the nonhospital setting.'' That final
rule further defined ``all or substantially all'' under Sec. 413.75(b)
to mean at least 90 percent of the total costs of the residents'
salaries and fringe benefits (including travel and lodging where
applicable) and the portion of the cost of the teaching physician's
salaries attributable to direct GME. Although several public commenters
had objected to our proposed redefinition of the ``all or substantially
all,'' we adopted the 90 percent rule because we believed it would
substantially address concerns that had been voiced previously by the
industry. With this modification, hospitals were no longer required to
pay 100 percent of the residents' salaries and fringe benefits
(including travel and lodging where applicable) and the portion of the
teaching physicians' costs attributable to direct GME at the
nonhospital site. This change in policy also allowed providers to use
an alternative, less burdensome method to calculate the GME teaching
physician costs attributable to direct GME at nonhospital sites. In
addition to the redefinition of ``all or substantially all of the
costs,'' the May 11, 2007 final rule also modified the regulation text
at Sec. 413.78(f)(3)(ii) to clarify that the required written
agreement between a hospital and a nonhospital site must be in place
before residents begin training at the nonhospital site. That final
rule also specified the information that must be included in the
written agreement, and stated that the amounts specified in the written
agreement may be modified by June 30 of the applicable academic year.
Section 5504(a) of the Affordable Care Act made changes to section
1886(h)(4)(E) of the Act to significantly reduce the costs that
hospitals must incur for residents training in nonhospital sites in
order to count the FTE residents for purposes of Medicare direct GME
payments. Specifically, section 5504(a) amended the statute to allow a
hospital to count all the time that a resident trains in a nonhospital
site so long as the hospital incurs the costs of the residents'
salaries and fringe benefits for the time that the resident spends
training in the nonhospital site. Section 5504(b) of the Affordable
Care Act made similar changes to section 1886(d)(5)(iv) of the Act for
IME payment purposes. For direct GME payments, the provision is
effective for cost reporting periods beginning on or after July 1,
2010; for IME payments, the provision is effective for discharges
occurring on or after July 1, 2010. The changes made by section 5504(a)
and (b) also specify that if more than one hospital incurs the
residency training costs in a nonhospital setting, those hospitals are
to count a proportional share of the training time as determined by
written agreement between the hospitals. In addition, section 5504(a)
amended section 1886(h)(4)(E) of the Act to require hospitals to
maintain documents indicating the amount of time their residents spend
training in nonhospital sites relative to a base year, and to make
those documents available to the Secretary.
Section 5504(c) of the Affordable Care Act specifies that the
amendments made by the provisions of sections 5504(a) and (b) shall not
be applied in a manner that would require the reopening of settled cost
reports except where the provider has a jurisdictionally proper appeal
pending on the issue of direct GME or IME payments as of March 23, 2010
(the date of the enactment of Pub. L. 111-148). We are proposing to
interpret ``pending, jurisdictionally proper appeal on direct GME or
IME payments'' to mean that in order for a hospital to request a change
to its FTE count, direct GME or IME respectively, the ``pending,
jurisdictionally proper appeal'' must be specific to direct GME or IME
respectively. For example, in order for a hospital to increase its FTE
count with regard to an ACA provision that is unique to IME (such as
inclusion in the IME count of didactic time occurring in the hospital
as specified by new section 1886(d)(5)(B)(x)(II)), the hospital's
``pending, jurisdictionally proper appeal'' must be on an IME issue;
IME FTEs or the available bed count. However, if the hospital's
``pending, jurisdictionally proper appeal'' is on an issue that only
affects direct GME payments, such as the initial residency period or
the Medicare patient load, that appeal would not be sufficient in order
for the hospital to increase its FTE count with regard to an ACA
provision that is unique to IME, such as didactic time in the hospital
setting.
2. Elimination of the ``All or Substantially All of the Costs for the
Training Program in the Nonhospital Setting'' Requirement and New Cost
Requirements for Hospitals
As stated earlier, in the May 11, 2007 final rule (72 FR 26949), we
redefined the phrase ``all or substantially all of the costs for the
training program in the nonhospital setting'' under Sec. 413.75(b) of
the regulations to mean at least 90 percent of the total costs of the
residents' salaries and fringe benefits (including travel and lodging
where applicable) and the portion of the cost of the teaching
physicians' salaries attributable to nonpatient care direct GME.
However, section 5504 of the Affordable Care Act revised the Act,
effective on July 1, 2010, and eliminated the requirement that a
hospital incur ``all or substantially all of the costs for the training
program in the nonhospital setting.'' Under the changes made by section
5504, hospitals are only required to incur the costs of the resident's
salaries and fringe benefits during the time the resident spends in the
nonhospital setting, and they no longer have to incur other training
costs in the nonhospital site in order to count such time for direct
GME and IME purposes.
We are proposing to revise our regulation at Sec. 413.75(b)
accordingly to conform to these new statutory requirements.
Specifically, we are proposing to revise the existing definition of
``all or substantially all of the costs for the training program in the
nonhospital setting'' to be effective for cost reporting periods
beginning on or after July 1, 2007, and before July 1, 2010. We also
are proposing to add a new Sec. 413.78(g) that details how hospitals
should count residents that train in nonhospital sites for cost
reporting periods beginning on or after July 1, 2010. Specifically, we
are proposing to require under Sec. 413.78(g)(2) that a hospital or
hospitals must incur the costs of the salaries and fringe benefits of
the resident during the time the resident spends in the nonprovider
setting in order to count the time spent by those residents for direct
GME payment purposes. Sec. 412.105(f) has also been revised to reflect
these changes for the purposes of IME payments.
3. Proposed Revision to Regulations To Allow More Than One Hospital To
Incur the Costs of Training Programs at Nonhospital Settings, Either
Directly or Through a Third Party
As indicated above, prior to the enactment of the Affordable Care
Act, we had interpreted both section 1886(h)(4)(E) of the Act
(regarding direct GME) and section 1886(d)(5)(B)(iv) of the Act
(regarding IME) as allowing a hospital to count the time spent by
residents training in a nonhospital site only when one single hospital
incurred the costs of a particular training program in a particular
nonhospital setting. We noted that both sections of the statute
specified that a hospital could count the time spent by residents
training in a nonhospital site ``if the
[[Page 46386]]
hospital incurs all or substantially all of the costs for the training
program in that setting'' (emphasis added). While we understand that,
in some cases, hospitals share the costs of training their respective
residents in the same programs at the same nonhospital site, we have
historically only allowed a hospital to count time spent by those
residents if one single hospital met the requirement to incur ``all or
substantially all'' of the training program costs at a nonhospital
site. Accordingly, two or more hospitals could not count the time spent
by their residents training in a nonhospital site if they shared the
training costs at the site or if a third party incurred the costs of
training at a nonhospital site on behalf of several hospitals. Examples
of third parties that might incur nonhospital site training program
costs are a medical or dental school, or a GME administrative entity
that is established to operate the GME program.
Sections 5504(a) and (b) of the Affordable Care Act specifically
address the situation in which more than one hospital incurs the costs
of training programs at nonhospital settings, either directly or
through a third party. Sections 5504(a) and (b) amend sections
1886(h)(4)(E) and 1886(d)(5)(B)(iv) of the Act, respectively, to
provide that when more than one hospital incurs these costs, either
directly or through a third party, those hospitals ``shall count a
proportional share of the time, as determined by written agreement
between the hospitals, that a resident spends training in that
setting.'' Therefore, these statutory changes now allow hospitals to
share the costs of resident training at nonhospital sites, so long as
those hospitals divide the resident time proportionally pursuant to a
written agreement, for the purposes of determining their respective
direct GME and IME FTE resident counts at the nonhospital site. These
provisions of the statute are effective for cost reporting periods
beginning on or after July 1, 2010 for direct GME, and for discharges
occurring on or after July 1, 2010 for IME. Accordingly, although
hospitals that shared training costs at nonhospital sites could not
count any of resident time spent training at those nonhospital sites
prior to July 1, 2010, hospitals can count all of that training time
beginning on or after July 1, 2010, as long as they divide the resident
training time proportionally.
We are proposing to revise our regulations to reflect the statutory
provision that allows hospitals to proportionally share the costs of
resident training at nonhospital sites under a new paragraph (g)(2) of
Sec. 413.78 and to make a conforming cross-reference change under
Sec. 412.105(f)(1)(ii) of the IME regulations. While the statute
allows hospitals to determine by an agreement the proportional share of
time that residents spend training in the nonhospital site, we are
proposing that hospitals must use some reasonable basis for
establishing that proportion (proposed Sec. 413.78(g)(2)(ii)). One
such reasonable basis could be that each hospital counts the number of
FTEs for which it incurs the salaries and fringe benefits. For example,
if there are 10 FTEs training in a nonhospital setting in a particular
program, and there are two hospitals that each incur the costs of the
salaries and fringe benefits of 5 of those FTEs, each hospital could
agree to count 50 percent of the FTEs (even if each hospital is not
necessarily paying 50 percent of the cost, due to differences in
resident salary amounts, this arrangement is acceptable, so long as 100
percent of the required cost is paid).
In addition to having a reasonable basis for establishing the
proportion, hospitals also must be able to document the amount that
they are paying collectively, and this amount must equate to at least
the sum of all the salaries and fringe benefits of the residents for
the amount of time that the residents are training in that site. The
salaries and fringe benefits of the residents will vary depending upon
the program year of the residents, and the specialty in which they are
training. As we indicated in the May 11, 2007 final rule (72 FR 26961),
hospitals must ``take into account the actual salary and fringe
benefits for each FTE resident that trains in the nonhospital site,
which may vary by resident.'' Therefore, as also indicated in the May
11, 2007 final rule (72 FR 26970), global agreements that cover a
variety of issues (GME and non-GME) between the hospital(s) and
nonhospital site, and that only specify a lump sum payment amount with
no break out of the residents' salaries and fringe benefits, do not
provide sufficient information for the Medicare contractor to determine
that ``all or substantially all'' of the costs (or, effective July 1,
2010, that all of the residents' salaries and fringe benefits) have
been paid. Accordingly, we would expect that, regardless of whether
there is one hospital paying the cost, or if more than one hospital is
sharing the costs, hospitals would need to determine prior to the start
of nonhospital rotations (with allowance for modification by June 30 of
that academic year) the total cost of the salaries and fringe benefits
of the residents that are training for the proportion of the year spent
in each nonhospital site. Of course, in the instance where the
residents remain on the payroll of one or more hospitals for the entire
year, it would be easier to document that the hospital(s) continues to
pay the residents' salaries and fringe benefits when the residents
rotate to nonhospital sites. Similarly, where the residents are on the
payroll of the medical or dental school, or of a third party GME
administrative entity, and the hospitals reimburse the school or the
third party for the entire salary and fringe benefit costs of the
residents for both hospital and nonhospital training, the hospitals
could easily document that they have incurred the requisite costs of
training in nonhospital sites. In some circumstances, it may be more
labor-intensive for a hospital or hospitals to document that they have
incurred costs of training in the nonhospital site that equate to at
least the sum of the salaries and fringe benefits of the FTE residents
for the proportion of time spent in the nonhospital site. This is
especially true in situations where funds are being transferred between
one or more hospitals and a third party administrative entity not
simply for Medicare GME purposes, but as part of global agreements that
also address a variety of Medicare and non-Medicare issues. However,
once the total costs for the residents' salaries and fringe benefits
for time spent in the nonhospital site are determined and covered by
the hospitals, the hospitals may decide among themselves the proportion
of those costs each will incur, and may use a reasonable basis to
allocate among themselves the proportion of FTE residents that each one
will count, as discussed above.
As specified in section 5504, we are proposing further that the
hospitals must record the proportion of the FTE resident time spent
training in the nonhospital site that will be counted by each hospital
for purposes of direct and indirect GME payment, as well as the
reasonable basis for the proportion, in a written agreement between the
hospitals. We are proposing to add this requirement in regulations at
Sec. 413.78(g)(2)(i). If hospitals have in place written agreements
with the nonhospital site in accordance with our existing regulations
at Sec. 413.78(f)(3)(ii), we are proposing that the proportion of the
FTE resident training time to be counted for IME and direct GME
purposes by each hospital, and the basis for the proportion, may be
recorded in that agreement (proposed Sec. 413.78(g)(2)(iii)). We are
proposing that if the hospitals choose to pay the
[[Page 46387]]
training program costs concurrently as described in Sec.
413.78(g)(3)(i), that is, without a written agreement, the hospitals
must still agree in writing to the proportion of costs and training
time they plan to incur and count (proposed Sec. 413.78(g)(2)(iv)) in
addition to the basis for that proportion, as specified by the statute.
That written agreement between the hospitals must be available for CMS
review and for auditing purposes. In addition, we would expect that the
hospitals' records of resident training time and training costs at
nonhospital sites, as required by the Affordable Care Act and as
discussed below, reflect the proportions of training time and costs as
agreed upon and documented in whichever type of written agreement the
hospitals used to record the proportional shares of resident training
time that each will count for purposes of direct GME and IME payment.
4. Proposed Changes to Regulations Regarding Recordkeeping and
Comparison to a Base Year
As stated above, section 5504(a) of the Affordable Care Act
requires hospitals to maintain records of the amount of time that their
residents spend in nonprovider settings, and to compare that time to
the time spent by their residents in nonprovider sites in a base year
as the Secretary may specify. This requirement is effective for cost
reporting periods beginning on or after July 1, 2010. We are proposing
to incorporate this statutory requirement for maintaining records under
a new paragraph (g)(5) of Sec. 413.78 of the regulations, and we
anticipate amending the cost report for hospitals to include lines
where hospitals can submit the required data, which is described below.
These data will help CMS identify whether barriers to resident training
in nonhospital sites exist. The original allowance of IME payments for
training in nonhospital sights, as instituted by the BBA, was intended
to act as an incentive to hospitals to increase such training. However,
we have not seen a marked increase in the amount of training that
occurs in nonhospital settings in the years since the implementation of
the BBA. Advocates of expanding training in nonhospital sites have
alleged that CMS' rules for counting residents in nonhospital sites
regarding teaching physician salary costs were an obstacle to the
expansion of training in nonhospital settings. The recordkeeping and
reporting requirement added by section 5504(a) of the Affordable Care
Act will provide the Secretary information to assess whether
nonhospital site resident training increases as a result of the
statutory revision of rules that were viewed as burdensome.
We understand that rotation schedules are a primary source of
information that hospitals supply to Medicare contractors for
determining where and for how much time each resident spends training
in each hospital or nonhospital site. Therefore, we are proposing that
rotation schedules be the source for establishing the amount of time
that residents spend training in nonhospital sites, both in the base
year and in subsequent years. The amendment to section 1886(h)(4)(E) of
the Act by section 5504(a) of the Affordable Care Act states that the
Secretary shall specify the aforementioned base year for the level of
training at nonhospital sites. We are proposing that cost reporting
periods beginning on or after July 1, 2009 and before June 30, 2010 be
the base year against which we will compare subsequent years' data to
determine if the amount of nonhospital training that occurs in
subsequent years increases relative to that base year (proposed new
Sec. 413.78(g)(5)). We also are proposing that, to meet this
documentation requirement, hospitals only need to maintain records of
the total unweighted direct GME FTE count (before application of the
direct GME FTE resident cap) of resident training time in nonhospital
settings.
Section 5504(a) of the Affordable Care Act also made changes to
require that these records be made available to the Secretary. In order
for CMS to evaluate whether nonhospital site training has increased as
a result of the changes made by section 5504 of the Affordable Care
Act, we are proposing to include several additional cost report lines
for hospitals to submit data for each of their primary care programs on
a program-specific basis. With respect to hospitals' nonprimary care
programs, hospitals would only need to supply that data on an overall
hospital basis, and we are proposing to add one line on the cost report
for hospitals to submit that data. We are only requiring program-
specific data with respect to resident training time in nonhospital
sites for primary care specialties because we believe that that is
sufficient for the intent of this provision. The intent of this
recordkeeping requirement is to see whether, as a result of the policy
changes required under section 5504(a), there is an increase in the
volume of residency training that takes place in nonhospital settings.
Since residents at nonhospital sites typically train in primary care
specialties, and in order to minimize the documentation burden on
hospitals, we do not believe it is necessary to require program-
specific data for other specialties that would provide only marginally
useful information. For the purposes of this provision, we propose to
use the definition of primary care resident in Sec. 413.75(b) to
identify those programs for which we are proposing to require program-
specific data.
Once this information is made available to CMS, the data would be
compared to the analogous data from the base year of cost reporting
periods beginning on or after July 1, 2009 and before June 30, 2010, in
order for CMS to determine whether the volume of nonhospital site
training has increased. Specifically, we are proposing to use the total
direct GME count of FTE training time in a primary care specialty in
nonhospital sites (prior to application of direct GME FTE resident
limits) as the gauge to determine if residency training time in
nonhospital settings in that specialty has increased in an academic
year relative to the base year. For example, if, in the base year, we
find that 10.5 direct GME FTEs out of a total of 15 FTE family practice
residents from a family practice residency program in a teaching
hospital trained in nonhospital settings (that is, 70 percent of the
FTE time of the residents in the family practice residency program was
spent training in nonhospital sites), we would note the subsequent
years' amount of direct GME FTE training time in nonhospital sites in
that particular teaching program to see if that FTE proportion
increased from 70 percent. This would help determine if more training
time is spent by primary care residents in nonhospital sites. Or, for
all of the nonprimary care teaching programs in a hospital, if 100
direct GME FTE residents out of 400 FTE residents spent time training
in nonhospital settings (that is, 25 percent of the time spent by
residents in the program is spent training in nonhospital sites), we
would look to see if in subsequent years, more than 25 percent of the
time spent by nonprimary care direct GME FTEs from that hospital is
spent training in nonhospital sites.
C. Counting Resident Time for Didactic and Scholarly Activities and
Other Activities (Section 5505 of the Affordable Care Act)
1. Background and Changes Made by the Affordable Care Act
Prior to the enactment of the Affordable Care Act, the time that
residents spend training at a nonhospital setting in nonpatient care
activities, as part of an approved
[[Page 46388]]
program, could not be included in a hospital's direct GME or IME FTE
resident count. There were also differences in the rules for counting
FTE resident time during the time that residents spend training in the
hospital for direct GME and IME payments. For direct GME payment
purposes, under 42 CFR 413.78(a), ``residents in an approved program
working in all areas of the hospital complex may be counted.'' As
explained in the September 29, 1989 Federal Register (54 FR 40286), the
hospital complex consists of the hospital and the hospital-based
providers and subproviders. Therefore, the distinction between patient
care activities and nonpatient care activities is not relevant to
direct GME FTE count determinations when the residents are training in
the hospital complex. However, for IME payment purposes, consistent
with the regulations at 42 CFR 413.9 and 412.105(f)(1)(iii)(C), only
time spent in patient care activities in the hospital is counted. It
has been our longstanding policy that, regardless of the site of
training, ``we do not include residents in the IME count to the extent
that the residents are not involved in furnishing patient care'' (66 FR
39897, August 1, 2001).
Section 5505(a) of the Affordable Care Act added new subparagraph
(J) to section 1886(h)(4) (as amended by section 5504) of the Act to
allow hospitals to count certain nonpatient care activities that occur
in certain nonprovider settings, including didactic conferences and
seminars, in the hospital's direct GME FTE resident counts. The
provision added by section 5505(a) allows a hospital to count the time
that residents spend training in an approved program in a ``nonprovider
setting that is primarily engaged in furnishing patient care'' for
direct GME purposes, even if those residents are engaged in nonpatient
care activities, such as didactic conferences and seminars (but not
including research not associated with the treatment or diagnosis of a
particular patient), during that training time at the nonhospital site.
This statutory change is effective for cost reporting periods beginning
on or after July 1, 2009. We are proposing to revise our regulations at
Sec. 413.78(f)(1) and (g)(1) to reflect the statutory provision.
Section 5505(b) of the Affordable Care Act addressed IME and added
a new clause (x) to section 1886(d)(5)(B) of the Act which allows
certain nonpatient care activities, including didactic conferences and
seminars (but not including research not associated with the treatment
or diagnosis of a particular patient), to be counted for IME purposes
as well. However, for IME purposes, this change only applies to such
activities during training that occurs in subsection (d) hospitals
(which are IPPS hospitals), subsection (d) Puerto Rico hospitals (IPPS
hospitals in Puerto Rico), hospitals that are reimbursed under a
reimbursement system authorized under section 1814(b)(3) of the Act, or
provider-based hospital outpatient departments. The IME provision is
applicable to cost reporting periods beginning on or after January 1,
1983. We are proposing to revise our regulations at Sec.
412.105(f)(1)(ii)(A) through (f)(1)(ii)(D) and (f)(1)(iii)(B) to
reflect these statutory provisions.
As specified in section 1886(d)(5)(B)(x)(III) of the Act, as added
by section 5505(b) of the Affordable Care Act, research activities that
are not associated with the treatment or diagnosis of a particular
patient are excluded from the allowable IME count of FTE residents, and
this specific change applies to cost reporting periods beginning on or
after October 1, 2001. We discuss this provision and our proposed
implementation under section XVII.C.3. of this proposed rule.
Section 10501(j) of Public Law 111-152 amended section 5505 of
Public Law 111-148 to clarify the application of the provisions of
section 5505. The amendment prohibits the provisions of section 5505
from being applied in a manner that would require the reopening of
settled cost reports except where the provider has a jurisdictionally
proper appeal pending on the issue of direct GME or IME payments as of
March 23, 2010 (the date of the enactment of Pub. L. 111-148). We are
proposing to reflect this provision in the proposed revisions to our
regulations under Sec. 412.105(f)(1)(ii), Sec. 412.105(f)(1)(iii)(C)
and Sec. 413.78(h). We are also proposing, as mentioned above with
respect to Section 5504, to interpret ``pending, jurisdictionally
proper appeal on direct GME or IME payments'' for this section to mean
that in order for a hospital to request a change to its FTE count,
direct GME or IME respectively, the ``pending, jurisdictionally proper
appeal'' must be specific to direct GME or IME respectively. For
example, in order for a hospital to increase its FTE count with regard
to an ACA provision that is unique to IME (such as inclusion in the IME
count of didactic time occurring in the hospital as specified by new
section 1886(d)(5)(B)(x)(II)), the hospital's ``pending,
jurisdictionally proper appeal'' must be on an IME issue; IME FTEs or
the available bed count. However, if the hospital's ``pending,
jurisdictionally proper appeal'' is on an issue that only affects
direct GME payments, such as the initial residency period or the
Medicare patient load, that appeal would not be sufficient in order for
the hospital to increase its FTE count with regard to an Affordable
Care Act provision that is unique to IME, such as didactic time in the
hospital setting.
2. Definition of ``Nonprovider Setting That Is Primarily Engaged in
Furnishing Patient Care''
As stated above, section 5505(a) of the Affordable Care Act amended
section 1886(h)(4) of the Act to allow hospitals to count the time that
residents spend in certain nonpatient care activities in nonhospital
sites towards the hospitals' direct GME resident count for cost
reporting periods beginning on or after July 1, 2009. The amendments
made by section 5505(a) to section 1886(h)(5) of the Act include a
definition of the term ``nonprovider setting that is primarily engaged
in furnishing patient care'' to mean ``a nonprovider setting in which
the primary activity is the care and treatment of patients, as defined
by the Secretary.'' In past discussions regarding our policy to
disallow time spent by residents in didactic nonpatient care
activities, we have given extensive explanations of what we mean by the
term ``patient care activities.'' When section 1886(h)(4)(E) of the Act
was first implemented, we specifically stated that ``only time spent in
activities relating to patient care may be counted [in nonhospital
sites]'' (54 FR 40292, September 29, 1989). In 1998, when we
implemented the statute allowing FTE residents to be counted in
nonhospital sites for IME, we reiterated that a hospital may only count
resident training time ``in nonhospital sites for indirect and direct
GME, respectively, if the resident is involved in patient care'' (63 FR
40986, July 31, 1998). In addition, we note that the scope of the term
``patient care'' had been well-established in the Medicare program even
prior to issuance of the first rules on counting FTE residents for
purposes of direct GME and IME payments. For example, prior to the
IPPS, acute care hospitals were paid by Medicare for inpatient services
based on their reasonable operating costs, or costs relating to the
provision of reasonable and necessary ``patient care.'' The
longstanding regulation at 42 CFR 413.9 (Costs related to patient care)
specifies that Medicare payment is limited to those services relating
to ``patient care,'' or to those relating to covered services for the
care of beneficiaries. In the August 18, 2006 Federal Register, we
defined the term ``patient care activities''
[[Page 46389]]
at 42 CFR 413.75 in a way that was consistent with these previous,
plain-language applications of the term (71 FR 48142). Therefore, we
currently define ``patient care'' at Sec. 413.75(b) as ``the care and
treatment of particular patients, including services for which a
physician or other practitioner may bill, and orientation activities as
defined in this section.''
Section 5505(a) of the Affordable Care Act added a new subparagraph
(K) to section 1886(h)(5) which defines the term ``nonprovider setting
that is primarily engaged in furnishing patient care'' to mean ``a
nonprovider setting in which the primary activity is the care and
treatment of particular patients, as defined by the Secretary.'' This
definition uses the term ``patient care'' which we have defined
previously, as discussed above. We are proposing to continue our
current construction of the term ``patient care'' as described above
and in current regulations and other guidance. Examples of nonprovider
settings that would be ``primarily engaged in furnishing patient care''
are those settings in which the main mission is to provide patient
care, such as doctors' offices and community health clinics.
Nonprovider settings that would not meet these criteria include those
with a main mission other than patient care. Examples of such settings
are medical schools and dental schools, even if those schools are part
of a larger system that includes institutions that are primarily
engaged in patient care. Despite any affiliations with patient care
settings, medical and dental schools are institutions that are
primarily engaged in educational activities as opposed to patient care.
Medical and dental schools retain their principal mission of education
regardless of their participation in various systems and affiliations,
parts of which may involve settings that are primarily engaged in
furnishing patient care. Another example of a nonprovider setting that
does not meet the ``primarily engaged in furnishing patient care''
criterion set forth in this section would be a hotel or convention
center. While residents may attend didactic conferences and seminars in
a hotel or convention center, that didactic time cannot be counted
toward a hospital's direct GME FTE count because the main mission of a
hotel or convention center is the provision of hospitality and meeting
services. Thus, any such time spent in a hotel or convention center
would not occur in a setting that is primarily engaged in furnishing
patient care.
The exclusion of medical and dental schools from the definition of
``nonprovider setting that is primarily engaged in furnishing patient
care'' is consistent with longstanding CMS policy, and we have
addressed this policy several times in the past. We explained in
response to comments in the aforementioned August 18, 2006 Federal
Register that, ``[lsqb]W[rsqb]e understand that it is quite common for
hospitals, especially large academic medical centers, to be located on
the same campus as a medical school, where the buildings are very
closely situated or even connected, and the facilities are often
shared. However * * * hospitals, nonhospital sites, and medical schools
are structured separately for legal and financial purposes, and are
recognized independently for state licensing and Medicare cost
reporting purposes. As we stated in 2006, ``to put it simply, a
hospital is not a medical school, and a medical school is not a
hospital'' (71 FR 48093). In the August 22, 2007 Federal Register, we
clarified that, ``[lsqb]T[rsqb]he commenter is also correct that
orientation activities in a related medical school cannot be counted *
* * the nonhospital settings we were referring to in which orientation
may be counted are those nonprovider settings such as physicians'
offices or clinics, where patient care is routinely provided and a
hospital is permitted to count the time spent by residents in
accordance with our regulations at Sec. Sec. 412.105(f)(1)(ii)(C) and
413.78(f), not other nonhospital settings where time spent by residents
is not permitted to be counted for purposes of direct GME and IME'' (72
FR 47382). Thus, while time spent by residents in certain nonpatient
care activities may be counted for direct GME payment purposes in a
nonhospital site primarily engaged in furnishing patient care, time
spent by residents in nonpatient care activities at nonhospital sites
that are not primarily engaged in patient care activities is not
allowable for direct GME and IME payment purposes.
We are proposing to add, under Sec. 413.75, the statutory
definition of ``nonprovider setting that is primarily engaged in
furnishing patient care'' to the definition of general terms used
throughout the GME regulations.
3. Distinguishing Between Allowed ``Nonpatient Care Activities'' and
Nonallowable Research Time
As discussed above, research time that is not associated with the
treatment or diagnosis of a particular patient is specifically excluded
from the ``nonpatient care activities, such as didactic conferences and
seminars'' that are otherwise allowable under section 5505 of the
Affordable Care Act for the purposes of direct GME in nonhospital sites
for cost reporting periods beginning on or after July 1, 2009, and for
purposes of IME in certain hospital settings for cost reporting periods
beginning on or after January 1, 1983. There are several unique
features of ``research not associated with the treatment or diagnosis
of a particular patient'' that distinguish it from ``nonpatient care
activities, such as didactic conferences and seminars.'' ``Research not
associated with the treatment or diagnosis of a particular patient''
usually comprises activities that are focused on developing new medical
treatments, evaluating medical treatments for efficacy or safety, or
elaborating upon knowledge that will contribute to the development and
evaluation of new medical treatments in the future, rather than on
establishing a diagnosis or furnishing therapeutic services for a
particular patient.
Section 5505 further distinguishes ``research not associated with
the treatment or diagnosis of a particular patient'' from ``nonpatient
care activities, such as didactic conferences and seminars,'' by
specifying that nonpatient care activities include ``didactic
conferences and seminars.'' Conferences or seminars could include an
administrative rotation, which would include resident training in the
administrative aspects of medical care such as practice management.
4. Approved Leaves of Absence
In the FY 2008 IPPS proposed rule (72 FR 24814), we proposed to
remove vacation, sick leave and other types of leave from the FTE
calculation for IME and for direct GME purposes. We proposed this
policy based on our belief that such leave time involved neither
patient care nor nonpatient care activities. However, we did not
finalize this proposed policy after many public commenters explained
that the implementation of the policy would involve significant
administrative burdens (FY 2008 IPPS final rule, 72 FR 47374). Thus, we
did not revise our previously existing policy which allowed vacation
and sick leave generally to be counted for direct GME and IME purposes.
In the FY 2008 IPPS proposed rule, we also proposed to continue to
count the time spent by residents in orientation activities in both the
hospital and nonhospital settings. We proposed this policy because we
recognized the distinct character of orientation activities as
essential to the provision of patient care by residents. We did
finalize our policy on orientation time, and in doing so, we specified
that patient care activities means the care and treatment of
[[Page 46390]]
particular patients, including services for which a physician or other
practitioner may bill, and orientation activities (Sec. 413.75(b)),
effective for cost reporting periods beginning on or after October 1
2007.
Section 5505(a) of the Affordable Care Act added new subparagraph
(K) to section 1886(h)(4) to clarify that hospitals may count
residents' vacation, sick leave, and other approved leave time toward
the hospitals' direct GME FTE resident count, so long as the leave does
not prolong the total time the resident participates in his or her
approved program. This direct GME provision regarding leave time is
effective for cost reporting periods beginning on or after January 1,
1983. In addition, section 5505(b) of the Affordable Care Act allows
hospitals to count residents' vacation, sick leave, and other approved
leave time toward the hospitals' IME FTE resident count, as long as the
leave does not prolong the total time the resident participates in his
or her approved program. This IME provision regarding leave time is
effective for cost reporting periods beginning on or after January 1,
1983.
We are proposing to revise our regulations to reflect these
statutory changes regarding counting residents' vacation, sick leave,
and other approved leave time toward the hospitals' direct FTE resident
count under new Sec. 413.78(h) for GME and under Sec.
412.105(f)(1)(iii)(D) for IME. Please note that each hospital is to
count the proportion of the leave of absence time as specified in 72 FR
47382. There, we explained that regardless of which hospital is paying
the resident's salaries and fringe benefits, the hospital to which the
resident is assigned during the time the vacation is taken is the
hospital that counts that FTE time for direct GME and IME. If the
rotation schedule does not clearly indicate where the resident is
assigned during the time the vacation is taken, the hospitals to which
the resident rotates over the course of the academic year would divide
and count the resident's vacation time proportionately based on the
amount of time spent in actual training at the respective hospitals. We
are also proposing to specify that ``other approved leave'' includes
those types of generally accepted leave of short duration (those that
do not prolong the total time that the resident is participating in the
approved training program) that have not been included in our resident
leave time policies in the past. Examples of such ``other approved
leave'' could include jury duty, other court leave, or voting leave.
D. Reductions and Increases to Hospitals' FTE Resident Caps for GME
Payment Purposes (Sec. Sec. 412.105(f)(1)(iv) and 413.79(m) and (o))
1. General Background on Methodology for Determining the FTE Resident
Count
As we discuss in section XVII.A. of this proposed rule, Medicare
makes both direct and indirect GME payments to hospitals that train
residents in approved medical residency training programs. Direct GME
payments are made in accordance with section 1886(h) of the Act, based
generally on hospital-specific PRAs, the number of FTE residents, and
the hospital's Medicare patient share. IME payments are made in
accordance with section 1886(d)(5)(B) of the Act, based generally on
the ratio of the hospital's FTE residents to the number of hospital
beds. Accordingly, the calculation of both direct GME and IME payments
is affected by the number of FTE residents that a hospital is allowed
to count; generally, the greater the number of FTE residents a hospital
counts, the greater the amount of Medicare direct GME and IME payments
the hospital will receive. In an attempt to end the implicit incentive
for hospitals to increase the number of FTE residents, Congress
instituted a cap on the number of allopathic and osteopathic residents
a hospital is allowed to count for direct GME and IME purposes under
the provisions of section 1886(h)(4)(F) of the Act for direct GME and
section 1886(d)(5)(B)(v) of the Act for IME. Dental and podiatric
residents are not included in this statutorily mandated cap.
2. Reduction of Hospitals' FTE Resident Caps Under the Provisions of
Section 5503 of the Affordable Care Act
Medicare makes direct GME and IME payments based on the number of
FTE residents the hospital is permitted to count, as limited by the
hospital's FTE resident caps. Some hospitals have trained a number of
allopathic and osteopathic residents in excess of their FTE resident
caps. Other hospitals have reduced their FTE resident counts to some
level below their FTE resident caps. Section 5503 of the Affordable
Care Act added a new section 1886(h)(8) to the Act to provide for
reductions in the statutory FTE resident caps for direct GME under
Medicare for certain hospitals, and authorizes a ``redistribution'' to
other hospitals of the estimated number of FTE resident slots resulting
from the reductions. Section 5503 also amended section 1886(d)(5)(B)(v)
to require application of the provisions of 1886(h)(8) ``in the same
manner'' to the FTE resident caps for IME. A previous redistribution of
``unused'' FTE resident slots was performed under section 422 of Public
Law 108-173 (the Medicare Modernization Act of 2003). Section 422
provided for the redistribution of unused residency positions effective
for portions of cost reporting periods beginning on or after July 1,
2005. While section 5503 of the Affordable Care Act is similar to
section 422 of Public Law 108-173, there are substantive differences
between the two provisions.
The new section 1886(h)(8)(A) of the Act provides that, effective
July 1, 2011, a hospital's FTE resident cap will be reduced if its
``reference resident level,'' is less than its ``otherwise applicable
resident limit,'' as these terms are described below. Rural hospitals
with fewer than 250 acute care inpatient beds as well as those
hospitals described in section XVII.D.5. of this proposed rule are
exempt from a reduction. For other hospitals, any such reduction will
be equal to 65 percent of the difference between the hospital's
``otherwise applicable resident limit'' and its ``reference resident
level.''
Under the new section 1886(h)(8)(B) of the Act, the Secretary is
authorized to increase the FTE resident caps for certain categories of
hospitals for portions of cost reporting periods occurring on or after
July 1, 2011, by an aggregate number that does not exceed the estimated
overall reduction in FTE resident caps for all hospitals under section
1886(h)(8)(A) of the Act. A single hospital may receive an increase in
its FTE resident cap of no more than 75 additional FTEs. That is, a
hospital would be allowed to receive up to 75 additional slots for
direct GME and up to 75 additional slots for IME. In determining which
hospitals would receive an increase in their FTE resident caps, section
1886(h)(8)(B) of the Act directs us to--
Take into account the demonstrated likelihood of the
hospital filling the additional positions within the first three cost
reporting periods beginning on or after July 1, 2011.
Take into account whether the hospital has an accredited
rural training track program.
Distribute 70 percent of the resident slots to hospitals
located in States with resident-to-population ratios in the lowest
quartile.
Distribute 30 percent of the resident slots to hospitals
located in a State, a territory of the United States, or the District
of Columbia that are among the top 10 States, territories, or Districts
in terms of the ratio of the total population living in an area
designated as a health
[[Page 46391]]
professional shortage area (HSPA), as of March 23, 2010, to the total
population, and to hospitals located in rural areas.
In summary, section 5503 of the Affordable Care Act added a new
section 1886(h)(8) of the Act that prescribes a methodology for
determining reductions to certain hospitals' FTE resident caps based on
unused FTE resident slots, provides for certain exceptions to the FTE
resident cap reductions, and includes general criteria that CMS must
consider in making a ``redistribution'' to other hospitals of the
estimated number of FTE resident slots resulting from the reductions in
the FTE resident caps. In this proposed rule, we are proposing
procedures for determining whether, and by what amount, a hospital's
FTE resident cap is subject to a reduction under section 1886(h)(8)(A)
of the Act. We also are specifying an application process for hospitals
that seek to receive increases in their FTE resident caps and the
specific criteria that we will use to determine which hospitals will
receive increases in their FTE resident caps under section
1886(h)(8)(B) of the Act.
3. Hospitals Subject to the FTE Resident Cap Reduction
As indicated earlier, section 1886(h)(8)(A) of the Act, as added by
section 5503 of the Affordable Care Act, provides that if a hospital's
``reference resident level'' is less than its ``otherwise applicable
resident limit,'' its FTE resident cap(s) will be reduced by 65 percent
of the difference between its ``otherwise applicable resident limit''
and its ``reference resident level.'' Under section 1886(h)(8)(H)(i)
(as added by section 5503 of the Affordable Care Act), the ``reference
resident level'' refers to the number of unweighted allopathic and
osteopathic FTE residents who are training at a hospital in a given
cost reporting period. That is, the ``reference resident level'' refers
to a hospital's allopathic and osteopathic FTE resident count for a
specific period. Under section 1886(h)(8)(H)(ii) the ``otherwise
applicable resident limit'' refers to a hospital's FTE resident cap
established under sections 1886(h)(4)(F)(i) and (h)(4)(H) of the Act
for direct GME payment purposes and a hospital's resident cap
established under section 1886(d)(5)(B)(v) for IME payment purposes.
For most hospitals, the permanent FTE cap under section
1886(h)(4)(F)(i) of the Act is based on: (1) For an urban hospital, the
number of unweighted allopathic and osteopathic FTE residents in the
hospital's most recent cost reporting period ending on or before
December 31, 1996 (the ``1996 cap''); (2) for a rural hospital, 130
percent of the 1996 cap, adjusted as specified under existing Sec.
413.79(c)(2); and (3) any adjustments to the hospital's cap under
paragraph (7), which specifies the previous ``redistribution'' of
resident positions required by section 422 of Public Law 108-173.
Section 1886(h)(4)(H) of the Act specifies that a hospital's FTE
resident cap under subparagraph (F) may be adjusted for a new medical
residency training program established on or after January 1, 1995,
participation in a Medicare GME affiliated group, and establishment by
an urban hospital of a separately accredited rural training track
program. We are proposing that, in defining a hospital's ``otherwise
applicable resident limit'' for purposes of section 1886(h)(8)(A) of
the Act, we will look at the hospital's 1996 cap during its reference
year, as adjusted for the following criteria: new programs as defined
at Sec. 413.79(e); participation in a Medicare GME affiliation
agreement as defined at Sec. Sec. 413.75(b) and 413.79(f);
participation in an Emergency Medicare GME affiliation agreement as
defined at Sec. 413.79(f); participation in a hospital merger; and
whether an urban hospital has a separately accredited rural training
track program as defined at Sec. 413.79(k). We discuss the
applicability of Medicare GME affiliation agreements under section
1886(h)(8)(A) of the Act in more detail under section XVII.D.8.c. of
this proposed rule and the treatment of hospital mergers under section
XVII.D.8.d. of this proposed rule. Furthermore, section
1886(h)(8)(H)(iii) of the Act requires that, in determining a
hospital's ``otherwise applicable resident limit,'' section
1886(h)(7)(A) of the Act shall be taken into account. Section
1886(h)(7)(A) of the Act refers to the reduction to a hospital's cap(s)
under section 422 of Public Law 108-173. The application of section 422
of Public Law 108-173 to the implementation of section 5503 of the
Affordable Care Act is further discussed under section XVII.D.10. of
this proposed rule.
In our discussion of the provisions of section 5503 of the
Affordable Care Act under this section of this proposed rule, we
generally refer to a hospital's number of unweighted allopathic and
osteopathic FTE residents in a particular period as a hospital's
``resident level.'' We also refer to a hospital's resident level in the
applicable ``reference period,'' as explained further below, as the
hospital's ``reference resident level.'' In addition, we refer to the
``otherwise applicable resident limit'' as the hospital's FTE resident
cap that is applicable during the relevant cost reporting period. Thus,
we are proposing, effective for portions of cost reporting periods
beginning on or after July 1, 2011, we will permanently reduce the
hospital's FTE resident cap by 65 percent of the difference between the
reference resident level and the hospital's otherwise applicable
resident limit for IME and direct GME respectively. For example, if a
hospital's otherwise applicable resident limit for the reference period
is 100, and its reference resident level is 80 FTEs, we will reduce the
hospital's FTE resident cap by 13 FTEs [0.65 (100 - 80)] = 13. We are
proposing to add new regulations at Sec. 412.105(f)(1)(iv)(B)(2) for
IME and at Sec. 413.79(m) for direct GME to reflect our proposals
regarding reductions to hospitals' FTE resident caps under section
5503.
4. Exemption From FTE Resident Cap Reduction for Certain Rural
Hospitals
Section 1886(h)(8)(A)(ii)(I) of the Act, as added by section 5503
of the Affordable Care Act, specifically exempts rural hospitals (as
defined in section 1886(d)(2)(D)(ii) of the Act) with fewer than 250
acute care inpatient beds from reductions to their FTE resident caps
under section 1886(h)(8)(A). Section 1886(d)(2)(D)(ii) of the Act
defines a rural area as any area outside a Metropolitan Statistical
Area (MSA). Under the existing regulations at Sec. 412.62(f)(ii), an
``urban area'' means: (1) An MSA or New England County Metropolitan
Area (NECMA), as defined by the Executive Office of Management and
Budget; or (2) the following New England counties: Litchfield County,
Connecticut; York County, Maine; Sagadahoc County, Maine; Merrimack
County, New Hampshire; and Newport County, Rhode Island. Under existing
Sec. 412.62(f)(iii), a ``rural area'' means any area outside an urban
area. We note that we no longer use the term MSA, and instead use the
term Core-Based Statistical Area (CBSA) for locality and wage index
purposes. A hospital's bed size is based on its number of available
beds, as determined for IME payment purposes under Sec. 412.105(b) of
the regulations. For purposes of determining whether a rural hospital
has fewer than 250 beds, we are proposing to use data from the rural
hospital's most recent cost reporting period ending on or before March
23, 2010. (This information may be found on Worksheet S-3, Part I of
the Medicare cost report, CMS-2552-96, the sum of lines 1 and 6 through
10 in column 2, minus line 26 in column 6, divided by the number of
days in the cost reporting period.) We are proposing that if a rural
hospital has fewer than
[[Page 46392]]
250 beds in its most recent cost reporting period ending on or before
March 23, 2010, the hospital would not be subject to a possible
reduction to its FTE resident cap(s) under section 1886(h)(8)(A) of the
Act. However, if a rural hospital has at least 250 beds in its most
recent cost reporting period ending on or before March 23, 2010, we are
proposing that the rural hospital would be subject to a reduction to
its FTE resident cap(s).
5. Application of Section 5503 to Hospitals That Participate in
Demonstration Projects or Voluntary Residency Reduction Programs and
Certain Other Hospitals
In addition to certain rural hospitals as noted above, section
1886(h)(8)(A)(ii) of the Act also exempts certain other hospitals from
a cap reduction.
Section 1886(h)(8)(A)(ii)(II) of the Act, as amended by section
5503 of the Affordable Care Act, specifically exempts ``a hospital that
was part of a qualifying entity which had a voluntary residency
reduction plan approved under paragraph (6)(B) or under the authority
of section 402 of Public Law 90-248, if the hospital demonstrates to
the Secretary that it has a specific plan in place for filling the
unused positions by not later than 2 years after the date of enactment
of this paragraph.'' This language is referring to the National
Voluntary Residency Reduction Plan (VRRP), the New York Medicare GME
Demonstration (New York Demonstration), and the Utah Medicare GME
Demonstration (Utah Demonstration).
In July 1997, 42 New York teaching hospitals participated in the
New York Demonstration. An additional seven hospitals joined the New
York Demonstration in July 1998. The purpose of the New York
Demonstration was to test reimbursement changes associated with
residency training to determine whether hospitals could use time-
limited transition funding to replace and reengineer the services
provided by a portion of their residency trainees. In exchange for
reducing its count of residents by 20 to 25 percent over a 5-year
period, while maintaining or increasing its primary care-to-specialty
ratio of residents, a participating hospital (or consortium of
hospitals) participating in the New York Demonstration would receive
``hold harmless payments'' for 6 years.
Since 2003, nine Utah teaching hospitals have participated in the
Utah Demonstration to allocate Medicare GME funding to Utah hospitals
based on health professions workforce planning. Under the Utah
Demonstration, Medicare contractors redirect Medicare direct GME funds
from each of the teaching hospitals in Utah and pay those amounts to
the Utah Medical Education Council, an agency of the State government.
Under the VRRP approved under section 1886(h)(6)(B) of the Act,
hospitals could use time-limited transition funding to replace the
services provided by a portion of their residents. In exchange for
reducing its count of residents by 20 to 25 percent over a 5-year
period, while maintaining or increasing its primary care-to-specialty
ratio of residents, a VRRP participating hospital would receive ``hold
harmless payments'' for 5 years.
Based on the language of section 1886(h)(8)(A)(ii)(II) of the Act,
we are proposing that hospitals that participated in the New York
Demonstration, the Utah Demonstration, or a VRRP could be exempt from a
cap reduction under section 1886(h)(8)(A) of the Act. We are proposing
to not differentiate between those hospitals that withdrew from either
demonstration prior to its completion and those hospitals that
completed either demonstration. That is, we are proposing that any
hospital that, at some point, participated in the New York
Demonstration, the Utah Demonstration, or the VRRP could be exempt from
a cap reduction. Specifically, consistent with the statutory language
at section 1886(h)(8) of the Act, even though only seven hospitals
actually completed the New York Demonstration, any hospital that
participated in the New York Demonstration could be exempt from a cap
reduction. As required under section 1886(h)(8)(A)(ii)(II) of the Act,
to be exempt from the cap reduction, hospitals that had a VRRP approved
under section 1886(h)(6)(B) of the Act or hospitals that participated
in a demonstration project approved under section 402 of Pub. L. 90-248
must demonstrate to the Secretary that they have a plan in place for
filling their unused slots within 2 years after the date of enactment
of Pub. L. 111-148 (that is, by March 23, 2012). We are proposing that
these hospitals must submit their plans specifying how they would fill
their unused slots to CMS by December 1, 2010, in order to be exempt
from a cap reduction.
In addition to the hospitals described under 1886(h)(8)(A)(ii)(II)
of the Act, section 1886(h)(8)(A)(ii)(III) of the Act exempts a
hospital described under section 1886(h)(4)(H)(v) of the Act from a cap
reduction. Therefore, we are proposing that such hospital described
under section 1886(h)(4)(H)(v) of the Act be exempt from a cap
reduction.
Finally, section 1886(h)(8)(H)(i) of the Act provides that the
hospital's reference resident level is the resident level for the one
cost reporting period out of the three most recent cost reporting
periods ending before March 23, 2010, with the highest resident level.
Under section 1886(h)(8)(A)(i), that reference resident level is used
to make the determination of whether a hospital's FTE resident cap(s)
should be reduced. Therefore, we are proposing that if a hospital
trains at or above its otherwise applicable resident level in all of
its three most recent cost reporting periods ending before March 23,
2010, the hospital would be exempt from a cap reduction. A separate
determination would be made regarding any reduction to the hospital's
direct GME cap and its IME cap.
6. Determining the Estimated Number of FTE Resident Slots Available for
Redistribution
In accordance with section 1886(h)(8)(A) of the Act, as added by
section 5503 of the Affordable Care Act, we will determine the number
of resident positions available for redistribution by estimating the
expected reductions to hospitals' FTE resident caps. We believe that
section 1886(h)(8)(A) of the Act allows us to distinguish between the
FTE counts that are used to determine the number of FTE resident slots
that are available for redistribution (that is, the ``redistribution
pool'') and the actual number of FTE residents by which hospitals' FTE
resident caps are ultimately reduced. We are proposing to estimate the
reduction to a hospital's FTE cap under section 1886(h)(8)(A) of the
Act for purposes of determining the number of FTEs that a hospital
might contribute to the redistribution pool. We are proposing to
estimate the redistribution pool for redistribution in accordance with
section 1886(h)(8)(B)(i) of the Act, as added by section 5503(a)(4),
which states: ``The aggregate number of increases in the otherwise
applicable resident limit under this subparagraph shall be equal to the
aggregate reduction in such limits attributable to subparagraph (A) (as
estimated by the Secretary)'' (emphasis added). Therefore, we are
proposing to estimate and redistribute the number of resident slots in
the redistribution pool, and to ensure that the aggregate number of FTE
residents by which we increase the FTE resident caps of qualifying
hospitals under section 1886(h)(8)(B) of the Act is not more than CMS'
estimate of the redistribution pool. We note if we
[[Page 46393]]
were subsequently to perform an audit, as described further in section
XVII.D.7. of this proposed rule, in order to make a final determination
regarding any reductions to a hospital's FTE resident cap, and find
that the aggregate number of FTE resident reductions differed from the
number CMS had initially estimated for the redistribution pool, the
number of slots that can be redistributed from the redistribution pool
to qualifying hospitals would not be affected.
To ensure that we will begin making payments for most hospitals
based on the revised FTE resident caps by July 1, 2011, we are
proposing to set a date by which we will have determined a hospital's
reference resident level and compared it to the hospital's otherwise
applicable FTE resident cap(s) to estimate whether, and by how much,
the hospital's FTE cap(s) would be reduced. We are proposing that this
date be May 1, 2011, and that date would apply for all hospitals for
purposes of determining an estimate of whether and by how much their
FTE resident caps should be reduced. In the event that the Medicare
contractors have not completed an audit (explained further under
section XVII.D.7. of this proposed rule) by May 1, 2011, we are
proposing to estimate by May 1, 2011, the number of FTE residents by
which a hospital's FTE resident cap is expected to be reduced. For
example, a Medicare contractor may estimate by May 1, 2011, that
Hospital A's FTE resident cap should be reduced by 10 FTEs. Thus, we
would place 10 FTEs into the redistribution pool. It is possible that
even after May 1, 2011, the contractor may continue to audit Hospital
A's relevant cost reports to determine if, in fact, 10 FTEs is the
appropriate number by which to reduce Hospital A's FTE resident cap,
and could ultimately conclude that Hospital A's FTE resident cap should
only be reduced by 8 FTEs. If the Medicare contractor does not make
this revised determination based on the audit by May 1, 2011, we would
reduce Hospital A's FTE resident cap by 8 FTEs effective July 1, 2011,
but the number of FTE residents in the redistribution pool attributable
to Hospital A would remain at 10 FTEs (the estimated number as of May
1, 2011). Similarly, if the Medicare contractor ultimately concluded
that Hospital A's FTE resident cap should be reduced by 12 FTEs, but
this final determination is not made by May 1, 2011, Hospital A's FTE
resident cap would be reduced by 12 FTEs effective July 1, 2011, but
the number of FTE residents in the redistribution pool attributable to
Hospital A would remain at 10 FTEs. Therefore, because we believe that
section 1886(h)(8)(B)(i) of the Act allows us to distinguish between
the FTE counts that are used to determine the size of the
redistribution pool, and the actual aggregate number of FTE residents
by which hospitals' FTE resident caps are ultimately reduced, we are
proposing to use estimated information to determine possible reductions
to hospitals' FTE resident caps to estimate the number of FTE resident
slots to be distributed under section 1886(h)(8)(B). In addition, we
note that, as was done when we implemented section 422 of Pub. L. 108-
173, Medicare contractors will provide hospitals with a time-limited
opportunity to review cap reduction determinations for possible
technical errors before they are finalized.
7. Reference Cost Reports That Are Under Appeal
We understand that there may be instances where a hospital's
otherwise applicable resident limit or a hospital's FTE resident count
for a reference cost reporting period might be under appeal. When
implementing section 422 of Public Law 108-173, we stated in the August
11, 2004 Federal Register (69 FR 49118) that we believe that it is in
the best interest of the Medicare program, CMS, the contractors, and
the hospitals to adopt an approach that allows for finality as early as
possible during the process of implementing this provision. We stated
that we believed Congress gave some consideration to the challenges we
would encounter in implementing a provision as complex as section 422
in such a short timeframe by providing the Secretary with the
discretion to distinguish between the FTE counts that are used to
estimate the number of FTE resident slots that are available for
redistribution (that is, the ``redistribution pool''), and the actual
number of FTE residents by which hospitals' FTE resident caps are
ultimately reduced.
Furthermore, as we stated in the August 11, 2004 Federal Register
(69 FR 49118), the fact that the Congress took the unusual step of
including the language at section 1886(h)(7)(D) of the Act which
provides that, ``There shall be no administrative or judicial review .
. . with respect to determinations made under this paragraph,''
supports the position advocating for finality. If we had delayed
determinations concerning hospital-specific FTE cap determinations
until all affected cost reports are settled, audited, and appealed
through the various channels normally available to providers, the
language, and in particular the specified timeframe, under section
1886(h)(7)(D) of the Act would have been rendered meaningless.
Therefore, despite the complexity of section 422 and the potential for
profound and long-term GME payment ramifications, we believed that the
Congress did not expect the implementation of section 422 provision to
linger indefinitely. Rather, by limiting appeal rights and requiring an
effective date of July 1, 2005, for reductions in FTE resident caps
(which required implementation in a relatively short timeframe), the
Congress expected section 1886(h)(7) of the Act, as added by section
422 of Public Law 108-173, to be implemented with expediency and
finality.
Similarly, in implementing section 5503 of the Affordable Care Act,
we note that determinations under section 1886(h)(8)(A)(i) of the Act
are required to be made effective July 1, 2011, and, for the same
reasons cited when we implemented section 422, we believe these
determinations should be final on, or as quickly as possible after,
that date. We note that section 5503(a)(3) of the Affordable Care Act
modified section 1886(h)(7)(E) of the Act by inserting ``or paragraph
(8)'' to specify that there shall be no administrative or judicial
review with respect to determinations made under section 5503 as well.
Therefore, as was our final policy when implementing section 422, we
are proposing to not wait for appeals of reference period cost reports
to be resolved before making a final determination as to whether and by
how much a hospital's FTE resident cap will be reduced. However, we do
perceive the need in certain instances to continue audit work for a
limited time period past July 1, 2011, to promote the accuracy of FTE
resident cap determinations. As under section 422, we are proposing to
adopt a policy that would require the Medicare contractors to use the
latest available cost report or audit data at the time they make their
determinations. If, as of the time the Medicare contractor makes the
determination as to whether and by how much a hospital's FTE resident
cap should be reduced, there is a pending appeal of the hospital's
otherwise applicable resident limit for the reference cost reporting
period (that is, a final decision has not been rendered), the Medicare
contractor would not wait until a decision is rendered, but would use
the FTE resident cap from the initially settled (as indicated in the
Notice of Program Reimbursement (NPR)) reference period cost report.
Alternatively, if the appeal regarding the otherwise applicable
resident limit has
[[Page 46394]]
been resolved as of the time that the Medicare contractor makes the
determination as to whether and by how much a hospital's FTE resident
cap should be reduced, the Medicare contractor would use the FTE
resident level that will be used in issuing the subsequent NPR, as
established through the appeal. If a reference period cost report has
been submitted but not settled at the time the Medicare contractor is
making the determination as to whether and by how much a hospital's FTE
resident cap should be reduced, the reference resident level is subject
to audit by the Medicare contractor, and the final determination
regarding any possible reduction to the hospital's FTE resident cap is
not subject to appeal. Although we would make every effort to provide
contractors with the resources they need to complete as many audits as
possible in time to notify each hospital by July 1, 2011, of their FTE
cap determinations under section 1886(h)(8)(A) of the Act, there may be
instances where the audits of the reference resident levels may not be
completed by July 1, 2011. We anticipate that within the scope of their
normal audit work, the Medicare contractors will complete as many of
these audits as possible, and some of the audits may not be completed
until December 31, 2011. We are proposing that, in accordance with
section 1886(h)(8)(A) all cap determinations made after July 1, 2011
and through December 2011 will be effective retroactively to July 1,
2011.
8. Determining the Possible Reduction to a Hospital's FTE Resident Cap
a. Reference Resident Level--General
In order to determine if a hospital's reference resident level is
less than the hospital's otherwise applicable FTE resident cap, section
1886(h)(8)(H) of the Act, as added by section 5503 of the Affordable
Care Act, directs the Secretary to use one of three reference cost
reporting periods. Section 1886(h)(8)(H) of the Act directs the
Secretary to use a hospital's most recent cost reporting period ending
before the date of enactment, which is March 23, 2010, with the highest
resident level ``for which a cost report has been settled (or, if not,
submitted (subject to audit)), as determined by the Secretary,'' as the
reference period. Generally, if the hospital's resident level for
either direct GME or IME is less than the hospital's otherwise
applicable resident limit for direct GME or IME, respectively, in the
reference period, the hospital's FTE resident cap for direct GME and/or
IME will be reduced by 65 percent of the difference between the
resident level and the otherwise applicable resident limit. We note
that, for purposes of determining a reduction to a hospital's direct
GME cap, the unweighted direct GME cap will be compared to the direct
GME FTE resident count. The following explanation is an example of how
a hospital's cap(s) would be reduced under section 1886(h)(8)(A) of the
Act. For purposes of this example, Hospital A's three most recent cost
reporting periods ending before March 23, 2010, which have been
submitted to the Medicare contractor are as follows: July 1, 2006-June
30, 2007; July 1, 2007-June 30, 2008; and July 1, 2008-June 30, 2009.
Hospital A's FTE resident count and FTE resident caps (as adjusted for
those items discussed in section XVII.D.3. of this proposed rule) are
as noted in the table.
[GRAPHIC] [TIFF OMITTED] TP03AU10.561
As noted earlier in this preamble, a separate determination
regarding whether and by how much to reduce a hospital's cap will be
made for its direct GME cap and for its IME cap. In order to determine
whether Hospital A would be subject to a cap reduction, we must first
determine whether Hospital A was training at or above its cap in all
three most recent (settled or submitted) cost reporting periods ending
before March 23, 2010. For purposes of a reduction to Hospital A's IME
cap, we note from the chart above that in all three cost reporting
periods, Hospital A is training below its otherwise applicable resident
limit for IME. Therefore, we know that Hospital A would be subject to
an IME cap reduction. In order to determine which cost reporting period
should be used as the reference period to determine the FTE cap
reduction, we would use the cost reporting period with the highest FTE
resident count for IME, which would be July 1, 2006-June 30, 2007.
Therefore, we calculate the difference between the otherwise applicable
resident limit for IME for the reference period (July 1, 2006-June 30,
2007) and the reference resident level for IME, and determine the IME
cap reduction based on 65 percent of the difference. For purposes of
Hospital A's IME cap reduction, we would determine the difference
between 18 (the otherwise applicable resident limit) and 17 (the
reference resident level) and multiply that difference by 65 percent
[(18 - 17) x .65] = 0.65. Therefore, the IME FTE cap for Hospital A
would be reduced by 0.65 of an FTE. For purposes of a reduction to
Hospital A's direct GME cap, we note from the chart above that Hospital
A was training at or above its otherwise applicable resident limits for
direct GME in all three cost reporting periods. Because a hospital that
is training at or above its cap in all three cost reporting periods is
exempt from a cap reduction, we would conclude that Hospital A's direct
GME cap would not be reduced for direct GME payment purposes. We note
that, in general, if a hospital was not participating in a Medicare GME
affiliated group during any of its three most recent cost reporting
periods ending before March 23, 2010, its reference cost reporting
period will be the cost reporting period with the least amount of
difference between the reference resident level and the otherwise
applicable resident limit. In addition, we are proposing, that if a
hospital has the same resident level for two or more cost reporting
periods and that resident level is the ``highest'' resident level, we
will use the cost reporting period of those ``highest'' cost reporting
periods in which there is the least amount of difference between the
resident level and the otherwise applicable resident limit to determine
a cap reduction.
b. Audits of the Reference Cost Reporting Periods
As mentioned under XVII.D.8.a. of this proposed rule, to determine
a possible reduction to a hospital's FTE resident cap, section
1886(h)(8)(H)(i) of the Act, as added by section 5503(a) of
[[Page 46395]]
Affordable Care Act, directs the Secretary to use, as the reference
cost report, the one cost report out of the hospital's three most
recent cost reporting periods ending before March 23, 2010, with the
highest resident count ``for which a cost report has been settled (or,
if not, submitted (subject to audit), as determined by the Secretary''
(emphasis added). We are proposing that if a hospital's cost report for
the reference cost reporting period has been settled, the hospital's
settled cost report, without further audit, would be used to determine
possible reductions to the FTE resident caps. We note that the
``settled'' cost report does not necessarily mean the initial cost
report settlement. The Medicare contractor may have previously settled
the cost report, reopened it to audit it, and then settled the cost
report again, issuing a revised NPR. Thus, we would refer to the more
recently issued NPR for that cost reporting period. For those cost
reporting periods that would be used as the reference cost reporting
period, which have been submitted to the Medicare contractor but not
settled, Medicare contractors may perform desk or onsite audits related
to section 5503. In addition, if the reference period cost report is
for a period other than 12 months, we are proposing that for direct
GME, the Medicare contractor would prorate the FTE resident caps and
unweighted FTE resident count to equal 12-month counts.
c. Medicare GME Affiliation Agreements
As described above, some hospitals that have resident levels below
their FTE resident caps may have entered into Medicare GME affiliation
agreements (as permitted under Sec. 413.79(f) of our regulations) with
other hospitals that would otherwise exceed their FTE resident caps.
Thus, while some hospitals in the Medicare GME affiliated group were
training a number of residents below their FTE resident caps prior to
entering into a Medicare GME affiliation agreement, upon affiliating,
their FTE resident caps were temporarily reduced because some or all of
their excess FTE slots were temporarily added to the FTE resident caps
of other hospitals as part of the affiliation agreement. Under section
422 of Pub. L. 108-173, the statute directed us to apply the provisions
to hospitals that were members of the same affiliated group as of July
1, 2003. In implementing section 422, we based the FTE resident cap
reductions for hospitals that were participating in a Medicare GME
affiliated group on the aggregate cap and count data from all hospitals
participating in the same Medicare GME affiliated group(s). If a
hospital was training a number of residents below its FTE resident cap
for the reference cost reporting period but the hospital was part of a
Medicare GME affiliated group for some or all of that reference cost
reporting period, the Medicare contractor determined if the aggregate
affiliated count for all hospitals in the affiliated group was greater
than the aggregate affiliated cap. If the aggregate affiliated count
was greater than the aggregate cap, then there was no reduction made to
the FTE caps of any hospital in the affiliated group (even for a
hospital that was part of the affiliated group, but was training below
its cap). However, we note that, in contrast to section 422 of Pub. L.
108-173, section 5503 of the Affordable Care Act does not include
language specific to affiliated groups. Rather, section 1886(h)(8)(H)
of the Act, as added by section 5503 of the Affordable Care Act,
defines the reference resident level and the otherwise applicable
resident limit with respect to ``a hospital.'' Similarly, section
1886(h)(8)(A) refers only to ``a hospital's'' reference resident level.
Thus in contrast to section 422 of Public Law 108-173, section 5503 is
not amenable to determinations based on the aggregate experience of a
Medicare GME affiliated group. Therefore, we are proposing that
Medicare contractors would make determinations regarding FTE cap
reductions under section 1886(h)(8)(A)(i) by considering the
relationship of the individual hospital's otherwise applicable resident
limit for the reference period (which is the FTE resident cap for a
period as adjusted by any affiliation agreement(s)) to the individual
hospital's reference resident level. That is, we are proposing that in
a hospital's reference year, if that hospital is participating in a
Medicare GME affiliated group and is training a number of residents
below its FTE caps as adjusted pursuant to any affiliation agreements
which can be found on Worksheet E, Part A, line 3.06 for IME, and
Worksheet E-3 Part IV, line 3.03 for direct GME, the hospital's FTE
resident caps would be subject to a reduction under section
1886(h)(8)(A)(i) even if the Medicare GME affiliated group as a whole
may be training a number of residents above the group's aggregate FTE
resident cap.
d. Treatment of Hospitals That Have Merged
We note that there may be instances where two hospitals merge on or
after March 23, 2010, but were not merged in any or all of their three
most recent cost reporting periods ending before March 23, 2010. For
these hospitals, we are proposing that the Medicare contractors
identify the hospitals' three most recent cost reporting periods ending
before March 23, 2010, and treat the hospitals for purposes of section
1886(h)(8)(A)(i) as if they were merged during those periods in
determining whether there should be a reduction to the merged
facility's FTE resident cap(s). That is, we are proposing that for each
of the 3 years, we would combine the FTE resident counts and caps of
the formerly separate facilities in order to identify the reference
period, and to calculate the reference resident level and the otherwise
applicable resident limit for the merged facility (for IME and direct
GME respectively), even if the two facilities have different fiscal
year ends. In addition, if any of the cost reporting periods are less
than 12 months or greater than 13 months, the Medicare contractor would
prorate the FTE resident counts and FTE caps for direct GME to equal a
12-month cost reporting period.
9. Application of Section 5503 to Hospitals That File Low Utilization
Medicare Cost Reports
In general, section 5503 of the Affordable Care Act applies to
Medicare-participating hospitals that train residents in approved
residency training programs. However, some Medicare-participating
hospitals may choose to submit low utilization cost reports. These low
utilization cost reports may not contain the cost report worksheet that
is used to calculate payments for direct GME, Worksheet E-3 Part IV.
That is, these cost reports may not contain FTE resident count and cap
information. For example, because Medicare-participating children's
hospitals primarily serve a non-Medicare population and, therefore,
receive minimal Medicare payments, some teaching children's hospitals
submit low utilization cost reports. If a children's hospital files a
low utilization cost report in a given cost reporting period, and does
not file the Worksheet E-3 Part IV, that hospital is not considered by
Medicare to be a teaching hospital for that cost reporting period. In
addition, although children's hospitals may have an FTE resident
``cap'' that is applicable for purposes of the Children's Hospital
Graduate Medical Education (CHGME) Payment Program, administered by
HRSA, this cap is not necessarily used for Medicare payment purposes.
Therefore, we are proposing that if a low utilization hospital does not
have a cap for Medicare payment purposes, it would not be subject to a
negative cap
[[Page 46396]]
reduction under section 5503. In addition, we are proposing that if a
low utilization hospital does have a cap for Medicare payment purposes
(for example, it had filed a regular cost report in 1996) but did not
file Worksheet E-3 Part IV as part of its cost report in all three most
recent cost reporting periods ending before March 23, 2010, it will be
exempt from cap reduction. In addition, we are proposing that if a low
utilization hospital has a cap for Medicare payment purposes and filed
Worksheet E-3 Part IV in at least one of its three most recent cost
reports ending before March 23, 2010, the Medicare contractor would
determine, based on the data of the available cost reports with
Worksheet E-3 Part IV, whether a cap reduction is necessary under
section 1886(h)(8)(A)(i).
For those low utilization hospitals that have an FTE cap for
Medicare payment purposes and have filed Worksheet E-3 Part IV in any
of the three most recent cost reporting periods ending before March 23,
2010, we are proposing that determinations as to whether, and by how
much, that low utilization hospital's cap may be reduced using the same
methodology that we are proposing to use for other Medicare-
participating teaching hospitals. In addition, for purposes of section
1886(h)(8)(B) of the Act, we are proposing that, a low utilization
hospital would be eligible to apply for an increase in its FTE resident
cap under section 1886(h)(8)(B) of the Act, subject to the same
demonstrated likelihood and evaluation criteria proposed in this
proposed rule for all other hospitals. However, as explained further
below in this preamble, section 1886(h)(8)(B)(ii) of the Act, as added
by section 5503(a)(4) of the Affordable Care Act, specifies certain
requirements and thresholds that a hospital that receives additional
slots must meet in order to retain those slots. One requirement is that
the hospital must ensure for a 5-year period that its number of FTE
primary care residents is not less than the average number of FTE
primary care residents during the 3 most recent cost reporting periods
ending prior to March 23, 2010. Accordingly, we are proposing that an
applying children's hospital must meet the same documentation
requirements to establish this primary care average as other applying
hospitals, which would mean that the children's hospital must have
submitted a Worksheet E-3, Part IV with its Medicare cost report for
those 3 most recent cost reporting periods ending prior to March 23,
2010. Furthermore, we are proposing that, in order to receive an
increase in its FTE resident cap under section 1886(h)(8)(B) of the Act
effective July 1, 2011, in addition to complying with the proposed
application requirements as described in this preamble, the hospital
would be required to file Worksheet E-3, Part IV, with its Medicare
cost report for its cost reporting period that includes July 1, 2011
through and including its cost reporting period that includes June 30,
2016 (that is, the 5-year period). We are proposing that the low
utilization hospital must meet this requirement because section
1886(h)(8)(B) is intended to allow a hospital to increase its FTE
counts for purposes of Medicare GME payments. We do not believe it
would be appropriate to grant an increase in a hospital's FTE resident
cap under section 1886(h)(8)(B) of the Act if the hospital does not use
the slots for Medicare purposes (but only, for example, for purposes of
the CHGME Payment Program) as would be evidenced by not filing a
Worksheet E-3, Part IV. Moreover, as explained further below, we are
required under section 1886(h)(8)(B)(ii) and (iii) to ensure certain
levels of primary care or general surgery training, and the information
in Worksheet E-3 Part IV, would be necessary for that purpose.
10. Treatment of Hospitals With Caps That Have Been Reduced or
Increased Under Section 422 of Pub. L. 108-173
For purposes of implementation of section 5503(a) of the Affordable
Care Act, section 1886(h)(8)(H)(iii) of the Act states that the term
``otherwise applicable resident limit,'' means, ``with respect to a
hospital, the limit otherwise applicable under subparagraphs (F)(i) and
(H) of paragraph (4) on the resident level for the hospital determined
without regard to this paragraph but taking into account paragraph
(7)(A).'' As noted earlier in this preamble, section 1886(h)(7)(A) of
the Act, as added by section 422 of Pub. L. 108-173, provided for
reductions to hospitals' caps if the hospitals were training a number
of residents below their FTE resident caps during the relevant
reference period, and for a ``redistribution'' that increased the FTE
resident caps for certain hospitals. Although sections 1886(h)(4)(F)(i)
and (H) refer to paragraph (7), which includes both cap reductions and
increases made pursuant to section 422 of Pub. L. 108-173, we believe
that specific mention of only paragraph (7)(A), which refers to cap
reductions made under section 422, gives the Secretary the authority to
only take into account the reductions made to hospitals' caps under
section 1886(h)(7)(A), for purposes of implementing section
1886(h)(8)(A)(i) of the Act. That is, we believe specific mention of
paragraph (7)(A) is meant to provide that in determining a hospital's
otherwise applicable resident limit, the Secretary should take into
account any reductions to its reference resident level made under
section 1886(h)(7)(A) to determine whether a cap reduction under
section 1886(h)(8)(A)(i) is necessary. Furthermore, section
1886(h)(8)(H)(i) requires that for purposes of determining the
reference resident level, the Secretary is required to consider the
hospital's three most recent cost reporting periods ending prior to
March 23, 2010 that have been settled (or, if not, submitted (subject
to audit)), as determined by the Secretary. In addition, we note that
increases made under section 1886(h)(7)(B) were effective for portions
of cost reporting periods beginning on or after July 1, 2005, and that
some hospitals may still be filling their residency training programs
with FTE resident slots gained under section 1886(h)(7)(B), during what
may be their reference cost reporting period for purposes of section
1886(h)(8)(A)(i). Therefore, we believe that it would be inappropriate
to include increases made under section 1886(h)(7)(B) in determining
the hospital's reference resident level for purposes of cap reductions
under section 1886(h)(8)(A)(i). Hospitals that received increases to
their caps under section 1886(h)(7)(B) may still be ``building'' their
residency programs using the additional FTE resident slots they
received under section 1886(h)(7)(B). Therefore, it would be premature
to remove any of those FTE resident slots. Accordingly, we are
proposing that, in determining whether a cap reduction is necessary
under section 1886(h)(8)(A)(i) we would compare the hospital's FTE
resident count for its reference period to its FTE resident cap, as
adjusted under section 1886(h)(7)(A). We are proposing that we would
not consider any increases to its resident cap a hospital may have
received under section 1886(h)(7).
11. Criteria for Determining Hospitals That Will Receive Increases in
Their FTE Resident Caps
Generally, under section 1886(h)(8)(A) of the Act, as added by
section 5503(a)(4) of the Affordable Care Act, the Secretary is to
reduce the FTE resident caps for hospitals that were training a number
of residents below their otherwise applicable resident limit in the
reference period by 65 percent of the ``excess'' resident slots. Under
section 1886(h)(8)(B), the Secretary is to
[[Page 46397]]
``redistribute'' the estimated number of FTE reductions under section
1886(h)(8)(A) to increase the FTE resident caps for use by other
hospitals. Under section 1886(h)(8)(B)(i) of the Act, the Secretary is
authorized to increase the otherwise applicable FTE resident cap for
each qualifying hospital that submits a timely application by a number
that the Secretary may approve, for portions of cost reporting periods
occurring on or after July 1, 2011. In implementing section
1886(h)(8)(B) of the Act, we note the difficulty in deciding which
teaching hospitals are more ``deserving'' than others to receive the
redistributed unused resident slots. Therefore, in addition to some
considerations and priorities in redistribution that are specified in
section 5503, we are proposing certain additional criteria that we
believe will allow for an objective decision-making process.
Section 1886(h)(8)(B) of the Act, as added by section 5503 of the
Affordable Care Act, establishes certain parameters in the statutory
language for hospitals to meet to qualify to receive increases in their
FTE resident caps. First, section 1886(h)(8)(B)(i) of the Act states
that the aggregate number of increases in the otherwise applicable
resident limits (caps) shall be equal to the aggregate reduction in the
resident limits determined under section 1886(h)(8)(A) of the Act as
estimated by the Secretary(as discussed in section XVII.D of this
proposed rule). Section 1886(h)(8)(F) of the Act states that in no case
will any hospital receive an FTE cap increase of more than 75 FTE
positions as a result of the redistribution. In addition, section
1886(h)(8)(C) of the Act specifies that, in determining which hospitals
will receive the increases to their FTE resident caps, the Secretary is
required to take into account the demonstrated likelihood that the
hospital would be able to fill the position(s) within the first three
cost reporting periods beginning on or after July 1, 2011, and whether
the hospital has an accredited rural training track program.
In setting up an application process for hospitals to apply for FTE
resident cap increases from the redistribution pool (discussed in
section XVII.D.8. of this proposed rule), we are proposing to consider
the ``demonstrated likelihood'' criterion under section
1886(h)(8)(C)(i) as an eligibility criterion that a hospital must meet
in order for CMS to further consider the hospital's application for an
increase in its FTE resident cap. We are proposing that a hospital
would meet the ``demonstrated likelihood'' criterion by demonstrating
that it is either already training a number of FTE residents at or in
excess of its current FTE caps (IME and direct GME FTE caps,
respectively, including any applicable section 422 cap add-on), or that
it does not have sufficient room under its current FTE caps to
accommodate a planned new program or expansion of an existing program.
We believe it is appropriate to consider a hospital's ``demonstrated
likelihood'' as a requirement because we believe such hospitals will be
best positioned to make immediate and efficient use of any FTE cap
increase, and thereby, to use any resulting increase in Medicare GME
payments to train the physician workforce that will provide care to
Medicare beneficiaries. Thus, we are proposing that, in order to be
eligible for consideration for an increase under section 1886(h)(8)(B)
of the Act, a hospital must first demonstrate the likelihood that it
will able to fill the slots within the first three cost reporting
periods beginning on or after July 1, 2011, by meeting at least one of
the following three criteria and by providing documentation that it
meets the criterion in its application for an increase to its FTE
resident cap:
Demonstrated Likelihood Criterion 1. The hospital does not
have sufficient room under its current FTE cap for a new residency
program that it intends to establish on or after July 1, 2011 (that is,
a newly approved program that begins training residents at any point
within the hospital's first three cost reporting periods beginning on
or after July 1, 2011). Under this criterion, the hospital would select
one of the following:
(1) Hospital will establish a newly approved residency program.
(Under this selection, the hospital would be required to check at least
one of the following, if applicable):
Application for approval of the new residency program has
been submitted to the ACGME, AOA, or the ABMS by December 1, 2010. (The
hospital would be required to attach a copy.)
The hospital has submitted an institutional review
document or program information form concerning the new program in an
application for approval of the new program by December 1, 2010. (The
hospital would be required to attach a copy.)
The hospital has received written correspondence from the
ACGME, AOA, or ABMS acknowledging receipt of the application for the
new program, or other types of communication from the accrediting
bodies concerning the new program approval process (such as
notification of site visit). (The hospital would be required to attach
a copy.)
(2) Hospital will likely fill the slots requested. (The hospital
would be required to select at least one of the following, if
applicable.)
The hospital does not have sufficient room under its FTE
cap, and the hospital's existing residency programs had a combined
resident fill rate of at least 85 percent in each of program years 2007
through 2009. (The hospital would be required to attach documentation.)
The hospital does not have sufficient room under its FTE
cap, and the specialty program for which the hospital is applying has a
resident fill rate either nationally, within the State, or within the
CBSA in which the hospital is located, of at least 85 percent. (The
hospital would be required to attach documentation.)
Demonstrated Likelihood Criterion 2. The hospital does not
have sufficient room under its FTE cap, and the hospital intends to use
the additional FTEs to expand an existing residency training program
within the hospital's first three cost reporting periods beginning on
or after July 1, 2011.
(1) Hospital intends to expand an existing program. Under this
selection, the hospital would be required to check at least one of the
following, if applicable:
The appropriate accrediting body (the ACGME, AOA, or ABMS)
has approved the hospital's expansion of the number of FTE residents in
the program. (The hospital would be required to attach documentation.)
The American Osteopathic Association Residency Match
Program has accepted or will be accepting the hospital's participation
in the match for the existing program that will include additional
resident slots in that residency training program. (The hospital would
be required to attach documentation.)
The hospital has submitted an institutional review
document or program information form for the expansion of the existing
residency training program by December 1, 2010. (The hospital would be
required to attach documentation.)
(2) Hospital will likely fill the slots of the expanded existing
residency program. Under this selection, the hospital would be required
to check at least one of the following, if applicable:
The hospital does not have sufficient room under its FTE
cap, and the hospital has other previously established residency
programs, with a resident fill rate of at least 85 percent in each of
program years 2007 through 2009. (The hospital would be required to
attach documentation.)
[[Page 46398]]
The hospital does not have sufficient room under its FTE
cap, and the hospital is expanding an existing program in a particular
specialty with a resident fill rate either nationally, within the
State, or within the CBSA in which the hospital is located, of at least
85 percent. (The hospital would be required to attach documentation.)
Demonstrated Likelihood Criterion 3. Hospital is applying
for an increase in its FTE resident cap because the hospital is already
training residents in an existing residency training program(s) in
excess of its direct GME FTE cap or IME FTE cap, or both. The hospital
would be required to attach copies of each of the following:
--Copies of the Medicare cost reports that have been most recently
submitted to the Medicare contractor by July 1, 2010 documenting on
Worksheet E, Part A, Worksheet E-3, Part VI, and Worksheet E-3, Part
VI, the resident counts and FTE resident caps for both direct GME and
IME for the relevant cost reporting periods.
--Copies of the 2010 residency match information concerning the number
of residents at the hospital in its existing programs (that is, all
programs, not only the ones for which the hospital may be requesting
more slots).
--Copies of the most recent accreditation letters on all of the
hospital's training programs in which the hospital trains and counts
FTE residents for direct GME and IME.
We are proposing that each hospital applying for an increase under
section 1886(h)(8)(B)(i) would be required to meet at least one of the
above criteria in order to demonstrate the likelihood that it will be
able to fill the additional slots associated with any increase in the
hospital's FTE resident cap within the first three cost reporting
periods beginning on or after July 1, 2012. In other words, each
hospital that wishes to apply for an increase in its FTE resident cap,
as a preliminary matter, would be required to meet the ``demonstrated
likelihood'' criterion in order for CMS to further consider the
hospital's application for an increase in its FTE resident cap.
Although a hospital might be applying for additional slots for more
than one specialty program, each application by a hospital must be
program-specific. That is, the hospital would be required to complete a
separate CMS evaluation form for each program and to demonstrate the
likelihood of filling the slots in each program. However, in accordance
with our general policy with respect to FTE resident caps, increases in
the hospital's FTE resident caps under section 1886(h)(8)(B)(i) for
direct GME and IME, once granted to a hospital, would no longer be
program-specific. Rather, the hospital's adjusted FTE resident caps
would be applied to the hospital's FTE resident counts, including any
residents the hospital trains. We note, however, that for FTE residents
counted as a result of an increase in the FTE resident caps under
section 422 of Pub. L. 108-173, payment is calculated separately for
direct GME purposes using the national average PRA and, for IME
purposes using a multiplier of 0.66. If a hospital receives an increase
to its FTE resident cap(s) under section 5503, and also received a cap
increase under section 422, we are proposing that the hospital would
first assess whether it is training a number of residents in excess of
its combined 1996 FTE and section 5503 caps and, only if its number of
FTE residents still exceeds this combined cap would the separate 422
payment rates be applied to the excess FTEs for IME and direct GME,
respectively.
For purposes of the application for the increase to the FTE caps
under section 1886(h)(8)(B)(i) of the Act, we are proposing to define
``national fill rate'' for each academic year, as we did when
implementing section 422 of Public Law 108-173. That is, we defined
``national fill rate'' as the number of residents training in a program
nationally as compared to the number of accredited slots in that
program as of June 30 of that year. This information is available from
the ACGME and the AOA. Furthermore, we are proposing to require that,
for the purposes of an application for an increase to a hospital's FTE
resident cap under section 1886(h)(8)(B) of the Act, a hospital must
use the ``fill rate'' for the most recent academic year for which data
are available.
We understand that hospitals may train fewer residents than the
number of available accredited slots in their approved programs due to
reasons other than an inability to fill those slots. Furthermore,
because we understand that a national fill rate is not necessarily the
only indicator of the ability of hospitals to fill residency positions
in its CBSA or State, and there may be characteristics particular to a
region, such as population density, variety of practice settings, or
access to technology or procedures that may allow a specified area to
have a fill rate in a specific program that exceeds the program's
national fill rate, we are proposing several options for a hospital to
satisfy the ``fill rate''' criterion. In part, as when implementing
section 422 of Public Law 108-173, we specified that the fill rate
``threshold'' is 85 percent. We believe that this rate will reasonably
identify those programs that are likely to fill FTE resident positions
in newly approved or expanded programs (while providing some latitude
to account for other factors that affect the national fill rate), and
to fully utilize an increase in FTE resident cap slots that may be
available under section 1886(h)(8)(B) of the Act as added by section
5503. We are proposing that a hospital may demonstrate the likelihood
of filling FTE resident positions associated with a possible increase
in its FTE resident cap under section 5503 by documenting that any of
the following applies to the new program or to an expansion of an
existing program:
The specialty program has a resident fill rate nationally,
across all hospitals, of at least 85 percent.
The specialty program has a resident fill rate within the
State in which the hospital is located of at least 85 percent.
If the hospital is located within an urban CBSA, the
specialty program has a resident fill rate within the CBSA of at least
85 percent.
For the purposes of demonstrating the likelihood of filling FTE
resident positions under section 1886(h)(8)(C)(i) of the Act, as added
by section 5503, we are proposing that ``national fill rate'' means,
for the most recent academic year for which data is available, the
number of residents training in a program nationally (combined
allopathic and osteopathic residents) compared to the number of
accredited slots in that program nationally as of June 30 of that year.
The proposed Demonstrated Likelihood Criterion 1 and Demonstrated
Likelihood Criterion 2 also allow a hospital to demonstrate the
likelihood of filling the requested slots by demonstrating that the
hospital's existing residency programs had a ``resident fill rate'' of
at least 85 percent in each program year from 2007 through 2009. For
the purpose of fulfilling these demonstrated likelihood criteria, we
are proposing to define ``resident fill rate'' to mean, for the most
recent academic year for which data is available, the number of
residents training in each program in total at a particular hospital as
compared to the number of accredited slots in each program in total at
that hospital as of June 30 of that year.
We also understand that, for certain programs, because of the
length of the accreditation process and a relatively long match period,
a hospital may be unable to accept its first class of PGY-1 residents
until July 1, 2012. We are proposing that the hospital may still
[[Page 46399]]
apply to receive a full complement of residents for the 3 years
beginning July 1, 2012, assuming the applicant hospital can demonstrate
the likelihood that it will fill the slots relating to a possible
increase in its FTE resident caps under section 1886(h)(8)(B)(i).
However, if the applicant hospital does not demonstrate the likelihood
that it will fill any FTE slots for programs described by the hospital
on the CMS evaluation form(s) at any point within the hospital's first
three cost reporting periods beginning on or after July 1, 2011, the
hospital would not be eligible for further consideration by CMS of an
increase to the hospital's FTE caps under section 1886(h)(8)(B)(i).
Accordingly, our proposed Demonstrated Likelihood Criterion 1 would
reflect that the hospital does not have sufficient room under its FTE
cap to train residents in a newly approved residency program that it
demonstrates it will establish within the hospital's first three cost
reporting periods beginning on or after July 1, 2011 (that is, a newly
approved program that begins training residents at any point within the
hospital's first three cost reporting periods beginning on or after
July 1, 2011) (emphasis added).
Under Demonstrated Likelihood Criterion 3, we are proposing to
allow a hospital that is already training a number of FTE residents in
an existing residency training program(s) in excess of its direct GME
FTE cap or IME FTE cap, or both, to meet the demonstrated likelihood
requirement. In order to document that it meets this criterion, a
hospital would be required to submit copies of the 2010 ``residency
match'' information concerning the number of residents the hospital has
in an existing program. We believe the most recent match information
could indicate that the hospital is expected to take in more residents
than the number of cap slots it has available. For purposes of the
application of this demonstrated likelihood criterion, we are defining
``residency match'' as a national process administered by the National
Residency Matching Program (NRMP), including the NRMP's Specialties
Matching Service, the San Francisco Matching Program, the American
Osteopathic Association Residency Match Program, or the Urology
Matching Program, by which applicants to approved medical residency
programs are paired with programs on the basis of preferences expressed
by both the applicants and the program directors.
We also note that under Demonstrated Likelihood Criteria 2 and 3,
the hospital would be applying for an increase in its FTE cap because
it is expanding an existing residency program, or it is already
training residents in an existing residency training program(s) in
excess of its FTE caps, respectively. By existing program, we are
proposing that, as of July 1, 2010, the hospital is either already
training residents in this program or programs, or the program exists
at another hospital prior to July 1, 2011, but the residents begin to
rotate at the applying hospital on or after July 1, 2011. We are
providing several proposed methods for hospitals to be able to
demonstrate to CMS under the proposed Demonstrated Likelihood Criterion
1 that they can fill the slots by showing to CMS that they are
establishing a new residency program on or after July 1, 2011. We
believe hospitals that establish new residency programs before July 1,
2011, could possibly also meet Demonstrated Likelihood Criterion 2,
relating to a hospital that is expanding an existing residency program
on or after July 1, 2011. From the perspective of applying for the cap
increase under section 1886(h)(8)(B)(i), the new program that starts
training residents in 2010 is an ``existing residency program'' because
it began before July 1, 2011, and it is ``expanding'' if that program
is increasing in the number of FTE residents in the first three cost
reporting periods beginning on or after July 1, 2011.
We note that the listing of programs participating in the AOA Match
Program will be available on the National Matching Services Web site as
of November 1, 2010. Therefore, we are proposing that programs
utilizing the AOA Match Program may, in addition to the two options
listed above, demonstrate the intent to expand an existing program by
documenting that the AOA has accepted the hospital's participation in
the match program by the December 1, 2010 application deadline.
Therefore, we are proposing that this method of demonstrating the
hospital's intent to expand an existing program will be applicable for
programs participating in the AOA Match Program.
12. Application Process for the Increases in Hospitals' FTE Resident
Caps
In order for hospitals to be considered for increases to their FTE
resident caps under section 1886(h)(8)(B)(i) of the Act, as added by
section 5503(a)(4) of the Affordable Care Act, we are proposing to
require that each qualifying hospital submit a timely application by
December 1, 2010. As part of the requirements that a hospital must
fulfill in order to complete an application for an increase to its FTE
resident caps, we are proposing to require that the applicant hospital
must include the total number of requested FTE resident slots (for all
residency programs) for direct GME or IME, or both (not to exceed 75
FTEs for each, as specified under section 1886(h)(8)(F) of the Act).
Thus, we would require that the hospital's total requests for increases
in the IME and the direct GME caps (that is, the total number of
requested FTE resident slots increases (for all residency programs at
the hospitals)) would be required to be indicated on the same
application for an increase under section 1886(h)(8)(B)(i). We are
proposing that each hospital must submit the following information on
its application for an increase in its FTE resident cap:
The name and Medicare provider number of the hospital, and
the name of the Medicare contractor to which the hospital submits its
cost report.
The total number of requested FTE resident slots (for all
residency programs at the hospital) for direct GME or IME, or both (not
to exceed 75 FTEs each).
A completed copy of the CMS evaluation form (as described
below) for each residency program for which the applicant hospital
intends to use the requested increase in the number of FTE residents
and source documentation to support the assertions made by the hospital
on the evaluation form. (For example, if the hospital checks off on the
evaluation form that the hospital is starting a new geriatrics program,
the hospital would include documentation to support that assertion.)
FTE resident counts for direct GME and IME and FTE
resident caps for direct GME and IME reported by the hospital in the
most recent as-filed cost report. (The hospital would be required to
include copies of Worksheets E, Part A, E-3, Part IV, and if a hospital
received an increase to its FTE cap(s) under section 422 of Pub. L.
108-173, a copy of E-3, Part VI.)
An attestation, signed and dated by an officer or
administrator of the hospital who signs the hospital's Medicare cost
report, of the following information in the hospital's application for
an increase in its FTE resident cap:
``I hereby certify that I understand that misrepresentation or
falsification of any information contained in this application may
be punishable by criminal, civil, and administrative action, fine
and/or imprisonment under federal law. Furthermore, I understand
that if services identified in this application were provided or
procured through payment directly or indirectly of a kickback or
where otherwise illegal, criminal, civil, and administrative
[[Page 46400]]
action, fines and/or imprisonment may result. I also certify that,
to the best of my knowledge and belief, it is a true, correct, and
complete application prepared from the books and records of the
hospital in accordance with applicable instructions, except as
noted. I further certify that I am familiar with the laws and
regulations regarding Medicare payment to hospitals for the training
of interns and residents.''
We are proposing that any hospital that wishes to apply for an
increase in its FTE resident cap(s) under section 1886(h)(8)(B)(i) must
submit a copy of its completed application (as described above) to the
CMS Central Office and to the CMS Regional Office for the region in
which the applicant hospital is located, and that the application must
be received by CMS on or before December 1, 2010. (The mailing
addresses for the CMS offices are indicated at the end of this section
of the preamble.) We note that some hospitals' FTE counts will be
subject to audit for purposes of possible cap reductions under section
1886(h)(8)(A)(i), and those audits may not be completed by December 1,
2010. Because the results of such an audit may be a factor in a
hospital's decision whether to request an increase in its FTE resident
cap under section 1886(h)(8)(B)(i) of the Act, we are proposing to
allow a later date for those hospitals to apply for increases in their
FTE resident caps. Therefore, if a hospital's resident level is audited
for purposes of section 1886(h)(8)(A) of the Act, whether or not the
hospital's FTE resident caps are reduced under section 1886(h)(8)(A) of
the Act, if that hospital wishes to apply for an increase in its FTE
resident cap(s) available under section 1886(h)(8)(B)(i) of the Act, we
are proposing that the hospital must submit a completed application to
CMS and that the application must be received on or before March 1,
2011.
We note that, although a hospital might be applying for an increase
to its FTE caps either to start a new program or expand a particular
program, the FTE caps are not program-specific; but rather, they are
hospital-specific. A hospital, and not a particular residency training
program, would be applying for an increase to its FTE caps. We are
proposing that all completed applications that are timely received
according to the above deadlines would be evaluated by CMS according to
the criteria described under section XVII.D. of this proposed rule for
determining the priority distribution of FTE resident slots. Hospitals
that satisfy at least one of the ``demonstrated likelihood'' criteria
would be further evaluated by the evaluation criteria described below.
13. CMS Evaluation of Applications for Increases in FTE Resident Caps
We are proposing to require hospitals to submit, with their
applications for increases in their FTE resident caps, a completed copy
of the CMS Evaluation Form. The CMS Evaluation Form will ask the
hospital to check off which of the ``demonstrated likelihood'' criteria
(described above in section XVII.D.11. of this proposed rule) the
hospital meets. We also are proposing to require that the hospital
provide the documentation that supports the ``demonstrated likelihood''
criteria it has checked off on the Evaluation Form.
Assuming that the applicant hospital meets the ``demonstrated
likelihood'' requirement, we are proposing that the applicant hospital
would indicate on the CMS Evaluation Form the category(ies) for which
it believes it will qualify. We would use this indication to prioritize
the applications. This prioritization is derived from section
1886(h)(8)(C) and (D) of the Act, as added by section 5503 of the
Affordable Care Act. That section established considerations in
redistribution and a priority order that must be applied in determining
the hospitals that will receive increases in their FTE caps. As
discussed above, the first consideration in redistribution is that the
applicant hospital must demonstrate the likelihood of filling the slots
requested within the first three cost reporting periods beginning on or
after July 1, 2011. Another consideration is ``whether the hospital has
an accredited rural training track'' (as described in section
1886(h)(4)(H)(iv) of the Act). Accordingly, we are proposing that, in
distinguishing between hospitals within a priority category, and
determining which hospitals will receive FTE cap increases, we would
give preference to a hospital that has an accredited rural training
track over a hospital that does not have such a program. Under section
1886(h)(4)(H)(iv) of the Act, as implemented in the regulations at
Sec. 413.79(k), an urban hospital that operates a rural training track
(often known as separately accredited 1-2 tracks in family medicine)
wherein residents rotate at the urban hospital for less than one-half
of the duration of the program, and to a rural area for the remainder
of the program, the urban hospital may include in its FTE count the FTE
resident time spent training in the rural track, even if that time
would be in excess of the hospital's FTE cap. We note that if an urban
hospital is interested in starting a new rural training track, it need
not apply for additional slots under section 1886(h)(8)(B)(i). Rather,
under the existing regulations at Sec. 413.79(k), the urban hospital
may receive an increase to its FTE cap to reflect FTE residents
training in the rural track. (For more details on rural training
tracks, and the direct GME and IME payment rules associated with them,
we refer readers to 66 FR 39902, August 1, 2001, and 68 FR 45454,
August 1, 2003). However, because section 1886(h)(8)(C) of the Act
states that the Secretary shall take into account ``whether the
hospital has an accredited rural training track'' (emphasis added), we
are proposing that an applying urban hospital that either has a
separately accredited rural training track, or can document that it
will have a separately accredited rural training track as of July 1,
2011, may receive preference over a hospital that, all other things
being equal, does not and will not have a rural training track by that
date. We note that section 1886(h)(8)(C) of the Act does not specify
that a hospital must be applying for additional slots in order to
expand its existing rural training track in order to qualify to receive
additional slots. Rather, section 1886(h)(8)(C) of the Act merely
states that ``the Secretary shall take into account * * * whether the
hospital has an accredited rural training track (as described in
paragraph (4)(H)(iv))'' (emphasis added). That is, the fact that an
urban hospital already has (or, under this proposed rule, would have as
of July 1, 2011) a separately accredited rural training track is
sufficient to give preference in redistribution to such a hospital.
Section 1886(h)(8)(D) of the Act instructs the Secretary to
``distribute the increase to hospitals based on the following
factors'':
Whether the hospital is located in a State with a
resident-to-population ratio in the lowest quartile (as determined by
the Secretary) (section 1886(h)(8)(D)(i) of the Act). In order to
determine which States are in the lowest quartile for resident-to-
population ratios, we are proposing to use three sources of data, and
the latest data available for each of those three sources. First, we
are proposing to determine the number of allopathic residents in each
state by using data from the ACGME's Data Resource Book for the
Academic Year 2008-2009. As of publication of this proposed rule, this
is the most recent data available from the ACGME. In this book, which
is available free of charge on the ACGME's Web site, is a table titled
``Number of Residents in Core and Subspecialty Programs, by State''
(www.acgme.org/acWebsite/dataBook/2008-2009_ACGME_Data_Resource_Book.pdf). This table lists
[[Page 46401]]
each State (including Puerto Rico), and includes a column called
``Number of Residents.'' We are proposing to use the data from this
column called ``Number of Residents'' as part of the numerator to
determine the resident-to-population ratio in each state. However,
because these data only include residents enrolled in ACGME-accredited
programs, we also are proposing to add to these numbers the number of
residents enrolled in AOA-accredited programs. We are proposing to
access data on the number of osteopathic residents in each State from
the AOA, which was provided to CMS upon special request. These data are
what is generally published in the AOA's Journal of the American
Osteopathic Association (JAOA). As of the issuance of this proposed
rule, the most recent data published in JAOA was that for the 2007-2008
academic year. However, because we have data from the ACGME for the
2008-2009 academic year, we requested and received data from the AOA
for the 2008-2009 academic year as well. Although these data will not
be published in the JAOA for some months, we have received permission
from the AOA to publish it in this proposed rule (as indicated at the
end of the GME discussion). These data are also presented in the form
of a table listing each State (there are no osteopathic programs in
Puerto Rico), and a column for the total number of residents in each
State. Therefore, we are proposing that the numerator for the ratio for
each State would be the sum of the residents from the 2008-2009 ACGME's
table for that State, and the residents from the 2008-2009 AOA table
for that State.
We understand that, although graduates of allopathic medical
schools are precluded from training in AOA-accredited programs, there
is no similar prohibition on osteopathic residents training in
allopathic programs. Because there are osteopathic residents who enroll
and participate in allopathic ACGME-accredited programs, we want to
ensure that there is no double counting of residents in the numerator.
We have learned from the ACGME that their data in the ACGME Data
Resource Book include osteopaths, but only those training in ACGME-
accredited programs. The AOA data do not include osteopathic residents
who are training in ACGME-accredited programs; AOA data only include
osteopathic residents enrolled and training in AOA-accredited programs.
Therefore, we do not believe there is a concern about double counting
with respect to osteopathic residents training in allopathic programs.
However, we also are aware that there are some programs that are dually
accredited by the ACMGE, and the AOA, and residents completing these
programs are able to sit for both the ABMS and the AOA board
examination in that specialty. We understand that the ACGME will
include a resident in its resident count as long as that resident is
training in an ACGME-accredited program, even if that program is dually
accredited. The AOA has the same practice of including in its total
count of residents those who are in AOA-accredited programs, even if it
is a dual eligible program. Therefore, there is some degree of
unavoidable double counting of residents in the total count. However,
we understand that the number of residents in dually-accredited
programs is less than 500, and because 500 is only 0.44 percent of the
combined ACGME and AOA 2008-2009 resident count of 114, 416, we believe
the effect of counting these residents by both the ACGME and AOA is
negligible and would not harm the integrity of the data.
We are proposing to define ``resident'' in ``resident-to-
population'' ratio as actual individual residents, as opposed to the
FTE resident figures that are used for Medicare payment purposes. We
believe it is appropriate to define ``residents'' as actual individual
residents in this instance because the intent behind this criterion is
to identify those States that have low numbers of physicians-in-
training in relation to the general population for which those
physicians-in-training are providing health care services. An ``FTE''
measure, which is the measure used for most Medicare payment purposes,
does not accurately reflect the number of individual physicians-in-
training providing services in a State.
With regard to State population data to be used in the denominator
of each State's resident-to-population ratio, we again are proposing to
use the latest available data on State populations. We are proposing to
use data from the Census Bureau that is from the 2000 Census, but that
have been updated with the most recent data available as of July 1,
2009. We accessed these data from the following Web site: http://www.census.gov/popest/datasets.html. On this Web page, the following
data can be found: State population datasets--Population, population
change and estimated components of population change: April 1, 2000 to
July 1, 2009 (NST-EST2009-alldata). We are proposing to use the CSV
file at this link. Specifically, we are proposing to use the data for
State population from the column called POPESTIMATE2009 (column Q of
the CSV spreadsheet). Therefore, we are proposing to determine each
State's resident-to-population ratio, and specifically those States
that fall within the lowest quartile by using the sum of the 2008-2009
ACGME and AOA resident data for each State, as described above, in the
numerator for each State, and by using the population data updated as
of July 1, 2009 in the denominator for each State from the column
called POPESTIMATE2009 in column Q of the CSV spreadsheet. The
following table lists each State, and is sorted by resident-to-
population ratio from lowest to highest. The first 13 shaded states are
the states in the lowest quartile.
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Based on the foregoing proposed data, the following States fall
within the lowest quartile for resident-to-population ratios: Montana,
Idaho, Alaska, Wyoming, Nevada, South Dakota, North Dakota,
Mississippi, Florida, Puerto Rico, Indiana, Arizona, and Georgia.
Accordingly, we are proposing that, consistent with section
1886(h)(8)(D)(i) of the Act, a hospital located in any one of these
States that applies for an increase to its FTE cap under section
1886(h)(8)(B) of the Act would receive preference over a hospital that
is applying for an increase to its cap that is not located in one of
these States.
Whether the hospital is located in a State, a territory of
the United States, or the District of Columbia that is among the top 10
States, territories, or Districts in terms of (1) the total population
of the State, territory, or District living in an area designated
(under such section 332(a)(1)(A)) as a health professional shortage
area (as of the date of enactment of this paragraph); to (2) the total
population of the State, territory, or District (as determined by the
Secretary based on the most recent available population data published
by the Bureau of the Census).
In order to determine which applying hospitals fall within this
priority category, we need to determine the total population living in
a HPSA in each State, territory, or District computed ``as of the date
of enactment,'' and we need to determine the total population of each
State, territory, or District ``(as determined by the Secretary based
on the most recent available population data published by the Bureau of
the Census).'' ``Territory'' is referring to Puerto Rico, which
currently has teaching hospitals, and ``District of Columbia'' refers
to Washington D.C. For ease of reference, and consistent with the
definition of ``State'' at section 210 of the Act, we are proposing to
refer to ``State, territory, or District'' simply as ``State.'' We have
received data on the population of each HPSA from the Health Resources
and Services Administration's (HRSA) Geospatial Warehouse. HRSA's
Shortage Designation Branch develops shortage designation criteria and
uses them to decide whether or not a geographic area, or population
group, is a HPSA. HRSA updates HPSA statistics on its Web site on a
daily basis, and we have requested and received the data reflective of
the ``date of enactment''; that is, March 23, 2010. Because HRSA
updates the data on its Web site daily, the data as of March 23, 2010
are no longer available on its Web site. (General information on HPSAs
and current data can be found on HRSA's Web site at: http://bhpr.hrsa.gov/shortage/).
HRSA designates three different kinds of HPSAs: Primary Care HPSAs,
Dental HPSAs, and Mental Health HPSAs. While many areas may only be
designated as one of these kinds of HPSAs, some areas may be designated
as two or three of these kinds of areas. Thus, if we were to add the
population in each State that is in a Primary Care HPSA, a Dental HPSA,
and a Mental Health HPSA, we would be duplicating the HPSA populations
in each State. Therefore, we are proposing to use only the population
in each State that is in a Primary Care HPSA. We believe that it is
appropriate to choose to recognize only the Primary Care HPSAs in each
State for the purpose of implementing section 5503 because section 5503
is intended to encourage an increase in the number of primary care
residents that are currently being trained in hospitals, as is
evidenced by the ``Requirements'' in section 1886(h)(8)(B)(ii) of the
Act, as added by section 5503(a)(4), which requires hospitals that
receive additional slots under this section to maintain a certain
average number of primary care resident positions, and that not less
than 75 percent of the redistributed positions must be awarded for
slots used in a primary care or a general surgery residency.
With respect to data on each State's total population ``as
determined by the Secretary based on the most recent available
population data published by the Bureau of the Census,'' we are
proposing to use the same data that we are using under the first
priority
[[Page 46404]]
category with regard to determining resident-to-population ratios, as
explained above. These data, which are the most recent available, were
last updated on July 1, 2009. As explained above, we accessed these
data from the following Web site: http://www.census.gov/popest/datasets.html. On this Web page, the following data can be found: State
population datasets--population change and estimated components of
population change: April 1, 2000 to July 1, 2009 (NST-EST2009-alldata).
We are proposing to use the CSV file at this link. Specifically, we are
proposing to use the data for State population from the column called
POPESTIMATE2009 (column Q of the CSV spreadsheet).
The following table lists each State, its Primary Care HPSA
population-to-State population ratio from highest to lowest, and
whether that State falls within the top 10 States for such Primary Care
HPSA population-to-State population ratios:
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[[Page 46406]]
Whether the hospital is located in a rural area (as
defined in section 1886(d)(2)(D)(ii) of the Act). Section
1886(d)(2)(D)(ii) of the Act defines a rural area as any area outside a
MSA. Under the existing regulations at Sec. 412.62(f)(ii), an ``urban
area'' means (1) a Metropolitan Statistical Area (MSA) or New England
County Metropolitan Area (NECMA); or (2) the following New England
counties: Litchfield County, Connecticut; York County, Maine; Sagadahoc
County, Maine; Merrimack County, New Hampshire; and Newport County,
Rhode Island. Under existing Sec. 412.62(f)(iii), a ``rural area''
means any area outside an urban area. Thus, for purposes of the
amendments made by section 5503, we are proposing that any hospital
located in an area that is not in a MSA is a rural hospital, regardless
of any reclassification under Sec. 412.102 or Sec. 412.103. We also
point out that, since FY 2005, we no longer use the term MSA, but
instead use CBSA, or Core-Based Statistical Area. There are urban
CBSAs, and rural CBSAs are areas outside of an urban CBSA. We note that
this definition of ``rural'' is consistent with our policy concerning
designation of wage index areas.
We also are proposing that, in determining which applicant
hospitals receive priority within the priority category of hospitals
located in a State in the lowest quartile for resident-to-population
ratios that hospitals in a State that is ranked lower in the quartile
(with number one being the lowest) would receive preference over
hospitals in states that are still within the quartile, but ranked
higher. For example, all other things being equal, a hospital located
in Montana would receive preference over a hospital located in Idaho,
while this hospital would receive preference over a hospital located in
Alaska, and so on. Similarly, we are proposing that, in determining
which applicant hospitals receive priority within the priority category
of hospitals located in a State that is among the top 10 of these areas
in terms of the ratio of Primary Care HPSA population to total
population, hospitals in an area that is ranked higher in the top 10
(with number 1 being highest and number 10 being lowest) would receive
preference over hospitals in an area that are still within the top 10,
but ranked lower. For example, all other things being equal, a hospital
located in Louisiana would receive preference over a hospital located
in Mississippi, while a hospital in Mississippi would receive
preference over a hospital located in Puerto Rico, and so on.
As we described above, we are proposing that an applicant hospital
indicate on the CMS Evaluation Form the category(ies) for which it
believes it will qualify, and we will use this indication to prioritize
the applications. Each of the categories (described below) is derived
from the priorities established by section 1886(h)(8)(D) of the Act, as
added by section 5503 of the Affordable Care Act. We are proposing to
use the following categories to determine the order in which hospitals
would be eligible to receive increases in their FTE resident caps:
First Level Priority Category: The hospital is in a State
whose resident-to-population ratio is within the lowest quartile, AND
the hospital is in a State whose Primary Care HPSA to population ratio
is in the top 10 States, AND the hospital is located in a rural area.
Second Level Priority Category: The hospital is in a State
whose resident-to-population ratio is within the lowest quartile, AND
is either in a State whose Primary Care HPSA to population ratio is in
the top 10 States, or it is located in a rural area, or is an urban
hospital and has or will have as of July 1, 2010, a rural training
track.
Third Level Priority Category: The hospital is in a State
whose resident-to-population ratio is within the lowest quartile.
Fourth Level Priority Category: The hospital is in a State
whose Primary Care HPSA to population ratio is in the top 10 States,
AND either the hospital is located in a rural area or the hospital is
an urban hospital and has, or will have as of July 1, 2010, a rural
training track.
Fifth Level Priority Category: The hospital is in a State
whose Primary Care HPSA to population ratio is in the top 10 States, or
the hospital is located in a rural area.
We believe it is appropriate to establish priority level categories
based on the fact that some hospitals that apply for the additional
resident slots may fit into more than one of the three statutory
priority categories listed in section 1886(h)(8)(D) of the Act.
Therefore, we are proposing to give consideration first to those
hospitals that meet more than one of the statutory priority categories
over those hospitals that meet only one of the statutory priorities. We
are further proposing that a hospital that is in a State whose
resident-to-population ratio is within the lowest quartile would
receive priority over a hospital that is not located in one of these
States. We believe this is consistent with the direction established at
section 1886(h)(8)(E)(i) of the Act which specifies that the Secretary
shall reserve 70 percent of all positions available for distribution
for hospitals in a State whose resident-to-population ratio is within
the lowest quartile. Only 30 percent of the positions are to be
distributed to hospitals in States whose Primary Care HPSA to
population ratio is in the top 10 States, and hospitals located in
rural areas. In addition, as discussed above, the first consideration
in redistribution under section 1886(h)(8)(C) of the Act is that the
applicant hospital must demonstrate the likelihood of filling the slots
requested within the first three cost reporting periods beginning on or
after July 1, 2011. The second consideration is ``whether the hospital
has an accredited rural training track'' (as described in section
1886(h)(4)(H)(iv) of the Act). Accordingly, we are proposing that, in
distinguishing between hospitals within priority categories, and in
determining which hospitals qualify to receive additional slots, we
would give preference to a hospital that has an accredited rural
training track as compared to a hospital that does not have such a
program.
Because section 1886(h)(8)(E) of the Act specifies that 70 percent
of the slots are to be reserved for hospitals that are in a State whose
resident-to-population ratio is within the lowest quartile, and 30
percent of the positions are to be reserved for hospitals in States
whose Primary Care HPSA to population ratio is in the top 10 States,
and hospitals located in rural areas, we are proposing that no slots
would be given to hospitals that do not fit within either of these
categories.
14. CMS Evaluation of Application for Increases in FTE Resident Caps--
Evaluation Criteria
We anticipate that there will be a limited number of slots
available for distribution from the redistribution pool, while there
will be a great demand for those limited slots. Therefore, as we did
when implementing section 422 of Public Law 108-173, we are proposing
to use additional criteria (some of which are the same as those used to
implement section 422) for evaluating the applications for increases in
hospitals' FTE resident caps within each of the seven level priority
categories described above under section 5503. In addition, in
implementing section 5503, we are proposing to assign a certain number
of points to each evaluation criterion, such that some will be worth
more points than others. We note that the criteria are not mutually
exclusive. Hospitals may qualify for a number of different criteria and
their ``score'' is the total point value for all criteria met by the
hospital for
[[Page 46407]]
each program. Because we anticipate that the redistribution pool under
section 5503 will be smaller than that under section 422, we believe a
more rigorous and competitive ranking system is appropriate under
section 5503. Thus, we are assigning a different amount of points to
each Evaluation Criterion, rather than just assigning one point to
each.
Evaluation Criterion One. The hospital that is requesting the
increase in its FTE resident cap(s) has a Medicare inpatient
utilization over 60 percent, as reflected in at least two of the
hospital's last three most recent audited cost reporting periods for
which there is a settled cost report. (5 Points) We have selected 60
percent utilization because we believe that level would identify
hospitals where Medicare beneficiaries will benefit the most from the
presence of a residency program, and it is consistent with the
utilization percentage required for Medicare-dependent, small rural
hospitals (MDHs) as specified in Sec. 412.108. In addition, it
identifies a type of hospital that warrants atypical treatment by the
Medicare program because it is so reliant on Medicare funding.
Evaluation Criterion Two. The hospital will use the additional
slots to establish a new geriatrics residency program, or to add
residents to an existing geriatrics program. (5 Points) Section 5503
places a particular emphasis on increasing the number of residency
positions in primary care specialties, as evidenced by the requirement
at section 1886(h)(8)(B)(ii) of the Act that a hospital that receives
slots must maintain at least the same number of primary care residents
as it had during the three most recent cost reporting periods prior to
enactment, and that not less than 75 percent of additional positions
received must be in a primary care or a general surgery residency.
Geriatrics is included in the definition of ``primary care resident''
at section 1886(h)(5)(H) of the Act. We believe that, of all the
medical specialties, geriatrics is the one specialty that is devoted
primarily to the care of the elderly, including Medicare beneficiaries.
As such, we are proposing to give special consideration to geriatric
programs to meet the ``fill rate'' criterion for demonstrating the
likelihood of filling FTE resident slots under section 5503. Geriatrics
is not a separately approved training program; rather, it is a
subspecialty of another specialty program. For example, there is a
geriatrics subspecialty of family practice or internal medicine. We are
proposing that, for the purposes of meeting the 85 percent fill rate
criterion, we would allow hospitals that are starting a new geriatrics
program or expanding an existing geriatric program to use the fill rate
associated with the overall specialty program (rather than the fill
rate for the geriatric subspecialty) to meet this demonstrated
likelihood criterion.
Evaluation Criterion Three. The hospital will use additional slots
to establish a new or expand an existing primary care program with a
demonstrated focus on training residents to pursue careers in primary
care, rather than in nonprimary subspecialties of those primary care
programs (for example, the hospital has an internal medicine program
with a designated primary care track). (3 Points) As stated previously,
section 5503 places a particular emphasis on encouraging the growth in
the number of primary care residents, and specifically, physicians who
practice in primary care, rather than only completing a primary care
residency as a prerequisite for further subspecialty training. Although
this proposed Evaluation Criterion applies to any primary care
specialty, according to the 2010-2011 ACGME Green Book, 30.1 percent of
accredited internal medicine programs offer a primary care track.
However, the ACGME does not have separate standards for or does not
separately accredit primary care tracks from categorical primary care
programs. We understand that, particularly for internal medicine
residents, these tracks are a way for graduating medical students who
are interested in primary care to declare that interest early on, and
in many cases, actually match into an internal medicine program with a
primary care track through the National Residency Match Program. These
residents may pursue their interest in primary care by choosing to do
more electives in ambulatory and community-based settings throughout
the 3 years of primary care training than residents with an interest in
specialization might do. We believe that encouraging growth of these
programs will increase the number of primary care practitioners.
Therefore, we are proposing to give special consideration to hospitals
that are applying for additional slots to start or expand a program(s)
that particularly focuses on residents who wish to pursue careers in
primary care, and we would prioritize among hospitals that are applying
for slots in a primary care program(s) accordingly. One example of a
hospital that demonstrates a focus on training residents to pursue
careers in primary care is a hospital that has a primary care track in
internal medicine. We are proposing that one way hospitals may qualify
for a point under this evaluation criterion is by documenting that they
are advertising that they have an internal medicine program with a
primary care track in the March 2011 National Residency Match Program.
Evaluation Criterion Four. The hospital will use all the additional
slots to establish a new or expand an existing primary care residency
program or general surgery program. (5 Points) ``Primary care
resident'' is defined at section 1886(h)(5)(H) of the Act as a resident
enrolled in an approved medical residency training program in family
medicine, general internal medicine, general pediatrics, preventive
medicine, geriatric medicine, or osteopathic general practice. Section
1886(h)(8)(B)(ii)(II) of the Act states that not less than 75 percent
of additional positions received must be in a primary care or a general
surgery residency. Therefore, we are proposing to award 5 points to a
hospital that goes beyond this minimum requirement, and documents that
it will use all of the slots received for either primary care or
general surgery programs.
Evaluation Criterion Five. The hospital is located in a Primary
Care HPSA.--2 Points. We believe this evaluation criterion is
consistent with the goal of reducing the shortage of primary care
physicians, and increasing access to care in underserved areas.
Evaluation Criterion Six. The hospital is in a rural area (as
defined under section 1886(d)(2)(D)(ii) of the Act) and is or will be
on or after July 1, 2011, a training site for a rural track residency
program (as specified under Sec. 413.79(k)), but is unable to count
all of the FTE residents training in the rural track because the rural
hospital's FTE cap is lower than its unweighted count of allopathic or
osteopathic FTE residents as of portions of cost reporting periods on
or after July 1, 2011. (1 Point). We understand that there are some
rural hospitals that serve as training sites for an urban hospital's
rural training track. The residents in the rural track are counted in
the urban hospital's FTE count, but because the rural training tracks
are not necessarily considered ``new'' medical residency programs
according to the regulations at Sec. 413.79(l), the rural hospital
cannot receive an increase to its FTE caps under Sec. 413.79(e)(3)
and, therefore, cannot receive direct GME and IME payments for training
all or some of those residents. The rural hospital may be training
residents in excess of its FTE resident cap prior to July 1, 2011 and,
therefore, cannot receive IME or direct GME payment for some or all of
the FTEs in the rural training track, or it
[[Page 46408]]
wishes to expand its rural training track above its FTE resident cap on
or after July 1, 2011. We are proposing this evaluation criterion as a
remedy to these scenarios to allow the rural hospital the possibility
of receiving payment for FTEs in its rural training track.
We are proposing to use these criteria to evaluate the applications
by hospitals for increases in their FTE resident caps that fall within
each of the seven level priority categories. We are proposing to place
each application in the appropriate priority level category based on a
review of the information a hospital checks off on the proposed CMS
Evaluation Form for each allopathic and osteopathic specialty program
requested by the applicant hospital, and the corresponding requested
FTE cap increase (the proposed form appears below). We propose to place
all of these evaluation criteria on the Evaluation Form and to ask the
hospital to check off which criteria on the form apply for each
specialty program for which an FTE cap increase is requested. Based on
the evaluation criteria checked off on the form, we are proposing to
score each CMS Evaluation Form. The higher-scoring CMS Evaluation
Form(s) for each applicant hospital within each level priority category
would be awarded the FTE resident cap increases first. It is possible
that a hospital may qualify for multiple points for the same program.
For example, if a hospital would be applying for slots to start a
primary care track within an internal medicine program, and also would
be using all of the slots it receives in that internal medicine
program, the hospital may receive points both for Evaluation Criterion
Three and Evaluation Criterion Four. Similarly, if a hospital would be
applying for slots to start or expand a geriatrics program, and the
additional slots would all be used for the geriatrics program, then the
hospital may receive points for both Evaluation Criterion Two and
Evaluation Criterion Four. Further, as specified by section
1886(h)(8)(E) of the Act, 70 percent of all positions are reserved to
be distributed to qualifying hospitals that are in States with
resident-to-population ratios in the lowest quartile, and 30 percent of
the positions are reserved to go to hospitals that are located in
States with HPSA population to State population ratios within the top
10 and to rural hospitals. As we described above, we are proposing to
award the cap increases in the order of the seven specified level
priority categories because, as a general rule, we believe hospitals
that meet more than one of the statutory priorities should be awarded
the increases in their FTE resident caps first before other hospitals.
We also believe that hospitals that meet a higher statutory priority
category should receive first consideration over hospitals that meet
lower statutory priorities. That is the reason, for instance, we are
proposing that the first, second, and third level categories give
preference to hospitals located in States with resident-to-population
ratios in the lowest quartile before considering hospitals that are
only located in States with high Primary Care HPSA population to State
population ratios or to hospitals that are only rural. Furthermore, in
the case where, for example, Hospital A's application for a program
falls within the Level Priority Category One, but scores no points on
the evaluation criteria on the CMS Evaluation Form for that program,
and Hospital B's application for a program falls within the Level
Priority Category Two, and scored 5 points on the evaluation criteria
on the CMS Evaluation Form for the program, Hospital A would receive
the section 5503 cap increase before Hospital B, because Hospital A
qualified to be in the higher level priority category.
Thus, first level priority category hospitals that score highest on
the evaluation criteria on the CMS Evaluation Form for a particular
specialty program would receive the increases in their FTE resident
caps first. For example, if Hospital D is a rural hospital that is
located in Mississippi, thereby falling within the first level priority
category, and Hospital D checks off on the CMS Evaluation Form that it
has a Medicare utilization of 60 percent (5 points), is using all the
slots to expand a primary care residency program (5 points), and is
located in a Primary Care HPSA (2 points), Hospital D would receive a
score of 12 points on the completed CMS Evaluation Form. We are
proposing that we would first award FTE cap increases to hospitals
whose CMS Evaluation Forms for a particular program receive the most
points (if there are any), and then to those with successively fewer
points within the level priority category. Hospital D would receive the
increase in its FTE resident cap(s) requested on its application only
after all the hospitals in the first level priority category whose
applications receive 13 or more points are awarded their requests
first. We are proposing to proceed through each level priority category
accordingly, and only move on to distribute slots to hospitals in the
next priority level category once all the qualifying applicants in the
previous priority level category have received slots. Once we have
distributed 70 percent of the slots to hospitals within States with
resident-to-population ratios in the lowest quartile in accordance with
the Priority Level Categories One through Three (or awarded increases
to all qualified applicant hospitals located in States with resident to
population ratios in the lowest quartile), we are proposing to then
distribute the remaining slots to hospitals in the fourth and fifth
level categories. Because of this requirement that 70 percent of the
slots be reserved for distribution to hospitals within States with
resident-to-population ratios in the lowest quartile, it is possible
that after first distributing slots to hospitals with the highest
scores on their CMS Evaluation Form, if there are requests for slots by
those hospitals which in the aggregate exceed the 70 percent of slots
available, there may be some remaining qualifying hospitals within the
same priority level category that receive the same score on the CMS
Evaluation Form. Thus, we would have no way of distinguishing among
these hospitals of equal rank. If this situation occurs, we are
proposing to prorate the remaining amount of slots in the ``70
percent'' pool, and distribute an equal share of slots to these
hospitals of equal rank. If a similar situation occurs within the ``30
percent'' pool, we also are proposing to prorate the remaining amount
of slots in the ``30 percent'' pool, and distribute an equal share of
slots to hospitals of equal rank.
For example, assume all applicant hospitals in the first and second
level priority categories receive the requested increases in their FTE
resident caps, and that we have awarded cap increases for all the third
level priority category hospitals that scored 5 or above on their CMS
Evaluation Forms for each residency program. We next evaluate hospital
applications and accompanying CMS Evaluation Forms in the third Level
Priority Category (The hospital is in a State whose resident-to-
population ratio is within the lowest quartile) with fewer than 5
points and we find that there is only a sufficient number of resident
slots remaining in the estimated ``70 percent'' pool to grant half of
the requests for slots from hospitals that scored 4 points. We are
proposing to prorate all of the remaining FTEs among the 4-point CMS
Evaluation Forms and accompanying applications in the third level
priority category. Thus, after awarding slots to hospitals in the third
level priority with at least 5 points, and to hospitals in the first
two level priority categories, if we could have awarded a total of 200
FTE slots
[[Page 46409]]
for direct GME and 185 FTE slots for IME to only 50 percent of the 4-
point CMS Evaluation Forms in the third level priority category (at the
point that the estimated ``70 percent'' pool of FTE slots is spent), we
are proposing to divide all of the 200 FTE slots remaining in the 70
percent pool for direct GME and 185 FTE slots for IME among all of the
4-point CMS Evaluation Forms and accompanying applications in that
third priority category, no matter what level of FTE resident cap
increase was requested on the individual hospital's application, but
not to exceed the number of slots a hospital requested for IME and
direct GME respectively.
We are also considering another possible scenario that could occur
with respect to hospitals that fall into the Second Level Priority
Category: The hospital is in a State whose resident-to-population ratio
is within the lowest quartile, AND is either in a State whose Primary
Care HPSA to population ratio is in the top 10 States, or it is located
in a rural area, or is an urban hospital and has or will have as of
July 1, 2010, a rural training track. Because a hospital in this second
level priority category is located both in a State whose resident-to-
population ratio is within the lowest quartile, AND is either in a
State whose Primary Care HPSA to population ratio is in the top 10
States, or it is located in a rural area, we believe that its request
for additional slots must first be fulfilled from the ``70 percent
pool.'' However, if there are insufficient slots in the ``70 percent
pool'' to satisfy the requests of all otherwise qualified applicants in
the second level priority category, then, rather than immediately
prorating the remaining slots in the ``70 percent pool'' among the
applicable hospitals in the second level priority category, we are
proposing to draw from the ``30 percent pool'' to grant the full FTE
cap increases (as applicable) to qualifying hospitals in the second
level priority category.
Alternatively, although unlikely, we recognize that the reverse
situation may occur, where there may not be a sufficient number of
qualified applicants or requests for FTEs in order to distribute at
least 70 percent of the slots hospitals located in the 13 States whose
resident-to-population ratios are in the lowest quartile (priority
level categories one through three). Should this occur, we are
proposing to begin evaluating applications from the next category of
qualifying hospitals (that is, those located in States that are among
the top 10 States for Primary Care HPSA to population ratios, and rural
hospitals--priority level categories four and five), and potentially
distribute more than 30 percent of the slots to hospitals in those
latter categories.
We recognize the complexity of the proposed evaluation process for
the award of increases in hospital's FTE resident caps under section
1886(h)(8)(B) of the Act. Therefore, we have included the following
examples depicting the proposed procedures:
Example 1
Hospital H is an urban hospital located in a State that is in the
lowest quartile for resident-to-population ratios. Hospital H can
demonstrate the likelihood that it will fill the requested five FTEs
resident slots for direct GME and IME for expanding a geriatric program
because it is currently training a number of FTE residents that exceeds
both of its FTE caps, and has attached to its application for the
increase a copy of Hospital H's past three Medicare cost reports (as
filed or audited, whichever is most recent and available), which
documents on Worksheet E, Part A, Worksheet E-3, Part IV, and Worksheet
E-3, Part VI that, according to the resident counts and the FTE
resident caps, Hospital H is training residents in excess of its caps.
Hospital H is also located in a Primary Care HPSA (but is not located
in a State that is among the top 10 States in terms of its Primary Care
HPSA population to State population ratio).
We would evaluate Hospital H's application as follows: Hospital H
is in the third Level Priority Category (The hospital is in a State
whose resident-to-population ratio is within the lowest quartile), and
receives a score of 12 (expanding a geriatrics program-Evaluation
Criterion Two-5 points, using all slots for a primary care residency
program-Evaluation Criterion Four-5 points, and is located in a Primary
Care HPSA-Evaluation Criterion Five-2 points).
Example 2
Hospital J is a rural hospital located in Montana. Hospital J is a
rotation site for an urban hospital's family practice rural track
program, but is unable to count all of the FTE residents training in
the rural track because the rural hospital's FTE cap is lower than its
unweighted count of allopathic or osteopathic FTE residents as of
portions of cost reporting periods on or after July 1, 2011. The rural
hospital wishes to expand the number of FTE residents training in the
family practice rural track. The rural hospital also wishes to serve as
a training site for one pediatrics resident in a pediatrics program
that already exists at the urban hospital (that is, it is not a new
pediatrics program).
Hospital J would need to submit two CMS Evaluation Forms; one for
family practice and another for pediatrics, and we would evaluate each
accordingly. Both requests would put the hospital in the second level
priority category (The hospital is in a State whose resident-to-
population ratio is within the lowest quartile, AND is either in a
State whose Primary Care HPSA to population ratio is in the top 10
States, or it is located in a rural area, or is an urban hospital and
has or will have as of July 1, 2010, a rural training track), and it
can demonstrate the likelihood of filling the slots (because it is
already over its FTE caps based on the family medicine residents it is
training in the rural track, and together with the urban hospital, it
has requested from the ACGME accreditation to expand the number of
family practice residents training in the rural track and to receive a
pediatrics resident). For the family practice request, Hospital J would
receive 5 points under Evaluation Criterion Four because all the slots
it is requesting (that is, family practice and pediatrics) are for
primary care programs, and it would receive 1 point under Evaluation
Criterion Six because it is requesting the family practice slots for
its rural training track, for a total of 6 points for the family
practice request. For the pediatrics request, Hospital J would be
placed in the second Priority Level Category, and receives 5 points
under Evaluation Criterion Four because all the slots it is requesting
(that is, family practice and pediatrics) are for primary care
programs.
15. Exception If Positions Are Not Redistributed by July 1, 2011
Section 1886(h)(8)(E)(iii) of the Act states that in the case
where, by July 1, 2011, the Secretary ``does not distribute positions
to hospitals,'' the Secretary shall distribute such positions to other
hospitals in accordance with the considerations in redistribution
specified at section 1886(h)(8)(C) of the Act (that is, the
demonstrated likelihood of filling the slots and whether the hospital
has a rural training track), and the priority for certain areas
specified at section 1886(h)(8)(D) of the Act (that is, whether the
hospital is located in a State with a resident-to-population ratio in
the lowest quartile, whether the hospital is located in a State that is
in top 10 States in terms of Primary Care HPSA population to State
population, and whether the hospital is rural). We believe that the
phrase ``does not distribute positions to hospitals'' contemplates the
scenario where there would be more slots available than the amount that
qualifying hospitals
[[Page 46410]]
requested, and therefore, CMS would be left with slots in the
distribution pool as of July 1, 2011. The Secretary is directed to
initiate another round of applications after July 1, 2011, in which
hospitals that could demonstrate that they could use the slots would
apply and possibly receive a portion of the remaining slots, until all
the slots in the pool are redistributed. Should the situation arise
where there are unused slots available as of July 1, 2011, we would
propose a process for redistributing those slots ``in accordance with
the considerations in redistribution specified at section
1886(h)(8)(C).'' We would then alert the public through another round
of notice and comment rulemaking to establish the application
timeframe, criteria, process and other relevant information at that
time.
16. Application of Direct GME PRAs for Primary Care and Nonprimary Care
Residents and Conforming Changes for the IME Multiplier
Section 1886(h)(8)(G) of the Act states that, ``With respect to
additional residency positions in a hospital attributable to the
increase provided under this paragraph, the approved FTE per resident
amounts are deemed to be equal to the hospital per resident amounts for
primary care and nonprimary care computed under paragraph (2)(D) for
that hospital.'' Hospitals that receive increases in their FTE resident
caps under section 1886(h)(8)(B)(i) will receive direct GME payments
associated with those FTE residents in the same manner as they receive
direct GME payments for their other (non-section 422) FTE residents,
that is, using the primary care PRA that is reported on Worksheet E-3,
Part IV, line 3.23, and the nonprimary care PRA reported on line 3.17
of the same worksheet. This provision in section 5503 differs from
section 422 in that hospitals that received additional slots under
section 422 receive direct GME payment for FTE residents attributable
to those slots using a single locality-adjusted national average PRA
(42 CFR 413.77(g)), and the payment determination is made on Worksheet
E-3, Part VI. Thus, if a hospital received additional slots under
section 422, and they train a number of residents that is sufficient to
require them to count FTE residents under those slots, the hospital
will continue to receive direct GME payment for those slots using the
locality-adjusted national average PRA. However, we are proposing that
a hospital that receives additional slots under section 5503 would be
paid for FTE residents counted under those slots using the same primary
care and nonprimary PRAs for which payment is made for FTE residents
subject to the 1996 FTE cap. We are expecting to revise Worksheet E-3,
Part IV to add a line on which hospitals would report the number of
FTEs by which the hospital's FTE caps were increased for direct GME
slots received under section 5503. To create a hospital's total
adjusted direct GME FTE cap, the increase granted under section
1886(h)(8)(B)(i) would be added to the 1996 direct GME FTE cap and
would include any applicable new program adjustment received under
Sec. 413.79(e), and any applicable adjustments for the cost reporting
period due to a Medicare GME affiliation agreement. In a given cost
reporting year, we are proposing that a hospital would only count FTE
residents under its direct GME section 422 cap slots on Worksheet E-3,
Part VI if the number of unweighted allopathic and osteopathic
residents it is training exceeds the total adjusted direct GME cap
(including the section 5503 slots) on Worksheet E-3, Part IV.
In addition, with respect to the IME adjustment, we are proposing
that a hospital that receives an increase in its FTE cap under section
1886(h)(8)(B)(i) will count FTE residents under those slots, and
payment will be made with respect to residents counted under those
slots, using the same IME multiplier for which payment is made for FTE
residents subject to the 1996 FTE cap (that is, currently a multiplier
of 1.35). This is because section 1886(d)(5)(B)(x) of the Act, as added
by section 5503(b)(2), states, ``For discharges occurring on or after
July 1, 2011, insofar as an additional payment amount under this
subparagraph is attributable to resident positions distributed to a
hospital under subsection (h)(8)(B), the indirect teaching adjustment
factor shall be computed in the same manner as provided under clause
(ii) with respect to such resident positions.'' This provision in
section 5503 differs from section 422 in that hospitals that received
additional slots under section 422 receive IME payment for FTE
residents counted under those slots using a special multiplier of 0.66
(42 CFR 412.105(e)(2)), and the payment determination is made on
Worksheet E-3, Part VI. We also are expecting to revise Worksheet E,
Part A to add a line in which applicable hospitals would report the
amount of additional IME slots received under section 5503. To create a
hospital's total adjusted IME FTE cap, this additional amount would be
added to the 1996 IME FTE cap, any applicable new program adjustment
received under Sec. 413.79(e), and any applicable adjustments for the
period due to a Medicare GME affiliation agreement. In a given cost
reporting year, we are proposing that a hospital would only use its IME
section 422 cap slots on Worksheet E-3, Part VI if the number of
unweighted allopathic and osteopathic residents it is training exceeds
the total adjusted IME cap (including the section 5503 slots) on
Worksheet E, Part A. Finally, under section 422 of Pub. L. 108-173,
hospitals that were members of the same Medicare GME affiliated group
on or after July 1, 2005, and that received additional FTE cap slots
under section 422 are precluded from including those additional section
422 slots in the aggregate affiliated cap. This is in part because
section 422 specified that a hospital would receive direct GME and IME
payments for additional slots awarded under section 422 with rates that
were different from the non-section 422 cap slots, and tracking the
different direct GME and IME payment rates associated with FTE
residents that are counted as a result of the section 422 cap increases
and those that were not would be extremely difficult for the Medicare
contractors. In addition, in order to qualify for additional slots
under section 422, the hospitals had to document a need for those
slots. Similarly, under section 5503, we are proposing that hospitals
that receive additional slots under section 5503 cannot use these slots
as part of the aggregate cap in a Medicare GME affiliation agreement.
This is because we believe that once a hospital has demonstrated that
it truly needs the additional slots, has made the effort to carefully
document that it will fill those slots within three years, and once we
have determined that the characteristics of the hospital and its
training program warrant an increase in the hospital's FTE resident
caps under section 1886(h)(8)(B)(i), we do not believe it would be
appropriate for the hospital to transfer those positions to another
hospital, albeit temporarily, under the terms of a Medicare GME
affiliation agreement. To do so would be to undermine the goals and
specifications for the redistribution of residency positions as set
forth under section 5503.
We note that section 1886(h)(8)(B) of the Act, which addresses the
increases in hospitals' FTE resident caps, makes no reference to
section 1886(h)(4)(G) or 1886(d)(5)(B)(vi)(II) of the Act, which are
the provisions concerning the rolling average count of FTE residents.
Furthermore, there is no mention of
[[Page 46411]]
section 1886(d)(5)(B)(vi)(I) of the Act, the provision regarding the
cap on the IME resident-to-bed ratio, in section 1886(h)(8)(B) of the
Act either. That is, the statute does not provide for an exclusion from
application of the rolling average for residents counted as a result of
FTE cap increases under section 1886(h)(8)(B)(i) of the Act, nor does
the statute exempt the residents counted pursuant to FTE cap increases
under section 1886(h)(8)(B)(i) from the application of the cap on the
IME resident-to-bed ratio. In light of the absence of a specific
directive in section 1886(h)(8)(B)(i) of the Act exempting those
residents from application of the rolling average for direct GME and
IME, and the cap on the IME resident-to-bed ratio, and with no apparent
reason to treat residents counted as a result of the FTE cap increases
under section 1886(h)(8)(B) of the Act differently, we are proposing to
require that if a hospital increases its direct GME or IME FTE count of
residents under an increase in the hospital's FTE resident cap under
section 1886(h)(8)(B)(i) of the Act, those FTE residents would be
immediately subject to the rolling average calculation and the cap on
the IME resident-to-bed ratio. Furthermore, we believe that, given
potentially significant shifts of FTE resident positions among
hospitals as a result of section 1886(h)(8) of the Act, the inclusion
of FTE residents counted as a result of FTE cap increases under section
1886(h)(8)(B)(i) of the Act in the rolling average would introduce a
measure of stability and predictability, and mitigate radical shifts in
GME payments from period to period.
17. Other Issues Related to a Request for Increase in the FTE Caps
Under Section 5503
Rural Hospitals or Urban Nonteaching Hospitals
Rural hospitals may receive an adjustment to their FTE caps for
establishing a new residency program under Sec. 413.79(e)(1)(iii) of
the existing regulations at any time. Therefore, if a rural hospital is
interested in starting a new program, or interested in participating in
training residents in a new program on or after July 1, 2011, it need
not apply for slots under section 5503 for that new program. If a rural
hospital seeks to expand an existing program, and does not have
sufficient space under its existing FTE caps to cover those additional
residents, the rural hospital may apply for an increase to its FTE caps
under section 5503. Similarly, an urban hospital may request additional
slots under section 5503 for the purpose of expanding an existing
program. A hospital, rural or urban, that is not yet a teaching
hospital and does not have a cap established, may not apply for a
permanent adjustment to their FTE caps under section 5503 since a non-
teaching hospital may apply for a permanent cap adjustment under
current Medicare regulations at Sec. 413.79(e). Also, if an urban non-
teaching hospital becomes a teaching hospital because it begins to
serve as a rotating site for another hospital's existing program, it
may apply for additional slots under section 5503, which would not
preempt the hospital from later getting a new cap adjustment under
Sec. 413.79(e) for starting a new program.
Closed Teaching Hospitals
We note that under section 5506 of Public Law 111-148, as explained
further in section XVII.E. of this proposed rule, the FTE resident caps
of teaching hospitals that close on or after March 23, 2008 are to be
redistributed to other qualifying hospitals according to specific
criteria. Assuming a teaching hospital closed recently, it is possible
that based on the closed teaching hospital's three most recent cost
reporting periods ending prior to March 23, 2010, its FTE resident caps
could be subject to reduction under section 5503. However, so as to
avoid duplication of FTE resident slots in the redistribution processes
under sections 5503 and 5506, we are proposing that if a hospital
closes on or after March 23, 2008, then its FTE resident cap slots
would not be redistributed under section 5503, but would be reserved
for redistribution under section 5506.
Requirements for Hospitals That Receive Additional Slots Under
Section 5503
Section 1886(h)(8)(B)(ii) of the Act, as added by section
5503(a)(4) of the Affordable Care Act, specifies requirements and
thresholds that a hospital that applies for and receives additional
slots effective July 1, 2011 must meet in order to retain those slots.
Under section 422 of Public Law 108-173, hospitals that received
additional slots were not held accountable for meeting any requirements
once those slots were received effective July 1, 2005, nor did section
422 require that CMS conduct any subsequent reviews of the hospitals
that received the slots in order to determine that the hospitals were
meeting certain thresholds. However, section 1886(h)(8)(B)(i) of the
Act, as added by section 5503 of the Affordable Care Act specifies
requirements that a hospital that receives an increase in its FTE
resident caps under section 1886(h)(8)(B)(i) must meet, at least for a
5-year period beginning on and after July 1, 2011, and section
1886(h)(8)(B)(iii) directs the Secretary to reduce the FTE caps of the
hospital by the same number of FTE residents by which the hospital's
FTE caps were increased if the hospital fails to meet these
requirements. Specifically, section 1886(h)(8)(B)(ii) of the Act
states, ``a hospital that receives an increase in the otherwise
applicable resident limit under this subparagraph shall ensure, during
the 5-year period beginning on the date of such increase, that--
(I) The number of full-time equivalent primary care residents, as
defined in paragraph (5)(H) (as determined by the Secretary), excluding
any additional positions under subclause (II), is not less than the
average number of full-time equivalent primary care residents (as so
determined) during the 3 most recent cost reporting periods ending
prior to the date of enactment of this paragraph; and
(II) Not less than 75 percent of the positions attributable to such
increase are in a primary care or general surgery residency (as
determined by the Secretary).
The Secretary may determine whether a hospital has met the
requirements under this clause during such 5-year period in such manner
and at such time as the Secretary determines appropriate, including at
the end of such 5-year period.''
Section 1886(h)(5)(H) of the Act defines ``primary care resident''
as a resident enrolled in an approved medical residency training
program in family medicine, general internal medicine, general
pediatrics, preventive medicine, geriatric medicine, or osteopathic
general practice. We are proposing that a hospital that is applying to
receive additional slots would have to submit data from the 3 most
recent cost reporting periods ending before March 23, 2010 (the date of
enactment) on the number of unweighted FTE residents in these primary
care programs. We note that this primary care average is based on the
hospital's total FTE count that would otherwise be allowable in absence
of the FTE cap; if a hospital is training FTE residents in excess of
its FTE caps, it would still determine the 3-year average based on the
total number of unweighted primary care FTE residents. A total primary
care FTE count, one for IME and one for direct GME, is sufficient for
the hospital for each of these 3 cost reporting periods; a hospital
need not report these data by specialty.
[[Page 46412]]
However, we note that, currently, the Medicare cost report does not
track a hospital's number of primary care residents. For direct GME, on
Worksheet E-3, Part IV, line 3.19, the hospital's number of weighted
primary care and OB/GYN residents is reported. Thus, if a hospital
trains OB/GYN residents in addition to primary care residents, we are
proposing that the OB/GYN count must be subtracted from the number
reported on line 3.19 of Worksheet E-3, Part IV for the hospital's 3
most recent cost reporting periods ending before March 23, 2010. This
would produce a weighted FTE count for direct GME. In any case, the
source documentation for these data is the rotation schedules for the
applicable years. For IME, on Worksheet E, Part A, there is no line
that currently records the number of primary care residents, as the
distinction between primary care and non-primary care residents is only
necessary in the direct GME payment formula (due to the use of a
primary care and OB/GYN PRA and a nonprimary care PRA for certain
years).
Therefore, we are proposing that the applicant hospital must
develop from its rotation schedules three IME FTE primary care counts
to correspond to its three most recent cost reporting periods ending
before March 23, 2010. As part of its application, we are proposing
that the hospital must include the documentation that it used to arrive
at its direct GME and IME primary care FTE counts, including a copy of
Worksheet E-3, Part IV for direct GME, and if the hospital has an OB/
GYN program, the rotation schedules corresponding to the three most
recent cost reporting periods ending prior to March 23, 2010 for OB/
GYN, and the rotation schedules for all primary care residency programs
used to establish the IME primary care FTE count corresponding to the
three most recent cost reporting periods ending prior to March 23,
2010. Although we have considered proposing that a hospital may
demonstrate that it is complying with the requirement to maintain the
primary care average with only a single unweighted FTE count, rather
than one FTE count for direct GME and one FTE count for IME, we believe
that we need to propose to require documentation from both a direct GME
and an IME FTE count because section 5503 of the Affordable Care Act
amended section 1886(d)(5)(B)(v) of the Act to make the entire section
1886(h)(8), of which maintenance of this primary care average is a
part, applicable for purposes of IME. Thus, both section 1886(h) of the
Act for direct GME and section 1886(d)(5)(B) of the Act for IME are
equally impacted by section 5503. Furthermore, we are proposing that
the FTE counts for IME and direct GME used to derive these primary care
averages are subject to audit by the Medicare contractors, and that, as
part of reviews or audits performed by the Medicare contractors in
accordance with their normal audit plans, the Medicare contractors
would check whether a hospital is maintaining its primary care average
in each of the cost reports in the 5-year period as early as tentative
settlement of those five respective cost reports, and may take prompt
action accordingly to adjust a hospital's FTE caps and direct GME and
IME interim payments.
In addition to maintaining this average number of primary care
residents, section 1886(h)(8)(B)(ii)(II) of the Act also requires that
a hospital that receives an increase to its FTE resident caps under
section 1886(h)(8)(B)(i) must ensure that 75 percent of those slots are
used to train primary care or general surgery residents. A hospital
that applies for additional slots may or may not already train at least
75 percent or more of its residents in primary care or general surgery
programs. At a minimum, the applicant hospital is required to maintain
the average number of FTE primary care residents that it trained during
the three most recent cost reporting periods ending prior to March 23,
2010. Further, we are proposing that in addition to the primary care
residents used to maintain the primary care average, the applicant
hospital must separately ensure that at least 75 percent of the
increased FTE cap slots it receives are used to count FTE residents in
primary care or general surgery. We are proposing that the hospital
must be able to document that, during each of the five years in the
five-year period of July 1, 2011 to June 30, 2016, for IME and direct
GME respectively, and for each cost report during those five years,
that not only is it maintaining its primary care average, but that 75
percent of the increased FTE cap slots that it received are being used
to count residents training in primary care or general surgery
programs. For example, Hospital A has a June 30 fiscal year end, an FTE
cap of 100 FTEs, and a total FTE count of 110. In its three most recent
cost reports ending prior to March 23, 2010 (fiscal year end June 30,
2009, June 30, 2008, and June 30, 2007), Hospital A was training 60
primary care FTE residents, 50 primary care FTE residents, and 40
primary care FTE residents respectively. The average number of primary
care FTE residents during those three years is 50. Hospital A applied
for and received 10 additional FTE cap slots under section 5503.
Beginning July 1, 2011, for each cost report ending June 30, 2012, June
30, 2013, June 30, 2014, June 30, 2015, and June 30, 2016, Hospital A
must ensure that it does not train less than 50 primary care FTE
residents, and it must ensure that it trains an additional 7.5 FTEs of
the 10 slots it receives in either primary care or general surgery. In
another example, Hospital B has a December 31 fiscal year end, an FTE
cap of 10 FTEs, and a total FTE count of 12. In its 3 most recent cost
reports ending prior to March 23, 2010 (fiscal year end December 31,
2009, December 31, 2008 and December 31, 2007), Hospital A was training
12 primary care FTE residents in each of the 3 years. The average
number of primary care FTE residents is 12. Hospital B applied for and
received 4 additional FTE cap slots under section 5503. Beginning July
1, 2011 and ending June 30, 2016, Hospital B must ensure that it does
not train less than 12 primary care FTE residents, and it must ensure
that it trains an additional 3 FTEs of the 4 slots it receives in
either primary care or general surgery. We are proposing that the
Medicare contractors would check whether a hospital is maintaining this
75-percent threshold as part of reviews or audits performed by the
Medicare contractors in accordance with their normal audit plans in the
5-year period as early as tentative settlement of those five respective
cost reports, and may take action accordingly to adjust a hospital's
FTE resident caps and direct GME and IME interim payments.
It is possible that there are hospitals that are not currently
training, nor have they trained in any of their three cost reporting
periods ending prior to March 23, 2010, any primary care residents at
all, but that such hospitals are applying for an increase to their FTE
caps for a new primary care or general surgery program that they would
like to start. Such hospitals would have a primary care average of
zero. Because the intent of section 5503 is to try to increase the
number of primary care (or general surgery) residents in training, we
are proposing that such hospitals would be able to apply for additional
slots under section 5503. Should such a hospital receive an FTE cap
increase, we are proposing that 75 percent of the increased FTE cap
slots must be used to count FTE residents in either primary care or
general surgery. We are proposing that a hospital is required to
document in each of the 5 years that it has maintained the primary care
average
[[Page 46413]]
and that at least 75 percent of the slots it receives is used for
training either primary care and/or general surgery residents rather
than only once at the end of the 5-year period. As explained more fully
below, if a hospital has not met these requirements, we believe it
would be less disruptive financially and administratively to a hospital
if we make the adjustment to the hospital's FTE resident caps under
section 1886(h)(8)(B)(iii)(I) and recover any overpayment after 1 year
rather than after the conclusion of the full 5 year monitoring period
under section 1886(h)(8)(B)(ii).
Section 1886(h)(8)(B)(ii) of the Act also states that ``The
Secretary may determine whether a hospital has met the requirements
under this clause during such 5-year period in such manner and at such
time as the Secretary determines appropriate, including at the end of
such 5-year period'' (emphasis added). We are proposing that the ``5-
year period beginning on the date of such increase'' is July 1, 2011
through June 30, 2016, because the effective date of section 5503 is
for portions of cost reporting periods beginning on or after July 1,
2011. Thus, it is during this 5-year period that an ``average number of
full-time equivalent primary care residents'' must be maintained, and
that 75 percent of the additional slots must be trained in primary care
or general surgery, for IME and direct GME respectively. However, the
Secretary is given some discretion as to how and when she determines
whether a hospital is meeting or has met the requirements ``during such
5-year period.'' Although we believe that the 5-year period must be
within July 1, 2011 through June 30, 2016, we believe we have
flexibility to determine which cost reporting periods within that 5-
year period we may use to assess whether the hospital is consistently
meeting the required criteria. For the sake of administrative
simplicity, on behalf of hospitals and the Medicare contractors, we are
proposing that the Medicare contractors, in accordance with their
normal audit plans, would make assessments based on a hospital's fiscal
year when possible, such that the Medicare contractors could make a
first assessment for an initial ``short'' period, then annually as each
of the hospital's fiscal year ends until there is another final
``short'' assessment period that starts after the provider's last
fiscal year end within the 5-year window and runs through June 30,
2016. If a hospital has a June 30 fiscal year end, we are proposing
that the Medicare contractor could assess whether the hospital is
meeting the required criteria five times, starting with its cost
reporting period beginning on July 1, 2011, and ending with its fifth
cost reporting period that starts on July 1, 2015 (and ending June 30,
2016). However, for hospitals that have a fiscal year end of other than
June 30, we are proposing that the Medicare contractors could assess
whether the hospital met the requirements for the portion of its cost
reporting period that occurs after July 1, 2011, its subsequent full
cost reporting periods, and then ending with the portion of the cost
reporting period prior to June 30, 2016. In other words, we are
proposing that the hospital would be considered to meet the required
criteria in ``Year 1'' if it meets the requirements based on an
annualized FTE count from July 1, 2011 through the end of its cost
reporting period; in each of years 2 through 4, it must meet the
requirements based on its next 3 cost reporting periods; and in year 5,
it must meet the requirements based on an annualized FTE count from the
first day of its cost reporting period through June 30, 2016 (which is
the last day on which a hospital has any obligation to meet these
requirements). For example, assume Hospital C has a September 30 fiscal
year end, and receives 16 additional slots under section 5503, and has
a primary care average of 30 FTE residents. We are proposing that
during the period of July 1, 2011 through June 30, 2016, Hospital C
must demonstrate that it is training at least 75 percent of its 16
slots in primary care or general surgery (that is, 12 slots), and that
it maintains a primary care FTE count of 30, as follows:
Year 1--July 1, 2011 to September 30, 2011, with an annualized
count of 3 (that is, 12 divided by 4) additional FTEs in primary care/
general surgery, and an annualized count of 7.5 (that is, 30 divided by
4) FTEs training in primary care residency programs.
Year 2--October 1, 2011 to September 30, 2012, with 12 FTEs in
primary care/general surgery, and 30 FTEs in primary care programs.
Year 3--October 1, 2012 to September 30, 2013, with 12 FTEs in
primary care/general surgery, and 30 FTEs in primary care programs.
Year 4--October 1, 2012 to September 30, 2014, with 12 FTEs in
primary care/general surgery, and 30 FTEs in primary care programs.
Year 5--October 1, 2014 to September 30, 2015, with 12 FTEs in
primary care/general surgery, and 30 FTEs in primary care programs.
Year 6--October 1, 2015 to June 30, 2016, with an annualized count
of 9 additional FTEs in primary care/general surgery, and an annualized
count of 22.5 FTEs training in primary care residency programs.
We are proposing to reserve the right to assess as many times as
necessary in the 5-year period that a hospital is meeting the required
criteria. Furthermore, if a Medicare contractor determines during an
audit that a hospital did not meet the requirements during, for
example, the second year, the contractor could go back and audit the
first year (full, or short period), and make a retroactive adjustment.
We also understand that we should consider that hospitals might not
immediately fill all the slots they receive, particularly because they
are only required to demonstrate the likelihood of filling the slots
within the first three cost reporting periods beginning on or after
July 1, 2011. Accordingly, in the preceding example in which Hospital C
was awarded 16 slots and has a September 30 fiscal year end, assume it
only added 2 actual residents immediately on July 1, 2011. Two
residents equate to 0.5 FTE for the 3-month period of July 1, 2011 to
September 30, 2011. Seventy five percent of 0.5 FTE equals 0.375. We
are proposing that at least 0.375 of the new FTEs added for the period
of July 1, 2011 to September 30, 2011 must be in primary care or
general surgery in order to meet the requirement in ``Year 1.''
In a case where the Medicare contractor determines that a hospital
did not meet the requirements in a cost reporting year within the 5-
year time period, section 1886(h)(8)(B)(iii) of the Act states that
``the Secretary shall--
(I) Reduce the otherwise applicable resident limit of the hospital
by the amount by which such limit was increased under this paragraph;
and
(II) Provide for the distribution of positions attributable to such
reduction in accordance with the requirements of this paragraph.''
Hospitals have different fiscal year ends and are subject to different
audit schedules, which may occur several years after a hospital's cost
report is submitted. Therefore, even though we are proposing that the
Medicare contractors may make adjustments to a hospital's direct GME
and IME payments as early as tentative settlement, it may be several
years after June 30, 2016 before CMS determines the exact number of
reductions, if any, that are applied to the FTE caps of hospitals that
received additional slots, but that failed to meet the requirements
under section 1886(h)(8)(B)(ii) of the Act, discussed above. However,
once we have determined the number of slots available for a second
redistribution, we would distribute them ``in accordance with the
requirements of this
[[Page 46414]]
paragraph.'' That is, we would distribute the slots to hospitals that
applied under this first redistribution and that qualified to receive
the slots they requested, but for whom we did not have sufficient slots
in the ``pool'' to grant them the full number of FTE slots that they
requested. As discussed above in section XVII.D. of this proposed rule,
because of the requirement that 70 percent of the slots be
redistributed to hospitals within States with resident-to-population
ratios in the lowest quartile, it is possible that, after first
distributing slots to hospitals with the highest scores on their CMS
Evaluation Form, there may be some remaining qualifying hospitals
within the same priority level category that receive the same score on
the CMS Evaluation Form. Thus, we would have no way of distinguishing
among these hospitals of equal rank. If this situation occurs, we are
proposing to prorate the remaining amount of slots in the ``70
percent'' pool, and distribute an equal share of slots to these
hospitals of equal rank. If a similar situation occurs within the ``30
percent'' pool, we also are proposing to prorate the remaining amount
of slots in the ``30 percent'' pool and distribute an equal share of
slots to hospitals of equal rank. Accordingly, in the event that there
is a second redistribution process pursuant to section
1886(h)(8)(B)(iii)(II), we are proposing to distribute the slots in the
``pool'' (created by the failure of one or more hospitals to meet the
criteria specified under section 1886(h)(8)(B)(ii)) to those hospitals
that did not receive all of the slots for which they technically
qualified, and for which we had to prorate under the first
redistribution. If we have sufficient slots to fully satisfy the
original requests of those qualifying hospitals, we would assign them
the difference between the prorated amount awarded under the first
redistribution and the amount of slots they requested on their original
application (assuming they actually otherwise qualified for all the
slots they requested). In other words, we would go back to the original
applications and continue to assign slots to those hospitals that
originally qualified to receive slots under section 5503, but for which
we did not have sufficient slots to satisfy their requests. We are
proposing to assign the additional slots in the same priority order as
under the first redistribution process under section 5503, resuming
where we left off, until all the slots have been distributed. After
such point, there would be no further harvesting of slots or
redistribution under section 5503.
We are proposing to add new regulations at Sec.
412.105(f)(1)(iv)(C)(2) for IME and at Sec. 413.79(n) for direct GME
to reflect our proposals regarding hospitals receiving increases to
their FTE resident caps under section 5503, and the requirements that
hospitals must meet in order to keep those FTE slots, and not be
subject to a removal of those FTE slots during the 5-year period of
July 1, 2011 through June 30, 2016.
No Administrative or Judicial Review
Section 5503(a)(3) of the Affordable Care Act amended section
1886(h)(7)(E) of the Act by adding ``or paragraph (8)'' such that
section 1886(h)(7)(E) of the Act now specifies that ``There shall be no
administrative or judicial review under section 1869, 1878, or
otherwise, with respect to determinations made under this paragraph or
paragraph (8).'' As stated in the preceding section regarding reference
cost reports that are under appeal, we believe the fact that Congress
included this language clearly means that the Congress intended for our
determination with regard to FTE resident cap reductions under section
1886(h)(8)(A) to be final, and not subject to appeal. Because of this
statutory language, together with the requirement that all reductions
and increases in FTE resident caps be made effective July 1, 2011, we
do not believe it would be appropriate to allow hospitals (or CMS) to
appeal determinations concerning the FTE cap reductions or the FTE cap
increases) under section 1886(h)(8) of the Act. In addition, as
indicated previously, we believe that Congress intended this provision
to be implemented fairly, but efficiently, avoiding the delays and
uncertainty that would be produced by an appeals process. Furthermore,
we note that, as explained previously in this preamble, as was done
under section 422 of Public Law 108-173, Medicare contractors will
provide hospitals with a time-limited opportunity to review cap
reduction determinations for possible technical errors before they are
finalized.
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[[Page 46417]]
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[[Page 46420]]
Application Process and CMS Central Office and Regional Office Mailing
Addresses for Receiving Increases in FTE Resident Caps
In order for hospitals to be considered for increases in their FTE
resident caps, each qualifying hospital must submit a timely
application. The following information must be submitted on
applications to receive an increase in FTE resident caps:
The name and Medicare provider number of the hospital.
The name of the Medicare contractor to which the hospital
submits its Medicare cost report.
The total number of requested FTE resident slots for
direct GME or IME, or both, up to 75 direct GME FTE and 75 IME FTE per
hospital.
A completed copy of the CMS Evaluation Form for each
residency program for which the hospital intends to use the requested
increase in FTE residents.
Source documentation to support the assertions made by the
hospital on the CMS Evaluation Form.
FTE resident counts for direct GME and IME and FTE
resident caps for direct GME and IME reported by the hospital in the
most recent as-filed cost report. (Include copies of Worksheets E, Part
A, E-3, Part IV, and if a hospital received an increase to its FTE
cap(s) under section 422 of the MMA, a copy of E-3, Part VI).
As part of its application, we are proposing that the
hospital must include the documentation that it used to arrive at its
direct GME and IME primary care FTE counts, including a copy of
Worksheet E-3, Part IV for direct GME, and if the hospital has an OB/
GYN program, the rotation schedules corresponding to the 3 most recent
cost reporting periods ending prior to March 23, 2010 for OB/GYN, and
the rotation schedules for all primary care residency programs used to
establish the IME primary care FTE count corresponding to the 3 most
recent cost reporting periods ending prior to March 23, 2010.
An attestation, signed and dated by an officer or
administrator of the hospital who signs the hospital's Medicare cost
report, of the following information:
``I hereby certify that I understand that misrepresentation or
falsification of any information contained in this application may
be punishable by criminal, civil, and administrative action, fine
and/or imprisonment under federal law. Furthermore, I understand
that if services identified in this application were provided or
procured through payment directly or indirectly of a kickback or
where otherwise illegal, criminal, civil, and administrative action,
fines and/or imprisonment may result. I also certify that, to the
best of my knowledge and belief, it is a true, correct, and complete
application prepared from the books and records of the hospital in
accordance with applicable instructions, except as noted. I further
certify that I am familiar with the laws and regulations regarding
Medicare payment to hospitals for the training of interns and
residents.''
The completed application and supporting documentation (as described
above) must be submitted to the CMS Central Office and the CMS Regional
Office for the region in which the applicant hospital is located. The
application must be received on or before December 1, 2010. The
addresses of the CMS central office and regional offices are listed
below.
CMS Central and CMS Regional Office Mailing Addresses for Applications
for Increases in FTE Resident Caps
Central Office
Centers for Medicare and Medicaid Services (CMS)
Director, Division of Acute Care
7500 Security Boulevard
Mail Stop C4-08-06
Baltimore, Maryland 21244
(410) 786-4548
Region I (Connecticut, Maine, Massachusetts, New Hampshire, Rhode
Island, and Vermont)
Centers for Medicare and Medicaid Services (CMS)
Associate Regional Administrator, Division of Financial Management and
Fee for Service Operations
Region I
JFK Federal Building
Room 23275
Boston, MA 02203
Phone: (617) 565-1331
Region II (New York, New Jersey, U.S. Virgin Islands, and Puerto Rico)
Centers for Medicare and Medicaid Services (CMS)
Associate Regional Administrator, Division of Financial Management and
Fee for Service Operations
Region II
26 Federal Plaza, 38th Floor
New York, NY 10278
Phone: (212) 616-2545
Region III (Delaware, Maryland, Pennsylvania, Virginia and West
Virginia, and the District of Columbia)
Centers for Medicare and Medicaid Services (CMS)
Associate Regional Administrator, Division of Financial Management and
Fee for Service Operations
Region III
Public Ledger Building, Suite 216
150 South Independence Mall West
Philadelphia, PA 19106
Phone: (215) 861-4140
Region IV (Alabama, North Carolina, South Carolina, Florida, Georgia,
Kentucky, Mississippi, and Tennessee)
Centers for Medicare and Medicaid Services (CMS)
Associate Regional Administrator, Division of Financial Management and
Fee for Service Operations
Region IV
Atlanta Federal Center
61 Forsyth Street, SW., Suite 4T20
Atlanta, GA 30303-8909
Phone: (404) 562-7300
Region V (Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin)
Centers for Medicare and Medicaid Services (CMS)
Associate Regional Administrator, Division of Financial Management and
Fee for Service Operations
Region V
233 North Michigan Avenue, Suite 600
Chicago, IL 60601
Phone: (312) 886-6432
Region VI (Arkansas, Louisiana, New Mexico, Oklahoma, and Texas)
Centers for Medicare and Medicaid Services (CMS)
Associate Regional Administrator, Division of Financial Management and
Fee for Service Operations
Region VI
1301 Young Street, Suite 714
Dallas, TX 75202
Phone: (214) 767-6423
Region VII (Iowa, Kansas, Missouri, and Nebraska)
Centers for Medicare and Medicaid Services (CMS)
Associate Regional Administrator, Division of Financial Management and
Fee for Service Operations
Region VII
Richard Bolling Federal Building
Room 235
601 East 12th Street
Kansas City, MO 64106
(816) 564-1843
Region VIII (Colorado, Montana, North Dakota, South Dakota, Utah and
Wyoming)
Centers for Medicare and Medicaid Services (CMS)
Associate Regional Administrator, Division of Financial Management and
Fee for Service Operations
Region VIII
Colorado State Bank Building
1600 Broadway, Suite 700
Denver, CO 80202
[[Page 46421]]
Phone: (303) 844-2111
Region IX (Arizona, California, Hawaii, and Nevada and Territories of
American Samoa, Guam and the Commonwealth of the Northern Mariana
Islands)
Centers for Medicare and Medicaid Services (CMS)
Associate Regional Administrator, Division of Financial Management and
Fee for Service Operations
Region IX
90 7th Street, Suite 5-300 (SW)
San Francisco, CA 94103-6708
Phone: (415) 744-3501
Region X (Alaska, Idaho, Oregon, and Washington)
Centers for Medicare and Medicaid Services (CMS)
Associate Regional Administrator, Division of Medicare Financial
Management
Region X
2201 Sixth Avenue, MS/RX-46
Seattle, WA 98121
Phone: (206) 615-2094
E. Preservation of Resident Cap Positions From Closed Hospitals
(Section 5506 of the Affordable Care Act) (Sec. 412.105(f)(1)(ix)(B)
and Sec. 413.79(o)(2))
1. Background
As we explain in Section XVII.A. of this proposed rule, Medicare
makes both direct GME and IME payments to hospitals that train
residents in approved medical residency training programs. Direct GME
payments are made in accordance with section 1886(h) of the Act, based
generally on hospital-specific PRAs, the number of FTE residents a
hospital trains, and the hospital's Medicare patient share. IME
payments are made in accordance with section 1886(d)(5)(B) of the Act,
based generally on the ratio of the hospital's FTE residents to the
number of hospital beds. Accordingly, the calculation of both direct
GME and IME payments is affected by the number of FTE residents that a
hospital is allowed to count; generally, the greater the number of FTE
residents a hospital counts, the greater the amount of Medicare direct
GME and IME payments the hospital will receive. In an attempt to end
the implicit incentive for hospitals to increase the number of FTE
residents, Congress instituted a cap on the number of allopathic and
osteopathic residents a hospital is allowed to count for direct GME and
IME purposes under the provisions of section 1886(h)(4)(F) of the Act
for direct GME and section 1886(d)(5)(B)(v) of the Act for IME. Dental
and podiatric residents were not included in this statutorily mandated
cap. For most hospitals, the limit, or cap, is the unweighted number of
allopathic and osteopathic FTE residents training in the hospital's
most recent cost reporting period ending on or before December 31,
1996. Thus, each teaching hospital FTE resident cap is unique to the
number of FTE residents that it trained in the hospital's most recent
cost reporting period ending on or before December 31, 1996.
Under existing regulations at Sec. 413.79(h) for direct GME and
Sec. 412.105(f)(1)(ix) for IME, a hospital that is training FTE
residents at or in excess of its FTE resident caps and takes in
residents displaced by the closure of another teaching hospital may
receive a temporary increase to its FTE residents caps so that it may
receive direct GME and IME payment associated with those displaced FTE
residents. However, those temporary FTE resident cap increases are
associated with those specific displaced FTE residents, and the
increases expire as those displaced residents complete their training
program. Thus, if a teaching hospital closes, its direct GME and IME
FTE resident cap slots would be ``lost,'' because those cap slots are
associated with a specific hospital's Medicare provider agreement,
which would be retired upon the hospital's closure. The closure of a
teaching hospital, particularly if it is a large academic medical
center, could mean not only the displacement of hundreds of residents,
but also the permanent loss of hundreds of Medicare-funded residency
training slots and a sophisticated GME infrastructure that could take
many years to rebuild, threatening the availability of health care
services in a community. Section 5506 of the Affordable Care Act
addresses this situation by amending section 1886(h)(4)(H) of the Act
to add a new clause (vi) 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 by the number of FTE resident
positions in the closed hospital's training programs.
Section 5506 of the Affordable Care Act specifically instructs the
Secretary to increase the FTE resident caps for other hospitals based
upon the FTE resident positions in teaching hospitals that closed ``on
or after a date that is 2 years before the date of enactment'' (that
is, March 23, 2008). Although certain of the FTE cap increases granted
pursuant to section 5506 will be based on hospital closures that
occurred prior to this notice and comment rulemaking procedure, the
process we are proposing to establish in the CY 2011 OPPS Final Rule
would also be used for all future teaching hospital closures. We are in
the process of instructing the Medicare contractors to notify us of
every teaching hospital that has closed since March 23, 2008, and of
the direct GME and IME FTE caps for each of those closed hospitals. We
plan to use this information to determine how many slots are currently
available for increases to other hospitals' FTE resident caps.
We note that section 1886(h)(4)(H)(vi)(IV) of the Act, as added by
section 5506(a) of the Affordable Care Act, states that ``The aggregate
number of increases in the otherwise applicable resident limits for the
hospitals under this clause shall be equal to the number of resident
positions in the approved medical residency programs that closed on or
after'' March 23, 2008. For purposes of implementing this section
1886(h)(4)(H)(vi)(IV), we are proposing to interpret ``the number of
resident positions'' to mean the number that is equal to the IME and
direct GME FTE resident caps of a hospital that closed, or will close.
We do not believe the intent of this provision is to distribute and pay
for more FTE resident slots than the amount equal to a closed
hospital's IME and direct GME FTE resident caps, in the instance where
a closed hospital was training more FTE residents than its FTE resident
caps. Further, in the situation where a closed hospital was training
FTE residents below its caps, we believe that for the sake of ensuring
that a community could retain up to its full training strength, we
believe it is appropriate to distribute, not the actual number of slots
the closed hospital had been training prior to its closure, but the
number of FTE resident slots equal to the IME and direct GME FTE caps
of the closed hospital.
2. Definition of a ``Closed Hospital''
Section 1886(h)(4)(H)(vi) of the Act, as added by section 5506(a)
of the Affordable Care Act, states that ``the Secretary shall, by
regulation, establish a process under which, in the case where a
hospital (other than a hospital described in clause (v)) with an
approved medical residency program closes on or after'' March 23, 2008,
the Secretary shall increase the FTE resident caps of other hospitals
accordingly (emphasis added). Under existing regulations at Sec.
489.52 and Sec. 413.79(h), ``closure of a hospital'' means the
hospital terminates its Medicare provider agreement. We are
[[Page 46422]]
proposing to define a ``closed teaching hospital'' for purposes of
section 5506 in a similar manner, but would also specify that the FTE
resident cap slots of the hospital that closed no longer exist as part
of any other hospital's permanent FTE resident cap. Thus, we are
proposing that this provision would not apply to hospitals that declare
bankruptcy but are still participating under the same Medicare provider
agreement, nor would it apply to teaching hospitals that remain open,
but close one or more residency programs. It also would not apply to
mergers, because in the case of a merger, the Medicare provider
agreement of one hospital is subsumed into the provider agreement of
the surviving provider; no provider agreement is retired, even if
operations at one facility are scaled back or ceased.
However, we are proposing that the proposed revised definition of
hospital closure for purposes of implementing section 5506 would apply
in the case of acquisitions, where the new owner retires the Medicare
provider agreement of the hospital it purchased, thus abdicating the
FTE resident cap slots associated with that provider agreement, even if
the new owner will continue to operate the hospital exactly as it had
been operated before the acquisition (that is, makes no changes to the
bed size, infrastructure, services, and GME programs). We believe this
is appropriate because section 5506 of the Affordable Care Act
specifically addresses hospital ``closure'' and ensures preservation of
the FTE cap slots within a community when a teaching hospital does
``close,'' based on specified criteria for redistributing the slots
from the closed hospital to increase the FTE caps for other hospitals.
However, as we explain further below, it is possible for the new
hospital formed in an acquisition to receive preference in receiving an
increase to its FTE resident caps based on redistributed slots from the
closed hospital that it acquired.
Section 1886(h)(4)(H)(vi) of the Act, as added by section 5506(a),
also states that ``the Secretary shall, by regulation, establish a
process under which, in the case where a hospital (other than a
hospital described in clause (v)) with an approved medical residency
program closes * * *'' (emphasis added). A hospital described in
section 1886(h)(4)(H)(v) of the Act is an entity that enters into a
provider agreement pursuant to section 1866(a) of the Act to provide
hospital services on the same physical site previously used by Medicare
Provider No. 05-0578. Accordingly, we are proposing not to redistribute
any FTE cap slots associated with Medicare Provider Number 05-0578.
3. Priority for Hospitals in Certain Areas
Section 1886(h)(4)(H)(vi)(II), as added by section 5506(a) of the
Affordable Care Act, specifies that the Secretary shall distribute the
FTE cap increases in the following priority order, ``with preference
given within each category to hospitals that are members of the same
affiliated group'' (as defined by the Secretary) as the closed
hospital:
First, to hospitals located in the same core-based
statistical area (CBSA) as, or in a CBSA contiguous to, the hospital
that closed.
Second, to hospitals located in the same State as the
closed hospital.
Third, to hospitals located in the same region as the
hospital that closed.
Fourth, if the slots have not yet been fully distributed,
to qualifying hospitals in accordance with the criteria established
under section 5503 (``Distribution of Additional Residency Positions'')
of the Affordable Care Act.
First, we are proposing to use the same pre-reclassification CBSAs
that are used for wage index purposes under the IPPS in determining
which hospitals are located in the same or contiguous CBSAs as the CBSA
in which the hospital that closed was located, without regard to any
reclassifications made under the provisions of Sec. Sec. 412.102,
412.103, 412.230, 412.232, 412.234, and 412.235 of the regulations.
Second, we are proposing to define ``State'' in the second priority
category to include Puerto Rico and the District of Columbia. Third, we
are proposing to define ``region'' in the third priority category as
Census Region, consistent with the use of the term elsewhere in the GME
regulations. (The term is used for purposes of establishing direct GME
PRAs of certain new teaching hospitals at Sec. 413.77(e)(1)(iii).)
Fourth, as specified in the fourth priority category, we are proposing
to employ the criteria for redistribution of residency positions
described in section 5503 of the Affordable Care Act, as implemented in
the proposed revised regulations at Sec. 413.79(n), should there be
any slots not redistributed under the first through third priority
categories.
With regard to members of the same Medicare GME affiliated group,
we are proposing to give priority within each category to hospitals
that are members of the same Medicare GME affiliated group as the
hospital that closed. A Medicare GME affiliated group, as defined at
Sec. 413.75(b), consists of hospitals that enter into a Medicare GME
affiliation agreement, also as defined at Sec. 413.75(b), for the
purpose of cross-training residents and that, under the terms of the
agreement, aggregate and make temporary adjustments to their respective
individual FTE resident caps. To provide flexibility to hospitals that
have affiliated with the hospital that closed, we are proposing to
refer to the most recent Medicare GME affiliation agreement of which
the closed hospital was a member. Hospitals that were listed as
participants of the Medicare GME affiliated group on that most recent
affiliation agreement before the closure of the hospital will receive
preference in receiving FTE cap increases based on the redistributed
slots.
4. Application Process
We are proposing to establish an application process for hospitals
to apply to CMS to receive an increase in FTE caps based on slots from
closed hospitals. Section 5506 of the Affordable Care Act did not
specify an effective date or an application deadline for hospitals to
request an increase to their caps when a hospital closes. Accordingly,
with respect to the first application process to be implemented for
section 1886(h)(4)(H)(vi) of the Act, as added by section 5506(a) of
the Affordable Care Act, and which includes all teaching hospital
closures back to March 23, 2008, we are proposing that the application
deadline would be January 1, 2011. For future teaching hospital
closures, we are proposing that we would inform the public through an
appropriate medium that increases to hospitals' FTE resident caps are
available for redistribution due to the closure of a teaching hospital,
and the application deadline would be 4 months following the issuance
of that notice to the public.
5. Ranking Criteria
Unlike the application process for FTE cap increases under section
1886(h)(8) of the Act as added by section 5503 of the Affordable Care
Act, we are not proposing to establish a ``point'' system to
distinguish between hospitals within each of the first three priority
categories. Rather, within each of the three first statutory priority
categories in section XVII.E.3. of this proposed rule (that is, same or
contiguous CBSAs, same State, and same Region), we are proposing to
rank categories in which we would assign slots first to hospitals that
fall within the first ranking category before assigning slots to those
hospitals that fall within the second ranking category, and would
assign slots to those hospitals that fall within the second ranking
category before assigning slots to hospitals in the
[[Page 46423]]
third ranking category, and so forth. We are not proposing to use these
ranking categories within the fourth priority category because, under
that fourth priority category, the Secretary would use the process
established under section 5503 for section 1886(h)(8) of the Act. In
order to maintain stability in existing GME programs, these proposed
ranking categories generally give preference to applying hospitals that
demonstrate a commitment to continue training residents in the same
programs that the closed hospital operated, or that had a training
relationship with the closed hospital (such as a Medicare GME
affiliation agreement).
Ranking Criterion One. The applying hospital is
requesting the increase in its FTE resident cap(s) because it is
assuming (or assumed) an entire program (or programs) from the hospital
that closed, and the applying hospital is continuing to operate the
program(s) exactly as it had been operated by the hospital that closed
(that is, same residents, same program director, and same (or many of
the same) teaching staff). We are proposing this ranking criterion
because we understand that there are situations where, when a hospital
is acquired and its provider agreement is retired and a new provider
agreement is established in the place of the old one, the new formed
``acquiring'' hospital continues to operate the GME programs seamlessly
and in the same manner as under the previous provider agreement. If
this situation occurs, we believe the new hospital with the new
provider agreement is demonstrating a strong commitment to not only
maintain the GME programs in the community for the long term (that is,
continuity), but to also allow the residents that were at the hospital
when the change in provider agreement occurred to continue to train
there, such that no residents are displaced and no training is
interrupted.
Alternatively, it is possible that perhaps a year or more prior to
a hospital's closure, the hospital closed some or all of its residency
programs, and another hospital assumed an entire program (or programs)
at the time of the residency program's closure, and the applying
hospital has continued to operate that program seamlessly, as it had
been operated at the hospital that ultimately closed. Since the
applying hospital has also demonstrated a strong commitment to
continuity of the residency program(s) in the community by assuming the
program(s) even prior to the other hospital's closure, we are proposing
that the applying hospital would be categorized in Ranking Criterion
One.
Ranking Criterion Two. The applying hospital was listed as
a participant of a Medicare GME affiliated group on the most recent
Medicare GME affiliation agreement of which the closed hospital was a
member before the hospital closed, and under the terms of that Medicare
GME affiliation agreement, the applying hospital received slots from
the hospital that closed, and the applying hospital will use the
additional slots to continue to train at least the number of FTE
residents it had trained under the terms of the Medicare GME
affiliation agreement. We are proposing this ranking criterion because
section 1886(h)(4)(H)(vi) of the Act, as added by section 5506(a) of
the Affordable Care Act, directs the Secretary to give preference to
hospitals that are members of the same affiliated group as the hospital
that closed. We believe that, generally, if the applying hospital was
affiliated to receive slots from the hospital that closed, then the
applying hospital was relying on that number of FTE resident slots that
it received in order to maintain its fair share of the cross-training
of the residents in the jointly operated programs. In the absence of
those slots received from the closed hospital, the applying hospital
may not be able to continue training that number of FTE residents, and
those same residents would not only be displaced from the closed
hospital, but might essentially become ``displaced'' from the
affiliated hospitals in which they were used to doing a portion of
their training. Accordingly, we are proposing this ranking criterion to
allow hospitals that were affiliated with the closed hospitals to at
least maintain their fair share of the training of the residents in the
programs that they had jointly operated with the closed hospital. We
note that we are proposing this ranking criterion regarding affiliated
hospitals as second, after the first ranking criterion regarding
applying hospitals that assume an entire program or programs from the
closed hospital because, even though section 5506 of the Affordable
Care Act directs the Secretary to give preference to members of the
same affiliated group, we believe that a hospital that assumes the
responsibility for an entire program or programs demonstrates a
commitment to maintain the programs to an even greater degree than does
a hospital that was affiliated with the hospital that closed and may
only be maintaining a portion of the residency program or programs.
Ranking Criterion Three. The applying hospital took in
residents displaced by the closure of the hospital, but is not assuming
an entire program or programs, and will use the additional slots to
continue training residents in the same programs as the displaced
residents, even after those displaced residents complete their training
(that is, the applying hospital is permanently expanding its own
existing programs). Similar to Ranking Criterion Two, hospitals fitting
into Ranking Criterion Three also demonstrate a commitment to protect
residents displaced by a hospital's closure, and to ensure that there
is a degree of continuity in the community with respect to the
particular training program or programs that the closed hospital
operated. However, because an applying hospital fitting into this
category was not part of the same Medicare GME affiliated group as the
closed hospital, we are proposing that this category would be ranked as
third, below Ranking Criterion Two which relates to hospitals that were
members of the same affiliated group as the closed hospital.
The next five proposed ranking criteria would apply in the instance
where there are still slots available from the closed hospital after
distributing slots to hospitals falling within the first three ranking
criteria. Thus, hospitals fitting into Ranking Criteria Four through
Eight would not fit into Ranking Criteria One, Two, or Three, but they
can demonstrate that they will use the slots in a manner that is
consistent with current Medicare policy goals, as indicated in section
5503 of the Affordable Care Act, such as using the slots for a
geriatrics or for other primary care residency programs, or for a
general surgery residency program.
Ranking Criterion Four. The applying hospital does not fit
into Ranking Criteria One, Two, or Three, and will use additional slots
to establish a new or expand an existing geriatrics residency program.
Ranking Criterion Five. The applying hospital does not fit
into Ranking Criteria One, Two, or Three, is located in a Primary Care
HPSA, and will use all the additional slots to establish a new or
expand an existing primary care residency program.
Ranking Criterion Six. The applying hospital does not fit
into Ranking Criteria One, Two, or Three, and will use all the
additional slots to establish a new or expand an existing primary care
residency program.
Ranking Criterion Seven. The applying hospital does not
fit into Ranking Criteria One, Two, or Three, and will use all the
additional slots to establish a new or expand an existing general
surgery residency program.
[[Page 46424]]
Ranking Criterion Eight. The applying hospital does not
fit into Ranking Criteria One through Seven.
6. Demonstrated Likelihood of Filling the Positions Within a Certain
Time Period
Section 1886(h)(4)(H)(vi) of the Act, as added by section 5506(a)
of the Affordable Care Act, does not place a limit on the number of
slots an applying hospital may request, although under section
1886(h)(4)(H)(iv)(IV) of the Act, the Secretary must ensure that the
aggregate number of increases to hospitals' FTE residents caps are
equal to the FTE residents caps of the hospital that closed. However,
section 1886(h)(4)(H)(iv)(III) of the Act specifies that the Secretary
may only award slots to an applying hospital ``if the Secretary
determines that the hospital has demonstrated a likelihood of filling
the positions made available under this clause within 3 years.'' We are
proposing that hospitals must provide documentation to demonstrate the
likelihood of filling requested slots under section 5506 within 3
years. For example, the applying hospital would document that it does
not have sufficient room under its FTE resident caps to take in the
additional residents, and has approval from the relevant accrediting
body to take over the closed hospital's residency program(s), or expand
its own residency program(s) to reflect a permanent commitment to train
additional residents. We are proposing that ``within 3 years'' would
mean within the 3 academic years immediately following the application
deadline to receive slots after a particular hospital closes. For
example, where the application deadline is January 1, 2011, the
immediately following academic year is July 1, 2011, and therefore,
hospitals must demonstrate the likelihood of filling their slots by
June 30, 2014.
7. No Duplication of FTE Cap Slots
Section 5506(d) of the Affordable Care Act specifies that ``the
Secretary shall give consideration to the effect of the amendments made
by this section on any temporary adjustment to a hospital's FTE cap
under Sec. 413.79(h) * * * (as in effect on the date of enactment of
this Act) in order to ensure that there is no duplication of FTE slots
* * *'' Under existing regulations at Sec. 413.79(h), hospitals that
take in residents that are displaced by the closure of another hospital
may receive temporary increases to their FTE resident caps so that they
may receive payment for training the specific displaced residents. The
temporary cap adjustment lasts only for the duration of a specific
displaced resident's training. In distributing slots permanently under
section 5506, we may need to be cognizant of the number of FTE
residents for whom a temporary FTE cap adjustment was provided, and
when those residents will complete their training, at which point the
temporary slot associated with those displaced residents would be
available for permanent redistribution.
We believe that it will only be necessary to delay permanent
assignment of FTE cap slots in instances where if, after fulfilling the
requests of hospitals that qualify to receive additional slots under
Ranking Criteria One, Two, and Three, there are still excess slots
available. In the case where an applying hospital fits within Ranking
Criterion One, we are proposing to revise the existing regulations at
Sec. 413.79(h) limiting temporary cap adjustments for displaced
residents by the number of FTE residents in the program(s) in which the
applying hospital is operating seamlessly. We are proposing to
immediately assign permanently that number of FTE slots to the
qualifying hospital. For example, if teaching hospital B assumes an
entire internal medicine program with 20 FTEs from closed hospital A,
no temporary FTE cap adjustment under Sec. 413.79(h) would be needed
for those internal medicine residents, and teaching hospital B would
immediately receive a permanent FTE resident cap increase of 10 FTE
residents. Similarly, in the case where an applying hospital fits
within Ranking Criterion Two, we are proposing to revise the existing
regulations at Sec. 413.79(h) limiting temporary cap adjustments for
displaced residents by the number of FTE residents that the applying
hospital received under the terms of the affiliation agreement from the
closed hospital. We are proposing to immediately assign permanently
that number of FTE slots to the qualifying hospital. For example, if
teaching hospital D had received 30 FTE slots from closed hospital C
under the terms of a Medicare GME affiliation agreement for the
purposes of a shared rotational arrangement (as defined at Sec.
413.75(b)) for a general surgery program, teaching hospital D would
immediately receive a permanent FTE resident cap increase of 30 FTE
residents, which would enable hospital D to continue to receive direct
GME and IME payment for its share of training 30 general surgery
residents.
Lastly, in the case where an applying hospital fits within Ranking
Criterion Three, we are proposing to revise Sec. 413.79(h) to provide
for temporary cap adjustments for displaced residents by the number of
displaced FTE residents the applying hospital takes in, and to
immediately assign permanently that number of FTE slots to the
qualifying hospital. For example, if Hospital E takes in three FTE
displaced residents in a family medicine program, and not only trains
those three displaced residents until they complete their training, but
permanently expands its existing family medicine program such that it
will add three more FTEs in the place of three that completed their
training, we would immediately assign three FTEs permanently to
Hospital E, bypassing any temporary adjustment under Sec. 413.79(h).
Accordingly, there would be no duplication of FTE slots when
distributing slots to hospitals that qualify under the first three
ranking criteria.
If, after distributing the slots from a closed hospital to increase
the FTE caps for applying hospitals that fall within Ranking Criteria
One, Two, and Three, there are still excess slots available, it is
possible that those excess slots might be associated with displaced
residents for whom temporary cap adjustments under Sec. 413.79(h) are
necessary. That is, it is possible that in the case where applying
hospitals do not permanently assume all of the closed hospital's
residents and programs, temporary cap transfers under Sec. 413.79(h)
would be necessary to allow the remaining residents to complete their
training. Therefore, we are proposing to distribute the slots
accordingly to increase the FTE resident caps for hospitals that fall
within Ranking Criteria Four through Seven. However, to avoid duplicate
FTE counting, we would only permanently assign the slots to the
qualified hospitals falling within Ranking Criteria Four through Seven
once the displaced residents have completed their training and their
temporary cap adjustments have expired.
We are proposing to add new regulations text at Sec.
412.105(f)(1)(ix)(B) for IME and Sec. 413.79(o)(2)) for direct GME to
reflect the provisions of section 5506 of the Affordable Care Act. In
addition, we have proposed some very minor changes to direct GME and
IME existing text in order to clarify meaning and standardize the
terminology that is used throughout.
8. Other Payment Issues Regarding Hospitals That Receive Increase in
FTE Caps Based on Slots From Closed Hospitals
We note that section 1886(h)(4)(H)(vi) of the Act, as added by the
Affordable Care Act, makes no reference to section 1886(h)(4)(G) or
1886(d)(5)(B)(vi)(II) of
[[Page 46425]]
the Act, which are the provisions concerning the rolling average count
of FTE residents. Furthermore, there is no mention of section
1886(d)(5)(B)(vi)(I) of the Act, the provision regarding the cap on the
IME resident-to-bed ratio, in section 1886(h)(4)(H)(vi) either. That
is, the statute does not provide for an exclusion from application of
the rolling average for residents counted as a result of FTE cap
increases under section 1886(h)(4)(H)(vi) of the Act, nor does the
statute exempt these residents from the application of the cap on the
IME resident-to-bed ratio. In light of the absence of a specific
directive in section 1886(h)(4)(H)(vi) of the Act exempting those
residents from application of the rolling average for direct GME and
IME, and the cap on the IME resident-to-bed ratio, and with no apparent
reason to treat residents counted as a result of the FTE cap increases
under section (h)(4)(H)(vi) of the Act differently, we are proposing to
require that if a hospital increases its direct GME or IME FTE count of
residents as a result of an FTE resident cap increase under section
1886(h)(4)(H)(vi) of the Act, those FTE residents would be immediately
subject to the rolling average calculation and the cap on the IME
resident-to-bed ratio.
We also note that section 1886(h)(4)(H)(vi) of the Act for direct
GME and section 1886(d)(5)(B)(v) of the Act for IME does not specify
use of a special direct GME PRA or IME multiplier for residents counted
by a hospital under an FTE cap increase received after the closure of
another hospital. Therefore, we are proposing that residents counted by
a hospital under a permanent adjustment to the hospital's FTE resident
caps under the provisions of section 5506 of the Affordable Care Act
would be paid for using the receiving hospital's otherwise applicable
direct GME PRA (which is hospital-specific) and IME multiplier (which
is the same for all hospitals). Further, as we have proposed with
respect to FTE resident cap increases awarded under section 5503
(section XVII.D. of this proposed rule), we are proposing that these
slots may not be used as part of the aggregate FTE resident cap under a
Medicare GME affiliation agreement. We believe this prohibition is
appropriate given that the receiving hospital has demonstrated that it
needs the additional slots, and therefore, those slots should remain at
the receiving hospital.
9. Application--No Reopening of Settled Cost Reports
Section 5506(c) of the Affordable Care Act specifies that the
changes made by the provisions of sections 5506(a) and (b) should not
be applied in a manner that would require the reopening of settled cost
reports for which there is not a pending, jurisdictionally proper
appeal on direct GME or IME payments as of March 23, 2010 (the date of
the enactment of Pub. L. 111-148). Such language would typically be
appropriate for a provision with a retroactive effective date (such as
section 5505), and since section 5506 does not have a retroactive
effective date, we are unsure of the purpose of this language in
section 5506. Nevertheless, we are proposing to reflect this provision
in the proposed revisions under Sec. 412.105(f)(1)(ix)(B), and Sec.
413.79(o)(2)(ii) of the regulations. In addition, as we explained
previously regarding sections 5504 and 5505, we are proposing to
interpret ``pending, jurisdictionally proper appeal on direct GME or
IME payments'' to mean that in order for a hospital to request a change
to its FTE count, direct GME or IME respectively, the ``pending,
jurisdictionally proper appeal'' must be specific to direct GME or IME
respectively. For example, in order for a hospital to increase its FTE
count with regard to an Affordable Care Act provision that is unique to
IME (such as inclusion in the IME count of didactic time occurring in
the hospital as specified by new section 1886(d)(5)(B)(x)(II)), the
hospital's ``pending, jurisdictionally proper appeal'' must be on an
IME issue; IME FTEs or the available bed count. However, if the
hospital's ``pending, jurisdictionally proper appeal'' is on an issue
that only affects direct GME payments, such as the initial residency
period or the Medicare patient load, that appeal would not be
sufficient in order for the hospital to increase its FTE count with
regard to an Affordable Care Act provision that is unique to IME, such
as didactic time in the hospital setting.
BILLING CODE 4120-01-P
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BILLING CODE 4120-01-C
In order for hospitals to be considered for increases in their FTE
resident caps, each qualifying hospital must submit a timely
application. The following information must be submitted on
applications to receive an increase in FTE resident caps:
The name and Medicare provider number, and Medicare
contractor (to which the hospital submits its cost report) of the
hospital.
The total number of requested FTE resident slots for
direct GME or IME, or both.
A completed copy of the CMS Evaluation Form for each
residency program for which the hospital intends to use the requested
increase in FTE residents.
Source documentation to support the assertions made by the
hospital on the CMS Evaluation Form.
FTE resident counts for direct GME and IME and FTE
resident caps for direct GME and IME reported by the hospital in the
most recent as-filed cost report. (Include copies of Worksheets E, Part
A, E-3, Part IV, and if a hospital received an increase to its FTE
cap(s) under section 422 of the MMA, a copy of E-3, Part VI).
An attestation, signed and dated by an officer or
administrator of the hospital who signs the hospital's Medicare cost
report, of the following information:
``I hereby certify that I understand that misrepresentation or
falsification of any information contained in this application may
be punishable by criminal, civil, and administrative action, fine
and/or imprisonment under federal law. Furthermore, I understand
that if services identified in this application were provided or
procured through payment directly or indirectly of a kickback or
where otherwise illegal, criminal, civil, and administrative action,
fines and/or imprisonment may result. I also certify that, to the
best of my knowledge and belief, it is a true, correct, and complete
application prepared from the
[[Page 46431]]
books and records of the hospital in accordance with applicable
instructions, except as noted. I further certify that I am familiar
with the laws and regulations regarding Medicare payment to
hospitals for the training of interns and residents.''
The completed application and supporting documentation (as
described above) must be submitted to the CMS Central Office and the
CMS Regional Office for the region in which the applicant hospital is
located. The addresses of the CMS Central Office and Regional Offices
are listed below.
CMS Central and CMS Regional Office Mailing Addresses for Applications
for Increases in FTE Resident Caps
Central Office
Centers for Medicare and Medicaid Services (CMS)
Director, Division of Acute Care
7500 Security Boulevard
Mail Stop C4-08-06
Baltimore, Maryland 21244
(410) 786-4548
Region I (Connecticut, Maine, Massachusetts, New Hampshire, Rhode
Island, and Vermont)
Centers for Medicare and Medicaid Services (CMS)
Associate Regional Administrator, Division of Financial Management and
Fee for Service Operations
Region I
JFK Federal Building
Room 23275
Boston, MA 02203
Phone: (617) 565-1331
Region II (New York, New Jersey, U.S. Virgin Islands, and Puerto Rico)
Centers for Medicare and Medicaid Services (CMS)
Associate Regional Administrator, Division of Financial Management and
Fee for Service Operations
Region II
26 Federal Plaza, 38th Floor
New York, NY 10278
Phone: (212) 616-2545
Region III (Delaware, Maryland, Pennsylvania, Virginia and West
Virginia, and the District of Columbia)
Centers for Medicare and Medicaid Services (CMS)
Associate Regional Administrator, Division of Financial Management and
Fee for Service Operations
Region III
Public Ledger Building, Suite 216
150 South Independence Mall West
Philadelphia, PA 19106
Phone: (215) 861-4140
Region IV (Alabama, North Carolina, South Carolina, Florida, Georgia,
Kentucky, Mississippi, and Tennessee)
Centers for Medicare and Medicaid Services (CMS)
Associate Regional Administrator, Division of Financial Management and
Fee for Service Operations
Region IV
Atlanta Federal Center
61 Forsyth Street, S.W., Suite 4T20
Atlanta, GA 30303-8909
Phone: (404) 562-7300
Region V (Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin)
Centers for Medicare and Medicaid Services (CMS)
Associate Regional Administrator, Division of Financial Management and
Fee for Service Operations
Region V
233 North Michigan Avenue, Suite 600
Chicago, IL 60601
Phone: (312) 886-6432
Region VI (Arkansas, Louisiana, New Mexico, Oklahoma, and Texas)
Centers for Medicare and Medicaid Services (CMS)
Associate Regional Administrator, Division of Financial Management and
Fee for Service Operations
Region VI
1301 Young Street, Suite 714
Dallas, TX 75202
Phone: (214) 767-6423
Region VII (Iowa, Kansas, Missouri, and Nebraska)
Centers for Medicare and Medicaid Services (CMS)
Associate Regional Administrator, Division of Financial Management and
Fee for Service Operations
Region VII
Richard Bolling Federal Building
Room 235
601 East 12th Street
Kansas City, MO 64106
(816) 564-1843
Region VIII (Colorado, Montana, North Dakota, South Dakota, Utah and
Wyoming)
Centers for Medicare and Medicaid Services (CMS)
Associate Regional Administrator, Division of Financial Management and
Fee for Service Operations
Region VIII
Colorado State Bank Building
1600 Broadway, Suite 700
Denver, CO 80202
Phone: (303) 844-2111
Region IX (Arizona, California, Hawaii, and Nevada and Territories of
American Samoa, Guam and the Commonwealth of the Northern Mariana
Islands)
Centers for Medicare and Medicaid Services (CMS)
Associate Regional Administrator, Division of Financial Management and
Fee for Service Operations
Region IX
90 7th Street, Suite 5-300 (SW)
San Francisco, CA 94103-6708
Phone: (415) 744-3501
Region X (Alaska, Idaho, Oregon, and Washington)
Centers for Medicare and Medicaid Services (CMS)
Associate Regional Administrator, Division of Financial Management and
Fee for Service Operations
Region X
2201 Sixth Avenue, MS/RX-46
Seattle, WA 98121
Phone: (206) 615-2094
XVIII. Proposed Changes to Whole Hospital and Rural Provider Exceptions
to the Physician Self-Referral Prohibition and Related Changes to
Provider Agreement Regulations
A. Background
Section 1877 of the Act, also known as the physician self-referral
law: (1) Prohibits a physician from making referrals for certain
``designated health services'' (DHS) payable by Medicare to an entity
with which he or she (or an immediate family member) has a financial
relationship (ownership or compensation), unless an exception applies;
and (2) prohibits the entity from filing claims with Medicare (or
billing another individual, entity, or third party payer) for those DHS
furnished as a result of a prohibited referral. The Act establishes a
number of specific exceptions and grants the Secretary the authority to
create regulatory exceptions that pose no risk of program or patient
abuse.
Section 1877(d) of the Act sets forth additional exceptions related
to ownership or investment interests held by a physician (or an
immediate family member of a physician) in an entity that furnishes
DHS. Section 1877(d)(1) of the Act provides that an ownership or
investment interest in a hospital located in Puerto Rico shall not be
considered to be an ownership or investment interest. Section
1877(d)(2) of the Act provides an exception for ownership or investment
interests in rural providers. In order for an entity to qualify for the
exception, the DHS must be furnished in a rural area (as defined in
section 1886(d)(2) of the Act) and substantially
[[Page 46432]]
all of the DHS furnished by the entity are furnished to individuals
residing in a rural area. Section 1877(d)(3) of the Act provides an
exception, known as the ``whole hospital'' exception, for ownership or
investment interests in a hospital located outside of Puerto Rico,
provided that the referring physician is authorized to perform services
at the hospital and the ownership or investment interest is in the
hospital itself (and not merely in a subdivision of the hospital).
B. Changes Made by the Affordable Care Act Relating to the Whole
Hospital and Rural Provider Exceptions to Ownership and Investment
Prohibition
Section 6001(a) of the Affordable Care Act amended the whole
hospital and rural provider exceptions to impose additional
restrictions on physician ownership or investment in hospitals to
qualify for such exceptions. The statute defines a ``physician owner or
investor'' in a hospital as a physician or an immediate family member
of a physician who has a direct or indirect ownership or investment
interest in the hospital. We will refer to hospitals with such
``physician owners or investors'' as ``physician-owned hospitals.''
Section 6001(a)(2) of the Affordable Care Act provides that in
order to satisfy the whole hospital exception, a physician-owned
hospital must meet the requirements described in a new section
1877(i)(1) of the Act no later than September 23, 2011. Section
6001(a)(1) amended the rural provider exception to require that
hospitals located in rural areas also satisfy the requirements of new
section 1877(i)(1) of the Act no later than September 23, 2011.
Section 6001(a)(3) of the Affordable Care Act, as amended by the
HCERA, sets forth the terms of new section 1877(i)(1) of the Act. Under
section 1877(i)(1) of the Act, a hospital must:
(1) Have physician owners or investors and a provider agreement in
effect no later than December 31, 2010;
(2) Not expand facility capacity beyond the number of operating
rooms, procedure rooms, and beds for which the hospital was licensed as
of March 23, 2010, unless an exception is granted by the Secretary;
(3) Comply with certain reporting and disclosure requirements and
not condition any physician ownership or investment interests directly
or indirectly on a physician making or influencing referrals to or
generating other business for the hospital;
(4) Comply with certain requirements designed to ensure that all
ownership and investment interests in the hospital are bona fide;
(5) Inform patients before admission if the hospital does not have
a physician available on the premises during all hours and receive a
signed acknowledgment that the patient understands this fact; and
(6) Not have been converted from an ASC on or after March 23, 2010.
In addition, section 1877(i)(2) of the Act requires the Secretary
to collect, publish, and update on an annual basis on the CMS Web site
(http://www.cms.hhs.gov) the physician and other ownership information
submitted by hospitals under section 1877(i)(1)(C)(i) of the Act.
Section 1877(i)(3) of the Act requires the Secretary to create an
exception process related to the prohibition on expansion of facility
capacity and publish in the Federal Register the final decision with
respect to each applicant hospital.
Section 6001(b)(1) of the Affordable Care Act requires the
Secretary to establish policies and procedures to ensure compliance
with the requirements described in section 1877(i)(1) of the Act, which
may include unannounced site reviews of hospitals. Section 6001(b)(2)
of the Affordable Care Act requires the Secretary, beginning no later
than May 1, 2012, to conduct audits to determine whether hospitals are
in compliance with the requirements of new section 1877(i)(1).
As noted above, physician-owned hospitals must meet the
requirements of new section 1877(i)(1) of the Act not later than 18
months after the date of enactment (that is, by September 23, 2011). We
have received numerous inquiries concerning how this language relates
to several of the requirements set forth in section 1877(i)(1) of the
Act that specify earlier deadlines. We believe that compliance with all
requirements must occur no later than September 23, 2011, and failure
to satisfy earlier deadlines will preclude use of the revised
exceptions after the earlier deadline has passed. For example, section
1877(i)(1)(A) of the Act provides that the hospital must have had
physician ownership or investment on December 31, 2010, and a provider
agreement in effect on that date. Failure to obtain a provider
agreement that is effective on or before December 31, 2010, will
preclude use of the revised rural provider and whole hospital
exceptions on and after January 1, 2011. Another example can be seen in
section 1877(i)(1)(D)(i) of the Act, which provides that the percentage
of the total value of physician ownership or investment interests held
in the hospital, in the aggregate, must not exceed such percentage as
of March 23, 2010. Therefore, if a hospital has no physician ownership
or investment as of March 23, 2010, and later adds physician owners or
investors, the hospital will not satisfy the whole hospital and rural
provider exceptions. Most of the provisions within section 1877(i)(1)
of the Act do not specify an explicit deadline for compliance. Thus, we
are proposing that the deadline for compliance with all provisions
within section 1877(i)(1) of the Act that do not contain an explicit
deadline is September 23, 2011, that is, 18 months after the date of
enactment.
Below, we discuss changes we are proposing to make to our
regulations in response to section 6001 of the Affordable Care Act, as
amended.
C. Proposed Changes to Physician Self-Referral Regulations
In order to conform our regulations to the amendments made to the
rural provider exception by section 6001(a)(1) of the Affordable Care
Act, we are proposing to revise Sec. 411.356(c)(1) to specify that, in
the case where the rural provider is a hospital, the hospital must meet
the requirements of proposed new Sec. 411.362 no later than September
23, 2011.
Similarly, we are proposing to revise Sec. 411.356(c)(3) to add a
new paragraph (iv) that provides that the hospital must meet the
requirements in new Sec. 411.362 not later than September 23, 2011. In
new Sec. 411.362, we set forth the additional requirements for both
exceptions as mandated by section 1877(i)(1) of the Act.
1. Physician Ownership and Provider Agreement
Section 1877(i)(1)(A) of the Act requires that, in order to use the
rural provider and whole hospital exception under section 1877(D)(3)(d)
of the Act, the hospital must have physician ownership or investment on
December 31, 2010, and a provider agreement under section 1866 of the
Act in effect on this date. We are proposing to incorporate these
requirements in Sec. 411.362(b)(1) of the regulations.
Section 1877(i)(5) of the Act defines a ``physician owner or
investor'' as a physician (or an immediate family member of such
physician) with a direct or an indirect ownership or investment
interest in the hospital. We are proposing to incorporate this
statutory definition in Sec. 411.362(a)(1) of the regulations.
[[Page 46433]]
2. Limitation on Expansion of Facility Capacity
Section 1877(i)(1)(B) of the Act requires that the number of
operating rooms, procedure rooms, and beds for which the hospital is
licensed at any time on or after March 23, 2010, be no greater than the
number of operating rooms, procedure rooms, and beds for which the
hospital was licensed on that date. However, section 1877(i)(3)(C) of
the Act authorizes the Secretary to permit a physician-owned hospital
to increase capacity above its ``baseline number of operating rooms,
procedure rooms, and beds.'' Section 1877(i)(3)(C)(iii) of the Act, as
amended by section 1106(2)(B) of the HCERA, defines the term ``baseline
number of operating rooms, procedure rooms, and beds'' to mean ``the
number of operating rooms, procedure rooms, and beds for which the
hospital is licensed as of [March 23, 2010] (or, in the case of a
hospital that did not have a provider agreement in effect as of that
date, but does have an agreement in effect on December 31, 2010, the
effective date of such provider agreement).'' Although section
1877(i)(1)(B) of the Act does not contain language regarding facility
capacity as of the effective date of a provider agreement issued
between March 23, 2010 and December 31, 2010, we must read sections
1877(i)(1)(B) and 1877(i)(3)(C)(iii) of the Act together and interpret
them harmoniously. Accordingly, in proposed Sec. 411.362(b)(2), we
specify that the hospital will be limited to the number of operating
rooms, procedure rooms, and beds for which the hospital is licensed on
March 23, 2010, or if the hospital did not have a provider agreement in
effect as of that date, but does have an agreement in effect on
December 31, 2010, the effective date of such provider agreement.
The limitation on expansion of facility capacity applies to
operating rooms, procedure rooms, and beds for which the hospital is
licensed. It is important to note that the limitation on expansion
applies to operating rooms and procedure rooms regardless of whether a
State licenses these rooms. Referrals are prohibited if made by
physician owners and investors after facility expansion and prior to
the Secretary's granting of an exception to the capacity restriction.
Exceptions for expanding facility capacity will protect only those
referrals made after the exception is granted.
Section 1877(i)(3)(G) of the Act specifies that ``the term
`procedure rooms' includes rooms in which catheterizations,
angiographies, angiograms, and endoscopies are performed, except such
term shall not include emergency rooms or departments (exclusive of
rooms in which catheterizations, angiographies, angiograms, and
endoscopies are performed).'' Under our proposed definition of
procedure rooms at Sec. 411.362(a)(2), the term is limited to the
types of rooms specified in the statute. Although the statute would
permit us to define ``procedure rooms'' to include rooms where other
services are performed, we are not proposing to do so at this time. We
encourage public comments on whether ``procedure rooms'' should include
rooms where additional services, such as CT or PET scans, or other
services, are performed.
Section 1877(i)(3)(A) of the Act gives the Secretary until January
1, 2012, to promulgate regulations concerning the process for a
hospital to apply for an exception and provides that the implementation
of this process must be completed by February 1, 2012. We plan to issue
a separate rulemaking document that will provide for implementation of
this exceptions process.
3. Preventing Conflicts of Interest
Section 1877(i)(1)(C)(i) of the Act requires the hospital to submit
to the Secretary an annual report containing a detailed description of
the identity of each physician owner or investor and any other owners
or investors of the hospital, and the nature and extent of all
ownership and investment interests in the hospital. We plan to propose
procedures for this reporting requirement in a separate rulemaking.
Section 1877(i)(1)(C)(ii)-(iv) of the Act requires hospitals to:
(1) Develop procedures requiring a referring physician owner or
investor to disclose (in time to permit the patient to make a
meaningful decision about receipt of care) his or her ownership
interest to the patient and, if applicable, the treating physician's
ownership or investment interest; (2) not condition any physician
ownership or investment interests either directly or indirectly on the
physician making or influencing referrals to the hospital or otherwise
generating business for the hospital; and (3) disclose on any public
Web site for the hospital and in any public advertising that it is
owned or invested in by physicians. Compliance with these three
requirements must be achieved no later than September 23, 2011.
To incorporate these requirements into our regulations, we are
proposing to: (1) Add Sec. 411.362(b)(3)(ii)(A) to specify that a
hospital must require each referring physician owner or investor to
agree, as a condition of continued medical staff membership or
admitting privileges, to provide written disclosure of his or her
ownership or investment interest in the hospital (and, if applicable,
the treating physician's ownership or investment interest in the
hospital) to all patients the physician refers to the hospital, at the
time the referral is made; (2) add Sec. 411.362(b)(3)(ii)(B) to
specify that a hospital may not condition any physician ownership or
investment interests either directly or indirectly on the physician
owner or investor making or influencing referrals to the hospital or
otherwise generating business for the hospital; and (3) add Sec.
411.362(b)(3)(ii)(C) to specify that the hospital must disclose on any
public Web site for the hospital and in any public advertising that the
hospital is owned or invested in by physicians.
Proposed Sec. 411.362(b)(3)(ii)(A) defines the procedures that a
hospital must have in place to require its physician owners and
investors to make certain patient disclosures. We do not believe the
disclosures to be made by physicians will be burdensome. For example, a
physician owner or investor could provide a written, form notice to
each patient that discloses the physician's ownership or investment
interest in the hospital, informs the patient that his or her treating
physician may have an ownership or investment interest in the hospital,
and directs the patient to review an attached list identifying all
other physician owners or investors in the hospital. This notice may be
used by the patient to make a meaningful decision regarding his or her
receipt of care.
We are soliciting public comments on several different issues
relating to preventing conflicts of interest. First, we are seeking
public comments on the benefits and drawbacks of our proposal,
discussed above, relating to the procedures hospitals must have in
place to require referring physician owners and investors to make the
patient disclosures set forth in section 1877(i)(1)(C)(ii) of the Act.
We are interested in receiving information about other methods and
alternative approaches to address this issue and what should constitute
sufficient hospital procedures to require such disclosures to a patient
by a referring physician owner or investor.
Second, we are aware that a patient may have multiple conditions
for which there are a variety of physician specialists who are
responsible for different aspects of a patient's care, even though the
statute refers to a single ``treating physician.'' We are not
[[Page 46434]]
proposing to define ``treating physician.'' We will consider treating
physicians to be those physicians who are responsible for any aspect of
a patient's care or treatment. We welcome public comments on this
approach.
Finally, we encourage public comments on the methods a hospital
should be required to use in disclosing its physician ownership or
investment in public advertising pursuant to section 1877(i)(1)(C)(iv)
of the Act. For example, we are interested in comments on whether a
hospital should be required to disclose physician ownership or
investment on its homepage, any particular page on its Web site (for
example, an ``About Us'' page), or all pages on its Web site; the types
of media that constitute, or do not constitute, public advertising; and
whether a minimum font size should be required for the disclosure.
4. Ensuring Bona Fide Investment
Section 1877(i)(1)(D) of the Act sets forth seven different
requirements related to ensuring bona fide investment in order for
hospitals to qualify for the rural provider and whole hospital
exceptions set forth in the physician self-referral law. First, the
percentage of the total value of the ownership or investment interests
held in the hospital, or in an entity whose assets include the
hospital, by physician owners or investors in the aggregate may not
exceed such percentage as of March 23, 2010. Second, any ownership or
investment interests that the hospital offers to a physician owner or
investor must not be offered on more favorable terms than the terms
offered to a person who is not a physician owner or investor. Third,
the hospital (or any owner or investor in the hospital) must not
directly or indirectly provide loans or financing for any investment in
the hospital by a physician owner or investor. Fourth, the hospital (or
any owner or investor in the hospital) must not directly or indirectly
guarantee a loan, make a payment toward a loan, or otherwise subsidize
a loan, for any individual physician owner or investor or group of
physician owners or investors that is related to acquiring any
ownership or investment interest in the hospital. Fifth, ownership or
investment returns must be distributed to each owner or investor in the
hospital in an amount that is directly proportional to the ownership or
investment interest of such owner or investor in the hospital. Sixth,
physician owners and investors must not receive, directly or
indirectly, any guaranteed receipt of or right to purchase other
business interests related to the hospital, including the purchase or
lease of any property under the control of other owners or investors in
the hospital or located near the premises of the hospital. Lastly, the
hospital must not offer a physician owner or investor the opportunity
to purchase or lease any property under the control of the hospital or
any other owner or investor in the hospital on more favorable terms
than the terms offered to an individual who is not a physician owner or
investor. We note that additional or different factors may be relevant
to a determination of whether an investment is bona fide for purposes
of complying with other laws, including fraud and abuse laws.
We are proposing to add Sec. 411.362(b)(4) to incorporate these
provisions in our regulations. We recognize that section 1877(i)(1)(A)
of the Act provides that the hospital must have had physician ownership
or investment on December 31, 2010, while section 1877(i)(1)(D)(i) of
the Act assumes the existence of physician ownership or investment on
March 23, 2010 and further provides that the percentage of the total
value of physician ownership or investment interests held in the
hospital, in the aggregate, on that date must not increase. Reading
these provisions together, we conclude the following: (i) If a hospital
had no physician ownership or investment as of March 23, 2010, it will
not qualify for the whole hospital or rural provider exceptions if it
adds any physician owners or investors after that date; and (ii) if a
hospital had physician ownership or investment as of March 23, 2010, it
may reduce the number of physician owners or investors, provided that
the percentage of the total value of physician ownership or investment
interests, in the aggregate, remains the same or decreases.
The second through seventh requirements tied to ensuring bona fide
investment (sections 1877(i)(1)(D)(ii) through 1877(i)(1)(D)(vii) of
the Act) do not specify any deadlines for compliance. Accordingly,
compliance with the second through seventh requirements must be
achieved no later than September 23, 2011.
If we determine that further guidance related to any aspect of
section 1877(i)(1)(D) of the Act is necessary, we will provide
clarification in future rulemaking. Furthermore, a hospital may request
an advisory opinion (pursuant to Sec. Sec. 411.370 through 411.389)
for a determination of whether an existing or proposed arrangement
meets the requirements for hospitals to ensure that investment is bona
fide.
5. Patient Safety
Section 1877(i)(1)(E) of the Act, as added by the Affordable Care
Act, requires a hospital that is owned or invested in by physicians to
disclose to a patient before admission if it does not have a physician
available on the premises to provide services during all hours that the
hospital is providing services to such patient. Following this
disclosure, the hospital must receive a signed acknowledgment of such
fact from the patient. In addition, the hospital must have the capacity
to provide assessment and initial treatment for patients and refer and
transfer such patients to hospitals with the capability to treat the
patients involved. We see no reason to treat the safety of inpatients
differently than outpatients. Accordingly, given the language and
purpose of the statute, we propose to apply these patient safety
requirements to inpatients as well as outpatients. Hospitals must meet
these requirements no later than September 23, 2011. We are proposing
to incorporate these provisions into our regulations at Sec.
411.362(b)(5).
6. Conversion From ASC
Section 1877(i)(1)(F) of the Act, as added by the Affordable Care
Act, also prohibits the use of the rural provider and whole hospital
exceptions by physician-owned hospitals that were converted from an ASC
to a hospital on or after March 23, 2010. We are proposing to add Sec.
411.362(b)(6) to reflect this provision in our regulations.
7. Publication of Information Reported
As discussed in section XVIII.B. of this proposed rule, section
1877(i)(1)(C) of the Act, as added by the Affordable Care Act, requires
the hospital to submit to the Secretary an annual report containing a
detailed description of the identity of each physician owner or
investor and any other owners or investors of the hospital and the
nature and extent of all ownership and investment interests in the
hospital. The process for collecting this information must be
determined no later than September 23, 2011. Section 1877(i)(2) of the
Act requires that the Secretary publish, and update on an annual basis,
the information submitted by hospitals under section 1877(i)(1)(C) of
the Act on the CMS Web site. As with the annual report requirement set
forth in section XVIII.B. of this proposed rule, we are not making a
proposal related to this provision at this time.
8. Enforcement
Section 6001(b)(1) of the Affordable Care Act requires the
Secretary to
[[Page 46435]]
establish policies and procedures to ensure compliance with the
requirements described in section 1877(i) of the Act, and states that
these policies and procedures may include unannounced site reviews of
hospitals. Section 6001(b)(2) of the Affordable Care Act requires the
Secretary, beginning not later than May 1, 2012, to conduct audits to
determine if physician-owned hospitals are in compliance with section
1877(i)(1) of the Act. We will comply with the statutory mandate, but
are not proposing any regulations on this topic at this time.
D. Proposed Related Changes to Provider Agreement Regulations
Section 1866 of the Act states that a provider of services shall be
qualified to participate in the Medicare program and shall be eligible
for Medicare payments if it files a Medicare provider agreement and
abides by the requirements applicable to Medicare provider agreements.
These requirements are incorporated in our regulations at 42 CFR part
489, Subparts A and B (Provider Agreements and Supplier Approval).
Section 1861(e) of the Act defines the term ``hospital.'' Section
1861(e)(9) of the Act defines a hospital and authorizes the Secretary
to establish requirements as determined necessary in the interest of
patient health and safety. Section 5006 of the Deficit Reduction Act of
2005 mandated the Secretary to develop a strategic and implementing
plan to address certain issues with respect to physician ownership of
specialty hospitals. As part of that plan, we used our authority under
sections 1866 and 1861(e)(9) of the Act (as well as our general
rulemaking authority under sections 1102 and 1871 of the Act) to impose
certain additional requirements on physician-owned hospitals as part of
their provider agreements. These new requirements were established in
the FY 2008 IPPS final rule with comment period (72 FR 47385 through
47391) and the FY 2009 IPPS final rule (73 FR 48686 through 48688).
Specifically, we amended the regulations at Sec. 489.3 governing
Medicare provider agreements to define a ``physician-owned hospital''
as any participating hospital (including a CAH) in which a physician or
immediate family member of a physician has an ownership or investment
interest, unless the ownership or investment interest satisfies the
exceptions at Sec. 411.356(a) or (b) regarding publicly-traded
securities and mutual funds. In addition, we added a new provision at
Sec. 489.20(u)(1) to require a physician-owned hospital to agree to
furnish patients with written notice, in a manner reasonably designed
to be understood by all patients, that it is physician-owned and that
the list of physician owners is available upon request. Further, we
added a new provision at Sec. 489.20(u)(2) to compel hospitals to
require that all physician owners who are also members of the
hospital's medical staff to disclose, in writing, their ownership
interest in the hospital (and that of any immediate family member) to
all patients they refer to the hospital, as a condition of continued
medical staff membership. Patient disclosure is required at the time
the physician makes a referral.
We also added a new provision to require that hospitals and CAHs:
(1) Furnish all patients written notice at the beginning of their
inpatient hospital stay or outpatient service if a doctor of medicine
or a doctor of osteopathy is not present in the hospital 24 hours per
day, 7 days per week; and (2) describe how the hospital or CAH will
meet the medical needs of any patient who develops an emergency medical
condition at a time when no physician is present in the hospital or
CAH. These requirements are codified at Sec. 489.20(w). The
requirements of Sec. 489.20(u) and (w) were made applicable to both
inpatient hospital stays and outpatient services because, as we stated
in the FY 2008 IPPS final rule with comment period, these provisions
are in the interest of the health and safety of all individuals who
receive services in these institutions. The notice requirements are
intended to permit individuals to make more informed decisions
regarding their treatment.
We are proposing to modify the Medicare provider agreement
regulations in Subpart B of Part 489 in order to make the rules
consistent with new Sec. 411.362, as required by the Affordable Care
Act. Furthermore, incorporating the additional requirements of the
Affordable Care Act is in the best interest of the health and safety of
individuals who receive services in hospitals and CAHs. With respect to
Sec. 489.20(u), we are proposing to: (1) Add a provision in Sec.
489.20(u)(1)(ii) to specify that the hospital must disclose on any
public Web site for the hospital and in any public advertising that it
is owned or invested in by physicians; (2) amend Sec. 489.20(u)(2) to
specify that a referring physician owner or investor must also disclose
in writing, if applicable, the treating physician's ownership or
investment interest in the hospital; and (3) add Sec. 489.20(u)(3) to
specify that a hospital may not condition any physician ownership or
investment interests either directly or indirectly on the physician
making or influencing referrals to the hospital or otherwise generating
business for the hospital.
Regarding Sec. 489.20(w), we are proposing to specify that, in the
case of a hospital where a doctor of medicine or a doctor of osteopathy
is not present in the hospital 24 hours per day, 7 days per week,
before admitting a patient or providing an outpatient service, the
hospital must receive a signed acknowledgment from the patient stating
that the patient understands that a physician may not be present during
all hours services are rendered to the patient.
We encourage public comments on whether the changes to the provider
agreement regulations (Part 489) are necessary or whether the
amendments and additions made to the whole hospital and rural provider
exceptions within subpart J of Part 411 of our regulations are
sufficient to provide guidance relating to section 6001 of the
Affordable Care Act.
XX. Files Available to the Public Via the Internet
A. Information in Addenda Related to the CY 2011 Hospital OPPS
Addenda A and B to this proposed rule provide various data
pertaining to the proposed CY 2011 payment for items and services under
the OPPS. Addendum A, which includes a list of all proposed APCs to be
payable under the OPPS, and Addendum B, which includes a list of all
active HCPCS codes with their proposed CY 2011 OPPS payment status and
comment indicators, are available to the public by clicking ``Hospital
Outpatient Regulations and Notices'' on the CMS Web site at: http://www.cms.gov/HospitalOutpatientPPS/ HospitalOutpatientPPS/.
For the convenience of the public, we also are including on the CMS
Web site a table that displays the HCPCS code data in Addendum B sorted
by proposed APC assignment, identified as Addendum C.
Addendum D1 defines the payment status indicators that we are
proposing to use in Addenda A and B. Addendum D2 defines the comment
indicators that we are proposing to use in Addendum B. Addendum E lists
the proposed HCPCS codes that we propose would only be payable to
hospitals as inpatient procedures and would not be payable under the
OPPS. Addendum L contains the proposed out-migration wage adjustment
for CY 2011. Addendum M lists the proposed HCPCS codes that would be
members of a composite APC
[[Page 46436]]
and identifies the composite APC to which each would be assigned. This
addendum also identifies the proposed status indicator for the HCPCS
code and a proposed comment indicator if there is a proposed change in
the code's status with regard to its membership in the composite APC.
Each of the proposed HCPCS codes included in Addendum M has a single
procedure payment APC, listed in Addendum B, to which it would be
assigned when the criteria for assignment to the composite APC are not
met. When the criteria for payment of the code through the composite
APC are met, one unit of the composite APC payment is paid, thereby
providing packaged payment for all services that are assigned to the
composite APC according to the specific I/OCE logic that applies to the
APC. We refer readers to the discussion of composite APCs in section
II.A.2.e. of this proposed rule for a complete description of the
composite APCs.
These addenda and other supporting OPPS data files are available on
the CMS Web site at: http://www.cms.gov/HospitalOutpatientPPS/.
B. Information in Addenda Related to the CY 2011 ASC Payment System
Addenda AA and BB to this proposed rule provide various data
pertaining to the proposed CY 2011 payment for the covered surgical
procedures and covered ancillary services for which ASCs may receive
separate payment. Addendum AA lists the proposed ASC covered surgical
procedures and the proposed CY 2011 payment indicators and payment
rates for each procedure. Addendum BB displays the proposed ASC covered
ancillary services, and their proposed CY 2011 payment indicators and
payment rates. All proposed ASC relative payment weights and payment
rates for CY 2011 are a result of applying the revised ASC payment
system methodology established in the final rule for the revised ASC
payment system published in the Federal Register on August 2, 2007 (72
FR 42470 through 42548) to the CY 2011 OPPS and MPFS ratesetting
information.
Addendum DD1 defines the proposed payment indicators that are used
in Addenda AA and BB. Addendum DD2 defines the proposed comment
indicators that are used in Addenda AA and BB.
Addendum EE (available only on the CMS Web site) lists the surgical
procedures that we are proposing to exclude from Medicare payment if
furnished in ASCs. The proposed excluded procedures listed in Addendum
EE are surgical procedures that would be assigned to the OPPS inpatient
list, would not be covered by Medicare, would be reported using a CPT
unlisted code, or have been determined to pose a significant safety
risk or are expected to require an overnight stay when performed in
ASCs.
These addenda and other supporting ASC data files are included on
the CMS Web site at: http://www.cms.gov/ASCPayment/. The MPFS data
files are located at: http://www.cms.gov/PhysicianFeeSched/.
The links to all of the proposed FY 2011 IPPS wage index-related
tables (that we are proposing to use for the CY 2011 OPPS) that were
published in the June 2, 2010 supplemental FY 2011 IPPS/LTCH PPS
proposed rule (75 FR 30918) are accessible on the CMS Web site at:
http://www.cms.gov/AcuteInpatientPPS/WIFN.
XXI. Collection of Information Requirements
A. Legislative Requirement for Solicitation of Comments
Under the Paperwork Reduction Act of 1995, we are required to
provide 60-day notice in the Federal Register and to solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
B. Proposed Requirements Specified in the Regulation Text
This proposed rule contains the following proposed information
collection requirements specified in regulatory text:
1. ICRs Regarding Redistribution of Medical Residency Slots
Existing regulations at Sec. 413.78 outline the requirements for
the determination of the total number of FTE residents in determining
direct GME payments to hospitals. Section XVII.B.2.c. of the preamble
of this proposed rule discusses the requirement for hospitals that
share the costs of resident training in nonprovider settings, as
permitted by the Affordable Care Act, to count a proportional share of
the time and to record that proportion in a written agreement. We are
proposing that this proportion must be included on a distinct written
agreement for hospitals that pay nonhospital sites concurrently,
without a written agreement as described in existing regulations. The
burden associated with this requirement is the time and effort put
forth by the hospital to prepare a written agreement. We estimate it
would take one hospital 15 minutes to meet this requirement. Hospitals
that already have a written agreement with a nonhospital site may
include the proportion on that existing agreement.
In section XVII.B.2.d. of the preamble of this proposed rule, we
discuss the requirement under the Affordable Care Act for hospitals to
maintain records of the amount of time that their residents spend
training in nonhospital sites, and to compare that time to the time
spent by their residents in nonprovider sites in a base year as the
Secretary may specify. We believe that a large part of the information
that hospitals would be required to record for the purposes of this
provision is contained in rotation schedules, which all hospitals are
already required to maintain. Therefore, we do not believe that this
requirement poses an undue administrative burden for the purposes of
the PRA.
Existing regulations at Sec. 412.105 and Sec. 413.79 outline the
requirements for the determination of the weighted number of FTE
residents for IME and direct GME payments to hospitals. In sections
XVII.B.4. and 5. of the preamble of this proposed rule, we discuss our
proposals that a hospital seeking an adjustment to the limit on its
unweighted resident count under section 5503 or section 5506 of the
Affordable Care Act must provide documentation justifying the
adjustment. Sections XVII.B.4. and 5. of the preamble of this proposed
rule specify the information that a request would have to include.
These requirements are exempt from the PRA in accordance with the
provisions of the Affordable Care Act.
2. ICRs Regarding Basic Commitments of Providers (Sec. 489.20) and
Additional Requirements Concerning Physician Ownership and Investment
in Hospitals (Sec. 411.362)
Current Sec. 489.20(u)(1) states that, in the case of a physician-
owned hospital as defined in Sec. 489.3, the hospital must furnish
written notice to all patients at the beginning of their hospital stay
or
[[Page 46437]]
outpatient visit that the hospital is a physician-owned facility. The
burden associated with the requirements in this section is the time and
effort necessary for a hospital to furnish written notice to all
patients that the hospital is a physician-owned hospital. Whereas this
requirement is subject to the PRA, the associated burden is currently
approved under OMB control number 0938-1034, with an expiration date of
February 28, 2011.
Our proposed amendment to Sec. 489.20(u)(1) and proposed new Sec.
411.362(b)(3)(ii)(C) would require disclosure by a hospital on any
public Web site for the hospital and in any public advertising that the
hospital is owned or invested in by physicians. The burden associated
with this disclosure requirement is the time and effort necessary for
hospitals to draft and post such a disclosure on their Web sites (where
applicable) and to include such a disclosure in any existing or future
public advertising that the hospitals may utilize. We estimate that 265
hospitals must comply with this requirement. In addition, we estimate
that it will take each hospital 1 hour to develop and place this
information on its Web site and/or in a public advertisement. The
estimated annual hospital burden associated with placing the
aforementioned information in Web sites, public advertisement, or both
is 265 hours at a cost of $3,993.55. In addition, we estimate that it
will take 30 minutes annually for a hospital to review and update the
information contained in its Web site, public advertising or both. The
estimated annual burden associated with the annual review and update of
the information is 132.5 hours at a cost of $1,996.77.
Our proposed amendment to Sec. 489.20(u)(2) and proposed new Sec.
411.362(b)(3)(ii)(A) would require the hospital to have procedures in
place to require that each referring physician agree, as a condition of
his or her continued medical staff membership or admitting privileges,
to provide written disclosure of his or her ownership or investment
interest in the hospital (and, if applicable a treating physician's
ownership or investment interest in the hospital) to all patients whom
the physician refers to the hospital. These provisions impose a burden
on both hospitals and physicians.
With respect to hospitals, the burden associated with this
requirement is the time and effort necessary for hospitals to develop,
draft, and implement changes to its medical staff bylaws and other
policies governing admitting privileges. Approximately 265 hospitals
would be required to comply with these requirements. We estimate that
it will require a hospital's general counsel 2 hours to revise a
hospital's medical staff bylaws and policies governing admitting
privileges. Therefore, the total annual hospital burden would be 530
hours at a cost of $32,875.90.
With respect to physicians, the burden associated with this
requirement is the time and effort necessary for a referring physician
owner or investor to develop a list of all other physician owners or
investors in the hospital and draft a form notice to patients that
discloses the referring physician's ownership or investment interest in
the hospital, informs the patient that a treating physician(s) of the
patient may have an ownership or investment interest in the hospital,
and directs the patient to review a list identifying all other
physician owners or investors in the hospital. This list may be used by
patients in making their health care decisions. Under existing Sec.
489.20(u)(1), hospitals are currently required to provide a list of
their physician owners or investors to patients upon request at the
beginning of their inpatient stay or outpatient visit. Because
hospitals already maintain lists of their owners and investors, we
estimate that it will take each physician 1 hour annually to obtain
such a list from the hospital, draft a disclosure notice, and make
copies that will be distributed to patients. In addition, we estimate
that it will take 30 seconds to provide the disclosure notice to each
patient and an additional 30 seconds to record proof of disclosure in
each patient's medical record.
Although we can estimate the number of physician-owned hospitals,
we are unable to quantify the number of physicians (or their immediate
family members) who possess an ownership or investment interest in
hospitals. There are limited data available concerning physician
ownership in hospitals. The studies to date, including those by CMS and
the GAO, pertain to physician ownership in specialty hospitals
(cardiac, orthopedic, and surgical hospitals). These specialty
hospitals published data concerning the average percentage of shares of
direct ownership by physicians (less than 2 percent), indirect
ownership through group practices, and the aggregate percentage of
physician ownership, but did not publish the number of physician owners
in these types of hospitals. More importantly, Sec. 489.20(u)(2)
applies to physician ownership in any type of hospital. Our other
research involved a review of enrollment data. However, the CMS
Medicare enrollment application (CMS-855) requires physicians to report
only those ownership interests that are 5 percent or more (direct or
indirect), and thus, most physician ownership is not captured. While we
acknowledge there is a burden associated with this ICR, we have no way
to quantify this requirement's burden. Therefore, because we are unable
to estimate the total physician burden associated with this reporting
requirement, we are assigning 1 burden hour to this requirement and we
are also seeking public comment pertaining to this burden allocation
and will reevaluate this issue in the final rule stage of rulemaking.
Existing Sec. 489.20(w) requires hospitals, as defined in Sec.
489.24(b), to furnish all patients notice in accordance with Sec.
482.13(b)(2), at the beginning of their hospital stay or outpatient
visit if a doctor of medicine or a doctor of osteopathy is not present
in the hospital 24 hours per day, 7 days per week. The notice must
indicate how the hospital will meet the medical needs of any inpatient
who develops an emergency medical condition, as defined in Sec.
489.24(b), at a time when there is no physician present in the
hospital. The burden associated with this requirement is the time and
effort necessary for each hospital to develop a standard notice to
furnish to its patients. Although this requirement is subject to the
PRA, the associated burden is approved under OMB control number 0938-
1034, with a current expiration date of February 28, 2011.
Our proposed new Sec. Sec. 489.20(w)(2) and 411.362(b)(5)(i) would
require that, following a hospital's disclosure to a patient that it
does not have a physician available during all hours that the hospital
is providing services to such patient, the hospital must obtain a
signed acknowledgment from the patient stating that the patient
understands that no physician is available for that period. The burden
associated with this requirement is the time and effort necessary for
each hospital to add an acknowledgment line to its current form,
disclose the form to the patient, obtain the patient's signature, and
copy and record the form in the patient's medical record. The
requirements in proposed Sec. 489.20(w) would apply to all hospitals
(not just physician-owned hospitals), as defined in Sec. 489.24(b). We
estimate that there are approximately 2,557 hospitals and CAHs that may
not have a physician on-site at all times. We estimate that it will
take each hospital 30 minutes to amend its current disclosure form to
add an acknowledgment line, an additional 30 seconds to obtain the
patient's
[[Page 46438]]
signature, and an additional 30 seconds to include a copy of the notice
in the patient's medical record. The estimated annual burden associated
with developing an amended form, obtaining patient signatures, and
copying and recording the form is 1,196,932.6 hours at a cost of
$18,518,081.15.
C. Associated Information Collections Not Specified in Regulatory Text
In this proposed rule, we make reference to proposed associated
information collection requirements that are not discussed in the
regulation text contained in this document. The following is a
discussion of those requirements.
1. Hospital Outpatient Quality Data Reporting Program (HOP QDRP)
As previously stated in section XVI. of this proposed rule, the
quality data reporting program for hospital outpatient care, known as
the Hospital Outpatient Quality Data Reporting Program (HOP QDRP), has
been generally modeled after the quality data reporting program for
hospital inpatient services, the Reporting Hospital Quality Data for
Annual Payment Update (RHQDAPU) program. Section 109(a) of the MIEA-
TRHCA (Pub. L. 109-432) amended section 1833(t) of the Act by adding a
new subsection (17) which affects the annual payment update factor
applicable to OPPS payments for services furnished by hospitals in
outpatient settings on or after January 1, 2009. Section 1833(t)(17)(A)
of the Act states that subsection (d) hospitals (as defined under
section 1886(d)(1)(B) of the Act) that fail to report data required for
the quality measures selected by the Secretary in the form and manner
required by the Secretary under section 1833(t)(17)(B) of the Act will
incur a 2.0 percentage point reduction to their annual payment update
factor. Section 1833(t)(17)(B) of the Act requires that hospitals
submit quality data in a form and manner, and at a time, that the
Secretary specifies. Section 1833(t)(17)(A)(ii) of the Act specifies
that any reduction would apply only to the payment year involved and
would not be taken into account in computing the applicable annual
payment update factor for a subsequent payment year. Section
1833(t)(17)(C)(i) of the Act requires the Secretary to develop measures
appropriate for the measurement of the quality of care (including
medication errors) furnished by hospitals in outpatient settings, that
these measures reflect consensus among affected parties and, to the
extent feasible and practicable, that these measures include measures
set forth by one or more national consensus building entities.
2. HOP QDRP Quality Measures for the CY 2012, CY 2013 and CY 2014
Payment Determinations
In the CY 2009 final rule with comment period (73 FR 68766), we
retained the seven chart-abstracted measure we used in CY 2009 and
adopted 4 new claims-based imaging measures for use in CY 2010,
bringing the total number to 11 measures. In the CY 2010 OPPS/ASC final
rule with comment period (74 FR 60637), we adopted the same 11 measures
and the same data submission requirements related to the 7 data
abstracted measures for CY 2011 payment determinations. For the CY 2012
payment update, we are proposing that hospitals continue to submit data
for the existing 7 chart-abstracted measures (we would continue to use
the 4 claims-based measures) and to add 1 new chart-abstracted AMI
measure, 4 additional claims-based imaging efficiency measures, and 1
structural measure regarding Health IT. These 17 measures are listed in
the table below. For the CY 2013 payment determination, we are
proposing that hospitals continue to submit data for all of the
nonclaims-based measures previously adopted for the CY 2012 payment
determination (we would continue to use the claims-based measures
previously adopted), and to adopt 1 new structural measure on tracking
clinical results, and 6 new chart-abstracted measures for the CY 2013
payment determination on the topics of HOPD care transitions, and ED
efficiency, for a total of 24 measures. For the CY 2014 payment
determination, we are proposing that hospitals continue to submit data
for all of the measures previously adopted for the CY 2013 payment
determination (we would continue to use the claims-based measures
previously adopted), and to adopt 6 new chart-abstracted measures on
the topics of diabetes care and exposure time for procedures using
fluoroscopy, for a total of 30 measures. These proposed measures are
listed below.
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For the CY 2012 payment determination, hospitals would submit data
related to the 8 chart-abstracted measures and we would calculate the 8
claims-based measures using administrative paid claims data and not
require additional hospital data submissions. For the structural
measure, hospitals would enter data into a Web-based collection tool.
As part of the data submission process pertaining to the 17
measures listed above for the CY 2012 payment determination, hospitals
must also complete and submit a notice of participation in the HOP
QDRP. By submitting this document, hospitals agree that they will allow
CMS to publicly report the quality measures as required by the HOP
QDRP.
For the CY 2012 payment determination, the burden associated with
this section is the time and effort associated with completing the
notice of participation as well as collecting and submitting the data
on the eight data abstracted measures and the one structural measure.
We estimate that there will be approximately 3,200 respondents per
year. For hospitals to collect and submit the information on the
required measures, we estimate it will take 35 minutes per sampled
case. We estimate there will be a total of 930,000 cases per year,
approximately 290 cases per year per respondent. The estimated annual
burden associated with the aforementioned submission requirements for
chart-abstracted data is 542,500 hours (930,000 cases per year x 0.583
hours/case). For the structural measure, we estimate that it will
require 10 minutes per hospital for one instance per year; the
estimated annual burden associated with this requirement is 533 hours
(3,200 hospitals x 0.167 hours per hospital).
We invite public comment on the burden associated with these
information collection requirements.
3. Proposed HOP QDRP Validation Requirements
In addition to requirements for submitting of quality data,
hospitals must also comply with the requirements for data validation in
CY 2012. Similar to our proposed policy for the FY 2012 RHQDAPU program
(75 FR 23991 through 23993), we are proposing to validate data from 800
randomly selected hospitals each year under the HOP QDRP, beginning
with the CY 2012 payment determination. We note that, because the 800
hospitals would be selected randomly, every HOP QDRP-participating
hospital would be eligible each year for validation selection. For each
selected hospital, we would randomly select up to 48 patient episodes
of care per year (12 per quarter) for validation purposes from the
total number of cases that the hospital successfully submitted to the
OPPS Clinical Warehouse during the applicable time period. However, if
a selected hospital has submitted less than 12 cases in one or more
quarters, only those cases available will be validated.
The burden associated with the proposed CY 2012 requirement is the
time and effort necessary to submit validation data to a CMS
contractor. We estimate that it will take each of the 800 sampled
hospitals approximately 12 hours to comply with these data submission
requirements. To comply with the requirements, we estimate each
hospital must submit 48 cases for the affected year for review. We
estimate that 800 hospitals must comply with these requirements to
submit a total of 38,400 charts across all sampled hospitals. The
estimated annual burden associated with the data validation process for
CY 2012 and subsequent years is 9,600 hours.
We invite public comment on this information collection
requirement.
4. Proposed HOP QDRP Reconsideration and Appeals Procedures
In the CY 2009 OPPS/ASC final rule with comment period (73 FR
68779), we adopted a mandatory reconsideration process that will apply
to the CY 2010 payment decisions. In the CY 2010 OPPS/ASC final rule
with comment period (74 FR 60654 through 60655), we continued this
process for the CY 2011 payment update. We are proposing to continue
this process for the CY 2012 payment update with some modifications. We
have proposed to eliminate a requirement that the reconsideration
request form be signed by the hospital CEO to facilitate electronic
submission of the form and reduce hospital burden. Under this proposed
process, the hospitals would be required to meet all of the
requirements specified in section XVI.E. of this proposed rule. While
there is burden associated with filing a reconsideration request,
section 5 CFR 1320.4 of the Paperwork Reduction Act of 1995 excludes
collection activities during the conduct of administrative actions such
as redeterminations, reconsiderations, and/or appeals. Specifically,
these actions are taken after the initial determination or denial of
payment.
5. Additional Topics
While we are seeking OMB approval for the information collection
requirements associated with the HOP QDRP and the data validation
processes, we also are seeking public comment on several issues that
may ultimately affect the burden associated with HOP QDRP and the data
validation processes. Specifically, this proposed rule lists proposed
quality measures for CY 2012 through CY 2014 payment determinations as
well as other possible quality measures under consideration for CY 2013
and subsequent years. We also are soliciting public comments to explore
the use of registries to comply with the HOP QDRP submission
requirements, the use of EHRs as a data submission tool, the use of a
standardized process for the retirement of HOP QDRP quality measures,
the continued use of an extraordinary circumstance extension or waiver
for reporting quality data, and the implementation of additional data
validation conditions.
If you comment on these information collection and recordkeeping
requirements, please do either of the following:
1. Submit your comments electronically as specified in the
ADDRESSES section of this proposed rule; or
2. Submit your comments to the Office of Information and Regulatory
Affairs, Office of Management and Budget,
Attention: CMS Desk Officer, (CMS-1504-P)
Fax: (202) 395-6974; or
E-mail: OIRA_submission@omb.eop.gov.
XXII. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this proposed
rule, and, when we proceed with a subsequent document(s), we will
respond to those comments in the preamble to that document(s).
XXIII. Regulatory Impact Analysis
A. Overall Impact
We have examined the impacts of this proposed rule as required by
Executive Order 12866 (September 1993, Regulatory Planning and Review),
the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-
354), section 1102(b) of the Social Security Act, the Unfunded Mandates
Reform Act of 1995 (Pub. L. 104-4), Executive Order 13132 on
Federalism, and the Congressional Review Act (5 U.S.C. 804(2)).
[[Page 46441]]
1. Executive Order 12866
Executive Order 12866 directs agencies to assess all costs and
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributive impacts, and equity). A regulatory impact
analysis (RIA) must be prepared for major rules that have economically
significant effects ($100 million or more in any 1 year) or adversely
affect in a material way the economy, a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or State, local, or tribal government or communities (58 FR
51741).
We estimate that the effects of the OPPS provisions that would be
implemented by this proposed rule would result in expenditures
exceeding $100 million in any 1 year. We estimate the total increase
(from proposed changes in this proposed rule as well as enrollment,
utilization, and case-mix changes) in expenditures under the OPPS for
CY 2011 compared to CY 2010 to be approximately $3.9 billion. Because
this proposed rule for the OPPS is ``economically significant'' as
measured by the $100 million threshold and also a major rule under the
Congressional Review Act, we have prepared a regulatory impact analysis
that, to the best of our ability, presents the costs and benefits of
this rulemaking. Table 55 of this proposed rule displays the
redistributional impact of the CY 2011 proposed changes on OPPS payment
to various groups of hospitals.
We estimate that the effects of the ASC provisions that would be
implemented by this proposed rule for the ASC payment system would not
exceed $100 million in any 1 year and, therefore, are not economically
significant. We estimate the total increase (from proposed changes in
this proposed rule as well as enrollment, utilization, and case-mix
changes) in expenditures under the ASC payment system for CY 2011
compared to CY 2010 to be approximately $0. However, because this
proposed rule for the ASC payment system substantially affects ASCs, we
have prepared a regulatory impact analysis of changes to the ASC
payment system that, to the best of our ability, presents the costs and
benefits of this rulemaking. Table 57 and Table 58 of this proposed
rule display the redistributional impact of the CY 2011 changes on ASC
payment, grouped by specialty area and then grouped by procedures with
the greatest ASC expenditures, respectively.
2. Regulatory Flexibility Act (RFA)
The RFA requires agencies to analyze options for regulatory relief
of small businesses if a rule has a significant impact on a substantial
number of small entities. For purposes of the RFA, small entities
include small businesses, nonprofit organizations, and small
governmental jurisdictions. Many hospitals, other providers, ASCs, and
other suppliers are considered to be small entities, either by being
nonprofit organizations or by meeting the Small Business Administration
(SBA) definition of a small business (hospitals having revenues of
$34.5 million or less in any 1 year and ASCs having revenues of $10
million or less in any 1 year). (For details on the latest standards
for health care providers, we refer readers to the SBA's Web site at:
http://sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf (refer to the 620000 series).)
For purposes of the RFA, we have determined that many hospitals and
most ASCs would be considered small entities according to the SBA size
standards. Individuals and States are not included in the definition of
a small entity. Therefore, the Secretary has determined that this
proposed rule would have a significant impact on a substantial number
of small entities. Because we acknowledge that many of the affected
entities are small entities, the analyses presented throughout this
proposed rule constitute our proposed regulatory flexibility analysis.
Therefore, we are soliciting public comments on our estimates and
analyses of the impact of this proposed rule on those small entities.
3. Small Rural Hospitals
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 603 of the RFA. With
the exception of hospitals located in certain New England counties, for
purposes of section 1102(b) of the Act, we now define a small rural
hospital as a hospital that is located outside an urban area and has
fewer than 100 beds. Section 601(g) of the Social Security Amendments
of 1983 (Pub. L. 98-21) designated hospitals in certain New England
counties as belonging to the adjacent urban areas. Thus, for OPPS
purposes, we continue to classify these hospitals as urban hospitals.
We believe that the proposed changes to the OPPS in this proposed rule
would affect both a substantial number of rural hospitals as well as
other classes of hospitals and that the effects on some may be
significant. Also, the changes to the ASC payment system in this
proposed rule would affect rural ASCs. Therefore, the Secretary has
determined that this proposed rule would have a significant impact on
the operations of a substantial number of small rural hospitals.
4. Unfunded Mandates
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. That threshold
level is currently approximately $135 million. This proposed rule would
not mandate any requirements for State, local, or tribal governments,
nor would it affect private sector costs.
5. Federalism
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct costs on State and local
governments, preempts State law, or otherwise has Federalism
implications.
We have examined the OPPS and ASC provisions included in this
proposed rule in accordance with Executive Order 13132, Federalism, and
have determined that they would not have a substantial direct effect on
State, local or tribal governments, preempt State law, or otherwise
have a Federalism implication. As reflected in Table 55 below, we
estimate that OPPS payments to governmental hospitals (including State
and local governmental hospitals) would increase by 2.2 percent under
this proposed rule. While we do not know the number of ASCs with
government ownership, we anticipate that it is small. We believe that
the provisions related to payments to ASCs in CY 2011 would not affect
payments to any ASCs owned by government entities.
The following analysis, in conjunction with the remainder of this
document, demonstrates that this proposed rule is consistent with the
regulatory philosophy and principles identified in Executive Order
12866, the RFA, and section 1102(b) of the Act.
This proposed rule would affect payments to a substantial number of
small rural hospitals and a small number of rural ASCs, as well as
other
[[Page 46442]]
classes of hospitals and ASCs, and some effects may be significant.
B. Effects of OPPS Changes in This Proposed Rule
We are proposing to make several changes to the OPPS that are
required by the statute. We are required under section
1833(t)(3)(C)(ii) of the Act to update annually the conversion factor
used to determine the APC payment rates. We also are required under
section 1833(t)(9)(A) of the Act to revise, not less often than
annually, the wage index and other adjustments, including pass-through
payments and outlier payments. In addition, we must review the clinical
integrity of payment groups and weights at least annually. Accordingly,
in this proposed rule, we are proposing to update the conversion factor
and the wage index adjustment for hospital outpatient services
furnished beginning January 1, 2011, as we discuss in sections II.B.
and II.C., respectively, of this proposed rule. We discuss our
implementation of section 10324 of the Affordable Care Act, as amended
by HCERA, authorizing a wage index of 1.00 for certain frontier states.
We also are proposing to revise the relative APC payment weights using
claims data for services furnished from January 1, 2009, through
December 31, 2009, and updated cost report information. We are
proposing to continue the current payment adjustment for rural SCHs,
including EACHs. We are proposing an adjustment for cancer hospitals
identified under 1886(d)(1)(B)(v) of the Act in accordance with section
3138 of the Affordable Care Act, as amended by HCERA. Finally, we list
the 18 drugs and biologicals in Table 20 of this proposed rule that we
are proposing to remove from pass-through payment status for CY 2011.
Under this proposed rule, we estimate that the proposed update
change to the conversion factor and other adjustments (but not
including the effects of outlier payments, pass-through estimates, the
expiration of section 508 wages on September 30, 2010, and the
application of the frontier wage adjustment for CY 2011) as provided by
the statute would increase total OPPS payments by 2.1 percent in CY
2011. The proposed changes to the APC weights, the changes to the wage
indices, the continuation of a payment adjustment for rural SCHs,
including EACHs, and the proposed payment adjustment for cancer
hospitals would not increase OPPS payments because these changes to the
OPPS are budget neutral. However, these proposed updates do change the
distribution of payments within the budget neutral system as shown in
Table 55 below and described in more detail in this section. We also
estimate that the total change in payments between CY 2010 and CY 2011,
considering all payments, including changes in estimated total outlier
payments, pass-through payments, the expiration of additional money for
specified section 508 reclassification and special exception wages
indices, and the application of the frontier adjustment outside of
budget neutrality, would increase total OPPS payments by 2.2 percent.
1. Alternatives Considered
Alternatives to the changes we are making and the reasons that we
have chosen the options are discussed throughout this proposed rule.
Some of the major issues discussed in this proposed rule and the
options considered are discussed below.
a. Alternatives Considered for the Extension of Waiver of Deductible to
Services Furnished in Connection With or in Relation to a Colorectal
Screening Test That Becomes Diagnostic
Section 4104(c)(2)of the Affordable Care Act waives the deductible
with respect to a colorectal cancer screening test regardless of the
code that is billed for the establishment of a diagnosis as a result of
the test, or for the removal of tissue or other matter or other
procedure that is furnished in connection with, as a result of, and in
the same clinical encounter as a screening test. We are proposing for
CY 2011 that the deductible be waived for all surgical services
furnished on the same date as a planned screening colonoscopy, planned
flexible sigmoidoscopy, or barium enema as being furnished in
connection with, as a result of, and in the same clinical encounter as
the screening test. As discussed in detail in XII.B.3 of this rule, we
are proposing to implement this provision by creating a HCPCS modifier
that hospitals would append to the diagnostic procedure code that is
reported instead of the screening colonoscopy or screening flexible
sigmoidoscopy HCPCS code or as a result of the barium enema when the
screening test becomes a diagnostic service. The claims processing
system would respond to the modifier by waiving the deductible for all
surgical services on the same date as the diagnostic test. Coinsurance
or copayment would continue to apply to the diagnostic test and other
services furnished in connection with, as a result of, and in the same
clinical encounter as the screening test.
We considered three alternatives for the extension of waiver of
deductible to services furnished in connection with or in relation to a
colorectal screening test that becomes diagnostic for CY 2011. The
first alternative we considered, but are not proposing, was to define a
limited set of colonoscopy codes to which the waiver could apply when
performed on the same date as a procedure that began as a screening
colonoscopy, screening flexible sigmoidoscopy, or barium enema. We did
not choose this alternative because it is virtually impossible to
create a valid and complete list of appropriate procedures to handle
all situations, due to the range of problems that could be identified
and complications that could occur with any invasive procedures.
Furthermore, we believe this alternative would be complex to
implement. Although this alternative narrows the potential for
hospitals to abuse the waiver of the deductible by applying it to
unrelated services, we believe the potential for abuse of the waiver of
the deductible to be minimal. The Part B deductible is a fixed amount
that the beneficiary pays before Medicare begins to pay and typically
would be met after receiving one to two services.
The second alternative we considered, but are not proposing, was to
define a broader, but still limited set of codes (for example, selected
surgical services) to which the waiver could apply when performed on
the same date as a procedure that began as a screening colonoscopy,
screening flexible sigmoidoscopy, or barium enema. Although this
alternative would encompass a broader set of codes, we believe it is
virtually impossible to create a valid and complete list of appropriate
procedures to handle all situations, due to the range of problems that
could be identified and complications that could occur with any
invasive procedures. While we acknowledge that this alternative narrows
the potential for abuse of the waiver of the deductible, we believe the
potential for abuse is minimal and that this alternative would be
complex to implement. For these reasons we did not choose to define a
broader set of limited codes to which the waiver could apply when
performed on the same date as a procedure that began as a screening
colonoscopy, screening flexible sigmoidoscopy, or barium enema.
The third alternative we considered, and the one we are proposing
for CY 2011, is to apply the waiver to any surgical procedure on the
same date as a screening colonoscopy, flexible sigmoidoscopy, or barium
enema that
[[Page 46443]]
providers report is ``in connection with or as a result of'' the
procedure that began as a screening test. We are proposing to create a
HCPCS modifier that providers would append to the diagnostic procedure
code that is reported instead of the screening colonoscopy or screening
flexible sigmoidoscopy HCPCS code or as a result of the barium enema
when the screening test becomes a diagnostic service. We chose this
alternative because we believe it provides the greatest ease of public
understanding and provider application. We believe that this
alternative is appropriate because we believe that it would be very
rare for an unrelated surgery to occur on the same date as one of these
scheduled screening tests. Moreover, we believe that the risk of
improper expenditures would be very small under this policy because it
is the deductible, and not the coinsurance, that is waived for the
related procedures other than the screening tests. As noted above, the
Part B deductible is a fixed amount that the beneficiary pays before
Medicare begins to pay and typically would be met after receiving one
to two services.
b. Alternatives Considered for Payment of the Acquisition and Pharmacy
Overhead Costs of Drugs and Biologicals That Do Not Have Pass-Through
Status
We are proposing that, for CY 2011, the OPPS would make payment for
separately payable drugs and biologicals at ASP+6 percent, and this
payment would continue to represent combined payment for both the
acquisition and pharmacy overhead costs of separately payable drugs and
biologicals. As discussed in detail in section V.B.3. of this proposed
rule, we believe that approximately $150 million of the estimated $593
million in pharmacy overhead cost currently attributed to coded
packaged drugs with an ASP and $50 million of the estimated $628
million in pharmacy overhead cost currently attributed to coded and
uncoded packaged drugs without an ASP should, instead, be attributed to
separately payable drugs and biologicals to provide an adjustment for
the pharmacy overhead costs of these separately payable products. As a
result, we also are proposing to reduce the cost of packaged drugs and
biologicals that is included in the payment for procedural APCs to
offset the $200 million adjustment to payment for separately payable
drugs and biologicals. We are proposing that any redistribution of
pharmacy overhead cost that may arise from CY 2011 final rule claims
data would occur only from some drugs and biologicals to other drugs
and biologicals, thereby maintaining the estimated total cost of drugs
and biologicals under the OPPS.
We considered three alternatives for payment of the acquisition and
pharmacy overhead costs of drugs and biologicals that do not have pass-
through status for CY 2011. The first alternative we considered, but
are not proposing, was to continue our standard policy of comparing the
estimated aggregate cost of separately payable drugs and biologicals in
our claims data to the estimated aggregate ASP dollars for separately
payable drugs and biologicals, using the ASP as a proxy for average
acquisition cost, to calculate the estimated percent of ASP that would
serve as the best proxy for the combined acquisition and pharmacy
overhead costs of separately payable drugs and biologicals (70 FR
68642). Under this standard methodology, using April 2010 ASP
information and costs derived from CY 2009 OPPS claims data, we
estimated the combined acquisition and overhead costs of separately
payable drugs and biologicals to be ASP plus 0 percent. As discussed in
section V.B.3. of this proposed rule, we also determined that the
combined acquisition and overhead costs of packaged drugs are 283
percent of ASP. We did not choose this alternative because we believe
that this analysis indicates that our standard drug payment methodology
has the potential to ``compress'' the calculated costs of separately
payable drugs and biologicals to some degree. Further, we recognize
that the attribution of pharmacy overhead costs to packaged or
separately payable drugs and biologicals through our standard drug
payment methodology of a combined payment for acquisition and pharmacy
overhead costs depends, in part, on the treatment of all drugs and
biologicals each year under our annual drug packaging threshold.
Changes to the packaging threshold may result in changes to payment for
the overhead cost of drugs and biologicals that do not reflect actual
changes in hospital pharmacy overhead cost for those products.
The second alternative we considered, but are not proposing, was to
adopt the APC Panel's February 2010 recommendation to redistribute a
larger portion of the overhead cost from packaged drugs to separately
payable drugs for payment of drugs and biologicals that do not have
pass-through status. We did not choose this alternative because, as we
discussed in V.B.3. of this proposed rule, we are not confident that we
know the amount of overhead cost available for redistribution in the
uncoded packaged drugs and, therefore, do not know if it is appropriate
to redistribute more payment from uncoded packaged drugs to separately
paid drugs. Presenters at the APC Panel meeting provided analyses
suggesting that the uncoded packaged drug cost contain exactly the same
drugs as those in the coded packaged drug cost, leading to a
recommendation that we could assume the same proportional amount of
overhead cost appears in the uncoded packaged drug cost as observed in
the coded packaged drug cost in order to increase the amount of
``overhead'' drug cost available for redistribution from uncoded
packaged drugs to separately payable drugs. However, we do not believe
we should assume that the costs reported under uncoded pharmacy revenue
code lines are for the same drugs and biologicals, with the same ASPs,
and overhead costs as the costs of packaged drugs and biologicals
reported with a HCPCS code. For these reasons, we are not accepting the
APC Panel's recommendation to redistribute a larger portion of overhead
costs from packaged drugs to separately payable drugs for CY 2011.
The third alternative we considered and the one we are proposing
for CY 2011 is to continue our CY 2010 redistribution methodology and
redistribute $200 million in overhead costs from packaged coded and
uncoded drugs to separately payable drugs which would result in a
payment for non-pass-through separately payable drugs and biologicals
at ASP+6 percent, which would continue to represent a combined payment
for both the acquisition costs of separately payable drugs and the
pharmacy overhead costs applicable to these products. We also are
proposing to reduce the cost of packaged drugs that is included in the
payment for procedural APCs to offset the $200 million adjustment to
payment for separately payable drugs and biologicals, resulting in
payment for packaged drugs and biologicals of ASP+186 percent under our
proposal. We chose this alternative because we believe that it provides
the most appropriate redistribution of pharmacy overhead costs
associated with drugs and biologicals, based on the analyses discussed
in section V.B.3. of this proposed rule, and is the alternative that is
most consistent with the principles of a prospective payment system.
c. Alternatives Considered for the Physician Supervision of Hospital
Outpatient Services
As we discussed extensively in previous sections, the goal of the
proposal on supervision is to address
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the concerns that have been brought to our attention since we issued
our last rule on this subject in CY 2010. The primary issue raised by
CAHs, rural hospitals and other small hospitals both during CY 2010
rulemaking and, in particular, following CY 2010 rulemaking was
difficulty in staffing their facilities to meet our requirement for
direct supervision of all outpatient therapeutic services, but
especially services that involve a significant amount of monitoring by
auxiliary staff, that may extend past regular business hours, and that
typically are lower clinical complexity and risk. We focused on these
issues for our CY 2011 proposal, and we are proposing to define a
limited set of outpatient therapeutic services as ``nonsurgical
extended duration therapeutic services'' that would require, at a
minimum, direct supervision during an initial period followed by
general supervision for the remaining duration of the service. We are
proposing to select therapeutic services that are nonsurgical, that can
last a significant period of time, that have a substantial monitoring
component, and that have a low risk of requiring the physician's or
appropriate non-physician practitioner's physical presence to furnish
assistance and direction after the initiation of the service.
Specifically, for observation services, IV hydration, and several
injection procedures identified in Table 37 of this proposed rule, CMS
would require direct supervision only at the initiation of the service
and would then allow general supervision for the remainder of the
service. We would apply the current definitions of general and direct
supervision delineated at 42 CFR 410.32(b)(3)(i) and Sec.
410.27(a)(1)(iv), respectively. General supervision would thus mean
that the service is furnished under the physician's or non-physician
practitioner's overall direction and control, but his or her physical
presence is not required during the performance of the service. Direct
supervision would mean that the physician or non-physician practitioner
is immediately available throughout the performance of the service to
furnish assistance and direction, but he or she does not need to be
present in the room when the service is being performed. We are
proposing to define ``initiation of the service'' as the beginning
portion of a service ending when the patient is stable and the
supervising physician or appropriate non-physician practitioner
believes the remainder of the service can safely be delivered under his
or her general direction and control without needing his or her
physical presence on the hospital campus or in the PBD of the hospital.
Under this proposal, we would continue to uphold direct supervision as
the minimum standard of supervision for all outpatient therapeutic
services, which we continue to believe is appropriate for ensuring some
minimum level of quality and safety in purchased hospital outpatient
services that are provided incident to physicians' services.
We considered but did not propose two other avenues of offering
flexibility while largely maintaining our minimum requirement for
direct supervision of outpatient therapeutic services. First, we
considered offering hospitals the flexibility of broadening the list of
nonsurgical extended duration therapeutic services to include more
complex and potentially acute services like chemotherapy administration
and blood transfusions, which some stakeholders also maintain do not
require direct supervision. Because we were concerned that these
services had a higher probability of needing a physician or non-
physician practitioner to redirect service, we reasoned that we would
have to require hospitals to create internal guidelines specifying a
supervision level and protocols for staffing that supervision level for
every nonsurgical extended duration therapeutic service. We considered
minimum requirements for these internal supervision guidelines,
including annual review and approval by a governing committee, periodic
internal evaluation of their implementation, and the ability to make
these guidelines available to auditors if requested. Further, auditors
would review those guidelines if a quality or patient safety event
would occur. Given the complexity of these services and the probability
that direct supervision would be necessary to ensure a minimum level of
quality and safety, we concluded that we should continue to require
direct supervision for these services. We also chose not to propose
this internal guidelines alternative because a variable standard of
supervision for these services could be administratively difficult for
us to audit and evaluate. Finally, we chose not to propose this option
because we believed that hospitals might find it burdensome to create
and maintain customized internal guidelines, especially without a clear
means of assessing whether their internal guidelines and implementation
of those guidelines would meet audit standards.
Second, we considered whether, for payment purposes, we should
deliberately exclude CAHs from all supervision requirements. We
acknowledge that statutory provisions allow CAHs some flexibility in
their staffing requirements to operate with more nursing staff and non-
physician practitioners rather than physicians if those are the
practitioners that are available, and that our regulations recognize
those reduced staffing requirements in the CoPs by establishing that,
at a minimum, the physician or non-physician practitioner must be
available, but not necessarily physically present on the CAH campus.
Some have suggested that these requirements reduce the quality and
safety of CAH services, and that CAHs should disclose their reduced
staffing levels to patients prior to providing services. We did not
choose to propose this option because we believe that Medicare should
purchase the same basic level of safety and quality from CAHs as from
all other hospitals, and for all beneficiaries, especially small rural
hospitals with a small number of beds. We do not believe that these
small rural hospitals paid under the OPPS through section 1833(t) of
the Act and CAHs paid at reasonable cost under section 1834(g) of the
Act have such different resource constraints that they require
different staffing rules for purposes of supervision. In fact, with
payment at cost, we reasoned that CAHs might be better able than other
small hospitals to hire staff to provide direct supervision of
therapeutic outpatient services.
In summary, we are proposing to define a list of nonsurgical
extended duration therapeutic services for a policy of direct
supervision followed by general supervision after the initiation of the
service because this alternative is responsive to the primary concerns
raised by CAHs and small rural hospitals, because it is
administratively feasible to implement, and because we believe it
continues to support our policy of direct supervision. We believe that
this proposed policy will maintain an adequate level of safety and
quality of care in the therapeutic services for hospital outpatients
that Medicare purchases.
2. Limitations of Our Analysis
The distributional impacts presented here are the projected effects
of the proposed CY 2011 policy changes on various hospital groups. We
post on the CMS Web site our hospital-specific estimated payments for
CY 2011 with the other supporting documentation for this proposed rule.
To view the hospital-specific estimates, we refer readers to the CMS
Web site at: http://www.cms.hhs.gov/
[[Page 46445]]
HospitalOutpatientPPS/. Select ``regulations and notices'' from the
left side of the page and then select ``CMS-1504-P'' from the list of
regulations and notices. The hospital-specific file layout and the
hospital-specific file are listed with the other supporting
documentation for this proposed rule. We show hospital-specific data
only for hospitals whose claims were used for modeling the impacts
shown in Table 55 below. We do not show hospital-specific impacts for
hospitals whose claims we were unable to use. We refer readers to
section II.A.2. of this proposed rule for a discussion of the hospitals
whose claims we do not use for ratesetting and impact purposes.
We estimate the effects of the proposed individual policy changes
by estimating payments per service, while holding all other payment
policies constant. We use the best data available, but do not attempt
to predict behavioral responses to our policy changes. In addition, we
do not make adjustments for future changes in variables such as service
volume, service mix, or number of encounters. As we have done in
previous rules, we are soliciting public comment and information about
the anticipated effects of our proposed changes on providers and our
methodology for estimating them.
3. Estimated Effects of This Proposed Rule on Hospitals
Table 55 below shows the estimated impact of this proposed rule on
hospitals. Historically, the first line of the impact table, which
estimates the change in payments to all hospitals, has always included
cancer and children's hospitals, which are held harmless to their pre-
BBA payment-to-cost ratio. We also include CMHCs in the first line that
includes all providers because we include CMHCs in our weight scalar
estimate.
We present separate impacts for CMHCs in Table 55 because CMHCs are
paid only for partial hospitalization services and CMHCs are a
different provider type from hospitals. For CY 2010, CMHCs and
hospitals were paid under two APCs for services under the OPPS: APC
0172 (Level 1 Partial Hospitalization (3 services)) and APC 0173 (Level
II Partial Hospitalization (4 or more services)). For CY 2011, we are
proposing to pay CMHCs under APC 0172 (Level I Partial Hospitalization
(3 services) for CMHCs) and APC 0173 (Level II Partial Hospitalization
(4 or more services) for CMHCs), and to pay hospitals for partial
hospitalization services under APC 0175 (Level I Partial
Hospitalization (3 services) for Hospital-based PHPs) and APC 0176
(Level II Partial Hospitalization (4 or more services) for Hospital-
based PHPs). We display the impact on CMHCs of this proposed policy
change below and we discuss the impact on CMHCs in section XXII.B.4. of
this proposed rule.
We also present separate impacts for cancer hospitals in Table 55
to illustrate the impact associated with our CY 2011 proposal for an
adjustment for cancer hospitals authorized by section 3138 of the
Affordable Care Act, as amended by HCERA, and discussed in section
II.F. of this proposed rule. Cancer hospitals are held harmless to the
proportional amount of payment they received before the OPPS was
implemented in 2001. We discuss the impact of this adjustment on cancer
hospitals in section XXII.B.5 of this proposed rule.
The estimated increase in the total payments made under the OPPS is
limited by the increase to the conversion factor set under the
methodology in the statute. The distributional impacts presented do not
include assumptions about changes in volume and service mix. Section
3137 of the Affordable Care Act, as amended by the HCERA, extended
additional payment to section 508 reclassification hospitals and
special exception hospital wages outside budget neutrality through
September 30, 2010. The amounts attributable to these reclassifications
are incorporated into the CY 2010 estimates in Table 55. Section 10324
of the Affordable Care Act, as amended by HCERA, further authorized
additional expenditures outside budget neutrality for hospitals in
certain frontier states to have a wage index of 1.00. The amounts
attributable to this Frontier state wage index adjustment are
incorporated into the CY 2011 estimates in Table 55.
Table 55 shows the estimated redistribution of hospital and CMHC
payments among providers as a result of APC reconfiguration and
recalibration; wage indices and the rural adjustment; the cancer
hospital adjustment; the combined impact of the APC recalibration, wage
and rural adjustment effects, the cancer hospital adjustment, and the
market basket update to the conversion factor; the Frontier wage index
adjustment; and, finally, estimated redistribution considering all
proposed payments for CY 2011 relative to all payments for CY 2010,
including the impact of changes in the outlier threshold, expiring
section 508 wage indices, and changes to the pass-through payment
estimate. We did not model an explicit budget neutrality adjustment for
the rural adjustment for SCHs because we are not proposing to make any
changes to the policy for CY 2011. Because the proposed updates to the
conversion factor, including the update of the market basket and the
subtraction of additional money dedicated to pass-through payment for
CY 2011, are applied uniformly across services, observed
redistributions of payments in the impact table for hospitals largely
depend on the mix of services furnished by a hospital (for example, how
the APCs for the hospital's most frequently furnished services would
change), and the impact of the wage index changes on the hospital.
However, total payments made under this system and the extent to which
this proposed rule would redistribute money during implementation also
would depend on changes in volume, practice patterns, and the mix of
services billed between CY 2010 and CY 2011 by various groups of
hospitals, which CMS cannot forecast.
Overall, the proposed OPPS rates for CY 2011 would have a positive
effect for providers paid under the OPPS, resulting in a 2.2 percent
estimated increase in Medicare payments. Removing cancer and children's
hospitals, because their payments are held harmless to the pre-BBA
ratio between payment and cost, and CMHCs suggests that these proposed
changes would result in a 2.1 percent estimated increase in Medicare
payments to all other hospitals.
To illustrate the impact of the proposed CY 2011 changes, our
analysis begins with a baseline simulation model that uses the final CY
2010 weights, the FY 2010 final IPPS wage indices that include
reclassifications, and the final CY 2010 conversion factor. Column 2 in
Table 55 shows the independent effect of the proposed changes resulting
from the reclassification of services among APC groups and the
recalibration of APC weights, based on 12 months of CY 2009 OPPS
hospital claims data and the most recent cost report data. We modeled
the effect of the proposed APC recalibration changes for CY 2011 by
varying only the weights (the final CY 2010 weights versus the proposed
CY 2011 weights calculated using the service mix and volume in the CY
2009 claims used for this proposed rule) and calculating the percent
difference in weight. Column 2 also reflects the effect of the proposed
changes resulting from the APC reclassification and recalibration
changes and any changes in multiple procedure discount patterns or
conditional packaging that occur as a result of the proposed changes in
the relative magnitude of payment weights.
Column 3 reflects the independent effects of the proposed updated
wage indices, including the application of budget neutrality for the
rural floor
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policy on a nationwide basis. This column excludes the effects of the
frontier wage index adjustment, which is not budget neutral and is
shown in column 6. We did not model a budget neutrality adjustment for
the rural adjustment for SCHs because we are making no changes to the
policy for CY 2011. We modeled the independent effect of updating the
wage indices by varying only the wage indices, holding APC relative
weights, service mix, and the rural adjustment constant and using the
proposed CY 2011 scaled weights and a CY 2010 conversion factor that
included a budget neutrality adjustment for the effect of changing the
wage indices between CY 2010 and CY 2011.
Column 4 demonstrates the independent effect of the cancer hospital
payment adjustment. We modeled the independent effect of the cancer
adjustment by varying only the payment to cancer hospitals after
applying provider specific adjustments that cumulatively result in the
proposed 40.5 percent adjustment while holding APC relative weights,
service mix, the rural adjustment and wage indices constant and using a
CY 2010 conversion factor.
Column 5 demonstrates the combined ``budget neutral'' impact of APC
recalibration (that is, Column 2), the wage index update (that is,
Column 3), the cancer hospital adjustment (that is, Column 4), as well
as the impact of updating the conversion factor with the adjusted
market basket update. We modeled the independent effect of the budget
neutrality adjustments and the adjusted market basket update by using
the weights and wage indices for each year, and using a CY 2010
conversion factor that included the market basket update and a budget
neutrality adjustment for differences in wage indices.
Column 6 demonstrates the impact of the budget neutral adjustments
and the market basket update reflected in Column 5 combined with the
non-budget neutral Frontier wage index adjustment, discussed in section
II.C.1. of this proposed rule.
Finally, Column 7 depicts the full impact of the proposed CY 2011
policies on each hospital group by including the effect of all the
proposed changes for CY 2011 (including the APC reconfiguration and
recalibration shown in Column 2) and comparing them to all estimated
payments in CY 2010 (these CY 2010 estimated payments include the
payments resulting from the non-budget neutral increases to wage
indices under section 508 of Public Law 108-173 as extended by Public
Law 111-148). Column 7 shows the combined budget neutral effects of
Columns 2 through 5, plus the impact of the Frontier wage index
adjustment; the proposed change to the fixed-dollar outlier threshold
from $2,175 to $2,025 as discussed in section II.G. of this proposed
rule; the expiration of section 508 reclassifications; the change in
the HOP QDRP payment reduction for the small number of hospitals in our
impact model that failed to meet the reporting requirements (see
section XVI.D. of this proposed rule); and the impact of increasing the
estimate of the percentage of total OPPS payments dedicated to
transitional pass-through payments. Of the 106 hospitals that failed to
meet the HOP QDRP reporting requirements for the full CY 2010 update
(and assumed, for modeling purposes, to be the same number for CY
2011), we included 24 in our model because they had both CY 2009 claims
data and recent cost report data. We estimate that the cumulative
effect of all changes for CY 2011 would increase payments to all
providers by 2.2 percent for CY 2011. We modeled the independent effect
of all changes in Column 7 using the final weights for CY 2010 and the
proposed weights for CY 2011. We used the final conversion factor for
CY 2010 of $67.241, which was announced in the notice describing
implementation of the Affordable Care Act provisions published around
the same time as this proposed rule and the proposed CY 2011 conversion
factor of $68.267 discussed in section II.B. of this proposed rule.
Column 7 also contains simulated outlier payments for each year. We
used the charge inflation factor used in the FY 2011 IPPS/RY 2011 LTCH
PPS proposed rule of 5.16 percent (1.0516) to increase individual costs
on the CY 2009 claims, and we used the most recent overall CCR in the
April 2010 Outpatient Provider-Specific File (OPSF) (75 FR 24068).
Using the CY 2009 claims and a 5.16 percent charge inflation factor, we
currently estimate that outlier payments for CY 2010, using a multiple
threshold of 1.75 and a fixed-dollar threshold of $2,175, would be
approximately 0.85 percent of total payments. Outlier payments of 0.85
percent are incorporated in the CY 2010 comparison in Column 7. We used
the same set of claims and a charge inflation factor of 10.59 percent
(1.1059) and the CCRs in the April 2010 OPSF, with an adjustment of
0.9890, to reflect relative changes in cost and charge inflation
between CY 2009 and CY 2011, to model the CY 2011 outliers at 1.0
percent of total payments using a multiple threshold of 1.75 and a
fixed-dollar threshold of $2,025.
Column 1: Total Number of Hospitals
The first line in Column 1 in Table 55 shows the total number of
providers (4,140), including cancer and children's hospitals and CMHCs
for which we were able to use CY 2009 hospital outpatient claims to
model CY 2010 and CY 2011 payments, by classes of hospitals. We
excluded all hospitals for which we could not accurately estimate CY
2010 or CY 2011 payment and entities that are not paid under the OPPS.
The latter entities include CAHs, all-inclusive hospitals, and
hospitals located in Guam, the U.S. Virgin Islands, Northern Mariana
Islands, American Samoa, and the State of Maryland. This process is
discussed in greater detail in section II.A. of this proposed rule. At
this time, we are unable to calculate a disproportionate share (DSH)
variable for hospitals not participating in the IPPS. Hospitals for
which we do not have a DSH variable are grouped separately and
generally include freestanding psychiatric hospitals, rehabilitation
hospitals, and long-term care hospitals. We show the total number
(3,871) of OPPS hospitals, excluding the hold-harmless cancer and
children's hospitals and CMHCs, on the second line of the table. We
excluded cancer and children's hospitals because section 1833(t)(7)(D)
of the Act permanently holds harmless cancer hospitals and children's
hospitals to their proportional payment relative to reasonable cost
prior to payment under the OPPS and, therefore, we removed them from
our impact analyses. We show the isolated impact on 207 CMHCs at the
bottom of the impact table and discuss that impact separately below. We
show the isolated impact on the 11 cancer hospitals in the last row of
the impact table.
Column 2: Proposed APC Changes Due to Reassignment and Recalibration
This column shows the combined effects of the reconfiguration,
recalibration, and other policies (such as our proposal to set payment
for separately payable drugs and biologicals at ASP+6 percent with an
accompanying reduction in the amount of cost associated with packaged
drugs and biologicals and changes in payment for PHP services).
Overall, we estimate that proposed changes in APC reassignment and
recalibration across all services paid under the OPPS would increase
payments to urban hospitals by 0.5 percent. We estimate that both large
and other urban hospitals would see an increase of 0.5 percent, all
attributable to recalibration. We estimate that urban hospitals billing
fewer than 11,000 lines
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for OPPS services would experience increases of 1.1 to 1.3 percent,
while urban hospitals billing 11,000 or more lines for OPPS services
would see increases of 0.5 to 0.8 percent.
Overall, we estimate that rural hospitals would experience an
increase of 0.5 percent as a result of changes to the APC structure. We
estimate that rural hospitals of all bed sizes would experience
increases of 0.4 to 0.7 percent as a result of APC recalibration. We
estimate that rural hospitals that report fewer than 5,000 lines for
OPPS services would experience a decrease of 0.4 percent, while rural
hospitals that report more than 5,000 lines for OPPS services would see
increases of 0.5 percent to 0.6 percent.
Among teaching hospitals, we estimate that the impact resulting
from APC recalibration would include an increase of 0.5 percent for
major and minor teaching hospitals.
Classifying hospitals by type of ownership suggests that voluntary
and governmental hospitals would see an increase of 0.5 percent, and
proprietary hospitals would see an estimated increase of 0.6 percent.
Finally, we estimate that hospitals for which DSH payments are not
available would experience decreases of 1.5 to 1.8 percent. We estimate
that most other classes of hospitals would experience modest increases
from CY 2010 to CY 2011 resulting from APC recalibration.
Column 3: Proposed New Wage Indices and the Effect of the Rural
Adjustment
This column estimates the impact of applying the proposed FY 2011
IPPS wage indices for the CY 2011 OPPS without the influence of the
Frontier wage index adjustment or the expiration of the section 508
wage index adjustment, which are not budget neutral. The Frontier wage
index adjustment is reflected in the combined impact shown in columns 6
and 7. The expiring section 508 adjustment is reflected in column 7. We
are not changing the rural payment adjustment for CY 2011. We estimate
that the combination of updated wage data and nationwide application of
rural floor budget neutrality would redistribute payment among regions.
We also updated the list of counties qualifying for the section 505
out-migration adjustment. Overall, we estimate that urban hospitals
would experience an increase of 0.1 percent from CY 2010 to CY 2011,
and that rural hospitals would experience a decrease of 0.3 percent as
a result of the updated wage indices. We estimate that hospitals in
rural New England States and rural West North Central States would
experience decreases of 1.9 and 0.8 percent, respectively. We estimate
that urban Pacific and rural West South Central States would experience
increases of 1.1 percent and 0.6 percent, respectively.
Column 4: Cancer Hospital Adjustment
This column estimates the budget neutral impact of applying the
proposed hospital-specific CY 2011 cancer adjustment, authorized by
section 3138 of the Affordable Care Act, as amended by the HCERA, which
results in an aggregate increase in payments to dedicated cancer
hospitals of 40.5% for the CY 2011 OPPS. We estimate that all other
hospitals will experience a decrease of 0.7 percent in CY 2011 as a
result of redistributing payments to the cancer hospitals under this
proposed adjustment.
Column 5: All Proposed Budget Neutrality Changes and Market Basket
Update
We estimate that the addition of the proposed market basket update
of 2.15 percent (which includes the reduction to the OPD fee schedule
update factor of 0.25 percentage points as required by section 3401(i)
and 10319(g) of the Affordable Care Act and section 1105(e) of HCERA)
would mitigate the negative impacts on hospital payments for CY 2011
created by the budget neutrality adjustments made in Columns 2, 3, and
4. Hospitals for which DSH is not available (generally hospitals not
paid under the IPPS, including freestanding psychiatric,
rehabilitation, and long-term care hospitals) experience the smallest
increases of between 0.2 and 0.5 percent. In general, Column 5 shows
that all hospitals would experience an estimated increase of 2.0
percent, attributable to the 2.15 percent OPD fee schedule update
factor increase (that is, the market basket) combined with the budget
neutrality adjustments.
Overall, we estimate that these proposed changes would increase
payments to urban hospitals by 2.1 percent. We estimate that large
urban hospitals would experience an increase of 2.2 percent, and
``other'' urban hospitals would experience a 1.9 percent increase. We
estimate that rural hospitals would experience a 1.6 percent increase
as a result of the proposed market basket update and other budget
neutrality adjustments. We estimate that rural hospitals that bill less
than 5,000 lines of OPPS services would experience an increase of 1.4
percent and that rural hospitals that bill more than 5,000 lines of
OPPS services would experience increases of 1.5 to 2.3 percent.
Among teaching hospitals, we estimate that the observed impacts
resulting from the market basket update and other budget neutrality
adjustments would include an increase of 2.0 and 1.9 percent,
respectively, for major and minor teaching hospitals.
Classifying hospitals by type of ownership suggests that voluntary,
proprietary, and governmental hospitals would experience estimated
increases of 1.9 percent, 2.2 percent, and 2.0 percent, respectively.
Column 6: Frontier Wage Index Adjustment
This column shows the impact of all budget neutrality adjustments,
application of the 2.15 percent OPD fee schedule update factor, and the
non-budget neutral impact of applying the Frontier wage adjustment
(that is, the Frontier wage index change in addition to all changes
reflected in column 5).
We estimate that hospitals in the urban West North Central and
urban Mountain States will experience increases of 2.5 and 2.3 percent,
respectively. Hospitals in the rural regions of the West North Central
and Mountain States would experience estimated increases of 2.3 and 4.1
percent, respectively.
Column 7: All Proposed Changes for CY 2011
Column 7 compares all proposed changes for CY 2011 to estimated
final payment for CY 2010, including the change in the outlier
threshold, payment reductions for hospitals that failed to meet the HOP
QDRP reporting requirements, the influence of the expiration of the
section 508 wage adjustment, and the difference in pass-through
estimates that are not included in the combined percentages shown in
Column 6. This column includes estimated payment for a handful of
hospitals receiving reduced payment because they did not meet their
hospital outpatient quality measure reporting requirements; however, we
estimate that the anticipated change in payment between CY 2010 and CY
2011 for these hospitals would be negligible. (We further discuss the
estimated impacts of hospitals' failure to meet these requirements
below in section XXII.D. of this proposed rule.) Overall, we estimate
that providers would experience an increase of 2.2 percent under this
proposed rule in CY 2011 relative to total spending in CY 2010. The
projected 2.2 percent increase for all providers in Column 7 of Table
55 reflects the proposed 2.15 percent adjusted OPD fee schedule update
factor increase, less 0.06 percent for the
[[Page 46448]]
change in the pass-through estimate between CY 2010 and CY 2011, plus
0.15 percent for the difference in estimated outlier payments between
CY 2010 (0.85 percent) and CY 2011 (1.0 percent), and less 0.09 percent
due to the expiration of the special, non-budget neutral wage index
payments made under section 508, plus .09 percent due to the Frontier
wage index adjustment. When we exclude cancer and children's hospitals
(which are held harmless to their pre-OPPS costs) and CMHCs, the
estimated increase is 2.1 percent.
We estimate that the combined effect of all changes for CY 2011
would increase payments to urban hospitals by 2.1 percent. We estimate
that large urban hospitals would experience a 2.2 percent increase,
while ``other'' urban hospitals would experience an increase of 2.0
percent. We estimate that urban hospitals that bill less than 5,000
lines of OPPS services would experience an increase of 3.3 percent, and
we estimate that all urban hospitals that bill more than 5,000 lines of
OPPS services would experience increases between 2.1 percent and 3.4
percent.
Overall, we estimate that rural hospitals would experience a 1.8
percent increase as a result of the combined effects of all changes for
CY 2011. We estimate that rural hospitals that bill less than 5,000
lines of OPPS services would experience an increase of 3.4 percent and
rural hospitals that bill greater than 5,000 lines of OPPS services
would experience increases ranging from 1.7 percent to 2.5 percent.
Among teaching hospitals, we estimate that the impacts resulting
from the combined effects of all changes would include an increase of
2.1 percent for both major and minor teaching hospitals.
Classifying hospitals by type of ownership, we estimate that
proprietary hospitals would gain 2.3 percent, governmental hospitals
would experience an increase of 2.2 percent, and voluntary hospitals
would experience an increase of 2.0 percent.
4. Estimated Effects of This Proposed Rule on CMHCs
The bottom of Table 55 demonstrates the isolated impact on CMHCs.
CMHCs are currently paid under two APCs for services under the OPPS:
APC 0172 (Level 1 Partial Hospitalization (3 services)) and APC 0173
(Level II Partial Hospitalization (4 or more services)). This proposed
rule proposes to further refine payment within these Partial
Hospitalization APCs for CY 2011 by providing two payment rates for
Partial Hospitalization services for each provider type (CMHCs and
hospital-based PHPs). Specifically, APC 0172 would be retitled: ``Level
I Partial Hospitalization (3 services) for CMHCs;'' APC 0173 would be
retitled: ``Level II Partial Hospitalization (4 or more services) for
CMHCs;'' new APC 0175 would be titled ``Level I Partial Hospitalization
(3 services) for Hospital-based PHPs'' and new APC 0176 would be
titled: ``Level II Partial Hospitalization (4 or more services) for
Hospital-based PHPs.'' We are proposing payment rates for each APC
based on the cost data derived from claims and cost reports for the
provider type to which the APC is specific. We modeled the impact of
this APC policy change assuming that CMHCs would continue to provide
the same number of days of PHP care, with each day having either three
services or four or more services, as seen in the CY 2009 claims data.
We excluded days with one or two services. Because the relative weights
for APC 0172 (Level 1 Partial Hospitalization (3 services)) and APC
0173 (Level II Partial Hospitalization (4 or more services)) both
decline in CY 2011 to reflect CMHC cost data for Partial
Hospitalization services provided by CMHCs under this proposed rule, we
estimate that there would be a 44.0 percent decrease in payments to
CMHCs due to these APC policy changes (shown in Column 2).
Column 3 shows that the estimated impact of adopting the CY 2011
wage index values would result in a 0.9 percent increase in payments to
CMHCs. We note that all providers paid under the OPPS, including CMHCs,
would receive a 2.15 percent adjusted market basket increase. Combining
this proposed market basket increase, along with proposed changes in
APC policy for CY 2011 and the proposed CY 2011 wage index updates, the
proposed cancer hospital adjustment, proposed changes in outlier and
pass-through payments, and the expiration of section 508 wages, we
estimate that the combined impact on CMHCs for CY 2011 would be a 41.7
percent decrease in payment.
The impact on hospitals of the proposed changes to payment rates to
hospitals for partial hospitalization services is reflected in the
impact of all proposed changes on hospitals.
5. Estimated Effects of This Proposed Rule on Cancer Hospitals
The bottom of Table 55 demonstrates the isolated impact on the 11
cancer hospitals meeting the classification criteria in
1886(d)(1)(B)(v) of the Act. Section 3138 of the Affordable Care Act,
as amended by HCERA, authorized the Secretary to conduct a study to
determine if these hospitals are more costly than other hospitals paid
under the OPPS, and if they are more costly, the Secretary shall make
an appropriate adjustment that is budget neutral. As discussed in
section II.F. of this proposed rule, we found that these hospitals are
more costly and proposed an adjustment. These cancer hospitals
currently are held harmless under section 1833(t)(7)(D) of the Act, and
most of them receive additional payments outside budget neutrality. In
general, the effect of this proposal is to make more payments to cancer
hospitals than received under the OPPS, but within budget neutrality,
effectively redistributing money from other hospitals to fund this
adjustment. The proposed adjustment is hospital-specific, raising
payment for each hospital to 86.7 percent of reasonable cost.
Column 2 demonstrates cancer hospitals receiving a modest increase
of 0.3 percent after recalibration of the APC groups and weights.
Column 3 shows that the estimated impact of adopting the CY 2011 wage
index values would result in a 0.1 percent increase in payments to
cancer hospitals within the PPS. Column 4 demonstrates the budget
neutral impact of applying a hospital-specific adjustment to the 11
designated cancer hospitals. We estimate that the cancer hospitals will
experience an aggregate increase in payment of 40.5%. All providers
paid under the OPPS would receive a 2.15 percent adjusted market basket
increase under this proposal. Combining this proposed market basket
increase, along with proposed changes in APC policy for CY 2011 and the
proposed CY 2011 wage index updates, the proposed cancer hospital
adjustment, proposed changes in outlier and pass-through payments, and
the expiration of section 508 wages, we estimate that the combined
impact on cancer hospitals within the PPS system would be a 39.9
percent increase. Cancer hospitals remain eligible for hold harmless
payments to the extent that their PPS amount, including the cancer
adjustment, is less than the estimated amount of payment they would
have received under reasonable cost payment for any given year.
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6. Estimated Effect of This Proposed Rule on Beneficiaries
For services for which the beneficiary pays a copayment of 20
percent of the payment rate, the beneficiary share of payment would
increase for services for which the OPPS payments would rise and would
decrease for services for which the OPPS payments would fall. For
example, for a service assigned to Level IV Needle Biopsy/Aspiration
Except Bone Marrow (APC 0037) in the CY 2010 OPPS, the national
unadjusted copayment is $228.76, and the minimum unadjusted copayment
is $208.46. For CY 2011, the national unadjusted copayment for APC 0037
would be $228.76, the same rate in effect for CY 2010. The minimum
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unadjusted copayment for APC 0037 would be $215.24 or 20 percent of the
CY 2011 national unadjusted payment rate for APC 0037 of $1,076.16. The
minimum unadjusted copayment would rise because the payment rate for
APC 0037 would rise for CY 2011. In all cases, the statute limits
beneficiary liability for copayment for a procedure to the hospital
inpatient deductible for the applicable year. The CY 2010 hospital
inpatient deductible is $1,100. The CY 2011 hospital inpatient
deductible is not yet available.
In order to better understand the impact of changes in copayment on
beneficiaries, we modeled the percent change in total copayment
liability using CY 2009 claims. We estimate, using the claims of the
4,140 hospitals and CMHCs on which our modeling is based, that total
beneficiary liability for copayments would decline as an overall
percentage of total payments, from 22.4 percent in CY 2010 to 22.1
percent in CY 2011.
7. Conclusion
The changes in this proposed rule would affect all classes of
hospitals and CMHCs. We estimated that some classes of hospitals would
experience significant gains and others less significant gains, but all
classes of hospitals would experience positive updates in OPPS payments
in CY 2011 with one exception. We estimate that CMHCs would see an
overall decrease in payment of 41.7 percent due to the recalibration of
payment rates for Partial Hospitalization services at CMHCs which bases
payment for CMHCs on cost report and claims data submitted by CMHCs.
Specifically, dedicated cancer hospitals would experience an aggregate
increase in payment of 40.5 percent, although because the cancer
adjustment is hospital-specific, dedicated cancer hospitals will
experience different increases.
Table 55 demonstrates the estimated distributional impact of the
OPPS budget neutrality requirements that would result in a 2.2 percent
increase in payments for all services paid under the OPPS in CY 2011,
after considering all changes to APC reconfiguration and recalibration,
as well as the adjusted market basket increase, wage index changes,
including the Frontier wage index adjustment and the expiration of
section 508 wage index reclassifications, the cancer hospital
adjustment, estimated payment for outliers, and changes to the pass-
through payment estimate. The accompanying discussion, in combination
with the rest of this proposed rule, constitutes a regulatory impact
analysis.
8. Accounting Statement
As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf), in Table 56, we have
prepared an accounting statement showing the CY 2011 estimated hospital
OPPS incurred benefit impact associated with the proposed CY 2011
hospital outpatient market basket update shown in this proposed rule
based on the FY 2011 President's Budget. All estimated impacts are
classified as transfers.
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C. Effects of ASC Payment System Changes in This Proposed Rule
On August 2, 2007, we published in the Federal Register the final
rule for the revised ASC payment system, effective January 1, 2008 (72
FR 42470). In that final rule, we adopted the methodologies to set
payment rates for covered ASC services to implement the revised payment
system so that it would be designed to result in budget neutrality as
required by section 626 of Public Law 108-173; established that the
OPPS relative payment weights would be the basis for payment and that
we would update the system annually as part of the OPPS rulemaking
cycle; and provided that the revised ASC payment rates would be phased-
in over 4 years. During the 4-year transition to full implementation of
the ASC payment rates, payments for surgical procedures performed in
ASCs that were on the CY 2007 ASC list of covered surgical procedures
were made using a blend of the CY 2007 ASC payment rate and the ASC
payment rate calculated according to the ASC standard ratesetting
methodology for the applicable transitional year. In CY 2009, we paid
ASCs using a 50/50 blend, in which payment was calculated by adding 50
percent of the CY 2007 ASC rate for a surgical procedure on the CY 2007
ASC list of covered surgical procedures and 50 percent of the CY 2009
ASC rate calculated according to the ASC standard ratesetting
methodology for the same procedure. For CY 2010, we transitioned the
blend to a 25/75 blend of the CY 2007 ASC rate and the CY 2010 ASC
payment rate calculated according to the ASC standard ratesetting
methodology. Beginning in CY 2011, we would pay ASCs for all covered
surgical procedures, including those on the CY 2007 ASC list, at the
ASC payment rates calculated according to the ASC standard ratesetting
methodology.
ASC payment rates are calculated by multiplying the ASC conversion
factor by the ASC relative payment weight. As discussed fully in
section XV. of this proposed rule, we set the proposed CY 2011 ASC
relative payment weights by scaling CY 2011 ASC relative payment
weights by the ASC scalar of 0.9090. The estimated effects of the
updated relative payment weights on payment rates during this first
year of full implementation of the ASC payment rates calculated
according to the ASC standard ratesetting methodology are varied and
are reflected in the estimated payments displayed in Tables 57 and 58
below.
[[Page 46453]]
Beginning in CY 2011, section 3401 of the Affordable Care Act
requires that the annual update to the ASC payment system, which is the
consumer price index for all urban consumers (CPI-U), be reduced by the
productivity adjustment. The Affordable Care Act defines the
productivity adjustment to be equal to the 10-year moving average of
changes in annual economy-wide private nonfarm business multi-factor
productivity (MFP) (as projected by the Secretary for the 10-year
period ending with the applicable fiscal year, year, cost reporting
period, or other annual period). We calculated the CY 2011 ASC
conversion factor by adjusting the CY 2010 ASC conversion factor by
1.0006 to account for changes in the pre-floor and pre-reclassified
hospital wage indices between CY 2010 and CY 2011 and by applying the
CY 2011 MFP-adjusted CPI-U of 0 percent (1.6 percent CPI-U minus 1.6
percent MFP). The proposed CY 2011 ASC conversion factor is $41.898.
1. Alternatives Considered
Alternatives to the changes we are making and the reasons that we
have chosen specific options are discussed throughout this proposed
rule. Some of the major ASC issues discussed in this proposed rule and
the options considered are discussed below.
a. Alternatives Considered for Office-Based Procedures
According to our final policy for the revised ASC payment system,
we designate as office-based those procedures that are added to the ASC
list of covered surgical procedures in CY 2008 or later years and that
we determine are predominantly performed in physicians' offices based
on consideration of the most recent available volume and utilization
data for each individual procedure HCPCS code and/or, if appropriate,
the clinical characteristics, utilization, and volume of related HCPCS
codes. We establish payment for procedures designated as office-based
at the lesser of the MPFS nonfacility practice expense payment amount
or the ASC rate developed according to the standard methodology of the
revised ASC payment system.
In developing this proposed rule, we reviewed the full CY 2009
utilization data for all surgical procedures added to the ASC list of
covered surgical procedures in CY 2008 or later years and for those
procedures for which the office-based designation is temporary in the
CY 2010 OPPS/ASC final rule with comment period (74 FR 60605 through
60608). Based on that review, and as discussed in section XV.C.1.b. of
this proposed rule, we are proposing to newly designate six surgical
procedures as permanent office-based (four of which we are also
proposing to add to the ASC list of covered surgical procedures for CY
2011) and to make permanent the office-based designations of three
existing surgical procedures that have temporary office-based
designations in CY 2010. We also are proposing temporary office-based
designations for 7 procedures in CY 2011. We considered two
alternatives in developing this policy.
The first alternative we considered was to make no change to the
procedure payment designations. This would mean that we would pay for
the 9 procedures we are proposing to designate as permanently office-
based and the 7 procedures we are proposing to designate as temporarily
office-based at an ASC payment rate calculated according to the
standard ratesetting methodology of the revised ASC payment system. We
did not select this alternative because our analysis of the data and
our clinical review indicated that all 9 procedures we are proposing to
designate as permanently office-based as well as the 7 procedures that
we are proposing to designate temporarily as office-based could be
considered to be predominantly performed in physicians' offices.
Consistent with our final policy adopted in the August 2, 2007 final
rule (72 FR 42509 through 42513), we were concerned that making
payments at the standard ASC payment rate for the 9 procedures
designated as office-based and 7 procedures designated as temporarily
office-based could create financial incentives for the procedures to
shift from physicians' offices to ASCs for reasons unrelated to
clinical decisions regarding the most appropriate setting for surgical
care. Further, consistent with our policy, we believe that when
adequate data become available to make permanent determinations about
procedures with temporary office-based designations, maintaining the
temporary designation is no longer appropriate.
The second alternative we considered and the one we are proposing
for CY 2011 is to designate six additional procedures as office-based
for CY 2011 and to make permanent the office-based designations of
three of the procedures with temporary office-based designations in CY
2010. We also are proposing to designate 7 procedures as temporarily
office-based in CY 2011. We chose this alternative because our claims
data and clinical review indicate that these procedures could be
considered to be predominantly performed in physicians' offices. We
believe that designating these procedures as office-based, which
results in the CY 2010 ASC payment rate for these procedures
potentially being capped at the CY 2010 physicians' office rate (that
is, the MPFS nonfacility practice expense payment amount), if
applicable, is an appropriate step to ensure that Medicare payment
policy does not create financial incentives for such procedures to
shift unnecessarily from physicians' offices to ASCs, consistent with
our final policy adopted in the August 2, 2007 final rule.
b. Alternatives Considered for Covered Surgical Procedures
According to our final policy for the revised ASC payment system,
we designate as covered all surgical procedures that we determine would
not be expected to pose a significant risk to beneficiary safety or
would not be expected to require an overnight stay when performed on
Medicare beneficiaries in an ASC.
In developing this proposed rule, we reviewed the clinical
characteristics and full CY 2009 utilization data, if applicable, for
all procedures reported by Category III CPT codes implemented July 1,
2010, and surgical procedures that were excluded from ASC payment for
CY 2010. Based on this review, we identified 8 new surgical procedures
described by Category III CPT codes that were new for July 2010 and 5
surgical procedures excluded from ASC payment for CY 2010, that we
determined were appropriate for addition to the ASC list of covered
surgical procedures. We considered two alternatives in developing this
policy.
The first alternative we considered was to make no change to the
ASC list of covered surgical procedures for CY 2010. We did not choose
this alternative because our analysis of data and clinical review
indicated that the 13 procedures we are designating as covered surgical
procedures for CY 2011 would not be expected to pose a significant risk
to beneficiary safety in ASCs and would not be expected to require an
overnight stay. Consistent with our final policy, we were concerned
that by continuing to exclude them from the list of ASC covered
surgical procedures, we may unnecessarily limit beneficiaries' access
to the services in the most clinically appropriate settings.
The second alternative we considered and the one we are proposing
for CY 2011 was to designate 13 additional procedures as ASC covered
surgical procedures for CY 2011. We chose this alternative because our
claims data and clinical review indicate that these procedures would
not be expected to
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pose a significant risk to beneficiary safety and would not be expected
to require an overnight stay, and thus they meet the criteria for
inclusion on the list of ASC covered surgical procedures. We believe
that adding these procedures to the list of covered surgical procedures
is an appropriate step to ensure that beneficiary access to services is
not limited unnecessarily.
c. Alternatives Considered for the Extension of Waiver of Deductible to
Services Furnished in Connection With or in Relation to a Colorectal
Screening Test That Becomes Diagnostic
Section 4104(c)(2) of the Affordable Care Act waives the deductible
with respect to a colorectal cancer screening test regardless of the
code that is billed for the establishment of a diagnosis as a result of
the test, or for the removal of tissue or other matter or other
procedure that is furnished in connection with, as a result of, and in
the same clinical encounter as a screening test. We are proposing for
CY 2011 that the deductible be waived for all surgical services
furnished in an ASC on the same date as a planned screening colonoscopy
or planned flexible sigmoidoscopy as being furnished in connection
with, as a result of, and in the same clinical encounter as the
screening test (we note that barium enemas are not ASC covered
ancillary or surgical procedures). As discussed in detail under the
alternatives considered for the OPPS (section XXII.B.1.a above), we
considered three alternatives for the extension of waiver of deductible
to services furnished in connection with or in relation to a colorectal
screening test that becomes diagnostic for CY 2011. The first
alternative we considered, but are not proposing for the reasons
previously discussed, was to define a limited set of colonoscopy codes
to which the waiver could apply when performed on the same date as a
procedure that began as a screening colonoscopy or screening flexible
sigmoidoscopy. The second alternative we considered, but are not
proposing for the reasons previously discussed, was to define a
broader, but still limited set of codes (for example, selected surgical
services) to which the waiver could apply when performed on the same
date as a procedure that began as a screening colonoscopy or screening
flexible sigmoidoscopy. The third alternative we considered, and the
one we are proposing for CY 2011, is to apply the waiver to any
surgical procedure on the same date as a screening colonoscopy or
flexible sigmoidoscopy performed in an ASC that providers report began
as a screening test. As we discuss above, we chose this alternative
because we believe it provides the greatest ease of public
understanding and provider application. We believe that this
alternative is appropriate because we believe that it would be very
rare for an unrelated surgery to occur on the same date as one of these
scheduled screening tests. Moreover, we believe that the risk of
improper expenditures would be very small under this policy because it
is the deductible, and not the coinsurance, that is waived for the
related procedures other than the screening tests (that is, the Part B
deductible is a fixed amount that the beneficiary pays before Medicare
begins to pay and typically would be met after receiving one to two
services).
2. Limitations of Our Analysis
Presented here are the projected effects of the proposed changes
for CY 2011 on Medicare payment to ASCs. A key limitation of our
analysis is our inability to predict changes in ASC service mix between
CY 2009 and CY 2011 with precision. We believe that the net effect on
Medicare expenditures resulting from the proposed CY 2011 changes would
be small in the aggregate for all ASCs. However, such changes may have
differential effects across surgical specialty groups as ASCs continue
to adjust to the payment rates based on the policies of the revised ASC
payment system. We are unable to accurately project such changes at a
disaggregated level. Clearly, individual ASCs would experience changes
in payment that differ from the aggregated estimated impacts presented
below.
3. Estimated Effects of This Proposed Rule to ASCs
Some ASCs are multispecialty facilities that perform the gamut of
surgical procedures, from excision of lesions to hernia repair to
cataract extraction; others focus on a single specialty and perform
only a limited range of surgical procedures, such as eye, digestive
system, or orthopedic procedures. The combined effect on an individual
ASC of the proposed update to the CY 2011 payments would depend on a
number of factors, including, but not limited to, the mix of services
the ASC provides, the volume of specific services provided by the ASC,
the percentage of its patients who are Medicare beneficiaries, and the
extent to which an ASC provides different services in the coming year.
The following discussion presents tables that display estimates of the
impact of the proposed CY 2011 update to the revised ASC payment system
on Medicare payments to ASCs, assuming the same mix of services as
reflected in our CY 2009 claims data. Table 57 depicts the estimated
aggregate percent change in payment by surgical specialty or ancillary
items and services group by comparing estimated CY 2010 payments to
estimated proposed CY 2011 payments, and Table 58 shows a comparison of
estimated CY 2010 payments to estimated proposed CY 2011 payments for
procedures that we estimate would receive the most Medicare payment in
CY 2011.
Table 57 shows the estimated effects on aggregate proposed Medicare
payments under the revised ASC payment system by surgical specialty or
ancillary items and services group. We have aggregated the surgical
HCPCS codes by specialty group, grouped all HCPCS codes for covered
ancillary items and services into a single group, and then estimated
the effect on aggregated payment for surgical specialty and ancillary
items and services groups. The groups are sorted for display in
descending order by estimated Medicare program payment to ASCs. The
following is an explanation of the information presented in Table 57.
Column 1--Surgical Specialty or Ancillary Items and
Services Group indicates the surgical specialty into which ASC
procedures are grouped or the ancillary items and services group which
includes all HCPCS codes for covered ancillary items and services. To
group surgical procedures by surgical specialty, we used the CPT code
range definitions and Level II HCPCS codes and Category III CPT codes,
as appropriate, to account for all surgical procedures to which the
Medicare program payments are attributed.
Column 2--Estimated ASC Payments were calculated using CY
2009 ASC utilization (the most recent full year of ASC utilization) and
CY 2010 ASC payment rates. The surgical specialty and ancillary items
and services groups are displayed in descending order based on
estimated CY 2010 ASC payments.
Column 3--Estimated CY 2011 Percent Change (Fully
Implemented Payment Rates) is the aggregate percentage increase or
decrease in Medicare program payment to ASCs for each surgical
specialty or ancillary items and services group that would be
attributable to proposed updates to ASC payment rates for CY 2011
compared to CY 2010.
As seen in Table 57, we estimate that the proposed update to ASC
rates for CY 2011 would result in a 1 percent decrease in aggregate
payment amounts for eye and ocular adnexa procedures, a
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6 percent decrease in aggregate payment amounts for digestive system
procedures, and a 1 percent increase in aggregate payment amounts for
nervous system procedures.
Generally, for the surgical specialty groups that account for less
ASC utilization and spending, we estimate that the payment effects of
the proposed CY 2011 update are positive. We estimate that ASC payments
for procedures in those surgical specialties would increase in CY 2011.
For instance, we estimate that, in the aggregate, payment for
integumentary system procedures would increase by 3 percent under the
proposed CY 2011 rates. We estimate similar effects for genitourinary,
cardiovascular, musculoskeletal, respiratory, hematologic and lymphatic
systems, and auditory system procedures as well.
An estimated increase in aggregate payment for the specialty group
does not mean that all procedures in the group would experience
increased payment rates. For example, the estimated modest increase for
CY 2011 for nervous system procedures is likely due to increase in the
ASC payment weight for some of the high volume procedures, such as CPT
code 64721 (Neuroplasty and/or transposition; median nerve at carpal
tunnel).
Also displayed in Table 57 is a separate estimate of Medicare ASC
payments for the group of separately payable covered ancillary items
and services. We estimate that aggregate payments for these items and
services would decrease by 2 percent for CY 2011. The payment estimates
for the covered surgical procedures include the costs of packaged
ancillary items and services. In rules for years prior to CY 2010, we
did not have ASC payment data for covered ancillary items and services
because, prior to CY 2008, they were paid under other fee schedules or
packaged into payment for the covered surgical procedures. Beginning
with the CY 2010 OPPS/ASC rulemaking, we have utilization data for
those services as well as for all of the covered surgical procedures
provided in ASCs under the revised payment system.
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Table 58 below shows the estimated impact of the proposed updates
to the revised ASC payment system on aggregate ASC payments for
selected surgical procedures during CY 2011. The table displays 30 of
the procedures receiving the greatest estimated CY 2010 aggregate
Medicare payments to ASCs. The HCPCS codes are sorted in descending
order by estimated CY 2010 program payment.
Column 1--HCPCS code.
Column 2--Short Descriptor of the HCPCS code.
Column 3--Estimated CY 2010 Allowed Charges were
calculated using CY 2009 ASC utilization (the most recent full year of
ASC utilization) and the CY 2010 ASC payment rates. The estimated CY
2010 allowed charges are expressed in millions of dollars.
Column 4--Estimated CY 2010 Percent Change (Fully
Implemented Payment Rates) reflects the percent differences between the
estimated ASC payment for CY 2010 and the estimated payment for CY 2011
based on the proposed update.
As displayed in Table 58, 21 of the 30 procedures with the greatest
estimated aggregate CY 2010 Medicare payment are included in the 3
surgical specialty groups that are estimated to account for the most
Medicare payment to ASCs in CY 2011, specifically eye and ocular
adnexa, digestive system, and nervous system surgical groups.
Consistent with the estimated payment effects on the surgical specialty
groups displayed in Table 57, the estimated effects of the proposed CY
2011 update on ASC payment for individual procedures shown in Table 58
are varied.
The ASC procedure for which the most Medicare payment is estimated
to be made in CY 2010 is the cataract removal procedure reported with
CPT code 66984 (Extracapsular cataract removal with insertion of
intraocular lens prosthesis (one stage procedure), manual or mechanical
technique (e.g.,
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irrigation and aspiration or phacoemulsification)). We estimate that
the proposed update to the ASC rates would result in a 2 percent
payment decrease for this procedure in CY 2011. The estimated payment
effects on two of the three other eye and ocular adnexa procedures
included in Table 58 are more significant. We estimate that the
proposed payment rate for CPT code 66821 (Discission of secondary
membranous cataract (opacified posterior lens capsule and/or anterior
hyaloid); laser surgery (e.g., YAG laser) (one or more stages)) would
decrease by 9 percent and payment for CPT code 67904 (Repair eyelid
defect) would increase by 9 percent.
We estimate that the proposed payment rates for all of the
digestive system procedures included in Table 58 would decrease by 1 to
10 percent in CY 2011. Those estimated decreases are consistent with
decreases in the previous 3 years under the revised ASC payment system
and are expected because, under the previous ASC payment system, the
payment rates for many high volume endoscopy procedures were almost the
same as the payments for the procedures under the OPPS.
The estimated effects of the proposed CY 2011 update on the 9
nervous system procedures for which the most Medicare ASC payment is
estimated to be made in CY 2010 would be variable. Our estimates
indicate that the proposed CY 2011 update would result in payment
increases of 2 to 10 percent for 5 of the 9 procedures and result in a
1 percent decrease for the other 4 nervous system procedures. The
nervous system procedures for which we estimate a positive effect on CY
2010 payments include CPT codes 64721 (Neuroplasty and/or
transposition; median nerve at carpal tunnel) and 64622 (Destruction by
neurolytic agent, paravertebral facet joint nerve; lumbar or sacral,
single level), which are expected to have payment increases of 10
percent and 6 percent, respectively.
The estimated payment effects for most of the remaining procedures
listed in Table 58 would be positive. For example, the proposed payment
rates for musculoskeletal CPT codes 29880 (Arthroscopy, knee, surgical;
with meniscectomy (medial AND lateral, including any meniscal shaving))
and 29881 (Arthroscopy, knee, surgical; with meniscectomy (medial OR
lateral, including any meniscal shaving)) would be estimated to
increase 10 percent over the CY 2010 transitional payment rates.
Musculoskeletal procedures would be expected to account for a greater
percentage of CY 2011 Medicare ASC spending as we estimate that payment
for procedures in that surgical specialty group would increase under
the revised payment system in CY 2011.
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The previous ASC payment system served as an incentive to ASCs to
focus on providing procedures for which they determined Medicare
payments would support their continued operation. We note that,
historically, the ASC payment rates for many of the most frequently
performed procedures in ASCs were similar to the OPPS payment rates for
the same procedures. Conversely, procedures with ASC payment rates that
were substantially lower than the OPPS rates have historically been
performed least often in ASCs. We believed that the revised ASC payment
system would encourage greater efficiency in ASCs and would promote
significant increases in the breadth of surgical procedures performed
in ASCs because it distributes payments across the entire spectrum of
covered surgical procedures based on a coherent system of relative
weights that are related to the clinical and facility resource
requirements of those procedures.
The CY 2009 claims data that we used to develop the proposed CY
2011 ASC payment system relative weights and rates reflect the second
year of utilization under the revised payment system. Although the
changes in the claims data are not large, the data reflect increased
Medicare ASC spending for procedures that were newly added to the ASC
list in CY 2008. Our estimates based on CY 2009 data indicate that for
CY 2011 there would be especially noticeable increases in spending for
respiratory systems, and hematologic and lymphatic systems, compared to
the previous ASC payment system.
[[Page 46458]]
4. Estimated Effects of This Proposed Rule on Beneficiaries
We estimate that the proposed CY 2011 update to the ASC payment
system would be generally positive for beneficiaries with respect to
the new procedures that we are adding to the ASC list of covered
surgical procedures and for those that we are designating as office-
based for CY 2010. First, as discussed in section XV.D.1.d. of this
proposed rule, we are proposing to waive either the coinsurance, the
Part B deductible, or both for certain preventive services recommended
by the USPSTF with a grade of A or B for any indication or population
and that are appropriate for the individual to comply with sections
4104 and 10406 of the Affordable Care Act. Other than these services,
the ASC coinsurance rate for all procedures is 20 percent. This
contrasts with procedures performed in HOPDs, where the beneficiary is
responsible for copayments that range from 20 percent to 40 percent of
the procedure payment. Second, ASC payment rates under the revised
payment system are lower than payment rates for the same procedures
under the OPPS; therefore, the beneficiary coinsurance amount under the
ASC payment system almost always would be less than the OPPS copayment
amount for the same services. (The only exceptions would be if the ASC
coinsurance amount exceeds the inpatient deductible. The statute
requires that copayment amounts under the OPPS not exceed the inpatient
deductible.) For new procedures that we are proposing to add to the ASC
list of covered surgical procedures in CY 2011, as well as for
procedures already included on the list, and that are furnished in an
ASC rather than the HOPD setting, the beneficiary coinsurance amount
would be less than the OPPS copayment amount. Furthermore, the proposed
additions to the ASC list of covered surgical procedures would provide
beneficiaries access to more surgical procedures in ASCs. Beneficiary
coinsurance for services migrating from physicians' offices to ASCs may
decrease or increase under the revised ASC payment system, depending on
the particular service and the relative payment amounts for that
service in the physician's office compared to the ASC. However, for
those additional procedures that we are proposing to designate as
office-based in CY 2011, the beneficiary coinsurance amount would be no
greater than the beneficiary coinsurance in the physician's office.
In addition, as finalized in the August 2, 2007 final rule (72 FR
42521), in CY 2011, the final year of the 4-year transition to the ASC
payment rates calculated according to the ASC standard ratesetting
methodology of the revised ASC payment system, ASC payment rates for a
number of commonly furnished ASC procedures would continue to be
reduced, resulting in lower beneficiary coinsurance amounts for these
ASC services in CY 2011.
5. Conclusion
The proposed updates to the ASC payment system for CY 2011 would
affect each of the approximately 5,000 ASCs currently approved for
participation in the Medicare program. The effect on an individual ASC
would depend on its mix of patients, the proportion of the ASC's
patients that are Medicare beneficiaries, the degree to which the
payments for the procedures offered by the ASC are changed under the
revised payment system, and the extent to which the ASC provides a
different set of procedures in the coming year.
The CY 2011 proposed update to the revised ASC payment system
includes an MFP-adjusted CPI-U increase factor of 0 percent that we
estimate would result in the same amount of Medicare expenditures in CY
2011 than was estimated to be made in CY 2010. We estimate that the
proposed update to the revised ASC payment system, including the
addition of surgical procedures to the list of covered surgical
procedures, would have minimal effect on Medicare expenditures compared
to the estimated level of Medicare expenditures in CY 2010.
6. Accounting Statement
As required by OMB Circular A-4 (available at http://www.whitehousegov/omb/circulars/a004/a-4.pdf), in Table 59 below, we
have prepared an accounting statement showing the classification of the
expenditures associated with the statutorily authorized 0.0 percent
update to the CY 2011 revised ASC payment system, based on the
provisions of this proposed rule and the baseline spending estimates
for ASCs in the FY 2011 President's Budget. This table provides our
best estimate of Medicare payments to suppliers as a result of the
proposed update to the CY 2011 ASC payment system, as presented in this
proposed rule. All expenditures are classified as transfers.
[GRAPHIC] [TIFF OMITTED] TP03AU10.586
D. Effects of Proposed Requirements for Hospital Reporting of Quality
Data for Annual Hospital Payment Update
In section XVI. of the CY 2009 OPPS/ASC final rule with comment
period (73 FR 68758), we discussed our requirements for subsection (d)
hospitals to report quality data under the HOP QDRP in order to receive
the full payment update for CY 2010. In section XVI. of this proposed
rule, we proposed additional policies affecting the HOP QDRP for CY
2012, CY 2013, and CY 2014. We estimate that about 90 hospitals may not
receive the full payment update in CY 2011. Most of these hospitals
receive little to no OPPS reimbursement on an annual basis. However, at
this time, information is not available to determine the precise number
of hospitals that do not meet the requirements for the full hospital
market basket increase for CY 2011. We also estimate that 90 hospitals
may not
[[Page 46459]]
receive the full payment update in CY 2012. We are unable at this time
to estimate the number of hospitals that may not receive the full
payment update in CY 2013 and CY 2014.
In section XVI.E.3.a. of the CY 2010 OPPS/ASC final rule with
comment period, for the CY 2011 payment update, as part of the
validation process, we are requiring hospitals to submit paper copies
of requested medical records to a designated contractor within the
required timeframe. Failure to submit requested documentation can
result in a 2 percentage point reduction in a hospital's update, but
the failure to attain a validation score threshold would not. Of the 90
hospitals that we estimate would not receive the full payment update
for CY 2011, we estimate that no more than 20 hospitals would fail the
validation documentation submission requirement for the CY 2011 payment
update.
In section XVI.E.3.b. of the CY 2010 OPPS/ASC final rule with
comment period, we did not, at that time, adopt our proposal in the CY
2010 OPPS/ASC proposed rule (74 FR 35403) to expand the CY 2011
validation requirement for the CY 2012 payment update. Instead, we
stated that we would consider the public comments we received on that
proposal, as well as any analyses we conduct of the CY 2011 validation
process, and propose a CY 2012 validation process as a part of the CY
2011 OPPS/ASC rulemaking. We believe that this approach would give HOP
QDRP hospitals experience with the validation process and allow these
hospitals sufficient time to prepare for the CY 2012 validation.
In this proposed rule, we are proposing to validate data submitted
by 800 hospitals for purposes of the CY 2012 HOP QDRP payment
determination. For CY 2011 and under our proposal for CY 2012 in this
proposed rule, we stated that we would calculate the validation matches
for CY 2011 (we note, however, that the validation results would not
affect the CY 2011 payment update) and CY 2012 by assessing whether the
measure data submitted by the hospital matches the independently
reabstracted measure data. In addition, for the CY 2012 payment update
in this proposed rule, we are proposing to validate data for only 800
hospitals out of the approximately 3,200 HOP QDRP participating
hospitals. We believe that this approach is suitable for HOP QDRP data
because it will: Produce a more reliable estimate of whether a
hospital's submitted data have been abstracted accurately; provide more
statistically reliable estimates of the quality of care delivered in
each selected hospital as well as at the national level; and reduce
overall hospital burden because most hospitals will not be selected to
undergo validation each year. We have proposed a threshold of 75
percent as the threshold for the validation score because we believe
this level is reasonable for hospitals to achieve while still ensuring
accuracy of the data. Additionally, this level is consistent with what
has been proposed in the RHQDAPU program (75 FR 23993). As a result, we
believe that the effect of our proposed validation process for CY 2012
would be minimal in terms of the number of hospitals that would not
meet all program requirements.
The validation requirement of a maximum of 12 cases per hospital
per quarter will result in medical record documentation for
approximately 9,600 cases per quarter being submitted to a designated
CMS contractor. We would pay for the cost of sending this medical
record documentation to the designated CMS contractor at the rate of 12
cents per page for copying and approximately $1.00 per case for
postage. We have found, based on experience that an outpatient medical
chart is up to 10 pages. Thus, as a result of validation requirements
effective for the CY 2012 annual payment update, we would have
expenditures of approximately $21,120 per quarter. Again, as we would
pay for the data collection effort, we believe that a requirement for
medical record documentation for a maximum of 12 cases per quarter for
800 hospitals represents a minimal burden to HOP QDRP-participating
hospitals.
E. Effects of Proposed Changes in Payments to Hospitals for Direct GME
and IME Costs
1. Redistribution of Residency Slots
As discussed in section XVII. of this proposed rule, section 5503
of the Affordable Care Act added a new section 1886(h)(8) to the Act
that provides for reductions in the statutory FTE resident caps under
Medicare for certain hospitals and authorizes a ``redistribution'' of
the FTE resident slots resulting from the reduction in the FTE resident
caps to other hospitals.
At this time, we are unable to project how many FTE resident slots
will be available for redistribution under section 5503 of the
Affordable Care Act. Unlike section 422 of the Medicare Modernization
Act, which also provided for a redistribution of FTE resident slots but
provided that the redistributed slots would be paid using the national
average per resident amount (PRA) for direct GME payment purposes,
section 5503 of the Affordable Care Act requires that hospitals be paid
for their additional FTE resident slots using the hospitals' specific
PRAs. Since we are unable to determine the number of FTE resident slots
that will be redistributed under section 5503 or which hospitals will
be receiving additional FTE resident slots, we cannot calculate a
direct GME impact for section 5503. We do not know the PRAs and
Medicare utilization rates of hospitals that will be receiving
additional FTE resident slots. For purposes of determining an impact
for IME payment purposes, section 5503 requires us to use an IME
multiplier of 1.35, however, we do not know the intern and resident to
bed ratio for the hospitals that will receive additional FTE resident
slots or the volume or case mix of Medicare discharges at those
hospitals. Therefore, we cannot determine a financial impact for
purposes of direct GME and IME for this provision.
2. Counting Resident Time in Nonprovider Settings
In section XVII. of this proposed rule, we discuss our proposed
implementation of several changes made by section 5504 of the
Affordable Care Act with regard to counting resident time in
nonprovider settings for GME and IME payment purposes. Specifically,
section 5504 eliminates the requirement for hospitals to incur ``all or
substantially all of the costs for the training program in the
nonhospital setting,'' and now hospitals must only incur the costs of
the salaries and fringe benefits of residents who train in nonhospital
sites It also allows more than one hospital to incur the costs of
training programs at nonhospital settings, either directly or through a
third party. In addition, section 5504 creates a recordkeeping
requirement for hospitals to track the time residents spend training in
nonhospital settings, which CMS must compare to analogous data from a
base year.
With respect to the recordkeeping requirement, we are proposing
that rotation schedules be the source for establishing the amount of
time that residents spend training in nonhospital sites, both in the
base year and in subsequent years. In addition, we are proposing that
cost reporting periods beginning on or after July 1, 2009 and before
June 30, 2010 be the base year against which we will compare subsequent
years' data to determine if the amount of nonhospital training that
occurs in subsequent years increases relative to that base year. We
also are proposing that hospitals only need to maintain records of the
direct GME FTE
[[Page 46460]]
count of resident training time in nonhospital settings. Finally, we
are proposing to include several additional lines on the Medicare cost
report for hospitals to submit these data. Hospitals would be required
to report these data on a program-specific basis for their primary care
programs, and on an overall hospital basis for their nonprimary care
programs. These data will help CMS identify whether barriers to
resident training in nonhospital sites continue to exist.
We do not believe that any of these proposed policies will have a
significant financial impact on the Medicare program. While these
policies may allow hospitals to count additional FTEs training in
nonhospital sites, we do not believe that this constitutes significant
financial impact on the Medicare program, since those residents would
have been training at the hospital if they were not training at the
nonhospital site. We note that the FTE slot redistribution discussed
above that is required by section 5503 of the Affordable Care Act may
have an impact on the hospitals' ability to increase the number of
residents training at nonhospital sites, unless it moves the training
that is currently conducted at the hospital to a nonhospital site.
Therefore, the financial impact of section 5504 will be minimal.
3. Counting Resident Time for Didactic and Scholarly Activities and
Other Activities
In section XVII. of this proposed rule, we discuss our proposals to
implement the provisions of section 5505 of the Affordable Care Act
that make several changes to existing CMS policy with respect to
counting resident training time for didactic, scholarly and other
activities. Specifically, section 5505(a) allows a hospital to count
the time that residents spend training in an approved program in a
``nonprovider setting that is primarily engaged in furnishing patient
care'' for direct GME purposes. Section 5505(b) allows nonpatient care
activities to count toward resident time for IME purposes as well, but
only in certain hospital settings. These nonpatient care activities do
not include research activities that are not associated with the
treatment or diagnosis of a particular patient. Section 5505 also
allows hospitals to count the time spent by residents on vacation, sick
leave, or other approved leave in the hospitals' direct GME and IME
resident counts, as long as the leave time does not prolong the total
time that the resident is participating in the approved training
program. In our discussion of the provisions of section 5505, we
described the definitions of the various new terms used in this section
of the Affordable Care Act.
We do not believe that any of the proposed policies to implement
section 5505 will have a significant financial impact on the Medicare
program. While all of these provisions allow teaching hospitals to
claim more resident training time on their respective cost reports, a
hospital is limited as to how many resident FTEs it can count. In
addition, we note that the FTE slot redistribution that is required by
section 5503 of the Affordable Care Act discussed earlier may impact
hospitals' ability to increase the number of residents training at
nonhospital sites, unless a hospital moves the training that is
currently conducted at the hospital to a nonhospital site. Therefore,
the financial impact of section 5505 is minimal.
4. Preservation of Resident Cap Positions From Closed Hospitals
In section XVII.C. of this proposed rule, we discuss our proposals
to implement section 5506 of the Affordable Care Act. Prior to the
passage of the Affordable Care Act, if a teaching hospital closed, its
direct GME and IME FTE resident cap slots would be ``lost,'' because
those slots are associated with a specific hospital's Medicare provider
agreement. Section 5506 of the Affordable Care Act addresses this
situation by instructing the Secretary to establish a process by
regulation that would redistribute slots from teaching hospitals that
close to hospitals that meet certain criteria.
Section 5506 applies to teaching hospitals that closed ``on or
after a date that is 2 years before the date of enactment,'' that is,
March 23, 2008. Accordingly, although section 5506 does address certain
teaching hospital closures that have already occurred, the focus of
this provision is primarily on future teaching hospital closures, and
ensuring that FTE resident cap slots are not lost to a community. We
are unable to project which teaching hospitals will close, how many FTE
resident slots they have, and to which hospitals those slots would be
ultimately redistributed. Therefore, we cannot determine a financial
impact for this provision.
F. Effects of Proposed Changes to Physician Self-Referral Regulations
and Related Proposed Changes to Provider Agreement Regulations
Most physicians who have ownership or investment interests in
hospitals (``physician-owned hospitals'') and who refer DHS to the
hospital, are subject to the physician self-referral prohibition, and
are unable to qualify for the ownership and investment exception at
section 1877(d)(1) of the Act. Section 1877(d)(1) of the Act provides
an exception for ownership or investment in publicly traded securities
in a corporation where there is stockholder equity exceeding $75
million at the end of the corporation's most recent fiscal year or on
average during the previous 3 fiscal years; or the ownership or
investment interest involves mutual funds in a company that has assets
greater than $75 million. Studies by the OIG and GAO have concluded
that physician-owned hospitals tend to be smaller and are unable to
meet the $75 million threshold. Therefore, most physician-owned
hospitals avail themselves of the rural provider or hospital ownership
exceptions (sections 1877(d)(2) and (d)(3) of the Act, respectively).
As discussed in section XVIII. of this proposed rule, section 6001 of
the Affordable Care Act amended section 1877 of the Act to impose
additional requirements in order to qualify for the rural provider and
hospital ownership or investment exceptions. Our proposals under
section XVIII. of this proposed rule would incorporate these
requirements into our regulations.
Our proposed revisions to the regulations would limit the creation
of new Medicare participating hospitals in which physician owners or
investors intend to refer patients for DHS by requiring such hospitals
to have physician ownership and a provider agreement in effect on
December 31, 2010, as provided for by section 6001 of the Affordable
Care Act. This proposed revision would affect facilities with physician
ownership or investment that are currently under development but may be
unable to have a provider agreement in effect on December 31, 2010. We
believe there would only be a few facilities or hospital projects under
development that would be unable to meet either of these criteria.
In addition to the effect on the creation of new physician-owned
hospitals, the proposed revision of the regulations to incorporate the
provisions of section 6001 of the Affordable Care Act would impact
existing physician-owned hospitals that currently avail themselves of
the rural provider or whole hospital exception. Specifically, a
physician-owned hospital would be prohibited from expanding the number
of beds, operating rooms, and procedure rooms beyond those for which it
was licensed as of March 23, 2010, or, in the case of a hospital that
did not have a provider agreement in effect as of this date but does
have a provider agreement
[[Page 46461]]
in effect on December 31, 2010, the effective date of the provider
agreement. We believe there are only a few hospitals that were in the
midst of an expansion that was not completed by March 23, 2010 (or, in
the case of a hospital that did not have a provider agreement in effect
as this date but does have a provider agreement in effect on December
31, 2010), and thus, may not be able to use the new beds, operating
rooms, and procedures rooms. We believe that most facilities and their
investors were aware of the possible legislation that would limit
facility expansion and, thus, did not continue to pursue expansion of
their facilities.
Our proposed regulations would require hospitals to have procedures
in place that require referring physicians to disclose to patients the
referring physicians' ownership or investment interests in the
hospital, as well as any ownership or investment interest in the
hospital held by a treating physician. This proposal also would require
hospitals to disclose on any public Web site for the hospital or in any
public advertising that it is owned or invested in by physicians.
Finally, under the proposed revision of the regulations, a hospital
would not condition any physician ownership or investment either
directly or indirectly on the physician making or influencing referrals
to the hospital or otherwise generating business for the hospital. Most
physician-owned hospitals comply with the current provisions of Sec.
489.20(u). Thus, they have procedures in place to require referring
physician owners or investors to disclose their ownership or investment
interests to patients. We believe most physicians and hospitals will be
minimally affected by the additional requirements.
Our proposed revisions to the regulations would require that
hospitals must ensure that all ownership and investment interests are
bona fide, a step that we believe most prudent hospitals are already
undertaking. We believe most of the new statutory and proposed
regulatory provisions would have little, if any, impact on physician-
owned hospitals or physicians. The only provision that may have a minor
impact is the provision found under section 1877(i)(1)(D)(i) of the Act
and proposed Sec. 411.362(b)(4)(i) that prohibits physician-owned
hospitals from increasing the percentage of the total value of the
ownership or investment interests held in the hospital, or in an entity
whose assets include the hospital by physician owners or investments
beyond that which existed on March 23, 2010. Therefore, hospitals and
other entities that own the hospital must monitor the percentages of
ownership or investment to ensure that the percentage is not increased.
We believe this proposal would have a minor effect on some hospitals
and their physician owners or investors.
Our proposed revisions to the regulations also would require
hospitals to take certain steps to ensure patient safety, most of which
are practices or procedures that we believe most hospitals currently
undertake. Building upon the safety requirements found in existing
Sec. 489.20(w), we are proposing to require under proposed Sec. Sec.
411.362(b)(5)(i) and 489.20(w)(2) that, before admitting a patient, the
hospitals must receive a signed acknowledgment from the patient stating
that the patient understands that a physician may not be present during
the time services are furnished to a patient. In addition, proposed
Sec. Sec. 411.362(b)(5)(ii) and 489.20(w)(1) would require hospitals
to have the capacity to provide assessment and initial treatment for
patients and the ability to refer and transfer patients to hospitals
with the capability to treat the needs of the patient involved. We
believe requesting a signed acknowledgment would impose a minimal
burden on hospitals. Also, most hospitals currently have in place
procedures to ensure that they have the capacity to provide assessment
and initial treatment for patients and the ability to refer and
transfer patients.
Lastly, our proposed revisions to the regulations would prohibit a
facility that was previously an ASC and was converted into a hospital
from qualifying for the rural provider or whole hospital ownership
exceptions to the self-referral prohibition. Although we have no direct
data on this point, we believe there are only a few ASCs that are being
converted to a hospital, and, thus, the effect is minimal.
We believe that our proposals in XVIII. of this proposed rule would
affect a relatively small number of physician-owned hospitals and
physicians. We are uncertain of the exact numbers of hospitals with
physician ownership or investment that would be impacted by the
proposals and their restrictions. However, the most recent studies by
CMS (August 8, 2006 Final Report to the Congress Required under Section
5006 of the Deficit Reduction Act of 2005) and MedPAC (June 2005 Report
to the Congress) concluded that there were approximately 128 physician-
owned specialty hospitals (those that focus primarily on patients with
a cardiac condition, orthopedic condition, or those receiving a
surgical procedure). We recognize that there are other hospitals with
physician ownership that do not meet the definition of a specialty
hospital but we do not have verifiable data on the number of these
facilities. However, we have recently received information from a trade
association representing physician-owned hospitals that there are
approximately 265 hospitals that would be subject to the provisions of
our proposed rule.
The proposed changes concerning disclosure of physician ownership
in hospitals and patient safety are consistent with the physician self-
referral statute and regulations, our existing regulations governing
basic commitments of providers, and the current practices of most
hospitals. Thus, our proposed requirements would present a negligible
impact on physician-owned hospitals. Physician-owned hospitals would
have a one-time cost associated with creating or modifying a notice to
be used when a physician is not on the premises 24 hours a day. In
addition, these hospitals would incur the costs associated with
ensuring that a signed acknowledgment is received from patients.
Similarly, the costs borne by individual physicians to implement the
provisions would be limited to a one-time cost associated with
developing a disclosure notice that discloses the ownership of the
referring and, where applicable, the treating physician.
Overall, we believe that beneficiaries would be positively impacted
by these proposed provisions. Specifically, additional information
concerning disclosures of ownership and patient safety measures equip
patients to make informed decisions about where they elect to receive
care. Our proposals make no significant changes that have the potential
to impede patient access to health care facilities and services. We
believe that our proposals are necessary to conform our regulations to
the amendments to section 1877 of the Act. We also believe the proposed
regulations would help minimize anticompetitive behavior that can
affect the decision as to where a beneficiary receives health care
services and would possibly enhance the quality of the services
furnished.
G. Executive Order 12866
In accordance with the provisions of Executive Order 12866, this
proposed rule was reviewed by the OMB.
List of Subjects
42 CFR Part 410
Health facilities, Health professions, Laboratories, Medicare,
Rural areas, X-rays.
[[Page 46462]]
42 CFR Part 411
Kidney diseases, Medicare, Physician referral, Reporting and
recordkeeping requirements.
42 CFR Part 412
Administrative practice and procedure, Health facilities, Medicare,
Puerto Rico, Reporting and recordkeeping requirements.
42 CFR Part 413
Health facilities, Kidney diseases, Medicare, Puerto Rico,
Reporting and recordkeeping requirements.
42 CFR Part 416
Health facilities, Health professions, Medicare, Reporting and
recordkeeping requirements.
42 CFR Part 419
Hospitals, Medicare, Reporting and recordkeeping requirements.
42 CFR Part 482
Grant programs--health, Hospitals, Medicaid, Medicare, Reporting
and recordkeeping requirements.
42 CFR Part 489
Health facilities, Medicare, Reporting and recordkeeping
requirements.
For reasons stated in the preamble of this document, the Centers
for Medicare & Medicaid Services is proposing to amend 42 CFR Chapter
IV as set forth below:
PART 410--SUPPLEMENTARY MEDICAL INSURANCE (SMI) BENEFITS
1. The authority citation for Part 410 continues to read as
follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
2. Section 410.2 is amended by--
a. Under the definition of ``Community mental health center
(CMHC)'', removing the word ``and'' at the end of paragraph (4);
removing the period at the end of paragraph (5) and adding in its place
``; and''; and adding a new paragraph (6).
b. Revising the definition of ``Partial hospitalization services''.
The additions and revisions read as follows:
Sec. 410.2 Definitions.
* * * * *
Community mental health center (CMHC) means an entity that--
* * * * *
(6) Provides at least 40 percent of its services to individuals who
are not eligible for benefits under title XVIII of the Social Security
Act.
* * * * *
Partial hospitalization services means a distinct and organized
intensive ambulatory treatment program that offers less than 24-hour
daily care other than in an individual's home or in an inpatient or
residential setting and furnishes the services as described in Sec.
410.43.
* * * * *
3. Section 410.27 is amended by--
a. Removing the word ``and'' at the end of paragraph (a)(1)(iii).
b. Adding a new paragraph (a)(1)(v).
c. Adding a new paragraph (a)(2).
d. Revising paragraph (b).
The addition and revisions read as follows:
Sec. 410.27 Outpatient hospital or CAH services and supplies incident
to a physician or nonphysician practitioner service: Conditions.
(a) * * *
(1) * * *
(v) Certain nonsurgical extended duration therapeutic services that
are designated by CMS as requiring direct supervision, as defined in
(a)(1)(iv) of this section, by a physician or nonphysician practitioner
only at the initiation of the service, after which general supervision,
as defined in Sec. 410.32(b)(3)(i), is required.
(A) Nonsurgical extended duration therapeutic services are services
that can last a significant period of time, have a substantial
monitoring component, and have a low risk of requiring the physician's
or appropriate nonphysician practitioner's physical presence to furnish
assistance and direction after the initiation of the service.
(B) Initiation of the service means the beginning portion of a
service ending when the patient is stable and the supervising physician
or appropriate nonphysician practitioner believes the remainder of the
service can safely be delivered under his or her general direction and
control without needing the supervising physician's or appropriate
nonphysician practitioner's physical presence on the hospital campus or
in the provider-based department of the hospital.
(2) In the case of partial hospitalization services, also meet the
conditions of paragraph (d) of this section.
(b) Drugs and biologicals also are subject to the limitations
specified in Sec. 410.29.
* * * * *
4. Section 410.152 is amended by revising paragraph (i)(2) to read
as follows:
Sec. 410.152 Amounts of payment.
* * * * *
(i) * * *
(2) For ASC services furnished on or after January 1, 2008, in
connection with the covered surgical procedures specified in Sec.
416.166 of this subchapter, except as provided in paragraphs (i)(2)(i),
(i)(2)(ii), and (l) of this section, Medicare Part B pays the lesser of
80 percent of the actual charge or 80 percent of the prospective
payment amount, geographically adjusted, if applicable, as determined
under Subpart F of Part 416 of this subchapter. Part B coinsurance is
20 percent of the actual charge or 20 percent of the prospective
payment amount, geographically adjusted, if applicable.
(i) If the limitation described in Sec. 416.167(b)(3) of this
subchapter applies, Medicare pays 80 percent of the amount determined
under Subpart B of Part 414 of this subchapter and Part B coinsurance
is 20 percent of the applicable payment amount, except as provided in
paragraph (l) of this section.
(ii) Between January 1, 2008 and December 31, 2010, Medicare Part B
pays 75 percent of the applicable payment amount for screening flexible
sigmoidoscopies and screening colonoscopies, and Part B coinsurance is
25 percent of the applicable payment amount.
PART 411--EXCLUSIONS FROM MEDICARE AND LIMITATIONS ON MEDICARE
PAYMENT
5. The authority citation for Part 411 continues to read as
follows:
Authority: Secs. 1102, 1860D-1 through 1860D-42, 1871, and 1877
of the Social Security Act (42 U.S.C. 1302, 1395w-101 through 1395w-
152, 1395hh and 1395nn).
6. Section 411.356 is amended by--
a. Republishing the introductory text of paragraph (c) and revising
paragraph (c)(1).
b. Removing the word ``and'' at the end of paragraph (c)(3)(ii).
c. Removing the period at the end of paragraph (c)(3)(iii) and
adding ``; and'' in its place.
d. Adding a new paragraph (c)(3)(iv).
The revision and addition read as follows:
Sec. 411.356 Exceptions to the referral prohibition related to
ownership or investment interests.
* * * * *
[[Page 46463]]
(c) Specific providers. Ownership or investment in the following
entities, for purposes of the services specified:
(1) A rural provider, in the case of DHS furnished in a rural area
(as defined at Sec. 411.351 of this subpart) by the provider. A
``rural provider'' is an entity that furnishes substantially all (not
less than 75 percent) of the DHS that it furnishes to residents of a
rural area and, for the 18-month period beginning on December 8, 2003
(or such other period as Congress may specify), is not a specialty
hospital, and in the case where the entity is a hospital, the hospital
meets the requirements of Sec. 411.362 no later than September 23,
2011.
* * * * *
(3) * * *
(iv) The hospital meets the requirements described in Sec. 411.362
not later than September 23, 2011.
7. A new Sec. 411.362 is added to read as follows:
Sec. 411.362 Additional requirements concerning physician ownership
and investment in hospitals.
(a) Definitions. For purposes of this section--
Physician owner or investor means a physician (or immediate family
member of the physician) with a direct or an indirect ownership or
investment interest in the hospital.
Procedure room means a room in which catheterizations,
angiographies, angiograms, and endoscopies are performed, except such
term shall not include an emergency room or department (exclusive of
rooms in which catheterizations, angiographies, angiograms, and
endoscopies are performed).
(b) General requirements. (1) Physician ownership and provider
agreement. The hospital had physician ownership or investment on
December 31, 2010; and a provider agreement under section 1866 of the
Act in effect on that date.
(2) Prohibition on facility expansion. The hospital may not
increase the number of operating rooms, procedure rooms, and beds
beyond that for which the hospital is licensed on March 23, 2010 (or,
in the case of a hospital that did not have a provider agreement in
effect as of this date, but does have a provider agreement in effect on
December 31, 2010, the effective date of such agreement), unless an
exception is granted by the Secretary pursuant to section 1877(i)(3) of
the Social Security Act.
(3) Disclosure of conflicts of interest.
(i) [Reserved].
(ii) The hospital must--
(A) Require each referring physician owner or investor who is a
member of the hospital's medical staff to agree, as a condition of
continued medical staff membership or admitting privileges, to provide
written disclosure of his or her ownership or investment interest in
the hospital (and, if applicable, the ownership or investment interest
of any treating physician) to all patients whom the physician refers to
the hospital. Disclosure must be required at the time the referral is
made.
(B) Not condition any physician ownership or investment interests
either directly or indirectly on the physician owner or investor making
or influencing referrals to the hospital or otherwise generating
business for the hospital.
(C) Disclose on any public Web site for the hospital or in any
public advertising that the hospital is owned or invested in by
physicians.
(4) Ensuring bona fide investment. The hospital satisfies the
following criteria:
(i) The percentage of the total value of the ownership or
investment interests held in the hospital, or in an entity whose assets
include the hospital, by physician owners or investors in the aggregate
does not exceed such percentage as of March 23, 2010.
(ii) Any ownership or investment interests that the hospital offers
to a physician owner or investor are not offered on more favorable
terms than the terms offered to a person who is not a physician owner
or investor.
(iii) The hospital (or any owner or investor in the hospital) does
not directly or indirectly provide loans or financing for any
investment in the hospital by a physician owner or investor.
(iv) The hospital (or any owner or investor in the hospital) does
not directly or indirectly guarantee a loan, make a payment toward a
loan, or otherwise subsidize a loan, for any individual physician owner
or investor or group of physician owners or investors that is related
to acquiring any ownership or investment interest in the hospital.
(v) Ownership or investment returns are distributed to each owner
or investor in the hospital in an amount that is directly proportional
to the ownership or investment interest of such owner or investor in
the hospital.
(vi) Physician owners and investors do not receive, directly or
indirectly, any guaranteed receipt of or right to purchase other
business interests related to the hospital, including the purchase or
lease of any property under the control of other owners or investors in
the hospital or located near the premises of the hospital.
(vii) The hospital does not offer a physician owner or investor the
opportunity to purchase or lease any property under the control of the
hospital or any other owner or investor in the hospital on more
favorable terms than the terms offered to an individual who is not a
physician owner or investor.
(5) Patient safety. The hospital satisfies the following criteria:
(i) If the hospital does not have a physician available on the
premises to provide services during all hours in which the hospital is
providing services to the patient, the hospital must disclose this
information to the patient. Before providing services to the patient,
the hospital must receive a signed acknowledgment from the patient
stating that the patient understands that a physician may not be
present during all hours services are furnished to the patient.
(ii) The hospital must have the capacity to provide assessment and
initial treatment for all patients, and the ability to refer and
transfer patients to hospitals with the capability to treat the needs
of the patient that the hospital is unable to address. For purposes of
this paragraph, the hospital inpatient stay or outpatient visit begins
with the provision of a package of information regarding scheduled
preadmission testing and registration for a planned hospital admission
for inpatient care or an outpatient service.
(6) Prohibition on conversion from an ambulatory surgery center.
The hospital must not have been converted from an ambulatory surgical
center to a hospital on or after March 23, 2010.
PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL
SERVICES
8. The authority citation for Part 412 continues to read as
follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh), and sec. 124 of Pub. L. 106-113 (113 Stat.
1501A-332).
9. Section 412.105 is amended--
a. Revising paragraph (f)(1)(ii).
b. Revising paragraph (f)(1)(iii)(C).
c. Adding a new paragraph (f)(1)(iii)(D).
d. Revising paragraph (f)(1)(iv)(B).
e. Revising paragraph (f)(1)(iv)(C).
f. Revising paragraph (f)(1)(ix).
The revisions and addition read as follows:
[[Page 46464]]
Sec. 412.105 Special treatment: Hospitals that incur indirect costs
for graduate medical education programs.
* * * * *
(f) * * *
(1) * * *
(ii) In order to be counted, the resident must be assigned to one
of the following areas:
(A) The portion of the hospital subject to the hospital inpatient
prospective payment system.
(B) The outpatient department of a hospital that meets provider-
based status as defined at Sec. 413.65(a)(2) of this subchapter.
(C) The portions of a hospital located in Puerto Rico that are
subject to the hospital inpatient prospective payment system, including
off-campus outpatient departments that meet provider-based status as
defined at Sec. 413.65(a)(2) of this subchapter.
(D) The portions of a hospital that are reimbursed under a
reimbursement system authorized under section 1814(b)(3) of the Act.
(E) Effective for discharges occurring on or after October 1, 1997,
the time spent by a resident in a nonhospital setting in patient care
activities, as defined in Sec. 413.75(b) of this subchapter, under an
approved medical residency training program is counted towards the
determination of full-time equivalency if the criteria set forth in
Sec. 413.78(c), (d), (e), (f), or (g) of this subchapter, as
applicable, are met.
(iii) * * *
(C) Effective for cost reporting periods beginning on or after
January 1, 1983, except for research activities described in paragraph
(f)(1)(iii)(B) of this section, the time a resident is training in an
approved medical residency program in a hospital setting, as described
in paragraphs (f)(1)(ii)(A) through (f)(1)(ii)(D) of this section, must
be spent in either patient care activities, as defined in Sec.
413.75(b) of this subchapter, or in nonpatient care activities, such as
didactic conferences and seminars, to be counted. This provision may
not be applied in a manner that would require the reopening of settled
cost reports, except those cost reports on which, as of March 23, 2010,
there is a pending, jurisdictionally proper appeal on direct GME or IME
payments.
(D) Effective for cost reporting periods beginning on or after
January 1, 1983, the time spent by a resident in an approved medical
residency program on vacation, sick leave, or other approved leave that
does not prolong the total time the resident is participating in the
approved program beyond the normal duration of the program is
countable. This provision may not be applied in a manner that would
require the reopening of settled cost reports, except those cost
reports on which, as of March 23, 2010, there is a pending,
jurisdictionally proper appeal on direct GME or IME payments.
(iv) * * *
(B)(1) Effective for portions of cost reporting periods beginning
on or after July 1, 2005, a hospital's otherwise applicable FTE
resident cap may be reduced if its reference resident level, as
determined under Sec. 413.79(c)(1)(ii)(A) of this subchapter, is less
than its otherwise applicable FTE resident cap in a reference cost
reporting period, in accordance with the provisions of Sec.
413.79(c)(3) of this subchapter. The reduction is 75 percent of the
difference between the otherwise applicable FTE resident cap and the
reference resident level.
(2) Effective for portions of cost reporting periods beginning on
or after July 1, 2011, a hospital's otherwise applicable FTE resident
cap may be reduced if its reference resident level, as determined under
Sec. 413.79(c)(1)(ii)(B) of this subchapter, is less than its
otherwise applicable FTE resident cap in a reference cost reporting
period, in accordance with the provisions of Sec. 413.79(m) of this
subchapter. The reduction shall take into account the hospital's FTE
resident cap as reduced under paragraph (f)(1)(E)(iv)(B)(1). The
reduction is 65 percent of the difference between the otherwise
applicable FTE resident cap and the reference resident level.
(C)(1) Effective for portions of cost reporting periods beginning
on or after July 1, 2005, a hospital may qualify to receive an increase
in its otherwise applicable FTE resident cap (up to 25 additional FTEs)
if the criteria specified in Sec. 413.79(c)(4) of this subchapter are
met.
(2) Effective for portions of cost reporting periods beginning on
or after July 1, 2011, a hospital may qualify to receive an increase in
its otherwise applicable FTE resident cap (up to 75 additional FTEs) if
the criteria specified in Sec. 413.79(n) of this subchapter are met.
The increase shall be made to the hospital's FTE resident cap as
reduced under paragraph (f)(1)(E)(iv)(B)(1).
* * * * *
(ix)(A) A hospital may receive a temporary adjustment to its FTE
resident cap to reflect residents added because of another hospital's
closure if the hospitals meets the criteria specified in Sec. Sec.
413.79(h)(1) and (h)(2) of this subchapter. If a hospital that closes
its residency training program agrees to temporarily reduce its FTE
resident cap according to the criteria specified in Sec. Sec.
413.79(h)(1) and (h)(3)(ii) of this subchapter, another hospital(s) may
receive a temporary adjustment to its FTE resident cap to reflect
residents added because of the closure of the residency training
program if the criteria specified in Sec. Sec. 413.79(h)(1) and
(h)(3)(i) of this subchapter are met.
(B) A hospital may receive a permanent adjustment to its FTE
resident cap as a result of slots that were redistributed from a closed
hospital, as defined at Sec. 413.79(h)(1)(i) of this subchapter, if
the hospital meets the requirements at Sec. 413.79(o) of this
subchapter.
* * * * *
PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR
END-STAGE RENAL DISEASE SERVICES; OPTIONAL PROSPECTIVELY DETERMINED
PAYMENT RATES FOR SKILLED NURSING FACILITIES
10. The authority citation for Part 413 continues to read as
follows:
Authority: Secs. 1102, 1812(d), 1814(b), 1815, 1833(a), (i),
and (n), 1861(v), 1871, 1881, 1883, and 1886 of the Social Security
Act (42 U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a), (i), and
(n), 1395x(v), 1395hh, 1395rr, 1395tt, and 1395ww); and sec. 124 of
Pub. L. 106-133 (113 Stat. 1501A-332).
11. Section 413.75(b) is amended by--
a. Revising paragraph (2) under the definition of ``All or
substantially all of the costs for the training program in the
nonhospital setting''.
b. Adding a definition of ``Nonprovider setting that is primarily
engaged in furnishing patient care''.
The revision and addition read as follows:
Sec. 413.75 Direct GME payments: General requirements.
* * * * *
(b) * * *
All or substantially all of the costs for the training program in
the nonhospital setting means--
* * * * *
(2) Effective for cost reporting periods beginning on or after July
1, 2007 and before July 1, 2010, at least 90 percent of the total of
the costs of the residents' salaries and fringe benefits (including
travel and lodging where applicable) and the portion of the cost of
teaching physicians' salaries attributable to nonpatient care direct
GME activities.
* * * * *
Nonprovider setting that is primarily engaged in furnishing patient
care
[[Page 46465]]
means a nonprovider setting in which the primary activity is the care
and treatment of patients.
* * * * *
12. Section 413.78 is amended by--
a. Revising the introductory text of paragraph (f).
b. Revising paragraph (f)(1).
c. Adding a new paragraph (g).
d. Adding a new paragraph (h).
The revisions and additions read as follows:
Sec. 413.78 Direct GME payments: Determination of the total number of
FTE residents.
* * * * *
(f) For cost reporting periods beginning on or after July 1, 2007
and before July 1, 2010, the time residents spend in nonprovider
settings such as freestanding clinics, nursing homes, and physicians'
offices in connection with approved programs may be included in
determining the number of FTE residents in the calculation of a
hospital's resident count if the following conditions are met--
(1) The resident spends his or her time in patient care activities,
except that for cost reporting periods beginning on or after July 1,
2009, the time spent training in nonpatient care activities, such as
didactic conferences and seminars, but excluding research not
associated with the treatment or diagnosis of a particular patient, in
a nonprovider setting that is primarily engaged in furnishing patient
care activities, as defined at Sec. 413.75(b), also may be counted.
* * * * *
(g) For cost reporting periods beginning on or after July 1, 2010,
the time residents spend in nonprovider settings such as freestanding
clinics, nursing homes, and physicians' offices in connection with
approved programs may be included in determining the number of FTE
residents in the calculation of a hospital's resident count if the
following conditions are met--
(1) The resident spends his or her time--
(i) In patient care activities, or,
(ii) In nonpatient care activities, such as didactic conferences
and seminars, but excluding research not associated with the treatment
or diagnosis of a particular patient, in a nonprovider setting that is
primarily engaged in furnishing patient care activities, as defined at
Sec. 413.75(b).
(2) The hospital or hospitals must incur the costs of the salaries
and fringe benefits of the resident during the time the resident spends
in the nonprovider setting.
(i) If more than one hospital incurs these costs, either directly
or through a third party, the hospitals must count a proportional share
of the time that residents train at the nonhospital setting(s) as
recorded in a written agreement between the hospitals.
(ii) Hospitals must have a reasonable basis for establishing that
proportion of the cost and the FTE time that each will incur and count.
(iii) If hospitals already arrange payment to the nonhospital site
via a written agreement as described in Sec. 413.78(g)(3)(ii), the
proportion may be recorded in that agreement.
(iv) If hospitals choose to pay the nonhospital site concurrently
as described in Sec. 413.78(g)(4)(i), the hospitals must record the
proportion of cost and FTE time they are incurring and counting in a
written agreement between the hospitals.
(3) For cost reporting periods beginning prior to July 1, 2010, the
hospitals must comply with one of the following:
(i) The hospital or hospitals must pay for all or substantially all
of the costs for the training program in a nonhospital setting(s)
attributable to training that occurs during a month by the end of the
third month following the month in which the training in the
nonhospital site occurred.
(ii) There is a written agreement between the hospital or hospitals
and the outside entity that states that the residents' salaries and
fringe benefits (including travel and lodging where applicable) during
the time the resident spends in the nonhospital setting is to be paid
by the hospital(s). Hospitals may modify the amounts specified in the
written agreement by the end of the academic year (that is, June 30) to
reflect that the costs of the training program in the nonhospital site
have been incurred.
(iii) If the hospital has in place an emergency Medicare GME
affiliation agreement in accordance with Sec. 413.79(f)(6), during the
period covered by the emergency Medicare GME affiliation agreement--
(A) The hospital must pay all or substantially all of the costs of
the training program in a nonhospital setting(s) attributable to
training that occurs during a month by the end of the sixth month after
the month in which the training in the nonhospital site occurs. For the
costs that would otherwise be required to be incurred by the hospital
during the period of August 29, 2005 through November 1, 2007, the
participating hospital must incur the costs by April 29, 2008; or
(B) There is a written agreement between the hospital and the
outside entity that states that the residents' salaries and fringe
benefits (including travel and lodging where applicable) during the
time the resident spends in the nonhospital setting is to be paid by
the hospital. The written agreement must be submitted to the contractor
by 180 days after the training at the nonhospital site begins.
Hospitals may modify the amounts specified in the written agreement by
the end of the academic year (that is, June 30) to reflect that the
costs of the training program in the nonhospital site have been
incurred. For written agreements that would otherwise be required to be
submitted prior to the date the training begins in the nonhospital site
during the period of August 29, 2005 through November 1, 2007, the
hospital must submit the written agreement to its contractor by April
29, 2008.
(4) For cost reporting periods beginning on or after July 1, 2010,
the hospitals must comply with one of the following:
(i) The hospital or hospitals must incur the costs of the salaries
and fringe benefits of the resident during the time the resident spends
in the nonprovider setting by the end of the third month following the
month in which the training in the nonhospital site occurred.
(ii) There is a written agreement between the hospital or hospitals
and the outside entity that states that the residents' salaries and
fringe benefits (including travel and lodging where applicable) during
the time the resident spends in the nonhospital setting is to be paid
by the hospital(s). Hospitals may modify the amounts specified in the
written agreement by the end of the academic year (that is, June 30) to
reflect that the costs of the training program in the nonhospital site
have been incurred.
(5) The hospital is subject to the principles of community support
and redistribution of costs as specified in Sec. 413.81.
(6) For cost reporting periods beginning on or after July 1, 2010,
a hospital must maintain and make available records of the FTE count
determined for direct GME purposes under this section that its
residents spend in nonprovider sites, in order to compare that time to
the time spent by its residents in nonprovider sites in the base year
July 1, 2009 through June 30, 2010. The hospital must supply the CMS
contractor with the data for each of its primary care programs on a
program-specific basis, and with data for its nonprimary care programs
on an overall basis.
(h) Effective for cost reporting periods beginning on or after
January 1, 1983,
[[Page 46466]]
the time spent by a resident in an approved medical residency program
on vacation, sick leave, or other approved leave that does not prolong
the total time the resident is participating in the approved program
beyond the normal duration of the program is countable. This provision
cannot be applied in a manner that would require the reopening of
settled cost reports, except those cost reports on which there is a
pending, jurisdictionally proper appeal on direct GME or IME payments
as of March 23, 2010.
13. Section 413.79 is amended by--
a. Revising paragraph (c)(1)(ii).
b. Revising the introductory text of paragraph (c)(2).
c. Revising paragraph (c)(2)(iv).
d. Revising the heading of paragraph (c)(3).
e. Revising the heading of paragraph (c)(4).
f. Revising the heading of paragraph (c)(5).
g. Adding a new paragraph (m).
h. Adding a new paragraph (n).
i. Adding a new paragraph (o).
Sec. 413.79 Direct GME payments: Determination of the weighted number
of FTE residents.
* * * * *
(c) * * *
(1) * * *
(ii)(A) For purposes of paragraph (c)(3) of this section, reference
resident level refers to a hospital's resident level in the applicable
reference period specified under paragraph (c)(3) of this section.
(B) For purposes of paragraph (m) of this section, reference
resident level means with respect to a hospital, the highest resident
level for any of the three most recent cost reporting periods ending
before March 23, 2010, for which a cost report has been either settled
or submitted (subject to audit).
* * * * *
(2) Determination of the FTE resident cap. Subject to the
provisions of paragraphs (c)(3) through (c)(6) and (m) through (o) of
this section and Sec. 413.81, for purposes of determining direct GME
payment--
* * * * *
(iv) Hospitals that are part of the same Medicare GME affiliated
group or the same emergency Medicare GME affiliated group (as described
under Sec. 413.75(b)) may elect to apply the limit on an aggregate
basis as described under paragraph (f) of this section.
* * * * *
(3) Determination of the reduction to the FTE resident cap due to
unused FTE resident slots under section 422 of Public Law 108-173. * *
*
(4) Determination of an increase in the otherwise applicable
resident cap under section 422 of Public Law 108-173. * * *
(5) Special rules for hospitals that participate in demonstration
projects or voluntary resident reduction plans for purposes of section
422 of Public Law 108-173. * * *
* * * * *
(m) Determination of the reduction to the FTE resident cap due to
unused FTE resident slots under section 5503 of Public Law 111-148. If
a hospital's reference resident level, as defined under paragraph
(c)(1)(ii)(B) of this section is less than its otherwise applicable FTE
resident cap as determined under paragraph (c)(2) of this section or
paragraph (e) of this section in the reference cost reporting period
(as described under paragraph (m)(5) of this section), for portions of
cost reporting periods beginning on or after July 1, 2011, the
hospital's otherwise applicable FTE resident cap is reduced by 65
percent of the difference between the otherwise applicable FTE resident
cap and the reference resident level. The reduction shall take into
account the hospital's FTE resident cap as reduced under paragraph
(c)(3) of this section. Under this provision--
(1) Exemption for certain rural hospitals. A rural hospital, as
defined at subpart D of paragraph 412 of this subchapter, with fewer
than 250 beds (as determined at Sec. 412.105(b)) in its most recent
cost reporting period ending on or before March 23, 2010, is exempt
from any reduction to its otherwise applicable FTE resident cap under
paragraph (m) of this section.
(2) Exemption for certain hospitals that participate in
demonstration projects or voluntary residency reduction plans. A
hospital that was participating in a demonstration project under
section 402 of Public Law 90-248 or the voluntary reduction plan under
Sec. 413.88, is exempt from any reduction to its otherwise applicable
FTE resident cap under paragraph (m) of this section if by December 1,
2010, it submits a plan to CMS for filling all of its unused FTE
resident slots by not later than March 23, 2012.
(3) Exemption for a hospital described at section 1886(h)(4)(H)(v)
of the Act. A hospital described at section 1886(h)(4)(H)(v) of the
Act, is exempt from any reduction to its otherwise applicable FTE
resident cap under paragraph (m) of this section.
(4) Exemptions for certain other hospitals. A hospital training at
or above its otherwise applicable FTE resident cap as determined under
paragraph (c)(2) of this section for all three most recent cost
reporting periods ending prior to March 23, 2010 (as described under
section (iv) of this paragraph), is exempt from any reduction to its
otherwise applicable FTE resident cap under paragraph (m) of this
section.
(5) Reference cost reporting period. (i) To determine a hospital's
reference resident level, CMS determines, for a hospital's three most
recent cost reporting periods ending before March 23, 2010, the cost
reporting period with the highest resident level, for which a cost
report has been settled or if the cost report has not been settled, the
as-submitted cost report (subject to audit).
(ii) If the cost report that is used to determine a hospital's
otherwise applicable FTE resident cap in the reference period is not
equal to 12 months, the Medicare contractor may make appropriate
modifications to apply the provisions of paragraph (m) of this section
based on the equivalent of a 12-month cost reporting period.
(iii) If a hospital is a member of a Medicare GME affiliated group
during its reference cost reporting period, and its reference resident
level is less than its otherwise applicable FTE resident cap as
adjusted by the terms of the Medicare GME affiliation agreement, the
hospital's FTE resident cap will be reduced as described under
paragraph (m) of this section.
(n) Determination of an increase in the otherwise applicable
resident cap under section 5503 of Public Law 111-148. (1) For portions
of cost reporting periods beginning on or after July 1, 2011, a
hospital may receive an increase in its otherwise applicable FTE
resident cap (as determined by CMS) up to an additional 75 FTEs if the
hospital meets the requirements and qualifying criteria of section
1886(h)(8) of the Act and implementing instructions issued by CMS and
if the hospital submits an application to CMS within the timeframe
specified by CMS.
(2) A hospital that receives an increase in the otherwise
applicable resident cap under paragraph (n)(1) of this section must
ensure, during the 5-year period beginning on July 1, 2011 and ending
on June 30, 2016, that--
(i) The number of FTE primary care residents, as defined in Sec.
413.75(b), excluding any additional positions under this paragraph, is
not less than the average number of FTE primary care residents (as so
determined) during the three most recent cost reporting periods ending
prior to March 23, 2010; and not less than 75 percent of the positions
attributable to such increase are in a primary care or general surgery
residency programs.
[[Page 46467]]
(ii) CMS may determine whether a hospital has met the requirements
under paragraph (n)(1) of this section during the 5-year period of July
1, 2011 through June 30, 2016 in such manner and at such time as CMS
determines appropriate, including at the end of such 5-year period.
(iii) In a case where the Medicare contractor determines that a
hospital did not meet the requirements in a cost reporting period
within the 5-year time period, the Medicare contractor will reduce the
otherwise applicable resident cap of the hospital by the amount by
which such limit was increased under paragraph (n)(1) of this section.
(o) Determination of an increase in the FTE resident cap due to
slots redistributed from a closed hospital. (1) Except in the case of
the closure of the hospital with Medicare Provider Number 05-0578, in
the instance of a hospital closure, as defined at (h)(1)(i) of this
section, the FTE resident cap of the closed hospital would be
redistributed, and a hospital that meets the requirements and
qualifying criteria of section 1886(h)(4)(H)(vi) of the Act and
implementing instructions issued by CMS, including submission of a
timely application to CMS, may receive an increase in its FTE resident
cap, as determined by CMS.
(2)(i) Except in the case of the closure of the hospital with
Medicare Provider Number 05-0578, in redistributing the FTE resident
cap of a closed hospital, consideration shall be given to ensure that
there is no duplication of FTE slots between FTE slots redistributed
under this paragraph and temporary adjustments to FTE resident caps
provider under paragraph (h)(2) of this section.
(ii) The provisions of this paragraph (o) will not be applied in a
manner that will require the reopening of settled cost reports, except
where the provider has a pending, jurisdictionally proper appeal on
direct GME or IME payments as of March 23, 2010.
PART 416--AMBULATORY SURGICAL SERVICES
14. The authority citation for Part 416 continues to read as
follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
15. Section 416.160 is amended by--
a. Revising paragraph (a)(1).
b. Revising paragraph (a)(4).
c. Adding a new paragraph (a)(5).
The revisions and addition read as follows:
Sec. 416.160 Basis and scope.
(a) * * *
(1) Section 1833(i)(2)(D) of the Act requires the Secretary to
implement a revised payment system for payment of surgical services
furnished in ASCs. The statute requires that, in the year such system
is implemented, the system shall be designed to result in the same
amount of aggregate expenditures for such services as would be made if
there was no requirement for a revised payment system. The revised
payment system shall be implemented no earlier than January 1, 2006,
and no later than January 1, 2008. The statute also requires that, for
CY 2011 and each subsequent year, any annual update to the ASC payment
system be reduced by a productivity adjustment. There shall be no
administrative or judicial review under section 1869 of the Act,
section 1878 of the Act, or otherwise of the classification system, the
relative weights, payment amounts, and the geographic adjustment
factor, if any, of the revised payment system.
* * * * *
(4) Section 1834(d) of the Act specifies that, when screening
colonoscopies or screening flexible sigmoidoscopies are performed in an
ASC or hospital outpatient department, payment shall be based on the
lesser of the amount under the fee schedule that would apply to such
services if they were performed in a hospital outpatient department in
an area or the amount under the fee schedule that would apply to such
services if they were performed in an ambulatory surgical center in the
same area. Section 1834(d) of the Act also specifies that, in the case
of screening flexible sigmoidoscopy and screening colonoscopy services,
the payment amounts must not exceed the payment rates established for
the related diagnostic services.
(5) Section 1833(a)(1) of the Act requires 100 percent payment for
preventive services described in section 1861(ww)(2) of the Act
(excluding electrocardiograms) to which the United States Preventive
Services Task Force (USPSTF) has given a grade of A or B for any
indication or population. Section 1833(b)(1) of the Act also specifies
that the Part B deductible shall not apply with respect to preventive
services described in section 1861(ww)(2) of the Act (excluding
electrocardiograms) to which the USPSTF has given a grade of A or B for
any indication or population.
* * * * *
16. Section 416.171 is amended by adding a new paragraph
(a)(2)(iii) to read as follows:
Sec. 416.171 Determination of payment rates for ASC services.
(a) * * *
(2) * * *
(iii) Productivity adjustment.
(A) For calendar year 2011 and subsequent years, the Consumer Price
Index for All Urban Consumers determined in paragraph (a)(2)(ii) of
this section is reduced by the productivity adjustment described in
section 1886(b)(3)(B)(xi)(II) of the Act.
(B) The application of the provisions of paragraph (a)(2)(iii)(A)
of this section may result in the update being less than 0.0 for a
year, and may result in payment rates for a year being less than the
payment rates for the preceding year.
* * * * *
PART 419--PROSPECTIVE PAYMENT SYSTEM FOR HOSPITAL OUTPATIENT
DEPARTMENT SERVICES
17. The authority citation for Part 419 continues to read as
follows:
Authority: Secs. 1102, 1833(t), and 1871 of the Social Security
Act (42 U.S.C. 1302, 1395(t), and 1395hh).
18. Section 419.21 is amended by--
a. Redesignating paragraph (e) as paragraph (e)(1).
b. Revising the newly redesignated paragraph (e)(1).
c. Adding a new paragraph (e)(2).
The revision and addition read as follows:
Sec. 419.21 Hospital outpatient services subject to the outpatient
prospective payment system.
* * * * *
(e)(1) Effective January 1, 2005 through December 31, 2008, an
initial preventive physical examination, as defined in Sec. 410.16 of
this chapter, if the examination is performed no later than 6 months
after the individual's initial Part B coverage date that begins on or
after January 1, 2005.
(2) Effective January 1, 2009, an initial preventive physical
examination, as defined in Sec. 410.16 of this chapter, if the
examination is performed no later than 12 months after the date of the
individual's initial enrollment in Part B.
19. Section 419.22 is amended by--
a. Revising paragraph (m).
b. Adding a new paragraph (t).
The revision and addition read as follows:
Sec. 419.22 Hospital outpatient services excluded from payment under
the hospital outpatient prospective payment system.
* * * * *
(m)(1) Services provided on or before December 31, 2010, for
patients with
[[Page 46468]]
ESRD that are paid under the ESRD composite rate and drugs and supplies
furnished during dialysis but not included in the composite rate.
(2) Renal dialysis services provided on or after January 1, 2011,
for patients with ESRD that are paid under the ESRD benefit, as
described in Subpart H of Part 413 of this chapter.
* * * * *
(t) Effective January 1, 2011, annual wellness visit providing
personalized prevention plan services as defined in Sec. 410.15 of
this chapter.
20. Section 419.32 is amended by revising paragraph (b)(1)(iv) to
read as follows:
Sec. 419.32 Calculation of prospective payment rates for hospital
outpatient services.
* * * * *
(b) * * *
(1) * * *
(iv)(A) For calendar year 2003 and subsequent years, by the
hospital inpatient market basket percentage increase applicable under
section 1886(b)(3)(B)(iii) of the Act.
(B) The percentage increase determined under paragraph
(b)(1)(iv)(A) of this section is reduced by the following for the
specific calendar year:
(i) For calendar year 2010, 0.25 percentage point; and
(ii) For calendar year 2011, 0.25 percentage point.
* * * * *
21. Section 419.43 is amended by--
a. Revising paragraph (c).
b. Adding a new paragraph (i).
The revision and addition read as follows:
Sec. 419.43 Adjustments to national program payment and beneficiary
copayment amounts.
* * * * *
(c) Wage index factor.--(1) CMS uses the hospital inpatient
prospective payment system wage index established in accordance with
Part 412 of this chapter to make the adjustment specified under
paragraph (a) of this section.
(2) For services furnished beginning January 1, 2011, the wage
index factor provided for in paragraph (c)(1) of this section
applicable to any hospital outpatient department that is located in a
frontier State, as defined in Sec. 412.64(m) of this chapter, may not
be less than 1.00.
(3) The additional payments made under the provisions of paragraph
(c)(2) of this section are not implemented in a budget neutral manner.
* * * * *
(i) Payment adjustment for certain cancer hospitals.--(1) General
rule. CMS provides for an additional payment for covered hospital
outpatient services furnished on or after January 1, 2011, by cancer
hospitals described in section 1886(d)(1)(B)(v) of the Act.
(2) Amount of adjustment. The amount of the additional payment
under paragraph (i)(1) of this section is determined by CMS and is
based on the difference between costs incurred by hospitals described
in section 1886(d)(1)(B)(v) of the Act and costs incurred by other
hospitals that are paid under the hospital outpatient prospective
payment system, including the costs of drugs and biologicals.
(3) Budget neutrality. CMS establishes the payment adjustment under
paragraph (i)(2) of this section in a budget neutral manner, excluding
services and groups specified in paragraph (i)(4) of this section.
(4) Excluded services and groups. The following services or groups
are excluded from qualification for the payment adjustment in paragraph
(i)(2) of this section:
(i) Devices paid under 419.66; and
(ii) Items and services paid at charges adjusted to cost by
application of a hospital specific cost-to-charge ratio.
22. Section 419.70 is amended by--
a. Revising the introductory text of paragraph (d)(2).
b. Adding a new paragraph (d)(6).
The revision and addition read as follows:
Sec. 419.70 Transitional adjustments to limit decline in payments.
* * * * *
(d) * * *
(2) Temporary treatment for small rural hospitals on or after
January 1, 2006. For covered hospital outpatient services furnished in
a calendar year from January 1, 2006, through December 31, 2010, for
which the prospective payment system amount is less than the pre-BBA
amount, the amount of payment under this part is increased by 95
percent of that difference for services furnished during 2006, 90
percent of that difference for services furnished during 2007, and 85
percent of that difference for services furnished during 2008, 2009,
and 2010, if the hospital--
* * * * *
(6) Temporary treatment for sole community hospitals on or after
January 1, 2010 and through December 31, 2010. For covered hospital
outpatient services furnished on or after January 1, 2010 through
December 31, 2010, for which the prospective payment system amount is
less than the pre-BBA amount, the amount of payment under this part is
increased by 85 percent of that difference if the hospital is a sole
community hospital as defined in Sec. 412.92 of this chapter or is an
essential access community hospital as described under Sec. 412.109 of
this chapter.
* * * * *
PART 482--CONDITIONS OF PARTICIPATION FOR HOSPITALS
23. The authority citation for Part 482 continues to read as
follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
24. Section 482.12 is amended by adding a new paragraph (g) to read
as follows:
Sec. 482.12 Condition of participation: Governing body.
* * * * *
(g) Standard: Inpatient rights. A hospital must have the capacity
to provide assessment and initial treatment for all patients and the
ability to refer and transfer patients to hospitals with capabilities
to treat the needs of the patient that the hospital is unable to
address.
PART 489--PROVIDER AGREEMENTS AND SUPPLIER APPROVAL
25. The authority citation for Part 489 continues to read as
follows:
Authority: Secs. 1102, 1819, 1820(e), 1861, 1864(m), 1866,
1869, and 1871 of the Social Security Act (42 U.S.C. 1302, 1395i-3,
1395x, 1395aa(m), 1395cc, 1395ff, and 1395hh).
26. Section 489.20 is amended by--
a. Republishing the introductory text of paragraph (u).
b. Revising paragraph (u)(1).
c. Revising paragraph (u)(2).
d. Adding a new paragraph (u)(3).
e. Revising paragraph (w).
The revisions and addition read as follows:
Sec. 489.20 Basic commitments.
* * * * *
(u) Except as provided in paragraph (v) of this section, in the
case of a physician-owned hospital as defined at Sec. 489.3--
(1)(i) To furnish written notice to each patient at the beginning
of the patient's hospital stay or outpatient visit that the hospital is
a physician-owned hospital, in order to assist the patient in making an
informed decision regarding his or her care, in accordance with Sec.
482.13(b)(2) of this subchapter. The notice should disclose, in a
manner reasonably designed to be understood by all patients, the fact
that the hospital meets the Federal definition of a
[[Page 46469]]
physician-owned hospital specified in Sec. 489.3 and that the list of
the hospital's owners or investors who are physicians or immediate
family members (as defined at Sec. 411.351 of this chapter) of
physicians is available upon request and must be provided to the
patient at the time the request for the list is made by or on behalf of
the patient. For purposes of this paragraph (u)(1), the hospital stay
or outpatient visit begins with the provision of a package of
information regarding scheduled preadmission testing and registration
for a planned hospital admission for inpatient care or an outpatient
service; and
(ii) To disclose on any public Web site for the hospital and in any
public advertising that the hospital is owned or invested in by
physicians.
(2) To require each physician who is a member of the hospital's
medical staff to agree, as a condition of continued medical staff
membership or admitting privileges, to disclose, in writing, to all
patients the physician refers to the hospital any ownership or
investment interest in the hospital that is held by the physician or by
an immediate family member (as defined at Sec. 411.351 of this
chapter) of the physician, and any ownership or investment interest in
the hospital by the patient's treating physician(s). Disclosure must be
required at the time the referral is made.
(3) To ensure that the hospital does not condition any physician
ownership or investment interests either directly or indirectly on the
physician owner or investor making or influencing referrals to the
hospital or otherwise generating business for the hospital.
* * * * *
(w)(1) In the case of a hospital as defined in Sec. 489.24(b), to
furnish written notice to all patients at the beginning of their
hospital stay or outpatient visit if a doctor of medicine or a doctor
of osteopathy is not present in the hospital 24 hours per day, 7 days
per week, in order to assist the patients in making informed decisions
regarding their care, in accordance with Sec. 482.13(b)(2) of this
subchapter. The notice must indicate how the hospital will meet the
medical needs of any patient who develops an emergency medical
condition, as defined in Sec. 489.24(b), at a time when there is no
physician present in the hospital. For purposes of this paragraph, the
hospital stay or outpatient visit begins with the provision of a
package of information regarding scheduled preadmission testing and
registration for a planned hospital admission for inpatient care or
outpatient service.
(2) Before admitting a patient or providing an outpatient service,
the hospital must receive a signed acknowledgment from the patient
stating that the patient understands that a physician may not be
present during all hours services are furnished to the patient.
* * * * *
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; Program No. 93.774, Medicare--
Supplementary Medical Insurance Program; andProgram No. 93.778
(Medical Assistance)
Dated: June 24, 2010.
Marilyn Tavenner,
Acting Administrator and Chief Operating Officer, Centers for Medicare
& Medicaid Services.
Dated: June 30, 2010
Kathleen Sebelius,
Secretary.
BILLING CODE 4120-01-P
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[FR Doc. 2010-16448 Filed 7-2-10; 2:30 pm]
BILLING CODE 4120-01-P