[Federal Register Volume 79, Number 217 (Monday, November 10, 2014)]
[Rules and Regulations]
[Pages 66769-67034]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-26146]



[[Page 66769]]

Vol. 79

Monday,

No. 217

November 10, 2014

Part II





 Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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42 CFR Parts 411, 412, 416, et al.





Medicare and Medicaid Programs: Hospital Outpatient Prospective Payment 
and Ambulatory Surgical Center Payment Systems and Quality Reporting 
Programs; Physician-Owned Hospitals: Data Sources for Expansion 
Exception; Physician Certification of Inpatient Hospital Services; 
Medicare Advantage Organizations and Part D Sponsors: CMS-Identified 
Overpayments Associated with Submitted Payment Data; Final Rule

Federal Register / Vol. 79 , No. 217 / Monday, November 10, 2014 / 
Rules and Regulations

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 411, 412, 416, 419, 422, 423, and 424

[CMS-1613-FC]
RIN 0938-AS15


Medicare and Medicaid Programs: Hospital Outpatient Prospective 
Payment and Ambulatory Surgical Center Payment Systems and Quality 
Reporting Programs; Physician-Owned Hospitals: Data Sources for 
Expansion Exception; Physician Certification of Inpatient Hospital 
Services; Medicare Advantage Organizations and Part D Sponsors: CMS-
Identified Overpayments Associated with Submitted Payment Data

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

ACTION: Final rule with comment period.

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SUMMARY: This final rule with comment period revises the Medicare 
hospital outpatient prospective payment system (OPPS) and the Medicare 
ambulatory surgical center (ASC) payment system for CY 2015 to 
implement applicable statutory requirements and changes arising from 
our continuing experience with these systems. In this final rule with 
comment period, we describe the changes to the amounts and factors used 
to determine the payment rates for Medicare services paid under the 
OPPS and those paid under the ASC payment system. In addition, this 
final rule with comment period updates and refines the requirements for 
the Hospital Outpatient Quality Reporting (OQR) Program and the ASC 
Quality Reporting (ASCQR) Program.
    In this document, we also are making changes to the data sources 
permitted for expansion requests for physician-owned hospitals under 
the physician self-referral regulations; changes to the underlying 
authority for the requirement of an admission order for all hospital 
inpatient admissions and changes to require physician certification for 
hospital inpatient admissions only for long-stay cases and outlier 
cases; and changes to establish a formal process, including a three-
level appeals process, to recoup overpayments that result from the 
submission of erroneous payment data by Medicare Advantage (MA) 
organizations and Part D sponsors in the limited circumstances in which 
the organization or sponsor fails to correct these data.

DATES: Effective Date: This final rule with comment period is effective 
on January 1, 2015.
    Comment Period: To be assured consideration, comments on the 
payment classifications assigned to HCPCS codes identified in Addenda 
B, AA, and BB to this final rule with comment period with the ``NI'' 
comment indicator, and on other areas specified throughout this final 
rule with comment period must be received at one of the addresses 
provided in the ADDRESSES section no later than 5 p.m. EST on December 
30, 2014.
    Application Deadline--New Class of New Technology Intraocular 
Lenses: Requests for review of applications for a new class of new 
technology intraocular lenses must be received by 5 p.m. EST on March 
2, 2015, at the following address: ASC/NTIOL, Division of Outpatient 
Care, Mailstop C4-05-17, Centers for Medicare and Medicaid Services, 
7500 Security Boulevard, Baltimore, MD 21244-1850.

ADDRESSES: In commenting, please refer to file code CMS-1613-FC. 
Because of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of four ways (no duplicates, 
please):
    1. Electronically. You may (and we encourage you to) submit 
electronic comments on this regulation to http://www.regulations.gov. 
Follow the instructions under the ``submit a comment'' tab.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-1613-FC, P.O. Box 8013, 
Baltimore, MD 21244-1850.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments via 
express or overnight mail to the following address ONLY: Centers for 
Medicare & Medicaid Services, Department of Health and Human Services, 
Attention: CMS-1613-FC, Mail Stop C4-26-05, 7500 Security Boulevard, 
Baltimore, MD 21244-1850.
    4. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments before the close of the comment period 
to either of the following addresses:
    a. For delivery in Washington, DC-- Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, Room 445-G, Hubert 
H. Humphrey Building, 200 Independence Avenue SW., Washington, DC 
20201.
    (Because access to the interior of the Hubert H. Humphrey Building 
is not readily available to persons without Federal Government 
identification, commenters are encouraged to leave their comments in 
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing 
by stamping in and retaining an extra copy of the comments being 
filed.)
    b. For delivery in Baltimore, MD-- Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, 7500 Security 
Boulevard, Baltimore, MD 21244-1850.
    If you intend to deliver your comments to the Baltimore address, 
please call the telephone number (410) 786-7195 in advance to schedule 
your arrival with one of our staff members.
    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and received after the comment 
period.
    For information on viewing public comments, we refer readers to the 
beginning of the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION: 
Marjorie Baldo, (410) 786-4617, for issues related to new CPT and Level 
II HCPCS codes, revised process for soliciting comments related to new 
Category I and III CPT codes, and exceptions to the 2 times rule.
Elizabeth Bainger, (410) 786-0529, for issues related to the Hospital 
Outpatient Quality Reporting--Program Administration, Validation, and 
Reconsideration Issues.
Anita Bhatia, (410) 786-7236, for issues related to the Ambulatory 
Surgical Center Quality Reporting (ASCQR) Program--Program 
Administration and Reconsideration Issues.
Chuck Braver, (410) 786-9379, for issues related to the CMS Web posting 
of the OPPS and ASC payment files.
Anne Calinger, (410) 786-3396, for issues related to Medicare Advantage 
(MA) organizations and Medicare Part D sponsor overpayments.
Elisabeth Daniel, (410) 786-0237, for issues related to OPPS drugs, 
radiopharmaceuticals, biologicals, blood clotting factors, packaged 
items/services, and brachytherapy sources payment.
Dexter Dickey, (410) 786-6856, or Dorothy Myrick, (410) 786-9671, for 
issues related to partial hospitalization and community mental health 
center (CMHC) issues.
Eva Fung, (410) 786-7539, or Vinitha Meyyur, (410) 786-8819, for issues

[[Page 66771]]

related to Hospital OQR Program and ASCQR measures issues and 
publication of Hospital OQR Program data issues.
Twi Jackson, (410) 786-1159, for issues related to device-dependent 
APCs, composite APCs (extended assessment and management, low dose 
brachytherapy, multiple imaging), hospital outpatient visits, inpatient 
procedures list, and no cost/full credit and partial credit devices.
Marina Kushnirova, (410) 786-2682, for issues related to OPPS status 
indicators and comment indicators.
John McInnes, (410) 786-0791, for issues related to new technology 
intraocular lenses (NTIOLs).
Esther Markowitz, (410) 786-4595, for issues related to comprehensive 
APCs and ambulatory surgical center (ASC) payments.
David Rice, (410) 786-6004, for issues related to APC weights, blood 
and blood products, cancer hospital payments, conversion factor, 
copayments, cost-to-charge ratios (CCRs), data claims, geometric mean 
calculation, off-campus provider-based issues, rural hospital payments, 
outlier payments, and wage index.
Daniel Schroder, (410) 786-4487, for issues related to physician 
certification of hospital inpatient services.
Carol Schwartz, (410) 786-0576, for issues related to the Advisory 
Panel on Hospital Outpatient Payment (HOP Panel) and OPPS pass-through 
devices.
Teresa Walden, (410) 786-3755, or Patricia Taft, (410) 786-4561, for 
issues related to the physician self-referral law/physician-owned 
hospital expansion exception process.
Marjorie Baldo, (410) 786-4617, for all other issues related to 
hospital outpatient and ambulatory surgical center payments not 
previously identified.

SUPPLEMENTARY INFORMATION:
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following Web 
site as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that Web site to 
view public comments.
    Comments received timely will also be available for public 
inspection, generally beginning approximately 3 weeks after publication 
of the rule, at the headquarters of the Centers for Medicare & Medicaid 
Services, 7500 Security Boulevard, Baltimore, MD 21244, on Monday 
through Friday of each week from 8:30 a.m. to 4:00 p.m. EST. To 
schedule an appointment to view public comments, phone 1-800-743-3951.

Electronic Access

    This Federal Register document is also available from the Federal 
Register online database through Federal Digital System (FDsys), a 
service of the U.S. Government Printing Office. This database can be 
accessed via the Internet at http://www.gpo.gov/fdsys/.

Addenda Available Only Through the Internet on the CMS Web Site

    In the past, a majority of the Addenda referred to in our OPPS/ASC 
proposed and final rules were published in the Federal Register as part 
of the annual rulemakings. However, beginning with the CY 2012 OPPS/ASC 
proposed rule, all of the Addenda no longer appear in the Federal 
Register as part of the annual OPPS/ASC proposed and final rules to 
decrease administrative burden and reduce costs associated with 
publishing lengthy tables. Instead, these Addenda are published and 
available only on the CMS Web site. The Addenda relating to the OPPS 
are available at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. The Addenda relating to the 
ASC payment system are available at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/index.html.

Alphabetical List of Acronyms Appearing in This Federal Register 
Document

AHA American Hospital Association
AMA American Medical Association
AMI Acute myocardial infarction
APC Ambulatory Payment Classification
ASC Ambulatory surgical center
ASCQR Ambulatory Surgical Center Quality Reporting
ASP Average sales price
AWP Average wholesale price
BBA Balanced Budget Act of 1997, Public Law 105-33
BBRA Medicare, Medicaid, and SCHIP [State Children's Health 
Insurance Program] Balanced Budget Refinement Act of 1999, Public 
Law 106-113
BIPA Medicare, Medicaid, and SCHIP Benefits Improvement and 
Protection Act of 2000, Public Law 106-554
BLS Bureau of Labor Statistics
CAH Critical access hospital
CAHPS Consumer Assessment of Healthcare Providers and Systems
CAP Competitive Acquisition Program
C-APC Comprehensive Ambulatory Payment Classification
CASPER Certification and Survey Provider Enhanced Reporting
CAUTI Catheter-associated urinary tract infection
CBSA Core-Based Statistical Area
CCN CMS Certification Number
CCR Cost-to-charge ratio
CDC Centers for Disease Control and Prevention
CED Coverage with Evidence Development
CERT Comprehensive Error Rate Testing
CFR Code of Federal Regulations
CI Comment indicator
CLABSI Central Line [Catheter] Associated Blood Stream Infection
CLFS Clinical Laboratory Fee Schedule
CMHC Community mental health center
CMS Centers for Medicare & Medicaid Services
CoP Condition of participation
CPI-U Consumer Price Index for All Urban Consumers
CPT Current Procedural Terminology (copyrighted by the American 
Medical Association)
CR Change request
CRC Colorectal cancer
CSAC Consensus Standards Approval Committee
CT Computed tomography
CV Coefficient of variation
CY Calendar year
DFO Designated Federal Official
DIR Direct or indirect remuneration
DME Durable medical equipment
DMEPOS Durable Medical Equipment, Prosthetic, Orthotics, and 
Supplies
DRA Deficit Reduction Act of 2005, Public Law 109-171
DSH Disproportionate share hospital
EACH Essential access community hospital
EAM Extended assessment and management
ECG Electrocardiogram
ED Emergency department
E/M Evaluation and management
EHR Electronic health record
ESRD End-stage renal disease
ESRD QIP End-Stage Renal Disease Quality Improvement Program
FACA Federal Advisory Committee Act, Public Law 92-463
FDA Food and Drug Administration
FFS [Medicare] Fee-for-service
FY Fiscal year
GAO Government Accountability Office
GI Gastrointestinal
HAI Healthcare-associated infection
HCAHPS Hospital Consumer Assessment of Healthcare Providers and 
Systems
HCERA Health Care and Education Reconciliation Act of 2010, Public 
Law 111-152
HCP Health care personnel
HCPCS Healthcare Common Procedure Coding System
HCRIS Healthcare Cost Report Information System
HCUP Healthcare Cost and Utilization Project
HH QRP Home Health Quality Reporting Program
HHS Department of Health and Human Services

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HIE Health information exchange
HEU Highly enriched uranium
HIPAA Health Insurance Portability and Accountability Act of 1996, 
Public Law 104-191
HOP Hospital Outpatient Payment [Panel]
HOPD Hospital outpatient department
HOP QDRP Hospital Outpatient Quality Data Reporting Program
HPMS Health Plan Management System
IBD Inflammatory bowel disease
ICC Interclass correlation coefficient
ICD Implantable cardioverter defibrillator
ICD-9-CM International Classification of Diseases, Ninth Revision, 
Clinical Modification
ICH In-center hemodialysis
IDTF Independent diagnostic testing facility
IGI IHS Global Insight, Inc.
IHS Indian Health Service
I/OCE Integrated Outpatient Code Editor
IOL Intraocular lens
IORT Intraoperative radiation treatment
IPFQR Inpatient Psychiatric Facility Quality Reporting
IPPS [Hospital] Inpatient Prospective Payment System
IQR [Hospital] Inpatient Quality Reporting
IRF Inpatient rehabilitation facility
IRF QRP Inpatient Rehabilitation Facility Quality Reporting
IT Information technology
LCD Local coverage determination
LDR Low dose rate
LTCH Long-term care hospital
LTCHQR Long-Term Care Hospital Quality Reporting
MAC Medicare Administrative Contractor
MAP Measure Application Partnership
MedPAC Medicare Payment Advisory Commission
MEG Magnetoencephalography
MFP Multifactor productivity
MGCRB Medicare Geographic Classification Review Board
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
MLR Medical loss ratio
MMA Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003, Public Law 108-173
MMEA Medicare and Medicaid Extenders Act of 2010, Public Law 111-309
MMSEA Medicare, Medicaid, and SCHIP Extension Act of 2007, Public 
Law 110-173
MPFS Medicare Physician Fee Schedule
MR Medical review
MRA Magnetic resonance angiography
MRgFUS Magnetic Resonance Image Guided Focused Ultrasound
MRI Magnetic resonance imaging
MRSA Methicillin-Resistant Staphylococcus Aures
MS-DRG Medicare severity diagnosis-related group
MSIS Medicaid Statistical Information System
MUC Measure under consideration
NCCI National Correct Coding Initiative
NDC National Drug Code
NHSN National Healthcare Safety Network
NOS Not otherwise specified
NPWT Negative Pressure Wound Therapy
NPI National provider identification
NQF National Quality Forum
NQS National Quality Strategy
NTIOL New technology intraocular lens
NUBC National Uniform Billing Committee
OACT [CMS] Office of the Actuary
OBRA Omnibus Budget Reconciliation Act of 1996, Public Law 99-509
OIG [HHS] Office of the Inspector General
OMB Office of Management and Budget
ONC Office of the National Coordinator for Health Information 
Technology
OPD [Hospital] Outpatient Department
OPO Organ Procurement Organization
OPPS [Hospital] Outpatient Prospective Payment System
OPSF Outpatient Provider-Specific File
OQR [Hospital] Outpatient Quality Reporting
OT Occupational therapy
PBD Provider-Based Department
PCHQR PPS-Exempt Cancer Hospital Quality Reporting
PCR Payment-to-cost ratio
PDE Prescription Drug Event
PE Practice expense
PEPPER Program Evaluation Payment Patterns Electronic Report
PHP Partial hospitalization program
PHSA Public Health Service Act, Public Law 96-88
PMA Premarket approval
PN Pneumonia
POS Place of service
PPI Producer Price Index
PPS Prospective payment system
PQRI Physician Quality Reporting Initiative
PQRS Physician Quality Reporting System
QDC Quality data code
QIO Quality Improvement Organization
RAC Recovery Audit Contractor
RADV Risk Adjustment Data Validation
RFA Regulatory Flexibility Act
RHQDAPU Reporting Hospital Quality Data for Annual Payment Update
RTI Research Triangle Institute, International
RVU Relative value unit
SAMS Secure Access Management Services
SCH Sole community hospital
SCOD Specified covered outpatient drugs
SES Socioeconomic status
SI Status indicator
SIR Standardized infection ratio
SNF Skilled nursing facility
SRS Stereotactic radiosurgery
SSA Social Security Administration
SSI Surgical site infection
TEP Technical Expert Panel
TIP Transprostatic implant procedure
TMS Transcranial Magnetic Stimulation [Therapy]
TOPs Transitional Outpatient Payments
USPSTF United States Preventive Services Task Force
VBP Value-based purchasing
WAC Wholesale acquisition cost

Table of Contents

I. Summary and Background
    A. Executive Summary of This Document
    1. Purpose
    2. Summary of the Major Provisions
    3. Summary of Costs and Benefits
    B. Legislative and Regulatory Authority for the Hospital OPPS
    C. Excluded OPPS Services and Hospitals
    D. Prior Rulemaking
    E. Advisory Panel on Hospital Outpatient Payment (the HOP Panel 
or the Panel)
    1. Authority of the Panel
    2. Establishment of the Panel
    3. Panel Meetings and Organizational Structure
    F. Public Comments Received on the CY 2015 OPPS/ASC Proposed 
Rule
    G. Public Comments Received on the CY 2014 OPPS/ASC Final Rule 
with Comment Period
II. Updates Affecting OPPS Payments
    A. Recalibration of APC Relative Payment Weights
    1. Database Construction
    a. Database Source and Methodology
    b. Use of Single and Multiple Procedure Claims
    c. Calculation and Use of Cost-to-Charge Ratios (CCRs)
    2. Data Development Process and Calculation of Costs Used for 
Ratesetting
    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 Geometric Mean Cost 
Calculations
    (1) General Process
    (2) Recommendations of the Panel Regarding Data Development
    d. Calculation of Single Procedure APC Criteria-Based Costs
    (1) Device-Dependent APCs
    (2) Blood and Blood Products
    (3) Brachytherapy Source Payment
    e. Establishment of Comprehensive APCs
    (1) Background
    (2) CY 2015 Policy for C-APCs
    (3) Public Comments
    (4) Statement of Final Policy and List of CY 2015 C-APCs
    f. Calculation of Composite APC Criteria-Based Costs
    (1) Extended Assessment and Management Composite APCs (APC 8009)
    (2) Low Dose Rate (LDR) Prostate Brachytherapy Composite APC 
(APC 8001)
    (3) Mental Health Services Composite APC (APC 0034)
    (4) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 
8007, and 8008)
    3. Changes to Packaged Items and Services
    a. Background and Rationale for Packaging in the OPPS
    b. Revision of a Packaging Policy Established in CY 2014--
Procedures Described by Add-On Codes
    c. Packaging Policies for CY 2015
    (1) Ancillary Services
    (2) Prosthetic Supplies
    4. Calculation of OPPS Scaled Payment Weights
    B. Conversion Factor Update
    C. Wage Index Changes
    D. Statewide Average Default CCRs
    E. Adjustment for Rural SCHs and EACHs under Section 
1833(t)(13)(B) of the Act

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    F. OPPS Payment to Certain Cancer Hospitals Described by Section 
1886(d)(1)(B)(v) of the Act
    1. Background
    2. Payment Adjustment for Certain Cancer Hospitals for CY 2015
    G. Hospital Outpatient Outlier Payments
    1. Background
    2. Outlier Calculation
    3. Final Outlier Calculation
    H. Calculation of an Adjusted Medicare Payment from the National 
Unadjusted Medicare Payment
    I. Beneficiary Copayments
    1. Background
    2. OPPS Copayment Policy
    3. Calculation of an Adjusted Copayment Amount for an APC Group
III. OPPS Ambulatory Payment Classification (APC) Group Policies
    A. OPPS Treatment of New CPT and Level II HCPCS Codes
    1. Treatment of New CY 2014 Level II HCPCS and CPT Codes 
Effective April 1, 2014 and July 1, 2014 for Which We Solicited 
Public Comments in the CY 2015 OPPS/ASC Proposed Rule
    2. Process for New Level II HCPCS Codes That Will Be Effective 
October 1, 2014 and New CPT and Level II HCPCS Codes That Will Be 
Effective January 1, 2015 for Which We Are Soliciting Public 
Comments in this CY 2015 OPPS/ASC Final Rule with Comment Period
    3. Process for Soliciting Public Comments for New and Revised 
CPT Codes Released by the AMA
    a. Current Process for Accepting Comments on New and Revised CPT 
Codes for a Year
    b. Modification of Process for New and Revised CPT Codes That 
Are Effective January 1
    B. OPPS Changes--Variations within APCs
    1. Background
    2. Application of the 2 Times Rule
    3. Exceptions to the 2 Times Rule
    C. OPPS APC-Specific Policies
    1. Cardiovascular and Vascular Services: Cardiac Telemetry (APC 
0213)
    2. Gastrointestinal (GI) Services: Upper GI Procedures (APCs 
0142, 0361, 0419, and 0422)
    3. Genitourinary Services
    a. Gynecologic Procedures (APCs 0188, 0189, 0192, 0193, and 
0202)
    b. Cystourethroscopy, Transprostatic Implant Procedures, and 
Other Genitourinary Procedures (APCs 0160, 0161, 0162, 0163, and 
1564
    c. Level IV Anal/Rectal Procedures (APC 0150)
    d. Percutaneous Renal Cryoablation (APC 0423)
    4. Nervous System Services
    a. Chemodenervation (APC 0206)
    b. Epidural Lysis (APCs 0203 and 0207)
    c. Transcranial Magnetic Stimulation Therapy (TMS) (APC 0218)
    5. Ocular Services: Ophthalmic Procedures and Services
    6. Imaging
    a. Echocardiography (APCs 0269, 0270, and 0697)
    b. Optical Coherence Tomography Procedures of the Breast
    c. Parathyroid Planar Imaging (APCs 0263, 0317, 0406, 0414)
    7. Radiology Oncology
    a. Proton Beam Therapy and Magnetoencephalography (MEG) Services 
(APCs 0065, 0412, 0446, 0664, and 0667)
    b. Stereotactic Radiosurgery Services (SRS) and Magnetic 
Resonance Image Guided Focused Ultrasound (MRgFUS) (APC 0066)
    8. Respiratory Services: Level II Endoscopy Lower Airway (APC 
0415)
    9. Other Services
    a. Epidermal Autograft (APC 0327)
    b. Image-Guided Breast Biopsy Procedures and Image-Guided 
Abscess Drainage Procedures (APCs 0005 and 0007)
    c. Negative Pressure Wound Therapy (NPWT) (APCs 0012 and 0015)
    d. Platelet Rich Plasma (PRP) (APC 0327)
IV. OPPS Payment for Devices
    A. Pass-Through Payments for Devices
    1. Expiration of Transitional Pass-Through Payments for Certain 
Devices
    a. Background
    b. CY 2015 Policy
    2. Provisions for Reducing Transitional Pass-Through Payments to 
Offset Costs Packaged into APC Groups
    a. Background
    b. CY 2015 Policy
    B. Adjustment to OPPS Payment for No Cost/Full Credit and 
Partial Credit Devices
    1. Background
    2. Policy for CY 2015
V. OPPS Payment Changes for Drugs, Biologicals, and 
Radiopharmaceuticals
    A. OPPS Transitional Pass-Through Payment for Additional Costs 
of Drugs, Biologicals, and Radiopharmaceuticals
    1. Background
    2. Drugs and Biologicals with Expiring Pass-Through Status in CY 
2014
    3. Drugs, Biologicals, and Radiopharmaceuticals with New or 
Continuing Pass-Through Status in CY 2015
    4. Provisions for Reducing Transitional Pass-Through Payments 
for Policy-Packaged Drugs and Biologicals to Offset Costs Packaged 
into APC Groups
    a. Background
    b. Payment Offset Policy for Diagnostic Radiopharmaceuticals
    c. Payment Offset Policy for Contrast Agents
    d. Payment Offset Policy for Drugs, Biologicals, and 
Radiopharmaceuticals That Function as Supplies When Used in a 
Diagnostic Test or Procedure and Drugs and Biologicals That Function 
as Supplies When Used in a Surgical Procedure
    B. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals 
without Pass-Through Status
    1. Background
    2. Criteria for Packaging Payment for Drugs, Biologicals, and 
Radiopharmaceuticals
    a. Background
    b. Cost Threshold for Packaging of Payment for HCPCS Codes That 
Describe Certain Drugs, Certain Biologicals, and Therapeutic 
Radiopharmaceuticals (``Threshold-Packaged Drugs'')
    c. High Cost/Low Cost Threshold for Packaged Skin Substitutes
    d. Pass-Through Evaluation Process for Skin Substitutes
    e. Packaging Determination for HCPCS Codes That Describe the 
Same Drug or Biological But Different Dosages
    3. Payment for Drugs and Biologicals without Pass-Through Status 
That Are Not Packaged
    a. Payment for Specified Covered Outpatient Drugs (SCODs) and 
Other Separately Payable and Packaged Drugs and Biologicals
    b. CY 2015 Payment Policy
    4. Payment Policy for Therapeutic Radiopharmaceuticals
    5. Payment Adjustment Policy for Radioisotopes Derived From Non-
Highly Enriched Uranium Sources
    6. Payment for Blood Clotting Factors
    7. Payment for Nonpass-Through Drugs, Biologicals, and 
Radiopharmaceuticals with HCPCS Codes but without OPPS Hospital 
Claims Data
VI. Estimate of OPPS Transitional Pass-Through Spending for Drugs, 
Biologicals, Radiopharmaceuticals, and Devices
    A. Background
    B. Estimate of Pass-Through Spending
VII. OPPS Payment for Hospital Outpatient Visits
    A. Payment for Hospital Outpatient Clinic and Emergency 
Department Visits
    B. Payment for Critical Care Services
VIII. Payment for Partial Hospitalization Services
    A. Background
    B. PHP APC Update for CY 2015
    C. Separate Threshold for Outlier Payments to CMHCs
IX. Procedures That Will Be Paid Only as Inpatient Procedures
    A. Background
    B. Changes to the Inpatient List
X. Nonrecurring Policy Changes: Collecting Data on Services 
Furnished in Off-Campus Provider-Based Departments of Hospitals
XI. CY 2015 OPPS Payment Status and Comment Indicators
    A. CY 2015 OPPS Payment Status Indicator Definitions
    B. CY 2015 Comment Indicator Definitions
XII. Updates to the Ambulatory Surgical Center (ASC) Payment System
    A. Background
    1. Legislative History, Statutory Authority, and Prior 
Rulemaking for the ASC Payment System
    2. Policies Governing Changes to the Lists of Codes and Payment 
Rates for ASC Covered Surgical Procedures and Covered Ancillary 
Services
    B. Treatment of New Codes
    1. Process for Recognizing New Category I and Category III CPT 
Codes and Level II HCPCS Codes
    2. Treatment of New Level II HCPCS Codes and Category III CPT 
Codes Implemented in April 2014 and July 2014 for Which We Solicited 
Public Comments in the CY 2015 OPPS/ASC Proposed Rule
    3. Process for New Level II HCPCS Codes and Category I and 
Category III CPT

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Codes for Which We Are Soliciting Public Comments in this CY 2015 
OPPS/ASC Final Rule with Comment Period
    C. Update to the Lists of ASC Covered Surgical Procedures and 
Covered Ancillary Services
    1. Covered Surgical Procedures
    a. Additions to the List of ASC Covered Surgical Procedures
    b. Covered Surgical Procedures Designated as Office-Based
    (1) Background
    (2) Changes for CY 2015 to Covered Surgical Procedures 
Designated as Office-Based
    c. ASC Covered Surgical Procedures Designated as Device-
Intensive
    (1) Background
    (2) Changes to List of Covered ASC Surgical Procedures 
Designated as Device-Intensive for CY 2015
    d. Adjustment to ASC Payments for No Cost/Full Credit and 
Partial Credit Devices
    e. ASC Treatment of Surgical Procedures Removed from the OPPS 
Inpatient List for CY 2015
    2. Covered Ancillary Services
    D. ASC Payment for Covered Surgical Procedures and Covered 
Ancillary Services
    1. ASC Payment for Covered Surgical Procedures
    a. Background
    b. Update to ASC Covered Surgical Procedure Payment Rates for CY 
2015
    c. Waiver of Coinsurance and Deductible for Certain Preventive 
Services
    d. Payment for Cardiac Resynchronization Therapy Services
    e. Payment for Low Dose Rate (LDR) Prostate Brachytherapy 
Composite
    2. Payment for Covered Ancillary Services
    a. Background
    b. Payment for Covered Ancillary Services for CY 2015
    E. New Technology Intraocular Lenses (NTIOLs)
    1. NTIOL Application Cycle
    2. Requests to Establish New NTIOL Classes for CY 2015
    3. Payment Adjustment
    4. Announcement of CY 2015 Deadline for Submitting Requests for 
CMS Review of Applications for a New Class of NTIOLs
    F. ASC Payment and Comment Indicators
    1. Background
    2. ASC Payment and Comment Indicators
    G. Calculation of the ASC Conversion Factor and the ASC Payment 
Rates
    1. Background
    2. Calculation of the ASC Payment Rates
    a. Updating the ASC Relative Payment Weights for CY 2015 and 
Future Years
    b. Transition Period to New OMB Delineations for ASC Wage Index
    c. Updating the ASC Conversion Factor
    3. Display of CY 2015 ASC Payment Rates
XIII. Hospital Outpatient Quality Reporting Program Updates
    A. Background
    1. Overview
    2. Statutory History of the Hospital OQR Program
    3. Measure Updates and Data Publication
    a. Maintenance of Technical Specifications for Quality Measures
    b. Public Display of Quality Measures
    B. Process for Retention of Hospital OQR Program Measures 
Adopted in Previous Payment Determinations
    C. Removal of Quality Measures from the Hospital OQR Program 
Measure Set
    1. Considerations in Removing Quality Measures from the Hospital 
OQR Program
    2. Criteria for Removal of ``Topped-Out'' Measures
    3. Removal of Measures from the Hospital OQR Program for the CY 
2017 Payment Determination and Subsequent Years
    D. Quality Measures Previously Adopted for the CY 2016 Payment 
Determination and Subsequent Years
    1. Data Submission Requirements for OP-27: Influenza Vaccination 
Coverage Among Healthcare Personnel (NQF #0431) Reported via NHSN 
for the CY 2017 Payment Determination and Subsequent Years
    a. Clarification of Submission Deadline and Data Submitted
    b. Clarification on Reporting by CMS Certification Number (CCN)
    2. Delayed Data Collection for OP-29 and OP-30
    3. OP-31: Cataracts--Improvement in Patient's Visual Function 
within 90 Days Following Cataract Surgery
    a. Correction of Response to Public Comments
    b. Delayed Data Collection for OP-31 and Exclusion from the CY 
2016 Payment Determination Measure Set
    c. Voluntary Collection of Data for OP-31 for the CY 2017 
Payment Determination and Subsequent Years
    E. New Quality Measure for the CY 2018 Payment Determination and 
Subsequent Years
    F. Possible Hospital OQR Program Measures and Topics for Future 
Consideration
    1. Electronic Clinical Quality Measures
    2. Partial Hospitalization Program Measures
    3. Behavioral Health Measures
    4. National Quality Strategy and CMS Quality Strategy Measure 
Domains
    G. Payment Reduction for Hospitals That Fail to Meet the 
Hospital Outpatient Quality Reporting (OQR) Program Requirements for 
the CY 2015 Payment Update
    1. Background
    2. Reporting Ratio Application and Associated Adjustment Policy 
for CY 2015
    H. Requirements for Reporting Hospital OQR Program Data for the 
CY 2017 Payment Determination and Subsequent Years
    1. Administrative Requirements for the CY 2017 Payment 
Determination and Subsequent Years
    2. Form, Manner, and Timing of Data Submitted for the Hospital 
OQR Program
    a. General Procedural Requirements
    b. Requirements for Chart-Abstracted Measures Where Data Are 
Submitted Directly to CMS for the CY 2017 Payment Determination and 
Subsequent Years
    c. Claims-Based Measure Data Requirements for the CY 2017 and CY 
2018 Payment Determination and Subsequent Years
    d. Data Submission Requirements for Measure Data Submitted via 
the CMS Web-Based Tool for the CY 2017 Payment Determination and 
Subsequent Years
    e. Population and Sampling Data Requirements for the CY 2017 
Payment Determination and Subsequent Years
    f. Review and Corrections Period for Chart-Abstracted Measures
    3. Hospital OQR Program Validation Requirements for Chart-
Abstracted Measure Data Submitted Directly to CMS for the CY 2017 
Payment Determination and Subsequent Years
    a. Background
    b. Selection of Hospitals for Data Validation of Chart-
Abstracted Measures for the CY 2017 Payment Determination and 
Subsequent Years
    c. Targeting Criteria for Data Validation Selection for the CY 
2017 Payment Determination and Subsequent Years
    d. Methodology for Encounter Selection for the CY 2017 Payment 
Determination and Subsequent Years
    e. Medical Record Documentation Requests for Validation and 
Validation Score Calculation for the CY 2017 Payment Determination 
and Subsequent Years
    I. Hospital OQR Program Reconsideration and Appeals Procedures 
for the CY 2017 Payment Determination and Subsequent Years
    J. Extension or Exception Process for the CY 2017 Payment 
Determination and Subsequent Years
XIV. Requirements for the Ambulatory Surgical Center Quality 
Reporting (ASCQR) Program
    A. Background
    1. Overview
    2. Statutory History of the Ambulatory Surgical Center Quality 
Reporting (ASCQR) Program
    3. Regulatory History of the ASCQR Program
    B. ASCQR Program Quality Measures
    1. Considerations in the Selection of ASCQR Program Quality 
Measures
    2. Policy for Removal of Quality Measures from the ASCQR Program
    3. Criteria for Removal of ``Topped-Out'' Measures
    4. ASCQR Program Quality Measures Adopted in Previous Rulemaking
    5. New ASCQR Program Quality Measure for the CY 2018 Payment 
Determination and Subsequent Years
    6. ASCQR Program Measures for Future Consideration
    7. Maintenance of Technical Specifications for Quality Measures
    8. Public Reporting of ASCQR Program Data
    C. Payment Reduction for ASCs That Fail to Meet the ASCQR 
Program Requirements
    1. Statutory Background
    2. Reduction to the ASC Payment Rates for ASCs That Fail to Meet 
the ASCQR Program Requirements for a Payment Determination Year

[[Page 66775]]

    D. Administrative Requirements
    1. Requirements Regarding QualityNet Account and Security 
Administrator
    2. Requirements Regarding Participation Status
    E. Form, Manner, and Timing of Data Submitted for the ASCQR 
Program
    1. Requirements Regarding Data Processing and Collection Periods 
for Claims-Based Measures Using Quality Data Codes (QDCs)
    2. Minimum Threshold, Minimum Case Volume, and Data Completeness 
for Claims-Based Measures Using QDCs
    3. Requirements for Data Submitted Via a CMS Online Data 
Submission Tool
    a. Data Collection for ASC-6 and ASC-7
    b. Delayed Data Collection for ASC-9 and ASC-10
    c. Delayed Data Collection and Exclusion for ASC-11 for the CY 
2016 Payment Determination and Voluntary Data Collection for ASC-11 
for the CY 2017 Payment Determination and Subsequent Years
    4. Claims-Based Measure Data Requirements for the New Measure 
for the CY 2018 Payment Determination and Subsequent Years
    5. Data Submission Requirements for ASC-8 (Influenza Vaccination 
Coverage Among Healthcare Personnel) Reported via the National 
Healthcare Safety Network (NHSN) for the CY 2016 Payment 
Determination and Subsequent Years
    a. Previously Adopted Requirements for the CY 2016 Payment 
Determination
    b. Data Collection Timeframes for the CY 2017 Payment 
Determination and Subsequent Years and Submission Deadlines for the 
CY 2016 Payment Determination and Subsequent Years
    6. ASCQR Program Validation of Claims-Based and CMS Web-Based 
Measures
    7. Extraordinary Circumstances Extensions or Exemptions for the 
CY 2017 Payment Determination and Subsequent Years
    8. ASCQR Program Reconsideration Procedures for the CY 2017 
Payment Determination and Subsequent Years
XV. Changes to the Rural Provider and Hospital Ownership Exceptions 
to the Physician Self-Referral Law: Expansion Exception Process
    A. Background
    1. Statutory Basis
    2. Affordable Care Act Amendments to the Rural Provider and 
Hospital Ownership Exceptions to the Physician Self-Referral Law
    B. Limitations Identified by Stakeholders Regarding the Required 
Use of HCRIS Data
    C. Changes to the Physician-Owned Hospital Expansion Exception 
Process
    1. Supplemental Data Sources
    a. Internal Data Sources
    b. External Data Sources
    c. Completeness of Supplemental Data Sources
    d. Other Issues Related to Supplemental Data Sources
    e. Summary of Final Provisions Regarding Supplemental Data 
Sources
    2. Fiscal Year Standard
    a. Summary of Public Comments and Our Response Regarding the 
Fiscal Year Standard
    b. Summary of Final Provisions Regarding the Fiscal Year 
Standard
    3. Community Input and Timing of a Complete Request
    a. Summary of Public Comments and Our Responses Regarding 
Community Input and Timing of a Complete Request
    b. Final Provisions Regarding Community Input and Timing of a 
Complete Request
    D. Additional Considerations
    E. Summary of the Final Provisions Regarding the Expansion 
Exception Process under the Rural Provider and Hospital Ownership 
Exceptions to the Physician Self-Referral Law
XVI. Revision of the Requirements for Physician Certification of 
Hospital Inpatient Services Other Than Psychiatric Inpatient 
Services
XVII. CMS-Identified Overpayments Associated with Payment Data 
Submitted by Medicare Advantage (MA) Organizations and Medicare Part 
D Sponsors (Sec. Sec.  422.330 and 423.352)
    A. Background
    1. Medicare Part C Payment Background
    1. Medicare Part D Payment Background
    B. Provisions of the Proposed Rule and Final Policies
    1. Definitions of ``Payment Data'' and ``Applicable 
Reconciliation Date''
    2. Request for Corrections of Payment Data
    3. Payment Offset
    a. Offset Amount
    b. Payment Offset Notification
    4. Appeals Process for MA Organizations and Part D Sponsors
    a. Reconsideration
    b. Informal Hearing
    c. Review by Administrator
    5. Matters Subject to Appeal and Burden of Proof
    6. Effective Date of Appeals Process Provisions
XVIII. Files Available to the Public Via the Internet
XIX. Collection of Information Requirements
    A. Legislative Requirements for Solicitation of Comments
    B. Requirements in Regulation Text: Changes to the Rural 
Provider and Hospital Ownership Exceptions to the Physician Self-
Referral Law: Expansion Exception Process (Sec.  411.362)
    C. Associated Information Collections Not Specified in 
Regulatory Text
    1. Hospital OQR Program
    a. Revisions to the CY 2016 Payment Determination Estimates
    b. Hospital OQR Program Requirements for the CY 2017 Payment 
Determination and Subsequent Years
    c. Review and Corrections Period Requirements for the CY 2017 
Payment Determination and Subsequent Years
    d. Hospital OQR Program Validation Requirements for the CY 2017 
Payment Determination and Subsequent Years
    e. Extraordinary Circumstances Extensions or Exemptions Process
    f. Reconsideration and Appeals
    2. ASCQR Program Requirements
    a. Background
    b. Revisions to the CY 2016 Payment Determination Estimates
    c. Claims-Based Measures for the CY 2014 Payment Determination 
and Subsequent Years
    d. Web-Based Measures for the CY 2017 Payment Determination and 
Subsequent Years
    e. Extraordinary Circumstances Extension or Exemptions Process
    f. Reconsiderations and Appeals
XX. Waiver of Proposed Rulemaking and Response to Comments
    A. Waiver of Proposed Rulemaking
    B. Response to Comments
XXI. Economic Analyses
    A. Regulatory Impact Analysis
    1. Introduction
    2. Statement of Need
    3. Overall Impacts for the OPPS and ASC Payment Provisions
    4. Detailed Economic Analyses
    a. Estimated Effects of OPPS Changes in this Final Rule with 
Comment Period
    (1) Limitations of Our Analysis
    (2) Estimated Effects of OPPS Changes on Hospitals
    (3) Estimated Effects of OPPS Changes on CMHCs
    (4) Estimated Effect of OPPS Changes on Beneficiaries
    (5) Estimated Effects of OPPS Changes on Other Providers
    (6) Estimated Effects of OPPS Changes on the Medicare and 
Medicaid Programs
    (7) Alternative OPPS Policies Considered
    b. Estimated Effects of CY 2015 ASC Payment System Policies
    (1) Limitations of Our Analysis
    (2) Estimated Effects of CY 2015ASC Payment System Policies on 
ASCs
    (3) Estimated Effects of ASC Payment System Policies on 
Beneficiaries
    (4) Alternative ASC Payment Policies Considered
    c. Accounting Statements and Tables
    d. Effects of Requirements for the Hospital OQR Program
    e. Effects of CY 2014 Policies for the ASCQR Program
    f. Effects of Changes to the Rural Provider and Hospital 
Ownership Exceptions to the Physician Self-Referral Law
    g. Effects of Policies Related to CMS-Identified Overpayments 
Associated with Payment Data Submitted by Medicare Advantage (MA) 
Organizations and Medicare Part D Sponsors
    B. Regulatory Flexibility Act (RFA) Analysis
    C. Unfunded Mandates Reform Act Analysis
    D. Conclusion
XXII. Federalism Analysis

I. Summary and Background

A. Executive Summary of This Document

1. Purpose
    In this final rule with comment period, we are updating the payment 
policies and payment rates for services furnished to Medicare 
beneficiaries in hospital outpatient departments and

[[Page 66776]]

Ambulatory Surgical Centers (ASCs) beginning January 1, 2015. Section 
1833(t) of the Social Security Act (the Act) requires us to annually 
review and update the relative payment weights and the conversion 
factor for services payable under the Outpatient Prospective Payment 
System (OPPS). Under section 1833(i) of the Act, we annually review and 
update the ASC payment rates. We describe these and various other 
statutory authorities in the relevant sections of this final rule with 
comment period. In addition, this final rule with comment period 
updates and refines the requirements for the Hospital Outpatient 
Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR) 
Program.
    In this document, we also are making changes to the data sources 
permitted for expansion requests for physician-owned hospitals under 
the physician self-referral regulations; changes to the underlying 
authority for the requirement of an admission order for all hospital 
inpatient admissions and changes to require physician certification for 
hospital inpatient admissions only for long-stay cases and outlier 
cases; and changes to establish a formal process, including a three-
level appeals process, to recoup overpayments that result from the 
submission of erroneous payment data by Medicare Advantage (MA) 
organizations and Part D sponsors in the limited circumstances in which 
the organization or sponsor fails to correct these data.
2. Summary of the Major Provisions
     OPPS Update: For CY 2015, we are increasing the payment 
rates under the OPPS by an Outpatient Department (OPD) fee schedule 
increase factor of 2.2 percent. This increase is based on the final 
hospital inpatient market basket percentage increase of 2.9 percent for 
inpatient services paid under the hospital inpatient prospective 
payment system (IPPS), minus the multifactor productivity (MFP) 
adjustment of 0.5 percentage point, and minus a 0.2 percentage point 
adjustment required by the Affordable Care Act. Under this final rule 
with comment period, we estimate that total payments for CY 2015, 
including beneficiary cost-sharing, to the approximate 4,000 facilities 
paid under the OPPS (including general acute care hospitals, children's 
hospitals, cancer hospitals, and community mental health centers 
(CMHCs)), will be approximately $56.1 billion, an increase of 
approximately $5.1 billion compared to CY 2014 payments, or $900 
million excluding our estimated changes in enrollment, utilization, and 
case-mix.
    We are continuing to implement the statutory 2.0 percentage point 
reduction in payments for hospitals failing to meet the hospital 
outpatient quality reporting requirements, by applying a reporting 
factor of 0.980 to the OPPS payments and copayments for all applicable 
services.
     Rural Adjustment: We are continuing the adjustment of 7.1 
percent to the OPPS payments to certain rural sole community hospitals 
(SCHs), including essential access community hospitals (EACHs). This 
adjustment will apply to all services 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 cost.
     Cancer Hospital Payment Adjustment: For CY 2015, we are 
continuing to provide additional payments to cancer hospitals so that 
the cancer hospital's payment-to-cost ratio (PCR) after the additional 
payments is equal to the weighted average PCR for the other OPPS 
hospitals using the most recently submitted or settled cost report 
data. Based on those data, a target PCR of 0.89 will be used to 
determine the CY 2015 cancer hospital payment adjustment to be paid at 
cost report settlement. That is, the payment adjustments will be the 
additional payments needed to result in a PCR equal to 0.89 for each 
cancer hospital.
     Payment of Drugs, Biologicals, and Radiopharmaceuticals: 
For CY 2015, payment for the acquisition and pharmacy overhead costs of 
separately payable drugs and biologicals that do not have pass-through 
status are set at the statutory default of average sales price (ASP) 
plus 6 percent.
     Packaging Policies: We are conditionally packaging certain 
ancillary services when they are integral, ancillary, supportive, 
dependent, or adjunctive to a primary service. The initial set of 
services packaged under this ancillary service policy are the services 
assigned to APCs having an APC geometric mean cost (prior to 
application of status indicator Q1) of less than or equal to $100. This 
$100 geometric mean cost limit for the APC is part of the methodology 
of establishing an initial set of conditionally packaged ancillary 
service APCs, and is not meant to represent a threshold above which a 
given ancillary service will not be packaged, but as a basis for 
selecting an initial set of APCs that will likely be updated and 
expanded in future years.
     Implementation of Comprehensive APCs: For CY 2015, we are 
implementing, with several modifications, the policy for comprehensive 
APCs (C-APCs) that was finalized in the CY 2014 OPPS/ASC final rule 
with comment period effective January 1, 2015. We are continuing to 
define the services assigned to C-APCs as primary services, and to 
define a C-APC as a classification for the provision of a primary 
service and all adjunctive services and supplies provided to support 
the delivery of the primary service. We continue to consider the entire 
hospital stay, defined as all services reported on the hospital claim 
reporting the primary service, to be one comprehensive service for the 
provision of a primary service into which all other services appearing 
on the claim would be packaged. This results in a single Medicare 
payment and a single beneficiary copayment under the OPPS for the 
comprehensive service based on all included charges on the claim.
    We are establishing a total of 25 C-APCs for CY 2015, including all 
of the formerly device-dependent APCs remaining after some 
restructuring and consolidation of these APCs (except for APCs 0427, 
0622, and 0652) and two C-APCs for other procedures that are either 
largely device-dependent or represent single session services with 
multiple components (single-session cranial stereotactic radiosurgery 
and intraocular telescope implantation). We are modifying the 
complexity adjustment criteria finalized last year by lowering volume 
and cost threshold criteria for complexity adjustments. Finally, we are 
packaging all add-on codes furnished as part of a comprehensive 
service, which is consistent with our general add-on code packaging 
policy. However, the add-on codes assigned to the CY 2014 device-
dependent APCs will be being evaluated with a primary service for a 
potential complexity adjustment.
     Ambulatory Surgical Center Payment Update: For CY 2015, we 
are increasing payment rates under the ASC payment system by 1.4 
percent. This increase is based on a projected CPI-U update of 1.9 
percent minus a multifactor productivity adjustment required by the 
Affordable Care Act that is projected to be 0.5 percentage point. Based 
on this update, we estimate that total payments to ASCs (including 
beneficiary cost-sharing and estimated changes in enrollment, 
utilization, and case-mix), for CY 2015 will be approximately $4.147 
billion, an increase of approximately $236 million compared to 
estimated CY 2014 Medicare payments.

[[Page 66777]]

     Hospital Outpatient Quality Reporting (OQR) Program: For 
the Hospital OQR Program, we are adding one claims-based quality 
measure for the CY 2018 payment determination and subsequent years 
instead of the CY 2017 payment determination and subsequent years as 
proposed. However, prior to publicly reporting this measure, we plan to 
conduct a dry run (a preliminary analysis) for hospitals to review 
their performance and provide feedback using the most recently 
available data. There will be no payment impact during this dry-run 
period, and the results of the dry run will not be publicly reported. 
We are refining the criteria for determining ``topped-out'' measures, 
and we are removing the OP-6 and OP-7 measures due to ``topped-out'' 
status. In addition, we are updating several previously adopted 
measures. We are clarifying data submission requirements for OP-27 and 
are noting a delayed data collection for OP-29 and OP-30. We are 
excluding one previously adopted measure (OP-31) from the measure set 
for the CY 2016 payment determination and changing this measure from 
required to voluntary for the CY 2017 payment determination and 
subsequent years. We will not subject hospitals to payment reductions 
with respect to the OP-31 measure for the CY 2016 payment determination 
or during the period of voluntary reporting. In addition, we are 
formalizing a review and corrections period for chart-abstracted 
measures. We also are updating validation procedures and changes to 
regulation text to correct typographical errors. We are changing the 
eligibility criteria for validation; a hospital will only be eligible 
for random selection for validation if it submits at least 12 cases to 
the Hospital OQR Program Clinical Data Warehouse during the quarter 
with the most recently available data. Hospitals also will have the 
option to submit validation data using electronic methods and must 
identify the medical record staff responsible for submission of records 
to the designated CMS contractor. Finally, we are clarifying how we 
refer to the extraordinary circumstances extensions or exemptions 
process.
     Ambulatory Surgical Center Quality Reporting (ASCQR) 
Program: For the ASCQR Program, we are adopting one new quality measure 
(ASC-12) for the CY 2018 payment determination and subsequent years. 
This measure will be computed using paid Medicare fee-for-service (FFS) 
claims data and will not impose any additional burden on ASCs. We also 
are excluding one measure (ASC-11) previously adopted for the CY 2016 
payment determination and providing that this measure may be 
voluntarily rather than mandatorily reported for the CY 2017 payment 
determination and subsequent years. We will not subject ASCs to payment 
reductions with respect to this measure for the CY 2016 payment 
determination or during the period of voluntary reporting. In addition, 
we are establishing a measure removal process and criteria, defining 
data collection timeframes and submission deadlines, and clarifying how 
we refer to the extraordinary circumstances extensions or exemptions 
process.
3. Summary of Costs and Benefits
    In sections XXI. and XXII. of this final rule with comment period, 
we set forth a detailed analysis of the regulatory and federalism 
impacts that the changes will have on affected entities and 
beneficiaries. Key estimated impacts are described below.
a. Impacts of the OPPS Update
(1) Impacts of All OPPS Changes
    Table 49 in section XXI. of this final rule with comment period 
displays the distributional impact of all the OPPS changes on various 
groups of hospitals and CMHCs for CY 2015 compared to all estimated 
OPPS payments in CY 2014. We estimate that the policies in this final 
rule with comment period will result in a 2.3 percent overall increase 
in OPPS payments to providers. We estimate that total OPPS payments for 
CY 2015, including beneficiary cost-sharing, to the approximate 4,000 
facilities paid under the OPPS (including general acute care hospitals, 
children's hospitals, cancer hospitals, and CMHCs) will be 
approximately $56.1 billion, an increase of approximately $5.1 billion 
compared to CY 2014 payments, or $900 million, excluding our estimated 
changes in enrollment, utilization, and case-mix.
    We estimated the isolated impact of our OPPS policies on CMHCs 
because CMHCs are only paid for partial hospitalization services under 
the OPPS. Continuing the provider-specific structure that we adopted 
beginning in CY 2011 and basing payment fully on the type of provider 
furnishing the service, we estimate a 1.3 percent increase in CY 2015 
payments to CMHCs relative to their CY 2014 payments.
(2) Impacts of the Updated Wage Indexes
    We estimate that our update of the wage indexes and application of 
the frontier State wage index, including changes resulting from the 
adoption of the new OMB labor market area delineations and the 
transitional 1-year, 50/50 blended wage index, will mitigate any 
negative changes due to the new CBSA delineations.
(3) Impacts of the Rural Adjustment and the Cancer Hospital Payment 
Adjustment
    There are no significant impacts of our CY 2015 payment policies 
for hospitals that are eligible for the rural adjustment or for the 
cancer hospital payment adjustment. We are not making any change in 
policies for determining the rural and cancer hospital payment 
adjustments, and the adjustment amounts do not significantly impact the 
budget neutrality adjustments for these policies.
(4) Impacts of the OPD Fee Schedule Increase Factor
    We estimate that, for most hospitals, the application of the OPD 
fee schedule increase factor of 2.2 percent to the conversion factor 
for CY 2015 will mitigate the small negative impacts of the budget 
neutrality adjustments. As a result of the OPD fee schedule increase 
factor and other budget neutrality adjustments, we estimate that urban 
and rural hospitals will experience increases of approximately 2.3 
percent for urban hospitals and 1.9 percent for rural hospitals. 
Classifying hospitals by teaching status or type of ownership suggests 
that these hospitals will receive similar increases.
b. Impacts of the ASC Payment Update
    For impact purposes, the surgical procedures on the ASC list of 
covered procedures are aggregated into surgical specialty groups using 
CPT and HCPCS code range definitions. The percentage change in 
estimated total payments by specialty groups under the CY 2015 payment 
rates compared to estimated CY 2014 payment rates ranges between -4.0 
percent for ancillary items and services and 14 percent for hematologic 
and lymphatic system procedures.
c. Impacts of the Hospital OQR Program
    We do not expect our CY 2015 policies to significantly affect the 
number of hospitals that do not receive a full annual payment update.
d. Impacts of the ASCQR Program
    We do not expect our CY 2015 proposed policies to significantly 
affect the number of ASCs that do not receive a full annual payment 
update.

[[Page 66778]]

B. Legislative and Regulatory Authority for the Hospital OPPS

    When Title XVIII of the Social Security Act was enacted, Medicare 
payment for hospital outpatient services was based on hospital-specific 
costs. In an effort to ensure that Medicare and its beneficiaries pay 
appropriately for services and to encourage more efficient delivery of 
care, the Congress mandated replacement of the reasonable cost-based 
payment methodology with a prospective payment system (PPS). The 
Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) added section 
1833(t) to the Act authorizing implementation of a PPS for hospital 
outpatient services. The OPPS was first implemented for services 
furnished on or after August 1, 2000. Implementing regulations for the 
OPPS are located at 42 CFR Parts 410 and 419.
    The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 
1999 (BBRA) (Pub. L. 106-113) made major changes in the hospital OPPS. 
The following Acts made additional changes to the OPPS: The Medicare, 
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 
(BIPA) (Pub. L. 106-554); the Medicare Prescription Drug, Improvement, 
and Modernization Act of 2003 (MMA) (Pub. L. 108-173); the Deficit 
Reduction Act of 2005 (DRA) (Pub. L. 109-171), enacted on February 8, 
2006; the Medicare Improvements and Extension Act under Division B of 
Title I of the Tax Relief and Health Care Act of 2006 (MIEA-TRHCA) 
(Pub. L. 109-432), enacted on December 20, 2006; the Medicare, 
Medicaid, and SCHIP Extension Act of 2007 (MMSEA) (Pub. L. 110-173), 
enacted on December 29, 2007; the Medicare Improvements for Patients 
and Providers Act of 2008 (MIPPA) (Pub. L. 110-275), enacted on July 
15, 2008; the Patient Protection and Affordable Care Act (Pub. L. 111-
148), enacted on March 23, 2010, as amended by the Health Care and 
Education Reconciliation Act of 2010 (Pub. L. 111-152), enacted on 
March 30, 2010 (these two public laws are collectively known as the 
Affordable Care Act); the Medicare and Medicaid Extenders Act of 2010 
(MMEA, Pub. L. 111-309); the Temporary Payroll Tax Cut Continuation Act 
of 2011 (TPTCCA, Pub. L. 112-78), enacted on December 23, 2011; the 
Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA, Pub. L. 
112-96), enacted on February 22, 2012; and the American Taxpayer Relief 
Act of 2012 (Pub. L. 112-240), enacted January 2, 2013.
    Under the OPPS, we pay for hospital Part B services on a rate-per-
service basis that varies according to the APC group to which the 
service is assigned. We use the Healthcare Common Procedure Coding 
System (HCPCS) (which includes certain Current Procedural Terminology 
(CPT) codes) to identify and group the services within each APC. The 
OPPS includes payment for most hospital outpatient services, except 
those identified in section I.C. of this final rule with comment 
period. Section 1833(t)(1)(B) of the Act provides for payment under the 
OPPS for hospital outpatient services designated by the Secretary 
(which includes partial hospitalization services furnished by CMHCs), 
and certain inpatient hospital services that are paid under Part B.
    The OPPS rate is an unadjusted national payment amount that 
includes the Medicare payment and the beneficiary copayment. This rate 
is divided into a labor-related amount and a nonlabor-related amount. 
The labor-related amount is adjusted for area wage differences using 
the hospital inpatient wage index value for the locality in which the 
hospital or CMHC is located.
    All services and items within an APC group are comparable 
clinically and with respect to resource use (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 (or mean cost, if elected by the Secretary) for an 
item or service within the same APC group (referred to as the ``2 times 
rule''). In implementing this provision, we generally use the cost of 
the item or service assigned to an APC group.
    For new technology items and services, special payments under the 
OPPS may be made in one of two ways. Section 1833(t)(6) of the Act 
provides for temporary additional payments, which we refer to as 
``transitional pass-through payments,'' for at least 2 but not more 
than 3 years for certain drugs, biological agents, brachytherapy 
devices used for the treatment of cancer, and categories of other 
medical devices. For new technology services that are not eligible for 
transitional pass-through payments, and for which we lack sufficient 
clinical information and cost data to appropriately assign them to a 
clinical APC group, we have established special APC groups based on 
costs, which we refer to as New Technology APCs. These New Technology 
APCs are designated by cost bands which allow us to provide appropriate 
and consistent payment for designated new procedures that are not yet 
reflected in our claims data. Similar to pass-through payments, an 
assignment to a New Technology APC is temporary; that is, we retain a 
service within a New Technology APC until we acquire sufficient data to 
assign it to a clinically appropriate APC group.

C. Excluded OPPS Services and Hospitals

    Section 1833(t)(1)(B)(i) of the Act authorizes the Secretary to 
designate the hospital outpatient services that are paid under the 
OPPS. While most hospital outpatient services are payable under the 
OPPS, section 1833(t)(1)(B)(iv) of the Act excludes payment for 
ambulance, physical and occupational therapy, and speech-language 
pathology services, for which payment is made under a fee schedule. It 
also excludes screening mammography, diagnostic mammography, and 
effective January 1, 2011, an annual wellness visit providing 
personalized prevention plan services. The Secretary exercises the 
authority granted under the statute to also exclude from the OPPS 
certain services that are paid under fee schedules or other payment 
systems. Such excluded services include, for example, the professional 
services of physicians and nonphysician practitioners paid under the 
Medicare Physician Fee Schedule (MPFS); certain laboratory services 
paid under the Clinical Laboratory Fee Schedule (CLFS); services for 
beneficiaries with end-stage renal disease (ESRD) that are paid under 
the ESRD prospective payment system; and services and procedures that 
require an inpatient stay that are paid under the hospital IPPS. We set 
forth the services that are excluded from payment under the OPPS in 
regulations at 42 CFR 419.22.
    Under Sec.  419.20(b) of the regulations, we specify the types of 
hospitals that are excluded from payment under the OPPS. These excluded 
hospitals include: Critical access hospitals (CAHs); hospitals located 
outside of the 50 States, the District of Columbia, and Puerto Rico; 
and Indian Health Service (IHS) hospitals.

D. Prior Rulemaking

    On April 7, 2000, we published in the Federal Register a final rule 
with comment period (65 FR 18434) to implement a prospective payment 
system for hospital outpatient services. The hospital OPPS was first 
implemented for services furnished on or after August 1, 2000. Section 
1833(t)(9) of the Act requires the Secretary to review certain 
components

[[Page 66779]]

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/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.

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

1. Authority of the Panel
    Section 1833(t)(9)(A) of the Act, as amended by section 201(h) of 
Public Law 106-113, and redesignated by section 202(a)(2) of Public Law 
106-113, requires that we consult with an external advisory panel of 
experts to annually review the clinical integrity of the payment groups 
and their weights under the OPPS. In CY 2000, based on section 
1833(t)(9)(A) of the Act and section 222 of the Public Health Service 
(PHS) Act, the Secretary established the Advisory Panel on Ambulatory 
Payment Classification Groups (APC Panel) to fulfill this requirement. 
In CY 2011, based on section 222 of the PHS Act which gives 
discretionary authority to the Secretary to convene advisory councils 
and committees, the Secretary expanded the panel's scope to include the 
supervision of hospital outpatient therapeutic services in addition to 
the APC groups and weights. To reflect this new role of the panel, the 
Secretary changed the panel's name to the Advisory Panel on Hospital 
Outpatient Payment (the HOP Panel, or the Panel). The Panel is not 
restricted to using data compiled by CMS, and in conducting its review 
it may use data collected or developed by organizations outside the 
Department.
2. Establishment of the Panel
    On November 21, 2000, the Secretary signed the initial charter 
establishing the HOP Panel, at that time named the APC Panel. This 
expert panel, which may be composed of up to 19 appropriate 
representatives of providers (currently employed full-time, not as 
consultants, in their respective areas of expertise), reviews clinical 
data and advises CMS about the clinical integrity of the APC groups and 
their payment weights. Since CY 2012, the Panel also is charged with 
advising the Secretary on the appropriate level of supervision for 
individual hospital outpatient therapeutic services. The Panel is 
technical in nature, and it is governed by the provisions of the 
Federal Advisory Committee Act (FACA). The current charter specifies, 
among other requirements, that: The Panel 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 charter was amended on November 15, 2011, and the Panel was 
renamed to reflect expanding the Panel's authority to include 
supervision of hospital outpatient therapeutic services and therefore 
to add CAHs to its membership.
    The current Panel membership and other information pertaining to 
the Panel, including its charter, Federal Register notices, membership, 
meeting dates, agenda topics, and meeting reports, can be viewed on the 
CMS Web site at: http://www.cms.gov/FACA/
05_AdvisoryPanelonAmbulatoryPaymentClassificationGroups .asp#TopOfPage.
3. Panel Meetings and Organizational Structure
    The Panel has held multiple meetings, with the last meeting taking 
place on August 25, 2014. Prior to each meeting, we publish a notice in 
the Federal Register to announce the meeting and, when necessary, to 
solicit nominations for Panel membership and to announce new members.
    The Panel has established an operational structure that, in part, 
currently includes the use of three subcommittees to facilitate its 
required review process. The three current subcommittees are the Data 
Subcommittee, the Visits and Observation Subcommittee, and the 
Subcommittee for APC Groups and Status Indicator (SI) Assignments.
    The Data Subcommittee is responsible for studying the data issues 
confronting the Panel and for recommending options for resolving them. 
The Visits and Observation Subcommittee reviews and makes 
recommendations to the Panel on all technical issues pertaining to 
observation services and hospital outpatient visits paid under the OPPS 
(for example, APC configurations and APC relative payment weights). The 
Subcommittee for APC Groups and SI Assignments advises the Panel on the 
following issues: The appropriate SIs to be assigned to HCPCS codes, 
including but not limited to whether a HCPCS code or a category of 
codes should be packaged or separately paid; and the appropriate APC 
placement of HCPCS codes regarding services for which separate payment 
is made.
    Each of these subcommittees was established by a majority vote from 
the full Panel during a scheduled Panel meeting, and the Panel 
recommended at the August 2014 meeting that the subcommittees continue. 
We accepted this recommendation.
    Discussions of the other recommendations made by the Panel at the 
August 2014 Panel meeting are included in the sections of this final 
rule with comment period that are specific to each recommendation. For 
discussions of earlier Panel meetings and recommendations, we refer 
readers to previously published 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. Public Comments Received on the CY 2015 OPPS/ASC Proposed Rule

    We received approximately 719 timely pieces of correspondence on 
the CY 2015 OPPS/ASC proposed rule that appeared in the Federal 
Register on July 14, 2014 (79 FR 40915). We note that we received some 
public comments that are outside the scope of the CY 2015 OPPS/ASC 
proposed rule. Out-of-scope public comments are not addressed in this 
CY 2015 OPPS/ASC final rule with comment period. Summaries of those 
public comments that are within the scope of the proposed rule and our 
responses are set forth in the various sections of this final rule with 
comment period under the appropriate headings.

G. Public Comments Received on the CY 2014 OPPS/ASC Final Rule With 
Comment Period

    We received approximately 490 timely pieces of correspondence on 
the CY 2014 OPPS/ASC final rule with comment period that appeared in 
the Federal Register on December 10, 2013 (78 FR 74826), some of which 
contained comments on the interim APC assignments and/or status 
indicators of new or replacement HCPCS codes (identified with comment 
indicator ``NI'' in Addenda B, AA, and BB to that final rule). 
Summaries of the public comments on new or replacement codes are set 
forth in this CY 2015 OPPS/ASC final rule with comment period under the 
appropriate subject-matter headings.

[[Page 66780]]

II. Updates Affecting OPPS Payments

A. Recalibration of APC Relative Payment Weights

1. Database Construction
a. Database Source and Methodology
    Section 1833(t)(9)(A) of the Act requires that the Secretary review 
not less often than annually and revise the relative payment weights 
for APCs. In the April 7, 2000 OPPS final rule with comment period (65 
FR 18482), we explained in detail how we calculated the relative 
payment weights that were implemented on August 1, 2000 for each APC 
group.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40925), for the CY 
2015 OPPS, we proposed to recalibrate the APC relative payment weights 
for services furnished on or after January 1, 2015, and before January 
1, 2016 (CY 2015), using the same basic methodology that we described 
in the CY 2014 OPPS/ASC final rule with comment period. That is, we 
proposed to recalibrate the relative payment weights for each APC based 
on claims and cost report data for hospital outpatient department 
(HOPD) services, using the most recent available data to construct a 
database for calculating APC group weights. Therefore, for the purpose 
of recalibrating the proposed APC relative payment weights for CY 2015, 
we used approximately 149 million final action claims (claims for which 
all disputes and adjustments have been resolved and payment has been 
made) for hospital outpatient department services furnished on or after 
January 1, 2013, and before January 1, 2014. For this final rule with 
comment period, for the purpose of recalibrating the final APC relative 
payment weights for CY 2015, we used approximately 161 million final 
action claims (claims for which all disputes and adjustments have been 
resolved and payment has been made) for HOPD services furnished on or 
after January 1, 2013, and before January 1, 2014. For exact counts of 
claims used, we refer readers to the claims accounting narrative under 
supporting documentation for the CY 2015 OPPS/ASC proposed rule and 
this final rule with comment period on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
    Of the approximately 161 million final action claims for services 
provided in hospital outpatient settings used to calculate the CY 2015 
OPPS payment rates for this final rule with comment period, 
approximately 123 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 
approximately 123 million claims, approximately 5 million claims were 
not for services paid under the OPPS or were excluded as not 
appropriate for use (for example, erroneous cost-to-charge ratios 
(CCRs) or no HCPCS codes reported on the claim). From the remaining 
approximately 118 million claims, we created approximately 101 million 
single records, of which approximately 50 million were ``pseudo'' 
single or ``single session'' claims (created from approximately 22 
million multiple procedure claims using the process we discuss later in 
this section). Approximately 1 million claims were trimmed out on cost 
or units in excess of  3 standard deviations from the 
geometric mean, yielding approximately 101 million single bills for 
ratesetting. As described in section II.A.2. of this final rule with 
comment period, our data development process is designed with the goal 
of using appropriate cost information in setting the APC relative 
payment weights. The bypass process is described in section II.A.1.b. 
of this final rule with comment period. This section discusses how we 
develop ``pseudo'' single procedure claims (as defined below), with the 
intention of using more appropriate data from the available claims. In 
some cases, the bypass process allows us to use some portion of the 
submitted claim for cost estimation purposes, while the remaining 
information on the claim continues to be unusable. Consistent with the 
goal of using appropriate information in our data development process, 
we only use claims (or portions of each claim) that are appropriate for 
ratesetting purposes.
    The final APC relative weights and payments for CY 2015 in Addenda 
A and B to this final rule with comment period (which are available via 
the Internet on the CMS Web site) were calculated using claims from CY 
2013 that were processed through June 30, 2014. While prior to CY 2013 
we historically based the payments on median hospital costs for 
services in the APC groups, beginning with the CY 2013 OPPS, we 
established the cost-based relative payment weights for the OPPS using 
geometric mean costs, as discussed in the CY 2013 OPPS/ASC final rule 
with comment period (77 FR 68259 through 68271). For the CY 2015 OPPS, 
we proposed and are using this same methodology, basing payments on 
geometric mean costs. Under this methodology, we select claims for 
services paid under the OPPS and match these claims to the most recent 
cost report filed by the individual hospitals represented in our claims 
data. 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 relative costs underpinning the APC 
relative payment weights and the CY 2015 payment rates.
b. Use of Single and Multiple Procedure Claims
    For CY 2015, in general, and as we proposed, we are continuing to 
use single procedure claims to set the costs on which the APC relative 
payment weights are based. We generally use single procedure claims to 
set the estimated costs for APCs because we believe that the OPPS 
relative weights on which payment rates are based should be derived 
from the costs of furnishing one unit of one procedure and because, in 
many circumstances, we are unable to ensure that packaged costs can be 
appropriately allocated across multiple procedures performed on the 
same date of service.
    It is generally desirable to use the data from as many claims as 
possible to recalibrate the APC relative payment weights, including 
those claims for multiple procedures. As we have for several years, we 
are continuing 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 2014 OPPS/
ASC final rule with comment period (78 FR 74849 through 74851). In 
addition, for CY 2008 (72 FR 66614 through 66664), we increased 
packaging and created the first composite APCs, and continued those 
policies through CY 2014. Increased packaging and creation of composite 
APCs also increased the number of bills that we were able to use for 
ratesetting by enabling us to use claims that contained multiple major

[[Page 66781]]

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 in developing the 
OPPS relative weights on which payments are based. We have continued 
the composite APCs for multiple imaging services through CY 2014, and 
as we proposed, we are continuing this policy for CY 2015. We refer 
readers to section II.A.2.f. of the CY 2014 OPPS/ASC final rule with 
comment period (78 FR 74910 through 74925) for a discussion of the use 
of claims in modeling the costs for composite APCs and to section 
II.A.3. of the CY 2014 OPPS/ASC final rule with comment period (78 FR 
74925 through 74948) for a discussion of our packaging policies for CY 
2014. In addition, as we proposed, we are establishing additional 
packaging policies for the CY 2015 OPPS, as discussed in section 
II.A.3. of this final rule with comment period.
    As we proposed, we are continuing to apply these processes to 
enable us to use as much claims data as possible for ratesetting for 
the CY 2015 OPPS. This methodology enabled us to create, for this final 
rule with comment period, approximately 50 million ``pseudo'' single 
procedure claims, including multiple imaging composite ``single 
session'' bills (we refer readers to section II.A.2.f.(4) of this final 
rule with comment period for further discussion), to add to the 
approximately 51 million ``natural'' single procedure claims.
    For CY 2015, we proposed to bypass 227 HCPCS codes that were 
identified in Addendum N to the CY 2015 OPPS/ASC proposed rule (which 
is available via the Internet on the CMS Web site). Since the inception 
of the bypass list, which is the list of codes to be bypassed to 
convert multiple procedure claims to ``pseudo'' single procedure 
claims, we have calculated the percent of ``natural'' single bills that 
contained packaging for each HCPCS code and the amount of packaging on 
each ``natural'' single bill for each code. Each year, we generally 
retain the codes on the previous year's bypass list and use the updated 
year's data (for CY 2015, data available for the March 10, 2014 meeting 
of the Advisory Panel on Hospital Outpatient Payment (the Panel) from 
CY 2013 claims processed through September 30, 2013, and CY 2012 claims 
data processed through June 30, 2013, used to model the payment rates 
for CY 2014) to determine whether it would be appropriate to add 
additional codes to the previous year's bypass list. For CY 2015, we 
proposed to continue to bypass all of the HCPCS codes on the CY 2014 
OPPS bypass list, with the exception of HCPCS codes that we proposed to 
delete for CY 2015, which were listed in Table 1 of the proposed rule 
(79 FR 40927 through 40929). We also proposed to remove HCPCS codes 
that are not separately paid under the OPPS because the purpose of the 
bypass list is to obtain more data for those codes relevant to 
ratesetting. Some of the codes we proposed to remove from the CY 2015 
bypass list are affected by the CY 2015 final packaging policy, 
discussed in section II.A.3. of this final rule with comment period. In 
addition, we proposed to add to the bypass list for CY 2015 HCPCS codes 
not on the CY 2014 bypass list that, using either the CY 2014 final 
rule with comment period data (CY 2012 claims) or the March 10, 2014 
Panel data (first 9 months of CY 2013 claims), met the empirical 
criteria for the bypass list that are summarized below. Finally, to 
remain consistent with the CY 2015 proposal to continue to develop OPPS 
relative payment weights based on geometric mean costs, we also 
proposed that the packaged cost criterion continue to be based on the 
geometric mean cost. The entire list proposed for CY 2015 (including 
the codes that remain on the bypass list from prior years) was open to 
public comment in the CY 2015 OPPS/ASC proposed rule. Because we must 
make some assumptions about packaging in the multiple procedure claims 
in order to assess a HCPCS code for addition to the bypass list, we 
assumed that the representation of packaging on ``natural'' single 
procedure claims for any given code is comparable to packaging for that 
code in the multiple procedure claims. The 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 geometric mean cost of packaging observed in the 
``natural'' single procedure claims is equal to or less than $55. This 
criterion also limits the amount of error in redistributed costs. 
During the assessment of claims against the bypass criteria, we do not 
know the dollar value of the packaged cost that should be appropriately 
attributed to the other procedures on the claim. Therefore, ensuring 
that redistributed costs associated with a bypass code are small in 
amount and volume protects the validity of cost estimates for low cost 
services billed with the bypassed service.
    We note that, as we did for CY 2014, we proposed to continue to 
establish the CY 2015 OPPS relative payment weights based on geometric 
mean costs. To remain consistent in the metric used for identifying 
cost patterns, we proposed to use the geometric mean cost of packaging 
to identify potential codes to add to the bypass list.
    In response to public comments on the CY 2010 OPPS/ASC proposed 
rule requesting that the packaged cost threshold be updated, we 
considered whether it would be appropriate to update the $50 packaged 
cost threshold for inflation when examining potential bypass list 
additions. As discussed in the CY 2010 OPPS/ASC final rule with comment 
period (74 FR 60328), the real value of this packaged cost threshold 
criterion has declined due to inflation, making the packaged cost 
threshold more restrictive over time when considering additions to the 
bypass list. Therefore, adjusting the threshold by the market basket 
increase would prevent continuing decline in the threshold's real 
value. Based on the same rationale described for the CY 2014 OPPS/ASC 
final rule with comment period (78 FR 74838), we proposed for CY 2015 
to continue to update the packaged cost threshold by the market basket 
increase. By applying the final CY 2014 market basket increase of 1.7 
percent to the prior nonrounded dollar threshold of $54.73 (78 FR 
74838), we determined that the threshold remains for CY 2015 at $55 
($55.66 rounded to $55, the nearest $5 increment). Therefore, we 
proposed to set the geometric mean packaged cost threshold on the CY 
2013 claims at $55 for a code to be considered for addition to the CY 
2015 OPPS bypass list.
     The code is not a code for an unlisted service. Unlisted 
codes do not describe a specific service, and thus their costs would 
not be appropriate for bypass list purposes.
    In addition, we proposed to continue to include on the bypass list 
HCPCS codes that CMS medical advisors believe have minimal associated 
packaging based on their clinical assessment of the complete CY 2015 
OPPS proposal. Some of these codes were identified by CMS medical

[[Page 66782]]

advisors and some were identified in prior years by commenters with 
specialized knowledge of the packaging associated with specific 
services. We also proposed to continue to include certain HCPCS codes 
on the bypass list 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) to the bypass list (73 
FR 68513).
    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 final rule with comment period for further discussion 
of the treatment of ``overlap bypass codes.'') This process also 
created multiple imaging composite ``single session'' bills that could 
be used for calculating composite APC costs. ``Overlap bypass codes'' 
that are members of the multiple imaging composite APCs are identified 
by asterisks (*) in Addendum N to this final rule with comment period 
(which is available via the Internet on the CMS Web site).
    Comment: One commenter supported the CY 2015 proposal to remove 
certain codes from the bypass list, in particular for the anatomic 
pathology procedures, and suggested that the bypass list undervalues 
codes and artificially lowers their estimated costs, as evidenced by 
the estimated increase in payment for some of those services in the CY 
2015 OPPS/ASC proposed rule.
    Response: We appreciate the commenter's support. The bypass list 
process is used to extract more data from claims that would otherwise 
be unusable. We use a variety of information in identifying codes that 
could be potentially added to the bypass list each year, including 
codes selected based on the empirical criteria, CMS medical advisor 
recommendations, and commenter requests. In doing so, we attempt to 
ensure that the amount of packaged cost being redistributed as a result 
of the process is limited.
    After consideration of the public comments we received, we are 
adopting as final the proposed ``pseudo'' single claims process. As 
discussed earlier in this section, there are interactions between the 
application of a bypass list and various other OPPS payment policies. 
As a result of modifications to the packaging policies described in 
section III. of this final rule with comment period, we are adding 
codes that we had originally proposed to remove from the CY 2015 bypass 
list back on the CY 2015 final OPPS bypass list.
    Addendum N to this final rule with comment period (which is 
available via the Internet on the CMS Web site) includes the list of 
bypass codes for CY 2015. The list of bypass codes contains codes that 
were reported on claims for services in CY 2013 and, therefore, 
includes codes that were in effect in CY 2013 and used for billing but 
were deleted for CY 2014. We retained these deleted bypass codes on the 
CY 2015 bypass list because these codes existed in CY 2013 and were 
covered OPD services in that period, and CY 2013 claims data are used 
to calculate CY 2015 payment rates. Keeping these deleted bypass codes 
on the bypass list potentially allows us to create more ``pseudo'' 
single procedure claims for ratesetting purposes. ``Overlap bypass 
codes'' that were members of the multiple imaging composite APCs are 
identified by asterisks (*) in the third column of Addendum N to this 
final rule with comment period. HCPCS codes that we are adding for CY 
2015 are identified by asterisks (*) in the fourth column of Addendum 
N.
    Table 1 of the proposed rule contained the list of codes that we 
proposed to remove from the CY 2015 bypass list (79 FR 40927 through 
40929). Table 1 below contains the list of codes that we are removing 
from the final CY 2015 bypass list because these codes were either 
deleted from the HCPCS before CY 2013 (and therefore were not covered 
OPD services in CY 2013) or were not separately payable codes under the 
CY 2015 OPPS because these codes are not used for ratesetting through 
the bypass process. The list of codes for removal from the bypass list 
includes those that will be affected by the CY 2015 OPPS packaging 
policy described in section II.A.3. of this final rule with comment 
period.

        Table 1--HCPCS Codes Removed From the CY 2015 Bypass List
------------------------------------------------------------------------
            HCPCS Code                     HCPCS Short descriptor
------------------------------------------------------------------------
11056.............................  Trim skin lesions 2 to 4.
11300.............................  Shave skin lesion 0.5 cm/<.
11301.............................  Shave skin lesion 0.6-1.0 cm.
11719.............................  Trim nail(s) any number.
11720.............................  Debride nail 1-5.
11721.............................  Debride nail 6 or more.
17000.............................  Destruct premalg lesion.
17110.............................  Destruct b9 lesion 1-14.
29240.............................  Strapping of shoulder.
29260.............................  Strapping of elbow or wrist.
29280.............................  Strapping of hand or finger.
29520.............................  Strapping of hip.
29530.............................  Strapping of knee.
51741.............................  Electro-uroflowmetry first.
51798.............................  Us urine capacity measure.
53601.............................  Dilate urethra stricture.
53661.............................  Dilation of urethra.
54240.............................  Penis study.
67820.............................  Revise eyelashes.
69210.............................  Remove impacted ear wax uni.
69220.............................  Clean out mastoid cavity.
70030.............................  X-ray eye for foreign body.
70100.............................  X-ray exam of jaw <4 views.
70110.............................  X-ray exam of jaw 4/>> views.
70120.............................  X-ray exam of mastoids.
70130.............................  X-ray exam of mastoids.
70140.............................  X-ray exam of facial bones.
70150.............................  X-ray exam of facial bones.
70160.............................  X-ray exam of nasal bones.
70200.............................  X-ray exam of eye sockets.
70210.............................  X-ray exam of sinuses.
70220.............................  X-ray exam of sinuses.
70240.............................  X-ray exam pituitary saddle.
70250.............................  X-ray exam of skull.
70260.............................  X-ray exam of skull.
70320.............................  Full mouth x-ray of teeth.
70328.............................  X-ray exam of jaw joint.
70330.............................  X-ray exam of jaw joints.
70355.............................  Panoramic x-ray of jaws.
70360.............................  X-ray exam of neck.
71021.............................  Chest x-ray frnt lat lordotc.
71022.............................  Chest x-ray frnt lat oblique.
71023.............................  Chest x-ray and fluoroscopy.
71030.............................  Chest x-ray 4/> views.
71035.............................  Chest x-ray special views.
71100.............................  X-ray exam ribs uni 2 views.
71101.............................  X-ray exam unilat ribs/chest.
71110.............................  X-ray exam ribs bil 3 views.
71111.............................  X-ray exam ribs/chest4/> vws.
71120.............................  X-ray exam breastbone 2/> vws.
71130.............................  X-ray strenoclavic jt 3/>vws.
72020.............................  X-ray exam of spine 1 view.
72040.............................  X-ray exam neck spine 2-3 vw.
72050.............................  X-ray exam neck spine 4/5vws.
72052.............................  X-ray exam neck spine 6/>vws.
72069.............................  X-ray exam trunk spine stand.
72070.............................  X-ray exam thorac spine 2vws.
72072.............................  X-ray exam thorac spine 3vws.
72074.............................  X-ray exam thorac spine4/>vw.

[[Page 66783]]

 
72080.............................  X-ray exam trunk spine 2 vws.
72090.............................  X-ray exam scloiosis erect.
72100.............................  X-ray exam l-s spine 2/3 vws.
72110.............................  X-ray exam l-2 spine 4/>vws.
72114.............................  X-ray exam l-s spine bending.
72120.............................  X-ray bend only l-s spine.
72170.............................  X-ray exam of pelvis.
72190.............................  X-ray exam of pelvis.
72202.............................  X-ray exam si joints 3/> vws.
72220.............................  X-ray exam sacrum tailbone.
73000.............................  X-ray exam of collar bone.
73010.............................  X-ray exam of shoulder blade.
73020.............................  X-ray exam of shoulder.
73030.............................  X-ray exam of shoulder.
73050.............................  X-ray exam of shoulders.
73060.............................  X-ray exam of humerus.
73070.............................  X-ray exam of elbow.
73080.............................  X-ray exam of elbow.
73090.............................  X-ray exam of forearm.
73100.............................  X-ray exam of wrist.
73110.............................  X-ray exam of wrist.
73120.............................  X-ray exam of hand.
73130.............................  X-ray exam of hand.
73140.............................  X-ray exam of finger(s).
73510.............................  X-ray exam of hip.
73520.............................  X-ray exam of hips.
73540.............................  X-ray exam of pelvis & hips.
73550.............................  X-ray exam of thigh.
73560.............................  X-ray exam of knee 1 or 2.
73562.............................  X-ray exam of knee 3.
73564.............................  X-ray exam knee 4 or more.
73565.............................  X-ray exam of knees.
73590.............................  X-ray exam of lower leg.
73600.............................  X-ray exam of ankle.
73610.............................  X-ray exam of ankle.
73620.............................  X-ray exam of foot.
73630.............................  X-ray exam of foot.
73650.............................  X-ray exam of heel.
73660.............................  X-ray exam of toe(s).
74000.............................  X-ray exam of abdomen.
74010.............................  X-ray exam of abdomen.
74020.............................  X-ray exam of abdomen.
74022.............................  X-ray exam series abdomen.
76100.............................  X-ray exam of body section.
76510.............................  Ophth us b & quant a.
76514.............................  Echo exam of eye thickness.
76516.............................  Echo exam of eye.
76519.............................  Echo exam of eye.
76645.............................  Us exam breast(s).
76816.............................  Ob us follow-up per fetus.
76882.............................  Us xtr non-vasc lmtd.
76970.............................  Ultrasound exam follow-up.
76977.............................  Us bone density measure.
77072.............................  X-rays for bone age.
77073.............................  X-rays bone length studies.
77074.............................  X-rays bone survey limited.
77076.............................  X-rays bone survey infant.
77077.............................  Joint survey single view.
77078.............................  Ct bone density axial.
77079.............................  Ct bone density peripheral.
77080.............................  Dxa bone density axial.
77081.............................  Dxa bone density/peripheral.
77082.............................  Dxa bone density vert fx.
77083.............................  Radiographic absorptiometry.
80500.............................  Lab pathology consultation.
80502.............................  Lab pathology consultation.
85097.............................  Bone marrow interpretation.
86510.............................  Histoplasmosis skin test.
86850.............................  Rbc antibody screen.
86870.............................  Rbc antibody identification.
86880.............................  Coombs test direct.
86885.............................  Coombs test indirect qual.
86886.............................  Coombs test indirect titer.
86900.............................  Blood typing abo.
86901.............................  Blood typing rh (d).
86904.............................  Blood typing patient serum.
86905.............................  Blood typing rbc antigens.
86906.............................  Blood typing rh phenotype.
86930.............................  Frozen blood prep.
86970.............................  Rbc pretx incubatj w/chemicl.
86977.............................  Rbc serum pretx incubj/inhib.
88104.............................  Cytopath fl nongyn smears.
88106.............................  Cytopath fl nongyn filter.
88107.............................  Cytopath fl nongyn sm/fltr.
88108.............................  Cytopath concentrate tech.
88112.............................  Cytopath cell enhance tech.
88120.............................  Cytp urne 3-5 probes ea spec.
88160.............................  Cytopath smear other source.
88161.............................  Cytopath smear other source.
88162.............................  Cytopath smear other source.
88172.............................  Cytp dx eval fna 1st ea site.
88173.............................  Cytopath eval fna report.
88182.............................  Cell marker study.
88184.............................  Flowcytometry/tc 1 marker.
88189.............................  Flowcytometry/read 16 & >.
88300.............................  Surgical path gross.
88302.............................  Tissue exam by pathologist.
88304.............................  Tissue exam by pathologist.
88305.............................  Tissue exam by pathologist.
88307.............................  Tissue exam by pathologist.
88312.............................  Special stains group 1.
88313.............................  Special stains group 2.
88321.............................  Microslide consultation.
88323.............................  Microslide consultation.
88325.............................  Comprehensive review of data.
88329.............................  Path consult introp.
88331.............................  Path consult intraop 1 bloc.
88342.............................  Immunohisto antibody slide.
88346.............................  Immunofluorescent study.
88347.............................  Immunofluorescent study.
88348.............................  Electron microscopy.
88358.............................  Analysis tumor.
88360.............................  Tumor immunohistochem/manual.
88361.............................  Tumor immunohistochem/comput.
88365.............................  Insitu hybridization (fish).
88368.............................  Insitu hybridization manual.
88385.............................  Eval molecul probes 51-250.
88386.............................  Eval molecul probes 251-500.
89049.............................  Chct for mal hyperthermia.
89220.............................  Sputum specimen collection.
89230.............................  Collect sweat for test.
89240.............................  Pathology lab procedure.
92020.............................  Special eye evaluation.
92025.............................  Corneal topography.
92060.............................  Special eye evaluation.
92081.............................  Visual field examination(s).
92082.............................  Visual field examination(s).
92083.............................  Visual field examination(s).
92133.............................  Cmptr ophth img optic nerve.
92134.............................  Cptr ophth dx img post segmt.
92136.............................  Ophthalmic biometry.
92225.............................  Special eye exam initial.
92226.............................  Special eye exam subsequent.
92230.............................  Eye exam with photos.
92250.............................  Eye exam with photos.
92285.............................  Eye photography.
92286.............................  Internal eye photography.
92520.............................  Laryngeal function studies.
92541.............................  Spontaneous nystagmus test.
92542.............................  Positional nystagmus test.
92550.............................  Tympanometry & reflex thresh.
92552.............................  Pure tone audiometry air.
92553.............................  Audiometry air & bone.
92555.............................  Speech threshold audiometry.
92556.............................  Speech audiometry complete.
92557.............................  Comprehensive hearing test.
92567.............................  Tympanometry.
92570.............................  Acoustic immitance testing.
92582.............................  Conditioning play audiometry.
92603.............................  Cochlear implt f/up exam 7/>.
92604.............................  Reprogram cochlear implt 7/>.
92626.............................  Eval aud rehab status.
93005.............................  Electrocardiogram tracing.
93017.............................  Cardiovascular stress test.
93225.............................  Ecg monit/reprt up to 48 hrs.
93226.............................  Ecg monit/reprt up to 48 hrs.
93270.............................  Remote 30 day ecg rev/report.
93278.............................  Ecg/signal-averaged.
93279.............................  Pm device progr eval sngl.
93280.............................  Pm device progr eval dual.
93281.............................  Pm device progr eval multi.
93282.............................  Icd device progr eval 1 sngl.
93283.............................  Icd device progr eval dual.
93284.............................  Icd device progr eval mult.
93285.............................  Ilr device eval progr.
93288.............................  Pm device eval in person.
93289.............................  Icd device interrogate.
93290.............................  Icm device eval.
93291.............................  Ilr device interrogate.
93292.............................  Wcd device interrogate.
93293.............................  Pm phone r-strip device eval.
93296.............................  Pm/icd remote tech serv.
93299.............................  Icm/ilr remote tech serv.
93701.............................  Bioimpedance cv analysis.
93786.............................  Ambulatory bp recording.
93788.............................  Ambulatory bp analysis.
93875.............................  Extracranial study.
94015.............................  Patient recorded spirometry.
94690.............................  Exhaled air analysis.
95803.............................  Actigraphy testing.
95869.............................  Muscle test thor paraspinal.
95900.............................  Motor nerve conduction test.
95921.............................  Autonomic nrv parasym inervj.
95970.............................  Analyze neurostim no prog.
96900.............................  Ultraviolet light therapy.
96910.............................  Photochemotherapy with uv-b.
96912.............................  Photochemotherapy with uv-a.
96920.............................  Laser tx skin < 250 sq cm.
96921.............................  Laser tx skin 250-500 sq cm.
98925.............................  Osteopath manj 1-2 regions.
98926.............................  Osteopath manj 3-4 regions.
98927.............................  Osteopath manj 5-6 regions.
98928.............................  Osteopath manj 7-8 regions.
98929.............................  Osteopath manj 9-10 regions.
98940.............................  Chiropract manj 1-2 regions.
98941.............................  Chiropract manj 3-4 regions.
98942.............................  Chiropractic manj 5 regions.
G0127.............................  Trim nail(s).
G0130.............................  Single energy x-ray study.
G0166.............................  Extrnl counterpulse, per tx.
G0239.............................  Oth resp proc, group.
G0389.............................  Ultrasound exam aaa screen.
G0404.............................  Ekg tracing for initial prev.
G0424.............................  Pulmonary rehab w exer.
Q0091.............................  Obtaining screen pap smear.
------------------------------------------------------------------------


[[Page 66784]]

c. Calculation and Use of Cost-to-Charge Ratios (CCRs)
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40929), we proposed to 
continue to use the hospital-specific overall ancillary and 
departmental cost-to-charge ratios (CCRs) to convert charges to 
estimated costs through application of a revenue code-to-cost center 
crosswalk. To calculate the APC costs on which the proposed CY 2015 APC 
payment rates were based, we calculated hospital-specific overall 
ancillary CCRs and hospital-specific departmental CCRs for each 
hospital for which we had CY 2013 claims data by comparing these claims 
data to the most recently available hospital cost reports, which, in 
most cases, were from CY 2012. For the CY 2015 OPPS proposed rates, we 
used the set of claims processed during CY 2013. 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/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
    To ensure the completeness of the revenue code-to-cost center 
crosswalk, we reviewed changes to the list of revenue codes for CY 2013 
(the year of claims data we used to calculate the proposed CY 2015 OPPS 
payment rates) and found that the National Uniform Billing Committee 
(NUBC) did not add any new revenue codes to the NUBC 2013 Data 
Specifications Manual.
    In accordance with our longstanding policy, we calculated CCRs for 
the standard and nonstandard cost centers accepted by the electronic 
cost report database. In general, the most detailed level at which we 
calculated CCRs was the hospital-specific departmental level. For a 
discussion of the hospital-specific overall ancillary CCR calculation, 
we refer readers to the CY 2007 OPPS/ASC final rule with comment period 
(71 FR 67983 through 67985). The calculation of blood costs is a 
longstanding exception (since the CY 2005 OPPS) to this general 
methodology for calculation of CCRs used for converting charges to 
costs on each claim. This exception is discussed in detail in the CY 
2007 OPPS/ASC final rule with comment period and discussed further in 
section II.A.2.d.(2) of this final rule with comment period.
    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 hospitals that filed 
outpatient claims in CY 2013 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, which, in most cases, were from cost reports with cost 
reporting periods beginning in CY 2012. For the proposed rule, we used 
the most recently submitted cost reports to calculate the CCRs to be 
used to calculate costs for the proposed CY 2015 OPPS payment rates. If 
the most recently 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 above for all purposes that require 
use of an overall ancillary CCR. We proposed to continue this 
longstanding methodology for the calculation of costs for CY 2015.
    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. This issue was evaluated in a report by the Research Triangle 
Institute, International (RTI). 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 (73 FR 48458 through 
45467). Specifically, we created one cost center for ``Medical Supplies 
Charged to Patients'' and one cost center for ``Implantable Devices 
Charged to Patients,'' essentially splitting the then current cost 
center for ``Medical Supplies Charged to Patients'' into one cost 
center for low-cost medical supplies and another cost center for high-
cost implantable devices in order to mitigate some of the effects of 
charge compression. In determining the items that should be reported in 
these respective cost centers, we adopted commenters' recommendations 
that hospitals should use revenue codes established by the AHA's NUBC 
to determine the items that should be reported in the ``Medical 
Supplies Charged to Patients'' and the ``Implantable Devices Charged to 
Patients'' cost centers. For a complete discussion of the rationale for 
the creation of the new cost center for ``Implantable Devices Charged 
to Patients,'' a summary of public comments received, and our responses 
to those public comments, we refer readers to the FY 2009 IPPS final 
rule.
    The cost center for ``Implantable Devices Charged to Patients'' has 
been available for use for cost reporting periods beginning on or after 
May 1, 2009. In the CY 2013 OPPS/ASC final rule with comment period, we 
determined that a significant volume of hospitals were utilizing the 
``Implantable Devices Charged to Patients'' cost center. Because a 
sufficient amount of data from which to generate a meaningful analysis 
was available, we established in the CY 2013 OPPS/ASC final rule with 
comment period a policy to create a distinct CCR using the 
``Implantable Devices Charged to Patients'' cost center (77 FR 68225). 
We retained this policy for the CY 2014 OPPS and, as we proposed, we 
are continuing this practice for the CY 2015 OPPS.
    In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50075 through 
50080), we finalized our proposal to create new standard cost centers 
for ``Computed Tomography (CT),'' ``Magnetic Resonance Imaging (MRI),'' 
and ``Cardiac Catheterization,'' and to require that hospitals report 
the costs

[[Page 66785]]

and charges for these services under these new cost centers on the 
revised Medicare cost report Form CMS 2552-10. As we discussed in the 
FY 2009 IPPS and CY 2009 OPPS/ASC proposed and final rules, RTI also 
found that the costs and charges of CT scans, MRIs, and cardiac 
catheterization differ significantly from the costs and charges of 
other services included in the standard associated cost center. RTI 
concluded that both the IPPS and the OPPS relative payment weights 
would better estimate the costs of those services if CMS were to add 
standard costs centers for CT scans, MRIs, and cardiac catheterization 
in order for hospitals to report separately the costs and charges for 
those services and in order for CMS to calculate unique CCRs to 
estimate the cost from charges on claims data. We refer readers to the 
FY 2011 IPPS/LTCH PPS final rule (75 FR 50075 through 50080) for a more 
detailed discussion on the reasons for the creation of standard cost 
centers for CT scans, MRIs, and cardiac catheterization. The new 
standard cost centers for CT scans, MRIs, and cardiac catheterization 
were effective for cost report periods beginning on or after May 1, 
2010, on the revised cost report Form CMS-2552-10.
    Using the HCRIS update for the CY 2015 final rule cycle, which we 
used to estimate costs in the CY 2015 OPPS ratesetting process, as 
discussed in the CY 2015 OPPS/ASC proposed rule (79 FR 40930), we were 
able to calculate a valid implantable device CCR for 2,895 hospitals, a 
valid MRI CCR for 1,934 hospitals, a valid CT scan CCR for 2,035 
hospitals, and a valid Cardiac Catheterization CCR for 1,397 hospitals.
    In our CY 2014 OPPS/ASC proposed rule discussion (78 FR 43549), we 
noted that, for CY 2014, the estimated changes in geometric mean 
estimated APC cost of using data from the new standard cost centers for 
CT scans and MRIs appeared consistent with RTI's analysis of cost 
report and claims data in the July 2008 final report (pages 5 and 6). 
RTI concluded that ``in hospitals that aggregate data for CT scanning, 
MRI, or nuclear medicine services with the standard line for Diagnostic 
Radiology, costs for these services all appear substantially 
overstated, while the costs for plain films, ultrasound and other 
imaging procedures are correspondingly understated.'' We also noted 
that there were limited additional impacts in the implantable device-
related APCs from adopting the new cost report Form CMS 2552-10 because 
we had used data from the standard cost center for implantable medical 
devices beginning in CY 2013 OPPS ratesetting, as discussed above.
    As we indicated in prior rulemaking (77 FR 68223 through 68225), 
once we determined that cost report data for the new standard cost 
centers were sufficiently available, we would analyze that data and, if 
appropriate, we would propose to use the distinct CCRs for new standard 
cost centers described above in the calculation of the OPPS relative 
payment weights. As stated in the CY 2014 OPPS/ASC proposed rule (78 FR 
43550), we have conducted our analysis and concluded that we should 
develop distinct CCRs for each of the new cost centers and use them in 
ratesetting. Therefore, we began in the CY 2014 OPPS, and proposed to 
continue for the CY 2015 OPPS, to calculate the OPPS relative payment 
weights using distinct CCRs for cardiac catheterization, CT scan, MRI, 
and implantable medical devices. Section XXI. of this final rule with 
comment period includes the impacts of calculating the CY 2015 OPPS 
relative payment weights using these new standard cost centers.
    Comment: A few commenters encouraged CMS to ensure data quality and 
continue to test, refine, and improve its CCR analysis for CT scans and 
MRI.
    Response: We will continue to monitor the CCRs for these services.
    After consideration of the public comments we received, we are 
finalizing our proposal to calculate the OPPS relative payment weights 
using distinct CCRs for cardiac catheterization, CT scan, MRI, and 
implantable medical devices for CY 2015 without modification.
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 
74847), we finalized a policy to remove claims from providers that use 
a cost allocation method of ``square feet'' to calculate CCRs used to 
estimate costs associated with the CT and MRI APCs. This change allows 
hospitals additional time to use one of the more accurate cost 
allocation methods, and thereby improve the accuracy of the CCRs on 
which the OPPS relative payment weights are developed. In Table 2 
below, we display CCR values for providers based on various cost 
allocation methods.

                Table 2--CCR Statistical Values Based on Use of Different Cost Allocation Methods
----------------------------------------------------------------------------------------------------------------
                                                                CT                              MRI
             Cost allocation method              ---------------------------------------------------------------
                                                    Median CCR       Mean CCR       Median CCR       Mean CCR
----------------------------------------------------------------------------------------------------------------
All Providers...................................          0.0464          0.0608          0.0901          0.1151
Square Feet Only................................          0.0370          0.0502          0.0787          0.1013
Direct Assign...................................          0.0640          0.0740          0.1063          0.1294
Dollar Value....................................          0.0555          0.0718          0.1046          0.1298
Direct Assign and Dollar Value..................          0.0554          0.0715          0.1047          0.1297
----------------------------------------------------------------------------------------------------------------

    As part of this transitional policy to estimate the CT and MRI APC 
relative payment weights using only cost data from providers that do 
not use ``square feet'' as the cost allocation statistic, we adopted a 
policy in the CY 2014 OPPS/ASC final rule with comment period that we 
will sunset this policy in 4 years once the updated cost report data 
become available for ratesetting purposes. We stated that we believe 4 
years is sufficient time for hospitals that have not done so to 
transition to a more accurate cost allocation method and for the 
related data to be available for ratesetting purposes. Therefore, in CY 
2018, we will estimate the CT and MRI APC relative payment weights 
using cost data from all providers, regardless of the cost allocation 
statistic employed. In Table 3 below, we display the impact of 
excluding claims based on the ``square feet'' cost allocation method 
from estimates of CT and MRI costs in CY 2015.

[[Page 66786]]



  Table 3--Percentage Change in Estimated Cost for CT and MRI APCs When
    Excluding Claims From Providers Using ``Square Feet'' as the Cost
                            Allocation Method
------------------------------------------------------------------------
       CY 2015 APC             CY 2015 APC Descriptor     Percent change
------------------------------------------------------------------------
0283.....................  Computed Tomography with                  9.6
                            Contrast.
0284.....................  Magnetic Resonance Imaging                4.0
                            and Magnetic Resonance
                            Angiography with Contrast.
0331.....................  Combined Abdomen and Pelvis              12.1
                            CT without Contrast.
0332.....................  Computed Tomography without              14.5
                            Contrast.
0333.....................  Computed Tomography without              12.3
                            Contrast followed by
                            Contrast.
0334.....................  Combined Abdomen and Pelvis              10.1
                            CT with Contrast.
0336.....................  Magnetic Resonance Imaging                7.5
                            and Magnetic Resonance
                            Angiography without Contrast.
0337.....................  Magnetic Resonance Imaging                6.4
                            and Magnetic Resonance
                            Angiography without Contrast
                            f.
0383.....................  Cardiac Computed Tomographic              3.6
                            Imaging.
0662.....................  CT Angiography...............            10.3
8005.....................  CT and CTA without Contrast              12.8
                            Composite.
8006.....................  CT and CTA with Contrast                  9.4
                            Composite.
8007.....................  MRI and MRA without Contrast              6.7
                            Composite.
8008.....................  MRI and MRA with Contrast                 6.9
                            Composite.
------------------------------------------------------------------------

    Comment: A few commenters supported CMS' proposal to continue 
removing claims from providers that use the ``square feet'' cost 
allocation method from the cost model. One commenter suggested that CMS 
continue removing claims from providers that use this method in CY 2018 
and beyond.
    Response: We thank the commenters for their support and are 
finalizing this policy as proposed. We will continue to only include 
cost data from providers that do not use ``square feet'' as the cost 
allocation statistic in relative payment weights through CY 2017. For 
CY 2018 and beyond, we will estimate the CT and MRI APC relative 
payment weights using cost data from all providers, regardless of the 
cost allocation statistic employed.
    In summary, as we proposed, we are continuing to use data from the 
``Implantable Devices Charged to Patients'' and ``Cardiac 
Catheterization'' cost centers to create distinct CCRs for use in 
calculating the OPPS relative payment weights for the CY 2015 OPPS. For 
the ``Magnetic Resonance Imaging (MRI)'' and ``Computed Tomography (CT) 
Scan'' APCs identified in Table 3 of this final rule with comment 
period, we are continuing our policy of removing claims from cost 
modeling for those providers using ``square feet'' as the cost 
allocation statistic for CY 2015.
2. Data Development Process and Calculation of Costs Used for 
Ratesetting
    In this section of this final rule with comment period, we discuss 
the use of claims to calculate the OPPS payment rates for CY 2015. The 
Hospital OPPS page on the CMS Web site on which this final rule with 
comment period is posted (http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html) provides an 
accounting of claims used in the development of the final payment 
rates. 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. The CMS 
Web site, http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html, 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 2013 claims that were used to 
calculate the final payment rates for the CY 2015 OPPS.
    In the history of the OPPS, we have traditionally established the 
scaled relative weights on which payments are based using APC median 
costs, which is a process described in the CY 2012 OPPS/ASC final rule 
with comment period (76 FR 74188). However, as discussed in more detail 
in section II.A.2.f. of the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68259 through 68271), we finalized the use of geometric 
mean costs to calculate the relative weights on which the CY 2013 OPPS 
payment rates were based. While this policy changed the cost metric on 
which the relative payments are based, the data process in general 
remained the same, under the methodologies that we used to obtain 
appropriate claims data and accurate cost information in determining 
estimated service cost. For CY 2015, as we proposed, we are continuing 
to use geometric mean costs to calculate the relative weights on which 
the CY 2015 OPPS payment rates are based.
    We used the methodology described in sections II.A.2.a. through 
II.A.2.f. of this final rule with comment period to calculate the costs 
we used to establish the relative weights used in calculating the OPPS 
payment rates for CY 2015 shown in Addenda A and B to this final rule 
with comment period (which are available via the Internet on the CMS 
Web site). We refer readers to section II.A.4. of this final rule with 
comment period for a discussion of the conversion of APC costs to 
scaled payment weights.
a. Claims Preparation
    For this final rule with comment period, we used the CY 2013 
hospital outpatient claims processed through June 30, 2014, to 
calculate the geometric mean costs of APCs that underpin the relative 
payment weights for CY 2015. To begin the calculation of the relative 
payment weights for CY 2015, we pulled all claims for outpatient 
services furnished in CY 2013 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 tests for 
persons who are neither inpatients nor outpatients of the hospital).
    We then excluded claims with condition codes 04, 20, 21, and 77 
because these are claims that providers submitted to Medicare knowing 
that no payment would be made. For example, 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

[[Page 66787]]

not paid under the OPPS, and, therefore, we do not use claims for 
services furnished in these areas in ratesetting.
    We divided the remaining claims into the three groups shown below. 
Groups 2 and 3 comprise the 123 million claims that contain hospital 
bill types paid under the OPPS.
    1. Claims that were not bill types 12X (Hospital Inpatient 
(Medicare Part B only)), 13X (Hospital Outpatient), 14X (Hospital--
Laboratory Services Provided to Nonpatients), or 76X (Clinic--Community 
Mental Health Center). Other bill types are not paid under the OPPS; 
therefore, these claims were not used to set OPPS payment.
    2. Claims that were bill types 12X, 13X or 14X. Claims with bill 
types 12X and 13X are hospital outpatient claims. Claims with bill type 
14X are laboratory specimen claims.
    3. Claims that were bill type 76X (CMHC).
    To convert charges on the claims to estimated cost, we multiplied 
the charges on each claim by the appropriate hospital-specific CCR 
associated with the revenue code for the charge as discussed in section 
II.A.1.c. of this final rule with comment period. We then flagged and 
excluded CAH claims (which are not paid under the OPPS) and claims from 
hospitals with invalid CCRs. The latter included claims from hospitals 
without a CCR; those from hospitals paid an all-inclusive rate; those 
from hospitals with obviously erroneous CCRs (greater than 90 or less 
than 0.0001); and those from hospitals with overall ancillary CCRs that 
were identified as outliers (that exceeded  3 standard 
deviations from the geometric mean after removing error CCRs). In 
addition, we trimmed the CCRs at the cost center (that is, 
departmental) level by removing the CCRs for each cost center as 
outliers if they exceeded  3 standard deviations from the 
geometric mean. We used a four-tiered hierarchy of cost center CCRs, 
which is the revenue code-to-cost center crosswalk, to match a cost 
center to every possible revenue code appearing in the outpatient 
claims that is relevant to OPPS services, with the top tier being the 
most common cost center and the last tier being the default CCR. If a 
hospital's cost center CCR was deleted by trimming, we set the CCR for 
that cost center to ``missing'' so that another cost center CCR in the 
revenue center hierarchy could apply. If no other cost center CCR could 
apply to the revenue code on the claim, we used the hospital's overall 
ancillary CCR for the revenue code in question as the default CCR. For 
example, if a visit was reported under the clinic revenue code but the 
hospital did not have a clinic cost center, we mapped the hospital-
specific overall ancillary CCR to the clinic revenue code. The revenue 
code-to-cost center crosswalk is available for inspection on the CMS 
Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. Revenue codes that we do not 
use in establishing relative costs or to model impacts are identified 
with an ``N'' in the revenue code-to-cost center crosswalk.
    We applied the CCRs as described above to claims with bill type 
12X, 13X, or 14X, excluding all claims from CAHs and hospitals in 
Maryland, Guam, the U.S. Virgin Islands, American Samoa, and the 
Northern Mariana Islands and claims from all hospitals for which CCRs 
were flagged as invalid.
    We identified claims with condition code 41 as partial 
hospitalization services of hospitals and moved them to another file. 
We note that the separate file containing partial hospitalization 
claims is included in the files that are available for purchase as 
discussed above.
    We then excluded claims without a HCPCS code. We moved to another 
file claims that contained only influenza and pneumococcal pneumonia 
(PPV) vaccines. Influenza and PPV vaccines are paid at reasonable cost; 
therefore, these claims are not used to set OPPS rates.
    We next copied line-item costs for drugs, blood, and brachytherapy 
sources to a separate file (the lines stay on the claim, but are copied 
onto another file). No claims were deleted when we copied these lines 
onto another file. These line-items are used to calculate a per unit 
arithmetic and geometric mean and median cost and a per day arithmetic 
and geometric 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.
    Prior to CY 2013, our payment policy for nonpass-through separately 
paid drugs and biologicals was based on a redistribution methodology 
that accounted for pharmacy overhead by allocating cost from packaged 
drugs to separately paid drugs. This methodology typically would have 
required us to reduce the cost associated with packaged coded and 
uncoded drugs in order to allocate that cost. However, for CY 2013, we 
paid for separately payable drugs and biologicals under the OPPS at 
ASP+6 percent, based upon the statutory default described in section 
1833(t)(14)(A)(iii)(II) of the Act. Under that policy, we did not 
redistribute the pharmacy overhead costs from packaged drugs to 
separately paid drugs. For the CY 2014 OPPS, we continued the CY 2013 
payment policy for separately payable drugs and biologicals, and we are 
continuing this payment policy for CY 2015. We refer readers to section 
V.B.3. of this final rule with comment period for a complete discussion 
of our CY 2015 final payment policy for separately paid drugs and 
biologicals.
    We then removed line-items that were not paid during claim 
processing, presumably for a line-item rejection or denial. The number 
of edits for valid OPPS payment in the Integrated Outpatient Code 
Editor (I/OCE) and elsewhere has grown significantly in the past few 
years, especially with the implementation of the full spectrum of 
National Correct Coding Initiative (NCCI) edits. To ensure that we are 
using valid claims that represent the cost of payable services to set 
payment rates, we removed line-items with an OPPS status indicator that 
were not paid during claims processing in the claim year, but have a 
status indicator of ``S,'' ``T,'' and ``V'' in the prospective year's 
payment system. This logic preserves charges for services that would 
not have been paid in the claim year but for which some estimate of 
cost is needed for the prospective year, such as services newly removed 
from the inpatient list for CY 2014 that were assigned status indicator 
``C'' in the claim year. It also preserves charges for packaged 
services so that the costs can be included in the cost of the services 
with which they are reported, even if the CPT codes for the packaged 
services were not paid because the service is part of another service 
that was reported on the same claim or the code otherwise violates 
claims processing edits.
    For CY 2015, as we proposed, we are continuing the policy we 
implemented for CY 2013 and CY 2014 to exclude line-item data for pass-
through drugs and biologicals (status indicator ``G'' for CY 2013) and 
nonpass-through drugs and biologicals (status indicator ``K'' for CY 
2013) 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

[[Page 66788]]

exceeded the number of units that would be reasonable and, therefore, 
is likely a billing error (for example, a line reporting 55 units of a 
drug for which 5 units is known to be a fatal dose). As with our 
trimming in the CY 2014 OPPS/ASC final rule with comment period (78 FR 
74849) 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 data used for ratesetting purposes.
    For the CY 2015 OPPS, as part of our continued packaging of 
clinical diagnostic laboratory tests, we also are applying the line 
item trim to these services if they did not receive payment in the 
claims year. Removing these lines ensures that, in establishing the CY 
2015 OPPS relative payment weights, we appropriately allocate the costs 
associated with packaging these services.
b. Splitting Claims and Creation of ``Pseudo'' Single Procedure Claims
(1) Splitting Claims
    For the CY 2015 OPPS, 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 are presented 
below.) We note that, under the proposed CY 2015 OPPS packaging policy 
(79 FR 40933), we proposed to delete status indicator ``X'' and revise 
the title and description of status indicator ``Q1'' to reflect that 
deletion, as discussed in sections II.A.3. and XI. of this final rule 
with comment period. We note that we also proposed to create status 
indicator ``J1'' to reflect the comprehensive APCs (C-APCs) discussed 
in section II.A.2.e. of this final rule with comment period. For CY 
2015, we proposed to define major procedures as any HCPCS code having a 
status indicator of ``J1,'' ``S,'' ``T,'' or ``V,'' define minor 
procedures as any code having a status indicator of ``F,'' ``G,'' 
``H,'' ``K,'' ``L,'' ``R,'' ``U,'' or ``N,'' and classify ``other'' 
procedures as any code having a status indicator other than one that we 
have classified as major or minor. For CY 2015, we proposed to continue 
to assign status indicator ``R'' to blood and blood products; status 
indicator ``U'' to brachytherapy sources; status indicator ``Q1'' to 
all ``STV-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. As we proposed, we are treating these codes in the same manner 
for data purposes for CY 2015 as we have treated them since CY 2008. 
Specifically, we are continuing 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 geometric mean costs for composite APCs 
from multiple procedure major claims is discussed in section II.A.2.f. 
of this final rule with comment period.
    Specifically, we divided the remaining claims into the following 
five groups:
    1. Single Procedure Major Claims: Claims with a single separately 
payable procedure (that is, status indicator ``S,'' ``T,'' or ``V'' 
which includes codes with status indicator ``Q3''); claims with status 
indicator ``J1,'' which receive special processing for C-APCs, as 
discussed in section II.A.2.e. of this final rule with comment period; 
claims with one unit of a status indicator ``Q1'' code (``STV-
packaged'') where there was no code with status indicator ``S,'' ``T,'' 
or ``V'' 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,'' 
or ``V'' 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'' or ``V''). 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'' (``STV-
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'' (``STV-packaged'') or more than one unit 
of a code with status indicator ``Q1'' but no codes with status 
indicator ``S,'' ``T,'' or ``V'' 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, and do not contain a 
code for a separately payable or packaged OPPS service. Non-OPPS claims 
include claims for therapy services paid sometimes under the OPPS but 
billed, in these non-OPPS cases, with revenue codes indicating that the 
therapy services would be paid under the Medicare Physician Fee 
Schedule (MPFS).
    The claims listed in numbers 1, 2, 3, and 4 above are included in 
the data file that can be purchased as described above. Claims that 
contain codes to which we have assigned status indicators ``Q1'' 
(``STV-packaged'') and ``Q2'' (``T-packaged'') appear in the data for 
the single major file, the multiple major file, and the multiple minor 
file

[[Page 66789]]

used for ratesetting. Claims that contain codes to which we have 
assigned status indicator ``Q3'' (composite APC members) appear in both 
the data of the single and multiple major files used in this final rule 
with comment period, depending on the specific composite calculation.
(2) Creation of ``Pseudo'' Single Procedure Claims
    To develop ``pseudo'' single procedure claims for this final rule 
with comment period, we examined both the multiple procedure major 
claims and the multiple procedure minor claims. We first examined the 
multiple major procedure claims for dates of service to determine if we 
could break them into ``pseudo'' single procedure claims using the 
dates of service for all lines on the claim. If we could create claims 
with single major procedures by using dates of service, we created a 
single procedure claim record for each separately payable procedure on 
a different date of service (that is, a ``pseudo'' single procedure 
claim).
    As proposed, we also use the bypass codes listed in Addendum N to 
this final rule with comment period (which is available via the 
Internet on our Web site) and discussed in section II.A.1.b. of this 
final rule with comment period to remove separately payable procedures 
which we determined contained limited or no packaged costs or that were 
otherwise suitable for inclusion on the bypass list from a multiple 
procedure bill. As discussed above, we ignore the ``overlap bypass 
codes,'' that is, those HCPCS codes that are both on the bypass list 
and are members of the multiple imaging composite APCs, in this initial 
assessment for ``pseudo'' single procedure claims. The final CY 2015 
``overlap bypass codes'' are listed in Addendum N to this final rule 
with comment period (which is available via the Internet on the CMS Web 
site). When one of the two separately payable procedures on a multiple 
procedure claim was on the bypass list, we split the claim into two 
``pseudo'' single procedure claim records. The single procedure claim 
record that contained the bypass code did not retain packaged services. 
The single procedure claim record that contained the other separately 
payable procedure (but no bypass code) retained the packaged revenue 
code charges and the packaged HCPCS code charges. We also removed lines 
that contained multiple units of codes on the bypass list and treated 
them as ``pseudo'' single procedure claims by dividing the cost for the 
multiple units by the number of units on the line. If 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.f.(5) of 
this final rule with comment period, were met. If 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 costs on which the CY 2015 OPPS relative 
payment weights are based. Having identified ``single session'' claims 
for the imaging composite APCs, we reassessed the claim to determine 
if, after removal of all lines for bypass codes, including the 
``overlap bypass codes,'' a single unit of a single separately payable 
code remained on the claim. If so, we attributed the packaged costs on 
the claim to the single unit of the single remaining separately payable 
code other than the bypass code to create a ``pseudo'' single procedure 
claim. We also identified line-items of overlap bypass codes as a 
``pseudo'' single procedure claim. This allowed us to use more claims 
data for ratesetting purposes.
    As we proposed, 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'' (``STV-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 2014 relative payment weight, 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 ``Q1.'' We then packaged all costs for the 
following into a single cost for the ``Q1'' HCPCS code that had the 
highest CY 2014 relative payment weight to create a ``pseudo'' single 
procedure claim for that code: additional units of the status indicator 
``Q1'' HCPCS code with the highest CY 2014 relative payment weight; 
other codes with status indicator ``Q1;'' and all other packaged HCPCS 
codes and packaged revenue code costs. We changed the status indicator 
for the selected code from the data status indicator of ``N'' to the 
status indicator of the APC to which the selected procedure was 
assigned for further data processing and considered this claim as a 
major procedure claim. We used this claim in the calculation of the APC 
geometric mean cost for the status indicator ``Q1'' HCPCS code.
    Similarly, if 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 2014 relative 
payment weight 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 ``Q2'' HCPCS code that had the highest CY 2014 relative payment 
weight to create a ``pseudo'' single procedure claim for that code: 
additional units of the status indicator ``Q2'' HCPCS code with the 
highest CY 2014 relative payment 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.
    If a multiple procedure minor claim contained multiple codes with 
status indicator ``Q2'' (``T-packaged'') and status indicator ``Q1'' 
(``STV-packaged''), we selected the T-packaged status indicator ``Q2'' 
HCPCS code that had the highest relative payment weight for CY 2014 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 2014 relative payment weight; 
other codes with status indicator ``Q2;'' codes with status indicator 
``Q1'' (``STV-packaged''); and

[[Page 66790]]

other packaged HCPCS codes and packaged revenue code costs. We selected 
status indicator ``Q2'' HCPCS codes instead of ``Q1'' HCPCS codes 
because ``Q2'' HCPCS codes have higher CY 2014 relative payment 
weights. If a status indicator ``Q1'' HCPCS code had a higher CY 2014 
relative payment weight, it became the primary code for the simulated 
single bill process. We changed the status indicator for the selected 
status indicator ``Q2'' (``T-packaged'') code from a data status 
indicator of ``N'' to the status indicator of the APC to which the 
selected code was assigned and we considered this claim as a major 
procedure claim.
    We then applied our process for creating ``pseudo'' single 
procedure claims to the conditionally packaged codes that do not meet 
the criteria for packaging, which enabled us to create single procedure 
claims from them, if they met the criteria for single procedure claims. 
Conditionally packaged codes are identified using status indicators 
``Q1'' and ``Q2,'' and are described in section XI.A. of this final 
rule with comment period.
    Lastly, we excluded those claims that we were not able to convert 
to single procedure claims even after applying all of the techniques 
for creation of ``pseudo'' single procedure claims to multiple 
procedure major claims and to multiple procedure minor claims. As has 
been our practice in recent years, we also excluded claims that 
contained codes that were viewed as independently or conditionally 
bilateral and that contained the bilateral modifier (Modifier 50 
(Bilateral procedure)) because the line-item cost for the code 
represented the cost of two units of the procedure, notwithstanding 
that hospitals billed the code with a unit of one.
    We proposed to continue to apply the methodology described above 
for the purpose of creating ``pseudo'' single procedure claims for the 
CY 2015 OPPS.
    We did not receive any public comments on this proposal. Therefore, 
we are finalizing our proposal to continue to apply the methodology 
described above for the purpose of creating ``pseudo'' single procedure 
claims for the CY 2015 OPPS.
c. Completion of Claim Records and Geometric Mean Cost Calculations
(1) General Process
    We then packaged the costs of packaged HCPCS codes (codes with 
status indicator ``N'' listed in Addendum B to this final rule with 
comment period (which is available via the Internet on the CMS Web 
site) and the costs of those lines for codes with status indicator 
``Q1'' or ``Q2'' when they are not separately paid), and the costs of 
the services reported under packaged revenue codes in Table 4 below 
that appeared on the claim without a HCPCS code into the cost of the 
single major procedure remaining on the claim. For a more complete 
discussion of our final CY 2015 OPPS packaging policy, we refer readers 
to section II.A.3. of this final rule with comment period.
    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, and as we proposed, we 
are continuing to compare the final list of packaged revenue codes that 
we adopt for CY 2015 to the revenue codes that the I/OCE will package 
for CY 2015 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 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 on the CY 2010 
proposed list of packaged revenue codes.
    For CY 2015, as we did for CY 2014, we reviewed the changes to 
revenue codes that were effective during CY 2013 for purposes of 
determining the charges reported with revenue codes but without HCPCS 
codes that we proposed to package for CY 2015. We believe that the 
charges reported under the revenue codes listed in Table 4 of the 
proposed rule continue to reflect ancillary and supportive services for 
which hospitals report charges without HCPCS codes. Therefore, for CY 
2015, we proposed to continue to package the costs that we derive from 
the charges reported without HCPCS codes under the revenue codes 
displayed in Table 4 of the proposed rule for purposes of calculating 
the geometric mean costs on which the final CY 2015 OPPS/ASC payment 
rates are based.
    Comment: One commenter recommended that CMS include, in the list of 
packaged revenue codes, revenue codes 0331 (Radiology--Therapeutic and/
or Chemotherapy Administration; Chemotherapy Admin--Injected), 0332 
(Radiology--Therapeutic and/or Chemotherapy Administration; 
Chemotherapy Admin--Oral), 0335 (Radiology--Therapeutic and/or 
Chemotherapy Administration; Chemotherapy Admin--IV), 0360 (Operating 
Room Services; General Classification), 0361 (Operating Room Services; 
Minor Surgery), 0362 (Operating Room Services; Organ Transplant--Other 
than Kidney), 0369 (Operating Room Services; Other OR Services), 0410 
(Respiratory Services; General Classification), 0412 (Respiratory 
Services; Inhalation Services), 0413 (Respiratory Services; Hyperbaric 
Oxygen Therapy), 0419 (Respiratory Services; Other Respiratory 
Services), 0722 (Labor Room/Delivery; Delivery Room), 0724 (Labor Room/
Delivery; Birthing Center), 0729 (Labor Room/Delivery; Other Labor 
Room/Delivery), 0760 (Specialty Services; General Classification), 0761 
(Specialty Services; Treatment Room), 0762 (Specialty Services; 
Observation), 0769 (Specialty Services; Other Specialty Services), 0770 
(Preventive Care Services; General Classification). The commenter 
stated that charge data on claim lines with these revenue codes is 
currently included in OPPS modeling, and including them when they 
appear without a HCPCS would more accurately capture the costs from 
these lines.
    Response: On the OPPS revenue code-to-cost center modeling 
crosswalk that we make available online, we indicate which revenue 
codes we believe are appropriately used for OPPS ratesetting purposes. 
As the commenter noted, coded lines billed using these specific revenue 
codes are already currently included for ratesetting purposes. While we 
note that including the packaged costs associated with uncoded lines 
billed with these revenue codes has a minimal impact on the relative 
payment weights, we believe that including them when establishing the 
OPPS relative payment weights would better estimate the full range of 
costs for services to which these lines are packaged. Including the 
uncoded lines and capturing the costs billed using these revenue codes 
would generally be appropriate in establishing the OPPS relative 
payment weights and our ratesetting methodology. Therefore, we have 
updated Table 4 which appeared in the proposed rule (79 FR 40935

[[Page 66791]]

through 40936) (also Table 4 in this final rule with comment period) to 
reflect the addition of these packaged revenue codes and incorporated 
these changes into our cost modeling logic. We will also ensure that 
this list corresponds with that used for I/OCE purposes.
    After consideration of the public comments we received, we are 
finalizing the proposed packaged revenue codes for CY 2015, which are 
identified in Table 4 below, with modification to include the revenue 
codes described earlier in this section.

                 Table 4--CY 2015 Packaged Revenue Codes
------------------------------------------------------------------------
           Revenue code                          Description
------------------------------------------------------------------------
250...............................  Pharmacy; General Classification.
251...............................  Pharmacy; Generic Drugs.
252...............................  Pharmacy; Non-Generic Drugs.
254...............................  Pharmacy; Drugs Incident to Other
                                     Diagnostic Services.
255...............................  Pharmacy; Drugs Incident to
                                     Radiology.
257...............................  Pharmacy; Non-Prescription.
258...............................  Pharmacy; IV Solutions.
259...............................  Pharmacy; Other Pharmacy.
260...............................  IV Therapy; General Classification.
261...............................  IV Therapy; Infusion Pump.
262...............................  IV Therapy; IV Therapy/Pharmacy
                                     Svcs.
263...............................  IV Therapy; IV Therapy/Drug/Supply
                                     Delivery.
264...............................  IV Therapy; IV Therapy/Supplies.
269...............................  IV Therapy; Other IV Therapy.
270...............................  Medical/Surgical Supplies and
                                     Devices; General Classification.
271...............................  Medical/Surgical Supplies and
                                     Devices; Non-sterile Supply.
272...............................  Medical/Surgical Supplies and
                                     Devices; Sterile Supply.
275...............................  Medical/Surgical Supplies and
                                     Devices; Pacemaker.
276...............................  Medical/Surgical Supplies and
                                     Devices; Intraocular Lens.
278...............................  Medical/Surgical Supplies and
                                     Devices; Other Implants.
279...............................  Medical/Surgical Supplies and
                                     Devices; Other Supplies/Devices.
280...............................  Oncology; General Classification.
289...............................  Oncology; Other Oncology.
331...............................  Radiology--Therapeutic and/or
                                     Chemotherapy Administration;
                                     Chemotherapy Admin--Injected.
332...............................  Radiology--Therapeutic and/or
                                     Chemotherapy Administration;
                                     Chemotherapy Admin--Oral.
335...............................  Radiology--Therapeutic and/or
                                     Chemotherapy Administration;
                                     Chemotherapy Admin--IV.
343...............................  Nuclear Medicine; Diagnostic
                                     Radiopharmaceuticals.
344...............................  Nuclear Medicine; Therapeutic
                                     Radiopharmaceuticals.
360...............................  Operating Room Services; General
                                     Classification.
361...............................  Operating Room Services; Minor
                                     Surgery.
362...............................  Operating Room Services; Organ
                                     Transplant--Other than Kidney.
369...............................  Operating Room Services; Other OR
                                     Services.
370...............................  Anesthesia; General Classification.
371...............................  Anesthesia; Anesthesia Incident to
                                     Radiology.
372...............................  Anesthesia; Anesthesia Incident to
                                     Other DX Services.
379...............................  Anesthesia; Other Anesthesia.
390...............................  Administration, Processing and
                                     Storage for Blood and Blood
                                     Components; General Classification.
392...............................  Administration, Processing and
                                     Storage for Blood and Blood
                                     Components; Processing and Storage.
399...............................  Administration, Processing and
                                     Storage for Blood and Blood
                                     Components; Other Blood Handling.
410...............................  Respiratory Services; General
                                     Classification.
412...............................  Respiratory Services; Inhalation
                                     Services.
413...............................  Respiratory Services; Hyperbaric
                                     Oxygen Therapy.
419...............................  Respiratory Services; Other
                                     Respiratory Services.
621...............................  Medical Surgical Supplies--Extension
                                     of 027X; Supplies Incident to
                                     Radiology.
622...............................  Medical Surgical Supplies--Extension
                                     of 027X; Supplies Incident to Other
                                     DX Services.
623...............................  Medical Supplies--Extension of 027X,
                                     Surgical Dressings.
624...............................  Medical Surgical Supplies--Extension
                                     of 027X; FDA Investigational
                                     Devices.
630...............................  Pharmacy--Extension of 025X;
                                     Reserved.
631...............................  Pharmacy--Extension of 025X; Single
                                     Source Drug.
632...............................  Pharmacy--Extension of 025X;
                                     Multiple Source Drug.
633...............................  Pharmacy--Extension of 025X;
                                     Restrictive Prescription.
681...............................  Trauma Response; Level I Trauma.
682...............................  Trauma Response; Level II Trauma.
683...............................  Trauma Response; Level III Trauma.
684...............................  Trauma Response; Level IV Trauma.
689...............................  Trauma Response; Other.
700...............................  Cast Room; General Classification.
710...............................  Recovery Room; General
                                     Classification.
720...............................  Labor Room/Delivery; General
                                     Classification.
721...............................  Labor Room/Delivery; Labor.
722...............................  Labor Room/Delivery; Delivery Room.
724...............................  Labor Room/Delivery; Birthing
                                     Center.
729...............................  Labor Room/Delivery; Other Labor
                                     Room/Delivery.
732...............................  EKG/ECG (Electrocardiogram);
                                     Telemetry.
760...............................  Specialty Services; General
                                     Classification.
761...............................  Specialty Services; Treatment Room.

[[Page 66792]]

 
762...............................  Specialty services; Observation
                                     Hours.
769...............................  Specialty Services; Other Specialty
                                     Services.
770...............................  Preventive Care Services; General
                                     Classification.
801...............................  Inpatient Renal Dialysis; Inpatient
                                     Hemodialysis.
802...............................  Inpatient Renal Dialysis; Inpatient
                                     Peritoneal Dialysis (Non-CAPD).
803...............................  Inpatient Renal Dialysis; Inpatient
                                     Continuous Ambulatory Peritoneal
                                     Dialysis (CAPD).
804...............................  Inpatient Renal Dialysis; Inpatient
                                     Continuous Cycling Peritoneal
                                     Dialysis (CCPD).
809...............................  Inpatient Renal Dialysis; Other
                                     Inpatient Dialysis.
810...............................  Acquisition of Body Components;
                                     General Classification.
819...............................  Acquisition of Body Components;
                                     Other Donor.
821...............................  Hemodialysis-Outpatient or Home;
                                     Hemodialysis Composite or Other
                                     Rate.
824...............................  Hemodialysis-Outpatient or Home;
                                     Maintenance--100%.
825...............................  Hemodialysis-Outpatient or Home;
                                     Support Services.
829...............................  Hemodialysis-Outpatient or Home;
                                     Other OP Hemodialysis.
942...............................  Other Therapeutic Services (also see
                                     095X, an extension of 094x);
                                     Education/Training.
943...............................  Other Therapeutic Services (also see
                                     095X, an extension of 094X),
                                     Cardiac Rehabilitation.
948...............................  Other Therapeutic Services (also see
                                     095X, an extension of 094X),
                                     Pulmonary Rehabilitation.
------------------------------------------------------------------------

    In accordance with our longstanding policy, we proposed 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 after July 1, 2014, 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 Medicare 
Administrative Contractor (MAC) was required to allocate the sum of 
charges for services with a status indicator equaling ``S'' or ``T'' 
based on the relative payment 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 proposed to continue these processes for 
the CY 2015 OPPS.
    For the remaining claims, we proposed to then standardize 60 
percent of the costs of the claim (which we have previously determined 
to be the labor-related portion) for geographic differences in labor 
input costs. We made this adjustment by determining the wage index that 
applied to the hospital that furnished the service and dividing the 
cost for the separately paid HCPCS code furnished by the hospital by 
that wage index. The claims accounting that we provide for the proposed 
rule and final rule with comment period contains the formula we use to 
standardize the total cost for the effects of the wage index. As has 
been our policy since the inception of the OPPS, we proposed to use the 
pre-reclassified wage indices for standardization because we believe 
that they better reflect the true costs of items and services in the 
area in which the hospital is located than the post-reclassification 
wage indices and, therefore, would result in the most accurate 
unadjusted geometric mean costs. We proposed to use these pre-
reclassified wage indices for standardization using the new OMB labor 
market area delineations described in section II.C. of this final rule 
with comment period.
    In accordance with our longstanding practice, we also proposed to 
exclude single and ``pseudo'' single procedure claims for which the 
total cost on the claim was outside 3 standard deviations from the 
geometric mean of units for each HCPCS code on the bypass list 
(because, as discussed above, we used claims that contain multiple 
units of the bypass codes).
    After removing claims for hospitals with error CCRs, claims without 
HCPCS codes, claims for immunizations not covered under the OPPS, and 
claims for services not paid under the OPPS, approximately 118 million 
claims were left. Using these approximately 118 million claims, we 
created approximately 100 million single and ``pseudo'' single 
procedure claims, of which we used approximately 51 million single 
bills (after trimming out approximately 1 million claims as discussed 
in section II.A.1.a. of this final rule with comment period) in the CY 
2015 geometric mean cost development and ratesetting.
    As discussed above, the OPPS has historically developed the 
relative weights on which APC payments are based using APC median 
costs. For the CY 2013 OPPS and the CY 2014 OPPS, we calculated the APC 
relative payment weights using geometric mean costs, and we are 
continuing this practice for CY 2015. Therefore, the following 
discussion of the 2 times rule violation and the development of the 
relative payment weight refers to geometric means. For more detail 
about the CY 2015 OPPS/ASC policy to calculate relative payment weights 
based on geometric means, we refer readers to section II.A.2.f. of this 
final rule with comment period.
    We proposed to use these claims to calculate the CY 2015 geometric 
mean costs for each separately payable HCPCS code and each APC. The 
comparison of HCPCS code-specific and APC geometric mean costs 
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 shall not be treated as 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 within 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 (the 
2 times rule). While we have historically applied the 2 times rule 
based on median costs, in the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68270), as part of the CY 2013 policy to develop the OPPS 
relative payment weights based on geometric mean costs, we also applied 
the 2 times rule based on geometric mean costs. For the CY 2015 OPPS, 
we are continuing to develop the APC relative payment weights based on 
geometric mean costs.

[[Page 66793]]

    We note that, for purposes of identifying significant HCPCS codes 
for examination in the 2 times rule, we consider codes that have more 
than 1,000 single major claims or codes that have both greater than 99 
single major claims and contribute at least 2 percent of the single 
major claims used to establish the APC geometric mean cost to be 
significant. This longstanding definition of when a HCPCS code is 
significant for purposes of the 2 times rule was selected because we 
believe that a subset of 1,000 claims is negligible within the set of 
approximately 100 million single procedure or single session claims we 
use for establishing geometric mean costs. Similarly, a HCPCS code for 
which there are fewer than 99 single bills and which comprises less 
than 2 percent of the single major claims within an APC will have a 
negligible impact on the APC geometric mean. We note that this method 
of identifying significant HCPCS codes within an APC for purposes of 
the 2 times rule was used in prior years under the median-based cost 
methodology. Under our CY 2015 policy to continue to base the relative 
payment weights on geometric mean costs, we believe that this same 
consideration for identifying significant HCPCS codes should apply 
because the principles are consistent with their use in the median-
based cost methodology. Unlisted codes are not used in establishing the 
percent of claims contributing to the APC, nor are their costs used in 
the calculation of the APC geometric mean. Finally, we reviewed the 
geometric mean costs for the services for which we pay separately under 
this final rule with comment period, and we reassigned HCPCS codes to 
different APCs where it was necessary to ensure clinical and resource 
homogeneity within the APCs. The APC geometric means were recalculated 
after we reassigned the affected HCPCS codes. Both the HCPCS code-
specific geometric means and the APC geometric means were weighted to 
account for the inclusion of multiple units of the bypass codes in the 
creation of ``pseudo'' single procedure claims.
    We did not receive any public comments on our proposed CY 2015 
methodology for calculating the geometric mean costs upon which the CY 
2015 OPPS payment rates are based, and therefore are finalizing our 
methodology as proposed.
    As we discuss in sections II.A.2.d., II.A.2.f., and VIII.B. of this 
final rule with comment period, in some cases, APC geometric mean costs 
are calculated using variations of the process outlined above. 
Specifically, section II.A.2.d. of this final rule with comment period 
addresses the calculation of single APC criteria-based geometric mean 
costs. Section II.A.2.f. of this final rule with comment period 
discusses the calculation of composite APC criteria-based geometric 
mean costs. Section VIII.B. of this final rule with comment period 
addresses the methodology for calculating the geometric mean costs for 
partial hospitalization services.
(2) Recommendations of the Panel Regarding Data Development
    At the August 2014 meeting of the Panel, we discussed changes in 
APC geometric mean cost between the CY 2015 Proposed OPPS and the CY 
2014 Final OPPS, the CY 2015 proposed comprehensive APC policy, and a 
study examining the packaged codes most commonly appearing with clinic 
visit codes.
    At the August 2014 Panel meeting, the Panel made a number of 
recommendations related to the data process. The Panel's data-related 
recommendations and our responses follow.
    Recommendation: The Panel recommends that the work of the Data 
Subcommittee continue.
    CMS Response: We are accepting this recommendation.
    Recommendation: The Panel recommends that Jim Nelson serve as the 
Chair of the Data Subcommittee.
    CMS Response: We are accepting this recommendation.
    Recommendation: The Panel recommends that CMS provide the Panel 
with a list of APCs for which costs fluctuate by more than 20 percent 
relative to the APCs in the most recent prior rulemaking cycle.
    CMS Response: We are accepting this recommendation and will provide 
this information regarding fluctuating APC costs at the next HOP Panel 
meeting.
d. Calculation of Single Procedure APC Criteria-Based Costs
(1) Device-Dependent APCs
    Historically, 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. The standard methodology for calculating 
device-dependent APC costs utilizes claims data that generally reflect 
the full cost of the required device by using only the subset of single 
procedure claims that pass the procedure-to-device and device-to-
procedure edits; do not contain token charges (less than $1.01) for 
devices; and, until January 1, 2014, did not contain the ``FB'' 
modifier signifying that the device was furnished without cost to the 
provider, or where a full credit was received; and do not contain the 
``FC'' modifier signifying that the hospital received partial credit 
for the device. For a full history of how we have calculated payment 
rates for device-dependent APCs in previous years and a detailed 
discussion of how we developed the standard device-dependent APC 
ratesetting methodology, we refer readers to the CY 2008 OPPS/ASC final 
rule with comment period (72 FR 66739 through 66742). Overviews of the 
procedure-to-device edits and device-to-procedure edits used in 
ratesetting for device-dependent APCs are available in the CY 2005 OPPS 
final rule with comment period (69 FR 65761 through 65763) and the CY 
2007 OPPS/ASC final rule with comment period (71 FR 68070 through 
68071).
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74857 
through 74859), we finalized a policy to define 29 device-dependent 
APCs as single complete services and to assign them to comprehensive 
APCs (C-APCs) that provide all-inclusive payments for those services, 
but we delayed implementation of this policy until CY 2015 (78 FR 
74862). This policy is a further step toward improving the prospective 
nature of our payments for these services where the cost of the device 
is relatively high compared to the other costs that contribute to the 
cost of the service. Table 5 of the CY 2014 OPPS/ASC final rule with 
comment period provided a list of the 39 APCs recognized as device-
dependent APCs and identified the 29 device-dependent APCs that would 
have been converted to C-APCs. In addition, in the CY 2014 OPPS/ASC 
final rule with comment period, we finalized a policy for the treatment 
of the remaining 10 device-dependent APCs that applied our standard APC 
ratesetting methodology to calculate the CY 2014 payment rates for 
these APCs, but implementation of the entire policy was delayed until 
CY 2015.
    In the CY 2014 OPPS/ASC proposed rule (78 FR 43556 through 43557) 
and in the CY 2015 OPPS/ASC proposed rule (79 FR 40937 through 40938), 
for CY 2015, we proposed to no longer implement procedure-to-device 
edits and device-to-procedure edits for any APC. Under this proposed 
policy, which was discussed but not finalized in the CY 2014 OPPS/ASC 
final rule with comment period (78 FR 74857 through 74858), hospitals 
are still expected to adhere to the guidelines of correct coding and 
append the correct device

[[Page 66794]]

code to the claim, when applicable. However, claims would no longer be 
returned to providers when specific procedure and device code pairings 
do not appear on a claim. As we stated in both the CY 2014 OPPS/ASC 
proposed rule (78 FR 43556 through 43557) and the CY 2014 OPPS/ASC 
final rule with comment period (78 FR 74857 through 74858), we believe 
that this is appropriate because of hospitals' multiyear experience in 
coding and reporting charges for medical device implantation 
procedures. We also believe that the C-APCs will reliably reflect the 
cost of the devices as the C-APCs will include all costs on the claim 
(except for the few categories of items and services that are excluded 
from the comprehensive APC policy). Therefore, we do not believe that 
the burden imposed upon hospitals to adhere to the procedure-to-device 
edits and device-to-procedure edits and the burden imposed upon the 
Medicare program to maintain those edits continue to be necessary. As 
with all other items and services recognized under the OPPS, we expect 
hospitals to code and report their costs appropriately, regardless of 
whether there are claims processing edits in place.
    The CY 2015 comprehensive APC policy that we proposed in the CY 
2015 OPPS/ASC proposed rule consolidates and restructures the 39 
current device-dependent APCs into 26 (of the total 28) proposed C-
APCs, which were listed in Table 5 of the proposed rule. The final CY 
2015 comprehensive APC policy is discussed in section II.A.2.e. of this 
final rule with comment period. As a result of the final CY 2015 
comprehensive APC policy, only 3 of the current 39 device-dependent 
APCs will remain in the CY 2015 OPPS because all other device-dependent 
APCs are being converted to C-APCs. All of the remaining device-
dependent APCs were either deleted due to the consolidation and 
restructuring of these APCs or they were converted to C-APCs. In 
conjunction with the conversion of almost all of the 39 device-
dependent APCs into C-APCs, and as discussed in the CY 2014 OPPS/ASC 
final rule with comment period (78 FR 74857 through 74858), in the CY 
2015 OPPS/ASC proposed rule, we proposed to no longer use procedure-to-
device edits and device-to-procedure edits for any APC because we 
continue to believe that the elimination of device-to-procedure edits 
and procedure-to-device edits is appropriate considering the experience 
that hospitals now have in coding and reporting these claims fully and, 
for the more costly devices, the C-APCs will reliably reflect the cost 
of the device if it is included anywhere on the claim.
    While we believe that device-to-procedure edits and procedure-to-
device edits are no longer necessary, we are sensitive to the concerns 
raised by stakeholders in the past about the costs of devices being 
reported and captured. In light of these concerns, in the CY 2015 OPPS/
ASC proposed rule (79 FR 40937 through 40938), we proposed to create 
claims processing edits that require any of the device codes used in 
the previous device-to-procedure edits for device-dependent APCs to be 
present on the claim whenever a procedure code assigned to any of the 
former device-dependent APCs (most of which are being converted to C-
APCs) is reported on the claim to ensure that device costs are captured 
by hospitals. We stated that we expect that hospitals would use an 
appropriate device code consistent with correct coding in order to 
ensure that device costs are always reported on the claim, so that 
costs are appropriately captured in claims that CMS uses for 
ratesetting.
    Comment: The majority of commenters requested that CMS maintain 
device-to-procedure and procedure-to-device edits in order to ensure 
continued complete and accurate cost reporting by hospitals. One 
commenter recommended that CMS adopt its proposal to require any 
appropriate device code used in the previous device-to-procedure edits 
to be present on the claim, if CMS discontinues the current edits and 
educates hospitals on the continued need to report the actual device 
used in the procedure for accurate ratesetting. One commenter was 
cautiously optimistic that CMS' proposal requiring any appropriate 
device code used in the previous device-to-procedure edits to be 
present on the claim for most comprehensive APCs could promote complete 
reporting in a potentially less prescriptive way for hospitals. Another 
commenter believed CMS' proposed policy change would result in 
``ridiculous'' combinations of device and procedure codes for some 
services and thus would result in invalid mean costs for the 
procedures. Other commenters recommended that CMS modify its proposed 
policy to incorporate edit logic that will allow exceptions for 
comprehensive APCs that do not require device codes to be reported with 
every assigned procedural code. One commenter recommended that the 
claims edits be implemented initially on a 1-year trial/interim basis. 
Other commenters suggested that CMS eliminate the device claims 
processing edits altogether.
    Response: We continue to believe that the elimination of device-to-
procedure edits and procedure-to-device edits is appropriate due to the 
experience hospitals now have in coding and reporting these claims 
fully. More specifically, for the more costly devices, we believe the 
C-APCs will reliably reflect the cost of the device if charges for the 
device are included anywhere on the claim. We remind commenters that, 
under our proposed policy, hospitals would still be expected to adhere 
to the guidelines of correct coding and append the correct device code 
to the claim when applicable. We also remind commenters that, as with 
all other items and services recognized under the OPPS, we expect 
hospitals to code and report their costs appropriately, regardless of 
whether there are claims processing edits in place. We do not believe 
that our proposed policy will result in ridiculous combinations of 
device and procedure codes for some services, as this would require 
deliberate miscoding by hospitals, which we do not believe would result 
from this change to the device code reporting requirements. We continue 
to expect that hospitals would use an appropriate device code 
consistent with correct coding in order to ensure that device costs are 
always reported on the claim, so that costs are appropriately captured 
in claims that CMS uses for ratesetting. While we believe that device-
to-procedure edits and procedure-to-device edits are no longer 
necessary at this time, we are sensitive to commenters' concerns that 
all relevant costs for the APCs currently recognized as device-
dependent APCs are appropriately included in the claims that CMS will 
use for ratesetting. In light of those concerns, we believe creating a 
claims processing edit requiring a device code to be present on the 
claim whenever a procedure code from the APCs currently recognized as a 
device-dependent APCs will help to ensure continued complete and 
accurate cost reporting by hospitals. Device edits will not apply to 
procedures assigned to C-APCs that either do not use implantable 
medical devices or procedures that do not have device-to-procedure or 
procedure-to-device edits assigned to them currently for CY 2014. This 
will ensure that the proposed device edit policy (requiring only that 
any device code be reported on a claim containing a procedure assigned 
to one of the formerly device-dependent APCs) will only apply to those 
procedures that currently have device-to-procedure or

[[Page 66795]]

procedure-to-device edits currently assigned to them.
    After consideration of the public comments we received, we are 
finalizing our proposal to no longer implement specific procedure-to-
device and device-to-procedure edits for any APC. We also are 
finalizing our proposal to create claims processing edits that require 
any of the device codes used in the previous device-to-procedure edits 
to be present on the claim whenever a procedure code assigned to any of 
the current device-dependent APCs (that remain after the consolidation 
and restructuring of these APCs) listed in Table 5 below is reported on 
the claim to ensure that device costs are captured by hospitals. CMS 
will monitor the claims data to ensure that hospitals continue 
reporting appropriate device codes on the claims for the formerly 
device-dependent APCs. We note that while we proposed to make all 26 of 
the APCs listed in Table 5 C-APCs for CY 2015, in section II.A.2.e. of 
this final rule with comment period, we are not finalizing our proposal 
to recognize APCs 0427, 0622, and 0652 as C-APCs. While APCs 0427, 
0622, and 0652 will not be recognized as comprehensive APCs for CY 
2015, our finalized device edit policy will apply to these 3 APCs, as 
these 3 APCs are formerly device-dependent APCs. The term ``device-
dependent APC'' will no longer be employed beginning in CY 2015. We 
will refer to APCs with a device offset of more than 40 percent as 
``device-intensive'' APCs. Device-intensive APCs will be subject to the 
no cost/full credit and partial credit device policy. For a discussion 
of device-intensive APCs and the no cost/full credit and partial credit 
device policy, we refer readers to section IV.B. of this final rule 
with comment period. For a discussion of ASC procedures designated as 
device intensive, we refer readers to section XII.C.1.c. of this final 
rule with comment period.

 Table 5--APCs That Will Require a Device Code To Be Reported on a Claim
       When a Procedure Assigned to One of These APCs Is Reported
------------------------------------------------------------------------
               APC                               APC Title
------------------------------------------------------------------------
0039.............................  Level III Neurostimulator.
0061.............................  Level II Neurostimulator.
0083.............................  Level I Endovascular.
0084.............................  Level I EP.
0085.............................  Level II EP.
0086.............................  Level III EP.
0089.............................  Level III Pacemaker.
0090.............................  Level II Pacemaker.
0107.............................  Level I ICD.
0108.............................  Level II ICD.
0202.............................  Level V Female Reproductive.
0227.............................  Implantation of Drug Infusion.
0229.............................  Level II Endovascular.
0259.............................  Level VII ENT Procedures.
0293.............................  Level IV Intraocular.
0318.............................  Level IV Neurostimulator.
0319.............................  Level III Endovascular.
0384.............................  GI Procedures with Stents.
0385.............................  Level I Urogenital.
0386.............................  Level II Urogenital.
0425.............................  Level V Musculoskeletal.
0427.............................  Level II Tube/Catheter.
0622.............................  Level II Vascular Access.
0648.............................  Level IV Breast Surgery.
0652.............................  Insertion of IP/Pl. Cath.
0655.............................  Level IV Pacemaker.
------------------------------------------------------------------------

(2) Blood and Blood Products
    Since the implementation of the OPPS in August 2000, we have made 
separate payments for blood and blood products through APCs rather than 
packaging payment for them into payments for the procedures with which 
they are administered. Hospital payments for the costs of blood and 
blood products, as well as for the costs of collecting, processing, and 
storing blood and blood products, are made through the OPPS payments 
for specific blood product APCs.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40938), for CY 2015, 
we proposed to continue to establish payment rates for blood and blood 
products using our blood-specific CCR methodology, which utilizes 
actual or simulated CCRs from the most recently available hospital cost 
reports to convert hospital charges for blood and blood products to 
costs. This methodology has been our standard ratesetting methodology 
for blood and blood products since CY 2005. It was developed in 
response to data analysis indicating that there was a significant 
difference in CCRs for those hospitals with and without blood-specific 
cost centers, and past public comments indicating that the former OPPS 
policy of defaulting to the overall hospital CCR for hospitals not 
reporting a blood-specific cost center often resulted in an 
underestimation of the true hospital costs for blood and blood 
products. Specifically, in order to address the differences in CCRs and 
to better reflect hospitals' costs, we proposed to continue to simulate 
blood CCRs for each hospital that does not report a blood cost center 
by calculating the ratio of the blood-specific CCRs to hospitals' 
overall CCRs for those hospitals that do report costs and charges for 
blood cost centers. We proposed to 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 proposed to calculate the costs upon which the 
proposed CY 2015 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.
    Comment: Commenters supported the proposal to continue to 
separately pay for blood and blood products using a blood-specific CCR 
methodology.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal 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.
    We continue to believe that the hospital-specific simulated blood-
specific CCR methodology better responds to the absence of a blood-
specific CCR for a hospital than alternative methodologies, such as 
defaulting to the overall hospital CCR or applying an average blood-
specific CCR across hospitals. Because this methodology takes into 
account the unique charging and cost accounting structure of each 
hospital, we believe that it yields more accurate estimated costs for 
these products. We continue to believe that this methodology in CY 2015 
will result in 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 note that, as discussed in section II.A.2.e. of the CY 2014 
OPPS/ASC final rule with comment period and this final rule with 
comment period, we established comprehensive APCs that will provide 
all-inclusive payments for certain device-dependent procedures. Under 
this policy, we include the costs of blood and blood products when 
calculating the overall costs of these comprehensive APCs. We proposed 
to continue to apply the blood-specific CCR methodology described in 
this

[[Page 66796]]

section when calculating the costs of the blood and blood products that 
appear on claims with services assigned to the comprehensive APCs (79 
FR 40939). Because the costs of blood and blood products will be 
reflected in the overall costs of the comprehensive APCs (and, as a 
result, in the final payment rates of the comprehensive APCs), we 
proposed to not make separate payments for blood and blood products 
when they appear on the same claims as services assigned to the 
comprehensive APCs (79 FR 40939).
    We did not receive any public comments on this proposal and are 
finalizing the policy as proposed. We refer readers to Addendum B to 
this final rule with comment period (which is available via the 
Internet on the CMS Web site) for the final CY 2015 payment rates for 
blood and blood products (which are identified with status indicator 
``R''). For a more detailed discussion of the blood-specific CCR 
methodology, we refer readers to the CY 2005 OPPS proposed rule (69 FR 
50524 through 50525). For a full history of OPPS payment for blood and 
blood products, we refer readers to the CY 2008 OPPS/ASC final rule 
with comment period (72 FR 66807 through 66810).
(3) Brachytherapy Sources
    Section 1833(t)(2)(H) of the Act mandates the creation of 
additional groups of covered OPD services that classify devices of 
brachytherapy consisting of a seed or seeds (or radioactive source) 
(``brachytherapy sources'') separately from other services or groups of 
services. The statute provides certain criteria for the additional 
groups. For the history of OPPS payment for brachytherapy sources, we 
refer readers to prior OPPS final rules, such as the CY 2012 OPPS/ASC 
final rule with comment period (77 FR 68240 through 68241). As we have 
stated in prior OPPS updates, we believe that adopting the general OPPS 
prospective payment methodology for brachytherapy sources is 
appropriate for a number of reasons (77 FR 68240). The general OPPS 
payment methodology uses costs based on claims data to set the relative 
payment weights for hospital outpatient services. This payment 
methodology results in more consistent, predictable, and equitable 
payment amounts per source across hospitals by averaging the extremely 
high and low values, in contrast to payment based on hospitals' charges 
adjusted to costs. We believe that the OPPS prospective payment 
methodology, as opposed to payment based on hospitals' charges adjusted 
to cost, also would provide hospitals with incentives for efficiency in 
the provision of brachytherapy services to Medicare beneficiaries. 
Moreover, this approach is consistent with our payment methodology for 
the vast majority of items and services paid under the OPPS. We refer 
readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 
66779 through 66787), the CY 2009 OPPS/ASC final rule with comment 
period (73 FR 68668 through 68670, the CY 2010 OPPS/ASC final rule with 
comment period (74 FR 60533 through 60537), the CY 2011 OPPS/ASC final 
rule with comment period (75 FR 71978 through 71981), the CY 2012 OPPS/
ASC final rule with comment period (76 FR 74160 through 74163), the CY 
2013 OPPS/ASC final rule with comment period (77 FR 68240 through 
68242), and the CY 2014 OPPS/ASC final rule with comment period (78 FR 
74860) for further discussion of the history of OPPS payment for 
brachytherapy sources.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40939 through 40940), 
for CY 2015, we proposed to use the costs derived from CY 2013 claims 
data to set the proposed CY 2015 payment rates for brachytherapy 
sources, as we proposed to use to set the proposed payment rates for 
most other items and services that would be paid under the CY 2015 
OPPS. We based the proposed payment rates for brachytherapy sources on 
the geometric mean unit costs for each source, consistent with the 
methodology proposed for other items and services paid under the OPPS, 
as discussed in section II.A.2. of the proposed rule. We also proposed 
to continue the other payment policies for brachytherapy sources that 
we finalized and first implemented in the CY 2010 OPPS/ASC final rule 
with comment period (74 FR 60537). We proposed to pay for the stranded 
and non-stranded not otherwise specified (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 to, for example, 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). We also proposed to continue the policy 
we first implemented in the CY 2010 OPPS/ASC final rule with comment 
period (74 FR 60537) regarding payment for new brachytherapy sources 
for which we have no claims data, based on the same reasons we 
discussed in the CY 2008 OPPS/ASC final rule with comment period (72 FR 
66786; which was delayed until January 1, 2010 by section 142 of Pub. 
L. 110-275). That policy is intended to enable us to assign new HCPCS 
codes for new brachytherapy sources to their own APCs, with prospective 
payment rates set based on our consideration of external data and other 
relevant information regarding the expected costs of the sources to 
hospitals.
    The proposed CY 2015 payment rates for brachytherapy sources were 
included in Addendum B to the proposed rule (which is available via the 
Internet on the CMS Web site) and were identified with status indicator 
``U.''
    We invited public comment on this proposed policy and also 
requested recommendations for new HCPCS codes to describe new 
brachytherapy sources consisting of a radioactive isotope, including a 
detailed rationale to support recommended new sources. In the CY 2015 
OPPS/ASC proposed rule, we provided an appropriate address for receipt 
of these recommendations; the address is repeated at the end of this 
section. We indicated that we will continue to add new brachytherapy 
source codes and descriptors to our systems for payment on a quarterly 
basis.
    Comment: Commenters expressed a number of concerns regarding CMS' 
outpatient hospital claims data used to set prospective payment rates 
for brachytherapy sources. Commenters stated that high dose rate (HDR) 
brachytherapy devices decay over a 90-day period and are used to treat 
multiple patients during this time period. According to the commenters, 
the true cost of brachytherapy sources depends on the number of 
patients treated by a hospital within a 90-day period, as well as the 
number of treatments required and the intensity of the treatments. For 
this reason, the commenters believed that it is difficult to establish 
fair and adequate prospective payment rates for brachytherapy sources. 
Commenters also noted that the brachytherapy source payment data 
continue to show huge variation in per unit cost across hospitals. In 
addition, the commenters believed that CMS' claims data contain rank 
order anomalies, causing the usual cost relationship between the high 
activity palladium-103 source (HCPCS code C2635, Brachytherapy source, 
non-stranded, high activity, palladium-103, greater than 2.2 mci (NIST) 
per source) and the low activity palladium-103 sources (HCPCS codes 
C2640, Brachytherapy source, stranded, palladium-103, per source and 
C2641, Brachytherapy source, non-stranded,

[[Page 66797]]

palladium-103, per source) to be reversed. The commenters noted that 
the proposed geometric mean costs of the brachytherapy source HCPCS 
codes are approximately $26, $69, and $72, respectively. The commenters 
stated that stranded palladium-103 sources (HCPCS code C2640) always 
cost more than non-stranded palladium-103 sources (HCPCS code C2641), 
which is not reflected in the proposed rule claims data.
    Response: As stated above, we believe that geometric mean costs 
based on hospital claims data for brachytherapy sources have produced 
reasonably consistent per-source cost estimates over the past several 
years, comparable to the patterns we have observed for many other OPPS 
services whose payments are set based upon relative payment weights 
from claims data. We believe that our per-source payment methodology 
specific to each source's radioisotope, radioactive intensity, and 
stranded or non-stranded configuration, supplemented by payment based 
on the number of sources used in a specific clinical case, adequately 
accounts for the major expected sources of variability across 
treatments. (We refer readers to the CY 208 OPPS final rule with 
comment period (72 FR 66782); the CY 2010 OPPS/ASC final rule with 
comment period (74 FR 60534); the CY 2011 OPPS/ASC final rule with 
comment period (75 FR 71979); the CY 2012 OPPS/ASC final rule with 
comment period (76 FR 74161); the CY 2013 OPPS/ASC final rule with 
comment period (77 FR 68241); and the CY 2014 OPPS/ASC final rule with 
comment period (78 FR 74861)). We believe that the CY 2013 
brachytherapy source claims data used for CY 2015 ratesetting produce 
adequate payment for these services. Also, as we have explained 
previously, a prospective payment system relies upon the concept of 
averaging, where the payment may be more or less than the estimated 
cost of providing a service for a particular patient. With the 
exception of outlier cases, the payment for services is adequate to 
ensure access to appropriate care. In the case of brachytherapy sources 
for which the law requires separate payment groups, without packaging, 
the costs of these individual items could be expected to show greater 
variation than some other APCs under the OPPS because higher 
variability in costs for some component items and services is not 
balanced with lower variability in costs for others, and because 
relative payment weights are typically estimated using a smaller set of 
claims. Nevertheless, we believe that prospective payment for 
brachytherapy sources based on geometric mean costs of the services 
reported on claims calculated according to the standard OPPS 
methodology is appropriate and provides hospitals with the greatest 
incentives for efficiency in furnishing brachytherapy treatment.
    Under the budget neutral provision for the OPPS, it is the 
relativity of costs, not the absolute costs, that is important, and we 
believe that brachytherapy sources are appropriately paid according to 
the standard OPPS payment approach. Furthermore, some sources may have 
geometric mean costs and payment rates based on 50 or fewer providers 
because it is not uncommon for OPPS prospective payment rates to be 
based on claims from a relatively small number of hospitals that 
furnished the service in the year of claims data available for the OPPS 
update year. Fifty hospitals may report hundreds of brachytherapy 
source services on claims for many cases and comprise the universe of 
providers using particular low volume sources, for which we are 
required to pay separately by statute. Further, our methodology for 
estimating geometric mean costs for brachytherapy sources utilizes all 
line-item charges for those sources, which allows us to use all 
hospital reported charge and estimated cost information to set payment 
rates for these items. Therefore, no brachytherapy source claims are 
excluded from the estimate of geometric means costs. We have no reason 
to believe that prospective payment rates based on claims data from 
those providers furnishing a particular source do not appropriately 
reflect the cost of that source to hospitals. As for most other OPPS 
services, we note that the geometric mean costs for brachytherapy 
sources are based upon the costs of those providers sources in CY 2013. 
Hospitals individually determine their charge for an item or service, 
and one of Medicare's primary requirements for setting a charge is that 
it be reasonably and consistently related to the cost of the item or 
service for that facility. (We refer readers to the Medicare Provider 
Reimbursement Manual, Part I, Section 2203, which is available on the 
CMS Web site at: http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-Based-Manuals-Items/CMS021929.html?DLPage=1&DLSort=0&DLSortDir=ascending.) We then estimate 
a cost from that charge using the hospital's most recent Medicare 
hospital cost report data in our standard OPPS ratesetting process.
    We acknowledge that HDR brachytherapy sources such as HDR iridium-
192 have a fixed active life and must be replaced every 90 days. As a 
result, a hospital's per treatment cost for the source would be 
dependent on the number of treatments furnished per source. The 
source's cost must be amortized over the life of the source. Therefore, 
when establishing charges for HDR iridium-192, we expect hospitals to 
project the number of treatments that would be provided over the life 
of the source and establish charges for the source accordingly (72 FR 
66783; 74 FR 60535; 75 FR 71980; 76 FR 74162; 77 FR 68242; and 78 FR 
74861). For most payable services under the OPPS, our practice is to 
establish prospective payment rates based on the geometric mean costs 
determined from hospitals' claims data to provide incentives for 
efficient and cost effective delivery of these services.
    In the case of high-activity and low-activity iodine-125 sources, 
our CY 2013 claims data show that the hospitals' relative costs for the 
high-activity source are greater than the costs of the low-activity 
sources. As we have stated in the past, we do not have any information 
about the expected cost differential between high-activity and low-
activity sources of various isotopes other than what is available in 
our claims and hospital cost report data (75 FR 71979; 76 FR 74162; 77 
FR 68242; and 78 FR 74861). In the case of the relationship between 
high-activity and low-activity palladium-103, our claims data 
consistently have shown higher average costs for low-activity 
palladium-103. For the high-activity palladium-103 sources (HCPCS code 
C2635), 8 hospitals reported this service in CY 2013, compared to 104 
and 159 hospitals that reported services for the low-activity 
palladium-103 sources described by HCPCS codes C2640 and C2641, 
respectively. It is clear that fewer hospitals furnished the high-
activity palladium-103 source than the low-activity palladium-103 
sources, and we expect that the hospital cost distribution for those 
hospitals could be different than the cost distribution of the large 
numbers of hospitals reporting the low-activity palladium-103 sources, 
as previously stated (74 FR 60535; 75 FR 71979; 76 FR 74162; 77 FR 
68242; and 78 FR 74861). These varied cost distributions clearly 
contribute to the observed relationship in geometric mean cost between 
the different types of sources. However, we see no reason why our 
standard ratesetting methodology for brachytherapy sources that relies 
on all claims data from all hospitals furnishing brachytherapy sources 
would not yield valid geometric

[[Page 66798]]

mean costs for those hospitals furnishing the different brachytherapy 
sources upon which CY 2015 prospective payments are based.
    Comment: One commenter, a developer of a linear non-stranded 
palladium-103 source described by HCPCS code C2636 (Brachytherapy 
linear source, nonstranded, palladium-103, per 1 mm), believed that CY 
2013 claims data for services furnished prior to November 2013 used to 
determine the CY 2015 payment rates are invalid because the claims data 
do not reflect the costs of its linear non-stranded palladium-103 
source, which became commercially available in November 2013. Further, 
the commenter stated that there were no other linear non-stranded 
palladium-103 sources commercially available prior to November 2013. 
Therefore, the commenter requested that payment for HCPCS code C2636 
remain at the current CY 2014 payment rate until claims data for HCPCS 
code C2636 become available in CY 2016.
    Response: We understand the commenter's claim that its linear non-
stranded palladium-103 source described by HCPCS code C2636 became 
commercially available in November 2013. However, we disagree with the 
commenter's assertion that there were no other commercially available 
linear non-stranded palladium-103 sources described by HCPCS code C2636 
prior to November 2013. We also disagree with the commenter that the CY 
2013 claims data used to determine the CY 2015 payment rate for HCPCS 
code C2636 are invalid. As discussed in the CY 2005 OPPS final rule (69 
FR 65840), we established HCPCS code C2636 to uniquely identify linear 
non-stranded Palladium-103 brachytherapy sources. Since the HCPCS code 
became effective January 1, 2005, we have used historical claims data 
to set the prospective payment rates. To determine the CY 2015 OPPS 
payment rate for HCPCS code C2636, we used CY 2013 claims data, which 
include brachytherapy sources costs for linear non-stranded palladium-
103 sources. Despite the date of commercial availability for the 
commenter's linear non-stranded palladium-103 brachytherapy source, we 
do have CY 2013 claims data for HCPCS code C2636. Therefore, in 
accordance with our above-mentioned methodology and consistent with our 
policy used to set the prospective payment rates for brachytherapy 
sources, we are finalizing our proposed payment rate for HCPCS code 
C2636 based on CY 2013 claims data.
    Comment: One commenter expressed concern regarding CMS' CY 2014 
payment rate for a new brachytherapy source described by HCPCS code 
C2644 (Brachytherapy source, cesium-131 chloride solution, per 
millicurrie), which became effective July 1, 2014. In the July 2014 
OPPS Change Request (CR) 8776, dated May 23, 2014, CMS established a 
payment rate for HCPCS code C2644 of $18.97. The commenter, who also 
petitioned for the initial establishment of HCPCS code C2644 to 
describe the new brachytherapy source, requested clarification on how 
the payment rate was established by CMS, given that the cost of the new 
brachytherapy source is $25 per millicurie and claims data are not yet 
available.
    Response: As discussed in the CY 2008 OPPS/ASC final rule with 
comment period (72 FR 66786), we assign new HCPCS codes that describe 
new brachytherapy sources to their own APCs, with prospective payment 
rates set based on consideration of external data and other relevant 
information regarding the expected costs of the sources to hospitals. 
The commenter provided CMS with clinical information on the 
brachytherapy source cesium-131 chloride solution within its petition 
for the establishment of the new HCPCS code, and noted the source's 
clinical similarities with the liquid iodine-125 solution source, which 
is described by HCPCS code A9527 (Iodine I-125 sodium iodide). The 
commenter stated that both iodine I-125 sodium iodide and cesium-131 
chloride solution ``have similar energies, are capable of delivering 
the same radiation dose to the planned treatment volume, are supplied 
in liquid form, and are compatible with the GliaSite RTS Catheter''. 
Based on clinical information provided by the commenter and a clinical 
review by CMS' medical advisors, we believe that the brachytherapy 
sources described by HCPCS code C2644 and HCPCS code A9527 are clinical 
substitutes. Therefore, we set a payment rate for HCPCS code C2644 that 
is equal to the payment rate for HCPCS code A9527 when it became 
effective in CY 2014, and proposed to apply the same methodology for CY 
2015. We are finalizing our proposal for CY 2015 to set the payment 
rate for HCPCS code C2644 as the equivalent of the payment rate for 
HCPCS code A9527. (We refer readers to Addendum B of this final rule 
with comment period for the CY 2015 OPPS payment rate. Addendum B is 
available via the Internet on the CMS Web site.)
    After consideration of the public comments we received, we are 
finalizing our proposal to continue to set the payment rates for 
brachytherapy sources using our established prospective payment 
methodology, which is based on geometric mean costs. The CY 2015 final 
payment rates for brachytherapy sources are found in Addendum B to this 
final rule with comment period (which is available via the Internet on 
the CMS Web site).
    As stated in the CY 2015 OPPS/ASC proposed rule (79 FR 40940), we 
continue to invite hospitals and other parties to submit 
recommendations to CMS for new HCPCS codes that 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 C4-03-27, Centers for Medicare and Medicaid Services, 7500 
Security Boulevard, Baltimore, MD 21244.
e. Comprehensive APCs
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74861 
through 74910), we finalized a comprehensive payment policy that 
packages payment for adjunctive and secondary items, services, and 
procedures into the most costly primary procedure (primarily medical 
device implantation procedures) under the OPPS at the claim level, 
effective January 1, 2015. We defined a comprehensive APC (C-APC) as a 
classification for the provision of a primary service and all 
adjunctive services provided to support the delivery of the primary 
service. We established comprehensive APCs as a category broadly for 
OPPS payment and established 29 C-APCs to prospectively pay for 167 of 
the most costly device-dependent services assigned to these 29 APCs 
beginning in CY 2015 (78 FR 74910). Under this policy, we designated 
each service described by a HCPCS code assigned to a C-APC as the 
primary service and, with few exceptions described below, consider all 
other services reported on a hospital outpatient claim in combination 
with the primary service to be related to the delivery of the primary 
service (78 FR 74869). In addition, under this policy, we calculate a 
single payment for the entire hospital stay, defined by a single claim, 
regardless of the date of service span over which the primary service 
and all related services are delivered. This comprehensive APC 
packaging policy packages payment for all items and services typically 
packaged under the OPPS, but also packages payment

[[Page 66799]]

for other items and services that are not typically packaged under the 
OPPS (78 FR 74909).
    Because of the overall complexity of this new policy and our 
introduction of complexity adjustments in the CY 2014 OPPS/ASC final 
rule with comment period, we modeled the policy as if we were 
implementing it for CY 2014, but delayed the effective date until 
January 1, 2015, to allow additional time for further analysis, 
opportunity for public comment, and systems preparation. In the CY 2015 
OPPS/ASC proposed rule (79 FR 40941 through 40953), we discussed our 
review of the policies finalized in the CY 2014 OPPS/ASC final rule 
with comment period for C-APCs, and summarized and responded to public 
comments received in response to the CY 2014 OPPS/ASC final rule with 
comment period relating to the comprehensive APC payment policy. We 
then outlined our proposed policy for CY 2015, which included several 
clarifications and proposed modifications in response to public 
comments received. In this section, we use the terms ``service'' and 
``procedure'' interchangeably.
(1) Background
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74861 
through 74910), we finalized a policy, with a delayed implementation 
date of CY 2015, that designated certain covered OPD services as 
primary services (identified by a new OPPS status indicator of ``J1'') 
assigned to C-APCs. When such a primary service is reported on a 
hospital outpatient claim, taking into consideration the few exceptions 
that are discussed below, we treat all other items and services 
reported on the claim as integral, ancillary, supportive, dependent, 
and adjunctive to the primary service (hereinafter collectively 
referred to as ``adjunctive services'') and representing components of 
a comprehensive service (78 FR 74865). This results in a single 
prospective payment for the primary, comprehensive service based on the 
cost of all reported services at the claim level. We only exclude 
charges for services that are statutorily excluded from the OPPS, such 
as certain mammography and ambulance services that are never covered 
OPD services in accordance with section 1833(t)(1)(B)(iv) of the Act; 
charges for brachytherapy seeds, which must receive separate payment 
under section 1833(t)(2)(H) of the Act; charges for pass-through drugs 
and devices, which also require separate payment under section 
1833(t)(6) of the Act; and charges for self-administered drugs (SADs) 
that are not otherwise packaged as supplies because they are not 
covered under Medicare Part B under section 1861(s)(2)(B) of the Act 
(78 FR 74865).
    The ratesetting process set forth in the CY 2014 OPPS/ASC final 
rule with comment period for the comprehensive APC payment policy is 
summarized as follows (78 FR 74887):
    APC assignment of primary (``J1'') services. HCPCS codes assigned 
to status indicator ``J1'' are assigned to C-APCs based on our usual 
APC assignment methodology of evaluating the geometric mean cost of the 
primary service claims to establish resource similarity and the 
clinical characteristics of each procedure to establish clinical 
similarity within each APC. Claims reporting multiple procedures 
described by HCPCS codes assigned to status indicator ``J1'' are 
identified and the procedures are then assigned to a C-APC based on the 
primary HCPCS code that has the highest APC geometric mean cost. This 
ensures that multiple procedures described by HCPCS codes assigned to 
status indicator ``J1'' reported on claims are always paid through and 
assigned to the C-APC that would generate the highest APC payment. If 
multiple procedures described by HCPCS codes assigned to status 
indicator ``J1'' that are reported on the same claim have the same APC 
geometric mean estimated cost, as would be the case when two different 
procedures described by HCPCS codes assigned to status indicator ``J1'' 
are assigned to the same APC, identification of the primary service is 
then based on the procedure described by the HCPCS code assigned to 
status indicator ``J1'' with the highest HCPCS-level geometric mean 
cost. When there is no claims data available upon which to establish a 
HCPCS-level comprehensive geometric mean cost, we use the geometric 
mean cost for the APC to which the HCPCS code is assigned.
    Complexity adjustments and determination of final C-APC groupings. 
We then considered reassigning complex subsets of claims for each 
primary service described by a HCPCS code assigned to status indicator 
``J1.'' All claims reporting more than one procedure described by HCPCS 
codes assigned to status indicator ``J1'' are evaluated for the 
existence of commonly occurring pairs of procedure codes reported on 
claims that exhibit a materially greater comprehensive geometric mean 
cost relative to the geometric mean cost of the claims reporting that 
primary service. This indicates that the subset of procedures 
identified by the secondary HCPCS code has increased resource 
requirements relative to less complex subsets of that primary procedure 
(78 FR 74887). The CY 2014 complexity adjustment criteria are as 
follows:
     The comprehensive geometric mean cost of the claims 
reporting the combination of procedures is more than two times the 
comprehensive geometric mean cost of the single major claims reporting 
only the primary service;
     There are more than 100 claims in the data year reporting 
the specific code combination;
     The number of claims reporting the specific code 
combination exceed 5 percent of the volume of all claims reporting the 
designated primary service; and
     There would be no violation of the ``2 times'' rule within 
the receiving C-APC (78 FR 74886).
    If a pair of procedure codes reported on claims is identified that 
meets these requirements, that is, commonly occurring and exhibiting 
materially greater resource requirements, the pair of procedure codes 
is further evaluated to confirm clinical validity as a complex subset 
of the primary procedure and the pair of procedure codes is then 
identified as complex, and primary service claims with that combination 
of procedure codes are subsequently reassigned as appropriate. If a 
pair of procedure codes does not meet the requirement for a materially 
greater resource requirement or does not occur commonly, the pair of 
procedure codes is not considered to be complex, and primary service 
claims with that combination of procedure codes are not reassigned. All 
pairs of procedures described by HCPCS codes assigned to status 
indicator ``J1'' for each primary service are similarly evaluated. Once 
all pairs of procedures described by HCPCS codes assigned to status 
indicator ``J1'' have been evaluated, all claims identified for 
reassignment for each primary service are combined and the group is 
assigned to a higher level C-APC within a clinical family of C-APCs, 
that is, an APC with greater estimated resource requirements than the 
initially assigned C-APC and with appropriate clinical homogeneity. We 
assessed resource variation for reassigned claims within the receiving 
APC using the geometric mean cost for all reassigned claims for the 
primary service relative to other services assigned to that APC using 
the 2 times rule criteria (78 FR 74887).
    For new HCPCS codes and codes without data, we use the best 
information available to us to identify combinations of procedure codes 
that represent a more complex form of the primary service and warrant

[[Page 66800]]

reassignment to a higher level APC. In the proposed rule, we stated 
that we would reevaluate our APC assignments and identification and APC 
placement of complex claims once claims data become available.
(2) CY 2015 Policy for C-APCs
(a) Methodology
    Basic C-APC Methodology. After consideration of the public comments 
we received on the CY 2014 OPPS/ASC final rule with comment period, in 
the CY 2015 OPPS/ASC proposed rule (79 FR 40941 through 40953), we 
described our proposed payment methodology for C-APCs for CY 2015. For 
CY 2015, we proposed to establish a policy that services assigned to C-
APCs would be designated as the primary services for C-APCs, using new 
status indicator ``J1'' as listed in Addendum J and Addendum B to the 
CY 2015 OPPS/ASC proposed rule (which are available via the Internet on 
the CMS Web site). We stated that the basic steps for calculating the 
C-APC payments remain the same as those finalized in the CY 2014 OPPS/
ASC final rule with comment period, except for the complexity 
adjustment criteria described briefly above (78 FR 74885 through 
74888). For CY 2015, we proposed to restructure and consolidate some of 
the current device-dependent APCs to improve both the resource and 
clinical homogeneity of these APCs. In addition, instead of assigning 
any add-on codes to status indicator ``J1'' as finalized in the CY 2014 
OPPS/ASC final rule with comment period (78 FR 74873 through 74883), we 
proposed to package all add-on codes, consistent with our CY 2014 OPPS 
policy to package add-on codes (78 FR 74942), but to allow certain add-
on codes to qualify a primary J1 procedure code-add-on code combination 
for a complexity adjustment. For CY 2015, similar to other procedures 
described by add-on codes under the OPPS and according to 42 CFR 
419.2(b)(18), procedures described by add-on codes furnished in 
conjunction with primary comprehensive services would be packaged 
instead of being assigned to an APC with a separately payable status 
indicator in accordance with the CY 2014 OPPS policy for add-on codes 
assigned to device-dependent APCs. However, the add-on codes currently 
assigned to device-dependent APCs (that are converted to C-APCs) may 
qualify as a secondary code in a complexity adjustment code pair.
    Further, we proposed to convert all current device-dependent APCs 
remaining after the proposed restructuring and consolidation of some of 
these APCs to C-APCs. We also proposed to create two new C-APCs: C-APC 
0067 for single-session cranial stereotactic radiosurgery services 
(SRS) and C-APC 0351 for intraocular telescope implantation. In 
addition, we proposed to reassign CPT codes 77424 and 77425 that 
describe intraoperative radiation therapy (IORT) to C-APC 0648 (Level 
IV Breast and Skin Surgery). We discuss in detail below our proposed 
new complexity adjustment criteria and our proposal to package all add-
on codes, but to allow complexity adjustments for qualifying code 
combinations of primary codes and add-on codes currently assigned to 
device-intensive C-APCs.
    As stated in the CY 2014 OPPS/ASC final rule with comment period, 
we define the comprehensive APC payment policy as including all covered 
OPD services on a hospital outpatient claim reporting a primary service 
that is assigned to status indicator ``J1,'' excluding services that 
cannot be covered OPD services or that cannot by statute be paid under 
the OPPS. Services packaged for payment under the comprehensive APC 
payment packaging policy, that is, services that are typically 
integral, ancillary, supportive, dependent, or adjunctive to the 
primary service, provided during the delivery of the comprehensive 
service, include diagnostic procedures, laboratory tests and other 
diagnostic tests and treatments that assist in the delivery of the 
primary procedure; visits and evaluations performed in association with 
the procedure; uncoded services and supplies used during the service; 
durable medical equipment as well as prosthetic and orthotic items and 
supplies when provided as part of the outpatient service; and any other 
components reported by HCPCS codes that are provided during the 
comprehensive service, except excluded services that are described 
below (78 FR 74865). In addition, payment for outpatient department 
services that are similar to therapy services and delivered either by 
therapists or nontherapists is packaged as part of the comprehensive 
service. These services that are provided during the perioperative 
period are adjunctive services and not therapy services as described in 
section 1834(k) of the Act, regardless of whether the services are 
delivered by therapists or other nontherapist health care workers. We 
have previously noted that therapy services are those provided by 
therapists under a plan of care in accordance with section 
1835(a)(2)(C) and section 1835(a)(2)(D) of the Act and are paid under 
section 1834(k) of the Act subject to annual therapy caps, as 
applicable (78 FR 74867). However, certain other services similar to 
therapy services are considered and paid as outpatient services. 
Payment for these nontherapy outpatient department services that are 
reported with therapy codes and provided with a comprehensive service 
is packaged with the comprehensive service. We note that these 
services, even though they are reported with therapy codes, are 
outpatient department services and not therapy services. Therefore, the 
requirement for functional reporting under the regulations at 42 CFR 
410.59(a)(4) and 42 CFR 410.60(a)(4) does not apply.
    Items packaged for payment provided in conjunction with the primary 
service also include all drugs, biologicals, and radiopharmaceuticals, 
regardless of cost, except those drugs with pass-through payment status 
and those drugs that are usually self-administered (SADs), unless they 
function as packaged supplies (78 FR 74868 through 74869 and 74909). We 
refer readers to the Medicare Benefit Policy Manual, Chapter 15, 
Covered Medical and Other Health Services, Section 50.2.M, for a 
description of our policy on self-administered drugs treated as 
hospital outpatient supplies, including lists of SADs that function as 
supplies and those that do not function as supplies.
    Services excluded from the comprehensive APC payment policy are as 
follows: SADs that are not considered supplies, because they are not 
covered under Medicare Part B under section 1861(s)(2)(B) of the Act; 
services excluded from the OPPS according to section 1833(t)(1)(B) of 
the Act including recurring therapy services, which we considered 
unrelated to the comprehensive service (defined as therapy services 
reported on a separate facility claim for recurring services), 
ambulance services, diagnostic and screening mammography, the annual 
wellness visit providing personalized prevention plan services, and 
pass-through drugs and devices that are paid according to section 
1833(t)(6) of the Act.
    We also exclude preventive services defined in 42 CFR 410.2, ``(1) 
[t]he specific services listed in section 1861(ww)(2) of the Act, with 
the explicit exclusion of electrocardiograms; (2) [t]he Initial 
Preventive Physical Examination (IPPE) (as specified by section 
1861(ww)(1) of the Act); and (3) Annual Wellness Visit (AWV), providing 
Personalized Prevention Plan Services (PPPS) (as specified by section 
1861(hhh)(1) of the Act).'' These preventive services are listed by 
their

[[Page 66801]]

HCPCS codes in Addendum J to this final rule with comment period and 
include: Annual wellness visits providing personalized prevention plan 
services; initial preventive physical examinations; pneumococcal, 
influenza, and hepatitis B vaccines and administrations; mammography 
screenings; pap smear screenings and pelvic examination screenings; 
prostate cancer screening tests; colorectal cancer screening tests; 
diabetes outpatient self-management training services; bone mass 
measurements; glaucoma screenings; medical nutrition therapy services; 
cardiovascular screening blood tests; diabetes screening tests; 
ultrasound screenings for abdominal aortic aneurysm; and additional 
preventive services as defined in section 1861(ddd)(1) of the Act. We 
defined and discussed these services in detail for hospital billing 
purposes in the CY 2011 OPPS/ASC final rule with comment period 
pursuant to coverage and payment provisions in the Affordable Care Act 
(75 FR 72013 through 72020).
    This policy is consistent with our policy to exclude preventive 
services from the ancillary services packaging policy, will encourage 
the provision of preventive services, and provide maximum flexibility 
to beneficiaries across different sites of service in receiving 
preventive services. In addition, the statute does not permit 
assessment of beneficiary cost-sharing for most preventive services, 
and some receive cost-based payment (75 FR 72013 through 72020 and 78 
FR 74962). While any beneficiary cost-sharing attributable to 
preventive services, if they were packaged, would be very small in 
relation to the comprehensive service overall, we believe that we 
should exclude these services from the OPPS beneficiary copayment 
calculations, as discussed in section II.I. of this final rule with 
comment period. We note that payment for one preventive service (HCPCS 
code G0102 (Prostate cancer screening; digital rectal examination)) 
will continue to be packaged under the OPPS in CY 2015, both broadly 
and in the context of comprehensive services. Currently, payment for 
the procedure described by this HCPCS code is packaged because it is 
included in evaluation and management services. We note that 
beneficiary cost-sharing is not waived for the service described by 
HCPCS code G0102.
    Consistent with the policy finalized in the CY 2014 OPPS/ASC final 
rule with comment period, we exclude brachytherapy services and pass-
through drugs, biologicals and devices that are separately payable by 
statute (78 FR 74868 and 74909). In addition, we exclude services 
assigned to OPPS status indicator ``F'' that are not paid under the 
OPPS and are instead paid on a reasonable cost basis (certain CRNA 
services, Hepatitis B vaccines, and corneal tissue acquisition, which 
is not part of a comprehensive service for CY 2015). In Table 6 below, 
we list the services that are excluded from the comprehensive APC 
payment policy.

    Table 6--Comprehensive APC Payment Policy Exclusions for CY 2015
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Ambulance services
------------------------------------------------------------------------
Brachytherapy
------------------------------------------------------------------------
Diagnostic and mammography screenings
------------------------------------------------------------------------
Physical therapy, speech-language pathology and occupational therapy
 services--Therapy services reported on a separate facility claim for
 recurring services
------------------------------------------------------------------------
Pass-through drugs, biologicals and devices
------------------------------------------------------------------------
Preventive services defined in 42 CFR 410.2:
     Annual wellness visits providing personalized prevention
     plan services
     Initial preventive physical examinations
     Pneumococcal, influenza, and hepatitis B vaccines and
     administrations
     Mammography Screenings
     Pap smear screenings and pelvic examination screenings
     Prostate cancer screening tests
     Colorectal cancer screening tests
     Diabetes outpatient self-management training services
     Bone mass measurements
     Glaucoma screenings
     Medical nutrition therapy services
     Cardiovascular screening blood tests
     Diabetes screening tests
     Ultrasound screenings for abdominal aortic aneurysm
     Additional preventive services (as defined in section
     1861(ddd)(1) of the Act)
------------------------------------------------------------------------
Self-administered drugs--Drugs that are usually self-administered and do
 not function as supplies in the provision of the comprehensive service
------------------------------------------------------------------------
Services assigned to OPPS status indicator ``F'' (Certain CRNA services,
 Hepatitis B vaccines and corneal tissue acquisition)
------------------------------------------------------------------------
Services assigned to OPPS status indicator ``L'' (Influenza and
 pneumococcal pneumonia vaccines)
------------------------------------------------------------------------
Certain Part B inpatient services--Ancillary Part B inpatient services
 payable under Part B when the primary ``J1'' service for the claim is
 not a payable Part B inpatient service (for example, exhausted Medicare
 Part A benefits, beneficiaries with Part B only)
------------------------------------------------------------------------

    We proposed to continue to define each hospital outpatient claim 
reporting a single unit of a single primary service assigned to status 
indicator ``J1'' as a single ``J1'' unit procedure claim (78 FR 74871). 
We proposed to sum all line item charges for services included in the 
C-APC payment, convert the charges to costs, and calculate the 
``comprehensive'' geometric mean cost of one unit of each service 
assigned to status indicator ``J1.'' (We note that we

[[Page 66802]]

use the term ``comprehensive'' to describe the geometric mean cost of a 
claim reporting ``J1'' service(s) or the geometric mean cost of a C-
APC, inclusive of all of the items and services in the C-APC payment 
bundle). Charges for services that would otherwise have been separately 
payable are added to the charges for the primary service. This process 
differs from our traditional cost accounting methodology only in that 
all such services on the claim are packaged (except certain services as 
described above). We proposed to apply our standard data trims, 
excluding claims with extremely high primary units or extreme costs.
    The comprehensive geometric mean costs are used to establish 
resource similarity and, along with clinical similarity, dictate the 
assignment of the primary services to the C-APCs. We proposed to 
establish a ranking of each primary service (single unit only) assigned 
to status indicator ``J1'' according to their comprehensive geometric 
mean costs. For the minority of claims reporting more than one primary 
service assigned to status indicator ``J1'' or units thereof 
(approximately 20 percent of CY 2013 claims), we proposed to continue 
to identify one ``J1'' service as the primary service for the claim 
based on our cost-based ranking of primary services. We then assign 
these multiple ``J1'' procedure claims to the C-APC to which the 
service designated as the primary service is assigned. If the reported 
``J1'' services reported on a claim map to different C-APCs, we 
designate the ``J1'' service assigned to the C-APC with the highest 
comprehensive geometric mean cost as the primary service for that 
claim. If the reported multiple ``J1'' services on a claim map to the 
same C-APC, we designate the most costly service (at the HCPCS code 
level) as the primary service for that claim. This process results in 
initial assignments of claims for the primary services assigned to 
status indicator ``J1'' to the most appropriate C-APCs based on both 
single and multiple procedure claims reporting these services and 
clinical and resource homogeneity.
    Complexity Adjustments. We proposed to use complexity adjustments 
to provide increased payment for certain comprehensive services. We 
proposed to apply a complexity adjustment by promoting qualifying 
``J1'' service code combinations or code combinations of ``J1'' 
services and certain add-on codes (as described further below) from the 
originating C-APC (the C-APC to which the designated primary service is 
first assigned) to a higher paying C-APC in the same clinical family of 
C-APCs, if reassignment is clinically appropriate and the reassignment 
would not create a violation of the 2 times rule in the receiving APC 
(the higher paying C-APC in the same clinical family of C-APCs). We 
proposed to implement this type of complexity adjustment when the code 
combination represents a complex, costly form or version of the primary 
service according to the following criteria:
     Frequency of 25 or more claims reporting the code 
combination (frequency threshold); and
     Violation of the 2 times rule (cost threshold).
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40947 through 40948, 
we explained in detail in response to a comment to the CY 2014 OPPS/ASC 
final rule with comment period the differences between the finalized CY 
2014 complexity adjustment criteria and the CY 2015 proposed complexity 
adjustment criteria and our rationale for the proposed changes.
    After designating a single primary service for a claim, we proposed 
to evaluate that service in combination with each of the other 
procedure codes reported on the claim assigned to status indicator 
``J1'' (or certain add-on codes) to determine if they meet the 
complexity adjustment criteria. For new HCPCS codes, we proposed to 
determine initial C-APC assignments and complexity adjustments using 
the best data available, cross-walking the new HCPCS codes to 
predecessor codes wherever possible.
    Once we have determined that a particular code combination of 
``J1'' services (or combinations of ``J1'' services reported in 
conjunction with certain add-on codes) represents a complex version of 
the primary service because it is sufficiently costly, frequent, and a 
subset of the primary comprehensive service overall according to the 
criteria described above, we proposed to promote the complex version of 
the primary service as described by the code combination to the next 
higher cost C-APC within the clinical family, unless the APC 
reassignment is not clinically appropriate, the reassignment would 
create a violation of the 2 times rule in the receiving APC, or the 
primary service is already assigned to the highest cost APC within the 
C-APC clinical family or assigned to the only C-APC in a clinical 
family (79 FR 40944). We did not propose to create new APCs with a 
geometric mean cost that is higher than the highest cost (or only) C-
APC in a clinical family just to accommodate potential complexity 
adjustments. Therefore, the highest payment for any code combination 
for services assigned to a C-APC would be the highest paying C-APC in 
the clinical family.
    As discussed below, we proposed that add-on codes reported in 
conjunction with a ``J1'' service would receive complexity adjustments 
when a qualifying add-on code is reported in conjunction with the 
primary service assigned to status indicator ``J1'' and satisfies the 
criteria described above for a complexity adjustment. Any combinations 
of HCPCS codes that fail to meet the proposed complexity adjustment 
criteria (frequency and cost thresholds) would not be identified as 
complex subsets of the primary procedure and would not be reassigned to 
a higher paying C-APC within the same clinical family of C-APCs. We 
provided a proposed list of qualifying code combinations (including 
add-on codes) in Addendum J to the proposed rule (which is available 
via the Internet on the CMS Web site).
    We proposed to package payment for all add-on codes into the 
payment for the C-APC. However, we indicated that add-on codes that are 
assigned to the current device-dependent APCs listed in Table 5 of the 
proposed rule (79 FR 40938) would be evaluated for a possible 
complexity adjustment when they are reported in conjunction with a 
designated primary service assigned to status indicator ``J1.'' We 
proposed to only evaluate the add-on codes that are assigned to the 
current device-dependent APCs listed in Table 5 of the proposed rule 
for potential complexity adjustments because we believe that, in 
certain cases, these procedure codes may represent services with 
additional medical device costs that result in significantly more 
complex and costly procedures. To determine which combinations of 
primary service codes reported in conjunction with the add-on code may 
qualify for a complexity adjustment for CY 2015, we proposed to apply 
the proposed frequency and cost criteria discussed above, testing 
claims reporting one unit of a single primary service assigned to 
status indicator ``J1'' and any number of units of a single add-on 
code. If the frequency and cost criteria for a complexity adjustment 
were met, and reassignment to the next higher cost APC in the clinical 
family is appropriate, we proposed to make a complexity adjustment for 
the code combination; that is, we proposed to reassign the primary 
service code reported in conjunction with the add-on code combination 
to a higher cost C-APC within the same clinical family of C-APCs. If 
any add-on code combination reported in conjunction

[[Page 66803]]

with the primary service code did not qualify for a complexity 
adjustment, payment for these services would be packaged. We listed the 
complexity adjustments proposed for add-on code combinations for CY 
2015, along with all of the other proposed complexity adjustments, in 
Addendum J to the proposed rule (which is available via the Internet on 
the CMS Web site). One primary service code and add-on code combination 
(CPT code 37225 and 37233) that satisfied the frequency and cost 
criteria was not proposed for a complexity adjustment because we 
believe that these claims are miscoded. Of the 35 qualifying claims 
reporting this code combination, only 3 claims contained the 
appropriate base code (CPT code 37228) for CPT add-on code 37233.
    We provided in Addendum J to the proposed rule a breakdown of cost 
statistics for each code combination that would qualify for a 
complexity adjustment (including primary code and add-on code 
combinations). Addendum J to the proposed rule also contained summary 
cost statistics for each of the code combinations proposed to be 
reassigned under a given primary code. The combined statistics for all 
proposed reassigned complex code combinations are represented by an 
alphanumeric code with the last 4 digits of the designated primary 
service followed by ``A'' (indicating ``adjustment''). For example, the 
geometric mean cost listed in Addendum J for the code combination 
described by CPT code 33208A assigned to C-APC 0655 included all code 
combinations that were proposed to be reassigned to C-APC 0655 when CPT 
code 33208 is the primary code. Providing the information contained in 
Addendum J in the proposed rule allowed stakeholders the opportunity to 
better assess the impact associated with the proposed reassignment of 
each of the code combinations eligible for a complexity adjustment.
(b) Additional C-APCs
    Several commenters to the CY 2014 OPPS/ASC proposed rule questioned 
why CMS only converted a subset of the device-dependent APCs to C-APCs 
(78 FR 74864). We responded that while we were initially adopting a 
subset of the most costly device-dependent services, we may extend 
comprehensive payments to other procedures in future years as part of a 
broader packaging initiative (78 FR 74864). Upon further review for CY 
2015, we stated in the CY 2015 OPPS/ASC proposed rule (79 FR 40944 
through 40945) that we believe that the entire set of the currently 
device-dependent APCs (after the proposed reorganization and 
consolidation of the current device-dependent APCs) are appropriate 
candidates for C-APC payment because the device-dependent APCs not 
included in last year's comprehensive APC payment proposal are similar 
to the original 29 device-dependent APCs that were proposed as C-APCs 
in CY 2014. Similar to the original 29 device-dependent APCs for CY 
2014 that were converted to C-APCs, the additional device-dependent 
APCs that were proposed for conversion to C-APCs contain comprehensive 
services primarily intended for the implantation of costly medical 
devices. Therefore, in the CY 2015 OPPS/ASC proposed rule, we proposed 
to apply the comprehensive APC payment policy to the remaining device-
dependent APCs for CY 2015.
    In addition, since the publication of the CY 2014 OPPS/ASC final 
rule with comment period, stakeholders brought several services to our 
attention as appropriate candidates for C-APC payment. Stakeholders 
recommended that we create C-APCs for these procedures and technologies 
or assign them to a previously proposed C-APC. We agreed with the 
stakeholders. Similar to the other services designated as comprehensive 
in CY 2014, these procedures are comprehensive single-session services 
with high-cost implantable devices or high-cost equipment. For CY 2015, 
we proposed to convert the following existing APCs into C-APCs: APC 
0067 (Single Session Cranial Stereotactic Radiosurgery) and APC 0351 
(Level V Intraocular Surgery)). C-APC 0351 only contains one 
procedure--CPT code 0308T (Insertion of ocular telescope prosthesis 
including removal of crystalline lens). We also proposed to assign the 
CPT codes for IORT (CPT codes 77424 and 77425) to C-APC 0648 (Level IV 
Breast and Skin Surgery) because IORT is a single session comprehensive 
service that includes breast surgery combined with a special type of 
radiation therapy that is delivered inside the surgical cavity but is 
not technically brachytherapy. The HCPCS codes that we proposed to 
assign to these C-APCs in CY 2015 would be assigned to status indicator 
``J1.''
(c) Reconfiguration and Restructuring of the C-APCs
    Based on further examination of the structure of the C-APCs 
illustrated in the CY 2014 OPPS/ASC final rule with comment period and 
an evaluation of their comprehensive geometric mean costs (using the 
updated CY 2013 claims data), in the CY 2015 OPPS/ASC proposed rule (79 
FR 40945), we proposed to reorganize, combine, and restructure some of 
the C-APCs. The purpose of this APC restructuring is to improve 
resource and clinical homogeneity among the services assigned to 
certain C-APCs and to eliminate APCs for clinically similar services, 
but with overlapping geometric mean costs. The services we proposed to 
assign to each of the C-APCs for CY 2015, along with the relevant cost 
statistics, were provided in Addendum J to the proposed rule. Addendum 
J is available at the CMS Web site at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. 
Table 7 of the proposed rule (79 FR 40952) listed the additional 28 
APCs proposed under the CY 2015 comprehensive APC policy.
    In summary, our proposal to reorganize, combine, and restructure 
some of the C-APCs included the following proposed changes:
     Endovascular clinical family (renamed Vascular Procedures, 
VASCX). We proposed to combine C-APCs 0082, 0083, 0104, 0229, 0319, and 
0656 illustrated for CY 2014 to form three proposed levels of 
comprehensive endovascular procedure APCs: C-APC 0083 (Level I 
Endovascular Procedures); C-APC 0229 (Level II Endovascular 
Procedures); and C-APC 0319 (Level IV Endovascular Procedures).
     Automatic Implantable Cardiac Defibrillators, Pacemakers, 
and Related Devices (AICDP). We proposed to combine C-APCs 0089, 0090, 
0106, 0654, 0655, and 0680 as illustrated for CY 2014 to form three 
proposed levels of C-APCs within a broader series of APCs for pacemaker 
implantation and similar procedures as follows: APC 0105 (Level I 
Pacemaker and Similar Procedures), a non-comprehensive APC; C-APC 0090 
(Level II Pacemaker and Similar Procedures); C-APC 0089 (Level III 
Pacemaker and Similar Procedures); and C-APC 0655 (Level IV Pacemaker 
and Similar Procedures).
     We proposed to delete the clinical family for Event 
Monitoring, which only had one C-APC (C-APC 0680 (Insertion of Patient 
Activated Event)) with a single CPT code 33282 as illustrated for CY 
2014. We also proposed to reassign CPT code 33282 to C-APC 0090, which 
contains clinically similar procedures.
     In the urogenital family, we proposed two levels instead 
of three levels for urogenital procedures, and to reassign several 
codes from APC 0195 to C-APC 0202 (Level V Female Reproductive 
Procedures).

[[Page 66804]]

     We proposed to rename the arthroplasty family of APCs to 
``Orthopedic Surgery.'' We also proposed to reassign several codes from 
APC 0052 to C-APC 0425, which we proposed to rename ``Level V 
Musculoskeletal Procedures Except Hand and Foot.''
     We proposed three levels of electrophysiologic procedures, 
using the current inactive APC ``0086'' instead of APC 0444, to have 
consecutive APC grouping numbers for this clinical family and to rename 
APC 0086 ``Level III Electrophysiologic Procedures.'' In addition, we 
proposed to replace composite APC 8000 with proposed C-APC 0086 as 
illustrated in the CY 2014 OPPS/ASC final rule with comment period (78 
FR 74870).
    We also proposed three new clinical families: Gastrointestinal 
Procedures (GIXXX) for gastrointestinal stents, Tube/Catheter Changes 
(CATHX) for insertion of various catheters, and Radiation Oncology 
(RADTX), which would include C-APC 0067 for single session cranial SRS.
(3) Public Comments
    Comment: Commenters were generally supportive of the proposed 
changes to the comprehensive APC payment policy for CY 2015 when 
compared to the CY 2014 final policy, and urged CMS to monitor 
implementation for payment adequacy and access to quality care. Some 
commenters requested that CMS delay implementation until at least July 
1, 2015, to allow time to fully test systems changes. Some commenters 
requested that CMS delay implementation for a year or more until CMS 
addresses assorted concerns or so that hospitals can continue to 
analyze the policy and budget for the financial impact.
    Response: We appreciate the commenters' support. We plan to monitor 
the implementation of this C-APC payment policy and will consider 
future revisions as necessary. We will not further delay implementation 
of this policy. We have already delayed implementation of the C-APC 
payment policy for a year, which we believe provided ample time for 
hospitals to evaluate the policy.
    Comment: We received feedback from commenters regarding the data 
resources that CMS provided to support the proposed rule. Some 
commenters commended CMS for the technical support and assistance 
provided that enabled the commenters to replicate CMS' methodology and 
match CMS' results. Other commenters expressed concern that the data 
resources were insufficient, inconsistent, and unclear. Some commenters 
also requested that CMS enhance transparency, expand the data resources 
available to the public, and engage stakeholders in future 
comprehensive APC payment policy development. Some commenters asked 
that CMS provide cost data on all of the code combinations that were 
evaluated for the complexity adjustments, including the code 
combinations that qualified for a complexity adjustment. One commenter 
stated that discrepancies in some of the number entries between 
Addendum J and Addendum B violate the Administrative Procedures Act 
(APA) because these discrepancies ``make it impossible to understand 
what CMS is proposing.''
    Response: We appreciate the commenters' support for the proposed 
expansion of available data resources related to the comprehensive APC 
payment policy methodology. In response to the commenters who expressed 
concern regarding the insufficiency of the data files provided, we 
understand that the OPPS is technically complex. However, we believe 
that the data made available to the public as part of the proposed rule 
were appropriate, clear, and sufficient. We acknowledge the commenters' 
concerns regarding the transparency of related data and the desire for 
additional resources. Therefore, for this final rule with comment 
period, we are providing additional data in Addendum J, such as cost 
statistics related to code combinations that are not eligible for 
complexity adjustments. Regarding any indications of discrepancies in 
some of the number entries between Addendum J and Addendum B, as the 
commenter suggested, we understand and acknowledge that minor 
discrepancies may sometimes occur with complex payment rules that 
include various files with many different types of data. However, we do 
not believe any such discrepancies would limit commenters' ability to 
understand the proposed policies or to evaluate the impacts or effects 
of the proposed policy changes. The comprehensive APC payment policy 
has been open for public comment during three consecutive OPPS 
rulemaking cycles: the CY 2014 OPPS/ASC proposed rule; the CY 2014 
OPPS/ASC final rule with comment period; and the CY 2015 OPPS/ASC 
proposed rule. Therefore, we do not believe that we provided 
insufficient notice of the policies that are a part of the 
comprehensive APC payment policy.
    Comment: Commenters expressed concern regarding the misalignment 
between hospitals' billing practices and systems and the proposal to 
package all services (except for the few exceptions noted above) on a 
claim into the payment for the comprehensive service. The commenters 
observed that a significant number of comprehensive service claims 
spanned more than 5 days, with some claims spanning close to 30 days. 
The commenters recommended that CMS limit the payment bundle to 
services provided within 1 or 2 days of the primary service, or 
defining the bundle based on episodes of care. Commenters also 
requested that CMS clarify the guidance provided and educate providers 
on how to report comprehensive services that fall within the span of a 
recurring service claim. Some commenters expressed concern that 
policies which reduce or eliminate series billing for recurring 
services may create an operational burden for hospitals; increase 
claims processing activity for Medicare contractors; and increase the 
amount of paperwork sent to a beneficiary.
    Response: Our intent is to capture all of the services associated 
with the primary service assigned to a C-APC, except those services 
that would still be separately paid under the OPPS, even when provided 
in conjunction with a comprehensive service. The 219 procedures 
assigned to the C-APCs are a small fraction of the total services 
provided in HOPDs. We believe that it would not be an undue hardship 
for some hospitals to alter their processes such that they file 
separate claims for services that are unrelated both clinically and in 
regard to time to the comprehensive service. With regard to recurring 
services, we have previously issued manual guidance in the Internet 
Only Manual, Pub. 100-4, Chapter 1, Section 50.2.2, that provides that 
only recurring services should be billed monthly. We also have 
specified that, in the event that a recurring service occurs on the 
same day as an acute service that falls within the span of the 
recurring service claim, hospitals should bill separately for recurring 
services on a monthly claim (repetitive billing) and submit a separate 
claim for the acute service. We also do not expect that these claims 
for comprehensive services in the outpatient setting would extend 
beyond a few days because the 219 procedures assigned to the 25 C-APCs 
are almost entirely surgical procedures. If a physician determined that 
furnishing one of these services would be medically necessary for the 
treatment of a Medicare beneficiary and expected the beneficiary to 
require hospital care for more than 2 midnights, inpatient admission 
would be appropriate.

[[Page 66805]]

    Comment: Commenters generally supported the proposed packaging of 
all add-on codes reported in conjunction with comprehensive service 
claims with the allowance of complexity adjustments for add-on codes 
currently assigned to device-dependent APCs in CY 2014. One commenter 
requested that CMS assign add-on CPT code 57267 (Insertion of mesh or 
other prosthesis for repair of pelvic floor defect, each site 
(anterior, posterior compartment), vaginal approach (List separately in 
addition to code for primary procedure) to C-APC 0202 because this code 
has high device costs.
    Response: We appreciate the commenters' support. According to 42 
CFR 419.2(b)(18), add-on codes are packaged under the OPPS. Because 
implementation of the finalized comprehensive APC payment policy was 
delayed until CY 2015, for CY 2014 we maintained the structure and code 
assignments for the device-dependent APCs, which continued separate 
payment for add-on codes assigned to device-dependent APCs for CY 2014. 
We refer readers to Table 7 of the CY 2014 OPPS/ASC final rule with 
comment period (78 FR 74859). The add-on code complexity adjustment 
policy is limited only to certain add-on codes that were previously 
assigned to device-dependent APCs and that, along with a primary 
comprehensive service, meet the complexity adjustment criteria. We 
refer readers to Table 9 of the CY 2015 OPPS/ASC proposed rule (79 FR 
40959) for a listing of these add-on codes. Our intent is not to make a 
higher payment in every case that an add-on procedure results in higher 
costs. Therefore, we are finalizing the CY 2015 proposal to package all 
add-on codes reported on a claim in conjunction with a comprehensive 
service, and also to allow a limited number of add-on codes to be 
evaluated for a complexity adjustment when billed with a primary 
comprehensive service. We are not extending the complexity adjustment 
policy beyond those add-on codes that were assigned to device-dependent 
APCs. The list of add-on codes that we evaluated for a complexity 
adjustment is included later in this section in Table 8.
    Comment: Some commenters requested that CMS divide the restructured 
C-APCs into more discrete groupings to increase clinical coherence and 
resource cost homogeneity. Some commenters believed that improved 
clinical coherence among the procedures within the C-APCs would 
increase the stability of C-APC payments from year-to-year and decrease 
opportunities for ``gaming'' the system. Some commenters also expressed 
concern with the high variation in geometric mean costs for services 
assigned to the C-APCs that do not create a violation of the 2 times 
rule, but would result in inadequate payment for the highest cost 
procedures assigned to the C-APC.
    Response: We disagree with the commenters. We believe that the 
categorization of the restructured C-APCs better represents clinical 
and resource homogeneity when compared to the CY 2014 structure of the 
C-APCs. We also note that the OPPS is a prospective payment system that 
relies on groupings of procedures resulting in a weighted-average cost 
payment based on all of the procedures in the group. Too much 
discretization of APC groupings would move the OPPS more toward a fee 
schedule, which would have individual payments for each HCPCS code and 
presents an undesirable outcome for the OPPS. In addition, we encourage 
all members of the stakeholder public to report all suspected incidents 
of fraud and abuse to the Office of Inspector General or the CMS Center 
for Program Integrity. As required by statute, we will review and 
evaluate, on an annual basis, any year-to-year changes in APC and HCPCS 
geometric mean costs.
    Comment: A few commenters disagreed with CMS' proposal to expand 
the C-APCs to include all of the current device-dependent APCs. The 
commenters noted that a significant percentage of claims for some of 
the lower paying C-APCs (specifically, C-APCs 0084 (Level I 
Electrophysiologic Procedures), 0427 (Level II Tube or Catheter Changes 
or Repositioning), 0622 (Level II Vascular Access Procedures), and 0652 
(Insertion of Intraperitoneal and Pleural Catheters) report services 
assigned to noncomprehensive APCs that are significantly more costly 
than the primary service that is motivating the C-APC payment. 
Commenters believed that procedures assigned to these APCs are not 
infrequently performed as secondary procedures to other more costly 
procedures that are assigned to noncomprehensive APCs. Commenters 
recommended various approaches for addressing this concern: (1) 
Applying complexity adjustments to these claims; (2) excluding high-
cost procedures from the comprehensive APC packaging policy; (3) paying 
for the higher-cost service and applying a multiple procedure reduction 
to the C-APC; or (4) eliminating the lower paying C-APCs from the 
comprehensive APC payment policy methodology.
    Response: Our analysis shows a significant number of claims in APCs 
0427 and 0622 that contain noncomprehensive services that are more 
costly than the procedures assigned to the proposed C-APC. In addition, 
similar to APCs 0427 and 0622, APC 0652 contains a total of three 
catheter-insertion procedures. These procedures are not similar to the 
other major procedures assigned to C-APCs, but are sometimes supportive 
of other procedures. For example, APC 0652 includes the procedure that 
describes the placement of a pleural catheter that can be used for drug 
delivery, but is not a definitive therapeutic procedure similar to most 
of the other procedures assigned to that C-APC. Also, APCs 0427, 0622, 
and 0652 are not device-intensive APCs, meaning that the device offsets 
are not greater than 40 percent. Therefore, we are accepting the 
commenters' recommendation. We are not converting APCs 0427, 0622, and 
0652 into C-APCs for CY 2015. In addition, because we are not 
converting APC 0427 into a C-APC, we will not evaluate add-on CPT code 
49435 for complexity adjustments because the APC that contains the base 
codes for CPT code 49435 are assigned to APC 0427. However, we are 
finalizing the proposal to convert APC 0084 into a C-APC. We did not 
find that a significant number of higher cost noncomprehensive 
procedures are performed in conjunction with the procedures assigned to 
APC 0084. Unlike many of the catheter insertion procedures assigned to 
APCs 0427, 0622, and 0652, the electrophysiology procedures assigned to 
APC 0084 are not supportive of other services, but are the definitive 
therapeutic procedures intended to treat a patient's cardiac condition.
    Comment: Commenters urged CMS to develop adjustments to C-APC 
payments based on patient acuity or diagnosis to account for clinical 
complexity and patient characteristics, which could help mitigate the 
negative payment impact of expanding the comprehensive APC payment 
policy on hospitals that treat more clinically complex patients, such 
as academic medical centers, cancer hospitals, and trauma centers.
    Response: As we stated in the CY 2015 OPPS/ASC proposed rule (79 FR 
40951), section 1833(t)(2) of the Act provides a procedure-based 
payment methodology for the OPPS, which is unlike the IPPS that makes 
payments based on both diagnoses and procedures. Currently OPPS 
payments are not based on patient severity or diagnosis like payments 
under the IPPS. Therefore, we are unable to make

[[Page 66806]]

payment adjustments based on diagnoses.
    Comment: Commenters expressed concern that not implementing C-APCs 
in the ASC setting distorts the payment relationship between ASCs and 
HOPDs and could result in incentives to direct patients from one 
setting to another. Commenters recommended that CMS reprogram the ASC 
payment system software, as soon as possible, to allow the system to 
perform the complex logic needed to implement and provide adequate 
payment for the C-APCs for ASCs.
    Response: The commenters are correct that the comprehensive APC 
payment policy methodology is not being adopted under the ASC payment 
system. However, we do not believe that this policy decision will 
result in site-of-service shifts, but we will continue to monitor 
procedure volumes in both settings. Although OPPS payments for 
individual surgical procedures assigned to C-APCs are higher than ASC 
payments for the same procedures, under the standard noncomprehensive 
service payment methodology that applies in the ASC for all APCs and in 
the OPPS for noncomprehensive services, there remains separate payment 
for covered procedures and covered ancillary services that are not 
packaged under a general packaging policy. This continuation of 
separate payment for covered procedures and covered ancillary services 
performed in the ASC (which is not available in the OPPS for procedures 
performed in addition to the primary procedures assigned to C-APCs) 
should help mitigate any incentive to perform procedures assigned to C-
APCs in the HOPD. However, given the significant difference between ASC 
and OPPS payment rates, we do not believe that separate payment (at the 
multiple procedure reduction reduced rate) for additional procedures 
performed in the ASC setting along with a procedure that is assigned to 
a C-APC will draw cases away from the HOPD because, in most cases, the 
overall HOPD will be higher than the ASC payment for the same set of 
procedures. We will consider the commenters' suggestion that we develop 
new payment software for the ASC payment system should an opportunity 
to do so arise in the future.
    Comment: Commenters requested that CMS provide separate payment for 
certain services reported on a comprehensive claim. Some commenters 
requested that CMS exclude the following additional services from the 
packaging provision under the comprehensive APC payment policy:
     Dialysis and emergency dialysis services.
     Blood products.
     Expensive diagnostic tests, such as angiography.
     High-cost drugs and devices that account for a high 
percentage of the geometric mean cost of a C-APC.
     Outpatient services paid under a payment schedule, such as 
laboratory services.
    The commenters believed that the C-APC payment would not adequately 
cover the cost of these services. One commenter believed that packaging 
payment for an otherwise separately payable drug when provided in 
conjunction with a comprehensive service may cause hospitals, in 
consultation with physicians, to choose a less-expensive alternative 
drug.
    Response: We responded to similar comments that disagreed with CMS' 
proposal to package payment for various items and services into the C-
APC payment in the CY 2014 OPPS/ASC final rule with comment period (78 
FR 74865 through 74910). As previously stated, we disagree with the 
commenters. We believe that the central attribute of the comprehensive 
APC payment policy is the packaging of all adjunctive services, with 
the exception of those services described above that, according to the 
statute, cannot be packaged or the list of preventive services that 
generally would not be provided at the time of a major procedure 
assigned to a C-APC. We note that (as stated above in section II.A.3.a. 
of this final rule with comment period) where there are a variety of 
devices, drugs, items, and supplies that could be used to furnish a 
service, some of which are more expensive than others, packaging 
encourages hospitals to use the most cost-efficient item that meets the 
patient's needs, rather than routinely using a more expensive item, 
which often results if separate payment is provided for the items. 
Furthermore, packaging also encourages hospitals to effectively 
negotiate with manufacturers and suppliers to reduce the purchase price 
of items and services (including drugs) or to explore alternative group 
purchasing arrangements, thereby encouraging the most economical health 
care delivery.
    Comment: Commenters asserted that the reliance on code combinations 
based on cost ranking of codes would lead to instability in the 
complexity adjustments from year to year, and overlook a large number 
of comprehensive claims with three or more ``J1'' services, which is 
common for the clinical complexity of procedures assigned to the 
endovascular revascularization family of APCs. Commenters suggested 
alternative methodologies for determining eligibility, such as applying 
a complexity adjustment to any claim that has three or more ``J1'' 
services or applying the cost and frequency criteria to all 
combinations of ``J1'' services.
    Response: We disagree with the commenters that assigning complexity 
adjustments based on cost ranking of primary and secondary codes is 
either insufficient or would result in instability of the complexity 
adjustments in future years. We proposed complexity adjustments for 
certain code pairs to provide a higher payment in the next higher APC 
within a clinical family for high cost procedure pairs consisting of a 
primary comprehensive procedure and a secondary comprehensive procedure 
that represent sufficiently frequent and sufficiently costly 
comprehensive procedure pairs such that they are separated from and 
provided a higher payment than all of the cases that are accounted for 
in APC assignment of the primary service. We do not believe that 
providing a complexity adjustment to any claim that has three or more 
``J1'' services or to all claims reporting pairs of ``J1'' services 
that meet the cost and frequency criteria would adequately serve the 
stated purpose of the policy. The intent of the complexity adjustment 
policy is to identify a limited number of costly procedure pairs for a 
higher payment at the next higher paying C-APC within the clinical 
family, not to unpackage and separately pay for all of the high cost 
cases that are associated with the primary ``J1'' procedure. Although 
such a policy as the commenters requested could be beneficial to the 
procedures assigned to the endovascular C-APC family because of the 
high number of codes that can be billed per case, we do not believe 
that this approach would serve the other clinical families that do not 
rely on component coding to the same extent as endovascular procedures. 
Therefore, we are finalizing our proposal to base the complexity 
adjustments on code pairs that include the two most costly ``J1'' 
services reported on the C-APC service claim.
    Comment: Commenters believed that the cost threshold is too 
restrictive and would cause financial hardship for hospitals and 
jeopardize beneficiary access to care. Commenters suggested that CMS 
adjust the cost threshold to 1.5, 1.75, or within 2 percent of the 2 
times rule limit.
    Response: In response to comments to the CY 2014 OPPS/ASC final 
rule with comment period, we significantly

[[Page 66807]]

lowered the cost criterion for a complexity adjustment from two times 
the cost of the primary procedure to two times the cost of the lowest 
cost procedure in the APC to which the primary procedure is assigned. 
This change made it significantly easier for code combinations to 
qualify for a complexity adjustment based on higher cost. We do not 
believe that further lowering of the cost criterion would be consistent 
with the objective of the comprehensive APC payment policy. We believe 
that lowering the cost criterion would result in effectively 
unpackaging too many cases from the primary C-APC assignment and, 
therefore, defeat the purpose of the policy, which is to create a 
comprehensive prospective payment for major, primary device-intensive 
procedures.
    Comment: Commenters expressed concern that claims assigned to the 
only level or the highest level C-APC within a clinical family are 
ineligible to receive a complexity adjustment because there is no 
higher paying APC in the clinical family in which to assign these code 
combinations. Commenters requested that CMS add an additional C-APC 
level to these clinical families to provide for more granular payment 
levels and accommodate potential complexity adjustments.
    Response: As we stated in the CY 2015 OPPS/ASC proposed rule, we 
would not create new APCs with a geometric mean cost that is higher 
than the highest cost C-APC in a clinical family just to accommodate 
potential complexity adjustments. Therefore, the highest payment for 
any code combination for services assigned to a C-APC would be the 
highest paying C-APC in the clinical family. We only found 7 code pairs 
out of the 219 procedures that are assigned to the 25 final C-APCs that 
would qualify for a complexity adjustment if a higher paying APC were 
available for assignment of the code combination. We do not believe 
that this small number of code combinations from the highest paying 
APCs in the final 12 clinical families of C-APCs that satisfy the 
complexity adjustment criteria necessitates creating additional APCs, 
especially if these APCs would be populated with only a few multiple 
procedure claims. In addition, in accordance with section 1833(t)(2)(B) 
of the Act, APCs are defined as ``groups of covered OPD services'' that 
are comparable clinically and with respect to the use of resources. If 
we created an additional new higher level APC within each C-APC 
clinical family that did not contain any primary comprehensive services 
and instead only contained a very small volume of complexity-adjusted 
code pairs, we do not believe that such APCs would constitute 
appropriate ``groups of covered OPD services.''
    Comment: One commenter urged CMS to finalize the proposal to assign 
CPT code 0308T to APC 0351 and to convert APC 0351 into a C-APC.
    Response: We appreciate the commenter's support. For this final 
rule with comment period, we are finalizing our proposal to assign CPT 
code 0308T to APC 0351 and to convert APC 0351 into a C-APC for CY 
2015.
    Comment: Commenters generally agreed with the proposed structure of 
the Automatic Implantable Cardiac Defibrillators, Pacemakers, and 
Related Devices (AICDP) C-APCs. One commenter specifically supported 
the assignment of CPT code 0319T to C-APC 108.
    Response: We appreciate the commenters' support.
    Comment: Several commenters supported CMS' proposed assignment of 
CPT codes 77424 and 77425 to C-APC 0648. Another commenter believed 
that the services assigned to C-APC 0648 are not similar clinically or 
similar in resource costs, and suggested that CMS divide this C-APC 
into two levels.
    Response: We appreciate the commenters' support for our proposal 
regarding C-APC 0648. However, we disagree with the commenter that the 
services assigned to C-APC 0648 are not similar clinically or in regard 
to resource costs. All of the seven services proposed to be assigned to 
C-APC 0648 involve the breast. The current clinical application of 
intraoperative radiation therapy (IORT CPT codes 77424 and 77425) is 
for breast cancer following lumpectomy. In regard to resource costs of 
the services assigned to C-APC 0648, the range from the lowest cost 
significant procedure to the highest cost significant procedure is 
between approximately $5,584 and $9,325, which is well within the 2 
times rule limit. In addition, C-APC 0648 is a small APC with only 7 
services and a total of approximately 5,000 claims based on CY2013 
claims data. To further divide this C-APC would be less consistent with 
a prospective payment system than its proposed structure. Therefore, we 
are finalizing our proposal to assign CPT codes 77424 and 77425 to C-
APC 0648.
    Comment: One commenter requested that CMS exclude C-APC 0259 from 
the comprehensive APC payment policy. The commenter believed that the 
change in the procedure-to-device claim edits policy would result in 
more incorrectly coded claims for the procedure described by CPT code 
69930 (Cochlear device implantation, with or without mastoidectomy), 
which is the only service assigned to C-APC 0259.
    Response: We do not believe that C-APC 0259 should be excluded from 
the comprehensive APC payment policy. The discussion of the device 
edits policy is in section II.A.2.d.1. of this final rule with comment 
period. We believe that hospitals will continue to report the cost of 
the cochlear implant when one of these devices is implanted into a 
Medicare beneficiary because the cost of this device is 84 percent of 
the total cost of the procedure. After consideration of this comment, 
we see no reason to exempt C-APC 0259 from the comprehensive APC 
payment policy. We are finalizing our proposal to convert APC 0259 into 
a C-APC for CY 2015.
    Comment: Several commenters agreed with CMS' proposed structure of 
the cardiac electrophysiology C-APCs: C-APC 0084 (Level I 
Electrophysiologic Procedures); C-APC 0085; and C-APC 0086 (Level III 
Electrophysiologic Procedures). One commenter requested that CMS 
reassign CPT code 93603 (Right ventricular recording) from C-APC 0084 
to C-APC 0085 because the commenter believed that the procedure 
described by CPT code 93603 is more similar to the procedures assigned 
to C-APC 0085 than the other procedures assigned to C-APC 0084.
    Response: We appreciate the commenters' support. However, we 
disagree with the commenter that CPT code 93603 should be reassigned 
from C-APC 0084 to C-APC 0085. CPT code 93603 is a very low-volume 
procedure, with a total of 12 claims for CY 2013. The geometric mean 
cost for CPT code 93603 (based on these 12 claims) is $1,807. The 
geometric mean cost of the lowest cost significant service in C-APC 
0085 is $4,064 (CPT code 93619). Therefore, we believe that CPT code 
93603 lacks resource similarity to the procedures assigned to C-APC 
0085. We are finalizing the structure of the cardiac electrophysiology 
C-APCs, as proposed for CY 2015.
    Comment: Several commenters agreed with CMS' proposed structure of 
the neurostimulator APCs. Two commenters believed that the difference 
in cost between CPT code 61885 (Insertion or replacement of cranial 
neurostimulator pulse generator or receiver, direct or inductive 
coupling; with connection to a single electrode array) and CPT code 
61886 (Insertion or replacement of cranial neurostimulator pulse 
generator or receiver, direct or inductive coupling; with connection to 
2 or more electrode

[[Page 66808]]

arrays) is too low and that the device costs may not be adequately 
captured based on the accuracy of the claims data. Another commenter 
recommended that CMS restructure the neurostimulator APCs to improve 
clinical coherence by limiting C-APC 0318 to only certain full-system 
procedures, assigning all lead placement procedures to C-APC 0061, and 
assigning the remaining neurostimulator procedures to C-APC 0039.
    Response: We appreciate the commenters' support. Regarding the 
commenters' concern about the geometric mean cost of CPT codes 61885 
and 61886, the geometric mean cost of CPT code 61886 (dual channel 
procedure) is higher than CPT code 61885 (single channel procedure), 
which is to be expected. It is important to remember that the C-APC 
payment policy packages all procedures performed with the primary 
procedure, so the cost for the primary service in a C-APC may be higher 
than the cost associated with single claims for the same service. We 
note that APC groupings are based on two factors, clinical similarity 
and resource similarity. The OPPS requires that we group services into 
APCs for payment purposes based on these two factors. Clinical 
similarity in the APC grouping context is by definition, and by 
necessity, is much broader than the comparisons that distinguish 
individual CPT codes. All of the procedures assigned to C-APCs 0061, 
0039, and 0318 include the various neurostimulator-related procedures. 
The neurostimulator family of C-APCs groups these procedures based on 
the geometric mean cost and clinical similarity of the primary service. 
In some cases, an APC includes implantation of a complete system of one 
type of neurostimulator and the implantation of either a generator 
alone or a complete system of other types. This is a function of the 
CPT coding system and the prospective nature of the comprehensive APC 
payment policy. Overall, we believe that the proposed structure of the 
neurostimulator family of C-APCs strikes the proper balance of both 
factors for APC construction and resource and clinical similarity. We 
are finalizing the proposed structure of the neurostimulator C-APCs, as 
proposed, and without modification.
    Comment: One commenter requested that CMS divide C-APC 0425 into 
two APCs because the range of procedure costs in this APC is too 
significant. Another commenter requested that CMS reassign the 
following CPT codes from APC 0208 to C-APC 0425 based on more 
appropriate resource homogeneity to the other procedures assigned to C-
APC 0425: CPT codes 22551, 22554, 22612, and 22856.
    Response: We disagree with the commenters' recommendation to divide 
C-APC 0425 into two C-APCs. The cost range for significant procedures 
within C-APC 0425 (using the proposed rule code assignments) is between 
approximately $9,087 (for CPT code 69714) and $15,740 (for CPT code 
24363), which is well within the 2 times rule limit. We agree with the 
commenters that CPT codes 22551 (with a geometric mean cost of 
$10,052), 22554 (with a geometric mean cost of $8,129), 22612 (with a 
geometric mean cost of $8,451), and 22856 (with a geometric mean cost 
of $12,958) should be reassigned from APC 0208 (with a geometric mean 
cost of $4,267) to C-APC 0425 (with a geometric mean cost of $10,606). 
We believe that assigning these four CPT codes to C-APC 0425 supports 
more appropriate resource and clinical similarity when compared to the 
current assignment to APC 0208. Otherwise, we are finalizing the 
proposed structure for C-APC 0425. With these additions to C-APC 0425, 
the cost range for significant procedures within C-APC 0425 (using the 
final rule code assignments) is between approximately $8,451 (for CPT 
code 22612) and $15,740 (for CPT code 24363).
    Comment: One commenter believed that the proposed C-APCs that 
include drug pumps would provide inadequate payment for its developing 
therapy because the therapy uses an advanced technology drug pump and a 
very costly drug. The commenter requested that CMS either provide 
complexity adjustments for high-cost drugs or unpackage the payment for 
certain high-cost drugs.
    Response: As we stated in the CY 2014 OPPS/ASC final rule with 
comment period (78 FR 74908 through 74909), we do not believe that 
drugs being supplied to the patient to fill the reservoir of a pump at 
the time of pump implantation should be excluded from the comprehensive 
APC payment policy because drugs supplied to fill the pump during 
implantation of the pump are adjunctive to the procedure. The costs of 
costly adjunctive services are included proportionally into the cost 
estimation for the primary services through our ability to use almost 
all claims for a service and adoption of the geometric mean cost upon 
which to establish relative payment weights. In addition, we do not 
believe that we should make complexity adjustments for higher cost 
drugs. Complexity adjustments are for more complex procedure variations 
that differ significantly from the primary ``J1'' procedure. Complexity 
adjustments are not intended as a way to provide separate payment for 
adjunctive drugs and supplies under the guise of a complexity 
adjustment. Therefore, we are not adopting this commenter's suggested 
changes to the comprehensive APC payment policy. We will continue to 
monitor the development of this technology and consider future 
revisions to this policy as needed.
    Comment: Commenters opinions varied regarding CMS' proposal to 
include C-APCs 0202 (Level V Gynecologic Procedures), 0385 (Level I 
Urogenital Procedures), and 0386 (Level II Urogenital Procedures) in 
the urogenital procedures clinical family of C-APCs and to allow 
complexity adjustments from C-APC 0202 to C-APC 0385 and complexity 
adjustments from C-APC 0385 to C-APC 0386. Some commenters agreed with 
CMS' proposed structure of the urogenital procedures family of C-APCs, 
while other commenters opposed the proposal to reassign complexity 
adjustment code combinations from C-APC 0202 to C-APC 0385. The 
commenters believed that the procedures assigned to C-APC 0202, which 
are related to female urogenital anatomy, are not sufficiently 
clinically similar to the primary procedures assigned to C-APC 0385, 
which relate to the male urogenital anatomy.
    Response: We appreciate the commenters' support for the proposed 
structure of the urogenital procedures C-APC clinical family and the 
proposed approach for complexity adjustments. However, we disagree with 
the commenters that complexity adjustments should not be made from C-
APC 0202 to C-APC 0385 because of insufficient clinical similarity 
between the complex procedures with a primary code assigned to C-APC 
0202 that have been reassigned according to the complexity adjustment 
policy to C-APC 0385 and the primary procedures assigned to C-APC 0385. 
Although we acknowledge that there are differences in the male and 
female human urogenital anatomy, we believe that many of these 
procedures involve relatively complex repairs of the urogenital region 
involving implantable medical devices and, therefore, it is appropriate 
to assign complexity adjusted code combinations from C-APC 0202 to the 
next higher paying APC in the urogenital procedures clinical family, 
which is C-APC 0385.
    Comment: Some commenters supported the proposed structure of the C-
APCs in the endovascular clinical

[[Page 66809]]

family. Other commenters noted that payments for some endovascular 
procedure code combinations would be negatively impacted by the 
proposed structure for C-APCs 0083 (Level I Endovascular Procedures), 
0229 Level II Endovascular Procedures), and 0319 (Level III 
Endovascular Procedures). The commenters recommended reviewing and 
revising these C-APCs and creating more levels beyond the proposed 
three levels of endovascular C-APCs.
    Response: We appreciate the commenters' support for the proposed 
structure of the endovascular C-APC clinical family. We do not believe 
that additional levels of endovascular C-APCs are necessary at this 
time. We believe that the restructured endovascular C-APCs better 
reflect resource homogeneity than the CY 2014 final structure of these 
C-APCs because the new structure has clearer delineations between the 
cost ranges of the procedures assigned to the three levels. In 
addition, in response to comments to the CY 2014 OPPS/ASC final rule 
with comment period (79 FR 40951), we proposed less stricter complexity 
adjustment criteria, which resulted in more code combinations 
qualifying for higher payment than would have qualified under the CY 
2014 OPPS final rule complexity adjustment criteria. We also proposed 
evaluating certain add-on codes that are currently assigned to device-
dependent APCs for complexity adjustments, and the overwhelming 
majority of these add-on codes are endovascular add-on codes. We 
believe that these two changes to the CY 2014 comprehensive APC payment 
policy sufficiently mitigate much of any negative payment impact for 
endovascular procedures in this transition from the current payment 
methodology to the comprehensive APC payment methodology. As we do 
annually, we will reevaluate the need for adjustments to the 
endovascular family of C-APCs.
    Comment: In the CY 2015 OPPS/ASC proposed rule (79 FR 40950 through 
40951) in response to a comment to the CY 2014 OPPS/ASC final rule with 
comment period, we proposed to continue to pay for stem cell transplant 
procedures as we have done for many years through APCs 0111 (Blood 
Product Exchange) and 0112 (Apheresis and Stem Cell Procedures). We 
stated that we would not create a C-APC for stem cell transplant 
procedures. Some commenters supported this approach. Other commenters 
requested that CMS create a C-APC for these procedures.
    Response: Based on the rationale discussed in the CY 2015 OPPS/ASC 
proposed rule (79 FR 40950 through 40951), we will continue to pay for 
stem cell transplant procedures through APCs 0111 and 0112 in CY 2015.
    (4) Statement of Final Policy and List of CY 2015 C-APCs.
    As we discussed earlier, in the CY 2015 OPPS/ASC proposed rule (79 
FR 40941 through 40953), we proposed to continue to define a 
comprehensive service as a classification for the provision of a 
primary service and all adjunctive services and supplies reported on 
the hospital Medicare Part B claim, with few exceptions, resulting in a 
single beneficiary copayment per claim. The comprehensive APC payment 
bundle policy includes all hospital services reported on the claim that 
are covered under Medicare Part B, except for the excluded services or 
services requiring separate payment by statute as noted above. We 
proposed to continue to define a clinical family of C-APCs as a set of 
clinically related C-APCs that represent different resource levels of 
clinically comparable services.
    After consideration of the public comments we received, we are 
finalizing our proposals, with some minor modifications, for 
establishment of C-APCs. In this final rule with comment period, we are 
establishing a total of 25 C-APCs within 12 clinical families for CY 
2015, as described below in Table 7.
    We are establishing a comprehensive APC payment methodology that 
adheres to the same basic principles as those finalized in the CY 2014 
OPPS/ASC final rule with comment period, with the following changes for 
CY 2015:
     We are reorganizing and consolidating several of the 
current device-dependent APCs and the CY 2014 C-APCs.
     We are expanding the comprehensive APC payment policy to 
include all device-dependent APCs, except for APCs 0427, 0622, and 
0652.
     We are creating two other new C-APCs (C-APC 0067 and C-APC 
0351).
     We are establishing new complexity adjustment criteria:
    [ssquf] Frequency of 25 or more claims reporting the HCPCS code 
combination (the frequency threshold); and
    [ssquf] Violation of the ``2 times'' rule (the cost threshold).
     We are establishing a policy to package all add-on codes, 
although we evaluate claims reporting a single primary service code 
reported in combination with an applicable add-on code (we refer 
readers to Table 8 below for the list of applicable add-on codes) for 
complexity adjustments.
    Addendum J to this final rule with comment period (which is 
available via the Internet on the CMS Web site) contains all of the 
data related to the comprehensive APC payment policy, including the 
list of complexity adjustments.

                                             Table 7--CY 2015 C-APCs
----------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2015
            Clinical family *               C-APC                       APC title                      payment
----------------------------------------------------------------------------------------------------------------
AICDP...................................       0090  Level II Pacemaker/Similar Procedures.........    $6,542.78
AICDP...................................       0089  Level III Pacemaker/Similar Procedures........     9,489.74
AICDP...................................       0655  Level IV Pacemaker/Similar Procedures.........    16,400.98
AICDP...................................       0107  Level I ICD and Similar Procedures............    22,907.64
AICDP...................................       0108  Level II ICD and Similar Procedures...........    30,806.39
BREAS...................................       0648  Level IV Breast and Skin Surgery..............     7,461.40
ENTXX...................................       0259  Level VII ENT Procedures......................    29,706.85
EPHYS...................................       0084  Level I Electrophysiologic Procedures.........       872.92
EPHYS...................................       0085  Level II Electrophysiologic Procedures........     4,633.33
EPHYS...................................       0086  Level III Electrophysiologic Procedures.......    14,356.62
EYEXX...................................       0293  Level IV Intraocular Procedures...............     8,446.54
EYEXX...................................       0351  Level V Intraocular Procedures................    23,075.30
GIXXX...................................       0384  GI Procedures with Stents.....................     3,173.83
NSTIM...................................       0061  Level II Neurostim./Related Procedures........     5,288.58
NSTIM...................................       0039  Level III Neurostim./Related Procedures.......    17,099.35
NSTIM...................................       0318  Level IV Neurostim./Related Procedures........    26,152.16
ORTHO...................................       0425  Level V Musculoskeletal Procedures............    10,220.00

[[Page 66810]]

 
PUMPS...................................       0227  Implantation of Drug Infusion Device..........    15,566.34
RADTX...................................       0067  Single Session Cranial SRS....................     9,765.40
UROGN...................................       0202  Level V Gynecologic Procedures................     3,977.63
UROGN...................................       0385  Level I Urogenital Procedures.................     6,822.35
UROGN...................................       0386  Level II Urogenital Procedures................    13,967.97
VASCX...................................       0083  Level I Endovascular Procedures...............     4,537.45
VASCX...................................       0229  Level II Endovascular Procedures..............     9,624.10
VASCX...................................       0319  Level III Endovascular Procedures.............    14,840.64
----------------------------------------------------------------------------------------------------------------
* Clinical Family Descriptor Key:
AICDP = Automatic Implantable Cardiac Defibrillators, Pacemakers, and Related Devices.
BREAS = Breast Surgery.
ENTXX = ENT Procedures.
EPHYS = Cardiac Electrophysiology.
EYEXX = Ophthalmic Surgery.
GIXXX = Gastrointestinal Procedures.
NSTIM = Neurostimulators.
ORTHO = Orthopedic Surgery.
PUMPS = Implantable Drug Delivery Systems.
RADTX = Radiation Oncology.
UROGN = Urogenital Procedures.
VASCX = Vascular Procedures.


   Table 8--CY 2015 Packaged CPT Add-On Codes That Are Evaluated for a
                          Complexity Adjustment
------------------------------------------------------------------------
  CY 2015  CPT/HCPCS  add-on code         CY 2015 short descriptor
------------------------------------------------------------------------
19297.............................  Place breast cath for rad.
33225.............................  L ventric pacing lead add-on.
37222.............................  Iliac revasc add-on.
37223.............................  Iliac revasc w/stent add-on.
37232.............................  Tib/per revasc add-on.
37233.............................  Tibper revasc w/ather add-on.
37234.............................  Revsc opn/prq tib/pero stent.
37235.............................  Tib/per revasc stnt & ather.
37237.............................  Open/perq place stent ea add.
37239.............................  Open/perq place stent ea add.
92921.............................  Prq cardiac angio addl art.
92925.............................  Prq card angio/athrect addl.
92929.............................  Prq card stent w/angio addl.
92934.............................  Prq card stent/ath/angio.
92938.............................  Prq revasc byp graft addl.
92944.............................  Prq card revasc chronic addl.
92998.............................  Pul art balloon repr precut.
C9601.............................  Perc drug-el cor stent bran.
C9603.............................  Perc d-e cor stent ather br.
C9605.............................  Perc d-e cor revasc t cabg b.
C9608.............................  Perc d-e cor revasc chro add.
------------------------------------------------------------------------

f. Calculation of Composite APC Criteria-Based Costs
    As discussed in the CY 2008 OPPS/ASC final rule with comment period 
(72 FR 66613), we believe it is important that the OPPS enhance 
incentives for hospitals to provide necessary, high quality care as 
efficiently as possible. For CY 2008, we developed composite APCs to 
provide a single payment for groups of services that are typically 
performed together during a single clinical encounter and that result 
in the provision of a complete service. Combining payment for multiple, 
independent services into a single OPPS payment in this way enables 
hospitals to manage their resources with maximum flexibility by 
monitoring and adjusting the volume and efficiency of services 
themselves. An additional advantage to the composite APC model is that 
we can use data from correctly coded multiple procedure claims to 
calculate payment rates for the specified combinations of services, 
rather than relying upon single procedure claims which may be low in 
volume and/or incorrectly coded. Under the OPPS, we currently have 
composite policies for extended assessment and management services, low 
dose rate (LDR) prostate brachytherapy, cardiac electrophysiologic 
evaluation and ablation services, mental health services, multiple 
imaging services, and cardiac resynchronization therapy 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) and the 
CY 2012 OPPS/ASC final rule with comment period (76 FR 74163) for more 
recent background.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40953), for CY 2015, 
we proposed to continue our composite APC payment policies for LDR 
prostate brachytherapy services, mental health services, and multiple 
imaging services, as discussed below. In addition, we noted that we 
finalized a policy in the CY 2014 OPPS/ASC final rule with comment 
period to modify our longstanding policy to provide payment to 
hospitals in certain circumstances when extended assessment and 
management of a patient occur (78 FR 74910 through 74912). For CY 2014, 
we created one new composite APC, entitled ``Extended Assessment and 
Management (EAM) Composite'' (APC 8009), to provide payment for all 
qualifying extended assessment and management encounters rather than 
recognize two levels of EAM composite APCs (78 FR 74910 through 74912). 
Under this policy, we allow any visits, a Level 4 or 5 Type A ED visit 
or a Level 5 Type B ED visit furnished by a hospital in conjunction 
with observation services of substantial duration to qualify for 
payment through EAM composite APC 8009. In the CY 2015 OPPS/ASC 
proposed rule (79 FR 40953 to 40954), we proposed to pay for qualifying 
extended assessment and management services through composite APC 8009.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40953), we also 
proposed to discontinue our composite APC payment policies for cardiac 
electrophysiologic evaluation and ablation services (APC 8000), and to 
pay for these services through comprehensive APC 0086 (Level III 
Electrophysiologic Procedures), as presented in a proposal included 
under section II.A.2.e. of the CY 2015 OPPS/ASC proposed rule. As such, 
in the CY 2015 OPPS/ASC proposed rule, we proposed to delete APC 8000 
for CY 2015 (79 FR 40953).
    We note that we finalized a policy to discontinue and supersede the 
cardiac resynchronization therapy composite APC with comprehensive APC 
0108 (Level II Implantation of Cardioverter-Defibrillators (ICDs)), as 
discussed in section II.A.2.e. of the CY 2014 OPPS/ASC final rule with 
comment period (78

[[Page 66811]]

FR 74902). For CY 2014, APC 0108 is classified as a composite APC, as 
discussed in the CY 2014 OPPS/ASC final rule with comment period, 
because comprehensive APCs were not made effective until CY 2015 (78 FR 
74925). For CY 2015, with the implementation of our new comprehensive 
APC policy, in the CY 2015 OPPS/ASC proposed rule, we proposed to 
effectuate the policy finalized in the CY 2014 OPPS/ASC final rule with 
comment period, and pay for cardiac resynchronization therapy services 
through comprehensive APC 0108 (proposed to be renamed ``Level II ICD 
and Similar Procedures''), which is discussed in section II.A.2.e. of 
the CY 2015 proposed rule (79 FR 40953).
(1) Extended Assessment and Management Composite APC (APC 8009)
    Beginning in CY 2008, we included composite APC 8002 (Level I 
Extended Assessment and Management (EAM) Composite) and composite APC 
8003 (Level II Extended Assessment and Management (EAM) Composite) in 
the OPPS to provide payment to hospitals in certain circumstances when 
extended assessment and management of a patient occur (an extended 
visit). In most of these circumstances, observation services are 
furnished in conjunction with evaluation and management services as an 
integral part of a patient's extended encounter of care. From CY 2008 
through CY 2013, in the circumstances when 8 or more hours of 
observation care was provided in conjunction with a high level visit, 
critical care, or direct referral for observation, was an integral part 
of a patient's extended encounter of care, and was not furnished on the 
same day as surgery or post-operatively, a single OPPS payment was made 
for the observation and evaluation and management services through one 
of the two composite APCs, as appropriate. We refer readers to the CY 
2012 OPPS/ASC final rule with comment period (76 FR 74163 through 
74165) for a full discussion of this longstanding policy for CY 2013 
and prior years. In the CY 2014 OPPS/ASC final rule with comment period 
(78 FR 74910), we created one new composite APC, APC 8009 (Extended 
Assessment and Management (EAM) Composite), to provide payment for all 
qualifying extended assessment and management encounters rather than 
recognizing two levels of EAM composite services. Under the CY 2014 
finalized policy, we no longer recognize composite APC 8002 or APC 
8003. Beginning in CY 2014, we allowed services identified by the new 
single clinic visit HCPCS code G0463, a Level 4 or 5 Type A ED visit 
(CPT code 99284 or 99285), a Level 5 Type B ED visit (HCPCS code 
G0384), or critical care (CPT code 99291) provided by a hospital in 
conjunction with observation services of substantial duration (8 or 
more hours) (provided the observation was not furnished on the same day 
as surgery or post-operatively) (78 FR 74910 through 74912) to qualify 
for payment through EAM composite APC 8009.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40953 through 40954), 
for CY 2015, we proposed to continue our CY 2014 finalized policy to 
provide payment for all qualifying extended assessment and management 
encounters through composite APC 8009. As we did for CY 2014, in the CY 
2015 OPPS/ASC proposed rule, for CY 2015, we proposed to allow a clinic 
visit and certain high level ED visits furnished by a hospital in 
conjunction with observation services of substantial duration (8 or 
more hours) to qualify for payment through the EAM composite APC 8009 
(provided the observation is not furnished on the same day as surgery 
or post-operatively). Specifically, we proposed to continue to allow a 
clinic visit, a Level 4 or Level 5 Type A ED visit, or a Level 5 Type B 
ED visit furnished by a hospital or a direct referral for observation 
(identified by HCPCS code G0379) performed in conjunction with 
observation services of substantial duration to qualify for payment 
through composite APC 8009 (provided the observation is not furnished 
on the same day as surgery or post-operatively). We note that, for CY 
2015, we also proposed to continue our current policy where one service 
code describes all clinic visits. We refer readers to the CY 2014 OPPS/
ASC final rule with comment period (78 FR 74910 through 74912) for a 
full discussion of the creation of composite APC 8009.
    As we noted in the CY 2014 OPPS/ASC final rule with comment period, 
the historical cost data used annually to calculate the geometric mean 
costs and payment rate for composite APC 8009 would not reflect the 
single clinic visit code that was new for CY 2014 (HCPCS code G0463) 
until our CY 2016 rulemaking cycle. We stated in the CY 2014 OPPS/ASC 
final rule with comment period (78 FR 74910 through 74912) that when 
hospital claims data for the CY 2014 clinic and ED visit codes become 
available, we would calculate the geometric mean cost for EAM composite 
APC 8009 using CY 2014 single and ``pseudo'' single procedure claims 
that meet each of the following criteria:
     The claims do 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 ensure that they would not contain a code for a service with 
status indicator ``T'' on the same date of service.)
     The claims contain 8 or more units of services described 
by HCPCS code G0378 (Observation services, per hour.)
     The claims contain one of the following codes: HCPCS code 
G0379 (Direct referral of patient for hospital observation care) on the 
same date of service as HCPCS code G0378; CPT code 99291 (Critical 
care, evaluation and management of the critically ill or critically 
injured patient; first 30-74 minutes); or HCPCS code G0463 (Hospital 
outpatient clinic visit for assessment and management of a patient) 
provided on the same date of service or 1 day before the date of 
service for HCPCS code G0378.
    Because we have no available cost data for HCPCS code G0463, for CY 
2015, we proposed to calculate the geometric mean cost for procedures 
assigned to APC 8009 using CY 2013 single and ``pseudo'' single 
procedure claims that met each of the following criteria:
     The claim 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 assured that they would not contain a code for a service 
with status indicator ``T'' on the same date of service.)
     The claim contained 8 or more units of services described 
by HCPCS code G0378 (Observation services, per hour.)
     The claim contained one of the following codes: HCPCS code 
G0379 (Direct referral of patient for hospital observation care) on the 
same date of service as HCPCS code G0378; or CPT code 99201 (Office or 
other outpatient visit for the evaluation and management of a new 
patient (Level 1)); CPT code 99202 (Office or other outpatient visit 
for the evaluation and management of a new patient (Level 2)); CPT code 
99203 (Office or other outpatient visit for the evaluation and 
management of a new patient (Level 3)); CPT code 99204 (Office or other 
outpatient visit for the evaluation and management of a new patient 
(Level 4)); CPT code 99205 (Office or other outpatient visit for the 
evaluation and management of a new patient (Level 5)); CPT code 99211

[[Page 66812]]

(Office or other outpatient visit for the evaluation and management of 
an established patient (Level 1)); CPT code 99212 (Office or other 
outpatient visit for the evaluation and management of an established 
patient (Level 2)); CPT code 99213 (Office or other outpatient visit 
for the evaluation and management of an established patient (Level 3)); 
CPT code 99214 (Office or other outpatient visit for the evaluation and 
management of an established patient (Level 4)); CPT code 99215 (Office 
or other outpatient visit for the evaluation and management of an 
established patient (Level 5)); 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)); HCPCS code G0384 (Type B emergency 
department visit (Level 5)); or CPT code 99291 (Critical care, 
evaluation and management of the critically ill or critically injured 
patient; first 30-74 minutes) provided on the same date of service or 1 
day before the date of service for HCPCS code G0378.
    The proposed CY 2015 geometric mean cost resulting from this 
methodology for EAM composite APC 8009 was approximately $1,287.
    Comment: One commenter urged CMS to consider options to minimize 
the financial burden for the beneficiary associated with self-
administered drugs while the beneficiary is receiving observation 
services. The commenter also supported efforts to count outpatient 
observation toward the Medicare skilled nursing facility (SNF) 3-day 
stay requirement. Another commenter expressed concern that paying for 
all qualifying EAM encounters through a single composite APC is likely 
to penalize certain outpatient facilities, such as those that are 
attached to safety-net or teaching hospitals, which treat more complex 
patients and populations. The commenter urged CMS to monitor and accept 
provider feedback concerning the impact of this coding change to ensure 
that it does not create financial pressure or incentives to admit 
borderline cases, deny treatment, or otherwise negatively affect 
clinical decision making.
    Response: The comments related to beneficiary liability associated 
with self-administered drugs and counting outpatient observation toward 
the SNF 3-day qualifying stay are outside the scope of the proposed 
regulations. We do not believe that paying for all qualifying EAM 
encounters through a single composite APC is likely to penalize certain 
outpatient facilities that treat more complex patients and populations. 
We believe that this proposal accurately accounts for the cost of 
providing an extended assessment and management service and that this 
proposal does not have any substantial impact on any particular type of 
facility or patient type. We also do not believe that paying for all 
qualifying EAM encounters through a single composite APC creates any 
financial pressure or incentives to admit borderline cases, deny 
treatment, or otherwise negatively affect clinical decision making. We 
continue to expect hospitals to provide the appropriate medical care to 
all beneficiaries.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to continue our CY 2014 
finalized policy to provide payment for all qualifying extended 
assessment and management encounters through composite APC 8009 for CY 
2015. We also are finalizing our proposal, without modification, to 
continue to allow a clinic visit and certain high level ED visits 
furnished by a hospital in conjunction with observation services of 
substantial duration (8 or more hours) to qualify for payment through 
EAM composite APC 8009 (provided the observation is not furnished on 
the same day as surgery or post-operatively). The final CY 2015 
geometric mean cost resulting from this methodology for EAM composite 
APC 8009 is approximately $1,281.
(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), which are 
generally present together on claims for the same date of service in 
the same operative session. In order to base payment on claims for the 
most common clinical scenario, and to further our goal of providing 
payment under the OPPS for a larger bundle of component services 
provided in a single hospital encounter, beginning in CY 2008, we began 
providing a single payment for LDR prostate brachytherapy when the 
composite service, reported as CPT codes 55875 and 77778, is furnished 
in a single hospital encounter. We base the payment for composite APC 
8001 (LDR Prostate Brachytherapy Composite) on the geometric mean 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. 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 services 
and a detailed description of how we developed the LDR prostate 
brachytherapy composite APC.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40955), for CY 2015, 
we proposed to continue to pay for LDR prostate brachytherapy services 
using the composite APC payment methodology proposed and implemented 
for CY 2008 through CY 2014. That is, we proposed to use CY 2013 claims 
reporting charges for both CPT codes 55875 and 77778 on the same date 
of service with no other separately paid procedure codes (other than 
those on the bypass list) to calculate the proposed payment rate for 
composite APC 8001. Consistent with our CY 2008 through CY 2014 
practice, in the CY 2015 OPPS/ASC proposed rule (79 FR 40955), we 
proposed not to use the claims that meet these criteria in the 
calculation of the geometric mean costs of procedures or services 
assigned to APC 0163 (Level IV Cystourethroscopy and Other 
Genitourinary Procedures) and APC 0651 (Complex Interstitial Radiation 
Source Application), the APCs to which CPT codes 55875 and 77778 are 
assigned, respectively. We proposed to continue to calculate the 
geometric mean costs of procedures or services assigned to APCs 0163 
and 0651 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 geometric mean cost upon which to base the proposed composite 
APC payment rate.
    Using a partial year of CY 2013 claims data available for the CY 
2015 OPPS/ASC proposed rule, we were able to use 379 claims that 
contained both CPT codes 55875 and 77778 to calculate the

[[Page 66813]]

proposed geometric mean cost of approximately $3,669 for these 
procedures upon which the proposed CY 2015 payment rate for composite 
APC 8001 is based.
    Comment: Several commenters expressed concern that the proposed 
payment rate for APC 8001 is based only on 379 claims that reported 
both CPT codes 55875 and 77778 on the same date of service, a 
significant decrease from the CY 2014 final rule claims data used for 
ratesetting when 591 claims were available. Commenters also noted that 
the proposed payment rate of $3,504.02 yields an 8.9 percent decrease 
in payment compared to the CY 2014 payment rate of $3,844.64. One 
commenter opined that the decrease in payment for these services is 
partially due to the number of brachytherapy procedures provided in the 
hospital outpatient setting. A few commenters urged CMS to closely 
monitor the number of claims used to set the payment rate for this APC 
and to consider other ratesetting methodologies if the number of claims 
continues to decrease. Several commenters expressed that the low volume 
of claims reporting outpatient brachytherapy services also affected 
other APCs, notably APC 0312 (Radioelement Applications) and APC 0651 
(Complex Interstitial Radiation Source Application), and cited 
additional decreases in the volume of claims used for ratesetting for 
these APCs.
    Response: The CY 2015 final rule claims data show that 406 claims 
were available and used to set the payment rate for APC 8001, with a 
geometric mean cost of approximately $3,745, compared to the proposed 
rule claims data that showed 379 claims available and used for 
ratesetting, with a geometric mean cost of approximately $3,669. In 
response to comments regarding the decrease in the number of claims 
available for CY 2015 ratesetting and the geometric mean cost relative 
to the number of claims available for CY 2014 ratesetting and the 
geometric mean cost, we note that there is typically some fluctuation 
in costs from year to year. We acknowledge that the number of claims 
available and used for ratesetting for APC 8001 has decreased over 
recent years. However, the percentage of single frequency claims 
compared to total claims that we were able to use for ratesetting in 
this final rule with comment period is comparable to prior years. In 
addition, evaluation of the claims data for the 4 years prior to CY 
2014 indicated that the mean or median costs used for ratesetting for 
APC 8001 were lower in those years than CY 2014 or CY 2015 cost levels. 
For APC 0651, based on final rule claims data, there are 62 single 
frequency claims out of a total of 3,785 claims, with a geometric mean 
cost of approximately $988. For APC 0312, based on final rule claims 
data, there are 26 single frequency claims out of a total of 378 
claims, with a geometric mean cost of approximately $411. We agree with 
the commenters' assertion that it appears that there are an increasing 
number of radiation oncological technologies that are competing with 
prostate brachytherapy, which may be contributing to a decreased number 
of claims available for ratesetting for these APCs. As we stated in the 
CY 2014 OPPS/ASC final rule with comment period, we will continue to 
evaluate additional refinements and improvements to our ratesetting 
methodologies in order to maximize the use of claims data (78 FR 
74913). In addition, we will continue to explore means by which we can 
use a larger volume of claims to establish the payment rate for APC 
0312 and APC 0651.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to continue use of 
composite APC 8001 for CY 2015 and to set the payment rate for this APC 
using our established methodology. The final geometric mean cost for 
composite APC 8001 for CY 2015 is approximately $3,745.
(3) Mental Health Services Composite APC (APC 0034)
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40955), for CY 2015, 
we proposed to continue our longstanding policy of limiting the 
aggregate payment for specified less resource-intensive mental health 
services furnished on the same date to the payment for a day of partial 
hospitalization services provided by a hospital, which we consider to 
be the most resource-intensive of all outpatient mental health 
services. We refer readers to the April 7, 2000 OPPS final rule with 
comment period (65 FR 18452 through 18455) for the initial discussion 
of this longstanding policy and the CY 2012 OPPS/ASC final rule with 
comment period (76 FR 74168) for more recent background.
    Specifically, in the CY 2015 OPPS/ASC proposed rule (79 FR 40955), 
we proposed that 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 payment rate for 
partial hospitalization services provided by a hospital, those 
specified mental health services would be assigned to APC 0034 (Mental 
Health Services Composite). We also proposed to continue to set the 
payment rate for APC 0034 at the same payment rate that we proposed to 
establish for APC 0176 (Level II Partial Hospitalization (4 or more 
services) for hospital-based PHPs), which is the maximum partial 
hospitalization per diem payment rate for a hospital, and that the 
hospital continue to be paid one unit of APC 0034 (79 FR 40955). Under 
this policy, the I/OCE would continue to determine whether to pay for 
these specified mental health services individually, or to make a 
single payment at the same payment rate established for APC 0176 for 
all of the specified mental health services furnished by the hospital 
on that single date of service. We continue to believe that the costs 
associated with administering a partial hospitalization program at a 
hospital represent the most resource-intensive of all outpatient mental 
health services. Therefore, we do not believe that we should pay more 
for mental health services under the OPPS than the highest partial 
hospitalization per diem payment rate for hospitals.
    We did not receive any public comments on this proposal. Therefore, 
we are finalizing our CY 2015 proposal, without modification, to 
continue our longstanding policy of limiting the aggregate payment for 
specified less resource-intensive mental health services furnished on 
the same date to a single beneficiary by a hospital to the payment rate 
for APC 0176, which is the maximum partial hospitalization per diem 
payment for a hospital for CY 2015.
(4) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007, and 
8008)
    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, in order to reflect and promote the 
efficiencies hospitals can achieve when performing multiple imaging 
procedures during a single session (73 FR 41448 through 41450). We 
utilize three imaging families based on imaging modality for purposes 
of this methodology: (1) Ultrasound; (2) computed tomography (CT) and 
computed tomographic angiography (CTA); and (3) magnetic resonance 
imaging (MRI) and magnetic resonance angiography (MRA). The HCPCS codes 
subject to the multiple imaging composite policy and their respective 
families are listed in Table 12 of the CY 2014 OPPS/ASC final rule with

[[Page 66814]]

comment period (78 FR 74920 through 74924).
    While there are three imaging families, there are five multiple 
imaging composite APCs due to the statutory requirement under section 
1833(t)(2)(G) of the Act that we differentiate payment for OPPS imaging 
services provided with and without contrast. While the ultrasound 
procedures included 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.
    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).
    In the CY 2015 OPPS/ASC proposed rule, for CY 2015, we proposed to 
continue to pay for all multiple imaging procedures within an imaging 
family performed on the same date of service using the multiple imaging 
composite APC payment methodology (79 FR 40956). We continue to believe 
that this policy will reflect and promote the efficiencies hospitals 
can achieve when performing multiple imaging procedures during a single 
session.
    The proposed CY 2015 payment rates for the five multiple imaging 
composite APCs (APC 8004, APC 8005, APC 8006, APC 8007, and APC 8008) 
were based on geometric mean costs calculated from a partial year of CY 
2013 claims available for the proposed rule that qualified for 
composite payment under the current policy (that is, those claims with 
more than one procedure within the same family on a single date of 
service). To calculate the proposed geometric mean costs, we used the 
same methodology that we used to calculate the final CY 2013 and CY 
2014 geometric mean costs for these composite APCs, as described in the 
CY 2014 OPPS/ASC final rule with comment period (78 FR 74918). The 
imaging HCPCS codes referred to as ``overlap bypass codes'' that we 
removed from the bypass list for purposes of calculating the proposed 
multiple imaging composite APC geometric mean costs, pursuant to our 
established methodology as stated in the CY 2014 OPPS/ASC final rule 
with comment period (78 FR 74918), are identified by asterisks in 
Addendum N to the CY 2015 OPPS/ASC proposed rule (which is available 
via the Internet on the CMS Web site) and are discussed in more detail 
in section II.A.1.b. of that proposed rule.
    For the CY 2015 OPPS/ASC proposed rule, we were able to identify 
approximately 636,000 ``single session'' claims out of an estimated 1.6 
million potential composite APC cases from our ratesetting claims data, 
approximately 40 percent of all eligible claims, to calculate the 
proposed CY 2015 geometric mean costs for the multiple imaging 
composite APCs.
    Table 8 of the proposed rule (79 FR 40956 through 40958) listed the 
proposed HCPCS codes that would be subject to the multiple imaging 
composite APC policy and their respective families and approximate 
composite APC geometric mean costs for CY 2015.
    Comment: A few commenters expressed concern that the multiple 
imaging composite APCs may undercompensate providers for imaging 
procedures. These commenters recommended that CMS provide an analysis 
of the effects of reductions in imaging payments due to the composite 
APC policy on utilization. The commenters recommended that CMS provide 
separate payment for each imaging procedure in light of reductions to 
payment for imaging procedures.
    Response: We continue to believe that our multiple imaging 
composite policies reflect and promote the efficiencies hospitals can 
achieve when performing multiple imaging procedures during a single 
session, and some of those efficiencies result in lower payments due to 
cost savings from furnishing multiple imaging services on the same 
date. We will continue to monitor the multiple imaging composite APC 
ratesetting methodology and the cost of providing imaging services. If 
appropriate, we may report any information to the HOP Panel, or discuss 
and propose changes to the multiple imaging composite APCs in 
rulemaking in the future.
    After consideration of the public comments received, we are 
finalizing our proposal to continue the use of multiple imaging 
composites without modification. We were able to identify approximately 
661,000 million ``single session'' claims out of an estimated 1.68 
million potential composite cases from our CY 2013 ratesetting claims 
data, approximately 39 percent of all eligible claims, to calculate the 
final CY 2015 geometric mean costs for the multiple imaging composite 
APCs.
    Table 9 below lists the HCPCS codes that will be subject to the 
multiple imaging composite APC policy and their respective families and 
approximate composite APC geometric mean costs for CY 2015.

 Table 9--OPPS Imaging Families and Multiple Imaging Procedure Composite
                                  APCs
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                          Family 1--Ultrasound
------------------------------------------------------------------------
CY 2015 APC 8004 (Ultrasound composite)      CY 2015 Approximate APC
                                            geometric mean cost = $296
------------------------------------------------------------------------
76604..................................  Us exam, chest.
76700..................................  Us exam, abdom, complete.
76705..................................  Echo exam of abdomen.
76770..................................  Us exam abdo back wall, comp.
76775..................................  Us exam abdo back wall, lim.
76776..................................  Us exam k transpl w/Doppler.
76831..................................  Echo exam, uterus.

[[Page 66815]]

 
76856..................................  Us exam, pelvic, complete.
76870..................................  Us exam, scrotum.
76857..................................  Us exam, pelvic, limited.
------------------------------------------------------------------------
             Family 2--CT and CTA with and without Contrast
------------------------------------------------------------------------
  CY 2015 APC 8005 (CT and CTA without       CY 2015 Approximate APC
          Contrast Composite)*              Geometric Mean Cost = $325
------------------------------------------------------------------------
70450..................................  Ct head/brain w/o dye.
70480..................................  Ct orbit/ear/fossa w/o dye.
70486..................................  Ct maxillofacial w/o dye.
70490..................................  Ct soft tissue neck w/o dye.
71250..................................  Ct thorax w/o dye.
72125..................................  Ct neck spine w/o dye.
72128..................................  Ct chest spine w/o dye.
72131..................................  Ct lumbar spine w/o dye.
72192..................................  Ct pelvis w/o dye.
73200..................................  Ct upper extremity w/o dye.
73700..................................  Ct lower extremity w/o dye.
74150..................................  Ct abdomen w/o dye.
74261..................................  Ct colonography, w/o dye.
74176..................................  Ct angio abd & pelvis.
------------------------------------------------------------------------
   CY 2015 APC 8006 (CT and CTA with         CY 2015 Approximate APC
          Contrast Composite)               Geometric Mean Cost = $548
------------------------------------------------------------------------
70487..................................  Ct maxillofacial w/dye.
70460..................................  Ct head/brain w/dye.
70470..................................  Ct head/brain w/o & w/dye.
70481..................................  Ct orbit/ear/fossa w/dye.
70482..................................  Ct orbit/ear/fossa w/o & w/dye.
70488..................................  Ct maxillofacial w/o & w/dye.
70491..................................  Ct soft tissue neck w/dye.
70492..................................  Ct sft tsue nck w/o & w/dye.
70496..................................  Ct angiography, head.
70498..................................  Ct angiography, neck.
71260..................................  Ct thorax w/dye.
71270..................................  Ct thorax w/o & w/dye.
71275..................................  Ct angiography, chest.
72126..................................  Ct neck spine w/dye.
72127..................................  Ct neck spine w/o & w/dye.
72129..................................  Ct chest spine w/dye.
72130..................................  Ct chest spine w/o & w/dye.
72132..................................  Ct lumbar spine w/dye.
72133..................................  Ct lumbar spine w/o & w/dye.
72191..................................  Ct angiograph pelv w/o & w/dye.
72193..................................  Ct pelvis w/dye.
72194..................................  Ct pelvis w/o & w/dye.
73201..................................  Ct upper extremity w/dye.
73202..................................  Ct uppr extremity w/o & w/dye.
73206..................................  Ct angio upr extrm w/o & w/dye.
73701..................................  Ct lower extremity w/dye.
73702..................................  Ct lwr extremity w/o & w/dye.
73706..................................  Ct angio lwr extr w/o & w/dye.
74160..................................  Ct abdomen w/dye.
74170..................................  Ct abdomen w/o & w/dye.
74175..................................  Ct angio abdom w/o & w/dye.
74262..................................  Ct colonography, w/dye.
75635..................................  Ct angio abdominal arteries.
74177..................................  Ct angio abd & pelv w/contrast.
74178..................................  Ct angio abd & pelv 1+ regns.
------------------------------------------------------------------------
* If a ``without contrast'' CT or CTA procedure is performed during the
 same session as a ``with contrast'' CT or CTA procedure, the I/OCE
 would assign APC 8006 rather than APC 8005.
------------------------------------------------------------------------
             Family 3--MRI and MRA with and without Contrast
------------------------------------------------------------------------
 CY 2015 APC 8007 (MRI and MRA without       CY 2015 Approximate APC
          Contrast Composite)*              Geometric Mean Cost = $631
------------------------------------------------------------------------
70336..................................  Magnetic image, jaw joint.
70540..................................  Mri orbit/face/neck w/o dye.
70544..................................  Mr angiography head w/o dye.
70547..................................  Mr angiography neck w/o dye.
70551..................................  Mri brain w/o dye.

[[Page 66816]]

 
70554..................................  Fmri brain by tech.
71550..................................  Mri chest w/o dye.
72141..................................  Mri neck spine w/o dye.
72146..................................  Mri chest spine w/o dye.
72148..................................  Mri lumbar spine w/o dye.
72195..................................  Mri pelvis w/o dye.
73218..................................  Mri upper extremity w/o dye.
73221..................................  Mri joint upr extrem w/o dye.
73718..................................  Mri lower extremity w/o dye.
73721..................................  Mri jnt of lwr extre w/o dye.
74181..................................  Mri abdomen w/o dye.
75557..................................  Cardiac mri for morph.
75559..................................  Cardiac mri w/stress img.
C8901..................................  MRA w/o cont, abd.
C8904..................................  MRI w/o cont, breast, uni.
C8907..................................  MRI w/o cont, breast, bi.
C8910..................................  MRA w/o cont, chest.
C8913..................................  MRA w/o cont, lwr ext.
C8919..................................  MRA w/o cont, pelvis.
C8932..................................  MRA, w/o dye, spinal canal.
C8935..................................  MRA, w/o dye, upper extr.
------------------------------------------------------------------------
   CY 2015 APC 8008 (MRI and MRA with        CY 2015 Approximate APC
          Contrast Composite)               Geometric Mean Cost = $945
------------------------------------------------------------------------
70549..................................  Mr angiograph neck w/o & w/dye.
70542..................................  Mri orbit/face/neck w/dye.
70543..................................  Mri orbt/fac/nck w/o & w/dye.
70545..................................  Mr angiography head w/dye.
70546..................................  Mr angiograph head w/o & w/dye.
70547..................................  Mr angiography neck w/o dye.
70548..................................  Mr angiography neck w/dye.
70552..................................  Mri brain w/dye.
70553..................................  Mri brain w/o & w/dye.
71551..................................  Mri chest w/dye.
71552..................................  Mri chest w/o & w/dye.
72142..................................  Mri neck spine w/dye.
72147..................................  Mri chest spine w/dye.
72149..................................  Mri lumbar spine w/dye.
72156..................................  Mri neck spine w/o & w/dye.
72157..................................  Mri chest spine w/o & w/dye.
72158..................................  Mri lumbar spine w/o & w/dye.
72196..................................  Mri pelvis w/dye.
72197..................................  Mri pelvis w/o & w/dye.
73219..................................  Mri upper extremity w/dye.
73220..................................  Mri uppr extremity w/o & w/dye.
73222..................................  Mri joint upr extrem w/dye.
73223..................................  Mri joint upr extr w/o & w/dye.
73719..................................  Mri lower extremity w/dye.
73720..................................  Mri lwr extremity w/o & w/dye.
73722..................................  Mri joint of lwr extr w/dye.
73723..................................  Mri joint lwr extr w/o & w/dye.
74182..................................  Mri abdomen w/dye.
74183..................................  Mri abdomen w/o & w/dye.
75561..................................  Cardiac mri for morph w/dye.
75563..................................  Card mri w/stress img & dye.
C8900..................................  MRA w/cont, abd.
C8902..................................  MRA w/o fol w/cont, abd.
C8903..................................  MRI w/cont, breast, uni.
C8905..................................  MRI w/o fol w/cont, brst, un.
C8906..................................  MRI w/cont, breast, bi.
C8908..................................  MRI w/o fol w/cont, breast,.
C8909..................................  MRA w/cont, chest.
C8911..................................  MRA w/o fol w/cont, chest.
C8912..................................  MRA w/cont, lwr ext.
C8914..................................  MRA w/o fol w/cont, lwr ext.
C8918..................................  MRA w/cont, pelvis.
C8920..................................  MRA w/o fol w/cont, pelvis.
C8931..................................  MRA, w/dye, spinal canal.
C8933..................................  MRA, w/o&w/dye, spinal canal.
C8934..................................  MRA, w/dye, upper extremity.
C8936..................................  MRA, w/o&w/dye, upper extr.
------------------------------------------------------------------------
* If a ``without contrast'' MRI or MRA procedure is performed during the
  same session as a ``with contrast'' MRI or MRA procedure, the I/OCE
  would assign APC 8008 rather than APC 8007.


[[Page 66817]]

3. Changes to Packaged Items and Services
a. Background and Rationale for Packaging in the OPPS
    Like other prospective payment systems, the OPPS relies on the 
concept of averaging to establish a payment rate for services. The 
payment may be more or less than the estimated cost of providing a 
specific service or bundle of specific services for a particular 
patient. The OPPS packages payment for multiple interrelated items and 
services into a single payment to create incentives for hospitals to 
furnish services most efficiently and to manage their resources with 
maximum flexibility. Our packaging policies support our strategic goal 
of using larger payment bundles in the OPPS to maximize hospitals' 
incentives to provide care in the most efficient manner. For example, 
where there are a variety of devices, drugs, items, and supplies that 
could be used to furnish a service, some of which are more expensive 
than others, packaging encourages hospitals to use the most cost-
efficient item that meets the patient's needs, rather than to routinely 
use a more expensive item, which often results if separate payment is 
provided for the items.
    Packaging also encourages hospitals to effectively negotiate 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 delivery. 
Similarly, packaging encourages hospitals to establish protocols that 
ensure that necessary services are furnished, while scrutinizing the 
services ordered by practitioners to maximize the efficient use of 
hospital resources. Packaging payments into larger payment bundles 
promotes the predictability and accuracy of payment for services over 
time. Finally, packaging may reduce the importance of refining service-
specific payment because packaged payments include costs associated 
with higher cost cases requiring many ancillary items and services and 
lower cost cases requiring fewer ancillary items and services. Because 
packaging encourages efficiency and is an essential component of a 
prospective payment system, packaging payment for items and services 
that are typically integral, ancillary, supportive, dependent, or 
adjunctive to a primary service has been a fundamental part of the OPPS 
since its implementation in August 2000. Over the last 15 years, as we 
have refined our understanding of the OPPS as a prospective payment 
system, we have packaged numerous services that we originally paid as 
primary services. As we continue to develop larger payment groups that 
more broadly reflect services provided in an encounter or episode of 
care, we have expanded the OPPS packaging policies. Most, but not 
necessarily all, items and services currently packaged in the OPPS are 
listed in 42 CFR 419.2(b), including the five packaging policies that 
were added in CY 2014 (78 FR 74925). Our overarching goal is to make 
OPPS payments for all services paid under the OPPS more consistent with 
those of a prospective payment system and less like those of a per 
service fee schedule, which pays separately for each coded item. As a 
part of this effort, we have continued to examine the payment for items 
and services provided in the OPPS to determine which OPPS services can 
be packaged to achieve the objective of advancing the OPPS as a 
prospective payment system.
    We have examined the items and services currently provided under 
the OPPS, reviewing categories of integral, ancillary, supportive, 
dependent, or adjunctive items and services for which we believe 
payment would be appropriately packaged into payment of the primary 
service they support. Specifically, we examined the HCPCS code 
definitions (including CPT code descriptors) to determine whether there 
were categories of codes for which packaging would be appropriate 
according to existing OPPS packaging policies or a logical expansion of 
those existing OPPS packaging policies. In general, in the CY 2015 
OPPS/ASC proposed rule (79 FR 40958 through 40961), we proposed to 
package the costs of selected HCPCS codes into payment for services 
reported with other HCPCS codes where we believe that one code reported 
an item or service that was integral, ancillary, supportive, dependent, 
or adjunctive to the provision of care that was reported by another 
HCPCS code. Below we discuss categories and classes of items and 
services that we proposed to package beginning in CY 2015. For an 
extensive discussion of the history and background of the OPPS 
packaging policy, we refer readers to the CY 2000 OPPS final rule (65 
FR 18434), the CY 2008 OPPS/ASC final rule with comment period (72 FR 
66580), and the CY 2014 OPPS/ASC final rule with comment period (78 FR 
74925).
b. Revisions of a Packaging Policy Established in CY 2014--Procedures 
Described by Add-On Codes
    In the CY 2014 OPPS/ASC final rule with comment period, we packaged 
add-on codes in the OPPS, with the exception of add-on codes describing 
drug administration services (78 FR 74943; 42 CFR 419.2(b)(18)). With 
regard to the packaging of add-on procedures that use expensive medical 
devices, we stated in the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 74943) that the most expensive medical devices used in 
procedures to insert or implant devices in the hospital outpatient 
setting are included in procedures that are assigned to comprehensive 
APCs. Comprehensive APCs are discussed in section II.A.2.e. of this 
final rule with comment period. In the CY 2014 OPPS/ASC final rule with 
comment period (78 FR 74864), we discussed the comprehensive APC 
policy, which we adopted, with modification, but delayed the 
implementation of, until CY 2015. We stated that, for CY 2014, we would 
continue to pay separately for only those add-on codes (except for drug 
administration add-on codes) that were assigned to device-dependent 
APCs in CY 2014, but that, after CY 2014, these device-dependent add-on 
codes would be paid under the comprehensive APC policy. According to 
the proposed changes to the comprehensive APC policy described in 
section II.A.2.e. of this final rule with comment period, we proposed 
to package all of the procedures described by add-on codes that are 
currently assigned to device-dependent APCs, which will be replaced by 
comprehensive APCs. The device-dependent add-on codes that are 
separately paid in CY 2014 that we proposed to package in CY 2015 were 
listed in Table 9 of the CY 2015 OPPS/ASC proposed rule (79 FR 40959).
    Comment: A few commenters disagreed with the proposal to package 
payment for the add-on codes listed in Table 9 of the proposed rule for 
the following reasons:
     Some commenters requested that CMS delay packaging the 
device-dependent add-on codes remaining for CY 2015 while additional 
data analysis is performed and refinements are adopted to ensure 
accurate payment for the full range of add-on procedures, including 
those not assigned to comprehensive APCs.
     A few commenters suggested that add-on codes are separate 
and distinct clinical procedures having unique, independent values 
determined by the American Medical Association (AMA)

[[Page 66818]]

and, therefore, should not be treated as ancillary services.
     Some commenters requested that CMS establish exceptions to 
its proposal to package add-on codes for specific add-on procedures 
with high cost supply items that commenters believed would be underpaid 
under the policy and impede patient access to care.
    Response: We disagree with the commenters that oppose packaging 
these remaining add-on codes. We received similar public comments 
during the CY 2014 rulemaking cycle and responded to those comments in 
the CY 2014 OPPS/ASC final rule with comment period. Generally, we 
disagree because add-on codes describe services that are integral, 
ancillary, supportive, dependent, or adjunctive to the primary service. 
In other words, add-on codes do not represent a stand-alone procedure 
and are inclusive to other procedures performed at the same time. For a 
full discussion of our response to these public comments, we refer 
readers to the CY 2014 OPPS/ASC final rule with comment period (78 FR 
74942 through 74943).
    We also disagree with commenters' assertion that add-on code 
services are separate and distinct clinical procedures and should not 
be treated as ancillary services. We received a similar public comment 
last year where commenters suggested that procedures described by add-
on codes are not integral, ancillary, supportive, dependent, or 
adjunctive to the primary service. As we noted previously (78 FR 74942 
through 74943), the fundamental nature of an add-on code procedure is 
that it typically describes some form of a related extension of or 
addition to the primary procedure or service described by the primary 
procedure. The definition of an add-on code is that it is an extension 
of a primary, base service. CPT defines add-on codes as codes that 
describe ``procedures [that] are commonly carried out in addition to 
the primary procedure performed'' (2014 CPT Codebook Professional 
Edition, page xiv). Further, CPT states that ``add-on codes describe 
additional intra-service work associated with the primary procedure 
(emphasis added) (2014 CPT Codebook Professional Edition, page xiv). We 
also disagree with commenters that some add-on codes are not related to 
the primary procedure but represent a separate procedure that should be 
paid separately from the primary procedure. If such procedures were in 
fact separate procedures, they would not be described by an add-on 
code. Thus, we believe that add-on code procedures are not always 
separate and distinct clinical procedures, but rather are related 
extensions, supportive, integral, or adjunctive of the primary 
procedure and, therefore, it is appropriate to package the cost of the 
add-on codes into the payment calculation for the primary procedure. 
Finally, in response to commenters who requested that CMS establish 
exceptions to its proposal for add-on code with high cost supply items, 
we are allowing certain add-on codes to be evaluated for a complexity 
adjustment when billed with a comprehensive APC primary procedure. We 
refer readers to section II.A.2.e. of this final rule with comment 
period for further discussion of that policy. We see no reason to grant 
exceptions to the add-on code packaging policy to specifically account 
for add-on procedures with high cost supply items, as any associated 
costs are accounted for in the payment for the primary procedure. The 
only reason we did not package the add-on codes listed in Table 9 of 
the proposed rule was that implementation of the comprehensive APC 
policy was delayed for 1 year (78 FR 74943). Because the comprehensive 
APC policy will be implemented in CY 2015, we are packaging these 
remaining add-on codes.
    After consideration of the public comments we received, we are 
finalizing our proposal to package all of the procedures described by 
add-on codes that are currently assigned to device-dependent APCs, 
which will be replaced by comprehensive APCs, as listed in Table 9 of 
the CY 2015 OPPS/ASC proposed rule (79 FR 40959) and included in Table 
10 below. The current device-dependent add-on codes that are separately 
paid in CY 2014 that will be packaged in CY 2015 are included in Table 
8 under section II.A.2.e. of this final rule with comment period, which 
addresses the comprehensive APC policy.

        Table 10--Add-On Codes Assigned to Device-Dependent APCS for CY 2014 That Are Packaged in CY 2015
----------------------------------------------------------------------------------------------------------------
             CY 2015 add-on code                                        Short descriptor
----------------------------------------------------------------------------------------------------------------
19297........................................  Place breast cath for rad.
33225........................................  L ventric pacing lead add-on.
37222........................................  Iliac revasc add-on.
37223........................................  Iliac revasc w/stent add-on.
37232........................................  Tib/per revasc add-on.
37233........................................  Tibper revasc w/ather add-on.
37234........................................  Revsc opn/prq tib/pero stent.
37235........................................  Tib/per revasc stnt & ather.
37237........................................  Open/perq place stent ea add.
37239........................................  Open/perq place stent ea add.
49435........................................  Insert subq exten to ip cath.
92921........................................  Prq cardiac angio addl art.
92925........................................  Prq card angio/athrect addl.
92929........................................  Prq card stent w/angio addl.
92934........................................  Prq card stent/ath/angio.
92938........................................  Prq revasc byp graft addl.
92944........................................  Prq card revasc chronic addl.
92998........................................  Pul art balloon repr precut.
C9601........................................  Perc drug-el cor stent bran.
C9603........................................  Perc d-e cor stent ather br.
C9605........................................  Perc d-e cor revasc t cabg b.
C9608........................................  Perc d-e cor revasc chro add.
----------------------------------------------------------------------------------------------------------------


[[Page 66819]]

c. Packaging Policies for CY 2015
(1) Ancillary Services
    Under the OPPS, we currently pay separately for certain ancillary 
services. Some of these ancillary services are currently assigned to 
status indicator ``X,'' which is defined as ``ancillary services,'' but 
some other ancillary services are currently assigned to status 
indicators other than ``X.'' This is because the current use of status 
indicator ``X'' in the OPPS is incomplete and imprecise. Some 
procedures and services that are ancillary, for example, a chest X-ray, 
are assigned to an APC with services assigned status indicator ``S.'' 
As discussed in the CY 2015 OPPS/ASC proposed rule (79 FR 40959 through 
40961), we reviewed all of the covered services provided in the HOPD 
and identified those that are commonly performed when provided with 
other HOPD services, and also provided as ancillary to a primary 
service in the HOPD. These ancillary services that we identified are 
primarily minor diagnostic tests and procedures that are often 
performed with a primary service, although there are instances where 
hospitals provide such services alone and without another primary 
service during the same encounter.
    As discussed in section II.A.3.a. of this final rule with comment 
period, our intent is that the OPPS be more of a prospective payment 
system with expanded packaging of items and services that are typically 
integral, ancillary, supportive, dependent, or adjunctive to a primary 
service. Given that the longstanding OPPS policy is to package items 
and services that are integral, ancillary, supportive, dependent, or 
adjunctive to a primary service, we stated in the CY 2014 OPPS/ASC 
final rule with comment period (78 FR 74945) that we believe that 
ancillary services should be packaged when they are performed with 
another service, but should continue to be separately paid when 
performed alone. We indicated that this packaging approach is most 
consistent with a prospective payment system and the regulation at 42 
CFR 419.2(b) that packages many ancillary services into primary 
services while preserving separate payment for those instances in which 
one of these ancillary services is provided alone (not with any other 
service paid under the OPPS) to a hospital outpatient. We did not 
finalize the ancillary packaging policy for CY 2014 because we believed 
that further evaluation was necessary (78 FR 74946).
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40959 through 40961), 
we proposed to conditionally package certain ancillary services for CY 
2015. Specifically, we proposed to limit the initial set of APCs that 
contain conditionally packaged services to those ancillary service APCs 
with a proposed geometric mean cost of less than or equal to $100 
(prior to application of the conditional packaging status indicator). 
We limited this initial set of packaged ancillary service APCs to those 
with a proposed geometric mean cost of less than or equal to $100 in 
response to public comments on the CY 2014 ancillary service packaging 
proposal in which commenters expressed concern that certain low volume 
but relatively costly ancillary services would have been packaged into 
high volume but relatively inexpensive primary services (for example, a 
visit) (74 FR 74945). We noted that the proposed $100 geometric mean 
cost limit for selecting this initial group of conditionally packaged 
ancillary service APCs is less than the geometric mean cost of APC 
0634, which contains the single clinic visit HCPCS code G0463, which is 
a single payment rate for clinic visits beginning in CY 2014, and had a 
CY 2015 OPPS/ASC proposed rule geometric mean cost of approximately 
$103. This proposed $100 geometric mean cost limit is part of the 
methodology of selecting the initial set of conditionally packaged 
ancillary service APCs under this proposed packaging policy. It is not 
meant to represent a threshold above which ancillary services will not 
be packaged, but as a basis for selecting this initial set of APCs, 
which will likely be updated and expanded in future years. In future 
years, we may package ancillary services assigned to APCs with 
geometric mean costs higher than $100. In addition, geometric mean 
costs can change over time. An increase in the geometric mean cost of 
any of the proposed APCs to above $100 in future years would not change 
the conditionally packaged status of services assigned to the APCs 
selected in CY 2015 in a future year. We would continue to consider 
these APCs to be conditionally packaged. However, we would review the 
conditionally packaged status of ancillary services annually.
    We proposed to exclude certain services from this packaging policy 
even though they are assigned to APCs with a geometric mean cost of 
less than or equal to $100. Preventive services will continue to be 
paid separately, and include the following services listed in Table 11 
below that would otherwise be packaged under this policy.

    Table 11--Preventive Services Exempted From the Ancillary Service
                            Packaging Policy
------------------------------------------------------------------------
           HCPCS Code                Short descriptor           APC
------------------------------------------------------------------------
76977..........................  Us bone density measure            0340
77078..........................  Ct bone density axial..            0260
77080..........................  Dxa bone density axial.            0261
77081..........................  Dxa bone density/                  0260
                                  peripheral.
G0117..........................  Glaucoma scrn hgh risk             0260
                                  direc.
G0118..........................  Glaucoma scrn hgh risk             0230
                                  direc.
G0130..........................  Single energy x-ray                0230
                                  study.
G0389..........................  Ultrasound exam aaa                0265
                                  screen.
G0404..........................  Ekg tracing for initial            0450
                                  prev.
Q0091..........................  Obtaining screen pap               0450
                                  smear.
------------------------------------------------------------------------

    In addition, we did not propose to package certain psychiatry and 
counseling-related services as we see similarities to a visit and, at 
the time of issuance of the CY 2015 OPPS/ASC proposed rule, did not 
consider them to be ancillary services. We also did not propose to 
package certain low cost drug administration services as we are 
examining various alternative payment policies for drug administration 
services, including the associated drug administration add-on codes.
    Finally, we proposed to delete status indicator ``X'' (Ancillary 
Services) because the majority of the services assigned to status 
indicator ``X'' were proposed to be assigned to status indicator ``Q1'' 
(STV-Packaged Codes). For the services that are currently

[[Page 66820]]

assigned status indicator ``X'' that were not proposed to be 
conditionally packaged under this policy, we proposed to assign those 
services status indicator ``S'' (Procedure or Service, Not Discounted 
When Multiple), indicating separate payment and that the services are 
not subject to the multiple procedure reduction. The APCs that we 
proposed for conditional packaging as ancillary services in CY 2015 
were listed in Table 11 of the CY 2015 OPPS/ASC proposed rule (79 FR 
40960 through 40961).
    The HCPCS codes that we proposed to conditionally package as 
ancillary services for CY 2015 were displayed in Addendum B to the CY 
2015 OPPS/ASC proposed rule (which is available via the Internet on the 
CMS Web site). The supporting documents for the proposed rule are 
available at the CMS Web site at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
    We also proposed to revise the regulations at 42 CFR 419.2(b)(7) to 
replace the phrase ``Incidental services such as venipuncture'' with 
``Ancillary services'' to more accurately reflect the proposed 
packaging policy discussed above.
    Comment: A number of commenters, which included hospital 
associations, health systems, and individual hospitals, supported 
conditionally packaging ancillary services with a geometric mean cost 
of $100 prior to application of the ``Q1'' status indicator.
    Response: We appreciate the commenters' support.
    Comment: A few commenters expressed concern that conditionally 
packaging ancillary services would disproportionately affect teaching 
hospitals because of the types of patients these hospitals serve and 
the types of services that they typically provide. One commenter 
submitted results from its data analysis that estimated major teaching 
hospitals will lose approximately -0.4 percent on average as a result 
of this packaging proposal, compared to nonteaching hospitals, which 
would gain approximately 0.2 percent. The commenter's concern was that 
the negative impact is a direct result of academic medical centers' 
caring for unique and complex patient populations, for example, trauma 
patients who are seen in teaching hospital emergency departments. The 
commenter's analysis suggested that a large proportion of certain APCs 
listed on Table 11 of the proposed rule (APCs 0012, 0099, 0260, 0261, 
0340, and 0420) are packaged into emergency department visits and 
related services.
    Response: Conditional packaging of ancillary services results in 
packaging of these services when provided with other primary services 
and separate payment for the services when they are performed alone. It 
is possible that, as the commenter asserted, the case-mix at teaching 
hospitals results in greater packaging of ancillary services than at 
nonteaching hospitals. This may be due to teaching hospitals being more 
likely to provide services in addition to the ancillary service, which 
would result in packaging of the ancillary service into the other 
primary service or services provided to the patient. Even if the 
commenter's observation is reflective of a difference between teaching 
and nonteaching hospitals, we do not believe that such an observation 
is a sufficient reason to not package ancillary services in the OPPS. 
Packaging is a fundamental element of a prospective payment system. As 
stated above, in the OPPS, we packaged items and services that are 
typically integral, ancillary, supportive, dependent, or adjunctive to 
a primary service. We believe that the ancillary services proposed for 
conditional packaging are ancillary when provided with other primary 
services and, therefore, are appropriately conditionally packaged in 
the OPPS. As for the impact of the CY 2015 OPPS policies on teaching 
hospitals, we refer the commenter to the impact table (Table 49) in 
section XXI. of this final rule with comment period, which shows that 
teaching hospitals will receive an overall 2.3 percent payment update 
compared to a 2.0 percent payment update for nonteaching hospitals. 
Therefore, overall teaching hospitals stand to benefit more than 
nonteaching hospitals from the policies adopted in this final rule with 
comment period, despite any relative negative impacts from the 
ancillary packaging policy.
    Comment: Several commenters requested clarification of the 
methodology used to identify APCs with a geometric mean cost less than 
or equal to $100 prior to application of the ``Q1'' status indicator, 
given that the geometric mean cost of some of the APCs listed in Table 
11 of the proposed rule exceeds $100. Also, commenters requested that 
the $100 threshold be held constant for future years or updated 
annually based on inflation akin to the drug threshold methodology.
    Response: As we stated in the CY 2015 OPPS/ASC proposed rule (79 FR 
40960), the ancillary services APCs proposed for conditional packaging 
were those with a geometric mean cost of less than or equal to $100 
prior to application of the ``Q1'' status indicator to the APC. In 
other words, it was ancillary service APCs with a geometric mean cost 
of $100 or less with all of the services assigned to the APC that had 
either status indicator ``X'' or ``S.'' Once status indicator ``Q1'' 
was assigned, some of the geometric mean costs of some of the APCs 
increased to above $100 due to conditional packaging according to the 
``Q1'' status indicator logic. We remind the commenters that the APCs 
listed in Table 11 of the proposed rule (79 FR 40960 through 40961) 
displayed the APC geometric mean costs after application of the ``Q1'' 
status indicator, which resulted in some of the APC geometric mean 
costs that were below $100 prior to application of the ``Q1'' status 
indicator to exceed $100 after application of the ``Q1'' status 
indicator. We also clarify that the $100 geometric mean cost initial 
selection criteria for this packaging policy is not a threshold above 
which ancillary services will not be conditionally packaged. As we 
stated in the CY 2015 OPPS/ASC proposed rule, ``[the $100 limit] is not 
meant to represent a threshold above which ancillary services will not 
be packaged, but as a basis for selecting this initial set of APCs, 
which will likely be updated and expanded in future years'' (79 FR 
40960). As we stated in the proposed rule, in future years, we may 
package additional ancillary services in APCs with a geometric mean 
cost (prior to the application of the conditional packaging status 
indicator) that exceeds $100.
    Comment: One commenter expressed concern regarding the composition 
of APC 0077 (Level I Pulmonary Treatment), which was proposed to be 
conditionally packaged. The commenter believed that HCPCS code G0424 
(Pulmonary rehabilitation, including exercise (includes monitoring), 
one hour, per session, up to two sessions per day) is not clinically 
similar to HCPCS code G0237 (Therapeutic procedures to increase 
strength or endurance of respiratory muscles, face to face, one on one, 
each 15 minutes (includes monitoring) and HCPCS code G0238 (Therapeutic 
procedures to improve respiratory function, other than described by 
G0237, one on one, face to face, per 15 minutes (includes monitoring), 
which also are assigned to APC 0077. In addition, the commenter stated 
that the assignment of HCPCS code G0424 to APC 0077 would create a 2 
times rule violation. The commenter recommended that CMS reassign HCPCS 
code G0424 to APC 0078 (Level II Pulmonary Treatment).
    Response: We disagree with the commenter's assertion that the 
assignment of HCPCS code G0424 to

[[Page 66821]]

APC 0077 would create a 2 times rule violation. Section 1833(t)(9) of 
the Act requires that we annually review all the items and services 
within an APC group and revise the APC structures accordingly. Included 
in this review is the identification of any 2 times rule violations as 
provided under section 1833(t)(2) of the Act and, to the extent 
possible, rectification of these violations. We review our claims data 
and determine whether we need to make changes to the current APC 
assignment for the following year. For HCPCS codes G0238 and G0424, we 
evaluated their APC assignment for the CY 2015 update and determined 
that APC 0340 (Level II Minor Procedures) is the more appropriate 
assignment for these services based on resource similarity to the other 
services assigned to APC 0340. In addition, with the reassignment of 
HCPCS codes G0424 and G0238 to APC 0340, only four HCPCS codes (31270, 
94668, 94669, and G0237) remained in APC 0077, one (HCPCS code 94669) 
of which did not have any claims volume in CY 2013. The commenter 
suggested that we reassign HCPCS code G0424 to APC 0078. APC 0078 has a 
mean cost of approximately $90, which is under the $100 initial 
selection criteria for conditionally packaged ancillary services. With 
the reduced size of APC 0077 and the mean cost of APC 0078 being less 
than $100, we are reassigning the procedure codes remaining in APC 0078 
to APC 0077 and revising the title of APC 0077 to read ``Pulmonary 
Treatment.'' The new combined APC 0077 is assigned status indicator 
``Q1'' under the conditional packaging policy. We note that the mean 
cost of this revised APC 0077 (after application of the ``Q1'' status 
indicator) is approximately $154.
    Comment: One commenter requested that CMS continue separate 
payment, by assigning status indicator ``S,'' for CPT codes 92557 
(comprehensive hearing test), 92601 through 92604 (cochlear implant 
programming), and 92640 (auditory brainstem implant programming) which 
are assigned to APC 0364, an APC that is proposed for conditional 
packaging. The commenter stated that these CPT codes are primary 
audiology services and are not dependent or incident to other services 
in the hospital.
    Response: We do not believe that it is necessary to change the 
status indicator to ``S'' as we disagree that these CPT codes represent 
primary audiology services. Conditional packaging provides separate 
payment when the otherwise packaged services are provided alone without 
other primary services. Therefore, these services will continue to be 
separately paid when performed without other primary services.
    Comment: Some commenters expressed concern that packaging payment 
for ancillary services could have a negative impact on patient access 
because hospitals will not have an incentive to perform ancillary 
services at the time of other therapeutic or evaluation/management 
services, even when providing such services at the same encounter would 
be efficient and offer patients the most appropriate and complete care. 
Commenters cautioned that expanded packaging policies will impede the 
accuracy and stability of future ratesetting under the OPPS.
    Response: We appreciate stakeholders' concerns and predictions 
about the effect that this conditional packaging policy may have on 
patient access to ancillary services. We will continue to monitor 
service utilization trends in the HOPD. We disagree with commenters 
that packaging services impedes the accuracy and stability of future 
OPPS ratesetting. As a reminder, hospitals include HCPCS codes and 
charges for packaged services on their claims, and the costs associated 
with those packaged services are included in the costs of the 
separately payable procedure on the claim. We also continue to 
emphasize that hospitals should report all HCPCS codes for all 
services, including those for packaged services, according to correct 
coding principles.
    Comment: One commenter disagreed with the proposed assignment of 
status indicator ``Q1'' to CPT code 95012 (Expired nitric oxide gas 
determination). The commenter requested that CMS assign status 
indicator ``S'' to CPT code 95012 because the code describes an 
independent, primary procedure that is not ancillary to any other 
procedure. The commenter also requested that CMS reassign CPT code 
95012 to APC 0078 (Level II Pulmonary Treatment) because of its 
clinical homogeneity to other services assigned to that APC.
    Response: We disagree with the commenter. We believe the procedure 
or service described by CPT code 95012 to be an ancillary diagnostic 
test and, therefore, appropriate for conditional packaging under the 
ancillary services policy. We believe that existing assignment to APC 
0340 (Level II Minor Procedures) is appropriate in that CPT code 95012 
is a minor test and that its mean cost of approximately $41 is similar 
to the mean cost of APC 0340 of approximately $53. Therefore, we are 
finalizing our proposal to maintain assignment of CPT code 95012 to APC 
0340 with a ``Q1'' status indicator for CY 2015.
    Comment: A few commenters requested that CMS make an exception to 
the ancillary packaging policy for pathology services, specifically 
those services assigned to APC 0342 (Level I Pathology) and APC 0433 
(Level II Pathology). These commenters were concerned about inadequate 
payment for pathology services.
    Response: We disagree with commenters' concern regarding inadequate 
payment for pathology services and do not believe that an exception to 
this packaging policy for the pathology services assigned to APCs 0342 
and 0433 is appropriate at this time. We remind the commenters that 
this policy only affects the facility payment for the technical aspect 
of the services and does not affect the physician fee schedule payment 
to the pathologist for the physician work in performing pathology 
services. We believe that pathology services are some of the best 
examples of ancillary services as they typically follow a surgical or 
other specimen-generating procedure for the purposes of diagnosis. We 
also remind the commenters that in the event a patient receives a 
pathology test in isolation from other primary HOPD services, the test 
would be separately paid because the ancillary services packaging 
policy is a conditional packaging policy. Therefore, we are not 
creating an exception to this ancillary packaging policy for pathology 
services.
    After consideration of the public comments we received, we are 
finalizing our ancillary services packaging policy as proposed, 
including deletion of status indicator ``X.'' We also are adopting as 
final our proposed revision of the regulations at 42 CFR 419.2(b)(7) to 
replace the phrase ``Incidental services such as venipuncture'' with 
``Ancillary services'' to more accurately reflect the final packaging 
policy for CY 2015.
    The APCs that we are conditionally packaging as ancillary services 
in CY 2015 are listed in Table 12 below.

[[Page 66822]]



                    Table 12--APCs for Conditionally Packaged Ancillary Services for CY 2015
----------------------------------------------------------------------------------------------------------------
                                      CY 2015 OPPS Geometric
                                          mean cost (with       Final CY 2015 OPPS
                APC                  application of Q1 status           SI                   Group title
                                            indicator)
----------------------------------------------------------------------------------------------------------------
0012...............................                  $102.18   Q1                    Level I Debridement &
                                                                                      Destruction.
0060...............................                    20.57   Q1                    Manipulation Therapy.
0077...............................                   170.77   Q1                    Level I Pulmonary
                                                                                      Treatment.
0099...............................                    81.40   Q1                    Electrocardiograms/
                                                                                      Cardiography.
0215...............................                    98.52   Q1                    Level I Nerve and Muscle
                                                                                      Services.
0230...............................                    54.01   Q1                    Level I Eye Tests &
                                                                                      Treatments.
0260...............................                    61.59   Q1                    Level I Plain Film
                                                                                      Including Bone Density
                                                                                      Measurement.
0261...............................                    98.56   Q1                    Level II Plain Film
                                                                                      Including Bone Density
                                                                                      Measurement.
0265...............................                    95.12   Q1                    Level I Diagnostic and
                                                                                      Screening Ultrasound.
0340...............................                    54.33   Q1                    Level II Minor Procedures.
0342...............................                    56.31   Q1                    Level I Pathology.
0345...............................                    78.91   Q1                    Level I Transfusion
                                                                                      Laboratory Procedures.
0364...............................                    44.94   Q1                    Level I Audiometry.
0365...............................                   122.36   Q1                    Level II Audiometry.
0367...............................                   167.31   Q1                    Level I Pulmonary Tests.
0420...............................                   136.66   Q1                    Level III Minor Procedures.
0433...............................                   190.55   Q1                    Level II Pathology.
0450...............................                    30.33   Q1                    Level I Minor Procedures.
0624...............................                    81.76   Q1                    Phlebotomy and Minor
                                                                                      Vascular Access Device
                                                                                      Procedures.
0690...............................                    36.47   Q1                    Level I Electronic Analysis
                                                                                      of Devices.
0698...............................                   104.61   Q1                    Level II Eye Tests &
                                                                                      Treatments.
----------------------------------------------------------------------------------------------------------------

    The HCPCS codes that we are conditionally package as ancillary 
services for CY 2015 are displayed in Addendum B to this CY 2015 OPPS/
ASC final rule with comment period (which is available via the Internet 
on the CMS Web site). The supporting documents for this final rule with 
comment period are available at the CMS Web site at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
(2) Prosthetic Supplies
    We have a longstanding policy of providing payment under the OPPS 
for implantable DME, implantable prosthetics, and medical and surgical 
supplies, as provided at sections 1833(t)(1)(B)(i) and (t)(1)(B)(iii) 
of the Act and 42 CFR 419.2(b)(4), (b)(10), and (b)(11). In the CY 2014 
OPPS/ASC final rule with comment period, we clarified that medical and 
surgical supplies under Sec.  419.2(b)(4) include (but are not limited 
to) all supplies on the DMEPOS Fee Schedule except prosthetic supplies 
(78 FR 74947). Under 42 CFR 419.22(j), prosthetic supplies are 
currently excluded from payment under the OPPS and are paid under the 
DMEPOS Fee Schedule, even when provided in the HOPD. However, as we 
discussed in the CY 2015 OPPS/ASC proposed rule (79 FR 40961), under 
section 1833(t)(1)(B)(i) of the Act, the Secretary has the authority to 
designate prosthetic supplies provided in the hospital outpatient 
setting as covered OPD services payable under the OPPS.
    As we stated in the CY 2015 OPPS/ASC proposed rule (79 FR 40961) 
and as mentioned above, implantable prosthetic devices are packaged in 
the OPPS under 42 CFR 419.2(b)(11). It is common for implantable 
prosthetic devices to be provided as a part of a device system. Such 
device systems include the implantable part or parts of the overall 
device system and also certain nonimplantable prosthetic supplies that 
are integral to the overall function of the medical device, part of 
which is implanted and part of which is external to the patient. These 
prosthetic supplies are integral to the implantable prosthetic because 
typically shortly after the surgical procedure to implant the 
implantable prosthetic device in the hospital, the surgeon and/or his 
or her colleagues will have to attach, fit, and program certain 
prosthetic supplies that are not surgically implanted into the patient 
but are a part of a system and that are essential to the overall 
function of an implanted device. Because these supplies are integral to 
the overall function of the implanted prosthetic, and because, as 
mentioned above, we package in the OPPS items and services that are 
typically integral, ancillary, supportive, dependent, or adjunctive to 
a primary service, we believe that it is most consistent with a 
prospective payment system to package the payment of prosthetic 
supplies (along with the implantable prosthetic device) into the 
surgical procedure that implants the prosthetic device, as all of the 
components are typically necessary for the performance of the system 
and the hospital typically purchases the system as a single unit. 
Patients requiring replacement supplies at a time later than the 
initial surgical procedure and outside of the hospital would obtain 
them as they typically do from a DMEPOS supplier with payment for such 
supplies made under the DMEPOS Fee Schedule.
    In addition to prosthetic supplies that are components of device 
systems, part of which are implanted, many other prosthetic supplies on 
the DMEPOS Fee Schedule are typical medical and surgical supplies and 
of the type that are packaged in the OPPS under Sec.  419.2(b)(4). 
Consistent with our change from status indicator ``A'' to ``N'' for all 
nonprosthetic DMEPOS supplies in the CY 2014 OPPS final rule with 
comment period (78 FR 74947), in the CY 2015 OPPS/ASC proposed rule (79 
FR 40961), we proposed to package and change the status indicator from 
``A'' to ``N'' for all DMEPOS prosthetic supplies. With this proposed 
change, all medical and surgical supplies would be packaged in the 
OPPS.
    Therefore, we proposed to delete ``prosthetic supplies'' from the 
regulations at Sec.  419.22(j) because we proposed that prosthetic 
supplies be packaged covered OPD services in the OPPS for CY 2015. 
Prosthetic supplies provided in the HOPD would be included in ``medical 
and surgical supplies'' (as are all other supplies currently provided 
in the HOPD) under Sec.  419.2(b)(4). The HCPCS codes for prosthetic 
supplies that we proposed to

[[Page 66823]]

package for CY 2015 were displayed in Addendum B to the CY 2015 OPPS/
ASC proposed rule (which is available via the Internet on the CMS Web 
site). The supporting documents for the proposed rule, including but 
not limited to Addendum B, are available at the CMS Web site at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
    Comment: Many commenters agreed with CMS' proposal to conditionally 
package prosthetic supplies furnished in the HOPD.
    Response: We appreciate the commenters' support.
    Comment: A few commenters requested to be informed of the fund 
transfer amount from the DMEPOS Fee Schedule to the OPPS as a result of 
this proposed policy.
    Response: Our CY 2013 claims analysis shows that packaging payment 
for prosthetic supplies under the OPPS would redistribute approximately 
$1 million.
    Comment: Some commenters recommended that CMS implement an 
exception to the ``unbundling'' rule that currently exists for the 
inpatient prospective payment systems (IPPS). (We refer readers to the 
Medicare Claims Processing Manual, Pub. 100-04, Chapter 20--Durable 
Medical Equipment, Prosthetics, Orthotic Devices, and Supplies, Section 
110--General Billing Requirements--for DME, Prosthetics, Orthotic 
Devices, and Supplies.) The commenters believed that such an exception 
would allow DME suppliers to bill Medicare directly for prosthetic 
supplies furnished to patients during an outpatient visit when the 
supplies are intended primarily for home use.
    Response: We do not believe that an additional exception to the 
``unbundling'' rule is necessary for the provision of prosthetic 
supplies in the HOPD. We remind commenters that DME, prosthetics, and 
orthotics can be billed by hospitals for outpatients and are paid 
according to the DMEPOS Fee Schedule. Only prosthetic supplies are 
packaged in the OPPS. Unlike inpatient stays, hospital outpatient stays 
are typically brief and the need for replacement supplies during a 
hospital outpatient stay should be minimal. If a hospital wants to 
provide a patient with some basic supplies for immediate home use (for 
example, tape, a syringe, or gauze), such supplies are packaged into 
the payment for whatever service the patient received at the hospital. 
DME suppliers can furnish additional or replacement prosthetic supplies 
to the patient's home and receive payment under the DMEPOS Fee 
Schedule.
    After consideration of the public comments we received, we are 
adopting as final our proposed deletion of ``prosthetic supplies'' from 
the regulations at Sec.  419.22(j) because prosthetic supplies are 
packaged covered OPD services in the OPPS for CY 2015. Prosthetic 
supplies provided in the HOPD will be included in the packaged category 
of ``medical and surgical supplies'' (as are all other supplies 
currently provided in the HOPD) under Sec.  419.2(b)(4). The HCPCS 
codes for prosthetic supplies that we are packaging for CY 2015 are 
displayed in Addendum B to this CY 2015 OPPS/ASC final rule with 
comment period (which is available via Internet on the CMS Web site). 
The supporting documents for this final rule with comment period, 
including but not limited to Addendum B, are available at the CMS Web 
site at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
4. Calculation of OPPS Scaled Payment Weights
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40961 through 40962), 
for CY 2015, we proposed to calculate the relative payment weights for 
each APC shown in Addenda A and B to the proposed rule (which are 
available via the Internet on the CMS Web site) using the APC costs 
discussed in sections II.A.1. and II.A.2. of the proposed rule. 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 it was the 
mid-level clinic visit APC (that is, Level 3 of five levels). For the 
CY 2013 OPPS (77 FR 68283), we established a policy of using geometric 
mean-based APC costs rather than median-based APC costs to calculate 
relative payment weights. For CY 2015, we proposed to continue this 
policy.
    For the CY 2014 OPPS, we standardized all of the relative payment 
weights to clinic visit APC 0634 as discussed in section VII. of the CY 
2015 OPPS/ASC proposed rule (79 FR 41008). For CY 2015, we proposed to 
continue this policy to maintain consistency in calculating unscaled 
weights that represent the cost of some of the most frequently provided 
services. We proposed to assign APC 0634 a relative payment weight of 
1.00 and to divide the geometric mean cost of each APC by the proposed 
geometric mean cost for APC 0634 to derive the proposed unscaled 
relative payment weight for each APC. The choice of the APC on which to 
base the proposed relative payment weights does not affect payments 
made under the OPPS because we scale the weights for budget neutrality.
    Section 1833(t)(9)(B) of the Act requires that APC reclassification 
and recalibration changes, wage index changes, and other adjustments be 
made in a budget neutral manner. Budget neutrality ensures that the 
estimated aggregate weight under the OPPS for CY 2015 is neither 
greater than nor less than the estimated aggregate weight that would 
have been made without the changes. To comply with this requirement 
concerning the APC changes, we proposed to compare the estimated 
aggregate weight using the CY 2014 scaled relative payment weights to 
the estimated aggregate weight using the proposed CY 2015 unscaled 
relative payment weights.
    We did not receive any public comments on our proposed policy for 
the CY 2015 unscaled relative payment weights. Therefore, we are 
finalizing our proposed policy to maintain consistency in calculating 
unscaled weights that represent the cost of some of the most frequently 
provided services by assigning APC 0634 a relative payment weight of 
1.00 and dividing the geometric mean cost of each APC by the geometric 
mean cost for APC 0634 to derive the unscaled relative payment weight 
for each APC for CY 2015.
    For CY 2014, we multiplied the CY 2014 scaled APC relative payment 
weight applicable to a service paid under the OPPS by the volume of 
that service from CY 2013 claims to calculate the total relative 
payment weight for each service. We then added together the total 
relative payment weight for each of these services in order to 
calculate an estimated aggregate weight for the year. For CY 2015, we 
proposed to apply the same process using the CY 2015 unscaled relative 
payment weights rather than scaled relative payment weights. We 
proposed to calculate the weight scaler by dividing the CY 2014 
estimated aggregate weight by the CY 2015 estimated aggregate weight 
(79 FR

[[Page 66824]]

40962). 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. We note that the CY 
2014 OPPS scaled relative weights incorporate the estimated payment 
weight from packaged laboratory tests previously paid at CLFS rates.
    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/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. Click on the CY 2015 OPPS 
final rule link, then open the claims accounting document link at the 
bottom of the page.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40962), we proposed to 
include estimated payments to CMHCs in our comparison of the estimated 
unscaled relative payment weights in CY 2015 to the estimated total 
relative payment weights in CY 2014 using CY 2013 claims data, holding 
all other components of the payment system constant to isolate changes 
in total weight. Based on this comparison, we proposed to adjust the 
proposed CY 2015 unscaled relative payment weights for purposes of 
budget neutrality. The proposed CY 2015 unscaled relative payment 
weights were adjusted by multiplying them by a weight scaler of 1.3220 
to ensure that the proposed CY 2015 relative payment weights are budget 
neutral.
    Section 1833(t)(14) of the Act provides the payment rates for 
certain SCODs. Section 1833(t)(14)(H) of the Act 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 SCODs (as discussed in section V.B.3. of this final rule with 
comment period) is included in the budget neutrality calculations for 
the CY 2015 OPPS.
    Comment: One commenter expressed concern that CMS did not provide 
detailed data on the weight scaling process. The commenter noted that 
it could not find the claims accounting document to which the proposed 
rule referenced.
    Response: The direct link to the proposed rule claims accounting 
document is located on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Downloads/CMS-1613-P-claims-accounting-narrative.pdf.
    After consideration of the public comments we received, we are 
finalizing our proposed methodology for calculating the OPPS scaled 
relative payment weights without modification, including updating of 
the budget neutrality scaler for this final rule with comment period. 
Under this methodology, the final unscaled relative payment weights 
were adjusted by a weight scaler of 1.2977 for this final rule with 
comment period. The CY 2015 unscaled relative payment weights listed in 
Addenda A and B to this final rule with comment period (which are 
available via the Internet on the CMS Web site) incorporate the 
recalibration adjustments discussed in sections II.A.1. and II.A.2. of 
this final rule with comment period.

B. Conversion Factor Update

    Section 1833(t)(3)(C)(ii) of the Act requires the Secretary to 
update the conversion factor used to determine the payment rates under 
the OPPS on an annual basis by applying the OPD fee schedule increase 
factor. For purposes of section 1833(t)(3)(C)(iv) of the Act, subject 
to sections 1833(t)(17) and 1833(t)(3)(F) of the Act, the OPD fee 
schedule increase factor is equal to the hospital inpatient market 
basket percentage increase applicable to hospital discharges under 
section 1886(b)(3)(B)(iii) of the Act. In the FY 2015 IPPS/LTCH PPS 
final rule (79 FR 49994), consistent with current law, based on IHS 
Global Insight, Inc.'s second quarter 2014 forecast of the FY 2015 
market basket increase, the FY 2015 IPPS market basket update is 2.9 
percent. However, sections 1833(t)(3)(F) and 1833(t)(3)(G)(iv) of the 
Act, as added by section 3401(i) of the Patient Protection and 
Affordable Care Act of 2010 (Pub. L. 111-148) and as amended by section 
10319(g) of that law and further amended by section 1105(e) of the 
Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152), 
provide adjustments to the OPD fee schedule increase factor for CY 
2015.
    Specifically, section 1833(t)(3)(F)(i) of the Act requires that, 
for 2012 and subsequent years, the OPD fee schedule increase factor 
under subparagraph (C)(iv) be reduced by the productivity adjustment 
described in section 1886(b)(3)(B)(xi)(II) of the Act. Section 
1886(b)(3)(B)(xi)(II) of the Act defines the productivity adjustment as 
equal to the 10-year moving average of changes in annual economy-wide, 
private nonfarm business multifactor productivity (MFP) (as projected 
by the Secretary for the 10-year period ending with the applicable 
fiscal year, year, cost reporting period, or other annual period) (the 
``MFP adjustment''). In the FY 2012 IPPS/LTCH PPS final rule (76 FR 
51689 through 51692), we finalized our methodology for calculating and 
applying the MFP adjustment. In the FY 2015 IPPS/LTCH PPS final rule 
(79 FR 49994), we discussed the calculation of the MFP adjustment for 
FY 2015, which is 0.5 percentage point.
    As we proposed, based on more recent data that became subsequently 
available after the publication of the CY 2015 OPPS/ASC proposed rule 
(for example, a more recent estimate of the market basket increase and 
the MFP adjustment), we are using such updated data, if appropriate, to 
determine the CY 2015 market basket update and the MFP adjustment, 
components in calculating the OPD fee schedule increase factor under 
sections 1833(t)(3)(C)(iv) and 1833(t)(3)(F) of the Act, in this CY 
2015 OPPS/ASC final rule with comment period.
    In addition, section 1833(t)(3)(F)(ii) of the Act requires that, 
for each of years 2010 through 2019, the OPD fee schedule increase 
factor under section 1833(t)(3)(C)(iv) of the Act be reduced by the 
adjustment described in section 1833(t)(3)(G) of the Act. For CY 2015, 
section 1833(t)(3)(G)(iv) of the Act provides a 0.2 percentage point 
reduction to the OPD fee schedule increase factor under section 
1833(t)(3)(C)(iv) of the Act. Therefore, in accordance with sections 
1833(t)(3)(F)(ii) and 1833(t)(3)(G)(iv) of the Act, as we proposed, we 
are applying a 0.2 percentage point reduction to the OPD fee schedule 
increase factor for CY 2015.
    We note that section 1833(t)(3)(F) of the Act provides that 
application of this subparagraph may result in the OPD fee schedule 
increase factor under section 1833(t)(3)(C)(iv) of the Act being less 
than 0.0 percent for a year, and may result in OPPS payment rates being 
less than rates for the preceding year. As described in further detail 
below, we are finalizing an OPD fee schedule increase factor of 2.2 
percent for the CY 2015 OPPS (which is 2.9 percent, the estimate of the 
hospital inpatient market basket percentage increase, less the 0.5 
percentage point MFP adjustment, and less the 0.2 percentage point 
additional adjustment).
    Hospitals that fail to meet the Hospital OQR Program reporting 
requirements are subject to an additional reduction of 2.0 percentage 
points from the OPD fee schedule increase factor adjustment to the 
conversion factor that would be used to calculate the OPPS payment 
rates for

[[Page 66825]]

their services, as required by section 1833(t)(17) of the Act. For 
further discussion of the Hospital OQR Program, we refer readers to 
section XIII. of this final rule with comment period.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40963), we proposed to 
amend 42 CFR 419.32(b)(1)(iv)(B) by adding a new paragraph (6) to 
reflect the requirement in section 1833(t)(3)(F)(i) of the Act that, 
for CY 2015, we reduce the OPD fee schedule increase factor by the MFP 
adjustment as determined by CMS, and to reflect the requirement in 
section 1833(t)(3)(G)(iv) of the Act, as required by section 
1833(t)(3)(F)(ii) of the Act, that we reduce the OPD fee schedule 
increase factor by an additional 0.2 percentage point for CY 2015.
    We did not receive any public comments on our proposed adjustments 
to the OPD fee schedule increase factor or the proposed amendment to 
Sec.  419.32(b)(1)(iv)(B) by adding a new paragraph (6) to reflect the 
requirement in section 1833(t)(3)(F)(i) of the Act. Therefore, for the 
reasons discussed above, we are adjusting the OPD fee schedule increase 
factor for CY 2015 as proposed. We also are finalizing the amendment to 
Sec.  419.32(b)(1)(iv)(B) as proposed.
    To set the OPPS conversion factor for CY 2015, we proposed to 
increase the CY 2014 conversion factor of $72.672 by 2.1 percent. In 
accordance with section 1833(t)(9)(B) of the Act, we further adjusted 
the conversion factor for CY 2015 to ensure that any revisions made to 
the wage index and rural adjustment were made on a budget neutral 
basis. We proposed a calculated overall budget neutrality factor of 
0.9998 for wage index changes by comparing total estimated payments 
from our simulation model using the FY 2015 IPPS wage indexes to those 
payments using the FY 2014 IPPS wage indexes, as adopted on a calendar 
year basis for the OPPS.
    For CY 2015, we proposed to maintain current rural adjustment 
policy, as discussed in section II.E. of this final rule with comment 
period. Therefore, the budget neutrality factor for the rural 
adjustment would be 1.0000.
    For CY 2015, we proposed to continue previously established 
policies for implementing the cancer hospital payment adjustment 
described in section 1833(t)(18) of the Act, as discussed in section 
II.F. of this final rule with comment period. We calculated a CY 2015 
budget neutrality adjustment factor for the cancer hospital payment 
adjustment by comparing estimated total CY 2015 payments under section 
1833(t) of the Act, including the CY 2015 cancer hospital payment 
adjustment, to estimated CY 2015 total payments using the CY 2014 final 
cancer hospital payment adjustment as required under section 
1833(t)(18)(B) of the Act. The CY 2015 estimated payments applying the 
CY 2015 cancer hospital payment adjustment are identical to estimated 
payments applying the CY 2014 final cancer hospital payment adjustment. 
Therefore, we applied a budget neutrality adjustment factor of 1.0000 
to the conversion factor for the cancer hospital payment adjustment.
    For the proposed rule, we estimated that pass-through spending for 
drugs, biologicals, and devices for CY 2015 would equal approximately 
$15.5 million, which represented 0.03 percent of total projected CY 
2015 OPPS spending. Therefore, the proposed conversion factor would be 
adjusted by the difference between the 0.02 percent estimate of pass-
through spending for CY 2014 and the 0.03 percent estimate of pass-
through spending for CY 2015, resulting in a proposed adjustment for CY 
2015 of 0.01 percent. Finally, estimated payments for outliers would 
remain at 1.0 percent of total OPPS payments for CY 2015.
    For the proposed rule, we proposed that hospitals that fail to meet 
the reporting requirements of the Hospital OQR Program would continue 
to be subject to a further reduction of 2.0 percentage points to the 
OPD fee schedule increase factor. For hospitals that fail to meet the 
requirements of the Hospital OQR Program, we would make all other 
adjustments discussed above, but use a reduced OPD fee schedule update 
factor of 0.2 percent (that is, the OPD fee schedule increase factor of 
2.1 percent further reduced by 2.0 percentage points). This resulted in 
a proposed reduced conversion factor for CY 2015 of $72.692 for 
hospitals that fail to meet the Hospital OQR requirements (a difference 
of -$1.484 in the conversion factor relative to hospitals that met the 
requirements).
    Comment: MedPAC noted that CMS is required by law to implement the 
2015 update to the conversion factor as stated in the Affordable Care 
Act. In its March 2014 Report to Congress, MedPAC recommended an update 
of 3.25 percent and Congressional action to direct the Secretary to 
reduce or eliminate differences in payment rates between HOPDs and 
physician offices, which is different from the Affordable Care Act 
requirement.
    Response: As discussed above, section 1833(t)(3)(C)(ii) of the Act 
requires the Secretary to update the conversion factor used to 
determine the payment rates under the OPPS on an annual basis by 
applying the OPD fee schedule increase factor. Section 
1833(t)(3)(C)(iv) provides that the OPD fee schedule increase factor, 
subject to sections 1833(t)(3)(F) and 1833(t)(3)(G)(iv) of the Act, is 
equal to the hospital inpatient market basket percentage increase 
applicable to hospital discharges under section 1886(b)(3)(B)(iii) of 
the Act.
    After consideration of the public comment we received, we are 
finalizing the calculation of the CY 2015 OPPS conversion factor as 
proposed. We are finalizing the proposed amendment to Sec.  
419.32(b)(1)(iv)(B) by adding a new paragraph (6) to reflect the 
reductions to the OPD fee schedule increase factor that are required 
for CY 2015 to satisfy the statutory requirements of sections 
1833(t)(3)(F) and (t)(3)(G)(iv) of the Act. We are using a reduced 
conversion factor of $72.661 in the calculation of payments for 
hospitals that fail to meet the Hospital OQR Program requirements (a 
difference of -$1.483 in the conversion factor relative to hospitals 
that met the requirements).
    For CY 2015, we are finalizing our proposal to continue previously 
established policies for implementing the cancer hospital payment 
adjustment described in section 1833(t)(18) of the Act, as discussed in 
section II.F. of this final rule with comment period.
    For this final rule with comment period, we estimate that pass-
through spending for drugs, biologicals, and devices for CY 2015 will 
equal approximately $82.8 million, which represents 0.15 percent of 
total projected CY 2015 OPPS spending. Therefore, the conversion factor 
is also adjusted by the difference between the 0.02 percent estimate of 
pass-through spending for CY 2014 and the 0.15 percent estimate of 
pass-through spending for CY 2015, resulting in an adjustment for CY 
2015 of -0.13 percent. Finally, estimated payments for outliers remain 
at 1.0 percent of total OPPS payments for CY 2015.
    As a result of these final policies, the OPD fee schedule increase 
factor for the CY 2015 OPPS is 2.2 percent (which is 2.9 percent, the 
estimate of the hospital inpatient market basket percentage increase, 
less the 0.5 percentage point MFP adjustment, and less the 0.2 
percentage point additional adjustment). For CY 2015, we are using a 
conversion factor of $74.144 in the calculation of the national 
unadjusted payment rates for those items and services for which payment 
rates are calculated using geometric mean costs, that is the OPD fee 
schedule increase factor of 2.2 percent for CY 2015, the required wage 
index budget neutrality adjustment of

[[Page 66826]]

approximately 0.9996, the cancer hospital payment adjustment of 1.0000, 
and the adjustment of -0.13 percent of projected OPPS spending for the 
difference in the pass-through spending result in a conversion factor 
for CY 2015 of $74.144.

C. Wage Index Changes

    Section 1833(t)(2)(D) of the Act requires the Secretary to 
``determine a wage adjustment factor to adjust the portion of payment 
and coinsurance attributable to labor-related costs for relative 
differences in labor and labor-related costs across geographic regions 
in a budget neutral manner'' (codified at 42 CFR 419.43(a)). This 
portion of the OPPS payment rate is called the OPPS labor-related 
share. Budget neutrality is discussed in section II.B. of this final 
rule with comment period.
    The OPPS labor-related share is 60 percent of the national OPPS 
payment. This labor-related share is based on a regression analysis 
that determined that, for all hospitals, approximately 60 percent of 
the costs of services paid under the OPPS were attributable to wage 
costs. We confirmed that this labor-related share for outpatient 
services is appropriate during our regression analysis for the payment 
adjustment for rural hospitals in the CY 2006 OPPS final rule with 
comment period (70 FR 68553). Therefore, in the CY 2015 OPPS/ASC 
proposed rule (79 FR 40964), we proposed to continue this policy for 
the CY 2015 OPPS. We refer readers to section II.H. of this final rule 
with comment period for a description and example of how the wage index 
for a particular hospital is used to determine payment for the 
hospital.
    As discussed in section II.A.2.c. of this final rule with comment 
period, for estimating APC costs, we standardize 60 percent of 
estimated claims costs for geographic area wage variation using the 
same FY 2015 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 copayment amount.
    Under 42 CFR 419.41(c)(1) and 419.43(c) (published in the original 
OPPS April 7, 2000 final rule with comment period (65 FR 18495 and 
18545)), the OPPS adopted the final fiscal year IPPS wage index as the 
calendar year wage index for adjusting the OPPS standard payment 
amounts for labor market differences. Therefore, the wage index that 
applies to a particular acute care short-stay hospital under the IPPS 
also applies to that hospital under the OPPS. As initially explained in 
the September 8, 1998 OPPS proposed rule (63 FR 47576), we believe that 
using the IPPS wage index as the source of an adjustment factor for the 
OPPS is reasonable and logical, given the inseparable, subordinate 
status of the HOPD within the hospital overall. In accordance with 
section 1886(d)(3)(E) of the Act, the IPPS wage index is updated 
annually.
    The Affordable Care Act contained several provisions affecting the 
wage index. These provisions were discussed in the CY 2012 OPPS/ASC 
final rule with comment period (76 FR 74191). As discussed in that 
final rule with comment period, section 10324 of the Affordable Care 
Act added section 1886(d)(3)(E)(iii)(II) to the Act, which defines a 
``frontier State,'' and amended section 1833(t) of the Act to add new 
paragraph (19), which requires a ``frontier State'' wage index floor of 
1.00 in certain cases, and states that the frontier State floor shall 
not be applied in a budget neutral manner. We codified these 
requirements in Sec.  419.43(c)(2) and (c)(3) of our regulations. In 
the CY 2015 OPPS/ASC proposed rule (79 FR 40964), we proposed to 
implement this provision in the same manner as we have since CY 2011. 
That is, frontier State hospitals would receive a wage index of 1.00 if 
the otherwise applicable wage index (including reclassification, rural 
and imputed floor, and rural floor budget neutrality) is less than 
1.00. Similar to our current policy for HOPDs that are affiliated with 
multicampus hospital systems, we proposed that the HOPD would receive a 
wage index based on the geographic location of the specific inpatient 
hospital with which it is associated. Therefore, if the associated 
hospital is located in a frontier State, the wage index adjustment 
applicable for the hospital also will apply for the affiliated HOPD. We 
refer readers to the following sections in the FY 2011 through FY 2015 
IPPS/LTCH PPS final rules for discussions regarding this provision, 
including our methodology for identifying which areas meet the 
definition of ``frontier States'' as provided for in section 
1886(d)(3)(E)(iii)(II) of the Act: For FY 2011, 75 FR 50160 through 
50161; for FY 2012, 76 FR 51793, 51795, and 51825; for FY 2013, 77 FR 
53369 through 53370; for FY 2014, 78 FR 50590 through 50591; and for FY 
2015, 79 FR 49971.
    In addition to the changes required by the Affordable Care Act, we 
note that the FY 2015 IPPS wage indexes continue to reflect a number of 
adjustments implemented over the past few years, including, but not 
limited to, reclassification of hospitals to different geographic 
areas, the rural and imputed floor provisions, an adjustment for 
occupational mix, and an adjustment to the wage index based on 
commuting patterns of employees (the out-migration adjustment). We 
refer readers to the FY 2015 IPPS/LTCH PPS proposed rule and final rule 
(79 FR 28054 through 28084 and 79 FR 49950 through 49991, respectively) 
for a detailed discussion of all changes to the FY 2015 IPPS wage 
indexes. 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.
    As discussed in the FY 2015 IPPS/LTCH PPS proposed rule and final 
rule (79 FR 28054 through 28055 and 79 FR 49951 through 49957, 
respectively), the Office of Management and Budget (OMB) issued 
revisions to the current labor market area delineations on February 28, 
2013, that included a number of significant changes such as new Core 
Based Statistical Areas (CBSAs), urban counties that become rural, 
rural counties that become urban, and existing CBSAs that are split 
apart (OMB Bulletin 13-01). This bulletin can be found at: http://www.whitehouse.gov/sites/default/files/omb/bulletins/2013/b13-01.pdf. 
As we stated in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50586), in 
order to allow for sufficient time to assess the new revisions and 
their ramifications, we intended to propose changes to the IPPS wage 
index based on the newest CBSA delineations in the FY 2015 IPPS/LTCH 
PPS proposed rule. Similarly, in the CY 2014 OPPS/ASC final rule with 
comment period (78 FR 74951), we stated that we intended to propose 
changes in the OPPS, which uses the IPPS wage index, based on the new 
OMB delineations in the CY 2015 OPPS/ASC proposed rule, consistent with 
any proposals in the FY 2015 IPPS/LTCH PPS proposed rule. We refer 
readers to proposed changes based on the new OMB delineations in the FY 
2015 IPPS/LTCH proposed rule at 79 FR 28054 through 28084 and the final 
changes based on the new OMB delineations in the FY 2015 IPPS/LTCH PPS 
final rule at 79 FR 49950 through 49966.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40964), we proposed to 
use the FY 2015 hospital IPPS wage index for urban and rural areas as 
the wage index for the OPPS hospital to determine the wage adjustments 
for the OPPS payment rate and the copayment standardized amount for CY 
2015. (We

[[Page 66827]]

refer readers to the FY 2015 IPPS/LTCH PPS final rule (79 FR 49850) and 
the final FY 2015 hospital wage index files posted on the CMS Web 
site.) We note that the final FY 2015 IPPS wage indexes reflect a 
number of changes as a result of the new OMB delineations as well as a 
1-year extension of the imputed rural floor. We proposed that the CY 
2015 OPPS wage index (for hospitals paid under the IPPS and OPPS) would 
be the final FY 2015 IPPS wage index. Thus, any adjustments, including 
the adjustments related to the new OMB delineations, that were 
finalized for the IPPS wage index would be reflected in the OPPS wage 
index. 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 did not 
propose to change our existing regulations, which require that we use 
the FY 2015 IPPS wage indexes for calculating OPPS payments in CY 2015.
    Hospitals that are paid under the OPPS but not under the IPPS do 
not have a hospital wage index under the IPPS. Therefore, for non-IPPS 
hospitals paid under the OPPS, we assign the wage index that would be 
applicable if the hospital were paid under the IPPS, based on its 
geographic location and any applicable wage index adjustments. We 
proposed to adopt the final wage index changes from the FY 2015 IPPS/
LTCH PPS final rule for these hospitals. The following is a brief 
summary of the major changes in the FY 2015 IPPS wage indexes and any 
adjustments that we proposed to apply to these hospitals under the OPPS 
for CY 2015. We refer the reader to the FY 2015 IPPS/LTCH PPS final 
rule (79 FR 49950 through 49991) for a detailed discussion of the 
changes to the wage indexes.
    For CY 2015, we proposed to continue our policy of allowing non-
IPPS hospitals paid under the OPPS to qualify for the out-migration 
adjustment if they are located in a section 505 out-migration county 
(section 505 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) (Pub. L. 108-173)). We stated in the 
proposed rule that applying this adjustment is consistent with our 
proposed policy of adopting IPPS wage index policies for hospitals paid 
under the OPPS. We note that, because non-IPPS hospitals cannot 
reclassify, they would be eligible for the out-migration wage 
adjustment if they are located in a section 505 out-migration county. 
This is the same out-migration adjustment policy that would apply if 
the hospital were paid under the IPPS. Table 4J from the FY 2015 IPPS/
LTCH PPS final rule (available via the Internet on the CMS Web site at: 
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) identifies counties eligible for the out-
migration adjustment and IPPS hospitals that will receive the 
adjustment for FY 2015.
    As we have done in prior years, we are including Table 4J from the 
FY 2015 IPPS/LTCH PPS final rule as Addendum L to this final rule with 
comment period with the addition of non-IPPS hospitals that would 
receive the section 505 out-migration adjustment under the CY 2015 
OPPS. Addendum L is available via the Internet on the CMS Web site.
    In the FY 2015 IPPS/LTCH PPS proposed rule, we proposed to adopt 
the new OMB labor market area delineations issued by OMB in OMB 
Bulletin No. 13-01 on February 28, 2013, based on standards published 
on June 28, 2010 (75 FR 37246 through 37252) and the 2010 Census data 
to delineate labor market areas for purposes of the IPPS wage index. In 
the FY 2015 IPPS/LTCH PPS final rule, we finalized the adoption of the 
new OMB delineations. For IPPS wage index purposes, for hospitals that 
are designated as rural under the new OMB labor market area 
delineations that currently are located in urban CBSAs, we generally 
assigned them the urban wage index value of the CBSA in which they are 
physically located for FY 2014 for a period of 3 fiscal years (79 FR 
28060 through 28061 and 79 FR 49957 through 49960). To be consistent, 
we proposed to apply the same policy to hospitals paid under the OPPS 
but not under the IPPS so that such hospitals will maintain the wage 
index of the CBSA in which they are physically located for FY 2014 for 
the next 3 calendar years. As stated in the CY 2015 OPPS/ASC proposed 
rule (79 FR 40965), this proposed policy would impact six hospitals for 
purposes of OPPS payment.
    We believe that adopting the new OMB labor market area delineations 
creates a more accurate wage index system, but we also recognize that 
implementing the new OMB delineations may cause some short-term 
instability in hospital payments. Therefore, similar to the policy we 
adopted in the FY 2005 IPPS final rule (69 FR 49033), in the FY 2015 
IPPS/LTCH PPS final rule (79 FR 49960 through 49962), we finalized a 1-
year blended wage index for all hospitals that experience any decrease 
in their actual payment wage index exclusively due to the 
implementation of the new OMB delineations. Under this final IPPS 
policy, a post-reclassified wage index with the rural and imputed 
floors applied is computed based on the hospital's FY 2014 CBSA (that 
is, using all of its FY 2014 constituent county/ies), and another post-
reclassified wage index with the rural and imputed floors applied is 
computed based on the hospital's new FY 2015 CBSA (that is, the FY 2015 
constituent county/ies). We then compare these two wage indexes. If the 
FY 2015 wage index with FY 2015 CBSAs is lower than the FY 2015 wage 
index with FY 2014 CBSAs, we compute a blended wage index consisting of 
50 percent of each of the two wage indexes added together. This blended 
wage index will be the IPPS hospital's wage index for FY 2015. In the 
CY 2015 OPPS/ASC proposed rule, for purposes of the OPPS, we proposed 
to apply this 50-percent transition blend to hospitals paid under the 
OPPS but not under the IPPS. We stated that we believe a 1-year, 50/50 
blended wage index would mitigate the short-term instability and 
negative payment impacts due to the implementation of the new OMB 
delineations, providing hospitals with a transition period during which 
they may adjust to their new geographic CBSA. We believe that a longer 
transition period would reduce the accuracy of the overall labor market 
area wage index system, and generally would not be warranted for 
hospitals moving from one urban geographic labor market area to 
another.
    In addition, for the FY 2015 IPPS, we are continuing the extension 
of the imputed floor policy (both the original methodology and 
alternative methodology) for another year, through September 30, 2015 
(79 FR 49969 through 49971). For purposes of the CY 2015 OPPS, we also 
proposed to apply the imputed floor policy to hospitals paid under the 
OPPS but not under the IPPS.
    For CMHCs, we proposed to continue to calculate the wage index by 
using the post-reclassification IPPS wage index based on the CBSA where 
the CMHC is located. As with OPPS hospitals and for the same reasons, 
we proposed to apply a 1-year, 50/50 blended wage index to CMHCs that 
would receive a lower wage index due to the new CBSA delineations. In 
addition, as with OPPS hospitals and for the same reasons, for CMHCs 
currently located in urban CBSAs that are designated as rural under the 
new OMB labor market area delineations, we proposed to maintain the 
urban wage index value of the CBSA in which they are physically located 
for

[[Page 66828]]

CY 2014 for the next 3 calendar years. Consistent with our current 
policy, the wage index that applies to CMHCs includes both the imputed 
floor adjustment and the rural floor adjustment, but does not include 
the out-migration adjustment because that adjustment only applies to 
hospitals.
    With the exception of the out-migration wage adjustment table 
(Addendum L to this final rule with comment period, which is available 
via the Internet on the CMS Web site), which includes non-IPPS 
hospitals paid under the OPPS, we are not reprinting the FY 2015 IPPS 
wage indexes referenced in this discussion of the wage index. We refer 
readers to the CMS Web site for the OPPS at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. At this link, readers will find a link to the final FY 2015 
IPPS wage index tables.
    Comment: One commenter suggested that the IPPS rural floor should 
utilize State-specific budget neutrality rather than national budget 
neutrality to prevent it from being susceptible to gaming by hospitals. 
The commenter suggested that, under the current policy, an urban 
hospital can reclassify to rural status to improve the rural wage index 
in the State, which in some cases is used as a floor for urban 
hospitals.
    Response: As we stated in the FY 2015 IPPS/LTCH PPS final rule (79 
FR 50370), section 3141 of Public Law 111-148 requires that a national 
budget neutrality adjustment be applied in implementing the rural floor 
policy under the IPPS. Therefore, absent a legislative change enacted 
by Congress, we are unable to change the rural floor budget neutrality 
adjustment from a national adjustment to a State-specific adjustment. 
In this final rule with comment period, we are adopting the final 
fiscal year IPPS wage index as the calendar year wage index for 
adjusting the OPPS standard payment amounts for labor market 
differences. We refer readers to the FY 2015 IPPS/LTCH PPS final rule 
(79 FR 50370 through 50372) for further discussion and a detailed 
response to a similar comment.
    After considering the public comment we received, we are finalizing 
our proposals to use the FY 2015 IPPS final wage index as the CY 2015 
wage index for OPPS hospitals and CMHCs, as discussed above and as set 
forth in the CY 2015 OPPS/ASC proposed rule (79 FR 40963 through 
40965), without modification.

D. Statewide Average Default CCRs

    In addition to using CCRs to estimate costs from charges on claims 
for ratesetting, CMS uses overall hospital-specific CCRs calculated 
from the hospital's most recent cost report to determine outlier 
payments, payments for pass-through devices, and monthly interim 
transitional corridor payments under the OPPS during the PPS year. MACs 
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 MAC 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 in which the most recent 
cost report reflects an all-inclusive rate status (Medicare Claims 
Processing Manual (Pub. 100-04), Chapter 4, Section 10.11). In the CY 
2015 OPPS/ASC proposed rule (79 FR 40966), we proposed to update the 
default ratios for CY 2015 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 2015, we proposed to continue to use our standard 
methodology of calculating the statewide average default CCRs using the 
same hospital overall CCRs that we use to adjust charges to costs on 
claims data for setting the CY 2015 OPPS relative payment weights. 
Table 12 published in the proposed rule (79 FR 40966 through 40968) 
listed the proposed CY 2015 default urban and rural CCRs by State and 
compared them to the CY 2014 default CCRs. These proposed CCRs 
represented the ratio of total costs to total charges for those cost 
centers relevant to outpatient services from each hospital's most 
recently submitted cost report, weighted by Medicare Part B charges. We 
also proposed to adjust ratios from submitted cost reports to reflect 
the final settled status by applying the differential between settled 
to submitted overall CCRs for the cost centers relevant to outpatient 
services from the most recent pair of final settled and submitted cost 
reports. We then proposed to weight each hospital's CCR by the volume 
of separately paid line-items on hospital claims corresponding to the 
year of the majority of cost reports used to calculate the overall 
CCRs. We refer readers to the CY 2008 OPPS/ASC final rule with comment 
period (72 FR 66680 through 66682) and prior OPPS rules for a more 
detailed discussion of our established methodology for calculating the 
statewide average default CCRs, including the hospitals used in our 
calculations and our trimming criteria.
    We did not receive any public comments on our CY 2015 proposal. 
Therefore, we are finalizing our proposal, without modification, to 
apply our standard methodology of calculating the statewide average 
default CCRs using the same hospital overall CCRs that we used to 
adjust charges to costs on claims data for setting the CY 2015 OPPS 
relative payment weights. We used this methodology to calculate the 
statewide average default CCRs listed in Table 13 below.
    For Maryland, we used an overall weighted average CCR for all 
hospitals in the Nation as a substitute for Maryland CCRs. Few 
hospitals in Maryland are eligible to receive payment under the OPPS, 
which limits the data available to calculate an accurate and 
representative CCR. The weighted CCR is used for Maryland because it 
takes into account each hospital's volume, rather than treating each 
hospital equally. We refer readers to the CY 2005 OPPS final rule with 
comment period (69 FR 65822) for further discussion and the rationale 
for our longstanding policy of using the national average CCR for 
Maryland. In general, observed changes in the statewide average default 
CCRs between CY 2014 and CY 2015 are modest and the few significant 
changes are associated with areas that have a small number of 
hospitals.
    Table 13 below lists the statewide average default CCRs for OPPS 
services furnished on or after January 1, 2015.

[[Page 66829]]



                                    Table 13--CY 2015 Statewide Average CCRs
----------------------------------------------------------------------------------------------------------------
                                                                                                     Previous
                                                                                CY 2015 default  default CCR (CY
                    State                                Urban/rural                  CCR        2014 OPPS final
                                                                                                      rule)
----------------------------------------------------------------------------------------------------------------
ALABAMA......................................  RURAL..........................           0.235            0.229
ALABAMA......................................  URBAN..........................           0.186            0.188
ALASKA.......................................  RURAL..........................           0.439            0.473
ALASKA.......................................  URBAN..........................           0.294            0.302
ARIZONA......................................  RURAL..........................           0.228            0.254
ARIZONA......................................  URBAN..........................           0.181            0.182
ARKANSAS.....................................  RURAL..........................           0.262            0.244
ARKANSAS.....................................  URBAN..........................           0.239            0.220
CALIFORNIA...................................  RURAL..........................           0.178            0.190
CALIFORNIA...................................  URBAN..........................           0.196            0.206
COLORADO.....................................  RURAL..........................           0.410            0.393
COLORADO.....................................  URBAN..........................           0.219            0.221
CONNECTICUT..................................  RURAL..........................           0.339            0.343
CONNECTICUT..................................  URBAN..........................           0.273            0.276
DELAWARE.....................................  URBAN..........................           0.314            0.356
DISTRICT OF COLUMBIA.........................  URBAN..........................           0.299            0.279
FLORIDA......................................  RURAL..........................           0.180            0.160
FLORIDA......................................  URBAN..........................           0.156            0.160
GEORGIA......................................  RURAL..........................           0.256            0.260
GEORGIA......................................  URBAN..........................           0.211            0.205
HAWAII.......................................  RURAL..........................           0.337            0.345
HAWAII.......................................  URBAN..........................           0.307            0.298
IDAHO........................................  RURAL..........................           0.353            0.359
IDAHO........................................  URBAN..........................           0.463            0.478
ILLINOIS.....................................  RURAL..........................           0.252            0.252
ILLINOIS.....................................  URBAN..........................           0.217            0.222
INDIANA......................................  RURAL..........................           0.334            0.326
INDIANA......................................  URBAN..........................           0.262            0.288
IOWA.........................................  RURAL..........................           0.321            0.308
IOWA.........................................  URBAN..........................           0.269            0.266
KANSAS.......................................  RURAL..........................           0.300            0.313
KANSAS.......................................  URBAN..........................           0.231            0.239
KENTUCKY.....................................  RURAL..........................           0.231            0.221
KENTUCKY.....................................  URBAN..........................           0.212            0.225
LOUISIANA....................................  RURAL..........................           0.272            0.257
LOUISIANA....................................  URBAN..........................           0.209            0.222
MAINE........................................  RURAL..........................           0.430            0.452
MAINE........................................  URBAN..........................           0.432            0.438
MARYLAND.....................................  RURAL..........................           0.296            0.283
MARYLAND.....................................  URBAN..........................           0.244            0.248
MASSACHUSETTS................................  RURAL..........................           0.326            0.395
MASSACHUSETTS................................  URBAN..........................           0.333            0.336
MICHIGAN.....................................  RURAL..........................           0.371            0.341
MICHIGAN.....................................  URBAN..........................           0.320            0.322
MINNESOTA....................................  RURAL..........................           0.485            0.462
MINNESOTA....................................  URBAN..........................           0.347            0.349
MISSISSIPPI..................................  RURAL..........................           0.247            0.233
MISSISSIPPI..................................  URBAN..........................           0.181            0.200
MISSOURI.....................................  RURAL..........................           0.267            0.263
MISSOURI.....................................  URBAN..........................           0.274            0.280
MONTANA......................................  RURAL..........................           0.501            0.481
MONTANA......................................  URBAN..........................           0.386            0.384
NEBRASKA.....................................  RURAL..........................           0.290            0.323
NEBRASKA.....................................  URBAN..........................           0.255            0.243
NEVADA.......................................  RURAL..........................           0.241            0.220
NEVADA.......................................  URBAN..........................           0.149            0.154
NEW HAMPSHIRE................................  RURAL..........................           0.362            0.326
NEW HAMPSHIRE................................  URBAN..........................           0.280            0.287
NEW JERSEY...................................  URBAN..........................           0.202            0.213
NEW MEXICO...................................  RURAL..........................           0.296            0.291
NEW MEXICO...................................  URBAN..........................           0.294            0.304
NEW YORK.....................................  RURAL..........................           0.333            0.345
NEW YORK.....................................  URBAN..........................           0.340            0.351
NORTH CAROLINA...............................  RURAL..........................           0.280            0.258
NORTH CAROLINA...............................  URBAN..........................           0.246            0.256
NORTH DAKOTA.................................  RURAL..........................           0.660            0.661
NORTH DAKOTA.................................  URBAN..........................           0.395            0.400
OHIO.........................................  RURAL..........................           0.317            0.327

[[Page 66830]]

 
OHIO.........................................  URBAN..........................           0.222            0.232
OKLAHOMA.....................................  RURAL..........................           0.282            0.258
OKLAHOMA.....................................  URBAN..........................           0.203            0.205
OREGON.......................................  RURAL..........................           0.287            0.311
OREGON.......................................  URBAN..........................           0.352            0.357
PENNSYLVANIA.................................  RURAL..........................           0.283            0.257
PENNSYLVANIA.................................  URBAN..........................           0.197            0.198
PUERTO RICO..................................  URBAN..........................           0.577            0.614
RHODE ISLAND.................................  URBAN..........................           0.297            0.295
SOUTH CAROLINA...............................  RURAL..........................           0.191            0.190
SOUTH CAROLINA...............................  URBAN..........................           0.207            0.203
SOUTH DAKOTA.................................  RURAL..........................           0.286            0.287
SOUTH DAKOTA.................................  URBAN..........................           0.214            0.219
TENNESSEE....................................  RURAL..........................           0.203            0.207
TENNESSEE....................................  URBAN..........................           0.188            0.190
TEXAS........................................  RURAL..........................           0.251            0.235
TEXAS........................................  URBAN..........................           0.203            0.197
UTAH.........................................  RURAL..........................           0.481            0.474
UTAH.........................................  URBAN..........................           0.335            0.334
VERMONT......................................  RURAL..........................           0.439            0.456
VERMONT......................................  URBAN..........................           0.353            0.397
VIRGINIA.....................................  RURAL..........................           0.219            0.226
VIRGINIA.....................................  URBAN..........................           0.241            0.238
WASHINGTON...................................  RURAL..........................           0.300            0.330
WASHINGTON...................................  URBAN..........................           0.330            0.360
WEST VIRGINIA................................  RURAL..........................           0.312            0.283
WEST VIRGINIA................................  URBAN..........................           0.300            0.319
WISCONSIN....................................  RURAL..........................           0.328            0.344
WISCONSIN....................................  URBAN..........................           0.294            0.291
WYOMING......................................  RURAL..........................           0.429            0.400
WYOMING......................................  URBAN..........................           0.262            0.269
----------------------------------------------------------------------------------------------------------------

E. Adjustment for Rural SCHs and EACHs Under Section 1833(t)(13)(B) of 
the Act

    In the CY 2006 OPPS final rule with comment period (70 FR 68556), 
we finalized a payment increase for rural SCHs of 7.1 percent for all 
services and procedures paid under the OPPS, excluding drugs, 
biologicals, brachytherapy sources, and devices paid under the pass-
through payment policy in accordance with section 1833(t)(13)(B) of the 
Act, as added by section 411 of the Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173). 
Section 1833(t)(13) of the Act provided 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 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) of the regulations to clarify that EACHs also are 
eligible to receive the rural SCH adjustment, assuming these entities 
otherwise meet the rural adjustment criteria. Currently, two hospitals 
are classified as EACHs, and as of CY 1998, under section 4201(c) of 
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 outlier payments and copayments. We stated in the CY 2006 
OPPS final rule with comment period (70 FR 68560) that we would not 
reestablish the adjustment amount on an annual basis, but we may review 
the adjustment in the future and, if appropriate, would revise the 
adjustment. We provided the same 7.1 percent adjustment to rural SCHs, 
including EACHs, again in CYs 2008 through 2014. 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.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40968), for the CY 
2015 OPPS, we proposed to continue our policy of a 7.1 percent payment 
adjustment that is done in a budget neutral manner 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.
    Comment: Several commenters supported the proposed continuation of 
the 7.1 percent rural SCH adjustment. Several commenters, including 
MedPAC, also recommended that CMS update the analysis in the near 
future to assess if the 7.1 percent payment adjustment remains a valid 
figure.
    Response: We appreciate the commenters' support. We agree that it 
is appropriate to continue the 7.1 percent

[[Page 66831]]

adjustment for rural SCHs (including EACHs) as we proposed for CY 2015. 
As we indicated in the proposed rule (79 FR 40968), we may reassess the 
7.1 percent rural adjustment in the near future by examining 
differences between urban hospitals' costs and rural hospitals' costs 
using updated claims, cost reports, and provider information.
    After consideration of the public comments we received, we are 
finalizing our CY 2015 proposal to continue our policy of a 7.1 percent 
payment adjustment that is done in a budget neutral manner 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.

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

1. Background
    Since the inception of the OPPS, which was authorized by the 
Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33), Medicare has paid 
the 11 hospitals that meet the criteria for cancer hospitals identified 
in section 1886(d)(1)(B)(v) of the Act under the OPPS for covered 
outpatient hospital services. These cancer hospitals are exempted from 
payment under the IPPS. With the Medicare, Medicaid and SCHIP Balanced 
Budget Refinement Act of 1999 (Pub. L. 106-113), Congress established 
section 1833(t)(7) of the Act, ``Transitional Adjustment to Limit 
Decline in Payment,'' to determine OPPS payments to cancer and 
children's hospitals based on their pre-BBA payment amount (often 
referred to as ``held harmless'').
    As required under section 1833(t)(7)(D)(ii) of the Act, a cancer 
hospital receives the full amount of the difference between payments 
for covered outpatient services under the OPPS and a ``pre-BBA 
amount.'' That is, cancer hospitals are permanently held harmless to 
their ``pre-BBA amount,'' and they receive transitional outpatient 
payments (TOPs) or hold harmless payments to ensure that they do not 
receive a payment that is lower 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 amount'' is the product 
of the hospital's reasonable costs for covered outpatient services 
occurring in the current year and the base payment-to-cost ratio (PCR) 
for the hospital defined in section 1833(t)(7)(F)(ii) of the Act. The 
``pre-BBA amount,'' 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 Cost Report or the Hospital Health Care Complex Cost 
Report (Form CMS-2552-96 and Form CMS-2552-10, respectively) as 
applicable each year. Section 1833(t)(7)(I) of the Act exempts TOPs 
from budget neutrality calculations.
    Section 3138 of the Affordable Care Act amended section 1833(t) of 
the Act by adding a new paragraph (18), which instructs the Secretary 
to conduct a study to determine if, under the OPPS, outpatient costs 
incurred by cancer hospitals described in section 1886(d)(1)(B)(v) of 
the Act with respect to APC groups exceed outpatient costs incurred by 
other hospitals furnishing services under section 1833(t) of the Act, 
as determined appropriate by the Secretary. Section 1833(t)(18)(A) of 
the Act requires the Secretary to take into consideration the cost of 
drugs and biologicals incurred by cancer and other hospitals. Section 
1833(t)(18)(B) of the Act provides that if the Secretary determines 
that cancer hospitals' costs are greater than other hospitals' costs, 
the Secretary shall provide an appropriate adjustment under section 
1833(t)(2)(E) of the Act to reflect these higher costs. In 2011, after 
conducting the study required by section 1833(t)(18)(A) of the Act, we 
determined that outpatient costs incurred by the 11 specified cancer 
hospitals were greater than the costs incurred by other OPPS hospitals. 
For a complete discussion regarding the cancer hospital cost study, we 
refer readers to the CY 2012 OPPS/ASC final rule with comment period 
(76 FR 74200 through 74201).
    Based on these findings, we finalized a policy to provide a payment 
adjustment to the 11 specified cancer hospitals that reflects their 
higher outpatient costs as discussed in the CY 2012 OPPS/ASC final rule 
with comment period (76 FR 74202 through 74206). Specifically, we 
adopted a policy to provide additional payments to the cancer hospitals 
so that each cancer hospital's final PCR for services provided in a 
given calendar year is equal to the weighted average PCR (which we 
refer to as the ``target PCR'') for other hospitals paid under the 
OPPS. The target PCR is set in advance of the calendar year and is 
calculated using the most recent submitted or settled cost report data 
that are available at the time of final rulemaking for the calendar 
year. The amount of the payment adjustment is made on an aggregate 
basis at cost report settlement. We note that the changes made by 
section 1833(t)(18) of the Act do not affect the existing statutory 
provisions that provide for TOPs for cancer hospitals. The TOPs are 
assessed as usual after all payments, including the cancer hospital 
payment adjustment, have been made for a cost reporting period. For CYs 
2012 and 2013, the target PCR for purposes of the cancer hospital 
payment adjustment was 0.91. For CY 2014, the target PCR for purposes 
of the cancer hospital payment adjustment was 0.89.
2. Payment Adjustment for Certain Cancer Hospitals for CY 2015
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40968), for CY 2015, 
we proposed to continue our policy to provide additional payments to 
cancer hospitals so that each cancer hospital's final PCR is equal to 
the weighted average PCR (or ``target PCR'') for the other OPPS 
hospitals using the most recent submitted or settled cost report data 
that were available at the time of the development of the proposed 
rule. To calculate the proposed CY 2015 target PCR, we used the same 
extract of cost report data from HCRIS, as discussed in section II.A. 
of the proposed rule, used to estimate costs for the CY 2015 OPPS. 
Using these cost report data, we included data from Worksheet E, Part 
B, for each hospital, using data from each hospital's most recent cost 
report, whether as submitted or settled.
    We then limited the dataset to the hospitals with CY 2013 claims 
data that we used to model the impact of the proposed CY 2015 APC 
relative payment weights (3,881 hospitals) because it is appropriate to 
use the same set of hospitals that we used to calibrate the modeled CY 
2015 OPPS. The cost report data for the hospitals in this dataset were 
from cost report periods with fiscal year ends ranging from 2012 to 
2013. We then removed the cost report data of the 47 hospitals located 
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, therefore, their inclusion may bias the calculation of hospital-
weighted statistics. We also removed the cost report data of 27 
hospitals because these hospitals had cost report data that were not 
complete (missing aggregate OPPS payments, missing aggregate cost data, 
or missing both), so that all cost reports in the study would have both 
the payment and cost data necessary to calculate a PCR for each 
hospital, leading to a proposed analytic file of 3,807 hospitals with 
cost report data.
    Using this smaller dataset of cost report data, we estimated that, 
on

[[Page 66832]]

average, the OPPS payments to other hospitals furnishing services under 
the OPPS were approximately 89 percent of reasonable cost (weighted 
average PCR of 0.89). Therefore, we proposed that the payment amount 
associated with the cancer hospital payment adjustment to be determined 
at cost report settlement would be the additional payment needed to 
result in a proposed target PCR equal to 0.89 for each cancer hospital. 
Table 13 of the proposed rule (79 FR 40969) indicated the estimated 
percentage increase in OPPS payments to each cancer hospital for CY 
2015 due to the cancer hospital payment adjustment policy.
    Comment: Several commenters noted that cancer hospitals have 
significantly higher costs than other OPPS hospitals and agreed with 
CMS' proposal to provide the proposed payment adjustment.
    Response: We appreciate the commenters' support of our proposal. As 
described in detail below, we performed the same analysis as in 
previous years comparing the PCR for these cancer hospitals relative to 
other OPPS hospitals. That study indicates that there is a difference 
in PCRs between these hospital types. Accordingly, we are finalizing a 
cancer hospital adjustment with a target PCR of 0.89 based on that 
analysis.
    After consideration of the public comments we received, we are 
finalizing our proposal to establish the target PCR equal to 0.89 for 
each cancer hospital. For this final rule with comment period, we have 
rerun our calculations to determine the target PCR using the latest 
available cost data and have determined that 0.89 is still the correct 
target PCR. We limited the dataset to the hospitals with CY 2013 claims 
data that we used to model the impact of the final CY 2015 APC relative 
payment weights (3,808 hospitals). The cost report data for the 
hospitals in this dataset were from cost report periods with fiscal 
year ends ranging from 2011 to 2013. We removed the cost report data of 
the 47 hospitals located in Puerto Rico from our dataset and also 
removed the cost report data of 14 hospitals that had cost report data 
that were not complete, leading to a final analytic file of 3,747 
hospitals with cost report data.
    Using this smaller dataset of cost report data, we estimated that, 
on average, the OPPS payments to other hospitals furnishing services 
under the OPPS are approximately 89 percent of reasonable cost 
(weighted average PCR of 0.89). Therefore, we are finalizing that the 
payment amount associated with the cancer hospital payment adjustment 
to be determined at cost report settlement would be the additional 
payment needed to result in a target PCR equal to 0.89 for each cancer 
hospital.
    Table 14 below indicates the estimated percentage increase in OPPS 
payments to each cancer hospital for CY 2015 due to the cancer hospital 
payment adjustment policy. The actual amount of the CY 2015 cancer 
hospital payment adjustment for each cancer hospital will be determined 
at cost report settlement and will depend on each hospital's CY 2015 
payments and costs. We note that the changes made by section 
1833(t)(18) of the Act do not affect the existing statutory provisions 
that provide for TOPs for cancer hospitals. The TOPs will be assessed 
as usual after all payments, including the cancer hospital payment 
adjustment, have been made for a cost reporting period.

  Table 14--Estimated CY 2015 Hospital-Specific Payment Adjustment for
        Cancer Hospitals To Be Provided at Cost Report Settlement
------------------------------------------------------------------------
                                                             Estimated
                                                            percentage
          Provider No.                Hospital name         increase in
                                                           OPPS payments
                                                            for CY 2015
------------------------------------------------------------------------
050146.........................  City of Hope                       15.5
                                  Comprehensive Cancer
                                  Center.
050660.........................  USC Norris Cancer                  22.0
                                  Hospital.
100079.........................  Sylvester Comprehensive            15.8
                                  Cancer Center.
100271.........................  H. Lee Moffitt Cancer              19.9
                                  Center & Research
                                  Institute.
220162.........................  Dana-Farber Cancer                 47.6
                                  Institute.
330154.........................  Memorial Sloan-                    46.7
                                  Kettering Cancer
                                  Center.
330354.........................  Roswell Park Cancer                16.6
                                  Institute.
360242.........................  James Cancer Hospital &            35.1
                                  Solove Research
                                  Institute.
390196.........................  Fox Chase Cancer Center            18.5
450076.........................  M.D. Anderson Cancer               60.1
                                  Center.
500138.........................  Seattle Cancer Care                53.9
                                  Alliance.
------------------------------------------------------------------------

G. Hospital Outpatient Outlier Payments

1. Background
    The OPPS provides outlier payments to hospitals to help mitigate 
the financial risk associated with high-cost and complex procedures, 
where a very costly service could present a hospital with significant 
financial loss. As explained in the CY 2014 OPPS/ASC final rule with 
comment period (78 FR 74958 through 74960), we set our projected target 
for aggregate outlier payments at 1.0 percent of the estimated 
aggregate total payments under the OPPS for the prospective year. 
Outlier payments are provided on a service-by-service basis when the 
cost of a service exceeds the APC payment amount multiplier threshold 
(the APC payment amount multiplied by a certain amount) as well as the 
APC payment amount plus a fixed-dollar amount threshold (the APC 
payment plus a certain amount of dollars). In CY 2014, the outlier 
threshold was met when the hospital's cost of furnishing a service 
exceeded 1.75 times (the multiplier threshold) the APC payment amount 
and exceeded the APC payment amount plus $2,900 (the fixed-dollar 
amount threshold). If the cost of a service exceeds both the multiplier 
threshold and the fixed-dollar threshold, the outlier payment is 
calculated as 50 percent of the amount by which the cost of furnishing 
the service exceeds 1.75 times the APC payment amount. Beginning with 
CY 2009 payments, outlier payments are subject to a reconciliation 
process similar to the IPPS outlier reconciliation process for cost 
reports, as discussed in the CY 2009 OPPS/ASC final rule with comment 
period (73 FR 68594 through 68599).

[[Page 66833]]

    It has been our policy to report the actual amount of outlier 
payments as a percent of total spending in the claims being used to 
model the OPPS. Our current estimate of total outlier payments as a 
percent of total CY 2013 OPPS payment, using available CY 2013 claims 
and the revised OPPS expenditure estimate for the FY 2015 President's 
Budget Mid-Session Review, is approximately 1.4 percent of the total 
aggregated OPPS payments. Therefore, for CY 2013, we estimate that we 
paid 0.4 percent above the CY 2013 outlier target of 1.0 percent of 
total aggregated OPPS payments.
    Using CY 2013 claims data and CY 2014 payment rates, we currently 
estimate that the aggregate outlier payments for CY 2014 will be 
approximately 0.8 percent of the total CY 2014 OPPS payments. The 
difference between 0.8 percent and the 1.0 percent target is reflected 
in the regulatory impact analysis in section XXII. of this final rule 
with comment period. We provide estimated CY 2015 outlier payments for 
hospitals and CMHCs with claims included in the claims data that we 
used to model impacts in the Hospital-Specific Impacts--Provider-
Specific Data file on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
2. Outlier Calculation
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40970), for CY 2015, 
we proposed to continue our policy of estimating outlier payments to be 
1.0 percent of the estimated aggregate total payments under the OPPS. 
We proposed that a portion of that 1.0 percent, an amount equal to 0.47 
percent of outlier payments (or 0.0047 percent of total OPPS payments) 
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 OPPS 
outlier payments. As discussed in section VIII.D. of the proposed rule, 
for CMHCs, we proposed to continue our longstanding policy that if a 
CMHC's cost for partial hospitalization services, paid under either APC 
0172 (Level I Partial Hospitalization (3 services) for CMHCs) or APC 
0173 (Level II Partial Hospitalization (4 or more services) for CMHCs), 
exceeds 3.40 times the payment rate for APC 0173, the outlier payment 
would be calculated as 50 percent of the amount by which the cost 
exceeds 3.40 times the APC 0173 payment rate. For further discussion of 
CMHC outlier payments, we refer readers to section VIII.D. of the 
proposed rule and this final rule with comment period.
    To ensure that the estimated CY 2015 aggregate outlier payments 
would equal 1.0 percent of estimated aggregate total payments under the 
OPPS, we proposed that the hospital outlier threshold be set so that 
outlier payments would be triggered when a hospital's cost of 
furnishing a service exceeds 1.75 times the APC payment amount and 
exceeds the APC payment amount plus $3,100.
    We calculated the proposed fixed-dollar threshold of $3,100 using 
the standard methodology most recently used for CY 2014 (78 FR 74959 
through 74960). For purposes of estimating outlier payments for the 
proposed rule, we used the hospital-specific overall ancillary CCRs 
available in the April 2014 update to the Outpatient Provider-Specific 
File (OPSF). The OPSF contains provider-specific data, such as the most 
current CCRs, which are maintained by the MACs and used by the OPPS 
Pricer to pay claims. The claims that we use to model each OPPS update 
lag by 2 years.
    In order to estimate the CY 2015 hospital outlier payments for the 
proposed rule, we inflated the charges on the CY 2013 claims using the 
same inflation factor of 1.1146 that we used to estimate the IPPS 
fixed-dollar outlier threshold for the FY 2015 IPPS/LTCH PPS proposed 
rule (79 FR 28321). We used an inflation factor of 1.0557 to estimate 
CY 2014 charges from the CY 2013 charges reported on CY 2013 claims. 
The methodology for determining this charge inflation factor is 
discussed in the FY 2015 IPPS/LTCH PPS proposed rule (79 FR 28321) and 
final rule (79 FR 50374). As we stated in the CY 2005 OPPS final rule 
with comment period (69 FR 65845), we believe that the use of these 
charge inflation factors are appropriate for the OPPS because, with the 
exception of the inpatient routine service cost centers, hospitals use 
the same ancillary and outpatient cost centers to capture costs and 
charges for inpatient and outpatient services.
    As noted in the CY 2007 OPPS/ASC final rule with comment period (71 
FR 68011), we are concerned that we could systematically overestimate 
the OPPS hospital outlier threshold if we did not apply a CCR inflation 
adjustment factor. Therefore, we proposed to apply the same CCR 
inflation adjustment factor that we proposed to apply for the FY 2015 
IPPS outlier calculation to the CCRs used to simulate the proposed CY 
2015 OPPS outlier payments to determine the fixed-dollar threshold. 
Specifically, for CY 2015, we proposed to apply an adjustment factor of 
0.9813 to the CCRs that were in the April 2014 OPSF to trend them 
forward from CY 2014 to CY 2015. The methodology for calculating this 
proposed adjustment was discussed in the FY 2015 IPPS/LTCH PPS proposed 
rule (79 FR 28321) and finalized in the FY 2015 IPPS/LTCH PS final rule 
(79 FR 50374).
    To model hospital outlier payments for the proposed rule, we 
applied the overall CCRs from the April 2014 OPSF file after adjustment 
(using the proposed CCR inflation adjustment factor of 0.9813 to 
approximate CY 2015 CCRs) to charges on CY 2013 claims that were 
adjusted (using the proposed charge inflation factor of 1.1146 to 
approximate CY 2015 charges). We simulated aggregated CY 2015 hospital 
outlier payments using these costs for several different fixed-dollar 
thresholds, holding the 1.75 multiple threshold constant and assuming 
that outlier payments would continue to be made at 50 percent of the 
amount by which the cost of furnishing the service would exceed 1.75 
times the APC payment amount, until the total outlier payments equaled 
1.0 percent of aggregated estimated total CY 2015 OPPS payments. We 
estimated that a proposed fixed-dollar threshold of $3,100, combined 
with the proposed multiple threshold of 1.75 times the APC payment 
rate, would allocate 1.0 percent of aggregated total OPPS payments to 
outlier payments. For CMHCs, we proposed that, if a CMHC's cost for 
partial hospitalization services, paid under either APC 0172 or APC 
0173, exceeds 3.40 times the payment rate for APC 0173, the outlier 
payment would be calculated as 50 percent of the amount by which the 
cost exceeds 3.40 times the APC 0173 payment rate.
    Section 1833(t)(17)(A) of the Act, which applies to hospitals as 
defined under section 1886(d)(1)(B) of the Act, requires that hospitals 
that fail to report data required for the quality measures selected by 
the Secretary, in the form and manner required by the Secretary under 
1833(t)(17)(B) of the Act, incur a 2.0 percentage point reduction to 
their OPD fee schedule increase factor, that is, the annual payment 
update factor. The application of a reduced OPD fee schedule increase 
factor results in reduced national unadjusted payment rates that will 
apply to certain outpatient items and services furnished by hospitals 
that are required to report outpatient quality data and that fail to 
meet the Hospital OQR Program requirements. For hospitals that fail to 
meet the Hospital OQR Program requirements, we proposed to continue the 
policy that we implemented in CY

[[Page 66834]]

2010 that the hospitals' costs will be compared to the reduced payments 
for purposes of outlier eligibility and payment calculation. For more 
information on the Hospital OQR Program, we refer readers to section 
XIII. of this final rule with comment period.
    Comment: A few commenters suggested that CMS not increase the 
outlier payment fixed dollar threshold from $2,900 to $3,100. One 
commenter suggested that CMS maintain the CY 2014 fixed-dollar 
threshold of $2,900, while another commenter suggested that CMS lower 
the CY 2014 fixed-dollar threshold because CMS' projection of CY 2014 
outlier payments in the proposed rule estimated that outlier payments 
would be below the target of 1.0 percent of OPPS payments.
    Response: We set the proposed CY 2015 outlier payment fixed-dollar 
threshold at $3,100 so that projected outlier payments would equal 1.0 
percent of total OPPS payments. We projected that CY 2014 outlier 
payments would fall below the 1.0 percent target with the $2,900 
threshold. However, we estimated that changes to recalibrate APCs and 
other payment policy changes would result in outlier payments greater 
than the 1.0 percent target in CY 2015 if we did not increase the 
fixed-dollar threshold. As discussed below, based on the more recent 
data available for this final rule with comment period, the CY 2015 
outlier payment fixed-dollar threshold will be $2,775. When combined 
with the multiple threshold of 1.75 times the APC payment rate, this 
fixed-dollar threshold will allocate an estimated 1.0 percent of 
projected total OPPS payments to outlier payments for CY 2015.
3. Final Outlier Calculation
    Consistent with historical practice, we used updated data for this 
final rule with comment period. For CY 2015, we are applying the 
overall CCRs from the July 2014 OPSF file after adjustment (using the 
CCR inflation adjustment factor of 0.9821 to approximate CY 2015 CCRs) 
to charges on CY 2013 claims that were adjusted (using the charge 
inflation factor of 1.1044 to approximate CY 2015 charges). These are 
the same CCR adjustment and charge inflation factors that were used to 
set the IPPS fixed-dollar threshold for the FY 2015 IPPS/LTCH PPS final 
rule (79 FR 50379 through 50380). We simulated aggregated CY 2015 
hospital outlier payments using these costs for several different 
fixed-dollar thresholds, holding the 1.75 multiple threshold constant 
and assuming that outlier payments will 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 2015 OPPS 
payments. We estimate that a fixed-dollar threshold of $2,775, combined 
with the multiple threshold of 1.75 times the APC payment rate, will 
allocate 1.0 percent of aggregated total OPPS payments to outlier 
payments. 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 rate for APC 0173, the outlier payment will be calculated 
as 50 percent of the amount by which the cost exceeds 3.40 times the 
APC 0173 payment rate.

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

    The basic methodology for determining prospective payment rates for 
HOPD services under the OPPS is set forth in existing regulations at 42 
CFR Part 419, Subparts C and D. For this CY 2015 OPPS/ASC final rule 
with comment period, the payment rate for most services and procedures 
for which payment is made under the OPPS is the product of the 
conversion factor calculated in accordance with section II.B. of this 
final rule with comment period and the relative payment weight 
determined under section II.A. of this final rule with comment period. 
Therefore, the national unadjusted payment rate for most APCs contained 
in Addendum A to this final rule with comment period (which is 
available via the Internet on the CMS Web site) and for most HCPCS 
codes to which separate payment under the OPPS has been assigned in 
Addendum B to this final rule with comment period (which is available 
via the Internet on the CMS Web site) was calculated by multiplying the 
CY 2015 scaled weight for the APC by the CY 2015 conversion factor.
    We note that section 1833(t)(17) of the Act, which applies to 
hospitals as defined under section 1886(d)(1)(B) of the Act, requires 
that hospitals that fail to submit data required to be submitted on 
quality measures selected by the Secretary, in the form and manner and 
at a time specified by the Secretary, incur a reduction of 2.0 
percentage points to their OPD fee schedule increase factor, that is, 
the annual payment update factor. The application of a reduced OPD fee 
schedule increase factor results in reduced national unadjusted payment 
rates that apply to certain outpatient items and services provided by 
hospitals that are required to report outpatient quality data and that 
fail to meet the Hospital OQR Program (formerly referred to as the 
Hospital Outpatient Quality Data Reporting Program (HOP QDRP)) 
requirements. For further discussion of the payment reduction for 
hospitals that fail to meet the requirements of the Hospital OQR 
Program, we refer readers to section XIII. of this final rule with 
comment period.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40971 through 40972), 
we demonstrated the steps on how to determine the APC payments that 
will be made in a calendar year under the OPPS to a hospital that 
fulfills the Hospital OQR Program requirements and to a hospital that 
fails to meet the Hospital OQR Program requirements for a service that 
has any of the following status indicator assignments: ``J1,'' ``P,'' 
``Q1,'' ``Q2,'' ``Q3,'' ``R,'' ``S,'' ``T,'' ``U,'' or ``V'' (as 
defined in Addendum D1 to the 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 are finalizing the 
methodology as proposed and demonstrate below how to calculate final CY 
2015 OPPS payments using the same parameters.
    We note that, although blood and blood products with status 
indicator ``R'' and brachytherapy sources with status indicator ``U'' 
are not subject to wage adjustment, they are subject to reduced 
payments when a hospital fails to meet the Hospital OQR Program 
requirements. We note that we are creating new status indicator ``J1'' 
to reflect the comprehensive APCs discussed in section II.A.2.e. of 
this final rule with comment period. We also note that we are deleting 
status indicator ``X'' as part of the CY 2015 packaging policy for 
ancillary services, discussed in section II.A.3. of this final rule 
with comment period.
    We did not receive any public comments on the proposed calculation 
of an adjusted Medicare payment. Therefore, we are finalizing the 
calculation of an adjusted Medicare payment, where appropriate, in the 
manner described as follows. Individual providers interested in 
calculating the payment amount that they will receive for a specific 
service from the national unadjusted payment rates presented in Addenda 
A and B to this final rule with comment period (which are available via 
the Internet on the CMS Web site) should follow the formulas presented 
in the following steps. For purposes of the payment calculations below, 
we refer to the national unadjusted payment rate for hospitals that 
meet the requirements

[[Page 66835]]

of the Hospital OQR Program as the ``full'' national unadjusted payment 
rate. We refer to the national unadjusted payment rate for hospitals 
that fail to meet the requirements of the Hospital OQR Program as the 
``reduced'' national unadjusted payment rate. The reduced national 
unadjusted payment rate is calculated by multiplying the reporting 
ratio of 0.980 times the ``full'' national unadjusted payment rate. The 
national unadjusted payment rate used in the calculations below is 
either the full national unadjusted payment rate or the reduced 
national unadjusted payment rate, depending on whether the hospital met 
its Hospital OQR Program requirements in order to receive the full CY 
2015 OPPS fee schedule increase factor of 2.2 percent.
    Step 1. Calculate 60 percent (the labor-related portion) of the 
national unadjusted payment rate. Since the initial implementation of 
the OPPS, we have used 60 percent to represent our estimate of that 
portion of costs attributable, on average, to labor. We refer readers 
to the April 7, 2000 OPPS final rule with comment period (65 FR 18496 
through 18497) for a detailed discussion of how we derived this 
percentage. During our regression analysis for the payment adjustment 
for rural hospitals in the CY 2006 OPPS final rule with comment period 
(70 FR 68553), we confirmed that this labor-related share for hospital 
outpatient services is appropriate.
    The formula below is a mathematical representation of Step 1 and 
identifies the labor-related portion of a specific payment rate for a 
specific service.

X is the labor-related portion of the national unadjusted payment rate.
X = .60 * (national unadjusted payment rate).

    Step 2. Determine the wage index area in which the hospital is 
located and identify the wage index level that applies to the specific 
hospital. We note that under the CY 2015 OPPS policy for transitioning 
wage indexes into the new OMB labor market area delineations, a hold 
harmless policy for the wage index may apply, as discussed in section 
II.C. of this final rule with comment period. 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 
2015 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. (For further discussion of the changes to the FY 2015 
IPPS wage indices, as applied to the CY 2015 OPPS, we refer readers to 
section II.C. of this final rule with comment period.) As we proposed, 
we are continuing to apply a wage index floor of 1.00 to frontier 
States, in accordance with section 10324 of the Affordable Care Act of 
2010.
    Step 3. Adjust the wage index of hospitals located in certain 
qualifying counties that have a relatively high percentage of hospital 
employees who reside in the county, but who work in a different county 
with a higher wage index, in accordance with section 505 of Public Law 
108-173. Addendum L to this final rule with comment period (which is 
available via the Internet on the CMS Web site) contains the qualifying 
counties and the associated wage index increase developed for the FY 
2015 IPPS and listed as Table 4J in the FY 2015 IPPS/LTCH PPS final 
rule (79 FR 49854) and available via the Internet on the CMS Web site 
at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. 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 unadjusted payment 
rate for the specific service by the wage index.

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

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

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

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

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

    We are providing examples below of the calculation of both the full 
and reduced national unadjusted payment rates that will apply to 
certain outpatient items and services performed by hospitals that meet 
and that fail to meet the Hospital OQR Program requirements, using the 
steps outlined above. For purposes of this example, we used a provider 
that is located in Brooklyn, New York that is assigned to CBSA 35614. 
This provider bills one service that is assigned to APC 0019 (Level I 
Excision/Biopsy). The CY 2015 full national unadjusted payment rate for 
APC 0019 is approximately $378.41. The reduced national unadjusted 
payment rate for APC 0019 for a hospital that fails to meet the 
Hospital OQR Program requirements is approximately $370.84. This 
reduced rate is calculated by multiplying the reporting ratio of 0.980 
by the full unadjusted payment rate for APC 0019.
    The FY 2015 wage index for a provider located in CBSA 35614 in New 
York is 1.2973. This is based on the 1-year 50/50 transition blend 
between the wage index under the old CBSA 35644 (1.3115) and the wage 
index under the new CBSA 35614 (1.2831). The labor-related portion of 
the full national unadjusted payment is approximately $294.55 (.60 * 
$378.41 * 1.2973). The labor-related portion of the reduced national 
unadjusted payment is approximately $288.65 (.60 * $370.84 * 1.2973). 
The nonlabor-related portion of the full national unadjusted payment is 
approximately $151.36 (.40 * $378.41). The nonlabor-related portion of 
the reduced national unadjusted payment is approximately $148.34 (40 * 
$370.84). The sum of the labor-related and nonlabor-related portions of 
the full national adjusted payment is approximately $445.91 ($294.55 + 
$151.36). The sum of the reduced national adjusted payment is 
approximately $436.99 ($288.65 + $148.34).

[[Page 66836]]

I. Beneficiary Copayments

1. Background
    Section 1833(t)(3)(B) of the Act requires the Secretary to set 
rules for determining the unadjusted copayment amounts to be paid by 
beneficiaries for covered OPD services. Section 1833(t)(8)(C)(ii) of 
the Act specifies that the Secretary must reduce the national 
unadjusted copayment amount for a covered OPD service (or group of such 
services) furnished in a year in a manner so that the effective 
copayment rate (determined on a national unadjusted basis) for that 
service in the year does not exceed a specified percentage. As 
specified in section 1833(t)(8)(C)(ii)(V) of the Act, the effective 
copayment rate for a covered OPD service paid under the OPPS in CY 
2006, and in calendar years thereafter, shall not exceed 40 percent of 
the APC payment rate.
    Section 1833(t)(3)(B)(ii) of the Act provides that, for a covered 
OPD service (or group of such services) furnished in a year, the 
national unadjusted copayment amount cannot be less than 20 percent of 
the OPD fee schedule amount. However, section 1833(t)(8)(C)(i) of the 
Act limits the amount of beneficiary copayment that may be collected 
for a procedure performed in a year to the amount of the inpatient 
hospital deductible for that year.
    Section 4104 of the Affordable Care Act eliminated the Part B 
coinsurance for preventive services furnished on and after January 1, 
2011, that meet certain requirements, including flexible 
sigmoidoscopies and screening colonoscopies, and waived the Part B 
deductible for screening colonoscopies that become diagnostic during 
the procedure. Our discussion of the changes made by the Affordable 
Care Act with regard to copayments for preventive services furnished on 
and after January 1, 2011, may be found in section XII.B. of the CY 
2011 OPPS/ASC final rule with comment period (75 FR 72013).
2. OPPS Copayment Policy
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40973), for CY 2015, 
we proposed to determine copayment amounts for new and revised APCs 
using the same methodology that we implemented beginning in CY 2004. 
(We refer readers to the November 7, 2003 OPPS final rule with comment 
period (68 FR 63458).) In addition, we proposed to use the same 
standard rounding principles that we have historically used in 
instances where the application of our standard copayment methodology 
would result in a copayment amount that is less than 20 percent and 
cannot be rounded, under standard rounding principles, to 20 percent. 
(We refer readers to the CY 2008 OPPS/ASC final rule with comment 
period (72 FR 66687) in which we discuss our rationale for applying 
these rounding principles.) The proposed national unadjusted copayment 
amounts for services payable under the OPPS that would be effective 
January 1, 2015, were shown in Addenda A and B to the proposed rule 
(which are available via the Internet on the CMS Web site). As 
discussed in section XII.G. of the proposed rule, for CY 2015, the 
Medicare beneficiary's minimum unadjusted copayment and national 
unadjusted copayment for a service to which a reduced national 
unadjusted payment rate applies equals the product of the reporting 
ratio and the national unadjusted copayment, or the product of the 
reporting ratio and the minimum unadjusted copayment, respectively, for 
the service.
    We note that OPPS copayments may increase or decrease each year 
based on changes in the calculated APC payment rates due to updated 
cost report and claims data, and any changes to the OPPS cost modeling 
process. However, as described in the CY 2004 OPPS/ASC final rule with 
comment period, the development of the copayment methodology generally 
moves beneficiary copayments closer to 20 percent of OPPS APC payments 
(68 FR 63458 through 63459).
    We did not receive any public comments regarding the proposed 
methodology for calculating copayments for CY 2015. Therefore, for the 
reasons set forth in this final rule with comment period, we are 
finalizing our proposed CY 2015 copayment methodology without 
modification.
3. Calculation of an Adjusted Copayment Amount for an APC Group
    Individuals interested in calculating the national copayment 
liability for a Medicare beneficiary for a given service provided by a 
hospital that met or failed to meet its Hospital OQR Program 
requirements should follow the formulas presented in the following 
steps.
    Step 1. Calculate the beneficiary payment percentage for the APC by 
dividing the APC's national unadjusted copayment by its payment rate. 
For example, using APC 0019, approximately $75.68 is 20 percent of the 
full national unadjusted payment rate of approximately $378.41. For 
APCs with only a minimum unadjusted copayment in Addenda A and B to 
this final rule with comment period (which are available via the 
Internet on the CMS Web site), the beneficiary payment percentage is 20 
percent.
    The formula below is a mathematical representation of Step 1 and 
calculates the national copayment as a percentage of national payment 
for a given service.

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

    Step 2. Calculate the appropriate wage-adjusted payment rate for 
the APC for the provider in question, as indicated in Steps 2 through 4 
under section II.H. of this final rule with comment period. Calculate 
the rural adjustment for eligible providers as indicated in Step 6 
under section II.H. of this final rule with comment period.
    Step 3. Multiply the percentage calculated in Step 1 by the payment 
rate calculated in Step 2. The result is the wage-adjusted copayment 
amount for the APC.
    The formula below is a mathematical representation of Step 3 and 
applies the beneficiary payment percentage to the adjusted payment rate 
for a service calculated under section II.H. of this final rule with 
comment period, with and without the rural adjustment, to calculate the 
adjusted beneficiary copayment for a given service.
    Wage-adjusted copayment amount for the APC = Adjusted Medicare 
Payment * B.
    Wage-adjusted copayment amount for the APC (SCH or EACH) = 
(Adjusted Medicare Payment * 1.071) * B.
    Step 4. For a hospital that failed to meet its Hospital OQR Program 
requirements, multiply the copayment calculated in Step 3 by the 
reporting ratio of 0.980.
    The unadjusted copayments for services payable under the OPPS that 
will be effective January 1, 2015, are shown in Addenda A and B to this 
final rule with comment period (which are available via the Internet on 
the CMS Web site). We note that the national unadjusted payment rates 
and copayment rates shown in Addenda A and B to this final rule with 
comment period reflect the full CY 2015 OPD fee schedule increase 
factor discussed in section II.B. of this final rule with comment 
period.
    In addition, as noted above, section 1833(t)(8)(C)(i) of the Act 
limits the amount of beneficiary copayment that may be collected for a 
procedure performed in a year to the amount of the inpatient hospital 
deductible for that year.

[[Page 66837]]

III. OPPS Ambulatory Payment Classification (APC) Group Policies

A. OPPS Treatment of New CPT and Level II HCPCS Codes

    CPT and Level II HCPCS codes are used to report procedures, 
services, items, and supplies under the hospital OPPS. Specifically, 
CMS recognizes the following codes on OPPS claims:
     Category I CPT codes, which describe surgical procedures 
and medical services;
     Category III CPT codes, which describe new and emerging 
technologies, services, and procedures; and
     Level II HCPCS codes, which are used primarily to identify 
products, supplies, temporary procedures, and services not described by 
CPT codes.
    CPT codes are established by the American Medical Association (AMA) 
and the Level II HCPCS codes are established by the CMS HCPCS 
Workgroup. These codes are updated and changed throughout the year. CPT 
and HCPCS code changes that affect the OPPS are published both through 
the annual rulemaking cycle and through the OPPS quarterly update 
Change Requests (CRs). CMS releases new Level II HCPCS codes to the 
public or recognizes the release of new CPT codes by the AMA and makes 
these codes effective (that is, the codes can be reported on Medicare 
claims) outside of the formal rulemaking process via OPPS quarterly 
update CRs. Based on our review, we assign the new CPT and Level II 
HCPCS codes to interim status indicator (SI) and APC assignments. These 
interim assignments are finalized in the OPPS/ASC final rules. 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 
public comments on these new codes and finalize our proposals related 
to these codes through our annual rulemaking process.
    We note that, under the OPPS, the APC assignment determines the 
payment rate for an item, procedure, or service. Items, procedures, or 
services not paid separately under the hospital OPPS are assigned to 
the appropriate status indicators. Section XI. of the CY 2015 OPPS/ASC 
proposed rule provided a discussion of the various status indicators 
used under the OPPS. Assigning procedures to certain status indicators 
would generate separate payment for the service furnished, while 
assignment to other status indicators would not.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40974), in Table 14 
(Table 15 of this final rule with comment period), we summarized our 
process for updating codes through our OPPS quarterly update CRs, 
seeking public comments, and finalizing their treatment under the OPPS. 
We noted that because the payment rates associated with codes effective 
July 1 were not available to us in time for incorporation into the 
Addenda to the proposed rule, the Level II HCPCS codes and the Category 
III CPT codes implemented through the July 2014 OPPS quarterly update 
CR were not included in Addendum B of the proposed rule (which is 
available via the Internet on the CMS Web site), while those codes 
based upon the April 2014 OPPS quarterly update were included in 
Addendum B. Nevertheless, we requested public comments on the codes 
included in the July 2014 OPPS quarterly update and included these 
codes in the preamble of the proposed rule.

                           Table 15--Comment Timeframe for New or Revised HCPCS Codes
----------------------------------------------------------------------------------------------------------------
    OPPS quarterly update CR         Type of code       Effective date      Comments sought     When finalized
----------------------------------------------------------------------------------------------------------------
April l, 2014...................  Level II HCPCS      April 1, 2014.....  CY 2015 OPPS/ASC    CY 2015 OPPS/ASC
                                   Codes.                                  proposed rule.      final rule with
                                                                                               comment period.
July 1, 2014....................  Level II HCPCS      July 1, 2014......  CY 2015 OPPS/ASC    CY 2015 OPPS/ASC
                                   Codes.                                  proposed rule.      final rule with
                                                                                               comment period.
                                  Category I          July 1, 2014......  CY 2015 OPPS/ASC    CY 2015 OPPS/ASC
                                   (certain vaccine                        proposed rule.      final rule with
                                   codes) and III                                              comment period.
                                   CPT codes.
October 1, 2014.................  Level II HCPCS      October 1, 2014...  CY 2015 OPPS/ASC    CY 2016 OPPS/ASC
                                   Codes.                                  final rule with     final rule with
                                                                           comment period.     comment period.
January 1, 2015.................  Level II HCPCS      January 1, 2015...  CY 2015 OPPS/ASC    CY 2016 OPPS/ASC
                                   Codes.                                  final rule with     final rule with
                                                                           comment period.     comment period.
                                  Category I and III  January 1, 2015...  CY 2015 OPPS/ASC    CY 2016 OPPS/ASC
                                   CPT Codes.                              final rule with     final rule with
                                                                           comment period.     comment period.
----------------------------------------------------------------------------------------------------------------

    This process is discussed in detail below. We have separated our 
discussion into two sections based on whether we solicited public 
comments in the CY 2015 OPPS/ASC proposed rule or whether we will be 
soliciting public comments in this CY 2015 OPPS/ASC final rule with 
comment period. We note that we will be seeking public comments in this 
CY 2015 OPPS/ASC final rule with comment period on the interim APC and 
status indicator assignments for new CPT and Level II HCPCS codes that 
will be effective January 1, 2015. In the CY 2015 OPPS/ASC proposed 
rule (79 FR 40977), we also noted that we sought public comments in the 
CY 2014 OPPS/ASC final rule with comment period on the interim APC and 
status assignments for new Level II HCPCS codes that became effective 
October 1, 2013, or January 1, 2014. These new and revised codes, with 
an effective date of October 1, 2013, or January 1, 2014, 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 2014 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, and were subject to 
public comment following publication of the

[[Page 66838]]

CY 2014 OPPS/ASC final rule with comment period. We are responding to 
public comments and finalizing our interim OPPS treatment of these 
codes in this CY 2015 OPPS/ASC final rule with comment period.
    We received public comments on some new codes that were assigned to 
comment indicator ``NI'' in Addendum B of the CY 2014 OPPS/ASC final 
rule with comment period. We respond to those comments in sections 
III.C. of this CY 2015 OPPS/ASC final rule with comment period.
1. Treatment of New CY 2014 Level II HCPCS and CPT Codes Effective 
April 1, 2014 and July 1, 2014 for Which We Solicited Public Comments 
in the CY 2015 OPPS/ASC Proposed Rule
    Through the April 2014 OPPS quarterly update CR (Transmittal 2903, 
Change Request 8653, dated March 11, 2014) and the July 2014 OPPS 
quarterly update CR (Transmittal 2971, Change Request 8776, dated May 
23, 2014), we recognized several new HCPCS codes for separate payment 
under the OPPS.
    Effective April 1, 2014, we made effective four new Level II HCPCS 
codes and also assigned them to appropriate interim OPPS status 
indicators and APCs. Through the April 2014 OPPS quarterly update CR, 
we allowed separate payment for three of the four new Level II HCPCS 
codes. Specifically, as displayed in Table 15 in the proposed rule (79 
FR 40975), we provided separate payment for HCPCS codes C9021, C9739, 
and C9740. HCPCS code Q2052 was assigned to status indicator ``N'' to 
indicate the service described by this code is packaged under the OPPS.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40974), we solicited 
public comments on the proposed APC and status indicator assignments, 
where applicable, for the Level II HCPCS codes listed in Table 15 of 
that proposed rule (HCPCS codes C9021, C9739, C9740, and Q2052). We did 
not receive any public comments on the proposed APC and status 
indicator assignments for HCPCS codes C9021 and Q2052. Because HCPCS 
code Q2052 will only be billed by pharmacy suppliers, we are modifying 
our CY 2015 proposal to continue to assign HCPCS code Q2052 to status 
indicator ``N.'' Instead, for CY 2015, we are reassigning HCPCS code 
Q2052 from OPPS status indicator ``N'' to ``E'' (Not paid by Medicare 
when submitted on outpatient claims (any outpatient bill type)). We are 
adopting as final, without modification, the proposed APC and status 
indicator assignments for HCPCS code C9021 for CY 2015. We note that we 
received some public comments on HCPCS codes C9739 and C9740, which we 
address in section III.C.3.e. of this final rule with comment period.
    Effective for CY 2015, the HCPCS Workgroup replaced HCPCS code 
C9021 with HCPCS code J9301. Table 16 below shows the complete long 
descriptor for HCPCS code J9301. Consistent with our general policy of 
using permanent HCPCS codes (that is, ``J'' codes) rather than using 
temporary HCPCS codes (that is, ``C'' codes and ``Q'' codes) for the 
reporting of drugs under the OPPS in order to streamline coding, we are 
showing the replacement HCPCS code for C9021, which is effective 
January 1, 2015, in Table 16.
    In this final rule with comment period, we are assigning the Level 
II HCPCS codes listed in Table 16 below to the specified APCs and 
status indicators for CY 2015. The final payment rates for these codes, 
where applicable, can be found in Addendum B to this final rule with 
comment period (which is available via the Internet on the CMS Web 
site).

   Table 16--Final CY 2015 Status Indicators And APC Assignments for the Level II HCPCS Codes That Were Newly
                                            Implemented in April 2014
----------------------------------------------------------------------------------------------------------------
                                                       CY 2015 long        Final CY 2015 status    Final CY 2015
   CY 2014 HCPCS Code       CY 2015 HCPCS Code          descriptor               indicator              APC
----------------------------------------------------------------------------------------------------------------
C9021..................  J9301..................  Injection,              G.....................            1476
                                                   obinutuzumab, 10mg.
C9739..................  C9739..................  Cystourethroscopy,      T.....................            0162
                                                   with insertion of
                                                   transprostatic
                                                   implant; 1 to 3
                                                   implants.
C9740..................  C9740..................  Cystourethroscopy,      T.....................            1564
                                                   with insertion of
                                                   transprostatic
                                                   implant; 4 or more
                                                   implants.
Q2052..................  Q2052..................  Services, supplies and  E.....................             N/A
                                                   accessories used in
                                                   the home under the
                                                   Medicare intravenous
                                                   immune globulin
                                                   (IVIG) demonstration.
----------------------------------------------------------------------------------------------------------------

    Effective July 1, 2014, we made effective several new CPT and Level 
II HCPCS codes and also assigned them to appropriate interim OPPS 
status indicators and APCs. Through the July 2014 OPPS quarterly update 
CR, we allowed separate payment under the OPPS for four new Level II 
HCPCS codes and 17 new Category III CPT codes effective July 1, 2014. 
Specifically, as displayed in Table 16 in the proposed rule, we allowed 
separate payment for HCPCS codes C2644, C9022, C9134, and Q9970. We 
note that HCPCS code Q9970 replaced HCPCS code C9441 (Injection, ferric 
carboxymaltose, 1 mg), beginning July 1, 2014. HCPCS code C9441 was 
made effective January 1, 2014, but the code was deleted June 30, 2014, 
because it was replaced with HCPCS code Q9970. HCPCS code C9441 was 
granted pass-through payment status when the code was implemented on 
January 1, 2014. Because HCPCS code Q9970 describes the same drug as 
HCPCS code C9441, in the CY 2015 OPPS/ASC proposed rule (79 FR 40975), 
we proposed to continue the pass-through payment status for HCPCS code 
Q9970, and assign the HCPCS Q-code to the same APC and status indicator 
as its predecessor HCPCS C-code, as shown in Table 16 of the proposed 
rule. Specifically, we proposed to assign HCPCS code Q9970 to APC 9441 
(Inj, Ferric Carboxymaltose) and status indicator ``G.''
    In addition, the HCPCS Workgroup established HCPCS code Q9974, 
effective July 1, 2014, to replace HCPCS codes J2271 (Injection, 
morphine sulfate, 100mg) and J2275 (Injection, morphine sulfate 
(preservative-free sterile solution), per 10 mg). Both of these HCPCS 
J-codes were assigned to status indicator ``N'' (Packaged Services). As 
a result of the establishment of new HCPCS code Q9974 as a replacement 
for HCPCS codes J2271 and J2275, the payment indicator for HCPCS codes 
J2271 and J2275 was changed to ``E'' (Not Payable by Medicare), 
effective July 1, 2014. Also, because HCPCS code Q9974 describes the 
same services that were described by HCPCS codes J2271 and J2275, in 
the CY 2015 OPPS/ASC proposed rule (79 FR 40975), we proposed to 
continue to assign HCPCS code Q9974 to the same status indicator as its 
predecessor HCPCS J-codes. Specifically, we proposed to assign HCPCS 
code Q9974 to status indicator ``N,'' effective July 1, 2014.

[[Page 66839]]

    In the CY 2015 OPPS/ASC proposed rule (79 FR 40975), we also 
proposed to assign the Level II HCPCS codes listed in Table 16 to the 
specified proposed APCs and status indicators set forth in Table 16 of 
the proposed rule. This table included a complete list of the Level II 
HCPCS codes that were made effective July 1, 2014. The codes that were 
made effective July 1, 2014, did not appear in Addendum B to the 
proposed rule, and as a result, the proposed payment rates along with 
the proposed status indicators and proposed APC assignments, where 
applicable, for CY 2015 were provided in Table 16 of the proposed rule.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40975), we solicited 
public comments on the proposed status indicators and APC assignments 
for the HCPCS codes that were listed in Table 16 of the proposed rule. 
We did not receive any public comments on the proposed APC and status 
indicator assignments for HCPCS codes C9022, C9134, Q9970, and Q9974 
for CY 2015. Therefore, we are adopting as final, without modification, 
the proposed APC and status indicator assignments for these four Level 
II HCPCS codes for CY 2015. We note that we received a public comment 
on HCPCS code C2644, which is addressed in section II.A.2.d.3. of this 
final rule with comment period.
    The HCPCS Workgroup replaced HCPCS code C9022 with HCPCS code 
J1322, effective January 1, 2015. Because HCPCS code J1322 describes 
the same drug with the same dosage descriptor as its predecessor code, 
HCPCS code C9022, this drug will continue to receive pass-through 
payment status in CY 2015. Therefore, we are assigning HCPCS code J1322 
to the same APC and status indicator as its predecessor code, HCPCS 
code C9022, as shown in Table 17 below.
    In addition, the HCPCS Workgroup replaced HCPCS code C9134 with 
HCPCS code J7181, effective January 1, 2015. Because HCPCS code J7181 
does not describe the same dosage descriptor as its predecessor code, 
HCPCS code J7181 has been assigned to a new APC. Specifically, HCPCS 
code C9134 had a dosage descriptor of ``10 i.u.,'' while HCPCS code 
J7181 has a dosage descriptor of ``i.u.'' Therefore, effective January 
1, 2015, we are assigning HCPCS code J7181 to APC 1746, which is a 
different APC assignment than the APC assignment for HCPCS code C9134, 
to maintain data consistency for future rulemakings. Because the 
predecessor code, HCPCS code C9134, was granted pass-through payment 
status, HCPCS code J7181 will continue to be assigned to status 
indicator ``G'' for CY 2015.
    We also note that the HCPCS Workgroup replaced HCPCS code Q9970 
with HCPCS code J1439, effective January 1, 2015. Because HCPCS code 
J1439 describes the same drug with the same dosage descriptor as its 
predecessor code, HCPCS code Q9970, this drug will continue to receive 
pass-through payment status in CY 2015. Therefore, we are assigning 
HCPCS code J1439 to the same APC and status indicator as its 
predecessor code, HCPCS code Q9970, as shown in Table 17 below.
    Further, the HCPCS Workgroup replaced HCPCS code Q9974 with HCPCS 
code J2274, effective January 1, 2015. Because HCPCS code J2274 
describes the same drug with the same dosage descriptor as its 
predecessor code, HCPCS code Q9974, this drug will continue its 
packaged status indicator. Therefore, we are assigning HCPCS code J2274 
to the same status indicator as its predecessor code, HCPCS code Q9974, 
as also shown in Table 17 below.
    Table 17 below includes a complete list of the Level II HCPCS codes 
that were made effective July 1, 2014, with their final status 
indicators and APC assignments for CY 2015. The final payment rates for 
these codes, where applicable, can be found in Addendum B to this final 
rule with comment period (which is available via the Internet on the 
CMS Web site).

   Table 17--Final CY 2015 Status Indicators and APC Assignments for the Level II HCPCS Codes That Were Newly
                                            Implemented in July 2014
----------------------------------------------------------------------------------------------------------------
                                                       CY 2015 long        Final CY 2015 status    Final CY 2015
   CY 2014 HCPCS Code       CY 2015 HCPCS Code          descriptor               indicator              APC
----------------------------------------------------------------------------------------------------------------
C2644..................  C2644..................  Brachytherapy source,   U.....................            2644
                                                   cesium-131 chloride
                                                   solution, per
                                                   millicurie.
C9022..................  J1322..................  Injection, elosulfase   G.....................            1480
                                                   alfa, 1mg.
C9134..................  J7181..................  Factor XIII A-Subunit   G.....................            1746
                                                   (Recombinant), Per IU.
Q9970..................  J1439..................  Injection, ferric       G.....................            9441
                                                   carboxymaltose, 1mg.
Q9974..................  J2274..................  Injection, morphine     N.....................             N/A
                                                   sulfate, preservative-
                                                   free for epidural or
                                                   intrathecal use, 10
                                                   mg.
----------------------------------------------------------------------------------------------------------------

    In the CY 2015 OPPS/ASC proposed rule (79 FR 40975), for CY 2015, 
we proposed to continue our established policy of recognizing Category 
I CPT vaccine codes for which FDA approval is imminent and Category III 
CPT codes that the AMA releases in January of each year for 
implementation in July through the OPPS quarterly update process. Under 
the OPPS, Category I CPT 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. For the July 2014 update, 
there were no new Category I CPT vaccine codes.
    Through the July 2014 OPPS quarterly update CR (Transmittal 2971, 
Change Request 8776, dated May 23, 2014), we assigned interim OPPS 
status indicators and APCs for 17 of the 27 new Category III CPT codes 
that were made effective July 1, 2014. Specifically, as displayed in 
Table 17 in the proposed rule, we made interim OPPS status indicators 
and APC assignments for Category III CPT codes 0347T, 0348T, 0349T, 
0350T, 0355T, 0356T, 0358T, 0359T, 0360T, 0362T, 0364T, 0366T, 0368T, 
0370T, 0371T, 0372T, and 0373T. Table 17 of the proposed rule listed 
the Category III CPT codes that were implemented on July 1, 2014, along 
with the proposed status indicators, proposed APC assignments, and 
proposed payment rates, where applicable, for CY 2015. We did not 
receive any public comments on the proposed APC and status indicator 
assignments for Category III CPT codes 0347T, 0348T, 0349T, 0350T, 
0356T, 0358T, 0359T, 0360T, 0362T, 0364T, 0366T, 0368T, 0370T, 0371T, 
0372T, and 0373T. Therefore, we are adopting as final, without 
modification, the proposed APC and status indicator assignments for 
these 16 CPT codes for CY 2015. We received a public comment on CPT 
codes 0335T, which we address

[[Page 66840]]

in section III.C.2.6. of this final rule with comment period. We also 
received specific public comments on CPT codes 0351T, 0352T, 0353T, and 
0354T, which are addressed in section II.C.6.b. of this final rule with 
comment period. Table 18 below lists the Category III CPT codes that 
were implemented in July 2014, along with their final status indicators 
and APC assignments for CY 2015. The final payment rates for these 
codes, where applicable, can be found in Addendum B to this final rule 
with comment period (which is available via the Internet on the CMS Web 
site).

                          Table 18--New Category III CPT Codes Implemented in July 2014
----------------------------------------------------------------------------------------------------------------
                                                       CY 2015 long       Final CY 2015 status    Final CY 2015
    CY 2014 CPT code         CY 2015 CPT code           descriptor              indicator              APC
----------------------------------------------------------------------------------------------------------------
0347T..................  0347T..................  Placement of           Q1....................            0420
                                                   interstitial
                                                   device(s) in bone
                                                   for
                                                   radiostereometric
                                                   analysis (RSA).
0348T..................  0348T..................  Radiologic             Q1....................            0261
                                                   examination,
                                                   radiostereometric
                                                   analysis (RSA);
                                                   spine, (includes,
                                                   cervical, thoracic
                                                   and lumbosacral,
                                                   when performed).
0349T..................  0349T..................  Radiologic             Q1....................            0261
                                                   examination,
                                                   radiostereometric
                                                   analysis (RSA);
                                                   upper
                                                   extremity(ies),
                                                   (includes shoulder,
                                                   elbow and wrist,
                                                   when performed).
0350T..................  0350T..................  Radiologic             Q1....................            0261
                                                   examination,
                                                   radiostereometric
                                                   analysis (RSA);
                                                   lower
                                                   extremity(ies),
                                                   (includes hip,
                                                   proximal femur, knee
                                                   and ankle, when
                                                   performed).
0351T..................  0351T..................  Optical coherence      N.....................             N/A
                                                   tomography of breast
                                                   or axillary lymph
                                                   node, excised
                                                   tissue, each
                                                   specimen; real time
                                                   intraoperative.
0352T..................  0352T..................  Optical coherence      B.....................             N/A
                                                   tomography of breast
                                                   or axillary lymph
                                                   node, excised
                                                   tissue, each
                                                   specimen;
                                                   interpretation and
                                                   report, real time or
                                                   referred.
0353T..................  0353T..................  Optical coherence      N.....................             N/A
                                                   tomography of
                                                   breast, surgical
                                                   cavity; real time
                                                   intraoperative.
0354T..................  0354T..................  Optical coherence      B.....................             N/A
                                                   tomography of
                                                   breast, surgical
                                                   cavity;
                                                   interpretation and
                                                   report, real time or
                                                   referred.
0355T..................  0355T..................  Gastrointestinal       T.....................            0142
                                                   tract imaging,
                                                   intraluminal (eg,
                                                   capsule endoscopy),
                                                   colon, with
                                                   interpretation and
                                                   report.
0356T..................  0356T..................  Insertion of drug-     Q1....................            0698
                                                   eluting implant
                                                   (including punctal
                                                   dilation and implant
                                                   removal when
                                                   performed) into
                                                   lacrimal
                                                   canaliculus, each.
0358T..................  0358T..................  Bioelectrical          Q1....................            0340
                                                   impedance analysis
                                                   whole body
                                                   composition
                                                   assessment, supine
                                                   position, with
                                                   interpretation and
                                                   report.
0359T..................  0359T..................  Behavior               V.....................            0632
                                                   identification
                                                   assessment, by the
                                                   physician or other
                                                   qualified health
                                                   care professional,
                                                   face-to-face with
                                                   patient and
                                                   caregiver(s),
                                                   includes
                                                   administration of
                                                   standardized and non-
                                                   standardized tests,
                                                   detailed behavioral
                                                   history, patient
                                                   observation and
                                                   caregiver interview,
                                                   interpretation of
                                                   test results,
                                                   discussion of
                                                   findings and
                                                   recommendations with
                                                   the primary
                                                   guardian(s)/
                                                   caregiver(s), and
                                                   preparation of
                                                   report.
0360T..................  0360T..................  Observational          V.....................            0632
                                                   behavioral follow-up
                                                   assessment, includes
                                                   physician or other
                                                   qualified health
                                                   care professional
                                                   direction with
                                                   interpretation and
                                                   report, administered
                                                   by one technician;
                                                   first 30 minutes of
                                                   technician time,
                                                   face-to-face with
                                                   the patient.
0361T..................  0361T..................  Observational          N.....................             N/A
                                                   behavioral follow-up
                                                   assessment, includes
                                                   physician or other
                                                   qualified health
                                                   care professional
                                                   direction with
                                                   interpretation and
                                                   report, administered
                                                   by one technician;
                                                   each additional 30
                                                   minutes of
                                                   technician time,
                                                   face-to-face with
                                                   the patient (List
                                                   separately in
                                                   addition to code for
                                                   primary service).
0362T..................  0362T..................  Exposure behavioral    V.....................            0632
                                                   follow-up
                                                   assessment, includes
                                                   physician or other
                                                   qualified health
                                                   care professional
                                                   direction with
                                                   interpretation and
                                                   report, administered
                                                   by physician or
                                                   other qualified
                                                   health care
                                                   professional with
                                                   the assistance of
                                                   one or more
                                                   technicians; first
                                                   30 minutes of
                                                   technician(s) time,
                                                   face-to-face with
                                                   the patient.
0363T..................  0363T..................  Exposure behavioral    N.....................             N/A
                                                   follow-up
                                                   assessment, includes
                                                   physician or other
                                                   qualified health
                                                   care professional
                                                   direction with
                                                   interpretation and
                                                   report, administered
                                                   by physician or
                                                   other qualified
                                                   health care
                                                   professional with
                                                   the assistance of
                                                   one or more
                                                   technicians; each
                                                   additional 30
                                                   minutes of
                                                   technician(s) time,
                                                   face-to-face with
                                                   the patient (List
                                                   separately in
                                                   addition to code for
                                                   primary procedure).
0364T..................  0364T..................  Adaptive behavior      S.....................            0322
                                                   treatment by
                                                   protocol,
                                                   administered by
                                                   technician, face-to-
                                                   face with one
                                                   patient; first 30
                                                   minutes of
                                                   technician time.
0365T..................  0365T..................  Adaptive behavior      N.....................             N/A
                                                   treatment by
                                                   protocol,
                                                   administered by
                                                   technician, face-to-
                                                   face with one
                                                   patient; each
                                                   additional 30
                                                   minutes of
                                                   technician time
                                                   (List separately in
                                                   addition to code for
                                                   primary procedure).
0366T..................  0366T..................  Group adaptive         S.....................            0325
                                                   behavior treatment
                                                   by protocol,
                                                   administered by
                                                   technician, face-to-
                                                   face with two or
                                                   more patients; first
                                                   30 minutes of
                                                   technician time.
0367T..................  0367T..................  Group adaptive         N.....................             N/A
                                                   behavior treatment
                                                   by protocol,
                                                   administered by
                                                   technician, face-to-
                                                   face with two or
                                                   more patients; each
                                                   additional 30
                                                   minutes of
                                                   technician time
                                                   (List separately in
                                                   addition to code for
                                                   primary procedure).
0368T..................  0368T..................  Adaptive behavior      S.....................            0322
                                                   treatment with
                                                   protocol
                                                   modification
                                                   administered by
                                                   physician or other
                                                   qualified health
                                                   care professional
                                                   with one patient;
                                                   first 30 minutes of
                                                   patient face-to-face
                                                   time.
0369T..................  0369T..................  Adaptive behavior      N.....................             N/A
                                                   treatment with
                                                   protocol
                                                   modification
                                                   administered by
                                                   physician or other
                                                   qualified health
                                                   care professional
                                                   with one patient;
                                                   each additional 30
                                                   minutes of patient
                                                   face-to-face time
                                                   (List separately in
                                                   addition to code for
                                                   primary procedure).

[[Page 66841]]

 
0370T..................  0370T..................  Family adaptive        S.....................            0324
                                                   behavior treatment
                                                   guidance,
                                                   administered by
                                                   physician or other
                                                   qualified health
                                                   care professional
                                                   (without the patient
                                                   present).
0371T..................  0371T..................  Multiple-family group  S.....................            0324
                                                   adaptive behavior
                                                   treatment guidance,
                                                   administered by
                                                   physician or other
                                                   qualified health
                                                   care professional
                                                   (without the patient
                                                   present).
0372T..................  0372T..................  Adaptive behavior      S.....................            0325
                                                   treatment social
                                                   skills group,
                                                   administered by
                                                   physician or other
                                                   qualified health
                                                   care professional
                                                   face-to-face with
                                                   multiple patients.
0373T..................  0373T..................  Exposure adaptive      S.....................            0323
                                                   behavior treatment
                                                   with protocol
                                                   modification
                                                   requiring two or
                                                   more technicians for
                                                   severe maladaptive
                                                   behavior(s); first
                                                   60 minutes of
                                                   technicians' time,
                                                   face-to-face with
                                                   patient.
0374T..................  0374T..................  Exposure adaptive      N.....................             N/A
                                                   behavior treatment
                                                   with protocol
                                                   modification
                                                   requiring two or
                                                   more technicians for
                                                   severe maladaptive
                                                   behavior(s); each
                                                   additional 30
                                                   minutes of
                                                   technicians' time
                                                   face-to-face with
                                                   patient (List
                                                   separately in
                                                   addition to code for
                                                   primary procedure).
----------------------------------------------------------------------------------------------------------------

    Further, in the CY 2015 OPPS/ASC proposed rule, we solicited public 
comments on the proposed CY 2015 status indicators, APC assignments, 
and payment rates for the Level II HCPCS codes and the Category III CPT 
codes that were made effective April 1, 2014, and July 1, 2014. These 
codes were listed in Tables 15, 16, and 17 of the proposed rule. We 
also proposed to finalize the status indicator and APC assignments and 
payment rates for these codes, if applicable, in this CY 2015 OPPS/ASC 
final rule with comment period. Because the new Category III CPT and 
Level II HCPCS codes that became effective for July were not available 
to us in time for incorporation into the Addenda to the proposed rule, 
our policy is to include the codes, the proposed status indicators, 
proposed APCs (where applicable), and proposed payment rates (where 
applicable) in the preamble of the proposed rule, but not in the 
Addenda to the proposed rule. These codes were listed in Tables 16 and 
17, respectively, of the proposed rule. We also proposed to incorporate 
these codes into Addendum B to this CY 2015 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 2014 
OPPS update CR and displayed in Table 15 were included in Addendum B to 
the proposed rule (which is available via the Internet on the CMS Web 
site), where the proposed CY 2015 payment rates for these codes were 
also shown.
    We did not receive any additional public comments on this process. 
The final APC and status indicator assignments and payment rates, if 
applicable, for the Level II HCPCS codes and the Category III CPT codes 
that were implemented or modified through the April 2014 or July 2014 
OPPS update CR can be found in Tables 16, 17, and 18, or in Addendum B 
to this final rule with comment period (which is available via the 
Internet on the CMS Web site).
2. Process for New Level II HCPCS Codes That Became Effective October 
1, 2014 and New CPT and Level II HCPCS Codes That Will Become Effective 
January 1, 2015 for Which We Are Soliciting Public Comments in This CY 
2015 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. For CY 2015, these 
codes are flagged with comment indicator ``NI'' in Addendum B to this 
OPPS/ASC final rule with comment period to indicate that we are 
assigning them an interim payment status which is subject to public 
comment. In addition, the CPT and Level II HCPCS codes that will become 
effective January 1, 2015, are flagged with comment indicator ``NI'' in 
Addendum B to this CY 2015 OPPS/ASC final rule with comment period. 
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 this final rule with comment 
period, and we will respond to these public comments in the OPPS/ASC 
final rule with comment period for the next year's OPPS/ASC update. In 
the CY 2015 OPPS/ASC proposed rule (79 FR 40977), we proposed to 
continue this process for CY 2015. Specifically, for CY 2015, we 
proposed to include in Addendum B to the CY 2015 OPPS/ASC final rule 
with comment period the following new HCPCS codes:
     New Level II HCPCS codes effective October 1, 2014, that 
would be incorporated in the October 2014 OPPS quarterly update CR;
     New Category I and III CPT codes effective January 1, 
2015, that would be incorporated in the January 2015 OPPS quarterly 
update CR; and
     New Level II HCPCS codes effective January 1, 2015, that 
would be incorporated in the January 2015 OPPS quarterly update CR.
    As stated above, the October 1, 2014 and January 1, 2015 codes are 
flagged with comment indicator ``NI'' in Addendum B to this CY 2015 
OPPS/ASC final rule with comment period to indicate that we have 
assigned the codes an interim OPPS payment status for CY 2015. We are 
inviting public comments on the interim status indicator and APC 
assignments and payment rates for these codes, if applicable, that will 
be finalized in the CY 2016 OPPS/ASC final rule with comment period.
3. Process for Soliciting Public Comments for New and Revised CPT Codes 
Released by the AMA
    We generally incorporate the new CPT codes that are effective 
January 1 in the OPPS/ASC final rule with comment period. We establish 
interim APC and status indicator assignments for these new codes for 
the coming year, and

[[Page 66842]]

request comments on the interim assignments in the OPPS/ASC final rule 
with comment period. Similarly, we establish interim APC and status 
indicator assignments for existing CPT codes that have substantial 
revision to their code descriptors that necessitate a change in the 
current APC assignments, and request comments on the interim 
assignments in the OPPS/ASC final rule with comment period. In both 
cases, we assign these new and revised codes to OPPS comment indicator 
``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.) in 
the OPPS/ASC final rule with comment period. We respond to comments and 
finalize the APC and status indicator assignments for these CPT codes 
in the following year's OPPS/ASC final rule with comment period.
a. Current Process for Accepting Comments on New and Revised CPT Codes 
for a Year
    As described above, under the hospital OPPS, our current process 
for both new CPT codes and existing CPT codes with substantial 
revisions to the code descriptors that are released by the AMA for use 
beginning January 1 is to flag these codes with comment indicator 
``NI'' in Addendum B to the OPPS/ASC final rule with comment period to 
indicate that the codes are new for the calendar year and have been 
assigned interim APCs and status indicators, and that we are accepting 
public comments on the interim APC and status indicator assignments. We 
address public comments received and finalize the APC and status 
indicator assignments for the codes in the next year's OPPS/ASC final 
rule with comment period. For example, the new CPT codes that were 
effective January 1, 2014, were assigned to comment indicator ``NI'' in 
Addendum B to the CY 2014 OPPS/ASC final rule with comment period. We 
respond to public comments received on the CY 2014 OPPS/ASC final rule 
with comment period and finalize the APC and status indicator 
assignments for these codes in this CY 2015 OPPS/ASC final rule with 
comment period. We include the final APC and status indicator 
assignments for these codes in Addendum B to this final rule with 
comment period (which is available via the Internet on the CMS Web 
site).
    Many stakeholders have expressed concern with the process we use to 
recognize new and revised CPT codes. They believe that CMS should 
publish proposed APC and status indicator assignments for the new and 
revised CPT codes that will be effective January 1 in the OPPS/ASC 
proposed rule for that calendar year, and request public comments prior 
to finalizing the assignments. Further, the stakeholders believe that 
seeking public input on the APC and status indicator assignments for 
these new and revised codes would assist CMS in assigning the CPT codes 
to appropriate APCs. Similar concerns have been expressed regarding our 
process for assigning interim payment values for revalued, and new and 
revised codes, under the Medicare Physician Fee Schedule (MPFS). We 
refer readers to the CY 2015 MPFS proposed rule for a detailed 
discussion of this issue as it relates to the MPFS (79 FR 40359 through 
40364).
    Like the MPFS, the OPPS and the ASC payment system rely principally 
upon the Current Procedural Terminology (CPT[supreg]) coding system 
maintained by the AMA to identify specific services for billing and 
payment purposes. CPT is the standard code set adopted under the Health 
Insurance Portability and Accountability Act of 1996 (HIPAA) for 
outpatient services. The AMA CPT Editorial Panel's coding cycle occurs 
concurrently with our calendar year rulemaking cycle for the OPPS and 
the ASC payment system. However, the OPPS/ASC proposed rules are 
published prior to the publication of the CPT codes that are made 
public in the Fall with a January 1 effective date, and we are 
currently unable to include these codes in the OPPS/ASC proposed rules. 
Consequently, we establish in the final rule with comment period 
interim APC and status indicator assignments for new and revised CPT 
codes that have an effective date of January 1, and we make payment 
based on those interim designations for one year, while accepting 
public comments on the final rule with comment period. We then respond 
to those public comments received and make final APC and status 
indicator assignments in the next year's final rule with comment 
period.
b. Modification of Process for New and Revised CPT Codes That Are 
Effective January 1
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40977 through 40979), 
we proposed to make changes in the process we use to establish APC 
assignments and status indicators for new and revised codes. We 
proposed that, for new and revised CPT codes that we receive from the 
AMA's CPT Editorial Panel too late for inclusion in the proposed rule 
for a year, we would delay adoption of the new and revised codes for 
that year, and instead, adopt coding policies and payment rates that 
conform, to the extent possible, to the policies and payment rates in 
place for the previous year. We proposed to adopt these conforming 
coding and payment policies on an interim basis pending the result of 
our specific proposals for status indicator and APC assignments for 
these new and revised codes through notice and comment rulemaking in 
the OPPS/ASC proposed rule for the following year. Because the changes 
in CPT codes are effective on January 1 of each year, and CMS would not 
have established status indicator or APC assignments for these new or 
revised codes, it would not be practicable for Medicare to use those 
CPT codes. In this circumstance, we proposed to create HCPCS G-codes to 
describe the predecessor codes for any codes that were revised or 
deleted as part of the annual CPT coding changes, but that we did not 
receive in time to include proposed APC and status indicator 
assignments in the proposed rule. However, if certain CPT codes are 
revised in a manner that would not affect the cost of inputs (for 
example, a minor change to CPT code descriptors), we would use these 
revised codes and continue to assign those codes to their current APC. 
For example, under this proposed process, if a single CPT code was 
separated into two codes and we did not receive those codes until May 
2015, we would assign each of those CPT codes to status indicator ``B'' 
in the final rule with comment period, to indicate that an alternate 
code is recognized under the OPPS. Hospitals could not use those two 
new CPT codes to bill Medicare for outpatient services the first year 
after the CPT effective date of the codes. Instead, we would create a 
HCPCS G-code with the same description as the single predecessor CPT 
code, and continue to use the same APC and status indicator assignment 
for the new G-code during the year. We would propose APC and status 
indicator assignments for the two new CPT codes during rulemaking in CY 
2016, accept and respond to public comments on the proposed 
assignments, and establish final APC and status indicator assignments 
for the codes in the final rule for payment beginning in CY 2017.
    For new codes that describe wholly new services, as opposed to new 
or revised codes that describe services for which APC and status 
indicator assignments are already established, we would make every 
effort to work with the AMA's CPT Editorial Panel to ensure that we 
received the codes in time to propose payment rates in the proposed 
rule. However, if we do not

[[Page 66843]]

receive the code for a wholly new service in time to include proposed 
APC and status indicator assignments in the proposed rule for a year, 
we would need to establish interim APC and status indicator assignments 
for the initial year because there would be no predecessor code we 
could use as a reference to establish a G-code in order to continue 
current payment policies for such a service. We proposed to continue to 
establish the initial APC and status indicator assignments for these 
wholly new services as interim final assignments, and to follow our 
current process to solicit and respond to public comments and finalize 
the APC and status indicator assignments in the subsequent year.
    We recognize that the use of HCPCS G-codes may place an 
administrative burden on those providers that bill for services under 
the OPPS and the ASC payment system. However, the proposed use of G-
codes would permit us to propose and accept public comment on the APC 
and status indicator assignments for the vast majority of new and 
revised codes before they take effect. We are hopeful that the AMA's 
CPT Editorial Panel ultimately will be able to adjust its timelines and 
processes so that most, if not all, of the annual coding changes can be 
addressed in the proposed rule before the new and revised CPT codes 
take effect on January 1. If the AMA's CPT Editorial Committee can make 
adjustments to its schedule, we would not need to use G-codes as 
described above for the purpose of maintaining outdated coding and APC 
and status indicator assignments for a year until we can include 
proposed APC and status indicator assignments for the new and revised 
codes in a proposed rule. We proposed to implement the revised CMS 
process for establishing APC and status indicator assignments for new 
and revised codes for CY 2016. However, we indicated in the proposed 
rule that we would consider alternative implementation dates if that 
would allow time for the AMA's CPT Editorial Panel to adjust its 
schedule in order to avoid the necessity to use numerous HCPCS G-codes.
    In summary, in conjunction with the proposals presented in the CY 
2015 MPFS proposed rule to revise the process used to address new, 
revised, and potentially misvalued codes under the MPFS, in the CY 2015 
OPPS/ASC proposed rule (79 FR 40977 through 40979), we proposed to 
include in the OPPS/ASC proposed rule the proposed APC and status 
indicator assignments for the vast majority of new and revised CPT 
codes before they are used for payment purposes under the OPPS and ASC 
payment system. We would address new and revised CPT codes for the 
upcoming year that are available in time for the proposed rule by 
proposing APC and status indicator assignments for the codes. 
Otherwise, we will delay adoption of the new and revised codes for a 
year while using methods (including creating G-codes that describe the 
predecessor codes) to maintain the existing APC and status indicator 
assignments until the following year when we would include proposed 
assignments for the new and revised codes in the proposed rule. We 
proposed to follow this revised process except in the case of a new CPT 
code that describes a wholly new service (such as a new technology or 
new surgical procedure) that has not previously been addressed under 
the OPPS. For codes that describe wholly new services for which we do 
not receive timely information from the AMA, we proposed to establish 
interim APC and status indicator assignments in the OPPS/ASC final 
rules with comment period, as is our current process. The proposed 
revised process would eliminate our current practice of assigning 
interim APC and status indicators for the vast majority of new and 
revised CPT codes that take effect on January 1 each year. We invited 
public comments on this proposal. We indicated in the proposed rule 
that we were specifically interested in receiving public comments on 
the following topics:
     Is this proposal preferable to the present process? Are 
there other alternatives?
     If we were to implement this proposal, is it better to 
move forward with the changes or is more time needed to make the 
transition and, therefore, implementation should be delayed beyond CY 
2016?
     Are there alternatives other than the use of HCPCS G-codes 
that would allow us to address the annual CPT code changes through 
notice and comment rather than interim final rulemaking?
     Is the process we have proposed for wholly new services 
appropriate? How should we define new services?
     Are there any classes of services, other than new 
services, that should remain on an interim final schedule?
    Comment: The majority of the commenters supported the proposal to 
modify the current process of recognizing new and revised CPT codes 
because it would provide an opportunity for the public to comment on 
specific APC and status indicator assignments prior to those 
assignments being finalized. However, several commenters disagreed with 
our proposed implementation date of CY 2016 and requested that CMS work 
with the AMA to determine an appropriate implementation date. Other 
commenters suggested that CMS finalize the proposal but urged CMS to 
work with the AMA on an appropriate timeline that considers the AMA's 
CPT and RUC (Specialty Society Relative Value Update Committee) meeting 
dates as well as CMS' OPPS and MPFS regulation schedule. The AMA 
supported the proposal but requested that CMS finalize the proposal for 
CY 2017 rather than CY 2016 because the CPT codes for the CY 2016 
update are almost complete.
    Response: We appreciate the commenters' support for our proposal. 
We believe that publishing our proposed status indicator and APC 
assignments for the new and revised CPT codes in the proposed rule 
would alleviate some concerns expressed by stakeholders in the past 
that some of our interim APC assignments were not appropriate, and that 
the APC assignment process could be improved if we had the benefit of 
public comments before adopting final APC and status indicator 
assignments for new and revised codes. This new process of proposing 
and requesting public comments before finalizing the APC and status 
indicator assignments for new and revised codes allows both CMS and 
stakeholders the benefit of public notice and comment prior to the use 
of the new and revised codes for payment purposes. When we receive 
information on the new and revised codes from the AMA in time to 
include proposals for new and revised codes in the proposed rule before 
the codes are effective the following January 1, the revised process 
allows public notice and comment before finalizing APC and status 
indicator assignments for the codes during the calendar year before the 
CPT codes become effective. In addition, this new process eliminates 
the need to make interim APC and status indicator assignments for new 
and revised CPT codes, which has been unpopular among some providers 
because the interim assignments are used for payment for a year before 
we address public comments and make any appropriate changes to an APC 
or status indicator assignment in the subsequent year's final rule.
    Although the AMA and several commenters requested that we modify 
our proposal by finalizing this new process for the CY 2017 OPPS 
update, we disagree with this recommendation. We believe the new 
process that permits an opportunity for public comment on

[[Page 66844]]

proposed APC and status indicator assignments for the vast majority of 
new and revised codes before they are finalized and used for payment 
purposes will be beneficial to CMS and to hospitals and other 
stakeholders, and we see no reason to delay implementation of this 
policy change. Therefore, beginning with the CY 2016 OPPS update, we 
will publish proposed APC and status indicator assignments for any new 
and revised CPT codes for January 1, 2016 that are publicly released by 
the AMA in time for us to consider them for inclusion in the OPPS/ASC 
proposed rule. After review of the public comments received on the 
proposed rule, we will finalize the status indicator and APC 
assignments for those new and revised CPT codes in the CY 2016 OPPS/ASC 
final rule. Because the APC assignments would be final, we would no 
longer request comments in the OPPS/ASC final rules for these new and 
revised CPT codes that are included in the proposed rule. For any new 
and revised codes released too late for us to consider them for 
inclusion in the CY 2016 OPPS/ASC proposed rule, we will create HCPCS 
G-codes that reflect the same description(s), and APC and status 
indicator assignments, as their predecessor codes. These HCPCS G-codes 
will be used during CY 2016, and then we will include proposals for the 
corresponding new and revised codes and APC and status indicator 
assignments in the CY 2017 OPPS/ASC proposed rule.
    Comment: Most commenters opposed the use of temporary HCPCS G-codes 
and requested that CMS not implement the HCPCS G-code process if it 
finalizes the proposal to change to process for new and revised CPT 
codes. The commenters recommended not establishing temporary HCPCS G-
codes because these codes would be extremely burdensome for providers 
to use. The commenters stated that establishing HCPCS G-codes for 
services or procedures that are already described by existing CPT codes 
would be too confusing for hospitals, physicians, and other third party 
insurers to accurately claim costs for these procedures, and that using 
two different sets of codes for the same procedure or service could 
result in erroneous claims.
    Response: As described above, we plan to publish the new and 
revised CPT codes that are publicly available and provided to us in 
time for evaluation in the CY 2016 OPPS/ASC proposed rule. 
Specifically, in the CY 2016 OPPS/ASC proposed rule, we expect to 
publish new and revised CPT codes that would be effective January 1, 
2016, with the proposed status indicator and APC assignments, and 
request public comments on these proposed assignments as long as we 
receive them in time for inclusion in the proposed rule. We would 
finalize the status indicator and APC assignments for these new and 
revised CPT codes in the CY 2016 OPPS/ASC final rule.
    However, for those new and revised CPT codes that are not publicly 
available in time for the OPPS/ASC proposed rule, we will create HCPCS 
G-codes that mirror the predecessor CPT codes and retain the current 
APC and status indicator assignments for a year until we can include 
proposed status indicator and APC assignments in the following year's 
proposed rule. These HCPCS G-codes will be assigned to comment 
indicator ``NI'' to indicate that the codes are new and open for 
comment for 60 days after display of the OPPS/ASC final rule with 
comment period. This is consistent with our current policy of seeking 
public comments on new CPT and Level II HCPCS codes with interim APC 
and status indicator assignments that were not previously published in 
the proposed rule. For new and revised codes, we recognize that there 
is a trade-off between the benefit of considering public comments on 
the proposed APC and status indicator assignments before they take 
effect and the potential confusion caused by the use of HCPCS G-codes. 
We anticipate that the use of HCPCS G-codes will be largely a temporary 
solution or may not be necessary in the OPPS, and we expect to work 
closely with the AMA to minimize the need for them. We note that, under 
the MPFS, we generally do not develop values for new and revised CPT 
codes until we receive recommendations provided by the AMA's RUC. In 
contrast, under the OPPS, we use only the publicly available new and 
revised CPT codes and their descriptors to develop APC and status 
indicator assignments. As such, we anticipate that the need to use 
HCPCS G-codes under the OPPS will be less frequent than under the MPFS.
    After consideration of the public comments we received, we are 
finalizing our proposal. For the new and revised CPT codes that we 
receive timely from the AMA's CPT Editorial Panel, we are finalizing 
our proposal to include these codes that would be effective January 1 
in the OPPS/ASC proposed rules, along with proposed APC and status 
indicator assignments for them, and to finalize the APC and status 
indicator assignments in the OPPS/ASC final rules beginning with the CY 
2016 OPPS update. For those new and revised CPT codes that we receive 
too late for inclusion in the OPPS/ASC proposed rule, we are finalizing 
our proposal to create and use HCPCS G-codes that mirror the 
predecessor CPT codes and retain the current APC and status indicator 
assignments for a year until we can propose APC and status indicator 
assignments in the following year's rulemaking cycle. We note that even 
if we find that we need to create HCPCS G-codes in place of certain CPT 
codes for the MPFS proposed rule, we do not anticipate that these HCPCS 
G-codes will always be necessary for OPPS purposes. We will make every 
effort to include proposed APC and status indicator assignments for all 
new and revised CPT codes that the AMA makes publicly available in time 
for us to include them in the proposed rule, and to avoid the resort to 
HCPCS G-codes and the resulting delay in utilization of the most 
current CPT codes. We also are finalizing our proposal to make interim 
APC and status indicator assignments for CPT codes that are not 
available in time for the proposed rule and that describe wholly new 
services (such as new technologies or new surgical procedures), solicit 
public comments, and finalize the specific APC and status indicator 
assignments for those codes in the following year's final rule.

B. OPPS Changes--Variations Within APCs

1. Background
    Section 1833(t)(2)(A) of the Act requires the Secretary to develop 
a classification system for covered hospital outpatient department 
services. Section 1833(t)(2)(B) of the Act provides that the Secretary 
may establish groups of covered OPD services within this classification 
system, so that services classified within each group are comparable 
clinically and with respect to the use of resources. In accordance with 
these provisions, we developed a grouping classification system, 
referred to as Ambulatory Payment Classifications (APCs), as set forth 
in Sec.  419.31 of the regulations. We use Level I and Level II HCPCS 
codes to identify and group the services within each APC. The APCs are 
organized such that each group is homogeneous both clinically and in 
terms of resource use. Using this classification system, we have 
established distinct groups of similar services. We also have developed 
separate APC groups for certain medical devices, drugs, biologicals, 
therapeutic radiopharmaceuticals, and brachytherapy devices that are 
not

[[Page 66845]]

packaged into the payment for the procedure.
    We have packaged into the payment for each procedure or service 
within an APC group the costs associated with those items and services 
that are typically ancillary and supportive to a primary diagnostic or 
therapeutic modality and, in those cases, are an integral part of the 
primary service they support. Therefore, we do not make separate 
payment for these packaged items or services. In general, packaged 
items and services include, but are not limited to the items and 
services listed in Sec.  419.2(b) of the regulations. A further 
discussion of packaged services is included in section II.A.3. of this 
final rule with comment period.
    In CY 2008, we implemented composite APCs to provide a single 
payment for groups of services that are typically performed together 
during a single clinical encounter and that result in the provision of 
a complete service (72 FR 66650 through 66652). For CY 2014, we 
provided composite APC payments for nine categories of services:

 Mental Health Services Composite (APC 0034)
 Cardiac Electrophysiologic Evaluation and Ablation Composite 
(APC 8000)
 Low Dose Rate (LDR) Prostate Brachytherapy Composite (APC 
8001)
 Ultrasound Composite (APC 8004)
 CT and CTA without Contrast Composite (APC 8005)
 CT and CTA with Contrast Composite (APC 8006)
 MRI and MRA without Contrast Composite (APC 8007)
 MRI and MRA with Contrast Composite (APC 8008)
 Extended Assessment & Management Composite (APC 8009)

    A further discussion of composite APCs is included in section 
II.A.2.f. of this final rule with comment period. We note that, as a 
consequence of the new comprehensive APC policy, APC 8000 (Cardiac 
Electrophysiologic Evaluation and Ablation Composite) is being deleted.
    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 relative payment weight represents the hospital cost of the 
services included in that APC, relative to the hospital cost of the 
services included in APC 0634 (Hospital Clinic Visits). The APC 
relative payment weights are scaled to APC 0634 because it is the 
hospital clinic visit APC and clinic visits are among the most 
frequently furnished services in the hospital outpatient setting.
    Section 1833(t)(9)(A) of the Act requires the Secretary to review, 
no less than annually, and revise the APC groups, the relative payment 
weights, and the wage and other adjustments to take into account 
changes in medical practice, changes in technology, the addition of new 
services, new cost data, and other relevant information and factors. 
Section 1833(t)(9)(A) of the Act also requires the Secretary to consult 
with an expert outside advisory panel composed of an appropriate 
selection of representatives of providers to review (and advise the 
Secretary concerning) the clinical integrity of the APC groups and the 
relative payment weights (the Panel recommendations for specific 
services for the CY 2015 OPPS and our responses to them are discussed 
in the relevant specific sections throughout this final rule with 
comment period).
    Finally, section 1833(t)(2) of the Act provides that, subject to 
certain exceptions, the items and services within an APC group cannot 
be considered comparable with respect to the use of resources if the 
highest cost for an item or service in the group is more than 2 times 
greater than the lowest cost for an item or service within the same 
group (referred to as the ``2 times rule''). The statute authorizes the 
Secretary to make exceptions to the 2 times rule in unusual cases, such 
as 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 cost of the highest cost item or service within an 
APC group is more than 2 times greater than the cost of the lowest cost 
item or service within that same group. In making this determination, 
we consider only those HCPCS codes that are significant based on the 
number of claims. We note that, for purposes of identifying significant 
procedure codes for examination under the 2 times rule, we consider 
procedure codes that have more than 1,000 single major claims or 
procedure codes that have both greater than 99 single major claims and 
contribute at least 2 percent of the single major claims used to 
establish the APC cost to be significant (75 FR 71832). This 
longstanding definition of when a procedure code is significant for 
purposes of the 2 times rule was selected because we believe that a 
subset of 1,000 claims (or less than 1,000 claims) is negligible within 
the set of approximately 100 million single procedure or single session 
claims we use for establishing costs. Similarly, a procedure code for 
which there are fewer than 99 single bills and which comprises less 
than 2 percent of the single major claims within an APC will have a 
negligible impact on the APC cost. In the CY 2015 OPPS/ASC proposed 
rule (79 FR 40981), for CY 2015, we proposed to make exceptions to this 
limit on the variation of costs within each APC group in unusual cases, 
such as low-volume items and services.
    In the CY 2015 OPPS/ASC proposed rule, we identified the APCs with 
violations of the 2 times rule for CY 2015 (79 FR 40980). Therefore, we 
proposed changes to the procedure codes assigned to these APCs in 
Addendum B to the CY 2015 OPPS/ASC proposed rule. We noted that 
Addendum B did not appear in the printed version of the Federal 
Register as part of the CY 2015 OPPS/ASC proposed rule. Rather, it was 
published and made available via the Internet on the CMS Web site at: 
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. In these cases, to eliminate a 
violation of the 2 times rule or to improve clinical and resource 
homogeneity, we proposed to reassign these procedure codes to new APCs 
that contain services that are similar with regard to both their 
clinical and resource characteristics. In many cases, the proposed 
procedure code reassignments and associated APC reconfigurations for CY 
2015 included in the proposed rule are related to changes in costs of 
services that were observed in the CY 2013 claims data newly available 
for CY 2015 ratesetting. We also proposed changes to the status 
indicators for some procedure codes that were not specifically and 
separately discussed in the proposed rule. In these cases, we proposed 
to change the status indicators for these procedure codes because we 
believe that another status indicator would more accurately describe 
their payment status from an OPPS perspective based on the policies 
that we proposed for CY 2015. In addition, we proposed to rename 
existing APCs or create new clinical APCs to complement the proposed 
procedure code reassignments. Addendum B to the CY 2015 OPPS/ASC

[[Page 66846]]

proposed rule identified with a comment indicator ``CH'' those 
procedure codes for which we proposed a change to the APC assignment or 
status indicator, or both, that were initially assigned in the April 
2014 Addendum B Update (available via the Internet on the CMS Web site 
at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html). In contrast, Addendum B to this 
final rule with comment period (available via the Internet on the CMS 
Web site) identifies with the ``CH'' comment indicator the final CY 
2015 changes compared to the HCPCS codes' status as reflected in the 
October 2014 Addendum B update.
3. Exceptions to the 2 Times Rule
    As discussed earlier, we may make exceptions to the 2 times rule 
limit on the variation of costs within each APC group in unusual cases 
such as low-volume items and services. Taking into account the APC 
changes that we proposed for CY 2015, we reviewed all of the APCs to 
determine which APCs would not meet the requirements of the 2 times 
rule. We used the following criteria to evaluate whether to propose 
exceptions to the 2 times rule for affected APCs:
     Resource homogeneity;
     Clinical homogeneity;
     Hospital outpatient setting utilization;
     Frequency of service (volume); and
     Opportunity for upcoding and code fragments.
    Based on the CY 2013 claims data available for the CY 2015 OPPS/ASC 
proposed rule, we found 9 APCs with violations of the 2 times rule. We 
applied the criteria as described above to identify the APCs that we 
proposed to make exceptions for under the 2 times rule for CY 2015, and 
identified 9 APCs that met the criteria for an exception to the 2 times 
rule based on the CY 2013 claims data available for the proposed rule. 
We did not include in that determination those APCs where a 2 times 
rule violation was not a relevant concept, such as APC 0375 (Ancillary 
Outpatient Services when Patient Expires), which has an APC cost set 
based on multiple procedure claims. Therefore, we only identified those 
APCs, including those with criteria-based costs, such as device-
dependent APCs, with violations of the 2 times rule. 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).
    We note that, for cases in which a recommendation by the Panel 
appears to result in or allow a violation of the 2 times rule, we 
generally accept the Panel's recommendation because those 
recommendations are based on explicit consideration (that is, a review 
of the latest OPPS claims data and group discussion of the issue) of 
resource use, clinical homogeneity, site of service, and the quality of 
the claims data used to determine the APC payment rates.
    Table 18 of the proposed rule (79 FR 40981) listed the 9 APCs that 
we proposed to make exceptions for under the 2 times rule for CY 2015 
based on the criteria cited above and claims data submitted between 
January 1, 2013, and December 31, 2013, and processed on or before 
December 31, 2013. For the final rule with comment period, we stated 
that we intend to use claims data for dates of service between January 
1, 2013, and December 31, 2013, that were processed on or before June 
30, 2014, and updated CCRs, if available. Therefore, after considering 
the public comments we received on the CY 2015 OPPS/ASC proposed rule 
and making changes to APC assignments based on those comments, we 
analyzed the CY 2013 claims data used for this final rule with comment 
period to identify the APCs with violations of the 2 times rule. Based 
on the final CY 2013 claims data, we found 12 APCs with violations of 
the 2 times rule for this final rule with comment period, which is 3 
more APCs that violated the 2 times rule compared to those indicated in 
the proposed rule. We applied the criteria as described earlier to 
identify the APCs that are exceptions to the 2 times rule for CY 2015, 
and identified three new APCs that meet the criteria for exception to 
the 2 times rule for this final rule with comment period, but that did 
not meet the criteria using proposed rule claims data. Specifically, we 
found that the following three new APCs violated the 2 times rule:
     APC 0095 (Cardiac Rehabilitation);
     APC 0388 (Discography); and
     APC 0420 (Level III Minor Procedures).
    After consideration of the public comments we received and our 
review of the CY 2013 costs from hospital claims and cost report data 
available for this final rule with comment period, we are finalizing 
our proposals with some modifications. Specifically, we are finalizing 
our proposal to except 7 of the 9 proposed APCs from the 2 times rule 
for CY 2015: APCs 0057, 0066, 0330, 0433, 0450, 0634, and 0661. In 
contrast, we are not finalizing our proposal to except 2 of the 9 
proposed APCs from the 2 times rule: APC 0012 (Level I Debridement & 
Destruction) and APC 0015 (Level II Debridement & Destruction). Our 
data analysis for this final rule with comment period revealed that 
these two APCs no longer violate the 2 times rule. Table 19 below lists 
10 APCs that we are excepting from the 2 times rule for CY 2015 based 
on the criteria above and a review of updated claims data. We note 
that, for cases in which a recommendation by the HOP Panel appears to 
result in or allow a violation of the 2 times rule, we generally accept 
the Panel's recommendation because those recommendations are based on 
explicit consideration of resource use, clinical homogeneity, site of 
service, and the quality of the claims data used to determine the APC 
payment rates. The geometric mean costs for hospital outpatient 
services for these and all other APCs that were used in the development 
of this final rule with comment period can be found on the CMS Web site 
at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html.

     TABLE 19--Final APC Exceptions to the 2 Times Rule for CY 2015
------------------------------------------------------------------------
          CY 2015 APC                       CY 2015 APC Title
------------------------------------------------------------------------
0057...........................  Bunion Procedures.
0066...........................  Level V Radiation Therapy.
0095...........................  Cardiac Rehabilitation.
0330...........................  Dental Procedures.
0388...........................  Discography.
0420...........................  Level III Minor Procedures.
0433...........................  Level II Pathology.
0450...........................  Level I Minor Procedures.
0634...........................  Hospital Clinic Visits.
0661...........................  Level III Pathology.
------------------------------------------------------------------------

    The final costs for hospital outpatient services for these and all 
other APCs that were used in the development of this final rule with 
comment period can be found on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.

C. OPPS APC-Specific Policies

1. Cardiovascular and Vascular Services: Cardiac Telemetry (APC 0213)
    For CY 2015, we proposed to reassign CPT code 93229 (External 
mobile cardiovascular telemetry with electrocardiographic recording, 
concurrent computerized real time data analysis and greater than 24 
hours of accessible ECG data storage (retrievable with query) with ECG 
triggered and patient selected events transmitted to a remote attended 
surveillance center for up to 30 days; technical support for connection 
and patient instructions for use, attended surveillance, analysis and

[[Page 66847]]

transmission of daily and emergent data reports as prescribed by a 
physician or other qualified health care professional) from APC 0209 
(Level II Extended EEG, Sleep, and Cardiovascular Studies), with a 
proposed rule payment rate of approximately $239 to APC 0213 (Level I 
Extended EEG, Sleep, and Cardiovascular Studies), with a proposed 
payment rate of approximately $175.
    Comment: One commenter opposed CMS' proposal to reassign CPT code 
93229 to APC 0213 and stated that the hospital costs used to set the CY 
2015 proposed payment rate is based on faulty claims data, which 
include miscoded claims reporting the service submitted by hospitals. 
The commenter indicated that based on its internal analysis of the CY 
2013 hospital claims data, which were used as the basis for the CY 2015 
proposed APC reassignment, several hospitals reported costs of under 
$100 for the procedure described by CPT code 93229. The commenter 
stated that the service described by CPT code 93229 involves the use of 
sophisticated technology requiring attended surveillance on a 24-hour, 
7 days a week basis by a technician for up to 30 days. According to the 
commenter, this particular service requires resources that are greater 
than $100. The commenter further explained that the service described 
by CPT code 93229 requires up to 30 days of electrocardiogram (ECG) 
monitoring through an external device worn by the patient at home that 
captures, stores, and transmits ECG data in real-time through wireless 
technology to a receiving or monitoring center (the hospital outpatient 
facility). These data are then reviewed by certified cardiac 
technicians and the ordering physician is provided with daily reports. 
The commenter added that this procedure is performed primarily 
(approximately 90 percent of the time) by independent diagnostic 
testing facilities (IDTFs) and infrequently performed by hospitals, 
typically under arrangements with IDTFs. The commenter believed that 
the CY 2015 proposed payment rate of approximately $175 for APC 0213 is 
significantly lower than the CY 2014 MPFS payment rate of $669. The 
commenter stated that the actual cost of providing the service is 
approximately $795. Therefore, the commenter recommended that CMS 
either reassign CPT code 93229 to APC 0435 (Level III Extended EEG, 
Sleep, and Cardiovascular Studies), which has a proposed payment rate 
of approximately $853, or establish a new APC for outpatient cardiac 
telemetry services that accurately reflects the costs associated with 
providing this service.
    Response: CPT code 93229 became effective January 1, 2009. We 
believe that 5 years is sufficient time to understand what procedure 
CPT code 93229 describes and how to appropriately report this service 
on hospital claims. Based on our analysis of the CY 2013 hospital 
outpatient claims data used for this final rule with comment period, we 
are unable to determine whether hospitals are miscoding the claims 
reporting this service. For all APCs whose payment rates are based upon 
relative payment weights, we note that the quality and accuracy of 
reported units and charges influence the geometric mean costs that are 
the basis for our payment rates, especially the geometric mean costs 
for low volume items and services. Beyond our standard OPPS trimming 
methodology (described in section II.A.2. of this final rule with 
comment period) that we apply to those claims that have passed various 
types of claims processing edits, it is not our general policy to 
determine the accuracy of hospital coding and charging practices for 
the purposes of ratesetting (75 FR 71838). We rely on hospitals to 
accurately report all of the services provided to beneficiaries using 
the established HCPCS and CPT codes that appropriately describe the 
procedures performed in accordance with their code descriptors and the 
CPT Editorial Panel's and CMS' instructions, as applicable, and to 
include these charges and costs on their Medicare hospital cost report 
appropriately. In addition, we do not specify the methodologies that 
hospitals must use to set charges for this or any other service.
    We recognize that the MPFS pays separately for CPT code 93229. 
However, the MPFS and the OPPS are very different payment systems. Each 
system is established under a different set of statutory and regulatory 
principles, and the policies established under the MPFS do not 
necessarily affect the payment policies under the OPPS. Moreover, we do 
not agree with the commenter that CPT code 93229 should be reassigned 
to APC 0435. Based on the claims data available for this final rule 
with comment period, we believe that APC 0213 is the most appropriate 
APC to reassign CPT code 93229 based on the clinical homogeneity and 
resource costs in relation to the other procedures assigned to this 
APC. Our analysis of the latest hospital outpatient CY 2013 claims data 
shows a final geometric mean cost of approximately $105 for CPT code 
93229 based on 3,505 single claims (out of 3,579 total claims), which 
is not inconsistent with the geometric mean cost of approximately $183 
for APC 0213, which is the lowest cost APC in the extended EEG, sleep, 
and cardiovascular studies series of APCs.
    In response to the commenter's concern regarding miscoding of 
hospital claims reporting the service described by CPT code 93229, we 
remind hospitals that CPT code 93229 is not the appropriate procedure 
code to use to report Holter monitoring (CPT codes 93224 through 
93227), or event monitoring (CPT codes 93268 through 93278) procedures. 
CPT code 93229 should be used to report continuous outpatient 
cardiovascular monitoring that includes up to 30 consecutive days of 
real-time cardiac monitoring. In particular, the 2014 CPT Code Book 
describes the procedure described by CPT code 93229 as a mobile 
cardiovascular telemetry service and defines it as:
    ``Mobile cardiovascular telemetry (MCT): Continuously records the 
electrocardiographic rhythm from external electrodes placed on the 
patient's body. Segments of the ECG data are automatically (without 
patient intervention) transmitted to a remote surveillance location by 
cellular or landline telephone signal. The segments of the rhythm, 
selected for transmission, are triggered automatically (MCT device 
algorithm) by rapid and slow heart rates or by the patient during a 
symptomatic episode. There is continuous real time data analysis by 
preprogrammed algorithms in the device and attended surveillance of the 
transmitted rhythm segments by a surveillance center technician to 
evaluate any arrhythmias and to determine signal quality. The 
surveillance center technician reviews the data and notifies the 
physician or other qualified health care professional depending on the 
prescribed criteria'' (2014 CPT Professional Edition; page 549).
    We expect that hospitals would only report CPT code 93229 on 
hospital claims for providing the mobile telemetry service that is 
described above.
    In summary, after consideration of the public comment we received, 
we are finalizing our CY 2015 proposal, without modification, to 
reassign CPT code 93229 to APC 0213 for CY 2015. Consistent with our 
policy of reviewing APC assignments annually, we will reevaluate the 
cost of CPT code 93229 and its APC assignment for the CY 2016 
rulemaking.

[[Page 66848]]

2. Gastrointestinal (GI) Services: Upper GI Procedures (APCs 0142, 
0361, 0419, and 0422)
    In the CY 2014 OPPS/ASC final rule with comment period, we assigned 
CPT codes 43211 (Esophagoscopy, flexible transoral; with endoscopic 
mucosal resection), and 43254 (Esophagogastroduodenoscopy, flexible, 
transoral; with endoscopic mucosal resection) to APC 0141 (Level I 
Upper GI Procedures) on an interim basis. In addition, we assigned CPT 
code 43240 (Upper gastrointestinal endoscopy including esophagus, 
stomach, and either the duodenum and/or jejunum as appropriate; with 
transmural drainage of pseudocyst) to APC 0419 (Level II Upper GI 
Procedures), CPT code 91035 (Esophagus, gastroesophageal reflux test; 
with mucosal attached telemetry ph electrode placement, recording, 
analysis and interpretation) to APC 0361 (Level II Alimentary Tests), 
and CPT code 0355T (Gastrointestinal tract imaging, intraluminal (eg, 
capsule endoscopy), colon, with interpretation and report) to APC 0142 
(Level I Small Intestine Endoscopy).
    For CY 2015, we proposed to reassign CPT codes 43211 and 43254 from 
APC 0141 to APC 0419. We also proposed to continue to assign CPT code 
43240 to APC 0419; CPT code 91035 to APC 0361; and CPT code 0355T to 
APC 0142.
    Comment: Several commenters requested that CMS reassign CPT codes 
43211 and 43254 from APC 0141 to APC 0419 in response to the CY 2014 
OPPS/ASC final rule with comment period. The commenters believed that 
the reassignment would be consistent with the resource and clinical 
homogeneity principles used to assign services to appropriate 
classification groupings. In response to the CY 2015 OPPS/ASC proposed 
rule, the same commenters supported CMS' proposal to reassign CPT codes 
43211 and 43254 to APC 0419 for the CY 2015 OPPS update, and applauded 
CMS for considering the suggestions made in response to the commenters' 
concerns. One commenter requested that CMS consider reassigning CPT 
codes 43211 and 43254 from APC 0141 to APC 0422 (Level III Upper GI 
Procedures) instead of from APC 0141 to APC 0419 as proposed. Based on 
an analysis of the CY 2013 OPPS claims data performed by the commenter, 
the commenter believed that the geometric mean costs associated with 
endoscopic mucosal resection (EMR) procedures are more closely aligned 
with the geometric mean cost of APC 0422 than APC 0419.
    Response: EMR CPT codes 43211 and 43254 became effective January 1, 
2014. As with all new codes, our policy has been to assign the service 
to an APC based on input from a variety of sources, including but not 
limited to, a review of the clinical similarity of the service in 
comparison to existing procedures; input from CMS medical advisors; 
information from interested specialty societies; and a review of all 
other information available to us. Based on the complexity of these 
procedures and input from our medical advisors, we believe that APC 
0419 appropriately reflects the clinical homogeneity and resource costs 
associated with performing EMR procedures. Therefore, after 
consideration of the public comments we received, we are finalizing our 
CY 2015 proposal, without modification, to reassign CPT codes 43211 and 
43254 from APC 0141 to APC 0419 for the CY 2015 OPPS update. As we do 
every year, we will review our claims data for these services for the 
CY 2016 OPPS rulemaking.
    Comment: Several commenters expressed concern with CMS' proposal to 
continue to assign CPT code 43240 to APC 0419, and requested that CMS 
reassign the CPT code to APC 0384 (GI Procedures with Stents) based on 
the clinical similarity of the service to other procedures assigned to 
this APC.
    Response: Based on our analysis of the latest hospital outpatient 
claims data used for this final rule with comment period, we agree with 
the commenters that a more appropriate APC reassignment is necessary 
for CPT code 43240. However, we believe that the most appropriate APC 
reassignment is APC 0422 (Level III Upper GI Procedures) rather than 
APC 0384. Our claims data show a geometric mean cost of approximately 
$1,574 for CPT code 43240 based on 44 single claims (out of 142 total 
claims), which is more comparable to the geometric mean cost of 
approximately $1,987 for APC 0422 than to the geometric mean cost of 
approximately $3,294 for APC 0384. Therefore, after consideration of 
the public comments we received, we are modifying our proposal 
regarding the APC reassignment of CPT code 43240. Specifically, we are 
reassigning CPT code 43240 from APC 0419 to APC 0422 for CY 2015.
    Comment: Several commenters expressed concern regarding the 
inadequate payment rate for CPT code 91035 under Medicare's ASC payment 
system, and requested that CMS reassign CPT code 91035 from APC 0361 to 
APC 0142 as a means to increase the payment rate in the ASC setting. 
The commenters noted that APC 0142 includes other capsule-based 
procedures that are clinically similar to the procedure described by 
CPT code 91035, such as the procedure described by CPT code 91112 
(Gastrointestinal transit and pressure measurement, stomach through 
colon, wireless capsule, with interpretation and report). The 
commenters further explained that the procedures described by CPT codes 
91035 and 91112 both involve the use of a capsule to collect pH and 
other data from the patient's gastrointestinal tract over a period of 
several days.
    Response: Based on our analysis of the latest hospital outpatient 
claims data used for this final rule with comment period, we believe 
that CPT code 91035 is appropriately assigned to APC 0361 to ensure 
adequate payment for the service in any hospital outpatient setting. 
Our claims data show a geometric mean cost of approximately $466 for 
CPT code 91035 based on 1,272 single claims (out of 5,099 total 
claims), while claims data for CPT code 91112 show a geometric mean 
cost of approximately $774 based on 353 single claims (out of 412 total 
claims). The geometric mean cost of APC 0361 is approximately $341 and 
the geometric mean cost of APC 0142 is approximately $884, which is 
almost twice the geometric cost of CPT code 91035. In addition, 
assigning CPT code 91035 to APC 0142 would create a violation of the 2 
times rule within APC 0142 because the geometric mean cost of the 
highest cost significant procedure assigned to APC 0142 (CPT code 
44361, with a geometric mean cost of approximately $1,019) is 2.2 times 
the geometric mean cost of CPT code 91035. Therefore, APC 0142 would 
not be an appropriate assignment for CPT code 91035. We are finalizing 
our CY 2015 proposal to continue to assign CPT code 91035 to APC 0361.
    Comment: In response to the CY 2014 OPPS/ASC final rule with 
comment period, several commenters requested that CMS assign CPT code 
0355T, which became effective July 1, 2014, to APC 0142 for the CY 2015 
OPPS update. The commenters believed that the procedure described by 
CPT code 0355T is similar to the procedures described by existing GI 
capsule endoscopy CPT codes 91110 (Gastrointestinal tract imaging, 
intraluminal (eg, capsule endoscopy), esophagus through ileum, with 
interpretation and report), 91111 (Gastrointestinal tract imaging, 
intraluminal (eg, capsule endoscopy), esophagus with interpretation and 
report), and 91112 (Gastrointestinal transit and pressure measurement, 
stomach through colon, wireless capsule, with interpretation and 
report), which are all assigned to APC 0142.
    Response: As published in Table 17 of the CY 2015 OPPS/ASC proposed 
rule (79 FR 40976), we proposed to continue

[[Page 66849]]

to assign this new code to APC 0142. We agree with the commenters that 
GI endoscopy CPT codes 0355T, 91110, 91111, and 91112 are clinically 
similar. Therefore, we are finalizing our CY 2015 proposal, without 
modification, to continue to assign CPT code 0355T to APC 0142, As a 
result, all four GI endoscopy procedures described by CPT codes 0355T, 
91110, 91111, and 91112 will be assigned to APC 0142 for the CY 2015 
OPPS update.
    We remind hospitals that because the payment rates associated with 
new codes that become effective July 1 are not available to us in time 
for incorporation into the Addenda to the proposed rule, the Level II 
HCPCS codes and the Category III CPT codes implemented through the July 
2014 OPPS quarterly update CR were not included in Addendum B to the 
proposed rule (which is available via the Internet on the CMS Web 
site). However, we listed the codes and their proposed APC assignments 
in the preamble of the proposed rule.
    The final CY 2015 payment rate for all of the CPT codes discussed 
can be found in Addendum B to this CY 2015 OPPS/ASC final rule with 
comment period (which is available via the Internet on the CMS Web 
site).
3. Genitourinary Services
a. Gynecologic Procedures (APCs 0188, 0189, 0192, 0193, and 0202)
    For the CY 2014 OPPS update, we made several changes to specific 
APC assignments, which included the female reproductive APCs; APC 0192, 
APC 0193, and APC 0195. These proposed changes were listed in Addendum 
B to the CY 2014 OPPS/ASC proposed rule (which is available via the 
Internet on the CMS Web site). With respect to these three APCs, based 
on claims data available for the CY 2014 OPPS/ASC proposed rule, only 
APC 0193 showed a violation of the 2 times rule. We note that, under 
the OPPS, we may make exceptions to the 2 times rule based on the 
variation of costs within each APC group in unusual cases such as low-
volume items and services. In the case of APC 0193, we believed that it 
was necessary to make an exception to the 2 times rule for the CY 2014 
OPPS update because this APC sufficiently reflected the clinical and 
resource coherence of the Level V female reproductive procedures.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40982), we discussed 
our proposal to make further changes to the existing female 
reproductive APCs; APC 0188, APC 0189, APC 0191, APC 0192, APC 0193, 
APC 0195, and APC 0202 based on a presentation made at the March 10, 
2014 Panel meeting. Specifically, one presenter expressed concern 
regarding the reassignment of the female reproductive procedures within 
existing APCs 0192 (Level IV Female Reproductive Procedures), 0193 
(Level V Female Reproductive Procedures), and 0195 (Level VI Female 
Reproductive Procedures) that became effective with the CY 2014 OPPS 
update. The presenter stated that the proposed changes would compromise 
beneficiary access to pelvic floor repair procedures, and urged the 
Panel to request that CMS reconsider its packaging policy for the 
procedures assigned to APCs 0193 and 0195 and allow stakeholders the 
opportunity to work with CMS to appropriately reassign these procedures 
to accurately account for the clinical complexity associated with 
providing these services. In addition, the presenter requested that CMS 
delay the conversion of existing APC 0202 (Level VII Female 
Reproductive Procedures) to a C-APC to allow for further study of the 
complexity of pelvic floor repair procedures. After review of the 
information provided by the presenter and examination of the hospital 
outpatient claims data available for the CY 2015 OPPS/ASC proposed 
rule, the Panel did not make any recommendations regarding any of the 
female reproductive APCs.
    For the CY 2015 OPPS update, based on our review of the latest 
hospital outpatient claims data available for the CY 2015 OPPS/ASC 
proposed rule, there were no violations of the 2 times rule within any 
of the female reproductive APCs (79 FR 40982). However, we proposed to 
restructure the female reproductive APCs to more appropriately reflect 
the resource and clinical characteristics of the procedures assigned to 
each APC. The proposed restructuring resulted in the use of five APCs 
for the CY 2015 OPPS update, as compared to the seven APCs used for the 
CY 2014 OPPS update. We believe that the proposed five-level APC 
structure will provide more accurate payments for the female 
reproductive procedures furnished to Medicare beneficiaries.
    Tables 21 and 22 of the proposed rule (79 FR 40983) showed the 
current CY 2014 and proposed CY 2015 female reproductive APCs. 
Specifically, Table 21 showed the female reproductive APCs, APC titles, 
and their status indicator assignments for CY 2014, while Table 22 
showed the proposed female reproductive APCs, APC titles, and their 
status indicator assignments for CY 2015. In the proposed rule, we 
noted that one of the five levels of the female reproductive APCs, APC 
0202, is proposed to be converted to a C-APC. We refer readers to 
section II.A.2.e. of this final rule with comment period for further 
discussion of our comprehensive APC policy.
    In addition, for CY 2015, we proposed to consolidate the two 
existing hysteroscopy APCs; APC 0190 (Level I Hysteroscopy) and APC 
0387 (Level II Hysteroscopy). Specifically, we proposed to delete APC 
0387 and to reassign the procedures currently assigned to this APC to 
APC 0190. In conjunction with this proposed reassignment, we proposed 
to rename APC 0190 from ``Level II Hysteroscopy'' to ``Hysteroscopy.'' 
Based on the hospital outpatient claims data available for the CY 2015 
OPPS/ASC proposed rule, we believe that the two-leveled structure of 
the hysteroscopy APCs is no longer necessary because the single-leveled 
hysteroscopy APC sufficiently reflects the resources and clinical 
similarities of all the hysteroscopic procedures. We note that, for CY 
2014, the payment rates for APCs 0190 and 0387 are $1,763 and $2,818, 
respectively. For CY 2015, the proposed payment rate for APC 0190 was 
approximately $2,014.
    Comment: Many commenters supported CMS' proposal to reassign 
several of the female reproductive procedures to APC 0202 and stated 
that the proposed restructuring of these APCs more appropriately 
reflects clinical and resource homogeneity among similar procedures.
    Response: We appreciate the commenters' support.
    Comment: Some commenters opposed CMS' proposal to reassign CPT code 
57155 (Insertion of uterine tandem and/or vaginal ovoids for clinical 
brachytherapy) from APC 0193 (Level IV Female Reproductive Procedures) 
to APC 0192 (Level III Female Reproductive Procedures) for the CY 2015 
OPPS update. According to the commenters, the proposed CY 2015 OPPS 
payment rate of approximately $501 for CPT code 57155 is significantly 
lower than the CY 2014 OPPS payment rate of approximately $1,375, which 
represents a 63-percent reduction in the payment for this service. The 
commenters noted that the APC assignment for this procedure has varied 
between APC 0192 and APC 0193 since the inception of the code, and 
recommended that CMS reexamine the procedures assigned to APCs 0192, 
0193, and 0202 to ensure that the proposed structure of these APCs 
provides the most appropriate payment for the services assigned to each 
APC.

[[Page 66850]]

Some commenters requested that CMS continue to assign CPT code 57155 to 
APC 0193 for the CY 2015 update. The commenters also recommended that 
CMS closely monitor medical practice patterns to ensure beneficiary 
access to this treatment if CMS finalizes the proposal to reassign CPT 
code 57155 to APC 0192.
    Response: CPT code 57155 became effective January 1, 2002. Since 
that time, CPT code 57155 has been assigned to either APC 0192 or APC 
0193. For CYs 2002, 2003, and 2006 through 2013, CPT code 57155 was 
assigned to APC 0192. For CYs 2004, 2005, and 2014, CPT code 57155 was 
assigned to APC 0193. Consistent with CMS' statutory requirement under 
section 1833(t)(9) of the Act to review and revise APC assignments 
annually and to construct the most appropriate APC groupings as well 
as, to the extent desirable, correct any 2 times rule violations, we 
evaluated the resource consumption and clinical coherence associated 
with the female reproductive APCs for the CY 2015 OPPS update. Based on 
an analysis of the latest hospital outpatient claims data for this 
final rule with comment period, CPT code 57155 has a geometric mean 
cost of approximately $731 based on 858 single claims (out of 2,461 
total claims). The geometric mean costs for the significant procedures 
assigned to APC 0192 range between approximately $398 (for CPT code 
56605) and $731 (for CPT code 57155). Therefore, we believe that CPT 
code 57155 is appropriately assigned to APC 0192 based on the 
comparable resource costs associated with the other procedures assigned 
to this APC and are not making any changes to our proposal for this 
final rule with comment period. We note that APC 0192 had a proposed 
payment rate of approximately $501, which was based on hospital 
outpatient claims data submitted between January 1, 2013, and December 
31, 2013, and processed on or before December 31, 2013. For this final 
rule with comment period, the final payment rate for APC 0192 is 
approximately $487, which is based on hospital outpatient claims data 
submitted between January 1, 2013, and December 31, 2013, and processed 
on or before June 30, 2014.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to reassign CPT code 
57155 from APC 0193 to APC 0192 for CY 2015.
    Comment: Several commenters requested that CMS not finalize the 
proposal to consolidate the two existing hysteroscopy APCs. Instead, 
the commenters suggested that CMS maintain the two-leveled structure of 
the hysteroscopy APCs to differentiate the less costly diagnostic 
hysteroscopic services from the more resource-intensive hysteroscopic 
procedures. One commenter stated that the reconfiguration of these APCs 
for CY 2015 is premature and warrants more discussion prior to 
finalizing a proposal regarding this issue. Another commenter believed 
that it is not clinically coherent to combine the diagnostic 
hysteroscopy procedure described by CPT code 58555 with a significant 
therapeutic procedure, such as a hysteroscopic myomectomy described by 
CPT code 58561. The commenter explained that all of the gynecology 
specialty societies recommend minimally invasive alternatives to 
hysterectomy when available. In addition, the commenter believed that 
the proposal to consolidate the hysteroscopy APCs would provide 
incentives for hospitals to encourage treatment that is not the 
standard of care.
    Response: Based on a review of the latest hospital outpatient 
claims data for the CY 2015 OPPS update, we believe that restructuring 
and consolidating the gynecology APCs is prudent in order to improve 
the comparability of resource and clinical similarity of all the 
hysteroscopy procedures assigned to a specific APC. In addition, we 
disagree with the commenter's assertion regarding hospitals' incentives 
to deliver substandard care for the purposes of financial gain. We 
believe that hospitals and physicians will offer their patients the 
appropriate care and treatment, which may or may not employ an 
expensive medical device.
    Comment: Several commenters suggested that modifications to the 
proposed APC assignments for certain related procedures be considered 
if CMS finalizes the proposal to restructure and consolidate the female 
reproductive APCs. One commenter suggested that CMS reassign CPT codes 
58561 and 58563 to APC 0202 instead of APC 0190 based on the clinical 
similarities in relation to the other procedures assigned to APC 0202.
    Response: Based on input from our medical advisors, we agree with 
the commenter that APC 0202 is the most appropriate APC assignment for 
CPT codes 58561 and 58563 based on their clinical similarity in 
relation to the other procedures assigned to this APC. We note that APC 
0202 is designated as a C-APC for the CY 2015 OPPS update. Further 
information on C-APCs can be found in section II.A.2.e. of this final 
rule with comment period.
    Comment: One commenter suggested that CMS reconsider the proposal 
to consolidate the hysteroscopy APCs and establish two separate APCs 
for female reproductive procedures; one for the more resource-intensive 
hysteroscopic procedures and another for the lower-cost and less 
complex hysteroscopic procedures. Specifically, the commenter 
recommended assigning the following seven resource-intensive female 
reproductive procedures to a higher-paying APC, with a geometric mean 
cost ranging between approximately $3,010 and $4,350: CPT codes 58353, 
58356, 58561, 58563, 58565, 58559, and 58560. The commenter also 
suggested assigning the following four less complex female reproductive 
procedures to a lower-paying APC, with a geometric mean cost ranging 
between approximately $1,758 and $2,099: CPT codes 58555, 58558, 58562, 
and 58579. Another commenter believed that the necessary resources 
required to provide the service described by CPT code 58555 are 
significantly less than the resources required to provide the service 
described by CPT code 58561. The commenter stated that the resource 
costs for providing the services described by CPT codes 58353, 58561, 
58563, and 58565 are similar and recommended that these procedures be 
assigned to the same APC.
    Response: We reviewed our latest hospital outpatient claims data 
used for this final rule with comment period for all of the 
hysteroscopic procedures. Based on our review and after consideration 
of the public comments we received, we are modifying our proposal 
regarding the proposed APC assignments for several of the hysteroscopic 
procedures for the CY 2015 OPPS update. Specifically, we are deleting 
APC 0190 and reassigning the eight procedures that were proposed to be 
assigned to this APC to APC 0188, APC 0193, or APC 0202.
    In summary, after consideration of the public comments received, we 
are finalizing our proposals with some modifications. For the 
hysteroscopy procedure APCs, we proposed to reassign all of the 
procedures assigned to APC 0387 to APC 0190, which resulted in a one-
leveled APC containing all of the hysteroscopy procedures. 
Specifically, we proposed to delete APC 0387 (Level II Hysteroscopy), 
and to rename APC 0190 ``Hysteroscopy.'' However, based on our analysis 
of the hospital outpatient claims data available for this final rule 
with comment period, we are modifying our proposal. Instead, we are 
reassigning all of the hysteroscopy procedures that we proposed to 
assign

[[Page 66851]]

to APC 0190 to one of the female reproductive APCs. That is, we are 
reassigning all of the procedures proposed for reassignment to APC 0190 
to APC 0188, APC 0193, or APC 0202. Consequently, with no procedures 
remaining in APC 0190, we deleted this APC for CY 2015. In addition, we 
are finalizing our proposal to restructure the female reproductive APCs 
to more appropriately reflect the resource and clinical characteristics 
of the procedures assigned to each APC. Specifically, we are finalizing 
our proposal to assign all of the female reproductive procedures to 
APCs 0188, 0189, 0192, 0193, or 0202. In addition, because of our 
revision to the hysteroscopy procedures APCs, we are revising the APC 
titles for the five female reproductive APCs; APC 0188, APC 0189, APC 
0192, APC 0193, and APC 0202, from ``Female Reproductive Procedures'' 
to ``Gynecologic Procedures'' to more appropriately describe the 
procedures assigned to these APCs. Table 20 below lists the 
hysteroscopic procedures CPT codes, along with their long descriptors, 
proposed CY 2015 OPPS status indicators and APC assignments, as well as 
their final CY 2015 OPPS status indicators and APC assignments. Table 
21 below lists the final APC titles and status indicators for the 
gynecologic procedure APCs. The final CY 2015 payment rates for the 
gynecologic procedures APCs, as well as the hysteroscopic procedures 
CPT codes listed in Table 21 can be found in Addendum B to this CY 2015 
OPPS/ASC final rule with comment period (which is available via the 
Internet on the CMS Web site).

                    Table 20--Final CY 2015 APC Assignments for the Hysteroscopic Procedures
----------------------------------------------------------------------------------------------------------------
                                                                          Proposed CY    Final  CY     Final CY
         CPT Code                   Long descriptor          Proposed CY   2015 OPPS    2015  OPPS    2015 OPPS
                                                            2015 OPPS SI      APC           SI           APC
----------------------------------------------------------------------------------------------------------------
58353.....................  Endometrial ablation, thermal,           J1          0202           J1          0202
                             without hysteroscopic
                             guidance.
58356.....................  Endometrial cryoablation with            J1          0202           J1          0202
                             ultrasonic guidance,
                             including endometrial
                             curettage, when performed.
58555.....................  Hysteroscopy, diagnostic                  T          0190            T          0193
                             (separate procedure).
58558.....................  Hysteroscopy, surgical; with              T          0190            T          0193
                             sampling (biopsy) of
                             endometrium and/or
                             polypectomy, with or without
                             d & c.
58559.....................  Hysteroscopy, surgical; with              T          0190           J1          0202
                             lysis of intrauterine
                             adhesions (any method).
58560.....................  Hysteroscopy, surgical; with              T          0190           J1          0202
                             division or resection of
                             intrauterine septum (any
                             method).
58561.....................  Hysteroscopy, surgical; with              T          0190           J1          0202
                             removal of leiomyomata.
58562.....................  Hysteroscopy, surgical; with              T          0190            T          0193
                             removal of impacted foreign
                             body.
58563.....................  Hysteroscopy, surgical; with              T          0190           J1          0202
                             endometrial ablation (eg,
                             endometrial resection,
                             electrosurgical ablation,
                             thermoablation).
58565.....................  Hysteroscopy, surgical; with             J1          0202           J1          0202
                             bilateral fallopian tube
                             cannulation to induce
                             occlusion by placement of
                             permanent implants.
58579.....................  Unlisted hysteroscopy                     T          0190            T          0188
                             procedure, uterus.
----------------------------------------------------------------------------------------------------------------


                          Table 21--Final CY 2015 APC Titles for Gynecologic Procedures
----------------------------------------------------------------------------------------------------------------
                                                                                                      Final CY
         CY 2015 APC               Proposed CY 2015 APC title          Final CY 2015 APC title       2015 status
                                                                                                      indicator
----------------------------------------------------------------------------------------------------------------
0188.........................  Level I Female Reproductive        Level I Gynecologic Procedures..            T
                                Procedures.
0189.........................  Level II Female Reproductive       Level II Gynecologic Procedures.            T
                                Procedures.
0192.........................  Level III Female Reproductive      Level III Gynecologic Procedures            T
                                Procedures.
0193.........................  Level IV Female Reproductive       Level IV Gynecologic Procedures.            T
                                Procedures.
0202.........................  Level V Female Reproductive        Level V Gynecologic Procedures..           J1
                                Procedures.
----------------------------------------------------------------------------------------------------------------

b. Cystourethroscopy, Transprostatic Implant Procedures, and Other 
Genitourinary Procedures (APCs 0160, 0161, 0162, 0163, and 1564)
    For the CY 2015 OPPS update, based on our review of the latest 
hospital outpatient claims data available for the CY 2015 OPPS/ASC 
proposed rule, we proposed to restructure the APCs containing 
cystourethroscopy and other genitourinary procedures to more 
appropriately reflect the resource costs and clinical characteristics 
of the procedures assigned within each APC (79 FR 40987). We note that, 
for the CY 2014 OPPS update, there are five levels of APCs that contain 
cystourethroscopy and genitourinary procedures. These APCs were listed 
in Table 26 of the CY 2015 OPPS/ASC proposed rule (79 FR 40986), along 
with their status indicator assignments for CY 2014. The proposed 
restructuring resulted in the use of four APCs for the CY 2015 OPPS 
update, as compared to the five APCs used for the CY 2014 OPPS update. 
Specifically, based on our review and evaluation of the procedures 
assigned to these APCs and the latest hospital outpatient claims data 
available, in the CY 2015 OPPS/ASC proposed rule, we proposed to delete 
APC 0429 (Level V Cystourethroscopy and Other Genitourinary Procedures) 
and reassign the procedures that were previously assigned to this APC 
to either APC 0161 (Level I Cystourethroscopy and Other Genitourinary 
Procedures) or APC 0163 (Level IV Cystourethroscopy and Other 
Genitourinary Procedures). We believe that the procedures currently 
assigned to APC 0429 would be more appropriately assigned to either APC 
0161 or APC 0163 based on their geometric mean costs for the CY 2015 
OPPS update. Further, we believe that this proposed restructuring 
appropriately categorizes all of the cystourethroscopy and other 
genitourinary procedures that are comparable clinically and with 
respect to resource use within an APC group. We also proposed to delete 
APC 0169 (Lithotripsy) because the one procedure,

[[Page 66852]]

specifically the procedure described by CPT code 50590 (Lithotripsy, 
extracorporeal shock wave), that was assigned to this APC was proposed 
for reassignment to APC 0163 (79 FR 40987). Table 27 of the CY 2015 
OPPS/ASC proposed rule (79 FR 40987) listed the proposed APCs that 
contain cystourethroscopy and other genitourinary procedures, the APC 
titles, and the proposed status indicator assignments for CY 2015. The 
proposed payment rates for the specific APCs listed in Table 27 were 
listed in Addendum A to the proposed rule. The proposed payment rates 
for the specific cystourethroscopy and other genitourinary procedure 
codes were listed in Addendum B to the proposed rule. (Addenda A and B 
to the proposed rule are available via the Internet on the CMS Web 
site.)
    Comment: Several commenters opposed CMS' proposal to delete APC 
0169 and reassign the extracorporeal shock wave lithotripsy (ESWL) CPT 
code 50590 to APC 0163. The commenters noted that the procedure 
described by CPT code 50590 is classified as a noninvasive therapy and 
is not similar, clinically or with respect to resource costs, to the 
other more invasive surgical urological procedures that are proposed 
for assignment to APC 0163. One commenter stated that the ESWL 
procedure does not involve the use of an endoscope and, therefore, 
should not be assigned to APC 0163. This commenter believed that the 
payment rate for APC 0163 would be influenced by dominating the claims 
data for CPT code 50590 because ESWL is a commonly performed procedure 
resulting in a significant high volume of single frequency claims. The 
commenter requested that CMS delay finalizing this proposal or, 
alternatively, reassign CPT code 50590 to APC 0162 (Level III 
Cystourethroscopy and Other Genitourinary Procedures) because this APC 
encompasses a broader and more diverse grouping of procedures than APC 
0163.
    Response: As part of our standard annual OPPS update process, we 
review each APC assignment for the clinical similarity and resource 
homogeneity of the procedures assigned to each APC. An analysis of our 
latest hospital outpatient claims data available for this final rule 
with comment period revealed a geometric mean cost of approximately 
$3,094 based on 32,370 single claims (out of 44,816 total claims) for 
CPT code 50590, which is comparable to the geometric mean cost of 
approximately $3,230 for APC 0163. The significant procedures assigned 
to APC 0163 have geometric mean costs ranging between $2,946 and 
$4,088. We do not agree with the commenters that APC 0162 is the more 
appropriate APC assignment because the geometric mean cost for this 
APC, approximately $2,163, is significantly lower than the geometric 
mean cost of approximately $3,094 for CPT code 50590. In addition, the 
geometric mean cost of APC 0163 (using proposed rule data) and without 
CPT code 50590 assigned to this APC was approximately $3,058, which is 
close to the final rule geometric mean cost of CPT code 50590 of 
$3,094. Although the ESWL procedure does not involve the use of an 
endoscope, we note that not every procedure proposed for reassignment, 
or ultimately reassigned, to APC 0163 uses an endoscope. In addition, 
we do not agree with the commenters that the ESWL procedure is not 
clinically similar to the other procedures assigned to APC 0163. There 
are no general rules for clinical similarity that apply to all APCs. 
Instead, the evaluation of clinical similarity depends upon the 
particular characteristics of the services being evaluated for a 
particular APC assignment. The use of single procedure APCs, like APC 
0169, the APC to which CPT code 50590 is assigned for CY 2014, 
generally is not considered appropriate under the OPPS because payment 
rates based on a single procedure code's geometric mean cost is more 
consistent with a fee schedule than a prospective payment system. 
However, there are limited circumstances in which we assign a single 
procedure code to an APC; for example, the intraocular procedures 
assigned to an APC series. Specifically, APC 0673 (Level III 
Intraocular Procedures) has a geometric mean cost of approximately 
$3,239. APC 0293 (Level IV Intraocular Procedures) is the next higher 
level APC in the intraocular procedures APC series, and it has a single 
procedure (CPT code 65770 (Keratoprosthesis)) assigned to it, which has 
a geometric mean cost of approximately $8,766. The highest cost 
procedure assigned to APC 0673 is CPT code 67113 (Repair of complex 
retinal detachment), which has a geometric mean cost of approximately 
$4,065. The geometric mean cost of CPT code 65770 is significantly 
higher, 2.2 times the geometric mean cost of CPT code 67113. Therefore, 
we assigned CPT code 65770 to a different APC because the resource 
costs are not similar. Because the procedure described by CPT code 
65770 is an intraocular surgery and there are no other APCs that 
contain clinically similar procedures, we assigned CPT code 65770 to 
APC 0293 without any other procedures. Continuing in this series, we 
assigned CPT code 0308T (Insertion of intraocular telescope prosthesis 
including removal of crystalline lens) to APC 0351 (Level V Intraocular 
Procedures) without any other procedures. CPT code 0308T has a 
geometric mean cost of approximately $23,947, which is 2.73 times the 
geometric mean cost of the procedure described by CPT code 65770, which 
is assigned to APC 0293, which is one level lower than APC 0351 in the 
intraocular procedures APC series. CPT code 0308T is the only procedure 
code assigned to APC 0351 because there are no other procedures that 
are similar in terms of resource costs. We do not believe that similar 
APC series assignment is applicable to CPT code 50590. Therefore, we 
proposed to reassign CPT code 50590 to APC 0163 and delete APC 0169 (79 
FR 40986 through 40987). In summary, based on our review of the latest 
hospital outpatient claims data for this final rule with comment 
period, we believe that CPT code 50590 would be appropriately assigned 
to APC 0163 based on its clinical and resource similarity to the other 
procedures assigned to APC 0163, several of which are dedicated to 
kidney stone removal. Therefore, we are finalizing our proposal, 
without modification, to assign CPT code 50590 to APC 0163 for CY 2015.
    Comment: One commenter requested that CMS not finalize the proposal 
to delete APC 0429, and suggested that CMS maintain this APC until data 
become available for CPT code 52356 (Cystourethroscopy, with 
ureteroscopy and/or pyeloscopy; with lithotripsy including insertion of 
indwelling ureteral stent (eg., Gibbons or double-J type)), which 
became effective January 1, 2014.
    Response: We believe that CPT code 52356 is appropriately 
categorized by APC 0163 based on its similarity to the other procedures 
assigned to this APC. Because CPT code 52356 became effective January 
1, 2014, we expect to have claims data for the procedure described by 
this code available for the CY 2016 OPPS rulemaking cycle. We note 
that, consistent with CMS' policy of reviewing APC assignments annually 
in accordance with the statutory requirement, we will reevaluate the 
APC assignment for CPT code 52356 for the CY 2016 OPPS update. 
Therefore, after consideration of the public comment we received, we 
are finalizing our proposals, without modification, to delete APC 0429 
and to assign CPT code 52356 to APC 0163 for CY 2015.
    Comment: Some commenters disagreed with CMS' proposal to

[[Page 66853]]

reassign CPT code 55875 (Transperineal placement of needles or 
catheters into prostate for interstitial radioelement application, with 
or without cystoscopy) from APC 0163 to APC 0162. The commenters stated 
that the proposal would result in a 28-percent reduction in the payment 
for this service when the CY 2014 payment rate of approximately $2,905 
for APC 0163 is compared to the CY 2015 proposed payment rate of 
approximately $2,091 for APC 0162. The commenters noted that CPT code 
55875 has been assigned to APC 0163 since the code's inception in CY 
2007, and believed that the proposed payment rate for APC 0163 more 
accurately reflects the resources necessary to provide this service. 
The commenters urged CMS to maintain the APC assignment of CPT code 
55875 to APC 0163.
    Response: Analysis of our latest hospital claims data used for this 
final rule with comment period revealed a geometric mean cost of 
approximately $2,501 for CPT code 55875 based on 703 single claims (out 
of 4,681 total claims), which is comparable to the geometric mean cost 
of approximately $2,163 for APC 0162. We do not agree with the 
commenters that APC 0163 is the more appropriate APC because its 
geometric mean cost of approximately $3,230 is significantly higher 
than the geometric mean cost of approximately $2,501 for CPT code 
55875. We believe that CPT code 55875 is appropriately assigned to APC 
0162 based on its clinical homogeneity and resource costs to the 
procedures currently assigned to this APC. Therefore, after 
consideration of the public comments we received, we are finalizing our 
proposal, without modification, to reassign CPT code 55875 to APC 0162 
for CY 2015.
    Comment: One commenter opposed CMS' proposal to reassign CPT code 
53850 (Transurethral destruction of prostate tissue; by microwave 
thermotherapy) from APC 0429 to APC 0161. The commenter stated that the 
CY 2015 proposed payment rate for APC 0161 is approximately $1,235, 
which is significantly lower than the CY 2014 payment rate of 
approximately $3,304 for APC 0429. The commenter suggested that CMS 
reassign CPT code 53850 to APC 0163, the APC to which CPT code 53852 
(Transurethral destruction of prostate tissue; by radiofrequency 
thermotherapy) is proposed to be reassigned. The commenter explained 
that both procedures are similar in clinical technique because both 
procedures use a thermal approach as an alternative to open 
prostatectomy or transurethral resection of the prostate for the 
treatment of benign prostatic hyperplasia (BPH).
    Response: As has been our practice since the implementation of the 
OPPS in 2000, we review, on an annual basis, the APC assignments for 
the procedures and services paid under the OPPS. Based on the latest 
hospital outpatient claims data used for this final rule with comment 
period, our analysis does not support the reassignment of CPT code 
53850 to APC 0163. Our analysis of the claims data shows a geometric 
mean cost of approximately $1,542 for CPT code 53850 based on 107 
single claims (out of 142 total claims), which is relatively similar to 
the geometric mean cost of approximately $1,273 for APC 0161. While we 
acknowledge that both procedures are similar, our analysis of the 
claims data shows that the resource costs of providing the procedure 
described by CPT code 53852 is significantly higher than the resource 
cost of providing the procedure described by CPT code 53850. 
Specifically, the geometric mean cost for CPT code 53852 is 
approximately $3,339 based on 98 single claims (out of 156 total 
claims), which is comparable to the geometric mean cost of APC 0163 of 
approximately $3,230. We do not agree with the commenters that APC 0163 
is the more appropriate APC assignment because its geometric mean cost 
is significantly higher than the geometric mean cost of CPT code 53850 
of approximately $1,542. We believe that CPT code 53850 would be 
appropriately assigned to APC 0161 based on its clinical homogeneity 
and resource costs to the procedures currently assigned to this APC. 
Therefore, after consideration of the public comment we received, we 
are finalizing our proposal, without modification, to reassign CPT code 
53850 from APC 0429 to APC 0161 for CY 2015.
    In addition, effective April 1, 2014, we created HCPCS codes C9739 
(Cystourethroscopy, with insertion of transprostatic implant; 1 to 3 
implants) and C9740 (Cystourethroscopy, with insertion of 
transprostatic implant; 4 or more implants) as a result of an 
application to assign the transprostatic implant procedures (TIPs) to a 
New Technology APC. We assigned HCPCS codes C9739 and C9740 to APCs 
0162 (Level III Cystourethroscopy and other Genitourinary Procedures) 
and 1564 (New Technology--Level XXVII), respectively, based on the 
estimated costs of the procedures, which include 1 to 3 implants in the 
case of procedures described by HCPCS code C9739, and 4 or more 
implants in the case of procedures described by HCPCS code C9740. We 
based the number of implants for HCPCS codes C9739 and C9740 on the 
number of implant utilization data per patient that the New Technology 
applicant provided within its approved application. The CY 2014 payment 
rates for APCs 0162 and 1564 are $2,007.32 and $4,750.00, respectively.
    The AMA's CPT Editorial Panel recently created two new codes for 
this technology, which become effective on January 1, 2015: CPT codes 
52441 (Cystourethroscopy, with insertion of permanent adjustable 
transprostatic implant; single implant) and 52442 (Cystourethroscopy, 
with insertion of permanent adjustable transprostatic implant; each 
additional permanent adjustable transprostatic implant (List separately 
in addition to code for primary procedure)).
    Comment: One commenter stated that the TIPs described by HCPCS 
codes C9739 and C9740 do not receive adequate payment under the OPPS 
because of the code descriptors for these procedure codes as they 
relate to the number of implants allowed in each respective code (1 to 
3 implants for HCPCS code C9739 and 4 or more implants for HCPCS code 
C9740), when categorized by the APCs in which these services are 
assigned. The commenter also believed that the TIPs are unable to be 
performed in the ASC setting because of the inadequate payment rate for 
the specific APCs. The commenter believed that the procedures described 
by HCPCS codes C9739 and C9740 are device dependent because a majority 
of the procedures' costs are associated with the costs of the implants, 
with a mean of 4.9 implants per procedure. The commenter also believed 
that there is considerable variation in the number of implants used for 
each procedure. The commenter believed that the ASC payment is 
extremely low because the procedures are not designated as ``device 
intensive'' in the ASC setting (that is, the procedures are not 
assigned to ASC payment indicator ``J8''), nor are the procedures 
assigned to a C-APC under the OPPS, which would most likely allow for 
the performance of the device-intensive treatment in the ASC setting, 
similar to most of the proposed C-APCs that are defined as device-
intensive APCs. The commenter stated that the proposed OPPS payments 
for HCPCS codes C9739 and C9740 are inadequate to cover both the costs 
of the number of implants required and the cost of the procedure. The 
commenter recommended several possible APC assignments to improve the 
payments for TIPs. The commenter recommended using new CPT codes 52441 
and 52442

[[Page 66854]]

to report the TIPs under the OPPS, and assigning the procedures to C-
APC 0385 (Level I Urogenital Procedures) because the proposed payment 
rate for C-APC 0385 of approximately $7,659 is comparable to the 
estimated cost of performing TIPs using 5 implants, which is 
approximately $7,519. The commenter's second recommendation was to 
continue to report the performance of the TIPs using HCPCS codes C9739 
and C9740, and to assign HCPCS code C9740 to APC 0385, as described 
previously, and HCPCS code C9739 to APC 0202 (Level V Female 
Reproductive Procedures) and remove ``Female'' from the title of APC 
0202. According to the commenter, the proposed payment for APC 0202 of 
approximately $4,366 is equivalent to the cost of a TIP using 2 or 3 
implants. The commenter believed that because APC 0202 is designated as 
a C-APC, the ASC payment for the procedure would also prove to be 
adequate. The commenter's third recommendation was to use new CPT codes 
52441 and 52442 to report TIPs and to assign the procedure codes to APC 
0168 (Level II Urethral Procedures) on an interim basis until OPPS 
claims data are available for these codes. The commenter believed that 
the proposed payment rate for APC 0168 of approximately $2,533 more 
appropriately equates to the cost of a single implant procedure 
described by CPT code 52441, while additional implant procedures 
described by CPT code 52442 would be paid at 50 percent, or 
approximately $1,267, because APC 0168 is subject to the multiple 
procedure discount (that is, the APC is assigned to status indicator 
``T''), which, the commenter claimed, more appropriately equates to the 
estimated cost of providing the procedure described by CPT code 52442 
of approximately $1,248. However, the commenter noted that, because APC 
0168 is not a C-APC, payment for the procedure may not be designated as 
``device intensive'' to ensure adequate ASC payment. The commenter 
recommended that CMS consider any procedure that has device costs that 
are greater than 40 percent as device intensive.
    Response: We agree with the commenter that the cost of the implants 
associated with the procedures described by HCPCS codes C9739 and C9740 
represents the majority of the costs of the procedures. We considered 
those costs and the variation in the number of implants per procedure 
when we created HCPCS codes C9739 and C9740 and assigned the procedure 
codes to APCs 0162 and 1564, respectively. We believe that HCPCS codes 
C9739 and C9740 are preferable to the new CPT codes 52441 and 52442 
with respect to OPPS and ASC payments because the new codes describe 
complete procedures instead of the insertion of individual implants, 
which are almost always incomplete procedures because patients usually 
receive multiple implants. We do not believe that any of the APCs 
recommended by the commenter are appropriate for assignment of HCPCS 
codes C9739 and C9740 at this time because our usual policy with new 
codes is to wait until we have OPPS claims data available before making 
an APC reassignment. In regard to the ASC payment for the procedures, 
neither APC 0162 nor APC 1564 is designated as device intensive. 
Therefore, the multiple procedure payment reduction under OPPS applies 
to the entire payment amount under the ASC payment as well. Currently, 
there is no policy regarding designating services that are assigned to 
a New Technology APC as device intensive for the ASC setting. We may 
consider such a policy in future rulemakings.
    We will maintain payment for the cystourethroscopy with insertion 
of TIPs using HCPCS codes C9739 and C9740 because we believe that the 
code descriptors more appropriately reflect complete procedures and the 
distribution of implant utilization per patient. For CY 2015, we are 
maintaining our APC assignments for HCPCS codes C9739 and C9740 to APCs 
0162 and 1564, respectively. The APC assignments for HCPCS codes C9739 
and C9740 are initial APC assignments until we obtain claims data for 
these two codes for the CY 2016 OPPS update. The final CY 2015 
geometric mean costs for APC 0162 is approximately $2,163, and the 
final CY 2015 payment rate (there are no geometric mean costs for New 
Technology APCs, only payment bands) for APC 1564 is approximately 
$4,750. CPT codes 52441 and 52442 will not be payable under the OPPS 
for CY 2015; we are assigning these two CPT codes to status indicator 
``B'' (Codes that are not recognized by OPPS when submitted on an 
outpatient hospital Part B bill type (12x and 13x)).
    After consideration of the public comments we received, we also are 
finalizing our proposal to restructure the APCs containing 
cystourethroscopy, transprostatic implant procedures, and other 
genitourinary procedures, and to use a four-level APC grouping to 
classify the procedures based on our analysis of the latest hospital 
outpatient claims data available for this final rule with comment 
period. The final payment rates for the cystourethroscopy, 
transprostatic implant procedures, and other genitourinary procedure 
codes, as well as the specific CPT codes on which we received public 
comments and that are discussed in this section, can be found in 
Addendum B to this final rule with comment period, which is available 
via the Internet on the CMS Web site. The final payment rates for APCs 
0160, 0161, 0162, and 0163, which are the final CY 2015 
cystourethroscopy, transprostatic implant procedures, and other 
genitourinary APCs, can be found in Addendum A to this final rule with 
comment period, which is also available via the Internet on the CMS Web 
site.
    We remind commenters that every year we revise, if necessary, the 
APC assignments for procedure codes based on our analysis of the latest 
hospital outpatient claims data. We anticipate that there will be 
further significant revisions to the urology-related APCs in futures 
years because the current overall APC structure is suboptimal and can 
be improved with respect to the clinical similarity and resource 
similarity of the groupings. In addition, we note that section 
1833(t)(9)(A) of the Act requires the Secretary to review, on a 
recurring basis occurring no less than annually, and revise the groups, 
the relative payment weights, and the wage and other adjustments to 
take into account changes in medical practice, changes in technology, 
the addition of new services, new cost data, and other relevant 
information and factors. Although we do not discuss every APC change in 
the proposed and final rules with comment period, these changes are 
listed in Addendum B to the proposed and final rules with comment 
period. Specifically, procedure codes with proposed revisions to the 
APC and/or status indicator assignments are assigned to comment 
indicator ``CH'' (Active HCPCS code in current year and next calendar 
year, status indicator and/or APC assignment has changed) in Addendum B 
to the proposed rule.
c. Level IV Anal/Rectal Procedures (APC 0150)
    We created HCPCS code C9735 (Anoscopy; with directed submucosal 
injection(s), any substance) effective April 1, 2013, and assigned the 
service to APC 0150 (Level IV Anal/Rectal Procedures) for CY 2013, 
which had a payment rate of $2,365.97. We maintained the assignment of 
HCPCS code C9735 to APC 0150 for CY 2014, with a payment rate of 
$2,501.31. HCPCS code C9735 involves injection of a bulking agent, 
L8605 (Injectable bulking agent dextranomer/hyaluronic

[[Page 66855]]

acid copolymer implant, anal canal, 1 ml, includes shipping and 
necessary supplies). One commenter in response to the CY 2014 OPPS/ASC 
proposed rule believed that the proposed assignment for HCPCS code 
C9735 to APC 0150 was inappropriate, and asserted that the entire HCPCS 
code C9735 procedure costs far more than the proposed payment rate for 
APC 0150. The commenter recommended creating a new Level V Anal/Rectal 
Procedures APC, composed of HCPCS code C9735, and two other procedures. 
CMS responded in the CY 2014 OPPS/ASC final rule with comment period 
that HCPCS code C9735 became effective April 1, 2013, so there were no 
claims data yet on this procedure, and that our longstanding policy is 
to wait until there are claims data on a new procedure before 
reassigning the service to another clinical APC (78 FR 74981). We did 
not agree with the commenters that creating a Level V Anal/Rectal 
Procedures APC was warranted for CY 2014. We believed that the 
suggested Level V APC would have a low volume of single frequency 
claims, and HCPCS code C9735 had no claims volume at that time. We 
stated that the low volume of claims for such an APC would contribute 
to APC cost and payment volatility.
    For CY 2015, we proposed to maintain the assignment of HCPCS code 
C9735 to APC 0150, which had a proposed payment rate of $2,612.71. The 
AMA's CPT Editorial Panel created new Category III CPT code 0377T 
(Anoscopy with directed submucosal injection of bulking agent for fecal 
incontinence), which describes the procedure performed by HCPCS code 
C9735, to be effective January 1, 2015.
    Comment: A few commenters recommended that CMS divide APC 0150 into 
two APCs by creating a higher cost Level V Anal/Rectal Procedures APC. 
The commenters stated that there are four procedure codes that have a 
geometric mean cost that is more than $500 higher than the proposed 
geometric mean cost of APC 0150, which is $2,735.52, and one procedure 
code that has a geometric mean cost that is approximately $300 higher 
than the proposed geometric mean cost of APC 0150. One commenter 
specifically stated that the proposed payment rate for APC 0150 is 
insufficient to cover the cost of the procedure described by HCPCS code 
C9735, which is one of the five procedure codes recommended for 
assignment to the suggested Level V Anal/Rectal Procedures APC, because 
the proposed payment rate for APC 0150 is lower than the total cost of 
the procedure. The commenter pointed out that the proposed geometric 
mean cost of HCPCS code C9735 is $3,241.32, which is considerably 
higher that the proposed geometric mean cost of APC 0150, which is 
$2,735.52. The commenter also recommended creating a Level V Anal/
Rectal Procedures APC, and assigning HCPCS code C9735 and other codes 
to this recommended APC. In addition, the commenter recommended that 
CMS use new CPT code 0377T for hospitals to report the anoscopy with 
directed submucosal injection of bulking agent for fecal incontinence 
procedure, effective January 1, 2015.
    Response: The claims data available for this final rule with 
comment period, which are used to establish final payment rates for the 
CY 2015 OPPS, show a geometric mean cost of approximately $2,698 for 
APC 0150, while the geometric mean cost for HCPCS code C9735 is 
approximately $2,863 based on 56 single frequency claims. We believe 
that the geometric mean cost of HCPCS code C9735 is similar to the 
geometric mean cost of APC 0150. Further, the procedure described by 
HCPCS code C9735 is no longer one of the five highest cost procedures 
assigned to APC 0150 based on claims data available for this final rule 
with comment period. Similarly, there are other higher cost, lower 
volume procedures with geometric mean costs that are greater than the 
geometric mean cost of APC 0150, but do not create a violation of the 2 
times rule because of the APC assignment. For instance, CPT code 46762 
(Sphincteroplasty, anal, for incontinence, adult; implantation 
artificial sphincter) has a final rule geometric mean cost of 
approximately $11,873 based on 9 single frequency claims. The volume of 
claims for this CPT code is too low to consider this procedure 
significant for purposes of evaluating a potential violation of the 2 
times rule. Therefore, we do not believe that the range of costs for 
the significant procedures assigned to APC 0150 warrants the creation 
of a higher level APC. Based on claims data available for this final 
rule with comment period, the five highest cost procedures assigned to 
APC 0150 have a total number of single frequency claims that equals 
less than 220 claims. The suggested Level V Anal/Rectal Procedures APC 
would have a low volume of single frequency claims and would contribute 
to APC cost and payment volatility, as was the case when based on CY 
2014 claims data. As we stated in the CY 2014 OPPS/ASC final rule with 
comment period, we are not accepting the commenter's recommendation 
because a low volume APC will contribute to the APC's cost volatility, 
which in turn contributes to payment volatility for the procedures 
assigned to the low volume APC (78 FR 74981).
    After consideration of the public comments we received regarding 
the composition of APC 0150, we are finalizing our proposal to continue 
to assign HCPCS code C9735 to APC 0150 for CY 2015. The CY 2015 final 
geometric mean cost of APC 0150 is approximately $2,698. In addition, 
new CPT code 0377T also is assigned to APC 0150 for CY 2015 because we 
agree with the commenters that HCPCS code C9735 should be deleted after 
December 31, 2014. We are instructing hospitals to use CPT code 0377T 
to report this service beginning with the code's effective date, 
January 1, 2015.
d. Percutaneous Renal Cryoablation (APC 0423)
    For CY 2014, we assigned CPT codes 50593 (Ablation, renal tumor(s), 
unilateral, percutaneous, cryotherapy) and 0340T (Ablation, pulmonary 
tumor(s), including pleura or chest wall when involved by tumor 
extension, percutaneous, cryoablation, unilateral, includes imaging 
guidance) to APC 0423 (Level II Percutaneous Abdominal and Biliary 
Procedures), which has a payment rate of $4,106.19. For CY 2015, we 
proposed to continue to assign these two CPT codes to APC 0423, with a 
proposed payment rate of $4,053.32.
    Comment: One commenter believed that CMS' proposal to continue to 
assign CPT codes 50593 and 0340T to APC 0423 does not accurately 
reflect the costs incurred when performing these cryoablation 
procedures. The commenter noted that APC 0423 includes several other 
radiofrequency ablation and endoscopy procedures, which do not include 
high-cost device systems like the cryoablation procedures described by 
CPT codes 50593 and 0340T. Although the commenter acknowledged that 
there is no violation of the 2 times rule, the commenter stated that 
the proposed geometric mean cost of CPT code 50593 is significantly 
higher than the proposed geometric mean cost of APC 0423. In addition, 
the commenter asserted that the cryoablation procedures described by 
CPT codes 50593 and 0340T are not clinically similar to other 
procedures assigned to APC 0423. The commenter further noted that less 
than half of claims used to establish the proposed geometric mean cost 
of CPT code 50593 were correctly coded, and did not include the device 
HCPCS code C2618 (Probe, cryoablation). The commenter

[[Page 66856]]

recommended that CMS create a new Level III Percutaneous Abdominal and 
Biliary Procedures APC, and assign CPT codes 50593 and 0340T to this 
APC.
    Response: We disagree with the commenter that the proposed 
geometric mean cost of CPT code 50593, which is $4,937.12 is 
significantly higher than the proposed geometric mean cost of APC 0423, 
which is $4,243.84. The claims data available for this final rule with 
comment period show a geometric mean cost of approximately $4,249 for 
APC 0423, and approximately $4,985 for CPT code 50593, which is based 
on 749 single frequency claims. The geometric mean cost of CPT code 
50593 is the highest cost procedure assigned to APC 0423, but is well 
within a normal range of costs associated with the other procedures 
assigned to this APC, and does not approach the 2 times limit that 
would create a violation of the 2 times rule. CPT code 0340T has no 
claims at this time because the procedure code became effective 
beginning in CY 2014. Therefore, we do not believe that a new Level III 
Percutaneous Abdominal and Biliary Procedures APC is warranted based on 
the geometric mean cost of CPT code 50593 relative to the geometric 
mean cost of APC 0423. We also remind the commenter that we typically 
do not investigate allegations of hospital cost underreporting or 
incorrect coding. As we stated in the CY 2011 OPPS/ASC final rule with 
comment period, ``Beyond our standard OPPS trimming methodology . . . 
that we apply to those claims that have passed various types of claims 
processing edits, it is not our general policy to judge the accuracy of 
hospital coding and charging for purposes of ratesetting'' (75 FR 
71838). We believe that the cryoablation procedures described by CPT 
codes 50593 and 0340T are clinically similar to the other procedures 
assigned to APC 0423. Many of the procedures assigned to APC 0423 are 
ablative procedures, and all of the procedures assigned to this APC are 
abdominal or biliary. Therefore, we are finalizing the CY 2015 
proposal, without modification, to continue to assign CPT codes 50593 
and 0340T to APC 0423. We will specifically review the APC assignment 
of CPT code 0340T when claims data for this service become available.
4. Nervous System Services
a. Chemodenervation (APC 0206)
    For CY 2015, we proposed to continue to assign CPT code 64616 
(Chemodenervation of muscle(s); neck muscle(s), excluding muscles of 
the larynx, unilateral (eg, for cervical dystonia, spasmodic 
torticollis)) to APC 0204 (Level I Nerve Injections), with a proposed 
payment rate of approximately $218. We note that CPT code 64616 became 
effective January 1, 2014.
    Comment: One commenter requested that CMS reassign CPT code 64616 
from APC 0204 to APC 0206 (Level II Nerve Injections), which had a 
proposed payment rate of approximately $375. The commenter noted that 
this recommendation for APC reassignment was also submitted in response 
to the CY 2014 OPPS/ASC final rule with comment period. The commenter 
stated that APC 0206 is the APC that was assigned to CPT code 64613 
(Chemodenervation of muscle(s); neck muscle(s) (eg, for spasmodic 
torticollis, spasmodic dysphonia), which is the predecessor code for 
CPT code 64616 in effect prior to January 1, 2014. Based on the 
commenter's analysis of the CY 2013 hospital outpatient claims data 
that was used for the CY 2015 OPPS/ASC proposed rule, the commenter 
believed that APC 0206 is the most appropriate APC assignment for CPT 
code 64616 based on the resource costs and clinical homogeneity of the 
predecessor code, CPT code 64613, in relation to the other procedures 
assigned to APC 0206.
    Response: We reviewed the latest hospital outpatient claims data 
reporting the service described by predecessor code, CPT code 64613, 
and the replacement code, CPT code 64616. We acknowledge that the 
procedure described by CPT code 64616 was previously described by CPT 
code 64613. Based on our analysis of the latest hospital outpatient 
claims data available for this final rule with comment period, we agree 
with the commenter's recommendation that CPT code 64616 should be 
reassigned from APC 0204 to APC 0206 for the CY 2015 update. 
Specifically, we reviewed the latest hospital outpatient claims data 
for CPT code 64613 based on claims submitted by hospitals for dates of 
service between January 1, 2013, and December 31, 2013, that were 
processed on or before June 30, 2014. Our review of the latest claims 
data shows a geometric mean cost of approximately $322 for CPT code 
64613 based on 11,177 single claims (out of 13,743 total claims), which 
is comparable to the geometric mean cost of approximately $387 for APC 
0206. There are 21 procedures assigned to APC 0206 and the geometric 
mean costs for the procedures with significant claims data range 
approximately between $322 (for CPT code 64613) and $536 (for CPT code 
62270). Based on these data, we agree with the commenter that APC 0206 
is the most appropriate APC assignment for CPT code 64616 based on 
clinical homogeneity to the other procedures assigned to this APC and 
the resource similarity of the predecessor code, CPT code 64613, to the 
other procedures assigned to APC 0206.
    Therefore, after consideration of the public comment we received, 
we are not adopting our proposal to continue to assign CPT code 64616 
to APC 0204. Instead, we are reassigning CPT code 64616 to APC 0206 for 
the CY 2015 OPPS update. The final CY 2015 payment rate for CPT code 
64616 can be found in Addendum B to this CY 2015 OPPS/ASC final rule 
with comment period (which is available via the Internet on the CMS Web 
site).
b. Epidural Lysis (APCs 0203 and 0207)
    For CY 2015, we proposed to continue to assign CPT code 62263 
(Percutaneous lysis of epidural adhesions using solution injection (eg, 
hypertonic saline, enzyme) or mechanical means (eg, catheter) including 
radiologic localization (includes contrast when administered), multiple 
adhesiolysis sessions; 2 or more days) to APC 0203 (Level IV Nerve 
Injections), with a proposed payment rate of approximately $1,524. We 
also proposed to continue to assign CPT code 62264 (Percutaneous lysis 
of epidural adhesions using solution injection (eg, hypertonic saline, 
enzyme) or mechanical means (eg, catheter) including radiologic 
localization (includes contrast when administered), multiple 
adhesiolysis sessions; 1 day) to APC 0207 (Level III Nerve Injections), 
with a proposed payment rate of approximately $683.
    Comment: One commenter opposed CMS' proposals to continue to assign 
CPT code 62263 to APC 0203 and CPT code 62264 to APC 0207. The 
commenter stated that CMS has overcompensated for the cost of providing 
the service described by CPT code 62263 by assigning the procedure to 
APC 0203. Alternatively, the commenter believed that CMS has 
undercompensated the cost of providing the service described by CPT 
code 62264 by assigning the procedure to APC 0207. The commenter stated 
that the resources utilized during the performance of the services 
described by both CPT codes are comparable, and each CPT code should be 
reassigned to a more appropriate APC to ensure adequate payment for the 
services provided.
    Response: We reviewed the latest hospital outpatient claims data 
reporting services described by CPT codes 62263 and 62264 for dates of 
service between January 1, 2013, and December 31, 2013, that were 
processed

[[Page 66857]]

on or before June 30, 2014. For CPT code 62263, our analysis of the 
claims data shows a geometric mean cost of approximately $1,215 based 
on 70 single claims (out of 88 total claims), which is comparable to 
the geometric mean cost of approximately $1,525 for APC 0203. For CPT 
code 62264, our analysis of the claims data shows a geometric mean cost 
of approximately $798 based on 1,971 single claims (out of 4,174 total 
claims), which is comparable to the geometric mean cost of 
approximately $697 for APC 0207. Therefore, we believe that the 
procedures described by CPT code 66263 and CPT code 62264 are 
appropriately assigned to APCs 0203 and 0207, respectively, based on 
clinical and resource similarities in relation to the other procedures 
assigned to these APCs. We remind the commenter that the OPPS is a 
system of averages, in which the costs of services, calculated from the 
most recent year's claims data, are weighted relative to the other 
services in the system, for that given year. Furthermore, as has been 
our practice since the implementation of the OPPS, we annually review 
all the items and services within an APC group to determine, with 
respect to comparability of the use of resources, any violations of the 
2 times rule. In making this determination, we review our claims data 
and determine whether we need to make changes to the current APC 
assignments for the following year. We will reevaluate the APC 
assignment for CPT codes 62263 and 62264 for the CY 2016 OPPS 
rulemaking.
    After consideration of the public comment that we received, we are 
finalizing our CY 2015 proposal, without modification, to continue to 
assign CPT code 62263 to APC 0203 and CPT code 62264 to APC 0207. The 
final CY 2015 payment rates for the two procedures can be found in 
Addendum B to this CY 2015 OPPS/ASC final rule with comment period 
(which is available via the Internet on the CMS Web site).
c. Transcranial Magnetic Stimulation (TMS) Therapy (APC 0218)
    Since July 2006, CPT codes have existed to describe Transcranial 
Magnetic Stimulation (TMS) therapy. The initial CPT codes were 
temporary Category III CPT codes, specifically, CPT codes 0160T 
(Therapeutic repetitive transcranial magnetic stimulation treatment 
planning) and 0161T (Therapeutic repetitive transcranial magnetic 
stimulation treatment delivery and management, per session), that 
became effective July 1, 2006. For CY 2011, the CPT Editorial Panel 
deleted CPT code 0160T on December 31, 2010, and replaced this 
procedure code with CPT code 90867 (Therapeutic repetitive transcranial 
magnetic stimulation (tms) treatment; initial, including cortical 
mapping, motor threshold determination, delivery and management), 
effective January 1, 2011. Similarly, CPT code 0161T was deleted on 
December 31, 2010, and was replaced with CPT code 90868 (Therapeutic 
repetitive transcranial magnetic stimulation (tms) treatment; 
subsequent delivery and management, per session), effective January 1, 
2011. In CY 2012, the CPT Editorial Panel established an additional TMS 
therapy code, specifically, CPT code 90869 (Therapeutic repetitive 
transcranial magnetic stimulation (tms) treatment; subsequent motor 
threshold re-determination with delivery and management), that became 
effective January 1, 2012.
    For the CY 2014 update, CPT codes 90867 and 90868 were assigned to 
APC 0216 (Level II Nerve and Muscle Tests), with a payment rate of 
$216.79, and CPT code 90869 was assigned to APC 0218 (Level II Nerve 
and Muscle Tests), with a payment rate of $127.75. For the CY 2015 
update, as listed in Addendum B to the CY 2015 OPPS/ASC proposed rule, 
we proposed to continue to assign CPT code 90869 to APC 0218, with a 
proposed payment rate of approximately $160. In addition, we proposed 
to reassign CPT codes 90867 and 90868 from APC 0216 to APC 0218, the 
same APC assignment for CPT code 90869.
    Comment: One commenter disagreed with CMS' proposal to reassign CPT 
codes 90867 and 90868 from APC 0216 to APC 0218, and to continue to 
assign CPT code 90869 to APC 0218. The commenter stated that the 
proposed addition of certain nerve conduction study codes to APC 0218 
for the CY 2015 update has negatively affected the proposed payment 
rate for APC 0218. The commenter believed that this proposal resulted 
in a decreased payment rate of approximately $160 for APC 0218, 
compared to the CY 2014 payment rate of approximately $217; thereby 
effectuating a potential financial loss for the provider with each 
treatment because a typical course of TMS therapy includes a total of 
25 daily treatment sessions. In addition, the commenter stated that 
assigning CPT codes 90867, 90868, and 90869 to APC 0218 is clinically 
inappropriate because these CPT codes describe therapy services, 
whereas the other procedure codes assigned to APC 0218 describe 
diagnostic tests (simple nerve conduction and electromyography 
studies). To correct the perceived clinical and resource discrepancies, 
the commenter suggested that CMS establish a new APC specifically for 
the TMS therapy codes, and that CMS title the APC ``Transcranial 
Magnetic Stimulation.''
    Response: We believe that APC 0218 is the most appropriate APC 
assignment for the three TMS therapy CPT codes. The CPT codes 
describing the procedures assigned to APC 0218 all describe noninvasive 
services that affect the nervous system. Based on the latest hospital 
outpatient claims data used for this final rule with comment period, 
our analysis revealed that the resources associated with providing the 
services described by CPT codes 90867, 90868, and 90869 are comparable 
to the other services assigned to APC 0218. Specifically, based on CY 
2013 claims data used for this final rule with comment period, the 
geometric mean cost for CPT code 90867 is approximately $210 based on 
72 single claims (out of 72 total claims), the geometric mean cost for 
CPT code 90868 is approximately $201 based on 2,513 single claims (out 
of 2,516 total claims), and the geometric mean cost for CPT code 90869 
is approximately $194 based on 28 single claims (out of 30 total 
claims). In addition, a review of the procedures assigned to APC 0218 
shows that the range of geometric mean cost for the services assigned 
to APC 0218 is approximately between $95 (for CPT code 95937) and $327 
(for CPT code 95875), which is comparable to the geometric mean costs 
for all three TMS therapy CPT codes. Based on the clinical and resource 
similarities in relation to the other procedures currently assigned to 
APC 0218, we believe that the TMS therapy codes would be appropriately 
assigned to APC 0218.
    After consideration of the public comment we received, we are 
finalizing our CY 2015 proposal, without modification, to reassign CPT 
codes 90867 and 90868 from APC 0216 to APC 0218, and to continue to 
assign CPT code 90869 to APC 0218 for CY 2015.
5. Ocular Services: Ophthalmic Procedures and Services
    For the CY 2015 OPPS update, based on our evaluation of the latest 
hospital outpatient claims data, we proposed to restructure all of the 
ophthalmic APCs to better reflect the costs and clinical 
characteristics of the procedures within each APC. This proposed 
restructuring resulted in the use of 13 APCs for the ophthalmology-
related procedures for the CY 2015 OPPS update, as compared to the 24 
APCs used for the CY 2014 OPPS update. We believe that this major

[[Page 66858]]

restructuring and consolidation of APCs more appropriately categorizes 
all of the ophthalmology-related procedures and services within an APC 
group, such that the services within each newly-configured APC are more 
comparable clinically and with respect to resource use. Tables 19 and 
20 in the proposed rule showed the current CY 2014 and proposed CY 2015 
ophthalmology-related APCs. Specifically, Table 19 of the CY 2015 OPPS/
ASC proposed rule (79 FR 40981) showed the CY 2014 ophthalmology-
related APCs and status indicator assignments, while Table 20 showed 
the proposed restructured ophthalmology-related APCs and their status 
indicator assignments for CY 2015 (79 FR 40981 through 40982). The 
proposed payment rates for the ophthalmology-related APCs listed in 
Table 20 were listed in Addendum B to the proposed rule (which is 
available via the Internet on the CMS Web site).
    In the CY 2015 OPPS/ASC proposed rule, we invited public comments 
on this proposal.
    Comment: Several commenters stated that the proposed restructuring 
and consolidation of the CY 2015 ophthalmic APC is substantial, and 
requested that CMS not finalize this proposal. The commenters also 
stated that CMS has not provided information regarding the criteria 
used to differentiate the various levels of treatments or procedures 
for the restructured 13 ophthalmic APCs. The commenters stated that the 
configuration and structure of the existing 24 APCs do not appear to be 
inconsistent with the requirements for clinical coherence or resource 
use. The commenters disagreed with CMS' proposal to establish broader 
categories within these APCs, and indicated that such a change in APC 
groupings has the potential to aggregate procedures that vary 
significantly in resource costs and clinical coherence. In addition, 
the commenters stated that some of the procedures in the restructured 
ophthalmic APCs appear to be inappropriately categorized. For example, 
the restructuring of the ophthalmic APCs has resulted in the 
consolidation of cornea procedures within one of the restructured APCs, 
and the procedures are no longer assigned to a separate classification 
grouping based on the previous APC configurations. The commenters 
pointed out that the major cornea transplant codes have been reassigned 
to restructured APC 0673 (Level III Intraocular Procedures), along with 
procedures that treat glaucoma and retina conditions. The commenters 
further explained that the equipment used for these services when 
performed in alternative settings and the depths of the condition of 
the eye and the appropriate treatments vastly differ, as does the time 
and other resources necessary to perform these types of surgeries. As a 
result, the commenters believed that additional APCs are needed to 
appropriately categorize ophthalmic procedures based on clinical 
homogeneity and resource consumption. The commenters also requested the 
opportunity to work with CMS to make appropriate adjustments to the 
restructured ophthalmic APC groupings to ensure clinical coherence and 
to minimize payment variances for these procedures.
    Response: Consistent with CMS' statutory requirement under section 
1833(t)(9) of the Act to review and revise APC assignments annually and 
to construct the most appropriate APC groupings, as well as, to the 
extent desirable, correct any 2 times rule violations, we evaluated the 
resource consumption and clinical coherence associated with the 
ophthalmic APCs for the CY 2015 update. Based on our analysis of the 
latest hospital outpatient claims data used for this final rule with 
comment period and understanding of the clinical aspects of these 
procedures, we believe that the restructured and consolidated 
ophthalmic APCs more appropriately group these ophthalmology-related 
services according to their current resource costs, as well as their 
clinical characteristics. The former ophthalmic procedures APC 
structure unnecessarily separated, from a clinical and resource 
similarity prospective, ophthalmic procedures based on disease state or 
traditional subdivisions within ophthalmic surgery. APC groupings were 
never intended to precisely track traditional ophthalmology 
subspecialty divisions, such as cornea surgery, retina surgery, or 
glaucoma surgery, as the commenters suggested. We also believe that 
larger APC groupings are more consistent with a prospective payment 
system than smaller groupings. We note that we regularly accept 
meetings from interested parties throughout the year, and we encourage 
stakeholders to continue a dialogue with us during the rulemaking cycle 
and throughout the year on our continuing efforts to improve the 
coherence of the OPPS APC groupings.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to restructure and 
consolidate the ophthalmic APCs. Table 22 below shows the final 
ophthalmology-related APCs and their status indicator assignments for 
CY 2015. The final payment rates for these APCs can be found in 
Addendum B to this CY 2015 OPPS/ASC final rule with comment period 
(which is available via the Internet on the CMS Web site). We also 
remind the public that we review the OPPS and APC structures and 
assignments annually and may propose additional restructurings of the 
APCs and procedure code assignments for other clinical areas and APC 
groupings in CY 2016 and future rulemakings.

  Table 22--Final CY 2015 APC Assignments for the Ophthalmic Procedures
                              and Services
------------------------------------------------------------------------
                                                              Final CY
        Final CY 2015 APC          Final CY 2015 APC title   2015 status
                                         description          indicator
------------------------------------------------------------------------
0230............................  Level I Eye Tests &                 S
                                   Treatments.
0231............................  Level III Eye Tests &               S
                                   Treatments.
0233............................  Level II Intraocular                T
                                   Procedures.
0238............................  Level I Extraocular,                T
                                   Repair, and Plastic Eye
                                   Procedures.
0239............................  Level II Extraocular,               T
                                   Repair, and Plastic Eye
                                   Procedures.
0240............................  Level III Extraocular,              T
                                   Repair, and Plastic Eye
                                   Procedures.
0242............................  Level IV Extraocular,               T
                                   Repair, and Plastic Eye
                                   Procedures.
0247............................  Laser Eye Procedures....            T
0255............................  Level I Intraocular                 T
                                   Procedures.
0293............................  Level IV Intraocular               J1
                                   Procedures.
0351............................  Level V Intraocular                J1
                                   Procedures.
0673............................  Level III Intraocular               T
                                   Procedures.

[[Page 66859]]

 
0698............................  Level II Eye Tests &                S
                                   Treatments.
------------------------------------------------------------------------

6. Imaging
a. Echocardiography Services Without Contrast (APCs 0269, 0270, and 
0697)
    We proposed to continue to use for the CY 2015 update the three 
APCs that describe echocardiography services without contrast, APC 0697 
(Level I Echocardiogram Without Contrast), APC 0269 (Level II 
Echocardiogram Without Contrast), and APC 0270 (Level III 
Echocardiogram Without Contrast), and to maintain the CY 2014 HCPCS 
code assignments for these APCs.
    Comment: One commenter requested that CMS reexamine the services 
assigned to the APCs for echocardiography services without contrast. In 
particular, the commenter requested that CMS reassign CPT codes 76825 
(Echocardiography, fetal, cardiovascular system, real time with image 
documentation (2D), with or without M-mode recording); and 76826 
(Echocardiography, fetal, cardiovascular system, real time with image 
documentation (2D), with or without M-mode recording; follow-up or 
repeat study) from APC 0697 to APC 0269 based on the clinical and 
resource similarities to the other echocardiography procedures assigned 
to APC 0269.
    Response: Based on our review of the latest hospital outpatient 
claims data available for this final rule with comment period, we agree 
with the commenter that CPT codes 76825 and 76826 should be reassigned 
to APC 0269, which more appropriately supports the clinical and 
resource homogeneity of the APCs rather than reassigning the procedure 
codes to APC 0697. The geometric mean cost of CPT code 76825 is 
approximately $384, and the geometric mean cost of CPT code 76826 is 
approximately $285. These costs are sufficiently close to the geometric 
mean cost of CPT code 93306 (Echocardiography, transthoracic, real time 
with image documentation (2D), includes M-mode recording, when 
performed, complete, with spectral Doppler echocardiography, and with 
color flow Doppler echocardiography), which is approximately $430. CPT 
code 93306 comprises 93 percent of the service volume within APC 0269. 
By reassigning CPT codes 76825 and 76826 to APC 0269, only one 
procedure code would remain in APC 0697. Therefore, we also are 
reassigning CPT code 93308 (Echocardiography, transthoracic, real time 
with image documentation (2D), includes M-mode recording, when 
performed, follow-up or limited study) from APC 0697 to APC 0267 (Level 
III Diagnostic and Screening Ultrasound) for CY 2015. We are deleting 
APC 0697 for the CY 2015 OPPS update because all of the procedure codes 
previously assigned to APC 0697 have been reassigned to more 
appropriate APCs to ensure adequate payment for the services provided 
and the clinical and resource homogeneity of APCs.
b. Optical Coherence Tomography (OCT) Procedures of the Breast
    For the July 2014 quarterly update, the CPT Editorial Panel 
established four new Category III CPT codes to describe optical 
coherence tomography (OCT) procedures of the breast: CPT code 0351T 
(Optical coherence tomography of breast or axillary lymph node, excised 
tissue, each specimen; real time intraoperative); CPT code 0352T 
(Optical coherence tomography of breast or axillary lymph node, excised 
tissue, each specimen; interpretation and report, real time or 
referred); CPT code 0353T (Optical coherence tomography of breast, 
surgical cavity; real time intraoperative); and CPT code 0354T (Optical 
coherence tomography of breast, surgical cavity; interpretation and 
report, real time or referred). As listed in Table 17 of the CY 2015 
OPPS/ASC proposed rule (79 FR 40976), we proposed to assign CPT codes 
0351T and 0353T to OPPS status indicator ``N'' (paid under OPPS; 
payment is packaged into payment for other services; there is no 
separate APC payment), and CPT codes 0352T and 0354T to OPPS status 
indicator ``B'' (codes that are not recognized by OPPS when submitted 
on an outpatient hospital Part B bill type (12x and 13x)).
    Comment: Some commenters expressed concern regarding CMS' proposal 
to assign CPT codes 0351T and 0353T to OPPS status indicator ``N'' and 
noted that both procedures describe independent, unique services and 
should be assigned to specific APCs. The commenters recommended 
assigning CPT codes 0351T and 0353T to any one of the following APCs: 
APC 0028 (Level I Breast and Skin Surgery), which had a proposed 
payment rate of approximately $2,176; APC 0029 (Level II Breast and 
Skin Surgery), which had a proposed payment rate of approximately 
$3,018; or APC 0030 (Level III Breast and Skin Surgery), which had a 
proposed payment rate of approximately $4,150.
    Response: Consistent with our packaging policy for intraoperative 
procedures, we proposed to assign CPT codes 0351T and 0353T to OPPS 
status indicator ``N'' because both procedure codes describe supportive 
dependent services that are performed during independent procedures. As 
clarified in the CY 2008 OPPS final rule with comment period (72 FR 
66627), we define ``intraoperative'' procedures as services that are 
provided during and, therefore, on the same date of service as another 
procedure that is separately payable under the OPPS. We further define 
intraoperative as services that support the performance of an 
independent procedure and are provided in the same operative session as 
the independent procedure. Both of the procedures described by CPT 
codes 0351T and 0353T must always be performed in conjunction with 
another procedure; specifically, the surgical procedure is performed 
followed by the breast OCT to improve the surgical outcome. We believe 
that these procedure codes clearly describe services that conform to 
the definition of ``intraoperative'' procedures. For further 
information on our policy for intraoperative services under the 
hospital OPPS, we refer readers to the CY 2008 OPPS final rule with 
comment period (72 FR 66627 through 66630).
    In summary, we believe that CPT codes 0351T and 0353T are 
procedures that support the performance of an independent procedure and 
are provided in the same operative session as the independent 
procedure. Specifically, we believe that both procedures are provided 
during and, therefore, on the same date of service as another procedure 
that is separately payable under the OPPS. In addition, we believe that 
CPT codes 0351T and 0353T are always integral to, and dependent upon, 
the independent procedure that they support. Therefore, payment for 
these services will be

[[Page 66860]]

packaged because the procedures would generally be performed on the 
same date as another procedure that is separately payable under the 
OPPS. After consideration of the public comments we received, we are 
finalizing our proposals to assign CPT codes 0351T and 0353T to OPPS 
status indicator ``N'' and CPT codes 0352T and 0354T to OPPS status 
indicator ``B'' for CY 2015.
c. Parathyroid Planar Imaging (APCs 0263, 0317, 0406, and 0414)
    For CY 2015, we proposed to assign CPT code 78071 (Parathyroid 
planar imaging (including subtraction, when performed); with 
tomographic (SPECT)) to APC 0263 (Level I Miscellaneous Radiology 
Procedures), for which we proposed a CY 2015 geometric mean cost of 
approximately $357. We also proposed to assign CPT code 78072 
(Parathyroid planar imaging (including subtraction, when performed); 
with tomographic (SPECT), and concurrently acquired computed tomography 
(CT) for anatomical localization) to APC 0317 (Level II Miscellaneous 
Radiology Procedures), for which we proposed a CY 2015 geometric mean 
cost of approximately $577. In addition, we proposed to change the 
status indicators for CPT codes 78071 and 78072 from ``X'' to ``S.''
    Comment: Commenters agreed with CMS' proposal to assign CPT codes 
78071 and 78072 to status indicator ``S,'' but opposed the proposal to 
assign CPT code 78071 to APC 0263. The commenters believed that CPT 
codes 78071 and 78072 should be assigned to the nuclear medicine APCs 
instead of the radiology APCs because the nuclear medicine APCs are 
more representative of the resources utilized in the performance of 
these procedures. The commenters suggested that CMS assign CPT codes 
78071 and 78072 to either APC 0414 (Level II Tumor/Infection Imaging) 
or 0408 (Level III Tumor/Infection Imaging).
    Response: We agree with the commenters that the resources utilized 
in the performance of the procedures described by CPT codes 78071 and 
78072 are more comparable to the procedures assigned to the nuclear 
medicine APCs. However, we do not agree with the commenters that CPT 
codes 78071 and 78072 are more appropriately assigned to either APC 
0408 or APC 0414. We believe that APC 0406 (Level I Tumor/Infection 
Imaging) is the most appropriate APC assignment for CPT codes 78071 and 
78072 because the procedures currently assigned to APC 0406 are similar 
to the procedures described by CPT codes 78071 and 78072 in clinical 
nature and resource utilization. The final CY 2015 APC geometric mean 
costs of approximately $362 for CPT code 78071 and approximately $427 
for CPT code 78072 are similar to the geometric mean costs of the 
significant procedures assigned to APC 0406, which range between 
approximately $307 and approximately $427.
    After consideration of the public comments we received, we are not 
finalizing our CY 2015 proposal to assign CPT codes 78071 and 78072 to 
APCs 0263 and 0317, respectively. Instead, based on consideration of 
the public comments we received, for CY 2015, we are assigning CPT 
codes 78071 and 78072 to APC 0406, which has a final CY 2015 APC 
geometric mean cost of approximately $391.
7. Radiology Oncology
a. Proton Beam Therapy and Magnetoencephalography (MEG) Services (APCs 
0065, 0412, 0446, 0664, and 0667)
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40989), we proposed 
several changes to the radiation therapy APCs for CY 2015. To correct a 
violation of the 2 times rule within APC 0664 (Level I Proton Beam 
Radiation Therapy), we proposed to reassign CPT code 77520 from APC 
0664 to APC 0412 (Level III Radiation Therapy). We believe that CPT 
code 77520 is both clinically similar and comparable in geometric mean 
cost to the other services assigned to APC 0412. We also proposed to 
reassign CPT code 77522 from APC 0664 to proposed newly renamed APC 
0667 (Level IV Radiation Therapy) because we believe that the procedure 
described by CPT code 77522 is both clinically similar and comparable 
in geometric mean cost to the other services assigned to APC 0667. 
Because there would be no other codes assigned to APC 0664 if these 
proposed reassignments are finalized, we also proposed to delete APC 
0664 for CY 2015 (79 FR 40989). In addition, we proposed to rename 
existing APC 0667 to ``Level IV Radiation Therapy'' (instead of using 
the existing title of ``Level II Proton Beam Radiation Therapy''), to 
make the title consistent with other APCs in the radiation therapy 
series. In conjunction with this proposed change, we proposed to 
reassign the following three services to proposed newly renamed APC 
0667 for CY 2015: CPT codes 77522, 77523, and 77525.
    Comment: Commenters generally supported CMS' proposals regarding 
the radiation therapy APCs, with one exception. The commenters 
supported the proposal to reassign CPT code 77520 from APC 0664 to APC 
0412. However, the commenters expressed concern regarding the proposal 
to reassign CPT code 77522 from APC 0664 to proposed newly renamed APC 
0667. Commenters disagreed with CMS' determination that the procedure 
described by CPT code 77522 is clinically similar and comparable in 
geometric mean cost to the other services assigned to APC 0667 in 2014, 
specifically the procedures described by CPT codes 77523 and 77525. The 
commenters recommended that CMS maintain the assignment of CPT code 
77522 to APC 0664 and not delete the classification grouping, which 
would result in CPT code 77522 being the only service assigned to this 
APC.
    Response: We appreciate the commenters' support for our proposals 
regarding the radiation therapy APCs, specifically our proposal to 
reassign CPT code 77520 from APC 0664 to APC 0412. In regard to the 
proposed reassignment of CPT code 77522 from APC 0664 to APC 0667, we 
disagree with the commenters for the following reasons. The three CPT 
codes, 77522, 77523, and 77525, are similar clinically. All three of 
these CPT codes describe procedures that involve proton beam therapy 
delivery services with a continuum of complexity. The procedure 
described by CPT code 77520 is the least complex. The procedure 
described by CPT code 77522 is more complex than the procedure 
described by CPT code 77520, and the procedure described by CPT code 
77523 is more complex than the procedure described by CPT code 77522. 
The procedure described by CPT code 77525 is the most complex procedure 
of the series proposed to be reassigned to APC 0667. We proposed to 
reassign CPT code 77520 from APC 0664 to APC 0412 because of the 
resource comparability with respect to the other procedures involving 
proton beam therapy delivery services assigned to APC 0412, not based 
on the clinical dissimilarity with respect to the procedures assigned 
to APC 0664. In regard to the remaining three procedures involving 
proton beam therapy delivery services (the procedures described by CPT 
codes 77522, 77523, and 77525), we believe that these procedures are 
clinically similar, but each has a slightly varying level of complexity 
relative to the others. The proposed configuration of APC 0667 only 
contains the three proton beam therapy delivery services described by 
CPT codes 77522, 77523, and 77525, and does not include any other 
service codes. APC 0667 is the most clinically homogeneous APC

[[Page 66861]]

under the OPPS to assign these services that would ensure adequate 
payment, with the exception of single service APCs. With regard to the 
resource comparability of the procedures described by CPT codes 77522, 
77523 and 77525, the lowest geometric mean cost among these procedures 
is associated with the procedure described by CPT code 77522, which is 
approximately $1,033, and the highest geometric mean cost is associated 
with the procedure described by CPT code 77525, which is approximately 
$1,244. The statutory prong that dictates when resources become 
dissimilar between two services is the 2 times rule. Based on the 
limitations imposed by the 2 times rule, the highest cost significant 
service assigned to an APC cannot exceed the lowest cost by greater 
than two times. In this case, the geometric mean cost of the procedure 
described by CPT code 77525 is only 1.2 times the geometric mean cost 
of the procedure described by CPT code 77522, which is well within the 
2 times limit. Therefore, we determined that the resource similarity 
among the services proposed to be reassigned to APC 0667 is comparable. 
In addition, we generally prefer to assign procedures to the most 
appropriate APC that would ensure adequate payment, as opposed to using 
single-service APCs, which the commenters recommended for the procedure 
described by CPT code 77522, unless no other reasonable options exist, 
because single-service APCs are more consistent with a fee schedule 
than a prospective payment system.
    Therefore, we are finalizing the following proposals affecting the 
proton beam therapy services for CY 2015: (1) We are reassigning CPT 
code 77520 from APC 0664 to APC 0412; (2) we are reassigning CPT code 
77522 from 0664 to APC 0667;(3) we are reassigning CPT codes 77523 and 
77525 to APC 0667; (4) we are deleting APC 0664; and (5) we are 
renaming APC 0667 to ``Level IV Radiation Therapy.''
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40989), we also 
proposed to delete APC 0065 (IORT, MRgFUS, and MEG) because we proposed 
to reassign the services assigned to this APC to more appropriate APCs 
based on clinical similarities and comparable geometric mean cost. With 
respect to MEG services, we proposed to reassign the MEG CPT codes 
95965 and 95966 from APC 0065 to APC 0446 (Level IV Nerve and Muscle 
Services), which would only contain MEG services.
    Comment: One commenter applauded CMS for the establishment of new 
APC 0446, the APC to which the MEG procedures are proposed to be 
reassigned. The commenter believed that the reassignment of CPT codes 
95965 and 95966 would produce more accurate data related to MEG usage. 
Alternatively, one commenter expressed concern that the current 
proposal does not adequately cover the costs associated with providing 
MEG services, and urged CMS to work with hospitals and other 
stakeholders to ensure that HOPDs submit claims correctly to capture 
the full costs of providing these services.
    Response: Based on our analysis of the latest hospital outpatient 
claims data used for this final rule with comment period, we believe 
that the establishment of APC 0446 is necessary to ensure clinical and 
resource homogeneity and adequate payment for MEG services. Therefore, 
after consideration of the public comments we received, we are 
finalizing our CY 2015 proposal without modification. As we do every 
year, we will review our claims data for these services for the CY 2016 
OPPS rulemaking.
    b. Stereotactic Radiosurgery Services (SRS) and Magnetic Resonance 
Image Guided Focused Ultrasound (MRgFUS) (APC 0066)
    For CY 2015, for SRS, we proposed to continue to assign CPT code 
77373 (Stereotactic body radiation therapy, treatment delivery, per 
fraction to 1 or more lesions, including image guidance, entire course 
not to exceed 5 fractions) to APC 0066, with a proposed payment rate of 
approximately $1,893. We also proposed to rename APC 0066 from ``Level 
I Stereotactic Radiosurgery'' to ``Level V Radiation Therapy'' (79 FR 
40989).
    In addition, we proposed to continue to assign CPT codes 77371 
(Radiation treatment delivery, stereotactic radiosurgery (SRS), 
complete course of treatment of cranial lesion(s) consisting of 1 
session; multi-source cobalt 60 based) and 77372 (Radiation treatment 
delivery, stereotactic radiosurgery (SRS), complete course of treatment 
of cranial lesion(s) consisting of 1 session; linear accelerator based) 
to APC 0067 (Single Session Cranial Stereotactic Radiosurgery), with a 
proposed payment rate of approximately $9,768. We also proposed to 
rename APC 0067 from ``Level II Stereotactic Radiosurgery'' to ``Single 
Session Cranial Stereotactic Radiosurgery,'' which we proposed as a C-
APC. For further discussion regarding C-APCs and SRS CPT codes 77371 
and 77372 assigned to C-APC 0067, we refer readers to section II.A.2.e. 
of this final rule with comment period.
    Comment: Several commenters requested that CMS reinstate the use of 
SRS G-codes because the SRS CPT codes do not accurately describe 
current clinical practices or adequately cover the cost of providing 
fractionated linac-based SRS.
    Response: For the CY 2014 update, we finalized our proposal to 
adopt the full range of SRS CPT codes and to discontinue the use of the 
remaining SRS G-codes under the OPPS. HOPDs must use and report SRS CPT 
codes 77371, 77372, and 77371 to describe the delivery of stereotactic 
radiosurgery treatment services under the OPPS. For a full discussion 
of this issue, we refer readers to the CY 2014 OPPS/ASC final rule with 
comment period (78 FR 74989 through 749995). In addition, for the CY 
2015 update, HCPCS code G0173 (Linear accelerator based stereotactic 
radiosurgery, complete course of therapy in one session), and HCPCS 
code G0251 ((Linear accelerator based stereotactic radiosurgery, 
delivery including collimator changes and custom plugging, fractionated 
treatment, all lesions, per session, maximum five sessions per course 
of treatment)) will be deleted, effective December 31, 2014, because 
these codes will no longer be used under the MPFS. However, HCPCS code 
G0339 (Image-guided robotic linear accelerator-based stereotactic 
radiosurgery, complete course of therapy in one session or first 
session of fractionated treatment) and HCPCS code G0340 (Image-guided 
robotic linear accelerator-based stereotactic radiosurgery, delivery 
including collimator changes and custom plugging, fractionated 
treatment, all lesions, per session, second through fifth sessions, 
maximum five sessions per course of treatment) will continue to be used 
under the MPFS and, therefore, will continue to be active codes for the 
CY 2015 MPFS update. However, HCPCS codes G0339 and G0340 will not be 
active codes for the CY 2015 OPPS update. Instead, HOPDs must use and 
report SRS CPT codes 77371, 77372, and 77373 to describe the delivery 
of stereotactic radiosurgery treatment services under the OPPS.
    Comment: Many commenters requested that CMS reassign HCPCS code 
G0251 to a different APC to resolve a violation of the 2 times rule 
within APC 0066. Several commenters recommended excluding the claims 
data for HCPCS code G0251 prior to determining the final payment rate 
for APC 0066. The commenters indicated that HCPCS code G0251 is used 
most often for fractionated cranial SRS, not for stereotactic body 
radiation therapy (SBRT), as described by CPT code 77373.

[[Page 66862]]

    Response: Both HCPCS code G0251 and CPT code 77373 describe 
fractionated cranial stereotactic radiosurgery services that involve 
between 2 and 5 fractions of treatment. Single-session cranial SRS are 
reported using either CPT code 77371 or 77372. Based on the code 
descriptor, we believe that the service described by HCPCS code G0251 
is appropriately crosswalked to the service described by CPT code 
77373. We explained the code crosswalk in the CY 2014 OPPS/ASC final 
rule with comment period (78 FR 74991).
    We note that, under the OPPS, we may make exceptions to the 2 times 
rule in unusual cases, such as low-volume items or services. For the CY 
2015 update (taking into consideration the APC changes that we proposed 
for CY 2015), we reviewed all of the APCs to determine which APCs would 
not satisfy the requirement of the 2 times rule. In the case of APC 
0066, we believe that it is necessary to make an exception to the 2 
times rule for this APC because the three G-codes that caused the 
violation of the 2 times rule to occur have been crosswalked to CPT 
code 77373. We expect to have claims data for only CPT code 77373 
available for the CY 2016 rulemaking. At that time, we will reevaluate 
the APC assignments for all of the SRS CPT codes.
    In addition to our proposal to continue to assign SRS CPT code 
77373 to APC 0066, we proposed to assign all four of the MRgFUS 
procedures to APC 0066 because in the past MRgFUS services were 
assigned to the same APC as some of the former SRS G-codes for 
fractionated linac-based SRS. Specifically, for CY 2015, we proposed to 
reassign HCPCS codes 0071T (Focused ultrasound ablation of uterine 
leiomyomata, including mr guidance; total leiomyomata volume less than 
200 cc of tissue), 0072T (Focused ultrasound ablation of uterine 
leiomyomata, including mr guidance; total leiomyomata volume greater or 
equal to 200 cc of tissue), C9734 (Focused ultrasound ablation/
therapeutic intervention, other than uterine leiomyomata, with magnetic 
resonance (mr) guidance), and 0301T (Destruction/reduction of malignant 
breast tumor with externally applied focused microwave, including 
interstitial placement of disposable catheter with combined temperature 
monitoring probe and microwave focusing sensocatheter under ultrasound 
thermotherapy guidance) from APC 0065 (IORT, MRgFUS, and MEG) to APC 
0066. We proposed to delete APC 0065 for CY 2015.
    Comment: Several commenters stated that the proposed payment rate 
for APC 0066 of approximately $1,893 does not adequately reflect the 
level of resources required to perform MRgFUS procedures. Instead, the 
commenters believed that the MRgFUS procedures are similar to the 
stereotactic radiosurgery procedures that are assigned to C-APC 0067 in 
terms of treatment set-up, delivery of radiation, and post-procedure 
recovery. The commenters further believed that the MRgFUS procedures 
would be more appropriately assigned to a C-APC from a clinical and 
resource perspective. The commenters explained that certain procedures 
are commonly reported in conjunction with MRgFUS procedures, similar to 
stereotactic radiosurgery procedures. Therefore, the commenters 
recommended that CMS reassign the MRgFUS procedures to C-APC 0067.
    Response: CPT codes 0071T and 0072T became effective January 1, 
2005. CPT code 0301T became effective January 1, 2012. HCPCS code C9734 
became effective April 1, 2013. Currently, we do not have any single 
claims reporting any of the four MRgFUS procedures. However, because we 
are deleting APC 0065, we believe that reassigning these procedures to 
APC 0066 for the CY 2015 update is more appropriate because, in the 
past, MRgFUS services were assigned to the same APC as some of the 
former fractionated linac-based SRS G-codes. We also believe that the 
MRgFUS procedures are clinically dissimilar to single-session cranial 
SRS because MRgFUS procedures may involve more than one treatment 
session. However, we will review and consider the comments related to 
C-APC 0067 in a future annual update.
    After consideration of the public comments we received, we are 
finalizing our proposal without modification. Specifically, for SRS CPT 
code 77373, we are finalizing our proposal to continue to assign this 
code to APC 0066 for the CY 2015 update. In addition, we are finalizing 
our proposal to reassign MRgFUS HCPCS codes 0071T, 0072T, 0301T, and 
C9734 from APC 0065 to APC 0066 for CY 2015. We are deleting APC 0065 
for CY 2015. Because we are deleting APC 0065, we are renaming APC 0066 
from ``Level I Stereotactic Radiosurgery'' to ``Level V Radiation 
Therapy.'' The final payment rates for SRS CPT code 77373 and MRgFUS 
HCPCS codes 0071T, 0072T, 0301T, and C9734 can be found in Addendum B 
to this final rule with comment period, which is available via the 
Internet on the CMS Web site.
8. Respiratory Services: Level II Endoscopy Lower Airway (APC 0415)
    In the CY 2015 OPPS/ASC proposed rule, we proposed to continue the 
APC assignment of the procedure codes that have been historically 
assigned to APC 0415 (Level II Endoscopy Lower Airway). Commenters 
responding to the CY 2014 OPPS/ASC proposed rule had recommended that 
CMS split the procedure codes assigned to APC 0415 into two levels of 
lower airway endoscopy APCs. We did not split APC 0415 into two levels 
for CY 2014, as the commenters suggested, because the geometric mean 
costs would have been based on a relatively low volume of single 
frequency claims and would have potentially effectuated APC and cost 
volatility (78 FR 74996). In the CY 2015 OPPS/ASC proposed rule, we did 
not propose any changes to the composition of APC 0415. There were not 
any violations of the 2 times rule for the services assigned to APC 
0415 based on claims data available for the proposed rule. The proposed 
geometric mean cost of APC 0415 was approximately $2,368.
    Comment: Several commenters recommended that CMS create a Level III 
Lower Airway Endoscopy APC and assign the procedure codes currently 
assigned and proposed for continued assignment to APC 0415 to this 
newly created APC based on geometric mean costs, procedure complexity, 
and clinical similarity. Specifically, one commenter recommended that 
CMS assign CPT code 31647 (Bronchoscopy, rigid or flexible, including 
fluoroscopic guidance, when performed; with balloon occlusion, when 
performed, assessment of air leak, airway sizing, and insertion of 
bronchial valve(s), initial lobe) to the recommended Level III APC. 
Another commenter recommended that CMS assign CPT code 31626 
(Bronchoscopy, rigid or flexible, including fluoroscopic guidance, when 
performed; with placement of fiducial markers, single or multiple) to 
the recommended Level III APC. One commenter recommended that seven 
specific procedure codes be assigned to the newly created Level III 
APC, namely: CPT codes 31634 (Bronchoscopy, rigid or flexible, 
including fluoroscopic guidance, when performed; with balloon 
occlusion, with assessment of air leak, with administration of 
occlusive substance (eg, fibrin glue), if performed), 31638 
(Bronchoscopy, rigid or flexible, including fluoroscopic guidance, when 
performed; with revision of tracheal or bronchial stent inserted at 
previous session (includes tracheal/bronchial dilation as required)), 
31626, 31631

[[Page 66863]]

(Bronchoscopy, rigid or flexible, including fluoroscopic guidance, when 
performed; with placement of tracheal stent(s) (includes tracheal/
bronchial dilation as required)), 31636 (Bronchoscopy, rigid or 
flexible, including fluoroscopic guidance, when performed; with 
placement of bronchial stent(s) (includes tracheal/bronchial dilation 
as required), initial bronchus), 31660 (Bronchoscopy, rigid or 
flexible, including fluoroscopic guidance, when performed; with 
bronchial thermoplasty, 1 lobe), and 31661 (Bronchoscopy, rigid or 
flexible, including fluoroscopic guidance, when performed; with 
bronchial thermoplasty, 2 or more lobes). The commenters believed that 
a new Level III Lower Airway Endoscopy APC would more accurately 
reflect the costs of expensive lower airway procedures that utilize new 
technologies.
    Response: We believe that there is considerable clinical similarity 
in regard to the procedures assigned to APC 0415. All of the procedures 
are lower airway bronchoscopy procedures and are generally clinically 
more complex than the lower airway endoscopy procedures assigned to APC 
0076 (Level I Endoscopy Lower Airway). We do not believe that the range 
of costs for the significant procedures assigned to APC 0415 warrants 
the creation of a Level III lower airway endoscopy APC. The final rule 
geometric mean cost for APC 0415 is approximately $2,341. Several of 
the procedures that the commenters recommended for assignment to the 
recommended Level III APC have final rule geometric mean costs 
comparable to the geometric mean cost of APC 0415. For CY 2015, CPT 
code 31634 has a final geometric mean cost of approximately $1,539; CPT 
code 31638 has a final geometric mean cost of approximately $2,320; and 
CPT code 31626 has a final geometric mean cost of approximately $2,897. 
The other CPT codes recommended by the commenters have somewhat higher 
approximate geometric mean costs, namely: CPT code 31631 (which has a 
geometric mean cost of approximately $3,488), CPT code 31661 (which has 
a geometric mean cost of approximately $3,789), CPT code 31660 (which 
has a geometric mean cost of approximately $3,840), and CPT code 31636 
(which has a geometric mean cost of approximately $4,090). Assigning 
any of these procedures to APC 0415 does not create a violation of the 
2 times rule when compared to the geometric mean cost of the lowest 
significant procedure assigned to this APC, CPT code 31629 
(Bronchoscopy, rigid or flexible, including fluoroscopic guidance, when 
performed; with transbronchial needle aspiration biopsy(s), trachea, 
main stem and/or lobar bronchus(i)), which is approximately $2,186. 
Among the procedures discussed above, CPT codes 31626 and 31660 
describe the only significant procedures assigned to this APC and are 
the procedures that we would normally apply the 2 times rule 
provisions. There are not any violations of the 2 times rule in regard 
to these procedures' costs. Although CPT code 31647 has a considerably 
higher geometric mean cost of approximately $5,373 based on 11 single 
frequency claims, it is not a significant procedure. We would not 
reassign this procedure to another APC based on a violation of the 2 
times rule. Moreover, considering the final rule claims data for the 
five highest cost procedures assigned to APC 0415, the total number of 
single frequency claims is 649. The possible composition of a Level III 
lower airway endoscopy APC would still be based on a low volume of 
claims, similar to the low volume of claims in regard to the Level III 
lower airway endoscopy APC recommended by the commenters in CY 2014. As 
we stated in the CY 2014 OPPS/ASC final rule with comment period, a 
low-volume APC would contribute to the APC's cost volatility, which in 
turn contributes to payment volatility for the procedures assigned to 
the low-volume APC (78 FR 74996).
    After consideration of the public comments we received regarding 
the composition of APC 0415, we are finalizing our proposal to continue 
the assignment of the procedure codes that have been historically 
assigned to APC 0415 for CY 2015. However, for CY 2016, we will explore 
possible changes to the lower airway endoscopy APCs as a part of our 
broader efforts to thoroughly review, revise, and consolidate APCs to 
improve both clinical and resource homogeneity. The CY 2015 final 
geometric mean cost of APC 0415 is approximately $2,341.
9. Other Services
    a. Epidermal Autograft (APC 0327)
    In the CY 2014 OPPS/ASC final rule with comment period, we assigned 
CPT code 15110 to APC 0329 (Level IV Skin Repair), with a payment rate 
of approximately $2,260. The payment rate for CPT code 15110 was 
derived from the latest hospital outpatient claims data used for the CY 
2014 ratesetting, which showed a geometric mean cost of approximately 
$2,174 based on 10 single claims (out of 29 total claims).
    As stated in section III.B. of this final rule with comment period, 
we review, on an annual basis, the APC assignments for all services and 
items paid under the OPPS. Analysis of the latest hospital outpatient 
claims data available for the CY 2015 OPPS/ASC proposed rule showed a 
geometric mean cost for CPT code 15110 of approximately $774 based on 
90 single claims (out of 122 total claims). Therefore, in the CY 2015 
OPPS/ASC proposed rule (79 FR 40987), we proposed to reassign CPT code 
15110 from APC 0329 to APC 0327 (Level II Skin Procedures), which has a 
geometric mean cost of approximately $451. We believe that APC 0327 is 
the most appropriate APC assignment for CPT code 15110 when considering 
the similarities in relation to the other procedures assigned to this 
APC.
    In addition, we proposed to revise the APC titles for the four skin 
repair APCs (79 FR 40987). Specifically, we proposed to rename APC 0326 
from ``Level I Skin Repair'' to ``Level I Skin Procedures,'' APC 0327 
from ``Level II Skin Repair'' to ``Level II Skin Procedures,'' APC 0328 
from ``Level III Skin Repair'' to ``Level III Skin Procedures,'' and 
APC 0329 from ``Level IV Skin Repair'' to ``Level IV Skin Procedures.''
    Table 28 of the proposed rule (79 FR 40987) showed the long 
descriptor, as well as the proposed CY 2015 APC and status indicator 
assignment for CPT code 15110. The proposed CY 2015 payment rate for 
CPT code 15110 can be found in Addendum B to the proposed rule (which 
is available via the Internet on the CMS Web site).
    Comment: Several commenters requested that CMS reevaluate the 
claims data for CPT code 15110, and recommended that CMS not finalize 
the proposal to reassign the procedure code to APC 0327. The commenters 
stated that the procedure described by CPT code 15110 allows patients 
with chronic or non-healing wounds to recover much sooner and without 
the use of expensive surgical interventions, which has resulted in cost 
savings for hospitals, patients, and payers. Other commenters suggested 
that CMS reassign CPT code 15110 to APC 0328 (Level III Skin 
Procedures), which has a proposed CY 2015 payment rate of approximately 
$1,408. The commenters believed that APC 0328 has clinically similar 
procedures and is more comparable to the geometric mean costs of CPT 
code 15110. Another commenter believed that the low volume of claims 
data for CPT code 15110 is attributable to providers and hospitals 
miscoding the performance of the service by not including the cost of 
the device.
    Response: We reviewed the historical claims data for CPT code 
15110, dating

[[Page 66864]]

back to CY 2008, which is the first year that claims data for this code 
became available. As listed in Table 23 below, for CY 2008 through CY 
2013, the payment rate for CPT code 15110 has ranged between $288.30 
and $393.38 based on a range of single claims between 3 and 8. In 
addition, for the CY 2014 update, which was based on hospital 
outpatient claims data that were submitted between January 1, 2012, and 
December 31, 2012, and processed on or before June 30, 2013, the 
payment rate for CPT code 15110 was significantly higher (approximately 
$2,260.46) based on 10 single claims. However, as has been our practice 
since the implementation of the OPPS in 2000, we review, on an annual 
basis, the APC assignments for the procedures and services paid under 
the OPPS. Based on the latest hospital outpatient claims data used for 
this final rule with comment period, our analysis does not support the 
continued assignment of CPT code 15110 to APC 0329, which is the APC to 
which the procedure was assigned during CY 2014, or the suggested APC 
0328. We examined the latest hospital outpatient claims data for CPT 
code 15110 for dates of service between January 1, 2013, and December 
31, 2013, that were processed on or before June 30, 2014. Our analysis 
of the claims data shows a geometric mean cost for CPT code 15110 of 
approximately $748 based on 127 single claims (out of 165 total 
claims). We do not believe that APC 0328 is the most appropriate APC 
assignment because the geometric mean cost for this APC is 
approximately $1,460, which is significantly higher than the geometric 
mean cost for CPT code 15110, which is approximately $748. Assigning 
CPT code 15110 to APC 0328 would result in an overpayment for the 
service provided. We believe that APC 0327 is the most appropriate APC 
assignment for CPT code 15110 based on clinical homogeneity to the 
other skin-related procedures assigned to this APC.

             Table 23--Historical and Current Opps Claims and Payment Information for CPT Code 15110
----------------------------------------------------------------------------------------------------------------
                                                                   OPPS payment
                       Calendar year (CY)                              rate        Single claims   Total claims
----------------------------------------------------------------------------------------------------------------
2008............................................................         $288.30               3              16
2009............................................................          292.68               3              15
2010............................................................          299.19               8              22
2011............................................................          319.74               5              16
2012............................................................          344.98               4              19
2013............................................................          393.38               4              30
2014............................................................        2,260.46              10              29
2015............................................................          429.95             127             165
----------------------------------------------------------------------------------------------------------------

    Further, based on our analysis of the CY 2013 hospital outpatient 
claims data used for this final rule with comment period, we are unable 
to determine whether hospitals are miscoding claims reporting this 
service. For all APCs whose payment rates are based upon relative 
payment weights, we note that the quality and accuracy of reported 
units and charges influence the geometric mean costs that are the basis 
for our payment rates, especially for low-volume items and services. 
Beyond our standard OPPS trimming methodology (described in section 
II.A.2. of this final rule with comment period) that we apply to those 
claims that have passed various types of claims processing edits, it is 
not our general policy to determine the accuracy of hospital coding and 
charging practices for purposes of ratesetting (75 FR 71838). We rely 
on hospitals to bill all HCPCS codes accurately in accordance with 
their code descriptors and CPT and CMS instructions, as applicable, and 
to report charges on claims and charges and costs on their Medicare 
hospital cost report appropriately. In addition, we do not specify the 
methodologies that hospitals must use to set charges for this or any 
other service.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to reassign CPT code 
15110 to APC 0327 for CY 2015. The final payment rate for CPT code 
15110 can be found in Addendum B to this final rule with comment 
period, which is available via the Internet on the CMS Web site.
b. Image-Guided Breast Biopsy Procedures and Image-Guided Abscess 
Drainage Procedures (APCs 0005 and 0007)
    For the CY 2014 OPPS update, the AMA's CPT Editorial Panel deleted 
the image-guided breast biopsy CPT codes 19102 and 19103 and replaced 
these procedure codes with six new CPT codes that ``bundled'' payment 
for associated imaging services, effective January 1, 2014. As shown in 
Table 23 of the proposed rule (79 FR 40983), CPT codes 19102 and 19103 
described percutaneous image-guided breast biopsies using specific 
devices. Specifically, CPT code 19102 described a breast biopsy 
performed using a core needle, and CPT code 19103 described a breast 
biopsy performed using either a vacuum-assisted or rotating device.
    In CY 2013, to appropriately report the performance of an image-
guided breast biopsy using a core needle, an automated vacuum-assisted 
device, or a rotating biopsy device, multiple procedure codes were 
required to identify the specific service performed. That is, a 
procedure code describing the device-related breast biopsy procedure 
was required to be reported in combination with the procedure code 
describing the localization device used during the procedures, as well 
as the specific image-guidance procedure codes describing the imaging 
service. Table 23 of the proposed rule showed how image-guided breast 
biopsy procedures were reported prior to CY 2014. Table 23 of the 
proposed rule also showed the CY 2013 OPPS status indicators, APC 
assignments, and payment rates for the breast biopsy procedure codes, 
the localization devices used during the procedures, and the specific 
image-guidance procedure codes describing the imaging service.
    For the CY 2014 OPPS update, the AMA's CPT Editorial Panel grouped 
the multiple procedures that describe these imaging services into 
single comprehensive service codes; specifically, CPT codes 19081, 
19082, 19083, 19084, 19085, and 19086. Table 24 of the proposed rule 
showed the six new CPT codes that replaced obsolete CPT codes 19102 and 
19103. These comprehensive breast biopsy procedure codes are 
differentiated based on the use of specific imaging-guidance devices--
specifically imaging services performed using stereotactic guidance, 
ultrasound

[[Page 66865]]

guidance, or magnetic-resonance guidance.
    As has been our practice since the implementation of the OPPS in 
2000, we review all new procedure codes before assigning the codes to 
an APC. Consistent with our longstanding policy for the treatment of 
new codes, we assigned these new replacement CPT codes to interim APCs 
for CY 2014. Based on our understanding of the resources required to 
furnish the service as defined in the code descriptor, as well as input 
from our medical advisors, we assigned replacement CPT codes 19081, 
19083, and 19085 to APC 0005 (Level II Needle Biopsy/Aspiration Except 
Bone Marrow) for the CY 2014 OPPS update. In addition, we assigned new 
CPT codes 19081, 19083, and 19085 to comment indicator ``NI'' in 
Addendum B to the CY 2014 OPPS/ASC final rule with comment period 
(which is available via the CMS Web site) to indicate that the codes 
were new with an interim APC assignment that was subject to public 
comment. We note that, for the CY 2014 OPPS update, we finalized our 
policy to package all add-on codes (except those for drug 
administration), effective January 1, 2014. Consequently, payment for 
replacement CPT codes 19082, 19084, and 19086, which describe add-on 
procedures, was packaged for CY 2014.
    At the Panel's March 10, 2014 meeting, one presenter requested that 
CMS reassign comprehensive CPT codes 19081, 19083, and 19085 from APC 
0005 (Level II Needle Biopsy/Aspiration Except Bone Marrow), which has 
a CY 2014 OPPS payment rate of $702.08, to APC 0037 (Level IV Needle 
Biopsy/Aspiration Except Bone Marrow), which has a CY 2014 OPPS payment 
rate of $1,223.25. The presenter indicated that it is inappropriate to 
combine all of the new replacement CPT codes into one APC without 
regard for the imaging modality or device used to perform the 
procedure. The presenter also requested that CMS maintain the historic 
assignment of the predecessor CPT codes cost data until claims data 
become available for the new comprehensive CPT codes. The Panel agreed 
with the presenter and recommended that CMS reassign the new 
replacement comprehensive CPT codes, as the presenter suggested.
    In light of the public presentation, the Panel's recommendation, 
and our longstanding policy of reviewing, on an annual basis, the APC 
assignments for all services and items paid under the OPPS, we 
evaluated the geometric mean costs associated with all of the 
procedures assigned to the existing four needle biopsy APCs, 
specifically, APCs 0004 (Level I Needle Biopsy/Aspiration Except Bone 
Marrow), 0005, 0685 (Level III Needle Biopsy/Aspiration Except Bone 
Marrow), and 0037. In the CY 2015 OPPS/ASC proposed rule (79 FR 40984), 
based on our review of the latest hospital outpatient claims data 
available for the proposed rule, we proposed to reassign all of the 
procedures assigned to APCs 0685 and 0037 to either APC 0004 or APC 
0005 based on clinical and resource homogeneity. If CMS finalizes this 
proposed revision, there would be no procedures assigned to APCs 0685 
or 0037. Therefore, in the CY 2015 OPPS/ASC proposed rule (79 FR 
40984), we proposed to delete APCs 0685 and 0037 for CY 2015.
    Consequently, for the CY 2015 OPPS update, we proposed to only use 
two needle biopsy APCs, specifically, APCs 0004 and 0005. The proposed 
reassignment of all of the procedures assigned to APCs 0685 and 0037 
results in increased payment rates for both APCs 0004 and 0005. For CY 
2015, the proposed payment rate for APC 0004 is approximately $494, 
which is 20 percent higher than the CY 2014 OPPS payment rate of 
approximately $411. Similarly, the proposed payment rate for APC 0005 
is approximately $1,062, which is 51 percent higher than the CY 2014 
OPPS payment rate of approximately $702. Therefore, we proposed to 
continue to assign CPT codes 19081, 19083, and 19085 to APC 0005 for 
the CY 2015 OPPS update (79 FR 40985). In addition, we proposed to 
continue to package payment for add-on CPT codes 19082, 19084, and 
19086 under the OPPS for CY 2015, consistent with our packaging policy 
for add-on codes that was implemented on January 1, 2014. Because we 
proposed to delete APC 0037 we believe that the proposed increased 
payment rate for APC 0005 is consistent with the Panel's recommendation 
to reassign CPT codes 19081, 19083, and 19085 to an appropriate APC 
based on resource utilization and clinical coherence.
    Comment: Commenters supported CMS' proposal to continue to assign 
CPT codes 19081, 19083, and 19085 to APC 0005. The commenters stated 
that the assignment of these CPT codes to APC 0005 is clinically 
coherent and more accurately captures the resource cost associated with 
providing these services when compared to the CY 2014 APC assignment.
    Response: We appreciate the commenters' support.
    Comment: Some commenters expressed concern regarding the inadequate 
payment for ancillary services associated with multiple biopsies that 
may be performed on the same date of service. The commenters indicated 
that patients sometimes present with multiple lesions, which requires a 
biopsy of each lesion. According to the commenters, prior to the 
establishment of the comprehensive CY 2014 breast biopsy CPT codes, 
hospitals would report each biopsy, imaging guidance, and marker or 
localization placements separately. The commenters requested that CMS 
provide guidance on how to report multiple biopsies performed on the 
same date of service.
    Response: We expect hospitals to report the performance of breast 
biopsies using the comprehensive breast biopsy CPT codes, consistent 
with the latest CPT coding guidelines. As stated in the CY 2014 CPT 
code book, image-guided breast biopsies, including the placement of 
localization devices when performed, are reported using the 
comprehensive breast biopsy CPT codes 19081 through 19086. Image-guided 
placement of localization devices without the performance of a biopsy 
are required to be reported using CPT codes 19281 through 19288. In 
addition, when more than one biopsy is performed using the same imaging 
modality, hospitals are required to report each biopsy using an add-on 
code. However, if more than one biopsy is performed using different 
imaging modalities, hospitals are required to report a separate primary 
code for each additional imaging modality.
    We note that it is extremely important that hospitals use all of 
the required HCPCS codes to report the performance of all services they 
furnish, consistent with the code descriptors, CPT and/or CMS 
instructions, and correct coding principles, whether payment for the 
services is made separately or packaged. The accuracy of the OPPS 
payment rates depends on the quality and completeness of the claims 
data that hospitals submit for the services they furnish to Medicare 
beneficiaries.
    After consideration of the public comments we received, we are 
finalizing our proposal to continue to assign CPT codes 19081, 19083, 
and 19085 to APC 0005 for CY 2015. In addition, we are finalizing our 
proposal to continue to package payment for add-on CPT codes 19082, 
19084, and 19086 under the OPPS for CY 2015, consistent with our 
packaging policy for add-on codes that was implemented on January 1, 
2014. Furthermore, we are finalizing our proposal to delete APC 0037 
because we believe that the proposed increased payment rate for APC 
0005 is consistent with the Panel's recommendation to reassign CPT 
codes 19081, 19083, and 19085 to an

[[Page 66866]]

appropriate APC based on resource utilization and clinical coherence. 
Table 24 below shows the final status indicators, APC assignments, and 
payment rates for the image-guided breast biopsy CPT codes 19081 
through 19086.

                              Table 24--Final CY 2015 APCs to Which Image-Guided Breast Biopsy Procedure Codes are Assigned
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                               Final CY
             CPT Code                         Long descriptor              CY 2014 SI   CY 2014 APC    CY 2014      Final CY      Final CY       2015
                                                                                                       Payment       2015 SI      2015 APC     payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
19081............................  Biopsy, breast, with placement of                T          0005       702.08            T          0005    $1,052.22
                                    breast localization device(s) (eg,
                                    clip, metallic pellet), when
                                    performed, and imaging of the biopsy
                                    specimen, when performed,
                                    percutaneous; first lesion,
                                    including stereotactic guidance.
19082............................  Biopsy, breast, with placement of                N           N/A          N/A            N           N/A          N/A
                                    breast localization device(s) (eg,
                                    clip, metallic pellet), when
                                    performed, and imaging of the biopsy
                                    specimen, when performed,
                                    percutaneous; each additional
                                    lesion, including stereotactic
                                    guidance (List separately in
                                    addition to code for primary
                                    procedure).
19083............................  Biopsy, breast, with placement of                T          0005      $702.08            T          0005     1,052.22
                                    breast localization device(s) (eg,
                                    clip, metallic pellet), when
                                    performed, and imaging of the biopsy
                                    specimen, when performed,
                                    percutaneous; first lesion,
                                    including ultrasound guidance.
19084............................  Biopsy, breast, with placement of                N           N/A          N/A            N           N/A          N/A
                                    breast localization device(s) (eg,
                                    clip, metallic pellet), when
                                    performed, and imaging of the biopsy
                                    specimen, when performed,
                                    percutaneous; each additional
                                    lesion, including ultrasound
                                    guidance (List separately in
                                    addition to code for primary
                                    procedure).
19085............................  Biopsy, breast, with placement of                T          0005      $702.08            T          0005     1,052.22
                                    breast localization device(s) (eg,
                                    clip, metallic pellet), when
                                    performed, and imaging of the biopsy
                                    specimen, when performed,
                                    percutaneous; first lesion,
                                    including magnetic resonance
                                    guidance.
19086............................  Biopsy, breast, with placement of                N           N/A          N/A            N           N/A          N/A
                                    breast localization device(s) (eg,
                                    clip, metallic pellet), when
                                    performed, and imaging of the biopsy
                                    specimen, when performed,
                                    percutaneous; each additional
                                    lesion, including magnetic resonance
                                    guidance (List separately in
                                    addition to code for primary
                                    procedure).
--------------------------------------------------------------------------------------------------------------------------------------------------------

    In addition to the proposal to maintain the APC assignment of the 
breast biopsy comprehensive CPT codes to APC 0005, we also discussed in 
the CY 2015 OPPS/ASC proposed rule our proposal to reassign CPT code 
10030 from APC 0006 (Level I Incision & Drainage) to APC 0007 (Level II 
Incision and Drainage). We note that, for the CY 2014 OPPS update, the 
AMA's CPT Editorial Panel established CPT code 10030 to report the 
bundled service of image-guided fluid collection drainage by catheter 
for percutaneous soft tissue, and CPT code 49407 to report the bundled 
service of image-guided fluid collection drainage by catheter for 
peritoneal, retroperitoneal, transvaginal or transrectal collections, 
effective January 1, 2014. As shown in Table 25 of the CY 2015 OPPS/ASC 
proposed rule, which showed the long descriptors for CPT codes 10030 
and 49407, and as listed in Addendum B to the CY 2014 OPPS/ASC final 
rule with comment period, we assigned CPT code 10030 to APC 0006, with 
a payment rate of $159.66 and CPT code 49407 to APC 0685, with a 
payment rate of $757.76. As listed in Addendum B to the CY 2014 OPPS/
ASC final rule with comment period, both procedure codes were assigned 
to comment indicator ``NI'' to indicate that the codes were new codes 
and assigned interim APC and status indicator assignments that were 
subject to public comment.
    At the Panel's March 10, 2014 meeting, one presenter requested that 
CMS reassign CPT codes 10030 and 49407 from APC 0006 and APC 0685, 
respectively, to APC 0037 (Level IV Needle Biopsy/Aspiration Except 
Bone Marrow), which has a CY 2014 OPPS payment rate of $1,223.25. The

[[Page 66867]]

commenter noted that similar procedures also are assigned to APC 0037. 
Specifically, the presenter indicated that all the image-guided fluid 
collection drainage procedures should be treated as one clinically 
cohesive group and assigned to APC 0037. The Panel agreed with the 
presenter and recommended that CMS reassign CPT code 49407 to APC 0037. 
However, the Panel did not agree with the presenter that CPT code 10030 
would be more appropriately assigned to APC 0037. Rather, the Panel 
believed that the most appropriate APC assignment for CPT code 10030 
would be APC 0007. We agreed with the Panel's recommendation that CPT 
code 10030 should be assigned to APC 0007. Therefore, in the CY 2015 
OPPS/ASC proposed rule (79 FR 40986), we proposed to reassign CPT code 
10030 from APC 0006 to APC 0007 for the CY 2015 OPPS update. In light 
of the Panel's recommendation to reassign CPT code 49407 and the image-
guided breast biopsy procedures to APC 0037 and APC 0007, respectively, 
and our longstanding policy of reviewing, on an annual basis, the APC 
assignments for all services and items paid under the OPPS, we 
evaluated the geometric mean costs associated with the procedures 
assigned to the existing four needle biopsy APCs, as previously stated, 
and proposed to reassign the procedures assigned to APCs 0685 and 0037 
to either APC 0004 or APC 0005 based on clinical and resource 
homogeneity and to delete APCs 0685 and 0037 for CY 2015. Specifically, 
we proposed to reassign CPT code 49407 from APC 0685 to APC 0005 for CY 
2015, and to delete APCs 0037 and 0685. Table 25 of the proposed rule 
also showed the long descriptors for CPT codes 10030 and 49407, and 
their proposed status indicator and APC assignments for the CY 2015 
OPPS update. The proposed CY 2015 payment rate for CPT codes 10030 and 
49407 can be found in Addendum B to this CY 2015 OPPS/ASC proposed rule 
(which is available via the Internet on the CMS Web site).
    Comment: Some commenters recommended that CMS reassign CPT code 
10030 from APC 0006 to APC 0005. The commenters stated that, according 
to an internal analysis, CPT code 10030 is comparable with respect to 
clinical and resource characteristics and costs to the other abscess 
drainage procedures assigned to APC 0005.
    Response: In light of the Panel's recommendation to reassign the 
procedure to APC 0007 and because CPT code 10030 is a new code for CY 
2014, we are not accepting the commenters' suggestion to assign this 
procedure to APC 0005. Rather, we are reassigning CPT code 10030 from 
APC 0006 to APC 0007 for the CY 2015 OPPS update, as recommended by the 
Panel. We note that we will have CY 2014 hospital claims data available 
for CPT codes 10030 and 49407 in preparation for the CY 2016 OPPS 
rulemaking. At that time, we will reevaluate the APC assignments for 
all the abscess drainage CPT codes.
    Therefore, after consideration of the public comments we received, 
we are finalizing our proposal, without modification, to reassign CPT 
code 10030 from APC 0006 to APC 0007. In addition, we are finalizing 
our proposal to reassign the procedures assigned to APCs 0685 and 0037 
to either APC 0004 or APC 0005 based on clinical and resource 
homogeneity. Because there would be no other procedures assigned to 
APCs 0685 and 0037 as a result of this reassignment, we are finalizing 
our proposal to delete APCs 0685 and 0037 for CY 2015. The final CY 
2015 payment rate for CPT codes 10030 and 49407 can be found in 
Addendum B to this CY 2015 OPPS/ASC final rule (which is available via 
the Internet on the CMS Web site).
c. Negative Pressure Wound Therapy (NPWT) (APCs 0012, 0013, 0015 and 
0016)
    For CY 2015, we proposed to assign all of the NPWT services to APC 
0015 (Level II Debridement & Destruction), with a proposed payment rate 
of $141.66. We proposed to continue to assign CPT code 97606 (Negative 
pressure wound therapy (eg, vacuum assisted drainage collection), 
including topical application(s), wound assessment, and instruction(s) 
for ongoing care, per session; total wound(s) surface area greater than 
50 square centimeters) to APC 0015. In addition, for the CY 2015 OPPS 
update, we proposed to reassign CPT code 97605 (Negative pressure wound 
therapy (eg, vacuum assisted drainage collection), including topical 
application(s), wound assessment, and instruction(s) for ongoing care, 
per session; total wound(s) surface area less than or equal to 50 
square centimeters) from APC 0013 (Level II Debridement & Destruction), 
the APC to which the procedure is assigned for CY 2014, to APC 0015. As 
listed in Table 29 of the CY 2015 OPPS/ASC proposed rule (79 FR 40916), 
we also proposed to reassign HCPCS codes G0456 (Negative pressure wound 
therapy (e.g. vacuum assisted drainage collection) using a 
mechanically-powered device, not durable medical equipment, including 
provision of cartridge and dressing(s), topical application(s), wound 
assessment, and instructions for ongoing care, per session; total 
wounds(s) surface area less than or equal to 50 square centimeters) and 
G0457 (Negative pressure wound therapy (e.g. vacuum assisted drainage 
collection) using a mechanically-powered device, not durable medical 
equipment, including provision of cartridge and dressing(s), topical 
application(s), wound assessment, and instructions for ongoing care, 
per session; total wounds(s) surface area greater than 50 square 
centimeters) from APC 0016 (Level III Debridement & Destruction) to APC 
0015.
    We note that CPT codes 97605 and 97606 became effective on January 
1, 2005, and describe the type of NPWT services that employ durable 
medical equipment (DME). Alternatively, HCPCS codes G0456 and G0457, 
which are relatively new codes that became effective on January 1, 
2013, were established by CMS to provide a payment mechanism for NPWT 
services furnished using disposable supplies instead of DME. We 
proposed to maintain the assignment of status indicator ``T'' to these 
two codes.
    For the CY 2013 OPPS update, we assigned CPT code 97605 to APC 0013 
(Level II Debridement & Destruction), with a payment rate of $71.54 and 
CPT code 97606 to APC 0015 (Level III Debridement & Destruction), with 
a payment rate of $106.96. In addition, we assigned HCPCS codes G0456 
and G0457 to APC 0016 (Level IV Debridement & Destruction), with a 
payment rate of $209.65.
    For the CY 2014 OPPS update, we continued to assign CPT code 97605 
to APC 0013 and CPT code 97606 to APC 0015. We also continued to assign 
HCPCS codes G0456 and G0457 to APC 0016, with a payment rate of 
$274.81. We note that we stated in the CY 2014 OPPS/ASC final rule with 
comment period (78 FR 75001) that some commenters requested the 
reassignment of HCPCS codes G0456 and G0457 to a higher paying APC, 
with a payment rate specifically ranging between $450 and $500. The 
commenters believed that a higher paying APC would be more reflective 
of the cost of providing NPWT services using disposable supplies. We 
further stated that because HCPCS codes G0456 and G0457 were new codes 
for the CY 2013 OPPS update, we expected to have claims data available 
for these codes during the CY 2015 rulemaking cycle and, at that time, 
we would reevaluate the APC assignments for these services in 
preparation for the CY 2015 OPPS update.

[[Page 66868]]

    For the CY 2015 OPPS update, we analyzed the latest hospital 
outpatient claims data available for the CY 2015 OPPS/ASC proposed 
rule, which was based on claims submitted between January 1, 2013 and 
December 31, 2013, and processed on or before December 31, 2013. The 
data indicated that the geometric mean cost of APC 0013 was comparable 
to the geometric mean cost of APC 0015. Therefore, in the CY 2015 OPPS/
ASC proposed rule (79 FR 40988), we proposed to combine these APCs by 
reassigning all of the procedures from APC 0013 to APC 0015; delete APC 
0013, and retain APC 0015 for the CY 2015 OPPS update. In addition, we 
proposed to rename the Debridement and Destruction APC series 
(excluding APC 0012) as follows: APC 0015 (Level II Debridement and 
Destruction); APC 0016 (Level III Debridement and Destruction); and APC 
0017 (Level IV Debridement and Destruction).
    Furthermore, the CY 2013 claims data available for the proposed 
rule also indicated that the geometric mean cost for HCPCS code G0456 
was approximately $152 based on 4,509 single claims (out of 5,772 total 
claims), and approximately $193 for HCPCS code G0457 based on 386 
single claims (out of 591 total claims). The claims data also showed 
that the geometric mean cost for CPT code 97605 was approximately $101 
based on 58,901 single claims (out of 75,378 total claims), and 
approximately $140 for CPT code 97606 based on 6,722 single claims (out 
of 9,063 total claims). The proposed geometric mean costs of HCPCS 
codes G0456 and G0457, and CPT codes 97605 and 97606 were all 
comparable to the proposed geometric mean cost for APC 0015 of 
approximately $148. Based on analysis of the most recent claims data 
available for the proposed rule, we stated that we believed that the 
most appropriate assignment for all of the NPWT services was APC 0015 
based on the clinical and resource homogeneity of the services assigned 
to this APC. The next higher cost APC in the series, APC 0016, had a 
proposed geometric mean cost of approximately $284, which was 
significantly higher than the proposed geometric mean cost of any of 
the NPWT services. Therefore, in the CY 2015 OPPS/ASC proposed rule, we 
proposed to continue to assign CPT code 97606 to APC 0015, reassign CPT 
code 97605 from APC 0013 to APC 0015, and reassign HCPCS codes G0456 
and G0457 from APC 0016 to APC 0015 for the CY 2015 OPPS update.
    Comment: Most commenters requested that CMS continue to assign the 
disposable NPWT HCPCS codes G0456 and G0457 to APC 0016 for the CY 2015 
OPPS update, which is the same APC to which these services are assigned 
for CY 2014. The commenters believed that hospitals may have miscoded 
claims reporting these services and, consequently, the CY 2015 proposed 
payment rate of approximately $142 for HCPCS codes G0456 and G0457 is 
insufficient because the CY 2013 OPPS claims data do not accurately 
capture the cost of the disposable supplies that is included in 
providing the service. One commenter stated that the cost of the 
disposable NPWT supplies range between $200 and $700 per case. The 
commenter provided copies of individual invoices that were forwarded to 
various hospitals from the manufacturer that showed a cost of 
approximately $220 for one disposable NPWT system. In addition, based 
on its analysis of charges reported by hospitals, the commenter 
believed that hospitals failed to understand the differences between 
the type of NPWT services that employ DME, which are described by CPT 
codes 97605 and 97606, and the type of disposable NPWT services 
described by HCPCS G-codes. The commenter stated that, according to its 
data analysis, there was no difference in hospital charges for the two 
types of NPWT services reported on claims. The commenter believed that 
hospitals miscoded these claims because they may have believed that the 
services described by the CPT codes for the type of NPWT services that 
use DME are similar to the services described by the disposable NPWT 
HCPCS G-codes. Several commenters explained that the cost of the type 
of NPWT services that use DME does not include the cost of the devices 
and supplies that are used to provide the services described by the 
HCPCS G-codes. The commenter speculated that, although it appeared that 
hospitals did not include the cost of the disposable devices when 
reporting their charges for the services described by the disposable 
NPWT HCPCS G-codes, hospitals should have included such costs. 
Therefore, the commenters urged CMS to continue to assign HCPCS codes 
G0456 and G0457 to APC 0016 for the CY 2015 OPPS update.
    Response: Based on the significant number of claims that are 
available for this final rule with comment period, we believe that APC 
0015 best reflects the clinical characteristics and resource costs of 
HCPCS codes G0456 and G0457. In addition, we do not believe that 
continuing to assign HCPCS codes G0456 and G0457 to APC 0016 would be 
appropriate for CY 2015. Our analysis of the latest hospital outpatient 
claims data available for this CY 2015 OPPS/ASC final rule with comment 
period, which is based on claims submitted between January 1, 2013 and 
December 31, 2013, and processed on or before June 30, 2014, indicates 
that the geometric mean costs for both HCPCS codes (G0456 and G0457) 
are very similar to the geometric mean cost of APC 0015. Specifically, 
our latest hospital outpatient claims data for this final rule with 
comment period show a geometric mean cost of approximately $158 for 
HCPCS code G0456 based on 5,198 single claims (out of 6,645 total 
claims), which is close to the geometric mean cost of APC 0015, which 
is approximately $152. Similarly, our claims data show a geometric mean 
cost of approximately $202 for HCPCS code G0457 based on 476 single 
claims (out of 676 total claims), which is also closer to the geometric 
mean cost of APC 0015, which is approximately $152 than the geometric 
mean cost of APC 0016, which is approximately $294.
    In addition, we are not convinced that hospitals are reporting the 
same charges for the two types of NPWT services (DME-based and 
disposable) because a review of the latest claims data shows that the 
geometric mean costs for the most highly utilized procedures described 
by HCPCS code G0456 (geometric mean cost of approximately $158) and CPT 
code 97605 (geometric mean cost of approximately $101) are 
significantly different. This difference in costs captured in the 
claims data demonstrates that hospitals are not reporting identical 
charges for the different types of NPWT services, DME and disposable-
based. Furthermore, we note that for all APCs whose payment rates are 
based upon relative payment weights, the quality and accuracy of 
reported units and charges influence the geometric mean costs that are 
the basis for our payment rates, especially for low volume items and 
services. However, beyond our standard OPPS trimming methodology 
(described in section II.A.2. of this final rule with comment period) 
that we apply to those claims that have passed various types of claims 
processing edits, it is not our general policy to judge the accuracy of 
hospital coding and charging for purposes of ratesetting (75 FR 71838). 
We rely on hospitals to bill all HCPCS codes accurately in accordance 
with their code descriptors and CPT and CMS instructions, as 
applicable, and to report charges on claims and charges and costs on 
their Medicare hospital cost reports appropriately. In addition, we do 
not specify the methodologies that hospitals

[[Page 66869]]

must use to set charges for this or any other service. Therefore, based 
on the latest hospital outpatient claims data available for this final 
rule with comment period, we believe that APC 0015 best reflects the 
clinical characteristics and resource costs of HCPCS codes G0456 and 
G0457.
    Comment: One commenter recommended that CMS make certain changes to 
APCs 0015 and 0016. Specifically, the commenter recommended that CMS 
lower the geometric mean cost for APC 0016 to $190, which would result 
in reassigning certain codes that were in APC 0015 whose geometric mean 
cost met or exceeded this amount to APC 0016. This commenter stated 
that such reassignment would retain HCPCS codes G0456 and G0457 in APC 
0016.
    Response: We believe that the proposed structures of APCs 0015 and 
0016 (aside from the few code reassignments that are being made for the 
purpose of resolving a violation of the 2 times rule in APC 0015 that 
are discussed below) are optimal in terms of clinical and resource 
homogeneity. The geometric mean cost range for significant procedures 
assigned to APC 0015 is between approximately $110 (for CPT code 17250) 
and approximately $201 (for CPT code 11100). The geometric mean cost 
range for significant procedures assigned to APC 0016 is between 
approximately $230 (for CPT code 17282) and approximately $368 (for CPT 
code 11043). Reassigning HCPCS code G0456 from APC 0015 to APC 0016 
would either violate the 2 times rule in APC 0016 or necessitate 
dividing APC 0016 into two APCs, which we do not believe is appropriate 
or necessary. Both of these options are undesirable, especially given 
that the geometric mean cost of HCPCS code G0456 (approximately $158) 
is comparable to the geometric mean cost of APC 0015 (approximately 
$152).
    In summary, based on the latest claims data used for this final 
rule with comment period, we believe that HCPCS codes G0456 and G0457 
are appropriately assigned in APC 0015 for the CY 2015 update based on 
the clinical and resource similarity to the other procedures in APC 
0015. As has been our practice since the implementation of the OPPS in 
2000, we review, on an annual basis, the APC assignments for the 
procedures and services paid under the OPPS. We will again review the 
APC assignments for all the NPWT services in light of the CY 2014 
claims data and the proposed APC structures for clinically relevant 
APCs and determine whether an APC reassignment for any of the NPWT 
codes would be appropriate in the CY 2016 rulemaking.
    In addition, in the CY 2015 OPPS/ASC proposed rule, there were 
violations of the 2 times rule noted for both APCs 0012 and 0015 (79 FR 
40981). Every year we make every effort to minimize the number of APCs 
that are listed as exceptions to the 2 times rule. To resolve the 
violations of the 2 times rule in APCs 0012 and 0015, we are making the 
following code reassignments:
     CPT codes 11719, 11720, 11721, 11740, and 17340, and HCPCS 
code G0127 from APC 0012 to APC 0340.
     CPT codes 11901, 12014, 96920, and 97605 from APC 0015 to 
APC 0012.
    These code reassignments eliminated the 2 times rule violations 
that existed in APCs 0012 and 0015 in the CY 2015 OPPS/ASC proposed 
rule. We note that APC 0012 is one of the APCs included in the 
ancillary services packaging policy that is discussed in section 
II.A.3.c.(1) of this final rule with comment period. Because CPT code 
97605 is assigned to APC 0012, the code will be conditionally packaged 
and assigned to status indicator ``Q1'' for CY 2015.
    After consideration of the public comments we received, we are 
finalizing our CY 2015 proposal, with modification. Specifically, we 
are finalizing our proposal to assign CPT code 97606 and HCPCS codes 
G0456 and G0457 to APC 0015. However, we are reassigning CPT code 97605 
from our proposed APC 0015 to APC 0012 for the CY 2015 update to 
eliminate the violation of the 2 times rule that existed in APC 0015 
based on claims data available for the proposed rule.
    In addition, for the CY 2015 update, the CPT Editorial Panel 
established two new CPT codes to describe disposable NPWT services and 
revised the long descriptors for existing CPT codes 97605 and 97606, 
effective January 1, 2015. Consistent with our general policy of using 
permanent codes rather than using temporary HCPCS G-codes in order to 
streamline coding, we are deleting HCPCS codes G0456 and G0457 because 
they are replaced with two new CPT codes effective January 1, 2015. 
Table 25 below shows the replacement CPT codes for HCPCS codes G0456 
and G0457 as well as the revised long descriptors for existing CPT 
codes 97605 and 97606. The final CY 2015 payment rate for the NPWT 
services codes can be found in Addendum B to this final rule with 
comment period (which is available via the Internet on the CMS Web 
site). Like all new codes effective January 1, 2015, the APC 
assignments for the new disposable NPWT CPT codes are open for comment 
for 60 days after display of this CY 2015 OPPS/ASC final rule with 
comment period.

                                            Table 25--Final APC Assignments for the NPWT Services for CY 2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                  Proposed CY                  Final CY
     CY 2014 CPT/HCPCS Code               CY 2015 CPT Code             CY 2015 Long descriptor       Proposed CY   2015 OPPS     Final CY     2015 OPPS
                                                                                                    2015 OPPS SI      APC      2015 OPPS SI      APC
--------------------------------------------------------------------------------------------------------------------------------------------------------
97605...........................  97605..........................  Negative pressure wound therapy            T          0015           Q1          0012
                                                                    (eg, vacuum assisted drainage
                                                                    collection), utilizing durable
                                                                    medical equipment (DME),
                                                                    including topical
                                                                    application(s), wound
                                                                    assessment, and instruction(s)
                                                                    for ongoing care, per session;
                                                                    total wound(s) surface area
                                                                    less than or equal to 50
                                                                    square centimeters.
97606...........................  97606..........................  Negative pressure wound therapy            T          0015            T          0015
                                                                    (eg, vacuum assisted drainage
                                                                    collection), utilizing durable
                                                                    medical equipment (DME),
                                                                    including topical
                                                                    application(s), wound
                                                                    assessment, and instruction(s)
                                                                    for ongoing care, per session;
                                                                    total wound(s) surface area
                                                                    greater than 50 square
                                                                    centimeters.

[[Page 66870]]

 
G0456...........................  97607..........................  Negative pressure wound                    T          0015            T          0015
                                                                    therapy, (eg, vacuum assisted
                                                                    drainage collection),
                                                                    utilizing disposable, non-
                                                                    durable medical equipment
                                                                    including provision of exudate
                                                                    management collection system,
                                                                    topical application(s), wound
                                                                    assessment, and instructions
                                                                    for ongoing care, per session;
                                                                    total wound(s) surface area
                                                                    less than or equal to 50
                                                                    square centimeters.
G0457...........................  97608..........................  Negative pressure wound                    T          0015            T          0015
                                                                    therapy, (eg, vacuum assisted
                                                                    drainage collection),
                                                                    utilizing disposable, non-
                                                                    durable medical equipment
                                                                    including provision of exudate
                                                                    management collection system,
                                                                    topical application(s), wound
                                                                    assessment, and instructions
                                                                    for ongoing care, per session;
                                                                    total wound(s) surface area
                                                                    greater than 50 square
                                                                    centimeters.
--------------------------------------------------------------------------------------------------------------------------------------------------------

d. Platelet Rich Plasma (PRP) (APC 0327)
    For CY 2015, we proposed to continue to assign HCPCS code G0460 
(Autologous platelet rich plasma for chronic wounds/ulcers, including 
phlebotomy, centrifugation, and all other preparatory procedures, 
administration and dressings, per treatment) to APC 0327 (Level II 
Debridement & Destruction), with a proposed payment rate of 
approximately $431. We note that HCPCS code G0460, which became 
effective July 1, 2013, describes both the procedure and product 
components associated with the autologous platelet rich plasma service.
    Comment: One commenter requested that CMS exempt HCPCS code G0460 
from the geographic wage index variations to enable hospitals to more 
willingly participate in the AutoloGel Coverage with Evidence 
Development (CED) protocols. According to the commenter, HOPDs are 
reluctant to enroll in the CED protocols because they are concerned 
that the proposed APC payment rate will not cover the cost of the 
product, the procedure, the overhead, and the additional administrative 
effort associated with CED data collection requirements. In addition, 
the commenter requested that CMS establish a final payment rate for APC 
0327 based on the geometric mean cost of $496.99 to help achieve some 
stability regarding the payment for the procedures assigned to this 
APC.
    Response: We note that comments related to CED protocols or data 
collection are outside the scope of the proposed rule. With regard to 
the geographic wage index exemption requested by the commenter, we have 
never made such an exception. Under the hospital OPPS, all procedures 
and services that include devices are wage adjusted. Moreover, the 
payment rates for procedures and APCs are not based on a specific 
projected amount. The final payment rate for APC 0327 is based on the 
geometric mean cost of all the procedures described by the HCPCS codes 
assigned to this APC. We believe that the procedure described by HCPCS 
code G0460 is appropriately assigned to APC 0327 for the CY 2015 OPPS 
update based on the clinical and resource similarities in relation to 
the other procedures assigned to APC 0327. We note that, for this final 
rule with comment period, which is based on hospital outpatient claims 
submitted between January 1, 2013, and December 31, 2013, that were 
processed on or before June 30, 2014, our latest hospital outpatient 
claims data show no claims reporting the service described by HCPCS 
code G0460. As has been our practice since the implementation of the 
OPPS in 2000, we review, on an annual basis, the APC assignments for 
the procedures and services paid under the OPPS. We will review the APC 
assignment for HCPCS code G0460 when sufficient claims data become 
available to determine whether a reassignment to a more appropriate APC 
is necessary for the CY 2016 update. After consideration of the public 
comment we received, we are finalizing our proposal, without 
modification, to continue to assign HCPCS code G0460 to APC 0327 for CY 
2015. The final CY 2015 payment rate for HCPCS code G0460 can be found 
in Addendum B to this CY 2015 OPPS/ASC final rule (which is available 
via the Internet on the CMS Web site).

IV. OPPS Payment for Devices

A. Pass-Through Payments for Devices

1. Expiration of Transitional Pass-Through Payments for Certain Devices
a. Background
    Section 1833(t)(6)(B)(iii) of the Act sets forth the period for 
which a device category eligible for transitional pass-through payments 
under the OPPS may be in effect. The implementing regulation at 42 CFR 
419.66(g) provides that this pass-through payment eligibility period 
begins on the date CMS establishes a particular transitional pass-
through category of devices. We may establish a new device category for 
pass-through payment in any quarter, and under our established policy, 
we base the pass-through status expiration date for a device category 
on the date on which pass-through payment is effective for the 
category; that is, the date CMS establishes a particular category of 
devices eligible for transitional pass-through payments. 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.
b. CY 2015 Policy
    There currently is one device category eligible for pass-through 
payment, which we established effective October 1, 2013: HCPCS code 
C1841 (Retinal

[[Page 66871]]

prosthesis, includes all internal and external components). Recognizing 
that this device category has been eligible for at least 2 years, but 
not more than 3 years, of pass-through status by the end of CY 2015, in 
the CY 2015 OPPS/ASC proposed rule (79 FR 40989), we proposed the 
expiration of pass-through payment for HCPCS code C1841 devices on 
December 31, 2015. Therefore, in accordance with our established 
policy, beginning with CY 2016, we proposed to package the costs of the 
HCPCS code C1841 devices into the costs related to the procedures with 
which the device is reported in the hospital claims data (79 FR 40989 
through 40990).
    Comment: A few commenters requested that CMS extend the pass-
through payment period for the device described by HCPCS code C1841 due 
to delay of the first date of sale of the device until January 2014. 
The commenters asserted that the delay was due to various regulatory 
delays, including the Food and Drug Administration's (FDA's) 
Humanitarian Device Exemption (HDE) approval process and Federal 
Communications Commission (FCC) regulations regarding utilization of a 
radiofrequency (RF) band approval. The commenters therefore requested 
that CMS use the date of the first sale or the date of the first HCPCS 
code C1841 device implant (January 16, 2014) to ``reset'' the start 
date for pass-through payment eligibility, which would result in 
another year of pass-through payment status.
    Response: According to 42 CFR 419.66(g), ``CMS limits the 
eligibility for a pass-through payment established under this section 
to a period of at least 2 years, but not more than 3 years, beginning 
on the date that CMS establishes a category of devices'' (emphasis 
added). We cannot extend the pass-through payment status of HCPCS code 
C1841 beyond CY 2015 because such an extension would make the pass-
through payment status effective longer than the maximum 3-year period 
permitted under 42 CFR 419.66(g). Moreover, the HCPCS code C1841 device 
category was made effective in the OPPS on October 1, 2013. The HCPCS 
code C1841 device category will have had more than 2 years of pass-
through payment status as of December 31, 2015. Extending pass-through 
payment status through December 31, 2016, as requested by the 
commenter, would afford the HCPCS code C1841 device category longer 
than the 3-year maximum pass-through payment period. Therefore, after 
consideration of the public comments we received, we are finalizing our 
proposal to expire HCPCS code C1841 device category from pass-through 
payment status after December 31, 2015. We are finalizing our proposal 
to package the costs for devices described by HCPCS code C1841 into the 
costs of the procedure with which the device is reported in the 
hospital claims data used in the development of the OPPS relative 
payment weights that will be used to establish the ASC payment rates 
for CY 2016.
    With the expiration of HCPCS code C1841 device category from pass-
through payment status at the end of CY 2015, there are no other 
currently active categories for which we would expire pass-through 
status in CY 2015. If we create new device categories for pass-through 
payment status during the remainder of CY 2014 or during CY 2015, we 
will propose future expiration dates in accordance with 42 CFR 
419.66(g).
2. Provisions for Reducing Transitional Pass-Through Payments To Offset 
Costs Packaged Into APC Groups
a. Background
    Section 1833(t)(6)(D)(ii) of the Act sets the amount of additional 
pass-through payment for an eligible device as the amount by which the 
hospital's charges for a device, adjusted to cost (the cost of the 
device) exceeds the portion of the otherwise applicable Medicare 
outpatient department fee schedule amount (the APC payment amount) 
associated with the device. 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) for purposes of estimating the 
portion of the otherwise applicable APC payment amount associated with 
pass-through devices. For eligible device categories, we deduct 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, from the charges adjusted to cost for the 
device, as provided by section 1833(t)(6)(D)(ii) of the Act, to 
determine the pass-through payment amount for the eligible device. We 
have consistently used an established methodology to estimate the 
portion of each APC payment rate that could reasonably be attributed to 
the cost of an associated device eligible for pass-through payment, 
using claims data from the period used for the most recent 
recalibration of the APC rates (72 FR 66751 through 66752). We 
establish and update the applicable device APC offset amounts for 
eligible pass-through device categories through the transmittals that 
implement the quarterly OPPS updates.
    We published a list of all procedural APCs with the CY 2014 
portions (both percentages and dollar amounts) of the APC payment 
amounts that we determined are associated with the cost of devices on 
the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. 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).
    Beginning in CY 2010, we include packaged costs related to 
implantable biologicals in the device offset calculations in accordance 
with our policy that the pass-through evaluation process and 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 (74 FR 60476).
b. CY 2015 Policy
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40990), we proposed to 
continue, for CY 2015, our established methodology to estimate the 
portion of each APC payment rate that could reasonably be attributed to 
(that is, reflect) the cost of an associated device eligible for pass-
through payment, using claims data from the period used for the most 
recent recalibration of the APC payment rates. We proposed to continue 
our policy, for CY 2015, 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, 
be the device pass-through process and payment methodology only. The 
rationale for this policy is provided in the CY 2010 OPPS/ASC final 
rule with comment period (74 FR 60471 through 60477). We also proposed 
to continue our established policies for calculating and setting the 
device APC offset amounts for each device category eligible for pass-
through payment. In addition, we

[[Page 66872]]

proposed to continue to review each new device category on a case-by-
case basis to determine whether device costs associated with the new 
category are already packaged into the existing APC structure. If 
device costs packaged into the existing APC structure are associated 
with the new category, we proposed to deduct the device APC offset 
amount from the pass-through payment for the device category. As stated 
earlier, these device APC offset amounts also would be used in order to 
evaluate whether the cost of a device in an application for a new 
device category for pass-through payment is not insignificant in 
relation to the APC payment amount for the service related to the 
category of devices (Sec.  419.66(d)).
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40990), for CY 2015, 
we also proposed to continue our policy established in CY 2010 to 
include implantable biologicals in our calculation of the device APC 
offset amounts. In addition, we proposed to continue to calculate and 
set any device APC offset amount for any new device pass-through 
category that includes a newly eligible implantable biological 
beginning in CY 2015, 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 (79 FR 40990).
    In addition, in the CY 2015 OPPS/ASC proposed rule (79 FR 40900), 
we proposed to update the list of all procedural APCs with the final CY 
2015 portions 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/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html so that this information is available 
for use by the public in developing potential CY 2015 device pass-
through payment applications and by CMS in reviewing those 
applications.
    Comment: One commenter objected to CMS' proposal to continue its 
policy of evaluating implantable biological pass-through applications 
through the device evaluation process. The commenter believed that all 
biologicals should be evaluated through the drug and biological pass-
through process, which is intended for the evaluation of drugs and 
biologicals.
    Response: We have discussed our rationale for this policy in the CY 
2010 OPPS/ASC final rule (74 FR 60463). Implantable biologicals 
function as implantable medical devices and are used in the HOPD in 
surgical procedures in a manner similar to implantable medical devices. 
Therefore, since CY 2010, we have treated them as medical devices for 
pass-through payment purposes. In addition, like implantable medical 
devices, implantable biologicals are treated as packaged surgical 
supplies in the OPPS under 42 CFR 419.2(b)(16). For these reasons, we 
will continue to treat implantable biologicals as devices for pass-
through payment purposes in CY 2015.
    After consideration of the public comment we received, we are 
finalizing, without modification, the aforementioned proposed policies 
for calculation of the device APC offset amounts for CY 2015. In 
addition, we are updating, on the CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html, the list of all procedural APCs with the final CY 2015 
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 2015 device pass-through 
payment applications and by CMS in reviewing those applications.

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

1. Background
    To ensure equitable OPPS payment when a hospital receives a device 
without cost or with full credit, in CY 2007, we implemented a policy 
to reduce the payment for specified device-dependent APCs by the 
estimated portion of the APC payment attributable to device costs (that 
is, the device offset) when the hospital receives a specified device at 
no cost or with full credit (71 FR 68071 through 68077). Hospitals are 
instructed to report no cost/full credit cases on the claim using the 
``FB'' modifier on the line with the procedure code in which the no 
cost/full credit device is used. In cases in which the device is 
furnished without cost or with full credit, 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 
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).
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75005 
through 75007), beginning in CY 2014, we modified our policy of 
reducing OPPS payment for specified APCs when a hospital furnishes a 
specified device without cost or with a full or partial credit. For CY 
2013 and prior years, our policy had been to reduce OPPS payment by 100 
percent of the device offset amount when a hospital furnishes a 
specified device without cost or with a full credit and by 50 percent 
of the device offset amount when the hospital receives partial credit 
in the amount of 50 percent or more of the cost for the specified 
device. For CY 2014, we reduced OPPS payment, for the applicable APCs, 
by the full or partial credit a hospital receives for a replaced 
device. Specifically, under this modified policy, hospitals are 
required to report on the claim the amount of the credit in the amount 
portion for value code ``FD'' (Credit Received from the Manufacturer 
for a Replaced Medical Device) when the hospital receives a credit for 
a replaced device that is 50 percent or greater than the cost of the 
device. For CY 2014, we also limited the OPPS payment deduction for the 
applicable APCs to the total amount of the device offset when the 
``FD'' value code appears on a claim.
2. Policy for CY 2015
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40990 through 40992), 
for CY 2015, we proposed to continue our existing policy of reducing 
OPPS payment for specified APCs when a hospital furnishes a specified 
device without cost or with a full or partial credit. Specifically, for 
CY 2015, we proposed to continue to reduce the OPPS payment, for the 
applicable APCs listed in Table 31 of the proposed rule, by the full or 
partial credit a provider receives for a replaced device. Under this 
proposed policy, hospitals would continue to be required to report on 
the claim the amount of the credit in the amount portion for ``FD'' 
when the

[[Page 66873]]

hospital receives a credit for a replaced device listed in Table 32 of 
the proposed rule that is 50 percent or greater than the cost of the 
device.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40990 through 40992), 
for CY 2015, we also proposed to continue using the three criteria 
established in the CY 2007 OPPS/ASC final rule with comment period for 
determining the APCs to which our proposed CY 2015 policy would apply 
(71 FR 68072 through 68077). Specifically: (1) All procedures assigned 
to the selected APCs must involve implantable devices that would be 
reported if device insertion procedures were performed; (2) the 
required devices must be surgically inserted or implanted devices that 
remain in the patient's body after the conclusion of the procedure (at 
least temporarily); and (3) the device offset amount must be 
significant, which, for purposes of this policy, is defined as 
exceeding 40 percent of the APC cost. We also proposed to continue to 
restrict the devices to which the APC payment adjustment would apply to 
a specific set of costly devices to ensure that the adjustment would 
not be triggered by the implantation of an inexpensive device whose 
cost would not constitute a significant proportion of the total payment 
rate for an APC. We stated that we continue to believe these criteria 
are appropriate because no cost 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.
    Comment: One commenter urged CMS to discontinue its current policy 
of reducing OPPS payment for specified APCs when a hospital furnishes a 
specified device without cost or with a full or partial credit. The 
commenter stated that procedures which involve the replacement of a 
device are of greater complexity than the original insertion of the 
device. The commenter recommended that, because the replacement 
procedures are not paid at a higher rate, CMS not further penalize the 
hospital by reducing the OPPS payment when the device is furnished 
without cost or with a full or partial credit to the hospital.
    Response: We do not agree with the commenter and believe that it is 
appropriate to reduce the OPPS payment for specified APCs when a 
hospital furnishes a specified device without cost or with a full or 
partial credit.
    After consideration of the public comments we received, we are 
finalizing our proposals to continue our existing policy of reducing 
OPPS payment for specified APCs when a hospital furnishes a specified 
device without cost or with a full or partial credit, and to continue 
using the three criteria established in the CY 2007 OPPS/ASC final rule 
with comment period (71 FR 68072 through 68077) for determining the 
APCs to which our CY 2015 policy will apply.
    We examined the offset amounts calculated from the CY 2015 final 
rule with comment period data and the clinical characteristics of the 
final CY 2015 APCs to determine which APCs meet the criteria for CY 
2015. Table 26 below lists the APCs to which the payment adjustment 
policy for no cost/full credit and partial credit devices will apply in 
CY 2015. Table 27 below lists the devices to which the payment 
adjustment policy for no cost/full credit and partial credit devices 
will apply in CY 2015.
    Based on the final CY 2013 claims data available for this CY 2015 
OPPS/ASC final rule with comment period, we have updated the lists of 
APCs and devices to which the no cost/full credit and partial credit 
device adjustment policy will apply for CY 2015, consistent with the 
three criteria discussed earlier in this section.

   Table 26--APCs to Which the No Cost/Full Credit and Partial Credit
         Device Payment Adjustment Policy Will Apply in CY 2015
------------------------------------------------------------------------
            CY 2015 APC                       CY 2015 APC title
------------------------------------------------------------------------
0039..............................  Level III Neurostimulator & Related
                                     Procedures.
0061..............................  Level II Neurostimulator & Related
                                     Procedures.
0064..............................  Level III Treatment Fracture/
                                     Dislocation.
0089..............................  Level III Pacemaker and Similar
                                     Procedures.
0090..............................  Level II Pacemaker and Similar
                                     Procedures.
0107..............................  Level I ICD and Similar Procedures.
0108..............................  Level II ICD and Similar Procedures.
0227..............................  Implantation of Drug Infusion
                                     Device.
0229..............................  Level II Endovascular Procedures.
0259..............................  Level VII ENT Procedures.
0293..............................  Level IV Intraocular Procedures.
0318..............................  Level IV Neurostimulator & Related
                                     Procedures.
0319..............................  Level III Endovascular Procedures.
0351..............................  Level V Intraocular Procedures.
0385..............................  Level I Urogenital Procedures.
0386..............................  Level II Urogenital Procedures.
0425..............................  Level V Musculoskeletal Procedures
                                     Except Hand and Foot.
0655..............................  Level IV Pacemaker and Similar
                                     Procedures.
------------------------------------------------------------------------


  Table 27--Devices to Which the No Cost/Full Credit and Partial Credit
         Device Payment Adjustment Policy Will Apply in CY 2015
------------------------------------------------------------------------
     CY 2015 Device HCPCS code            CY 2015 Short descriptor
------------------------------------------------------------------------
C1721.............................  AICD, dual chamber.
C1722.............................  AICD, single chamber.
C1728.............................  Cath, brachytx seed adm.
C1764.............................  Event recorder, cardiac.
C1767.............................  Generator, neurostim, imp.
C1771.............................  Rep dev, urinary, w/sling.
C1772.............................  Infusion pump, programmable.
C1776.............................  Joint device (implantable).
C1777.............................  Lead, AICD, endo single coil.
C1778.............................  Lead, neurostimulator.
C1779.............................  Lead, pmkr, transvenous VDD.
C1785.............................  Pmkr, dual, rate-resp.
C1786.............................  Pmkr, single, rate-resp.
C1789.............................  Prosthesis, breast, imp.
C1813.............................  Prosthesis, penile, inflatab.
C1815.............................  Pros, urinary sph, imp.
C1818.............................  Integrated keratoprosthesis.
C1820.............................  Generator, neuro rechg bat sys.
C1840.............................  Lens, intraocular (telescopic).
C1881.............................  Dialysis access system.
C1882.............................  AICD, other than sing/dual.
C1891.............................  Infusion pump, non-prog, perm.
C1895.............................  Lead, AICD, endo dual coil.
C1896.............................  Lead, AICD, non sing/dual.
C1897.............................  Lead, neurostim, test kit.
C1898.............................  Lead, pmkr, other than trans.
C1899.............................  Lead, pmkr/AICD combination.
C1900.............................  Lead coronary venous.
C2619.............................  Pmkr, dual, non rate-resp.
C2620.............................  Pmkr, single, non rate-resp.
C2621.............................  Pmkr, other than sing/dual.
C2622.............................  Prosthesis, penile, non-inf.
C2626.............................  Infusion pump, non-prog, temp.
C2631.............................  Rep dev, urinary, w/o sling.
------------------------------------------------------------------------


[[Page 66874]]

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

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

1. Background
    Section 1833(t)(6) of the Act provides for temporary additional 
payments or ``transitional pass-through payments'' for certain drugs 
and biologicals. Throughout this final rule with comment period, the 
term ``biological'' is used because this is the term that appears in 
section 1861(t) of the Act. ``Biological'' as used in this final rule 
with comment period includes ``biological product'' or ``biologic'' as 
defined in the Public Health Service Act. As enacted by the Medicare, 
Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 (BBRA) (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; current drugs 
and biologicals and brachytherapy sources used in cancer therapy; and 
current radiopharmaceutical drugs and biologicals. ``Current'' refers 
to drugs or biologicals that are outpatient hospital services under 
Medicare Part B for which payment was made on the first date the 
hospital OPPS was implemented.
    Transitional pass-through payments also are provided for certain 
``new'' drugs and biologicals that were not being paid for as an HOPD 
service as of December 31, 1996 and whose cost is ``not insignificant'' 
in relation to the OPPS payments for the procedures or services 
associated with the new drug or biological. For pass-through payment 
purposes, radiopharmaceuticals are included as ``drugs.'' As required 
by statute, transitional pass-through payments for a drug or biological 
described in section 1833(t)(6)(C)(i)(II) of the Act can be made for a 
period of at least 2 years, but not more than 3 years, after the 
payment was first made for the product as a hospital outpatient service 
under Medicare Part B. CY 2015 pass-through drugs and biologicals and 
their designated APCs are assigned status indicator ``G'' in Addenda A 
and B to this final rule with comment period, which are available via 
the Internet on the CMS Web site.
    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. However, we note that the 
Part B drug competitive acquisition program (CAP) has been postponed 
since CY 2009, and such a program has not been reinstated for CY 2015.
    This methodology for determining the pass-through payment amount is 
set forth in regulations at 42 CFR 419.64. These regulations specify 
that the pass-through payment equals the amount determined under 
section 1842(o) of the Act minus the portion of the APC payment that 
CMS determines is associated with the drug or biological. Section 1847A 
of the Act establishes the average sales price (ASP) methodology, which 
is used for payment for drugs and biologicals described in section 
1842(o)(1)(C) of the Act furnished on or after January 1, 2005. The ASP 
methodology, as applied under the OPPS, uses several sources of data as 
a basis for payment, including the ASP, the wholesale acquisition cost 
(WAC), and the average wholesale price (AWP). In this final rule with 
comment period, the term ``ASP methodology'' and ``ASP-based'' are 
inclusive of all data sources and methodologies described therein. 
Additional information on the ASP methodology can be found on the CMS 
Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice/index.html.
    The pass-through application and review process for drugs and 
biologicals is explained on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html.
2. Drugs and Biologicals With Expiring Pass-Through Payment Status in 
CY 2014
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40992), we proposed 
that the pass-through status of 9 drugs and biologicals would expire on 
December 31, 2014, as listed in Table 33 of the proposed rule (79 FR 
40993). 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, 2014. These drugs and biologicals were approved for pass-
through status on or before January 1, 2013. 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; anesthesia drugs; drugs, 
biologicals, and radiopharmaceuticals that function as supplies when 
used in a diagnostic test or procedure; and drugs and biologicals that 
function as supplies when used in a surgical procedure), 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 $95 for 
CY 2015), as discussed further in section V.B.2. of this final rule 
with comment period. If the estimated per day cost for the drug or 
biological is less than or equal to the applicable OPPS drug packaging 
threshold, we would package payment for the drug or biological into the 
payment for the associated procedure in the upcoming calendar year. If 
the estimated per day cost of the drug or biological is greater than 
the OPPS drug packaging threshold, we would provide separate payment at 
the applicable relative ASP-based payment amount (which is ASP+6 
percent for CY 2015, as discussed further in section V.B.3. of this 
final rule with comment period).
    Comment: Commenters, including several hospitals, physicians, and a 
manufacturer, requested that CMS continue to pay separately for 
Exparel[supreg] (bupivacaine liposome injectable suspension) described 
by HCPCS code C9290 (Injection, bupivicaine liposome, 1 mg) once pass-
through payment status expires on December 31, 2014. Commenters 
disagreed with CMS' proposal to package Exparel[supreg] as a surgical 
supply and stated that the drug is used to control postoperative pain 
and is not used in the actual surgical procedure. In addition, 
commenters noted that the product cost of Exparel[supreg] exceeds the 
proposed CY 2015 packaging threshold of $90 and is not FDA-approved as 
a local anesthetic.
    Response: We disagree with the commenters' characterization of 
Exparel[supreg] as not functioning as a surgical supply because it is 
indicated for the alleviation of postoperative pain. The indications 
and usage of Exparel[supreg] as listed in the FDA-approved label are as 
follows: ``Exparel[supreg] is a liposome injection of bupivacaine, an 
amide-type local anesthetic, indicated for administration into the 
surgical site to produce postsurgical analgesia.''

[[Page 66875]]

Exparel[supreg] is injected immediately after the surgical procedure 
while the patient is still on the operating room table at the surgical 
wound site to control postoperative pain, which is an important part of 
the surgical care of the patient affecting the surgical outcome. In the 
CY 2014 OPPS/ASC final rule with comment period (78 FR 74925 through 
74939), we finalized our policy at 42 CFR 419.2(b)(16) to 
unconditionally package all drugs and biologicals that function as 
supplies in a surgical procedure. According to OPPS policy, drugs, 
biologicals, radiopharmaceuticals, implantable medical devices, and 
other items and products that are not equipment can be supplies in the 
OPPS (78 FR 43571 and 43575). While the commenter stated that the cost 
of Exparel[supreg] exceeds the drug packaging threshold, we emphasize 
that cost consideration is not a factor in determining whether an item 
is a surgical supply. We consider all items related to the surgical 
outcome and provided during the hospital stay in which the surgery is 
performed, including postsurgical pain management drugs, to be part of 
the surgery for purposes of our drug and biological surgical supply 
packaging policy. Therefore, for CY 2015, we are finalizing our 
proposal to package Exparel[supreg] described by HCPCS code C9290 and 
to assign status indicator ``N'' to the code for CY 2015.
    Comment: A few commenters recommended that CMS continue pass-
through payment status for new drugs, specifically diagnostic 
radiopharmaceuticals and contrast agents, for a full 3 years. The 
commenters asserted that providing pass-through payment status for 3 
years would help provide a more current and accurate data set on which 
to base payment amounts of the procedure when the diagnostic 
radiopharmaceutical or contrast agent is subsequently packaged. The 
commenters further recommended that CMS expire pass-through payment 
status for drugs and biologicals on a quarterly as opposed to an annual 
basis.
    Response: As we stated in the CY 2012 OPPS/ASC final rule with 
comment period (76 FR 74287), the CY 2013 OPPS/ASC final rule with 
comment period (77 FR 68363), and the CY 2014 OPPS/ASC final rule with 
comment period (78 FR 75010), and as described in section V.A. of this 
final rule with comment period, section 1833(t)(6)(c)(i)(II) of the Act 
permits CMS to make pass-through payments for a period of at least 2 
years, but not more than 3 years, after the product's first payment as 
a hospital outpatient service under Medicare Part B OPPS. We continue 
to believe that this period of payment appropriately facilitates 
dissemination of these new products into clinical practice and 
facilitates the collection of sufficient hospital claims data 
reflective of their costs for future OPPS ratesetting. Our longstanding 
practice has been to provide pass-through payment for a period of 2 to 
3 years, with expiration of pass-through payment status proposed and 
finalized through the annual rulemaking process. Each year, when 
proposing to expire the pass-through payment status of certain drugs 
and biologicals, we examine our claims data for these products. We 
observe that hospitals typically have incorporated these products into 
their chargemasters based on the utilization and costs observed in our 
claims data. Under the existing pass-through payment policy, we begin 
pass-through payment on a quarterly basis, depending on when 
applications are submitted to us for consideration. We are confident 
that the period of time for which drugs, biologicals, contrast agents, 
and radiopharmaceuticals receive pass-through payment status, which is 
at least 2 but no more than 3 years, is appropriate for CMS to collect 
the sufficient amount of data to make a packaging determination.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to expire the pass-
through payment status of the nine drugs and biologicals listed in 
Table 28 below. Table 28 lists the drugs and biologicals for which 
pass-through payment status will expire on December 31, 2014, the 
status indicators, and the assigned APCs for CY 2015.

         Table 28--Drugs and Biologicals for Which Pass-Through Payment Status Expires December 31, 2014
----------------------------------------------------------------------------------------------------------------
                                                                                  Final CY 2015    Final CY 2015
           CY 2015 HCPCS Code                    CY 2015 Long descriptor                SI              APC
----------------------------------------------------------------------------------------------------------------
C9290..................................  Injection, bupivicaine liposome, 1 mg.               N              N/A
C9293..................................  Injection, glucarpidase, 10 units.....               K             9293
J0178..................................  Injection, aflibercept, 1 mg vial.....               K             1420
J0716..................................  Injection, centruroides (scorpion)                   K             1431
                                          immune f(ab)2, up to 120 milligrams.
J9019..................................  Injection, asparaginase (erwinaze),                  K             9289
                                          1,000 iu.
J9306..................................  Injection, pertuzumab, 1 mg...........               K             1471
Q4131..................................  EpiFix, per square centimeter.........               N              N/A
Q4132..................................  Grafix core, per square centimeter....               N              N/A
Q4133..................................  Grafix prime, per square centimeter...               N              N/A
----------------------------------------------------------------------------------------------------------------

3. Drugs, Biologicals, and Radiopharmaceuticals With New or Continuing 
Pass-Through Payment Status in CY 2015
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40993), we proposed to 
continue pass-through payment status in CY 2015 for 22 drugs and 
biologicals. None of these drugs and biologicals will have received 
OPPS pass-through payment for at least 2 years and no more than 3 years 
by December 31, 2014. These drugs and biologicals, which were approved 
for pass-through status between January 1, 2013 and July 1, 2014, were 
listed in Table 34 of the proposed rule (79 FR 40994). The APCs and 
HCPCS codes for these drugs and biologicals approved for pass-through 
status through July 1, 2014 were assigned status indicator ``G'' in 
Addenda A and B to the proposed rule. Addenda A and B to the proposed 
rule are available via the Internet on the CMS Web site.
    Section 1833(t)(6)(D)(i) of the Act sets the amount of pass-through 
payment for pass-through drugs and biologicals (the pass-through 
payment amount) as the difference between the amount authorized under 
section 1842(o) of the Act and the portion of the otherwise applicable 
OPD fee schedule that the Secretary determines is associated with the 
drug or biological. 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 stated in the proposed rule that we 
believe it is

[[Page 66876]]

consistent with the statute to propose to continue to provide payment 
for drugs and biologicals with pass-through status at a rate of ASP+6 
percent in CY 2015, which is the amount that drugs and biologicals 
receive under section 1842(o) of the Act.
    Therefore, for CY 2015, we proposed to pay for pass-through drugs 
and biologicals at ASP+6 percent, equivalent to the rate these drugs 
and biologicals would receive in the physician's office setting in CY 
2015. We proposed that a $0.00 pass-through payment amount would be 
paid for most pass-through drugs and biologicals under the CY 2015 OPPS 
because the difference between the amount authorized under section 
1842(o) of the Act, which is ASP+6 percent, and the portion of the 
otherwise applicable OPD fee schedule that the Secretary determines is 
appropriate, proposed at ASP+6 percent, is $0.
    In the case of policy-packaged drugs (which include the following: 
Contrast agents; diagnostic radiopharmaceuticals; anesthesia drugs; 
drugs, biologicals, and radiopharmaceuticals that function as supplies 
when used in a diagnostic test or procedure and drugs; and biologicals 
that function as supplies when used in a surgical procedure), we 
proposed that their pass-through payment amount would be equal to ASP+6 
percent for CY 2015 because, if not on pass-through status, payment for 
these products would be packaged into the associated procedure.
    In addition, we proposed to continue to update pass-through payment 
rates on a quarterly basis on the CMS Web site during CY 2015 if later 
quarter ASP submissions (or more recent WAC or AWP information, as 
applicable) indicate that adjustments to the payment rates for these 
pass-through drugs or biologicals are necessary. For a full description 
of this policy, we refer readers to the CY 2006 OPPS/ASC final rule 
with comment period (70 FR 68632 through 68635).
    In CY 2015, as is consistent with our CY 2014 policy for diagnostic 
and therapeutic radiopharmaceuticals, we proposed to provide payment 
for both diagnostic and therapeutic radiopharmaceuticals that are 
granted pass-through payment status based on the ASP methodology. As 
stated above, for purposes of pass-through payment, we consider 
radiopharmaceuticals to be drugs under the OPPS. Therefore, if a 
diagnostic or therapeutic radiopharmaceutical receives pass-through 
payment status during CY 2015, we proposed to follow the standard ASP 
methodology to determine the pass-through payment rate that drugs 
receive under section 1842(o) of the Act, which is ASP+6 percent. If 
ASP data are not available for a radiopharmaceutical, we proposed to 
provide pass-through payment at WAC+6 percent, the equivalent payment 
provided to pass-through drugs and biologicals without ASP information. 
If WAC information also is not available, we proposed to provide 
payment for the pass-through radiopharmaceutical at 95 percent of its 
most recent AWP.
    Comment: Several commenters supported CMS' proposal to provide 
payment at ASP+6 percent for drugs, biologicals, contrast agents, and 
radiopharmaceuticals that are granted pass-through payment status. A 
few commenters requested that CMS provide an additional payment for 
radiopharmaceuticals that are granted pass-through payment status.
    Response: As discussed above, the statute provides that mandated 
pass-through payment for pass-through drugs and biologicals for CY 2015 
equals the amount determined under section 1842(o) of the Act minus the 
portion of the otherwise applicable APC payment that CMS determines is 
associated with the drug or biological. Therefore, the pass-through 
payment is determined by subtracting the otherwise applicable payment 
amount under the OPPS (ASP+6 percent for CY 2015) from the amount 
determined under section 1842(o) of the Act (ASP+6 percent).
    Regarding the commenters' request that CMS provide an additional 
payment for radiopharmaceuticals that are granted pass-through payment 
status, we note that, for CY 2015, consistent with our CY 2014 payment 
policy for diagnostic and therapeutic radiopharmaceuticals, we proposed 
to provide payment for both diagnostic and therapeutic 
radiopharmaceuticals with pass-through payment status based on the ASP 
methodology. As stated above, the ASP methodology, as applied under the 
OPPS, uses several sources of data as a basis for payment, including 
the ASP, the WAC if the ASP is unavailable, and 95 percent of the 
radiopharmaceutical's most recent AWP if the ASP and WAC are 
unavailable. For purposes of pass-through payment, we consider 
radiopharmaceuticals to be drugs under the OPPS. Therefore, if a 
diagnostic or therapeutic radiopharmaceutical receives pass-through 
payment status during CY 2015, we proposed to follow the standard ASP 
methodology to determine its pass-through payment rate under the OPPS 
to account for the acquisition and pharmacy overhead costs, including 
compounding costs. We continue to believe that a single payment is 
appropriate for diagnostic radiopharmaceuticals with pass-through 
payment status in CY 2015, and that the payment rate of ASP+6 percent 
(or payment based on the ASP methodology) is appropriate to provide 
payment for both the radiopharmaceutical's acquisition cost and any 
associated nuclear medicine handling and compounding costs. We refer 
readers to section V.B.3. of this final rule with comment period for 
further discussion of payment for therapeutic radiopharmaceuticals 
based on ASP information submitted by manufacturers, and readers also 
may refer to the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
    After consideration of the public comments we received, we are 
finalizing our proposal to provide payment for drugs, biologicals, 
diagnostic and therapeutic radiopharmaceuticals, and contrast agents 
that are granted pass-through payment status based on the ASP 
methodology. If a diagnostic or therapeutic radiopharmaceutical 
receives pass- through status during CY 2015, we will follow the 
standard ASP methodology to determine the pass-through payment rate 
that drugs receive under section 1842(o) of the Act, which is ASP+6 
percent. If ASP data are not available for a radiopharmaceutical, we 
will provide pass-through payment at WAC+6 percent, the equivalent 
payment provided to pass-through drugs and biologicals without ASP 
information. If WAC information also is not available, we will provide 
payment for the pass-through radiopharmaceutical at 95 percent of its 
most recent AWP.
    As discussed in more detail in section II.A.3. of this final rule 
with comment period, we implemented a policy whereby payment for the 
following nonpass-through items is packaged into payment for the 
associated procedure: diagnostic radiopharmaceuticals; contrast agents; 
anesthesia drugs; drugs, biologicals, and radiopharmaceuticals that 
function as supplies when used in a diagnostic test or procedure; and 
drugs and biologicals that function as supplies when used in a surgical 
procedure. As stated earlier, pass-through payment is the difference 
between the amount authorized under section 1842(o) of the Act and the 
portion of the otherwise applicable OPD fee schedule that the Secretary 
determines is associated with the drug or biological. Because payment 
for a drug that is policy-packaged would otherwise be packaged if the 
product did not have pass-through payment

[[Page 66877]]

status, we believe the otherwise applicable OPPS payment amount would 
be equal to the policy-packaged drug APC offset amount for the 
associated clinical APC in which the drug or biological is utilized. 
The calculation of the policy-packaged drug APC offset amounts is 
described in more detail in section V.A.4. of this final rule with 
comment period. It follows that the copayment for the nonpass-through 
payment portion (the otherwise applicable fee schedule amount that we 
would also offset from payment for the drug or biological if a payment 
offset applies) of the total OPPS payment for those drugs and 
biologicals, therefore, would 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 2014, in the CY 2015 OPPS/ASC 
proposed rule, we proposed to continue to set the associated copayment 
amount to zero for CY 2015 for pass-through drugs and biologicals that 
would otherwise be packaged if the item did not have pass-through 
payment status. The 22 drugs and biologicals that we proposed would 
continue to have pass-through payment status for CY 2015 or have been 
granted pass-through payment status as of January 2015 were shown in 
Table 34 of the proposed rule (79 FR 40994).
    Comment: Commenters supported the CY 2015 proposal to continue to 
set the associated copayment amounts for pass-through diagnostic 
radiopharmaceuticals and contrast agents that would otherwise be 
packaged if the product did not have pass-through payment status to 
zero. The commenters noted that this policy is consistent with 
statutory requirements and provides cost-saving benefits to Medicare 
beneficiaries.
    Response: We appreciate the commenters' support of our proposal. As 
discussed in the CY 2015 OPPS/ASC proposed rule (79 FR 40993 through 
40994), we believe that for drugs and biologicals that are ``policy-
packaged,'' the copayment for the nonpass-through payment portion of 
the total OPPS payment for this subset of drugs and biologicals is 
accounted for in the copayment of the associated clinical APC in which 
the drug or biological is used. According to section 1833(t)(8)(E) of 
the Act, the amount of copayment associated with pass-through items is 
equal to the amount of copayment that would be applicable if the pass-
through adjustment was not applied. Therefore, we believe that the 
copayment amount should be zero for drugs and biologicals that are 
``policy-packaged,'' including diagnostic radiopharmaceuticals and 
contrast agents. We also believe that the copayment amount should be 
zero for anesthesia drugs that would otherwise be packaged if the item 
did not have pass-through payment status.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to continue to set the 
associated copayment amount for pass-through diagnostic 
radiopharmaceuticals, contrast agents, and anesthesia drugs that would 
otherwise be packaged if the item did not have pass-through payment 
status to zero for CY 2015.
    The 35 drugs and biologicals that will continue to have pass-
through payment status for CY 2015 or have been granted pass-through 
payment status as of January 1, 2015 are shown in Table 29 below. 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. Table 29 below 
includes those coding changes.

                   Table 29--Drugs and Biologicals With Pass-Through Payment Status in CY 2015
----------------------------------------------------------------------------------------------------------------
                                                                                        Final CY      Final CY
 CY 2014 HCPCS code      CY 2015 HCPCS code           CY 2015 Long descriptor            2015 SI      2015 APC
----------------------------------------------------------------------------------------------------------------
A9520...............  A9520..................  Technetium Tc 99m tilmanocept,                   G          1463
                                                diagnostic, up to 0.5 millicuries.
N/A.................  A9586..................  Florbetapir f18, diagnostic, per                 G          1664
                                                study dose, up to 10 millicuries.
C9021...............  J9301..................  Injection, obinutuzumab, 10 mg.......            G          1476
C9022...............  J1322..................  Injection, elosulfase alfa, 1mg......            G          1480
C9023...............  J3145..................  Injection, testosterone undecanoate,             G          1487
                                                1 mg.
C9025...............  C9025..................  Injection, ramucirumab, 5 mg.........            G          1488
C9026...............  C9026..................  Injection, vedolizumab, 1 mg.........            G          1489
N/A.................  C9027..................  Injection, pembrolizumab, 1 mg.......            G          1490
C9132...............  C9132..................  Prothrombin complex concentrate                  G          9132
                                                (human), Kcentra, per i.u. of Factor
                                                IX activity.
C9133...............  J7200..................  Factor ix (antihemophilic factor,                G          1467
                                                recombinant), Rixubus, per i.u.
C9134...............  J7181..................  Injection, Factor XIII A-subunit,                G          1746
                                                (recombinant), per i.u.
C9135...............  J7201..................  Injection, factor ix, fc fusion                  G          1486
                                                protein (recombinant), per i.u.
N/A.................  C9136..................  Injection, factor viii, fc fusion                G          1656
                                                protein, (recombinant), per i.u.
C9441...............  J1439..................  Injection, ferric carboxymaltose, 1              G          9441
                                                mg.
N/A.................  C9349..................  FortaDerm, and FortaDerm                         G          1657
                                                Antimicrobial, any type, per square
                                                centimeter.
N/A.................  C9442..................  Injection, belinostat, 10 mg.........            G          1658
N/A.................  C9443..................  Injection, dalbavancin, 10 mg........            G          1659
N/A.................  C9444..................  Injection, oritavancin, 10 mg........            G          1660
N/A.................  C9446..................  Injection, tedizolid phosphate, 1 mg.            G          1662
N/A.................  C9447..................  Injection, phenylephrine and                     G          1663
                                                ketorolac, 4 ml vial.
C9497...............  C9497..................  Loxapine, inhalation powder, 10 mg...            G          9497
J1446...............  J1446..................  Injection, tbo-filgrastim, 5                     G          1477
                                                micrograms.
J1556...............  J1556..................  Injection, immune globulin (Bivigam),            G          9130
                                                500 mg.
J3060...............  J3060..................  Injection, taliglucerase alfa, 10                G          9294
                                                units.
J7315...............  J7315..................  Mitomycin, ophthalmic, 0.2 mg........            G          1448
J7316...............  J7316..................  Injection, Ocriplasmin, 0.125 mg.....            G          9298
J7508...............  J7508..................  Tacrolimus, Extended Release, Oral,              G          1465
                                                0.1 mg.
J9047...............  J9047..................  Injection, carfilzomib, 1 mg.........            G          9295
J9262...............  J9262..................  Injection, omacetaxine mepesuccinate,            G          9297
                                                0.01 mg.
J9354...............  J9354..................  Injection, ado-trastuzumab emtansine,            G          9131
                                                1 mg.
J9371...............  J9371..................  Injection, Vincristine Sulfate                   G          1466
                                                Liposome, 1 mg.

[[Page 66878]]

 
J9400...............  J9400..................  Injection, Ziv-Aflibercept, 1 mg.....            G          9296
Q4121...............  Q4121..................  Theraskin, per square centimeter.....            G          1479
Q4122...............  Q4122..................  Dermacell, per square centimeter.....            G          1419
Q4127...............  Q4127..................  Talymed, per square centimeter.......            G          1449
----------------------------------------------------------------------------------------------------------------

4. Provisions for Reducing Transitional Pass-Through Payments for 
Policy-Packaged Drugs and Biologicals 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 2014, in the CY 2014 OPPS/ASC final rule with comment period 
(78 FR 74925), we continued to package payment for all nonpass-through 
diagnostic radiopharmaceuticals, contrast agents, and anesthesia drugs, 
and we began packaging all nonpass-through drugs, biologicals, and 
radiopharmaceuticals that function as supplies when used in a 
diagnostic test or procedure and drugs and biologicals that function as 
supplies when used in a surgical procedure. These packaging policies 
are codified at 42 CFR 419.2(b).
b. Payment Offset Policy for Diagnostic Radiopharmaceuticals
    As previously noted, radiopharmaceuticals are considered to be 
drugs for OPPS pass-through payment purposes. As described above, 
section 1833(t)(6)(D)(i) of the Act specifies that the transitional 
pass-through payment amount for pass-through drugs and biologicals is 
the difference between the amount paid under section 1842(o) of the Act 
and the otherwise applicable OPD fee schedule amount. Because a payment 
offset is necessary in order to provide an appropriate transitional 
pass-through payment, we deduct from the pass-through payment for 
diagnostic radiopharmaceuticals an amount reflecting the portion of the 
APC payment associated with predecessor radiopharmaceuticals in order 
to ensure no duplicate radiopharmaceutical payment is made.
    In CY 2009, we established a policy to estimate the portion of each 
APC payment rate that could reasonably be attributed to the cost of 
predecessor diagnostic radiopharmaceuticals when considering a new 
diagnostic radiopharmaceutical for pass-through payment (73 FR 68638 
through 68641). Specifically, we use the policy-packaged drug offset 
fraction for APCs containing nuclear medicine procedures, calculated as 
1 minus the following: 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. 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. For CY 2015, as we did in CY 2014, 
we proposed to continue to apply the diagnostic radiopharmaceutical 
offset policy to payment for pass-through diagnostic 
radiopharmaceuticals.
    There is currently one diagnostic radiopharmaceutical with pass-
through status under the OPPS. HCPCS code A9520 (Technetium Tc 99m 
tilmanocept, diagnostic, up to 0.5 millicuries) was granted pass-
through payment status beginning October 1, 2013. We currently apply 
the established radiopharmaceutical payment offset policy to pass-
through payment for this product.
    Table 35 of the CY 2015 OPPS/ASC proposed rule (79 FR 40995) 
displayed the proposed APCs to which nuclear medicine procedures would 
be assigned in CY 2015 and for which we expect that an APC offset could 
be applicable in the case of diagnostic radiopharmaceuticals with pass-
through status.
    Comment: A few commenters requested that CMS reinstate the ``FB'' 
modifier to specified nuclear medicine procedures in cases in which the 
diagnostic radiopharmaceutical is received at no cost or full credit. 
The commenters requested that the policy be maintained for CY 2015 and 
beyond.
    Response: As we discussed in the CY2014 OPPS/ASC final rule with 
comment period (78 FR 75016), our review of claims data showed that 
hospitals rarely received diagnostic radiopharmaceuticals at no cost or 
full credit. Therefore, we do not believe that the ``FB'' modifier 
policy is warranted for diagnostic radiopharmaceuticals.
    Comment: A few commenters agreed that pass-through payment status 
for HCPCS code A9520 should be extended for CY 2015.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to continue to apply the 
diagnostic radiopharmaceutical offset policy to payment for pass-
through diagnostic radiopharmaceuticals, as described in the CY 2015 
OPPS/ASC proposed rule (79 FR 40994 through 40995). We will continue to 
reduce the payment amount for procedures in the APCs listed in Table 30 
in this final rule with comment period by the full policy-packaged 
offset amount appropriate for diagnostic radiopharmaceuticals.
    Table 30 below displays the APCs to which nuclear medicine 
procedures will be assigned in CY 2015 and for which we expect that an 
APC offset could be applicable in the case of diagnostic 
radiopharmaceuticals with pass-through payment status.

[[Page 66879]]



 Table 30--APCs To Which a Diagnostic Radiopharmaceutical Offset May Be
                          Applicable in CY 2015
------------------------------------------------------------------------
          CY 2015 APC                       CY 2015 APC title
------------------------------------------------------------------------
0308...........................  Positron Emission Tomography (PET)
                                  Imaging.
0377...........................  Level II Cardiac Imaging.
0378...........................  Level II Pulmonary Imaging.
0389...........................  Level I Non-imaging Nuclear Medicine.
0390...........................  Level I Endocrine Imaging.
0391...........................  Level II Endocrine Imaging.
0392...........................  Level II Non-imaging Nuclear Medicine.
0393...........................  Hematologic Processing & Studies.
0394...........................  Hepatobiliary Imaging.
0395...........................  GI Tract Imaging.
0396...........................  Bone Imaging.
0398...........................  Level I Cardiac Imaging.
0400...........................  Hematopoietic Imaging.
0401...........................  Level I Pulmonary Imaging.
0402...........................  Level II Nervous System Imaging.
0403...........................  Level I Nervous System Imaging.
0404...........................  Renal and Genitourinary Studies.
0406...........................  Level I Tumor/Infection Imaging.
0408...........................  Level III Tumor/Infection Imaging.
0414...........................  Level II Tumor/Infection Imaging.
------------------------------------------------------------------------

c. Payment Offset Policy for Contrast Agents
    Section 1833(t)(6)(D)(i) of the Act specifies that the transitional 
pass-through payment amount for pass-through drugs and biologicals is 
the difference between the amount paid under section 1842(o) of the Act 
and the otherwise applicable OPD fee schedule amount. Because a payment 
offset is necessary in order to provide an appropriate transitional 
pass-through payment, we deduct from the pass-through payment for 
contrast agents an amount reflecting 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). Specifically, we use 
the policy-packaged drug offset fraction for procedural APCs, 
calculated as 1 minus the following: 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. To 
determine the actual APC offset amount for pass-through contrast agents 
that takes into consideration the otherwise applicable OPPS payment 
amount, in the CY 2015 OPPS/ASC proposed rule (79 FR 40995), we 
proposed to multiply the policy packaged drug offset fraction by the 
APC payment amount for the procedure with which the pass-through 
contrast agent is used and, accordingly, reduce the separate OPPS 
payment for the pass-through contrast agent by this amount. For CY 
2015, as we did in CY 2014, we proposed to continue to apply our 
standard contrast agents offset policy to payment for pass-through 
contrast agents (we refer readers to the CY 2014 OPPS/ASC final rule 
with comment period (78 FR 75017) for the final CY 2014 policy and the 
CY 2015 OPPS/ASC proposed rule (79 FR 40995 through 40996) for the 
proposed CY 2015 policy).
    Although there are currently no contrast agents with pass-through 
payment status under the OPPS, we believe that a payment offset is 
necessary in the event that a new contrast agent is approved for pass-
through status during CY 2015 in order to provide an appropriate 
transitional pass-through payment for new contrast agents. We proposed 
to identify procedural APCs for which we expect a contrast offset could 
be applicable in the case of a pass-through contrast agent as any 
procedural APC with a policy-packaged drug amount greater than $20 that 
is not a nuclear medicine APC identified in Table 35 of the proposed 
rule, and these APCs were displayed in Table 36 of the proposed rule. 
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 (74 FR 60483 
through 60484). For CY 2015, we proposed to continue to recognize that 
when a contrast agent with pass-through status is billed with any 
procedural APC listed in Table 36 of the proposed rule (79 FR 40995 
through 40996), a specific offset based on the procedural APC would be 
applied to payment for the contrast agent to ensure that duplicate 
payment is not made for the contrast agent.
    We did not receive any public comments on this proposal. Therefore, 
we are finalizing our proposal for CY 2015 without modification. We 
will continue to recognize that when a contrast agent with pass-through 
payment status is billed with any procedural APC listed in Table 31 
below, a specific offset based on the procedural APC will be applied to 
the payment for the contrast agent to ensure that duplicate payment is 
not made for the contrast agent.

Table 31--APCs To Which a Contrast Agent Offset May Be Applicable for CY
                                  2015
------------------------------------------------------------------------
          CY 2015 APC                       CY 2015 APC title
------------------------------------------------------------------------
0080...........................  Diagnostic Cardiac Catheterization.
0083...........................  Coronary Angioplasty, Valvuloplasty,
                                  and Level I Endovascular
                                  Revascularization.
0093...........................  Vascular Reconstruction/Fistula Repair.
0152...........................  Level I Percutaneous Abdominal and
                                  Biliary Procedures.
0177...........................  Level I Echocardiogram With Contrast.
0178...........................  Level II Echocardiogram With Contrast.
0229...........................  Level II Endovascular Revascularization
                                  of the Lower Extremity.
0278...........................  Diagnostic Urography.
0279...........................  Level II Angiography and Venography.
0280...........................  Level III Angiography and Venography.
0283...........................  Computed Tomography with Contrast.
0284...........................  Magnetic Resonance Imaging and Magnetic
                                  Resonance Angiography with Contrast.
0333...........................  Computed Tomography without Contrast
                                  followed by Contrast.
0334...........................  Combined Abdomen and Pelvis CT with
                                  Contrast.
0337...........................  Magnetic Resonance Imaging and Magnetic
                                  Resonance Angiography without Contrast
                                  followed by Contrast.
0375...........................  Ancillary Outpatient Services When
                                  Patient Expires.
0383...........................  Cardiac Computed Tomographic Imaging.
0388...........................  Discography.
0442...........................  Dosimetric Drug Administration.
0662...........................  CT Angiography.
0668...........................  Level I Angiography and Venography.
8006...........................  CT and CTA with Contrast Composite.
8008...........................  MRI and MRA with Contrast Composite.
------------------------------------------------------------------------

d. Payment Offset Policy for Drugs, Biologicals, and 
Radiopharmaceuticals That Function as Supplies When Used in a 
Diagnostic Test or Procedure and Drugs and Biologicals That Function as 
Supplies When Used in a Surgical Procedure
    Section 1833(t)(6)(D)(i) of the Act specifies that the transitional 
pass-through payment amount for pass-through drugs and biologicals is 
the difference between the amount paid under section 1842(o) of the Act 
and the otherwise applicable OPD fee schedule amount. In the CY 2014 
OPPS/ASC final rule with comment period (78 FR 74925), we finalized our 
policy to

[[Page 66880]]

package drugs, biologicals, and radiopharmaceuticals that function as 
supplies when used in a diagnostic test or procedure and drugs and 
biologicals that function as supplies when used in a surgical 
procedure. As a part of this policy, we specifically finalized that 
skin substitutes and stress agents used in myocardial perfusion imaging 
(MPI) be policy packaged in CY 2014, in addition to diagnostic 
radiopharmaceuticals, contrast agents, and anesthesia drugs (78 FR 
75019). Because a payment offset is necessary in order to provide an 
appropriate transitional pass-through payment, we finalized a policy 
for CY 2014 to deduct from the pass-through payment for skin 
substitutes and stress agents an amount reflecting the portion of the 
APC payment associated with predecessor skin substitutes and stress 
agents in order to ensure no duplicate skin substitute or stress agent 
payment is made (78 FR 75019).
    In CY 2014, we established a policy to estimate the portion of each 
APC payment rate that could reasonably be attributed to the cost of 
predecessor skin substitutes or stress agents when considering a new 
skin substitute or stress agent for pass-through payment (78 FR 75019). 
Specifically, in the case of pass-through skin substitutes, we use the 
policy-packaged drug offset fraction for skin substitute procedural 
APCs, calculated as 1 minus the following: 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. 
Because policy packaged radiopharmaceuticals also would be included in 
the drug offset fraction for the APC to which MPI procedures are 
assigned, in the case of pass-through stress agents, we use the policy-
packaged drug offset fraction for the procedural APC, calculated as 1 
minus the following: The cost from single procedure claims in the APC 
after removing the cost for policy-packaged drugs excluding policy-
packaged diagnostic radiopharmaceuticals divided by the cost from 
single procedure claims in the APC. To determine the actual APC offset 
amount for pass-through skin substitutes and pass-through stress agents 
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 procedure with which the pass-through skin 
substitute or pass-through stress agent is used and, accordingly, 
reduce the separate OPPS payment for the pass-through skin substitute 
or pass-through stress agent by this amount (78 FR 75019). In the CY 
2015 OPPS/ASC proposed rule (79 FR 40996), for CY 2015, as we did in CY 
2014, we proposed to continue to apply the skin substitute and stress 
agent offset policy to payment for pass-through skin substitutes and 
stress agents.
    There are currently six skin substitutes (HCPCS codes Q4121, Q4122, 
Q4127, Q4131, Q4132, and Q4133) with pass-through payment status under 
the OPPS. We currently apply the established skin substitute payment 
offset policy to pass-through payment for these products. Table 37 of 
the CY 2015 OPPS/ASC proposed rule (79 FR 40996) displayed the proposed 
APCs to which skin substitute procedures would be assigned in CY 2015 
and for which we expect that an APC offset could be applicable in the 
case of skin substitutes with pass-through status.
    Although there are currently no stress agents with pass-through 
status under the OPPS, we believe that a payment offset is necessary in 
the event that a new stress agent is approved for pass-through status 
during CY 2015 in order to provide an appropriate transitional pass 
through payment for new stress agents. Table 38 of the CY 2015 OPPS/ASC 
proposed rule (79 FR 40996) displayed the proposed APCs to which MPI 
procedures would be assigned in CY 2015 and for which we expect that an 
APC offset could be applicable in the case of a stress agent with pass-
through status.
    We did not receive any public comments on these proposals. 
Therefore, we are finalizing our proposal, without modification, to 
recognize that when a skin substitute with pass-through payment status 
is billed with any procedural APC listed in Table 32 below, a specific 
offset based on the procedural APC will be applied to the payment for 
the skin substitute to ensure that duplicate payment is not made for 
the skin substitute. In addition, when a stress agent with pass-through 
payment status is billed with any procedural APC listed in Table 33 
below, a specific offset based on the procedural APC will be applied to 
the payment for the stress agent to ensure that duplicate payment is 
not made for the stress agent. Table 32 below displays the APCs to 
which skin substitute procedures will be assigned in CY 2015 and for 
which we expect that an APC offset could be applicable in the case of 
skin substitutes with pass-through payment status. Table 33 below 
displays the APCs to which MPI procedures will be assigned in CY 2015 
and for which we expect that an APC offset could be applicable in the 
case of a stress agent with pass-through payment status.

 Table 32--APCs To Which a Skin Substitute Offset May Be Applicable For
                                 CY 2015
------------------------------------------------------------------------
            CY 2015 APC                       CY 2015 APC title
------------------------------------------------------------------------
0328..............................  Level III Skin Repair.
0329..............................  Level IV Skin Repair.
------------------------------------------------------------------------


 Table 33--APCs To Which a Stress Agent Offset May Be Applicable For CY
                                  2015
------------------------------------------------------------------------
            CY 2015 APC                       CY 2015 APC title
------------------------------------------------------------------------
0100..............................  Cardiac Stress Tests.
0377..............................  Level II Cardiac Imaging.
------------------------------------------------------------------------

    As we proposed, we will continue to post annually on the CMS Web 
site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html a file that contains the APC offset 
amounts that will be used for that year for purposes of both evaluating 
cost significance for candidate pass-through device categories and 
drugs and biologicals and establishing any appropriate APC offset 
amounts. Specifically, the file will continue to provide the amounts 
and percentages of APC payment associated with packaged implantable 
devices, policy-packaged drugs, and threshold packaged drugs and 
biologicals for every OPPS clinical APC.

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

1. Background
    Under the CY 2013 OPPS, we currently pay for drugs, biologicals, 
and radiopharmaceuticals that do not have pass-through payment status 
in one of two ways: as a packaged payment included in the payment for 
the associated service, or as a separate payment (individual APCs). We 
explained in the April 7, 2000 OPPS final rule with comment period (65 
FR 18450) that we generally package the cost of drugs and 
radiopharmaceuticals into the APC payment rate for the procedure or 
treatment with which the products are usually furnished. Hospitals do 
not receive separate payment for packaged items and supplies, and 
hospitals may not bill beneficiaries separately for any packaged items 
and supplies whose costs are recognized and paid within the

[[Page 66881]]

national OPPS payment rate for the associated procedure or service.
    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.
2. Criteria for Packaging Payment for Drugs, Biologicals, and 
Radiopharmaceuticals
a. Background
    As indicated in section V.B.1. of this final rule with comment 
period, in accordance with section 1833(t)(16)(B) of the Act, the 
threshold for establishing separate APCs for payment of drugs and 
biologicals was set to $50 per administration during CYs 2005 and 2006. 
In CY 2007, we used the four quarter moving average Producer Price 
Index (PPI) levels for Pharmaceutical Preparations (Prescription) to 
trend the $50 threshold forward from the third quarter of CY 2005 (when 
the Pub. L. 108-173 mandated threshold became effective) to the third 
quarter of CY 2007. We then rounded the resulting dollar amount to the 
nearest $5 increment in order to determine the CY 2007 threshold amount 
of $55. Using the same methodology as that used in CY 2007 (which is 
discussed in more detail in the CY 2007 OPPS/ASC final rule with 
comment period (71 FR 68085 through 68086)), we set the packaging 
threshold for establishing separate APCs for drugs and biologicals at 
$90 for CY 2014.
    Following the CY 2007 methodology, for the CY 2015 OPPS/ASC 
proposed rule (79 FR 40997), we used the most recently available four 
quarter moving average PPI levels to trend the $50 threshold forward 
from the third quarter of CY 2005 to the third quarter of CY 2015 and 
rounded the resulting dollar amount ($91.46) to the nearest $5 
increment, which yielded a figure of $90. In performing this 
calculation, we used the most recent forecast of the quarterly index 
levels for the PPI for Pharmaceuticals for Human Use (Prescription) 
(Bureau of Labor Statistics (BLS) series code WPUSI07003) from CMS' 
Office of the Actuary (OACT). We refer below to this series generally 
as the PPI for Prescription Drugs.
    Based on the calculations described above, we proposed a packaging 
threshold for CY 2015 of $90. (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).)
    Following the CY 2007 methodology, for this CY 2015 OPPS/ASC final 
rule with comment period, we used the most recently available four 
quarter moving average PPI levels to trend the $50 threshold forward 
from the third quarter of CY 2005 to the third quarter of CY 2015 and 
rounded the resulting dollar amount ($93.48) to the nearest $5 
increment, which yielded a figure of $95. In performing this 
calculation, we used the most recent forecast of the quarterly index 
levels for the PPI for Pharmaceuticals for Human Use (Prescription) 
(Bureau of Labor Statistics (BLS) series code WPUSI07003) from CMS' 
Office of the Actuary (OACT). Therefore, for this CY 2015 OPPS/ASC 
final rule with comment period, using the CY 2007 OPPS methodology, we 
are establishing a packaging threshold for CY 2015 of $95.
b. Cost Threshold for Packaging of Payment for HCPCS Codes That 
Describe Certain Drugs, Certain Biologicals, and Therapeutic 
Radiopharmaceuticals (``Threshold-Packaged Drugs'')
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40997), to determine 
the proposed CY 2015 packaging status for all nonpass-through drugs and 
biologicals that are not policy packaged, we calculated, on a HCPCS 
code-specific basis, the per day cost of all drugs, biologicals, and 
therapeutic radiopharmaceuticals (collectively called ``threshold-
packaged'' drugs) that had a HCPCS code in CY 2013 and were paid (via 
packaged or separate payment) under the OPPS. We used data from CY 2013 
claims processed before January 1, 2014 for this calculation. However, 
we did not perform this calculation for those drugs and biologicals 
with multiple HCPCS codes that include different dosages, as described 
in section V.B.2.c. of the proposed rule, or for the following policy-
packaged items that we proposed to continue to package in CY 2015: 
diagnostic radiopharmaceuticals; contrast agents; anesthesia drugs; 
drugs, biologicals, and radiopharmaceuticals that function as supplies 
when used in a diagnostic test or procedure; and drugs and biologicals 
that function as supplies when used in a surgical procedure.
    In order to calculate the per day costs for drugs, biologicals, and 
therapeutic radiopharmaceuticals to determine their proposed packaging 
status in CY 2015, we used the methodology that was described in detail 
in the CY 2006 OPPS proposed rule (70 FR 42723 through 42724) and 
finalized in the CY 2006 OPPS final rule with comment period (70 FR 
68636 through 68638). For each drug and biological HCPCS code, we used 
an estimated payment rate of ASP+6 percent (which is the payment rate 
we proposed for separately payable drugs and biologicals for CY 2015, 
as discussed in more detail in section V.B.3.b. of the proposed rule) 
to calculate the CY 2015 proposed rule per day costs. We used the 
manufacturer submitted ASP data from the fourth quarter of CY 2013 
(data that were used for payment purposes in the physician's office 
setting, effective April 1, 2014) to determine the proposed rule per 
day cost.
    As is our standard methodology, for CY 2015, we proposed to use 
payment rates based on the ASP data from the fourth quarter of CY 2013 
for budget neutrality estimates, packaging determinations, impact 
analyses, and completion of Addenda A and B to the proposed rule (which 
are available via the Internet on the CMS Web site) because these were 
the most recent data available for use at the time of development of 
the proposed rule. These data also were the basis for drug payments in 
the physician's office setting, effective April 1, 2014. 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 
2013 hospital claims data to determine their per day cost.
    We proposed to package items with a per day cost less than or equal 
to $90, and identify items with a per day cost greater than $90 as 
separately payable. Consistent with our past practice, we crosswalked 
historical OPPS claims data from the CY 2013 HCPCS codes that were 
reported to the CY 2014 HCPCS codes that we displayed in Addendum B to 
the proposed rule (which is available via the Internet on the CMS Web 
site) for payment in CY 2015.
    Comment: The majority of the commenters opposed the continuation of 
the OPPS packaging threshold of $90 for CY 2015. The commenters 
believed that, over the past 5 years, CMS has rapidly increased the 
packaging threshold, which contradicts Congressional intent. As such, 
the commenters recommended that CMS eliminate the packaging threshold 
and provide separate payment for all drugs with HCPCS codes or freeze 
the packaging threshold at the current level ($90).

[[Page 66882]]

    Response: As stated in the CY 2007 OPPS/ASC final rule with comment 
period (71 FR 68086), we believe that packaging certain items is a 
fundamental component of a prospective payment system, that updating 
the packaging threshold of $50 for the CY 2005 OPPS is consistent with 
industry and government practices, and that the PPI for Prescription 
Drugs is an appropriate mechanism to gauge Part B drug inflation. 
Therefore, because of our continued belief that packaging is a 
fundamental component of a prospective payment system that continues to 
provide important flexibility and efficiency in the delivery of high 
quality hospital outpatient services, we are not adopting commenters' 
recommendations to pay separately for all drugs, biologicals, and 
radiopharmaceuticals for CY 2015 or to eliminate the packaging 
threshold or to freeze the packaging threshold at $90.
    Since publication of the CY 2015 OPPS/ASC proposed rule, consistent 
with our policy of updating the packaging threshold with more recently 
available data for this final rule with comment period, we have again 
followed the CY 2007 methodology for CY 2015 and used updated four 
quarter moving average PPI index levels provided by the CMS Office of 
the Actuary to trend the $50 threshold forward from the third quarter 
of CY 2005 to the third quarter of CY 2015. We then rounded the 
resulting updated dollar amount ($93.48) to the nearest $5 increment, 
which yielded a figure of $95. Therefore, after consideration of the 
public comments we received, and consistent with our methodology for 
establishing the packaging threshold using the most recent PPI forecast 
data, we are adopting a CY 2015 packaging threshold of $95.
    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, biologicals, and therapeutic 
radiopharmaceuticals for the OPPS/ASC final rule with comment period. 
We note that it is also our policy to make an annual packaging 
determination for a HCPCS code only when we develop the OPPS/ASC final 
rule with comment period for the update year. Only HCPCS codes that are 
identified as separately payable in the final rule with comment period 
are subject to quarterly updates. For our calculation of per day costs 
of HCPCS codes for drugs and biologicals in this CY 2015 OPPS/ASC final 
rule with comment period, we used ASP data from the first quarter of CY 
2014, 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, 2014, along with updated hospital claims 
data from CY 2013. We note that we also used these data for budget 
neutrality estimates and impact analyses for this CY 2015 OPPS/ASC 
final rule with comment period.
    Payment rates for HCPCS codes for separately payable drugs and 
biologicals included in Addenda A and B to this final rule with comment 
period are based on ASP data from the second quarter of CY 2014. These 
data are the basis for calculating payment rates for drugs and 
biologicals in the physician's office setting using the ASP 
methodology, effective October 1, 2014. These payment rates will then 
be updated in the January 2015 OPPS update, based on the most recent 
ASP data to be used for physician's office and OPPS payment as of 
January 1, 2015. For items that do not currently have an ASP-based 
payment rate, we recalculated their mean unit cost from all of the CY 
2013 claims data and updated cost report information available for this 
CY 2015 final rule with comment period to determine their final per day 
cost.
    Consequently, the packaging status of some HCPCS codes for drugs, 
biologicals, and therapeutic radiopharmaceuticals in the CY 2015 OPPS/
ASC proposed rule may be different from the same drug HCPCS code's 
packaging status determined based on the data used for this CY 2015 
OPPS/ASC final rule with comment period. Under such circumstances, we 
proposed to continue to follow the established policies initially 
adopted for the CY 2005 OPPS (69 FR 65780) in order to more equitably 
pay for those drugs whose cost fluctuates relative to the proposed CY 
2015 OPPS drug packaging threshold and the drug's payment status 
(packaged or separately payable) in CY 2014. Specifically, for CY 2015, 
consistent with our historical practice, we proposed to apply the 
following policies to these HCPCS codes for drugs, biologicals, and 
therapeutic radiopharmaceuticals whose relationship to the drug 
packaging threshold changes based on the updated drug packaging 
threshold and on the final updated data:
     HCPCS codes for drugs and biologicals that were paid 
separately in CY 2014 and that were proposed for separate payment in CY 
2015, and that then have per day costs equal to or less than the CY 
2015 final rule drug packaging threshold, based on the updated ASPs and 
hospital claims data used for the CY 2015 final rule, would continue to 
receive separate payment in CY 2015.
     HCPCS codes for drugs and biologicals that were packaged 
in CY 2014 and that were proposed for separate payment in CY 2015, and 
that then have per day costs equal to or less than the CY 2015 final 
rule drug packaging threshold, based on the updated ASPs and hospital 
claims data used for the CY 2015 final rule, would remain packaged in 
CY 2015.
     HCPCS codes for drugs and biologicals for which we 
proposed packaged payment in CY 2015 but then have per day costs 
greater than the CY 2015 final rule drug packaging threshold, based on 
the updated ASPs and hospital claims data used for the CY 2015 final 
rule, would receive separate payment in CY 2015.
    We did not receive any public comments on our proposal to apply the 
established policies initially adopted for the CY 2005 OPPS (69 FR 
65780) in order to more equitably pay for those drugs whose cost 
fluctuates relative to the CY 2015 OPPS drug packaging threshold and 
the drug's payment status (packaged or separately payable) in CY 2013. 
Therefore, we are finalizing our proposal, without modification, for CY 
2015.
c. High Cost/Low Cost Threshold for Packaged Skin Substitutes
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 
74938), we unconditionally packaged skin substitute products into their 
associated surgical procedures as part of a broader policy to package 
all drugs and biologicals that function as supplies when used in a 
surgical procedure. The adoption of this policy, to package all drugs 
and biologicals that function as supplies when used in a surgical 
procedure, followed these packaging policies: (1) Packaging of medical 
and surgical supplies into the related procedure under 42 CFR 
419.2(b)(4) (68 FR 18543); (2) packaging of implantable devices (68 FR 
18444); and (3) packaging of implantable biologicals (73 FR 68634). As 
noted in the CY 2014 OPPS/ASC final rule with comment period, we 
believe these policies represented an example of a broader category of 
drugs and biologicals that should be packaged in the OPPS, that is, 
drugs and biologicals that function as supplies in a surgical procedure 
(78 FR 74930). As part of the policy to finalize the packaging of skin 
substitutes, we also finalized a methodology that divides the skin 
substitutes into a high cost group and a low cost group, in order to 
ensure adequate resource homogeneity among APC assignments

[[Page 66883]]

for the skin substitute application procedures (78 FR 74933). For the 
CY 2014 update, assignment to the high cost or low cost skin substitute 
group depended upon a comparison of the July 2013 ASP+6 percent payment 
amount for each skin substitute to the weighted average payment per 
unit for all skin substitutes. The weighted average was calculated 
using the skin substitute utilization from the CY 2012 claims data and 
the July 2013 ASP+6 percent payment amounts. The high cost/low cost 
skin substitute threshold for CY 2014 is $32 per cm\2\. Skin 
substitutes that had a July 2013 ASP+6 percent amount above $32 per 
cm\2\ were classified in the high cost group, and skin substitutes that 
had a July 2013 ASP+6 percent amount at or below $32 per cm\2\ were 
classified in the low cost group. Any new skin substitutes without 
pricing information are assigned to the low cost category until pricing 
information is available to compare to the $32 per cm\2\ threshold for 
CY 2014. Skin substitutes with pass-through payment status are assigned 
to the high cost category, with an offset applied as described in 
section V.A.4.d. of the CY 2015 OPPS/ASC proposed rule (79 FR 40996).
    As discussed in the CY 2015 OPPS/ASC proposed rule (79 FR 40998 
through 40999), after the effective date of the CY 2014 packaging 
policy, some skin substitute manufacturers brought the following issues 
to our attention regarding the CY 2014 methodology for determining the 
high cost/low cost threshold:
     Using ASP to determine a product's placement in the high 
or low cost category may unfairly disadvantage the limited number of 
skin substitute products that are sold in large sizes (that is, above 
150 cm\2\). Large size skin substitute products are primarily used for 
burns that are treated on an inpatient basis. These manufacturers 
contend that nonlinear pricing for skin substitute products sold in 
both large and small sizes results in lower per cm\2\ prices for large 
sizes. Therefore, the use of ASP data to categorize products into high 
and low cost categories can result in placement of products that have 
significant inpatient use of the large, lower-priced (per cm\2\) sizes 
into the low cost category, even though these large size products are 
not often used in the hospital outpatient department.
     Using a weighted average ASP to establish the high/low 
cost categories, combined with the drug pass-through policy, will lead 
to unstable high/low cost skin substitute categories in the future. 
According to one manufacturer, under our CY 2014 policy, manufacturers 
with products on pass-through payment status have an incentive to set a 
very high price because hospitals are price-insensitive to products 
paid with pass-through payments. As these new high priced pass-through 
skin substitutes capture more market share, the weighted average ASP 
high cost/low cost threshold could escalate rapidly, resulting in a 
shift in the assignment of many skin substitutes from the high cost 
category to the low cost category.
    As stated in the CY 2015 OPPS/ASC proposed rule (79 FR 40998), we 
agree with stakeholder concerns regarding the potential instability of 
the high/low cost categories associated with the drug pass-through 
policy, as well as stakeholder concerns about the inclusion of large-
sized products that are primarily used for inpatients in the ASP 
calculation, when ASP is used to establish the high cost/low cost 
categories. As an alternative to using ASP data, we believe that 
establishing the high cost/low cost threshold using an alternative 
methodology (that is, the weighted average mean unit cost (MUC) for all 
skin substitute products from claims data) may provide more stable 
high/low cost categories and will resolve the issue associated with 
large sized products because the MUC will be derived from hospital 
outpatient claims only. The threshold would be based on costs from 
hospital outpatient claims data instead of manufacturer reported sales 
prices that would not include larger sizes primarily used for inpatient 
burn cases.
    Therefore, in the CY 2015 OPPS/ASC proposed rule (79 FR 40999), we 
proposed to maintain the high cost/low cost APC structure for skin 
substitute procedures in CY 2015. However, we proposed to revise the 
current methodology used to establish the high cost/low cost threshold, 
and to establish the high cost/low cost threshold based on the weighted 
average MUC for all skin substitutes using CY 2013 claims (which was 
proposed to be $27 per cm\2\). Skin substitutes with an MUC above $27 
per cm\2\ using CY 2013 claims were proposed to be classified in the 
high cost group and those with an MUC at or below $27 per cm\2\ were 
proposed to be classified in the low cost group. Table 39 of the CY 
2015 OPPS/ASC proposed rule (79 FR 40999) showed the CY 2014 high cost/
low cost status for each skin substitute product and the proposed CY 
2015 high cost/low cost status based on the weighted average MUC 
threshold of $27. We proposed to continue the CY 2014 policy that skin 
substitutes with pass-through payment status would be assigned to the 
high cost category for CY 2015. Skin substitutes with pricing 
information but without claims data to calculate an MUC would be 
assigned to either the high or low cost category based on the product's 
ASP+6 percent payment rate. If ASP is not available we would use WAC+6 
percent or 95 percent of AWP to assign a product to either the high 
cost or low cost category. We also proposed that any new skin 
substitute without pricing information be assigned to the low cost 
category until pricing information is available to compare to the CY 
2015 threshold.
    Comment: Several commenters supported CMS' proposal to revise the 
methodology used to establish the high cost/low cost threshold from an 
ASP-based methodology to a methodology based on the weighted average 
MUC for all skin substitutes using CY 2013 claims data. The commenters 
agreed that the MUC methodology would promote stability of assignments 
to the high and low cost categories and not disadvantage certain skin 
substitutes that are sold in especially large sizes.
    Response: We appreciate the commenters' support.
    Comment: Other commenters requested that CMS retain the ASP-based 
methodology for calculating the high cost/low cost threshold because, 
in their opinion, the ASP is a better metric for skin substitute costs 
than hospital outpatient claims data.
    Response: We disagree with the assertion that ASP better represents 
the hospital costs for skin substitutes than hospital claims data. ASP 
is a blend of sales prices from a variety of purchasers, including 
various nonhospital entities. ASP also excludes a significant number of 
hospital sales, for example sales to 340B hospitals. Hospital claims 
data are specific to hospitals, and are used in assessing the costs of 
almost all other items and services in the OPPS, including other 
similar surgical supplies, such as implantable devices and implantable 
biologicals, which we package for payment purposes in the OPPS. 
Furthermore, as stated in the CY 2015 OPPS/ASC proposed rule (79 FR 
40998), we believe that using MUC will better promote stability versus 
ASP for high and low cost category assignments for skin substitutes, 
because ASP can be set very high by skin substitute manufacturers and 
disproportionally impact the threshold calculation.
    Comment: Two commenters recommended an alternative high cost/low 
cost threshold calculation methodology. Instead of basing the threshold 
on the unit cost the commenters urged CMS to calculate the high cost/
low cost threshold based on the total skin substitute costs per

[[Page 66884]]

patient, per day, which is currently the mechanism used to set the 
general OPPS drug, biological, and radiopharmaceutical packaging 
threshold, which was proposed as $90 for CY 2015. These commenters 
believed that calculating the threshold cost per cm\2\ does not 
accurately reflect the true cost of products as they are used 
clinically, and could result in displacing larger single-size skin 
substitutes approved through a Premarket Approval (PMA) into the low-
cost skin substitute group beginning in CY 2016. They believed that 
this is partly a consequence of CMS' broad categorization of products 
as skin substitutes that, according to the commenters, includes 510(k)-
cleared wound dressings and human cell, tissue, and cellular and 
tissue-based products (HCT/Ps) under section 361 of the Public Health 
Service Act (PHSA) (for example, cadaver skin or placental tissue). 
According to these commenters, manufacturers of products regulated 
through these processes can market different sizes of their skin 
substitutes with greater ease than can manufacturers of skin 
substitutes approved through a PMA, who must reapply for an updated 
label through the FDA to change or add a different product size. The 
commenters are concerned that a unit cost threshold may result in large 
products with lower per cm\2\ costs, but with higher total costs per 
case, being assigned to the low cost category in the future. One of 
these commenters, although generally supportive of the change from an 
ASP-based methodology to an MUC-based methodology, also submitted a 
hypothetical predictive model comparing per unit high cost/low cost 
calculations with per day threshold calculations for the various skin 
substitutes and requested that CMS adopt a per day high cost/low cost 
calculation methodology beginning in CY 2016 to prevent their skin 
substitutes from moving from the high cost to the low cost group in CY 
2016.
    Response: As we explained in the CY 2014 OPPS/ASC final rule with 
comment period, the FDA treatment of the various skin substitutes does 
not affect how skin substitutes are treated under our policy of 
packaging drugs and biologicals that function as supplies in a surgical 
procedure (78 FR 74932 through 74933). The 61 skin substitutes listed 
in Table 34 below are available in many different sizes. Product 
sizing, product packaging, quantity per package, and other such 
individual product attributes are manufacturer business decisions that 
do not concern the agency. We also believe that the commenters' analogy 
between the general drug, biological, and radiopharmaceutical packaging 
threshold and the high cost/low cost skin substitute threshold is 
imperfect. Per day costs are used for the general drug, biological, and 
radiopharmaceutical packaging threshold because this threshold applies 
to the entire spectrum of drugs, biologicals, and radiopharmaceuticals, 
which have a wide variety of dosing units and dose descriptors, among 
others, such that per unit comparisons are not possible and therefore a 
total per day dollar amount is calculated. On the contrary, skin 
substitutes divided into the high and low cost categories are all dosed 
per cm\2\, which is also the standard measurement for sizing wounds. 
Therefore, notwithstanding the various sizes of the 61 skin substitutes 
listed in Table 34, meaningful unit cost comparisons can be made for 
skin substitutes. As discussed earlier, we believe that the MUC 
methodology will help mitigate or eliminate the effect of high skin 
substitute ASPs on the high cost/low cost threshold. However, using a 
per day cost methodology as suggested by the commenters could adversely 
affect the majority of products that are tailored to the wound size. We 
will evaluate the per day cost methodology and compare it to the MUC 
methodology next year once CY 2014 claims data are available.
    After consideration of the public comments we received, we are 
finalizing our proposal to maintain the high cost/low cost APC 
structure for skin substitute procedures in CY 2015, and our proposal 
to revise the current methodology used to establish the high/low cost 
threshold with the alternative MUC methodology. We also are finalizing 
for CY 2015 the policy that skin substitutes with pass-through payment 
status would be assigned to the high cost category. Skin substitutes 
with pricing information but without claims data to calculate an MUC 
will be assigned to either the high cost or low cost category based on 
the product's ASP+6 percent payment rate. If ASP is not available, we 
will use WAC+6 percent or 95 percent of AWP to assign a product to 
either the high cost or low cost category. We also are finalizing our 
proposal that any new skin substitutes without pricing information will 
be assigned to the low cost category until pricing information is 
available to compare to the CY 2015 threshold. New skin substitute 
manufacturers must submit pricing information to CMS no later than the 
15th of the third month prior to the effective date of the next OPPS 
quarterly update. For example, for a new skin substitute with new 
pricing information to be included in the July 1 OPPS update and 
designated as included in the high cost group, verifiable pricing 
information must be provided to CMS no later than April 15. Table 34 
below shows the CY 2014 high cost/low cost status for each skin 
substitute product and the final CY 2015 high cost/low cost status 
based on the weighted average MUC threshold of $25, which decreased 
slightly from the proposed $27 threshold due to updated final rule 
claims data. Skin substitutes with an MUC above $25 are assigned to the 
high cost group for CY 2015. For 2014 there are 16 high cost skin 
substitutes and 27 low cost skin substitutes. For CY 2015, there are 62 
skin substitute codes, which represent the following products: 30 high 
cost skin substitutes; 24 low cost skin substitutes; 7 powdered, 
liquid, or micronized skin substitutes; and 1 miscellaneous skin 
substitute code.

                     Table 34--Skin Substitute Assignments to High Cost and Low Cost Groups
----------------------------------------------------------------------------------------------------------------
                                                                                   CY 2014 High/   CY 2015 High/
                                      CY 2015 Short        HCPCS Code    CY 2015    low status      low status
       CY 2015 HCPCS Code               descriptor           dosage        SI        based on        based on
                                                                                   weighted ASP    weighted MUC
----------------------------------------------------------------------------------------------------------------
C9358..........................  SurgiMend, fetal.......  0.5 cm\2\...  N         Low...........  Low.
C9360..........................  SurgiMend, neonatal....  0.5 cm\2\...  N         Low...........  Low.
C9363..........................  Integra Meshed Bil       1 cm\2\.....  N         Low...........  High.
                                  Wound Mat.
Q4100..........................  Skin substitute, NOS...  N/A.........  N         Low...........  Low.
Q4101..........................  Apligraf...............  1 cm\2\.....  N         High..........  High.

[[Page 66885]]

 
Q4102..........................  Oasis wound matrix.....  1 cm\2\.....  N         Low...........  Low.
Q4103..........................  Oasis burn matrix......  1 cm\2\.....  N         Low...........  Low.
Q4104..........................  Integra BMWD...........  1 cm\2\.....  N         Low...........  High.
Q4105..........................  Integra DRT............  1 cm\2\.....  N         Low...........  High.
Q4106..........................  Dermagraft.............  1 cm\2\.....  N         High..........  High.
Q4107..........................  Graftjacket............  1 cm\2\.....  N         High..........  High.
Q4108..........................  Integra Matrix.........  1 cm\2\.....  N         Low...........  High.
Q4110..........................  Primatrix..............  1 cm\2\.....  N         High..........  High.
Q4111..........................  Gammagraft.............  1 cm\2\.....  N         Low...........  Low.
Q4112..........................  Cymetra injectable.....  1 cc........  N         N/A...........  N/A.
Q4113..........................  GraftJacket Xpress.....  1 cc........  N         N/A...........  N/A.
Q4114..........................  Integra Flowable Wound   1 cc........  N         N/A...........  N/A.
                                  Matrix.
Q4115..........................  Alloskin...............  1 cm\2\.....  N         Low...........  Low.
Q4116..........................  Alloderm...............  1 cm\2\.....  N         High..........  High.
Q4117..........................  Hyalomatrix............  1 cm\2\.....  N         Low...........  Low.
Q4118..........................  Matristem Micromatrix..  1 mg........  N         N/A...........  N/A.
Q4119..........................  Matristem Wound Matrix.  1 cm\2\.....  N         Low...........  Low.
Q4120..........................  Matristem Burn Matrix..  1 cm\2\.....  N         Low...........  Low.
Q4121..........................  Theraskin..............  1 cm\2\.....  G         High..........  High.
Q4122..........................  Dermacell..............  1 cm\2\.....  G         High..........  High.
Q4123..........................  Alloskin...............  1 cm\2\.....  N         Low...........  High.
Q4124..........................  Oasis Tri-layer Wound    1 cm\2\.....  N         Low...........  Low.
                                  Matrix.
Q4125..........................  Arthroflex.............  1 cm\2\.....  N         High..........  High.
Q4126..........................  Memoderm/derma/tranz/    1 cm\2\.....  N         High..........  High.
                                  integup.
Q4127..........................  Talymed................  1 cm\2\.....  G         High..........  High.
Q4128..........................  Flexhd/Allopatchhd/      1 cm\2\.....  N         Low...........  High.
                                  matrixhd.
Q4129..........................  Unite Biomatrix........  1 cm\2\.....  N         Low...........  High.
Q4131..........................  Epifix.................  1 cm\2\.....  N         High..........  High.
Q4132..........................  Grafix core............  1 cm\2\.....  N         High..........  High.
Q4133..........................  Grafix prime...........  1 cm\2\.....  N         High..........  High.
Q4134..........................  HMatrix................  1 cm\2\.....  N         High..........  High.
Q4135..........................  Mediskin...............  1 cm\2\.....  N         Low...........  Low.
Q4136..........................  EZderm.................  1 cm\2\.....  N         Low...........  Low.
Q4137..........................  Amnioexcel or            1 cm\2\.....  N         Low...........  High.
                                  Biodexcel, 1cm.
Q4138..........................  BioDfence DryFlex, 1cm.  1 cm\2\.....  N         Low...........  High.
Q4139..........................  Amniomatrix or           1 cc........  N         N/A...........  N/A.
                                  Biodmatrix, 1cc.
Q4140..........................  Biodfence 1cm..........  1 cm\2\.....  N         Low...........  High.
Q4141..........................  Alloskin ac, 1 cm......  1 cm\2\.....  N         Low...........  Low.
Q4142..........................  Xcm biologic tiss        1 cm\2\.....  N         Low...........  Low.
                                  matrix 1cm.
Q4143..........................  Repriza, 1cm...........  1 cm\2\.....  N         Low...........  Low.
Q4145..........................  Epifix, 1mg............  1 mg........  N         N/A...........  N/A.
Q4146..........................  Tensix, 1cm............  1 cm\2\.....  N         Low...........  Low.
Q4147..........................  Architect ecm px fx 1    1 cm\2\.....  N         High..........  High.
                                  sq cm.
Q4148..........................  Neox 1k, 1cm...........  1 cm\2\.....  N         High..........  High.
Q4149..........................  Excellagen, 0.1 cc.....  0.1 cc......  N         N/A...........  N/A.
Q4150..........................  Allowrap DS or Dry 1 sq  1 cm\2\.....  N         N/A...........  Low.
                                  cm.
Q4151..........................  AmnioBand, Guardian 1    1 cm\2\.....  N         N/A...........  Low.
                                  sq cm.
Q4152..........................  Dermapure 1 square cm..  1 cm\2\.....  N         N/A...........  Low.
Q4153..........................  Dermavest 1 square cm..  1 cm\2\.....  N         N/A...........  Low.
Q4154..........................  Biovance 1 square cm...  1 cm\2\.....  N         N/A...........  High.
Q4155..........................  NeoxFlo or ClarixFlo 1   1 mg........  N         N/A...........  N/A.
                                  mg.
Q4156..........................  Neox 100 1 square cm...  1 cm\2\.....  N         N/A...........  High.
Q4157..........................  Revitalon 1 square cm..  1 cm\2\.....  N         N/A...........  Low.
Q4158..........................  MariGen 1 square cm....  1 cm\2\.....  N         N/A...........  Low.
Q4159..........................  Affinity 1 square cm...  1 cm\2\.....  N         N/A...........  Low.
Q4160..........................  NuShield 1 square cm...  1 cm\2\.....  N         N/A...........  High.
C9349..........................  Fortaderm, fortaderm     1 cm\2\.....  G         N/A...........  High.
                                  antimic.
----------------------------------------------------------------------------------------------------------------

d. Pass-Through Evaluation Process for Skin Substitutes
    At the beginning of the OPPS, skin substitutes were originally 
evaluated for pass-through status using the medical device pass-through 
process (65 FR 67839). Since mid-2001, skin substitutes have been 
evaluated for pass-through payment status through the drug, biological, 
and radiopharmaceutical pass-through payment process. In 2001, there 
were two distinct HCPCS codes describing skin substitutes. For the CY 
2015 update, there are 61 distinct HCPCS codes describing skin 
substitutes (not including the not otherwise classified HCPCS code, 
Q4100), and of these 61 products, 18

[[Page 66886]]

products that are listed in Table 35 below have had, currently have, or 
will have pass-through payment status.

       Table 35--Skin Substitutes That Have Had, Currently Have, or Will Have Pass-Through Payment Status
----------------------------------------------------------------------------------------------------------------
                                                                                                   Pass-through
         CY 2015 HCPCS code                            CY 2015 short descriptor                  expiration date
----------------------------------------------------------------------------------------------------------------
C9358...............................  SurgiMend, fetal.........................................      12/31/2010
C9360...............................  SurgiMend, neonatal......................................      12/31/2011
C9363...............................  Integra Meshed Bil Wound Mat.............................      12/31/2011
C9349...............................  FortaDerm, FortaDerm Antimic.............................      12/31/2017
Q4101...............................  Apligraf.................................................      12/31/2002
Q4104...............................  Integra BMWD.............................................      12/31/2006
Q4105...............................  Integra DRT..............................................      12/31/2006
Q4106...............................  Dermagraft...............................................      03/31/2005
Q4107...............................  Graftjacket..............................................      12/31/2006
Q4108...............................  Integra matrix...........................................      12/31/2010
Q4110...............................  Primatrix................................................      12/31/2008
Q4121...............................  Theraskin................................................      12/31/2016
Q4122...............................  Dermacell................................................      12/31/2015
Q4124...............................  Oasis tri-layer wound matrix.............................      12/31/2013
Q4127...............................  Talymed..................................................      12/31/2015
Q4131...............................  Epifix...................................................      12/31/2014
Q4132...............................  Grafix core..............................................      12/31/2014
Q4133...............................  Grafix prime.............................................      12/31/2014
----------------------------------------------------------------------------------------------------------------

    As discussed earlier, and as we stated in the CY 2015 OPPS/ASC 
proposed rule (79 FR 40999 through 41001) and in the CY 2014 OPPS/ASC 
final rule with comment period (78 FR 74938), we packaged all skin 
substitutes not on pass-through payment status under the policy that 
packages all drugs and biologicals that function as supplies when used 
in a surgical procedure (78 FR 74938), because we consider skin 
substitutes to be a type of surgical supply in the HOPD. The adoption 
of the policy to package all drugs and biologicals that function as 
supplies when used in a surgical procedure, followed the packaging 
policies for implantable biologicals, implantable devices, and more 
broadly, the policy to package medical and surgical supplies into the 
related procedure under 42 CFR 419.2(b)(4). Further, as noted in the CY 
2014 OPPS/ASC final rule with comment period, we believe these policies 
represented an example of a broader category of drugs and biologicals 
that should be packaged in the OPPS, that is, drugs and biologicals 
that function as supplies in a surgical procedure (78 FR 74930).
    Separately, in the CY 2010 OPPS/ASC final rule with comment period, 
we finalized a policy to evaluate implantable biologicals that are 
surgically inserted or implanted (through a surgical incision or a 
natural orifice) for pass-through payment through the medical device 
pass-through evaluation process, because implantable biologicals 
function as implantable devices (74 FR 60473), which have historically 
been considered supplies in the OPPS (65 FR 18443), and have been 
evaluated for pass-through payment through the medical device pass-
through evaluation process since CY 2010. As noted earlier, the 
finalized packaging policy in the CY 2014 OPPS/ASC final rule with 
comment period to package all drugs and biologicals that function as 
supplies when used in a surgical procedure included skin substitutes as 
a type of surgical supply, and, notably, the similarities between 
implantable biologicals and skin substitutes were a key factor in 
packaging (like we did beginning in 2009 with implantable biologicals) 
skin substitutes into the associated surgical procedure (78 FR 74932). 
We also note that many skin substitutes are FDA-approved or cleared as 
devices, even though skin substitutes have traditionally been treated 
as biologicals under the OPPS. The similarities between these classes 
of products (implantable devices, implantable biologicals, and skin 
substitutes) informed our proposal to similarly treat applications for 
pass-through payment for skin substitutes using the OPPS device pass-
through process, described below.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41000), we proposed 
that applications for pass-through payment for skin substitutes be 
evaluated using the medical device pass-through process and payment 
methodology. As a result of this proposal, we proposed that the last 
skin substitute pass-through applications evaluated using the drug and 
biological pass-through payment evaluation process would be those with 
an application deadline of the first business date in September 2014, 
and an effective date of January 1, 2015. In light of this proposal, we 
would change the December 1, 2014 pass-through payment application 
deadline (for an effective date of April 1, 2015) for both drugs and 
biologicals and devices to January 15, 2015, in order to provide 
sufficient time for applicants to adjust to the new policies and 
procedures in effect as of January 1, 2015. Any applications submitted 
after the first business date in September 2014, through January 15, 
2015, would be evaluated for the April 1, 2015 cycle. We believe that 
requiring skin substitutes seeking pass-through payment to use the OPPS 
device pass-through evaluation process is more appropriate because, 
although skin substitutes have characteristics of both surgical 
supplies and biologicals, we believe skin substitutes are best 
characterized as surgical supplies or devices because of their required 
surgical application and because they share significant clinical 
similarity with other surgical devices and supplies, including 
implantable biologicals. Therefore, we stated in the proposed rule that 
if this proposal is finalized, beginning with applications seeking 
pass-through payment effective April 1, 2014, new skin substitutes 
would no longer be eligible to submit biological pass-through 
applications; rather, such applications for pass-through payment would 
be evaluated using the medical device pass-through payment evaluation 
process, for which payment is based on charges reduced to cost from 
claims. We

[[Page 66887]]

refer readers to the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/ to view the 
device pass-through payment application requirements and review 
criteria that would apply to the evaluation of all skin substitute 
product applications for pass-through payment status beginning on or 
after January 1, 2015. Those skin substitutes that are approved for 
pass-through payment status as biologicals effective on or before 
January 1, 2015, would continue to be paid as pass-through biologicals 
for the duration of their period of pass-through payment.
    We also proposed to revise our regulations at Sec. Sec.  419.64 and 
419.66 to reflect this proposed new policy. Specifically, we proposed 
to revise Sec.  419.64 by deleting the existing paragraph (a)(4)(iv) 
text because it is currently outdated and adding new text at paragraph 
(a)(4)(iv) to exclude skin substitutes from consideration for drug and 
biological pass-through payment. We proposed to modify the regulation 
at Sec.  419.66(b)(3) to add that a pass-through device may be applied 
in or on a wound or other skin lesion, and we proposed to simplify the 
language that ``whether or not it remains with the patient when the 
patient is released from the hospital'' to read ``either permanently or 
temporarily.'' We also proposed to delete the current example in Sec.  
419.66(b)(4)(iii) of the regulations regarding the exclusion of 
materials, for example, biological or synthetic materials, that may be 
used to replace human skin from device pass-through payment 
eligibility. We invited public comment on these proposals.
    Comment: Several commenters supported CMS' proposal to evaluate 
skin substitute pass-through applications through the medical device 
pass-through process and pay for pass-through skin substitutes 
according to the medical device pass-through payment methodology 
beginning January 1, 2015. The commenters believed that this policy 
change will limit instability in the high cost/low cost groups from 
pass-through skin substitutes with very high ASPs. The commenter stated 
that instability could occur because manufacturers set ASP and 
hospitals are relatively insensitive to price for separately paid pass-
through skin substitutes. Therefore, the commenter added, a new high 
priced pass-through skin substitute could gain significant sales and 
move the high cost/low cost threshold significantly higher from year to 
year.
    Response: We agree with the commenters and appreciate their 
support.
    Comment: Several commenters opposed CMS' proposal to evaluate skin 
substitute pass-through applications through the medical device pass-
through process. Some of these commenters argued that CMS lacks the 
authority to change the process for evaluating skin substitute pass-
through applications. The commenters also believed that biologicals 
approved by the FDA under section 351 of the PHSA (those approved by 
the FDA under biologics license applications (BLAs)) cannot be treated 
as devices for pass-through payment evaluation purposes according to 
the Social Security Act and Congressional intent. The commenters also 
claimed that changing the pass-through payment process for skin 
substitutes will stifle innovation of new wound care products.
    Response: We disagree with the commenters' assertion that the 
agency lacks the authority to change the process for evaluating skin 
substitutes for pass-through and that biologicals approved by the FDA 
under section 351 of the PHSA (BLA process) cannot be treated as 
devices for pass-through payment evaluation purposes according to the 
Social Security Act and Congressional intent. As we stated in the 2010 
OPPS final rule in response to a similar comment on the proposal to 
change the pass-through evaluation process for implantable biologicals: 
``We do not agree with the commenters who asserted that Congress 
intended biologicals approved under BLAs to be paid under the specific 
OPPS statutory provisions that apply to SCODs, including the pass-
through provisions'' (74 FR 60476). Similarly, Congress did not specify 
that we must pay for skin substitutes as separately payable biologicals 
rather than devices or supplies, if they also meet our criteria for 
payment as a device. We believe that skin substitutes can satisfy the 
definitions applied under the OPPS of a device or supply and a 
biological and that, for OPPS payment purposes, it is appropriate for 
us to consider skin substitutes as devices or supplies under both pass-
through and nonpass-through payment policies, and not as separately 
payable biologicals. For example, beginning in CY 2014, we package the 
costs of skin substitutes into the costs of the surgical procedures in 
which they are used, as we do for implantable biologicals and other 
implantable devices. Therefore, we do not believe that we must pay for 
skin substitutes under our OPPS payment methodologies for separately 
payable biologicals, rather than our device payment methodologies.
    In addition, for the skin substitute packaging policy, in the CY 
2014 OPPS/ASC final rule with comment period (78 FR 74933), we stated 
the following: ``We do not believe that the FDA approval process should 
exempt products from this packaging proposal or factor into the level 
of Medicare payment.'' Similarly, regarding our proposal to change the 
pass-through payment evaluation process and payment methodology for 
skin substitutes from the drug and biological process to the device 
process, we also believe that any particular FDA approval process 
should not exempt such products that appropriately fall under the 
category of skin substitutes under the OPPS from the application of 
this pass-through payment proposal or direct which pass-through payment 
evaluation process must be used.
    Notably, none of the current 61 skin substitute products described 
by distinct HCPCS codes and listed in Table 35 above have been approved 
by FDA under section 351 of the PHSA. This fact is somewhat 
counterintuitive, as biologics or biologicals or biological products 
are most commonly understood to be products approved by the FDA under 
section 351 of the PHSA. Current skin substitute products' FDA 
classifications include a variety of Class III medical devices, Class 
II medical devices, and HCT/Ps under section 361 of the PHSA, which are 
tissue bank materials not subject to FDA approval requirements. We also 
note that whether a future wound healing product is described by the 
OPPS packaged category of products described in 42 CFR 419.2(b)(16) as 
``skin substitutes and similar products that aid wound healing'' will 
depend upon the particular characteristics of the future product. We do 
not intend for the category of products described as ``skin substitutes 
and similar products that aid wound healing'' to necessarily include 
all products with a wound healing indication. However, if a new wound 
healing product, regardless of FDA approval or clearance type, fits 
with the ``skin substitutes and similar products that aid wound 
healing'' category of products, all of the applicable OPPS policies 
that apply to ``skin substitutes and similar products that aid wound 
healing'' would also apply to the new wound healing product.
    Finally, we do not believe that this policy will stifle innovation 
of new skin substitutes, as new skin substitutes that can demonstrate a 
substantial clinical improvement over current wound treatments could 
receive pass-through

[[Page 66888]]

status as a device. In addition, there are currently 61 distinct HCPCS 
codes for various skin substitutes. Of these 61 products, only 18 (30 
percent) have had, currently have, or will have pass-through payment 
status granted through the drug and biological pass-through payment 
process. Therefore, pass-through payment does not appear to be 
necessary for the commercialization of these products, which have (in 
terms of distinct HCPCS codes describing them) expanded significantly 
from 2 skin substitutes in CY 2001 to 61 skin substitutes in CY 2015. 
Furthermore, we have not restricted access to the high cost skin 
substitute group, and we have only required manufacturers of new skin 
substitutes to submit pricing information for assignment to the high 
cost group of skin substitutes. For these reasons, we do not believe 
that any CMS OPPS payment policies will stifle innovation or impede the 
development of new skin substitutes.
    Comment: One commenter was concerned that the substantial clinical 
improvement criterion for medical device pass-through places an unduly 
high burden on new skin substitute products. The commenter believed 
that this requirement is ``incompatible with skin substitute products, 
which are not required to submit efficacy data to the Food and Drug 
Administration.'' This commenter also disagreed with CMS' proposal to 
not accept any skin substitute applications though the drug and 
biological pass-through payment process after September 1, 2014, and to 
move the final pass-through payment deadline for drug and biologicals 
and devices from December 1, 2014, to January 15, 2015. The commenter 
requested that additional guidance on substantial clinical improvement 
be provided specifically for application to skin substitute products, 
beyond that described in the November 2, 2001, interim final rule with 
comment period entitled ``Medicare Program--Prospective Payment System 
for Hospital Outpatient Services: Criteria for Establishing Additional 
Pass-Through Categories for Medical Devices'' (66 FR 55850).
    Response: The comment that FDA does not require submission of 
efficacy data for skin substitute products is overly simplified. The 
different skin substitute products that have been identified in Table 
35 above are subject to different FDA regulatory requirements (that is, 
based on review by CBER versus CDRH, regulatory classification and 
claims).
    FDA/CDRH draws a distinction between wound dressing devices 
intended only to serve as a wound covering versus products intended to 
promote wound healing. Those devices that are intended to promote wound 
healing are subject to Premarket Approval (PMA) and require clinical 
data to support safety and effectiveness of the device. Those devices 
that are intended to serve as a wound covering are subject to Premarket 
Notification (510(k)) and require demonstration of substantial 
equivalence (that is, the device demonstrates that it is as safe and 
effective as a legally marketed predicate device). Generally, 
substantial equivalence in safety and effectiveness is demonstrated 
through comparative bench and animal studies and leveraged with 
historical clinical effectiveness data for similar devices. The 
weakness of the evidence for many skin substitute products has been 
documented in two recent technology assessments by the Agency for 
Healthcare Research and Quality. However, different pre-market data 
requirements for skin substitute products regulated by FDA should not 
excuse these products from the substantial clinical improvement pass-
through criterion for device pass-through payment. Pass-through payment 
status is not intended to be granted to every new product, but only to 
those that satisfy the pass-through payment requirements. As stated in 
the CY 2001 OPPS interim final rule: ``We believe it is important for 
hospitals to receive pass-through payments for devices that offer 
substantial clinical improvement in the treatment of Medicare 
beneficiaries to facilitate access by beneficiaries to the advantages 
of the new technology. Conversely, the need for additional payments for 
devices that offer little or no clinical improvement over a previously 
existing device is less apparent'' (66 FR 55852).
    Regarding the requirements for satisfying the substantial clinical 
improvement criterion, we believe that the list on page 55852 of the CY 
2001 OPPS interim final rule suffices. For example, among the items 
listed is: ``More rapid beneficial resolution of the disease process 
treated because of the use of the device.'' If a new skin substitute 
demonstrated improved wound healing compared to existing wound 
treatments, it could potentially qualify for pass-through as a medical 
device, assuming that the skin substitute is not described by an 
expired pass-through payment device category.
    Finally, we believe that sufficient notice was provided of this 
policy change in the CY 2015 OPPS/ASC proposed rule, and that accepting 
drug and biological applications through the first business date of 
September 2014 deadline for a January 1, 2015 pass-through payment 
effective date is a fair application of a policy that takes effect on 
January 1, 2015. The regular December 1, 2014 application deadline, 
which is being extended to January 15, 2015 for this cycle, was for 
pass-through payment applications with an earliest effective date of 
April 1, 2015, which is well past the effective date of this new 
policy.
    After consideration of the public comments we received, we are 
finalizing our proposal for applications seeking pass-through payment 
for skin substitute and similar wound healing products effective 
beginning April 1, 2015, to apply using the medical device pass-through 
evaluation process.
e. 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. 
During CYs 2008 and 2009, we applied a policy that assigned the status 
indicator of the previously recognized HCPCS code to the associated 
newly recognized code(s), reflecting the packaged or separately payable 
status of the new code(s).
    In the CY 2010 OPPS/ASC final rule with comment period (74 FR 60490 
through 60491), we finalized a policy to make a single packaging 
determination for a drug, rather than an individual HCPCS code, when a 
drug has multiple HCPCS codes describing different dosages because we 
believed that adopting the standard HCPCS code-specific packaging 
determinations for these codes could lead to inappropriate payment 
incentives for hospitals to report certain HCPCS codes instead of 
others. We continue to believe that making packaging determinations on 
a drug-specific basis eliminates payment incentives for hospitals to 
report certain HCPCS codes for drugs and allows hospitals flexibility 
in choosing to report all HCPCS codes for different dosages of the same 
drug or only the lowest dosage HCPCS code. Therefore, in the CY 2015 
OPPS/ASC proposed rule (79 FR 41001), we proposed to continue our 
policy to make packaging determinations on a drug-specific basis, 
rather than a HCPCS code-specific basis, for those HCPCS codes that 
describe the

[[Page 66889]]

same drug or biological but different dosages in CY 2015.
    For CY 2015, 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 2013 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. The following drugs 
did not have pricing information available for the ASP methodology for 
this CY 2015 OPPS/ASC final rule with comment period and, as is our 
current policy for determining the packaging status of other drugs, we 
used the mean unit cost available from the fourth quarter CY 2013 
claims data to make the packaging determinations for these drugs: HCPCS 
code J3471 (Injection, hyaluronidase, ovine, preservative free, per 1 
usp unit (up to 999 usp units)) and HCPCS code J3472 (Injection, 
hyaluronidase, ovine, preservative free, per 1000 usp units).
    For all other drugs and biologicals that have HCPCS codes 
describing different doses, we then multiplied the weighted average 
ASP+6 percent per unit payment amount across all dosage levels of a 
specific drug or biological by the estimated units per day for all 
HCPCS codes that describe each drug or biological from our claims data 
to determine the estimated per day cost of each drug or biological at 
less than or equal to $95 (so that all HCPCS codes for the same drug or 
biological would be packaged) or greater than $95 (so that 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 was displayed in Table 41 of 
the CY 2015 OPPS/ASC proposed rule (79 FR 41001 through 41002).
    We did not receive any public comments on this proposal. Therefore, 
we are finalizing our CY 2015 proposal, without modification, to 
continue 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. Table 36 
below displays the packaging status of each drug and biological HCPCS 
code to which the methodology applies for CY 2015.

      Table 36--HCPCS Codes To Which the CY 2015 Drug-Specific Packaging Determination Methodology Applies
----------------------------------------------------------------------------------------------------------------
         CY 2015 HCPCS code                            CY 2015 long descriptor                      CY 2015 SI
----------------------------------------------------------------------------------------------------------------
C9257...............................  Injection, bevacizumab, 0.25 mg..........................               K
J9035...............................  Injection, bevacizumab, 10 mg............................               K
J1020...............................  Injection, methylprednisolone acetate, 20 mg.............               N
J1030...............................  Injection, methylprednisolone acetate, 40 mg.............               N
J1040...............................  Injection, methylprednisolone acetate, 80 mg.............               N
J1070...............................  Injection, testosterone cypionate, up to 100 mg..........               N
J1080...............................  Injection, testosterone cypionate, 1 cc, 200 mg..........               N
J1440...............................  Injection, filgrastim (g-csf), 300 mcg...................               N
J1441...............................  Injection, filgrastim (g-csf), 480 mcg...................               N
J1460...............................  Injection, gamma globulin, intramuscular, 1 cc...........               N
J1560...............................  Injection, gamma globulin, intramuscular over 10 cc......               N
J1642...............................  Injection, heparin sodium, (heparin lock flush), per 10                 N
                                       units.
J1644...............................  Injection, heparin sodium, per 1000 units................               N
J1850...............................  Injection, kanamycin sulfate, up to 75 mg................               N
J1840...............................  Injection, kanamycin sulfate, up to 500 mg...............               N
J2270...............................  Injection, morphine sulfate, up to 10 mg.................               N
J2271...............................  Injection, morphine sulfate, 100mg.......................               N
J2788...............................  Injection, rho d immune globulin, human, minidose, 50                   N
                                       micrograms (250 i.u.).
J2790...............................  Injection, rho d immune globulin, human, full dose, 300                 N
                                       micrograms (1500 i.u.).
J2920...............................  Injection, methylprednisolone sodium succinate, up to 40                N
                                       mg.
J2930...............................  Injection, methylprednisolone sodium succinate, up to 125               N
                                       mg.
J3120...............................  Injection, testosterone enanthate, up to 100 mg..........               N
J3130...............................  Injection, testosterone enanthate, up to 200 mg..........               N
J3471...............................  Injection, hyaluronidase, ovine, preservative free, per 1               N
                                       usp unit (up to 999 usp units).
J3472...............................  Injection, hyaluronidase, ovine, preservative free, per                 N
                                       1000 usp units.
J7050...............................  Infusion, normal saline solution , 250 cc................               N
J7040...............................  Infusion, normal saline solution, sterile (500 ml = 1                   N
                                       unit).
J7030...............................  Infusion, normal saline solution, 1000 cc................               N
J7515...............................  Cyclosporine, oral, 25 mg................................               N
J7502...............................  Cyclosporine, oral, 100 mg...............................               N
J8520...............................  Capecitabine, oral, 150 mg...............................               K
J8521...............................  Capecitabine, oral, 500 mg...............................               K
J9250...............................  Methotrexate sodium, 5 mg................................               N
J9260...............................  Methotrexate sodium, 50 mg...............................               N
----------------------------------------------------------------------------------------------------------------


[[Page 66890]]

3. Payment for Drugs and Biologicals Without Pass-Through Status That 
Are Not Packaged
a. Payment for Specified Covered Outpatient Drugs (SCODs) and Other 
Separately Payable and Packaged Drugs and Biologicals
    Section 1833(t)(14) of the Act defines certain separately payable 
radiopharmaceuticals, drugs, and biologicals and mandates specific 
payments for these items. Under section 1833(t)(14)(B)(i) of the Act, a 
``specified covered outpatient drug'' (known as a SCOD) is defined as a 
covered outpatient drug, as defined in section 1927(k)(2) of the Act, 
for which a separate APC has been established and that either is a 
radiopharmaceutical agent or 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 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, and later 
periodic surveys conducted by the Secretary as set forth in the 
statute. If hospital acquisition cost data are not available, the law 
requires that payment be equal to payment rates established under the 
methodology described in section 1842(o), section 1847A, or section 
1847B of the Act, as calculated and adjusted by the Secretary as 
necessary. Most physician Part B drugs are paid at ASP+6 percent 
pursuant to section 1842(o) and section 1847A of the Act.
    Section 1833(t)(14)(E)(ii) of the Act provides for an adjustment in 
OPPS payment rates for SCODs to take into account overhead and related 
expenses, such as pharmacy services and handling costs. Section 
1833(t)(14)(E)(i) of the Act required MedPAC to study pharmacy overhead 
and related expenses and to make recommendations to the Secretary 
regarding whether, and if so how, a payment adjustment should be made 
to compensate hospitals for overhead and related expenses. Section 
1833(t)(14)(E)(ii) of the Act authorizes the Secretary to adjust the 
weights for ambulatory procedure classifications for SCODs to take into 
account the findings of the MedPAC study.
    It has been our longstanding policy to apply the same treatment to 
all separately payable drugs and biologicals, which include SCODs, and 
drugs and biologicals that are not SCODs. Therefore, we apply the 
payment methodology in section 1833(t)(14)(A)(iii) of the Act to SCODs, 
as required by statute, but we also apply it to separately payable 
drugs and biologicals that are not SCODs, which is a policy 
determination rather than a statutory requirement. In the CY 2015 OPPS/
ASC proposed rule (79 FR 41002), we proposed to apply section 
1833(t)(14)(A)(iii)(II) of the Act to all separately payable drugs and 
biologicals, including SCODs. Although we do not distinguish SCODs in 
this discussion, we note that we are required to apply section 
1833(t)(14)(A)(iii)(II) of the Act to SCODs, but we also are applying 
this provision to other separately payable drugs and biologicals, 
consistent with our history of using the same payment methodology for 
all separately payable drugs and biologicals.
    Since CY 2006, we have attempted to establish a drug payment 
methodology that reflects hospitals' acquisition costs for drugs and 
biologicals while taking into account relevant pharmacy overhead and 
related handling expenses. We have attempted to collect more data on 
hospital overhead charges for drugs and biologicals by making several 
proposals that would require hospitals to change the way they report 
the cost and charges for drugs. None of these proposals were adopted 
due to significant stakeholder concern, including that hospitals stated 
that it would be administratively burdensome to report hospital 
overhead charges. We established a payment policy for separately 
payable drugs and biologicals, authorized by section 
1833(t)(14)(A)(iii)(I) of the Act, based on an ASP+X amount that is 
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 
through 68643). We referred to this methodology as our standard drug 
payment methodology. Taking into consideration comments made by the 
pharmacy stakeholders and acknowledging the limitations of the reported 
data due to charge compression and hospitals' reporting practices, we 
added an ``overhead adjustment'' in CY 2010 (an internal adjustment of 
the data) by redistributing cost from coded and uncoded packaged drugs 
and biologicals to separately payable drugs in order to provide more 
appropriate payments for drugs and biologicals in the HOPD. We 
continued this methodology, and we further refined it in CY 2012 by 
finalizing a policy to update the redistribution amount for inflation 
and to keep the redistribution ratio constant between the proposed rule 
and the final rule. For a detailed discussion of our OPPS drug payment 
policies from CY 2006 to CY 2012, we refer readers to the CY 2013 OPPS/
ASC final rule with comment period (77 FR 68383 through 68385).
    Because of continuing uncertainty about the full cost of pharmacy 
overhead and acquisition cost, based in large part on the limitations 
of the submitted hospital charge and claims data for drugs, in the CY 
2013 OPPS/ASC final rule with comment period (77 FR 68386), we 
indicated our concern that the continued use of the standard drug 
payment methodology (including the overhead adjustment) still may not 
appropriately account for average acquisition and pharmacy overhead 
cost and, therefore, may result in payment rates that are not as 
predictable, accurate, or appropriate as they could be. Section 
1833(t)(14)(A)(iii)(II) of the Act requires an alternative methodology 
for determining payment rates for SCODS wherein, if hospital 
acquisition cost data are not available, payment shall be equal 
(subject to any adjustment for overhead costs) to payment rates 
established under the methodology described in section 1842(o), 1847A, 
or 1847B of the Act. We refer to this alternative methodology as the 
``statutory default.'' In the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68386), we noted that section 1833(t)(14)(A)(iii)(II) of 
the Act authorizes the Secretary to calculate and adjust, as necessary, 
the average price for a drug in the year established under section 
1842(o), 1847A, or 1847B of the Act, as the case may be, in determining 
payment for SCODs. Pursuant to sections 1842(o) and 1847A of the Act, 
Part B drugs are paid at ASP+6 percent when furnished in physicians' 
offices. We indicated that we believe that establishing the payment 
rates based on

[[Page 66891]]

the statutory default of ASP+6 percent is appropriate as it yields 
increased predictability in payment for separately payable drugs and 
biologicals under the OPPS and, therefore, we finalized our proposal 
for CY 2013 to pay for separately payable drugs and biologicals at 
ASP+6 percent based on section 1833(t)(14)(A)(iii)(II) of the Act (the 
statutory default). We also finalized our proposal that the ASP+6 
percent payment amount for separately payable drugs and biologicals 
requires no further adjustment and represents the combined acquisition 
and pharmacy overhead payment for drugs and biologicals, that payments 
for separately payable drugs and biologicals are included in the budget 
neutrality adjustments under the requirements in section 1833(t)(9)(B) 
of the Act, and that the budget neutral weight scaler is not applied in 
determining payments for these separately paid drugs and biologicals 
for CY 2013 (77 FR 68389).
b. CY 2015 Payment Policy
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41003), we proposed to 
continue our CY 2014 policy and pay for separately payable drugs and 
biologicals at ASP+6 percent pursuant to section 
1833(t)(14)(A)(iii)(II) of the Act (the statutory default). We proposed 
that the ASP+6 percent payment amount for separately payable drugs and 
biologicals requires no further adjustment and represents the combined 
acquisition and pharmacy overhead payment for drugs and biologicals. We 
also proposed that payments for separately payable drugs and 
biologicals are included in the budget neutrality adjustments, under 
the requirements in section 1833(t)(9)(B) of the Act, and that the 
budget neutral weight scaler is not applied in determining payments for 
these separately paid drugs and biologicals.
    Comment: Commenters supported CMS' proposal to pay for separately 
payable drugs and biologicals based on the statutory default rate of 
ASP+6 percent. A few commenters supported CMS' proposal, but 
recommended that CMS examine ways to compensate hospitals for the 
unique, higher overhead and handling costs associated with therapeutic 
radiopharmaceuticals.
    Response: We appreciate the commenters' support of our proposal. We 
continue to believe that ASP+6 percent based on the statutory default 
is appropriate for hospitals for CY 2015 and that this percentage 
amount includes payment for acquisition and overhead cost. We see no 
evidence that an additional overhead adjustment is required for 
separately payable drugs, biologicals, and therapeutic 
radiopharmaceuticals for CY 2015.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to pay for separately 
payable drugs and biologicals at ASP+6 percent based on section 
1833(t)(14)(A)(iii)(II) of the Act (the statutory default). The ASP+6 
percent payment amount for separately payable drugs and biologicals 
requires no further adjustment and represents the combined acquisition 
and pharmacy overhead payment for drugs and biologicals for CY 2015. In 
addition, we are finalizing our proposal which states that payment for 
separately payable drugs and biologicals be included in the budget 
neutrality adjustments, under the requirements of section 1833(t)(9)(B) 
of the Act, and that the budget neutral weight scaler is not applied in 
determining payment of these separately paid drugs and biologicals. We 
note that separately payable drug and biological payment rates listed 
in Addenda A and B to this final rule with comment period (available 
via the Internet on the CMS Web site), which illustrate the final CY 
2015 payment of ASP+6 percent for separately payable nonpass-through 
drugs and biologicals and ASP+6 percent for pass-through drugs and 
biologicals, reflect either ASP information that is the basis for 
calculating payment rates for drugs and biologicals in the physician's 
office setting effective October 1, 2014, or WAC, AWP, or mean unit 
cost from CY 2013 claims data and updated cost report information 
available for this final rule with comment period. In general, these 
published payment rates are not reflective of actual January 2015 
payment rates. This is because payment rates for drugs and biologicals 
with ASP information for January 2015 will be determined through the 
standard quarterly process where ASP data submitted by manufacturers 
for the third quarter of 2014 (July 1, 2014 through September 30, 2014) 
are used to set the payment rates that are released for the quarter 
beginning in January 2015 near the end of December 2014. In addition, 
payment rates for drugs and biologicals in Addenda A and B to this 
final rule with comment period for which there was no ASP information 
available for October 2014 are based on mean unit cost in the available 
CY 2013 claims data. If ASP information becomes available for payment 
for the quarter beginning in January 2015, we will price payment for 
these drugs and biologicals based on their newly available ASP 
information. Finally, there may be drugs and biologicals that have ASP 
information available for this final rule with comment period 
(reflecting October 2014 ASP data) that do not have ASP information 
available for the quarter beginning in January 2015. These drugs and 
biologicals will then be paid based on mean unit cost data derived from 
CY 2013 hospital claims. Therefore, the payment rates listed in Addenda 
A and B to this final rule with comment period are not for January 2015 
payment purposes and are only illustrative of the CY 2015 OPPS payment 
methodology using the most recently available information at the time 
of issuance of this final rule with comment period.
4. Payment Policy for Therapeutic Radiopharmaceuticals
    Beginning in CY 2010 and continuing for CY 2014, we established a 
policy to pay for separately paid therapeutic radiopharmaceuticals 
under the ASP methodology adopted for separately payable drugs and 
biologicals. If ASP information is unavailable for a therapeutic 
radiopharmaceutical, we base therapeutic radiopharmaceutical payment on 
mean unit cost data derived from hospital claims. We believe that the 
rationale outlined in the CY 2010 OPPS/ASC final rule with comment 
period (74 FR 60524 through 60525) for applying the principles of 
separately payable drug pricing to therapeutic radiopharmaceuticals 
continues to be appropriate for nonpass-through separately payable 
therapeutic radiopharmaceuticals in CY 2015. Therefore, in the CY 2015 
OPPS/ASC proposed rule (79 FR 41003), we proposed for CY 2015 to pay 
all nonpass-through, separately payable therapeutic 
radiopharmaceuticals at ASP+6 percent, based on the statutory default 
described in section 1833(t)(14)(A)(iii)(II) of the Act. For a full 
discussion of ASP-based payment for therapeutic radiopharmaceuticals, 
we refer readers to the CY 2010 OPPS/ASC final rule with comment period 
(74 FR 60520 through 60521). We also proposed to rely on CY 2013 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. For a complete 
history of the OPPS payment policy for therapeutic 
radiopharmaceuticals, we refer readers

[[Page 66892]]

to the CY 2005 OPPS final rule with comment period (69 FR 65811), the 
CY 2006 OPPS final rule with comment period (70 FR 68655), and the CY 
2010 OPPS/ASC final rule with comment period (74 FR 60524).
    The proposed CY 2015 payment rates for nonpass-through separately 
payable therapeutic radiopharmaceuticals were included in Addenda A and 
B to the proposed rule (which are available via the Internet on the CMS 
Web site).
    Comment: Several commenters supported CMS' proposal to pay for 
separately payable therapeutic radiopharmaceuticals under the statutory 
default payment rate of ASP+6 percent, if ASP data are submitted to 
CMS.
    Response: We appreciate the commenters' support. We continue to 
believe that providing payment for therapeutic radiopharmaceuticals 
based on ASP or mean unit cost if ASP information is not available 
would provide appropriate payment for these products. When ASP data are 
not available, we believe that paying for therapeutic 
radiopharmaceuticals using mean unit cost will appropriately pay for 
the average hospital acquisition and associated handling costs of 
nonpass-through separately payable therapeutic radiopharmaceuticals. As 
we stated in the CY 2010 OPPS/ASC final rule with comment period (74 FR 
60523), although using mean unit cost for payment for therapeutic 
radiopharmaceuticals when ASP data are not available is not the usual 
OPPS process (the usual process relies on alternative data sources such 
as WAC or AWP when ASP information is temporarily unavailable, prior to 
defaulting to the mean unit cost from hospital claims data), we 
continue to believe that WAC or AWP is not an appropriate proxy to 
provide OPPS payment for average therapeutic radiopharmaceutical 
acquisition cost and associated handling costs when manufacturers are 
not required to submit ASP data. Payment based on WAC or AWP under the 
established OPPS methodology for payment of separately payable drugs 
and biologicals is usually temporary for a calendar quarter until a 
manufacturer is able to submit the required ASP data in accordance with 
the quarterly ASP submission timeframes for reporting under section 
1847A of the Act. Because ASP reporting for OPPS payment of separately 
payable therapeutic radiopharmaceuticals is not required, a 
manufacturer's choice to not submit ASP could result in payment for a 
separately payable therapeutic radiopharmaceutical based on WAC or AWP 
for a full year, a result that we believe would be inappropriate.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to continue to pay all 
nonpass-through, separately payable therapeutic radiopharmaceuticals at 
ASP+6 percent. We also are finalizing our proposal to continue to rely 
on CY 2013 mean unit cost data derived from hospital claims data for 
payment rates for therapeutic radiopharmaceuticals for which ASP data 
are unavailable. The CY 2015 final rule payment rates for nonpass-
through separately payable therapeutic radiopharmaceuticals are 
included in Addenda A and B to this final rule with comment period 
(which are available via the Internet on the CMS Web site).
5. Payment Adjustment Policy for Radioisotopes Derived From Non-Highly 
Enriched Uranium Sources
    Radioisotopes are widely used in modern medical imaging, 
particularly for cardiac imaging and predominantly for the Medicare 
population. Technetium-99 (Tc-99m), the radioisotope used in the 
majority of such diagnostic imaging services, is currently produced in 
legacy reactors outside of the United States using highly enriched 
uranium (HEU).
    The United States would like to eliminate domestic reliance on 
these reactors, and is promoting the conversion of all medical 
radioisotope production to non-HEU sources. Alternative methods for 
producing Tc-99m without HEU are technologically and economically 
viable, and conversion to such production has begun and is expected to 
be completed within a 3-year time period. We expect this change in the 
supply source for the radioisotope used for modern medical imaging will 
introduce new costs into the payment system that are not accounted for 
in the historical claims data.
    Therefore, for CY 2013, we finalized a policy to provide an 
additional payment of $10 for the marginal cost for radioisotopes 
produced by non-HEU sources (77 FR 68323). Under this policy, hospitals 
report HCPCS code Q9969 (Tc-99m from non-highly enriched uranium 
source, full cost recovery add-on per study dose) once per dose along 
with any diagnostic scan or scans furnished using Tc-99m as long as the 
Tc-99m doses used can be certified by the hospital to be at least 95 
percent derived from non-HEU sources. The time period for this 
additional payment was not to exceed 5 years from January 1, 2013 (77 
FR 68321).
    Comment: A few commenters requested that CMS extend payment for 
HCPCS code Q9969 an additional 3 to 5 years to ensure adequate data are 
collected and provide a longer ramp up period for more widespread use 
of non-HEU materials since they are not yet widely available. One 
commenter believed that the $10 payment is not sufficient and requested 
that CMS increase the payment rate. This commenter also requested that 
CMS eliminate the copayment.
    Response: We stated in our CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68316) that our expectation was that the transition to 
non-HEU sourced Mo-99 would be completed within 4 to 5 years and that 
there might be a need to make differential payments for a period of 4 
to 5 years. We further stated that we would reassess, and propose if 
necessary, on an annual basis whether such an adjustment continued to 
be necessary and whether any changes to the adjustment were warranted. 
We have reassessed this payment for CY 2015 and have not identified any 
new information that would cause us to modify payment at this time. We 
do not agree with the commenter's suggestion to eliminate the 
beneficiary's copayment because section 1833(t)(8) of the Act and 
Sec. Sec.  419.41 through 419.45 of the regulations require a 
beneficiary copayment. We are continuing the policy of providing an 
additional $10 payment for radioisotopes produced by non-HEU sources 
for CY 2015. Although we will reassess this policy annually, consistent 
with the original policy in the CY 2013 OPPS/ASC final rule with 
comment period (77 FR 68321), we do not anticipate that this additional 
payment would extend beyond CY 2017.
6. Payment for Blood Clotting Factors
    For CY 2014, 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 2014, we provided payment for blood 
clotting factors under the OPPS at ASP+6 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 2014 updated furnishing fee was $0.192 per unit.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41003), for CY 2015, 
we proposed to pay for blood clotting factors at ASP+6 percent, 
consistent

[[Page 66893]]

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. Our policy to pay for a 
furnishing fee for blood clotting factors under the OPPS is consistent 
with the methodology applied in the physician office and inpatient 
hospital setting, and first articulated in the CY 2006 OPPS final rule 
with comment period (70 FR 68661) and later discussed in the CY 2008 
OPPS/ASC final rule with comment period (72 FR 66765). The proposed 
furnishing fee update was based on the percentage increase in the 
Consumer Price Index (CPI) for medical care for the 12-month period 
ending in June of the previous year. Because the Bureau of Labor 
Statistics releases the applicable CPI data after the MPFS and OPPS/ASC 
proposed rules are published, we were not able to include the actual 
updated furnishing fee in the proposed rules. Therefore, in accordance 
with our policy, as finalized in the CY 2008 OPPS/ASC final rule with 
comment period (72 FR 66765), we proposed to 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.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice/index.html.
    Comment: Commenters supported CMS' proposal to continue to apply 
the furnishing fee for blood clotting factors provided in the OPD. The 
commenters also supported CMS' proposal to pay for separately payable 
drugs at ASP+6 percent based on the statutory default for CY 2015.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to provide payment for 
blood clotting factors under the same methodology as other separately 
payable drugs and biologicals under the OPPS and to continue payment of 
an updated furnishing fee. We will announce the actual figure of the 
percent change in the applicable CPI and the updated furnishing fee 
calculation based on that figure through the applicable program 
instructions and posting on the CMS Web site.
7. 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) did not address the OPPS payment in CY 2005 
and subsequent years 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 was 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. Beginning in CY 2008 and continuing 
through CY 2014, we implemented a policy to provide payment for new 
drugs and biologicals with HCPCS codes (except those that are policy-
packaged), but which did not have pass-through status and were without 
OPPS hospital claims data, at an amount consistent with the final OPPS 
payment methodology for other separately payable nonpass-through drugs 
and biologicals for the given year.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41004), for CY 2015, 
we proposed to continue this policy and provide payment for new drugs, 
biologicals, and therapeutic radiopharmaceuticals that do not have 
pass-through status at ASP+6 percent, consistent with the proposed CY 
2015 payment methodology for other separately payable nonpass-through 
drugs, biologicals, and therapeutic radiopharmaceuticals, which was 
proposed to be ASP+6 percent. We believe this proposed policy would 
ensure that new nonpass-through drugs, biologicals, and therapeutic 
radiopharmaceuticals would be treated like other drugs, biologicals, 
and therapeutic radiopharmaceuticals under the OPPS.
    For CY 2015, we are also continuing to package payment for all new 
nonpass-through policy-packaged products (diagnostic 
radiopharmaceuticals, contrast agents, anesthesia drugs, drugs, 
biologicals, and radiopharmaceuticals that function as supplies when 
used in a diagnostic test or procedure, and drugs and biologicals that 
function as supplies when used in a surgical procedure) with HCPCS 
codes but without claims data (those new CY 2015 HCPCS codes that do 
not crosswalk to predecessor HCPCS codes). This is consistent with the 
CY 2014 finalized policy packaging proposal of all existing nonpass-
through diagnostic radiopharmaceuticals, contrast agents, anesthesia 
drugs, drugs, biologicals, and radiopharmaceuticals that function as 
supplies when used in a diagnostic test or procedure, and drugs and 
biologicals that function as supplies when used in a surgical 
procedure, as discussed in more detail in section II.A.3. of this final 
rule with comment period.
    In accordance with the OPPS ASP methodology, in the absence of ASP 
data, for CY 2015, we proposed to continue our policy 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 proposed to assign status indicator ``K'' (Separately paid 
nonpass-through drugs and biologicals, including therapeutic 
radiopharmaceuticals) to HCPCS codes for new drugs and biologicals 
without OPPS claims data and for which we have not granted pass-through 
status. With respect to new nonpass-through drugs and biologicals for 
which we do not have ASP data, we proposed that once their ASP data 
become available in later quarterly 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 proposed ASP-based amount (proposed 
for CY 2015 at ASP+6 percent) for items that have not been granted 
pass-through status. This proposed policy, which utilizes the ASP 
methodology for new nonpass-through drugs and biologicals with an ASP, 
is consistent with prior years' policies for these items and would 
ensure that new nonpass-through drugs and biologicals would be treated 
like other drugs and

[[Page 66894]]

biologicals under the OPPS, unless they are granted pass-through 
status.
    Similarly, we proposed to continue to base the initial 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 also are unavailable, we proposed to 
make payment for new therapeutic radiopharmaceuticals at 95 percent of 
the products' most recent AWP because we would not have mean costs from 
hospital claims data upon which to base payment. As we proposed with 
new drugs and biologicals, we proposed 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 payment, for CY 2015, we proposed 
to announce any changes to the payment amounts for new drugs and 
biologicals in this CY 2015 OPPS/ASC final rule with comment period and 
also on a quarterly basis on the CMS Web site during CY 2015 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 
also would be changed accordingly based on later quarter ASP 
submissions. We note that the new CY 2015 HCPCS codes for drugs, 
biologicals, and therapeutic radiopharmaceuticals were not available at 
the time of development of the proposed rule. However, these agents are 
included in Addendum B to this CY 2015 OPPS/ASC final rule with comment 
period (which is available via the Internet on the CMS Web site), where 
they are assigned comment indicator ``NI.'' This comment indicator 
reflects that their interim final OPPS treatment is open to public 
comment in this CY 2015 OPPS/ASC final rule with comment period.
    There are several nonpass-through drugs and biologicals that were 
payable in CY 2013 and/or CY 2014 for which we did not have CY 2013 
hospital claims data available for the proposed rule and for which 
there are no other HCPCS codes that describe different doses of the 
same drug, but which have pricing information available for the ASP 
methodology. In order to determine the packaging status of these 
products for CY 2015, we proposed to continue our policy to calculate 
an estimate of the per day cost of each of these items by multiplying 
the payment rate of 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 day in the 
hospital outpatient setting. This rationale was first adopted in the CY 
2006 OPPS/ASC final rule with comment period (70 FR 68666 through 
68667).
    We proposed to package items for which we estimated the per day 
administration cost to be less than or equal to $90 (although, as 
mentioned in section V.B.2. of this final rule with comment period, we 
are finalizing a packaging threshold of $95 for CY 2015) and to pay 
separately for items for which we estimated the per day administration 
cost to be greater than $90 (with the exception of diagnostic 
radiopharmaceuticals, contrast agents, anesthesia drugs, drugs, 
biologicals, and radiopharmaceuticals that function as supplies when 
used in a diagnostic test or procedure, and drugs and biologicals that 
function as supplies when used in a surgical procedure, which we 
proposed to continue to package regardless of cost) in CY 2015. We also 
proposed that the CY 2015 payment for separately payable items without 
CY 2013 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 paid in the 
physician's office setting, in the absence of ASP data, we proposed to 
use the WAC for the product to establish the initial payment rate and, 
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 were displayed in Table 42 of the 
proposed rule (79 FR 41005).
    Finally, there were 35 drugs and biologicals, shown in Table 43 of 
the proposed rule (79 FR 41005 through 41006), that were payable in CY 
2013 but for which we lacked CY 2013 claims data and any other pricing 
information for the ASP methodology for the CY 2015 OPPS/ASC proposed 
rule. For CY 2010, we finalized a policy to assign status indicator 
``E'' (Not paid by Medicare when submitted on outpatient claims [any 
outpatient bill type]) whenever we lacked claims data and pricing 
information and were unable to determine the per day cost of a drug or 
biological. In addition, we noted that we would provide separate 
payment for these drugs and biologicals if pricing information 
reflecting recent sales became available mid-year for the ASP 
methodology.
    For CY 2015, as we finalized in CY 2014 (78 FR 75031), we proposed 
to continue to assign status indicator ``E'' to drugs and biologicals 
that lack CY 2013 claims data and pricing information for the ASP 
methodology. All drugs and biologicals without CY 2013 hospital claims 
data or data based on the ASP methodology that were assigned status 
indicator ``E'' on this basis at the time of the proposed rule for CY 
2015 were displayed in Table 43 of the proposed rule (79 FR 41005 
through 41006). We also proposed to continue our policy to assign the 
products status indicator ``K'' and pay for them separately for the 
remainder of CY 2015 if pricing information becomes available.
    We did not receive any specific public comments regarding our 
proposed payment for nonpass-through drugs, biologicals, and 
radiopharmaceuticals with HCPCS codes, but without OPPS hospital claims 
data. Many commenters supported our proposal to pay for separately 
payable drugs at ASP+6 percent under the statutory default. However, 
these comments were not specific to new drugs and biologicals with 
HCPCS codes but without OPPS claims data.
    After consideration of the public comments we received, we are 
finalizing our CY 2015 proposal without modification, including our 
proposal to assign drug or biological products status indicator ``K'' 
and pay for them separately for the remainder of CY 2015 if pricing 
information becomes available. The final estimated units per day and 
status indicators for drugs and biologicals without CY 2013 claims data 
are displayed in Table 37 below.
    We did not receive any public comments on our proposal to continue 
to assign status indicator ``E'' to drugs and biologicals that lack CY 
2013 claims data and pricing information for the ASP methodology and, 
therefore, we are finalizing this proposal without modification. All 
drugs and biologicals without CY 2013 hospital claims data and without 
pricing information for the ASP methodology that are assigned status 
indicator ``E'' on this basis at the time of this final rule with 
comment period for CY 2015 are displayed in Table 38 below.

[[Page 66895]]



                           Table 37--Drugs And Biologicals Without CY 2013 Claims Data
----------------------------------------------------------------------------------------------------------------
                                                                   Estimated
                                                                average number
     CY 2015 HCPCS code            CY 2015 long descriptor       of units per      CY 2015 SI      CY 2015 APC
                                                                      day
----------------------------------------------------------------------------------------------------------------
90581.......................  Anthrax vaccine, for                           1               K             1422
                               subcutaneous or intramuscular
                               use.
J0215.......................  Injection, alefacept, 0.5 mg....              29               K             1633
J0365.......................  Injection, aprotonin, 10,000 kiu               1               N             1439
J0630.......................  Injection, calcitonin salmon, up               2               K             1433
                               to 400 units.
J2670.......................  Injection, tolazoline hcl, up to               1               N             1457
                               25 mg.
J3355.......................  Injection, urofollitropin, 75 iu               2               K             1741
J7196.......................  Injection, antithrombin                      268               K             1332
                               recombinant, 50 IU.
J7505.......................  Muromonab-cd3, parenteral, 5 mg.               1               N             7038
J7513.......................  Daclizumab, parenteral, 25 mg...               1               N             1612
J8650.......................  Nabilone, oral, 1 mg............               4               K             1424
J9151.......................  Injection, daunorubicin citrate,              10               K             0821
                               liposomal formulation, 10 mg.
J9215.......................  Injection, interferon, alfa-n3,                1               N             1473
                               (human leukocyte derived),
                               250,000 iu.
J9300.......................  Injection, gemtuzumab                          1               K             9004
                               ozogamicin, 5 mg.
----------------------------------------------------------------------------------------------------------------


     Table 38--Drugs and Biologicals Without CY 2013 Claims Data and Without Pricing Information for the ASP
                                                   Methodology
----------------------------------------------------------------------------------------------------------------
         CY 2015 HCPCS code                            CY 2015 long descriptor                      CY 2015 SI
----------------------------------------------------------------------------------------------------------------
90296...............................  Diphtheria antitoxin, equine, any route..................               E
90393...............................  Vaccina immune globulin, human, for intramuscular use....               E
90477...............................  Adenovirus vaccine, type 7, live, for oral use...........               E
90644...............................  Meningococcal conjugate vaccine, serogroups c & y and                   E
                                       hemophilus influenza b vaccine (hib-mency), 4 dose
                                       schedule, when administered to children 2-15 months of
                                       age, for intramuscular use.
90681...............................  Rotavirus vaccine, human, attenuated, 2 dose schedule,                  E
                                       live, for oral use.
90727...............................  Plague vaccine, for intramuscular use....................               E
J0190...............................  Injection, biperiden lactate, per 5 mg...................               E
J0205...............................  Injection, alglucerase, per 10 units.....................               E
J0350...............................  Injection, anistreplase, per 30 units....................               E
J0364...............................  Injection, apomorphine hydrochloride, 1 mg...............               E
J0395...............................  Injection, arbutamine hcl, 1 mg..........................               E
J0710...............................  Injection, cephapirin sodium, up to 1 gm.................               E
J1180...............................  Injection, dyphylline, up to 500 mg......................               E
J1435...............................  Injection estrone per 1 mg...............................               E
J1562...............................  Injection, immune globulin (vivaglobin), 100 mg..........               E
J1620...............................  Injection, gonadorelin hydrochloride, per 100 mcg........               E
J1655...............................  Injection, tinzaparin sodium, 1000 iu....................               E
J1730...............................  Injection, diazoxide, up to 300 mg.......................               E
J1835...............................  Injection, itraconazole, 50 mg...........................               E
J2460...............................  Injection, oxytetracycline hcl, up to 50 mg..............               E
J2513...............................  Injection, pentastarch, 10% solution, 100 ml.............               E
J2725...............................  Injection, protirelin, per 250 mcg.......................               E
J2670...............................  Injection, tolazoline hcl, up to 25 mg...................               E
J2725...............................  Injection, protirelin, per 250 mcg.......................               E
J2940...............................  Injection, somatrem, 1 mg................................               E
J3305...............................  Injection, trimetrexate glucuronate, per 25 mg...........               E
J3365...............................  Injection, iv, urokinase, 250,000 i.u. vial..............               E
J3400...............................  Injection, triflupromazine hcl, up to 20 mg..............               E
J8562...............................  Fludarabine phosphate, oral, 10 mg.......................               E
J9165...............................  Injection, diethylstilbestrol diphosphate, 250 mg........               E
J9212...............................  Injection, interferon alfacon-1, recombinant, 1 microgram               E
J9219...............................  Leuprolide acetate implant, 65 mg........................               E
Q0174...............................  Thiethylperazine maleate, 10 mg, oral, fda approved                     E
                                       prescription anti-emetic, for use as a complete
                                       therapeutic substitute for an iv anti-emetic at the time
                                       of chemotherapy treatment, not to exceed a 48 hour
                                       dosage regimen.
Q0515...............................  Injection, sermorelin acetate, 1 microgram...............               E
----------------------------------------------------------------------------------------------------------------


[[Page 66896]]

VI. 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,'' currently not to exceed 2.0 percent of total 
program payments estimated to be made for all covered services under 
the OPPS furnished for that year. If we estimate before the beginning 
of the calendar year that the total amount of pass-through payments in 
that year would exceed the applicable percentage, section 
1833(t)(6)(E)(iii) of the Act requires a uniform prospective reduction 
in the amount of each of the transitional pass-through payments made in 
that year to ensure that the limit is not exceeded. We estimate the 
pass-through spending to determine whether payments exceed the 
applicable percentage and the appropriate prorata reduction to the 
conversion factor for the projected level of pass-through spending in 
the following year to ensure that total estimated pass-through spending 
for the prospective payment year is budget neutral, as required by 
section 1833(t)(6)(E) of the Act.
    For devices, developing an estimate of pass-through spending in CY 
2015 entails estimating spending for two groups of items. The first 
group of items consists of device categories that are currently 
eligible for pass-through payment and that will continue to be eligible 
for pass-through payment in CY 2015. The CY 2008 OPPS/ASC final rule 
with comment period (72 FR 66778) describes the methodology we have 
used in previous years to develop the pass-through spending estimate 
for known device categories continuing into the applicable update year. 
The second group of items consists of items that we know are newly 
eligible, or project may be newly eligible, for device pass-through 
payment beginning in CY 2015. The sum of the CY 2015 pass-through 
estimates for these two groups of device categories equals the total CY 
2015 pass-through spending estimate for device categories with pass-
through status. We base the device pass-through estimated payments for 
each device category on the amount of payment as established in section 
1833(t)(6)(D)(ii) of the Act, and as outlined in previous rules, 
including the CY 2014 OPPS/ASC final rule with comment period (78 FR 
75034 through 75036). We note that, beginning in CY 2010, the pass-
through evaluation process and pass-through payment for implantable 
biologicals newly approved for pass-through payment beginning on or 
after January 1, 2010 that are surgically inserted or implanted 
(through a surgical incision or a natural orifice) is the device pass-
through process and payment methodology (74 FR 60476). As has been our 
past practice (76 FR 74335), in the CY 2015 OPPS/ASC proposed rule (79 
FR 41007), for CY 2015, we proposed to include an estimate of any 
implantable biologicals eligible for pass-through payment in our 
estimate of pass-through spending for devices. We also proposed that, 
beginning in CY 2015, applications for pass-through payment for skin 
substitutes and similar products be evaluated using the medical device 
pass-through process and payment methodology. We proposed that the last 
skin substitute pass-through applications evaluated using the drugs and 
biologicals pass-through evaluation process would be those with an 
application deadline of September 1, 2014, and an earliest effective 
date of January 1, 2015. Therefore, in light of this proposal, we 
proposed to change the December 1, 2014 pass-through application 
deadline (for an earliest effective date of April 1, 2015) for both 
drugs and biologicals and devices to January 15, 2015, in order to 
provide sufficient time for applicants to adjust to the new policies 
and procedures that will be in effect as of January 1, 2015. We discuss 
our proposal to change the pass-through evaluation process for skin 
substitutes and address comments to this proposal and the proposal to 
change the April 1, 2015 pass-through effective date application 
deadline in section V.B.2.d. of this final rule with comment period, 
where we explain that we are finalizing this proposal. Therefore, 
beginning in CY 2015, we will include an estimate of any skin 
substitutes eligible for pass-through payment in our estimate of pass-
through spending for devices.
    We did not receive any public comments on our proposed methodology 
or proposed estimate for pass-through spending for devices. Therefore, 
we are finalizing our proposal to base the pass-through estimate for 
devices on our established methodology, as described above. Moreover, 
we are finalizing our proposal, beginning in CY 2015 and in future 
years, to include an estimate of any skin substitutes eligible for 
pass-through payment in our estimate of pass-through spending for 
devices.
    For drugs and biologicals eligible for pass-through payment, 
section 1833(t)(6)(D)(i) of the Act establishes the pass-through 
payment amount as the amount by which the amount authorized under 
section 1842(o) of the Act (or, if the drug or biological is covered 
under a competitive acquisition contract under section 1847B of the 
Act, an amount determined by the Secretary equal to the average price 
for the drug or biological for all competitive acquisition areas and 
year established under such section as calculated and adjusted by the 
Secretary) exceeds the portion of the otherwise applicable fee schedule 
amount that the Secretary determines is associated with the drug or 
biological. We note that the Part B drug CAP program has been postponed 
since CY 2009, and such a program has not been reinstated for CY 2015. 
Because, as we proposed, we will pay for most nonpass-through 
separately payable drugs and biologicals under the CY 2015 OPPS at 
ASP+6 percent, as we discuss in section V.B.3. of the proposed rule and 
this final rule with comment period, which represents the otherwise 
applicable fee schedule amount associated with most pass-through drugs 
and biologicals, and because, as we proposed, we will pay for CY 2015 
pass-through drugs and biologicals at ASP+6 percent, as we discuss in 
section V.A. of the proposed rule and this final rule with comment 
period, our estimate of drug and biological pass-through payment for CY 
2015 for this group of items is $0, as discussed below.
    Furthermore, payment for certain drugs, specifically diagnostic 
radiopharmaceuticals and contrast agents, without pass-through status 
will always be packaged into payment for the associated procedures and 
these products will not be separately paid. In addition, we policy-
package all nonpass-through drugs, biologicals, and 
radiopharmaceuticals that function as supplies when used in a 
diagnostic test or procedure and drugs and biologicals that function as 
supplies when used in a surgical procedure, as discussed in section 
II.A.3. of this final rule with comment period. In the CY 2015 OPPS/ASC 
proposed rule (79 FR 41007), we proposed that all of these policy-
packaged drugs and biologicals with pass-through status would be paid 
at ASP+6 percent, like other pass-through drugs and biologicals, for CY 
2015. Therefore, our estimate of pass-through payment for policy-
packaged drugs and biologicals with pass-through status approved prior 
to CY 2015 is not $0. In section V.A.4. of this final rule with comment 
period, we discuss our

[[Page 66897]]

proposed and finalized policy to determine if the costs of certain 
policy-packaged drugs or biologicals are already packaged into the 
existing APC structure. If we determine that a policy-packaged drug or 
biological approved for pass-through payment resembles predecessor 
drugs or biologicals already included in the costs of the APCs that are 
associated with the drug receiving pass-through payment, we proposed to 
offset the amount of pass-through payment for the policy-packaged drug 
or biological. For these drugs or biologicals, the APC offset amount is 
the portion of the APC payment for the specific procedure performed 
with the pass-through drug or biological, which we refer to as the 
policy-packaged drug APC offset amount. If we determine that an offset 
is appropriate for a specific policy-packaged drug or biological 
receiving pass-through payment, we reduce our estimate of pass-through 
payments for these drugs or biologicals by this amount.
    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 will continue to be eligible for pass-through 
payment in CY 2015. The second group contains drugs and biologicals 
that we know are newly eligible, or project will be newly eligible, 
beginning in CY 2015. The sum of the CY 2015 pass-through estimates for 
these two groups of drugs and biologicals equals the total CY 2015 
pass-through spending estimate for drugs and biologicals with pass-
through status.

B. Estimate of Pass-Through Spending

    In the CY 2015 OPPS/ASC proposed rule (79 FR 41007), we proposed to 
set the applicable pass-through payment percentage limit at 2.0 percent 
of the total projected OPPS payments for CY 2015, consistent with 
section 1833(t)(6)(E)(ii)(II) of the Act, and our OPPS policy from CY 
2004 through CY 2014 (78 FR 75034 through 75036).
    For the first group of devices for pass-through payment estimation 
purposes, there is one device category, HCPCS code C1841 (Retinal 
prosthesis, includes all internal and external components), eligible 
for pass-through payment as of October 1, 2013, continuing to be 
eligible for CY 2014, and that will continue to be eligible for pass-
through payment for CY 2015. Based on the one device category, HCPCS 
code C1841, we are finalizing our proposed rule estimate for the first 
group of devices of $0.5 million.
    In estimating our CY 2015 pass-through spending for device 
categories in the second group, we include: Device categories that we 
knew at the time of the development of the final rule will be newly 
eligible for pass-through payment in CY 2015; additional device 
categories that we estimate could be approved for pass-through status 
subsequent to the development of the final rule and before January 1, 
2015; and contingent projections for new device categories established 
in the second through fourth quarters of CY 2015. We proposed to use 
the general methodology described in the CY 2008 OPPS/ASC final rule 
with comment period (72 FR 66778), while also taking into account 
recent OPPS experience in approving new pass-through device categories. 
For the proposed rule, the estimate of CY 2015 pass-through spending 
for this second group of device categories was $10.0 million. We did 
not receive any public comments regarding our proposed pass-through 
estimate for devices. We are establishing one new device category 
subsequent to the publication of the proposed rule, HCPCS code C2624 
(Implantable wireless pulmonary artery pressure sensor with delivery 
catheter, including all system components), that will be effective 
January 1, 2015. We estimate that HCPCS code C2624 will cost $50.5 
million in pass-through expenditures in CY 2015. Therefore, for this CY 
2015 OPPS/ASC final rule with comment period, the estimate of CY 2015 
pass-through spending for this second group of device categories is 
$60.5 million.
    To estimate CY 2015 pass-through spending for drugs and biologicals 
in the first group, specifically those drugs and biologicals recently 
made eligible for pass-through payment and continuing on pass-through 
payment status for CY 2015, we proposed to utilize the most recent 
Medicare physician claims 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 to project the CY 2015 
OPPS utilization of the products.
    For the known drugs and biologicals (excluding policy-packaged 
diagnostic radiopharmaceuticals, contrast agents, drugs, biologicals, 
and radiopharmaceuticals that function as supplies when used in a 
diagnostic test or procedure, and drugs and biologicals that function 
as supplies when used in a surgical procedure) that will be continuing 
on pass-through payment status in CY 2015, we estimate the pass-through 
payment amount as the difference between ASP+6 percent and the payment 
rate for nonpass-through drugs and biologicals that will be separately 
paid at ASP+6 percent, which is zero for this group of drugs. Because 
payment for policy-packaged drugs and biologicals is packaged if the 
product was not paid separately due to its pass-through status, we 
proposed to include in the CY 2015 pass-through estimate the difference 
between payment for the policy-packaged drug or biological at ASP+6 
percent (or WAC+6 percent, or 95 percent of AWP, if ASP or WAC 
information is not available) and the policy-packaged drug APC offset 
amount, if we determine that the policy-packaged drug or biological 
approved for pass-through payment resembles a predecessor drug or 
biological already included in the costs of the APCs that are 
associated with the drug receiving pass-through payment. For the 
proposed rule, using the methodology described above, we calculated a 
CY 2015 proposed spending estimate for this first group of drugs and 
biologicals of approximately $2.8 million.
    We did not receive any public comments on our proposed methodology 
for calculating for calculating the spending estimate for the first 
group of drugs and biologicals.
    For this final rule with comment period, using the methodology 
described above, we calculated a final CY 2015 spending estimate for 
this first group of drugs and biologicals of approximately $11.7 
million.
    To estimate proposed CY 2015 pass-through spending for drugs and 
biologicals in the second group (that is, drugs and biologicals that we 
know are newly eligible, or project will be newly eligible, beginning 
in CY 2015), in the CY 2015 OPPS/ASC proposed rule (79 FR 41008), we 
proposed 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 
2015 pass-through payment estimate. We also proposed to consider the 
most recent OPPS experience in approving new pass-through drugs and 
biologicals. Using our proposed methodology for estimating CY 2015 
pass-through payments for this second group of drugs, we calculated a 
proposed spending estimate for this second group of drugs and 
biologicals of approximately $2.2 million.
    We did not receive any public comments on our proposed methodology 
for calculating for

[[Page 66898]]

calculating the spending estimate for the second group of drugs and 
nonimplantable biologicals.
    For this final rule with comment period, using our finalized 
methodology for estimating CY 2015 pass-through payments for this 
second group of drugs, we calculated a spending estimate for this 
second group of drugs and biologicals of approximately $10.1 million. 
Our CY 2015 estimate for total pass-through spending for drugs and 
biologicals (spending for the first group of drugs and biologicals 
($11.7 million) plus spending for the second group of drugs and 
biologicals ($10.1 million)) equals $21.8 million.
    In summary, in accordance with the methodology described above in 
this section, for this final rule with comment period, 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 
2015 and those device categories, drugs, and biologicals that first 
become eligible for pass-through payment during CY 2015 will be 
approximately $82.8 million (approximately $61.0 million for device 
categories and approximately $21.8 million for drugs and biologicals), 
which represents 0.15 percent of total projected OPPS payments for CY 
2015. Therefore, we estimate that pass-through spending in CY 2015 will 
not amount to 2.0 percent of total projected OPPS CY 2015 program 
spending.

VII. OPPS Payment for Hospital Outpatient Visits

A. Payment for Hospital Outpatient Clinic and Emergency Department 
Visits

    Since April 7, 2000, we have instructed hospitals to report 
facility resources for clinic and ED hospital outpatient visits using 
the CPT E/M codes and to develop internal hospital guidelines for 
reporting the appropriate visit level (65 FR 18451). 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 ED 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.
    While many hospitals have advocated for hospital-specific national 
guidelines for visit billing since the OPPS started in 2000, and we 
have signaled in past rulemaking our intent to develop guidelines, this 
complex undertaking has proven challenging. Our work with interested 
stakeholders, such as hospital associations, along with a contractor, 
has confirmed that no single approach could consistently and accurately 
capture hospitals' relative costs. Public comments received on this 
issue, as well as our own knowledge of how clinics operate, have led us 
to conclude that it is not feasible to adopt a set of national 
guidelines for reporting hospital clinic visits that can accommodate 
the enormous variety of patient populations and service-mix provided by 
hospitals of all types and sizes throughout the country. Moreover, no 
single approach has been broadly endorsed by the stakeholder community.
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75036 
through 75045), we finalized a new policy which created an alphanumeric 
HCPCS code, G0463 (Hospital outpatient clinic visit for assessment and 
management of a patient), for hospital use only representing any and 
all clinic visits under the OPPS and assigned HCPCS code G0463 to new 
APC 0634. We also finalized a policy to use CY 2012 claims data to 
develop the CY 2014 OPPS payment rates for HCPCS code G0463 based on 
the total geometric mean cost of the levels one through five CPT E/M 
codes for clinic visits previously recognized under the OPPS (CPT codes 
99201 through 99205 and 99211 through 99215). In addition, we finalized 
a policy to no longer recognize a distinction between new and 
established patient clinic visits.
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75036 
through 75043), we also stated our policy that we would continue to use 
our existing methodology to recognize the existing CPT codes for Type A 
ED visits as well as the five HCPCS codes that apply to Type B ED 
visits, and to establish the OPPS payment under our established 
standard process. We refer readers to the CY 2014 OPPS/ASC final rule 
with comment period for a detailed discussion of the public comments 
and our rationale for the CY 2014 policies.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41008 through 41009), 
for CY 2015, we proposed to continue the current policy, adopted in CY 
2014, for clinic and ED visits. HCPCS code G0463 (for hospital use 
only) will represent any and all clinic visits under the OPPS. We 
proposed to continue to assign HCPCS code G0463 to APC 0634. We 
proposed to use CY 2013 claims data to develop the CY 2015 OPPS payment 
rates for HCPCS code G0463 based on the total geometric mean cost of 
the levels one through five CPT E/M codes for clinic visits currently 
recognized under the OPPS (CPT codes 99201 through 99205 and 99211 
through 99215). Finally, as we established in the CY 2014 OPPS/ASC 
final rule with comment period, there is no longer a policy to 
recognize a distinction between new and established patient clinic 
visits.
    Comment: Commenters requested that CMS discontinue the single HCPCS 
G-code for reporting clinic visits and return to a reporting structure 
that recognizes differences in clinical acuity and resource 
utilization. The commenters expressed concern that CMS' clinic visit 
coding proposal creates a payment bias that unfairly penalizes certain 
providers, such as trauma centers, cancer hospitals, and major teaching 
hospitals, which provide care for more severely ill Medicare 
beneficiaries. One commenter urged CMS to carefully review its 
ratesetting process for HCPCS code G0463 to ensure that claims 
containing packaged services that are intended to be part of the 
hospital clinic rates are not being excluded from the payment 
computations, thereby creating artificially low rates. Another 
commenter recommended that CMS work with the American Medical 
Association (AMA) to develop facility-specific CPT codes for E/M clinic 
visits (with no distinction between new and established patients) and 
seek input from industry stakeholders to develop descriptions for these 
new codes that allow for their consistent application by hospital 
outpatient clinics/facilities.
    Response: We believe that the spectrum of hospital resources 
provided during an outpatient hospital clinic visit is appropriately 
captured and reflected in the single level payment for clinic visits. 
We also believe that the single visit code is consistent with a 
prospective payment system, where payment is based on an average 
estimated relative cost for the service, although the cost of 
individual cases may be more or less costly than the average. We 
believe the proposed payment rate for APC 0634 represents an 
appropriate payment for clinic visits, as it is based on the geometric 
mean costs of all visits. Although the cost for any given clinic visit 
may be higher or lower than the geometric mean cost of APC 0634, the 
payment remains appropriate to the hospital delivering a variety of 
clinic visits. The high volume of claims from every level of clinic CPT 
code that we used for ratesetting for HCPCS code G0463 allows us to 
have accurate data upon which to develop appropriate payment rates.
    With regard to specific concerns for hospitals that treat patients 
with a more

[[Page 66899]]

complex case-mix, we note that the relatively low estimated cost of 
clinic visits overall would result in much less underpayment or 
overpayment for hospitals that may serve a population with a more 
complex case-mix. As we stated in the CY 2015 OPPS/ASC proposed rule 
(79 FR 41008), we proposed to use CY 2013 claims data to develop the CY 
2015 OPPS payment rates for HCPCS code G0463 based on the total 
geometric mean cost of the levels one through five CPT E/M codes for 
clinic visits currently recognized under the OPPS (CPT codes 99201 
through 99205 and 99211 through 99215). We note that claims containing 
packaged services that are intended to be part of the hospital clinic 
rates are not excluded from payment computations for HCPCS code G0463, 
consistent with our application of our line-item trim as described in 
section II.A.2.a. of this final rule with comment period. The line-item 
trim described in section II.A.2.a. of this final rule with comment 
period requires the lines to be eligible for payment in both the claims 
year and the prospective years. Therefore, the lines that would be 
packaged when modeling clinic visits would not be subject to this trim. 
For a more detailed discussion of the OPPS data process, we refer 
readers to section II.A. of this final rule with comment period.
    With regard to the potential for facility-specific CPT codes, as we 
have stated in the past (76 FR 74346), if the AMA were to create 
facility-specific CPT codes for reporting visits provided in HOPDs 
(based on internally developed guidelines), we would consider such 
codes for OPPS use.
    After consideration of the public comments we received, we are 
finalizing our CY 2015 proposal, without modification, to continue to 
use HCPCS code G0463 (for hospital use only) to represent any and all 
clinic visits under the OPPS for CY 2015. In addition, for CY 2015 we 
are finalizing our proposals, without modification, to continue to 
assign HCPCS code G0463 to APC 0634 and to use CY 2013 claims data to 
develop the CY 2015 OPPS payment rates for HCPCS code G0463 based on 
the total geometric mean cost of the levels one through five CPT E/M 
codes for clinic visits currently recognized under the OPPS (CPT codes 
99201 through 99205 and 99211 through 99215).
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 
75040), we stated that additional study was needed to fully assess the 
most suitable payment structure for ED visits, including the particular 
number of visit levels that would not underrepresent resources required 
to treat the most complex patients, such as trauma patients and that we 
believed it was best to delay any change in ED visit coding while we 
reevaluate the most appropriate payment structure for Type A and Type B 
ED visits. At this time, we continue to believe that additional study 
is needed to assess the most suitable payment structure for ED visits. 
In the CY 2015 OPPS/ASC proposed rule, we did not propose any change in 
ED visit coding. Rather, for CY 2015, we proposed to continue to use 
our existing methodology to recognize the existing CPT codes for Type A 
ED visits as well as the five HCPCS codes that apply to Type B ED 
visits, and to establish the CY 2015 proposed OPPS payment rates using 
our established standard process. We stated that we intend to further 
explore the issues described above related to ED visits, including 
concerns about excessively costly patients, such as trauma patients. We 
also stated that we may propose changes to the coding and APC 
assignments for ED visits in future rulemaking.
    Comment: Commenters supported CMS' proposal to continue its current 
methodology to recognize the existing five CPT codes for Type A ED 
visits, as well as the five HCPCS codes for Type B ED visits, and to 
establish the associated CY 2015 OPPS payment rates using its standard 
process. Commenters commended CMS for proceeding with caution and 
agreed that additional study is needed on the appropriate payment 
structure for ED visits. Commenters also expressed their desire to work 
with CMS on a future policy proposal to create an appropriate payment 
structure for ED visits. Some commenters stated that one level of 
hospital ED payment is not appropriate for the various levels of 
resources required in ED visits, especially at major teaching 
hospitals, and expressed concern that a single level of ED visit 
payment would create a payment bias that would unfairly penalize 
certain providers, such as trauma centers and major teaching hospitals, 
which provide care for more severely ill Medicare beneficiaries. One 
commenter requested that CMS continue with its current ED visit payment 
policy for the foreseeable future and no longer attempt to make future 
changes to the policy in the coming years. Another commenter 
recommended that CMS work with the AMA to develop facility-specific CPT 
codes for Type A ED visits and Type B ED visits and seek input from 
industry stakeholders to develop descriptions for these new codes that 
allow for their consistent application by hospital outpatient clinics/
facilities.
    Response: We appreciate the commenters' support of our proposal to 
continue the current coding structure for ED visits while we continue 
to study the most appropriate payment structure for Type A and Type B 
ED visits. As discussed above, we received multiple comments that a 
single payment for an ED visit might underrepresent resources required 
to treat the most complex patients, such as trauma patients. As we have 
stated before (78 FR 75040), considering this issue requires additional 
study. As we continue to give additional study to this issue, we 
continue to welcome stakeholder input on the particular number of visit 
levels that would not underrepresent resources required to treat the 
most complex patients, such as trauma patients.
    With regard to the potential for facility-specific CPT codes, as we 
have also stated in the past (76 FR 74346), if the AMA were to create 
facility-specific CPT codes for reporting visits provided in HOPDs 
(based on internally developed guidelines), we would consider such 
codes for OPPS use.
    Comment: One commenter recommended, on a short-term basis, that CMS 
develop a set of three trauma[hyphen]specific HCPCS codes for all 
trauma patients, for whom a trauma team is activated.
    Response: We appreciate the alternative presented by the commenter. 
We will take this recommendation into consideration as we continue to 
study and fully consider the most appropriate payment structure for 
Type A and Type B ED visits.
    After consideration of the public comments we received, we are 
finalizing our proposals, without modification, to continue to use our 
existing methodology to recognize the existing CPT codes for Type A ED 
visits as well as the five HCPCS codes that apply to Type B ED visits, 
and to establish the CY 2015 OPPS payment rates using our established 
standard process. We intend to further explore the issues described 
above related to ED visits, including concerns about excessively costly 
patients, such as trauma patients. We note that we may propose changes 
to the coding and APC assignments for ED visits in the future 
rulemaking.

B. Payment for Critical Care Services

    For the history of the payment policy for critical care services, 
we refer readers to the CY 2014 OPPS/ASC final rule with comment period 
(78 FR 75043). In the CY 2014 OPPS/ASC final rule with comment period, 
we

[[Page 66900]]

continued to use the methodology established in the CY 2011 OPPS/ASC 
final rule with comment period for calculating a payment rate for 
critical care services that includes packaged payment of ancillary 
services, for example electrocardiograms, chest X-rays, and pulse 
oximetry. Critical care services are described by CPT codes 99291 
(Critical care, evaluation and management of the critically ill or 
critically injured patient; first 30-74 minutes) and 99292 (Critical 
care, evaluation and management of the critically ill or critically 
injured patient; each additional 30 minutes (List separately in 
addition to code for primary service)).
    As we discussed in the CY 2015 OPPS/ASC proposed rule (79 FR 
41009), compared to the CY 2012 hospital claims data used for the CY 
2014 OPPS ratesetting, the CY 2013 hospital claims data used for the CY 
2015 OPPS ratesetting again show increases in the geometric mean line 
item costs as well as the geometric mean line item charges for CPT code 
99291, which continue to suggest that hospitals' billing practices for 
CPT code 99291 have remained the same. Because the CY 2013 claims data 
do not support any significant change in hospital billing practices for 
critical care services, we stated in the proposed rule that we continue 
to believe that it would be inappropriate to pay separately for the 
ancillary services that hospitals typically report in addition to CPT 
codes for critical care services. Therefore, for CY 2015, we proposed 
to continue our policy (that has been in place since CY 2011) to 
recognize the existing CPT codes for critical care services and 
establish a payment rate based on historical claims data. We also 
proposed to continue to implement claims processing edits that 
conditionally package payment for the ancillary services that are 
reported on the same date of service as critical care services in order 
to avoid overpayment. We stated that we will continue to monitor the 
hospital claims data for CPT code 99291 in order to determine whether 
revisions to this policy are warranted based on changes in hospitals' 
billing practices.
    We did not receive any public comments on this issue. Accordingly, 
we are finalizing our proposals, without modification, to continue our 
policy to recognize the existing CPT codes for critical care services 
and establish a payment rate based on historical claims data, and to 
continue to implement claims processing edits that conditionally 
package payment for the ancillary services that are reported on the 
same date of service as critical care services in order to avoid 
overpayment.

VIII. 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. Section 1861(ff)(1) of the Act defines partial hospitalization 
services as ``the items and services described in paragraph (2) 
prescribed by a physician and provided under a program described in 
paragraph (3) under the supervision of a physician pursuant to an 
individualized, written plan of treatment established and periodically 
reviewed by a physician (in consultation with appropriate staff 
participating in such program), which sets forth the physician's 
diagnosis, the type, amount, frequency, and duration of the items and 
services provided under the plan, and the goals for treatment under the 
plan.'' Section 1861(ff)(2) of the Act describes the items and services 
included in partial hospitalization services. Section 1861(ff)(3)(A) of 
the Act specifies that a partial hospitalization program (PHP) is a 
program furnished by a hospital to its outpatients or by a community 
mental health center (CMHC) (as defined in subparagraph (B)), and 
``which is 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.'' Section 
1861(ff)(3)(B) of the Act defines a community mental health center for 
purposes of this benefit.
    Section 1833(t)(1)(B)(i) of the Act provides the Secretary with the 
authority to designate the OPD services to be covered under the OPPS. 
The Medicare regulations that implement this provision specify, under 
42 CFR 419.21, that payments under the OPPS will be made for partial 
hospitalization services furnished by CMHCs as well as Medicare Part B 
services furnished to hospital outpatients designated by the Secretary, 
which include partial hospitalization services (65 FR 18444 through 
18445).
    Section 1833(t)(2)(C) of the Act, in pertinent part, requires the 
Secretary to ``establish relative payment weights for covered OPD 
services (and any groups of such services described in subparagraph 
(B)) based on median (or, at the election of the Secretary, mean) 
hospital costs'' using data on claims from 1996 and data from the most 
recent available cost reports. In pertinent part, subparagraph (B) 
provides that the Secretary may establish groups of covered OPD 
services, within a classification system developed by the Secretary for 
covered OPD services, so that services classified within each group are 
comparable clinically and with respect to the use of resources. In 
accordance with these provisions, we have developed the PHP APCs. 
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 described in paragraph (2) 
to take into account changes in medical practice, changes in 
technology, the addition of new services, new cost data, and other 
relevant information and factors.''
    Because 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 July 1, 2000 (65 FR 18452 through 18455). Under 
this methodology, the median per diem costs have been used to calculate 
the relative payment weights for PHP APCs.
    From CY 2003 through CY 2006, the median per diem costs for CMHCs 
fluctuated significantly from year to year, while the median per diem 
costs for hospital-based PHPs remained relatively constant. We were 
concerned that CMHCs may have increased and decreased their charges in 
response to Medicare payment policies. Therefore, we began efforts to 
strengthen the PHP benefit through extensive data analysis and policy 
and payment changes finalized in the CY 2008 OPPS/ASC final rule with 
comment period (72 FR 66670 through 66676). We made two refinements to 
the methodology for computing the PHP median: The first remapped 10 
revenue codes that are common among hospital-based PHP claims to the 
most appropriate cost centers; and the second refined our methodology 
for computing the PHP median per diem cost by computing a separate per 
diem cost for each day rather than for each bill. We refer readers to a 
complete discussion of these refinements in the CY 2008 OPPS/ASC final 
rule with comment period (72 FR 66670 through 66676).
    In CY 2009, we implemented several regulatory, policy, and payment 
changes, including a two-tiered payment approach for PHP services under 
which we paid one amount for days with 3 services (APC 0172 Level I 
Partial Hospitalization) and a higher amount for days with 4 or more 
services

[[Page 66901]]

(APC 0173 Level II Partial Hospitalization). We refer readers to 
section X.B. 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 submitted for days when fewer than 3 units 
of therapeutic services are provided (73 FR 68694).
    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 under 
42 CFR 424.24 to conform our regulations to our longstanding policy (73 
FR 68694 through 68695). 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.3. of 
the CY 2009 OPPS/ASC final rule with comment period (73 FR 68695 
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 APC 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 were reflected for the first 
time in the claims data that we used to determine payment rates for the 
CY 2011 rulemaking (74 FR 60556 through 60559).
    In CY 2011, in accordance with section 1301(b) of the Health Care 
and Education Reconciliation Act of 2010 (HCERA 2010), we amended the 
description of a PHP in our regulations to specify that a PHP must be a 
distinct and organized intensive ambulatory treatment program offering 
less than 24-hour daily care ``other than in an individual's home or in 
an inpatient or residential setting.'' In addition, in accordance with 
section 1301(a) of HCERA 2010, we revised the definition of a CMHC in 
the regulations to conform to the revised definition now set forth 
under section 1861(ff)(3)(B) of the Act. We discussed our finalized 
policies for these two provisions of HCERA 2010 in section X.C. of the 
CY 2011 OPPS/ASC final rule with comment period (75 FR 71990).
    In the CY 2011 OPPS/ASC final rule with comment period (75 FR 
71994), we also established four separate PHP APC per diem payment 
rates, two for CMHCs (for Level I and Level II services) and two for 
hospital-based PHPs (for Level I and Level II services), based on each 
provider's own unique data. As stated in the CY 2011 OPPS/ASC proposed 
rule (75 FR 46300) and the final rule with comment period (75 FR 
71991), for CY 2011, using CY 2009 claims data, CMHC costs had 
significantly decreased again. We attributed the decrease to the lower 
cost structure of CMHCs compared to hospital-based PHP providers, and 
not the impact of the CY 2009 policies. CMHCs have a lower cost 
structure than hospital-based PHP providers, in part, because the data 
showed that CMHCs generally provide fewer PHP services in a day and use 
less costly staff than hospital-based PHPs. Therefore, it was 
inappropriate to continue to treat CMHCs and hospital-based providers 
in the same manner regarding payment, particularly in light of such 
disparate differences in costs. We also were concerned that paying 
hospital-based PHPs at a lower rate than their cost structure reflects 
could lead to hospital-based PHP closures and possible access problems 
for Medicare beneficiaries because hospital-based PHPs are located 
throughout the country and, therefore, offer the widest access to PHP 
services. Creating the four payment rates (two for CMHCs and two for 
hospital-based PHPs) based on each provider's data supported continued 
access to the PHP benefit, while also providing appropriate payment 
based on the unique cost structures of CMHCs and hospital-based PHPs. 
In addition, separation of data by provider type was supported by 
several hospital-based PHP commenters who responded to the CY 2011 
OPPS/ASC proposed rule (75 FR 71992).
    For CY 2011, we instituted a 2-year transition period for CMHCs to 
the CMHC APC per diem payment rates based solely on CMHC data. For CY 
2011, under the transition methodology, CMHC PHP APCs Level I and Level 
II per diem costs were calculated by taking 50 percent of the 
difference between the CY 2010 final hospital-based PHP median costs 
and the CY 2011 final CMHC median costs and then adding that number to 
the CY 2011 final CMHC median costs. A 2-year transition under this 
methodology moved us in the direction of our goal, which is to pay 
appropriately for PHP services based on each provider type's data, 
while at the same time allowing providers time to adjust their business 
operations and protect access to care for beneficiaries. We also stated 
that we would review and analyze the data during the CY 2012 rulemaking 
cycle and, based on these analyses, we might further refine the payment 
mechanism. We refer readers to section X.B. of the CY 2011 OPPS/ASC 
final rule with comment period (75 FR 71991 through 71994) for a full 
discussion.
    After publication of the CY 2011 OPPS/ASC final rule with comment 
period, a CMHC and one of its patients filed an application for a 
preliminary injunction, challenging the OPPS payment rates for PHP 
services provided by CMHCs in CY 2011 as adopted in the CY 2011 OPPS/
ASC final rule with comment period (75 FR 71995). We refer readers to 
the court case, Paladin Cmty. Mental Health Ctr. v. Sebelius, 2011 WL 
3102049 (W.D.Tex. 2011), aff'd, 684 F.3d 527 (5th Cir. 2012) (Paladin). 
The plaintiffs in the Paladin case challenged the agency's use of cost 
data derived from both hospitals and CMHCs in determining the relative 
payment weights for the OPPS payment rates for PHP services furnished 
by CMHCs, alleging that section 1833(t)(2)(C) of the Act requires that 
such relative payment weights be based on cost data derived solely from 
hospitals. As discussed above, section 1833(t)(2)(C) of the Act 
requires CMS to ``establish relative payment weights for covered OPD 
services (and any groups of such services . . .) . . . based on . . . 
hospital costs.'' Numerous courts have held that ``based on'' does not 
mean ``based exclusively on.'' On July 25, 2011, the District Court 
dismissed the plaintiffs' complaint and application for a preliminary 
injunction for lack of subject-matter jurisdiction, which the 
plaintiffs appealed to the United States Court of Appeals for the Fifth 
Circuit. On June 15, 2012, the Court of Appeals affirmed the District 
Court's dismissal for lack of subject-matter jurisdiction and found 
that the Secretary's payment rate determinations for PHP services are 
not a facial violation of a clear statutory mandate (Paladin, 684 F.3d 
at 533).
    For CY 2012, as discussed in the CY 2012 OPPS/ASC final rule with 
comment period (76 FR 74348 through 74352), we determined the relative 
payment weights for PHP services provided by CMHCs based on data 
derived solely from CMHCs and the relative payment weights for 
hospital-based PHP services based exclusively on hospital data. The 
statute is reasonably interpreted to allow the relative payment weights 
for the OPPS payment rates for PHP services provided by CMHCs to be 
based solely on CMHC data and relative payment weights for hospital-
based PHP services to be based exclusively on hospital data. Section 
1833(t)(2)(C) of the Act requires the

[[Page 66902]]

Secretary to ``establish relative payment weights for covered OPD 
services (and any groups of such services described in subparagraph 
(B)) based on . . . hospital costs.'' In pertinent part, subparagraph 
(B) provides that ``the Secretary may establish groups of covered OPD 
services . . . so that services classified within each group are 
comparable clinically and with respect to the use of resources.'' In 
accordance with subparagraph (B), we developed the PHP APCs, as set 
forth in Sec.  419.31 of the regulations (65 FR 18446 and 18447; 63 FR 
47559 through 47562 and 47567 through 47569). As discussed above, PHP 
services are grouped into APCs.
    Based on section 1833(t)(2)(C) of the Act, we believe that the word 
``establish'' can be interpreted as applying to APCs at the inception 
of the OPPS in 2000 or whenever a new APC is added to the OPPS. In 
creating the original APC for PHP services (APC 0033), we did 
``establish'' the initial relative payment weight for PHP services, 
provided in both hospital-based and CMHC-based settings, only on the 
basis of hospital data. Subsequently, from CY 2003 through CY 2008, the 
relative payment weights for PHP services were based on a combination 
of hospital and CMHC data. For CY 2009, we established new APCs for PHP 
services based exclusively on hospital data. Specifically, we adopted a 
two-tiered APC methodology (in lieu of the original APC 0033) under 
which CMS paid one rate for days with 3 services (APC 0172) and a 
different payment rate for days with 4 or more services (APC 0173). 
These two new APCs were established using only hospital data. For CY 
2011, we added two new APCs (APCs 0175 and 0176) for PHP services 
provided by hospitals and based the relative payment weights for these 
APCs solely on hospital data. APCs 0172 and 0173 were designated for 
PHP services provided by CMHCs and were based on a mixture of hospital 
and CMHC data. As the Secretary argued in the Paladin case, the courts 
have consistently held that the phrase ``based on'' does not mean 
``based exclusively on.'' Thus, the relative payment weights for the 
two APCs for PHP services provided by CMHCs in CY 2011 were ``based 
on'' hospital data, no less than the relative payment weights for the 
two APCs for hospital-based PHP services.
    Although we used hospital data to establish the relative payment 
weights for APCs 0033, 0172, 0173, 0175, and 0176 for PHP services, we 
believe that we have the authority to discontinue the use of hospital 
data in determining the OPPS relative payment weights for PHP services 
provided by CMHCs. Other parts of section 1833(t)(2)(C) of the Act make 
plain that the data source for the relative payment weights is subject 
to change from one period to another. Section 1833(t)(2)(C) of the Act 
provides that, in establishing the relative payment weights, ``the 
Secretary shall . . . us[e] data on claims from 1996 and us[e] data 
from the most recent available cost reports.'' We used 1996 data (in 
addition to 1997 data) in determining only the original relative 
payment weights for 2000. In the ensuing calendar year updates, we 
continually used more recent cost report data.
    Moreover, 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 described 
in paragraph (2) 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.'' For purposes of the CY 2012 
update, we exercised our authority under section 1833(t)(9)(A) of the 
Act to change the data source for the relative payment weights for PHP 
services provided by CMHCs based on ``new cost data, and other relevant 
information and factors.''
    In the CY 2014 OPPS/ASC final rule with comment period, we 
finalized our proposal to base the relative payment weights that 
underpin the OPPS APCs, including the four PHP APCs, on geometric mean 
costs rather than on the median costs. For CY 2014, we established the 
four PHP APC per diem payment rates based on geometric mean cost levels 
calculated using the most recent claims and cost data for each provider 
type. We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period for a more detailed discussion (78 FR 75047 through 75050).

B. PHP APC Update for CY 2015

    In the CY 2015 OPPS/ASC proposed rule (79 FR 41009 through 41012), 
for CY 2015, we proposed to continue to apply our established policies 
to calculate the four PHP APC per diem payment rates based on geometric 
mean per diem costs using the most recent claims and cost data for each 
provider type. We computed proposed CMHC PHP APC geometric mean per 
diem costs for Level I (3 services per day) and Level II (4 or more 
services per day) PHP services using only CY 2013 CMHC claims data and 
the most recent cost data, and proposed hospital-based PHP APC 
geometric mean per diem costs for Level I and Level II PHP services 
using only CY 2013 hospital-based PHP claims data and the most recent 
cost report data. These proposed geometric mean per diem costs were 
shown in Table 44 of the CY 2015 OPPS/ASC proposed rule (79 FR 41011). 
To prevent confusion, we will refer to the per diem information listed 
in Table 44 of the proposed rule and Tables 39 and 40 of this final 
rule with comment period as the PHP APC per diem costs or the PHP APC 
geometric mean per diem costs, and the per diem information listed in 
Addendum A as the PHP APC per diem payment rates or the PHP APC 
geometric mean per diem rates. The PHP APC per diem costs are the 
provider-specific costs derived from the most recent claims and cost 
data. The PHP APC per diem payment rates are the national unadjusted 
payment rates calculated after applying the OPPS budget neutrality 
adjustments described in sections II.A.4. and II.B of this final rule 
with comment period.
    For CY 2015, the proposed geometric mean per diem costs for days 
with 3 services (Level I) were approximately $97 for CMHCs and 
approximately $177 for hospital-based PHPs. The proposed geometric mean 
per diem costs for days with 4 or more services (Level II) were 
approximately $115 for CMHCs and approximately $190 for hospital-based 
PHPs.
    The CY 2015 proposed geometric mean per diem costs for CMHCs 
calculated under the proposed CY 2015 methodology using CY 2013 claims 
data and the most recent cost data remained relatively constant when 
compared to the CY 2014 final geometric mean per diem costs for CMHCs 
established in the CY 2014 OPPS/ASC final rule with comment period (78 
FR 75050), with geometric mean per diem costs for Level I CMHC PHP 
services decreasing from approximately $99 to approximately $97 for CY 
2015, and geometric mean per diem costs for Level II CMHC PHP services 
increasing from approximately $112 to approximately $115 for CY 2015.
    The CY 2015 proposed geometric mean per diem costs for hospital-
based PHPs calculated under the proposed CY 2015 methodology using CY 
2013 claims data and the most recent cost report data showed more 
variation when compared to the CY 2014 final geometric mean per diem 
costs for hospital-based PHPs, with geometric mean per diem costs for 
Level I hospital-based PHP services decreasing from approximately $191 
to approximately $177 for CY 2015, and geometric mean per diem costs 
for Level II hospital-based PHP services

[[Page 66903]]

decreasing from approximately $214 to approximately $190 for CY 2015.
    We understand that having little variation in the PHP per diem 
payment rates from one year to the next allows providers to more easily 
plan their fiscal needs. However, we believe that it is important to 
base the PHP payment rates on the claims and cost reports submitted by 
each provider type so these rates accurately reflect the cost 
information for these providers. We recognize that several factors may 
cause a fluctuation in the per diem payment rates, including direct 
changes to the PHP APC per diem costs (for example, establishing 
separate APCs and associated per diem payment rates for CMHCs and 
hospital-based providers based on the provider type's costs), changes 
to the OPPS (for example, basing the relative payment weights on 
geometric mean costs), and provider-driven changes (for example, a 
provider's decision to change its mix of services or to change its 
charges and clinical practice for some services). We refer readers to a 
more complete discussion of this issue in the CY 2014 OPPS/ASC final 
rule with comment period (78 FR 75049). We invited public comments on 
what causes PHP costs to fluctuate from year to year and on these 
proposals.
    The proposed CY 2015 geometric mean per diem costs for the CMHC and 
hospital-based PHP APCs were shown in Table 44 of the proposed rule. We 
invited public comments on these proposals.
    Comment: Several commenters opposed the proposed CY 2015 PHP APC 
per diem payment rates and raised concerns about a continued decline in 
payments for these services. Commenters stated that the proposed per 
diem payment rates were inadequate to pay providers for furnishing 
these services, and were below most program costs for providing PHP 
services. Other commenters suggested that CMS continue to use the CY 
2014 payment rates for CY 2015. A few commenters expressed concerns 
that the 15-percent reduction in payment rates for Level II services in 
hospitals dropped the payment rates too far below providers' costs. 
Another commenter asked that CMS provide documentation to support the 
proposed payment rates for PHP services.
    Response: We acknowledge the concerns raised by the commenters who 
believe that reduced payment rates for CY 2015 will not adequately pay 
their costs to provide PHP services. However, the per diem payment 
rates reflect the cost of what each provider type expends to maintain 
such programs. Therefore, we do not believe that the final payment 
rates would be inadequate to cover the costs of providing these 
services.
    Based on the final geometric mean per diem costs derived from CY 
2013 claims data and the most recent cost data, CMHCs' geometric mean 
per diem costs increased from CY 2014 to CY 2015 for APC 0172 Level I 
(3 services per day) from approximately $99 to approximately $100, and 
for APC 0173 Level II (4 or more services per day) from approximately 
$112 to approximately $119. These per diem cost increases for CMHC APCs 
0172 and 0173 are 0.76 percent and 5.7 percent, respectively. Final 
hospital-based PHP per diem costs decreased by significantly smaller 
amounts than the per diem costs that were proposed, but still declined 
when compared to CY 2014 geometric mean per diem costs. The PHP APC 
geometric mean per diem costs decreased for hospital-based PHPs from CY 
2014 to CY 2015 for APC 0175 Level I (3 services per day) from 
approximately $191 to approximately $186, and for APC 0176 Level II (4 
or more service per day) from approximately $214 to approximately $203. 
These final hospital-based PHP APC geometric mean per diem cost 
decreases are 2.6 percent for APC 0175 (instead of the proposed 
decrease of 7.1 percent) and 5.3 percent for APC 0176 (instead of the 
proposed decrease of 11.3 percent). We believe that the PHP APC per 
diem payment rates for both providers accurately reflect the claims and 
cost data of each provider type. Again, the resulting PHP APC per diem 
payment rates and the APC payment structures reflect the cost of what 
providers expend to maintain such programs. At this time, we cannot 
establish payment rates that do not accurately reflect the current 
claims and cost data. For these reasons, we are not suspending 
implementation of the CY 2015 PHP APC per diem payment rates for CMHCs 
and hospital-based PHPs.
    The PHP APC per diem payment rates are directly related to the 
accuracy of the claims and cost data submitted by providers. Therefore, 
it is imperative that providers submit accurate claims and cost data in 
order for the payment rates to accurately reflect the providers' costs.
    Regarding the documentation supporting the proposed PHP per diem 
payment rates, for each calendar year update, we explain how the PHP 
APC per diem payment rates are calculated in a proposed rule and a 
final rule. The industry is welcome to comment during the rulemaking 
process. We also make available to the public the OPPS PHP limited data 
set (LDS) and the OPPS LDS, which we discussed in the CY 2015 OPPS/ASC 
proposed rule (79 FR 40931). The OPPS PHP LDS can be used to recreate 
the PHP cost estimates and, when used in conjunction with the OPPS LDS, 
can be used to recreate the PHP APC payment rates. Both of these files 
are available twice a year, once for the proposed rule and again for 
the final rule. The LDSs are available for purchase under a CMS data 
use agreement through the CMS Web sites at: http://www.cms.gov/research-statistics-data-and-systems/files-for-order/limiteddatasets/HospitalOPPSPHPLDS.html and http://www.cms.gov/research-statistics-data-and-systems/files-for-order/limiteddatasets/HospitalOPPS.html.
    Comment: A number of commenters noted the difficulty in planning 
and budgeting when payment rates for these services fluctuate and asked 
that CMS establish consistent and stable payments. Several commenters 
stated that they are committed to working with CMS to better understand 
and stabilize the payment rates for the PHP benefit, and to determine 
the factors driving the fluctuation in rates. One commenter asserted 
that the wide variability in PHP APC payment rates from year-to-year 
does not allow quality providers to plan for and to maintain services 
in a predictable way. Another commenter believed that the erratic 
payment rate structure could diminish access to care because providers 
may be unable to forecast statistical and financial parameters based on 
the proposed PHP APC payment rates.
    In response to our solicitation for public comments in the proposed 
rule on what the industry believed was causing the fluctuation in 
payment rates, a few commenters stated that other types of hospitals 
(rehabilitation, long-term acute care, and inpatient psychiatric 
facilities) are now providing PHP-like services, and questioned whether 
the cost structure of these facilities could be distorting PHP APC 
payment rates. Another commenter stated that as providers move away 
from PHPs and toward other mental health care options, the sample size 
used in calculating payment rates is smaller. The commenter further 
stated that volumes of services in a few areas could take on greater 
influence in the calculations and affect costs, creating instability in 
the PHP APC payment rates and difficulty in planning.
    A few commenters mentioned that their PHPs had not experienced 
significant operational or clinical protocol changes, and no changes in 
the personnel delivering the mix of services that would support a 
reduction in the

[[Page 66904]]

geometric mean per diem costs. Several commenters stated that almost 
one-third of the proposed PHP APC payment rate reduction could be 
explained by the budget neutrality adjustment, which disproportionately 
affects PHPs, and which, for CY 2015, may have led to payment rates 
that are less than the geometric mean per diem costs.
    A few commenters cited a study that they had a contractor conduct 
to investigate the fluctuations. The commenters stated that the study 
results did not suggest that the tiered payments, the use of a 
geometric mean versus a median methodology, the different payments by 
site of service, or provider-driver factors, such as service-mix or 
patient-mix, were the source of the problem. The commenters noted that 
the study found a dramatic decrease in the total volume of PHP services 
provided, but an increase in hospital-based PHP days, particularly for 
Level II services. The commenters believed that this shift to providing 
more hospital-based PHP services has partially offset the decline in 
CMHC PHP days and may have caused PHP costs to fluctuate. The 
commenters suggested several areas for potential future study, 
including the shift of services from CMHCs to hospital-based PHPs, a 
different of mix of providers within the hospital category, other types 
of hospitals newly offering PHP services, volume, and the size of 
hospitals and of PHPs.
    Response: We acknowledge the difficulties in planning and budgeting 
that can occur when payments fluctuate, or when payment rates decline. 
However, we are continuing to pay for PHP services based on provider 
data. We also believe that changes in payment rates from one year to 
the next are appropriate in a payment system that is annually updated 
to more accurately estimate the cost of a service upon which the 
relative payment weights are based. We continue to believe that payment 
rates for PHP services have fluctuated from year to year based on a 
variety of factors, including direct changes to the PHP APC per diem 
payment rate, and changes to the OPPS. Over the past several years, we 
have made changes to the OPPS methodology for calculating PHP APC per 
diem payment rates to more accurately align the payments with costs. 
The changes have included establishing two PHP APC payment tiers, 
establishing separate APCs and associated per diem payment rates for 
CMHCs and hospital-based providers based on each provider's costs, and 
basing payments on the geometric mean costs rather than on median 
costs.
    In addition, the OPPS is a budget neutral payment system and, as a 
result, changes in the relative payment weights associated with certain 
services may affect those of other services in the payment system. 
Furthermore, provider-driven changes, such as a provider's decision to 
change its mix of services or to change its charges and clinical 
practice for some services, may cause fluctuations in the per diem 
payment rates. We provided a detailed discussion of possible reasons 
for the fluctuation in the rates in the CY 2015 OPPS/ASC proposed rule 
(79 FR 41012) and in section VIII.B. of this final rule with comment 
period.
    We appreciate the commenters' providing possible reasons for 
fluctuations or declines in the payment rates. While several providers 
noted that their operations have not changed to support a decline in 
payments, we reiterate that our payment rates are based upon claims and 
cost data submitted to us by providers and, therefore, reflect the cost 
of what providers expend to maintain such programs. We also acknowledge 
the variables raised by the commenters that could cause the payment 
rate fluctuations and the study that several commenters had 
commissioned to look into PHP payments. We are unable to comment 
directly on the study results because we are not certain of the 
detailed methods used for this study. However, we appreciate the areas 
of potential future study suggested by commenters, and will take them 
into consideration in future analyses.
    Comment: Many commenters stated that the methodology for 
calculating payment rates was ``flawed and illogical'' and asked CMS to 
reexamine the methodology to determine why payment rates are declining. 
The commenters suggested that CMS consider other methods for paying for 
PHP services, such as removing PHP services from APC group assignments 
and creating PHPs under an independent payment status, such as is done 
under the home health benefit. The commenters suggested that CMS 
establish a base payment rate for PHP services at a higher level than 
the current mean cost, and annually adjust the base rate by an 
inflation factor.
    A few commenters supported the two-tiered payment methodology. 
However, the commenters suggested using only hospital-based data, which 
was implemented in CY 2009. Some commenters disagreed with CMS paying 
PHPs differently by site of service. One commenter disputed CMS' 
assertion that CMHCs generally provide fewer PHP services in a day. The 
commenter stated that claims information indicates that CMHCs submit a 
greater percentage of their claims for 4 or more services per day. The 
commenter added that CMS does not collect wage data on CMHCs in its 
costs reports. Several commenters did not support continued use of the 
CY 2014 policy, which uses the geometric mean per diem costs to 
calculate PHP payment rates.
    Many commenters suggested other alternatives to the current payment 
system, such as developing oversight strategies for poorly performing 
CMHCs if their performance suggests a high risk of fraud, and allowing 
top performing CMHCs to admit patients into intensive outpatient 
programs similarly structured as PHPs. One commenter noted that some 
hospital-based providers are moving away from PHPs and providing 
programs that are structured similarly to a PHP, but are not Medicare-
certified PHPs (that is, providing several individual mental health 
services in a day that would be similar to a PHP, but providers are not 
enrolled as a PHP). The commenter stated that the programs similar to 
PHPs would require fewer services and be subject to fewer regulatory 
requirements (for example, no certification or recertification, no 
physical examination requirement, and no minimum attendance mandate), 
and yet have similar payment rates as those established for PHPs. The 
commenter suggested that CMS require that these programs bill for 
furnishing these services under the mental health services composite 
APC under the OPPS, with payment aligned with how commercial insurers 
pay for these services. The commenter also suggested that CMS consider 
policy levers to ease regulatory requirements for administering PHPs.
    Response: The OPPS successfully pays for outpatient services 
provided, such as and including partial hospitalization services, and 
we disagree that the system is flawed and illogical. This system bases 
payment on the geometric mean costs of providing the service or 
services using provider data from claims and cost reports. As discussed 
above, we believe this system provides appropriate payment for partial 
hospitalization services based on provider costs.
    Sections 1833(t)(2) and 1833(t)(9) of the Act set forth the 
requirements for establishing and adjusting the OPPS payment rates, 
including the PHP payment rates. As such, we are directed to pay for 
these services under the OPPS (which uses APCs) and may not remove 
these PHP services from the OPPS and pay for them separately (such as 
by establishing a base rate and annually

[[Page 66905]]

adjusting it for inflation). The estimated costs of the PHP APCs are 
based on the most updated cost and claims data. The OPPS conversion 
factor used to calculate payments for those PHP APCs is updated by a 
market basket each year. While we continuously examine ways in which 
the data process could be improved, we also welcome and appreciate 
public comment with regard to potential improvements. Similarly, we 
appreciate the meaningful comments that stakeholders provided regarding 
ways that the cost modeling process could be more accurate or methods 
to extract more appropriate data from the claims available for OPPS 
cost modeling. For a more detailed discussion of the OPPS ratesetting 
process, including PHP payments, we refer readers to the CY 2015 OPPS 
Final Rule Claims Accounting document, available on the CMS Web site 
at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. Click on the link for ``Hospital 
Outpatient Regulations and Notices'', then on the link to the CY 2015 
OPPS final rule, and then on the CY2015 OPPS Claims Accounting 
document.
    With respect to the commenters' request to return to the two-tiered 
payment methodology calculated using only hospital-based data that was 
implemented in the CY 2009 OPPS/ASC final rule with comment period (73 
FR 68688 through 68693), we refer commenters to the CY 2011 OPPS/ASC 
final rule with comment period (75 FR 71991 through 71994). Because the 
cost of providing PHP services differs significantly by site of 
service, in CY 2011, we implemented differing PHP payment rates for 
hospital-based PHPs and CMHCs. We added two new APCs (APCs 0175 and 
0176) for PHP services provided by hospitals, and based the relative 
payment weights for these APCs solely on hospital data. APCs 0172 and 
0173 were designated for PHP services provided by CMHCs and were based 
on a blend of CMHC and hospital data. We calculate the PHP APC per diem 
payment rates based on the data provided for each type of provider in 
order to pay for services. The resulting PHP APC per diem payment rates 
reflect the cost of what providers expend to maintain such programs 
based on data provided by these types of providers, which we believe is 
an improvement over the two-tiered payment methodology calculated using 
only hospital-based data.
    In regard to the commenters' concerns regarding the use of 
geometric mean rather than the median, in the CY 2013 OPPS/ASC final 
rule with comment period, we established the geometric mean rather than 
the median as the measure upon which to base the relative payment 
weights that underpin the OPPS APCs, including the four PHP APCs (77 FR 
68406 to 68412). The CY 2015 PHP APC per diem payment rates are based 
on geometric mean costs. While a few commenters disagreed with our use 
of geometric mean costs, we believe that the use of geometric mean 
costs rather than median costs represents an improvement to our cost 
estimation process. As we stated in the CY 2013 OPPS/ASC final rule 
with comment period (77 FR 68409), we believe that including outlier 
observations in developing the relative payment weights and capturing 
the full range of service costs lead to more accurate relative payment 
weights. In addition to better incorporating those cost values that 
surround the median and, therefore, describing a broader range of cost 
patterns, basing the relative payment weight on geometric mean costs 
also may promote better stability in the payment system by making OPPS 
payments more reflective of the range of costs associated with 
providing services. Further, applying the geometric mean to the PHP 
APCs helps ensure that the relativity of the OPPS payment weights is 
properly aligned. We do not believe that paying for some services based 
on median costs, while using geometric mean costs for other services is 
appropriate or equitable.
    We believe that paying providers using the four PHP APC per diem 
payment rates based on the methodologies described above supports 
continued access to the PHP benefit, while also providing appropriate 
payment based on the unique cost structures of CMHCs and hospital-based 
PHPs. We also believe that each of these policies enables us to 
continue our responsible stewardship of the Medicare Trust Fund by more 
accurately matching payments with costs. For a full discussion of each 
of these policies implemented in prior rulemaking, including details on 
the rationales, we refer readers to the above-mentioned final rules 
with comment period, which are available on the CMS OPPS Web site at: 
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html.
    In response to the commenters' concerns regarding CMS' statement 
that CMHCs provide fewer services in a day, as stated in the CY 2014 
OPPS/ASC final rule with comment period (78 FR 75047 through 75050), we 
are calculating the payment rates for PHP services based on the claims 
and cost data submitted by providers. The updated data used for 
calculating payments for this CY 2015 OPPS/ASC final rule with comment 
period indicate that CMHCs do indeed have a greater percentage of PHP 
days with 4 or more services, compared to hospital-based PHPs (94.6 
percent of days compared to 88.3 percent of days, respectively). 
However, in spite of their providing a greater percentage of days with 
4 or more services, our updated cost data continue to show that CMHC 
costs per day are lower than those of hospital-based PHPs.
    In response to the question about wage data, CMHCs are required to 
include wage data for their staff on their cost reports, with certain 
exceptions. We direct readers to Medicare's cost reporting instructions 
for CMHCs that are available online in the Provider Reimbursement 
Manual, Part 2, Chapter 18 on the CMS Web site at: http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-Based-Manuals-Items/CMS021935.html?DLPage=1&DLSort=0&DLSortDir=ascending.
    With respect to the suggestion that CMS develop oversight 
strategies for poor performing CMHCs with conduct that suggests 
potential fraud, we already have oversight strategies in place for 
providers that operate in a questionable manner. For example, MACs 
perform medical reviews of certain PHP claims, and PHP providers with 
claims that present ongoing concerns may have their claims placed on 
prepayment review. In some cases, CMHC and hospital-based PHP payments 
may be suspended or a CMHC's or hospital's billing privileges may be 
revoked. Our Office of Financial Management (OFM) has Recovery Audit 
Contractors (RACs), which regularly identify and collect overpayments 
from Medicare providers. Additionally, the Center for Program Integrity 
(CPI) and Zone Program Integrity Contractors (ZPICs) investigate 
potential fraud, waste, and abuse across the Medicare program, 
including potential concerns within CMHCs. Finally, the Office of 
Inspector General (OIG) and other law enforcement agencies continue in 
their efforts to address fraud and abuse throughout the Medicare 
program, including questionable billing for partial hospitalization 
services.
    With respect to the commenters' request to allow top performing 
CMHCs to admit beneficiaries who require partial hospitalization 
services into outpatient programs that are structured similarly to 
PHPs, Medicare covers and

[[Page 66906]]

pays for reasonable and necessary PHP services provided by hospitals 
and CMHCs under the OPPS. While some private insurers and some State 
Medicaid programs recognize other types of intensive outpatient mental 
health programs as a distinct benefit like PHP services, the Medicare 
program does not. However, hospitals may provide and bill for 
individual services that make up various other mental health programs.
    Because all Medicare outpatient mental health services are capped 
at the hospital-based Level II PHP per diem payment rate, from a 
payment standpoint, it does not matter how many of these individual 
services are billed to Medicare because payment will never exceed the 
hospital-based Level II PHP per diem payment rate. However, CMHCs may 
only be paid for partial hospitalization services under the OPPS.
    We are constantly monitoring the OPPS in search of potential 
refinements that would improve the accuracy and stability of the 
payment system. We are unclear about the policy changes that the 
commenters suggested that we make regarding easing the regulatory 
requirements for administering PHPs. Some of the PHP requirements are 
set forth in the statute. For example, physician certification and 
recertification requirements for PHP services are set forth in section 
1835(a)(2)(F) of the Act and would require Congressional legislation to 
change. However, if providers have suggestions for specific policy 
changes to improve PHP operations while safeguarding access to PHP 
services and paying accurately for these services, we welcome those 
suggestions during rulemaking or through other dialogue with the 
industry.
    Comment: Many commenters described the key role that PHPs play in 
the continuum of care for patients with mental health issues. A number 
of commenters stated that if CMS moved forward with the proposed 
payment rates, much-needed PHP programs would struggle to remain 
financially viable. Multiple commenters believed that additional 
reductions in payments for CY 2015 would limit the ability of hospitals 
and CMHCs to provide these vital psychiatric services, reducing 
capacity or leading to closures, especially in rural areas, and thereby 
reducing access to care for Medicare patients. Several commenters noted 
that, as access to PHP services decreases, the decreases could lead to 
patients not receiving any services or to patients receiving services 
that are not appropriate for their needs; to use of more expensive 
inpatient psychiatric services; or to use of already stressed emergency 
departments. One commenter believed that CMS was concerned about the 
potential for hospital-based PHP closures, but not about CMHC closures.
    Response: In response to commenters' concern about reduced PHP 
payment rates leading to decreased capacity and PHP closures, thereby 
reducing access to care and further eroding the viability of the safety 
net system, we emphasize again that the resulting PHP APC per diem 
payment rates for CY 2015 reflect the costs of what providers expend to 
maintain PHP programs. Therefore, it continues to be unclear to us why 
reduced PHP payment rates would lead to reduced capacity or program or 
business closures. As noted previously, the final CY 2015 per diem 
costs increased for CMHCs compared to CY 2014, and decreased less than 
proposed for hospital-based PHPs. As we stated in the CY 2012 OPPS/ASC 
final rule with comment period (76 FR 74350), the closure of PHPs may 
be due to any number of reasons, such as poor business management or 
marketing decisions, competition, oversaturation of certain geographic 
areas, and Federal and State fraud and abuse efforts, among others. It 
does not directly follow that closure could be due to reduced per diem 
payment rates alone, especially when these per diem payment rates 
reflect the costs of PHP providers as stated in claims and cost data.
    In response to the commenters' concerns that further reduction in 
the CMHC and hospital-based PHP APC per diem payment amounts could 
further erode the viability of the safety net system and make it more 
difficult for patients to receive needed mental health services, we 
take such concerns seriously for both CMHCs and hospital-based PHPs. We 
will continue to monitor facility closings and openings for both rural 
and urban areas to make sure that access issues do not exist. We also 
remain steadfast in our concern regarding access to care for all 
beneficiaries, while also providing appropriate payments for such care.
    A PHP is not the only program in which a Medicare beneficiary is 
able to receive needed mental health care. Access to other forms of 
mental health servic