[Federal Register Volume 82, Number 239 (Thursday, December 14, 2017)]
[Rules and Regulations]
[Pages 59216-59497]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: R1-2017-23932]



[[Page 59215]]

Vol. 82

Thursday,

No. 239

December 14, 2017

Part II

Book 2 of 2 Books

Pages 59215-59502





Department of Health and Human Services





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Centers for Medicare & Medicaid Services



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42 CFR Parts 414, 416, and 419



Medicare Program: Hospital Outpatient Prospective Payment and 
Ambulatory Surgical Center Payment Systems and Quality Reporting 
Programs; Rule

Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / 
Rules and Regulations

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 414, 416, and 419

[CMS-1678-FC]
RIN 0938-AT03


Medicare Program: Hospital Outpatient Prospective Payment and 
Ambulatory Surgical Center Payment Systems and Quality Reporting 
Programs

Republication

    Editorial Note:  Rule document 2017-23932 was originally 
published on pages 52356 through 52637 in the issue of Monday, 
November 13, 2017. In that publication, a section of the document 
was omitted due to a printing error. The corrected document is 
published here in its entirety.

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 2018 to 
implement 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.

DATES: 
    Effective date: This final rule with comment period is effective on 
January 1, 2018, unless otherwise noted.
    Comment period: To be assured consideration, comments on the 
payment classifications assigned to HCPCS codes identified in Addenda 
B, AA, and BB with the comment indicator ``NI'' 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 31, 2017.

ADDRESSES: In commenting, please refer to file code CMS-1678-FC when 
commenting on the issues in this proposed rule. 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-1678-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-1678-FC, Mail Stop C4-26-05, 7500 
Security Boulevard, Baltimore, MD 21244-1850.
    4. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments before the close of the comment period 
to either of the following addresses:
    a. For delivery in Washington, DC--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, Room 445-G, Hubert 
H. Humphrey Building, 200 Independence Avenue SW., Washington, DC 
20201.
    (Because access to the interior of the Hubert H. Humphrey Building 
is not readily available to persons without Federal Government 
identification, commenters are encouraged to leave their comments in 
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing 
by stamping in and retaining an extra copy of the comments being 
filed.)
    b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, 7500 Security 
Boulevard, Baltimore, MD 21244-1850.
    If you intend to deliver your comments to the Baltimore address, 
please call the telephone number (410) 786-7195 in advance to schedule 
your arrival with one of our staff members.
    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and received after the comment 
period.
    For information on viewing public comments, we refer readers to the 
beginning of the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: (We note that public comments must be 
submitted through one of the four channels outlined in the ADDRESSES 
section above. Comments may not be submitted via email.)

    Advisory Panel on Hospital Outpatient Payment (HOP Panel), 
contact the HOP Panel mailbox at [email protected].
    Ambulatory Surgical Center (ASC) Payment System, contact 
Elisabeth Daniel via email [email protected] or at 410-
786-0237.
    Ambulatory Surgical Center Quality Reporting (ASCQR) Program 
Administration, Validation, and Reconsideration Issues, contact 
Anita Bhatia via email [email protected] or at 410-786-7236.
    Ambulatory Surgical Center Quality Reporting (ASCQR) Program 
Measures, contact Vinitha Meyyur via email 
[email protected] or at 410-786-8819.
    Blood and Blood Products, contact Josh McFeeters via email 
[email protected] at 410-786-9732.
    Cancer Hospital Payments, contact Scott Talaga via email 
[email protected] or at 410-786-4142.
    Care Management Services, contact Scott Talaga via email 
[email protected] or at 410-786-4142.
    CPT Codes, contact Marjorie Baldo via email 
[email protected] or at 410-786-4617.
    CMS Web Posting of the OPPS and ASC Payment Files, contact Chuck 
Braver via email [email protected] or at 410-786-6719.
    Composite APCs (Low Dose Brachytherapy and Multiple Imaging), 
contact Twi Jackson via email [email protected] or at 410-786-
1159.
    Comprehensive APCs (C-APCs), contact Lela Strong via email 
[email protected] or at 410-786-3213.
    Hospital Outpatient Quality Reporting (OQR) Program 
Administration, Validation, and Reconsideration Issues, contact 
Anita Bhatia via email [email protected] or at 410-786-7236.
    Hospital Outpatient Quality Reporting (OQR) Program Measures, 
contact Vinitha Meyyur via email [email protected] or at 
410-786-8819.
    Hospital Outpatient Visits (Emergency Department Visits and 
Critical Care Visits), contact Twi Jackson via email 
[email protected] or at 410-786-1159.
    Inpatient Only (IPO) Procedures List, contact Lela Strong via 
email [email protected] or at 410-786-3213.
    New Technology Intraocular Lenses (NTIOLs), contact Scott Talaga 
via email [email protected] or at 410-786-4142.
    No Cost/Full Credit and Partial Credit Devices, contact Twi 
Jackson via email [email protected] or at 410-786-1159.
    OPPS Brachytherapy, contact Scott Talaga via email 
[email protected] or at 410-786-4142.
    OPPS Data (APC Weights, Conversion Factor, Copayments, Cost-to-
Charge Ratios

[[Page 59217]]

(CCRs), Data Claims, Geometric Mean Calculation, Outlier Payments, 
and Wage Index), contact Erick Chuang via email 
[email protected] or at 410-786-1816 or Elisabeth Daniel via 
email [email protected] or at 410-786-0237.
    OPPS Drugs, Radiopharmaceuticals, Biologicals, and Biosimilar 
Products, contact Elisabeth Daniel via email 
[email protected] or at 410-786-0237.
    OPPS New Technology Procedures/Services, contact the New 
Technology APC email at [email protected].
    OPPS Exceptions to the 2 Times Rule, contact Marjorie Baldo via 
email [email protected] or at 410-786-4617.
    OPPS Packaged Items/Services, contact Elisabeth Daniel via email 
[email protected] or at 410-786-0237.
    OPPS Pass-Through Devices, contact the Device Pass-Through email 
at [email protected].
    OPPS Status Indicators (SI) and Comment Indicators (CI), contact 
Marina Kushnirova via email [email protected] or at 410-
786-2682.
    Partial Hospitalization Program (PHP) and Community Mental 
Health Center (CMHC) Issues, contact the PHP Payment Policy Mailbox 
at [email protected].
    Revisions to the Laboratory Date of Service Policy, contact 
Craig Dobyski via email [email protected] or at 410-786-4584 
or Rasheeda Johnson via email [email protected] or at 
410-786-3434 or Marjorie Baldo (for OPPS) via email 
[email protected] or at 410-786-4617.
    Rural Hospital Payments, contact Josh McFeeters via email 
[email protected] or at 410-786-9732.
    Skin Substitutes, contact Josh McFeeters via email 
[email protected] or at 410-786-9732.

    All Other Issues Related to Hospital Outpatient and Ambulatory 
Surgical Center Payments Not Previously Identified, contact Lela Strong 
via email [email protected] or at 410-786-3213.

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

Electronic Access

    This Federal Register document is also available from the Federal 
Register online database through Federal Digital System (FDsys), a 
service of the U.S. Government Printing Office. This database can be 
accessed via the Internet at https://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: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. The Addenda relating 
to the ASC payment system are available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/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
API Application programming interface
APU Annual payment update
ASC Ambulatory surgical center
ASCQR Ambulatory Surgical Center Quality Reporting
ASP Average sales price
AUC Appropriate use criteria
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
CCM Chronic care management
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
DME Durable medical equipment
DMEPOS Durable Medical Equipment, Prosthetic, Orthotics, and 
Supplies
DOS Date of service
DRA Deficit Reduction Act of 2005, Public Law 109-171
DSH Disproportionate share hospital
EACH Essential access community hospital
EAM Extended assessment and management
ECD Expanded criteria donor
EBRT External beam radiotherapy
ECG Electrocardiogram
ED Emergency department
EDTC Emergency department transfer communication
EHR Electronic health record
E/M Evaluation and management
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
GME Graduate medical education
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

[[Page 59218]]

HCUP Healthcare Cost and Utilization Project
HEU Highly enriched uranium
HH QRP Home Health Quality Reporting Program
HHS Department of Health and Human Services
HIE Health information exchange
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
ICD-10 International Classification of Diseases, Tenth Revision
ICH In-center hemodialysis
ICR Information collection requirement
IDTF Independent diagnostic testing facility
IGI IHS Global, 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 Program
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
MACRA Medicare Access and CHIP Reauthorization Act of 2015, Public 
Law 114-10
MAP Measure Application Partnership
MDH Medicare-dependent, small rural hospital
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 Aureus
MS-DRG Medicare severity diagnosis-related group
MSIS Medicaid Statistical Information System
MUC Measure under consideration
NCCI National Correct Coding Initiative
NEMA National Electrical Manufacturers Association
NHSN National Healthcare Safety Network
NOTA National Organ and Transplantation Act
NOS Not otherwise specified
NPI National Provider Identifier
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
O/E Observed to expected event
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
OPPS [Hospital] Outpatient Prospective Payment System
OPSF Outpatient Provider-Specific File
OQR [Hospital] Outpatient Quality Reporting
OT Occupational therapy
PAMA Protecting Access to Medicare Act of 2014, Public Law 113-93
PCHQR PPS-Exempt Cancer Hospital Quality Reporting
PCR Payment-to-cost ratio
PDC Per day cost
PDE Prescription Drug Event
PE Practice expense
PHP Partial hospitalization program
PHSA Public Health Service Act, Public Law 96-88
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
RFA Regulatory Flexibility Act
RHQDAPU Reporting Hospital Quality Data for Annual Payment Update
RTI Research Triangle Institute, International
RVU Relative value unit
SAD Self-administered drug
SAMS Secure Access Management Services
SCH Sole community hospital
SCOD Specified covered outpatient drugs
SES Socioeconomic status
SI Status indicator
SIA Systems Improvement Agreement
SIR Standardized infection ratio
SNF Skilled nursing facility
SRS Stereotactic radiosurgery
SRTR Scientific Registry of Transplant Recipients
SSA Social Security Administration
SSI Surgical site infection
TEP Technical Expert Panel
TOPs Transitional Outpatient Payments
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 in Response to CY 2017 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. Calculation and Use of Cost-to-Charge Ratios (CCRs)
    2. Data Development Process and Calculation of Costs Used for 
Ratesetting
    a. Calculation of Single Procedure APC Criteria-Based Costs
    (1) Blood and Blood Products
    (2) Brachytherapy Sources
    b. Comprehensive APCs (C-APCs) for CY 2018
    (1) Background
    (2) C-APCs for CY 2018
    (3) Brachytherapy Insertion Procedures
    (4) C-APC 5627 (Level 7 Radiation) Stereotactic Radiosurgery 
(SRS)
    (5) Complexity Adjustment for Blue Light Cystoscopy Procedures
    (6) Analysis of C-APC Packaging Under the OPPS
    c. Calculation of Composite APC Criteria-Based Costs
    (1) Mental Health Services Composite APC
    (2) 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. CY 2018 Drug Administration Packaging Policies
    (1) Background of Drug Administration Packaging Policy
    (2) Packaging of Level 1 and Level 2 Drug Administration 
Services
    (3) Discussion and Summary of Comments Received in Response to 
Solicitation Regarding Unconditionally Packaging Drug Administration 
Add-On Codes
    c. Analysis of Packaging of Pathology Services in the OPPS
    d. Summary of Public Comments and Our Responses Regarding 
Packaging of Items and Services Under the OPPS
    4. Calculation of OPPS Scaled Payment Weights
    B. Conversion Factor Update
    C. Wage Index Changes

[[Page 59219]]

    D. Statewide Average Default CCRs
    E. Adjustment for Rural Sole Community Hospitals (SCHs) and 
Essential Access Community Hospitals (EACHs) Under Section 
1833(t)(13)(B) of the Act
    F. Payment Adjustment for Certain Cancer Hospitals for CY 2018
    1. Background
    2. Policy for CY 2018
    G. Hospital Outpatient Outlier Payments
    1. Background
    2. Outlier Calculation for CY 2018
    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 HCPCS Codes That Were Effective April 1, 
2017 for Which We Solicited Public Comments in the CY 2018 OPPS/ASC 
Proposed Rule
    2. Treatment of New HCPCS Codes Effective July 1, 2017 for Which 
We Solicited Public Comments in the CY 2018 OPPS/ASC Proposed Rule
    3. Process for New Level II HCPCS Codes That Are Effective 
October 1, 2017 and January 1, 2018 for Which We Are Soliciting 
Public Comments in This CY 2018 OPPS/ASC Final Rule With Comment 
Period
    4. Treatment of New and Revised CY 2018 Category I and III CPT 
Codes That Are Effective January 1, 2018 for Which We Solicited 
Public Comments in the CY 2018 OPPS/ASC Proposed Rule
    B. OPPS Changes--Variations Within APCs
    1. Background
    2. Application of the 2 Times Rule
    3. APC Exceptions to the 2 Times Rule
    C. New Technology APCs
    1. Background
    2. Revised and Additional New Technology APC Groups
    3. Procedures Assigned to New Technology APC Groups for CY 2018
    a. Overall Policy
    b. Magnetic Resonance-Guided Focused Ultrasound Surgery (MRgFUS) 
(APCs 1537, 5114, and 5415)
    c. Retinal Prosthesis Implant Procedure
    d. Pathogen Test for Platelets
    e. Fractional Flow Reserve Derived From Computed Tomography 
(FFRCT)
    D. OPPS APC-Specific Policies
    1. Blood-Driven Hematopoietic Cell Harvesting
    2. Brachytherapy Insertion Procedures (C-APCs 5341 and 5092)
    a. C-APC 5341 (Abdominal/Peritoneal/Biliary and Related 
Procedures)
    b. C-APC 5092 (Level 2 Breast/Lymphatic Surgery and Related 
Procedures)
    3. Care Management Coding Changes Effective January 1, 2018 
(APCs 5821 and 5822)
    4. Cardiac Telemetry (APC 5721)
    5. Collagen Cross-Linking of Cornea (C-APC 5503)
    6. Cryoablation Procedures for Lung Tumors (C-APC 5361)
    7. Diagnostic Bone Marrow Aspiration and Biopsy (C-APC 5072)
    8. Discussion of the Comment Solicitation in the Proposed Rule 
on Intraocular Procedures APCs
    9. Endovascular APCs (C-APCs 5191 Through 5194)
    10. Esophagogastroduodenoscopy (C-APC 5362)
    11. Hemorrhoid Treatment by Thermal Energy (APC 5312)
    12. Ileoscopy Through Stoma With Stent Placement (C-APC 5303)
    13. Laparoscopic Nephrectomy (C-APC 5362)
    14. Multianalyte Assays With Algorithmic Analyses (MAAA)
    15. Musculoskeletal APCs (APCs 5111 Through 5116)
    16. Nasal/Sinus Endoscopy Procedures (C-APC 5155)
    17. Nuclear Medicine Services (APCs 5592 and 5593)
    18. Percutaneous Transluminal Mechanical Thrombectomy (C-APC 
5192)
    19. Peripherally Inserted Central Venous Catheter (APC 5182)
    20. Pulmonary Rehabilitation Services (APCs 5732 and 5733) and 
Cardiac Rehabilitation Services (APC 5771)
    21. Radiology and Imaging Procedures and Services
    a. Imaging APCs
    b. Non-Ophthalmic Fluorescent Vascular Angiography (APC 5523)
    22. Sclerotherapy (APC 5054)
    23. Skin Substitutes (APCs 5053, 5054, and 5055)
    24. Subdermal Drug Implants for the Treatment of Opioid 
Addiction (APC 5735)
    25. Suprachoroidal Delivery of Pharmacologic Agent (APC 5694)
    26. Transperineal Placement of Biodegradable Material (C-APC 
5375)
    27. Transcranial Magnetic Stimulation Therapy (TMS) (APCs 5721 
and 5722)
    28. Transurethral Waterjet Ablation of Prostate (C-APC 5375)
    29. Transurethral Water Vapor Thermal Therapy of Prostate (C-APC 
5373)
IV. OPPS Payment for Devices
    A. Pass-Through Payments for Devices
    1. Beginning Eligibility Date for Device Pass-Through Status and 
Quarterly Expiration of Device Pass-Through Payments
    a. Background
    b. Expiration of Transitional Pass-Through Payment for Certain 
Devices
    2. New Device Pass-Through Applications
    a. Background
    b. Applications Received for Device Pass-Through Payment for CY 
2018
    B. Device-Intensive Procedures
    1. Background
    2. HCPCS Code-Level Device-Intensive Determination
    3. Device Edit Policy
    4. Adjustment to OPPS Payment for No Cost/Full Credit and 
Partial Credit Devices
    a. Background
    b. Policy for No Cost/Full Credit and Partial Credit Devices
    5. Payment Policy for Low-Volume Device-Intensive Procedures
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. 3-Year Transitional Pass-Through Payment Period for All Pass-
Through Drugs, Biologicals, and Radiopharmaceuticals and Expiration 
of Pass-Through Status
    3. Drugs and Biologicals With Expiring Pass-Through Payment 
Status in CY 2017
    4. Drugs, Biologicals, and Radiopharmaceuticals With New or 
Continuing Pass-Through Status in CY 2018
    5. Provisions for Reducing Transitional Pass-Through Payments 
for Policy-Packaged Drugs, Biologicals, and Radiopharmaceuticals to 
Offset Costs Packaged Into APC Groups
    B. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals 
Without Pass-Through Payment Status
    1. Criteria for Packaging Payment for Drugs, Biologicals, and 
Radiopharmaceuticals
    a. Packaging Threshold
    b. Packaging of Payment for HCPCS Codes That Describe Certain 
Drugs, Certain Biologicals, and Therapeutic Radiopharmaceuticals 
Under the Cost Threshold (``Threshold-Packaged Policy'')
    c. Policy Packaged Drugs, Biologicals, and Radiopharmaceuticals
    d. High Cost/Low Cost Threshold for Packaged Skin Substitutes
    e. Packaging Determination for HCPCS Codes That Describe the 
Same Drug or Biological But Different Dosages
    2. 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 2018 Payment Policy
    c. Biosimilar Biological Products
    3. Payment Policy for Therapeutic Radiopharmaceuticals
    4. Payment Adjustment Policy for Radioisotopes Derived From Non-
Highly Enriched Uranium Sources
    5. Payment for Blood Clotting Factors
    6. Payment for Nonpass-Through Drugs, Biologicals, and 
Radiopharmaceuticals With HCPCS Codes But Without OPPS Hospital 
Claims Data
    7. Alternative Payment Methodology for Drugs Purchased Under the 
340B Program
    a. Background
    b. OPPS Payment Rate for 340B Purchased Drugs
    c. Summaries of Public Comments Received and Our Responses
    d. Summary of Final Policies for CY 2018
    e. Comment Solicitation on Additional 340B Considerations

[[Page 59220]]

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 and Critical Care 
Services
VIII. Payment for Partial Hospitalization Services
    A. Background
    B. PHP APC Update for CY 2018
    1. PHP APC Geometric Mean per Diem Costs
    2. Development of the PHP APC Geometric Mean per Diem Costs
    a. CMHC Data Preparation: Data Trims, Exclusions, and CCR 
Adjustments
    b. Hospital-Based PHP Data Preparation: Data Trims and 
Exclusions
    3. PHP Service Utilization Updates
    4. Minimum Service Requirement: 20 Hours per Week
    C. Outlier Policy for CMHCs
IX. Procedures That Will Be Paid Only as Inpatient Procedures
    A. Background
    B. Changes to the Inpatient Only (IPO) List
    1. Methodology for Identifying Appropriate Changes to IPO List
    2. Removal of Procedures Described by CPT Code 55866
    3. Removal of the Total Knee Arthroplasty (TKA) Procedure 
Described by CPT Code 27447
    4. Recovery Audit Contractor (RAC) Review of TKA Procedures
    5. Public Requests for Additions to or Removal of Procedures on 
the IPO List
    6. Summary of Changes to the IPO List for CY 2018
    C. Discussion of Solicitation of Public Comments on the Possible 
Removal of Partial Hip Arthroplasty (PHA) and Total Hip Arthroplasty 
(THA) Procedures From the IPO List
    1. Background
    2. Topics and Questions Posed for Public Comments
X. Nonrecurring Policy Changes
    A. Payment for Certain Items and Services Furnished by Certain 
Off-Campus Departments of a Provider
    1. Background
    2. Expansion of Services by Excepted Off-Campus Hospital 
Outpatient Departments
    3. Section 16002 of the 21st Century Cures Act (Treatment of 
Cancer Hospitals in Off-Campus Outpatient Department of a Provider 
Policy)
    B. Medicare Site-of-Service Price Transparency (Section 4011 of 
the 21st Century Cures Act)
    C. Appropriate Use Criteria for Advanced Diagnostic Imaging 
Services
    D. Enforcement Instruction for the Supervision of Outpatient 
Therapeutic Services in Critical Access Hospitals (CAHs) and Certain 
Small Rural Hospitals
    E. Payment Changes for Film X-Rays Services and Payment Changes 
for X-Rays Taken Using Computed Radiography Technology
    F. Revisions to the Laboratory Date of Service Policy
XI. CY 2018 OPPS Payment Status and Comment Indicators
    A. CY 2018 OPPS Payment Status Indicator Definitions
    B. CY 2018 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
    3. Definition of ASC Covered Surgical Procedures
    B. Treatment of New and Revised Codes
    1. Background on Current Process for Recognizing New and Revised 
Category I and Category III CPT Codes and Level II HCPCS Codes
    2. Treatment of New and Revised Level II HCPCS Codes Implemented 
in April 2017 for Which We Solicited Public Comments in the CY 2018 
Proposed Rule
    3. Treatment of New and Revised Level II HCPCS Codes Implemented 
in July 2017 for Which We Solicited Public Comments in the CY 2018 
Proposed Rule
    4. Process for New and Revised Level II HCPCS Codes That Are 
Effective October 1, 2017 and January 1, 2018 for Which We Are 
Soliciting Public Comments in this CY 2018 OPPS/ASC Final Rule With 
Comment Period
    5. Process for Recognizing New and Revised Category I and 
Category III CPT Codes That Are Effective January 1, 2018 for Which 
We Are Soliciting Public Comments in This CY 2018 OPPS/ASC Final 
Rule With Comment Period
    C. Update to the List of ASC Covered Surgical Procedures and 
Covered Ancillary Services
    1. Covered Surgical Procedures
    a. Covered Surgical Procedures Designated as Office-Based
    (1) Background
    (2) Changes for CY 2018 to Covered Surgical Procedures 
Designated as Office-Based
    b. ASC Covered Surgical Procedures Designated as Device-
Intensive
    (1) Background
    (2) Changes to List of ASC Covered Surgical Procedures 
Designated as Device-Intensive for CY 2018
    c. Adjustment to ASC Payments for No Cost/Full Credit and 
Partial Credit Devices
    d. Additions to the List of ASC Covered Surgical Procedures
    e. Discussion of Comment Solicitation on Adding Additional 
Procedures to the ASC Covered Procedures List
    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 
CY2018
    2. Payment for Covered Ancillary Services
    a. Background
    b. Payment for Covered Ancillary Services for CY 2018
    E. New Technology Intraocular Lenses (NTIOLs)
    1. NTIOL Application Cycle
    2. Requests To Establish New NTIOL Classes for CY 2018
    3. Payment Adjustment
    4. Announcement of CY 2019 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 2018 and 
Future Years
    b. Updating the ASC Conversion Factor
    3. Discussion of Comment Solicitation on ASC Payment System 
Reform
    4. Display of CY 2018 ASC Payment Rates
XIII. Requirements for the Hospital Outpatient Quality Reporting 
(OQR) Program
    A. Background
    1. Overview
    2. Statutory History of the Hospital OQR Program
    3. Regulatory History of the Hospital OQR Program
    B. Hospital OQR Program Quality Measures
    1. Considerations in the Selection of Hospital OQR Program 
Quality Measures
    2. Accounting for Social Risk Factors in the Hospital OQR 
Program
    3. Retention of Hospital OQR Program Measures Adopted in 
Previous Payment Determinations
    4. Removal of Quality Measures From the Hospital OQR Program 
Measure Set
    a. Considerations in Removing Quality Measures From the Hospital 
OQR Program
    b. Criteria for Removal of ``Topped-Out'' Measures
    c. Measure Removal From the Hospital OQR Program Measure Set
    5. Make Reporting of OP-37a-e: Outpatient and Ambulatory Surgery 
Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) 
Survey-Based Measures Voluntary for CY 2018 Reporting and Subsequent 
Years
    6. Previously Adopted Hospital OQR Program Measure Set for the 
CY 2020 Payment Determination and Subsequent Years
    7. Newly Finalized Hospital OQR Program Measure Set for the CY 
2020 Payment Determination and Subsequent Years
    8. Hospital OQR Program Measures and Topics for Future 
Consideration
    a. Future Measure Topics
    b. Possible Future Adoption of the Electronic Version of OP-2: 
Fibrinolytic Therapy Received Within 30 Minutes of Emergency 
Department Arrival
    9. Maintenance of Technical Specifications for Quality Measures
    10. Public Display of Quality Measures
    a. Background

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    b. Public Reporting of OP-18c: Median Time From Emergency 
Department Arrival to Emergency Department Departure for Discharged 
Emergency Department Patients--Psychiatric/Mental Health Patients
    C. Administrative Requirements
    1. QualityNet Account and Security Administrator
    2. Requirements Regarding Participation Status
    a. Background
    b. Changes to the NOP Submission Deadline
    D. Form, Manner, and Timing of Data Submitted for the Hospital 
OQR Program
    1. Hospital OQR Program Annual Payment Determinations
    2. Requirements for Chart-Abstracted Measures Where Patient-
Level Data Are Submitted Directly to CMS for the CY 2021 Payment 
Determination and Subsequent Years
    3. Claims-Based Measure Data Requirements for the CY 2020 
Payment Determination and Subsequent Years
    4. Data Submission Requirements for OP-37a-e: Outpatient and 
Ambulatory Surgery Consumer Assessment of Healthcare Providers and 
Systems (OAS CAHPS) Survey-Based Measures for the CY 2020 Payment 
Determination and Subsequent Years
    5. Data Submission Requirements for Previously Finalized 
Measures for Data Submitted via a Web-Based Tool for the CY 2020 
Payment Determination and Subsequent Years
    6. Population and Sampling Data Requirements for the CY 2020 
Payment Determination and Subsequent Years
    7. Hospital OQR Program Validation Requirements for Chart-
Abstracted Measure Data Submitted Directly to CMS for the CY 2020 
Payment Determination and Subsequent Years
    a. Clarification
    b. Codification
    c. Modifications to the Educational Review Process for Chart-
Abstracted Measures Validation
    8. Extraordinary Circumstances Exception Process for the CY 2020 
Payment Determination and Subsequent Years
    a. ECE Policy Nomenclature
    b. Timeline for CMS Response to ECE Requests
    9. Hospital OQR Program Reconsideration and Appeals Procedures 
for the CY 2020 Payment Determination and Subsequent Years
    E. Payment Reduction for Hospitals That Fail To Meet the 
Hospital OQR Program Requirements for the CY 2018 Payment 
Determination
    1. Background
    2. Reporting Ratio Application and Associated Adjustment Policy 
for CY 2018
XIV. Requirements for the Ambulatory Surgical Center Quality 
Reporting (ASCQR) Program
    A. Background
    1. Overview
    2. Statutory History of the 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. Accounting for Social Risk Factors in the ASCQR Program
    3. Policies for Retention and Removal of Quality Measures From 
the ASCQR Program
    a. Retention of Previously Adopted ASCQR Program Measures
    b. Measure Removal
    4. Delay of ASC-15a-e: Outpatient and Ambulatory Surgery 
Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) 
Survey-Based Measures Beginning With the 2020 Payment Determination
    5. ASCQR Program Quality Measures Adopted in Previous Rulemaking
    6. ASCQR Program Quality Measures for the CY 2021 and CY 2022 
Payment Determinations and Subsequent Years
    a. Adoption of ASC-16: Toxic Anterior Segment Syndrome Beginning 
With the CY 2021 Payment Determination
    b. Adoption of ASC-17: Hospital Visits After Orthopedic 
Ambulatory Surgical Center Procedures Beginning With the CY 2022 
Payment Determination
    c. Adoption of ASC-18: Hospital Visits After Urology Ambulatory 
Surgical Center Procedures Beginning With the CY 2022 Payment 
Determination
    d. Summary of Previously Adopted Measurers and Newly Adopted 
ASCQR Program Measures for the CY 2022 Payment Determination and 
Subsequent Years
    7. ASCQR Program Measures and Topics for Future Consideration
    8. Maintenance of Technical Specifications for Quality Measures
    9. Public Reporting of ASCQR Program Data
    C. Administrative Requirements
    1. Requirements Regarding QualityNet Account and Security 
Administrator
    2. Requirements Regarding Participation Status
    D. 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 an Online Data Submission 
Tool
    a. Requirements for Data Submitted via a Non-CMS Online Data 
Submission Tool
    b. Requirements for Data Submitted via a CMS Online Data 
Submission Tool
    4. Requirements for Claims-Based Measure Data
    5. Requirements for Data Submission for ASC-15a-e: Outpatient 
and Ambulatory Surgery Consumer Assessment of Healthcare Providers 
and Systems (OAS CAHPS) Survey-Based Measures
    6. Extraordinary Circumstances Extensions or Exemptions for the 
CY 2019 Payment Determination and Subsequent Years
    a. Background
    b. ECE Policy Nomenclature
    c. Timeline for CMS Response to ECE Requests
    7. ASCQR Program Reconsideration Procedures
    E. 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
XV. Files Available to the Public via the Internet
XVI. Collection of Information Requirements
    A. Statutory Requirement for Solicitation of Comments
    B. ICRs for the Hospital OQR Program
    C. ICRs for the ASCQR Program
XVII. Response to Comments
XVIII. Economic Analyses
    A. Regulatory Impact Analysis
    1. Introduction
    2. Statement of Need
    3. Overall Impacts for the OPPS and ASC Payment Provisions
    4. Regulatory Review Costs
    5. 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 to Part B Drug Payment on 
340B Eligible Hospitals Paid Under the OPPS
    (3) Estimated Effects of OPPS Changes on Hospitals
    (4) Estimated Effects of OPPS Changes on CMHCs
    (5) Estimated Effects of OPPS Changes on Beneficiaries
    (6) Estimated Effects of OPPS Changes on Other Providers
    (7) Estimated Effects of OPPS Changes on the Medicare and 
Medicaid Programs
    (8) Alternative OPPS Policies Considered
    b. Estimated Effects of CY 2018 ASC Payment System Policies
    (1) Limitations of Our Analysis
    (2) Estimated Effects of CY 2018 ASC 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 Requirements for the ASCQR Program
    B. Regulatory Flexibility Act (RFA) Analysis
    C. Unfunded Mandates Reform Act Analysis
    D. Reducing Regulation and Controlling Regulatory Costs
    E. Conclusion
XIX. Federalism Analysis
Regulation Text

I. Summary and Background

A. Executive Summary of This Document

1. Purpose
    In this final rule with comment period, we are updating the payment

[[Page 59222]]

policies and payment rates for services furnished to Medicare 
beneficiaries in hospital outpatient departments (HOPDs) and ambulatory 
surgical centers (ASCs) beginning January 1, 2018. Section 1833(t) of 
the Social Security Act (the Act) requires us to annually review and 
update the payment rates for services payable under the Hospital 
Outpatient Prospective Payment System (OPPS). Specifically, section 
1833(t)(9)(A) of the Act requires the Secretary to review certain 
components of the OPPS not less often than annually, and to revise the 
groups, relative payment weights, and other adjustments that take into 
account changes in medical practices, changes in technologies, and the 
addition of new services, new cost data, and other relevant information 
and factors. In addition, 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.
2. Summary of the Major Provisions
     OPPS Update: For CY 2018, we are increasing the payment 
rates under the OPPS by an Outpatient Department (OPD) fee schedule 
increase factor of 1.35 percent. This increase factor is based on the 
hospital inpatient market basket percentage increase of 2.7 percent for 
inpatient services paid under the hospital inpatient prospective 
payment system (IPPS), minus the multifactor productivity (MFP) 
adjustment of 0.6 percentage point, and minus a 0.75 percentage point 
adjustment required by the Affordable Care Act. Based on this update, 
we estimate that total payments to OPPS providers (including 
beneficiary cost-sharing and estimated changes in enrollment, 
utilization, and case-mix) for CY 2018 is approximately $70 billion, an 
increase of approximately $5.8 billion compared to estimated CY 2017 
OPPS payments.
    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.
     High Cost/Low Cost Threshold for Packaged Skin 
Substitutes: As we did for CY 2017, we are assigning skin substitutes 
with a geometric mean unit cost (MUC) or a per day cost (PDC) that 
exceeds either the MUC threshold or the PDC threshold to the high cost 
group. In addition, for CY 2018, we are establishing that a skin 
substitute product that does not exceed either the CY 2018 MUC or PDC 
threshold for CY 2018, but was assigned to the high cost group for CY 
2017, is assigned to the high cost group for CY 2018. The goal of our 
policy is to maintain similar levels of payment for skin substitute 
products for CY 2018 while we study our current skin substitute payment 
methodology to determine whether refinements to our existing 
methodologies may be warranted.
     Supervision of Hospital Outpatient Therapeutic Services: 
In the CY 2009 and CY 2010 OPPS/ASC proposed rules and final rules with 
comment period, we clarified that direct supervision is required for 
hospital outpatient therapeutic services covered and paid by Medicare 
that are furnished in hospitals, CAHs, and in provider-based 
departments (PBDs) of hospitals, as set forth in the CY 2000 OPPS final 
rule with comment period. For several years, there has been a 
moratorium on the enforcement of the direct supervision requirement for 
CAHs and small rural hospitals, with the latest moratorium on 
enforcement expiring on December 31, 2016. In this final rule with 
comment period, as we proposed, we are reinstating the nonenforcement 
policy for direct supervision of outpatient therapeutic services 
furnished in CAHs and small rural hospitals having 100 or fewer beds 
and reinstating our enforcement instruction for CY 2018 and CY 2019.
     340B Drug Pricing: We are changing our current Medicare 
Part B drug payment methodology for 340B hospitals that we believe will 
better, and more appropriately, reflect the resources and acquisition 
costs that these hospitals incur. These changes will lower drug costs 
for Medicare beneficiaries for drugs acquired by hospitals under the 
340B Program. For CY 2018, we are exercising the Secretary's authority 
to adjust the applicable payment rate as necessary for separately 
payable drugs and biologicals (other than drugs on pass-through payment 
status and vaccines) acquired under the 340B Program from average sales 
price (ASP) plus 6 percent to ASP minus 22.5 percent. Rural sole 
community hospitals (SCHs), children's hospitals, and PPS-exempt cancer 
hospitals are excluded from this payment adjustment in CY 2018. In 
addition, in this final rule with comment period, we are establishing 
two modifiers to identify whether a drug billed under the OPPS was 
purchased under the 340B Program--one for hospitals that are subject to 
the payment reduction and another for hospitals not subject to the 
payment reduction but that acquire drugs under the 340B Program.
     Device Pass-Through Payment Applications: For CY 2018, we 
evaluated five devices for eligibility to receive pass through payments 
and sought public comments in the CY 2018 proposed rule on whether each 
of these items meet the criteria for device pass-through payment 
status. None of the applications were approved for device pass-through 
payments for CY 2018.
     Rural Adjustment: We are continuing the adjustment of 7.1 
percent to the OPPS payments to certain rural 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 2018, 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. However, beginning CY 2018, section 16002(b) of the 21st Century 
Cures Act requires that this weighted average PCR be reduced by 1.0 
percentage point. Based on the data and the required 1.0 percentage 
point reduction, a target PCR of 0.88 will be used to determine the CY 
2018 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 0.88 for each cancer 
hospital.
     Changes to the Inpatient Only List: For CY 2018, we are 
finalizing our proposal to remove total knee arthroplasty (TKA) from 
the inpatient only list. In addition, we are precluding the Recovery 
Audit Contractors from reviewing TKA procedures for ``patient status'' 
(that is, site of service) for a period of 2 years. We note that we 
will monitor changes in site of service to determine whether changes 
may be necessary to certain CMS Innovation Center models. In addition, 
we are removing five other procedures from the inpatient only list and 
adding one procedure to the list.
     Comprehensive APCs: For CY 2018, we did not propose to 
create any new

[[Page 59223]]

C-APCs or make any extensive changes to the already established 
methodology used for C-APCs. There will be a total number of 62 C-APCs 
as of January 1, 2018. For CY 2018, for the C-APC for stereotactic 
radio surgery (SRS), specifically, C-APC 5627 (Level 7 Radiation 
Therapy), we are continuing to make separate payments for the 10 
planning and preparation services adjunctive to the delivery of the SRS 
treatment using either the Cobalt-60-based or LINAC-based technology 
when furnished to a beneficiary within 30 days of the SRS treatment. In 
addition, the data collection period for SRS claims with modifier 
``CP'' is set to conclude on December 31, 2017. Accordingly, for CY 
2018, we are deleting this modifier and discontinuing its required use.
     Packaging Policies: In CY 2015, we implemented a policy to 
conditionally package ancillary services assigned to APCs with a 
geometric mean cost of $100 or less prior to packaging, with some 
exceptions, including drug administration services. For CY 2018, we are 
removing the exception for certain drug administration services and 
conditionally packaging payment for low-cost drug administration 
services. We did not propose to package drug administration add-on 
codes for CY 2018, but solicited comments on this policy. The public 
comments that we received are discussed in this final rule with comment 
period. In addition, we solicited comments on existing packaging 
policies that exist under the OPPS, including those related to drugs 
that function as a supply in a diagnostic test or procedure or in a 
surgical procedure. The public comments that we received are also 
discussed in this final rule with comment period.
     Payment Changes for X-rays Taken Using Computed 
Radiography Technology: Section 502(b) of Division O, Title V of the 
Consolidated Appropriations Act, 2016 (Pub. L. 114-113) amended section 
1833(t)(16) of the Act by adding new subparagraph (F). New section 
1833(t)(16)(F)(ii) of the Act provides for a phased-in reduction of 
payments for imaging services that are taken using computed radiography 
technology. That section provides that payments for such services 
furnished during CYs 2018 through 2022 shall be reduced by 7 percent, 
and if such services are furnished during CY 2023 or a subsequent year, 
payments for such services shall be reduced by 10 percent. We are 
establishing a new modifier that will be reported on claims to identify 
those HCPCS codes that describe X-rays taken using computed radiography 
technology. Specifically, this modifier, as allowed under the 
provisions of new section 1833(t)(16)(F)(ii) of the Act, will be 
reported with the applicable HCPCS code to describe imaging services 
that are taken using computed radiography technology beginning January 
1, 2018.
     ASC Payment Update: For CY 2018, we are increasing payment 
rates under the ASC payment system by 1.2 percent for ASCs that meet 
the quality reporting requirements under the ASCQR Program. This 
increase is based on a projected CPI-U update of 1.7 percent minus a 
multifactor productivity adjustment required by the Affordable Care Act 
of 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 2018 is 
approximately $4.62 billion, an increase of approximately $130 million 
compared to estimated CY 2017 Medicare payments. In addition, in the CY 
2018 proposed rule, we solicited comment on payment reform for ASCs, 
including the collection of cost data which may support a rate update 
other than CPI-U. We discuss the public comments that we received in 
response to this solicitation in this final rule with comment period.
     Comment Solicitation on ASC Payment Reform: In the CY 2018 
proposed rule, we indicated that we were broadly interested in feedback 
from stakeholders and other interested parties on potential reforms to 
the current payment system, including, but not limited to (1) the rate 
update factor applied to ASC payments, (2) whether and how ASCs should 
submit data relating to costs, (3) whether ASCs should bill on the 
institutional claim form rather than the professional claim form, and 
(4) other ideas to improve payment accuracy for ASCs. We discuss the 
feedback we received in this final rule with comment period.
     Changes to the List of ASC Covered Surgical Procedures: 
For CY 2018, we are adding three procedures to the ASC covered 
procedures list. In addition, in the CY 2018 proposed rule, we 
solicited comment on whether total knee arthroplasty, partial hip 
arthroplasty and total hip arthroplasty meet the criteria to be added 
to the ASC covered procedures list. We also solicited comments from 
stakeholders on whether there are codes that are outside the AMA-CPT 
surgical code range that nonetheless, should be considered to be a 
covered surgical procedure. We discuss the public comments we received 
on this solicitation in this final rule with comment period.
     Revisions to the Laboratory Date of Service Policy: To 
better understand the potential impact of the current date of service 
(DOS) policy on billing for molecular pathology tests and advanced 
diagnostic laboratory tests (ADLTs) under the new private payor rate-
based Clinical Laboratory Fee Schedule (CLFS), in the CY 2018 proposed 
rule, we solicited public comments on billing for molecular pathology 
tests and certain ADLTs ordered less than 14 days of a hospital 
outpatient discharge and discussed potential modifications to our DOS 
policy to address those tests. After considering the public comments 
received, we are adding an additional exception to our current 
laboratory DOS regulations at 42 CFR 414.510. This new exception to the 
laboratory DOS policy generally permits laboratories to bill Medicare 
directly for ADLTs and molecular pathology tests excluded from OPPS 
packaging policy if the specimen was collected from a hospital 
outpatient during a hospital outpatient encounter and the test was 
performed following the patient's discharge from the hospital 
outpatient department. We discuss the public comments we received on 
this solicitation in this final rule with comment period.
     Hospital Outpatient Quality Reporting (OQR) Program: For 
the Hospital OQR Program, we are finalizing our proposals to remove and 
delay certain measures for the CY 2020 payment determination and 
subsequent years. Specifically, beginning with the CY 2020 payment 
determination, we are finalizing our proposals to remove: (1) OP-21: 
Median Time to Pain Management for Long Bone Fracture; and (2) OP-26: 
Hospital Outpatient Volume Data on Selected Outpatient Surgical 
Procedures. While we proposed to remove: OP-1: Median Time to 
Fibrinolysis, OP-4: Aspirin at Arrival, OP-20: Door to Diagnostic 
Evaluation by a Qualified Medical Professional, and OP-25: Safe Surgery 
Checklist for the CY 2021 payment determination and subsequent years, 
we are finalizing these proposals with modification, such that we are 
removing them for the CY 2020 payment determination and subsequent 
years, one year earlier than proposed. We are also finalizing our 
proposal to delay the OAS CAHPS Survey-based measures (OP-37 a-e) 
beginning with the CY 2020 payment determination (CY 2018 reporting). 
In addition, for the CY 2020 payment determination and subsequent years 
we are: (1) Providing clarification on our procedures for validation of 
chart-abstracted measures for targeting the poorest performing outlier 
hospitals; (2)

[[Page 59224]]

formalizing the validation educational review process and updating it 
to allow corrections of incorrect validation results for chart-
abstracted measures, and modifying the CFR accordingly; (3) aligning 
the first quarter for which to submit data for hospitals that did not 
participate in the previous year's Hospital OQR Program and make 
corresponding changes to the CFR; and (4) aligning the naming of the 
Extraordinary Circumstances Exceptions (ECE) policy with that used in 
our other quality reporting and value-based payment programs and making 
corresponding changes to the CFR. We are not finalizing our proposal to 
extend the Notice of Participation (NOP) deadline and make 
corresponding changes to the CFR. Lastly, we are finalizing with 
modifications, our proposal to publicly report OP-18c: Median Time from 
Emergency Department Arrival to Emergency Department Departure for 
Discharged Emergency Department Patients--Psychiatric/Mental Health 
Patients.
     Ambulatory Surgical Center Quality Reporting (ASCQR) 
Program: For the ASCQR Program, we are finalizing measures and policies 
for the CY 2019 payment determination, 2021 payment determination, and 
CY 2022 payment determination and subsequent years. Specifically, we 
are finalizing our proposals to, beginning with the CY 2019 payment 
determination, remove three measures from the ASCQR Program measure 
set: (1) ASC-5: Prophylactic Intravenous (IV) Antibiotic Timing; (2) 
ASC-6: Safe Surgery Checklist Use; and, (3) ASC-7: Ambulatory Surgical 
Center Facility Volume Data on Selected Ambulatory Surgical Center 
Surgical Procedures. In addition, we are also finalizing our proposal 
to delay the OAS CAHPS Survey measures (ASC-15a-e) beginning with the 
CY 2020 payment determination (CY 2018 data collection). Furthermore, 
starting with CY 2018, we are finalizing our proposals to: (1) Expand 
the CMS online tool to also allow for batch submission of measure data 
and make corresponding changes to the CFR; and (2) align the naming of 
the Extraordinary Circumstances Exceptions (ECE) policy with that used 
in our other quality reporting and value-based payment programs and 
make corresponding changes to the CFR. We are not finalizing our 
proposal to adopt one new measure, ASC-16: Toxic Anterior Segment 
Syndrome, beginning with the CY 2021 payment determination. However, we 
are finalizing proposals to adopt two new measures collected via 
claims, beginning with the CY 2022 payment determination, ASC-17: 
Hospital Visits after Orthopedic Ambulatory Surgical Center Procedures 
and ASC-18: Hospital Visits after Urology Ambulatory Surgical Center 
Procedures.
3. Summary of Costs and Benefits
    In sections XVIII. and XIX. 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 88 in section XVIII. 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 2018 compared to all estimated 
OPPS payments in CY 2017. We estimate that policies in this final rule 
with comment period will result in a 1.4 percent overall increase in 
OPPS payments to providers. We estimate that total OPPS payments for CY 
2018, including beneficiary cost-sharing, to the approximate 3,900 
facilities paid under the OPPS (including general acute care hospitals, 
children's hospitals, cancer hospitals, and CMHCs) will increase by 
approximately $690 million compared to CY 2017 payments, 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 17.2 percent increase in CY 2018 
payments to CMHCs relative to their CY 2017 payments.
(2) Impacts of the Updated Wage Indexes
    We estimate that our update of the wage indexes based on the FY 
2018 IPPS final rule wage indexes results in no change for urban and 
rural hospitals under the OPPS. These wage indexes include the 
continued implementation of the OMB labor market area delineations 
based on 2010 Decennial Census data.
(3) Impacts of the Rural Adjustment and the Cancer Hospital Payment 
Adjustment
    There are no significant impacts of our CY 2018 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 hospital payment adjustments. While 
we are implementing the required reduction to the cancer hospital 
payment adjustment in Section 16002 of the 21st Century Cures Act for 
CY 2018, 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 1.35 percent to the conversion factor 
for CY 2018 will mitigate the impacts of the budget neutrality 
adjustments. As a result of the OPD fee schedule increase factor and 
other budget neutrality adjustments, we estimate that rural and urban 
hospitals will experience increases of approximately 1.3 percent for 
urban hospitals and 2.7 percent for rural hospitals. Classifying 
hospitals by teaching status, we estimate non-teaching hospitals will 
experience increases of 2.9 percent, minor teaching hospitals will 
experience increases of 1.7 percent, and major teaching hospitals will 
experience decreases of -0.9 percent. We also classified hospitals by 
type of ownership. We estimate that hospitals with voluntary ownership 
will experience increases of 1.3 percent, hospitals with proprietary 
ownership will experience increases of 4.5 percent and hospitals with 
government ownership will experience no change in payments.
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 2018 payment 
rates, compared to estimated CY 2017 payment rates, generally ranges 
between an increase of 1 to 5 percent, depending on the service, with 
some exceptions.

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-

[[Page 59225]]

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; the American Taxpayer Relief Act 
of 2012 (Pub. L. 112-240), enacted January 2, 2013; the Pathway for SGR 
Reform Act of 2013 (Pub. L. 113-67) enacted on December 26, 2013; the 
Protecting Access to Medicare Act of 2014 (PAMA, Pub. L. 113-93), 
enacted on March 27, 2014; the Medicare Access and CHIP Reauthorization 
Act (MACRA) of 2015 (Pub. L. 114-10), enacted April 16, 2015; the 
Bipartisan Budget Act of 2015 (Pub. L. 114-74), enacted November 2, 
2015; the Consolidated Appropriations Act, 2016 (Pub. L. 114-113), 
enacted on December 18, 2015, and the 21st Century Cures Act (Pub. L. 
114-255), enacted on December 13, 2016.
    Under the OPPS, we generally 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 Medicare 
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. In 
addition, section 1833(t)(1)(B)(v) of the Act does not include 
applicable items and services (as defined in subparagraph (A) of 
paragraph (21)) that are furnished on or after January 1, 2017 by an 
off-campus outpatient department of a provider (as defined in 
subparagraph (B) of paragraph (21). 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);

[[Page 59226]]

     Hospitals located in Maryland and paid under the Maryland 
All-Payer Model;
     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)(A) of the Act requires the Secretary to review certain 
components of the OPPS, not less often than annually, and to revise the 
groups, relative payment weights, and other adjustments that take into 
account changes in medical practices, changes in technologies, and the 
addition of new services, new cost data, and other relevant information 
and factors.
    Since initially implementing the OPPS, we have published final 
rules in the Federal Register annually to implement statutory 
requirements and changes arising from our continuing experience with 
this system. These rules can be viewed on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.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, 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 HOP 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 Panel, and at that time named the APC Panel. This 
expert panel is composed of 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--
     May advise on the clinical integrity of Ambulatory Payment 
Classification (APC) groups and their associated weights;
     May advise on the appropriate supervision level for 
hospital outpatient services;
     Continues to be technical in nature;
     Is governed by the provisions of the FACA;
     Has a Designated Federal Official (DFO); and
     Is chaired by a Federal Official designated by the 
Secretary.
    The Panel's charter was amended on November 15, 2011, renaming the 
Panel and expanding the Panel's authority to include supervision of 
hospital outpatient therapeutic services and to add critical access 
hospital (CAH) representation to its membership. The Panel's charter 
was also amended on November 6, 2014 (80 FR 23009), and the number of 
members was revised from up to 19 to up to 15 members. The Panel's 
current charter was approved on November 21, 2016, for a 2-year period 
(81 FR 94378).
    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: https://www.cms.gov/Regulations-and-Guidance/Guidance/FACA/AdvisoryPanelonAmbulatoryPaymentClassificationGroups.html.
3. Panel Meetings and Organizational Structure
    The Panel has held multiple meetings, with the last meeting taking 
place on August 21, 2017. 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, to announce new members and 
to announce any other changes of which the public should be aware. 
Beginning in CY 2017, we have transitioned to one meeting per year (81 
FR 31941). Further information on the 2017 summer meeting can be found 
in the meeting notice titled ``Medicare Program: Announcement of the 
Advisory Panel on Hospital Outpatient Payment (the Panel) Meeting on 
August 21-22, 2017'' (82 FR 24128).
    In addition, 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 
include the following:
     APC Groups and Status Indicator Assignments Subcommittee, 
which advises the Panel on the appropriate status indicators 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, as 
well as the appropriate APC assignment of HCPCS codes regarding 
services for which separate payment is made;
     Data Subcommittee, which is responsible for studying the 
data issues confronting the Panel and for recommending options for 
resolving them; and
     Visits and Observation Subcommittee, which reviews and 
makes recommendations to the Panel on all technical issues pertaining 
to observation services and hospital outpatient visits paid under the 
OPPS.
    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 21, 2017 meeting that the subcommittees 
continue. We accepted this recommendation.
    In addition, discussions of the other recommendations made by the 
Panel at the August 21, 2017 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://facadatabase.gov.

[[Page 59227]]

    We note that we received some public comments on the CY 2018 OPPS/
ASC proposed rule related to the HOP Panel meeting presentations, which 
we address below.
    Comment: One commenter supported CMS' extension of the HOP Panel 
meeting presentation submission deadline when there is a truncated 
submittal timeframe due to delayed publication of the OPPS/ASC proposed 
rule. However, to avoid the need to modify the submission deadline in 
the future, the commenter suggested that CMS revise the submission 
deadline in the Federal Register notice from a firm date to a fluid 21 
days from the proposed rule display date to avoid this deadline issue 
in the future.
    Response: We appreciate the commenter's request to modify the HOP 
Panel meeting submission deadline format. However, frequency, timing, 
and presentation deadlines are outside the scope of the proposed rule 
and are generally announced through either a separate Federal Register 
notice or subregulatory channel such as the CMS Web site, or both.
    Comment: One commenter requested that CMS reinstate the winter 
Panel meetings as part of a multifaceted process that would allow for 
multiple proposal refinements with Panel input prior to finalization of 
a policy. The commenter also suggested that CMS use this winter meeting 
as a vehicle to allow stakeholders to review and discuss updated cost 
data for HCPCS codes and APCs prior to the release of the data in the 
proposed rule.
    Response: We appreciate the commenter's request to modify the Panel 
meeting processes. However, the frequency of Panel meetings is outside 
the scope of the proposed rule; meetings are generally announced 
through either a separate Federal Register notice or a subregulatory 
channel such as the CMS Web site, or both.

F. Public Comments Received on the CY 2017 OPPS/ASC Final Rule With 
Comment Period

    We received 39 timely pieces of correspondence on the CY 2017 OPPS/
ASC final rule with comment period that appeared in the Federal 
Register on November 14, 2016 (81 FR 79562), some of which contained 
comments on the interim APC assignments and/or status indicators of new 
or replacement Level II HCPCS codes (identified with comment indicator 
``NI'' in OPPS Addendum B, ASC Addendum AA, and ASC Addendum BB to that 
final rule), the potential limitation on clinical service line 
expansion or volume of service increases by nonexcepted off-campus 
provider-based departments, and the Medicare Physician Fee Schedule 
(MPFS) payment rates for nonexcepted items and services furnished and 
billed by nonexcepted off-campus provider-based departments of 
hospitals. Summaries of the public comments are set forth in the CY 
2018 proposed rule and this final rule with comment period under the 
appropriate subject matter headings. Summaries of public comments on 
the MPFS payment rates for nonexcepted items and services are set forth 
in the CY 2018 MPFS 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
    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 2018 OPPS/ASC proposed rule (82 FR 33568), for CY 2018, 
we proposed to recalibrate the APC relative payment weights for 
services furnished on or after January 1, 2018, and before January 1, 
2019 (CY 2018), using the same basic methodology that we described in 
the CY 2017 OPPS/ASC final rule with comment period (81 FR 79574 
through 79595). For this final rule with comment period, for CY 2018, 
we recalibrated the APC relative payment weights for services furnished 
on or after January 1, 2018, and before January 1, 2019 (CY 2018), 
using the same basic methodology that we described in the CY 2017 OPPS/
ASC final rule with comment period, using updated CY 2016 claims data. 
That is, we 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.
    For the purpose of recalibrating the APC relative payment weights 
for CY 2018, we began with approximately 163 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, 2016, and before January 1, 2017, before applying our 
exclusionary criteria and other methodological adjustments. After the 
application of those data processing changes, we used approximately 86 
million final action claims to develop the CY 2018 OPPS payment 
weights. For exact numbers of claims used and additional details on the 
claims accounting process, we refer readers to the claims accounting 
narrative under supporting documentation for this CY 2018 OPPS/ASC 
final rule with comment period on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
    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 2018. The list of bypass codes contains codes that 
were reported on claims for services in CY 2016 and, therefore, 
includes codes that were in effect in CY 2016 and used for billing, but 
were deleted for CY 2017. We retained these deleted bypass codes on the 
CY 2018 bypass list because these codes existed in CY 2016 and were 
covered OPD services in that period, and CY 2016 claims data are used 
to calculate CY 2018 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 are 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 
2018 are identified by asterisks (*) in the fourth column of Addendum 
N.
    Table 1 below contains the list of codes that we are removing from 
the CY 2018 bypass list.

        Table 1--HCPCS Codes Removed From the CY 2018 Bypass List
------------------------------------------------------------------------
           HCPCS code                     HCPCS short descriptor
------------------------------------------------------------------------
77305...........................  Teletx isodose plan simple.
77310...........................  Teletx isodose plan intermed.
77315...........................  Teletx isodose plan complex.
77327...........................  Brachytx isodose calc intern.
90801...........................  Psy dx interview.
90802...........................  Intac psy dx interview.
90804...........................  Psytx office 20-30 min.
90805...........................  Psytx off 20-30 min w/e&m.
90806...........................  Psytx off 45-50 min.
90807...........................  Psytx off 45-50 min w/e&m.
90808...........................  Psytx office 75-80 min.
90809...........................  Psytx off 75-80 w/e&m.
90810...........................  Intac psytx off 20-30 min.
90811...........................  Intac psytx 20-40 w/e&m.
90812...........................  Intac psytx off 45-50 min.
90857...........................  Intac group psytx.
90862...........................  Medication management.
95115...........................  Immunotherapy one injection.
95117...........................  Immunotherapy injections.

[[Page 59228]]

 
95144...........................  Antigen therapy services.
95147...........................  Antigen therapy services.
95165...........................  Antigen therapy services.
96402...........................  Chemo hormon antineopl sq/im.
99201...........................  Office/outpatient visit new.
99202...........................  Office/outpatient visit new.
99203...........................  Office/outpatient visit new.
99204...........................  Office/outpatient visit new.
99205...........................  Office/outpatient visit new.
99212...........................  Office/outpatient visit est.
99213...........................  Office/outpatient visit est.
99214...........................  Office/outpatient visit est.
C1300...........................  Hyperbaric oxygen.
G0340...........................  Robt lin-radsurg fractx 2-5.
G9141...........................  Influenza A H1N1, admin w cou.
M0064...........................  Visit for drug monitoring.
------------------------------------------------------------------------

b. Calculation and Use of Cost-to-Charge Ratios (CCRs)
    For CY 2018, in this CY 2018 OPPS/ASC final rule with comment 
period, as we proposed, we are continuing 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 
CY 2018 APC payment rates are based, we calculated hospital-specific 
overall ancillary CCRs and hospital-specific departmental CCRs for each 
hospital for which we had CY 2016 claims data by comparing these claims 
data to the most recently available hospital cost reports, which, in 
most cases, are from CY 2015. For the final CY 2018 OPPS payment rates, 
we used the set of claims processed during CY 2016. 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 2016 
(the year of claims data we used to calculate the CY 2018 OPPS payment 
rates) and found that the National Uniform Billing Committee (NUBC) did 
not add any new revenue codes to the NUBC 2016 Data Specifications 
Manual.
    In accordance with our longstanding policy, we calculate CCRs for 
the standard and nonstandard cost centers accepted by the electronic 
cost report database. In general, the most detailed level at which we 
calculate CCRs is 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.a.(1) of this final rule with comment period.
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74840 
through 74847), we finalized our policy of creating new cost centers 
and distinct CCRs for implantable devices, MRIs, CT scans, and cardiac 
catheterization. However, in response to the CY 2014 OPPS/ASC proposed 
rule, commenters reported that some hospitals currently use an 
imprecise ``square feet'' allocation methodology for the costs of large 
moveable equipment like CT scan and MRI machines. They indicated that 
while CMS recommended using two alternative allocation methods, 
``direct assignment'' or ``dollar value,'' as a more accurate 
methodology for directly assigning equipment costs, industry analysis 
suggested that approximately only half of the reported cost centers for 
CT scans and MRIs rely on these preferred methodologies. In response to 
concerns from commenters, we finalized a policy for the CY 2014 OPPS 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 (78 FR 74847). Further, we finalized a 
transitional policy to estimate imaging APC relative payment weights 
using only CT and MRI cost data from providers that do not use ``square 
feet'' as the cost allocation statistic. We provided that this 
finalized policy would sunset in 4 years to provide a sufficient time 
for hospitals to transition to a more accurate cost allocation method 
and for the related data to be available for ratesetting purposes (78 
FR 74847). Therefore, beginning CY 2018, with the sunset of the 
transition policy, we will estimate the imaging APC relative payment 
weight using cost data from all providers, regardless of the cost 
allocation statistic employed.
    As we discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 
33570), some stakeholders have raised concerns regarding using claims 
from all providers to calculate CT and MRI CCRs, regardless of the cost 
allocations statistic employed (78 FR 74840 through 74847). 
Stakeholders noted that providers continue to use the ``square feet'' 
cost allocation method and that including claims from such providers 
would cause significant reductions in imaging APC payment rates.
    Table 2 below demonstrates the relative effect on imaging APC 
payments after removing cost data for providers that report CT and MRI 
standard cost centers using ``square feet'' as the cost allocation 
method by extracting HCRIS data on Worksheet B-1. Table 3 below 
provides statistical values based on the CT and MRI standard cost 
center CCRs using the different cost allocation methods.

  Table 2--Percentage Change in Estimate Cost for CT and MRI APCs When
    Excluding Claims From Provider Using ``Square Feet'' as the Cost
                            Allocation Method
------------------------------------------------------------------------
                                                            Percentage
              APC                    APC descriptor           change
------------------------------------------------------------------------
5521..........................  Level 1 Imaging without             -3.8
                                 Contrast.
5522..........................  Level 2 Imaging without              5.3
                                 Contrast.
5523..........................  Level 3 Imaging without              6.3
                                 Contrast.
5524..........................  Level 4 Imaging without              5.0
                                 Contrast.
5571..........................  Level 1 Imaging with                 9.0
                                 Contrast.
5572..........................  Level 2 Imaging with                 7.0
                                 Contrast.
5573..........................  Level 3 Imaging with                 2.1
                                 Contrast.
8005..........................  CT and CTA without                  14.4
                                 Contrast Composite.
8006..........................  CT and CTA with Contrast            11.9
                                 Composite.

[[Page 59229]]

 
8007..........................  MRI and MRA without                  7.2
                                 Contrast Composite.
8008..........................  MRI and MRA with                     7.5
                                 Contrast Composite.
------------------------------------------------------------------------


                Table 3--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...................................          0.0387          0.0538          0.0795          0.1059
Square Feet Only................................          0.0317          0.0488          0.0717          0.0968
Direct Assign...................................          0.0557          0.0650          0.1032          0.1222
Dollar Value....................................          0.0457          0.0603          0.0890          0.1178
Direct Assign and Dollar Value..................          0.0457          0.0603          0.0893          0.1175
----------------------------------------------------------------------------------------------------------------

    Our analysis showed that since the CY 2014 OPPS in which we 
established the transition policy, the number of valid MRI CCRs has 
increased by 17.5 percent to 2,177 providers and the number of valid CT 
CCRs has increased by 15.1 percent to 2,251 providers. However, in the 
proposed rule, we noted that, as shown in Table 2 above, nearly all 
imaging APCs would see an increase in payment rates for CY 2018 if 
claims from providers that report ``square feet'' cost allocation 
method were removed. This can be attributed to the generally lower CCR 
values from providers that use a cost allocation method of ``square 
feet'' as shown in Table 3 above. We stated in the proposed rule that 
we believe that the imaging CCRs that we have are appropriate for 
ratesetting. However, in response to provider concerns and to provide 
added flexibility for hospitals to improve their cost allocation 
methods, we proposed to extend the transition policy an additional 
year, for the CY 2018 OPPS.
    For the CY 2018 OPPS, we proposed to continue to remove claims from 
providers that use a cost allocation method of ``square feet'' to 
calculate CCRs used to estimate costs with the CT and MRI APCs 
identified in Table 2 above. Beginning in CY 2019, we would estimate 
the imaging APC relative payment weights using cost data from all 
providers, regardless of the cost allocation statistic employed.
    Comment: Commenters supported CMS' proposal to extend the 
transition policy an additional year, for the CY 2018 OPPS. Several 
commenters recommended that CMS continue to remove claims from 
providers that use a cost allocation method of ``square feet'' to 
calculate CT and MRI CCRs in subsequent calendar years.
    Response: We thank the commenters for their support. As we 
discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33570), our 
analysis shows that the number of valid MRI and CT CCRs has increased 
since we established the transition policy. We believe extending our 
transition policy for 1 additional year will provide hospitals adequate 
time to implement a more accurate cost allocation method for the costs 
of large moveable equipment like CT scan and MRI machines.
    Comment: Some commenters recommended that CMS discontinue the use 
of CT and MRI cost centers for developing CT and MRI CCRs. One 
commenter believed that creating separate CT and MRI cost centers has 
resulted in a decline in geometric means for imaging APCs which can be 
attributed to costs being dropped out and changes in hospital charging 
practices.
    Response: We are not convinced that the change in CT and MRI CCRs 
over the previous years is a result of costs not being reported 
accurately. The standard cost centers for CT scans and MRIs have been 
in effect since cost reporting periods beginning on or after May 1, 
2010, on the revised Medicare cost report Form CMS-2552-10. Therefore, 
the cost reports that we used to develop the CY 2018 OPPS relative 
payment weights were the fifth or sixth opportunity for hospitals to 
submit cost reports with the CT and MRI cost centers. However, we will 
continue to monitor cost reporting practices with respect to CT scan 
and MRI cost centers as well as trends in CT and MRI CCRs.
    After consideration of the public comments we received, we are 
finalizing our proposal to extend our transition policy for 1 
additional year and continue to remove claims from providers that use a 
cost allocation method of ``square feet'' to calculate CT and MRI CCRs 
for the CY 2018 OPPS.
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 2018. 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 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 upon payment of an administrative fee 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 obtaining the ``OPPS Limited Data Set,'' which now 
includes the additional variables previously available only in the OPPS 
Identifiable Data Set, including ICD-10-CM diagnosis codes and revenue 
code payment amounts. This file is derived from the CY 2016 claims that 
were used to calculate the payment rates for the CY 2018 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

[[Page 59230]]

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 2018, in this CY 2018 OPPS/
ASC final rule with comment period, as we proposed, we are continuing 
to use geometric mean costs to calculate the relative weights on which 
the CY 2018 OPPS payment rates are based.
    We used the methodology described in sections II.A.2.a. through 
II.A.2.c. of this final rule with comment period to calculate the costs 
we used to establish the relative payment weights used in calculating 
the OPPS payment rates for CY 2018 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.
    For details of the claims process used in this final rule with 
comment period, we refer readers to the claims accounting narrative 
under supporting documentation for this CY 2018 OPPS/ASC final rule 
with comment period on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
a. Calculation of Single Procedure APC Criteria-Based Costs
(1) Blood and Blood Products
(a) Methodology
    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 2018 OPPS/ASC proposed rule (82 FR 33571), 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 also 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 2018 payment rates for 
blood and blood products are based using the actual blood-specific CCR 
for hospitals that reported costs and charges for a blood cost center 
and a hospital-specific, simulated blood-specific CCR for hospitals 
that did not report costs and charges for a blood cost center.
    We continue to believe 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 2018 
would 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 CYs 2014 
through 2017 OPPS/ASC final rules with comment period (78 FR 74861 
through 74910, 79 FR 66798 through 66810, 80 FR 70325 through 70339, 
and 81 FR 79580 through 79585, respectively), 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. Under this policy, we include the 
costs of blood and blood products when calculating the overall costs of 
these C-APCs. In the CY 2018 OPPS/ASC proposed rule (82 FR 33571), we 
proposed to continue to apply the blood-specific CCR methodology 
described in this section when calculating the costs of the blood and 
blood products that appear on claims with services assigned to the C-
APCs. Because the costs of blood and blood products would be reflected 
in the overall costs of the C-APCs (and, as a result, in the proposed 
payment rates of the C-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 C-APCs (we refer readers to the CY 2015 OPPS/
ASC final rule with comment period (79 FR 66796)).
    We also referred readers to Addendum B to the proposed rule (which 
is available via the Internet on the CMS Web site) for the proposed CY 
2018 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).
    We invited public comments on our proposals.
    Comment: Several commenters continued to support using the blood-
specific CCR methodology to establish payment rates for blood and blood 
products, which utilizes actual or simulated CCRs from the most 
recently available hospital cost reports to convert hospital charges 
for blood and blood products to costs. The commenters also supported 
using a blood-specific APC with a separate APC for each blood and blood 
product service code. The commenters viewed the blood-specific CCR 
methodology as the best current methodology to report the costs of 
blood and blood products.
    Response: We appreciate the commenters' support.
    Comment: Several commenters expressed concerns about reduced 
payment for several blood and blood products HCPCS codes, including 
HCPCS codes P9010 (Blood (whole), for transfusion, per unit), P9011 
(Blood, split unit), P9012 (Cryoprecipitate, each

[[Page 59231]]

unit), P9016 (Red blood cells, leukocytes reduced, each unit), P9023 
(Plasma, pooled multiple donor, solvent/detergent treated, frozen, each 
unit), P9035 (Platelets, pheresis, leukocytes reduced, each unit), 
P9043 (Infusion, plasma protein fraction (human), 5%, 50 ml), P9048 
(Infusion, plasma protein fraction (human), 5%, 250 ml), P9055 
(Platelets, leukocytes reduced, cmv-negative, apheresis/pheresis, each 
unit), and P9060 (Fresh frozen plasma, donor retested, each unit). 
Commenters supported the higher payment rates for several HCPCS codes, 
including HCPCS codes P9019 (Platelets, each unit) and P9034 
(Platelets, pheresis, each unit).
    Response: We used claims data from CY 2016 and the same blood-
specific CCR methodology we used in previous years to calculate these 
proposed payment rates and believe the changes in costs for the 
services mentioned by these commenters are a result of normal 
variations in the claims data.
    Comment: Two commenters expressed concern that the proposed payment 
rate for HCPCS code P9070 (Plasma, pooled multiple donor, pathogen 
reduced, frozen, each unit) does not accurately reflect the cost of the 
blood product.
    Response: HCPCS code P9070 was established on January 1, 2016, and 
for CY 2016 and CY 2017, we linked the payment of HCPCS code P9070 to a 
blood product, HCPCS code P9059 (Fresh frozen plasma between 8-24 hours 
of collection, each unit), that we believed would have a comparable 
cost to HCPCS code P9070. CY 2018 is the first year for which we have 
claims data that will allow us to directly determine the cost of HCPCS 
code P9070. In this case, the payment rate for HCPCS code P9070 in CY 
2018 is lower than the CY 2017 payment rate. However, we believe the CY 
2018 payment rate is appropriate because it is based on actual claims 
data for HCPCS code P9070 rather than for HCPCS code P9059.
    Comment: Commenters requested that CMS immediately include the cost 
of newly implemented FDA blood safety measures for blood and blood 
products prior to receiving claims data that would contain the costs 
for the new safety measures.
    Response: As stated earlier in this section, the OPPS covers 
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. The cost of blood and blood products is determined using 
claims data and blood-specific CCRs from hospitals. To the extent that 
compliance with blood safety measures is included in hospital reporting 
of the cost of collecting, processing and storing blood and blood 
products, these costs would be reflected in the hospital rates. It is 
not possible to estimate the potential costs of new safety measures 
outside of claims data.
    Comment: Several commenters resubmitted the comments they made in 
response to a solicitation for public comments in the CY 2017 OPPS/ASC 
proposed rule (81 FR 45617 through 45618) and summarized in the CY 2017 
OPPS/ASC final rule with comment period (81 FR 79577) on the current 
set of active HCPCS P-codes that describe blood products regarding how 
the code descriptors could be revised and updated (if necessary) to 
reflect the current blood products provided to hospital outpatients.
    The commenters supported a thorough examination of the current set 
of HCPCS P-codes for blood products as a necessary undertaking because 
the HCPCS P-codes were created several years ago. Several commenters 
recommended that CMS convene a stakeholder group that includes 
representatives of hospitals, blood banks, the American Red Cross, and 
others to discuss a framework to systematically review and revise the 
HCPCS P-codes for blood products. Commenters also suggested that CMS 
establish a ``not otherwise classified (NOC)'' code for blood products, 
which would allow hospitals to begin immediately billing for a new 
blood product that is not described by a specific HCPCS P-code. One 
commenter supported the use of broader descriptions for HCPCS P-codes 
when more granular language is no longer meaningful for differentiating 
between different types of blood and blood products, and where the 
costs and volume of the HCPCS P-codes are similar. Other commenters 
suggested specific modifications to the order, classification, and code 
descriptors of the blood and blood product HCPCS P-codes.
    Response: We appreciate the commenters' detailed responses. The 
safety of the nation's blood supply continues to be among the highest 
priorities, and we will work with the commenters and other stakeholders 
to ensure that any future updates to the HCPCS P-codes will support our 
goal of maintaining the safety of the blood supply.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to establish payment 
rates for blood and blood products using our blood-specific CCR 
methodology. Addendum B to this final rule with comment period (which 
is available via the Internet on the CMS Web site) contains the final 
CY 2018 payment rates for blood and blood products (which are 
identified with status indicator ``R'').
(b) Pathogen-Reduced Platelets and Rapid Bacterial Testing for 
Platelets
    In March 2016, the Food and Drug Administration (FDA) issued draft 
guidance for blood collection establishments and transfusion services 
entitled ``Bacterial Risk Control Strategies for Blood Collection 
Establishments and Transfusion Services to Enhance the Safety and 
Availability of Platelets for Transfusion'' (available at: https://www.fda.gov/downloads/BiologicsBloodVaccines/GuidanceComplianceRegulatoryInformation/Guidances/Blood/UCM425952.pdf). 
This draft guidance recommended, among other things, the use of rapid 
bacterial testing devices secondary to testing using a culture-based 
bacterial detection device or the implementation of pathogen-reduction 
technology for platelets to adequately control the risk of bacterial 
contamination of platelets.
    In the CY 2016 OPPS/ASC final rule with comment period (80 FR 
70322), we established HCPCS code P9072 (Platelets, pheresis, pathogen 
reduced, each unit). The CMS HCPCS Workgroup later revised HCPCS code 
P9072 to include the use of pathogen-reduction technology or rapid 
bacterial testing. Specifically, the descriptor for this code was 
revised, effective January 1, 2017, to read as follows: HCPCS code 
P9072 (Platelets, pheresis, pathogen reduced or rapid bacterial tested, 
each unit). The payment rate for HCPCS code P9072 is based on a 
crosswalk to HCPCS code P9037 (Platelets, pheresis, leukocyte reduced, 
irradiated, each unit). We refer readers to the CY 2016 OPPS/ASC final 
rule with comment period for a further discussion of crosswalks for 
pathogen-reduced blood products (80 FR 70323).
    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33571 and 
33572), after the release of the CY 2017 OPPS/ASC final rule with 
comment period, several blood and blood product stakeholders expressed 
concerns about the revised code descriptor for HCPCS code P9072. The 
stakeholders believed that the revision to HCPCS code P9072 to describe 
both pathogen reduction and rapid bacterial testing was an 
inappropriate code descriptor. They stated that separate coding is 
needed to describe each service because each service is distinct. The 
stakeholders also noted that the code descriptor for

[[Page 59232]]

HCPCS code P9072 results in hospitals receiving the same payment rate 
for platelets undergoing rapid bacterial testing that the hospitals 
receive for platelets treated with pathogen reduction technology, 
despite the fact that pathogen reduction is significantly more 
expensive than rapid bacterial testing.
    After review of the concerns expressed by the blood and blood 
product stakeholders, the CMS HCPCS Workgroup deactivated HCPCS code 
P9072 for Medicare reporting and replaced the code with two new HCPCS 
codes effective July 1, 2017. Specifically, effective July 1, 2017, 
HCPCS code Q9988 (Platelets, pheresis, pathogen reduced, each unit) is 
used to report the use of pathogen-reduction technology and HCPCS code 
Q9987 (Pathogen(s) test for platelets) is used to report rapid 
bacterial testing or other pathogen tests for platelets, instead of 
HCPCS code P9072. We note that HCPCS code Q9987 should be reported to 
describe the test used for the detection of bacterial contamination in 
platelets as well as any other test that may be used to detect pathogen 
contamination. HCPCS code Q9987 should not be used for reporting 
donation testing for infectious agents such as viruses. The coding 
changes associated with these codes were published on the CMS HCPCS 
Quarterly Update Web site, effective July 2017, at: https://www.cms.gov/Medicare/Coding/HCPCSReleaseCodeSets/HCPCS-Quarterly-Update.html. In addition, for OPPS, we announced the new HCPCS codes 
that were effective July 1, 2017 through the July 2017 OPPS quarterly 
update Change Request (Transmittal 3783, Change Request 10122, dated 
May 26, 2017). We note that, effective July 1, 2017, HCPCS code Q9988 
is assigned to APC 9536 (Pathogen Reduced Platelets), with a payment 
rate of $647.12, and HCPCS code Q9987 is assigned to New Technology APC 
1493, with a payment rate of $25.50.
    In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70322 
through 70323), we reiterated that we calculate 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. Because HCPCS code P9072 was new for CY 2016, there 
were no claims data available on the charges and costs for this blood 
product upon which to apply our blood-specific CCR methodology. 
Therefore, we established an interim payment rates for this HCPCS code 
based on a crosswalk to existing blood product HCPCS code P9037, which 
we believed provided the best proxy for the costs of the new blood 
product. In addition, we stated that once we had claims data for HCPCS 
code P9072, we would calculate its payment rate using the claims data 
that should be available for the code beginning in CY 2018, which is 
our practice for other blood product HCPCS codes for which claims data 
have been available for 2 years.
    We stated in the proposed rule that, although our standard practice 
for new codes involves using claims data to set payment rates once 
claims data become available, we are concerned that there may have been 
confusion among the provider community about the services that HCPCS 
code P9072 described. That is, as early as 2016, there were discussions 
about changing the descriptor for HCPCS code P9072 to include the 
phrase ``or rapid bacterial tested'', which is a much less costly 
technology than pathogen reduction. In addition, as noted above, 
effective January 2017, the code descriptor for HCPCS code P9072 was, 
in fact, changed to also describe rapid bacterial testing of platelets 
and, effective July 1, 2017, the descriptor for the temporary successor 
code for HCPCS code P9072 (that is, HCPCS code Q9988) was changed again 
back to the original descriptor for HCPCS code P9072 that was in place 
for 2016.
    Based on the ongoing discussions involving changes to the original 
HCPCS code P9072 established in CY 2016, we believe that claims for 
pathogen reduced platelets may potentially reflect certain claims for 
rapid bacterial testing of platelets. The geometric mean costs based on 
submitted claims for HCPCS code P9072 based on available claims data 
from CY 2016 is $491.53, which is a 24-percent reduction from the CY 
2017 payment rate of $647.12. Because we believe that there may have 
been confusion related to ongoing discussions about changes to the 
original code descriptor for HCPCS code P9072, we believe it is 
appropriate to continue to crosswalk the payment amount for at least 1 
additional year. Therefore, in the CY 2018 OPPS/ASC proposed rule (82 
FR 33571 and 33572), we proposed for CY 2018 to determine the payment 
rate for HCPCS code Q9988 (the successor code to HCPCS code P9072) by 
continuing to use the payment rate that has been crosswalked from HCPCS 
code P9037 of $647.12.
    In the CY 2018 OPPS/ASC proposed rule, we solicited public comments 
on the proposed APC and status indicator assignments for HCPCS codes 
Q9987 and Q9988 for the CY 2018 OPPS update. The proposed payment rates 
for HCPCS codes Q9987 and Q9988 were included in Addendum B to the 
proposed rule (which is available via the Internet on the CMS Web 
site).
    Comment: Commenters expressed their appreciation to CMS for working 
collaboratively with the American Red Cross and other stakeholders in 
the blood banking community to respond to their concerns about HCPCS 
code P9072. The commenters supported the actions of CMS to deactivate 
HCPCS code P9072 and replace it with HCPCS codes Q9987 and Q9988 to 
have coding options that more accurately reflect available 
technologies. The commenters also appreciated that separate payment for 
each code was established in the OPPS and is proposed to continue in CY 
2018.
    Response: We appreciate the support for our actions in CY 2017 and 
our proposal for CY 2018.
    Comment: One commenter requested that the description of HCPCS code 
Q9987 (Pathogen(s) test for platelets) be modified by adding the word 
``secondary'' to clarify in the procedure code descriptor that HCPCS 
code Q9987 is intended to be used for secondary bacterial testing of 
platelets.
    Response: We believe the guidance we have provided through the CY 
2018 proposed rule (82 FR 33571 and 33572) and associated subregulatory 
guidance (Pub. 100-04 Medicare Claims Processing, Transmittal 3783, 
Change Request 10122) are sufficient for providers to understand how to 
appropriately report HCPCS code Q9987. We do not agree with the 
suggestion to modify the descriptor of HCPCS code Q9987, as we want the 
code to have the flexibility to be used to report new tests that may be 
developed in the future that are designed to identify pathogen 
contamination of platelets.
    After consideration of the public comments we received, we are 
finalizing our CY 2018 proposal for reporting pathogen-reduced 
platelets and rapid bacterial testing for platelets. The only changes 
are to replace HCPCS code Q9987 (Pathogen(s) test for platelets) with 
HCPCS code P9100 (Pathogen(s) test for platelets) and to replace HCPCS 
code Q9988 (Platelets, pheresis, pathogen-reduced, each unit) with 
HCPCS code P9073 (Platelets, pheresis, pathogen-reduced, each unit). 
Details of the replacement of HCPCS codes Q9987 and Q9988 with HCPCS 
codes P9100 and P9073, respectively, are found in Table 4 below. The 
final payment rates for HCPCS codes P9100 and P9073 can be found in 
Addendum B to this final rule with comment period

[[Page 59233]]

(which is available via the Internet on the CMS Web site).

                Table 4--Replacement Codes for HCPCS Codes Q9987 and Q9988 as of January 1, 2018
----------------------------------------------------------------------------------------------------------------
                                                                                  Final CY  2018  Final CY  2018
    CY 2017 HCPCS code        CY 2018 HCPCS code       CY 2018 long descriptor          SI              APC
----------------------------------------------------------------------------------------------------------------
Q9987....................  P9100                     Pathogen(s) test for                     S             1493
                                                      platelets.
Q9988....................  P9073                     Platelets, pheresis,                     R             9536
                                                      pathogen-reduced, each
                                                      unit.
----------------------------------------------------------------------------------------------------------------

(2) 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 
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 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 2016 OPPS/ASC final rule with comment period (80 FR 70323 
through 70325) for further discussion of the history of OPPS payment 
for brachytherapy sources.
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33572), for CY 2018, 
we proposed to use the costs derived from CY 2016 claims data to set 
the proposed CY 2018 payment rates for brachytherapy sources because CY 
2016 is the same year of data we proposed to use to set the proposed 
payment rates for most other items and services that would be paid 
under the CY 2018 OPPS. We proposed to base the payment rates for 
brachytherapy sources on the geometric mean unit costs for each source, 
consistent with the methodology that we 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 nonstranded not otherwise 
specified (NOS) codes, HCPCS codes C2698 and C2699, at a rate equal to 
the lowest stranded or nonstranded 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). Specifically, this 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 2018 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''. For CY 2018, we proposed to assign status indicator ``E2'' 
(Items and Services for Which Pricing Information and Claims Data Are 
Not Available) to HCPCS code C2645 (Brachytherapy planar, palladium-
103, per square millimeter) because this code was not reported on CY 
2016 claims. Therefore, we are unable to calculate a proposed payment 
rate based on the general OPPS ratesetting methodology described 
earlier. Although HCPCS code C2645 became effective January 1, 2016, 
and although we would expect that if a hospital furnished a 
brachytherapy source described by this code in CY 2016, HCPCS code 
C2645 should appear on the CY 2016 claims, there were no CY 2016 claims 
reporting this code available for the proposed rule. In addition, 
unlike our policy for new brachytherapy sources HCPCS codes, we did not 
consider external data to determine a proposed payment rate for HCPCS 
code C2645 for CY 2018. Therefore, we proposed to assign status 
indicator ``E2'' to HCPCS code C2645.
    In addition, we assigned status indicator ``E2'' to HCPCS code 
C2644 (Brachytherapy, cesium-131 chloride, per square millimeter) 
because this code was not reported on any CY 2015 claims (that is, 
there were no Medicare claims submitted by any hospitals in 2015 that 
reported this HCPCS code). In our review of CY 2016 claims (which are 
used to set rates for CY 2018), we found that one hospital submitted 
one claim reporting HCPCS code C2644. Therefore, we proposed to assign 
status indicator ``U'' to HCPCS code C2644.
    We invited public comments on our proposals.
    Comment: One commenter suggested that CMS set the CY 2018 APC 
payment rate for HCPCS code C2636 (Brachytherapy linear, non-stranded, 
palladium-103, per 1mm) at $26.99 per millimeter.
    Response: As noted in past rulemaking cycles and in the CY 2018 
OPPS/ASC proposed rule (82 FR 33572), we believe that adopting the 
general OPPS prospective payment methodology for brachytherapy sources 
is consistent with our payment methodology for the vast majority of 
items and services paid under the OPPS. Further, while we 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

[[Page 59234]]

relevant information regarding the expected costs of the sources to 
hospitals, HCPCS code C2636 is neither new nor lacks claim information. 
HCPCS code C2636 became effective July 1, 2007. The final CY 2018 APC 
payment rate for HCPCS code C2636 is $27.08 based on data for the 8 
claims we received for the CY 2018 OPPS standard ratesetting process 
and can be found in Addendum B to this final rule with comment period 
(which is available via the Internet on the CMS Web site).
    Comment: Some commenters suggested that HCPCS code C2645 
(Brachytherapy, planar, palladium-103) had been incorrectly assigned 
status indicator ``E2'' (Items and Services for Which Pricing 
Information and Claims Data Are Not Available). These commenters stated 
that CMS has considered external data and other relevant information 
where no claims data exist for new HCPCS codes for new brachytherapy 
sources. For example, commenters included the following excerpt from 
the CY 2008 OPPS/ASC final rule with comment period regarding CMS' 
policy with respect to establishing a payment rate for HCPCS code C2637 
(Brachytherapy non-stranded, ytterbium-169, per source) for which CMS 
lacked claims data: ``if in public comments to the proposed rule or 
later in CYs 2007 or 2008, we would receive relevant and reliable 
information on the hospital cost for ytterbium-169 and information that 
this source is being marketed, we could establish a prospective payment 
rate for the source in the CY 2008 final rule with comment period or in 
a quarterly OPPS update, respectively'' (72 FR 66786).
    In addition, commenters noted that, for CY 2016 and CY 2017, HCPCS 
code C2645 was assigned an OPPS status indicator of ``U'' 
(Brachytherapy Sources, Paid under OPPS; separate APC payment) and a 
payment rate of $4.69 per mm\2\ and that the payment rate was based 
upon external pricing data previously supplied by the developer of the 
brachytherapy source described by HCPCS code C2645. The developer of 
the brachytherapy source noted that there were no outpatient claims 
from CY 2016 for HCPCS code C2645 because all of the cases in CY 2016 
that used the brachytherapy source were inpatient cases. However, the 
commenter noted its expectation that such source would begin to be used 
in the hospital outpatient department setting beginning approximately 
in mid-2018. This commenter noted that the ``E2'' status indicator 
would effectively render the outpatient payment rate as $0 for CY 2018. 
The commenter supplied external invoices to support maintaining the 
current payment rate of $4.69 per mm\2\.
    Response: We note that the CY 2008 final rule with comment period 
preamble language that the commenters referenced to support their 
argument that external data have been used in the past was in reference 
to a brachytherapy source for which there appeared to have been 
erroneous claims submitted since the claims were from 2006, but the 
brachytherapy source did not come to market until 2007. This is 
distinguishable from the situation with HCPCS code C2645 which has been 
on the market since August 29, 2014 and had a code effective date of 
January 1, 2016. Nonetheless, as the commenters noted, there are no 
Medicare claims data available at this time. While this brachytherapy 
source is no longer ``new,'' the absence of even a single Medicare 
claim in the outpatient hospital data leads us to agree with the 
commenter that using an external source of data would be appropriate at 
this time. Accordingly, for CY 2018, we are assigning status indicator 
``U'' to HCPCS code C2645 and are using external data (invoice prices) 
and other relevant information to establish the APC payment rate for 
HCPCS code C2645. Specifically, we are setting the payment rate at 
$4.69 per mm\2\, the same rate that was in effect for CYs 2016 and 
2017.
    After consideration of the public comments we received, we are 
finalizing our proposal to assign status indicator ``U'' to HCPCS code 
C2636 (Brachytherapy linear, non-stranded, palladium-103, per 1mm) and 
assigning an APC payment rate for HCPCS code C2636 at $27.08 based on 
the 8 claims we received for the CY 2018 OPPS standard ratesetting 
process. We also are finalizing our proposal to assign status indicator 
``U'' to HCPCS code C2644 (Brachytherapy, cesium-131 chloride, per 
millicurie) and are modifying our proposal to assign status indicator 
``E2'' to HCPCS code C2645 (Brachytherapy planar, palladium-103, per 
square millimeter) and instead adopting a status indicator of ``U'' for 
CY 2018. The final CY 2018 payment rates for brachytherapy sources can 
be found in Addendum B to this final rule with comment period (which is 
available via the Internet on the CMS Web site) and are identified with 
status indicator ``U''.
    We continue to invite hospitals and other parties to submit 
recommendations to us for new codes to describe new brachytherapy 
sources. Such recommendations should be directed to the Division of 
Outpatient Care, Mail Stop C4-01-26, Centers for Medicare and Medicaid 
Services, 7500 Security Boulevard, Baltimore, MD 21244. We will 
continue to add new brachytherapy source codes and descriptors to our 
systems for payment on a quarterly basis.
b. Comprehensive APCs (C-APCs) for CY 2018
(1) Background
    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 under the OPPS at the 
claim level. The policy was finalized in CY 2014, but the effective 
date was delayed until January 1, 2015, to allow additional time for 
further analysis, opportunity for public comment, and systems 
preparation. The comprehensive APC (C-APC) policy was implemented 
effective January 1, 2015, with modifications and clarifications in 
response to public comments received regarding specific provisions of 
the C-APC policy (79 FR 66798 through 66810).
    A C-APC is defined 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 C-APCs as a category 
broadly for OPPS payment and implemented 25 C-APCs beginning in CY 2015 
(79 FR 66809 through 66810). In the CY 2016 OPPS/ASC final rule with 
comment period (80 FR 70332), we finalized 10 additional C-APCs to be 
paid under the existing C-APC payment policy and added one additional 
level to both the Orthopedic Surgery and Vascular Procedures clinical 
families. In the CY 2017 OPPS/ASC final rule with comment period (81 FR 
79584 through 79585), we finalized another 25 C-APCs.
    Under this policy, we designate a service described by a HCPCS code 
assigned to a C-APC as the primary service when the service is 
identified by OPPS status indicator ``J1''. When such a primary service 
is reported on a hospital outpatient claim, taking into consideration 
the few exceptions that are discussed below, we make payment for all 
other items and services reported on the hospital outpatient claim as 
being integral, ancillary, supportive, dependent, and adjunctive to the 
primary service (hereinafter collectively referred to as ``adjunctive 
services'') and representing components of a complete comprehensive 
service (78 FR 74865 and 79 FR 66799). Payments for adjunctive services 
are packaged into

[[Page 59235]]

the payments for the primary services. This results in a single 
prospective payment for each of the primary, comprehensive services 
based on the costs of all reported services at the claim level.
    Services excluded from the C-APC policy under the OPPS include 
services that are not covered OPD services, services that cannot by 
statute be paid for under the OPPS, and services that are required by 
statute to be separately paid. This includes certain mammography and 
ambulance services that are not covered OPD services in accordance with 
section 1833(t)(1)(B)(iv) of the Act; brachytherapy seeds, which also 
are required by statute to receive separate payment under section 
1833(t)(2)(H) of the Act; pass-through payment drugs and devices, which 
also require separate payment under section 1833(t)(6) of the Act; 
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; and certain preventive services (78 
FR 74865 and 79 FR 66800 through 66801). A list of services excluded 
from the C-APC policy is included in Addendum J to this final rule with 
comment period (which is available via the Internet on the CMS Web 
site).
    The C-APC policy payment methodology set forth in the CY 2014 OPPS/
ASC final rule with comment period for the C-APCs and modified and 
implemented beginning in CY 2015 is summarized as follows (78 FR 74887 
and 79 FR 66800):
    Basic Methodology. As stated in the CY 2015 OPPS/ASC final rule 
with comment period, we define the C-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 are not covered OPD services or that cannot by statute be 
paid for under the OPPS. Services and procedures described by HCPCS 
codes assigned to status indicator ``J1'' are assigned to C-APCs based 
on our usual APC assignment methodology by evaluating the geometric 
mean costs of the primary service claims to establish resource 
similarity and the clinical characteristics of each procedure to 
establish clinical similarity within each APC.
    In the CY 2016 OPPS/ASC final rule with comment period, we expanded 
the C-APC payment methodology to qualifying extended assessment and 
management encounters through the ``Comprehensive Observation 
Services'' C-APC (C-APC 8011). Services within this APC are assigned 
status indicator ``J2''. Specifically, we make a payment through C-APC 
8011 for a claim that:
     Does not contain a procedure described by a HCPCS code to 
which we have assigned status indicator ``T'' that is reported with a 
date of service on the same day or 1 day earlier than the date of 
service associated with services described by HCPCS code G0378;
     Contains 8 or more units of services described by HCPCS 
code G0378 (Observation services, per hour);
     Contains services provided on the same date of service or 
1 day before the date of service for HCPCS code G0378 that are 
described by 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 99281 (Emergency department visit 
for the evaluation and management of a patient (Level 1)); CPT code 
99282 (Emergency department visit for the evaluation and management of 
a patient (Level 2)); CPT code 99283 (Emergency department visit for 
the evaluation and management of a patient (Level 3)); 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)) or HCPCS code G0380 
(Type B emergency department visit (Level 1)); HCPCS code G0381 (Type B 
emergency department visit (Level 2)); HCPCS code G0382 (Type B 
emergency department visit (Level 3)); HCPCS code G0383 (Type B 
emergency department visit (Level 4)); HCPCS code G0384 (Type B 
emergency department visit (Level 5)); CPT code 99291 (Critical care, 
evaluation and management of the critically ill or critically injured 
patient; first 30-74 minutes); or HCPCS code G0463 (Hospital outpatient 
clinic visit for assessment and management of a patient); and
     Does not contain services described by a HCPCS code to 
which we have assigned status indicator ``J1''.
    The assignment of status indicator ``J2'' to a specific combination 
of services performed in combination with each other allows for all 
other OPPS payable services and items reported on the claim (excluding 
services that are not covered OPD services or that cannot by statute be 
paid for under the OPPS) to be deemed adjunctive services representing 
components of a comprehensive service and resulting in a single 
prospective payment for the comprehensive service based on the costs of 
all reported services on the claim (80 FR 70333 through 70336).
    Services included under the C-APC payment packaging policy, that 
is, services that are typically adjunctive to the primary service and 
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 represent services that are provided 
during the complete comprehensive service (78 FR 74865 and 79 FR 
66800).
    In addition, payment for hospital outpatient department services 
that are similar to therapy services and delivered either by therapists 
or nontherapists is included as part of the payment for the packaged 
complete comprehensive service. These services that are provided during 
the perioperative period are adjunctive services and are deemed not to 
be 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 for under section 1834(k) of the Act, subject to 
annual therapy caps as applicable (78 FR 74867 and 79 FR 66800). 
However, certain other services similar to therapy services are 
considered and paid for as hospital outpatient department services. 
Payment for these nontherapy outpatient department services that are 
reported with therapy codes and provided with a comprehensive service 
is included in the payment for the packaged complete comprehensive 
service. We note that these services, even though they are reported 
with therapy codes, are hospital 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. We refer readers to the July 2016 OPPS Change Request 
9658 (Transmittal 3523) for further instructions on reporting these 
services in the context of a C-APC service.
    Items included in the packaged payment provided in conjunction with 
the primary service also include all

[[Page 59236]]

drugs, biologicals, and radiopharmaceuticals, regardless of cost, 
except those drugs with pass-through payment status and SADs, unless 
they function as packaged supplies (78 FR 74868 through 74869 and 74909 
and 79 FR 66800). We refer readers to Section 50.2M, Chapter 15, of the 
Medicare Benefit Policy Manual for a description of our policy on SADs 
treated as hospital outpatient supplies, including lists of SADs that 
function as supplies and those that do not function as supplies.
    We 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 and 79 FR 66801). Line 
item charges for services included on the C-APC claim are converted to 
line item costs, which are then summed to develop the estimated APC 
costs. These claims are then assigned one unit of the service with 
status indicator ``J1'' and later used to develop the geometric mean 
costs for the C-APC relative payment weights. (We note that we 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 included in the C-APC 
service payment bundle.) Charges for services that would otherwise be 
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 apply our standard data trims, 
which exclude 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 establish a 
ranking of each primary service (single unit only) to be assigned to 
status indicator ``J1'' according to its comprehensive geometric mean 
costs. For the minority of claims reporting more than one primary 
service assigned to status indicator ``J1'' or units thereof, we 
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 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 use complexity adjustments to provide 
increased payment for certain comprehensive services. We apply a 
complexity adjustment by promoting qualifying paired ``J1'' service 
code combinations or paired 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 the next higher paying C-APC in the same clinical family 
of C-APCs. We apply this type of complexity adjustment when the paired 
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 in the originating C-APC 
(cost threshold).
    These criteria identify paired code combinations that occur 
commonly and exhibit materially greater resource requirements than the 
primary service. The CY 2017 OPPS/ASC final rule with comment period 
(81 FR 79582) included a revision to the complexity adjustment 
eligibility criteria. Specifically, we finalized a policy to 
discontinue the requirement that a code combination (that qualifies for 
a complexity adjustment by satisfying the frequency and cost criteria 
thresholds described above) also not create a 2 times rule violation in 
the higher level or receiving APC.
    After designating a single primary service for a claim, we 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 there are paired code combinations that 
meet the complexity adjustment criteria. For a new HCPCS code, we 
determine initial C-APC assignment and qualification for a complexity 
adjustment using the best available information, crosswalking the new 
HCPCS code to a predecessor code(s) when appropriate.
    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 promote the claim including 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 
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. We do not create new APCs with a comprehensive geometric mean 
cost that is higher than the highest geometric mean cost (or only) C-
APC in a clinical family just to accommodate potential complexity 
adjustments. Therefore, the highest payment for any claim including a 
code combination for services assigned to a C-APC would be the highest 
paying C-APC in the clinical family (79 FR 66802).
    We package payment for all add-on codes into the payment for the C-
APC. However, certain primary service add-on combinations may qualify 
for a complexity adjustment. As noted in the CY 2016 OPPS/ASC final 
rule with comment period (80 FR 70331), all add-on codes that can be 
appropriately reported in combination with a base code that describes a 
primary ``J1'' service are evaluated for a complexity adjustment.
    To determine which combinations of primary service codes reported 
in conjunction with an add-on code may qualify for a complexity 
adjustment for CY 2018, in the CY 2018 OPPS/ASC proposed rule (82 FR 
33575), we proposed to apply the frequency and cost criteria thresholds 
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 for the primary ``J1'' service. If the frequency 
and cost criteria thresholds for a complexity adjustment are met and 
reassignment to the next higher cost APC in the clinical family is 
appropriate (based on meeting the criteria outlined above), we make a 
complexity adjustment for the code combination; that is, we reassign 
the primary service code reported in conjunction with the add-on code 
to the next higher cost C-APC within the same clinical family of C-
APCs. As previously stated, we package payment for add-on codes into 
the C-APC

[[Page 59237]]

payment rate. If any add-on code reported in conjunction with the 
``J1'' primary service code does not qualify for a complexity 
adjustment, payment for the add-on service continues to be packaged 
into the payment for the primary service and is not reassigned to the 
next higher cost C-APC. We listed the complexity adjustments proposed 
for ``J1'' and add-on code combinations for CY 2018, 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).
    Addendum J to the proposed rule included the 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 paired code combinations that describe a complex code combination 
that would qualify for a complexity adjustment and were proposed to be 
reassigned to the next higher cost C-APC within the clinical family. 
The combined statistics for all proposed reassigned complex code 
combinations were represented by an alphanumeric code with the first 4 
digits of the designated primary service followed by a letter. For 
example, the proposed geometric mean cost listed in Addendum J for the 
code combination described by complexity adjustment assignment 3320R, 
which is assigned to C-APC 5224 (Level 4 Pacemaker and Similar 
Procedures), included all paired code combinations that were proposed 
to be reassigned to C-APC 5224 when CPT code 33208 is the primary code. 
Providing the information contained in Addendum J to the proposed rule 
allowed stakeholders the opportunity to better assess the impact 
associated with the proposed reassignment of claims with each of the 
paired code combinations eligible for a complexity adjustment.
    Comment: Several commenters requested exceptions to the current 
complexity adjustment criteria of 25 or more claims reporting the code 
combination (frequency) and a violation of the 2 times rule in the 
originating C-APC (cost) to allow claims with code combinations that do 
not currently meet these criteria to be paid at the next higher paying 
C-APC. The C-APC complexity adjustments requested by the commenters are 
listed in Table 5 below. We did not propose for claims with these code 
combinations to receive complexity adjustments because they failed to 
meet either the cost or frequency criteria.

                        Table 5--C-APC Complexity Adjustments Requested by the Commenters
----------------------------------------------------------------------------------------------------------------
                                                                                                     Requested
                                                                                    Primary APC     complexity
         Primary ``J1'' HCPCS code               Secondary ``J1'' HCPCS code        assignment     adjusted APC
                                                                                                    assignment
----------------------------------------------------------------------------------------------------------------
20983 (Ablation therapy for reduction or     22513 (Percutaneous vertebral                  5114            5115
 eradication of 1 or more bone tumors         augmentation, including cavity
 (e.g., metastasis including adjacent soft    creation (fracture reduction and
 tissue when involved by tumor extension,     bone biopsy included when
 percutaneous, including imaging guidance     performed) using mechanical device
 when performed; radio frequency)).           (e.g., kyphoplasty), 1 vertebral
                                              body, unilateral or bilateral
                                              cannulation, inclusive of all
                                              imaging guidance; thoracic).
20983 (Ablation therapy for reduction or     22514 (Percutaneous vertebral                  5114            5115
 eradication of 1 or more bone tumors         augmentation, including cavity
 (e.g., metastasis including adjacent soft    creation (fracture reduction and
 tissue when involved by tumor extension,     bone biopsy included when
 percutaneous, including imaging guidance     performed) using mechanical device
 when performed; radio frequency)).           (e.g., kyphoplasty), 1 vertebral
                                              body, unilateral or bilateral
                                              cannulation, inclusive of all
                                              imaging guidance; lumbar).
28297 (Correction, hallux valgus             28285 (Correction, hammertoe (e.g.,            5114            5115
 (bunionectomy), with sesamoidectomy, when    interphalangeal fusion, partial or
 performed; with first metatarsal and         total phalangectomy)).
 medial cuneiform joint with arthrodesis,
 any method).
28297 (Correction, hallux valgus             28292 (Correction, hallux valgus               5114            5115
 (bunionectomy), with sesamoidectomy, when    (bunionectomy), with
 performed; with first metatarsal and         sesamoidectomy, when performed;
 medial cuneiform joint with arthrodesis,     with resection of proximal phalanx
 any method).                                 base, when performed, any method).
28740 (Arthrodesis, midtarsal or             28285 (Correction, hammertoe (e.g.,            5114            5115
 tarsometatarsal, single joint).              interphalangeal fusion, partial or
                                              total phalangectomy)).
61885 (Insertion or replacement of cranial   61885 (Insertion or replacement of             5463            5464
 nuerostimulator pulse generator or           cranial nuerostimulator pulse
 receiver, direct or inductive coupling;      generator or receiver, direct or
 with connection to a single electrode        inductive coupling; with
 array).                                      connection to a single electrode
                                              array).
28740 (Arthrodesis, midtarsal or             28292 (Correction, hallux valgus               5114            5115
 tarsometatarsal, single joint).              (bunionectomy), with
                                              sesamoidectomy, when performed;
                                              with resection of proximal phalanx
                                              base, when performed, any method).
52234 (Cystourethroscopy, with biopsy(s))..  C9738 * (Adjunctive blue light                 5374            5375
                                              cystoscopy with fluorescent
                                              imaging agent (List separately in
                                              addition to code for primary
                                              procedure)).
52235 (Cystourethroscopy, with fulguration   C9738 * (Adjunctive blue light                 5374            5375
 (including cryosurgery or laser surgery)     cystoscopy with fluorescent
 of trigone, bladder neck, prostatic fossa,   imaging agent (List separately in
 urethra, or periurethral glands).            addition to code for primary
                                              procedure)).
52240 (Cystourethroscopy with fulgration     C9738 * (Adjunctive blue light                 5375            5376
 (including cryosurgery or laser surgery)     cystoscopy with fluorescent
 or treatment of MINOR (less than 0.5 cm)     imaging agent (List separately in
 lesion(s) with or without biopsy).           addition to code for primary
                                              procedure)).
----------------------------------------------------------------------------------------------------------------
* HCPCS code C9738 was identified in the proposed rule as HCPCS code C97XX.


[[Page 59238]]

    Other commenters requested various changes to the complexity 
adjustment criteria. One commenter requested that CMS amend the current 
cost criterion for a complexity adjustment to allow for code 
combinations that have qualified for a complexity adjustment in the 
previous year to qualify for a complexity adjustment for the subsequent 
year if the code combination is within 5 percent of the cost criterion 
for the subsequent year. Another commenter requested that CMS eliminate 
the criterion that the code combination must create a violation of the 
2 times rule in the originating C-APC in order to qualify for a 
complexity adjustment.
    Some commenters recommended that CMS create a complexity adjustment 
for endoscopic sinus surgery claims that include a drug or device code 
(C-code or a J-code), or more than two ``J1'' procedures. Other 
commenters requested that CMS revise its complexity adjustment 
methodology to account for the higher costs that essential hospitals 
incur when performing complex procedures and treating sicker patients.
    Response: We appreciate these comments. However, at this time, we 
do not believe changes to the C-APC complexity adjustment criteria are 
necessary or that we should make exceptions to the criteria to allow 
claims with the code combinations suggested by the commenters to 
receive complexity adjustments. As stated previously (81 FR 79582), we 
continue to believe that the complexity adjustment criteria, which 
require a frequency of 25 or more claims reporting a code combination 
and a violation of the 2 times rule in the originating C-APC in order 
to receive payment in the next higher cost C-APC within the clinical 
family, are adequate to determine if a combination of procedures 
represents a complex, costly subset of the primary service. If a code 
combination meets these criteria, the combination receives payment at 
the next higher cost C-APC. Code combinations that do not meet these 
criteria receive the C-APC payment rate associated with the primary 
``J1'' service.
    A minimum of 25 claims is already very low for a national payment 
system. Lowering the minimum of 25 claims further could lead to 
unnecessary complexity adjustments for service combinations that are 
rarely performed. The complexity adjustment cost threshold compares the 
code combinations to the lowest cost significant procedure assigned to 
the APC. If the cost of the code combination does not exceed twice the 
cost of the lowest cost significant procedure within the APC, no 
complexity adjustment is made. Lowering or eliminating this threshold 
could remove so many claims from the accounting for the primary ``J1'' 
service that the geometric mean costs attributed to the primary 
procedure could be skewed.
    Regarding the request for a code combination that qualified 
previously for a complexity adjustment to qualify for the subsequent 
year if the code combination is within 5 percent of the cost criterion 
for the subsequent year, we evaluate code combinations each year 
against our complexity adjustment criteria using the latest available 
data. We do not believe it is necessary to expand the ability for code 
combinations to meet the cost criterion in this manner.
    We also do not believe that it is necessary to adjust the 
complexity adjustment criteria to allow claims that include a drug or 
device code, more than two ``J1'' procedures, or procedures performed 
at certain hospitals to qualify for a complexity adjustment. As 
mentioned earlier, we believe the current criteria are adequate to 
determine if a combination of procedures represents a complex, costly 
subset of the primary service.
    Comment: Some commenters noted that there were certain code 
combinations that met the complexity adjustment criteria that were not 
included in Addendum J of the CY 2018 OPPS/ASC proposed rule. 
Specifically, commenters noted that the combinations of procedures 
described by the following codes were not included in Addendum J:
     CPT code 22510 (Percutaneous vertebroplasty (bone biopsy 
included when performed), 1 vertebral body, unilateral or bilateral 
injection, inclusive of all imaging guidance; cervicothoracic) and CPT 
code 22512 (Percutaneous vertebroplasty (bone biopsy included when 
performed), 1 vertebral body, unilateral or bilateral injection, 
inclusive of all imaging guidance; each additional cervicothoracic or 
lumbosacral vertebral body) for multi-level vertebroplasty in the 
cervicothoracic region);
     CPT code 22511 (Percutaneous vertebroplasty (bone biopsy 
included when performed), 1 vertebral body, unilateral or bilateral 
injection, inclusive of all imaging guidance; lumbosacral) and CPT code 
22512 (Percutaneous vertebroplasty (bone biopsy included when 
performed), 1 vertebral body, unilateral or bilateral injection, 
inclusive of all imaging guidance; each additional cervicothoracic or 
lumbosacral vertebral body); and
     CPT code 22511 (Percutaneous vertebroplasty (bone biopsy 
included when performed), 1 vertebral body, unilateral or bilateral 
injection, inclusive of all imaging guidance; lumbosacral) and CPT code 
20982 (Ablation therapy for reduction or eradication of 1 or more bone 
tumors (e.g., metastasis), including adjacent soft tissue when involved 
by tumor extension, percutaneous, including imaging guidance when 
performed; radiofrequency).
    Response: These code combinations were inadvertently excluded from 
Addendum J to the CY 2018 OPPS/ASC proposed rule. These code 
combinations and all other code combinations that qualify for 
complexity adjustments are included in Addendum J to this final rule 
with comment period.
    Comment: One commenter stated that CMS should have included the 
following add-on CPT codes in the complexity adjustment evaluation:
     CPT code 92978 (Endoluminal imaging of coronary vessel or 
graft using intravascular ultrasound (IVUS) or optical coherence 
tomography (OCT) during diagnostic evaluation and/or therapeutic 
intervention including imaging supervision, interpretation and report; 
initial vessel (List separately in addition to code for primary 
procedure);
     CPT code 92979 (Endoluminal imaging of coronary vessel or 
graft using intravascular ultrasound (IVUS) or optical coherence 
tomography (OCT) during diagnostic evaluation and/or therapeutic 
intervention including imaging supervision, interpretation and report; 
each additional vessel (List separately in addition to code for primary 
procedure));
     CPT code 93571 (Intravascular Doppler velocity and/or 
pressure derived coronary flow reserve measurement (coronary vessel or 
graft) during coronary angiography including pharmacologically induced 
stress; initial vessel (List separately in addition to code for primary 
procedure)); and
     CPT code 93572 ((Intravascular Doppler velocity and/or 
pressure derived coronary flow reserve measurement (coronary vessel or 
graft) during coronary angiography including pharmacologically induced 
stress; each additional vessel (List separately in addition to code for 
primary procedure)) in the complexity adjustment evaluation.
    Response: We note that CPT codes 92978 and 93571 were both included 
in the complexity adjustment evaluation in Addendum J to the CY 2018 
OPPS/ASC proposed rule. However, CPT codes

[[Page 59239]]

92979 and 93572 are not add-on codes to primary ``J1'' services. As 
stated in the CY 2018 OPPS/ASC proposed rule, to determine the code 
combinations that qualify for complexity adjustments, we apply the 
established frequency and cost criteria thresholds and tests 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 for 
the primary ``J1'' service (82 FR 33575). Accordingly, because CPT 
codes 92979 and 93572 are not add-on codes for any primary ``J1'' 
services, it would not have been appropriate to include them in our 
complexity adjustment evaluation.
    After consideration of the public comments we received, we are 
applying the complexity adjustment criteria as proposed. The finalized 
complexity adjustments for CY 2018 can be found in Addendum J to this 
final rule with comment period (which is available via the Internet on 
the CMS Web site).
(2) C-APCs for CY 2018
    For CY 2018 and subsequent years, in the CY 2018 OPPS/ASC proposed 
rule (82 FR 33576), we proposed to continue to apply the C-APC payment 
policy methodology made effective in CY 2015 and updated with the 
implementation of status indicator ``J2'' in CY 2016. A discussion of 
the C-APC payment policy methodology can be found at 81 FR 79583.
    As a result of our annual review of the services and APC 
assignments under the OPPS, we did not propose any additional C-APCs to 
be paid under the existing C-APC payment policy beginning in CY 2018. 
Table 4 of the proposed rule listed the proposed C-APCs for CY 2018, 
all of which were established in past rules. All C-APCs were displayed 
in Addendum J to the proposed rule (which is available via the Internet 
on the CMS Web site). Addendum J to the proposed rule also contained 
all of the data related to the C-APC payment policy methodology, 
including the list of proposed complexity adjustments and other 
information.
    Comment: Several commenters supported the proposed C-APCs for CY 
2018.
    Response: We appreciate the commenters' support.
    Comment: Several commenters noted that CPT code 67027 (Implantation 
of intravitreal drug delivery system (e.g., ganciclovir implant), 
includes concomitant removal of vitreous) is assigned to a single-
procedure C-APC (C-APC 5494 (Level 4 Intraocular Procedures)) with 
status indicator ``J1''. The commenters stated that the C-APC policy 
packages payment for adjunctive services into the payment for the 
primary ``J1'' procedure at the claim level, and that when the drug 
Retisert (described by HCPCS code J7311) is included on the claim with 
CPT code 62707, payment for the drug is packaged into the C-APC 
payment. The commenters noted that the costs of claims for the 
procedure, including the drug (approximately $18,433), were more than 
twice the proposed CY 2018 geometric mean cost for C-APC 5494 
(approximately $9,134) and that, as such, this represents a violation 
of the 2 times rule. The commenters suggested that CMS address this 
issue by either separately paying for Retisert (described by HCPCS code 
J7311) or creating a unique APC for procedures with which HCPCS code 
J7311 may be billed.
    Response: As stated in the CY 2017 OPPS/ASC final rule with comment 
period (81 FR 79612), section 1833(t)(2) of the Act provides that 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 APC group is more than 2 times greater than the lowest 
cost for an item or service within the same APC group (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 if there are any APC violations of the 
2 times rule and whether there are any appropriate revisions to APC 
assignments that may be necessary or exceptions to be made. In 
determining the APCs with a 2 times rule violation, we consider only 
those HCPCS codes that are significant based on the number of claims.
    It is the cost of the primary item or service that drives 
assignment to an APC group. In this case, the primary service is 
described by CPT code 67027, which is the only CPT code assigned to C-
APC 5494 (Level 4 Intraocular Procedures). The costs of drugs or other 
packaged ancillary items or services that may be used with a primary 
service are packaged into the costs of the primary service and are not 
separately paid. In this case, because CPT code 67027 is assigned to a 
C-APC, the costs of drugs, such as Retisert, and any other items or 
services that are billed with the ``J1'' service are packaged into the 
geometric mean cost for HCPCS code 67027 and are bundled into the C-APC 
payment. The geometric mean cost is based on reported costs for all 
hospitals paid under the OPPS; to the extent that Retisert or other 
items are billed with the primary service, those costs are also 
reflected in the cost of the primary service. Therefore, because the 
cost of the Retisert drug is packaged into the cost of CPT code 67027, 
assignment of HCPCS code 67027 to C-APC 5494 does not create a 2 times 
rule violation.
    In addition, with regard to the packaging of the drug Retisert 
based on the C-APC policy, as stated in previous rules (78 FR 74868 
through 74869 and 74909 and 79 FR 66800), items included in the 
packaged payment provided with the primary ``J1'' service include all 
drugs, biologicals, and radiopharmaceuticals, regardless of cost, 
except those drugs with pass-through payment status and SADs, unless 
they function as packaged supplies. Therefore, we believe that HCPCS 
code J3711 is appropriately packaged, and we are not providing separate 
payment for the drug.
    Comment: One commenter suggested that APC 5491 (Level 1 Intraocular 
Procedures) no longer be labeled a C-APC and instead be considered a 
traditional APC. The commenter noted that there was little cost 
difference for APC 5491 if it is considered a C-APC or a traditional 
APC and that no specific justification was given for making APC 5491 a 
C-APC. The commenter suggested that only higher level Intraocular 
Procedure APCs have enough complexity to suggest that they should be 
classified as C-APCs.
    Response: We continue to believe that the procedures assigned to C-
APC 5491 are appropriately paid through a comprehensive APC. As stated 
in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79584), 
procedures assigned to C-APCs are primary services (mostly major 
surgical procedures) that are typically the focus of the hospital 
outpatient stay. Therefore, we believe that these procedures are 
appropriately assigned to a C-APC.
    Comment: One commenter expressed concern that the proposal to 
continue to assign status indicator ``J2'' to CPT code 99291 (Critical 
care, evaluation and management of the critically ill or critically 
injured patient; first 30-74 minutes) and to assign it to C-APC 8011 
(Comprehensive Observation Services) when certain criteria are met 
would have negative effects on critical care (CPT codes 99291 and 99292 
(Critical care, evaluation and management of the critically ill or 
critically injured patient; each additional 30 minutes)) provided in 
the intensive care unit ICU). Specifically, the commenter was concerned 
that the proposal would impact payment for tests that were ordered and 
furnished in the emergency room when they are appropriately repeated in 
the ICU and urged CMS to

[[Page 59240]]

move with caution, and provide transparency and impact tables for 
hospitals, in continuing C-APC 8011.
    Response: We appreciate this comment and will continue to monitor 
the impact of this C-APC on critical care services. We note that in 
situations where a patient receives critical care services in the 
hospital outpatient setting and is subsequently transferred to the ICU 
as part of an appropriate hospital inpatient admission, payment for the 
services furnished in the hospital outpatient setting, including 
critical care services, may be bundled into the Part A hospital 
inpatient claim via the ``Payment Window for Outpatient Services 
Treated as Inpatient Services (also known as the 3-day payment rule), 
when certain criteria are met. In addition, when a patient receiving 
critical care services in the hospital outpatient setting is 
transferred to the ICU but is not admitted to the hospital as an 
inpatient, payment for all eligible services is made through C-APC 
8011, when certain criteria are met. We also note that CPT code 99292 
is an add-on code which is packaged under the OPPS and is not one of 
the codes eligible to trigger payment through C-APC 8011.
    After consideration of the public comments we received, we are 
finalizing the proposed C-APCs for CY 2018. Table 6 below lists the 
final C-APCs for CY 2018, all of which were established in past rules. 
All C-APCs are displayed in Addendum J to this final rule with comment 
period (which is available via the Internet on the CMS Web site). 
Addendum J to this final rule with comment period also contains all of 
the data related to the C-APC payment policy methodology, including the 
list of complexity adjustments and other information for CY 2018.

                         Table 6--CY 2018 C-APCs
------------------------------------------------------------------------
         C-APC              CY 2018 APC title         Clinical  family
------------------------------------------------------------------------
5072..................  Level 2 Excision/Biopsy/   EBIDX
                         Incision and Drainage.
5073..................  Level 3 Excision/Biopsy/   EBIDX
                         Incision and Drainage.
5091..................  Level 1 Breast/Lymphatic   BREAS
                         Surgery and Related
                         Procedures.
5092..................  Level 2 Breast/Lymphatic   BREAS
                         Surgery and Related
                         Procedures.
5093..................  Level 3 Breast/Lymphatic   BREAS
                         Surgery & Related
                         Procedures.
5094..................  Level 4 Breast/Lymphatic   BREAS
                         Surgery & Related
                         Procedures.
5112..................  Level 2 Musculoskeletal    ORTHO
                         Procedures.
5113..................  Level 3 Musculoskeletal    ORTHO
                         Procedures.
5114..................  Level 4 Musculoskeletal    ORTHO
                         Procedures.
5115..................  Level 5 Musculoskeletal    ORTHO
                         Procedures.
5116..................  Level 6 Musculoskeletal    ORTHO
                         Procedures.
5153..................  Level 3 Airway Endoscopy.  AENDO
5154..................  Level 4 Airway Endoscopy.  AENDO
5155..................  Level 5 Airway Endoscopy.  AENDO
5164..................  Level 4 ENT Procedures...  ENTXX
5165..................  Level 5 ENT Procedures...  ENTXX
5166..................  Cochlear Implant           COCHL
                         Procedure.
5191..................  Level 1 Endovascular       VASCX
                         Procedures.
5192..................  Level 2 Endovascular       VASCX
                         Procedures.
5193..................  Level 3 Endovascular       VASCX
                         Procedures.
5194..................  Level 4 Endovascular       VASCX
                         Procedures.
5200..................  Implantation Wireless PA   WPMXX
                         Pressure Monitor.
5211..................  Level 1                    EPHYS
                         Electrophysiologic
                         Procedures.
5212..................  Level 2                    EPHYS
                         Electrophysiologic
                         Procedures.
5213..................  Level 3                    EPHYS
                         Electrophysiologic
                         Procedures.
5222..................  Level 2 Pacemaker and      AICDP
                         Similar Procedures.
5223..................  Level 3 Pacemaker and      AICDP
                         Similar Procedures.
5224..................  Level 4 Pacemaker and      AICDP
                         Similar Procedures.
5231..................  Level 1 ICD and Similar    AICDP
                         Procedures.
5232..................  Level 2 ICD and Similar    AICDP
                         Procedures.
5244..................  Level 4 Blood Product      SCTXX
                         Exchange and Related
                         Services.
5302..................  Level 2 Upper GI           GIXXX
                         Procedures.
5303..................  Level 3 Upper GI           GIXXX
                         Procedures.
5313..................  Level 3 Lower GI           GIXXX
                         Procedures.
5331..................  Complex GI Procedures....  GIXXX
5341..................  Abdominal/Peritoneal/      GIXXX
                         Biliary and Related
                         Procedures.
5361..................  Level 1 Laparoscopy &      LAPXX
                         Related Services.
5362..................  Level 2 Laparoscopy &      LAPXX
                         Related Services.
5373..................  Level 3 Urology & Related  UROXX
                         Services.
5374..................  Level 4 Urology & Related  UROXX
                         Services.
5375..................  Level 5 Urology & Related  UROXX
                         Services.
5376..................  Level 6 Urology & Related  UROXX
                         Services.
5377..................  Level 7 Urology & Related  UROXX
                         Services.
5414..................  Level 4 Gynecologic        GYNXX
                         Procedures.
5415..................  Level 5 Gynecologic        GYNXX
                         Procedures.
5416..................  Level 6 Gynecologic        GYNXX
                         Procedures.
5431..................  Level 1 Nerve Procedures.  NERVE
5432..................  Level 2 Nerve Procedures.  NERVE
5462..................  Level 2 Neurostimulator &  NSTIM
                         Related Procedures.
5463..................  Level 3 Neurostimulator &  NSTIM
                         Related Procedures.
5464..................  Level 4 Neurostimulator &  NSTIM
                         Related Procedures.
5471..................  Implantation of Drug       PUMPS
                         Infusion Device.
5491..................  Level 1 Intraocular        INEYE
                         Procedures.

[[Page 59241]]

 
5492..................  Level 2 Intraocular        INEYE
                         Procedures.
5493..................  Level 3 Intraocular        INEYE
                         Procedures.
5494..................  Level 4 Intraocular        INEYE
                         Procedures.
5495..................  Level 5 Intraocular        INEYE
                         Procedures.
5503..................  Level 3 Extraocular,       EXEYE
                         Repair, and Plastic Eye
                         Procedures.
5504..................  Level 4 Extraocular,       EXEYE
                         Repair, and Plastic Eye
                         Procedures.
5627..................  Level 7 Radiation Therapy  RADTX
5881..................  Ancillary Outpatient       N/A
                         Services When Patient
                         Dies.
8011..................  Comprehensive Observation  N/A
                         Services.
------------------------------------------------------------------------
C-APC Clinical Family Descriptor Key: AENDO = Airway Endoscopy; AICDP =
  Automatic Implantable Cardiac Defibrillators, Pacemakers, and Related
  Devices; BREAS = Breast Surgery; COCHL = Cochlear Implant; EBIDX =
  Excision/Biopsy/Incision and Drainage; ENTXX = ENT Procedures; EPHYS =
  Cardiac Electrophysiology; EXEYE = Extraocular Ophthalmic Surgery;
  GIXXX = Gastrointestinal Procedures; GYNXX = Gynecologic Procedures;
  INEYE = Intraocular Surgery; LAPXX = Laparoscopic Procedures; NERVE =
  Nerve Procedures; NSTIM = Neurostimulators; ORTHO = Orthopedic
  Surgery; PUMPS = Implantable Drug Delivery Systems; RADTX = Radiation
  Oncology; SCTXX = Stem Cell Transplant; UROXX = Urologic Procedures;
  VASCX = Vascular Procedures; WPMXX = Wireless PA Pressure Monitor.

(3) Brachytherapy Insertion Procedures
    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 
79584), we finalized 25 new C-APCs. Some of the HCPCS codes assigned to 
the C-APCs established for CY 2017 described surgical procedures for 
inserting brachytherapy catheters/needles and other related 
brachytherapy procedures such as the insertion of tandem and/or ovoids 
and the insertion of Heyman capsules. In the CY 2017 OPPS/ASC final 
rule with comment period (81 FR 79583), we stated that we received 
public comments which noted that claims that included several insertion 
codes for brachytherapy devices often did not also contain a 
brachytherapy treatment delivery code (CPT codes 77750 through 77799). 
The brachytherapy insertion codes that commenters asserted were not 
often billed with a brachytherapy treatment code included the 
following:
     CPT code 57155 (Insertion of uterine tandem and/or vaginal 
ovoids for clinical brachytherapy);
     CPT code 20555 (Placement of needles or catheters into 
muscle and/or soft tissue for subsequent interstitial radioelement 
application (at the time of or subsequent to the procedure));
     CPT code 31643 (Bronchoscopy, rigid or flexible, including 
fluoroscopic guidance, when performed; with placement of catheter(s) 
for intracavitary radioelement application);
     CPT code 41019 (Placement of needles, catheters, or other 
device(s) into the head and/or neck region (percutaneous, transoral, or 
transnasal) for subsequent interstitial radioelement application);
     CPT code 43241 (Esophagogastroduodenoscopy, flexible, 
transoral; with insertion of intraluminal tube catheter);
     CPT code 55920 (Placement of needles or catheters into 
pelvic organs and/or genitalia (except prostate) for subsequent 
interstitial radioelement application); and
     CPT code 58346 (Insertion of Heyman capsules for clinical 
brachytherapy).
    The commenters concluded that brachytherapy delivery charges are 
being underrepresented in ratesetting under the C-APC methodology 
because a correctly coded claim should typically include an insertion 
and treatment delivery code combination. The commenters stated that the 
insertion procedure and brachytherapy treatment delivery generally 
occur on the same day or within the same week and therefore the 
services should appear on a claim together. In the CY 2017 OPPS/ASC 
final rule with comment period, we indicated that we would not exclude 
claims from the CY 2017 ratesetting calculation because we generally do 
not remove claims from the claims accounting when stakeholders believe 
that hospitals included incorrect information on some claims (81 FR 
79583). However, we stated that we would examine the claims for the 
brachytherapy insertion codes in question and determine if any future 
adjustment to the methodology (or possibly code edits) would be 
appropriate.
    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33577 
through 33578), we analyzed the claims that include brachytherapy 
insertion codes assigned to status indicator ``J1'' and that received 
payment through a C-APC, and we determined that several of these codes 
are frequently billed without an associated brachytherapy treatment 
code. As mentioned above, stakeholders have expressed concerns that 
using claims for ratesetting for brachytherapy insertion procedures 
that do not also include a brachytherapy treatment code may not capture 
all of the costs associated with the insertion procedure. To address 
this issue and base payment on claims for the most common clinical 
scenario, for CY 2018 and subsequent years, we indicated in the CY 2018 
OPPS/ASC proposed rule (82 FR 33578) that we were establishing a code 
edit that requires a brachytherapy treatment code when a brachytherapy 
insertion code is billed.
    As noted in section II.A.2.c. of the proposed rule and this final 
rule with comment period, we also proposed to delete composite APC 8001 
(LDR Prostate Brachytherapy Composite) and assign HCPCS code 55875 
(Transperineal placement of needles or catheters into prostate for 
interstitial radioelement application, with or without cystoscopy) to 
status indicator ``J1'' and to provide payment for this procedure 
through the C-APC payment methodology, similar to the payment 
methodology for other surgical insertion procedures related to 
brachytherapy. Specifically, when HCPCS code 55875 is the primary 
service reported on a hospital outpatient claim, we proposed to package 
payments for all adjunctive services reported on the claim into the 
payment for HCPCS code 55875. We proposed to assign HCPCS code 55875 to 
C-APC 5375 (Level 5 Urology and Related Services). The code edit for 
claims with brachytherapy services described above that will be 
effective January 1, 2018, will require the brachytherapy application 
HCPCS code 77778 (Interstitial radiation source application; complex) 
to be included on the claim with the brachytherapy insertion procedure 
(HCPCS code 55875).
    Comment: Several commenters opposed the implementation of a code

[[Page 59242]]

edit that requires a brachytherapy treatment code when a brachytherapy 
insertion code is billed. These commenters noted that, in some cases, 
the insertion procedure and the brachytherapy treatment are performed 
on different days and reported on separate claims. The commenters also 
noted that the brachytherapy insertion procedure and radiation 
treatment delivery are not always performed in the same facility, in 
which case they would be on different claims. The commenters stated 
that this practice pattern is especially common in the treatment of 
breast cancer and related breast brachytherapy catheter codes.
    Response: We appreciate the commenters' views. We intended to 
address the concerns raised by commenters in CY 2017 rulemaking 
regarding ratesetting for C-APCs for brachytherapy insertion procedures 
by establishing a code edit to require a brachytherapy treatment code 
when a brachytherapy insertion code is billed. This was largely based 
on information received from commenters last year, in which commenters 
had suggested that brachytherapy insertion procedures and brachytherapy 
radiation treatment are often performed on the same day or within the 
same week and are often billed on the same claim. However, based on 
comments received in response to the code edit, it appears that there 
may be some clinical scenarios where that is not the case. Accordingly, 
in light of the numerous comments opposing this code edit and the 
information provided by commenters that suggests that brachytherapy 
insertion and treatment services may be appropriately furnished on 
different dates and different claims, we have decided not to implement 
an edit which would require a brachytherapy treatment code when a 
brachytherapy insertion code is billed. As we have previously stated, 
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 (77 FR 68324). We 
will continue to examine the issues involving ratesetting for 
brachytherapy insertion procedures assigned to C-APCs and welcome the 
public's input regarding alternative payment policies that could 
appropriately address the issue while maintaining the C-APC policy.
    Comment: Some commenters requested that CMS discontinue the C-APC 
payment policy for all brachytherapy insertion codes identified in the 
CY 2018 OPPS/ASC proposed rule. These commenters expressed concerns 
that hospital billing practices for radiation oncology services are 
variable and inconsistent with the C-APC policy which packages services 
at the claim level. The commenters stated that, in some cases, needles 
or catheters are surgically placed prior to the brachytherapy treatment 
delivery, which consists of multiple fractions over several days or 
weeks and may be delivered at a different site of service. The 
commenters also requested that CMS continue the composite APC for Low 
Dose Rate Brachytherapy instead of assigning CPT code 55875 
(Transperineal placement of needles or catheters into prostate for 
interstitial radioelement application, with or without cystoscopy) to a 
C-APC (Level 5 Urology and Related Services). The commenters stated 
that CPT codes 55920 and 19298 should be assigned to a different C-APC 
if CMS maintained the C-APC payment policy for brachytherapy insertion 
procedures in CY 2018.
    Response: We continue to believe that the C-APC payment policy is 
appropriately applied to brachytherapy insertion procedures, including 
the procedure described by CPT code 55875. These procedures, like other 
procedures assigned to C-APCs, are primary services (mostly major 
surgical procedures) that are typically the focus of the hospital 
outpatient stay. As mentioned previously, we welcome input on 
alternative payment policies to address concerns surrounding the 
variation in hospital billing practices for radiation oncology while 
maintaining the C-APC policy, and we will continue to monitor this 
issue. The APC assignments for CPT codes 55920 and 19298 are discussed 
in greater detail in section XII.D.2. of this final rule with comment 
period.
    Comment: Some commenters requested that CMS continue to provide 
payment for the brachytherapy insertion procedures through the C-APC 
policy, but exclude all radiation oncology codes on the claim (defined 
as CPT codes 77261 through 77799) and make separate payment for the 
brachytherapy treatment delivery and related planning and preparation 
services in addition to the C-APC payment for the brachytherapy 
insertion procedures. These commenters stated that this was similar to 
the C-APC policy for stereotactic radiosurgery (SRS) treatment.
    Response: The policy intent of C-APCs is to bundle payment for all 
services related and adjunctive to the primary ``J1'' procedure. We do 
not believe that providing separate payment for radiation oncology 
codes that are included on a claim with a brachytherapy insertion 
procedure assigned to status indicator ``J1'' is in accordance with the 
C-APC policy. With regard to the SRS treatment policy to pay separately 
for the planning and preparation procedures, as stated in the CY 2017 
OPPS/ASC final rule with comment period (81 FR 79583), this policy is a 
temporary special exception to the C-APC packaging policy that packages 
all adjunctive services (with a few exceptions listed in Addendum J to 
this final rule with comment period).
    After consideration of the public comments we received, we are not 
establishing a code edit that requires a brachytherapy treatment code 
when a brachytherapy insertion code is billed. We are finalizing our 
proposal to delete composite APC 8001 (LDR Prostate Brachytherapy 
Composite) and assign HCPCS code 55875 (Transperineal placement of 
needles or catheters into prostate for interstitial radioelement 
application, with or without cystoscopy) to status indicator ``J1'' and 
to provide payment for this procedure through the C-APC payment 
methodology, similar to the payment methodology for other surgical 
insertion procedures related to brachytherapy.
(4) C-APC 5627 (Level 7 Radiation Therapy) Stereotactic Radiosurgery 
(SRS)
    Stereotactic radiosurgery (SRS) is a type of radiation therapy that 
targets multiple beams of radiation to precisely deliver radiation to a 
brain tumor while sparing the surrounding normal tissue. SRS treatment 
can be delivered by Cobalt-60-based (also referred to as gamma knife) 
technology or robotic linear accelerator-based (LINAC)-based 
technology. As stated in the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70336), section 634 of the American Taxpayer Relief Act 
(ATRA) of 2012 (Pub. L. 112-240) amended section 1833(t)(16) of the Act 
by adding a new subparagraph (D) to require that OPPS payments for 
Cobalt-60-based SRS be reduced to equal that of payments for LINAC-
based SRS for covered OPD services furnished on or after April 1, 2013. 
Because section 1833(t)(16)(D) of the Act requires equal payment for 
SRS treatment delivered by Cobalt-60-based or LINAC-based technology, 
the two types of services involving SRS delivery instruments (which are 
described by HCPCS code 77371 (Radiation treatment delivery, 
stereotactic radiosurgery [SRS], complete course of treatment cranial 
lesion(s) consisting of 1 session; multi-source Cobalt 60-based) and

[[Page 59243]]

HCPCS code 77372 (Linear accelerator-based)) are assigned to the same 
C-APC (C-APC 5627 Level 7 Radiation Therapy).
    In the CY 2016 OPPS/ASC final rule with comment period (80 FR 
70336), we stated that we had identified differences in the billing 
patterns for SRS procedures delivered using Cobalt-60-based and LINAC-
based technologies. In particular, our claims data analysis revealed 
that services involving SRS delivered by Cobalt-60-based technologies 
(as described by HCPCS code 77371) typically included SRS treatment 
planning services (for example, imaging studies, radiation treatment 
aids, and treatment planning) and the actual deliveries of SRS 
treatment on the same date of service and reported on the same claim. 
In contrast, claims data analysis results revealed that services 
involving SRS delivered by LINAC-based technologies (as described by 
HCPCS code 77372) frequently included services related to SRS treatment 
(for example, imaging studies, radiation treatment aids, and treatment 
planning) that were provided on different dates of service and reported 
on claims separate from the actual delivery of SRS treatment.
    We stated in the CY 2016 OPPS/ASC final rule with comment period 
(80 FR 70336) that the intent of the C-APC policy is to package payment 
for all services adjunctive to the primary ``J1'' procedure and that we 
believed that all essential planning and preparation services related 
to the SRS treatment are adjunctive to the SRS treatment delivery 
procedure. Therefore, payment for these adjunctive services should be 
packaged into the C-APC payment for the SRS treatment instead of 
reported on a different claim and paid separately. To identify services 
that are adjunctive to the primary SRS treatment described by HCPCS 
codes 77371 and 77372, but reported on a different claim, we 
established modifier ``CP'' which became effective in CY 2016 and 
required the use of the modifier for CY 2016 and CY 2017.
    To ensure appropriate ratesetting for the SRS C-APC, we believed it 
was necessary to unbundle payment for the adjunctive services for CY 
2016 and CY 2017. Therefore, we finalized a policy to change the 
payment for SRS treatment for the 10 SRS planning and preparation 
services identified in our claims data (HCPCS codes 70551, 70552, 
70553, 77011, 77014, 77280, 77285, 77290, 77295, and 77336) that were 
reported differentially using HCPCS codes 77371 and 77372 both on the 
same claim as the SRS services and on claims 1 month prior to the 
delivery of SRS services. These codes were removed from the geometric 
mean cost calculations for C-APC 5627. In addition, for CY 2016 and CY 
2017, we provided separate payment for the 10 planning and preparation 
services adjunctive to the delivery of the SRS treatment using either 
the Cobalt-60-based or LINAC-based technology, even when the planning 
service was included on the same claim as the primary ``J1'' SRS 
treatment service. The use of the modifier ``CP'' was not required to 
identify these 10 planning and preparation codes.
    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33564 and 
33465), the data collection period for SRS claims with modifier ``CP'' 
began on January 1, 2016 and concludes on December 31, 2017. Based on 
our analysis of preliminary data collected with modifier ``CP'', we 
have identified some additional services that are adjunctive to the 
primary SRS treatment and reported on a different claim outside of the 
10 SRS planning and preparation codes that were removed from the SRS C-
APC costs calculations and paid separately.
    However, the ``CP'' modifier has been used by a small number of 
providers since its establishment. In addition, our analysis showed 
that several of the HCPCS codes that were billed with modifier ``CP'' 
belonged to the group of 10 SRS planning and preparation codes that we 
pay separately and do not require the use of modifier ``CP''. Also, 
some providers erroneously included the modifier when reporting the 
HCPCS code for the delivery of the LINAC-based SRS treatment. As stated 
above, the data collection period for SRS claims with modifier ``CP'' 
was set to conclude on December 31, 2017. Accordingly, for CY 2018, we 
are deleting this modifier and discontinuing its required use.
    For CY 2018, we also proposed to continue to make separate payments 
for the 10 planning and preparation services adjunctive to the delivery 
of the SRS treatment using either the Cobalt-60-based or LINAC-based 
technology when furnished to a beneficiary within 1 month of the SRS 
treatment. The continued separate payment of these services will allow 
us to complete our analysis of the claims data including modifier 
``CP'' from both CY 2016 and CY 2017 claims. As stated in the CY 2017 
OPPS/ASC final rule with comment period (81 FR 79583), we will consider 
in the future whether repackaging all adjunctive services (planning, 
preparation, and imaging, among others) back into cranial single 
session SRS is appropriate.
    We invited public comments on these proposals.
    Comment: Commenters generally supported the proposal to continue to 
make separate payments for the planning and preparation services 
adjunctive to the delivery of the SRS treatment and requested that CMS 
continue to pay separately for these services in the future. Commenters 
also supported the deletion of modifier ``CP''.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to make separate payments for the 10 planning 
and preparation services adjunctive to the delivery of the SRS 
treatment using either the Cobalt-60-based or LINAC-based technology 
when furnished to a beneficiary within 1 month of the SRS treatment.
(5) Complexity Adjustment for Blue Light Cystoscopy Procedures
    As discussed in prior OPPS/ASC final rules with comment period, and 
most recently in the CY 2017 OPPS/ASC final rule with comment period 
(81 FR 79668), we continue to believe that Cysview[supreg] 
(hexaminolevulinate HCl) (described by HCPCS code C9275) is a drug that 
functions as a supply in a diagnostic test or procedure and is 
therefore packaged with payment for the primary procedure. In addition, 
as discussed in section II.A.2.b.(1) of the CY 2018 OPPS/ASC proposed 
rule and this final rule with comment period, drugs that are not 
eligible for pass-through payment are always packaged when billed with 
a comprehensive service. To maintain the integrity of the OPPS, we 
believe it is generally not appropriate to allow exceptions to our drug 
packaging policy or comprehensive APC policy that would result in 
separate payment for the drug based on the product's ASP+6 percent 
payment rate. While we did not propose in the CY 2018 proposed rule to 
pay separately for Cysview[supreg], we have heard concerns from 
stakeholders that the payment for blue light cystoscopy procedures 
involving Cysview[supreg] may be creating a barrier to beneficiaries 
receiving access to reasonable and necessary care for which there may 
not be a clinically comparable alternative. Therefore, as we stated in 
the proposed rule, we revisited our payment policy for blue light 
cystoscopy procedures. As described in more detail below, we believe 
certain code combinations for blue light cystoscopy procedures should 
be eligible to qualify for a complexity

[[Page 59244]]

adjustment, given the unique properties of the procedure and resource 
costs.
    Traditionally, white light (or standard) cystoscopy, typically 
performed by urologists, has been the gold standard for diagnosing 
bladder cancer. Enhanced bladder cancer diagnostics, such as narrow 
band imaging or blue light cystoscopy, increase tumor detection in 
nonmuscle invasive bladder cancer over white light cystoscopy alone, 
thus enabling more precise tumor removal by the urologist. Blue light 
cystoscopy can only be performed after performance of white light 
cystoscopy. Because blue light cystoscopy requires specialized imaging 
equipment to view cellular uptake of the dye that is not otherwise used 
in white light cystoscopy procedures, some practitioners consider blue 
light cystoscopy to be a distinct and adjunctive procedure to white 
light cystoscopy. However, the current CPT coding structure for 
cystoscopy procedures does not identify blue light cystoscopy in the 
coding descriptions separate from white light cystoscopy. Therefore, 
the existing cystoscopy CPT codes do not distinguish cystoscopy 
procedures involving only white light cystoscopy from those involving 
both white and blue light cystoscopy, which require additional 
resources compared to white light cystoscopy alone.
    As discussed in the CY 2018 OPPS/ASC proposed rule, after 
discussion with our clinical advisors (including a urologist), we 
believe that blue light cystoscopy represents an additional elective 
but distinguishable service as compared to white light cystoscopy that, 
in some cases, may allow greater detection of bladder tumors in 
beneficiaries relative to white light cystoscopy alone. Given the 
additional equipment, supplies, operating room time, and other 
resources required to perform blue light cystoscopy in addition to 
white light cystoscopy, for CY 2018, in the proposed rule, we proposed 
to create a new HCPCS C-code to describe blue light cystoscopy and to 
allow for a complexity adjustment to APC 5374 (Level 4 Urology and 
Related Services) for certain code combinations in APC 5373 (Level 3 
Urology and Related Services). (In the proposed rule, we cited HCPCS 
code ``C97XX'' as a placeholder for the new code. However, for ease of 
reading, hereafter in this section, we refer to the replacement code 
HCPCS code C9738 (Adjunctive blue light cystoscopy with fluorescent 
imaging agent (List separately in addition to code for primary 
procedure)) instead of the placeholder code.) Specifically, to 
determine which code pair combinations of a procedure described by 
proposed new HCPCS code C9738 and a cystoscopy procedure would qualify 
for a complexity adjustment, we first crosswalked the costs of the 
procedure described by HCPCS code C9275 (Hexaminolevulinate hcl) to the 
procedure described by proposed new HCPCS code C9738 assigned status 
indicator ``N''. Next, we identified the procedure codes used to 
describe white light cystoscopy of the bladder which include the 
following CPT codes and APC assignments:

 APC 5372 (Level 2 Urology and Related Services)
    [squ] CPT code 52000
 APC 5373 (Level 3 Urology and Related Services)
    [squ] CPT code 52204
    [squ] CPT code 52214
    [squ] CPT code 52224
 APC 5374 (Level 4 Urology and Related Services)
    [squ] CPT code 52234
    [squ] CPT code 52235
 APC 5375 (Level 5 Urology and Related Services)
    [squ] CPT code 52240

    Because APC 5372 is not a C-APC, cystoscopy procedures assigned to 
Level 2 Urology are not eligible for a complexity adjustment, and 
therefore, we did not analyze these codes to determine whether they met 
the criteria for this adjustment. We modeled the data to determine 
which code pair combinations exceed the claim frequency and cost 
threshold in APC 5373, APC 5374, and APC 5375, which are all C-APCs. In 
the proposed rule, we stated that the results of our analysis indicate 
that the code pair combination of procedures described by proposed new 
HCPCS code C9738 and cystoscopy procedures assigned to APC 5373 would 
be eligible for a complexity adjustment based on current criteria and 
cost data because they meet the frequency and cost criteria thresholds. 
Likewise, our results indicated that the combination of procedures 
described by proposed new HCPCS code C9738 and cystoscopy procedures 
assigned to APC 5374 and APC 5375 would not qualify for a complexity 
adjustment because they do not meet the frequency and cost criteria 
thresholds.
    We indicated in the proposed rule that, under the C-APC policy, 
blue light cystoscopy would be packaged, but when performed with a 
cystoscopy procedure in APC 5373 and reported with proposed new HCPCS 
code C9738 in addition to the cystoscopy CPT code, there would be a 
complexity adjustment to the next higher level APC in the series, 
resulting in a higher payment than for the white light cystoscopy 
procedure alone. That is, if the code pair combination of proposed new 
HCPCS code C9738 with CPT code 52204, 52214, or 52224 is reported on a 
claim, the claim will qualify for payment reassignment from APC 5373 to 
APC 5374. We stated that we plan to track the utilization and the costs 
associated with white light/blue light cystoscopy procedure 
combinations that will receive a complexity adjustment.
    We invited public comments on our CY 2018 proposal to allow for a 
complexity adjustment when a white light cystoscopy procedure followed 
by a blue light cystoscopy procedure is performed. In addition, we 
sought public comments on whether alternative procedures, such as 
narrow band imaging, may be disadvantaged by this proposed policy.
    Comment: One commenter agreed that there are differences in 
resource utilization between cystoscopy procedures involving white 
light only and cystoscopy procedures involving both white light and 
blue light. However, the commenter recommended that a proposal to 
expand the cystoscopy CPT codes be submitted to the American Medical 
Association (AMA) to capture the resource distinction. The commenter 
stated that the use of CPT codes and HCPCS C-codes (for example, the 
proposed HCPCS code C9738) to capture cystoscopy procedures is 
duplicative, administratively burdensome, and can affect the quality of 
claims data.
    Response: We appreciate the commenter's concerns. However, we 
proposed to establish this code based on programmatic need under the 
OPPS to accurately describe blue light cystoscopy procedures. Given 
that a CPT code that describes blue light cystoscopy with an optical 
imaging agent does not exist in the CY 2018 CPT code set published by 
the AMA, it is unclear to us why the commenter believes HCPCS code 
C9738 would be duplicative, administratively burdensome, or affect the 
quality of claims data. Moreover, it is the combination of two 
different procedures that trigger a complexity adjustment; therefore, 
two distinct CPT or HCPCS codes are necessary to effectuate a 
complexity adjustment. If the AMA establishes a CPT code that describes 
blue light cystoscopy with an optical imaging agent, we would consider 
recognizing that CPT code under the OPPS as a replacement for HCPCS 
code C9738.
    Comment: A few commenters generally supported the proposal to allow 
for a complexity adjustment for

[[Page 59245]]

blue light cystoscopy with Cysview procedures. Many commenters, 
including several commenters with experience utilizing blue light 
cystoscopy with Cysview, shared their views on how this procedure has 
positively affected patient care management. These commenters 
recommended that CMS apply a complexity adjustment to all blue light 
cystoscopy with Cysview procedures performed in HOPDs to improve 
utilization and beneficiary access to care. Alternatively, the 
commenters recommended that CMS pay separately for Cysview to allow 
access in both white light and blue light cystoscopies in HOPD and ASC 
settings or establish a payment methodology conceptually similar to the 
device-intensive payment procedure for ASCs. The commenters suggested 
that a ``device-intensive like'' payment for a cystoscopy procedure 
performed in the ASC would be set based on the service cost and the 
drug cost (as determined by the manufacturer-reported average sales 
price).
    Response: We appreciate the commenters' support. In developing the 
blue light cystoscopy procedure complexity adjustment payment proposal, 
we considered the unique properties and resources required to perform 
blue light cystoscopy with Cysview. As described in the proposal, we 
approximated the costs for the additional resources required to perform 
blue light cystoscopy by crosswalking the costs associated with HCPCS 
code C9275 to HCPCS code C9738. We then applied the established 
complexity adjustment criteria to determine which cystoscopy 
procedures, when performed with blue light cystoscopy, would qualify 
for a complexity adjustment. For this final rule with comment period, 
we repeated the analysis to determine which code pair combinations of 
HCPCS code C9738 with a cystoscopy procedure CPT code satisfied the 
complexity adjustment criteria. Consistent with the proposed rule 
results, based on the updated final rule with comment period claims 
data, the code pair combination of HCPCS code C9738 with CPT code 
52204, 52214, or 52224 each will qualify for a complexity adjusted 
payment from APC 5373 to APC 5374. Because APC 5372 is not a C-APC, 
cystoscopy procedures assigned to Level 2 Urology are not eligible for 
a complexity adjustment. Therefore, we did not analyze these codes to 
determine whether they were eligible for a complexity adjustment. 
Likewise, our analysis of the final rule claims data indicated that the 
combination of proposed HCPCS code C9738 and cystoscopy procedures 
assigned to APC 5374 and APC 5375 would not qualify for a complexity 
adjustment because they do not meet the frequency and cost criteria 
thresholds.
    We did not propose and the commenters did not provide evidence to 
support waiving application of the complexity adjustment criteria and 
allowing for a complexity adjustment whenever a blue light cystoscopy 
procedure is performed with any white light cystoscopy procedure. To 
allow for a complexity adjustment under any circumstance would require 
a change to the complexity adjustment criteria, which we did not 
propose. Therefore, we are finalizing the blue light cystoscopy 
complexity adjustment proposal, without modification. In addition we 
are establishing HCPCS code C9738 (Adjunctive blue light cystoscopy 
with fluorescent imaging agent (List separately in addition to code for 
primary procedure)), which replaces proposed HCPCS code C97XX. For CY 
2018, the code pair combination of HCPCS code C9738 with CPT code 
52204, 52214, or 52224 will qualify for a complexity adjusted payment 
from APC 5373 to APC 5374.
    With respect to the public comments on unpackaging Cysview to allow 
for separate payment in both the HOPD and ASC settings, as we stated in 
the background section for the proposal, we continue to believe that 
Cysview is a drug that functions as a supply in a diagnostic test or 
procedure and therefore is packaged with payment for the primary 
procedure. In the CY 2018 OPPS/ASC proposed rule, we did not propose to 
make any changes to the ``drugs that function as a supply'' packaging 
policy or make any corresponding proposals to pay separately for 
Cysview in the HOPD and ASC settings. Therefore, Cysview will remain 
packaged.
    With respect to the recommendation that we establish a payment 
methodology for blue light cystoscopy with Cysview procedures 
conceptually similar to the ASC device intensive payment policy, we did 
not propose revisions to the ASC device-intensive procedure policy. In 
addition, it is unclear to us exactly how such a policy would work and 
to what precise procedures in addition to blue light cystoscopy it 
might apply. Further, we believe that the C-APC payment adequately 
reflects the average resources expended by hospitals as reflected in 
hospital claims data. In addition, for especially costly cases, we 
believe our proposed policy appropriately recognizes the additional 
costs of blue light cystoscopy with white light cystoscopy through the 
complexity adjustment. We will continue to analyze the data and 
evaluate whether refinements to the C-APC policy, including the 
complexity adjustment criteria, should be considered in future 
rulemaking.
    Comment: A few commenters responded to the solicitation for public 
comments on whether an alternative procedure, such as narrow band 
imaging, would be disadvantaged by the blue light cystoscopy with 
Cysview complexity adjustment proposal. One commenter, the manufacturer 
of Cysview, requested that CMS not establish a complexity adjustment 
for narrow band imaging because this imaging does not require a drug, 
additional technology, or additional resource. The commenter stated 
that the equipment used in narrow band imaging cystoscopy procedures is 
not different than the equipment for white light cystoscopy and does 
not require more resource time, expense, or cost to the hospital 
because narrow band imaging technology is part of the standard 
equipment available for cystoscopic procedures. Another commenter, the 
developer of narrow band imaging, contended that the procedure shares 
many clinical and procedural similarities with blue light cystoscopy 
with Cysview procedures, and therefore narrow band imaging should be 
eligible for a complexity adjustment. In addition, the commenter 
expressed concern that a complexity adjustment for blue light 
cystoscopy with Cysview and not narrow band imaging would provide a 
financial incentive for providers to choose one technology over the 
other. However, the commenter did not provide cost information for 
narrow band imaging.
    Response: We appreciate the commenters' responses. We do not 
believe that the information presented supports a complexity adjustment 
for narrow band imaging. The lack of cost information for narrow band 
imaging and the fact that narrow band imaging does not require use of a 
contrast agent (and, therefore, avoids the cost of contrast and the 
time associated with the administration of contrast) lead us to 
question whether the resource costs of narrow band imaging are the same 
as those of blue light cystoscopy with Cysview. For these reasons, we 
do not believe it is appropriate to modify the proposal to allow for a 
complexity adjustment when narrow band imaging is performed with white 
light cystoscopy.
    After consideration of the public comments we received, we are

[[Page 59246]]

finalizing our proposal, without modification, to allow for a 
complexity adjustment when HCPCS code C9738 is reported on the same 
claim as CPT code 52204, 52214, or 52224. The result of billing any one 
of these three code pair combinations is a payment reassignment from 
APC 5373 to APC 5374.
(6) Analysis of C-APC Packaging Under the OPPS
    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 
79584), we accepted a recommendation made at the August 22, 2016 HOP 
Panel meeting to analyze the effects of C-APCs. The HOP panel 
recommendation did not elucidate specific concerns with the C-APC 
policy or provide detailed recommendations on particular aspects of the 
policy to analyze. Therefore, we took a broad approach in studying 
HCPCS codes and APCs subject to the C-APC policy to determine whether 
aberrant trends in the data existed. Overall, we observed no such 
aberrancies and believe that the C-APC policy is working as intended.
    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33580), 
specifically, using OPPS claims data for the CY 2016 final rule with 
comment period, the CY 2017 final rule with comment period, and the CY 
2018 proposed rule, which reflect an observation period of CY 2014 to 
CY 2016, we examined the effects of C-APCs and their impact on OPPS 
payments. We started with all hospital outpatient claims billed on the 
13X claim-type and, from that, separately identified HCPCS codes and 
APCs that were subject to the comprehensive methodology in CYs 2015 and 
2016 (that is, HCPCS codes or APCs assigned status indicator ``J1'' or 
``J2''). Next, we analyzed the claims to create a subset of claims that 
contain the HCPCS codes and APCs that were subject to the comprehensive 
methodology. Using the claims noted above, we analyzed claim frequency, 
line frequency, number of billing units, and the total OPPS payment 
between CYs 2014 and 2016 for each HCPCS code and APC that had been 
previously identified. In reviewing the cost statistics for HCPCS codes 
for procedures with status indicator ``S'', ``T'', or ``V'' in CY 2014 
that were assigned to a C-APC in either CY 2015 or CY 2016, overall, we 
observed an increase in claim line frequency, units billed, and 
Medicare payment, which suggest that the C-APC payment policy did not 
adversely affect access to care or reduce payments to hospitals. 
Decreases in these cost statistics would suggest our comprehensive 
packaging logic is not working as intended and/or the C-APC payment 
rates were inadequate, resulting in lower volume due to migration of 
services to other settings or the cessation of providing these 
services. Likewise, because the cost statistics of major separately 
payable codes (that is, HCPCS codes with status indicator ``S'', ``T'', 
or ``V'') that were packaged into a C-APC prospectively were consistent 
with the cost statistics of the codes packaged on the claim, in 
actuality, indicate that costs were appropriately redistributed, we 
believe the C-APC payment methodology is working as intended.
    Comment: A few commenters appreciated CMS' analysis of C-APC 
packaging under the OPPS and urged CMS to continue to monitor the data 
and report on any changes in billing patterns or utilization for 
particular items or services.
    Response: We appreciate the commenters' support. We will continue 
to monitor the impact of our C-APC policy on OPPS rate setting and 
evaluate if future adjustments are needed.
c. 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 low dose rate (LDR) prostate brachytherapy, 
mental health services, and multiple imaging services. We refer readers 
to the CY 2008 OPPS/ASC final rule with comment period for a full 
discussion of the development of the composite APC methodology (72 FR 
66611 through 66614 and 66650 through 66652) and the CY 2012 OPPS/ASC 
final rule with comment period (76 FR 74163) for more recent 
background.
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33580), for CY 2018 
and subsequent years, we proposed to continue our composite APC payment 
policies for mental health services and multiple imaging services, as 
discussed below. As discussed in section II.A.2.b. of the proposed rule 
and this final rule with comment period, we proposed to assign CPT code 
55875 (Transperineal placement of needs or catheters into prostate for 
interstitial radioelement application, with or without cystoscopy) a 
status indicator of ``J1'' and assign it to a C-APC. In conjunction 
with this proposal, we also proposed to delete the low dose rate (LDR) 
prostate brachytherapy composite APC for CY 2018 and subsequent years. 
We refer readers to section II.A.2.b. of the CY 2018 OPPS/ASC proposed 
rule and this final rule with comment period for our discussion on our 
low dose rate (LDR) prostate brachytherapy APC proposal for CY 2018 and 
subsequent years.
(1) Mental Health Services Composite APC
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33580), 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.
    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79588 
through 79589), we finalized a policy to combine the existing Level 1 
and Level 2 hospital-based PHP APCs into a single hospital-based PHP 
APC and, thereby, discontinue APCs 5861 (Level 1 Partial 
Hospitalization (3 services) for Hospital-Based PHPs) and 5862 (Level 2 
Partial Hospitalization (4 or more services) for Hospital-Based PHPs) 
and replace them with APC 5863 (Partial Hospitalization (3 or more 
services per day)). For CY 2018, and subsequent years, we proposed that 
when the aggregate payment for specified mental health services 
provided by one hospital to a single beneficiary on a single 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

[[Page 59247]]

by a hospital, those specified mental health services would be paid 
through composite APC 8010 (Mental Health Services Composite) for CY 
2018. In addition, we proposed to set the payment rate for composite 
APC 8010 for CY 2018 at the same payment rate that we proposed for APC 
5863, which is the maximum partial hospitalization per diem payment 
rate for a hospital, and that the hospital continue to be paid the 
payment rate for composite APC 8010. 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 5863 for all of the specified mental health 
services furnished by the hospital on that single date of service. We 
stated that 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 these proposals. 
Therefore, we are finalizing our CY 2018 proposal, without 
modification, that when aggregate payment for specified mental health 
services provided by one hospital to a single beneficiary on a date of 
service, based on the payment rates 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 will be paid through composite APC 8010 for CY 2018. In 
addition, we are finalizing our CY 2018 proposal, without modification, 
to set the payment rate for composite APC 8010 for CY 2018 at the same 
payment rate that we established for APC 5863, which is the maximum 
partial hospitalization per diem payment rate for a hospital, and that 
the hospital continue to be paid the payment rate for composite APC 
8010.
(2) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007, and 
8008)
    Effective January 1, 2009, we provide a single payment each time a 
hospital submits a claim for 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 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 under 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 based on the payment rate for APC 8008, the ``with 
contrast'' composite APC.
    We make a single payment for those imaging procedures that qualify 
for payment based on the composite APC payment rate, which includes 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 2018 OPPS/ASC proposed rule (82 FR 33581), we proposed, 
for CY 2018 and subsequent years, 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. We stated that we continue to believe that this policy 
would reflect and promote the efficiencies hospitals can achieve when 
performing multiple imaging procedures during a single session.
    The proposed CY 2018 payment rates for the five multiple imaging 
composite APCs (APCs 8004, 8005, 8006, 8007, and 8008) were based on 
proposed geometric mean costs calculated from a partial year of CY 2016 
claims available for the CY 2018 OPPS/ASC proposed rule that qualified 
for composite payment under the current policy (that is, those claims 
reporting 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 geometric 
mean costs for these composite APCs since CY 2014, 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, in accordance with 
our established methodology as stated in the CY 2014 OPPS/ASC final 
rule with comment period (78 FR 74918), were identified by asterisks in 
Addendum N to the CY 2018 OPPS/ASC proposed rule (which is available 
via the Internet on the CMS Web site) and were discussed in more detail 
in section II.A.1.b. of the CY 2018 OPPS/ASC proposed rule.
    For the CY 2018 OPPS/ASC proposed rule, we were able to identify 
approximately 634,918 ``single session'' claims out of an estimated 1.7 
million potential claims for payment through composite APCs from our 
ratesetting claims data, which represents approximately 36 percent of 
all eligible claims, to calculate the proposed CY 2018 geometric mean 
costs for the multiple imaging composite APCs. Table 6 of the CY 2018 
OPPS/ASC proposed rule listed the proposed HCPCS codes that would be 
subject to the multiple imaging composite APC policy and their 
respective families and approximate composite APC proposed geometric 
mean costs for CY 2018.
    Comment: One commenter supported the composite APC policy for 
imaging services and recommended that CMS pay composite imaging APCs 
separately when billed on a claim with a service

[[Page 59248]]

that has been assigned a ``J1'' status indicator, that is, as a C-APC.
    Response: We appreciate the commenter's support. Regarding the 
recommendation about paying for composite APCs separately when billed 
on a claim with a service that has been assigned a ``J1'' status 
indicator, procedures assigned to C-APCs are primary services that are 
typically the focus of the hospital outpatient stay. As discussed in 
section II.A.2.b. of this final rule with comment period, our C-APC 
policy packages payment for adjunctive and secondary items, services, 
and procedures, including diagnostic procedures, into the most costly 
procedure under the OPPS at the claim level. We believe that paying for 
composite APCs separately when billed with a service that has been 
assigned a ``J1'' status indicator would be in conflict with the intent 
of our C-APC policy and would not be appropriate.
    After consideration of the public comments we received, we are 
finalizing our proposal to continue the use of multiple imaging 
composite APCs to pay for services providing more than one imaging 
procedure from the same family on the same date, without modification. 
Table 7 below lists the HCPCS codes that will be subject to the 
multiple imaging composite APC policy and their respective families and 
approximate composite APC proposed geometric mean costs for CY 2018.

 Table 7--OPPS Imaging Families and Multiple Imaging Procedure Composite
                                  APCs
------------------------------------------------------------------------
 
------------------------------------------------------------------------
CY 2018 APC 8004 (ultrasound composite)      CY 2018 approximate APC
                                            geometric mean cost = $300
------------------------------------------------------------------------
                          Family 1--Ultrasound
------------------------------------------------------------------------
76700..................................  Us exam, abdom, complete.
76705..................................  Echo exam of abdomen.
76770..................................  Us exam abdo back wall, comp.
76776..................................  Us exam k transpl w/Doppler.
76831..................................  Echo exam, uterus.
76856..................................  Us exam, pelvic, complete.
76857..................................  Us exam, pelvic, limited.
------------------------------------------------------------------------
  CY 2018 APC 8005 (CT and CTA without       CY 2018 approximate APC
         contrast composite) *              geometric mean cost = $275
------------------------------------------------------------------------
             Family 2--CT and CTA with and without Contrast
------------------------------------------------------------------------
70450..................................  Ct head/brain w/o dye.
70480..................................  Ct orbit/ear/fossa w/o dye.
70486..................................  Ct maxillofacial w/o dye.
70490..................................  Ct soft tissue neck w/o dye.
71250..................................  Ct thorax w/o dye.
72125..................................  Ct neck spine w/o dye.
72128..................................  Ct chest spine w/o dye.
72131..................................  Ct lumbar spine w/o dye.
72192..................................  Ct pelvis w/o dye.
73200..................................  Ct upper extremity w/o dye.
73700..................................  Ct lower extremity w/o dye.
74150..................................  Ct abdomen w/o dye.
74261..................................  Ct colonography, w/o dye.
74176..................................  Ct angio abd & pelvis.
------------------------------------------------------------------------
   CY 2018 APC 8006 (CT and CTA with         CY 2018 approximate APC
          contrast composite)               geometric mean cost = $501
------------------------------------------------------------------------
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.

[[Page 59249]]

 
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
 assigns the procedure to APC 8006 rather than APC 8005..
------------------------------------------------------------------------
 CY 2018 APC 8007 (MRI and MRA without       CY 2018 approximate APC
         contrast composite) *              geometric mean cost = $556
------------------------------------------------------------------------
             Family 3--MRI and MRA with and without Contrast
------------------------------------------------------------------------
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.
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 2018 APC 8008 (MRI and MRA with        CY 2018 approximate APC
          contrast composite)               geometric mean cost = $871
------------------------------------------------------------------------
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.

[[Page 59250]]

 
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
  assigns the procedure to APC 8008 rather than APC 8007.

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 a bundle of specific services for a particular 
patient. The OPPS packages payments 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 costly 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 occurs if separate payment is provided 
for the item.
    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 payments 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. 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), the CY 2014 OPPS/ASC 
final rule with comment period (78 FR 74925), the CY 2015 OPPS/ASC 
final rule with comment period (79 FR 66817), the CY 2016 OPPS/ASC 
final rule with comment period (80 FR 70343), and the CY 2017 OPPS/ASC 
final rule with comment period (81 FR 79592). 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). 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 under the OPPS to determine 
which OPPS services can be packaged to further achieve the objective of 
advancing the OPPS toward a more prospective payment system.
    For CY 2018, we 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 that they support. Specifically, we examined the HCPCS 
code definitions (including CPT code descriptors) and outpatient 
hospital billing patterns 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 the CY 2018 OPPS/ASC proposed rule (82 FR 33584 
through 33585), for CY 2018, we proposed to conditionally package the 
costs of selected newly identified ancillary services into payment with 
a primary service where we believe that the packaged item or service is 
integral, ancillary, supportive, dependent, or adjunctive to the 
provision of care that was reported by the primary service HCPCS code. 
Below we discuss the items and services that we proposed to package 
beginning in CY 2018.

[[Page 59251]]

b. Drug Administration Packaging Policy
(1) Background of Drug Administration Packaging Policy
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74942 
through 74945), we finalized a policy to unconditionally package 
procedures described by add-on codes. Procedures described by add-on 
codes represent an extension or continuation of a primary procedure, 
which means that they are typically supportive, dependent, or 
adjunctive to a primary service. The primary code defines the purpose 
and typical scope of the patient encounter and the add-on code 
describes incremental work, when the extent of the procedure 
encompasses a range rather than a single defined endpoint applicable to 
all patients. Given the dependent nature and adjunctive characteristics 
of procedures described by add-on codes and in light of longstanding 
OPPS packaging principles, we finalized a policy to unconditionally 
package add-on codes with the primary procedure. However, in response 
to stakeholder comments on the appropriateness of packaging drug 
administration add-on codes, we did not finalize our proposal to 
package drug administration add-on codes (78 FR 74945).
    In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66819 
through 66822), we conditionally packaged payment for ancillary 
services assigned to APCs with a geometric mean cost of less than or 
equal to $100 (prior to application of the conditional packaging status 
indicator). The 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. Under this policy, we assigned the conditionally packaged 
services to status indicator ``Q1'', which indicates that the service 
is separately payable when not billed on the same claim as a HCPCS code 
assigned status indicator ``S'', ``T'', or ``V''. Exclusions to this 
ancillary service packaging policy include preventive services, certain 
psychiatric and counseling-related services, and certain low-cost drug 
administration services. In the CY 2015 OPPS/ASC final rule with 
comment period (79 FR 66819), we indicated that we did not propose to 
package certain low-cost drug administration services because we were 
examining various alternative payment policies for drug administration, 
including the associated drug administration add-on codes.
(2) Packaging of Level 1 and Level 2 Drug Administration Services
    As stated earlier, 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. To achieve this goal, it is important that we are consistent 
in our approach to packaging items and services under the established 
packaging categories. Although we excluded packaging of low-cost drug 
administration services from the ancillary services packaging policy in 
the CY 2015 rulemaking, separate payment for drug administration 
services is an example of inconsistent application of our packaging 
policy where we are continuing to pay separately for a service, 
regardless of cost and performance with another service. Given the 
frequency of drug administration in hospital outpatient care, in the CY 
2018 OPPS/ASC proposed rule, we stated that we believe it is 
appropriate for us to reconsider whether payment for drug 
administration services with a geometric mean cost of less than or 
equal to $100 (prior to application of the conditional packaging status 
indicator) should continue to be excluded from the ancillary services 
packaging policy.
    As part of our review of CY 2016 claims data used for ratesetting 
in the CY 2018 OPPS/ASC proposed rule, we examined drug administration 
billing patterns and payment for drug administration services under the 
OPPS. Based on our analysis of CY 2016 claims data used for the CY 2018 
proposed rule ratesetting, we found that the geometric mean cost for 
APC 5691 (Level 1 Drug Administration) is approximately $37 and the 
geometric mean cost for APC 5692 (Level 2 Drug Administration) is 
approximately $59. In addition, we observed that drug administration 
services in APC 5692 are frequently reported on the same claim with 
other separately payable services, such as an emergency department or 
clinic visit, while drug administration services in APC 5691 are 
sometimes reported with other separately payable services. Accordingly, 
Medicare data show that these drug administration services are 
currently being provided as part of another separately payable service 
for which two separate payments are made, and support that packaging 
these services, when they are reported with another separately payable 
service, is appropriate. Further, packaging for Levels 1 and 2 Drug 
Administration services is consistent with the ancillary packaging 
policy that was adopted in CY 2015, as noted earlier in this section. 
Therefore, given the low geometric mean costs of drug administration 
services in APC 5691 and APC 5692 as well as their associated billing 
patterns, we stated in the CY 2018 OPPS/ASC proposed rule that we 
believe that when these services are performed with another separately 
payable service, they should be packaged, but that they should be 
separately paid when performed alone. That is, we stated that we 
believe it is no longer necessary to exclude low-cost drug 
administration services from packaging under the ancillary services 
packaging policy adopted in CY 2015.
    In addition, as we examine payment differences between the hospital 
outpatient department and the physician office for similar services, 
under the OPPS, hospitals may receive separate payments for a clinic 
(office) visit and a drug administration service. In contrast, 
physicians are not eligible to receive payment for an office visit when 
a drug administration service is also provided. As a result, for 
furnishing the same drug administration service, hospitals receive an 
additional payment for which physician offices are not eligible. We 
stated in the proposed rule that we believe that conditional packaging 
of drug administration services would promote equitable payment between 
the physician office and the hospital outpatient hospital department. 
Accordingly, for CY 2018, we proposed to conditionally package payment 
for HCPCS codes describing drug administration services in APC 5691 and 
APC 5692, except for add-on codes and preventive services, when these 
services are performed with another service.
    Because preventive services are excluded from our packaging 
policies, we proposed to continue to pay separately for Medicare Part B 
vaccine administration services. In addition, at that time, we did not 
propose to package any drug administration services in APC 5693 (Level 
3 Drug Administration) or APC 5694 (Level 4 Drug Administration), but 
indicated our interest in public comments pertaining to whether payment 
for the services in these APCs may be appropriate for packaging. The 
proposed status indicators for drug administration services in APC 5691 
and APC 5692 were listed in Table 7 of the proposed rule.
    Comment: Numerous commenters disagreed with CMS' proposal to 
conditionally package low-cost drug administration services assigned to 
APC

[[Page 59252]]

5691 and APC 5692. The commonly cited concerns among the commenters who 
opposed the proposal were as follows:
     Low-cost drug administration services are dissimilar from 
other low cost ancillary services in that drug administration services 
are separate and distinct stand-alone services and not adjunctive, 
supportive, or dependent to a primary procedure.
     The proposal would not promote equitable payment between 
the physician's office and the hospital outpatient department because, 
in accordance with CMS guidelines, there are clinical circumstances 
where a physician may receive payment for both a drug administration 
service and an office visit.
     Because all drugs are separately payable in the 
physician's office, unlike under the OPPS, the proposal, if 
implemented, would exacerbate differences in payment between the 
hospital outpatient department and the physician office setting. 
Commenters expressed doubt that the full cost of a packaged drug 
administration service or drug would be appropriately and accurately 
reflected in the payment for another separately payable procedure.
     Packaging drug administration services with other services 
could result in hospitals scheduling patients for multiple visits, 
thereby reducing access to care and quality of care.
     Further analysis of the impact packaging drug 
administration services would have on APCs should be conducted prior to 
making a policy change.
     In general, packaging discourages full reporting of 
hospital costs, which impacts the accuracy of cost data that are used 
to calculate OPPS payment rates.
    In addition, at the summer 2017 meeting of the HOP Panel, the HOP 
Panel recommended that CMS not implement its proposal to package drug 
administration services described under APC 5691 (Level 1 Drug 
Administration) and APC 5692 (Level 2 Drug Administration).
    Response: We appreciate the detailed responses to our proposal and 
agree with the statements concerning the importance of payment accuracy 
to maintain access to care. However, we disagree that conditional 
packaging of low-level drug administration services, which are commonly 
furnished both in the hospital outpatient setting and in the physician 
office setting, would lead to payment inaccuracy for hospital rates for 
these services (which would include the packaged costs of these 
services) or to decreased access to drug administration services. As 
stated in the proposed rule, we believe it is no longer necessary to 
exclude low-cost drug administration services from packaging under the 
ancillary services packaging policy adopted in CY 2015, which is 
supported by our analysis of drug administration billing patterns. As 
described earlier in the introduction to this section, our analysis of 
CY 2016 OPPS claims data showed that low-cost drug administration 
services are currently being provided as part of another separately 
payable service for which two separate payments are made, and supported 
a policy that packaging low-cost drug administration services, when 
they are reported with another separately payable service, is 
appropriate. In response to the commenters who raised concerns 
regarding potential behavioral changes by providers as a consequence of 
the proposal, we will continue to monitor the data for changes in drug 
administration billing patterns.
    Furthermore, regarding the comments that low-cost drug 
administration services are separate and distinct standalone services 
and not adjunctive, supportive, or dependent to a primary procedure, we 
disagree based on typical billing patterns for these services. As 
stated earlier in the introduction to this section, ancillary services 
are often performed with a primary service. Because these low-cost drug 
administration services are typically furnished with another primary 
service and are assigned to APCs with a geometric mean cost of less 
than or equal to $100 (prior to the application of the conditional 
packaging status indicator), we believe these services fall under the 
ancillary services packaging policy.
    In addition, as stated in the proposed rule, we believe that 
conditional packaging of drug administration services will promote 
equitable payment between the physician office and the hospital 
outpatient department. However, we clarify that while typically 
physicians are not eligible to receive payment for an office visit when 
a drug administration service is also provided, we acknowledge that 
Medicare will pay for both services when the office visit CPT code is 
reported with Modifier 25 (Significant, separately identifiable 
evaluation and management services by the same physician on the day of 
the procedure).
    With respect to data availability and general requests for further 
CMS analysis, we believe that the data made available to the public as 
part of the proposed rule were appropriate, clear, and sufficient for 
interested parties to conduct analyses to evaluate facility-specific 
impacts of the proposed policy. It is unclear what the commenters meant 
by requesting that CMS further analyze the effects of the proposal on 
APCs, as the commenters did not specify any particular analysis that 
CMS should conduct or data that CMS should provide that is not already 
available to the public. Because the OPPS is a budget neutral payment 
system, packaging a procedure does not remove its costs from 
ratesetting.
    With respect to commenters' concerns on reporting of hospital costs 
for packaged services, we remind commenters that hospitals are expected 
to report all HCPCS codes that describe the services provided, 
regardless of whether or not those services are separately paid or 
their payment is packaged. The calculation of OPPS relative payment 
weights that reflect the relative resources required for HOPD services 
is the foundation of the OPPS. 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 
(77 FR 68324).
    Therefore, for the reasons stated above, we believe that it is 
appropriate, and a logical expansion of our ancillary services policy, 
to finalize our proposal to unconditionally package low-cost drug 
administration services assigned to APCs 5691 and 5692. Accordingly, we 
are not accepting the HOP Panel's recommendation to not finalize our 
proposal.
    Comment: One commenter stated that the packaging proposal is a 
logical expansion of the current ancillary packaging policy but 
recommended a 1-year implementation delay to allow providers time to 
assess the administrative and fiscal impact.
    Response: We appreciate the commenter's support. Packaging is a 
longstanding payment principle under the OPPS and CMS has packaged a 
number of items and services through the years and makes OPPS data 
available to all interested parties on its Web site. Therefore, we do 
not see a reason to delay implementation of the policy. With each 
proposed and final rule release, CMS posts on its Web site various 
public use files (PUFs), including payment rates and cost statistics 
for applicable items and procedures. Stakeholders interested in a more 
comprehensive analysis of OPPS claims data used to derive the CY 2018 
OPPS/ASC payment rates may purchase the ``OPPS Limited Data Set'' (LDS) 
that is available on the CMS Web site at:

[[Page 59253]]

https://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/LimitedDataSets/HospitalOPPS.html. We believe the information 
contained in the PUF and LDS files is sufficient to allow stakeholders 
to analyze the effects of our policies on their areas of interest. 
Therefore, we are finalizing our proposal to conditionally package low-
cost drug administration services assigned to APC 5691 and APC 5692, 
effective January 1, 2018.
    Comment: Some commenters believed that the proposal would 
conditionally package Medicare Part B vaccine administration. In 
addition, some commenters believed that if a hospital provides a low-
cost drug administration service for a drug that is unconditionally 
packaged, CMS would make no payment to the hospital.
    Response: We believe that some commenters may have misunderstood 
the proposal. Consistent with our existing policy to exclude preventive 
services from packaging, administration of Part B vaccines--influenza, 
pneumococcal, and hepatitis B--are exempt from packaging and will 
continue to be paid separately. With respect to payment for a 
conditionally packaged low-cost drug administration service and an 
unconditionally packaged drug, the drug administration service is 
separately payable when not billed on the same claim as a HCPCS code 
with status indicator ``S'', ``T'', or ``V''. Payment for the 
threshold-packaged drug would be packaged with the payment for the 
highest paying separately payable procedure reported on the claim. For 
example, if a threshold-packaged drug, a low-cost drug administration 
service, and a clinic visit are reported on the same claim, payment for 
the drug and drug administration service would be packaged with the 
clinic visit payment.
    In summary, after consideration of the public comments we received, 
we are finalizing, without modification, the proposed policy to 
conditionally package low-cost drug administration services assigned to 
APC 5691 and APC 5692.
    Because preventive services are excluded from our packaging 
policies, we are continuing to pay separately for Medicare Part B 
vaccine administration services. In addition, at this time, we are not 
packaging any drug administration services assigned to APC 5693 (Level 
3 Drug Administration) or APC 5694 (Level 4 Drug Administration). The 
status indicators for drug administration services in APC 5691 and APC 
5692 for CY 2018 are listed in Table 8 below.

 Table 8--CY 2018 Status Indicators for Drug Administration Services in
              Level 1 and Level 2 Drug Administration APCs
------------------------------------------------------------------------
                                                               CY 2018
           HCPCS code                 Short descriptor         status
                                                              indicator
------------------------------------------------------------------------
                  APC 5691--Level 1 Drug Administration
------------------------------------------------------------------------
95115...........................  Immunotherapy one                  Q1
                                   injection.
95117...........................  Immunotherapy injections           Q1
95144...........................  Antigen therapy services           Q1
95145...........................  Antigen therapy services           Q1
95146...........................  Antigen therapy services           Q1
95165...........................  Antigen therapy services           Q1
95170...........................  Antigen therapy services           Q1
96361...........................  Hydrate iv infusion add-            S
                                   on.
96366...........................  Ther/proph/diag iv inf              S
                                   addon.
96370...........................  Sc ther infusion addl hr            S
96375...........................  Tx/pro/dx inj new drug              S
                                   addon.
96377...........................  Application on-body                Q1
                                   injector.
96379...........................  Ther/prop/diag inj/inf             Q1
                                   proc.
96423...........................  Chemo ia infuse each                S
                                   addl hr.
96549...........................  Chemotherapy unspecified           Q1
G0008...........................  Admin influenza virus               S
                                   vac.
G0009...........................  Admin pneumococcal                  S
                                   vaccine.
G0010...........................  Admin hepatitis b                   S
                                   vaccine.
------------------------------------------------------------------------
                  APC 5692--Level 2 Drug Administration
------------------------------------------------------------------------
90471...........................  Immunization admin......           Q1
90473...........................  Immune admin oral/nasal.           Q1
95147...........................  Antigen therapy services           Q1
95148...........................  Antigen therapy services           Q1
95149...........................  Antigen therapy services           Q1
96367...........................  Tx/proph/dg addl seq iv             S
                                   inf.
96371...........................  Sc ther infusion reset             Q1
                                   pump.
96372...........................  Ther/proph/diag inj sc/            Q1
                                   im.
96401...........................  Chemo anti-neopl sq/im..           Q1
96402...........................  Chemo hormon antineopl             Q1
                                   sq/im.
96405...........................  Chemo intralesional up             Q1
                                   to 7.
96411...........................  Chemo iv push addl drug.            S
96415...........................  Chemo iv infusion addl              S
                                   hr.
96417...........................  Chemo iv infus each addl            S
                                   seq.
------------------------------------------------------------------------


[[Page 59254]]

(3) Discussion of Comment Solicitation Regarding Unconditionally 
Packaging Drug Administration Add-On Codes
    With respect to drug administration add-on codes, as discussed in 
the CY 2014 OPPS/ASC proposed rule (78 FR 43573), we proposed to 
unconditionally package all drug administration services described by 
add-on codes. In response to the proposal, commenters objected to 
packaging drug administration add-on codes, which typically describe 
each additional hour of infusion or each additional intravenous push, 
among others, in addition to the initial drug administration service. 
The commenters believed that such a policy could disadvantage providers 
of longer drug administration services, which are often protocol-driven 
and are not necessarily dictated by the hospital, but by the 
characteristics of the specific drug or biological being administered 
to the patient. In response to these comments, we stated in the CY 2014 
OPPS/ASC final rule with comment period (78 FR 74945) that, given the 
frequency of drug administration services in the hospital outpatient 
department and their use in such a wide variety of different drug 
treatment protocols for various diseases in all types of hospitals, 
further study of the payment methodology for these services was 
warranted at that time. Therefore, we did not finalize our proposal to 
package the drug administration add-on codes in CY 2014. However, we 
stated we would continue to explore other payment options, including 
packaging and variations on packaging, in future years.
    In the CY 2018 OPPS/ASC proposed rule, we did not propose to 
package drug administration add-on codes for CY 2018 because we wanted 
stakeholder input on a payment methodology that supports the principles 
of a prospective payment system while ensuring patient access to 
prolonged infusion services. Instead, we solicited public comment on 
whether conditionally or unconditionally packaging such codes would 
create access to care issues or have other unintended consequences. 
Specifically, we requested public comments on the following: (1) 
Whether we should conditionally or unconditionally package drug 
administration services add-on codes; (2) how we should consider or 
incorporate the varied clinical drug protocols that result in different 
infusion times into a drug administration service add-on code payment 
proposal; and (3) other recommendations on an encounter-based payment 
approach for drug administration services that are described by add-on 
codes when furnished in the hospital outpatient department setting.
    Comment: Many commenters raised concerns about the appropriateness 
of packaging drug administration services add-on codes, given the 
variation in clinical treatment protocols. The commenters believed that 
packaging drug administration services add-on codes could create a 
barrier to access for drugs or biologicals with a long infusion time. 
Without explicit incremental payment for additional hours of infusion, 
some commenters suggested hospitals could discontinue offering the 
infusion. A few commenters suggested that CMS consider the creation of 
a drug administration C-APC for common drug administration encounters 
but did not provide details on what specific services should comprise 
the C-APC.
    Response: We appreciate the comments we received on this topic and 
will take them into consideration for future rulemaking.
c. Analysis of Packaging of Pathology Services in the OPPS
    At the August 22, 2016 HOP Panel meeting, a stakeholder expressed 
concern regarding conditional packaging of multiple pathology services. 
When multiple conditionally packaged services are billed on the same 
claim, the costs of the lowest paying services are bundled into the 
cost of the highest paying service and payment is made based on the 
highest single payable service. The stakeholder requested that CMS 
create a pathology composite APC to more appropriately pay for claims 
with only multiple pathology services and no other separately payable 
service such as a surgical procedure or a clinic visit. The HOP panel 
recommended that CMS develop a composite APC for pathology services 
when multiple pathology services are provided on a claim with no other 
payable services. The HOP Panel also requested that CMS take into 
consideration the stakeholder presentation comments made at the August 
22, 2016 HOP Panel meeting regarding hospital pathology laboratories as 
CMS evaluates conditional packaging to determine whether an 
accommodation can be made. Specifically, the stakeholder expressed 
concern with conditional packaging of pathology services, particularly 
when payment is limited to the single highest paying code, regardless 
of the number of services provided or specimens tested.
    In response to these HOP Panel requests and recommendation, we 
stated that we may consider the stakeholders' request for a pathology 
composite APC as well as additional composite APCs for future 
rulemaking (81 FR 79588). In light of these requests and 
recommendation, in development of the CY 2018 OPPS/ASC proposed rule, 
we evaluated and considered a pathology composite APC when multiple 
pathology services are performed and billed without a separately 
payable service on the same claim. To understand the frequency of 
billing multiple pathology services and no other separately payable 
codes on the same claim by hospital outpatient departments, we examined 
currently available claims data to identify the frequency distribution 
of pathology codes within the CPT code range 88300 to 88361. The claim 
frequency breakdown was displayed in Table 8 of the proposed rule (82 
FR 33587).
    Based on our analysis of claims data for the proposed rule, the 
majority of pathology only OPPS claims are reported with one pathology 
code. Therefore, as we stated in the CY 2018 OPPS/ASC proposed rule (82 
FR 33588), we believe that it is neither a frequent occurrence nor a 
common occurrence for a provider to submit a claim for payment under 
the OPPS with multiple pathology services and no other separately 
payable service.
    With regard to the HOP Panel's recommendation to develop a 
composite APC for pathology services when multiple pathology services 
are provided on a claim with no other payable services, we used CY 2016 
claims data available for the CY 2018 OPPS/ASC proposed rule to model 
four hypothetical pathology composite APCs. That is, following our 
standard packaging methodology, we modeled four hypothetical pathology 
composite APCs based on the following clinical scenarios that were 
specifically requested by a stakeholder at the August 2016 HOP Panel 
meeting:
     Hypothetical Composite APC A: Claims that contain 2-4 
pathology units (CPT codes 88302 through 88309) with or without special 
stains (CPT codes 88312 through 88314);
     Hypothetical Composite APC B: Claims that contain 5 or 
more pathology units (CPT codes 88302 through 88309) with or without 
special stains (CPT codes 88312 through 88314);
     Hypothetical Composite APC C: Claims that contain 2-4 
pathology units (CPT codes 88302 through 88309) with immunostains (CPT 
codes 88341, 88342, 88346, 88350, 88360, 88361); and
     Hypothetical Composite APC D: Claims that contain 5 or 
more pathology units (CPT codes 88302 through 88309)

[[Page 59255]]

with immunostains (CPT codes 88341, 88342, 88346, 88350, 88360, 88361).
    In addition, for the proposed rule, we evaluated the volume of 
services and costs for each hypothetical composite. Results from 
modeling the four composite scenarios showed low claim volume, which 
indicates that the suggested pathology code combinations are 
infrequently billed by hospital outpatient departments and which may 
mean that these are not likely clinical scenarios in hospital 
outpatient departments. A summary of the results from our composite 
analysis was presented in Table 9 of the proposed rule (82 FR 33587). 
We refer readers to Addendum B to the CY 2018 OPPS/ASC proposed rule 
(which is available via the Internet on the CMS Web site) for the CPT 
code descriptors.
    As we move toward larger payment bundles under the OPPS, the 
necessity of composite APCs diminishes. For example, in the CY 2018 
OPPS/ASC proposed rule, we proposed to delete composite APC 8001 (LDR 
Prostate Brachytherapy Composite) and to provide payment for the 
component procedures through the C-APC payment methodology. Composite 
APCs were a precursor to C-APCs. 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). Because a C-APC would treat all individually reported codes as 
representing components of the comprehensive service, all of the 
elements of the composite service are included in the C-APC payment. In 
addition, given the infrequent occurrence of multiple pathology 
services on the same claim without a separately payable service, we do 
not believe a composite APC is necessary or warranted.
    Therefore, for CY 2018, we did not propose to create a pathology 
composite APC or additional composite APCs for stakeholder-requested 
services, such as X-ray services, respiratory services, cardiology 
services, or allergy testing services. However, we solicited public 
comments on our packaging policies, as discussed under section 
II.A.3.d. of this final rule with comment period.
    We did not receive any public comments on our analysis of packaging 
of pathology services.
d. Summary of Public Comments and Our Responses Regarding Packaging of 
Items and Services Under the OPPS
    As previously noted, packaging is an inherent principle of a 
prospective payment system. The OPPS, like other prospective payment 
systems, relies on the concept of averaging, where the payment may be 
more or less than the estimated costs of providing a service or package 
of services for a particular patient, but with the exception of outlier 
cases, is adequate to ensure access to appropriate care. Packaging and 
bundling payments for multiple interrelated services into a single 
payment create incentives for providers to furnish services in the most 
efficient way by enabling hospitals to manage their resources with 
maximum flexibility, thereby encouraging long-term cost containment. 
Decisions about packaging and bundling payment involve a balance 
between ensuring some separate payment for individual services or items 
while establishing incentives for efficiency through larger units of 
payment.
    As the OPPS continues to move toward prospectively determined 
encounter-based payments and away from separate fee schedule-like 
payments, we continue to hear concerns from stakeholders that our 
packaging policies may be hampering patient access or resulting in 
other undesirable consequences. However, we have not observed 
significant fluctuations in our data that show a sharp decline of the 
volume of packaged items and services, nor have we heard from Medicare 
beneficiaries specifically about access issues or other concerns with 
packaged items and services. However, given that aggregate spending and 
utilization continue to increase for covered hospital outpatient 
services, it is unclear what, if any, adverse effect packaging has on 
beneficiary access to care. Specifically, in the CY 2018 OPPS/ASC 
proposed rule (82 FR 33588), within the framework of existing packaging 
categories, such as drugs that function as supplies in a surgical 
procedure or diagnostic test or procedure, we expressed interest in 
stakeholder feedback on common clinical scenarios involving currently 
packaged HCPCS codes for which stakeholders believe packaged payment is 
not appropriate under the OPPS. Likewise, outside the framework of 
existing packaging categories, we expressed interest in stakeholder 
feedback on common clinical scenarios involving separately payable 
HCPCS codes for which payment would be most appropriately packaged 
under the OPPS. In the proposed rule, we solicited public comments from 
a broad cross-section of stakeholders, including beneficiaries, patient 
advocates, hospital providers, clinicians, manufacturers, and other 
interested parties.
    Comment: Commenters expressed a variety of views on packaging under 
the OPPS. The comments ranged from requests to unpackage most items and 
services that are either conditionally or unconditionally packaged 
under the OPPS, including drugs and devices, to specific requests to 
unpackage a specific drug or device.
    Response: We appreciate the comments received and will review them 
as we continue to explore and evaluate packaging policies that apply 
under the OPPS and take them into consideration for future rulemaking.
4. Calculation of OPPS Scaled Payment Weights
    We established a policy in the CY 2013 OPPS/ASC final rule with 
comment period (77 FR 68283) of using geometric mean-based APC costs to 
calculate relative payment weights under the OPPS. In the CY 2017 OPPS/
ASC final rule with comment period (81 FR 79594 through 79595), we 
applied this policy and calculated the relative payment weights for 
each APC for CY 2017 that were shown in Addenda A and B to that final 
rule with comment period (which were made available via the Internet on 
the CMS Web site) using the APC costs discussed in sections II.A.1. and 
II.A.2. of that final rule with comment period. For CY 2018, as we did 
for CY 2017, we proposed to continue to apply the policy established in 
CY 2013 and calculate relative payment weights for each APC for CY 2018 
using geometric mean-based APC costs (82 FR 33588).
    For CY 2012 and CY 2013, outpatient clinic visits were assigned to 
one of five levels of clinic visit APCs, with APC 0606 representing a 
mid-level clinic visit. In the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75036 through 75043), we finalized a policy that created 
alphanumeric HCPCS code G0463 (Hospital outpatient clinic visit for 
assessment and management of a patient), representing any and all 
clinic visits under the OPPS. HCPCS code G0463 was assigned to APC 0634 
(Hospital Clinic Visits). 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.

[[Page 59256]]

    For CY 2016, we deleted APC 0634 and reassigned the outpatient 
clinic visit HCPCS code G0463 to APC 5012 (Level 2 Examinations and 
Related Services) (80 FR 70351). In the CY 2018 OPPS/ASC proposed rule 
(82 FR 33588), for CY 2018, as we did for CY 2017, we proposed to 
continue to standardize all of the relative payment weights to APC 
5012. We stated that we believe that standardizing relative payment 
weights to the geometric mean of the APC to which HCPCS code G0463 is 
assigned maintains consistency in calculating unscaled weights that 
represent the cost of some of the most frequently provided OPPS 
services. For CY 2018, as we did for CY 2017, we proposed to assign APC 
5012 a relative payment weight of 1.00 and to divide the geometric mean 
cost of each APC by the geometric mean cost for APC 5012 to derive the 
unscaled relative payment weight for each APC. The choice of the APC on 
which to standardize the relative payment weights does not affect 
payments made under the OPPS because we scale the weights for budget 
neutrality.
    We did not receive any public comments on our proposal to use the 
geometric mean cost of APC 5012 to standardize relative payment weights 
for CY 2018. Therefore, we are finalizing our proposal and assigning 
APC 5012 the relative payment weight of 1.00, and using the relative 
payment weight for APC 5012 to derive the unscaled relative payment 
weight for each APC for CY 2018.
    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 2018 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, in the CY 2018 OPPS/ASC proposed rule (82 
FR 33588), we proposed to compare the estimated aggregate weight using 
the CY 2017 scaled relative payment weights to the estimated aggregate 
weight using the proposed CY 2018 unscaled relative payment weights.
    For CY 2017, we multiplied the CY 2017 scaled APC relative payment 
weight applicable to a service paid under the OPPS by the volume of 
that service from CY 2016 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 2018, we 
proposed to apply the same process using the estimated CY 2018 unscaled 
relative payment weights rather than scaled relative payment weights. 
We proposed to calculate the weight scalar by dividing the CY 2017 
estimated aggregate weight by the unscaled CY 2018 estimated aggregate 
weight.
    For a detailed discussion of the weight scalar 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 2018 OPPS 
final rule link and open the claims accounting document link at the 
bottom of the page.
    We proposed to compare the estimated unscaled relative payment 
weights in CY 2018 to the estimated total relative payment weights in 
CY 2017 using CY 2016 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 calculated CY 2018 unscaled 
relative payment weights for purposes of budget neutrality. We proposed 
to adjust the estimated CY 2018 unscaled relative payment weights by 
multiplying them by a proposed weight scalar of 1.328 to ensure that 
the proposed CY 2018 relative payment weights are scaled to be budget 
neutral. The proposed CY 2018 relative payment weights listed in 
Addenda A and B to the proposed rule (which are available via the 
Internet on the CMS Web site) were scaled and incorporated the 
recalibration adjustments discussed in sections II.A.1. and II.A.2. of 
the proposed rule.
    The final CY 2018 relative payment weights listed in Addenda A and 
B to the final rule with comment period (which are available via the 
Internet on the CMS Web site) were scaled and incorporate the 
recalibration adjustments discussed in sections II.A.1. and II.A.2. of 
this final rule with comment period.
    Section 1833(t)(14) of the Act provides the payment rates for 
certain SCODs. Section 1833(t)(14)(H) of the Act provides 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.2. of this final rule with 
comment period) is included in the budget neutrality calculations for 
the CY 2018 OPPS.
    We did not receive any public comments on the proposed weight 
scalar calculation. Therefore, we are finalizing our proposal to use 
the calculation process described in the proposed rule, without 
modification, for CY 2018. Using updated final rule claims data, we are 
updating the estimated CY 2018 unscaled relative payment weights by 
multiplying them by a weight scalar of 1.4457 to ensure that the final 
CY 2018 relative payment weights are scaled to be budget neutral.

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. As stated in the CY 2018 OPPS/
ASC proposed rule, in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 
19931), consistent with current law, based on IHS Global, Inc.'s fourth 
quarter 2016 forecast of the FY 2018 market basket increase, the 
proposed FY 2018 IPPS market basket update was 2.9 percent. However, 
sections 1833(t)(3)(F) and 1833(t)(3)(G)(v) 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 2018.
    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, and then

[[Page 59257]]

revised this methodology as discussed in the FY 2016 IPPS/LTCH PPS 
final rule (80 FR 49509). In the FY 2018 IPPS/LTCH PPS proposed rule 
(82 FR 19931 through 19932), the proposed MFP adjustment for FY 2018 
was 0.4 percentage point.
    In the CY 2018 OPPS/ASC proposed rule, we proposed that if more 
recent data became subsequently available after the publication of the 
proposed rule (for example, a more recent estimate of the market basket 
increase and the MFP adjustment), we would use such updated data, if 
appropriate, to determine the CY 2018 market basket update and the MFP 
adjustment, which are 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 2018 OPPS/ASC final rule with comment period. 
Consistent with that proposal, and the FY 2018 IPPS/LTCH PPS final rule 
(82 FR 38177), we applied the final FY 2018 market basket percentage 
increase (2.7 percent) and the final FY 2018 MFP adjustment (0.6 
percent) to the OPD fee schedule increase factor for the CY 2018 OPPS.
    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 2018, 
section 1833(t)(3)(G)(v) of the Act provides a 0.75 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)(v) of the Act, in the CY 2018 OPPS/
ASC proposed rule, we proposed to apply a 0.75 percentage point 
reduction to the OPD fee schedule increase factor for CY 2018.
    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 applying an OPD fee schedule increase factor of 1.35 
percent for the CY 2018 OPPS (which is 2.7 percent, the final estimate 
of the hospital inpatient market basket percentage increase, less the 
final 0.6 percentage point MFP adjustment, and less the 0.75 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 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 2018 OPPS/ASC proposed rule, we proposed to amend 42 CFR 
419.32(b)(1)(iv)(B) by adding a new paragraph (9) to reflect the 
requirement in section 1833(t)(3)(F)(i) of the Act that, for CY 2018, 
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)(v) 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 0.75 percentage point for CY 2018.
    We did not receive any public comments on our proposal. Therefore, 
we are implementing our proposal without modification.
    To set the OPPS conversion factor for the CY 2018 OPPS/ASC proposed 
rule, we proposed to increase the CY 2017 conversion factor of $75.001 
by 1.75 percent (82 FR 33589). In accordance with section 1833(t)(9)(B) 
of the Act, we proposed further to adjust the conversion factor for CY 
2018 to ensure that any revisions made to the wage index and rural 
adjustment were made on a budget neutral basis. We proposed to 
calculate an overall budget neutrality factor of 0.9999 for wage index 
changes by comparing proposed total estimated payments from our 
simulation model using the proposed FY 2018 IPPS wage indexes to those 
payments using the FY 2017 IPPS wage indexes, as adopted on a calendar 
year basis for the OPPS.
    For the CY 2018 OPPS/ASC proposed rule, we proposed to maintain the 
current rural adjustment policy, as discussed in section II.E. of this 
final rule with comment period. Therefore, the proposed budget 
neutrality factor for the rural adjustment was 1.0000.
    For the CY 2018 OPPS/ASC proposed rule, 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 
proposed to calculate a CY 2018 budget neutrality adjustment factor for 
the cancer hospital payment adjustment by comparing estimated total CY 
2018 payments under section 1833(t) of the Act, including the proposed 
CY 2018 cancer hospital payment adjustment, to estimated CY 2018 total 
payments using the CY 2017 final cancer hospital payment adjustment as 
required under section 1833(t)(18)(B) of the Act. The CY 2018 proposed 
estimated payments applying the proposed CY 2018 cancer hospital 
payment adjustment were less than estimated payments applying the CY 
2017 final cancer hospital payment adjustment. Therefore, we proposed 
to apply a budget neutrality adjustment factor of 1.0003 to the 
conversion factor for the cancer hospital payment adjustment. In 
accordance with section 16002(b) of the 21st Century Cures Act, we 
stated in the proposed rule that we are applying a budget neutrality 
factor calculated as if the proposed cancer hospital adjustment target 
payment-to-cost ratio was 0.90, not the 0.89 target payment-to-cost 
ratio we are applying as stated in section II.F. of the proposed rule.
    For the CY 2018 OPPS/ASC proposed rule, we estimated that proposed 
pass-through spending for drugs, biologicals, and devices for CY 2018 
would equal approximately $26.2 million, which represented 0.04 percent 
of total projected CY 2018 OPPS spending. Therefore, the proposed 
conversion factor would be adjusted by the difference between the 0.26 
percent estimate of pass-through spending for CY 2017 and the 0.04 
percent estimate of proposed pass-through spending for CY 2018, 
resulting in a proposed adjustment for CY 2018 of 0.22 percent. 
Proposed estimated payments for outliers would remain at 1.0 percent of 
total OPPS payments for CY 2018. We estimated for the proposed rule 
that outlier payments would be 1.04 percent of total OPPS payments in 
CY 2017; the 1.0 percent for proposed outlier payments in CY 2018 would 
constitute a 0.04 percent decrease in payment in CY 2018 relative to CY 
2017.
    For the CY 2018 OPPS/ASC proposed rule, we also 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 proposed to make all other adjustments discussed above, but 
use a reduced OPD fee schedule update factor of -0.25 percent (that is, 
the proposed OPD fee schedule increase factor of 1.75 percent further 
reduced by 2.0 percentage points). This would result in a proposed 
reduced conversion factor for CY 2018 of $74.953 for hospitals that 
fail to meet the Hospital OQR Program requirements (a difference of -
1.530 in

[[Page 59258]]

the conversion factor relative to hospitals that met the requirements).
    In summary, for CY 2018, we proposed to amend Sec.  
419.32(b)(1)(iv)(B) by adding a new paragraph (9) to reflect the 
reductions to the OPD fee schedule increase factor that are required 
for CY 2018 to satisfy the statutory requirements of sections 
1833(t)(3)(F) and (t)(3)(G)(v) of the Act. We proposed to use a reduced 
conversion factor of $74.953 in the calculation of payments for 
hospitals that fail to meet the Hospital OQR Program requirements (a 
difference of -1.530 in the conversion factor relative to hospitals 
that met the requirements).
    For CY 2018, we proposed to use a conversion factor of $76.483 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 proposed OPD fee schedule increase 
factor of 1.75 percent for CY 2018, the required proposed wage index 
budget neutrality adjustment of approximately 0.9999, the proposed 
cancer hospital payment adjustment of 1.0003, and the proposed 
adjustment of 0.22 percentage point of projected OPPS spending for the 
difference in the pass-through spending and outlier payments that 
resulted in a proposed conversion factor for CY 2018 of $76.483.
    We invited public comments on these proposals. However, we did not 
receive any public comments. Therefore, we are finalizing these 
proposals without modification, as discussed below.
    For CY 2018, 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. Based on the updated 
claims data for this final rule with comment period used in calculating 
the cancer hospital payment adjustment in section II.F. of this final 
rule with comment period, the target PCR for the cancer hospital 
payment adjustment, which was 0.91 for CY 2017, is 0.88 for CY 2018. 
Because we budget neutralize using the target PCR ratio prior to 
implementation of section 16002 (b) of the 21st Century Cures Act, we 
are applying a budget neutrality adjustment factor of 1.0008 to the 
conversion factor for the cancer hospital payment adjustment for CY 
2018.
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33712), we estimated a 
1.4 percent adjustment to nondrug OPPS payment rates as a result of the 
proposed payment adjustment to separately payable nonpass-through drugs 
purchased under the 340B Program. As part of that proposed policy, we 
noted that our adjustment in the final rule could potentially change as 
a result of changes such as updated data, modifications to the estimate 
methodology, and other factors. Applying the final payment policy for 
drugs purchased under the 340B Program, as described in section V.B.7. 
of this final rule with comment period, results in an estimated 
reduction of approximately $1.6 billion in separately paid OPPS drug 
payments. To ensure budget neutrality under the OPPS after applying 
this alternative payment methodology for drugs purchased under the 340B 
Program, we applied an offset of approximately $1.6 billion into the 
OPPS conversion factor, which results in a final adjustment of 1.0319 
to the OPPS conversion factor.
    As a result of these finalized policies, the OPD fee schedule 
increase factor for the CY 2018 OPPS is 1.35 percent (which is 2.7 
percent, the estimate of the hospital inpatient market basket 
percentage increase, less the 0.6 percentage point MFP adjustment, and 
less the 0.75 percentage point additional adjustment). For CY 2018, we 
are using a conversion factor of $78.636 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 1.35 percent for CY 2018, the 
required wage index budget neutrality adjustment of approximately 
0.9997, the cancer hospital payment adjustment of 1.0008, the 
adjustment for drugs purchased under the 340B Program of 1.0319, and 
the adjustment of 0.2 percentage point of projected OPPS spending for 
the difference in the pass-through spending and outlier payments that 
result in a conversion factor for CY 2018 of $78.636.

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). In the CY 2018 OPPS/ASC proposed rule (82 
FR 33590), we proposed to continue this policy for the CY 2018 OPPS. We 
refer readers to section II.H. of this final rule with comment period 
for a description and an example of how the wage index for a particular 
hospital is used to determine payment for the hospital. We did not 
receive any public comments on this proposal. Therefore, for the 
reasons discussed above and in the CY 2018 OPPS/ASC proposed rule (82 
FR 33590), we are finalizing our proposal to continue this policy as 
discussed above for the CY 2018 OPPS without modification.
    As discussed in the claims accounting narrative included with the 
supporting documentation for this final rule with comment period (which 
is available via the Internet on the CMS Web site), for estimating APC 
costs, we standardize 60 percent of estimated claims costs for 
geographic area wage variation using the same FY 2018 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 OPPS 
April 7, 2000 final rule with comment period (65 FR 18495 and 18545)), 
the OPPS adopted the final fiscal year IPPS post-reclassified 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). Section 10324 of the 
Affordable Care Act added section 1886(d)(3)(E)(iii)(II)

[[Page 59259]]

to the Act, which defines a frontier State and amended section 1833(t) 
of the Act to add 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 at Sec.  419.43(c)(2) and (3) of our 
regulations. For the CY 2018 OPPS, we proposed to implement this 
provision in the same manner as we have since CY 2011 (82 FR 33591). 
Under this policy, the frontier State hospitals would receive a wage 
index of 1.00 if the otherwise applicable wage index (including 
reclassification, the rural floor, and rural floor budget neutrality) 
is less than 1.00 (as discussed below and in the CY 2018 OPPS/ASC 
proposed rule (82 FR 33591 through 33592)), we proposed not to extend 
the imputed floor under the OPPS for CY 2018 and subsequent years, 
consistent with our proposal in the FY 2018 IPPS/LTCH PPS proposed rule 
(81 FR 19904 through 19905) not to extend the imputed floor under the 
IPPS for FY 2018 and subsequent fiscal years). Because the HOPD 
receives a wage index based on the geographic location of the specific 
inpatient hospital with which it is associated, we stated that the 
frontier State wage index adjustment applicable for the inpatient 
hospital also would apply for any associated HOPD. In the proposed rule 
(82 FR 33591), we referred readers to the FY 2011 through FY 2017 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. We invited public comments on this 
proposal.
    We did not receive any public comments on this proposal. Therefore, 
for the reasons discussed above and in the CY 2018 OPPS/ASC proposed 
rule (82 FR 33591), we are finalizing our proposal to implement the 
frontier State floor under the OPPS in the same manner as we have since 
CY 2011. We note that, after we made our proposal in the FY 2018 IPPS/
LTCH PPS proposed rule not to extend the imputed floor under the IPPS 
for FY 2018 and subsequent fiscal years (82 FR 19904 through 19905), 
and our proposal in the CY 2018 OPPS/ASC proposed rule not to extend 
the imputed floor under the OPPS for CY 2018 and subsequent years (82 
FR 33592), we decided in the FY 2018 IPPS/LTCH PPS final rule not to 
finalize our proposal to discontinue the imputed floor under the IPPS 
(82 FR 38138 through 38142). As discussed below, consistent with the FY 
2018 IPPS/LTCH PPS final rule, we are not finalizing our proposal to 
discontinue application of the imputed floor under the OPPS. This means 
that the applicable wage index, which can be superseded by the frontier 
State wage index if the applicable criteria are met, could also be 
affected by the imputed floor. We discuss our policy on the extension 
of the imputed floor under the IPPS as finalized in the FY 2018 IPPS/
LTCH PPS final rule (82 FR 38142), and under the OPPS as finalized in 
this rule, in more detail later in this section.
    In addition to the changes required by the Affordable Care Act, we 
note that the FY 2018 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 floor provisions, an adjustment for occupational mix, 
and an adjustment to the wage index based on commuting patterns of 
employees (the out-migration adjustment). In the CY 2018 OPPS/ASC 
proposed rule, we referred readers to the FY 2018 IPPS/LTCH PPS 
proposed rule (82 FR 19898 through 19915) for a detailed discussion of 
all proposed changes to the FY 2018 IPPS wage indexes. We note that, in 
the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19905), we proposed not 
to apply the imputed floor to the IPPS wage index computations for FY 
2018 and subsequent fiscal years. Consistent with this, we proposed in 
the CY 2018 OPPS/ASC proposed rule (82 FR 33592) not to extend the 
imputed floor policy under the OPPS beyond December 31, 2017 (the date 
the imputed floor policy is set to expire under the OPPS). However, in 
the FY 2018 IPPS/LTCH PPS final rule, we did not finalize our proposal 
to discontinue the imputed floor under the IPPS, and instead decided to 
temporarily extend the imputed floor for an additional year through FY 
2018, while we continue to assess the effects of this policy and 
whether to continue or discontinue the imputed floor for the long term. 
As discussed below, consistent with the FY 2018 IPPS/LTCH PPS final 
rule, we are not finalizing our proposal to discontinue application of 
the imputed floor under the OPPS, but are instead continuing the 
imputed floor policy under the OPPS for an additional year, through 
December 31, 2018. We refer readers to the FY 2018 IPPS/LTCH PPS 
proposed and final rules (82 FR 19898 through 19915 and 82 FR 38129 
through 38157, respectively) for a detailed discussion of all proposed 
and final changes to the FY 2018 IPPS wage indexes (including our 
proposed and final policy regarding the imputed floor for FY 2018 and 
subsequent fiscal years). 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.
    Summarized below are comments we received regarding the application 
of the rural and imputed floor policies under the OPPS, along with our 
responses.
    Comment: One commenter opposed applying budget neutrality for the 
rural floor under the OPPS on a national basis. The commenter believed 
applying budget neutrality on a national basis disadvantages hospitals 
in most States while benefiting hospitals in a few States that have 
taken advantage of the system where a rural hospital has a wage index 
higher than most or all urban hospitals in a State. The commenter 
stated that rural floor budget neutrality currently requires all wage 
indexes for hospitals throughout the nation to be reduced. However, 
hospitals in those States that have higher wage indexes because of the 
rural floor are not substantially affected by the wage index 
reductions. Therefore, the commenter supported calculating rural floor 
budget neutrality under the OPPS for each individual State.
    Response: We appreciate this comment. We acknowledge that the 
application of the wage index and applicable wage index adjustments to 
OPPS payment rates may create distributional payment variations, 
especially within a budget neutral system. However, we continue to 
believe it is reasonable and appropriate to continue the current policy 
of applying budget neutrality for the rural floor under the OPPS on a 
national basis, consistent with the IPPS. We believe that hospital 
inpatient and outpatient departments are subject to the same labor cost 
environment, and therefore, the wage index and any applicable wage 
index adjustments (including the rural floor and rural floor budget 
neutrality) should be applied in the same manner under the IPPS and 
OPPS. Furthermore, we believe that applying the rural floor and rural 
floor budget neutrality in the same manner under the IPPS and OPPS is 
reasonable and logical, given the inseparable, subordinate status of 
the HOPD within the hospital overall. In addition, we believe the 
application of different wage indexes and wage index adjustments under 
the IPPS and OPPS would add a level of administrative complexity that 
is overly burdensome and unnecessary.

[[Page 59260]]

Therefore, we are continuing the current policy of applying budget 
neutrality for the rural floor under the OPPS on a national basis, 
consistent with the IPPS.
    Comment: One commenter supported the proposal to not apply the 
imputed floor to the IPPS wage index computations for FY 2018 and 
subsequent fiscal years when calculating the hospital wage indexes for 
the OPPS.
    Response: In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19905), 
we proposed not to apply the imputed floor to the IPPS wage index 
computations for FY 2018 and subsequent fiscal years. Consistent with 
this proposal, we proposed in the CY 2018 OPPS/ASC proposed rule (82 FR 
33592) not to extend the imputed floor policy under the OPPS beyond 
December 31, 2017 (the date the imputed floor policy is set to expire 
under the OPPS). As discussed in the FY 2018 IPPS/LTCH PPS final rule 
(82 FR 38138 through 38142), after consideration of the many comments 
we received both in support of and against our proposal to discontinue 
the imputed floor under the IPPS, we decided to temporarily extend the 
imputed floor for an additional year under the IPPS through FY 2018, 
while we continue to assess the effects of this policy and whether to 
continue or discontinue the imputed floor for the long term. Therefore, 
in the FY 2018 IPPS/LTCH PPS final rule, we extended the imputed floor 
policy under both the original methodology and the alternative 
methodology for an additional year, through September 30, 2018. We 
refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38138 
through 38142) for a detailed discussion of our final policy and 
rationale regarding application of the imputed floor under the IPPS for 
FY 2018. Given the inseparable, subordinate status of the HOPD within 
the hospital overall, we believe that using the IPPS wage index and 
wage index adjustments, including the imputed floor, as the source of 
an adjustment factor for the OPPS is reasonable and logical. 
Furthermore, as we previously stated, we believe that hospital 
inpatient and outpatient departments are subject to the same labor cost 
environment and, therefore, the wage index and any applicable wage 
index adjustments (including the imputed floor) should be applied in 
the same manner under the IPPS and OPPS. In addition, as discussed 
above, we believe the application of different wage index adjustments 
under the IPPS and OPPS would add a level of administrative complexity 
that is overly burdensome and unnecessary. Thus, as discussed further 
below, consistent with the FY 2018 IPPS/LTCH PPS final rule, we are not 
finalizing our proposal to discontinue application of the imputed floor 
under the OPPS, and instead are temporarily extending the imputed floor 
policy under the OPPS for an additional year.
    After consideration of the public comments we received and for the 
reasons discussed above, consistent with the FY 2018 IPPS/LTCH PPS 
final rule, we have decided to extend the imputed floor policy under 
the OPPS for an additional year, through December 31, 2018, while we 
continue to assess the effects of this policy and whether to continue 
or discontinue the imputed floor for the long term. Therefore, we are 
not finalizing our proposal to discontinue the imputed floor policy 
under the OPPS. We continue to believe that using the final fiscal year 
IPPS post-reclassified wage index, inclusive of any adjustments 
(including the imputed floor), as the wage index for the OPPS to 
determine the wage adjustments for both the OPPS payment rate and the 
copayment standardized amount is reasonable and logical, given the 
inseparable, subordinate status of the HOPD within the hospital 
overall.
    As discussed in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49951 
through 49963), the FY 2016 IPPS/LTCH PPS final rule (80 FR 49488 
through 49489 and 49494 through 49496), and the FY 2017 IPPS/LTCH PPS 
final rule (81 FR 56913), the Office of Management and Budget (OMB) 
issued revisions to the labor market area delineations on February 28, 
2013 (based on 2010 Decennial Census data), that included a number of 
significant changes such as new Core Based Statistical Areas (CBSAs), 
urban counties that became rural, rural counties that became urban, and 
existing CBSAs that were split apart (OMB Bulletin 13-01). This 
bulletin can be found at: https://obamawhitehouse.archives.gov/sites/default/files/omb/bulletins/2013/b13-01.pdf. In the FY 2015 IPPS/LTCH 
PPS final rule (79 FR 49950 through 49985), we adopted the use of the 
OMB labor market area delineations contained in OMB Bulletin No. 13-01, 
effective October 1, 2014. In the FY 2017 IPPS/LTCH PPS final rule (81 
FR 56913), we adopted revisions to statistical areas contained in OMB 
Bulletin No. 15-01, issued on July 15, 2015, which provided updates to 
and superseded OMB Bulletin No. 13-01 that was issued on February 28, 
2013. We believe that it is important for the OPPS to use the latest 
labor market area delineations available as soon as is reasonably 
possible in order to maintain a more accurate and up-to-date payment 
system that reflects the reality of population shifts and labor market 
conditions. Therefore, for purposes of the OPPS, in the CY 2017 OPPS/
ASC final rule with comment period (81 FR 79598), we adopted the 
revisions to the OMB statistical area delineations contained in OMB 
Bulletin No. 15-01, effective January 1, 2017, beginning with the CY 
2017 OPPS wage indexes.
    CBSAs are made up of one or more constituent counties. Each CBSA 
and constituent county has its own unique identifying codes. The FY 
2018 IPPS/LTCH PPS proposed rule (82 FR 19898 through 19899) and final 
rule (82 FR 38130) discuss the two different lists of codes to identify 
counties: Social Security Administration (SSA) codes and Federal 
Information Processing Standard (FIPS) codes. Historically, CMS has 
listed and used SSA and FIPS county codes to identify and crosswalk 
counties to CBSA codes for purposes of the IPPS and OPPS wage indexes. 
However, the SSA county codes are no longer being maintained and 
updated, although the FIPS codes continue to be maintained by the U.S. 
Census Bureau. The Census Bureau's most current statistical area 
information is derived from ongoing census data received since 2010; 
the most recent data are from 2015. In the FY 2018 IPPS/LTCH PPS 
proposed rule (81 FR 19898), for purposes of crosswalking counties to 
CBSAs for the IPPS wage index, we proposed to discontinue the use of 
the SSA county codes and begin using only the FIPS county codes. (We 
note that we finalized the proposal to discontinue use of SSA county 
codes and begin using only the FIPS county codes for purposes of 
crosswalking counties to CBSAs in the FY 2018 IPPS/LTCH PPS final rule 
(82 FR 38130)). Similarly, for the purposes of crosswalking counties to 
CBSAs for the OPPS wage index, in the CY 2018 OPPS/ASC proposed rule 
(82 FR 33591), we proposed to discontinue the use of SSA county codes 
and begin using only the FIPS county codes. We invited public comments 
on this proposal. We did not receive any public comments on this 
proposal. Thus, for the reasons discussed above and in the CY 2018 
OPPS/ASC proposed rule (82 FR 33591), we are finalizing, without 
modification, our proposal to discontinue the use of SSA county codes 
and begin using only the FIPS county codes for the purposes of 
crosswalking counties to CBSAs for the OPPS wage index.
    The Census Bureau maintains a complete list of changes to counties 
or county equivalent entities on the Web site at: https://
www.census.gov/geo/

[[Page 59261]]

reference/county-changes.html. In our proposed transition to using only 
FIPS codes for counties for the IPPS wage index, in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19899), we proposed to update the FIPS 
codes used for crosswalking counties to CBSAs for the IPPS wage index 
effective October 1, 2017, to incorporate changes to the counties or 
county equivalent entities included in the Census Bureau's most recent 
list. We proposed to include these updates to calculate the area wage 
indexes in a manner that is generally consistent with the CBSA-based 
methodologies finalized in the FY 2005 IPPS final rule and the FY 2015 
IPPS/LTCH PPS final rule. Based on information included in the Census 
Bureau's Web site, since 2010, the Census Bureau has made the following 
updates to the FIPS codes for counties or county equivalent entities:
     Petersburg Borough, AK (FIPS State County Code 02-195), 
CBSA 02, was created from part of former Petersburg Census Area (02-
195) and part of Hoonah-Angoon Census Area (02-105). The CBSA code 
remains 02.
     The name of La Salle Parish, LA (FIPS State County Code 
22-059), CBSA 14, is now LaSalle Parish, LA (FIPS State County Code 22-
059). The CBSA code remains as 14.
     The name of Shannon County, SD (FIPS State County Code 46-
113), CBSA 43, is now Oglala Lakota County, SD (FIPS State County Code 
46-102). The CBSA code remains as 43.
    In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38130), for the 
IPPS, we finalized our proposal to implement these FIPS code updates, 
effective October 1, 2017, beginning with the FY 2018 wage indexes. We 
note that while the county update changes listed earlier changed the 
county names, the CBSAs to which these counties map did not change from 
the prior counties. Therefore, there is no impact or change to 
hospitals in these counties; they continue to be considered rural for 
the IPPS wage index under these changes. Consistent with the FY 2018 
IPPS/LTCH PPS proposed rule, in the CY 2018 OPPS/ASC proposed rule (82 
FR 33592), we proposed to implement these revisions for purposes of the 
OPPS, effective January 1, 2018, beginning with the CY 2018 OPPS wage 
indexes. We stated that we believe it is important to use the latest 
counties or county equivalent entities in order to properly crosswalk 
hospitals from a county to a CBSA for purposes of the OPPS wage index. 
In addition, we stated we believe that using the latest FIPS codes will 
allow us to maintain a more accurate and up-to-date payment system that 
reflects the reality of population shifts and labor market conditions. 
We invited public comments on this proposal.
    We did not receive any public comments on this proposal. Therefore, 
for the reasons discussed above and in the CY 2018 OPPS/ASC proposed 
rule (82 FR 33591 through 33592), we are finalizing our proposal, 
without modification, to implement the FIPS code updates described 
above, effective January 1, 2018, beginning with the CY 2018 OPPS wage 
indexes. Tables 2 and 3 associated with the FY 2018 IPPS/LTCH PPS final 
rule and the County to CBSA Crosswalk File and Urban CBSAs and 
Constituent Counties for Acute Care Hospitals File posted on the CMS 
Web site reflect these county changes.
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33592), we proposed to 
use the FY 2018 hospital IPPS post-reclassified wage index for urban 
and rural areas as the wage index for the OPPS to determine the wage 
adjustments for both the OPPS payment rate and the copayment 
standardized amount for CY 2018. Therefore, we stated in the proposed 
rule that any adjustments for the FY 2018 IPPS post-reclassified wage 
index would be reflected in the final CY 2018 OPPS wage index. (We 
refer readers to the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19898 
through 19915) and final rule (82 FR 38129 through 38157), and the 
proposed and final FY 2018 hospital wage index files posted on the CMS 
Web site.) We invited public comments on this proposal. As discussed 
above, we received public comments regarding the application of the 
rural and imputed floors under the OPPS. We refer readers to our 
earlier discussion of these comments and our responses. After 
consideration of these comments, for the reasons discussed above and in 
the CY 2018 OPPS/ASC proposed rule (82 FR 33592), we are finalizing 
this proposal without modification. As stated earlier, we continue to 
believe that using the final fiscal year IPPS post-reclassified wage 
index, inclusive of any adjustments, as the wage index for the OPPS to 
determine the wage adjustments for both the OPPS payment rate and the 
copayment standardized amount is reasonable and logical, given the 
inseparable, subordinate status of the HOPD within the hospital 
overall.
    Hospitals that are paid under the OPPS, but not under the IPPS, do 
not have an assigned hospital wage index under the IPPS. Therefore, for 
non-IPPS hospitals paid under the OPPS, it is our longstanding policy 
to 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. In the CY 2018 OPPS/ASC proposed 
rule, we proposed to continue this policy for CY 2018, and included a 
brief summary of the major proposed FY 2018 IPPS wage index policies 
and adjustments that we proposed to apply to these hospitals under the 
OPPS for CY 2018. These proposals are summarized below. We invited 
public comments on these proposals.
    It has been our longstanding policy to allow non-IPPS hospitals 
paid under the OPPS to qualify for the out-migration adjustment if they 
are located in a section 505 out-migration county (section 505 of the 
Medicare Prescription Drug, Improvement, and Modernization Act of 2003 
(MMA)). Applying this adjustment is consistent with our policy of 
adopting IPPS wage index policies for hospitals paid under the OPPS. We 
note that, because non-IPPS hospitals cannot reclassify, they are 
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 applies if the hospital were paid under the 
IPPS. For CY 2018, 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 MMA). We did not receive any public comments on 
this proposal. Therefore, for the reasons discussed above and in the CY 
2018 OPPS/ASC proposed rule (82 FR 33592), we are finalizing this 
proposal without modification.
    As stated earlier, in the FY 2015 IPPS/LTCH PPS final rule, we 
adopted the 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. 
For IPPS wage index purposes, for hospitals that were located in urban 
CBSAs in FY 2014 but were designated as rural under these revised OMB 
labor market area delineations, we generally assigned them the urban 
wage index value of the CBSA in which they were physically located for 
FY 2014 for a period of 3 fiscal years (79 FR 49957 through 49960). To 
be consistent, we applied 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 were physically located for FY 
2014 for 3 calendar years (until December 31, 2017). Because this 3-
year transition will end at the end of CY

[[Page 59262]]

2017, it will no longer be applied in CY 2018.
    In addition, under the IPPS, the imputed floor policy was set to 
expire effective October 1, 2017. However, as discussed above and in 
the FY 2018 IPPS/LTCH PPS final rule (82 FR 38138 through 38142), we 
did not finalize our proposal not to extend the imputed floor policy 
under the IPPS for FY 2018 and subsequent fiscal years (82 FR 38132), 
and instead decided to extend the imputed floor policy for one 
additional year, through FY 2018. For purposes of the CY 2018 OPPS, we 
proposed not to extend the imputed floor policy beyond December 31, 
2017. However, consistent with the FY 2018 IPPS/LTCH PPS final rule, as 
discussed above, we are extending the imputed floor policy under the 
OPPS for one additional year, through December 31, 2018. Therefore, for 
CY 2018, for hospitals paid under the OPPS but not under the IPPS, the 
imputed floor policy will continue to apply through December 31, 2018.
    For CMHCs, for CY 2018, 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, for CMHCs previously located in urban CBSAs that were 
designated as rural under the revised OMB labor market area 
delineations in OMB Bulletin No. 13-01, we finalized a policy to 
maintain the urban wage index value of the CBSA in which they were 
physically located for CY 2014 for 3 calendar years (until December 31, 
2017). Because this 3-year transition will end at the end of CY 2017, 
it will not be applied in CY 2018. Furthermore, in the CY 2018 OPPS/ASC 
proposed rule (82 FR 33592), we proposed that the wage index that 
applies to CMHCs would include the rural floor adjustment, but not the 
imputed floor adjustment, given that we had proposed not to extend the 
imputed floor policy under the OPPS beyond December 31, 2017 (the 
expiration date for the imputed floor under the OPPS). We also proposed 
that the wage index that applies to CMHCs would not include the out-
migration adjustment because that adjustment only applies to hospitals. 
We did not receive any public comments regarding these proposals, and 
are finalizing these proposals with the following modification. 
Because, as discussed above, we are extending the application of the 
imputed floor under the OPPS for an additional year, through December 
31, 2018, the wage index that applies to CMHCs will continue to include 
the imputed floor adjustment through December 31, 2018.
    Table 2 associated with the FY 2018 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 2018. We are 
including the out-migration adjustment information from Table 2 
associated with the FY 2018 IPPS/LTCH PPS final rule as Addendum L to 
this final rule with comment period with the addition of non-IPPS 
hospitals that will receive the section 505 out-migration adjustment 
under the CY 2018 OPPS. Addendum L is available via the Internet on the 
CMS Web site. 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 2018 IPPS wage index tables and Addendum L.

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 earlier 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, hospitals that have not 
accepted assignment of an existing hospital's provider agreement, and 
hospitals that 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 2018 OPPS/ASC proposed rule (82 FR 33593), we proposed to 
update the default ratios for CY 2018 using the most recent cost report 
data. We discussed 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 detail on our process for 
calculating the statewide average CCRs, we referred readers to the CY 
2018 OPPS proposed rule Claims Accounting Narrative that is posted on 
the CMS Web site. Table 10 published in the proposed rule (82 FR 33593 
through 33594) listed the proposed statewide average default CCRs for 
OPPS services furnished on or after January 1, 2018, based on proposed 
rule data.
    We did not receive any public comments on our proposal to use 
statewide average default CCRs if a MAC cannot calculate a CCR for a 
hospital and to use these CCRs to adjust charges to costs on claims 
data for setting the final CY 2018 OPPS relative payment weights. 
Therefore, we are finalizing our proposal without modification.
     Table 9 below lists the statewide average default CCRs for OPPS 
services furnished on or after January 1, 2018, based on final rule 
data.

                                     Table 9--CY 2018 Statewide Average CCRs
----------------------------------------------------------------------------------------------------------------
                                                                                                     Previous
                                                                                      CY 2018       default CCR
                     State                                 Urban/rural              default CCR    (CY 2017 OPPS
                                                                                                    final rule)
----------------------------------------------------------------------------------------------------------------
ALASKA........................................  RURAL...........................           0.659           0.449
ALASKA........................................  URBAN...........................           0.218           0.237
ALABAMA.......................................  RURAL...........................           0.190           0.196
ALABAMA.......................................  URBAN...........................           0.155           0.158
ARKANSAS......................................  RURAL...........................           0.186           0.196

[[Page 59263]]

 
ARKANSAS......................................  URBAN...........................           0.200           0.205
ARIZONA.......................................  RURAL...........................           0.232           0.238
ARIZONA.......................................  URBAN...........................           0.160           0.176
CALIFORNIA....................................  RURAL...........................           0.181           0.179
CALIFORNIA....................................  URBAN...........................           0.193           0.188
COLORADO......................................  RURAL...........................           0.346           0.354
COLORADO......................................  URBAN...........................           0.204           0.208
CONNECTICUT...................................  RURAL...........................           0.324           0.402
CONNECTICUT...................................  URBAN...........................           0.249           0.253
DISTRICT OF COLUMBIA..........................  URBAN...........................           0.279           0.286
DELAWARE......................................  URBAN...........................           0.295           0.288
FLORIDA.......................................  RURAL...........................           0.158           0.169
FLORIDA.......................................  URBAN...........................           0.138           0.143
GEORGIA.......................................  RURAL...........................           0.222           0.230
GEORGIA.......................................  URBAN...........................           0.198           0.196
HAWAII........................................  RURAL...........................           0.332           0.338
HAWAII........................................  URBAN...........................           0.322           0.319
IOWA..........................................  RURAL...........................           0.296           0.291
IOWA..........................................  URBAN...........................           0.254           0.252
IDAHO.........................................  RURAL...........................           0.339           0.341
IDAHO.........................................  URBAN...........................           0.369           0.401
ILLINOIS......................................  RURAL...........................           0.214           0.241
ILLINOIS......................................  URBAN...........................           0.208           0.209
INDIANA.......................................  RURAL...........................           0.299           0.272
INDIANA.......................................  URBAN...........................           0.213           0.218
KANSAS........................................  RURAL...........................           0.264           0.269
KANSAS........................................  URBAN...........................           0.199           0.194
KENTUCKY......................................  RURAL...........................           0.184           0.194
KENTUCKY......................................  URBAN...........................           0.187           0.189
LOUISIANA.....................................  RURAL...........................           0.212           0.217
LOUISIANA.....................................  URBAN...........................           0.195           0.201
MASSACHUSETTS.................................  RURAL...........................           0.322           0.316
MASSACHUSETTS.................................  URBAN...........................           0.348           0.345
MAINE.........................................  RURAL...........................           0.419           0.425
MAINE.........................................  URBAN...........................           0.422           0.413
MARYLAND......................................  RURAL...........................           0.258           0.264
MARYLAND......................................  URBAN...........................           0.227           0.229
MICHIGAN......................................  RURAL...........................           0.302           0.295
MICHIGAN......................................  URBAN...........................           0.318           0.324
MINNESOTA.....................................  RURAL...........................           0.379           0.398
MINNESOTA.....................................  URBAN...........................           0.302           0.319
MISSOURI......................................  RURAL...........................           0.220           0.222
MISSOURI......................................  URBAN...........................           0.240           0.261
MISSISSIPPI...................................  RURAL...........................           0.213           0.224
MISSISSIPPI...................................  URBAN...........................           0.160           0.167
MONTANA.......................................  RURAL...........................           0.486           0.450
MONTANA.......................................  URBAN...........................           0.350           0.368
NORTH CAROLINA................................  RURAL...........................           0.206           0.216
NORTH CAROLINA................................  URBAN...........................           0.212           0.223
NORTH DAKOTA..................................  RURAL...........................           0.366           0.411
NORTH DAKOTA..................................  URBAN...........................           0.369           0.334
NEBRASKA......................................  RURAL...........................           0.313           0.294
NEBRASKA......................................  URBAN...........................           0.233           0.238
NEW HAMPSHIRE.................................  RURAL...........................           0.307           0.320
NEW HAMPSHIRE.................................  URBAN...........................           0.255           0.279
NEW JERSEY....................................  URBAN...........................           0.200           0.195
NEW MEXICO....................................  RURAL...........................           0.224           0.225
NEW MEXICO....................................  URBAN...........................           0.284           0.280
NEVADA........................................  RURAL...........................           0.175           0.196
NEVADA........................................  URBAN...........................           0.114           0.123
NEW YORK......................................  RURAL...........................           0.299           0.309
NEW YORK......................................  URBAN...........................           0.303           0.292
OHIO..........................................  RURAL...........................           0.280           0.292
OHIO..........................................  URBAN...........................           0.203           0.207
OKLAHOMA......................................  RURAL...........................           0.215           0.231
OKLAHOMA......................................  URBAN...........................           0.169           0.180
OREGON........................................  RURAL...........................           0.290           0.280
OREGON........................................  URBAN...........................           0.336           0.344

[[Page 59264]]

 
PENNSYLVANIA..................................  RURAL...........................           0.267           0.274
PENNSYLVANIA..................................  URBAN...........................           0.173           0.179
PUERTO RICO...................................  URBAN...........................           0.577           0.527
RHODE ISLAND..................................  URBAN...........................           0.276           0.291
SOUTH CAROLINA................................  RURAL...........................           0.170           0.185
SOUTH CAROLINA................................  URBAN...........................           0.191           0.190
SOUTH DAKOTA..................................  RURAL...........................           0.391           0.383
SOUTH DAKOTA..................................  URBAN...........................           0.242           0.229
TENNESSEE.....................................  RURAL...........................           0.173           0.181
TENNESSEE.....................................  URBAN...........................           0.174           0.180
TEXAS.........................................  RURAL...........................           0.205           0.214
TEXAS.........................................  URBAN...........................           0.168           0.177
UTAH..........................................  RURAL...........................           0.391           0.349
UTAH..........................................  URBAN...........................           0.304           0.315
VIRGINIA......................................  RURAL...........................           0.177           0.191
VIRGINIA......................................  URBAN...........................           0.215           0.226
VERMONT.......................................  RURAL...........................           0.393           0.426
VERMONT.......................................  URBAN...........................           0.378           0.340
WASHINGTON....................................  RURAL...........................           0.256           0.271
WASHINGTON....................................  URBAN...........................           0.323           0.294
WISCONSIN.....................................  RURAL...........................           0.348           0.354
WISCONSIN.....................................  URBAN...........................           0.308           0.290
WEST VIRGINIA.................................  RURAL...........................           0.253           0.266
WEST VIRGINIA.................................  URBAN...........................           0.297           0.285
WYOMING.......................................  RURAL...........................           0.407           0.429
WYOMING.......................................  URBAN...........................           0.327           0.311
----------------------------------------------------------------------------------------------------------------

E. Adjustment for Rural Sole Community Hospitals (SCHs) and Essential 
Access Community Hospitals (EACHs) Under Section 1833(t)(13)(B) of the 
Act for CY 2018

    In the CY 2006 OPPS final rule with comment period (70 FR 68556), 
we finalized a payment increase for rural sole community hospitals 
(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 essential access 
community hospitals (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 2017. 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 2018 OPPS/ASC proposed rule (82 FR 33594 through 33595), 
for the CY 2018 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: Commenters supported the proposed payment adjustment for 
rural SCHs and EACHs, and stated that this adjustment would support 
access to care in rural areas and provide additional resources for 
rural SCHs and EACHs.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing the proposal for CY 2017 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.

[[Page 59265]]

F. Payment Adjustment for Certain Cancer Hospitals for CY 2018

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 in amount under the OPPS than the 
payment amount 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'' and 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 or 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 hospitals and other hospitals. 
Section 1833(t)(18)(B) of the Act provides that, if the Secretary 
determines that cancer hospitals' costs are higher than those of other 
hospitals, 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 recently 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. 
For CY 2015, the target PCR was 0.90. For CY 2016, the target PCR was 
0.92, as discussed in the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70362 through 70363). For CY 2017, the target PCR was 
0.91, as discussed in the CY 2017 OPPS/ASC final rule with comment 
period (81 FR 79603 through 7960).
2. Proposed and Finalized Policy for CY 2018
    Section 16002(b) of the 21st Century Cures Act (Pub. L. 114-255) 
amended section 1833(t)(18) of the Act by adding subparagraph (C), 
which requires that in applying 42 CFR 419.43(i), that is, the payment 
adjustment for certain cancer hospitals, for services furnished on or 
after January 1, 2018, the target PCR adjustment be reduced by 1.0 
percentage point less than what would otherwise apply. Section 16002(b) 
also provides that, in addition to the percentage reduction, the 
Secretary may consider making an additional percentage point reduction 
to the target PCR that takes into account payment rates for applicable 
items and services described under section 1833(t)(21)(C) of the Act 
for hospitals that are not cancer hospitals described under section 
1886(d)(1)(B)(v) of the Act. Further, in making any budget neutrality 
adjustment under section 1833(t) of the Act, the Secretary shall not 
take into account the reduced expenditures that result from application 
of section 1833(t)(18)(C) of the Act. In the CY 2018 OPPS/ASC proposed 
rule (82 FR 33595), for CY 2018, we proposed to provide additional 
payments to the 11 specified 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, reduced by 1.0 percentage point to 
comply with section 16002(b) of the 21st Century Cures Act. We did not 
propose an additional reduction beyond the 1.0 percentage point 
reduction required by section 16002(b) for CY 2018. To calculate the 
proposed CY 2018 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 2018 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 2016 claims 
data that we used to model the impact of the proposed CY 2018 APC 
relative payment weights (3,701 hospitals) because it is appropriate to 
use the same set of hospitals that we are using to calibrate the 
modeled CY 2018 OPPS. The cost report data for the hospitals in this 
dataset were from cost report periods with fiscal year ends ranging

[[Page 59266]]

from 2013 to 2016. We then removed the cost report data of the 49 
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 16 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 3,636 
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 were approximately 90 percent of reasonable cost 
(weighted average PCR of 0.90). Therefore, after applying the 1.0 
percentage point reduction as required by section 16002(b) of the 21st 
Century Cures Act, 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 11 of the proposed rule indicated the proposed estimated 
percentage increase in OPPS payments to each cancer hospital for CY 
2018 due to the cancer hospital payment adjustment policy. We stated in 
the proposed rule that the actual amount of the CY 2018 cancer hospital 
payment adjustment for each cancer hospital will be determined at cost 
report settlement and will depend on each hospital's CY 2018 payments 
and costs. We noted that the requirements contained in 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.
    Comment: Several commenters supported the proposed cancer hospital 
payment adjustment for CY 2018.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our cancer hospital payment adjustment methodology as 
proposed. For this final rule with comment period, we are using the 
most recent cost report data through June 30, 2017 to update the 
adjustment. This update yields a target PCR of 0.88. We limited the 
dataset to the hospitals with CY 2016 claims data that we used to model 
the impact of the CY 2018 APC relative payment weights (3,724 
hospitals) because it is appropriate to use the same set of hospitals 
that we are using to calibrate the modeled CY 2018 OPPS. The cost 
report data for the hospitals in this dataset were from cost report 
periods with fiscal year ends ranging from 2012 to 2017. We then 
removed the cost report data of the 49 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 14 
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 an analytic file of 3,661 hospitals with cost 
report data.
    Using this smaller dataset of cost report data, we estimated a 
target PCR of 0.89. Therefore, after applying the 1.0 percentage point 
reduction as required by section 16002(b) of the 21st Century Cures 
Act, we are finalizing that the payment amount associated with the 
cancer hospital payment adjustment to be determined at cost report 
settlement will be the additional payment needed to result in a PCR 
equal to 0.88 for each cancer hospital. Table 10 below indicates the 
estimated percentage increase in OPPS payments to each cancer hospital 
for CY 2018 due to the cancer hospital payment adjustment policy. We 
note that the requirements contained in 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 10--Estimated CY 2018 Hospital-Specific Payment Adjustment for
        Cancer Hospitals To Be Provided at Cost Report Settlement
------------------------------------------------------------------------
                                                             Estimated
                                                            percentage
                                                            increase in
          Provider No.                Hospital name        OPPS payments
                                                            for CY 2018
                                                          due to payment
                                                             adjustment
------------------------------------------------------------------------
050146.........................  City of Hope                       31.5
                                  Comprehensive Cancer
                                  Center.
050660.........................  USC Norris Cancer                  16.4
                                  Hospital.
100079.........................  Sylvester Comprehensive            22.9
                                  Cancer Center.
100271.........................  H. Lee Moffitt Cancer              21.7
                                  Center & Research
                                  Institute.
220162.........................  Dana-Farber Cancer                 44.2
                                  Institute.
330154.........................  Memorial Sloan-                    46.9
                                  Kettering Cancer
                                  Center.
330354.........................  Roswell Park Cancer                20.0
                                  Institute.
360242.........................  James Cancer Hospital &            27.5
                                  Solove Research
                                  Institute.
390196.........................  Fox Chase Cancer Center             7.6
450076.........................  M.D. Anderson Cancer               74.9
                                  Center.
500138.........................  Seattle Cancer Care                52.2
                                  Alliance.
------------------------------------------------------------------------


[[Page 59267]]

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 2015 OPPS/ASC final rule with 
comment period (79 FR 66832 through 66834), 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 2017, 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 $3,825 (the fixed-dollar 
amount threshold) (81 FR 79604 through 79606). 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).
    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 estimate of total outlier payments as a percent of 
total CY 2016 OPPS payments, using CY 2016 claims available for this 
proposed rule, is approximately 1.0 percent of the total aggregated 
OPPS payments. Therefore, for CY 2016, we estimate that we paid the 
outlier target of 1.0 percent of total aggregated OPPS payments.
    As stated in the proposed rule, using CY 2016 claims data and CY 
2017 payment rates, we estimated that the aggregate outlier payments 
for CY 2017 would be approximately 1.0 percent of the total CY 2017 
OPPS payments. Using an updated claims dataset and OPPS ancillary CCRs, 
we estimate that we paid approximately 1.11 percent of the total CY 
2017 OPPS payments, in OPPS outliers. We provided estimated CY 2018 
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: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
2. Outlier Calculation for CY 2018
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33596), for CY 2018, 
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 less 
than 0.01 percent of outlier payments (or 0.0001 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.C. of the proposed rule, 
we proposed to continue our longstanding policy that if a CMHC's cost 
for partial hospitalization services, paid under APC 5853 (Partial 
Hospitalization for CMHCs), exceeds 3.40 times the payment rate for 
proposed APC 5853, the outlier payment would be calculated as 50 
percent of the amount by which the cost exceeds 3.40 times the proposed 
APC 5853 payment rate. For further discussion of CMHC outlier payments, 
we refer readers to section VIII.D. of the proposed rule.
    To ensure that the estimated CY 2018 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 $4,325.
    We calculated the proposed fixed-dollar threshold of $4,325 using 
the standard methodology most recently used for CY 2017 (81 FR 79604 
through 79605). For purposes of estimating outlier payments for the 
proposed rule, we used the hospital-specific overall ancillary CCRs 
available in the April 2017 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 2018 hospital outlier payments for the 
proposed rule, we inflated the charges on the CY 2016 claims using the 
same inflation factor of 1.104055 that we used to estimate the IPPS 
fixed-dollar outlier threshold for the FY 2018 IPPS/LTCH PPS proposed 
rule (82 FR 20173). We used an inflation factor of 1.05074 to estimate 
CY 2017 charges from the CY 2016 charges reported on CY 2016 claims. 
The methodology for determining this charge inflation factor is 
discussed in the FY 2017 IPPS/LTCH PPS final rule (81 FR 57286). 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 2018 
IPPS outlier calculation to the CCRs used to simulate the proposed CY 
2018 OPPS outlier payments to determine the fixed-dollar threshold. 
Specifically, for CY 2018, we proposed to apply an adjustment factor of 
0.979187 to the CCRs that were in the April 2017 OPSF to trend them 
forward from CY 2017 to CY 2018. The methodology for calculating this 
proposed adjustment was discussed in the FY 2018 IPPS/LTCH PPS proposed 
rule (82 FR 20173).
    To model hospital outlier payments for the proposed rule, we 
applied the overall CCRs from the April 2017 OPSF after adjustment 
(using the proposed CCR inflation adjustment factor of 0.979187 to 
approximate CY 2018 CCRs) to charges on CY 2016 claims that were 
adjusted (using the proposed charge inflation factor of 1.104055 to 
approximate CY 2018 charges). We simulated aggregated CY 2018 hospital 
outlier payments using these costs for several different fixed-dollar 
thresholds, holding the 1.75 multiplier 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

[[Page 59268]]

equaled 1.0 percent of aggregated estimated total CY 2018 OPPS 
payments. We estimated that a proposed fixed-dollar threshold of 
$4,325, combined with the proposed multiplier 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 APC 5853, 
exceeds 3.40 times the payment rate for APC 5853, the outlier payment 
would be calculated as 50 percent of the amount by which the cost 
exceeds 3.40 times the APC 5853 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 
section 1833(t)(17)(B) of the Act, incur a 2.0 percentage point 
reduction to their OPD fee schedule increase factor; that is, the 
annual payment update factor. 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 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 referred readers to section XIII. of the 
proposed rule.
    We did not receive any public comments on our hospital outpatient 
outlier payment methodology. Therefore, we are finalizing our proposal 
to continue our policy of estimating outlier payments to be 1.0 percent 
of the estimated aggregate total payments under the OPPS and to use our 
established methodology to set the OPPS outlier fixed-dollar loss 
threshold for CY 2018.
3. Final Outlier Calculation
    Consistent with historical practice, we used updated data for this 
final rule with comment period for outlier calculations. For CY 2018, 
we are applying the overall CCRs from the July 2017 OPSF file after 
adjustment (using the CCR inflation adjustment factor of 0.9856 to 
approximate CY 2018 CCRs) to charges on CY 2016 claims that were 
adjusted using a charge inflation factor of 1.0936 to approximate CY 
2018 charges. These are the same CCR adjustment and charge inflation 
factors that were used to set the IPPS fixed-dollar thresholds for the 
FY 2018 IPPS/LTCH PPS final rule (82 FR 38527). We simulated aggregated 
CY 2018 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 
payment equaled 1.0 percent of aggregated estimated total CY 2018 OPPS 
payments. We estimate that a fixed-dollar threshold of $4,150, 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. We note that the difference in our calculation of the final 
fixed-dollar threshold of $4,150 and the proposed fixed-dollar 
threshold of $4,350 is largely attributed to finalized proposals 
related to reducing payments for drugs purchased under the 340B drug 
program for CY 2018, as discussed in section V.B.7. of this final rule 
with comment period.
    For CMHCs, if a CMHC's cost for partial hospitalization services, 
paid under APC 5853, exceeds 3.40 times the payment rate, the outlier 
payment will be calculated as 50 percent of the amount by which the 
cost exceeds 3.40 times APC 5853.

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 2018 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 2018 scaled weight for the APC by the CY 2018 conversion factor. We 
note that this is the same methodology proposed in the CY 2018 OPPS/ASC 
proposed rule (82 FR 33598), on which we did not receive any public 
comments.
    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.
    We demonstrate below 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'', ``J2'', 
``P'', ``Q1'', ``Q2'', ``Q3'', ``Q4'', ``R'', ``S'', ``T'', ``U'', or 
``V'' (as defined in Addendum D1 to this final rule with comment 
period, which is available via the Internet on the CMS Web site), in a 
circumstance in which the multiple procedure discount does not apply, 
the procedure is not bilateral, and conditionally packaged services 
(status indicator of ``Q1'' and ``Q2'') qualify for separate payment. 
We note that, although blood and blood products with status indicator 
``R'' and brachytherapy sources with status indicator ``U'' are not 
subject to wage adjustment, they are subject to reduced payments when a 
hospital fails to meet the Hospital OQR Program requirements.
    Individual providers interested in calculating the payment amount 
that they will receive for a specific service from the national 
unadjusted payment

[[Page 59269]]

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 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 
2018 OPPS fee schedule increase factor.
    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 2018 OPPS policy for continuing to 
use the OMB labor market area delineations based on the 2010 Decennial 
Census data for the wage indexes used under the IPPS, 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 2018 under 
the IPPS, reclassifications through the Metropolitan Geographic 
Classification Review Board (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 2018 IPPS wage indexes, as applied 
to the CY 2018 OPPS, we refer readers to section II.C. of this final 
rule with comment period. 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 
2018 IPPS, which are listed in Table 2 in the FY 2018 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. (Click on the link on the left side of 
the screen titled ``FY 2018 IPPS Final Rule Home Page'' and select ``FY 
2018 Final Rule Tables.'') 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 5071 (Level 1 
Excision/Biopsy/Incision and Drainage). The CY 2018 full national 
unadjusted payment rate for APC 5071 is approximately $572.81. The 
reduced national unadjusted payment rate for APC 5071 for a hospital 
that fails to meet the Hospital OQR Program requirements is 
approximately $561.35. This reduced rate is calculated by multiplying 
the reporting ratio of 0.980 by the full unadjusted payment rate for 
APC 5071.
    The FY 2018 wage index for a provider located in CBSA 35614 in New 
York is 1.2876. The labor-related portion of the full national 
unadjusted payment is approximately $442.53 (.60 * $572.81 * 1.2876). 
The labor-related portion of the reduced national unadjusted payment is 
approximately $433.68 (.60 * $561.35 * 1.2876). The nonlabor-related 
portion of the full national unadjusted payment is approximately 
$229.12 (.40 * $572.81). The nonlabor-related portion of the

[[Page 59270]]

reduced national unadjusted payment is approximately $224.54 (.40 * 
$561.35). The sum of the labor-related and nonlabor-related portions of 
the full national adjusted payment is approximately $671.65 ($442.53 + 
$229.12). The sum of the portions of the reduced national adjusted 
payment is approximately $658.22 ($433.68 + $224.54).

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 Medicare 
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 2018 OPPS/ASC proposed rule (82 FR 33599), for CY 2018, 
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, 2018 were included in Addenda A and B to the proposed rule 
(which are available via the Internet on the CMS Web site).
    We did not receive any public comments on the proposed copayment 
amounts for new and revised APCs using the same methodology we 
implemented beginning in CY 2004 or the standard rounding principles we 
apply to our copayment amounts. Therefore, we are finalizing our 
proposed copayment policies, without modification.
    As discussed in section XIII.E. of this final rule with comment 
period, for CY 2018, the Medicare beneficiary's minimum unadjusted 
copayment and national unadjusted copayment for a service to which a 
reduced national unadjusted payment rate applies will equal the product 
of the reporting ratio and the national unadjusted copayment, or the 
product of the reporting ratio and the minimum unadjusted copayment, 
respectively, for the service.
    We 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 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).
    In the CY 2004 OPPS final rule with comment period (68 FR 63459), 
we adopted a new methodology to calculate unadjusted copayment amounts 
in situations including reorganizing APCs, and we finalized the 
following rules to determine copayment amounts in CY 2004 and 
subsequent years.
     When an APC group consists solely of HCPCS codes that were 
not paid under the OPPS the prior year because they were packaged or 
excluded or are new codes, the unadjusted copayment amount would be 20 
percent of the APC payment rate.
     If a new APC that did not exist during the prior year is 
created and consists of HCPCS codes previously assigned to other APCs, 
the copayment amount is calculated as the product of the APC payment 
rate and the lowest coinsurance percentage of the codes comprising the 
new APC.
     If no codes are added to or removed from an APC and, after 
recalibration of its relative payment weight, the new payment rate is 
equal to or greater than the prior year's rate, the copayment amount 
remains constant (unless the resulting coinsurance percentage is less 
than 20 percent).
     If no codes are added to or removed from an APC and, after 
recalibration of its relative payment weight, the new payment rate is 
less than the prior year's rate, the copayment amount is calculated as 
the product of the new payment rate and the prior year's coinsurance 
percentage.
     If HCPCS codes are added to or deleted from an APC and, 
after recalibrating its relative payment weight, holding its unadjusted 
copayment amount constant results in a decrease in the coinsurance 
percentage for the reconfigured APC, the copayment amount would not 
change (unless retaining the copayment amount would result in a 
coinsurance rate less than 20 percent).
     If HCPCS codes are added to an APC and, after 
recalibrating its relative payment weight, holding its unadjusted 
copayment amount constant results in an increase in the coinsurance 
percentage for the reconfigured APC, the copayment amount would be 
calculated as the product of the payment rate of the reconfigured APC 
and the lowest coinsurance percentage of the codes being added to the 
reconfigured APC.
    We noted in the CY 2004 OPPS final rule with comment period that we 
would seek to lower the copayment percentage for a service in an APC 
from the prior year if the copayment percentage was greater than 20 
percent. We noted that this principle was consistent with section 
1833(t)(8)(C)(ii) of the Act, which accelerates the reduction in the 
national unadjusted coinsurance rate so that beneficiary liability will 
eventually equal 20 percent of the OPPS payment rate for all OPPS 
services to which a copayment

[[Page 59271]]

applies, and with section 1833(t)(3)(B) of the Act, which achieves a 
20-percent copayment percentage when fully phased in and gives the 
Secretary the authority to set rules for determining copayment amounts 
for new services. We further noted that the use of this methodology 
would, in general, reduce the beneficiary coinsurance rate and 
copayment amount for APCs for which the payment rate changes as the 
result of the reconfiguration of APCs and/or recalibration of relative 
payment weights (68 FR 63459).
3. Calculation of an Adjusted Copayment Amount for an APC Group
    As we stated in the CY 2018 OPPS/ASC proposed rule (82 FR 33600), 
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 5071, $114.57 is approximately 20 percent of the 
full national unadjusted payment rate of $572.81. For APCs with only a 
minimum unadjusted copayment in Addenda A and B to this final rule with 
comment period rule (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, 2018, 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 CY 2018 OPD fee schedule increase factor 
discussed in section II.B. of this final rule with comment period.
    In addition, as noted earlier, 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.

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 indicators (SIs) and APCs. 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 provides payment or more 
accurate payment for these items or services in a timelier manner than 
if we 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. Those items, 
procedures, or services not paid separately under the hospital OPPS are 
assigned to appropriate status indicators. Certain payment status 
indicators provide separate payment, while other payment status 
indicators do not. Section XI. of this final rule with comment period 
discusses the various status indicators used under the OPPS.
    As we did in the CY 2018 OPPS/ASC proposed rule, in Table 11 below, 
we summarize our current process for updating codes through our OPPS 
quarterly update CRs, seeking public comments, and finalizing the 
treatment of these new codes under the OPPS.

                           Table 11--Comment Timeframe for New or Revised HCPCS Codes
----------------------------------------------------------------------------------------------------------------
    OPPS quarterly update CR         Type of code       Effective date      Comments sought     When finalized
----------------------------------------------------------------------------------------------------------------
April 1, 2017...................  Level II HCPCS      April 1, 2017.....  CY 2018 OPPS/ASC    CY 2018 OPPS/ASC
                                   Codes.                                  proposed rule.      final rule with
                                                                                               comment period.

[[Page 59272]]

 
July 1, 2017....................  Level II HCPCS      July 1, 2017......  CY 2018 OPPS/ASC    CY 2018 OPPS/ASC
                                   Codes.                                  proposed rule.      final rule with
                                                                                               comment period.
                                  Category I          July 1, 2017......  CY 2018 OPPS/ASC    CY 2018 OPPS/ASC
                                   (certain vaccine                        proposed rule.      final rule with
                                   codes) and III                                              comment period.
                                   CPT codes.
October 1, 2017.................  Level II HCPCS      October 1, 2017...  CY 2018 OPPS/ASC    CY 2019 OPPS/ASC
                                   Codes.                                  final rule with     final rule with
                                                                           comment period.     comment period.
January 1, 2018.................  Level II HCPCS      January 1, 2018...  CY 2018 OPPS/ASC    CY 2019 OPPS/ASC
                                   Codes.                                  final rule with     final rule with
                                                                           comment period.     comment period.
                                  Category I and III  January 1, 2018...  CY 2018 OPPS/ASC    CY 2018 OPPS/ASC
                                   CPT Codes.                              proposed rule.      final rule with
                                                                                               comment period.
----------------------------------------------------------------------------------------------------------------

1. Treatment of New HCPCS Codes That Were Effective April 1, 2017 for 
Which We Solicited Public Comments in the CY 2018 OPPS/ASC Proposed 
Rule
    Through the April 2017 OPPS quarterly update CR (Transmittal 3728, 
Change Request 10005, dated March 3, 2017), we made effective five new 
Level II HCPCS codes for separate payment under the OPPS. In the CY 
2018 OPPS/ASC proposed rule (82 FR 33601), we solicited public comments 
on the proposed APC and status indicator assignments for these Level II 
HCPCS codes, which were displayed in Table 13 of the proposed rule and 
are now listed in Table 12 of this final rule with comment period. 
Specifically, we solicited public comments on HCPCS codes C9484, C9485, 
C9486, C9487, and C9488. We note that HCPCS code C9487 was deleted on 
June 30, 2017, and replaced with HCPCS code Q9989, effective July 1, 
2017. We indicated that the proposed payment rates for these codes were 
included in Addendum B to the proposed rule (which is available via the 
Internet on the CMS Web site).

                           Table 12--New Level II HCPCS Codes Effective April 1, 2017
----------------------------------------------------------------------------------------------------------------
                                                                                  Final CY 2018    Final CY 2018
    CY 2017 HCPCS code        CY 2018 HCPCS code       CY 2018 long descriptor          SI              APC
----------------------------------------------------------------------------------------------------------------
C9484....................  J1428                     Injection, eteplirsen, 10                G             9484
                                                      mg.
C9485....................  J9285                     Injection, olaratumab, 10                G             9485
                                                      mg.
C9486....................  J1627                     Injection, granisetron,                  G             9486
                                                      extended-release, 0.1 mg.
C9487 *..................  J3358                     Ustekinumab, for                         G             9487
                                                      intravenous injection, 1
                                                      mg.
C9488....................  C9488                     Injection, conivaptan                    G             9488
                                                      hydrochloride, 1 mg.
----------------------------------------------------------------------------------------------------------------
* HCPCS code C9487, which was effective April 1, 2017, was deleted June 30, 2017 and replaced with HCPCS code
  Q9989 (Ustekinumab, for intravenous injection, 1 mg) effective July 1, 2017.

    We did not receive any public comments on the proposed APC and 
status indicator assignments for the new Level II HCPCS codes 
implemented in April 2017. Therefore, we are finalizing the proposed 
APC and status indicator assignments for these codes, as indicated in 
Table 12 above. We note that several of the HCPCS C-codes have been 
replaced with HCPCS J-codes effective January 1, 2018. Their 
replacement codes are listed in Table 12 above. The final payment rates 
for these 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). In addition, the status indicator meanings can be found in 
Addendum A to this final rule with comment period (which is available 
via the Internet on the CMS Web site).
2. Treatment of New HCPCS Codes That Were Effective July 1, 2017 for 
Which We Solicited Public Comments in the CY 2018 OPPS/ASC Proposed 
Rule
    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33602), 
through the July 2017 OPPS quarterly update CR (Transmittal 3783, 
Change Request 10122, dated May 26, 2017), we made 10 new Category III 
CPT codes and 13 Level II HCPCS codes effective July 1, 2017, and 
assigned them to appropriate interim OPPS status indicators and APCs. 
In the CY 2018 OPPS/ASC proposed rule, we solicited public comments on 
the proposed APC and status indicator assignments for CY 2018 for the 
CPT and Level II HCPCS codes implemented on July 1, 2017, all of which 
were displayed in Table 14 of the proposed rule, and are now listed in 
Table 13 of this final rule with comment period. We note that three of 
the new HCPCS codes effective July 1, 2017 replaced four existing HCPCS 
codes. Specifically, HCPCS code Q9986 replaced HCPCS code J1725 
(Injection, hydroxyprogesterone caproate, 1 mg), HCPCS codes Q9987 and 
Q9988 replaced HCPCS code P9072 (Platelets, pheresis, pathogen reduced 
or rapid bacterial tested, each unit), and HCPCS code Q9989 replaced 
HCPCS code C9487 (Ustekinumab, for intravenous injection, 1 mg). With 
the establishment of HCPCS codes Q9986, Q9987, and Q9988, we made their 
predecessor HCPCS codes J1725 and P9072 inactive for reporting and 
revised the status indicators for both codes to ``E1'' (Not Payable by 
Medicare) effective July 1, 2017. In addition, because HCPCS code Q9989 
describes the same drug as HCPCS code C9487, in the CY 2018 OPPS/ASC 
proposed rule, we proposed to continue the drug's pass-through payment 
status and to assign HCPCS code Q9989 to the same APC and status 
indicator as its predecessor HCPCS code

[[Page 59273]]

C9487, as shown in Table 14 of the proposed rule. The proposed payment 
rates and status indicators for these codes, where applicable, were 
included in Addendum B to the proposed rule (which is available via the 
Internet on the CMS Web site).
    We did not receive any public comments on the proposed APC and 
status indicator assignments for the new Category III CPT codes and 
Level II HCPCS codes implemented in July 2017. Therefore, we are 
finalizing the proposed APC and status indicator assignments for these 
codes, as indicated in Table 13 below. We note that several of the 
HCPCS C and Q-codes have been replaced with HCPCS J-codes effective 
January 1, 2018. Their replacement codes are listed in Table 13 below. 
The final payment rates for these 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). In addition, the status indicator 
meanings can be found in Addendum A to this final rule with comment 
period (which is available via the Internet on the CMS Web site).

                 Table 13--New Category III CPT and Level II HCPCS Codes Effective July 1, 2017
----------------------------------------------------------------------------------------------------------------
                                                                                  Final  CY 2018  Final  CY 2018
    CY 2017 HCPCS code        CY 2018 HCPCS code       CY 2018 long descriptor          SI              APC
----------------------------------------------------------------------------------------------------------------
C9489....................  J2326...................  Injection, nusinersen, 0.1               G             9489
                                                      mg.
C9490....................  J0565...................  Injection, bezlotoxumab,                 G             9490
                                                      10 mg.
C9745....................  C9745...................  Nasal endoscopy, surgical;              J1             5165
                                                      balloon dilation of
                                                      eustachian tube.
C9746....................  C9746...................  Transperineal implantation              J1             5377
                                                      of permanent adjustable
                                                      balloon continence
                                                      device, with
                                                      cystourethroscopy, when
                                                      performed and/or
                                                      fluoroscopy, when
                                                      performed.
C9747....................  C9747...................  Ablation of prostate,                   J1             5376
                                                      transrectal, high
                                                      intensity focused
                                                      ultrasound (HIFU),
                                                      including imaging
                                                      guidance.
K0553....................  K0553...................  Supply allowance for                     Y              N/A
                                                      therapeutic continuous
                                                      glucose monitor (CGM),
                                                      includes all supplies and
                                                      accessories, 1 month
                                                      supply = 1 Unit Of
                                                      Service.
K0554....................  K0554...................  Receiver (monitor),                      Y              N/A
                                                      dedicated, for use with
                                                      therapeutic glucose
                                                      continuous monitor system.
Q9984....................  J7296...................  Levonorgestrel-releasing                E1              N/A
                                                      intrauterine
                                                      contraceptive system
                                                      (Kyleena), 19.5 mg.
Q9985....................  J1729...................  Injection,                               N              N/A
                                                      hydroxyprogesterone
                                                      caproate, not otherwise
                                                      specified, 10 mg.
Q9986....................  J1726...................  Injection,                               K             9074
                                                      hydroxyprogesterone
                                                      caproate (Makena), 10 mg.
Q9987....................  P9100...................  Pathogen(s) test for                     S             1493
                                                      platelets.
Q9988....................  P9073...................  Platelets, pheresis,                     R             9536
                                                      pathogen reduced, each
                                                      unit.
Q9989....................  J3358...................  Ustekinumab, for                         G             9487
                                                      intravenous injection, 1
                                                      mg.
0469T....................  0469T...................  Retinal polarization scan,              E1              N/A
                                                      ocular screening with on-
                                                      site automated results,
                                                      bilateral.
0470T....................  0470T...................  Optical coherence                        M              N/A
                                                      tomography (OCT) for
                                                      microstructural and
                                                      morphological imaging of
                                                      skin, image acquisition,
                                                      interpretation, and
                                                      report; first lesion.
0471T....................  0471T...................  Optical coherence                        N              N/A
                                                      tomography (OCT) for
                                                      microstructural and
                                                      morphological imaging of
                                                      skin, image acquisition,
                                                      interpretation, and
                                                      report; each additional
                                                      lesion (List separately
                                                      in addition to code for
                                                      primary procedure).
0472T....................  0472T...................  Device evaluation,                      Q1             5743
                                                      interrogation, and
                                                      initial programming of
                                                      intra- ocular retinal
                                                      electrode array (eg,
                                                      retinal prosthesis), in
                                                      person, with iterative
                                                      adjustment of the
                                                      implantable device to
                                                      test functionality,
                                                      select optimal permanent
                                                      programmed values with
                                                      analysis, including
                                                      visual training, with
                                                      review and report by a
                                                      qualified health care
                                                      professional.
0473T....................  0473T...................  Device evaluation and                   Q1             5742
                                                      interrogation of intra-
                                                      ocular retinal electrode
                                                      array (eg, retinal
                                                      prosthesis), in person,
                                                      including reprogramming
                                                      and visual training, when
                                                      performed, with review
                                                      and report by a qualified
                                                      health care professional.
0474T....................  0474T...................  Insertion of anterior                   J1             5492
                                                      segment aqueous drainage
                                                      device, with creation of
                                                      intraocular reservoir,
                                                      internal approach, into
                                                      the supraciliary space.
0475T....................  0475T...................  Recording of fetal                       M              N/A
                                                      magnetic cardiac signal
                                                      using at least 3
                                                      channels; patient
                                                      recording and storage,
                                                      data scanning with signal
                                                      extraction, technical
                                                      analysis and result, as
                                                      well as supervision,
                                                      review, and
                                                      interpretation of report
                                                      by a physician or other
                                                      qualified health care
                                                      professional.
0476T....................  0476T...................  Recording of fetal                      Q1             5734
                                                      magnetic cardiac signal
                                                      using at least 3
                                                      channels; patient
                                                      recording, data scanning,
                                                      with raw electronic
                                                      signal transfer of data
                                                      and storage.
0477T....................  0477T...................  Recording of fetal                      Q1             5734
                                                      magnetic cardiac signal
                                                      using at least 3
                                                      channels; signal
                                                      extraction, technical
                                                      analysis, and result.
0478T....................  0478T...................  Recording of fetal                       M              N/A
                                                      magnetic cardiac signal
                                                      using at least 3
                                                      channels; review,
                                                      interpretation, report by
                                                      physician or other
                                                      qualified health care
                                                      professional.
----------------------------------------------------------------------------------------------------------------


[[Page 59274]]

3. Process for New Level II HCPCS Codes That Became Effective October 
1, 2017 and New Level II HCPCS Codes That Will Be Effective January 1, 
2018 for Which We Are Soliciting Public Comments in This CY 2018 OPPS/
ASC Final Rule With Comment Period
    As has been our practice in the past, we incorporate those new 
Level II HCPCS codes that are effective October 1 and January 1 in the 
final rule with comment period, thereby updating the OPPS for the 
following calendar year, as displayed in Table 11 of this final rule 
with comment period. These codes are released to the public through the 
October and January OPPS quarterly update CRs and via the CMS HCPCS Web 
site (for Level II HCPCS codes). For CY 2018, 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. Specifically, the 
status indicators and the APC assignments for 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 2018 OPPS/ASC proposed rule (82 FR 33603), we 
proposed to continue this process for CY 2018. Specifically, for CY 
2018, we proposed to include in Addendum B to the CY 2018 OPPS/ASC 
final rule with comment period the following new HCPCS codes:
     New Level II HCPCS codes effective October 1, 2017, that 
would be incorporated in the October 2017 OPPS quarterly update CR; and
     New Level II HCPCS codes effective January 1, 2018, that 
would be incorporated in the January 2018 OPPS quarterly update CR.
    As stated above, the October 1, 2017 and January 1, 2018 codes are 
flagged with comment indicator ``NI'' in Addendum B to this CY 2018 
OPPS/ASC final rule with comment period to indicate that we have 
assigned these codes an interim OPPS payment status for CY 2018. We are 
inviting public comments on the interim status indicator and APC 
assignments for these codes, if applicable, that will be finalized in 
the CY 2019 OPPS/ASC final rule with comment period.
4. Treatment of New and Revised Category I and III CPT Codes That Will 
Be Effective January 1, 2018 for Which We Solicited Public Comments in 
the CY 2018 OPPS/ASC Proposed Rule
    In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66841 
through 66844), we finalized a revised process of assigning APC and 
status indicators for new and revised Category I and III CPT codes that 
would be effective January 1. Specifically, for the new/revised CPT 
codes that we receive in a timely manner from the AMA's CPT Editorial 
Panel, we finalized our proposal to include the 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/revised CPT codes that were 
received too late for inclusion in the OPPS/ASC proposed rule, we 
finalized our proposal to establish 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. Also, we finalized 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.
    For the CY 2018 OPPS update, we received the CY 2018 CPT codes from 
AMA in time for inclusion in the CY 2018 OPPS/ASC proposed rule. The 
new, revised, and deleted CY 2018 Category I and III CPT codes were 
included in Addendum B to the CY 2018 OPPS/ASC proposed rule (which is 
available via the Internet on the CMS Web site). We noted in the 
proposed rule that the new and revised codes are assigned to new 
comment indicator ``NP'' to indicate that the code is new for the next 
calendar year or the code is an existing code with substantial revision 
to its code descriptor in the next calendar year as compared to the 
current calendar year with a proposed APC assignment, and that comments 
will be accepted on the proposed APC assignment and status indicator.
    Further, in the CY 2018 OPPS/ASC proposed rule, we reminded readers 
that the CPT code descriptors that appear in Addendum B are short 
descriptors and do not fully describe the complete procedure, service, 
or item described by the CPT code. Therefore, we included the 5-digit 
placeholder codes and their long descriptors for the new and revised CY 
2018 CPT codes in Addendum O to the proposed rule (which is available 
via the Internet on the CMS Web site) so that the public could 
adequately comment on our proposed APCs and status indicator 
assignments. We indicated that the 5-digit placeholder codes were 
included in Addendum O, specifically under the column labeled ``CY 2018 
OPPS/ASC Proposed Rule 5-Digit AMA Placeholder Code,'' to the proposed 
rule. We stated that the final CPT code numbers will be included in the 
CY 2018 OPPS/ASC final rule with comment period. We noted that not 
every code listed in Addendum O is subject to comment. For the new and 
revised Category I and III CPT codes, we requested comments on only 
those codes that are assigned to comment indicator ``NP''. We indicated 
that public comments would not be accepted for new Category I CPT 
laboratory codes that were not assigned to the ``NP'' comment indicator 
in Addendum O to the proposed rule. We stated that comments to these 
codes must be submitted at the Clinical Laboratory Fee Schedule (CLFS) 
Public Meeting, which was scheduled on July 31-August 1, 2017.
    In summary, we solicited public comments on the proposed APC and 
status indicator assignments for the new and revised Category I and III 
CPT codes that will be effective January 1, 2018. The CPT codes were 
listed in Addendum B to the proposed rule with short descriptors only. 
We listed them again in Addendum O to the proposed rule with long 
descriptors. We also proposed to finalize the status indicator and APC 
assignments for these codes (with their final CPT code numbers) in the 
CY 2018 OPPS/ASC final rule with comment period.
    Commenters addressed several of the new CPT codes that were 
assigned to comment indicator ``NP'' in Addendum

[[Page 59275]]

B to the CY 2018 OPPS/ASC proposed rule. We have responded to those 
public comments in sections II.A.2.b. (Comprehensive APCs), III.D. 
(OPPS APC-Specific Policies), V. (OPPS Payment Changes for Drugs, 
Biologicals, and Radiopharmaceuticals), and XII. (Updates to the ASC 
Payment System) of this CY 2018 OPPS/ASC final rule with comment 
period.
    The final status indicators, APC assignments, and payment rates for 
the new CPT codes that are effective January 1, 2018 can be found in 
Addendum B to this final rule with comment period (which is available 
via the Internet on the CMS Web site). In addition, the status 
indicator meanings can be found in Addendum A to this final rule with 
comment period (which is available via the Internet on the CMS Web 
site).

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.  [thinsp]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 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.
    Under the OPPS, we generally pay for covered 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. In the CY 2018 OPPS/ASC proposed rule (82 FR 33604), for CY 
2018, we proposed that 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 5012 (Clinic Visits and 
Related Services). The APC relative payment weights are scaled to APC 
5012 because it is the hospital clinic visit APC and clinic visits are 
among the most frequently furnished services in the hospital outpatient 
setting.
2. Application of the 2 Times Rule
    Section 1833(t)(9)(A) of the Act requires the Secretary to review, 
not less often than annually, and revise the APC 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. 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. We note that the HOP 
Panel recommendations for specific services for the CY 2018 OPPS and 
our responses to them are discussed in the relevant specific sections 
throughout this final rule with comment period.
    In addition, 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).
    Therefore, 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 if there are any APC 
violations of the 2 times rule and whether there are any appropriate 
revisions to APC assignments that may be necessary or exceptions to be 
made. In determining the APCs with a 2 times rule violation, 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 claims 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 2018 OPPS/ASC proposed 
rule (81 FR 33604 through 33605), we proposed to make exceptions to 
this limit on the variation of costs within each APC group in unusual 
cases, such as low-volume items and services.
    For the CY 2018 OPPS update, we identified the APCs with violations 
of the 2 times rule, and we proposed changes to the procedure codes 
assigned to these APCs in Addendum B to the CY 2018 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 2018 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, in the CY 2018 OPPS/ASC proposed rule (81 FR 33604 through 
33605), we proposed to reassign these procedure codes to new APCs that 
contain services that are similar with regard to both their clinical 
and

[[Page 59276]]

resource characteristics. In many cases, the proposed procedure code 
reassignments and associated APC reconfigurations for CY 2018 included 
in the proposed rule are related to changes in costs of services that 
were observed in the CY 2016 claims data newly available for CY 2018 
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 
2018. Addendum B to the CY 2018 OPPS/ASC proposed rule identified with 
the 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 July 1, 2017 OPPS Addendum B update 
(available via the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Addendum-A-and-Addendum-B-Updates.html). 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 2018 changes compared to the HCPCS codes' status as reflected 
in the October 2017 Addendum B update.
3. APC Exceptions to the 2 Times Rule
    Taking into account the APC changes that we proposed for CY 2018, 
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 2016 claims data available for the CY 2018 proposed 
rule, we found 12 APCs with violations of the 2 times rule. We applied 
the criteria as described above to identify the APCs for which we 
proposed to make exceptions under the 2 times rule for CY 2018, and 
found that all of the 12 APCs we identified met the criteria for an 
exception to the 2 times rule based on the CY 2016 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 5401 (Dialysis), which only has two HCPCS 
codes assigned to it that have similar geometric mean costs and do not 
create a 2 times rule violation. Therefore, we have only identified 
those APCs, including those with criteria-based costs, such as device-
dependent CPT/HCPCS codes, with 2 times rule violations.
    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 may 
accept the HOP 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 16 of the proposed rule listed the 12 APCs for which we 
proposed to make exceptions under the 2 times rule for CY 2018 based on 
the criteria cited above and claims data submitted between January 1, 
2016, and December 31, 2016, that were processed on or before December 
31, 2016. We indicated that, for the final rule with comment period, we 
intended to use claims data for dates of service between January 1, 
2016, and December 31, 2016, that were processed on or before June 30, 
2017, and updated CCRs, if available.
    Based on the updated final rule CY 2016 claims data used for this 
CY 2018 final rule with comment period, we were able to remedy 6 APC 
violations out of the 12 APCs that appeared in Table 16 of the CY 2018 
OPPS/ASC proposed rule. Specifically, we found that the following 6 
APCs no longer met the criteria for exception to the 2 times rule in 
this final rule with comment period:
     APC 5161 (Level 1 ENT Procedures);
     APC 5311 (Level 1 Lower GI Procedures);
     APC 5461 (Level 1 Neurostimulator and Related Procedures);
     APC 5573 (Level 3 Imaging with Contrast);
     APC 5611 (Level 1 Therapeutic Radiation Treatment 
Preparation); and
     APC 5735 (Level 5 Minor Procedures).
    Secondly, based on our analysis of the final rule claims data, we 
found a total of 11 APCs with violations of the 2 times rule. Of these 
11 total APCs, 6 were identified in the proposed rule and 5 are newly 
identified APCs. Specifically, we found the following 6 APCs from the 
proposed rule continued to have violations of the 2 times rule for this 
final rule with comment period:
     APC 5112 (Level 2 Musculoskeletal Procedures);
     APC 5521 (Level 1 Imaging without Contrast);
     APC 5691 (Level 1 Drug Administration);
     APC 5731 (Level 1 Minor Procedures);
     APC 5771 (Cardiac Rehabilitation); and
     APC 5823 (Level 3 Health and Behavior Services).
    In addition, we found that the following 5 additional APCs violated 
the 2 times rule using the final rule with comment period claims data:
     APC 5522 (Level 2 Imaging without Contrast);
     APC 5524 (Level 4 Imaging without Contrast);
     APC 5571 (Level 1 Imaging with Contrast);
     APC 5721 (Level 1 Diagnostic Tests and Related Services); 
and
     APC 5732 (Level 2 Minor Procedures).
    Comment: Some commenters requested that CMS not adopt the exception 
to C-APCs, including C-APC 5112 (Level 2 Musculoskeletal Procedures), 
because they believed it would result in lowering the payments for the 
procedures assigned to C-APCs. According to the commenters, because C-
APCs involve complex combinations of items and services where 
appropriate valuation is critical, CMS should not adopt exceptions that 
have the result of lowering the overall payment rate for associated 
procedures. Instead, as one commenter suggested, CMS should establish 
additional APC levels to avoid any exceptions to the 2 times rule.
    Response: We do not agree that we should establish a new APC for 
every group that violates the 2 times rule. We believe that excepting 
certain APCs from the 2 times rule is necessary, especially for 
procedures assigned to the same APC based on clinical homogeneity. As 
we have seen throughout the years since the implementation of the OPPS 
on August 1, 2000, APCs excepted in one year are usually resolved the 
following year based on our analysis of the latest claims data used for 
ratesetting. For example, we listed C-APC 5165 (Level 5 ENT Procedures) 
in Table 19 of the CY 2016 OPPS/ASC final rule with comment period (80 
FR 70374) as one of the APCs that violated the 2 times rule for CY 
2016. However, this same APC no longer appeared in Table 9 of the CY 
2017 OPPS/ASC final rule with comment period (81 FR 79614) as excepted 
from the 2 times rule. We

[[Page 59277]]

believe that the anomalies seen in one year but not the next year for a 
given APC are the result of more accurate coding and charge master 
identification by HOPDs.
    After considering the public comments we received on APC 
assignments and our analysis of the CY 2016 costs from hospital claims 
and cost report data available for this CY 2018 final rule with comment 
period, we are finalizing our proposals with some modifications. 
Specifically, we are finalizing our proposal to except 6 of the 12 
proposed APCs from the 2 times rule for CY 2018 (APCs 5112, 5521, 5691, 
5731, 5771, and 5823), and also excepting 5 additional APCs (APCs 5522, 
5524, 5571, 5721, and 5732). As noted above, we were able to remedy the 
other 6 of the proposed rule 2 time violations in this final rule with 
comment period.
    Table 14 below lists the 11 APCs that we are excepting from the 2 
times rule for CY 2018 based on the criteria described earlier and a 
review of updated claims data for dates of service between January 1, 
2016 and December 31, 2016, that were processed on or before June 30, 
2017, and updated CCRs, if available. 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 HOP 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.

        Table 14--APC Exceptions to the 2 Times Rule for CY 2018
------------------------------------------------------------------------
              APC                           CY 2018 APC title
------------------------------------------------------------------------
5112...........................  Level 2 Musculoskeletal Procedures.
5521...........................  Level 1 Imaging without Contrast.
5522...........................  Level 2 Imaging without Contrast.
5524...........................  Level 4 Imaging without Contrast.
5571...........................  Level 1 Imaging with Contrast.
5691...........................  Level 1 Drug Administration.
5721...........................  Level 1 Diagnostic Tests and Related.
                                  Services
5731...........................  Level 1 Minor Procedures.
5732...........................  Level 2 Minor Procedures.
5771...........................  Cardiac Rehabilitation.
5823...........................  Level 3 Health and Behavior Services.
------------------------------------------------------------------------

C. New Technology APCs

1. Background
    In the November 30, 2001 final rule (66 FR 59903), we finalized 
changes to the time period in which a service can be eligible for 
payment under a New Technology APC. Beginning in CY 2002, we retain 
services within New Technology APC groups until we gather sufficient 
claims data to enable us to assign the service to an appropriate 
clinical APC. This policy allows us to move a service from a New 
Technology APC in less than 2 years if sufficient data are available. 
It also allows us to retain a service in a New Technology APC for more 
than 2 years if sufficient data upon which to base a decision for 
reassignment have not been collected.
    For CY 2017, there are 51 New Technology APC levels, ranging from 
the lowest cost band assigned to APC 1491 (New Technology--Level 1A 
($0-$10)) through the highest cost band assigned to APC 1906 (New 
Technology--Level 51 ($140,001-$160,000)). In the CY 2004 OPPS final 
rule with comment period (68 FR 63416), we restructured the New 
Technology APCs to make the cost intervals more consistent across 
payment levels and refined the cost bands for these APCs to retain two 
parallel sets of New Technology APCs, one set with a status indicator 
of ``S'' (Significant Procedures, Not Discounted when Multiple. Paid 
under OPPS; separate APC payment) and the other set with a status 
indicator of ``T'' (Significant Procedure, Multiple Reduction Applies. 
Paid under OPPS; separate APC payment). These current New Technology 
APC configurations allow us to price new technology services more 
appropriately and consistently.
    We note that the cost bands for the New Technology APCs, 
specifically, APCs 1491 through 1599 and 1901 through 1906, vary with 
increments ranging from $10 to $19,999. These cost bands identify the 
APCs to which new technology procedures and services with estimated 
service costs that fall within those cost bands are assigned under the 
OPPS. Payment for each APC is made at the mid-point of the APC's 
assigned cost band. For example, payment for New Technology APC 1507 
(New Technology--Level 7 ($501-$600)) is made at $550.50.
    Every year, we receive several requests for higher payment amounts 
under the New Technology APCs for specific procedures paid under the 
OPPS because they require the use of expensive equipment. As we did in 
the CY 2018 OPPS/ASC proposed rule, we are taking this opportunity to 
reiterate our response, in general, to the issue of hospitals' capital 
expenditures as they relate to the OPPS and Medicare, as specified in 
the CY 2016 OPPS/ASC final rule with comment period (80 FR 70374).
    Under the OPPS, one of our goals is to make payments that are 
appropriate for the services that are necessary for the treatment of 
Medicare beneficiaries. The OPPS, like other Medicare payment systems, 
is budget neutral and increases are limited to the annual hospital 
inpatient market basket increase. We believe that our payment rates 
generally reflect the costs that are associated with providing care to 
Medicare beneficiaries. Furthermore, we believe that our payment rates 
are adequate to ensure access to services (80 FR 70374).
    For many emerging technologies, there is a transitional period 
during which utilization may be low, often because providers are first 
learning about the techniques and their clinical utility. Quite often, 
parties request that Medicare make higher payment amounts under the New 
Technology APCs for new procedures in that transitional phase. These 
requests, and their accompanying estimates for expected total patient 
utilization, often reflect very low rates of patient use of expensive 
equipment, resulting in high per use costs for which requesters believe 
Medicare should make full payment. Medicare does not, and we believe 
should not, assume responsibility for more than its share of the costs 
of procedures based on projected utilization for Medicare beneficiaries 
and does not set its payment rates based on initial projections of low 
utilization for services that require expensive capital equipment. For 
the OPPS, we rely on hospitals to make informed business decisions 
regarding the acquisition of high-cost capital equipment, taking into 
consideration their knowledge about their entire patient base (Medicare 
beneficiaries included) and an understanding of Medicare's and other 
payers' payment policies. (We refer readers to the CY 2013 OPPS/ASC 
final rule with comment period (77 FR 68314) for further discussion 
regarding this payment policy.)
    We note that, in a budget neutral environment, payments may not 
fully cover hospitals' costs in a particular circumstance, including 
those for the purchase and maintenance of capital equipment. We rely on 
hospitals to make their decisions regarding the acquisition of high-
cost equipment with the understanding that the Medicare program must be 
careful to establish its

[[Page 59278]]

initial payment rates, including those made through New Technology 
APCs, for new services that lack hospital claims data based on 
realistic utilization projections for all such services delivered in 
cost-efficient hospital outpatient settings. As the OPPS acquires 
claims data regarding hospital costs associated with new procedures, we 
regularly examine the claims data and any available new information 
regarding the clinical aspects of new procedures to confirm that our 
OPPS payments remain appropriate for procedures as they transition into 
mainstream medical practice (77 FR 68314).
2. Revised and Additional New Technology APC Groups
    As stated earlier, for CY 2017, there are currently 51 levels of 
New Technology APCs. To improve our ability to have payments for 
services over $100,000 more closely match the cost of the service, in 
the CY 2018 OPPS/ASC proposed rule (82 FR 33606), for CY 2018, we 
proposed to narrow the increments for New Technology APCs 1901-1906 
from $19,999 cost bands to $14,999 cost bands. We also proposed to add 
New Technology APCs 1907 and 1908 (New Technology Level 52 ($145,001-
$160,000), which would allow for an appropriate payment of retinal 
prosthesis implantation procedures, which is discussed later in this 
section. Table 17 of the proposed rule included the complete list of 
the proposed modified and additional New Technology APC groups for CY 
2018.
    We did not receive any public comments on our proposal. Therefore, 
we are finalizing the proposal, without modification. Table 15 below 
includes the complete list of the final modified and additional New 
Technology APC groups for CY 2018.

                             Table 15--CY 2018 Additional New Technology APC Groups
----------------------------------------------------------------------------------------------------------------
          CY 2018 APC                    CY 2018 APC title             CY 2018 SI         Updated or new APC
----------------------------------------------------------------------------------------------------------------
1901...........................  New Technology--Level 49                        S   Updated.
                                  ($100,001-$115,000).
1902...........................  New Technology--Level 49                        T   Updated.
                                  ($100,001-$115,000).
1903...........................  New Technology--Level 50                        S   Updated.
                                  ($115,001-$130,000).
1904...........................  New Technology--Level 50                        T   Updated.
                                  ($115,001-$130,000).
1905...........................  New Technology--Level 51                        S   Updated.
                                  ($130,001-$145,000).
1906...........................  New Technology--Level 51                        T   Updated.
                                  ($130,001-$145,000).
1907...........................  New Technology--Level 52                        S   New.
                                  ($145,001-$160,000).
1908...........................  New Technology--Level 52                        T   New.
                                  ($145,001-$160,000).
----------------------------------------------------------------------------------------------------------------

    The final payment rates for New Technology APCs 1901 through 1908 
are included in Addendum A to this final rule with comment period 
(which is available via the Internet on the CMS Web site).
3. Procedures Assigned to New Technology APC Groups for CY 2018
    As we explained in the CY 2002 OPPS final rule with comment period 
(66 FR 59902), we generally retain a procedure in the New Technology 
APC to which it is initially assigned until we have obtained sufficient 
claims data to justify reassignment of the procedure to a clinically 
appropriate APC.
    In addition, in cases where we find that our initial New Technology 
APC assignment was based on inaccurate or inadequate information 
(although it was the best information available at the time), where we 
obtain new information that was not available at the time of our 
initial New Technology APC assignment, or where the New Technology APCs 
are restructured, we may, based on more recent resource utilization 
information (including claims data) or the availability of refined New 
Technology APC cost bands, reassign the procedure or service to a 
different New Technology APC that more appropriately reflects its cost 
(66 FR 59903).
    Consistent with our current policy, for CY 2018, in the CY 2018 
OPPS/ASC proposed rule (82 FR 33606), we proposed to retain services 
within New Technology APC groups until we obtain sufficient claims data 
to justify reassignment of the service to a clinically appropriate APC. 
The flexibility associated with this policy allows us to reassign a 
service from a New Technology APC in less than 2 years if sufficient 
claims data are available. It also allows us to retain a service in a 
New Technology APC for more than 2 years if sufficient claims data upon 
which to base a decision for reassignment have not been obtained (66 FR 
59902).
a. Magnetic Resonance-Guided Focused Ultrasound Surgery (MRgFUS) (APCs 
1537, 5114, and 5414)
    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33607), 
currently, there are four CPT/HCPCS codes that describe magnetic 
resonance image guided high intensity focused ultrasound (MRgFUS) 
procedures, three of which we proposed to continue to assign to 
standard APCs and one of which we proposed to continue to assign to a 
New Technology APC for CY 2018. These codes include CPT codes 0071T, 
0072T, and 0398T, and HCPCS code C9734. CPT codes 0071T and 0072T are 
used for the treatment of uterine fibroids, CPT code 0398T is used for 
the treatment of essential tremor, and HCPCS code C9734 is used for 
pain palliation for metastatic bone cancer.
    As shown in Table 18 of the proposed rule, and as listed in 
Addendum B of the CY 2018 OPPS/ASC proposed rule, we proposed to 
continue to assign CPT codes 0071T and 0072T to APC 5414 (Level 4 
Gynecologic Procedures), with a proposed payment rate of approximately 
$2,189 for CY 2018. We also proposed to continue to assign the APC to 
status indicator ``J1'' (Hospital Part B services paid through a 
comprehensive APC) to indicate that all covered Part B services on the 
claim are packaged with the payment for the primary ``J1'' service for 
the claim, except for services assigned to OPPS status indicator ``F'', 
``G'', ``H'', ``L'', and ``U''; ambulance services; diagnostic and 
screening mammography; all preventive services; and certain Part B 
inpatient services. In addition, we proposed to continue to assign 
HCPCS code C9734 (Focused ultrasound ablation/therapeutic intervention, 
other than uterine leiomyomata, with magnetic resonance (mr) guidance) 
to APC 5114 (Level 4 Musculoskeletal Procedures), with a proposed 
payment rate of approximately $5,385 for CY 2018. We also proposed to 
continue to assign HCPCS code C9734 to status indicator ``J1''.
    Further, we proposed to continue to assign CPT code 0398T to APC 
1537 (New Technology--Level 37 ($9,501-

[[Page 59279]]

$10,000)), with a proposed payment rate of $9,750.50 for CY 2018. At 
the time the proposed rule was developed, there was only one claim for 
CPT code 0398T with a geometric mean cost of $27,516. We referred 
readers to Addendum B to the proposed rule for the proposed payment 
rates for all codes reportable under the OPPS. Addendum B is available 
via the Internet on the CMS Web site.
    Comment: Several commenters stated that the proposed payment rate 
for CPT code 0398T is too low and recommended that CPT code 0398T be 
assigned to either New Technology APC 1578 (New Technology--Level 41 
($25,001-$30,000)) or APC 5464 (Level 4 Neurostimulator and Related 
Procedures), which have payment rates closer to the reported cost of 
the procedure of $27,500 based on the one claim available at the time 
of the development of the proposed rule. Commenters also noted that the 
resources required for the procedure described by CPT code 0398T are 
substantially more than the resources required for the procedure 
described by CPT code C9734, which had been used by CMS to attempt to 
model the cost of the procedure described by CPT code 0398T.
    Response: We appreciate the concerns of the commenters and, for the 
reasons set forth below, agree that the proposed payment rate for CPT 
code 0398T may be too low and the procedure should be reassigned to a 
different APC. The proposed payment rate for CPT code 0398T was based 
on the payment rate for HCPCS code C9734 because the MRgFUS equipment 
used in the performance of the procedure described by CPT code 0398T is 
very similar to the MRgFUS equipment used in the performance of the 
procedure described by HCPCS code C9734. Both machines are made by the 
same manufacturer (81 FR 79642). However, based on information from the 
manufacturer, resources involved for the procedure described by CPT 
code 0398T appear to be higher than those involved for the procedure 
described by HCPCS code C9734. In addition, we still have concerns that 
the costs reported from the one claim for the procedure described by 
CPT code 0398T may not accurately reflect the geometric mean costs of 
the procedure. However, the geometric mean cost of $29,254 for the one 
claim means the cost of CPT code 0398T is substantially higher than the 
proposed payment rate of $9,750.50. We note that, for CY 2017, the 
manufacturer indicated that an appropriate payment for the procedure 
described by CPT code 0398T would be approximately $18,000 and that 
either a New Technology APC paying that amount or assignment to 
clinical APC 5463 (Level 3 Neurostimulator and Related Procedures) 
would be appropriate. Based on the presence of only one claim along 
with the reported costs associated with the procedure described by CPT 
code 0398T presented to us last year by the manufacturer, we believe 
that it is appropriate to assign the procedure described by CPT code 
0398T to APC 1576 (New Technology--Level 39 ($15,001-$20,000)), with a 
payment rate of $17,500.50 for CY 2018. The continued New Technology 
APC assignment will allow time to collect more claims data before 
assigning CPT code 0398T to a clinical APC.
    Comment: One commenter supported the proposal to assign CPT code 
C9734 to APC 5114.
    Response: We appreciate the commenter's support.
    In summary, after consideration of the public comments we received, 
we are modifying our proposal for the APC assignment of CPT code 0398T. 
Instead of continuing to assign this code to New Technology APC 1537 
(New Technology--Level 37 ($9,501-$10,000)), with a payment rate of 
$9,750.50, for CY 2018, we are reassigning CPT code 0398T to New 
Technology APC 1576 (New Technology--Level 39 ($15,001-$20,000)), with 
a payment rate of $17,500.50. In addition, we are finalizing our 
proposal, without modification, to reassign HCPCS code C9734 to APC 
5114. We did not receive any public comments related to our proposal 
for CPT codes 0071T and 0072T. Therefore, we are finalizing our 
proposal to continue to assign these CPT codes to APC 5414 without 
modification. Table 16 below lists the final CY 2018 status indicator 
and APC assignments for the magnetic resonance image guided high 
intensity focused ultrasound (MRgFUS) procedures. We refer readers to 
Addendum B of this final rule with comment period for the final payment 
rates for all codes reportable under the OPPS. Addendum B is available 
via the Internet on the CMS Web site.

Table 16--CY 2018 Status Indicator (SI) and APC Assignment for the Magnetic Resonance Image Guided High Intensity Focused Ultrasound (MRgFUS) Procedures
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       CY 2017
                                                          CY 2017 OPPS    CY 2017        OPPS     CY 2018 OPPS    CY 2018
      CPT/HCPCS code               Long descriptor             SI         OPPS APC     payment         SI         OPPS APC    CY 2018 OPPS payment rate
                                                                                         rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
0071T.....................  Focused ultrasound ablation            J1          5414    $2,084.59           J1          5414  Refer to OPPS Addendum B.
                             of uterine leiomyomata,
                             including mr guidance;
                             total leiomyomata volume
                             less than 200 cc of tissue.
0072T.....................  Focused ultrasound ablation            J1          5414     2,084.59           J1          5414  Refer to OPPS Addendum B.
                             of uterine leiomyomata,
                             including mr guidance;
                             total leiomyomata volume
                             greater or equal to 200 cc
                             of tissue.
0398T.....................  Magnetic resonance image                S          1537     9,750.50            S          1576  Refer to OPPS Addendum B.
                             guided high intensity
                             focused ultrasound
                             (mrgfus), stereotactic
                             ablation lesion,
                             intracranial for movement
                             disorder including
                             stereotactic navigation and
                             frame placement when
                             performed.

[[Page 59280]]

 
C9734.....................  Focused ultrasound ablation/           J1          5114     5,219.36           J1          5114  Refer to OPPS Addendum B.
                             therapeutic intervention,
                             other than uterine
                             leiomyomata, with magnetic
                             resonance (mr) guidance.
--------------------------------------------------------------------------------------------------------------------------------------------------------

c. Retinal Prosthesis Implant Procedure
    CPT code 0100T (Placement of a subconjunctival retinal prosthesis 
receiver and pulse generator, and implantation of intra-ocular retinal 
electrode array, with vitrectomy) describes the implantation of a 
retinal prosthesis, specifically, a procedure involving the use of the 
Argus[supreg] II Retinal Prosthesis System. This first retinal 
prosthesis was approved by the FDA in 2013 for adult patients diagnosed 
with advanced retinitis pigmentosa. Pass-through payment status was 
granted for the Argus[supreg] II device under HCPCS code C1841 (Retinal 
prosthesis, includes all internal and external components) beginning 
October 1, 2013, and this status expired on December 31, 2015. We note 
that after pass-through payment status expires for a medical device, 
the payment for the device is packaged into the payment for the 
associated surgical procedure. Consequently, for CY 2016, the device 
described by HCPCS code C1841 was assigned to OPPS status indicator 
``N'' to indicate that payment for the device is packaged and included 
in the payment rate for the surgical procedure described by CPT code 
0100T. For CY 2016, CPT code 0100T was assigned to New Technology APC 
1599 with a payment rate of $95,000, which was the highest paying New 
Technology APC for that year. This payment includes both the surgical 
procedure (CPT code 0100T) and the use of the Argus[supreg] II device 
(HCPCS code C1841). However, stakeholders (including the device 
manufacturer and hospitals) believed that the CY 2016 payment rate for 
the procedure involving the Argus[supreg] II System was insufficient to 
cover the hospital cost of performing the procedure, which includes the 
cost of the retinal prosthesis with a retail price of approximately 
$145,000.
    For CY 2017, analysis of the CY 2015 OPPS claims data used for the 
CY 2017 final rule with comment period showed 9 single claims (out of 
13 total claims) for CPT code 0100T, with a geometric mean cost of 
approximately $142,003 based on claims submitted between January 1, 
2015, through December 31, 2015, and processed through June 30, 2016. 
Based on the CY 2015 OPPS claims data available for the final rule with 
comment period and our understanding of the Argus[supreg] II procedure, 
we reassigned CPT code 0100T from New Technology APC 1599 to New 
Technology APC 1906, with a final payment rate of $150,000.50 for CY 
2017. We noted that this payment rate included the cost of both the 
surgical procedure (CPT code 0100T) and the retinal prosthesis device 
(HCPCS code C1841).
    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33607 
through 33608), for the CY 2018 update, analysis of the CY 2016 OPPS 
claims data used for the CY 2018 proposed rule showed 3 single claims 
(out of 3 total claims) for CPT code 0100T, with a geometric mean cost 
of approximately $116,239 based on the claims submitted between January 
1, 2016 through December 31, 2016, and processed through December 31, 
2016. We stated in the proposed rule that, for the CY 2018 OPPS/ASC 
final rule with comment period, the final payment rate would be based 
on claims submitted between January 1, 2016 and December 31, 2016, and 
processed through June 30, 2017.
    In the proposed rule, based on the CY 2016 OPPS claims data 
available, which showed a geometric mean cost of approximately 
$116,239, we proposed to reassign the Argus[supreg] II procedure to a 
New Technology APC with a payment band that covers the geometric mean 
cost of the procedure. Therefore, we proposed to reassign CPT code 
0100T to APC 1904 (New Technology--Level 50 ($115,001-$130,000)), with 
a proposed payment of $122,500.50 for CY 2018. We invited public 
comments on this proposal.
    Comment: One commenter, the manufacturer, opposed the proposal to 
reassign CPT code 0100T to APC 1904, with a proposed payment of 
$122,500.50 for CY 2018. Instead, the commenter requested that CMS 
reassign CPT code 0100T to a New Technology APC that would establish a 
payment rate near the CY 2017 payment rate of $150,000.50. The 
commenter stated that the estimated cost of the service generated from 
3 claims reported in CY 2016 is much lower than the actual cost of the 
procedure. The commenter believed the lower cost of the procedure 
described by CPT code 0100T is a result of CMS' decision to set the 
payment rate of the procedure at $95,000 for CY 2016 based on 2 claims, 
for which the submitting hospital stated the charges reported were 
mistakenly low. The commenter asserted that the lower payment rate 
forced the manufacturer of the Argus[supreg] II to provide a 
substantial discount for the device, which is reflected in the lower 
reported cost for the Argus[supreg] II procedure in CY 2016. This 
commenter and a second commenter were concerned with the high level of 
variation in payment for a low volume service like the Argus[supreg] II 
procedure from year to year. The commenters requested payment of 
approximately $150,000 for CPT code 0100T in CY 2018 to break the cycle 
of extremely volatile year-to-year shifts of the payment for the 
procedure described by this CPT code and noted its expectation that 
claims for CY 2017 (which would be used for the CY 2019 rulemaking) 
would reflect a significantly higher average cost than those for CY 
2016.
    Response: We understand the concerns of the commenters. The 
reported cost of the Argus[supreg] II procedure based on the updated CY 
2016 hospital outpatient claims data, which include additional claims 
received after issuance of the CY 2018 proposed rule and finalized as 
of June 30, 2017, is approximately $94,455, which is more than $55,000 
less than the payment rate for the procedure in CY 2017. We note that 
the costs of the Argus[supreg] II procedure are extraordinarily high 
compared to many other procedures paid under the OPPS. In addition, the 
number of claims

[[Page 59281]]

submitted has, to date, been very low and has not exceeded 10 claims. 
We believe it is important to mitigate significant payment differences, 
especially shifts of several tens of thousands of dollars, while also 
basing payment rates on available costs information and claims data. In 
CY 2016, the payment rate for the Argus[supreg] II procedure was 
$95,000.50. The payment rate increased to $150,000.50 in CY 2017. For 
CY 2018, we proposed a payment rate of $122,500.50 based on the most 
recent claims data available at the time of the development of the 
proposed rule. However, if we were to assign the payment rate based on 
updated final rule claims data, the payment rate would decrease, to 
$95,000.50 for CY 2018, a decrease of $55,000 relative to CY 2017. We 
are concerned that these large changes in payment could potentially 
create an access to care issue for the Argus[supreg] II procedure. 
While we believe that the proposed payment rate of $122,500.50 is a 
significant decrease, we believe that it would be appropriate to 
finalize the proposed rate to mitigate a much sharper decline in 
payment from one year to the next (as well as from the proposed rule to 
the final rule).
    In accordance with section 1833(t)(2)(B) of the Act, we must 
establish that services classified within each APC are comparable 
clinically and with respect to the use of resources. Accordingly, we 
are using our equitable adjustment authority under section 
1833(t)(2)(E) of the Act, which states that the Secretary shall 
establish, in a budget neutral manner, other adjustments as determined 
to be necessary to ensure equitable payments, to maintain the proposed 
rate for this procedure, despite the lower geometric mean costs 
available in the claims data used for this final rule with comment 
period. As stated earlier, we believe that this situation is unique, 
given the high cost and very limited number of claims for the 
procedure. Therefore, for CY 2018, we are reassigning the Argus[supreg] 
II procedure to APC 1904 (New Technology--Level 50 ($115,001-
$130,000)). This APC assignment will establish a payment rate for the 
Argus[supreg] II procedure of $122,500.50, which is the arithmetic mean 
of the payment rates for the service for CY 2016 and CY 2017. As we do 
each year, we acquire claims data regarding hospital costs associated 
with new procedures. We regularly examine the claims data and any 
available new information regarding the clinical aspects of new 
procedures to confirm that our OPPS payments remain appropriate for 
procedures like the Argus[supreg] II procedure as they transition into 
mainstream medical practice (77 FR 68314).
    After consideration of the public comments we received, we are 
finalizing our proposal to reassign CPT code 0100T to APC 1904 through 
use of our equitable adjustment authority. We are reassigning CPT code 
0100T from APC 1906 (New Technology--Level 51 ($140,001-$160,000)), 
which has a final payment rate of $150,000.50 for CY 2017, to APC 1904 
(New Technology--Level 50 $115,001-$130,000)), which has a final 
payment rate of $122,500.50 for CY 2018. We note this payment includes 
both the surgical procedure (CPT code 0100T) and the use of the 
Argus[supreg] II device (HCPCS code C1841).
d. Pathogen Test for Platelets
    As stated in the CY 2018 OPPS/ASC proposed rule (82 FR 33608), the 
CMS HCPCS Workgroup established HCPCS code Q9987 (Pathogen(s) test for 
platelets), effective July 1, 2017. HCPCS code Q9987 will be used to 
report any test used to identify bacterial or other pathogen 
contamination in blood platelets. Currently, there is one test approved 
by the FDA that is described by HCPCS code Q9987. The test is a rapid 
bacterial test, and the manufacturer estimates the cost of the test to 
be between $26 and $35. HCPCS code Q9987 was established after concerns 
from blood and blood product stakeholders that the previous CPT code 
used to describe pathogen tests for platelets, CPT code P9072 
(Platelets, pheresis, pathogen reduced or rapid bacterial tested, each 
unit), inappropriately described rapid bacterial testing by combining 
the test with the pathogen reduction of platelets. CPT code P9072 is 
inactive effective on July 1, 2017.
    In the CY 2018 OPPS/ASC proposed rule, we sought more information 
on the actual costs of pathogen tests for platelets before assigning 
HCPCS code Q9987 to a clinical APC. Effective July 1, 2017, HCPCS code 
Q9987 is assigned to New Technology APC 1493 (New Technology--Level 1C 
($21-$30)), with a payment rate of $25.50. We proposed to continue to 
assign HCPCS code Q9987 to New Technology APC 1493, with a proposed 
payment rate of $25.50, until such time as claims data are available to 
support the assignment to a clinical APC. We invited public comments on 
this proposal.
    Comment: Two commenters supported the proposal to continue to 
provide separate payment for HCPCS code Q9987.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to continue separate payment for HCPCS code 
Q9987 for CY 2018, with a modification that HCPCS code Q9987 will be 
replaced by HCPCS code P9100 (Pathogen(s) test for platelets). Table 17 
below contains more information on the coding change.

                      Table 17--Replacement Code for HCPCS Code Q9987 as of January 1, 2018
----------------------------------------------------------------------------------------------------------------
                                                                CY 2018 long      Final CY 2018    Final CY 2018
        CY 2017 HCPCS code            CY 2018 HCPCS code         descriptor             SI              APC
----------------------------------------------------------------------------------------------------------------
Q9987............................  P9100..................  Pathogen(s) test                  S             1493
                                                             for platelets.
----------------------------------------------------------------------------------------------------------------

e. Fractional Flow Reserve Derived From Computed Tomography 
(FFRCT)
    For CY 2018, the AMA CPT Editorial Panel established four new CPT 
codes for fractional flow reserve derived from computed tomography 
(FFRCT). Table 18 below lists the new CPT codes along with 
their complete descriptors. These codes were listed in Addendum B and 
Addendum O to the CY 2018 OPPS/ASC proposed rule (which is available 
via the Internet on the CMS Web site). Addendum B included the proposed 
status indicator assignments for the new codes and their assignment to 
comment indicator ``NP'' (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, proposed APC 
assignment; comments will be accepted on the proposed APC assignment 
for the new code). Addendum O included the proposed/placeholder CY 2018 
CPT codes and the long descriptors.
    We note that the CPT code descriptors that appeared in Addendum B 
were short descriptors and did not fully describe the complete 
procedure,

[[Page 59282]]

service, or item identified for the CPT codes. Therefore, we included 
the 5-digit placeholder codes and their long descriptors in Addendum O 
to the proposed rule, specifically under the column labeled ``CY 2018 
OPPS/ASC Proposed Rule 5-Digit AMA Placeholder Code,'' so that the 
public could adequately comment on our proposed APC and status 
indicator assignments. We also indicated that the final CPT code 
numbers would be included in this CY 2018 OPPS/ASC final rule with 
comment period. The final CPT code numbers, along with their 
corresponding 5-digit placeholder codes, can be found in Table 19 
below.
    As displayed in Table 18 and in Addendum B of the CY 2018 OPPS/ASC 
proposed rule, we proposed to assign CPT codes 0501T and 0504T to 
status indicator ``M'' (Not paid under OPPS; Items and Services Not 
Billable to the MAC) to indicate that these services are not paid under 
the OPPS, and to assign CPT codes 0502T and 0503T to status indicator 
``N'' (packaged) to indicate that the payment for these services is 
packaged into the primary service or procedure that is reported with 
the codes.

  Table 18--Proposed CY 2018 Status Indicator (SI) Assignment for the New FFRCT CPT Codes Effective January 1,
                                                      2018
----------------------------------------------------------------------------------------------------------------
                           CY 2018 OPPS/ASC                                             Proposed CY  Proposed CY
       CPT code              proposed rule           Long descriptor       Proposed CY   2018 OPPS    2018 OPPS
                           placeholder code                               2018 OPPS SI      APC        payment
----------------------------------------------------------------------------------------------------------------
0501T.................  02X4T.................  Non-invasive estimated              M           N/A          N/A
                                                 coronary fractional
                                                 flow reserve (FFR)
                                                 derived from coronary
                                                 computed tomography
                                                 angiography data using
                                                 computation fluid
                                                 dynamics physiologic
                                                 simulation software
                                                 analysis of functional
                                                 data to assess the
                                                 severity of coronary
                                                 artery disease; data
                                                 preparation and
                                                 transmission, analysis
                                                 of fluid dynamics and
                                                 simulated maximal
                                                 coronary hyperemia,
                                                 generation of estimated
                                                 FFR model, with
                                                 anatomical data review
                                                 in comparison with
                                                 estimated FFR model to
                                                 reconcile discordant
                                                 data, interpretation
                                                 and report.
0502T.................  02X5T.................  Non-invasive estimated              N           N/A          N/A
                                                 coronary fractional
                                                 flow reserve (FFR)
                                                 derived from coronary
                                                 computed tomography
                                                 angiography data using
                                                 computation fluid
                                                 dynamics physiologic
                                                 simulation software
                                                 analysis of functional
                                                 data to assess the
                                                 severity of coronary
                                                 artery disease; data
                                                 preparation and
                                                 transmission.
0503T.................  02X6T.................  Non-invasive estimated              N           N/A          N/A
                                                 coronary fractional
                                                 flow reserve (FFR)
                                                 derived from coronary
                                                 computed tomography
                                                 angiography data using
                                                 computation fluid
                                                 dynamics physiologic
                                                 simulation software
                                                 analysis of functional
                                                 data to assess the
                                                 severity of coronary
                                                 artery disease;
                                                 analysis of fluid
                                                 dynamics and simulated
                                                 maximal coronary
                                                 hyperemia, and
                                                 generation of estimated
                                                 FFR model.
0504T.................  02X7T.................  Non-invasive estimated              M           N/A          N/A
                                                 coronary fractional
                                                 flow reserve (FFR)
                                                 derived from coronary
                                                 computed tomography
                                                 angiography data using
                                                 computation fluid
                                                 dynamics physiologic
                                                 simulation software
                                                 analysis of functional
                                                 data to assess the
                                                 severity of coronary
                                                 artery disease;
                                                 anatomical data review
                                                 in comparison with
                                                 estimated FFR model to
                                                 reconcile discordant
                                                 data, interpretation
                                                 and report.
----------------------------------------------------------------------------------------------------------------

    According to the FDA, FFRCT uses post-processing 
software to create ``a mathematically derived quantity, computed from 
simulated pressure, velocity and blood flow information obtained from a 
3D computer model generated from static coronary CT images.'' \1\ 
FFRCT is performed outside the outpatient hospital setting 
by HeartFlow, which uses proprietary software to conduct the analysis. 
Hospital outpatient providers use industry-leading protocols and 
technologies at every step to ensure protection of patient data and 
that the CT images are securely transferred to HeartFlow.\2\ After 
FFRCT is performed, a report is generated that provides 
fractional flow reserve values throughout the coronary blood vessels, 
which allows providers to determine treatment strategies based on the 
findings of the report while considering the patient's medical history, 
symptoms, and results of other diagnostic tests.
---------------------------------------------------------------------------

    \1\ Available at: https://www.accessdata.fda.gov/cdrh_docs/reviews/DEN130045.pdf, page 1.
    \2\ Available at: http://www.heartflow.com/.
---------------------------------------------------------------------------

    The developer of FFRCT first submitted an application 
for the procedure to be given a temporary procedure code and assigned 
to a New Technology APC in March 2016. CMS denied the developer's 
application because we considered the FFRCT procedure to be 
an image guidance, processing, supervision, or interpretation service 
whose payment should be packaged into the payment for the related 
computed tomography service, in accordance with our regulations at 42 
CFR 419.2(b)(13). The developer then filed a New Technology APC 
reconsideration request in March 2017 asking that CMS reverse its 
denial of the developer's application to have the FFRCT 
assigned to a New Technology APC. We reviewed the reconsideration 
request and denied the request for the same reason as we did in March 
2016.
    In a New Technology APC application for HeartFlow for CY 2018, the 
developer of the FFRCT service proposed that the service be 
reported with CPT code 0503T (Non-invasive estimated coronary 
fractional flow reserve (FFR) derived from coronary computed tomography 
angiography data using computation fluid dynamics physiologic 
simulation software analysis of functional data to assess the severity 
of

[[Page 59283]]

coronary artery disease; analysis of fluid dynamics and simulated 
maximal coronary hyperemia, and generation of estimated FFR model) and 
requested that the service be assigned to APC 1517 (New Technology--
Level 17 ($1501-$1600)), with a payment rate of $1,550.50. Because both 
the initial New Technology APC application and the reconsideration 
request were denied, we did not describe the associated New Technology 
APC application for HeartFlow in the CY 2018 OPPS/ASC proposed rule.
    Comment: Several commenters, including the developer of HeartFlow 
and some clinicians who have experience with it, supported having a 
FFRCT service paid as a separate service and not packaged 
into the payment for the coronary computed tomography angiography. The 
commenters stated that FFRCT is performed separately from a 
coronary computed tomography angiography by an independent testing 
company that is not affiliated with any outpatient hospital provider 
and is performed at locations owned by the testing company. These 
commenters noted that the service may be performed several days or 
weeks after the original coronary computed tomography angiography is 
performed. Also, commenters noted that several physician societies 
involved in cardiac care recognize FFRCT as a separate 
service from a coronary computed tomography angiography and requested 
that new CPT codes 0501T, 0502T, 0503T, and 0504T be established for 
FFRCT services, effective January 1, 2018. The commenters 
stated that the physician societies and the AMA determined that a 
coronary computed tomography angiography and a FFRCT service 
are not connected services.
    Commenters asserted that a FFRCT service provides 
information that cannot be obtained from standard analysis of a 
coronary computed tomography angiography image. Several commenters 
stated that FFRCT services can improve the quality of 
screening for coronary artery disease (CAD) while reducing costs. That 
is, the commenters stated that, unlike a coronary computed tomography 
angiography service, which merely produces images, the FFRCT 
service is able to directly produce FFRCT values by creating 
a 3-D model of the patient's coronary arteries using the previously 
acquired image. Moreover, the commenters contended that, because the 
FFRCT service does not produce images, it is improper to 
package the costs of FFRCT into the payment for the 
associated coronary computed tomography angiography service.
    Commenters stated that, many times, a coronary computed tomography 
angiography indicates that a beneficiary may potentially have CAD and 
that without FFRCT, providers will often request an invasive 
coronary angiogram to verify the presence of CAD. In many cases, the 
invasive coronary angiogram finds no occurrence of CAD. 
FFRCT services can provide analytic services not otherwise 
available to determine fractional flow rates in coronary arteries using 
the original coronary computed tomography angiography image and show 
whether a beneficiary has CAD without performing a coronary procedure.
    The developer also stated that hospitals incur a cost charged by 
HeartFlow of $1,500 to perform the FFRCT analysis, and 
certain other modest costs (for example, overhead for interpretation 
and entering results into medical record). Therefore, the commenters 
stated that bundling the payment for FFRCT with the payment 
for the coronary computed tomography angiography imaging service would 
prevent hospitals from using FFRCT because the payment rate 
for the bundled coronary computed tomography angiography service would 
be less than $300. One commenter (the developer) requested that the 
service be assigned to APC 1517 (New Technology--Level 17 ($1501-
$1600)), with a payment rate of $1,550.50.
    Some commenters, including the developer, stated that CMS did not 
properly interpret the regulation at 42 CFR 419.2(b)(13) in its 
previous decisions to deny the FFRCT application and 
reconsideration request to receive separate payment in a New Technology 
APC. Specifically, the FFRCT developer and other commenters 
stated that the FFRCT service was not an image guidance 
service because CMS stated in prior preamble language that an image 
guidance service must produce images. The commenters stated that a 
FFRCT service does not produce images, but instead produces 
FFR values. They stated that the FFRCT service is also not 
an image processing service because such processing services help to 
compile diagnostic data to create an image, and noted that, although 
the FFRCT service analyzes image data, it is not used to 
construct an anatomic image. In addition, the commenters asserted that 
the FFRCT service is not an imaging supervision or 
interpretation service. The commenters believed that imaging 
supervision and interpretation services should be performed on the same 
day and at the provider location as the independent imaging service; 
whereas the FFRCT service can be performed days or weeks 
after the original coronary computed tomography angiography service is 
performed and is performed in a specialized location outside of 
hospital. In addition, the commenters stated that imaging supervision 
and interpretation services are for radiological services that are 
mostly billed with the CPT radiological code set (CPT codes 70000-
79999) and the FFRCT service is not a radiological service 
and does not involve supervision or interpretation.
    Response: We appreciate the comments we have received about the 
FFRCT service. We have reviewed our image packaging 
regulations under 42 CFR 419.2(b)(13). This regulation states, in 
relevant part, that in determining the packaged costs for hospital 
outpatient prospective payment rates, the prospective payment system 
establishes a national payment rate, standardized for geographic wage 
differences, that includes operating and capital-related costs that are 
integral, ancillary, supportive, dependent, or adjunctive to performing 
a procedure or furnishing a service on an outpatient basis. In general, 
these packaged costs may include, but are not limited to, among other 
items and services, image guidance, processing, supervision, and 
interpretation services, the payment for which are packaged or 
conditionally packaged into the payment for the related procedures or 
services.
    After reviewing the public comments, we agree with the commenters 
that the FFRCT service is not image guidance or supervision 
because FFRCT does not produce images, does not appear to be 
a supportive guidance service that aids in the performance of an 
independent procedure, and, unlike typical supervision services, is not 
generally reported when the initial image is acquired. However, we are 
concerned that it may be image processing and/or interpretation. We 
discuss these concerns below.
    With respect to image processing, in the CY 2008 OPPS/ASC interim 
and final rule with comment period, we stated that an ``image 
processing service processes and integrates diagnostic test data that 
were captured during another independent procedure, usually one that is 
separately payable under the OPPS. The image processing service is not 
necessarily provided on the same date of service as the independent 
procedure. In fact, several of the image processing services that we 
proposed to package for CY 2008 do not need to be provided face-to-face 
with the patient in the same encounter as the independent service'' (72 
FR 66625). In addition, we stated that we believed it was important

[[Page 59284]]

to package payment for supportive dependent services that accompany 
independent services but that may not need to be provided face-to-face 
with the patient in the same encounter because the supportive services 
utilize data that were collected during the preceding independent 
services and packaging their payment encourages the most efficient use 
of hospital resources. We noted that we were particularly concerned 
with any OPPS payment policies that could encourage certain inefficient 
and more costly service patterns. In addition, we stated that packaging 
encourages hospitals to establish protocols that ensure that services 
are furnished only when they are medically necessary and to carefully 
scrutinize the services ordered by practitioners to minimize 
unnecessary use of hospital resources (72 FR 66625).
    FFRCT services necessarily require the use of the prior 
coronary computed tomography angiography image; the fact that the 
FFRCT service is done on a different date, at a different 
site, and by nonhospital staff does not, in and of itself, mean that 
the service is separate and distinct, from the CCTA. This is especially 
true because it is using a prior image acquired by the hospital for the 
patient and is used for the same purpose to diagnose CAD.
    With respect to imaging interpretation, as stated in the CY 2008 
OPPS/ASC final rule with comment period (72 FR 66630), we define 
``imaging supervision and interpretation codes'' as HCPCS codes for 
services that are defined as ``radiological supervision and 
interpretation'' in the radiology series, codes 70000 through 79999 of 
the book of AMA CPT codes, with the addition of some services in other 
code ranges of CPT, Category III CPT tracking codes, or Level II HCPCS 
codes that are clinically similar or directly crosswalk to codes 
defined as radiological supervision and interpretation services in the 
CPT radiology range. The current CPT FFRCT codes are 
Category III codes, and we believe they may be clinically similar to 
codes in the 70000 through 79999 range of the AMA book of CPT codes.
    Nonetheless, we were persuaded by the commenters that the 
FFRCT service is a separate and distinct service from the 
original coronary computed tomography angiography service and should 
receive separate payment. Specifically, the commenters provided 
additional details since the denial of the new technology 
reconsideration request that FFRCT is not covered by the 
image packaging regulations under 42 CFR 419.2(b)(13). Most of the 
additional detail focuses on whether FFRCT is an image 
processing service. In particular, the FFRCT service 
generates data on FFR values that can only be obtained by performing 
the FFRCT service. Accordingly, we now believe that the 
FFRCT service should not be considered to be an image 
processing service because the diagnostic output of the 
FFRCT service yields functional values (that is, FFR 
values), which reflect the drop in pressure across a narrowing in a 
coronary artery as opposed to anatomic images. The CY 2008 OPPS/ASC 
final rule with comment period (72 FR 66625) states that image 
processing covers ``supportive dependent services to process and 
integrate diagnostic test data in the development of images, indicating 
that an image processing service must help develop or otherwise 
visually enhance an image and the FFRCT service does 
neither. Further, we agree that the quantitative diagnostic information 
about the function of the coronary arteries produced by the 
FFRCT service is not possible to derive from examining 
anatomic images of the arteries. Additionally, we agree with the 
commenters that the FFRCT service does not support the 
diagnostic output of CCTA. Notably, CPT code 0503T does not mention 
processing, interpretation, or supervision. Further, the FDA clearance 
refers to the FFRCT service as ``post-processing image 
analysis software . . . using graphics and text [FFRCT] to 
aid the clinician in the assessment of coronary artery disease.''
    Therefore, we conclude, based on the information available to us at 
this time, that the costs of the FFRCT service, as described 
by CPT code 0503T, should not be a packaged service under the 
regulation at 42 CFR 419.2(b)(13). Accordingly, we are assigning CPT 
code 0503T to a New Technology APC for CY 2018. We remind hospitals 
that, according to the Medicare statute, this service should only be 
furnished when reasonable and medically necessary for the purposes of 
diagnosis of and treatment a Medicare beneficiary.
    In summary, after consideration of the public comments we received, 
we are finalizing our proposal for CPT codes 0501T, 0502T, and 0504T 
without modification. However, for CPT code 0503T, we are finalizing 
our proposal with modification. Specifically, we are reassigning CPT 
code 0503T from packaged status (status indicator ``N'') to New 
Technology APC 1516 (New Technology--Level 16 ($1401-$1500)), with a 
payment rate of $1,450.50 for CY 2018. We note our belief that CPT code 
0503T covers payment for the majority of hospital resources involved in 
the HeartFlow service, and that CPT 0502T, which reflects data 
preparation and transmission, will be packaged under the OPPS.
    Table 19 lists the final status indicator assignments for CPT codes 
0501T, 0502T, 0503T, and 0504T. We refer readers to Addendum B to this 
final rule with comment period for the payment rates for all codes 
reported under the OPPS. In addition, we refer readers to Addendum A to 
this final rule with comment period for the status indicator meanings 
for all codes reported under the OPPS. Both Addendum A and B are 
available via the Internet on the CMS Web site.

[[Page 59285]]



                             Table 19--Final CY 2018 Status Indicator (SI) Assignment for the New FFRCT CPT Codes Effective
                                                                     January 1, 2018
--------------------------------------------------------------------------------------------------------------------------------------------------------
                               CY 2018 OPPS/ASC proposed                                                    CY 2018 OPPS
          CPT code               rule placeholder code            Long descriptor         CY 2018 OPPS SI        APC            CY 2018 OPPS payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
0501T.......................  02X4T......................  Non-invasive estimated                      M              N/A  N/A.
                                                            coronary fractional flow
                                                            reserve (FFR) derived from
                                                            coronary computed tomography
                                                            angiography data using
                                                            computation fluid dynamics
                                                            physiologic simulation
                                                            software analysis of
                                                            functional data to assess
                                                            the severity of coronary
                                                            artery disease; data
                                                            preparation and
                                                            transmission, analysis of
                                                            fluid dynamics and simulated
                                                            maximal coronary hyperemia,
                                                            generation of estimated FFR
                                                            model, with anatomical data
                                                            review in comparison with
                                                            estimated FFR model to
                                                            reconcile discordant data,
                                                            interpretation and report.
0502T.......................  02X5T......................  Non-invasive estimated                      N              N/A  N/A.
                                                            coronary fractional flow
                                                            reserve (FFR) derived from
                                                            coronary computed tomography
                                                            angiography data using
                                                            computation fluid dynamics
                                                            physiologic simulation
                                                            software analysis of
                                                            functional data to assess
                                                            the severity of coronary
                                                            artery disease; data
                                                            preparation and transmission.
0503T.......................  02X6T......................  Non-invasive estimated                      S             1516  Refer to OPPS Addendum B.
                                                            coronary fractional flow
                                                            reserve (FFR) derived from
                                                            coronary computed tomography
                                                            angiography data using
                                                            computation fluid dynamics
                                                            physiologic simulation
                                                            software analysis of
                                                            functional data to assess
                                                            the severity of coronary
                                                            artery disease; analysis of
                                                            fluid dynamics and simulated
                                                            maximal coronary hyperemia,
                                                            and generation of estimated
                                                            FFR model.
0504T.......................  02X7T......................  Non-invasive estimated                      M              N/A  N/A.
                                                            coronary fractional flow
                                                            reserve (FFR) derived from
                                                            coronary computed tomography
                                                            angiography data using
                                                            computation fluid dynamics
                                                            physiologic simulation
                                                            software analysis of
                                                            functional data to assess
                                                            the severity of coronary
                                                            artery disease; anatomical
                                                            data review in comparison
                                                            with estimated FFR model to
                                                            reconcile discordant data,
                                                            interpretation and report.
--------------------------------------------------------------------------------------------------------------------------------------------------------

D. OPPS APC-Specific Policies

1. Blood-Derived Hematopoietic Cell Harvesting
    HCPCS code 38205 describes blood-derived hematopoietic progenitor 
cell harvesting for transplantation, per collection; allogeneic. This 
code represents a donor acquisition cost for an allogeneic 
hematopoietic stem cell transplant (HSCT). In the CY 2010 OPPS/ASC 
final rule with comment period (74 FR 60575), we assigned HCPCS code 
38205 to status indicator ``B'', which indicates that this code is not 
recognized by the OPPS when submitted on an outpatient hospital Part B 
bill (type 12x and 13x).
    In CY 2017, we finalized a C-APC for HSCT (81 FR 79586 through 
79587). Payment for donor acquisition services for HSCT is included in 
the C-APC payment for the allogeneic stem cell transplant when the 
transplant occurs in the hospital outpatient setting. All donor 
acquisition costs, including the costs for HCPCS code 38205, should be 
reported on the same date of service as the transplant procedure (HCPCS 
code 38240 (Hematopoietic progenitor (HPC); allogeneic transplantation 
per donor)) in order to be appropriately packaged for payment purposes. 
Hospitals are instructed to identify services required to acquire stem 
cells from a donor for allogeneic HSCT separately in Field 42 on Form 
CMS-1450 (or UB-04), with revenue code 0815 when an allogeneic stem 
cell transplant occurs. (We refer readers to the Medicare Claims 
Processing Manual (Pub. 100-04), Chapter 4, Section 231.11, and Chapter 
3, Section 90.3.1.)
    There are other donor acquisition costs, namely those costs for the 
procedure described by HCPCS code 38230 (Bone marrow harvesting for 
transplantation; allogeneic), that are assigned to status indicator 
``S''. For consistency and to ensure that the donor acquisition costs 
are captured accurately, in the CY 2018 OPPS/ASC proposed rule (82 FR 
33608), for CY 2018, we proposed to change the status indicator 
assignment for the procedure described by HCPCS code 38205 from ``B'' 
to ``S'', which indicates that the procedure is paid under the OPPS and 
receives separate payment.
    The CY 2016 claims data used for the proposed rule, which included 
claims submitted between January 1, 2016, and December 31, 2016, and 
processed on or before December 31, 2016, showed a geometric mean cost 
of approximately $580 for HCPCS code 38205 based on 2 single claims 
(out of 8 total claims). The procedure described by HCPCS code 38205 
has resource and clinical similarities to procedures assigned to APC 
5242 (Level 2 Blood Product Exchange and Related Services). Therefore, 
we proposed to assign HCPCS code 38205 to APC 5242. We invited public 
comments on these proposals.
    Comment: Several commenters opposed the proposal to change the 
status indicator assignment for the procedure described by HCPCS code 
38205 from ``B'' to ``S''. The commenters stated that this procedure 
represents a donor acquisition cost for allogeneic hematopoietic stem 
cell transplants for

[[Page 59286]]

which Medicare does not make separate payment because hospitals may 
bill and receive payment only for services provided to the Medicare 
beneficiary who is the recipient of the stem cell transplant and whose 
illness is being treated with the stem cell transplant. The commenters 
believed that a change from status indicator ``B'' to ``S'' may 
indicate to providers that they can bill donors for these services and 
lead to potential for erroneous separate payments if this code is 
billed with status indicator ``S''. In addition, the HOP Panel 
recommended that CMS retain status indicator ``B'' for HCPCS code 
38205. The commenters also encouraged CMS to look at the entire series 
of bone marrow and stem cell transplant-related CPT codes to ensure 
consistency in terms of coding, billing guidance, appropriate APC 
assignment, and payment.
    Response: We appreciate the commenters' responses. We believed that 
changing the status indicator assignment from ``B'' to ``S'' for HCPCS 
code 38205 would be consistent with other donor acquisition costs and 
ensure that the donor acquisition costs for allogeneic HSCT are 
captured accurately. However, we agree with the commenters that this 
change could result in erroneous billing or misinterpretations by 
providers.
    After consideration of the public comments we received, we are not 
finalizing our proposal to change the status indicator assignment for 
the procedure described by HCPCS code 38205 from ``B'' to ``S'' and to 
assign HCPCS code 38205 to APC 5242.
2. Brachytherapy Insertion Procedures (C-APCs 5341 and 5092)
a. C-APC 5341 (Abdominal/Peritoneal/Biliary and Related Procedures)
    For CY 2018, as displayed in Table 20 below and in Addendum B to 
the CY 2018 OPPS/ASC proposed rule, we proposed to continue to assign 
CPT code 55920 to C-APC 5341 (Abdominal/Peritoneal/Biliary and Related 
Procedures), with a proposed payment rate of $2,788.26.

                          Table 20--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Code 55920
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2017                               Proposed CY
                                                                          CY 2017 OPPS    CY 2017        OPPS      Proposed CY  Proposed CY   2018 OPPS
               CPT code                         Long descriptor                SI         OPPS APC     payment    2018 OPPS SI   2018 OPPS     payment
                                                                                                         rate                       APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
55920................................  Placement of needles or catheters           J1          5341    $2,861.53           J1          5341    $2,788.26
                                        into pelvic organs and/or
                                        genitalia (except prostate) for
                                        subsequent interstitial
                                        radioelement application.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: Commenters disagreed with the proposed APC assignment for 
CPT code 55920 and recommended that this code be reassigned to an APC 
that includes gynecologic procedures, specifically C-APC 5415 (Level 5 
Gynecologic Procedures). The commenters noted that radiation therapy is 
an important adjuvant treatment for gynecological malignancies and the 
vignette for the procedure described by CPT 55920 describes a 
gynecological implant with a Syed-type intracavitary applicator 
insertion to the vagina, cervix, or female urethra. The commenters 
stated that the procedure described by CPT code 55920 was similar, from 
a clinical and resource perspective, to procedures assigned to C-APC 
5415.
    Response: Our analysis of the final rule updated claims data 
revealed a geometric mean cost of approximately $4,791 for CPT code 
55920 based on 134 single claims (out of 135 total claims), which is 
comparable to the geometric mean cost of approximately $4,109 for C-APC 
5415. The geometric mean cost for C-APC 5341 is approximately $2,909. 
After reviewing the procedures assigned to C-APC 5415, we agree with 
the commenters that CPT code 55920 would be more appropriately 
reassigned to C-APC 5415 based on its clinical homogeneity and resource 
costs.
    After consideration of the public comments we received, we are 
finalizing our CY 2018 proposal with modification. Specifically, we are 
reassigning CPT code 55920 from C-APC 5341 to C-APC 5415 for CY 2018. 
We refer readers to Addendum B to this final rule with comment period 
for the final CY 2018 payment rates for all codes reported under the 
OPPS. In addition, we refer readers to Addendum A to this final rule 
with comment period for the status indicator meanings for all codes 
reported under the OPPS for CY 2018. Both Addendum A and Addendum B are 
available via the Internet on the CMS Web site.
b. C-APC 5092 (Level 2 Breast/Lymphatic Surgery and Related Procedures)
    For CY 2018, as displayed in Table 21 below and in Addendum B to 
the CY 2018 OPPS/ASC proposed rule, we proposed to continue to assign 
CPT code 19298 to C-APC 5092 (Level 2 Breast/Lymphatic Surgery and 
Related Procedures), with a proposed payment rate of $4,616.48.

[[Page 59287]]



                          Table 21--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Code 19298
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2017                               Proposed CY
                                                                          CY 2017 OPPS    CY 2017        OPPS      Proposed CY  Proposed CY   2018 OPPS
             CPT code                          Long descriptor                 SI         OPPS APC     payment    2018 OPPS SI   2018 OPPS     payment
                                                                                                         rate                       APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
19298.............................  Placement of radiotherapy                      J1          5092    $4,417.60           J1          5092    $4,616.48
                                     afterloading brachytherapy
                                     catheters (multiple tube and button
                                     type) into breast for interstitial;
                                     radioelement application following
                                     (at the time of or subsequent to)
                                     partial mastectomy, includes image
                                     guidance).
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: Commenters disagreed with the proposed continued APC 
assignment for CPT code 19298 to C-APC 5092. These commenters stated 
that the CY 2018 proposed payment is inadequate and does not cover the 
costs associated with the surgical placement of the breast 
brachytherapy catheter or the brachytherapy treatment delivery and 
related planning and preparation codes included on the claim. The 
commenters also stated that, previously, both breast brachytherapy 
catheter placement codes 19296 (Breast interstitial radiation 
treatment, delayed (expandable) and 19298 have been assigned to the 
same APC as they are similar clinically and with regard to resource 
cost. The commenters requested that CPT code 19298 be assigned to the 
same C-APC as CPT code 19296 proposed for CY 2018; that is, C-APC 5093 
(Level 3 Breast/Lymphatic Surgery and Related Procedures).
    Response: Our analysis of the final rule updated claims data 
revealed a geometric mean cost of approximately $5,944 for CPT code 
19298 based on 68 single claims (out of 69 total claims). Based on our 
updated analysis, we believe that CPT code 19298 is appropriately 
assigned to C-APC 5092, which has a geometric mean cost of 
approximately $4,809, rather than to C-APC 5093, which has a geometric 
mean cost of approximately $7,383 as suggested by the commenters. In 
addition, our updated analysis showed that the geometric mean cost of 
approximately $5,944 for CPT code 19298 is within the range of the 
significant procedures assigned to C-APC 5092, which is between $4,276 
(for CPT code 19380) and $6,134 (for CPT code 19340).
    After consideration of the public comments we received and based on 
updated claims data, we are finalizing our proposal to continue to 
assign CPT code 19298 to C-APC 5092 for CY 2018.
3. Care Management Coding Changes Effective January 1, 2018 (APCs 5821 
and 5822)
    As noted in the CY 2018 MPFS proposed rule (82 FR 34079), we 
continue to be interested in the ongoing work of the medical community 
to refine the set of codes used to describe care management services, 
including chronic care management. In the CY 2018 OPPS/ASC proposed 
rule (82 FR 33603 and 33604), we proposed to adopt CPT replacement 
codes for CY 2018 for several of the care management services finalized 
last year and sought public comment on ways we might further reduce the 
burden on reporting providers, including through stronger alignment 
between CMS requirements and CPT guidance for existing and potential 
new codes. Table 15 of the CY 2018 OPP/ASC proposed rule detailed the 
proposed care management coding changes. We referred readers to 
Addendum B to the proposed rule (which is available via the Internet on 
the CMS Web site) for the proposed CY 2018 payment rates for the 
replacement codes.
    Comment: Commenters supported CMS' proposed replacement codes for 
CY 2018 for several of the care management services finalized for CY 
2017. One commenter recommended that the new chronic care management 
codes be removed from the financial settlement of accountable care 
organizations (ACOs). This commenter also recommended that CMS develop 
documentation and billing workflow to reduce administrative burden on 
providers billing transitional care management and chronic care 
management codes.
    Response: We appreciate the commenters' support. We also appreciate 
the suggestion for reducing provider burden with respect to billing and 
documentation requirements for chronic care management and will 
consider these suggestions in future rulemaking. However, we note that 
ACOs are outside the scope of this final rule with comment period.
    After consideration of the public comments we received, we are 
finalizing our proposal to adopt CPT replacement codes for CY 2018 for 
several of the care management services finalized last year. Table 22 
below details the final care management coding changes. 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 2018 
payment rates for the replacement codes.

                                           Table 22--Care Management Coding Changes Effective January 1, 2018
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                        CY 2018
      CY 2017 HCPCS code        CY 2017 HCPCS code short   CY 2017 OPPS    CY 2017    replacement  CY 2018  replacement HCPCS  CY 2018 OPPS    CY 2018
                                       descriptor               SI         OPPS ASC     CPT code     code short descriptor *        SI         OPPS APC
--------------------------------------------------------------------------------------------------------------------------------------------------------
G0502........................  Init psych care Manag,                S          5822        99492  1st Psyc collab care mgmt.            S          5822
                                70min.
G0503........................  Subseq psych care man,                S          5822        99493  Sbsg psyc collab care mgmt            S          5822
                                60mi.

[[Page 59288]]

 
G0504........................  Init/sub psych Care add 30            N           N/A        99494  1st/sbsq psyc collab care.            N           N/A
                                m.
G0505........................  Cog/func assessment outpt.            S          5822        99483  Assmt & care pln pt cog               S          5822
                                                                                                    imp.
G0507........................  Care manage serv minimum              S          5821        99484  Care mgmt. svc bhvl hlth              S          5821
                                20.                                                                 cond.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The long descriptors for the final CPT codes can be found in Addendum O (New Category I and Category III CPT Codes Effective January 1, 2018) to this
  final rule with comment period, which is available via the Internet on the CMS Web site.

4. Cardiac Telemetry (APC 5721)
    For CY 2018, as noted in Table 23 below and in Addendum B to the CY 
2018 OPPS/ASC proposed rule, we proposed to reassign CPT code 93229 
from APC 5733 (Level 3 Minor Procedures) to APC 5734 (Level 4 Minor 
Procedures), with a proposed payment rate of $94.27.

                          Table 23--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Code 93229
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2017                               Proposed CY
                                                                          CY 2017 OPPS    CY 2017        OPPS      Proposed CY  Proposed CY   2018 OPPS
               CPT Code                         Long descriptor                SI         OPPS APC     payment    2018 OPPS SI   2018 OPPS     payment
                                                                                                         rate                       APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
93229................................  External mobile cardiovascular               S          5733       $54.55            S          5734       $94.27
                                        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
                                        transmission of daily and
                                        emergent data reports as
                                        prescribed by a physician or
                                        other qualified health care
                                        professional.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    We proposed to revise the APC assignment for CPT code 93229 based 
on claims data used for the CY 2018 OPPS/ASC proposed rule. We note 
that the proposed rule data were based on claims data submitted between 
January 1, 2016, and December 31, 2016, that were processed on or 
before December 31, 2016. Our analysis of the claims data revealed a 
geometric mean cost of approximately $156 for CPT code 93229 based on 
1,518 single claims (out of 3,370 total claims). Our analysis further 
revealed a geometric mean cost of approximately $98 for APC 5734. Based 
on the geometric mean cost, we believed that it was necessary to revise 
the APC assignment for CPT code 93229 from APC 5733 to APC 5734 to pay 
appropriately for the service.
    Comment: Some commenters disagreed with the proposed reassignment 
of CPT code 93229 to APC 5734, and instead requested a reassignment to 
APC 5722 (Level 2 Diagnostic Tests and Related Services), which had a 
proposed payment rate of $242.21 and which is the same APC assignment 
for CPT code 93229 as in CY 2016. The commenters believed that the cost 
data used to set the payment rate for the CY 2017 OPPS update was based 
on miscoding of the service because mobile outpatient telemetry is a 
low-volume service in the HOPD setting that is performed by a small 
number of hospitals. The commenters indicated that since the 
publication of a 2016 coding guidance in the AHA Coding Clinic for 
HCPCS on the proper coding of remote cardiac monitoring services, they 
have noticed that the top billers of this service from prior years are 
no longer inappropriately reporting the service. In addition, the 
commenters believed that APC 5734 is an inappropriate assignment both 
from the clinical and resource cost perspectives. The commenters 
further indicated that the service is not a minor procedure, as 
described by the group description for APC 5734, and added that CPT 
code 93229 is the only code in APC 5734 with a status indicator 
assignment of ``S'' (Procedure or Service, Not Discounted When 
Multiple), while all the other codes in the APC are assigned to status 
indicator ``Q1'' (conditionally packaged).
    Response: Although CPT code 93229 was assigned to status indicator 
``S'' in APC 5734, it was not the only status indicator assigned to the 
codes in this APC. As indicated in OPPS Addendum B that was released 
with the CY 2018 OPPS/ASC proposed rule, three separate status 
indicators were assigned to the codes in APC 5734. Specifically, CPT 
code 93229 was assigned to status indicator ``S'', CPT codes 30903 and 
30905 were assigned to status indicator ``T'' (Procedure or Service, 
Discounted

[[Page 59289]]

When Multiple), and the remaining codes were assigned to status 
indicator ``Q1''. We note that a specific status indicator assignment 
does not preclude a code's assignment to a specific APC.
    In addition, as we have stated since the implementation of the OPPS 
in August 2000, 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 the most recently available OPPS claims 
data every year and determine whether changes to the current APC 
assignment are necessary. Although CPT code 93229 was assigned to APC 
5722 in CY 2016, we revised the APC assignment to APC 5733 for CY 2017 
based on the latest claims data available at that time. The discussion 
related to this APC revision can be found in the CY 2017 OPPS/ASC final 
rule with comment period (81 FR 79616 through 79617).
    For this CY 2018 OPPS/ASC final rule with comment period, we again 
reviewed the claims data associated with CPT code 93229. We note that, 
for this final rule with comment period, we used claims data with dates 
of service between January 1, 2016, and December 31, 2016 that were 
processed on or before June 30, 2017. Our analysis revealed a geometric 
mean cost of approximately $160 for CPT code 93229 based on 1,750 
single claims (out of 3,869 total claims). Based on our review of the 
four levels of Diagnostic Tests and Related Services APCs, we believe 
that CPT code 93229 appropriately fits in APC 5721 (Level 1 Diagnostic 
Tests and Related Services), which has a geometric mean cost of 
approximately $136, rather than in APC 5722, which has a geometric mean 
cost of approximately $249. In addition, our review shows that the 
geometric mean cost of approximately $160 for CPT code 93229 is within 
the range of the significant procedures in APC 5721, which is between 
$60 (for CPT code 93702) and $181 (for CPT code 94727). Consequently, 
we believe that a reassignment of CPT code 93229 to APC 5721 is more 
appropriate.
    In summary, after consideration of the public comments we received, 
we are finalizing our CY 2018 proposal with modification. Specifically, 
we are revising the assignment for CPT code 93229 to APC 5721 for CY 
2018 rather than the proposed APC 5734. 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 2019 rulemaking. Table 24 
below lists the final status indicator and APC assignment for CPT code 
93229 for CY 2018. We refer readers to Addendum B of this final rule 
with comment period for the payment rates for all codes reported under 
the OPPS. In addition, we refer readers to Addendum A to this final 
rule with comment period for the status indicator meanings for all 
codes reported under the OPPS. Both Addenda A and B are available via 
the Internet on the CMS Web site.

                                   Table 24--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Code 93229
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     CY 2017
                                                        CY 2017 OPPS    CY 2017        OPPS     CY 2018 OPPS    CY 2018
          CPT code                 Long descriptor           SI         OPPS APC     payment         SI         OPPS APC     CY 2018 OPPS payment rate
                                                                                       rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
93229.......................  External mobile                     S          5733       $54.55            S          5721  Refer to OPPS Addendum B.
                               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 transmission of
                               daily and emergent data
                               reports as prescribed
                               by a physician or other
                               qualified health care
                               professional.
--------------------------------------------------------------------------------------------------------------------------------------------------------

5. Collagen Cross-Linking of Cornea (C-APC 5503)
    For CY 2018, as noted in Addendum B to the CY 2018 OPPS/ASC 
proposed rule, we proposed to continue to assign CPT code 0402T 
(Collagen cross-linking of cornea (including removal of the corneal 
epithelium and intraoperative pachymetry when performed)) to APC 5502 
(Level 2 Extraocular, Repair, and Plastic Eye Procedures) for CY 2018.
    Comment: One commenter requested that CMS reassign CPT code 0402T 
from APC 5502 to APC 5504 (Level 4 Extraocular, Repair, and Plastic Eye 
Procedures). The commenter recommended reassignment to APC 5504 because 
it believed that assignment to that APC would more accurately reflect 
the level of resource utilization (particularly labor time and capital 
equipment) involved in the corneal collagen cross-linking procedure. In 
addition, the commenter provided resource information on the supplies, 
equipment, and labor required to perform the procedure described by CPT 
code 0402T. According to the commenter, the capital equipment required 
for the procedure costs approximately $90,000, and disposable supplies 
and at least one technician or registered nurse are also required. In 
addition, the commenter stated that the average procedure time can last 
from 1.25 to 2 hours. The commenter acknowledged that there are no 
Medicare claims data for CPT code

[[Page 59290]]

0402T because it was established on January 1, 2016.
    Response: We reviewed the updated CY 2016 claims data used for this 
final rule with comment period. Based on our review, and with 
consideration of the resource information provided by the commenter, in 
the absence of data and based on the resources and operating expenses 
to perform the procedure as described by the commenter, we disagree 
with the commenter's recommendation that CPT code 0402T should be 
reassigned to APC 5504, which has a geometric mean cost of 
approximately $3,000 in CY 2018. In the absence of claims data, we may 
use other data, such as invoices, to assign a new procedure to a 
clinical APC. In this case, the commenter did not provide invoices, but 
did supply some cost information in its comment. We note that the 
payment rate is not designed to pay for capital equipment costs on a 
per claim basis. However, taking into account the disposable costs as 
well as information from the commenter about the time to perform the 
procedure and the hospital staff involved, we are persuaded to modify 
our proposal. Given the resource cost and clinical congruence of CPT 
code 0402T with other procedures assigned to APC 5503 (approximate 
geometric mean cost of $1,800), such as CPT code 65436 (Removal of 
corneal epithelium; with application of chelating agent, eg., EDTA), we 
believe that the reassignment to APC 5503 is more appropriate for CY 
2018. Therefore, we are modifying our proposal, and reassigning CPT 
code 0402T to APC 5503 (Level 3 Extraocular, Repair, and Plastic Eye 
Procedures) for CY 2018. We will consider reassignment of CPT code 
0402T to APC 5504 in the CY 2019 rulemaking.
6. Cryoablation Procedure for Lung Tumors (C-APC 5361)
    For CY 2018, the AMA CPT Editorial Panel deleted CPT code 0340T and 
replaced the code with CPT code 32994, effective January 1, 2018. We 
note that CPT code 0340T was effective January 1, 2014, and deleted on 
December 31, 2017. Table 25 below lists the complete descriptors for 
the deleted and replacement code. We note that the deleted and 
replacement code were both listed in Addendum B and Addendum O to the 
CY 2018 OPPS/ASC proposed rule (which are available via the Internet on 
the CMS Web site). Addendum B listed the proposed status indicator 
assignment for the replacement code and assigned it to comment 
indicator ``NP'' (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, proposed APC assignment; 
comments will be accepted on the proposed APC assignment for the new 
code), while Addendum O listed the proposed/placeholder CY 2018 CPT 
codes and the long descriptors.

               Table 25--Coding Changes for CPT Code 32994
------------------------------------------------------------------------
                           CY 2018  OPPS/ASC
       CPT Code              proposed rule           Long descriptor
                           placeholder code
------------------------------------------------------------------------
0340T.................  ......................  Ablation, pulmonary
                                                 tumor(s), including
                                                 pleura or chest wall
                                                 when involved by tumor
                                                 extension,
                                                 percutaneous,
                                                 cryoablation,
                                                 unilateral, includes
                                                 imaging guidance.
32994.................  32X99.................  Ablation therapy for
                                                 reduction or
                                                 eradication of 1 or
                                                 more pulmonary tumor(s)
                                                 including pleura or
                                                 chest wall when
                                                 involved by tumor
                                                 extension,
                                                 percutaneous, including
                                                 imaging guidance when
                                                 performed, unilateral;
                                                 cryoablation.
------------------------------------------------------------------------

    As noted in Table 26 below and in Addendum B to the CY 2018 OPPS/
ASC proposed rule, we proposed to delete CPT code 0340T (status 
indicator ``D'') and assign its replacement code, CPT code 32994 
(placeholder code 32X99), to C-APC 5361 (Level 1 Laparoscopy and 
Related Services), with a proposed payment rate of $4,340.65. As noted 
in Table 26, for CY 2017, CPT code 0340T was assigned to C-APC 5361, 
which is the same APC assignment for CPT code 32994.

                          Table 26--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Code 32994
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                             Proposed CY
                              CY 2018 OPPS/ASC                           CY 2017 OPPS    CY 2017    CY 2017 OPPS   Proposed CY  Proposed CY   2018 OPPS
        CPT code               proposed rule         Short descriptor         SI         OPPS APC   payment rate  2018 OPPS SI   2018 OPPS     payment
                              placeholder code                                                                                      APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
0340T...................  .......................  Ablate pulm tumors +           J1          5361    $4,199.13             D           N/A          N/A
                                                    extnsn.
32994...................  32X99..................  Ablate pulm tumor             N/A           N/A          N/A            J1          5361    $4,340.65
                                                    perq crybl.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: Commenters presented opposing recommendations on the 
proposed APC assignment for CPT code 32994. Some commenters supported 
the proposed APC assignment to C-APC 5361. One commenter stated that 
the APC assignment maintains clinical homogeneity for services within 
the APC and addresses resource cost fluctuation and volatility, and 
suggested that CMS finalize the proposal. However, other commenters 
disagreed with the proposed APC assignment and recommended that CPT 
code 32994 be assigned to C-APC 5362 (Level 2 Laparoscopy and Related 
Services), which had a proposed payment rate of $7,213.53. One 
commenter understood why CMS proposed to assign CPT code 32994 to C-APC 
5361, which is the same APC to which its predecessor code was assigned. 
However, the commenter believed that the cost of the procedure will 
only increase as hospitals gain

[[Page 59291]]

experience with it. Consequently, the commenter suggested that CMS 
assign the CPT code to C-APC 5362. Another commenter recommended that 
CMS assign CPT code 32994 to C-APC 5362 and further noted the 
importance of new codes to be priced correctly before they are subject 
to APC placement based on their actual cost data.
    Response: Because CPT code 0340T is a predecessor code to CPT code 
32994, we have historical claims data on which to base the payment rate 
for CPT code 32994. Review of our claims data for this final rule with 
comment period shows a geometric mean cost of approximately $5,471 for 
CPT code 0340T based on 27 single claims (out of 27 total claims), 
which is more comparable to the geometric mean cost of approximately 
$4,486 for C-APC 5361 than to the geometric mean cost of approximately 
$7,591 for C-APC 5362. We do not agree that we should assign CPT code 
32994 to C-APC 5362 because the geometric mean cost for this APC is 
significantly greater than that of CPT code 32994 (cross-walked from 
CPT code 0340T) as indicated in our claims data available for this 
final rule with comment period. In addition, if the cost of the 
procedure increases, this will be identified through our annual review 
of the claims data. Consistent with our policy of reviewing APC 
assignments annually, we will reevaluate the geometric mean cost of CPT 
code 32994 and its APC assignment in next year's rulemaking for the CY 
2019 OPPS update.
    In summary, after consideration of the public comments we received 
and our analysis of the updated claims data for this final rule with 
comment period, we are finalizing our CY 2018 proposal without 
modification, and assigning CPT code 32994 to C-APC 5361. The final CY 
2018 geometric mean cost for C-APC 5361 is approximately $4,486. Table 
27 below lists the final status indicator and APC assignment for CPT 
code 32994 for CY 2018. We refer readers to Addendum B to this final 
rule with comment period for the payment rates for all codes reported 
under the OPPS. In addition, we refer readers to Addendum A to this 
final rule with comment period for the status indicator meanings for 
all codes reported under the OPPS. Both Addenda A and B are available 
via the Internet on the CMS Web site.

                                   Table 27--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Code 32994
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            CY 2017
                        CY 2018 OPPS/ASC                       CY 2017 OPPS    CY 2017        OPPS     CY 2018 OPPS    CY 2018     CY 2018 OPPS payment
      CPT code            proposed rule      Short descriptor       SI         OPPS APC     payment         SI         OPPS APC            rate
                        placeholder code                                                      rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
0340T...............  N/A.................  Ablate pulm                 J1          5361    $4,199.13            D           N/A  N/A.
                                             tumors + extnsn.
32994...............  32X99...............  Ablate pulm tumor          N/A           N/A          N/A           J1          5361  Refer to OPPS Addendum
                                             perq crybl.                                                                           B.
--------------------------------------------------------------------------------------------------------------------------------------------------------

7. Diagnostic Bone Marrow Aspiration and Biopsy (C-APC 5072)
    For CY 2018, the AMA CPT Editorial Panel revised the bone marrow 
and aspiration CPT codes. Specifically, the descriptors for CPT codes 
38220 and 38221 were revised and new CPT codes 20939 (placeholder code 
2093X) and 38222 (placeholder code 382X3) were established, effective 
January 1, 2018. In addition, add-on HCPCS code G0364, which was 
effective January 1, 2005, will be deleted on December 31, 2017 and 
replaced with CPT codes 38220, 38221, and 38222, effective January 1, 
2018. The deleted and replacement codes were listed in Addendum B and 
Addendum O to the CY 2018 OPPS/ASC proposed rule. Addendum B listed the 
proposed status indicator assignment for revised CPT codes 38220 and 
38221 and new CPT code 38222, which was assigned to comment indicator 
``NP'' (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, proposed APC assignment; comments 
will be accepted on the proposed APC assignment for the new code), 
while Addendum O listed the proposed/placeholder CY 2018 CPT codes and 
the long descriptors.
    Table 28 below lists the complete descriptors for the bone marrow 
aspiration and biopsy codes.

Table 28--Coding Changes for the Bone Marrow Aspiration and Biopsy Codes
------------------------------------------------------------------------
                           CY 2018 OPPS/ASC
      HCPCS code             proposed rule           Long descriptor
                           placeholder code
------------------------------------------------------------------------
20939.................  2093X.................  Bone marrow aspiration
                                                 for bone grafting,
                                                 spine surgery only,
                                                 through separate skin
                                                 or fascial incision
                                                 (List separately in
                                                 addition to code for
                                                 primary procedure).
38220.................  N/A...................  Diagnostic bone marrow;
                                                 aspiration.
38221.................  N/A...................  Diagnostic bone marrow;
                                                 biopsy(ies).
38222.................  382X3.................  Diagnostic bone marrow;
                                                 biopsy(ies) and
                                                 aspiration(s).
G0364.................  N/A...................  Bone marrow aspiration
                                                 performed with bone
                                                 marrow biopsy through
                                                 the same incision on
                                                 the same date of
                                                 service.
------------------------------------------------------------------------

    As noted in Table 29 below and in Addendum B of the CY 2018 OPPS/
ASC proposed rule, we proposed to delete HCPCS code G0364 (status 
indicator ``D'') and assign revised CPT codes 38220 and 38221, as well 
as new CPT code 38222 (placeholder code 382X3) to C-APC 5072 (Level 2 
Excision/Biopsy/Incision and Drainage), with a proposed payment rate of 
$1,268.53. We note that, under the OPPS, we packaged the payment for 
HCPCS code G0364 (status

[[Page 59292]]

indicator ``N'') into the primary service or procedure that is reported 
with the code because we considered the service to be an add-on 
furnished as part of a comprehensive service. In addition, we proposed 
to assign CPT code 20939 (placeholder 2093X) to status indicator ``N'' 
(Packaged status) because it is an add-on code. Under Medicare 
regulations at 42 CFR 419.2(b)(18), add-on codes are packaged under the 
OPPS. Further, we proposed to continue to assign revised CPT codes 
38220 and 38221 to C-APC 5072 for CY 2018.

           Table 29--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rates for the Bone Marrow Aspiration and Biopsy Codes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                               Proposed
                                                                                                           CY 2017   Proposed CY   Proposed     CY 2018
        HCPCS Code         CY 2018 OPPS/ASC proposed      Short descriptor        CY 2017      CY 2017      OPPS      2018 OPPS     CY 2018      OPPS
                             rule placeholder code                                OPPS SI     OPPS APC     payment        SI       OPPS APC     payment
                                                                                                            rate                                 rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
20939....................  2093X....................  Bone marrow aspir bone           N/A          N/A         N/A           N          N/A         N/A
                                                       grfg.
38220....................  N/A......................  Dx bone marrow                    J1         5072   $1,236.62          J1         5072   $1,268.53
                                                       aspirations.
38221....................  N/A......................  Dx bone marrow biopsies.          J1         5072   $1,236.62          J1         5072   $1,268.53
38222....................  382X3....................  Dx bone marrow bx &              N/A          N/A         N/A          J1         5072   $1,268.53
                                                       aspir.
G0364....................  N/A......................  Bone marrow aspirate               N          N/A         N/A           D          N/A         N/A
                                                       &biopsy.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: One commenter disagreed with the proposed APC assignment 
of new CPT code 38222 to C-APC 5072 and recommended that the code be 
assigned to C-APC 5073 (Level 3 Excision/Biopsy/Incision and Drainage), 
which had a proposed payment rate of $2,222.47. This commenter further 
noted the importance of new codes being priced correctly before they 
are subject to APC assignment based on their actual cost data.
    Response: As displayed in Table 29, we proposed to make no change 
to the APC assignments for CPT codes 38220 and 38221. Specifically, we 
proposed to continue to assign both codes to C-APC 5072 for CY 2018 
based on claims data used for the CY 2018 OPPS/ASC proposed rule. We 
note that the proposed rule data was based on claims data submitted 
between January 1, 2016, and December 31, 2016, that were processed on 
or before December 31, 2016. For CPT code 38220, our examination of the 
claims data revealed a geometric mean cost of approximately $1,645 
based on 5,361 single claims (out of 5,431 total claims). For CPT code 
38221, our claims data showed a geometric mean cost of approximately 
$1,615 based on 53,789 single claims (out of 54,335 total claims). We 
believe that the geometric mean costs of approximately $1,645 for CPT 
code 38220 and $1,615 for CPT code 38221 are comparable to the 
geometric mean cost of approximately $1,319 for C-APC 5072. 
Consequently, we proposed to maintain both codes in C-APC 5072 for CY 
2018. We note that we had no claims data for HCPCS code G0364 because 
this is an add-on code whose payment is packaged into the primary 
service that is reported with the code.
    For this final rule with comment period, we again analyzed updated 
claims data associated with the four codes. We note that, for this 
final rule with comment period, we used claims data with dates of 
service between January 1, 2016, and December 31, 2016, that were 
processed on or before June 30, 2017. Our review of the final rule 
claims data revealed a similar pattern for both codes. For CPT code 
38220, we found a geometric mean cost of approximately $1,787 based on 
5,908 single claims (out of 5,993 total claims), and for CPT code 
38221, our claims data revealed a geometric mean cost of approximately 
$1,799 based on 59,892 single claims (out of 60,467 total claims). 
Because the geometric mean costs of approximately $1,787 for CPT code 
38220 and $1,799 for CPT code 38221 are similar to the geometric mean 
cost of approximately $1,347 for C-APC 5072, we continue to believe 
that C-APC 5072 is the most appropriate APC assignment for both codes 
for CY 2018.
    In addition, based on input from our medical advisors, we believe 
that C-APC 5072 is the most appropriate APC assignment for new CPT code 
38222, consistent with the APC assignment for similar diagnostic bone 
marrow aspiration and biopsy procedures. As noted in Table 29, CPT 
codes 38220 and 38221 are assigned to C-APC 5072, and we believe that 
the service described by new CPT code 38222 is similar to the existing 
bone marrow aspiration and biopsy codes. Consistent with the statutory 
requirement under section 1833(t)(9)(A) of the Act, we will reevaluate 
the APC groupings during the next rulemaking cycle.
    After consideration of the public comment we received, we are 
finalizing our CY 2018 proposals, without modification, for the bone 
marrow aspiration and biopsy codes, specifically, CPT codes 20939, 
38220, 38221, and 38222. Table 30 below lists the final APC and status 
indicator assignments for CPT codes 20939, 38220, 38221, and 38222 for 
CY 2018. We refer readers to Addendum B to this final rule with comment 
period for the payment rates for all codes reported under the OPPS. In 
addition, we refer readers to Addendum A to this final rule with 
comment period for the status indicator meanings for all codes reported 
under the OPPS. Both Addendum A and Addendum B are available via the 
Internet on the CMS Web site.

                    Table 30--Final CY 2018 Status Indicator (SI) and APC Assignment for the Bone Marrow Aspiration and Biopsy Codes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 CY 2017
                           CY 2018 OPPS/ASC                             CY 2017      CY 2017      OPPS       CY 2018      CY 2018   CY 2018 OPPS payment
      HCPCS code             proposed rule        Short descriptor      OPPS SI     OPPS APC     payment     OPPS SI     OPPS APC           rate
                           placeholder code                                                       rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
20939.................  2093X.................  Bone marrow aspir            N/A          N/A         N/A           N          N/A  N/A.
                                                 bone grfg.
38220.................  N/A...................  Dx bone marrow                J1         5072   $1,236.62          J1         5072  Refer to OPPS
                                                 aspirations.                                                                        Addendum B.

[[Page 59293]]

 
38221.................  N/A...................  Dx bone marrow                J1         5072   $1,236.62          J1         5072  Refer to OPPS
                                                 biopsies.                                                                           Addendum B.
38222.................  382X3.................  Dx bone marrow bx &          N/A          N/A         N/A          J1         5072  Refer to OPPS
                                                 aspir.                                                                              Addendum B.
G0364.................  ......................  Bone marrow aspirate           N          N/A         N/A           D          N/A  N/A.
                                                 &biopsy.
--------------------------------------------------------------------------------------------------------------------------------------------------------

8. Discussion of Comment Solicitation in the Proposed Rule on 
Intraocular Procedure APCs
    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33609 
through 33610), as part of our CY 2018 comprehensive review of the 
structure of the APCs and procedure code assignments, we evaluated the 
intraocular procedure APCs with a particular focus on C-APC 5491 (Level 
1 Intraocular Procedures) that contains cataract surgery procedures. We 
strive to maintain APCs that contain procedures that are relatively 
homogenous in resource costs and clinical characteristics. While it is 
impracticable and contrary to the principles of a prospective payment 
system to assign each procedure to its own APC, thus resulting in a 
cost-based, fee schedule payment system, we seek to ensure our clinical 
groupings appropriately group like items and services while maintaining 
the integrity of a prospective payment system under which bundled, 
encounter-based payments are essential.
    For CY 2018, we considered proposing a new intraocular procedure 
APC that would further distinguish the resource costs and clinical 
characteristics between cataract surgery and complex cataract surgery. 
As listed in Addendum B of the CY 2018 OPPS/ASC proposed rule, we 
proposed to continue to assign CPT code 66984 (Cataract surgery with 
IOL 1 stage procedure) and CPT code 66982 (Cataract surgery complex) to 
C-APC 5491. However, because the 2017 AMA CPT Code manual describes a 
complex cataract surgery case as ``requiring devices or techniques not 
generally used in routine cataract surgery (e.g., iris expansion 
device, suture support for intraocular lens, or primary posterior 
capsulorrhexis),'' we stated that we believe it may be more appropriate 
to assign CPT code 66982 to a C-APC that is separate from the C-APC 
assignment for CPT code 66984. However, because this potential APC 
grouping would assign CPT code 66982 to a higher paying C-APC than CPT 
code 66984, we indicated that we would monitor claims data for changes 
in the distribution of coding complex cataract surgery and routine 
cataract surgery if we were to adopt this change. In the proposed rule, 
we sought public comments from stakeholders, including 
ophthalmologists, organizations representing ophthalmologists, 
beneficiaries, hospitals, and all other interested parties on whether 
we should create a new C-APC that includes complex cataract surgeries 
identified by CPT code 66982 (along with other intraocular procedures 
that are similar in resources) in a newly created C-APC that is 
separate from those identified by CPT code 66984. That is, we are 
considering whether to establish a new Level 2 Intraocular Procedures 
C-APC in between existing C-APCs 5491 and 5492.
    Comment: Commenters, including several ophthalmologists and 
organizations representing ophthalmologists, did not support separation 
of complex cataract surgery identified by CPT code 66982 and simple 
cataract surgery identified by CPT code 66984 into separate APCs. 
Commenters recommended that CMS maintain the current assignment of CPT 
code 66982 and 66984 in the same APC (APC 5491) because the procedures 
are similar clinically and the modest variation in cost between the two 
procedures does not warrant reassignment of CPT code 66982 into a 
higher payment APC. However, commenters supported CMS' intent to 
monitor the data for these procedures and make future changes, if 
needed. In addition, one commenter indicated that variations in payment 
between simple and complex cataract surgery should be reflected in the 
physician payment rather than the facility fee.
    Response: We thank the commenters for providing detailed responses 
to the comment solicitation on whether to separate simple and complex 
cataract surgery into separate APCs. Based on the points raised in 
response to the comment solicitation with respect to the facility 
resource costs and clinical similarity between simple and complex 
cataract surgery, it does not appear necessary to separate these 
procedures into separate APCs.
    After consideration of the public comments we received, we are 
continuing the assignment of simple and complex cataract surgery 
procedures (described by CPT codes 66984 and 66982, respectively) to 
the same APC for CY 2018. We appreciate the commenters' support of CMS' 
continuing efforts to monitor both the cost and utilization of simple 
and complex cataract surgery to determine if an APC reassignment or 
other change may be needed in the future.
9. Endovascular APCs (C-APCs 5191 through 5194)
    For CY 2018, we proposed to continue the existing four levels of 
Endovascular C-APCs (C-APCs 5191 through 5194) as displayed in Table 31 
below and in Addendum B to the CY 2018 OPPS/ASC proposed rule.

     Table 31--Proposed CY 2018 Geometric Mean Cost and Payment for
                           Endovascular C-APCs
------------------------------------------------------------------------
                                              CY 2018       Proposed CY
                  C-APC                   geometric mean     2018 OPPS
                                               cost           payment
------------------------------------------------------------------------
5191--Level 1 Endovascular Procedures...       $2,958.89          $2,844

[[Page 59294]]

 
5192--Level 2 Endovascular Procedures...        5,199.87           4,999
5193--Level 3 Endovascular Procedures...       10,627.86          10,218
5194--Level 4 Endovascular Procedures...       16,197.55          15,572
------------------------------------------------------------------------

    Comment: Commenters disagreed with the proposal to continue the 
four levels of the endovascular C-APCs and requested that CMS create 
more levels within the endovascular C-APCs to improve resource 
homogeneity within these C-APCs. Specifically, the commenters requested 
that CMS create a six-level endovascular C-APC family by reassigning 
endovascular procedures with costs greater than approximately $7,000 up 
one level, from the current C-APC 5192 (Level 2 Endovascular 
Procedures) to a new Level 3 Endovascular Procedures C-APC (519X), and 
reassigning procedures with costs less than approximately $9,000 down 
one level, from the current C-APC 5193 (Level 3 Endovascular 
Procedures) to the new requested Level 3 Endovascular Procedures C-APC. 
Commenters also requested that procedures with costs greater than 
approximately $12,000 in the current C-APC 5193 be moved up one level 
to a new Level 5 Endovascular Procedures C-APC (519Y), and those 
procedures with costs greater than approximately $13,000 to be moved 
down one level from current C-APC 5194 (Level 4 Endovascular 
Procedures) to the new requested Level 5 C-APC (519Y). The commenters' 
requested the C-APC structure and estimated payment amount for each C-
APC as listed in Table 32 below.

    Table 32--CY 2018 Structure for Endovascular C-APCs Requested by
                               Commenters
------------------------------------------------------------------------
                                                           Estimated CY
                          C-APC                              2018 OPPS
                                                              payment
------------------------------------------------------------------------
5191--Level 1 Endovascular Procedures...................          $2,845
5192--Level 2 Endovascular Procedures...................           4,875
519X--New Level 3 Endovascular Procedures...............           8,042
5193--Current Level 3 Endovascular Procedures/New Level           10,084
 4 Endovascular Procedures..............................
519Y--New Level 5 Endovascular Procedures...............          12,149
5194--Current Level 4 Endovascular Procedures/New Level           15,713
 6 Endovascular Procedures..............................
------------------------------------------------------------------------

    At the annual meeting for the HOP Panel held on August 21, 2017, 
the HOP Panel recommended that, for CY 2018, CMS examine the number of 
APCs for endovascular procedures. The HOP Panel also recommended that 
the appropriate Panel subcommittee review the APCs for endovascular 
procedures to determine whether more granularity (that is, more APCs) 
is warranted.
    Other commenters opposed a reorganization of the endovascular C-
APCs for CY 2018 and expressed concerns regarding changing the number 
of C-APCs in this family without a chance for the public to comment. 
These commenters encouraged CMS to consider the impact that adding APCs 
for the endovascular procedures may have on other procedures in 
existing APCs and recommended that, if CMS plans to make a change to 
the endovascular APCs, it include a proposal in the CY 2019 OPPS/ASC 
proposed rule to allow the opportunity for the public to comment.
    Response: We thank the commenters for their input. At this time, we 
continue to believe that the current C-APC levels for the endovascular 
C-APC family provide an appropriate distinction between the resource 
costs at each level and provide clinical homogeneity. We will continue 
to review this C-APC structure, including consultation with the 
appropriate HOP Panel subcommittee, to determine if additional 
granularity is necessary for this C-APC family.
10. Esophagogastroduodenoscopy (EGD) (C-APC 5362)
    For CY 2018, as displayed in Table 33 below and in Addendum B to 
the CY 2018 OPPS/ASC proposed rule, we proposed to continue to assign 
CPT code 43210 to APC 5331 (Complex GI Procedures), with a proposed 
payment rate of $4,119.27.

[[Page 59295]]



                          Table 33--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Code 43210
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2017                               Proposed CY
                                                                          CY 2017 OPPS    CY 2017        OPPS      Proposed CY  Proposed CY   2018 OPPS
               CPT code                         Long descriptor                SI         OPPS APC     payment    2018 OPPS SI   2018 OPPS     payment
                                                                                                         rate                       APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
43210................................  Esophagogastroduo-denoscopy,                J1          5331    $3,940.61           J1          5331    $4,119.27
                                        flexible, transoral; with
                                        esophagogastric fundoplasty,
                                        partial or complete, includes
                                        duodenoscopy when performed.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: One commenter disagreed with the proposed APC assignment 
for CPT code 43210 and stated that that the proposed payment is 
inadequate to cover the cost of the procedure. The commenter stated 
that the device associated with the procedure costs approximately 
$4,100. The commenter elaborated that because of the inadequate payment 
for the procedure, providers are reluctant to perform the procedure, 
and instead are opting to perform the higher paying procedures for the 
treatment of gastroesophageal reflux disease (GERD). The commenter also 
stated that, based on the geometric mean cost of $7,013 for CPT code 
43210, the code is inappropriately assigned to APC 5331, which has a 
geometric mean cost of approximately $4,284. To correct the inadequate 
payment for the procedure, the commenter suggested that CMS either 
reassign CPT code 43210 to C-APC 5362 (Level 2 Laparoscopy and Related 
Services), which had a proposed payment rate of $7,214, or establish a 
new Level 2 Complex GI Procedures APC that contains only the surgical 
procedures described by the following CPT codes:
     43210 (Esophagogastroduodenoscopy, flexible, transoral; 
with esophagogastric fundoplasty, partial or complete, includes 
duodenoscopy when performed);
     43257 (Esophagogastroduodenoscopy, flexible, transoral; 
with delivery of thermal energy to the muscle of lower esophageal 
sphincter and/or gastric cardia, for treatment of gastroesophageal 
reflux disease);
     43280 (Laparoscopy, surgical, esophagogastric fundoplasty 
(e.g., nissen, toupet procedures));
     43281 (Laparoscopy, surgical, repair of paraesophageal 
hernia, includes fundoplasty, when performed; without implantation of 
mesh);
     43284 (Laparoscopy, surgical, esophageal sphincter 
augmentation procedure, placement of sphincter augmentation device 
(i.e., magnetic band), including cruroplasty when performed);
     43770 (Laparoscopy, surgical, gastric restrictive 
procedure; placement of adjustable gastric restrictive device (e.g., 
gastric band and subcutaneous port components)); and
     46762 (Sphincteroplasty, anal, for incontinence, adult; 
implantation artificial sphincter).
    Response: For the second suggestion, we believe the grouping of 
procedures in the suggested APC may be inappropriate based on lack of 
clinical homogeneity. Specifically, CPT code 46762 describes a 
sphincteroplasty procedure, which is unlike that of the other GERD-
related procedures in the suggested APC. However, for the first 
suggestion, based on our analysis of the final rule claims data, we 
believe that it would be appropriate to reassign CPT code 43210 to C-
APC 5362. We note that, for this final rule with comment period, we 
used claims data with dates of service between January 1, 2016, and 
December 31, 2016, that were processed on or before June 30, 2017. Our 
analysis of the final rule claims data revealed a geometric mean cost 
of approximately $6,759 for CPT code 43210 based on 91 single claims 
(out of 92 total claims), which is comparable to the geometric mean 
cost of approximately $7,591 for C-APC 5362. Compared to the geometric 
mean cost of approximately $4,291 for C-APC 5331, we agree with the 
commenter that C-APC 5362 is the more appropriate C-APC assignment for 
CPT code 43210 based on its clinical homogeneity and resource costs.
    In summary, after consideration of the public comment we received, 
we are finalizing our CY 2018 proposal with modification. Specifically, 
we are reassigning CPT code 43210 from C-APC 5331 to C-APC 5362 for CY 
2018. As we do every year under the OPPS, we will reevaluate the cost 
of the procedure and its APC assignment for next year's OPPS 
rulemaking. Table 34 below lists the final status indicator and APC 
assignments for CPT code 43210. We refer readers to Addendum B of this 
final rule with comment period for the payment rates for all codes 
reported under the OPPS. In addition, we refer readers to Addendum A of 
this final rule with comment period for the status indicator meanings 
for all codes reported under the OPPS. Both Addendum A and Addendum B 
are available via the Internet on the CMS Web site.

                                   Table 34--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Code 43210
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     CY 2017
                                                        CY 2017 OPPS    CY 2017        OPPS     CY 2018 OPPS    CY 2018
          CPT code                 Long descriptor           SI         OPPS APC     payment         SI         OPPS APC     CY 2018 OPPS payment rate
                                                                                       rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
43210.......................  Esophagogastroduo-                 J1          5331    $3,940.61           J1          5362  Refer to OPPS Addendum B.
                               denoscopy, flexible,
                               transoral; with
                               esophagogastric
                               fundoplasty, partial or
                               complete, includes
                               duodenoscopy when
                               performed.
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 59296]]

11. Hemorrhoid Treatment by Thermal Energy (APC 5312)
    For CY 2018, as displayed in Table 35 below and in Addendum B to 
the CY 2018 OPPS/ASC proposed rule, we proposed to continue to assign 
CPT code 46930 to APC 5311 (Level 1 Lower GI Procedures), with a 
proposed payment rate of $690.37.

                          Table 35--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Code 46930
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2017                               Proposed CY
                                                                          CY 2017 OPPS    CY 2017        OPPS      Proposed CY  Proposed CY   2018 OPPS
              HCPCS code                        Long descriptor                SI         OPPS APC     payment    2018 OPPS SI   2018 OPPS     payment
                                                                                                         rate                       APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
46930................................  Destruction of internal                      T          5311      $667.67            T          5311      $690.37
                                        hemorrhoid(s) by thermal energy
                                        (e.g., infrared coagulation,
                                        cautery, radiofrequency).
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: One commenter requested a reassignment of CPT code 46930 
to APC 5312 (Level 2 Lower GI Procedures), which had a CY 2018 proposed 
payment rate of $907.04. The commenter indicated that review of the 
geometric mean cost of approximately $879 for CPT code 46930 from the 
CY 2018 proposed rule claims data is more in line with the geometric 
mean cost for APC 5312. Specifically, the commenter noted that the 
geometric mean cost for APC 5312 is approximately $943, which is 
comparable to the geometric cost of $879 for CPT code 46930, rather 
than the geometric mean cost of approximately $718 for APC 5311.
    Response: For this final rule with comment period, we reviewed the 
claims data associated with CPT codes 46930. We used claims data for 
this final rule with comment period with dates of service between 
January 1, 2016, and December 31, 2016 that were processed on or before 
June 30, 2017. Our analysis of the final rule claims data revealed that 
a change in the APC assignment to APC 5312 for CPT code 46930 is 
appropriate. Specifically, we found a geometric mean cost of 
approximately $858 for CPT code 46930 based on 363 single claims (out 
of 970 total claims), which is similar to the geometric mean cost of 
approximately $936 for APC 5312 rather than the geometric mean cost of 
approximately $710 for APC 5311. In addition, our analysis of the range 
of geometric mean costs for the significant procedures within APCs 5311 
and 5312 shows that the geometric mean cost for CPT code 46930 is 
comparable to the costs of procedures assigned to APC 5312. 
Specifically, the geometric mean costs of the significant procedures 
assigned to APC 5311 range between approximately $382 (for CPT code 
46221) and $750 (for CPT code 45378), while the range for procedures 
assigned to APC 5312 is between approximately $824 (for CPT code 45341) 
and $1,579 (for CPT 45390). Consequently, we agree that a reassignment 
of CPT code 46930 to APC 5312 is more appropriate.
    Therefore, after consideration of the public comment we received, 
we are finalizing our CY 2018 proposal with modification to the APC 
assignment for CPT code 46930. Specifically, we are reassigning CPT 
code 46930 from C-APC 5311 to C-APC 5312 for CY 2018. Table 36 below 
lists the final status indicator and APC assignments for CPT code 
49630. We refer readers to Addendum B to this final rule with comment 
period for the payment rates for all codes reported under the OPPS. In 
addition, we refer readers to Addendum A to this final rule with 
comment period for the status indicator meanings for all codes reported 
under the OPPS. Both Addendum A and Addendum B are available via the 
Internet on the CMS Web site.

                                   Table 36--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Code 46930
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     CY 2017
                                                        CY 2017 OPPS    CY 2017        OPPS     CY 2018 OPPS    CY 2018
          CPT code                 Long descriptor           SI         OPPS APC     payment         SI         OPPS APC     CY 2018 OPPS payment rate
                                                                                       rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
46930.......................  Destruction of internal             T          5311      $667.67            T          5312  Refer to OPPS Addendum B.
                               hemorrhoid(s) by
                               thermal energy (e.g.,
                               infrared coagulation,
                               cautery,
                               radiofrequency).
--------------------------------------------------------------------------------------------------------------------------------------------------------

12. Ileoscopy Through Stoma With Stent Placement (C-APC 5303)
    For CY 2018, as displayed in Table 37 below and in Addendum B to 
the CY 2018 OPPS/ASC proposed rule, we proposed to continue to assign 
CPT code 44384 to C-APC 5303 (Level 3 Upper GI Procedures).

[[Page 59297]]



                          Table 37--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Code 44384
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2017                               Proposed CY
                                                                          CY 2017 OPPS    CY 2017        OPPS      Proposed CY  Proposed CY   2018 OPPS
               CPT code                         Long descriptor                SI         OPPS APC     payment    2018 OPPS SI   2018 OPPS     payment
                                                                                                         rate                       APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
44384................................  Ileoscopy, through stoma; with              J1          5303    $2,510.70           J1          5303    $2,630.93
                                        placement of endoscopic stent
                                        (includes pre- and post-dilation
                                        and guide wire passage, when
                                        performed).
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: Several commenters opposed the proposed continued 
assignment of CPT code 44384 to C-APC 5303. The commenters stated that 
the procedure includes the use of a stent that costs approximately 
$1,500, and that the resources required to perform the procedure are 
similar to those other small and large bowel procedures that require 
stent placement in C-APC 5331 (Complex GI Procedures), which had a CY 
2018 proposed payment rate of $4,119.27. The commenters further added 
that because C-APC 5303 is not a device-dependent designated APC, the 
continued assignment of CPT code 44384 to C-APC 5303 results in an ASC 
payment that is below the cost of performing the procedure. 
Consequently, the commenters urged CMS to revise the APC assignment for 
CPT code 44384 back to its CY 2016 APC assignment, specifically, C-APC 
5331.
    Response: We proposed to continue the APC assignment for CPT code 
44384 based on claims data used for the CY 2018 OPPS/ASC proposed rule. 
We note that the proposed rule data was based on claims data submitted 
between January 1, 2016, and December 31, 2016, that were processed on 
or before December 31, 2016. For CPT code 44384, our analysis of the 
claims data revealed a geometric mean cost of approximately $2,404 for 
the CPT code based on 25 single claims (out of 26 total claims), which 
is similar to the geometric mean cost of approximately $2,736 for C-APC 
5303 rather than the geometric mean cost of approximately $4,284 for C-
APC 5331. Consequently, we proposed to continue the APC assignment for 
CPT code 44384 to C-APC 5303 for CY 2018.
    For this final rule with comment period, we again examined updated 
claims data associated with CPT code 44384. We note that for this final 
rule with comment period we used claims data with dates of service 
between January 1, 2016, and December 31, 2016, that were processed on 
or before June 30, 2017. Our examination of the final rule claims data 
revealed a similar pattern for CPT code 44384. Specifically, we found a 
geometric mean cost of approximately $2,492 for CPT code 44384 based on 
32 single claims (out of 33 total claims), which is similar to the 
geometric mean cost of approximately $2,742 for C-APC 5303 rather than 
the geometric mean cost of approximately $4,291 for C-APC 5331. 
Assigning CPT code 43384 to C-APC 5331 would result in an overpayment 
for the procedure. C-APC 5303 contains several GI-related procedures, 
which are similar to those procedures described by CPT code 44384, 
based on clinical homogeneity and resource costs.
    In response to the comment related to device-dependent APCs, we 
note that device-dependent APCs are no longer recognized under the OPPS 
as of CY 2015 and that, effective January 1, 2017, device-intensive 
status is assigned at the HCPCS code level, not at the APC level. We 
note that when we implemented the C-APC policy in CY 2015, we 
eliminated the device-dependent APC policy and replaced it with the 
device-intensive policy, effective January 1, 2015. For more 
information on this change, we refer readers to the CY 2015 OPPS/ASC 
final rule with comment period (79 FR 66793 through 66795), the CY 2016 
OPPS/ASC final rule with comment period (80 FR 70421 through 70422), 
and the CY 2017 OPPS/ASC final rule with comment period (81 FR 79657 
through 79659). In addition, we refer readers to section IV.B. of this 
final rule with comment period for the discussion related to the 
device-intensive policy under the OPPS. 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.
    Finally, we remind readers that, as we have stated since the 
implementation of the OPPS in August 2000, 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 
every year and determine whether we need to make changes to the current 
APC assignment for the following year. Although CPT code 44384 was 
assigned to C-APC 5331 in CY 2016, we revised the assignment to C-APC 
5303 for CY 2017 based on the latest claims data.
    In summary, after consideration of the public comments we received, 
we are finalizing our CY 2018 proposal without modification to continue 
the assignment of CPT code 44384 to C-APC 5303. Table 38 below lists 
the final status indicator and APC assignments for CY 2018. We refer 
readers to Addendum B to this final rule with comment period for the 
payment rates for all codes reported under the OPPS. In addition, we 
refer readers to Addendum A to this final rule with comment period for 
the status indicator meanings for all codes reported under the OPPS. 
Both Addendum A and Addendum B are available via the Internet on the 
CMS Web site.

[[Page 59298]]



                                   Table 38--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Code 44384
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     CY 2017
                                                        CY 2017 OPPS    CY 2017        OPPS     CY 2018 OPPS    CY 2018
          CPT code                Long descriptors           SI         OPPS APC     payment         SI         OPPS APC     CY 2018 OPPS payment rate
                                                                                       rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
44384.......................  Ileoscopy, through                 J1          5303    $2,510.70           J1          5303  Refer to OPPS Addendum B.
                               stoma; with placement
                               of endoscopic stent
                               (includes pre- and post-
                               dilation and guide wire
                               passage, when
                               performed).
--------------------------------------------------------------------------------------------------------------------------------------------------------

13. Laparoscopic Nephrectomy (C-APC 5362)
    For CY 2018, as displayed in Table 39 below and in Addendum B to 
the CY 2018 OPPS/ASC proposed rule, we proposed to reassign CPT code 
50543 from C-APC 5377 (Level 7 Urology and Related Services), which had 
a proposed payment rate of $15,220.83 to C-APC 5362 (Level 2 
Laparoscopy and Related Services), which had a proposed payment rate of 
$7,213.53.

                          Table 39--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Code 50543
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2017                  Proposed CY  Proposed CY
               CPT code                         Long descriptor           CY 2017 OPPS    CY 2017        OPPS      Proposed CY   2018 OPPS    2018 OPPS
                                                                               SI         OPPS APC     payment    2018 OPPS SI      APC        payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
50543................................  Laparoscopy, surgical; partial              J1          5377   $14,363.61           J1          5362    $7,213.53
                                        nephrectomy.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: One commenter applauded CMS' proposal to remove CPT code 
50543 from C-APC 5377. The commenter indicated that the code was 
inappropriately placed in C-APC 5377 because the procedure involves no 
implantable device, which is in contrast to the device-related 
procedures in C-APC 5377. The commenter believed that the addition of 
this CPT code to C-APC 5377 for CY 2017 was an error that disrupted the 
clinical homogeneity of the APC. The commenter suggested that CMS 
finalize the proposal to reassign CPT code 50543 from C-APC 5377 to APC 
5362.
    Response: We appreciate the commenter's support. For this final 
rule with comment period, we again reviewed the updated claims data 
associated with CPT code 50543 and continue to believe that C-APC 5362 
is the more appropriate assignment for the CPT code based on its 
clinical coherence and resource similarity to the other procedures in 
the APC. Although our analysis showed a geometric mean cost of 
approximately $7,591 for C-APC 5362, which is lower than the geometric 
mean cost of approximately $10,247 for CPT code 50543 based on 1,008 
single claims (out of 1,016 total claims), we found that the geometric 
mean cost for the CPT code falls within the range of costs for 
significant procedures assigned to C-APC 5362. Specifically, the cost 
range for procedures assigned to C-APC 5362 is between approximately 
$5,997 (for CPT code 50593) and $10,247 (for CPT code 50543). Based on 
the final rule claims data, we believe that CPT code 50543 is more 
appropriately assigned to C-APC 5362 based on its clinical coherence 
and resource similarity to the other procedures assigned to C-APC 5362.
    Therefore, after consideration of the public comment we received, 
we are finalizing our proposal, without modification, to reassign CPT 
code 50543 to C-APC 5362 for CY 2018. As we do every year, we will 
review our claims data for the procedure for the CY 2019 OPPS 
rulemaking. Table 40 below lists the final CY 2018 status indicator and 
APC assignments for CPT code 50543. We refer readers to Addendum B to 
this final rule with comment period for the payment rates for all codes 
reported under the OPPS. In addition, we refer readers to Addendum A to 
this final rule with comment period for the status indicator meanings 
for all codes reported under the OPPS. Both Addendum A and Addendum B 
are available via the Internet on the CMS Web site.

                                   Table 40--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Code 50543
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     CY 2017
                                                        CY 2017 OPPS    CY 2017        OPPS     CY 2018 OPPS    CY 2018
          CPT code                 Long descriptor           SI         OPPS APC     payment         SI         OPPS APC     CY 2018 OPPS payment rate
                                                                                       rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
50543.......................  Laparoscopy, surgical;             J1          5377   $14,363.61           J1          5362  Refer to OPPS Addendum B.
                               partial nephrectomy.
--------------------------------------------------------------------------------------------------------------------------------------------------------

14. Multianalyte Assays With Algorithmic Analyses (MAAA)
    For CY 2018, as displayed in Table 41 below and as listed in 
Addendum B to the CY 2018 OPPS/ASC proposed rule, we proposed to 
continue to assign CPT codes 81490, 81503, 81535, 81536, 81538, and 
81539, to status indicator ``Q4'' to indicate that the codes are 
conditionally packaged. Specifically, as defined in Addendum D1 to the 
CY 2018 OPPS/ASC proposed rule, an

[[Page 59299]]

assignment to status indicator ``Q4'' indicates that payment for the 
laboratory test is either packaged if billed on the same claim as a 
HCPCS code assigned to status indicator ``J1'', ``J2'', ``S'', ``T'', 
``V'', ``Q1'', ``Q2'', or ``Q3'', or in other circumstances, is paid 
through the CLFS.

  Table 41--Proposed CY 2018 Status Indicator (SI) for CPT Codes 81490,
                  81503, 81535, 81536, 81538, and 81539
------------------------------------------------------------------------
                                              CY 2017 OPPS   Proposed CY
        CPT code           Long descriptor         SI       2018 OPPS SI
------------------------------------------------------------------------
81490..................  Autoimmune                    Q4            Q4
                          (rheumatoid
                          arthritis),
                          analysis of 12
                          biomarkers using
                          immunoassays,
                          utilizing serum,
                          prognostic
                          algorithm reported
                          as a disease
                          activity score.
81503..................  Oncology (ovarian),           Q4            Q4
                          biochemical assays
                          of five proteins
                          (ca-125,
                          apolipoprotein a1,
                          beta-2
                          microglobulin,
                          transferrin, and
                          pre-albumin),
                          utilizing serum,
                          algorithm reported
                          as a risk score.
81535..................  Oncology                      Q4            Q4
                          (gynecologic),
                          live tumor cell
                          culture and
                          chemotherapeutic
                          response by dapi
                          stain and
                          morphology,
                          predictive
                          algorithm reported
                          as a drug response
                          score; first
                          single drug or
                          drug combination.
81536..................  Oncology                      Q4            Q4
                          (gynecologic),
                          live tumor cell
                          culture and
                          chemotherapeutic
                          response by dapi
                          stain and
                          morphology,
                          predictive
                          algorithm reported
                          as a drug response
                          score; each
                          additional single
                          drug or drug
                          combination (list
                          separately in
                          addition to code
                          for primary
                          procedure).
81538..................  Oncology (lung),              Q4            Q4
                          mass spectrometric
                          8-protein
                          signature,
                          including amyloid
                          a, utilizing
                          serum, prognostic
                          and predictive
                          algorithm reported
                          as good versus
                          poor overall
                          survival.
81539..................  Oncology (high-               Q4            Q4
                          grade prostate
                          cancer),
                          biochemical assay
                          of four proteins
                          (total psa, free
                          psa, intact psa,
                          and human
                          kallikrein-2
                          [hk2]), utilizing
                          plasma or serum,
                          prognostic
                          algorithm reported
                          as a probability
                          score.
------------------------------------------------------------------------

    Comment: Some commenters requested a revision to the status 
indicator assignment for the six MAAA codes (CPT codes 81490, 81503, 
81535, 81536, 81538, and 81539) from ``Q4'' to ``A'' (Not paid under 
the OPPS but may be paid under a different Medicare payment system), 
consistent with the status indicator assignment for the DNA and RNA-
based MAAA tests. The commenters stated that these tests are generally 
not performed in the HOPD setting. Also, the commenters indicated that 
all of the Category I CPT MAAA codes are already assigned to status 
indicator ``A'' except for CPT codes 81490, 81503, 81535, 81536, 81538, 
and 81539, which are protein-based MAAA codes. The commenters asserted 
that, based on the June 23, 2016 CLFS final rule entitled ``Medicare 
Program; Medicare Clinical Diagnostic Laboratory Tests Payment 
System,'' CMS defined an ADLT under section 1834A(d)(5)(A) of the Act 
to include DNA, RNA, and protein-based tests, and, as such, the six 
protein-based MAAA codes should be reassigned to status indicator 
``A''.
    Response: As we stated in the CY 2017 OPPS/ASC final rule with 
comment period (81 FR 79594), we will assign status indicator ``A'' 
(Separate payment under the CLFS) to ADLTs once a laboratory test is 
designated as an ADLT under the CLFS. Before a test can be designated 
as an ADLT, applicants must submit an application for successful 
designation as an ADLT by CMS. These 6 codes (CPT codes 81490, 81503, 
81535, 81536, 81538, and 81539) have not been designated as ADLTs by 
CMS at this time, and therefore we do not believe they should be 
reassigned to status indicator ``A''. However, once a code has been 
designated under the CLFS as an ADLT that meets the criteria of section 
1834A(d)(5)(A) of the Act, we will update the OPPS payment file 
(Addendum B) on a quarterly basis to reflect the appropriate status 
indicator assignment.
    Therefore, after consideration of the public comments, we are 
finalizing our proposal, without modification, for CPT codes 81490, 
81503, 81535, 81536, 81538, and 81539. As stated earlier, we will 
update the OPPS payment file (Addendum B) to appropriately reflect the 
status indicator assignment once a CPT code has been designated under 
the CLFS as an ADLT that meets the criteria of section 1834A(d)(5)(A) 
of the Act. Table 42 below lists the final status indicator for the CPT 
codes. We refer readers to Addendum B to this final rule with comment 
period for the payment rates for all codes reported under the OPPS. In 
addition, we refer readers to Addendum A to this final rule with 
comment period for the status indicator meanings for all codes reported 
under the OPPS. Both Addendum A and Addendum B are available via the 
Internet on the CMS Web site.

   Table 42--Final CY 2018 Status Indicator (SI) for CPT Codes 81490,
                  81503, 81535, 81536, 81538, and 81539
------------------------------------------------------------------------
                                              CY 2017 OPPS  CY 2018 OPPS
        CPT code           Long descriptor         SI            SI
------------------------------------------------------------------------
81490..................  Autoimmune                    Q4            Q4
                          (rheumatoid
                          arthritis),
                          analysis of 12
                          biomarkers using
                          immunoassays,
                          utilizing serum,
                          prognostic
                          algorithm reported
                          as a disease
                          activity score.
81503..................  Oncology (ovarian),           Q4            Q4
                          biochemical assays
                          of five proteins
                          (ca-125,
                          apolipoprotein a1,
                          beta-2
                          microglobulin,
                          transferrin, and
                          pre-albumin),
                          utilizing serum,
                          algorithm reported
                          as a risk score.
81535..................  Oncology                      Q4            Q4
                          (gynecologic),
                          live tumor cell
                          culture and
                          chemotherapeutic
                          response by dapi
                          stain and
                          morphology,
                          predictive
                          algorithm reported
                          as a drug response
                          score; first
                          single drug or
                          drug combination.
81536..................  Oncology                      Q4            Q4
                          (gynecologic),
                          live tumor cell
                          culture and
                          chemotherapeutic
                          response by dapi
                          stain and
                          morphology,
                          predictive
                          algorithm reported
                          as a drug response
                          score; each
                          additional single
                          drug or drug
                          combination (list
                          separately in
                          addition to code
                          for primary
                          procedure).
81538..................  Oncology (lung),              Q4            Q4
                          mass spectrometric
                          8-protein
                          signature,
                          including amyloid
                          a, utilizing
                          serum, prognostic
                          and predictive
                          algorithm reported
                          as good versus
                          poor overall
                          survival.

[[Page 59300]]

 
81539..................  Oncology (high-               Q4            Q4
                          grade prostate
                          cancer),
                          biochemical assay
                          of four proteins
                          (total psa, free
                          psa, intact psa,
                          and human
                          kallikrein-2
                          [hk2]), utilizing
                          plasma or serum,
                          prognostic
                          algorithm reported
                          as a probability
                          score.
------------------------------------------------------------------------

15. Musculoskeletal APCs (APC 5111 Through 5116)
    For CY 2018, we proposed to continue the existing C-APCs for the 
six levels of musculoskeletal procedures (C-APCs 5111 through 5116), as 
displayed in Table 43 below and in Addendum B to the CY 2018 OPPS/ASC 
proposed rule.

     Table 43--Proposed CY 2018 Geometric Mean Cost and Payment for
                         Musculoskeletal C-APCs
------------------------------------------------------------------------
                                              CY 2018       Proposed CY
                  C-APC                   geometric mean     2018 OPPS
                                               cost           payment
------------------------------------------------------------------------
5111--Level 1 Musculoskeletal Procedures         $222.10            $214
5112--Level 2 Musculoskeletal Procedures        1,311.47           1,261
5113--Level 3 Musculoskeletal Procedures        2,600.94           2,501
5114--Level 4 Musculoskeletal Procedures        5,602.87           5,385
5115--Level 5 Musculoskeletal Procedures       10,310.27           9,913
5116--Level 6 Musculoskeletal Procedures       15,783.57          15,175
------------------------------------------------------------------------

    Comment: Commenters disagreed with the proposal for six levels of 
the musculoskeletal C-APCs and requested that CMS create two additional 
levels within the musculoskeletal C-APCs. The commenters stated 
concerns about the range of costs of procedures assigned to Level 4, 
Level 5, and Level 6. The commenters believed that the gap between the 
musculoskeletal procedure levels and payments is too large and results 
in APCs that include disparate procedures in terms of clinical 
complexity and resource use.
    Response: At this time, we continue to believe that the proposed C-
APC levels for the musculoskeletal procedures C-APC family provide an 
appropriate distinction between the resource costs at each level and 
provide clinical homogeneity. We will continue to review this C-APC 
structure to determine if additional granularity is necessary for this 
C-APC family.
16. Nasal/Sinus Endscopy Procedures (C-APC 5155)
    For CY 2018, the AMA CPT Editorial Panel established several new 
bundled nasal/sinus endoscopy CPT codes. Table 44 below lists the 
complete descriptors for the new CPT codes. These codes were listed in 
Addendum B and Addendum O to the CY 2018 OPPS/ASC proposed rule (which 
is available via the Internet on the CMS Web site). Addendum B listed 
the proposed status indicator assignments for the new codes and 
assigned them to comment indicator ``NP'' (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, proposed APC assignment; comments will be accepted on the 
proposed APC assignment for the new code), while Addendum O listed the 
proposed/placeholder CY 2018 CPT codes and the long descriptors. We 
note that the CPT code descriptors that appeared in the OPPS Addendum B 
were short descriptors and did not accurately describe the complete 
procedure, service, or item described by the CPT code. Therefore, we 
included the 5-digit placeholder codes and their long descriptors in 
Addendum O to the proposed rule, specifically under the column labeled 
``CY 2018 OPPS/ASC Proposed Rule 5-Digit AMA Placeholder Code'' so that 
the public could adequately comment on our proposed APC and status 
indicator assignments. We also indicated that the final CPT code 
numbers would be included in this CY 2018 OPPS/ASC final rule with 
comment period. The final CPT code numbers, along with their 
corresponding 5-digit placeholder codes, can be found in Table 45 
below.
    As displayed in Table 44 below and in Addendum B of the CY 2018 
OPPS/ASC proposed rule, we proposed to assign CPT code 31241 to status 
indicator ``C'' to indicate that this is an inpatient only procedure, 
and to assign CPT codes 31253, 31257, 31259, and 31298 to C-APC 5155 
(Level 5 Airway Endoscopy), with a proposed payment rate of $4,628.89.

[[Page 59301]]



   Table 44--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rates for the New Nasal/Sinus
                                  Endoscopy CPT Codes Effective January 1, 2018
----------------------------------------------------------------------------------------------------------------
                                                                                                     Proposed CY
                              CY 2018 OPPS/ASC                             Proposed CY  Proposed CY   2018 OPPS
        CPT code                proposed rule          Long descriptor    2018 OPPS SI   2018 OPPS     payment
                              placeholder code                                              APC          rate
----------------------------------------------------------------------------------------------------------------
31241...................  31XX1...................  Nasal/sinus                      C          N/A          N/A
                                                     endoscopy,
                                                     surgical; with
                                                     ligation of
                                                     sphenopalatine
                                                     artery.
31253...................  31XX2...................  Nasal/sinus                    J1          5155    $4,628.89
                                                     endoscopy, surgical
                                                     with ethmoidectomy;
                                                     total (anterior and
                                                     posterior),
                                                     including frontal
                                                     sinus exploration,
                                                     with removal of
                                                     tissue from frontal
                                                     sinus, when
                                                     performed.
31257...................  31XX3...................  Nasal/sinus                    J1          5155     4,628.89
                                                     endoscopy, surgical
                                                     with ethmoidectomy;
                                                     total (anterior and
                                                     posterior),
                                                     including
                                                     sphenoidotomy.
31259...................  31XX4...................  Nasal/sinus                    J1          5155     4,628.89
                                                     endoscopy, surgical
                                                     with ethmoidectomy;
                                                     total (anterior and
                                                     posterior),
                                                     including
                                                     sphenoidotomy, with
                                                     removal of tissue
                                                     from the sphenoid
                                                     sinus.
31298...................  31XX5...................  Nasal/sinus                    J1          5155     4,628.89
                                                     endoscopy,
                                                     surgical; with
                                                     dilation of frontal
                                                     and sphenoid sinus
                                                     ostia (e.g.,
                                                     balloon dilation).
----------------------------------------------------------------------------------------------------------------

    Comment: Several commenters expressed concern with the APC 
placement and indicated that assignment to C-APC 5155 in the OPPS would 
reduce the ASC payment for the procedures by 32 percent. The commenters 
requested that CMS assign the new bundled codes to a higher paying APC 
to provide appropriate payment in the ASC setting. Some commenters 
clarified that, in CY 2017, these bundled procedures were reported 
under two separate codes that were separately payable. Because of the 
effect on the ASC payment, the commenters recommended that CMS 
establish a new APC for multiple (five or more) sinus procedures, 
reconfigure the airway APCs to better recognize the complexity 
associated with performing multiple sinus procedures in a single 
surgery, or create a complexity adjustment for sinus procedures billed 
with a device or drug HCPCS C-code or J-code.
    Response: C-APC 5155 contains several endoscopic sinus procedures, 
including the single endoscopic sinus surgeries. Based on input from 
our medical advisors, we believe this APC is the most appropriate 
assignment for CPT codes 31253, 31257, 31259, and 31298. C-APC 5155, 
which has a final rule geometric mean cost of approximately $4,861, is 
currently the highest paying APC within the airway endoscopy APC 
series. Because CPT codes 31253, 31257, 31259, and 31298 are new codes 
for CY 2018, we believe that we should assign these codes to C-APC 5155 
where similar endoscopic sinus procedures are assigned.
    With regards to the comment recommending separate payment for the 
single endoscopic sinus procedures performed in 2017, because the codes 
describing single endoscopic sinus surgery are assigned to status 
indicator ``J1'', HOPDs receive one payment for the multiple surgeries, 
regardless of the number of endoscopic sinus procedures performed in a 
day. The status indicator assignment of ``J1'' to C-APC 5155 indicates 
that the APC is designated as a comprehensive APC (C-APC) under the 
OPPS. C-APCs provide a single payment for a primary service, and 
payment for all adjunctive services reported on the same claim is 
packaged into payment for the primary service. With few exceptions, all 
other services reported on a hospital outpatient claim in combination 
with the primary service are considered to be related to the delivery 
of the primary service and packaged into the single payment for the 
primary service and, therefore, separate payment is not available. We 
note that C-APCs do not apply to ASCs; consequently, the procedures 
would not be packaged. Instead, the procedures would be separately 
payable in the ASC setting. As we stated in the CY 2017 OPPS/ASC final 
rule with comment period, we did not implement C-APCs in the ASC 
payment system, and consequently, procedures paid separately through 
the ASC payment system are paid based on the standard ASC methodology 
(81 FR 79738). We refer readers to section II.A.2.b. (Comprehensive 
APCs) of this final rule with comment period for the discussion on the 
payment methodology for C-APCs and to section XII. (ASC Payment System) 
of this final rule with comment period for the discussion on the ASC 
Payment System. For the history on the establishment of C-APCs under 
the OPPS, we refer readers to the CY 2014 OPPS/ASC final rule (78 FR 
74861-4910).
    In summary, after consideration of the public comments we received, 
we are finalizing our proposal for CPT codes 31241, 31253, 31257, 
31259, and 31298 without modification. Consistent with the statutory 
requirement under section 1833(t)(9)(A) of the Act, we will reevaluate 
the APC assignment for these codes in the next rulemaking cycle. Table 
45 below lists the final status indicator and APC assignments for CPT 
codes 31241, 31253, 31257, 31259, and 31298 for CY 2018. We refer 
readers to Addendum B to this final rule with comment period for the 
payment rates for all codes reported under the OPPS. In addition, we 
refer readers to Addendum A to this final rule with comment period for 
the status indicator meanings for all codes reported under the OPPS. 
Both Addendum A and Addendum B are available via the Internet on the 
CMS Web site.

[[Page 59302]]



  Table 45--Final CY 2018 Status Indicator (SI) and APC Assignment for the New Nasal/Sinus Endoscopy CPT Codes
                                            Effective January 1, 2018
----------------------------------------------------------------------------------------------------------------
                        CY 2018 OPPS/ASC
      CPT code            proposed rule      Long descriptor   CY 2018 OPPS    CY 2018     CY 2018 OPPS payment
                        placeholder code                            SI         OPPS APC            rate
----------------------------------------------------------------------------------------------------------------
31241...............  31XX1...............  Nasal/sinus                   C          N/A  Refer to OPPS Addendum
                                             endoscopy,                                    B.
                                             surgical; with
                                             ligation of
                                             sphenopalatine
                                             artery.
31253...............  31XX2...............  Nasal/sinus                 J1          5155  Refer to OPPS Addendum
                                             endoscopy,                                    B.
                                             surgical with
                                             ethmoidectomy;
                                             total (anterior
                                             and posterior),
                                             including
                                             frontal sinus
                                             exploration,
                                             with removal of
                                             tissue from
                                             frontal sinus,
                                             when performed.
31257...............  31XX3...............  Nasal/sinus                 J1          5155  Refer to OPPS Addendum
                                             endoscopy,                                    B.
                                             surgical with
                                             ethmoidectomy;
                                             total (anterior
                                             and posterior),
                                             including
                                             sphenoidotomy.
31259...............  31XX4...............  Nasal/sinus                 J1          5155  Refer to OPPS Addendum
                                             endoscopy,                                    B.
                                             surgical with
                                             ethmoidectomy;
                                             total (anterior
                                             and posterior),
                                             including
                                             sphenoidotomy,
                                             with removal of
                                             tissue from the
                                             sphenoid sinus.
31298...............  31XX5...............  Nasal/sinus                 J1          5155  Refer to OPPS Addendum
                                             endoscopy,                                    B.
                                             surgical; with
                                             dilation of
                                             frontal and
                                             sphenoid sinus
                                             ostia (eg,
                                             balloon
                                             dilation).
----------------------------------------------------------------------------------------------------------------

17. Nuclear Medicine Services (APCs 5592 and 5593)
    For CY 2018, as illustrated in Table 46 below, we proposed to 
continue to assign CPT codes 78018 and 78121 to APC 5592 (Level 2 
Nuclear Medicine and Related Services) and to also continue to assign 
CPT codes 78110 and 78111 to APC 5593 (Level 3 Nuclear Medicine and 
Related Services).

             Table 46--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Codes 78018, 78110, 78111, and 78121
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2017                               Proposed CY
                                                                          CY 2017 OPPS    CY 2017        OPPS      Proposed CY  Proposed CY   2018 OPPS
               CPT code                         Long descriptor                SI         OPPS APC     payment    2018 OPPS SI   2018 OPPS     payment
                                                                                                         rate                       APC          Rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
78018................................  Thyroid carcinoma metastases                 S          5592      $429.13            S          5592      $439.56
                                        imaging; whole body.
78110................................  Plasma volume,                               S          5593     1,138.94            S          5593     1,163.30
                                        radiopharmaceutical volume-
                                        dilution technique (separate
                                        procedure); single sampling.
78111................................  Plasma volume,                               S          5593     1,138.94            S          5593     1,163.30
                                        radiopharmaceutical volume-
                                        dilution technique (separate
                                        procedure); multiple samplings.
78121................................  Red cell volume determination                S          5592       429.13            S          5592       439.56
                                        (separate procedure); multiple
                                        samplings.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: One commenter stated that CMS proposed to reassign CPT 
codes 78018, 78110, 78111 and 78121 to new APC groups, and recommended 
that CMS maintain the CPT codes in the ``new APC groups'' to ensure 
stability within the coding structure. The commenter added that CMS has 
moved these codes several times over the years and believed they are 
currently assigned to appropriate APC groups. This commenter noted that 
the codes are low volume with high costs, and recommended that CMS 
defer to the specialty societies for appropriate APC assignment.
    Response: For the CY 2017 update, as indicated in the OPPS Addendum 
B that was released with the CY 2017 OPPS/ASC final rule with comment 
period, we assigned CPT codes 78018, 78110, 78111 and 78121 to comment 
indicator ``CH'' to indicate that their APC assignments were revised. 
However, as displayed in Table 46, we proposed to make no change to the 
APC assignments for all four codes for the CY 2018 OPPS update. 
Specifically, we proposed to continue to assign CPT codes 78018, 78110, 
78111, and 78121 to the same CY 2017 APCs for CY 2018 based on claims 
data used for the CY 2018 OPPS/ASC proposed rule. We note that the 
proposed rule data was based on claims data submitted between January 
1, 2016, and December 31, 2016, that were processed on or before 
December 31, 2016. For CPT code 78018, our examination of the claims 
data revealed a geometric mean cost of approximately $418 based on 
5,604 single claims (out of 6,327 total claims). Because the geometric 
mean cost of $418 is similar to the geometric mean cost of 
approximately $457 for APC 5592, we proposed to maintain the assignment 
of this code to APC 5592. For CPT code 78110, our claims data showed a 
geometric mean cost of approximately $1,046 based on 12 single claims 
(out of 14 total claims). We believe that the geometric mean cost of 
$1,046 for CPT code 78110 is comparable to the geometric mean cost of 
approximately $1,210 for APC 5593. Consequently, we proposed to 
maintain the assignment of this code to APC 5593. For CPT code 78111, 
we had no claims data. However, based on its clinical similarity to CPT 
code 78110, we proposed to continue to assign the CPT code to APC 5593. 
For CPT code 78121, our analysis revealed a geometric mean cost of 
approximately $807 based on 3 single claims (out of 3 total claims). 
Based on the low volume and because revising the assignment to

[[Page 59303]]

APC 5593, which had a proposed geometric mean cost of approximately 
$1,210 would result in an overpayment for the test, we proposed to 
continue to assign CPT code 78121 to APC 5592, and to review the claims 
data for the final rule to determine whether a revision to the APC 
assignment would be necessary.
    For this final rule with comment period, we again analyzed updated 
claims data associated with the four codes. We note that, for this 
final rule with comment period, we used claims data with dates of 
service between January 1, 2016, and December 31, 2016, that were 
processed on or before June 30, 2017. Our review of the final rule 
claims data revealed a similar pattern for all four codes. For CPT code 
78018, we found a geometric mean cost of approximately $418 based on 
6,113 single claims (out of 6,923 total claims), which is similar to 
the geometric mean cost of approximately $453 for APC 5592. 
Consequently, we believe that it continues to be appropriate to assign 
CPT code 78018 to APC 5592. For CPT code 78110, our claims data 
revealed a geometric mean cost of approximately $1,037 based on 12 
single claims (out of 14 total claims), which is similar to the 
geometric mean cost of approximately $1,202 for APC 5593.
    Consequently, we are maintaining CPT code 78110 in APC 5593. For 
CPT code 78111, we again had no claims data. However, because of its 
clinical similarity to CPT code 78110, we will maintain the assignment 
to APC 5593. For CPT code 78121, we found a geometric mean cost of 
approximately $808 based on 3 single claims (out of 3 total claims). 
Based on the comment received that the APC assignment is appropriate, 
we will retain CPT code 78121 in APC 5592, whose geometric mean cost is 
approximately $453, for CY 2018. In addition, given the low volume for 
the CPT code, we do not believe that we should reassign CPT code 78121 
to APC 5593, whose geometric mean cost is approximately $1,202 for CY 
2018. To reassign CPT code 78121 to APC 5593 would result in an 
overpayment for CPT code 78121.
    Further, we remind the commenter, that as we do every year, we 
review the latest OPPS claims data to set the payment rates for the 
following year. 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.
    With regard to the comment of deferring to specialty societies for 
appropriate APC placement for designated codes, while we rely on our 
latest claims data to appropriately set payment rates under the OPPS, 
we welcome and appreciate comments from all stakeholders on our 
proposals. We note that every year we publish the OPPS/ASC proposed 
rules with requests for public comments on the OPPS and ASC payment 
assignments from interested parties, including hospitals, specialty 
societies, physicians, nurses, health care technicians, other health 
care professionals, interested individuals, patients, and any other 
stakeholders interested on commenting on our proposed payment 
assignments.
    In summary, after consideration of the public comment we received, 
we are finalizing our CY 2018 proposals, without modification, for CPT 
codes 78018, 78110, 78111, and 78121. Table 47 below lists the final 
status indicator and APC assignments for the CPT codes. We refer 
readers to Addendum B to this final rule with comment period for the 
payment rates for all codes reported under the OPPS. In addition, we 
refer readers to Addendum A to this final rule with comment period for 
the status indicator meanings for all codes reported under the OPPS. 
Both Addendum A and Addendum B are available via the Internet on the 
CMS Web site.

                      Table 47--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Codes 78018, 78110, 78111, and 78121
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     CY 2017
                                                        CY 2017 OPPS    CY 2017        OPPS     CY 2018 OPPS    CY 2018
          CPT code                Long descriptors           SI         OPPS APC     payment         SI         OPPS APC     CY 2018 OPPS  payment rate
                                                                                       rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
78018.......................  Thyroid carcinoma                   S          5592      $429.13            S          5592  Refer to OPPS Addendum B.
                               metastases imaging;
                               whole body.
78110.......................  Plasma volume,                      S          5593     1,138.94            S          5593  Refer to OPPS Addendum B.
                               radiopharmaceutical
                               volume-dilution
                               technique (separate
                               procedure); single
                               sampling.
78111.......................  Plasma volume,                      S          5593     1,138.94            S          5593  Refer to OPPS Addendum B.
                               radiopharmaceutical
                               volume-dilution
                               technique (separate
                               procedure); multiple
                               samplings.
78121.......................  Red cell volume                     S          5592       429.13            S          5592  Refer to OPPS Addendum B.
                               determination (separate
                               procedure); multiple
                               samplings.
--------------------------------------------------------------------------------------------------------------------------------------------------------

18. Percutaneous Transluminal Mechanical Thrombectomy (C-APC 5192)
    For CY 2018, as noted in Table 48 below and in Addendum B to the CY 
2018 OPPS/ASC proposed rule, we proposed to revise the APC assignment 
for the percutaneous transluminal mechanical thrombectomy procedures, 
specifically, CPT codes 37184 and 37187. Specifically, we proposed to 
reassign CPT codes 37184 and 37187 from APC 5183 (Level 3 Vascular 
Procedures) to APC 5184 (Level 4 Vascular Procedures), with a proposed 
payment rate of $4,084.25.

[[Page 59304]]



                            Table 48--Proposed CY 2018 U (SI), APC Assignment, and Payment Rate for CPT Codes 37184 and 37187
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2017                               Proposed CY
                                                                          CY 2017 OPPS    CY 2017        OPPS      Proposed CY  Proposed CY   2018 OPPS
               CPT code                         Long descriptor                SI         OPPS APC     payment    2018 OPPS SI   2018 OPPS     payment
                                                                                                         rate                       APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
37184................................  Primary percutaneous transluminal            T          5183    $3,924.28            T          5184    $4,084.25
                                        mechanical thrombectomy,
                                        noncoronary, non-intracranial,
                                        arterial or arterial bypass
                                        graft, including fluoroscopic
                                        guidance and intraprocedural
                                        pharmacological thrombolytic
                                        injection(s); initial vessel.
37187................................  Percutaneous transluminal                    T          5183     3,924.28            T          5184     4,084.25
                                        mechanical thrombectomy,
                                        vein(s), including
                                        intraprocedural pharmacological
                                        thrombolytic injections and
                                        fluoroscopic guidance.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: One commenter requested that CMS revise the proposed APC 
assignment for CPT codes 37184 and 37187 from APC 5184 to C-APC 5192 
based on their clinical and resource homogeneity to the procedures 
assigned to C-APC 5192 (Level 2 Endovascular Procedures). The commenter 
indicated that both procedures are clinically similar to other 
percutaneous transluminal procedures assigned to C-APC 5192, including 
CPT code 36904 (Percutaneous transluminal mechanical thrombectomy and/
or infusion for thrombolysis, dialysis circuit, any method, including 
all imaging and radiological supervision and interpretation, diagnostic 
angiography, fluoroscopic guidance, catheter placement(s), and 
intraprocedural pharmacological thrombolytic injection(s)), which CMS 
proposed to assign to C-APC 5192 for CY 2018, with a proposed payment 
of $4,999.36. This commenter added that the geometric mean costs 
associated with the procedures described by CPT codes 37184 and 37187 
are similar to the geometric mean costs of other procedures currently 
assigned to C-APC 5192.
    Response: For this final rule with comment period, we reviewed the 
updated CY 2016 claims data associated with CPT codes 37184 and 37187. 
We note that, for this final rule with comment period, we used claims 
data with dates of service between January 1, 2016, and December 31, 
2016, that were processed on or before June 30, 2017. Our analysis of 
the final rule claims data revealed that a change in the APC assignment 
for CPT codes 37184 and 37187 to C-APC 5192 (rather than proposed APC 
5184) is appropriate. Specifically, we found a geometric mean cost of 
approximately $8,459 for CPT code 37184 based on 149 single claims (out 
of 150 total claims), and a geometric mean cost of approximately $6,343 
for CPT code 37187 based on 188 single claims (out of 190 total 
claims). We believe that the geometric mean costs for CPT codes 37184 
and 37187 are more similar to the geometric mean costs of other 
procedures assigned to C-APC 5192, whose geometric mean cost is 
approximately $5,082, rather than the geometric mean costs of 
procedures assigned to APC 5184, whose geometric mean cost is 
approximately $4,262. We note that we also considered whether we should 
reassign CPT codes 37184 and 37187 to C-APC 5193 (Level 3 Endovascular 
Procedures), which has a geometric mean cost of approximately $10,504. 
However, based on our review, we believe that C-APC 5192 is more 
appropriate. Therefore, based on their clinical homogeneity and 
resource costs in relation to the other procedures assigned to C-APC 
5192, we agree with the commenter that C-APC 5192 is the most 
appropriate APC assignment for CPT codes 37184 and 37187.
    After consideration of the public comment we received, we are 
finalizing our CY 2018 proposal, with modification, for CPT codes 37184 
and 37187. Specifically, we are reassigning CPT codes 37184 and 37187 
from APC 5183 to C-APC 5192 for CY 2018. As we do every year under the 
OPPS, we will reevaluate the cost of CPT codes 37184, and 37187 and 
their APC assignment for next year's OPPS update. Table 49 below lists 
the final status indicator and APC assignments for both CPT codes. We 
refer readers to Addendum B to this final rule with comment period for 
the payment rates for all codes reported under the OPPS. In addition, 
we refer readers to Addendum A to this final rule with comment period 
for the status indicator meanings for all codes reported under the 
OPPS. Both Addendum A and Addendum B are available via the Internet on 
the CMS Web site.

[[Page 59305]]



                             Table 49--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Codes 37184 and 37187
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     CY 2017
                                                        CY 2017 OPPS    CY 2017        OPPS     CY 2018 OPPS    CY 2018
          CPT code                 Long descriptor           SI         OPPS APC     payment         SI         OPPS APC     CY 2018 OPPS payment rate
                                                                                       rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
37184.......................  Primary percutaneous                T          5183    $3,924.28           J1          5192  Refer to OPPS Addendum B.
                               transluminal mechanical
                               thrombectomy,
                               noncoronary, non-
                               intracranial, arterial
                               or arterial bypass
                               graft, including
                               fluoroscopic guidance
                               and intraprocedural
                               pharmacological
                               thrombolytic
                               injection(s); initial
                               vessel.
37187.......................  Percutaneous                        T          5183     3,924.28           J1          5192  Refer to OPPS Addendum B.
                               transluminal mechanical
                               thrombectomy, vein(s),
                               including
                               intraprocedural
                               pharmacological
                               thrombolytic injections
                               and fluoroscopic
                               guidance.
--------------------------------------------------------------------------------------------------------------------------------------------------------

19. Peripherally Inserted Central Venous Catheter (PICC) (APC 5182)
    For CY 2018, as noted in Table 50 below, we proposed to reassign 
CPT code 36569 from APC 5181 (Level 1 Vascular Procedures) to APC 5182 
(Level 2 Vascular Procedures), with a proposed payment rate of $945.33.

                          Table 50--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Code 36569
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2017                               Proposed CY
                                                                          CY 2017 OPPS    CY 2017        OPPS      Proposed CY  Proposed CY   2018 OPPS
               CPT code                         Long descriptor                SI         OPPS APC     payment    2018 OPPS SI   2018 OPPS     payment
                                                                                                         rate                       APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
36569................................  Insertion of peripherally                    T          5181      $684.13            T          5182      $945.33
                                        inserted central venous catheter
                                        (picc), without subcutaneous
                                        port or pump; age 5 years or
                                        older.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    We proposed to revise the APC assignment for CPT code 36569 based 
on claims data used for the CY 2018 OPPS/ASC proposed rule. We note 
that the proposed rule data was based on claims data submitted between 
January 1, 2016, and December 31, 2016, that were processed on or 
before December 31, 2016. Our analysis of the proposed rule claims data 
revealed a geometric mean cost of approximately $934 for CPT code 36569 
based on 29,514 single claims (out of 52,035 total claims). Our 
analysis further revealed a geometric mean cost of approximately $983 
for APC 5182 and $610 for APC 5181. Based on the geometric mean costs 
of APCs 5181 and 5182, we believed it was necessary to revise the APC 
assignment for CPT code 36569 from APC 5181 to APC 5182 to pay 
appropriately for the procedure. Consequently, we proposed to revise 
the APC assignment for CPT code 36569, whose geometric mean cost of 
approximately $934 is comparable to the geometric mean cost of 
approximately $983 for APC 5182.
    For this final rule with comment period, we again reviewed the 
updated claims data associated with CPT code 36569. We note that, for 
this final rule with comment period, we used claims data with dates of 
service between January 1, 2016, and December 31, 2016, that were 
processed on or before June 30, 2017. Our analysis of the final rule 
claims data revealed a similar pattern for CPT code 36569. 
Specifically, we found a geometric mean cost of approximately $929 for 
CPT code 36569 based on 31,559 single claims (out of 56,891 total 
claims). We also found the geometric mean cost of approximately $982 
for APC 5182 to be similar to the geometric mean cost of CPT code 36569 
compared to the geometric mean cost of approximately $612 for APC 5181.
    Comment: One commenter supported the proposed APC reassignment for 
CPT code 36569 and stated that APC 5182 more appropriately reflects the 
resources to perform the procedure.
    Response: We appreciate the commenter's support. Based on our 
latest analysis of the final rule claims data, we are finalizing our 
proposal to reassign CPT code 36569 from APC 5181 to APC 5182.
    In summary, after consideration of the public comment we received, 
we are finalizing our CY 2018 proposal, without modification, to 
reassign CPT code 36569 to APC 5182. Table 51 below lists the final 
status indicator and APC assignments for CPT code 36569 for CY 2018. We 
refer readers to Addendum B to this final rule with comment period for 
the payment rates for all codes reported under the OPPS. In addition, 
we refer readers to Addendum A to this final rule with comment period 
for the status indicator meanings for all codes reported under the 
OPPS. Both Addendum A and Addendum B are available via the Internet on 
the CMS Web site.

[[Page 59306]]



                                   Table 51--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Code 36569
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     CY 2017
                                                        CY 2017 OPPS    CY 2017        OPPS     CY 2018 OPPS    CY 2018
          CPT code                 Long descriptor           SI         OPPS APC     payment         SI         OPPS APC     CY 2018 OPPS payment rate
                                                                                       rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
36569.......................  Insertion of                        T          5181      $684.13            T          5182  Refer to OPPS Addendum B.
                               peripherally inserted
                               central venous catheter
                               (picc), without
                               subcutaneous port or
                               pump; age 5 years or
                               older.
--------------------------------------------------------------------------------------------------------------------------------------------------------

20. Pulmonary Rehabilitation Services (APCs 5732 and 5733) and Cardiac 
Rehabilitation Services (APC 5771)
    For CY 2018, as displayed in Table 52 below, and as listed in 
Addendum B of the CY 2018 OPPS/ASC proposed rule, we did not propose to 
make any change to the APC assignments for the pulmonary rehabilitation 
services and cardiac rehabilitation services codes. Currently, there 
are four HCPCS codes that describe pulmonary rehabilitation services, 
specifically, HCPCS codes G0237, G0238, G0239, and G0424. For CY 2018, 
we proposed to continue to assign HCPCS codes G0237, G0238, and G0239 
to APC 5732 (Level 2 Minor Procedures) and to continue to assign HCPCS 
code G0424 to APC 5733 (Level 3 Minor Procedures) for CY 2018. In 
addition, there are currently four HCPCS codes that describe the 
cardiac rehabilitation services, specifically, HCPCS codes 93797, 
93798, G0422, and G0423. For CY 2018, we proposed to continue to assign 
the cardiac rehabilitation services codes to APC 5771 (Cardiac 
Rehabilitation) for CY 2018.

 Table 52--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for the Pulmonary Rehabilitation Services and Cardiac Rehabilitation
                                                                  Services HCPCS Codes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2017                               Proposed CY
                                                                          CY 2017 OPPS    CY 2017        OPPS      Proposed CY  Proposed CY   2018 OPPS
              HCPCS code                        Long descriptor                SI         OPPS APC     payment    2018 OPPS SI   2018 OPPS     payment
                                                                                                         rate                       APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Pulmonary Rehabilitation Services
--------------------------------------------------------------------------------------------------------------------------------------------------------
G0237................................  Therapeutic procedures to                    S          5732       $28.38            S          5732       $29.65
                                        increase strength or endurance
                                        of respiratory muscles, face to
                                        face, one on one, each 15
                                        minutes (includes monitoring).
G0238................................  Therapeutic procedures to improve            S          5732        28.38            S          5732        29.65
                                        respiratory function, other than
                                        described by g0237, one on one,
                                        face to face, per 15 minutes
                                        (includes monitoring).
G0239................................  Therapeutic procedures to improve            S          5732        28.38            S          5732        29.65
                                        respiratory function or increase
                                        strength or endurance of
                                        respiratory muscles, two or more
                                        individuals (includes
                                        monitoring).
G0424................................  Pulmonary rehabilitation,                    S          5733        54.55            S          5733        53.22
                                        including exercise (includes
                                        monitoring), one hour, per
                                        session, up to two sessions per
                                        day.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Cardiac Rehabilitation Services
--------------------------------------------------------------------------------------------------------------------------------------------------------
93797................................  Physician or other qualified                 S          5771      $110.22            S          5771      $113.71
                                        health care professional
                                        services for outpatient cardiac
                                        rehabilitation; without
                                        continuous ecg monitoring (per
                                        session).
93798................................  Physician or other qualified                 S          5771       110.22            S          5771       113.71
                                        health care professional
                                        services for outpatient cardiac
                                        rehabilitation; with continuous
                                        ecg monitoring (per session).
G0422................................  Intensive cardiac rehabilitation;            S          5771       110.22            S          5771       113.71
                                        with or without continuous ecg
                                        monitoring with exercise, per
                                        session.
G0423................................  Intensive cardiac rehabilitation;            S          5771       110.22            S          5771       113.71
                                        with or without continuous ecg
                                        monitoring; without exercise,
                                        per session.
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 59307]]

    Comment: Several commenters expressed concern that the payment 
rates for the pulmonary rehabilitation services are significantly less 
than those for the cardiac rehabilitation services. The commenters 
stated that, despite the legislative and clinical similarity between 
both services, CMS has taken different approaches to implementing the 
services, with pulmonary rehabilitation services paid less than cardiac 
rehabilitation services. One commenter indicated that, since 2010, the 
code describing pulmonary rehabilitation services has had three 
different status indicator assignments and payment volatility. This 
commenter recommended that CMS reassign the pulmonary rehabilitation 
HCPCS code G0464 from APC 5733 to the cardiac rehabilitation APC group, 
specifically, APC 5771. Another commenter recommended that CMS revisit 
its approach to payment for pulmonary rehabilitation services to 
improve access to care. One commenter recommended that both types of 
services be placed in one composite APC under the OPPS.
    Response: The payment rates for both the pulmonary and cardiac 
rehabilitation services are based on claims data that are analyzed each 
year. As we do every year, we review the latest OPPS claims data to set 
the payment rates for the following year. We note that 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.
    For the proposed rule, we based the proposed payment rates on 
claims data submitted between January 1, 2016, and December 31, 2016, 
that were processed on or before December 31, 2016. Based on our 
analysis, we found the costs for both types of services to be 
significantly different.
    For the pulmonary rehabilitation services, our analysis revealed a 
geometric mean cost of approximately $26 for HCPCS code G0237 (based on 
19,925 single claims), $22 for HCPCS code G0238 (based on 17,361 single 
claims), and $33 for HCPCS code G0239 (based on 168,295 single claims). 
We note that the range of costs (between $26 and $33) for HCPCS codes 
G0237, G0238, and G0239 are similar to the geometric mean cost of 
approximately $31 for APC 5732. Consequently, we proposed to continue 
to assign all three pulmonary rehabilitation services HCPCS codes to 
APC 5732 for CY 2018. In addition, we found a geometric mean cost of 
approximately $45 for HCPCS code G0424 (based on 468,571 single claims) 
that is comparable to the geometric mean cost of approximately $55 for 
APC 5733. Therefore, we proposed to continue to assign HCPCS code G0424 
to APC 5733.
    For the cardiac rehabilitation services, our analysis revealed a 
geometric mean cost of approximately $101 for HCPCS code 93797 (based 
on 129,124 single claims), $118 for HCPCS code 93798 (based on 
2,698,534 single claims), $212 for HCPCS code G0422 (based on 38,094 
single claims), and $174 for HCPCS code G0423 (based on 18,001 single 
claims). Because the range of costs (between $101 and $212) for the 
cardiac rehabilitation services are comparable to the geometric mean 
cost of approximately $118 for APC 5771, we proposed to continue to 
assign the cardiac rehabilitation HCPCS codes to APC 5771 for CY 2018.
    For this final rule with comment period, we again analyzed the 
updated claims data associated with the pulmonary and cardiac 
rehabilitation services. We note that, for this final rule with comment 
period, we used claims data with dates of service between January 1, 
2016, and December 31, 2016, that were processed on or before June 30, 
2017. Similar to our proposed rule findings, we found the costs to be 
different for both services.
    For the pulmonary rehabilitation services, our final rule claims 
data revealed a geometric mean cost of approximately $25 for HCPCS code 
G0237 (based on 22,097 single claims), $22 for HCPCS code G0238 (based 
on 18,900 single claims), and $33 for HCPCS code G0239 (based on 
187,134 single claims). Based on the range of costs (between $22 and 
$33), we believe that HCPCS codes G0237, G0238, and G0239 are 
appropriately assigned to APC 5732, whose geometric mean cost is 
approximately $32. Similarly, we believe that the geometric mean cost 
of approximately $44 (based on 514,478 single claims) for HCPCS code 
G0424 is comparable to the geometric mean costs of those services 
assigned to APC 5733, whose geometric mean cost is approximately $56 
for CY 2018.
    For the cardiac rehabilitation services, our final rule claims data 
revealed a geometric mean cost of approximately $224 for HCPCS code 
G0422 (based on 44,754 single claims), $186 for HCPCS code G0423 (based 
on 22,188 single claims), $101 for HCPCS code 93797 (based on 143,507 
single claims), and $116 for HCPCS code 93798 (based on 2,991,759 
single claims). Based on the costs for the cardiac rehabilitation HCPCS 
codes (between $101 to $224), we believe that the geometric mean cost 
of approximately $117 for APC 5771 appropriately reflects the resources 
in providing cardiac rehabilitation services.
    In addition, while the commenters believed that pulmonary and 
cardiac rehabilitation services are similar, our analysis of the 
available OPPS data reveals that their costs are significantly 
different. Consequently, we do not agree that we should assign both 
services to one APC, or even assign the pulmonary rehabilitation HCPCS 
code G0424 to the cardiac rehabilitation services group (APC 5771). We 
note that the commenters did not provide data to suggest that the 
hospital reported costs in our data are incorrect or that the resources 
(costs) incurred to furnish these two types of services are equal. 
Accordingly, we have no reason to believe that the data reported to us 
by hospitals are incorrect.
    Moreover, we do not agree that we should create a composite APC for 
the pulmonary and cardiac rehabilitation services. Composite APCs 
provide a single payment for groups of services that are typically 
performed together during a single clinical encounter 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. Establishing a composite APC for these services would not 
be appropriate because pulmonary and cardiac rehabilitation services 
are generally not performed on the same day. 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.
    Comment: Some commenters stated that, despite evidence that 
pulmonary rehabilitation is a valuable service, few patients with 
chronic obstructive pulmonary disease (COPD) are able to access this 
treatment. The commenters further indicated that a study of Medicare 
beneficiaries revealed that only 3.7 percent of COPD patients received 
pulmonary rehabilitation in 2012, and believe this number may be higher 
for non-Medicare beneficiaries. The commenters noted that payment for 
pulmonary rehabilitation is lower than cardiac rehabilitation (a 
similar service) in the Medicare program, and believed

[[Page 59308]]

this difference is based on idiosyncratic hospital billing and OPPS 
rules, not based on rational policy or evidence. Specifically, the 
commenter indicated that, for CY 2017, payment for 1 hour of pulmonary 
rehabilitation is $54.55 under the OPPS. These commenters suggested 
that the payment discrepancy between cardiac services and pulmonary 
rehabilitation services may be a contributing factor to inadequate 
access of the pulmonary rehabilitation services.
    Response: As stated in section III.B. of this final rule with 
comment period, payments for OPPS services and procedures are based on 
our analysis of the latest claims data. Under the OPPS, we pay for 
covered 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. Under the Medicare program, we pay 
separately for both cardiac and pulmonary rehabilitation services. We 
have not found evidence that there is an access to care issue for 
pulmonary rehabilitation services compared to cardiac rehabilitation 
services. We note that there are a variety of treatment options for 
patients with COPD and pulmonary rehabilitation remains a covered 
service for those beneficiaries for whom physicians order this service. 
We note that, under the Medicare program, when the service is provided 
in the hospital outpatient setting, we make two payments, one to the 
hospital outpatient department under the OPPS and another for the 
professional services under the MPFS.
    In addition, as illustrated in Table 52-1 below, the number of 
services paid by Medicare for both cardiac rehabilitation and pulmonary 
rehabilitation has grown in the last several years. For the CY 2018 
OPPS update, our claims data reveal over 514,000 single claims for 
pulmonary rehabilitation services as described by HCPCS code G0424 
alone. Accordingly, we do not believe that beneficiary access to 
pulmonary rehabilitation services is inadequate. Details pertaining to 
the volume of these services furnished in the physician office setting 
can be derived from the CY 2018 MPFS final rule and associated public 
use files.

Table 52-1--OPPS Claims Data for the Pulmonary and Cardiac (Including Intensive Cardiac) Rehabilitation HCPCS Codes for the CY 2014 Through CY 2018 OPPS
                                                                         Updates
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             2014 OPPS       2015 OPPS       2016 OPPS       2017 OPPS       2018 OPPS
            HCPCS code                        Short descriptor             single claims   single claims   single claims   single claims   single claims
                                                                               data            data            data            data            data
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Cardiac Rehabilitation Services
--------------------------------------------------------------------------------------------------------------------------------------------------------
93797.............................  Cardiac rehab.......................          87,689          94,769         109,420         120,821         143,507
93798.............................  Cardiac rehab/monitor...............       2,428,984       2,481,175       2,581,446       2,761,806       2,991,759
G0422.............................  Intens cardiac rehab w/exerc........          12,060          12,043          17,646          30,165          44,754
G0423.............................  Intens cardiac rehab no exer........             703           1,325           6,654          11,979          22,188
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Pulmonary Rehabilitation Services
--------------------------------------------------------------------------------------------------------------------------------------------------------
G0237.............................  Therapeutic procd strg endur........          15,337          43,591          47,046          19,098          22,097
G0238.............................  Oth resp proc, indiv................          14,437          22,736          23,960          18,482          18,900
G0239.............................  Oth resp proc, group................         132,475         111,755         127,425         165,799         187,134
G0424.............................  Pulmonary rehab w exer..............         457,226         459,572         454,121         443,777         514,478
--------------------------------------------------------------------------------------------------------------------------------------------------------

    In summary, after consideration of the public comments we received 
and after our analysis of the updated claims data for this final rule 
with comment period, we believe that the current APC assignments for 
the pulmonary and cardiac rehabilitation services appropriately 
reflects their clinical coherence and resource costs. Consequently, we 
are finalizing our proposal to continue the current APC assignment of 
the pulmonary and cardiac rehabilitation HCPCS codes, without 
modification, for CY 2018. As we do every year, we will review our 
claims data for these services for the CY 2019 OPPS rulemaking. Table 
53 below lists the final status indicator and APC assignments for the 
codes for pulmonary and cardiac rehabilitation services. We refer 
readers to Addendum B to this final rule with comment period for the 
payment rates for all codes reported under the OPPS. In addition, we 
refer readers to Addendum A to this final rule with comment period for 
the status indicator meanings for all codes reported under the OPPS. 
Both Addendum A and Addendum B are available via the Internet on the 
CMS Web site.

     Table 53--Final CY 2018 Status Indicator (SI) and APC Assignment for the Pulmonary Rehabilitation Services and Cardiac Rehabilitation Services
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     CY 2017
                                                        CY 2017 OPPS    CY 2017        OPPS     CY 2018 OPPS    CY 2018
         HCPCS code                Long descriptor           SI         OPPS APC     payment         SI         OPPS APC     CY 2018 OPPS  payment rate
                                                                                       rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Pulmonary Rehabilitation Services
--------------------------------------------------------------------------------------------------------------------------------------------------------
G0237.......................  Therapeutic procedures              S          5732       $28.38            S          5732  Refer to OPPS Addendum B.
                               to increase strength or
                               endurance of
                               respiratory muscles,
                               face to face, one on
                               one, each 15 minutes
                               (includes monitoring).

[[Page 59309]]

 
G0238.......................  Therapeutic procedures              S          5732        28.38            S          5732  Refer to OPPS Addendum B.
                               to improve respiratory
                               function, other than
                               described by g0237, one
                               on one, face to face,
                               per 15 minutes
                               (includes monitoring).
G0239.......................  Therapeutic procedures              S          5732        28.38            S          5732  Refer to OPPS Addendum B.
                               to improve respiratory
                               function or increase
                               strength or endurance
                               of respiratory muscles,
                               two or more individuals
                               (includes monitoring).
G0424.......................  Pulmonary                           S          5733        54.55            S          5733  Refer to OPPS Addendum B.
                               rehabilitation,
                               including exercise
                               (includes monitoring),
                               one hour, per session,
                               up to two sessions per
                               day.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Cardiac Rehabilitation Services
--------------------------------------------------------------------------------------------------------------------------------------------------------
93797.......................  Physician or other                  S          5771      $110.22            S          5771  Refer to OPPS Addendum B.
                               qualified health care
                               professional services
                               for outpatient cardiac
                               rehabilitation; without
                               continuous ecg
                               monitoring (per
                               session).
93798.......................  Physician or other                  S          5771       110.22            S          5771  Refer to OPPS Addendum B.
                               qualified health care
                               professional services
                               for outpatient cardiac
                               rehabilitation; with
                               continuous ecg
                               monitoring (per
                               session).
G0422.......................  Intensive cardiac                   S          5771       110.22            S          5771  Refer to OPPS Addendum B.
                               rehabilitation; with or
                               without continuous ecg
                               monitoring with
                               exercise, per session.
G0423.......................  Intensive cardiac                   S          5771       110.22            S          5771  Refer to OPPS Addendum B.
                               rehabilitation; with or
                               without continuous ecg
                               monitoring; without
                               exercise, per session.
--------------------------------------------------------------------------------------------------------------------------------------------------------

21. Radiology and Imaging Procedures and Services
a. Imaging APCs
    Section 1833(t)(9)(A) of the Act requires the Secretary to review 
not less often than annually, and revise the APC group assignments, 
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. In addition, section 1833(t)(2)(G) of the Act requires the 
Secretary to create additional groups of covered OPD services that 
classify separately those procedures that utilize contrast agents from 
those procedures that do not utilize contrast agents.
    In CY 2016, as a part of our comprehensive review of the structure 
of the APCs and procedure code assignments, we restructured the APCs 
that contain imaging services (80 FR 70392). The purpose of this 
restructuring was to more appropriately reflect the resource costs and 
clinical characteristics of the services classified within the imaging 
APCs. The restructuring of the imaging APCs resulted in broader 
groupings that removed the excessive granularity of grouping imaging 
services according to organ or physiologic system, which did not 
necessarily reflect either significant differences in resources or how 
these services are delivered in the hospital outpatient setting. In CY 
2017, in response to public comments on the CY 2017 OPPS/ASC proposed 
rule, we further consolidated the imaging APCs from 17 APCs in CY 2016 
to 7 APCs in CY 2017 (81 FR 79633). These included four imaging APCs 
without contrast and three imaging APCs with contrast.
    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33608), 
for CY 2018, we reviewed the services assigned to the imaging without 
contrast APCs and imaging with contrast APCs. Specifically, we 
evaluated the resource costs and clinical coherence of the procedures 
associated with the four levels of imaging without contrast APCs and 
the three levels of imaging with contrast APCs, as well as identified 
and corrected any 2 times rule violations as discussed in section 
III.B.2. of the CY 2018 OPPS/ASC proposed rule. In addition, we 
reviewed and considered stakeholder recommendations to make additional 
refinements to the structure of the APC groupings of the imaging 
procedures classified within the imaging APCs that would maintain 
clinical homogeneity while more appropriately addressing resource cost 
fluctuation and volatility. As a result of our analysis and review of 
the claims data used for CY 2018 ratesetting, we stated in the proposed 
rule that we believed a Level 5 Imaging without Contrast APC was needed 
to more appropriately group certain imaging services with higher 
resource costs. Specifically, we stated our belief that

[[Page 59310]]

the data supported splitting the current (CY 2017) Level 4 Imaging 
without Contrast APC into two APCs such that the Level 4 Imaging 
without Contrast APC would include high frequency, low-cost services 
and the proposed Level 5 Imaging without Contrast APC would include low 
frequency high-cost services. Therefore, for CY 2018, we proposed to 
add a fifth level within the Imaging without Contrast APCs. In Table 19 
of the proposed rule, we listed the CY 2017 imaging APCs, and in Table 
20 of the proposed rule, we listed the proposed CY 2018 imaging APCs 
with the addition of a fifth level within the Imaging without Contrast 
APCs. The specific APC assignments for each service grouping were 
listed in Addendum B to the proposed rule, which is available via the 
Internet on the CMS Web site. We stated that this proposal would 
increase the imaging APCs from 7 APCs in CY 2017 to 8 in CY 2018. The 
specific APC assignments for each imaging service HCPCS code were 
listed in Addendum B to the proposed rule, which is available via the 
Internet on the CMS Web site. We noted that some of the imaging 
procedures are assigned to APCs that are not listed in the tables (for 
example, the vascular procedures APCs). Also, the nuclear medicine 
services APCs were not included in this proposal. These imaging 
services were not included in this proposal because we did not propose 
changes to their APC structure.
    We invited public comments on our proposal to add a Level 5 Imaging 
without Contrast APC in CY 2018.
    Comment: Commenters generally disagreed with CMS' proposal to add a 
fifth level within the Imaging without Contrast APC series. These 
commenters represented various imaging specialty societies and 
individual practitioners who utilize various imaging modalities. Many 
of the commenters opposed adding a fifth level because of the proposed 
resultant reduction in payment to several vascular ultrasound 
procedures. The commenters urged CMS to not finalize the proposal 
because it would destabilize and drastically decrease payments for 
certain imaging services compared to CY 2017 rates. The commenters 
noted that the proposed rate for certain imaging services would cause 
certain providers to no longer be able to furnish these services, 
thereby impeding access to these important services for Medicare 
beneficiaries. However, some commenters recommended various alternative 
HCPCS code placements within the Imaging without Contrast APC series if 
CMS finalized its proposal to add a fifth level. Some of these same 
commenters suggested that maintaining the CY 2017 APC groupings and 
payment rates, to the extent possible, would address their concerns.
    Response: We appreciate these comments and recommendations on how 
to structure and assign HCPCS codes to the Imaging without Contrast APC 
series. We analyzed the various alternative suggestions for the various 
recommended HCPCS code placements, including maintaining the CY 2017 
APC groupings. After consideration of the public comments and 
suggestions we received, we are not finalizing our proposal to add a 
fifth level to the Imaging without Contrast APC series. Instead, we are 
maintaining the CY 2017 APC structure of four levels of Imaging Without 
Contrast APCs and making minor reassignments to the HCPCS codes within 
this series to resolve or mitigate any violations of the 2 times rule 
or both. We understand the importance of payment stability for 
providers and believe that continuation of the four levels of Imaging 
without Contrast APCs would minimize fluctuation in payment rates from 
CY 2017 to CY 2018. As displayed in the ``2 Times Rule'' for this final 
rule with comment period, which is available via the Internet on the 
CMS Web site, the APC geometric mean costs for APCs 5521 through 5524 
are consistent with the CY 2017 APC geometric mean costs for the same 
APCs, indicating the cost-based relative weights that are used to 
calculate payment are stable.
    Comment: A few commenters objected to the proposed exception to the 
violation of the 2 times rule for APC 5573 (Level 3 Imaging With 
Contrast) and recommended alternative approaches to resolving the 
violation, such as the creation of a Level 4 Imaging With Contrast or 
maintaining the CY 2017 APC groupings. Commenters stated that the 
proposed reassignment of nine high-volume contrast magnetic resonance 
imaging (MRI) procedures from Level 2 (CY 2017 placement) to Level 3 
(proposed CY 2018 placement) would result in a significant reduction 
and underpayment for contrast echocardiography procedures and would 
significantly lower the payment rate for contrast echocardiography 
procedures, which has been relatively stable for the past several 
years, consistent with the procedure costs. These nine high-volume 
contrast MRI procedures are described by the following CPT codes:
     CPT code 70543 (Magnetic resonance imaging, orbit, face, 
and/or neck; without contrast material(s) and further sequences);
     CPT code 70553 (Magnetic resonance imaging, brain 
(including brain stem); without contrast material, followed by contrast 
material(s) and further sequences);
     CPT code 71552 (Magnetic resonance imaging, chest; without 
contrast material(s), followed by contrast material(s) and further 
sequences);
     CPT code 72156 (Magnetic resonance imaging, spinal canal 
and contents, without contrast material, followed by contrast 
material(s) and further sequences; cervical);
     CPT code 72157 (Magnetic resonance imaging spinal canal 
and contents, without contrast material, followed by contrast 
material(s) and further sequences; thoracic);
     CPT code 72158 (Magnetic resonance imaging spinal canal 
and contents, without contrast material, followed by contrast 
material(s) and further sequences; lumbar);
     CPT code 72197 (Magnetic resonance imaging pelvis; without 
contrast material(s), followed by contrast material(s) and further 
sequences);
     CPT code 73223 (Magnetic resonance imaging, any joint of 
upper extremity; without contrast material(s), followed by contrast 
material(s) and further sequences); and
     CPT code 74183 (Magnetic resonance imaging abdomen; 
without contrast material(s), followed by with contrast material(s) and 
further sequences).
    Response: We were persuaded by the points raised by the commenters 
and agree that continuation of the CY 2017 groupings is appropriate to 
maintain payment stability for imaging services assigned to APC 5572 
and APC 5573. Although the proposed grouping for APC 5573 achieved 
clinical similarity, based on analysis of the claims data used for this 
final rule with comment period, we believe we should take a deliberate 
approach to maintain consistency in payment assignment by not adopting 
the proposals to reassign the nine high-volume contrast MRI procedures 
from APC 5572 to APC 5573 and to allow for an exception for APC 5573 
from the 2 times rule. Therefore, we are modifying our proposed 
grouping for APC 5573 by moving the nine high-volume contrast MRI 
procedures from Level 3 (Imaging with Contrast) to Level 2 (Imaging 
with Contrast), which is consistent with their CY 2017 APC assignment. 
In addition, we are making a few other code reassignments to resolve 
the 2 times rule violation in APC 5573.

[[Page 59311]]

    In summary, after consideration of the public comments we received 
and for the reasons discussed above, we are not finalizing the proposal 
to create a Level 5 (Imaging without Contrast) APC or the proposal to 
assign nine high-volume contrast MRI procedures to Level 3 (Imaging 
with Contrast) for CY 2018. Table 54 below compares the CY 2017 and 
2018 APC geometric mean costs for the imaging APCs.

Table 54--Comparison of CY 2017 and CY 2018 Geometric Mean Costs for the
                              Imaging APCs
------------------------------------------------------------------------
                                            CY 2017 APC     CY 2018 APC
         APC            APC group title      geometric       geometric
                                             mean cost       mean cost
------------------------------------------------------------------------
5521.................  Level 1 Imaging            $61.53          $62.08
                        without Contrast.
5522.................  Level 2 Imaging            115.88          118.68
                        without Contrast.
5523.................  Level 3 Imaging            232.21          245.08
                        without Contrast.
5524.................  Level 4 Imaging            462.23          486.38
                        without Contrast.
5571.................  Level 1 Imaging            272.40          252.58
                        with Contrast.
5572.................  Level 2 Imaging            438.42          456.08
                        with Contrast.
5573.................  Level 3 Imaging            675.23          681.45
                        with Contrast.
------------------------------------------------------------------------

    The specific APC assignments for each imaging procedure grouping 
are listed in Addendum B to this final rule with comment period, which 
is available via the Internet on the CMS Web site.
b. Non-Ophthalmic Fluorescent Vascular Angiography (APC 5523)
    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33609), 
for the CY 2018 OPPS update, we proposed to reassign HCPCS code C9733 
(Non-ophthalmic fluorescent vascular angiography) from APC 5523 (Level 
3 Imaging without Contrast) to APC 5524 (Level 4 Imaging without 
Contrast) based on the latest claims data available for the proposed 
rule. We proposed to maintain the status indicator assignment of ``Q2'' 
(T-packaged) to indicate that the service is conditionally packaged 
when performed in conjunction with other procedures on the same day but 
paid separately when performed as a stand-alone service.
    Our claims data used for the proposed rule, which included claims 
submitted between January 1, 2016, and December 31, 2016, and processed 
on or before December 31, 2016, showed a geometric mean cost of 
approximately $236 for HCPCS code C9733 based on 216 single claims (out 
of 953 total claims), which is closely aligned with the geometric mean 
cost of approximately $275 for APC 5524. Because HCPCS code C9733 is an 
imaging service which is similar to the codes assigned to APC 5524, we 
proposed to reassign HCPCS code C9733 from APC 5523 to APC 5524. We 
stated that we believe this proposed reassignment would improve the 
clinical homogeneity of APC 5524 and appropriately align the resource 
costs of HCPCS code C9733 to the resource costs of those procedures 
assigned to APC 5524.
    As we have stated in previous OPPS/ASC final rules, specifically, 
in the CY 2013 OPPS/ASC final rule with comment period (77 FR 68345 
through 68346), the CY 2014 OPPS/ASC final rule with comment period (78 
FR 74976 through 74977), and the CY 2017 OPPS/ASC final rule with 
comment period (81 FR 79632), the service described by HCPCS code C9733 
is primarily an intraoperative imaging service that is performed in 
combination with a number of primary procedures, including facial 
reconstruction and reanimation, muscle flaps, trauma reconstruction, 
digital and limb reattachment, and breast reconstruction. Therefore, 
payment for the service described by HCPCS code C9733 is conditionally 
packaged under 42 CFR 419.2(b)(14), which contains the policies 
governing packaging of intraoperative items and services. Consequently, 
we proposed to maintain the status indicator assignment of ``Q2'' to 
indicate that the payment for the service will be packaged in the APC 
payment if billed on the same date of service as a HCPCS code assigned 
to status indicator ``T'', but in all other circumstances, a separate 
APC payment for the service will be made. We believe that the OPPS 
payments, separate or packaged, for surgical procedures with which this 
service is performed are more than adequate to cover the cost of the 
service described by HCPCS code C9733 for Medicare beneficiaries in 
need of this service.
    Comment: Several commenters supported the proposed APC reassignment 
for HCPCS code C9733 to APC 5524. A few commenters also suggested 
assignment of HCPCS code C9733 in a higher payment APC (compared to the 
CY 2017 payment rate) that would cover the cost of the service, but did 
not recommend a specific APC. In addition, commenters requested that 
CMS change the status indicator assignment from ``Q2'' to a separately 
payable status indicator ``S''. The commenters noted that status 
indicator ``Q2'' indicates that payment for the procedure described by 
HCPCS code C9733 is conditionally packaged when provided in conjunction 
with other procedures assigned to status indicator ``T,'' which are 
primarily surgical procedures.
    Response: Regarding the status indicator assignment of HCPCS code 
C9733, we have addressed this comment in prior rules (81 FR 79632). The 
service described by HCPCS code C9733 is primarily an intraoperative 
imaging service. Therefore, payment for the service is conditionally 
packaged under Sec.  419.2(b)(14), which packages intraoperative items 
and services. When the procedure described by HCPCS code C9733 is not 
furnished in conjunction with a surgical procedure, the service is paid 
separately. We believe that the OPPS payments, separate or packaged, 
for surgical procedures with which this test is performed (for example, 
breast reconstruction) are more than adequate to cover the cost of the 
service described by HCPCS code C9733 for Medicare beneficiaries in 
need of this service. With respect to the APC reassignment for APC 
5524, because we are maintaining the CY 2017 APC group assignments for 
imaging services, we are not finalizing our proposal to reassign HCPCS 
code C9733 from APC 5523 to APC 5524. Rather, we are maintaining the 
assignment of the procedure described by HCPCS code C9733 to APC 5523 
for CY 2018. Based on our review of the CY 2018 final rule claims data, 
the procedure described by HCPCS code C9733 has a geometric mean unit 
cost of approximately $237 and the geometric mean cost of APC 5523 is 
approximately $245 for CY 2018. Therefore, it is not necessary to 
reassign the procedure described by HCPCS code C9733 to APC 5524, which 
has a geometric mean unit cost of about $486. It is more appropriate to 
maintain the assignment

[[Page 59312]]

of the procedure described by HCPCS code C9733 to APC 5523 because of 
the similarity in clinical characteristics and resource use for this 
procedure and other imaging procedures assigned to APC 5523.
    After consideration of the public comments we received, we are not 
finalizing our proposal to reassign HCPCS code C9733 from APC 5523 to 
APC 5524 for CY 2018. Instead, for CY 2018, we are continuing to assign 
HCPCS code C9733 to APC 5523 and continuing to assign the code to 
status indicator ``Q2'' to indicate that the service is conditionally 
packaged. The final CY 2018 OPPS payment rate for HCPCS code C9733 can 
be found in OPPS Addendum B to this final rule with comment period, 
which is available via the Internet on the CMS Web site.
22. Sclerotherapy (APC 5054)
    For CY 2018, the AMA CPT Editorial Panel established two new codes 
to describe the injection of a noncompounded foam sclerosant for 
treatment of incompetent veins. Table 55 below lists the complete 
descriptors for the new CPT codes. These codes were listed in Addendum 
B and Addendum O to the CY 2018 OPPS/ASC proposed rule (which are 
available via the Internet on the CMS Web site). Addendum B listed the 
proposed status indicator assignments for the new codes and assigned 
them to comment indicator ``NP'' (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, proposed 
APC assignment; comments will be accepted on the proposed APC 
assignment for the new code), while Addendum O listed the proposed/
placeholder CY 2018 CPT codes and the long descriptors. We note that 
the CPT code descriptors that appeared in Addendum B to the CY 2018 
proposed rule were short descriptors and did not accurately describe 
the complete procedure, service, or item described of the CPT code. 
Therefore, we included the 5-digit placeholder codes and their long 
descriptors in Addendum O to the proposed rule, specifically under the 
column labeled ``CY 2018 OPPS/ASC Proposed Rule 5-Digit AMA Placeholder 
Code'' so that the public could adequately comment on our proposed APC 
and status indicator assignments. We also indicated that the final CPT 
code numbers would be included in this CY 2018 OPPS/ASC final rule with 
comment period. The final CPT code numbers, along with their 
corresponding 5-digit placeholder codes, can be found in Table 55 
below.
    As displayed in Table 55 below and in Addendum B of the CY 2018 
OPPS/ASC proposed rule, we proposed to assign CPT codes 36465 and 36466 
to APC 5053 (Level 3 Skin Procedures), with a proposed payment rate of 
$468.82.

   Table 55--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rates for CPT Codes 36465 and
                                                      36466
----------------------------------------------------------------------------------------------------------------
                                                                                                       Proposed
                              CY 2018 OPPS/ASC                                            Proposed     CY 2018
        CPT code                proposed rule          Long descriptor     Proposed CY    CY 2018        OPPS
                              placeholder code                            2018 OPPS SI    OPPS APC     payment
                                                                                                         rate
----------------------------------------------------------------------------------------------------------------
36465...................  364X5...................  Injection of non-               T          5053      $468.82
                                                     compounded foam
                                                     sclerosant with
                                                     ultrasound
                                                     compression
                                                     maneuvers to guide
                                                     dispersion of the
                                                     injectate,
                                                     inclusive of all
                                                     imaging guidance
                                                     and monitoring;
                                                     single incompetent
                                                     extremity truncal
                                                     vein (e.g., great
                                                     saphenous vein,
                                                     accessory saphenous
                                                     vein).
36466...................  364X6...................  Injection of non-               T          5053       468.82
                                                     compounded foam
                                                     sclerosant with
                                                     ultrasound
                                                     compression
                                                     maneuvers to guide
                                                     dispersion of the
                                                     injectate,
                                                     inclusive of all
                                                     imaging guidance
                                                     and monitoring;
                                                     multiple
                                                     incompetent truncal
                                                     veins (e.g., great
                                                     saphenous vein,
                                                     accessory saphenous
                                                     vein), same leg.
----------------------------------------------------------------------------------------------------------------

    Comment: Several commenters opposed the proposed assignment of new 
CPT codes 36465 and 36466 to APC 5053 and requested the assignment to 
APC 5183 (Level 3 Vascular Procedures), which had a proposed payment 
rate of $2,409.72. The commenters stated that CMS inappropriately 
proposed to assign these codes to APC 5053 based on a comparison to CPT 
codes 36470 (Injection of sclerosing solution; single vein) and 36471 
(Injection of sclerosing solution; multiple veins, same leg). However, 
the commenters indicated that CPT codes 36465 and 36466 are dissimilar 
to the procedures assigned to APC 5053, which describe simple skin 
procedures (for example, debridement, Moh's surgery, and skin lesion 
destruction). They stated that the procedures assigned to APC 5053 are 
not comparable to the procedures described by new CPT codes 36465 and 
36466 based on complexity, staff type, staff time, and use of 
ultrasound guidance. The commenters further added that the two 
procedures are most similar to the endovenous ablative procedures that 
treat incompetent veins in APC 5183, specifically, the procedures 
described by the following CPT codes:
     CPT code 36473 (Endovenous ablation therapy of incompetent 
vein, extremity, inclusive of all imaging guidance and monitoring, 
percutaneous, mechanochemical; first vein treated);
     CPT code 36474 (Endovenous ablation therapy of incompetent 
vein, extremity, inclusive of all imaging guidance and monitoring, 
percutaneous, mechanochemical; subsequent vein(s) treated in a single 
extremity, each through separate access sites (list separately in 
addition to code for primary procedure));
     CPT code 36475 (Endovenous ablation therapy of incompetent 
vein, extremity, inclusive of all imaging guidance and monitoring, 
percutaneous, radiofrequency; first vein treated);
     CPT code 36476 (Endovenous ablation therapy of incompetent 
vein, extremity, inclusive of all imaging guidance and monitoring, 
percutaneous, radiofrequency; subsequent vein(s) treated in a single 
extremity, each through separate access sites (list separately in 
addition to code for primary procedure))
     CPT code 36478 (Endovenous ablation therapy of incompetent 
vein, extremity, inclusive of all imaging guidance and monitoring, 
percutaneous, laser; first vein treated); and

[[Page 59313]]

     CPT code 36479 (Endovenous ablation therapy of incompetent 
vein, extremity, inclusive of all imaging guidance and monitoring, 
percutaneous, laser; subsequent vein(s) treated in a single extremity, 
each through separate access sites (list separately in addition to code 
for primary procedure)).
    One commenter stated that the procedures described by CPT codes 
36465 and 36466 share similar characteristics and comparable 
anticipated costs as the procedures assigned to APC 5183, and 
consequently, requested an assignment to APC 5183 for the two new CPT 
codes. Another commenter noted that CPT codes 36473, 36475, and 36478 
are currently assigned to APC 5183, and requested that CMS also assign 
new CPT codes 36465 and 36466 to APC 5183. One commenter reported that, 
in the CY 2018 MPFS proposed rule, CMS proposed a nonfacility payment 
of $1,605.17 for new CPT code 36465 and $1,678.23 for new CPT code 
36466 for CY 2018. This commenter also listed a practice expense input 
price of $1,054 for the Varithena (foam) used in the procedures.
    Response: Because CPT codes 36465 and 36466 are new codes for CY 
2018, we have no claims data on which to base our payment rate. 
However, in the absence of claims data, we reviewed the clinical 
characteristics of the procedures to determine whether they are similar 
to existing procedures. After reviewing information from the public 
commenters and input from our clinical advisors, we believe that new 
CPT codes 36465 and 36466 are clinically similar to those procedures 
assigned to APC 5053. However, in light of the commenter's reported 
supply expense of $1,054 for the Varithena (foam), we believe that an 
assignment to APC 5054 is necessary. We note that the final CY 2018 
geometric mean cost for APC 5054 is approximately $1,567. Therefore, we 
believe that APC 5054 is a more appropriate APC assignment for the new 
CPT codes. Consistent with the statutory requirement under section 
1833(t)(9)(A) of the Act, we will reevaluate the APC assignment for CPT 
codes 36465 and 36466 in the next rulemaking cycle.
    In summary, after consideration of the public comments we received, 
we are finalizing our proposal for the APC assignment of the procedures 
described by new CPT codes 36465 and 36466, with modification. 
Specifically, we are assigning both codes to APC 5054, instead of 
proposed APC 5053, for CY 2018. Table 56 below lists the final status 
indicator and APC assignments for CPT codes 36465 and 36466 for CY 
2018. We refer readers to Addendum B to this final rule with comment 
period for the payment rates for all codes reported under the OPPS. In 
addition, we refer readers to Addendum A to this final rule with 
comment period for the status indicator meanings for all codes reported 
under the OPPS. Both Addendum A and Addendum B are available via the 
Internet on the CMS Web site.

         Table 56--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Codes 36465 and 36466
----------------------------------------------------------------------------------------------------------------
                        CY 2018 OPPS/ASC                                     Proposed CY
      CPT code            proposed rule      Long descriptor    Proposed CY   2018 OPPS    CY 2018 OPPS payment
                        placeholder code                       2018 OPPS SI      APC               rate
----------------------------------------------------------------------------------------------------------------
36465...............  364X5...............  Injection of non-            T          5054  Refer to OPPS Addendum
                                             compounded foam                               B.
                                             sclerosant with
                                             ultrasound
                                             compression
                                             maneuvers to
                                             guide dispersion
                                             of the
                                             injectate,
                                             inclusive of all
                                             imaging guidance
                                             and monitoring;
                                             single
                                             incompetent
                                             extremity
                                             truncal vein
                                             (e.g., great
                                             saphenous vein,
                                             accessory
                                             saphenous vein).
36466...............  364X6...............  Injection of non-            T          5054  Refer to OPPS Addendum
                                             compounded foam                               B.
                                             sclerosant with
                                             ultrasound
                                             compression
                                             maneuvers to
                                             guide dispersion
                                             of the
                                             injectate,
                                             inclusive of all
                                             imaging guidance
                                             and monitoring;
                                             multiple
                                             incompetent
                                             truncal veins
                                             (e.g., great
                                             saphenous vein,
                                             accessory
                                             saphenous vein),
                                             same leg.
----------------------------------------------------------------------------------------------------------------

23. Skin Substitutes (APCs 5053, 5054, and 5055)
    For CY 2018, we proposed to assign skin substitute procedures to 
APCs 5053 through 5055 (Level 3 through 5 Skin Procedures). The cost of 
the procedures is affected by whether the skin substitute product is 
low cost or high cost, the surface area of the wound, and the location 
of the wound.
    Comment: Commenters requested that CPT codes for large wounds be 
assigned to higher paying APCs. One commenter asked that HCPCS code 
C5277 (Application of low cost skin substitute graft to face, scalp, 
eyelids, mouth, neck, ears, orbits, genitalia, hands, feet, and/or 
multiple digits, total wound surface area greater than or equal to 100 
sq cm; first 100 sq cm wound surface area, or 1% of body area of 
infants and children) be moved from APC 5053 (Level 3 Skin Procedures) 
to APC 5054 (Level 4 Skin Procedures) and that CPT code 15277 
(Application of skin substitute graft to face, scalp, eyelids, mouth, 
neck, ears, orbits, genitalia, hands, feet, and/or multiple digits, 
total wound surface area greater than or equal to 100 sq cm; first 100 
sq cm wound surface area, or 1% of body area of infants and children) 
be moved from APC 5054 (Level 4 Skin Procedures) to APC 5055 (Level 5 
Skin Procedures). Another commenter focused on the payment for large 
venous leg ulcers that are over 100 cm\2\. This commenter requested 
that the skin substitute procedures used to treat large venous leg 
ulcers and other large wounds be moved to a higher paying APC.
    Response: We reviewed the procedures assigned to both APC 5053 and 
APC 5054 and continue to believe that the procedures described by HCPCS 
code C5277 and CPT code 15277 are appropriately assigned to APCs 5053 
and 5054, respectively. While the geometric mean cost of the procedure 
described by HCPCS code C5277 ($2,187) is higher than the geometric 
mean cost of other procedures assigned to APC 5053 ($488), there are 
fewer than 25 single claims billed for the procedure described by HCPCS 
code C5277. Therefore, HCPCS code C5277 is not a significant procedure 
code and does not create a 2 times rule violation in APC 5053. 
Likewise, while the geometric mean cost of the procedure described by 
CPT code 15277 ($2,464) is higher than the geometric mean cost for all 
procedures assigned to APC 5054 ($1,567), there are fewer than 80 
single claims billed for the procedure described by CPT code 15277.

[[Page 59314]]

Therefore, CPT code 15277 is not a significant procedure and does not 
create a 2 times violation in APC 5054. Accordingly, we continue to 
believe that both HCPCS code C5277 and CPT code 15277 are appropriately 
assigned to APCs 5053 and 5054, respectively. As we do every year, we 
will evaluate the costs and APC assignment of both of these codes in 
the next annual rulemaking cycle.
    After consideration of the public comments we received, we are 
finalizing our proposal for CY 2018 for assignment of skin substitute 
procedures to APCs 5053 through 5055, including the assignment of HCPCS 
code C5277 to APC 5053 and CPT code 15277 to APC 5054.
24. Subdermal Drug Implants for the Treatment of Opioid Addiction (APC 
5735)
    In the CY 2018 MPFS proposed rule (82 FR 34011 through 34012), CMS 
proposed to establish three G-codes to appropriately report the 
insertion and removal of buprenorphine hydrochloride, formulated as a 
4-rod, 80 mg, long-acting subdermal drug implant for the treatment of 
opioid addiction (82 FR 34011 through 34012). Specifically, we proposed 
to establish the following HCPCS G-codes:
     Placeholder HCPCS Code GDDD1 (Insertion, non-biodegradable 
drug delivery implants, 4 or more);
     Placeholder HCPCS Code GDDD2 (Removal, non-biodegradable 
drug delivery implants, 4 or more); and
     Placeholder HCPCS code GDDD3 (Removal with reinsertion, 
non-biodegradable drug delivery implants, 4 or more).
    We did not make any proposal related to HCPCS codes GDDD1 through 
GDDD3 in the CY 2018 OPPS/ASC proposed rule because there are existing 
codes that can be used to report the insertion and removal of 
buprenorphine hydrochloride, as well as a HCPCS J-code to report use of 
the buprenorphine hydrochloride drug. Listed below in Table 57 are the 
specific CPT and HCPCS codes for the buprenorphine hydrochloride 
subdermal drug and its administration, and the proposed OPPS payment 
rates for CY 2018.

      Table 57--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Codes 11981, 11982, and 11983 and HCPCS Code J0570
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                               Proposed
                                                                                                       CY 2017                    Proposed     CY 2018
              HCPCS code                        Long descriptor           CY 2017 OPPS    CY 2017        OPPS      Proposed CY    CY 2018        OPPS
                                                                               SI         OPPS APC     payment    2018 OPPS SI    OPPS APC     payment
                                                                                                         rate                                    rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
11981................................  Insertion, non-biodegradable drug           Q1          5734      $100.02           Q1          5734       $94.27
                                        delivery implant.
11982................................  Removal, non-biodegradable drug             Q1          5735       263.61           Q1          5735       265.20
                                        delivery implant.
11983................................  Removal with reinsertion, non-              Q1          5735       263.61           Q1          5735       265.20
                                        biodegradable drug delivery
                                        implant.
J0570................................  Buprenorphine implant, 74.2 mg...            G          9058   * 1,260.59            G          9058  ** 1,261.31
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The proposed payment rate of $1,260.59 was based on the April 1, 2017 OPPS update.
** The payment rate of $1,261.31 was based on the October 1, 2017 OPPS update. Payments for the HCPCS drug codes are updated on a quarterly basis, and
  this payment rate will be updated for the January 2018 OPPS update. Refer to the January 2018 OPPS Addendum B payment file for the payment rate.

    Comment: Some commenters requested that the MPFS proposal for 
establishment of HCPCS G-codes for insertion and removal of 
buprenorphine hydrochloride also apply to the OPPS and ASC payment 
systems. In addition, the commenters recommended that CMS assign the 
HCPCS G-codes to APC 5735 (Level 5 Minor Procedures), which had a 
proposed payment rate of $265.20, for CY 2018.
    Response: We agree with the commenters that the HCPCS G-codes GDDD1 
through GDDD3 (now HCPCS codes G0516, G0517, and G0518 in this final 
rule with comment period) should also be recognized under the OPPS 
because the service associated with the insertion and removal of 
buprenorphine hydrochloride can be performed in the hospital outpatient 
department. However, because these services are conditionally packaged 
under the OPPS, they will be packaged when performed in the ASC and, 
therefore, not separately paid. Accordingly, to adequately track and 
improve data collection and analysis associated with subdermal 
buprenorphine implants, we are recognizing these HCPCS G-codes in the 
OPPS.
    In summary, after consideration of the public comments we received, 
we are establishing HCPCS G-codes G0516, G0517, and G0518 under the 
OPPS, effective January 1, 2018. Table 58 below lists the final status 
indicator and APC assignments for HCPCS G-codes G0516, G0517, G0518, 
and HCPCS code J0570 for CY 2018. We remind hospitals that the HCPCS 
drug code for buprenorphine hydrochloride (HCPCS code J0570) should 
also be reported when billing for the subdermal administration of the 
drug. We refer readers to Addendum B to this final rule with comment 
period for the payment rates for all codes reported under the OPPS. In 
addition, we refer readers to Addendum A to this final rule with 
comment period for the status indicator meanings for all codes reported 
under the OPPS. Both Addendum A and Addendum B are available via the 
Internet on the CMS Web site.

[[Page 59315]]



 Table 58--Final CY 2018 Status Indicator (SI) and APC Assignment for HCPCS Codes G0516, G0517, G0518 and HCPCS
                                                   Code J0570
----------------------------------------------------------------------------------------------------------------
                          CY 2018 MPFS
     HCPCS code           proposed rule      Long descriptor   CY 2018 OPPS    CY 2018     CY 2018 OPPS  payment
                        placeholder code                            SI         OPPS APC            rate
----------------------------------------------------------------------------------------------------------------
G0516...............  GDDD1...............  Insertion of non-           Q1          5735  Refer to OPPS Addendum
                                             biodegradable                                 B.
                                             drug delivery
                                             implants, 4 or
                                             more (services
                                             for subdermal
                                             implants).
G0517...............  GDDD2...............  Removal of non-             Q1          5735  Refer to OPPS Addendum
                                             biodegradable                                 B.
                                             drug delivery
                                             implants, 4 or
                                             more (services
                                             for subdermal
                                             implants).
G0518...............  GDDD3...............  Removal with                Q1          5735  Refer to OPPS Addendum
                                             reinsertion, non-                             B.
                                             biodegradable
                                             drug delivery
                                             implants, 4 or
                                             more (services
                                             for subdermal
                                             implants).
J0570...............  N/A.................  Buprenorphine                G          9058  Refer to OPPS Addendum
                                             implant, 74.2 mg.                             B.
----------------------------------------------------------------------------------------------------------------

25. Suprachoroidal Delivery of Pharmacologic Agent (APC 5694)
    For CY 2018, as noted in Table 59 below, we proposed to continue to 
assign CPT codes 67028 and 0465T to APC 5694 (Level 4 Drug 
Administration), with a proposed payment rate of $286.62. We also 
proposed to continue to assign CPT code 67028 to status indicator ``S'' 
(Procedure or Service, Not Discounted When Multiple) and to continue to 
assign CPT code 0465T to status indicator ``T'' (Procedure or Service, 
Multiple Procedure Reduction Applies).

                    Table 59--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Codes 67028 and 0465T
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2017                               Proposed CY
                                                                          CY 2017 OPPS    CY 2017        OPPS      Proposed CY  Proposed CY   2018 OPPS
               CPT code                         Long descriptors               SI         OPPS APC     payment    2018 OPPS SI   2018 OPPS     payment
                                                                                                         rate                       APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
67028................................  Intravitreal injection of a                  S          5694      $279.45            S          5694      $286.62
                                        pharmacologic agent (separate
                                        procedure).
0465T................................  Suprachoroidal injection of a                T          5694       279.45            T          5694       286.62
                                        pharmacologic agent (does not
                                        include supply of medication).
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: Some commenters stated that the different status indicator 
assignment for both CPT codes 67028 and 0465T appears to be an error 
and contradicts CMS' decision in the CY 2017 OPPS/ASC final rule with 
comment period where CMS indicated that both procedures are similar 
from a clinical and resource consideration (81 FR 79617). The 
commenters reported that the different status indicators suggest that 
the procedures are not similar. Consequently, the commenters requested 
the reassignment of CPT code 0465T from status indicator ``T'' to 
``S''.
    Response: We note that while many HCPCS codes within a given APC 
may have the same status indicator, having an identical status 
indicator is not a prerequisite for APC assignment. That is, assignment 
of a HCPCS code to an APC is based on the resource and clinical 
similarity of the service described by the HCPCS code, while assignment 
of a status indicator is based on service-specific characteristics. 
Status indicator ``T'' is used to denote that the procedure is subject 
to the multiple procedure reduction under the OPPS, while status 
indicator ``S'' describes a procedure or service that is not 
discounted. Within APC 5694, there are four CPT codes that are assigned 
to status indicator ``T''. These include the following procedures:
     CPT code 0465T (Suprachoroidal injection of a 
pharmacologic agent (does not include supply of medication));
     CPT code 36593 (Declotting by thrombolytic agent of 
implanted vascular access device or catheter);
     CPT code 37195 (Thrombolysis, cerebral, by intravenous 
infusion); and
     CPT code 92977 (Thrombolysis, coronary; by intravenous 
infusion).
    As stated earlier, status indicator ``T'' indicates that the 
service will be reduced by 50 percent if it is the lower priced service 
on the same claim with another procedure that is also assigned to a 
status indicator ``T''. For CPT code 0465T, we expect this reduction to 
occur when there is a separate procedure performed on the same day as 
the suprachoroidal injection due to significant efficiencies in 
administering the pharmacologic agent. If the suprachoroidal injection 
is performed by itself or with a visit, or with a service or procedure 
assigned to status indicator ``S'', the multiple procedure reduction 
will not apply. We remind hospitals that, when reporting CPT code 
0465T, the appropriate HCPCS drug code should also be reported on the 
claim.
    Therefore, after consideration of the public comments we received, 
we are finalizing our CY 2018 proposal, without modification, to 
continue to assign CPT codes 67028 and 0465T to status indicator ``S'' 
and ``T'' respectively, and to continue to assign the CPT codes to APC 
5694. Table 60 below lists the final status indicator and APC 
assignments for both codes for CY 2018. We refer readers to Addendum B 
to this final rule with comment period for the payment rates for all 
codes reported under the OPPS. In addition, we refer readers to 
Addendum A to this final rule with comment period for the status 
indicator meanings for all codes reported under the OPPS. Both Addendum 
A and Addendum B are available via the Internet on the CMS Web site.

[[Page 59316]]



                             Table 60--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Codes 67028 and 0465T
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     CY 2017
                                                        CY 2017 OPPS    CY 2017        OPPS     CY 2018 OPPS    CY 2018
         HCPCS code                Long descriptor           SI         OPPS APC     payment         SI         OPPS APC     CY 2018 OPPS  payment rate
                                                                                       rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
67028.......................  Intravitreal injection              S          5694      $279.45            S          5694  Refer to OPPS Addendum B.
                               of a pharmacologic
                               agent (separate
                               procedure).
0465T.......................  Suprachoroidal injection            T          5694       279.45            T          5694  Refer to OPPS Addendum B.
                               of a pharmacologic
                               agent (does not include
                               supply of medication).
--------------------------------------------------------------------------------------------------------------------------------------------------------

26. Transperineal Placement of Biodegradeable Material (C-APC 5375)
    For CY 2018, the AMA CPT Editorial Panel deleted CPT code 0438T and 
replaced the code with CPT code 55874, effective January 1, 2018. CPT 
code 0438T was effective July 1, 2016 and will be deleted on December 
31, 2017. Prior to July 2016, the transperineal placement of 
biodegradable material procedure was described by HCPCS code C9743 
(Injection/implantation of bulking or spacer material (any type) with 
or without image guidance (not to be used if a more specific code 
applies)), which was effective October 1, 2015 and was deleted on June 
30, 2016, when it was replaced with CPT code 0438T, effective July 1, 
2016.
    Table 61 below lists the complete descriptors for the deleted and 
replacement CPT codes. We note that the deleted and replacement CPT 
codes were both listed in Addendum B and Addendum O to the CY 2018 
OPPS/ASC proposed rule (which are available via the Internet on the CMs 
Web site). Addendum B listed the proposed status indicator assignment 
for the replacement code and assigned it to comment indicator ``NP'' 
(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, proposed APC assignment; comments will be 
accepted on the proposed APC assignment for the new code), while 
Addendum O listed the proposed/placeholder CY 2018 CPT codes and the 
long descriptors.

               Table 61--Coding Changes for CPT Code 55874
------------------------------------------------------------------------
                           CY 2018 OPPS/ASC
       CPT code              proposed rule           Long descriptor
                           placeholder code
------------------------------------------------------------------------
0438T.................  N/A...................  Transperineal placement
                                                 of biodegradable
                                                 material, peri-
                                                 prostatic (via needle),
                                                 single or multiple,
                                                 includes image
                                                 guidance.
55874.................  55X87.................  Transperineal placement
                                                 of biodegradable
                                                 material, peri-
                                                 prostatic, single or
                                                 multiple injection(s),
                                                 including image
                                                 guidance, when
                                                 performed.
------------------------------------------------------------------------

    As listed in Table 63 below and in Addendum B of the CY 2018 OPPS/
ASC proposed rule, we proposed to delete CPT code 0438T (status 
indicator ``D'') and assign its replacement code, CPT code 55874 
(placeholder code 55X87), to C-APC 5375 (Level 5 Urology and Related 
Services) with a proposed payment rate of $3,597.65. As noted in Table 
62, the predecessor code 0438T was assigned to C-APC 5374 (Level 4 
Urology and Related Services), while this replacement code is proposed 
to be reassigned to C-APC 5375. We proposed to revise the APC 
assignment for CPT code 55874 based on claims data used for the CY 2018 
OPPS/ASC proposed rule. We note that the proposed rule claims data was 
based on claims data submitted between January 1, 2016, and December 
31, 2016, that were processed on or before December 31, 2016. For the 
predecessor codes HCPCS codes C9743 and 0438T that were in effect 
during CY 2016, our analysis of the proposed rule claims data revealed 
a geometric mean cost of approximately $4,504 based on 157 single 
claims (out of 159 total claims), which is similar to the geometric 
mean cost of approximately $3,742 for C-APC 5375 rather than the 
geometric mean cost of approximately $2,714 for C-APC 5374 or the 
geometric mean cost of approximately $7,747 for C-APC 5376 (Level 6 
Urology and Related Services). Based on its clinical homogeneity and 
resource similarity to the other procedures assigned to C-APC 5375, we 
proposed to reassign replacement CPT code 55874 from C-APC 5374 to C-
APC 5375 for CY 2018.

                          Table 62--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Code 55874
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                               Proposed
                                                                                                           CY 2017   Proposed CY   Proposed     CY 2018
         CPT code          CY 2018 OPPS/ASC proposed      Short descriptor        CY 2017      CY 2017      OPPS      2018 OPPS     CY 2018      OPPS
                             rule placeholder code                                OPPS SI     OPPS APC     payment        SI       OPPS APC     payment
                                                                                                            rate                                 rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
0438T....................  .........................  Tprnl plmt biodegrdabl             T         5374   $2,542.56           D          N/A         N/A
                                                       matrl.
55874....................  55X87....................  Tprnl plmt biodegrdabl           N/A          N/A         N/A           T         5375   $3,597.65
                                                       matrl.
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 59317]]

    Comment: One commenter supported the reassignment to C-APC 5375 for 
CPT code 55874 and urged CMS to finalize the proposal. The commenter 
further indicated that C-APC 5375 is the appropriate APC assignment for 
CPT code 55874 based on its clinical and resource coherence to the 
other procedures assigned to C-APC 5375. While supportive of the 
assignment to C-APC 5375, this same commenter expressed concern with 
the payment for the procedure under the ASC payment system. The 
commenter suggested that CPT code 55874 should be designated as a 
device-intensive procedure.
    Response: We appreciate the commenter's support. For this final 
rule with comment period, we again reviewed the updated claims data 
associated with predecessor HCPCS codes C9743 and 0438T. We note that, 
for this final rule with comment period, we used claims data with dates 
of service between January 1, 2016, and December 31, 2016, that were 
processed on or before June 30, 2017. Our analysis of the final rule 
claims data shows a similar pattern for the predecessor codes. 
Specifically, we found a geometric mean cost of approximately $4,452 
for the predecessor codes based on 157 single claims (out of 160 total 
claims), which is similar to the geometric mean cost of approximately 
$3,704 for C-APC 5375. In addition, our analysis of the significant 
procedures within C-APC 5375 shows that the geometric mean cost of 
$4,452 for the predecessor codes are similar to the costs of the 
procedures assigned to C-APC 5375. Specifically, our analysis revealed 
the range of the significant procedures assigned to C-APC 5375 is 
between $3,134 (for CPT code 52320) and $5,004 (for CPT code 55875). 
Consequently, we believe that C-APC 5375 is the most appropriate APC 
assignment for CPT code 55874.
    With regards to the device-intensive designation for CPT code 
55874, based on our analysis of the predecessor HCPCS code C9743, this 
code is not eligible for device-intensive status because it does not 
meet the criteria of a device offset that is greater than 40 percent. 
For more information on how codes are designated as device-intensive 
status, we refer readers to section IV.B. of this final rule with 
comment period.
    In summary, after consideration of the public comments we received 
and our analysis of the updated claims data for this final rule with 
comment period, we are finalizing our CY 2018 proposal, without 
modification, and assigning CPT code 55874 to C-APC 5375. Table 63 
below lists the final status indicator and APC assignments for CPT code 
55874 for CY 2018. We refer readers to Addendum B to this final rule 
with comment period for the payment rates for all codes reported under 
the OPPS. In addition, we refer readers to Addendum A to this final 
rule with comment period for the status indicator meanings for all 
codes reported under the OPPS. Both Addendum A and Addendum B are 
available via the Internet on the CMS Web site.

                                   Table 63--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Code 55874
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                             CY 2017
                         CY 2018 OPPS/ASC                           CY 2017      CY 2017      OPPS       CY 2018      CY 2018     CY 2018 OPPS payment
       CPT code            proposed rule       Short descriptor     OPPS SI     OPPS APC     payment     OPPS SI     OPPS APC             rate
                         placeholder code                                                     rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
0438T................  ....................  Tprnl plmt                    T         5374   $2,542.56           D          N/A  N/A.
                                              biodegrdabl matrl.
55874................  55X87...............  Tprnl plmt                  N/A          N/A         N/A           T         5375  Refer to OPPS Addendum
                                              biodegrdabl matrl.                                                                 B.
--------------------------------------------------------------------------------------------------------------------------------------------------------

27. Transcranial Magnetic Stimulation (TMS) Therapy (APCs 5721 and 
5722)
    For CY 2018, as listed in Table 64 below, we proposed to continue 
to assign CPT code 90867 to APC 5722 (Level 2 Diagnostic Tests and 
Related Services) and to also continue to assign CPT code 90869 to APC 
5721 (Level 1 Diagnostic Tests and Related Services). However, we 
proposed to reassign CPT code 90868 from APC 5722 to APC 5721.

  Table 64--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for the Transcranial Magnetic Stimulation (TMS) Therapy CPT Codes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2017                               Proposed CY
                                                                          CY 2017 OPPS    CY 2017        OPPS      Proposed CY  Proposed CY   2018 OPPS
                CPT code                         Long descriptor               SI         OPPS APC     payment    2018 OPPS SI   2018 OPPS     payment
                                                                                                         rate                       APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
90867..................................  Therapeutic repetitive                     S          5722      $232.31            S          5722      $242.21
                                          transcranial magnetic
                                          stimulation (tms) treatment;
                                          initial, including cortical
                                          mapping, motor threshold
                                          determination, delivery and
                                          management.
90868..................................  Therapeutic repetitive                     S          5722       232.31            S          5721       129.59
                                          transcranial magnetic
                                          stimulation (tms) treatment;
                                          subsequent delivery and
                                          management, per session.
90869..................................  Therapeutic repetitive                     S          5721       127.10            S          5721       129.59
                                          transcranial magnetic
                                          stimulation (tms) treatment;
                                          subsequent motor threshold re-
                                          determination with delivery
                                          and management.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: Several commenters disagreed with CMS' proposal to 
reassign CPT code 90868 to APC 5721 and stated that the proposed 
payment rate does not cover the cost of providing the service. One 
commenter stated that

[[Page 59318]]

transcranial magnetic stimulation (TMS) therapy requires the use of an 
expensive machine, technicians to assist with the service, staff to 
work on insurance approvals, and significant time with physicians. 
Another commenter stated that the proposed payment rate for CPT codes 
90868 and 90869 is insufficient, and that the cost of providing the 
service exceeds the payment rate. Several commenters requested that CMS 
reconsider and increase the payment rates for CPT codes 90868 and 
90869.
    Response: We proposed to revise the APC assignment for CPT code 
90868 and to continue the APC assignment for CPT code 90869 based on CY 
2016 claims data used for the CY 2018 OPPS/ASC proposed rule. We note 
that the proposed rule data was based on claims data submitted between 
January 1, 2016, and December 31, 2016, that were processed on or 
before December 31, 2016. For CPT code 90868, our analysis of the 
claims data showed a geometric mean cost of approximately $152 for the 
code based on 6,433 single claims (out of 6,493 total claims), which is 
similar to the geometric mean cost of approximately $135 for APC 5721 
rather than the geometric mean cost of approximately $252 for APC 5722. 
Consequently, we proposed to revise the APC assignment for CPT code 
90868 to APC 5721 rather than continue to assign it to APC 5722. For 
CPT code 90869, our claims data showed a geometric mean cost of 
approximately $119 for CPT code 90869 based on 95 single claims (out of 
96 total claims), which is similar to the geometric mean cost of 
approximately $135 for APC 5721. Consequently, we proposed to continue 
to assign CPT code 90869 to APC 5721.
    For this final rule with comment period, we again reviewed the 
updated claims data associated with CPT codes 90868 and 90869. We note 
that, for this final rule with comment period, we used claims data with 
dates of service between January 1, 2016, and December 31, 2016, that 
were processed on or before June 30, 2017. Our analysis of the final 
rule claims data revealed a similar pattern for both codes. 
Specifically, we found a geometric mean cost of approximately $148 for 
CPT code 90868 based on 7,258 single claims (out of 7,312 total 
claims), which is similar to the geometric mean cost of approximately 
$136 for APC 5721, rather than the geometric mean cost of approximately 
$249 for APC 5722. Our analysis also revealed a geometric mean cost of 
approximately $125 for CPT code 90869 based on 105 single claims (out 
of 106 total claims), which is comparable to the geometric mean cost of 
$136 for APC 5721. Based on our analysis of the final rule claims data, 
we believe that APC 5721 is the appropriate APC assignment for both CPT 
codes 90868 and 90869 based on their clinical homogeneity and resource 
costs to the other procedures in APC 5721.
    With regards to the comment that TMS therapy requires significant 
time with physicians, we remind readers that payments under the OPPS 
are for services provided by hospital outpatient facilities, not 
physician services. We note that physician services are paid under the 
MPFS. Medicare payment rates for physician services can be found on the 
CMS Physician Fee Schedule Web site, specifically at: https://www.cms.gov/apps/physician-fee-schedule/overview.aspx.
    In summary, after consideration of the public comments we received, 
we are finalizing our CY 2018 proposal, without modification, for CPT 
codes 90867, 90868, and 90869. Table 65 below lists the final status 
indicator and APC assignments for all three CPT codes. We refer readers 
to Addendum B to this final rule with comment period for the payment 
rates for all codes reported under the OPPS. In addition, we refer 
readers to Addendum A to this final rule with comment period for the 
status indicator meanings for all codes reported under the OPPS. Both 
Addendum A and Addendum B are available via the Internet on the CMS Web 
site.

           Table 65--Final CY 2018 Status Indicator (SI) and APC Assignment for the Transcranial Magnetic Stimulation (TMS) Therapy CPT Codes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     CY 2017
                                                        CY 2017 OPPS    CY 2017        OPPS     CY 2018 OPPS    CY 2018
          CPT code                 Long descriptor           SI         OPPS APC     payment         SI         OPPS APC     CY 2018 OPPS payment rate
                                                                                       rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
90867.......................  Therapeutic repetitive              S          5722      $232.31            S          5722  Refer to OPPS Addendum B.
                               transcranial magnetic
                               stimulation (tms)
                               treatment; initial,
                               including cortical
                               mapping, motor
                               threshold
                               determination, delivery
                               and management.
90868.......................  Therapeutic repetitive              S          5722       232.31            S          5721  Refer to OPPS Addendum B.
                               transcranial magnetic
                               stimulation (tms)
                               treatment; subsequent
                               delivery and
                               management, per session.
90869.......................  Therapeutic repetitive              S          5721       127.10            S          5721  Refer to OPPS Addendum B.
                               transcranial magnetic
                               stimulation (tms)
                               treatment; subsequent
                               motor threshold re-
                               determination with
                               delivery and management.
--------------------------------------------------------------------------------------------------------------------------------------------------------

28. Transurethral Waterjet Ablation of the Prostate (C-APC 5375)
    On June 5, 2017, the Category B Investigational Device Exemption 
(IDE) study associated with the ``Waterjet Ablation Therapy for 
Endoscopic Resection of Prostate Tissue II (WATER)'' met CMS' standards 
for coverage. According to the National Institutes of Health (NIH) 
clinicaltrials.gov Web site, the estimated completion date of this 
study is August 2020. Under Medicare, studies with Category A 
designation are approved for coverage of routine services only, while 
studies with the Category B designation are approved for coverage of 
the Category B device and related services, and routine services. We 
note that the procedure associated with this study is currently 
described by CPT code 0421T. Based on the recent Medicare coverage of 
the IDE study, we revised the OPPS status indicator assignment for CPT

[[Page 59319]]

code 0421T from ``E1'' (Not paid by Medicare when submitted on 
outpatient claims (any outpatient bill type)) to ``J1'' (Hospital Part 
B services paid through a comprehensive APC) and assigned the code to 
C-APC 5374 (Level 4 Urology and Related Services) to indicate that the 
procedure would be paid separately under the OPPS. We announced this 
change through the October 2017 OPPS quarterly update CR (Transmittal 
3864, Change Request 10236, dated September 15, 2017), and further 
stated in this same CR that the payment would be effective on June 5, 
2017, which is the date of Medicare's approval for coverage.
    In the CY 2018 OPPS/ASC proposed rule, we solicited public comments 
on the proposed APC and status indicator assignments for the code. 
Specifically, as listed in Table 66 below, we proposed to continue to 
assign CPT code 0421T to C-APC 5374 for CY 2018.

                            Table 66--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment for CPT Code 0421T
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2017                               Proposed CY
                                                                          CY 2017 OPPS    CY 2017        OPPS      Proposed CY  Proposed CY   2018 OPPS
               CPT code                         Long descriptor                SI         OPPS APC     payment    2018 OPPS SI   2018 OPPS     payment
                                                                                                         rate                       APC          rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
0421T................................  Transurethral waterjet ablation             J1          5374    $2,542.56           J1          5374    $2,609.60
                                        of prostate, including control
                                        of post-operative bleeding,
                                        including ultrasound guidance,
                                        complete (vasectomy, meatotomy,
                                        cystourethroscopy, urethral
                                        calibration and/or dilation, and
                                        internal urethrotomy are
                                        included when performed).
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comment: Several commenters expressed concern over the proposed 
payment rate for CPT code 0421T and requested a reassignment to either 
C-APC 5375 (Level 5 Urology and Related Services), which had a proposed 
payment rate of $3,597.65, or C-APC 5376 (Level 6 Urology and Related 
Services), which had a proposed payment rate of $7,448.11 for the 
Aquablation procedure. The commenters stated that the proposed payment 
rate for C-APC 5374 does not take into account the cost of the device, 
the overhead costs, and the personnel costs associated with providing 
the Aquablation procedure. One commenter stated that the Aquablation 
procedure is dissimilar to the other procedures assigned to C-APC 5374, 
some of which require the use of reusable equipment. This same 
commenter reported that the level of complexity in the performing the 
Aquablation procedure is comparable to those procedures in C-APC 5375 
and C-APC 5376. Specifically, as indicated by the commenter, the 
Aquablation procedure is similar to implanting brachytherapy seeds into 
the prostate (CPT code 55875, proposed for assignment to C-APC 5375), 
cryoablation of the prostate (CPT code 55873, proposed for assignment 
to C-APC 5376), and high intensity focused ultrasound (HIFU) of the 
prostate (HCPCS code C9747, proposed for assignment to C-APC 5376). 
Another commenter believed the Aquablation procedure requires more 
effort than the traditional transurethral resection of the prostate 
(TURP) procedure (CPT code 52601, proposed for assignment to C-APC 
5375) or the laser ablation of the prostate procedure (GreenLight Laser 
Therapy described by CPT code 52648, proposed for assignment to C-APC 
5375), and added that the TURP and Aquablation each require general 
anesthesia and take approximately 1 hour to perform. Several commenters 
stated that the complexity of performing the Aquablation procedure is 
similar to the cryoablation of the prostate and HIFU procedures, of 
which both were proposed to be assigned to C-APC 5376. Consequently, 
these same commenters requested that CMS revisit the APC assignment for 
CPT code 0421T and consider a reassignment to C-APC 5376.
    Response: Based on our review of the procedure and input from our 
clinical advisors, we believe that a reassignment from C-APC 5374 to C-
APC 5375 for the Aquablation is appropriate. We note that this 
procedure is currently in clinical trial with an estimated study 
completion date of August 2020. We believe that the procedure is 
clinically similar to other procedures that are currently assigned to 
C-APC 5375. As we do every year under the OPPS, we will reevaluate the 
cost of the procedure described by CPT code 0421T and its APC 
assignment for next year's rulemaking update.
    In summary, after consideration of the public comments, we are 
finalizing our CY 2018 proposal with modification. Specifically, we are 
revising the APC assignment for CPT code 0421T from proposed C-APC 5374 
to C-APC 5375 for CY 2018. Table 67 below lists the final status 
indicator and APC assignments for CPT code 0421T for CY 2018. We refer 
readers to Addendum B to this final rule with comment period for the 
payment rates for all codes reported under the OPPS. In addition, we 
refer readers to Addendum A to this final rule with comment period for 
the status indicator meanings for all codes reported under the OPPS. 
Both Addendum A and Addendum B are available via the Internet on the 
CMS Web site.

[[Page 59320]]



                                     Table 67--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT U0421T
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     CY 2017
                                                        CY 2017 OPPS    CY 2017        OPPS     CY 2018 OPPS    CY 2018
          CPT code                Long descriptors           SI         OPPS APC     payment         SI         OPPS APC     CY 2018 OPPS payment rate
                                                                                       rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
0421T.......................  Transurethral waterjet             J1          5374    $2,542.56           J1          5375  Refer to OPPS Addendum B.
                               ablation of prostate,
                               including control of
                               post-operative
                               bleeding, including
                               ultrasound guidance,
                               complete (vasectomy,
                               meatotomy,
                               cystourethroscopy,
                               urethral calibration
                               and/or dilation, and
                               internal urethrotomy
                               are included when
                               performed).
--------------------------------------------------------------------------------------------------------------------------------------------------------

29. Transurethral Water Vapor Thermal Therapy of the Prostate (C-APC 
5373)
    For CY 2018, CMS received a New Technology APC application 
requesting a new HCPCS code for the Rez[umacr]m therapy. The 
Rez[umacr]m procedure is a new treatment, and the Rez[umacr]m System 
associated with this procedure received a 510(k) FDA clearance on 
August 27, 2015. The procedure utilizes water vapor for the treatment 
of benign prostatic hypertrophy (BPH). The applicant maintained that 
there was coding confusion about whether the procedure could be 
described by existing CPT code 53852 (Transurethral destruction of 
prostate tissue; by radiofrequency thermotherapy). We note that CPT 
code 53852 is assigned to C-APC 5375 (Level 5 Urology and Related 
Services), which has a geometric mean cost of approximately $3,704 for 
CY 2018.
    Based on our review of the application, the procedure, and input 
from our clinical advisors, we agree that CPT code 53852 does not 
appropriately describe the Rez[umacr]m procedure. Consequently, we are 
establishing HCPCS code C9748 to appropriately describe the procedure. 
Effective January 1, 2018, HOPDs should report HCPCS code C9748 to 
report the use of the Rez[umacr]m procedure for the treatment of BPH. 
In addition, based on cost information submitted to CMS in the 
application, we believe that the procedure should appropriately be 
assigned to C-APC 5373 (Level 3 Urology and Related Services), which 
has a geometric mean cost of approximately $1,695. We believe the 
Rez[umacr]m procedure shares similar resource and clinical homogeneity 
to the other procedures currently assigned to C-APC 5373.
    Table 68 below lists the final status indicator and APC assignments 
for HCPCS code C9748 for CY 2018. We refer readers to Addendum B to 
this final rule with comment period for the payment rates for all codes 
reported under the OPPS. In addition, we refer readers to Addendum A to 
this final rule with comment period for the status indicator meanings 
for all codes reported under the OPPS. Both Addendum A and Addendum B 
are available via the Internet on the CMS Web site.

   Table 68--Final CY 2018 Status Indicator (SI) and APC Assignment for the Transurethral Water Vapor Thermal
                                             Therapy of the Prostate
----------------------------------------------------------------------------------------------------------------
                                                        CY 2018 OPPS    CY 2018
         HCPCS code                Long descriptor           SI         OPPS APC     CY 2018 OPPS payment rate
----------------------------------------------------------------------------------------------------------------
C9748.......................  Transurethral                      J1          5373  Refer to OPPS Addendum B.
                               destruction of prostate
                               tissue; by
                               radiofrequency water
                               vapor (steam) thermal
                               therapy.
----------------------------------------------------------------------------------------------------------------

    We note that HCPCS code C9748 is assigned to comment indicator 
``NI'' in Addendum B to this CY 2018 OPPS/ASC final rule with comment 
period to indicate that we have assigned the code an interim OPPS 
payment status for CY 2018. We are inviting public comments on the 
interim status indicator and APC assignments that will be finalized in 
the CY 2019 OPPS/ASC final rule with comment period.

IV. OPPS Payment for Devices

A. Pass-Through Payments for Devices

1. Beginning Eligibility Date for Device Pass-Through Status and 
Quarterly Expiration of Device Pass-Through Payments
a. Background
    Under section 1833(t)(6)(B)(iii) of the Act, the period for which a 
device category eligible for transitional pass-through payments under 
the OPPS can be in effect is at least 2 years but not more than 3 
years. Prior to CY 2017, our regulation at 42 CFR 419.66(g) provided 
that this pass-through payment eligibility period began on the date CMS 
established a particular transitional pass-through category of devices, 
and we based the pass-through status expiration date for a device 
category on the date on which pass-through payment was effective for 
the category. In the CY 2017 OPPS/ASC final rule with comment period 
(81 FR 79654), in accordance with section 1833(t)(6)(B)(iii)(II) of the 
Act, we amended Sec.  419.66(g) to provide that the pass-through 
eligibility period for a device category begins on the first date on 
which pass-through payment is made under the OPPS for any medical 
device described by such category.
    In addition, prior to CY 2017, our policy was to propose and 
finalize the dates for expiration of pass-through status for device 
categories as part of the OPPS annual update. This means that device 
pass-through status would expire

[[Page 59321]]

at the end of a calendar year when at least 2 years of pass-through 
payments have been made, regardless of the quarter in which the device 
was approved. In the CY 2017 OPPS/ASC final rule with comment period 
(81 FR 79655), we changed our policy to allow for quarterly expiration 
of pass-through payment status for devices, beginning with pass-through 
devices approved in CY 2017 and subsequent calendar years, to afford a 
pass-through payment period that is as close to a full 3 years as 
possible for all pass-through payment devices. We refer readers to the 
CY 2017 OPPS/ASC final rule with comment period (81 FR 79648 through 
79661) for a full discussion of the changes to the device pass-through 
payment policy. 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).
b. Expiration of Transitional Pass-Through Payments for Certain Devices
    As stated earlier, section 1833(t)(6)(B)(iii) of the Act requires 
that, under the OPPS, a category of devices be eligible for 
transitional pass-through payments for at least 2 years, but not more 
than 3 years. There currently are three device categories eligible for 
pass-through payment: (1) HCPCS code C2623 (Catheter, transluminal 
angioplasty, drug-coated, non-laser), which was established effective 
April 1, 2015; (2) HCPCS code C2613 (Lung biopsy plug with delivery 
system), which was established effective July 1, 2015; and (3) HCPCS 
code C1822 (Generator, neurostimulator (implantable), high frequency, 
with rechargeable battery and charging system), which was established 
effective January 1, 2016. The pass-through payment status of the 
device categories for HCPCS codes C2623, C2613, and C1822 will end on 
December 31, 2017. We note that our new policy adopted in the CY 2017 
OPPS/ASC final rule with comment period to allow for quarterly 
expiration of pass-through payment status for devices applies to 
devices approved in CY 2017 and subsequent years. As all the devices in 
these three device categories were approved prior to CY 2017, we are 
applying our policy to expire them at the end of the calendar year when 
at least 2 years of pass-through payments have been made. Therefore, in 
the CY 2018 OPPS/ASC proposed rule (82 FR 33610), we proposed, 
beginning in CY 2018, to package the costs of each of the devices 
described by HCPCS codes C2623, C2613, and C1822 into the costs related 
to the procedure with which each device is reported in the hospital 
claims data.
    Comment: Various stakeholders, including physicians, device 
manufacturers, and professional societies, opposed the proposal to 
package the costs of the device described by HCPCS code C2623 into the 
costs related to the procedure(s) with which the device is reported. 
The commenters specifically opposed packaging of the cost of the drug-
coated balloons into the procedure described by CPT code 37224 
(Revascularization, endovascular, open or percutaneous, femoral, 
popliteal artery(s), unilateral; with transluminal angioplasty). These 
commenters stated concerns that the proposed payment rate for this 
procedure did not adequately reflect the additional costs of drug-
coated balloons over non-drug-coated balloons, which could limit 
patient access to the technology. Several commenters described the 
clinical benefits provided by the drug-coated balloon in the treatment 
of peripheral arterial disease (PAD) and supported the continuation of 
the pass-through status of the device category for HCPCS code C2623 
beyond December 31, 2017. At the August 21, 2017 meeting of the HOP 
Panel, the HOP Panel made a recommendation that CMS continue to track 
CPT code 37224 (Revascularization, endovascular, open or percutaneous, 
femoral, popliteal artery(s), unilateral; with transluminal 
angioplasty) with HCPCS code C2623, and that the appropriate HOP Panel 
subcommittee review the APCs for endovascular procedures to determine 
whether more granularity (that is, more APCs) is warranted. One 
commenter supported the proposal to package the costs of the device 
described by HCPCS code C2623 into the costs related to the 
procedure(s) with which the device is reported. The commenter stated 
that the proposed payment rate provided under the OPPS for procedures 
using drug-coated balloons was appropriate. This commenter also stated 
concerns over a lack of scientific evidence of the effectiveness of 
these devices outside of clinical trials.
    Response: As mentioned earlier, under section 1833(t)(6)(B)(iii) of 
the Act, the period for which a device category eligible for 
transitional pass-through payments under the OPPS can be in effect is 
at least 2 years but not more than 3 years. Our policy for devices 
approved for pass-through payment status prior to CY 2017 is to propose 
and finalize the dates for expiration of pass-through payment status 
for device categories as part of the OPPS annual update. This means 
that device pass-through payment status would expire at the end of a 
calendar year when at least 2 years of pass-through payments had been 
made, regardless of the quarter in which the device was approved for 
pass-through payment status. According to our established policy (67 FR 
66763), after this eligibility period expires, payments for the costs 
of the device(s) are packaged into payment for the procedures with 
which they are billed. The device category for HCPCS code C2623 was 
established effective April 1, 2015, and will have been in effect for a 
period of at least 2 years, but not more than 3 years, when its 
eligibility expires on December 31, 2017. Therefore, this category is 
no longer eligible for pass-through payments. In accordance with our 
established policy, we are finalizing our proposal to package payment 
for the costs of the device(s) described by this category into payment 
for the costs of the procedures with which they are reported. In 
response to the recommendation of the HOP Panel from the August 21, 
2017 meeting, we will continue to track CPT code 37224 
(Revascularization, endovascular, open or percutaneous, femoral, 
popliteal artery(s), unilateral; with transluminal angioplasty) with 
HCPCS code C2623. We will share information on all items and services 
paid under the OPPS, including endovascular procedures, so that the 
appropriate HOP Panel subcommittee may review the APCs for endovascular 
procedures and advise on whether more granularity (that is, more APCs) 
is warranted.
    Comment: Some commenters, including device manufacturers and 
associations, stated that the geometric mean costs of the procedure 
described by CPT code 37224 involving a drug-coated balloon were higher 
than the geometric mean costs of the same angioplasty procedure when a 
drug-coated balloon was not used and a plain balloon angioplasty 
catheter was used instead. Specifically, these commenters presented 
their analysis of Medicare claims data which suggested that when CPT 
code 37224 is billed with HCPCS code C2623, the geometric mean cost of 
these claims is $8,483, while the geometric mean cost of claims 
including CPT code 37224 without HCPCS code C2623 is $6,396. The 
commenters also noted that the total geometric mean costs for CPT code 
37224, regardless of whether HCPCS code C2623 is billed with CPT code 
37224, is approximately $7,153. These commenters requested that CMS 
create a new procedural HCPCS C-code or G-code for hospitals to

[[Page 59322]]

use to differentiate procedures described by CPT code 37224 that use 
drug-coated balloons from procedures described by CPT code 37224 that 
use plain balloon angioplasty catheters, with a suggested descriptor of 
``Revascularization, endovascular, open percutaneous, femoral, 
popliteal artery(s), unilateral; with transluminal drug-coated balloon 
angioplasty''.
    One commenter also referenced the proposal in the CY 2018 OPPS/ASC 
proposed rule (82 FR 33579 and 33580) to establish a HCPCS C-code to 
describe blue light cystoscopy (HCPCS code C9738 (Adjunctive blue light 
cystoscopy with fluorescent imaging agent (List separately in addition 
to code for primary procedure)) and to apply the C-APC complexity 
adjustment policy when this C-code is billed with specific white light 
cystoscopy codes. The commenter pointed out that, in the proposed rule, 
CMS stated that establishment of this C-code was appropriate because 
CMS believed that blue light cystoscopy is a distinguishable service in 
comparison to white light cystoscopy alone. CMS further stated that, 
with the C-APC complexity adjustment, qualifying combinations of the 
blue light cystoscopy C-code and white light cystoscopy codes are paid 
at the next higher paying C-APC when billed together on the same claim. 
The commenter requested that CMS take comparable steps to separately 
identify and pay for angioplasty procedures involving drug-coated 
balloons.
    Finally, several commenters referenced the HOP Panel's 
recommendation that CMS examine the number of APCs for endovascular 
procedures for CY 2018 and requested CMS create two new levels within 
the Endovascular C-APCs to provide higher payment for angioplasty 
procedures using a drug-coated balloon.
    Response: We believe that procedures with which the drug-coated 
balloons are used, specifically the procedure described by CPT code 
37224, are appropriately described by the existing procedure code and 
do not believe it is necessary at this time to establish a HCPCS C-code 
or G-code to distinguish an angioplasty procedure with a drug-coated 
balloon from an angioplasty procedure without a drug-coated balloon. 
The OPPS is a prospective payment system that relies on the principles 
of averaging, with some cases in an APC being more costly than others 
(and some cases being less costly). Although there is some evidence of 
higher geometric mean costs when a drug-coated balloon is used for 
certain angioplasty procedures versus a plain balloon angioplasty 
catheter, the higher costs of the procedures involving the drug-coated 
balloon are reflected in the claims data. Our analysis of the final 
rule claims data revealed a geometric mean cost of approximately $7,029 
for CPT code 37224 based on 11,346 single claims (out of 11,437 total 
claims). CPT code 37224 is assigned to C-APC 5192 (Level 2 Endovascular 
Procedures), which has a geometric mean cost of approximately $5,081. 
There is no 2 times violation in this C-APC. We also do not believe a 
C-APC complexity adjustment would be applicable, based on existing 
criteria used to assign a complexity adjustment. We do not believe that 
the example the commenter raised is entirely analogous because the 
HCPCS C-code that the commenter referenced necessarily involves an 
additional procedure (blue light cystoscopy) in addition to white light 
cystoscopy and the administration of the fluorescent imaging agent is 
required, which adds additional procedure time. In contrast, the use of 
a drug coated balloon does not involve a separate procedure.
    We note that stakeholders who are interested in the establishment 
of a CPT procedure code to describe angioplasty procedures involving 
the use of drug-coated balloons may request a new procedure code from 
the AMA CPT Editorial Panel.
    With regard to the request to create additional levels within the 
Vascular C-APC clinical family, this issue is discussed in greater 
detail in section III.D. of this final rule with comment period. As we 
do every year, we will review and evaluate the APC groupings based on 
the latest available data in the next rulemaking cycle.
    Comment: Several commenters requested that HCPCS code C1822 
(Generator, neurostimulator (implantable), high frequency, with 
rechargeable battery and charging system), otherwise known as the Senza 
SCS System, receive an additional year of pass-through payment status 
for CY 2018. Reasons stated by the commenters included: (1) A belief 
that CMS has the authority under current law to extend pass-through 
payment status for one more year, for a total of 3 years, and that, 
although CMS' policy to allow devices with transitional pass-through 
payment status as close to 3 years as possible was effective for device 
approvals on or after January 1, 2017, CMS has the authority to grant 
the third year of pass-through payment status on a case-by-case basis 
for devices that were granted pass-through payment status prior to CY 
2017 based on specific characteristics of the device and procedure with 
which it is used; (2) the reported costs for devices described by HCPCS 
code C1822 in CY 2016 were lower than actual cost for the device due to 
hospital CCR ratios used to calculate device cost instead of 
implantable device CCRs, which were used for many hospitals to 
calculate device costs starting in CY 2017; (3) the reported costs for 
devices described by HCPCS C1822 in CY 2016 were lower than actual 
costs due to hospital cost reporting errors, billing of HCPCS code 
C1822 by hospitals that, according to the device manufacturer, had not 
purchased the device, hospitals not reporting use of the device, and 
other claims reporting problems; and (4) ending pass-through payment 
status would reduce access to the Senza SCS System. The commenters 
stated that the Senza SCS System helps beneficiaries manage chronic 
pain and reduces opioid usage among beneficiaries with the device.
    Response: Historically, a device approved for pass-through payment 
status under the OPPS had an eligibility period of at least 2 years but 
no more than 3 years--with the pass-through payment period starting on 
the date when CMS established a particular transitional category of 
devices (80 FR 70415) and expiring at the end of a calendar year when 
at least 2 years but no more than 3 years have passed. Effective 
January 1, 2017, we revised our policy to allow for a quarterly 
expiration of pass-through payment status for devices to afford a pass-
through payment period that is as close to a full 3 years as possible 
for all pass-through payment devices (81 FR 79655). HCPCS code C1822 
was established as a pass-through payment category on January 1, 2016, 
and will have received 2 years of pass-through payment status on 
December 31, 2017, in accordance with the statutory requirement of 
receiving at least 2 years of pass-through payments, but not more than 
3 years, and consistent with the policy in effect at the time the 
device pass-through payment period began for HCPCS code C1822. 
Accordingly, the policy adopted in CY 2017 does not apply to devices 
approved for pass-through payment status prior to that date. Likewise, 
the change in CY 2017 from using the average hospital-wide CCR to the 
implantable device CCR also was a prospective policy change to use the 
best available data in a given year to determine device pass-through 
payment.
    With respect to comments expressing concerns that the reported 
costs for HCPCS code C1822 for CY 2016 were lower due to hospital cost 
reporting

[[Page 59323]]

errors, as we have stated in Section 20.5 (Clarification of HCPCS Code 
to Revenue Code Reporting) of Chapter 4 of the Medicare Claims 
Processing Manual, hospitals are responsible for reporting the correct 
revenue code on the claim form. Specifically, we state that we do not 
instruct hospitals on how to report the assignment of HCPCS codes to 
revenue codes for services provided under OPPS because hospitals' costs 
vary. Where explicit instructions are not provided, providers should 
report their charges under the revenue code that will result in the 
charges being assigned to the same cost center to which the cost of 
those services are assigned in the cost report. We note that the 
Medicare cost report form allows hospitals to report in a manner that 
is consistent with their own financial accounting systems and, 
therefore, should be accurate for each individual hospital. Moreover, 
we believe that the cost report data and their use in the OPPS cost 
estimation and payment rate development process, combined with 
potential penalties for inaccurate reporting, provide financial 
incentives for hospitals to report costs accurately. Furthermore, as we 
have stated repeatedly, 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. (We refer 
readers to the CY 2011 OPPS/ASC final rule with comment period (75 FR 
71838) for further discussion.)
    Commenters writing in support of extending the pass-through payment 
period for HCPCS code C1822 also stated that access to the service 
covered by HCPCS code C1822 could be reduced if pass-through payment 
status for HCPCS code C1822 is removed. Because reported costs for CPT 
code 63685 appear to be consistent with or without being reported in 
combination with HCPCS code C1822, we do not anticipate a significant 
impact to the payment amount for CPT code 63685 once HCPCS code C1822 
is removed from pass-through payment status. We anticipate that 
hospitals will be able to adjust to any possible changes to the payment 
for the service.
    Comment: One commenter, another device manufacturer, agreed with 
CMS' proposal to end pass-through payment status of HCPCS code C1822 on 
December 31, 2017, stating that the decision to end pass-through 
payment status is consistent with CMS policy and there is no need to 
apply the policy established in CY 2017 retroactively.
    Response: We appreciate the commenter's support.
    We did not receive any public comments regarding the proposal to 
package the payment for the costs of the device described by HCPCS code 
C2623 into the payment for the costs related to the procedure with 
which the device is reported.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to package the payment 
for the costs of each of the devices described by HCPCS codes C2623, 
C2613, and C1822 into the payment for the costs related to the 
procedure with which each device is reported in the hospital claims 
data.
2. New Device Pass-Through Applications
a. Background
    Section 1833(t)(6) of the Act provides for pass-through payments 
for devices, and section 1833(t)(6)(B) of the Act requires CMS to use 
categories in determining the eligibility of devices for pass-through 
payments. As part of implementing the statute through regulations, we 
have continued to believe that 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, we have noted that the need for additional payments for 
devices that offer little or no clinical improvement over previously 
existing devices is less apparent. In such cases, these devices can 
still be used by hospitals, and hospitals will be paid for them through 
appropriate APC payment. Moreover, a goal is to target pass-through 
payments for those devices where cost considerations might be most 
likely to interfere with patient access (66 FR 55852; 67 FR 66782; and 
70 FR 68629).
    As specified in regulations at 42 CFR 419.66(b)(1) through (b)(3), 
to be eligible for transitional pass-through payment under the OPPS, a 
device must meet the following criteria: (1) If required by FDA, the 
device must have received FDA approval or clearance (except for a 
device that has received an FDA investigational device exemption (IDE) 
and has been classified as a Category B device by the FDA), or another 
appropriate FDA exemption; and the pass-through payment application 
must be submitted within 3 years from the date of the initial FDA 
approval or clearance, if required, unless there is a documented, 
verifiable delay in U.S. market availability after FDA approval or 
clearance is granted, in which case CMS will consider the pass-through 
payment application if it is submitted within 3 years from the date of 
market availability; (2) the device is determined to be reasonable and 
necessary for the diagnosis or treatment of an illness or injury or to 
improve the functioning of a malformed body part, as required by 
section 1862(a)(1)(A) of the Act; and (3) the device is an integral 
part of the service furnished, is used for one patient only, comes in 
contact with human tissue, and is surgically implanted or inserted 
(either permanently or temporarily), or applied in or on a wound or 
other skin lesion. In addition, according to Sec.  419.66(b)(4), a 
device is not eligible to be considered for device pass-through payment 
if it is any of the following: (1) Equipment, an instrument, apparatus, 
implement, or item of this type for which depreciation and financing 
expenses are recovered as depreciation assets as defined in Chapter 1 
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a 
material or supply furnished incident to a service (for example, a 
suture, customized surgical kit, or clip, other than a radiological 
site marker).
    Separately, we use the following criteria, as set forth under Sec.  
419.66(c), to determine whether a new category of pass-through payment 
devices should be established. The device to be included in the new 
category must--
     Not be appropriately described by an existing category or 
by any category previously in effect established for transitional pass-
through payments, and was not being paid for as an outpatient service 
as of December 31, 1996;
     Have an average cost that is not ``insignificant'' 
relative to the payment amount for the procedure or service with which 
the device is associated as determined under Sec.  419.66(d) by 
demonstrating: (1) The estimated average reasonable costs of devices in 
the category exceeds 25 percent of the applicable APC payment amount 
for the service related to the category of devices; (2) the estimated 
average reasonable cost of the devices in the category exceeds the cost 
of the device-related portion of the APC payment amount for the related 
service by at least 25 percent; and (3) the difference between the 
estimated average reasonable cost of the devices in the category and 
the portion of the APC payment amount for the device exceeds 10 percent 
of the APC payment amount for the related service (with the exception 
of brachytherapy and temperature-monitored cryoblation, which are 
exempt from the cost

[[Page 59324]]

requirements as specified at Sec. Sec.  419.66(c)(3) and (e)); and
     Demonstrate a substantial clinical improvement, that is, 
substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment.
    Beginning in CY 2016, we changed our device pass-through evaluation 
and determination process. Device pass-through applications are still 
submitted to CMS through the quarterly subregulatory process, but the 
applications will be subject to notice-and-comment rulemaking in the 
next applicable OPPS annual rulemaking cycle. Under this process, all 
applications that are preliminarily approved upon quarterly review will 
automatically be included in the next applicable OPPS annual rulemaking 
cycle, while submitters of applications that are not approved upon 
quarterly review will have the option of being included in the next 
applicable OPPS annual rulemaking cycle or withdrawing their 
application from consideration. Under this notice-and-comment process, 
applicants may submit new evidence, such as clinical trial results 
published in a peer-reviewed journal or other materials for 
consideration during the public comment process for the proposed rule. 
This process allows those applications that we are able to determine 
meet all the criteria for device pass-through payment under the 
quarterly review process to receive timely pass-through payment status, 
while still allowing for a transparent, public review process for all 
applications (80 FR 70417 through 70418).
    More details on the requirements for device pass-through payment 
applications are included on the CMS Web site in the application form 
itself at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html, in the 
``Downloads'' section. In addition, CMS is amenable to meeting with 
applicants or potential applicants to discuss research trial design in 
advance of any device pass-through application or to discuss 
application criteria, including the substantial clinical improvement 
criterion.
b. Applications Received for Device Pass-Through Payment for CY 2018
    We received five applications by the March 1, 2017 quarterly 
deadline, which was the last quarterly deadline for applications to be 
received in time to be included for the CY 2018 OPPS/ASC proposed rule. 
All applications were received in the second quarter of 2016. None of 
the five applications were approved for device pass-through payment 
during the quarterly review process.
    Applications received for the later deadlines for the remaining 
2017 quarters (June 1, September 1, and December 1), if any, will be 
presented in the CY 2019 OPPS/ASC proposed rule. We note that the 
quarterly application process and requirements have not changed in 
light of the addition of rulemaking review. Detailed instructions on 
submission of a quarterly device pass-through payment application are 
included on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Downloads/catapp.pdf. A 
discussion of the five applications received by the March 1, 2017 
deadline is presented below, as detailed in the CY 2018 OPPS/ASC 
proposed rule (82 FR 33611 through 33618).
(1) Architect[supreg] Px
    Harbor MedTech, Inc. submitted an application for a new device 
category for transitional pass-through payment status for 
Architect[supreg] Px. Architect[supreg] Px is a collagen biomatrix 
comprised of a stabilized extracellular matrix derived from equine 
pericardium. The equine pericardium is stabilized to become a catalyst 
and scaffold for use by autologous tissue regeneration factors. 
Architect[supreg] Px is packaged as an individual unit in sizes ranging 
from 2 cm x 2 cm up to 10 cm x 15 cm and is approximately 0.75 mm 
thick. Architect[supreg] Px typically requires only one application. 
The applicant asserted that it is clinically superior to other skin 
substitutes that work by flooding the wound with nonautologous collagen 
and growth factors because Architect[supreg] Px attracts and 
concentrates the patient's own autologous collagen and growth factors 
to support healing.
    With respect to the newness criterion at Sec.  419.66(b)(1), the 
applicant received FDA clearance for Architect[supreg] Px on September 
12, 2014, and its June 1, 2016 application was submitted within 3 years 
of FDA clearance. However, Unite BioMatrix, cleared by the FDA on June 
20, 2007, is claimed as a predicate of Architect[supreg] Px. The 
Architect[supreg] Px application states that ``. . . while packaged 
differently, Architect[supreg] Px and Unite BioMatrix are identical . . 
. they are both stabilized equine pericardium manufactured using the 
same processes . . . .'' If the date for FDA clearance for Unite 
BioMatrix is used to evaluate the newness criterion, Architect[supreg] 
Px may not meet the newness criterion. We invited public comments on 
this issue.
    Comment: One commenter, the manufacturer, stated that 
Architect[supreg] Px is substantially different than its predicate 
product, Unite Biomatrix, and should be considered to meet the newness 
criterion for device pass-through payment. The commenter pointed out 
the following: Architect[supreg] Px uses a different process from Unite 
Biomatrix to stabilize the equine pericardium. Architect[supreg] Px is 
de-hydrated, packaged dry in a foil pouch, and is sterilized by 
radiation. Unite Biomatrix is packaged wet in a jar and is not 
sterilized using radiation. The new process that is used to 
manufacturer Architect[supreg] Px was found by researchers in 2016 to 
add key properties to the device that promote the use of endogenous 
collagen and growth factors to support healing. The commenter implied 
that Unite Biomatrix does not contain these key properties.
    Response: The statements by the manufacturer about the differences 
in performance between Architect[supreg] Px and Unite Biomatrix appear 
to be different than what was stated in the device pass-through 
application. The application stated that, despite different packaging, 
the two products were identical. However, we acknowledge that the 
research cited by the manufacturer of substantial performance 
differences between Architect[supreg] Px and Unite Biomatrix is from 
2016, and the findings may not have been available when the device 
pass-through payment application was submitted. For purposes of the 
device pass-through payment process, we are persuaded by this 
additional information and have determined that Architect[supreg] Px 
does meet the newness criterion based on the additional performance 
information supplied by the manufacturer.
    With respect to the eligibility criterion at Sec.  419.66(b)(3), 
according to the applicant, Architect[supreg] Px is a skin substitute 
product that is integral to the service provided, is used for one 
patient only, comes in contact with human skin, and is surgically 
inserted into the patient. The applicant also claims Architect[supreg] 
Px meets the device eligibility requirements of Sec.  419.66(b)(4) 
because Architect[supreg] Px is not an instrument, apparatus, 
implement, or item for which depreciation and financing expenses are 
recovered, and it is not a supply or material.
    The criteria for establishing new device categories are specified 
at Sec.  419.66(c). The first criterion, at Sec.  419.66(c)(1), 
provides that CMS

[[Page 59325]]

determines that a device to be included in the category is not 
appropriately described by any of the existing categories or by any 
category previously in effect, and was not being paid for as an 
outpatient service as of December 31, 1996. We have not identified an 
existing pass-through category that describes Architect[supreg] Px. 
Harbor MedTech, Inc. suggested a new device category descriptor of 
``Stabilized Skin Substitute for Autologous Tissue Regeneration'' for 
Architect[supreg] Px. We invited public comments on this issue.
    We did not receive any public comments on this issue. We are 
confirming that there is no existing pass-through category that 
describes Architect[supreg] Px and have determined that 
Architect[supreg] Px meets this eligibility criterion.
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines that a device to be included 
in the category has demonstrated that it will substantially improve the 
diagnosis or treatment of an illness or injury or improve the 
functioning of a malformed body part compared to the benefits of a 
device or devices in a previously established category or other 
available treatment. With regard to the substantial clinical 
improvement criterion, the applicant only identified two references, 
neither of which we believe provide evidence of substantial clinical 
improvement. One reference is a 2012 summary report \3\ of skin 
substitute products that can be used to treat chronic wounds that only 
describes characteristics of the predecessor product to 
Architect[supreg] Px with no efficacy or performance information. The 
second reference \4\ is a small observational study of 34 subjects with 
no comparison group. We invited public comments on whether 
Architect[supreg] Px meets the substantial clinical improvement 
criterion.
---------------------------------------------------------------------------

    \3\ Snyder, D.L. et al. Skin Substitutes for Treating Chronic 
Wounds. Technology Assessment Report. Project ID: HCPR0610. AHRQ. 
December 18, 2012.
    \4\ Alexander JH, Yeager DA, et al. Equine Pericardium as a 
Biological Covering for the Treatment of Diabetic Foot Wounds; a 
Prospective Study. J Am Podiatric Assoc., 2012 Sep-Oct.:102 (5): 
352-358.
---------------------------------------------------------------------------

    Comment: One commenter, the manufacturer, stated that the inclusion 
of stabilized equine pericardium is an extremely important property of 
Architect[supreg] Px and Unite Biomatrix, and that this property allows 
these products to stay on a chronic wound, resist degradation, and 
remain on the wound until it heals. The commenter stated that 
Architect[supreg] Px is a nondegrading skin substitute that constantly 
supports healing and does not need to be reapplied. The commmenter also 
stated that skin substitutes that degrade need to be reapplied multiple 
times and there is the risk that reapplying the skin substitute may 
interrupt the wound healing process which drives up the costs of 
medical care. The commenter believed that Architect[supreg] Px is the 
first skin substitute that totally aligned with the Quality and Value 
of Care objectives of the Medicare Access and CHIP Reauthorization Act 
of 2015 (MACRA). Lastly, the commenter stated that other skin 
substitute products have previously received pass-through payment 
approval by presenting similar data as have been presented for 
Architect[supreg] Px.
    Response: The commenter has provided additional information about 
the potential beneficial qualities of Architect[supreg] Px. However, 
the commenter has provided no additional studies that demonstrate that 
its use results in a substantial clinical improvement relative to other 
skin substitute and wound healing products available on the market. The 
commenter mentioned that skin substitutes had previously received pass-
through payment status based on the same type of information the 
manufacturer provided in its device pass-through payment application 
and in its comments on the proposed rule. However, the commenter is 
referring to a previous process to evaluate skin substitutes for pass-
through payment eligibility (the drugs and biological pass-through 
payment process), which did not require evidence of a substantial 
clinical improvement. Since CY 2015, skin substitutes have been 
evaluated using the medical device pass-through payment process (79 FR 
66885 through 66888), which includes the criterion for substantial 
clinical improvement. Applicants must demonstrate that the device under 
consideration for pass-through payment status will substantially 
improve the diagnosis or treatment of an illness or injury or improve 
the functioning of a malformed body part compared to the benefits of a 
device or devices in a previously established category or other 
available treatment. The commenter has not provided additional 
information showing substantial clinical improvement. Therefore, we 
determine that Architect[supreg] Px does not meet the criterion for 
substantial clinical improvement.
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements: Architect[supreg] Px would be reported with 
CPT codes 15271 through 15278, which cover the application of skin 
substitute grafts to different areas of the body for high-cost skin 
substitutes. To meet the cost criterion for device pass-through 
payment, a device must pass all three tests of the cost criteria for at 
least one APC. CPT codes 15271 through 15278 are assigned to either APC 
5054 (Level 4 Skin Procedures), with a CY 2016 payment rate of 
$1,411.21 and a device offset of $4.52, or APC 5055 (Level 5 Skin 
Procedures), with a CY 2016 payment rate of $2,137.49 and a device 
offset of $25.44. According to the applicant, the cost of the 
substitute graft procedures when performed with Architect[supreg] Px is 
$5,495.
    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The estimated 
average reasonable cost of $5,495 for Architect[supreg] Px exceeds the 
applicable APC amount for the service related to the category of 
devices of $1,411.21 by 389 percent ($5,495/$1,411.21 x 100 percent = 
389 percent). Therefore, it appears that Architect[supreg] Px meets the 
first cost significance test.
    The second cost significance test, at Sec.  419.66(d)(2), provides 
that the estimated average reasonable cost of the devices in the 
category must exceed the cost of the device-related portion of the APC 
payment amount for the related service by at least 25 percent, which 
means the device cost needs to be at least 125 percent of the offset 
amount (the device-related portion of the APC found on the offset 
list). The estimated average reasonable cost of $5,495 for 
Architect[supreg] Px exceeds the device-related portion of the APC 
payment amount for the related service of $4.52 by 121,571 percent 
($5,495/$4.52 x 100 percent = 121,571 percent). Therefore, we stated in 
the proposed rule that it appears that Architect[supreg] Px meets the 
second cost significance test.
    Section 419.66(d)(3), the third cost significance test, requires 
that the difference between the estimated average reasonable cost of 
the devices in the category and the portion of the APC payment amount 
for the device must exceed 10 percent of the APC payment amount for the 
related service. The difference between the estimated average 
reasonable cost of $5,495 for Architect[supreg] Px and the portion of 
the APC payment amount for the device of

[[Page 59326]]

$4.52 exceeds 10 percent at 389 percent (($5,495-$4.52)/$1,411.21) x 
100 percent = 389 percent). Therefore, it appears that 
Architect[supreg] Px meets the third cost significance test. Based on 
the costs submitted by the applicant and the calculations noted 
earlier, we believe that Architect[supreg] Px meets the cost criterion 
at Sec.  419.66(c)(3) for new device categories.
    We invited public comments on whether Architect[supreg] Px meets 
the device pass-through payment criteria discussed in this section.
    We did not receive any public comments relating to whether 
Architect[supreg] Px meets the device pass-through payment cost 
criterion. As stated earlier, we believe that Architect[supreg] Px 
meets the cost criterion at Sec.  419.66(c)(3) for new device 
categories. However after consideration of the public comments we 
received, we are not approving device pass-through payment status for 
Architect[supreg] Px for CY 2018.
(2) Dermavest and Plurivest Human Placental Connective Tissue Matrix 
(HPCTM)
    Aedicell, Inc. submitted an application for a new device category 
for transitional pass-through payment status for Dermavest and 
Plurivest human placental connective tissue matrix (HPCTM). Dermavest 
and Plurivest HPCTM use tissue sourced from the placental disk, amnion/
chorion, and umbilical cord to replace or supplement damaged tissue. 
The applicant stated that Dermavest and Plurivest replace or supplement 
damaged or inadequate integumental tissue by providing a scaffold to 
entrap migrating cells for repopulation. The applicant stated that the 
products may be clinically indicated for the following conditions: 
Partial and full thickness wounds; pressure ulcers; venous ulcers; 
chronic vascular ulcers; diabetic ulcers; trauma wounds (abrasions, 
lacerations, second degree burns, and skin tears); drainage wounds; and 
surgical wounds (donor sites/grafts post mohs surgery, post laser 
surgery, and podiatric). Dermavest and Plurivest HPCTM are applied to 
the area of inadequate or damaged tissue, moistened if necessary and 
covered with a nonadherent secondary dressing. While the application 
does not distinguish between the Dermavest and Plurivest products, the 
AediCell Inc. Web site states that the two products differ by dosage. 
According to information on the Web site at www.aedicell.com, each 
product contains different tissue cell attachment proteins (CAP) and 
cytokine/growth factors (GF) profiles. There is a lower cytokine/GF 
concentration profile in Plurivest and a higher concentration of CAP 
and cytokine/GF in Dermavest.
    With respect to the newness criterion at Sec.  419.66(b)(1), the 
applicant indicated that the product conforms to the requirements for 
Human Cells, Tissues, and Cellular and Tissue-Based Products (HCT/Ps) 
regulated solely under section 361 of the Public Health Service (PHS) 
Act and 21 CFR part 1271. For these products, FDA requires, among other 
things, that the manufacturer register and list its HCT/Ps with the 
Center for Biologics Evaluation and Research (CBER) within 5 days after 
beginning operations and update their registrations annually. AediCell, 
Inc. has an FDA field establishment identifier (FEI) under the HHS-FDA-
Establishment Registration and Listing for Human Cells, Tissues, and 
Cellular and Tissue-Based Products (HCT/Ps) and submitted with its 
application the annual registration/listing for Dermavest and Plurivest 
dated November 9, 2015. The applicant noted that the initial 
registration for the manufacture of Dermavest was submitted to the CBER 
on October 28, 2013, and the registration of Plurivest was submitted 
the following year on November 14, 2014. The registration forms 
including these dates were not included in the application. Therefore, 
it is unclear if the newness criterion is met.
    Comment: One commenter, the manufacturer, provided an FDA 
registration form for the product that indicated that there was change 
in information for the Dermavest product submitted on December 18, 
2013. The manufacturer also submitted a document indicating that a 
registration form was submitted to FDA on October 20, 2014 to change 
the name of the product to Dermavest/Plurivest.
    Response: Based on the information submitted by the manufacturer, 
we are unable to determine that Dermavest and Plurivest meet the 
newness criterion at Sec.  419.66(b)(1).
    With respect to the eligibility criterion at Sec.  419.66(b)(3), 
according to the applicant, Dermavest and Plurivest are skin substitute 
products that are integral to the service provided, are used for one 
patient only, come in contact with human skin, and are applied in or on 
a wound or other skin lesion. The applicant also claimed Dermavest and 
Plurivest meet the device eligibility requirements of Sec.  
419.66(b)(4) because they are not instruments, apparatuses, implements, 
or items for which depreciation and financing expenses are recovered, 
and they are not supplies or materials furnished incident to a service.
    The criteria for establishing new device categories are specified 
at Sec.  419.66(c). The first criterion, at Sec.  419.66(c)(1), 
provides that CMS determines that a device to be included in the 
category is not appropriately described by any of the existing 
categories or by any category previously in effect, and was not being 
paid for as an outpatient service as of December 31, 1996. We have not 
identified an existing pass-through payment category that describes 
Dermavest and Plurivest HPCTM. The applicant proposed a category 
descriptor for Dermavest and Plurivest of ``Human placental connective 
tissue matrix (HPCTM), comprised of tissue sourced from the placental 
disk, amnion/chorion, and umbilical cord for the intention of replacing 
or supplementing damaged or inadequate integumental issue.'' We invited 
public comments on this issue.
    Comment: One commenter, the manufacturer, supported CMS' statement 
that CMS had not identified an existing pass-through payment category 
that describes Dermavest and Plurivest HPTCM.
    Response: At this time, we still have not identified an existing 
pass-through payment category that describes Dermavest and Plurivest 
HPCTM.
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines that a device to be included 
in the category has demonstrated that it will substantially improve the 
diagnosis or treatment of an illness or injury or improve the 
functioning of a malformed body part compared to the benefits of a 
device or devices in a previously established category or other 
available treatment. With respect to this criterion, the applicant 
provided several background studies showing general evidence that 
placental tissue, umbilical cord, and amnion membrane products are 
effective in the treatment of various wounds and ulcers. However, these 
studies were not specific to Dermavest and Plurivest HPCTM. The 
applicant submitted two poster presentations describing case studies 
that evaluated the wound healing time and wound characteristics of 
patients with diabetic and venous ulcers treated with Dermavest and 
Plurivest HPCTM. Both studies were described as case series and, as 
such, lacked blinding, randomization, and control groups. The first 
poster,\5\ presented in 2015,

[[Page 59327]]

described a prospective, multi-center case series with a small number 
of participants (n=15). The study evaluated wound healing time and 
wound characteristics of patients with various etiologies. The patients 
were treated with up to two 6 cm\2\ pieces of Dermavest per application 
on wounds up to 44 cm\2\. Results were presented for diabetic and 
venous ulcer cases and showed a week 4 percent area reduction (PAR) of 
71 percent for diabetic ulcers and 50 percent for venous ulcers. Eighty 
percent of the diabetic ulcer cases and 50 percent of the venous ulcer 
cases had a week 4 PAR of greater than 40 percent.
---------------------------------------------------------------------------

    \5\ Connell et al., Human placental connective tissue matrix in 
the treatment of chronic wounds: A prospective multi-center case 
series. 2015 at Society of Advanced Wound Healing (SAWC) Spring 
meeting.
---------------------------------------------------------------------------

    The second poster,\6\ presented in 2016, also described a case 
series that evaluated wound healing time and wound characteristics of 
patients with various etiologies (n=8). The poster stated that the 
patients were treated with pieces of HPCTM according to manufacturer 
guidelines on wounds ranging in size up to 3.8 cm\2\. The methods 
presented in the poster do not specify whether the patients were 
treated with Dermavest or Plurivest, or both. The results presented in 
the poster compile Dermavest data from two case series presented at the 
Society for Advanced Wound Care (SAWC) annual meeting. It was unclear 
whether there was overlap between the patients used in the 2015 and 
2016 case series included in the application. The compiled Dermavest 
data were compared to the 4-week PAR results for diabetic and venous 
ulcers from two other noncontemporaneous studies evaluating different 
skin replacement products. The results showed, at week 4, approximately 
80 percent of the Dermavest-treated diabetic ulcer cases had a PAR of 
greater than 50 percent in comparison to approximately 60 percent of 
cases and approximately 30 percent of cases, respectively, in the 
comparison studies using other skin replacement products. The results 
also showed that, at week 4, approximately 60 percent of the Dermavest-
treated venous ulcer cases had a PAR of greater than 40 percent in 
comparison to approximately 50 percent of cases and approximately 30 
percent of cases in the comparison studies treated with other skin 
replacement products. There were multiple differences between the 
Dermavest studies included in the poster presentations and these two 
additional studies presented as comparators, including the number of 
patients included in the studies, the number of wounds treated, and the 
purpose of the study. Based on the results presented in the poster, the 
applicant concluded that HPCTM provides an effective alternative to 
other skin replacement products.
---------------------------------------------------------------------------

    \6\ McGuire and Sebag, The use of a new placental acellular 
tissue product in the management of chronic wounds: A case series. 
2016 at the Society of Advanced Wound Healing (SAWC) Spring meeting.
---------------------------------------------------------------------------

    In the CY 2018 OPPS/ASC proposed rule, we stated that we were 
concerned that the research provided did not clinically demonstrate the 
active ingredients of the product(s) that might distinguish the product 
from others, the correct dosing of the product(s), the amount of 
durable wound closure with the product(s) compared to standard of care 
in studies with rigorous trial design/implementation, and the amount of 
durable wound closure with the product(s) compared to other products in 
studies with rigorous trial design/implementation. We stated in the 
proposed rule that, based on the evidence submitted with the 
application, we were not yet convinced that the Dermavest and Plurivest 
HPCTM provide a substantial clinical improvement over other treatments 
for wound care. We invited public comments on whether the Dermavest and 
Plurivest HPCTM meet this criterion.
    Comment: One commenter, the manufacturer, provided information 
regarding the active ingredients and concentrations of active 
ingredients of the product as compared to other skin substitutes. The 
comment also included personal statements from physicians who used the 
product and attested to its clinical benefit over the current standard 
of care. The physicians' statements also noted that a randomized 
controlled trial that compares the product to the standard of care and 
to other advanced human tissue products, as well as registry studies, 
would be helpful in proving the substantial clinical improvement 
provided by Dermavest/Plurivest HPTCM. The manufacturer also stated 
that it was endeavoring to enter into a registry study and two 
randomized controlled trials using other high tiered skin substitutes 
as comparators.
    Response: We appreciate the commenters' responses on the Dermavest 
and Plurivest HPCTM application. However, the commenters did not 
provide new empirical evidence that addressed our concerns that the 
studies included with the application were described as case series 
and, as such, lacked blinding, randomization, and control groups. At 
this time, we have not been able to determine that Dermavest and 
Plurivest HPCTM represents a substantial clinical improvement relative 
to existing therapies currently available for wound care.
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that Dermavest and 
Plurivest HPCTM would be reported with CPT codes 15271, 15272, 15273, 
15274, 15275, 15276, 15277, and 15278. CPT codes 15272, 15274, 15276, 
and 15278 are add-on codes assigned status indicator ``N'', which means 
payment is packaged under the OPPS. CPT codes 15271 and 15275 are 
assigned to APC 5054 (Level 4 Skin Procedures), and CPT codes 15273 and 
15277 are assigned to APC 5055 (Level 5 Skin Procedures). To meet the 
cost criterion for device pass-through payment, a device must pass all 
three tests of the cost criterion for at least one APC. For our 
calculations, we used APC 5054 (Level 4 Skin Procedures), which had a 
CY 2016 payment rate of $1,411 and a device offset amount of $4.52 at 
the time the application was received. According to the applicant, the 
cost of a sheet of 2x3 cm Dermavest is $550, and the cost of a sheet of 
2x3 cm Plurivest is $500.
    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The estimated 
average reasonable cost of $550 for Dermavest and Plurivest exceeds 39 
percent of the applicable APC payment amount for the service related to 
the category of devices of $1,411 ($550/$1,411 x 100 = 39 percent). 
Therefore, we stated in the proposed rule that we believe Dermavest and 
Plurivest meet the first cost significance test.
    The second cost significance test, at Sec.  419.66(d)(2), provides 
that the estimated average reasonable cost of the devices in the 
category must exceed the cost of the device-related portion of the APC 
payment amount for the related service by at least 25 percent, which 
means that the device cost needs to be at least 125 percent of the 
offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $550 for 
Dermavest and Plurivest exceeds the cost of the device-related portion 
of the APC payment amount for the related service of $4.52 by 12,168 
percent

[[Page 59328]]

($550/$4.52) x 100 = 12,168 percent). Therefore, we stated in the 
proposed rule that we believe that Dermavest and Plurivest meet the 
second cost significance test.
    The third cost significance test, at Sec.  419.66(d)(3), requires 
that the difference between the estimated average reasonable cost of 
the devices in the category and the portion of the APC payment amount 
for the device must exceed 10 percent of the APC payment amount for the 
related service. The difference between the estimated average 
reasonable cost of $550 for Dermavest and Plurivest and the portion of 
the APC payment amount for the device of $4.52 exceeds the APC payment 
amount for the related service of $1,411 by 38.6 percent (($550-$4.52)/
$1,411 x 100 = 38.6 percent). Therefore, we stated in the proposed rule 
that we believe that Dermavest and Plurivest meet the third cost 
significance test.
    We invited public comments on whether Dermavest and Plurivest meet 
the device pass-through payment cost criteria discussed in this 
section.
    We did not receive any public comments on this issue. We continue 
to believe that Dermavest and Plurivest meet the device pass-through 
payment cost criteria.
    After consideration of the public comments we received, we are not 
approving device pass-through payment status for the Dermavest and 
Plurivest HPCTM for CY 2018.
(3) Fl[omacr]Graft[supreg]/Fl[omacr]graft Neogenesis[supreg]
    Applied Biologics, LLC submitted an application for a new device 
category for transitional pass-through payment status for 
Fl[omacr]Graft[supreg]/Fl[omacr]graft Neogenesis[supreg]. 
Fl[omacr]Graft[supreg]/Fl[omacr]graft Neogenesis[supreg] is an 
injectable, human placental amniotic fluid. It is an allograft derived 
from human birth tissue recovered from a live, healthy C-section birth. 
The allograft is used to augment tissue to bone and tissue to tissue 
repairs. The allograft is implanted at the surgical site at the end of 
the procedure using a needle and syringe under direct visualization. 
The applicant claimed that the product helps drive healing towards 
native tissue regeneration and away from scar formation. 
Fl[omacr]Graft[supreg] has a standardized potency of 2 million cells. 
Fl[omacr]Graft Neogenesis[supreg] has a standardized potency of 1.5 
million cells. The applicant indicated that the product may be used 
with several surgical procedures, including joint replacement 
procedures, traumatic bone and soft tissue injury, meniscal repairs, 
meniscal transplantation, articular cartilage restoration, foot and 
ankle repairs, and chronic wounds.
    With respect to the newness criterion at Sec.  419.66(b)(1), the 
applicant indicated that Fl[omacr]Graft[supreg] and Fl[omacr]graft 
Neogenesis[supreg] conform to the requirements for Human Cells, 
Tissues, and Cellular and Tissue-Based Products (HCT/Ps) regulated 
solely under section 361 of the PHS Act and 21 CFR part 1271. For these 
products, FDA requires, among other things, that the manufacturer 
register and list their HCT/Ps with the Center for Biologics Evaluation 
and Research (CBER) within 5 days after beginning operations and update 
their registrations annually. Applied Biologics, LLC has two FDA field 
establishment identifiers (FEI) under the HHS-FDA-Establishment 
Registration and Listing for Human Cells, Tissues, and Cellular and 
Tissue-Based Products (HCT/Ps). Both registration forms list the 
product as ``Fl[omacr]Graft[supreg]''. The applicant submitted an 
initial registration/listing for one FEI dated June 8, 2015, as well as 
an annual registration/listing for a different FEI dated December 1, 
2014. The first date of U.S. sale for Fl[omacr]Graft[supreg] was May 
23, 2013. It is not clear when the initial CBER filing occurred for the 
Fl[omacr]Graft[supreg] product. Therefore, it is unclear if the newness 
criterion for the Fl[omacr]Graft[supreg] product is met.
    Comment: One commenter, the manufacturer, supplied information 
indicating that the initial registration forms for 
Fl[omacr]Graft[supreg] and Fl[omacr]Graft Neogenesis[supreg] were 
submitted on February 24, 2015 and were validated by FDA on June 8, 
2015.
    Response: Based on the information submitted by the manufacturer, 
we believe that the product meets the newness criterion at Sec.  
419.66(b)(1).
    With respect to the eligibility criterion at Sec.  419.66(b)(3), 
according to the applicant, Fl[omacr]Graft[supreg] and Fl[omacr]graft 
Neogenesis[supreg] are integral to the service provided, are used for 
one patient only, come in contact with human skin, and are applied in 
or on a wound or other skin lesion. The applicant also claimed 
Fl[omacr]Graft[supreg] and Fl[omacr]graft Neogenesis meet the device 
eligibility requirements of Sec.  419.66(b)(4) because they are not 
instruments, apparatuses, implements, or items for which depreciation 
and financing expenses are recovered, and they are not supplies or 
materials furnished incident to a service.
    The criteria for establishing new device categories are specified 
at Sec.  419.66(c). The first criterion, at Sec.  419.66(c)(1), 
provides that CMS determines that a device to be included in the 
category is not appropriately described by any of the existing 
categories or by any category previously in effect, and was not being 
paid for as an outpatient service as of December 31, 1996. We have not 
identified an existing pass-through payment device category that 
describes Fl[omacr]Graft[supreg]/Fl[omacr]graft Neogenesis[supreg]. The 
application suggested a payment device category for 
Fl[omacr]Graft[supreg]/Fl[omacr]graft Neogenesis[supreg] with a 
category descriptor of ``Injectable Amniotic Fluid Allograft''. We 
invited public comments on this issue.
    We did not receive any public comments on this issue, and at this 
time, we have not identified an existing pass-through category that 
describes Fl[omacr]Graft[supreg]/Fl[omacr]graft Neogenesis[supreg].
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines that a device to be included 
in the category has demonstrated that it will substantially improve the 
diagnosis or treatment of an illness or injury or improve the 
functioning of a malformed body part compared to the benefits of a 
device or devices in a previously established category or other 
available treatment. With respect to the substantial clinical 
improvement criterion, the applicant submitted several peer-reviewed 
publications that provided general evidence that amniotic fluid and 
amniotic membrane-based products significantly reduce recovery time. 
However, these studies did not include the use of the 
Fl[omacr]Graft[supreg]/Fl[omacr]graft Neogenesis[supreg] product. The 
applicant did list several studies in the application that involved the 
use of the Fl[omacr]Graft[supreg]/Fl[omacr]graft Neogenesis[supreg] 
product. Of these studies, five unpublished studies were available for 
review. The five studies submitted with the application were described 
as case studies, case series, or retrospective cohort studies. The 
studies lacked random allocation, blinding, and a comparison group. The 
first study \7\ described a retrospective cohort study of 30 patients. 
The studies showed that 93 percent of the patients (n=14) who received 
a Fl[omacr]Graft[supreg] injection, coupled with conservative, 
nonsurgical treatment plan to treat their Morton's Nerve entrapment 
condition, had their issue resolved compared to 20 percent of patients 
(n=3) who did not receive Fl[omacr]Graft[supreg] injection, coupled 
with conservative, nonsurgical treatment plan to treat their Morton's 
Nerve entrapment condition. A greater percentage of patients who did 
not receive a Fl[omacr]Graft[supreg] injection with their conservative 
treatment required surgery (80 percent versus 7 percent). Patients who 
required surgery had a 95-percent

[[Page 59329]]

success rate when surgery was coupled with a Fl[omacr]Graft[supreg] 
injection.
---------------------------------------------------------------------------

    \7\ Bregman, Peter. (2014). Addressing Morton's Nerve Entrapment 
Surgically and Non-surgically with FloGraft.
---------------------------------------------------------------------------

    The next study \8\ was a retrospective analysis that involved 27 
patients who were treated for stalled wounds. The patients had a broad 
spectrum of etiologies. Over a 12-month period, the applicant indicated 
that 96 percent of wounds that had stalled demonstrated rapid 
acceleration towards closure within a 21-day period when treated with 
Fl[omacr]Graft[supreg]. The article recommended a randomized controlled 
trial (RCT) to confirm the results. The applicant also submitted two 
case studies,9 10 each involving one patient, which 
described the use of Fl[omacr]Graft[supreg] to treat distal fibula 
fracture and tarsal tunnel compression neuropathy. Lastly, the 
application included a study \11\ which presented the results from a 
case study of one patient as well as a retrospective cohort of 34 
patients who received a Brostr[ouml]m-Evans procedure with the 
Fl[omacr]Graft[supreg] product. In general, the studies submitted 
lacked a clear description of the outcome variable and study 
population, and did not include statistical analysis.
---------------------------------------------------------------------------

    \8\ Gottleib, et al. FloGraft Rapidly Moves Stalled Wounds Into 
the Proliferative Phase.
    \9\ Jacoby, Richard. Case Study 221: Non-surgical Resolution of 
Distal Fibula Fracture with Flograft Implant; 82 YO Male.
    \10\ Jacoby, Richard. Tarsal Tunnel Compression Neuropathy Case 
Study Using Flograft.
    \11\ Maling, Scott. A Case Series: A retrospective analysis of 
34 patients receiving modified Bronstom-Evans procedure with 
Flograft reduce time to full mobility by 52%.
---------------------------------------------------------------------------

    Based on the evidence submitted, we stated in the proposed rule 
that we believe there is insufficient data to determine whether 
Fl[omacr]Graft[supreg]/Fl[omacr]graft Neogenesis[supreg] offers a 
substantial clinical improvement over other treatments for wound care. 
We invited public comments on whether the Fl[omacr]Graft[supreg]/
Fl[omacr]graft Neogenesis[supreg] meets the substantial clinical 
improvement criterion.
    Comment: Several commenters described the clinical benefits that 
they have observed using the Fl[omacr]Graft[supreg] product in the 
treatment of wounds, bone, and soft tissue repairs. Other commenters 
described their current, ongoing studies involving the impact of 
Fl[omacr]Graft[supreg] on rotator cuff healing after repair. One study 
described a randomized single blind study (n=20). One commenter was 
enthusiastic about the potential impact the product could have on 
improving healing for patients with rotator cuff injuries, while 
another commenter presented a more neutral position and stated that he 
could not confirm that the use of the product would impact the healing, 
but hoped that the study would guide the use of the product in the 
future. Other commenters submitted case studies of wound care patients 
treated with Fl[omacr]Graft[supreg]. One commenter submitted several 
studies related to amniotic fluid and amniotic membrane-based products; 
however, none of these studies were specific to the 
Fl[omacr]Graft[supreg] product.
    Response: We appreciate the commenters' responses on the 
Fl[omacr]Graft[supreg]/Fl[omacr]graft Neogenesis[supreg] product. 
However, the commenters did not provide new empirical evidence that 
addressed our concerns regarding the evidence of substantial clinical 
improvement that was submitted with the application. These concerns 
included the lack of a clear description of the outcome variable and 
study population and the lack of statistical analysis. The comments 
also did not address our concerns that the studies submitted with the 
application were case studies, case series, or retrospective cohort 
studies that lacked random allocation, blinding, and a comparison 
group. The commenters also discussed studies that did not include the 
use of Fl[omacr]Graft[supreg]/Fl[omacr]graft Neogenesis[supreg] and 
studies that were still in progress. At this time, we have not been 
able to determine that Fl[omacr]Graft[supreg]/Fl[omacr]graft 
Neogenesis[supreg] represents a substantial clinical improvement 
relative to existing therapies currently available for wound care.
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated several CPT codes would 
be used to report Fl[omacr]Graft[supreg]/Fl[omacr]graft 
Neogenesis[supreg], including CPT codes 29826, 29827, 29828, 23473, 
23420, 23412, 27605, 27650, 29891, 29888, 29889, 28008, 22551, 22856, 
27179, 29861, and 29862. To meet the cost criterion for device pass-
through payment, a device must pass all three tests of the cost 
criterion for at least one APC. These CPT codes are assigned to APCs 
5121 through 5125 (Level 1 through Level 5 Musculoskeletal Procedures). 
For our calculations, we used APC 5121 (Level 1 Musculoskeletal 
Procedures), which had a CY 2016 payment rate of $1,455 and a device 
offset of $15.86 at the time the application was received. According to 
the applicant, the Fl[omacr]Graft[supreg]/Fl[omacr]graft 
Neogenesis[supreg] product is available in a variety of vial sizes, the 
largest size being 18 cc with a cost of $19,925.
    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. We used the highest 
priced product for this determination. The estimated average reasonable 
cost of $19,925 for Fl[omacr]Graft[supreg]/Fl[omacr]graft 
Neogenesis[supreg] exceeds the applicable APC payment amount for the 
service related to the category of devices of $1,455 by 1,369 percent 
($19,925/$1,455 x 100 = 1,369 percent). Therefore, we stated in the 
proposed rule that we believe Fl[omacr]Graft[supreg]/Fl[omacr]graft 
Neogenesis[supreg] meets the first cost significance test.
    The second cost significance test, at Sec.  419.66(d)(2), provides 
that the estimated average reasonable cost of the devices in the 
category must exceed the cost of the device-related portion of the APC 
payment amount for the related service by at least 25 percent, which 
means that the device cost needs to be at least 125 percent of the 
offset amount (the device-related portion of the APC found on the 
offset list). The average reasonable cost of $19,925 for 
Fl[omacr]Graft[supreg]/Fl[omacr]graft Neogenesis[supreg] exceeds the 
device-related portion of the APC payment amount of $15,86 by 125,360 
percent ($19,925/$15.86) x 100 = 125,630 percent). Therefore, in the 
proposed rule, we stated that we believe that Fl[omacr]Graft[supreg]/
Fl[omacr]graft Neogenesis[supreg] meets the second cost significance 
test.
    The third cost significance test, at Sec.  419.66(d)(3), requires 
that the difference between the estimated average reasonable cost of 
the devices in the category and the portion of the APC payment amount 
for the device must exceed 10 percent of the APC payment amount for the 
related service. The difference between the average reasonable cost of 
$19,925 for Fl[omacr]Graft[supreg]/Fl[omacr]graft Neogenesis[supreg] 
and the portion of the APC payment amount for the device of $15.86 
exceeds the APC payment amount for the related service of $1,455 by 
1,368 percent (($19,925-$15.86)/$1,455 x 100 = 1,368 percent). 
Therefore, in the proposed rule, we stated that we believe 
Fl[omacr]Graft[supreg]/Fl[omacr]graft Neogenesis[supreg] meets the 
third cost significance test.
    We invited public comments on whether Fl[omacr]Graft[supreg]/
Fl[omacr]graft Neogenesis[supreg] meets the device pass-through payment 
cost criteria discussed in this section.
    We did not receive any public comments on this issue. We continue 
to believe that Fl[omacr]Graft[supreg]/Fl[omacr]graft 
Neogenesis[supreg] meets the device pass-through payment cost criteria.

[[Page 59330]]

    After consideration of the public comments we received, we are not 
approving device pass-through payment status for the 
Fl[omacr]Graft[supreg]/Fl[omacr]graft Neogenesis[supreg] product for CY 
2018.
(4) KerecisTM Omega3 Wound (Skin Substitute)
    Kerecis, LLC submitted an application for a new device category for 
transitional pass-through payment status for KerecisTM 
Omega3 Wound. KerecisTM Omega3 Wound is made from acellular 
fish skin from wild Atlantic cod (Gadus morhua) caught in the North 
Atlantic Ocean that is used to regenerate damaged human tissue in 
chronic wounds. The applicant claimed that there is no disease 
transmission risk and noted that the fish skin is not required to 
undergo the viral inactivation process that the FDA dictates for 
tissues from farm animals. The applicant noted that the Omega3 fatty 
acids offer multiple health benefits, including anti-inflammation. 
KerecisTM Omega3 Wound is supplied as a sterile, single-use 
sheet in peel-open pouches. KerecisTM Omega3 Wound does not 
elicit an immune response because the major antigenic components 
present within cell membranes are removed in a gentle manner during 
processing. Unlike mammalian and human sourced products, the fish skin 
possesses extremely low risk of disease transmission and offers no 
known cultural or religious constraints for usage. The fish skin 
product is both halal and kosher compatible and avoids potential 
conflicts with Sikhism and Hinduism (Vaishnavism).
    With respect to the newness criterion at Sec.  419.66(b)(1), the 
applicant received FDA clearance for KerecisTM Omega3 Wound 
through the premarket notification section 510(k) process on October 
23, 2013 and its June 1, 2016 application was within 3 years of FDA 
clearance.
    With respect to the eligibility criterion at Sec.  419.66(b)(3), 
according to the applicant, KerecisTM Omega3 Wound is a skin 
substitute product that is integral to the service provided, is used 
for one patient only, comes in contact with human skin, and is 
surgically inserted into the patient. The applicant also claimed 
KerecisTM Omega3 Wound meets the device eligibility 
requirements of Sec.  419.66(b)(4) because it is not an instrument, 
apparatus, implement, or item for which depreciation and financing 
expenses are recovered, and it is not a supply or material.
    The criteria for establishing new device categories are specified 
at Sec.  419.66(c). The first criterion, at Sec.  419.66(c)(1), 
provides that CMS determines that a device to be included in the 
category is not appropriately described by any of the existing 
categories or by any category previously in effect, and was not being 
paid for as an outpatient service as of December 31, 1996. We have not 
identified an existing pass-through payment category that describes 
KerecisTM Omega3 Wound. The applicant proposed a pass-
through payment device category for KerecisTM Omega3 Wound 
with category descriptor of ``Piscine skin substitute.'' We invited 
public comments on this issue.
    We did not receive any public comments on this issue. As we stated 
earlier, we have not identified an existing pass-through category that 
describes KerecisTM Omega3 Wound. Therefore, for the reasons 
discussed earlier, we believe KerecisTM Omega3 Wound meets 
the eligibility criterion.
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines that a device to be included 
in the category has demonstrated that it will substantially improve the 
diagnosis or treatment of an illness or injury or improve the 
functioning of a malformed body part compared to the benefits of a 
device or devices in a previously established category or other 
available treatment. With regard to the substantial clinical 
improvement criterion, the applicant stated that individuals who would 
normally refuse to use skin substitute products from animal sources, 
including pigs, cows, horses, and sheep, would use KerecisTM 
Omega3 Wound because it is a fish-based skin substitute. The applicant 
also asserted that KerecisTM Omega3 Wound provides several 
beneficial outcomes, including faster resolution of the disease process 
compared to similar products, decreased antibiotic use, decreased pain, 
and reduced amounts of device-related complications.
    The applicant cited three studies in support of the application. 
The first study \12\ was a parallel-group, double-blinded, randomized 
controlled trial undertaken to determine if healing time of whole 
thickness biopsy wounds treated with KerecisTM Omega3 Wound 
is noninferior to that of wounds treated with porcine SIS ECM (Oasis). 
The study was an intention-to-treat study. Participants had two 4-mm 
full thickness punch wounds made on the proximal anterolateral aspect 
of their nondominant arm. The study population was comprised of 
volunteers aged between 18 and 67 years with most volunteers between 
the ages of 18 and 30. There were 80 volunteers who received 
KerecisTM Omega3 Wound and 82 volunteers who received 
porcine SIS ECM (Oasis).
---------------------------------------------------------------------------

    \12\ Tumi Baldursson, T, MD, Ph.D. et al. Healing Rate and 
Autoimmune Safety of Full-Thickness Wounds Treated With Fish Skin 
Acellular Dermal Matrix Versus Porcine Small-Intestine Submucosa: A 
Noninferiority Study; The International Journal of Lower Extremity 
Wounds 2015, Vol. 14(1) 37-43.
---------------------------------------------------------------------------

    The results showed that, at 21 days, 58 (72.5 percent) of the fish 
skin ADM group were healed, compared with 46 (56 percent) of the 
porcine SIS ECM group. At 25 days, 62 (77.5 percent) of the fish skin 
ADM and 53 (65 percent) of the porcine SIS ECM group had healed. At the 
completion of the trial (28 days), 76 of the 80 wounds treated with 
fish skin ADM (95 percent) and 79 of the 82 wounds treated with porcine 
SIS ECM (96.3 percent) were healed. The odds ratio of a fish skin ADM-
treated wound being healed as compared with that treated with porcine 
SIS ECM at any given time point was estimated to be 4.75. The 
difference between the treatments was statistically significant (P = 
0.041). The immunological part of the study was designed to detect 
autoimmune reactions in those individuals treated with 
KerecisTM Omega3 Wound. There was no evidence of antibodies 
forming in the presence of KerecisTM Omega3 Wound.
    There were issues with this study that may limit its usefulness to 
determine substantial clinical improvement including the use of 
nonpatient volunteers; studying the healing of biopsy sites rather than 
actual wounds requiring treatment; and the use of a 1-month endpoint of 
care instead of a longer period, such as a 6-month endpoint of care.
    The second study \13\ was a case series study of 18 patients to 
assess the percentage of wound closure area from baseline after 5 
weekly fish-skin graft applications with at least one ``hard-to-heal'' 
criterion. Patients underwent application of the fish skin for 5 
sequential weeks, followed by 3 weeks of standard care. Wound area, 
skin assessments, and pain were analyzed weekly.
---------------------------------------------------------------------------

    \13\ Yang, CK et al. A Prospective, Postmarket, Compassionate 
Clinical Evaluation of a Novel Acellular Fish-skin Graft Which 
Contains Omega-3 Fatty Acids for the Closure of Hard-to-heal Lower 
Extremity Chronic Ulcers. Wounds 2016;28(4): 112-118.
---------------------------------------------------------------------------

    The study results showed a 40-percent decrease in wound surface 
area (P <0.05) and a 48-percent decrease in wound depth was seen with 5 
weekly applications of the fish-skin graft and secondary dressing (P 
<0.05). Complete closure was seen in 3 of 18 patients by

[[Page 59331]]

the end of the study phase. This study did not use a comparator group 
to measure whether there is substantial clinical improvement with 
KerecisTM Omega3 Wound compared to other skin substitute 
products.
    The third study \14\ was a case series study of five patients with 
diabetes mellitus and complicated wounds in the lower limbs with 
exposed bone segments. The five patients had a total of seven wounds. 
Initial debridement occurred in the operating room, followed by 
application of wound matrix and covered with silicone mesh. All seven 
wounds healed and the patients did not have to have planned amputations 
on the limbs with the wounds. The mean duration of treatment to achieve 
full closure of the wound was 25  10 weeks and ranged from 
13 to 41 weeks. This study did not have a comparator group to determine 
if there was substantial clinical improvement with KerecisTM 
Omega3 Wound compared to other skin substitute products.
---------------------------------------------------------------------------

    \14\ Trinh, TT, et al. Marine Omega3 wound matrix for: the 
treatment of complicated wounds; Phlebologie 2016; 45: 93-98.
---------------------------------------------------------------------------

    There are no clinical data provided by the applicant to suggest 
that KerecisTM Omega3 Wound provides a substantial clinical 
improvement over other similar skin substitute products. We invited 
public comments on whether KerecisTM Omega3 Wound meets the 
substantial clinical improvement criterion.
    Comment: One commenter, the manufacturer, stated that 
KerecisTM Omega3 Wound significantly improves acute wound 
healing, nearly eliminates risk from side effects and adverse events, 
and provides a skin substitute option for beneficiaries who have 
allergic reactions or personal objections to mammalian or human sourced 
skin substitutes. The commenter referred to a study, believed to be the 
first study reviewed in the proposed rule,\15\ and stated that it was 
the largest study performed in skin substitute research and that the 
study showed substantial clinical improvement from KerecisTM 
Omega3 Wound. The commenter believed it had submitted more comparative 
data than skin substitute products that had previously received pass-
through payment approval.
---------------------------------------------------------------------------

    \15\ Tumi Baldursson, T, MD, Ph.D. et al. Healing Rate and 
Autoimmune Safety of Full-Thickness Wounds Treated With Fish Skin 
Acellular Dermal Matrix Versus Porcine Small-Intestine Submucosa: A 
Noninferiority Study; The International Journal of Lower Extremity 
Wounds 2015, Vol. 14(1) 37-43.
---------------------------------------------------------------------------

    Lastly, the commenter believed that a skin substitute product that 
eliminates religious objections to its use, because 
KerecisTM Omega3 Wound is fish sourced and not a mammalian 
or human sourced skin substitute, provides a significant benefit to 
beneficiaries with those objections, as they now have access to skin 
substitute products when previously skin substitute products may not be 
available to them.
    Response: The commenter did not provide information to demonstrate 
that KerecisTM Omega3 Wound represents a substantial 
clinical improvement relative to other wound care products currently 
available on the market. The commenter did not provide additional 
studies to support its claims of improvement with acute wound healing 
and low risk of side effects and adverse events. The commenter also did 
not address the concerns of the first study reviewed for this 
criterion, including the use of nonpatient volunteers; studying the 
healing of biopsy sites rather than actual wounds requiring treatment; 
and the use of an unrealistic 1-month endpoint of care instead of a 6-
month endpoint of care. Instead, the manufacturer simply stated the 
study ``epitomizes'' substantial clinical improvement.
    The commenter stated that other skin substitute products that had 
presented less evidence of substantial clinical improvement had 
previously been approved for pass-through payment status. However, we 
believe that the commenter may have been referring to skin substitutes 
approved for transitional pass-through payments before these products 
were subject to the transitional pass-through payment approval for 
medical devices. Since CY 2015, skin substitutes have been evaluated 
using the medical device pass-through payment process (79 FR 66885 
through 66888), which includes the criterion for substantial clinical 
improvement. Applicants must demonstrate that the device under 
consideration for pass-through status will substantially improve the 
diagnosis or treatment of an illness or injury or improve the 
functioning of a malformed body part compared to the benefits of a 
device or devices in a previously established category or other 
available treatment. The commenter did not provided additional 
information showing substantial clinical improvement.
    Finally, the commenter stated that KerecisTM Omega3 
Wound should meet the substantial clinical improvement criterion 
because it provides a skin substitute option for beneficiaries with 
allergies or personal objections to mammalian or human sourced 
products. However, the commenter did not provide any studies nor cite 
any data to show that this population would receive a substantial 
clinical improvement through the use of KerecisTM Omega3 
Wound, as compared to the wound care treatments available to this group 
of beneficiaries. Therefore, we determine that KerecisTM 
Omega3 Wound does not meet the criterion for substantial clinical 
improvement.
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. With respect to the cost criterion, the 
applicant stated that KerecisTM Omega3 Wound would be 
reported with CPT codes 15271 through 15278, which cover the 
application of skin substitute grafts to different areas of the body 
for high-cost skin substitutes. To meet the cost criterion for device 
pass-through payment, a device must pass all three tests of the cost 
criterion for at least one APC. CPT codes 15271 through 15278 are 
assigned to either APC 5054 (Level 4 Skin Procedures), with a CY 2016 
payment rate of $1,411.21 and a device offset amount of $4.52, or APC 
5055 (Level 5 Skin Procedures), with a CY 2016 payment rate of 
$2,137.49 and a device offset amount of $25.44. According to the 
applicant, the cost of substitute graft procedures when performed with 
KerecisTM Omega3 Wound is $2,030.
    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The estimated 
average reasonable cost of $2,030 for KerecisTM Omega3 Wound 
exceeds the applicable APC payment amount for the service related to 
the category of devices of $1,411.21 by 144 percent ($2,030/$1,411.21 x 
100 percent = 144 percent). Therefore, we stated in the proposed rule 
that it appears that KerecisTM Omega3 Wound meets the first 
cost significance test.
    The second cost significance test, at Sec.  419.66(d)(2), provides 
that the estimated average reasonable cost of the devices in the 
category must exceed the cost of the device-related portion of the APC 
payment amount for the related service by at least 25 percent, which 
means that the device cost needs to be at least 125 percent of the 
offset amount (the device-related portion of the APC found on the 
offset list). The average reasonable cost of $2,030 for 
KerecisTM

[[Page 59332]]

Omega3 Wound exceeds the device-related portion of the APC payment 
amount of $4.52 by 44,911 percent ($2,030/$4.52 x 100 percent = 44,911 
percent). Therefore, it appears that KerecisTM Omega3 Wound 
meets the second cost significance test.
    The third cost significance test, at Sec.  419.66(d)(3), requires 
that the difference between the estimated average reasonable cost of 
the devices in the category and the portion of the APC payment amount 
for the device must exceed 10 percent of the APC payment amount for the 
related service. The difference between the average reasonable cost of 
$2,030 for KerecisTM Omega3 Wound and the portion of the APC 
payment amount for the device of $4.52 exceeds the APC payment amount 
for the related service of $1,411 by 144 percent (($2,030-$4.52)/
$1,411.21) x 100 percent = 144 percent). Therefore, we stated in the 
proposed rule that it appears that KerecisTM Omega3 Wound 
meets the third cost significance test. Based on the costs submitted by 
the applicant and the calculations noted earlier, it appears that 
KerecisTM Omega3 Wound meets the cost criterion.
    We invited public comments on whether KerecisTM Omega3 
Wound meets the device pass-through payment criteria discussed in this 
section.
    We did not receive any public comments for this section. We confirm 
that KerecisTM Omega3 Wound meets the cost criteria for new 
device categories.
    After consideration of the public comments we received, we are not 
approving device pass-through payment status for KerecisTM 
Omega3 Wound for CY 2018.
(5) X-WRAP[supreg]
    Applied Biologics, LLC submitted an application for a new device 
category for transitional pass-through payment status for X-
WRAP[supreg]. X-WRAP[supreg] is a chorion-free, amnion membrane 
allograft that can be used as a biological wrap or patch at any 
surgical site. It is used as a treatment for surgical or traumatic 
injury to bone or soft tissue. It is used to minimize adhesions, reduce 
inflammation, and promote soft tissue healing. The X-WRAP[supreg] is 
made from the intermediate amniotic epithelial layer of the placenta, 
recovered from a Cesarean delivery of pre-screened donors. It is 
available in a variety of sizes and is used as a biologic augmentation 
to a variety of orthopedic repairs.
    With respect to the newness criterion at Sec.  419.66(b)(1), the 
applicant indicated that X-WRAP[supreg] conforms to the requirements 
for Human Cells, Tissues, and Cellular and Tissue-Based Products (HCT/
Ps) regulated solely under section 361 of the PHS Act and 21 CFR part 
1271. For these products, FDA requires, among other things, that the 
manufacturers register and list their HCT/Ps with the Center for 
Biologics Evaluation and Research (CBER) within 5 days after beginning 
operations and update their registrations annually. Applied Biologics, 
LLC has a FDA field establishment identifier (FEI) under the HHS-FDA-
Establishment Registration and Listing for Human Cells, Tissues, and 
Cellular and Tissue-Based Products (HCT/Ps). The applicant submitted an 
annual registration/listing dated December 30, 2015. It is not clear 
when the initial CBER filing occurred for the X-WRAP[supreg] product, 
and therefore, it is unclear if the newness criterion for X-
WRAP[supreg] is met.
    Comment: One commenter, the manufacturer, supplied information 
indicating that the initial registration form for X-WRAP[supreg] was 
submitted on February 24, 2015 and validated by FDA on June 8, 2015.
    Response: Based on the information submitted by the manufacturer, 
we believe that the product meets the newness criterion at Sec.  
419.66(b)(1).
    With respect to the eligibility criterion at Sec.  419.66(b)(3), 
according to the applicant, X-WRAP[supreg] is integral to the service 
provided, is used for one patient only, comes in contact with human 
skin, and is applied in or on a wound or other skin lesion. The 
applicant also claimed X-WRAP[supreg] meets the device eligibility 
requirements of Sec.  419.66(b)(4) because it is not an instrument, 
apparatus, implement or item for which depreciation and financing 
expenses are recovered, and it is not a supply or material furnished 
incident to a service.
    The criteria for establishing new device categories are specified 
at Sec.  419.66(c). The first criterion, at Sec.  419.66(c)(1), 
provides that CMS determines that a device to be included in the 
category is not appropriately described by any of the existing 
categories or by any category previously in effect, and was not being 
paid for as an outpatient service as of December 31, 1996. We have not 
identified an existing pass-through payment device category that 
describes X-WRAP[supreg]. The applicant proposed a pass-through device 
category for X-WRAP[supreg] with a category descriptor of ``Amniotic 
Membrane Soft Tissue Allografts''. We invited public comments on this 
issue.
    We did not receive any public comments on this issue, and at this 
time, we have not identified an existing pass-through category that 
describes X-WRAP[supreg].
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines that a device to be included 
in the category has demonstrated that it will substantially improve the 
diagnosis or treatment of an illness or injury or improve the 
functioning of a malformed body part compared to the benefits of a 
device or devices in a previously established category or other 
available treatment. With regard to the substantial clinical 
improvement criterion, the applicant submitted a list of studies in the 
application that showed general effectiveness of amniotic fluid and 
amniotic membrane-based products. However, these studies were not 
specific to the X-WRAP[supreg] product. The applicant also submitted 
one study \16\ that was a retrospective review with prospective follow-
up of patients (n=8) with recurrent surgical primary cubital tunnel 
syndrome (CuTS) who had undergone at least two previous ulnar nerve 
surgeries before having an ulnar neurolysis with X-WRAP[supreg] dry 
amniotic membrane barrier. The results showed that the participants 
experienced significant improvement in VAS pain scores, QuickDASH 
outcome scores, and grip strength in comparison to these scores prior 
to the surgery. Mean VAS improved by 3.5, from 7.3 to 3.8 (P <.0001). 
Mean QuickDASH improved by 30, from 80 to 50 (P <.0001). Grip strength 
improved by 25 pounds on average (P <.0001), a mean improvement of 38 
percent relative to the contralateral side compared with preoperative 
measurements. Also, none of the patients reported progression or 
worsening of their symptoms compared with preoperatively. The 
applicant's conclusions from the article were that using the X-
WRAP[supreg] amniotic membrane with revision neurolysis was a safe and 
effective treatment for primary cubital syndrome. The study lacked a 
comparison arm and did not include group assignment or blinding of 
patients.
---------------------------------------------------------------------------

    \16\ Gaspar, M.P., et al. (2016). Recurrent cubital tunnel 
syndrome treated with revision neurolysis and amniotic membrane 
nerve wrapping. Journal of Shoulder and Elbow surgery, 25, 2057-
2065.
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    Based on the evidence submitted, we believe there are insufficient 
data to determine whether X-WRAP[supreg] offers a substantial clinical 
improvement over other treatments for wound care. We invited public 
comments on whether the X-WRAP[supreg] meets the substantial clinical 
improvement criterion.
    Comment: Commenters described the clinical benefits that they have 
observed using the X-WRAP[supreg] product in the treatment of wounds, 
bone, and soft

[[Page 59333]]

tissue repairs. One commenter submitted several studies related to 
amniotic fluid and amniotic membrane-based products; however, none of 
these studies were specific to the X-WRAP[supreg] product.
    Response: We appreciate the commenters' responses on the X-
WRAP[supreg] product. However, the commenters did not provide new 
empirical evidence that addressed our concerns regarding the evidence 
of substantial clinical improvement that was submitted with the 
application, specifically that this evidence was limited to one 
retrospective study that lacked a comparison arm and did not include 
group assignment or blinding of patients. At this time, we have not 
been able to determine that X-WRAP[supreg] represents a substantial 
clinical improvement relative to existing therapies currently available 
for wound care.
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that several CPT codes 
would be used to report X-WRAP[supreg], including: CPT codes 29826, 
29827, 29828, 23473, 23420, 23412, 27605, 27650, 29891, 29888, 29889, 
28008, 22551, 22856, 27179, 29861, 29862, 15271, 15272, 15273, and 
15277. To meet the cost criterion for device pass-through payment, a 
device must pass all three tests for cost threshold for at least one 
APC. These CPT codes are assigned to APCs 5121 through 5125 (Level 1 
through Level 5 Musculoskeletal Procedures) and APCs 5054 and 5055 
(Level 4 and Level 5 Skin Procedures). For our calculations, we used 
APC 5121 (Level 1 Musculoskeletal Procedures), which had a CY 2016 
payment rate of $1,455 and a device offset amount of $15.86 at the time 
the application was received. According to the applicant, the X-
WRAP[supreg] product is available in several sizes, the largest being 
4x8 cm with a cost of $5,280.
    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The estimated 
average reasonable cost of $5,280 for X-WRAP[supreg] exceeds the 
applicable APC payment amount for the service related to the category 
of devices of $1,455 by 363 percent ($5,280/$1,455 x 100 = 363 
percent). Therefore, we stated in the proposed rule that it appears 
that X-WRAP[supreg] meets the first cost significance test.
    The second cost significance test, at Sec.  419.66(d)(2), provides 
that the estimated average reasonable cost of the devices in the 
category must exceed the cost of the device-related portion of the APC 
payment amount for the related service by at least 25 percent, which 
means that the device cost needs to be at least 125 percent of the 
offset amount (the device related portion of the APC found on the 
offset list). The average reasonable cost of $5,280 for X-WRAP[supreg] 
exceeds the device-related portion of the APC payment amount of $15.86 
by 33,291 percent ($5,280/$15.86) x 100 = 33,291 percent). Therefore, 
we stated in the proposed rule that it appears that X-WRAP[supreg] 
meets the second cost significance test.
    The third cost significance test, at Sec.  419.66(d)(3), requires 
that the difference between the estimated average reasonable cost of 
the devices in the category and the portion of the APC payment amount 
for the device must exceed 10 percent of the APC payment amount for the 
related service. The difference between the average reasonable cost of 
$5,280 for X-WRAP[supreg] and the portion of the APC payment amount for 
the device of $15.86 exceeds the APC payment amount for the related 
service of $1,455 by 361 percent (($5280-$15.86)/$1455 x 100 = 361 
percent). Therefore, we stated in the proposed rule that it appears 
that X-WRAP[supreg] meets the third cost significance test.
    We invited public comments on whether X-WRAP[supreg] meets the 
device pass-through payment cost criteria discussed in this section.
    We did not receive any public comments on this issue. We continue 
to believe that X-WRAP[supreg] meets the device pass-through payment 
cost criteria.
    After consideration of the public comments we received, we are not 
approving device pass-through payment status for the X-WRAP[supreg] 
product for CY 2018.

B. Device-Intensive Procedures

1. Background
    Under the OPPS, prior to CY 2017, device-intensive APCs were 
defined as those APCs with a device offset greater than 40 percent (79 
FR 66795). In assigning device-intensive status to an APC, the device 
costs of all of the procedures within the APC were calculated and the 
geometric mean device offset of all of the procedures had to exceed 40 
percent. Almost all of the procedures assigned to device-intensive APCs 
utilize devices, and the device costs for the associated HCPCS codes 
exceed the 40-percent threshold. The no cost/full credit and partial 
credit device policy (79 FR 66872 through 66873) applies to device-
intensive APCs and is discussed in detail in section IV.B.4. of this 
final rule with comment period. A related device policy was the 
requirement that certain procedures assigned to device-intensive APCs 
require the reporting of a device code on the claim (80 FR 70422). For 
further background information on the device-intensive APC policy, we 
refer readers to the CY 2016 OPPS/ASC final rule with comment period 
(80 FR 70421 through 70426).
2. HCPCS Code-Level Device-Intensive Determination
    As stated above, prior to CY 2017, the device-intensive methodology 
assigned device-intensive status to all procedures requiring the 
implantation of a device, which were assigned to an APC with a device 
offset greater than 40 percent. Historically, the device-intensive 
designation was at the APC level and applied to the applicable 
procedures within that given APC. In the CY 2017 OPPS/ASC final rule 
with comment period (81 FR 79658), we changed our methodology to assign 
device-intensive status to all procedures that require the implantation 
of a device and have an individual HCPCS code-level device offset of 
greater than 40 percent, regardless of the APC assignment. Under this 
policy, all procedures with significant device costs (defined as a 
device offset of more than 40 percent) are assigned device-intensive 
status, regardless of their APC placement. Also, we believe that a 
HCPCS code-level device offset is, in most cases, a better 
representation of a procedure's device cost than an APC-wide average 
device offset based on the average device offset of all of the 
procedures assigned to an APC. Unlike a device offset calculated at the 
APC level, which is a weighted average offset for all devices used in 
all of the procedures assigned to an APC, a HCPCS code-level device 
offset is calculated using only claims for a single HCPCS code. We 
believe that such a methodological change results in a more accurate 
representation of the cost attributable to implantation of a high-cost 
device, which ensures consistent device-intensive designation of 
procedures with a significant device cost. Further, we believe a HCPCS 
code-level device offset removes inappropriate device-intensive status 
to procedures without a significant device

[[Page 59334]]

cost but which are granted such status because of APC assignment.
    Under our CY 2017 finalized policy, procedures that have an 
individual HCPCS code-level device offset of greater than 40 percent 
are identified as device-intensive procedures and are subject to all 
the policies applicable to procedures assigned device-intensive status 
under our established methodology, including our policies on device 
edits and device credits. Therefore, all procedures requiring the 
implantation of a medical device and that have an individual HCPCS 
code-level device offset of greater than 40 percent are subject to the 
device edit and no cost/full credit and partial credit device policies, 
discussed in sections IV.B.3. and IV.B.4. of this final rule with 
comment period, respectively.
    In addition, for new HCPCS codes describing procedures requiring 
the implantation of medical devices that do not yet have associated 
claims data, in the CY 2017 OPPS/ASC final rule with comment period (81 
FR 79658), we finalized a policy for CY 2017 to apply device-intensive 
status with a default device offset set at 41 percent for new HCPCS 
codes describing procedures requiring the implantation of a medical 
device that do not yet have associated claims data until claims data 
are available to establish the HCPCS code-level device offset for the 
procedures. This default device offset amount of 41 percent is not 
calculated from claims data; instead, it is applied as a default until 
claims data are available upon which to calculate an actual device 
offset for the new code. The purpose of applying the 41-percent default 
device offset to new codes that describe procedures that implant 
medical devices is to ensure ASC access for new procedures until claims 
data become available. However, in certain rare instances, for example, 
in the case of a very expensive implantable device, we may temporarily 
assign a higher offset percentage if warranted by additional 
information such as pricing data from a device manufacturer (81 FR 
79658). Once claims data are available for a new procedure requiring 
the implantation of a medical device, device-intensive status will be 
applied to the code if the HCPCS code-level device offset is greater 
than 40 percent, according to our finalized policy of determining 
device-intensive status by calculating the HCPCS code-level device 
offset.
    The full listing of proposed CY 2018 device-intensive procedures 
was included in Addendum P to the proposed rule (which is available via 
the Internet on the CMS Web site). The full listing of the final CY 
2018 device-intensive procedures is included in Addendum P to this 
final rule with comment period.
    In response to comments received in the CY 2017 OPPS/ASC final rule 
with comment period, we specified that additional information for our 
consideration of an offset percentage higher than the default of 41 
percent for new HCPCS codes describing procedures requiring the 
implantation (or in some cases the insertion) of a medical device that 
do not yet have associated claims data, such as pricing data or 
invoices from a device manufacturer, should be directed to the Division 
of Outpatient Care, Mail Stop C4-01-26, Centers for Medicare and 
Medicaid Services, 7500 Security Boulevard, Baltimore, MD 21244-1850, 
or electronically at [email protected]. Additional information 
can be submitted prior to issuance of an OPPS/ASC proposed rule or as a 
public comment in response to an issued OPPS/ASC proposed rule. Device 
offset percentages will be set in each year's final rule.
    We did not propose any changes to this policy for CY 2018.
    Comment: Several commenters suggested that CMS use alternate device 
offset percentage thresholds for assigning device-intensive status. One 
of those commenters suggested that the device-intensive designation be 
given for any specified procedure with a HCPCS code level device offset 
percentage of greater than 30 percent. Another commenter suggested that 
CMS apply the device-intensive designation to any procedure for which 
the individual HCPCS code level device offset is greater than 40 
percent of the procedure's unadjusted ASC payment rate. In addition, 
one commenter requested that CMS provide clarification on the criteria 
for device-intensive procedures, specifically with respect to 
temporarily inserted devices.
    Response: We thank the commenters for their suggestions. However, 
we continue to believe that our current methodology to assign device-
intensive status to all procedures that require the implantation of a 
device and have an individual HCPCS code-level device offset of greater 
than 40 percent is appropriate. With respect to the request for 
clarification about the criteria for device-intensive procedures 
pertaining to temporarily inserted devices, we would like to clarify 
that device-intensive procedures require the implantation of a device 
and additionally are subject to the following criteria: (1) All 
procedures 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 is defined as exceeding 40 percent of the procedure's mean cost.
    Comment: One commenter supported the proposed designation of CPT 
code 28740 (Arthrodesis, midtarsal or tarsometatarsal, single joint) as 
a device-intensive procedure. A few commenters requested that the 
following HCPCS codes be assigned device-intensive status: HCPCS codes 
55874 (placeholder code 55X87) (Transperineal placement of 
biodegradable material, peri-prostatic, single or multiple 
injection(s), including image guidance, when performed); 0275T 
(Percutaneous laminotomy/laminectomy (interlaminar approach) for 
decompression of neural elements, (with or without ligamentous 
resection, discectomy, facetectomy and/or foraminotomy), any method, 
under indirect image guidance (e.g., fluoroscopic, ct), single or 
multiple levels, unilateral or bilateral; lumbar); and 28297 
(Correction, hallux valgus (bunionectomy), with sesamoidectomy, when 
performed; with first metatarsal and medial cuneiform joint 
arthrodesis, any method).
    Response: We thank the commenter for its support for our proposed 
designation of CPT code 28740. With respect to the commenters' request 
that we assign the device-intensive designation to HCPCS codes 55874, 
0275T, and 28297, we note that the device offset percentage for all 
three of these procedures (as identified by the above mentioned HCPCS 
codes or predecessor codes) is not above the 40 percent threshold, and 
therefore, these procedures are not eligible to be assigned device-
intensive status.
    Comment: Several commenters suggested that CMS develop a mechanism 
that prevents significant payment reductions for device-intensive 
procedures due to wage index adjustments.
    Response: In response to the commenters' suggestion that CMS 
develop a mechanism that prevents significant payment reductions for 
device-intensive procedures due to wage index adjustments, we note that 
we did not include such a proposal in the CY 2018 proposed rule. 
However, we will take this comment into consideration for future 
rulemaking.
3. Device Edit Policy
    In the CY 2015 OPPS/ASC final rule with comment period (79 FR 
66795), we

[[Page 59335]]

finalized a policy and implemented 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 APCs listed in Table 5 of the CY 2015 OPPS/ASC final rule with 
comment period (the CY 2015 device-dependent APCs) is reported on the 
claim. In addition, in the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70422), we modified our previously existing policy and 
applied the device coding requirements exclusively to procedures that 
require the implantation of a device that are assigned to a device-
intensive APC. In the CY 2016 OPPS/ASC final rule with comment period, 
we also finalized our policy that the claims processing edits are such 
that any device code, when reported on a claim with a procedure 
assigned to a device-intensive APC (listed in Table 42 of the CY 2016 
OPPS/ASC final rule with comment period (80 FR 70422)) will satisfy the 
edit.
    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79658 
through 79659), we changed our policy for CY 2017 and subsequent years 
to apply the CY 2016 device coding requirements to the newly defined 
(individual HCPCS code-level device offset greater than 40 percent) 
device-intensive procedures. For CY 2017 and subsequent years, we also 
specified that any device code, when reported on a claim with a device-
intensive procedure, will satisfy the edit. In addition, we created 
HCPCS code C1889 to recognize devices furnished during a device-
intensive procedure that are not described by a specific Level II HCPCS 
Category C-code. Reporting HCPCS code C1889 with a device-intensive 
procedure will satisfy the edit requiring a device code to be reported 
on a claim with a device-intensive procedure.
    We did not propose any changes to this policy for CY 2018.
    Comment: One commenter requested that CMS restore the device-to-
procedure and procedure-to-device edits. Another commenter requested 
that CMS adopt an additional policy for device-intensive procedures 
that have a device offset percentage above 75 percent, that would 
implement device-to-procedure and procedure-to-device edits for all 
such procedures (having a device offset percentage above 75 percent) 
and would only utilize claims that passed those edits for establishing 
the geometric mean cost and the HCPCS-level device offset for those 
procedures. Also, as part of this commenter's suggested new policy, the 
commenter requested that CMS only allow clinically similar, device-
intensive procedures with a device offset above 75 percent to be 
grouped into an APC together and that all other procedures be excluded 
(both nondevice-intensive procedures and device-intensive procedures 
that have a device offset percentage below 75 percent).
    Response: As we stated in the CY 2015 OPPS/ASC final rule with 
comment period (79 FR 66794), 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 current policy, hospitals are still 
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. In addition, we remind commenters that, under our current 
policy, the APC assignment of a device-intensive procedure has no 
bearing on the procedure's device-intensive designation. With respect 
to the commenter's request for an additional policy specifically for 
device-intensive procedures that have a device offset percentage above 
75 percent, for the reasons stated above in this comment response, we 
do not believe that such a policy is needed.
4. Adjustment to OPPS Payment for No Cost/Full Credit and Partial 
Credit Devices
a. 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 were 
instructed to report no cost/full credit device 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, hospitals were 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, hospitals were instructed to report as the 
device charge the difference between the hospital's usual charge for 
the device being implanted and the hospital's 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 were 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'' modifiers 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. For CY 2015, we continued 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 use the three

[[Page 59336]]

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 (79 FR 66872 through 66873). In the CY 
2016 OPPS/ASC final rule with comment period (80 FR 70424), we 
finalized our policy to no longer specify a list of devices to which 
the OPPS payment adjustment for no cost/full credit and partial credit 
devices would apply and instead apply this APC payment adjustment to 
all replaced devices furnished in conjunction with a procedure assigned 
to a device-intensive APC when the hospital receives a credit for a 
replaced specified device that is 50 percent or greater than the cost 
of the device.
b. Policy for No Cost/Full Credit and Partial Credit Devices
    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79659 
through 79660), for CY 2017 and subsequent years, we finalized our 
policy to reduce OPPS payment for device-intensive procedures, by the 
full or partial credit a provider receives for a replaced device, when 
a hospital furnishes a specified device without cost or with a full or 
partial credit. Under our current policy, hospitals continue to be 
required to report on the claim the amount of the credit in the amount 
portion for value code ``FD'' when the hospital receives a credit for a 
replaced device that is 50 percent or greater than the cost of the 
device.
    In addition, for CY 2017 and subsequent years, we finalized our 
policy to use the following three criteria for determining the 
procedures to which our final policy applies: (1) All procedures 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 
procedure must be device intensive; that is, the device offset amount 
must be significant, which is defined as exceeding 40 percent of the 
procedure's mean cost.
    We did not propose any changes to this policy for CY 2018 and did 
not receive any public comments on this policy.
5. Payment Policy for Low-Volume Device-Intensive Procedures
    For CY 2016, we used our equitable adjustment authority under 
section 1833(t)(2)(E) of the Act and used the median cost (instead of 
the geometric mean cost per our standard methodology) to calculate the 
payment rate for the implantable miniature telescope procedure 
described by CPT code 0308T (Insertion of ocular telescope prosthesis 
including removal of crystalline lens or intraocular lens prosthesis), 
which is the only code assigned to APC 5494 (Level 4 Intraocular 
Procedures) (80 FR 70388). We note that, as stated in the CY 2017 OPPS/
ASC proposed rule (81 FR 45656), we proposed to reassign the procedure 
described by CPT code 0308T to APC 5495 (Level 5 Intraocular 
Procedures) for CY 2017, but it would be the only procedure code 
assigned to APC 5495. The payment rates for a procedure described by 
CPT code 0308T (including the predecessor HCPCS code C9732) were 
$15,551 in CY 2014, $23,084 in CY 2015, and $17,551 in CY 2016. The 
procedure described by CPT code 0308T is a high-cost device-intensive 
surgical procedure that has a very low volume of claims (in part 
because most of the procedures described by CPT code 0308T are 
performed in ASCs), and we believe that the median cost is a more 
appropriate measure of the central tendency for purposes of calculating 
the cost and the payment rate for this procedure because the median 
cost is impacted to a lesser degree than the geometric mean cost by 
more extreme observations. We stated that, in future rulemaking, we 
would consider proposing a general policy for the payment rate 
calculation for very low-volume device-intensive APCs (80 FR 70389).
    For CY 2017, we proposed and finalized a payment policy for low-
volume device-intensive procedures that is similar to the policy 
applied to the procedure described by CPT code 0308T in CY 2016. In the 
CY 2017 OPPS/ASC final rule with comment period (81 FR 79660 through 
79661), we established our current policy that the payment rate for any 
device-intensive procedure that is assigned to a clinical APC with 
fewer than 100 total claims for all procedures in the APC be calculated 
using the median cost instead of the geometric mean cost, for the 
reasons described above for the policy applied to the procedure 
described by CPT code 0308T in CY 2016. The CY 2017 final rule 
geometric mean cost for the procedure described by CPT code 0308T 
(based on 19 claims containing the device HCPCS C-code in accordance 
with the device-intensive edit policy) was approximately $21,302, and 
the median cost was approximately $19,521. The final CY 2017 payment 
rate (calculated using the median cost) is approximately $18,984.
    For CY 2018, in the CY 2018 OPPS/ASC proposed rule (82 FR 33620), 
we proposed to continue with our current policy of establishing the 
payment rate for any device-intensive procedure that is assigned to a 
clinical APC with fewer than 100 total claims for all procedures in the 
APC based on calculations using the median cost instead of the 
geometric mean cost. For CY 2018, this policy would continue to apply 
only to a procedure described by CPT code 0308T in APC 5495 because 
this APC is the only clinical APC containing a device-intensive 
procedure with fewer than 100 total claims in the APC. As we have 
stated before (81 FR 79660), we believe that this approach will help to 
mitigate significant year-to-year payment rate fluctuations while 
preserving accurate claims data-based payment rates for low-volume 
device-intensive procedures. The CY 2018 proposed rule median cost for 
the procedure described by CPT code 0308T was approximately $17,643.75. 
The proposed CY 2018 payment rate (calculated using the median cost and 
the claims that reported the device consistent with our device edit 
policy for device intensive procedures) was approximately $16,963.69.
    Comment: Some commenters supported CMS' proposal to base payment on 
the median cost instead of the geometric mean cost for any device-
intensive procedure that is assigned to an APC with fewer than 100 
total claims. Other commenters requested that CMS limit the impact of 
geometric mean cost reductions on payment rates for low-volume 
procedures by a certain percentage to ensure payment stability for low-
volume procedures.
    Response: We thank commenters for their support. With respect to 
the commenters' request to limit the impact of the geometric mean cost 
reductions on payment rates for low volume procedures by a certain 
percentage, we disagree with commenters that such a percentage-based 
limitation is necessary. We continue to believe our current policy--
establishing the payment rate for any device-intensive procedure that 
is assigned to a clinical APC with fewer than 100 total claims for all 
procedures in the APC based on calculations using the median cost 
instead of the geometric mean cost--will help to mitigate significant 
year-to-year payment rate fluctuations while preserving accurate claims 
data-based payment rates for low-volume device-intensive procedures.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, that the payment rate 
for

[[Page 59337]]

any device-intensive procedure that is assigned to a clinical APC with 
fewer than 100 total claims for all procedures in the APC be calculated 
using the median cost instead of the geometric mean cost. The CY 2018 
final rule median cost for the procedure described by CPT code 0308T is 
$17,550.18. The final CY 2018 payment rate (calculated using updated 
median cost and the claims that reported the device consistent with our 
device edit policy for device-intensive procedures) is $17,560.07.

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. A ``biological'' as used in this final rule 
with comment period includes (but is not necessarily limited to) a 
``biological product'' or a ``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 
pass-through payment 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 those types of drugs or biologicals mentioned 
above that are hospital outpatient services under Medicare Part B for 
which transitional pass-through 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 2018 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. The 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 described on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html.
2. 3-Year Transitional Pass-Through Payment Period for All Pass-Through 
Drugs, Biologicals, and Radiopharmaceuticals and Quarterly Expiration 
of Pass-Through Status
    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. Our current policy is to 
accept pass-through applications on a quarterly basis and to begin 
pass-through payments for newly approved pass-through drugs and 
biologicals on a quarterly basis through the next available OPPS 
quarterly update after the approval of a product's pass-through status. 
However, prior to CY 2017, we expired pass-through status for drugs and 
biologicals on an annual basis through notice-and-comment rulemaking 
(74 FR 60480). In the CY 2017 OPPS/ASC final rule with comment period 
(81 FR 79662), we finalized a policy change, beginning with pass-
through drugs and biologicals newly approved in CY 2017 and subsequent 
calendar years, to allow for a quarterly expiration of pass-through 
payment status for drugs and biologicals to afford a pass-through 
payment period that is as close to a full 3 years as possible for all 
pass-through drugs, biologicals, and radiopharmaceuticals.
    This change eliminated the variability of the pass-through payment 
eligibility period, which previously varied based on when a particular 
application was initially received. We adopted this change for pass-
through approvals beginning on or after CY 2017, to allow, on a 
prospective basis, for the maximum pass-through payment period for each 
pass-through drug without exceeding the statutory limit of 3 years.
3. Drugs and Biologicals With Expiring Pass-Through Payment Status in 
CY 2017
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33621), we proposed 
that the pass-through payment status of 19 drugs and biologicals would 
expire on December 31, 2017, as listed in Table 21 of the proposed rule 
(82 FR 33622). 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, 2017. These drugs and biologicals were approved for 
pass-through payment status on or before January 1, 2016. In accordance 
with the policy finalized last year and described above, pass-through 
payment status for drugs and biologicals newly approved in CY 2017 and 
subsequent years will expire on a quarterly basis, with a pass-through 
payment period as close to 3 years as possible. With the exception of 
those groups of drugs and biologicals that are always packaged when 
they do not have pass-through payment status (specifically, anesthesia 
drugs; drugs, biologicals, and radiopharmaceuticals that function as

[[Page 59338]]

supplies when used in a diagnostic test or procedure (including 
diagnostic radiopharmaceuticals, contrast agents, and stress agents); 
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 payment 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 $120 for CY 2018), as discussed further in 
section V.B.2. of this final rule with comment period. In the CY 2018 
OPPS/ASC proposed rule (82 FR 33622), we proposed that 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 
proposed to provide separate payment at the applicable relative ASP-
based payment amount (which was proposed at ASP+6 percent for CY 2018, 
and is finalized at ASP+6 percent for CY 2018, as discussed further in 
section V.B.3. of this final rule with comment period).
    Comment: Several commenters responded to the proposed expiration of 
pass-through status for HCPCS code A9586 (Florbetapir f18) on December 
31, 2017. (We note that the brand name for the radiopharmaceutical 
described by HCPCS code A9586 is Amyvid[supreg]. Amyvid is a FDA-
approved radioactive diagnostic agent for Positron Emission Tomography 
(PET) imaging of the brain to estimate beta-amyloid neuritic plaque 
density in adult patients with cognitive impairment who are being 
evaluated for Alzheimer's Disease and other causes of cognitive 
decline. Amyvid was approved for drug pass-through payment status 
effective January 1, 2015.)
    One commenter, the manufacturer of Amyvid, urged CMS to extend 
pass-through payment status for another year on the basis that CMS 
could not have paid a legitimately billed claim for Amyvid in CY 2015, 
given the manufacturer's assertion regarding CED trial sites' dates of 
approval and start dates for patient enrollment. In addition, while the 
commenter acknowledged that the period of drug and biological pass-
through payment status starts on the first date on which payment is 
made for the drug or biological as an outpatient hospital service (42 
CFR 419.64(c)(2)), the commenter believed that an erroneous payment by 
Medicare should not have triggered the start of pass-through payment 
for Amyvid in 2015. In addition, the commenter asserted that expiration 
of pass-through payment status for Amyvid prior to completion of the 
CED trial will adversely affect the trial results. The commenter 
requested that, if CMS finalized expiration of pass-through payment 
status as proposed, CMS create a new APC for PET procedures with Amyvid 
to avoid violating the 2 times rule--which provides that 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. The commenter stated that the median cost of Amyvid is 
approximately $2,756, over two times the median cost of the PET scan 
procedure.
    One commenter, a manufacturer of another radiopharmaceutical, 
recommended that CMS allow for those products whose pass-through 
payment status will expire after a period of at least 2 years and no 
more than 3 years to expire as proposed, as a matter of applying policy 
consistently.
    Several commenters recommended that CMS allow products covered by 
Medicare in the context of coverage with evidence development (CED) 
clinical trial to retain their pass-through status for the duration of 
the CED trial.
    Response: CMS issued a Medicare National Coverage Determination 
(NCD) on September 27, 2013, which allows conditional coverage of 
amyloid PET under CED. Currently, there are three Medicare-approved 
amyloid PET CED trials. The first CED trial was approved on April 2, 
2014. The second CED trial was approved on March 3, 2015. The third CED 
trial was approved January 5, 2016. Information on these clinical 
trials is available on the CMS amyloid PET Web page available via the 
Internet at: https://www.cms.gov/Medicare/Coverage/Coverage-with-Evidence-Development/Amyloid-PET.html. The effective date of Medicare 
billing for CED trial sites is the CMS approval date. CMS has provided 
billing instructions for providers and practitioner that specify proper 
coding for clinical trial claims. For example, providers and 
practitioner must report certain diagnosis codes, procedure codes, 
modifiers, and a national clinical trial number. Therefore, providers 
enrolled in one of these trials could have begun appropriate billing 
Medicare for the amyloid PET procedures and associated Amyloid PET 
tracers beginning April 2, 2014.
    Based on our claims analysis, we found that HCPCS code A9586 was 
billed by hospital providers 14 times in CY 2015, with 1 claim being 
paid. Based on our review of provider enrollment in the CED trials, it 
appears that this paid Medicare claim from CY 2015 was submitted from a 
CED clinical trial participant and not paid in error as the commenter 
suggests. According to section 1833(t)(6)(C)(i)(II) of the Act and the 
regulations at 42 CFR 419.66(g), the pass-through payment eligibility 
period begins on the first date on which pass-through payment is made. 
Because there is a paid claim from CY 2015, the pass-through payment 
period for HCPCS code A9586 began in CY 2015. Therefore, based on the 
CY 2015 paid claim for HCPCS code A9586 as a hospital outpatient 
service, which triggered the start of the pass-through payment period, 
we are expiring pass-through payment status on December 31, 2017. From 
the start of the pass-through payment period through December 31, 2017, 
Medicare will have provided an OPPS pass-through payment for at least 2 
years and no more than 3 years by December 31, 2017. Extending pass-
through payment status into CY 2018 would cause pass-through payments 
for HCPCS code A9586 to extend into a fourth year, thereby exceeding 
the pass-through payment period authorized by section 
1833(t)(6)(C)(i)(II) of the Act.
    In addition, regarding the commenters' concern that expiration of 
pass-through payment status for Amyvid, and subsequent packaging of it 
as a ``policy-packaged'' drug, will skew trial results (presumably 
because providers will not receive an ASP-based payment), we disagree, 
given that analysis of CY 2016 claims data across different sites of 
care shows that the vast majority of billings for HCPCS code A9586 is 
concentrated in the physician office and the independent diagnostic 
testing facility (IDTF) setting. Further, we note that hospitals are 
not precluded from billing for HCPCS code A9586 in the context of a CED 
trial once its pass-through payment status expires. We also note that 
the payment for HCPCS A9586 would be reflected in the payment rate for 
the associated procedure.
    With respect to the request that we create a new APC for PET 
procedures with Amyvid, we do not believe it is appropriate, prudent, 
or practicable to create unique APCs for specific drugs or biologicals 
or other individual items

[[Page 59339]]

that are furnished with a particular procedure or procedures. We 
disagree with the commenter's assertion that packaging of Amyvid with 
the associated PET procedure described by CPT code 78814 (Pet image w/
ct lmtd) creates a 2 times rule violation in APC 5594 (Level 4 Nuclear 
Medicine) (we refer readers to section III.B. of this final rule with 
comment period for discussion of 2 times rule) and believe that the 
commenter may have misunderstood the application of the 2 times rule. 
Specifically, we note that, in determining the APCs with a 2 times rule 
violation, we do not consider the cost of an individual packaged item 
that may be furnished with a procedure or service, but rather the 
geometric mean cost of the service (which includes aggregate cost of 
packaged items that may be furnished with a procedure). Moreover, we 
disagree with the commenter's statement that the median cost of Amyvid 
is approximately $2,756. While it is correct that the CY 2017 pass-
through payment for Amyvid is $2,756, the pass-through payment rate of 
ASP+6 percent is not indicative of the cost incurred by hospitals to 
acquire, store, handle, and dispense Amyvid. Our analysis of the 
updated CY 2016 claims data used for CY 2018 ratesetting for this CY 
2018 OPPS/ASC final rule with comment period shows that the median cost 
of Amyvid is $1,275.75, which when combined with the aggregate cost of 
packaged items that may be furnished with CPT code 78814, would not 
create a 2 times rule violation.
    With respect to the commenters' request that we allow drug or 
biological pass-through payment status for products covered by CED for 
the duration of the CED trial, we reiterate that the statute limits the 
period of pass-through payment eligibility to at least 2 years, but no 
more than 3 years, after the product's first payment as a hospital 
outpatient service under Medicare Part B. As such, we are unable to 
extend pass-through payment status beyond 3 years.
    Finally, with respect to the commenter's support of our proposal to 
finalize the expiration of pass-through payment status as proposed for 
consistent policy application, we agree with the commenter.
    In summary, we are finalizing our proposal to expire pass-through 
payment status for HCPCS code A9586 on December 31, 2017. Because pass-
through payment was effective in CY 2015, HCPCS code A9586 will have 
had pass-through payment status for at least 2 years but no more than 3 
years in accordance with section 1833(t)(6) of the Act.
    Comment: Several commenters requested that CMS not package payment 
for Omidria[supreg] (described by HCPCS code C9447) upon expiration of 
pass-through payment status on December 31, 2017, and continue to pay 
separately for the drug at ASP+6 percent. One commenter, the 
manufacturer of Omidria, reiterated many previous arguments (81 FR 
79667) for why CMS should dispense with classifying Omidria as drug 
that functions as a surgical supply when used in a surgical procedure. 
Specially, the commenter made the following arguments:
     The language used to construct the ``packaging as a 
surgical supply'' policy is overly broad and not consistent with 
Congressional intent that requires clinically comparable APC groups. 
CMS has not defined surgery or provided a rationale for applying 
different packaging policies to surgery than would be applied to other 
drugs with therapeutic indications;
     Mischaracterization of drugs used in surgery as 
``supplies'', given regulatory requirements that apply to drugs. The 
FDA-approved label indicates its specific use in intraocular 
procedures;
     Packaging Omidria and other drugs as surgical supplies 
creates barriers to access, especially in ASC settings, low-volume 
HOPDs, and hospitals with low percentage of insured patients 
(presumably because providers may choose lower cost alternatives 
because separate payment would no longer be made);
     Packaging Omidria and other drugs as surgical supplies may 
affect quality of care improvements and patient outcomes; and
     Packaging drugs as ``surgical supplies'' interferes with 
physician discretion and is inconsistent with the principles that guide 
packaging under the OPPS.
    A few commenters requested that CMS consider a narrow exception to 
the ``drug as a supply'' packaging policy to enable separate payment 
for Omidria.
    Response: We have addressed many of these comments in prior 
rulemaking. We refer readers to the CY 2017 OPPS/ASC final rule with 
comment period for a detailed discussion on why we believe Omidria is a 
drug that functions as a surgical supply (81 FR 79668). We did not 
propose any policy changes to the criteria applied to a drug that 
functions as a surgical supply when used in a surgical procedure in the 
CY 2018 OPPS/ASC proposed rule, nor do we believe the commenters 
provided any new information that would cause us to change our position 
that Omidria is a drug that functions as a surgical supply. Therefore, 
we are not addressing these comments in this final rule with comment 
period. However, in the proposed rule, we did solicit comments on 
packaging policies generally, including drugs that function as a 
surgical supply, and will take responses to the comment solicitation, 
along with these commenters' recommendations and suggestions, into 
consideration in future rulemaking.
    Comment: Commenters urged CMS to apply quarterly expiration of drug 
pass-through payment to drugs and biologicals first added to the pass-
through payment list in CYs 2015 and 2016 that would otherwise 
transition off pass-through payment in less than 3 years. Commenters 
suggested CMS could apply the quarterly expiration of pass-through 
payment policy to devices approved for pass-through payment status in 
CY 2015 or 2016 because it would not cause harm to providers or 
beneficiaries. As stated earlier in this section, one commenter 
suggested that CMS allow for those products whose pass-through payment 
status will expire after a period of at least 2 years and no more than 
3 years to expire as proposed, as a matter of applying policy 
consistently.
    Response: As finalized in the CY 2017 OPPS/ASC final rule with 
comment period (81 FR 79662), the quarterly expiration of pass-through 
payment policy applies to drugs and biologicals newly approved for 
pass-through payment in CY 2017. We note that, even prior to the policy 
change adopted in CY 2017 rulemaking, the Agency's prior policy 
practice of making drug pass-through payments for a minimum of 2 years, 
but not more than 3 years, was consistent with statutory authority. 
Further, once a drug's pass-through payment status period expires, its 
costs are packaged into the associated procedure(s) with which it is 
billed, and accordingly, reversing past expirations of pass-through 
payment would potentially cause payment rates established for a prior 
year for certain services to be incorrect.
    We agree with the commenter who stated that we should expire the 
drug-pass-through payment status for drugs and biologicals as proposed, 
to allow for consistent application of our policy.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to expire the pass-
through payment status of the 19 drugs and biologicals listed in Table 
69 below on December 31, 2017.

[[Page 59340]]



         Table 69--Drugs and Biologicals for Which Pass-Through Payment Status Expires December 31, 2017
----------------------------------------------------------------------------------------------------------------
                                                                  Final CY 2018                    Pass-through
       CY 2018 HCPCS code            CY 2018 long descriptor          status       Final CY 2018      payment
                                                                    indicator           APC       effective date
----------------------------------------------------------------------------------------------------------------
A9586...........................  Florbetapir f18, diagnostic,                N              N/A      01/01/2015
                                   per study dose, up to 10
                                   millicuries.
C9447...........................  Injection, phenylephrine and                N              N/A      01/01/2015
                                   ketorolac, 4 ml vial.
J0596...........................  Injection, c-1 esterase                     K             9445      04/01/2015
                                   inhibitor (human), Ruconest,
                                   10 units.
J0695...........................  Injection, ceftolozane 50 mg                K             9452      04/01/2015
                                   and tazobactam 25 mg.
J0875...........................  Injection, dalbavancin, 5 mg.               K             1823      01/01/2015
J1833...........................  Injection, isavuconazonium                  K             9456      10/01/2015
                                   sulfate, 1 mg.
J2407...........................  Injection, oritavancin, 10 mg               K             1660      01/01/2015
J2502...........................  Injection, pasireotide long                 K             9454      07/01/2015
                                   acting, 1 mg.
J2547...........................  Injection, peramivir, 1 mg...               K             9451      04/01/2015
J2860...........................  Injection, siltuximab, 10 mg.               K             9455      07/01/2015
J3090...........................  Injection, tedizolid                        K             1662      01/01/2015
                                   phosphate, 1 mg.
J7313...........................  Injection, fluocinolone                     K             9450      04/01/2015
                                   acetonide intravitreal
                                   implant, 0.01 mg.
J8655...........................  Netupitant (300 mg) and                     K             9448      04/01/2015
                                   palonosetron (0.5 mg).
J9032...........................  Injection, belinostat, 10 mg.               K             1658      01/01/2015
J9039...........................  Injection, blinatumomab, 1                  K             9449      04/01/2015
                                   mcg.
J9271...........................  Injection, pembrolizumab, 1                 K             1490      01/01/2015
                                   mg.
J9299...........................  Injection, nivolumab, 1 mg...               K             9453      07/01/2015
Q4172...........................  PuraPly, and PuraPly                        N              N/A      01/01/2015
                                   Antimicrobial, any type, per
                                   square centimeter.
Q9950...........................  Injection, sulfur                           N              N/A      10/01/2015
                                   hexafluoride lipid
                                   microsphere, per ml.
----------------------------------------------------------------------------------------------------------------

    The final packaged or separately payable status of each of these 
drugs or biologicals is listed in Addendum B to this final rule with 
comment period (which is available via the Internet on the CMS Web 
site).
4. Drugs, Biologicals, and Radiopharmaceuticals With New or Continuing 
Pass-Through Payment Status in CY 2018
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33622), we proposed to 
continue pass-through payment status in CY 2018 for 38 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, 2017. These drugs and biologicals, which were approved 
for pass-through payment status between January 1, 2016, and July 1, 
2017, were listed in Table 22 of the proposed rule (82 FR 33623). The 
APCs and HCPCS codes for these drugs and biologicals approved for pass-
through payment status through July 1, 2017 were assigned status 
indicator ``G'' in Addenda A and B to the proposed rule (which 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. For CY 2018, we proposed to continue to pay for 
pass-through drugs and biologicals at ASP+6 percent, equivalent to the 
payment rate these drugs and biologicals would receive in the 
physician's office setting in CY 2018. We proposed that a $0 pass-
through payment amount would be paid for pass-through drugs and 
biologicals under the CY 2018 OPPS because the difference between the 
amount authorized under section 1842(o) of the Act, which was proposed 
at ASP+6 percent, and the portion of the otherwise applicable OPD fee 
schedule that the Secretary determines is appropriate, which was 
proposed at ASP+6 percent, is $0.
    In the case of policy-packaged drugs (which include the following: 
Anesthesia drugs; drugs, biologicals, and radiopharmaceuticals that 
function as supplies when used in a diagnostic test or procedure 
(including contrast agents, diagnostic radiopharmaceuticals, and stress 
agents); 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 2018 because, if not for 
their pass-through payment 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 2018 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).
    For CY 2018, consistent with our CY 2017 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 
earlier, 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 2018, 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 was proposed at 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 payment 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: 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.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to provide

[[Page 59341]]

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 payment status 
during CY 2018, 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 payment drugs and biologicals without ASP information. If WAC 
information also is not available, we will provide payment for the 
pass-through payment radiopharmaceutical at 95 percent of its most 
recent AWP.
    The 50 drugs and biologicals that continue to have pass-through 
payment status for CY 2018 or have been granted pass-through payment 
status as of January 2018 are shown in Table 70 below.

                   Table 70--Drugs and Biologicals With Pass-Through Payment Status in CY 2018
----------------------------------------------------------------------------------------------------------------
                                                                                                   Pass-through
 CY 2017 HCPCS code   CY 2018 HCPCS code       CY 2018 long       CY 2018 status    CY 2018 APC       payment
                                                descriptor          indicator                     effective date
----------------------------------------------------------------------------------------------------------------
A9515..............  A9515..............  Choline C 11,                       G             9461      04/01/2016
                                           diagnostic, per
                                           study dose.
A9587..............  A9587..............  Gallium ga-68,                      G             9056      01/01/2017
                                           dotatate,
                                           diagnostic, 0.1
                                           millicurie.
A9588..............  A9588..............  Fluciclovine f-18,                  G             9052      01/01/2017
                                           diagnostic, 1
                                           millicurie.
C9140..............  J7210..............  Injection, Factor                   G             9043      01/01/2017
                                           VIII (antihemophilic
                                           factor, recombinant)
                                           (Afstyla), 1 I.U.
C9460..............  C9460..............  Injection, cangrelor,               G             9460      01/01/2016
                                           1 mg.
C9482..............  C9482..............  Injection, sotalol                  G             9482      10/01/2016
                                           hydrochloride, 1 mg.
C9483..............  J9022..............  Injection,                          G             9483      10/01/2016
                                           atezolizumab, 10 mg.
C9484..............  J1428..............  Injection,                          G             9484      04/01/2017
                                           eteplirsen, 10 mg.
C9485..............  J9285..............  Injection,                          G             9485      04/01/2017
                                           olaratumab, 10 mg.
C9486..............  J1627..............  Injection,                          G             9486      04/01/2017
                                           granisetron extended
                                           release, 0.1 mg.
C9488..............  C9488..............  Injection, conivaptan               G             9488      04/01/2017
                                           hydrochloride, 1 mg.
C9489..............  J2326..............  Injection,                          G             9489      07/01/2017
                                           nusinersen, 0.1 mg.
C9490..............  J0565..............  Injection,                          G             9490      07/01/2017
                                           bezlotoxumab, 10 mg.
C9491..............  J9023..............  Injection, avelumab,                G             9491      10/01/2017
                                           10 mg.
C9492..............  C9492..............  Injection,                          G             9492      10/01/2017
                                           durvalumab, 10 mg.
C9493..............  C9493..............  Injection, edaravone,               G             9493      10/01/2017
                                           1 mg.
C9494..............  J2350..............  Injection,                          G             9494      10/01/2017
                                           ocrelizumab, 1 mg.
J0570..............  J0570..............  Buprenorphine                       G             9058      01/01/2017
                                           implant, 74.2 mg.
J1942..............  J1942..............  Injection,                          G             9470      04/01/2016
                                           aripiprazole
                                           lauroxil, 1 mg.
J2182..............  J2182..............  Injection,                          G             9473      04/01/2016
                                           mepolizumab, 1 mg.
J2786..............  J2786..............  Injection,                          G             9481      10/01/2016
                                           reslizumab, 1 mg.
J2840..............  J2840..............  Injection, sebelipase               G             9478      07/01/2016
                                           alfa, 1 mg.
J7179..............  J7179..............  Injection, von                      G             9059      01/01/2017
                                           willebrand factor
                                           (recombinant),
                                           (Vonvendi), 1 i.u.
                                           vwf:rco.
J7202..............  J7202..............  Injection, Factor IX,               G             9171      10/01/2016
                                           albumin fusion
                                           protein
                                           (recombinant),
                                           Idelvion, 1 i.u.
J7207..............  J7207..............  Injection, Factor                   G             1844      04/01/2016
                                           VIII (antihemophilic
                                           factor, recombinant)
                                           PEGylated, 1 I.U.
J7209..............  J7209..............  Injection, Factor                   G             1846      04/01/2016
                                           VIII (antihemophilic
                                           factor, recombinant)
                                           (Nuwiq), per i.u.
J7322..............  J7322..............  Hyaluronan or                       G             9471      04/01/2016
                                           derivative, Hymovis,
                                           for intra-articular
                                           injection, 1 mg.
J7328..............  J7328..............  Hyaluronan or                       G             1862      04/01/2017
                                           derivative, Gelsyn-
                                           3, for intra-
                                           articular injection,
                                           0.1 mg.
J7342..............  J7342..............  Instillation,                       G             9479      07/01/2016
                                           ciprofloxacin otic
                                           suspension, 6 mg.
J7503..............  J7503..............  Tacrolimus, extended                G             1845      04/01/2016
                                           release, (envarsus
                                           xr), oral, 0.25 mg.
J9034..............  J9034..............  Injection,                          G             1861      01/01/2017
                                           bendamustine hcl
                                           (Bendeka), 1 mg.
J9145..............  J9145..............  Injection,                          G             9476      07/01/2016
                                           daratumumab, 10 mg.
J9176..............  J9176..............  Injection,                          G             9477      07/01/2016
                                           elotuzumab, 1 mg.
J9205..............  J9205..............  Injection, irinotecan               G             9474      04/01/2016
                                           liposome, 1 mg.
J9295..............  J9295..............  Injection,                          G             9475      04/01/2016
                                           necitumumab, 1 mg.
J9325..............  J9325..............  Injection, talimogene               G             9472      04/01/2016
                                           laherparepvec, 1
                                           million plaque
                                           forming units (PFU).
J9352..............  J9352..............  Injection,                          G             9480      07/01/2016
                                           trabectedin, 0.1 mg.
N/A................  J9203..............  Injection, gemtuzumab               G             9495      01/01/2018
                                           ozogamicin, 0.1 mg.
Q5101..............  Q5101..............  Injection, Filgrastim               G             1822      01/01/2016
                                           (G-CSF), Biosimilar,
                                           1 microgram.
Q5102..............  Q5102..............  Injection,                          G             1847      04/01/2017
                                           Infliximab,
                                           Biosimilar, 10 mg.
Q9982..............  Q9982..............  Flutemetamol F18,                   G             9459      01/01/2016
                                           diagnostic, per
                                           study dose, up to 5
                                           millicuries.
Q9983..............  Q9983..............  Florbetaben F18,                    G             9458      01/01/2016
                                           diagnostic, per
                                           study dose, up to
                                           8.1 millicuries.
Q9989..............  J3358..............  Ustekinumab, for                    G             9487      04/01/2017
                                           Intravenous
                                           Injection, 1 mg.
N/A................  C9014..............  Injection,                          G             9014      01/01/2018
                                           cerliponase alfa, 1
                                           mg.
N/A................  C9015..............  Injection, c-1                      G             9015      01/01/2018
                                           esterase inhibitor
                                           (human), Haegarda,
                                           10 units.

[[Page 59342]]

 
N/A................  C9016..............  Injection,                          G             9016      01/01/2018
                                           triptorelin extended
                                           release, 3.75 mg.
N/A................  C9024..............  Injection, liposomal,               G             9302      01/01/2018
                                           1 mg daunorubicin
                                           and 2.27 mg
                                           cytarabine.
N/A................  C9028..............  Injection, inotuzumab               G             9028      01/01/2018
                                           ozogamicin, 0.1 mg.
N/A................  C9029..............  Injection,                          G             9029      01/01/2018
                                           guselkumab, 1 mg.
N/A................  J7345..............  Aminolevulinic acid                 G             9301      01/01/2018
                                           hcl for topical
                                           administration, 10%
                                           gel, 10 mg.
----------------------------------------------------------------------------------------------------------------

5. Provisions for Reducing Transitional Pass-Through Payments for 
Policy-Packaged Drugs, Biologicals, and Radiopharmaceuticals To Offset 
Costs Packaged Into APC Groups
    Under the regulations at 42 CFR 419.2(b), nonpass-through drugs, 
biologicals, and radiopharmaceuticals that function as supplies when 
used in a diagnostic test or procedure are packaged in the OPPS. This 
category includes diagnostic radiopharmaceuticals, contrast agents, 
stress agents, and other diagnostic drugs. Also under 42 CFR 419.2(b), 
nonpass-through drugs and biologicals that function as supplies in a 
surgical procedure are packaged in the OPPS. This category includes 
skin substitutes and other surgical-supply drugs and biologicals. As 
described earlier, 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 policy packaged drugs, biologicals, and 
radiopharmaceuticals an amount reflecting the portion of the APC 
payment associated with predecessor products in order to ensure no 
duplicate payment is made. This amount reflecting the portion of the 
APC payment associated with predecessor products is called the payment 
offset.
    The payment offset policy applies to all policy packaged drugs, 
biologicals, and radiopharmaceuticals. For a full description of the 
payment offset policy as applied to diagnostic radiopharmaceuticals, 
contrast agents, stress agents, and skin substitutes, we refer readers 
to the discussion in the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70430 through 70432). In the CY 2018 OPPS/ASC proposed 
rule (82 FR 33624), for CY 2018, as we did in CY 2017, we proposed to 
continue to apply the same policy packaged offset policy to payment for 
pass-through diagnostic radiopharmaceuticals, pass-through contrast 
agents, pass-through stress agents, and pass-through skin substitutes. 
The proposed APCs to which a payment offset may be applicable for pass-
through diagnostic radiopharmaceuticals, pass-through contrast agents, 
pass-through stress agents, and pass-through skin substitutes were 
identified in Table 23 of the proposed rule.
    Comment: A few commenters requested that CMS separate the costs of 
diagnostic radiopharmaceuticals and stress agents from the ``packaged 
drug cost'' in the APC offset file published with the yearly proposed 
and final rules.
    Response: We thank the commenter for this recommendation. However, 
we do not believe that the suggested change is necessary at this time. 
The offset amount is the portion of each APC payment rate that could 
reasonably be attributed to the cost of a predecessor contrast agent, 
diagnostic radiopharmaceutical, or stress agent when considering a new 
contrast agent, diagnostic radiopharmaceutical, or stress agent for 
pass-through payment and has no bearing on APC assignment. The exact 
data used to calculate all of the proposed and final payment rates, 
including the associated offset amounts, for this CY 2018 OPPS final 
rule with comment are available for purchase under a CMS data use 
agreement through the CMS Web site available via the Internet at: 
https://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/IdentifiableDataFiles/index.html.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, for CY 2018, to continue 
to apply the same policy-packaged offset policy to payment for pass-
through diagnostic radiopharmaceuticals, pass-through contrast agents, 
pass-through stress agents, and pass-through skin substitutes as we did 
in CY 2017.

  Table 71--APCS to Which a Policy-Packaged Drug or Radiopharmaceutical
                    Offset Are Applicable in CY 2018
------------------------------------------------------------------------
           CY 2018  APC                      CY 2018  APC title
------------------------------------------------------------------------
                     Diagnostic Radiopharmaceutical
------------------------------------------------------------------------
5591..............................  Level 1 Nuclear Medicine and Related
                                     Services.
5592..............................  Level 2 Nuclear Medicine and Related
                                     Services.
5593..............................  Level 3 Nuclear Medicine and Related
                                     Services.
5594..............................  Level 4 Nuclear Medicine and Related
                                     Services.
------------------------------------------------------------------------
                             Contrast Agent
------------------------------------------------------------------------
5571..............................  Level 1 Imaging with Contrast.
5572..............................  Level 2 Imaging with Contrast.
5573..............................  Level 3 Imaging with Contrast.
------------------------------------------------------------------------
                              Stress Agent
------------------------------------------------------------------------
5722..............................  Level 2 Diagnostic Tests and Related
                                     Services.
5593..............................  Level 3 Nuclear Medicine and Related
                                     Services.
------------------------------------------------------------------------
                             Skin Substitute
------------------------------------------------------------------------
5054..............................  Level 4 Skin Procedures.
5055..............................  Level 5 Skin Procedures.
------------------------------------------------------------------------

    We also are finalizing our proposal to continue to post annually on 
the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Annual-Policy-Files.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 payment 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

[[Page 59343]]

packaged drugs and biologicals for every OPPS clinical APC.

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

1. Criteria for Packaging Payment for Drugs, Biologicals, and 
Radiopharmaceuticals
a. Packaging Threshold
    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 $110 for CY 
2017 (81 FR 79665).
    Following the CY 2007 methodology, for this CY 2018 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 2018 and 
rounded the resulting dollar amount ($118.52) to the nearest $5 
increment, which yielded a figure of $120. 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 series code WPUSI07003) from CMS' Office of 
the Actuary.
    Therefore, for this CY 2018 OPPS/ASC final rule with comment 
period, using the CY 2007 OPPS methodology, we are finalizing a 
packaging threshold for CY 2018 of $120.
b. Packaging of Payment for HCPCS Codes That Describe Certain Drugs, 
Certain Biologicals, and Therapeutic Radiopharmaceuticals Under the 
Cost Threshold (``Threshold-Packaged Drugs'')
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33625), to determine 
the proposed CY 2018 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 2016 and were paid (via 
packaged or separate payment) under the OPPS. We used data from CY 2016 
claims processed before January 1, 2017 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.1.d. of the proposed rule, or for the following policy-
packaged items that we proposed to continue to package in CY 2018: 
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 2018, 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 2018, 
as discussed in more detail in section V.B.2.b. of the proposed rule) 
to calculate the CY 2018 proposed rule per day costs. We used the 
manufacturer submitted ASP data from the fourth quarter of CY 2016 
(data that were used for payment purposes in the physician's office 
setting, effective April 1, 2017) to determine the proposed rule per 
day cost.
    As is our standard methodology, for CY 2018, we proposed to use 
payment rates based on the ASP data from the first quarter of CY 2017 
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, 2017. 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 
2016 hospital claims data to determine their per day cost.
    We proposed to package items with a per day cost less than or equal 
to $120, and identify items with a per day cost greater than $120 as 
separately payable. Consistent with our past practice, we cross-walked 
historical OPPS claims data from the CY 2016 HCPCS codes that were 
reported to the CY 2017 HCPCS codes that we displayed in Addendum B to 
the proposed rule (which is available via the Internet on the CMS Web 
site) for proposed payment in CY 2018.
    Comment: Many commenters requested that CMS eliminate the threshold 
packaging policy and pay separately for all drugs and biologicals 
described by a unique HCPCS code. Several commenters expressed concern 
with the annual increases in the drug packaging threshold, citing that 
yearly increases have outpaced conversion factor updates and place a 
financial burden on hospitals. A few commenters recommended that CMS 
delay the proposed increase in the packaging threshold for drugs or 
freeze the packaging threshold at the current level ($110).
    Response: We have received and addressed similar comments in prior 
rules and most recently in CY 2017 OPPS/ASC final rule with comment (81 
FR 79666). As we 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 packaging is a fundamental component of a 
prospective payment system that continues to provide important 
flexibility and efficiency in the delivery of high quality hospital 
outpatient services, we are not adopting the commenters' 
recommendations to pay separately for all drugs, biologicals, and 
radiopharmaceuticals for CY 2018, eliminate the packaging threshold, 
and delay updating the packaging threshold or freeze the packaging 
threshold at $110.
    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 
2018 packaging threshold of $120.
    Our policy during previous cycles of the OPPS has been to use 
updated ASP and claims data to make final

[[Page 59344]]

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 2018 OPPS/ASC final rule with comment period, we 
used ASP data from the first quarter of CY 2017, 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, 2017, along 
with updated hospital claims data from CY 2016. We note that we also 
used these data for budget neutrality estimates and impact analyses for 
this CY 2018 OPPS/ASC final rule with comment period.
    Payment rates for HCPCS codes for separately payable drugs and 
biologicals included in Addenda A and B for this final rule with 
comment period are based on ASP data from the third quarter of CY 2017. 
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, 2017. These payment rates will be 
updated in the January 2018 OPPS update, based on the most recent ASP 
data to be used for physician's office and OPPS payment as of January 
1, 2018. For items that do not currently have an ASP-based payment 
rate, we proposed to recalculate their mean unit cost from all of the 
CY 2016 claims data and updated cost report information available for 
this CY 2018 final rule with comment period to determine their final 
per day cost.
    Consequently, as stated in the CY 2018 OPPS/ASC proposed rule (82 
FR 33625), the packaging status of some HCPCS codes for drugs, 
biologicals, and therapeutic radiopharmaceuticals in the proposed rule 
may be different from the same drug HCPCS code's packaging status 
determined based on the data used for this final rule with comment 
period. Under such circumstances, in the CY 2018 OPPS/ASC proposed 
rule, 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 2018 OPPS drug packaging threshold and the drug's payment 
status (packaged or separately payable) in CY 2017. These established 
policies have not changed for many years and are the same as described 
in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70434). 
Specifically, for CY 2018, 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 2017 and that were proposed for separate payment in CY 
2018, and that then have per day costs equal to or less than the CY 
2018 final rule drug packaging threshold, based on the updated ASPs and 
hospital claims data used for this CY 2018 final rule, would continue 
to receive separate payment in CY 2018.
     HCPCS codes for drugs and biologicals that were packaged 
in CY 2017 and that were proposed for separate payment in CY 2018, and 
that then have per day costs equal to or less than the CY 2018 final 
rule drug packaging threshold, based on the updated ASPs and hospital 
claims data used for this CY 2018 final rule, would remain packaged in 
CY 2018.
     HCPCS codes for drugs and biologicals for which we 
proposed packaged payment in CY 2018 but then have per day costs 
greater than the CY 2018 final rule drug packaging threshold, based on 
the updated ASPs and hospital claims data used for this CY 2018 final 
rule, would receive separate payment in CY 2018.
    We did not receive any public comments on our proposal to 
recalculate the mean unit cost for items that do not currently have an 
ASP-based payment rate from all of the CY 2016 claims data and updated 
cost report information available for this CY 2018 final rule with 
comment period to determine their final per day cost. We also did not 
receive any public comments on our proposal to continue to follow the 
established policies initially adopted for the CY 2005 OPPS (69 FR 
65780), when the packaging status of some HCPCS codes for drugs, 
biologicals, and therapeutic radiopharmaceuticals in the proposed rule 
may be different from the same drug HCPCS code's packaging status 
determined based on the data used for the final rule with comment 
period. Therefore, for CY 2018, we are finalizing these two CY 2018 
proposals without modification.
c. Policy Packaged Drugs, Biologicals, and Radiopharmaceuticals
    As mentioned briefly earlier, in the OPPS, we package several 
categories of drugs, biologicals, and radiopharmaceuticals, regardless 
of the cost of the products. Because the products are packaged 
according to the policies in 42 CFR 419.2(b), we refer to these 
packaged drugs, biologicals, and radiopharmaceuticals as ``policy-
packaged'' drugs, biologicals, and radiopharmaceuticals. These policies 
are either longstanding or based on longstanding principles and 
inherent to the OPPS and are as follows:
     Anesthesia, certain drugs, biologicals, and other 
pharmaceuticals; medical and surgical supplies and equipment; surgical 
dressings; and devices used for external reduction of fractures and 
dislocations (Sec.  419.2(b)(4));
     Intraoperative items and services (Sec.  419.2(b)(14));
     Drugs, biologicals, and radiopharmaceuticals that function 
as supplies when used in a diagnostic test or procedure (including but 
not limited to, diagnostic radiopharmaceuticals, contrast agents, and 
pharmacologic stress agents (Sec.  419.2(b)(15)); and
     Drugs and biologicals that function as supplies when used 
in a surgical procedure (including, but not limited to, skin 
substitutes and similar products that aid wound healing and implantable 
biologicals) (Sec.  419.2(b)(16)).
    The policy at Sec.  419.2(b)(16) is broader than that at Sec.  
419.2(b)(14). As we stated in the CY 2015 OPPS/ASC final rule with 
comment period: ``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'' (79 FR 66875). The category described by Sec.  
419.2(b)(15) is large and includes diagnostic radiopharmaceuticals, 
contrast agents, stress agents, and some other products. The category 
described by Sec.  419.2(b)(16) includes skin substitutes and some 
other products. We believe it is important to reiterate that cost 
consideration is not a factor when determining whether an item is a 
surgical supply (79 FR 66875).
    We did not make any proposals to revise our policy-packaged drug 
policy. We solicited public comment on the general OPPS packaging 
policies as discussed in section II.A.3.d. of this final rule with 
comment period.
    Comment: Several commenters requested that CMS revise its packaging

[[Page 59345]]

policies to allow for separate payment for Cysview[supreg] 
(hexaminolevulinate HCl), which is described by HCPCS code C9275, 
according to the ASP methodology. The commenters also provided 
recommendations in response to the general comment solicitation on 
packaging under the OPPS.
    Response: We appreciate the comments in response to the packaging 
solicitation, including feedback on the ``packaging as a supply'' 
policy and will consider these recommendations in future rulemaking. 
However, because we did not propose to modify our policy-packaged drug 
policy for drugs that function as a supply when used in a diagnostic 
test or procedure, or receive information from commenters that caused 
us to believe that Cysview[supreg] is not a drug that functions as a 
supply when used in a diagnostic test or procedure and, accordingly, 
should be paid separately, payment for HCPCS code C9275 will continue 
to be packaged with the primary procedure in CY 2018.
    Comment: Numerous commenters requested that CMS pay separately for 
Exparel[supreg], an FDA approved post-surgical analgesia drug. Several 
commenters, including many commenters who received care from the same 
provider, shared their experience with receiving Exparel[supreg] after 
their knee replacement surgery and urged CMS to pay hospitals and/or 
physicians for the use of Exparel[supreg].
    Response: We refer readers to the CY 2015 OPPS/ASC final rule with 
comment (79 FR 66874 and 66875) for a detailed discussion on our 
decision to package Exparel[supreg] (bupivacaine liposome injectable 
suspension) described by HCPCS code C9290 (Injection, bupivicaine 
liposome, 1 mg) as a drug that functions as a supply in a surgical 
procedure. Because we did not propose to modify our packaged drug 
policy for drugs that function as a surgical supply when used in a 
surgical procedure, and believe payment for HCPCS code C9290 is 
appropriately packaged with the primary surgical procedure, payment for 
HCPCS code C9290 will remain packaged in CY 2018.
    Comment: A few commenters recommended that CMS continue to apply 
the nuclear medicine procedure to radiolabeled product edits to ensure 
that all packaged costs are included on nuclear medicine claims in 
order to establish appropriate payment rates in the future.
    Response: We do not agree with commenters that we should reinstate 
the nuclear medicine procedure to radiolabeled product edits, which 
required a diagnostic radiopharmaceutical to be present on the same 
claim as a nuclear medicine procedure for payment under the OPPS to be 
made. The edits were in place between CY 2008 and CY 2014 (78 FR 
75033). We believe the period of time in which the edits were in place 
was sufficient for hospitals to gain experience reporting procedures 
involving radiolabeled products and to grow accustomed to ensuring that 
they code and report charges so that their claims fully and 
appropriately reflect the costs of those radiolabeled products. 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.
    Comment: One commenter recommended that CMS use ASP information, 
when voluntarily reported by the manufacturer, as a better price input 
to account for the packaged costs of the diagnostic 
radiopharmaceuticals and more appropriately reflect hospitals' actual 
acquisition costs. This commenter also requested that CMS provide an 
additional payment for radiopharmaceuticals that are granted pass-
through payment status.
    Response: We disagree with commenter's recommendation that we use 
voluntarily-reported ASP information for nonpass-through payment for 
radiopharmaceuticals as an approximation of their acquisition cost. 
Packaging hospital costs based on hospital claims data is how all the 
costs of all packaged items are factored into payment rates for 
associated procedures under the OPPS, and we do not believe it is 
appropriate to depart from that policy for radiopharmaceuticals.
    Radiopharmaceuticals for which we have not established a separate 
APC will receive packaged payment under the OPPS. We provide payment 
for diagnostic radiopharmaceuticals based on a proxy for average 
acquisition cost. We continue to believe that the line-item estimated 
cost for a diagnostic radiopharmaceutical in our claims data is a 
reasonable approximation of average acquisition and preparation and 
handling costs for diagnostic radiopharmaceuticals.
    In addition, we note that not all manufacturers would be able to 
submit ASP data through the established ASP reporting methodology. 
Therefore, if we were to use ASP data to package the costs of some 
diagnostic radiopharmaceuticals, but use hospital claims data for 
others, our methodologies for packaging the costs of diagnostic 
radiopharmaceuticals into their associated nuclear medicine procedures 
would be inconsistent among nuclear medicine procedures. The foundation 
of a system of relative weights is the relativity of the costs of all 
services to one another, as derived from a standardized system that 
uses standardized inputs and a consistent methodology. Adoption of a 
ratesetting methodology for certain APCs containing nuclear medicine 
procedures that is different from the standard APC ratesetting 
methodology would undermine this relativity. For this reason, we do not 
believe it would be appropriate to use external pricing information in 
place of the costs derived from the claims and Medicare cost report 
data because to do so would distort the relativity that is fundamental 
to the integrity of the OPPS.
    With respect to the request to provide an additional payment for 
radiopharmaceuticals that are granted pass-through payment status, the 
commenter did not provide information on what expenses or costs 
incurred by providers would be covered by an additional payment. We 
continue to believe that a single payment is appropriate for 
radiopharmaceuticals with pass-through payment status in CY 2018 and 
that the payment rate of ASP+6 percent is appropriate to provide 
payment for both the radiopharmaceutical's acquisition cost and any 
associated nuclear medicine handling and compounding costs.
d. 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. 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 for the skin 
substitute application procedures (78 FR 74933).
    Skin substitutes assigned to the high cost group are described by 
HCPCS codes 15271 through 15278. Skin substitutes assigned to the low 
cost group are described by HCPCS codes C5271 through C5278. Geometric 
mean costs for the various procedures are calculated using only claims 
for the skin substitutes that are assigned to each group. Specifically, 
claims billed with HCPCS code 15271, 15273, 15275, or 15277 are used to 
calculate the

[[Page 59346]]

geometric mean costs for procedures assigned to the high cost group, 
and claims billed with HCPCS code C5271, C5273, C5275, or C5277 are 
used to calculate the geometric mean costs for procedures assigned to 
the low cost group (78 FR 74935).
    Each of the HCPCS codes described above are assigned to one of the 
following three skin procedure APCs according to the geometric mean 
cost for the code: APC 5053 (Level 3 Skin Procedures) (HCPCS codes 
C5271, C5275, and C5277); APC 5054 (Level 4 Skin Procedures) (HCPCS 
codes C5273, 15271, 15275, and 15277); or APC 5055 (Level 5 Skin 
Procedures) (HCPCS code 15273). In CY 2017, the payment rate for APC 
5053 (Level 3 Skin Procedures) was $466, the payment rate for APC 5054 
(Level 4 Skin Procedures) was $1,468, and the payment rate for APC 5055 
(Level 5 Skin Procedures) was $2,575. This information also is 
available in Addenda A and B of the CY 2017 OPPS/ASC final rule with 
comment period (which is available via the Internet on the CMS Web 
site).
    We have continued the high cost/low cost categories policy since CY 
2014, and in the CY 2018 OPPS/ASC proposed rule (82 FR 33626 through 
33627), we proposed to continue it for CY 2018 with the modification 
discussed below. Under this current policy, skin substitutes in the 
high cost category are reported with the skin substitute application 
CPT codes, and skin substitutes in the low cost category are reported 
with the analogous skin substitute HCPCS C-codes. For a discussion of 
the CY 2014 and CY 2015 methodologies for assigning skin substitutes to 
either the high cost group or the low cost group, we refer readers to 
the CY 2014 OPPS/ASC final rule with comment period (78 FR 74932 
through 74935) and the CY 2015 OPPS/ASC final rule with comment period 
(79 FR 66882 through 66885).
    For a discussion of the high cost/low cost methodology that was 
adopted in CY 2016 and has been in effect since then, we refer readers 
to the CY 2016 OPPS/ASC final rule with comment period (80 FR 70434 
through 70435). For CY 2018, as in CY 2016 and CY 2017, we proposed to 
continue to determine the high/low cost status for each skin substitute 
product based on either a product's geometric mean unit cost (MUC) 
exceeding the geometric MUC threshold or the product's per day cost 
(PDC) (the total units of a skin substitute multiplied by the mean unit 
cost and divided by the total number of days) exceeding the PDC 
threshold. For CY 2018, as for CY 2017, we proposed to assign each skin 
substitute that exceeds either the MUC threshold or the PDC threshold 
to the high cost group. In addition, as described in more detail later 
in this section, for CY 2018, as for CY 2017, we proposed to assign any 
skin substitute with an MUC or a PDC that does not exceed either the 
MUC threshold or the PDC threshold to the low cost group. For CY 2018, 
we proposed that any skin substitute product that was assigned to the 
high cost group in CY 2017 would be assigned to the high cost group for 
CY 2018, regardless of whether it exceeds or falls below the CY 2018 
MUC or PDC threshold.
    For this CY 2018 OPPS/ASC final rule with comment period, 
consistent with the methodology as established in the CY 2014 through 
CY 2017 final rules with comment period, we analyzed updated CY 2016 
claims data to calculate the MUC threshold (a weighted average of all 
skin substitutes' MUCs) and the PDC threshold (a weighted average of 
all skin substitutes' PDCs). The final CY 2018 MUC threshold is $46 per 
cm\2\ (rounded to the nearest $1) (proposed at $47 per cm\2\) and the 
final CY 2018 PDC threshold is $861 (rounded to the nearest $1) 
(proposed at $755).
    For CY 2018, we proposed to continue to assign skin substitutes 
with pass-through payment status to the high cost category. However, 
there are no skin substitutes that are proposed to have pass-through 
payment status for CY 2018. We proposed to assign skin substitutes with 
pricing information but without claims data to calculate a geometric 
MUC or PDC to either the high cost or low cost category based on the 
product's ASP+6 percent payment rate as compared to the MUC threshold. 
If ASP is not available, we stated in the proposed rule that 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 stated in the proposed rule 
that new skin substitutes without pricing information would be assigned 
to the low cost category until pricing information is available to 
compare to the CY 2018 MUC threshold. For a discussion of our existing 
policy under which we assign skin substitutes without pricing 
information to the low cost category until pricing information is 
available, we refer readers to the CY 2016 OPPS/ASC final rule with 
comment period (80 FR 70436).
    Some skin substitute manufacturers have raised concerns about 
significant fluctuation in both the MUC threshold and the PDC threshold 
from year to year. The fluctuation in the thresholds may result in the 
reassignment of several skin substitutes from the high cost group to 
the low cost group which, under current payment rates, can be a 
difference of approximately $1,000 in the payment amount for the same 
procedure. In addition, these stakeholders were concerned that the 
inclusion of cost data from skin substitutes with pass-through payment 
status in the MUC and PDC calculations would artificially inflate the 
thresholds. Skin substitute stakeholders requested that CMS consider 
alternatives to the current methodology used to calculate the MUC and 
PDC thresholds and also requested that CMS consider whether it might be 
appropriate to establish a new cost group in between the low cost group 
and the high cost group to allow for assignment of moderately priced 
skin substitutes to a newly created middle group.
    We share the goal of promoting payment stability for skin 
substitute products and their related procedures as price stability 
allows hospitals using such products to more easily anticipate future 
payments associated with these products. We have attempted to limit 
year to year shifts for skin substitute products between the high cost 
and low cost groups through multiple initiatives implemented since CY 
2014, including: establishing separate skin substitute application 
procedure codes for low-cost skin substitutes (78 FR 74935); using a 
skin substitute's MUC calculated from outpatient hospital claims data 
instead of an average of ASP+6 percent as the primary methodology to 
assign products to the high cost or low cost group (79 FR 66883); and 
establishing the PDC threshold as an alternate methodology to assign a 
skin substitute to the high cost group (80 FR 70434 through 70435).
    In order to allow additional time to evaluate concerns and 
suggestions from stakeholders about the volatility of the MUC and PDC 
thresholds, for CY 2018, we proposed that a skin substitute that was 
assigned to the high cost group for CY 2017 would be assigned to the 
high cost group for CY 2018, even if it does not exceed the CY 2018 MUC 
or PDC thresholds. Our analysis has found that seven skin substitute 
products that would have otherwise been assigned to the low cost group 
for CY 2018 would instead be assigned to the high cost group under this 
proposed policy. The skin substitute products affected by this proposed 
policy were identified with an ``*'' in Table 24 of the proposed rule 
(82 FR 33627 through 33628). For CY 2019 and subsequent years, we 
requested public comments on how we should calculate data for products 
in determining the MUC and PDC

[[Page 59347]]

thresholds that are included in the high cost group solely based on 
assignment to the high cost group in CY 2017.
    We stated in the proposed rule that the goal of our proposal to 
retain the same skin substitute cost group assignments in CY 2018 as in 
CY 2017 is to maintain similar levels of payment for skin substitute 
products for CY 2018 while we study our current skin substitute payment 
methodology to determine whether refinement to the existing policies is 
consistent with our policy goal of providing payment stability for skin 
substitutes. We requested public comments on the methodologies that are 
used to calculate pricing thresholds as well as the payment groupings 
that recognize a low cost group and a high cost group. We stated that 
we are especially interested in suggestions that are based on analysis 
of Medicare claims data from hospital outpatient departments that might 
better promote improved payment stability for skin substitute products 
under the OPPS. This proposal was intended to apply for CY 2018 to 
allow time for the public to submit other ideas that could be evaluated 
for the CY 2019 rulemaking.
    In summary, we proposed to assign skin substitutes with a MUC or a 
PDC that does not exceed either the MUC threshold or the PDC threshold 
to the low cost group, unless the product was assigned to the high cost 
group in CY 2017, in which case we proposed to assign the product to 
the high cost group for CY 2018, regardless of whether it exceeds the 
CY 2018 MUC or PDC threshold. We also proposed to assign to the high 
cost group skin substitute products that exceed the CY 2018 MUC or PDC 
threshold and assign to the low cost group skin substitute products 
that did not exceed either the CY 2017 or CY 2018 MUC or PDC thresholds 
and were not assigned to the high cost group in CY 2017. We proposed to 
continue to use payment methodologies including ASP+6 percent, WAC+6 
percent, or 95 percent of AWP for skin substitute products that have 
pricing information but do not have claims data to determine if their 
costs exceed the CY 2018 MUC threshold. Finally, we proposed to 
continue to assign new skin substitute products without pricing 
information to the low cost group.
    Comment: Several commenters responded to CMS' request for public 
comments on the methodologies that are used to calculate pricing 
thresholds as well as the payment groupings that recognize a low cost 
group and a high cost group with the goal of improving payment 
stability for skin substitute products in the OPPS. The commenters 
covered such issues as: Improving the quality of claims data CMS uses 
to determine the MUC and PDC thresholds; using ASP pricing data for the 
skin substitutes either in addition to or in place of claims data to 
determine the MUC and PDC thresholds; limiting annual changes to the 
MUC and PDC thresholds to the change in the consumer price index; 
adding more cost groups where skin substitutes may be assigned; ending 
the packaging of skin substitute products in general and ending 
packaging costs for add-on codes into the primary service codes for 
skin substitute procedures; establishing device offsets when the cost 
of a skin substitute used in a procedure is more than 40 percent of 
total cost of the procedure; and reducing incentives that favor the use 
of more expensive skin substitutes or products that require an 
excessive number of applications.
    Response: We appreciate the feedback we received from the 
commenters. We will continue to study issues related to the payment of 
skin substitutes and take these comments into consideration for future 
rulemaking.
    Comment: One commenter requested that PuraPly and PuraPly antimic 
reported with HCPCS code Q4172 retain its pass-through status in CY 
2018. The commenter believed that giving PuraPly and PuraPly antimic an 
additional year of pass-through payment status would be consistent with 
CMS' policy proposal to assign all skin substitute products that were 
in the high cost skin substitute group in CY 2017 to the high cost skin 
substitute group in CY 2018. The commenter believed that, consistent 
with the spirit of this proposal, PuraPly and PuraPly antimic should 
receive the same payment treatment in CY 2017 as it did in CY 2018; 
that is, continued pass-through payment status.
    Response: PuraPly and PuraPly antimic (HCPCS code Q4172) became 
eligible for drug and biological pass-through payments effective 
January 1, 2015. Therefore, 2017 is the third year of pass-through 
payment status for these skin substitutes. Section 1833(t)(6)(B)(iii) 
provides for temporary pass-through payments for devices for a period 
of at least 2 years but not more than 3 years. Extending PuraPly and 
PuraPly antimic for a fourth year of pass-through payment status would 
be contrary to the statute. Therefore, PuraPly and PuraPly antimic will 
be assigned to the high-cost skin substitute group for CY 2018 and the 
product will receive payment in the same manner as other skin 
substitute products assigned to the high cost group.
    Comment: One commenter opposed CMS' proposal to assign all skin 
substitutes that qualified for the high cost group in CY 2017 to the 
high cost group in CY 2018, including those skin substitutes that would 
have not met either the MUC or PDC threshold in CY 2018 and would have 
instead been assigned to the low-cost group. The commenter stated that 
the products included in the high cost group that otherwise would have 
been assigned to the low cost group have generated enough payment data 
for CMS to estimate their costs. The commenter believed the proposal 
would encourage excessive use of the skin substitute products that 
should have been assigned to the low cost group.
    Response: We appreciate the concerns of the commenter. However, as 
we stated in the proposed rule, we aim to encourage the goal of payment 
stability for all skin substitute products to help hospitals anticipate 
future costs related to skin substitute procedures. The MUC has nearly 
doubled since CY 2016, with an increase from $25 per cm\2\ to the 
proposed CY 2018 threshold of $47 per cm\2\. Likewise, the PDC has 
fluctuated over $300, between $715 and $1,050, since it was established 
in CY 2016. We requested suggestions from the public to help address 
these stability issues in future rulemaking. We believe allowing all 
skin substitute products assigned to the high cost group in CY 2017 to 
remain in the high cost group for CY 2018 gives us time to consider 
revisions to the payment of skin substitute procedures and products 
while avoiding substantial payment reductions to hospitals during our 
review period.
    Comment: Several commenters supported the proposal to assign all 
skin substitutes that qualified for the high cost group in CY 2017 to 
the high cost group in CY 2018, including those skin substitutes that 
would have not met either the MUC or PDC threshold in CY 2018 and would 
have instead been assigned to the low cost group.
    Response: We appreciate the commenters' support.
    Comment: One commenter supported the proposed assignment of HCPCS 
code Q4150 (Allowrap DS or Dry 1 sq cm) to the high cost group.
    Response: We appreciate the commenter's support.
    After consideration of the public comments we received, we are 
finalizing our proposals without modification for CY 2018. Table 72 
below displays the CY 2018 cost category assignment for each skin 
substitute product.
    For this final rule with comment period, we have identified 10 skin

[[Page 59348]]

substitute products that would otherwise have been assigned to the low 
cost group for CY 2018, but will instead be assigned to the high cost 
group under our policy to include in the high cost group for CY 2018 
any skin substitute that was in the high cost group for CY 2017. The 
skin substitute products affected by this policy are identified with an 
asterisk ``*'' in Table 72 below.

               Table 72--Skin Substitute Assignments to High Cost and Low Cost Groups for CY 2018
----------------------------------------------------------------------------------------------------------------
                                                                      CY 2017  high/low      CY 2018  high/low
  CY 2018 HCPCS code             CY 2018 short descriptor                 assignment             assignment
----------------------------------------------------------------------------------------------------------------
C9363................  Integra Meshed Bil Wound Mat...............  High.................  High.
Q4100................  Skin Substitute, NOS.......................  Low..................  Low.
Q4101................  Apligraf...................................  High.................  High.
Q4102................  Oasis Wound Matrix.........................  Low..................  Low.
Q4103................  Oasis Burn Matrix..........................  High.................  High.*
Q4104................  Integra BMWD...............................  High.................  High.
Q4105................  Integra DRT................................  High.................  High.*
Q4106................  Dermagraft.................................  High.................  High.
Q4107................  GraftJacket................................  High.................  High.
Q4108................  Integra Matrix.............................  High.................  High.*
Q4110................  Primatrix..................................  High.................  High.*
Q4111................  Gammagraft.................................  Low..................  Low.
Q4115................  Alloskin...................................  Low..................  Low.
Q4116................  Alloderm...................................  High.................  High.
Q4117................  Hyalomatrix................................  Low..................  Low.
Q4121................  Theraskin..................................  High.................  High.
Q4122................  Dermacell..................................  High.................  High.
Q4123................  Alloskin...................................  High.................  High.*
Q4124................  Oasis Tri-layer Wound Matrix...............  Low..................  Low.
Q4126................  Memoderm/derma/tranz/integup...............  High.................  High.
Q4127................  Talymed....................................  High.................  High.*
Q4128................  Flexhd/Allopatchhd/Matrixhd................  High.................  High.
Q4131................  Epifix.....................................  High.................  High
Q4132................  Grafix core and grafixpl core, per square    High.................  High.
                        centimeter.
Q4133................  Grafix prime and grafixpl prime, per square  High.................  High.
                        centimeter.
Q4134................  hMatrix....................................  Low..................  Low.
Q4135................  Mediskin...................................  Low..................  Low.
Q4136................  Ezderm.....................................  Low..................  Low.
Q4137................  Amnioexcel or Biodexcel, 1cm...............  High.................  High.
Q4138................  Biodfence DryFlex, 1cm.....................  High.................  High.
Q4140................  Biodfence 1cm..............................  High.................  High.
Q4141................  Alloskin ac, 1cm...........................  High.................  High.*
Q4143................  Repriza, 1cm...............................  High.................  High.
Q4146................  Tensix, 1CM................................  High.................  High.
Q4147................  Architect ecm, 1cm.........................  High.................  High.*
Q4148................  Neox cord 1k, neox cord rt, or clarix cord   High.................  High.
                        1k, per square centimeter.
Q4150................  Allowrap DS or Dry 1 sq cm.................  High.................  High.
Q4151................  AmnioBand, Guardian 1 sq cm................  High.................  High.
Q4152................  Dermapure 1 square cm......................  High.................  High.
Q4153................  Dermavest 1 square cm......................  High.................  High.
Q4154................  Biovance 1 square cm.......................  High.................  High.
Q4156................  Neox 100 or clarix 100, per square           High.................  High.
                        centimeter.
Q4157................  Revitalon 1 square cm......................  High.................  High.
Q4158................  Kerecis omega3, per square centimeter......  High.................  High.*
Q4159................  Affinity 1 square cm.......................  High.................  High.
Q4160................  NuShield 1 square cm.......................  High.................  High.
Q4161................  Bio-Connekt per square cm..................  High.................  High.*
Q4163................  Woundex, bioskin, per square centimeter....  High.................  High.
Q4164................  Helicoll, per square cm....................  High.................  High.
Q4165................  Keramatrix, per square cm..................  Low..................  Low.
Q4166................  Cytal, per square cm.......................  Low..................  Low.
Q4167................  Truskin, per square cm.....................  Low..................  Low.
Q4169................  Artacent wound, per square cm..............  High.................  High.
Q4170................  Cygnus, per square cm......................  Low..................  Low.
Q4172................  PuraPly, PuraPly antimic...................  High.................  High.
Q4173................  Palingen or palingen xplus, per sq cm......  High.................  High.
Q4175................  Miroderm, per square cm....................  High.................  High.
Q4176................  Neopatch, per square centimeter............  Low..................  Low.
Q4178................  Floweramniopatch, per square centimeter....  Low..................  Low.
Q4179................  Flowerderm, per square centimeter..........  Low..................  Low.
Q4180................  Revita, per square centimeter..............  Low..................  Low.
Q4181................  Amnio wound, per square centimeter.........  Low..................  Low.
Q4182................  Transcyte, per square centimeter...........  Low..................  Low.
----------------------------------------------------------------------------------------------------------------
* These products do not exceed either the MUC or PDC threshold for CY 2018, but are assigned to the high cost
  group because they were assigned to the high cost group in CY 2017.


[[Page 59349]]

e. Packaging Determination for HCPCS Codes That Describe the Same Drug 
or Biological but Different Dosages
    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 2018 
OPPS/ASC proposed rule (82 FR 33628), we proposed to continue our 
policy to make packaging determinations on a drug-specific basis, 
rather than a HCPCS code-specific basis, for those HCPCS codes that 
describe the same drug or biological but different dosages in CY 2018.
    For CY 2018, 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 2016 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 
the CY 2018 OPPS/ASC proposed rule, and as is our current policy for 
determining the packaging status of other drugs, we used the mean unit 
cost available from the CY 2016 claims data to make the proposed 
packaging determinations for these drugs: HCPCS code J7100 (infusion, 
dextran 40,500 ml) and HCPCS code J7110 (infusion, dextran 75,500 ml).
    For all other drugs and biologicals that have HCPCS codes 
describing different doses, we then multiplied the proposed 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 the proposed CY 2018 drug packaging threshold of 
$120 (so that all HCPCS codes for the same drug or biological would be 
packaged) or greater than the proposed CY 2018 drug packaging threshold 
of $120 (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 in CY 2018 
was displayed in Table 25 of the CY 2018 OPPS/ASC proposed rule (82 FR 
33629).
    We did not receive any public comments on this proposal. Therefore, 
for CY 2018, we are finalizing our CY 2018 proposal, without 
modification, to continue our policy to make packaging determinations 
on a drug-specific basis, rather than a HCPCS code-specific basis, for 
those HCPCS codes that describe the same drug or biological but 
different dosages. Table 73 below displays the final packaging status 
of each drug and biological HCPCS code to which the finalized 
methodology applies for CY 2018.

      Table 73--HCPCS Codes to Which the CY 2018 Drug-Specific Packaging Determination Methodology Applies
----------------------------------------------------------------------------------------------------------------
         CY 2018  HCPCS code                            CY 2018 long descriptor                     CY 2018 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
J1460................................  Injection, gamma globulin, intramuscular, 1 cc..........               K
J1560................................  Injection, gamma globulin, intramuscular over 10 cc.....               K
J1642................................  Injection, heparin sodium, (heparin lock flush), per 10                N
                                        units.
J1644................................  Injection, heparin sodium, per 1000 units...............               N
J1840................................  Injection, kanamycin sulfate, up to 500 mg..............               N
J1850................................  Injection, kanamycin sulfate, up to 75 mg...............               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                  N
                                        125 mg.
J3471................................  Injection, hyaluronidase, ovine, preservative free, per                N
                                        1 usp unit (up to 999 usp units).
J3472................................  Injection, hyaluronidase, ovine, preservative free, per                N
                                        1000 usp units.
J7030................................  Infusion, normal saline solution, 1000 cc...............               N
J7040................................  Infusion, normal saline solution, sterile (500 ml = 1                  N
                                        unit).
J7050................................  Infusion, normal saline solution, 250 cc................               N
J7100................................  Infusion, dextran 40, 500 ml............................               N
J7110................................  Infusion, dextran 75, 500 ml............................               N
J7515................................  Cyclosporine, oral, 25 mg...............................               N
J7502................................  Cyclosporine, oral, 100 mg..............................               N
J8520................................  Capecitabine, oral, 150 mg..............................               N
J8521................................  Capecitabine, oral, 500 mg..............................               N
J9250................................  Methotrexate sodium, 5 mg...............................               N
J9260................................  Methotrexate sodium, 50 mg..............................               N
----------------------------------------------------------------------------------------------------------------


[[Page 59350]]

2. 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. We refer to this alternative methodology as the ``statutory 
default.'' Most physician Part B drugs are paid at ASP+6 percent in 
accordance with 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.\17\
---------------------------------------------------------------------------

    \17\ Medicare Payment Advisory Committee. June 2005 Report to 
the Congress. Chapter 6: Payment for pharmacy handling costs in 
hospital outpatient departments. Available at: http://www.medpac.gov/docs/default-source/reports/June05_ch6.pdf?sfvrsn=0.
---------------------------------------------------------------------------

    It has been our policy since CY 2006 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 2018 OPPS/
ASC proposed rule (82 FR 33630), 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.
    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). In the CY 2013 OPPS/
ASC final rule with comment period (77 FR 68386 through 68389), we 
first adopted the statutory default policy to pay for separately 
payable drugs and biologicals at ASP+6 percent based on section 
1833(t)(14)(A)(iii)(II) of the Act. We continued this policy of paying 
for separately payable drugs and biologicals at the statutory default 
for CY 2014, CY 2015, CY 2016, and CY 2017 (81 FR 79673).
b. CY 2018 Payment Policy
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33630), for CY 2018, 
we proposed to continue our payment policy that has been in effect from 
CY 2013 to present and pay for separately payable drugs and biologicals 
at ASP+6 percent in accordance with 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 scalar is 
not applied in determining payments for these separately paid drugs and 
biologicals.
    We note that we proposed, as specified below, to pay for separately 
payable, nonpass-through drugs acquired with a 340B discount at a rate 
of ASP minus 22.5 percent. We refer readers to the full discussion of 
this proposal in section V.B.7. of the proposed rule and this final 
rule with comment period.
    Comment: Numerous commenters supported CMS' proposal to continue to 
pay for separately payable drugs and biologicals based on the statutory 
default rate of ASP+6 percent.
    Response: We thank commenters for their support.
    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 2018. In 
addition, we are finalizing our proposal 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 scalar is not applied in 
determining payment of these separately paid drugs and biologicals. We 
refer readers to section V.B.7. of the final rule with comment period 
for the final payment policy for drugs acquired with a 340B discount.
    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 2018 payment of

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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, 2017, or WAC, AWP, or mean unit cost from 
CY 2016 claims data and updated cost report information available for 
this final rule with comment period. In general, these published 
payment rates are not the same as the actual January 2018 payment 
rates. This is because payment rates for drugs and biologicals with ASP 
information for January 2018 will be determined through the standard 
quarterly process where ASP data submitted by manufacturers for the 
third quarter of 2017 (July 1, 2017 through September 30, 2017) will be 
used to set the payment rates that are released for the quarter 
beginning in January 2018 near the end of December 2017. 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 2017 are based on mean unit cost in the available 
CY 2016 claims data. If ASP information becomes available for payment 
for the quarter beginning in January 2018, 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 2017 ASP data) that do not have ASP information 
available for the quarter beginning in January 2018. As stated in the 
CY 2018 OPPS/ASC proposed rule (82 FR 33630), these drugs and 
biologicals will then be paid based on mean unit cost data derived from 
CY 2016 hospital claims. Therefore, the payment rates listed in Addenda 
A and B to this final rule with comment period are not for January 2018 
payment purposes and are only illustrative of the CY 2018 OPPS payment 
methodology using the most recently available information at the time 
of issuance of this final rule with comment period.
c. Biosimilar Biological Products
    For CY 2016 and CY 2017, we finalized a policy to pay for 
biosimilar biological products based on the payment allowance of the 
product as determined under section 1847A of the Act and to subject 
nonpass-through biosimilar biological products to our annual threshold-
packaged policy (for CY 2016, 80 FR 70445 through 70446; and for CY 
2017, 81 FR 79674). In the CY 2018 OPPS/ASC proposed rule (82 FR 
33630), for CY 2018, we proposed to continue this same payment policy 
for biosimilar biological products.
    We noted in the proposed rule that public comments on the Medicare 
Part B biosimilar biological product payment policy should be submitted 
in response to the biosimilar biological product payment policy comment 
solicitation in the CY 2018 MPFS proposed rule.
    Comment: Several comments urged CMS to assign separate HCPCS codes 
for each biosimilar biological product rather than combining biosimilar 
biological products of the same reference product into one HCPCS code. 
Some commenters who addressed the biosimilar payment policy as it 
relates to the 340B proposal stated that current policy (adopted in the 
CY 2016 OPPS/ASC final rule with comment period (80 FR 70445)) for 
pass-through payment for biosimilar biological products is restricted 
to the first biosimilar biological product of a reference product. The 
commenters believed that, if the 340B proposal is finalized as 
proposed, the preclusion on pass-through payment eligibility for second 
and subsequent biosimilar biological products of the same reference 
product would be significantly disadvantaged by the reduced payment if 
purchased with a 340B discount. These commenters urged CMS to 
reevaluate pass-through payment eligibility for biosimilar biological 
products and their payment under the 340B payment proposal in the 
proposed rule.
    Response: Comments related to policy for coding for biosimilar 
biological products are outside of the scope of the CY 2018 OPPS/ASC 
proposed rule. As we indicated in the CY 2018 OPPS/ASC proposed rule, 
commenters should refer to the CY 2018 MPFS final rule for discussion 
of the biosimilar biological product coding policy. With respect to 
comments regarding OPPS payment for biosimilar biological products, in 
the CY 2018 MPFS final rule, CMS finalized a policy to implement 
separate HCPCS codes for biosimilar biological products. Therefore, 
consistent with our established OPPS drug, biological, and 
radiopharmaceutical payment policy, HCPCS coding for biosimilar 
biological products will be based on policy established under the CY 
2018 MPFS rule.
    Comments related to 340B and biosimilar biological products are 
discussed in section V.B.7. of this final rule with comment period.
    After consideration of the public comments we received, we are 
finalizing our proposed payment policy for biosimilar biological 
products, with the following technical correction: All biosimilar 
biological products will be eligible for pass-through payment and not 
just the first biosimilar biological product for a reference product.
3. Payment Policy for Therapeutic Radiopharmaceuticals
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33630), for CY 2018, 
we proposed to continue the payment policy for therapeutic 
radiopharmaceuticals that began in CY 2010. We 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 2018. Therefore, we proposed for CY 2018 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 2016 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 unavailable. For a 
complete history of the OPPS payment policy for therapeutic 
radiopharmaceuticals, we refer readers 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 2018 payment rates for 
nonpass-through, separately payable therapeutic radiopharmaceuticals 
were in Addenda A and B to the proposed rule (which are

[[Page 59352]]

available via the Internet on the CMS Web site).
    Comment: Commenters supported continuation of the policy to pay 
ASP+6 percent for therapeutic radiopharmaceuticals, if available, and 
to base payment on the mean unit cost derived from hospital claims data 
when not available. Commenters also requested that CMS examine ways to 
compensate hospitals for their documented higher overhead and handling 
costs associated with radiopharmaceuticals.
    Response: We appreciate the commenters' support. However, as we 
stated earlier in section V.B.1.c. of this final rule with comment 
period in response to a similar request for additional 
radiopharmaceutical payment, we continue to believe that a single 
payment is appropriate for radiopharmaceuticals with pass-through 
payment status in CY 2018 and that the payment rate of ASP+6 percent is 
appropriate to provide payment for both the radiopharmaceutical's 
acquisition cost and any associated nuclear medicine handling and 
compounding costs incurred by the hospital pharmacy. Payment for the 
radiopharmaceutical and radiopharmaceutical processing services is made 
through the single ASP-based payment. We refer readers to the CMS 
guidance document available via the Internet at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Archives.html for details on submission of ASP data for therapeutic 
radiopharmaceuticals.
    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 2016 mean unit cost data derived from hospital claims data for 
payment rates for therapeutic radiopharmaceuticals for which ASP data 
are unavailable. The CY 2018 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).
4. 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. Some of the Technetium-99 (Tc-99m), the radioisotope used 
in the majority of such diagnostic imaging services, is 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. We expect that 
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, beginning in 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 (77 FR 68321).
    We stated in the CY 2013 OPPS/ASC final rule with comment period 
(77 FR 68321) that our expectation is that this additional payment will 
be needed for the duration of the industry's conversion to alternative 
methods to producing Tc-99m without HEU. We also 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 (77 FR 68316). We have reassessed this 
payment for CY 2018 and did not identify any new information that would 
cause us to modify payment. Therefore, in the CY 2018 OPPS/ASC proposed 
rule (82 FR 33631), for CY 2018, we proposed to continue to provide an 
additional $10 payment for radioisotopes produced by non-HEU sources.
    Comment: Commenters supported CMS' proposal to provide an 
additional $10 payment for the marginal cost of radioisotopes produced 
by non-HEU sources and supported continuation of the policy. However, 
the commenters requested that CMS update the payment amount using the 
hospital market basket update or hospital cost data. The commenters 
also requested that CMS assess whether the collection of a beneficiary 
copayment could discourage hospital adoption.
    Response: We appreciate the commenters' support. As discussed in 
the CY 2013 OPPS/ASC final rule with comment period, we did not 
finalize a policy to use the usual OPPS methodologies to update the 
non-HEU add-on payment (77 FR 68317). The purpose for the additional 
payment is limited to mitigating any adverse impact of transitioning to 
non-HEU sources and is based on the authority set forth at section 
1833(t)(2)(E) of the Act. Accordingly, because we do not have authority 
to waive beneficiary copayment for this incentive payment, we believe 
it is unnecessary to assess whether a beneficiary copayment liability 
would deter a hospital from reporting HCPCS code Q9969. Furthermore, 
reporting of HCPCS code Q9969 is optional. Hospitals that are not 
experiencing high volumes of significantly increased costs are not 
obligated to request this additional payment (77 FR 68323).
    Comment: One commenter requested that CMS publish HCPCS code volume 
and cost data in the proposed and final rule ``Drug Blood Brachy Cost 
Statistics'' files yearly.
    Response: We appreciate the request and will consider revising the 
content of the ``Drug Blood Brachy Cost statistics'' file to include 
data on HCPCS code Q9969 for future rulemaking. In the interim, claims 
data on HCPCS code Q9969 are available for purchase in the claims data 
sets released with publication of this final rule with comment period.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to continue the policy 
of providing an additional $10 payment for radioisotopes produced by 
non-HEU sources for CY 2018, which will be the sixth year in which this 
policy is in effect in the OPPS. We will continue to reassess this 
policy annually, consistent with the original policy in the CY 2013 
OPPS/ASC final rule with comment period (77 FR 68319).
5. Payment for Blood Clotting Factors
    For CY 2017, 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 (81 FR 79676). That is, for CY 2017, 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

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physicians' offices under Medicare Part B and in other Medicare 
settings, a furnishing fee is also applied to the payment. The CY 2017 
updated furnishing fee was $0.209 per unit.
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33631), for CY 2018, 
we proposed to pay for blood clotting factors at ASP+6 percent, 
consistent with our proposed payment policy for other nonpass-through, 
separately payable drugs and biologicals, and to continue our policy 
for payment of the furnishing fee using an updated amount. Our policy 
to pay for a furnishing fee for blood clotting factors under the OPPS 
is consistent with the methodology applied in the physician's office 
and in the inpatient hospital setting. These methodologies were 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 with 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 pay for 
a blood clotting factor furnishing fee in the hospital outpatient 
department.
    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.
6. Payment for Nonpass-Through Drugs, Biologicals, and 
Radiopharmaceuticals With HCPCS Codes but Without OPPS Hospital Claims 
Data
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33631), for CY 2018, 
we proposed to continue to use the same payment policy as in CY 2017 
for nonpass-through drugs, biologicals, and radiopharmaceuticals with 
HCPCS codes but without OPPS hospital claims data, which describes how 
we determine the payment rate for drugs, biologicals, or 
radiopharmaceuticals without an ASP. For a detailed discussion of the 
payment policy and methodology, we refer readers to the CY 2016 OPPS/
ASC final rule with comment period (80 FR 70442 through 70443). The 
proposed CY 2018 payment status of each of the nonpass-through drugs, 
biologicals, and radiopharmaceuticals with HCPCS codes but without OPPS 
hospital claims data was listed in Addendum B to the proposed rule, 
which is available via the Internet on the CMS Web site.
    Comment: One commenter, the manufacturer of Mylotarg[supreg], 
requested that CMS change the dose descriptor for HCPCS code J9300 from 
``Injection, gemtuzumab ozogamicin, 5 mg'' to ``Injection, gemtuzumab 
ozogamicin, 0.1 mg,'' to accommodate the new 4.5 mg vial size for 
Mylotarg[supreg]. The commenter noted that HCPCS code J9300 was 
inactive for a period of time because the prior version of gemtuzumab 
ozogamicin was removed from the market. As such, HCPCS code J9300 is 
assigned status indicator ``E2 (items and services for which pricing 
information and claims data are not available).'' The commenter also 
requested that CMS change the status indicator from ``E2'' to a payable 
status indicator.
    Response: This comment is outside of the scope of the proposed 
rule. Requests for changes to Level II Alphanumeric HCPCS codes should 
be submitted to the CMS HCPCS Workgroup using CMS' standard procedures. 
Information on the Level II HCPCS code process is available via the 
Internet on the CMS Web site, which is publicly available at: https://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo/HCPCSCODINGPROCESS.html.
    After consideration of the public comments we received, we are 
finalizing our CY 2018 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 2018 if pricing 
information becomes available. The CY 2018 payment status of each of 
the nonpass-through drugs, biologicals, and radiopharmaceuticals with 
HCPCS codes but without OPPS hospital claims data is listed in Addendum 
B to this final rule with comment period, which is available via the 
Internet on the CMS Web site.
7. Alternative Payment Methodology for Drugs Purchased Under the 340B 
Program
a. Background
    The 340B Program, which was established by section 340B of the 
Public Health Service Act by the Veterans Health Care Act of 1992, is 
administered by the Health Resources and Services Administration (HRSA) 
within HHS. The 340B Program allows participating hospitals and other 
health care providers to purchase certain ``covered outpatient drugs'' 
(as defined under section 1927(k) of the Act and interpreted by HRSA 
through various guidance documents) at discounted prices from drug 
manufacturers. The statutory intent of the 340B Program is to maximize 
scarce Federal resources as much as possible, reaching more eligible 
patients, and providing care that is more comprehensive.\18\
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    \18\ The House report that accompanied the authorizing 
legislation for the 340B Program stated: ``In giving these `covered 
entities' access to price reductions the Committee intends to enable 
these entities to stretch scarce Federal resources as far as 
possible, reaching more eligible patients and providing more 
comprehensive services.'' (H.R. Rept. No. 102-384(II), at 12 
(1992)).
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    The 340B statute defines which health care providers are eligible 
to participate in the program (``covered entities''). In addition to 
Federal health care grant recipients, covered entities include 
hospitals with a Medicare disproportionate share hospital (DSH) 
percentage above 11.75 percent. However, under Public Law 111-148, 
section 7101 expanded eligibility to critical access hospitals (CAHs), 
children's hospitals with a DSH adjustment greater than 11.75 percent, 
sole community hospitals (SCHs) with a DSH adjustment percentage of 8.0 
percent or higher, rural referral centers (RRCs) with a DSH adjustment 
percentage of 8.0 percent or higher, and freestanding cancer hospitals 
with a DSH adjustment percentage above 11.75 percent. In accordance 
with section 340B(a)(4)(L)(i) of the Public Health Service Act, all 
participating hospital types must also meet other criteria.
    HRSA calculates the ceiling price for each covered outpatient drug. 
The ceiling price is the drug's average manufacturer price (AMP) minus 
the unit rebate amount (URA), which is a statutory formula that varies 
depending on whether the drug is an innovator

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single source drug (no generic available), an innovator multiple source 
drug (a brand drug with available generic(s)), or a non-innovator 
multiple source (generic) drug.\19\ The ceiling price represents the 
maximum price a participating drug manufacturer can charge a covered 
entity for the drug. However, covered entities also have the option to 
participate in HRSA's Prime Vendor Program (PVP), under which the prime 
vendor can negotiate even deeper discounts (known as ``subceiling 
prices'') on some covered outpatient drugs. By the end of FY 2015, the 
PVP had nearly 7,600 products available to participating entities below 
the 340B ceiling price, including 3,557 covered outpatient drugs with 
an estimated average savings of 10 percent below the 340B ceiling 
price.\20\
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    \19\ 42 U.S.C. 256b(a)(1-2). Occasionally, a drug's URA is equal 
to its AMP, resulting in a 340B ceiling price of $0. In these 
instances, HRSA has advised manufacturers to charge covered entities 
$0.01 per unit.
    \20\ Department of Health and Human Services. 2017. Fiscal Year 
2018 Health Resources and Services Administration justification of 
estimates for appropriations committees. Washington, DC: HHS. 
Available at: https://www.hrsa.gov/sites/default/files/hrsa/about/budget/budget-justification-2018.pdf.
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    As we discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33632 
and 33633), several recent studies and reports on Medicare Part B 
payments for 340B purchased drugs highlight a difference in Medicare 
Part B drug spending between 340B hospitals and non-340B hospitals as 
well as varyi