[Federal Register Volume 83, Number 160 (Friday, August 17, 2018)]
[Rules and Regulations]
[Pages 41144-41784]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-16766]



[[Page 41143]]

Vol. 83

Friday,

No. 160

August 17, 2018

Part II

Book 2 of 3 Books

Pages 41143-41784





 Department of Health and Human Services





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 Centers for Medicare & Medicaid Services



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42 CFR Parts 412, 413, 424, et al.



Medicare Program; Hospital Inpatient Prospective Payment Systems for 
Acute Care Hospitals and the Long Term Care Hospital Prospective 
Payment System and Policy Changes and Fiscal Year 2019 Rates; Quality 
Reporting Requirements for Specific Providers; Medicare and Medicaid 
Electronic Health Record (EHR) Incentive Programs (Promoting 
Interoperability Programs) Requirements for Eligible Hospitals, 
Critical Access Hospitals, and Eligible Professionals; Medicare Cost 
Reporting Requirements; and Physician Certification and Recertification 
of Claims; Final Rule

Federal Register / Vol. 83 , No. 160 / Friday, August 17, 2018 / 
Rules and Regulations

[[Page 41144]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 412, 413, 424, and 495

[CMS-1694-F]
RIN 0938-AT27


Medicare Program; Hospital Inpatient Prospective Payment Systems 
for Acute Care Hospitals and the Long-Term Care Hospital Prospective 
Payment System and Policy Changes and Fiscal Year 2019 Rates; Quality 
Reporting Requirements for Specific Providers; Medicare and Medicaid 
Electronic Health Record (EHR) Incentive Programs (Promoting 
Interoperability Programs) Requirements for Eligible Hospitals, 
Critical Access Hospitals, and Eligible Professionals; Medicare Cost 
Reporting Requirements; and Physician Certification and Recertification 
of Claims

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

ACTION: Final rule.

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SUMMARY: We are revising the Medicare hospital inpatient prospective 
payment systems (IPPS) for operating and capital-related costs of acute 
care hospitals to implement changes arising from our continuing 
experience with these systems for FY 2019. Some of these changes 
implement certain statutory provisions contained in the 21st Century 
Cures Act and the Bipartisan Budget Act of 2018, and other legislation. 
We also are making changes relating to Medicare graduate medical 
education (GME) affiliation agreements for new urban teaching 
hospitals. In addition, we are providing the market basket update that 
will apply to the rate-of-increase limits for certain hospitals 
excluded from the IPPS that are paid on a reasonable cost basis, 
subject to these limits for FY 2019. We are updating the payment 
policies and the annual payment rates for the Medicare prospective 
payment system (PPS) for inpatient hospital services provided by long-
term care hospitals (LTCHs) for FY 2019.
    In addition, we are establishing new requirements or revising 
existing requirements for quality reporting by specific Medicare 
providers (acute care hospitals, PPS-exempt cancer hospitals, and 
LTCHs). We also are establishing new requirements or revising existing 
requirements for eligible professionals (EPs), eligible hospitals, and 
critical access hospitals (CAHs) participating in the Medicare and 
Medicaid Electronic Health Record (EHR) Incentive Programs (now 
referred to as the Promoting Interoperability Programs). In addition, 
we are finalizing modifications to the requirements that apply to 
States operating Medicaid Promoting Interoperability Programs. We are 
updating policies for the Hospital Value-Based Purchasing (VBP) 
Program, the Hospital Readmissions Reduction Program, and the Hospital-
Acquired Condition (HAC) Reduction Program.
    We also are making changes relating to the required supporting 
documentation for an acceptable Medicare cost report submission and the 
supporting information for physician certification and recertification 
of claims.

DATES: This final rule is effective on October 1, 2018.

FOR FURTHER INFORMATION CONTACT: Donald Thompson, (410) 786-4487, and 
Michele Hudson, (410) 786-4487, Operating Prospective Payment, MS-DRGs, 
Wage Index, New Medical Service and Technology Add-On Payments, 
Hospital Geographic Reclassifications, Graduate Medical Education, 
Capital Prospective Payment, Excluded Hospitals, Sole Community 
Hospitals, Medicare Disproportionate Share Hospital (DSH) Payment 
Adjustment, Medicare-Dependent Small Rural Hospital (MDH) Program, and 
Low-Volume Hospital Payment Adjustment Issues.
    Michele Hudson, (410) 786-4487, Mark Luxton, (410) 786-4530, and 
Emily Lipkin, (410) 786-3633, Long-Term Care Hospital Prospective 
Payment System and MS-LTC-DRG Relative Weights Issues.
    Siddhartha Mazumdar, (410) 786-6673, Rural Community Hospital 
Demonstration Program Issues.
    Jeris Smith, (410) 786-0110, Frontier Community Health Integration 
Project Demonstration Issues.
    Cindy Tourison, (410) 786-1093, Hospital Readmissions Reduction 
Program--Readmission Measures for Hospitals Issues.
    James Poyer, (410) 786-2261, Hospital Readmissions Reduction 
Program--Administration Issues.
    Elizabeth Bainger, (410) 786-0529, Hospital-Acquired Condition 
Reduction Program Issues.
    Joseph Clift, (410) 786-4165, Hospital-Acquired Condition Reduction 
Program--Measures Issues.
    Grace Snyder, (410) 786-0700 and James Poyer, (410) 786-2261, 
Hospital Inpatient Quality Reporting and Hospital Value-Based 
Purchasing--Program Administration, Validation, and Reconsideration 
Issues.
    Reena Duseja, (410) 786-1999 and Cindy Tourison, (410) 786-1093, 
Hospital Inpatient Quality Reporting--Measures Issues Except Hospital 
Consumer Assessment of Healthcare Providers and Systems Issues; and 
Readmission Measures for Hospitals Issues.
    Kim Spalding Bush, (410) 786-3232, Hospital Value-Based Purchasing 
Efficiency Measures Issues.
    Elizabeth Goldstein, (410) 786-6665, Hospital Inpatient Quality 
Reporting and Hospital Value-Based Purchasing--Hospital Consumer 
Assessment of Healthcare Providers and Systems Measures Issues.
    Joel Andress, (410) 786-5237 and Caitlin Cromer, (410) 786-3106, 
PPS-Exempt Cancer Hospital Quality Reporting Issues.
    Mary Pratt, (410) 786-6867, Long-Term Care Hospital Quality Data 
Reporting Issues.
    Elizabeth Holland, (410) 786-1309, Promoting Interoperability 
Programs Clinical Quality Measure Related Issues.
    Kathleen Johnson, (410) 786-3295 and Steven Johnson (410) 786-3332, 
Promoting Interoperability Programs Nonclinical Quality Measure Related 
Issues.
    Kellie Shannon, (410) 786-0416, Acceptable Medicare Cost Report 
Submissions Issues.
    Thomas Kessler, (410) 786-1991, Physician Certification and 
Recertification of Claims.

SUPPLEMENTARY INFORMATION:

Electronic Access

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

Tables Available Through the Internet on the CMS Website

    In the past, a majority of the tables referred to throughout this 
preamble and in the Addendum to the proposed rule and the final rule 
were published in the Federal Register as part of the annual proposed 
and final rules. However, beginning in FY 2012, the majority of the 
IPPS tables and LTCH PPS tables are no longer published in the Federal 
Register. Instead, these tables, generally, will be available only 
through the internet. The IPPS tables for this final rule are available 
through the internet on the CMS website at: http://www.cms.hhs.gov/
Medicare/Medicare-Fee-for-Service-Payment/

[[Page 41145]]

AcuteInpatientPPS/index.html. Click on the link on the left side of the 
screen titled, ``FY 2019 IPPS Final Rule Home Page'' or ``Acute 
Inpatient--Files for Download.'' The LTCH PPS tables for this FY 2019 
final rule are available through the internet on the CMS website at: 
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/LongTermCareHospitalPPS/index.html under the list item for Regulation 
Number CMS-1694-F. For further details on the contents of the tables 
referenced in this final rule, we refer readers to section VI. of the 
Addendum to this final rule.
    Readers who experience any problems accessing any of the tables 
that are posted on the CMS websites identified above should contact 
Michael Treitel at (410) 786-4552.

Table of Contents

I. Executive Summary and Background
    A. Executive Summary
    B. Background Summary
    C. Summary of Provisions of Recent Legislation Implemented in 
this Final Rule
    D. Issuance of Notice of Proposed Rulemaking
II. Changes to Medicare Severity Diagnosis-Related Group (MS-DRG) 
Classifications and Relative Weights
    A. Background
    B. MS-DRG Reclassifications
    C. Adoption of the MS-DRGs in FY 2008
    D. FY 2019 MS-DRG Documentation and Coding Adjustment
    E. Refinement of the MS-DRG Relative Weight Calculation
    F. Changes to Specific MS-DRG Classifications
    G. Recalibration of the FY 2019 MS-DRG Relative Weights
    H. Add-On Payments for New Services and Technologies for FY 2019
III. Changes to the Hospital Wage Index for Acute Care Hospitals
    A. Background
    B. Worksheet S-3 Wage Data for the FY 2019 Wage Index
    C. Verification of Worksheet S-3 Wage Data
    D. Method for Computing the FY 2019 Unadjusted Wage Index
    E. Occupational Mix Adjustment to the FY 2019 Wage Index
    F. Analysis and Implementation of the Occupational Mix 
Adjustment and the FY 2019 Occupational Mix Adjusted Wage Index
    G. Application of the Rural, Imputed, and Frontier Floors
    H. FY 2019 Wage Index Tables
    I. Revisions to the Wage Index Based on Hospital Redesignations 
and Reclassifications
    J. Out-Migration Adjustment Based on Commuting Patterns of 
Hospital Employees
    K. Reclassification From Urban to Rural under Section 
1886(d)(8)(E) of the Act Implemented at 42 CFR 412.103
    L. Process for Requests for Wage Index Data Corrections
    M. Labor-Related Share for the FY 2019 Wage Index
IV. Other Decisions and Changes to the IPPS for Operating System
    A. Changes to MS-DRGs Subject to Postacute Care Transfer and MS-
DRG Special Payment Policies
    B. Changes in the Inpatient Hospital Updates for FY 2019 (Sec.  
412.64(d))
    C. Rural Referral Centers (RRCs) Annual Updates to Case-Mix 
Index and Discharge Criteria (Sec.  412.96)
    D. Payment Adjustment for Low-Volume Hospitals (Sec.  412.101)
    E. Indirect Medical Education (IME) Payment Adjustment (Sec.  
412.105)
    F. Payment Adjustment for Medicare Disproportionate Share 
Hospitals (DSHs) for FY 2019 (Sec.  412.106)
    G. Sole Community Hospitals (SCHs) and Medicare-Dependent, Small 
Rural Hospitals (MDHs) (Sec. Sec.  412.90, 412.92, and 412.108)
    H. Hospital Readmissions Reduction Program: Updates and Changes 
(Sec. Sec.  412.150 Through 412.154)
    I. Hospital Value-Based Purchasing (VBP) Program: Policy Changes
    J. Changes to the Hospital-Acquired Condition (HAC) Reduction 
Program
    K. Payments for Indirect and Direct Graduate Medical Education 
Costs (Sec. Sec.  412.105 and 413.75 Through 413.83)
    L. Rural Community Hospital Demonstration Program
    M. Revision of Hospital Inpatient Admission Orders Documentation 
Requirements Under Medicare Part A
V. Changes to the IPPS for Capital-Related Costs
    A. Overview
    B. Additional Provisions
    C. Annual Update for FY 2019
VI. Changes for Hospitals Excluded From the IPPS
    A. Rate-of-Increase in Payments to Excluded Hospitals for FY 
2019
    B. Revisions to Regulations Governing Satellite Facilities
    C. Revisions to Regulations Governing Excluded Units of 
Hospitals
    D. Report on Adjustment (Exceptions) Payments
    E. Critical Access Hospitals (CAHs)
VII. Changes to the Long-Term Care Hospital Prospective Payment 
System (LTCH PPS) for FY 2019
    A. Background of the LTCH PPS
    B. Medicare Severity Long-Term Care Diagnosis-Related Group (MS-
LTC-DRG) Classifications and Relative Weights for FY 2019
    C. Modifications to the Application of the Site Neutral Payment 
Rate (Sec.  412.522)
    D. Changes to the LTCH PPS Payment Rates and Other Proposed 
Changes to the LTCH PPS for FY 2019
    E. Elimination of the ``25-Percent Threshold Policy'' Adjustment 
(Sec.  412.538)
VIII. Quality Data Reporting Requirements for Specific Providers and 
Suppliers
    A. Hospital Inpatient Quality Reporting (IQR) Program
    B. PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program
    C. Long-Term Care Hospital Quality Reporting Program (LTCH QRP)
    D. Changes to the Medicare and Medicaid EHR Incentive Programs 
(Now Referred to as the Medicare and Medicaid Promoting 
Interoperability Programs)
IX. Revisions of the Supporting Documentation Required for 
Submission of an Acceptable Medicare Cost Report
X. Requirements for Hospitals To Make Public a List of Their 
Standard Charges via the Internet
XI. Revisions Regarding Physician Certification and Recertification 
of Claims
XII. Request for Information on Promoting Interoperability and 
Electronic Healthcare Information Exchange through Possible 
Revisions to the CMS Patient Health and Safety Requirements for 
Hospitals and Other Medicare- and Medicaid-Participating Providers 
and Suppliers
XIII. MedPAC Recommendations
XIV. Other Required Information
    A. Publicly Available Data
    B. Collection of Information Requirements
    C. Response to Public Comments
Regulation Text
Addendum--Schedule of Standardized Amounts, Update Factors, Rate-of-
Increase Percentages Effective With Cost Reporting Periods Beginning 
on or After October 1, 2018 and Payment Rates for LTCHs Effective 
for Discharges Occurring on or After October 1, 2018
I. Summary and Background
II. Changes to the Prospective Payment Rates for Hospital Inpatient 
Operating Costs for Acute Care Hospitals for FY 2019
    A. Calculation of the Adjusted Standardized Amount
    B. Adjustments for Area Wage Levels and Cost-of-Living
    C. Calculation of the Prospective Payment Rates
III. Changes to Payment Rates for Acute Care Hospital Inpatient 
Capital-Related Costs for FY 2019
    A. Determination of Federal Hospital Inpatient Capital-Related 
Prospective Payment Rate Update
    B. Calculation of the Inpatient Capital-Related Prospective 
Payments for FY 2019
    C. Capital Input Price Index
IV. Changes to Payment Rates for Excluded Hospitals: Rate-of-
Increase Percentages for FY 2019
V. Changes to the Payment Rates for the LTCH PPS for FY 2019
    A. LTCH PPS Standard Federal Payment Rate for FY 2019
    B. Adjustment for Area Wage Levels Under the LTCH PPS for FY 
2019
    C. LTCH PPS Cost-of-Living Adjustment (COLA) for LTCHs Located 
in Alaska and Hawaii
    D. Adjustment for LTCH PPS High-Cost Outlier (HCO) Cases
    E. Update to the IPPS Comparable/Equivalent Amounts To Reflect 
the Statutory Changes to the IPPS DSH Payment Adjustment Methodology

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    F. Computing the Adjusted LTCH PPS Federal Prospective Payments 
for FY 2019
VI. Tables Referenced in This Rule Generally Available Through the 
Internet on the CMS Website
Appendix A--Economic Analyses
I. Regulatory Impact Analysis
    A. Statement of Need
    B. Overall Impact
    C. Objectives of the IPPS and the LTCH PPS
    D. Limitations of Our Analysis
    E. Hospitals Included in and Excluded From the IPPS
    F. Effects on Hospitals and Hospital Units Excluded From the 
IPPS
    G. Quantitative Effects of the Policy Changes Under the IPPS for 
Operating Costs
    H. Effects of Other Policy Changes
    I. Effects of Changes in the Capital IPPS
    J. Effects of Payment Rate Changes and Policy Changes Under the 
LTCH PPS
    K. Effects of Requirements for Hospital Inpatient Quality 
Reporting (IQR) Program
    L. Effects of Requirements for the PPS-Exempt Cancer Hospital 
Quality Reporting (PCHQR) Program
    M. Effects of Requirements for the Long-Term Care Hospital 
Quality Reporting Program (LTCH QRP)
    N. Effects of Requirements Regarding the Medicare and Medicaid 
Promoting Interoperability Programs
    O. Alternatives Considered
    P. Reducing Regulation and Controlling Regulatory Costs
    Q. Overall Conclusion
    R. Regulatory Review Costs
II. Accounting Statements and Tables
    A. Acute Care Hospitals
    B. LTCHs
III. Regulatory Flexibility Act (RFA) Analysis
IV. Impact on Small Rural Hospitals
V. Unfunded Mandate Reform Act (UMRA) Analysis
VI. Executive Order 13175
VII. Executive Order 12866
Appendix B: Recommendation of Update Factors for Operating Cost 
Rates of Payment for Inpatient Hospital Services
I. Background
II. Inpatient Hospital Update for FY 2019
    A. FY 2019 Inpatient Hospital Update
    B. Update for SCHs and MDHs for FY 2019
    C. FY 2019 Puerto Rico Hospital Update
    D. Update for Hospitals Excluded From the IPPS
    E. Update for LTCHs for FY 2019
III. Secretary's Recommendation
IV. MedPAC Recommendation for Assessing Payment Adequacy and 
Updating Payments in Traditional Medicare

I. Executive Summary and Background

A. Executive Summary

1. Purpose and Legal Authority
    This final rule makes payment and policy changes under the Medicare 
inpatient prospective payment systems (IPPS) for operating and capital-
related costs of acute care hospitals as well as for certain hospitals 
and hospital units excluded from the IPPS. In addition, it makes 
payment and policy changes for inpatient hospital services provided by 
long-term care hospitals (LTCHs) under the long-term care hospital 
prospective payment system (LTCH PPS). This final rule also makes 
policy changes to programs associated with Medicare IPPS hospitals, 
IPPS-excluded hospitals, and LTCHs.
    We are establishing new requirements and revising existing 
requirements for quality reporting by specific providers (acute care 
hospitals, PPS-exempt cancer hospitals, and LTCHs) that are 
participating in Medicare. We also are establishing new requirements 
and revising existing requirements for eligible professionals (EPs), 
eligible hospitals, and CAHs participating in the Medicare and Medicaid 
Promoting Interoperability Programs. We are updating policies for the 
Hospital Value-Based Purchasing (VBP) Program, the Hospital 
Readmissions Reduction Program, and the Hospital-Acquired Condition 
(HAC) Reduction Program.
    We are making changes relating to the supporting documentation 
required for an acceptable Medicare cost report submission and the 
supporting information for physician certification and recertification 
of claims.
    Under various statutory authorities, we are making changes to the 
Medicare IPPS, to the LTCH PPS, and to other related payment 
methodologies and programs for FY 2019 and subsequent fiscal years. 
These statutory authorities include, but are not limited to, the 
following:
     Section 1886(d) of the Social Security Act (the Act), 
which sets forth a system of payment for the operating costs of acute 
care hospital inpatient stays under Medicare Part A (Hospital 
Insurance) based on prospectively set rates. Section 1886(g) of the Act 
requires that, instead of paying for capital-related costs of inpatient 
hospital services on a reasonable cost basis, the Secretary use a 
prospective payment system (PPS).
     Section 1886(d)(1)(B) of the Act, which specifies that 
certain hospitals and hospital units are excluded from the IPPS. These 
hospitals and units are: Rehabilitation hospitals and units; LTCHs; 
psychiatric hospitals and units; children's hospitals; cancer 
hospitals; extended neoplastic disease care hospitals, and hospitals 
located outside the 50 States, the District of Columbia, and Puerto 
Rico (that is, hospitals located in the U.S. Virgin Islands, Guam, the 
Northern Mariana Islands, and American Samoa). Religious nonmedical 
health care institutions (RNHCIs) are also excluded from the IPPS.
     Sections 123(a) and (c) of the BBRA (Pub. L. 106-113) and 
section 307(b)(1) of the BIPA (Pub. L. 106-554) (as codified under 
section 1886(m)(1) of the Act), which provide for the development and 
implementation of a prospective payment system for payment for 
inpatient hospital services of LTCHs described in section 
1886(d)(1)(B)(iv) of the Act.
     Sections 1814(l), 1820, and 1834(g) of the Act, which 
specify that payments are made to critical access hospitals (CAHs) 
(that is, rural hospitals or facilities that meet certain statutory 
requirements) for inpatient and outpatient services and that these 
payments are generally based on 101 percent of reasonable cost.
     Section 1866(k) of the Act, as added by section 3005 of 
the Affordable Care Act, which establishes a quality reporting program 
for hospitals described in section 1886(d)(1)(B)(v) of the Act, 
referred to as ``PPS-exempt cancer hospitals.''
     Section 1886(a)(4) of the Act, which specifies that costs 
of approved educational activities are excluded from the operating 
costs of inpatient hospital services. Hospitals with approved graduate 
medical education (GME) programs are paid for the direct costs of GME 
in accordance with section 1886(h) of the Act.
     Section 1886(b)(3)(B)(viii) of the Act, which requires the 
Secretary to reduce the applicable percentage increase that would 
otherwise apply to the standardized amount applicable to a subsection 
(d) hospital for discharges occurring in a fiscal year if the hospital 
does not submit data on measures in a form and manner, and at a time, 
specified by the Secretary.
     Section 1886(o) of the Act, which requires the Secretary 
to establish a Hospital Value-Based Purchasing (VBP) Program, under 
which value-based incentive payments are made in a fiscal year to 
hospitals meeting performance standards established for a performance 
period for such fiscal year.
     Section 1886(p) of the Act, as added by section 3008 of 
the Affordable Care Act, which establishes a Hospital-Acquired 
Condition (HAC) Reduction Program, under which payments to applicable 
hospitals are adjusted to provide an incentive to reduce hospital-
acquired conditions.
     Section 1886(q) of the Act, as added by section 3025 of 
the Affordable Care Act and amended by section 10309 of the Affordable 
Care Act and section 15002 of the 21st Century Cures Act, which 
establishes the ``Hospital

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Readmissions Reduction Program.'' Under the program, payments for 
discharges from an ``applicable hospital'' under section 1886(d) of the 
Act will be reduced to account for certain excess readmissions. Section 
15002 of the 21st Century Cures Act requires the Secretary to compare 
cohorts of hospitals to each other in determining the extent of excess 
readmissions.
     Section 1886(r) of the Act, as added by section 3133 of 
the Affordable Care Act, which provides for a reduction to 
disproportionate share hospital (DSH) payments under section 
1886(d)(5)(F) of the Act and for a new uncompensated care payment to 
eligible hospitals. Specifically, section 1886(r) of the Act requires 
that, for fiscal year 2014 and each subsequent fiscal year, subsection 
(d) hospitals that would otherwise receive a DSH payment made under 
section 1886(d)(5)(F) of the Act will receive two separate payments: 
(1) 25 Percent of the amount they previously would have received under 
section 1886(d)(5)(F) of the Act for DSH (``the empirically justified 
amount''), and (2) an additional payment for the DSH hospital's 
proportion of uncompensated care, determined as the product of three 
factors. These three factors are: (1) 75 Percent of the payments that 
would otherwise be made under section 1886(d)(5)(F) of the Act; (2) 1 
minus the percent change in the percent of individuals who are 
uninsured (minus 0.2 percentage point for FY 2018 and FY 2019); and (3) 
a hospital's uncompensated care amount relative to the uncompensated 
care amount of all DSH hospitals expressed as a percentage.
     Section 1886(m)(6) of the Act, as added by section 
1206(a)(1) of the Pathway for Sustainable Growth Rate (SGR) Reform Act 
of 2013 (Pub. L. 113-67) and amended by section 51005(a) of the 
Bipartisan Budget Act of 2018 (Pub. L. 115-123), which provided for the 
establishment of site neutral payment rate criteria under the LTCH PPS, 
with implementation beginning in FY 2016, and provides for a 4-year 
transitional blended payment rate for discharges occurring in LTCH cost 
reporting periods beginning in FYs 2016 through 2019. Section 51005(b) 
of the Bipartisan Budget Act of 2018 amended section 1886(m)(6)(B) by 
adding new clause (iv), which specifies that the IPPS comparable amount 
defined in clause (ii)(I) shall be reduced by 4.6 percent for FYs 2018 
through 2026.
     Section 1886(m)(6) of the Act, as amended by section 15009 
of the 21st Century Cures Act (Pub. L. 114-255), which provides for a 
temporary exception to the application of the site neutral payment rate 
under the LTCH PPS for certain spinal cord specialty hospitals for 
discharges in cost reporting periods beginning during FYs 2018 and 
2019.
     Section 1886(m)(6) of the Act, as amended by section 15010 
of the 21st Century Cures Act (Pub. L. 114-255), which provides for a 
temporary exception to the application of the site neutral payment rate 
under the LTCH PPS for certain LTCHs with certain discharges with 
severe wounds occurring in cost reporting periods beginning during FY 
2018.
     Section 1886(m)(5)(D)(iv) of the Act, as added by section 
1206(c) of the Pathway for Sustainable Growth Rate (SGR) Reform Act of 
2013 (Pub. L. 113-67), which provides for the establishment of a 
functional status quality measure in the LTCH QRP for change in 
mobility among inpatients requiring ventilator support.
     Section 1899B of the Act, as added by section 2(a) of the 
Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT 
Act, Pub. L. 113-185), which provides for the establishment of 
standardized data reporting for certain post-acute care providers, 
including LTCHs.
2. Improving Patient Outcomes and Reducing Burden Through Meaningful 
Measures
    Regulatory reform and reducing regulatory burden are high 
priorities for CMS. To reduce the regulatory burden on the healthcare 
industry, lower health care costs, and enhance patient care, in October 
2017, we launched the Meaningful Measures Initiative.\1\ This 
initiative is one component of our agency-wide Patients Over Paperwork 
Initiative,\2\ which is aimed at evaluating and streamlining 
regulations with a goal to reduce unnecessary cost and burden, increase 
efficiencies, and improve beneficiary experience. The Meaningful 
Measures Initiative is aimed at identifying the highest priority areas 
for quality measurement and quality improvement, in order to assess the 
core quality of care issues that are most vital to advancing our work 
to improve patient outcomes. The Meaningful Measures Initiative 
represents a new approach to quality measures that will foster 
operational efficiencies and will reduce costs, including collection 
and reporting burden while producing quality measurement that is more 
focused on meaningful outcomes.
---------------------------------------------------------------------------

    \1\ Meaningful Measures web page: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/MMF/General-info-Sub-Page.html.
    \2\ Remarks by Administrator Seema Verma at the Health Care 
Payment Learning and Action Network (LAN) Fall Summit, as prepared 
for delivery on October 30, 2017. Available at: https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2017-Fact-Sheet-items/2017-10-30.html.
---------------------------------------------------------------------------

    The Meaningful Measures framework has the following objectives:
     Address high-impact measure areas that safeguard public 
health;
     Patient-centered and meaningful to patients;
     Outcome-based where possible;
     Fulfill each program's statutory requirements;
     Minimize the level of burden for health care providers 
(for example, through a preference for EHR-based measures, where 
possible, such as electronic clinical quality measures; \3\
---------------------------------------------------------------------------

    \3\ We refer readers to section VIII.A.9.c. of the preamble of 
this final rule where we discuss public comments on the potential 
future development and adoption of eCQMs.
---------------------------------------------------------------------------

     Significant opportunity for improvement;
     Address measure needs for population based payment through 
alternative payment models; and
     Align across programs and/or with other payers.
    In order to achieve these objectives, we have identified 19 
Meaningful Measures areas and mapped them to six overarching quality 
priorities, as shown in the following table:

------------------------------------------------------------------------
            Quality priority                 Meaningful measure area
------------------------------------------------------------------------
Making Care Safer by Reducing Harm       Healthcare-Associated
 Caused in the Delivery of Care.          Infections.
                                         Preventable Healthcare Harm.
Strengthen Person and Family Engagement  Care is Personalized and
 as Partners in Their Care.               Aligned with Patient's Goals.
                                         End of Life Care According to
                                          Preferences.
                                         Patient's Experience of Care.
                                         Patient Reported Functional
                                          Outcomes.

[[Page 41148]]

 
Promote Effective Communication and      Medication Management.
 Coordination of Care.                   Admissions and Readmissions to
                                          Hospitals.
                                         Transfer of Health Information
                                          and Interoperability.
Promote Effective Prevention and         Preventive Care.
 Treatment of Chronic Disease.           Management of Chronic
                                          Conditions.
                                         Prevention, Treatment, and
                                          Management of Mental Health.
                                         Prevention and Treatment of
                                          Opioid and Substance Use
                                          Disorders.
                                         Risk Adjusted Mortality.
Work with Communities to Promote Best    Equity of Care.
 Practices of Healthy Living.            Community Engagement.
Make Care Affordable...................  Appropriate Use of Healthcare.
                                         Patient-focused Episode of
                                          Care.
                                         Risk Adjusted Total Cost of
                                          Care.
------------------------------------------------------------------------

    By including Meaningful Measures in our programs, we believe that 
we can also address the following cross-cutting measure criteria:
     Eliminating disparities;
     Tracking measurable outcomes and impact;
     Safeguarding public health;
     Achieving cost savings;
     Improving access for rural communities; and
     Reducing burden.
    We believe that the Meaningful Measures Initiative will improve 
outcomes for patients, their families, and health care providers, while 
reducing burden and costs for clinicians and providers, as well as 
promoting operational efficiencies.
    We received numerous comments from stakeholders regarding the 
Meaningful Measures Initiative and the impact of its implementation in 
CMS' quality programs. Many of these comments pertained to specific 
program proposals, and are discussed in the appropriate program-
specific sections of this final rule. However, commenters also provided 
insights and recommendations for the ongoing development of the 
Meaningful Measures Initiative generally, including: ensuring 
transparency in public reporting and usability of publicly reported 
data; evaluating the benefit of individual measures to patients via use 
in quality programs weighed against the burden to providers of 
collecting and reporting that measure data; and identifying additional 
opportunities for alignment across CMS quality programs. We look 
forward to continuing to work with stakeholders to refine and further 
implement the Meaningful Measures Initiative, and will take commenters' 
insights and recommendations into account moving forward.
3. Summary of the Major Provisions
    Below we provide a summary of the major provisions in this final 
rule. In general, these major provisions are as part of the annual 
update to the payment policies and payment rates, consistent with the 
applicable statutory provisions. A general summary of the proposed 
changes that we included in the proposed rule issued prior to this 
final rule is presented in section I.D. of the preamble of this final 
rule.
a. MS-DRG Documentation and Coding Adjustment
    Section 631 of the American Taxpayer Relief Act of 2012 (ATRA, Pub. 
L. 112-240) amended section 7(b)(1)(B) of Public Law 110-90 to require 
the Secretary to make a recoupment adjustment to the standardized 
amount of Medicare payments to acute care hospitals to account for 
changes in MS-DRG documentation and coding that do not reflect real 
changes in case-mix, totaling $11 billion over a 4-year period of FYs 
2014, 2015, 2016, and 2017. The FY 2014 through FY 2017 adjustments 
represented the amount of the increase in aggregate payments as a 
result of not completing the prospective adjustment authorized under 
section 7(b)(1)(A) of Public Law 110-90 until FY 2013. Prior to the 
ATRA, this amount could not have been recovered under Public Law 110-
90. Section 414 of the Medicare Access and CHIP Reauthorization Act of 
2015 (MACRA) (Pub. L. 114-10) replaced the single positive adjustment 
we intended to make in FY 2018 with a 0.5 percent positive adjustment 
to the standardized amount of Medicare payments to acute care hospitals 
for FYs 2018 through 2023. (The FY 2018 adjustment was subsequently 
adjusted to 0.4588 percent by section 15005 of the 21st Century Cures 
Act.) Therefore, for FY 2019, we are making an adjustment of +0.5 
percent to the standardized amount.
b. Expansion of the Postacute Care Transfer Policy
    Section 53109 of the Bipartisan Budget Act of 2018 amended section 
1886(d)(5)(J)(ii) of the Act to also include discharges to hospice care 
by a hospice program as a qualified discharge, effective for discharges 
occurring on or after October 1, 2018. Accordingly, we are making 
conforming amendments to Sec.  412.4(c) of the regulation, effective 
for discharges on or after October 1, 2018, to specify that if a 
discharge is assigned to one of the MS-DRGs subject to the postacute 
care transfer policy and the individual is transferred to hospice care 
by a hospice program, the discharge is subject to payment as a transfer 
case.
c. DSH Payment Adjustment and Additional Payment for Uncompensated Care
    Section 3133 of the Affordable Care Act modified the Medicare 
disproportionate share hospital (DSH) payment methodology beginning in 
FY 2014. Under section 1886(r) of the Act, which was added by section 
3133 of the Affordable Care Act, starting in FY 2014, DSHs receive 25 
percent of the amount they previously would have received under the 
statutory formula for Medicare DSH payments in section 1886(d)(5)(F) of 
the Act. The remaining amount, equal to 75 percent of the amount that 
otherwise would have been paid as Medicare DSH payments, is paid as 
additional payments after the amount is reduced for changes in the 
percentage of individuals that are uninsured. Each Medicare DSH will 
receive an additional payment based on its share of the total amount of 
uncompensated care for all Medicare DSHs for a given time period.
    In this FY 2019 IPPS/LTCH PPS final rule, we are updating our 
estimates of the three factors used to determine uncompensated care 
payments for FY 2019. We are continuing to use uninsured estimates 
produced by CMS' Office of the Actuary (OACT) as part of the 
development of the National Health Expenditure Accounts (NHEA) in the 
calculation of Factor 2. We also are continuing to incorporate data 
from Worksheet S-10 in the calculation of hospitals' share of the 
aggregate amount

[[Page 41149]]

of uncompensated care by combining data on uncompensated care costs 
from Worksheet S-10 for FYs 2014 and 2015 with proxy data regarding a 
hospital's share of low-income insured days for FY 2013 to determine 
Factor 3 for FY 2019. In addition, we are using only data regarding 
low-income insured days for FY 2013 to determine the amount of 
uncompensated care payments for Puerto Rico hospitals, Indian Health 
Service and Tribal hospitals, and all-inclusive rate providers. For 
this final rule, we are establishing the following policies: (1) For 
providers with multiple cost reports, beginning in the same fiscal 
year, to use the longest cost report and annualize Medicaid data and 
uncompensated care data if a hospital's cost report does not equal 12 
months of data; (2) in the rare case where a provider has multiple cost 
reports, beginning in the same fiscal year, but one report also spans 
the entirety of the following fiscal year, such that the hospital has 
no cost report for that fiscal year, the cost report that spans both 
fiscal years will be used for the latter fiscal year; and (3) to apply 
statistical trim methodologies to potentially aberrant cost-to-charge 
ratios (CCRs) and potentially aberrant uncompensated care costs 
reported on the Worksheet S-10.
d. Changes to the LTCH PPS
    In this final rule, we set forth changes to the LTCH PPS Federal 
payment rates, factors, and other payment rate policies under the LTCH 
PPS for FY 2019. In addition, we are eliminating the 25-percent 
threshold policy, and under this policy, we are applying a one-time 
adjustment of approximately 0.9 percent to the LTCH PPS standard 
Federal payment rate in FY 2019 to ensure this elimination of the 25-
percent threshold policy is budget neutral.
e. Reduction of Hospital Payments for Excess Readmissions
    We are making changes to policies for the Hospital Readmissions 
Reduction Program, which was established under section 1886(q) of the 
Act, as added by section 3025 of the Affordable Care Act, as amended by 
section 10309 of the Affordable Care Act and further amended by section 
15002 of the 21st Century Cures Act. The Hospital Readmissions 
Reduction Program requires a reduction to a hospital's base operating 
DRG payment to account for excess readmissions of selected applicable 
conditions. For FY 2018 and subsequent years, the reduction is based on 
a hospital's risk-adjusted readmission rate during a 3-year period for 
acute myocardial infarction (AMI), heart failure (HF), pneumonia, 
chronic obstructive pulmonary disease (COPD), total hip arthroplasty/
total knee arthroplasty (THA/TKA), and coronary artery bypass graft 
(CABG). In this final rule, we are establishing the applicable periods 
for FY 2019, FY 2020, and FY 2021. We also are codifying the 
definitions of dual-eligible patients, the proportion of dual-
eligibles, and the applicable period for dual-eligibility.
f. Hospital Value-Based Purchasing (VBP) Program
    Section 1886(o) of the Act requires the Secretary to establish a 
Hospital VBP Program under which value-based incentive payments are 
made in a fiscal year to hospitals based on their performance on 
measures established for a performance period for such fiscal year. As 
part of agency-wide efforts under the Meaningful Measures Initiative to 
use a parsimonious set of the most meaningful measures for patients, 
clinicians, and providers in our quality programs and the Patients Over 
Paperwork Initiative to reduce costs and burden and program complexity, 
as discussed in section I.A.2. of the preamble of this final rule, we 
are removing a total of 4 measures from the Hospital VBP Program, all 
of which will continue to be used in the Hospital IQR Program, in order 
to reduce the costs and complexity of tracking these measures in 
multiple programs. Specifically, we are removing one measure, beginning 
with the FY 2021 program year: (1) Elective Delivery (NQF #0469) (PC-
01). We also are removing three measures from the Hospital VBP Program, 
effective with the effective date of this FY 2019 IPPS/LTCH PPS final 
rule: (1) Hospital-Level, Risk-Standardized Payment Associated With a 
30-Day Episode-of-Care for Acute Myocardial Infarction (NQF #2431) (AMI 
Payment); (2) Hospital-Level, Risk-Standardized Payment Associated With 
a 30-Day Episode-of-Care for Heart Failure (NQF #2436) (HF Payment); 
and (3) Hospital-Level, Risk-Standardized Payment Associated With a 30-
Day Episode-of-Care for Pneumonia (PN Payment) (NQF #2579). In 
addition, we are renaming the Clinical Care domain as the Clinical 
Outcomes domain, beginning with the FY 2020 program year. We also are 
adopting measure removal factors for the Hospital VBP Program.
    We are not finalizing our proposals to remove of the following six 
patient safety measures: (1) National Healthcare Safety Network (NHSN) 
Catheter-Associated Urinary Tract Infection (CAUTI) Outcome Measure 
(NQF #0138); (2) National Healthcare Safety Network (NHSN) Central 
Line-Associated Bloodstream Infection (CLABSI) Outcome Measure (NQF 
#0139); (3) American College of Surgeons-Centers for Disease Control 
and Prevention (ACS-CDC) Harmonized Procedure Specific Surgical Site 
Infection (SSI) Outcome Measure (NQF #0753); (4) National Healthcare 
Safety Network (NHSN) Facility-wide Inpatient Hospital-onset 
Methicillin-resistant Staphylococcus aureus Bacteremia (MRSA) Outcome 
Measure (NQF #1716); (5) National Healthcare Safety Network (NHSN) 
Facility-wide Inpatient Hospital-onset Clostridium difficile Infection 
(CDI) Outcome Measure (NQF #1717); and (6) Patient Safety and Adverse 
Events (Composite) (NQF #0531) (PSI 90). We are not finalizing our 
proposal to remove the Safety domain from the Hospital VBP Program, as 
we are not finalizing our proposals to remove all of the measures in 
this domain, and therefore we also are not finalizing changes to the 
domain weighting.
g. Hospital-Acquired Condition (HAC) Reduction Program
    Section 1886(p) of the Act, as added under section 3008(a) of the 
Affordable Care Act, establishes an incentive to hospitals to reduce 
the incidence of hospital-acquired conditions by requiring the 
Secretary to make an adjustment to payments to applicable hospitals 
effective for discharges beginning on October 1, 2014. This 1-percent 
payment reduction applies to a hospital whose ranking in the worst-
performing quartile (25 percent) of all applicable hospitals, relative 
to the national average, of conditions acquired during the applicable 
period and on all of the hospital's discharges for the specified fiscal 
year. As part of our agency-wide Patients over Paperwork and Meaningful 
Measures Initiatives, discussed in section I.A.2. of the preamble of 
this final rule, we are retaining the measures currently included in 
the HAC Reduction Program because the measures address a performance 
gap in patient safety and reduce harm caused in the delivery of care. 
In this final rule, we are: (1) Establishing administrative policies to 
collect, validate, and publicly report NHSN healthcare-associated 
infection (HAI) quality measure data that facilitate a seamless 
transition, independent of the Hospital IQR Program, beginning with 
January 1, 2020 infectious events; (2) changing the scoring methodology 
by removing domains and assigning equal weighting to each measure for 
which a hospital has a measure; and (3) establishing the

[[Page 41150]]

applicable period for FY 2021. In addition, we are summarizing comments 
we received regarding the potential future inclusion of additional 
measures, including eCQMs.
h. Hospital Inpatient Quality Reporting (IQR) Program
    Under section 1886(b)(3)(B)(viii) of the Act, subsection (d) 
hospitals are required to report data on measures selected by the 
Secretary for a fiscal year in order to receive the full annual 
percentage increase that would otherwise apply to the standardized 
amount applicable to discharges occurring in that fiscal year.
    In this final rule, we are making several changes. As part of 
agency-wide efforts under the Meaningful Measures Initiative to use a 
parsimonious set of the most meaningful measures for patients and 
clinicians in our quality programs and the Patients Over Paperwork 
initiative to reduce burden, cost, and program complexity, as discussed 
in section I.A.2. of the preamble of this final rule, we are adding a 
new measure removal factor and removing a total of 39 measures from the 
Hospital IQR Program. We are finalizing a modified version of our 
proposal to remove 5 of those measures such that removal is delayed by 
1 year. For a full list of measures being removed, we refer readers to 
section VIII.A.5.c. of the preamble of this final rule. Beginning with 
the CY 2018 reporting period/FY 2020 payment determination and 
subsequent years, we are removing 17 claims-based measures and two 
structural measures. Beginning with the CY 2019 reporting period/FY 
2021 payment determination and subsequent years, we are removing three 
chart-abstracted measures and two claims-based measures. Beginning with 
the CY 2020 reporting period/FY 2022 payment determination and 
subsequent years, we are removing six chart-abstracted measures, one 
claims-based measure, and seven eCQMs from the Hospital IQR Program 
measure set. Beginning with the CY 2021 reporting period/FY 2023 
payment determination, we are removing one claims-based measure.
    In addition, for the CY 2019 reporting period/FY 2021 payment 
determination, we are: (1) Requiring the same eCQM reporting 
requirements that were adopted for the CY 2018 reporting period/FY 2020 
payment determination (82 FR 38355 through 38361), such that hospitals 
submit one, self-selected calendar quarter of 2019 data for 4 eCQMs in 
the Hospital IQR Program measure set; and (2) requiring that hospitals 
use the 2015 Edition certification criteria for CEHRT. These changes 
are in alignment with changes or current established policies under the 
Medicare and Medicaid Promoting Interoperability Programs (previously 
known as the Medicare and Medicaid EHR Incentive Programs). In 
addition, we are summarizing public comments we received on two 
measures we are considering for potential future inclusion in the 
Hospital IQR Program, as well as on the potential future development 
and adoption of electronic clinical quality measures generally.
i. Long-Term Care Hospital Quality Reporting Program (LTCH QRP)
    The LTCH QRP is authorized by section 1886(m)(5) of the Act and 
applies to all hospitals certified by Medicare as long-term care 
hospitals (LTCHs). Under the LTCH QRP, the Secretary reduces by 2 
percentage points the annual update to the LTCH PPS standard Federal 
rate for discharges for an LTCH during a fiscal year if the LTCH fails 
to submit data in accordance with the LTCH QRP requirements specified 
for that fiscal year. As part of agency-wide efforts under the 
Meaningful Measures Initiative to use a parsimonious set of the most 
meaningful measures for patients and clinicians in our quality programs 
and the Patients Over Paperwork Initiative to reduce cost and burden 
and program complexity, as discussed in section I.A.2. of the preamble 
of this final rule, we are removing three measures from the LTCH QRP. 
We also are adopting a new measure removal factor and are codifying the 
measure removal factors in our regulations. In addition, we are 
updating our regulations to expand the methods by which an LTCH is 
notified of noncompliance with the requirements of the LTCH QRP for a 
program year and how CMS will notify an LTCH of a reconsideration 
decision.
j. Medicare and Medicaid Promoting Interoperability Programs 
(Previously Referred to as Medicare and Medicaid EHR Incentive 
Programs)
    In this final rule, we are finalizing several changes to reduce 
burden, increase interoperability and improve patient electronic access 
to their health information under the Medicare and Medicaid Promoting 
Interoperability Programs (previously referred to as Medicare and 
Medicaid EHR Incentive Programs). Specifically, we are finalizing: (1) 
An EHR reporting period of a minimum of any continuous 90 days in CYs 
2019 and 2020 for new and returning participants attesting to CMS or 
their State Medicaid agency; (2) modifications to our proposed 
performance-based scoring methodology, which consists of a smaller set 
of objectives as well as a smaller set of new and modified measures; 
(3) the removal of certain CQMs beginning with the reporting period in 
CY 2020 as well as the CY 2019 reporting requirements we proposed to 
align the CQM reporting requirements for the Promoting Interoperability 
Programs with the Hospital IQR Program; (4) the codification of 
policies for subsection (d) Puerto Rico hospitals; (5) amendments to 
the prior approval policy applicable in the Medicaid Promoting 
Interoperability Program to align with the prior approval policy for 
MMIS and ADP systems and to minimize burden on States; and (6) 
deadlines for funding availability for States to conclude the Medicaid 
Promoting Interoperability Program.
4. Summary of Costs and Benefits
     Adjustment for MS-DRG Documentation and Coding Changes. 
Section 414 of the MACRA replaced the single positive adjustment we 
intended to make in FY 2018 once the recoupment required by section 631 
of the ATRA was complete with a 0.5 percent positive adjustment to the 
standardized amount of Medicare payments to acute care hospitals for 
FYs 2018 through 2023. (The FY 2018 adjustment was subsequently 
adjusted to 0.4588 percent by section 15005 of the 21st Century Cures 
Act.) For FY 2019, we are making an adjustment of +0.5 percent to the 
standardized amount consistent with the MACRA.
     Expansion of the Postacute Care Transfer Policy. Section 
53109 of the Bipartisan Budget Act of 2018 amended section 
1886(d)(5)(J)(ii) of the Act to also include discharges to hospice care 
by a hospice program as a qualified discharge, effective for discharges 
occurring on or after October 1, 2018. Accordingly, we are making 
conforming amendments to Sec.  412.4(c) of the regulation to specify 
that, effective for discharges on or after October 1, 2018, if a 
discharge is assigned to one of the MS-DRGs subject to the postacute 
care transfer policy, and the individual is transferred to hospice care 
by a hospice program, the discharge will be subject to payment as a 
transfer case. We estimate that this statutory expansion to the 
postacute care transfer policy will reduce Medicare payments under the 
IPPS by approximately $240 million in FY 2019.
     Medicare DSH Payment Adjustment and Additional Payment for 
Uncompensated Care. Under section 1886(r) of the Act (as added by 
section

[[Page 41151]]

3133 of the Affordable Care Act), DSH payments to hospitals under 
section 1886(d)(5)(F) of the Act are reduced and an additional payment 
for uncompensated care is made to eligible hospitals, beginning in FY 
2014. Hospitals that receive Medicare DSH payments receive 25 percent 
of the amount they previously would have received under the statutory 
formula for Medicare DSH payments in section 1886(d)(5)(F) of the Act. 
The remainder, equal to an estimate of 75 percent of what otherwise 
would have been paid as Medicare DSH payments, is the basis for 
determining the additional payments for uncompensated care after the 
amount is reduced for changes in the percentage of individuals that are 
uninsured and additional statutory adjustments. Each hospital that 
receives Medicare DSH payments will receive an additional payment for 
uncompensated care based on its share of the total uncompensated care 
amount reported by Medicare DSHs. The reduction to Medicare DSH 
payments is not budget neutral.
    For FY 2019, we are updating our estimates of the three factors 
used to determine uncompensated care payments. We are continuing to use 
uninsured estimates produced by OACT as part of the development of the 
NHEA in the calculation of Factor 2. We also are continuing to 
incorporate data from Worksheet S-10 in the calculation of hospitals' 
share of the aggregate amount of uncompensated care by combining data 
on uncompensated care costs from Worksheet S-10 for FY 2014 and FY 2015 
with proxy data regarding a hospital's share of low-income insured days 
for FY 2013 to determine Factor 3 for FY 2019. To determine the amount 
of uncompensated care for Puerto Rico hospitals, Indian Health Service 
and Tribal hospitals, and all-inclusive rate providers, we are using 
only the data regarding low-income insured days for FY 2013. In 
addition, in this final rule, we are establishing the following 
policies: (1) For providers with multiple cost reports beginning in the 
same fiscal year, to use the longest cost report and annualize Medicaid 
data and uncompensated care data if a hospital's cost report does not 
equal 12 months of data; (2) in the rare case where a provider has 
multiple cost reports beginning in the same fiscal year, but one report 
also spans the entirety of the following fiscal year such that the 
hospital has no cost report for that fiscal year, the cost report that 
spans both fiscal years will be used for the latter fiscal year; and 
(3) to apply statistical trim methodologies to potentially aberrant 
CCRs and potentially aberrant uncompensated care costs.
    We project that the amount available to distribute as payments for 
uncompensated care for FY 2019 will increase by approximately $1.5 
billion, as compared to the estimate of overall payments, including 
Medicare DSH payments and uncompensated care payments, that will be 
distributed in FY 2018. The payments have redistributive effects, based 
on a hospital's uncompensated care amount relative to the uncompensated 
care amount for all hospitals that are estimated to receive Medicare 
DSH payments, and the calculated payment amount is not directly tied to 
a hospital's number of discharges.
     Update to the LTCH PPS Payment Rates and Other Payment 
Policies. Based on the best available data for the 409 LTCHs in our 
database, we estimate that the changes to the payment rates and factors 
that we present in the preamble and Addendum of this final rule, which 
reflect the continuation of the transition of the statutory application 
of the site neutral payment rate, the update to the LTCH PPS standard 
Federal payment rate for FY 2019, and the one-time permanent adjustment 
of approximately 0.9 percent to the LTCH PPS standard Federal payment 
rate to ensure the elimination of the 25-percent threshold policy is 
budget neutral, will result in an estimated increase in payments in FY 
2019 of approximately $39 million.
     Changes to the Hospital Readmissions Reduction Program. 
For FY 2019 and subsequent years, the reduction is based on a 
hospital's risk-adjusted readmission rate during a 3-year period for 
acute myocardial infarction (AMI), heart failure (HF), pneumonia, 
chronic obstructive pulmonary disease (COPD), total hip arthroplasty/
total knee arthroplasty (THA/TKA), and coronary artery bypass graft 
(CABG). Overall, in this final rule, we estimate that 2,610 hospitals 
will have their base operating DRG payments reduced by their determined 
proxy FY 2019 hospital-specific readmission adjustment. As a result, we 
estimate that the Hospital Readmissions Reduction Program will save 
approximately $566 million in FY 2019.
     Value-Based Incentive Payments under the Hospital VBP 
Program. We estimate that there will be no net financial impact to the 
Hospital VBP Program for the FY 2019 program year in the aggregate 
because, by law, the amount available for value-based incentive 
payments under the program in a given year must be equal to the total 
amount of base operating MS-DRG payment amount reductions for that 
year, as estimated by the Secretary. The estimated amount of base 
operating MS-DRG payment amount reductions for the FY 2019 program year 
and, therefore, the estimated amount available for value-based 
incentive payments for FY 2019 discharges is approximately $1.9 
billion.
     Changes to the HAC Reduction Program. A hospital's Total 
HAC score and its ranking in comparison to other hospitals in any given 
year depend on several different factors. Any significant impact due to 
the HAC Reduction Program changes for FY 2019, including which 
hospitals will receive the adjustment, will depend on actual 
experience.
    The removal of NHSN HAI measures from the Hospital IQR Program and 
the subsequent cessation of its validation processes for NHSN HAI 
measures and the creation of a validation process for the HAC Reduction 
program represent no net change in reporting burden across CMS hospital 
quality programs. However, with the finalization of our proposal to 
remove HAI chart-abstracted measures from the Hospital IQR Program, we 
anticipate a total burden shift of 43,200 hours and approximately $1.6 
million, as a result of no longer needing to validate those HAI 
measures under the Hospital IQR Program and beginning the validation 
process under the HAC Reduction Program.
     Changes to the Hospital Inpatient Quality Reporting (IQR) 
Program. Across 3,300 IPPS hospitals, we estimate that our finalized 
requirements for the Hospital IQR Program in this final rule will 
result in the following changes to costs and burdens related to 
information collection for this program, compared to previously adopted 
requirements: (1) A total collection of information burden reduction of 
1,046,138 hours and a total cost reduction of approximately $38.3 
million for the CY 2019 reporting period/FY 2021 payment determination, 
due to the removal of ED-1, IMM-2, and VTE-6 measures; and (2) a total 
collection of information burden reduction of 858,000 hours and a total 
cost reduction of $31.3 million for the CY 2020 reporting period/FY 
2022 payment determination due to the removal of ED-2; and (3) a total 
collection of information burden reduction of 43,200 hours and a total 
of $1.6 million for the CY 2021 reporting period/FY 2023 payment 
determination due to validation of the NHSN HAI measures no longer 
being conducted under the Hospital IQR Program once the HAC Reduction 
Program begins validating these measures, as discussed

[[Page 41152]]

in the preamble of this final rule for the HAC Reduction Program.
    Further, we anticipate that the removal of 39 measures will result 
in a reduction in costs unrelated to information collection. For 
example, it may be costly for health care providers to track the 
confidential feedback, preview reports, and publicly reported 
information on a measure where we use the measure in more than one 
program. Also, when measures are in multiple programs, maintaining the 
specifications for those measures, as well as the tools we need to 
collect, validate, analyze, and publicly report the measure data may 
result in costs to CMS. In addition, beneficiaries may find it 
confusing to see public reporting on the same measure in different 
programs. We anticipate that our finalized policies will reduce the 
above-described costs.
     Changes Related to the LTCH QRP. In this final rule, we 
are removing two measures beginning with the FY 2020 LTCH QRP and one 
measure beginning with the FY 2021 LTCH QRP, for a total of three 
measures. We also are adopting a new quality measure removal factor for 
the LTCH QRP. We estimate that the impact of these changes is a 
reduction in costs of approximately $1,148 per LTCH annually or 
approximately $482,469 for all LTCHs annually.
     Changes to the Medicare and Medicaid Promoting 
Interoperability Programs. We believe that, overall, the finalized 
proposals in this final rule will reduce burden, as described in detail 
in section XIV.B.9. of the preamble and Appendix A, section I.N. of 
this final rule.

B. Background Summary

1. Acute Care Hospital Inpatient Prospective Payment System (IPPS)
    Section 1886(d) of the Social Security Act (the Act) sets forth a 
system of payment for the operating costs of acute care hospital 
inpatient stays under Medicare Part A (Hospital Insurance) based on 
prospectively set rates. Section 1886(g) of the Act requires the 
Secretary to use a prospective payment system (PPS) to pay for the 
capital-related costs of inpatient hospital services for these 
``subsection (d) hospitals.'' Under these PPSs, Medicare payment for 
hospital inpatient operating and capital-related costs is made at 
predetermined, specific rates for each hospital discharge. Discharges 
are classified according to a list of diagnosis-related groups (DRGs).
    The base payment rate is comprised of a standardized amount that is 
divided into a labor-related share and a nonlabor-related share. The 
labor-related share is adjusted by the wage index applicable to the 
area where the hospital is located. If the hospital is located in 
Alaska or Hawaii, the nonlabor-related share is adjusted by a cost-of-
living adjustment factor. This base payment rate is multiplied by the 
DRG relative weight.
    If the hospital treats a high percentage of certain low-income 
patients, it receives a percentage add-on payment applied to the DRG-
adjusted base payment rate. This add-on payment, known as the 
disproportionate share hospital (DSH) adjustment, provides for a 
percentage increase in Medicare payments to hospitals that qualify 
under either of two statutory formulas designed to identify hospitals 
that serve a disproportionate share of low-income patients. For 
qualifying hospitals, the amount of this adjustment varies based on the 
outcome of the statutory calculations. The Affordable Care Act revised 
the Medicare DSH payment methodology and provides for a new additional 
Medicare payment that considers the amount of uncompensated care 
beginning on October 1, 2013.
    If the hospital is training residents in an approved residency 
program(s), it receives a percentage add-on payment for each case paid 
under the IPPS, known as the indirect medical education (IME) 
adjustment. This percentage varies, depending on the ratio of residents 
to beds.
    Additional payments may be made for cases that involve new 
technologies or medical services that have been approved for special 
add-on payments. To qualify, a new technology or medical service must 
demonstrate that it is a substantial clinical improvement over 
technologies or services otherwise available, and that, absent an add-
on payment, it would be inadequately paid under the regular DRG 
payment.
    The costs incurred by the hospital for a case are evaluated to 
determine whether the hospital is eligible for an additional payment as 
an outlier case. This additional payment is designed to protect the 
hospital from large financial losses due to unusually expensive cases. 
Any eligible outlier payment is added to the DRG-adjusted base payment 
rate, plus any DSH, IME, and new technology or medical service add-on 
adjustments.
    Although payments to most hospitals under the IPPS are made on the 
basis of the standardized amounts, some categories of hospitals are 
paid in whole or in part based on their hospital-specific rate, which 
is determined from their costs in a base year. For example, sole 
community hospitals (SCHs) receive the higher of a hospital-specific 
rate based on their costs in a base year (the highest of FY 1982, FY 
1987, FY 1996, or FY 2006) or the IPPS Federal rate based on the 
standardized amount. SCHs are the sole source of care in their areas. 
Specifically, section 1886(d)(5)(D)(iii) of the Act defines an SCH as a 
hospital that is located more than 35 road miles from another hospital 
or that, by reason of factors such as an isolated location, weather 
conditions, travel conditions, or absence of other like hospitals (as 
determined by the Secretary), is the sole source of hospital inpatient 
services reasonably available to Medicare beneficiaries. In addition, 
certain rural hospitals previously designated by the Secretary as 
essential access community hospitals are considered SCHs.
    Under current law, the Medicare-dependent, small rural hospital 
(MDH) program is effective through FY 2022. Through and including FY 
2006, an MDH received the higher of the Federal rate or the Federal 
rate plus 50 percent of the amount by which the Federal rate was 
exceeded by the higher of its FY 1982 or FY 1987 hospital-specific 
rate. For discharges occurring on or after October 1, 2007, but before 
October 1, 2022, an MDH receives the higher of the Federal rate or the 
Federal rate plus 75 percent of the amount by which the Federal rate is 
exceeded by the highest of its FY 1982, FY 1987, or FY 2002 hospital-
specific rate. MDHs are a major source of care for Medicare 
beneficiaries in their areas. Section 1886(d)(5)(G)(iv) of the Act 
defines an MDH as a hospital that is located in a rural area (or, as 
amended by the Bipartisan Budget Act of 2018, a hospital located in a 
State with no rural area that meets certain statutory criteria), has 
not more than 100 beds, is not an SCH, and has a high percentage of 
Medicare discharges (not less than 60 percent of its inpatient days or 
discharges in its cost reporting year beginning in FY 1987 or in two of 
its three most recently settled Medicare cost reporting years).
    Section 1886(g) of the Act requires the Secretary to pay for the 
capital-related costs of inpatient hospital services in accordance with 
a prospective payment system established by the Secretary. The basic 
methodology for determining capital prospective payments is set forth 
in our regulations at 42 CFR 412.308 and 412.312. Under the capital 
IPPS, payments are adjusted by the same DRG for the case as they are 
under the operating IPPS. Capital IPPS payments are also adjusted for 
IME and DSH, similar to the adjustments made under the operating IPPS. 
In addition, hospitals may receive outlier payments for those cases 
that have unusually high costs.

[[Page 41153]]

    The existing regulations governing payments to hospitals under the 
IPPS are located in 42 CFR part 412, subparts A through M.
2. Hospitals and Hospital Units Excluded From the IPPS
    Under section 1886(d)(1)(B) of the Act, as amended, certain 
hospitals and hospital units are excluded from the IPPS. These 
hospitals and units are: Inpatient rehabilitation facility (IRF) 
hospitals and units; long-term care hospitals (LTCHs); psychiatric 
hospitals and units; children's hospitals; cancer hospitals; extended 
neoplastic disease care hospitals, and hospitals located outside the 50 
States, the District of Columbia, and Puerto Rico (that is, hospitals 
located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, 
and American Samoa). Religious nonmedical health care institutions 
(RNHCIs) are also excluded from the IPPS. Various sections of the 
Balanced Budget Act of 1997 (BBA, Pub. L. 105-33), the Medicare, 
Medicaid and SCHIP [State Children's Health Insurance Program] Balanced 
Budget Refinement Act of 1999 (BBRA, Pub. L. 106-113), and the 
Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act 
of 2000 (BIPA, Pub. L. 106-554) provide for the implementation of PPSs 
for IRF hospitals and units, LTCHs, and psychiatric hospitals and units 
(referred to as inpatient psychiatric facilities (IPFs)). (We note that 
the annual updates to the LTCH PPS are included along with the IPPS 
annual update in this document. Updates to the IRF PPS and IPF PPS are 
issued as separate documents.) Children's hospitals, cancer hospitals, 
hospitals located outside the 50 States, the District of Columbia, and 
Puerto Rico (that is, hospitals located in the U.S. Virgin Islands, 
Guam, the Northern Mariana Islands, and American Samoa), and RNHCIs 
continue to be paid solely under a reasonable cost-based system, 
subject to a rate-of-increase ceiling on inpatient operating costs. 
Similarly, extended neoplastic disease care hospitals are paid on a 
reasonable cost basis, subject to a rate-of-increase ceiling on 
inpatient operating costs.
    The existing regulations governing payments to excluded hospitals 
and hospital units are located in 42 CFR parts 412 and 413.
3. Long-Term Care Hospital Prospective Payment System (LTCH PPS)
    The Medicare prospective payment system (PPS) for LTCHs applies to 
hospitals described in section 1886(d)(1)(B)(iv) of the Act, effective 
for cost reporting periods beginning on or after October 1, 2002. The 
LTCH PPS was established under the authority of sections 123 of the 
BBRA and section 307(b) of the BIPA (as codified under section 
1886(m)(1) of the Act). During the 5-year (optional) transition period, 
a LTCH's payment under the PPS was based on an increasing proportion of 
the LTCH Federal rate with a corresponding decreasing proportion based 
on reasonable cost principles. Effective for cost reporting periods 
beginning on or after October 1, 2006 through September 30, 2015 all 
LTCHs were paid 100 percent of the Federal rate. Section 1206(a) of the 
Pathway for SGR Reform Act of 2013 (Pub. L. 113-67) established the 
site neutral payment rate under the LTCH PPS, which made the LTCH PPS a 
dual rate payment system beginning in FY 2016. Under this statute, 
based on a rolling effective date that is linked to the date on which a 
given LTCH's Federal FY 2016 cost reporting period begins, LTCHs are 
generally paid for discharges at the site neutral payment rate unless 
the discharge meets the patient criteria for payment at the LTCH PPS 
standard Federal payment rate. The existing regulations governing 
payment under the LTCH PPS are located in 42 CFR part 412, subpart O. 
Beginning October 1, 2009, we issue the annual updates to the LTCH PPS 
in the same documents that update the IPPS (73 FR 26797 through 26798).
4. Critical Access Hospitals (CAHs)
    Under sections 1814(l), 1820, and 1834(g) of the Act, payments made 
to critical access hospitals (CAHs) (that is, rural hospitals or 
facilities that meet certain statutory requirements) for inpatient and 
outpatient services are generally based on 101 percent of reasonable 
cost. Reasonable cost is determined under the provisions of section 
1861(v) of the Act and existing regulations under 42 CFR part 413.
5. Payments for Graduate Medical Education (GME)
    Under section 1886(a)(4) of the Act, costs of approved educational 
activities are excluded from the operating costs of inpatient hospital 
services. Hospitals with approved graduate medical education (GME) 
programs are paid for the direct costs of GME in accordance with 
section 1886(h) of the Act. The amount of payment for direct GME costs 
for a cost reporting period is based on the hospital's number of 
residents in that period and the hospital's costs per resident in a 
base year. The existing regulations governing payments to the various 
types of hospitals are located in 42 CFR part 413.

C. Summary of Provisions of Recent Legislation Implemented in This 
Final Rule

1. Pathway for SGR Reform Act of 2013 (Pub. L. 113-67)
    The Pathway for SGR Reform Act of 2013 (Pub. L. 113-67) introduced 
new payment rules in the LTCH PPS. Under section 1206 of this law, 
discharges in cost reporting periods beginning on or after October 1, 
2015, under the LTCH PPS, receive payment under a site neutral rate 
unless the discharge meets certain patient-specific criteria. In this 
final rule, we are continuing to update certain policies that 
implemented provisions under section 1206 of the Pathway for SGR Reform 
Act.
2. Improving Medicare Post-Acute Care Transformation Act of 2014 
(IMPACT Act) (Pub. L. 113-185)
    The Improving Medicare Post-Acute Care Transformation Act of 2014 
(IMPACT Act) (Pub. L. 113-185), enacted on October 6, 2014, made a 
number of changes that affect the Long-Term Care Hospital Quality 
Reporting Program (LTCH QRP). In this final rule, we are continuing to 
implement portions of section 1899B of the Act, as added by section 
2(a) of the IMPACT Act, which, in part, requires LTCHs, among other 
post-acute care providers, to report standardized patient assessment 
data, data on quality measures, and data on resource use and other 
measures.
3. The Medicare Access and CHIP Reauthorization Act of 2015 (Pub. L. 
114-10)
    Section 414 of the Medicare Access and CHIP Reauthorization Act of 
2015 (MACRA, Pub. L. 114-10) specifies a 0.5 percent positive 
adjustment to the standardized amount of Medicare payments to acute 
care hospitals for FYs 2018 through 2023. These adjustments follow the 
recoupment adjustment to the standardized amounts under section 1886(d) 
of the Act based upon the Secretary's estimates for discharges 
occurring from FYs 2014 through 2017 to fully offset $11 billion, in 
accordance with section 631 of the ATRA. The FY 2018 adjustment was 
subsequently adjusted to 0.4588 percent by section 15005 of the 21st 
Century Cures Act.
4. The 21st Century Cures Act (Pub. L. 114-255)
    The 21st Century Cures Act (Pub. L. 114-255), enacted on December 
13, 2016, contained the following provision affecting payments under 
the Hospital Readmissions Reduction Program,

[[Page 41154]]

which we are continuing to implement in this final rule:
     Section 15002, which amended section 1886(q)(3) of the Act 
by adding subparagraphs (D) and (E), which requires the Secretary to 
develop a methodology for calculating the excess readmissions 
adjustment factor for the Hospital Readmissions Reduction Program based 
on cohorts defined by the percentage of dual-eligible patients (that 
is, patients who are eligible for both Medicare and full-benefit 
Medicaid coverage) cared for by a hospital. In this final rule, we are 
continuing to implement changes to the payment adjustment factor to 
assess penalties based on a hospital's performance, relative to other 
hospitals treating a similar proportion of dual-eligible patients.
5. The Bipartisan Budget Act of 2018 (Pub. L. 115-123)
    The Bipartisan Budget Act of 2018 (Pub. L. 115-123), enacted on 
February 9, 2018, contains provisions affecting payments under the IPPS 
and the LTCH PPS, which we are implementing or continuing to implement 
in this final rule:
     Section 50204 amended section 1886(d)(12) of the Act to 
provide for certain temporary changes to the low-volume hospital 
payment adjustment policy for FYs 2018 through 2022. For FY 2018, this 
provision extends the qualifying criteria and payment adjustment 
formula that applied for FYs 2011 through 2017. For FYs 2019 through 
2022, this provision modifies the discharge criterion and payment 
adjustment formula. In FY 2023 and subsequent fiscal years, the 
qualifying criteria and payment adjustment revert to the requirements 
that were in effect for FYs 2005 through 2010.
     Section 50205 extends the MDH program through FY 2022. It 
also provides for an eligible hospital that is located in a State with 
no rural area to qualify for MDH status under an expanded definition if 
the hospital satisfies any of the statutory criteria at section 
1886(d)(8)(E)(ii)(I), (II) (as of January 1, 2018), or (III) of the Act 
to be reclassified as rural.
     Section 51005(a) modified section 1886(m)(6) of the Act by 
extending the blended payment rate for site neutral payment rate LTCH 
discharges for cost reporting periods beginning in FY 2016 by an 
additional 2 years (FYs 2018 and 2019). In addition, section 51005(b) 
reduces the LTCH IPPS comparable per diem amount used in the site 
neutral payment rate for FYs 2018 through 2026 by 4.6 percent. In this 
final rule, we are making conforming changes to the existing 
regulations.
     Section 53109 modified section 1886(d)(5)(J) of the Act to 
require that, beginning in FY 2019, discharges to hospice care also 
qualify as a postacute care transfer and are subject to payment 
adjustments.

D. Issuance of a Notice of Proposed Rulemaking

    In the proposed rule that appeared in the Federal Register on May 
7, 2018 (83 FR 20164), we set forth proposed payment and policy changes 
to the Medicare IPPS for FY 2019 operating costs and for capital-
related costs of acute care hospitals and certain hospitals and 
hospital units that are excluded from IPPS. In addition, we set forth 
proposed changes to the payment rates, factors, and other payment and 
policy-related changes to programs associated with payment rate 
policies under the LTCH PPS for FY 2019.
    Below is a general summary of the major changes that we proposed to 
make in the proposed rule.
1. Proposed Changes to MS-DRG Classifications and Recalibrations of 
Relative Weights
    In section II. of the preamble of the proposed rule, we included--
     Proposed changes to MS-DRG classifications based on our 
yearly review for FY 2019.
     Proposed adjustment to the standardized amounts under 
section 1886(d) of the Act for FY 2019 in accordance with the 
amendments made to section 7(b)(1)(B) of Public Law 110-90 by section 
414 of the MACRA.
     Proposed recalibration of the MS-DRG relative weights.
     A discussion of the proposed FY 2019 status of new 
technologies approved for add-on payments for FY 2018 and a 
presentation of our evaluation and analysis of the FY 2019 applicants 
for add-on payments for high-cost new medical services and technologies 
(including public input, as directed by Pub. L. 108-173, obtained in a 
town hall meeting).
2. Proposed Changes to the Hospital Wage Index for Acute Care Hospitals
    In section III. of the preamble to the proposed rule, we proposed 
to make revisions to the wage index for acute care hospitals and the 
annual update of the wage data. Specific issues addressed include, but 
are not limited to, the following:
     The proposed FY 2019 wage index update using wage data 
from cost reporting periods beginning in FY 2015.
     Proposal regarding other wage-related costs in the wage 
index.
     Calculation of the proposed occupational mix adjustment 
for FY 2019 based on the 2016 Occupational Mix Survey.
     Analysis and implementation of the proposed FY 2019 
occupational mix adjustment to the wage index for acute care hospitals.
     Proposed application of the rural floor and the frontier 
State floor and the proposed expiration of the imputed floor.
     Proposals to codify policies regarding multicampus 
hospitals.
     Proposed revisions to the wage index for acute care 
hospitals, based on hospital redesignations and reclassifications under 
sections 1886(d)(8)(B), (d)(8)(E), and (d)(10) of the Act.
     The proposed adjustment to the wage index for acute care 
hospitals for FY 2019 based on commuting patterns of hospital employees 
who reside in a county and work in a different area with a higher wage 
index.
     Determination of the labor-related share for the proposed 
FY 2019 wage index.
     Public comment solicitation on wage index disparities.
3. Other Decisions and Proposed Changes to the IPPS for Operating Costs
    In section IV. of the preamble of the proposed rule, we discussed 
proposed changes or clarifications of a number of the provisions of the 
regulations in 42 CFR parts 412 and 413, including the following:
     Proposed changes to MS-DRGs subject to the postacute care 
transfer policy and special payment policy and implementation of the 
statutory changes to the postacute care transfer policy.
     Proposed changes to the inpatient hospital update for FY 
2019.
     Proposed changes related to the statutory changes to the 
low-volume hospital payment adjustment policy.
     Proposed updated national and regional case-mix values and 
discharges for purposes of determining RRC status.
     The statutorily required IME adjustment factor for FY 
2019.
     Proposed changes to the methodologies for determining 
Medicare DSH payments and the additional payments for uncompensated 
care.
     Proposed changes to the effective date of SCH and MDH 
classification status determinations.
     Proposed changes related to the extension of the MDH 
program.
     Proposed changes to the rules for payment adjustments 
under the

[[Page 41155]]

Hospital Readmissions Reduction Program based on hospital readmission 
measures and the process for hospital review and correction of those 
rates for FY 2019.
     Proposed changes to the requirements and provision of 
value-based incentive payments under the Hospital Value-Based 
Purchasing Program.
     Proposed requirements for payment adjustments to hospitals 
under the HAC Reduction Program for FY 2019.
     Proposed changes to Medicare GME affiliation agreements 
for new urban teaching hospitals.
     Discussion of and proposals relating to the implementation 
of the Rural Community Hospital Demonstration Program in FY 2019.
     Proposed revisions of the hospital inpatient admission 
orders documentation requirements.
4. Proposed FY 2019 Policy Governing the IPPS for Capital-Related Costs
    In section V. of the preamble to the proposed rule, we discussed 
the proposed payment policy requirements for capital-related costs and 
capital payments to hospitals for FY 2019.
5. Proposed Changes to the Payment Rates for Certain Excluded 
Hospitals: Rate-of-Increase Percentages
    In section VI. of the preamble of the proposed rule, we discussed--
     Proposed changes to payments to certain excluded hospitals 
for FY 2019.
     Proposed changes to the regulations governing satellite 
facilities.
     Proposed changes to the regulations governing excluded 
units of hospitals.
     Proposed continued implementation of the Frontier 
Community Health Integration Project (FCHIP) Demonstration.
6. Proposed Changes to the LTCH PPS
    In section VII. of the preamble of the proposed rule, we set 
forth--
     Proposed changes to the LTCH PPS Federal payment rates, 
factors, and other payment rate policies under the LTCH PPS for FY 
2019.
     Proposed changes to the blended payment rate for site 
neutral payment rate cases.
     Proposed elimination of the 25-percent threshold policy.
7. Proposed Changes Relating to Quality Data Reporting for Specific 
Providers and Suppliers
    In section VIII. of the preamble of the proposed rule, we address--
     Proposed requirements for the Hospital Inpatient Quality 
Reporting (IQR) Program.
     Proposed changes to the requirements for the quality 
reporting program for PPS-exempt cancer hospitals (PCHQR Program).
     Proposed changes to the requirements under the LTCH 
Quality Reporting Program (LTCH QRP).
     Proposed changes to requirements pertaining to the 
clinical quality measurement for eligible hospitals and CAHs 
participating in the Medicare and Medicaid Promoting Interoperability 
Programs.
8. Proposed Revision to the Supporting Documentation Requirements for 
an Acceptable Medicare Cost Report Submission
    In section IX. of the preamble of the proposed rule, we set forth 
proposed revisions to the supporting documentation required for an 
acceptable Medicare cost report submission.
9. Requirements for Hospitals To Make Public List of Standard Charges
    In section X. of the preamble of the proposed rule, we discussed 
our efforts to further improve the public accessibility of hospital 
standard charge information, effective January 1, 2019, in accordance 
with section 2718(e) of the Public Health Service Act.
10. Proposed Revisions Regarding Physician Certification and 
Recertification of Claims
    In section XI. of the preamble of the proposed rule, we set forth 
proposed revisions to the requirements for supporting information used 
for physician certification and recertification of claims.
11. Request for Information
    In section XII. of the preamble of the proposed rule, we included a 
request for information on the possible establishment of CMS patient 
health and safety requirements for hospitals and other Medicare- and 
Medicaid-participating providers and suppliers for interoperable 
electronic health records and systems for electronic health care 
information exchange.
12. Determining Prospective Payment Operating and Capital Rates and 
Rate-of-Increase Limits for Acute Care Hospitals
    In sections II. and III. of the Addendum to the proposed rule, we 
set forth the proposed changes to the amounts and factors for 
determining the proposed FY 2019 prospective payment rates for 
operating costs and capital-related costs for acute care hospitals. We 
proposed to establish the threshold amounts for outlier cases. In 
addition, in section IV. of the Addendum to the proposed rule, we 
addressed the update factors for determining the rate-of-increase 
limits for cost reporting periods beginning in FY 2019 for certain 
hospitals excluded from the IPPS.
13. Determining Prospective Payment Rates for LTCHs
    In section V. of the Addendum to the proposed rule, we set forth 
proposed changes to the amounts and factors for determining the 
proposed FY 2019 LTCH PPS standard Federal payment rate and other 
factors used to determine LTCH PPS payments under both the LTCH PPS 
standard Federal payment rate and the site neutral payment rate in FY 
2019. We proposed to establish the adjustments for wage levels, the 
labor-related share, the cost-of-living adjustment, and high-cost 
outliers, including the applicable fixed-loss amounts and the LTCH 
cost-to-charge ratios (CCRs) for both payment rates.
14. Impact Analysis
    In Appendix A of the proposed rule, we set forth an analysis of the 
impact the proposed changes would have on affected acute care 
hospitals, CAHs, LTCHs, and PCHs.
15. Recommendation of Update Factors for Operating Cost Rates of 
Payment for Hospital Inpatient Services
    In Appendix B of the proposed rule, as required by sections 
1886(e)(4) and (e)(5) of the Act, we provided our recommendations of 
the appropriate percentage changes for FY 2019 for the following:
     A single average standardized amount for all areas for 
hospital inpatient services paid under the IPPS for operating costs of 
acute care hospitals (and hospital-specific rates applicable to SCHs 
and MDHs).
     Target rate-of-increase limits to the allowable operating 
costs of hospital inpatient services furnished by certain hospitals 
excluded from the IPPS.
     The LTCH PPS standard Federal payment rate and the site 
neutral payment rate for hospital inpatient services provided for LTCH 
PPS discharges.
16. Discussion of Medicare Payment Advisory Commission Recommendations
    Under section 1805(b) of the Act, MedPAC is required to submit a 
report to Congress, no later than March 15 of each year, in which 
MedPAC reviews and makes recommendations on Medicare payment policies. 
MedPAC's March 2018 recommendations concerning hospital inpatient 
payment

[[Page 41156]]

policies addressed the update factor for hospital inpatient operating 
costs and capital-related costs for hospitals under the IPPS. We 
addressed these recommendations in Appendix B of the proposed rule. For 
further information relating specifically to the MedPAC March 2018 
report or to obtain a copy of the report, contact MedPAC at (202) 220-
3700 or visit MedPAC's website at: http://www.medpac.gov.

II. Changes to Medicare Severity Diagnosis-Related Group (MS-DRG) 
Classifications and Relative Weights

A. Background

    Section 1886(d) of the Act specifies that the Secretary shall 
establish a classification system (referred to as diagnosis-related 
groups (DRGs)) for inpatient discharges and adjust payments under the 
IPPS based on appropriate weighting factors assigned to each DRG. 
Therefore, under the IPPS, Medicare pays for inpatient hospital 
services on a rate per discharge basis that varies according to the DRG 
to which a beneficiary's stay is assigned. The formula used to 
calculate payment for a specific case multiplies an individual 
hospital's payment rate per case by the weight of the DRG to which the 
case is assigned. Each DRG weight represents the average resources 
required to care for cases in that particular DRG, relative to the 
average resources used to treat cases in all DRGs.
    Section 1886(d)(4)(C) of the Act requires that the Secretary adjust 
the DRG classifications and relative weights at least annually to 
account for changes in resource consumption. These adjustments are made 
to reflect changes in treatment patterns, technology, and any other 
factors that may change the relative use of hospital resources.

B. MS-DRG Reclassifications

    For general information about the MS-DRG system, including yearly 
reviews and changes to the MS-DRGs, we refer readers to the previous 
discussions in the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 
43764 through 43766) and the FYs 2011 through 2018 IPPS/LTCH PPS final 
rules (75 FR 50053 through 50055; 76 FR 51485 through 51487; 77 FR 
53273; 78 FR 50512; 79 FR 49871; 80 FR 49342; 81 FR 56787 through 
56872; and 82 FR 38010 through 38085, respectively).

C. Adoption of the MS-DRGs in FY 2008

    For information on the adoption of the MS-DRGs in FY 2008, we refer 
readers to the FY 2008 IPPS final rule with comment period (72 FR 47140 
through 47189).

D. FY 2019 MS-DRG Documentation and Coding Adjustment

1. Background on the Prospective MS-DRG Documentation and Coding 
Adjustments for FY 2008 and FY 2009 Authorized by Public Law 110-90 and 
the Recoupment or Repayment Adjustment Authorized by Section 631 of the 
American Taxpayer Relief Act of 2012 (ATRA)
    In the FY 2008 IPPS final rule with comment period (72 FR 47140 
through 47189), we adopted the MS-DRG patient classification system for 
the IPPS, effective October 1, 2007, to better recognize severity of 
illness in Medicare payment rates for acute care hospitals. The 
adoption of the MS-DRG system resulted in the expansion of the number 
of DRGs from 538 in FY 2007 to 745 in FY 2008. By increasing the number 
of MS-DRGs and more fully taking into account patient severity of 
illness in Medicare payment rates for acute care hospitals, MS-DRGs 
encourage hospitals to improve their documentation and coding of 
patient diagnoses.
    In the FY 2008 IPPS final rule with comment period (72 FR 47175 
through 47186), we indicated that the adoption of the MS-DRGs had the 
potential to lead to increases in aggregate payments without a 
corresponding increase in actual patient severity of illness due to the 
incentives for additional documentation and coding. In that final rule 
with comment period, we exercised our authority under section 
1886(d)(3)(A)(vi) of the Act, which authorizes us to maintain budget 
neutrality by adjusting the national standardized amount, to eliminate 
the estimated effect of changes in coding or classification that do not 
reflect real changes in case-mix. Our actuaries estimated that 
maintaining budget neutrality required an adjustment of -4.8 percentage 
points to the national standardized amount. We provided for phasing in 
this -4.8 percentage point adjustment over 3 years. Specifically, we 
established prospective documentation and coding adjustments of -1.2 
percentage points for FY 2008, -1.8 percentage points for FY 2009, and 
-1.8 percentage points for FY 2010.
    On September 29, 2007, Congress enacted the TMA [Transitional 
Medical Assistance], Abstinence Education, and QI [Qualifying 
Individuals] Programs Extension Act of 2007 (Pub. L. 110-90). Section 
7(a) of Public Law 110-90 reduced the documentation and coding 
adjustment made as a result of the MS-DRG system that we adopted in the 
FY 2008 IPPS final rule with comment period to -0.6 percentage point 
for FY 2008 and -0.9 percentage point for FY 2009.
    As discussed in prior year rulemakings, and most recently in the FY 
2017 IPPS/LTCH PPS final rule (81 FR 56780 through 56782), we 
implemented a series of adjustments required under sections 7(b)(1)(A) 
and 7(b)(1)(B) of Public Law 110-90, based on a retrospective review of 
FY 2008 and FY 2009 claims data. We completed these adjustments in FY 
2013 but indicated in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53274 
through 53275) that delaying full implementation of the adjustment 
required under section 7(b)(1)(A) of Public Law 110-90 until FY 2013 
resulted in payments in FY 2010 through FY 2012 being overstated, and 
that these overpayments could not be recovered under Public Law 110-90.
    In addition, as discussed in prior rulemakings and most recently in 
the FY 2018 IPPS/LTCH PPS final rule (82 FR 38008 through 38009), 
section 631 of the ATRA amended section 7(b)(1)(B) of Public Law 110-90 
to require the Secretary to make a recoupment adjustment or adjustments 
totaling $11 billion by FY 2017. This adjustment represented the amount 
of the increase in aggregate payments as a result of not completing the 
prospective adjustment authorized under section 7(b)(1)(A) of Public 
Law 110-90 until FY 2013.
2. Adjustment Made for FY 2018 as Required Under Section 414 of Public 
Law 114-10 (MACRA) and Section 15005 of Public Law 114-255
    As stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56785), 
once the recoupment required under section 631 of the ATRA was 
complete, we had anticipated making a single positive adjustment in FY 
2018 to offset the reductions required to recoup the $11 billion under 
section 631 of the ATRA. However, section 414 of the MACRA (which was 
enacted on April 16, 2015) replaced the single positive adjustment we 
intended to make in FY 2018 with a 0.5 percentage point positive 
adjustment for each of FYs 2018 through 2023. In the FY 2017 
rulemaking, we indicated that we would address the adjustments for FY 
2018 and later fiscal years in future rulemaking. Section 15005 of the 
21st Century Cures Act (Pub. L. 114-255), which was enacted on December 
13, 2016, amended section 7(b)(1)(B) of the TMA, as amended by section 
631 of the ATRA and section 414 of the MACRA, to reduce the

[[Page 41157]]

adjustment for FY 2018 from a 0.5 percentage point to a 0.4588 
percentage point. As we discussed in the FY 2018 rulemaking, we believe 
the directive under section 15005 of Public Law 114-255 is clear. 
Therefore, in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38009) for FY 
2018, we implemented the required +0.4588 percentage point adjustment 
to the standardized amount. This is a permanent adjustment to payment 
rates. While we did not address future adjustments required under 
section 414 of the MACRA and section 15005 of Public Law 114-255 at 
that time, we stated that we expected to propose positive 0.5 
percentage point adjustments to the standardized amounts for FYs 2019 
through 2023.
3. Adjustment for FY 2019
    In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20176 and 20177), 
consistent with the requirements of section 414 of the MACRA, we 
proposed to implement a positive 0.5 percentage point adjustment to the 
standardized amount for FY 2019. We indicated that this would be a 
permanent adjustment to payment rates. We stated in the proposed rule 
that we plan to propose future adjustments required under section 414 
of the MACRA for FYs 2020 through 2023 in future rulemaking.
    Comment: Several commenters stated that CMS has misinterpreted the 
Congressional directives regarding the level of positive adjustment 
required for FY 2018 and FY 2019. The commenters contended that, while 
the positive adjustments required under section 414 of the MACRA would 
only total 3.0 percentage points by FY 2023, the levels of these 
adjustments were determined using an estimated positive ``3.2 percent 
baseline'' adjustment that otherwise would have been made in FY 2018. 
The commenters believed that because CMS implemented an adjustment of -
1.5 percentage points instead of the expected -0.8 percentage points in 
FY 2017, totaling -3.9 percentage points overall, CMS has imposed a 
permanent -0.7 percentage point negative adjustment beyond its 
statutory authority, contravening what the commenters asserted was 
Congress' clear instructions and intent. A majority of the commenters 
requested that CMS reverse its previous position and implement 
additional 0.7 percentage point adjustments for both FY 2018 and FY 
2019. Some of the commenters requested that CMS use its statutory 
discretion to ensure that all 3.9 percentage points in negative 
adjustment be restored. In addition, some of the commenters, while 
acknowledging that CMS may be bound by law, expressed opposition to the 
permanent reductions and requested that CMS refrain from making any 
additional coding adjustments in the future.
    Response: As we discussed in the FY 2019 IPPS/LTCH PPS proposed 
rule, we believe section 414 of the MACRA and section 15005 of the 21st 
Century Cures Act clearly set forth the levels of positive adjustments 
for FYs 2018 through 2023. We are not convinced that the adjustments 
prescribed by MACRA were predicated on a specific ``baseline'' 
adjustment level. While we had anticipated making a positive adjustment 
in FY 2018 to offset the reductions required to recoup the $11 billion 
under section 631 of the ATRA, section 414 of the MACRA required that 
we implement a 0.5 percentage point positive adjustment for each of FYs 
2018 through 2023, and not the single positive adjustment we intended 
to make in FY 2018. As noted by the commenters, and discussed in the FY 
2017 IPPS/LTCH PPS final rule, by phasing in a total positive 
adjustment of only 3.0 percentage points, section 414 of the MACRA 
would not fully restore even the 3.2 percentage points adjustment 
originally estimated by CMS in the FY 2014 IPPS/LTCH PPS final rule (78 
FR 50515). Moreover, as discussed in the FY 2018 IPPS/LTCH PPS final 
rule, Public Law 114-255, which further reduced the positive adjustment 
required for FY 2018 from 0.5 percentage point to 0.4588 percentage 
point, was enacted on December 13, 2016, after CMS had proposed and 
finalized the final negative -1.5 percentage points adjustment required 
under section 631 of the ATRA. We see no evidence that Congress enacted 
these adjustments with the intent that CMS would make an additional 
+0.7 percentage point adjustment in FY 2018 to compensate for the 
higher than expected final ATRA adjustment made in FY 2017.
    After consideration of the public comments we received, we are 
finalizing the +0.5 percentage point adjustment to the standardized 
amount for FY 2019, as required under section 414 of the MACRA.

E. Refinement of the MS-DRG Relative Weight Calculation

1. Background
    Beginning in FY 2007, we implemented relative weights for DRGs 
based on cost report data instead of charge information. We refer 
readers to the FY 2007 IPPS final rule (71 FR 47882) for a detailed 
discussion of our final policy for calculating the cost-based DRG 
relative weights and to the FY 2008 IPPS final rule with comment period 
(72 FR 47199) for information on how we blended relative weights based 
on the CMS DRGs and MS-DRGs. We also refer readers to the FY 2017 IPPS/
LTCH PPS final rule (81 FR 56785 through 56787) for a detailed 
discussion of the history of changes to the number of cost centers used 
in calculating the DRG relative weights. Since FY 2014, we have 
calculated the IPPS MS-DRG relative weights using 19 CCRs, which now 
include distinct CCRs for implantable devices, MRIs, CT scans, and 
cardiac catheterization.
2. Discussion of Policy for FY 2019
    Consistent with our established policy, we calculated the final MS-
DRG relative weights for FY 2019 using two data sources: the MedPAR 
file as the claims data source and the HCRIS as the cost report data 
source. We adjusted the charges from the claims to costs by applying 
the 19 national average CCRs developed from the cost reports. The 
description of the calculation of the 19 CCRs and the MS-DRG relative 
weights for FY 2019 is included in section II.G. of the preamble to 
this FY 2019 IPPS/LTCH PPS final rule. As we did with the FY 2018 IPPS/
LTCH PPS final rule, for this FY 2019 final rule, we are providing the 
version of the HCRIS from which we calculated these 19 CCRs on the CMS 
website 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 2019 IPPS Final Rule Home Page'' or 
``Acute Inpatient Files for Download.''
    Comment: One commenter requested that CMS use a single diagnostic 
radiology CCR to set weights, rather than using the separate CT and MRI 
cost centers. The commenter requested that if CMS maintains the 
separate CT and MRI cost centers, CMS not include cost reports from 
hospitals that use the ``square foot'' allocation methodology. The 
commenter provided an analysis to support its assertion that the CCRs 
for CT and MRI are incorrect and are inappropriately reducing payments 
under the IPPS. The commenter indicated that the charge compression 
hypothesis has been shown to be false with the use of the separate CT 
and MRI cost centers. The commenter discussed problems with cost 
allocation to the CT and MRI cost centers and referenced discussions in 
prior IPPS/LTCH PPS rules about this issue. The commenter acknowledged 
that CMS did not include a specific proposal in the FY 2019 proposed 
rule regarding this issue.

[[Page 41158]]

    Response: As the commenter noted, we did not make any proposal for 
FY 2019 relating to the number of cost centers used to calculate the 
relative weights. As noted previously and discussed in detail in prior 
rulemakings, and as noted in response to a similar public comment 
received last year, we have calculated the IPPS MS-DRG relative weights 
using 19 CCRs, including distinct CCRs for MRIs and CT scans, since FY 
2014. We refer readers to the FY 2017 IPPS/LTCH PPS final rule (81 FR 
56785) for a detailed discussion of the basis for establishing these 19 
CCRs. We further note that in the FY 2014 IPPS/LTCH PPS final rule (78 
FR 50518 through 50523), we presented data analyses using distinct CCRs 
for implantable devices, MRIs, CT scans, and cardiac catheterization.
    We will continue to explore ways in which we can improve the 
accuracy of the cost report data and calculated CCRs used in the cost 
estimation process.

F. Changes to Specific MS-DRG Classifications

1. Discussion of Changes to Coding System and Basis for FY 2019 MS-DRG 
Updates
a. Conversion of MS-DRGs to the International Classification of 
Diseases, 10th Revision (ICD-10)
    As of October 1, 2015, providers use the International 
Classification of Diseases, 10th Revision (ICD-10) coding system to 
report diagnoses and procedures for Medicare hospital inpatient 
services under the MS-DRG system instead of the ICD-9-CM coding system, 
which was used through September 30, 2015. The ICD-10 coding system 
includes the International Classification of Diseases, 10th Revision, 
Clinical Modification (ICD-10-CM) for diagnosis coding and the 
International Classification of Diseases, 10th Revision, Procedure 
Coding System (ICD-10-PCS) for inpatient hospital procedure coding, as 
well as the ICD-10-CM and ICD-10-PCS Official Guidelines for Coding and 
Reporting. For a detailed discussion of the conversion of the MS-DRGs 
to ICD-10, we refer readers to the FY 2017 IPPS/LTCH PPS final rule (81 
FR 56787 through 56789).
b. Basis for FY 2019 MS-DRG Updates
    CMS has previously encouraged input from our stakeholders 
concerning the annual IPPS updates when that input was made available 
to us by December 7 of the year prior to the next annual proposed rule 
update. As discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR 
38010), as we work with the public to examine the ICD-10 claims data 
used for updates to the ICD-10 MS DRGs, we would like to examine areas 
where the MS-DRGs can be improved, which will require additional time 
for us to review requests from the public to make specific updates, 
analyze claims data, and consider any proposed updates. Given the need 
for more time to carefully evaluate requests and propose updates, we 
changed the deadline to request updates to the MS-DRGs to November 1 of 
each year. This will provide an additional 5 weeks for the data 
analysis and review process. Interested parties had to submit any 
comments and suggestions for FY 2019 by November 1, 2017, and are 
encouraged to submit any comments and suggestions for FY 2020 by 
November 1, 2018 via the CMS MS-DRG Classification Change Request 
Mailbox located at: [email protected]. The comments 
that were submitted in a timely manner for FY 2019 are discussed in 
this section of the preamble of this final rule.
    Following are the changes that we proposed to the MS-DRGs for FY 
2019 in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20177 through 
20257). We invited public comments on each of the MS-DRG classification 
proposed changes, as well as our proposals to maintain certain existing 
MS-DRG classifications discussed in the proposed rule. In some cases, 
we proposed changes to the MS-DRG classifications based on our analysis 
of claims data and consultation with our clinical advisors. In other 
cases, we proposed to maintain the existing MS-DRG classifications 
based on our analysis of claims data and consultation with our clinical 
advisors. For the FY 2019 IPPS/LTCH PPS proposed rule, our MS-DRG 
analysis was based on ICD-10 claims data from the September 2017 update 
of the FY 2017 MedPAR file, which contains hospital bills received 
through September 30, 2017, for discharges occurring through September 
30, 2017. In our discussion of the proposed MS-DRG reclassification 
changes, we referred to our analysis of claims data from the 
``September 2017 update of the FY 2017 MedPAR file.''
    In this FY 2019 IPPS/LTCH PPS final rule, we summarize the public 
comments we received on our proposals, present our responses, and state 
our final policies. For this FY 2019 final rule, we did not perform any 
further MS-DRG analysis of claims data. Therefore, all of the data 
analysis is based on claims data from the September 2017 update of the 
FY 2017 MedPAR file, which contains bills received through September 
30, 2017, for discharges occurring through September 30, 2017.
    As explained in previous rulemaking (76 FR 51487), in deciding 
whether to propose to make further modifications to the MS-DRGs for 
particular circumstances brought to our attention, we consider whether 
the resource consumption and clinical characteristics of the patients 
with a given set of conditions are significantly different than the 
remaining patients represented in the MS-DRG. We evaluate patient care 
costs using average costs and lengths of stay and rely on the judgment 
of our clinical advisors to determine whether patients are clinically 
distinct or similar to other patients represented in the MS-DRG. In 
evaluating resource costs, we consider both the absolute and percentage 
differences in average costs between the cases we select for review and 
the remainder of cases in the MS-DRG. We also consider variation in 
costs within these groups; that is, whether observed average 
differences are consistent across patients or attributable to cases 
that are extreme in terms of costs or length of stay, or both. Further, 
we consider the number of patients who will have a given set of 
characteristics and generally prefer not to create a new MS-DRG unless 
it would include a substantial number of cases.
    In our examination of the claims data, we apply the following 
criteria established in FY 2008 (72 FR 47169) to determine if the 
creation of a new complication or comorbidity (CC) or major 
complication or comorbidity (MCC) subgroup within a base MS-DRG is 
warranted:
     A reduction in variance of costs of at least 3 percent;
     At least 5 percent of the patients in the MS-DRG fall 
within the CC or MCC subgroup;
     At least 500 cases are in the CC or MCC subgroup;
     There is at least a 20-percent difference in average costs 
between subgroups; and
     There is a $2,000 difference in average costs between 
subgroups.
    In order to warrant creation of a CC or MCC subgroup within a base 
MS-DRG, the subgroup must meet all five of the criteria.
    We are making the FY 2019 ICD-10 MS-DRG GROUPER and Medicare Code 
Editor (MCE) Software Version 36, the ICD-10 MS-DRG Definitions Manual 
files Version 36 and the Definitions of Medicare Code Edits Manual 
Version 36 available to the public on our CMS website at: https://
www.cms.gov/Medicare/Medicare-Fee-for-Service-

[[Page 41159]]

Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.html.
2. Pre-MDC
a. Heart Transplant or Implant of Heart Assist System
    In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38012), we stated 
our intent to review the ICD-10 logic for Pre-MDC MS-DRGs 001 and 002 
(Heart Transplant or Implant of Heart Assist System with and without 
MCC, respectively), as well as MS-DRG 215 (Other Heart Assist System 
Implant) and MS-DRGs 268 and 269 (Aortic and Heart Assist Procedures 
Except Pulsation Balloon with and without MCC, respectively) where 
procedures involving heart assist devices are currently assigned. We 
also encouraged the public to submit any comments on restructuring the 
MS-DRGs for heart assist system procedures to the CMS MS-DRG 
Classification Change Request Mailbox located at: 
[email protected] by November 1, 2017.
    As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 
20178 through 20179), the logic for Pre-MDC MS-DRGs 001 and 002 is 
comprised of two lists. The first list includes procedure codes 
identifying a heart transplant procedure, and the second list includes 
procedure codes identifying the implantation of a heart assist system. 
The list of procedure codes identifying the implantation of a heart 
assist system includes the following three codes.

------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
02HA0QZ...................  Insertion of implantable heart assist system
                             into heart, open approach.
02HA3QZ...................  Insertion of implantable heart assist system
                             into heart, percutaneous approach.
02HA4QZ...................  Insertion of implantable heart assist system
                             into heart, percutaneous endoscopic
                             approach.
------------------------------------------------------------------------

    In addition to these three procedure codes, there are also 33 pairs 
of code combinations or procedure code ``clusters'' that, when reported 
together, satisfy the logic for assignment to MS-DRGs 001 and 002. The 
code combinations are represented by two procedure codes and include 
either one code for the insertion of the device with one code for 
removal of the device or one code for the revision of the device with 
one code for the removal of the device. The 33 pairs of code 
combinations are listed below.

----------------------------------------------------------------------------------------------------------------
           Code                Code description                         Code                Code description
----------------------------------------------------------------------------------------------------------------
02HA0RS..................  Insertion of                with   02PA0RZ.................  Removal of short-term
                            biventricular short-                                         external heart assist
                            term external heart                                          system from heart, open
                            assist system into                                           approach.
                            heart, open approach.
02HA0RS..................  Insertion of                with   02PA3RZ.................  Removal of short-term
                            biventricular short-                                         external heart assist
                            term external heart                                          system from heart,
                            assist system into                                           percutaneous approach.
                            heart, open approach.
02HA0RS..................  Insertion of                with   02PA4RZ.................  Removal of short-term
                            biventricular short-                                         external heart assist
                            term external heart                                          system from heart,
                            assist system into                                           percutaneous endoscopic
                            heart, open approach.                                        approach.
02HA0RZ..................  Insertion of short-term     with   02PA0RZ.................  Removal of short-term
                            external heart assist                                        external heart assist
                            system into heart, open                                      system from heart, open
                            approach.                                                    approach.
02HA0RZ..................  Insertion of short-term     with   02PA3RZ.................  Removal of short-term
                            external heart assist                                        external heart assist
                            system into heart, open                                      system from heart,
                            approach.                                                    percutaneous approach.
02HA0RZ..................  Insertion of short-term     with   02PA4RZ.................  Removal of short-term
                            external heart assist                                        external heart assist
                            system into heart, open                                      system from heart,
                            approach.                                                    percutaneous endoscopic
                                                                                         approach.
02HA3RS..................  Insertion of                with   02PA0RZ.................  Removal of short-term
                            biventricular short-                                         external heart assist
                            term external heart                                          system from heart, open
                            assist system into                                           approach.
                            heart, percutaneous
                            approach.
02HA3RS..................  Insertion of                with   02PA3RZ.................  Removal of short-term
                            biventricular short-                                         external heart assist
                            term external heart                                          system from heart,
                            assist system into                                           percutaneous approach.
                            heart, percutaneous
                            approach.
02HA3RS..................  Insertion of                with   02PA4RZ.................  Removal of short-term
                            biventricular short-                                         external heart assist
                            term external heart                                          system from heart,
                            assist system into                                           percutaneous endoscopic
                            heart, percutaneous                                          approach.
                            approach.
02HA4RS..................  Insertion of                with   02PA0RZ.................  Removal of short-term
                            biventricular short-                                         external heart assist
                            term external heart                                          system from heart, open
                            assist system into                                           approach.
                            heart, percutaneous
                            endoscopic approach.
02HA4RS..................  Insertion of                with   02PA3RZ.................  Removal of short-term
                            biventricular short-                                         external heart assist
                            term external heart                                          system from heart,
                            assist system into                                           percutaneous approach.
                            heart, percutaneous
                            endoscopic approach.
02HA4RS..................  Insertion of                with   02PA4RZ.................  Removal of short-term
                            biventricular short-                                         external heart assist
                            term external heart                                          system from heart,
                            assist system into                                           percutaneous endoscopic
                            heart, percutaneous                                          approach.
                            endoscopic approach.
02HA4RZ..................  Insertion of short-term     with   02PA0RZ.................  Removal of short-term
                            external heart assist                                        external heart assist
                            system into heart,                                           system from heart, open
                            percutaneous endoscopic                                      approach.
                            approach.
02HA4RZ..................  Insertion of short-term     with   02PA3RZ.................  Removal of short-term
                            external heart assist                                        external heart assist
                            system into heart,                                           system from heart,
                            percutaneous endoscopic                                      percutaneous approach.
                            approach.

[[Page 41160]]

 
02HA4RZ..................  Insertion of short-term     with   02PA4RZ.................  Removal of short-term
                            external heart assist                                        external heart assist
                            system into heart,                                           system from heart,
                            percutaneous endoscopic                                      percutaneous endoscopic
                            approach.                                                    approach.
02WA0QZ..................  Revision of implantable     with   02PA0RZ.................  Removal of short-term
                            heart assist system in                                       external heart assist
                            heart, open approach.                                        system from heart, open
                                                                                         approach.
02WA0QZ..................  Revision of implantable     with   02PA3RZ.................  Removal of short-term
                            heart assist system in                                       external heart assist
                            heart, open approach.                                        system from heart,
                                                                                         percutaneous approach.
02WA0QZ..................  Revision of implantable     with   02PA4RZ.................  Removal of short-term
                            heart assist system in                                       external heart assist
                            heart, open approach.                                        system from heart,
                                                                                         percutaneous endoscopic
                                                                                         approach.
02WA0RZ..................  Revision of short-term      with   02PA0RZ.................  Removal of short-term
                            external heart assist                                        external heart assist
                            system in heart, open                                        system from heart, open
                            approach.                                                    approach.
02WA0RZ..................  Revision of short-term      with   02PA3RZ.................  Removal of short-term
                            external heart assist                                        external heart assist
                            system in heart, open                                        system from heart,
                            approach.                                                    percutaneous approach.
02WA0RZ..................  Revision of short-term      with   02PA4RZ.................  Removal of short-term
                            external heart assist                                        external heart assist
                            system in heart, open                                        system from heart,
                            approach.                                                    percutaneous endoscopic
                                                                                         approach.
02WA3QZ..................  Revision of implantable     with   02PA0RZ.................  Removal of short-term
                            heart assist system in                                       external heart assist
                            heart, percutaneous                                          system from heart, open
                            approach.                                                    approach.
02WA3QZ..................  Revision of implantable     with   02PA3RZ.................  Removal of short-term
                            heart assist system in                                       external heart assist
                            heart, percutaneous                                          system from heart,
                            approach.                                                    percutaneous approach.
02WA3QZ..................  Revision of implantable     with   02PA4RZ.................  Removal of short-term
                            heart assist system in                                       external heart assist
                            heart, percutaneous                                          system from heart,
                            approach.                                                    percutaneous endoscopic
                                                                                         approach.
02WA3RZ..................  Revision of short-term      with   02PA0RZ.................  Removal of short-term
                            external heart assist                                        external heart assist
                            system in heart,                                             system from heart, open
                            percutaneous approach.                                       approach.
02WA3RZ..................  Revision of short-term      with   02PA3RZ.................  Removal of short-term
                            external heart assist                                        external heart assist
                            system in heart,                                             system from heart,
                            percutaneous approach.                                       percutaneous approach.
02WA3RZ..................  Revision of short-term      with   02PA4RZ.................  Removal of short-term
                            external heart assist                                        external heart assist
                            system in heart,                                             system from heart,
                            percutaneous approach.                                       percutaneous endoscopic
                                                                                         approach.
02WA4QZ..................  Revision of implantable     with   02PA0RZ.................  Removal of short-term
                            heart assist system in                                       external heart assist
                            heart, percutaneous                                          system from heart, open
                            endoscopic approach.                                         approach.
02WA4QZ..................  Revision of implantable     with   02PA3RZ.................  Removal of short-term
                            heart assist system in                                       external heart assist
                            heart, percutaneous                                          system from heart,
                            endoscopic approach.                                         percutaneous approach.
02WA4QZ..................  Revision of implantable     with   02PA4RZ.................  Removal of short-term
                            heart assist system in                                       external heart assist
                            heart, percutaneous                                          system from heart,
                            endoscopic approach.                                         percutaneous endoscopic
                                                                                         approach.
02WA4RZ..................  Revision of short-term      with   02PA0RZ.................  Removal of short-term
                            external heart assist                                        external heart assist
                            system in heart,                                             system from heart, open
                            percutaneous endoscopic                                      approach.
                            approach.
02WA4RZ..................  Revision of short-term      with   02PA3RZ.................  Removal of short-term
                            external heart assist                                        external heart assist
                            system in heart,                                             system from heart,
                            percutaneous endoscopic                                      percutaneous approach.
                            approach.
02WA4RZ..................  Revision of short-term      with   02PA4RZ.................  Removal of short-term
                            external heart assist                                        external heart assist
                            system in heart,                                             system from heart,
                            percutaneous endoscopic                                      percutaneous endoscopic
                            approach.                                                    approach.
----------------------------------------------------------------------------------------------------------------

    In response to our solicitation for public comments on 
restructuring the MS-DRGs for heart assist system procedures, 
commenters recommended that CMS maintain the current logic under the 
Pre-MDC MS-DRGs 001 and 002. Similar to the discussion in the FY 2018 
IPPS/LTCH PPS final rule (82 FR 38011 through 38012) involving MS-DRG 
215 (Other Heart Assist System Implant), the commenters provided 
examples of common clinical scenarios involving a left ventricular 
assist device (LVAD) and included the procedure codes that were 
reported under the ICD-9 based MS-DRGs in comparison to the procedure 
codes reported under the ICD-10 MS-DRGs, which are reflected in the 
following table.

----------------------------------------------------------------------------------------------------------------
                                    ICD-9-CM procedure
            Procedure                      code          ICD-9 MS-DRG       ICD-10-PCS codes       ICD-10 MS-DRG
----------------------------------------------------------------------------------------------------------------
New LVAD inserted................  37.66 (Insertion of      001 or 002  02WA0QZ (Insertion of         001 or 002
                                    implantable heart                    implantable heart
                                    assist system).                      assist system into
                                                                         heart, open approach).
                                                                        02WA3QZ (Insertion of
                                                                         implantable heart
                                                                         assist system into
                                                                         heart, percutaneous
                                                                         approach).
                                                                        02WA4QZ (Insertion of
                                                                         implantable heart
                                                                         assist system into
                                                                         heart, percutaneous
                                                                         endoscopic approach).

[[Page 41161]]

 
LVAD Exchange--existing LVAD is    37.63 (Repair of                215  02PA0QZ (Removal of           001 or 002
 removed and replaced with either   heart assist                         implantable heart
 new LVAD system or new LVAD pump.  system).                             assist system from
                                                                         heart, open approach).
                                                                        02PA3QZ (Removal of
                                                                         implantable heart
                                                                         assist system from
                                                                         heart, percutaneous
                                                                         approach).
                                                                        02PA4QZ (Removal of
                                                                         implantable heart
                                                                         assist system from
                                                                         heart, percutaneous
                                                                         endoscopic approach)
                                                                         and.
                                                                        02WA0QZ (Insertion of
                                                                         implantable heart
                                                                         assist system into
                                                                         heart, open approach).
                                                                        02WA3QZ (Insertion of
                                                                         implantable heart
                                                                         assist system into
                                                                         heart, percutaneous
                                                                         approach).
                                                                        02WA4QZ (Insertion of
                                                                         implantable heart
                                                                         assist system into
                                                                         heart, percutaneous
                                                                         endoscopic approach).
LVAD revision and repair--         37.63 (Repair of                215  02WA0QZ (Revision of                 215
 existing LVAD is adjusted or       heart assist                         implantable heart
 repaired without removing the      system).                             assist system in heart,
 existing LVAD device.                                                   open approach).
                                                                        02WA3QZ (Revision of
                                                                         implantable heart
                                                                         assist system in heart,
                                                                         percutaneous approach).
                                                                        02WA4QZ (Revision of
                                                                         implantable heart
                                                                         assist system in heart,
                                                                         percutaneous endoscopic
                                                                         approach).
----------------------------------------------------------------------------------------------------------------

    The commenters noted that, for Pre-MDC MS-DRGs 001 and 002, the 
procedures involving the insertion of an implantable heart assist 
system, such as the insertion of a LVAD, and the procedures involving 
exchange of an LVAD (where an existing LVAD is removed and replaced 
with either a new LVAD or a new LVAD pump) demonstrate clinical 
similarities and utilize similar resources. Although the commenters 
recommended that CMS maintain the current logic under the Pre-MDC MS-
DRGs 001 and 002, they also recommended that CMS continue to monitor 
the data in these MS-DRGs for future consideration of distinctions (for 
example, different approaches and evolving technologies) that may 
impact the clinical and resource use of patients undergoing procedures 
utilizing heart assist devices. The commenters also requested that 
coding guidance be issued for assignment of the correct ICD-10-PCS 
procedure codes describing LVAD exchanges to encourage accurate 
reporting of these procedures.
    In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20180), we stated 
that we agree with the commenters that we should continue to monitor 
the data in Pre-MDC MS-DRGs 001 and 002 for future consideration of 
distinctions (for example, different approaches and evolving 
technologies) that may impact the clinical and resource use of patients 
undergoing procedures utilizing heart assist devices. In response to 
the request that coding guidance be issued for assignment of the 
correct ICD-10-PCS procedure codes describing LVAD exchanges to 
encourage accurate reporting of these procedures, as we noted in the FY 
2018 IPPS/LTCH PPS final rule (82 FR 38012), coding advice is issued 
independently from payment policy. We also noted that, historically, we 
have not provided coding advice in rulemaking with respect to policy 
(82 FR 38045). We collaborate with the American Hospital Association 
(AHA) through the Coding Clinic for ICD-10-CM and ICD-10-PCS to promote 
proper coding. We recommended that the requestor and other interested 
parties submit any questions pertaining to correct coding for these 
technologies to the AHA.
    In response to the public comments we received on this topic, in 
the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20180), we provided the 
results of our claims analysis from the September 2017 update of the FY 
2017 MedPAR file for cases in Pre-MDC MS-DRGs 001 and 002. Our findings 
are shown in the following table.

                         MS-DRGs for Heart Transplant or Implant of Heart Assist System
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 001--All cases...........................................           1,993            35.6        $185,660
MS-DRG 002--All cases...........................................             179            18.3          99,635
----------------------------------------------------------------------------------------------------------------

    As shown in this table, for MS-DRG 001, there were a total of 1,993 
cases with an average length of stay of 35.6 days and average costs of 
$185,660. For MS-DRG 002, there were a total of 179 cases with an 
average length of stay of 18.3 days and average costs of $99,635.
    We then examined claims data in Pre-MDC MS-DRGs 001 and 002 for 
cases that reported one of the three procedure codes identifying the 
implantation of a heart assist system such as the LVAD. Our findings 
are shown in the following table.

                         MS-DRGs for Heart Transplant or Implant of Heart Assist System
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 001--All cases...........................................           1,993            35.6        $185,660

[[Page 41162]]

 
MS-DRG 001--Cases with procedure code 02HA0QZ (Insertion of                1,260            35.5         206,663
 implantable heart assist system into heart, open approach).....
MS-DRG 001--Cases with procedure code 02HA3QZ (Insertion of                    1               8          33,889
 implantable heart assist system into heart, percutaneous
 approach)......................................................
MS-DRG 001--Cases with procedure code 02HA4QZ (Insertion of                    0               0               0
 implantable heart assist system into heart, percutaneous
 endoscopic approach)...........................................
MS-DRG 002--All cases...........................................             179            18.3          99,635
MS-DRG 002--Cases with procedure code 02HA0QZ (Insertion of                   82            19.9         131,957
 implantable heart assist system into heart, open approach).....
MS-DRG 002--Cases with procedure code 02HA3QZ (Insertion of                    0               0               0
 implantable heart assist system into heart, percutaneous
 approach)......................................................
MS-DRG 002--Cases with procedure code 02HA4QZ (Insertion of                    0               0               0
 implantable heart assist system into heart, percutaneous
 endoscopic approach)...........................................
----------------------------------------------------------------------------------------------------------------

    As shown in this table, for MS-DRG 001, there were a total of 1,260 
cases reporting procedure code 02HA0QZ (Insertion of implantable heart 
assist system into heart, open approach) with an average length of stay 
of 35.5 days and average costs of $206,663. There was one case that 
reported procedure code 02HA3QZ (Insertion of implantable heart assist 
system into heart, percutaneous approach) with an average length of 
stay of 8 days and average costs of $33,889. There were no cases 
reporting procedure code 02HA4QZ (Insertion of implantable heart assist 
system into heart, percutaneous endoscopic approach). For MS-DRG 002, 
there were a total of 82 cases reporting procedure code 02HA0QZ 
(Insertion of implantable heart assist system into heart, open 
approach) with an average length of stay of 19.9 days and average costs 
of $131,957. There were no cases reporting procedure codes 02HA3QZ 
(Insertion of implantable heart assist system into heart, percutaneous 
approach) or 02HA4QZ (Insertion of implantable heart assist system into 
heart, percutaneous endoscopic approach).
    We also examined the cases in MS-DRGs 001 and 002 that reported one 
of the possible 33 pairs of code combinations or clusters. Our findings 
are shown in the following 8 tables. The first table provides the total 
number of cases reporting a procedure code combination (or cluster) 
compared to all of the cases in the respective MS-DRG, followed by 
additional detailed tables showing the number of cases, average length 
of stay, and average costs for each specific code combination that was 
reported in the claims data.

                               Heart Transplant or Implant of Heart Assist System
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                       MS-DRGs 001 and 002                             cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 001--All cases...........................................           1,993            35.6        $185,660
MS-DRG 001--Cases with a procedure code combination (cluster)...             149            28.4         179,607
MS-DRG 002--All cases...........................................             179            18.3          99,635
MS-DRG 002--Cases with a procedure code combination (cluster)...               6             3.8          57,343
----------------------------------------------------------------------------------------------------------------


                         Procedure Code Combinations for Implant of Heart Assist System
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                           MS-DRG 001                                  cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
Cases with a procedure code combination of 02HA0RS (Insertion of               3            20.3        $121,919
 biventricular short-term external heart assist system into
 heart, open approach) with 02PA0RZ (Removal of short-term
 external heart assist system from heart, open approach)........
Cases with a procedure code combination of 02HA0RS (Insertion of               2              12         114,688
 biventricular short-term external heart assist system into
 heart, open approach) with 02PA3RZ (Removal of short-term
 external heart assist system from heart, percutaneous approach)
All cases reporting one or more of the above procedure code                    5              17         119,027
 combinations in MS-DRG 001.....................................
----------------------------------------------------------------------------------------------------------------


                         Procedure Code Combinations for Implant of Heart Assist System
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                                                                       cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
                                                   MS-DRG 001
----------------------------------------------------------------------------------------------------------------
Cases with a procedure code combination of 02HA0RZ (Insertion of              30            55.6        $351,995
 short-term external heart assist system into heart, open
 approach) with 02PA0RZ (Removal of short-term external heart
 assist system from heart, open approach).......................
Cases with a procedure code combination of 02HA0RZ (Insertion of              19            29.8         191,163
 short-term external heart assist system into heart, open
 approach) with 02PA3RZ (Removal of short-term external heart
 assist system from heart, percutaneous approach)...............

[[Page 41163]]

 
All cases reporting one or more of the above procedure code                   49            45.6         289,632
 combinations in MS-DRG 001.....................................
----------------------------------------------------------------------------------------------------------------
                                                   MS-DRG 002
----------------------------------------------------------------------------------------------------------------
Cases with a procedure code combination of 02HA0RZ (Insertion of               1               4          48,212
 short-term external heart assist system into heart, open
 approach) with 02PA0RZ (Removal of short-term external heart
 assist system from heart, open approach).......................
Cases with a procedure code combination of 02HA0RZ (Insertion of               2             4.5          66,386
 short-term external heart assist system into heart, open
 approach) with 02PA3RZ (Removal of short-term external heart
 assist system from heart, percutaneous approach)...............
All cases reporting one or more of the above procedure code                    3             4.3          60,328
 combinations in MS-DRG 002.....................................
All cases reporting one or more of the above procedure code                   52            43.3         276,403
 combinations across both MS-DRGs 001 and 002...................
----------------------------------------------------------------------------------------------------------------


                         Procedure Code Combinations for Implant of Heart Assist System
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                                                                       cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
                                                   MS-DRG 001
----------------------------------------------------------------------------------------------------------------
Cases with a procedure code combination of 02HA3RS (Insertion of               3            43.3        $233,330
 biventricular short-term external heart assist system into
 heart, percutaneous approach) with 02PA0RZ (Removal of short-
 term external heart assist system from heart, open approach)...
Cases with a procedure code combination of 02HA3RS (Insertion of              24            14.8         113,955
 biventricular short-term external heart assist system into
 heart, percutaneous approach) with 02PA3RZ (Removal of short-
 term external heart assist system from heart, percutaneous
 approach)......................................................
Cases with a procedure code combination of 02HA3RS (Insertion of               1              44         153,284
 biventricular short-term external heart assist system into
 heart, percutaneous approach) with 02PA4RZ (Removal of short-
 term external heart assist system from heart, percutaneous
 endoscopic approach)...........................................
All cases reporting one or more of the above procedure code                   28            18.9         128,150
 combinations in MS-DRG 001.....................................
----------------------------------------------------------------------------------------------------------------
                                                   MS-DRG 002
----------------------------------------------------------------------------------------------------------------
Cases with a procedure code combination of 02HA3RS (Insertion of               2               4          30,954
 biventricular short-term external heart assist system into
 heart, percutaneous approach) with 02PA3RZ (Removal of short-
 term external heart assist system from heart, percutaneous
 approach)......................................................
All cases reporting one of the above procedure code combinations               2               4          30,954
 in MS-DRG 002..................................................
All cases reporting one or more of the above procedure code                   30            17.9         121,670
 combinations across both MS[dash]DRGs 001 and 002..............
----------------------------------------------------------------------------------------------------------------


                         Procedure Code Combinations for Implant of Heart Assist System
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                           MS-DRG 001                                  cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
Cases with a procedure code combination of 02HA4RZ (Insertion of               4            17.3        $154,885
 short-term external heart assist system into heart,
 percutaneous endoscopic approach) with 02PA3RZ (Removal of
 short-term external heart assist system from heart,
 percutaneous approach).........................................
Cases with a procedure code combination of 02HA4RZ (Insertion of               2            15.5          80,852
 short-term external heart assist system into heart, open
 approach with 02PA4RZ (Removal of short-term external heart
 assist system from heart, percutaneous endoscopic approach)....
All cases reporting one or more of the above procedure code                    6            16.7         130,207
 combinations in MS-DRG 001.....................................
----------------------------------------------------------------------------------------------------------------


                         Procedure Code Combinations for Implant of Heart Assist System
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                           MS-DRG 001                                  cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
Cases with a procedure code combination of 02WA0QZ (Revision of                1             105        $516,557
 implantable heart assist system in heart, open approach) with
 02PA0RZ (Removal of short-term external heart assist system
 from heart, open approach).....................................
----------------------------------------------------------------------------------------------------------------


[[Page 41164]]


                         Procedure Code Combinations for Implant of Heart Assist System
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                           MS-DRG 001                                  cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
Cases with a procedure code combination of 02WA0RZ (Revision of                2              40        $285,818
 short-term external heart assist system in heart, open
 approach) with 02PA0RZ (Removal of short-term external heart
 assist system from heart, open approach).......................
Cases with a procedure code combination of 02WA0RZ (Revision of                1              43         372,673
 short-term external heart assist system in heart, open
 approach) with 02PA03Z (Removal of short-term external heart
 assist system from heart, percutaneous approach)...............
All cases reporting one or more of the above procedure code                    3              41         314,770
 combinations in MS-DRG 001.....................................
----------------------------------------------------------------------------------------------------------------


                         Procedure Code Combinations for Implant of Heart Assist System
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                                                                       cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
                                                   MS-DRG 001
----------------------------------------------------------------------------------------------------------------
Cases with a procedure code combination of 02WA3RZ (Revision of                2              24        $123,084
 short-term external heart assist system in heart, percutaneous
 approach) with 02PA0RZ (Removal of short-term external heart
 assist system from heart, open approach).......................
Cases with a procedure code combination of 02WA3RZ (Revision of               55            14.7         104,963
 short-term external heart assist system in heart, percutaneous
 approach) with 02PA3RZ (Removal of short-term external heart
 assist system from heart, percutaneous approach)...............
All cases reporting one or more of the above procedure code                   57              15         105,599
 combinations in MS-DRG 001.....................................
----------------------------------------------------------------------------------------------------------------
                                                   MS-DRG 002
----------------------------------------------------------------------------------------------------------------
Cases with a procedure code combination of 02WA3RZ (Revision of                1               2         101,168
 short-term external heart assist system in heart, percutaneous
 approach) with 02PA3RZ (Removal of short-term external heart
 assist system from heart, percutaneous approach)...............
All cases reporting one or more of the above procedure code                   58            14.8         105,522
 combinations across both MS-DRGs 001 and 002...................
----------------------------------------------------------------------------------------------------------------
                                                   MS-DRG 001
----------------------------------------------------------------------------------------------------------------
Cases with a procedure code combination of 02WA4RZ (Revision of                1              10         112,698
 short-term external heart assist system in heart, percutaneous
 endoscopic approach) with 02PA0RZ (Removal of short-term
 external heart assist system from heart, open approach)........
----------------------------------------------------------------------------------------------------------------

    We did not find any cases reporting the following procedure code 
combinations (clusters) in the claims data.

----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
02HA4RS..................  Insertion of                with   02PA0RZ.................  Removal of short-term
                            biventricular short-                                         external heart assist
                            term external heart                                          system from heart, open
                            assist system into                                           approach.
                            heart, percutaneous
                            endoscopic approach.
02HA4RS..................  Insertion of                with   02PA3RZ.................  Removal of short-term
                            biventricular short-                                         external heart assist
                            term external heart                                          system from heart,
                            assist system into                                           percutaneous approach.
                            heart, percutaneous
                            endoscopic approach.
02HA4RS..................  Insertion of                with   02PA4RZ.................  Removal of short-term
                            biventricular short-                                         external heart assist
                            term external heart                                          system from heart,
                            assist system into                                           percutaneous endoscopic
                            heart, percutaneous                                          approach.
                            endoscopic approach.
02WA3QZ..................  Revision of implantable     with   02PA0RZ.................  Removal of short-term
                            heart assist system in                                       external heart assist
                            heart, percutaneous                                          system from heart, open
                            approach.                                                    approach.
02WA3QZ..................  Revision of implantable     with   02PA3RZ.................  Removal of short-term
                            heart assist system in                                       external heart assist
                            heart, percutaneous                                          system from heart,
                            approach.                                                    percutaneous approach.
02WA3QZ..................  Revision of implantable     with   02PA4RZ.................  Removal of short-term
                            heart assist system in                                       external heart assist
                            heart, percutaneous                                          system from heart,
                            approach.                                                    percutaneous endoscopic
                                                                                         approach.
----------------------------------------------------------------------------------------------------------------

    The data show that there are differences in the average length of 
stay and average costs for cases in Pre-MDC MS-DRGs 001 and 002 
according to the type of procedure (insertion, revision, or removal), 
the type of device (biventricular short-term external heart assist 
system, short-term external heart assist system or implantable heart 
assist system), and the approaches that were utilized (open, 
percutaneous, or percutaneous endoscopic). In the FY 2019 IPPS/LTCH PPS 
proposed rule, we agreed with the commenters' recommendation to 
maintain the structure of Pre-MDC MS-DRGs 001 and 002 for FY 2019 and 
stated that we would continue to analyze the claims data.
    Comment: Commenters supported CMS' proposal to maintain the current 
structure of Pre-MDC MS-DRGs 001 and 002 for FY 2019, and to continue 
to analyze claims data for consideration of

[[Page 41165]]

future modifications. The commenters agreed with CMS that current 
claims data do not yet reflect recent advice published in Coding Clinic 
for ICD-10-CM/PCS regarding the coding of procedures involving external 
heart assist devices or recent changes to ICD-10-PCS codes for these 
procedures.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
maintaining the current structure of Pre-MDC MS-DRGs 001 and 002 for FY 
2019.
    Commenters also suggested that CMS maintain the current logic for 
MS-DRG 215 (Other Heart Assist System Implant), but they recommended 
that CMS continue to monitor the data in MS-DRG 215 for future 
consideration of distinctions (for example, different approaches and 
evolving technologies) that may impact the clinical and resource use of 
procedures utilizing heart assist devices. As discussed in the FY 2019 
IPPS/LTCH PPS proposed rule (83 FR 20184), we also received a request 
to review claims data for procedures involving extracorporeal membrane 
oxygenation (ECMO) in combination with the insertion of a percutaneous 
short-term external heart assist device to determine if the current MS-
DRG assignment is appropriate.
    The logic for MS-DRG 215 is comprised of the procedure codes shown 
in the following table, for which we examined claims data in the 
September 2017 update of the FY 2017 MedPAR file in response to the 
commenters' requests. Our findings are shown in the following table.

                                                   MS-DRG 215
                                       [Other Heart Assist System Implant]
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                                                                       cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
All cases.......................................................           3,428             8.7         $68,965
Cases with procedure code 02HA0RJ (Insertion of short-term                     0               0               0
 external heart assist system into heart, intraoperative, open
 approach)......................................................
Cases with procedure code 02HA0RS (Insertion of biventricular                  9              10         118,361
 short-term external heart assist system into heart, open
 approach)......................................................
Cases with procedure code 02HA0RZ (Insertion of short-term                    66            11.5          99,107
 external heart assist system into heart, open approach)........
Cases with procedure code 02HA3RJ (Insertion of short-term                     0               0               0
 external heart assist system into heart, intraoperative,
 percutaneous approach).........................................
Cases with procedure code 02HA3RS (Insertion of biventricular                117             7.2          64,302
 short-term external heart assist system into heart,
 percutaneous approach).........................................
Cases with procedure code 02HA3RZ (Insertion of short-term                 3,136             8.4          67,670
 external heart assist system into heart, percutaneous approach)
Cases with procedure code 02HA4RJ (Insertion of short-term                     0               0               0
 external heart assist system into heart, intraoperative,
 percutaneous endoscopic approach)..............................
Cases with procedure code 02HA4RS (Insertion of biventricular                  1               2          43,988
 short-term external heart assist system into heart,
 percutaneous endoscopic approach)..............................
Cases with procedure code 02HA4RZ (Insertion of short-term                    31             5.3          57,042
 external heart assist system into heart, percutaneous
 endoscopic approach)...........................................
Cases with procedure code 02WA0JZ (Revision of synthetic                       1              84         366,089
 substitute in heart, open approach)............................
Cases with procedure code 02WA0QZ (Revision of implantable heart              56            25.1         123,410
 assist system in heart, open approach).........................
Cases with procedure code 02WA0RS (Revision of biventricular                   0               0               0
 short-term external heart assist system in heart, open
 approach)......................................................
Cases with procedure code 02WA0RZ (Revision of short-term                      8            13.5          99,378
 external heart assist system in heart, open approach)..........
Cases with procedure code 02WA3QZ (Revision of implantable heart               0               0               0
 assist system in heart, percutaneous approach).................
Cases with procedure code 02WA3RS (Revision of biventricular                   0               0               0
 short-term external heart assist system in heart, percutaneous
 approach)......................................................
Cases with procedure code 02WA3RZ (Revision of short-term                     80              10          71,077
 external heart assist system in heart, percutaneous approach)..
Cases with procedure code 02WA4QZ (Revision of implantable heart               0               0               0
 assist system in heart, percutaneous endoscopic approach)......
Cases with procedure code 02WA4RS (Revision of biventricular                   0               0               0
 short-term external heart assist system in heart, percutaneous
 endoscopic approach)...........................................
Cases with procedure code 02WA4RZ (Revision of short-term                      0               0               0
 external heart assist system in heart, percutaneous endoscopic
 approach)......................................................
----------------------------------------------------------------------------------------------------------------

    As shown in this table, for MS-DRG 215, we found a total of 3,428 
cases with an average length of stay of 8.7 days and average costs of 
$68,965. For procedure codes describing the insertion of a 
biventricular short-term external heart assist system with open, 
percutaneous or percutaneous endoscopic approaches, we found a total of 
127 cases with an average length of stay ranging from 2 to 10 days and 
average costs ranging from $43,988 to $118,361. For procedure codes 
describing the insertion of a short-term external heart assist system 
with open, percutaneous or percutaneous endoscopic approaches, we found 
a total of 3,233 cases with an average length of stay ranging from 5.3 
days to 11.5 days and average costs ranging from $57,042 to $99,107. 
For procedure codes describing the revision of a short-term external 
heart assist system with open or percutaneous approaches, we found a 
total of 88 cases with an average length of stay ranging from 10 to 
13.5 days and average costs ranging from $71,077 to $99,378. We found 1 
case

[[Page 41166]]

reporting procedure code 02WA0JZ (Revision of synthetic substitute in 
heart, open approach), with an average length of stay of 84 days and 
average costs of $366,089. Lastly, we found 56 cases reporting 
procedure code 02WA0QZ (Revision of implantable heart assist system in 
heart, open approach) with an average length of stay of 25.1 days and 
average costs of $123,410.
    As the data show, there is a wide range in the average length of 
stay and the average costs for cases reporting procedures that involve 
a biventricular short-term external heart assist system versus a short-
term external heart assist system. There is an even greater range in 
the average length of stay and the average costs when comparing the 
revision of a short-term external heart assist system to the revision 
of a synthetic substitute in the heart or to the revision of an 
implantable heart assist system.
    In the proposed rule, we stated that we agreed with the commenters 
that continued monitoring of the data and further analysis is necessary 
prior to proposing any modifications to MS-DRG 215. As stated in the FY 
2018 IPPS/LTCH PPS final rule (82 FR 38012), we are aware that the AHA 
published Coding Clinic advice that clarified coding and reporting for 
certain external heart assist devices due to the technology being 
approved for new indications. The current claims data do not yet 
reflect that updated guidance. We also noted that there have been 
recent updates to the descriptions of the codes for heart assist 
devices in the past year. For example, the qualifier ``intraoperative'' 
was added effective October 1, 2017 (FY 2018) to the procedure codes 
describing the insertion of short-term external heart assist system 
procedures to distinguish between procedures where the device was only 
used intraoperatively and was removed at the conclusion of the 
procedure versus procedures where the device was not removed at the 
conclusion of the procedure and for which that qualifier would not be 
reported. The current claims data do not yet reflect these new 
procedure codes, which are displayed in the following table and are 
assigned to MS-DRG 215.

------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
02HA0RJ...................  Insertion of short-term external heart
                             assist system into heart, intraoperative,
                             open approach.
02HA3RJ...................  Insertion of short-term external heart
                             assist system into heart, intraoperative,
                             percutaneous approach.
02HA4RJ...................  Insertion of short-term external heart
                             assist system into heart, intraoperative,
                             percutaneous endoscopic approach.
------------------------------------------------------------------------

    In the proposed rule, we indicated that our clinical advisors also 
agreed that additional claims data are needed for analysis prior to 
proposing any changes to MS-DRG 215. Therefore, we did not propose to 
make any modifications to MS-DRG 215 for FY 2019.
    Comment: Commenters supported CMS' proposal to not make any 
modifications to MS-DRG 215 for FY 2019 and supported continued 
analysis of claims data for consideration of modifications in future 
rulemaking. The commenters noted that the proposal was reasonable, 
given the data, the ICD-10-PCS procedure codes, and information 
provided.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to maintain the current structure of MS-DRG 215 
for FY 2019.
    As stated in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20185) 
and earlier in this section, we also received a request to review cases 
reporting the use of ECMO in combination with the insertion of a 
percutaneous short-term external heart assist device. Under ICD-10-PCS, 
ECMO is identified with procedure code 5A15223 (Extracorporeal membrane 
oxygenation, continuous) and the insertion of a percutaneous short-term 
external heart assist device is identified with procedure code 02HA3RZ 
(Insertion of short-term external heart assist system into heart, 
percutaneous approach). According to the commenter, when ECMO 
procedures are performed percutaneously, they are less invasive and 
less expensive than traditional ECMO. The commenter also noted that, 
currently under ICD-10-PCS, there is not a specific procedure code to 
identify percutaneous ECMO, and providers are only able to report ICD-
10-PCS procedure code 5A15223, which may be inappropriately resulting 
in a higher paying MS-DRG. Therefore, the commenter submitted a 
separate request to create a new ICD-10-PCS procedure code specifically 
for percutaneous ECMO which was discussed at the March 6-7, 2018 ICD-10 
Coordination and Maintenance Committee Meeting. We refer readers to 
section II.F.18. of the preamble of this final rule for further 
information regarding this meeting and the discussion for a new 
procedure code.
    The requestor suggested that cases reporting a procedure code for 
ECMO in combination with the insertion of a percutaneous short-term 
external heart assist device could be reassigned from Pre-MDC MS-DRG 
003 (ECMO or Tracheostomy with Mechanical Ventilation >96 Hours or 
Principal Diagnosis Except Face, Mouth and Neck with Major O.R. 
Procedure) to MS-DRG 215. Our analysis involved examining cases in Pre-
MDC MS-DRG 003 in the September 2017 update of the FY 2017 MedPAR file 
for cases reporting ECMO with and without the insertion of a 
percutaneous short-term external heart assist device. Our findings are 
shown in the following table.

                          ECMO and Percutaneous Short-Term External Heart Assist Device
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                         Pre-MDC MS-DRG                                cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 003--All cases...........................................          14,383            29.5        $118,218
MS-DRG 003--Cases with procedure code 5A15223 (Extracorporeal              1,786              19         119,340
 membrane oxygenation, continuous)..............................
MS-DRG 003--Cases with procedure code 5A15223 (Extracorporeal                 94            11.4         110,874
 membrane oxygenation, continuous) and 02HA3RZ (Insertion of
 short-term external heart assist system into heart,
 percutaneous approach).........................................

[[Page 41167]]

 
MS-DRG 003--Cases with procedure code 5A15223 (Extracorporeal                  1               1          64,319
 membrane oxygenation, continuous) and 02HA4RZ (Insertion of
 short-term external heart assist system into heart,
 percutaneous endoscopic approach)..............................
----------------------------------------------------------------------------------------------------------------

    As shown in this table, we found a total of 14,383 cases with an 
average length of stay of 29.5 days and average costs of $118,218 in 
Pre-MDC MS-DRG 003. We found 1,786 cases reporting procedure code 
5A15223 (Extracorporeal membrane oxygenation, continuous) with an 
average length of stay of 19 days and average costs of $119,340. We 
found 94 cases reporting procedure code 5A15223 and 02HA3RZ (Insertion 
of short-term external heart assist system into heart, percutaneous 
approach) with an average length of stay of 11.4 days and average costs 
of $110,874. Lastly, we found 1 case reporting procedure code 5A15223 
and 02HA4RZ (Insertion of short-term external heart assist system into 
heart, percutaneous endoscopic approach) with an average length of stay 
of 1 day and average costs of $64,319.
    We also reviewed the cases in MS-DRG 215 for procedure codes 
02HA3RZ and 02HA4RZ. Our findings are shown in the following table.

                              Percutaneous Short-Term External Heart Assist Device
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 215--All cases...........................................           3,428             8.7         $68,965
MS-DRG 215--Cases with procedure code 02HA3RZ (Insertion of                3,136             8.4          67,670
 short-term external heart assist system into heart,
 percutaneous approach).........................................
MS-DRG 215--Cases with procedure code 02HA4RZ (Insertion of                   31             5.3          57,042
 short-term external heart assist system into heart,
 percutaneous endoscopic approach)..............................
----------------------------------------------------------------------------------------------------------------

    As shown in this table, we found a total of 3,428 cases with an 
average length of stay of 8.7 days and average costs of $68,965. We 
found a total of 3,136 cases reporting procedure code 02HA3RZ with an 
average length of stay of 8.4 days and average costs of $67,670. We 
found a total of 31 cases reporting procedure code 02HA4RZ with an 
average length of stay of 5.3 days and average costs of $57,042.
    We stated in the proposed rule that, for Pre-MDC MS-DRG 003, while 
the average length of stay and average costs for cases where procedure 
code 5A15223 was reported with procedure code 02HA3RZ or procedure code 
02HA4RZ are lower than the average length of stay and average costs for 
cases where procedure code 5A15223 was reported alone, we are unable to 
determine from the data if those ECMO procedures were performed 
percutaneously in the absence of a unique code. In addition, the one 
case reporting procedure code 5A15223 with 02HA4RZ only had a 1 day 
length of stay and it is unclear from the data what the circumstances 
of that case may have involved. For example, the patient may have been 
transferred or may have expired. Therefore, in the FY 2019 IPPS/LTCH 
PPS proposed rule (83 FR 20186), we proposed to not reassign cases 
reporting procedure code 5A15223 when reported with procedure code 
02HA3RZ or procedure code 02HA4RZ for FY 2019. We stated in the 
proposed rule that our clinical advisors agreed that until there is a 
way to specifically identify percutaneous ECMO in the claims data to 
enable further analysis, a proposal at this time is not warranted.
    Comment: Commenters supported CMS' proposal to not reassign cases 
reporting the use of ECMO (procedure code 5A15223) in combination with 
the insertion of a percutaneous short-term external heart assist device 
(procedure code 02HA3RZ or procedure code 02HA4RZ) for FY 2019.
    Response: We appreciate the commenters' support.
    Comment: Other commenters acknowledged that new ICD-10-PCS 
procedure codes that identify percutaneous ECMO procedures were made 
publicly available in May 2018. The commenters suggested that the new 
procedure codes be assigned to MS-DRGs that reflect cases representing 
patients with similar clinical characteristics and whose treatment 
requires similar resource utilization, such as MS-DRG 215. Some 
commenters specifically requested that the new procedure code 
describing a percutaneous veno-arterial (VA) ECMO procedure be 
considered for assignment to MS-DRG 215 versus Pre-MDC MS-DRG 003 
because MS-DRG 215 is the primary MS-DRG for procedures involving the 
implantation of peripheral heart assist pumps, with similar cases 
representing patient conditions and clinical coherence. The commenters 
noted that the percutaneous ECMO procedure is less invasive and less 
expensive than the traditional ECMO procedure, and has the clinical 
similarities and requires similar resource utilization as procedures 
currently assigned to MS-DRG 215, such as the percutaneous ventricular 
assist devices procedure.
    Another commenter suggested that CMS should assign cases 
representing patients receiving treatment involving the peripheral VA 
ECMO procedure to MS-DRG 215 or another MS-DRG within MDC 5. The 
commenter stated that cases representing patients currently assigned to 
MS-DRG 215 are clinically coherent to the characteristics of the 
patients who undergo a peripheral VA ECMO procedure. Another commenter 
recommended that the new procedure code describing a percutaneous veno-
venous (VV) ECMO procedure be considered for assignment to MS-DRG 004 
or another MS-DRG within MDC 4 because the indication is to provide 
respiratory support.
    Response: The commenters are correct that the FY 2019 ICD-10-PCS 
procedure code files (which are available via the internet on the CMS 
website at: https://www.cms.gov/Medicare/Coding/ICD10/2019-ICD-10-PCS.html) include new ICD-10-PCS procedure codes that identify 
percutaneous ECMO procedures. In addition, the files also show that the 
current code for ECMO

[[Page 41168]]

procedures (ICD-10-PCS code 5A15223) has been revised. These new 
procedure codes, and the revised ECMO procedure code and description, 
effective October 1, 2018, are shown in the following table.

------------------------------------------------------------------------
           ICD-10-PCS code                     Code description
------------------------------------------------------------------------
5A1522F.............................  Extracorporeal Oxygenation,
                                       Membrane, Central.
5A1522G.............................  Extracorporeal Oxygenation,
                                       Membrane, Peripheral Veno-
                                       arterial.
5A1522H.............................  Extracorporeal Oxygenation,
                                       Membrane, Peripheral Veno-venous.
------------------------------------------------------------------------

    In response to the commenters' suggestions to assign the new 
procedure codes for percutaneous ECMO procedures to MS-DRG 215, we note 
that the new procedure codes created to describe percutaneous ECMO 
procedures were not finalized at the time of the proposed rule. In 
addition, the deletion of the current procedure code for ECMO (ICD-10-
PCS code 5A15223) and the creation of the new procedure code for 
central ECMO were not finalized at the time of the proposed rule. As 
these codes were not finalized at the time of the proposed rule, they 
were not reflected in Table 6B.--New Procedure Codes (which is 
available via the internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) associated with the FY 2019 IPPS/LTCH PPS 
proposed rule. Therefore, because these procedure codes were not yet 
approved, there were no proposed MDC, MS-DRG, or O.R. and non-O.R. 
designations for these new procedure codes.
    Consistent with our annual process of assigning new procedure codes 
to MDCs and MS-DRGs, and designating a procedure as an O.R. or non-O.R. 
procedure, we reviewed the predecessor procedure code assignments. The 
predecessor procedure code (ICD-10-PCS code 5A15223) for the new 
percutaneous ECMO procedure codes describes an open approach which 
requires an incision along the sternum (sternotomy) and is performed 
for open heart surgery. It is considered extremely invasive and carries 
significant risks for complications, including bleeding, infection, and 
vessel injury. For central ECMO, arterial cannulation typically occurs 
directly into the ascending aorta and venous cannulation occurs 
directly into the right atrium. Conversely, percutaneous (peripheral) 
ECMO does not require a sternotomy and can be performed in the 
intensive care unit or at the bedside. The cannulae are placed 
percutaneously and can utilize a variety of configurations, according 
to the indication (VA or VV) and patient age (adult vs. pediatric). 
While percutaneous ECMO also carries risks, they differ from those of 
central ECMO. For example, our clinical advisor note that patients 
receiving percutaneous ECMO are at a greater risk of suffering vascular 
complications.
    Upon review, our clinical advisors do not support assigning the new 
procedure codes for peripheral ECMO procedures to the same MS-DRG as 
the predecessor code for open (central) ECMO in Pre-MDC MS-DRG 003. Our 
clinical advisors also do not agree with designating percutaneous ECMO 
procedures as O.R. procedures because they are less resource intensive 
compared to open ECMO procedures. As shown in Table 6B.--New Procedure 
Codes associated with this final rule (which is available via the 
internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html), the new 
procedure codes for percutaneous ECMO procedures have been designated 
as non-O.R. procedures that will affect the MS-DRG assignment for 
specific medical MS-DRGs. Effective October 1, 2018, the MS-DRGs for 
which the percutaneous ECMO procedures will affect MS-DRG assignment 
are shown in the following table, along with the revised MS-DRG titles.

------------------------------------------------------------------------
            MDC                  MS-DRG              MS-DRG title
------------------------------------------------------------------------
4..........................             207  Respiratory System
                                              Diagnosis with Ventilator
                                              Support >96 Hours or
                                              Peripheral Extracorporeal
                                              Membrane Oxygenation
                                              (ECMO).
5..........................             291  Heart Failure and Shock
                                              with MCC or Peripheral
                                              Extracorporeal Membrane
                                              Oxygenation (ECMO).
5..........................             296  Cardiac Arrest, Unexplained
                                              with MCC or Peripheral
                                              Extracorporeal Membrane
                                              Oxygenation (ECMO).
18.........................             870  Septicemia or Severe Sepsis
                                              with MV >96 Hours or
                                              Peripheral Extracorporeal
                                              Membrane Oxygenation
                                              (ECMO).
------------------------------------------------------------------------

    Our clinical advisors support the designation of the peripheral 
ECMO procedures as a non-O.R. procedure affecting the MS-DRG assignment 
of MS-DRG 207 because they consider the procedure to be similar to 
providing mechanical ventilation greater than 96 hours in terms of both 
clinical severity and resource use. Because any respiratory diagnosis 
classified under MDC 4 with mechanical ventilation greater than 96 
hours is assigned to MS-DRG 207, it is reasonable to expect that any 
patient with a respiratory diagnosis who requires treatment involving a 
peripheral ECMO procedure should also be assigned to MS-DRG 207. The 
same rationale was applied for MS-DRG 870, which also includes 
mechanical ventilation greater than 96 hours. In addition, based on the 
common clinical indications for which a percutaneous ECMO procedure is 
utilized, such as cardiogenic shock and cardiac arrest, our clinical 
advisors determined that MS-DRGs 291 (Heart Failure and Shock with MCC) 
and 296 (Cardiac Arrest, Unexplained with MCC) also are appropriate for 
a percutaneous ECMO procedure to affect the MS-DRG assignment. The MS-
DRG assignment for a central ECMO procedure will remain in Pre-MDC MS-
DRG 003.
    In cases where a percutaneous external heart assist device is 
utilized, in combination with a percutaneous ECMO procedure, effective 
October 1, 2018, the ICD-10 MS-DRG Version 36 GROUPER logic results in 
a case assignment to MS-DRG 215 because the percutaneous external heart 
assist device procedure is designated as an O.R. procedure and assigned 
to MS-DRG 215.
    Because the procedure codes describing percutaneous ECMO procedures 
are new, becoming effective October 1, 2018, we do not yet have any 
claims data to analyze. Once claims data becomes available, we can 
examine the

[[Page 41169]]

volume, and length of stay and cost data to determine if modifications 
to the assignment of these procedure codes are warranted.
    After consideration of the public comments we received, we are 
finalizing our proposal to not reassign cases reporting ICD-10-PCS 
procedure code 5A15223 when reported with ICD-10-PCS procedure code 
02HA3RZ or ICD-10-PCS procedure code 02HA4RZ for FY 2019. Consistent 
with our policy for determining MS-DRG assignment for new codes and for 
the reasons discussed, the two new procedure codes describing 
percutaneous ECMO procedures discussed and displayed in the table 
above, under the ICD-10 MS-DRGs Version 36 GROUPER logic, effective 
October 1, 2018, are designated as non-O.R. procedures impacting the 
MS-DRG assignment of MS-DRGs 207, 291, 296, and 870. The MS-DRG 
assignment for the central ECMO procedure remains in Pre-MDC MS-DRG 
003.
    In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20186), we also 
discussed that a commenter also suggested that CMS maintain the current 
logic for MS-DRGs 268 and 269 (Aortic and Heart Assist Procedures 
Except Pulsation Balloon with and without MCC, respectively), but 
recommended that CMS continue to monitor the data in these MS-DRGs for 
future consideration of distinctions (for example, different approaches 
and evolving technologies) that may impact the clinical and resource 
use of procedures involving heart assist devices.
    The logic for heart assist system devices in MS-DRGs 268 and 269 is 
comprised of the procedure codes shown in the following table, for 
which we examined claims data in the September 2017 update of the FY 
2017 MedPAR file in response to the commenter's request. Our findings 
are shown in the following table.

                     MS-DRGs for Aortic and Heart Assist Procedures Except Pulsation Balloon
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                                                                       cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 268--All cases...........................................           3,798             9.6         $49,122
MS-DRG 268--Cases with procedure code 02PA0QZ (Removal of                     16            23.4          79,850
 implantable heart assist system from heart, open approach).....
MS-DRG 268--Cases with procedure code 02PA0RS (Removal of                      0               0               0
 biventricular short-term external heart assist system from
 heart, open approach)..........................................
MS-DRG 268--Cases with procedure code 02PA0RZ (Removal of short-               0               0               0
 term external heart assist system from heart, open approach)...
MS-DRG 268--Cases with procedure code 02PA3QZ (Removal of                     28            10.5          31,797
 implantable heart assist system from heart, percutaneous
 approach)......................................................
MS-DRG 268--Cases with procedure code 02PA3RS (Removal of                      0               0               0
 biventricular short-term external heart assist system from
 heart, percutaneous approach)..................................
MS-DRG 268--Cases with procedure code 02PA3RZ (Removal of short-              96            12.4          51,469
 term external heart assist system from heart, percutaneous
 approach)......................................................
MS-DRG 268--Cases with procedure code 02PA4QZ (Removal of                      5             7.8          37,592
 implantable heart assist system from heart, percutaneous
 endoscopic approach)...........................................
MS-DRG 268--Cases with procedure code 02PA4RS (Removal of                      0               0               0
 biventricular short-term external heart assist system from
 heart, percutaneous endoscopic approach).......................
MS-DRG 268--Cases with procedure code 02PA4RZ (Removal of short-               0               0               0
 term external heart assist system from heart, percutaneous
 endoscopic approach)...........................................
MS-DRG 269--All cases...........................................          16,900             2.4          30,793
MS-DRG 269--Cases with procedure code 02PA0QZ (Removal of                     10               8          23,741
 implantable heart assist system from heart, open approach).....
MS-DRG 269--Cases with procedure code 02PA0RS (Removal of                      0               0               0
 biventricular short-term external heart assist system from
 heart, open approach)..........................................
MS-DRG 269--Cases with procedure code 02PA0RZ (Removal of short-               0               0               0
 term external heart assist system from heart, open approach)...
MS-DRG 269--Cases with procedure code 02PA3QZ (Removal of                      6               5          19,421
 implantable heart assist system from heart, percutaneous
 approach)......................................................
MS-DRG 269--Cases with procedure code 02PA3RS (Removal of                      0               0               0
 biventricular short-term external heart assist system from
 heart, percutaneous approach)..................................
MS-DRG 269--Cases with procedure code 02PA3RZ (Removal of short-              11               4          25,719
 term external heart assist system from heart, percutaneous
 approach)......................................................
MS-DRG 269--Cases with procedure code 02PA4QZ (Removal of                      1               3          14,415
 implantable heart assist system from heart, percutaneous
 endoscopic approach)...........................................
MS-DRG 269--Cases with procedure code 02PA4RS (Removal of                      0               0               0
 biventricular short-term external heart assist system from
 heart, percutaneous endoscopic approach).......................
MS-DRG 269--Cases with procedure code 02PA4RZ (Removal of short-               0               0               0
 term external heart assist system from heart, percutaneous
 endoscopic approach)...........................................
----------------------------------------------------------------------------------------------------------------

    As shown in this table, for MS-DRG 268, there were a total of 3,798 
cases, with an average length of stay of 9.6 days and average costs of 
$49,122. There were 16 cases reporting procedure code 02PA0QZ (Removal 
of implantable heart assist system from heart, open approach), with an 
average length of stay of 23.4 days and average costs of $79,850. There 
were no cases that reported procedure codes 02PA0RS (Removal of 
biventricular short-term external heart assist system from heart, open 
approach), 02PA0RZ (Removal of short-term external heart assist system 
from heart, open approach), 02PA3RS (Removal of biventricular short-
term external heart assist system from heart, percutaneous approach), 
02PA4RS (Removal of biventricular short-term external heart assist 
system from heart, percutaneous endoscopic approach) or 02PA4RZ 
(Removal of short-term external heart assist system from heart, 
percutaneous endoscopic approach). There were 28 cases reporting 
procedure code 02PA3QZ (Removal of implantable

[[Page 41170]]

heart assist system from heart, percutaneous approach), with an average 
length of stay of 10.5 days and average costs of $31,797. There were 96 
cases reporting procedure code 02PA3RZ (Removal of short-term external 
heart assist system from heart, percutaneous approach), with an average 
length of stay of 12.4 days and average costs of $51,469. There were 5 
cases reporting procedure code 02PA4QZ (Removal of implantable heart 
assist system from heart, percutaneous endoscopic approach), with an 
average length of stay of 7.8 days and average costs of $37,592. For 
MS-DRG 269, there were a total of 16,900 cases, with an average length 
of stay of 2.4 days and average costs of $30,793. There were 10 cases 
reporting procedure code 02PA0QZ (Removal of implantable heart assist 
system from heart, open approach), with an average length of stay of 8 
days and average costs of $23,741. There were no cases reporting 
procedure codes 02PA0RS (Removal of biventricular short-term external 
heart assist system from heart, open approach), 02PA0RZ (Removal of 
short-term external heart assist system from heart, open approach), 
02PA3RS (Removal of biventricular short-term external heart assist 
system from heart, percutaneous approach), 02PA4RS (Removal of 
biventricular short-term external heart assist system from heart, 
percutaneous endoscopic approach) or 02PA4RZ (Removal of short-term 
external heart assist system from heart, percutaneous endoscopic 
approach). There were 6 cases reporting procedure code 02PA3QZ (Removal 
of implantable heart assist system from heart, percutaneous approach), 
with an average length of stay of 5 days and average costs of $19,421. 
There were 11 cases reporting procedure code 02PA3RZ (Removal of short-
term external heart assist system from heart, percutaneous approach), 
with an average length of stay of 4 days and average costs of $25,719. 
There was 1 case reporting procedure code 02PA4QZ (Removal of 
implantable heart assist system from heart, percutaneous endoscopic 
approach), with an average length of stay of 3 days and average costs 
of $14,415.
    The data show that there are differences in the average length of 
stay and average costs for cases in MS-DRGs 268 and 269 according to 
the type of device (short-term external heart assist system or 
implantable heart assist system), and the approaches that were utilized 
(open, percutaneous, or percutaneous endoscopic). In the proposed rule, 
we stated that we agreed with the recommendation to maintain the 
structure of MS-DRGs 268 and 269 for FY 2019 and will continue to 
analyze the claims data for possible future updates. As such, we 
proposed to not make any changes to the structure of MS-DRGs 268 and 
269 for FY 2019.
    Comment: Commenters supported CMS' proposal to not make any changes 
to the structure of MS-DRGs 268 and 269 for FY 2019.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to maintain the structure of MS-DRGs 268 and 
269 for FY 2019.
b. Brachytherapy
    As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 
20188), we received a request to create a new Pre-MDC MS-DRG for all 
procedures involving the CivaSheet[supreg] technology, an implantable, 
planar brachytherapy source designed to enable delivery of radiation to 
the site of the cancer tumor excision or debulking, while protecting 
neighboring tissue. The requestor stated that physicians have used the 
CivaSheet[supreg] technology for a number of indications, such as 
colorectal, gynecological, head and neck, soft tissue sarcomas and 
pancreatic cancer. The requestor noted that potential uses also include 
nonsmall-cell lung cancer, ocular melanoma, and atypical meningioma. 
Currently, procedures involving the CivaSheet[supreg] technology are 
reported using ICD-10-PCS Section D--Radiation Therapy codes, with the 
root operation ``Brachytherapy.'' These codes are non-O.R. codes and 
group to the MS-DRG to which the principal diagnosis is assigned.
    In response to this request, we analyzed claims data from the 
September 2017 update of the FY 2017 MedPAR file for cases representing 
patients who received treatment that reported low dose rate (LDR) 
brachytherapy procedure codes across all MS-DRGs. We referred readers 
to Table 6P.--ICD-10-CM and ICD-10-PCS Codes for Proposed MS-DRG 
Changes associated with the proposed rule, which is available via the 
internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. A detailed list 
of these procedure codes was shown in Table 6P.1.associated with the 
proposed rule. Our findings are reflected in the following table. As we 
note below in response to comments, there were errors in the table 
included in the proposed rule (83 FR 20188) with regard to an 
identified MS-DRG and procedure code. However, there were no errors in 
the data findings reported. In the proposed rule, we identified claims 
data for MS-DRG 129 with procedure code D710BBZ (Low dose rate (LDR) 
brachytherapy of bone marrow using Palladium-103 (Pd-103)). That entry 
was an inadventent error. The correct MS-DRG, that is, MS-DRG 054, and 
procedure code, that is, D010BBZ, are reflected in the table that 
follows. In addition, in the proposed rule we inadvertently identified 
MS-DRG 724 with procedure code DV10BBZ (Low dose rate (LDR) 
brachytherapy of prostate using Palladium 103 (Pd-103)). Upon review, 
this case was actually reported with MS-DRG 189. The data findings 
identified for each of these 4 cases are correctly reflected in the 
table that follows.

              Cases Reporting Low Dose Rate (LDR) Brachytherapy Procedure Codes Across All MS-DRGs
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                      ICD-10-PCS procedures                            cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 054 (Nervous System Neoplasms with CC)--Cases with                      1               7         $10,357
 procedure code D010BBZ (Low dose rate (LDR) brachytherapy of
 brain using Palladium[dash]103 (Pd-103)).......................
MS-DRG 189 (Pulmonary Edema and Respiratory Failure)--Cases with               1               7          32,298
 procedure code DV10BBZ (Low dose rate (LDR) brachytherapy of
 prostate using Palladium[dash]103 (Pd-103))....................
MS-DRG 129 (Major Head and Neck Procedures with CC/MCC or Major                1               3          42,565
 Device)--Cases with procedure code DW11BBZ (Low dose rate (LDR)
 brachytherapy of head and neck using Palladium[dash]103 (Pd-
 103))..........................................................
MS-DRG 330 (Major Small and Large Bowel Procedures with CC)--                  1               8          74,190
 Cases with procedure code DW16BBZ (Low dose rate (LDR)
 brachytherapy of pelvic region using Palladium[dash]103 (Pd-
 103))..........................................................
----------------------------------------------------------------------------------------------------------------


[[Page 41171]]

    As shown in the immediately preceding table, we identified 4 cases 
reporting one of these LDR brachytherapy procedure codes across all MS-
DRGs, with an average length of stay of 6.3 days and average costs of 
$39,853. In the proposed rule, we stated that we believe that creating 
a new Pre-MDC MS-DRG based on such a small number of cases could lead 
to distortion in the relative payment weights for the Pre-MDC MS-DRG. 
Having a larger number of clinically cohesive cases within the Pre-MDC 
MS-DRG provides greater stability for annual updates to the relative 
payment weights. Therefore, we did not propose to create a new Pre-MDC 
MS-DRG for procedures involving the CivaSheet[supreg] technology for FY 
2019.
    Comment: Some commenters supported CMS' proposal not to create a 
new MS-DRG for assignment of procedures involving the CivaSheet[supreg] 
technology. Several commenters, including the manufacturer of the 
CivaSheet[supreg] technology, disagreed with CMS' proposal, and stated 
that the current payment for cases involving the CivaSheet[supreg] 
technology is inadequate and does not currently allow widespread 
adoption and use of the technology. One commenter noted that its 
contractor also identified four cases in the proposed rule, but raised 
some concerns regarding the procedure codes and costs associated with 
the cases identified in the proposed rule. Other commenters described 
the clinical benefits and potential cost-savings associated with the 
CivaSheet[supreg] technology, and requested that CMS reconsider its 
proposal to not create a new Pre- MDC MS-DRG for the assignment of 
cases involving the use of this technology. The commenters stated that 
they understood CMS' concern about the lack of volume, but indicated 
that the lack of adequate payment for procedures involving the 
CivaSheet[supreg] technology does not allow more widespread use. The 
manufacturer requested that, if CMS finalizes its proposal not to 
create a new MS-DRG for assignment of cases involving the 
CivaSheet[supreg] technology, CMS consider other payment mechanisms by 
which to ensure adequate payment for hospitals providing this service.
    Response: We appreciate the commenters' support and input. With 
respect to the commenters who disagreed with our proposal, we reiterate 
that our analysis of the claims data and our clinical advisors did not 
support the creation of a new MS-DRG based on the very small number of 
cases identified. As we noted in the proposed rule, only four cases 
were identified. The MS-DRGs are a classification system intended to 
group together those diagnoses and procedures with similar clinical 
characteristics and utilization of resources. As we discussed in the 
proposed rule, basing a new MS-DRG on such a small number of cases 
could lead to distortions in the relative payment weights for the MS-
DRG because several expensive cases could impact the overall relative 
payment weight. Having larger clinical cohesive groups within an MS-DRG 
provides greater stability for annual updates to the relative payment 
weights.
    We agree with the commenter that there were some inadvertent errors 
in the table included in the proposed rule in reference to certain 
procedure codes and MS-DRGs; the table in this final rule above now 
correctly reflects the procedure codes and MS-DRGs reflected in the FY 
2017 MedPAR file (as of the September 2017 update). We note that 
because our proposal was based on the small number of cases, and not 
the nature of those cases, these errors had no bearing on our proposal 
or our decision to finalize this proposal. We acknowledge the 
commenters' concerns about the adequacy of payment for these low volume 
services. Therefore, as part of our ongoing, comprehensive analysis of 
the MS-DRGs under ICD-10, we will continue to explore mechanisms 
through which to address rare diseases and low volume DRGs.
    After consideration of the public comments we received, we are 
finalizing our proposal to maintain the current MS-DRG structure for 
procedures involving the CivaSheet[supreg] technology for FY 2019.
c. Laryngectomy
    The logic for case assignment to Pre-MDC MS-DRGs 11, 12, and 13 
(Tracheostomy for Face, Mouth and Neck Diagnoses with MCC, with CC, and 
without CC/MCC, respectively) as displayed in the ICD-10 MS-DRG Version 
35 Definitions Manual, which is available via the internet on the CMS 
website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-Items/FY2018-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending, is 
comprised of a list of procedure codes for laryngectomies, a list of 
procedure codes for tracheostomies, and a list of diagnosis codes for 
conditions involving the face, mouth, and neck. The procedure codes for 
laryngectomies are listed separately and are reported differently from 
the procedure codes listed for tracheostomies. The procedure codes 
listed for tracheostomies must be reported with a diagnosis code 
involving the face, mouth, or neck as a principal diagnosis to satisfy 
the logic for assignment to Pre-MDC MS-DRG 11, 12, or 13. 
Alternatively, any principal diagnosis code reported with a procedure 
code from the list of procedure codes for laryngectomies will satisfy 
the logic for assignment to Pre-MDC MS-DRG 11, 12, or 13.
    To improve the manner in which the logic for assignment is 
displayed in the ICD-10 MS-DRG Definitions Manual and to clarify how it 
is applied for grouping purposes, in the FY 2019 IPPS/LTCH PPS proposed 
rule (83 FR 20188), we proposed to reorder the lists of the diagnosis 
and procedure codes. The list of principal diagnosis codes for face, 
mouth, and neck would be sequenced first, followed by the list of the 
tracheostomy procedure codes and, lastly, the list of laryngectomy 
procedure codes.
    We also proposed to revise the titles of Pre-MDC MS-DRGs 11, 12, 
and 13 from ``Tracheostomy for Face, Mouth and Neck Diagnoses with MCC, 
with CC and without CC/MCC, respectively'' to ``Tracheostomy for Face, 
Mouth and Neck Diagnoses or Laryngectomy with MCC'', ``Tracheostomy for 
Face, Mouth and Neck Diagnoses or Laryngectomy with CC'', and 
``Tracheostomy for Face, Mouth and Neck Diagnoses or Laryngectomy 
without CC/MCC'', respectively, to reflect that laryngectomy procedures 
may also be assigned to these MS-DRGs.
    Comment: Commenters supported CMS' proposal to reorder the lists of 
diagnoses and procedure codes for Pre-MDC MS-DRGs 11, 12 and 13 in the 
ICD-10 MS-DRG Definitions Manual to clarify the GROUPER logic. The 
commenters stated that the proposal was reasonable given the ICD-10-CM 
diagnosis codes, the ICD-10-PCS procedure codes, and the information 
provided. Commenters also supported the proposal to revise the titles 
for Pre-MDC MS-DRGs 11, 12 and 13.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to reorder the lists of diagnoses and procedure 
codes for Pre-MDC MS-DRGs 11, 12, and 13 in the ICD-10 MS-DRG 
Definitions Manual Version 36. We also are finalizing our proposal to 
revise the titles for Pre-MDC MS-DRGs 11, 12, and 13 as follows for the 
ICD-10 MS-DRGs Version 36, effective October 1, 2018:
     MS-DRG 11 (Tracheostomy for Face, Mouth and Neck Diagnoses 
or Laryngectomy with MCC);

[[Page 41172]]

     MS-DRG 12 (Tracheostomy for Face, Mouth and Neck Diagnoses 
or Laryngectomy with CC); and
     MS-DRG 13 (Tracheostomy for Face, Mouth and Neck Diagnoses 
or Laryngectomy without CC/MCC).
d. Chimeric Antigen Receptor (CAR) T-Cell Therapy
    Chimeric Antigen Receptor (CAR) T-cell therapy is a cell-based gene 
therapy in which T-cells are genetically engineered to express a 
chimeric antigen receptor that will bind to a certain protein on a 
patient's cancerous cells. The CAR T-cells are then administered to the 
patient to attack certain cancerous cells and the individual is 
observed for potential serious side effects that would require medical 
intervention.
    Two CAR T-cell therapies received FDA approval in 2017. 
KYMRIAH[supreg] (manufactured by Novartis Pharmaceuticals Corporation) 
was approved for the use in the treatment of patients up to 25 years of 
age with B-cell precursor acute lymphoblastic leukemia (ALL) that is 
refractory or in second or later relapse. In May 2018, KYMRIAH received 
FDA approval for a second indication, treatment of adult patients with 
relapsed or refractory large B-cell lymphoma after two or more lines of 
systemic therapy, including diffuse large B-cell lymphoma (DLBCL), high 
grade B-cell lymphoma, and DLBCL arising from follicular lymphoma. 
YESCARTA[supreg] (manufactured by Kite Pharma, Inc.) was approved for 
use in the treatment of adult patients with relapsed or refractory 
large B-cell lymphoma and who have not responded to or who have 
relapsed after at least two other kinds of treatment.
    Procedures involving the CAR T-cell therapies are currently 
identified with ICD-10-PCS procedure codes XW033C3 (Introduction of 
engineered autologous chimeric antigen receptor t-cell immunotherapy 
into peripheral vein, percutaneous approach, new technology group 3) 
and XW043C3 (Introduction of engineered autologous chimeric antigen 
receptor t-cell immunotherapy into central vein, percutaneous approach, 
new technology group 3), which both became effective October 1, 2017. 
Procedures described by these two ICD-10-PCS procedure codes are 
designated as non-O.R. procedures that have no impact on MS-DRG 
assignment.
    As we discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 
20189), we have received many inquiries from the public regarding 
payment of CAR T-cell therapy under the IPPS. Suggestions for the MS-
DRG assignment for FY 2019 ranged from assigning ICD-10-PCS procedure 
codes XW033C3 and XW043C3 to an existing MS-DRG to the creation of a 
new MS-DRG for CAR T-cell therapy. In the context of the recommendation 
to create a new MS-DRG for FY 2019, we also received suggestions that 
payment should be established in a way that promotes comparability 
between the inpatient setting and outpatient setting.
    As part of our review of these suggestions, we examined the 
existing MS-DRGs to identify the MS-DRGs that represent cases most 
clinically similar to those cases in which the CAR T-cell therapy 
procedures would be reported. The CAR T-cell procedures involve a type 
of autologous immunotherapy in which the patient's cells are 
genetically transformed and then returned to that patient after the 
patient undergoes cell depleting chemotherapy. Our clinical advisors 
believe that patients receiving treatment utilizing CAR T-cell therapy 
procedures would have similar clinical characteristics and 
comorbidities to those seen in cases representing patients receiving 
treatment for other hematologic cancers who are treated with autologous 
bone marrow transplant therapy that are currently assigned to MS-DRG 
016 (Autologous Bone Marrow Transplant with CC/MCC). Therefore, after 
consideration of the inquiries received as to how the IPPS can 
appropriately group cases reporting the use of CAR T-cell therapy, in 
the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20189), we proposed to 
assign ICD-10-PCS procedure codes XW033C3 and XW043C3 to Pre-MDC MS-DRG 
016 for FY 2019. In addition, we proposed to revise the title of MS-DRG 
016 from ``Autologous Bone Marrow Transplant with CC/MCC'' to 
``Autologous Bone Marrow Transplant with CC/MCC or T-cell 
Immunotherapy.''
    However, we noted in the proposed rule that, as discussed in 
greater detail in section II.H.5.a. of the preamble of the proposed 
rule and this final rule, the manufacturer of KYMRIAH and the 
manufacturer of YESCARTA submitted applications for new technology add-
on payments for FY 2019. We stated that we also recognize that many 
members of the public have noted that the combination of the new 
technology add-on payment applications, the extremely high-cost of 
these CAR T-cell therapies, and the potential for volume increases over 
time present unique challenges with respect to the MS-DRG assignment 
for procedures involving the utilization of CAR T-cell therapies and 
cases representing patients receiving treatment involving CAR T-cell 
therapies. We stated in the proposed rule that we believed that, in the 
context of these pending new technology add-on payment applications, 
there may also be merit in the alternative suggestion we received to 
create a new MS-DRG for procedures involving the utilization of CAR T-
cell therapies and cases representing patients receiving treatment 
involving CAR T-cell therapy to which we could assign ICD-10-PCS 
procedure codes XW033C3 and XW043C3, effective for discharges occurring 
in FY 2019. We stated that, as noted in section II.H.5.a. of the 
preamble of the proposed rule, if a new MS-DRG were to be created then 
consistent with section 1886(d)(5)(K)(ix) of the Act there may no 
longer be a need for a new technology add-on payment under section 
1886(d)(5)(K)(ii)(III) of the Act.
    We invited public comments on our proposed approach of assigning 
ICD-10-PCS procedure codes XW033C3 and XW043C3 to Pre-MDC MS-DRG 016 
for FY 2019. We also invited public comments on alternative approaches, 
including in the context of the pending KYMRIAH and YESCARTA new 
technology add-on payment applications, and the most appropriate way to 
establish payment for FY 2019 under any alternative approaches. We 
indicated that such payment alternatives may include using a CCR of 1.0 
for charges associated with ICD-10-PCS procedure codes XW033C3 and 
XW043C3, given that many public inquirers believed that hospitals would 
be unlikely to set charges different from the costs for KYMRIAH and 
YESCARTA CAR T-cell therapies, as discussed further in section 
II.A.4.g.2. of the Addendum of the proposed rule and this final rule. 
We further stated that these payment alternatives, including payment 
under any potential new MS-DRG, also could take into account an 
appropriate portion of the average sales price (ASP) for these drugs, 
including in the context of the pending new technology add-on payment 
applications.
    We invited comments on how these payment alternatives would affect 
access to care, as well as how they affect incentives to encourage 
lower drug prices, which is a high priority for this Administration. In 
addition, we stated that we are considering approaches and authorities 
to encourage value-based care and lower drug prices. We solicited 
comments on how the payment methodology alternatives may intersect and 
affect future participation in any such alternative approaches.
    We noted that, as stated in section II.F.1.b. of the preamble of 
the proposed rule, we described the criteria used to establish new MS-
DRGs. In particular,

[[Page 41173]]

we consider whether the resource consumption and clinical 
characteristics of the patients with a given set of conditions are 
significantly different than the remaining patients in the MS-DRG. We 
evaluate patient care costs using average costs and lengths of stay and 
rely on the judgment of our clinical advisors to decide whether 
patients are clinically distinct or similar to other patients in the 
MS-DRG. In evaluating resource costs, we consider both the absolute and 
percentage differences in average costs between the cases we select for 
review and the remainder of cases in the MS-DRG. We also consider 
whether observed average differences are consistent across patients or 
attributable to cases that were extreme in terms of costs or length of 
stay, or both. Further, we consider the number of patients who will 
have a given set of characteristics and generally prefer not to create 
a new MS-DRG unless it would include a substantial number of cases. 
Based on the principles typically used to establish a new MS-DRG, we 
solicited comments on how the administration of the CAR T-cell 
therapies and associated services meet the criteria for the creation of 
a new MS-DRG. Also, section 1886(d)(4)(C)(iii) of the Act specifies 
that, beginning in FY 1991, the annual DRG reclassification and 
recalibration of the relative weights must be made in a manner that 
ensures that aggregate payments to hospitals are not affected. Given 
that a new MS-DRG must be established in a budget neutral manner, we 
stated that we are concerned with the redistributive effects away from 
core hospital services over time toward specialized hospitals and how 
that may affect payment for these core services. Therefore, we 
solicited public comments on our concerns with the payment alternatives 
that we were considering for CAR T-cell therapies.
    Comment: Many commenters stated that the existing payment 
mechanisms under the IPPS do not allow for accurate payment of CAR T-
cell therapy due its unprecedented high cost. Commenters also asserted 
structural insufficiencies in the new technology add-on payments for 
the drug therapy, such as the maximum add-on payment of 50 percent; the 
inapplicability of the usual cost to charge ratios used in ratesetting 
and payment, including those used in determining new technology add-on 
payments, outlier payments, and payments to IPPS-excluded cancer 
hospitals; and a lack of sufficient historical data and experience 
related to a therapy with a cost of this magnitude. In addition, 
commenters stated that payment for CAR T-cell therapy should avoid 
inappropriate financial incentives for care to be provided in an 
outpatient instead of an inpatient setting. Many commenters requested a 
permanent and long-term solution to ensure accurate payment for CAR T-
cell therapy while concurrently ensuring any redistributive payment 
effects within the IPPS are limited.
    Some commenters recommended that, until a more permanent solution 
is developed, CMS finalize the proposed assignment of CAR T-cell 
therapy to MS-DRG 016, approve the NTAP application for CAR T-cell 
therapy, and/or allow for a CCR of 1.0 for CAR T-cell therapy. However, 
some commenters disagreed with CMS' proposed assignment of CAR T-cell 
therapy to MS-DRG 016 and requested a new separate MS-DRG. These 
commenters disagreed that patients receiving CAR T-cell therapy are 
sufficiently clinically similar to patients receiving autologous bone 
marrow transplants. Reasons cited by these commenters included 
differences in lengths of stay, the level and predictability of 
associated toxicity, and the overall disease burden. Some of these 
commenters suggested creating a new separate MS-DRG for CAR T-cell 
therapy and developing the FY 2019 weight for this MS-DRG not based 
only on historical claims data but also including alternative data on 
the cost of CAR T-cell therapy drugs, such as average sales price (ASP) 
data. Some commenters pointed to the establishment of a separate DRG 
for drug eluting stents under the IPPS as a possible payment model for 
CAR T-cell therapy.
    Other commenters did not support the creation of a new separate MS-
DRG for CAR T-cell therapy. Reasons cited by these commenters included 
the relative newness of the therapy, the limited number of providers 
delivering these treatments, the low volume of patients, redistributive 
effects, and the lack of long term data surrounding length of stay, 
treatment complexities, and costs. These commenters urged CMS to 
collect more comprehensive clinical and cost data before considering 
assignment of a new MS-DRG to these therapies.
    Some commenters requested that CMS carve out the cost of CAR T-cell 
therapy from the IPPS and pay for it on a pass-through basis reflecting 
the cost of the therapy to the hospital and indicated that this was the 
approach taken by some state Medicaid programs. These commenters 
believed that payment on a pass-through basis, for inpatient and/or 
outpatient care, provides the most accurate payment while minimizing 
inappropriate payment incentives across the inpatient and outpatient 
setting.
    Commenters also made technical and operational suggestions to CMS 
if we were to adopt changes to our existing payment mechanisms in the 
final rule as they apply to CAR T-cell therapy, including how a CCR of 
1.0 would be operationalized, or how CMS would collect data on the cost 
of CAR T-cell therapy for pass-through and other purposes.
    Response: Building on President Trump's Blueprint to Lower Drug 
Prices and Reduce Out-of-Pocket Costs, the CMS Center for Medicare and 
Medicaid Innovation (Innovation Center) is soliciting public comment in 
the CY 2019 OPPS/ASC proposed rule on key design considerations for 
developing a potential model that would test private market strategies 
and introduce competition to improve quality of care for beneficiaries, 
while reducing both Medicare expenditures and beneficiaries' out of 
pocket spending. CMS sought similar feedback in a previous solicitation 
of comments,\4\ and, most recently, in the President's Blueprint to 
Lower Drug Prices and Reduce Out-of-Pocket Costs.\5\
---------------------------------------------------------------------------

    \4\ CMS included a solicitation of comments on the Competitive 
Acquisition Program (CAP) for Part B Drugs and Biologicals (81 FR 
13247) in a proposed rule, on March 11, 2016, entitled ``Medicare 
Program; Part B Drug Payment Model'' (81 FR 13230). The solicitation 
of comments sought to help CMS determine if there was sufficient 
interest in the CAP program, and to gather public input if we were 
to consider developing and testing a future model that would be at 
least partly based on the authority for the CAP under section 1847B 
of the Act. The March 11, 2016 proposed rule was withdrawn on 
October 4, 2017 (82 FR 46182) to ensure agency flexibility in 
reexamining important issues related to the proposed payment model 
and exploring new options and alternatives with stakeholders as CMS 
develops potential payment models that support innovative approaches 
to improve quality, accessibility, and affordability, reduce 
Medicare program expenditures, and empower patients and doctors to 
make decisions about their health care.
    \5\ President Donald J. Trump's Blueprint to Lower Drug Prices 
and Reduce Out-of-Pocket Costs, May 11, 2018. Available at: https://www.whitehouse.gov/briefings-statements/president-donald-j-trumps-blueprint-lower-drug-prices/.
---------------------------------------------------------------------------

    Given the relative newness of CAR T-cell therapy, the potential 
model, including the reasons underlying our consideration of a 
potential model described in greater detail in the CY 2019 OPPS/ASC 
proposed rule, and our request for feedback on this model approach, we 
believe it would be premature to adopt changes to our existing payment 
mechanisms, either under the IPPS or for IPPS-excluded cancer 
hospitals, specifically for CAR T-cell therapy. Therefore, we disagree 
with commenters who have requested such changes under the IPPS for FY

[[Page 41174]]

2019, including, but not limited to, the creation of a pass-through 
payment; structural changes in new technology add-on payments for the 
drug therapy; changes in the usual cost-to-charge ratios (CCRs) used in 
ratesetting and payment, including those used in determining new 
technology add-on payments, outlier payments, and payments to IPPS 
excluded cancer hospitals; and the creation of a new MS-DRG 
specifically for CAR T-cell therapy prior to gaining more experience 
with the therapy.
    We agree with commenters who recommended that we finalize the 
proposed assignment of CAR-T therapy to MS-DRG 016 rather than consider 
the creation of a new MS-DRG for these therapies, given the relative 
newness of the therapy, the limited number of providers delivering 
these treatments, the low volume of patients, redistributive effects, 
and the lack of long-term data surrounding length of stay, treatment 
complexities, and costs. In addition to the potential model, we agree 
we should collect more comprehensive clinical and cost data before 
considering assignment of a new MS-DRG to these therapies.
    In response to the commenters who indicated that MS-DRG 016 is a 
poor clinical match for CAR T-cell therapy patients and would prefer 
that we create a new MS-DRG for CAR-T cell therapy, we acknowledge that 
there are differences between the treatment approaches, but we continue 
to believe that MS-DRG 016 is the most appropriate match of the 
existing MS-DRGs, given similarities between CAR-T cell therapy and 
autologous bone marrow transplant in harvesting and infusion of patient 
cells as well as post-infusion monitoring for and management of 
potentially severe adverse effects. We reiterate that, in light of the 
potential model and our request for feedback on this approach, it would 
be premature to create a new MS-DRG specifically for CAR T-cell 
therapy. We will consider requests for alternative MS-DRG assignments 
and/or the creation of a new MS-DRG for CAR T-cell therapy after we 
review the public feedback on a potential model and as we gain further 
experience with CAR T-cell therapy and can better evaluate the 
commenters' concerns.
    As described in more detail in section II.H. of the preamble of 
this final rule, we are approving new technology add-on payments for 
CAR T-cell therapy for FY 2019.
    In response to commenters who made technical and operational 
suggestions if CMS were to adopt changes to its existing payment 
mechanisms in the final rule as they apply to CAR T-cell therapy, 
because we are not adopting such changes, we are not addressing those 
technical and operational comments at the current time but will 
consider them for future rulemaking as appropriate.
    After consideration of the public comments we received, we are 
finalizing our proposed approach of assigning ICD-10-PCS procedure 
codes XW033C3 and XW043C3 to Pre-MDC MS-DRG 016 for FY 2019 and to 
revise the title of MS-DRG 016 from ``Autologous Bone Marrow Transplant 
with CC/MCC'' to ``Autologous Bone Marrow Transplant with CC/MCC or T-
cell Immunotherapy.''
3. MDC 1 (Diseases and Disorders of the Nervous System)
a. Epilepsy With Neurostimulator
    In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38015 through 
38019), based on a request we received and our review of the claims 
data, the advice of our clinical advisors, and consideration of public 
comments, we finalized our proposal to reassign all cases reporting a 
principal diagnosis of epilepsy and one of the following ICD-10-PCS 
code combinations, which capture cases involving neurostimulator 
generators inserted into the skull (including cases involving the use 
of the RNS(copyright) neurostimulator), to retitled MS-DRG 
023 (Craniotomy with Major Device Implant or Acute Complex Central 
Nervous System (CNS) Principal Diagnosis (PDX) with MCC or Chemotherapy 
Implant or Epilepsy with Neurostimulator), even if there is no MCC 
reported:
     0NH00NZ (Insertion of neurostimulator generator into 
skull, open approach), in combination with 00H00MZ (Insertion of 
neurostimulator lead into brain, open approach);
     0NH00NZ (Insertion of neurostimulator generator into 
skull, open approach), in combination with 00H03MZ (Insertion of 
neurostimulator lead into brain, percutaneous approach); and
     0NH00NZ (Insertion of neurostimulator generator into 
skull, open approach), in combination with 00H04MZ (Insertion of 
neurostimulator lead into brain, percutaneous endoscopic approach).
    The finalized listing of epilepsy diagnosis codes (82 FR 38018 
through 38019) contained codes provided by the requestor (82 FR 38016), 
in addition to diagnosis codes organized in subcategories G40.A- and 
G40.B- as recommended by a commenter in response to the proposed rule 
(82 FR 38018) because the diagnosis codes organized in these 
subcategories also are representative of diagnoses of epilepsy.
    For FY 2019, we received a request to include two additional 
diagnosis codes organized in subcategory G40.1- in the listing of 
epilepsy diagnosis codes for cases assigned to MS-DRG 023 because these 
diagnosis codes also represent diagnoses of epilepsy. The two 
additional codes identified by the requestor are:
     G40.109 (Localization-related (focal) (partial) 
symptomatic epilepsy and epileptic syndromes with simple partial 
seizures, not intractable, without status epilepticus); and
     G40.111 (Localization-related (focal) (partial) 
symptomatic epilepsy and epileptic syndromes with simple partial 
seizures, intractable, with status epilepticus).
    In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20190), we stated 
that we agreed with the requestor that diagnosis codes G40.109 and 
G40.111 also are representative of epilepsy diagnoses and should be 
added to the listing of epilepsy diagnosis codes for cases assigned to 
MS-DRG 023 because they also capture a type of epilepsy. Our clinical 
advisors reviewed this issue and agreed that adding the two additional 
epilepsy diagnosis codes is appropriate. Therefore, we proposed to add 
ICD-10-CM diagnosis codes G40.109 and G40.111 to the listing of 
epilepsy diagnosis codes for cases assigned to MS-DRG 023, effective 
October 1, 2018.
    Comment: Commenters agreed with CMS' proposal to add ICD-10-CM 
diagnosis codes G40.109 and G40.111 to the list of epilepsy diagnosis 
codes for assignment to MS-DRG 023. The commenters stated that the 
proposal was reasonable, given the ICD-10-CM diagnosis codes and the 
information provided.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to add ICD-10-CM diagnosis codes G40.109 and 
G40.111 to the list of epilepsy diagnosis codes for assignment to MS-
DRG 023 in the ICD-10 MS-DRGs Version 36, effective October 1, 2018.
b. Neurological Conditions With Mechanical Ventilation
    As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 
20190), we received two separate, but related requests to create new 
MS-DRGs for cases that identify patients who have been diagnosed with 
neurological conditions classified under MDC 1 (Diseases and Disorders 
of the Nervous

[[Page 41175]]

System) and who require mechanical ventilation with and without a 
thrombolytic and in the absence of an O.R. procedure. The requestors 
suggested that CMS consider when mechanical ventilation is reported 
with a neurological condition for the ICD-10 MS-DRG GROUPER assignment 
logic, similar to the current logic for MS-DRGs 207 and 208 
(Respiratory System Diagnosis with Ventilator Support >96 Hours and 
<=96 Hours, respectively) under MDC 4 (Diseases and Disorders of the 
Respiratory System), which consider respiratory conditions that require 
mechanical ventilation and are assigned a higher relative weight.
    The requestors stated that patients with a principal diagnosis of 
respiratory failure requiring mechanical ventilation are currently 
assigned to MS-DRG 207 (Respiratory System Diagnoses with Ventilator 
Support >96 Hours), which has a relative weight of 5.4845, and to MS-
DRG 208 (Respiratory System Diagnoses with Ventilator Support <=96 
Hours), which has a relative weight of 2.3678. The requestors also 
stated that patients with a principal diagnosis of ischemic cerebral 
infarction who received a thrombolytic agent during the hospital stay 
and did not undergo an O.R. procedure are assigned to MS-DRGs 061, 062, 
and 063 (Ischemic Stroke, Precerebral Occlusion or Transient Ischemia 
with Thrombolytic Agent with MCC, with CC, and without CC/MCC, 
respectively) under MDC 1, while patients with a principal diagnosis of 
intracranial hemorrhage or ischemic cerebral infarction who did not 
receive a thrombolytic agent during the hospital stay and did not 
undergo an O.R. procedure are assigned to MS-DRGs 064, 065 and 66 
(Intracranial Hemorrhage or Cerebral Infarction with MCC, with CC or 
TPA in 24 Hours, and without CC/MCC, respectively) under MDC 1.
    The requestors provided the current FY 2018 relative weights for 
these MS-DRGs as shown in the following table.

------------------------------------------------------------------------
                                                             Relative
           MS-DRG                    MS-DRG title             weight
------------------------------------------------------------------------
MS-DRG 061..................  Ischemic Stroke,                    2.7979
                               Precerebral Occlusion or
                               Transient Ischemia with
                               Thrombolytic Agent with
                               MCC.
MS-DRG 062..................  Ischemic Stroke,                    l.9321
                               Precerebral Occlusion or
                               Transient Ischemia with
                               Thrombolytic Agent with
                               CC.
MS-DRG 063..................  Ischemic Stroke,                    l.6169
                               Precerebral Occlusion or
                               Transient Ischemia with
                               Thrombolytic Agent
                               without CC/MCC.
MS-DRG 064..................  Intracranial Hemorrhage or          l.7685
                               Cerebral Infarction with
                               MCC.
MS-DRG 065..................  Intracranial Hemorrhage or          1.0311
                               Cerebral Infarction with
                               CC or TPA in 24 hours.
MS-DRG 066..................  Intracranial Hemorrhage or           .7466
                               Cerebral Infarction with
                               MCC.
------------------------------------------------------------------------

    The requestors stated that although the ICD-10-CM Official 
Guidelines for Coding and Reporting allow sequencing of acute 
respiratory failure as the principal diagnosis when it is jointly 
responsible (with an acute neurologic event) for admission, which would 
result in assignment to MS-DRGs 207 or 208 when the patient requires 
mechanical ventilation, it would not be appropriate to sequence acute 
respiratory failure as the principal diagnosis when it is secondary to 
intracranial hemorrhage or ischemic cerebral infarction.
    The requestors also stated that reporting for other purposes, such 
as quality measures, clinical trials, and Joint Commission and State 
certification or survey cases, is based on the principal diagnosis, and 
it is important, from a quality of care perspective, that the 
intracranial hemorrhage or cerebral infarction codes continue to be 
sequenced as principal diagnosis. The requestors believed that cases of 
patients who present with cerebral infarction or cerebral hemorrhage 
and acute respiratory failure are currently in conflict for principal 
diagnosis sequencing because the cerebral infarction or cerebral 
hemorrhage code is needed as the principal diagnosis for quality 
reporting and other purposes. However, acute respiratory failure is 
needed as the principal diagnosis for purposes of appropriate payment 
under the MS-DRGs.
    The requestors stated that by creating new MS-DRGs for neurological 
conditions with mechanical ventilation, those patients who require 
mechanical ventilation for airway protection on admission and those 
patients who develop acute respiratory failure requiring mechanical 
ventilation after admission can be grouped to MS-DRGs that provide 
appropriate payment for the mechanical ventilation resources. The 
requestors suggested two new MS-DRGs, citing as support that new MS-
DRGs were created for patients with sepsis requiring mechanical 
ventilation greater than and less than 96 hours.
    As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 
20191) and earlier in this section, the requests we received were 
separate, but related requests. The first request was to specifically 
identify patients presenting with intracranial hemorrhage or cerebral 
infarction with mechanical ventilation and create two new MS-DRGs as 
follows:
     Suggested new MS-DRG XXX (Intracranial Hemorrhage or 
Cerebral Infarction with Mechanical Ventilation >96 Hours); and
     Suggested new MS-DRG XXX (Intracranial Hemorrhage or 
Cerebral Infarction with Mechanical Ventilation <=96 Hours).
    The second request was to consider any principal diagnosis under 
the current GROUPER logic for MDC 1 with mechanical ventilation and 
create two new MS-DRGs as follows:
     Suggested New MS-DRG XXX (Neurological System Diagnosis 
with Mechanical Ventilation 96+ Hours); and
     Suggested New MS-DRG XXX (Neurological System Diagnosis 
with Mechanical Ventilation <96 Hours).
    Both requesters suggested that CMS use the three ICD-10-PCS codes 
identifying mechanical ventilation to assign cases to the respective 
suggested new MS-DRGs. The three ICD-10-PCS codes are shown in the 
following table.

------------------------------------------------------------------------
           ICD-10-PCS code                     Code description
------------------------------------------------------------------------
5A1935Z.............................  Respiratory ventilation, less than
                                       96 consecutive hours.
5A1945Z.............................  Respiratory ventilation, 24-96
                                       consecutive hours.
5A1955Z.............................  Respiratory ventilation, greater
                                       than 96 consecutive hours.
------------------------------------------------------------------------


[[Page 41176]]

    Below we discuss the different aspects of each request in more 
detail.
    The first request involved two aspects: (1) Analyzing patients 
diagnosed with cerebral infarction and required mechanical ventilation 
who received a thrombolytic (for example, TPA) and did not undergo an 
O.R. procedure; and (2) analyzing patients diagnosed with intracranial 
hemorrhage or ischemic cerebral infarction and required mechanical 
ventilation who did not receive a thrombolytic (for example, TPA) 
during the current episode of care and did not undergo an O.R. 
procedure.
    For the first subset of patients, we analyzed claims data from the 
September 2017 update of the FY 2017 MedPAR file for MS-DRGs 061, 062, 
and 063 because cases that are assigned to these MS-DRGs specifically 
identify patients who were diagnosed with a cerebral infarction and 
received a thrombolytic. The 90 ICD-10-CM diagnosis codes that specify 
a cerebral infarction and were included in our analysis are listed in 
Table 6P.1a associated with the proposed rule (which is available via 
the internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html).
    The ICD-10-PCS procedure codes displayed in the following table 
describe use of a thrombolytic agent.

------------------------------------------------------------------------
           ICD-10-PCS code                     Code description
------------------------------------------------------------------------
3E03017.............................  Introduction of other thrombolytic
                                       into peripheral vein, open
                                       approach.
3E03317.............................  Introduction of other thrombolytic
                                       into peripheral vein,
                                       percutaneous approach.
3E04017.............................  Introduction of other thrombolytic
                                       into central vein, open approach.
3E04317.............................  Introduction of other thrombolytic
                                       into central vein, percutaneous
                                       approach.
3E05017.............................  Introduction of other thrombolytic
                                       into peripheral artery, open
                                       approach.
3E05317.............................  Introduction of other thrombolytic
                                       into peripheral artery,
                                       percutaneous approach.
3E06017.............................  Introduction of other thrombolytic
                                       into central artery, open
                                       approach.
3E06317.............................  Introduction of other thrombolytic
                                       into central artery, percutaneous
                                       approach.
3E08017.............................  Introduction of other thrombolytic
                                       into heart, open approach.
3E08317.............................  Introduction of other thrombolytic
                                       into heart, percutaneous
                                       approach.
------------------------------------------------------------------------

    We examined claims data in MS-DRGs 061, 062, and 063 and identified 
cases that reported mechanical ventilation of any duration with a 
principal diagnosis of cerebral infarction where a thrombolytic agent 
was administered and the patient did not undergo an O.R. procedure. Our 
findings are shown in the following table.

                                  Cerebral Infarction With Thrombolytic and MV
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 061--All cases...........................................           5,192             6.4         $20,097
MS-DRG 061--Cases with principal diagnosis of cerebral                       166            12.8          41,691
 infarction and mechanical ventilation >96 hours................
MS-DRG 061--Cases with principal diagnosis of cerebral                       378             7.5          26,368
 infarction and mechanical ventilation = 24-96 hours............
MS-DRG 061--Cases with principal diagnosis of cerebral                       214             4.9          19,795
 infarction and mechanical ventilation <24 hours................
MS-DRG 062--All cases...........................................           9,730             3.9          13,865
MS-DRG 062--Cases with principal diagnosis of cerebral                         0             0.0               0
 infarction and mechanical ventilation >96 hours................
MS-DRG 062--Cases with principal diagnosis of cerebral                        10             5.3          19,817
 infarction and mechanical ventilation = 24-96 hours............
MS-DRG 062--Cases with principal diagnosis of cerebral                        23             3.8          14,026
 infarction and mechanical ventilation <24 hours................
MS-DRG 063--All cases...........................................           1,984             2.7          11,771
MS-DRG 063--Cases with principal diagnosis of cerebral                         0             0.0               0
 infarction and mechanical ventilation >96 hours................
MS-DRG 063--Cases with principal diagnosis of cerebral                         3             2.7          14,588
 infarction and mechanical ventilation = 24-96 hours............
MS-DRG 063--Cases with principal diagnosis of cerebral                         5             2.0          11,195
 infarction and mechanical ventilation <24 hours................
----------------------------------------------------------------------------------------------------------------

    As shown in this table, there were a total of 5,192 cases in MS-DRG 
061 with an average length of stay of 6.4 days and average costs of 
$20,097. There were a total of 758 cases reporting the use of 
mechanical ventilation in MS-DRG 061 with an average length of stay 
ranging from 4.9 days to 12.8 days and average costs ranging from 
$19,795 to $41,691. For MS-DRG 062, there were a total of 9,730 cases 
with an average length of stay of 3.9 days and average costs of 
$13,865. There were a total of 33 cases reporting the use of mechanical 
ventilation in MS-DRG 062 with an average length of stay ranging from 
3.8 days to 5.3 days and average costs ranging from $14,026 to $19,817. 
For MS-DRG 063, there were a total of 1,984 cases with an average 
length of stay of 2.7 days and average costs of $11,771. There were a 
total of 8 cases reporting the use of mechanical ventilation in MS-DRG 
063 with an average length of stay ranging from 2.0 days to 2.7 days 
and average costs ranging from $11,195 to $14,588.
    We then compared the total number of cases in MS-DRGs 061, 062, and 
063 specifically reporting mechanical

[[Page 41177]]

ventilation >96 hours with a principal diagnosis of cerebral infarction 
where a thrombolytic agent was administered and the patient did not 
undergo an O.R. procedure against the total number of cases reporting 
mechanical ventilation <=96 hours with a principal diagnosis of 
cerebral infarction where a thrombolytic agent was administered and the 
patient did not undergo an O.R. procedure. Our findings are shown in 
the following table.

                                  Cerebral Infarction With Thrombolytic and MV
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 061--All cases...........................................           5,192             6.4         $20,097
MS-DRG 061--Cases with principal diagnosis of cerebral                       166            12.8          41,691
 infarction and mechanical ventilation >96 hours................
MS-DRG 061--Cases with principal diagnosis of cerebral                       594             6.5          23,780
 infarction and mechanical ventilation <=96 hours...............
MS-DRG 062--All cases...........................................           9,730             3.9          13,865
MS-DRG 062--Cases with principal diagnosis of cerebral                         0             0.0               0
 infarction and mechanical ventilation >96 hours................
MS-DRG 062--Cases with principal diagnosis of cerebral                        34             4.2          15,558
 infarction and mechanical ventilation <=96 hours...............
MS-DRG 063--All cases...........................................           1,984             2.7          11,771
MS-DRG 063--Cases with principal diagnosis of cerebral                         0             0.0               0
 infarction and mechanical ventilation >96 hours................
MS-DRG 063--Cases with principal diagnosis of cerebral                         8             2.3          12,467
 infarction and mechanical ventilation <=96 hours...............
----------------------------------------------------------------------------------------------------------------

    As shown in this table, the total number of cases reported in MS-
DRG 061 was 5,192, with an average length of stay of 6.4 days and 
average costs of $20,097. There were 166 cases that reported mechanical 
ventilation >96 hours, with an average length of stay of 12.8 days and 
average costs of $41,691. There were 594 cases that reported mechanical 
ventilation <=96 hours, with an average length of stay of 6.5 days and 
average costs of $23,780.
    The total number of cases reported in MS-DRG 062 was 9,730, with an 
average length of stay of 3.9 days and average costs of $13,865. There 
were no cases identified in MS-DRG 062 where mechanical ventilation >96 
hours was reported. However, there were 34 cases that reported 
mechanical ventilation <=96 hours, with an average length of stay of 
4.2 days and average costs of $15,558.
    The total number of cases reported in MS-DRG 63 was 1,984 with an 
average length of stay of 2.7 days and average costs of $11,771. There 
were no cases identified in MS-DRG 063 where mechanical ventilation >96 
hours was reported. However, there were 8 cases that reported 
mechanical ventilation <=96 hours, with an average length of stay of 
2.3 days and average costs of $12,467.
    For the second subset of patients, we examined claims data for MS-
DRGs 064, 065, and 066. We identified cases reporting mechanical 
ventilation of any duration with a principal diagnosis of cerebral 
infarction or intracranial hemorrhage where a thrombolytic agent was 
not administered during the current hospital stay and the patient did 
not undergo an O.R. procedure. The 33 ICD-10-CM diagnosis codes that 
specify an intracranial hemorrhage and were included in our analysis 
are listed in Table 6P.1b associated with the proposed rule (which is 
available via the internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html).
    We also used the list of 90 ICD-10-CM diagnosis codes that specify 
a cerebral infarction listed in Table 6P.1a associated with the 
proposed rule for our analysis. We noted that the GROUPER logic for 
case assignment to MS-DRG 065 includes that a thrombolytic agent (for 
example, TPA) was administered within 24 hours of the current hospital 
stay. The ICD-10-CM diagnosis code that describes this scenario is 
Z92.82 (Status post administration of tPA (rtPA) in a different 
facility within the last 24 hours prior to admission to current 
facility). We did not review the cases reporting that diagnosis code 
for our analysis. Our findings are shown in the following table.

                 Cerebral Infarction or Intracranial Hemorrhage With MV and Without Thrombolytic
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 064--All cases...........................................          76,513             6.0         $12,574
MS-DRG 064--Cases with principal diagnosis of cerebral                     2,153            13.4          38,262
 infarction or intracranial hemorrhage and mechanical
 ventilation >96 hours..........................................
MS-DRG 064--Cases with principal diagnosis of cerebral                     4,843             6.6          18,119
 infarction or intracranial hemorrhage and mechanical
 ventilation = 24-96 hours......................................
MS-DRG 064--Cases with principal diagnosis of cerebral                     4,001             3.1           8,675
 infarction or intracranial hemorrhage and mechanical
 ventilation <24 hours..........................................
MS-DRG 065--All cases...........................................         106,554             3.7           7,236
MS-DRG 065--Cases with principal diagnosis of cerebral                        22            10.2          20,759
 infarction or intracranial hemorrhage and mechanical
 ventilation >96 hours..........................................
MS-DRG 065--Cases with principal diagnosis of cerebral                       127             4.2          12,688
 infarction or intracranial hemorrhage and mechanical
 ventilation = 24-96 hours......................................
MS-DRG 065--Cases with principal diagnosis of cerebral                       301             2.1           6,145
 infarction or intracranial hemorrhage and mechanical
 ventilation <24 hours..........................................

[[Page 41178]]

 
MS-DRG 066--All cases...........................................          34,689             2.5           5,321
MS-DRG 066--Cases with principal diagnosis of cerebral                         1             4.0           3,426
 infarction or intracranial hemorrhage and mechanical
 ventilation >96 hours..........................................
MS-DRG 066--Cases with principal diagnosis of cerebral                        31             3.7          10,364
 infarction or intracranial hemorrhage and mechanical
 ventilation = 24-96 hours......................................
MS-DRG 066--Cases with principal diagnosis of cerebral                       163             1.4           4,148
 infarction or intracranial hemorrhage and mechanical
 ventilation <24 hours..........................................
----------------------------------------------------------------------------------------------------------------

    The total number of cases reported in MS-DRG 064 was 76,513, with 
an average length of stay of 6.0 days and average costs of $12,574. 
There were a total of 10,997 cases reporting the use of mechanical 
ventilation in MS-DRG 064 with an average length of stay ranging from 
3.1 days to 13.4 days and average costs ranging from $8,675 to $38,262. 
For MS-DRG 065, there were a total of 106,554 cases with an average 
length of stay of 3.7 days and average costs of $7,236. There were a 
total of 450 cases reporting the use of mechanical ventilation in MS-
DRG 065 with an average length of stay ranging from 2.1 days to 10.2 
days and average costs ranging from $6,145 to $20,759. For MS-DRG 066, 
there were a total of 34,689 cases with an average length of stay of 
2.5 days and average costs of $5,321. There were a total of 195 cases 
reporting the use of mechanical ventilation in MS-DRG 066 with an 
average length of stay ranging from 1.4 days to 4.0 days and average 
costs ranging from $3,426 to $10,364.
    We then compared the total number of cases in MS-DRGs 064, 065, and 
066 specifically reporting mechanical ventilation >96 hours with a 
principal diagnosis of cerebral infarction or intracranial hemorrhage 
where a thrombolytic agent was not administered and the patient did not 
undergo an O.R. procedure against the total number of cases reporting 
mechanical ventilation <=96 hours with a principal diagnosis of 
cerebral infarction or intracranial hemorrhage where a thrombolytic 
agent was not administered and the patient did not undergo an O.R. 
procedure. Our findings are shown in the following table.

                 Cerebral Infarction or Intracranial Hemorrhage With MV and Without Thrombolytic
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 064--All cases...........................................          76,513             6.0         $12,574
MS-DRG 064--Cases with principal diagnosis of cerebral                     2,153            13.4          38,262
 infarction or intracranial hemorrhage and mechanical
 ventilation >96 hours..........................................
MS-DRG 064--Cases with principal diagnosis of cerebral                     8,794             4.9          13,704
 infarction or intracranial hemorrhage and mechanical
 ventilation <=96 hours.........................................
MS-DRG 065--All cases...........................................         106,554             3.7           7,236
MS-DRG 065--Cases with principal diagnosis of cerebral                        22            10.2          20,759
 infarction or intracranial hemorrhage and mechanical
 ventilation >96 hours..........................................
MS-DRG 065--Cases with principal diagnosis of cerebral                       428             2.7           8,086
 infarction or intracranial hemorrhage and mechanical
 ventilation <=96 hours.........................................
MS-DRG 066--All cases...........................................          34,689             2.5           5,321
MS-DRG 066--Cases with principal diagnosis of cerebral                         1             4.0           3,426
 infarction or intracranial hemorrhage and mechanical
 ventilation >96 hours..........................................
MS-DRG 066--Cases with principal diagnosis of cerebral                       194             1.8           5,141
 infarction or intracranial hemorrhage and mechanical
 ventilation <=96 hours.........................................
----------------------------------------------------------------------------------------------------------------

    The total number of cases reported in MS-DRG 064 was 76,513, with 
an average length of stay of 6.0 days and average costs of $12,574. 
There were 2,153 cases that reported mechanical ventilation >96 hours, 
with an average length of stay of 13.4 days and average costs of 
$38,262, and there were 8,794 cases that reported mechanical 
ventilation <=96 hours, with an average length of stay of 4.9 days and 
average costs of $13,704.
    The total number of cases reported in MS-DRG 65 was 106,554, with 
an average length of stay of 3.7 days and average costs of $7,236. 
There were 22 cases that reported mechanical ventilation >96 hours, 
with an average length of stay of 10.2 days and average costs of 
$20,759, and there were 428 cases that reported mechanical ventilation 
<=96 hours, with an average length of stay of 2.7 days and average 
costs of $8,086.
    The total number of cases reported in MS-DRG 66 was 34,689, with an 
average length of stay of 2.5 days and average costs of $5,321. There 
was one case that reported mechanical ventilation >96 hours, with an 
average length of stay of 4.0 days and average costs of $3,426, and 
there were 194 cases that reported mechanical ventilation <=96 hours, 
with an average length of stay of 1.8 days and average costs of $5,141.
    We also analyzed claims data for MS-DRGs 207 and 208. As shown in 
the following table, there were a total of 19,471 cases found in MS-DRG 
207 with an average length of stay of 13.8 days and average costs of 
$38,124. For MS-DRG 208, there were a total of 55,802 cases found with 
an average length of stay of 6.7 days and average costs of $17,439.

[[Page 41179]]



                              Respiratory System Diagnosis With Ventilator Support
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 207--All cases...........................................          19,471            13.8         $38,124
MS-DRG 208--All cases...........................................          55,802             6.7          17,439
----------------------------------------------------------------------------------------------------------------

    We stated in the proposed rule that our analysis of claims data 
relating to the first request for MS-DRGs 061, 062, 063, 064, 065, and 
066 and consultation with our clinical advisors do not support creating 
new MS-DRGs for cases that identify patients diagnosed with cerebral 
infarction or intracranial hemorrhage who require mechanical 
ventilation with or without a thrombolytic and in the absence of an 
O.R. procedure.
    For the first subset of patients (in MS-DRGs 061, 062 and 063), our 
data findings for MS-DRG 061 demonstrate the 166 cases that reported 
mechanical ventilation >96 hours had a longer average length of stay 
(12.8 days versus 6.4 days) and higher average costs ($41,691 versus 
$20,097) compared to all the cases in MS-DRG 061. However, there were 
no cases that reported mechanical ventilation >96 hours for MS-DRG 062 
or MS-DRG 063. For the 594 cases that reported mechanical ventilation 
<=96 hours in MS-DRG 061, the data show that the average length of stay 
was consistent with the average length of stay of all of the cases in 
MS-DRG 061 (6.5 days versus 6.4 days) and the average costs were also 
consistent with the average costs of all of the cases in MS-DRG 061 
($23,780 versus $20,097). For the 34 cases that reported mechanical 
ventilation <=996 hours in MS-DRG 062, the data show that the average 
length of stay was consistent with the average length of stay of all of 
the cases in MS-DRG 062 (4.2 days versus 3.9 days) and the average 
costs were also consistent with the average costs of all of the cases 
in MS DRG 062 ($15,558 versus $13,865). Lastly, for the 8 cases that 
reported mechanical ventilation <=96 hours in MS-DRG 063, the data show 
that the average length of stay was consistent with the average length 
of stay of all of the cases in MS-DRG 063 (2.3 days versus 2.7 days) 
and the average costs were also consistent with the average costs of 
all of the cases in MS DRG 063 ($12,467 versus $11,771).
    For the second subset of patients (in MS-DRGs 064, 065 and 066), 
the data findings for the 2,153 cases that reported mechanical 
ventilation >96 hours in MS-DRG 064 showed a longer average length of 
stay (13.4 days versus 6.0 days) and higher average costs ($38,262 
versus $12,574) compared to all of the cases in MS-DRG 064. However, 
the 2,153 cases represent only 2.8 percent of all the cases in MS-DRG 
064. For the 22 cases that reported mechanical ventilation >96 hours in 
MS-DRG 065, the data showed a longer average length of stay (10.2 days 
versus 3.7 days) and higher average costs ($20,759 versus $7,236) 
compared to all of the cases in MS-DRG 065. However, the 22 cases 
represent only 0.02 percent of all the cases in MS-DRG 065. For the one 
case that reported mechanical ventilation >96 hours in MS-DRG 066, the 
data showed a longer average length of stay (4.0 days versus 2.5 days) 
and lower average costs ($3,426 versus $5,321) compared to all of the 
cases in MS-DRG 066. For the 8,794 cases that reported mechanical 
ventilation <=96 hours in MS-DRG 064, the data showed that the average 
length of stay was shorter than the average length of stay for all of 
the cases in MS-DRG 064 (4.9 days versus 6.0 days) and the average 
costs were consistent with the average costs of all of the cases in MS-
DRG 064 ($13,704 versus $12,574). For the 428 cases that reported 
mechanical ventilation <=96 hours in MS-DRG 065, the data showed that 
the average length of stay was shorter than the average length of stay 
for all of the cases in MS-DRG 065 (2.7 days versus 3.7 days) and the 
average costs were consistent with the average costs of all the cases 
in MS-DRG 065 ($8,086 versus $7,236). For the 194 cases that reported 
mechanical ventilation <=96 hours in MS-DRG 066, the data showed that 
the average length of stay was shorter than the average length of stay 
for all of the cases in MS-DRG 066 (1.8 days versus 2.5 days) and the 
average costs were less than the average costs of all of the cases in 
MS-DRG 066 ($5,141 versus $5,321).
    We stated in the proposed rule that, based on the analysis 
described above, the current MS-DRG assignment for the cases in MS-DRGs 
061, 062, 063, 064, 065 and 066 that identify patients diagnosed with 
cerebral infarction or intracranial hemorrhage who require mechanical 
ventilation with or without a thrombolytic and in the absence of an 
O.R. procedure appears appropriate.
    Our clinical advisors also noted that patients requiring mechanical 
ventilation (in the absence of an O.R. procedure) are known to be more 
resource intensive and it would not be practical to create new MS-DRGs 
specifically for this subset of patients diagnosed with an acute 
neurologic event, given the various indications for which mechanical 
ventilation may be utilized. We stated in the proposed rule that, if we 
were to create new MS-DRGs for patients diagnosed with an intracranial 
hemorrhage or cerebral infarction who require mechanical ventilation, 
it would not address all of the other patients who also utilize 
mechanical ventilation resources. It would also necessitate further 
extensive analysis and evaluation for several other conditions that 
require mechanical ventilation across each of the 25 MDCs under the 
ICD-10 MS-DRGs.
    To evaluate the frequency in which the use of mechanical 
ventilation is reported for different clinical scenarios, we examined 
claims data across each of the 25 MDCs to determine the number of cases 
reporting the use of mechanical ventilation >96 hours. Our findings are 
shown in the table below.

                                Mechanical Ventilation >96 Hours Across All MDCs
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                               MDC                                     cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
All cases with mechanical ventilation >96 hours.................         127,626            18.4         $61,056
MDC 1 (Diseases and Disorders of the Nervous System)--Cases with          13,668            18.3          61,234
 mechanical ventilation >96 hours...............................
MDC 2 (Disease and Disorders of the Eye)--Cases with mechanical               33            22.7          79,080
 ventilation >96 hours..........................................

[[Page 41180]]

 
MDC 3 (Diseases and Disorders of the Ear, Nose, Mouth and                    602            20.3          62,625
 Throat)--Cases with mechanical ventilation >96 hours...........
MDC 4 (Diseases and Disorders of the Respiratory System)--Cases           27,793            16.6          48,869
 with mechanical ventilation >96 hours..........................
MDC 5 (Diseases and Disorders of the Circulatory System)--Cases           16,923            20.7          84,565
 with mechanical ventilation >96 hours..........................
MDC 6 (Diseases and Disorders of the Digestive System)--Cases              6,401            22.4          73,759
 with mechanical ventilation >96 hours..........................
MDC 7 (Diseases and Disorders of the Hepatobiliary System and              1,803            24.5          80,477
 Pancreas)--Cases with mechanical ventilation >96 hours.........
MDC 8 (Diseases and Disorders of the Musculoskeletal System and            2,780            22.3          83,271
 Connective Tissue)--Cases with mechanical ventilation >96 hours
MDC 9 (Diseases and Disorders of the Skin, Subcutaneous Tissue               390            22.2          68,288
 and Breast)--Cases with mechanical ventilation >96 hours.......
MDC 10 (Endocrine, Nutritional and Metabolic Diseases and                  1,168            20.9          60,682
 Disorders)--Cases with mechanical ventilation >96 hours........
MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract)--          2,325            19.6          57,893
 Cases with mechanical ventilation >96 hours....................
MDC 12 (Diseases and Disorders of the Male Reproductive System)--             54            26.8          95,204
 Cases with mechanical ventilation >96 hours....................
MDC 13 (Diseases and Disorders of the Female Reproductive                     89            24.6          83,319
 System)--Cases with mechanical ventilation >96 hours...........
MDC 14 (Pregnancy, Childbirth and the Puerperium)--Cases with                 22            17.4          56,981
 mechanical ventilation >96 hours...............................
MDC 16 (Diseases and Disorders of Blood, Blood Forming Organs,               468            20.1          68,658
 Immunologic Disorders)--Cases with mechanical ventilation >96
 hours..........................................................
MDC 17 (Myeloproliferative Diseases and Disorders, Poorly                    538            29.7          99,968
 Differentiated Neoplasms)--Cases with mechanical ventilation
 >96 hours......................................................
MDC 18 (Infectious and Parasitic Diseases, Systemic or                    48,176            17.3          55,022
 Unspecified Sites)--Cases with mechanical ventilation >96 hours
MDC 19 (Mental Diseases and Disorders)--Cases with mechanical                 54            29.3          52,749
 ventilation >96 hours..........................................
MDC 20 (Alcohol/Drug Use and Alcohol/Drug Induced Organic Mental             312            20.5          47,637
 Disorders)--Cases with mechanical ventilation >96 hours........
MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs)--Cases            2,436            18.2          57,712
 with mechanical ventilation >96 hours..........................
MDC 22 (Burns)--Cases with mechanical ventilation >96 hours.....             242            34.8         188,704
MDC 23 (Factors Influencing Health Status and Other Contacts                  64            17.7          50,821
 with Health Services)--Cases with mechanical ventilation >96
 hours..........................................................
MDC 24 (Multiple Significant Trauma)--Cases with mechanical                  922            17.6          72,358
 ventilation >96 hours..........................................
MDC 25 (Human Immunodeficiency Virus Infections)--Cases with                 363            19.1          56,688
 mechanical ventilation >96 hours...............................
----------------------------------------------------------------------------------------------------------------

    As shown in the table, the top 5 MDCs with the largest number of 
cases reporting mechanical ventilation >96 hours are MDC 18, with 
48,176 cases; MDC 4, with 27,793 cases; MDC 5, with 16,923 cases; MDC 
1, with 13,668 cases; and MDC 6, with 6,401 cases. We noted that the 
claims data demonstrate that the average length of stay is consistent 
with what we would expect for cases reporting the use of mechanical 
ventilation >96 hours across each of the 25 MDCs. The top 5 MDCs with 
the highest average costs for cases reporting mechanical ventilation 
>96 hours were MDC 22, with average costs of $188,704; MDC 17, with 
average costs of $99,968; MDC 12, with average costs of $95,204; MDC 5, 
with average costs of $84,565; and MDC 13, with average costs of 
$83,319. We noted that the data for MDC 8 demonstrated similar results 
compared to MDC 13 with average costs of $83,271 for cases reporting 
mechanical ventilation >96 hours. In summary, the claims data reflect a 
wide variance with regard to the frequency and average costs for cases 
reporting the use of mechanical ventilation >96 hours.
    We also examined claims data across each of the 25 MDCs for the 
number of cases reporting the use of mechanical ventilation <=96 hours. 
Our findings are shown in the table below.

                                Mechanical Ventilation <=96 Hours Across All MDCs
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                               MDC                                     cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
All cases with mechanical ventilation <=96 hours................         266,583             8.5         $26,668
MDC 1 (Diseases and Disorders of the Nervous System)--Cases with          29,896             7.4          22,838
 mechanical ventilation <=96 hours..............................
MDC 2 (Disease and Disorders of the Eye)--Cases with mechanical               60             8.4          29,708
 ventilation <=96 hours.........................................
MDC 3 (Diseases and Disorders of the Ear, Nose, Mouth and                  1,397             9.8          29,479
 Throat)--Cases with mechanical ventilation <=96 hours..........
MDC 4 (Diseases and Disorders of the Respiratory System)--Cases           64,861             7.8          20,929
 with mechanical ventilation <=96 hours.........................

[[Page 41181]]

 
MDC 5 (Diseases and Disorders of the Circulatory System)--Cases           45,147             8.8          35,818
 with mechanical ventilation <=96 hours.........................
MDC 6 (Diseases and Disorders of the Digestive System)--Cases             15,629            11.3          33,660
 with mechanical ventilation <=96 hours.........................
MDC 7 (Diseases and Disorders of the Hepatobiliary System and              4,678            10.5          31,565
 Pancreas)--Cases with mechanical ventilation <=96 hours........
MDC 8 (Diseases and Disorders of the Musculoskeletal System and            7,140            10.4          40,183
 Connective Tissue)--Cases with mechanical ventilation <=96
 hours..........................................................
MDC 9 (Diseases and Disorders of the Skin, Subcutaneous Tissue             1,036            10.7          26,809
 and Breast)--Cases with mechanical ventilation <=96 hours......
MDC 10 (Endocrine, Nutritional and Metabolic Diseases and                  3,591             9.0          23,863
 Disorders)--Cases with mechanical ventilation <=96 hours.......
MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract)--          5,506            10.2          27,951
 Cases with mechanical ventilation <=96 hours...................
MDC 12 (Diseases and Disorders of the Male Reproductive System)--            168            11.5          35,009
 Cases with mechanical ventilation <=96 hours...................
MDC 13 (Diseases and Disorders of the Female Reproductive                    310            10.8          32,382
 System)--Cases with mechanical ventilation <=96 hours..........
MDC 14 (Pregnancy, Childbirth and the Puerperium)--Cases with                 55             7.6          21,785
 mechanical ventilation <=96 hours..............................
MDC 16 (Diseases and Disorders of Blood, Blood Forming Organs,             1,171             8.7          26,138
 Immunologic Disorders)--Cases with mechanical ventilation <=96
 hours..........................................................
MDC 17 (Myeloproliferative Diseases and Disorders, Poorly                  1,178            15.3          46,335
 Differentiated Neoplasms)--Cases with mechanical ventilation
 <=96 hours.....................................................
MDC 18 (Infectious and Parasitic Diseases, Systemic or                    69,826             8.5          25,253
 Unspecified Sites)--Cases with mechanical ventilation <=96
 hours..........................................................
MDC 19 (Mental Diseases and Disorders)--Cases with mechanical                264            10.4          18,805
 ventilation <=96 hours.........................................
MDC 20 (Alcohol/Drug Use and Alcohol/Drug Induced Organic Mental             918             8.3          19,376
 Disorders)--Cases with mechanical ventilation <=96 hours.......
MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs)--Cases           10,842             6.5          17,843
 with mechanical ventilation <=96 hours.........................
MDC 22 (Burns)--Cases with mechanical ventilation <=96 hours....             353             9.7          45,557
MDC 23 (Factors Influencing Health Status and Other Contacts                 307             6.6          16,159
 with Health Services)--Cases with mechanical ventilation <=96
 hours..........................................................
MDC 24 (Multiple Significant Trauma)--Cases with mechanical                1,709             8.8          36,475
 ventilation <=96 hours.........................................
MDC 25 (Human Immunodeficiency Virus Infections)--Cases with                 541            10.4          29,255
 mechanical ventilation <=96 hours..............................
----------------------------------------------------------------------------------------------------------------

    As shown in the table, the top 5 MDCs with the largest number of 
cases reporting mechanical ventilation <=96 hours are MDC 18, with 
69,826 cases; MDC 4, with 64,861 cases; MDC 5, with 45,147 cases; MDC 
1, with 29,896 cases; and MDC 6, with 15,629 cases. We noted that the 
claims data demonstrate that the average length of stay is consistent 
with what we would expect for cases reporting the use of mechanical 
ventilation <=96 hours across each of the 25 MDCs. The top 5 MDCs with 
the highest average costs for cases reporting mechanical ventilation 
<=96 hours are MDC 17, with average costs of $46,335; MDC 22, with 
average costs of $45,557; MDC 8, with average costs of $40,183; MDC 24, 
with average costs of $36,475; and MDC 5, with average costs of 
$35,818. Similar to the cases reporting mechanical ventilation >96 
hours, the claims data for cases reporting the use of mechanical 
ventilation <=96 hours also reflect a wide variance with regard to the 
frequency and average costs. Depending on the number of cases in each 
MS-DRG, it may be difficult to detect patterns of complexity and 
resource intensity.
    With respect to the requestor's statement that reporting for other 
purposes, such as quality measures, clinical trials, and Joint 
Commission and State certification or survey cases, is based on the 
principal diagnosis, and their belief that patients who present with 
cerebral infarction or cerebral hemorrhage and acute respiratory 
failure are currently in conflict for principal diagnosis sequencing 
because the cerebral infarction or cerebral hemorrhage code is needed 
as the principal diagnosis for quality reporting and other purposes 
(however, acute respiratory failure is needed as the principal 
diagnosis for purposes of appropriate payment under the MS-DRGs), we 
noted that providers are required to assign the principal diagnosis 
according to the ICD-10-CM Official Guidelines for Coding and Reporting 
and these assignments are not based on factors such as quality measures 
or clinical trials indications. Furthermore, we do not base MS-DRG 
reclassification decisions on those factors. If the cerebral hemorrhage 
or ischemic cerebral infarction is the reason for admission to the 
hospital, the cerebral hemorrhage or ischemic cerebral infarction 
diagnosis code should be assigned as the principal diagnosis.
    We acknowledged in the proposed rule that new MS-DRGs were created 
for cases of patients with sepsis requiring mechanical ventilation 
greater than and less than 96 hours. However, those MS-DRGs (MS-DRG 575 
(Septicemia with Mechanical Ventilation 96+ Hours Age >17) and MS-DRG 
576 (Septicemia without Mechanical Ventilation 96+ Hours Age >17)) were 
created several years ago, in FY 2007 (71 FR 47938 through 47939) in 
response to public comments suggesting alternatives for the need to 
recognize the treatment for that subset of patients with severe sepsis 
who exhibit a greater degree of severity and resource consumption as 
septicemia is a systemic condition, and also as a

[[Page 41182]]

preliminary step in the transition from the CMS DRGs to MS-DRGs.
    We stated in the proposed rule that we believe that additional 
analysis and efforts toward a broader approach to refining the MS-DRGs 
for cases of patients requiring mechanical ventilation across the MDCs 
involves carefully examining the potential for instability in the 
relative weights and disrupting the integrity of the MS-DRG system 
based on the creation of separate MS-DRGs involving small numbers of 
cases for various indications in which mechanical ventilation may be 
required.
    The second request focused on patients diagnosed with any 
neurological condition classified under MDC 1 requiring mechanical 
ventilation in the absence of an O.R. procedure and without having 
received a thrombolytic agent. Because the first request specifically 
involved analysis for the acute neurological conditions of cerebral 
infarction and intracranial hemorrhage under MDC 1 and our findings did 
not support creating new MS-DRGs for those specific conditions, we did 
not perform separate claims analysis for other conditions classified 
under MDC 1.
    Therefore, in the FY 2019 IPPS/LTCH PPS proposed rule, we did not 
propose to create new MS-DRGs for cases that identify patients 
diagnosed with neurological conditions classified under MDC 1 who 
require mechanical ventilation with or without a thrombolytic and in 
the absence of an O.R. procedure.
    Comment: Commenters supported CMS' proposal to not create new MS-
DRGs, classified under MDC 1, for cases representing patients diagnosed 
with a neurological condition who require mechanical ventilation with 
or without a thrombolytic, and in the absence of an O.R. procedure. The 
commenters stated that the proposal was reasonable, given the data, the 
ICD-10-CM diagnosis codes, the ICD-10-PCS procedure codes, and the 
information provided. However, the commenters also recommended that CMS 
continue to conduct further analyses across all the MDCs for the subset 
of patients who require mechanical ventilation in an effort to better 
address the reporting and payment issues.
    Response: We appreciate the commenters' support and agree that 
further analyses are necessary to evaluate the development of potential 
proposals for the subset of patients requiring mechanical ventilation 
across all the MDCs.
    Comment: One commenter disagreed with CMS' proposal to not create 
new MS-DRGs for patients admitted with strokes and treated with 
mechanical ventilation. The commenter expressed appreciation for CMS' 
efforts in analyzing the cost and length of stay data for this subset 
of patients. However, the commenter believed that the results of the 
analysis identifying patients who receive mechanical ventilation >96 
hours and also have an MCC demonstrate that these cases require twice 
the cost of all cases in MS-DRG 61 (Ischemic Stroke, Precerebral 
Occlusion or Transient Ischemia with Thrombolytic Agent with MCC) and 
MS-DRG 64 (Intracranial Hemorrhage or Cerebral Infarction with MCC). 
The commenter requested that CMS reconsider alternative options for 
this subset of patients due to the cost and length of stay disparities.
    Response: We acknowledge the commenters' concern that the average 
length of stay and average costs for cases where mechanical ventilation 
>96 hours was reported with an MCC for MS-DRG 61 and MS-DRG 64 are 
greater when compared to the average length of stay and average costs 
for all cases in those MS-DRGs. However, as stated in the FY 2019 IPPS/
LTCH PPS proposed rule (83 FR 20195), our clinical advisors noted that 
patients requiring mechanical ventilation are known to be more resource 
intensive and it would not be practical to create new MS-DRGs for this 
subset of patients given the various other indications in which 
mechanical ventilation may be utilized for other patients. We will 
consider additional analysis in the future in our efforts toward a 
broader approach to refining the MS-DRGs for cases of patients 
requiring mechanical ventilation across the MDCs.
    Comment: One commenter suggested that, although CMS' analysis of 
the cases reporting a neurological condition with mechanical 
ventilation was acceptable, CMS consider creating a new MS-DRG for 
poisoning with mechanical ventilation in future rulemaking. The 
commenter believed that a patient who is in critical condition as a 
result of a poisoning and requires prolonged mechanical ventilation is 
not being recognized appropriately under the current MS-DRG relative 
payment weights.
    Response: We appreciate the commenter's input and suggestion. As 
noted earlier, we will consider additional analysis in our efforts 
toward a broader approach to refining the MS-DRGs for cases of patients 
requiring mechanical ventilation across the MDCs.
    After consideration of the public comments we received, we are 
finalizing our proposal to not create new MS-DRGs, classified under MDC 
1, for cases that identify patients requiring mechanical ventilation 
and are diagnosed with stroke or any other neurological condition with 
or without a thrombolytic, and in the absence of an O.R. procedure for 
FY 2019.
4. MDC 5 (Diseases and Disorders of the Circulatory System)
a. Pacemaker Insertions
    In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56804 through 
56809), we discussed a request to examine the ICD-10-PCS procedure code 
combinations that describe procedures involving pacemaker insertions to 
determine if some procedure code combinations were excluded from the 
Version 33 ICD-10 MS-DRG assignments for MS-DRGs 242, 243, and 244 
(Permanent Cardiac Pacemaker Implant with MCC, with CC, and without CC/
MCC, respectively) under MDC 5. We finalized our proposal to modify the 
Version 34 ICD-10 MS-DRG GROUPER logic so the specified procedure code 
combinations were no longer required for assignment into those MS-DRGs. 
As a result, the logic for pacemaker insertion procedures was 
simplified by separating the procedure codes describing cardiac 
pacemaker device insertions into one list and separating the procedure 
codes describing cardiac pacemaker lead insertions into another list. 
Therefore, when any ICD-10-PCS procedure code describing the insertion 
of a pacemaker device is reported from that specific logic list with 
any ICD-10-PCS procedure code describing the insertion of a pacemaker 
lead from that specific logic list (81 FR 56804 through 56806), the 
case is assigned to MS-DRGs 242, 243, and 244 under MDC 5.
    We then discussed our examination of the Version 33 GROUPER logic 
for MS-DRGs 258 and 259 (Cardiac Pacemaker Device Replacement with and 
without MCC, respectively) because assignment of cases to these MS-DRGs 
also included qualifying ICD-10-PCS procedure code combinations 
involving pacemaker insertions (81 FR 56806 through 56808). 
Specifically, the logic for Version 33 ICD-10 MS-DRGs 258 and 259 
included ICD-10-PCS procedure code combinations describing the removal 
of pacemaker devices and the insertion of new pacemaker devices. We 
finalized our proposal to modify the Version 34 ICD-10 MS-DRG GROUPER 
logic for MS-DRGs 258 and 259 to establish that a case reporting any 
procedure code from the list of ICD-10-PCS procedure codes describing 
procedures involving pacemaker device insertions without any other 
procedure

[[Page 41183]]

codes describing procedures involving pacemaker leads reported would be 
assigned to MS-DRGs 258 and 259 (81 FR 56806 through 56807) under MDC 
5. In addition, we pointed out that a limited number of ICD-10-PCS 
procedure codes describing pacemaker insertion are classified as non-
operating room (non-O.R.) codes within the MS-DRGs and that the Version 
34 ICD-10 MS-DRG GROUPER logic would continue to classify these 
procedure codes as non-O.R. codes. We noted that a case reporting any 
one of these non-O.R. procedure codes describing a pacemaker device 
insertion without any other procedure code involving a pacemaker lead 
would be assigned to MS-DRGs 258 and 259. Therefore, the listed 
procedure codes describing a pacemaker device insertion under MS-DRGs 
258 and 259 are designated as non-O.R. affecting the MS-DRG.
    Lastly, we discussed our examination of the Version 33 GROUPER 
logic for MS-DRGs 260, 261, and 262 (Cardiac Pacemaker Revision Except 
Device Replacement with MCC, with CC, and without CC/MCC, 
respectively), and noted that cases assigned to these MS-DRGs also 
included lists of procedure code combinations describing procedures 
involving the removal of pacemaker leads and the insertion of new 
leads, in addition to lists of single procedure codes describing 
procedures involving the insertion of pacemaker leads, removal of 
cardiac devices, and revision of cardiac devices (81 FR 56808). We 
finalized our proposal to modify the ICD-10 MS-DRG GROUPER logic for 
MS-DRGs 260, 261, and 262 so that cases reporting any one of the listed 
ICD-10-PCS procedure codes describing procedures involving pacemakers 
and related procedures and associated devices are assigned to MS DRGs 
260, 261, and 262 under MDC 5. Therefore, the GROUPER logic that 
required a combination of procedure codes be reported for assignment 
into MS-DRGs 260, 261 and 262 under Version 33 was no longer required 
effective with discharges occurring on or after October 1, 2016 (FY 
2017) under Version 34 of the ICD-10 MS-DRGs.
    In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20198), we noted 
that while the discussion in the FY 2017 IPPS/LTCH PPS final rule 
focused on the MS-DRGs involving pacemaker procedures under MDC 5, 
similar GROUPER logic exists in Version 33 of the ICD-10 MS-DRGs under 
MDC 1 (Diseases and Disorders of the Nervous System) in MS-DRGs 040, 
041 and 042 (Peripheral, Cranial Nerve and Other Nervous System 
Procedures with MCC, with CC or Peripheral Neurostimulator and without 
CC/MCC, respectively) and MDC 21 (Injuries, Poisonings and Toxic 
Effects of Drugs) in MS-DRGs 907, 908, and 909 (Other O.R. Procedures 
for Injuries with MCC, with CC, and without MCC, respectively) where 
procedure code combinations involving cardiac pacemaker device 
insertions or removals and cardiac pacemaker lead insertions or 
removals are required to be reported together for assignment into those 
MS-DRGs. We also noted that, with the exception of when a principal 
diagnosis is reported from MDC 1, MDC 5, or MDC 21, the procedure codes 
describing the insertion, removal, replacement, or revision of 
pacemaker devices are assigned to a medical MS-DRG in the absence of 
another O.R. procedure according to the GROUPER logic. We referred the 
reader to the ICD-10 MS-DRG Definitions Manual Version 33, which is 
available via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2016-IPPS-Final-Rule-Home-Page-Items/FY2016-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending for 
complete documentation of the GROUPER logic that was in effect at that 
time for the Version 33 ICD-10 MS-DRGs discussed earlier.
    As discussed in the FY 2019 IPS/LTCH PPS proposed rule (83 FR 
20198), for FY 2019, we received a request to assign all procedures 
involving the insertion of pacemaker devices to surgical MS-DRGs, 
regardless of the principal diagnosis. The requestor recommended that 
procedures involving pacemaker insertion be grouped to surgical MS-DRGs 
within the MDC to which the principal diagnosis is assigned, or that 
they group to MS-DRGs 981, 982, and 983 (Extensive O.R. Procedure 
Unrelated to Principal Diagnosis with MCC, with CC and without CC/MCC, 
respectively). Currently, in Version 35 of the ICD-10 MS-DRGs, 
procedures involving pacemakers are assigned to MS-DRGs 040, 041, and 
042 (Peripheral, Cranial Nerve and Other Nervous System Procedures with 
MCC, with CC or Peripheral Neurostimulator and without CC/MCC, 
respectively) under MDC 1 (Diseases and Disorders of the Nervous 
System), to MS-DRGs 242, 243, and 244 (Permanent Cardiac Pacemaker 
Implant with MCC, with CC, and without CC/MCC, respectively), MS-DRGs 
258 and 259 (Cardiac Pacemaker Device Replacement with MCC and without 
MCC, respectively), and MS-DRGs 260, 261 and 262 (Cardiac Pacemaker 
Revision Except Device Replacement with MCC, with CC, and without CC/
MCC, respectively) under MDC 5 (Diseases and Disorders of the 
Circulatory System), and to MS-DRGs 907, 908, and 909 (Other O.R. 
Procedures for Injuries with MCC, with CC, and without CC/MCC, 
respectively), under MDC 21 (Injuries, Poisoning and Toxic Effects of 
Drugs), with all other unrelated principal diagnoses resulting in a 
medical MS-DRG assignment. According to the requestor, the medical MS-
DRGs do not provide adequate payment for the pacemaker device, 
specialized operating suites, time, skills, and other resources 
involved for pacemaker insertion procedures. Therefore, the requestor 
recommended that procedures involving pacemaker insertions be grouped 
to surgical MS-DRGs. We refer readers to the ICD-10 MS-DRG Definitions 
Manual Version 35, which is available via the internet on the CMS 
website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-Items/FY2018-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending for 
complete documentation of the GROUPER logic for the MS-DRGs discussed 
earlier.
    The following procedure codes describe procedures involving the 
insertion of a cardiac rhythm related device which are classified as a 
type of pacemaker insertion under the ICD-10 MS-DRGs. These four codes 
are assigned to MS-DRGs 040, 041, and 042, as well as MS-DRGs 907, 908, 
and 909, and are designated as O.R. procedures.

------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
0JH60PZ...................  Insertion of cardiac rhythm related device
                             into chest subcutaneous tissue and fascia,
                             open approach.
0JH63PZ...................  Insertion of cardiac rhythm related device
                             into chest subcutaneous tissue and fascia,
                             percutaneous approach.
0JH80PZ...................  Insertion of cardiac rhythm related device
                             into abdomen subcutaneous tissue and
                             fascia, open approach.
0JH83PZ...................  Insertion of cardiac rhythm related device
                             into abdomen subcutaneous tissue and
                             fascia, percutaneous approach.
------------------------------------------------------------------------


[[Page 41184]]

    We examined cases from the September update of the FY 2017 MedPAR 
claims data for cases involving pacemaker insertion procedures 
reporting the above ICD-10-PCS codes in MS-DRGs 040, 041 and 042 under 
MDC 1. Our findings are shown in the following table.

                             Cases Involving Pacemaker Insertion Procedures in MDC 1
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                         MS-DRG in MDC 1                               cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 040--All cases...........................................           4,462            10.4         $26,877
MS-DRG 040--Cases with procedure code 0JH60PZ (Insertion of                   13            14.2          55,624
 cardiac rhythm related device into chest subcutaneous tissue
 and fascia, open approach).....................................
MS-DRG 040--Cases with procedure code 0JH63PZ (Insertion of                    2             3.5          15,826
 cardiac rhythm related device into chest subcutaneous tissue
 and fascia, percutaneous approach).............................
MS-DRG 040--Cases with procedure code 0JH80PZ (Insertion of                    0               0               0
 cardiac rhythm related device into abdomen subcutaneous tissue
 and fascia, open approach).....................................
MS-DRG 040--Cases with procedure code 0JH83PZ (Insertion of                    0               0               0
 cardiac rhythm related device into abdomen subcutaneous tissue
 and fascia, percutaneous approach).............................
MS-DRG 041--All cases...........................................           5,648             5.2          16,927
MS-DRG 041--Cases with procedure code 0JH60PZ (Insertion of                   12             6.4          22,498
 cardiac rhythm related device into chest subcutaneous tissue
 and fascia, open approach).....................................
MS-DRG 041--Cases with procedure code 0JH63PZ (Insertion of                    4               5          17,238
 cardiac rhythm related device into chest subcutaneous tissue
 and fascia, percutaneous approach).............................
MS-DRG 041--Cases with procedure code 0JH80PZ (Insertion of                    0               0               0
 cardiac rhythm related device into abdomen subcutaneous tissue
 and fascia, open approach).....................................
MS-DRG 041--Cases with procedure code 0JH83PZ (Insertion of                    0               0               0
 cardiac rhythm related device into abdomen subcutaneous tissue
 and fascia, percutaneous approach).............................
MS-DRG 042--All cases...........................................           2,154             3.1          13,730
MS-DRG 042--Cases with procedure code 0JH60PZ (Insertion of                    5               8          18,183
 cardiac rhythm related device into chest subcutaneous tissue
 and fascia, open approach).....................................
MS-DRG 042--Cases with procedure code 0JH83PZ (Insertion of                    0               0               0
 cardiac rhythm related device into abdomen subcutaneous tissue
 and fascia, percutaneous approach).............................
MS-DRG 042--Cases with procedure code 0JH80PZ (Insertion of                    0               0               0
 cardiac rhythm related device into abdomen subcutaneous tissue
 and fascia, open approach).....................................
MS-DRG 042--Cases with procedure code 0JH83PZ (Insertion of                    0               0               0
 cardiac rhythm related device into abdomen subcutaneous tissue
 and fascia, percutaneous approach).............................
----------------------------------------------------------------------------------------------------------------

    The following table is a summary of the findings shown above from 
our review of MS-DRGs 040, 041 and 042 and the total number of cases 
reporting a pacemaker insertion procedure.

                       MS-DRGs for Cases Involving Pacemaker Insertion Procedures in MDC 1
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                         MS-DRG in MDC 1                               cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRGs 040, 041, and 042--All cases............................          12,264             6.7         $19,986
MS-DRGs 040, 041, and 042--Cases with a pacemaker insertion                   36             9.1          32,906
 procedure......................................................
----------------------------------------------------------------------------------------------------------------

    We found a total of 12,264 cases in MS-DRGs 040, 041, and 042 with 
an average length of stay of 6.7 days and average costs of $19,986. We 
found a total of 36 cases in MS-DRGs 040, 041, and 042 reporting 
procedure codes describing the insertion of a pacemaker device with an 
average length of stay of 9.1 days and average costs of $32,906.
    We then examined cases involving pacemaker insertion procedures 
reporting those same four ICD-10-PCS procedure codes 0JH60PZ, 0JH63PZ, 
0JH80PZ and 0JH83PZ in MS-DRGs 907, 908, and 909 under MDC 21. Our 
findings are shown in the following table.

                      MS-DRGs for Cases Involving Pacemaker Insertion Procedures in MDC 21
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                        MS-DRG in MDC 21                               cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 907-All cases............................................           7,405            10.1         $28,997
MS-DRG 907--Cases with procedure code 0JH60PZ (Insertion of                    7            11.1          60,141
 cardiac rhythm related device into chest subcutaneous tissue
 and fascia, open approach).....................................
MS-DRG 908--All cases...........................................           8,519             5.2          14,282
MS-DRG 908--Cases with procedure code 0JH60PZ (Insertion of                    4             3.8          35,678
 cardiac rhythm related device into chest subcutaneous tissue
 and fascia, open approach).....................................
MS-DRG 909--All cases...........................................           3,224             3.1           9,688
MS-DRG 909--Cases with procedure code 0JH60PZ (Insertion of                    2               2          42,688
 cardiac rhythm related device into chest subcutaneous tissue
 and fascia, open approach).....................................
----------------------------------------------------------------------------------------------------------------


[[Page 41185]]

    We note that there were no cases found where procedure codes 
0JH63PZ, 0JH80PZ or 0JH83PZ were reported in MS-DRGs 907, 908 and 909 
under MDC 21 and, therefore, they are not displayed in the table.
    The following table is a summary of the findings shown above from 
our review of MS-DRGs 907, 908, and 909 and the total number of cases 
reporting a pacemaker insertion procedure.

                      MS-DRGs for Cases Involving Pacemaker Insertion Procedures in MDC 21
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                        MS-DRG in MDC 21                               cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRGs 907, 908 and 909--All cases.............................          19,148             6.7         $19,199
MS-DRGs 907, 908 and 909--Cases with a pacemaker insertion                    13             7.5          49,929
 procedure......................................................
----------------------------------------------------------------------------------------------------------------

    We found a total of 19,148 cases in MS-DRGs 907, 908, and 909 with 
an average length of stay of 6.7 days and average costs of $19,199. We 
found a total of 13 cases in MS-DRGs 907, 908, and 909 reporting 
pacemaker insertion procedures with an average length of stay of 7.5 
days and average costs of $49,929.
    We also examined cases involving pacemaker insertion procedures 
reporting the following procedure codes that are assigned to MS-DRGs 
242, 243, and 244 under MDC 5.

------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
0JH604Z...................  Insertion of pacemaker, single chamber into
                             chest subcutaneous tissue and fascia, open
                             approach.
0JH605Z...................  Insertion of pacemaker, single chamber rate
                             responsive into chest subcutaneous tissue
                             and fascia, open approach.
0JH606Z...................  Insertion of pacemaker, dual chamber into
                             chest subcutaneous tissue and fascia, open
                             approach.
0JH607Z...................  Insertion of cardiac resynchronization
                             pacemaker pulse generator into chest
                             subcutaneous tissue and fascia, open
                             approach.
0JH60PZ...................  Insertion of cardiac rhythm related device
                             into chest subcutaneous tissue and fascia,
                             open approach.
0JH634Z...................  Insertion of pacemaker, single chamber into
                             chest subcutaneous tissue and fascia,
                             percutaneous approach.
0JH635Z...................  Insertion of pacemaker, single chamber rate
                             responsive into chest subcutaneous tissue
                             and fascia, percutaneous approach.
0JH636Z...................  Insertion of pacemaker, dual chamber into
                             chest subcutaneous tissue and fascia,
                             percutaneous approach.
0JH637Z...................  Insertion of cardiac resynchronization
                             pacemaker pulse generator into chest
                             subcutaneous tissue and fascia,
                             percutaneous approach.
0JH63PZ...................  Insertion of cardiac rhythm related device
                             into chest subcutaneous tissue and fascia,
                             percutaneous approach.
0JH804Z...................  Insertion of pacemaker, single chamber into
                             abdomen subcutaneous tissue and fascia,
                             open approach.
0JH805Z...................  Insertion of pacemaker, single chamber rate
                             responsive into abdomen subcutaneous tissue
                             and fascia, open approach.
0JH806Z...................  Insertion of pacemaker, dual chamber into
                             abdomen subcutaneous tissue and fascia,
                             open approach.
0JH807Z...................  Insertion of cardiac resynchronization
                             pacemaker pulse generator into abdomen
                             subcutaneous tissue and fascia, open
                             approach.
0JH80PZ...................  Insertion of cardiac rhythm related device
                             into abdomen subcutaneous tissue and
                             fascia, open approach.
0JH834Z...................  Insertion of pacemaker, single chamber into
                             abdomen subcutaneous tissue and fascia,
                             percutaneous approach.
0JH835Z...................  Insertion of pacemaker, single chamber rate
                             responsive into abdomen subcutaneous tissue
                             and fascia, percutaneous approach.
0JH836Z...................  Insertion of pacemaker, dual chamber into
                             abdomen subcutaneous tissue and fascia,
                             percutaneous approach.
0JH837Z...................  Insertion of cardiac resynchronization
                             pacemaker pulse generator into abdomen
                             subcutaneous tissue and fascia,
                             percutaneous approach.
0JH83PZ...................  Insertion of cardiac rhythm related device
                             into abdomen subcutaneous tissue and
                             fascia, percutaneous approach.
------------------------------------------------------------------------

    Our data findings are shown in the following table. We note that 
procedure codes displayed with an asterisk (*) in the table are 
designated as non-O.R. procedures affecting the MS-DRG.

                             Cases Involving Pacemaker Insertion Procedures in MDC 5
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                         MS-DRG in MDC 5                               cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 242--All cases...........................................          18,205             6.9         $26,414
MS-DRG 242--Cases with procedure code 0JH604Z* (Insertion of               2,518             7.7          25,004
 pacemaker, single chamber into chest subcutaneous tissue and
 fascia, open approach).........................................
MS-DRG 242--Cases with procedure code 0JH605Z* (Insertion of                 306             7.7          24,454
 pacemaker, single chamber rate responsive into chest
 subcutaneous tissue and fascia, open approach).................
MS-DRG 242--Cases with procedure code 0JH606Z* (Insertion of              13,323             6.7          25,497
 pacemaker, dual chamber into chest subcutaneous tissue and
 fascia, open approach).........................................
MS-DRG 242--Cases with procedure code 0JH607Z (Insertion of                1,528             8.1          37,060
 cardiac resynchronization pacemaker pulse generator into chest
 subcutaneous tissue and fascia, open approach).................
MS-DRG 242--Cases with procedure code 0JH60PZ (Insertion of                    5            16.6          59,334
 cardiac rhythm related device into chest subcutaneous tissue
 and fascia, open approach).....................................
MS-DRG 242--Cases with procedure code 0JH634Z* (Insertion of                  65             8.5          26,789
 pacemaker, single chamber into chest subcutaneous tissue and
 fascia, percutaneous approach).................................

[[Page 41186]]

 
MS-DRG 242--Cases with procedure code 0JH635Z* (Insertion of                  10               7          35,104
 pacemaker, single chamber rate responsive into chest
 subcutaneous tissue and fascia, percutaneous approach).........
MS-DRG 242--Cases with procedure code 0JH636Z* (Insertion of                 313             6.4          23,699
 pacemaker, dual chamber into chest subcutaneous tissue and
 fascia, percutaneous approach).................................
MS-DRG 242--Cases with procedure code 0JH637Z (Insertion of                   82             7.1          35,382
 cardiac resynchronization pacemaker pulse generator into chest
 Subcutaneous tissue and fascia, percutaneous approach).........
MS-DRG 242--Cases with procedure code 0JH63PZ (Insertion of                    2            12.5          32,405
 cardiac rhythm related device into chest subcutaneous tissue
 and fascia, percutaneous approach).............................
MS-DRG 242--Cases with procedure code 0JH804Z* (Insertion of                  25            14.4          43,080
 pacemaker, single chamber into abdomen subcutaneous tissue and
 fascia, open approach).........................................
MS-DRG 242--Cases with procedure code 0JH805Z* (Insertion of                   2               4          26,949
 pacemaker, single chamber rate responsive into abdomen
 subcutaneous tissue and fascia, open approach).................
MS-DRG 242--Cases with procedure code 0JH806Z* (Insertion of                  50             6.8          25,306
 pacemaker, dual chamber into abdomen subcutaneous tissue and
 fascia, open approach).........................................
MS-DRG 242--Cases with procedure code 0JH807Z (Insertion of                    5            21.2          67,908
 cardiac resynchronization pacemaker pulse generator into
 abdomen subcutaneous tissue and fascia, open approach).........
MS-DRG 242--Cases with procedure code 0JH836Z (Insertion of                    1               5          36,111
 pacemaker, dual chamber into abdomen subcutaneous tissue and
 fascia, percutaneous approach).................................
MS-DRG 243--All cases...........................................          24,586               4          18,669
MS-DRG 243--Cases with procedure code 0JH604Z* (Insertion of               2,537             4.7          17,118
 pacemaker, single chamber into chest subcutaneous tissue and
 fascia, open approach).........................................
MS-DRG 243--Cases with procedure code 0JH605Z* (Insertion of                 271             4.4          17,268
 pacemaker, single chamber rate responsive into chest
 subcutaneous tissue and fascia, open approach).................
MS-DRG 243--Cases with procedure code 0JH606Z* (Insertion of              19,921             3.9          18,306
 pacemaker, dual chamber into chest subcutaneous tissue and
 fascia, open approach).........................................
MS-DRG 243--Cases with procedure code 0JH607Z (Insertion of                1,236             4.4          28,658
 cardiac resynchronization pacemaker pulse generator into chest
 subcutaneous tissue and fascia, open approach).................
MS-DRG 243--Cases with procedure code 0JH60PZ (Insertion of                    6             4.2          20,994
 cardiac rhythm related device into chest subcutaneous tissue
 and fascia, open approach).....................................
MS-DRG 243--Cases with procedure code 0JH634Z* (Insertion of                  55             5.2          16,784
 pacemaker, single chamber into chest subcutaneous tissue and
 fascia, percutaneous approach).................................
MS-DRG 243--Cases with procedure code 0JH635Z* (Insertion of                  15             4.1          17,938
 pacemaker, single chamber rate responsive into chest
 subcutaneous tissue and fascia, percutaneous approach).........
MS-DRG 243--Cases with procedure code 0JH636Z* (Insertion of                 431             3.7          16,164
 pacemaker, dual chamber into chest subcutaneous tissue and
 fascia, percutaneous approach).................................
MS-DRG 243--Cases with procedure code 0JH637Z (Insertion of                   58               5          28,926
 cardiac resynchronization pacemaker pulse generator into chest
 subcutaneous tissue and fascia, percutaneous approach).........
MS-DRG 243--Cases with procedure code 0JH63PZ (Insertion of                    3             8.3          23,717
 cardiac rhythm related device into chest subcutaneous tissue
 and fascia, percutaneous approach).............................
MS-DRG 243--Cases with procedure code 0JH804Z* (Insertion of                  10             8.2          20,871
 pacemaker, single chamber into abdomen subcutaneous tissue and
 fascia, open approach).........................................
MS-DRG 243--Cases with procedure code 0JH805Z* (Insertion of                   1               4          15,739
 pacemaker, single chamber rate responsive into abdomen
 subcutaneous tissue and fascia, open approach).................
MS-DRG 243--Cases with procedure code 0JH806Z* (Insertion of                  57             4.4          18,787
 pacemaker, dual chamber into abdomen subcutaneous tissue and
 fascia, open approach).........................................
MS-DRG 243--Cases with procedure code 0JH807Z (Insertion of                    3               4          19,653
 cardiac resynchronization pacemaker pulse generator into
 abdomen subcutaneous tissue and fascia, open approach).........
MS-DRG 243--Cases with procedure code 0JH80PZ (Insertion of                    1               7          16,224
 cardiac rhythm related device into abdomen subcutaneous tissue
 and fascia, open approach).....................................
MS-DRG 243--Cases with procedure code 0JH836Z* (Insertion of                   1               2          14,005
 pacemaker, dual chamber into abdomen subcutaneous tissue and
 fascia, percutaneous approach).................................
MS-DRG 244--All cases...........................................          15,974             2.7          15,670
MS-DRG 244--Cases with procedure code 0JH604Z* (Insertion of               1,045             3.2          14,541
 pacemaker, single chamber into chest subcutaneous tissue and
 fascia, open approach).........................................
MS-DRG 244--Cases with procedure code 0JH605Z* (Insertion of                 127               3          13,208
 pacemaker, single chamber rate responsive into chest
 subcutaneous tissue and fascia, open approach).................
MS-DRG 244--Cases with procedure code 0JH606Z* (Insertion of              14,092             2.7          15,596
 pacemaker, dual chamber into chest subcutaneous tissue and
 fascia, open approach).........................................
MS-DRG 244--Cases with procedure code 0JH607Z (Insertion of                  303             2.8          26,221
 cardiac resynchronization pacemaker pulse generator into chest
 subcutaneous tissue and fascia, open approach).................
MS-DRG 244--Cases with procedure code 0JH60PZ (Insertion of                    2             4.5           9,248
 cardiac rhythm related device into chest subcutaneous tissue
 and fascia, open approach).....................................
MS-DRG 244--Cases with procedure code 0JH634Z* (Insertion of                  32             2.8          11,525
 pacemaker, single chamber into chest subcutaneous tissue and
 fascia, percutaneous approach).................................
MS-DRG 244--Cases with procedure code 0JH635Z* (Insertion of                   1               2          30,100
 pacemaker, single chamber rate responsive into chest
 subcutaneous tissue and fascia, percutaneous approach).........
MS-DRG 244--Cases with procedure code 0JH636Z* (Insertion of                 320             2.6          13,670
 pacemaker, dual chamber into chest subcutaneous tissue and
 fascia, percutaneous approach).................................

[[Page 41187]]

 
MS-DRG 244--Cases with procedure code 0JH637Z (Insertion of                   20             2.7          19,218
 cardiac resynchronization pacemaker pulse generator into chest
 subcutaneous tissue and fascia, percutaneous approach).........
MS-DRG 244--Cases with procedure code 0JH63PZ (Insertion of                    1               3          12,120
 cardiac rhythm related device into chest subcutaneous tissue
 and fascia, percutaneous approach).............................
MS-DRG 244--Cases with procedure code 0JH805Z* (Insertion of                   1               1          21,604
 pacemaker, single chamber rate responsive into abdomen
 subcutaneous tissue and fascia, open approach).................
MS-DRG 244--Cases with procedure code 0JH806Z* (Insertion of                  36             3.2          16,492
 pacemaker, dual chamber into abdomen subcutaneous tissue and
 fascia, open approach).........................................
MS-DRG 244--Cases with procedure code 0JH836Z* (Insertion of                   1               3          12,160
 pacemaker, dual chamber into abdomen subcutaneous tissue and
 fascia, percutaneous approach).................................
----------------------------------------------------------------------------------------------------------------

    The following table is a summary of the findings shown above from 
our review of MS-DRGs 242, 243, and 244 and the total number of cases 
reporting a pacemaker insertion procedure.

                       MS-DRGs for Cases Involving Pacemaker Insertion Procedures in MDC 5
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                         MS-DRG in MDC 5                               cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRGs 242, 243 and 244--All cases.............................          58,765             4.6         $20,253
MS-DRGs 242, 243, and 244--Cases with a pacemaker insertion             * 58,822             4.6          20,270
 procedure......................................................
----------------------------------------------------------------------------------------------------------------
* The figure is not adjusted for cases reporting more than one pacemaker insertion procedure code. The figure
  represents the frequency in which the number of pacemaker insertion procedures was reported.

    We found a total of 58,765 cases in MS-DRGs 242, 243, and 244 with 
an average length of stay of 4.6 days and average costs of $20,253. We 
found a total of 58,822 cases reporting pacemaker insertion procedures 
in MS-DRGs 242, 243, and 244 with an average length of stay of 4.6 days 
and average costs of $20,270. We note that the analysis performed is by 
procedure code, and because multiple pacemaker insertion procedures may 
be reported on a single claim, the total number of these pacemaker 
insertion procedure cases exceeds the total number of all cases found 
across MS-DRGs 242, 243, and 244 (58,822 procedures versus 58,765 
cases).
    We then analyzed claims for cases reporting a procedure code 
describing (1) the insertion of a pacemaker device only, (2) the 
insertion of a pacemaker lead only, and (3) both the insertion of a 
pacemaker device and a pacemaker lead across all the MDCs except MDC 5 
to determine the number of cases currently grouping to medical MS-DRGs 
and the potential impact of these cases moving into the surgical 
unrelated MS-DRGs 981, 982 and 983 (Extensive O.R. Procedure Unrelated 
to Principal Diagnosis with MCC, with CC and without CC/MCC, 
respectively). Our findings are shown in the following table.

                                Pacemaker Insertion Procedures in Medical MS-DRGs
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                      All MDCs except MDC 5                            cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
Procedures for insertion of pacemaker device....................           2,747             9.5         $29,389
Procedures for insertion of pacemaker lead......................           2,831             9.4          29,240
Procedures for insertion of pacemaker device with insertion of             2,709             9.4          29,297
 pacemaker lead.................................................
----------------------------------------------------------------------------------------------------------------

    We found a total of 2,747 cases reporting the insertion of a 
pacemaker device in 177 medical MS-DRGs with an average length of stay 
of 9.5 days and average costs of $29,389 across all the MDCs except MDC 
5. We found a total of 2,831 cases reporting the insertion of a 
pacemaker lead in 175 medical MS-DRGs with an average length of stay of 
9.4 days and average costs of $29,240 across all the MDCs except MDC 5. 
We found a total of 2,709 cases reporting both the insertion of a 
pacemaker device and the insertion of a pacemaker lead in 170 medical 
MS-DRGs with an average length of stay of 9.4 days and average costs of 
$29,297 across all the MDCs except MDC 5.
    We also analyzed claims for cases reporting a procedure code 
describing the insertion of a pacemaker device with a procedure code 
describing the insertion of a pacemaker lead in all the surgical MS-
DRGs across all the MDCs except MDC 5. Our findings are shown in the 
following table.

[[Page 41188]]



                               Pacemaker Insertion Procedures in Surgical MS-DRGs
----------------------------------------------------------------------------------------------------------------
                                                                                 Average length
                    All MDCs except MDC 5                      Number of cases      of stay       Average costs
----------------------------------------------------------------------------------------------------------------
Procedures for insertion of pacemaker device with insertion             3,667             12.8          $48,856
 of pacemaker lead...........................................
----------------------------------------------------------------------------------------------------------------

    We found a total of 3,667 cases reporting the insertion of a 
pacemaker device and the insertion of a pacemaker lead in 194 surgical 
MS-DRGs with an average length of stay of 12.8 days and average costs 
of $48,856 across all the MDCs except MDC 5.
    For cases where the insertion of a pacemaker device, the insertion 
of a pacemaker lead or the insertion of both a pacemaker device and 
lead were reported on a claim grouping to a medical MS-DRG, the average 
length of stay and average costs were generally higher for these cases 
when compared to the average length of stay and average costs for all 
the cases in their assigned MS-DRGs. For example, we found 113 cases 
reporting both the insertion of a pacemaker device and lead in MS-DRG 
378 (G.I. Hemorrhage with CC), with an average length of stay of 7.1 
days and average costs of $23,711. The average length of stay for all 
cases in MS-DRG 378 was 3.6 days and the average cost for all cases in 
MS-DRG 378 was $7,190. The average length of stay for cases reporting 
both the insertion of a pacemaker device and lead were twice as long as 
the average length of stay for all the cases in MS-DRG 378 (7.1 days 
versus 3.6 days). In addition, the average costs for the cases 
reporting both the insertion of a pacemaker device and lead were 
approximately $16,500 higher than the average costs of all the cases in 
MS-DRG 378 ($23,711 versus $7,190). We refer readers to Table 6P.1c 
associated with the proposed rule (which is available via the internet 
on the CMS website) for the detailed report of our findings across the 
other medical MS-DRGs. We note that the average costs and average 
length of stay for cases reporting the insertion of a pacemaker device, 
the insertion of a pacemaker lead or the insertion of both a pacemaker 
device and lead are reflected in Columns D and E, while the average 
costs and average length of stay for all cases in the respective MS-DRG 
are reflected in Columns I and J.
    The claims data results from our analysis of this request showed 
that if we were to support restructuring the GROUPER logic so that 
pacemaker insertion procedures that include a combination of the 
insertion of the pacemaker device with the insertion of the pacemaker 
lead are designated as an O.R. procedure across all the MDCs, we would 
expect approximately 2,709 cases to move or ``shift'' from the medical 
MS-DRGs where they are currently grouping into the surgical unrelated 
MS-DRGs 981, 982, and 983.
    Our clinical advisors reviewed the data results and recommended 
that pacemaker insertion procedures involving a complete pacemaker 
system (insertion of pacemaker device combined with insertion of 
pacemaker lead) warrant classification into surgical MS-DRGs because 
the patients receiving these devices demonstrate greater treatment 
difficulty and utilization of resources when compared to procedures 
that involve the insertion of only the pacemaker device or the 
insertion of only the pacemaker lead. We note that the request we 
addressed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24981 
through 24984) was to determine if some procedure code combinations 
were excluded from the ICD-10 MS-DRG assignments for MS-DRGs 242, 243, 
and 244. We proposed and, upon considering public comments received, 
finalized an alternate approach that we believed to be less 
complicated. We also stated in the FY 2017 IPPS/LTCH PPS final rule (81 
FR 56806) that we would continue to monitor the MS-DRGs for pacemaker 
insertion procedures as we receive ICD-10 claims data. Upon further 
review, we stated that we believe that recreating the procedure code 
combinations for pacemaker insertion procedures would allow for the 
grouping of these procedures to the surgical MS-DRGs, which we believe 
is warranted to better recognize the resources and complexity of 
performing these procedures. Therefore, in the FY 2019 IPPS/LTCH PPS 
proposed rule (83 FR 20203), we proposed to recreate pairs of procedure 
code combinations involving both the insertion of a pacemaker device 
with the insertion of a pacemaker lead to act as procedure code 
combination pairs or ``clusters'' in the GROUPER logic that are 
designated as O.R. procedures outside of MDC 5 when reported together.
    Comment: Commenters supported the proposal to recreate pairs of 
procedure code combinations involving both the insertion of a pacemaker 
device with the insertion of a pacemaker lead to act as procedure code 
combination pairs or ``clusters'' in the GROUPER logic that are 
designated as O.R. procedures outside of MDC 5 when reported together. 
One commenter specifically expressed its appreciation of CMS' efforts 
to update the MS-DRG GROUPER logic to better recognize the resources 
and complexity of pacemaker device and lead procedures. Another 
commenter disagreed with the proposal to use pacemaker code pairs for 
assignment to a surgical MS-DRG, stating it would be more appropriate 
to designate each pacemaker device and pacemaker lead procedure code as 
an O.R. procedure to allow initial insertions and replacement of 
individual components to group to surgical MS-DRGs within all MDCs. 
According to the commenter, this designation would compensate providers 
for the cost of the device and the resources utilized in the 
performance of initial insertions and the replacement of individual 
components.
    Response: We appreciate the commenters' support. With regard to the 
commenter who disagreed with the proposal to utilize pacemaker code 
pairs for assignment to a surgical MS-DRG and suggested that the 
GROUPER logic designate each pacemaker device and pacemaker lead 
procedure code as an O.R. procedure to allow initial insertions and 
replacement of individual components to group to surgical MS-DRGs 
within all MDCs, we note that, as displayed in Table 6P.1c. associated 
with the FY 2019 IPPS/LTCH PPS proposed rule (which is available via 
the internet on the CMS website), our claims analysis for cases 
reporting a procedure code describing the insertion of a pacemaker 
device only demonstrated a total of six cases across all the medical 
MS-DRGs, and for cases reporting a procedure code describing the 
insertion of a pacemaker lead only, the data demonstrated a total of 
four cases across all the medical MS-DRGs. As a result, there were a 
total of only 10 cases where a stand-alone code for insertion of a 
pacemaker device procedure or a stand-alone code for insertion of a 
pacemaker lead procedure was reported. Those 10 cases grouped to 10 
different medical MS-DRGs, of which 8 included a CC or MCC diagnosis. 
Therefore, it is not clear how much of the average costs, the average 
length of stay, the complexity of service, and resource utilization for 
those cases

[[Page 41189]]

are attributable to the insertion of the pacemaker device/lead 
procedure versus the severity of illness.
    After consideration of the public comments we received, we are 
finalizing our proposal to recreate pairs of procedure code 
combinations involving both the insertion of a pacemaker device with 
the insertion of a pacemaker lead to act as procedure code combination 
pairs or ``clusters'' in the GROUPER logic that are designated as O.R. 
procedures outside of MDC 5 when reported together under the ICD-10 MS-
DRGs Version 36, effective October 1, 2018.
    We also proposed to designate all the procedure codes describing 
the insertion of a pacemaker device or the insertion of a pacemaker 
lead as non-O.R. procedures when reported as a single, individual 
stand-alone code based on the recommendation of our clinical advisors 
as noted in the proposed rule and earlier in this section and 
consistent with how these procedures were classified under the Version 
33 ICD-10 MS-DRG GROUPER logic.
    Comment: A number of commenters supported the proposal to designate 
all the procedure codes describing the insertion of a pacemaker device 
or the insertion of a pacemaker lead as non-O.R. procedures when 
reported as a single, individual stand-alone code. However, other 
commenters opposed the proposal. One commenter acknowledged that the 
complexity of inserting a full pacemaker system is greater than when 
inserting a pacemaker lead or generator. However, this commenter 
asserted that the complexity does not increase significantly and that 
the placement of a lead or generator still requires the use of an 
operating room, sterile field, anesthesiology, and preparing the 
patient. The commenter believed that the placement of a pacemaker lead 
or device does require the use of an operating room and expressed 
concern that CMS would designate the procedures as a non-O.R. 
procedure.
    Response: We appreciate the commenters' support. With regard to the 
commenter who expressed concern that we proposed to designate procedure 
codes describing the insertion of a pacemaker device or the insertion 
of a pacemaker lead as non-O.R. procedures when reported as a single, 
individual stand-alone code, we note that historically, these 
procedures have been designated as non-O.R. procedures. As we noted in 
the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20203), our proposal to 
designate all the procedure codes describing the insertion of a 
pacemaker device or the insertion of a pacemaker lead as non-O.R. 
procedures when reported as a single, individual stand-alone code is 
consistent with how these procedures were classified under the Version 
33 ICD-10 MS-DRG GROUPER logic. In addition, our clinical advisors 
continue to support the non-O.R. designation because, as the commenter 
noted in its own comments, while these procedures may require a sterile 
field, anesthesia and preparing the patient, the complexity of 
inserting a pacemaker lead or generator alone is less than that of 
inserting a full pacemaker system and the former can be performed in 
settings such as cardiac catheterization laboratories.
    After consideration of the public comments we received, we are 
finalizing our proposal to designate all the procedure codes describing 
the insertion of a pacemaker device or the insertion of a pacemaker 
lead as non-O.R. procedures when reported as a single, individual 
stand-alone code outside of MDC 5 under the ICD-10 MS-DRGs Version 36, 
effective October 1, 2018.
    In the proposed rule, we referred readers to Table 6P.1d, Table 
6P.1e, and Table 6P.1f. associated with the proposed rule (which is 
available via the internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) for (1) a complete list of the proposed 
procedure code combinations or ``pairs''; (2) a complete list of the 
procedure codes describing the insertion of a pacemaker device; and (3) 
a complete list of the procedure codes describing the insertion of a 
pacemaker lead. We invited public comments on our lists of procedure 
codes that we proposed to include for restructuring the ICD-10 MS-DRG 
GROUPER logic for pacemaker insertion procedures.
    In addition, we proposed to maintain the current GROUPER logic for 
MS-DRGs 258 and 259 (Cardiac Pacemaker Device Replacement with MCC and 
without MCC, respectively) where the listed procedure codes as shown in 
the ICD-10 MS-DRG Definitions Manual Version 35, which is available via 
the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-Items/FY2018-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending, 
describing a pacemaker device insertion, continue to be designated as 
``non-O.R. affecting the MS-DRG'' because they are reported when a 
pacemaker device requires replacement and have a corresponding 
diagnosis from MDC 5. Also, we proposed to maintain the current GROUPER 
logic for MS-DRGs 260, 261, and 262 (Cardiac Pacemaker Revision Except 
Device Replacement with MCC, with CC, and without CC/MCC, respectively) 
so that cases reporting any one of the listed ICD-10-PCS procedure 
codes as shown in the ICD-10 MS-DRG Definitions Manual Version 35 
describing procedures involving pacemakers and related procedures and 
associated devices will continue to be assigned to those MS DRGs under 
MDC 5 because they are reported when a pacemaker device requires 
revision and they have a corresponding circulatory system diagnosis.
    Comment: Commenters agreed with the proposed lists of procedure 
codes for restructuring the ICD-10 MS DRG GROUPER logic for pacemaker 
insertion procedures. One commenter also suggested the addition of ICD-
10-PCS procedure code 02H63MZ (Insertion of cardiac lead into right 
atrium, percutaneous approach) and ICD-10-PCS procedure code 02H73MZ 
(Insertion of cardiac lead into left atrium, percutaneous approach) to 
Tables 6P.1d. and Table 6P.1f. that were associated with the proposed 
rule. The commenter noted that the tables included the open and 
percutaneous endoscopic approaches but did not include the percutaneous 
approach.
    Response: We appreciate the commenters' support. We agree with the 
commenter to add ICD-10-PCS procedure codes 02H63MZ and 02H73MZ to 
Table 6P.1d and as reflected in Table 6P.1f. associated with this final 
rule (which is available via the internet on the CMS website), to be 
included for the pacemaker insertion code pairs and as stand-alone 
codes for the insertion of a pacemaker lead. The codes are consistent 
with the other insertion of cardiac lead procedures and were 
inadvertently omitted from the initial list.
    After consideration of the public comments we received, we are 
finalizing the lists of the procedure codes in Tables 6P.1d., Table 
6P.1e., and Table 6P.1f associated with the proposed rule, with the 
addition of ICD-10-PCS procedure codes 02H63MZ and 02H73MZ to be 
included for the pacemaker insertion code pairs and as stand-alone 
codes for the insertion of a pacemaker lead, as reflected in Tables 
6P.1.d. and 6P.1.f. associated with this final rule. We also are 
finalizing our proposal to maintain the current GROUPER logic for MS-
DRGs 258 and 259 and for MS-DRGs 260, 261, and 262

[[Page 41190]]

under the ICD-10 Version 36, effective October 1, 2018.
    We noted in the proposed rule that, while the requestor did not 
include the following procedure codes in its request, these codes are 
also currently designated as O.R. procedure codes and are assigned to 
MS-DRGs 260, 261, and 262 under MDC 5.

------------------------------------------------------------------------
           ICD-10-PCS code                     Code description
------------------------------------------------------------------------
02PA0MZ.............................  Removal of cardiac lead from
                                       heart, open approach.
02PA3MZ.............................  Removal of cardiac lead from
                                       heart, percutaneous approach.
02PA4MZ.............................  Removal of cardiac lead from
                                       heart, percutaneous endoscopic
                                       approach.
02WA0MZ.............................  Revision of cardiac lead in heart,
                                       open approach.
02WA3MZ.............................  Revision of cardiac lead in heart,
                                       percutaneous approach.
02WA4MZ.............................  Revision of cardiac lead in heart,
                                       percutaneous endoscopic approach.
0JPT0PZ.............................  Removal of cardiac rhythm related
                                       device from trunk subcutaneous
                                       tissue and fascia, open approach.
0JPT3PZ.............................  Removal of cardiac rhythm related
                                       device from trunk subcutaneous
                                       tissue and fascia, percutaneous
                                       approach.
0JWT0PZ.............................  Revision of cardiac rhythm related
                                       device in trunk subcutaneous
                                       tissue and fascia, open approach.
0JWT3PZ.............................  Revision of cardiac rhythm related
                                       device in trunk subcutaneous
                                       tissue and fascia, percutaneous
                                       approach.
------------------------------------------------------------------------

    In the proposed rule, we solicited public comments on whether these 
procedure codes describing the removal or revision of a cardiac lead 
and removal or revision of a cardiac rhythm related (pacemaker) device 
should also be designated as non-O.R. procedure codes for FY 2019 when 
reported as a single, individual stand-alone code with a principal 
diagnosis outside of MDC 5 for consistency in the classification among 
these devices.
    Comment: One commenter recommended that CMS not finalize the 
proposed designation of the procedure codes listed in the above table 
describing the removal or revisions of a cardiac lead and the removal 
or revision of a cardiac rhythm related (pacemaker) device from O.R. 
procedures to non-O.R. procedures when reported as a single, individual 
stand-alone code when reported with a principal diagnosis outside of 
MDC 5. Another commenter expressed concern that the rationale for the 
proposal was not clear and warranted additional clarification about the 
data used to arrive at this recommendation. According to this 
commenter, regardless of the principal diagnosis, the resources for 
procedures involving insertion, removal or revision of a pacemaker 
generator or lead are the same. The commenter further noted that 
revisions are often more complex and require greater resources. The 
commenter recommended that CMS continue to designate the procedures as 
O.R. procedures and further explain the proposal.
    Response: We appreciate the commenter's feedback. We note that 
while we were soliciting comments on the procedure codes listed in the 
table above that describe the removal or revision of a cardiac lead and 
the removal or revision of a cardiac rhythm related (pacemaker) device, 
we did not specifically recommend a change to the designation of the 
procedure codes at this time. We agree with the commenter that the 
removal or revision of a cardiac lead or pacemaker generator can be 
more complex and require greater resources than an initial insertion 
procedure.
    After consideration of the public comments we received, we are 
maintaining the O.R. designation of the procedure codes listed in the 
above table under the ICD-10 MS-DRGs Version 36, effective October 1, 
2018. As additional claims data become available, we will continue to 
analyze these procedures.
    We also note in the proposed rule that, while the requestor did not 
include the following procedure codes in its request, the codes in the 
following table became effective October 1, 2016 (FY 2017) and also 
describe procedures involving the insertion of a pacemaker. 
Specifically, the following list includes procedure codes that describe 
an intracardiac or ``leadless'' pacemaker. These procedure codes are 
designated as O.R. procedure codes and are currently assigned to MS-
DRGs 228 and 229 (Other Cardiothoracic Procedures with MCC and without 
MCC, respectively) under MDC 5.

------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
02H40NZ...................  Insertion of intracardiac pacemaker into
                             coronary vein, open approach.
02H43NZ...................  Insertion of intracardiac pacemaker into
                             coronary vein, percutaneous approach.
02H44NZ...................  Insertion of intracardiac pacemaker into
                             coronary vein, percutaneous endoscopic
                             approach.
02H60NZ...................  Insertion of intracardiac pacemaker into
                             right atrium, open approach.
02H63NZ...................  Insertion of intracardiac pacemaker into
                             right atrium, percutaneous approach.
02H64NZ...................  Insertion of intracardiac pacemaker into
                             right atrium, percutaneous endoscopic
                             approach.
02H70NZ...................  Insertion of intracardiac pacemaker into
                             left atrium, open approach.
02H73NZ...................  Insertion of intracardiac pacemaker into
                             left atrium, percutaneous approach.
02H74NZ...................  Insertion of intracardiac pacemaker into
                             left atrium, percutaneous endoscopic
                             approach.
02HK0NZ...................  Insertion of intracardiac pacemaker into
                             right ventricle, open approach.
02HK3NZ...................  Insertion of intracardiac pacemaker into
                             right ventricle, percutaneous approach.
02HK4NZ...................  Insertion of intracardiac pacemaker into
                             right ventricle, percutaneous endoscopic
                             approach.
02HL0NZ...................  Insertion of intracardiac pacemaker into
                             left ventricle, open approach.
02HL3NZ...................  Insertion of intracardiac pacemaker into
                             left ventricle, percutaneous Approach.
02HL4NZ...................  Insertion of intracardiac pacemaker into
                             left ventricle, percutaneous endoscopic
                             approach.
02WA0NZ...................  Revision of intracardiac pacemaker in heart,
                             open approach.
02WA3NZ...................  Revision of intracardiac pacemaker in heart,
                             percutaneous approach.
02WA4NZ...................  Revision of intracardiac pacemaker in heart,
                             percutaneous endoscopic approach.
02WAXNZ...................  Revision of intracardiac pacemaker in heart,
                             external approach.
02H40NZ...................  Insertion of intracardiac pacemaker into
                             coronary vein, open approach.

[[Page 41191]]

 
02H43NZ...................  Insertion of intracardiac pacemaker into
                             coronary vein, percutaneous approach.
------------------------------------------------------------------------

    We examined claims data for procedures involving an intracardiac 
pacemaker reporting any of the above codes across all MS-DRGs. Our 
findings are shown in the following table.

                                        Intracardiac Pacemaker Procedures
----------------------------------------------------------------------------------------------------------------
                                                                                 Average length
                      Across all MS-DRGs                       Number of cases      of stay       Average costs
----------------------------------------------------------------------------------------------------------------
Procedures for intracardiac pacemaker........................           1,190              8.6          $38,576
----------------------------------------------------------------------------------------------------------------

    We found 1,190 cases reporting a procedure involving an 
intracardiac pacemaker with an average length of stay of 8.6 days and 
average costs of $38,576. Of these 1,190 cases, we found 1,037 cases in 
MS-DRGs under MDC 5. We also found that the 153 cases that grouped to 
MS-DRGs outside of MDC 5 grouped to surgical MS-DRGs; therefore, 
another O.R. procedure was also reported on the claim. However, in the 
FY 2019 IPPS/LTCH PPS proposed rule, we solicited public comments on 
whether these procedure codes describing the insertion and revision of 
intracardiac pacemakers should also be considered for classification 
into all surgical unrelated MS-DRGs outside of MDC 5 for FY 2019.
    Comment: Commenters supported classifying the procedure codes 
listed in the table above describing the insertion and revision of 
intracardiac pacemakers into all surgical unrelated MS-DRGs outside of 
MDC 5.
    Response: We appreciate the commenters' feedback. We note that 
while we solicited comments on the procedure codes listed in the table 
above that describe the insertion of an intracardiac pacemaker device, 
we did not specifically recommend a change to the designation of the 
procedure codes at this time. We also note that, currently, the 
procedures are already classified within the GROUPER logic as extensive 
O.R. procedures. Therefore, if one of the procedure codes is reported 
with a principal diagnosis outside of MDC 5, the case will group to one 
of the unrelated surgical MS-DRGs.
    After consideration of the public comments we received, we are 
maintaining the O.R. designation of the procedure codes listed in the 
above table under the ICD-10 MS-DRGs Version 36, effective October 1, 
2018. As additional claims data become available, we will continue to 
analyze these procedures.
b. Drug-Coated Balloons in Endovascular Procedures
    In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38111), we 
discontinued new technology add-on payments for the LUTONIX[supreg] and 
IN.PACTTM AdmiralTM drug-coated balloon (DCB) 
technologies, effective for FY 2018, because the technology no longer 
met the newness criterion for new technology add-on payments. For FY 
2019, we received a request to reassign cases that utilize a drug-
coated balloon in the performance of an endovascular procedure 
involving the treatment of superficial femoral arteries for peripheral 
arterial disease from the lower severity level MS-DRG 254 (Other 
Vascular Procedures without CC/MCC) and MS-DRG 253 (Other Vascular 
Procedures with CC) to the highest severity level MS-DRG 252 (Other 
Vascular Procedures with MCC). We also received a request to revise the 
title of MS-DRG 252 to ``Other Vascular Procedures with MCC or Drug-
Coated Balloon Implant''.
    As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 
20205), there are currently 36 ICD-10-PCS procedure codes that describe 
the performance of endovascular procedures involving treatment of the 
superficial femoral arteries that utilize a drug-coated balloon, which 
are listed in the following table.

------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
047K041...................  Dilation of right femoral artery with drug-
                             eluting intraluminal device using drug-
                             coated balloon, open approach.
047K0D1...................  Dilation of right femoral artery with
                             intraluminal device using drug-coated
                             balloon, open approach.
047K0Z1...................  Dilation of right femoral artery using drug-
                             coated balloon, open approach.
047K341...................  Dilation of right femoral artery with drug-
                             eluting intraluminal device using drug-
                             coated balloon, percutaneous approach.
047K3D1...................  Dilation of right femoral artery with
                             intraluminal device using drug-coated
                             balloon, percutaneous approach.
047K3Z1...................  Dilation of right femoral artery using drug-
                             coated balloon, percutaneous approach.
047K441...................  Dilation of right femoral artery with drug-
                             eluting intraluminal device using drug-
                             coated balloon, percutaneous endoscopic
                             approach.
047K4D1...................  Dilation of right femoral artery with
                             intraluminal device using drug-coated
                             balloon, percutaneous endoscopic approach.
047K4Z1...................  Dilation of right femoral artery using drug-
                             coated balloon, percutaneous endoscopic
                             approach.
047L041...................  Dilation of left femoral artery with drug-
                             eluting intraluminal device using drug-
                             coated balloon, open approach.
047L0D1...................  Dilation of left femoral artery with
                             intraluminal device using drug-coated
                             balloon, open approach.
047L0Z1...................  Dilation of left femoral artery using drug-
                             coated balloon, open approach.
047L341...................  Dilation of left femoral artery with drug-
                             eluting intraluminal device using drug-
                             coated balloon, percutaneous approach.
047L3D1...................  Dilation of left femoral artery with
                             intraluminal device using drug-coated
                             balloon, percutaneous approach.
047L3Z1...................  Dilation of left femoral artery using drug-
                             coated balloon, percutaneous approach.
047L441...................  Dilation of left femoral artery with drug-
                             eluting intraluminal device using drug-
                             coated balloon, percutaneous endoscopic
                             approach.
047L4D1...................  Dilation of left femoral artery with
                             intraluminal device using drug-coated
                             balloon, percutaneous endoscopic approach.
047L4Z1...................  Dilation of left femoral artery using drug-
                             coated balloon, percutaneous endoscopic
                             approach.

[[Page 41192]]

 
047M041...................  Dilation of right popliteal artery with drug-
                             eluting intraluminal device using drug-
                             coated balloon, open approach.
047M0D1...................  Dilation of right popliteal artery with
                             intraluminal device using drug-coated
                             balloon, open approach.
047M0Z1...................  Dilation of right popliteal artery using
                             drug-coated balloon, open approach.
047M341...................  Dilation of right popliteal artery with drug-
                             eluting intraluminal device using drug-
                             coated balloon, percutaneous approach.
047M3D1...................  Dilation of right popliteal artery with
                             intraluminal device using drug-coated
                             balloon, percutaneous approach.
047M3Z1...................  Dilation of right popliteal artery using
                             drug-coated balloon, percutaneous approach.
047M441...................  Dilation of right popliteal artery with drug-
                             eluting intraluminal device using drug-
                             coated balloon, percutaneous endoscopic
                             approach.
047M4D1...................  Dilation of right popliteal artery with
                             intraluminal device using drug-coated
                             balloon, percutaneous endoscopic approach.
047M4Z1...................  Dilation of right popliteal artery using
                             drug-coated balloon, percutaneous
                             endoscopic approach.
047N041...................  Dilation of left popliteal artery with drug-
                             eluting intraluminal device using drug-
                             coated balloon, open approach.
047N0D1...................  Dilation of left popliteal artery with
                             intraluminal device using drug-coated
                             balloon, open approach.
047N0Z1...................  Dilation of left popliteal artery using drug-
                             coated balloon, open approach.
047N341...................  Dilation of left popliteal artery with drug-
                             eluting intraluminal device using drug-
                             coated balloon, percutaneous approach.
047N3D1...................  Dilation of left popliteal artery with
                             intraluminal device using drug-coated
                             balloon, percutaneous approach.
047N3Z1...................  Dilation of left popliteal artery using drug-
                             coated balloon, percutaneous approach.
047N441...................  Dilation of left popliteal artery with drug-
                             eluting intraluminal device using drug-
                             coated balloon, percutaneous endoscopic
                             approach.
047N4D1...................  Dilation of left popliteal artery with
                             intraluminal device using drug-coated
                             balloon, percutaneous endoscopic approach.
047N4Z1...................  Dilation of left popliteal artery using drug-
                             coated balloon, percutaneous endoscopic
                             approach.
------------------------------------------------------------------------

    The requestor performed its own analysis of claims data and 
expressed concern that it found that the average costs of cases using a 
drug-coated balloon in the performance of percutaneous endovascular 
procedures involving treatment of patients who have been diagnosed with 
peripheral arterial disease are significantly higher than the average 
costs of all of the cases in the MS-DRGs where these procedures are 
currently assigned. The requestor also expressed concern that payments 
may no longer be adequate because the new technology add-on payments 
have been discontinued and may affect patient access to these 
procedures.
    We first examined claims data from the September 2017 update of the 
FY 2017 MedPAR file for cases reporting any 1 of the 36 ICD-10-PCS 
procedure codes listed in the immediately preceding table that describe 
the use of a drug-coated balloon in the performance of endovascular 
procedures in MS-DRGs 252, 253, and 254. Our findings are shown in the 
following table.

                       MS-DRGs for Other Vascular Procedures With Drug[dash]Coated Balloon
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 252--All cases...........................................          33,583             7.6         $23,906
MS-DRG 252--Cases with drug-coated balloon......................             870             8.8          30,912
MS-DRG 253--All cases...........................................          25,714             5.4          18,986
MS-DRG 253--Cases with drug-coated balloon......................           1,532             5.4          23,051
MS-DRG 254--All cases...........................................          12,344             2.8          13,287
MS-DRG 254--Cases with drug-coated balloon......................             488             2.4          17,445
----------------------------------------------------------------------------------------------------------------

    As shown in this table, there were a total of 33,583 cases in MS-
DRG 252, with an average length of stay of 7.6 days and average costs 
of $23,906. There were 870 cases in MS-DRG 252 reporting the use of a 
drug-coated balloon in the performance of an endovascular procedure, 
with an average length of stay of 8.8 days and average costs of 
$30,912. The total number of cases in MS-DRG 253 was 25,714, with an 
average length of stay of 5.4 days and average costs of $18,986. There 
were 1,532 cases in MS-DRG 253 reporting the use of a DCB in the 
performance of an endovascular procedure, with an average length of 
stay of 5.4 days and average costs of $23,051. The total number of 
cases in MS-DRG 254 was 12,344, with an average length of stay of 2.8 
days and average costs of $13,287. There were 488 cases in MS-DRG 254 
reporting the use of a DCB in the performance of an endovascular 
procedure, with an average length of stay of 2.4 days and average costs 
of $17,445.
    The results of our data analysis show that there is not a very high 
volume of cases reporting the use of a drug-coated balloon in the 
performance of endovascular procedures compared to all of the cases in 
the assigned MS-DRGs. The data results also show that the average 
length of stay for cases reporting the use of a drug-coated balloon in 
the performance of endovascular procedures in MS-DRGs 253 and 254 is 
lower compared to the average length of stay for all of the cases in 
the assigned MS-DRGs, while the average length of stay for cases 
reporting the use of a drug-coated balloon in the performance of 
endovascular procedures in MS-DRG 252 is slightly higher compared to 
all of the cases in MS-DRG 252 (8.8 days versus 7.6 days). Lastly, the 
data results showed that the average costs for cases reporting the use 
of a drug-coated balloon in the performance of percutaneous 
endovascular procedures were higher compared to all of the cases in the 
assigned MS-DRGs. Specifically, for MS-DRG 252, the average costs for 
cases reporting the use of a DCB in the performance of endovascular 
procedures were $30,912 versus the average costs of $23,906 for all 
cases in MS-DRG 252, a difference of $7,006. For MS-DRG 253, the 
average costs for cases reporting the use of a drug-coated balloon in 
the performance of endovascular procedures were $23,051 versus the 
average costs of $18,986 for all cases in MS-DRG 253, a difference

[[Page 41193]]

of $4,065. For MS-DRG 254, the average costs for cases reporting the 
use of a drug-coated balloon in the performance of endovascular 
procedures were $17,445 versus the average costs of $13,287 for all 
cases in MS-DRG 254, a difference of $4,158.
    The following table is a summary of the findings discussed above 
from our review of MS-DRGs 252, 253 and 254 and the total number of 
cases that used a drug-coated balloon in the performance of the 
procedure across MS-DRGs 252, 253, and 254.

                    MS-DRGs for Other Vascular Procedures and Cases With Drug-Coated Balloon
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRGs 252, 253, and 254--All cases............................          71,641             6.0         $20,310
MS-DRGs 252, 253, and 254--Cases with drug-coated balloon.......           2,890             6.0          24,569
----------------------------------------------------------------------------------------------------------------

    As shown in this table, there were a total of 71,641 cases across 
MS-DRGs 252, 253, and 254, with an average length of stay of 6.0 days 
and average costs of $20,310. There were a total of 2,890 cases across 
MS-DRGs 252, 253, and 254 reporting the use of a drug-coated balloon in 
the performance of the procedure, with an average length of stay of 6.0 
days and average costs of $24,569. The data analysis showed that cases 
reporting the use of a drug-coated balloon in the performance of the 
procedure across MS-DRGs 252, 253 and 254 have similar lengths of stay 
(6.0 days) compared to the average length of stay for all of the cases 
in MS-DRGs 252, 253, and 254. The data results also showed that the 
cases reporting the use of a drug-coated balloon in the performance of 
the procedure across these MS-DRGs have higher average costs ($24,569 
versus $20,310) compared to the average costs for all of the cases 
across these MS-DRGs.
    We stated in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20207) 
that the results of our claims data analysis and the advice from our 
clinical advisors did not support reassigning cases reporting the use 
of a drug-coated balloon in the performance of these procedures from 
the lower severity level MS-DRGs 253 and 254 to the highest severity 
level MS-DRG 252 at this time. We further stated that, if we were to 
reassign cases that utilize a drug-coated balloon in the performance of 
these types of procedures from MS-DRG 254 to MS-DRG 252, the cases 
would result in overpayment and also would have a shorter length of 
stay compared to all of the cases in MS-DRG 252. While the cases 
reporting the use of a drug-coated balloon in the performance of these 
procedures are higher compared to the average costs for all cases in 
their assigned MS-DRGs, it is not by a significant amount. We stated 
that we believe that as use of a drug-coated balloon becomes more 
common, the costs will be reflected in the data. Our clinical advisors 
also agreed that it would not be clinically appropriate to reassign 
cases for patients from the lowest severity level (without CC/MCC) MS-
DRG to the highest severity level (with MCC) MS-DRG in the absence of 
additional data to better determine the resource utilization for this 
subset of patients. Therefore, for these reasons, we proposed to not 
reassign cases reporting the use of a drug-coated balloon in the 
performance of endovascular procedures from MS-DRGs 253 and 254 to MS-
DRG 252.
    Comment: A number of commenters supported maintaining the current 
classification of cases involving the use of a drug-coated balloon in 
the performance of endovascular procedures. The commenters stated that 
CMS' proposal was reasonable, given the data, ICD-10-PCS procedure 
codes, and information provided.
    Response: We appreciate the commenters' support.
    Comment: One commenter recommended that further data analysis be 
conducted after the new ICD-10-PCS procedure codes for endovascular 
procedures utilizing a drug-coated balloon in the upper extremity 
become effective on October 1, 2018, in order to determine if MS-DRG 
structure and assignment modifications are warranted in the future.
    Response: We agree with the commenter that continued monitoring of 
the cases reporting the use of a drug-coated balloon in the performance 
of endovascular procedures in the lower extremity, along with analysis 
of the new ICD-10-PCS procedure codes that identify the use of a drug-
coated balloon in the upper extremity, would be advantageous. As claims 
data become available, we will be able to evaluate the resource 
utilization of these procedures more effectively.
    Comment: One commenter believed that an analysis of the average 
costs of cases performed with and without the use of drug-coated 
balloons in MS-DRGs 252, 253, and 254 justified assigning cases, 
including cases involving the use of drug-coated balloons in the 
performance of the procedure, to MS-DRGs 252 or 253, and not to MS-DRG 
254. The commenter indicated that claims data showed the average costs 
of MS-DRG 253 for all cases is $18,986, while the average cost of cases 
utilizing drug-coated balloons in the performance of the procedure 
assigned to MS-DRG 254 is $17,445. The commenter believed that, while 
the average length-of-stay is lower for these cases, the average costs 
are consistent with that of MS-DRG 253. Therefore, the commenter 
suggested that CMS reassign these cases to MS-DRG 253 as a more 
appropriate reflection of the hospital resources utilized for these 
cases.
    Response: Our clinical advisors reviewed the data, and again 
determined that it would not be clinically appropriate to reassign 
cases for patients from the lowest severity level (without CC/MCC) MS-
DRG to the higher severity level (with CC) MS-DRG in the absence of 
additional data to better determine the resource utilization for this 
subset of patients. We reiterate that we believe as use of the drug-
coated balloon in the performance of endovascular procedures becomes 
more common, the costs will be reflected in the data. In addition, as 
noted above, new ICD-10-PCS procedure codes that describe the use of a 
drug-coated balloon in the upper extremity are effective with 
discharges occurring on or after October 1, 2018. As such, we will 
continue to monitor cases reporting the use of a drug-coated balloon in 
the performance of endovascular procedures and determine if future MS-
DRG structure and assignment modifications are supported.
    After consideration of the public comments we received, we are 
finalizing our proposal to not reassign cases reporting the use of a 
drug-coated balloon in the performance of endovascular procedures from 
MS-DRGs 253 and 254 to MS-DRG 252 for FY 2019.
    We noted in the proposed rule that because 24 of the 36 ICD-10-PCS 
procedure codes describing the use of a

[[Page 41194]]

drug-coated balloon in the performance of endovascular procedures also 
include the use of an intraluminal device, we conducted further 
analysis to determine the number of cases reporting an intraluminal 
device with the use of a drug-coated balloon in the performance of the 
procedure versus the number of cases reporting the use of a drug-coated 
balloon alone. We analyzed the number of cases across MS-DRGs 252, 253, 
and 254 reporting: (1) The use of an intraluminal device (stent) with 
use of a drug-coated balloon in the performance of the procedure; (2) 
the use of a drug-eluting intraluminal device (stent) with the use of a 
drug-coated balloon in the performance of the procedure; and (3) the 
use of a drug-coated balloon only in the performance of the procedure. 
Our findings are shown in the following table.

                    MS-DRGs for Other Vascular Procedures and Cases With Drug-Coated Balloon
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRGs 252, 253 and 254--All cases.............................          71,641             6.0         $20,310
MS-DRGs 252, 253 and 254--Cases with intraluminal device with                522             6.0          28,418
 drug-coated balloon............................................
MS-DRGs 252, 253 and 254--Cases with drug-eluting intraluminal               447             6.0          26,098
 device with drug-coated balloon................................
MS-DRGs 252, 253 and 254--Cases with drug-coated balloon only...           2,705             6.1          24,553
----------------------------------------------------------------------------------------------------------------

    As shown in this table, there were a total of 71,641 cases across 
MS-DRGs 252, 253, and 254, with an average length of stay of 6.0 days 
and average costs of $20,310. There were 522 cases across MS-DRGs 252, 
253, and 254 reporting the use of an intraluminal device with use of a 
drug-coated balloon in the performance of the procedure, with an 
average length of stay of 6.0 days and average costs of $28,418. There 
were 447 cases across MS-DRGs 252, 253, and 254 reporting the use of a 
drug-eluting intraluminal device with use of a drug-coated balloon in 
the performance of the procedure, with an average length of stay of 6.0 
days and average costs of $26,098. Lastly, there were 2,705 cases 
across MS-DRGs 252, 253, and 254 reporting the use of a drug-coated 
balloon alone in the performance of the procedure, with an average 
length of stay of 6.1 days and average costs of $24,553.
    The data showed that the 2,705 cases in MS-DRGs 252, 253, and 254 
reporting the use of a drug-coated balloon alone in the performance of 
the procedure have lower average costs compared to the 969 cases in MS-
DRGs 252, 253, and 254 reporting the use of an intraluminal device (522 
cases) or a drug-eluting intraluminal device (447 cases) with a drug-
coated balloon in the performance of the procedure ($24,553 versus 
$28,418 and $26,098, respectively.) The data also showed that the cases 
reporting the use of a drug-coated balloon alone in the performance of 
the procedure have a comparable average length of stay compared to the 
cases reporting the use of an intraluminal device or a drug-eluting 
intraluminal device with a drug-coated balloon in the performance of 
the procedure (6.1 days versus 6.0 days).
    In summary, as we stated in the proposed rule, we believe that 
further analysis of endovascular procedures involving the treatment of 
superficial femoral arteries for peripheral arterial disease that 
utilize a drug-coated balloon in the performance of the procedure would 
be advantageous. As additional claims data become available, we will be 
able to more fully evaluate the differences in cases where a procedure 
utilizes a drug-coated balloon alone in the performance of the 
procedure versus cases where a procedure utilizes an intraluminal 
device or a drug-eluting intraluminal device in addition to a drug-
coated balloon in the performance of the procedure.
5. MDC 6 (Diseases and Disorders of the Digestive System)
a. Benign Lipomatous Neoplasm of Kidney
    As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 
20207), we received a request to reassign ICD-10-CM diagnosis code 
D17.71 (Benign lipomatous neoplasm of kidney) from MDC 06 (Diseases and 
Disorders of the Digestive System) to MDC 11 (Diseases and Disorders of 
the Kidney and Urinary Tract). The requestor stated that this diagnosis 
code is used to describe a kidney neoplasm and believed that because 
the ICD-10-CM code is specific to the kidney, a more appropriate 
assignment would be under MDC 11. In FY 2015, under the ICD-9-CM 
classification, there was not a specific diagnosis code for a benign 
lipomatous neoplasm of the kidney. The only diagnosis code available 
was ICD-9-CM diagnosis code 214.3 (Lipoma of intra-abdominal organs), 
which was assigned to MS-DRGs 393, 394, and 395 (Other Digestive System 
Diagnoses with MCC, with CC, and without CC/MCC, respectively) under 
MDC 6. Therefore, when we converted from the ICD-9 based MS-DRGs to the 
ICD-10 MS-DRGs, there was not a specific code available that identified 
the kidney from which to replicate. As a result, ICD-10-CM diagnosis 
code D17.71 was assigned to those same MS-DRGs (MS-DRGs 393, 394, and 
395) under MDC 6.
    While reviewing the MS-DRG classification of ICD-10-CM diagnosis 
code D17.71, we also reviewed the MS-DRG classification of another 
diagnosis code organized in subcategory D17.7, ICD-10-CM diagnosis code 
D17.72 (Benign lipomatous neoplasm of other genitourinary organ). ICD-
10-CM diagnosis code D17.72 is currently assigned under MDC 09 
(Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast) to 
MS-DRGs 606 and 607 (Minor Skin Disorders with and without MCC, 
respectively). Similar to the replication issue with ICD-10-CM 
diagnosis code D17.71, with ICD-10-CM diagnosis code D17.72, under the 
ICD-9-CM classification, there was not a specific diagnosis code to 
identify a benign lipomatous neoplasm of genitourinary organ. The only 
diagnosis code available was ICD-9-CM diagnosis code 214.8 (Lipoma of 
other specified sites), which was assigned to MS-DRGs 606 and 607 under 
MDC 09. Therefore, when we converted from the ICD-9 based MS-DRGs to 
the ICD-10 MS-DRGs, there was not a specific code available that 
identified another genitourinary organ (other than the kidney) from 
which to replicate. As a result, ICD-10-CM diagnosis code D17.72 was 
assigned to those same MS-DRGs (MS-DRGs 606 and 607) under MDC 9.
    In the proposed rule, we proposed to reassign ICD-10-CM diagnosis 
code D17.71 from MS-DRGs 393, 394, and 395 (Other Digestive System 
Diagnoses with MCC, with CC, and without CC/MCC, respectively) under 
MDC 06 to

[[Page 41195]]

MS-DRGs 686, 687, and 688 (Kidney and Urinary Tract Neoplasms with MCC, 
with CC, and without CC/MCC, respectively) under MDC 11 because this 
diagnosis code is used to describe a kidney neoplasm. We also proposed 
to reassign ICD-10-CM diagnosis code D17.72 from MS-DRGs 606 and 607 
under MDC 09 to MS-DRGs 686, 687, and 688 under MDC 11 because this 
diagnosis code is used to describe other types of neoplasms classified 
to the genitourinary tract that do not have a specific code identifying 
the site. Our clinical advisors agreed that the conditions described by 
the ICD-10-CM diagnosis codes provide specific anatomic detail 
involving the kidney and genitourinary tract and, therefore, if 
reclassified under this proposed MDC and reassigned to these MS-DRGs, 
would improve the clinical coherence of the patients assigned to these 
groups.
    Comment: Commenters agreed with CMS' proposals to reassign ICD-10-
CM diagnosis code D17.71 that describes benign lipomatous neoplasm of 
the kidney from MDC 6 to MDC 11, and to reassign ICD-10-CM diagnosis 
code D17.72 that describes benign lipomatous neoplasm of other 
genitourinary tract organ from MDC 9 to MDC 11. The commenters stated 
the proposals were reasonable, given the ICD-10-CM diagnosis codes and 
information provided.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposals to reassign ICD-10-CM diagnosis code D17.71 
from MS-DRGs 393, 394, and 395 under MDC 6 to MS-DRGs 686, 687, and 688 
under MDC 11, and to reassign ICD-10-CM diagnosis code D17.72 from MS-
DRGs 606 and 607 under MDC 9 to MS-DRGs 686, 687, and 688 under MDC 11 
in the ICD-10 MS-DRGs Version 36, effective October 1, 2018.
b. Bowel Procedures
    As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 
20208), we received a request to reassign the following 8 ICD-10-PCS 
procedure codes that describe repositioning of the colon and takedown 
of end colostomy from MS-DRGs 344, 345, and 346 (Minor Small and Large 
Bowel Procedures with MCC, with CC, and without CC/MCC, respectively) 
to MS-DRGs 329, 330, and 331 (Major Small and Large Bowel Procedures 
with MCC, with CC, and without CC/MCC, respectively):

------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
0DSK0ZZ...................  Reposition ascending colon, open approach.
0DKL4ZZ...................  Reposition ascending colon, percutaneous
                             endoscopic approach.
0DSL0ZZ...................  Reposition transverse colon, open approach.
0DSL4ZZ...................  Reposition transverse colon, percutaneous
                             endoscopic approach.
0DSM0ZZ...................  Reposition descending colon, open approach.
0DSM4ZZ...................  Reposition descending colon, percutaneous
                             endoscopic approach.
0DSN0ZZ...................  Reposition sigmoid colon, open approach.
0DSN4ZZ...................  Reposition sigmoid colon, percutaneous
                             endoscopic approach.
------------------------------------------------------------------------

    The requestor indicated that the resources required for procedures 
identifying repositioning of specified segments of the large bowel are 
more closely aligned with other procedures that group to MS-DRGs 329, 
330, and 331, such as repositioning of the large intestine (unspecified 
segment).
    We analyzed the claims data from the September 2017 update of the 
FY 2017 Med PAR file for MS-DRGs 344, 345 and 346 for all cases 
reporting the 8 ICD-10-PCS procedure codes listed in the table above. 
Our findings are shown in the following table:

----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 344--All cases...........................................           1,452             9.5         $20,609
MS-DRG 344--All cases with a specific large bowel reposition                  52             9.6          23,409
 procedure......................................................
MS-DRG 345--All cases...........................................           2,674             5.6          11,552
MS-DRG 345--All cases with a specific large bowel reposition....             246               6          14,915
MS-DRG 346--All cases...........................................             990             3.8           8,977
MS-DRG 346--All cases with a specific large bowel reposition                 223             4.5          12,279
 procedure......................................................
----------------------------------------------------------------------------------------------------------------

    The data showed that the average length of stay and average costs 
for cases that reported a specific large bowel reposition procedure 
were generally consistent with the average length of stay and average 
costs for all of the cases in their assigned MS-DRG.
    We then examined the claims data in the September 2017 update of 
the FY 2017 MedPAR file for MS-DRGs 329, 330 and 331. Our findings are 
shown in the following table.

----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRGs 329, 330, and 331--All cases............................         112,388             8.4         $21,382
MS-DRG 329--All cases...........................................          33,640            13.3          34,015
MS-DRG 330--All cases...........................................          52,644             7.3          17,896
MS-DRG 331--All cases...........................................          26,104             4.1          12,132
----------------------------------------------------------------------------------------------------------------


[[Page 41196]]

    As shown in this table, across MS-DRGs 329, 330, and 331, we found 
a total of 112,388 cases, with an average length of stay of 8.4 days 
and average costs of $21,382. We stated in the FY 2019 IPPS/LTCH PPS 
proposed rule that the results of our analysis indicate that the 
resources required for cases reporting the specific large bowel 
repositioning procedures are more aligned with those resources required 
for all cases assigned to MS-DRGs 344, 345, and 346, with the average 
costs being lower than the average costs for all cases assigned to MS-
DRGs 329, 330, and 331. Our clinical advisors also indicated that the 8 
specific bowel repositioning procedures are best aligned with those in 
MS-DRGs 344, 345, and 346. Therefore, in the FY 2019 IPPS/LTCH PPS 
proposed rule (83 FR 20209), we proposed to maintain the current 
assignment of the 8 specific bowel repositioning procedures in MS-DRGs 
344, 345, and 346 for FY 2019.
    Comment: Commenters supported CMS' proposal to maintain the current 
assignment of the 8 specific bowel repositioning procedures in MS DRGs 
344, 345, and 346 for FY 2019.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to maintain the current assignment of the 8 
specific bowel repositioning procedures in MS DRGs 344, 345, and 346 
for FY 2019.
    In conducting our analysis of MS-DRGs 329, 330, and 331, we also 
examined the subset of cases reporting one of the bowel procedures 
listed in the following table as the only O.R. procedure.

------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
0DQK0ZZ...................  Repair ascending colon, open approach.
0DQK4ZZ...................  Repair ascending colon, percutaneous
                             endoscopic approach.
0DQL0ZZ...................  Repair transverse colon, open approach.
0DQL4ZZ...................  Repair transverse colon, percutaneous
                             endoscopic approach.
0DQM0ZZ...................  Repair descending colon, open approach.
0DQM4ZZ...................  Repair descending colon, percutaneous
                             endoscopic approach.
0DQN0ZZ...................  Repair sigmoid colon, open approach.
0DQN4ZZ...................  Repair sigmoid colon, percutaneous
                             endoscopic approach.
0DSB0ZZ...................  Reposition ileum, open approach.
0DSB4ZZ...................  Reposition ileum, percutaneous endoscopic
                             approach.
0DSE0ZZ...................  Reposition large intestine, open approach.
0DSE4ZZ...................  Reposition large intestine, percutaneous
                             endoscopic approach.
------------------------------------------------------------------------

    This approach can be useful in determining whether resource use is 
truly associated with a particular procedure or whether the procedure 
frequently occurs in cases with other procedures with higher than 
average resource use. As shown in the following table, we identified 
398 cases reporting a bowel procedure as the only O.R. procedure, with 
an average length of stay of 6.3 days and average costs of $13,595 
across MS-DRGs 329, 330, and 331, compared to the overall average 
length of stay of 8.4 days and average costs of $21,382 for all cases 
in MS-DRGs 329, 330, and 331.

----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRGs 329, 330 and 331--All cases.............................         112,388             8.4         $21,382
MS-DRGs 329, 330 and 331--All cases with a bowel procedure as                398             6.3          13,595
 only O.R. procedure............................................
MS-DRG 329--All cases...........................................          33,640            13.3          34,015
MS-DRG 329--Cases with a bowel procedure as only O.R. procedure.              86             8.3          19,309
MS-DRG 330--All cases...........................................          52,644             7.3          17,896
MS-DRG 330--Cases with a bowel procedure as only O.R. procedure.             183             6.9          13,617
MS-DRG 331--All cases...........................................          26,104             4.1          12,132
MS-DRG 331--Cases with a bowel procedure as only O.R. procedure.             129             4.3           9,754
----------------------------------------------------------------------------------------------------------------

    We stated in the FY 2019 IPPS/LTCH PPS proposed rule that the 
resources required for these cases are more aligned with the resources 
required for cases assigned to MS-DRGs 344, 345, and 346 than with the 
resources required for cases assigned to MS-DRGs 329, 330, and 331. Our 
clinical advisors also agreed that these cases are more clinically 
aligned with cases in MS-DRGs 344, 345, and 346, as they are minor 
procedures relative to the major bowel procedures assigned to MS-DRGs 
329, 330, and 331. Therefore, in the proposed rule, we proposed to 
reassign the 12 ICD-10-PCS procedure codes listed above from MS-DRGs 
329, 330, and 331 to MS-DRGs 344, 345, and 346.
    Comment: Commenters disagreed with CMS' proposal to reassign the 12 
ICD-10-PCS procedure codes listed above from MS-DRGs 329, 330, and 331 
to MS DRGs 344, 345, and 346. The commenters recommended that changes 
to these MS-DRGs be delayed until a thorough data analysis is 
conducted. The commenters further recommended that any future analysis 
include a thorough review of the principal diagnoses for cases 
involving these ICD-10-PCS codes, as the associated diagnosis 
significantly impacts the resource utilization and complexity of the 
procedure performed and MS-DRG assignment. The commenters noted that 
the root operation of ``Reposition'' may be used for the takedown of a 
stoma, as well as to treat a specific medical condition such as 
malrotation of the intestine, and that ``Repair'' is the root operation 
of last resort when no other ICD-10-PCS root operation applies and, 
therefore, is used for a wide range of procedures of varying 
complexity.
    Commenters also noted that several questions and answers regarding 
these ICD-10-PCS procedure codes were published in Coding Clinic for 
ICD-10-CM/PCS between late 2016 and the end of 2017, and stated that 
because 2 full

[[Page 41197]]

years of data were not available subsequent to publication of this 
advice, CMS' analysis and proposed MS-DRG modifications may be based on 
unreliable data.
    Response: Upon further review, we agree with the commenters that 
the availability of a full 2 years of data would allow us to conduct a 
more comprehensive analysis upon which to consider potential 
modifications to these MS-DRGs. Therefore, we believe it would be 
preferable to wait until these data are available before finalizing 
changes to the MS-DRG assignment for these bowel procedures.
    After consideration of the public comments we received, we are not 
finalizing our proposal to reassign the 12 ICD-10-PCS procedure codes 
listed above from MS-DRGs 329, 330, and 331 to MS-DRGs 344, 345, and 
346 for FY 2019.
6. MDC 8 (Diseases and Disorders of the Musculoskeletal System and 
Connective Tissue): Spinal Fusion
    In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38036), we announced 
our plans to review the ICD-10 logic for the MS-DRGs where procedures 
involving spinal fusion are currently assigned for FY 2019. After 
publication of the FY 2018 IPPS/LTCH PPS final rule, we received a 
comment suggesting that CMS publish findings from this review and 
discuss possible future actions. The commenter agreed that it is 
important to be able to fully evaluate the MS-DRGs to which all spinal 
fusion procedures are currently assigned with additional claims data, 
particularly considering the 33 clinically invalid codes that were 
identified through the rulemaking process (82 FR 38034 through 38035) 
and the 87 codes identified from the upper and lower joint fusion 
tables in the ICD-10-PCS classification and discussed at the September 
12, 2017 ICD-10 Coordination and Maintenance Committee that were 
proposed to be deleted effective October 1, 2018 (FY 2019). The agenda 
and handouts from that meeting can be obtained from the CMS website at: 
https://www.cms.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/ICD-9-CM-C-and-M-Meeting-Materials.html.
    According to the commenter, deleting the 33 procedure codes 
describing clinically invalid spinal fusion procedures for FY 2018 
partially resolves the issue for data used in setting the FY 2020 
payment rates. However, the commenter also noted that the problem will 
not be fully resolved until the FY 2019 claims are available for FY 
2021 ratesetting (due to the 87 codes identified at the ICD-10 
Coordination and Maintenance Committee meeting for deletion effective 
October 1, 2018 (FY 2019)).
    The commenter noted that it analyzed claims data from the FY 2016 
MedPAR data set and was surprised to discover a significant number of 
discharges reporting 1 of the 87 clinically invalid codes that were 
identified and discussed by the ICD-10 Coordination and Maintenance 
Committee among the following spinal fusion MS-DRGs.

------------------------------------------------------------------------
          MS-DRG                             Description
------------------------------------------------------------------------
453.......................  Combined Anterior/Posterior Spinal Fusion
                             with MCC.
454.......................  Combined Anterior/Posterior Spinal Fusion
                             with CC.
455.......................  Combined Anterior/Posterior Spinal Fusion
                             without CC/MCC.
456.......................  Spinal Fusion Except Cervical with Spinal
                             Curvature or Malignancy or Infection or
                             Extensive Fusions with MCC.
457.......................  Spinal Fusion Except Cervical with Spinal
                             Curvature or Malignancy or Infection or
                             Extensive Fusions with CC.
458.......................  Spinal Fusion Except Cervical with Spinal
                             Curvature or Malignancy or Infection or
                             Extensive Fusions without CC/MCC.
459.......................  Spinal Fusion Except Cervical with MCC.
460.......................  Spinal Fusion Except Cervical without MCC.
471.......................  Cervical Spinal Fusion with MCC.
472.......................  Cervical Spinal Fusion with CC.
473.......................  Cervical Spinal Fusion without CC/MCC.
------------------------------------------------------------------------

    In addition, the commenter noted that it also identified a number 
of discharges for the 33 clinically invalid codes we identified in the 
FY 2018 IPPS/LTCH PPS final rule in the same MS-DRGs listed above. 
According to the commenter, its findings of these invalid spinal fusion 
procedure codes in the FY 2016 claims data comprise approximately 30 
percent of all discharges for spinal fusion procedures.
    The commenter expressed its appreciation that CMS is making efforts 
to address coding inaccuracies within the classification and suggested 
that CMS publish findings from its own review of spinal fusion coding 
issues in those MS-DRGs where cases reporting spinal fusion procedures 
are currently assigned and include a discussion of possible future 
actions in the FY 2019 IPPS/LTCH PPS proposed rule. The commenter 
believed that such an approach would allow time for stakeholder input 
on any possible proposals along with time for the invalid codes to be 
worked out of the datasets. The commenter also noted that publishing 
CMS' findings will put the agency, as well as the public, in a better 
position to address any potential payment issues for these services 
beginning in FY 2021.
    In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20210), we 
thanked the commenter for acknowledging the steps we have taken in our 
efforts to address coding inaccuracies within the classification as we 
continue to refine the ICD-10 MS-DRGs. We did not propose any changes 
to the MS-DRGs involving spinal fusion procedures for FY 2019. However, 
in response to the commenter's suggestion and findings, we provided the 
following results from our analysis of the September 2017 update of the 
FY 2017 MedPAR claims data for the MS-DRGs involving spinal fusion 
procedures.
    We noted that while the commenter stated that 87 codes were 
identified from the upper and lower joint fusion tables in the ICD-10-
PCS classification and discussed at the September 12, 2017 ICD-10 
Coordination and Maintenance Committee meeting to be deleted effective 
October 1, 2018 (FY 2019), there were 99 spinal fusion codes identified 
in the meeting materials, as shown in Table 6P.1g associated with the 
proposed rule (which is available via the internet on the CMS website 
at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html).
    As shown in Table 6P.1g associated with the proposed rule, the 99 
procedure codes describe spinal fusion procedures that have device 
value ``Z'' representing No Device for the 6th character in the code. 
Because a spinal fusion procedure always requires some type of device 
(for example, instrumentation with bone graft or bone

[[Page 41198]]

graft alone) to facilitate the fusion of vertebral bones, these codes 
are considered clinically invalid and were proposed for deletion at the 
September 12, 2017 ICD-10 Coordination and Maintenance Committee 
meeting. We received public comments in support of the proposal to 
delete the 99 codes describing a spinal fusion without a device, in 
addition to receiving support for the deletion of other procedure codes 
describing fusion of body sites other than the spine. A total of 213 
procedure codes describing fusion of a specific body part with device 
value ``Z'' No Device are being deleted effective October 1, 2018 (FY 
2019) as shown in Table 6D.--Invalid Procedure Codes associated with 
the proposed rule and this final rule (which is available via the 
internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html).
    We examined claims data from the September 2017 update of the FY 
2017 MedPAR file for cases reporting any of the clinically invalid 
spinal fusion procedures with device value ``Z'' No Device in MS-DRGs 
028 (Spinal Procedures with MCC), 029 (Spinal Procedures with CC or 
Spinal Neurostimulators), and 030 (Spinal Procedures without CC/MCC) 
under MDC 1 and MS-DRGs 453, 454, 455, 456, 457, 458, 459, 460, 471, 
472, and 473 under MDC 8 (that are listed and shown earlier in this 
section). Our findings are shown in the following tables.

                                            Spinal Fusion Procedures
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 028--All cases...........................................           1,927            11.7         $37,524
MS-DRG 028--Cases with invalid spinal fusion procedures.........             132              13          52,034
MS-DRG 029--All cases...........................................           3,426             5.7          22,525
MS-DRG 029--Cases with invalid spinal fusion procedures.........             171             7.4          33,668
MS-DRG 030--All cases...........................................           1,578               3          15,984
MS-DRG 030--Cases with invalid spinal fusion procedures.........              52             2.6          22,471
MS-DRG 453--All cases...........................................           2,891             9.5          70,005
MS-DRG 453--Cases with invalid spinal fusion procedures.........             823            10.1          84,829
MS-DRG 454--All cases...........................................          12,288             4.7          47,334
MS-DRG 454--Cases with invalid spinal fusion procedures.........           2,473             5.4          59,814
MS-DRG 455--All cases...........................................          12,751               3          37,440
MS-DRG 455--Cases with invalid spinal fusion procedures.........           2,332             3.2          45,888
MS-DRG 456--All cases...........................................           1,439            11.5          66,447
MS-DRG 456--Cases with invalid spinal fusion procedures.........             404            12.5          71,385
MS-DRG 457--All cases...........................................           3,644               6          48,595
MS-DRG 457--Cases with invalid spinal fusion procedures.........             960             6.7          53,298
MS-DRG 458--All cases...........................................           1,368             3.6          37,804
MS-DRG 458--Cases with invalid spinal fusion procedures.........             244             4.1          43,182
MS-DRG 459--All cases...........................................           4,904             7.8          43,862
MS-DRG 459--Cases with invalid spinal fusion procedures.........             726               9          49,387
MS-DRG 460--All cases...........................................          59,459             3.4          29,870
MS-DRG 460--Cases with invalid spinal fusion procedures.........           5,311             3.9          31,936
MS-DRG 471--All cases...........................................           3,568             8.4          36,272
MS-DRG 471--Cases with invalid spinal fusion procedures.........             389             9.9          43,014
MS-DRG 472--All cases...........................................          15,414             3.2          21,836
MS-DRG 472--Cases with invalid spinal fusion procedures.........           1,270               4          25,780
MS-DRG 473--All cases...........................................          18,095             1.8          17,694
MS-DRG 473--Cases with invalid spinal fusion procedures.........           1,185             2.3          19,503
----------------------------------------------------------------------------------------------------------------


                                   Summary Table for Spinal Fusion Procedures
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRGs 028, 029, 030, 453, 454, 455, 456, 457, 458, 459, 460,           142,752             3.9         $31,788
 471, 472, and 473--All cases...................................
MS-DRGs 028, 029, 030, 453, 454, 455, 456, 457, 458, 459, 460,            16,472             5.1          42,929
 471, 472, and 473--Cases with invalid spinal fusion procedures.
----------------------------------------------------------------------------------------------------------------

    As shown in this summary table, we found a total of 142,752 cases 
in MS-DRGs 028, 029, 030, 453, 454, 455, 456, 457, 458, 459, 460, 471, 
472, and 473 with an average length of stay of 3.9 days and average 
costs of $31,788. We found a total of 16,472 cases reporting a 
procedure code for an invalid spinal fusion procedure with device value 
``Z'' No Device across MS-DRGs 028, 029, and 030 under MDC 1 and MS-
DRGs 453, 454, 455, 456, 457, 458, 459, 460, 471, 472, and 473 under 
MDC 8, with an average length of stay of 5.1 days and average costs of 
$42,929. The results of the data analysis demonstrate that these 
invalid spinal fusion procedures represent approximately 12 percent of 
all discharges across the spinal fusion MS-DRGs. Because these 
procedure codes describe clinically invalid procedures, we would not 
expect these codes to be reported on any claims data. We stated in the 
proposed rule that it is unclear why providers assigned procedure codes 
for spinal fusion procedures with the device value ``Z'' No Device. Our 
analysis did not examine whether these claims were isolated to a 
specific provider or whether this inaccurate reporting was widespread 
among a number of providers.

[[Page 41199]]

    With regard to possible future action, we indicated in the proposed 
rule that we will continue to monitor the claims data for resolution of 
the coding issues previously identified. Because the procedure codes 
that we analyzed and presented findings for in the FY 2019 IPPS/LTCH 
PPS proposed rule will no longer be in the classification system, 
effective October 1, 2018 (FY 2019), the claims data that we examine 
for FY 2020 may still contain claims with the invalid codes. As such, 
we will continue to collaborate with the AHA as one of the four 
Cooperating Parties through the AHA's Coding Clinic for ICD-10-CM/PCS 
and provide further education on spinal fusion procedures and the 
proper reporting of the ICD-10-PCS spinal fusion procedure codes. We 
agreed with the commenter that until these coding inaccuracies are no 
longer reflected in the claims data, it would be premature to propose 
any MS-DRG modifications for spinal fusion procedures. Possible MS-DRG 
modifications may include taking into account the approach that was 
utilized in performing the spinal fusion procedure (for example, open 
versus percutaneous).
    For the reasons described and as stated in the proposed rule and 
earlier in our discussion, we proposed not to make any changes to the 
spinal fusion MS-DRGs for FY 2019.
    Comment: Commenters agreed with CMS' proposal not to make any 
changes to the MS-DRGs involving spinal fusion procedures for FY 2019.
    Response: We thank the commenters for their support.
    Comment: Some commenters noted that confusion has existed as to 
whether a spinal fusion code may be assigned when no bone graft or bone 
graft substitute is used (that is, instrumentation only) but the 
medical record documentation refers to the procedure as a spinal 
fusion. One commenter recommended that additional refinements be made 
to the ICD-10-PCS spinal fusion coding guidelines in order to further 
clarify appropriate reporting of spinal fusion codes. Another commenter 
asserted that the planned deletion of a total of 213 ICD-10-PCS fusion 
procedure codes with the device value ``Z'' for ``no device'', 
effective October 1, 2018, should help remedy the confusion regarding 
the correct coding of spinal procedures.
    Response: We agree with the commenters that accurate coding of 
spinal fusion procedures has been the subject of confusion in the past, 
and we will continue to monitor the claims data for spinal fusion 
procedures. As one of the four Cooperating Parties, we also will 
continue to collaborate with the American Hospital Association to 
provide guidance for coding spinal fusion procedures through the Coding 
Clinic for ICD-10-CM/PCS publication and to review the ICD-10-PCS 
spinal fusion coding guidelines to determine where further 
clarifications may be made.
    After consideration of the public comments we received, we are 
finalizing our proposal to not make any changes to the spinal fusion 
MS-DRGs for FY 2019.
7. MDC 9 (Diseases and Disorders of the Skin, Subcutaneous Tissue and 
Breast): Cellulitis With Methicillin Resistant Staphylococcus Aureus 
(MRSA) Infection
    As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 
20212), we received a request to reassign ICD-10-CM diagnosis codes 
reported with a principal diagnosis of cellulitis and a secondary 
diagnosis code of B95.62 (Methicillin resistant Staphylococcus aureus 
infection as the cause of diseases classified elsewhere) or A49.02 
(Methicillin resistant Staphylococcus aureus infection, unspecified 
site). Currently, these cases are assigned to MS-DRG 602 (Cellulitis 
with MCC) and MS-DRG 603 (Cellulitis without MCC) in MDC 9. The 
requestor believed that cases of cellulitis with MSRA infection should 
be reassigned to MS-DRG 867 (Other Infectious and Parasitic Diseases 
Diagnoses with MCC) because MS-DRGs 602 and 603 include cases that do 
not accurately reflect the severity of illness or risk of mortality for 
patients diagnosed with cellulitis and MRSA. The requestor acknowledged 
that the organism is not to be coded before the localized infection, 
but stated in its request that patients diagnosed with cellulitis and 
MRSA are entirely different from patients diagnosed only with 
cellulitis. The requestor stated that there is a genuine threat to life 
or limb in these cases. The requestor further stated that, with the 
opioid crisis and the frequency of MRSA infection among this 
population, cases of cellulitis with MRSA should be identified with a 
specific combination code and assigned to MS-DRG 867.
    For the FY 2019 IPPS/LTCH PPS proposed rule, we analyzed claims 
data from the September 2017 update of the FY 2017 MedPAR file for all 
cases assigned to MS-DRGs 602 and 603 and subsets of these cases 
reporting a principal ICD-10-CM diagnosis of cellulitis and a secondary 
diagnosis code of B95.62 or A49.02. Our findings are shown in the 
following table.

----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 602--All cases...........................................          26,244             5.8         $10,034
MS-DRG 603--All cases...........................................         104,491             3.9           6,128
MS-DRGs 602 and 603--Cases reported with a principal diagnosis             5,364             5.3           8,245
 of cellulitis and a secondary diagnosis of B95.62..............
MS-DRGs 602 and 603--Cases reported with a principal diagnosis               309             5.4           8,832
 of cellulitis and a secondary diagnosis of A49.02..............
----------------------------------------------------------------------------------------------------------------

    As shown in this table, we examined the subsets of cases in MS-DRGs 
602 and 603 reported with a principal diagnosis of cellulitis and a 
secondary diagnosis code B95.62 or A49.02. Both of these subsets of 
cases had an average length of stay that was comparable to the average 
length of stay for all cases in MS-DRG 602 and greater than the average 
length of stay for all cases in MS-DRG 603, and average costs that were 
lower than the average costs of all cases in MS-DRG 602 and higher than 
the average costs of all cases in MS-DRG 603. As we have discussed in 
prior rulemaking (77 FR 53309), it is a fundamental principle of an 
averaged payment system that half of the procedures in a group will 
have above average costs. It is expected that there will be higher cost 
and lower cost subsets, especially when a subset has low numbers.
    To examine the request to reassign ICD-10-CM diagnosis codes 
reported with a principal diagnosis of cellulitis and a secondary 
diagnosis code of B95.62 or A49.02 from MS-DRGs 602 and 603 to MS-DRG 
867 (which would typically involve also reassigning those cases to the 
two other severity level MS-DRGs 868 and 869 (Other Infectious

[[Page 41200]]

and Parasitic Diseases Diagnoses with CC and Other Infectious and 
Parasitic Diseases Diagnoses without CC/MCC, respectively)), we then 
analyzed the data for all cases in MS-DRGs 867, 868 and 869. The 
results of our analysis are shown in the following table.

----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 867--All cases...........................................           2,653             7.5         $14,762
MS-DRG 868--All cases...........................................           2,096             4.4           7,532
MS-DRG 869--All cases...........................................             499             3.3           5,624
----------------------------------------------------------------------------------------------------------------

    We compared the average length of stay and average costs for MS-
DRGs 867, 868, and 869 to the average length of stay and average costs 
for the subsets of cases in MS-DRGs 602 and 603 reported with a 
principal diagnosis of cellulitis and a secondary diagnosis code of 
B95.62 or A49.02. We found that the average length of stay for these 
subsets of cases was shorter and the average costs were lower than 
those for all cases in MS-DRG 867, but that the average length of stay 
and average costs were higher than those for all cases in MS-DRG 868 
and MS-DRG 869. We stated in the proposed rule that our findings from 
the analysis of claims data do not support reassigning cellulitis cases 
reported with ICD-10-CM diagnosis code B95.62 or A49.02 from MS-DRGs 
602 and 603 to MS-DRGs 867, 868 and 869. Our clinical advisors noted 
that when a principal diagnosis of cellulitis is accompanied by a 
secondary diagnosis of B95.62 or A49.02 in MS-DRGs 602 or 603, the 
combination of these primary and secondary diagnoses is the reason for 
the hospitalization, and the level of acuity of these subsets of 
patients is similar to other patients in MS-DRGs 602 and 603. 
Therefore, in the proposed rule, we stated that these cases are more 
clinically aligned with all cases in MS-DRGs 602 and 603. For these 
reasons, we did not propose to reassign cellulitis cases reported with 
ICD-10-CM diagnosis code of B95.62 or A49.02 to MS-DRG 867, 868, or 869 
for FY 2019. We invited public comments on our proposal to maintain the 
current MS-DRG assignment for ICD-10-CM codes B95.62 and A49.02 when 
reported as secondary diagnoses with a principal diagnosis of 
cellulitis.
    Comment: One commenter supported CMS' proposal to maintain the 
current MS-DRG assignment for ICD-10-CM codes B95.62 and A49.02 when 
reported as secondary diagnoses with a principal diagnosis of 
cellulitis.
    Response: We appreciate the commenter's support.
    After consideration of the public comments we received, we are 
finalizing our proposal to maintain the current MS-DRG classification 
for cases reported with ICD-10-CM diagnosis codes B95.62 and A49.02 
when reported as secondary diagnoses with a principal diagnosis of 
cellulitis.
8. MDC 10 (Endocrine, Nutritional and Metabolic Diseases and 
Disorders): Acute Intermittent Porphyria
    As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 
20212), we received a request to revise the MS-DRG classification for 
cases of patients diagnosed with porphyria and reported with ICD-10-CM 
diagnosis code E80.21 (Acute intermittent (hepatic) porphyria) to 
recognize the resource requirements in caring for these patients, to 
ensure appropriate payment for these cases, and to preserve patient 
access to necessary treatments. Porphyria is defined as a group of rare 
disorders (``porphyrias'') that interfere with the production of 
hemoglobin that is needed for red blood cells. While some of these 
disorders are genetic (inborn) and others are acquired, they all result 
in the abnormal accumulation of hemoglobin building blocks, called 
porphyrins, which can be deposited in the tissues where they 
particularly interfere with the functioning of the nervous system and 
the skin. Treatment for patients suffering from disorders of porphyrin 
metabolism consists of an intravenous injection of Panhematin[supreg] 
(hemin for injection). ICD-10-CM diagnosis code E80.21 is currently 
assigned to MS-DRG 642 (Inborn and Other Disorders of Metabolism). (We 
note that this issue has been discussed previously in the FY 2013 IPPS/
LTCH PPS proposed and final rules (77 FR 27904 through 27905 and 77 FR 
53311 through 53313, respectively) and the FY 2015 IPPS/LTCH PPS 
proposed and final rules (79 FR 28016 and 79 FR 49901, respectively)).
    We analyzed claims data from the September 2017 update of the FY 
2017 MedPAR file for cases assigned to MS-DRG 642. Our findings are 
shown in the following table.

----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                           MS-DRG 642                                  cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 642--All cases...........................................           1,801             4.3          $9,157
MS-DRG 642--Cases reporting diagnosis code E80.21 as principal               183             5.6          19,244
 diagnosis......................................................
MS-DRG 642--Cases not reporting diagnosis code E80.21 as                   1,618             4.1           8,016
 principal diagnosis............................................
----------------------------------------------------------------------------------------------------------------

    As shown in this table, cases reporting diagnosis code E80.21 as 
the principal diagnosis in MS-DRG 642 had higher average costs and 
longer average lengths of stay compared to the average costs and 
lengths of stay for all other cases in MS-DRG 642.
    To examine the request to reassign cases with ICD-10-CM diagnosis 
code E80.21 as the principal diagnosis, we analyzed claims data for all 
cases in MS-DRGs for endocrine disorders, including MS-DRG 643 
(Endocrine Disorders with MCC), MS-DRG 644 (Endocrine Disorders with 
CC), and MS-DRG 645 (Endocrine Disorders without CC/MCC). The results 
of our analysis are shown in the following table.

----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 643--All cases...........................................           9,337             6.3         $11,268

[[Page 41201]]

 
MS-DRG 644--All cases...........................................          11,306             4.2           7,154
MS-DRG 645--All cases...........................................           4,297             3.2           5,406
----------------------------------------------------------------------------------------------------------------

    The data results showed that the average length of stay for the 
subset of cases reporting ICD-10-CM diagnosis code E80.21 as the 
principal diagnosis in MS-DRG 642 is lower than the average length of 
stay for all cases in MS-DRG 643, but higher than the average length of 
stay for all cases in MS-DRGs 644 and 645. The average costs for the 
subset of cases reporting ICD-10-CM diagnosis code E80.21 as the 
principal diagnosis in MS-DRG 642 are much higher than the average 
costs for all cases in MS-DRGs 643, 644, and 645. However, after 
considering these findings in the context of the current MS-DRG 
structure, we stated in the FY 2019 IPPS/LTCH PPS proposed rule that we 
were unable to identify an MS-DRG that would more closely parallel 
these cases with respect to average costs and length of stay that would 
also be clinically aligned. We further stated that our clinical 
advisors believe that, in the current MS-DRG structure, the clinical 
characteristics of patients in these cases are most closely aligned 
with the clinical characteristics of patients in all cases in MS-DRG 
642. Moreover, given the small number of porphyria cases, we do not 
believe there is justification for creating a new MS-DRG. Basing a new 
MS-DRG on such a small number of cases could lead to distortions in the 
relative payment weights for the MS-DRG because several expensive cases 
could impact the overall relative payment weight. Having larger 
clinical cohesive groups within an MS-DRG provides greater stability 
for annual updates to the relative payment weights. In summary, we did 
not propose to revise the MS-DRG classification for porphyria cases.
    Comment: Some commenters supported CMS' proposal to maintain 
porphyria cases in MS-DRG 642.
    Response: We appreciate the commenters' support.
    Comment: Other commenters opposed CMS' proposal to not create a new 
MS-DRG for cases involving ICD-10-CM diagnosis code E80.21. These 
commenters described significant difficulties encountered by patients 
with acute porphyria attacks in obtaining Panhematin[supreg] when 
presenting to an inpatient hospital, which they attribute to the strong 
financial disincentives faced by facilities to treat these cases on an 
inpatient basis. The commenters asserted that the inpatient stays 
required for management of acute porphyria attacks are not clinically 
similar to inpatient stays for other inborn disorders of metabolism 
(which comprise the cases assigned to MS-DRG 642). The commenters 
stated that, based on the lower than expected average cost per case and 
longer than expected length of stay for acute porphyria attacks, it 
appears that facilities are frequently not providing Panhematin[supreg] 
to patients in this condition, and instead attempting to provide 
symptom relief and transferring patients to an outpatient setting to 
receive the drug where they can be adequately paid. The commenters 
stated that this is in contrast to the standard of care for acute 
porphyria attacks and can result in devastating long-term health 
consequences. The commenters suggested that CMS consider alternative 
mechanisms to ensure adequate payment for cases involving rare 
diseases. In summary, commenters asserted that creating a new MS-DRG 
would allow more accurate payment for the cases that remain in MS-DRG 
642 and facilitate access to the standard of care for patients with 
acute porphyria attacks.
    Response: We acknowledge the commenters' concerns. As we have 
stated in prior rulemaking, it is not appropriate for facilities to 
deny treatment to beneficiaries needing a specific type of therapy or 
treatment that involves increased costs. The MS-DRG system is a system 
of averages and it is expected that across the diagnostic related 
groups that within certain groups, some cases may demonstrate higher 
than average costs, while other cases may demonstrate lower than 
average costs.
    As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 
20212 through 20213), we recognize the average costs of the small 
number of porphyria cases are greater than the average costs of the 
cases in MS-DRG 642 overall. An averaged payment system depends on 
aggregation of similar cases with a range of costs, and it is therefore 
usually possible to define subsets with higher values and subsets with 
lower values. We seek to identify sufficiently large sets of claims 
data with a resource/cost similarity and clinical similarity in 
developing diagnostic-related groups rather than smaller subsets of 
diagnoses. In response to the commenters' assertion that these cases 
are not clinically similar to other cases within the MS-DRG, our 
clinical advisors continue to believe that MS-DRG 642 represents the 
most clinically appropriate placement within the current MS-DRG 
structure at this time because the clinical characteristics of patients 
in these cases are most closely aligned with the clinical 
characteristics of patients in all cases in MS-DRG 642.
    We are sensitive to the commenters' concerns about access to 
treatment for beneficiaries who have been diagnosed with this 
condition. Therefore, as part of our ongoing, comprehensive analysis of 
the MS-DRGs under ICD-10, we will continue to explore mechanisms 
through which to address rare diseases and low volume DRGs. However, at 
this time, for the reasons summarized earlier, we are finalizing our 
proposal for FY 2019 to maintain the MS-DRG classification for 
porphyria cases.
9. MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract): 
Admit for Renal Dialysis
    As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 
20213 through 20214),we received a request to review the codes assigned 
to MS-DRG 685 (Admit for Renal Dialysis) to determine if the MS-DRG 
should be deleted, or if it should remain as a valid MS-DRG. Currently, 
the ICD-10-CM diagnosis codes shown in the table below are assigned to 
MS-DRG 685:

------------------------------------------------------------------------
      ICD-10-CM code                    ICD-10-CM code title
------------------------------------------------------------------------
Z49.01....................  Encounter for fitting and adjustment of
                             extracorporeal dialysis catheter.
Z49.02....................  Encounter for fitting and adjustment of
                             peritoneal dialysis catheter.
Z49.31....................  Encounter for adequacy testing for
                             hemodialysis.

[[Page 41202]]

 
Z49.32....................  Encounter for adequacy testing for
                             peritoneal dialysis.
------------------------------------------------------------------------

    The requestor stated that, under ICD-9-CM, diagnosis code V56.0 
(Encounter for extracorporeal dialysis) was reported as the principal 
diagnosis to identify patients who were admitted for an encounter for 
dialysis. However, under ICD-10-CM, there is no comparable code in 
which to replicate such a diagnosis. The requestor noted that, while 
patients continued to be admitted under inpatient status (under certain 
circumstances) for dialysis services, there is no existing ICD-10-CM 
diagnosis code within the classification that specifically identifies a 
patient being admitted for an encounter for dialysis services.
    The requestor also noted that three of the four ICD-10-CM diagnosis 
codes currently assigned to MS-DRG 685 are on the ``Unacceptable 
Principal Diagnosis'' edit code list in the Medicare Code Editor (MCE). 
Therefore, these codes are not allowed to be reported as a principal 
diagnosis for an inpatient admission.
    We examined claims data from the September 2017 update of the FY 
2017 MedPAR file for cases reporting ICD-10-CM diagnosis codes Z49.01, 
Z49.02, Z49.31, and Z49.32. Our findings are shown in the following 
table.

                                       Admit for Renal Dialysis Encounter
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 685--All cases...........................................              78               4          $8,871
MS-DRG 685--Cases reporting ICD-10-CM diagnosis code Z49.01.....              78               4           8,871
MS-DRG 685--Cases reporting ICD-10-CM diagnosis code Z49.02.....               0               0               0
MS-DRG 685--Cases reporting ICD-10-CM diagnosis code Z49.31.....               0               0               0
MS-DRG 685--Cases reporting ICD-10-CM diagnosis code Z49.32.....               0               0               0
----------------------------------------------------------------------------------------------------------------

    As shown in the table above, for MS-DRG 685, there were a total of 
78 cases reporting ICD-10-CM diagnosis code Z49.01, with an average 
length of stay of 4 days and average costs of $8,871. There were no 
cases reporting ICD-10-CM diagnosis code Z49.02, Z49.31, or Z49.32.
    Our clinical advisors reviewed the clinical issues, as well as the 
claims data for MS-DRG 685. Based on their review of the data analysis, 
our clinical advisors recommended that MS-DRG 685 be deleted and ICD-
10-CM diagnosis codes Z49.01, Z49.02, Z49.31, and Z49.32 be reassigned. 
Historically, patients were admitted as inpatients to receive 
hemodialysis services. However, over time, that practice has shifted to 
outpatient and ambulatory settings. Because of this change in medical 
practice, we stated in the FY 2019 IPPS/LTCH PPS proposed rule that we 
did not believe that it was appropriate to maintain a vestigial MS-DRG, 
particularly due to the fact that the transition to ICD-10 had resulted 
in three out of four codes that mapped to the MS-DRG being precluded 
from being used as principal diagnosis codes on the claim. In addition, 
our clinical advisors believed that reassigning the ICD-10-CM diagnosis 
codes from MS-DRG 685 to MS-DRGs 698, 699, and 700 (Other Kidney and 
Urinary Tract Diagnoses with MCC, with CC, and without CC\MCC, 
respectively) was clinically appropriate because the reassignment would 
result in an accurate MS-DRG assignment of a specific case or inpatient 
service and encounter based on acceptable principal diagnosis codes 
under these MS-DRGs.
    Therefore, for FY 2019, because there is no existing ICD-10-CM 
diagnosis code within the classification system that specifically 
identifies a patient being admitted for an encounter for dialysis 
services; and three of the four ICD-10-CM diagnosis codes, Z49.02, 
Z49.31, and Z49.32, currently assigned to MS-DRG 685 are on the 
Unacceptable Principal Diagnosis edit code list in the MCE, we proposed 
to reassign ICD-10-CM diagnosis codes Z49.01, Z49.02, Z49.31, and 
Z49.32 from MS-DRG 685 to MS-DRGs 698, 699, and 700, and to delete MS-
DRG 685.
    Comment: Commenters agreed with the proposal to reassign ICD-10-CM 
diagnosis codes Z49.01, Z49.02, Z49.31, and Z49.32 from MS-DRG 685 to 
MS-DRGs 698, 699, and 700, and to delete MS-DRG 685.
    Response: We thank the commenters for their support.
    After consideration of the public comments we received, we are 
finalizing our proposal to delete MS-DRG 685 and reassign ICD-10-CM 
diagnosis codes Z49.01, Z49.02, Z49.31, and Z49.32 from MS-DRG 685 to 
MS-DRGs 698, 699, and 700 for FY 2019, without modification.
10. MDC 14 (Pregnancy, Childbirth and the Puerperium)
    In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19834) and final 
rule (82 FR 38036 through 38037), we noted that the MS-DRG logic 
involving a vaginal delivery under MDC 14 is technically complex as a 
result of the requirements that must be met to satisfy assignment to 
the affected MS-DRGs. As a result, we solicited public comments on 
further refinement to the following four MS-DRGs related to vaginal 
delivery: MS-DRG 767 (Vaginal Delivery with Sterilization and/or D&C); 
MS-DRG 768 (Vaginal Delivery with O.R. Procedure Except Sterilization 
and/or D&C); MS-DRG 774 (Vaginal Delivery with Complicating Diagnosis); 
and MS-DRG 775 (Vaginal Delivery without Complicating Diagnosis). In 
addition, we sought public comments on further refinements to the 
conditions defined as a complicating diagnosis in MS-DRG 774 and MS-DRG 
781 (Other Antepartum Diagnoses with Medical Complications). We 
indicated that we would review public comments received in response to 
the solicitation as we continued to evaluate these MS-DRGs under MDC 14 
and, if warranted, we would propose refinements for FY 2019. Commenters 
were instructed to direct comments for consideration to the CMS MS-DRG 
Classification Change Request Mailbox located at 
[email protected] by November 1, 2017.

[[Page 41203]]

    In response to our solicitation for public comments on the MS-DRGs 
related to vaginal delivery, one commenter recommended that CMS convene 
a workgroup that would include hospital staff and physicians to 
systematically review the MDC 14 MS-DRGs and to identify which 
conditions should appropriately be considered complicating diagnoses. 
As an interim step, this commenter recommended that CMS consider the 
following suggestions as a result of its own evaluation of MS-DRGs 767, 
774 and 775.
    For MS-DRG 767, the commenter recommended that the following ICD-
10-CM diagnosis codes and ICD-10-PCS procedure code be removed from the 
GROUPER logic and provided the rationale for why the commenter 
suggested removing each code.

                       Suggestions for MS-DRG 767
            [Vaginal delivery with sterilization and/or D&C]
------------------------------------------------------------------------
                                                  Rationale for removing
     ICD-10-CM code          Code description      code from MS-DRG 767
------------------------------------------------------------------------
O66.41..................  Failed attempted        This code indicates
                           vaginal birth after     that the attempt at
                           previous cesarean       vaginal delivery has
                           delivery.               failed.
O71.00..................  Rupture of uterus       This code indicates
                           before onset of         that the uterus has
                           labor, unspecified      ruptured before onset
                           trimester.              of labor and
                                                   therefore, a vaginal
                                                   delivery would not be
                                                   possible.
O82.....................  Encounter for cesarean  This code indicates
                           delivery without        the encounter is for
                           indication.             a cesarean delivery.
O75.82..................  Onset (spontaneous) of  This code indicates
                           labor after 37 weeks    this is a cesarean
                           of gestation but        delivery.
                           before 39 completed
                           weeks, with delivery
                           by (planned) C-
                           section.
------------------------------------------------------------------------


                       Suggestions for MS-DRG 767
            [Vaginal delivery with sterilization and/or D&C]
------------------------------------------------------------------------
                                                  Rationale for removing
     ICD-10-PCS code         Code description      code from MS-DRG 767
------------------------------------------------------------------------
10A07Z6.................  Abortion of products    This code indicates
                           of conception,          the procedure to be
                           vacuum, via natural     an abortion rather
                           or artificial opening.  than a vaginal
                                                   delivery.
------------------------------------------------------------------------

    For MS-DRG 774, the commenter recommended that the following ICD-
10-CM diagnosis codes be removed from the GROUPER logic and provided 
the rationale for why the commenter suggested removing each code.

                       Suggestions for MS-DRG 774
             [Vaginal delivery with complicating diagnoses]
------------------------------------------------------------------------
                                                  Rationale for removing
     ICD-10-CM code          Code description      code from MS-DRG 774
------------------------------------------------------------------------
O66.41..................  Failed attempted        This code indicates
                           vaginal birth after     that the attempt at
                           previous cesarean       vaginal delivery has
                           delivery.               failed.
O71.00..................  Rupture of uterus       This code indicates
                           before onset of         that the uterus has
                           labor, unspecified      ruptured before onset
                           trimester.              of labor and
                                                   therefore, a vaginal
                                                   delivery would not be
                                                   possible.
O75.82..................  Onset (spontaneous) of  This code indicates
                           labor after 37 weeks    this is a planned
                           of gestation but        cesarean delivery.
                           before 39 completed
                           weeks, with delivery
                           by (planned) C-
                           section.
O82.....................  Encounter for cesarean  This code indicates
                           delivery without        the encounter is for
                           indication.             a cesarean delivery.
O80.....................  Encounter for full-     According to the
                           term uncomplicated      Official Guidelines
                           delivery.               for Coding and
                                                   Reporting, ``Code O80
                                                   should be assigned
                                                   when a woman is
                                                   admitted for a full
                                                   term normal delivery
                                                   and delivers a
                                                   single, healthy
                                                   infant without any
                                                   complications
                                                   antepartum, during
                                                   the delivery, or
                                                   postpartum during the
                                                   delivery episode.''
------------------------------------------------------------------------

    For MS-DRG 775, the commenter recommended that the following ICD-
10-CM diagnosis codes and ICD-10-PCS procedure code be removed from the 
GROUPER logic and provided the rationale for why the commenter 
suggested removing each code.

[[Page 41204]]



                                           Suggestions for MS-DRG 775
                                [Vaginal delivery without complicating diagnoses]
----------------------------------------------------------------------------------------------------------------
                                                                        Rationale for removing code from MS-DRG
          ICD-10-CM code                    Code description                              775
----------------------------------------------------------------------------------------------------------------
O66.41............................  Failed attempted vaginal birth    This code indicates that the attempt at
                                     after previous cesarean           vaginal delivery has failed.
                                     delivery.
O69.4XX0..........................  Labor and delivery complicated    According to the physicians consulted,
                                     by vasa previa, not applicable    vasa previa always results in C-section.
                                     or unspecified.                   Research indicates that when vasa previa
                                                                       is diagnosed, C-section before labor
                                                                       begins can save the baby's life.
O69.4XX2..........................  Labor and delivery complicated    According to the physicians consulted,
                                     by vasa previa, fetus 2.          vasa previa always results in C-section.
                                                                       Research indicates that when vasa previa
                                                                       is diagnosed, C-section before labor
                                                                       begins can save the baby's life.
O69.4XX3..........................  Labor and delivery complicated    According to the physicians consulted,
                                     by vasa previa, fetus 3.          vasa previa always results in C-section.
                                                                       Research indicates that when vasa previa
                                                                       is diagnosed, C-section before labor
                                                                       begins can save the baby's life.
O69.4XX4..........................  Labor and delivery complicated    According to the physicians consulted,
                                     by vasa previa, fetus 4.          vasa previa always results in C-section.
                                                                       Research indicates that when vasa previa
                                                                       is diagnosed, C-section before labor
                                                                       begins can save the baby's life.
O69.4XX5..........................  Labor and delivery complicated    According to the physicians consulted,
                                     by vasa previa, fetus 5.          vasa previa always results in C-section.
                                                                       Research indicates that when vasa previa
                                                                       is diagnosed, C-section before labor
                                                                       begins can save the baby's life.
O69.4XX9..........................  Labor and delivery complicated    According to the physicians consulted,
                                     by vasa previa, other fetus.      vasa previa always results in C-section.
                                                                       Research indicates that when vasa previa
                                                                       is diagnosed, C-section before labor
                                                                       begins can save the baby's life.
O71.00............................  Rupture of uterus before onset    This code indicates that the uterus has
                                     of labor, unspecified trimester.  ruptured before onset of labor and
                                                                       therefore, a vaginal delivery would not
                                                                       be possible.
O82...............................  Encounter for cesarean delivery   This code indicates the encounter is for a
                                     without indication.               cesarean delivery.
----------------------------------------------------------------------------------------------------------------


                       Suggestions for MS-DRG 775
            [Vaginal delivery without complicating diagnoses]
------------------------------------------------------------------------
                                                  Rationale for removing
     ICD-10-PCS code         Code description      code from MS-DRG 775
------------------------------------------------------------------------
10A07Z6.................  Abortion of Products    This code indicates
                           of Conception,          the procedure to be
                           Vacuum, Via Natural     an abortion rather
                           or Artificial Opening.  than a vaginal
                                                   delivery.
------------------------------------------------------------------------

    Another commenter agreed that the MS-DRG logic for a vaginal 
delivery under MDC 14 is technically complex and provided examples to 
illustrate these facts. For instance, the commenter noted that the 
GROUPER logic code lists appear redundant with several of the same 
codes listed for different MS-DRGs and that the GROUPER logic code list 
for a vaginal delivery in MS-DRG 774 is comprised of diagnosis codes 
while the GROUPER logic code list for a vaginal delivery in MS-DRG 775 
is comprised of procedure codes. The commenter also noted that several 
of the ICD-10-CM diagnosis codes shown in the table below that became 
effective with discharges on and after October 1, 2016 (FY 2017) or 
October 1, 2017 (FY 2018) appear to be missing from the GROUPER logic 
code lists for MS-DRGs 781 and 774.

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
O11.4.....................  Pre-existing hypertension with pre-
                             eclampsia, complicating childbirth.
O11.5.....................  Pre-existing hypertension with pre-
                             eclampsia, complicating the puerperium.
012.04....................  Gestational edema, complicating childbirth.
012.05....................  Gestational edema, complicating the
                             puerperium.
012.14....................  Gestational proteinuria, complicating
                             childbirth.
012.15....................  Gestational proteinuria, complicating the
                             puerperium.
012.24....................  Gestational edema with proteinuria,
                             complicating childbirth.
012.25....................  Gestational edema with proteinuria,
                             complicating the puerperium.
O13.4.....................  Gestational [pregnancy-induced] hypertension
                             without significant proteinuria,
                             complicating childbirth.
O13.5.....................  Gestational [pregnancy-induced] hypertension
                             without significant proteinuria,
                             complicating the puerperium.
O14.04....................  Mild to moderate pre-eclampsia, complicating
                             childbirth.
O14.05....................  Mild to moderate pre-eclampsia, complicating
                             the puerperium.
O14.14....................  Severe pre-eclampsia complicating
                             childbirth.
O14.15....................  Severe pre-eclampsia, complicating the
                             puerperium.
O14.24....................  HELLP syndrome, complicating childbirth.
O14.25....................  HELLP syndrome, complicating the puerperium.
O14.94....................  Unspecified pre-eclampsia, complicating
                             childbirth.
O14.95....................  Unspecified pre-eclampsia, complicating the
                             puerperium.
O15.00....................  Eclampsia complicating pregnancy,
                             unspecified trimester.
O15.02....................  Eclampsia complicating pregnancy, second
                             trimester.

[[Page 41205]]

 
O15.03....................  Eclampsia complicating pregnancy, third
                             trimester.
O15.1.....................  Eclampsia complicating labor.
O15.2.....................  Eclampsia complicating puerperium, second
                             trimester.
O16.4.....................  Unspecified maternal hypertension,
                             complicating childbirth.
O16.5.....................  Unspecified maternal hypertension,
                             complicating the puerperium.
O24.415...................  Gestational diabetes mellitus in pregnancy,
                             controlled by oral hypoglycemic drugs.
O24.425...................  Gestational diabetes mellitus in childbirth,
                             controlled by oral hypoglycemic drugs.
O24.435...................  Gestational diabetes mellitus in puerperium,
                             controlled by oral hypoglycemic drugs.
O44.20....................  Partial placenta previa NOS or without
                             hemorrhage, unspecified trimester.
O44.21....................  Partial placenta previa NOS or without
                             hemorrhage, first trimester.
O44.22....................  Partial placenta previa NOS or without
                             hemorrhage, second trimester.
O44.23....................  Partial placenta previa NOS or without
                             hemorrhage, third trimester.
O44.30....................  Partial placenta previa with hemorrhage,
                             unspecified trimester.
O44.31....................  Partial placenta previa with hemorrhage,
                             first trimester.
O44.32....................  Partial placenta previa with hemorrhage,
                             second trimester.
O44.33....................  Partial placenta previa with hemorrhage,
                             third trimester.
O44.40....................  Low lying placenta NOS or without
                             hemorrhage, unspecified trimester.
O44.41....................  Low lying placenta NOS or without
                             hemorrhage, first trimester.
O44.42....................  Low lying placenta NOS or without
                             hemorrhage, second trimester.
O44.43....................  Low lying placenta NOS or without
                             hemorrhage, third trimester.
O44.50....................  Low lying placenta with hemorrhage,
                             unspecified trimester.
O44.51....................  Low lying placenta with hemorrhage, first
                             trimester.
O44.52....................  Low lying placenta with hemorrhage, second
                             trimester.
O44.53....................  Low lying placenta with hemorrhage, third
                             trimester.
O70.20....................  Third degree perineal laceration during
                             delivery, unspecified.
O70.21....................  Third degree perineal laceration during
                             delivery, IIIa.
O70.22....................  Third degree perineal laceration during
                             delivery, IIIb.
O70.23....................  Third degree perineal laceration during
                             delivery, IIIc.
O86.11....................  Cervicitis following delivery.
O86.12....................  Endometritis following delivery.
O86.13....................  Vaginitis following delivery.
O86.19....................  Other infection of genital tract following
                             delivery.
O86.20....................  Urinary tract infection following delivery,
                             unspecified.
O86.21....................  Infection of kidney following delivery.
O86.22....................  Infection of bladder following delivery.
O86.29....................  Other urinary tract infection following
                             delivery.
O86.81....................  Puerperal septic thrombophlebitis.
O86.89....................  Other specified puerperal infections.
------------------------------------------------------------------------

    Lastly, the commenter stated that the list of ICD-10-PCS procedure 
codes appears comprehensive, but indicated that inpatient coding is not 
their expertise. We note that it was not clear which list of procedure 
codes the commenter was specifically referencing. The commenter did not 
provide a list of any procedure codes for CMS to review or reference a 
specific MS-DRG in its comment.
    Another commenter expressed concern that ICD-10-PCS procedure codes 
10D17Z9 (Manual extraction of products of conception, retained, via 
natural or artificial opening) and 10D18Z9 (Manual extraction of 
products of conception, retained, via natural or artificial opening 
endoscopic) are not assigned to the appropriate MS-DRG. ICD-10-PCS 
procedure codes 10D17Z9 and 10D18Z9 describe the manual removal of a 
retained placenta and are currently assigned to MS-DRG 767 (Vaginal 
Delivery with Sterilization and/or D&C). According to the commenter, a 
patient that has a vaginal delivery with manual removal of a retained 
placenta is not having a sterilization or D&C procedure. The commenter 
noted that, under ICD-9-CM, a vaginal delivery with manual removal of 
retained placenta grouped to MS-DRG 774 (Vaginal Delivery with 
Complicating Diagnosis) or MS-DRG 775 (Vaginal Delivery without 
Complicating Diagnosis). The commenter suggested CMS review these 
procedure codes for appropriate MS-DRG assignment under the ICD-10 MS-
DRGs.
    In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20217), we 
thanked the commenters and stated that we appreciated the 
recommendations and suggestions provided in response to our 
solicitation for comments on the GROUPER logic for the MS-DRGs 
involving a vaginal delivery or complicating diagnosis under MDC 14. 
With regard to the commenter who recommended that we convene a 
workgroup that would include hospital staff and physicians to 
systematically review the MDC 14 MS-DRGs and to identify which 
conditions should appropriately be considered complicating diagnoses, 
we noted that we formed an internal workgroup comprised of clinical 
advisors that included physicians, coding specialists, and other IPPS 
policy staff that assisted in our review of the GROUPER logic for a 
vaginal delivery and complicating diagnoses. We indicated that we also 
received clinical input from 3M/Health Information Systems (HIS) staff, 
which, under contract with CMS, is responsible for updating and 
maintaining the GROUPER program. We note that our analysis involved 
other MS-DRGs under MDC 14, in addition to those for which we 
specifically solicited public comments. As one of the other commenters 
correctly pointed out, there is redundancy, with several of the same 
codes listed for different MS-DRGs. Below we provide a summary of our 
internal analysis with responses to the commenters' recommendations and 
suggestions incorporated into the applicable sections. We referred 
readers to the ICD-10 MS-DRG Version 35 Definitions Manual located via 
the internet on the CMS website at: https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/

[[Page 41206]]

AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-Items/FY2018-IPPS-
Final-Rule-Data-
Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending for 
documentation of the GROUPER logic associated with the MDC 14 MS-DRGs 
to assist in the review of our discussion that follows.
    We started our evaluation of the GROUPER logic for the MS-DRGs 
under MDC 14 by first reviewing the current concepts that exist. For 
example, there are ``groups'' for cesarean section procedures, vaginal 
delivery procedures, and abortions. There also are groups where no 
delivery occurs, and lastly, there are groups for after the delivery 
occurs, or the ``postpartum'' period. These groups are then further 
subdivided based on the presence or absence of complicating conditions 
or the presence of another procedure. We examined how we could simplify 
some of the older, complex GROUPER logic and remain consistent with the 
structure of other ICD-10 MS-DRGs. We identified the following MS-DRGs 
for closer review, in addition to MS-DRG 767, MS-DRG 768, MS-DRG 774, 
MS-DRG 775 and MS-DRG 781.

 
------------------------------------------------------------------------
          MS-DRG                             Description
------------------------------------------------------------------------
MS-DRG 765................  Cesarean Section with CC/MCC.
MS-DRG 766................  Cesarean Section without CC/MCC.
MS-DRG 769................  Postpartum and Post Abortion Diagnoses with
                             O.R. Procedure.
MS-DRG 770................  Abortion with D&C, Aspiration Curettage or
                             Hysterotomy.
MS-DRG 776................  Postpartum and Post Abortion Diagnoses
                             without O.R. Procedure.
MS-DRG 777................  Ectopic Pregnancy.
MS-DRG 778................  Threatened Abortion.
MS-DRG 779................  Abortion without D&C.
MS-DRG 780................  False Labor.
MS-DRG 782................  Other Antepartum Diagnoses without Medical
                             Complications.
------------------------------------------------------------------------

    The first issue we reviewed was the GROUPER logic for complicating 
conditions (MS-DRGs 774 and 781). Because one of the main objectives in 
our transition to the MS-DRGs was to better recognize the severity of 
illness of a patient, we believed we could structure the vaginal 
delivery and other MDC 14 MS-DRGs in a similar way. Therefore, we began 
working with the concept of vaginal delivery ``with MCC, with CC and 
without CC/MCC'' to replace the older, ``complicating conditions'' 
logic.
    Next, we compared the additional GROUPER logic that exists between 
the vaginal delivery and the cesarean section MS-DRGs (MS-DRGs 765, 
766, 767, 774, and 775). Currently, the vaginal delivery MS-DRGs take 
into account a sterilization procedure; however, the cesarean section 
MS-DRGs do not. Because a patient can have a sterilization procedure 
performed along with a cesarean section procedure, we adopted a working 
concept of ``cesarean section with and without sterilization with MCC, 
with CC and without CC/MCC'', as well as ``vaginal delivery with and 
without sterilization with MCC, with CC and without CC/MCC''.
    We then reviewed the GROUPER logic for the MS-DRGs involving 
abortion and where no delivery occurs (MS-DRGs 770, 777, 778, 779, 780, 
and 782). We believed that we could consolidate the groups in which no 
delivery occurs.
    Finally, we considered the GROUPER logic for the MS-DRGs related to 
the postpartum period (MS-DRGs 769 and 776) and determined that the 
structure of these MS-DRGs did not appear to require modification.
    After we established those initial working concepts for the MS-DRGs 
discussed above, we examined the list of the ICD-10-PCS procedure codes 
that comprise the sterilization procedure GROUPER logic for the vaginal 
delivery MS-DRG 767. We identified the two manual extraction of 
placenta codes that the commenter had brought to our attention (ICD-10-
PCS codes 10D17Z9 and 10D18Z9). We also identified two additional 
procedure codes, ICD-10-PCS codes 10D17ZZ (Extraction of products of 
conception, retained, via natural or artificial opening) and 10D18ZZ 
(Extraction of products of conception, retained, via natural or 
artificial opening endoscopic) in the list that are not sterilization 
procedures. Two of the four procedure codes describe manual extraction 
(removal) of retained placenta and the other two procedure codes 
describe dilation and curettage procedures. We then identified four 
more procedure codes in the list that do not describe sterilization 
procedures. ICD-10-PCS procedure codes 0UDB7ZX (Extraction of 
endometrium, via natural or artificial opening, diagnostic), 0UDB7ZZ 
(Extraction of endometrium, via natural or artificial opening), 0UDB8ZX 
(Extraction of endometrium, via natural or artificial opening 
endoscopic, diagnostic), and 0UDB8ZZ (Extraction of endometrium, via 
natural or artificial opening endoscopic) describe dilation and 
curettage procedures that can be performed for diagnostic or 
therapeutic purposes. We stated in the proposed rule that we believe 
that these ICD-10-PCS procedure codes would be more appropriately 
assigned to MDC 13 (Diseases and Disorders of the Female Reproductive 
System) in MS-DRGs 744 and 745 (D&C, Conization, Laparaoscopy and Tubal 
Interruption with and without CC/MCC, respectively) and, therefore, 
removed them from our working list of sterilization and/or D&C 
procedures. Because the GROUPER logic for MS-DRG 767 includes both 
sterilization and/or D&C, we agreed that all the other procedure codes 
currently included under that logic list of sterilization procedures 
should remain, with the exception of the two identified by the 
commenter. Therefore, in the proposed rule, we stated we agreed with 
the commenter that the manual extraction of retained placenta procedure 
codes should be reassigned to a more clinically appropriate vaginal 
delivery MS-DRG because they are not describing sterilization 
procedures.
    Our attention then turned to other MDC 14 GROUPER logic code lists 
starting with the ``CC for C-section'' list under MS-DRGs 765 and 766 
(Cesarean Section with and without CC/MCC, respectively). As noted in 
the proposed rule and earlier in this section, in conducting our 
review, we considered how we could utilize the severity level concept 
(with MCC, with CC, and without CC/MCC) where applicable. Consistent 
with this approach, we removed the ``CC for C-section'' logic from 
these MS-DRGs as part of our working concept and efforts to refine MDC 
14. We determined it would be less complicated to simply allow the 
existing ICD-10 MS-DRG CC and MCC

[[Page 41207]]

code list logic to apply for these MS-DRGs. Next, we reviewed the logic 
code lists for ``Malpresentation'' and ``Twins'' and concluded that 
this logic was not necessary for the cesarean section MS-DRGs because 
these are describing antepartum conditions and it is the procedure of 
the cesarean section that determines whether or not a patient would be 
classified to these MS-DRGs. Therefore, those code lists were also 
removed for purposes of our working concept. With regard to the 
``Operating Room Procedure'' code list, we stated in the proposed rule 
that we agreed there should be no changes. However, we noted that the 
title to ICD-10-PCS procedure code 10D00Z0 (Extraction of products of 
conception, classical, open approach) is being revised, effective 
October 1, 2018, to replace the term ``classical'' with ``high'' and 
ICD-10-PCS procedure code 10D00Z1 (Extraction of products of 
conception, low cervical, open approach) is being revised to replace 
the term ``low cervical'' to ``low''. These revisions are also shown in 
Table 6F--Revised Procedure Code Titles associated with the proposed 
rule and this final rule available via the internet on the CMS website 
at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.
    Next, we reviewed the ``Delivery Procedure'' and ``Delivery 
Outcome'' GROUPER logic code lists for the vaginal delivery MS-DRGs 
767, 768, 774, and 775. We identified ICD-10-PCS procedure code 10A0726 
(Abortion of products of conception, vacuum, via natural or artificial 
opening) and ICD-10-PCS procedure code 10S07ZZ (Reposition products of 
conception, via natural or artificial opening) under the ``Delivery 
Procedure'' code list as procedure codes that should not be included 
because ICD-10-PCS procedure code 10A07Z6 describes an abortion 
procedure and ICD-10-PCS procedure code 10S07ZZ describes repositioning 
of the fetus and does not indicate a delivery took place. We also noted 
that, as described in the proposed rule and earlier in this discussion, 
a commenter recommended that ICD-10-PCS procedure code 10A07Z6 be 
removed from the GROUPER logic specifically for MS-DRGs 767 and 775. 
Therefore, we removed these two procedure codes from the logic code 
list for ``Delivery Procedure'' in MS-DRGs 767, 768, 774, and 775. We 
stated in the proposed rule that we agreed with the commenter that ICD-
10-PCS procedure code 10A07Z6 would be more appropriately assigned to 
one of the Abortion MS-DRGs. For the remaining procedures currently 
included in the ``Delivery Procedure'' code list we considered which 
procedures would be expected to be performed during the course of a 
standard, uncomplicated delivery episode versus those that would 
reasonably be expected to require additional resources outside of the 
delivery room. The list of procedure codes we reviewed is shown in the 
following table.

 
------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
0DQP7ZZ...................  Repair rectum, via natural or artificial
                             opening.
0DQQ0ZZ...................  Repair anus, open approach.
0DQQ3ZZ...................  Repair anus, percutaneous approach.
0DQQ4ZZ...................  Repair anus, percutaneous endoscopic
                             approach.
0DQQ7ZZ...................  Repair anus, via natural or artificial
                             opening.
0DQQ8ZZ...................  Repair anus, via natural or artificial
                             opening endoscopic.
0DQR0ZZ...................  Repair anal sphincter, open approach.
0DQR3ZZ...................  Repair anal sphincter, percutaneous
                             approach.
0DQR4ZZ...................  Repair anal sphincter, percutaneous
                             endoscopic approach.
------------------------------------------------------------------------

    While we acknowledged that these procedures may be performed to 
treat obstetrical lacerations as discussed in prior rulemaking (81 FR 
56853), we stated that we also believe that these procedures would 
reasonably be expected to require a separate operative episode and 
would not be performed immediately at the time of the delivery. 
Therefore, we removed those procedure codes describing repair of the 
rectum, anus, and anal sphincter shown in the table above from our 
working concept list of procedures to consider for a vaginal delivery. 
Our review of the list of diagnosis codes for the ``Delivery Outcome'' 
as a secondary diagnosis did not prompt any changes. We stated in the 
proposed rule we agreed that the current list of diagnosis codes 
continues to appear appropriate for describing the outcome of a 
delivery.
    As the purpose of our analysis and this review was to clarify what 
constitutes a vaginal delivery to satisfy the ICD-10 MS-DRG logic for 
the vaginal delivery MS-DRGs, we believed it was appropriate to expect 
that a procedure code describing the vaginal delivery or extraction of 
``products of conception'' procedure and a diagnosis code describing 
the delivery outcome should be reported on every claim in which a 
vaginal delivery occurs. This is also consistent with Section 
I.C.15.b.5 of the ICD-10-CM Official Guidelines for Coding and 
Reporting, which states ``A code from category Z37, Outcome of 
delivery, should be included on every maternal record when a delivery 
has occurred. These codes are not to be used on subsequent records or 
on the newborn record.'' Therefore, we adopted the working concept 
that, regardless of the principal diagnosis, if there is a procedure 
code describing the vaginal delivery or extraction of ``products of 
conception'' procedure and a diagnosis code describing the delivery 
outcome, this logic would result in assignment to a vaginal delivery 
MS-DRG. In the proposed rule, we noted that, as a result of this 
working concept, there would no longer be a need to maintain the 
``third condition'' list under MS-DRG 774. In addition, as noted in the 
proposed rule and earlier in this discussion, because we were working 
with the concept of vaginal delivery ``with MCC, with CC, and without 
CC/MCC'' to replace the older, ``complicating conditions'' logic, there 
would no longer be a need to maintain the ``second condition'' list of 
complicating diagnosis under MS-DRG 774.
    We then reviewed the GROUPER logic code list of ``Or Other O.R. 
procedures'' (MS-DRG 768) to determine if any changes to these lists 
were warranted. Similar to our analysis of the procedures listed under 
the ``Delivery Procedure'' logic code list, our examination of the 
procedures currently described in the ``Or Other O.R. procedures'' 
procedure code list also considered which procedures would be expected 
to be

[[Page 41208]]

performed during the course of a standard, uncomplicated delivery 
episode versus those that would reasonably be expected to require 
additional resources outside of the delivery room. Our analysis of all 
the procedures resulted in the working concept to allow all O.R. 
procedures to be applicable for assignment to MS-DRG 768, with the 
exception of the procedure codes for sterilization and/or D&C and ICD-
10-PCS procedure codes 0KQM0ZZ (Repair perineum muscle, open approach) 
and 0UJM0ZZ (Inspection of vulva, open approach), which we determined 
would be reasonably expected to be performed during a standard delivery 
episode and, therefore, assigned to MS-DRG 774 or MS-DRG 775. We also 
noted that, this working concept for MS-DRG 768 would eliminate vaginal 
delivery cases with an O.R. procedure grouping to the unrelated MS-DRGs 
because all O.R. procedures would be included in the GROUPER logic 
procedure code list for ``Or Other O.R. Procedures''.
    The next set of MS-DRGs we examined more closely included MS-DRGs 
777, 778, 780, 781, and 782. We believed that, because the conditions 
in these MS-DRGs are all describing antepartum related conditions, we 
could group the conditions together clinically. Diagnoses described as 
occurring during pregnancy and diagnoses specifying a trimester or 
maternal care in the absence of a delivery procedure reported were 
considered antepartum conditions. We also believed we could better 
classify these groups of patients based on the presence or absence of a 
procedure. Therefore, we worked with the concept of ``antepartum 
diagnoses with and without O.R. procedure''.
    As noted in the proposed rule and earlier in the discussion, we 
adopted a working concept of ``cesarean section with and without 
sterilization with MCC, with CC, and without CC/MCC.'' This concept is 
illustrated in the following table and includes our suggested 
modifications.

              Suggested Modifications to MS-DRGs for MDC 14
               [Pregnancy, childbirth and the puerperium]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
DELETE 2 MS-DRGs:
  MS-DRG 765 (Cesarean Section with CC/MCC).
  MS-DRG 766 (Cesarean Section without CC/MCC).
CREATE 6 MS-DRGs:
  MS-DRG XXX (Cesarean Section with Sterilization with MCC).
  MS-DRG XXX (Cesarean Section with Sterilization with CC).
  MS-DRG XXX (Cesarean Section with Sterilization without CC/MCC).
  MS-DRG XXX (Cesarean Section without Sterilization with MCC).
  MS-DRG XXX (Cesarean Section without Sterilization with CC).
  MS-DRG XXX (Cesarean Section without Sterilization without CC/MCC).
------------------------------------------------------------------------

    As shown in the table, we suggested deleting MS-DRGs 765 and 766. 
We also suggested creating 6 new MS-DRGs that are subdivided by a 3-way 
severity level split that includes ``with Sterilization'' and ``without 
Sterilization''.
    We also adopted a working concept of ``vaginal delivery with and 
without sterilization with MCC, with CC, and without CC/MCC''. This 
concept is illustrated in the following table and includes our 
suggested modifications.

              Suggested Modifications to MS-DRGs for MDC 14
               [Pregnancy, childbirth and the puerperium]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
DELETE 3 MS-DRGs:
  MS-DRG 767 (Vaginal Delivery with Sterilization and/or D&C).
  MS-DRG 774 (Vaginal Delivery with Complicating Diagnosis).
  MS-DRG 775 (Vaginal Delivery without Complicating Diagnosis).
CREATE 6 MS-DRGs:
  MS-DRG XXX (Vaginal Delivery with Sterilization/D&C with MCC).
  MS-DRG XXX (Vaginal Delivery with Sterilization/D&C with CC).
  MS-DRG XXX (Vaginal Delivery with Sterilization/D&C without CC/MCC).
  MS-DRG XXX (Vaginal Delivery without Sterilization/D&C with MCC).
  MS-DRG XXX (Vaginal Delivery without Sterilization/D&C with CC).
  MS-DRG XXX (Vaginal Delivery without Sterilization/D&C without CC/
   MCC).
------------------------------------------------------------------------

    As shown in the table, we suggested deleting MS-DRGs 767, 774, and 
775. We also suggested creating 6 new MS-DRGs that are subdivided by a 
3-way severity level split that includes ``with Sterilization/D&C'' and 
``without Sterilization/D&C''.
    In addition, as indicated above, we believed that we could 
consolidate the groups in which no delivery occurs. In the proposed 
rule, we stated we believe that consolidating MS-DRGs where clinically 
coherent conditions exist is consistent with our approach to MS-DRG 
reclassification and our continued refinement efforts. This concept is 
illustrated in the following table and includes our suggested 
modifications.

              Suggested Modifications to MS-DRGs for MDC 14
               [Pregnancy, childbirth and the puerperium]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
DELETE 5 MS-DRGs:
  MS-DRG 777 (Ectopic Pregnancy).
  MS-DRG 778 (Threatened Abortion).
  MS-DRG 780 (False Labor).
  MS-DRG 781 (Other Antepartum Diagnoses with Medical Complications).
  MS-DRG 782 (Other Antepartum Diagnoses without Medical Complications).
CREATE 6 MS-DRGs:
  MS-DRG XXX (Other Antepartum Diagnoses with O.R. Procedure with MCC).
  MS-DRG XXX (Other Antepartum Diagnoses with O.R. Procedure with CC).
  MS-DRG XXX (Other Antepartum Diagnoses with O.R. Procedure without CC/
   MCC).
  MS-DRG XXX (Other Antepartum Diagnoses without O.R. Procedure with
   MCC).
  MS-DRG XXX (Other Antepartum Diagnoses without O.R. Procedure with
   CC).
  MS-DRG XXX (Other Antepartum Diagnoses without O.R. Procedure without
   CC/MCC).
------------------------------------------------------------------------

    As shown in the table, we suggested deleting MS-DRGs 777, 778, 780, 
781, and 782. We also suggested creating 6 new MS-DRGs that are 
subdivided by a 3-way severity level split that includes ``with O.R. 
Procedure'' and ``without O.R. Procedure''.
    Once we established each of these fundamental concepts from a 
clinical perspective, we were able to analyze the data to determine if 
our initial suggested modifications were supported.
    To analyze our suggested modifications for the cesarean section and 
vaginal delivery MS-DRGs, we examined the claims data from the 
September 2017 update of the FY 2017 MedPAR file for MS-DRGs 765, 766, 
767, 768, 774, and 775.

                           MS-DRGs for MDC 14 Pregnancy, Childbirth and the Puerperium
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 765 (Cesarean Section with CC/MCC)--All cases............           3,494             4.6          $8,929
MS-DRG 766 (Cesarean Section without CC/MCC)--All cases.........           1,974             3.1           6,488
MS-DRG 767 (Vaginal Delivery with Sterilization and/or D&C)--All             351             3.2           7,886
 cases..........................................................
MS-DRG 768 (Vaginal Delivery with O.R. Procedure Except                       17             6.2          26,164
 Sterilization and/or D&C)--All cases...........................

[[Page 41209]]

 
MS-DRG 774 (Vaginal Delivery with Complicating Diagnosis)--All             1,650             3.3           6,046
 cases..........................................................
MS-DRG 775 (Vaginal Delivery without Complicating Diagnosis)--             4,676             2.4           4,769
 All cases......................................................
----------------------------------------------------------------------------------------------------------------

    As shown in the table, there were a total of 3,494 cases in MS-DRG 
765, with an average length of stay of 4.6 days and average costs of 
$8,929. For MS-DRG 766, there were a total of 1,974 cases, with an 
average length of stay of 3.1 days and average costs of $6,488. For MS-
DRG 767, there were a total of 351 cases, with an average length of 
stay of 3.2 days and average costs of $ 7,886. For MS-DRG 768, there 
were a total of 17 cases, with an average length of stay of 6.2 days 
and average costs of $26,164. For MS-DRG 774, there were a total of 
1,650 cases, with an average length of stay of 3.3 days and average 
costs of $6,046. Lastly, for MS-DRG 775, there were a total of 4,676 
cases, with an average length of stay of 2.4 days and average costs of 
$4,769.
    To compare and analyze the impact of our suggested modifications, 
we ran a simulation using the Version 35 ICD-10 MS-DRG GROUPER. The 
following table reflects our findings for the suggested Cesarean 
Section MS-DRGs with a 3-way severity level split.

                                     Suggested MS-DRGs for Cesarean Section
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 783 (Cesarean Section with Sterilization with MCC).......             178             6.4         $12,977
MS-DRG 784 (Cesarean Section with Sterilization with CC)........             511             4.1           8,042
MS-DRG 785 (Cesarean Section with Sterilization without CC/MCC).             475             3.0           6,259
MS-DRG 786 (Cesarean Section without Sterilization with MCC)....             707             5.9          11,515
MS-DRG 787 (Cesarean Section without Sterilization with CC).....           1,887             4.2           7,990
MS-DRG 788 (Cesarean Section without Sterilization without CC/             1,710             3.3           6,663
 MCC)...........................................................
----------------------------------------------------------------------------------------------------------------

    As shown in the table, there were a total of 178 cases for the 
cesarean section with sterilization with MCC group, with an average 
length of stay of 6.4 days and average costs of $12,977. There were a 
total of 511 cases for the cesarean section with sterilization with CC 
group, with an average length of stay of 4.1 days and average costs of 
$8,042. There were a total of 475 cases for the cesarean section with 
sterilization without CC/MCC group, with an average length of stay of 
3.0 days and average costs of $6,259. For the cesarean section without 
sterilization with MCC group there were a total of 707 cases, with an 
average length of stay of 5.9 days and average costs of $11,515. There 
were a total of 1,887 cases for the cesarean section without 
sterilization with CC group, with an average length of stay of 4.2 days 
and average costs of $7,990. Lastly, there were a total of 1,710 cases 
for the cesarean section without sterilization without CC/MCC group, 
with an average length of stay of 3.3 days and average costs of $6,663.
    The following table reflects our findings for the suggested Vaginal 
Delivery MS-DRGs with a 3-way severity level split.

                                     Suggested MS-DRGs for Vaginal Delivery
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 796 (Vaginal Delivery with Sterilization/D&C with MCC)...              25             6.7         $11,421
MS-DRG 797 (Vaginal Delivery with Sterilization/D&C with CC)....              63             2.4           6,065
MS-DRG 798 (Vaginal Delivery with Sterilization/D&C without CC/              126             2.3           6,697
 MCC)...........................................................
MS-DRG 805 (Vaginal Delivery without Sterilization/D&C with MCC)             406             5.0           9,605
MS-DRG 806 (Vaginal Delivery without Sterilization/D&C with CC).           1,952             2.9           5,506
MS-DRG 807 (Vaginal Delivery without Sterilization/D&C without             4,105             2.3           4,601
 CC/MCC)........................................................
----------------------------------------------------------------------------------------------------------------

    As shown in the table, there were a total of 25 cases for the 
vaginal delivery with sterilization/D&C with MCC group, with an average 
length of stay of 6.7 days and average costs of $11,421. There were a 
total of 63 cases for the vaginal delivery with sterilization/D&C with 
CC group, with an average length of stay of 2.4 days and average costs 
of $6,065. There were a total of 126 cases for vaginal delivery with 
sterilization/D&C without CC/MCC group, with an average length of stay 
of 2.3 days and average costs of $6,697. There were a total of 406 
cases for the vaginal delivery without sterilization/D&C with MCC 
group, with an average length of stay of 5.0 days and average costs of 
$9,605. There were a total of 1,952 cases for the vaginal delivery 
without sterilization/D&C with CC group, with an average length of stay 
of 2.9 days and average costs of $5,506. There were a total of 4,105 
cases for the vaginal delivery without sterilization/D&C without CC/MCC 
group, with an average length of stay of 2.3 days and average costs of 
$4,601.
    We then reviewed the claims data from the September 2017 update of 
the FY 2017 MedPAR file for MS-DRGs 777, 778, 780, 781, and 782. Our 
findings are shown in the following table.

[[Page 41210]]



                           MS-DRGs for MDC 14 Pregnancy, Childbirth and the Puerperium
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 777 (Ectopic Pregnancy)--All cases.......................              72             1.9          $7,149
MS-DRG 778 (Threatened Abortion)--All cases.....................             205             2.7           4,001
MS-DRG 780 (False Labor)--All cases.............................              41             2.1           3,045
MS-DRG 781 (Other Antepartum Diagnoses with Medical                        2,333             3.7           5,817
 Complications)--All cases......................................
MS-DRG 782 (Other Antepartum Diagnoses without Medical                        70             2.1           3,381
 Complications)--All cases......................................
----------------------------------------------------------------------------------------------------------------

    As shown in the table, there were a total of 72 cases in MS-DRG 
777, with an average length of stay of 1.9 days and average costs of 
$7,149. For MS-DRG 778, there were a total of 205 cases, with an 
average length of stay of 2.7 days and average costs of $4,001. For MS-
DRG 780, there were a total of 41 cases, with an average length of stay 
of 2.1 days and average costs of $3,045. For MS-DRG 781, there were a 
total of 2,333 cases, with an average length of stay of 3.7 days and 
average costs of $5,817. Lastly, for MS-DRG 782, there were a total of 
70 cases, with an average length of stay of 2.1 days and average costs 
of $3,381.
    To compare and analyze the impact of deleting those 5 MS-DRGs and 
creating 6 new MS-DRGs, we ran a simulation using the Version 35 ICD-10 
MS-DRG GROUPER. Our findings below represent what we found and would 
expect under the suggested modifications. The following table reflects 
the MS-DRGs for the suggested Other Antepartum Diagnoses MS-DRGs with a 
3-way severity level split.

                                Suggested MS-DRGs for Other Antepartum Diagnoses
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 817 (Other Antepartum Diagnoses with O.R. Procedure with               60             5.1         $13,117
 MCC)...........................................................
MS-DRG 818 (Other Antepartum Diagnoses with O.R. Procedure with               66             4.2          10,483
 CC)............................................................
MS-DRG 819 (Other Antepartum Diagnoses with O.R. Procedure                    44             1.7           5,904
 without CC/MCC)................................................
MS-DRG 831 (Other Antepartum Diagnoses without O.R. Procedure                786             4.3           7,248
 with MCC)......................................................
MS-DRG 832 (Other Antepartum Diagnoses without O.R. Procedure                910             3.5           4,994
 with CC).......................................................
MS-DRG 833 (Other Antepartum Diagnoses without O.R. Procedure                855             2.7           3,843
 without CC/MCC)................................................
----------------------------------------------------------------------------------------------------------------

    Our analysis of claims data from the September 2017 update of the 
FY 2017 MedPAR file recognized that when the criteria to create 
subgroups were applied for the 3-way severity level splits for the 
suggested MS-DRGs, those criteria were not met in all instances. For 
example, the criteria that there are at least 500 cases in the MCC or 
CC group was not met for the suggested Vaginal Delivery with 
Sterilization/D&C 3-way severity level split or the suggested Other 
Antepartum Diagnoses with O.R. Procedure 3-way severity level split.
    However, as we have noted in prior rulemaking (72 FR 47152), we 
cannot adopt the same approach to refine the maternity and newborn MS-
DRGs because of the extremely low volume of Medicare patients there are 
in these DRGs. While there is not a high volume of these cases 
represented in the Medicare data, and while we generally advise that 
other payers should develop MS-DRGs to address the needs of their 
patients, we believe that our suggested 3-way severity level splits 
would address the complexity of the current MDC 14 GROUPER logic for a 
vaginal delivery and takes into account the new and different clinical 
concepts that exist under ICD-10 for this subset of patients while also 
maintaining the existing MS-DRG structure for identifying severity of 
illness, utilization of resources and complexity of service.
    However, as an alternative option, we also performed analysis for a 
2-way severity level split for the suggested MS-DRGs. Our findings are 
shown in the following tables.

                                     Suggested MS-DRGs for Cesarean Section
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG XXX (Cesarean Section with Sterilization with CC/MCC)....             689             4.7          $9,317
MS-DRG XXX (Cesarean Section with Sterilization without CC/MCC).             475             3.0           6,259
MS-DRG XXX (Cesarean Section without Sterilization with MCC)....           2,594             4.7           8,951
MS-DRG XXX (Cesarean Section without Sterilization without CC/             1,710             3.3           6,663
 MCC)...........................................................
----------------------------------------------------------------------------------------------------------------


                                     Suggested MS-DRGs for Vaginal Delivery
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG XXX (Vaginal Delivery with Sterilization/D&C with CC/MCC)              88             3.6          $7,586
MS-DRG XXX (Vaginal Delivery with Sterilization/D&C without CC/              126             2.3           6,697
 MCC)...........................................................
MS-DRG XXX (Vaginal Delivery without Sterilization/D&C with MCC)           2,358             3.2           6,212
MS-DRG XXX (Vaginal Delivery without Sterilization/D&C without             4,105             2.3           4,601
 CC/MCC)........................................................
----------------------------------------------------------------------------------------------------------------


[[Page 41211]]


                                Suggested MS-DRGs for Other Antepartum Diagnoses
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG XXX (Other Antepartum Diagnoses with O.R. Procedure with              126             4.7         $11,737
 MCC)...........................................................
MS-DRG XXX (Other Antepartum Diagnoses with O.R. Procedure                    44             1.7           5,904
 without CC/MCC)................................................
MS-DRG XXX (Other Antepartum Diagnoses without O.R. Procedure              1,696             3.9           6,039
 with MCC)......................................................
MS-DRG XXX (Other Antepartum Diagnoses without O.R. Procedure                855             2.7           3,843
 without CC/MCC)................................................
----------------------------------------------------------------------------------------------------------------

    Similar to the analysis performed for the 3-way severity level 
split, we acknowledged that when the criteria to create subgroups was 
applied for the alternative 2-way severity level splits for the 
suggested MS-DRGs, those criteria were not met in all instances. For 
example, the suggested Vaginal Delivery with Sterilization/D&C and the 
Other Antepartum Diagnoses with O.R. Procedure alternative option 2-way 
severity level splits did not meet the criteria for 500 or more cases 
in the MCC or CC group.
    Based on our review, which included support from our clinical 
advisors, and the analysis of claims data described above, in the FY 
2019 IPPS/LTCH PPS proposed rule, we proposed the deletion of 10 MS-
DRGs and the creation of 18 new MS-DRGs (as shown below). This proposal 
was based on the approach described above, which involves consolidating 
specific conditions and concepts into the structure of existing logic 
and making additional modifications, such as adding severity levels, as 
part of our refinement efforts for the ICD-10 MS-DRGs. We indicated in 
the proposed rule that our proposals are intended to address the 
vaginal delivery ``complicating diagnosis'' logic and antepartum 
diagnoses with ``medical complications'' logic with the proposed 
addition of the existing and familiar severity level concept (with MCC, 
with CC, and without CC/MCC) to the MDC 14 MS-DRGs to provide the 
ability to distinguish the varying resource requirements for this 
subset of patients and allow the opportunity to make more meaningful 
comparisons with regard to severity across the MS-DRGs. We stated that 
our proposals, as set forth below, would also simplify the vaginal 
delivery procedure logic that we identified and commenters acknowledged 
as technically complex by eliminating the extensive diagnosis and 
procedure code lists for several conditions that must be met for 
assignment to the vaginal delivery MS-DRGs. We stated that our 
proposals also are intended to respond to issues identified and brought 
to our attention through public comments for consideration in updating 
the GROUPER logic code lists in MDC 14.
    Specifically, we proposed to delete the following 10 MS-DRGs under 
MDC 14:
     MS-DRG 765 (Cesarean Section with CC/MCC);
     MS-DRG 766 (Cesarean Section without CC/MCC);
     MS-DRG 767 (Vaginal Delivery with Sterilization and/or 
D&C);
     MS-DRG 774 (Vaginal Delivery with Complicating Diagnosis);
     MS-DRG 775 (Vaginal Delivery without Complicating 
Diagnosis);
     MS-DRG 777 (Ectopic Pregnancy);
     MS-DRG 778 (Threatened Abortion);
     MS-DRG 780 (False Labor);
     MS-DRG 781 (Other Antepartum Diagnoses with Medical 
Complications); and
     MS-DRG 782 (Other Antepartum Diagnoses without Medical 
Complications).
    We proposed to create the following new 18 MS-DRGs under MDC 14:
     Proposed new MS-DRG 783 (Cesarean Section with 
Sterilization with MCC);
     Proposed new MS-DRG 784 (Cesarean Section with 
Sterilization with CC);
     Proposed new MS-DRG 785 (Cesarean Section with 
Sterilization without CC/MCC);
     Proposed new MS-DRG 786 (Cesarean Section without 
Sterilization with MCC);
     Proposed new MS-DRG 787 (Cesarean Section without 
Sterilization with CC);
     Proposed new MS-DRG 788 Cesarean Section without 
Sterilization without CC/MCC);
     Proposed new MS-DRG 796 (Vaginal Delivery with 
Sterilization/D&C with MCC);
     Proposed new MS-DRG 797 (Vaginal Delivery with 
Sterilization/D&C with CC);
     Proposed new MS-DRG 798 (Vaginal Delivery with 
Sterilization/D&C without CC/MCC);
     Proposed new MS-DRG 805 (Vaginal Delivery without 
Sterilization/D&C with MCC);
     Proposed new MS-DRG 806 (Vaginal Delivery without 
Sterilization/D&C with CC);
     Proposed new MS-DRG 807 (Vaginal Delivery without 
Sterilization/D&C without CC/MCC);
     Proposed new MS-DRG 817 (Other Antepartum Diagnoses with 
O.R. Procedure with MCC);
     Proposed new MS-DRG 818 (Other Antepartum Diagnoses with 
O.R. Procedure with CC);
     Proposed new MS-DRG 819 (Other Antepartum Diagnoses with 
O.R. Procedure without CC/MCC);
     Proposed new MS-DRG 831 (Other Antepartum Diagnoses 
without O.R. Procedure with MCC);
     Proposed new MS-DRG 832 (Other Antepartum Diagnoses 
without O.R. Procedure with CC); and
     Proposed new MS-DRG 833 (Other Antepartum Diagnoses 
without O.R. Procedure without CC/MCC).
    The diagrams below illustrate how the proposed MS-DRG logic for MDC 
14 would function. The first diagram (Diagram 1.) begins by asking if 
there is a principal diagnosis from MDC 14. If no, the GROUPER logic 
directs the case to the appropriate MDC based on the principal 
diagnosis reported. Next, the logic asks if there is a cesarean section 
procedure reported on the claim. If yes, the logic asks if there was a 
sterilization procedure reported on the claim. If yes, the logic 
assigns the case to one of the proposed new MS-DRGs 783, 784, or 785. 
If no, the logic assigns the case to one of the proposed new MS-DRGs 
786, 787, or 788. If there was not a cesarean section procedure 
reported on the claim, the logic asks if there was a vaginal delivery 
procedure reported on the claim. If yes, the logic asks if there was 
another O.R. procedure other than sterilization, D&C, delivery 
procedure or a delivery inclusive O.R. procedure. If yes, the logic 
assigns the case to existing MS-DRG 768. If no, the logic asks if there 
was a sterilization and/or D&C reported on the claim. If yes, the logic 
assigns the case to one of the proposed new MS-DRGs 796, 797, or 798. 
If no, the logic assigns the case to one of the proposed new MS-DRGs 
805, 806, or 807. If there was not a vaginal delivery procedure 
reported on the claim, the GROUPER logic directs you to the other

[[Page 41212]]

non-delivery MS-DRGs as shown in Diagram 2.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR17AU18.000

    The logic for Diagram 2. begins by asking if there is a principal 
diagnosis of abortion reported on the claim. If yes, the logic then 
asks if there was a D&C, aspiration curettage or hysterotomy procedure 
reported on the claim. If yes, the logic assigns the case to existing 
MS-DRG 770. If no, the logic assigns the case to existing MS-DRG 779. 
If there was not a principal diagnosis of abortion reported on the 
claim, the logic asks if there was a principal diagnosis of an 
antepartum condition reported on the claim. If yes, the logic then asks 
if there was an O.R. procedure reported on the claim. If yes, the logic 
assigns the case to one of the proposed new MS-DRGs 817, 818, or 819. 
If no, the logic assigns the case to one of the proposed new MS-DRGs 
831, 832, or 833. If there was not a principal diagnosis of an 
antepartum condition reported on the claim, the logic asks if there was 
a principal diagnosis of a postpartum condition reported on the claim. 
If yes, the logic then asks if there was an O.R. procedure reported on 
the claim. If yes, the logic assigns the case to existing MS-DRG 769. 
If no, the logic assigns the case to existing MS-DRG 776. If there was 
not a principal diagnosis of a postpartum condition reported on the 
claim, the logic identifies that there was a principal diagnosis 
describing childbirth, delivery or an intrapartum condition reported on 
the claim without

[[Page 41213]]

any other procedures, and assigns the case to existing MS-DRG 998 
(Principal Diagnosis Invalid as Discharge Diagnosis).
    To assist in detecting coding and MS-DRG assignment errors for MS-
DRG 998 that could result when a provider does not report the procedure 
code for either a cesarean section or a vaginal delivery along with an 
outcome of delivery diagnosis code, as discussed in section II.F.13.d., 
we proposed to add a new Questionable Obstetric Admission edit under 
the MCE. We invited public comments on this proposed MCE edit and we 
also invited public comments on the need for any additional MCE 
considerations with regard to the proposed changes for the MDC 14 MS-
DRGs.
[GRAPHIC] [TIFF OMITTED] TR17AU18.001

BILLING CODE 4120-01-C
    We referred readers to Tables 6P.1h. through 6P.1k. associated with 
the proposed rule for the lists of the diagnosis and procedure codes 
that we proposed to assign to the GROUPER logic for the proposed new 
MS-DRGs and the existing MS-DRGs under MDC 14. We invited public 
comments on our proposed list of diagnosis codes, which also addresses 
the list of diagnosis codes that a commenter identified as missing from 
the GROUPER logic. We noted that, as a result of our proposed GROUPER 
logic changes to the vaginal delivery MS-DRGs, which would only take 
into account the procedure codes for a vaginal delivery and the outcome 
of delivery secondary diagnosis codes, there is no longer a need to 
maintain a specific principal diagnosis logic list for those MS-DRGs. 
Therefore, while we

[[Page 41214]]

appreciate the detailed suggestions and rationale submitted by the 
commenter for why specific diagnosis codes should be removed from the 
vaginal delivery principal diagnosis logic as displayed earlier in this 
discussion, we proposed to remove that logic. We invited public 
comments on this proposal, as well as our proposed list of procedure 
codes for the proposed revised MDC 14 MS-DRG logic, which would require 
a procedure code for case assignment. We also invited public comments 
on the proposed deletion of the 10 MS-DRGs and the proposed creation of 
18 new MS-DRGs with a 3-way severity level split listed above in this 
section, as well as on the potential alternative new MS-DRGs using a 2-
way severity level split as also presented above.
    Comment: Commenters agreed with CMS' proposal to restructure the 
MS-DRGs within MDC 14. A few commenters commended CMS on the proposed 
new structure and GROUPER logic for these MS-DRGs, and believed that 
the new structure and logic is clearer and clinically appropriate. 
Another commenter agreed with the proposed new GROUPER logic for MDC 14 
for deliveries with the 3-way severity level splits. The commenters 
anticipated that the new structure and logic will provide more clarity 
than the current structure.
    Response: We appreciate the commenters' support. We agree the 
proposed new structure and GROUPER logic of the MS-DRGs under MDC 14 
will provide more clarity than the current structure and logic.
    Comment: Another commenter stated that all of the diagnoses 
currently assigned to MS-DRG 774 (Vaginal Delivery with Complicating 
Diagnosis) in the GROUPER logic, along with some of the diagnoses that 
were noted to appear to be missing from the GROUPER logic (83 FR 20216 
through 20217), should be added to the Principal Diagnosis Is Its Own 
CC Or MCC logic for the proposed new vaginal delivery MS-DRGs 796 
(Vaginal Delivery with Sterilization/D&C with MCC), 797 (Vaginal 
Delivery with Sterilization/D&C with CC), 798 (Vaginal Delivery with 
Sterilization/D&C without CC/MCC), 805 (Vaginal Delivery without 
Sterilization/D&C with MCC), 806 (Vaginal Delivery without 
Sterilization/D&C with CC), and 807 (Vaginal Delivery without 
Sterilization/D&C without CC/MCC). The commenter provided the following 
list of diagnosis codes that were noted to appear to be missing from 
the GROUPER logic, and requested CMS consider adding these diagnosis 
codes to the Principal Diagnosis Is Its Own CC Or MCC Lists. The 
commenter believed that the current GROUPER logic for MS-DRG 774 
includes diagnoses that could change the MS-DRG assignment of a case 
from MS-DRG 775 to MS-DRG 774 based on the principal diagnosis. The 
commenter further expressed concern that these same diagnoses may group 
to the proposed new MS-DRGs 798 or 807 (without CC/MCC) under the 
proposed new structure and GROUPER logic for the vaginal delivery MS-
DRGs.

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
O11.5.....................  Pre-existing hypertension with pre-
                             eclampsia, complicating the puerperium.
012.04....................  Gestational edema, complicating childbirth.
012.05....................  Gestational edema, complicating the
                             puerperium.
012.14....................  Gestational proteinuria, complicating
                             childbirth.
012.15....................  Gestational proteinuria, complicating the
                             puerperium.
012.24....................  Gestational edema with proteinuria,
                             complicating childbirth.
012.25....................  Gestational edema with proteinuria,
                             complicating the puerperium.
O13.4.....................  Gestational [pregnancy-induced] hypertension
                             without significant proteinuria,
                             complicating childbirth.
O13.5.....................  Gestational [pregnancy-induced] hypertension
                             without significant proteinuria,
                             complicating the puerperium.
O14.04....................  Mild to moderate pre-eclampsia, complicating
                             childbirth.
O14.05....................  Mild to moderate pre-eclampsia, complicating
                             the puerperium.
O14.14....................  Severe pre-eclampsia complicating
                             childbirth.
O14.15....................  Severe pre-eclampsia, complicating the
                             puerperium.
O14.24....................  HELLP syndrome, complicating childbirth.
O14.25....................  HELLP syndrome, complicating the puerperium.
O14.94....................  Unspecified pre-eclampsia, complicating
                             childbirth.
O14.95....................  Unspecified pre-eclampsia, complicating the
                             puerperium.
O15.00....................  Eclampsia complicating pregnancy,
                             unspecified trimester.
O15.02....................  Eclampsia complicating pregnancy, second
                             trimester.
O15.03....................  Eclampsia complicating pregnancy, third
                             trimester.
O15.1.....................  Eclampsia complicating labor.
O15.2.....................  Eclampsia complicating puerperium, second
                             trimester.
O16.4.....................  Unspecified maternal hypertension,
                             complicating childbirth.
O16.5.....................  Unspecified maternal hypertension,
                             complicating the puerperium.
------------------------------------------------------------------------

    Response: As discussed in the FY 2019 IPPS/LTCH PPS proposed rule 
(83 FR 20236 through 20239), we proposed to remove the special logic in 
the GROUPER for processing claims containing a diagnosis code from the 
Principal Diagnosis Is Its Own CC or MCC Lists. For the reasons stated 
in section II.F.15.c. of the preamble of this final rule, we are 
finalizing that proposal, and therefore this logic will no longer apply 
for FY 2019. We refer readers to section II.F.15.c. of the preamble of 
this final rule for further discussion of the specific proposal, 
including summaries of the public comments we received and our 
responses and our statement of final policy.
    With regard to the commenter's concern that the diagnosis codes 
listed above appear to be missing from the GROUPER logic, we note that, 
currently, all of the diagnoses codes are included in the MDC 14 
Assignment of Diagnosis Codes List. The diagnosis codes that include 
the terminology ``complicating the puerperium'' are listed under the 
``Second Condition--Principal or Secondary Diagnosis'' code list in the 
diagnosis code logic for MS-DRG 774, and the diagnosis codes that 
include the terminology ``complicating childbirth'' are listed under 
the ``Principal Diagnosis'' code list for the diagnosis code logic for 
MS-DRG 781 (Other Antepartum Diagnoses with Medical Complications). We 
acknowledge that the diagnosis codes that include the

[[Page 41215]]

terminology ``complicating childbirth'' that the commenter referenced 
were inadvertently omitted, and are not listed in the ICD-10 MS-DRG 
Definitions Manual Version 35 under the diagnosis code logic list for 
MS-DRG 774 (or for MS-DRGs 767 (Vaginal Delivery with Sterilization 
and/or D&C) and 768 (Vaginal Delivery with O.R. Procedure Except 
Sterilization and/or D&C)). However, if one of those diagnosis codes is 
reported with a procedure code from the vaginal delivery code list, the 
ICD-10 MS-DRG GROUPER Version 35 accurately groups the case to a 
vaginal delivery MS-DRG.
    As stated in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20220), 
in our proposal for restructuring the MDC 14 MS-DRGs under the ICD-10 
MS-DRGs Version 36, diagnoses described as occurring during pregnancy 
and diagnoses specifying a trimester or maternal care in the absence of 
a delivery procedure reported are considered antepartum conditions. 
Also, as shown in Table 6P.1j. associated with the proposed rule 
(available via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2019-IPPS-Proposed-Rule-Home-Page-Items/FY2019-IPPS-Proposed-Rule-Tables.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending), we did 
not propose to include any diagnosis codes describing a condition as 
``complicating childbirth'' in the list of diagnosis codes describing 
antepartum conditions. Therefore, the diagnosis codes described as 
``complicating childbirth'' would be applicable when a patient is 
admitted for a delivery episode and are subject to MS-DRG assignment to 
proposed MS-DRGs describing a cesarean or vaginal delivery.
    Comment: Another commenter agreed with CMS' initiative to 
restructure the MS-DRGs and GROUPER logic under MDC 14. However, the 
commenter expressed concerns with the proposed GROUPER logic, and 
requested CMS consider all of the issues prior to implementing the 
proposed new MS-DRGs and GROUPER logic. The commenter believed that 
grouping a vaginal delivery by procedure codes describing a delivery 
and a diagnosis code describing the outcome of delivery did not seem 
appropriate. The commenter stated that it is necessary to determine if 
a case should be assigned to a vaginal delivery MS-DRG based on the 
combination of principal diagnoses and procedure codes versus the 
combination of a procedure code with an outcome of delivery code. The 
commenter recommended that the first consideration should consist of 
identification of a principal diagnosis code within the O00-O08 code 
range (Pregnancy with Abortive Outcome) and then proceeding with 
grouping those cases to the Abortion MS-DRGs 770 (Abortion with D&C, 
Aspiration Curettage or Hysterotomy) and 779 (Abortion without D&C), 
prior to possibly grouping the cases to the cesarean or vaginal 
delivery MS-DRGs. The commenter provided the example of a blighted ovum 
that may be treated with ICD-10-PCS procedure codes 10D07Z6 (Extraction 
of products of conception, vacuum, via natural or artificial opening) 
or 10D07Z8 (Extraction of products of conception, other, via natural or 
artificial opening), which are reported for vaginal deliveries.
    Response: We appreciate the commenter's support for the effort to 
restructure the MS-DRGs and GROUPER logic under MDC 14. However, with 
respect to the commenter's concerns regarding the proposed new GROUPER 
logic for a vaginal delivery, we disagree with the commenter that it is 
necessary to determine if cases should be assigned to a vaginal 
delivery MS-DRG based on the combination of principal diagnoses and 
procedure codes versus the combination of a procedure code with an 
outcome of delivery code. One of the underlying purposes of the effort 
to restructure the vaginal delivery MS-DRGs was to simplify the complex 
logic currently associated with the vaginal delivery MS-DRGs, which 
includes multiple code lists for principal and secondary diagnoses. 
Based on the proposed new structure and GROUPER logic of the MS-DRGs 
under MDC 14, to identify that a vaginal delivery occurred, the logic 
does not have to consider or depend on the reason the patient was 
admitted. Rather, the GROUPER logic is structured to account for the 
fact that a delivery took place during that hospitalization. The 
delivery MS-DRGs (whether cesarean or vaginal) are specifically 
intended for that reason. With regard to the example provided by the 
commenter, we note that ICD-10-PCS procedure codes 10D07Z6 and 10D07Z8 
are designated as non-O.R. procedures that affect the MS-DRG assignment 
of specific MS-DRGs. ICD-10-PCS procedure codes 10D07Z6 and 10D07Z8 
impact the MS-DRG assignment of the vaginal delivery MS-DRGs. However, 
ICD-10-CM diagnosis code O02.0 (Blighted ovum and nonhydatidiform mole) 
is identified as a proposed antepartum condition, as shown in Table 
6P.1j. associated with the proposed rule (available via the internet on 
the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2019-IPPS-Proposed-Rule-Home-Page-Items/FY2019-IPPS-Proposed-Rule-Tables.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending) and, 
therefore, as depicted in the commenter's example, if a patient has a 
principal diagnosis of a blighted ovum and either ICD-10-PCS procedure 
code 10D07Z6 or 10D07Z8 is reported, the proposed new GROUPER logic 
would result in an MS-DRG case assignment to one of the proposed new 
MS-DRGs 831, 832, or 833 (Other Antepartum Diagnoses without O.R. 
Procedure with MCC, with CC or without CC/MCC, respectively) and not a 
vaginal delivery MS-DRG. The diagnosis of a blighted ovum does not 
result in a viable pregnancy and, therefore, an outcome of delivery 
diagnosis code would not be reported. An illustration of how this 
proposed new GROUPER logic would apply for antepartum conditions was 
represented in Diagram 2 of the FY 2019 IPPS/LTCH PPS proposed rule (83 
FR 20225).
    Comment: One commenter expressed concern about the proposed 
relative weights for several of the proposed new MS-DRGs under MDC 14. 
The commenter stated that the low volume of the procedures assigned to 
these MS-DRGs accounted for volatility in the relative weights. With 
regard to proposed new MS-DRGs 817, 818, and 819 (Other Antepartum 
Diagnoses with O.R. Procedure with MCC, CC, and without CC/MCC, 
respectively), the commenter stated that the proposed relative weights 
for these MS-DRGs are significantly lower than the proposed relative 
weights of the surgical MS-DRGs to which the procedure codes proposed 
to be assigned to these proposed new MS-DRGs would map for non-
obstetrical patients. This commenter also stated that the relative 
weights for proposed new MS-DRGs 806 and 807 (Vaginal Delivery without 
Sterilization/D&C with CC and without CC/MCC, respectively) are lower 
than the current relative weights for MS-DRGs 774 and 775 (Vaginal 
Delivery with and without Complicating Diagnosis, respectively), and 
believed the relative weight for proposed new MS-DRG 805 (Vaginal 
Delivery without Sterilization/D&C with MCC) is likely inadequate for 
the resources required to care for patients with MCC severity level 
designations. The commenter suggested that CMS maintain the relative 
weights for proposed new MS-DRGs 806 and 807 at the same value of

[[Page 41216]]

the current MS-DRGs, and establish a relative weight for proposed new 
MS-DRG 805 that is more comparable with those values of medical MS-DRGs 
with MCC severity level designations. The commenter further noted that 
the relative weights for proposed new MS-DRGs 797 and 798 (Vaginal 
Delivery with Sterilization/D&C with CC and without CC/MCC, 
respectively) are the same value, but believed the relative weight 
should be greater for proposed new MS-DRG 797. The commenter also 
believed that the relative weight for proposed new MS-DRG 786 (Cesarean 
Section without Sterilization with MCC) is insufficient for the 
required resources necessary to perform these procedures and provide 
the appropriate care to patients, and requested CMS establish a 
relative weight with a value more consistent with values of surgical 
MS-DRGs with MCC severity level designations. The commenter also 
requested that CMS maintain the relative weights for MS-DRG 787 
(Cesarean Section without Sterilization with CC) at the same value of 
current MS-DRG 765 (Cesarean Section with CC/MCC), and the relative 
weight for proposed new MS-DRG 833 (Other Antepartum Diagnoses without 
O.R. Procedure without CC/MCC) at the same value of current MS-DRG 782 
(Other Antepartum Diagnoses without Medical Complications).
    Response: It is to be expected that when MS-DRGs are restructured, 
resulting in a different case-mix within the new MS-DRGs, the relative 
weights of the MS-DRGs will change as a result. With respect to the 
comment about the low volume of cases, as we have noted in the proposed 
rule, we were unable to use our usual criterion of ensuring that there 
are at least 500 cases in the MCC or CC group to refine the maternity 
MS-DRGs because of the extremely low volume of Medicare patients cases 
reflected in claims data for these DRGs. While there is not a high 
volume of these cases represented in the Medicare data, and while we 
generally advise that other payers should develop MS-DRGs to address 
the needs of their patients, we continue to believe that the 
restructured MS-DRGs within MDC 14 serve important purposes to account 
for the new and different clinical concepts that exist under ICD-10 for 
this subset of patients while also maintaining the existing MS-DRG 
structure for identifying severity of illness, utilization of 
resources, and complexity of service. We believe that even though some 
of the resulting MS-DRGs have relatively low volumes in the Medicare 
population, using our established methodology for developing DRG 
relative weights is the most appropriate approach for the new MS-DRGs 
within MDC 14. With regard to the comment about MS-DRGs 797 and 798, we 
note that the average cost per case for MS-DRG 797 was lower than the 
average cost per case for MS-DRG 798. Therefore, we blended the data 
for these two MS-DRGs to avoid nonmonotonocity, in which the lower 
severity MS-DRG has a higher relative weight than the higher severity 
MS-DRG. For these reasons, we are not finalizing a change to the 
calculation of the relative weights for the MS-DRGs under MDC 14.
    After consideration of the public comments we received, we are 
finalizing our proposals, without modification, including the list of 
diagnosis codes assigned to the MS-DRGs under the restructuring of the 
vaginal delivery MS-DRGs under MDC 14, which we note also addresses the 
list of diagnosis codes that a commenter identified and were noted in 
the proposed rule as appearing to be missing from the GROUPER logic.
    We also invited public comments on our proposal to reassign ICD-10-
PCS procedure codes 0UDB7ZX, 0UDB7ZZ, 0UDB8ZX, and 0UDB8ZZ that 
describe dilation and curettage procedures from MS-DRG 767 under MDC 14 
to MS-DRGs 744 and 745 under MDC 13.
    Comment: Commenters supported CMS' proposal to reassign ICD-10-PCS 
procedure codes 0UDB7ZX, 0UDB7ZZ, 0UDB8ZX, and 0UDB8ZZ from MS-DRG 767 
to MS-DRGs 744 and 745.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to reassign ICD-10-PCS procedure codes 0UDB7ZX, 
0UDB7ZZ, 0UDB8ZX, and 0UDB8ZZ that describe dilation and curettage 
procedures from MS-DRG 767 under MDC 14 to MS-DRGs 744 and 745 under 
MDC 13 in the ICD-10 MS-DRGs Version 36, effective October 1, 2018.
    After consideration of the public comments we received, we are 
finalizing our proposed list of diagnosis and procedure codes for 
assignment to the revised MDC 14 MS-DRGs including the deletion of 10 
MS-DRGs and the creation of 18 new MS-DRGs in the ICD-10 MS-DRGs 
Version 36, effective October 1, 2018.
11. MDC 18 (Infectious and Parasitic Diseases (Systematic or 
Unspecified Sites): Systemic Inflammatory Response Syndrome (SIRS) of 
Non-Infectious Origin
    ICD-10-CM diagnosis codes R65.10 (Systemic Inflammatory Response 
Syndrome (SIRS) of non-infectious origin without acute organ 
dysfunction) and R65.11 (Systemic Inflammatory Response Syndrome (SIRS) 
of non-infectious origin with acute organ dysfunction) are currently 
assigned to MS-DRGs 870 (Septicemia or Severe Sepsis with Mechanical 
Ventilation >96 Hours), 871 (Septicemia or Severe Sepsis with 
Mechanical Ventilation >96 Hours with MCC), and 872 (Septicemia or 
Severe Sepsis with Mechanical Ventilation >96 Hours without MCC) under 
MDC 18 (Infectious and Parasitic Diseases, Systemic or Unspecified 
Sites). As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 
20226), our clinical advisors noted that these diagnosis codes are 
specifically describing conditions of a non-infectious origin, and 
recommended that they be reassigned to a more clinically appropriate 
MS-DRG.
    We examined claims data from the September 2017 update of the FY 
2017 MedPAR file for cases in MS-DRGs 870, 871, and 872. Our findings 
are shown in the following table.

       Septicemia or Severe Sepsis With and Without Mechanical Ventilation >96 Hours With and Without MCC
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 870--All cases...........................................          31,658            14.3         $42,981
MS-DRG 871--All cases...........................................         566,531             6.3          13,002
MS-DRG 872--All cases...........................................         150,437             4.3           7,532
----------------------------------------------------------------------------------------------------------------

    As shown in this table, we found a total of 31,658 cases in MS-DRG 
870, with an average length of stay of 14.3 days and average costs of 
$42,981. We found a total of 566,531 cases in MS-DRG 871, with an 
average length of stay

[[Page 41217]]

of 6.3 days and average costs of $13,002. Lastly, we found a total of 
150,437 cases in MS-DRG 872, with an average length of stay of 4.3 days 
and average costs of $7,532.
    We then examined claims data in MS-DRGs 870, 871, or 872 for cases 
reporting an ICD-10-CM diagnosis code of R65.10 or R65.11. Our findings 
are shown in the following table.

                     SIRS of Non-Infectious Origin With and Without Acute Organ Dysfunction
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                    MS-DRGs 870, 871 and 872                           cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRGs 870, 871, and 872--Cases reporting a principal diagnosis           1,254             3.8          $6,615
 code of R65.10.................................................
MS-DRGs 870, 871, and 872--Cases reporting a principal diagnosis             138             4.8           9,655
 code of R65.11.................................................
MS-DRGs 870, 871, and 872--Cases reporting a secondary diagnosis           1,232             5.5          10,670
 code of R65.10.................................................
MS-DRGs 870, 871, and 872--Cases reporting a secondary diagnosis             117             6.2          12,525
 code of R65.11.................................................
----------------------------------------------------------------------------------------------------------------

    As shown in this table, we found a total of 1,254 cases reporting a 
principal diagnosis code of R65.10 in MS-DRGs 870, 871, and 872, with 
an average length of stay of 3.8 days and average costs of $6,615. We 
found a total of 138 cases reporting a principal diagnosis code of 
R65.11 in MS-DRGs 870, 871, and 872, with an average length of stay of 
4.8 days and average costs of $9,655. We found a total of 1,232 cases 
reporting a secondary diagnosis code of R65.10 in MS-DRGs 870, 871, and 
872, with an average length of stay of 5.5 days and average costs of 
$10,670. Lastly, we found a total of 117 cases reporting a secondary 
diagnosis code of R65.11 in MS-DRGs 870, 871, and 872, with an average 
length of stay of 6.2 days and average costs of $12,525.
    The claims data included a total of 1,392 cases in MS-DRGs 870, 
871, and 872 that reported a principal diagnosis code of R65.10 or 
R65.11. We noted in the FY 2019 IPPS/LTCH PPS proposed rule that these 
1,392 cases appear to have been coded inaccurately according to the 
ICD-10-CM Official Guidelines for Coding and Reporting at Section 
I.C.18.g., which specifically state: ``The systemic inflammatory 
response syndrome (SIRS) can develop as a result of certain non-
infectious disease processes, such as trauma, malignant neoplasm, or 
pancreatitis. When SIRS is documented with a non-infectious condition, 
and no subsequent infection is documented, the code for the underlying 
condition, such as an injury, should be assigned, followed by code 
R65.10, Systemic inflammatory response syndrome (SIRS) of non-
infectious origin without acute organ dysfunction or code R65.11, 
Systemic inflammatory response syndrome (SIRS) of non-infectious origin 
with acute organ dysfunction.'' Therefore, according to the Coding 
Guidelines, ICD-10-CM diagnosis codes R65.10 and R65.11 should not be 
reported as the principal diagnosis on an inpatient claim.
    We have acknowledged in past rulemaking the challenges with coding 
for SIRS (and sepsis) (71 FR 24037). In addition, we note that there 
has been confusion with regard to how these codes are displayed in the 
ICD-10 MS-DRG Definitions Manual under MS-DRGs 870, 871, and 872, which 
may also impact the reporting of these conditions. For example, in 
Version 35 of the ICD-10 MS-DRG Definitions Manual (which is available 
via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-Items/FY2018-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending, the 
logic for case assignment to MS-DRGs 870, 871, and 872 is comprised of 
a list of several diagnosis codes, of which ICD-10-CM diagnosis codes 
R65.10 and R65.11 are included. Because these codes are listed under 
the heading of ``Principal Diagnosis'', it may appear that these codes 
are to be reported as a principal diagnosis for assignment to MS-DRGs 
870, 871, or 872. However, the Definitions Manual display of the 
GROUPER logic assignment for each diagnosis code is for grouping 
purposes only. The GROUPER (and, therefore, documentation in the MS-DRG 
Definitions Manual) was not designed to account for coding guidelines 
or coverage policies. Since the inception of the IPPS, the data editing 
function has been a separate and independent step in the process of 
determining a DRG assignment. Except for extreme data integrity issues 
that prevent a DRG from being assigned, such as an invalid principal 
diagnosis, the DRG assignment GROUPER does not edit for data integrity. 
Prior to assigning the MS-DRG to a claim, the MACs apply a series of 
data integrity edits using programs such as the Medicare Code Editor 
(MCE). The MCE is designed to identify cases that require further 
review before classification into an MS-DRG. These data integrity edits 
address issues such as data validity, coding rules, and coverage 
policies. The separation of the MS-DRG grouping and data editing 
functions allows the MS-DRG GROUPER to remain stable during a fiscal 
year even though coding rules and coverage policies may change during 
the fiscal year. As such, in the FY 2018 IPPS/LTCH PPS final rule (82 
FR 38050 through 38051), we finalized our proposal to add ICD-10-CM 
diagnosis codes R65.10 and R65.11 to the Unacceptable Principal 
Diagnosis edit in the MCE as a result of the Official Guidelines for 
Coding and Reporting related to SIRS, in efforts to improve coding 
accuracy for these types of cases.
    To address the issue of determining a more appropriate MS-DRG 
assignment for ICD-10-CM diagnosis codes R65.10 and R65.11, we reviewed 
alternative options under MDC 18. Our clinical advisors determined the 
most appropriate option is MS-DRG 864 (Fever) because the conditions 
that are assigned here describe conditions of a non-infectious origin.
    Therefore, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 
20227), we proposed to reassign ICD-10-CM diagnosis codes R65.10 and 
R65.11 to MS-DRG 864 and to revise the title of MS-DRG 864 to ``Fever 
and Inflammatory Conditions'' to better reflect the diagnoses assigned 
there.

[[Page 41218]]



                         Proposed Revised MS-DRG 864 (Fever and Inflammatory Conditions)
----------------------------------------------------------------------------------------------------------------
                                                                                 Average length
                            MS-DRG                             Number of cases      of stay       Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 864--All cases........................................          12,144              3.4           $6,232
----------------------------------------------------------------------------------------------------------------

    Comment: Commenters supported the proposal to reassign ICD-10-CM 
diagnosis codes R65.10 and R65.11 to MS-DRG 864 and to revise the title 
of MS-DRG 864 to ``Fever and Inflammatory Conditions''.
    Response: We thank the commenters for their support.
    Comment: One commenter questioned the proposed logic for ICD-10-CM 
diagnosis codes R65.10 and R65.11 within MS-DRG 864. The commenter 
noted that the diagnosis codes are included on the unacceptable 
principal diagnoses code edit list in the MCE and specifically inquired 
if cases reporting diagnosis code R65.10 or R65.11 as a secondary 
diagnosis would result in assignment to MS-DRG 864.
    Response: The GROUPER logic assignment for each diagnosis code as a 
principal diagnosis is for grouping purposes only. The GROUPER was not 
designed to account for coding guidelines or coverage policies. The MCE 
is designed to identify cases that require further review before 
classification into an MS-DRG. Therefore, the MS-DRG logic must 
specifically require a condition to group based on whether it is 
reported as a principal diagnosis or a secondary diagnosis, and 
consider any procedures that are reported, in addition to consideration 
of the patient's age, sex and discharge status in order to affect the 
MS-DRG assignment.
    As noted in the ICD-10 MS-DRG Definitions Manual Version 35, 
Appendix B--Diagnosis Code/MDC/MS-DRG Index, each diagnosis code is 
listed with the MDC and the MS-DRGs to which the diagnosis is used to 
define the logic of the DRG either as a principal diagnosis or a 
secondary diagnosis. For diagnosis codes R65.10 and R65.11, the ICD-10 
MS DRG Definitions Manual displays MDC 18 and MS-DRGs 870-872, as 
described previously. As discussed in the proposed rule, because the 
diagnosis are codes listed under the heading of ``Principal Diagnosis'' 
in the ICD-10 MS DRG Definitions Manual, it may appear to indicate that 
these codes are to be reported as a principal diagnosis for assignment 
to these MS-DRGs. However, the Definitions Manual display of the 
GROUPER logic assignment for each diagnosis code is for grouping 
purposes only and does not correspond to coding guidelines for 
reporting the principal diagnosis. In other words, cases will group 
according to the GROUPER logic, regardless of any coding guidelines or 
coverage policies. It is the MCE and other payer specific edits that 
identify inconsistencies in the coding guidelines or coverage policies. 
Under our proposed change to the ICD-10 MS-DRGs Version 36, cases 
reporting diagnosis code R65.10 or R65.11 as a secondary diagnosis 
would result in assignment to MS-DRG 864 when one of the other listed 
diagnosis codes in the MS-DRG 864 logic is reported as the principal 
diagnosis.
    After consideration of the public comments we received, we are 
finalizing our proposal to reassign ICD-10-CM diagnosis codes R65.10 
and R65.11 to MS-DRG 864 and to revise the title of MS-DRG 864 to 
``Fever and Inflammatory Conditions''.
12. MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs): Corrosive 
Burns
    ICD-10-CM Coding Guidelines include ``Code first'' sequencing 
instructions for cases reporting a principal diagnosis of toxic effect 
(ICD-10-CM codes T51 through T65) and a secondary diagnosis of 
corrosive burn (ICD-10-CM codes T21.40 through T21.79). As discussed in 
the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20227), we received a 
request to reassign these cases from MS-DRGs 901 (Wound Debridements 
for Injuries with MCC), 902 (Wound Debridements for Injuries with CC), 
903 (Wound Debridements for Injuries without CC/MCC), 904 (Skin Grafts 
for Injuries with CC/MCC), 905 (Skin Grafts for Injuries without CC/
MCC), 917 (Poisoning and Toxic Effects of Drugs with MCC), and 918 
(Poisoning and Toxic Effects of Drugs without MCC) to MS-DRGs 927 
(Extensive Burns or Full Thickness Burns with Mechanical Ventilation 
>96 Hours with Skin Graft), 928 (Full Thickness Burn with Skin Graft or 
Inhalation Injury with CC/MCC), 929 (Full Thickness Burn with Skin 
Graft or Inhalation Injury without CC/MCC), 933 (Extensive Burns or 
Full Thickness Burns with Mechanical Ventilation >96 Hours without Skin 
Graft), 934 (Full Thickness Burn without Skin Graft or Inhalation 
Injury), and 935 (Nonextensive Burns).
    The requestor noted that, for corrosion burns codes T21.40 through 
T21.79, ICD-10-CM Coding Guidelines instruct to ``Code first (T51 
through T65) to identify chemical and intent.'' Because code first 
notes provide sequencing directive, when patients are admitted with 
corrosive burns (which can be full thickness and extensive), toxic 
effect codes T51 through T65 must be sequenced first followed by codes 
for the corrosive burns. This causes full-thickness and extensive burns 
to group to MS-DRGs 901 through 905 when excisional debridement and 
split thickness skin grafts are performed, and to MS-DRGs 917 and 918 
when procedures are not performed. This is in contrast to cases 
reporting a principal diagnosis of corrosive burn, which group to MS-
DRGs 927 through 935.
    The requestor stated that MS-DRGs 456 (Spinal Fusion except 
Cervical with Spinal Curvature or Malignancy or Infection or Extensive 
Fusions with MCC), 457 (Spinal Fusion Except Cervical with Spinal 
Curvature or Malignancy or Infection or Extensive Fusions with CC), and 
458 (Spinal Fusion Except Cervical with Spinal Curvature or Malignancy 
or Infection or Extensive Fusions without CC/MCC) are grouped based on 
the procedure performed in combination with the principal diagnosis or 
secondary diagnosis (secondary scoliosis). The requestor stated that 
when codes for corrosive burns are reported as secondary diagnoses in 
conjunction with principal diagnoses codes T5l through T65, 
particularly when skin grafts are performed, they would be more 
appropriately assigned to MS-DRGs 927 through 935.
    We analyzed claims data from the September 2017 update of the FY 
2017 MedPAR file for all cases assigned to MS-DRGs 901, 902, 903, 904, 
905, 917, and 918, and subsets of these cases with principal diagnosis 
of toxic effect with secondary diagnosis of corrosive burn. We noted in 
the proposed rule that we found no cases from this subset in MS-DRGs 
903, 907, 908, and 909 and, therefore, did not include the results for 
these MS-DRGs in the table below. We also analyzed all cases assigned 
to MS-DRGs 927, 928, 929, 933, 934, and 935 and those cases that 
reported a principal diagnosis of corrosive burn. Our findings are 
shown in the following two tables.

[[Page 41219]]



                             MDC 21 Injuries, Poisonings and Toxic Effects of Drugs
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRGs                                   cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
All Cases with principal diagnosis of toxic effect and secondary              55             5.5         $18,077
 diagnosis of corrosive burn--Across all MS-DRGs................
MS-DRG 901--All cases...........................................             968              13          31,479
MS-DRG 901--Cases with principal diagnosis of toxic effect and                 1               8          12,388
 secondary diagnosis of corrosive burn..........................
MS-DRG 902--All cases...........................................           1,775             6.6          14,206
MS-DRG 902--Cases with principal diagnosis of toxic effect and                 8            10.3          20,940
 secondary diagnosis of corrosive burn..........................
MS-DRG 904--All cases...........................................             905             9.8          23,565
MS-DRG 904--Cases with principal diagnosis of toxic effect and                 8             6.4          22,624
 secondary diagnosis of corrosive burn..........................
MS-DRG 905--All cases...........................................             263             4.9          13,291
MS-DRG 905--Cases with principal diagnosis of toxic effect and                 2             2.5           7,682
 secondary diagnosis of corrosive burn..........................
MS-DRG 906--All cases...........................................             458             4.8          13,555
MS-DRG 906--Cases with principal diagnosis of toxic effect and                 1               5           7,409
 secondary diagnosis of corrosive burn..........................
MS-DRG 917--All cases...........................................          31,730             4.8          10,280
MS-DRG 917--Cases with principal diagnosis of toxic effect and                 6             4.8           7,336
 secondary diagnosis of corrosive burn..........................
MS-DRG 918--All cases...........................................          19,819               3           5,529
MS-DRG 918--Cases with principal diagnosis of toxic effect and                28             3.5           5,643
 secondary diagnosis of corrosive burn..........................
----------------------------------------------------------------------------------------------------------------

    As shown in this table, there were a total of 55 cases with a 
principal diagnosis of toxic effect and a secondary diagnosis of 
corrosive burn across MS-DRGs 901, 902, 903, 904, 905, 917, and 918. 
When comparing this subset of codes relative to those of each MS-DRG as 
a whole, we noted that, in most of these MS-DRGs, the average costs and 
average length of stay for this subset of cases were roughly equivalent 
to or lower than the average costs and average length of stay for cases 
in the MS-DRG as a whole, while in one case, they were higher. As we 
have noted in prior rulemaking (77 FR 53309) and elsewhere in the 
proposed rule and this final rule, it is a fundamental principle of an 
averaged payment system that half of the procedures in a group will 
have above average costs. It is expected that there will be higher cost 
and lower cost subsets, especially when a subset has low numbers. We 
stated in the proposed rule that the results of this analysis indicate 
that these cases are appropriately placed within their current MDC.
    Our clinical advisors reviewed this request and indicated that 
patients with a principal diagnosis of toxic effect and a secondary 
diagnosis of corrosive burn have been exposed to an irritant or 
corrosive substance and, therefore, are clinically similar to those 
patients in MDC 21. Furthermore, our clinical advisors did not believe 
that the size of this subset of cases justifies the significant changes 
to the GROUPER logic that would be required to address the commenter's 
request, which would involve rerouting cases when the primary and 
secondary diagnoses are in different MDCs.

                                                  MDC 22 Burns
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
All cases with principal diagnosis of corrosive burn--Across all              60             8.5         $19,456
 MS-DRGs........................................................
MS-DRG 927--All cases...........................................             159            28.1         128,960
MS-DRG 927--Cases with principal diagnosis of corrosive burn....               1              41          75,985
MS-DRG 928--All cases...........................................           1,021            15.1          42,868
MS-DRG 928--Cases with principal diagnosis of corrosive burn....              13            13.2          31,118
MS-DRG 929--All cases...........................................             295             7.9          21,600
MS-DRG 929--Cases with principal diagnosis of corrosive burn....               4            12.5          18,527
MS-DRG 933--All cases...........................................             121             4.6          21,291
MS-DRG 933--Cases with principal diagnosis of corrosive burn....               1               7          91,779
MS-DRG 934--All cases...........................................             503             6.1          13,286
MS-DRG 934--Cases with principal diagnosis of corrosive burn....              11             5.8          13,280
MS-DRG 935--All cases...........................................           1,705             5.2          13,065
MS-DRG 935--Cases with principal diagnosis of corrosive burn....              29               5           9,822
----------------------------------------------------------------------------------------------------------------

    To address the request of reassigning cases with a principal 
diagnosis of toxic effect and secondary diagnosis of corrosive burn, we 
reviewed the data for all cases in MS-DRGs 927, 928, 929, 933, 934, and 
935 and those cases reporting a principal diagnosis of corrosive burn. 
We found a total of 60 cases reporting a principal diagnosis of 
corrosive burn, with an average length of stay of 8.5 days and average 
costs of $19,456. We stated in the proposed rule that our clinical 
advisors believe that these cases reporting a principal diagnosis of 
corrosive burn are appropriately placed in MDC 22 as they are 
clinically aligned with other patients in this MDC. We further stated 
that, in

[[Page 41220]]

summary, the results of our claims data analysis and the advice from 
our clinical advisors do not support reassigning cases in MS-DRGs 901, 
902, 903, 904, 905, 917, and 918 reporting a principal diagnosis of 
toxic effect and a secondary diagnosis of corrosive burn to MS-DRGs 
927, 928, 929, 933, 934 and 935. Therefore, we did not propose to 
reassign these cases.
    Comment: One commenter supported the proposal to maintain the 
current MS-DRG structure for cases reporting a principal diagnosis of 
toxic effect (ICD-10-CM codes T51 through T65) and a secondary 
diagnosis of corrosive burn (ICD-10-CM codes T21.40 through T21.79). 
Another commenter suggested that the 60 identified cases that CMS used 
in its analysis were incorrectly coded. The commenter noted that ICD-
10-CM coding guidelines under each code for corrosion burn state ``Code 
first (T51-T65) to identify chemical and intent.'' The commenter stated 
that corrosive burns cannot be sequenced as the principal diagnosis 
because the coding guidelines must be followed. The commenter stated 
that the toxic effect codes T51-T65 must be sequenced first, which 
causes these cases to group to MS-DRGs 901 through 905 and 917 and 918 
instead of the more appropriate burn MS-DRGs. The commenter stated that 
it appears that when codes T51-T65 are the principal diagnosis, the 
cases group to MDC 21 (Injuries, Poisoning. and Toxic Effects of 
Drugs), and then to MS-DRGs 901 through 905 and 917 and 918.
    Response: We appreciate the commenter's support. With regard to the 
commenter who raised concerns about the coding guidelines and display 
of codes in the ICD-10 MS-DRG Definitions Manual, we note that the 
GROUPER logic was not designed to account for coding guidelines. With 
regard to the display of code lists in the ICD-10 MS-DRG Definitions 
Manual, the MS-DRG logic must specifically require a condition to group 
based on whether it is reported as a principal diagnosis or a secondary 
diagnosis and consider any procedures that are reported in order to 
affect the MS-DRG assignment. However, as stated previously, the 
GROUPER logic is not dependent on coding guidelines. The purpose of the 
GROUPER is to group cases into particular MS-DRGs. We recognize that, 
over time, the desire to create or modify existing GROUPER logic in 
response to coding guidelines has become more common. As we continue 
our efforts to refine the ICD-10 MS-DRGs, we will consider alternate 
approaches to ensure the integrity of both the GROUPER logic and coding 
guidelines. Based on the data available at this time, we do not believe 
that it is appropriate to change the MS-DRG assignment for the 
procedures identifying corrosive burns identified earlier.
    After consideration of the public comments we received, we are 
finalizing our proposal to maintain the current MS-DRG structure for 
cases reporting a principal diagnosis of toxic effect (ICD-10-CM codes 
T51 through T65) and a secondary diagnosis of corrosive burn (ICD-10-CM 
codes T21.40 through T21.79).
13. Changes to the Medicare Code Editor (MCE)
    The Medicare Code Editor (MCE) is a software program that detects 
and reports errors in the coding of Medicare claims data. Patient 
diagnoses, procedure(s), and demographic information are entered into 
the Medicare claims processing systems and are subjected to a series of 
automated screens. The MCE screens are designed to identify cases that 
require further review before classification into an MS-DRG.
    As discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38045), 
we made available the FY 2018 ICD-10 MCE Version 35 manual file. The 
link to this MCE manual file, along with the link to the mainframe and 
computer software for the MCE Version 35 (and ICD-10 MS-DRGs) are 
posted on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html through the FY 2018 
IPPS Final Rule Home Page.
    In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20229), we 
addressed the MCE requests we received by the November 1, 2017 
deadline. We also discussed the proposals we were making based on our 
internal review and analysis. In this FY 2019 IPPS/LTCH PPS final rule, 
we present a summation of the comments we received in response to the 
MCE requests and proposals presented based on internal reviews and 
analyses in the proposed rule, our responses to those comments, and our 
finalized policies.
    In addition, as a result of new and modified code updates approved 
after the annual spring ICD-10 Coordination and Maintenance Committee 
meeting, we routinely make changes to the MCE. In the past, in both the 
IPPS proposed and final rules, we only provided the list of changes to 
the MCE that were brought to our attention after the prior year's final 
rule. We historically have not listed the changes we have made to the 
MCE as a result of the new and modified codes approved after the annual 
spring ICD-10 Coordination and Maintenance Committee meeting. These 
changes are approved too late in the rulemaking schedule for inclusion 
in the proposed rule. Furthermore, although our MCE policies have been 
described in our proposed and final rules, we have not provided the 
detail of each new or modified diagnosis and procedure code edit in the 
final rule. However, we make available the finalized Definitions of 
Medicare Code Edits (MCE) file. Therefore, we are making available the 
FY 2019 ICD-10 MCE Version 36 Manual file, along with the link to the 
mainframe and computer software for the MCE Version 36 (and ICD-10 MS 
DRGs), on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.html.
a. Age Conflict Edit
    In the MCE, the Age Conflict edit exists to detect inconsistencies 
between a patient's age and any diagnosis on the patient's record; for 
example, a 5-year-old patient with benign prostatic hypertrophy or a 
78-year-old patient coded with a delivery. In these cases, the 
diagnosis is clinically and virtually impossible for a patient of the 
stated age. Therefore, either the diagnosis or the age is presumed to 
be incorrect. Currently, in the MCE, the following four age diagnosis 
categories appear under the Age Conflict edit and are listed in the 
manual and written in the software program:
     Perinatal/Newborn--Age of 0 years only; a subset of 
diagnoses which will only occur during the perinatal or newborn period 
of age 0 (for example, tetanus neonatorum, health examination for 
newborn under 8 days old).
     Pediatric--Age is 0-17 years inclusive (for example, 
Reye's syndrome, routine child health exam).
     Maternity--Age range is 12-55 years inclusive (for 
example, diabetes in pregnancy, antepartum pulmonary complication).
     Adult--Age range is 15-124 years inclusive (for example, 
senile delirium, mature cataract).
(1) Perinatal/Newborn Diagnoses Category
    Under the ICD-10 MCE, the Perinatal/Newborn Diagnoses category 
under the Age Conflict edit considers the age of 0 years only; a subset 
of diagnoses which will only occur during the perinatal or newborn 
period of age 0 to be inclusive. This includes conditions that have 
their origin in the fetal or perinatal period (before birth through the 
first 28 days

[[Page 41221]]

after birth) even if morbidity occurs later. For that reason, the 
diagnosis codes on this Age Conflict edit list would be expected to 
apply to conditions or disorders specific to that age group only.
    In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20229), we 
indicated that, in the ICD-10-CM classification, there are 14 diagnosis 
codes that describe specific suspected conditions that have been 
evaluated and ruled out during the newborn period and are currently not 
on the Perinatal/Newborn Diagnoses Category edit code list. We 
consulted with staff at the Centers for Disease Control's (CDC's) 
National Center for Health Statistics (NCHS) because NCHS has the lead 
responsibility for the ICD-10-CM diagnosis codes. The NCHS' staff 
confirmed that the following diagnosis codes are appropriate to add to 
the edit code list for the Perinatal/Newborn Diagnoses Category.

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
Z05.0.....................  Observation and evaluation of newborn for
                             suspected cardiac condition ruled out.
Z05.1.....................  Observation and evaluation of newborn for
                             suspected infectious condition ruled out.
Z05.2.....................  Observation and evaluation of newborn for
                             suspected neurological condition ruled out.
Z05.3.....................  Observation and evaluation of newborn for
                             suspected respiratory condition ruled out.
Z05.41....................  Observation and evaluation of newborn for
                             suspected genetic condition ruled out.
Z05.42....................  Observation and evaluation of newborn for
                             suspected metabolic condition ruled out.
Z05.43....................  Observation and evaluation of newborn for
                             suspected immunologic condition ruled out.
Z05.5.....................  Observation and evaluation of newborn for
                             suspected gastrointestinal condition ruled
                             out.
Z05.6.....................  Observation and evaluation of newborn for
                             suspected genitourinary condition ruled
                             out.
Z05.71....................  Observation and evaluation of newborn for
                             suspected skin and subcutaneous tissue
                             condition ruled out.
Z05.72....................  Observation and evaluation of newborn for
                             suspected musculoskeletal condition ruled
                             out.
Z05.73....................  Observation and evaluation of newborn for
                             suspected connective tissue condition ruled
                             out.
Z05.8.....................  Observation and evaluation of newborn for
                             other specified suspected condition ruled
                             out.
Z05.9.....................  Observation and evaluation of newborn for
                             unspecified suspected condition ruled out.
------------------------------------------------------------------------

    Therefore, we proposed to add the ICD-10-CM diagnosis codes listed 
in the table above to the Age Conflict edit under the Perinatal/Newborn 
Diagnoses Category edit code list. We also proposed to continue to 
include the existing diagnosis codes currently listed under the 
Perinatal/Newborn Diagnoses Category edit code list.
    Comment: Commenters agreed with CMS' proposal to add the diagnosis 
codes listed in the table above to the Age Conflict edit under the 
Perinatal/Newborn Diagnoses Category edit code list.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to add the ICD-10-CM diagnosis codes listed in 
the table above to the Age Conflict edit under the Perinatal/Newborn 
Diagnoses Category edit code list. We also are finalizing our proposal 
to continue to include the existing list of codes on the Perinatal/
Newborn Diagnoses Category edit code list under the ICD-10 MCE Version 
36, effective October 1, 2018.
(2) Pediatric Diagnoses Category
    Under the ICD-10 MCE, the Pediatric Diagnoses Category for the Age 
Conflict edit considers the age range of 0 to 17 years inclusive. For 
that reason, the diagnosis codes on this Age Conflict edit list would 
be expected to apply to conditions or disorders specific to that age 
group only.
    As discussed in section II.F.15. of the preamble of the proposed 
rule, Table 6C.--Invalid Diagnosis Codes associated with the proposed 
rule and this final (which is available via the internet on the CMS 
website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) lists the diagnoses that will no 
longer be effective as of October 1, 2018. Included in this table is an 
ICD-10-CM diagnosis code currently listed on the Pediatric Diagnoses 
Category edit code list, ICD-10-CM diagnosis code Z13.4 (Encounter for 
screening for certain developmental disorders in childhood). In the FY 
2019 IPPS/LTCH PPS proposed rule (83 FR 20230), we proposed to remove 
this code from the Pediatric Diagnoses Category edit code list. We also 
proposed to continue to include the other existing diagnosis codes 
currently listed under the Pediatric Diagnoses Category edit code list.
    Comment: Commenters agreed with the proposal to remove ICD-10-CM 
diagnosis code Z13.4 from the Pediatric Diagnoses Category edit code 
list because this code will no longer be effective as of October 1, 
2018.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to remove ICD-10-CM diagnosis code Z13.4 from 
the Pediatric Diagnoses Category edit code list. We also are finalizing 
our proposal to maintain the other existing codes on the Pediatric 
Diagnoses Category edit code list under the ICD-10 MCE Version 36, 
effective October 1, 2018.
(3) Maternity Diagnoses
    Under the ICD-10 MCE, the Maternity Diagnoses Category for the Age 
Conflict edit considers the age range of 12 to 55 years inclusive. For 
that reason, the diagnosis codes on this Age Conflict edit list would 
be expected to apply to conditions or disorders specific to that age 
group only.
    As discussed in section II.F.15. of the preamble of the proposed 
rule, Table 6A.--New Diagnosis Codes associated with the proposed rule 
(which is available via the internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) listed the new diagnoses codes that had 
been approved to date, which will be effective with discharges 
occurring on and after October 1, 2018. The following table lists the 
new ICD-10-CM diagnosis codes included in Table 6A associated with 
pregnancy and maternal care that we stated we believe are appropriate 
to add to the Maternity Diagnoses Category edit code list under the Age 
Conflict edit. Therefore, in the proposed rule, we proposed to add 
these codes to the Maternity Diagnoses Category edit code list under 
the Age Conflict edit.

[[Page 41222]]



------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
F53.0.....................  Postpartum depression.
F53.1.....................  Puerperal psychosis.
O30.131...................  Triplet pregnancy, trichorionic/triamniotic,
                             first trimester.
O30.132...................  Triplet pregnancy, trichorionic/triamniotic,
                             second trimester.
O30.133...................  Triplet pregnancy, trichorionic/triamniotic,
                             third trimester.
O30.139...................  Triplet pregnancy, trichorionic/triamniotic,
                             unspecified trimester.
O30.231...................  Quadruplet pregnancy, quadrachorionic/quadra-
                             amniotic, first trimester.
O30.232...................  Quadruplet pregnancy, quadrachorionic/quadra-
                             amniotic, second trimester.
O30.233...................  Quadruplet pregnancy, quadrachorionic/quadra-
                             amniotic, third trimester.
O30.239...................  Quadruplet pregnancy, quadrachorionic/quadra-
                             amniotic, unspecified trimester.
O30.831...................  Other specified multiple gestation, number
                             of chorions and amnions are both equal to
                             the number of fetuses, first trimester.
O30.832...................  Other specified multiple gestation, number
                             of chorions and amnions are both equal to
                             the number of fetuses, second trimester.
O30.833...................  Other specified multiple gestation, number
                             of chorions and amnions are both equal to
                             the number of fetuses, third trimester.
O30.839...................  Other specified multiple gestation, number
                             of chorions and amnions are both equal to
                             the number of fetuses, unspecified
                             trimester.
O86.00....................  Infection of obstetric surgical wound,
                             unspecified.
O86.01....................  Infection of obstetric surgical wound,
                             superficial incisional site.
O86.02....................  Infection of obstetric surgical wound, deep
                             incisional site.
O86.03....................  Infection of obstetric surgical wound, organ
                             and space site.
O86.04....................  Sepsis following an obstetrical procedure.
O86.09....................  Infection of obstetric surgical wound, other
                             surgical site.
------------------------------------------------------------------------

    In addition, as discussed in section II.F.15. of the preamble of 
the proposed rule, Table 6C.--Invalid Diagnosis Codes associated with 
the proposed rule (which is available via the internet on the CMS 
website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) listed the diagnosis codes that 
will no longer be effective as of October 1, 2018. Included in this 
table are two ICD-10-CM diagnosis codes currently listed on the 
Maternity Diagnoses Category edit code list: ICD-10-CM diagnosis codes 
F53 (Puerperal psychosis) and O86.0 (Infection of obstetric surgical 
wound). In the proposed rule, we proposed to remove these codes from 
the Maternity Diagnoses Category Edit code list. We also proposed to 
continue to include the other existing diagnosis codes currently listed 
under the Maternity Diagnoses Category edit code list.
    Comment: Commenters agreed with the proposal to add the diagnosis 
codes listed in the table above to the Maternity Diagnoses Category 
edit code list. Commenters also agreed with the proposal to remove ICD-
10-CM diagnosis codes F53 and O86.0 from the Maternity Diagnoses 
Category edit code list.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to add the diagnosis codes listed in the table 
above to the Maternity Diagnoses Category edit code list and our 
proposal to remove ICD-10-CM diagnosis codes F53 and O86.0 from the 
Maternity Diagnoses Category edit code list. We also are finalizing our 
proposal to maintain the other existing codes on the Maternity 
Diagnoses Category edit code list under the ICD-10 MCE Version 36, 
effective October 1, 2018.
b. Sex Conflict Edit
    In the MCE, the Sex Conflict edit detects inconsistencies between a 
patient's sex and any diagnosis or procedure on the patient's record; 
for example, a male patient with cervical cancer (diagnosis) or a 
female patient with a prostatectomy (procedure). In both instances, the 
indicated diagnosis or the procedure conflicts with the stated sex of 
the patient. Therefore, the patient's diagnosis, procedure, or sex is 
presumed to be incorrect.
(1) Diagnoses for Females Only Edit
    In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20231), we 
indicated that we received a request to consider the addition of the 
following ICD-10-CM diagnosis codes to the list for the Diagnoses for 
Females Only edit.

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
Z30.015...................  Encounter for initial prescription of
                             vaginal ring hormonal contraceptive.
Z31.7.....................  Encounter for procreative management and
                             counseling for gestational carrier.
Z98.891...................  History of uterine scar from previous
                             surgery.
------------------------------------------------------------------------

    The requestor noted that, currently, ICD-10-CM diagnosis code 
Z30.44 (Encounter for surveillance of vaginal ring hormonal 
contraceptive device) is on the Diagnoses for Females Only edit code 
list and suggested that ICD-10-CM diagnosis code Z30.015, which also 
describes an encounter involving a vaginal ring hormonal contraceptive, 
be added to the Diagnoses for Females Only edit code list as well. In 
addition, the requestor suggested that ICD-10-CM diagnosis codes Z31.7 
and Z98.891 be added to the Diagnoses for Females Only edit code list.
    We reviewed ICD-10-CM diagnosis codes Z30.015, Z31.7, and Z98.891, 
and we agreed with the requestor that it is clinically appropriate to 
add these three ICD-10-CM diagnosis codes to the Diagnoses for Females 
Only edit code list because the conditions described by these codes are 
specific to and consistent with the female sex.
    In addition, as discussed in section II.F.15. of the preamble of 
the proposed rule, Table 6A.--New Diagnosis Codes associated with the 
proposed rule (which is available via the internet on the CMS website 
at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) listed

[[Page 41223]]

the new diagnosis codes that had been approved to date, which will be 
effective with discharges occurring on and after October 1, 2018. The 
following table lists the new diagnosis codes that are associated with 
conditions consistent with the female sex. We proposed to add these 
ICD-10-CM diagnosis codes to the Diagnoses for Females Only edit code 
list under the Sex Conflict edit.

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
F53.0.....................  Postpartum depression.
F53.1.....................  Puerperal psychosis.
N35.82....................  Other urethral stricture, female.
N35.92....................  Unspecified urethral stricture, female.
O30.131...................  Triplet pregnancy, trichorionic/triamniotic,
                             first trimester.
O30.132...................  Triplet pregnancy, trichorionic/triamniotic,
                             second trimester.
O30.133...................  Triplet pregnancy, trichorionic/triamniotic,
                             third trimester.
O30.139...................  Triplet pregnancy, trichorionic/triamniotic,
                             unspecified trimester.
O30.231...................  Quadruplet pregnancy, quadrachorionic/quadra-
                             amniotic, first trimester.
O30.232...................  Quadruplet pregnancy, quadrachorionic/quadra-
                             amniotic, second trimester.
O30.233...................  Quadruplet pregnancy, quadrachorionic/quadra-
                             amniotic, third trimester.
O30.239...................  Quadruplet pregnancy, quadrachorionic/quadra-
                             amniotic, unspecified trimester.
O30.831...................  Other specified multiple gestation, number
                             of chorions and amnions are both equal to
                             the number of fetuses, first trimester.
O30.832...................  Other specified multiple gestation, number
                             of chorions and amnions are both equal to
                             the number of fetuses, second trimester.
O30.833...................  Other specified multiple gestation, number
                             of chorions and amnions are both equal to
                             the number of fetuses, third trimester.
O30.839...................  Other specified multiple gestation, number
                             of chorions and amnions are both equal to
                             the number of fetuses, unspecified
                             trimester.
O86.00....................  Infection of obstetric surgical wound,
                             unspecified.
O86.01....................  Infection of obstetric surgical wound,
                             superficial incisional site.
O86.02....................  Infection of obstetric surgical wound, deep
                             incisional site.
O86.03....................  Infection of obstetric surgical wound, organ
                             and space site.
O86.04....................  Sepsis following an obstetrical procedure.
O86.09....................  Infection of obstetric surgical wound, other
                             surgical site.
Q51.20....................  Other doubling of uterus, unspecified.
Q51.21....................  Other complete doubling of uterus.
Q51.22....................  Other partial doubling of uterus.
Q51.28....................  Other doubling of uterus, other specified.
Z13.32....................  Encounter for screening for maternal
                             depression.
------------------------------------------------------------------------

    Comment: Commenters supported the proposals to add ICD-10-CM 
diagnosis codes Z30.015, Z31.7 and Z98.891 and the ICD-10-CM diagnosis 
codes listed in the table above to the Diagnoses for Females Only edit 
code list.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposals to add ICD-10-CM diagnosis codes Z30.015, 
Z31.7 and Z98.891 and the ICD-10-CM diagnosis codes listed in the table 
above to the Diagnoses for Females Only edit code list under the ICD-10 
MCE Version 36, effective October 1, 2018.
    In addition, as discussed in section II.F.15. of the preamble of 
the proposed rule, Table 6C.--Invalid Diagnosis Codes associated with 
the proposed rule (which is available via the internet on the CMS 
website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) listed the diagnosis codes that 
are no longer effective as of October 1, 2018. Included in this table 
were the following three ICD-10-CM diagnosis codes currently listed on 
the Diagnoses for Females Only edit code list.

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
F53.......................  Puerperal psychosis.
O86.0.....................  Infection of obstetric surgical wound.
Q51.2.....................  Other doubling of uterus, unspecified.
------------------------------------------------------------------------

    Because these three ICD-10-CM diagnosis codes will no longer be 
effective as of October 1, 2018, we proposed to remove them from the 
Diagnoses for Females Only edit code list under the Sex Conflict edit.
    Comment: Commenters supported the proposal to remove ICD-10-CM 
diagnosis codes F53, O86.0, and Q51.2, from the Diagnoses for Females 
Only edit code list, as they are no longer valid effective October 1, 
2018. One commenter also noted that there were typographical errors in 
the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20232) for diagnosis 
codes O86.0 and Q51.2, where an extra zero was inadvertently included 
as a fifth digit.
    Response: We appreciate the commenters' support. We agree with the 
commenter that there were typographical errors in the FY 2019 IPPS/LTCH 
PPS proposed rule (83 FR 20232) for diagnosis codes O86.0 and Q51.2, 
where an extra zero was inadvertently included as a fifth digit, and 
have corrected these errors in the table presented in this final rule 
preamble.
    After consideration of the public comments we received, we are 
finalizing our proposal to remove ICD-10-CM diagnosis codes F53, O86.0, 
and Q51.2, from the Diagnoses for Females Only edit code list under the 
ICD-10 MCE Version 36, effective October 1, 2018.

[[Page 41224]]

(2) Procedures for Females Only Edit
    As discussed in section II.F.15. of the preamble of the FY 2019 
IPPS/LTCH PPS proposed rule, Table 6B.--New Procedure Codes associated 
with the proposed rule (which is available via the internet on the CMS 
website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) listed the procedure codes that 
had been approved to date, which will be effective with discharges 
occurring on and after October 1, 2018. In the proposed rule, we 
proposed to add the three ICD-10-PCS procedure codes in the following 
table describing procedures associated with the female sex to the 
Procedures for Females Only edit code list.

------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
0UY90Z0...................  Transplantation of uterus, allogeneic, open
                             approach.
0UY90Z1...................  Transplantation of uterus, syngeneic, open
                             approach.
0UY90Z2...................  Transplantation of uterus, zooplastic, open
                             approach.
------------------------------------------------------------------------

    We also proposed to continue to include the existing procedure 
codes currently listed under the Procedures for Females Only edit code 
list.
    Comment: Commenters supported the proposal to add ICD-10-PCS 
procedure codes 0UY90Z0, 0UY90Z1 and 0UY90Z2 to the Procedures for 
Females Only edit code list.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to add ICD-10-PCS procedure codes 0UY90Z0, 
0UY90Z1 and 0UY90Z2 to the Procedures for Females Only edit code list. 
We also are finalizing our proposal to maintain the existing list of 
codes on the Procedures for Females Only edit code list under the ICD-
10 MCE Version 36, effective October 1, 2018.
(3) Diagnoses for Males Only Edit
    As discussed in section II.F.15. of the preamble of the proposed 
rule, Table 6A.--New Diagnosis Codes associated with the proposed rule 
(which is available via the internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) listed the new diagnosis codes that had 
been approved to date, which will be effective with discharges 
occurring on and after October 1, 2018. The following table lists the 
new diagnosis codes that are associated with conditions consistent with 
the male sex. In the proposed rule, we proposed to add these ICD-10-CM 
diagnosis codes to the Diagnoses for Males Only edit code list under 
the Sex Conflict edit.

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
N35.016...................  Post-traumatic urethral stricture, male,
                             overlapping sites.
N35.116...................  Postinfective urethral stricture, not
                             elsewhere classified, male, overlapping
                             sites.
N35.811...................  Other urethral stricture, male, meatal.
N35.812...................  Other urethral bulbous stricture, male.
N35.813...................  Other membranous urethral stricture, male.
N35.814...................  Other anterior urethral stricture, male,
                             anterior.
N35.816...................  Other urethral stricture, male, overlapping
                             sites.
N35.819...................  Other urethral stricture, male, unspecified
                             site.
N35.911...................  Unspecified urethral stricture, male,
                             meatal.
N35.912...................  Unspecified bulbous urethral stricture,
                             male.
N35.913...................  Unspecified membranous urethral stricture,
                             male.
N35.914...................  Unspecified anterior urethral stricture,
                             male.
N35.916...................  Unspecified urethral stricture, male,
                             overlapping sites.
N35.919...................  Unspecified urethral stricture, male,
                             unspecified site.
N99.116...................  Postprocedural urethral stricture, male,
                             overlapping sites.
R93.811...................  Abnormal radiologic findings on diagnostic
                             imaging of right testicle.
R93.812...................  Abnormal radiologic findings on diagnostic
                             imaging of left testicle.
R93.813...................  Abnormal radiologic findings on diagnostic
                             imaging of testicles, bilateral.
R93.819...................  Abnormal radiologic findings on diagnostic
                             imaging of unspecified testicle.
------------------------------------------------------------------------

    We also proposed to continue to include the existing diagnosis 
codes currently listed under the Diagnoses for Males Only edit code 
list.
    Comment: Commenters supported the proposal to add the ICD-10-CM 
diagnosis codes listed in the table above to the Diagnoses for Males 
Only edit code list.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to add the ICD-10-CM diagnosis codes listed in 
the table above to the Diagnoses for Males Only edit code list. We also 
are finalizing our proposal to maintain the existing list of codes on 
the Diagnoses for Males Only edit code list under the ICD-10 MCE 
Version 36, effective October 1, 2018.
c. Manifestation Code as Principal Diagnosis Edit
    In the ICD-10-CM classification system, manifestation codes 
describe the manifestation of an underlying disease, not the disease 
itself and, therefore, should not be used as a principal diagnosis.
    In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20232), we noted 
that, as discussed in section II.F.15. of the preamble of the proposed 
rule, Table 6A.--New Diagnosis Codes associated with the proposed rule 
(which is available via the internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) listed the new diagnosis codes that had 
been approved to date which will be effective with discharges

[[Page 41225]]

occurring on and after October 1, 2018. Included in this table are ICD-
10-CM diagnosis codes K82.A1 (Gangrene of gallbladder in cholecystitis) 
and K82.A2 (Perforation of gallbladder in cholecystitis). We proposed 
to add these two ICD-10-CM diagnosis codes to the Manifestation Code as 
Principal Diagnosis edit code list because the type of cholecystitis 
would be required to be reported first. We also proposed to continue to 
include the existing diagnosis codes currently listed under the 
Manifestation Code as Principal Diagnosis edit code list. We invited 
public comments on our proposals.
    Comment: Commenters supported the proposal to add ICD-10-CM 
diagnosis codes K82.A1 and K82.A2 to the Manifestation Code as 
Principal Diagnosis edit code list and to continue to include the 
existing diagnosis codes currently listed under the Manifestation Code 
as Principal Diagnosis edit code list.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to add ICD-10-CM diagnosis codes K82.A1 and 
K82.A2 to the Manifestation Code as Principal Diagnosis edit code list 
and to continue to include the existing diagnosis codes currently 
listed under the Manifestation Code as Principal Diagnosis edit code 
list under the ICD-10 MCE Version 36, effective October 1, 2018.
d. Questionable Admission Edit
    In the MCE, some diagnoses are not usually sufficient justification 
for admission to an acute care hospital. For example, if a patient is 
assigned ICD-10-CM diagnosis code R03.0 (Elevated blood pressure 
reading, without diagnosis of hypertension), the patient would have a 
questionable admission because an elevated blood pressure reading is 
not normally sufficient justification for admission to a hospital.
    In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20233), we noted 
that, as discussed in section II.F.10. of the preamble of the proposed 
rule, we were proposing several modifications to the MS-DRGs under MDC 
14 (Pregnancy, Childbirth and the Puerperium). We stated in the 
proposed rule that one aspect of these proposed modifications involves 
the GROUPER logic for the cesarean section and vaginal delivery MS-
DRGs. We referred readers to section II.F.10. of the preamble of the 
proposed rule for a detailed discussion of the proposals regarding 
these MS-DRG modifications under MDC 14 and the relation to the MCE.
    If a patient presents to the hospital and either a cesarean section 
or a vaginal delivery occurs, it is expected that, in addition to the 
specific type of delivery code, an outcome of delivery code is also 
assigned and reported on the claim. The outcome of delivery codes are 
ICD-10-CM diagnosis codes that are to be reported as secondary 
diagnoses as instructed in Section I.C.15.b.5 of the ICD-10-CM Official 
Guidelines for Coding and Reporting which states: ``A code from 
category Z37, Outcome of delivery, should be included on every maternal 
record when a delivery has occurred. These codes are not to be used on 
subsequent records or on the newborn record.'' Therefore, to encourage 
accurate coding and appropriate MS-DRG assignment in alignment with the 
proposed modifications to the delivery MS-DRGs, we proposed to create a 
new ``Questionable Obstetric Admission Edit'' under the Questionable 
Admission edit to read as follows:

``b. Questionable obstetric admission

ICD-10-PCS procedure codes describing a cesarean section or vaginal 
delivery are considered to be a questionable admission except when 
reported with a corresponding secondary diagnosis code describing 
the outcome of delivery.

Procedure code list for cesarean section

10D00Z0 Extraction of Products of Conception, High, Open Approach
10D00Z1 Extraction of Products of Conception, Low, Open Approach
10D00Z2 Extraction of Products of Conception, Extraperitoneal, Open 
Approach

Procedure code list for vaginal delivery

10D07Z3 Extraction of Products of Conception, Low Forceps, Via 
Natural or Artificial Opening
10D07Z4 Extraction of Products of Conception, Mid Forceps, Via 
Natural or Artificial Opening
10D07Z5 Extraction of Products of Conception, High Forceps, Via 
Natural or Artificial Opening
10D07Z6 Extraction of Products of Conception, Vacuum, Via Natural or 
Artificial Opening
10D07Z7 Extraction of Products of Conception, Internal Version, Via 
Natural or Artificial Opening
10D07Z8 Extraction of Products of Conception, Other, Via Natural or 
Artificial Opening
10D17Z9 Manual Extraction of Products of Conception, Retained, Via 
Natural or Artificial Opening
10D18Z9 Manual Extraction of Products of Conception, Retained, Via 
Natural or Artificial Opening Endoscopic
10E0XZZ Delivery of Products of Conception, External Approach

Secondary diagnosis code list for outcome of delivery

Z37.0 Single live birth
Z37.1 Single stillbirth
Z37.2 Twins, both liveborn
Z37.3 Twins, one liveborn and one stillborn
Z37.4 Twins, both stillborn
Z37.50 Multiple births, unspecified, all liveborn
Z37.51 Triplets, all liveborn
Z37.52 Quadruplets, all liveborn
Z37.53 Quintuplets, all liveborn
Z37.54 Sextuplets, all liveborn
Z37.59 Other multiple births, all liveborn
Z37.60 Multiple births, unspecified, some liveborn
Z37.61 Triplets, some liveborn
Z37.62 Quadruplets, some liveborn
Z37.63 Quintuplets, some liveborn
Z37.64 Sextuplets, some liveborn
Z37.69 Other multiple births, some liveborn
Z37.7 Other multiple births, all stillborn
Z37.9 Outcome of delivery, unspecified''

    We proposed that the three ICD-10-PCS procedure codes listed in the 
following table would be used to establish the list of codes for the 
proposed Questionable Obstetric Admission edit logic for cesarean 
section.

   ICD-10-PCS Procedure Codes for Cesarean Section Under the Proposed
       Questionable Obstetric Admission Edit Code List in the MCE
------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
10D00Z0...................  Extraction of products of conception, high,
                             open approach.
10D00Z1...................  Extraction of products of conception, low,
                             open approach.
10D00Z2...................  Extraction of products of conception,
                             extraperitoneal, open approach.
------------------------------------------------------------------------

    We proposed that the nine ICD-10-PCS procedure codes listed in the 
following table would be used to establish the list of codes for the 
proposed new Questionable Obstetric

[[Page 41226]]

Admission edit logic for vaginal delivery.

   ICD-10-PCS Procedure Codes for Vaginal Delivery Under the Proposed
       Questionable Obstetric Admission Edit Code List in the MCE
------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
10D07Z3...................  Extraction of products of conception, low
                             forceps, via natural or artificial opening.
10D07Z4...................  Extraction of products of conception, mid
                             forceps, via natural or artificial opening.
10D07Z5...................  Extraction of products of conception, high
                             forceps, via natural or artificial opening.
10D07Z6...................  Extraction of products of conception,
                             vacuum, via natural or artificial opening.
10D07Z7...................  Extraction of products of conception,
                             internal version, via natural or artificial
                             opening.
10D07Z8...................  Extraction of products of conception, other,
                             via natural or artificial opening.
10D17Z9...................  Manual extraction of products of conception,
                             retained, via natural or artificial
                             opening.
10D18Z9...................  Manual extraction of products of conception,
                             retained, via natural or artificial
                             opening.
10E0XZZ...................  Delivery of products of conception, external
                             approach.
------------------------------------------------------------------------

    We proposed that the 19 ICD-10-CM diagnosis codes listed in the 
following table would be used to establish the list of secondary 
diagnosis codes for the proposed new Questionable Obstetric Admission 
edit logic for outcome of delivery.

  ICD-10-CM Secondary Diagnosis Codes for Outcome of Delivery Under the
   Proposed Questionable Obstetric Admission Edit Code List in the MCE
------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
Z37.0.....................  Single live birth.
Z37.1.....................  Single stillbirth.
Z37.2.....................  Twins, both liveborn.
Z37.3.....................  Twins, one liveborn and one stillborn.
Z37.4.....................  Twins, both stillborn.
Z37.50....................  Multiple births, unspecified, all liveborn.
Z37.51....................  Triplets, all liveborn.
Z37.52....................  Quadruplets, all liveborn.
Z37.53....................  Quintuplets, all liveborn.
Z37.54....................  Sextuplets, all liveborn.
Z37.59....................  Other multiple births, all liveborn.
Z37.60....................  Multiple births, unspecified, some liveborn.
Z37.61....................  Triplets, some liveborn.
Z37.62....................  Quadruplets, some liveborn.
Z37.63....................  Quintuplets, some liveborn.
Z37.64....................  Sextuplets, some liveborn.
Z37.69....................  Other multiple births, some liveborn.
Z37.7.....................  Other multiple births, all liveborn.
Z37.9.....................  Outcome of delivery, unspecified.
------------------------------------------------------------------------

    Comment: Commenters supported creating the new Questionable 
Obstetric Admission edit. Commenters also supported the list of 
diagnoses and procedure codes that we proposed to include for the 
proposed new edit. However, a few commenters expressed concern with 
several of the procedure codes that were proposed for inclusion under 
the vaginal delivery procedure code list. Specifically, the commenters 
identified that ICD-10-PCS procedure codes 10D17Z9 and 10D18Z9 may be 
reported for other clinical indications, in the absence of an outcome 
of delivery diagnosis code. Therefore, the commenter stated that the 
edit would be triggered erroneously for those case scenarios.
    Response: We appreciate the commenters' support. We reviewed the 
procedure codes for which the commenters expressed concern under the 
vaginal delivery procedure code list (ICD-10-PCS procedure codes 
10D17Z9 and 10D18Z9) and agree that there may be instances in which the 
procedure codes could be reported in the absence of an outcome of 
delivery diagnosis code. Therefore, we believe it is appropriate to 
remove these two procedure codes from the vaginal delivery procedure 
code list for the edit. In addition, we reviewed ICD-10-PCS procedure 
codes 10D07Z6 and 10D07Z8 and believe the procedures could potentially 
be performed for other clinical indications, in the absence of an 
outcome of delivery code, and erroneously trigger the proposed edit if 
reported.
    After consideration of the public comments we received, we are 
finalizing our proposal to create the new Questionable Obstetric 
Admission edit. We also are finalizing our proposal to include ICD-10-
PCS procedure codes 10D00Z0, 10D00Z1, and 10D00Z2 listed above for the 
``Procedure code list for cesarean section'' portion of the edit. We 
are finalizing our proposal to include the procedure codes listed above 
for vaginal delivery with modifications. Specifically, we are not 
including ICD-10-PCS procedure codes 10D07Z6, 10D07Z87, 10D17Z9 and 
10D18Z9 in the ``Procedure code list for vaginal delivery'' portion of 
the edit and finalizing the inclusion of the remaining

[[Page 41227]]

procedure codes listed above. In addition, we are finalizing our 
proposal to include the diagnosis codes listed above under the 
``Secondary diagnosis code list for outcome of delivery'' portion of 
the edit. We are finalizing these changes as described above under the 
ICD-10 MCE Version 36, effective October 1, 2018.
e. Unacceptable Principal Diagnosis Edit
    In the MCE, there are select codes that describe a circumstance 
which influences an individual's health status, but does not actually 
describe a current illness or injury. There also are codes that are not 
specific manifestations, but may be due to an underlying cause. These 
codes are considered unacceptable as a principal diagnosis. In limited 
situations, there are a few codes on the MCE Unacceptable Principal 
Diagnosis edit code list that are considered ``acceptable'' when a 
specified secondary diagnosis is also coded and reported on the claim.
    In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20234), we noted 
that, as discussed in section II.F.9. of the preamble of the proposed 
rule, ICD-10-CM diagnosis codes Z49.02 (Encounter for fitting and 
adjustment of peritoneal dialysis catheter), Z49.31 (Encounter for 
adequacy testing for hemodialysis), and Z49.32 (Encounter for adequacy 
testing for peritoneal dialysis) are currently on the Unacceptable 
Principal Diagnosis edit code list. We proposed to add diagnosis code 
Z49.01 (Encounter for fitting and adjustment of extracorporeal dialysis 
catheter) to the Unacceptable Principal Diagnosis edit code list 
because this is an encounter code that would more likely be performed 
in an outpatient setting.
    Comment: Some commenters supported the proposal to add ICD-10-CM 
diagnosis code Z49.01 to the Unacceptable Principal Diagnosis edit code 
list. However, some commenters recommended that CMS reconsider the 
proposal. These commenters did not dispute the fact that this code is 
more likely to be reported in the outpatient setting. However, they 
stated that the proposal to add it to the edit appeared to conflict 
with the proposal that was discussed in section II.F.9. for MDC 11 
(Diseases and Disorders of the Kidney and Urinary Tract) and MS-DRG 685 
(Admit for Renal Dialysis). According to the commenters, CMS proposed 
to only reassign diagnosis code Z49.01 as a principal diagnosis in the 
proposal to delete MS-DRG 685 and reassign diagnosis code Z49.01 to MS-
DRGs 698, 699 and 700.
    Response: We appreciate the commenters' support. With regard to the 
commenters who recommended that we reconsider the proposal to add 
diagnosis code Z49.01 to the Unacceptable Principal Diagnoses edit code 
list, we believe there is some confusion with respect to the proposal 
that was discussed in section II.F.9. of the preamble of the proposed 
rule. The proposal was to reassign diagnosis codes Z49.01, Z49.02, 
Z49.31 and Z49.32 to MS-DRGs 698, 699 and 700 (Other Kidney and Urinary 
Tract Diagnoses with MCC, with CC and without CC/MCC, respectively) 
with the proposed deletion of MS-DRG 685. We are unable to determine 
what aspect of the proposal that was discussed in section II.F. 9. of 
the preamble of the proposed rule was unclear. For example, it is not 
clear if the commenters' confusion relates to the GROUPER logic for MS-
DRGs 698, 699, and 700 as shown in the ICD-10 MS-DRG Definitions 
Manual. As discussed elsewhere in this final rule, in the ICD-10 MS-DRG 
Definitions Manual, diagnosis codes listed under the heading of 
``Principal Diagnosis'' may appear to indicate that those codes are to 
be reported as a principal diagnosis for assignment to the respective 
MS-DRG. However, the Definitions Manual display of the GROUPER logic 
assignment for each diagnosis code is for grouping purposes only and 
does not correspond to coding guidelines for reporting the principal 
diagnosis. In other words, cases will group according to the GROUPER 
logic, regardless of any coding guidelines or coverage policies. It is 
the MCE and other payer-specific edits that identify inconsistencies in 
the coding guidelines or coverage policies.
    We also noted in the proposed rule that, as discussed in section 
II.F.15. of the preamble of the proposed rule, Table 6C.--Invalid 
Diagnosis Codes associated with the proposed rule (which is available 
via the internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) 
listed the diagnosis codes that will no longer be effective as of 
October 1, 2018. As previously noted, included in this table is an ICD-
10-CM diagnosis code Z13.4 (Encounter for screening for certain 
developmental disorders in childhood) which is currently listed on the 
Unacceptable Principal Diagnoses edit code list. We proposed to remove 
this code from the Unacceptable Principal Diagnosis edit code list.
    We also proposed to continue to include the other existing 
diagnosis codes currently listed under the Unacceptable Principal 
Diagnosis edit code list.
    Comment: Commenters supported the proposal to remove ICD-10-CM 
diagnosis code Z13.4 from the Unacceptable Principal diagnoses category 
edit code list because it will be an invalid code effective October 1, 
2018.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to add ICD-10-CM diagnosis code Z49.01 to the 
Unacceptable Principal Diagnosis edit code list. We also are finalizing 
our proposal to remove ICD-10-CM diagnosis code Z13.4 from the 
Unacceptable Principal Diagnosis edit code list. In addition, we are 
finalizing our proposal to maintain the other existing codes on the 
Unacceptable Principal Diagnosis edit code list under the ICD-10 MCE 
Version 36, effective October 1, 2018.
    Comment: One commenter requested that CMS review a coverage edit in 
the MCE manual and software. According to the commenter, CMS began 
covering multiple myeloma on January 1, 2016 under the condition of 
coverage with evidence development (CED) as shown in guidance located 
at: https://www.cms.gov/Medicare/Coverage/Coverage-with-Evidence-Development/allo-MM.html. The commenter noted that the applicable 
procedure codes along with diagnosis codes C90.00 (Multiple myeloma not 
having achieved remission) and C90.01 (Multiple myeloma in remission) 
are listed as ``non-covered'' in the MCE manual and encouraged CMS to 
review further and make any necessary updates as needed to ensure 
claims are processed appropriately.
    Response: We thank the commenter for bringing this to our 
attention. Upon review, guidance was issued on January 27, 2016 for 
allogeneic hematopoietic stem cell transplant (HSCT) for certain 
Medicare beneficiaries with multiple myeloma under CED. This guidance 
is available via the internet on the CMS website at: https://www.cms.gov/Medicare/Coverage/Coverage-with-Evidence-Development/allo-MM.html. We agree with the commenter and, therefore, are removing the 
following noncovered procedure edit from the ICD-10 MCE Version 36 
manual, effective October 1, 2018:

``E. Non-covered procedure codes

    The procedures shown below are identified as non-covered procedures 
only when any code from the diagnoses list shown below is present as 
either a principal or secondary diagnosis.

[[Page 41228]]

Procedures
30230G2 Transfuse Allo Rel Bone Marrow in Periph Vein, Open
30230G3 Transfuse Allo Unr Bone Marrow in Periph Vein, Open
30230G4 Transfuse Allo Unsp Bone Marrow in Periph Vein, Open
30230Y2 Transfuse Allo Rel Hemat Stem Cell in Periph Vein, Open
30230Y3 Transfuse Allo Unr Hemat Stem Cell in Periph Vein, Open
30230Y4 Transfuse Allo Unsp Hemat Stem Cell in Periph Vein, Open
30233G2 Transfuse Allo Rel Bone Marrow in Periph Vein, Perc
30233G3 Transfuse Allo Unr Bone Marrow in Periph Vein, Perc
30233G4 Transfuse Allo Unsp Bone Marrow in Periph Vein, Perc
30233Y2 Transfuse Allo Rel Hemat Stem Cell in Periph Vein, Per
30233Y3 Transfuse Allo Unr Hemat Stem Cell in Periph Vein, Perc
30233Y4 Transfuse Allo Unsp Hemat Stem Cell in Periph Vein, Perc
30240G2 Transfuse Allo Rel Bone Marrow in Central Vein, Open
30240G3 Transfuse Allo Unr Bone Marrow in Central Vein, Open
30240G4 Transfuse Allo Unsp Bone Marrow in Central Vein, Open
30240Y2 Transfuse Allo Rel Hemat Stem Cell in Central Vein, Open
30240Y3 Transfuse Allo Unr Hemat Stem Cell in Central Vein, Open
30240Y4 Transfuse Allo Unsp Hemat Stem Cell in Central Vein, Open
30243G2 Transfuse Allo Rel Bone Marrow in Central Vein, Perc
30243G3 Transfuse Allo Unr Bone Marrow in Central Vein, Perc
30243G4 Transfuse Allo Unsp Bone Marrow in Central Vein, Perc
30243Y2 Transfuse Allo Rel Hemat Stem Cell in Central Vein, Perc
30243Y3 Transfuse Allo Unr Hemat Stem Cell in Central Vein, Perc
30243Y4 Transfuse Allo Unsp Hemat Stem Cell in Central Vein, Perc
30250G1 Transfuse Nonaut Bone Marrow in Periph Art, Open
30250Y1 Transfuse Nonaut Hemat Stem Cell in Periph Art, Open
30253G1 Transfuse Nonaut Bone Marrow in Periph Art, Perc
30253Y1 Transfuse Nonaut Hemat Stem Cell in Periph Art, Perc
30260G1 Transfuse Nonaut Bone Marrow in Central Art, Open
30260Y1 Transfuse Nonaut Hemat Stem Cell in Central Art, Open
30263G1 Transfuse Nonaut Bone Marrow in Central Art, Perc
30263Y1 Transfuse Nonaut Hemat Stem Cell in Central Art, Perc
Diagnoses
C9000 Multiple myeloma not having achieved remission
C9001 Multiple myeloma in remission''

    This update will also be reflected in the ICD-10 MCE software 
Version 36 effective October 1, 2018.
f. Future Enhancement
    In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38053 through 
38054), we noted the importance of ensuring accuracy of the coded data 
from the reporting, collection, processing, coverage, payment, and 
analysis aspects. We have engaged a contractor to assist in the review 
of the limited coverage and noncovered procedure edits in the MCE that 
may also be present in other claims processing systems that are 
utilized by our MACs. The MACs must adhere to criteria specified within 
the National Coverage Determinations (NCDs) and may implement their own 
edits in addition to what are already incorporated into the MCE, 
resulting in duplicate edits. The objective of this review is to 
identify where duplicate edits may exist and to determine what the 
impact might be if these edits were to be removed from the MCE.
    We have noted that the purpose of the MCE is to ensure that errors 
and inconsistencies in the coded data are recognized during Medicare 
claims processing. In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 
20235), we indicated that we are considering whether the inclusion of 
coverage edits in the MCE necessarily aligns with that specific goal 
because the focus of coverage edits is on whether or not a particular 
service is covered for payment purposes and not whether it was coded 
correctly.
    As we continue to evaluate the purpose and function of the MCE with 
respect to ICD-10, we encourage public input for future discussion. As 
we discussed in the FY 2018 IPPS/LTCH PPS final rule, we recognize a 
need to further examine the current list of edits and the definitions 
of those edits. We continue to encourage public comments on whether 
there are additional concerns with the current edits, including 
specific edits or language that should be removed or revised, edits 
that should be combined, or new edits that should be added to assist in 
detecting errors or inaccuracies in the coded data. Comments should be 
directed to the MS-DRG Classification Change Mailbox located at: 
[email protected] by November 1, 2018 for FY 2020.
14. Changes to Surgical Hierarchies
    Some inpatient stays entail multiple surgical procedures, each one 
of which, occurring by itself, could result in assignment of the case 
to a different MS-DRG within the MDC to which the principal diagnosis 
is assigned. Therefore, it is necessary to have a decision rule within 
the GROUPER by which these cases are assigned to a single MS-DRG. The 
surgical hierarchy, an ordering of surgical classes from most resource-
intensive to least resource-intensive, performs that function. 
Application of this hierarchy ensures that cases involving multiple 
surgical procedures are assigned to the MS-DRG associated with the most 
resource-intensive surgical class.
    A surgical class can be composed of one or more MS-DRGs. For 
example, in MDC 11, the surgical class ``kidney transplant'' consists 
of a single MS-DRG (MS-DRG 652) and the class ``major bladder 
procedures'' consists of three MS-DRGs (MS-DRGs 653, 654, and 655). 
Consequently, in many cases, the surgical hierarchy has an impact on 
more than one MS-DRG. The methodology for determining the most 
resource-intensive surgical class involves weighting the average 
resources for each MS-DRG by frequency to determine the weighted 
average resources for each surgical class. For example, assume surgical 
class A includes MS-DRGs 001 and 002 and surgical class B includes MS-
DRGs 003, 004, and 005. Assume also that the average costs of MS-DRG 
001 are higher than that of MS-DRG 003, but the average costs of MS-
DRGs 004 and 005 are higher than the average costs of MS-DRG 002. To 
determine whether surgical class A should be higher or lower than 
surgical class B in the surgical hierarchy, we would weigh the average 
costs of each MS-DRG in the class by frequency (that is, by the number 
of cases in the MS-DRG) to determine average resource consumption for 
the surgical class. The surgical classes would then be ordered from the 
class with the highest average resource utilization to that with the 
lowest, with the exception of ``other O.R. procedures'' as discussed in 
this final rule.
    This methodology may occasionally result in assignment of a case 
involving multiple procedures to the lower-weighted MS-DRG (in the 
highest, most resource-intensive surgical class) of the available 
alternatives. However, given that the logic underlying the surgical 
hierarchy provides that the GROUPER search for the procedure in the 
most resource-intensive surgical class, in

[[Page 41229]]

cases involving multiple procedures, this result is sometimes 
unavoidable.
    We note that, notwithstanding the foregoing discussion, there are a 
few instances when a surgical class with a lower average cost is 
ordered above a surgical class with a higher average cost. For example, 
the ``other O.R. procedures'' surgical class is uniformly ordered last 
in the surgical hierarchy of each MDC in which it occurs, regardless of 
the fact that the average costs for the MS-DRG or MS-DRGs in that 
surgical class may be higher than those for other surgical classes in 
the MDC. The ``other O.R. procedures'' class is a group of procedures 
that are only infrequently related to the diagnoses in the MDC, but are 
still occasionally performed on patients with cases assigned to the MDC 
with these diagnoses. Therefore, assignment to these surgical classes 
should only occur if no other surgical class more closely related to 
the diagnoses in the MDC is appropriate.
    A second example occurs when the difference between the average 
costs for two surgical classes is very small. We have found that small 
differences generally do not warrant reordering of the hierarchy 
because, as a result of reassigning cases on the basis of the hierarchy 
change, the average costs are likely to shift such that the higher-
ordered surgical class has lower average costs than the class ordered 
below it.
    Based on the changes that we proposed to make in the FY 2019 IPPS/
LTCH PPS proposed rule, as discussed in section II.F.10. of the 
preamble of this final rule, in the FY 2019 IPPS/LTCH PPS proposed rule 
(83 FR 20235), we proposed to revise the surgical hierarchy for MDC 14 
(Pregnancy, Childbirth & the Puerperium) as follows: In MDC 14, we 
proposed to delete MS-DRGs 765 and 766 (Cesarean Section with and 
without CC/MCC, respectively) and MS-DRG 767 (Vaginal Delivery with 
Sterilization and/or D&C) from the surgical hierarchy. We proposed to 
sequence proposed new MS-DRGs 783, 784, and 785 (Cesarean Section with 
Sterilization with MCC, with CC and without CC/MCC, respectively) above 
proposed new MS-DRGs 786, 787, and 788 (Cesarean Section without 
Sterilization with MCC, with CC and without CC/MCC, respectively). We 
proposed to sequence proposed new MS-DRGs 786, 787, and 788 (Cesarean 
Section without Sterilization with MCC, with CC and without CC/MCC, 
respectively) above MS-DRG 768 (Vaginal Delivery with O.R. Procedure 
Except Sterilization and/or D&C). We also proposed to sequence proposed 
new MS-DRGs 796, 797, and 798 (Vaginal Delivery with Sterilization/D&C 
with MCC, with CC and without CC/MCC, respectively) below MS-DRG 768 
and above MS-DRG 770 (Abortion with D&C, Aspiration Curettage or 
Hysterotomy). Finally, we proposed to sequence proposed new MS-DRGs 
817, 818, and 819 (Other Antepartum Diagnoses with O.R. procedure with 
MCC, with CC and without CC/MCC, respectively) below MS-DRG 770 and 
above MS-DRG 769 (Postpartum and Post Abortion Diagnoses with O.R. 
Procedure). Our proposals for Appendix D MS-DRG Surgical Hierarchy by 
MDC and MS-DRG of the ICD-10 MS-DRG Definitions Manual Version 36 are 
illustrated in the following table.

                   Proposed Surgical Hierarchy: MDC 14
               [Pregnancy, childbirth and the puerperium]
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Proposed New MS-DRGs 783-785...........  Cesarean Section with
                                          Sterilization.
Proposed New MS-DRGs 786-788...........  Cesarean Section without
                                          Sterilization.
MS-DRG 768.............................  Vaginal Delivery with O.R.
                                          Procedures.
Proposed New MS-DRGs 796-798...........  Vaginal Delivery with
                                          Sterilization/D&C.
MS-DRG 770.............................  Abortion with D&C, Aspiration
                                          Curettage or Hysterotomy.
Proposed New MS-DRGs 817-819...........  Other Antepartum Diagnoses with
                                          O.R. Procedure.
MS-DRG 769.............................  Postpartum and Post Abortion
                                          Diagnoses with O.R. Procedure.
------------------------------------------------------------------------

    Comment: Commenters supported the proposed additions, deletions, 
and sequencing for the surgical hierarchy under MDC 14.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposed changes to Appendix D MS-DRG Surgical Hierarchy 
by MDC and MS-DRG of the ICD-10 MS-DRG Definitions Manual Version 36 as 
illustrated in the table above effective October 1, 2018.
    As with other MS-DRG related issues, we encourage commenters to 
submit requests to examine ICD-10 claims pertaining to the surgical 
hierarchy via the CMS MS-DRG Classification Change Request Mailbox 
located at: [email protected] by November 1, 2018 
for FY 2020 consideration.
15. Changes to the MS-DRG Diagnosis Codes for FY 2019
a. Background of the CC List and the CC Exclusions List
    Under the IPPS MS-DRG classification system, we have developed a 
standard list of diagnoses that are considered CCs. Historically, we 
developed this list using physician panels that classified each 
diagnosis code based on whether the diagnosis, when present as a 
secondary condition, would be considered a substantial complication or 
comorbidity. A substantial complication or comorbidity was defined as a 
condition that, because of its presence with a specific principal 
diagnosis, would cause an increase in the length-of-stay by at least 1 
day in at least 75 percent of the patients. However, depending on the 
principal diagnosis of the patient, some diagnoses on the basic list of 
complications and comorbidities may be excluded if they are closely 
related to the principal diagnosis. In FY 2008, we evaluated each 
diagnosis code to determine its impact on resource use and to determine 
the most appropriate CC subclassification (non-CC, CC, or MCC) 
assignment. We refer readers to sections II.D.2. and 3. of the preamble 
of the FY 2008 IPPS final rule with comment period for a discussion of 
the refinement of CCs in relation to the MS-DRGs we adopted for FY 2008 
(72 FR 47152 through 47171).
b. Additions and Deletions to the Diagnosis Code Severity Levels for FY 
2019
    In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20236), we 
indicated that the following tables identifying the proposed additions 
and deletions to the MCC severity levels list and the proposed 
additions and deletions to the CC severity levels list for FY 2019 were 
available via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.

[[Page 41230]]

    Table 6I.1--Proposed Additions to the MCC List--FY 2019;
    Table 6I.2--Proposed Deletions to the MCC List--FY 2019;
    Table 6J.1--Proposed Additions to the CC List--FY 2019; and
    Table 6J.2--Proposed Deletions to the CC List--FY 2019.
    We invited public comments on our proposed severity level 
designations for the diagnosis codes listed in Table 6I.1. and Table 
6J.1. We noted that, for Table 6I.2. and Table 6J.2., the proposed 
deletions are a result of code expansions, with the exception of 
diagnosis codes B20 and J80, which are the result of proposed severity 
level designation changes. Therefore, the diagnosis codes on these 
lists will no longer be valid codes, effective FY 2019.
    We referred readers to the Tables 6I.1, 6I.2, 6J.1, and 6J.2 
associated with the proposed rule, which are available via the internet 
on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.
    Comment: Commenters supported the proposed additions and deletions 
for the diagnosis codes, and their corresponding severity level 
designations that were listed in Tables 6I.1, 6I.2, 6J.1, and 6J.2. 
associated with the FY 2019 IPPS/LTCH PPS proposed rule. However, a few 
commenters expressed concern with the proposed severity level 
designation change to diagnosis code B20, and recommended CMS conduct 
further analysis prior to finalizing any proposals.
    Response: We appreciate the commenters' support. We refer readers 
to section II.F.16.b. of the preamble of this final rule for the 
detailed discussion of public comments related to the proposals and 
final statement of policy involving diagnosis codes B20 and J80.
    Comment: One commenter disagreed with CMS' proposal to designate 
diagnosis codes K35.20 (Acute appendicitis with generalized 
peritonitis, without abscess) and T81.44XA (Sepsis following a 
procedure, initial encounter) as CC severity levels, and recommended 
CMS reconsider the conditions and classify the severity levels as MCCs. 
The commenter noted that the predecessor code for diagnosis code K35.20 
is diagnosis code K35.2 (Acute appendicitis with generalized 
peritonitis), which is classified as a MCC severity level designation. 
Therefore, the commenter also believed that diagnosis code K35.20 
should be designated as a MCC severity level. Additionally, the 
commenter stated that diagnosis code T81.44XA should be classified as 
an MCC severity level because sepsis is defined as a life-threatening 
organ dysfunction caused by a host response to infection.
    Response: While we acknowledge that our process in assigning a 
severity level designation for a diagnosis code generally begins with 
identifying the designation of the predecessor code assignment, we 
believe that any new or revised clinical concepts included in the new 
diagnosis codes should also be considered when making a severity level 
designation. We reviewed diagnosis codes K35.20 and T81.44XA and our 
clinical advisors continue to support the CC severity level designation 
of these diagnosis codes. The commenter is correct that, effective 
October 1, 2018, diagnosis code K35.20 has been expanded from the 
current diagnosis code K35.2. However, we also note that, effective 
October 1, 2018, diagnosis code K35.2 has been expanded to create new 
diagnosis code K35.21 (Acute appendicitis with generalized peritonitis, 
with abscess). In addition, effective October 1, 2018, diagnosis code 
K35.3 (Acute appendicitis with localized peritonitis) has been expanded 
to create new diagnosis codes K35.30 (Acute appendicitis with localized 
peritonitis, without perforation or gangrene), K35.31 (Acute 
appendicitis with localized peritonitis and gangrene, without 
perforation), K35.32 (Acute appendicitis with perforation and localized 
peritonitis, without abscess) and K35.33 (Acute appendicitis with 
perforation and localized peritonitis, with abscess). Consistent with 
our usual process, in reviewing all of these newly expanded conditions, 
our clinical advisors considered the additional clinical concepts now 
included with each diagnosis code in evaluating the appropriate 
proposed severity level assignments. Our clinical advisors believed 
that the new diagnosis codes for acute appendicitis described as ``with 
abscess'' or ``with perforation'' were clinically qualified for the MCC 
severity level designation, while acute appendicitis ``without 
abscess'' or ``without perforation'' were clinically qualified for the 
CC severity level designation because cases with abscess or perforation 
would be expected to require more clinical resources and time to treat 
while those cases ``without abscess'' or ``without perforation'' are 
not as severe clinical conditions. As such, we disagree with the 
commenter that, based on the designation of its predecessor code alone, 
diagnosis code K35.20 should be designated as an MCC severity level 
instead of a CC for FY 2019. With regard to diagnosis code T81.44XA, 
our clinical advisors maintain that a CC severity level designation is 
most appropriate because the new code is clinically consistent with the 
predecessor code, T81.4XXA (Infection following a procedure, initial 
encounter), which also has a CC severity level designation. Currently, 
under Version 35 of the ICD-10 MS-DRGs, diagnosis code T81.4XXA 
contains several inclusion terms (conditions for which the code may be 
reported), one of which is ``sepsis following a procedure''. Our 
clinical advisors do not believe that the creation of a unique 
diagnosis code to specifically identify this condition within the 
classification introduces a new clinical concept requiring a higher 
level of resources. The new diagnosis code provides additional detail 
as to the type of infection following a procedure. However, it is 
considered to be clinically similar to the current diagnosis code 
describing an infection following a procedure. We also note that an 
additional five new diagnosis codes describing infections of varying 
degrees following a procedure were created for FY 2019 based on the 
other inclusion terms that currently exist at diagnosis code T81.4XXA.
    As shown in the table below and in Table 6J.1. associated with the 
proposed rule, a total of six new diagnosis codes were proposed to be 
designated at the CC severity level based on review of the predecessor 
code (T81.4XXA), clinical coherence, and resource considerations.

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
T81.40XA..................  Infection following a procedure,
                             unspecified, initial encounter.
T81.41XA..................  Infection following a procedure, superficial
                             incisional surgical site, initial
                             encounter.
T81.42XA..................  Infection following a procedure, deep
                             incisional surgical site, initial
                             encounter.
T81.43XA..................  Infection following a procedure, organ and
                             space surgical site, initial encounter.
T81.44XA..................  Sepsis following a procedure, initial
                             encounter.
T81.49XA..................  Infection following a procedure, other
                             surgical site, initial encounter.
------------------------------------------------------------------------


[[Page 41231]]

    Therefore, for the reasons discussed above, our clinical advisors 
continue to support the proposed CC severity level designation for 
diagnosis code T81.44XA for FY 2019.
    In addition, because these diagnosis codes identified by the 
commenter are new, we do not have any claims data for further analysis. 
Once we have additional claims data to allow us to conduct further 
review, we can continue to examine these conditions to determine if 
their impact on resource use is equal to or above the expected value of 
a CC severity level designation.
    After consideration of the public comments we received, we are 
finalizing our proposal to designate diagnosis codes K35.20 and 
T81.44XA as CC severity levels. We also are finalizing our other 
proposed additions and deletions with their corresponding severity 
level designations for FY 2019. We refer readers to Tables 6I.1., 6I.2, 
6J.1, and 6J.2. associated with this final rule, which are available 
via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.
c. Principal Diagnosis Is Its Own CC or MCC
    In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38060), we provided 
the public with notice of our plans to conduct a comprehensive review 
of the CC and MCC lists for FY 2019. In the FY 2018 IPPS/LTCH PPS final 
rule (82 FR 38056 through 38057), we also finalized our proposal to 
maintain the existing lists of principal diagnosis codes in Table 6L.--
Principal Diagnosis Is Its Own MCC List and Table 6M.--Principal 
Diagnosis Is Its Own CC List for FY 2018, without any changes to the 
existing lists, noting our plans to conduct a comprehensive review of 
the CC and MCC lists for FY 2019 (82 FR 38060). We stated that having 
multiple lists for CC and MCC diagnoses when reported as a principal 
and/or secondary diagnosis may not provide an accurate representation 
of resource utilization for the MS-DRGs.
    We also stated that the purpose of the Principal Diagnosis Is Its 
Own CC or MCC Lists was to ensure consistent MS-DRG assignment between 
the ICD-9-CM and ICD-10 MS-DRGs. The Principal Diagnosis Is Its Own CC 
or MCC Lists were developed for the FY 2016 implementation of the ICD-
10 version of the MS-DRGs to facilitate replication of the ICD-9-CM MS-
DRGs. As part of our efforts to replicate the ICD-9-CM MS-DRGs, we 
implemented logic that may have increased the complexity of the MS-DRG 
assignment hierarchy and altered the format of the ICD-10 MS-DRG 
Definitions Manual. Two examples of workarounds used to facilitate 
replication are the proliferation of procedure clusters in the surgical 
MS-DRGs and the creation of the Principal Diagnosis Is Its Own CC or 
MCC Lists special logic.
    The following paragraph was added to the Version 33 ICD-10 MS-DRG 
Definitions Manual to explain the use of the Principal Diagnosis Is Its 
Own CC or MCC Lists: ``A few ICD-10-CM diagnosis codes express 
conditions that are normally coded in ICD-9-CM using two or more ICD-9-
CM diagnosis codes. In the interest of ensuring that the ICD-10 MS-DRGs 
Version 33 places a patient in the same DRG regardless whether the 
patient record were to be coded in ICD-9-CM or ICD-10-CM/PCS, whenever 
one of these ICD-10-CM combination codes is used as principal 
diagnosis, the cluster of ICD-9-CM codes that would be coded on an ICD-
9-CM record is considered. If one of the ICD-9-CM codes in the cluster 
is a CC or MCC, then the single ICD-10-CM combination code used as a 
principal diagnosis must also imply the CC or MCC that the ICD-9-CM 
cluster would have presented. The ICD-10-CM diagnoses for which this 
implication must be made are listed here.'' Versions 34 and 35 of the 
ICD-10 MS-DRG Definitions Manual also include this special logic for 
the MS-DRGs.
    The Principal Diagnosis Is Its Own CC or MCC Lists were developed 
in the absence of ICD-10 coded data by mapping the ICD-9-CM diagnosis 
codes to the new ICD-10-CM combination codes. CMS has historically used 
clinical judgment combined with data analysis to assign a principal 
diagnosis describing a complex or severe condition to the appropriate 
DRG or MS-DRG. The initial ICD-10 version of the MS-DRGs replicated 
from the ICD-9 version can now be evaluated using clinical judgment 
combined with ICD-10 coded data because it is no longer necessary to 
replicate MS-DRG assignment across the ICD-9 and ICD-10 versions of the 
MS-DRGs for purposes of calculating relative weights. Now that ICD-10 
coded data are available, in addition to using the data for calculating 
relative weights, ICD-10 data can be used to evaluate the effectiveness 
of the special logic for assigning a severity level to a principal 
diagnosis, as an indicator of resource utilization. In the FY 2019 
IPPS/LTCH PPS proposed rule (83 FR 20237), to evaluate the 
effectiveness of the special logic, we conducted analysis of the ICD-10 
coded data combined with clinical review to determine whether to 
propose to keep the special logic for assigning a severity level to a 
principal diagnosis, or to propose to remove the special logic and use 
other available means of assigning a complex principal diagnosis to the 
appropriate MS-DRG.
    In the proposed rule, using claims data from the September 2017 
update of the FY 2017 MedPAR file, we employed the following method to 
determine the impact of removing the special logic used in the current 
Version 35 GROUPER to process claims containing a code on the Principal 
Diagnosis Is Its Own CC or MCC Lists. Edits and cost estimations used 
for relative weight calculations were applied, resulting in 9,070,073 
IPPS claims analyzed for this special logic impact evaluation. We refer 
readers to section II.G. of the preamble of this final rule for further 
information regarding the methodology for calculation of the relative 
weights.
    First, we identified the number of cases potentially impacted by 
the special logic. We identified 310,184 cases reporting a principal 
diagnosis on the Principal Diagnosis Is Its Own CC or MCC lists. Of the 
310,184 total cases that reported a principal diagnosis code on the 
Principal Diagnosis Is Its Own CC or MCC Lists, 204,749 cases also 
reported a secondary diagnosis code at the same severity level or 
higher severity level, and therefore the special logic had no impact on 
MS-DRG assignment. However, of the 310,184 total cases, there were 
105,435 cases that did not report a secondary diagnosis code at the 
same severity level or higher severity level, and therefore the special 
logic could potentially impact MS-DRG assignment, depending on the 
specific severity leveling structure of the base DRG.
    Next, we removed the special logic in the GROUPER that is used for 
processing claims reporting a principal diagnosis on the Principal 
Diagnosis Is Its Own CC or MCC Lists, thereby creating a Modified 
Version 35 GROUPER. Using this Modified Version 35 GROUPER, we 
reprocessed the 105,435 claims for which the principal diagnosis code 
was the sole source of a MCC or CC on the case, to obtain data for 
comparison showing the effect of removing the special logic.
    After removing the special logic in the Version 35 GROUPER for 
processing claims containing diagnosis codes on the Principal Diagnosis 
Is Its Own CC or MCC Lists, and reprocessing the claims using the 
Modified Version 35 GROUPER software, we found that 18,596 (6 percent) 
of the 310,184 cases reporting a principal diagnosis on the Principal 
Diagnosis Is Its Own CC or MCC Lists resulted in a different MS-

[[Page 41232]]

DRG assignment. Overall, the number of claims impacted by removal of 
the special logic (18,596) represents 0.2 percent of the 9,070,073 IPPS 
claims analyzed.
    Below we provide a summary of the steps that we followed for the 
analysis performed.
    Step 1. We analyzed 9,070,073 claims to determine the number of 
cases impacted by the special logic.

              With Special Logic--9,070,073 Claims Analyzed
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Number of cases reporting a principal diagnosis from the         310,184
 Principal Diagnosis Is Its Own CC/MCC lists (special
 logic).................................................
Number of cases reporting an additional CC/MCC secondary         204,749
 diagnosis code at or above the level of the designated
 severity level of the principal diagnosis..............
Number of cases not reporting an additional CC/MCC               105,435
 secondary diagnosis code...............................
------------------------------------------------------------------------

    Step 2. We removed special logic from GROUPER and created a 
modified GROUPER.
    Step 3. We reprocessed 105,435 claims with modified GROUPER.

             Without Special Logic--105,435 Claims Analyzed
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Number of cases reporting a principal diagnosis from the         310,184
 Principal Diagnosis Is Its Own CC/MCC lists............
Number of cases resulting in different MS-DRG assignment          18,596
------------------------------------------------------------------------

    To estimate the overall financial impact of removing the special 
logic from the GROUPER, we calculated the aggregate change in estimated 
payment for the MS-DRGs by comparing average costs for each MS-DRG 
affected by the change, before and after removing the special logic. 
Before removing the special logic in the Version 35 GROUPER, the cases 
impacted by the special logic had an estimated average payment of $58 
million above the average costs for all the MS-DRGs to which the claim 
was originally assigned. After removing the special logic in the 
Version 35 GROUPER, the 18,596 cases impacted by the special logic had 
an estimated average payment of $39 million below the average costs for 
the newly assigned MS-DRGs.
    We performed regression analysis to compare the proportion of 
variance in the MS-DRGs with and without the special logic. The results 
of the regression analysis showed a slight decrease in variance when 
the logic was removed. While the decrease itself was not statistically 
significant (an R-squared of 36.2603 percent after the special logic 
was removed, compared with an R-squared of 36.2501 percent in the 
current version 35 GROUPER), we note that the proportion of variance 
across the MS-DRGs essentially stayed the same, and certainly did not 
increase, when the special logic was removed.
    We further examined the 18,596 claims that were impacted by the 
special logic in the GROUPER for processing claims containing a code on 
the Principal Diagnosis Is Its Own CC or MCC Lists. The 18,596 claims 
were analyzed by the principal diagnosis code and the MS-DRG assigned, 
resulting in 588 principal diagnosis and MS-DRG combinations or 
subsets. Of the 588 subsets of cases that utilized the special logic, 
556 of the 588 subsets (95 percent) had fewer than 100 cases, 529 of 
the 588 subsets (90 percent) had fewer than 50 cases, and 489 of the 
588 subsets (83 percent) had fewer than 25 cases.
    We examined the 32 subsets of cases (5 percent of the 588 subsets) 
that utilized the special logic and had 100 or more cases. Of the 32 
subsets of cases, 18 (56 percent) are similar in terms of average costs 
and length of stay to the MS-DRG assignment that results when the 
special logic is removed, and 14 of the 32 subsets of cases (44 
percent) are similar in terms of average costs and length of stay to 
the MS-DRG assignment that results when the special logic is utilized.
    The table below contains examples of four subsets of cases that 
utilize the special logic, comparing average length of stay and average 
costs between two MS-DRGs within a base DRG, corresponding to the MS-
DRG assigned when the special logic is removed and the MS-DRG assigned 
when the special logic is utilized. All four subsets of cases involve 
the principal diagnosis code E11.52 (Type 2 diabetes mellitus with 
diabetic peripheral angiopathy with gangrene). There are four subsets 
of cases in this example because the records involving the principal 
diagnosis code E11.52 are assigned to four different base DRGs, one 
medical MS-DRG and three surgical MS-DRGs, depending on the procedure 
code(s) reported on the claim. All subsets of cases contain more than 
100 claims. In three of the four subsets, the cases are similar in 
terms of average length of stay and average costs to the MS-DRG 
assignment that results when the special logic is removed, and in one 
of the four subsets, the cases are similar in terms of average length 
of stay and average costs to the MS-DRG assignment that results when 
the special logic is utilized.
    As shown in the following table, using ICD-10-CM diagnosis code 
E11.52 (Type 2 diabetes mellitus with diabetic peripheral angiopathy 
with gangrene) as our example, the data findings show four different 
MS-DRG pairs for which code E11.52 was the principal diagnosis on the 
claim and where the special logic impacted MS-DRG assignment. For the 
first MS-DRG pair, we examined MS-DRGs 240 and 241 (Amputation for 
Circulatory System Disorders Except Upper Limb and Toe with CC and 
without CC/MCC, respectively). We found 436 cases reporting diagnosis 
code E11.52 as the principal diagnosis, with an average length of stay 
of 5.5 days and average costs of $11,769. These 436 cases are assigned 
to MS-DRG 240 with the special logic utilized, and assigned to MS-DRG 
241 with the special logic removed. The total number of cases reported 
in MS-DRG 240 was 7,675, with an average length of stay of 8.3 days and 
average costs of $17,876. The total number of cases reported in MS-DRG 
241 was 778, with an average length of stay of 5.0 days and average 
costs of $10,882. The 436 cases are more similar to MS-DRG 241 in terms 
of length of stay and average cost and less similar to MS-DRG 240.
    For the second MS-DRG pair, we examined MS-DRGs 256 and 257 (Upper 
Limb and Toe Amputation for Circulatory System Disorders with CC and 
without CC/MCC, respectively). We found 193 cases reporting ICD-10-CM

[[Page 41233]]

diagnosis code E11.52 as the principal diagnosis, with an average 
length of stay of 4.2 days and average costs of $8,478. These 193 cases 
are assigned to MS-DRG 256 with the special logic utilized, and 
assigned to MS-DRG 257 with the special logic removed. The total number 
of cases reported in MS-DRG 256 was 2,251, with an average length of 
stay of 6.1 days and average costs of $11,987. The total number of 
cases reported in MS-DRG 257 was 115, with an average length of stay of 
4.6 days and average costs of $7,794. These 193 cases are more similar 
to MS-DRG 257 in terms of average length of stay and average costs and 
less similar to MS-DRG 256.
    For the third MS-DRG pair, we examined MS-DRGs 300 and 301 
(Peripheral Vascular Disorders with CC and without CC/MCC, 
respectively). We found 185 cases reporting ICD-10-CM diagnosis code 
E11.52 as the principal diagnosis, with an average length of stay of 
3.6 days and average costs of $5,981. These 185 cases are assigned to 
MS-DRG 300 with the special logic utilized, and assigned to MS-DRG 301 
with the special logic removed. The total number of cases reported in 
MS-DRG 300 was 29,327, with an average length of stay of 4.1 days and 
average costs of $7,272. The total number of cases reported in MS-DRG 
301 was 9,611, with an average length of stay of 2.8 days and average 
costs of $5,263. These 185 cases are more similar to MS-DRG 301 in 
terms of average length of stay and average costs and less similar to 
MS-DRG 300.
    For the fourth MS-DRG pair, we examined MS-DRGs 253 and 254 (Other 
Vascular Procedures with CC and without CC/MCC, respectively). We found 
225 cases reporting diagnosis code E11.52 as the principal diagnosis, 
with an average length of stay of 5.2 days and average costs of 
$17,901. These 225 cases are assigned to MS-DRG 253 with the special 
logic utilized, and assigned to MS-DRG 254 with the special logic 
removed. The total number of cases reported in MS-DRG 253 was 25,714, 
with an average length of stay of 5.4 days and average costs of 
$18,986. The total number of cases reported in MS-DRG 254 was 12,344, 
with an average length of stay of 2.8 days and average costs of 
$13,287. Unlike the previous three MS-DRG pairs, these 225 cases are 
more similar to MS-DRG 253 in terms of average length of stay and 
average costs and less similar to MS-DRG 254.

        MS-DRG Pairs for Principal Diagnosis ICD-10-CM Code E11.52 With and Without Special MS-DRG Logic
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRGs 240 and 241--Special logic impacted cases with ICD-10-CM             436             5.5         $11,769
 code E11.52 as principal diagnosis.............................
MS-DRG 240--All cases...........................................           7,675             8.3          17,876
MS-DRG 241--All cases...........................................             778             5.0          10,882
MS-DRGs 253 and 254--Special logic impacted cases with ICD-10-CM             225             5.2          17,901
 E11.52 as principal diagnosis..................................
MS-DRG 253--All cases...........................................          25,714             5.4          18,986
MS-DRG 254--All cases...........................................          12,344             2.8          13,287
MS-DRGs 256 and 257--Special logic impacted cases with ICD-10-CM             193             4.2           8,478
 E11.52 as principal diagnosis..................................
MS-DRG 256--All cases...........................................           2,251             6.1          11,987
MS-DRG 257--All cases...........................................             115             4.6           7,794
MS-DRGs 300 and 301--Special logic impacted cases with ICD-10-CM             185             3.6           5,981
 E11.52 as principal diagnosis..................................
MS-DRG 300--All cases...........................................          29,327             4.1           7,272
MS-DRG 301--All cases...........................................           9,611             2.8           5,263
----------------------------------------------------------------------------------------------------------------

    Based on our analysis of the data, we stated that we believe that 
there may be more effective indicators of resource utilization than the 
Principal Diagnosis Is Its Own CC or MCC Lists and the special logic 
used to assign clinical severity to a principal diagnosis. As stated in 
the proposed rule and earlier in this discussion, it is no longer 
necessary to replicate MS-DRG assignment across the ICD-9 and ICD-10 
versions of the MS-DRGs. The available ICD-10 data can now be used to 
evaluate other indicators of resource utilization.
    Therefore, as an initial recommendation from the first phase in our 
comprehensive review of the CC and MCC lists, we proposed to remove the 
special logic in the GROUPER for processing claims containing a 
diagnosis code from the Principal Diagnosis Is Its Own CC or MCC Lists, 
and we proposed to delete the tables containing the lists of principal 
diagnosis codes, Table 6L.--Principal Diagnosis Is Its Own MCC List and 
Table 6M.--Principal Diagnosis Is Its Own CC List, from the ICD-10 MS-
DRG Definitions Manual for FY 2019. We invited public comments on our 
proposals.
    Comment: Commenters supported the proposed deletion of the 
Principal Diagnosis Is Its Own CC or MCC logic. One commenter stated 
that the lists were created to facilitate replication of the ICD-9 
based MS-DRGs and are an artifact of the ICD-10 transitions. Another 
commenter recommended removing some of the conditions that are 
currently on the lists but expressed concern that eliminating the logic 
completely could impact the ability to measure a patient's severity of 
illness. One commenter noted that CMS described its internal 
comprehensive review and analysis that were conducted, which provided 
some level of insight for the proposal; however, the overarching 
comment was that CMS believed there were more effective indicators of 
resource utilization. Other commenters disagreed with CMS' proposal to 
``globally'' remove the Principal Diagnosis Is Its Own CC or MCC logic. 
A few commenters stated that a more detailed analysis, consistent with 
the comprehensive CC/MCC analysis approach conducted for severity level 
changes, should occur. One commenter recommended that the logic 
described as part of the MS-DRG Conversion Project with the MCC and CC 
translations from ICD-9 to ICD-10 be considered. Another commenter 
acknowledged that CMS is no longer attempting to replicate the ICD-9 
based MS-DRG GROUPER logic. However, this commenter noted that the 
conditions represented by the ICD-10-CM combination codes are 
clinically the

[[Page 41234]]

same conditions that were CCs or MCCs under ICD-9-CM.
    Response: We appreciate the commenters' support. With regard to the 
commenter who recommended removing some of the conditions that are 
currently on the lists but expressed concern that eliminating the logic 
completely could impact the ability to measure a patient's severity of 
illness, we disagree because, in general, the description of a 
diagnosis code itself describes or implies a certain level of severity. 
In addition, there are other factors to consider besides the principal 
diagnosis when determining severity of illness and resource 
utilization. In response to the other commenters who disagreed with our 
proposal to remove the Principal Diagnosis Is Its Own CC or MCC logic 
and recommended that we perform an analysis consistent with the 
comprehensive CC/MCC analysis, we note that such an analysis would not 
be conclusive because the purpose of the comprehensive CC/MCC analysis 
is to evaluate the impact in resource use for patients with conditions 
reported as secondary diagnoses. We believe that the analysis that was 
performed and discussed in the proposed rule was appropriate for 
assessing if we should maintain the special logic that currently exists 
for assigning a severity level to a principal diagnosis, as well as to 
assess whether it would be appropriate to propose removing the special 
logic and utilize alternate methods to evaluate what should be 
considered a complex principal diagnosis for MS-DRG assignment 
purposes. As stated in the proposed rule (83 FR 20237), CMS has 
historically used clinical judgment combined with data analysis to 
assign a principal diagnosis describing a complex or severe condition 
to the appropriate MS-DRG. We also note that, as stated in the proposed 
rule (83 FR 20238), the findings from our analysis of the 18,596 claims 
that were impacted by the special logic in the GROUPER for processing 
claims containing a code on the Principal Diagnosis Is Its Own CC or 
MCC Lists demonstrated that 556 of the 588 subsets had fewer than 100 
cases. The low number of cases means that if the special logic had been 
proposed for the first time under ICD-10, 95 percent of the diagnosis 
codes that were responsible for 95 percent of the cases using the 
special logic would not have met the criteria for proposing a change to 
their severity level. With regard to the commenter who stated that the 
conditions represented by the ICD-10-CM combination codes are 
clinically the same conditions that were CCs or MCCs under ICD-9-CM, we 
note that combination diagnosis codes are a feature of the 
classification of both ICD-9-CM and ICD-10-CM. The majority of the 
combination diagnosis codes in ICD-9-CM are also combination codes in 
ICD-10-CM. The current list of ICD-10-CM codes that are included in the 
special logic is a result of the fact that the codes were classified 
differently in ICD-9-CM than in ICD-10-CM. Diagnoses represented as two 
separate codes under ICD-9-CM were represented in a combination code 
under ICD-10-CM. Codes that were combination codes in both ICD-9-CM and 
ICD-10-CM do not have any special severity logic applied, regardless of 
the clinical severity of the conditions described, or the increased use 
of resources that could be associated with a particular combination 
principal diagnosis. As a result, the categorization of ICD-10-CM codes 
into lists wherein the principal diagnosis is its own CC or MCC is 
based not on a systematic clinical evaluation of the severity of 
illness of patients with these combination diagnosis codes, or on a 
systematic evaluation of data containing these combination diagnosis 
codes used as principal diagnosis, but on a collection of codes 
selected exclusively because there were structural differences between 
the classification scheme in ICD-9-CM versus ICD-10-CM. Now that ICD-10 
coded data are available, it can be used to evaluate other indicators 
of resource utilization, along with clinical judgment.
    After consideration of the public comments we received, we are 
finalizing our proposal to remove the special logic in the GROUPER for 
processing claims containing a code on the Principal Diagnosis Is Its 
Own CC or MCC Lists as an initial step in our first phase of the 
comprehensive review of the CC and MCC lists. We also are finalizing 
our proposal to delete the tables containing the lists of principal 
diagnosis codes, Table 6L.--Principal Diagnosis Is Its Own MCC List and 
Table 6M.--Principal Diagnosis Is Its Own CC List, from the ICD-10 MS-
DRG Definitions Manual Version 36, effective October 1, 2018.
d. CC Exclusions List for FY 2019
    In the September 1, 1987 final notice (52 FR 33143) concerning 
changes to the DRG classification system, we modified the GROUPER logic 
so that certain diagnoses included on the standard list of CCs would 
not be considered valid CCs in combination with a particular principal 
diagnosis. We created the CC Exclusions List for the following reasons: 
(1) To preclude coding of CCs for closely related conditions; (2) to 
preclude duplicative or inconsistent coding from being treated as CCs; 
and (3) to ensure that cases are appropriately classified between the 
complicated and uncomplicated DRGs in a pair.
    In the May 19, 1987 proposed notice (52 FR 18877) and the September 
1, 1987 final notice (52 FR 33154), we explained that the excluded 
secondary diagnoses were established using the following five 
principles:
     Chronic and acute manifestations of the same condition 
should not be considered CCs for one another;
     Specific and nonspecific (that is, not otherwise specified 
(NOS)) diagnosis codes for the same condition should not be considered 
CCs for one another;
     Codes for the same condition that cannot coexist, such as 
partial/total, unilateral/bilateral, obstructed/unobstructed, and 
benign/malignant, should not be considered CCs for one another;
     Codes for the same condition in anatomically proximal 
sites should not be considered CCs for one another; and
     Closely related conditions should not be considered CCs 
for one another.
    The creation of the CC Exclusions List was a major project 
involving hundreds of codes. We have continued to review the remaining 
CCs to identify additional exclusions and to remove diagnoses from the 
master list that have been shown not to meet the definition of a CC. We 
refer readers to the FY 2014 IPPS/LTCH PPS final rule (78 FR 50541 
through 50544) for detailed information regarding revisions that were 
made to the CC and CC Exclusion Lists under the ICD-9-CM MS-DRGs.
    The ICD-10 MS-DRGs Version 35 CC Exclusion List is included as 
Appendix C in the ICD-10 MS-DRG Definitions Manual, which is available 
via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html, and 
includes two lists identified as Part 1 and Part 2. Part 1 is the list 
of all diagnosis codes that are defined as a CC or MCC when reported as 
a secondary diagnosis. If the code designated as a CC or MCC is allowed 
with all principal diagnoses, the phrase ``NoExcl'' (for no exclusions) 
follows the CC or MCC designation. For example, ICD-10-CM diagnosis 
code A17.83 (Tuberculous neuritis) has this ``NoExcl'' entry. For all 
other diagnosis codes on the list, a link is provided to a collection 
of diagnosis codes which, when used as the principal diagnosis, would 
cause the CC or MCC diagnosis to be considered as a non-CC. Part 2 is 
the list of diagnosis codes designated as a MCC only for

[[Page 41235]]

patients discharged alive; otherwise, they are assigned as a non-CC.
    In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20239), for FY 
2019, we proposed changes to the ICD-10 MS-DRGs Version 36 CC Exclusion 
List. Therefore, we developed Table 6G.1.--Proposed Secondary Diagnosis 
Order Additions to the CC Exclusions List--FY 2019; Table 6G.2.--
Proposed Principal Diagnosis Order Additions to the CC Exclusions 
List--FY 2019; Table 6H.1.--Proposed Secondary Diagnosis Order 
Deletions to the CC Exclusions List--FY 2019; and Table 6H.2.--Proposed 
Principal Diagnosis Order Deletions to the CC Exclusions List--FY 2019. 
For Table 6G.1, each secondary diagnosis code proposed for addition to 
the CC Exclusion List is shown with an asterisk and the principal 
diagnoses proposed to exclude the secondary diagnosis code are provided 
in the indented column immediately following it. For Table 6G.2, each 
of the principal diagnosis codes for which there is a CC exclusion is 
shown with an asterisk and the conditions proposed for addition to the 
CC Exclusion List that will not count as a CC are provided in an 
indented column immediately following the affected principal diagnosis. 
For Table 6H.1, each secondary diagnosis code proposed for deletion 
from the CC Exclusion List is shown with an asterisk followed by the 
principal diagnosis codes that currently exclude it. For Table 6H.2, 
each of the principal diagnosis codes is shown with an asterisk and the 
proposed deletions to the CC Exclusions List are provided in an 
indented column immediately following the affected principal diagnosis. 
Tables 6G.1., 6G.2., 6H.1., and 6H.2. associated with the proposed rule 
are available via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.
    To identify new, revised and deleted diagnosis and procedure codes, 
for FY 2019, we developed Table 6A.--New Diagnosis Codes, Table 6B.--
New Procedure Codes, Table 6C.--Invalid Diagnosis Codes, Table 6D.--
Invalid Procedure Codes, Table 6E.--Revised Diagnosis Code Titles, and 
Table 6F.--Revised Procedure Code Titles for the proposed rule and this 
final rule.
    These tables are not published in the Addendum to the proposed rule 
or the final rule but are available via the internet on the CMS website 
at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html as described in section VI. of the 
Addendum to this final rule. As discussed in section II.F.18. of the 
preamble of this final rule, the code titles are adopted as part of the 
ICD-10 (previously ICD-9-CM) Coordination and Maintenance Committee 
process. Therefore, although we publish the code titles in the IPPS 
proposed and final rules, they are not subject to comment in the 
proposed or final rules.
    In the FY 2019 IPPS/LTCH PPS proposed rule, we invited public 
comments on the MDC and MS-DRG assignments for the new diagnosis and 
procedure codes as set forth in Table 6A.--New Diagnosis Codes and 
Table 6B.--New Procedure Codes. In addition, we invited public comments 
on the proposed severity level designations for the new diagnosis codes 
as set forth in Table 6A. and the proposed O.R. status for the new 
procedure codes as set forth in Table 6B.
    Comment: One commenter addressed the proposed MS-DRG assignment for 
ICD-10-CM diagnosis code K35.20 (Acute appendicitis with generalized 
peritonitis, without abscess) that was included in Table 6A.--New 
Diagnosis Codes associated with the proposed rule. The commenter 
included the following codes that describe conditions involving 
appendicitis with peritonitis, abscess, perforation and gangrene.

------------------------------------------------------------------------
       ICD-10-CM code             Code description       Proposed MS-DRG
------------------------------------------------------------------------
K35.20.....................  Acute appendicitis with       371, 372, 373
                              generalized peritonitis,
                              without abscess.
K35.21.....................  Acute appendicitis with       338, 339, 340
                              generalized peritonitis,     371, 372, 373
                              with abscess.
K35.30.....................  Acute appendicitis with       371, 372, 373
                              localized peritonitis,
                              without perforation or
                              gangrene.
K35.31.....................  Acute appendicitis with       371, 372, 373
                              localized peritonitis
                              and gangrene, without
                              perforation.
K35.32.....................  Acute appendicitis with       338, 339, 340
                              perforation and              371, 372, 373
                              localized peritonitis,
                              without abscess.
K35.33.....................  Acute appendicitis with       338, 339, 340
                              perforation and              371, 372, 373
                              localized peritonitis,
                              with abscess.
K35.890....................  Other acute appendicitis      371, 372, 373
                              without perforation or
                              gangrene.
K35.891....................  Other acute appendicitis      371, 372, 373
                              without perforation,
                              with gangrene.
------------------------------------------------------------------------

    The commenter stated that the proposed MS-DRG assignment for 
diagnosis code K35.20 is inappropriate and urged CMS to assign 
additional MS-DRGs and revise Table 6A. Specifically, the commenter 
expressed concern that MS-DRGs 371, 372, and 373 (Major 
Gastrointestinal Disorders and Peritoneal Infections with MCC, with CC, 
and without CC/MCC, respectively) were the only MS-DRGs assigned to 
diagnosis code K35.20 and requested that MS-DRGs 338, 339, and 340 
(Appendectomy with Complicated Principal Diagnosis with MCC, with CC, 
and without CC/MCC, respectively) also be assigned. The commenter 
questioned why CMS only assigned MS-DRGs 371, 372, and 373 for 
diagnosis code K35.20 when diagnosis code K35.32 was assigned to MS-
DRGs 338, 339, and 340 in addition to MS-DRGs 371, 372, and 373. The 
commenter stated that the FY 2019 ICD-10-CM Tabular List of Diseases 
and Injuries indicates that codes at the new subcategory K35.2 include 
a ruptured or perforated appendix, which is a complicating diagnosis 
and requires additional resources. The commenter expressed concern that 
the proposed MS-DRG assignment for diagnosis code K35.20 does not 
appropriately reflect the complications of the underlying disease or 
resources associated with acute appendicitis with generalized 
peritonitis. The commenter also noted that studies of patients admitted 
with appendicitis define complicated appendicitis as the presence of 
either generalized peritonitis due to perforated appendicitis or 
appendicular abscess. The commenter further noted that an appendix may 
perforate and cause generalized peritonitis without abscess if the 
perforation is walled off from the remainder of the peritoneal cavity 
because of its retroperitoneal location or by loops of small intestine 
or omentum.
    Response: We note that the predecessor code for new diagnosis code 
K35.20 is diagnosis code K35.2 (Acute appendicitis with generalized 
peritonitis), which is currently assigned

[[Page 41236]]

to MS-DRGs 338, 339, 340, 371, 372, and 373. Diagnosis code K35.2 was 
subdivided into diagnosis codes K35.20 and K35.21. In assigning the 
proposed MS-DRGs for these new diagnosis codes, we considered the 
predecessor code MS-DRG assignment and the descriptions of the new 
diagnosis codes. Our clinical advisors determined that diagnosis code 
K35.21 ``with abscess'' was more appropriate to assign to MS-DRGs 338, 
339, and 340 in addition to MS-DRGs 371, 372, and 373 versus diagnosis 
code K35.20 ``without abscess''. The degree and severity of the 
peritonitis in a patient with acute appendicitis can vary greatly. 
However, not all patients with peritonitis develop an abscess. While we 
agree that peritonitis is a serious condition when it develops in a 
patient with acute appendicitis, we also believe that, clinically, an 
abscess presents an even greater risk of complications that requires 
more resources as discussed in section II.F.15.b. of the preamble of 
this final rule with regard to the severity level designation.
    We also consulted with the staff at the Centers for Disease 
Control's (CDC's) National Center for Health Statistics (NCHS) because 
NCHS has the lead responsibility for maintaining the ICD-10-CM 
diagnosis codes. The NCHS' staff acknowledged the clinical concerns of 
the commenter based on the manner in which diagnosis codes K35.2 and 
K35.3 were expanded and confirmed that they will consider further 
review of these newly expanded codes with respect to the clinical 
concepts.
    Therefore, we maintain that the proposed MS-DRG assignment for 
diagnosis code K35.20 as shown in Table 6A is appropriate. Because the 
diagnosis codes that the commenter submitted in its comments are new, 
effective October 1, 2018, we do not yet have any claims data. We will 
continue to monitor these codes as data become available.
    After consideration of the public comments we received, we are 
finalizing our proposal to assign diagnosis code K35.20 to MS-DRGs 371, 
372, and 373 under the ICD-10 MS-DRGs Version 36, effective October 1, 
2018.
    Comment: One commenter recommended that the following new diagnosis 
codes that were included in Table 6A.--New Diagnosis Codes--FY 2019, be 
designated as a CC in the ICD-10-CM classification.

------------------------------------------------------------------------
         ICD-10-CM code                      Code description
------------------------------------------------------------------------
K61.31.........................  Horseshoe abscess.
K61.39.........................  Other ischiorectal abscess.
K61.5..........................  Supralevator abscess.
K82.A1.........................  Gangrene of gallbladder in
                                  cholecystitis.
O86.00.........................  Infection of obstetric surgical wound,
                                  unspecified.
O86.01.........................  Infection of obstetric surgical wound,
                                  superficial incisional site.
O86.02.........................  Infection of obstetric surgical wound,
                                  deep incisional site.
O86.03.........................  Infection of obstetric surgical wound,
                                  organ and space site.
O86.09.........................  Infection of obstetric surgical wound,
                                  other surgical site.
------------------------------------------------------------------------

    According to the commenter, abscesses, postoperative infections, 
and gangrene of gallbladder warrant the CC designation because they are 
acute conditions and require antibiotics or surgical treatment and 
impact the length of stay. The commenter noted that, currently, 
diagnosis codes K61.3 (Ischiorectal abscess) and K61.4 
(Intrasphincteric abscess) are designated as CCs. The commenter also 
noted that gangrene of gallbladder classifies to acute cholecystitis, 
which is a CC, and recommended that the codes listed in the above table 
all be designated as CCs.
    Response: We appreciate the commenter's feedback on the proposed 
severity level designations of the diagnosis codes that were included 
in Table 6A.--New Diagnosis Codes--FY 2019. The commenter is correct 
that, currently, diagnosis codes K61.3 and K61.4 are designated as CCs. 
However, our clinical advisors reviewed diagnosis codes K61.31, K61.39, 
and K61.5 and continue to support maintaining the proposed non-CC 
designation because they do not agree from a clinical perspective that 
these conditions warrant a CC designation or significantly impact 
resource utilization as a secondary diagnosis. Specifically, our 
clinical advisors believe that these diagnosis codes described 
conditions that can range in severity and subsequently, the treatment 
that is rendered. With regard to the commenter's statement that 
abscesses, postoperative infections, and gangrene of gallbladder 
warrant the CC designation because they are acute conditions and 
require antibiotics or surgical treatment and impact the length of 
stay, we note that there are various types of abscesses and 
postoperative infections with varying levels of severity that do not 
always warrant surgical intervention.
    With regard to the commenter's statement that gangrene of 
gallbladder classifies to acute cholecystitis which is a CC, we 
acknowledge that, currently, diagnosis code K81.0 (Acute cholecystitis) 
is a CC and has an inclusion term for gangrene of gallbladder. However, 
the new code description does not include the term ``acute''. Upon 
review of code K82.A1, our clinical advisors continue to support 
maintaining the proposed non-CC designation because they do not agree 
from a clinical perspective that this condition warrants a CC 
designation or significantly impacts resource utilization as a 
secondary diagnosis as the primary diagnosis likely is a more 
significant contributor to resource utilization. With regard to the 
codes describing infection of obstetrical wound of varying degrees and 
depths, the predecessor code O86.0 (Infection of obstetric wound) is 
currently classified as a non-CC and our clinical advisors agreed that, 
in the absence of data for the new codes, they are appropriately 
designated as non-CCs.
    After consideration of the public comments we received, we are 
finalizing our proposed severity level assignments for the above listed 
diagnosis codes under the ICD-10 MS-DRGs Version 36, effective October 
1, 2018.
    We also are making available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html the following final tables associated with 
this final rule:
     Table 6A.--New Diagnosis Codes--FY 2019;
     Table 6B.--New Procedure Codes--FY 2019;
     Table 6C.--Invalid Diagnosis Codes--FY 2019;

[[Page 41237]]

     Table 6D.--Invalid Procedure Codes--FY 2019;
     Table 6E.--Revised Diagnosis Code Titles--FY 2019;
     Table 6F.--Revised Procedure Code Titles--FY 2019;
     Table 6G.1.--Secondary Diagnosis Order Additions to the CC 
Exclusions List--FY 2019;
     Table 6G.2.--Principal Diagnosis Order Additions to the CC 
Exclusions List--FY 2019;
     Table 6H.1.--Secondary Diagnosis Order Deletions to the CC 
Exclusions List--FY 2019;
     Table 6H.2.--Principal Diagnosis Order Deletions to the CC 
Exclusions List--FY 2019;
     Table 6I.1.--Additions to the MCC List--FY 2019;
     Table 6I.2.-Deletions to the MCC List--FY 2019;
     Table 6J.1.--Additions to the CC List--FY 2019; and
     Table 6J.2.--Deletions to the CC List--FY 2019.
    We note that, as discussed in section II.F.15.c. of the preamble of 
this final rule, we proposed, and in this final rule are finalizing, to 
delete Table 6L. and Table 6M. from the ICD-10 MS-DRG Definitions 
Manual for FY 2019.
16. Comprehensive Review of CC List for FY 2019
a. Overview of Comprehensive CC/MCC Analysis
    In the FY 2008 IPPS/LTCH PPS final rule (72 FR 47159), we described 
our process for establishing three different levels of CC severity into 
which we would subdivide the diagnosis codes. The categorization of 
diagnoses as an MCC, a CC, or a non-CC was accomplished using an 
iterative approach in which each diagnosis was evaluated to determine 
the extent to which its presence as a secondary diagnosis resulted in 
increased hospital resource use. We refer readers to the FY 2008 IPPS/
LTCH PPS final rule (72 FR 47159) for a complete discussion of our 
approach. Since this comprehensive analysis was completed for FY 2008, 
we have evaluated diagnosis codes individually when receiving requests 
to change the severity level of specific diagnosis codes. However, 
given the transition to ICD-10-CM and the significant changes that have 
occurred to diagnosis codes since this review, we believe it is 
necessary to conduct a comprehensive analysis once again. We have begun 
this analysis and will discuss our findings in future rulemaking. We 
are currently using the same methodology utilized in FY 2008 and 
described below to conduct this analysis.
    For each secondary diagnosis, we measured the impact in resource 
use for the following three subsets of patients:
    (1) Patients with no other secondary diagnosis or with all other 
secondary diagnoses that are non-CCs.
    (2) Patients with at least one other secondary diagnosis that is a 
CC but none that is an MCC.
    (3) Patients with at least one other secondary diagnosis that is an 
MCC.
    Numerical resource impact values were assigned for each diagnosis 
as follows:

------------------------------------------------------------------------
              Value                               Meaning
------------------------------------------------------------------------
0................................  Significantly below expected value
                                    for the non-CC subgroup.
1................................  Approximately equal to expected value
                                    for the non-CC subgroup.
2................................  Approximately equal to expected value
                                    for the CC subgroup.
3................................  Approximately equal to expected value
                                    for the MCC subgroup.
4................................  Significantly above the expected
                                    value for the MCC subgroup.
------------------------------------------------------------------------

    Each diagnosis for which Medicare data were available was evaluated 
to determine its impact on resource use and to determine the most 
appropriate CC subclass (non-CC, CC, or MCC) assignment. In order to 
make this determination, the average cost for each subset of cases was 
compared to the expected cost for cases in that subset. The following 
format was used to evaluate each diagnosis:

--------------------------------------------------------------------------------------------------------------------------------------------------------
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
               Code       Diagnosis                    Cnt1               C1                 Cnt2               C2                 Cnt3               C3
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Count (Cnt) is the number of patients in each subset and C1, C2, 
and C3 are a measure of the impact on resource use of patients in each 
of the subsets. The C1, C2, and C3 values are a measure of the ratio of 
average costs for patients with these conditions to the expected 
average cost across all cases. The C1 value reflects a patient with no 
other secondary diagnosis or with all other secondary diagnoses that 
are non-CCs. The C2 value reflects a patient with at least one other 
secondary diagnosis that is a CC but none that is a major CC. The C3 
value reflects a patient with at least one other secondary diagnosis 
that is a major CC. A value close to 1.0 in the C1 field would suggest 
that the code produces the same expected value as a non-CC diagnosis. 
That is, average costs for the case are similar to the expected average 
costs for that subset and the diagnosis is not expected to increase 
resource usage. A higher value in the C1 (or C2 and C3) field suggests 
more resource usage is associated with the diagnosis and an increased 
likelihood that it is more like a CC or major CC than a non-CC. Thus, a 
value close to 2.0 suggests the condition is more like a CC than a non-
CC but not as significant in resource usage as an MCC. A value close to 
3.0 suggests the condition is expected to consume resources more 
similar to an MCC than a CC or non-CC. For example, a C1 value of 1.8 
for a secondary diagnosis means that for the subset of patients who 
have the secondary diagnosis and have either no other secondary 
diagnosis present, or all the other secondary diagnoses present are 
non-CCs, the impact on resource use of the secondary diagnoses is 
greater than the expected value for a non-CC by an amount equal to 80 
percent of the difference between the expected value of a CC and a non-
CC (that is, the impact on resource use of the secondary diagnosis is 
closer to a CC than a non-CC).
    These mathematical constructs are used as guides in conjunction 
with the judgment of our clinical advisors to classify each secondary 
diagnosis reviewed as an MCC, CC or non-CC. Our clinical panel reviews 
the resource use impact reports and suggests modifications to the 
initial CC subclass assignments when clinically appropriate.
b. Requested Changes to Severity Levels
(1) Human Immunodeficiency Virus [HIV] Disease
    As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 
20241), we received a request that we consider changing the severity 
level of ICD-10-CM diagnosis code B20 (Human immunodeficiency virus 
[HIV] disease) from an MCC to a CC. We used the approach outlined above 
to evaluate this request. The table below contains the data that were 
evaluated for this request.

[[Page 41238]]



--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                               Proposed
                ICD-10-CM diagnosis code                     Cnt1         C1         Cnt2         C2         Cnt3         C3      Current CC      CC
                                                                                                                                   subclass    subclass
--------------------------------------------------------------------------------------------------------------------------------------------------------
B20 (Human immunodeficiency virus [HIV] disease)........      2,918      0.9946       8,938      2.1237      11,479      3.0960           MCC          CC
--------------------------------------------------------------------------------------------------------------------------------------------------------

    We stated in the proposed rule that while the data did not strongly 
suggest that the categorization of HIV as an MCC was inaccurate, our 
clinical advisors indicated that, for many patients with HIV disease, 
symptoms are well controlled by medications. Our clinical advisors 
stated that if these patients have an HIV-related complicating disease, 
that complicating disease would serve as a CC or an MCC. Therefore, 
they advised us that ICD-10-CM diagnosis code B20 is more similar to a 
CC than an MCC. Based on the data results and the advice of our 
clinical advisors, we proposed to change the severity level of ICD-10-
CM diagnosis code B20 from an MCC to a CC.
    Comment: Commenters opposed the proposal to change the severity 
level for ICD-10-CM diagnosis code B20 from an MCC to a CC. The 
commenters stated that the change should not be made without strong 
supporting empirical data, referencing the language in the proposed 
rule that indicated that the data did not strongly suggest that the 
categorization of HIV as an MCC was inaccurate. One commenter indicated 
that patients with CD4 counts of less than 100, or elevated viral 
loads, would need more laboratory tests, more imaging, and a higher 
level of care even if they are in the hospital for a non-HIV related 
condition. This commenter suggested that if diagnosis code B20 is 
changed to a CC, CMS develop distinct codes for patients with AIDS 
based on their level of CD4 and whether viral loads are suppressed.
    Response: While we stated in the proposed rule that the data did 
not strongly suggest correlation of a secondary diagnosis code of B20 
with a severity level of an MCC was inaccurate, the data also did not 
definitively support maintaining a severity level of an MCC. While we 
understand that HIV is a serious disease that causes significant 
chronic illness and can lead to serious complications, we note that 
when a patient is admitted for a non-HIV related condition, our 
clinical advisors do not believe that the secondary diagnosis of HIV 
would be expected to result in the additional resources associated with 
an MCC. As explained in the proposed rule, our clinical advisors 
believe that, for many patients with HIV disease, symptoms are well 
controlled by medications, and if these patients have an HIV-related 
complicating disease, that complicating disease would serve as a CC or 
an MCC. For these reasons, our clinical advisors continue to believe 
that ICD-10-CM diagnosis code B20 is more accurately characterized as a 
CC.
    As discussed in section II.F.18. of the preamble of this final 
rule, requests for new ICD-10-CM diagnosis codes are discussed at the 
ICD-10 Coordination and Maintenance Committee meetings. We refer the 
commenter to the National Center for Health Statistics (NCHS) website 
at https://www.cdc.gov/nchs/icd/icd10_maintenance.html for further 
information regarding these meetings and the process for how to request 
code updates.
    After consideration of the public comments we received, we are 
finalizing our proposal to change the severity level of diagnosis code 
of B20 from an MCC to a CC.
(2) Acute Respiratory Distress Syndrome
    As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 
20241), we also received a request to change the severity level for 
ICD-10-CM diagnosis code J80 (Acute respiratory distress syndrome) from 
a CC to a MCC. We used the approach outlined above to evaluate this 
request. The following table contains the data that were evaluated for 
this request.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                               Proposed
                ICD-10-CM diagnosis code                     Cnt1         C1         Cnt2         C2         Cnt3         C3      Current CC      CC
                                                                                                                                   subclass    subclass
--------------------------------------------------------------------------------------------------------------------------------------------------------
J80 (Acute respiratory distress syndrome)...............      1,840      1.7704       6,818      2.5596      18,376      3.3428            CC         MCC
--------------------------------------------------------------------------------------------------------------------------------------------------------

    We stated in the proposed rule that the data suggest that the 
resources involved in caring for a patient with this condition are 77 
percent greater than expected when the patient has either no other 
secondary diagnosis present or all the other secondary diagnoses 
present are non-CCs. The resources are 56 percent greater than expected 
when reported in conjunction with another secondary diagnosis that is a 
CC, and 34 percent greater than expected when reported in conjunction 
with another secondary diagnosis code that is an MCC. Our clinical 
advisors agreed that the resources required to care for a patient with 
this secondary diagnosis are consistent with those of an MCC. 
Therefore, we proposed to change the severity level of ICD-10-CM 
diagnosis code J80 from a CC to an MCC.
    Comment: Commenters supported the proposal to change the severity 
level of ICD-10-CM diagnosis code J80 from a CC to an MCC.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to change the severity level of ICD-10-CM 
diagnosis code J80 from a CC to an MCC.
(3) Encephalopathy
    As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 
20241), we also received a request to change the severity level for 
ICD-10-CM diagnosis code G93.40 (Encephalopathy, unspecified) from an 
MCC to a non-CC. The requestor pointed out that the nature of the 
encephalopathy or its underlying cause should be coded. The requestor 
also noted that unspecified heart failure is a non-CC. We used the 
approach outlined earlier to evaluate this request. The following table 
contains the data that were evaluated for this request.

[[Page 41239]]



--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                               Proposed
                ICD-10-CM diagnosis code                     Cnt1         C1         Cnt2         C2         Cnt3         C3      Current CC      CC
                                                                                                                                   subclass    subclass
--------------------------------------------------------------------------------------------------------------------------------------------------------
G93.40 (Encephalopathy, unspecified)....................     16,306       1.840      80,222      1.8471     139,066      2.4901           MCC         MCC
--------------------------------------------------------------------------------------------------------------------------------------------------------

    We stated in the proposed rule that the data suggest that the 
resources involved in caring for a patient with this condition are 84 
percent greater than expected when the patient has either no other 
secondary diagnosis present or all the other secondary diagnoses 
present are non-CCs. We stated in the proposed rule that the resources 
are 15 percent lower than expected when reported in conjunction with 
another secondary diagnosis that is a CC, and 49 percent lower than 
expected when reported in conjunction with another secondary diagnosis 
code that is an MCC. The sentence should have read as follows: The 
resources are 15 percent lower than expected when reported in 
conjunction with another secondary diagnosis that is a CC, and 51 
percent lower than expected when reported in conjunction with another 
secondary diagnosis code that is an MCC. We noted that the pattern 
observed in resource use for the condition of unspecified heart failure 
(ICD-10-CM diagnosis code I50.9) differs from that of unspecified 
encephalopathy. Our clinical advisors reviewed this request and agreed 
that, from a clinical standpoint, the resources involved in caring for 
a patient with this condition are aligned with those of an MCC. 
Therefore, we did not propose a change to the severity level for ICD-
10-CM diagnosis code G93.40.
    Comment: Several commenters supported the proposal to maintain the 
severity level for ICD-10-CM diagnosis code G93.40 as an MCC. One 
commenter opposed the proposal, stating that unspecified encephalopathy 
is poorly defined, not all specified encephalopathies are MCCs, and the 
MCC status creates an incentive for coding personnel to not pursue 
specificity of encephalopathy which could lead to a lower relative 
weight.
    Response: We appreciate the commenters' support. After reviewing 
the rationale provided by the commenter who opposed our proposal, we 
concur with the commenter that unspecified encephalopathy is poorly 
defined, not all encephalopathies are MCCs, and the MCC status creates 
an incentive for coding personnel to not pursue specificity of 
encephalopathy. For these reason, our clinical advisors agree that it 
is appropriate to change the severity level from an MCC to a CC.
    After consideration of the public comments we received, we are 
changing the severity level for ICD-10-CM diagnosis code G93.40 from an 
MCC to a CC.
(4) End-Stage Heart Failure and Hepatic Encephalopathy
    Comment: One commenter stated that ICD-10-CM code I50.84 (End-stage 
heart failure) should be assigned the severity level of a CC and that 
hepatic encephalopathy should be assigned the severity level of an MCC. 
The commenter did not provide the specific ICD-10-CM diagnosis codes 
that describe hepatic encephalopathy.
    Response: Because ICD-10-CM code I50.84 and the codes that describe 
hepatic encephalopathy referred to by the commenter are newly created 
codes, we do not yet have data with which to evaluate the commenter's 
request. We will consider these diagnosis codes during our ongoing 
comprehensive CC/MCC analysis once data become available.
    After consideration of the public comment received, we are not 
changing the severity level of ICD-10-CM code I50.84 or the ICD-10-CM 
codes describing hepatic encephalopathy for FY 2019.
17. Review of Procedure Codes in MS DRGs 981 Through 983 and 987 
Through 989
    Each year, we review cases assigned to MS-DRGs 981, 982, and 983 
(Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, 
with CC, and without CC/MCC, respectively) and MS-DRGs 987, 988, and 
989 (Nonextensive O.R. Procedure Unrelated to Principal Diagnosis with 
MCC, with CC, and without CC/MCC, respectively) to determine whether it 
would be appropriate to change the procedures assigned among these MS-
DRGs. MS-DRGs 981 through 983 and 987 through 989 are reserved for 
those cases in which none of the O.R. procedures performed are related 
to the principal diagnosis. These MS-DRGs are intended to capture 
atypical cases, that is, those cases not occurring with sufficient 
frequency to represent a distinct, recognizable clinical group.
a. Moving Procedure Codes From MS-DRGs 981 Through 983 or MS-DRGs 987 
Through 989 Into MDCs
    We annually conduct a review of procedures producing assignment to 
MS-DRGs 981 through 983 (Extensive O.R. Procedure Unrelated to 
Principal Diagnosis with MCC, with CC, and without CC/MCC, 
respectively) or MS-DRGs 987 through 989 (Nonextensive O.R. Procedure 
Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, 
respectively) on the basis of volume, by procedure, to see if it would 
be appropriate to move procedure codes out of these MS-DRGs into one of 
the surgical MS-DRGs for the MDC into which the principal diagnosis 
falls. The data are arrayed in two ways for comparison purposes. We 
look at a frequency count of each major operative procedure code. We 
also compare procedures across MDCs by volume of procedure codes within 
each MDC.
    We identify those procedures occurring in conjunction with certain 
principal diagnoses with sufficient frequency to justify adding them to 
one of the surgical MS-DRGs for the MDC in which the diagnosis falls. 
Based on the results of our review of the claims data from the 
September 2017 update of the FY 2017 MedPAR file, in the FY 2019 IPPS/
LTCH PPS proposed rule (83 FR 20242), we did not propose to move any 
procedures from MS-DRGs 981 through 983 or MS-DRGs 987 through 989 into 
one of the surgical MS-DRGs for the MDC into which the principal 
diagnosis is assigned.
    Comment: One commenter identified two scenarios that involve some 
cases that are grouping to MS-DRGs 981 through 983 and MS-DRGs 987 
through 989. The commenter stated that these grouping issues should be 
addressed by CMS and provided specific examples with a combination of 
several codes.
    Response: We appreciate the commenter bringing these issues to our 
attention. However, we were unable to fully evaluate these scenarios 
for consideration in FY 2019. We intend to review and consider these 
items for FY 2020 as part of our ongoing analysis of the unrelated 
procedure MS-DRGs. As stated in section II.F.1.b. of the preamble of 
this final rule, we encourage individuals with comments about MS-DRG 
classification issues to submit these comments no later than November 1 
of each year so that they can be considered for possible inclusion in 
the annual proposed rule.
    After consideration of the public comments we received, we are not

[[Page 41240]]

moving any procedures from MS-DRGs 981 through 983 or MS-DRGs 987 
through 989 into one of the surgical MS-DRGs for the MDC into which the 
principal diagnosis is assigned for FY 2019.
b. Reassignment of Procedures Among MS-DRGs 981 Through 983 and 987 
Through 989
    We also review the list of ICD-10-PCS procedures that, when in 
combination with their principal diagnosis code, result in assignment 
to MS-DRGs 981 through 983, or 987 through 989, to ascertain whether 
any of those procedures should be reassigned from one of those two 
groups of MS-DRGs to the other group of MS-DRGs based on average costs 
and the length of stay. We look at the data for trends such as shifts 
in treatment practice or reporting practice that would make the 
resulting MS-DRG assignment illogical. If we find these shifts, we 
would propose to move cases to keep the MS-DRGs clinically similar or 
to provide payment for the cases in a similar manner. Generally, we 
move only those procedures for which we have an adequate number of 
discharges to analyze the data.
    Based on the results of our review of the September 2017 update of 
the FY 2017 MedPAR file, we also proposed to maintain the current 
structure of MS-DRGs 981 through 983 and MS-DRGs 987 through 989.
    Comment: One commenter recommended that CMS classify the insertion 
and revision of intracardiac pacemakers as discussed in section 
II.F.4.a. of the proposed rule (83 FR 20204) as extensive O.R. 
procedures (MS-DRG 981 through 983). The commenter performed its own 
analysis where the results demonstrated the average costs of the 
intracardiac pacemakers were higher than the average costs of cases in 
MS-DRGs 981 through 983.
    Response: We are unclear as to the nature of the commenter's 
request, as the intracardiac pacemaker procedure codes are already 
designated as extensive O.R. procedures in the GROUPER logic, as 
discussed in section II.F.4.a. of the preamble of this final rule
    After consideration of the public comments we received, we are 
finalizing our proposal to maintain the current structure of MS-DRGs 
981 through 983 and MS-DRGs 987 through 989 under the ICD-10 MS-DRGs 
Version 36, effective October 1, 2018.
c. Adding Diagnosis or Procedure Codes to MDCs
    We received a request recommending that CMS reassign cases for 
congenital pectus excavatum (congenital depression of the sternum or 
concave chest) when reported with a procedure describing repositioning 
of the sternum (the Nuss procedure) from MS-DRGs 981, 982, and 983 
(Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, 
with CC, and without CC/MCC, respectively) to MS-DRGs 515, 516, and 517 
(Other Musculoskeletal System and Connective Tissue O.R. Procedures 
with MCC, with CC, and without CC/MCC, respectively). ICD-10-CM 
diagnosis code Q67.6 (Pectus excavatum) is reported for this congenital 
condition and is currently assigned to MDC 4 (Diseases and Disorders of 
the Respiratory System). ICD-10-PCS procedure code 0PS044Z (Reposition 
sternum with internal fixation device, percutaneous endoscopic 
approach) may be reported to identify the Nuss procedure and is 
currently assigned to MDC 8 (Diseases and Disorders of the 
Musculoskeletal System and Connective Tissue) in MS-DRGs 515, 516, and 
517. The requester noted that acquired pectus excavatum (ICD-10-CM 
diagnosis code M95.4) groups to MS-DRGs 515, 516, and 517 when reported 
with a ICD-10-PCS procedure code describing repositioning of the 
sternum and requested that cases involving diagnoses describing 
congenital pectus excavatum also group to those MS-DRGs when reported 
with a ICD-10-PCS procedure code describing repositioning of the 
sternum.
    Our analysis of this grouping issue confirmed that, when pectus 
excavatum (ICD-10-CM diagnosis code Q67.6) is reported as a principal 
diagnosis with a procedure such as the Nuss procedure (ICD-10-PCS 
procedure code 0PS044Z), these cases group to MS-DRGs 981, 982, and 
983. The reason for this grouping is because whenever there is a 
surgical procedure reported on a claim, which is unrelated to the MDC 
to which the case was assigned based on the principal diagnosis, it 
results in an MS-DRG assignment to a surgical class referred to as 
``unrelated operating room procedures.'' In the example provided, 
because the ICD-10-CM diagnosis code Q67.6 describing pectus excavatum 
is classified to MDC 4 and the ICD-10-PCS procedure code 0PS044Z is 
classified to MDC 8, the GROUPER logic assigns this case to the 
``unrelated operating room procedures'' set of MS-DRGs.
    During our review of ICD-10-CM diagnosis code Q67.6, we also 
reviewed additional ICD-10-CM diagnosis codes in the Q65 through Q79 
code range to determine if there might be other conditions classified 
to MDC 4 that describe congenital malformations and deformities of the 
musculoskeletal system. We identified the following six ICD-10-CM 
diagnosis codes:

------------------------------------------------------------------------
         ICD-10-CM code                      Code description
------------------------------------------------------------------------
Q67.7..........................  Pectus carinatum.
Q76.6..........................  Other congenital malformations of ribs.
Q76.7..........................  Congenital malformation of sternum.
Q76.8..........................  Other congenital malformations of bony
                                  thorax.
Q76.9..........................  Congenital malformation of bony thorax,
                                  unspecified.
Q77.2..........................  Short rib syndrome.
------------------------------------------------------------------------

    In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20243), we 
proposed to reassign ICD-10-CM diagnosis code Q67.6, as well as the 
additional six ICD-10-CM diagnosis codes above describing congenital 
musculoskeletal conditions, from MDC 4 to MDC 8 where other related 
congenital conditions that correspond to the musculoskeletal system are 
classified, as discussed further below.
    We identified other related ICD-10-CM diagnosis codes that are 
currently assigned to MDC 8 in categories Q67 (Congenital 
musculoskeletal deformities of head, face, spine and chest), Q76 
(Congenital malformations of spine and bony thorax), and Q77 
(Osteochondrodysplasia with defects of growth of tubular bones and 
spine) that are listed in the following table.

[[Page 41241]]



------------------------------------------------------------------------
         ICD-10-CM code                      Code description
------------------------------------------------------------------------
Q67.0..........................  Congenital facial asymmetry.
Q67.1..........................  Congenital compression facies.
Q67.2..........................  Dolichocephaly.
Q67.3..........................  Plagiocephaly.
Q67.4..........................  Other congenital deformities of skull,
                                  face and jaw.
Q67.5..........................  Congenital deformity of spine.
Q67.8..........................  Other congenital deformities of chest.
Q76.1..........................  Klippel-Feil syndrome.
Q76.2..........................  Congenital spondylolisthesis.
Q76.3..........................  Congenital scoliosis due to congenital
                                  bony malformation.
Q76.411........................  Congenital kyphosis, occipito-atlanto-
                                  axial region.
Q76.412........................  Congenital kyphosis, cervical region.
Q76.413........................  Congenital kyphosis, cervicothoracic
                                  region.
Q76.414........................  Congenital kyphosis, thoracic region.
Q76.415........................  Congenital kyphosis, thoracolumbar
                                  region.
Q76.419........................  Congenital kyphosis, unspecified
                                  region.
Q76.425........................  Congenital lordosis, thoracolumbar
                                  region.
Q76.426........................  Congenital lordosis, lumbar region.
Q76.427........................  Congenital lordosis, lumbosacral
                                  region.
Q76.428........................  Congenital lordosis, sacral and
                                  sacrococcygeal region.
Q76.429........................  Congenital lordosis, unspecified
                                  region.
Q76.49.........................  Other congenital malformations of
                                  spine, not associated with scoliosis.
Q76.5..........................  Cervical rib.
Q77.0..........................  Achondrogenesis.
Q77.1..........................  Thanatophoric short stature.
Q77.3..........................  Chondrodysplasia punctate.
Q77.4..........................  Achondroplasia.
Q77.5..........................  Diastrophic dysplasia.
Q77.6..........................  Chondroectodermal dysplasia.
Q77.7..........................  Spondyloepiphyseal dysplasia.
Q77.8..........................  Other osteochondrodysplasia with
                                  defects of growth of tubular bones and
                                  spine.
Q77.9..........................  Osteochondrodysplasia with defects of
                                  growth of tubular bones and spine,
                                  unspecified.
------------------------------------------------------------------------

    Next, we analyzed the MS-DRG assignments for the related codes 
listed above and found that cases with the following conditions are 
assigned to MS-DRGs 551 and 552 (Medical Back Problems with and without 
MCC, respectively) under MDC 8.

------------------------------------------------------------------------
         ICD-10-CM code                      Code description
------------------------------------------------------------------------
Q76.2..........................  Congenital spondylolisthesis.
Q76.411........................  Congenital kyphosis, occipito-atlanto-
                                  axial region.
Q76.412........................  Congenital kyphosis, cervical region.
Q76.413........................  Congenital kyphosis, cervicothoracic
                                  region.
Q76.414........................  Congenital kyphosis, thoracic region.
Q76.415........................  Congenital kyphosis, thoracolumbar
                                  region.
Q76.419........................  Congenital kyphosis, unspecified
                                  region.
Q76.49.........................  Other congenital malformations of
                                  spine, not associated with scoliosis.
------------------------------------------------------------------------

    The remaining conditions shown below are assigned to MS-DRGs 564, 
565, and 566 (Other Musculoskeletal System and Connective Tissue 
Diagnoses with MCC, with CC, and without CC/MCC, respectively) under 
MDC 8.

------------------------------------------------------------------------
         ICD-10-CM code                      Code description
------------------------------------------------------------------------
Q67.0..........................  Congenital facial asymmetry.
Q67.1..........................  Congenital compression facies.
Q67.2..........................  Dolichocephaly.
Q67.3..........................  Plagiocephaly.
Q67.4..........................  Other congenital deformities of skull,
                                  face and jaw.
Q67.5..........................  Congenital deformity of spine.
Q67.8..........................  Other congenital deformities of chest.
Q76.1..........................  Klippel-Feil syndrome.
Q76.3..........................  Congenital scoliosis due to congenital
                                  bony malformation.
Q76.425........................  Congenital lordosis, thoracolumbar
                                  region.
Q76.426........................  Congenital lordosis, lumbar region.
Q76.427........................  Congenital lordosis, lumbosacral
                                  region.
Q76.428........................  Congenital lordosis, sacral and
                                  sacrococcygeal region.

[[Page 41242]]

 
Q76.429........................  Congenital lordosis, unspecified
                                  region.
Q76.5..........................  Cervical rib.
Q77.0..........................  Achondrogenesis.
Q77.1..........................  Thanatophoric short stature.
Q77.3..........................  Chondrodysplasia punctate.
Q77.4..........................  Achondroplasia.
Q77.5..........................  Diastrophic dysplasia.
Q77.6..........................  Chondroectodermal dysplasia.
Q77.7..........................  Spondyloepiphyseal dysplasia.
Q77.8..........................  Other osteochondrodysplasia with
                                  defects of growth of tubular bones and
                                  spine.
Q77.9..........................  Osteochondrodysplasia with defects of
                                  growth of tubular bones and spine,
                                  unspecified.
------------------------------------------------------------------------

    As a result of our review, we proposed to reassign ICD-10-CM 
diagnosis code Q67.6, as well as the additional six ICD-10-CM diagnosis 
codes above describing congenital musculoskeletal conditions, from MDC 
4 to MDC 8 in MS-DRGs 564, 565, and 566. Our clinical advisors agreed 
with this proposed reassignment because it is clinically appropriate 
and consistent with the other related ICD-10-CM diagnosis codes grouped 
in the Q65 through Q79 range that describe congenital malformations and 
deformities of the musculoskeletal system that are classified under MDC 
8 in MS-DRGs 564, 565, and 566. We stated in the propsed rule that by 
reassigning ICD-10-CM diagnosis code Q67.6 and the additional six ICD-
10-CM diagnosis codes listed in the table above from MDC 4 to MDC 8, 
cases reporting these ICD-10-CM diagnosis codes in combination with the 
respective ICD-10-PCS procedure code will reflect a more appropriate 
grouping from a clinical perspective because they will now be 
classified under a surgical musculoskeletal system related MS-DRG and 
will no longer result in an MS-DRG assignment to the ``unrelated 
operating room procedures'' surgical class.
    In summary, we proposed to reassign ICD-10-CM diagnosis codes 
Q67.6, Q67.7, Q76.6, Q76.7, Q76.8, Q76.9, and Q77.2 from MDC 4 to MDC 8 
in MS-DRGs 564, 565, and 566 (Other Musculoskeletal System and 
Connective Tissue Diagnoses with MCC, with CC, and without CC/MCC, 
respectively).
    Comment: Commenters supported the proposal to reassign the seven 
ICD-10-CM diagnosis codes describing congenital musculoskeletal 
conditions from MDC 4 to MDC 8 into MS-DRGs 564, 565 and 566. The 
commenters stated that the proposal was reasonable, given the ICD-10-CM 
codes and the information provided.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing the proposal to reassign ICD-10-CM diagnosis codes Q67.6, 
Q67.7, Q76.6, Q76.7, Q76.8, Q76.9, and Q77.2 from MDC 4 to MDC 8 in MS-
DRGs 564, 565, and 566 under the ICD-10 MS-DRGs Version 36, effective 
October 1, 2018.
    We also received a request recommending that CMS reassign cases for 
sternal fracture repair procedures from MS-DRGs 981, 982, and 983 and 
from MS-DRGs 166, 167 and 168 (Other Respiratory System O.R. Procedures 
with MCC, with CC and without CC/MCC, respectively) under MDC 4 to MS-
DRGs 515, 516, and 517 under MDC 8. The requester noted that clavicle 
fracture repair procedures with an internal fixation device group to 
MS-DRGs 515, 516, and 517 when reported with an ICD-10-CM diagnosis 
code describing a fractured clavicle. However, sternal fracture repair 
procedures with an internal fixation device group to MS-DRGs 981, 982, 
and 983 or MS-DRGs 166, 167 and 168 when reported with an ICD-10-CM 
diagnosis code describing a fracture of the sternum. According to the 
requestor, because the clavicle and sternum are in the same anatomical 
region of the body, it would appear that assignment to MS-DRGs 515, 
516, and 517 would be more appropriate for sternal fracture repair 
procedures.
    The requestor provided the following list of ICD-10-PCS procedure 
codes in its request for consideration to reassign to MS-DRGs 515, 516 
and 517 when reported with an ICD-10-CM diagnosis code for sternal 
fracture.

------------------------------------------------------------------------
        ICD-10-PCS code                      Code description
------------------------------------------------------------------------
0PS000Z........................  Reposition sternum with rigid plate
                                  internal fixation device, open
                                  approach.
0PS004Z........................  Reposition sternum with internal
                                  fixation device, open approach.
0PS00ZZ........................  Reposition sternum, open approach.
0PS030Z........................  Reposition sternum with rigid plate
                                  internal fixation device, percutaneous
                                  approach.
0PS034Z........................  Reposition sternum with internal
                                  fixation device, percutaneous
                                  approach.
------------------------------------------------------------------------

    We noted that the above five ICD-10-PCS procedure codes that may be 
reported to describe a sternal fracture repair are already assigned to 
MS-DRGs 515, 516, and 517 under MDC 8. In addition, ICD-10-PCS 
procedure codes 0PS000Z and 0PS030Z are assigned to MS-DRGs 166, 167 
and 168 under MDC 4.
    As noted in the previous discussion, whenever there is a surgical 
procedure reported on a claim, which is unrelated to the MDC to which 
the case was assigned based on the principal diagnosis, it results in 
an MS-DRG assignment to a surgical class referred to as ``unrelated 
operating room procedures.'' In the examples provided by the requestor, 
when the ICD-10-CM diagnosis code describing a sternal fracture is 
classified under MDC 4 and the ICD-10-PCS procedure code describing a 
sternal fracture repair procedure is classified under MDC 8, the 
GROUPER logic assigns these cases to the ``unrelated operating room 
procedures'' group of MS-DRGs (981, 982, and 983) and when the ICD-10-
CM diagnosis code describing a sternal fracture is classified under MDC 
4 and the ICD-10-PCS procedure code

[[Page 41243]]

describing a sternal repair procedure is also classified under MDC 4, 
the GROUPER logic assigns these cases to MS-DRG 166, 167, or 168.
    For our review of this grouping issue and the request to have 
procedures for sternal fracture repairs assigned to MDC 8, we analyzed 
the ICD-10-CM diagnosis codes describing a sternal fracture currently 
classified under MDC 4. We identified 10 ICD-10-CM diagnosis codes 
describing a sternal fracture with an ``initial encounter'' classified 
under MDC 4 that are listed in the following table.

------------------------------------------------------------------------
         ICD-10-CM code                      Code description
------------------------------------------------------------------------
S22.20XA.......................  Unspecified fracture of sternum,
                                  initial encounter for closed fracture.
S22.20XB.......................  Unspecified fracture of sternum,
                                  initial encounter for open fracture.
S22.21XA.......................  Fracture of manubrium, initial
                                  encounter for closed fracture.
S22.21XB.......................  Fracture of manubrium, initial
                                  encounter for open fracture.
S22.22XA.......................  Fracture of body of sternum, initial
                                  encounter for closed fracture.
S22.22XB.......................  Fracture of body of sternum, initial
                                  encounter for open fracture.
S22.23XA.......................  Sternal manubrial dissociation, initial
                                  encounter for closed fracture.
S22.23XB.......................  Sternal manubrial dissociation, initial
                                  encounter for open fracture.
S22.24XA.......................  Fracture of xiphoid process, initial
                                  encounter for closed fracture.
S22.24XB.......................  Fracture of xiphoid process, initial
                                  encounter for open fracture.
------------------------------------------------------------------------

    Our analysis of this grouping issue confirmed that when 1 of the 10 
ICD-10-CM diagnosis codes describing a sternal fracture listed in the 
table above from MDC 4 is reported as a principal diagnosis with an 
ICD-10-PCS procedure code for a sternal repair procedure from MDC 8, 
these cases group to MS-DRG 981, 982, or 983. We also confirmed that 
when 1 of the 10 ICD-10-CM diagnosis codes describing a sternal 
fracture listed in the table above from MDC 4 is reported as a 
principal diagnosis with an ICD-10-PCS procedure code for a sternal 
repair procedure from MDC 4, these cases group to MS-DRG 166, 167 or 
168.
    Our clinical advisors agreed with the requested reclassification of 
ICD-10-CM diagnosis codes S22.20XA, S22.20XB, S22.21XA, S22.21XB, 
S22.22XA, S22.22XB, S22.23XA, S22.23XB, S22.24XA, and S22.24XB 
describing a sternal fracture with an initial encounter from MDC 4 to 
MDC 8. They advised that this requested reclassification is clinically 
appropriate because it is consistent with the other related ICD-10-CM 
diagnosis codes that describe fractures of the sternum and which are 
classified under MDC 8. The ICD-10-CM diagnosis codes describing a 
sternal fracture currently classified under MDC 8 to MS-DRGs 564, 565, 
and 566 are listed in the following table.

------------------------------------------------------------------------
         ICD-10-CM code                      Code description
------------------------------------------------------------------------
S22.20XD.......................  Unspecified fracture of sternum,
                                  subsequent encounter for fracture with
                                  routine healing.
S22.20XG.......................  Unspecified fracture of sternum,
                                  subsequent encounter for fracture with
                                  delayed healing.
S22.20XK.......................  Unspecified fracture of sternum,
                                  subsequent encounter for fracture with
                                  nonunion.
S22.20XS.......................  Unspecified fracture of sternum,
                                  sequela.
S22.21XD.......................  Fracture of manubrium, subsequent
                                  encounter for fracture with routine
                                  healing.
S22.21XG.......................  Fracture of manubrium, subsequent
                                  encounter for fracture with delayed
                                  healing.
S22.21XK.......................  Fracture of manubrium, subsequent
                                  encounter for fracture with nonunion.
S22.21XS.......................  Fracture of manubrium, sequela.
S22.22XD.......................  Fracture of body of sternum, subsequent
                                  encounter for fracture with routine
                                  healing.
S22.22XG.......................  Fracture of body of sternum, subsequent
                                  encounter for fracture with delayed
                                  healing.
S22.22XK.......................  Fracture of body of sternum, subsequent
                                  encounter for fracture with nonunion.
S22.22XS.......................  Fracture of body of sternum, sequela.
S22.23XD.......................  Sternal manubrial dissociation,
                                  subsequent encounter for fracture with
                                  routine healing.
S22.23XG.......................  Sternal manubrial dissociation,
                                  subsequent encounter for fracture with
                                  delayed healing.
S22.23XK.......................  Sternal manubrial dissociation,
                                  subsequent encounter for fracture with
                                  nonunion.
S22.23XS.......................  Sternal manubrial dissociation,
                                  sequela.
S22.24XD.......................  Fracture of xiphoid process, subsequent
                                  encounter for fracture with routine
                                  healing.
S22.24XG.......................  Fracture of xiphoid process, subsequent
                                  encounter for fracture with delayed
                                  healing.
S22.24XK.......................  Fracture of xiphoid process, subsequent
                                  encounter for fracture with nonunion.
S22.24XS.......................  Fracture of xiphoid process, sequela.
------------------------------------------------------------------------

    We stated in the proposed rule that by reclassifying the 10 ICD-10-
CM diagnosis codes listed in the table earlier in this section 
describing sternal fracture codes with an ``initial encounter'' from 
MDC 4 to MDC 8, the cases reporting these ICD-10-CM diagnosis codes in 
combination with the respective ICD-10-PCS procedure codes will reflect 
a more appropriate grouping from a clinical perspective and will no 
longer result in an MS-DRG assignment to the ``unrelated operating room 
procedures'' surgical class when reported with a surgical procedure 
classified under MDC 8.
    Therefore, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 
20245), we proposed to reassign ICD-10-CM diagnosis codes S22.20XA, 
S22.20XB, S22.21XA, S22.21XB, S22.22XA, S22.22XB, S22.23XA, S22.23XB, 
S22.24XA, and S22.24XB from under MDC 4 to MDC 8 to MS-DRGs 564, 565, 
and 566. We invited public comments on our proposals.
    Comment: Commenters supported the proposal to reassign the 10 ICD-
10-CM diagnosis codes describing sternal fractures with an initial 
encounter from MDC 4 to MDC 8 into MS-DRGs 564, 565 and 566. The 
commenters stated that the proposal was reasonable, given

[[Page 41244]]

the ICD-10-CM codes and the information provided.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing the proposal to reassign ICD-10-CM diagnosis codes S22.20XA, 
S22.20XB, S22.21XA, S22.21XB, S22.22XA, S22.22XB, S22.23XA, S22.23XB, 
S22.24XA, and S22.24XB from MDC 4 to MDC 8 to MS-DRGs 564, 565, and 566 
under the ICD-10 MS-DRGs Version 36, effective October 1, 2018.
    In addition, we received a request recommending that CMS reassign 
cases for rib fracture repair procedures from MS-DRGs 981, 982, and 
983, and from MS-DRGs 166, 167 and 168 (Other Respiratory System O.R. 
Procedures with MCC, with CC, and without CC/MCC, respectively) under 
MDC 4 to MS-DRGs 515, 516, and 517 under MDC 8. The requestor noted 
that clavicle fracture repair procedures with an internal fixation 
device group to MS-DRGs 515, 516, and 517 when reported with an ICD-10-
CM diagnosis code describing a fractured clavicle. However, rib 
fracture repair procedures with an internal fixation device group to 
MS-DRGs 981, 982, and 983 or to MS-DRGs 166, 167 and 168 when reported 
with an ICD-10-CM diagnosis code describing a rib fracture. According 
to the requestor, because the clavicle and ribs are in the same 
anatomical region of the body, it would appear that assignment to MS-
DRGs 515, 516, and 517 would be more appropriate for rib fracture 
repair procedures.
    The requestor provided the following list of 10 ICD-10-PCS 
procedure codes in its request for consideration for reassignment to 
MS-DRGs 515, 516 and 517 when reported with an ICD-10-CM diagnosis code 
for rib fracture.

------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
0PH104Z...................  Insertion of internal fixation device into 1
                             to 2 ribs, open approach.
0PH134Z...................  Insertion of internal fixation device into 1
                             to 2 ribs, percutaneous approach.
0PH144Z...................  Insertion of internal fixation device into 1
                             to 2 ribs, percutaneous endoscopic
                             approach.
0PH204Z...................  Insertion of internal fixation device into 3
                             or more ribs, open approach.
0PH234Z...................  Insertion of internal fixation device into 3
                             or more ribs, percutaneous approach.
0PH244Z...................  Insertion of internal fixation device into 3
                             or more ribs, percutaneous endoscopic
                             approach.
0PS104Z...................  Reposition 1 to 2 ribs with internal
                             fixation device, open approach.
0PS134Z...................  Reposition 1 to 2 ribs with internal
                             fixation device, percutaneous approach.
0PS204Z...................  Reposition 3 or more ribs with internal
                             fixation, device, open approach.
0PS234Z...................  Reposition 3 or more ribs with internal
                             fixation device, percutaneous approach.
------------------------------------------------------------------------

    We note that the above 10 ICD-10-PCS procedure codes that may be 
reported to describe a rib fracture repair are already assigned to MS-
DRGs 515, 516, and 517 under MDC 8. In addition, 6 of the 10 ICD-10-PCS 
procedure codes listed above (0PH104Z, 0PH134Z, 0PH144Z, 0PH204Z, 
0PH234Z and 0PH244Z) are also assigned to MS-DRGs 166, 167, and 168 
under MDC 4.
    As noted in the previous discussions above, whenever there is a 
surgical procedure reported on a claim, which is unrelated to the MDC 
to which the case was assigned based on the principal diagnosis, it 
results in an MS-DRG assignment to a surgical class referred to as 
``unrelated operating room procedures.'' In the examples provided by 
the requestor, when the ICD-10-CM diagnosis code describing a rib 
fracture is classified under MDC 4 and the ICD-10-PCS procedure code 
describing a rib fracture repair procedure is classified under MDC 8, 
the GROUPER logic assigns these cases to the ``unrelated operating room 
procedures'' group of MS-DRGs (981, 982, and 983) and when the ICD-10-
CM diagnosis code describing a rib fracture is classified under MDC 4 
and the ICD-10-PCS procedure code describing a rib repair procedure is 
also classified under MDC 4, the GROUPER logic assigns these cases to 
MS-DRG 166, 167, or 168.
    For our review of this grouping issue and the request to have 
procedures for rib fracture repairs assigned to MDC 8, we analyzed the 
ICD-10-CM diagnosis codes describing a rib fracture and found that, 
while some rib fracture ICD-10-CM diagnosis codes are classified under 
MDC 8 (which would result in those cases grouping appropriately to MS-
DRGs 515, 516, and 517), there are other ICD-10-CM diagnosis codes that 
are currently classified under MDC 4. We identified the following ICD-
10-CM diagnosis codes describing a rib fracture with an initial 
encounter classified under MDC 4, as listed in the following table.

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
S2231XA...................  Fracture of one rib, right side, initial
                             encounter for closed fracture.
S2231XB...................  Fracture of one rib, right side, initial
                             encounter for open fracture.
S2232XA...................  Fracture of one rib, left side, initial
                             encounter for closed fracture.
S2232XB...................  Fracture of one rib, left side, initial
                             encounter for open fracture.
S2239XA...................  Fracture of one rib, unspecified side,
                             initial encounter for closed fracture.
S2239XB...................  Fracture of one rib, unspecified side,
                             initial encounter for open fracture.
S2241XA...................  Multiple fractures of ribs, right side,
                             initial encounter for closed fracture.
S2241XB...................  Multiple fractures of ribs, right side,
                             initial encounter for open fracture.
S2242XA...................  Multiple fractures of ribs, left side,
                             initial encounter for closed fracture.
S2242XB...................  Multiple fractures of ribs, left side,
                             initial encounter for open fracture.
S2243XA...................  Multiple fractures of ribs, bilateral,
                             initial encounter for closed fracture.
S2243XB...................  Multiple fractures of ribs, bilateral,
                             initial encounter for open fracture.
S2249XA...................  Multiple fractures of ribs, unspecified
                             side, initial encounter for closed
                             fracture.
S2249XB...................  Multiple fractures of ribs, unspecified
                             side, initial encounter for open fracture.
S225XXA...................  Flail chest, initial encounter for closed
                             fracture.
S225XXB...................  Flail chest, initial encounter for open
                             fracture.
------------------------------------------------------------------------


[[Page 41245]]

    Our analysis of this grouping issue confirmed that, when one of the 
following four ICD-10-PCS procedure codes identified by the requestor 
(and listed in the table earlier in this section) from MDC 8 (0PS104Z, 
0PS134Z, 0PS204Z, or 0PS234Z) is reported to describe a rib fracture 
repair procedure with a principal diagnosis code for a rib fracture 
with an initial encounter listed in the table above from MDC 4, these 
cases group to MS-DRG 981, 982, or 983.
    During our review of those four repositioning of the rib procedure 
codes, we also identified the following four ICD-10-PCS procedure codes 
classified to MDC 8 that describe repositioning of the ribs.

------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
0PS10ZZ...................  Reposition 1 to 2 ribs, open approach.
0PS144Z...................  Reposition 1 to 2 ribs with internal
                             fixation device, percutaneous endoscopic
                             approach.
0PS20ZZ...................  Reposition 3 or more ribs, open approach.
0PS244Z...................  Reposition 3 or more ribs with internal
                             fixation device, percutaneous endoscopic
                             approach.
------------------------------------------------------------------------

    We confirmed that when one of the above four procedure codes is 
reported with a principal diagnosis code for a rib fracture listed in 
the table above from MDC 4, these cases also group to MS-DRG 981, 982, 
or 983.
    Lastly, we confirmed that when one of the six ICD-10-PCS procedure 
codes describing a rib fracture repair listed in the previous table 
above from MDC 4 is reported with a principal diagnosis code for a rib 
fracture with an initial encounter from MDC 4, these cases group to MS-
DRG 166, 167, or 168.
    In response to the request to reassign the procedure codes that 
describe a rib fracture repair procedure from MS-DRGs 981, 982, and 983 
and from MS-DRGs 166, 167, and 168 under MDC 4 to MS-DRGs 515, 516, and 
517 under MDC 8, as discussed above, the 10 ICD-10-PCS procedure codes 
submitted by the requestor that may be reported to describe a rib 
fracture repair are already assigned to MS-DRGs 515, 516, and 517 under 
MDC 8 and 6 of those 10 procedure codes (0PH104Z, 0PH134Z, 0PH144Z, 
0PH204Z, 0PH234Z, and 0PH244Z) are also assigned to MS-DRGs 166, 167, 
and 168 under MDC 4.
    We analyzed claims data from the September 2017 update of the FY 
2017 MedPAR file for cases reporting a principal diagnosis of a rib 
fracture (initial encounter) from the list of diagnosis codes shown in 
the table above with one of the six ICD-10-PCS procedure codes 
describing the insertion of an internal fixation device into the rib 
(0PH104Z, 0PH134Z, 0PH144Z, 0PH204Z, 0PH234Z, and 0PH244Z) in MS-DRGs 
166, 167, and 168 under MDC 4. Our findings are shown in the table 
below.

                              MS-DRGs for Other Respiratory System O.R. Procedures
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 166-All cases............................................          22,938            10.2         $24,299
MS-DRG 166-Cases with principal diagnosis of rib fracture(s) and              40            11.4          43,094
 insertion of internal fixation device for the rib(s)...........
MS-DRG 167-All cases............................................          10,815             5.7          13,252
MS-DRG 167-Cases with principal diagnosis of rib fracture(s) and              10             6.7          30,617
 insertion of internal fixation device for the rib(s)...........
MS-DRG 168-All cases............................................           3,242             3.1           9,708
MS-DRG 168-Cases with principal diagnosis of rib fracture(s) and               4               2          21,501
 insertion of internal fixation device for the rib(s)...........
----------------------------------------------------------------------------------------------------------------

    As shown in this table, there were a total of 22,938 cases in MS-
DRG 166, with an average length of stay of 10.2 days and average costs 
of $24,299. In MS-DRG 166, we found 40 cases reporting a principal 
diagnosis of a rib fracture(s) with insertion of an internal fixation 
device for the rib(s), with an average length of stay of 11.4 days and 
average costs of $43,094. There were a total of 10,815 cases in MS-DRG 
167, with an average length of stay of 5.7 days and average costs of 
$13,252. In MS-DRG 167, we found 10 cases reporting a principal 
diagnosis of a rib fracture(s) with insertion of an internal fixation 
device for the rib(s), with an average length of stay of 6.7 days and 
average costs of $30,617. There were a total of 3,242 cases in MS-DRG 
168, with an average length of stay of 3.1 days and average costs of 
$9,708. In MS-DRG 168, we found 4 cases reporting a principal diagnosis 
of a rib fracture(s) with insertion of an internal fixation device for 
the rib(s), with an average length of stay of 2 days and average costs 
of $21,501. Overall, for MS-DRGs 166, 167, and 168, there were a total 
of 54 cases reporting a principal diagnosis of a rib fracture(s) with 
insertion of an internal fixation device for the rib(s), demonstrating 
that while rib fractures may require treatment, they are not typically 
corrected surgically. Our clinical advisors agreed with the current 
assignment of procedure codes to MS-DRGs 166, 167, and 168 that may be 
reported to describe repair of a rib fracture under MDC 4, as well as 
the current assignment of procedure codes to MS-DRGs 515, 516, and 517 
that may be reported to describe repair of a rib fracture under MDC 8. 
Our clinical advisors noted that initial, acute rib fractures can cause 
numerous respiratory related issues requiring various treatments and 
problems with the healing of a rib fracture are considered 
musculoskeletal issues.
    We also noted that the procedure codes submitted by the requestor 
may be reported for other indications and they are not restricted to 
reporting for repair of a rib fracture. Therefore, assignment of these 
codes to the MDC 4 MS-DRGs and the MDC 8 MS-DRGs is clinically 
appropriate.
    To address the cases reporting procedure codes describing the

[[Page 41246]]

repositioning of a rib(s) that are grouping to MS-DRGs 981, 982, and 
983 when reported with a principal diagnosis of a rib fracture (initial 
encounter), in the FY 2019 IPPS/LTCH PPS proposed rule, we proposed to 
add the following eight ICD-10-PCS procedure codes currently assigned 
to MDC 8 into MDC 4, in MS-DRGs 166, 167 and 168.

------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
0PS104Z...................  Reposition 1 to 2 ribs with internal
                             fixation device, open approach.
0PS10ZZ...................  Reposition 1 to 2 ribs, open approach.
0PS134Z...................  Reposition 1 to 2 ribs with internal
                             fixation device, percutaneous approach.
0PS144Z...................  Reposition 1 to 2 ribs with internal
                             fixation device, percutaneous endoscopic
                             approach.
0PS204Z...................  Reposition 3 or more ribs with internal
                             fixation device, open approach.
0PS20ZZ...................  Reposition 3 or more ribs, open approach.
0PS234Z...................  Reposition 3 or more ribs with internal
                             fixation device, percutaneous approach.
0PS244Z...................  Reposition 3 or more ribs with internal
                             fixation device, percutaneous endoscopic
                             approach.
------------------------------------------------------------------------

    Our clinical advisors agreed with this proposed addition to the 
classification structure because it is clinically appropriate and 
consistent with the other related ICD-10-PCS procedure codes that may 
be reported to describe rib fracture repair procedures with the 
insertion of an internal fixation device and are classified under MDC 
4.
    We stated in the proposed rule that by adding the eight ICD-10-PCS 
procedure codes describing repositioning of the rib(s) that may be 
reported to describe a rib fracture repair procedure under the 
classification structure for MDC 4, these cases will no longer result 
in an MS-DRG assignment to the ``unrelated operating room procedures'' 
surgical class when reported with a diagnosis code under MDC 4.
    Comment: Commenters supported the proposal to add the eight ICD-10-
PCS procedure codes describing repositioning of the ribs to MDC 4 in 
MS-DRGs 166, 167 and 168. The commenters stated that the proposal was 
reasonable, given the data, the ICD-10-PCS codes and the information 
provided.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing the proposal to add ICD-10-PCS procedure codes 0PS104Z, 
0PS10ZZ, 0PS134Z, 0PS144Z, 0PS204Z, 0PS20ZZ, 0PS234Z and 0PS244Z 
currently assigned to MDC 8 into MDC 4 in MS-DRGs 166, 167 and 168 
under the ICD-10 MS-DRGs Version 36, effective October 1, 2018.
18. Changes to the ICD-10-CM and ICD-10-PCS Coding Systems
    In September 1985, the ICD-9-CM Coordination and Maintenance 
Committee was formed. This is a Federal interdepartmental committee, 
co-chaired by the National Center for Health Statistics (NCHS), the 
Centers for Disease Control and Prevention (CDC), and CMS, charged with 
maintaining and updating the ICD-9-CM system. The final update to ICD-
9-CM codes was made on October 1, 2013. Thereafter, the name of the 
Committee was changed to the ICD-10 Coordination and Maintenance 
Committee, effective with the March 19-20, 2014 meeting. The ICD-10 
Coordination and Maintenance Committee addresses updates to the ICD-10-
CM and ICD-10-PCS coding systems. The Committee is jointly responsible 
for approving coding changes, and developing errata, addenda, and other 
modifications to the coding systems to reflect newly developed 
procedures and technologies and newly identified diseases. The 
Committee is also responsible for promoting the use of Federal and non-
Federal educational programs and other communication techniques with a 
view toward standardizing coding applications and upgrading the quality 
of the classification system.
    The official list of ICD-9-CM diagnosis and procedure codes by 
fiscal year can be found on the CMS website at: http://cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/codes.html. The official 
list of ICD-10-CM and ICD-10-PCS codes can be found on the CMS website 
at: http://www.cms.gov/Medicare/Coding/ICD10/index.html.
    The NCHS has lead responsibility for the ICD-10-CM and ICD-9-CM 
diagnosis codes included in the Tabular List and Alphabetic Index for 
Diseases, while CMS has lead responsibility for the ICD-10-PCS and ICD-
9-CM procedure codes included in the Tabular List and Alphabetic Index 
for Procedures.
    The Committee encourages participation in the previously mentioned 
process by health-related organizations. In this regard, the Committee 
holds public meetings for discussion of educational issues and proposed 
coding changes. These meetings provide an opportunity for 
representatives of recognized organizations in the coding field, such 
as the American Health Information Management Association (AHIMA), the 
American Hospital Association (AHA), and various physician specialty 
groups, as well as individual physicians, health information management 
professionals, and other members of the public, to contribute ideas on 
coding matters. After considering the opinions expressed at the public 
meetings and in writing, the Committee formulates recommendations, 
which then must be approved by the agencies.
    The Committee presented proposals for coding changes for 
implementation in FY 2019 at a public meeting held on September 12-13, 
2017, and finalized the coding changes after consideration of comments 
received at the meetings and in writing by November 13, 2017.
    The Committee held its 2018 meeting on March 6-7, 2018. The 
deadline for submitting comments on these code proposals was scheduled 
for April 6, 2018. It was announced at this meeting that any new ICD-
10-CM/PCS codes for which there was consensus of public support and for 
which complete tabular and indexing changes would be made by May 2018 
would be included in the October 1, 2018 update to ICD-10-CM/ICD-10-
PCS. As discussed in earlier sections of the preamble of this final 
rule, there are new, revised, and deleted ICD-10-CM diagnosis codes and 
ICD-10-PCS procedure codes that are captured in Table 6A.--New 
Diagnosis Codes, Table 6B.--New Procedure Codes, Table 6C.--Invalid 
Diagnosis Codes, Table 6D.--Invalid Procedure Codes, Table 6E.--Revised 
Diagnosis Code Titles, and Table 6F.--Revised Procedure Code Titles for 
this final rule, which are available via the internet on the CMS 
website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. The code titles are adopted as 
part of the

[[Page 41247]]

ICD-10 (previously ICD-9-CM) Coordination and Maintenance Committee 
process. Therefore, although we make the code titles available for the 
IPPS proposed rule, they are not subject to comment in the proposed 
rule. Because of the length of these tables, they were not published in 
the Addendum to the proposed rule. Rather, they are available via the 
internet as discussed in section VI. of the Addendum to the proposed 
rule.
    Live Webcast recordings of the discussions of procedure codes at 
the Committee's September 12-13, 2017 meeting and March 6-7, 2018 
meeting can be obtained from the CMS website at: http://cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/index.html?redirect=/icd9ProviderDiagnosticCodes/03_meetings.asp. The minutes of the 
discussions of diagnosis codes at the September 12-13, 2017 meeting and 
March 6-7, 2018 meeting can be found at: http://www.cdc.gov/nchs/icd/icd10cm_maintenance.html. These websites also provide detailed 
information about the Committee, including information on requesting a 
new code, attending a Committee meeting, and timeline requirements and 
meeting dates.
    We encourage commenters to address suggestions on coding issues 
involving diagnosis codes to: Donna Pickett, Co-Chairperson, ICD-10 
Coordination and Maintenance Committee, NCHS, Room 2402, 3311 Toledo 
Road, Hyattsville, MD 20782. Comments may be sent by Email to: 
[email protected].
    Questions and comments concerning the procedure codes should be 
submitted via Email to: [email protected].
    In the September 7, 2001 final rule implementing the IPPS new 
technology add-on payments (66 FR 46906), we indicated we would attempt 
to include proposals for procedure codes that would describe new 
technology discussed and approved at the Spring meeting as part of the 
code revisions effective the following October.
    Section 503(a) of Public Law 108-173 included a requirement for 
updating diagnosis and procedure codes twice a year instead of a single 
update on October 1 of each year. This requirement was included as part 
of the amendments to the Act relating to recognition of new technology 
under the IPPS. Section 503(a) amended section 1886(d)(5)(K) of the Act 
by adding a clause (vii) which states that the Secretary shall provide 
for the addition of new diagnosis and procedure codes on April 1 of 
each year, but the addition of such codes shall not require the 
Secretary to adjust the payment (or diagnosis-related group 
classification) until the fiscal year that begins after such date. This 
requirement improves the recognition of new technologies under the IPPS 
by providing information on these new technologies at an earlier date. 
Data will be available 6 months earlier than would be possible with 
updates occurring only once a year on October 1.
    While section 1886(d)(5)(K)(vii) of the Act states that the 
addition of new diagnosis and procedure codes on April 1 of each year 
shall not require the Secretary to adjust the payment, or DRG 
classification, under section 1886(d) of the Act until the fiscal year 
that begins after such date, we have to update the DRG software and 
other systems in order to recognize and accept the new codes. We also 
publicize the code changes and the need for a mid-year systems update 
by providers to identify the new codes. Hospitals also have to obtain 
the new code books and encoder updates, and make other system changes 
in order to identify and report the new codes.
    The ICD-10 (previously the ICD-9-CM) Coordination and Maintenance 
Committee holds its meetings in the spring and fall in order to update 
the codes and the applicable payment and reporting systems by October 1 
of each year. Items are placed on the agenda for the Committee meeting 
if the request is received at least 2 months prior to the meeting. This 
requirement allows time for staff to review and research the coding 
issues and prepare material for discussion at the meeting. It also 
allows time for the topic to be publicized in meeting announcements in 
the Federal Register as well as on the CMS website. Final decisions on 
code title revisions are currently made by March 1 so that these titles 
can be included in the IPPS proposed rule. A complete addendum 
describing details of all diagnosis and procedure coding changes, both 
tabular and index, is published on the CMS and NCHS websites in June of 
each year. Publishers of coding books and software use this information 
to modify their products that are used by health care providers. This 
5-month time period has proved to be necessary for hospitals and other 
providers to update their systems.
    A discussion of this timeline and the need for changes are included 
in the December 4-5, 2005 ICD-9-CM Coordination and Maintenance 
Committee Meeting minutes. The public agreed that there was a need to 
hold the fall meetings earlier, in September or October, in order to 
meet the new implementation dates. The public provided comment that 
additional time would be needed to update hospital systems and obtain 
new code books and coding software. There was considerable concern 
expressed about the impact this April update would have on providers.
    In the FY 2005 IPPS final rule, we implemented section 
1886(d)(5)(K)(vii) of the Act, as added by section 503(a) of Public Law 
108-173, by developing a mechanism for approving, in time for the April 
update, diagnosis and procedure code revisions needed to describe new 
technologies and medical services for purposes of the new technology 
add-on payment process. We also established the following process for 
making these determinations. Topics considered during the Fall ICD-10 
(previously ICD-9-CM) Coordination and Maintenance Committee meeting 
are considered for an April 1 update if a strong and convincing case is 
made by the requester at the Committee's public meeting. The request 
must identify the reason why a new code is needed in April for purposes 
of the new technology process. The participants at the meeting and 
those reviewing the Committee meeting summary report are provided the 
opportunity to comment on this expedited request. All other topics are 
considered for the October 1 update. Participants at the Committee 
meeting are encouraged to comment on all such requests. There were not 
any requests approved for an expedited April 1, 2018 implementation of 
a code at the September 12-13, 2017 Committee meeting. Therefore, there 
were not any new codes for implementation on April 1, 2018.
    ICD-9-CM addendum and code title information is published on the 
CMS website at: http://www.cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/index.html?redirect=/icd9ProviderDiagnosticCodes/01overview.asp#TopofPage. ICD-10-CM and 
ICD-10-PCS addendum and code title information is published on the CMS 
website at: http://www.cms.gov/Medicare/Coding/ICD10/index.html. CMS 
also sends copies of all ICD-10-CM and ICD-10-PCS coding changes to its 
Medicare contractors for use in updating their systems and providing 
education to providers.
    Information on ICD-10-CM diagnosis codes, along with the Official 
ICD-10-CM Coding Guidelines, can also be found on the CDC website at: 
http://www.cdc.gov/nchs/icd/icd10.htm. Additionally, information on 
new, revised, and deleted ICD-10-CM/ICD-10-PCS codes is provided to the 
AHA for publication in the Coding Clinic for ICD-10. AHA also 
distributes coding update information to publishers and software 
vendors.

[[Page 41248]]

    The following chart shows the number of ICD-10-CM and ICD-10-PCS 
codes and code changes since FY 2016 when ICD-10 was implemented.

  Total Number of Codes and Changes in Total Number of Codes per Fiscal
                   Year ICD-10-CM and ICD-10-PCS Codes
------------------------------------------------------------------------
               Fiscal year                    Number          Change
------------------------------------------------------------------------
FY 2016:
  ICD-10-CM.............................          69,823  ..............
  ICD-10-PCS............................          71,974  ..............
FY 2017:
  ICD-10-CM.............................          71,486          +1,663
  ICD-10-PCS............................          75,789          +3,815
FY 2018:
  ICD-10-CM.............................          71,704            +218
  ICD-10-PCS............................          78,705          +2,916
FY 2019:................................
  ICD-10-CM.............................          71,932            +228
  ICD-10-PCS............................          78,881            +176
------------------------------------------------------------------------

    As mentioned previously, the public is provided the opportunity to 
comment on any requests for new diagnosis or procedure codes discussed 
at the ICD-10 Coordination and Maintenance Committee meeting.
    At the September 12-13, 2017 and March 6-7, 2018 Committee 
meetings, we discussed any requests we had received for new ICD-10-CM 
diagnosis codes and ICD-10-PCS procedure codes that were to be 
implemented on October 1, 2018. We invited public comments on any code 
requests discussed at the September 12-13, 2017 and March 6-7, 2018 
Committee meetings for implementation as part of the October 1, 2018 
update. The deadline for commenting on code proposals discussed at the 
September 12-13, 2017 Committee meeting was November 13, 2017. The 
deadline for commenting on code proposals discussed at the March 6-7, 
2018 Committee meeting was April 6, 2018.
19. Replaced Devices Offered Without Cost or With a Credit
a. Background
    In the FY 2008 IPPS final rule with comment period (72 FR 47246 
through 47251), we discussed the topic of Medicare payment for devices 
that are replaced without cost or where credit for a replaced device is 
furnished to the hospital. We implemented a policy to reduce a 
hospital's IPPS payment for certain MS-DRGs where the implantation of a 
device that subsequently failed or was recalled determined the base MS-
DRG assignment. At that time, we specified that we will reduce a 
hospital's IPPS payment for those MS-DRGs where the hospital received a 
credit for a replaced device equal to 50 percent or more of the cost of 
the device.
    In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51556 through 
51557), we clarified this policy to state that the policy applies if 
the hospital received a credit equal to 50 percent or more of the cost 
of the replacement device and issued instructions to hospitals 
accordingly.
b. Changes for FY 2019
    In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20250 through 
20251), for FY 2019, we did not propose to add any MS-DRGs to the 
policy for replaced devices offered without cost or with a credit. We 
proposed to continue to include the existing MS-DRGs currently subject 
to the policy as displayed in the table below.

------------------------------------------------------------------------
              MDC                    MS-DRG            MS-DRG title
------------------------------------------------------------------------
Pre-MDC........................             001  Heart Transplant or
                                                  Implant of Heart
                                                  Assist System with
                                                  MCC.
Pre-MDC........................             002  Heart Transplant or
                                                  Implant of Heart
                                                  Assist System without
                                                  MCC.
1..............................             023  Craniotomy with Major
                                                  Device Implant or
                                                  Acute Complex CNS
                                                  Principal Diagnosis
                                                  with MCC or
                                                  Chemotherapy Implant
                                                  or Epilepsy with
                                                  Neurostimulator.
1..............................             024  Craniotomy with Major
                                                  Device Implant or
                                                  Acute Complex CNS
                                                  Principal Diagnosis
                                                  without MCC.
1..............................             025  Craniotomy &
                                                  Endovascular
                                                  Intracranial
                                                  Procedures with MCC.
1..............................             026  Craniotomy &
                                                  Endovascular
                                                  Intracranial
                                                  Procedures with CC.
1..............................             027  Craniotomy &
                                                  Endovascular
                                                  Intracranial
                                                  Procedures without CC/
                                                  MCC.
1..............................             040  Peripheral, Cranial
                                                  Nerve & Other Nervous
                                                  System Procedures with
                                                  MCC.
1..............................             041  Peripheral, Cranial
                                                  Nerve & Other Nervous
                                                  System Procedures with
                                                  CC or Peripheral
                                                  Neurostimulator.
1..............................             042  Peripheral, Cranial
                                                  Nerve & Other Nervous
                                                  System Procedures
                                                  without CC/MCC.
3..............................             129  Major Head & Neck
                                                  Procedures with CC/MCC
                                                  or Major Device.
3..............................             130  Major Head & Neck
                                                  Procedures without CC/
                                                  MCC.
5..............................             215  Other Heart Assist
                                                  System Implant.
5..............................             216  Cardiac Valve & Other
                                                  Major Cardiothoracic
                                                  Procedure with Cardiac
                                                  Catheterization with
                                                  MCC.
5..............................             217  Cardiac Valve & Other
                                                  Major Cardiothoracic
                                                  Procedure with Cardiac
                                                  Catheterization with
                                                  CC.
5..............................             218  Cardiac Valve & Other
                                                  Major Cardiothoracic
                                                  Procedure with Cardiac
                                                  Catheterization
                                                  without CC/MCC.
5..............................             219  Cardiac Valve & Other
                                                  Major Cardiothoracic
                                                  Procedure without
                                                  Cardiac
                                                  Catheterization with
                                                  MCC.
5..............................             220  Cardiac Valve & Other
                                                  Major Cardiothoracic
                                                  Procedure without
                                                  Cardiac
                                                  Catheterization with
                                                  CC.
5..............................             221  Cardiac Valve & Other
                                                  Major Cardiothoracic
                                                  Procedure without
                                                  Cardiac
                                                  Catheterization
                                                  without CC/MCC.
5..............................             222  Cardiac Defibrillator
                                                  Implant with Cardiac
                                                  Catheterization with
                                                  AMI/Heart Failure/
                                                  Shock with MCC.

[[Page 41249]]

 
5..............................             223  Cardiac Defibrillator
                                                  Implant with Cardiac
                                                  Catheterization with
                                                  AMI/Heart Failure/
                                                  Shock without MCC.
5..............................             224  Cardiac Defibrillator
                                                  Implant with Cardiac
                                                  Catheterization
                                                  without AMI/Heart
                                                  Failure/Shock with
                                                  MCC.
5..............................             225  Cardiac Defibrillator
                                                  Implant with Cardiac
                                                  Catheterization
                                                  without AMI/Heart
                                                  Failure/Shock without
                                                  MCC.
5..............................             226  Cardiac Defibrillator
                                                  Implant without
                                                  Cardiac
                                                  Catheterization with
                                                  MCC.
5..............................             227  Cardiac Defibrillator
                                                  Implant without
                                                  Cardiac
                                                  Catheterization
                                                  without MCC.
5..............................             242  Permanent Cardiac
                                                  Pacemaker Implant with
                                                  MCC.
5..............................             243  Permanent Cardiac
                                                  Pacemaker Implant with
                                                  CC.
5..............................             244  Permanent Cardiac
                                                  Pacemaker Implant
                                                  without CC/MCC.
5..............................             245  AICD Generator
                                                  Procedures.
5..............................             258  Cardiac Pacemaker
                                                  Device Replacement
                                                  with MCC.
5..............................             259  Cardiac Pacemaker
                                                  Device Replacement
                                                  without MCC.
5..............................             260  Cardiac Pacemaker
                                                  Revision Except Device
                                                  Replacement with MCC.
5..............................             261  Cardiac Pacemaker
                                                  Revision Except Device
                                                  Replacement with CC.
5..............................             262  Cardiac Pacemaker
                                                  Revision Except Device
                                                  Replacement without CC/
                                                  MCC.
5..............................             265  AICD Lead Procedures.
5..............................             266  Endovascular Cardiac
                                                  Valve Replacement with
                                                  MCC.
5..............................             267  Endovascular Cardiac
                                                  Valve Replacement
                                                  without MCC.
5..............................             268  Aortic and Heart Assist
                                                  Procedures Except
                                                  Pulsation Balloon with
                                                  MCC.
5..............................             269  Aortic and Heart Assist
                                                  Procedures Except
                                                  Pulsation Balloon
                                                  without MCC.
5..............................             270  Other Major
                                                  Cardiovascular
                                                  Procedures with MCC.
5..............................             271  Other Major
                                                  Cardiovascular
                                                  Procedures with CC.
5..............................             272  Other Major
                                                  Cardiovascular
                                                  Procedures without CC/
                                                  MCC.
8..............................             461  Bilateral or Multiple
                                                  Major Joint Procedures
                                                  Of Lower Extremity
                                                  with MCC.
8..............................             462  Bilateral or Multiple
                                                  Major Joint Procedures
                                                  of Lower Extremity
                                                  without MCC.
8..............................             466  Revision of Hip or Knee
                                                  Replacement with MCC.
8..............................             467  Revision of Hip or Knee
                                                  Replacement with CC.
8..............................             468  Revision of Hip or Knee
                                                  Replacement without CC/
                                                  MCC.
8..............................             469  Major Hip and Knee
                                                  Joint Replacement or
                                                  Reattachment of Lower
                                                  Extremity with MCC or
                                                  Total Ankle
                                                  Replacement.
8..............................             470  Major Hip and Knee
                                                  Joint Replacement or
                                                  Reattachment of Lower
                                                  Extremity without MCC.
------------------------------------------------------------------------

    We did not receive any public comments on our proposal to continue 
to include the existing MS-DRGs currently subject to the policy and to 
not add any additional MS-DRGs. Therefore, we are finalizing the list 
of MS-DRGs in the table included in the proposed rule and above that 
will be subject to the replaced devices offered without cost or with a 
credit policy, effective October 1, 2018.
20. Other Policy Changes: Other Operating Room (O.R.) and Non-O.R. 
Issues
    In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20251 through 
20257), we addressed requests that we received regarding changing the 
designation of specific ICD-10-PCS procedure codes from non-O.R. to 
O.R. procedures, or changing the designation from O.R. procedure to 
non-O.R. procedure. In cases where we proposed to change the 
designation of procedure codes from non-O.R. to O.R. procedures, we 
also proposed one or more MS-DRGs with which these procedures are 
clinically aligned and to which the procedure code would be assigned. 
We generally examine the MS-DRG assignment for similar procedures, such 
as the other approaches for that procedure, to determine the most 
appropriate MS-DRG assignment for procedures newly designated as O.R. 
procedures. We invited public comments on these proposed MS-DRG 
assignments.
    We also noted that many MS-DRGs require the presence of any O.R. 
procedure. As a result, cases with a principal diagnosis associated 
with a particular MS-DRG would, by default, be grouped to that MS-DRG. 
Therefore, we do not list these MS-DRGs in our discussion below. 
Instead, we only discussed MS-DRGs that require explicitly adding the 
relevant procedures codes to the GROUPER logic in order for those 
procedure codes to affect the MS-DRG assignment as intended. In 
addition, cases that contain O.R. procedures will map to MS-DRGs 981, 
982, or 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis 
with MCC, with CC, and without CC/MCC, respectively) or MS-DRGs 987, 
988, or 989 (Non-Extensive O.R. Procedure Unrelated to Principal 
Diagnosis with MCC, with CC, and without CC/MCC, respectively) when 
they do not contain a principal diagnosis that corresponds to one of 
the MDCs to which that procedure is assigned. These procedures need not 
be assigned to MS-DRGs 981 through 989 in order for this to occur. 
Therefore, if requestors included some or all of MS-DRGs 981 through 
989 in their request or included MS-DRGs that require the presence of 
any O.R. procedure, we did not specifically address that aspect in 
summarizing their request or our response to the request in the section 
below.
(a) Percutaneous and Percutaneous Endoscopic Excision of Brain and 
Cerebral Ventricle
    One requestor identified 22 ICD-10-PCS procedure codes that 
describe procedures involving transcranial brain and cerebral ventricle 
excision that the requestor stated would generally require the 
resources of an operating room. The 22 procedure codes are listed in 
the following table.

------------------------------------------------------------------------
 ICD-10-PCS procedure code                Code description
------------------------------------------------------------------------
00B03ZX...................  Excision of brain, percutaneous approach,
                             diagnostic.

[[Page 41250]]

 
00B13ZX...................  Excision of cerebral meninges, percutaneous
                             approach, diagnostic.
00B23ZX...................  Excision of dura mater, percutaneous
                             approach, diagnostic.
00B63ZX...................  Excision of cerebral ventricle, percutaneous
                             approach, diagnostic.
00B73ZX...................  Excision of cerebral hemisphere,
                             percutaneous approach, diagnostic.
00B83ZX...................  Excision of basal ganglia, percutaneous
                             approach, diagnostic.
00B93ZX...................  Excision of thalamus, percutaneous approach,
                             diagnostic.
00BA3ZX...................  Excision of hypothalamus, percutaneous
                             approach, diagnostic.
00BB3ZX...................  Excision of pons, percutaneous approach,
                             diagnostic.
00BC3ZX...................  Excision of cerebellum, percutaneous
                             approach, diagnostic.
00BD3ZX...................  Excision of medulla oblongata, percutaneous
                             approach, diagnostic.
00B04ZX...................  Excision of brain, percutaneous endoscopic
                             approach, diagnostic.
00B14ZX...................  Excision of cerebral meninges, percutaneous
                             endoscopic approach, diagnostic.
00B24ZX...................  Excision of dura mater, percutaneous
                             endoscopic approach, diagnostic.
00B64ZX...................  Excision of cerebral ventricle, percutaneous
                             endoscopic approach, diagnostic.
00B74ZX...................  Excision of cerebral hemisphere,
                             percutaneous endoscopic approach,
                             diagnostic.
00B84ZX...................  Excision of basal ganglia, percutaneous
                             endoscopic approach, diagnostic.
00B94ZX...................  Excision of thalamus, percutaneous
                             endoscopic approach, diagnostic.
00BA4ZX...................  Excision of hypothalamus, percutaneous
                             endoscopic approach, diagnostic.
00BB4ZX...................  Excision of pons, percutaneous endoscopic
                             approach, diagnostic.
00BC4ZX...................  Excision of cerebellum, percutaneous
                             endoscopic approach, diagnostic.
00BD4ZX...................  Excision of medulla oblongata, percutaneous
                             endoscopic approach, diagnostic.
------------------------------------------------------------------------

    The requestor stated that, although percutaneous burr hole biopsies 
are performed through smaller openings in the skull than open burr hole 
biopsies, these procedures require drilling or cutting through the 
skull using sterile technique with anesthesia for pain control. The 
requestor also noted that similar procedures involving percutaneous 
drainage of the subdural space are currently classified as O.R. 
procedures in Version 35 of the ICD-10 MS-DRGs. However, these 22 ICD-
10-PCS procedure codes are not recognized as O.R. procedures for 
purposes of MS-DRG assignment. The requestor recommended that the 22 
ICD-10-PCS codes be designated as O.R. procedures and assigned to MS-
DRGs 25, 26, and 27 (Craniotomy and Endovascular Intracranial 
Procedures with MCC, with CC, and without CC/MCC, respectively).
    In the proposed rule, we stated that we agreed with the requestor 
that these procedures typically require the resources of an operating 
room. Therefore, we proposed to add these 22 ICD-10-PCS procedure codes 
to the FY 2019 ICD-10 MS-DRGs Version 36 Definitions Manual in Appendix 
E--Operating Room Procedures and Procedure Code/MS-DRG Index as O.R. 
procedures assigned to MS-DRGs 25, 26, and 27 in MDC 1 (Diseases and 
Disorders of the Nervous System).
    Comment: One commenter supported the proposal to change the 
designation of the 22 procedure codes listed in the table above to O.R. 
procedures.
    Response: We appreciate the commenter's support.
    After consideration of the public comment we received, we are 
finalizing our proposal to change the designation of the 22 ICD-10-PCS 
procedure codes shown in the table above from non-O.R. procedures to 
O.R. procedures, effective October 1, 2018.
b. Open Extirpation of Subcutaneous Tissue and Fascia
    One requestor identified 22 ICD-10-PCS procedure codes that 
describe procedures involving open extirpation of subcutaneous tissue 
and fascia that the requestor stated would generally require the 
resources of an operating room. The 22 procedure codes are listed in 
the following table.

------------------------------------------------------------------------
 ICD-10-PCS procedure code                Code description
------------------------------------------------------------------------
0JC00ZZ...................  Extirpation of matter from scalp
                             subcutaneous tissue and fascia, open
                             approach.
0JC10ZZ...................  Extirpation of matter from face subcutaneous
                             tissue and fascia, open approach.
0JC40ZZ...................  Extirpation of matter from right neck
                             subcutaneous tissue and fascia, open
                             approach.
0JC50ZZ...................  Extirpation of matter from left neck
                             subcutaneous tissue and fascia, open
                             approach.
0JC60ZZ...................  Extirpation of matter from chest
                             subcutaneous tissue and fascia, open
                             approach.
0JC70ZZ...................  Extirpation of matter from back subcutaneous
                             tissue and fascia, open approach.
0JC80ZZ...................  Extirpation of matter from abdomen
                             subcutaneous tissue and fascia, open
                             approach.
0JC90ZZ...................  Extirpation of matter from buttock
                             subcutaneous tissue and fascia, open
                             approach.
0JCB0ZZ...................  Extirpation of matter from perineum
                             subcutaneous tissue and fascia, open
                             approach.
0JCC0ZZ...................  Extirpation of matter from pelvic region
                             subcutaneous tissue and fascia, open
                             approach.
0JCD0ZZ...................  Extirpation of matter from right upper arm
                             subcutaneous tissue and fascia, open
                             approach.
0JCF0ZZ...................  Extirpation of matter from left upper arm
                             subcutaneous tissue and fascia, open
                             approach.
0JCG0ZZ...................  Extirpation of matter from right lower arm
                             subcutaneous tissue and fascia, open
                             approach.
0JCH0ZZ...................  Extirpation of matter from left lower arm
                             subcutaneous tissue and fascia, open
                             approach.
0JCJ0ZZ...................  Extirpation of matter from right hand
                             subcutaneous tissue and fascia, open
                             approach.
0JCK0ZZ...................  Extirpation of matter from left hand
                             subcutaneous tissue and fascia, open
                             approach.
0JCL0ZZ...................  Extirpation of matter from right upper leg
                             subcutaneous tissue and fascia, open
                             approach.
0JCM0ZZ...................  Extirpation of matter from left upper leg
                             subcutaneous tissue and fascia, open
                             approach.
0JCN0ZZ...................  Extirpation of matter from right lower leg
                             subcutaneous tissue and fascia, open
                             approach.
0JCP0ZZ...................  Extirpation of matter from left lower leg
                             subcutaneous tissue and fascia, open
                             approach.
0JCQ0ZZ...................  Extirpation of matter from right foot
                             subcutaneous tissue and fascia, open
                             approach.
0JCR0ZZ...................  Extirpation of matter from left foot
                             subcutaneous tissue and fascia, open
                             approach.
------------------------------------------------------------------------


[[Page 41251]]

    The requestor stated that these procedures involve making an open 
incision deeper than the skin under general anesthesia, and that 
irrigation and/or excision of devitalized tissue or cavity are often 
required and are considered inherent to the procedure. The requestor 
also stated that open drainage of subcutaneous tissue and fascia, open 
excisional debridement of subcutaneous tissue and fascia, and open 
nonexcisional debridement/extraction of subcutaneous tissue and fascia 
are designated as O.R. procedures, and that these 22 procedures should 
be designated as O.R. procedures for the same reason. In the ICD-10 MS-
DRGs Version 35, these 22 ICD-10-PCS procedure codes are not recognized 
as O.R. procedures for purposes of MS-DRG assignment. The requestor 
recommended that the 22 ICD-10-PCS procedure codes listed in the table 
be assigned to MS-DRGs 579, 580, and 581 (Other Skin, Subcutaneous 
Tissue and Breast Procedures with MCC, CC, and without CC/MCC, 
respectively).
    In the proposed rule, we stated that we disagreed with the 
requestor that these procedures typically require the resources of an 
operating room. Our clinical advisors indicated that these open 
extirpation procedures are minor procedures that can be performed 
outside of an operating room, such as in a radiology suite with CT or 
MRI guidance. We disagreed that these procedures are similar to open 
drainage procedures. Therefore, we proposed to maintain the status of 
these 22 ICD-10-PCS procedure codes as non-O.R. procedures.
    Comment: Some commenters supported the proposal to maintain the 
designation of the 22 identified procedure codes as non-O.R. 
procedures. One commenter opposed the proposal, stating that open 
extirpation procedures typically require the use of anesthesia and an 
operating room. This commenter stated that the 22 procedures are 
similar to open drainage, excisional debridement, and non-excisional 
debridement/extraction of subcutaneous tissue and fascia, which are 
designated as O.R. procedures.
    Response: We appreciate the commenters' support. In response to the 
commenter who opposed the proposal, our clinical advisors continue to 
believe that these open extirpation procedures are minor procedures 
that can be performed outside of an operating room, such as in a 
radiology suite with CT or MRI guidance, and therefore do not require 
the use of an operating room. Our clinical advisors further noted that 
the use of anesthesia frequently occurs in a CT or MRI suite. In 
addition, our clinical advisors continue to disagree with the assertion 
that these procedures are similar to open drainage procedures because 
fewer resources are required for open extirpation procedures relative 
to open drainage procedures and the open extirpation procedures are not 
usually performed in the operating room.
    After consideration of the public comments we received, we are 
finalizing our proposal to maintain the non-O.R. status of the 22 
identified open extirpation procedures.
c. Open Scrotum and Breast Procedures
    One requestor identified 13 ICD-10-PCS procedure codes that 
describe procedures involving open drainage, open extirpation, and open 
debridement/excision of the scrotum and breast. The requestor stated 
that the 13 procedures listed in the following table involve making an 
open incision deeper than the skin under general anesthesia, and that 
irrigation and/or excision of devitalized tissue or cavity are often 
required and are considered inherent to the procedure. The requestor 
also stated that open drainage of subcutaneous tissue and fascia, open 
excisional debridement of subcutaneous tissue and fascia, open non-
excisional debridement/extraction of subcutaneous tissue and fascia, 
and open excision of breast are designated as O.R. procedures, and that 
these 13 procedures should be designated as O.R. procedures for the 
same reason. In the ICD-10 MS-DRGs Version 35, these 13 ICD-10-PCS 
procedure codes are not recognized as O.R. procedures for purposes of 
MS-DRG assignment.

------------------------------------------------------------------------
 ICD-10-PCS procedure code                Code description
------------------------------------------------------------------------
0V950ZZ...................  Drainage of scrotum, open approach.
0VB50ZZ...................  Excision of scrotum, open approach.
0VC50ZZ...................  Extirpation of matter from scrotum, open
                             approach.
0H9U0ZZ...................  Drainage of left breast, open approach.
0H9T0ZZ...................  Drainage of right breast, open approach.
0H9V0ZZ...................  Drainage of bilateral breast, open approach.
0H9W0ZZ...................  Drainage of right nipple, open approach.
0H9X0ZZ...................  Drainage of left nipple, open approach.
0HCT0ZZ...................  Extirpation of matter from right breast,
                             open approach.
0HCU0ZZ...................  Extirpation of matter from left breast, open
                             approach.
0HCV0ZZ...................  Extirpation of matter from bilateral breast,
                             open approach.
0HCW0ZZ...................  Extirpation of matter from right nipple,
                             open approach.
0HCX0ZZ...................  Extirpation of matter from left nipple, open
                             approach.
------------------------------------------------------------------------

    The requestor recommended that the 3 ICD-10-PCS scrotal procedure 
codes be assigned to MS-DRGs 717 and 718 (Other Male Reproductive 
System O.R. Procedures Except Malignancy with CC/MCC and without CC/
MCC, respectively) and the 10 breast procedure codes be assigned to MS-
DRGs 584 and 585 (Breast Biopsy, Local Excision and Other Breast 
Procedures with CC/MCC and without CC/MCC, respectively).
    In the proposed rule, we stated that we agreed with the requestor 
that these procedures typically require the resources of an operating 
room due to the nature of breast and scrotal tissue, as well as with 
the MS-DRG assignments recommended by the requestor. In addition, we 
stated that we believe that the scrotal codes should also be assigned 
to MS-DRGs 715 and 716 (Other Male Reproductive System O.R. Procedures 
for Malignancy with CC/MCC and without CC/MCC, respectively). 
Therefore, we proposed to add these 13 ICD-10-PCS procedure codes to 
the FY 2019 ICD-10 MS-DRGs Version 36 Definitions Manual in Appendix 
E--Operating Room Procedures and Procedure Code/MS-DRG Index as O.R. 
procedures, assigned to MS-DRGs 715, 716, 717, and 718 in MDC 12 
(Diseases and Disorders of the Male Reproductive System) for the 
scrotal procedure codes and assigned to MS-DRGs 584 and 585 in MDC 9 
(Diseases and Disorders of the Skin,

[[Page 41252]]

Subcutaneous Tissue & Breast) for the breast procedure codes.
    Comment: Commenters supported the proposal to change the 
designation of the 13 identified procedure codes to O.R. procedures.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to change the designation of the 13 ICD-10-PCS 
procedure codes shown in the table above from non-O.R. procedures to 
O.R. procedures, effective October 1, 2018.
d. Open Parotid Gland and Submaxillary Gland Procedures
    One requestor identified eight ICD-10-PCS procedure codes that 
describe procedures involving open drainage and open extirpation of the 
parotid or submaxillary glands, shown in the following table.

------------------------------------------------------------------------
 ICD-10-PCS procedure code                Code description
------------------------------------------------------------------------
0C980ZZ...................  Drainage of right parotid gland, open
                             approach.
0C990ZZ...................  Drainage of left parotid gland, open
                             approach.
0C9G0ZZ...................  Drainage of right submaxillary gland, open
                             approach.
0C9H0ZZ...................  Drainage of left submaxillary gland, open
                             approach.
0CC80ZZ...................  Extirpation of matter from right parotid
                             gland, open approach.
0CC90ZZ...................  Extirpation of matter from left parotid
                             gland, open approach.
0CCG0ZZ...................  Extirpation of matter from right
                             submaxillary gland, open approach.
0CCH0ZZ...................  Extirpation of matter from left submaxillary
                             gland, open approach.
------------------------------------------------------------------------

    The requestor stated that these procedures involve making an open 
incision through subcutaneous tissue, fascia, and potentially muscle, 
to reach and incise the parotid or submaxillary gland under general 
anesthesia, and that irrigation and/or excision of devitalized tissue 
or cavity may be required and are considered inherent to the procedure. 
The requestor also stated that open drainage of subcutaneous tissue and 
fascia, open excisional debridement of subcutaneous tissue and fascia, 
and open non-excisional debridement/extraction of subcutaneous tissue 
and fascia are designated as O.R. procedures, and that these eight 
procedures should be designated as O.R. procedures for the same reason. 
In the ICD-10 MS-DRGs Version 35, these eight ICD-10-PCS procedure 
codes are not recognized as O.R. procedures for purposes of MS-DRG 
assignment. The requestor requested that these procedures be assigned 
to MS-DRG 139 (Salivary Gland Procedures).
    In the proposed rule, we stated that we agreed with the requestor 
that these eight procedures typically require the resources of an 
operating room. Therefore, we proposed to add these ICD-10-PCS 
procedure codes to the FY 2019 ICD-10 MS-DRGs Version 36 Definitions 
Manual in Appendix E--Operating Room Procedures and Procedure Code/MS-
DRG Index as O.R. procedures assigned to MS-DRG 139 in MDC 3 (Diseases 
and Disorders of the Ear, Nose, Mouth and Throat).
    Comment: One commenter supported the proposal to change the 
designation of the 8 identified procedure codes to O.R. procedures.
    Response: We appreciate the commenter's support.
    After consideration of the public comments we received, we are 
finalizing our proposal to change the designation of the 8 ICD-10-PCS 
procedure codes shown in the table above from non-O.R. procedures to 
O.R. procedures, effective October 1, 2018.
e. Removal and Reinsertion of Spacer; Knee Joint and Hip Joint
    One requestor identified four sets of ICD-10-PCS procedure code 
combinations (eight ICD-10-PCS codes) that describe procedures 
involving open removal and insertion of spacers into the knee or hip 
joints, shown in the following table. The requestor stated that these 
are invasive procedures involving removal and reinsertion of devices 
into major joints and are performed in the operating room under general 
anesthesia. In the ICD-10 MS-DRGs Version 35, these four ICD-10-PCS 
procedure code combinations are not recognized as O.R. procedures for 
purposes of MS-DRG assignment. The requestor recommended that CMS 
determine the most appropriate surgical DRGs for these procedures.

------------------------------------------------------------------------
   ICD-10-PCS procedure code                 Code description
------------------------------------------------------------------------
0SPC08Z........................  Removal of spacer from right knee
                                  joint, open approach.
0SHC08Z........................  Insertion of spacer into right knee
                                  joint, open approach.
0SPD08Z........................  Removal of spacer from left knee joint,
                                  open approach.
0SHD08Z........................  Insertion of spacer into left knee
                                  joint, open approach.
0SP908Z........................  Removal of spacer from right hip joint,
                                  open approach.
0SH908Z........................  Insertion of spacer into right hip
                                  joint, open approach.
0SPB08Z........................  Removal of spacer from left hip joint,
                                  open approach.
0SHB08Z........................  Insertion of spacer into left hip
                                  joint, open approach.
------------------------------------------------------------------------

    In the proposed rule, we stated that we agreed with the requestor 
that these procedures typically require the resources of an operating 
room. However, our clinical advisors indicated that these codes should 
be designated as O.R. procedures even when reported as stand-alone 
procedures. Therefore, for the knee procedures, we proposed to add 
these four ICD-10-PCS procedure codes to the FY 2019 ICD-10 MS-DRGs 
Version 36 Definitions Manual in Appendix E--Operating Room Procedures 
and Procedure Code/MS-DRG Index as O.R. procedures assigned to MS-DRGs 
485, 486, and 487 (Knee Procedures with Principal Diagnosis of 
Infection with MCC, with CC, and without CC/MCC, respectively) or MS-
DRGs 488 and 489 (Knee Procedures without Principal diagnosis of 
Infection with CC/MCC and without CC/MCC, respectively), both in MDC 8 
(Diseases and Disorders of the Musculoskeletal

[[Page 41253]]

System and Connective Tissue). For the hip procedures, we proposed to 
add these four ICD-10-PCS procedure codes to the FY 2019 ICD-10 MS-DRGs 
Version 36 Definitions Manual in Appendix E--Operating Room Procedures 
and Procedure Code/MS-DRG Index as O.R. procedures assigned to MS-DRGs 
480, 481, and 482 (Hip and Femur Procedures Except Major Joint with 
MCC, with CC, and without CC/MCC, respectively) in MDC 8 (Diseases and 
Disorders of the Musculoskeletal System and Connective Tissue).
    Comment: Commenters supported the proposal to change the 
designation of the eight identified procedure codes to O.R. procedures. 
Several commenters who supported the proposal also requested that CMS 
ensure that changing the designation to O.R. procedures not have the 
unintended impact of reducing payment for these procedures. These 
commenters also requested that CMS clarify that the proposed MS-DRG 
assignments only apply when the eight codes are reported as stand-alone 
procedures and not, for example, when a spacer is removed and a 
permanent joint implant is inserted. One commenter stated that 
additional cost data would be useful in determining whether the payment 
for the proposed MS-DRGs fully reflect the O.R. resources used in these 
procedures.
    Response: We appreciate the commenters' support. With regard to the 
MS-DRG assignment, we are clarifying that, in all cases, the GROUPER 
logic would consider all of the procedures reported, the principal 
diagnosis, the surgical hierarchy, and the MS-DRG assignments for those 
procedures to determine the appropriate MS-DRG assignment. In cases 
where there is a procedure that is used for MS-DRG assignment that is 
higher in the surgical hierarchy, that procedure code would determine 
the MS-DRG assignment. In cases where the other procedure(s) are lower 
in the surgical hierarchy, the case would be assigned to the MS-DRGs 
listed above. With regard to the comments about the implications for 
payment and the cost data, we note that the goals of changing the 
designation of procedures from non-O.R. to O.R., or vice versa, are to 
better clinically represent the resources involved in caring for these 
patients and to enhance the overall accuracy of the system. Therefore, 
decisions to change an O.R. designation are based on whether such a 
change would accomplish those goals and not whether the change in 
designation would impact the payment in a particular direction.
    After consideration of the public comments we received, we are 
finalizing our proposal to change the designation of the eight ICD-10-
PCS procedure codes shown in the table above from non-O.R. procedures 
to O.R. procedures, effective October 1, 2018.
f. Endoscopic Dilation of Ureter(s) With Intraluminal Device
    One requestor identified the following three ICD-10-PCS procedure 
codes that describe procedures involving endoscopic dilation of 
ureter(s) with intraluminal device.

------------------------------------------------------------------------
 ICD-10-PCS procedure code                Code description
------------------------------------------------------------------------
0T778DZ...................  Dilation of left ureter with intraluminal
                             device, via natural or artificial opening
                             endoscopic.
0T768DZ...................  Dilation of right ureter with intraluminal
                             device, via natural or artificial opening
                             endoscopic.
0T788DZ...................  Dilation of bilateral ureters with
                             intraluminal device, via natural or
                             artificial opening endoscopic.
------------------------------------------------------------------------

    The requestor stated that these procedures involve the use of 
cystoureteroscopy to view the bladder and ureter and dilation under 
visualization, which are often followed by placement of a ureteral 
stent. The requestor also stated that endoscopic extirpation of matter 
from ureter, endoscopic biopsy of bladder, endoscopic dilation of 
bladder, endoscopic dilation of renal pelvis, and endoscopic dilation 
of the ureter without insertion of intraluminal device are all assigned 
to surgical DRGs, and that these three procedures should be designated 
as O.R. procedures for the same reason. In the ICD-10 MS-DRGs Version 
35, these three ICD-10-PCS procedure codes are not recognized as O.R. 
procedures for purposes of MS-DRG assignment. The requestor recommended 
that these procedures be assigned to MS-DRGs 656, 657, and 658 (Kidney 
and Ureter Procedures for Neoplasm with MCC, with CC, and without CC/
MCC, respectively) and MS-DRGs 659, 660, and 661 (Kidney and Ureter 
Procedures for Non-Neoplasm with MCC, with CC, and without CC/MCC, 
respectively).
    In the proposed rule, we stated that we agreed with the requestor 
that these procedures typically require the resources of an operating 
room. In addition to the MS-DRGs recommended by the requestor, we 
further stated that we believe that these procedure codes should also 
be assigned to other MS-DRGs, consistent with the assignment of other 
dilation of ureter procedures: MS-DRG 907, 908, and 909 (Other O.R. 
Procedures for Injuries with MCC, with CC, and without CC/MCC, 
respectively) and MS-DRGs 957, 958, and 959 (Other O.R. Procedures for 
Multiple Significant Trauma with MCC, with CC, and without CC/MCC, 
respectively). Therefore, we proposed to add the three ICD-10-PCS 
procedure codes identified by the requestor to the FY 2019 ICD-10 MS-
DRGs Version 36 Definitions Manual in Appendix E--Operating Room 
Procedures and Procedure Code/MS-DRG Index as O.R. procedures assigned 
to MS-DRGs 656, 657, and 658 in MDC 11 (Diseases and Disorders of the 
Kidney and Urinary Tract), MS-DRGs 659, 660, and 661 in MDC 11, MS-DRGs 
907, 908, and 909 in MDC 21 (Injuries, Poisonings and Toxic Effects of 
Drugs), and MS-DRGs 957, 958, and 959 in MDC 24 (Multiple Significant 
Trauma).
    Comment: One commenter supported the proposal to change the 
designation of the three identified procedure codes to O.R. procedures.
    Response: We appreciate the commenter's support.
    After consideration of the public comments we received, we are 
finalizing our proposal to change the designation of the three ICD-10-
PCS procedure codes shown in the table above from non-O.R. procedures 
to O.R. procedures, effective October 1, 2018.
g. Thoracoscopic Procedures of Pericardium and Pleura
    One requestor identified seven ICD-10-PCS procedure codes that 
describe procedures involving thoracoscopic drainage of the pericardial 
cavity or pleural cavity, or extirpation of matter from the pleura, as 
shown in the following table.

[[Page 41254]]



------------------------------------------------------------------------
 ICD-10-PCS procedure code                Code description
------------------------------------------------------------------------
0W9D4ZZ...................  Drainage of pericardial cavity, percutaneous
                             endoscopic approach.
0W9D40Z...................  Drainage of pericardial cavity with drainage
                             device, percutaneous endoscopic approach.
0W9D4ZX...................  Drainage of pericardial cavity, percutaneous
                             endoscopic approach, diagnostic.
0W994ZX...................  Drainage of right pleural cavity,
                             percutaneous endoscopic approach,
                             diagnostic.
0W9B4ZX...................  Drainage of left pleural cavity,
                             percutaneous endoscopic approach,
                             diagnostic.
0BCP4ZZ...................  Extirpation of matter from left pleura,
                             percutaneous endoscopic approach.
0BCN4ZZ...................  Extirpation of matter from right pleura,
                             percutaneous endoscopic approach.
------------------------------------------------------------------------

    The requestor stated that these procedures involve making an 
incision through the chest wall and inserting a thoracoscope for 
visualization of thoracic structures during the procedure. The 
requestor also stated that some thoracoscopic procedures are assigned 
to surgical MS-DRGs, while other procedures are assigned to medical MS-
DRGs. In the ICD-10 MS-DRGs Version 35, these seven ICD-10-PCS 
procedure codes are not recognized as O.R. procedures for purposes of 
MS-DRG assignment.
    In the proposed rule, we stated that we agreed with the requestor 
that these procedures typically require the resources of an operating 
room, as well as significant time and skill. During our review, we 
noted that the following two related procedures using the open approach 
also were not currently recognized as O.R. procedures:

------------------------------------------------------------------------
   ICD-10-PCS procedure code                 Code description
------------------------------------------------------------------------
0BCP0ZZ........................  Extirpation of matter from left pleura,
                                  open approach.
0BCN0ZZ........................  Extirpation of matter from right
                                  pleura, open approach.
------------------------------------------------------------------------

    Therefore, to be consistent with the MS-DRGs to which other 
approaches for procedures involving drainage or extirpation of matter 
from the pleura are assigned, we proposed to add these nine ICD-10-PCS 
procedure codes to the FY 2019 ICD-10 MS-DRGs Version 36 Definitions 
Manual in Appendix E--Operating Room Procedures and Procedure Code/MS-
DRG Index as O.R. procedures assigned to one of the following MS-DRGs: 
MS-DRGs 163, 164, and 165 (Major Chest Procedures with MCC, with CC, 
and without CC/MCC, respectively) in MDC 4 (Diseases and Disorders of 
the Respiratory System); MS-DRGs 270, 271, and 272 (Other Major 
Cardiovascular Procedures with MCC, with CC, and without CC/MCC, 
respectively) in MDC 5 (Diseases and Disorders of the Circulatory 
System); MS-DRGs 820, 821, and 822 (Lymphoma and Leukemia with Major 
O.R. Procedure with MCC, with CC, and without CC/MCC, respectively) in 
MDC 17 (Myeloproliferative Diseases and Disorders, Poorly 
Differentiated Neoplasms); MS-DRGs 826, 827, and 828 
(Myeloproliferative Disorders or Poorly Differentiated Neoplasms with 
Major O.R. Procedure with MCC, with CC, and without CC/MCC, 
respectively) in MDC 17; MS-DRGs 907, 908, and 909 (Other O.R. 
Procedures for Injuries with MCC, with CC, and without CC/MCC, 
respectively) in MDC 21 (Injuries, Poisonings and Toxic Effects of 
Drugs); and MS-DRGs 957, 958, and 959 (Other O.R. Procedures for 
Multiple Significant Trauma with MCC, with CC, and without CC/MCC, 
respectively) in MDC 24 (Multiple Significant Trauma). We invited 
public comments on our proposal.
    Comment: One commenter supported the proposal to change the 
designation of the nine identified procedure codes to O.R. procedures.
    Response: We appreciate the commenter's support.
    After consideration of the public comments we received, we are 
finalizing our proposal to change the designation of the nine ICD-10-
PCS procedure codes shown in the tables above from non-O.R. procedures 
to O.R. procedures, effective October 1, 2018.
h. Open Insertion of Totally Implantable and Tunneled Vascular Access 
Devices
    One requestor identified 20 ICD-10-PCS procedure codes that 
describe procedures involving open insertion of totally implantable and 
tunneled vascular access devices. The codes are identified in the 
following table.

------------------------------------------------------------------------
 ICD-10-PCS procedure code                Code description
------------------------------------------------------------------------
0JH60WZ...................  Insertion of totally implantable vascular
                             access device into chest subcutaneous
                             tissue and fascia, open approach.
0JH60XZ...................  Insertion of tunneled vascular access device
                             into chest subcutaneous tissue and fascia,
                             open approach.
0JH80WZ...................  Insertion of totally implantable vascular
                             access device into abdomen subcutaneous
                             tissue and fascia, open approach.
0JH80XZ...................  Insertion of tunneled vascular access device
                             into abdomen subcutaneous tissue and
                             fascia, open approach.
0JHD0WZ...................  Insertion of totally implantable vascular
                             access device into right upper arm
                             subcutaneous tissue and fascia, open
                             approach.
0JHD0XZ...................  Insertion of tunneled vascular access device
                             into right upper arm subcutaneous tissue
                             and fascia, open approach.
0JHF0WZ...................  Insertion of totally implantable vascular
                             access device into left upper arm
                             subcutaneous tissue and fascia, open
                             approach.
0JHF0XZ...................  Insertion of tunneled vascular access device
                             into left upper arm subcutaneous tissue and
                             fascia, open approach.
0JHG0WZ...................  Insertion of totally implantable vascular
                             access device into right lower arm
                             subcutaneous tissue and fascia, open
                             approach.
0JHG0XZ...................  Insertion of tunneled vascular access device
                             into right lower arm subcutaneous tissue
                             and fascia, open approach.
0JHH0WZ...................  Insertion of totally implantable vascular
                             access device into left lower arm
                             subcutaneous tissue and fascia, open
                             approach.
0JHH0XZ...................  Insertion of tunneled vascular access device
                             into left lower arm subcutaneous tissue and
                             fascia, open approach.
0JHL0WZ...................  Insertion of totally implantable vascular
                             access device into right upper leg
                             subcutaneous tissue and fascia, open
                             approach.
0JHL0XZ...................  Insertion of tunneled vascular access device
                             into right upper leg subcutaneous tissue
                             and fascia, open approach.
0JHM0WZ...................  Insertion of totally implantable vascular
                             access device into left upper leg
                             subcutaneous tissue and fascia, open
                             approach.
0JHM0XZ...................  Insertion of tunneled vascular access device
                             into left upper leg subcutaneous tissue and
                             fascia, open approach.
0JHN0WZ...................  Insertion of totally implantable vascular
                             access device into right lower leg
                             subcutaneous tissue and fascia, open
                             approach.

[[Page 41255]]

 
0JHN0XZ...................  Insertion of tunneled vascular access device
                             into right lower leg subcutaneous tissue
                             and fascia, open approach.
0JHP0WZ...................  Insertion of totally implantable vascular
                             access device into left lower leg
                             subcutaneous tissue and fascia, open
                             approach.
0JHP0XZ...................  Insertion of tunneled vascular access device
                             into left lower leg subcutaneous tissue and
                             fascia, open approach.
------------------------------------------------------------------------

    The requestor stated that open procedures to insert totally 
implantable vascular access devices (VAD) involve implantation of a 
port by open approach, cutting through subcutaneous tissue/fascia, 
placing the device, and then closing tissues so that none of the device 
is exposed. The requestor explained that open procedures to insert 
tunneled VADs involve insertion of the catheter into central 
vasculature, and then open incision of subcutaneous tissue and fascia 
through which the device is tunneled. The requestor also indicated that 
these procedures require two ICD-10-PCS codes: One for the insertion of 
the VAD or port within the subcutaneous tissue; and one for 
percutaneous insertion of the central venous catheter that is connected 
to the device. The requestor further noted that, in MDC 11, cases with 
these procedure codes are assigned to surgical MS-DRGs and that 
insertion of infusion pumps by open approach groups to surgical MS-
DRGs. The requestor recommended that these procedures be assigned to 
surgical MS-DRGs in MDC 09 as well. We examined the O.R. designations 
for this group of procedures and determined that they currently are 
designated as non-O.R. procedures for MDC 09 and MDC 11.
    In the proposed rule, we stated that we agreed with the requestor 
that procedures involving open insertion of totally implantable VAD 
procedures typically require the resources of an operating room. 
However, we stated that we disagreed that the tunneled VAD procedures 
typically require the resources of an operating room. Therefore, we 
proposed to update the FY 2019 ICD-10 MS-DRGs Version 36 Definitions 
Manual in Appendix E--Operating Room Procedures and Procedure Code/MS-
DRG Index to designate the 10 ICD-10-PCS procedure codes describing the 
totally implantable VAD procedures as O.R. procedures, which will 
continue to be assigned to MS-DRGs 579, 580, and 581 (Other Skin, 
Subcutaneous Tissue and Breast Procedures with MCC, with CC, and 
without CC/MCC, respectively) in MDC 9 (Diseases and Disorders of the 
Skin, Subcutaneous Tissue and Breast) and MS-DRGs 673, 674, and 675 
(Other Kidney and Urinary Tract Procedures, with CC, with MCC, and 
without CC/MCC, respectively) in MDC 11 (Diseases and Disorders of the 
Kidney and Urinary Tract). We noted that these procedures already 
affect MS-DRG assignment to these MS-DRGs. However, we stated that if 
the procedure is unrelated to the principal diagnosis, it will be 
assigned to MS-DRGs 981, 982, and 983 instead of a medical MS-DRG.
    Comment: Commenters supported the proposal to change the 
designation of the open insertion of totally implantable VAD procedures 
to O.R. procedures. One commenter requested that CMS reconsider the 
GROUPER logic to add totally implantable VADs to additional MDCs, and 
not just MDCs 9 and 11.
    Response: We appreciate the commenters' support. With regard to the 
GROUPER logic, we will consider whether procedures should be added to 
additional MDCs during our annual assessment of the codes that group to 
the unrelated procedure MS-DRGs, which is discussed later in this 
section of the preamble of this final rule.
    After consideration of the public comments we received, we are 
finalizing our proposal to change the designation of the 10 ICD-10-PCS 
procedure codes describing open insertion of totally implantable VAD 
procedures shown in the table above from non-O.R. procedures to O.R. 
procedures, effective October 1, 2018.
    Comment: Some commenters supported the proposal to maintain the 
non-O.R. assignment of the tunneled VAD procedures listed in the table 
above, while others opposed this proposal. The commenters who opposed 
the proposal stated that tunneled VAD procedures involve significantly 
more resources than non-tunneled catheters because of the significant 
subcutaneous tunneling required. The commenters also noted that the 
procedures require the specialized setting of an operating room or 
interventional radiology suite. The commenters explained the following 
aspects of the technique that they believe indicate that the procedures 
should be designated as O.R. procedures: A small incision is typically 
made and one end of the catheter is advanced into the internal jugular 
vein, and threaded into the superior/inferior vena cava, or right 
atrium under fluoroscopic guidance. The other end of the catheter is 
tunneled beneath the skin and subcutaneous tissue and a small incision 
is made at the exit site on the chest. A small cuff is sometimes 
anchored to the skin to stabilize and prevent infection. While the 
tunneled VADs are typically performed with small incisions, the 
subcutaneous tunneling is the most complex portion of the procedure. In 
addition, one commenter listed additional tunneled VAD codes (performed 
on other body parts, such as the arms and legs) that should also be 
considered for a change to the O.R. designation.
    Response: Our clinical advisors continue to believe that tunneled 
VAD procedures do not typically require the use of an operating room. 
As the commenter stated, these procedures are frequently performed 
under image guidance, which our clinical advisors believe would 
typically take place in a radiology suite. Our clinical advisors 
believe that the list of other VAD procedures cited by the commenter 
would also typically take place in the radiology suite and, therefore, 
would not typically require the use of an operating room. Therefore, we 
are not making a change to the O.R. designation of the codes suggested 
by the commenter.
    After consideration of the public comments we received, we are 
finalizing our proposals to change the designation of the totally 
implantable VAD procedures to O.R. procedures and to maintain the non-
O.R. designation of the tunneled VAD procedures.
i. Percutaneous Joint Reposition With Internal Fixation Device
    One requestor identified 20 ICD-10-PCS procedure codes that 
describe procedures involving percutaneous joint reposition with 
internal fixation device, shown in the following table.

[[Page 41256]]



------------------------------------------------------------------------
 ICD-10-PCS procedure code                Code description
------------------------------------------------------------------------
0SS034Z...................  Reposition lumbar vertebral joint with
                             internal fixation device, percutaneous
                             approach.
0SS334Z...................  Reposition lumbosacral joint with internal
                             fixation device, percutaneous approach.
0SS534Z...................  Reposition sacrococcygeal joint with
                             internal fixation device, percutaneous
                             approach.
0SS634Z...................  Reposition coccygeal joint with internal
                             fixation device, percutaneous approach.
0SS734Z...................  Reposition right sacroiliac joint with
                             internal fixation device, percutaneous
                             approach.
0SS834Z...................  Reposition left sacroiliac joint with
                             internal fixation device, percutaneous
                             approach.
0SS934Z...................  Reposition right hip joint with internal
                             fixation device, percutaneous approach.
0SSB34Z...................  Reposition left hip joint with internal
                             fixation device, percutaneous approach.
0SSC34Z...................  Reposition right knee joint with internal
                             fixation device, percutaneous approach.
0SSD34Z...................  Reposition left knee joint with internal
                             fixation device, percutaneous approach.
0SSF34Z...................  Reposition right ankle joint with internal
                             fixation device, percutaneous approach.
0SSG34Z...................  Reposition left ankle joint with internal
                             fixation device, percutaneous approach.
0SSH34Z...................  Reposition right tarsal joint with internal
                             fixation device, percutaneous approach.
0SSJ34Z...................  Reposition left tarsal joint with internal
                             fixation device, percutaneous approach.
0SSK34Z...................  Reposition right tarsometatarsal joint with
                             internal fixation device, percutaneous
                             approach.
0SSL34Z...................  Reposition left tarsometatarsal joint with
                             internal fixation device, percutaneous
                             approach.
0SSM34Z...................  Reposition right metatarsal-phalangeal joint
                             with internal fixation device, percutaneous
                             approach.
0SSN34Z...................  Reposition left metatarsal-phalangeal joint
                             with internal fixation device, percutaneous
                             approach.
0SSP34Z...................  Reposition right toe phalangeal joint with
                             internal fixation device, percutaneous
                             approach.
0SSQ34Z...................  Reposition left toe phalangeal joint with
                             internal fixation device, percutaneous
                             approach.
------------------------------------------------------------------------

    The requestor stated that reposition of the sacrum, femur, tibia, 
fibula, and other fractures of bone with internal fixation device by 
percutaneous approach are assigned to surgical DRGs, and that 
reposition of sacroiliac, hip, knee, and other joint locations with 
internal fixation should therefore also be assigned to surgical DRGs. 
In the ICD-10 MS-DRGs Version 35, these 20 ICD-10-PCS procedure codes 
are not recognized as O.R. procedures for purposes of MS-DRG 
assignment.
    In the proposed rule, we stated that we disagreed with the 
requestor that these procedures typically require the resources of an 
operating room, as these procedures are not as invasive as the bone 
reposition procedures referenced by the requestor. Our clinical 
advisors advised that these procedures are typically performed in a 
radiology suite. Therefore, we proposed to maintain the status of these 
20 ICD-10-PCS procedure codes as non-O.R. procedures.
    Comment: Some commenters supported the proposal to maintain the 
status of the 20 ICD-10-PCS procedure codes that describe procedures 
involving percutaneous joint reposition with internal fixation device 
listed in the table above, while one commenter opposed our proposal. 
The commenter who opposed the proposal stated that these procedures are 
often done under image guidance, but that they are typically done in 
the operating room because they require anesthesia. The commenter 
stated that these procedures involving dislocated joints are even more 
resource intensive than fracture treatment involving a single bone, 
which are classified as O.R. procedures.
    Response: Our clinical advisors continue to believe that the 
resources involved in furnishing these procedures are consistent with 
non-O.R. procedures, given that they are typically done with imaging 
guidance. Our clinical advisors noted that it is not uncommon for 
anesthesia to be used in the radiology suite, and that the nature of 
the resources used in repositioning displaced joints do not require the 
use of an operating room.
    After consideration of the public comments we received, we are 
finalizing our proposal to maintain the non-O.R. status of the 20 ICD-
10-PCS procedure codes that describe procedures involving percutaneous 
joint reposition with internal fixation device listed in the table 
above.
j. Endoscopic Destruction of Intestine
    One requestor identified four ICD-10-PCS procedure codes that 
describe procedures involving endoscopic destruction of the intestine, 
as shown in the following table.

------------------------------------------------------------------------
 ICD-10-PCS procedure code                Code description
------------------------------------------------------------------------
0D5A8ZZ...................  Destruction of jejunum, via natural or
                             artificial opening endoscopic.
0D5B8ZZ...................  Destruction of ileum, via natural or
                             artificial opening endoscopic.
0D5C8ZZ...................  Destruction of ileocecal valve, via natural
                             or artificial opening endoscopic.
0D588ZZ...................  Destruction of small intestine, via natural
                             or artificial opening endoscopic.
------------------------------------------------------------------------

    The requestor stated that these procedures are rarely performed in 
the operating room. In the ICD-10 MS-DRGs Version 35, these four ICD-
10-PCS procedure codes are currently recognized as O.R. procedures for 
purposes of MS-DRG assignment.
    In the proposed rule, we stated that we agreed with the requestor 
that these procedures do not typically require the resources of an 
operating room. Therefore, we proposed to remove these four procedure 
codes from the FY 2019 ICD-10 MS-DRGs Version 36 Definitions Manual in 
Appendix E--Operating Room Procedures and Procedure Code/MS-DRG Index 
as O.R. procedures.
    Comment: One commenter supported the proposal to change the 
designation of the four identified procedure codes to non-O.R. 
procedures.
    Response: We appreciate the commenter's support.
    After consideration of the public comments we received, we are 
finalizing our proposal to change the designation of the four ICD-10-
PCS procedure codes shown in the table above from O.R. procedures to 
non-O.R. procedures, effective October 1, 2018.

[[Page 41257]]

k. Drainage of Lower Lung Via Natural or Artificial Opening Endoscopic, 
Diagnostic
    One requestor identified the following ICD-10-PCS procedure codes 
that describe procedures involving endoscopic drainage of the lung via 
natural or artificial opening for diagnostic purposes.

------------------------------------------------------------------------
 ICD-10-PCS procedure code                Code description
------------------------------------------------------------------------
0B9J8ZX...................  Drainage of left lower lung lobe, via
                             natural or artificial opening endoscopic,
                             diagnostic.
0B9F8ZX...................  Drainage of right lower lung lobe, via
                             natural or artificial opening endoscopic,
                             diagnostic.
------------------------------------------------------------------------

    The requestor stated that these procedures are rarely performed in 
the operating room.
    In the proposed rule, we stated that we agreed with the requestor 
that these procedures do not require the resources of an operating 
room. In addition, while we were reviewing this comment, we identified 
three additional related codes:

------------------------------------------------------------------------
 ICD-10-PCS procedure code                Code description
------------------------------------------------------------------------
0B9D8ZX...................  Drainage of right middle lung lobe, via
                             natural or artificial opening endoscopic,
                             diagnostic.
0B9C8ZX...................  Drainage of right upper lung lobe, via
                             natural or artificial opening endoscopic,
                             diagnostic.
0B9G8ZX...................  Drainage of left upper lung lobe, via
                             natural or artificial opening endoscopic,
                             diagnostic.
------------------------------------------------------------------------

    In the ICD-10 MS-DRGs Version 35, these ICD-10-PCS procedure codes 
are currently recognized as O.R. procedures for purposes of MS-DRG 
assignment.
    We proposed to remove ICD-10-PCS procedure codes 0B9J8ZX, 0B9F8ZX, 
0B9D8ZX, 0B9C8ZX, and 0B9G8ZX from the FY 2019 ICD-10 MS-DRGs Version 
36 Definitions Manual in Appendix E--Operating Room Procedures and 
Procedure Code/MS-DRG Index as O.R. procedures.
    Comment: One commenter supported the proposal to change the 
designation of the five identified procedure codes to non-O.R. 
procedures.
    Response: We appreciate the commenter's support.
    After consideration of the public comments we received, we are 
finalizing our proposal to change the designation of the five ICD-10-
PCS procedure codes shown in the tables above from O.R. procedures to 
non-O.R. procedures, effective October 1, 2018.
l. Endobronchial Valve Procedures
    One commenter responding to the FY 2019 IPPS/LTCH PPS proposed rule 
identified eight ICD-10-PCS procedure codes that describe endobronchial 
valve procedures that the commenter believed should be designated as 
O.R. procedures. The codes are identified in the following table.

------------------------------------------------------------------------
 ICD-10-PCS procedure code                Code description
------------------------------------------------------------------------
0BH38GZ...................  Insertion of endobronchial valve into right
                             main bronchus, via natural or artificial
                             opening endoscopic.
0BH48GZ...................  Insertion of endobronchial valve into right
                             upper lobe bronchus, via natural or
                             artificial opening endoscopic.
0BH58GZ...................  Insertion of endobronchial valve into right
                             middle lobe bronchus, via natural or
                             artificial opening endoscopic.
0BH68GZ...................  Insertion of endobronchial valve into right
                             lower lobe bronchus, via natural or
                             artificial opening endoscopic.
0BH78GZ...................  Insertion of endobronchial valve into left
                             main bronchus, via natural or artificial
                             opening endoscopic.
0BH88GZ...................  Insertion of endobronchial valve into left
                             upper lobe bronchus, via natural or
                             artificial opening endoscopic.
0BH98GZ...................  Insertion of endobronchial valve into
                             lingula bronchus, via natural or artificial
                             opening endoscopic.
0BHB8GZ...................  Insertion of endobronchial valve into left
                             lower lobe bronchus, via natural or
                             artificial opening endoscopic.
------------------------------------------------------------------------

    The commenter stated that these procedures are most commonly 
performed in the O.R., given the need for better monitoring and support 
through the process of identifying and occluding a prolonged air leak 
using endobronchial valve technology. The commenter also noted that 
other endobronchial valve procedures have an O.R. designation. In the 
ICD-10 MS-DRGs Version 35, these eight ICD-10-PCS procedure codes are 
not recognized as O.R. procedures for purposes of MS-DRG assignment. 
The commenter requested that these eight codes be assigned to MS-DRG 
163 (Major Chest Procedures with MCC) due to similar cost and resource 
use.
    Our clinical advisors disagree with the commenter that the eight 
identified procedures typically require the use of an operating room. 
Our clinical advisors believe that these procedures would typically be 
performed in an endoscopy suite. Therefore, we are not changing the 
non-O.R. designation of the eight identified ICD-10-PCS codes listed in 
the table above.
21. Out of Scope Public Comments Received
    We received public comments regarding a number of MS-DRG and 
related issues that were outside the scope of the proposals included in 
the FY 2019 IPPS/LTCH PPS proposed rule. These comments were as 
follows:
     One commenter requested that CMS evaluate the MS-DRG 
assignment for Face Transplant procedures and its designation as an 
extensive versus nonextensive O.R. procedure.
     One commenter requested that a new ICD-10-CM diagnosis 
code be created for a Kennedy terminal ulcer.
     One commenter requested that CMS examine the MS-DRG 
assignment and/or payment of patients who are admitted to the hospital 
for initiation or titration of certain antiarrhythmic drugs.
     One commenter requested that diagnosis codes in category 
O9A.2- and

[[Page 41258]]

O9A.3- for obstetrical patients be considered as a principal diagnosis 
for MDC 24 (Multiple Significant Trauma).
     One commenter requested that new MS-DRGs be created for 
endovascular cardiac valve replacements with and without a cardiac 
catheterization.
     One commenter recommended that CMS analyze claims data for 
cases reporting renal replacement therapy and issue guidance to 
facilities on the use of the ICD-10-PCS procedure codes.
     One commenter requested specific MS-DRG assignments for 
ICD-10-PCS codes that were not yet approved at the time of issuance of 
the proposed rule.
     One commenter recommended changes to the severity level 
designation for diagnosis codes that appear in Table 6E.--Revised 
Diagnosis Code Titles associated with the proposed rule.
    Because we consider these public comments to be outside the scope 
of the proposed rule, we are not addressing them in this final rule. As 
stated in section II.F.1.b. of the preamble of this final rule, we 
encourage individuals with comments about MS-DRG classification to 
submit these comments no later than November 1 of each year so that 
they can be considered for possible inclusion in the annual proposed 
rule and, if included, may be subjected to public review and comment. 
We will consider these public comments for possible proposals in future 
rulemaking as part of our annual review process.

G. Recalibration of the FY 2019 MS-DRG Relative Weights

1. Data Sources for Developing the Relative Weights
    In developing the FY 2019 system of weights, we proposed to use two 
data sources: Claims data and cost report data. As in previous years, 
the claims data source is the MedPAR file. This file is based on fully 
coded diagnostic and procedure data for all Medicare inpatient hospital 
bills. The FY 2017 MedPAR data used in this final rule include 
discharges occurring on October 1, 2016, through September 30, 2017, 
based on bills received by CMS through March 31, 2018, from all 
hospitals subject to the IPPS and short-term, acute care hospitals in 
Maryland (which at that time were under a waiver from the IPPS). The FY 
2017 MedPAR file used in calculating the relative weights includes data 
for approximately 9,689,743 Medicare discharges from IPPS providers. 
Discharges for Medicare beneficiaries enrolled in a Medicare Advantage 
managed care plan are excluded from this analysis. These discharges are 
excluded when the MedPAR ``GHO Paid'' indicator field on the claim 
record is equal to ``1'' or when the MedPAR DRG payment field, which 
represents the total payment for the claim, is equal to the MedPAR 
``Indirect Medical Education (IME)'' payment field, indicating that the 
claim was an ``IME only'' claim submitted by a teaching hospital on 
behalf of a beneficiary enrolled in a Medicare Advantage managed care 
plan. In addition, the March 31, 2018 update of the FY 2017 MedPAR file 
complies with version 5010 of the X12 HIPAA Transaction and Code Set 
Standards, and includes a variable called ``claim type.'' Claim type 
``60'' indicates that the claim was an inpatient claim paid as fee-for-
service. Claim types ``61,'' ``62,'' ``63,'' and ``64'' relate to 
encounter claims, Medicare Advantage IME claims, and HMO no-pay claims. 
Therefore, the calculation of the relative weights for FY 2019 also 
excludes claims with claim type values not equal to ``60.'' The data 
exclude CAHs, including hospitals that subsequently became CAHs after 
the period from which the data were taken. We note that the FY 2019 
relative weights are based on the ICD-10-CM diagnoses and ICD-10-PCS 
procedure codes from the FY 2017 MedPAR claims data, grouped through 
the ICD-10 version of the FY 2019 GROUPER (Version 36).
    The second data source used in the cost-based relative weighting 
methodology is the Medicare cost report data files from the HCRIS. 
Normally, we use the HCRIS dataset that is 3 years prior to the IPPS 
fiscal year. Specifically, we used cost report data from the March 31, 
2018 update of the FY 2016 HCRIS for calculating the final FY 2019 
cost-based relative weights.
2. Methodology for Calculation of the Relative Weights
    As we explain in section II.E.2. of the preamble of this final 
rule, we calculated the FY 2019 relative weights based on 19 CCRs, as 
we did for FY 2018. The methodology we used to calculate the FY 2019 
MS-DRG cost-based relative weights based on claims data in the FY 2017 
MedPAR file and data from the FY 2016 Medicare cost reports is as 
follows:
     To the extent possible, all the claims were regrouped 
using the FY 2019 MS-DRG classifications discussed in sections II.B. 
and II.F. of the preamble of this final rule.
     The transplant cases that were used to establish the 
relative weights for heart and heart-lung, liver and/or intestinal, and 
lung transplants (MS-DRGs 001, 002, 005, 006, and 007, respectively) 
were limited to those Medicare-approved transplant centers that have 
cases in the FY 2017 MedPAR file. (Medicare coverage for heart, heart-
lung, liver and/or intestinal, and lung transplants is limited to those 
facilities that have received approval from CMS as transplant centers.)
     Organ acquisition costs for kidney, heart, heart-lung, 
liver, lung, pancreas, and intestinal (or multivisceral organs) 
transplants continue to be paid on a reasonable cost basis. Because 
these acquisition costs are paid separately from the prospective 
payment rate, it is necessary to subtract the acquisition charges from 
the total charges on each transplant bill that showed acquisition 
charges before computing the average cost for each MS-DRG and before 
eliminating statistical outliers.
     Claims with total charges or total lengths of stay less 
than or equal to zero were deleted. Claims that had an amount in the 
total charge field that differed by more than $30.00 from the sum of 
the routine day charges, intensive care charges, pharmacy charges, 
implantable devices charges, supplies and equipment charges, therapy 
services charges, operating room charges, cardiology charges, 
laboratory charges, radiology charges, other service charges, labor and 
delivery charges, inhalation therapy charges, emergency room charges, 
blood and blood products charges, anesthesia charges, cardiac 
catheterization charges, CT scan charges, and MRI charges were also 
deleted.
     At least 92.5 percent of the providers in the MedPAR file 
had charges for 14 of the 19 cost centers. All claims of providers that 
did not have charges greater than zero for at least 14 of the 19 cost 
centers were deleted. In other words, a provider must have no more than 
five blank cost centers. If a provider did not have charges greater 
than zero in more than five cost centers, the claims for the provider 
were deleted.
     Statistical outliers were eliminated by removing all cases 
that were beyond 3.0 standard deviations from the geometric mean of the 
log distribution of both the total charges per case and the total 
charges per day for each MS-DRG.
     Effective October 1, 2008, because hospital inpatient 
claims include a POA indicator field for each diagnosis present on the 
claim, only for purposes of relative weight-setting, the POA indicator 
field was reset to ``Y'' for ``Yes'' for all claims that otherwise have 
an ``N'' (No) or a ``U'' (documentation insufficient to determine if 
the condition was present at the time of inpatient admission) in the 
POA field.

[[Page 41259]]

    Under current payment policy, the presence of specific HAC codes, 
as indicated by the POA field values, can generate a lower payment for 
the claim. Specifically, if the particular condition is present on 
admission (that is, a ``Y'' indicator is associated with the diagnosis 
on the claim), it is not a HAC, and the hospital is paid for the higher 
severity (and, therefore, the higher weighted MS-DRG). If the 
particular condition is not present on admission (that is, an ``N'' 
indicator is associated with the diagnosis on the claim) and there are 
no other complicating conditions, the DRG GROUPER assigns the claim to 
a lower severity (and, therefore, the lower weighted MS-DRG) as a 
penalty for allowing a Medicare inpatient to contract a HAC. While the 
POA reporting meets policy goals of encouraging quality care and 
generates program savings, it presents an issue for the relative 
weight-setting process. Because cases identified as HACs are likely to 
be more complex than similar cases that are not identified as HACs, the 
charges associated with HAC cases are likely to be higher as well. 
Therefore, if the higher charges of these HAC claims are grouped into 
lower severity MS-DRGs prior to the relative weight-setting process, 
the relative weights of these particular MS-DRGs would become 
artificially inflated, potentially skewing the relative weights. In 
addition, we want to protect the integrity of the budget neutrality 
process by ensuring that, in estimating payments, no increase to the 
standardized amount occurs as a result of lower overall payments in a 
previous year that stem from using weights and case-mix that are based 
on lower severity MS-DRG assignments. If this would occur, the 
anticipated cost savings from the HAC policy would be lost.
    To avoid these problems, we reset the POA indicator field to ``Y'' 
only for relative weight-setting purposes for all claims that otherwise 
have an ``N'' or a ``U'' in the POA field. This resetting ``forced'' 
the more costly HAC claims into the higher severity MS-DRGs as 
appropriate, and the relative weights calculated for each MS-DRG more 
closely reflect the true costs of those cases.
    In addition, in the FY 2013 IPPS/LTCH PPS final rule, for FY 2013 
and subsequent fiscal years, we finalized a policy to treat hospitals 
that participate in the Bundled Payments for Care Improvement (BPCI) 
initiative the same as prior fiscal years for the IPPS payment modeling 
and ratesetting process without regard to hospitals' participation 
within these bundled payment models (77 FR 53341 through 53343). 
Specifically, because acute care hospitals participating in the BPCI 
Initiative still receive IPPS payments under section 1886(d) of the 
Act, we include all applicable data from these subsection (d) hospitals 
in our IPPS payment modeling and ratesetting calculations as if the 
hospitals were not participating in those models under the BPCI 
Initiative. We refer readers to the FY 2013 IPPS/LTCH PPS final rule 
for a complete discussion on our final policy for the treatment of 
hospitals participating in the BPCI Initiative in our ratesetting 
process.
    The participation of hospitals in the BPCI initiative is set to 
conclude on September 30, 2018. The participation of hospitals in the 
Bundled Payments for Care Improvement (BPCI) Advanced model is set to 
start on October 1, 2018. The BPCI Advanced model, tested under the 
authority of section 3021 of the Affordable Care Act (codified at 
section 1115A of the Act), is comprised of a single payment and risk 
track, which bundles payments for multiple services beneficiaries 
receive during a Clinical Episode. Acute care hospitals may participate 
in BPCI Advanced in one of two capacities: As a model Participant or as 
a downstream Episode Initiator. Regardless of the capacity in which 
they participate in the BPCI Advanced model, participating acute care 
hospitals will continue to receive IPPS payments under section 1886(d) 
of the Act. Acute care hospitals that are Participants also assume 
financial and quality performance accountability for Clinical Episodes 
in the form of a reconciliation payment. For additional information on 
the BPCI Advanced model, we refer readers to the BPCI Advanced web page 
on the CMS Center for Medicare and Medicaid Innovation's website at: 
https://innovation.cms.gov/initiatives/bpci-advanced/. As we stated in 
the proposed rule, for FY 2019, consistent with how we have treated 
hospitals that participated in the BPCI Initiative, we believe it is 
appropriate to include all applicable data from the subsection (d) 
hospitals participating in the BPCI Advanced model in our IPPS payment 
modeling and ratesetting calculations because, as noted above and in 
the proposed rule, these hospitals are still receiving IPPS payments 
under section 1886(d) of the Act.
    The charges for each of the 19 cost groups for each claim were 
standardized to remove the effects of differences in area wage levels, 
IME and DSH payments, and for hospitals located in Alaska and Hawaii, 
the applicable cost-of-living adjustment. Because hospital charges 
include charges for both operating and capital costs, we standardized 
total charges to remove the effects of differences in geographic 
adjustment factors, cost-of-living adjustments, and DSH payments under 
the capital IPPS as well. Charges were then summed by MS-DRG for each 
of the 19 cost groups so that each MS-DRG had 19 standardized charge 
totals. Statistical outliers were then removed. These charges were then 
adjusted to cost by applying the national average CCRs developed from 
the FY 2016 cost report data.
    The 19 cost centers that we used in the relative weight calculation 
are shown in the following table. The table shows the lines on the cost 
report and the corresponding revenue codes that we used to create the 
19 national cost center CCRs. In the FY 2019 IPPS/LTCH PPS proposed 
rule (83 FR 20259), we stated that if stakeholders have comments about 
the groupings in this table, we may consider those comments as we 
finalize our policy. However, we did not receive any comments on the 
groupings in this table, and therefore, we are finalizing the groupings 
as proposed.
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    In the FY 2019 IPPS/LTCH PPS proposed rule, we also invited public 
comments on our proposals related to recalibration of the proposed FY 
2019 relative weights and the changes in the relative weights from FY 
2018.
    Comment: Several commenters expressed concern about significant 
reductions in the relative weights for certain MS-DRGs, typically 
citing reductions of greater than 20 percent from FY 2018. Some 
commenters specifically addressed the significant reductions to MS-DRG 
215. Commenters stated that the proposed payment rate for MS-DRG 215 is 
less than the cost of the medical devices used in these procedures, and 
suggested that the reduced payments resulting from the reduction in the 
relative weight could limit access to the procedures that map to this 
MS-DRG. Some commenters suggested that CMS maintain the relative weight 
for MS-DRG 215 at the FY 2018 level until the claims data reflects the 
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[[Page 41273]]

procedures that map to this MS-DRG. Other commenters suggested a 1-year 
policy for FY 2019 to ensure that the 2-year decrease in payment rates 
for any MS-DRG from FY 2017 does not exceed 20 percent. Yet other 
commenters suggested a phase-in for MS-DRGs with significant reductions 
to their weights to give hospitals time to modify their operations to 
adapt to the new rates. Commenters referenced prior rulemaking in which 
CMS delayed or transitioned changes impacting payment rates to limit 
the impact on providers.
    Response: As we indicated in the FY 2018 IPPS/LTCH final rule (82 
FR 38103), we do not believe it is normally appropriate to address 
relative weight fluctuations that appear to be driven by changes in the 
underlying data. Nevertheless, after reviewing the comments received 
and the data used in our ratesetting calculations, we acknowledge an 
outlier circumstance where the weight for an MS-DRG is seeing a 
significant reduction of at least 20 percent for each of the 2 years 
since CMS began using the ICD-10 data in calculating the relative 
weights. While we would ordinarily consider this weight change to be 
appropriately driven by the underlying data, given the comments 
received and the potential for these declines to be related to the 
ongoing implementation of ICD-10, we are adopting a temporary one-time 
measure for FY 2019 for an MS-DRG where the FY 2018 relative weight 
declined by 20 percent from the FY 2017 relative weight and the FY 2019 
relative weight would have declined by 20 percent or more from the FY 
2018 relative weight. (We note that no FY 2018 weight declined by more 
than 20 percent from FY 2017 due to our FY 2018 policy.) Specifically, 
for an MS-DRG meeting this criterion, the FY 2019 relative weight will 
be set equal to the FY 2018 final relative weight. We believe this 
policy is consistent with our general authority to assign and update 
appropriate weighting factors under sections 1886(d)(4)(B) and (C) of 
the Act. We also believe that it appropriately addresses the situation 
in which the reduction to the FY 2019 relative weights may still be 
potentially related to the implementation of ICD-10. We continue to 
believe that changes in relative weights that are not of this outlier 
magnitude over the 2 years since we first incorporated the ICD-10 data 
in our ratesetting are appropriately being driven by the underlying 
data and not the implementation of ICD-10. There is a significant 
approximately 10-percentage point outlier gap between this type of 
reduction and any other reduction that has occurred over the 2-year 
period.
3. Development of National Average CCRs
    We developed the national average CCRs as follows:
    Using the FY 2016 cost report data, we removed CAHs, Indian Health 
Service hospitals, all-inclusive rate hospitals, and cost reports that 
represented time periods of less than 1 year (365 days). We included 
hospitals located in Maryland because we include their charges in our 
claims database. We then created CCRs for each provider for each cost 
center (see prior table for line items used in the calculations) and 
removed any CCRs that were greater than 10 or less than 0.01. We 
normalized the departmental CCRs by dividing the CCR for each 
department by the total CCR for the hospital for the purpose of 
trimming the data. We then took the logs of the normalized cost center 
CCRs and removed any cost center CCRs where the log of the cost center 
CCR was greater or less than the mean log plus/minus 3 times the 
standard deviation for the log of that cost center CCR. Once the cost 
report data were trimmed, we calculated a Medicare-specific CCR. The 
Medicare-specific CCR was determined by taking the Medicare charges for 
each line item from Worksheet D-3 and deriving the Medicare-specific 
costs by applying the hospital-specific departmental CCRs to the 
Medicare-specific charges for each line item from Worksheet D-3. Once 
each hospital's Medicare-specific costs were established, we summed the 
total Medicare-specific costs and divided by the sum of the total 
Medicare-specific charges to produce national average, charge-weighted 
CCRs.
    Comment: Several commenters noted that the CCRs used in the 
calculation of the relative weights did not match those calculated 
using the FY 2016 HCRIS.
    Response: We appreciate the commenters bringing this issue to our 
attention. The commenters are correct that there was an error in the 
calculation of the national average CCRs in the FY 2019 proposed rule, 
in that we inadvertently used the FY 2015 HCRIS data rather than the FY 
2016 HCRIS data. The CCRs used in the calculation of the relative 
weights in this final rule correctly reflect the described methodology 
and the FY 2016 HCRIS data.
    After we multiplied the total charges for each MS-DRG in each of 
the 19 cost centers by the corresponding national average CCR, we 
summed the 19 ``costs'' across each MS-DRG to produce a total 
standardized cost for the MS-DRG. The average standardized cost for 
each MS-DRG was then computed as the total standardized cost for the 
MS-DRG divided by the transfer-adjusted case count for the MS-DRG. We 
calculated the transfer-adjusted discharges for use in the calculation 
of the Version 36 MS-DRG relative weights using the statutory expansion 
of the postacute care transfer policy to include discharges to hospice 
care by a hospice program discussed in section IV.A.2.b. of the 
preamble of this final rule. For the purposes of calculating the 
normalization factor, we used the transfer-adjusted discharges with the 
expanded postacute care transfer policy for Version 35 as well. (When 
we calculate the normalization factor, we calculate the transfer-
adjusted case count for the prior GROUPER version (in this case Version 
35) and multiply by the weights of that GROUPER. We then compare that 
pool to the transfer-adjusted case count using the new GROUPER 
version.) The average cost for each MS-DRG was then divided by the 
national average standardized cost per case to determine the relative 
weight.
    The FY 2019 cost-based relative weights were then normalized by an 
adjustment factor of 1.761194774 so that the average case weight after 
recalibration was equal to the average case weight before 
recalibration. The normalization adjustment is intended to ensure that 
recalibration by itself neither increases nor decreases total payments 
under the IPPS, as required by section 1886(d)(4)(C)(iii) of the Act.
    The 19 national average CCRs for FY 2019 are as follows:

------------------------------------------------------------------------
                             Group                                 CCR
------------------------------------------------------------------------
Routine Days...................................................    0.442
Intensive Days.................................................    0.368
Drugs..........................................................    0.191
Supplies & Equipment...........................................    0.299
Implantable Devices............................................    0.309
Therapy Services...............................................    0.304
Laboratory.....................................................    0.113
Operating Room.................................................    0.179
Cardiology.....................................................    0.103
Cardiac Catheterization........................................     0.11
Radiology......................................................    0.145
MRIs...........................................................    0.074
CT Scans.......................................................    0.035
Emergency Room.................................................    0.159
Blood and Blood Products.......................................    0.296
Other Services.................................................    0.345
Labor & Delivery...............................................    0.382
Inhalation Therapy.............................................    0.156
Anesthesia.....................................................    0.078
------------------------------------------------------------------------

    Since FY 2009, the relative weights have been based on 100 percent 
cost weights based on our MS-DRG grouping system.
    When we recalibrated the DRG weights for previous years, we set a

[[Page 41274]]

threshold of 10 cases as the minimum number of cases required to 
compute a reasonable weight. We proposed to use that same case 
threshold in recalibrating the MS-DRG relative weights for FY 2019. 
Using data from the FY 2017 MedPAR file, there were 7 MS-DRGs that 
contain fewer than 10 cases. For FY 2019, because we do not have 
sufficient MedPAR data to set accurate and stable cost relative weights 
for these low-volume MS-DRGs, we proposed to compute relative weights 
for the low-volume MS-DRGs by adjusting their final FY 2018 relative 
weights by the percentage change in the average weight of the cases in 
other MS-DRGs. The crosswalk table is shown:

------------------------------------------------------------------------
    Low-volume MS-DRG          MS-DRG title        Crosswalk to MS-DRG
------------------------------------------------------------------------
789......................  Neonates, Died or    Final FY 2018 relative
                            Transferred to       weight (adjusted by
                            Another Acute Care   percent change in
                            Facility.            average weight of the
                                                 cases in other MS-
                                                 DRGs).
790......................  Extreme Immaturity   Final FY 2018 relative
                            or Respiratory       weight (adjusted by
                            Distress Syndrome,   percent change in
                            Neonate.             average weight of the
                                                 cases in other MS-
                                                 DRGs).
791......................  Prematurity with     Final FY 2018 relative
                            Major Problems.      weight (adjusted by
                                                 percent change in
                                                 average weight of the
                                                 cases in other MS-
                                                 DRGs).
792......................  Prematurity without  Final FY 2018 relative
                            Major Problems.      weight (adjusted by
                                                 percent change in
                                                 average weight of the
                                                 cases in other MS-
                                                 DRGs).
793......................  Full-Term Neonate    Final FY 2018 relative
                            with Major           weight (adjusted by
                            Problems.            percent change in
                                                 average weight of the
                                                 cases in other MS-
                                                 DRGs).
794......................  Neonate with Other   Final FY 2018 relative
                            Significant          weight (adjusted by
                            Problems.            percent change in
                                                 average weight of the
                                                 cases in other MS
                                                 DRGs).
795......................  Normal Newborn.....  Final FY 2018 relative
                                                 weight (adjusted by
                                                 percent change in
                                                 average weight of the
                                                 cases in other MS-
                                                 DRGs).
------------------------------------------------------------------------

    After consideration of the comments we received, we are finalizing 
our proposals, with the modification for recalibrating the relative 
weights for FY 2019 at the same level as the FY 2018 relative weights 
for MS-DRGs where the FY 2018 relative weight declined by 20 percent 
from the FY 2017 relative weight and the FY 2019 relative weight would 
have declined by 20 percent or more from the FY 2018 relative weight.

H. Add-On Payments for New Services and Technologies for FY 2019

1. Background
    Sections 1886(d)(5)(K) and (L) of the Act establish a process of 
identifying and ensuring adequate payment for new medical services and 
technologies (sometimes collectively referred to in this section as 
``new technologies'') under the IPPS. Section 1886(d)(5)(K)(vi) of the 
Act specifies that a medical service or technology will be considered 
new if it meets criteria established by the Secretary after notice and 
opportunity for public comment. Section 1886(d)(5)(K)(ii)(I) of the Act 
specifies that a new medical service or technology may be considered 
for new technology add-on payment if, based on the estimated costs 
incurred with respect to discharges involving such service or 
technology, the DRG prospective payment rate otherwise applicable to 
such discharges under this subsection is inadequate. We note that, 
beginning with discharges occurring in FY 2008, CMS transitioned from 
CMS-DRGs to MS-DRGs. The regulations at 42 CFR 412.87 implement these 
provisions and specify three criteria for a new medical service or 
technology to receive the additional payment: (1) The medical service 
or technology must be new; (2) the medical service or technology must 
be costly such that the DRG rate otherwise applicable to discharges 
involving the medical service or technology is determined to be 
inadequate; and (3) the service or technology must demonstrate a 
substantial clinical improvement over existing services or 
technologies. Below we highlight some of the major statutory and 
regulatory provisions relevant to the new technology add-on payment 
criteria, as well as other information. For a complete discussion on 
the new technology add-on payment criteria, we refer readers to the FY 
2012 IPPS/LTCH PPS final rule (76 FR 51572 through 51574).
    Under the first criterion, as reflected in Sec.  412.87(b)(2), a 
specific medical service or technology will be considered ``new'' for 
purposes of new medical service or technology add-on payments until 
such time as Medicare data are available to fully reflect the cost of 
the technology in the MS-DRG weights through recalibration. We note 
that we do not consider a service or technology to be new if it is 
substantially similar to one or more existing technologies. That is, 
even if a technology receives a new FDA approval or clearance, it may 
not necessarily be considered ``new'' for purposes of new technology 
add-on payments if it is ``substantially similar'' to a technology that 
was approved or cleared by FDA and has been on the market for more than 
2 to 3 years. In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 
43813 through 43814), we established criteria for evaluating whether a 
new technology is substantially similar to an existing technology, 
specifically: (1) Whether a product uses the same or a similar 
mechanism of action to achieve a therapeutic outcome; (2) whether a 
product is assigned to the same or a different MS-DRG; and (3) whether 
the new use of the technology involves the treatment of the same or 
similar type of disease and the same or similar patient population. If 
a technology meets all three of these criteria, it would be considered 
substantially similar to an existing technology and would not be 
considered ``new'' for purposes of new technology add-on payments. For 
a detailed discussion of the criteria for substantial similarity, we 
refer readers to the FY 2006 IPPS final rule (70 FR 47351 through 
47352), and the FY 2010 IPPS/LTCH PPS final rule (74 FR 43813 through 
43814).
    Under the second criterion, Sec.  412.87(b)(3) further provides 
that, to be eligible for the add-on payment for new medical services or 
technologies, the MS-DRG prospective payment rate otherwise applicable 
to discharges involving the new medical service or technology must be 
assessed for adequacy. Under the cost criterion, consistent with the 
formula specified in section 1886(d)(5)(K)(ii)(I) of the Act, to assess 
the adequacy of payment for a new technology paid under the applicable 
MS-DRG prospective payment rate, we evaluate whether the charges for 
cases involving the new technology exceed certain threshold amounts. 
Table 10 that was released with the FY 2018 IPPS/LTCH PPS final rule 
contains the final thresholds that we used to evaluate applications for 
new medical service or technology add-

[[Page 41275]]

on payments for FY 2019. We refer readers to the CMS website at: 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-Items/FY2018-IPPS-Final-Rule-Tables.html to download and view Table 10.
    As previously stated, Table 10 that is released with each proposed 
and final rule contains the thresholds that we use to evaluate 
applications for new medical service and technology add-on payments for 
the fiscal year that follows the fiscal year that is otherwise the 
subject of the rulemaking. For example, the thresholds in Table 10 
released with the FY 2018 IPPS/LTCH PPS final rule are applicable to FY 
2019 new technology applications. In the FY 2019 IPPS/LTCH PPS proposed 
rule (83 FR 20276), we proposed, beginning with the thresholds for FY 
2020 and future years, to provide the thresholds that we previously 
included in Table 10 as one of our data files posted via the internet 
on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html, which is the same URL 
where the impact data files associated with the rulemaking for the 
applicable fiscal year are posted. We stated that we believed this 
proposed change in the presentation of this information, specifically 
in the data files rather than in a Table 10, will clarify for the 
public that the listed thresholds will be used for new technology add-
on payment applications for the next fiscal year (in this case, for FY 
2020) rather than for the fiscal year that is otherwise the subject of 
the rulemaking (in this case, for FY 2019), while continuing to furnish 
the same information on the new technology add-on payment thresholds 
for applications for the next fiscal year as has been provided in 
previous fiscal years. Accordingly, we would no longer include Table 10 
as one of our IPPS tables, but would instead include the thresholds 
applicable to the next fiscal year (beginning with FY 2020) in the data 
files associated with the prior fiscal year (in this case, FY 2019).
    We did not receive any public comments on this proposal. Therefore, 
we are finalizing the proposal, without modification, and presenting 
the MS-DRG threshold amounts (previously included in Table 10 of the 
annual IPPS/LTCH PPS proposed and final rules) that will be used in 
evaluating new technology add-on payment applications for FY 2020 in a 
data file that is available, along with the other data files associated 
with this FY 2019 IPPS/LTCH PPS final rule, on the CMS website at: 
http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.
    In the September 7, 2001 final rule that established the new 
technology add-on payment regulations (66 FR 46917), we discussed the 
issue of whether the Health Insurance Portability and Accountability 
Act (HIPAA) Privacy Rule at 45 CFR parts 160 and 164 applies to claims 
information that providers submit with applications for new medical 
service or technology add-on payments. We refer readers to the FY 2012 
IPPS/LTCH PPS final rule (76 FR 51573) for complete information on this 
issue.
    Under the third criterion, Sec.  412.87(b)(1) of our existing 
regulations provides that a new technology is an appropriate candidate 
for an additional payment when it represents an advance that 
substantially improves, relative to technologies previously available, 
the diagnosis or treatment of Medicare beneficiaries. For example, a 
new technology represents a substantial clinical improvement when it 
reduces mortality, decreases the number of hospitalizations or 
physician visits, or reduces recovery time compared to the technologies 
previously available. (We refer readers to the September 7, 2001 final 
rule for a more detailed discussion of this criterion (66 FR 46902).)
    The new medical service or technology add-on payment policy under 
the IPPS provides additional payments for cases with relatively high 
costs involving eligible new medical services or technologies, while 
preserving some of the incentives inherent under an average-based 
prospective payment system. The payment mechanism is based on the cost 
to hospitals for the new medical service or technology. Under Sec.  
412.88, if the costs of the discharge (determined by applying cost-to-
charge ratios (CCRs) as described in Sec.  412.84(h)) exceed the full 
DRG payment (including payments for IME and DSH, but excluding outlier 
payments), Medicare will make an add-on payment equal to the lesser of: 
(1) 50 percent of the estimated costs of the new technology or medical 
service (if the estimated costs for the case including the new 
technology or medical service exceed Medicare's payment); or (2) 50 
percent of the difference between the full DRG payment and the 
hospital's estimated cost for the case. Unless the discharge qualifies 
for an outlier payment, the additional Medicare payment is limited to 
the full MS-DRG payment plus 50 percent of the estimated costs of the 
new technology or medical service.
    Section 503(d)(2) of Public Law 108-173 provides that there shall 
be no reduction or adjustment in aggregate payments under the IPPS due 
to add-on payments for new medical services and technologies. 
Therefore, in accordance with section 503(d)(2) of Public Law 108-173, 
add-on payments for new medical services or technologies for FY 2005 
and later years have not been subjected to budget neutrality.
    In the FY 2009 IPPS final rule (73 FR 48561 through 48563), we 
modified our regulations at Sec.  412.87 to codify our longstanding 
practice of how CMS evaluates the eligibility criteria for new medical 
service or technology add-on payment applications. That is, we first 
determine whether a medical service or technology meets the newness 
criterion, and only if so, do we then make a determination as to 
whether the technology meets the cost threshold and represents a 
substantial clinical improvement over existing medical services or 
technologies. We amended Sec.  412.87(c) to specify that all applicants 
for new technology add-on payments must have FDA approval or clearance 
for their new medical service or technology by July 1 of the year prior 
to the beginning of the fiscal year that the application is being 
considered.
    The Council on Technology and Innovation (CTI) at CMS oversees the 
agency's cross-cutting priority on coordinating coverage, coding and 
payment processes for Medicare with respect to new technologies and 
procedures, including new drug therapies, as well as promoting the 
exchange of information on new technologies and medical services 
between CMS and other entities. The CTI, composed of senior CMS staff 
and clinicians, was established under section 942(a) of Public Law 108-
173. The Council is co-chaired by the Director of the Center for 
Clinical Standards and Quality (CCSQ) and the Director of the Center 
for Medicare (CM), who is also designated as the CTI's Executive 
Coordinator.
    The specific processes for coverage, coding, and payment are 
implemented by CM, CCSQ, and the local Medicare Administrative 
Contractors (MACs) (in the case of local coverage and payment 
decisions). The CTI supplements, rather than replaces, these processes 
by working to assure that all of these activities reflect the agency-
wide priority to promote high-quality, innovative care. At the same 
time, the CTI also works to streamline, accelerate, and improve 
coordination of these processes to ensure that they remain up to date 
as new issues arise. To achieve its goals, the CTI works to streamline

[[Page 41276]]

and create a more transparent coding and payment process, improve the 
quality of medical decisions, and speed patient access to effective new 
treatments. It is also dedicated to supporting better decisions by 
patients and doctors in using Medicare-covered services through the 
promotion of better evidence development, which is critical for 
improving the quality of care for Medicare beneficiaries.
    To improve the understanding of CMS' processes for coverage, 
coding, and payment and how to access them, the CTI has developed an 
``Innovator's Guide'' to these processes. The intent is to consolidate 
this information, much of which is already available in a variety of 
CMS documents and in various places on the CMS website, in a user 
friendly format. This guide was published in 2010 and is available on 
the CMS website at: https://www.cms.gov/Medicare/Coverage/CouncilonTechInnov/Downloads/Innovators-Guide-Master-7-23-15.pdf.
    As we indicated in the FY 2009 IPPS final rule (73 FR 48554), we 
invite any product developers or manufacturers of new medical services 
or technologies to contact the agency early in the process of product 
development if they have questions or concerns about the evidence that 
would be needed later in the development process for the agency's 
coverage decisions for Medicare.
    The CTI aims to provide useful information on its activities and 
initiatives to stakeholders, including Medicare beneficiaries, 
advocates, medical product manufacturers, providers, and health policy 
experts. Stakeholders with further questions about Medicare's coverage, 
coding, and payment processes, or who want further guidance about how 
they can navigate these processes, can contact the CTI at 
[email protected].
    In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20277), we noted 
that applicants for add-on payments for new medical services or 
technologies for FY 2020 must submit a formal request, including a full 
description of the clinical applications of the medical service or 
technology and the results of any clinical evaluations demonstrating 
that the new medical service or technology represents a substantial 
clinical improvement, along with a significant sample of data to 
demonstrate that the medical service or technology meets the high-cost 
threshold. Complete application information, along with final deadlines 
for submitting a full application, will be posted as it becomes 
available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/newtech.html. To allow 
interested parties to identify the new medical services or technologies 
under review before the publication of the proposed rule for FY 2020, 
the CMS website also will post the tracking forms completed by each 
applicant. We note that the burden associated with this information 
collection requirement is the time and effort required to collect and 
submit the data in the formal request for add-on payments for new 
medical services and technologies to CMS. The aforementioned burden is 
subject to the PRA; it is currently approved under OMB control number 
0938-1347, which expires on December 31, 2020.
2. Public Input Before Publication of a Notice of Proposed Rulemaking 
on Add-On Payments
    Section 1886(d)(5)(K)(viii) of the Act, as amended by section 
503(b)(2) of Public Law 108-173, provides for a mechanism for public 
input before publication of a notice of proposed rulemaking regarding 
whether a medical service or technology represents a substantial 
clinical improvement or advancement. The process for evaluating new 
medical service and technology applications requires the Secretary to--
     Provide, before publication of a proposed rule, for public 
input regarding whether a new service or technology represents an 
advance in medical technology that substantially improves the diagnosis 
or treatment of Medicare beneficiaries;
     Make public and periodically update a list of the services 
and technologies for which applications for add-on payments are 
pending;
     Accept comments, recommendations, and data from the public 
regarding whether a service or technology represents a substantial 
clinical improvement; and
     Provide, before publication of a proposed rule, for a 
meeting at which organizations representing hospitals, physicians, 
manufacturers, and any other interested party may present comments, 
recommendations, and data regarding whether a new medical service or 
technology represents a substantial clinical improvement to the 
clinical staff of CMS.
    In order to provide an opportunity for public input regarding add-
on payments for new medical services and technologies for FY 2019 prior 
to publication of the FY 2019 IPPS/LTCH PPS proposed rule, we published 
a notice in the Federal Register on December 4, 2017 (82 FR 57275), and 
held a town hall meeting at the CMS Headquarters Office in Baltimore, 
MD, on February 13, 2018. In the announcement notice for the meeting, 
we stated that the opinions and presentations provided during the 
meeting would assist us in our evaluations of applications by allowing 
public discussion of the substantial clinical improvement criterion for 
each of the FY 2019 new medical service and technology add-on payment 
applications before the publication of the FY 2019 IPPS/LTCH PPS 
proposed rule.
    As stated in the proposed rule, approximately 150 individuals 
registered to attend the town hall meeting in person, while additional 
individuals listened over an open telephone line. We also live-streamed 
the town hall meeting and posted the town hall on the CMS YouTube web 
page at: https://www.youtube.com/watch?v=9niqfxXe4oA&t=217s. We 
considered each applicant's presentation made at the town hall meeting, 
as well as written comments submitted on the applications that were 
received by the due date of February 23, 2018, in our evaluation of the 
new technology add-on payment applications for FY 2019 in the FY 2019 
IPPS/LTCH PPS proposed rule.
    In response to the published notice and the February 13, 2018 New 
Technology Town Hall meeting, we received written comments regarding 
the applications for FY 2019 new technology add-on payments. (We refer 
readers to the FY 2019 IPPS/LTCH PPS proposed rule for summaries of the 
comments received in response to the published notice and the New 
Technology Town Hall meeting and our responses (83 FR 20278 through 
20280).) We also noted in the proposed rule that we do not summarize 
comments that are unrelated to the ``substantial clinical improvement'' 
criterion. As explained earlier and in the Federal Register notice 
announcing the New Technology Town Hall meeting (82 FR 57275 through 
57277), the purpose of the meeting was specifically to discuss the 
substantial clinical improvement criterion in regard to pending new 
technology add-on payment applications for FY 2019. Therefore, we did 
not summarize those written comments in the proposed rule. In section 
II.H.5. of the preamble of the FY 2019 IPPS/LTCH PPS proposed rule, we 
summarized comments regarding individual applications, or, if 
applicable, indicated that there were no comments received in response 
to the New Technology Town Hall meeting

[[Page 41277]]

notice, at the end of each discussion of the individual applications.
    Public commenters stated opinions and made suggestions relating to 
the mapping of new technologies to the appropriate MS-DRG, deeming a 
new technology a substantial clinical improvement if it receives HDE 
approval from the FDA, and the use of external data in determining the 
cost threshold that CMS considers to be outside of the scope of the 
proposed rule. Because we did not request public comments nor propose 
to make any changes to any of the issues above, we are not summarizing 
these public comments, nor responding to them in this final rule. As 
noted below in section II.H.5.a. of the preamble of this final rule, we 
refer readers to section II.F.2.d. of the preamble of this final rule 
for a summary of and our responses to the public comments we received 
in response to our solicitation regarding the most appropriate 
mechanism to provide payment to hospitals for new technologies, such as 
CAR T-cell therapy drugs, including through the use of new technology 
add-on payments (82 FR 20294), as well as a summary of the public 
comments we received in response to the solicitation for public comment 
on our concerns with the payment alternatives that we considered for 
CAR T-cell therapy drugs and therapies and our responses to those 
comments (83 FR 20190).
3. ICD-10-PCS Section ``X'' Codes for Certain New Medical Services and 
Technologies
    As discussed in the FY 2016 IPPS/LTCH final rule (80 FR 49434), the 
ICD-10-PCS includes a new section containing the new Section ``X'' 
codes, which began being used with discharges occurring on or after 
October 1, 2015. Decisions regarding changes to ICD-10-PCS Section 
``X'' codes will be handled in the same manner as the decisions for all 
of the other ICD-10-PCS code changes. That is, proposals to create, 
delete, or revise Section ``X'' codes under the ICD-10-PCS structure 
will be referred to the ICD-10 Coordination and Maintenance Committee. 
In addition, several of the new medical services and technologies that 
have been, or may be, approved for new technology add-on payments may 
now, and in the future, be assigned a Section ``X'' code within the 
structure of the ICD-10-PCS. We posted ICD-10-PCS Guidelines on the CMS 
website at: http://www.cms.gov/Medicare/Coding/ICD10/2016-ICD-10-PCS-and-GEMs.html, including guidelines for ICD-10-PCS Section ``X'' codes. 
We encourage providers to view the material provided on ICD-10-PCS 
Section ``X'' codes.
4. FY 2019 Status of Technologies Approved for FY 2018 Add-On Payments
a. Defitelio[supreg] (Defibrotide)
    Jazz Pharmaceuticals submitted an application for new technology 
add-on payments for FY 2017 for Defitelio[supreg] (defibrotide), a 
treatment for patients diagnosed with hepatic veno-occlusive disease 
(VOD) with evidence of multiorgan dysfunction. VOD, also known as 
sinusoidal obstruction syndrome (SOS), is a potentially life-
threatening complication of hematopoietic stem cell transplantation 
(HSCT), with an incidence rate of 8 percent to 15 percent. Diagnoses of 
VOD range in severity from what has been classically defined as a 
disease limited to the liver (mild) and reversible, to a severe 
syndrome associated with multi-organ dysfunction or failure and death. 
Patients treated with HSCT who develop VOD with multi-organ failure 
face an immediate risk of death, with a mortality rate of more than 80 
percent when only supportive care is used. The applicant asserted that 
Defitelio[supreg] improves the survival rate of patients diagnosed with 
VOD with multi-organ failure by 23 percent.
    Defitelio[supreg] received Orphan Drug Designation for the 
treatment of VOD in 2003 and for the prevention of VOD in 2007. It has 
been available to patients as an investigational drug through an 
expanded access program since 2006. The applicant's New Drug 
Application (NDA) for Defitelio[supreg] received FDA approval on March 
30, 2016. The applicant confirmed that Defitelio[supreg] was not 
available on the U.S. market as of the FDA NDA approval date of March 
30, 2016. According to the applicant, commercial packaging could not be 
completed until the label for Defitelio[supreg] was finalized with FDA 
approval, and that commercial shipments of Defitelio[supreg] to 
hospitals and treatment centers began on April 4, 2016. Therefore, we 
agreed that, based on this information, the newness period for 
Defitelio[supreg] begins on April 4, 2016, the date of its first 
commercial availability.
    The applicant received approval to use unique ICD-10-PCS procedure 
codes to describe the use of Defitelio[supreg], with an effective date 
of October 1, 2016. The approved ICD-10PCS procedure codes are: XW03392 
(Introduction of defibrotide sodium anticoagulant into peripheral vein, 
percutaneous approach); and XW04392 (Introduction of defibrotide sodium 
anticoagulant into central vein, percutaneous approach).
    After evaluation of the newness, costs, and substantial clinical 
improvement criteria for new technology add-on payments for 
Defitelio[supreg] and consideration of the public comments we received 
in response to the FY 2017 IPPS/LTCH PPS proposed rule, we approved 
Defitelio[supreg] for new technology add-on payments for FY 2017 (81 FR 
56906). With the new technology add-on payment application, the 
applicant estimated that the average Medicare beneficiary would require 
a dosage of 25 mg/kg/day for a minimum of 21 days of treatment. The 
recommended dose is 6.25 mg/kg given as a 2-hour intravenous infusion 
every 6 hours. Dosing should be based on a patient's baseline body 
weight, which is assumed to be 70 kg for an average adult patient. All 
vials contain 200 mg at a cost of $825 per vial. Therefore, we 
determined that cases involving the use of the Defitelio[supreg] 
technology would incur an average cost per case of $151,800 (70 kg 
adult x 25 mg/kg/day x 21 days = 36,750 mg per patient/200 mg vial = 
184 vials per patient x $825 per vial = $151,800). Under Sec.  
412.88(a)(2), we limit new technology add-on payments to the lesser of 
50 percent of the average cost of the technology or 50 percent of the 
costs in excess of the MS-DRG payment for the case. As a result, the 
maximum new technology add-on payment amount for a case involving the 
use of Defitelio[supreg] is $75,900.
    Our policy is that a medical service or technology may continue to 
be considered ``new'' for purposes of new technology add-on payments 
within 2 or 3 years after the point at which data begin to become 
available reflecting the inpatient hospital code assigned to the new 
service or technology. Our practice has been to begin and end new 
technology add-on payments on the basis of a fiscal year, and we have 
generally followed a guideline that uses a 6-month window before and 
after the start of the fiscal year to determine whether to extend the 
new technology add-on payment for an additional fiscal year. In 
general, we extend new technology add-on payments for an additional 
year only if the 3-year anniversary date of the product's entry onto 
the U.S. market occurs in the latter half of the fiscal year (70 FR 
47362).
    With regard to the newness criterion for Defitelio[supreg], we 
considered the beginning of the newness period to commence on the first 
day Defitelio[supreg] was commercially available (April 4, 2016). 
Because the 3-year anniversary date of the entry of the 
Defitelio[supreg] onto the U.S. market (April 4, 2019) will

[[Page 41278]]

occur in the latter half of FY 2019, in the FY 2019 IPPS/LTCH PPS 
proposed rule (83 FR 20280 through 20281), we proposed to continue new 
technology add-on payments for this technology for FY 2019. We proposed 
that the maximum payment for a case involving Defitelio[supreg] would 
remain at $75,900 for FY 2019. We invited public comments on our 
proposal to continue new technology add-on payments for 
Defitelio[supreg] for FY 2019.
    Comment: A few commenters agreed with CMS' proposal to continue new 
technology add-on payments for Defitelio[supreg] for FY 2019. In 
addition, the applicant provided updated cost information that 
indicated, as of April 4, 2018, the current Wholesale Acquisition Cost 
(WAC) for Defitelio[supreg] is $875.24 per vial, which changes the 
average cost per case from $151,800 to $161,000 (70 kg adult x 25 mg/
kg/day x 21 days = 36,750 mg per patient/200 mg vial = 184 vials per 
patient x $875 per vial = $161,000). As such, the applicant requested 
that CMS revise the maximum new technology add-on payment for 
Defitelio[supreg] for FY 2019 to $80,500, or increase the maximum new 
technology add-on payment for cases involving the use of 
Defitelio[supreg] to 50 percent of the revised WAC of the technology 
per case.
    Response: We appreciate the commenters' support and the updated 
cost information submitted by the applicant.
    After consideration of the public comments we received, we are 
finalizing our proposal, with modification, to continue new technology 
add-on payments for Defitelio[supreg] for FY 2019. Based on the 
applicant's updated cost information, the maximum new technology add-on 
payment for a case involving the use of Defitelio[supreg] is $80,500 
for FY 2019.
b. EDWARDS INTUITY Elite\TM\ Valve System (INTUITY) and LivaNova 
Perceval Valve (Perceval)
    Two manufacturers, Edwards Lifesciences and LivaNova, submitted 
applications for new technology add-on payments for FY 2018 for the 
INTUITY Elite\TM\ Valve System (INTUITY) and the Perceval Valve 
(Perceval), respectively. Both of these technologies are prosthetic 
aortic valves inserted using surgical aortic valve replacement (AVR). 
The applicant for the INTUITY valve stated that it has a unique design, 
which utilizes features that were not previously included in 
conventional aortic valves. The deployment mechanism allows for rapid 
deployment. The expandable frame can reshape the native valve's 
orifice, creating a larger and more efficiently shaped effective 
orifice area. In addition, the expandable skirt allows for structural 
differentiation upon fixation of the valve requiring 3 permanent, 
guiding sutures rather than the 12 to 18 permanent sutures used to 
fasten standard prosthetic aortic valves. The applicant for the 
Perceval valve described the Perceval valve as including: (a) No 
permanent sutures; (b) a dedicated delivery system that increases the 
surgeon's visibility; (c) an enabler of a minimally invasive approach; 
(d) a capability to promote complexity reduction and reproducibility of 
the procedure; and (e) a unique device assembly and delivery system.
    Aortic valvular disease is relatively common, primarily manifested 
by aortic stenosis. Most aortic stenosis is due to calcification of the 
valve, either on a normal tri-leaflet valve or on a congenitally 
bicuspid valve. The resistance to outflow of blood is progressive over 
time, and as the size of the aortic orifice narrows, the heart must 
generate increasingly elevated pressures to maintain blood flow. 
Symptoms such as angina, heart failure, and syncope eventually develop, 
and portend a very serious prognosis. There is no effective medical 
therapy for aortic stenosis, so the diseased valve must be replaced or, 
less commonly, repaired.
    According to both applicants, the INTUITY valve and the Perceval 
valve are the first sutureless, rapid deployment aortic valves that can 
be used for the treatment of patients who are candidates for surgical 
AVR. Because potential cases representing patients who are eligible for 
treatment using the INTUITY and the Perceval aortic valve devices would 
group to the same MS-DRGs, and we believe that these devices are 
intended to treat the same or similar disease in the same or similar 
patient population, and are purposed to achieve the same therapeutic 
outcome using the same or similar mechanism of action, we determined 
these two devices are substantially similar to each other and that it 
was appropriate to evaluate both technologies as one application for 
new technology add-on payments under the IPPS.
    With respect to the newness criterion, the INTUITY valve received 
FDA approval on August 12, 2016, and was commercially available on the 
U.S. market on August 19, 2016. The Perceval valve received FDA 
approval on January 8, 2016, and was commercially available on the U.S. 
market on February 29, 2016. In accordance with our policy, we stated 
in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38120) that we believe 
it is appropriate to use the earliest market availability date 
submitted as the beginning of the newness period. Accordingly, for both 
devices, we stated that the beginning of the newness period is February 
29, 2016, when the Perceval valve became commercially available. The 
ICD-10-PCS code approved to identify procedures involving the use of 
both devices when surgically implanted is ICD-10-PCS code X2RF032 
(Replacement of aortic valve using zooplastic tissue, rapid deployment 
technique, open approach, new technology group 2).
    After evaluation of the newness, costs, and substantial clinical 
improvement criteria for new technology add-on payments for the INTUITY 
and Perceval valves and consideration of the public comments we 
received in response to the FY 2018 IPPS/LTCH PPS proposed rule, we 
approved the INTUITY and Perceval valves for new technology add-on 
payments for FY 2018 (82 FR 38125). We stated that we believed that the 
use of a weighted-average of the cost of the standard valves based on 
the projected number of cases involving each technology to determine 
the maximum new technology add-on payment was most appropriate. To 
compute the weighted-cost average, we summed the total number of 
projected cases for each of the applicants, which equaled 2,429 cases 
(1,750 plus 679). We then divided the number of projected cases for 
each of the applicants by the total number of cases, which resulted in 
the following case-weighted percentages: 72 percent for the INTUITY and 
28 percent for the Perceval valve. We then multiplied the cost per case 
for the manufacturer specific valve by the case-weighted percentage 
(0.72 * $12,500 = $9,005.76 for INTUITY and 0.28 * $11,500 = $3,214.70 
for the Perceval valve). This resulted in a case-weighted average cost 
of $12,220.46 for the valves. Under Sec.  412.88(a)(2), we limit new 
technology add-on payments to the lesser of 50 percent of the average 
cost of the device or 50 percent of the costs in excess of the MS-DRG 
payment for the case. As a result, the maximum new technology add-on 
payment for a case involving the INTUITY or Perceval valves is 
$6,110.23 for FY 2018.
    With regard to the newness criterion for the INTUITY and Perceval 
valves, we considered the newness period for the INTUITY and Perceval 
valves to begin February 29, 2016. As discussed previously in this 
section, in general, we extend new technology add-on payments for an 
additional year only if the 3-year anniversary date of the product's 
entry onto the U.S. market

[[Page 41279]]

occurs in the latter half of the upcoming fiscal year. Because the 3-
year anniversary date of the entry of the technology onto the U.S. 
market (February 29, 2019) will occur in the first half of FY 2019, in 
the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20281), we proposed to 
discontinue new technology add-on payments for the INTUITY and Perceval 
valves for FY 2019. We invited public comments on our proposal to 
discontinue new technology add-on payments for the INTUITY and Perceval 
valves.
    Comment: Some commenters supported CMS' proposal to discontinue new 
technology add-on payments for the INTUITY and Perceval valves and 
stated that the consideration of these two applications together 
demonstrated CMS' commitment to efficiency and optimization of the new 
technology add-on payment application process. Most commenters agreed 
that it is appropriate for the newness period to be based on the 
earliest anniversary date of the product's entry onto the U.S. market, 
given that the two technologies were evaluated and approved as one 
application. Other commenters disagreed with CMS' proposal to 
discontinue new technology add-on payments for the INTUITY and Perceval 
valves for reasons including the following: (1) There is no precedent 
for CMS to determine the 3-year anniversary date of a product's entry 
onto the U.S. market for two technologies that have been jointly 
awarded new technology add-on payments with different market 
availability dates; (2) it is inappropriate to choose the earliest 
market availability date for this class of technologies because it does 
not acknowledge the disparate newness periods for the two applicants; 
and (3) Medicare claims data and MS-DRG payment rates do not adequately 
reflect the additional costs of these technologies. Instead, some of 
these commenters suggested that the mid-point of the two commercial 
market availability dates for the Perceval and INTUITY valves be used 
as the beginning of the newness period, which would be May 25, 2016. 
These commenters believed that, by using the May 25, 2016 mid-point 
commercial market availability date, the newness period would conclude 
on May 25, 2019, which occurs in the second half of the fiscal year 
and, therefore, would allow new technology add-on payments for the 
Perceval and INTUITY valves to continue through FY 2019. Another 
commenter also disagreed with CMS' proposal to discontinue new 
technology add-on payments for the Perceval and INTUITY valves because 
the commenter believed that the commercial market availability date of 
February 29, 2016, is an inappropriate beginning for the newness period 
for the Perceval valve due to the thorough training and education 
process that was implemented by LivaNova, which impacted the market 
availability of the Perceval valve prior to April 1, 2016, and noted 
there were fewer than 30 Medicare patients who received implants 
involving the use of the Perceval valve prior to April 1, 2016.
    Response: We appreciate the commenters' input. With regard to the 
beginning of the technology's newness period, as discussed in the FY 
2005 IPPS final rule (69 FR 49003), the timeframe that a new technology 
can be eligible to receive new technology add-on payments begins when 
data begin to become available. Therefore, the precedent the commenter 
mentions regarding two technologies that have been jointly awarded new 
technology add-on payments with different commercial market 
availability dates is not relevant. Section 412.87(b)(2) states that a 
medical service or technology may be considered ``new'' within 2 or 3 
years after the point at which data begin to become available 
reflecting the inpatient hospital code assigned to the new service or 
technology (depending on when a new code is assigned and data on the 
new service or technology become available for DRG recalibration). 
Section 412.87(b)(2) also specifies that after CMS has recalibrated the 
DRGs, based on available data, to reflect the costs of an otherwise new 
medical service or technology, the medical service or technology will 
no longer be considered ``new'' under the criterion of the section. 
Additionally, as stated above, we have determined that the Perceval and 
INTUITY valves are substantially similar to each other and, therefore, 
we used the earliest date when data became available for the technology 
to determine the beginning of the newness period. Therefore, the 
newness period began February 29, 2016.
    In addition, we do not believe that case volume is a relevant 
consideration for making the determination as to whether a product is 
``new.'' Consistent with the statute and our implementing regulations, 
a technology is no longer considered as ``new'' once it is more than 2 
to 3 years old, irrespective of how frequently the medical service or 
technology has been used in the Medicare population (70 FR 47349). As 
such, in this case, because the Perceval and INTUITY valves have been 
available on the U.S. market for more than 2 to 3 years, we consider 
the costs to have been included in the MS-DRG relative weights 
regardless of whether the technologies' use in the Medicare population 
has been frequent or infrequent.
    Based on all of the reasons stated above, the Perceval and INTUITY 
valves are no longer considered ``new'' for purposes of new technology 
add-on payments for FY 2019. Therefore, after consideration of the 
public comments we received, we are finalizing our proposal to 
discontinue new technology add-on payments for the Perceval and INTUITY 
valves for FY 2019.
c. GORE[supreg] EXCLUDER[supreg] Iliac Branch Endoprosthesis (Gore IBE 
Device)
    W. L. Gore and Associates, Inc. submitted an application for new 
technology add-on payments for the GORE[supreg] EXCLUDER[supreg] Iliac 
Branch Endoprosthesis (GORE IBE device) for FY 2017. The device 
consists of two components: The Iliac Branch Component (IBC) and the 
Internal Iliac Component (IIC). The applicant indicated that each 
endoprosthesis is pre-mounted on a customized delivery and deployment 
system allowing for controlled endovascular delivery via bilateral 
femoral access. According to the applicant, the device is designed to 
be used in conjunction with the GORE[supreg] EXCLUDER[supreg] AAA 
Endoprosthesis for the treatment of patients requiring repair of common 
iliac or aortoiliac aneurysms. When deployed, the GORE IBE device 
excludes the common iliac aneurysm from systemic blood flow, while 
preserving blood flow in the external and internal iliac arteries.
    With regard to the newness criterion, the applicant received FDA 
pre-market approval of the GORE IBE device on February 29, 2016. The 
following procedure codes describe the use of this technology: 04VC0EZ 
(Restriction of right common iliac artery with branched or fenestrated 
intraluminal device, one or two arteries, open approach); 04VC3EZ 
(Restriction of right common iliac artery with branched or fenestrated 
intraluminal device, one or two arteries, percutaneous approach); 
04VC4EZ (Restriction of right common iliac artery with branched or 
fenestrated intraluminal device, one or two arteries, percutaneous 
approach); 04VD0EZ (Restriction of left common iliac artery with 
branched or fenestrated intraluminal device, one or two arteries, open 
approach); 04VD3EZ (Restriction of left common iliac artery with 
branched or fenestrated intraluminal device, one or two arteries, 
percutaneous approach); 04VD4EZ (Restriction of left common iliac 
artery

[[Page 41280]]

with branched or fenestrated intraluminal device, one or two arteries, 
percutaneous endoscopic approach).
    After evaluation of the newness, costs, and substantial clinical 
improvement criteria for new technology add-on payments for the GORE 
IBE device and consideration of the public comments we received in 
response to the FY 2017 IPPS/LTCH PPS proposed rule, we approved the 
GORE IBE device for new technology add-on payments for FY 2017 (81 FR 
56909). With the new technology add-on payment application, the 
applicant indicated that the total operating cost of the GORE IBE 
device is $10,500. Under Sec.  412.88(a)(2), we limit new technology 
add-on payments to the lesser of 50 percent of the average cost of the 
device, or 50 percent of the costs in excess of the MS-DRG payment for 
the case. As a result, the maximum new technology add-on payment for a 
case involving the GORE IBE device is $5,250.
    With regard to the newness criterion for the GORE IBE device, we 
considered the beginning of the newness period to commence when the 
GORE IBE device received FDA approval on February 29, 2016. As 
discussed previously in this section, in general, we extend new 
technology add-on payments for an additional year only if the 3-year 
anniversary date of the product's entry onto the U.S. market occurs in 
the latter half of the upcoming fiscal year. Because the 3-year 
anniversary date of the entry of the GORE IBE device onto the U.S. 
market (February 28, 2019) will occur in the first half of FY 2019, in 
the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20282), we proposed to 
discontinue new technology add-on payments for this technology for FY 
2019. We invited public comments on our proposal to discontinue new 
technology add-on payments for the GORE IBE device.
    Comment: The applicant (manufacturer) disagreed with CMS' proposal 
to discontinue new technology add-on payments for the GORE IBE device, 
and recommended that CMS continue new technology add-on payments for an 
additional year until sufficient claims data are available to reflect 
the cost of the technology. The applicant indicated that the FDA 
approval date is the date that the manufacturer may begin 
commercialization and actual manufacturing and marketing takes several 
months. As such, the applicant believed that it would be more 
appropriate to use the date of first sale or the date of the first 
procedure as the beginning of the newness period because it would more 
appropriately align with the point at which claims and costs data would 
begin to become available.
    With regard to the GORE IBE device, the applicant noted that there 
was a deletion of ICD-10-PCS procedure codes in FY 2018 used for the 
coding of procedures identifying the GORE IBE implant, which created 
confusion for hospital billing departments that were reporting these 
codes. As a result, the applicant believed that the GORE IBE implant 
procedures may have been under-reported and the claims data has not 
captured the utilization and cost data for these implant procedures. 
Additionally, the applicant stated that MACs, as a general practice, do 
not include Category III CPT codes in their internal processes and, 
specifically, do not include 0254T for the identification of the GORE 
IBE procedure. The applicant believed that this lack of alignment 
between the new technology add-on payment policy and the MACs' 
treatment of Category III CPT codes for the identification of GORE IBE 
procedures likely contributed to the severe under-reporting of 
procedures involving the GORE IBE implant. Therefore, the applicant 
recommended that CMS maintain consistent ICD-10 coding practices, 
encourage the MACs to include procedures involving devices for which 
new technology add-on payments are effective in their internal 
processes, and extend new technology add-on payments for the GORE IBE 
technology through FY 2019 to allow assessment of sufficient claims 
data that reflect the costs of the GORE IBE device.
    Response: We appreciate the applicant's input. As stated above, 
while CMS may consider a documented delay in a technology's 
availability on the U.S. market in determining when the newness period 
begins, its policy for determining whether to extend new technology 
add-on payments for an additional year generally applies regardless of 
the volume of claims for the technology after the beginning of the 
newness period. Similar to our discussion earlier and in the FY 2006 
IPPS final rule (70 FR 47349), we do not believe that case volume is a 
relevant consideration for making the determination as to whether a 
product is considered ``new'' for purposes of new technology add-on 
payments. Consistent with the statute and our implementing regulations, 
a technology is no longer considered ``new'' once it is more than 2 to 
3 years old, and the costs of the procedures are considered to be 
included in the relative weights irrespective of how frequently the 
technology has been used in the Medicare population. Additionally, 
since the technology is on the market coding changes or local coverage 
determinations typically do not delay the beginning of the newness 
period. Therefore, in this case, because the GORE IBE device has been 
available on the U.S. market for more than 2 to 3 years, we consider 
claims and costs data to be available for DRG recalibration of the 
relative weights, and the costs of the technology to have been included 
in the MS-DRG relative weights regardless of whether the technology's 
use in the Medicare population has been frequent or infrequent.
    Based on the reasons stated above, the GORE IBE device is no longer 
considered ``new'' for purposes of new technology add-on payments for 
FY 2019. Therefore, after consideration of the public comments we 
received, we are finalizing our proposal to discontinue new technology 
add-on payments for the GORE IBE device for FY 2019.
d. PRAXBIND (Idarucizumab)
    Boehringer Ingelheim Pharmaceuticals, Inc. submitted an application 
for new technology add-on payments for FY 2017 for idarucizumab (also 
known as PRAXBIND), a product developed as an antidote to reverse the 
effects of PRADAXA (dabigatran), which is also manufactured by 
Boehringer Ingelheim Pharmaceuticals, Inc.
    Dabigatran is an oral direct thrombin inhibitor currently 
indicated: (1) To reduce the risk of stroke and systemic embolism in 
patients who have been diagnosed with nonvalvular atrial fibrillation 
(NVAF); (2) for the treatment of deep venous thrombosis (DVT) and 
pulmonary embolism (PE) in patients who have been administered a 
parenteral anticoagulant for 5 to 10 days; (3) to reduce the risk of 
recurrence of DVT and PE in patients who have been previously treated; 
and (4) for the prophylaxis of DVT and PE in patients who have 
undergone hip replacement surgery. Currently, unlike the anticoagulant 
warfarin, there is no specific way to reverse the anticoagulant effect 
of dabigatran in the event of a major bleeding episode. Idarucizumab is 
a humanized fragment antigen binding (Fab) molecule, which specifically 
binds to dabigatran to deactivate the anticoagulant effect, thereby 
allowing thrombin to act in blood clot formation. The applicant stated 
that idarucizumab represents a new pharmacologic approach to 
neutralizing the specific anticoagulant effect of dabigatran in 
emergency situations.
    PRAXBIND was approved by the FDA on October 16, 2015. PRAXBIND is 
indicated for the use in the treatment of

[[Page 41281]]

patients who have been administered PRADAXA when reversal of the 
anticoagulant effects of dabigatran is needed for emergency surgery or 
urgent medical procedures or in life-threatening or uncontrolled 
bleeding.
    The applicant was granted approval to use unique ICD-10-PCS 
procedure codes that became effective October 1, 2016, to describe the 
use of this technology. The approved ICD-10-PCS procedure codes are: 
XW03331 (Introduction of idarucizumab, dabigatran reversal agent into 
peripheral vein, percutaneous approach, new technology group 1); and 
XW04331 (Introduction of idarucizumab, dabigatran reversal agent into 
central vein, percutaneous approach, new technology group 1).
    After evaluation of the newness, costs, and substantial clinical 
improvement criteria for new technology add-on payments for 
idarucizumab and consideration of the public comments we received in 
response to the FY 2017 IPPS/LTCH PPS proposed rule, we approved 
idarucizumab for new technology add-on payments for FY 2017 (81 FR 
56897). With the new technology add-on payment application, the 
applicant indicated that the total operating cost of idarucizumab is 
$3,500. Under Sec.  412.88(a)(2), we limit new technology add-on 
payments to the lesser of 50 percent of the average cost of the 
technology, or 50 percent of the costs in excess of the MS-DRG payment 
for the case. As a result, the maximum new technology add-on payment 
for a case involving idarucizumab is $1,750.
    With regard to the newness criterion for idarucizumab, we 
considered the beginning of the newness period to commence when 
PRAXBIND was approved by the FDA on October 16, 2015. As discussed 
previously in this section, in general, we extend new technology add-on 
payments for an additional year only if the 3-year anniversary date of 
the product's entry onto the U.S. market occurs in the latter half of 
the upcoming fiscal year. Because the 3-year anniversary date of the 
entry of PRAXBIND onto the U.S. market will occur in the first half of 
FY 2019 (October 15, 2018), in the FY 2019 IPPS/LTCH PPS proposed rule 
(83 FR 20282), we proposed to discontinue new technology add-on 
payments for this technology for FY 2019. We invited public comments on 
our proposal to discontinue new technology add-on payments for 
idarucizumab.
    Comment: A few commenters supported CMS' proposal to discontinue 
new technology add-on payments for FY 2019 for idarucizumab.
    Response: We appreciate the commenters' support. After 
consideration of the public comments we received, we are finalizing our 
proposal to discontinue new technology add-on payments for idarucizumab 
for FY 2019.
e. Stelara[supreg] (Ustekinumab)
    Janssen Biotech submitted an application for new technology add-on 
payments for the Stelara[supreg] induction therapy for FY 2018. 
Stelara[supreg] received FDA approval as an intravenous (IV) infusion 
treatment for adult patients with moderately to severe active Crohn's 
disease (CD) who have failed or were intolerant to treatment using 
immunomodulators or corticosteroids, but never failed a tumor necrosis 
factor (TNF) blocker, or failed or were intolerant to treatment using 
one or more TNF blockers. The FDA approved Stelara[supreg] on September 
23, 2016. Stelara[supreg] IV is intended for induction--subcutaneous 
prefilled syringes are intended for maintenance dosing. Stelara[supreg] 
must be administered intravenously by a health care professional in 
either an inpatient hospital setting or an outpatient hospital setting.
    Stelara[supreg] for IV infusion is packaged in single 130 mg vials. 
Induction therapy consists of a single IV infusion dose using the 
following weight-based dosing regimen: Patients weighing less than 
(<)55 kg are administered 260 mg of Stelara[supreg] (2 vials); patients 
weighing more than (>)55 kg, but less than (<)85 kg are administered 
390 mg of Stelara[supreg] (3 vials); and patients weighing more than 
(>)85 kg are administered 520 mg of Stelara[supreg] (4 vials). An 
average dose of Stelara[supreg] administered through IV infusion is 390 
mg (3 vials). Maintenance doses of Stelara[supreg] are administered at 
90 mg, subcutaneously, at 8-week intervals and may occur in the 
outpatient hospital setting.
    CD is an inflammatory bowel disease of unknown etiology, 
characterized by transmural inflammation of the gastrointestinal (GI) 
tract. Symptoms of CD may include fatigue, prolonged diarrhea with or 
without bleeding, abdominal pain, weight loss and fever. CD can affect 
any part of the GI tract including the mouth, esophagus, stomach, small 
intestine, and large intestine. Conventional pharmacologic treatments 
of CD include antibiotics, mesalamines, corticosteroids, 
immunomodulators, tumor necrosis alpha (TNF[alpha]) inhibitors, and 
anti-integrin agents. Surgery may be necessary for some patients 
diagnosed with CD in which conventional therapies have failed.
    After evaluation of the newness, costs, and substantial clinical 
improvement criteria for new technology add-on payments for 
Stelara[supreg] and consideration of the public comments we received in 
response to the FY 2018 IPPS/LTCH PPS proposed rule, we approved 
Stelara[supreg] for new technology add-on payments for FY 2018 (82 FR 
38129). Cases involving Stelara[supreg] that are eligible for new 
technology add-on payments are identified by ICD-10-PCS procedure code 
XW033F3 (Introduction of other New Technology therapeutic substance 
into peripheral vein, percutaneous approach, new technology group 3). 
With the new technology add-on payment application, the applicant 
estimated that the average Medicare beneficiary would require a dosage 
of 390 mg (3 vials) at a hospital acquisition cost of $1,600 per vial 
(for a total of $4,800). Under Sec.  412.88(a)(2), we limit new 
technology add-on payments to the lesser of 50 percent of the average 
cost of the technology or 50 percent of the costs in excess of the MS-
DRG payment for the case. As a result, the maximum new technology add-
on payment amount for a case involving the use of Stelara[supreg] is 
$2,400.
    With regard to the newness criterion for Stelara[supreg], we 
considered the beginning of the newness period to commence when 
Stelara[supreg] received FDA approval as an IV infusion treatment of 
Crohn's disease (CD) on September 23, 2016. Because the 3-year 
anniversary date of the entry of Stelara[supreg] onto the U.S. market 
(September 23, 2019) will occur after FY 2019, in the FY 2019 IPPS/LTCH 
PPS proposed rule (83 FR 20282 through 20283) we proposed to continue 
new technology add-on payments for this technology for FY 2019. We 
proposed that the maximum payment for a case involving Stelara[supreg] 
would remain at $2,400 for FY 2019. We invited public comments on our 
proposal to continue new technology add-on payments for Stelara[supreg] 
for FY 2019.
    Comment: A few commenters supported CMS' proposal to continue new 
technology add-on payments for Stelara[supreg] for FY 2019. In 
addition, the applicant (manufacturer) also agreed with CMS' proposal 
to continue new technology add-on payments for the Stelara[supreg] for 
FY 2019, and noted that because the technology's 3-year anniversary 
date of the product's entry onto the U.S. market would not occur until 
September 23, 2019, it is appropriate to continue new technology add-on 
payments for FY 2019.
    Response: We appreciate the commenters' support. After 
consideration of the public comments

[[Page 41282]]

we received, we are finalizing our proposal to continue new technology 
add-on payments for Stelara[supreg] for FY 2019. The maximum payment 
for a case involving Stelara[supreg] will remain at $2,400 for FY 2019.
f. VistogardTM (Uridine Triacetate)
    BTG International Inc. submitted an application for new technology 
add-on payments for the VistogardTM for FY 2017. 
VistogardTM was developed as an emergency treatment for 
fluorouracil or capecitabine overdose regardless of the presence of 
symptoms and for those who exhibit early-onset, severe, or life-
threatening toxicity.
    Chemotherapeutic agent 5-fluorouracil (5-FU) is used to treat 
specific solid tumors. It acts upon deoxyribonucleic acid (DNA) and 
ribonucleic acid (RNA) in the body, as uracil is a naturally occurring 
building block for genetic material. Fluorouracil is a fluorinated 
pyrimidine. As a chemotherapy agent, fluorouracil is absorbed by cells 
and causes the cell to metabolize into byproducts that are toxic and 
used to destroy cancerous cells. According to the applicant, the 
byproducts fluorodoxyuridine monophosphate (F-dUMP) and floxuridine 
triphosphate (FUTP) are believed to do the following: (1) Reduce DNA 
synthesis; (2) lead to DNA fragmentation; and (3) disrupt RNA 
synthesis. Fluorouracil is used to treat a variety of solid tumors such 
as colorectal, head and neck, breast, and ovarian cancer. With 
different tumor treatments, different dosages, and different dosing 
schedules, there is a risk for toxicity in these patients. Patients may 
suffer from fluorouracil toxicity/death if 5-FU is delivered in slight 
excess or at faster infusion rates than prescribed. The cause of 
overdose can happen for a variety of reasons including: Pump 
malfunction, incorrect pump programming or miscalculated doses, and 
accidental or intentional ingestion.
    VistogardTM is an antidote to fluorouracil toxicity and 
is a prodrug of uridine. Once the drug is metabolized into uridine, it 
competes with the toxic byproduct FUTP in binding to RNA, thereby 
reducing the impact FUTP has on cell death.
    With regard to the newness criterion, VistogardTM 
received FDA approval on December 11, 2015. However, as discussed in 
the FY 2017 IPPS/LTCH PPS final rule (81 FR 56910), due to the delay in 
VistogardTM's commercial availability, we considered the 
newness period to begin March 2, 2016, instead of December 11, 2015. 
The applicant noted that the VistogardTM is the first FDA-
approved antidote used to reverse fluorouracil toxicity. The applicant 
submitted a request for a unique ICD-10-PCS procedure code and was 
granted approval for the following procedure code: XW0DX82 
(Introduction of Uridine Triacetate into Mouth and Pharynx, External 
Approach, new technology group 2). The new code became effective on 
October 1, 2016.
    After evaluation of the newness, costs, and substantial clinical 
improvement criteria for new technology add-on payments for 
VistogardTM and consideration of the public comments we 
received in response to the FY 2017 IPPS/LTCH PPS proposed rule, we 
approved VistogardTM for new technology add-on payments for 
FY 2017 (81 FR 56912). With the new technology add-on payment 
application, the applicant stated that the total operating cost of 
VistogardTM is $75,000. Under Sec.  412.88(a)(2), we limit 
new technology add-on payments to the lesser of 50 percent of the 
average cost of the technology or 50 percent of the costs in excess of 
the MS-DRG payment for the case. As a result, the maximum new 
technology add-on payment for a case involving VistogardTM 
is $37,500.
    With regard to the newness criterion for the 
VistogardTM, we considered the beginning of the newness 
period to commence upon the entry of VistogardTM onto the 
U.S. market on March 2, 2016. As discussed previously in this section, 
in general, we extend new technology add-on payments for an additional 
year only if the 3-year anniversary date of the product's entry onto 
the U.S. market occurs in the latter half of the upcoming fiscal year. 
Because the 3-year anniversary date of the entry of the 
VistogardTM onto the U.S. market (March 2, 2019) will occur 
in the first half of FY 2019, in the FY 2019 IPPS/LTCH PPS proposed 
rule (83 FR 20283), we proposed to discontinue new technology add-on 
payments for this technology for FY 2019. We invited public comments on 
our proposal to discontinue new technology add-on payments for the 
VistogardTM.
    Comment: A few commenters supported CMS' proposal to discontinue 
new technology add-on payments for FY 2019 for VistogardTM.
    Response: We appreciate the commenters' support. After 
consideration of the public comments we received, we are finalizing our 
proposal to discontinue new technology add-on payments for 
VistogardTM for FY 2019.
g. ZINPLAVATM (Bezlotoxumab)
    Merck & Co., Inc. submitted an application for new technology add-
on payments for ZINPLAVATM for FY 2018. 
ZINPLAVATM is indicated to reduce recurrence of Clostridium 
difficile infection (CDI) in adult patients who are receiving 
antibacterial drug treatment for a diagnosis of CDI who are at high 
risk for CDI recurrence. ZINPLAVATM is not indicated for the 
treatment of the presenting episode of CDI and is not an antibacterial 
drug.
    Clostridium difficile (C-diff) is a disease-causing anaerobic, 
spore forming bacteria that can affect the gastrointestinal (GI) tract. 
Some people carry the C-diff bacterium in their intestines, but never 
develop symptoms of an infection. The difference between asymptomatic 
colonization and pathogenicity is caused primarily by the production of 
an enterotoxin (Toxin A) and/or a cytotoxin (Toxin B). The presence of 
either or both toxins can lead to symptomatic CDI, which is defined as 
the acute onset of diarrhea with a documented infection with toxigenic 
C-diff, or the presence of either toxin A or B. The GI tract contains 
millions of bacteria, commonly referred to as ``normal flora'' or 
``good bacteria,'' which play a role in protecting the body from 
infection. Antibiotics can kill these good bacteria and allow the C-
diff bacteria to multiply and release toxins that damage the cells 
lining the intestinal wall, resulting in a CDI. CDI is a leading cause 
of hospital-associated gastrointestinal illnesses. Persons at increased 
risk for CDI include people who are treated with current or recent 
antibiotic use, people who have encountered current or recent 
hospitalization, people who are older than 65 years, immunocompromised 
patients, and people who have recently had a diagnosis of CDI. CDI 
symptoms include, but are not limited to, diarrhea, abdominal pain, and 
fever. CDI symptoms range in severity from mild (abdominal discomfort, 
loose stools) to severe (profuse, watery diarrhea, severe pain, and 
high fevers). Severe CDI can be life-threatening and, in rare cases, 
can cause bowel rupture, sepsis and organ failure. CDI is responsible 
for 14,000 deaths per year in the United States.
    C-diff produces two virulent, pro-inflammatory toxins, Toxin A and 
Toxin B, which target host colonocytes (that is, large intestine 
endothelial cells) by binding to endothelial cell surface receptors via 
combined repetitive oligopeptide (CROP) domains. These toxins cause the 
release of inflammatory cytokines leading to intestinal fluid secretion 
and intestinal inflammation. The applicant asserted that 
ZINPLAVATM targets Toxin B sites within the CROP domain 
rather than the

[[Page 41283]]

C-diff organism itself. According to the applicant, by targeting C-diff 
Toxin B, ZINPLAVATM neutralizes Toxin B, prevents large 
intestine endothelial cell inflammation, symptoms associated with CDI, 
and reduces the recurrence of CDI.
    ZINPLAVATM received FDA approval on October 21, 2016, 
for reduction of recurrence of CDI in adult patients receiving 
antibacterial drug treatment for CDI and who are at high risk of CDI 
recurrence. ZINPLAVATM became commercially available on 
February 10, 2017. Therefore, the newness period for 
ZINPLAVATM began on February 10, 2017. The applicant 
submitted a request for a unique ICD-10-PCS procedure code and was 
granted approval for the following procedure codes: XW033A3 
(Introduction of bezlotoxumab monoclonal antibody, into peripheral 
vein, percutaneous approach, new technology group 3) and XW043A3 
(Introduction of bezlotoxumab monoclonal antibody, into central vein, 
percutaneous approach, new technology group 3).
    After evaluation of the newness, costs, and substantial clinical 
improvement criteria for new technology add-on payments for 
ZINPLAVATM and consideration of the public comments we 
received in response to the FY 2018 IPPS/LTCH PPS proposed rule, we 
approved ZINPLAVATM for new technology add-on payments for 
FY 2018 (82 FR 38119). With the new technology add-on payment 
application, the applicant estimated that the average Medicare 
beneficiary would require a dosage of 10mg/kg of ZINPLAVATM 
administered as an IV infusion over 60 minutes as a single dose. 
According to the applicant, the WAC for one dose is $3,800. Under Sec.  
412.88(a)(2), we limit new technology add-on payments to the lesser of 
50 percent of the average cost of the technology, or 50 percent of the 
costs in excess of the MS-DRG payment for the case. As a result, the 
maximum new technology add-on payment amount for a case involving the 
use of ZINPLAVATM is $1,900.
    With regard to the newness criterion for ZINPLAVATM, we 
considered the beginning of the newness period to commence on February 
10, 2017. Because the 3-year anniversary date of the entry of 
ZINPLAVATM onto the U.S. market (February 10, 2020) will 
occur after FY 2019, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 
20283 through 20284), we proposed to continue new technology add-on 
payments for this technology for FY 2019. We proposed that the maximum 
payment for a case involving ZINPLAVATM would remain at 
$1,900 for FY 2019. We invited public comments on our proposal to 
continue new technology add-on payments for ZINPLAVATM for 
FY 2019.
    Comment: A few commenters supported CMS' proposal to continue new 
technology add-on payments for ZINPLAVATM for FY 2019.
    Response: We appreciate the commenters' support. After 
consideration of the public comments we received, we are finalizing our 
proposal to continue new technology add-on payments for 
ZINPLAVATM for FY 2019. The maximum new technology add-on 
payment for a case involving ZINPLAVATM will remain at 
$1,900 for FY 2019.
5. FY 2019 Applications for New Technology Add-On Payments
    We received 15 applications for new technology add-on payments for 
FY 2019. In accordance with the regulations under Sec.  412.87(c), 
applicants for new technology add-on payments must have FDA approval or 
clearance by July 1 of the year prior to the beginning of the fiscal 
year that the application is being considered. Since the issuance of 
the FY 2019 IPPS/LTCH PPS proposed rule, three applicants, Progenics 
Pharmaceuticals, Inc. (the applicant for AZEDRA[supreg]), Somahlution, 
Inc. (the applicant for DURAGRAFT[supreg]), and TherOx, Inc. (the 
applicant for Supersaturated Oxygen (SSO2) Therapy), 
withdrew their applications. One applicant, Isoray Medical, Inc. and GT 
Medical Technologies, Inc. (the applicant for GammaTileTM), 
did not meet the deadline of July 1 for FDA approval or clearance of 
the technology and, therefore, the technology is not eligible for 
consideration for new technology add-on payments for FY 2019. A 
discussion of the remaining 11 applications is presented below.
a. KYMRIAH[supreg] (Tisagenlecleucel) and YESCARTA[supreg] 
(Axicabtagene Ciloleucel)
    Two manufacturers, Novartis Pharmaceuticals Corporation and Kite 
Pharma, Inc. submitted separate applications for new technology add-on 
payments for FY 2019 for KYMRIAH (tisagenlecleucel) and YESCARTA 
(axicabtagene ciloleucel), respectively. Both of these technologies are 
CD-19-directed T-cell immunotherapies used for the purposes of treating 
patients with aggressive variants of non-Hodgkin lymphoma (NHL). In the 
FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20284), we noted that 
KYMRIAH was approved by the FDA on August 30, 2017, for use in the 
treatment of patients up to 25 years of age with B-cell precursor acute 
lymphoblastic leukemia (ALL) that is refractory or in second or later 
relapse, which is a different indication and patient population than 
the new indication and targeted patient population for which the 
applicant submitted a request for approval of new technology add-on 
payments for FY 2019. Specifically, and as summarized in a table 
presented in the proposed rule and updated in the following table 
presented in this final rule, the new indication for which Novartis 
Pharmaceuticals Corporation is requesting approval for new technology 
add-on payments for KYMRIAH is as an autologous T-cell immune therapy 
indicated for use in the treatment of patients with relapsed/refractory 
(r/r) diffuse large B-Cell lymphoma after two or more lines of systemic 
therapy including diffuse large B-cell lymphoma (DLBCL) not eligible 
for autologous stem cell transplant (ASCT). In addition, we indicated 
that as of the time of the development of the proposed rule, Novartis 
Pharmaceuticals Corporation had been granted Breakthrough Therapy 
designation by the FDA, and was awaiting FDA approval for the use of 
KYMRIAH under this new indication. The updated table that follows 
reflects that Novartis Pharmaceuticals Corporation received FDA 
approval for the use of KYMRIAH under this new indication on May 1, 
2018. We also noted that Kite Pharma, Inc. previously submitted an 
application for approval for new technology add-on payments for FY 2018 
for KTE-C19 for use as an autologous T-cell immune therapy in the 
treatment of adult patients with r/r aggressive B-cell NHL who are 
ineligible for ASCT. However, Kite Pharma, Inc. withdrew its 
application for KTE-C19 prior to publication of the FY 2018 IPPS/LTCH 
PPS final rule. Kite Pharma, Inc. resubmitted an application for 
approval for new technology add-on payments for FY 2019 for KTE-C19 
under a new name, YESCARTA, for the same indication. Kite Pharma, Inc. 
received FDA approval for this original indication and treatment use of 
YESCARTA on October 18, 2017. (We refer readers to the following 
updated table for a comparison of the indications and FDA approvals for 
KYMRIAH and YESCARTA).

[[Page 41284]]



                       Comparison of Indication and FDA Approval for KYMRIAH and YESCARTA
----------------------------------------------------------------------------------------------------------------
                                            Description of indication for which new
    FY 2019 applicant technology name        technology add-on payments are being         FDA approval status
                                                           requested
----------------------------------------------------------------------------------------------------------------
KYMRIAH (Novartis Pharmaceuticals         KYMRIAH: Autologous T-cell immune therapy   FDA approval received
 Corporation).                             indicated for use in the treatment of      5/1/2018.
                                           patients with relapsed/refractory (r/r)
                                           large B-cell lymphoma after two or more
                                           lines of systemic therapy including
                                           diffuse large B cell lymphoma (DLBCL) not
                                           eligible for autologous stem cell
                                           transplant (ASCT).
YESCARTA (Kite Pharma, Inc.)............  YESCARTA: Autologous T-cell immune therapy  FDA approval received
                                           indicated for use in the treatment of      10/18/2017.
                                           adult patients with r/r large B-cell
                                           lymphoma after two or more lines of
                                           systemic therapy, including DLBCL not
                                           otherwise specified, primary mediastinal
                                           large B-cell, high grade B-cell lymphoma,
                                           and DLBCL arising from follicular
                                           lymphoma.
----------------------------------------------------------------------------------------------------------------


 
      Technology approved for other                                                      FDA approval of other
               indications                      Description of other indication               indication
----------------------------------------------------------------------------------------------------------------
KYMRIAH (Novartis Pharmaceuticals         KYMRIAH: CD-19[dash]directed T-cell         FDA approval received
 Corporation).                             immunotherapy indicated for the use in     8/30/2017.
                                           the treatment of patients up to 25 years
                                           of age with B-cell precursor ALL that is
                                           refractory or in second or later relapse.
YESCARTA (Kite Pharma, Inc.)............  None......................................  N/A.
----------------------------------------------------------------------------------------------------------------

    We note that procedures involving the KYMRIAH and YESCARTA 
therapies are both reported using the following ICD-10-PCS procedure 
codes: XW033C3 (Introduction of engineered autologous chimeric antigen 
receptor t-cell immunotherapy into peripheral vein, percutaneous 
approach, new technology group 3); and XW043C3 (Introduction of 
engineered autologous chimeric antigen receptor t-cell immunotherapy 
into central vein, percutaneous approach, new technology group 3). We 
further note that, in section II.F.2.d. of the preamble of this final 
rule, we are finalizing our proposal to assign cases reporting these 
ICD-10-PCS procedure codes to Pre-MDC MS-DRG 016 for FY 2019 and to 
revise the title of this MS-DRG to (Autologous Bone Marrow Transplant 
with CC/MCC or T-cell Immunotherapy). We refer readers to section 
II.F.2.d. of the preamble of this final rule for a complete discussion 
of these final policies.
    According to the applicants, patients with NHL represent a 
heterogeneous group of B-cell malignancies with varying patterns of 
behavior and response to treatment. B-cell NHL can be classified as 
either an aggressive, or indolent disease, with aggressive variants 
including DLBCL; primary mediastinal large B-cell lymphoma (PMBCL); and 
transformed follicular lymphoma (TFL). Within diagnoses of NHL, DLBCL 
is the most common subtype of NHL, accounting for approximately 30 
percent of patients who have been diagnosed with NHL, and survival 
without treatment is measured in months.\6\ Despite improved therapies, 
only 50 to 70 percent of newly diagnosed patients are cured by standard 
first-line therapy alone. Furthermore, r/r disease continues to carry a 
poor prognosis because only 50 percent of patients are eligible for 
autologous stem cell transplantation (ASCT) due to advanced age, poor 
functional status, comorbidities, inadequate social support for 
recovery after ASCT, and provider or patient choice.\7\ \8\ \9\ \10\ Of 
the roughly 50 percent of patients that are eligible for ASCT, nearly 
50 percent fail to respond to prerequisite salvage chemotherapy and 
cannot undergo ASCT.\11\ \12\ \13\ \14\ Second-line chemotherapy 
regimens studied to date include rituximab, ifosfamide, carboplatin and 
etoposide (R-ICE), and rituximab, dexamethasone, cytarabine, and 
cisplatin (R-DHAP), followed by consolidative high-dose therapy (HDT)/
ASCT. Both regimens offer similar overall response rates (ORR) of 51 
percent with 1 in 4 patients achieving long-term complete response (CR) 
at the expense of increased toxicity.\15\ Second-line treatment with 
dexamethasone, high-dose cytarabine, and cisplatin (DHAP) is considered 
a standard chemotherapy regimen, but is associated with substantial 
treatment-related toxicity.\16\ For patients who experience disease 
progression during or after primary treatment, the combination of HDT/
ASCT remains the only curative option.\17\ According to the applicants, 
given the modest response to second-line therapy and/or HDT/ASCT, the 
population of patients with the highest unmet need is those with 
chemorefractory disease, which include DLBCL, PMBCL, and TFL. These

[[Page 41285]]

patients are defined as either progressive disease (PD) as best 
response to chemotherapy, stable disease as best response following 
greater than or equal to 4 cycles of first-line or 2 cycles of later-
line therapy, or relapse within less than or equal to 12 months of 
ASCT.\18\ Based on these definitions and available data from a multi-
center retrospective study (SCHOLAR-1), chemorefractory disease treated 
with current and historical standards of care has consistently poor 
outcomes with an ORR of 26 percent and median overall survival (OS) of 
6.3 months.\19\
---------------------------------------------------------------------------

    \6\ Chaganti, S., et al., ``Guidelines for the management of 
diffuse large B-cell lymphoma,'' BJH Guideline, 2016. Available at: 
www.bit.do/bsh-guidelines.
    \7\ Matasar, M., et al., ``Ofatumumab in combination with ICE or 
DHAP chemotherapy in relapsed or refractory intermediate grade B-
cell lymphoma,'' Blood, 25 July 2013, vol. 122, No 4.
    \8\ Hitz, F., et al., ``Outcome of patients with chemotherapy 
refractory and early progressive diffuse large B cell lymphoma after 
R-CHOP treatment,'' Blood (American Society of Hematology (ASH) 
annual meeting abstracts, poster session), 2010, pp. 116 (abstract 
#1751).
    \9\ Telio, D., et al., ``Salvage chemotherapy and autologous 
stem cell transplant in primary refractory diffuse large B-cell 
lymphoma: outcomes and prognostic factors,'' Leukemia & Lymphoma, 
2012, vol. 53(5), pp. 836-41.
    \10\ Moskowitz, C.H., et al., ``Ifosfamide, carboplatin, and 
etoposide: a highly effective cytoreduction and peripheral-blood 
progenitor-cell mobilization regimen for transplant-eligible 
patients with non-Hodgkin's lymphoma,'' Journal of Clinical 
Oncology, 1999, vol. 17(12), pp. 3776-85.
    \11\ Crump, M., et al., ``Outcomes in patients with refractory 
aggressive diffuse large B-cell lymphoma (DLBCL): results from the 
international scholar-1 study,'' Abstract and poster presented at 
Pan Pacific Lymphoma Conference (PPLC), July 2016.
    \12\ Gisselbrecht, C., et al., ``Results from SCHOLAR-1: 
outcomes in patients with refractory aggressive diffuse large B-cell 
lymphoma (DLBCL),'' Oral presentation at European Hematology 
Association conference, July 2016.
    \13\ Iams, W., Reddy, N., ``Consolidative autologous 
hematopoietic stem-cell transplantation in first remission for non-
Hodgkin lymphoma: current indications and future perspective,'' Ther 
Adv Hematol, 2014, vol. 5(5), pp. 153-67.
    \14\ Kantoff, P.W., et al., ``Sipuleucel-T immunotherapy for 
castration-resistant prostate cancer,'' N Engl J Med, 2010, vol. 
363, pp. 411-422.
    \15\ Rovira, J., Valera, A., Colomo, L., et al., ``Prognosis of 
patients with diffuse large B cell lymphoma not reaching complete 
response or relapsing after frontline chemotherapy or 
immunochemotherapy,'' Ann Hematol, 2015, vol. 94(5), pp. 803-812.
    \16\ Swerdlow, S.H., Campo, E., Pileri, S.A., et al., ``The 2016 
revision of the World Health Organization classification of lymphoid 
neoplasms,'' Blood, 2016, vol. 127(20), pp. 2375-2390.
    \17\ Koristka, S., Cartellieri, M., Arndt, C., et al., ``Tregs 
activated by bispecific antibodies: killers or suppressors?,'' 
OncoImmunology, 2015, vol. (3):e994441, DOI: 10.4161/
2162402X.2014.994441.
    \18\ Crump, M., Neelapu, S.S., Farooq, U., et al., ``Outcomes in 
refractory diffuse large B-cell lymphoma: results from the 
international SCHOLAR-1 study,'' Blood, Published online: August 3, 
2017, doi: 10.1182/blood-2017-03-769620.
    \19\ Ibid.
---------------------------------------------------------------------------

    According to Novartis Pharmaceuticals Corporation, the recent FDA 
approval (on May 1, 2018) for the additional indication allows KYMRIAH 
to be used for the treatment of patients with R/R DLBCL who are not 
eligible for ASCT. Novartis Pharmaceuticals Corporation describes 
KYMRIAH as a CD-19-directed genetically modified autologous T-cell 
immunotherapy which utilizes peripheral blood T-cells, which have been 
reprogrammed with a transgene encoding, a chimeric antigen receptor 
(CAR), to identify and eliminate CD-19-expressing malignant and normal 
cells. Upon binding to CD-19-expressing cells, the CAR transmits a 
signal to promote T-cell expansion, activation, target cell 
elimination, and persistence of KYMRIAH cells. The transduced T-cells 
expand in vivo to engage and eliminate CD-19-expressing cells and may 
exhibit immunological endurance to help support long-lasting 
remission.\20\ \21\ \22\ \23\ At the time the applicant submitted its 
application for new technology add-on payments, the applicant conveyed 
that no other agent currently used in the treatment of patients with r/
r DLBCL employs gene modified autologous cells to target and eliminate 
malignant cells.
---------------------------------------------------------------------------

    \20\ KYMRIAHTM [prescribing information], East 
Hanover, NJ: Novartis Pharmaceuticals Corp, 2017.
    \21\ Kalos, M., Levine, B.L., Porter, D.L., et al., ``T-cells 
with chimeric antigen receptors have potent antitumor effects and 
can establish memory in patients with advanced leukemia,'' Sci 
Transl Med, 2011, vol. 3(95), pp, 95ra73.
    \22\ FDA Briefing Document. Available at: https://www.fda.gov/downloads/AdvisoryCommittees/CommitteesMeetingMaterials/Drugs/OncologicDrugsAdvisoryCommittee/UCM566168.pdf.
    \23\ Wang, X., Riviere, I., ``Clinical manufacturing of CART 
cells: foundation of a promising therapy,'' Mol Ther Oncolytics, 
2016, vol. 3, pp. 16015.
---------------------------------------------------------------------------

    According to Kite Pharma, Inc., YESCARTA is indicated for the use 
in the treatment of adult patients with r/r large B-cell lymphoma after 
two or more lines of systemic therapy, including DLBCL not otherwise 
specified, PMBCL, high grade B-cell lymphoma, and DLBCL arising from 
follicular lymphoma. YESCARTA is not indicated for the treatment of 
patients with primary central nervous system lymphoma. The applicant 
for YESCARTA described the technology as a CD-19-directed genetically 
modified autologous T-cell immunotherapy that binds to CD-19-expressing 
cancer cells and normal B-cells. These normal B-cells are considered to 
be non-essential tissue, as they are not required for patient survival. 
According to the applicant, studies demonstrated that following anti-
CD-19 CAR T-cell engagement with CD-19-expressing target cells, the CD-
28 and CD-3-zeta co-stimulatory domains activate downstream signaling 
cascades that lead to T-cell activation, proliferation, acquisition of 
effector functions and secretion of inflammatory cytokines and 
chemokines. This sequence of events leads to the elimination of CD-19-
expressing tumor cells.
    Both applicants expressed that their technology is the first 
treatment of its kind for the targeted adult population. In addition, 
both applicants asserted that their technology is new and does not use 
a substantially similar mechanism of action or involve the same 
treatment indication as any other currently FDA-approved technology. In 
the FY 2019 IPPS/LTCH PPS proposed rule, we noted that, at the time 
each applicant submitted its new technology add-on payment application, 
neither technology had received FDA approval for the indication for 
which the applicant requested approval for the new technology add-on 
payment. We indicated that KYMRIAH had been granted Breakthrough 
Therapy designation for the use in the treatment of patients for the 
additional indication that is the subject of its new technology add-on 
application and, as of the time of the development of the proposed 
rule, was awaiting FDA approval. As noted previously, the applicant for 
KYMRIAH received approval for this additional indication on May 1, 
2018. We further noted in the proposed rule that, YESCARTA received FDA 
approval for use in the treatment of patients and the indication stated 
in its application on October 18, 2017, after each applicant submitted 
its new technology add-on payment application.
    As noted, according to both applicants, KYMRIAH and YESCARTA are 
the first CAR T-cell immunotherapies of their kind. Because potential 
cases representing patients who may be eligible for treatment using 
KYMRIAH and YESCARTA would group to the same MS-DRGs (because the same 
ICD-10-CM diagnosis codes and ICD-10-PCS procedures codes are used to 
report treatment using either KYMRIAH or YESCARTA), and we believed 
that these technologies are intended to treat the same or similar 
disease in the same or similar patient population, and are purposed to 
achieve the same therapeutic outcome using the same or similar 
mechanism of action, we disagreed with the applicants and believed 
these two technologies are substantially similar to each other and that 
it was appropriate to evaluate both technologies as one application for 
new technology add-on payments under the IPPS. For these reasons, and 
as discussed further below, we stated that we intended to make one 
determination regarding approval for new technology add-on payments 
that would apply to both applications, and in accordance with our 
policy, would use the earliest market availability date submitted as 
the beginning of the newness period for both KYMRIAH and YESCARTA. 
Several public commenters submitted comments regarding whether the 
technologies are substantially similar to each other in response to the 
proposed rule and we summarize and respond to the public comments 
below.
    With respect to the newness criterion, as previously stated, 
YESCARTA received FDA approval on October 18, 2017. According to the 
applicant, prior to FDA approval, YESCARTA had been available in the 
U.S. only on an investigational basis under an investigational new drug 
(IND) application. For the same IND patient population, and until 
commercial availability, YESCARTA was available under an Expanded 
Access Program (EAP) which started on May 17, 2017. The applicant 
stated that it did not recover any costs associated with the EAP. 
According to the applicant, the first commercial shipment of YESCARTA 
was received by a certified treatment center on November 22, 2017. As 
discussed previously, KYMRIAH received FDA approval May 1, 2018, for 
use in the treatment of patients diagnosed with r/r DLBCL that are not 
eligible for ASCT. Additionally, as noted in the proposed rule, KYMRIAH 
was previously granted Breakthrough Therapy designation by the FDA. We 
stated in the proposed rule that we believe that, in accordance with 
our policy, if these technologies are substantially similar to each 
other, it is appropriate to use the earliest market

[[Page 41286]]

availability date submitted as the beginning of the newness period for 
both technologies. Therefore, based on our policy, with regard to both 
technologies, if the technologies are approved for new technology add-
on payments, we stated that we believe that the beginning of the 
newness period would be November 22, 2017.
    We stated in the proposed rule that, because we believe these two 
technologies are substantially similar to each other, we believe it is 
appropriate to evaluate both technologies as one application for new 
technology add-on payments under the IPPS. The applicants submitted 
separate cost and clinical data, and we reviewed and discussed each set 
of data separately. However, we stated that we intended to make one 
determination regarding new technology add-on payments that would apply 
to both applications. We stated that we believe that this is consistent 
with our policy statements in the past regarding substantial 
similarity. Specifically, we have noted that approval of new technology 
add-on payments would extend to all technologies that are substantially 
similar (66 FR 46915), and we believe that continuing our current 
practice of extending new technology add-on payments without a further 
application from the manufacturer of the competing product, or a 
specific finding on cost and clinical improvement if we make a finding 
of substantial similarity among two products is the better policy 
because we avoid--
     Creating manufacturer-specific codes for substantially 
similar products;
     Requiring different manufacturers of substantially similar 
products to submit separate new technology add-on payment applications;
     Having to compare the merits of competing technologies on 
the basis of substantial clinical improvement; and
     Bestowing an advantage to the first applicant representing 
a particular new technology to receive approval (70 FR 47351).
    We stated that, if substantially similar technologies are submitted 
for review in different (and subsequent) years, rather than the same 
year, we would evaluate and make a determination on the first 
application and apply that same determination to the second 
application. However, we stated that, because the technologies have 
been submitted for review in the same year and we believe they are 
substantially similar to each other, we believe that it is appropriate 
to consider both sets of cost data and clinical data in making a 
determination, and we do not believe that it is possible to choose one 
set of data over another set of data in an objective manner. We 
received public comments regarding our proposal to evaluate KYMRIAH and 
YESCARTA as one application for new technology add-on payments under 
the IPPS and we summarize and respond to these public comments below.
    In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20284), we stated 
that we believe that KYMRIAH and YESCARTA are substantially similar to 
each other for purposes of analyzing these two applications as one 
application. As discussed in the proposed rule, we stated that we also 
need to determine whether KYMRIAH and YESCARTA are substantially 
similar to existing technologies prior to their approval by the FDA and 
their release onto the U.S. market. As discussed earlier, if a 
technology meets all three of the substantial similarity criteria, it 
would be considered substantially similar to an existing technology and 
would not be considered ``new'' for purposes of new technology add-on 
payments.
    With respect to the first criterion, whether a product uses the 
same or a similar mechanism of action to achieve a therapeutic outcome, 
the applicant for KYMRIAH asserted that its unique design, which 
utilizes features that were not previously included in traditional 
cytotoxic chemotherapeutic or immunotherapeutic agents, constitutes a 
new mechanism of action. The deployment mechanism allows for 
identification and elimination of CD-19-expressing malignant and non-
malignant cells, as well as possible immunological endurance to help 
support long-lasting remission.\24\ \25\ \26\ \27\ The applicant 
provided context regarding how KYMRIAH's unique design contributes to a 
new mechanism of action by explaining that peripheral blood T-cells, 
which have been reprogrammed with a transgene encoding, a CAR, identify 
and eliminate CD-19-expressing malignant and nonmalignant cells. As 
explained by the applicant, upon binding to CD-19-expressing cells, the 
CAR transmits a signal to promote T-cell expansion, activation, target 
cell elimination, and persistence of KYMRIAH cells.\28\ \29\ \30\ 
According to the applicant, transduced T-cells expand in vivo to engage 
and eliminate CD-19-expressing cells and may exhibit immunological 
endurance to help support long-lasting remission.\31\ \32\ \33\
---------------------------------------------------------------------------

    \24\ KYMRIAH [prescribing information]. East Hanover, NJ: 
Novartis Pharmaceuticals Corp; 2017.
    \25\ Kalos, M., Levine, B.L., Porter, D.L., et al., ``T cells 
with chimeric antigen receptors have potent antitumor effects and 
can establish memory in patients with advanced leukemia,'' Sci 
Transl Med, 2011, vol. 3(95), pp. 95ra73.
    \26\ FDA Briefing Document. Available at: https://www.fda.gov/downloads/AdvisoryCommittees/CommitteesMeetingMaterials/Drugs/OncologicDrugsAdvisoryCommittee/UCM566168.pdf.
    \27\ Maude, S.L., Frey, N., Shaw, P.A., et al., ``Chimeric 
antigen receptor T cells for sustained remissions in leukemia,'' N 
Engl J Med, 2014, vol. 371(16), pp. 1507-1517.
    \28\ KYMRIAHTM [prescribing information], East 
Hanover, NJ: Novartis Pharmaceuticals Corp, 2017.
    \29\ Kalos, M., Levine, B.L., Porter, D.L., et al., ``T-cells 
with chimeric antigen receptors have potent antitumor effects and 
can establish memory in patients with advanced leukemia,'' Sci 
Transl Med, 2011, 3(95), pp, 95ra73.
    \30\ FDA Briefing Document. Available at: https://www.fda.gov/downloads/AdvisoryCommittees/CommitteesMeetingMaterials/Drugs/OncologicDrugsAdvisoryCommittee/UCM566168.pdf.
    \31\ Kalos, M., Levine, B.L., Porter, D.L., et al., ``T cells 
with chimeric antigen receptors have potent antitumor effects and 
can establish memory in patients with advanced leukemia,'' Sci 
Transl Med, 2011, vol. 3(95), pp. 95rs73.
    \32\ FDA Briefing Document. Available at: https://www.fda.gov/downloads/AdvisoryCommittees/CommitteesMeetingMaterials/Drugs/OncologicDrugsAdvisoryCommittee/UCM566168.pdf.
    \33\ Maude, S.L., Frey, N., Shaw, P.A., et al., ``Chimeric 
antigen receptor T-cells for sustained remissions in leukemia,'' N 
Engl J Med, 2014, vol. 371(16) pp. 1507-1517.
---------------------------------------------------------------------------

    The applicant for YESCARTA stated that YESCARTA is the first 
engineered autologous cellular immunotherapy comprised of CAR T-cells 
that recognizes CD-19 express cancer cells and normal B-cells with 
efficacy in patients with r/r large B-cell lymphoma after two or more 
lines of systemic therapy, including DLBCL not otherwise specified, 
PMBCL, high grade B-cell lymphoma, and DLBCL arising from follicular 
lymphoma as demonstrated in a multi-centered clinical trial. Therefore, 
the applicant believed that YESCARTA's mechanism of action is distinct 
and unique from any other cancer drug or biologic that is currently 
approved for use in the treatment of patients who have been diagnosed 
with aggressive B-cell NHL, namely single-agent or combination 
chemotherapy regimens. At the time of the development of the proposed 
rule, the applicant also pointed out that YESCARTA was the only 
available therapy that has been granted FDA approval for the treatment 
of adult patients with r/r large B-cell lymphoma after two or more 
lines of systemic therapy, including DLBCL not otherwise specified, 
PMBCL, high grade B-cell lymphoma, and DLBCL arising from follicular 
lymphoma.
    With respect to the second and third criteria, whether a product is 
assigned to the same or a different MS-DRG and whether the new use of 
the technology involves the treatment of the same or similar type of 
disease and the same or similar patient population, the applicant

[[Page 41287]]

for KYMRIAH indicated that the technology is used in the treatment of 
the same patient population, and potential cases representing patients 
that may be eligible for treatment using KYMRIAH would be assigned to 
the same MS-DRGs as cases involving patients with a DLBCL diagnosis. 
Potential cases representing patients that may be eligible for 
treatment using KYMRIAH map to 437 separate MS-DRGs, with the top 20 
MS-DRGs covering approximately 68 percent of all patients who have been 
diagnosed with DLBCL. For patients with DLBCL and who have received 
chemotherapy during their hospital stay, the target population mapped 
to 8 separate MS-DRGs, with the top 2 MS-DRGs covering over 95 percent 
of this population: MS-DRGs 847 (Chemotherapy without Acute Leukemia as 
Secondary Diagnosis with CC), and 846 (Chemotherapy without Acute 
Leukemia as Secondary Diagnosis with MCC). The applicant for YESCARTA 
submitted findings that potential cases representing patients that may 
be eligible for treatment using YESCARTA span 15 unique MS-DRGs, 8 of 
which contain more than 10 cases. The most common MS-DRGs were: MS-DRGs 
840 (Lymphoma and Non-Acute Leukemia with MCC), 841 (Lymphoma and Non-
Acute Leukemia with CC), and 823 (Lymphoma and Non-Acute Leukemia with 
other O.R. Procedures with MCC). These 3 MS-DRGs accounted for 628 (76 
percent) of the 827 cases. While the applicants for KYMRIAH and 
YESCARTA submitted different findings regarding the most common MS-DRGs 
to which potential cases representing patients who may be eligible for 
treatment involving their technology would map, we stated in the 
proposed rule that we believe that, under the current MS-DRGs (FY 
2018), potential cases representing patients who may be eligible for 
treatment involving either KYMRIAH or YESCARTA would map to the same 
MS-DRGs because the same ICD-10-CM diagnosis codes and ICD-10-PCS 
procedures codes will be used to report cases for patients who may be 
eligible for treatment involving KYMRIAH and YESCARTA. Furthermore, as 
noted above, we proposed, and are finalizing, that cases reporting 
these ICD-10-PCS procedure codes would be assigned to MS-DRG 016 for FY 
2019. Therefore, under this proposal (and our finalized policy), for FY 
2019, cases involving the utilization of KYMRIAH and YESCARTA would 
continue to map to the same MS-DRGs.
    The applicant for YESCARTA also addressed the concern expressed by 
CMS in the FY 2018 IPPS/LTCH PPS proposed rule regarding Kite Pharma 
Inc.'s FY 2018 new technology add-on payment application for the KTE-
C19 technology (82 FR 19888). At the time, CMS expressed concern that 
KTE-C19 may use the same or similar mechanism of action as the Bi-
Specific T-Cell engagers (BiTE) technology. The applicant for YESCARTA 
explained that YESCARTA has a unique and distinct mechanism of action 
that is substantially different from BiTE's or any other drug or 
biologic currently assigned to any MS-DRG in the FY 2016 MedPAR 
Hospital Limited Data Set. In providing more detail regarding how 
YESCARTA is different from the BiTE technology, the applicant explained 
that the BiTE technology is not an engineered autologous T-cell 
immunotherapy derived from a patient's own T-cells. Instead, it is a 
bi-specific T-cell engager that recognizes CD-19 and CD-3 cancer cells. 
Unlike engineered T-cell therapy, BiTE does not have the ability to 
enhance the proliferative and cytolytic capacity of T-cells through ex-
vivo engineering. Further, BiTE is approved for the treatment of 
patients who have been diagnosed with Philadelphia chromosome-negative 
relapsed or refractory B-cell precursor acute lymphoblastic leukemia 
(ALL) and is not approved for patients with relapsed or refractory 
large B-cell lymphoma, whereas YESCARTA is indicated for use in the 
treatment of adult patients with r/r aggressive B-cell NHL who are 
ineligible for ASCT.
    The applicant for YESCARTA also indicated that its mechanism of 
action is not the same or similar to the mechanism of action used by 
KYMRIAH's currently available FDA-approved CD-19-directed genetically 
modified autologous T-cell immunotherapy indicated for use in the 
treatment of patients up to 25 years of age with B-cell precursor acute 
lymphoblastic leukemia (ALL) that is refractory or in second or later 
relapse.\34\ The applicant for YESCARTA stated that the mechanism of 
action is different from KYMRIAH's FDA-approved therapy because the 
spacer, transmembrane and co-stimulatory domains of YESCARTA are 
different from those of KYMRIAH. The applicant explained that YESCARTA 
is comprised of a CD-28 co-stimulatory domain and KYMRIAH has 4-1BB co-
stimulatory domain. Further, the applicant stated the manufacturing 
processes of the two immunotherapies are also different, which may 
result in cell composition differences leading to possible efficacy and 
safety differences.
---------------------------------------------------------------------------

    \34\ Food and Drug Administration. Available at: 
www.accessdata.fda.gov/scripts/opdlisting/oopd/.
---------------------------------------------------------------------------

    We stated in the proposed rule that while the applicant for 
YESCARTA stated how its technology is different from KYMRIAH, because 
both technologies are CD-19-directed T-cell immunotherapies used for 
the purpose of treating patients with aggressive variants of NHL, we 
believe that YESCARTA and KYMRIAH are substantially similar treatment 
options. Furthermore, in the FY 2019 IPPS/LTCH PPS proposed rule, we 
also stated that we were concerned there may be an age overlap (18 to 
25) between the two different patient populations for the currently 
approved KYMRIAH technology and YESCARTA technology. We stated in the 
proposed rule, which was issued prior to the approval for a second 
indication (adult patients), that the indication for the KYMRIAH 
technology is for use in the treatment of patients who are up to 25 
years of age and the YESCARTA technology is indicated for use in the 
treatment of adult patients.
    We noted in the proposed rule that the applicant asserted that 
YESCARTA is not substantially similar to KYMRIAH. We stated that under 
this scenario, if both YESCARTA and KYMRIAH meet all of the new 
technology add-on payment criteria and are approved for new technology 
add-on payments for FY 2019, for purposes of making the new technology 
add-on payment, because procedures utilizing either YESCARTA or KYMRIAH 
CAR T-cell therapy drugs are reported using the same ICD-10-PCS 
procedure codes, in order to accurately pay the new technology add-on 
payment to hospitals that perform procedures utilizing either 
technology, it may be necessary to use alternative coding mechanisms to 
make the new technology add-on payments. In the FY 2019 IPPS/LTCH PPS 
proposed rule, CMS invited comments on alternative coding mechanisms to 
make the new technology add-on payments, if necessary.
    We also invited public comments on whether KYMRIAH and YESCARTA are 
substantially similar to existing technologies and whether the 
technologies meet the newness criterion.
    Comment: The applicants for KYMRIAH and YESCARTA each provided 
comments regarding whether KYMRIAH and YESCARTA were substantially 
similar to the other, or to any existing technology. Additional 
commenters also submitted comments.

[[Page 41288]]

    The applicant for YESCARTA stated that it continued to believe each 
technology consists of notable differences in the construction, as well 
as manufacturing processes and successes that may lead to differences 
in activity. The applicant encouraged CMS to evaluate YESCARTA as a 
separate new technology add-on payment application and approve separate 
new technology add-on payments for YESCARTA, effective October 1, 2018, 
and to not move forward with a single new technology add-on payment 
evaluation determination that covers both CAR T-cell therapies, 
YESCARTA and KYMRIAH. The applicant stated that the transmembrane 
domain of YESCARTA is comprised of a fragment of CD-28 co-stimulatory 
molecule, including an extracellular hinge domain, which provides 
structural flexibility for optimal binding of the target antigen by the 
scFV target binding region. The applicant further stated that, in 
contrast, KYMRIAH consists of a spacer and a transmembrane domain, 
which are derived from CD8-a. The applicant for YESCARTA believed that, 
the spacer provides a flexible link between the scFv and the 
transmembrane domain, which then accommodates different orientations of 
the antigen binding domain upon CD19 antigen recognition. The applicant 
stated that these differences in the origin of the transmembrane 
component between the YESCARTA and KYMRIAH may be one of the 
differences which lead to differentiation in CAR function and resulting 
activity between the two CAR constructs, which will be described later 
in this section.
    The applicant for YESCARTA believed perhaps the most critical 
difference between the two technologies, YESCARTA and KYMRIAH, may be 
that of the co-stimulatory domains, which connect the extracellular 
scFv antigen binding domain to the cytoplasmic CD3-zeta downstream 
signaling domain. The applicant explained that, for YESCARTA, the 
technology is derived from the intracellular domains of co-stimulatory 
protein CD-28. However, for KYMRIAH, in contrast, the technology is 
derived from the co-stimulatory protein 4-1BB (CD137). The applicant 
believed that, although clear mechanisms are unknown, it is surmised 
that the difference in co-stimulatory region of the two CAR products 
may be responsible for differences in activity. The applicant stated 
that the ongoing hypothesis for these differences are based on 
differentially affecting CAR T-cell cytokine production, expansion, 
cytotoxicity and persistence after administration.
    The applicant for YESCARTA also described an additional concept 
regarding the manufacturing process that it believed supported why the 
two technologies were different. The applicant explained that both, 
YESCARTA and KYMRIAH, are prepared from the patient's peripheral blood 
mononuclear cells, which are obtained via a standard leukapheresis 
procedure. However, the applicant stated that, with YESCARTA, the 
mononuclear cells are then enriched for T-cells and activated with 
anti-CD-3 antibody in the presence of IL-2 then transduced with the 
replication incompetent y-retroviral vector containing the anti-CD-19 
CAR transgene. The applicant further explained that the transduced T-
cells are expanded in cell culture, washed, formulated into a 
suspension, and cryopreserved. The applicant for YESCARTA believed 
that, in contrast, KYMRIAH uses anti CD-3/anti CD-28 coated magnetic 
beads for T-cell enrichment and activation, rather than anti-CD-3 
antibody and IL-2, which are removed after CAR T-cell expansion and 
prior to harvest. The applicant explained that a further difference in 
the manufacturing of KYMRIAH is the use of lentiviral vector in the 
anti-CD-19 CAR gene transduction rather than a y-retroviral vector, as 
used for YESCARTA in manufacturing. The applicant stated that both y-
retroviral or lentiviral vectors can permanently insert DNA into the 
genome. However, lentiviral vectors are capable of transducing 
quiescent cells, while y-retroviral vectors require cells in mitosis. 
According to the applicant, the manufacturing success in clinical 
trials is also different with results showing median turnaround time of 
17 days for YESCARTA, with 99 percent success rate versus median 
turnaround time of 113 days, with 93 percent success rate for KYMRIAH.
    The applicant for YESCARTA further stated that, if CMS decides to 
establish one new technology add-on payment determination and approval 
for both CAR T-cell therapies, the add-on payments should be structured 
to ensure that payment does not hinder access in any way for patients 
to receive the most appropriate cell therapy and use of YESCARTA and 
KYMRIAH can be uniquely and individually identified in the Medicare 
inpatient data.
    Other commenters believed that the two CAR T-cell technologies 
should be considered as separate new technology add-on payment 
applications because the technologies' indications are approved for two 
different patient populations and diagnoses. The commenters stated 
that, while the approval for one of the diagnoses for adults is the 
same for KYMRIAH and YESCARTA, KYMRIAH has also been approved for 
treating children and, therefore, that should be reasoning to consider 
the application separately. Additionally, commenters stated that the 
pricing of both medications varies based on the patient population, and 
encouraged CMS to recognize this discrepancy when determining approval 
of new technology add-on payment and establishing adequate payments 
rates. Commenters agreed with CMS' conclusion that it is appropriate to 
consider both sets of cost and clinical data when determining whether 
the standard criteria for new technology add-on payments for KYMRIAH 
and YESCARTA were met, but also encouraged CMS to consider evaluation 
and determination of both technologies as separate applications.
    Some commenters disagreed with CMS' views of the YESCARTA and 
KYMRIAH with respect to substantial similarity and expressed concerns 
with CMS' conclusion that the two CAR T-cell therapies are 
substantially similar to each other. The commenters believed that, 
because each therapy has received separate FDA Breakthrough 
designations, is approved based on separate Biological License 
Applications, and may likely be used in the treatment of different 
patient populations in different sites of care, consideration for 
approval of new technology add-on payments should be based on separate 
applications. Commenters further believed that, for purposes of meeting 
the newness criterion, each new technology add-on payment application 
must be treated as being unique. Despite these concerns, commenters 
supported CMS creating a new MS-DRG for procedures and cases 
representing patients receiving treatment involving CAR T-cell 
therapies, and recognized that each of the CAR T-cell therapies would 
be used in the treatment of cases representing patients that would be 
assigned to the same MS-DRG.
    Several commenters disagreed with CMS' determination that the 
applications for KYMRIAH and YESCARTA are similar enough to warrant 
consideration as a single new technology add-on payment application, 
and recommended CMS consider the applications separately. Commenters 
believed that because KYMRIAH received FDA approval for the use in the 
treatment of patients diagnosed with

[[Page 41289]]

r/r DLBCL on May 1, 2018, the beginning of the newness period for 
KYMRIAH for cases reporting the ICD-10-PCS procedure codes representing 
patients diagnosed with r/r DLBCL should not be the same as YESCARTA, 
which began November 22, 2017. Commenters stated that equating the two 
beginning dates for the start of the newness periods will prematurely 
shorten the new technology add-on payment period for KYMRIAH's new 
patient population, which commenters believed would wrongfully withhold 
anticipated payments from hospitals. Commenters also recommended that, 
if CMS finalized its position to consider KYMRIAH and YESCARTA as one 
application, to use the approval date for KYMRIAH as the beginning of 
the newness period to avoid any inappropriate shortening of the new 
technology add-on payment length.
    Other commenters further cautioned CMS that combining the new 
technology add-on payment applications' evaluation and determination 
for these two therapies would create precedent that may make it 
unlikely for future CAR T-cell therapies to be considered distinct from 
existing CAR T-cell therapies, or substantially similar. As a result, 
the commenters believed that, if CMS finalized its proposal to make a 
combined decision for KYMRIAH and YESCARTA, it is more likely that 
future CAR T-cell therapies will not qualify for new technology add-on 
payments. The commenters noted that, to mitigate any potential negative 
impact if CMS combines both the applications and makes its 
determination, it would be important for CMS to leave open the option 
for future CAR T-cell therapies to apply for and receive approval of 
new technology add-on payments, regardless of the decision made for the 
current applications under consideration.
    Some commenters believed that section 1886(d)(5)(K) of the Act does 
not appear to clearly authorize CMS to jointly evaluate KYMRIAH and 
YESCARTA, which were submitted by separate manufacturers, as separate 
new technology add-on payment applications for two different products 
approved by FDA under two separate Biologics License Applications with 
distinct clinical and cost data submissions. The commenters believed 
that CMS' assessment appeared concentrated on a handful of perceived 
similarities in the mechanism of action and the patient and disease 
categories between the two newly approved CAR T-cell products. 
Commenters stated that this focused approach appeared to give little 
weight to the distinctions in the manufacturing process and co-
stimulatory domains between the two CAR T-cell therapies, which 
obscures the important distinctions in how the different CAR T-cell 
technologies have been refined and optimized. The commenters further 
stated that CMS' evaluation also does not fully account for the 
difference in clinical profiles of these two agents.
    Other commenters believed that failure to recognize the legitimate 
distinctions and technological innovations reflected by CAR T-cell 
therapy--and inherent across different CAR T-cell treatments, such as 
KYMRIAH and YESCARTA, could artificially restrict access to new 
technology add-on payments for these new and promising technologies. 
Commenters recommended CMS encourage development of medical innovation 
by applying the new technology add-on payment ``newness'' criterion in 
a way that recognizes the unique, novel, and distinct nature of the CAR 
T-cell technology.
    In evaluating the new technology add-on payment applications for 
KYMRIAH and YESCARTA, some commenters believed that CMS may be 
overlooking the significant ways these two technologies represent a 
substantial medical advancement compared to existing therapies, most of 
which patients have already failed, before they go on to receive 
treatment involving CAR T-cell therapy. The commenters stated that CMS 
appeared to be unduly focusing on the perceived similarities between 
the two newly approved CAR T-cell therapies versus the advancement the 
technologies represent over existing therapies. The commenters 
encouraged CMS to recognize the ways in which KYMRIAH and YESCARTA 
significantly differ from existing technologies and to further apply 
the ``newness'' eligibility requirement for new technology add-on 
payments in a manner that does not unnecessarily discourage the 
availability of new technology add-on payments for these newly approved 
CAR T-cell therapies that represent significant clinical advantages 
over existing treatments.
    The applicant for KYMRIAH stated that, at the time it submitted its 
new technology add-on payment application and as summarized in the FY 
2019 IPPS/LTCH PPS proposed rule, similar to the applicant for 
YESCARTA, it believed the two technologies were not substantially 
similar to the other, or to other cancer drugs or biologics currently 
approved for use in the treatment of aggressive B-cell NHL and, 
therefore, met the newness criterion. However, the applicant 
acknowledged that, since the date it submitted its new technology add-
on payment application both technologies, YESCARTA and KYMRIAH, have 
received FDA approval for the technologies' intended indications. The 
applicant for KYMRIAH further indicated that, based on FDA's recent 
approval, it agreed with CMS that KYMRIAH is substantially similar to 
YESCARTA, as defined by the new technology add-on payment application 
evaluation criteria.
    The applicant for KYMRIAH detailed how it believed the technology 
is substantially similar to YESCARTA with respect to each criterion 
pertaining to substantial similarity.
    With regard to the first criterion, whether YESCARTA and KYMRIAH 
use the same or a similar mechanism of action to achieve a therapeutic 
action, the applicant stated that, although KYMRIAH's and YESCARTA's 
mechanisms of actions are distinct and unique from any other cancer 
drug or biologic that is currently FDA-approved, namely single-agent or 
combination chemotherapy regimens, the applicant believed KYMRIAH and 
YESCARTA use the same or similar mechanisms of action to achieve the 
therapeutic outcome. To further support the assertion that the two 
technologies are substantially similar to one another, the applicant 
for KYMRIAH also provided the FDA-approved prescribing information 
(``12.1 Mechanism of Action'') issued for KYMRIAH and YESCARTA 
describing the mechanisms of actions as being the same or similar for 
both technologies in the following manner:
    [ssquf] KYMRIAH: KYMRIAH is a CD19-directed genetically modified 
autologous T cell immunotherapy which involves reprogramming a 
patient's own T cells with a transgene encoding a chimeric antigen 
receptor (CAR) to identify and eliminate CD-19-expressing malignant and 
normal cells. The CAR is comprised of a murine single-chain antibody 
fragment which recognizes CD-19 and is fused to intracellular signaling 
domains from 4-1BB (CD137) and CD3 zeta. The CD3 zeta component is 
critical for initiating T-cell activation and antitumor activity, while 
4-1BB enhances the expansion and persistence of KYMRIAH. Upon binding 
to CD-19-expressing cells, the CAR transmits a signal to promote T-cell 
expansion, activation, target cell elimination, and persistence of the 
KYMRIAH cells.
    [ssquf] YESCARTA: YESCARTA, a CD-19-directed genetically modified 
autologous T-cell immunotherapy, binds to CD-19-expressing cancer cells 
and normal B cells. Studies

[[Page 41290]]

demonstrated that following anti-CD-19 CAR T cell engagement with CD-
19-expressing target cells, the CD28 and CD3-zeta co-stimulatory 
domains activate downstream signaling cascades that lead to T-cell 
activation, proliferation, acquisition of effector functions and 
secretion of inflammatory cytokines and chemokines. This sequence of 
events leads to killing of CD-19-expressing cells.
    In a summary of the FDA-approved prescribing information, the 
applicant further noted that, within the FDA-approved prescribing 
information, both KYMRIAH and YESCARTA are CD-19-directed genetically 
modified autologous T-cell immunotherapies that bind to CD-19-
expressing cancer cells and normal B cells. Upon binding to CD-19-
expressing cells, the respective CARs transmit a signal to promote T 
cell expansion, activation, and target cell elimination.
    In response to the differences between KYMRIAH and YESCARTA related 
to spacer, transmembrane and co-stimulatory domains, which were stated 
by the applicant for YESCARTA, the applicant for KYMRIAH believed that, 
although there are structural differences that impact aspects of how 
the treatment effect is achieved, the overall mechanisms of actions of 
the two CAR T-cell therapy products are similar. The applicant 
explained that in defining drug classes, the FDA provided guidance that 
a class defined by mechanism of action would include drugs that have 
similar pharmacologic action at the receptor, membrane or tissue level. 
The applicant indicated that KYMRIAH is a cellular immunotherapy 
generated by gene modification of autologous donor T-cells. Further, 
the applicant for KYMRIAH stated that through the process of apheresis, 
leukocytes are harvested from the patient and undergo a process of ex-
vivo gene transfer in which a CAR is introduced by lentiviral 
transduction. The applicant further explained that the CAR construct 
contains an antigen binding region designed to target CD-19, a co-
stimulatory domain known as 4-1BB and a signaling domain called CD-3-
zeta. The applicant stated that once transferred, the patient's T-cells 
will express the CAR construct anti-CD-19 4-1BB/CD-3-zeta, and undergo 
ex-vivo expansion. The applicant for KYMRIAH stated that both, KYMRIAH 
and YESCARTA, utilize a gene transfer process to modify autologous 
patient immune cells with a chimeric antigen receptor capable of 
directing immune mediated killing at a pre-specified target. The 
applicant further explained that both technologies accomplish their 
pharmacological effect through the use of three specialized domains, 
which are structurally different, but achieve similar environmental 
interactions. The applicant indicated that, in both agents, the antigen 
binding domain identifies CD-19 and, therefore, the interaction between 
the agent and its environment begins with the same receptor target 
interaction. Additionally, the applicant noted that both KYMRIAH and 
YESCARTA induce T-cell mediated cell death of the bound tumor cell by 
activating the T-cell expressing the CAR through the signaling domain, 
which is common to both agents and, therefore, at the tissue level, 
both generate a pharmacological impact by producing T-cell mediated 
apoptosis. The applicant for KYMRIAH stated that the pharmacological 
effect of these two agents is attained through tumor directed expansion 
of CAR T-cells and the development of memory T-cells that allow for 
potential long-term persistence and immunosurveillance. The applicant 
believed that, in both agents, this is achieved through the use of a 
co-stimulatory domain, which leads to the secretion of inflammatory 
substances such as cytokines, chemokines and growth factors, which 
induce T-cell proliferation and differentiation. The applicant for 
KYMRIAH stated that, although it agreed with the applicant for 
YESCARTA\'\s assertion that 41BB and CD-28 are both structurally and 
functionally different and that at a micro level they generate a 
different metabolic profile and stimulate different types of memory T-
cell, on a macroscopic level the general impact is ``substantially 
similar'' in that the mechanisms of actions allow for expansion and 
memory, which yield tumor-directed killing of the target tissue and 
memory T-cell generation for longer duration response that can be 
expected with a traditional biologic agent. The applicant further 
believed that, while the manufacturing process, safety and efficacy 
outcomes of any two members of a class of drugs may differ, these 
factors do not impact the mechanism of action.
    With regard to the second criterion, whether YESCARTA and KYMRIAH 
will be assigned to the same or a different MS-DRG, the applicant 
stated that this criterion is met because cases representing patients 
eligible for treatment involving both, KYMRIAH and YESCARTA, will be 
reported using the same ICD-10-PCS procedure codes (XW033C3 and 
XW043C3) and will be assigned to the same MS-DRG--Pre-MDC MS-DRG 016 
(as discussed in section II.F.2.d. of the preamble of this final rule).
    With regard to the third criterion, whether YESCARTA[supreg] and 
KYMRIAH[supreg] will be used to treat the same or similar patient 
population, the applicant stated that both, KYMRIAH and YESCARTA, are 
FDA approved to treat adult patients diagnosed with r/r aggressive B-
cell NHL in the same or similar patient population. The applicant, in 
summary, agreed with CMS' conclusion that KYMRIAH is ``substantially 
similar'' to YESCARTA, as defined by CMS, because both technologies 
are: (1) Intended to treat the same or similar disease in the same or 
similar patient population; (2) purposed to achieve the same 
therapeutic outcome using the same or similar mechanism of action; and 
(3) would be assigned to the same MS-DRGs. However, the applicant 
stated that, despite being ``substantially similar'' technologies, 
KYMRIAH and YESCARTA are not ``substantially similar'' to any other 
existing technology and, therefore, it believed KYMRIAH met the newness 
criterion.
    Other commenters, generally, agreed that both, KYMRIAH and 
YESCARTA, are substantially similar technologies. One commenter stated 
that it agreed with CMS' approach on both clinical and policy grounds 
because given the promises and perils of both therapies, the 
surrounding coverage and payment issues present to be the same and that 
will also be the case for the successor drugs expected to soon achieve 
FDA approval and enter the U.S. market. The commenter explained that 
consideration of KYMRIAH and YESCARTA as one new technology add-on 
payment application simplifies the newness test because both 
technologies were assigned an ICD-10-PCS procedure code in 2017, and 
cases involving the utilization of the technologies and procedures 
reporting the ICD-10-PCS procedure codes will be assigned to the same 
MS-DRG, effective with the beginning of FY 2019 on October 1, 2018. The 
commenter also noted that, CMS indicated that November 22, 2017, would 
be the beginning date for the ``newness'' period because it marks the 
first delivery of YESCARTA to eligible treatment centers. The commenter 
believed this date was somewhat arbitrary, but did not provide an 
alternative date for consideration and, therefore, agreed that KYMRIAH 
and YESCARTA should be considered together as one new technology add-on 
payment application, both technologies met the criterion for newness, 
and the newness period appropriately begins on November 22, 2017. The 
commenter stated that, if approved for new

[[Page 41291]]

technology add-on payments, this newness period should grant CMS and 
the public sufficient time under the MS-DRG recalibration and the new 
technology add-on payment policies to determine whether MS-DRG 016 is 
an appropriate MS-DRG assignment for payment of CAR T-cell therapies.
    Response: We appreciate all the commenters' input and the 
additional detail regarding whether KYMRIAH and YESCARTA are 
substantially similar to each other and existing technologies.
    After consideration of the public comments we received, although we 
recognize the technologies are not completely the same in terms of 
their manufacturing process, co-stimulatory domains, and clinical 
profiles, we and also as the commenters expressed, are not convinced 
that these differences result in the use of a different mechanism of 
action and, therefore, infer that the two technologies' mechanisms of 
action are the same. Furthermore, we believe that KYMRIAH and YESCARTA 
are substantially similar to one another because potential cases 
representing patients who may be eligible for treatment using KYMRIAH 
and YESCARTA would group to the same MS-DRGs (because the same ICD-10-
CM diagnosis codes and ICD-10-PCS procedures codes are used to report 
treatment using either KYMRIAH or YESCARTA). We also believe, as we and 
other commenters describe throughout this section, that these 
technologies are intended to treat the same or similar disease in the 
same or similar patient population--patients with r/r DLBCL who are 
ineligible for, or who have failed ASCT, and are purposed to achieve 
the same therapeutic outcome--ORR, CR, OS using the same or similar 
mechanism of action using genetically modified autologous T-cell 
immunotherapies. The respective CAR T-cells transmit a signal to 
promote T-cell expansion, activation, and ultimately cancer cell 
elimination to produce a targeted cellular therapy that may persist in 
the body even after the malignancy is eradicated.
    We also believe that KYMRIAH and YESCARTA are not substantially 
similar to any other existing technologies because, as both applicants 
asserted in their FY 2019 new technology add-on payment applications 
and as stated by the other commenters, the technologies do not use the 
same or similar mechanism of action to achieve a therapeutic outcome as 
any other existing drug or therapy assigned to the same or different 
MS-DRG and represent the only FDA-approved technologies for this 
treatment population.
    With regard to the commenter that indicated pricing of both 
products varies based on the patient population, and encouraged CMS to 
recognize this discrepancy when determining approval of new technology 
add-on payment and establishing adequate payments rates, we note that 
the applicants for both, KYMRIAH and YESCARTA, estimate that the 
average cost for an administered dose of KYMRIAH or YESCARTA is 
$373,000. We refer readers to the end of this discussion for complete 
details on the pricing of KYMRIAH and YESCARTA.
    With respect to CMS' policy for evaluating substantially similar 
technologies, we believe our current policy is consistent with the 
authority and criteria in section 1886(d)(5)(K) of the Act. We note 
that CMS is authorized by the Act to develop criteria for the purposes 
of evaluating new technology add-on payment applications. For the 
purposes of new technology add-on payments, when technologies are 
substantially similar to each other, we believe it is appropriate to 
evaluate both technologies as one application for new technology add-on 
payments under the IPPS, for the reasons we discussed above and 
consistent with our evaluation of substantially similar technologies in 
prior rulemaking (82 FR 38120).
    Finally, we note that for FY 2019, there is no payment impact 
regarding the determination that the two technologies are substantially 
similar to each other because the cost of the technologies is the same. 
However, we welcome additional comments in future rulemaking regarding 
whether KYMRIAH and YESCARTA are substantially similar and intend to 
revisit this issue in next year's proposed rule.
    As we stated in the proposed rule and above, each applicant 
submitted separate analysis regarding the cost criterion for each of 
their products, and both applicants maintained that their product meets 
the cost criterion. We summarize each analysis below.
    With regard to the cost criterion, the applicant for KYMRIAH 
searched the FY 2016 MedPAR claims data file to identify potential 
cases representing patients who may be eligible for treatment using 
KYMRIAH. The applicant identified claims that reported an ICD-10-CM 
diagnosis code of: C83.30 (DLBCL, unspecified site); C83.31 (DLBCL, 
lymph nodes of head, face and neck); C83.32 (DLBCL, intrathoracic lymph 
nodes); C83.33 (DLBCL, intra-abdominal lymph nodes); C83.34 (DLBCL, 
lymph nodes of axilla and upper limb); C83.35 (DLBCL, lymph nodes of 
inquinal region and lower limb); C83.36 (DLBCL, intrapelvic lymph 
nodes); C83.37 (DLBCL, spleen); C83.38 (DLBCL, lymph nodes of multiple 
sites); or C83.39 (DLBCL, extranodal and solid organ sites). The 
applicant also identified potential cases where patients received 
chemotherapy using two encounter codes, Z51.11 (Antineoplastic 
chemotherapy) and Z51.12 (Antineoplastic immunotherapy), in conjunction 
with DLBCL diagnosis codes.
    Applying the parameters above, the applicant for KYMRIAH identified 
a total of 22,589 DLBCL potential cases that mapped to 437 MS-DRGs. The 
applicant chose the top 20 MS-DRGs which made up a total of 15,451 
potential cases at 68 percent of total cases. Of the 22,589 total DLBCL 
potential cases, the applicant also provided a breakdown of DLBCL 
potential cases where chemotherapy was used, and DLBCL potential cases 
where chemotherapy was not used. Of the 6,501 DLBCL potential cases 
where chemotherapy was used, MS-DRGs 846 and 847 accounted for 6,181 
(95 percent) of the 6,501 cases. Of the 16,088 DLBCL potential cases 
where chemotherapy was not used, the applicant chose the top 20 MS-DRGs 
which made up a total of 9,333 potential cases at 58 percent of total 
cases. The applicant believed the distribution of patients that may be 
eligible for treatment using KYMRIAH will include a wide variety of MS-
DRGs. As such, the applicant conducted an analysis of three scenarios: 
potential DLBCL cases, potential DLBCL cases with chemotherapy, and 
potential DLBCL cases without chemotherapy.
    The applicant removed reported historic charges that would be 
avoided through the use of KYMRIAH. Next, the applicant removed 50 
percent of the chemotherapy pharmacy charges that would not be required 
for patients that may be eligible to receive treatment using KYMRIAH. 
The applicant standardized the charges and then applied an inflation 
factor of 1.09357, which is the 2-year inflation factor in the FY 2018 
IPPS/LTCH PPS final rule (82 FR 38527), to update the charges from FY 
2016 to FY 2018. The applicant did not add charges for KYMRIAH to its 
analysis. However, the applicant provided a cost analysis related to 
the three categories of claims data it previously researched (that is, 
potential DLBCL cases, potential DLBCL cases with chemotherapy, and 
potential DLBCL cases without chemotherapy). The applicant's analysis 
showed the inflated average case-weighted standardized charge per case 
for

[[Page 41292]]

potential DLBCL cases, potential DLBCL cases with chemotherapy, and 
potential DLBCL cases without chemotherapy was $63,271, $39,723, and 
$72,781, respectively. The average case-weighted threshold amount for 
potential DLBCL cases, potential DLBCL cases with chemotherapy, and 
potential DLBCL cases without chemotherapy was $58,278, $48,190, and 
$62,355 respectively. While the inflated average case-weighted 
standardized charge per case ($39,723) is lower than the average case-
weighted threshold amount ($48,190) for potential DLBCL cases with 
chemotherapy, the applicant expected the cost of KYMRIAH to be higher 
than the new technology add-on payment threshold amount for all three 
cohorts. Therefore, the applicant maintained that it met the cost 
criterion.
    We noted in the proposed rule that, as discussed in section 
II.F.2.d. of the preamble of the proposed rule, we proposed to assign 
the ICD-10-PCS procedure codes that describe procedures involving the 
utilization of these CAR T-cell therapy drugs and cases representing 
patients receiving treatment involving CAR T-cell therapy procedures to 
Pre-MDC MS-DRG 016 for FY 2019. Therefore, in addition to the analysis 
above, we compared the inflated average case-weighted standardized 
charge per case from all three cohorts above to the average case-
weighted threshold amount for MS-DRG 016. The average case-weighted 
threshold amount for MS-DRG 016 from Table 10 in the FY 2018 IPPS/LTCH 
PPS final rule is $161,058. Although the inflated average case-weighted 
standardized charge per case for all three cohorts ($63,271, $39,723, 
and $72,781) is lower than the average case-weighted threshold amount 
for MS-DRG 016, we noted that similar to above, the applicant expected 
the cost of KYMRIAH to be higher than the new technology add-on payment 
threshold amount for MS-DRG 016. Therefore, it appeared that KYMRIAH 
would meet the cost criterion under this scenario as well.
    We stated in the proposed rule that we appreciated the applicant's 
analysis. However, we noted that the applicant did not provide 
information regarding which specific historic charges were removed in 
conducting its cost analysis. Nonetheless, we stated that we believed 
that even if historic charges were identified and removed, the 
applicant would meet the cost criterion because, as indicated, the 
applicant expected the cost of KYMRIAH to be higher than the new 
technology add-on payment threshold amounts listed earlier.
    We invited public comments on whether KYMRIAH meets the cost 
criterion.
    Comment: Commenters agreed with CMS that KYMRIAH meets the cost 
criterion for new technology add-on payments based on the analysis 
above. The commenters noted that more recent information indicates that 
the cost of the drug alone is more than twice the estimated new 
technology add-on payment MS-DRG threshold amount.
    Response: We appreciate the commenters' input and note that, since 
the publication of the proposed rule, CMS has received supplemental 
information that the cost for each administration of KYMRIAH is 
$373,000.
    After consideration of the public comments we received, we agree 
that KYMRIAH meets the cost criterion.
    With regard to the cost criterion in reference to YESCARTA, the 
applicant conducted the following analysis. The applicant examined FY 
2016 MedPAR claims data restricted to patients discharged in FY 2016. 
The applicant included potential cases reporting an ICD-10 diagnosis 
code of C83.38. Noting that only MS-DRGs 820 (Lymphoma and Leukemia 
with Major O.R. Procedure with MCC), 821 (Lymphoma and Leukemia with 
Major O.R. Procedure with CC), 823 and 824 (Lymphoma and Non-Acute 
Leukemia with Other O.R. Procedure with MCC, with CC, respectively), 
825 (Lymphoma and Non Acute Leukemia with Other O.R Procedure without 
CC/MCC), and 840, 841 and 842 (Lymphoma and Non-Acute Leukemia with 
MCC, with CC and without CC/MCC, respectively) consisted of 10 or more 
cases, the applicant limited its analysis to these 8 MS-DRGs. The 
applicant identified 827 potential cases across these MS-DRGs. The 
average case-weighted unstandardized charge per case was $126,978. The 
applicant standardized charges using FY 2016 standardization factors 
and applied an inflation factor of 1.09357 from the FY 2018 IPPS/LTCH 
PPS final rule (82 FR 38527). The applicant for YESCARTA did not 
include the cost of its technology in its analysis.
    Included in the average case-weighted standardized charge per case 
were charges for the current treatment components. Therefore, the 
applicant for YESCARTA removed 20 percent of radiology charges to 
account for chemotherapy, and calculated the adjusted average case-
weighted standardized charge per case by subtracting these charges from 
the standardized charge per case. Based on the distribution of 
potential cases within the eight MS-DRGs, the applicant case-weighted 
the final inflated average case-weighted standardized charge per case. 
This resulted in an inflated average case-weighted standardized charge 
per case of $118,575. Using the FY 2018 IPPS Table 10 thresholds, the 
average case-weighted threshold amount was $72,858. Even without 
considering the cost of its technology, the applicant maintained that 
because the inflated average case-weighted standardized charge per case 
exceeded the average case-weighted threshold amount, the technology met 
the cost criterion.
    We noted in the proposed rule that, as discussed in section 
II.F.2.d. of the preamble of the proposed rule, we proposed to assign 
the ICD-10-PCS procedure codes that describe procedures involving the 
utilization of these CAR T-cell therapy drugs and cases representing 
patients receiving treatment involving CAR T-cell therapy procedures to 
Pre-MDC MS-DRG 016 for FY 2019. Therefore, in addition to the analysis 
above, we compared the inflated average case-weighted standardized 
charge per case ($118,575) to the average case-weighted threshold 
amount for MS-DRG 016. The average case-weighted threshold amount for 
MS-DRG 016 from Table 10 in the FY 2018 IPPS/LTCH PPS final rule is 
$161,058. Although the inflated average case-weighted standardized 
charge per case is lower than the average case-weighted threshold 
amount for MS-DRG 016, we noted that the applicant expected the cost of 
YESCARTA to be higher than the new technology add-on payment threshold 
amount for MS-DRG 016. Therefore, we stated that it appeared that 
YESCARTA would meet the cost criterion under this scenario as well.
    We invited public comments on whether YESCARTA technology meets the 
cost criterion.
    Comment: Commenters agreed with CMS that YESCARTA meets the cost 
criterion for new technology add-on payments based on the analysis 
above. The commenters noted that more recent information indicates the 
cost of the drug alone is more than twice the estimated new technology 
add-on payment MS-DRG threshold amount.
    Response: We appreciate the commenters' input and note that, since 
the publication of the proposed rule, CMS has received supplemental 
information that the cost for each administration of YESCARTA is 
$373,000.
    After consideration of the public comments we received, we agree 
that YESCARTA meets the cost criterion.

[[Page 41293]]

    With regard to substantial clinical improvement for KYMRIAH, the 
applicant asserted that several aspects of the treatment represent a 
substantial clinical improvement over existing technologies. The 
applicant believed that KYMRIAH allows access for a treatment option 
for those patients who are unable to receive standard-of-care 
treatment. The applicant stated in its application that there are no 
currently FDA-approved treatment options for patients with r/r DLBCL 
who are ineligible for or who have failed ASCT. Additionally, the 
applicant maintained that KYMRIAH significantly improves clinical 
outcomes, including ORR, CR, OS, and durability of response, and allows 
for a manageable safety profile. The applicant asserted that, when 
compared to the historical control data (SCHOLAR-1) and the currently 
available treatment options, it is clear that KYMRIAH significantly 
improves clinical outcomes for patients with r/r DLBCL who are not 
eligible for ASCT. The applicant conveyed that, given that the patient 
population has no other available treatment options and an expected 
very short lifespan without therapy, there are no randomized controlled 
trials of the use of KYMRIAH in patients with r/r DLBCL and, therefore, 
efficacy assessments must be made in comparison to historical control 
data. The SCHOLAR-1 study is the most comprehensive evaluation of the 
outcome of patients with refractory DLBCL. SCHOLAR-1 includes patients 
from two large randomized controlled trials (Lymphoma Academic Research 
Organization-CORAL and Canadian Cancer Trials Group LY.12) and two 
clinical databases (MD Anderson Cancer Center and University of Iowa/
Mayo Clinic Lymphoma Specialized Program of Research Excellence).\35\
---------------------------------------------------------------------------

    \35\ Crump, M., Neelapu, S.S., Farooq, U., et al., ``Outcomes in 
refractory diffuse large B-cell lymphoma: Results from the 
international SCHOLAR-1 study,'' Blood, Published online: August 3, 
2017, doi: 10.1182/blood-2017-03-769620.
---------------------------------------------------------------------------

    The applicant for KYMRIAH conveyed that the PARMA study established 
high-dose chemotherapy and ASCT as the standard treatment for patients 
with r/r DLBCL.\36\ However, according to the applicant, many patients 
with r/r DLBCL are ineligible for ASCT because of medical frailty. 
Patients who are ineligible for ASCT because of medical frailty would 
also be adversely affected by high-dose chemotherapy regimens.\37\ 
Lowering the toxicity of chemotherapy regimens becomes the only 
treatment option, leaving patients with little potential for 
therapeutic outcomes. According to the applicant, the lack of efficacy 
of these aforementioned salvage regimens was demonstrated in nine 
studies evaluating combined chemotherapeutic regimens in patients who 
were either refractory to first-line or first salvage. Chemotherapy 
response rates ranged from 0 percent to 23 percent with OS less than 10 
months in all studies.\38\ For patients who do not respond to combined 
therapy regimens, the National Comprehensive Cancer Network (NCCN) 
offers only clinical trials or palliative care as therapeutic 
options.\39\
---------------------------------------------------------------------------

    \36\ Philip, T., Guglielmi, C., Hagenbeek, A., et al., 
``Autologous bone marrow transplantation as compared with salvage 
chemotherapy in relapses of chemotherapy-sensitive non-Hodgkin's 
lymphoma,'' N Engl J Med, 1995, vol. 333(23), pp. 1540-1545.
    \37\ Friedberg, J.W., ``Relapsed/refractory diffuse large B-cell 
lymphoma,'' Hematology AM Soc Hematol Educ Program, 2011, vol. (1), 
pp. 498-505.
    \38\ Crump, M., Neelapu, S.S., Farooq, U., et al., ``Outcomes in 
refractory diffuse large B-cell lymphoma: Results from the 
international SCHOLAR-1 study,'' Blood, Published online: August 3, 
2017, doi: 10.1182/blood-2017-03-769620.
    \39\ National Comprehensive Cancer Network, NCCN Clinical 
Practice Guidelines in Oncology (NCCN GuidelinesR), ``B-cell 
lymphomas: Diffuse large b-cell lymphoma and follicular lymphoma 
(Version 3.2017),'' May 25, 2017. Available at: https://www.nccn.org/professionals/physician_gls/pdf/b-cell_blocks.pdf.
---------------------------------------------------------------------------

    According to the applicant for KYMRIAH, the immunomodulatory agent 
Lenalidomide was only able to show an ORR of 30 percent, a CR rate of 8 
percent, and a 4.6-month median duration of response.\40\ M-tor 
inhibitors such as Everolimus and Temserolimus have been studied as 
single agents, or in combination with Rituximab, as have newer 
monoclonal antibodies Dacetuzumab, Ofatumomab and Obinutuzumab. 
However, none induced a CR rate higher than 20 percent or showed a 
median duration of response longer than 1 year.\41\
---------------------------------------------------------------------------

    \40\ Klyuchnikov, E., Bacher, U., Kroll, T., et al., 
``Allogeneic hematopoietic cell transplantation for diffuse large B 
cell lymphoma: Who, when and how?,'' Bone Marrow Transplant, 2014, 
vol. 49(1), pp. 1-7.
    \41\ Ibid.
---------------------------------------------------------------------------

    According to the applicant, although controversial, allogeneic stem 
cell transplantation (allo-SCT) has been proposed for patients who have 
been diagnosed with r/r disease. It is hypothesized that the malignant 
cell will be less able to escape the immune targeting of allogenic T-
cells--known as the graft-vs-lymphoma effect.42 43 The use 
of allo-SCT is limited in patients who are not eligible for ASCT 
because of the high rate of morbidity and mortality. This medically 
frail population is generally excluded from participation. The 
population most impacted by this is the elderly, who are often excluded 
based on age alone. In seven studies evaluating allo-SCT in patients 
with r/r DLBCL, the median age at transplant was 43 years old to 52 
years old, considerably lower than the median age of patients with 
DLBCL of 64 years old. Only two studies included any patients over 66 
years old. In these studies, allo-SCT provided OS rates ranging from 18 
percent to 52 percent at 3 to 5 years, but was accompanied by 
treatment-related mortality rates ranging from 23 percent to 56 
percent.\44\ According to the applicant, this toxicity and efficacy 
profile of allo-SCT substantially limits its use, especially in 
patients 65 years old and older. Given the high unmet medical need, the 
applicant maintained that KYMRIAH represents a substantial clinical 
improvement by offering a treatment option for a patient population 
unresponsive to, or ineligible for, currently available treatments.
---------------------------------------------------------------------------

    \42\ Ibid.
    \43\ Maude, S.L., Teachey, D.T., Porter, D.L., Grupp, S.A., 
``CD19-targeted chimeric antigen receptor T-cell therapy for acute 
lymphoblastic leukemia,'' Blood, 2015, vol. 125(26), pp. 4017-4023.
    \44\ Klyuchnikov, E., Bacher, U., Kroll, T., et al., 
``Allogeneic hematopoietic cell transplantation for diffuse large B 
cell lymphoma: Who, when and how?,'' Bone Marrow Transplant, 2014, 
vol. 49(1), pp. 1-7.
---------------------------------------------------------------------------

    To express how KYMRIAH has improved clinical outcomes, including 
ORR, CR rate, OS, and durability of response, the applicant referenced 
clinical trials in which KYMRIAH was tested. Study 1 was a single-arm, 
open-label, multi-site, global Phase II study to determine the safety 
and efficacy of tisagenlecleucel in patients with R/R DLBCL 
(CCTL019C2201/CT02445248/`JULIET' study).45 46 47 Key 
inclusion criteria included patients who were 18 years old and older, 
patients with refractory to at least two lines of chemotherapy and 
either relapsed post ASCT or who were ineligible for ASCT, measurable 
disease at the time of infusion, and adequate organ and bone marrow 
function. The study was conducted in three phases. In the screening 
phase patient eligibility was

[[Page 41294]]

assessed and patient cells collected for product manufacture. Patients 
were also able to receive bridging, cytotoxic chemotherapy during this 
time. In the pre-treatment phase patients underwent a restaging of 
disease followed by lymphodepleting chemotherapy with fludarabine 25mg/
m2 x 3 and cyclophosphamide 250mg/m2/d x 3 or bendamustine 90mg/m2/d x 
2 days. The treatment and follow-up phase began 2 to 14 days after 
lymphodepleting chemotherapy, when the patient received a single 
infusion of tisagenlecleucel with a target dose of 5 x 108 
CTL019 transduced viable cells. The primary objective was to assess the 
efficacy of tisagenlecleucel, as measured by the best overall response 
(BOR), which was defined as CR or partial response (PR). It was 
assessed on the Chesson 2007 response criteria amended by Novartis 
Pharmaceutical Corporation as confirmed by an Independent Review 
Committee (IRC). One hundred forty-seven patients were enrolled, and 99 
of them were infused with tisagenlecleucel. Forty-three patients 
discontinued prior to infusion (9 due to inability to manufacture and 
34 due to patient-related issues).\48\ The median age of treated 
patients was 56 years old with a range of 24 to 75; 20 percent were 
older than 65 years old. Patients had received 2 to 7 prior lines of 
therapy, with 60 percent receiving 3 or more therapies, and 51 percent 
having previously undergone ASCT. A primary analysis was performed on 
81 patients infused and followed for more than or at least 3 months. In 
this primary analysis, the BOR was 53 percent; the study met its 
primary objective based on statistical analysis (that is, testing 
whether BOR was greater than 20 percent, a clinically relevant 
threshold chosen based on the response to chemotherapy in a patient 
with r/r DLBCL). Forty-three percent (43 percent) of evaluated patients 
reached a CR, and 14 percent reached a PR. ORR evaluated at 3 months 
was 38 percent with a distribution of 32 percent CR and 6 percent PR. 
All patients in CR at 3 months continued to be in CR. ORR was similar 
across subgroups including 64.7 percent response in patients who were 
older than 65 years old, 61.1 percent response in patients with Grade 
III/IV disease at the time of enrollment, 58.3 percent response in 
patients with Activated B-cell, 52.4 percent response in patients with 
Germinal Center B-cell subtype, and 60 percent response in patients 
with double and triple hit lymphoma. Durability of response was 
assessed based on relapse free survival (RFS), which was estimated at 
74 percent at 6 months.
---------------------------------------------------------------------------

    \45\ Data on file, Oncology clinical trial protocol 
CCTL019C2201: ``A Phase II, single-arm, multi-center trial to 
determine the efficacy and safety of CTL019 in adult patients with 
relapsed or refractory diffuse large Bcell lymphoma (DLBCL),'' 
Novartis Pharmaceutical Corp, 2015.
    \46\ Schuster, S.J., Bishop, M.R., Tam, C., et al., ``Global 
trial of the efficacy and safety of CTL019 in adult patients with 
relapsed or refractory diffuse large B-cell lymphoma: An interim 
analysis,'' Presented at: 22nd Congress of the European Hematology 
Association, June 22-25, 2017, Madrid, Spain.
    \47\ ClinicalTrials.gov, ``Study of efficacy and safety of 
CTL019 in adult DLBCL patients (JULIET).''Available at: https://clinicaltrials.gov/ct2/show/NCT02445248.
    \48\ Schuster, S.J., Bishop, M.R., Tam, C., et al., ``Global 
trial of the efficacy and safety of CTL019 in adult patients with 
relapsed or refractory diffuse large B-cell lymphoma: an interim 
analysis,'' Presented at: 22nd Congress of the European Hematology 
Association, June 22-25, 2017, Madrid, Spain.
---------------------------------------------------------------------------

    The applicant for KYMRIAH reported that Study 2 was a supportive 
Phase IIa single institution study of adults who were diagnosed with 
advanced CD19+ NHL conducted at the University of 
Pennsylvania.49 50 Tisagenlecleucel cells were produced at 
the University of Pennsylvania using the same genetic construct and a 
similar manufacturing technique as employed in Study 1. Key inclusion 
criteria included patients who were at least 18 years old, patients 
with CD19+ lymphoma with no available curative options, and measurable 
disease at the time of enrollment. Tisagenlecleucel was delivered in a 
single infusion 1 to 4 days after restaging and lymphodepleting 
chemotherapy. The median tisagenlecleucel cell dose was 5.0 x 108 
transduced cells. The study enrolled 38 patients; of these, 21 were 
diagnosed with DLBCL and 13 received treatment involving KYMRIAH. 
Patients ranged in age from 25 to 77 years old, and had a median of 4 
prior therapies. Thirty-seven percent had undergone ASCT and 63 percent 
were diagnosed with Grade III/IV disease. ORR at 3 months was 54 
percent. Progression free survival was 43 percent at a median follow-up 
of 11.7 months. Safety and efficacy results are similar to those of the 
multi-center study.
---------------------------------------------------------------------------

    \49\ ClinicalTrials.gov, ``Phase IIa study of redirected 
autologous T-cells engineered to contain anti-CD19 attached to TCRz 
and 4-signaling domains in patients with chemotherapy relapsed or 
refractory CD19+ lymphomas,'' Available at: https://clinicaltrials.gov/ct2/show/NCT02030834.
    \50\ Schuster, S.J., Svoboda, J., Nasta, S.D., et al., 
``Sustained remissions following chimeric antigen receptor modified 
T-cells directed against CD-19 (CTL019) in patients with relapsed or 
refractory CD19+ lymphomas,'' Presented at: 57th Annual Meeting of 
the American Society of Hematology, December 6, 2015, Orlando, FL.
---------------------------------------------------------------------------

    The applicant for KYMRIAH reported that Study 3 was a supportive, 
patient-level meta-analysis of historical outcomes in patients who were 
diagnosed with refractory DLBCL (SCHOLAR-1).\51\ This study included a 
pooled data analysis of two Phase III clinical trials (Lymphoma 
Academic Research Organization-CORAL and Canadian Cancer Trials Group 
LY.12) and two observational cohorts (MD Anderson Cancer Center and 
University of Iowa/Mayo Clinic Lymphoma Specialized Program of Research 
Excellence). Refractory disease was defined as progressive disease or 
stable disease as best response to chemotherapy (received more than or 
at least 4 cycles of first-line therapy or 2 cycles of later-line 
therapy, respectively) or relapse in less than or at 12 months post-
ASCT. Of 861 abstracted records, 636 were included based on these 
criteria. All patients from each data source who met criteria for 
diagnosis of refractory DLBCL, including TFL and PMBCL, who went on to 
receive subsequent therapy were considered for analysis. Patients who 
were diagnosed with TFL and PMBCL were included because they are 
histologically similar and clinically treated as large cell lymphoma. 
Response rates were similar across the 4 datasets, ranging from 20 
percent to 31 percent, with a pooled response rate of 26 percent. CR 
rates ranged from 2 percent to 15 percent, with a pooled CR rate of 7 
percent. Subgroup analyses including patients with primary refractory, 
refractory to second or later-line therapy, and relapse in less than 12 
months post-ASCT revealed response rates similar to the pooled 
analysis, with worst outcomes in the primary refractory group (20 
percent). OS from the commencement of therapy was 6.3 months and was 
similar across subgroup analyses. Achieving a CR after last salvage 
chemotherapy predicted a longer OS of 14.9 months compared to 4.6 
months in nonresponders. Patients who had not undergone ASCT had an OS 
of 5.1 months with a 2 year OS rate of 11 percent.
---------------------------------------------------------------------------

    \51\ Crump, M., Neelapu, S.S., Farooq, U., et al., ``Outcomes in 
refractory diffuse large B-cell lymphoma: Results from the 
international SCHOLAR-1 study,'' Blood, Published online: August 3, 
2017, doi: 10.1182/blood-2017-03-769620.
---------------------------------------------------------------------------

    The applicant asserted that KYMRIAH provides a manageable safety 
profile when treatment is performed by trained medical personnel and, 
as opposed to ASCT, KYMRIAH mitigates the need for high-dose 
chemotherapy to induce response prior to infusion. Adverse events were 
most common in the 8 weeks following infusion and were manageable by a 
trained staff. Cytokine Relapse Syndrome (CRS) occurred in 58 percent 
of patients with 23 percent having Grade III or IV events as graded on 
the University of Pennsylvania grading system.52 53 Median 
time to

[[Page 41295]]

onset of CRS was 3 days and median duration was 7 days with a range of 
2 to 30 days. Twenty-four percent of the patients required ICU 
admission. CRS was managed with supportive care in most patients. 
However, 16 percent required anti-cytokine therapy including 
tocilizumab (15 percent) and corticosteroids (11 percent). Other 
adverse events of special interest include infection in 34 percent (20 
percent Grade III or IV) of patients, cytopenias not resolved by day 28 
in 36 percent (27 percent Grade III or IV) of patients, neurologic 
events in 21 percent (12 percent Grade III or IV) of patients, febrile 
neutropenia in 13 percent (13 percent Grade III or IV) of patients, and 
tumor lysis syndrome 1 percent (1 percent Grade III). No deaths were 
attributed to tisagenlecleucel including no fatal cases of CRS or 
neurologic events. No cerebral edema was observed.\54\ Study 2 safety 
results were consistent to those of Study 1.\55\
---------------------------------------------------------------------------

    \52\ ClinicalTrials.gov, ``Phase IIa study of redirected 
autologous T-cells engineered to contain anti-CD19 attached to TCRz 
and 4-signaling domains in patients with chemotherapy relapsed or 
refractory CD19+ lymphomas.'' Available at: https://clinicaltrials.gov/ct2/show/NCT02030834.
    \53\ Schuster, S.J., Svoboda, J., Nasta, S.D., et al., 
``Sustained remissions following chimeric antigen receptor modified 
T-cells directed against CD-19 (CTL019) in patients with relapsed or 
refractory CD19+ lymphomas,'' Presented at: 57th Annual Meeting of 
the American Society of Hematology, December 6, 2015, Orlando, FL.
    \54\ Schuster, S.J., Bishop, M.R., Tam, C., et al., ``Global 
trial of the efficacy and safety of CTL019 in adult patients with 
relapsed or refractory diffuse large B-cell lymphoma: an interim 
analysis,'' Presented at: 22nd Congress of the European Hematology 
Association, June 22-25, 2017, Madrid, Spain.
    \55\ Ibid.
---------------------------------------------------------------------------

    After reviewing the studies provided by the applicant, in the FY 
2019 IPPS/LTCH PPS proposed rule (83 FR 20292), we stated that we were 
concerned the applicant included patients who were diagnosed with TFL 
and PMBCL in the SCHOLAR-1 data results for their comparison analysis, 
possibly skewing results. Furthermore, the discontinue rate of the 
JULIET trial was high. Of 147 patients enrolled for infusion involving 
KYMRIAH, 43 discontinued prior to infusion (9 discontinued due to 
inability to manufacture, and 34 discontinued due to patient-related 
issues). Finally, the rate of patients who experienced a diagnosis of 
CRS was high, 58 percent.\56\
---------------------------------------------------------------------------

    \56\ Schuster, S.J., Bishop, M.R., Tam, C., et al., ``Global 
trial of the efficacy and safety of CTL019 in adult patients with 
relapsed or refractory diffuse large B-cell lymphoma: an interim 
analysis,'' Presented at: 22nd Congress of the European Hematology 
Association, June 22-25, 2017, Madrid, Spain.
---------------------------------------------------------------------------

    The applicant for YESCARTA stated that YESCARTA represents a 
substantial clinical improvement over existing technologies when used 
in the treatment of patients with aggressive B-cell NHL. The applicant 
asserted that YESCARTA can benefit the patient population with the 
highest unmet need, patients with r/r disease after failure of first-
line or second-line therapy, and patients who have failed or who are 
ineligible for ASCT. These patients, otherwise, have adverse outcomes 
as demonstrated by historical control data.
    Regarding clinical data for YESCARTA, the applicant stated that 
historical control data was the only ethical and feasible comparison 
information for these patients with chemorefractory, aggressive NHL who 
have no other available treatment options and who are expected to have 
a very short lifespan without therapy. According to the applicant, 
based on meta-analysis of outcomes in patients with chemorefractory 
DLBCL, there are no curative options for patients with aggressive B-
cell NHL, regardless of refractory subgroup, line of therapy, and 
disease stage with their median OS being 6.6 months.\57\
---------------------------------------------------------------------------

    \57\ Seshardi, T., et al., ``Salvage therapy for relapsed/
refractory diffuse large B-cell lymphoma,'' Biol Blood Marrow 
Transplant, 2008 Mar, vol. 14(3), pp. 259-67.
---------------------------------------------------------------------------

    In the applicant's FY 2018 new technology add-on payment 
application for the KTE-C19 technology, which was discussed in the FY 
2018 IPPS/LTCH PPS proposed rule (82 FR 19889), the applicant cited 
ongoing clinical trials. The applicant provided updated data related to 
these ongoing clinical trials as part of its FY 2019 application for 
YESCARTA.58 59 60 The updated analysis of the pivotal Study 
1 (ZUMA-1, KTE-C19-101), Phase I and II occurred when patients had been 
followed for 12 months after infusion of YESCARTA. Study 1 is a Phase 
I-II multi-center, open-label study evaluating the safety and efficacy 
of the use of YESCARTA in patients with aggressive refractory NHL. The 
trial consists of two distinct phases designed as Phase I (n=7) and 
Phase II (n=101). Phase II is a multi-cohort open-label study 
evaluating the efficacy of YESCARTA.\61\ The applicant noted that, as 
of the analysis cutoff date for the interim analysis, the results of 
Study 1 demonstrated rapid and substantial improvement in objective, or 
ORR. After 6 and 12 months, the ORR was 82 and 83 percent, 
respectively. Consistent response rates were observed in both Study 1, 
Cohort 1 (DLBCL; n=77) and Cohort 2 (PMBCL or TFL; n=24) and across 
covariates including disease stage, age, IPI scores, CD-19 status, and 
refractory disease subset. In the updated analysis, results were 
consistent across age groups. In this analysis, 39 percent of patients 
younger than 65 years old were in ongoing response, and 50 percent of 
patients at least 65 years old or older were in ongoing response. 
Similarly, the survival rate at 12 months was 57 percent among patients 
younger than 65 years old and 71 percent among patients at least 65 
years old or older versus historical control of 26 percent. The 
applicant further stated that evidence of substantial clinical 
improvement regarding the efficacy of YESCARTA for the treatment of 
patients with chemorefractory, aggressive B-cell NHL is supported by 
the CR of YESCARTA in Study 1, Phase II (54 percent) versus the 
historical control (7 percent).62 63 64 65 The applicant 
noted that CR rates were observed in both Study 1, Cohort 1. The 
applicant reported that, in the updated analysis, results were in 
ongoing response (46 percent of patients at least 65 years old or older 
were in ongoing response). Similarly, the survival rate at 12 months 
was 57 percent among patients younger than 65 years old and 71 percent 
among patients at least 65 years old or older.66 67 68 69 
The applicant also

[[Page 41296]]

provided the following tables to depict data to support substantial 
clinical improvement (we refer readers to the two tables below).
---------------------------------------------------------------------------

    \58\ Locke, F.L., et al., ``Ongoing complete remissions in Phase 
1 of ZUMA-1: a phase I-II multicenter study evaluating the safety 
and efficacy of KTE-C19 (anti-CD19 CAR T cells) in patients with 
refractory aggressive B-cell non-Hodgkin lymphoma (NHL),'' Oral 
presentation (abstract 10480) presented at European Society for 
Medical Oncology (ESMO), October 2016.
    \59\ Locke, F.L., et al., ``Primary results from ZUMA-1: a 
pivotal trial of axicabtagene ciloretroleucel (axi-cel; KTE-C19) in 
patients with refractory aggressive non-Hodgkins lymphoma (NHL),'' 
Oral presentation, American Association of Cancer Research (AACR).
    \60\ Locke, F.L., et al., ``Phase I results of ZUMA-1: a 
multicenter study of KTE-C19 anti-CD19 CAR T cell therapy in 
refractory aggressive lymphoma,'' Mol Ther, vol. 25, No 1, January 
2017.
    \61\ Neelapu, S.S., Locke, F.L., et al., 2016, ``KTE-C19 (anti-
CD19 CAR T cells) induces complete remissions in patients with 
refractory diffuse large B-cell lymphoma (DLBCL): results from the 
pivotal Phase II ZUMA-1,'' Abstract presented at American Society of 
Hematology (ASH) 58th Annual Meeting, December 2016.
    \62\ Locke, F.L., et al., ``Ongoing complete remissions in Phase 
I of ZUMA-1: a phase I-II multicenter study evaluating the safety 
and efficacy of KTE-C19 (anti-CD19 CAR T cells) in patients with 
refractory aggressive B-cell non-Hodgkin lymphoma (NHL),'' Oral 
presentation (abstract 10480) presented at European Society for 
Medical Oncology (ESMO), October 2016.
    \63\ Locke, F.L., et al., ``Primary results from ZUMA-1: a 
pivotal trial of axicabtagene ciloretroleucel (axi-cel; KTE-C19) in 
patients with refractory aggressive non-Hodgkins lymphoma (NHL),'' 
Oral presentation, American Association of Cancer Research (AACR).
    \64\ Locke, F.L., et al., ``Phase I results of ZUMA-1: a 
multicenter study of KTE-C19 anti-CD19 CAR T cell therapy in 
refractory aggressive lymphoma,'' Mol Ther, vol. 25, No 1, January 
2017.
    \65\ Crump, et al., 2017, ``Outcomes in refractory diffuse large 
B-cell lymphoma: Results from the international SCHOLAR-1 study,'' 
Blood, vol. 0, 2017, pp. blood-2017-03-769620v1.
    \66\ Locke, F.L., et al., ``Ongoing complete remissions in Phase 
I of ZUMA-1: a phase I-II multicenter study evaluating the safety 
and efficacy of KTE-C19 (anti-CD19 CAR T cells) in patients with 
refractory aggressive B-cell non-Hodgkin lymphoma (NHL),'' Oral 
presentation (abstract 10480) presented at European Society for 
Medical Oncology (ESMO), October 2016.
    \67\ Locke, F.L., et al., ``Primary results from ZUMA-1: a 
pivotal trial of axicabtagene ciloretroleucel (axi-cel; KTE-C19) in 
patients with refractory aggressive non-Hodgkins lymphoma (NHL),'' 
Oral presentation, American Association of Cancer Research (AACR).
    \68\ Locke, F.L., et al., ``Phase I results of ZUMA-1: a 
multicenter study of KTE-C19 anti-CD19 CAR T cell therapy in 
refractory aggressive lymphoma,'' Mol Ther, vol. 25, No 1, January 
2017.
    \69\ Crump, et al., ``Outcomes in refractory diffuse large B-
cell lymphoma: results from the international SCHOLAR-1 study,'' 
Blood, vol. 0, 2017, pp. blood-2017-03-769620v1.

                        Overall Response Rates Across All YESCARTA Studies vs. SCHOLAR-1
----------------------------------------------------------------------------------------------------------------
                                        Study 1, Phase                                               Scholar-1
                                             I n=7               Study 1, Phase II n=101               n=529
----------------------------------------------------------------------------------------------------------------
Overall Response Rate (%).............              71  83......................................              26
Month 6 (%)...........................              43  41......................................
Ongoing with >15 Months of follow-up                43  42......................................
 (%).
Ongoing with >18 Months of follow-up                43  Follow-up ongoing.......................
 (%).
----------------------------------------------------------------------------------------------------------------


        Results for YESCARTA Study 1, Phase II: Complete Response
------------------------------------------------------------------------
                                               Study 1, Phase II n=101
------------------------------------------------------------------------
Complete Response (%) (95 Percent           54 (44,64).
 Confidence Interval).
Duration of Response, median (range in      not reached.
 months).
Ongoing Responses, CR (%) Median 8.7        39.
 months follow-up; median overall survival
 has not been reached.
Ongoing Responses, CR (%) Median 15.3       40.
 months follow-up; median overall survival
 has not been reached.
------------------------------------------------------------------------

    According to the applicant, the 6-month and 12-month survival rates 
(95 percent CI) for patients enrolled in the SCHOLAR-1 study were 53 
percent (49 percent, 57 percent) and 28 percent (25 percent, 32 
percent).\70\ In contrast, the 6-month and 12-month survival rates (95 
percent CI) in the Study 1 updated analysis were 79 percent (70 
percent, 86 percent) and 60 percent (50 percent, 69 
percent).71 72 73
---------------------------------------------------------------------------

    \70\ Crump, et al., ``Outcomes in refractory diffuse large B-
cell lymphoma: results from the international SCHOLAR-1 study,'' 
Blood, vol. 0, 2017, pp. blood-2017-03-769620v1.
    \71\ Locke, F.L., et al., ``Ongoing complete remissions in Phase 
I of ZUMA-1: a phase I-II multicenter study evaluating the safety 
and efficacy of KTE-C19 (anti-CD19 CAR T cells) in patients with 
refractory aggressive B-cell non-Hodgkin lymphoma (NHL),'' Oral 
presentation (abstract 10480) presented at European Society for 
Medical Oncology (ESMO), October 2016.
    \72\ Locke, F.L., et al., ``Primary results from ZUMA-1: a 
pivotal trial of axicabtagene ciloretroleucel (axi-cel; KTE-C19) in 
patients with refractory aggressive non-Hodgkins lymphoma (NHL),'' 
Oral presentation, American Association of Cancer Research (AACR).
    \73\ Locke, F.L., et al., ``Phase I results of ZUMA-1: a 
multicenter study of KTE-C19 anti-CD19 CAR T cell therapy in 
refractory aggressive lymphoma,'' Mol Ther, vol. 25, No 1, January 
2017.
---------------------------------------------------------------------------

    The applicant also cited safety results from the pivotal Study 1, 
Phase II. According to the applicant, the clinical trial protocol 
stipulated that patients were infused with YESCARTA in the hospital 
inpatient setting and were monitored in the inpatient setting for at 
least 7 days for early identification and treatment involving YESCARTA-
related toxicities, which primarily included CRS diagnoses and 
neurotoxicities. The applicant noted that the interim analysis showed 
the length of stay following infusion of YESCARTA was a median of 15 
days. Ninety-three percent of patients experienced CRS diagnoses, 13 
percent of whom experienced Grad